-107
-1,380,384
1,461,166
285,060
3,538
1,668,982
-1,540,085
301,526
3,575
1,845,186
-1,655,138
305,030
3,630
1,963,798
-1,811,719
302,183
9.5
-0.9
4,063
-11.9
2,117,965
7.9
Production volume
-1,224,280
234,175
2,711
BMW 5
Rolls-Royce
1,236,989
241,043
3,221
Total 5
1,481,253
-1,440,315
294,120
3,725
1,738,160
-1,547,057
311,490
- 3,279
1,861,826
1,699,835
303,177
- 3,354
2,006,366
1,838,268
8.1
322,803
6.5
4,495
2,165,566
34.0
MINI
Total²
Rolls-Royce
MINI
-116,324
5.4
Automotive segment
Sales volume2
-1,461,166
-1,668,982
-1,845,186
1,963,798
-2,117,965
-7.9
Fleet emissions in g CO2/km³
148
145
143
133
-130
-2.3
Motorcycles segment
Sales volume4
98,047
-104,286
-106,358
115,215
123,495
-7.2
Further non-financial key performance figures
Automotive segment
Sales volume
BMW²
7.9
Motorcycles segment
Production volume6
BMW
-8,707
10.3
Automotive segment
Revenues
€ million
54,137
63,229
-70,208
EBIT margin
% (change in %pts)
- 8.0
11.8
10.8
-70,630¹
9.4
-75,173
6.4
9.6
0.2
ROCE
% (change in %pts)
40.2
-77.3
-73.7
63.01
61.7
-1.3
Motorcycles segment
ROCE
% (change in %pts)
-7,893¹
-110,351
-7,803
4,853
Financial Services segment
New contracts with retail customers
99,236
-110,360
-113,811
-110,127
133,615
21.3
1,083,154
-1,196,610
1,341,296
-1,471,385
1,509,113
2.6
1 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2010: 53,701 units, 2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units).
3 EU-28.
4 Excluding Husqvarna, sales volume up to 2013: 59,776 units.
5 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2010: 55,588 units, 2011: 98,241 units, 2012: 150,052 units, 2013: 214,920 units, 2014: 287,466 units).
6 Excluding Husqvarna, production up to 2013: 59,426 units.
4
BMW Group in figures
Principal financial performance indicators
BMW Group
Profit before tax
.2010
2011
2012
2013
-2014
- Change in %
€ million
-7,383
-105,876
-100,306
-95,453
49
General and Sector-specific Environment
Overall Assessment by Management
Financial and Non-financial Performance Indicators
Review of Operations
Results of Operations, Financial Position and
Net Assets
Comments on Financial Statements of BMW AG
Events after the End of the Reporting Period
Report on Outlook, Risks and Opportunities
61
64
65
65
70
82
83
88
Outlook
Report on Risks and Opportunities
Internal Control System and Risk Management System
Relevant for the Consolidated Financial Reporting
Process
Disclosures Relevant for Takeovers
87 BMW Stock and Capital Markets in 2014
90-GROUP FINANCIAL STATEMENTS
90
90
92
94
96
29
98
26
23
ANNUAL REPORT
2014
successful
BMW
GROUP
innovative
forward-looking
sustainable
profitable
B
M
W
MINI
Rolls-Royce
Motor Cars Limited
Contents
3- BMW GROUP IN FIGURES
6- REPORT OF THE SUPERVISORY BOARD
14-STATEMENT OF THE CHAIRMAN OF THE
BOARD OF MANAGEMENT
18-COMBINED MANAGEMENT REPORT
18
23
General Information on the BMW Group
18
20
Business Model
Management System
Report on Economic Position
22222
26
18.0
Income Statements for Group and Segments
Statement of Comprehensive Income for Group
Balance Sheets for Group and Segments
Cash Flow Statements for Group and Segments
Group Statement of Changes in Equity
Accounting Principles and Policies
Applied beyond Mandatory Requirements
Compliance in the BMW Group
Compensation Report
198-Responsibility Statement by the
Company's Legal Representatives
199― Auditor's Report
200-OTHER INFORMATION
200
BMW Group Ten-year Comparison
202
BMW Group Locations
204
Glossary
206
208
Financial Calendar
209
Contacts
3
BMW Group in figures
2010
2011
2012
2013
2014
Change in %
Principal non-financial performance indicators
BMW Group
Workforce at end of year¹
Information on Corporate Governance Practices
Notes to the Group Financial Statements
of BMW AG and its Committees
Management of BMW AG and its Committees
98
116
Notes to the Income Statement
123
Notes to the Statement of
Comprehensive Income
124
Notes to the Balance Sheet
149
Other Disclosures
165
Segment Information
170-STATEMENT ON CORPORATE GOVERNANCE (§ 289 a HGB)
(Part of the Combined Management Report)
Information on the Company's Governing Constitution
Declaration of the Board of Management
and of the Supervisory Board pursuant to § 161 AktG
Members of the Board of Management
170
171
172
173
Members of the Supervisory Board
176
178
183
184
189
Composition and Work Procedures of the Board of
Composition and Work Procedures of the Supervisory Board
10.2
Index
16.4
in € billion
2,100
1,800
1,500
1,200
900
600
300
10 -11 -12 ―13 14
84
72
60
48
36
24
12
10 ―11
―12 13 14
1,461.2 1,669.0 1,845.2 1,963.8 2,118.0
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2010:
53,701 units, 2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014:
275,891 units).
60.5
68.8
76.8
76.1*
80.4
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Profit before financial result
in € million
8,400
Revenues
7,200
in thousand units
BMW Group in figures
Other Entities
Eliminations
45
-358
-168
-1,103
3
-164
-154
-6.1
-937
-527
-163
69.1
Income taxes
Net profit
Earnings per share² in €
-1,610
3,243
-2,476
-2,692
- 4.93/4.95
4,907
-7.45/7.47
-2,564¹
5,111
5,3291
-7.75/7.77 - 8.081/8.101
-2,890
5,817
-12.7
9.2
- 8.83/8.85
9.3/9.3
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Common/preferred stock. In computing earnings per share of preferred stock, earnings to cover the additional dividend of €0.02 per share of preferred stock are spread over the
quarters of the corresponding financial year.
5
Sales volume of automobiles*
6.4
6,000
3,600
One Supervisory Board meeting was held in Shenyang, one of the locations operated by the BMW Brilliance
Automotive Ltd. (BBA) joint venture in China. Representatives of the managements of BBA and the BMW
sales company reported to us on sales volume trends and the car market in China in general as well as plans
for additionally increasing production capacity in the plants located at Tiexi and Dadong in Shenyang. We
also visited the production facilities of the Tiexi plant. Moreover, in the course of our on-site visits we gathered
useful facts regarding cooperation with suppliers and dealerships in China. Reports from, and discussions
with, local management representatives provided us with a useful overview of local developments in China
and individual development projects, and helped provide a good insight into the specific needs of Chinese
customers.
One two-day meeting of the Supervisory Board dealt with the BMW Group's corporate and product
strategies as well as the Long-term Business Forecast. The format of the two-day meeting was designed to
provide the opportunity for an in-depth discussion with the Board of Management on forward-looking
topics and technical innovations.
In the first part of the meeting, together with the Board of Management we discussed the results of the
corporate strategy Number ONE review, which is performed by the Board of Management once a year. Our
discussions primarily focused on challenges involving further reductions in carbon emissions and also the
electrification, digitisation and, in particular, the increasing connectedness of vehicle data. As part of its strategy
review report, the Board of Management also looked at the importance of the “Future Retail” programme,
which is designed to improve sales and after-sales services by consistently seeing things from the point of view
of customers and intensifying their product and brand experience.
In the course of various vehicle presentations, we were given the opportunity to test selected BMW, MINI
and Rolls-Royce brand cars on a test track. In addition, the current state of progress of selected vehicle de-
velopment projects was presented and explained to us.
In the second part of the meeting we deliberated at length on the Long-term Business Forecast pre-
sented by the Board of Management for the years 2015-2020. After diligent examination, we approved
the forecast.
We also gave in-depth consideration to the business development, strategic direction and role of the Finan-
cial Services segment going into the future. The Board of Management also reported on the latest develop-
ments on used car markets and explained individual measures designed to further improve the stability of
the segment in times of crisis.
The two boards jointly discussed the annual budget put forward by the Board of Management towards the
end of the year under report for the financial year 2015, and considered pertinent external factors.
The structure and amount of compensation of Board of Management members was examined once again in
2014 by both the Personnel Committee and the full Supervisory Board. In addition to comparing performance
trends and board compensation on a multi-year basis, we also reviewed he development of the remuneration
of senior management and employees of BMW AG within Germany over the course of time. An external
9 REPORT OF THE SUPERVISORY BOARD
compensation consultant, independent of both the Board of Management and BMW AG, was called upon to
provide expert advice and assist us in evaluating DAX compensation studies. After a careful review, we con-
cluded that the compensation of board members is appropriate and that the current compensation system
is functioning well. Further information on the compensation of Board of Management members is provided
in the Compensation Report (see chapter Statement on Corporate Governance).
Corporate governance The Supervisory Board and the Board of Management again jointly addressed the
topic of corporate governance within the BMW Group in 2014. In the most recent Declaration of Compliance,
issued in December 2014, the Board of Management and the Supervisory Board declared that the BMW
Group has and will continue to comply with all of the recommendations of the German Government Cor-
porate Governance Code Commission published on 30 September 2014 (Code version; 24 June 2014), with
one exception, which relates to the presentation of information concerning Board of Management compensa-
tion using stipulated model tables. We remain committed to providing information on board compensation
that is both as comprehensive and comprehensible as possible, taking into account all relevant financial
reporting requirements. After careful consideration, we came to the conclusion that the additional use of the
tables recommended in the Code would not improve the desired level of transparency and readability of
the Compensation Report.
As part of the joint examination of corporate governance within the BMW Group, the Board of Manage-
ment informed both the Personnel Committee and the full Supervisory Board on the status of implementa-
tion of the BMW Group's diversity concept. This programme does not only focus on gender, it is also aimed
at promoting diversity in other areas, particularly in terms of cultural diversity and age mix within the work-
force. We were also informed with respect to the proportion and number of women occupying positions
at various levels of management and deliberated with the Board of Management on the planned measures to
continue the process of raising that proportion, specifically at a senior level. Consideration was also given to
draft legislation relating to equal participation of women and men in management positions in Germany and
the potential impact of this legislation on the BMW Group.
With regard to its own composition, based on a detailed composition profile, the Supervisory Board has
decided upon specific appointment targets, which are discussed in detail in the Corporate Governance Report.
Based on a self-assessment, the Supervisory Board concluded that its composition at 31 December 2014
meets the targets set.
BMW AG has entered into contracts for personnel-related services with an external entity, in which mem-
bers of the Supervisory Board have an indirect participation. During the year under report, the Personnel
Committee approved an amendment to these contracts as a precautionary measure. None of the members of
the Supervisory Board with an interest in the relevant entity participated in this vote. Apart from this one
matter, there were no indications of potential conflicts of interest involving Supervisory Board members during
the financial year 2014.
Supervisory Board members are required to provide information on a quarterly basis of any significant
transactions they or other related parties (as defined by IAS 24), including close relatives and intermediary
entities, have with BMW Group entities.
We are fully committed to assessing and continuously improving the efficiency of the work of the Super-
visory Board and its committees. The Chairman of the Audit Committee and myself are therefore always
glad to receive comments and suggestions for improvement from Supervisory Board members. The formal
examination of the Supervisory Board's efficiency is also treated each year as a separate agenda point
for discussion, without the members of the Board of Management being present. The efficiency examination
10
in 2014, again prepared with the aid of a questionnaire, resulted in a number of suggestions being accepted
for additional consideration.
Each of the five Supervisory Board meetings in 2014 was attended, on average, by over 95% of its mem-
bers, a fact that can be tied in to the analysis of attendance fees for individual members, as disclosed in the
Compensation Report. No member of the Supervisory Board was absent at more than two meetings during
the period under report. Presiding Board and committee meetings were fully attended in the vast majority of
cases (see chapter Statement on Corporate Governance).
Description of Presiding Board activities and committee work In order to work more efficiently and
prepare complex issues and decisions with greater thoroughness, the Supervisory Board has established
a Presiding Board and several committees. A description of the duties, composition and work procedures of
these committees is provided in the Corporate Governance Report.
The relevant chairmen reported in depth on the status of Presiding Board and committee work at the
subsequent Supervisory Board meeting.
In a total of four meetings, the Presiding Board focused mainly on preparing topics for the meetings of
the full Supervisory Board, unless this responsibility fell under the remit of one of the committees. Complex
issues, such as the Long-term Business Forecast and the Annual Strategic Review, were dealt with on the
basis of written and oral reports provided by Board of Management members and senior department heads.
The Presiding Board selected further topics of discussion for Supervisory Board meetings and made sugges-
tions to the Board of Management regarding items to be included in its reports to the full Supervisory Board.
The Audit Committee held four meetings and three telephone conference calls during 2014. Prior to their
publication, the Interim Financial Reports were discussed with the Board of Management in those telephone
conference calls. Representatives of the external auditors took part in the telephone conference call held to
present the Interim Financial Report for the six-month period ended 30 June 2014. The report had been sub-
jected to review by the external auditors.
The Audit Committee meeting held in spring 2014 was primarily dedicated to preparing the Supervisory
Board meeting at which the financial statements were examined. Prior to proposing KPMG AG Wirtschafts-
prüfungsgesellschaft for election as Company and Group auditor at the 2014 Audit Committee Meeting, we
obtained a Declaration of Independence from KPMG. The Audit Committee also considered the scope and
composition of non-audit-related services, including tax advisory services provided by KPMG entities to the
BMW Group. There were no indications of conflicts of interest, grounds for exclusion or lack of independence
on the part of the auditor.
The fee proposals for the audit of the year-end Company and Group Financial Statements 2014 and
the review of the six-month Interim Financial Report were deemed appropriate by the Audit Committee.
Subsequent to the Annual General Meeting 2014, the Audit Committee therefore appointed KPMG AG
Wirtschaftsprüfungsgesellschaft for the relevant engagements and, with due consideration to the sugges-
tions made by the full Supervisory Board, specified a number of audit focus areas.
The Head of Group Controlling reported to the Audit Committee on risk management processes within
the BMW Group, provided information with respect to new developments and elucidated a number of risks
which are required to be reported on in accordance with internal rules.
The Head of Group Financial Reporting provided the Audit Committee with an up-to-date overview of
developments concerning the internal control system (ICS), which serves as the basis for financial reporting.
1.8
Furthermore, both in business status reports and subsequent discussions with the Board of Management,
numerous important current events and projects were addressed, such as the extension of the cooperation
agreement with the Chinese joint venture partner Brilliance, the cooperation with Toyota and the current
state of plans for the long-term development of production facilities in Russia. Other topics reported on and
discussed at Supervisory Board meetings included the start-up of the new MINI at the Oxford plant, the
current situation with recalls and the economic impact of the Ukraine conflict.
4,800
8
In its regular reports on the financial condition of the Group, the Board of Management informed us of
sales volume developments and market competition issues relevant for the Automotive and Motorcycles
segments and highlighted fluctuations in the size of the workforce. Equally, we were kept up to date with
respect to the market developments and economic prospects of the world's key regions. On the Financial
Services side of the business, the Board of Management provided us with regular updates on new business
with retail customers, changes in the portfolio of contracts with dealerships and retail customers as well as
the total volume of business.
2,400
1,200
10 -11 -12 ―13 14
Profit before tax
8,400
7,200
6,000
4,800
3,600
2,400
1,200
10
―11 ―12 13 14
5,111
8,018 8,275 7,978*
9,118
4,853
7,383 7,803 7,893' 8,707
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
6
Joachim Milberg
Chairman of the Supervisory Board
7 REPORT OF THE SUPERVISORY BOARD
Dear Shareholders and Shareholder Representatives,
Back in 2007, the BMW Group set a new strategic course with the adoption of its strategy “Number ONE".
Today, we can look back on the fifth successive year in which we have achieved record figures. Responsible
management involves anticipating new developments and initiating the next moves in good time to ensure
the future success of the business. This forward-looking approach applies equally to the Supervisory Board.
By taking the step of announcing Harald Krüger's future appointment to the position of Chairman of the
Board of Management at an early stage and implementing other decisions with respect to the board's com-
position, the resolutions adopted by the Supervisory Board in 2014 have set a clear-cut course for the future
leadership of the BMW Group. At the same stage, we also announced our plan to ring in a change at the
head of the Supervisory Board in 2015 by declaring our unanimous support in favour of the appointment of
Dr Norbert Reithofer as its new Chairman. With the backing of major shareholders, we intend to propose
his election to the Supervisory Board at the Annual General Meeting. These proposed changes in leadership
have been initiated in order to strengthen the position of the BMW Group by ensuring a long-term manage-
ment perspective.
Main emphases of the Supervisory Board's monitoring and advisory activities The Supervisory Board
again advised the Board of Management during the past financial year and carefully monitored its governance
of the business. Our work, both within the Supervisory Board and together with the Board of Management,
was constructive and characterised by open, trustful interaction.
In a total of five Supervisory Board meetings, we deliberated on the current situation of the BMW Group
as well as on macroeconomic developments in its most important sales markets. Additional key points of
debate at our meetings were Group corporate strategy and planning. Furthermore, we developed concepts
for a generational change at the chair level of both the Board of Management and the Supervisory Board, took
decisions regarding the composition and compensation of the Board of Management and passed resolutions
with respect to corporate governance.
We carefully monitored the performance of the BMW Group, both at scheduled meetings and at other times
as the need arose. In particular, the Board of Management kept us well informed of all key sales and workforce
figures. The Chairman of the Board of Management, Dr Norbert Reithofer, informed me promptly and di-
rectly about major business transactions and projects. In addition to scheduled meetings, Dr Karl-Ludwig Kley,
the Chairman of the Supervisory Board's Audit Committee, and Dr Friedrich Eichiner, member of the Board
of Management responsible for Finance, consulted with each other directly at other times as the need arose.
At the beginning of the year, the Board of Management presented us with a summary of new and revised
models scheduled for market launch over the course of 2014.
The Board of Management also reported to us on its intention to increase the size of the Group's produc-
tion network, with particular regard to the planned expansion of the Spartanburg plant in South Carolina,
USA, and the search for a new plant location in the NAFTA region, which is now due to be built in San Luis
Potosí, Mexico. As part of this process, we also discussed with the Board of Management the general sig-
nificance and scope of the "production follows the market” principle in the context of the global distribution
of value added along the production chain.
-1,723
in € million
-76
-1,6191
-5.4
Revenues
- Automotive
60,477
-68,821
-76,848
-76,059¹
-80,401
5.7
54,137
63,229
- Motorcycles
- Financial Services
-1,304
-16,617
1,436
-17,510
-70,208
-1,490
-70,630¹
-75,173
-6.4
-1,504
1,679
-11.6
-19,550
-19,874
20,599
3.6
Other Entities
Eliminations
9,423
4
9,9641
-8,149
21.8
40.8
5.4
Financial Services segment
RoE
% (change in %pts)
26.1
29.4
21.2
20.01
19.4
-0.6
Further financial key performance figures
in € million
Capital expenditure
3,263
3,692
5,240
6,7111
-6,100
-9.1
Depreciation and amortisation
3,682
3,646
-3,541
3,7411
4,170
-11.5
Operating cash flow Automotive segment
-9,167
5
8,110
6
-1,248
58
-949
44
-71
61.4
-4371
-65
85.1
Profit before tax
4,853
-7,383
-7,803
Automotive
-6,823
-7,170
-7,893¹
-6,561
-8,707
-10.3
6,886
5.0
Motorcycles
65
41
6
Financial Services
-1,214
5
-1,790
-1,561
-475
Eliminations
3,887
6.9
-7
-16.7
-11,585
-19
-13,359
-14,405
-15,955
-17,057
6.9
Profit before financial result (EBIT)
Automotive
4,355
8,018
-7,477
8,275
-7,599
Motorcycles
5,111
-14.3
Financial Services
Other Entities
-71
1,201
-41
45
-1,763
9
1,756
-1,558
-7,978¹
-6,6491
-79
-1,643
-9,118
41.8
-7,244
8.9
112
445
63
-5,204
Assets
-6
54
469
35,366
271
34
34
-4,335
30,230
2013*
285
2014
(unaudited supplementary information)
- Eliminations
72,864
5,808
Prior year figures have been adjusted in accordance with IAS 8, see note 9.
79,131
- Motorcycles
2014
2013
93 GROUP FINANCIAL STATEMENTS
Financial Services
(unaudited supplementary information)
2014
2013
Other Entities
(unaudited supplementary information)
2014
-2013*
(unaudited supplementary information)
5,754
Other assets
-10,460
65,352
29,822
-1,779
290
-19,677
27,501
-384
-1,846
-26,396
-44,346
-645
Financial assets
-1,181
-24,048
-40,669
Deferred tax
383
318
8
8
-120
131,839
128
75,699
-10,516
334
-367
21,895
37,438
- 32,616
Intangible assets
Property, plant and equipment
Leased products
Investments accounted for using the equity method -
Other investments
Receivables from sales financing
210
276
-1,751
-287
285
20
1,913
1,436
359
138,377
39-
Total equity and liabilities
3,404
5,445
- 4,677
Non-current provisions and liabilities
58,288
51,643
- 3,603
51,887
11,366
Other provisions
37-
-4,522
3,412
-3,246
14,317
4,275
40-
Other liabilities
- 3,075
137
Deferred tax
17-
1,974
-2,459
-2,094
421
-1,072
Financial liabilities
-43,167
39,450
39,095
-1,933
-1,604
-3,746
3,040
Current tax
38-
Other liabilities
40
-7,775
-7,064
6,792
-18,794
-19,029
Liabilities in conjunction with assets held for sale
30
Current provisions and liabilities
59,078
51,134
49,380
33,769
30,589
-6,774
154,803
6,929
-7,485
-1,590
-2,319
-2,463
1,050
-1,021
Financial liabilities
39-
37,482
30,854
30,412
3,250
-725
Trade payables
41-
-7,709
-6,437
-145
275
23,586
-1,048
-102
57
192
204
21
-23
-432
162
19,122
571
32,871
62
309
-155
-16,006
502
15,624
3
-1,143
-14,805
3
Pension provisions
Other provisions
282
-378
-2,790
-645
-22,594
-26,029
-3,538
-384
-25,258
-29,180
24,115
68
25,808
-14,376
357
318
23,680
-21,134
595
488
43,801
40,010
12,031
1,710
58
-13
26,923
51
28,755
10,781
-14,996
-14,478
Equity
-1,296
323
6
Deferred tax
Financial liabilities
- Other liabilities
Non-current provisions and liabilities
24,700
870
772
106,316
92,330
68,174
61,289
-55,512
-99,688
-48,371
Current provisions and liabilities
-88,878
Total equity and liabilities
94
BMW Group
938
27,388
-14,695
43,932
284
Other provisions
Current tax
-514
-682
- Financial liabilities
-17
5
Trade payables
-26,960
-11,087
-8,744
-54,998
-47,692
Other liabilities
Liabilities in conjunction with assets held for sale
53,158
4,171
-5,078
40
289
-1,783
879
-153
-17
Cash and cash equivalents
Assets held for sale
511
438
30,617
26,978
38,352
870
772
106,316
92,330
Other assets
68,174
-47,527
-32,775
-21,501
826
89
-898
-3,953
-3,530
618
36,682
936
60
-514
-682
Non-current assets
Inventories
Trade receivables
Receivables from sales financing
Financial assets
Current tax
-54,828
1
33,788
61,289
-48,209
Capital reserves
Revenue reserves
Accumulated other equity.
Equity attributable to shareholders of BMW AG
Minority interest
'| ༅ !
9,357
8,388
_
-78
29
-75
160
-141
-273
Subscribed capital
-55,342
-99,688
2014
2013*
Current assets
-88,878
Total assets
- Motorcycles
(unaudited supplementary information)
2014
2013
Financial Services
Equity and liabilities
Other Entities
Eliminations
(unaudited supplementary information) (unaudited supplementary information)
- 2013*
2014
2014
(unaudited supplementary information)
2,741
-3,777
-1,279
3,828
Diluted earnings per share of common stock in € —
Diluted earnings per share of preferred stock in € -
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
92 Balance Sheets
96 Group Statement of Changes in
Equity
98 Notes
92
BMW Group
Balance Sheets for Group and Segments at 31 December
94 Cash Flow Statements
Attributable to shareholders of BMW AG
-Attributable to minority interest
-327
104
༄| ༅ ༅། ༑ ཆྀ།
164
-163
-527
Profit/loss before tax
-68
83
200
Income taxes
-80
-327
Net profit/loss
95
-80
Assets
Note
Group
in € million
-30,165
25,914
24,468
3
19
Investments accounted for using the equity method
26-
1,088
638
- 505
-1,088
638
Other investments
27-
-408
25-
1,093
Leased products
5,646
2014 31.12.2013"
1.1.2013*
2014
Automotive
(unaudited supplementary information)
2013*
Intangible assets
23-
6,499
-6,179
-5,207
Property, plant and equipment
24-
17,182
-15,168
-13,376
5,999
16,863
-14,863
1,187
1
8
112
79
1,756
1,643
71
44
-65
-437
4
5
1,295
-1,340
-1,430
-5
-3
- Other operating expenses.
-29
-77
-54
-10
- Selling and administrative expenses
-7
-73
57
136
115
-81
-79
- Other operating income
-1
-2
-98
-65
-44
83
553
-27
Cash Flow Statements for Group and Segments
-98
-90
Financial result
73
༄[ ༤།སྙ ༞| ༞
1,723
1,619
154
-525
-518
-49
1,198
1,101
105
-11
120
-1,197
83
-33
1,332
-1,465
1,375
-8
-2
-15
59
Profit/loss before financial result
Result from equity accounted investments
Interest and similar income
Interest and similar expenses
- Other financial result
-5
107
-34
73
-24
- 3,481
548
5,253
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Group
Note
Automotive
in € million
2014 31.12.2013* -1.1.2013*
2014
2013*
Subscribed capital
35-
(unaudited supplementary information)
Equity and liabilities
98 Accounting Principles and
Policies
72,864
Assets held for sale
-8,374
45
5,752
6,775
Current assets
56,844
52,184
50,541
42,706
39,189
Total assets
154,803
138,377
131,839
79,131
656
Capital reserves
35-
2,005
Equity
217
37,437
-188
35,600
-107
30,572
31,045
30,909
Pension provisions
36
-4,604
2,303
- 3,813
Other provisions
37-
4,268
35-
-7,671
Minority interest
35,412
-656
-1,990
-656
-1,973
Revenue reserves
35-
-35,621
33,122
28,510
Accumulated other equity
35
-1,062
-356
-674
Equity attributable to shareholders of BMWAG
35-
37,220
30,465
-7,688
34-
Cash and cash equivalents
Other assets
31-
-1,094
-912
-770
-3,662
-3,847
Non-current assets
97,959
86,193
81,298
36,425
33,675
Inventories
32
2,226
11,089
-3,253
-1,620
Receivables from sales financing
28-
-37,438
- 32,616
32,309
Financial assets
29-
2,024
-2,593
-2,148
447
-1,183
Deferred tax
17-
-2,061
-1,967
5,110
9,595
-10,698
-4,479
Current tax
30-
-1,906
-1,151
-966
1,186
-1,002
Other assets
31-
5,038
- 4,258
- 3,664
19,231
-15,480
3,952
9,732
-4,612
5,384
9,269
Trade receivables
33-
-2,153
-2,449
-2,543
1,887
2,184
Receivables from sales financing
28-
-23,586
21,501
20,605
Financial assets
29-
- 5,559
in € million
Investments in marketable securities and term deposits
Note
1,990
33,122
-1,707
5,798
-1,592
4,206
656
15
656
2,005
35,621
97 GROUP FINANCIAL STATEMENTS
Accumulated other equity
Equity
attributable to
35-
35-
reserves
Revenue reserves
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2014
17
5,303
936
6,239
13
35-
656
1,990
33,122
Note
Subscribed
capital
- Capital
Minority
interest
-Total
shareholders
of BMW AG
-1,640
Adjustment IAS 8*
1 January 2013 (adjusted)
- Dividends paid
5,303
-26
26
5,329
Net profit
-643
-643
ཁྱིམ།
27
934
-1,254
1,254
-1,640
Other comprehensive income for the period after tax
Comprehensive income 31 December 2014
30,572
30,465
Translation
differences
Securities
Derivative
financial
instruments
-984
108
202
30,499
107
30,606
1 January 2013, as originally reported
-34
-34
-984
108
202
107
Net profit
Dividends paid
1 January 2014
Effect of exchange rate on cash and cash equivalents
Effect of changes in composition of Group on cash and cash equivalents
Change in cash and cash equivalents
- Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
96
BMW Group
Group Statement of Changes in Equity
in € million
Note
Subscribed
Capital
Revenue reserves
capital
reserves
879
1 January 2013, as originally reported
F| '| ཙྪ|
༄། ། ༅། སྔེ⌘|
5,152
Cash inflow/outflow from financing activities
-53
-11
-36
e ས།
47
-1,023
-713
-6,775
5,752
-7,488
-879
6,775
1,783
82
904
27
35-
1,973
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Net profit
Other comprehensive income for the period after tax-
Comprehensive income 31 December 2013
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2013
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
in € million
Equity
656
96 - Group Statement of Changes in
92 Balance Sheets
28,544
Adjustment IAS 8*
1 January 2013 (adjusted)
Dividends paid
-34
35-
656
1,973
28,510
-1,640
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
94 Cash Flow Statements
5,927
934
26
The BMW Group Financial Statements include, besides
BMW AG, all material subsidiaries, including one
special purpose securities fund and 30 special purpose
trusts, almost all of which are used for asset-backed
financing transactions.
The number of subsidiaries, including the special pur-
pose securities fund and the special purpose trusts,
consolidated in the Group Financial Statements
changed in 2014 as follows:
Included at 31 December 2013
Included for the first time in 2014
No longer included in 2014
Included at 31 December 2014
The scope of the consolidated financial statements is
based on the application of IFRS 10 (Consolidated
Financial Statements) and IFRS 11 (Joint Arrangements).
Germany
Total
20
-167
187
2
-13
Foreign
2-Consolidated companies
The Board of Management authorised the Group Finan-
cial Statements for issue on 19 February 2015.
Financial Statements and the Combined Management
Report can be downloaded from the BMW Group web-
site at www.bmwgroup.com/ir.
In order to improve clarity, various items are aggregated
in the income statements and balance sheets presented.
These items are disclosed and analysed separately in the
notes.
A Statement of Comprehensive Income is presented at
Group level reconciling the net profit to comprehensive
income for the year.
In order to provide a better insight into the net assets,
financial position and performance of the BMW Group
and going beyond the requirements of IFRS 8 (Operat-
ing Segments), the Group Financial Statements also
include balance sheets and income statements for the
Automotive, Motorcycles, Financial Services and Other
Entities segments. The Group Cash Flow Statement is
supplemented by statements of cash flows for the Auto-
motive and Financial Services segments. This supple-
mentary information is unaudited.
In order to facilitate the sale of its products, the BMW
Group provides various financial services - mainly loan
and lease financing - to both retail customers and dealers.
The inclusion of the financial services activities of the
Group therefore has an impact on the Group Financial
Statements.
-
Inter-segment transactions – relating primarily to inter-
nal sales of products, the provision of funds and the
related interest - are eliminated in the "Eliminations"
column. Further information regarding the allocation
of activities of the BMW Group to segments and a
description of the segments is provided in note 50.
In conjunction with the refinancing of financial services
business, a significant volume of receivables arising
from retail customer and dealer financing is sold. Simi-
larly, rights and obligations relating to leases are sold.
The sale of receivables is a well-established instrument
used by industrial companies. These transactions usu-
ally take the form of asset-backed financing transac-
tions involving the sale of a portfolio of receivables to a
trust which, in turn, issues marketable securities to re-
finance the purchase price. The BMW Group continues
to "service" the receivables and receives an appropriate
fee for these services. In accordance with IFRS 10 (Con-
solidated Financial Statements) such assets remain in
the Group Financial Statements although they have been
legally sold, since all the conditions relevant for control
are met. Gains and losses relating to the sale of such
assets are not recognised until the assets are removed
from the Group balance sheet. The balance sheet value of
the assets sold at 31 December 2014 totalled €10.9 bil-
lion (31 December 2013: €10.1 billion).
In addition to credit financing and leasing contracts, the
Financial Services segment also brokers insurance busi-
ness via cooperation arrangements entered into with
local insurance companies. These activities are not ma-
terial to the BMW Group as a whole.
The Group currency is the euro. All amounts are dis-
closed in millions of euros (€ million) unless stated
otherwise.
Bayerische Motoren Werke Aktiengesellschaft has its
seat in Munich, Petuelring 130, and is registered in the
Commercial Register of the District Court of Munich
under the number HRB 42243.
All consolidated subsidiaries have the same year end as
BMW AG with the exception of BMW India Private
Ltd., Gurgaon, and BMW India Financial Services Private
Ltd., Gurgaon, both of whose year-ends are 31 March in
accordance with local legal requirements.
99 GROUP FINANCIAL STATEMENTS
The Group Financial Statements, drawn up in accord-
ance with §315a HGB, and the Combined Management
Report for the financial year ended 31 December 2014
will be submitted to the operator of the electronic version
of the German Federal Gazette and can be obtained via
the Company Register website. Printed copies will also
be made available on request. In addition the Group
15
-13
-13
22
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
B.V., Groningen, was sold and therefore ceased to be a
consolidated company. In addition, Alphabet Belgium
N.V., Bornem, and Bavaria NTTBL Company Ltd.,
Dublin, were liquidated and ceased to be consolidated
companies. The British Motor Corporation Ltd.,
Bracknell, was wound up and ceased to be a consolidated
company.
3-Sale of business
With the purchase of the ING Car Lease Group in
2011, the BMW Group also acquired Noord Lease B.V.,
Groningen. This entity was managed alongside Alphabet
Nederland B. V., Breda, as a second fleet leasing com-
pany in the Netherlands, with a strong regional focus
and a high proportion of private leasing. As part of an
evaluation of the strategic direction of fleet business
in the Netherlands, it was decided to focus on only one
company in this region. Accordingly, BMW AG's Board
4-Consolidation principles
The equity of subsidiaries is consolidated in accordance
with IFRS 3 (Business Combinations). IFRS 3 requires
that all business combinations are accounted for using
the acquisition method, whereby identifiable assets and
liabilities acquired are measured at their fair value at
acquisition date. An excess of acquisition cost over the
Group's share of the net fair value of identifiable assets,
liabilities and contingent liabilities is recognised as good-
will as a separate balance sheet line item and allocated
to the relevant cash-generating unit (CGU). Goodwill of
€91 million which arose prior to 1 January 1995 remains
netted against reserves.
Receivables, payables, provisions, income and expenses
and profits between consolidated companies (intra-group
profits) are eliminated on consolidation.
Joint operations and joint ventures are forms of joint
arrangements. Such an arrangement exists when the
BMW Group jointly carries out activities on the basis of
a contractual agreement with a third party that requires
the unanimous consent of both parties with respect to
all significant activities of the joint arrangement.
The Group reporting entity also changed by comparison
to the previous year as a result of the first-time consoli-
dation of six special purpose trusts and the deconsolida-
tion of eight special purpose entities.
The changes to the composition of the Group do not have
a material impact on the results of operations, financial
position or net assets of the Group.
of Management put up Noord Lease B.V., Groningen
for sale during the financial year 2014. At the end of
a bidding process, Noord Lease B.V., Groningen, was
sold to Noordlease Midco B. V., Groningen. The pur-
chase agreement was signed in June 2014 and the
shares transferred in August 2014. The deconsolidation
of Noord Lease B.V., Groningen, gave rise in the third
quarter to a gain of €7.4 million, which is included in
other operating income and expenses of the Financial
Services segment.
In the case of a joint operation, the parties that have joint
control of the arrangement have rights to the assets,
and obligations for the liabilities, relating to the arrange-
ment. Assets, liabilities, revenues and expenses of a
joint operation are recognised proportionately in the
Group Financial Statements on the basis of the BMW
Group's rights and obligations.
Investments accounted for using the equity method
(joint ventures and associated companies) are measured
at the BMW Group's share of equity taking account of
fair value adjustments. Any difference between the cost
of investment and the Group's share of equity is ac-
counted for in accordance with the acquisition method.
Investments in other companies are accounted for as
a general rule using the equity method when significant
influence can be exercised (IAS 28 Investments in Asso-
ciates and Joint Ventures). As a general rule, there is a
rebuttable assumption that the Group has significant in-
fluence if it holds between 20% and 50% of the associated
company's or joint venture's voting power.
98-Accounting Principles and
Policies
The BMW Group and segment income statements are
presented using the cost of sales method. The Group
and segment balance sheets correspond to the classi-
fication provisions contained in IAS 1 (Presentation of
Financial Statements).
98-Notes
94 Cash Flow Statements
167
189
43 subsidiaries (2013: 48), either dormant or generating
a negligible volume of business, and four joint opera-
tions (2013: 1) are not consolidated on the grounds
that their inclusion would not influence the economic
decisions of users of the Group Financial Statements.
Non-inclusion of operating subsidiaries and joint oper-
ations reduces total Group revenues by 0.3% (2013:
1.0%).
The joint operations - SGL Automotive Carbon Fibers
GmbH & Co. KG, Munich, SGL Automotive Carbon
Fibers Verwaltungs GmbH, Munich, and SGL Automo-
tive Carbon Fibers LLC, Dover, DE - are consolidated
proportionately for the first time in the financial year
2014 on the basis of the BMW Group's 49% sharehold-
ing. These entities supply carbon fibre and carbon fibre
fabrics for vehicle production. Further information is
provided in note 9.
The joint ventures - BMW Brilliance Automotive Ltd.,
Shenyang, DriveNow GmbH & Co. KG, Munich, and
DriveNow Verwaltungs GmbH, Munich - are accounted
for using the equity method. As in the previous year,
five participations are not consolidated using the equity
method on the grounds of immateriality. They are in-
cluded in the Group balance sheet in the line “Other in-
vestments", measured at cost less - where applicable -
accumulated impairment losses.
A "List of Group Investments" pursuant to § 313 (2)
HGB will be submitted to the operator of the electronic
version of the German Federal Gazette. This list, along
with the "List of Third Party Companies which are not
of Minor Importance for the Group", will also be posted
on the BMW Group website at www.bmwgroup.com/ir.
The List of Group Investments, the List of Third Party
Companies which are not of Minor Importance for the
Group and the full list of consolidated companies are
also posted as appendices on the BMW Group website.
BMW Madrid S. L., Madrid, BMW Amsterdam B.V.,
Amsterdam, BMW Den Haag B.V., The Hague, BMW
Retail Nederland B.V., The Hague, BMW Milano
S. r. 1., Milan, BMW Distribution S. A. S., Montigny-le-
Bretonneux, BMW Vermögensverwaltungs GmbH,
Munich, BMW Beteiligungs GmbH & Co. KG, Munich,
and BMW International Holding B.V., The Hague, were
consolidated for the first time in the financial year 2014.
BMW Österreich Finanzierungs GmbH, Steyr, was
merged with BMW Motoren GmbH, Steyr, and there-
fore ceased to be a consolidated company. Noord Lease
100
90-GROUP FINANCIAL STATEMENTS
Income Statements
90
90 Statement of
Comprehensive Income
92 Balance Sheets
96 Group Statement of Changes in
Equity
The Group Financial Statements comply with § 315a of
the German Commercial Code (HGB). This provision,
in conjunction with the Regulation (EC) No. 1606/2002
of the European Parliament and Council of 19 July
2002, relating to the application of International Finan-
cial Reporting Standards, provides the legal basis for
preparing consolidated financial statements in accord-
ance with international standards in Germany and
applies to financial years beginning on or after 1 January
2005.
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMW Group Finan-
cial Statements or Group Financial Statements) at 31 De-
cember 2014 have been drawn up in accordance with
International Financial Reporting Standards (IFRSs) as
endorsed by the EU. The designation "IFRSS" also in-
cludes all valid International Accounting Standards (IASS).
All Interpretations of the IFRS Interpretations Commit-
tee (IFRICS) mandatory for the financial year 2014 are
also applied.
1-Basis of preparation
Derivative
financial
instruments
Other comprehensive income for the period after tax
Comprehensive income 31 December 2013
Subscribed share capital increase out of Authorised Capital -
Premium arising on capital increase relating to preferred stock -
Other changes
31 December 2013
-1,627
135
1,136
35,412
188
35,600
1 January 2014
-1,707
-1,707
Dividends paid
5,798
Securities
-19
- Translation
differences
Total
6,583
-17
17
13
55
68
-1,627
135
1,136
35,412
188
35,600
Accumulated other equity
Equity
attributable to
shareholders
Minority
interest
of BMW AG
6,557
904
904
-1,616
31 December 2014
98
BMW Group
Notes to the Group Financial Statements
Accounting Principles and Policies
90-GROUP FINANCIAL STATEMENTS
Income Statements
90
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98-Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Subscribed share capital increase out of Authorised Capital -
Premium arising on capital increase relating to preferred stock -
Other changes
6
Other comprehensive income for the period after tax
Comprehensive income 31 December 2014
37,437
-2,298
6
-1,616
3,500
19
5,817
-2,298
3,519
-15
15
-10
10
-723
141
-480
37,220
217
Net profit
Net profit
-2,673
Change in commercial paper
Payments into equity
Payment of dividend for the previous year
Intragroup financing and equity transactions
Interest paid
Proceeds from the issue of bonds
Repayment of bonds
Issue/buy-back of treasury shares
Proceeds from new non-current other financial liabilities
Change in current other financial liabilities
Change in commercial paper-
Cash inflow/outflow from financing activities
Effect of exchange rate on cash and cash equivalents
Effect of changes in composition of Group on cash and cash equivalents
Change in cash and cash equivalents
Repayment of non-current other financial liabilities
-7,491
3,250
4,072
-6,116
-6,693
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investments
-36
22
-99
-76
Proceeds from the disposal of investments
190
-137
Investments in marketable securities and term deposits
-4,216
-4,131
Proceeds from the sale of marketable securities and from matured term deposits
Cash inflow/outflow from investing activities
44-
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Interest relating to financial services business is classified as revenues/cost of sales.
2,703
86
2
༈ e| །
44-
17
-703
-7,671
8,374
7,688
7,671
95 GROUP FINANCIAL STATEMENTS
Automotive
(unaudited supplementary information)
2014
3,133
-6,099
44-
-1,012
15
-1,715
17
-1,653
-133
-122
-10,892
8,982
-7,249
-7,242
5,900
6,626
-5,697
-4,996
2,132
-721
-1,812
Investment in intangible assets and property, plant and equipment
4,127
-136
Change in receivables from sales financing
-3,898
-4,501
Change in deferred taxes
-116
-17
Other non-cash income and expense items
331
-552
Gain/loss on disposal of tangible and intangible assets and marketable securities
-63
-21
Result from equity accounted investments
-655
-407
-2,048
Changes in working capital ·
-2,720
480
2014
Group
20131
5,817
5,329
Reconciliation between net profit and cash inflow/outflow from operating activities
Current tax
2,774
2,581
Other interest and similar income/expenses
127
-147
Depreciation and amortisation of other tangible, intangible and investment assets
4,323
Change in provisions
-1,103
Change in leased products
20131
Change in inventories
Change in trade payables
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Income taxes paid
Interest received
Cash inflow/outflow from operating activities
-4,252
-2,787
44-
-137
2,912
94 - Cash Flow Statements
Change in trade receivables
Balance Sheets
92
-551
986
-971
-195
379
-22
41
1,159
Change in other operating assets and liabilities
323
969
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
-4,682
Financial Services
2014
-3,945
-458
-179
-3,881
-5,836
2,908
-170
-3,775
342
-297
324
- Investment in intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment-
Expenditure for investments
Proceeds from the disposal of investments
-7,998
-163
-137
177
-132
Change in other operating assets and liabilities
Income taxes paid
180
9,423
-191
9,964
Interest received
-4,715
-5,358
Cash inflow/outflow from operating activities
-6,021
-6,599
36
-15
7
-134
-514
17
Proceeds from the sale of marketable securities and from matured term deposits
Cash inflow/outflow from investing activities
Issue/buy-back of treasury shares
85
5,298
-6,015
Proceeds from the issue of bonds
Repayment of bonds
Proceeds from new non-current other financial liabilities
-26
-4,814
-4,940
Repayment of non-current other financial liabilities-
-125
-1,073
517
Change in current other financial liabilities
-489
452
-41
1,042
-161
-1,383
-1,099
Payments into equity
Payment of dividend for the previous year-
Intragroup financing and equity transactions
-15
-17
-1,715
-1,653
-4,299
-582
4,094
3,844
-136
-150
Interest paid
1,009
-733
-2,487
-2,531
269
374
109
-153
-15
-109
-3,309
-2,895
-3,898
-4,501
-124
-239
383
523
-5
-56
1,034
-14
20
3,747
20131
4,521
4,408
-1,198
1,101
Net profit
-2,786
2,516
-40
9
159
-154
242
172
4,230
29
(unaudited supplementary information)
54
-21
4
- Change in inventories
371
53
-14
-25
- Change in trade receivables
-16
-1,194
56
45
- Change in trade payables
419
-657
-858
-229
-54
-907
Result from equity accounted investments
8
-655
-407
-552
-1,018
-70
-24
Reconciliation between net profit and cash inflow/outflow from operating activities
- Current tax
- Other interest and similar income/expenses
Depreciation and amortisation of other tangible, intangible and investment assets
Change in provisions
Change in leased products
Change in receivables from sales financing
Change in deferred taxes
Other non-cash income and expense items
Gain/loss on disposal of tangible and intangible assets and marketable securities-
Changes in working capital
-23
3,832
―――――――2013
19,874
-17,270
-17,783
-1,253
2014
20,599
1,504
1,679
2014 ――――――――2013*
2013
2014
2014
- Motorcycles
(unaudited supplementary information) (unaudited supplementary information) (unaudited supplementary information) (unaudited supplementary information)
Eliminations
Other Entities
Financial Services
-2013
7
6
-1,365
-15,955
-28
-953
-1,035
-177
-17,057
Gross profit
-445
-84
6
-201
2,604
-Revenues
16,973
-15,510
Cost of sales
7
91 GROUP FINANCIAL STATEMENTS
314
251
2,816
1.1.2014
Insignificant
Significant in principle
IAS 27
-1.1.2013
28.6.2012
Changes in Transitional Regulations
Significant in principle
Separate Financial Statements
-1.1.2014
1.1.2014
17.6.2014²
1.2.20151
-12.5.2011 -1.1.2013
IFRS 12 - Disclosure of Interest in Other Entities
Significant in principle
-1.1.2014
-1.1.2013
-12.5.2011
Joint Arrangements
IFRS 11
Significant in principle
1.1.2014
IAS 28
-1.1.2014
Investments in Associates and
Novation of Derivatives and Continuation
-12.5.2011
Date of
Standard/Interpretation-
(b) Financial reporting pronouncements issued by the IASB, but not yet applied
Information regarding the introduction and impact of the consolidation-related Standards IFRS 10, IFRS 11 and
IFRS 12 is provided note 9.
(Amendments to IAS 39)
of Hedge Accounting
Insignificant
-1.1.2014
-1.1.2014
-27.6.2013
1.1.2013
IAS 39
Insignificant
-1.1.2014
1.1.2014
Presentation - Offsetting of Financial Assets - -16.12.2011
and Financial Liabilities
IAS 32
Joint Ventures
None
None
1.1.2014
1.1.2014
1.1.2013
-1.1.2013
-12.5.2011
12.5.2011
note 36.
IFRS 10
90-GROUP FINANCIAL STATEMENTS
Income Statements
108
The bad debt risk relating to receivables from sales financ-
ing is assessed regularly by the BMW Group. For these
purposes, the main factors taken into consideration are
past experience, current market data (such as the level
of financing business arrears), rating classes and
scoring information. Further information is provided
in note 28.
The BMW Group regularly checks the recoverability of
its leased products. One of the main assumptions re-
quired for leased products relates to their residual value
since this represents a significant portion of future cash
inflows. In order to estimate the level of prices likely
to be achieved in the future, the BMW Group incorpo-
rates internally available historical data, current market
data and forecasts of external institutions into its cal-
culations. Internal back-testing is applied to validate the
estimations made. Further information is provided in
note 25.
portfolio, future market share developments, macro-
economic developments (such as currency, interest rate
and raw materials) as well as the legal environment and
past experience.
Estimations are required to assess the recoverability of
a cash-generating unit (CGU). If the recoverability of an
asset is being tested at the level of a CGU, assumptions
must be made with regard to future cash inflows and out-
flows, involving in particular an assessment of the fore-
casting period to be used and of developments after that
period. For the purposes of determining future cash
inflows and outflows, management applies forecasting
assumptions which are continually brought up to date
and regularly compared with external sources of in-
formation. The assumptions used take account in par-
ticular of expectations of the profitability of the product
The preparation of the Group Financial Statements in
accordance with IFRSS requires management to make
certain assumptions and judgements and to use estima-
tions that can affect the reported amounts of assets and
liabilities, revenues and expenses and contingent lia-
bilities. Major items requiring assumptions and estima-
tions are described below. The assumptions used are
continuously checked for their validity. Actual amounts
could differ from the assumptions and estimations used
if business conditions develop differently to the Group's
expectations.
7-Assumptions, judgements and estimations
Financial liabilities are measured on first-time recogni-
tion at cost which corresponds to the fair value of the
consideration given. Transaction costs are also taken
into account except for financial liabilities allocated to
the category "financial liabilities measured at fair value
through profit or loss". Subsequent to initial recogni-
tion, liabilities are - with the exception of derivative
financial instruments - measured at amortised cost
using the effective interest method. The BMW Group
has no liabilities which are held for trading. Liabilities
from finance leases are stated at the present value of
the future lease payments and disclosed under other
financial liabilities.
period. Non-current provisions with a remaining period
of more than one year are discounted to the present
value of the expenditures expected to settle the obligation
at the end of the reporting period.
Other provisions are recognised when the BMW Group
has a present obligation (legal or constructive) arising
from past events, the settlement of which is probable
and when a reliable estimate can be made of the amount
of the obligation. Measurement of provisions is based
on the best estimate of the expenditure required to
settle the present obligation at the end of the reporting
Net interest expense on the net defined benefit liability
and/or net interest income on the net defined benefit
asset are presented separately within the financial result.
All other costs relating to allocations to pension pro-
visions are allocated to costs by function in the income
statement.
90
Remeasurements of the net defined benefit liability
for pension plans are recognised, net of deferred tax,
directly in equity (revenue reserves).
Provisions for pensions are recognised using the pro-
jected unit credit method in accordance with IAS 19
(Employee Benefits). Under this method, not only obli-
gations relating to known vested benefits at the re-
porting date are recognised, but also the effect of future
increases in pensions and salaries. This involves taking
account of various input factors which are evaluated
on a prudent basis. The calculation is based on an inde-
pendent actuarial valuation which takes into account
all relevant biometric factors.
Assets held for sale and disposal groups held for sale
are presented separately in the balance sheet in ac-
cordance with IFRS 5, if the carrying amount of the
relevant assets will be recovered principally through a
sale transaction rather than through continuing use.
This situation only arises if the assets can be sold imme-
diately in their present condition, the sale is expected
to be completed within one year from the date of classi-
fication and the sale is highly probable. At the date of
classification, property, plant and equipment, intangible
assets and disposal groups which are being held for
sale are measured at the lower of their carrying amount
and their fair value less costs to sell and scheduled de-
preciation/amortisation ceases. This does not apply,
however, to items within the disposal group which are
not covered by the measurement rules contained in
IFRS 5. Simultaneously, liabilities directly related to the
sale are presented separately on the equity and liabili-
ties side of the balance sheet as "Liabilities in conjunction
with assets held for sale".
Cash and cash equivalents comprise mainly cash on hand
and cash at bank with an original term of up to three
months.
Borrowing costs are not included in the acquisition or
manufacturing cost of inventories.
value. Manufacturing cost comprises all costs which
are directly attributable to the manufacturing process
and an appropriate proportion of production-related
overheads. This includes production-related deprecia-
tion and an appropriate proportion of administrative and
social costs.
Work in progress and finished goods are stated at the
lower of average manufacturing cost and net realisable
Inventories of raw materials, supplies and goods for re-
sale are stated at the lower of average acquisition cost
and net realisable value.
In accordance with IAS 12 (Income Taxes), deferred taxes
are recognised on all temporary differences between
the tax and accounting bases of assets and liabilities and
on consolidation procedures. Deferred tax assets also
include claims to future tax reductions which arise from
the expected usage of existing tax losses available for
carryforward to the extent that future usage is probable.
Deferred taxes are computed using enacted or planned
tax rates which are expected to apply in the relevant
national jurisdictions when the amounts are recovered.
Derivative financial instruments are measured using
market information and recognised valuation tech-
niques. In those cases where hedge accounting is ap-
plied, changes in fair value are recognised either in
profit or loss or in other comprehensive income as a
component of accumulated other equity, depending
on whether the transactions are classified as fair value
hedges or cash flow hedges. In the case of fair value
hedges, the results of the fair value measurement of
the derivative financial instruments and the related
hedged items are recognised in the income statement.
In the case of fair value changes in cash flow hedges
which are used to mitigate the future cash flow risk
on a recognised asset or liability or on forecast trans-
actions, unrealised gains and losses on the hedging
instrument are recognised initially directly in accumu-
lated other equity. Any such gains or losses are recog-
nised subsequently in the income statement when the
hedged item (usually external revenue) is recognised
in the income statement. The portion of the gains or
losses from fair value measurement not relating to the
hedged item is recognised immediately in the income
statement. If, contrary to the normal case within the
BMW Group, hedge accounting cannot be applied, the
gains or losses from the fair value measurement of
derivative financial instruments are recognised imme-
diately in the income statement.
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
116 Notes to the Income Statement
123 Notes to the Statement
98-Accounting Principles and
Policies
107 GROUP FINANCIAL STATEMENTS
Consolidated Financial Statements
90 Statement of
92 Balance Sheets
―31.10.2012
(IFRS 10, IFRS 11 and IFRS 12)
Investment Entities (Amendments to
IFRS 10, IFRS 12 and IAS 27)
on BMW Group
Impact
Date of
mandatory
application
EU
issue by IASB
Date of
Standard/Interpretation.
(a) Financial reporting rules applied for the first time in the financial year 2014
The following Standards, Revised Standards, Amendments and Interpretations were applied for the first time in
the financial year 2014:
8-New financial reporting rules
109 GROUP FINANCIAL STATEMENTS
Determining the scope of consolidated companies to
be included in the Group Financial Statements may
involve the use of judgement. In particular when the
BMW Group holds 50% or less of the voting rights, a
detailed assessment must be made as to whether sole
control, joint control or significant influence applies.
For instance, other contractual rights and/or other mat-
ters and circumstances could result in the conclusion
that the BMW entity concerned controls or jointly con-
trols an entity in which it has a participation. In the
latter case, it must then be decided whether the joint
arrangement is a joint operation or a joint venture. In
making its judgement, the BMW Group must take all
contractual arrangements and other circumstances into
account, and not just the structure and legal form of
the entity. A new assessment is made in the event of
any indication of changes in the previous assessment of
(joint) control. Further information is provided in note 2.
Comprehensive Income
In addition, judgement is required in particular when
assessing whether the risks and rewards incidental to
ownership of a leased asset have been transferred for
the
purposes s of determining the classification of leasing
arrangements.
estimations also involve assessing the future level of
potential repair costs and price increases per product
and market. Provisions for warranties are adjusted
regularly to take account of new circumstances and the
impact of any changes recognised in the income state-
ment. Further information is provided in note 37.
Similar estimates are also made in conjunction with the
measurement of expected reimbursement claims.
Estimations are required for the purposes of recognis-
ing and measuring provisions for warranty obligations
(statutory, contractual and voluntary). In addition to
statutorily prescribed manufacturer warranties, the
BMW Group also offers various categories of warranty
depending on the product and sales market concerned.
Warranty provisions are recognised when the risks
and rewards of ownership of the goods are transferred
to the dealer or retail customer or when a new category
of warranty is introduced. In order to determine the
level of the provision, various factors are taken into
consideration, including estimations based on past ex-
perience with the nature and amount of claims. These
issue by IASB
The calculation of pension provisions requires assump-
tions to be made with regard to discount factors, salary
trends, employee fluctuation and the life expectancy
of employees. As in previous years, discount factors are
determined by reference to market yields at the end of
the reporting period on high quality corporate bonds.
The salary level trend refers to the expected rate of
salary increase which is estimated annually depending
on inflation and the career development of employees
within the Group. Further information is provided in
Current income taxes are computed throughout the
BMW Group in accordance with tax legislation appli-
cable in each relevant country. In situations where a
permissible element of discretion has been applied in
determining the amount of a tax exposure to be recog-
nised in the financial statements, there is always a pos-
sibility that local tax authorities may reach a different
conclusion.
The calculation of deferred tax assets requires assump-
tions to be made with regard to the level of future tax-
able income and the timing of recovery of deferred tax
assets. These assumptions take account of forecast oper-
ating results and the impact on earnings of the reversal
of taxable temporary differences. Since future business
developments cannot be predicted with certainty and to
some extent cannot be influenced by the BMW Group,
the measurement of deferred tax assets is subject to un-
certainty. Further information is provided in note 17.
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
116 Notes to the Income Statement
123 Notes to the Statement
98-Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
In the event of involvement in legal proceedings or
when claims are brought against a Group entity, provi-
sions for litigation and liability risks are recognised
when an outflow of resources is probable and a reliable
estimate can be made of the amount of the obligation.
Management is required to make assumptions with re-
spect to the probability of occurrence, the amount in-
volved and the duration of the legal dispute. For these
reasons, the recognition and measurement of provi-
sions for litigation and liability risks are subject to un-
certainty. Further information is provided in note 37.
Date of
mandatory
application
IASB
IFRS 10/
Expected impact
on BMW Group
Annual Improvements to IFRS 2010-2012
Annual Improvements to IFRS 2011-2013
1.1.2014
20.5.2013
None
No
1.1.2016
-12.8.2014
- Equity Method in Separate Financial
Statements (Amendments to IAS 27)
Levies
IFRIC 21
IAS 27
Employee Contributions (Amendments to
IAS 19)
12.12.2013
Insignificant
1.7.2014
21.11.2013
Employment Benefits:
IAS 19
(Amendments to IAS 16 and IAS 41)
None
- No
1.1.2016
30.6.2014
Agriculture: Bearer Plants-
IAS 16/
IAS 41
1.2.20151
-1.7.2014
Insignificant
12.12.2013
In May 2014 the IASB issued IFRS 15 (Revenue from
Contracts with Customers) together with the Financial
Accounting Standards Board. The objective of the new
Standard is to assimilate all the various existing require-
ments and Interpretations relating to revenue recogni-
tion (IAS 11 Construction Contracts, IAS 18 Revenue,
IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agree-
ments for the Construction of Real Estate, IFRIC 18
Transfers of Assets from Customers, SIC-31 Revenue -
Barter Transactions involving Advertising Services) in a
single Standard. The new Standard also stipulates uni-
form revenue recognition principles for all sectors and
all categories.
on 19 November 2013. On the one hand, the amend-
ments overhaul the requirements for hedge accounting
by introducing a new hedge accounting model. They
also enable entities to change the accounting for lia-
bilities they have elected to measure at fair value, before
applying any other requirement in IFRS 9, such that fair
value changes due to changes in "own credit risk" would
not require to be recognised in profit or loss. The man-
datory effective date of 1 January 2015 was removed and
a new application date of 1 January 2018 set. The impact
of adoption of the Standard on the Group Financial
Statements is currently being assessed.
In October 2010, additional rules for financial liabilities
were added to IFRS 9. The requirements for financial
liabilities contained in IAS 39 remain unchanged with
the exception of new requirements relating to the
measurement of an entity's own credit risk at fair value.
A package of amendments to IFRS 9 was announced
The new categorisation is based partly on the entity's
business model and partly on the contractual cash flow
characteristics.
Financial assets are measured at either amortised cost
or fair value. IFRS 9 harmonises the various rules con-
tained in IAS 39 and reduces the number of valuation
categories for financial instruments on the assets side
of the balance sheet.
In November 2009 the IASB issued IFRS 9 (Financial
Instruments) as part of a project to revise the accounting
for financial instruments. This Standard marks the
first of three phases of the IASB project to replace the
existing IAS 39 (Financial Instruments: Recognition and
Measurement). The first phase deals initially only with
financial assets. IFRS 9 amends the recognition and
measurement requirements for financial assets, includ-
ing various hybrid contracts.
1 Mandatory application in annual periods beginning on or after 1 February 2015.
2 Mandatory application in annual periods beginning on or after 17 June 2014.
Annual Improvements to IFRS 2012-2014
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
116 Notes to the Income Statement
123 Notes to the Statement
98-Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
Insignificant
Insignificant
Insignificant
1.1.2015
- No
-1.1.2016
25.9.2014
1.7.2014
(Amendments to IAS 16 and IAS 38)
Date of
mandatory
application
EU
-Insignificant
1.1.2016
-1.1.2016
6.5.2014
Acquisition of an Interest in a Joint Operation -
(Amendments to IFRS 11)
Consolidation Exception (Amendments to
IFRS 10, IFRS 12 and IAS 28)
IFRS 12/
IAS 28
IFRS 11
Insignificant
- No
1.1.2016
18.12.2014
Investment Entities: Applying the-
98-Notes
-No
Insignificant
1.1.2016
11.9.2014
Sale or Contribution of Assets between an
Investor and an Associate or Joint Venture
(Amendments to IFRS 10 and IAS 28)
IFRS 10/
IAS 28
24.7.2014
19.11.2013/
- No Significant in principle
1.1.2018
-12.11.2009/
28.10.2010/
16.12.2011/
Financial Instruments
IFRS 9
-No
Insignificant
IFRS 14
Regulatory Deferral Accounts
12.5.2014
Significant in principle
No
1.1.2016
18.12.2014
Presentation of Financial Statements
(Initiative to Improve Disclosure Require-
ments Amendments to IAS 1)
Clarification of Acceptable Methods of
Depreciation and Amortisation
IAS 16/
IAS 38
IAS 1
EU
on BMW Group
Expected impact
Date of
mandatory
application
Date of
mandatory
application
IASB
Date of
issue by IASB
Standard/Interpretation
110
- No Significant in principle
-1.1.2017
28.5.2014
Revenue from Contracts with Customers
IFRS 15
Insignificant
No
1.1.2016
30.1.2014
No
96 Group Statement of Changes in
Equity
Date of
mandatory
application
IASB
92 Balance Sheets
70.98
- 45.29
51.03
42.34
6-Accounting policies
The financial statements of BMW AG and of its subsidi-
aries in Germany and elsewhere have been prepared for
consolidation purposes using uniform accounting poli-
cies in accordance with IFRS 10 (Consolidated Financial
Statements).
Revenues from the sale of products are recognised when
the risks and rewards of ownership of the goods are
transferred to the dealer or customer, provided that the
amount of revenue can be measured reliably, it is
probable that the economic benefits associated with the
transaction will flow to the entity and costs incurred
or to be incurred in respect of the sale can be measured
reliably. Revenues are stated net of settlement discount,
bonuses and rebates. Revenues also include lease rentals
and interest income earned in conjunction with finan-
cial services. Revenues from leasing instalments relate to
operating leases and are recognised in the income state-
ment on a straight line basis over the relevant term of
the lease. Interest income from finance leases and from
customer and dealer financing are recognised using
the effective interest method and reported as revenues
within the line item “Interest income on loan financing".
If the sale of products includes a determinable amount
for subsequent services (multiple-component contracts),
the related revenues are deferred and recognised as
income over the relevant service period. Amounts are
normally recognised as income by reference to the pat-
tern of related expenditure. Profits arising on the sale
of vehicles for which a Group company retains a repur-
chase commitment (buy-back contracts) are not recog-
nised until such profits have been realised. The differ-
ence between the sales and buy-back price is accounted
for as deferred income and recognised in instalments as
revenue over the contract term.
Cost of sales comprises the cost of products sold and the
acquisition cost of purchased goods sold. In addition
to directly attributable material and production costs, it
also includes research costs and development costs not
recognised as assets, the amortisation of capitalised
development costs as well as overheads (including depre-
ciation of property, plant and equipment and amortisation
102
90-GROUP FINANCIAL STATEMENTS
Income Statements
90
90 Statement of
129.70
Comprehensive Income
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98-Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
of other intangible assets relating to production), write-
downs on inventories, freight and insurance costs re-
lating to deliveries to dealers and agency fees on direct
sales. Expenses which are directly attributable to finan-
cial services business (including depreciation on leased
products), the interest expense from refinancing the
entire financial services business as well as the expense
of risk provisions and write-downs relating to such busi-
ness are also reported in cost of sales.
In accordance with IAS 20 (Accounting for Government
Grants and Disclosure of Government Assistance), pub-
lic sector grants are not recognised until there is reason-
able assurance that the conditions attaching to them
have been complied with and the grants will be received.
They are recognised as income over the periods neces-
sary to match them with the related costs which they are
intended to compensate.
Basic earnings per share are computed in accordance with
IAS 33 (Earnings per Share). Basic earnings per share
are calculated for common and preferred stock by di-
viding the Group net profit after minority interests, as
attributable to each category of stock, by the average
number of outstanding shares. The net profit is accord-
ingly allocated to the different categories of stock. The
portion of the Group net profit for the year which is not
being distributed is allocated to each category of stock
based on the number of outstanding shares. Profits
available for distribution are determined directly on the
basis of the dividend resolutions passed for common
and preferred stock. Diluted earnings per share are dis-
closed separately.
Share-based remuneration programmes which are ex-
pected to be settled in shares are, in accordance with
IFRS 2 (Share-based Payments), measured at their fair
value at grant date. The related expense is recognised
in the income statement (as personnel expense) over
the vesting period, with a contra (credit) entry recorded
against capital reserves.
Share-based remuneration programmes expected to be
settled in cash are revalued to their fair value at each
balance sheet date between the grant date and the settle-
ment date and on the settlement date itself. The ex-
pense
for such programmes is recognised in the income
statement (as personnel expense) over the vesting period
of the programmes and recognised in the balance sheet
as a provision.
The share-based remuneration programme for Board
of Management members and senior heads of depart-
ment entitles BMW AG to elect whether to settle its
commitments in cash or with shares of BMW AG com-
mon stock. Following the decision to settle in cash,
this programme is accounted for as a cash-settled
share-based transaction. Further information on
share-based remuneration programmes is provided
92 Balance Sheets
140.38
-144.55
144.95
94 Cash Flow Statements
101 GROUP FINANCIAL STATEMENTS
5-Foreign currency translation
come statement are also recognised directly in accumu-
lated other equity.
Foreign currency receivables and payables in the single
entity accounts of BMW AG and subsidiaries are re-
corded, at the date of the transaction, at cost. At the end
of the reporting period, foreign currency receivables
and payables are translated at the closing exchange rate.
The resulting unrealised gains and losses as well as the
subsequent realised gains and losses arising on settle-
ment are recognised in the income statement in accord-
ance with the underlying substance of the relevant
transactions.
The exchange rates of those currencies which have a ma-
terial impact on the Group Financial Statements were as
follows:
US Dollar
British Pound
Chinese Renminbi
Japanese Yen
Russian Rouble
Closing rate
31.12.2014
31.12.2013
Average rate
2014
2013
1.21
1.38
1.33
1.33
-0.78
0.83
0.81
0.85
-7.53
8.34
8.19
8.16
in note 20.
Purchased and internally-generated intangible assets are
recognised as assets in accordance with IAS 38 (Intan-
gible Assets), where it is probable that the use of the asset
will generate future economic benefits and where the
costs of the asset can be determined reliably. Such assets
are measured at acquisition and/or manufacturing cost
and, to the extent that they have a finite useful life,
amortised over their estimated useful lives. With the ex-
ception of capitalised development costs, intangible
assets are generally amortised over their estimated use-
ful lives of between three and ten years.
The financial statements of consolidated companies
which are drawn up in a foreign currency are translated
using the functional currency concept (IAS 21 The
Effects of Changes in Foreign Exchange Rates) and the
modified closing rate method. The functional currency
of a subsidiary is determined as a general rule on the
basis of the primary economic environment in which it
operates and corresponds therefore usually to the rele-
vant local currency. Income and expenses of foreign
subsidiaries are translated in the Group Financial State-
ments at the average exchange rate for the year and
assets and liabilities are translated at the closing rate.
Exchange differences arising from the translation of
shareholders' equity are recognised directly in accumu-
lated other equity. Exchange differences arising from
the use of different exchange rates to translate the in-
Goodwill arises on first-time consolidation of an acquired
business when the cost of acquisition exceeds the
Group's share of the fair value of the individually iden-
tifiable assets acquired and liabilities and contingent
liabilities assumed.
assets.
The first step of the impairment test is to determine the
value in use of an asset. If the calculated value in use is
lower than the carrying amount of the asset, then its fair
value less costs to sell are also determined. If the latter
is also lower than the carrying amount of the asset, then
an impairment loss is recorded, reducing the carrying
amount to the higher of the asset's value in use or fair
value less costs to sell. The value in use is determined
on the basis of a present value computation. Cash flows
used for the purposes of this calculation are derived
from long-term forecasts approved by management. The
long-term forecasts themselves are based on detailed
forecasts drawn up at an operational level and, based on
a planning period of six years, correspond roughly to
a typical product's life-cycle. For the purposes of calcu-
lating cash flows beyond the planning period, the as-
set's assumed residual value does not take growth into
account. Forecasting assumptions are continually
brought up to date and regularly compared with exter-
nal sources of information. The assumptions used take
account in particular of expectations of the profitability
of the product portfolio, future market share develop-
ments, macro-economic developments (such as currency,
interest rate and raw materials prices) as well as the le-
gal environment and past experience. Cash flows of the
Automotive and Motorcycles CGUs are discounted us-
ing a risk-adjusted pre-tax weighted average cost of cap-
ital (WACC) of 12.0% (2013: 12.0%). In the case of the
Financial Services CGU, a sector-compatible pre-tax cost
of equity capital of 13.4% (2013: 13.4%) is applied. In
conjunction with the impairment tests for CGUs, sensi-
tivity analyses are performed for the main assumptions.
Analyses performed in the year under report confirmed,
as in the previous year, that no impairment loss was re-
quired to be recognised.
If the reason for a previously recognised impairment loss
no longer exists, the impairment loss is reversed up to
the level of the recoverable amount, capped at the level
of rolled-forward amortised cost. This does not apply
to goodwill: previously recognised impairment losses on
goodwill are not reversed.
Investments accounted for using the equity method are
(except when the investment is impaired) measured at
the Group's share of equity taking account of fair value
adjustments on acquisition. Investments accounted for
using the equity method comprise joint ventures and
significant associated companies.
Investments in non-consolidated Group companies and
interests in associated companies not accounted for using
the equity method are reported as Other investments and
measured at cost or, if lower, at their fair value.
Participations are measured at their fair value. If this
value is not available or cannot be determined reliably,
participations are measured at cost.
Non-current marketable securities are measured ac-
cording to the category of financial asset to which they
are classified. No held-for-trading financial assets are
included under this heading.
A financial instrument is a contract that gives rise to a
financial asset of one entity and a financial liability
or equity instrument of another entity. Once a BMW
Group entity becomes party to such to a contract, the
financial instrument is recognised either as a financial
asset or as a financial liability.
Financial assets are accounted for on the basis of the
settlement date. On initial recognition, they are meas-
ured at their fair value. Transaction costs are included
in the fair value unless the financial assets are allocated
to the category "financial assets measured at fair value
through profit or loss".
Subsequent to initial recognition, available-for-sale and
held-for-trading financial assets are measured at their
fair value. When market prices are not available, the fair
value of available-for-sale financial assets is measured
using appropriate valuation techniques e.g. discounted
cash flow analysis based on market information available
at the balance sheet date.
Available-for-sale assets include non-current investments,
securities and investment fund shares. This category
includes all non-derivative financial assets which are
105 GROUP FINANCIAL STATEMENTS
not classified as "loans and receivables" or "held-to-
maturity investments" or as items measured "at fair
value through profit and loss".
use corresponds to the present value of future cash
flows expected to be derived from an asset or group of
Loans and receivables which are not held for trading
and held-to-maturity financial investments with a fixed
term are measured at amortised cost using the effec-
tive interest method. All financial assets for which pub-
lished price quotations in an active market are not avail-
able and whose fair value cannot be determined reliably
are required to be measured at cost.
With the exception of derivative financial instruments,
all receivables and other current assets relate to loans
and receivables which are not held for trading. All such
items are measured at amortised cost. Receivables with
maturities of over one year which bear no or a lower-
than-market interest rate are discounted. Appropriate
impairment losses are recognised to take account of all
identifiable risks.
Receivables from sales financing comprise receivables
from retail customer, dealer and lease financing.
Impairment losses on receivables relating to financial ser-
vices business are recognised using a uniform method-
ology that is applied throughout the Group and meets
the requirements of IAS 39. This methodology results in
the recognition of impairment losses both on individual
assets and on groups of assets. If there is objective evi-
dence of impairment, the BMW Group recognises im-
pairment losses on the basis of individual assets. Within
the retail customer business, the existence of overdue
balances or the incidence of similar events in the past
are examples of such objective evidence. In the event of
overdue receivables, impairment losses are always recog-
nised individually based on the length of period of the
arrears. In the case of dealer financing receivables, the
allocation of the dealer to a corresponding rating cate-
gory is also deemed to represent objective evidence of
impairment. If there is no objective evidence of impair-
ment, impairment losses are recognised on financial as-
sets using a portfolio approach based on similar groups
of assets. Company-specific loss probabilities and loss
ratios, derived from historical data, are used to measure
impairment losses on similar groups of assets.
The recognition of impairment losses on receivables
relating to industrial business is also, as far as possible,
based on the same procedures applied to financial ser-
vices business. Impairment losses (write-downs and
allowances) on receivables are always recorded on sepa-
rate accounts and derecognised at the same time the
corresponding receivables are derecognised.
Items are presented as financial assets to the extent that
they relate to financing transactions.
Derivative financial instruments are only used within the
BMW Group for hedging purposes in order to reduce cur-
rency, interest rate, fair value and market price risks from
operating activities and related financing requirements.
All derivative financial instruments (such as interest, cur-
rency and combined interest/currency swaps, forward
currency and forward commodity contracts) are meas-
ured in accordance with IAS 39 at their fair value, irre-
spective of their purpose or the intention for which they
are held.
If there are no quoted prices on active markets for de-
rivative financial instruments, credit risk is taken into
account as an adjustment to the fair value of the finan-
cial instrument. The BMW Group applies the option of
measuring the credit risk for a group of financial assets
and financial liabilities on the basis of its net exposure.
Portfolio-based value adjustments to the individual
financial assets and financial liabilities are allocated using
the relative fair value approach (net method).
106
90-GROUP FINANCIAL STATEMENTS
Income Statements
90 Statement of
Development costs for vehicle and engine projects are
capitalised at manufacturing cost, to the extent that
attributable costs can be measured reliably and both
technical feasibility and successful marketing are as-
sured. It must also be probable that the development
expenditure will generate future economic benefits.
Capitalised development costs comprise all expenditure
that can be attributed directly to the development pro-
cess, including development-related overheads. Capi-
talised development costs are amortised systematically
over the estimated product life (usually four to eleven
years) following start of production.
In accordance with IAS 39 (Financial Instruments: Recog-
nition and Measurement), assessments are made regu-
larly as to whether there is any objective evidence that a
financial asset or group of assets may be impaired. Im-
pairment losses identified after carrying out an impair-
ment test are recognised as an expense. Gains and losses
on available-for-sale financial assets are recognised di-
rectly in accumulated other equity until the financial as-
set is disposed of or is determined to be impaired, at
which time the cumulative loss previously recognised in
other comprehensive income is reclassified to profit or
loss for the period.
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
90
116 Notes to the Income Statement
123 Notes to the Statement
All items of property, plant and equipment are considered
to have finite useful lives. They are recognised at acqui-
of Comprehensive Income
103 GROUP FINANCIAL STATEMENTS
sition or manufacturing cost less scheduled depreciation
based on the estimated useful lives of the assets. De-
preciation on property, plant and equipment reflects
the pattern of their usage and is generally computed us-
ing the straight-line method. Components of items of
in years
property, plant and equipment with different useful
lives are depreciated separately.
Systematic depreciation is based on the following useful
lives, applied throughout the BMW Group:
Factory and office buildings, residential buildings, fixed installations in buildings and outside facilities
Plant and machinery
Other equipment, factory and office equipment
8 to 50
3 to 21
- 2 to 25
For machinery used in multiple-shift operations, depre-
ciation rates are increased to account for the additional
utilisation.
The cost of internally constructed plant and equipment
comprises all costs which are directly attributable to
the manufacturing process as well as an appropriate
proportion of production-related overheads. This in-
cludes production-related depreciation and an appro-
priate proportion of administrative and social costs.
As a general rule, borrowing costs are not included in
acquisition or manufacturing cost. Borrowing costs that
are directly attributable to the acquisition, construction
or production of a qualifying asset are recognised as a
part of the cost of that asset in accordance with IAS 23
(Borrowing Costs).
Comprehensive Income
In accordance with IAS 17, assets leased under finance
leases are measured at their fair value at the inception
of the lease or at the present value of the lease payments,
if lower. The assets are depreciated using the straight-
line method over their estimated useful lives or over the
lease period, if shorter. The obligations for future lease
instalments are recognised as other financial liabilities.
Non-current assets also include assets relating to leases.
The BMW Group uses property, plant and equipment as
lessee on the one hand and leases out vehicles produced
by the Group and other brands as lessor on the other.
IAS 17 (Leases) contains rules for determining, on the
basis of risks and rewards, the economic owner of the
assets. In the case of finance leases, the assets are at-
tributed to the lessee and in the case of operating leases
the assets are attributed to the lessor.
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
98-Accounting Principles and
Policies
90-GROUP FINANCIAL STATEMENTS
Income Statements
104
are measured at manufacturing cost. All other leased
products are measured at acquisition cost. All leased
products are depreciated over the period of the lease
using the straight-line method down to their expected
residual value. Changes in residual value expectations
are recognised - in situations where the recoverable
amount of the lease exceeds the carrying amount of the
asset - by adjusting scheduled depreciation prospec-
tively over the remaining term of the lease contract. If
the recoverable amount is lower than the expected
residual value, an impairment loss is recognised for the
shortfall. A test is carried out at each balance sheet
date to determine whether an impairment loss recog-
nised in prior years no longer exists or has decreased.
In these cases, the carrying amount of the asset is in-
creased to the recoverable amount. The higher carrying
amount resulting from the reversal may not, however,
exceed the rolled-forward amortised cost of the asset.
If there is any evidence of impairment of non-financial
assets (except inventories and deferred taxes), or if an
annual impairment test is required to be carried out -
i.e. for intangible assets not yet available for use, intan-
gible assets with an indefinite useful life and goodwill
acquired as part of a business combination – an impair-
ment test pursuant to IAS 36 (Impairment of Assets) is
performed. Each individual asset is tested separately
unless the asset generates cash flows that are largely in-
dependent of the cash flows from other assets or groups
of assets (cash-generating units/CGUs). For the purposes
of the impairment test, the asset's carrying amount is
compared with its recoverable amount, the latter defined
as the higher of the asset's fair value less costs to sell and
its value in use. An impairment loss is recognised when
the recoverable amount is lower than the asset's carrying
amount. Fair value is the price that would be received
to sell an asset in an orderly transaction between mar-
ket participants at the measurement date. The value in
Where Group products are recognised by BMW Group
entities as leased products under operating leases, they
90
Changes in deferred tax assets and liabilities during the
reporting period can be summarised as follows:
2014
2013*
90-GROUP FINANCIAL STATEMENTS
90 Statement of
Income Statements
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
90
Deferred taxes recognised directly in equity amounted
to €1,889 million (2013: €451 million), an increase of
€1,438 million (2013: decrease of €771 million) com-
pared to the previous year. The change includes an
increase in deferred taxes recognised in conjunction
with currency translation amounting to €9 million
(2013: reduction of €1 million).
-
in € million
Capital losses available for carryforward in the United
Kingdom which do not relate to ongoing operations in-
creased to €2,112 million due to exchange rate factors
(2013: €1,975 million). As in previous years, deferred
tax assets recognised on these tax losses - amounting to
€422 million at the end of the reporting period (2013:
€395 million) – were fully written down since they can
only be utilised against future capital gains.
31 December 2014 amounting to €140 million (2013:
€192 million). Deferred tax assets are recognised on
the basis of management's assessment of whether it is
probable that the relevant entities will generate suffi-
cient future taxable profits, against which deductible
temporary differences can be offset.
98-Notes
Prior year figures have been adjusted in accordance with IAS 8, see note 9.
(2013*: €402 million). This includes an amount of €228 mil-
lion (2013: €42 million), for which a valuation allowance
of €74 million (2013: €14 million) was recognised on
the related deferred tax asset. For entities with tax losses
available for carryforward, a net surplus of deferred
tax assets over deferred tax liabilities is reported at
Tax losses available for carryforward - for the most part
usable without restriction - amounted to €469 million
Deferred tax assets on tax loss carryforwards and capi-
tal losses before allowances totalled €566 million (2013*:
€512 million). After valuation allowances of €496 mil-
lion (2013: €409 million), their carrying amount stood at
€70 million (2013*: €103 million).
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2,459
-839
-8,783
-9,704
1,974
-409
-8,783
1,620
Netting relates to the offset of deferred tax assets and
liabilities within individual separate entities or tax
groups to the extent that they relate to the same tax
authorities.
120
Deferred taxes at 31 December (assets (-)/liabilities (+))
116-Notes to the Income Statement
123 Notes to the Statement
Diluted earnings per share of preferred stock in €
8.08
2,061
87
-0.02
8.10
Diluted earnings per share of common stock in €
8.10
-0.02
8.12
Basic earnings per share of preferred stock in €
The tax returns of BMW Group entities are checked reg-
ularly by German and foreign tax authorities. Taking ac-
count of a variety of factors - including existing interpre-
tations, commentaries and legal decisions taken relating
to the various tax jurisdictions and the BMW Group's
past experience - adequate provision has, as far as identi-
fiable, been made for potential future tax obligations.
expense.
Deferred taxes are not recognised on retained profits
of €30.7 billion (2013: €28.0 billion) of foreign subsidi-
aries, as it is intended to invest these profits to maintain
and expand the business volume of the relevant com-
panies. A computation was not made of the potential im-
pact of income taxes on the grounds of disproportionate
98 Accounting Principles and
Policies
839
-42
387
-1,429
-17
116
-128
839
Changes in deferred taxes include changes relating to
items recognised either through the income statement
or directly in equity as well as the impact of exchange
rate fluctuations, first-time consolidations and decon-
solidations. Deferred taxes recognised directly in equity
increased in total by €1,429 million (2013: decrease of
€770 million). Of this amount, €759 million (2013:
€421 million) related to the fair value measurement of
derivative financial instruments and marketable securi-
ties (recognised directly in equity), shown in the sum-
mary
above in the line items “Other assets” and “Liabili-
ties". A further €670 million (2013: decrease of €349 mil-
lion) related to the remeasurements of the net defined
benefit liability for pension plans, shown in the sum-
mary
above in the line item "Provisions".
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Exchange rate impact and other changes
Deferred tax expense (+)/income (-) recognised through income statement
Change in deferred taxes recognised directly in equity
Deferred taxes at 1 January (assets (-)/liabilities (+))
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
-87
-770
264
11,242
-1,706
9
11
Deferred tax liabilities -
2013*
2014
Deferred tax assets -
2013*
2014
Net
Deferred taxes
Netting
Valuation allowance
Eliminations
Liabilities
Provisions
Tax loss carryforwards
Other assets
Investments
Leased products
Property, plant and equipment
Intangible assets
in € million
The allocation of deferred tax assets and liabilities to
balance sheet line items at 31 December is shown in the
following table:
The line "Other variances" comprises primarily recon-
ciling items relating to the Group's share of results of
equity accounted investments.
-32.5%
33.2%
8.12
2,564
1,571
50
26
400
11,678
10,812
12,261
661
690
-2,570
2,945
449
602
-2,955
2,827
47
95
-496
-9,704
- 3,220
-512
-566
5
3,747
2,687
-1,078
1,289
12
6
5
- 4,498
5,486
436
393
4,175
-0.02
500
90
and marketable securities
- Gain/loss on disposal of tangible and intangible assets
-552
-551
Other non-cash income and expense items
-17
-155
138
Change in deferred taxes
480
479
Change in provisions
3,832
2
3,830
and investment assets
Depreciation and amortisation of other tangible, intangible
-147
20
-126
Other interest and similar income/expenses
2,581
146
-2,435
Current tax
5,329
-11
-22
5,340
-21
-398
2,890
-500
-10
-6,981
Cash outflow from investing activities
-136
-1
-137
Interest received
969
500
-16
- 453
Change in other operating assets and liabilities-
-1,159
6
1,153
Change in trade payables
-195
-3
-192
986
3
-983
Change in inventories
Changes in working capital
-407
Result from equity accounted investments
4,127
-13
-3,614
- 5,329
-11
-635
5,340
Items expected to be reclassified to the income statement
Currency translation foreign operations
Net profit
As reported
Restatements in
accordance with
IAS 8.41 et seq.
reported
in € million
As originally
2013
Changes in presentation of the Statement of Comprehensive Income
165 Segment Information
149 Other Disclosures
124 Notes to the Balance Sheet
of Comprehensive Income
-125
116 Notes to the Income Statement
98-Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
2
-633
in the future
316
Net profit
Cash inflow from operating activities
― As reported
Term
deposits
USA
with IAS 8.41 et seq.
accordance
Restatements in-
accordance with
IAS 8.14
As originally - Adjustments in
reported
in € million
2013
Changes in Group Cash Flow Statement presentation
8.10
115 GROUP FINANCIAL STATEMENTS
9
-6,566
Total comprehensive income attributable to shareholders of BMW AG
6,583
9
6,592
Total comprehensive income
1,254
2
1,252
Other comprehensive income for the period after tax
318
2
6,557
-95
123 Notes to the Statement
222
346
311
Exchange gains
2013*
2014
in € million
Income from the reversal of provisions
13-Other operating income and expenses
Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Administrative expenses amounted to €2,548 million
(2013: €2,371 million) and comprise expenses for ad-
ministration not attributable to development, produc-
tion or sales functions.
Selling expenses amounted to €5,344 million (2013*:
€4,886 million) and comprise mainly marketing, adver-
tising and sales personnel costs.
12-Selling and administrative expenses
4,793
4,566
117 GROUP FINANCIAL STATEMENTS
1,744
184
Income from the reversal of impairment losses and write-downs
Expense for impairment losses and write-downs
Expense for additions to provisions
Exchange losses
Other operating income
842
877
-183
247
Sundry operating income
53
-101
Gains on the disposal of assets
-13
-30
251
1,499
-1,069
-1,068
-1,407
-14,044
14,716
1,243
1,451
-4,118
-1,483
4,135
38,253
2013*
2014
As in the previous year, manufacturing costs do not con-
tain any impairment losses on intangible assets and
property, plant and equipment. Cost of sales is reduced
by public-sector subsidies in the form of reduced taxes
90-GROUP FINANCIAL STATEMENTS
Income Statements
Group cost of sales include €16,485 million (2013:
€15,962 million) relating to Financial Services business.
-36,578
-362
-435
3,072
4,118
4,135
2013*
2014
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Total research and development expenditure
New expenditure for capitalised development costs
Amortisation
Research and development expenses
in € million
Total research and development expenditure comprises
research costs, non-capitalised development costs and
capitalised development costs (excluding scheduled
amortisation). Total research and development expendi-
ture was as follows:
on assets and reduced consumption-based taxes amount-
ing to €54 million (2013: €45 million).
60,791
63,396
-2,890
Losses on the disposal of assets
Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Sundry operating expenses.
Other operating income and expenses
16-Other financial result
118
-286
-319
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Net interest result
in € million
-469
Interest and similar expenses
thereof to subsidiaries: €-6 million (2013: €-6 million)
-330
-326
Other interest and similar expenses
-7
-519
Write-downs on current marketable securities
2014
2013
-597
Other financial result
Sundry other financial result
Losses and gains relating to financial instruments
-81
-150
112
Result on investments
Expenses from investments in subsidiaries
-91
-153
3
Income from investments in subsidiaries and participations
― thereof from subsidiaries: €2 million (2013: €8 million)
Impairment losses on investments in subsidiaries and participations
|
-2
-5
-105
Expense relating to interest impact on other long-term provisions
5
-875
-872
-222
-202
-27
-33
-25
-86
-265
-225
-324
-334
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
-37
14-Result from equity accounted investments
The profit from equity accounted investments amounted
to €655 million (2013: €407 million) and includes pri-
marily the Group's share of the result of the joint
venture, BMW Brilliance Automotive Ltd., Shenyang.
Prior year figures have been adjusted in accordance with IAS 8, see note 9.
-127
-88
-125
Net interest expense on the net defined benefit liability for pension plans
183
200
-183
200
2013*
2014
Interest and similar income
thereof from subsidiaries: €18 million (2013*: €17 million)
Other interest and similar income
in € million
15-Net interest result
Other operating expenses
-153
Cost of sales
Interest expense relating to financial services business
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Taxes on income comprise the following:
in € million
123 Notes to the Statement
Current tax expense
Income taxes
Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Current tax expense includes €275 million (2013: €222 mil-
lion) relating to prior periods.
A deferred tax expense of €83 million (2013*: income of
€42 million) is attributable to new temporary differences
and the reversal of temporary differences brought for-
ward.
The tax expense was reduced by €27 million (2013: €5 mil-
lion) as a result of utilising tax losses/tax credits brought
forward, for which deferred assets had not previously
been recognised.
The change in the valuation allowance on deferred tax
assets relating to tax losses available for carryforward
and temporary differences resulted in a tax expense of
€49 million (2013: €7 million).
Deferred tax expense/income
Deferred taxes are computed using enacted or planned
tax rates which are expected to apply in the relevant
national jurisdictions when the amounts are recovered.
A uniform corporation tax rate of 15.0% plus solidarity
116-Notes to the Income Statement
98 Accounting Principles and
Policies
-7,491
-747
-206
The result from investments in 2014 was negatively
impacted by an impairment loss on other investments
amounting to €152 million (2013: €73 million).
The deterioration in other financial result was primarily
due to the negative impact of currency and commodity
derivatives.
90-GROUP FINANCIAL STATEMENTS
17-Income taxes
90
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
Income Statements
2014
2013*
2,774
Effective tax rate
Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Tax increases as a result of non-deductible expenses
and tax reductions due to tax-exempt income remained
more or less at a similar level to the previous year. As
in the previous year, tax increases as a result of non-tax-
deductible expenses were attributable primarily to the
impact of non-recoverable withholding taxes and trans-
fer price issues.
-8,707
-7,893
-30.7%
Actual tax expense
30.5%
2,407
-55
-134
150
-164
275
2,673
Other variances
Tax increases (+)/tax reductions (-) as a result of non-deductible expenses and tax-exempt income
Tax expense (+)/benefits (-) for prior years
Variances due to different tax rates
2,581
116
2,890
-17
2,564
surcharge of 5.5% applies in Germany, giving a tax rate
of 15.8%, unchanged from the previous year. After taking
account of an average municipal trade tax multiplier
rate (Hebesatz) of 425.0% (2013: 420.0%), the municipal
trade tax rate for German entities is 14.9% (2013: 14.7%).
The overall income tax rate in Germany is therefore
30.7% (2013: 30.5%). Deferred taxes for non-German
entities are calculated on the basis of the relevant country-
specific tax rates and remained in a range of between
12.5% and 46.9% once again in the financial
year 2014.
Changes in tax rates resulted in a deferred tax expense
of €22 million (2013: €2 million).
The actual tax expense for the financial year 2014 of
€2,890 million (2013*: €2,564 million) is €217 million
(2013: €157 million) higher than the expected tax ex-
pense of €2,673 million (2013*: €2,407 million) which
would theoretically arise if the tax rate of 30.7% (2013:
30.5%), applicable for German companies, was applied
across the Group.
Prior year figures have been adjusted in accordance with IAS 8, see note 9.
119 GROUP FINANCIAL STATEMENTS
The difference between the expected and actual tax expense is explained in the following reconciliation:
in € million
2014
*2013*
Profit before tax
Tax rate applicable in Germany
Expected tax expense
Investment in intangible assets and property, plant and equipment
Expense for risk provisions and write-downs for financial services business
Other cost of sales
-6,669
-6,693
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
note 50.
An analysis of revenues by business segment and geographical region is shown in the segment information in
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
90 Statement of
76,059
2,671
2,776
2,868
2,881
-6,412
6,716
80,401
-7,296
Comprehensive Income
94 Cash Flow Statements
Cost of sales directly attributable to financial services
Warranty expenditure
Research and development expenses
Manufacturing costs.
in € million
Cost of sales comprises:
92 Balance Sheets
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
116-Notes to the Income Statement
123 Notes to the Statement
11-Cost of sales
98 Accounting Principles and
Policies
98-Notes
Equity
96 Group Statement of Changes in
of Comprehensive Income
-7,748
56,812
-60,280
8,370
Cash and cash equivalents as at 1 January
-703
3
-706
Change in cash and cash equivalents
4
-4,131
-3,631
Investments in marketable securities and time deposits
-76
-14
-90
- Expenditure for investments
-500
- 8,374
Cash and cash equivalents as at 31 December
-7,664
2013*
2014
Revenues
Other income
Interest income on loan financing
Sale of products previously leased to customers
Income from lease instalments
Sales of products and related goods
in € million
Revenues by activity comprise the following:
10-Revenues
Notes to the Group Financial Statements
Notes to the Income Statement
BMW Group
116
-7,671
-24
8.08
-597
8.10
- 3,441
thereof other provisions
51,887
-947
52,834
Total non-current provisions and liabilities
111 GROUP FINANCIAL STATEMENTS
-
The new Standard is based on a five-step model, which
sets out the rules for revenue from contracts with cus-
tomers, with the exception - among other things – of
lease arrangements, insurance contracts, financial in-
struments and specified contractual rights and obliga-
tions relating to non-monetary transactions between
entities within the same sector. Revenue can be recog-
nised either over time or at a specific point in time. The
five-step model describes the five steps necessary to
recognise revenue on the basis of the transfer of control:
1. Identify the contract with the customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
of the new requirements on the Group Financial State-
ments is currently being assessed.
In December 2014, the IASB issued Amendments to
IAS 1 as part of its disclosure initiative. The amend-
ments relate primarily to clarifications relating to the
presentation of financial reports.
Firstly, disclosures are only required to be made in the
notes if their inclusion is material for users of the
financial statements. This also applies when an IFRS
Standard explicitly specifies a minimum list of disclo-
sures. Secondly, items to be presented in the balance
4. Allocate the transaction price to separate performance sheet, income statement and comprehensive income
obligations
-0.02
5. Recognise revenue when a performance obligation is
satisfied.
In the case of multi-component transactions or trans-
actions with variable consideration, it is possible that
revenue may have to be recognised earlier or later un-
der IFRS 15 compared with the previous Standard.
90 Statement of
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
112
IFRS 11 supersedes IAS 31 (Interests in Joint Ventures)
and SIC-13 (Jointly Controlled Entities - Non-Monetary
Contributions by Venturers). This Standard sets out the
requirements for accounting for joint arrangements and
places the emphasis on the rights and obligations that
arise from such arrangements. IFRS 11 distinguishes
40
IFRS 10 introduces a uniform consolidation model which
establishes control as the basis for consolidation - con-
trol of a subsidiary entity by a parent entity - and which
can be applied to all entities. The control concept must
therefore be applied both to parent-subsidiary relation-
ships based on voting rights as well as to parent-sub-
sidiary relationships arising from other contractual ar-
rangements. Under the control concept established in
IFRS 10, an investor controls another entity when it is
exposed to or has rights to variable returns from its in-
volvement with the investee and has the ability to affect
those returns through its power over the investee.
Adjustments as a result of consolidation-related Standards
In May 2011, the IASB issued three new Standards -
IFRS 10 (Consolidated Financial Statements), IFRS 11
(Joint Arrangements), IFRS 12 (Disclosure of Interests
in Other Entities) -
- 
as well as amendments to IAS 27
(Separate Financial Statements) and to IAS 28 (Invest-
ments in Associates and Joint Ventures), all relating
to accounting for business combinations. The three new
Standards, which were endorsed by the EU in Decem-
ber 2012, are mandatory for the first time for annual
periods beginning on or after 1 January 2014 and are re-
quired to be applied retrospectively.
9-Adjustments in accordance with IAS 8
The Standard is mandatory for the first time for annual
periods beginning on or after 1 January 2016. Early
adoption is permitted. The potential impact of adoption
of the new requirements on the Group Financial State-
ments is currently being assessed.
can be aggregated or disaggregated by using subtotals.
Thirdly, it clarifies that an entity's share of other com-
prehensive income of equity-accounted entities is re-
quired to be analysed - within the Statement of Com-
prehensive Income - to show "components, which
will be subsequently reclassified to profit and loss" and
"components, which will be not subsequently reclassi-
fied to profit and loss". Fourthly, it is stressed that there
is no standard template for the notes and that the em-
phasis should be on structuring the notes based on the
relevance for the specific reporting entity.
The Standard is mandatory for the first time for annual
periods beginning on or after 1 January 2017. Early
adoption is permitted under IFRS. The impact of adoption
A major difference to the previous Standard is the in-
creased scope of discretion for estimates and the intro-
duction of thresholds that could influence the amount
and timing of revenue recognition.
IFRS 10 replaces the consolidation guidelines contained
in IAS 27 and SIC-12 (Consolidation - Special Purpose
Entities). The requirements for separate financial state-
ments remain unchanged in the revised version of
IAS 27.
Comprehensive Income
3,481
Total current provisions and liabilities
-14
-652
- thereof investments accounted for using the equity method
- 86,193
-15,168
-138,377
9
As reported
- Restatements in
accordance with
IAS 8.41 et seq.
-Adjustments in
accordance with
IAS 8.14
As originally
reported
55
-15,113
- thereof property, plant and equipment
86,194
Total non-current assets
-138,368
Total assets
thereof current tax
thereof trade payables.
- 3,081
-987
2,094
48,395
thereof deferred tax
981
-1,482
6,433
981
-2,463
6,437
31 December 2013
in € million
49,380
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
-13,376
- thereof investments accounted for using the equity method -
-514
-9
505
thereof non-current other assets
- 803
-33
-770
Total current assets
50,530
-11
50,541
thereof inventories
-9,725
7
9,732
28,544
thereof revenue reserves
30,465
-34
30,499
thereof equity attributable to shareholders of BMW AG
35
30,572
30,606
Total equity
8,374
4
-8,370
thereof cash and cash equivalents
-34
-13,341
81,298
-7
Prior year figures in the Balance Sheet, Income State-
ment, Statement of Comprehensive Income, Statement
of Changes in Equity, Cash Flow Statement and Notes
to the Group Financial Statements have been restated
retrospectively. The restatements also impacted the
figures reported for the Financial Services and Other
Entities segments. The Financial Service's segment re-
sult for 2013 was reduced by €20 million and amounted
to €1,619 million after restatement, while segment as-
sets were reduced by €19 million to €8,388 million. Seg-
ment assets reported for the Other Entities segment
amounted to €55,300 million at the end of the financial
year 2013, correcting the previously reported amount
by €1,050 million. The tables at the end of this section
show the impact for the Group.
In previous years, there had been a misallocation between
current and deferred income taxes for leased products
in the USA. The figures have been restated in accordance
with IAS 8.41 et seq., involving a reclassification from
deferred tax liabilities to current tax payables. The re-
lated interest and penalty charges up to 31 December
2012 were recorded directly in equity (in revenue re-
serves). Interest relating to the financial year 2013 is
reported as an expense for that period (in financial
result).
Restatement of income taxes in conjunction with leased
products in the USA
In accordance with IAS 8.14, the resulting adjustments
relating to the financial year 2013 are presented in the
tables at the end of this section. The transition require-
ments contained in these new Standards were com-
plied with and, accordingly, the impact on the Group's
Balance Sheet, Income Statement and Cash Flow State-
ment is not presented separately for the financial year
2014.
The new requirements pertaining to IFRS 10, IFRS 11
and IFRS 12 are required to be applied retrospectively.
Application of IFRS 10 has no impact on the scope of
entities included in the Group Financial Statements.
The removal of the option for accounting for joint ven-
tures (as stipulated by IFRS 11) does not have any im-
pact since the BMW Group already accounted for joint
ventures using the equity method. By contrast, the
classification of joint arrangements in accordance with
IFRS 11 has changed. The investments in SGL Automo-
tive Carbon Fibers GmbH & Co. KG, Munich, SGL
Automotive Carbon Fibers Verwaltungs GmbH, Munich,
and SGL Automotive Carbon Fibers LLC, Dover, DE -
previously accounted for at equity - have been classi-
fied with effect from the first quarter of the financial
year 2014 as joint operations and consolidated propor-
tionately on the basis of the BMW Group's 49% share-
holding. This change in classification reflects the fact
that the arrangement is primarily designed to provide
the joint operators with an output (i.e. production) as
well as the fact that settlement of the liabilities relating
to the activities conducted through the arrangement
depends on both parties on a continuous basis. Appli-
cation of IFRS 12 impacts the scope of disclosures
required to be made in the notes to the BMW Group
Financial Statements, in particular the requirement to
disclose more detailed financial information with re-
spect to significant joint ventures. Further details can be
found in note 26.
Change in presentation of term deposits within the Cash
Flow Statement
IFRS 12 sets out the requirements for disclosures relating
to all types of interests in other entities, including joint
arrangements, associated companies, structured entities
and unconsolidated entities.
149 Other Disclosures
165 Segment Information
124 Notes to the Balance Sheet
of Comprehensive Income
116 Notes to the Income Statement
123 Notes to the Statement
98-Accounting Principles and
Policies
98-Notes
between two types of joint arrangements, namely joint
operations and joint ventures, and therefore results in
a change in the classification of joint arrangements. A
joint operation is a joint arrangement whereby the
par-
ties that have joint control of the arrangement have
rights to the assets, and obligations for the liabilities, re-
lating to the arrangement. A joint venture is a joint ar-
rangement whereby the parties that have joint control
of the arrangement have rights to the net assets result-
ing from the arrangement. IFRS 11 requires joint opera-
tors to account for their share of assets and liabilities in
the joint operation (and their share of income and ex-
penses). Joint venturers are required to account for their
investment using the equity method. The withdrawal
of IAS 31 means the removal of the option to account
for joint ventures using either the proportionate consoli-
dation or the equity method. The equity method must
be applied in accordance with amended IAS 28.
638
The BMW Group uses a broad range of instruments on
international capital markets to manage its liquidity.
Due to the situation on the financial markets, the BMW
Group is increasingly investing in term deposits with
longer terms (i.e. money deposits that mature after more
than three months). Term deposits were previously re-
ported in the Cash Flow Statement on the line "Change
in other operating assets and liabilities” within operating
cash flows. Since the payments related to these money
deposits qualify as instruments pursuant to IAS 7.16c-d,
they are required to be presented as cash flows from
investing activities. In accordance with IAS 8.41 et seq.,
these amounts have been reclassified to the line items
"Investments in marketable securities and term deposits"
and "Proceeds from the sale of marketable securities and
from matured term deposits". As a result of the reclassi-
fication, the net cash inflow from operating activities
-81,305
-131,839
4
131,835
thereof property, plant and equipment
Total non-current assets
113 GROUP FINANCIAL STATEMENTS
Total assets
-Adjustments in - Restatements in
accordance with accordance with
IAS 8.14 IAS 8.41 et seq.
As originally
reported
in the previous year increased by €500 million, whereas
the net cash outflow for investing activities was in-
creased by the same amount.
in € million
1 January 2013.
Changes in Group Balance Sheet presentation
As reported
28,510
-34
thereof current tax
2
-356
Total non-current provisions and liabilities -
-52,682
-1,039
51,643
thereof other provisions
- 3,772
56
3,828
thereof deferred tax
Total current provisions and liabilities
thereof other provisions
thereof trade payables
-358
thereof other liabilities
-1,095
2,459
50,043
-1,082
51,134
- 3,411
3,412
1,082
- 2,319
-7,475
-10
-7,485
-7,066
-2
- 3,554
-7,064
thereof accumulated other equity
-45
thereof non-current other assets
954
-42
912
Total current assets
52,174
10
52,184
thereof inventories
9,585
10
9,595
thereof current other assets
4,265
33,122
-7
thereof cash and cash equivalents
-7,664
7
-7,671
Total equity
35,643
-43
35,600
thereof equity attributable to shareholders of BMW AG
35,455
-43
35,412
thereof revenue reserves
33,167
4,258
114
-1,237
2013
-2,564
9
-2,573
-7,893
-20
-7,913
-85
Changes in Group Income Statement presentation
-20
-73
Net profit
-875
Profit/loss before financial result
-7,986
8
-7,978
Result from equity accounted investments
398
9
407
Interest and similar income
184
-1
-183
Interest and similar expenses
-449
-20
-469
Financial result
5,340
-11
5,329
Attributable to shareholders of BMW AG
in € million
As originally
reported
― Adjustments in
accordance with
IAS 8.14
Restatements in
accordance with
IAS 8.41 et seq.
As reported
Revenues
Cost of sales
Basic earnings per share of common stock in €
Gross profit
Selling and administrative expenses
-76,058
-76,059
-60,784
-7
Profit/loss before tax
-60,791
-6
-15,268
5,303
-7,255
-2
-7,257
Other operating income
-841
1
842
Other operating expenses
-874
-11
-5,314
-15,274
Income taxes
93
5
-1,825
607
-28,843
Plant and machinery
-9,803
51
428
-9,341
-407
-8,812
third party land
Land, titles to land, buildings, including buildings on
11,153
1,923
1,443
369
-207
1,561
€ million
11,500
2,436
Notes to the Group Financial Statements
Notes to the Balance Sheet
22-Analysis of changes in Group tangible, intangible and investment assets 2014
in € million
- Acquisition and manufacturing cost
1.1.2014 Translation - Additions ― Reclassi- - Disposals
differences
fications
―31.12.
2014
15
Development costs
1,499
Goodwill
-374
Other intangible assets
1,459
15
62
Intangible assets
9,667
2,023
1,954
32,764
1,346
47,091
Leased products
32,486
BMW Group
14,576
12,047
36,969
Investments accounted for using the equity method
638
600
150
1,088
=
Investments in non-consolidated subsidiaries
-240
2
Net profit for the year after minority interest-
Profit attributable to common stock
Profit attributable to preferred stock.
Average number of common stock shares in circulation
Average number of preferred stock shares in circulation
Other facilities, factory and office equipment
2,355
-65
-207
32
-149
-2,510
Advance payments made and construction in progress
-1,145
-2,972
-1,489
-2,483
1
2,014
Property, plant and equipment
42,982
916
4,539
-37
124
(2013: negative amount of €10 million) and within
"Derivative financial instruments" with a negative
amount of €141 million (2013: positive amount of
€2 million).
Other comprehensive income arising at the level of
equity accounted investments is reported in the
Statement of Changes in Equity within “Translation
differences" with a positive amount of €140 million
thereof KPMG AG Wirtschaftsprüfungsgesellschaft-
thereof KPMG AG Wirtschaftsprüfungsgesellschaft-
Fee expense
thereof KPMG AG Wirtschaftsprüfungsgesellschaft-
Other services
Tax advisory services
- thereof KPMG AG Wirtschaftsprüfungsgesellschaft
Other attestation services
thereof KPMG AG Wirtschaftsprüfungsgesellschaft
Audit of financial statements
2013
2014
amounted to €23 million (2013: €26 million) and consists
of the following:
in € million
The fee expense pursuant to § 314 (1) no. 9 HGB recog-
nised in the financial year 2014 for the Group auditors
Fee expense
122
The number of employees at the end of the reporting period is disclosed in the Combined Management Report.
107,222
113,303
-7,165
-7,560
-100,057
-105,743
2013*
15
-14
3
3
98-Notes
Equity
96 Group Statement of Changes in
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
90
90-GROUP FINANCIAL STATEMENTS
Income Statements
26
9
6
2014
23
1
2
2
3
1
-7
4
2
1
3
2
1
98 Accounting Principles and
Policies
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
- thereof 186 (2013: 96) at proportionately-consolidated entities
Apprentices and students gaining work experience
8.85
€
8.08
-8.83
€
Basic earnings per share of preferred stock are com-
puted on the basis of the number of preferred stock
shares entitled to receive a dividend in each of the rele-
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Dividend per share of preferred stock
Dividend per share of common stock
Basic earnings per share of common stock
Basic earnings per share of preferred stock
53,993,635
number 54,259,767
-601,995,196
-601,995,196
number
437.5
480.4
€ million
4,865.3
5,317.7
€ million
5,302.8
5,798.1
8.10
€
2.90
2.60
Employees
was:
The average number of employees during the year
8,992
9,764
-1,591
1,670
-7,401
-8,094
Personnel expenses include €42 million (2013: €48 mil-
lion) of expenditure incurred to adjust the workforce size.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
― thereof 2 (2013: 3) at proportionately-consolidated entities
Average number of employees
Personnel expenses
Social security, retirement and welfare costs
Wages and salaries
2013*
2014
in € million
The income statement includes personnel expenses as follows:
19-Other disclosures relating to the income statement
Personnel expenses
vant financial years. As in the previous year, diluted
earnings per share correspond to basic earnings per
share.
2.62
-2.92
€
thereof pension costs: €991 million (2013: €958 million)
The total fee comprises expenses recorded by BMW AG,
Munich, and all consolidated subsidiaries.
The fee expense shown for KPMG AG Wirtschaftsprü-
fungsgesellschaft, Berlin, relates only to services pro-
vided on behalf of BMW AG, Munich, and its German
subsidiaries.
20-Share-based remuneration
Financial instruments used for hedging purposes
40
-2,298
Remeasurement of the net defined benefit liability for pension plans
Available-for-sale securities
After
tax
2013*
Deferred
taxes
Before
tax
After
tax
2014
Deferred
taxes
Before
tax
in € million
Deferred taxes on components of other comprehensive income are as follows:
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Other comprehensive income for the period after tax
1,254
-2,298
318
-706
-633
-764
-407
-732
-7
-2,194
Other comprehensive income from equity accounted investments
Currency translation foreign operations
-48
-706
-34
-719
47
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
1,254
-779
-633
-8
-7
-633
2,033
-764
-2,298
1,438
-3,736
Other comprehensive income
-764
-48
-1
-425
1,357
-1,475
27
-19
8
6
936
-372
1,308
-1,592
932
-179
--255
-1,536
Remeasurement of the net defined benefit liability for pension plans
in € million
Other comprehensive income for the period after tax comprises the following:
21-Disclosures relating to total comprehensive income
Further details on the remuneration of the Board of
Management are provided in the 2014 Compensation
Report, which is part of the Combined Management
Report.
grant of the share-based remuneration components
was €1,479,939 (2013: €1,453,500), based on a total of
17,712 shares (2013: 19,196 shares) of BMW AG com-
mon stock or a corresponding cash-based settlement
measured at the relevant market share price prevailing
on the grant date.
The fair value of the programmes for Board of Manage-
ment members and department heads at the date of
The total expense recognised in 2014 for the share-based
remuneration component of eligible current and former
Board of Management members and department heads
was €1,449,486 (2013: €989,912).
The total carrying amount of the provision for the share-
based remuneration component of eligible current and
former Board of Management members and depart-
ment heads at 31 December 2014 was €3,096,674 (2013:
€1,647,188).
Notes to the Group Financial Statements
Notes to the Statement of Comprehensive Income
BMW Group
Deferred taxes
123 GROUP FINANCIAL STATEMENTS
The share-based remuneration component is measured
at its fair value at each balance sheet date between grant
and settlement date, and on the settlement date itself.
The appropriate amounts are recognised as personnel
expense on a straight-line basis over the vesting period
and reported in the balance sheet as a provision.
With effect from the financial year 2012, qualifying de-
partment heads are also entitled to opt for a share-based
remuneration component, which, in most respects, is
comparable to the share-based remuneration arrange-
ments for Board of Management members.
separate custodian account for each member concerned
(annual tranche). Each annual tranche is subject to a
holding period of four years (vesting period). Once the
holding period is fulfilled, BMW AG grants one addi-
tional share of BMW AG common stock for each three
held or, at its discretion, pays the equivalent amount in
cash (share-based remuneration component) provided
that the term of office has not been terminated before
the end of the agreed contract period (except in the case
of death or invalidity).
Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Government grants and government assistance
Income from asset-related and performance-related
grants, amounting to €30 million (2013*: €25 million)
and €73 million (2013: €73 million) respectively, were
recognised in the income statement in 2014.
Each Board of Management member is required to
invest 20% of his/her total bonus (after tax) in shares
of BMW AG common stock, which are recorded in a
For financial years beginning after 1 January 2011,
BMW AG has added a share-based remuneration com-
ponent to the existing compensation system for Board
of Management members.
In the case of the Employee Share Programme, non-vot-
ing shares of preferred stock in BMW AG were granted
to qualifying employees during the financial year 2014
at favourable conditions (see note 35 for the number
and price of issued shares). The holding period for these
shares is up to 31 December 2017. The BMW Group re-
corded a personnel expense of €6 million (2013: €5 mil-
lion) for the Employee Share Programme in 2014, cor-
responding to the difference between the market price
and the reduced price of the shares of preferred stock
purchased by employees. The Board of Management re-
serves the right to decide anew each year with respect
to an Employee Share Programme.
The BMW Group operates three share-based remunera-
tion schemes, namely the Employee Share Programme
(for entitled employees), share-based commitments to
members of the Board of Management and share-based
commitments to senior heads of department.
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
116-Notes to the Income Statement
123-Notes to the Statement
The cash-settlement obligation for the share-based re-
muneration component is measured at its fair value at
the balance sheet date (based on the closing price of
BMW AG common stock in Xetra trading at 31 Decem-
ber 2014).
2013*
Items not expected to be reclassified to the income statement in the future
- thereof gains/losses arising in the period under report
-1,939
-1,357
-2,194
-40
-69
48
-109
8
40
936
-372
Available-for-sale securities
-706
-1,592
2014
2013*
2014
Items expected to be reclassified to the income statement in the future
Currency translation foreign operations
Deferred taxes
Other comprehensive income from equity accounted investments
thereof reclassifications to the income statement
thereof gains/losses arising in the period under report
Financial instruments used for hedging purposes
- thereof reclassifications to the income statement
1,308
-2,298
638
?
-Trans-
lation
differ-
ences
Current - Changes
Dis-
year
not effect-
posals
31.12.
2014
ing net
income
Carrying amount
31.12.
31.12.
2014
20132
4,645
1,068
-1,825
3,888
1.1.20141
5,453
Depreciation and amortisation
5 Including assets under construction of €2,570 million.
Investments in non-consolidated subsidiaries
205
66
30
240
Participations
571
6
2
575
Non-current marketable securities
Other investments
776
72
སྐྱ།
32
815
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Including mergers.
3 Amended for the effect of refining the accounting policy for leased products as described in note 6 to the Group Financial Statements 2013.
4 This line includes the adjustments described in note 24 to the Group Financial Statements 2013.
125 GROUP FINANCIAL STATEMENTS
וי
5,022
.5
-5,625
22,071
431
- 2,461
1,129
-23,834
-1,809
52
-181
-145
-1,897
-8,930
613
- 4,890
-6,771
Land, titles to land, buildings, including buildings on
―third party land
Plant and machinery
-536
27,729
568
2,924
1,312
29,909
-4,178
- Development costs
38
85
5
364
369
- Goodwill
665
-10
-178
92
-761
682
-788
- Other intangible assets
5,315
10
1,246
1,917
4,654
6,499
6,179
Intangible assets
3,849
-282
638
237
361
in € million
-Acquisition and manufacturing cost
1.1.20132
Adjust--Translation - Additions - Reclassi- - Disposals ―31.12.
ment differences
fications
2013
575
66
641
815
107
57
867
וי
Development costs
Goodwill
Other intangible assets
Intangible assets
8,488
374
-1,008
Analysis of changes in Group tangible, intangible and investment assets 2013¹
9,870
3 Including assets under construction of €1,679 million.
149 Other Disclosures
165 Segment Information
41
57
-226
Participations
Non-current marketable securities
Other investments
1 Including first-time consolidations.
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124-Notes to the Balance Sheet
2 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
1,744
473
2,217
565
-2,331
Advance payments made and construction in progress
Property, plant and equipment
-2,617
-37
39,936
-429
1,617
4,494
-1,223
3
2,971
1,136
42,865
Leased products4
31,412
-46
-734
13,192
11,338
32,486
Investments accounted for using the equity method
514
-121
-15
178
-55
9,667
374
22
1,453
587
11,494
Land, titles to land, buildings, including buildings on
third party land
- 8,182
-125
489
2,0143
17,182
226
-8,721
Plant and machinery.
26,823
-212
-2,210
-982
961
28,842
Other facilities, factory and office equipment
-2,314
51
- Other facilities, factory and office equipment
-2,971 Advance payments made and construction in progress -
15,168 Property, plant and equipment
6,572
293
228
'|
ཆ།
-57
' |
262
553
548
Other investments
126
23-Intangible assets
Intangible assets mainly comprise capitalised develop-
ment costs on vehicle and engine projects as well as
subsidies for tool costs, licences, purchased development
projects, software and purchased customer bases.
Amortisation on intangible assets is presented in cost of
sales, selling expenses and administrative expenses.
Other intangible assets include a brand-name right
amounting to €46 million (2013: €43 million). This
line item also includes goodwill of €33 million (2013:
€33 million) allocated to the Automotive cash-gener-
ating unit (CGU) and goodwill of €331 million (2013:
€336 million) allocated to the Financial Services CGU,
whereby the decrease compared to 31 December 2013
related to the sale of Noord Lease B.V., Groningen.
Intangible assets amounting to €46 million (2013:
€43 million) are subject to restrictions on title.
As in the previous year, there was no requirement to
recognise impairment losses or reversals of impair-
ment losses on intangible assets in 2014.
As in the previous year no borrowing costs were recog-
nised as a cost component of intangible assets during
the year under report.
An analysis of changes in intangible assets is provided
in note 22.
90-GROUP FINANCIAL STATEMENTS
Income Statements
90
90 Statement of
Comprehensive Income
-Non-current marketable securities
92 Balance Sheets
147 Investments in non-consolidated subsidiaries
401 Participations
387
27,697
-2,9715
15,168
-2,604 - Advance payments made and construction in progress -
13,341 Property, plant and equipment
6,944
-175
-132
3,215
3,280
6,572
25,914
24,468
Leased products4
514
==
58
170
-16
-75
-57
-74
166
188
Investments accounted for using the equity method
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
Present value of future minimum lease payments
due within one year
due between one and five years
due later than five years
៦៩៨
14
-13
-53
44
119
71
8
3
»
-25
-7
-12
-13
45
23
28
due later than five years
due between one and five years
due within one year
Interest portion of the future minimum lease payments
98-Notes
98 Accounting Principles and
Policies
24-Property, plant and equipment
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124-Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
A break-down of the different classes of property, plant
and equipment disclosed in the balance sheet and
changes during the year are shown in the analysis of
changes in Group tangible, intangible and investment
assets in note 22.
As in the previous year, there was no requirement to
recognise impairment losses in 2014.
No borrowing costs were recognised as a cost compo-
nent of property, plant and equipment during the year
under report.
1,089
Property, plant and equipment include a total of €67 mil-
lion (2013: €42 million) relating to land and operational
buildings, for which economic ownership is attributable
to the BMW Group due to the nature of the lease ar-
rangements (finance leases). Leases to which BMW AG
is party, with a carrying amount of €64 million (2013:
€37 million), run for periods up to 2028 at the latest and
contain price adjustment clauses as well as extension
and purchase options. The asset leased by BMW Tokyo
Corp., Tokyo, has a carrying amount of €2 million (2013:
€2 million) under a lease with a remaining term of
17
years. BMW Osaka Corp., Osaka, is party to finance
leases running until 2022 for operational buildings with
a carrying amount of €1 million at 31 December 2014
(2013: €2 million).
Minimum lease payments of the relevant leases are as
follows:
31.12.2014
31.12.2013
Total of future minimum lease payments
due within one year
due between one and five years
due later than five years
in € million
5
2,494
26,551
57
16
459
408
553
Other investments
Depreciation and amortisation
-Trans- -Current - Changes
Carrying amount
ment
lation
differ-
ences
year
not effect-
Dis-
posals
31.12.
2013
31.12.
2013
31.12.
2012
ing net
income
153
1.1.20132 Adjust-
264
387 Participations
3,401
3,462
6,804
30,165
25,914
Leased products
1,088
638
==
Investments accounted for using the equity method
-76
-16
62
-164
-166
-Investments in non-consolidated subsidiaries
188
-152
57
397
244
Non-current marketable securities.
- 4,347 Development costs
- Goodwill
4,141
251
34
3,831
4,890
4,502
21,099
-166
- 2,084
946
22,071
-6,771
- 5,705
Plant and machinery.
-1,785
-40
-159
-109
1,795
536
- 530
Other facilities, factory and office equipment
-53
3,667
Land, titles to land, buildings, including buildings on
third party land
Intangible assets
-1,069
565
4,645
5
5
5,022
-369
369
516
-11
-178
-259
-18
-788
491
4,662
-11
1,247
583
5,315
6,179
5,207
Other intangible assets
665
(€48 million; 2013: €44 million) is reported under "Other
financial assets". Investment funds are held to secure
these obligations. These funds are managed by BMW
Trust e. V., Munich, as part of a Contractual Trust
Arrangement (CTA) and are therefore netted against
the corresponding settlement arrears for pre-retirement
part-time work arrangements.
121 GROUP FINANCIAL STATEMENTS
2014
Non-current provisions and liabilities
Current financial liabilities
Current provisions and liabilities
450
-237
-236
4,215
3,363
8
Reconciliation of aggregated financial information
Assets
-7,575
-5,468
-20
11
Non-current financial liabilities
Equity and liabilities
Equity
10
2,741
1
Cash and cash equivalents
976
593
13
4
Current assets
3,404
2,727
19
2,910
-1,868
12
92
6
4,665
- 3,600
-8
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
If the Group's share of the at-equity result of BMW
Brilliance Automotive Ltd., Shenyang, were reported
as part of the Automotive segment's EBIT, the EBIT
27-Other investments
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124-Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Other investments relate to investments in non-con-
solidated subsidiaries, interests in associated com-
panies not accounted for using the equity method
and joint operations, participations and non-current
marketable securities.
The additions to investments in subsidiaries relate
primarily to a share capital increase at the level of
BMW iVentures B.V., Rijswijk.
90-GROUP FINANCIAL STATEMENTS
3
6
635
5
Net assets
2,910
-1,868
12
6
Group's interest in net assets (50%)
4,171
1,455
6
3
Eliminations
Carrying amount
-373
-299
1,082
-934
Non-current assets
Disclosures relating to the balance sheet
2013
-3
5
14,712
12,906
Contingent rents of €56 million (2013: €171 million),
based principally on the distance driven, were recog-
nised in income. Some of the agreements contain price
adjustment clauses as well as extension and purchase
options.
Impairment losses recognised on leased products
totalled €137 million (2013: €139 million), while rever-
sals of impairment losses totalled €44 million (2013:
€104 million).
An analysis of changes in leased products is provided in
note 22.
26-Investments accounted for using the equity method
Investments accounted for using the equity method re-
late to the joint ventures BMW Brilliance Automotive
Ltd., Shenyang (BMW Brilliance) on the one hand and
DriveNow GmbH & Co. KG, Munich, and DriveNow
Verwaltungs GmbH, Munich, (DriveNow) on the other.
The BMW Brilliance Automotive Ltd., Shenyang, joint
venture (in which BMW has a 50% shareholding)
produces various BMW brand models for the Chinese
market and also has engine manufacturing facilities,
which supply the joint venture's two plants with petrol
engines.
The DriveNow joint venture - comprising DriveNow
GmbH & Co. KG, Munich, and DriveNow Verwaltungs
GmbH, Munich, (both 50% shareholdings) - - is a car
sharing provider which currently offers individual mo-
bility services in major German cities and, going for-
ward, increasingly outside Germany.
The accounting treatment applied to investments
accounted for using the equity method is described in
note 6. Financial information relating to equity ac-
counted investments is aggregated in the following
table:
in € million
Disclosures relating to the income statement
Revenues
6,587
-7,442
6,314
-7,267
11
.6
41
31
74
48
127 GROUP FINANCIAL STATEMENTS
Scheduled depreciation
25-Leased products
in € million
cial services business. Minimum lease payments of
€14,712 million (2013: €12,906 million) from non-can-
cellable operating leases fall due as follows:
31.12.2014 ―31.12.2013
within one year
between one and five years
later than five years
Minimum lease payments
The BMW Group, as lessor, leases out its own products
and those of other manufacturers as part of its finan-
Additions to participations mainly reflect the purchase
of available-for-sale marketable securities.
18-Earnings per share
Interest income
-285
Other comprehensive income
Total comprehensive income
1,339
834
-5
Dividends received by the Group
-147
127
128
in € million
BMW Brilliance -
DriveNow
2014
2013
449
Income taxes
-16
24
Interest expenses
BMW Brilliance -
-DriveNow
2014
2013
2014
2013
Profit/loss before financial result
11,550
-32
18
247
-157
1,702
1,096
.5
-8,963
margin would increase by 0.9 percentage points (2013:
0.6 percentage points) to 10.5% (2013: 10.0%).
The amount by which the value of the investment funds
exceeds obligations for part-time working arrangements
Impairment losses on participations - recognised with
income statement effect – related mainly to the invest-
ment in SGL Carbon SE, Wiesbaden, which was written
down on the basis of objective criteria.
--80
1,099
481
1,580
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
-19
At the end of the reporting period, impairment allow-
ances of €515 million (2013: €481 million) were recog-
nised on a group basis on gross receivables from sales
financing totalling €38,780 million (2013*: €33,740 mil-
lion). Impairment allowances of €1,000 million (2013:
€1,099 million) were recognised at 31 December 2014
on a specific item basis on gross receivables from sales
financing totalling €12,951 million (2013: €12,211 mil-
lion).
-61
-15
Balance at 1 January
Allocated/reversed
Utilised
Exchange rate impact and other changes
Balance at 31 December
Allowance for impairment recognised on a
- Total
specific item basis
group basis
1,268
411
1,679
-194
-104
298
-302
-317
29-Financial assets
116 Notes to the Income Statement
123 Notes to the Statement
239
222
297
825
7,408
8,152
thereof non-current
thereof current
2,024
2,593
5,384
5,559
The decrease in derivative instruments was primarily
attributable to negative market price developments of
currency derivatives.
The rise in marketable securities and investment funds
mainly reflects an increase in the BMW Group's strate-
gic liquidity reserve.
Disposals of investments in subsidiaries result from the
first-time consolidation of six European branches.
32
12
4,013
3,060
3,972
of Comprehensive Income
124-Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Financial assets comprise:
in € million
Derivative instruments
Marketable securities and investment funds
Loans to third parties
in € million
Credit card receivables
Financial assets
€10,808 million (2013*: €9,746 million). No impairment
losses were recognised for these balances.
The estimated fair value of collateral received for receiv-
ables on which impairment losses were recognised to-
talled €25,443 million (2013: €23,689 million) at the end
of the reporting period. This collateral related primarily
to vehicles. The carrying amount of assets held as col-
lateral and taken back as a result of payment default
amounted to €41 million (2013: €30 million).
* Prior year figures amended.
31.12.2014
31.12.2013
2,888
Other
2013
Receivables from sales financing which were not over-
due at the end of the reporting period amounted to
* Balance at 1 January adjusted due to deconsolidation of entities.
4,816
9,748
- 98
16,706
14,662
4,898
-10,175
4,378
8,813
11,231
-102
15,175
13,276
1,531
1,386
Contingent rents recognised as income (generally re-
lating to the distance driven) amounted to €2 million
(2013: €3 million). Write-downs on finance leases
amounting to €183 million (2013: €159 million) were
measured and recognised on the basis of specific credit
risks. Non-guaranteed residual values that fall to the
Allowances for impairment and credit risk
in € million
benefit of the lessor amounted to €140 million (2013:
€120 million).
85
Receivables from sales financing include €37,438 mil-
lion (2013: €32,616 million) with a remaining term of
more than one year.
5,366
due later than five years
A break-down of the different classes of other invest-
ments disclosed in the balance sheet and changes
during the year are shown in the analysis of changes in
Group tangible, intangible and investment assets in
note 22.
130
129 GROUP FINANCIAL STATEMENTS
28-Receivables from sales financing
Receivables from sales financing, totalling €61,024 mil-
lion (2013: €54,117 million), comprise €45,849 million
(2013: €40,841 million) for credit financing for retail
in € million
customers and dealers and €15,175 million (2013:
€13,276 million) for finance leases. Finance leases are
analysed as follows:
Unrealised interest income
31.12.2014
Gross investment in finance leases
due within one year
due between one and five years
due later than five years
Present value of future minimum lease payments
due within one year
due between one and five years
31.12.2013
31.12.2014
109
31.12.2013
482
-1,580
239
41
280
-20
-391
Exchange rate impact and other changes
Balance at 31 December
34
-12
-46
1,000
515
1,515
-1,098
Utilised
-371
Balance at 1 January
Gross carrying amount
Allocated/reversed
Allowance for impairment
Net carrying amount
62,539
55,697
-1,580
61,024
-1,515
Allowances on receivables from sales financing - which only arise within the Financial Services segment - developed
as follows:
2014
in € million
Allowance for impairment recognised on a
specific item basis
Total
group basis
54,117
-3
-15,861
144
-383
thereof assets
thereof pension provision
4,601
20,462
522
-145
-534
-679
Translation differences and other changes
3
4,603
-519
31 December 2014
4,604
-3,812
140
Pensions and other benefits paid
362
4
362
Net defined
benefit liability
3,808
-12,447
-1
-16,255
-Total
Plan assets
Defined benefit
obligation
Current service cost
Expense/income
1 January 2013
in € million
- Limitation of
the net defined
benefit asset to
the asset ceiling
-71
-540
Employee contributions
amounts included in interest income
Gains (-) or losses (+) on plan assets, excluding
Remeasurements
-8
-8
-8
Gains (-) or losses (+) arising from settlements.
Gains (-) or losses (+) arising from changes in
demographic assumptions
-3
-3
Past service cost
-88
88
628
362
Interest expense (+)/income (-)
-3
53
Gains (-) or losses (+) arising from changes in
financial assumptions
3,490
-383
-383
Transfers to fund
-24
-24
-3,490
-53
-1,394
3,490
53
-1,394
-1,394
-24
experience adjustments
Gains (-) or losses (+) arising from
asset to the asset ceiling
Changes in the limitation of the net defined benefit
-71
Interest expense (+)/income (-).
Net interest expense on the net defined benefit liability
is presented within the financial result. All other com-
ponents of pension expense are presented in the income
statement under cost of sales, selling and administrative
expenses.
-438
Comprehensive Income
90 Statement of
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
2,301
2,297
92 Balance Sheets
-13,461
-44
-43
154
-197
Translation differences and other changes
-136
-136
15,758
324
94 Cash Flow Statements
98-Notes
337
to a positive amount of €3,519 million (2013: negative
amount of €780 million) and related mainly to the
lower discount rates used in Germany, the UK and
the USA.
rise
Remeasurements on the obligations side: gave
-2
2,303
thereof assets
96 Group Statement of Changes in
Equity
thereof pension provision
Employee contributions
Transfers to fund
149 Other Disclosures
165 Segment Information
of Comprehensive Income
124-Notes to the Balance Sheet
123 Notes to the Statement
116 Notes to the Income Statement
98 Accounting Principles and
Policies
31 December 2013
-460
Pensions and other benefits paid
-64
4
demographic assumptions.
Gains (-) or losses (+) arising from changes in
amounts included in interest income
Gains (-) or losses (+) on plan assets, excluding
Remeasurements
2
Gains (-) or losses (+) arising from changes in
financial assumptions
-2
Gains (-) or losses (+) arising from settlements.
-53
-53
-53
Past service cost-
127
127
2
-818
Changes in the limitation of the net defined benefit
asset to the asset ceiling
64
-509
-509
-509
-34
34
1
-818
4
-481
-818
4
-481
481
34
experience adjustments
Gains (-) or losses (+) arising from
565
131 GROUP FINANCIAL STATEMENTS
-337
Current service cost
918
851
944
-851
9,227
-7,893
11,089
9,595
133 GROUP FINANCIAL STATEMENTS
At 31 December 2014, inventories measured at their
net realisable value amounted to €723 million (2013:
€592 million) and are included in total inventories of
€11,089 million (2013*: €9,595 million). Write-downs
to net realisable value amounting to €29 million (2013:
€28 million) were recognised in 2014. Reversals of
write-downs amounted to €3 million (2013: €4 million).
*Prior year figures have been adjusted in accordance with IAS 8, see note 9.
33-Trade receivables
Trade receivables totalling €2,153 million (2013: €2,449 million) include an unchanged amount of €47 million which
is due later than one year.
Allowances for impairment and credit risk
in € million
31.12.2014
31.12.2013
Gross carrying amount
Allowance for impairment -
Net carrying amount
Allowances on trade receivables developed as following during the
2014
in € million
Balance at 1 January
Allocated/reversed
31.12.2013
Utilised
31.12.2014
Finished goods and goods for resale
Inventories
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124-Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
thereof non-current
thereof current
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Receivables from subsidiaries include trade receivables
of €41 million (2013: €102 million) and financial receiva-
bles of €680 million (2013: €677 million). They include
€293 million (2013: €253 million) with a remaining term
of more than one year.
Receivables from other companies in which an invest-
ment is held include €1,054 million (2013*: €905 mil-
lion) due within one year.
Prepayments of €1,323 million (2013*: €1,074 million)
relate mainly to prepaid interest, insurance premiums
and commission paid to dealers. Prepayments of
-1,094
5,038
912
4,258
€674 million (2013: €565 million) have a maturity of less
than one year.
Collateral receivables comprise mainly customary
collateral (banking deposits) arising on the sale of re-
ceivables.
In the financial year 2014, expected reimbursement
claims totalling €641 million arising in connection with
warranty arrangements with suppliers were reclassified
from other provisions to sundry other assets.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
32-Inventories
Inventories comprise the following:
in € million
Raw materials and supplies
Work in progress, unbilled contracts
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Exchange rate impact and other changes
Balance at 31 December
*Including entities consolidated for the first time during the financial year.
Total
group basis
105
6
111
-2
4
-6
-8
-8
-2
-3
97
106
Some trade receivables were overdue for which an impairment loss was not recognised. Overdue balances are
analysed into the following time windows:
in € million
1-30 days overdue
31-60 days overdue
61-90 days overdue
91-120 days overdue
More than 120 days overdue
31.12.2014
31.12.2013
100
80
Allowance for impairment recognised on a
specific item basis
83
7
76
2013
in € million
Balance at 1 January
Allocated/reversed
Utilised
Exchange rate impact and other changes
Balance at 31 December
2,236
-2,555
-83
2,153
-106
2,449
Comprehensive Income
year
Allowance for impairment recognised on a
specific item basis
- Total
group basis
98
-107
-6
-2
-8
-15
-15
-1
-1
under report:
-73
90 Statement of
90
422
3,872
2,973
Receivables relating to credit card business comprise the following:
in € million
31.12.2014
Gross carrying amount
Allowance for impairment
Net carrying amount
31.12.2013
-247
231
-8
-9
239
222
Allowances for impairment losses on receivables relating to credit card business developed as follows during the
year under report:
2014
in € million
Balance at 1 January
Allocated/reversed
Utilised
Exchange rate impact and other changes
Balance at 31 December
Allowance for impairment recognised on a
specific item basis
group basis
532
- Total
- 2,478
595
2,745
Marketable securities and investment funds relate to available-for-sale financial assets and comprise:
in € million
31.12.2014 ―31.12.2013
Stocks
Fixed income securities
Other debt securities
Marketable securities and investment funds
100
87
-3,340
2,551
532
3,972
422
3,060
The contracted maturities of debt securities are as follows:
in € million
31.12.2014 ―31.12.2013
Fixed income securities
due within three months
due later than three months
Other debt securities
- due within three months
due later than three months
Debt securities
Allowances for impairment and credit risk
-73
9
6
8
in € million
31.12.2014
31.12.2013"
Other taxes
1,078
867
Receivables from subsidiaries
-721
-779
Receivables from other companies in which an investment is held
1,055
950
Prepayments
1,323
-1,074
Collateral receivables
-412
-706
Sundry other assets
-1,543
-794
Other assets
6,132
5,170
90-GROUP FINANCIAL STATEMENTS
Other assets comprise:
31-Other assets
settled after more than twelve months. Some of the
claims may be settled earlier than this depending on
the timing of proceedings.
Income tax assets totalling €1,906 million (2013:
€1,151 million) include claims amounting to €653 mil-
lion (2013: €530 million) which are expected to be
1
8
9
6
8
1
8
2013
in € million
Balance at 1 January
Allocated/reversed
Utilised
Income Statements
Exchange rate impact and other changes
Allowance for impairment recognised on a
specific item basis
group basis
-Total
13
6
-10
13
36
-10
9
9
132
30 Income tax assets
Balance at 31 December
337
30
8
2.00
3.40
2.43
4.40
3.48
4.46
3.32
0.03
0.05
The following mortality tables are applied in countries, in which the BMW Group has significant defined benefit plans:
Germany
Mortality Table 2005 G issued by Prof. K. Heubeck (with invalidity rates reduced by 50%)
United Kingdom - S1PA tables weighted accordingly, and S1NA tables minus 2 years, both with a minimum long term annual improvement allowance
USA
RP2014 Mortality Table with collar adjustments projected with MP2014
In Germany, the so-called "pension entitlement trend"
(Festbetragstrend) also represents a significant actuarial
assumption for the purposes of determining benefits
payable at retirement and was left unchanged at 2.0%.
By contrast, the salary level trend assumption is subject
to a comparatively low level of sensitivity within the
BMW Group. The calculation of the salary level trend in
31 December
in € million
the UK also takes account of restrictions due to caps
and floors.
Based on the measurement principles contained in
IAS 19, the following balance sheet carrying amounts
apply to the Group's pension plans:
Germany - - United Kingdom
Other
-Total
2014-2013-2014 -2013 - 2014 -2013 - 2014 - 2013
Present value of defined benefit obligations
Fair value of plan assets
Effect of limiting net defined benefit asset to asset ceiling
Carrying amounts at 31 December
thereof pension provision
thereof assets
3.50
9,636 -7,400 -9,499 -7,409 -1,327
-7,323 -6,749 -7,734 -6,076
2.10
1.60
2014 2013
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124-Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
36-Pension provisions
Pension provisions are recognised as a result of commit-
ments to pay future vested pension benefits and cur-
rent pensions to present and former employees of the
BMW Group and their dependants. Depending on the
legal, economic and tax circumstances prevailing in each
country, various pension plans are used, based generally
on the length of service, salary and remuneration struc-
ture of the employees involved. Due to similarity of na-
ture, the obligations of BMW Group companies in the
USA and of BMW (South Africa) (Pty) Ltd., Pretoria, for
post-retirement medical care are also accounted for as
pension provisions in accordance with IAS 19.
Post-employment benefit plans are classified as either
defined contribution or defined benefit plans. Under
defined contribution plans an enterprise pays fixed con-
tributions into a separate entity or fund and does not
assume any other obligations. The total pension expense
for defined contribution plans of the BMW Group
amounted to €60 million (2013: €51 million). Employer
contributions paid to state pension insurance plans to-
talled €517 million (2013: €470 million).
Under defined benefit plans the enterprise is required to
pay the benefits granted to present and past employees.
Defined benefit plans may be funded or unfunded,
the latter sometimes covered by accounting provisions.
Pension commitments in Germany are mostly covered
by assets contributed to BMW Trust e. V., Munich,
in conjunction with a contractual trust arrangement
(CTA). The main other countries with funded plans
are the UK, the USA, Switzerland, the Netherlands,
Belgium and Japan.
In the case of externally funded plans, the defined bene-
fit obligation is offset against plan assets measured at
their fair value. Where the plan assets exceed the pen-
sion obligations and the BMW Group has a right of re-
imbursement or a right to reduce future contributions,
it reports an asset (within "Other financial assets") at
an amount equivalent to the present value of the future
economic benefits attached to the plan assets. If the
plan is externally funded, a liability is recognised under
pension provisions where the benefit obligation exceeds
fund assets.
Remeasurements of the net liability arise from changes
in the present value of the defined benefit obligation,
the fair value of the plan assets or the asset ceiling. Rea-
sons for remeasurements include changes in financial
and demographic assumptions as well as changes in the
detailed composition of beneficiaries. Remeasurements
are recognised immediately in “Other comprehensive
income" and hence directly in equity (within revenue
reserves).
137 GROUP FINANCIAL STATEMENTS
Past service cost arises where a BMW Group entity in-
troduces a defined benefit plan or changes the benefits
payable under an existing plan. These costs are recog-
nised immediately in the income statement. Similarly,
gains and losses arising on the settlement of a defined
benefit plan are recognised immediately in the income
statement.
The defined benefit obligation is calculated on an actu-
arial basis. The actuarial computation requires the use
of estimates and assumptions, which depend on the
economic situation in each particular country. The most
important assumptions applied by the BMW Group are
shown below. The following weighted average values
have been used for Germany, the United Kingdom and
other countries:
31 December
in %
Discount rate
Pension level trend
2014
Germany
-2013
=
United Kingdom
-Other
2014 -2013
-804
2,313
651 1,765 1,333
mum amount.
Defined benefit obligations also remain in Germany, for
which benefits are determined either by multiplying
a fixed amount by the number of years of service or on
the basis of an employee's final salary. The defined bene-
fit plans have been closed to new entrants. With effect
from 1 January 2014, new employees receive a defined
contribution entitlement with minimum rate of return.
The assets of the German pension plans are administered
by BMW Trust e. V., Munich, (German registered asso-
ciation) in accordance with a CTA. The representative
bodies of this entity are the Board of Directors and the
Members' General Meeting. BMW Trust e. V., Munich,
currently has seven members and three Board of Direc-
tors members elected by the Members' General Meeting.
The Board of Directors is responsible for investments,
drawing up and deciding on investment guidelines as
well as monitoring compliance with those guidelines.
The members of the association can be employees, senior
executives and members of the Board of Directors. An
ordinary Members' General Meeting takes place once
every calendar year and deals with a range of matters,
including receiving and approving the association's an-
nual report, ratifying the activities of the Board of Direc-
tors and adopting changes to the association's statutes.
United Kingdom
In the United Kingdom, the BMW Group has defined
benefit plans, which are primarily employer-funded
combined with employee-funded components based
on the conversion of employee remuneration. These
plans are subject to statutory minimum recovery require-
ments. Benefits paid in conjunction with these plans
comprise old-age retirement pensions as well as inva-
lidity and surviving dependants' benefits. These de-
fined benefit plans have been closed to new entrants,
who, since 1 January 2014, are covered by a defined
contribution plan.
The pension plans are administered by BMW Pension
Trustees Limited, Hams Hall, and BMW (UK) Trustees
Limited, Hams Hall, both trustee companies which act
independently of the BMW Group. BMW (UK) Trustees
Limited, Hams Hall, is represented by 14 trustees and
BMW Pension Trustees Limited, Hams Hall, by five
trustees. A minimum of one third of the trustees must
be elected by plan participants. The trustees represent
the interests of plan participants and decide on invest-
ment strategies and plan amendments. Recovery con-
tributions to the funds are determined in agreement
with the BMW Group.
USA
The BMW Group's defined benefit plans in the USA are
primarily employer-funded and include final salary
pension plans and a post-retirement medical care plan.
Benefits paid in conjunction with these plans comprise
139 GROUP FINANCIAL STATEMENTS
old-age retirement pensions, early retirement benefits,
surviving dependants' benefits as well as post-retire-
ment medical care benefits.
Statutory minimum funding requirements apply to the
final salary pension plans. Plan participants are repre-
sented by a committee consisting of six members, which
is authorised to take all decisions pertaining to the rele-
vant pension plan, including plan structure, investments
in € million
Defined benefit
obligation
and selection of investment managers as well as regular
allocations and retrospective allocations to the plan.
The committee members are nominated by the manage-
ment of the relevant participating US entities. Plan
committees act in a fiduciary capacity and are subject to
statutory framework conditions.
The change in the net defined benefit liability for pen-
sion plans can be derived as follows:
Plan assets
Total Limitation of
the net defined
benefit asset to
the asset ceiling
Net defined
benefit liability
1 January 2014
Expense/income
-15,758
-13,461
2,297
4
-2,301
The Deferred Remuneration Retirement Plan is an em-
ployee-financed defined contribution plan with a mini-
mum rate of return. The fact that the plan involves a
minimum rate of return means that it is classified as a
defined benefit plan. Employees have the option to
waive payment of certain remuneration components in
return for a future benefit. Any employer social security
contributions saved are credited in the following year
to the individual's benefits account. The converted re-
muneration components and the social security contri-
butions saved are invested on capital markets. When
the benefit falls due, it is paid on the basis of the higher
of the value of the depot account or a guaranteed mini-
Both employer- and employee-funded benefit plans are
in place in Germany. Benefits paid in conjunction with
these plans comprise old-age retirement pensions as
well as invalidity and surviving dependents' benefits.
Germany
Numerous defined benefit plans are in place through-
out the BMW Group, the most significant of which are
described below.
2
525
949 20,462 15,758
636 15,861 13,461
4
2
4
317 4,603 2,301
-2,313
-652 -1,765 -1,333
526
―318 -4,604 - 2,303
-1
-1
—-1 ―-1 ―-2
94 Cash Flow Statements
138
90
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124-Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
The increase in defined benefit obligations results mainly
from the change in the discount rate used for the ac-
tuarial computation in Germany, the UK and the USA.
The provision for pension-like obligations for post-em-
ployment medical care in the USA and South Africa
amounts to €57 million (2013: €45 million) and is deter-
mined on a similar basis to the measurement of pension
obligations in accordance with IAS 19. Increased costs
do not have a direct impact on medical care obligations
relating to pensioners in the USA. In the case of South
Africa, however, it was assumed that costs would in-
crease in the long term by 8.3% (2013: 8.1%) p.a. The
expense recognised for obligations relating to post-em-
ployment medical care amounted to €8 million (2013:
income of €40 million).
90-GROUP FINANCIAL STATEMENTS
Income Statements
-26
92 Balance Sheets
90 Statement of
20
582
54,499,544
601,995,196
54,259,787 601,995,196 -601,995,196
90-GROUP FINANCIAL STATEMENTS
90
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124-Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
At 31 December 2014 common stock issued by BMW AG
was divided, as at the end of the previous year, into
601,995,196 shares of common stock with a par-value of
€1. Preferred stock issued by BMW AG was divided into
54,499,544 shares (2013: 54,259,787 shares) with a par-
value of €1. Unlike the common stock, no voting rights
are attached to the preferred stock. All of the Company's
stock is issued to bearer. Preferred stock bears an addi-
tional dividend of €0.02 share.
per
In 2014, a total of 239,777 shares of preferred stock was
sold to employees at a reduced price of €37.08 per share
in conjunction with the Company's Employee Share
Programme. These shares are entitled to receive divi-
dends with effect from the financial year 2015. 20 shares
of preferred stock were bought back via the stock ex-
change in conjunction with the Company's Employee
Share Programme.
Further information on share-based remuneration is
provided in note 20.
Issued share capital increased by €0.2 million as a re-
sult of the issue to employees of 239,757 shares of non-
voting preferred stock. The number of authorised shares
and the Authorised Capital of BMW AG amounted to
4.8 million shares and €4.8 million respectively at the
end of the reporting period. The Company is authorised
to issue 5 million shares of non-voting preferred stock
amounting to nominal €5.0 million prior to 14 May 2019.
The share premium of €14.6 million arising on the share
capital increase was transferred to capital reserves.
Capital reserves
Capital reserves include premiums arising from the issue
of shares and totalled €2,005 million (2013: €1,990 mil-
lion). The change related to the share capital increase in
conjunction with the issue of shares of preferred stock
to employees.
Revenue reserves
266,152
Revenue reserves comprise the post-acquisition and non-
distributed earnings of consolidated companies. In
addition, remeasurements of the net defined benefit lia-
bility for pension plans are also presented in revenue
reserves along with positive and negative goodwill aris-
ing on the consolidation of Group companies prior to
239,777
2013
-30
13
52
17
281
148
134
Receivables that are overdue by between one and
30 days do not normally result in bad debt losses since
the overdue nature of the receivables is primarily at-
tributable to the timing of receipts around the month-
end. In the case of trade receivables, collateral is gen-
erally held in the form of vehicle documents and
bank guarantees so that the risk of bad debt loss is ex-
tremely low.
34-Cash and cash equivalents
Cash and cash equivalents of €7,688 million (2013*:
€7,671 million) comprise cash on hand and at bank, all
with an original term of up to three months.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
35-Equity
Number of shares issued
Shares issued/in circulation at 1 January.
Shares issued in conjunction with Employee Share Scheme
Less: shares repurchased and re-issued
Shares issued/in circulation at 31 December
Preferred stock
2014
2013
54,259,787
Common stock
2014
53,994,217 - 601,995,196
31 December 1994.
Revenue reserves increased during the financial year
2014 to €35,621 million. They were increased by the
amount of the net profit attributable to shareholders of
135 GROUP FINANCIAL STATEMENTS
30,854
-80,649
-70,304
-68.4%
-66.5%
Total capital
117,869
105,716
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
136
Equity attributable to shareholders of BMW AG decreased
during the financial year by 1.9 percentage points,
primarily reflecting the increase in financial liabilities.
Since December 2013, the BMW AG has a long-term
rating of A+ (with stable outlook) and a short-term rating
of A-1 from the rating agency Standard & Poor's, cur-
rently the highest rating given by Standard & Poor's to
Company rating
Non-current financial liabilities
Current financial liabilities
Outlook
a European car manufacturer. Since July 2011, the
BMW AG has a long-term rating of A2 (with stable out-
look) and a short-term rating of P-1 from the rating
agency Moody's. This means that BMW AG continues
to enjoy the best ratings of all European car manufac-
turers, clearly reflecting the financial strength of the
BMW Group.
Moody's
Standard & Poor's
A2
P-1
stable
A+
A-1
stable
With their current long-term ratings of A+ (Standard &
Poor's) and A2 (Moody's), the agencies continue to con-
firm BMW AG's robust creditworthiness for debt with a
term of more than one year. BMW AG's creditworthiness
for short-term debt is also classified by the rating agen-
cies as very good, thus enabling it to obtain refinancing
funds on competitive conditions.
90-GROUP FINANCIAL STATEMENTS
Income Statements
90
37,482
39,450
43,167
Proportion of total capital
BMW AG amounting to €5,798 million (2013*: €5,303
million) and reduced by the payment of the dividend for
2013 amounting to €1,707 million (for 2012: €1,640 mil-
lion). Revenue reserves decreased by €1,592 million
(2013: increased by €936 million) as a result of remeasure-
ments of the net defined benefit liability for pension
plans (net of deferred tax recognised directly in equity).
The unappropriated profit of BMW AG at 31 December
2014 amounts to €1,904 million and will be proposed
to the Annual General Meeting for distribution. This
amount includes €158 million relating to preferred stock.
The amount proposed for distribution represents an
amount of €2.92 per share of preferred stock and €2.90
per share of common stock. The proposed distribution
must be authorised by the shareholders at the Annual
General Meeting of BMW AG. It is therefore not recog-
nised as a liability in the Group Financial Statements.
Accumulated other equity
Accumulated other equity comprises all amounts recog-
nised directly in equity resulting from the translation
of the financial statements of foreign subsidiaries, the
effects of recognising changes in the fair value of deriva-
tive financial instruments and marketable securities
directly in equity and the related deferred taxes recog-
nised directly in equity.
Minority interests
Equity attributable to minority interests amounted to
€217 million (2013: €188 million). This includes a mi-
nority interest of €19 million in the results for the year
(2013: €26 million).
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
in € million
Capital management disclosures
The BMW Group's objectives when managing capital
are to safeguard the Group's ability to continue as
a going concern in the long-term and to provide an
adequate return to shareholders.
The BMW Group manages the capital structure and
makes adjustments to it in the light of changes in eco-
nomic conditions and the risk profile of the underlying
assets.
The BMW Group is not subject to any external minimum
equity capital requirements. Within the Financial Ser-
vices segment, however, there are a number of indi-
vidual entities which are subject to equity capital require-
ments set by regulatory banking agencies.
Comprehensive Income
In order to manage its capital structure, the BMW Group
uses various instruments including the amount of divi-
dends paid to shareholders and share buy-backs.
The capital structure at the end of the reporting period
was as follows:
31.12.2014
31.12.2013"
Equity attributable to shareholders of BMWAG
Proportion of total capital
37,220
35,412
-31.6%
33.5%
Non-current financial liabilities
Current financial liabilities
Total financial liabilities
Moreover, the BMW Group pro-actively manages debt
capital, determining levels of debt capital transactions
with a target debt structure in mind. An important
aspect of the selection of financial instruments is the
objective to achieve matching maturities for the Group's
financing requirements. In order to reduce non-sys-
tematic risk, the BMW Group uses a variety of financial
instruments available on the world's capital markets to
achieve optimal diversification.
Income Statements
Depending on the cash flow profile and risk structure of the pension obligations involved, pension plan assets are
invested in various investment classes.
-3,143
Cash funds
Carrying
amount
971
66,672
971
68,290
8,100
8,100
412
412
1,055
-1,055
-721
-721
2,153
-2,153
-7,688
-7,688
297
Fair value
Carrying
amount
- Fair value
Carrying
amount
Fair value
62,642
Loans
61,024
200
-12
-12
239
239
-297
-200
Held-to-maturity
investments
and receivables
Fair value
-7.0
3.6
fixed
EUR 3,590 million
5.5
3.0
fixed
- GBP 300 million
5.0
2.0
fixed
HKD 500 million
3.0
1.4
fixed
JPY 6,000 million
2.0
Carrying
amount
Fair value
Carrying
amount
Fair value
Carrying
amount
Held-to-maturity.
investments
1 The carrying amounts of cash flow and fair value hedges are allocated to the category "Held for trading" for the sake of clarity.
-fixed
2.4
3.0
NOK 1,500 million
fixed
0.3
2 Based on the fact that maturities are generally short, it is assumed for some items that fair value corresponds to the carrying amount.
3 Carrying amount corresponds to market value.
CHF 325 million
Loans
and receivables
Other
Derivative instruments
Financial assets
Receivables from sales financing
Other investments
Assets
in € million
31 December 2014
124 Notes to the Balance Sheet
149-Other Disclosures
165 Segment Information
of Comprehensive Income
116 Notes to the Income Statement
123 Notes to the Statement
98 Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
852
603
587
1,790
1,774
Other financial commitments include €7 million (2013:
€10 million) in respect of obligations to non-consoli-
dated subsidiaries and, as in the previous year, €1 mil-
lion for back-to-back operating leases.
Cash flow hedges
Purchase commitments amounted to €2,247 million
(2013: €2,661 million) for property, plant and equipment
and €750 million (2013: €446 million) for intangible
150
43-Financial instruments
The carrying amounts and fair values of financial instruments are assigned to IAS 39 categories and cash funds as
follows:1, 2
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
assets.
Cash funds
Fair value hedges
Marketable securities and investment funds
an investment is held.
Payables to other companies in which
Payables to subsidiaries
Total
Other liabilities
Trade payables
Other
Other derivative instruments
Fair value hedges
Cash flow hedges
Derivative instruments
Asset backed financing transactions
Commercial paper
Liabilities from customer deposits (banking)
Liabilities to banks
Bonds
Financial liabilities
Loans to third parties
Credit card receivables
Other
Cash and cash equivalents
Trade receivables
Other assets
Other derivative instruments
Receivables from subsidiaries
an investment is held
Collateral receivables
Other
Total
31 December 2014
in € million
Liabilities
Receivables from companies in which
fixed
Comprehensive Income
Income Statements
Other
Financial liabilities
426
632
45
1,103
-723
30,854
-307
334
1,364
36,046
3,404
70,304
The increase in liabilities relating to derivatives results
from the fair value measurement of currency and com-
modity derivative instruments.
The BMW Group uses various short-term and long-term
refinancing instruments on money and capital markets
to finance its operations. This diversification enables it to
obtain attractive market conditions.
The main instruments used are corporate bonds, asset-
backed financing transactions, liabilities to banks and
liabilities from customer deposits (banking).
Customer deposit liabilities arise in the BMW Group's
banks in Germany and the USA, both of which offer a
range of investment products.
0.3
2.3
EUR 4,835 million
variable
BMW Finance N.V., The Hague
Weighted
average nominal
interest rate (in %)
Derivative instruments
Weighted
average maturity
period (in years)
in relevant currency
Issue volume
Interest
Issuer
Bonds comprise:
146
(ISO-Code)
-variable
-10,128
-7,517
387
501
1,514
Financial liabilities
37,482
37,974
5,193
80,649
31 December 2013
in € million
Maturity
within
Maturity
between one
one year
and five years
Maturity
later than
five years
-Total
Bonds
-2,579
Asset backed financing transactions
-8,590
-12,457
6,292
-6,292
Commercial paper
-3,115
32
9,342
-30,370
2,875
-118
20,329
-4,146
- 4,326
Liabilities to banks
-7,166
Liabilities from customer deposits (banking)
GBP 380 million
1.2
0.2
- 2.1
fixed
GBP 300 million
8.0
5.0
BMW US Capital, LLC, Wilmington, DE
-variable
EUR 100 million
3.0
0.1
-variable
SEK 1,000 million
2.7
0.3
-variable
USD 1,710 million
2.8
90
90-GROUP FINANCIAL STATEMENTS
98 Accounting Principles and
Policies
98-Notes
Equity
96 Group Statement of Changes in
5.0
94 Cash Flow Statements
90 Statement of
4.0
3.2
- AUD 200 million
fixed
0.3
92 Balance Sheets
CHF 500 million
fixed
BMW (UK) Capital plc, Farnborough.
CHF 300 million
fixed
4.6
3.9
AUD 700 million
fixed
6.0
0.3
USD 540 million
-variable
0.3
2.3
SEK 6,500 million
variable
1.8
888
1.8
EUR 13,564 million
3.2
3.7
- NOK 3,500 million
fixed
0.3
2.8
fixed
JPY 31,000 million
3.0
6.1
GBP 1,050 million
fixed
3.0
6.6
fixed
335
299
Other financial obligations
Payables to subsidiaries
768
348
415
Deposits received
565
105
460
Advance payments from customers
-78
2
7
69
Social security
943
14
-929
-0.2
EUR 250 million
12
0.03
USD 3,260 million
33
162
-0.1
Maturity
between one
Maturity
later than
-Total
and five years
five years
Other taxes
Maturity
within
one year
-73
162
5
one year
Maturity
between one
Maturity
within
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Other liabilities
Other
Deferred income
Payables to other companies in which an investment is held
Payables to subsidiaries
Deposits received
Advance payments from customers
Social security
Other taxes
in € million
31 December 2013*
12,050
249
5
Deferred income
1,894
3,373
221
-5,488
Payables to other companies in which an investment is held
Other
-193
-7
-4,041
Other liabilities
7,775
4,026
3,841
USD 725 million
-0.5
56
3.0
JPY 10,000 million
-variable
Other
0.3
2.0
JPY 6,500 million
fixed
0.7
2.3
USD 330 million
variable
165 Segment Information
149 Other Disclosures
0.3
2.3
- EUR 150 million
4.4
116 Notes to the Income Statement
-fixed
- USD 2,245 million
8.0
3.5
0.3
123 Notes to the Statement
BMW Australia Finance Ltd., Melbourne, Victoria
-variable
AUD 200 million
3.0
3.3
variable
of Comprehensive Income
124-Notes to the Balance Sheet
fixed
- INR 6,000 million
4.2
BMW US Capital, LLC, Wilmington, DE
40-Other liabilities
Other liabilities comprise the following items:
31 December 2014
in € million
paper:
BMW Malta Finance Ltd., Floriana
Issue volume
Weighted
average maturity
period (in days)
Weighted
average nominal
interest rate (in %)
EUR 1,007 million.
30
0.03
GBP 825 million
in relevant currency
(ISO-Code)
and five years
BMW Finance N.V., The Hague
The following details apply to the commercial
10.2
fixed
CAD 2,275 million
3.9
- 2.3
fixed
Issuer
JPY 53,000 million
0.5
fixed
- KRW 370,000 million
3.2
3.2
147 GROUP FINANCIAL STATEMENTS
3.8
626
Maturity
later than
five years
-729
-7,485
192
-Total
Maturity
later than
five years
Maturity
between one
and five years
-7,709
129
-Total
Maturity
later than
five years
Maturity
between one
and five years
-7,293
Maturity
within
one year
-7,580
Maturity
within
one year
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Trade payables
in € million
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
41-Trade payables
The total amount of financial liabilities, other liabilities and trade payables with a maturity later than five
amounts to €5,442 million (2013: €3,635 million).
116 Notes to the Income Statement
of Comprehensive Income
124-Notes to the Balance Sheet
149-Other Disclosures
165 Segment Information
31 December 2014
in € million
Trade payables
31 December 2013*
123 Notes to the Statement
92 Balance Sheets
years
BMW Group
due later than five years
due between one and five years
due within one year
31.12.2013
31.12.2014
The total of future minimum lease payments under non-
cancellable and other operating leases can be analysed
by maturity as follows:
options (also including compensation for inflation). In
2014 an amount of €350 million (2013: €320 million)
was recognised as expense in conjunction with operating
leases. All of these amounts relate to minimum lease
payments.
in € million
In addition to liabilities, provisions and contingent lia-
bilities, the BMW Group also has other financial com-
mitments, primarily under lease contracts for land,
buildings, plant and machinery, tools, office and other
facilities. The leases run for periods of one to 50 years
and in some cases contain extension and/or purchase
Other financial commitments
entities.
Contingent liabilities relate entirely to non-group
76
121
39
-84
4
Notes to the Group Financial Statements
Other Disclosures
42-Contingent liabilities and other financial commitments
Contingent liabilities
No provisions were recognised for the following contingent liabilities (stated at estimated amounts), since an out-
flow of resources is not considered to be probable:
in € million
31.12.2014
149 GROUP FINANCIAL STATEMENTS
31.12.2013
Performance guarantees
Other
Contingent liabilities
33
33
4
Guarantees
Comprehensive Income
90 Statement of
Income Statements
148
10,667
231
3,372
7,064
3,709
8
-121
- 3,580
4,926
191
- 3,069
-1,666
-70
-70
157
157
1
15
.60
-11
53
745
Deferred income comprises the following items:
-74
-77
605
274
93
-14
381
528
in € million
Deferred income from lease financing-
Deferred income relating to service contracts -
31
193
20
127
5,488
56
104
-306
48
4,926
1,666
Deferred income relating to service contracts relates to
service and repair work to be provided under commit-
ments given at the time of the sale of a vehicle (multi-
component arrangements). Grants comprise primarily
public sector funds to promote regional structures and
which have been invested in the production plants in
Brazil, Leipzig and Berlin. The grants in Leipzig and
Berlin are subject to holding periods for the assets con-
cerned of up to five years and minimum employment
figures. All conditions attached to the grants were com-
plied with at 31 December 2014. In accordance with
IAS 20, grant income is recognised over the useful lives
of the assets to which they relate.
90-GROUP FINANCIAL STATEMENTS
90
1,894
-Total
837
1,027
Grants
Other deferred income
Deferred income
31.12.2014
-Total
thereof
due within
one year
-2,855
Total
thereof
due within
one year
1,685
780
-1,774
-761
3,370
31.12.2013
3.0
NZD 100 million
-1,190
2014 2013
2014 2013
Equity instruments
1,865
-1,718
-1,230
-1,030
203
-133
3,298
-2,881
Debt instruments -
4,509
- 4,143
4,562
- 3,333
379
1,238
thereof non-investment grade
6,390
-7,936
-243
334
2014 2013
- 3,160
2,987
3,271
thereof investment grade
-7,739
9,450
263
4,331
-1,156
-Total
United Kingdom
1,521
-174
-351
-946
1,872
Remeasurements
300
-1,910
651
238
-183
-237
-483
475
Expense(+)/income (-)
-6,064
-6,749
-7,974
Germany
2014-2013
in € million
Components of plan assets
Plan assets in Germany, the UK and other countries comprised the following:
141 GROUP FINANCIAL STATEMENTS
The net defined benefit liability for pension plans in Germany, the UK and other countries changed as follows:
Other
Germany
Defined benefit obligation
2014 2013
Plan assets
2014 2013
Net liability
2014 2013
1 January
-7,400
in € million
231
173
45
10,935
Debt instruments
-183
177
298
-310
12
-12
493
499
thereof investment grade
-183
-177
111
136
12
9
105
- 570
683
99
107
Real estate
12,894
-177
3
174
-187
thereof non-investment grade
322
306
-187
459
142
594
12
113
100
89
Money market funds
22
43
3
3
3
Real estate
1,349
1,514
20
-19
-1,120
112
Absolute return funds
4,526
5,926
5,950
6,374
Total with quoted market price
-27
245
5
5
Other
-21
-26
21
26
26
64
Payments to external funds
-301
-164
257
Remeasurements
26
-46
-22
-28
48
-74
Expense(+)/income (-)
Effect of first-time consolidation
547
317
-601
-636
1,144
-949
-7,734
-6,076
1,765
-32
1,333
Other
in € million
-53
Defined benefit -
obligation
2014 2013
2014 2013
Effect of limiting the
net defined benefit
asset to the asset ceiling
2014 -2013
Net liability
2014 2013
1 January
Plan assets.
106
-2
-165
317
525
-13
38
-5
-5
-636
-804
949
1,327
31 December
26
-71
-38
110
Translation differences and other changes
40
Payments to external funds
-74
-73
-74
-73
Employee contributions
203
3
-3
-4
Payments on account and pension payments
-66
-45
61
4
-128
-463
-160
7,409
-6,076
-7,409 -7,137
1 January
2014 -2013
Net liability-
Plan assets -
2014-2013
Defined benefit obligation
2014-2013
in € million
United Kingdom
651
2,313
-6,749
-7,323
7,400
9,636
31 December
1
-97
-301
Employee contributions
48
42
-48
-5,782
-42
-159
-154
159
15
-139
Other changes
Payments on account and pension payments
-1,333 -1,355
Expense(+)/income (-)
405
20
-18
-20
-18
Payments on account and pension payments
-294
Employee contributions
― -261
269
8
8
Translation differences and other changes.
31 December
569
9,499
302
-97
-135
--135
- 345
-275
- -233
-130
-112
Remeasurements
-212
-1,390
-990
- -305
400
- 25
Payments to external funds
-212
330
895
-733
Cash and cash equivalents
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
Obligations for personnel and social expenses
Obligations for ongoing operational expenses.
Other obligations
Other provisions
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Provisions for obligations for personnel and social ex-
penses comprise mainly performance-related remunera-
tion components, early retirement part-time working
arrangements and employee long-service awards. Obli-
gations for performance-related remuneration compo-
nents are normally settled in the following financial year.
Provisions for obligations for on-going operational ex-
penses relate primarily to warranty obligations and com-
prise both statutorily prescribed manufacturer warranties
in € million
1,871
-1,442
1,698
1,300
4,887
1.1.2014 Translation -Additions -Reversal of - Utilised Reversed - 31.12.2014
differences
discounting
Other provisions changed during the year as follows:
and other guaranties offered by the BMW Group. De-
pending on when claims are made, it is possible that
the BMW Group may be called upon to fulfil obligations
over the whole period of the warranty or guarantee.
Provisions for other obligations cover numerous specific
risks and obligations of uncertain timing and amount,
in particular for litigation and liability risks.
3,412
7,240
4,522
92 Balance Sheets
8,790
-2,074
1,294
2,032
-1,076
- 3,468
-1,786
-1,036
of Comprehensive Income
124-Notes to the Balance Sheet
Comprehensive Income
90
-0.6
In the UK, the sensitivity analysis for the pension level
trend also takes account of restrictions due to
caps
and
floors.
The weighted duration of all pension obligations in
Germany, the UK and other countries (based on present
values of the defined benefit obligation) developed as
follows:
31 December
in years
Germany
United Kingdom
Other
2014 2013
2014 2013
2014 2013
Weighted duration of all pension obligations
21.4
-19.6
19.9
18.3
-19.2
90-GROUP FINANCIAL STATEMENTS
Income Statements
thereof
due within
one year
-Total
thereof
due within
one year
-Total
31.12.2013*
90 Statement of
31.12.2014
Other provisions comprise the following items:
37-Other provisions
to measure the level of funding. In conjunction with
these valuations, funding plans are drawn up and the
amount of any special allocations determined.
Statutory minimum funding and recovery requirements
apply in the UK and the USA which may have an effect
on future amounts. Valuations are performed regularly
144
14.9
in € million
149 Other Disclosures
165 Segment Information
Obligations for personnel and social expenses
Obligations for ongoing operational expenses
1,698
Financial liabilities include all liabilities of the BMW
Group at the relevant balance sheet dates relating to
31 December 2014
in € million
financing activities. Financial liabilities comprise the
following:
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
-Total
Bonds
Liabilities to banks
- 8,561
-7,784
22,817
3,281
4,111
489
Liabilities from customer deposits (banking).
-1,930
Other
Derivative instruments
10,884
69
-6,990
39-Financial liabilities
3,825
5,599
- 5,599
Commercial paper
-35,489
11,554
-12,466
- 3,309
-9,157
Asset backed financing transactions
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Current tax liabilities of €1,590 million (2013*: €2,319 mil-
lion) comprise €151 million (2013: €197 million) for
taxes payable and €1,439 million (2013*: €2,122 million)
for tax provisions. Tax provisions totalling €1 million were
reversed in the year under report (2013: €44 million).
liabilities may be settled earlier than this depending on
the timing of proceedings.
62
2,074
Other obligations
4,887
-86
-1,304
- 602
-70
-16
-1,271
9
-1,438
2,435
13
304
3,468
1,871
-97
23
-280
Current income tax liabilities totalling €1,590 million
(2013: €2,319 million) include obligations amounting to
€956 million (2013: €823 million) which are expected to
be settled after more than twelve months. Some of the
38-Income tax liabilities
145 GROUP FINANCIAL STATEMENTS
Income from the reversal of other provisions amounting to €198 million (2013: €134 million) is recorded in cost of
sales and in selling and administrative expenses.
*Including the reclassification described in note 31 amounting to €641 million.
8,790
-449
-382
102
4,475
379
7,240
Other provisions
2,032
-3,024
23
-0.7
0.6
804
636
15,861 13,461
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124-Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Employer contributions to plan assets are expected to
amount to €652 million in the coming year. Plan assets
of the BMW Group include own transferable financial
instruments amounting to €5 million (2013: €4 million).
The BMW Group is exposed to risks arising from de-
fined benefit plans on the one hand and defined contri-
bution plans with a minimum return guarantee on the
other. Pension obligations to employees under such plans
are measured on the basis of actuarial reports. Future
pension payments are discounted by reference to mar-
ket yields on high quality corporate bonds. These yields
are subject to market fluctuation and influence the level
of pension obligations. Furthermore, changes in other
actuarial parameters, such as expected rates of inflation,
also have an impact on pension obligations.
Other
United Kingdom
2014 2013
The defined benefit obligation relates to current em-
ployees, former employees with vested benefits and
pensioners as follows:
payments out of operations will be substantially re-
duced in the future, since most of the Group's pension
obligations are settled out of the assets of pension
funds/trust fund arrangements.
in € million
31 December
6,076
Most of the BMW Group's pension assets are adminis-
tered separately and kept legally segregated from com-
pany assets using trust fund arrangements. As a conse-
quence, the level of funds required to finance pension
143 GROUP FINANCIAL STATEMENTS
As part of the internal reporting procedures and for in-
ternal management purposes, financial risks relating
to the pension plans are reported on using a deficit-
value-at-risk approach. The investment strategy is also
subjected to regular review together with external con-
sultants, with the aim of ensuring that investments
are structured to coincide with the timing of pension
Pension fund assets are monitored continuously and
managed from a risk-and-yield perspective. Risk is
reduced by ensuring a broad spread of investments. In
this context, the BMW Group continuously monitors
the degree of coverage of pension plans as well as adher-
ence to the stipulated investment strategy.
In order to reduce currency exposures, a substantial
portion of plan assets are either invested in the same
currency as the underlying plan or hedged by means of
currency derivatives.
account in the actuarial assumptions applied. The finan-
cial risk of longer-than-assumed life expectancy is hedged
for the BMW Group's largest pension plan in the UK by
means of a so-called "longevity hedge".
A substantial portion of plan assets is invested in debt
instruments in order to minimise the effect of capital
market fluctuations on the net liability. The asset port-
folio also includes equity instruments, property and
alternative investments - asset classes capable of gener-
ating the higher rates of return necessary to cover risks
(such as changes in mortality tables) not taken into
payments and the expected pattern of pension obliga-
tions. In their own way, each of these measures helps to
reduce fluctuations in pension funding shortfalls.
2014 -2013
7,734
7,323
11
1
9
1
-20
2
Absolute return funds
424
361
-557
-454
981
-815
Other
224
-161
261
31 December
2,967 2,526
177
210
1,550
1,808
6,749
799
Total without quoted market price
477
578
100
93
-216
949
-146
Current employees
Former employees with vested benefits
Defined benefit obligation
-3.3
-679
decrease of 0.25%
3.2
506
3.6
-479
727
Pension level trend
-16.0
2,528
-18.0
-12.9
-2,028
increase of 0.25%
-14.1
-3.0
Pension entitlement trend
-101
-0.7
152
increase of 0.25%
decrease of 0.25%
-3.3
-514
Average life expectancy.
-3.4
decrease of 1 year
3.2
510
3.4
-703
increase of 1 year
-700
Pensioners
-2,888
3,675
increase of 0.75%
7,400
9,636
2,996
-491 _ 388
-141
212
9,499
-723
1,604
- 3,651
4,208
2,650 2,297
2,295
6,495 -4,715
Germany
2014 -2013
1,003
decrease of 0.75%
- 2,154
7,409
- 85
Discount rate
in %
in € million
in %
in € million
2013
112
2014
at the end of the reporting period, if the other assump-
tions used in the calculation were kept constant. The
defined benefit obligation amounted to €20,462 million
at 31 December 2014.
31 December
The sensitivity analysis provided below shows the ex-
tent to which - based on an appropriate review – the
defined benefit obligation would have been affected by
changes in the relevant assumptions that were possible
949
1,327
Change in defined benefit obligation
an investment is held
Collateral receivables
Other
149-Other Disclosures
165 Segment Information
6,292
-189
Other investments (available-for-sale) amounting to
€177 million (2013: €174 million) are measured at amor-
tised cost since quoted market prices are not available
or cannot be determined reliably. These are therefore
not included in the level hierarchy shown above. In
addition, other investments amounting to €231 million
(2013: €379 million) are measured at fair value since
quoted market prices are available. These items are in-
cluded in Level 1.
As in the previous year, there were no reclassifications
within the level hierarchy during the financial year 2014.
In situations where a fair value was required to be meas-
ured for a financial instrument only for disclosure pur-
in € million
poses, this was achieved using the discounted cash flow
method and taking account of the BMW Group's own
default risk; for this reason, the fair values calculated can
be allocated to Level 2.
Offsetting of financial instruments
In the BMW Group, financial assets and liabilities relat-
ing to derivative financial instruments would normally
be required to be offset. No offsetting takes place for ac-
counting purposes, however, since the necessary crite-
ria are not met. Since legally enforceable master netting
agreements or similar contracts are in place, actual off-
setting would be possible in principle, for instance in
the case of insolvency. Offsetting would have the follow-
ing impact on the carrying amounts of derivatives:
465
Reported on
assets side
Reported on
assets side
31.12.2013
Reported on
equity and
liabilities side
Balance sheet amounts as reported
Gross amount of derivatives which can be offset in case of insolvency
Net amount after offsetting
-2,888
-1,228
31.12.2014 —
Reported on
equity and
liabilities side
321
317
-1,049
Marketable securities, investment fund shares and collateral assets - available-for-sale
Other investments - available-for-sale
Derivative instruments (assets)
-Cash flow hedges
Fair value hedges
- Other derivative instruments
Derivative instruments (liabilities)
Cash flow hedges
Fair value hedges
Other derivative instruments
Level hierarchy in accordance with IFRS 13-
Level 1
Level 2
Level 3
-3,134
-379
-1,914
-1,050
-3,143
in € million
4,013
-1,228
-57
- Net income from participations and investments
3
-10
Accumulated other equity
Balance at 1 January
-65
135
and to manage interest rate risks. This is based on a
state-of-the-art historical simulation, in which the
potential future fair value losses of the interest rate
portfolios are compared across the Group with ex-
pected amounts measured on the basis of a holding
period of 250 days and a confidence level of 99.98%.
Aggregation of these results creates a risk reduction
effect due to correlations between the various port-
folios.
6
-27
thereof recognised in the income statement during the period under report
Balance at 31 December
-69
-40
108
- Gains and losses on sale and fair value measurement of marketable securities held for sale
(including investments in subsidiaries and participations measured at cost)
Available-for-sale
571
-710
-710
1,660
1,915
- 3,303
393
156
Gains and losses on financial instruments
The following table shows the net gains and losses arising for each of the categories of financial instrument defined
by IAS 39:
in € million
2014
2013
Held for trading
-Gains/losses from the use of derivative instruments
-971
1,103
31 December 2013.
155 GROUP FINANCIAL STATEMENTS
-1,120
0.43
0.74
0.14
4.44
0.36
1.78
0.16
1.45
4.16
0.82
2.31
-1.87
0.52
4.22
0.22
4.91
0.07
0.68
154
Fair value measurement of financial instruments
The fair values shown are computed using market in-
formation available at the balance sheet date, on the
basis of prices quoted by the contract partners or using
ISO Code
in %
EUR
appropriate measurement methods, e.g. discounted cash
flow models. In the latter case, amounts were discounted
at 31 December 2014 on the basis of the following inter-
est rates:
USD
GBP
JPY
CNY
Interest rate for six months
Interest rate for one year
Interest rate for five years
Interest rate for ten years
0.13
0.31
90-GROUP FINANCIAL STATEMENTS
Income Statements
90
90 Statement of
Comprehensive Income
Marketable securities, investment fund shares and collateral assets - available-for-sale
Other investments - available-for-sale
3,772
231
Derivative instruments (assets)
Cash flow hedges
Fair value hedges
Other derivative instruments
Derivative instruments (liabilities)
Cash flow hedges
Fair value hedges
- Other derivative instruments
-708
-1,294
-886
-1,302
-721-
- Level hierarchy in accordance with IFRS 13-
Level 1
Level 2
Level 3
141
in € million
The following table shows the amounts allocated to
each measurement level at the end of the reporting
period:
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149-Other Disclosures
165 Segment Information
Interest rates taken from interest rate curves were ad-
justed, where necessary, to take account of the credit
quality and risk of the underlying financial instrument.
Derivative financial instruments are measured at their
fair value. The fair values of derivative financial instru-
ments are determined using measurement models, as a
consequence of which there is a risk that the amounts
calculated could differ from realisable market prices on
disposal. Observable financial market price spreads are
taken into account in the measurement of derivative
financial instruments. The supply of data to the model
used to calculate fair values also takes account of tenor
and currency basis spreads, thus helping to minimise
differences between the carrying amounts of the instru-
ments and the amounts that can be realised on the finan-
cial markets on their disposal. In addition, the Group's
own default risk and that of counterparties is taken into
account in the form of credit default swap (CDS) con-
tracts which have matching terms and which can be ob-
served on the market.
Financial instruments measured at fair value are allo-
cated to different measurement levels in accordance
with IFRS 13. This includes financial instruments that
are
1. measured at their fair values in an active market for
identical financial instruments (Level 1),
2. measured at their fair values in an active market for
comparable financial instruments or using measure-
ment models whose main input factors are based on
observable market data (Level 2), or
3. using input factors not based on observable market
data (Level 3).
31 December 2014
Total
-135
90
149-Other Disclosures
165 Segment Information
Asset backed financing transactions
Derivative instruments
Trade payables
Other financial liabilities
Total
enters into such contracts with parties of first-class
credit standing. The general credit risk on derivative
financial instruments utilised by the BMW Group is
therefore not considered to be significant.
124 Notes to the Balance Sheet
A concentration of credit risk with particular borrowers
or groups
of borrowers has not been identified in con-
junction with financial instruments.
Liquidity risk
The following table shows the maturity structure of ex-
pected contractual cash flows (undiscounted) for finan-
cial liabilities:
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
Further disclosures relating to credit risk - in particular
with regard to the amounts of impairment losses recog-
nised - are provided in the explanatory notes to the
relevant categories of receivables in notes 28, 29 and 33.
of Comprehensive Income
123 Notes to the Statement
116 Notes to the Income Statement
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
More detailed information regarding this methodology
is provided in the section on accounting policies (note 6).
Creditworthiness testing is an important aspect of the
BMW Group's credit risk management. Every borrower's
creditworthiness is tested for all credit financing and
lease contracts entered into by the BMW Group. In the
case of retail customers, creditworthiness is assessed
using validated scoring systems integrated into the pur-
chasing process. In the area of dealer financing, credit-
worthiness is assessed by means of ongoing credit
monitoring and an internal rating system that takes ac-
count not only of the tangible situation of the borrower
but also of qualitative factors such as past reliability in
business relations.
The credit risk relating to derivative financial instru-
ments is minimised by the fact that the Group only
31 December 2014
in € million
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
96 Group Statement of Changes in
Equity
Commercial paper
98-Notes
98 Accounting Principles and
Policies
-Total
90 Statement of
9,266
4,232
-177
434
500
1,111
45,942
39,785
-7,710
5,299
31 December 2013
in € million
Maturity
within
one year
Maturity
between one
and five years
91,026
-129
-7,581
-3,418
37,284
-8,110
-3,432
489
-12,031
-9,225
3,461
-12,686
5,601
-5,601
- 3,882
-7,226
-11,185
-2,100
1,317
23,786
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
in € million
-278
-310
-506
-126
238
Impairment losses of €152 million (2013: €73 million)
were recognised in the income statement in 2014 on
available-for-sale securities accounted for as participa-
tions, for which fair value changes had previously been
recognised directly in equity. Reversals of impairment
losses on marketable securities amounting to €7 million
(2013: €70 million) were recognised directly in equity.
-235
Cash flow hedges
The effect of cash flow hedges on accumulated other
equity was as follows:
2014
2013
Balance at 1 January
Total changes during the year
The disclosure of interest income resulting from the un-
winding of interest on future expected receipts would
normally only be relevant for the BMW Group where as-
sets have been discounted as part of the process of de-
termining impairment losses. However, as a result of the
assumption that most of the income that is subsequently
recovered is received within one year and the fact that
the impact is not material, the BMW Group does not dis-
count assets for the purposes of determining impairment
losses.
Net interest income from interest rate and interest
rate/currency swaps amounted to €101 million (2013:
€126 million).
Gains/losses from the use of derivatives relate pri-
marily to fair value gains or losses arising on stand-alone
derivatives.
Income/expenses
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149-Other Disclosures
165 Segment Information
Loans and receivables
Impairment losses/reversals of impairment losses
Other income/expenses
Other liabilities
― thereof reclassified to the income statement
Balance at 31 December
-1,136
202
-1,616
Gains/losses on hedging instruments designated as part of a fair value hedge relationship
Gains/losses from hedged items
Ineffectiveness of fair value hedges
369
-359
10
-525
503
-22
The difference between the gains/losses on hedging
instruments (mostly interest rate swaps) and the results
recognised on hedged items represents the ineffective
portion of fair value hedges.
Fair value hedges are mainly used to hedge the market
prices of bonds, other financial liabilities and receivables
from sales financing.
Bad debt risk
Notwithstanding the existence of collateral accepted,
the carrying amounts of financial assets generally take
account of the maximum credit risk arising from the
possibility that the counterparties will not be able to ful-
fil their contractual obligations. The maximum credit risk
for irrevocable credit commitments relating to credit
card business amounts to €1,181 million (2013: €943 mil-
lion). The equivalent figure for dealer financing is
€22,025 million (2013: €19,856 million).
In the case of performance relationships underlying
non-derivative financial instruments, collateral will be
required, information on the credit-standing of the
counterparty obtained or historical data based on the
existing business relationship (i.e. payment patterns to
date) reviewed in order to minimise the credit risk, all
depending on the nature and amount of the exposure
that the BMW Group is proposing to enter into.
Within the financial services business, the financed
items (e.g. vehicles, equipment and property) in the re-
tail customer and dealer lines of business serve as first-
ranking collateral with a recoverable value. Security is
also put up by customers in the form of collateral asset
pledges, asset assignment and first-ranking mortgages,
supplemented where appropriate by warranties and
guarantees. If an item previously accepted as collateral
is acquired, it undergoes a multi-stage process of repos-
session and disposal in accordance with the legal situa-
tion prevailing in the relevant market. The assets in-
volved are generally vehicles which can be converted
into cash at any time via the dealer organisation.
Impairment losses are recorded as soon as credit risks
are identified on individual financial assets, using a
methodology specifically designed by the BMW Group.
158
31.12.2013
90-GROUP FINANCIAL STATEMENTS
31.12.2014
Fair value hedges
934
-255
-179
-480
1,136
Fair value gains and losses recognised on derivatives and
recorded initially in accumulated other equity are re-
classified to cost of sales when the derivatives mature.
As in the previous year, no gains/losses were recognised
in “Financial Result" in 2014 in connection with fore-
casting errors and the resulting over-hedging of currency
exposures. Losses attributable to the ineffective portion
of cash flow hedges amounting to €27 million were rec-
ognised in "Financial Result” (2013: gains of €8 million).
Losses of €6 million (2013: €- million) arising in con-
nection with forecasting errors relating to cash flow
hedges for commodities and gains of €6 million (2013:
loss of €8 million) attributable to the ineffective portion
of commodity hedges were recognised in "Financial
Result" in 2014.
157 GROUP FINANCIAL STATEMENTS
At 31 December 2014 the BMW Group held derivative
financial instruments (mainly forward currency and op-
tion contracts) with terms of up to 60 months (2013:
60 months) in order to hedge currency risks attached to
future transactions. These derivative instruments are
intended to hedge forecast sales denominated in a for-
eign currency over the coming 60 months. The income
statement impact of the hedged cash flows will be rec-
ognised as a general rule in the same periods in which
external revenues are recognised. It is expected that
€278 million of net losses, recognised in equity at the
end of the reporting period, will be reclassified to profit
and loss in the new financial year (2013: net gains of
€162 million).
At 31 December 2014 the BMW Group held derivative
financial instruments (mostly interest rate swaps) with
terms of up to one month (2013: 13 months) to hedge
interest rate risks. These derivative instruments are in-
tended to hedge interest-rate risks arising on financial
instruments with variable interest payments within
the coming month. The income statement impact of the
hedged cash flows will be recognised as a general rule
in € million
in the same periods over which the relevant interest
rates are fixed. It is expected that €1 million of net
losses, recognised in equity at the end of the reporting
period, will be reclassified to profit and loss in the new
financial year (2013: €- million).
At 31 December 2014 the BMW Group held derivative
financial instruments (mostly commodity swaps) with
terms of up to 59 months (2013: 60 months) to hedge
raw materials price risks attached to future transactions
over the coming 59 months. The income statement im-
pact of the hedged cash flows will be recognised as a
general rule in the same period in which the derivative
instruments mature. It is expected that €54 million of
net losses, recognised in equity at the end of the report-
ing period, will be reclassified to profit and loss in the
new financial 1 year (2013: €60 million).
The following table shows gains and losses on hedging
instruments and hedged items which are deemed to be
part of a fair value hedge relationship:
1,103
Other
an investment is held
36,083
11,636
amount 1,3
amount 3
amount 3
Carrying
Carrying
-35,489
Carrying
Held for
trading
option
for-sale
Fair value
Available-
2,888
Carrying
amount
-11,554
-12,487
-12,466
Assets
89,663
90,362
4,281
4,281
5
5
162
162
-1,514
-7,709
1,514
-7,709
10,884
10,886
5,599
5,599
4,180
Other investments
3,772
1,294
Total
31 December 2013
in € million
Liabilities
Financial liabilities
Bonds
151 GROUP FINANCIAL STATEMENTS
Fair value
Carrying
amount
Loans
and receivables
Fair value
Held-to-maturity
investments
Cash funds
Other liabilities
Available-
for-sale
Fair value
-708
408
Fair value
Other liabilities
amount³
amount³
amount³
Carrying
Carrying
Carrying
Carrying
amount
Fair value
trading
option
Held for
-886
Receivables from sales financing
Financial assets
Derivative instruments
Credit card receivables
Loans to third parties.
Marketable securities and investment funds
- Other derivative instruments
Fair value hedges
Cash flow hedges
Other
Derivative instruments
Receivables from sales financing
Other investments
Assets
in € million
31 December 20131,2,
152
Financial assets
Cash and cash equivalents
Trade receivables
Other assets
124 Notes to the Balance Sheet
of Comprehensive Income
116 Notes to the Income Statement
123 Notes to the Statement
98 Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
Receivables from companies in which
Receivables from subsidiaries
Total
3,143
Other
an investment is held
Other
Collateral receivables
an investment is held
Receivables from companies in which
Receivables from subsidiaries
Other assets
Trade receivables
Cash and cash equivalents
Other
Credit card receivables
Loans to third parties.
Marketable securities and investment funds
Other derivative instruments
Fair value hedges
Cash flow hedges
Total
Carrying
1,302
1,120
Payables to other companies in which
-Payables to subsidiaries
Other liabilities
Trade payables
Other
Other derivative instruments
Fair value hedges
Cash flow hedges
Derivative instruments
Asset backed financing transactions
Commercial paper
Liabilities from customer deposits (banking)
Liabilities to banks
Bonds
Liabilities
Financial liabilities
-721
Carrying
amount
Fair value
55,536
- 8,590
12,457
6,292
-10,173
-10,128
-1,364
-7,485
12,471
-1,364
-7,485
-157
-70
4,126
-70
4,126
81,669
81,039
157
- 30,370
30,860
-8,671
amount 3,4
3,687
4,013
Other liabilities
Available-
Fair value
for-sale
option
Held for
trading
Fair value'
Carrying
amount
Carrying
Carrying
Carrying
amount³
amount3
-317
- 321
465
Assets
Liabilities
Financial liabilities
Bonds
Liabilities to banks
Liabilities from customer deposits (banking).
Commercial paper.
Asset backed financing transactions
Derivative instruments
Cash flow hedges.
Fair value hedges
Other
Other derivative instruments.
Trade payables
Other liabilities
Payables to subsidiaries
-Payables to other companies in which
Total
324
Other
Receivables from companies in which
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
- Marketable securities and investment funds
Loans to third parties
Credit card receivables
Other
Cash and cash equivalents
- Trade receivables
Other assets
Receivables from subsidiaries
an investment is held
Collateral receivables
Maturity
later than
five years
2,810
-1,050
172
8,053
8,053
61,215
-172
59,796
Cash funds
382
amount
Held-to-maturity
investments
Fair value
Carrying
amount
Fair value
Carrying
amount
Fair value
Loans
and receivables
382
-950
-950
54,117
- 250
250
32
32
222
222
-825
825
-7,671
-7,671
-2,449
-2,449
-779
-779
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Other liabilities
Available-
for-sale
Fair value
option
Held for
trading
Fair value
Carrying
amount
Carrying
Carrying
amount³
amount 3
Carrying
amount
3,4
553
1,914
153 GROUP FINANCIAL STATEMENTS
-1,049
amount
4 The carrying amounts of cash flow and fair value hedges are allocated to the category "Held for trading" for the sake of clarity.
Derivative instruments
Cash flow hedges
Other
Fair value hedges
Other derivative instruments
Trade payables
Other liabilities
_ Payables to subsidiaries-
- Payables to other companies in which
Total
an investment is held
Other
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Based on the fact that maturities are generally short, it is assumed for some items that fair value corresponds to the carrying amount.
3 Carrying amount corresponds to market value.
Carrying
-Total
Total change during the year-
-7,933
Market risks
The principal market risks to which the BMW Group
is exposed are currency risk, interest rate risk and raw
materials price risk.
Protection against such risks is provided in the first in-
stance through natural hedging which arises when
the values of non-derivative financial instruments have
matching maturities and amounts (netting). Derivative
financial instruments are used to reduce the risk re-
in € million
maining after netting. Financial instruments are only
used to hedge underlying positions or forecast trans-
actions.
The scope of permitted transactions, responsibilities,
financial reporting procedures and control mechanisms
used for financial instruments are set out in internal
guidelines. This includes, above all, a clear separation of
duties between trading and processing. Currency, inter-
est rate and raw materials price risks of the BMW Group
are managed at a corporate level.
Further information is provided in the "Report on out-
look, risks and opportunities" section of the Combined
Management Report.
Currency risks
As an enterprise with worldwide operations, business
is conducted in a variety of currencies, from which cur-
rency risks arise. Since a significant portion of Group
revenues is generated outside the euro currency region
and the procurement of production material and fund-
ing is also organised on a worldwide basis, the currency
risk is an extremely important factor for Group earnings.
At 31 December 2014 derivative financial instruments,
mostly in the form of forward currency and option con-
tracts, were in place to hedge the main currencies.
A description of the management of this risk is pro-
vided in the Combined Management Report. The BMW
Group measures currency risk using a cash-flow-at-risk
model.
The starting point for analysing currency risk with this
model is the identification of forecast foreign currency
transactions or “exposures”. At the end of the reporting
period, the principal exposures for the relevant coming
year were as follows:
31.12.2014
31.12.2013
Euro/Chinese Renminbi
Euro/US Dollar
Euro/British Pound
Euro/Russian Rouble
Euro/Japanese Yen
-10,937
10,691
4,743
4,401
4,818
3,852
-758
1,738
Also reducing liquidity risk, additional secured and
unsecured lines of credit are in place with first-class in-
ternational banks, including a syndicated credit line
totalling €6 billion (2013: €6 billion). Intra-group cash
flow fluctuations are evened out by the use of daily cash
pooling arrangements.
-1,004
Short-term liquidity is managed primarily by issuing
money market instruments (commercial paper). In this
area too, competitive refinancing conditions can be
achieved thanks to Moody's and Standard & Poor's short-
term ratings of P-1 and A-1 respectively.
the reporting period amounted to €7,247 million (2013:
€6,760 million).
-32,410
9,140
-12,648
Bonds
Commercial paper
6,294
6,294
Asset backed financing transactions
-2,814
-7,614
32
-10,460
Derivative instruments
426
-659
80
-1,165
Trade payables
Other financial liabilities
Total
-7,283
195
-7,478
210
39,051
- 361
37,834
938
3,648
80,533
The cash flows shown comprise principal repayments
and the related interest. The amounts disclosed for de-
rivatives comprise only cash flows relating to derivatives
that have a negative fair value at the balance sheet date.
At 31 December 2014 irrevocable credit commitments
to dealers which had not been called upon at the end of
159 GROUP FINANCIAL STATEMENTS
Solvency is assured at all times by managing and moni-
toring the liquidity situation on the basis of a rolling
cash flow forecast. The resulting funding requirements
are secured by a variety of instruments placed on the
world's financial markets. The objective is to minimise
risk by matching maturities for the Group's financing
requirements within the framework of the target debt
structure. The BMW Group has good access to capital
markets as a result of its solid financial position and a
diversified refinancing strategy. This is underpinned by
the longstanding long- and short-term ratings issued
by Moody's and Standard & Poor's.
1,469
367
In the next stage, these exposures are compared to all
hedges that are in place. The net cash flow surplus rep-
resents an uncovered risk position. The cash-flow-at-
risk approach involves allocating the impact of potential
exchange rate fluctuations to operating cash flows on
the basis of probability distributions. Volatilities and
correlations serve as input factors to assess the relevant
probability distributions.
Currency risk for the BMW Group is concentrated on
the currencies referred to above.
Interest rate risks
The BMW Group's financial management system involves
the use of standard financial instruments such as short-
term deposits, investments in variable and fixed-income
securities as well as securities funds. The BMW Group
is therefore exposed to risks resulting from changes in
interest rates.
in € million
These risks arise when funds with differing fixed-rate
periods or differing terms are borrowed and invested. All
items subject to, or bearing, interest are exposed to in-
terest rate risk. Interest rate risks can affect either side
of the balance sheet.
The fair values of the Group's interest rate portfolios for
the five main currencies were as follows at the end of the
reporting period:
31.12.2014
31.12.2013
Euro*
US Dollar
British Pound
Chinese Renminbi
Japanese Yen
* Prior year figures amended for one additional interest-bearing exposure.
Interest rate risks can be managed by the use of interest
rate derivatives. The interest rate contracts used for
hedging purposes comprise mainly swaps which are ac-
counted for on the basis of whether they are designated
as a fair value hedge or as a cash flow hedge. A descrip-
tion of the management of interest rate risks is provided
in the Combined Management Report.
As stated there, the BMW Group applies a group-wide
value-at-risk approach for internal reporting purposes
-16,495
-11,931
3,960
574
-113
-1,787
3,243
9,405
Liabilities from customer deposits (banking).
-3,043
-126
4,328
4,686
160
-21,434
Liabilities to banks
124 Notes to the Balance Sheet
149-Other Disclosures
165 Segment Information
of Comprehensive Income
-17,535
-12,087
-5,091
98 Accounting Principles and
Policies
in € million
dence level of 95% and a holding period of up to one
year. Correlations between the various currencies are
taken into account when the risks are aggregated, thus
reducing the overall risk.
116 Notes to the Income Statement
123 Notes to the Statement
The following table shows the potential negative impact
for the BMW Group - measured on the basis of the
cash-flow-at-risk approach - attributable to unfavoura-
ble changes in exchange rates. The impact for the prin-
cipal currencies, in each case for the following financial
year, is as follows:
31.12.2014
―31.12.2013
Euro/Chinese Renminbi
Euro/British Pound
Euro/Russian Rouble
Euro/Japanese Yen
173
-197
-73
65
Euro/US Dollar
80
98-Notes
Equity
96 Group Statement of Changes in
66
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
The potential negative impact on earnings is computed
for each currency for the following financial year on the
basis of current market prices and exposures to a confi-
90 Statement of
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
160
6
-109
44
A number of companies and incorporated partnerships
(as defined by § 264a HGB) which are consolidated sub-
sidiaries of BMW AG and for which the Group Financial
Statements of BMW AG represent exempting consoli-
dated financial statements, apply the exemptions available
in § 264 (3) and § 264b HGB with regard to the drawing
up of a management report. The exemptions have been
applied by:
43.4
90-GROUP FINANCIAL STATEMENTS
Income Statements
90
90 Statement of
Comprehensive Income
92 Balance Sheets
49-Application of exemption provisions
98-Notes
96 Group Statement of Changes in
Equity
46.1
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
The total compensation of the current Board of Manage-
ment members for 2014 amounted to €35.7 million (2013:
€34.5 million). This comprised fixed components of
€7.7 million (2013: €7.9 million), variable components of
€27.0 million (2013: €25.9 million) and a share-based
compensation component totalling €1.0 million (2013:
€0.7 million). Pension obligations to current members of
the Board of Management are covered by provisions
amounting to €31.3 million (2013: €24.8 million), com-
puted in accordance with IAS 19 (Employee Benefits).
The compensation of the members of the Supervisory
Board for the financial year 2014 amounted to €4.8 mil-
lion (2013: €4.6 million). This comprised fixed compo-
nents of €2.0 million (2013: €2.0 million) and variable
components of €2.8 million (2013: €2.6 million).
The remuneration of former members of the Board
of Management and their dependants amounted to
€5.8 million (2013: €4.7 million).
94 Cash Flow Statements
124 Notes to the Balance Sheet
149-Other Disclosures
165-Segment Information
Short-term employment benefits
3.5
48 Compensation of members of the Board of
Bavaria Wirtschaftsagentur GmbH, Munich
BMW Fahrzeugtechnik GmbH, Eisenach
BMW Hams Hall Motoren GmbH, Munich
Management and Supervisory Board
The total compensation of the current members of the
Board of Management and the Supervisory Board of
in € million
BMW AG for the financial year 2014 amounted to €46.1
million (2013: €43.4 million) and comprised the following:
2014
2013-
Share-based remuneration component
Post-employment benefits
Benefits in conjunction with the termination of an employment relationship
Compensation
39.5
38.4
1.0
-0.7
2.1
2.2
2.1
BMW M GmbH Gesellschaft für individuelle
Automobile, Munich
The role of "chief operating decision maker" with respect
to resource allocation and performance assessment of
the reportable segment is embodied in the full Board of
Management. In order to assist the decision-taking pro-
cess, various measures of segment performance as well
as segment assets have been set for the various operat-
ing segments.
Pension obligations to former members of the Board
of Management and their surviving dependants are
covered by pension provisions amounting to €68.4 mil-
lion (2013: €58.0 million), computed in accordance with
The Automotive segment develops, manufactures, as-
sembles and sells cars and off-road vehicles, under the
brands BMW, MINI and Rolls-Royce as well as spare
parts and accessories. BMW and MINI brand products
are sold in Germany through branches of BMW AG
and by independent, authorised dealers. Sales outside
Germany are handled primarily by subsidiary com-
panies and, in a number of markets, by independent
import companies. Rolls-Royce brand vehicles are sold
in the USA, China and Russia via subsidiary companies
and elsewhere by independent, authorised dealers.
The BMW Motorcycles segment develops, manufac-
tures, assembles and sells motorcycles as well as spare
parts and accessories.
The principal lines of business of the Financial Services
segment are car leasing, fleet business, multi-brand busi-
ness, retail customer and dealer financing, customer de-
posit business and insurance activities.
Holding and Group financing companies are included in
the Other Entities segment. This segment also includes
operating companies - BMW Services Ltd., Farnborough,
BMW (UK) Investments Ltd., Farnborough, Bavaria Lloyd
Reisebüro GmbH, Munich, and MITEC Mikroelektronik
Mikrotechnik Informatik GmbH, Munich, - which are
not allocated to one of the other segments.
Internal management and reporting
Segment information is prepared in conformity with
the accounting policies adopted for preparing and
presenting the Group Financial Statements. Excep-
tions to this general principle is the treatment of inter-
segment warranties (the earnings impact of which
is allocated to the Automotive and Financial Services
segments on the basis used internally to manage the
business) and cross-segment impairment losses on
investments in subsidiaries. Inter-segment receivables
and payables, provisions, income, expenses and profits
are eliminated in the column "Eliminations". Inter-
segment sales take place at arm's length prices.
The performance of the Automotive and Motorcycles
segments is managed on the basis of return on capital
employed (ROCE). The relevant measure of segment
results used is therefore profit before financial result.
Capital employed is the corresponding measure of seg-
ment assets used to determine how to allocate resources
and comprises all current and non-current operational
assets after deduction of liabilities used operationally
which are not subject to interest (e.g. trade payables).
The performance of the Financial Services segment is
measured on the basis of return on equity (ROE), with
profit before tax therefore representing the measure of
segment result used. For this reason, the measure of
segment assets in the Financial Services segment corre-
sponds to net assets, defined as total assets less total
liabilities.
The activities of the BMW Group are broken down into
the operating segments Automotive, Motorcycles, Finan-
cial Services and Other Entities.
The performance of the Other Entities segment is as-
sessed on the basis of profit or loss before tax. The
corresponding measure of segment assets used to
manage the Other Entities segment is total assets less
tax assets and intragroup investments.
90
Income Statements
166
Segment information by operating segment is as follows:
Segment information by operating segment
in € million
External revenues
164
90-GROUP FINANCIAL STATEMENTS
- Rolls-Royce Motor Cars GmbH, Munich
For the purposes of presenting segment information,
the activities of the BMW Group are divided into oper-
ating segments in accordance with IFRS 8 (Operating
Segments). Operating segments are identified on the
same basis that is used internally to manage and report
on performance and takes account of the organisational
structure of the BMW Group based on the various prod-
ucts and services of the reportable segments.
50-Explanatory notes to segment information
IAS 19.
The compensation systems for members of the Super-
visory Board do not include any stock options, value
appreciation rights comparable to stock options or any
other stock-based compensation components. Apart
from vehicle lease contracts entered into on customary
market conditions, no advances or loans were granted to
members of the Board of Management and the Super-
visory Board, nor were any contingent liabilities entered
into on their behalf.
Further details about the remuneration of current mem-
bers of the Board of Management and the Supervisory
Board can be found in the Compensation Report, which
is part of the Combined Management Report.
The following German entities apply the exemption
available in § 264 (3) and § 264b HGB with regard to
publication:
-
-
Bavaria Wirtschaftsagentur GmbH, Munich
-
Information on reportable segments
· Alphabet International GmbH, Munich
BMW Hams Hall Motoren GmbH, Munich
-
-
BMW INTEC Beteiligungs GmbH, Munich
BMW Verwaltungs GmbH, Munich
Rolls-Royce Motor Cars GmbH, Munich
BMW Beteiligungs GmbH & Co. KG, Munich
In addition, the Dutch entity, BMW International
Holding B.V., The Hague, applies the exemption pro-
vision contained in Article 2:403 of the Civil Code
of the Netherlands.
165 GROUP FINANCIAL STATEMENTS
BMW Group
Notes to the Group Financial Statements
Segment Information
BMW M GmbH Gesellschaft für individuelle
Automobile, Munich
(2013: 11.55 %) to Susanne Klatten, Germany. As at
the end of the previous financial year, shareholdings of
members of the BMW AG Board of Management account,
in total, for less than 1% of issued shares.
-6
47-Shareholdings of members of the Board of Management 16.07%) relates to Stefan Quandt, Germany, and 11.54%
and Supervisory Board
The first step in the analysis of the raw materials price
risk is to determine the volume of planned purchases
of raw materials (and components containing those raw
materials). These amounts, which represent the gross
exposure, were as follows at each reporting date for the
following financial year:
in € million
Raw materials price exposures
31.12.2014
31.12.2013
-3,770
4,550
In the next stage, these exposures are compared to all
hedges that are in place. The net cash flow surplus
represents an uncovered risk position. The cash-flow-at-
risk approach involves allocating the impact of potential
raw materials fluctuations to operating cash flows on
the basis of probability distributions. Volatilities and cor-
relations serve as input factors to assess the relevant
probability distributions.
The potential negative impact on earnings is com-
puted for each raw material category for the following
financial 1 year on the basis of current market prices
in € million
and exposure to a confidence level of 95% and a hold-
ing period of up to one year. Correlations between the
various categories of raw materials are taken into ac-
count when the risks are aggregated, thus reducing the
overall risk.
The following table shows the potential negative impact
for the BMW Group – measured on the basis of the cash-
flow-at-risk approach – attributable to fluctuations in
prices across all categories of raw materials. The risk at
each reporting date for the following financial year was
as follows:
31.12.2014
31.12.2013
Cash flow at risk
-230
405
Inter-segment revenues
11
-44
62
161 GROUP FINANCIAL STATEMENTS
In the following table the potential volumes of fair value
fluctuations - measured on the basis of the value-at-risk
in € million
approach - are compared with the expected value for
the interest-rate-sensitive exposures of the BMW Group:
31.12.2014 ―31.12.2013
Euro
US Dollar
British Pound
44-Explanatory notes to the cash flow statements
Chinese Renminbi
* Prior year figures amended for the value-at-risk of one additional interest-bearing exposure.
Raw materials price risk
The BMW Group is exposed to the risk of price fluctua-
tions for raw materials. A description of the management
of these risks is provided in the Combined Management
Report.
398
363
347
246
108
Japanese Yen
The cash flow statements show how the cash and cash
equivalents of the BMW Group and of the Automotive
and Financial Services segments have changed in the
course of the year as a result of cash inflows and cash
outflows. In accordance with IAS 7 (Statement of Cash
Flows), cash flows are classified into cash flows from
operating, investing and financing activities.
Cash and cash equivalents included in the cash flow
statement comprise cash in hand, cheques, and cash at
bank, to the extent that they are available within three
months from the end of the reporting period and are
subject to an insignificant risk of changes in value.
The BMW Group maintains normal business relation-
ships with non-consolidated subsidiaries. Transactions
lessor) is also reported within cash flows from operating
activities.
with these companies are small in scale, arise in the
normal course of business and are conducted on the
basis of arm's length principles.
Transactions of BMW Group companies with the joint
venture BMW Brilliance Automotive Ltd., Shenyang,
all arise in the normal course of business and are con-
ducted on the basis of arm's length principles. Group
companies sold goods and services to BMW Brilliance
Automotive Ltd., Shenyang, during the financial year
under report for an amount of €4,417 million (2013:
€3,588 million). At 31 December 2014, receivables of
Group companies from BMW Brilliance Automotive
Ltd., Shenyang, totalled €943 million (2013: €898 mil-
lion). Group companies had no payables to BMW
Brilliance Automotive Ltd., Shenyang, at the end of
the reporting period (2013: €66 million). Group compa-
nies received goods and services from BMW Brilliance
Automotive Ltd., Shenyang, in 2014 for an amount of
€34 million (2013: €31 million).
All relationships of BMW Group entities with the joint
ventures DriveNow GmbH & Co. KG, Munich, and
Drive Now Verwaltungs GmbH, Munich, are conducted
on the basis of arm's length principles. Transactions
with these entities arise in the normal course of business
and are small in scale.
Transactions of Group companies with SGL Automotive
Carbon Fibers GmbH & Co. KG, Munich, SGL Auto-
motive Carbon Fibers Verwaltungs GmbH, Munich, and
SGL Automotive Carbon Fibers LLC, Dover, DE, were
reported in their entirety in the Group Financial State-
ments until 1 January 2014. As a result of the first-time
application of IFRS 11 (Joint Arrangements) in the finan-
cial year 2014, these entities are now consolidated, as
joint operations, on a proportionate basis (49%) and
163 GROUP FINANCIAL STATEMENTS
the appropriate portion of transactions eliminated on
consolidation. The remaining 51% of the transactions
continue to be reported in the Group Financial State-
ments (non-consolidated portion) and are described be-
low. Prior year figures have been adjusted accordingly.
All relationships with the joint operations are attributa-
ble to the ordinary activities of the entities concerned.
All transactions were conducted on the basis of arm's
length principles. At 31 December 2014, loans receiva-
ble from the joint operations amounted to €111 million
(2013: €52 million). Interest income recognised on
these loans amounted to €2.4 million (2013*: €1.4 mil-
lion) in the financial year 2014. Goods and services re-
ceived by Group companies from the joint operations
during the twelve-month period totalled €62 million
(2013: €18 million). Amounts payable to the joint oper-
ations at the end of the reporting period totalled €5 mil-
lion (2013: €4 million).
In the financial year 2014, the disclosure requirements
contained in IAS 24 affect the BMW Group with re-
gard to business relationships with non-consolidated
subsidiaries, joint ventures, joint operations and asso-
ciated companies as well as with members of the Board
of Management and Supervisory Board of BMW AG.
The BMW Group maintains normal business relation-
ships with associated companies. Transactions with
these companies are small in scale, arise in the normal
course of business and are conducted on the basis of
arm's length principles.
electromobility. The focus of this collaboration is on
providing complete photovoltaic solutions for rooftop
systems and carports to BMW i customers. Solarwatt
GmbH, Dresden, leased vehicles from the BMW Group
in 2014. The service, cooperation and lease contracts
referred to above are not material for the BMW Group.
They all arise in the normal course of business and are
conducted on the basis of arm's length principles.
Susanne Klatten is a shareholder and member of the
Supervisory Board of BMW AG and also a shareholder
and Deputy Chairman of the Supervisory Board of
Altana AG, Wesel. Altana AG, Wesel, acquired vehicles
from the BMW Group during the financial year 2014,
mostly in the form of lease contracts. These contracts
are not material for the BMW Group, arise in the course
of ordinary activities and are made, without exception,
on the basis of arm's length principles.
Apart from vehicle lease contracts concluded on an
arm's length basis, companies of the BMW Group have
not entered into any contracts with members of the
Board of Management or Supervisory Board of BMW
AG. The same applies to close members of the families
of those persons.
BMW Trust e. V., Munich, administers assets on a trustee
basis to secure obligations relating to pensions and
pre-retirement part-time work arrangements in Germany
and is therefore a related party of the BMW Group in
accordance with IAS 24. This entity, which is a registered
association (eingetragener Verein) under German law,
does not have any assets of its own. It did not have any
income or expenses during the period under report.
BMW AG bears expenses on a minor scale and renders
services on behalf of BMW Trust e. V., Munich.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
46-Declaration with respect to the Corporate
Governance Code
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft
have issued the prescribed Declaration of Compliance
pursuant to § 161 of the German Stock Corporation
Act. It is reproduced in the Annual Report 2014 of the
BMW Group and is also available to shareholders on
the BMW Group website at www.bmwgroup.com/ir.
Stefan Quandt is a shareholder and Deputy Chairman
of the Supervisory Board of BMW AG. He is also the
sole shareholder and Chairman of the Supervisory
Board of DELTON AG, Bad Homburg v. d. H., which, via
its subsidiaries, performed logistic-related services for
the BMW Group during the financial year 2014. In addi-
tion, companies of the DELTON Group used vehicles
provided by the BMW Group, mostly in the form of
leasing contracts. Stefan Quandt is also the indirect ma-
jority shareholder of Solarwatt GmbH, Dresden. Co-
operation arrangements are in place between BMW AG
and Solarwatt GmbH, Dresden, within the field of
The members of the Supervisory Board of BMW AG hold
in total 27.61% (2013: 27.62%) of the issued common
and preferred stock shares, of which 16.06% (2013:
In addition, the disclosure requirements of IAS 24 also
cover transactions with associated companies, joint
ventures, joint operations and individuals that have the
ability to exercise significant influence over the finan-
cial and operating policies of the BMW Group. This also
includes close relatives and intermediary entities. Sig-
nificant influence over the financial and operating poli-
cies of the BMW Group is presumed when a party holds
20% or more of the voting power of BMW AG. In addi-
tion, the requirements contained in IAS 24 relating to
key management personnel and close members of their
families or intermediary entities are also applied. In the
case of the BMW Group, this applies to members of the
Board of Management and Supervisory Board.
124 Notes to the Balance Sheet
149-Other Disclosures
165 Segment Information
The cash flows from investing and financing activities
are based on actual payments and receipts. By con-
trast, the cash flow from operating activities is derived
indirectly from the net profit for the year. Under this
method, changes in assets and liabilities relating to
operating activities are adjusted for currency translation
effects and changes in the composition of the Group.
162
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
In accordance with IAS 24 (Related Party Disclosures),
related individuals or entities which have the ability to
control the BMW Group or which are controlled by the
BMW Group, must be disclosed unless such parties are
already included in the Group Financial Statements of
BMW AG as consolidated companies. Under the con-
trol concept established in IFRS 10, an investor controls
another entity when it is exposed to or has rights to
variable returns from its involvement with the investee
and has the ability to affect those returns through its
power over the investee.
94 Cash Flow Statements
98-Notes
98 Accounting Principles and
Policies
The changes in balance sheet positions shown in the
cash flow statement do not therefore agree directly with
the amounts shown in the Group and segment balance
sheets.
Cash inflows and outflows relating to operating leases,
where the BMW Group is the lessor, are aggregated and
shown on the line "Change in leased products" within
cash flows from operating activities.
The net change in receivables from sales financing (in-
cluding finance leases, where the BMW Group is the
45-Related party relationships
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
96 Group Statement of Changes in
Equity
Total revenues
∙11
Income from equity accounted investments
Operating liabilities - Financial Services segment
5,989
-6,658
- Non-operating assets - Other Entities segment
-74,494
82,937
-96,959
Total for reportable segments
―31.12.2013*
31.12.2014
6,956
7,571
-3,787
-4,112
Reconciliation of segment assets
83,942
Interest-bearing assets - Automotive and Motorcycles segments
-39,449
Germany
in € million
current assets relates to property, plant and equip-
ment, intangible assets and leased products. Elimina-
tions disclosed for non-current assets relate to leased
products.
In the case of information by geographical region, exter-
nal sales are based on the location of the customer's
registered office. Revenues with major customers were
not material overall. The information disclosed for non-
Information by region
169 GROUP FINANCIAL STATEMENTS
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
138,377
154,803
Total Group assets
-88,878
-99,688
25,473
28,488
Liabilities of Automotive and Motorcycles segments not subject to interest
Elimination of inter-segment items
37,357
-10,743
USA
-11,683
Total Group depreciation and amortisation on non-current assets
Segment figures can be reconciled to the corresponding
Group figures as follows:
The information disclosed for capital expenditure and
depreciation and amortisation relates to non-current
property, plant and equipment, intangible assets and
leased products.
The Other Entities segment result includes interest
and similar income amounting to €1,295 million (2013:
€1,340 million) and interest and similar expenses
amounting to €1,197 million (2013: €1,279 million). The
segment result was not impacted by any impairment
losses in the financial year 2014 (2013: €7 million).
recognised on leased products. Reversals of impair-
ment losses amounted to €169 million.
Total Group capital expenditure on non-current assets
Elimination of inter-segment items
2014
Total for reportable segments
Group profit before tax
Segment result
Financial result of Automotive segment and Motorcycles segment
Elimination of inter-segment items
Total for reportable segments
Reconciliation of segment result
in € million
Reconciliation of capital expenditure on non-current assets
2013
9,233
-8,511
Elimination of inter-segment items
Total for reportable segments
Reconciliation of depreciation and amortisation on non-current assets
19,903
20,676
-4,325
-4,621
24,228
-25,297
7,893
8,707
-527
-163
-91
-363
in € million
Financial Services segment result was negatively im-
pacted by impairment losses totalling €268 million
China
Rest of the Americas
Dr. Ian Robertson (HonDSc)
Harald Krüger
47,261
53,846
76,059
80,401
Peter Schwarzenbauer
-4,335
-1,025
-1,102
-10,568
-11,145
-1,668
2,050
-5,204
170
STATEMENT ON CORPORATE GOVERNANCE
170-STATEMENT ON
The Corporate Governance Code for the BMW Group,
together with the Declaration of Compliance, Articles
of Incorporation and other information, can be viewed
and/or downloaded from the BMW Group's website at
www.bmwgroup.com/ir under the menu items "Corpo-
rate Facts" and "Corporate Governance".
The Board of Management and the Supervisory Board
approved the Group's own Corporate Governance Code
based on the GCGC in previous years in order to pro-
vide interested parties with a comprehensive and stand-
alone document covering the corporate governance
practices applied by the BMW Group. A coordinator
responsible for all corporate governance issues reports
directly and on a regular basis to the Board of Manage-
ment and Supervisory Board.
Management and supervisory boards of companies listed
in Germany are required by law (§ 161 German Stock
Corporation Act) to report once a year whether the offi-
cially published and relevant recommendations issued
by the "German Government Corporate Governance
Code Commission", as valid at the date of the declara-
tion, have been, and are being, complied with. Com-
panies affected are also required to state which of the
recommendations of the Code have not been or are not
being applied, stating the reason or reasons. The full
text of the declaration, together with explanatory com-
ments, is shown on the following page of this Annual
Report.
Declaration of Compliance and the BMW Group
Corporate Governance Code
The close interaction between Board of Management
and Supervisory Board in the interests of the enterprise
as described above is also known as a "two-tier board
structure".
In accordance with the requirements of the German
Co-determination Act for companies that generally em-
ploy more than 20,000 people, the Supervisory Board
of BMW AG is required to comprise ten shareholder
representatives elected at the Annual General Meeting
(Supervisory Board members representing equity or
shareholders) and ten employees elected in accordance
with the provisions of the Co-determination Act (Super-
visory Board members representing employees). The
ten Supervisory Board members representing employees
comprise seven Company employees, including one
executive staff representative, and three members elected
following nomination by unions.
Information on the Company's Governing Constitution
The designation "BMW Group" comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and its
group entities. BMW AG is a stock corporation (Aktien-
gesellschaft) based on the German Stock Corporation
Act (Aktiengesetz) and has its registered office in
Munich, Germany. It has three representative bodies:
the Annual General Meeting, the Supervisory Board
and the Board of Management. The duties and authori-
ties of those bodies derive from the Stock Corporation
Act and the Articles of Incorporation of BMW AG.
Shareholders, as the owners of the business, exercise
their rights at the Annual General Meeting. The Annual
General Meeting decides in particular on the utilisation
of unappropriated profit, the ratification of the acts
of the members of the Board of Management and of the
Supervisory Board, the appointment of the external
auditor, changes to the Articles of Incorporation, speci-
fied capital measures and elects the shareholders'
representatives to the Supervisory Board. The Board of
Management manages the enterprise under its own
responsibility. Within this framework, it is monitored
and advised by the Supervisory Board. The Supervisory
Board appoints the members of the Board of Manage-
ment and can, at any time, revoke an appointment if
there is an important reason. The Board of Manage-
ment keeps the Supervisory Board informed of all sig-
nificant matters regularly, promptly and comprehen-
sively, following the principles of conscientious and
faithful accountability and in accordance with prevailing
law and the reporting duties allocated to it by the Super-
visory Board. The Board of Management requires
the approval of the Supervisory Board for certain major
transactions. The Supervisory Board is not, however,
authorised to undertake management measures itself.
Good corporate governance - acting in accordance with
the principles of responsible management aimed at in-
creasing the value of the business on a sustainable basis -
is an essential requirement for the BMW Group em-
bracing all areas of the business. Corporate culture within
the BMW Group is founded on transparent reporting
and internal communication, a policy of corporate
governance aimed at the interests of stakeholders, fair
and open dealings between the Board of Management
and the Supervisory Board as well as among employees
and compliance with the law. The Board of Management
and Supervisory Board report in this statement on
important aspects of corporate governance pursuant to
§ 289 a HGB and section 3.10 of the German Corporate
Governance Code (GCGC).
184 Compliance in the BMW Group
189 Compensation Report
183 Information on Corporate
Governance Practices
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
173 Members of the Supervisory
Board
172 Members of the Board of
Management
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
CORPORATE GOVERNANCE
(Part of Management Report)
170 - Information on the Company's
Governing Constitution
-3,103
Rest of Europe
2,961
-11,643
External
revenues
Klaus Fröhlich
Dr. Friedrich Eichiner
Dr.-Ing. Klaus Draeger
Milagros Caiña Carreiro-Andree
Dr.-Ing. Dr.-Ing. E. h. Norbert Reithofer
- Non-current
assets
The Board of Management
Bayerische Motoren Werke
Munich, 19 February 2015
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Group
Eliminations
Other
Aktiengesellschaft
2014
*2013*
2014
22,552
-24,635
21
-25
-15,348
-15,002
12,911
-17,093
-12,691
-13,666
25,320
27,137
-11,797
-12,992
2013*
-10,651
Interest and similar income of the Financial Services
segment is a component of segment result and totalled
€4 million (2013: €5 million). Interest and similar ex-
penses of the Financial Services segment amounted to
€29 million (2013*: €27 million).
Income taxes paid and interest received are classified
as cash flows from operating activities in accordance
with IAS 7.31 and IAS 7.35. Interest paid is presented
on a separate line within cash flows from financing ac-
tivities. Dividends received in the financial year 2014
amounted to €1 million (2013: €4 million).
Write-downs on inventories to their net realisable value
amounting to €29 million (2013: €28 million) were recog-
nised by the Automotive segment in the financial year
2014. Reversals of write-downs during the same period
amounted to €3 million (2013: €4 million).
-Inter-segment revenues
80,401
76,059
Total revenues
1,723
-1,619
-15,955
-15,955
154
-526
-618
-19,206
-7,539
-17,484
-7,021
-4,621
-4,112
-4,325
-3,787
164
-17,057
6
7
Group
2013*
19,073
18,276
3
2
-80,401
-76,059
External revenues
1,526
20,599
-1,598
4
4
-17,057
19,874
8,707
655
-20,676
-7,571
2014
-7,893
Capital expenditure on non-current assets
Investments accounted for using the equity method -
168
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Segment assets
Comprehensive Income
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
92 Balance Sheets
-638
1,088
-138,377
Segment result
Income from equity accounted investments
Depreciation and amortisation on non-current assets -
Impairment losses on other investments amounting to
€153 million (2013: €84 million) relating to the Automo-
tive segment were recognised as part of the financial
result and are therefore not included in segment result.
Other Entities
Reconciliation to
Group figures
Group
31.12.2014 - 31.12.2013 - 31.12.2014 - 31.12.2013 - 31.12.2014 - 31.12.2013 - 31.12.2014 - 31.12.2013*
9,357
8,388
61,516
- 55,300
-71,866
- 63,883
-154,803
407
-19,903
-6,956
2013*
Financial
Services
2013
124 Notes to the Balance Sheet
149 Other Disclosures
165-Segment Information
Segment assets
Investments accounted for using the equity method
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Automotive
- Motorcycles
of Comprehensive Income
2014
2014
2013
59,654
56,286
-1,671
1,495
2013*
123 Notes to the Statement
116 Notes to the Income Statement
98 Accounting Principles and
Policies
149 Other Disclosures
165-Segment Information
2014
124 Notes to the Balance Sheet
of Comprehensive Income
123 Notes to the Statement
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
in € million
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
-15,519
-14,344
98-Notes
75,173
31.12.2014 - 31.12.2013 - 31.12.2014 - 31.12.2013
-11,489
1,088
-10,318
638
575
488
Financial
Motorcycles -
Other Entities
Services
Group figures
2014
8
2013*
2014
- Reconciliation to
Automotive
167 GROUP FINANCIAL STATEMENTS
-64
70,630
9
1,504
65
-7,244
6,649
1,679
.79
655
-112
6,022
6,659
69
85
-4,080
3,657
- 407
Sales Channels BMW Group
Sales and Marketing BMW,
Dr. Ian Robertson (HonDSc) (born 1958)
-Membership of equivalent national or foreign boards of business enterprises.
-Membership of other statutory supervisory boards.
- BMW Motoren GmbH (Chairman)
Mandates
BMW (South Africa) (Pty) Ltd. (Chairman)
(since 09.12.2014)
Harald Krüger (born 1965)
Production
Dr.-Ing. Klaus Draeger (born 1956)
Purchasing and Supplier Network
(until 09.12.2014)
Dr.-Ing. Herbert Diess (born 1958)
Development
Klaus Fröhlich (born 1960)
Development
Milagros Caiña Carreiro-Andree (born 1962)
Human Resources, Industrial Relations Director
- Dyson James Group Limited
FESTO Management Aktiengesellschaft
Mandates
Peter Schwarzenbauer (born 1959)
Chairman of the Presiding Board, Personnel Committee
and Nomination Committee; member of Audit Committee
and the Mediation Committee
Aftersales BMW Group
BMW Brilliance Automotive Ltd. (Deputy Chairman)
FESTO Management Aktiengesellschaft (Deputy Chairman)
(until 25.04.2014)
Deere & Company
Bertelsmann Management SE (Deputy Chairman)
Bertelsmann SE & Co. KGaA (Deputy Chairman)
FESTO Aktiengesellschaft (Deputy Chairman)
(until 25.04.2014)
Mandates
Management of BMW AG
Former Chairman of the Board of
Joachim Milberg (born 1943)
Chairman
MINI, Motorcycles, Rolls-Royce,
Prof. Dr.-Ing. Dr. h. c. Dr.-Ing. E. h.
173 STATEMENT ON CORPORATE GOVERNANCE
-
-
-
Dr. Jürgen Reul
General Counsel:
Rolls-Royce Motor Cars Limited (Chairman)
Mandates
Members of the Supervisory Board
FESTO Aktiengesellschaft
Bayerische Motoren Werke
Aktiengesellschaft
Mandates
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
(Part of Management Report)
170 Information on the Company's
Governing Constitution
CORPORATE GOVERNANCE
170-STATEMENT ON
Dr.-Ing. Dr.-Ing. E. h.
Norbert Reithofer
Chairman
On behalf of the
Board of Management
Dr.-Ing. E. h. Joachim Milberg
Chairman
Prof. Dr.-Ing. Dr. h. c.
§161 AktG
Supervisory Board
Munich, December 2014
It is recommended in section 4.2.5 sentences 5 and 6
of the Code that specified information pertaining to
management board compensation be disclosed in the
Compensation Report. These recommendations will
not be complied with, due to uncertainties with respect
to their interpretation and doubts as to whether the
supplementary use of model tables would be instru-
mental in making the BMW Group's Compensation
Report transparent and generally understandable in ac-
cordance with generally applicable financial reporting
requirements (see section 4.2.5 sentence 3 of the Code).
2. BMW AG will in future comply with all of the recom-
mendations published on 30 September 2014 in the
electronic Federal Gazette (Code version dated 24 June
2014), with the following exception:
1. Since issuance of the last Declaration in December
2013, BMW AG has complied with all of the recommen-
dations published officially on 10 June 2013 (Code
version dated 13 May 2013), to the extent that they were
already applicable.
of Bayerische Motoren Werke Aktiengesellschaft
("BMW AG") declare the following regarding the recom-
mendations of the "Government Commission on the
German Corporate Governance Code":
The Board of Management and Supervisory Board
Declaration by the Board of Management and the
Supervisory Board of Bayerische Motoren Werke
Aktiengesellschaft with respect to the recommendations
of the "Government Commission on the German
Corporate Governance Code" pursuant to § 161 German
Stock Corporation Act
171 STATEMENT ON CORPORATE GOVERNANCE
On behalf of the
· Allianz Deutschland AG
172-Members of the Board of
173-Members of the Supervisory
Dr. Friedrich Eichiner (born 1955)
Finance
-
Henkel AG & Co. KGaA (Shareholders' Committee)
Siemens Aktiengesellschaft
(since 27.01.2015)
Mandates
Chairman
Dr.-Ing. Dr.-Ing. E. h. Norbert Reithofer (born 1956)
Members of the Board of Management
Management
172
189 Compensation Report
184 Compliance in the BMW Group
Governance Practices
183 Information on Corporate
Supervisory Board
178 Work Procedures of the
176 Work Procedures of the
Board of Management
Board
-
-
Chairman of the Works Council, Dingolfing
Deputy Chairman
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176-Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
Composition and work procedures of the Board of
Management of BMW AG and its committees
The Board of Management governs the enterprise under
its own responsibility, acting in the interests of the BMW
Group with the aim of achieving sustainable growth
in value. The interests of shareholders, employees and
other stakeholders are also taken into account in the
pursuit of this aim.
The Board of Management determines the strategic
orientation of the enterprise, agrees upon it with the
Supervisory Board and ensures its implementation.
The Board of Management is responsible for ensuring
that all provisions of law and internal regulations are
complied with. Further details about compliance within
the BMW Group can be found in the "Corporate
Governance" section of the Annual Report. The Board
of Management is also responsible for ensuring that
appropriate risk management and risk controlling sys-
tems are in place throughout the Group.
During their period of employment for BMW AG, mem-
bers of the Board of Management are bound by a com-
prehensive non-competition clause. They are required
to act in the enterprise's best interests and may not
pursue personal interests in their decisions or take ad-
vantage of business opportunities intended for the
enterprise. They may only undertake ancillary activities,
in particular supervisory board mandates outside
the BMW Group, with the approval of the Supervisory
Board's Personnel Committee. Each member of the
Board of Management of BMW AG is obliged to disclose
conflicts of interest to the Supervisory Board without
delay and inform the other members of the Board of
Management accordingly.
Following the appointment of a new member to the
Board of Management, the BMW Corporate Governance
Officer informs the new member of the framework
conditions under which the board member's duties are
to be carried out – in particular those enshrined in the
BMW Group's Corporate Governance Code - as well
as the duty to cooperate when a transaction or event
triggers reporting requirements or requires the approval
of the Supervisory Board.
The Board of Management consults and takes decisions
as a collegiate body in meetings of the Board of Manage-
ment, the Sustainability Board, the Operations Com-
mittee and the Committee for Executive Management
Matters. At its meetings, the Board of Management
defines the overall framework for business strategies
and the use of resources, takes decisions regarding the
implementation of strategies and deals with issues of
particular importance to the BMW Group. The full board
also takes decisions at a basic policy level relating to
the Group's automobile product strategies and product
projects inasmuch as these are relevant for all brands.
The Board of Management and its committees may, as
required and depending on the subject matters being
discussed, invite non-voting advisers to participate at
meetings.
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
Terms of reference approved by the Board of Manage-
ment contain a planned allocation of divisional respon-
sibilities between the individual board members. These
terms of reference also incorporate the principle that
the full Board of Management bears joint responsibility
for all matters of particular importance and scope. In
addition, members of the Board of Management man-
age the relevant portfolio of duties under their responsi-
bility, whereby case-by-case rules can be put in place
for cross-divisional projects. Board members continually
provide the Chairman of the Board of Management
with all information regarding major transactions and
developments within their area of responsibility. The
Chairman of the Board of Management coordinates
cross-divisional matters with the overall targets and plans
of the BMW Group, involving other board members to
the extent that divisions within their area of responsi-
bility are affected.
Unless stipulated otherwise by law or in BMW AG's
statutes, the Board of Management makes decisions on
the basis of a simple majority of votes cast at meetings.
Outside of board meetings, decisions are taken on
the basis of a simple majority of board members. In the
event of a tied vote, the Chairman of the Board of
Management has the casting vote. Any changes to the
board's terms of reference must be passed unanimously.
A board meeting may only be held if more than half of
the board members are present.
In the event that the Chairman of the Board of Manage-
ment is not present or is unable to attend a meeting, the
177 STATEMENT ON CORPORATE GOVERNANCE
Member of the Board responsible for Finance will
represent him.
Minutes are taken of all meetings and the Board of
Management's resolutions and signed by the Chairman.
Decisions taken by the Board of Management are
binding for all employees.
The rules relating to meetings and resolutions taken
by the full Board of Management are also applicable for
its committees.
Members of the Board of Management not represented
in a committee are provided with the agendas and
minutes of committee meetings. Committee matters are
dealt with in full board meetings if the committee con-
siders it necessary or at the request of a member of the
Board of Management.
A secretariat for Board of Management matters has been
established to assist the Chairman and other board
members with the preparation and follow-up work con-
nected with board meetings.
At meetings of the Operations Committee (generally held
three times a month), decisions are reached in connec-
tion with automobile product projects, based on the
strategic orientation and decision framework stipulated
at Board of Management meetings. The Operations
Committee comprises the Board of Management mem-
ber responsible for Development (who also chairs the
meetings), together with the board members responsible
for the following areas: Purchasing and Supplier Network;
Production; Sales and Marketing BMW, Sales Channels
BMW Group; and MINI, Motorcycles, Rolls-Royce,
Aftersales BMW Group. If the committee chairman is
not present or unable to attend a meeting, the Member
of the Board responsible for Production represents
him. Resolutions taken at meetings of the Operations
Committee are made online.
The full board usually convenes twice a year in its func-
tion as Sustainability Board in order to define strategy
with regard to sustainability and decide upon measures
to implement that strategy. The Head of Corporate
Affairs and the Representative for Sustainability and
Environmental Protection participate in these meetings
in an advisory capacity.
The Board's Committee for Executive Management
Matters deals with enterprise-wide issues affecting ex-
ecutive managers of the BMW Group, either in their
entirety or individually (such as the executive manage-
ment structure, potential candidates for executive
management, nominations for or promotions to senior
The Board of Management takes its decisions at meetings
generally held on a weekly basis which are convened,
coordinated and headed by the Chairman of the Board
of Management. At the request of the Chairman, de-
cisions can also be taken outside of board meetings if
none of the board members object to this procedure. A
meeting is quorate if all Board of Management members
are invited to the meeting in good time. Members unable
to attend any meeting are entitled to vote in writing,
by fax or by telephone. Votes cast by phone must be sub-
sequently confirmed in writing. Except in urgent cases,
matters relating to a division for which the responsible
board member is not present will only be discussed and
decided upon with that member's consent.
(Part of Management Report)
170 Information on the Company's
Governing Constitution
CORPORATE GOVERNANCE
170-STATEMENT ON
Deutsche Lufthansa Aktiengesellschaft (Chairman)
― Infineon Technologies AG (Chairman)
― Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München
HEICO Corporation
1 Employee representatives (company employees).
2 Employee representatives (union representatives).
3 Employee representatives (members of senior management).
-Membership of other statutory supervisory boards.
-Membership of equivalent national or foreign boards of business enterprises.
175 STATEMENT ON CORPORATE GOVERNANCE
Dr. Dominique Mohabeer¹ (born 1963)
Member of the Works Council, Munich
Brigitte Rödig (born 1963)
Member of the Works Council, Dingolfing
Dr. Markus Schramm³ (born 1963)
(until 15.05.2014)
Head of Development Aftersales
Business Management and
Mobility Services BMW Group
Jürgen Wechsler² (born 1955)
Regional Head of IG Metall Bavaria
Mandates
Schaeffler AG (Deputy Chairman)
Werner Zierer (born 1959)
Chairman of the Works Council, Regensburg
176
management positions). This committee has, on the
one hand, an advisory and preparatory role (e.g.
making suggestions for promotions to the two remu-
neration groups below board level and preparing
decisions to be taken at board meetings with regard
to human resources principles with the emphasis on
executive management issues) and a decision-taking
function on the other (e.g. deciding on appointments
to senior management positions and promotions to
higher remuneration groups or the wording of human
resources principles decided on by the full board).
The Committee has two members who are entitled to
vote at meetings, namely the Chairman of the Board
of Management (who also chairs the meetings) and
the board member responsible for Human Resources
and Social Affairs. The Head of Human Resources,
Personnel Network and Human Resources Interna-
tional and the Head of Human Resources Executive
Management also participate in an advisory function.
At the request of the Chairman, resolutions may also
be passed outside of committee meetings by casting
votes in writing, by fax or by telephone if the other
member entitled to vote does not object immediately.
As a general rule, between five and ten meetings are
held each year.
Mandates
The Board of Management is represented by its Chair-
man in its dealings with the Supervisory Board. The
Chairman of the Board of Management maintains
regular contact with the Chairman of the Supervisory
Board and keeps him informed of all important mat-
ters. The Supervisory Board has passed a resolution
specifying the information and reporting duties of the
Board of Management. As a general rule, in the case
of reports required by dint of law, the Board of Manage-
ment submits its reports to the Supervisory Board in
writing. To the extent possible, documents required as
a basis for taking decisions are sent to the members of
the Supervisory Board in good time before the relevant
meeting. Regarding transactions of fundamental im-
portance, the Supervisory Board has stipulated specific
transactions which require the approval of the Super-
visory Board. Whenever necessary, the Chairman of
the Board of Management obtains the approval of the
Supervisory Board and ensures that reporting duties
to the Supervisory Board are complied with. In order
to fulfil these tasks, the Chairman is supported by all
members of the Board of Management. The fundamen-
tal principle followed when reporting to the Supervi-
sory Board is that the latter should be kept informed
regularly, without delay and comprehensively of all
significant matters relating to planning, business per-
formance, risk exposures, risk management and com-
pliance, as well as any major variances between actual
and budgeted figures.
170-STATEMENT ON
The composition of the Presiding Board and the various
committees is based on legal requirements, BMW AG's
Articles of Incorporation, terms of reference and corpo-
rate governance principles. The expertise and technical
skills of its members are also taken into account.
According to the relevant terms of reference, the Chair-
man of the Supervisory Board is, in this capacity, auto-
matically a member of the Presiding Board, the Personnel
Committee and the Nomination Committee, and also
chairs these committees.
The number of meetings held by the Presiding Board
and the committees depends on current requirements.
The Presiding Board, the Personnel Committee and
the Audit Committee normally hold several meetings in
the course of the year (see “Overview of Supervisory
Board Committees, Meetings" for details of the number
of meetings held in 2014).
In line with the terms of reference for the activities of
the plenum, the Supervisory Board has also set terms of
reference for the Presiding Board and the various com-
mittees. The committees are only quorate if all members
are present. Resolutions taken by the committees are
180
170-STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company's
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178-Work Procedures of the
Supervisory Board
Taking into account the specific circumstances of the
BMW Group and the number of board members, the
Supervisory Board has set up a Presiding Board and
four committees, namely the Personnel Committee, the
Audit Committee, the Nomination Committee and
the Mediation Committee (see "Overview of Supervisory
Board Committees, Meetings"). Such committees serve
to raise the efficiency of the Supervisory Board's work
and facilitate the handling of complex issues. The estab-
lishment and function of a mediation committee is pre-
scribed by law. The person chairing a committee reports
in detail on its work at each plenum meeting.
183 Information on Corporate
Governance Practices
passed by simple majority unless stipulated otherwise
by law. Minutes are also taken at the meetings and for
the resolutions of the committees and the Presiding
Board, and signed by the person chairing the particular
meeting. This person also represents the committee in
any dealings it may have with the Board of Management
or third parties.
Members of the Supervisory Board may not delegate their
duties. The Supervisory Board, the Presiding Board
and committees may call on experts and other suitably
informed persons to attend meetings to give advice on
specific matters.
The Supervisory Board, the Presiding Board and the
committees also meet without the Board of Management
if necessary.
BMW AG ensures that the Supervisory Board and its
committees are sufficiently equipped to carry out their
duties. This includes the services provided by a cen-
tralised secretariat to support the chairmen in coordi-
nating the work of the Supervisory Board.
In accordance with the relevant terms of reference, the
Presiding Board comprises the Chairman of the Super-
visory Board and board deputies. The Presiding Board
prepares Supervisory Board meetings to the extent that
the subject matter to be discussed does not fall within
the remit of a committee. This includes, for example,
preparing the annual Declaration of Compliance with
the German Corporate Governance Code and the Super-
visory Board's efficiency examination.
The Personnel Committee prepares the decisions of the
Supervisory Board with regard to the appointment and
revocation of appointment of members of the Board
of Management and, together with the full Supervisory
Board and the Board of Management, ensures that long-
term successor planning is in place. The Personnel
Committee also prepares the decisions of the Super-
visory Board with regard to the Board of Management's
compensation and the Supervisory Board's regular
review of the Board of Management's compensation
system. In conjunction with the resolutions taken by
the Supervisory Board regarding the compensation of
the Board of Management, the Personnel Committee
is responsible for drawing up, amending and revoking
service/employment contracts or, when necessary,
other relevant contracts with members of the Board of
Management. In specified cases, the Personnel Com-
mittee also has the authority to give the necessary ap-
proval for a particular transaction (instead of the Super-
visory Board). This includes loans to members of the
Board of Management or Supervisory Board, specified
contracts with members of the Supervisory Board (in
each case taking account of the consequences of related
parties), as well as other activities of members of the Board
of Management, including the acceptance of non-BMW
Group supervisory board mandates.
The Audit Committee deals in particular with issues
relating to the supervision of the financial reporting
process, the effectiveness of the internal control system,
the risk management system, internal audit arrange-
ments and compliance. It also monitors the external
audit, auditor independence and any additional work
performed by the external auditor. It prepares the pro-
posal for the election of the external auditor at the An-
nual General Meeting, makes a recommendation re-
garding the election of the external auditor, issues the
audit engagement letter and agrees on points of audit
focus as well as the auditor's fee. The Audit Committee
prepares the Supervisory Board's resolution relating
to the Company and Group Financial Statements and
discusses interim reports with the Board of Manage-
ment before publication. The Audit Committee also
decides on the Supervisory Board's agreement to use
the Authorised Capital 2014 (Article 4 no. 5 of the
Articles of Incorporation) and on amendments to the
Articles of Incorporation which only affect its wording.
In line with the recommendations of the German Cor-
porate Governance Code, the Chairman of the Audit
Committee is independent and not a former Chairman
of the Board of Management and has specific know-how
and experience in applying financial reporting stand-
ards and internal control procedures. He also fulfils the
requirements of being an independent financial expert
as defined by $100 (5) and § 107 (4) AktG.
The Nomination Committee is charged with the task
of finding suitable candidates for election to the Super-
visory Board (as shareholder representatives) and for
inclusion in the Supervisory Board's proposals for elec-
tion at the Annual General Meeting. In line with the
recommendations of the German Corporate Governance
Code, the Nomination Committee comprises only share-
holder representatives.
The establishment and composition of a mediation
committee are required by the German Co-determina-
tion Act. The Mediation Committee has the task of
making proposals to the Supervisory Board if a resolu-
tion for the appointment of a member of the Board of
Management has not been carried by the necessary
two-thirds majority of members' votes. In accordance
with statutory requirements, the Mediation Commit-
tee comprises the Chairman and the Deputy Chairman
of the Supervisory Board and one member each se-
lected by shareholder representatives and employee
representatives.
184 Compliance in the BMW Group
189 Compensation Report
The ability of the Supervisory Board to supervise and
advise the Board of Management independently is also
assisted by the fact that the Supervisory Board is required,
based on its own assessment, to have an appropriate
number of independent members. Prof. Dr.-Ing. Dr. h. c.
Dr.-Ing. E. h. Joachim Milberg is the only person on the
Supervisory Board to have previously served on the
Board of Management, of which he ceased to be a mem-
ber in 2002. Supervisory Board members do not exercise
directorships or similar positions or undertake advisory
tasks for important competitors of the BMW Group.
measures such as that may be necessary to carry out
the tasks assigned to them. The Company provides
appropriate assistance to members of the Supervisory
Board in this respect.
The members of the Supervisory Board are responsible
for undertaking appropriate basic and further training
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company's
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178-Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
Composition and work procedures of the Supervisory
Board of BMW AG and its committees
BMW AG's Supervisory Board, comprising ten share-
holder representatives (elected by the Annual General
Meeting) and ten employee representatives (elected
by employees in accordance with the German Co-deter-
mination Act), has the task of advising and supervising
the Board of Management in its governance of the
BMW Group. It is involved in all decisions of fundamen-
tal importance for the BMW Group. The Supervisory
Board appoints the members of the Board of Manage-
ment and decides upon the level of compensation
they are to receive. The Supervisory Board can revoke
appointments for important reasons.
Together with the Personnel Committee and the Board
of Management, the Supervisory Board ensures that
long-term successor planning is in place. In their assess-
ment of candidates for a post on the Board of Manage-
ment, the underlying criteria applied by the Supervisory
Board for determining the suitability of candidates are
their expertise in the relevant area of board responsi-
bility, outstanding leadership qualities, a proven track
record and an understanding of the BMW Group's busi-
ness. The Supervisory Board takes diversity into ac-
count when assessing, on balance, which individual will
best complement the Board of Management as a repre-
sentative body of the Company. “Diversity” in the con-
text of the decision process is understood by the Super-
visory Board to encompass different, complementary
individual profiles, work and life experiences, at both a
national and international level, as well as appropriate
representation of both genders. The Supervisory Board
strives to ensure appropriate female representation
on the Board of Management. The Board of Manage-
ment reports accordingly to the Personnel Committee
and the Supervisory Board at regular intervals on the
proportion of, and changes in, management positions
held by women, in particular below senior executive
level and at uppermost management level. When actu-
ally selecting an individual for a post on the Board of
Management, the Supervisory Board decides in the
best interests of the Company and after taking account
of all relevant circumstances.
The Supervisory Board holds a minimum of two meet-
ings in each of the first and second six-month periods of
the calendar year. Normally, five plenary meetings are
held per calendar year. One meeting each year is planned
to cover a number of days and is used, amongst other
things, to enable an in-depth exchange on strategic and
technological matters. The main emphases of meetings in
the period under report are described in the Report of
the Supervisory Board. As a general rule, the shareholder
representatives and employee representatives prepare the
Supervisory Board meetings separately and, if necessary,
together with members of the Board of Management.
Members of the Supervisory Board are in particular le-
gally bound to maintain confidentiality with respect to
any confidential reports they receive and any confiden-
tial discussions in which they partake.
The Chairman of the Supervisory Board coordinates
work within the Supervisory Board, chairs its meet-
ings, handles the external affairs of the Supervisory
Board and represents it in its dealings with the Board
of Management.
The Supervisory Board is quorate if all members have
been invited to the meeting and at least half of its
members participate in the vote on a particular resolu-
tion. A resolution relating to an agenda item not in-
cluded in the invitation is only valid if none of the mem-
bers of the Supervisory Board who were not present
at the meeting object to the resolution and a minimum
of two-thirds of the members are present.
As a basic rule, resolutions are passed by the Super-
visory Board by simple majority. The German Co-de-
termination Act contains specific requirements with
regard to majority voting and technical procedures,
particularly with regard to the appointment and revoca-
tion of appointment of management board members
and the election of a supervisory board chairman or
deputy chairman. In the event of a tied vote in the
Supervisory Board, the Chairman of the Supervisory
Board has two votes in a renewed vote, if it also results
in a tie.
In practice, resolutions are taken by the Supervisory
Board and its committees at the relevant meetings. A
Supervisory Board member who is not present at a
meeting can have his/her vote cast by another Super-
visory Board member if an appropriate request has
been made in writing, by fax or in electronic form. This
rule also applies to the casting of the second vote by
the Chairman of the Supervisory Board. The Chairman
of the Supervisory Board can also accept the retrospec-
tive casting of votes by any members not present at a
meeting if this is done within the time limit previously
set. In special cases, resolutions may also be taken
outside of meetings, i.e. in writing, by fax or by elec-
tronic means. Minutes are taken of all resolutions and
meetings.
After its meetings, the Supervisory Board is generally
provided information on new vehicle models in the
form of a short presentation.
179 STATEMENT ON CORPORATE GOVERNANCE
Following the election of a new Supervisory Board mem-
ber, the BMW Corporate Governance Officer informs
the new member of the principal issues affecting his or
her duties – in particular those enshrined in the BMW
Group Corporate Governance Code - including the
duty to cooperate when a transaction or event triggers
reporting requirements or is subject to the approval of
the Supervisory Board.
All members of the Supervisory Board of BMW AG are
required to ensure that they have sufficient time to
perform their mandate. If members of the Supervisory
Board of BMW AG are also members of the management
board of a listed company, they may not accept more
than a total of three mandates on non-BMW Group super-
visory boards of listed companies or in other bodies
with comparable requirements.
The Supervisory Board examines the efficiency of its
activities on a regular basis. Joint discussions are also
held at plenum meetings, prepared on the basis of a
questionnaire previously devised by and distributed to
the members of the Supervisory Board. The Chairman
of the Supervisory Board is open to suggestions for
improvement at all times.
Each member of the Supervisory Board of BMW AG is
bound to act in the enterprise's best interests. Members
of the Supervisory Board may not pursue personal in-
terests in their decisions or take advantage of business
opportunities intended for the benefit of the enterprise.
Members of the Supervisory Board are obliged to in-
form the full Supervisory Board of any conflicts of inter-
est which may result from a consultant or directorship
function with clients, suppliers, lenders or other busi-
ness partners, enabling the Supervisory Board to report
to the shareholders at the Annual General Meeting on
how it has dealt with such issues. Material conflicts of
interest and those which are not merely temporary in
nature result in the termination of the mandate of the
relevant Supervisory Board member.
With regard to nominations for the election of members
of the Supervisory Board, care is taken that the Super-
visory Board in its entirety has the required knowledge,
skills and expert experience to perform its tasks in a
proper manner.
The Supervisory Board has set out specific targets for its
own composition (see section “Composition targets for
the Supervisory Board").
178
Stefan Schmid (born 1965)
Deutsche Lufthansa Aktiengesellschaft
Wolfgang Mayrhuber (born 1947)
Bertin Eichler² (born 1952)
(until 15.05.2014)
Former Executive Member of the
Executive Board of IG Metall
Mandates
- C.+H. Winter GmbH (since 01.05.2014)
- Luitpoldhütte AG
- ThyssenKrupp AG (Deputy Chairman)
(until 17.01.2014)
- BGAG Beteiligungsgesellschaft der
Gewerkschaften GmbH (Chairman Advisory Board)
1 Employee representatives (company employees).
2 Employee representatives (union representatives).
- T-Systems International GmbH (until 31.07.2014)
3 Employee representatives (members of senior management).
-Membership of equivalent national or foreign boards of business enterprises.
174
Franz Haniel (born 1955)
Engineer, MBA
Mandates
DELTON AG (Deputy Chairman)
Franz Haniel & Cie. GmbH (Chairman)
Heraeus Holding GmbH
Metro AG (Chairman)
― secunet Security Networks AG (until 14.05.2014)
Giesecke & Devrient GmbH (until 08.04.2014)
TBG Limited
Prof. Dr. rer. pol. Renate Köcher (born 1952)
-Membership of other statutory supervisory boards.
Robert Bosch GmbH
Mandates
Executive Board of IG Metall
Member of the Presiding Board, Personnel Committee,
Audit Committee and Mediation Committee
Dr. jur. Karl-Ludwig Kley (born 1951)
Deputy Chairman
Chairman of the Executive Management of
Merck KGaA
Chairman of the Audit Committee and Independent
Finance Expert; member of the Presiding Board,
Personnel Committee and Nomination Committee
Mandates
·Bertelsmann Management SE
Bertelsmann SE & Co. KGaA
· Deutsche Lufthansa Aktiengesellschaft
Manfred Schoch (born 1955)
Deputy Chairman
Chairman of the European and
General Works Council
Industrial Engineer
Member of the Presiding Board, Personnel Committee,
Audit Committee and Mediation Committee
Stefan Quandt (born 1966)
Deputy Chairman
Entrepreneur
Member of the Presiding Board, Personnel Committee,
Audit Committee, Nomination Committee and Mediation
Committee
Mandates
DELTON AG (Chairman)
AQTON SE (Chairman)
DataCard Corp. (until 11.11.2014)
Entrust Datacard Corp. (since 12.11.2014)
Christiane Benner2 (born 1968)
(since 15.05.2014)
Executive Member of the
Director of Institut für Demoskopie Allensbach
Gesellschaft zum Studium der öffentlichen
Meinung mbH
Chairman of the Supervisory Board of
Mandates
Infineon Technologies AG
― MAN Truck & Bus AG
170-STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company's
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
172 Members of the Board of
Management
173-Members of the Supervisory
Board
· KraussMaffei Technologies GmbH
176 Work Procedures of the
Board of Management
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
-
Susanne Klatten (born 1962)
Entrepreneur
Member of the Nomination Committee
Mandates
ALTANA AG (Deputy Chairman)
SGL Carbon SE (Chairman)
UnternehmerTUM GmbH (Chairman)
Willibald Löw (born 1956)
Chairman of the Works Council, Landshut
178 Work Procedures of the
Allianz SE
- KraussMaffei Group GmbH
General Representative of IG Metall Munich
Nestlé Deutschland AG
Robert Bosch GmbH
Prof. Dr. rer. nat. Dr. h. c. Reinhard Hüttl (born 1957)
Chairman of the Executive Board of
Helmholtz-Zentrum Potsdam Deutsches
GeoForschungszentrum - GFZ
University Professor
Ulrich Kranz³ (born 1958)
(since 15.05.2014)
Head of Product Line BMWi
Prof. Dr. rer. nat. Dr.-Ing. E. h.
Henning Kagermann (born 1947)
President of acatech - Deutsche Akademie der
Technikwissenschaften e. V.
Mandates
Deutsche Bank AG
Deutsche Post AG
Franz Haniel & Cie GmbH
Nokia Corporation (until 17.06.2014)
Wipro Limited (until 30.06.2014)
Dr. h. c. Robert W. Lane (born 1949)
Former Chairman and Chief Executive Officer of
Deere & Company
Mandates
General Electric Company
Northern Trust Corporation
· Verizon Communications Inc.
Horst Lischka² (born 1963)
Mandates
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München
The compensation system includes a share-based remu-
neration programme, in which the level of share-based
remuneration is based on the amount of the bonus paid.
The system is aimed at creating further long-term incen-
tives to encourage sustainable
governance.
This programme envisages a share-based remuneration
component equivalent to 20% of the board member's
total bonus after taxes, which the board member is re-
quired to invest in BMW AG common stock. Taxes and
social insurance relating to the share-based remunera-
tion component are also borne by the Company. As a
general rule, the shares must be held for a minimum of
four years. As part of a matching plan, the Board of
Management members will, at the end of the holding
period, receive from the Company either one additional
share of common stock or an equivalent cash amount
for three shares of common stock held, to be decided at
the discretion of the Company (share-based remunera-
tion component/matching component), unless the em-
ployment relationship was ended before expiry of the
agreed contractual period (except if caused by death or
invalidity). Special rules apply in the case of death or
invalidity of a Board of Management member before ful-
filment of the holding period.
181 STATEMENT ON CORPORATE GOVERNANCE
Adaptability
The only results that count for the Company are those
which have a sustainable impact. In assessing leader-
ship, we must consider the effectiveness of performance
on results.
Effectiveness
Every BMW Group employee has the personal responsi-
bility for the Company's success. When working in a
team, each employee must assume personal responsibility
for his or her actions. We are fully aware that we are
working to achieve the Company's goals. For this reason,
we work together in the best interests of the Company.
Responsibility
We aim to be the best - a challenge to which all of us
must rise. Each and every employee must be prepared
to deliver peak performance. We strive to be among
the elite, but without being arrogant. It is the Company
and its products that count - and nothing else.
Peak performance
The success of our Company is determined by our cus-
tomers. They are at the heart of everything we do.
The results of all our activities must be valued in terms
of the benefits they will generate for our customers.
Customer focus
Within the BMW Group, the Board of Management, the
Supervisory Board and the employees base their actions
on twelve core principles which are the cornerstone of
the success of the BMW Group:
Information on corporate governance practices
applied beyond mandatory requirements
Core principles
In order to provide shareholders with a profile of the
individual members of the Supervisory Board and
to make it easier to assess composition targets, brief
curricula vitae of the current members of the Super-
visory Board are available on the Company's website
at www.bmwgroup.com.
In order to ensure our long-term success we must adapt
to new challenges with speed and flexibility. We there-
fore see change as an opportunity - adaptability is essen-
tial to be able to capitalise on it.
In the Supervisory Board's opinion, its composition as
at 31 December 2014 fulfilled the composition objec-
tives detailed above.
183 STATEMENT ON CORPORATE GOVERNANCE
The time schedule set by the Supervisory Board for
achieving the above-mentioned composition targets is
the Annual General Meeting in 2016. Future pro-
posals for nomination made by the Supervisory Board
at the Annual General Meeting - insofar as they apply
to shareholder Supervisory Board members – should
take account of these objectives in such a way that they
can be achieved with the support of the appropriate
resolutions at the Annual General Meeting. The Annual
General Meeting is not bound by nominations for elec-
tion proposed by the Supervisory Board. The freedom
of employees to vote for the employee members of the
Supervisory Board is also protected. Under the proce-
dural rules stipulated by the German Co-Determination
Act, the Supervisory Board does not have the right to
nominate employee representatives for election. The ob-
jectives which the Supervisory Board has set itself with
regard to its composition are therefore not intended to
be instructions to those entitled to vote or restrictions
on their freedom to vote. More to the point, they reflect
As a general rule, the age limit for membership of the
Supervisory Board should be set at 70 years. In ex-
ceptional cases, members may be allowed to remain
on the Board up until the end of the Annual General
Meeting following their 73rd birthday, in order to ful-
fil legal requirements or to facilitate smooth succes-
sion in the case of persons with key roles or specialist
qualifications.
At least twelve of the 20 members of the Supervisory
Board should be independent members within the
meaning of section 5.4.2 of the German Corporate
Governance Code, including at least six members
representing the Company's shareholders. Two inde-
pendent members of the Supervisory Board should
have expert knowledge of accounting or auditing.
No persons carrying out directorship functions or ad-
visory tasks for important competitors of the BMW
Group may belong to the Supervisory Board. In com-
pliance with prevailing legislation, the members of
the Supervisory Board will strive to ensure that no
persons will be nominated for election with whom a
serious conflict of interests could arise (other than
temporarily) due to other activities and functions car-
ried out by them outside the BMW Group; this in-
cludes in particular advisory activities or directorships
with customers, suppliers, creditors or other business
partners.
The Supervisory Board believes it is the joint respon-
sibility of all persons and groupings participating in
the nomination and election process to ensure that
the Supervisory Board includes an appropriate num-
ber of qualified women.
-
-
When seeking suitably qualified individuals for the
Supervisory Board whose specialist skills and leader-
ship qualities are most likely to strengthen the Board
as a whole, consideration should also be given to di-
versity. When preparing nominations, the extent to
which the work of the Supervisory Board would bene-
fit from diversified professional and personal back-
grounds (including international aspects) and from
an appropriate representation of both genders should
also be taken into account. In view of the proportion
of women in the workforce (BMW AG: 14.8%; BMW
Group 17.8%) and in management positions (BMW AG:
11.4%; BMW Group: 14.2%) at 31 December 2014,
the Supervisory Board is of the opinion that a propor-
tion of three female members out of a total of 20 mem-
bers (15%) is satisfactory as far as gender mix is con-
cerned, but that an increase to at least four female
members (20%) would be desirable. The Supervisory
Board therefore considers it appropriate that oppor-
tunities available in conjunction with selection proce-
dures through to the end of the ordinary Annual
General Meeting in 2016 should be used to maintain
the current proportion of 25% female representation.
-
- Ideally, three members of the Supervisory Board
should be figures from the worlds of business, science
or research who have gained experience in areas rele-
vant to the BMW Group - e.g. chemistry, energy sup-
ply, information technology, or who have acquired
specialist knowledge in subjects relevant for the future
of the BMW Group e.g. customer requirements, mo-
bility, resources or sustainability.
- If possible, the Supervisory Board should include seven
members who have acquired in-depth knowledge and
experience from within the enterprise. The Super-
visory Board should not, however, include more than
two former members of the Board of Management.
If possible three of the shareholder representatives in
the Supervisory Board should be entrepreneurs or
persons who have already gained experience in the
management or supervision of another medium or
large-sized company.
-
the composition which the current Supervisory Board
believes should be striven for in future by those entitled
to nominate and elect board members, in view of the
advisory and supervisory needs of BMW AG's Supervisory
Board.
184 Compliance in the BMW Group
189 Compensation Report
Frankness
Respect, trust, fairness
It
recognised guidelines. The BMW Group is committed to
adhering to the OECD's guidelines for multinational
companies and the contents of the ICC Business Charter
for Sustainable Development. Details of the contents
of these guidelines and other relevant information can
be found at www.oecd.org and www.iccwbo.org. The
Board of Management signed the United Nations Global
Compact in 2001 and, in 2005, together with employee
representatives, issued a "Joint Declaration on Human
Rights and Working Conditions in the BMW Group”.
This Joint Declaration was reconfirmed in 2010. With
the signature of these documents, we have given our
commitment to abide worldwide by internationally rec-
ognised human rights and with the fundamental work-
ing standards of the International Labour Organization
(ILO). The most important of these are freedom of em-
ployment, the prohibition of discrimination, the freedom
of association and the right to collective bargaining,
the prohibition of child labour, the right to appropriate
remuneration, regulated working times and compliance
with work and safety regulations. The complete text of
the UN Global Compact and the recommendations of
the ILO and other relevant information can be found at
www.unglobalcompact.org and www.ilo.org. The Joint
Declaration on Human Rights and Working Conditions
in the BMW Group can be found at www.bmwgroup.
com under the menu item “Responsibility" (Services/
downloads/topics: "Employees and Society").
183-Information on Corporate
Governance Practices
184-Compliance in the BMW Group
189 Compensation Report
178 Work Procedures of the
Supervisory Board
176 Work Procedures of the
Board of Management
173 Members of the Supervisory
Board
172 Members of the Board of
Management
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
(Part of Management Report)
170 Information on the Company's
Governing Constitution
CORPORATE GOVERNANCE
170-STATEMENT ON
184
As we strive to find the best solution, it is each em-
ployee's duty to express any opposing opinions they
may have. The solutions we agree upon will then be
consistently implemented by all those involved.
The BMW Group stands by its social responsibilities. Our
corporate culture combines the drive for success with a
willingness to be open, trustworthy and transparent.
We are well aware of our responsibility towards society.
Our models for sustainable social responsibility towards
employees and for ensuring compliance with interna-
tional social standards are based on various internationally
The core principles are also available at www.bmwgroup.
com under the menu items "Responsibility” and “Em-
ployees".
We secure the corporate independence of the BMW
Group through sustained profitable growth.
Independence
Social responsibility is an integral part of our corporate
self-image.
Society
In our view, sustainability constitutes a lasting contribu-
tion to the success of the Company. This is the basis upon
which we assume ecological and social responsibility.
Sustainability
Every manager must lead by example.
Leading by example
People make companies. Our employees are the strong-
est factor in our success, which means our personnel
decisions will be among the most important we ever
make.
Employees
We treat each other with respect. Leadership is based on
mutual trust. Trust is rooted in fairness and reliability.
Social responsibility towards employees and along
the supplier chain
176 Work Procedures of the
Board of Management
178-Work Procedures of the
Supervisory Board
183-Information on Corporate
Governance Practices
173 Members of the Supervisory
Board
172 Members of the Board of
Management
Nomination Committee
- establishment in accordance with the recommendation contained in the
German Corporate Governance Code, activities based on terms of reference
- amendments to Articles of Incorporation only affecting wording
- decision on approval for utilisation of Authorised Capital 2014
- discussion of interim reports with Board of Management prior to publication
preparation of proposals for election of external auditor at Annual General Meet-
ing, engagement of external auditor and compliance of audit engagement, de-
termination of areas of audit emphasis and fee agreements with external auditor
preparation of Supervisory Board's resolution on Company and Group Finan-
cial Statements
- supervision of external audit, in particular auditor independence and addi-
tional work performed by external auditor
supervision of the financial reporting process, effectiveness of the internal
control system, risk management system, internal audit arrangements and
compliance
-
Audit Committee
- decisions relating to the approval of ancillary activities of Board of Management
members, including acceptance of non-BMW Group supervisory mandates as
well as the approval of transactions requiring Supervisory Board approval by dint
of law (e.g. loans to Board of Management or Supervisory Board members)
set up in accordance with the recommendation contained in the German
Corporate Governance Code, activities based on terms of reference
- conclusion, amendment and revocation of employment contracts (in conjunc-
tion with the resolutions taken by the Supervisory Board regarding the com-
pensation of the Board of Management) and other contracts with members of
the Board of Management
- identification of suitable candidates (male/female) as shareholder representa-
tives on the Supervisory Board to be put forward for inclusion in the Super-
visory Board's proposals for election at the Annual General Meeting
preparation of decisions relating to the appointment and revocation of appoint-
ment of members of the Board of Management, the compensation and the
regular review of the Board of Management's compensation system
Personnel Committee
- activities based on terms of reference
- preparation of Supervisory Board meetings to the extent that the subject
matter to be discussed does not fall within the remit of a committee
Presiding Board
attendance
Number - Average
of meetings
2014
Members
basis for activities
Principal duties,
Overview of Supervisory Board Committees, Meetings
Share-based remuneration programme
-
- establishment in accordance with the recommendation contained in the
German Corporate Governance Code, activities based on terms of reference
Mediation Committee
proposal to Supervisory Board if resolution for appointment of Board of
Management member has not been carried by the necessary two-thirds
majority of Supervisory Board members' votes
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company's
Governing Constitution
170-STATEMENT ON
182
88%
2
3 telephone
conferences
plus
94%
4
97%
6
95%
4
2 Independent financial expert within the meaning of §100 (5) AktG and § 107 (4) AktG.
1 Chair.
(In accordance with statutory require-
ments, the Mediation Committee
comprises the Chairman and Deputy
Chairman of the Supervisory Board and
one member each selected by share-
holder representatives and employee
representatives.)
Stefan Schmid
Stefan Quandt
Manfred Schoch
Joachim Milberg
(In line with the recommendations of the
German Corporate Governance Code,
the Nomination Committee comprises
only shareholder representatives.)
Joachim Milberg
Susanne Klatten
Karl-Ludwig Kley
Stefan Quandt
Karl-Ludwig Kley 1,2
Joachim Milberg
Manfred Schoch
Stefan Quandt
Stefan Schmid
Joachim Milberg
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Joachim Milberg
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
- committee required by law
goes
without saying that the BMW Group abides by
these fundamental principles and rights worldwide.
Employees have therefore been sensitised to this issue
since 2005 by means of regular internal communica-
tions and further training on recent developments in
this area. Two dedicated helplines – the “Human Rights
Contact" and the BMW Group SpeakUP Line - are
available to employees wishing to raise queries or com-
plaints relating to human rights issues. The UN Guiding
Principles for Business and Human Rights provide a
framework for critical reflection and continuous improve-
ment in our endeavours to ensure that human rights are
respected throughout the organisation.
Composition objectives of the Supervisory Board
The Supervisory Board must be composed in such a way
that its members as a group possess the knowledge, skills
and experience required to properly complete its tasks.
To this end, the Supervisory Board has formally speci-
fied the following concrete objectives regarding its com-
position, taking into account the recommendations
contained in the German Corporate Governance Code:
If possible four of the members of the Supervisory
Board should have international experience or spe-
cialist knowledge with regard to one or more of
the non-German markets important to the Company.
Activities can only be sustainable, however, if they en-
compass the entire value-added chain. That is why the
Compensation Report
189 STATEMENT ON CORPORATE GOVERNANCE
BMW AG and its directly or indirectly- wholly owned
German subsidiaries (if agreed to by the directors of
those entities) were entitled to participate in the scheme.
Employees were required to have been in an uninter-
rupted employment relationship with BMW AG or the
relevant subsidiary for at least one year at the date on
which the allocation for the year was announced. Shares
of preferred stock acquired in conjunction with the Em-
ployee Share Scheme are subject to a vesting period of
four years, starting from 1 January of the year in which
the employees acquired the shares. A total of 239,777
(2013: 266,152) shares of preferred stock were acquired
by employees under the scheme in 2014; 239,757 (2013:
265,570) of these shares were drawn from the Author-
ised Capital 2014, the remainder were bought back via
the stock exchange. Every year the Board of Manage-
ment of BMW AG decides whether the scheme is to be
continued. Further information is provided in notes 20
and 35 to the Group Financial Statements.
-
Under the terms of this scheme, participants give a
commitment to invest an amount equivalent to 20% of
their performance-based bonus in BMW common stock
The share-based remuneration scheme for qualifying
department heads, introduced with effect for financial
years beginning after 1 January 2012, is closely based
on the scheme for Board of Management members and
is aimed at rewarding a long-term, entrepreneurial ap-
proach to running the business on a sustainable basis.
Three share-based remuneration schemes were in place
at BMW AG during the year under report, namely the
Employee Share Programme (under which entitled
employees of BMW AG have been able to participate in
the enterprise's success since 1989 in the form of non-
voting shares of preferred stock), a share-based remu-
neration scheme for Board of Management members
and a share-based remuneration scheme for department
heads (relating in both cases to shares of common
stock). The share-based remuneration scheme for Board
of Management members is described in detail in the
Compensation Report (see also the "Share-based re-
muneration" section in the Compensation Report and
note 20 to the Group Financial Statements).
Share-based remuneration schemes for employees
and Management Board members
The members of the Supervisory Board of BMW AG
hold in total 27.61% of the Company's shares of com-
mon and preferred stock (2013: 27.62%), of which
16.06% (2013: 16.07%) relates to Stefan Quandt, Ger-
many, and 11.54% (2013: 11.55%) to Susanne Klatten,
Germany. The shareholdings of the members of the
Board of Management total less than 1% of the issued
shares.
Shareholdings of members of the Board of Management ber to 12 November 2014: €62.08). All employees of
and the Supervisory Board
Under the terms of the Employee Share Programme, em-
ployees were able in 2014 to acquire packages of be-
tween four and ten shares of non-voting preferred stock
with a discount in each case of €25 (2013: €19.23) per
share compared to the market price (average closing
price in Xetra trading during the period from 6 Novem-
-
The following section describes the principles relating
to the compensation of the Board of Management and
the stipulations set out in the statutes relating to the
compensation of the Supervisory Board. In addition to
discussing the compensation system, the components
of compensation are also disclosed in absolute figures.
Furthermore, the compensation of each member of the
Board of Management and the Supervisory Board for
the financial year 2014 is disclosed by individual and
analysed in its component parts.
and to hold the shares so acquired for four years. In re-
turn for this commitment, BMW AG pays 100% of the
investment amount as a net subsidy. Once the four-year
holding period requirement has been fulfilled, the par-
ticipants receive - for each three common stock shares
held and at the Company's option – one further share
of common stock or the equivalent amount in cash.
Reportable securities transactions
("Directors Dealings")
184 Compliance in the BMW Group
189 Compensation Report
183 Information on Corporate
Governance Practices
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
173 Members of the Supervisory
Board
172 Members of the Board of
Management
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company's
Governing Constitution
170-STATEMENT ON
188
In the interest of investor protection and to ensure that
the BMW Group complies with regulations relating
to potential insider information, the Board of Manage-
ment appointed an Ad Hoc Committee back in 1994,
consisting of representatives of various specialist de-
partments, whose members examine the relevance of
issues for ad hoc disclosure purposes. All persons
working on behalf of the company who have access to
insider information in accordance with existing rules
have been, and continue to be, included in a corre-
sponding, regularly updated list and informed of the
duties arising from insider rules.
Compliance is also an important factor in safeguarding
the future of the BMW Group workforce. With this in
mind, the Board of Management and the national and
international employee representative bodies of the
BMW Group have agreed on a binding set of Joint Prin-
ciples for Lawful Conduct. In doing so, all parties in-
volved made a commitment to the principles contained
in the BMW Group Legal Compliance Code and to
trustful cooperation in all matters relating to compliance.
Employee representatives are therefore regularly in-
volved in the process of refining compliance measures
within the BMW Group.
Pursuant to § 15 a of the German Securities Trading Act
(WPHG), members of the Board of Management and
the Supervisory Board and any persons related to those
members are required to give notice to BMW AG and
the Federal Agency for the Supervision of Financial Ser-
vices of transactions with BMW stock or related finan-
cial instruments if the total sum of such transactions
equals or exceeds an amount of €5,000 during any given
calendar year. No securities transactions pursuant to
§ 15 a WPHG were notified to the Company during the
financial year 2014.
1. Board of Management compensation
Responsibilities
The Supervisory Board is responsible for determining
and regularly reviewing the Board of Management's
compensation. The Personnel Committee plays a pre-
paratory role in this process.
Principles of compensation
Further information on social responsibility to employees
can be found in the section "Workforce".
An earnings and dividend factor of 1.00 would give rise
to an earnings-based bonus of €0.75 million for the finan-
cial
year 2014 for a member of the Board of Management
during the first period of office and one of €0.875 mil-
lion during the second term of appointment or from the
fourth year in office. The equivalent bonus for the Chair-
man of the Board of Management is €1.5 million. The
earnings factor is 1.00 in the event of a Group net profit
of €3.1 billion and a post-tax return on sales of 5.6%.
The dividend factor is 1.00 in the event that the dividend
paid on the shares of common stock is between 101 and
110 cents. If the Group net profit is below €1 billion or
if the post-tax return on sales is less than 2%, the earn-
ings factor for the financial year 2014 would be zero. In
this case, no corporate earnings-related bonus would be
paid. Based on the principle of consistency at all levels,
this rule is also applicable in determining the corporate
earnings-related variable compensation components of
all managers and staff of BMW AG.
The corporate earnings-related bonus is based on the
BMW Group's net profit and post-tax return on sales
(which are combined in a single earnings factor) and the
level of the dividend (common stock). The corporate
earnings-related bonus is derived by multiplying the tar-
get amount fixed for each member of the Board of
Management by the earnings factor and by the dividend
factor. In exceptional circumstances, for instance when
there have been major acquisitions or disposals, the
Supervisory Board may adjust the level of the corporate
earnings-related bonus.
The bonus is made up of two components, each equally
weighted, namely a corporate earnings-related bonus
and a personal performance-related bonus. The target
bonus (100%) for a Board of Management member,
for both components of variable compensation, totals
€1.5 million p.a., rising to €1.75 million p.a. from the
second term of appointment or fourth year of office on-
wards. The equivalent figure for the Chairman of the
Board of Management is €3 million p.a. The amount of
bonus is capped for all Board of Management members.
With effect from financial years beginning on or after
1 January 2014, the upper limits are 200% of the relevant
target bonus (2013: 250%).
the board member is required to invest in BMW AG
common stock. Taxes and social insurance relating to
the share-based remuneration are also borne by the
Company. In substantiated cases, the Supervisory
Board also has the option of paying an additional spe-
cial bonus.
184 Compliance in the BMW Group
189 Compensation Report
183 Information on Corporate
Governance Practices
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
173 Members of the Supervisory
Board
172 Members of the Board of
Management
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
(Part of Management Report)
170 Information on the Company's
Governing Constitution
CORPORATE GOVERNANCE
170-STATEMENT ON
190
Variable cash remuneration consists of a cash bonus
and share-based remuneration component equivalent to
20% of a board member's total bonus after taxes, which
Variable cash remuneration, in particular bonuses
The variable remuneration of Board of Management
members comprises variable cash remuneration on the
one hand and a share-based remuneration component
on the other.
Variable remuneration
The basic remuneration of members of the Board of
Management is unchanged from the previous year,
namely €0.75 million p.a. for a board member during
the first period of office, €0.9 million p.a. for a board
member from the second term of appointment or fourth
year of office onwards and €1.5 million p.a. for the
Chairman of the Board of Management.
Fixed remuneration consists of a base salary (paid
monthly) and other remuneration elements. Other re-
muneration elements comprise mainly the use of com-
pany and lease cars as well as the payment of insurance
premiums, contributions towards security systems and
an annual medical check-up. Members of the Board of
Management are also entitled to purchase vehicles and
other services of the BMW Group at conditions that also
apply in each relevant case for employees.
Fixed compensation
Compensation system, compensation components
The compensation of the Board of Management com-
prises both fixed and variable remuneration as well as
a share-based component. Retirement and surviving
dependants' benefit entitlements are also in place.
The Supervisory Board reviews the appropriateness of
the compensation system annually. The Personnel
Committee also makes use of remuneration studies. The
Supervisory Board reviews the appropriateness of the
compensation system in horizontal terms by comparing
compensation paid by DAX companies and in vertical
terms by comparing board compensation with the sala-
ries of executive managers and with the average salaries
of employees of BMW AG in Germany, in both cases in
terms of level and of changes over time. Recommenda-
tions made by an independent external remuneration
expert and suggestions made by investors and analysts
are also considered in the consultative process.
performance. Targets and other parameters may not be
changed retrospectively.
The compensation of members of the Board of Manage-
ment is determined by the full Supervisory Board on
the basis of performance criteria and after taking into
account any remuneration received from Group com-
panies. The principal performance criteria are the nature
of the tasks allocated to each member of the Board of
Management, the economic situation and the perfor-
mance and future prospects of the BMW Group. The
Supervisory Board sets demanding and relevant parame-
ters as the basis for variable compensation. It also takes
care to ensure that variable components based on
multi-year assessment criteria take account of both posi-
tive and negative developments and that the package
as a whole encourages a long-term approach to business
The compensation system for the Board of Management
at BMW AG is designed to encourage a management
approach focused on sustainable development of the
BMW Group. One further principle applied when de-
signing remuneration systems at BMW is that of consist-
ency at different levels. In other words, compensation
systems for the Board of Management, senior: manage-
ment and employees of BMW AG should all have a simi-
lar structure and contain similar components. The Super-
visory Board carries out regular checks to ensure that
all Board of Management compensation components are
appropriate, both individually and in total, and do not
encourage the Board of Management to take inappro-
priate risks on behalf of the BMW Group. At the same
time, the compensation model used for the Board of
Management should be attractive in the context of the
competitive environment for highly qualified executives.
evaluated with a view to identifying potential compliance
risks. These procedures are particularly relevant for
relations with sales partners and service providers, such
as agencies and consultants. Depending on the results
of the evaluation, appropriate measures - such as com-
munication measures, training and possible monitoring –
are implemented to manage compliance risks. The
Business Relations Compliance programme has already
been introduced in 32 units since its launch and, over
the coming years, will be rolled out successively through-
out the BMW Group's worldwide sales organisation.
In 2014, the company also continued integrating com-
pliance clauses to protect contractual relationships into
dealer and importer contracts.
In the same way that the BMW Group is committed to
lawful and responsible conduct, it expects no less
from its business partners. In 2012, the BMW Group
developed a new Business Relations Compliance pro-
gramme aimed at ensuring the reliability of its business
relations. Relevant business partners are checked and
The personal performance-related bonus is derived by
multiplying the target amount set for each member of
the Board of Management by a performance factor. The
Supervisory Board sets the performance factor on the
basis of its assessment of the contribution of the relevant
Board of Management member to sustainable and long-
term oriented business development. In setting the
factor, consideration is given equally to personal perfor-
mance and decisions taken in previous forecasting pe-
riods, key decisions affecting the future development
of the business and the effectiveness of measures taken
in response to changing external conditions as well as
other activities aimed at safeguarding the future viability
of the business to the extent not included directly in
the basis of measurement. Performance factor criteria
include innovation (economic and ecological, e.g. re-
duction of carbon emissions), customer focus, ability to
adapt, leadership accomplishments, contributions to
the Company's attractiveness as an employer, progress
in implementing the diversity concept and activities that
foster corporate social responsibility. The target bonus
and the key figures used to determine the corporate
earnings-related bonus are fixed in advance for a period
of three financial years, during which time they may not
be amended retrospectively.
Compliance
Reporting
Annual
Compliance
Reporting
Annual
Report
Annual
Report
Compliance
Governance and
Processes
Compliance
Compliance
Instruments and
Measures of
the BMW Group
Legal Compliance
Code and Regulations
Compliance Risk
Analysis
of all BMW Group
Compliance Responsibles
Compliance Operations Network
To avoid this, BMW Group employees are kept fully up-
to-date with the instruments and measures used by the
Compliance Management System via various internal
channels. As of 2014, all new staff receive a welcome
email underscoring the BMW Group's special commit-
ment to compliance when they join the company. The
central means of communication is the Compliance
website within the BMW Group's intranet, where em-
ployees can find compliance-related information and
access training materials in both German and English.
The website contains a special service area where various
practical tools are made available to employees to help
them deal with typical compliance-related matters. BMW
Group employees also have access on the website to an
electronically supported approval process for invitations
in connection with business partners and an evaluation
tool for independent assessment of the admissibility of
incentive schemes to promote sales.
Compliance
Investigations
and Controls
Compliance
Communication
BMW Group Compliance Committee Office<
Board of Management BMWAG
Supervisory Board BMWAG ←
BMW Group Compliance Management System
The BMW Group Compliance Committee reports regu-
larly to the Board of Management on all compliance-
related issues, including the progress made in refining
the BMW Group Compliance Management System, de-
tails of investigations performed, known infringements
of the law, sanctions imposed and corrective/preventa-
tive measures implemented. This ensures that the Board
of Management is immediately notified of any cases of
particular significance. The decisions taken by the BMW
Group Compliance Committee are drafted in concept,
and implemented operationally, by the BMW Group
Compliance Committee Office. The BMW Group Com-
monitors activities necessary to avoid non-compliance
with the law (Legal Compliance). These activities include
training, information and communication measures,
compliance controls and following up cases of non-com-
pliance.
185 STATEMENT ON CORPORATE GOVERNANCE
The BMW Group Compliance Committee comprises
the heads of the following divisions: Legal Affairs and
Patents, Corporate and Governmental Affairs, Corpo-
rate Audit, Group Reporting, Organisational Develop-
ment and Corporate Human Resources. It manages and
This principle has been embedded in BMW's internal
rules of conduct for many years. In order to protect
itself systematically against compliance-related and
reputational risks, the Board of Management created
a Compliance Committee several years ago, mandated
to establish a worldwide Compliance Management
System throughout the BMW Group.
Responsible and lawful conduct is fundamental to the
success of the BMW Group. It is an integral part of
our corporate culture and the reason why customers,
shareholders, business partners and the general public
place their trust in us. The Board of Management and
the employees of the BMW Group are obliged to act
responsibly and in compliance with applicable laws and
regulations.
Compliance in the BMW Group
We also work in close partnership with our suppliers
and promote their commitment to sustainability.
BMW Group not only makes high demands of itself but
also expects its suppliers and partners to meet the eco-
logical and social standards it sets and strives continu-
ally to improve the efficiency of processes, measures
and activities. For instance, we are successively requir-
ing our dealers and importers to comply with ecolog-
ical and social standards on a contractual basis. Simi-
larly, corresponding criteria are embedded in our
purchasing terms and our evaluation of suppliers with
a view to ensuring the inclusion of sustainability as-
pects throughout the purchasing system. The BMW
Group Sustainability Standard is an integral compo-
nent of our enquiry documents and of the automotive
supplier self-assessment questionnaire on sustainabil-
ity required to be completed sector-wide by new sup-
pliers. The BMW Group expects suppliers to ensure
that the BMW Group's sustainability criteria are also
adhered to by sub-suppliers. Purchasing terms and
conditions and other information relating to purchasing
can be found in the publicly available section of the
BMW Group Partner Portal at https://b2b.bmw.com.
BMW Group Compliance Committee
Compliance
Training
Contact and
SpeakUP Line
The Chairman of the BMW Group Compliance Com-
mittee keeps the Audit Committee (which is part of the
Supervisory Board) informed on the current status of
compliance activities within the BMW Group, both on a
regular and a case-by-case basis as the need arises.
It is essential that employees are aware of and comply
with applicable legal regulations. The BMW Group
does not tolerate violations of the law by its employees.
Culpable violations of the law result in employment-
contract sanctions and may involve personal liability con-
sequences for the employee involved.
Compliance with and implementation of the Legal Com-
pliance Code are audited regularly by Corporate Audit
and subjected to control checks by Corporate Security
and the BMW Group Compliance Committee Office. As
part of its regular activities, Corporate Audit carries out
on-site audits. The BMW Group Compliance Committee
also engages Corporate Audit to perform compliance-
specific checks. In addition, a BMW Group Compliance
Spot Check, a sample test specifically designed to identify
potential corruption risks, was carried out in 2014. Com-
pliance control activities are coordinated by the BMW
Group Panel Compliance Controls. Any necessary follow-
up measures are organised by the BMW Group Com-
pliance Committee Office.
187 STATEMENT ON CORPORATE GOVERNANCE
Through the group-wide reporting system, Compliance
Responsibles throughout the BMW Group report on
compliance-relevant issues to the Compliance Commit-
tee on a regular basis, and, if necessary, on an ad hoc
basis. This includes reporting on the compliance status
of the relevant entities, on identified legal risks and
incidences of non-compliance, as well as on corrective/
preventative measures implemented.
Compliance-related queries and concerns are docu-
mented and followed up by the BMW Group Compliance
Committee Office using an electronic Case Management
System. If necessary, Corporate Audit, Corporate
Security, the Works Council and legal departments may
be called upon to assist in the investigation process.
Employees also have the opportunity to submit informa-
tion - anonymously and confidentially - via the BMW
Group SpeakUP Line about possible breaches of the law
within the company. The BMW Group SpeakUP Line
is available in a total of 34 languages and can be reached
via local toll-free numbers in all countries in which BMW
Group employees are engaged in activities.
In order to avoid legal risks, all members of staff are
expected to discuss compliance matters with their
managers and with the relevant departments within
the BMW Group, in particular Legal Affairs, Corporate
Audit and Corporate Security. The BMW Group Com-
pliance Contact serves as a further point of contact for
both employees and non-employees for any questions
regarding compliance.
pliance Committee Office comprises ten employees and
is allocated in organisational terms to the Chairman of
the Board of Management.
total of 3,900 employees have already completed this
training. The relevant divisions also implemented further
measures and processes to make employees who par-
ticipate in meetings with competitors sufficiently aware
of antitrust risks.
In addition to this basic training, more in-depth training
is also provided to certain groups of staff on specific
compliance issues. In 2014, a total of 1,900 employees at
BMW AG branches received further training as anti-
money laundering measures were upgraded. Antitrust
law training was also expanded in 2013, targeting em-
ployees who come into contact with antitrust-related
issues as a result of their functions within sales and
marketing, purchasing, production or development. A
More than 25,400 managers and staff worldwide have re-
ceived training in essential compliance matters since the
introduction of the BMW Group Compliance Manage-
ment System. The training material is available on an In-
ternet-based training platform in German and English
and includes a final test. Successful completion of the
training programme, which is documented by a certificate,
is mandatory for all BMW Group managers. Appropriate
processes are in place to ensure that all newly recruited
managers and promoted staff undergo compliance train-
ing. In this way, the BMW Group ensures full training
coverage for its managers in compliance matters.
Managers in particular bear a high degree of responsi-
bility and must set a good example with regard to pre-
venting infringements. Managers throughout the BMW
Group acknowledge this principle by signing a written
declaration, in which they also undertake to inform
staff working for them of the content and significance
of the Legal Compliance Code and make them aware
of legal risks. Managers must, at regular intervals and
on their own initiative, verify compliance with the law
and communicate regularly with staff on this issue.
Any indication of non-compliance with the law must
be rigorously investigated.
The BMW Group Legal Compliance Code is the corner-
stone of the Group's Compliance Management System,
spelling out the Board of Management's commitment
to compliance as a joint responsibility ("tone from the
top"). This document, which was revised and expanded
in 2014, explains the significance of legal compliance
and provides an overview of the various areas relevant
for the BMW Group. It is available both as a printed
brochure and for download in German and English. In
addition, translations into eleven other languages are
available in the BMW Group intranet.
Additional compliance coaching has also been imple-
mented for international sales and financial service lo-
cations in local markets. These multi-day classroom
seminars strengthen the understanding of compliance
in selected units and enhance cooperation between
the central BMW Group Compliance Committee Office
and decentralised compliance offices. In 2014, market
coaching was conducted in Canada, China and the UK.
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184-Compliance in the BMW Group
189 Compensation Report
A coordinated set of instruments and measures is em-
ployed to ensure that the BMW Group, its representative
bodies, its managers and staff act in a lawful manner.
Particular emphasis is placed on compliance with anti-
trust legislation and the avoidance of corruption risks.
Compliance measures are supplemented by a whole
range of internal policies, guidelines and instructions,
which in part reflect applicable legislation. The BMW
Group Policy "Corruption Prevention" and the BMW
Group Instruction "Corporate Hospitality and Gifts",
which were revised in 2014, deserve particular mention.
These documents deal with lawful handling of gifts
and benefits and define appropriate assessment criteria
and approval procedures for specified actions.
Compliance measures are determined and prioritised
on the basis of a group-wide compliance risk assess-
ment covering all 331 business units and functions
worldwide within the BMW Group. The assessment of
compliance risks is updated annually. Measures are
realised with the aid of a regionally structured com-
pliance management team covering all parts of the
BMW Group, which oversees a network of more than
180 Compliance Responsibles.
The various elements of the BMW Group Compliance
Management System are shown in the diagram on the
left and are applicable for all BMW Group entities world-
wide. To the extent that additional compliance require-
ments apply to individual countries or specific lines
of business, these are covered by supplementary com-
pliance measures.
186
The Board of Management keeps track of and analyses
compliance-related developments and trends on the
basis of the Group's compliance reporting and input
from the BMW Group Compliance Committee. Measures
to improve the Compliance Management System are
initiated on the basis of identified requirements.
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company's
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
170-STATEMENT ON
General Information on the BMW Group
Business Model
18-COMBINED MANAGEMENT REPORT
18-Business Model
This Combined Management Report combines the
management reports of BMW AG and the BMW Group.
General information on the BMW Group
23 Report on Economic Position
20 Management System
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26
COMBINED MANAGEMENT REPORT
18-General Information on the BMW Group General information on the BMW Group is provided be-
low. There have been no significant changes compared
to the previous year.
18
Our understanding of the term "premium" is now being
taken to a new level with the BMW i brand. Inspired
through and through by the desire for even greater sus-
tainability, the BMW i epitomises the vehicle of the
future - with its electric drivetrain, revolutionary light-
weight construction, exceptional design and an entirely
newly designed range of mobility services.
Norbert Reithofer
Л.
Yours
The course is set for the future.
As you can see, much still remains to be done. New trends and challenges also bring new business opportu-
nities and possibilities. I strongly believe that the BMW Group will grow dynamically, by innovatively shaping
the individual mobility of the future in all its forms and continuing to be a responsible partner for society.
In December 2014, the Supervisory Board decided to make a change at the head of the company's Board
of Management. Our Board of Management Member for Production Harald Krüger will take over as Chairman
of the Board of Management after the 2015 Annual General Meeting. This generational change will enable
the company to move forward with new ideas and impulses.
The course is set for the future To mark our centenary on 7 March 2016, we deliberately choose to look
to the future. Every age has its challenges and must find its own solutions. That is why we give younger
generations the chance to shape the further development of the company according to their own ideas.
Mobility services mainly used by young people We are selectively expanding our range of mobility
services: car-sharing is one option that is particularly appealing to young people. London and Vienna are
two further European cities outside of Germany that have now been added to our DriveNow offering. By the
end of 2014, around 390,000 customers had already registered with DriveNow. Additional cities in Europe
and in the US will follow in 2015.
The car as a part of the Internet will change our industry even more than the shift to alternative drivetrains.
As in-car connectivity increases, new competitors will seek access to customers in their vehicles. We are
committed to shaping the age of in-car connectivity responsibly, in the interests of our customers. We already
offer advanced driver assistance systems in our vehicles today. Moreover, we also have the capacity for highly
autonomous driving.
Connectivity defines our times and will dominate the future The digital, connected world is a particularly
important area for premium manufacturers when it comes to differentiation and growth. It affects both the
vehicle itself and the way that vehicle is produced. Last year, at our Spartanburg and Dingolfing plants, we
took a major step towards intensive human-robot collaboration. We use this form of cooperation selectively in
areas where it adds value and relieves associates of heavy physical work, enabling them to stay healthy for a
long time.
The innovation of our engineers and developers ensures the company's continued success. In 2014, we
invested more than 4.5 billion euros in research and development. Between now and 2018, we will expand
and modify our FIZ Research and Innovation Centre in Munich. Once the final stage of expansion is com-
plete, the investment will be equivalent to building a completely new plant.
In Mexico, preparations are underway for the opening of a new plant with a capacity of up to 150,000 units
in 2019. During celebrations to mark the 20th anniversary of our Spartanburg plant, we announced an in-
crease in capacity there to 450,000 units. We are also stepping up local production at our facility in Shenyang,
China, which is set to build six BMW models specifically for the Chinese market. We have already extended
our joint venture with Brilliance to 2028, thereby paving the way for further growth in China.
Chairman of the Board of Management
Financial and Non-financial
Our premium brands - BMW, MINI and Rolls-Royce -
are well known and highly admired around the globe
for their innovative technologies and state-of-the-art
design. The BMW Group provides the full spectrum of
individual mobility, ranging from premium-segment
small vehicles through to ultra-luxurious and powerful
vehicles. Our entire product range is linked by one
characteristic: efficiency. The MINI brand is a veritable
icon in the premium small car segment, offering unri-
valled driving pleasure in its class. Rolls-Royce has a
long and distinguished tradition in the ultra-luxury seg-
ment stretching back over more than 100 years. Our
core BMW brand satisfies a broad spectrum of customer
wishes, ranging from fuel-efficient, innovative models
equipped with Efficient Dynamics through to high-per-
formance, extremely efficient BMW M sub-brand vehi-
cles, which bring the flair of motor sport onto the roads.
All BMW vehicles share one thing in common: their im-
pressive driving dynamics.
29 Review of Operations
17 STATEMENT OF THE CHAIRMAN OF THE BOARD OF MANAGEMENT
The worldwide distribution network currently consists
of around 3,250 BMW, 1,550 MINI and 130 Rolls-Royce
dealerships. In China alone, more than 40 BMW dealer-
ships and 30 MINI dealerships were opened in 2014.
Products and services are sold in Germany through
BMW Group branches and by independent authorised
dealers. Sales outside Germany are handled primarily
by subsidiary companies and, in a number of markets,
by independent import companies. The dealership
and agency network for BMW i currently covers some
650 locations. The sales network for BMW motorcycles
is organised in a similar way to the automobile business.
Currently, there are around 1,000 BMW Motorrad dealer-
ships worldwide.
BMW motorcycle models roll off the production lines at
the BMW Group plant in Berlin. Car brake discs are
also produced at this location. Two further motorcycle
assembly plants are located in Manaus (Brazil) and
Rayong (Thailand).
The Rolls-Royce Phantom, Ghost and Wraith models
are manufactured exclusively at the Goodwood plant
(United Kingdom).
The MINI models - Hatch (3- and 5-door), Convertible,
Coupé and Roadster - are manufactured at the Oxford
plant (United Kingdom). The UK production triangle
also includes the components plant in Swindon as well
as the engine plant at Hams Hall, where petrol engines
are manufactured for MINI and BMW. In Graz (Austria),
Magna Steyr Fahrzeugtechnik manufactures the MINI
Countryman and, since 2012, the MINI Paceman for
the BMW Group. In 2014 the Dutch car manufacturer,
VDL Nedcar bv (Born) began producing the MINI Hatch
on behalf of the BMW Group.
The primary function of the BMW Group's assembly
plants is to serve nearby regional markets. BMW cars are
currently being assembled in Chennai (India), Jakarta
(Indonesia), Cairo (Egypt), Kaliningrad (Russia), Kulim
(Malaysia) and Rayong (Thailand). Production at the
BMW Group's newest plant in Araquari (Brazil) cur-
rently covers the BMW 3 Series and the X1, and will be
extended to include the BMW 1 Series, the X3 and the
MINI Countryman over the course of 2015.
motive Ltd. joint venture opened an engine plant in
Shenyang (China), which supplies petrol engines to its
neighbouring plants.
19 COMBINED MANAGEMENT REPORT
Components for the worldwide production network are
manufactured at the BMW Group plants in Landshut
and Wackersdorf. The Eisenach plant is responsible for
toolmaking. The two production sites in Moses Lake
(USA) and Wackersdorf are operated by the SGL Auto-
motive Carbon Fibers (ACF) joint venture and supply
carbon fibre and carbon fibre fabrics for the production
of BMW i models. The BMW Group's largest engine
manufacturing plant in Steyr (Austria) makes petrol and
diesel engines for the various BMW plants and diesel
engines for the MINI. In 2012 the BMW Brilliance Auto-
BMW 3 Series and 4 Series models as well as petrol and
diesel engines are manufactured at the BMW Group
plant in Munich, next to the BMW Group's headquarters.
Models of the BMW 1, 3 and 4 Series as well as the Z4
Roadster roll off the production lines at the Regensburg
plant. The currently largest BMW Group plant is located
in Dingolfing, where we build the BMW 3 Series Gran
Turismo, the BMW 4 Series Gran Coupé, models of
the BMW 5, 6 and 7 Series as well as hybrid BMW 5 and
7 Series vehicles. Chassis and drive components are also
manufactured at this plant. The BMW Group Leipzig
plant's production range covers models of the BMW 1
and 2 Series, the BMW X1 and the electrically powered
BMW i3 as well as the BMW i8 hybrid sports car. The
BMW 3 Series Sedan is assembled at the plant in
Rosslyn (South Africa). The BMW Group plant in
Spartanburg (USA) is responsible for producing the
BMW X3, X4, X5 and X6 models. BMW X1 and models
of the BMW 3 and 5 Series are built exclusively for
the Chinese market at the two plants operated by
the BMW Brilliance Automotive Ltd. joint venture in
Shenyang (China).
The BMW Group operates on a global scale and is repre-
sented in more than 140 countries worldwide. Its re-
search and innovation network is spread over twelve
locations in five countries. At 31 December 2014 the
Group's production network comprised a total of 30 lo-
cations in 14 countries.
Long-term thinking and responsible action have always
been the cornerstones of our success. Striving for eco-
logical and social sustainability along the entire value-
added chain, taking full responsibility for our products
and giving an unequivocal commitment to preserving
resources are prime objectives firmly embedded in our
corporate strategy. As a result of these endeavours, we
have ranked among the most sustainable companies in
the automobile industry for many years.
The BMW Group is one of the most successful makers
of cars and motorcycles worldwide and among the
largest industrial companies in Germany. With BMW,
MINI and Rolls-Royce, the BMW Group owns three of
the strongest premium brands in the automotive in-
dustry. The vehicles it manufactures set the highest
standards in terms of aesthetics, dynamics, technology
and quality, a fact borne out by the BMW Group's
leading position in engineering and innovation. In addi-
tion to its strong position in the motorcycles market,
the BMW Group also offers its customers a successful
range of financial services. In recent years, the Group
has also established itself as a leading provider of pre-
mium services for individual mobility. At the end of the
reporting period, the BMW Group had a workforce of
116,324 employees worldwide.
Bayerische Motoren Werke G. m. b. H. came into
being in 1917. Having been originally founded in
1916 as Bayerische Flugzeugwerke AG (BFW), it be-
came Bayerische Motoren Werke Aktiengesellschaft
(BMW AG) in 1918. The BMW Group comprises
BMW AG and all subsidiaries, which BMW AG - either
directly or indirectly - has the power to control.
BMW AG is also responsible for managing the BMW
Group. General conditions on the world's automobile
and motorcycle markets (such as the competitive situa-
tion, government policies, statutory regulations),
underlying trends within society as well as changes
in raw materials prices, exchange rates and interest
rates are some of the major external factors that exert
an influence over our business.
and Explanatory Comments
87 BMW Stock and Capital Markets
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
70 Report on Risks and Opportunities
82 Internal Control System and Risk
65 Outlook
Opportunities
65 Report on Outlook, Risks and
Reporting Period
64 Events after the End of the
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
which is based in Munich, Germany, is the parent com-
pany of the BMW Group. The primary business objective
61 Comments on Financial Statements of the BMW Group is the development, manufacture and
sale of engines as well as of all vehicles equipped with
those engines. The BMW Group is subdivided into the
Automotive, Motorcycles, Financial Services and Other
Entities segments (the latter primarily comprising hold-
ing companies and Group financing companies).
Business model
of BMW AG
Position and Net Assets
49 Results of Operations, Financial
Performance Indicators
The global automobile market continues to expand: from around 62 million new vehicle registrations in
2007 to more than 80 million in 2014. We see no contradiction between participating in this growth and
maintaining the desirability of our premium brands. In 2014, we continued to create the conditions necessary
for strategic expansion of our global production network. In October, the first car rolled off the assembly
line at our new plant in Araquari, Brazil. This gives us a permanent presence in an important growth region.
Munich, 12 March 2015
We will continue to chart our own course with Efficient Dynamics, hybridisation and electromobility.
There is no way back. Average emissions for our European fleet currently stand at 130 grams of CO2 per
kilometre. At the same time, we are focusing on sustainable production and efficient use of resources. Since
2006, we have reduced average resource consumption per vehicle produced by 45 per cent. Sustainability
pays dividends - in every respect.
Other changes in the composition and organisational structure of the Board of Management Klaus
Fröhlich, previously Head of Small and Mid-size Series BMW Group, was appointed as member of the Board
of Management with effect from 9 December 2014, with responsibility for Development. His predecessor,
Dr Herbert Diess, resigned from the Board of Management on 9 December 2014.
The Financial Statements and the Combined Management Report, the long-form audit reports of the
external auditors and the Board of Management's profit distribution proposal were made available to all
members of the Supervisory Board in a timely manner.
The Group and Company Financial Statements of Bayerische Motoren Werke Aktiengesellschaft for the
year ended 31 December 2014 and the Combined Management Report – as authorised for issue by the Board
of Management on 19 February 2015 – were audited by KPMG AG Wirtschaftsprüfungsgesellschaft and
given an unqualified audit opinion.
-
that the abridged Interim Group Financial Statements and Interim Group Management Report had not been
prepared, in all material respects, in accordance with the applicable provisions.
13 REPORT OF THE SUPERVISORY BOARD
Examination of financial statements and the profit distribution proposal KPMG AG Wirtschafts-
prüfungsgesellschaft conducted a review of the abridged Interim Group Financial Statements and Interim
Group Management Report for the six-month period ended 30 June 2014. The results of the review were
presented to the Audit Committee by KPMG representatives. No issues were identified that might indicate
Wolfgang Mayrhuber has resigned his mandate as member of the Supervisory Board with effect from
the end of the Annual General Meeting 2015. We also wish to extend our thanks to him for more than
ten years of valuable and highly appreciated service in the Supervisory Board, always working in the best
interest of the Group.
After 10 years of valuable and highly appreciated work in the Supervisory Board, Bertin Eichler did not
stand for re-election. In his place, Christiane Benner (Executive Board member of IG Metall) was newly
elected to the Supervisory Board as union representative. As a result, the Supervisory Board now has five
female members (25%). Ulrich Kranz, Head of the BMW i product line, was newly elected to the Supervisory
Board to succeed Dr Markus Schramm as executive staff representative. The Supervisory Board thanked
the members leaving office for their constructive work and trusting cooperation within the Supervisory
Board. The composition of the Presiding Board and the committees remained unchanged in 2014, with all
previous members confirmed in their respective functions. The Corporate Governance Report includes an
overview of the composition of the Supervisory Board and its committees (see chapter Statement on Corpo-
rate Governance).
Other personnel changes in the Supervisory Board In accordance with the regulations of the Co-Deter-
mination Act, the ten employee representatives were re-elected with effect from the end of the Annual
General Meeting on 15 May 2014.
11 REPORT OF THE SUPERVISORY BOARD
Testing performed during the year under report did not highlight any material ICS weaknesses which could
jeopardise the system's effectiveness.
These documents were examined and discussed thoroughly by the Audit Committee at the meeting held
on 5 March 2015. The Supervisory Board subsequently examined these documents at its meeting on 12 March
2015, after receiving the committee chairman's report on the meeting of the Audit Committee. In both
meetings, the Board of Management gave a detailed explanation of the financial reports it had prepared.
Representatives of the external auditors attended both meetings, reported on significant findings and an-
swered any additional questions raised by the members of the Supervisory Board. They also confirmed that
the risk management system put in place by the Board of Management is capable of identifying any events
or developments that might impair the going-concern status of the Company and that no material weak-
nesses in either the internal control system or the risk management system were found with regard to the
financial reporting process. Similarly, they confirmed that they had not identified any facts in the course of
their audit work that were inconsistent with the contents of the Declaration of Compliance issued jointly by
the two boards.
The Chairman of the BMW Group Compliance Committee reported to the Audit Committee on the con-
cept that has been developed to strengthen local compliance functions as well as on the current compliance
situation, which, as in the previous year, was deemed satisfactory overall. None of the information received
relating to potential non-compliance or actual incidences of non-compliance identified in specific cases gave
any indication of serious or systemic non-compliance with applicable requirements.
We concurred in the Audit Committee with the decision of the Board of Management to raise the Com-
pany's share capital in accordance with § 4 (5) of the Articles of Incorporation (Authorised Capital 2014) by
€239,757 and to issue a corresponding number of new non-voting bearer shares of preferred stock, each with
a par value of €1, at favourable conditions to employees.
The Personnel Committee convened six times during the financial year 2014. One major area of deliberation
was the future composition of the Board of Management, with particular regard to preparing for successor
decisions, including consideration of possible scenarios for the future change in the chair of the Board of
Management.
In preparation for the full Supervisory Board's meetings, the Personnel Committee reviewed the structure
and appropriateness of Board of Management compensation and prepared the Supervisory Board's decision
with respect to board members' bonuses. In two cases we also gave our approval for one member of the
Board of Management to accept the mandate for membership of the supervisory board of a non-BMW Group
entity.
The Nomination Committee convened twice during the financial year 2014. At these meetings, we deliber-
ated on successor planning for mandates of the shareholders' representatives on the Supervisory Board and
considered proposals for candidates for the Supervisory Board elections at the Annual General Meeting 2015,
taking the composition objectives stipulated for the Supervisory Board into due account.
The statutory Mediation Committee was not required to convene during the financial
year 2014.
Generational change at head of Board of Management and Supervisory Board initiated The Supervisory
Board worked through a number of scenarios with respect to succession planning at the head of the Super-
visory Board and - together with the Chairman of the Board of Management, Dr Norbert Reithofer - assessed
the range of options available for selecting a new Chairman of the Board of Management. Various constella-
tions were examined, including the important issue of timing. We wanted to bring about a farsighted, timely
change in leadership in order to strengthen the position of the BMW Group with a long-term perspective
for management. We shared the opinion of major shareholders that Dr Reithofer's wealth of knowledge and
experience should be retained within the BMW Group and that the Supervisory Board would benefit greatly
from his playing a key role in its work.
-
The Supervisory Board therefore supports the proposal that Dr Norbert Reithofer be appointed to the
position of Chairman of the Supervisory Board – subject to his election to that board. After carefully con-
sidering various scenarios, the conclusion was reached that a direct move by Dr Reithofer to the position of
12
Chairman of the Supervisory Board – without an interim phase – will strengthen the role of the Supervisory
Board and is thus in the best interests of the BMW Group.
In order to ensure that this generational change can also take place in good time at the head of the Super-
visory Board, in agreement with its other members, I have resigned my mandate as Supervisory Board
member with effect from the end of the Annual General Meeting 2015.
In due consideration of these developments, the Supervisory Board has reached agreement with
Dr Reithofer concerning the early termination of his Board of Management mandate and his service con-
tract with effect from the end of the Annual General Meeting 2015.
Harald Krüger has been appointed Chairman of the Board of Management with effect from the end of the
Annual General Meeting 2015, to coincide with Dr Reithofer's planned exit from the Board of Management.
Harald Krüger brings a great deal of experience to this position from his previous board responsibilities. Since
2013, he has been in charge of Production, before which, from 2008 to 2012, he was first responsible for Human
Resources and then for the MINI, BMW Motorrad, Rolls-Royce and BMW Group Aftersales division.
The Head of Group Internal Audit reported to us in the Audit Committee on the organisation of the Group
Internal Audit as the BMW Group's "Third Line of Defence", informed us of the significant findings of audits
conducted by Group Internal Audit, on both the industrial and financial services sides of the business, and
explained the main points of emphasis for planned audits.
Targeted expansion of our global production network We continue to aim for a balanced distribution
of sales between the three main economic regions of the world. This allows us to offset fluctuations in indi-
vidual markets and avoid overdependence on any single region. In 2014, Europe accounted for around 43 per
cent of sales, Asia 31 per cent and the Americas just under 23 per cent.
Based on thorough examination by the Audit Committee and the full Supervisory Board, we concurred
with the results of the external audit. In accordance with the conclusion reached after the examination by
the Audit Committee and Supervisory Board, no objections were raised. The Group and Company Financial
Statements of Bayerische Motoren Werke Aktiengesellschaft for the financial year 2014 prepared by the Board
of Management were approved at the Supervisory Board meeting held on 12 March 2015. The separate finan-
cial statements have therefore been adopted.
Expression of appreciation by the Supervisory Board We wish to express our appreciation to the mem-
bers of the Board of Management and the entire workforce of the BMW Group worldwide for their concerted
efforts and outstanding contribution to the record result we are able to post for the financial
We also use our know-how and experience with BMW i in series production of our other models. In autumn
2015, we will release our first plug-in hybrid BMW X model, the BMW X5 xDrive40e, which incorporates the
technological expertise gained from BMW i. The new BMW 7 Series is also set to become the benchmark for
lightweight design in its segment through the use of carbon fibre. Over time, all model series will be available
with electric drive technology. Climate protection policies worldwide will remain challenging and growing
urbanisation demands new mobility solutions.
Customers have the choice: sheer driving pleasure also available with electric and hybrid drivetrains
The new BMW i family has further strengthened our image as the industry's leading innovator. 2014 was the
first
year of availability for the pure electric BMW i3. More than 16,000 customers chose this model, which
was specially designed for urban areas. The BMW i8 has been available to customers since summer. Orders for
the BMW i8 plug-in hybrid continue to well exceed the planned number of units for production. A total of
1,741 BMW i8 vehicles were delivered to customers from June to December.
I would therefore like to thank all our associates on behalf of the Board of Management. I would also like
to thank all our business partners, and especially our suppliers, who play such a key part in our success.
And, of course, our thanks also extend to our entire retail organisation and the dealers who are our link to
the customer.
The younger generation ensures our future success: more than 1,500 apprentices worldwide embarked
on a career with us in September 2014; 1,200 of them in Germany. A total of 4,595 young people are currently
in vocational training with the BMW Group. This represents an increase of 150 over the previous year.
Our associates at all 30 BMW Group production sites in 14 countries are our most important success factor.
We are investing extensively in vocational and professional training to qualify them for new demands and
technologies, such as digitalisation. Between 2007 and the end of 2014 alone, we channelled around 1.8 billion
euros into vocational and professional training – more than in our Efficient Dynamics technology package.
People and technology have the same importance for us.
We owe our achievements to our associates worldwide Our successful business development is driven
by our 116,324 associates worldwide. Their skills, their performance and their dedication – each in his or her
own area of responsibility - contribute to the overall success of the company.
Customer deliveries climbed more than 40 per cent between the end of 2007 and the end of 2014. Group
revenues increased by 44 per cent over the same period while pre-tax earnings more than doubled. During
this time, BMW common shares performed much better than the DAX. Our associates, as well as our share-
holders, benefit from this positive development through our preferred shares ] programme.
16
The Financial Services segment once again made a solid contribution to the success of the BMW Group.
Impact of Strategy Number ONE reflected in key performance indicators We laid the foundation for
this successful development back in 2007 with our Strategy Number ONE. This strategy guides all our busi-
ness activities into 2020 and has already taken the company to a new dimension. We operate at an entirely
different level of performance today than in 2007.
With regard to our individual brands, there were new records for BMW, Rolls-Royce and BMW Motorrad.
More than 1.8 million customers purchased a BMW in 2014. Our MINI brand maintained roughly the same
high level as the previous year, with a total of 302,000 vehicles sold, despite the model changeover. Our
MINI plant in Oxford in the UK produced its three-millionth MINI last year. With exactly 4,063 vehicles sold,
Rolls-Royce remains in strong demand and continues to set the standard for the ultra-luxury class. BMW
Motorrad also reported growth, with more than 123,000 deliveries, and once again outperformed the overall
market. The anniversary model BMW R nineT and the fully electric C evolution proved popular with both
customers and the automotive press.
Strong demand for our premium vehicles is the main factor contributing to record revenues of 80.4 billion
euros. For the first time, we sold more than two million vehicles worldwide in a single year - 2.118 million
BMW, MINI and Rolls-Royce vehicles, to be exact - fulfilling a wish for many customers. This represents an
increase of 7.9 per cent over the previous year and a new sales high for the BMW Group.
Today, we can say: we delivered on our promises. Group profit before tax climbed 10.3 per cent to
8.7 billion euros. Net profit increased by 9.2 per cent to more than 5.8 billion euros. The EBIT margin in the
Automotive Segment stands at 9.6 per cent and therefore at the upper end of our target range.
The Supervisory Board also examined the proposal of the Board of Management to use the unappropriat-
ed profit to pay an increased dividend of €2.90 per share of common stock and €2.92 per share of non-voting
preferred stock. We consider the proposal appropriate and therefore concur with it.
2014 financial year - fifth successive record year for the BMW Group In the 2014 financial year, the
company's successful development since the global financial and economic crisis of 2008/2009 continued.
We had set ourselves ambitious goals in a difficult environment: record sales of over two million vehicles;
our highest-ever Group profit before tax, with a significant increase year-on-year; and an EBIT margin in our
target range of eight to ten per cent for the Automotive Segment.
Investors in the BMW Group can look forward to long-term value enhancement, on the basis of healthy,
organic growth. Our shareholders can rely on us to sustain our profitability. Strong competition, market
volatility, political uncertainty, new trends in our environment – all of this is part of our daily business.
BMW will reach its 100th year in 2016. We naturally plan to celebrate this important milestone in our
history. It is a testament to our value-based corporate philosophy, geared towards the long term and shaped
by independent-minded decisions. But above all else, this centenary compels us to look to the future.
The successes a company has achieved in the past belong to its history. All that matters today is a com-
pany's future. Forward-looking companies renew themselves of their own initiative. It is crucial for a company
to question its own actions, explore new directions and consistently implement innovations to benefit its
customers. Financial strength allows companies to invest in the future – thereby securing long-term success
and fulfilling responsibilities towards shareholders, associates and other stakeholders.
Dear Shareholders,
Norbert Reithofer
Chairman of the Board of Management
14
year 2014.
Chairman of the Supervisory Board
Joachim Milberg
Jouchein liills
Your
On behalf of the Supervisory Board
We firmly believe that mobility will remain a fundamental human need and a cornerstone of dynamic
economies. We aim to lead the industry with our ideas in all areas of individual mobility, transporting sheer
driving pleasure to a new age of sustainable mobility. This is an exciting direction for us – and a profitable
one for our shareholders who accompany us along this path.
BMW Motorrad also focuses on the premium segment
and offers a range of motorcycles for the Tourer, Enduro,
Sport and Roadster segments as well as Maxi-Scooter
for urban mobility. A wide range of accessories and
equipment is also available, providing additional safety
and comfort to customers.
15 STATEMENT OF THE CHAIRMAN OF THE BOARD OF MANAGEMENT
20
term performance and assess strategic issues, additional
key performance figures are measured at Group level for
controlling purposes. The contribution made to busi-
ness value growth during the financial year is measured
in terms of "value added". This approach is translated
for operational purposes at both Group and segment
level by identifying the main financial and non-financial
factors ("value drivers") which affect the value of the
business. The link between value added and the relevant
value drivers is shown in simplified form in the following
diagram.
Return on sales
Profit
Expenses
Revenues
Capital turnover
Cost of capital
Capital employed
Due to the high aggregate impact of various factors, it is
difficult to manage a business proactively simply by
focusing on value added. This key figure therefore only
serves for intermediate reporting purposes.
Return on capital
(ROCE/ROE)
Value drivers which could have a significant impact on
profitability and the value of the business are defined
for each controlling level. The financial and non-finan-
cial value drivers referred to above are reflected in the
principal key performance indicators used to manage the
business.
Management of operating performance at segment level
Operating performance is managed at segment level on
the basis of capital rates of return. Depending on the
business model, the segments are managed on the basis
Average weighted cost
of capital rate
of total return or the return on equity capital. The per-
formance of the Automotive and Motorcycles segments
is measured on the basis of the return on capital em-
ployed (ROCE) and that of the Financial Services seg-
ment using the return on equity (RoE). Profitability (re-
turn on sales) and capital efficiency (capital turnover)
are aggregated in the capital rate of return, together with
a whole host of business-relevant information that has
an impact on segment performance and changes in the
value of the business.
Automotive segment
The principal key performance indicator for the Auto-
motive segment is return on capital employed (RoCE),
measured on the basis of segment profit before financial
result and the average level of capital employed in oper-
ations. The strategic target for the Automotive segment's
ROCE is 26%.
ROCE Automotive
Profit before financial result
Capital employed
The Financial Services segment, which works in tandem
with the sales organisation, is represented in more than
50 countries around the world. Credit financing and
the lease of BMW Group brand cars and motorcycles to
retail customers is its largest line of business. The BMW
Group's international multi-brand fleet business, oper-
ating under the brand name “Alphabet”, provides fleet
financing products and comprehensive management
services for corporate car fleets in 19 countries. Within
the multi-brand financing line of business, credit financ-
ing, leasing and other services are marketed to retail
customers under the brand name “Alphera”. The seg-
ment's range of products is rounded off by providing
support to the dealer organisation and offering insurance
and banking services.
With effect from the end of the Annual General Meeting 2015, the Supervisory Board appointed
Oliver Zipse, most recently Head of Corporate Planning and Product Strategy, as a member of the Board of
Management. He will take over responsibility for Production from Harald Krüger.
In the case of project decisions, the system is supple-
mented by the application of project-relevant control
logic, also utilising value-based and return-based
per-
formance indicators.
Value added
The Supervisory Board also renewed the appointment of three Board of Management members in 2014.
term if the profit generated by the business sustainably
exceeds the cost of equity and debt capital available to it,
thus reflecting the profitable employment of capital.
The BMW Group's internal management system is
multilayered. Operating performance is managed first
and foremost at segment level. In order to manage long-
General Information on the BMW Group
Management System
The business management system applied by the BMW
Group follows a value-based approach, with a clear focus
on achieving profitable growth, increasing the value of
the business for capital providers and safeguarding jobs.
18-General Information on the BMW Group Corporate autonomy can only be ensured in the long
18 Business Model
20-Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
18-COMBINED MANAGEMENT REPORT
61 Comments on Financial Statements
of BMW AG
49 Results of Operations, Financial
Position and Net Assets
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
70 Report on Risks and Opportunities
65 Outlook
82 Internal Control System and Risk
65 Report on Outlook, Risks and
Reporting Period
64 Events after the End of the
Opportunities
(262,500)
(289,681)
687,570
(289,308)
Total4
1,922,497
3,054,178
31,334,919
(24,819,665)
(2,033,085)
(2,723,228)
(21,753,227)
Herbert Diess5
178,809
(211,774)
- 383,900
(407,705)
25,028,384
(262,500)
3,029,448
-371,398
lan Robertson
220,609
(143,734)
359,256
(358,325)
3,927,671
(2,648,384)
3,204,346
(2,516,021)
356,067
-688,271
414,827
2,395,377
(395,507)
(274,357)
(2,025,994)
(1,771,848)
Peter Schwarzenbauer
369,234
4,256,732
(3,294,607)
3,858,064
(3,062,183)
These two interacting components are intended to
ensure that the compensation of Supervisory Board
members is commensurate overall in relation to the
2 Based on legal right to receive the benefits already promised to them, Board of Management members appointed for the first time prior to 1 January 2010 were given
the option of choosing between the old and new models at the time the Company changed from a defined benefit to a defined contribution system.
The German Corporate Governance Code also recom-
mends in section 5.4.6 paragraph 1 sentence 2 that the
exercising of chair and deputy chair positions in the
Supervisory Board as well as the chair and membership
of committees should also be considered when deter-
mining the level of
compensation.
Accordingly, the Articles of Incorporation of BMW AG
stipulate that the Chairman of the Supervisory Board
shall receive three times the amount and each Deputy
Chairman shall receive twice the amount of the remu-
neration of a Supervisory Board member. Provided the
relevant committee convened for meetings on at least
three days during the financial year, each chairman of
the Supervisory Board's committees receives twice the
209 Contacts
208 Financial Calendar
207 Index of Graphs
206 Index
Glossary
With this combination of fixed compensation elements
and a corporate performance-related compensation
component oriented toward sustainable growth, the
compensation structure in place for BMW AG's Super-
visory Board complies with the recommendation on
supervisory board compensation contained in section
5.4.6 paragraph 2 sentence 2 of the German Corporate
Governance Code (version dated 24 June 2014).
204
5 Figures are reported in the cash flow statement up to 2006 as cash inflow from operating activities of Industrial Operations and from 2007 as cash inflow from
operating activities of the Automotive segment.
4 Research and development expenses included in cost of sales with the effect from 2008.
1 Excluding Husqvarna, sales volume up to 2013: 59,776 units; production up to 2013: 59,426 units.
2 Amount computed on the basis of balance sheet figures: until 2007 from the Group balance sheet, from 2008 onwards from the Financial Services segment balance sheet.
3 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
202 BMW Group Locations
200 BMW Group Ten-year Comparison
200-OTHER INFORMATION
-1,508
2.30/2.32
6 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.
1 Service cost differs due to the different valuation bases used to measure pension obligations for HGB purposes (expected settlement amount) and for IFRS purposes
(present value of the defined benefit obligation).
tasks performed and the Company's financial condition
and also takes account of business performance over
several years.
183 Information on Corporate
Governance Practices
3 Member of the Board of Management since 9 December 2014.
-1,640
-2.50/2.52
4 The previous year's figures include amounts relating to Dr Diess.
5 Member of the Board of Management until 9 December 2014.
2. Supervisory Board compensation
Responsibilities, regulation pursuant to Articles
of Incorporation
The compensation of the Supervisory Board is specified
by resolution of the shareholders at the Annual General
Meeting or in the Articles of Incorporation. The com-
pensation regulation valid for the financial year under
report was resolved by shareholders at the Annual Gen-
eral Meeting on 14 May 2013 and is set out in Article 15
of BMW AG's Articles of Incorporation, which can be
viewed and/or downloaded at www.bmwgroup.com/ir
under the menu items "Corporate Facts" and "Corporate
Governance".
184 Compliance in the BMW Group
189 Compensation Report
Compensation principles, compensation components
The Supervisory Board of BMW AG receives a fixed
compensation component as well as a corporate per-
formance-related compensation component which is
oriented toward sustainable growth, based on a multi-
year assessment. The corporate performance-related
component is based on average earnings per share of
common stock for the remuneration year and the two
preceding financial years.
170-STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company's
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
196
In accordance with the Articles of Incorporation, each
member of BMW AG's Supervisory Board receives, in
addition to the reimbursement of reasonable expenses,
a fixed amount of €70,000 (payable at the end of the
year) as well as a corporate performance-related compen-
sation of €170 for each full €0.01 by which the average
amount of (undiluted) earnings per share (EPS) of
common stock reported in the Group Financial State-
ments for the remuneration year and the two preceding
financial years exceeds a minimum amount of €2.00
(payable after the Annual General Meeting held in
the following year). An upper limit corresponding to
twice the amount of the fixed compensation (€140,000)
is in place for the corporate performance-related com-
pensation.
€ million
1,904
2.90/2.92
1,668,982
-1,845,186
106,358
-1,963,798
-115,215
-2,117,965
123,495
units
units
2011
2012
2013
2014
Income Statement
Business volume (based on balance sheet carrying amounts)² -
104,286
Contract portfolio
Motorcycles
Automobiles
Production volume
Motorcycles¹
Automobiles
Sales volume
BMW Group Ten-year Comparison
OTHER INFORMATION
200
Wirtschaftsprüfer
Feege
Financial Services
Wirtschaftsprüfer
units
units
2,006,366
-110,127
9,118
€ million
Profit before financial result
21.1
20.2
20.1
21.2
%
Gross profit margin Group
68,821
-76,848
2,165,566
-133,615
-76,059³
€ million
Revenues
- 3,592,093
-75,245
3,846,364
80,974
4,130,002
84,347
4,359,572
-96,390
€ million
contracts
-110,360
-1,738,160
-1,861,826
113,811
-80,401
-7,9783
Pastor
KPMG AG
Dr.-Ing. Dr.-Ing. E. h. Norbert Reithofer
The Board of Management
Bayerische Motoren Werke
Aktiengesellschaft
Munich, 19 February 2015
"To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position and profit of the
Group, and the Group Management Report includes
a fair review of the development and performance of
the business and the position of the Group, together
with a description of the principal opportunities and
risks associated with the expected development of the
Group."
Statement pursuant to § 37y No. 1 of the Securities
Trading Act (WPHG) in conjunction with § 297 (2)
sentence 4 and § 315 (1) sentence 6 of the German
Commercial Code (HGB)
Responsibility Statement by the Company's Legal Representatives
198
granted by the Company to members of the Board of
Management and the Supervisory Board, nor were any
contingent liabilities entered into on their behalf.
Apart from vehicle lease contracts entered into on cus-
tomary market conditions, no advances and loans were
3. Other
Milagros Caiña Carreiro-Andree
4 Figures for the previous year include the remuneration of members of the Supervisory Board who left office during the financial year 2013.
2 Member of the Supervisory Board since 15.05.2014.
(4,557,735)
1 These employee representatives have - in line with the guidelines of the Deutsche Gewerkschaftsbund - requested that their remuneration be paid into the
Hans Böckler Foundation.
(2,547,653)
(192,000)
(1,818,082)
4,764,622
2,754,240
190,000
1,820,382
Total4
3 Member of the Supervisory Board until 15.05.2014.
Wirtschaftsprüfungsgesellschaft
Dr.-Ing. Klaus Draeger
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company's
Governing Constitution
Munich, 5 March 2015
In our opinion, based on the findings of our audit, the
consolidated financial statements comply with IFRSS,
as adopted by the EU, the additional requirements of
German commercial law pursuant to § 315a (1) HGB and
give a true and fair view of the net assets, financial
position and results of operations of the Group in ac-
cordance with these requirements. The group manage-
ment report is consistent with the consolidated finan-
cial statements and as a whole provides a suitable
view of the Group's position and suitably presents the
opportunities and risks of future development.
Our audit has not led to any reservations.
the business activities and the economic and legal
environment of the Group and expectations as to possi-
ble misstatements are taken into account in the deter-
mination of audit procedures. The effectiveness of the
accounting-related internal control system and the evi-
dence supporting the disclosures in the consolidated
financial statements and in the group management
report are examined primarily on a test basis within the
framework of the audit. The audit also includes assess-
ing the annual financial statements of those entities
included in consolidation, the determination of entities
to be included in consolidation, the accounting and
consolidation principles used and significant estimates
made by the management, as well as evaluating the
overall presentation of the consolidated financial state-
ments and group management report. We believe that
our audit provides a reasonable basis for our opinion.
We conducted our audit of the consolidated financial
statements in accordance with § 317 HGB and German
generally accepted standards for the audit of financial
statements promulgated by the Institut der Wirtschafts-
prüfer (Institute of Public Auditors in Germany) (IDW).
Those standards require that we plan and perform the
audit such that misstatements materially affecting the
presentation of the net assets, financial position and
results of operations in the consolidated financial state-
ments in accordance with the applicable financial report-
ing framework and in the group management report
are detected with reasonable assurance. Knowledge of
We have audited the consolidated financial statements
prepared by Bayerische Motoren Werke Aktiengesell-
schaft, comprising the income statement for group and
statement of comprehensive income for group, the
balance sheet for group, cash flow statement for group,
group statement of changes in equity and the notes to
group financial statements and its report on the
position of the Company and the Group for the business
year from 1 January to 31 December 2014. The prepara-
tion of the consolidated financial statements and group
management report in accordance with IFRSS, as
adopted by the EU, and the additional requirements of
German commercial law pursuant to § 315a (1) HGB
(Handelsgesetzbuch "German Commercial Code") are
the responsibility of the parent company's management.
Our responsibility is to express an opinion on the con-
solidated financial statements and on the group manage-
ment report based on our audit.
the
BMW Group
Auditor's Report
199 STATEMENT ON CORPORATE GOVERNANCE
Peter Schwarzenbauer
Dr. Ian Robertson (HonDSc)
170-STATEMENT ON
Harald Krüger
Dr. Friedrich Eichiner
189 Compensation Report
184 Compliance in the BMW Group
183 Information on Corporate
Governance Practices
178 Work Procedures of the
Supervisory Board
176 Work Procedures of the
Board of Management
Board
173 Members of the Supervisory
172 Members of the Board of
Management
Supervisory Board pursuant to
§161 AktG
171 Declaration of the Board of
Management and of the
Klaus Fröhlich
-1,707
2.60/2.62
-8,275
Profit before tax
Operating cash flow 5
-7,776
-8,370
-7,6713
-7,688
€ million
Cash and cash equivalents at balance sheet date
Cash Flow Statement
-123,429
131,835
-138,3773
€ million
154,803
47,213
48,395
51,1343
49,113
52,834
51,6433
-58,288
-59,078
€ million
€ million
In addition, each member of the Supervisory Board re-
ceives an attendance fee of €2,000 for each full meeting
of the Supervisory Board (Plenum) which the member
has attended (payable at the end of the financial year).
Attendance at more than one meeting on the same day
is not remunerated separately.
22.0
€ million
- 23.2
9,423
9,167
€
€ million
-100,306
84,887
-105,876
89,161
-110,351
89,8693
116,324
-92,337
Dividend per share of common stock/preferred stock
Dividend total
Dividend
Personnel cost per employee
Workforce at the end of year6.
9,9643
Personnel
6.8
8.8
- 3,692
- 5,240
6,7113
6,100
-7.6
-%
Capital expenditure ratio (capital expenditure/revenues)
€ million
Capital expenditure
8,110
5.4
-8,018
25.73
%
Net profit for the year
33.5
34.5
32.5
-33.2
%
Effective tax rate
-2,476
2,692
2,5643
2,890
€ million
€ million
-10.7
10.2
-10.4
-10.8
%
Return on sales (earnings before tax/revenues)
-7,383
-7,803
-7,8933
8,707
Harald Krüger
Income taxes
-24.2
5,817
5,111
27,103
30,606
35,600³
37,437
€ million
49,004
50,530
52,1843
56,844
€ million
-74,425
5,3293
81,305
-97,959
€ million
Balance sheet total
Current provisions and liabilities
Non-current provisions and liabilities
Equity ratio Group
Equity
Current assets
Non-current assets
Balance Sheet
-4,907
86,1933
(-)
amount and each member of a committee receives one
and a half times the amount of the remuneration of a
Supervisory Board member. If a member of the Super-
visory Board exercises more than one of the functions
referred to above, the compensation is measured only
on the basis of the function which is remunerated with
the highest amount.
(-)
22.9
-7.9
21.8
-7.7
Fixed compensation
Variable cash
Amount Proportion - Amount Proportion
in %
in %
compensation
2013
in € million
The total compensation of the current members of the
Board of Management of BMW AG for the financial year
2014 amounted to €35.4 million (2013: €34.5 million),
of which €7.7 million (2013: €7.9 million) relates to
fixed components (including other remuneration).
Variable components amounted to €27.0 million (2013:
€25.9 million) and share-based remuneration compo-
nents to €0.7 million (2013: €0.7 million).
Compensation of the Board of Management for the
financial year 2014 (2013) (total)
The Supervisory Board has stipulated caps for all variable
remuneration components and for the remuneration of
Board of Management members in total. The caps are
shown in the overview of the compensation system and
compensation components.
Remuneration caps
benefits from third parties in 2014 on account of their
activities as members of the Board of Management of
BMW AG.
2014
Share-based compen-
sation component*
Total compensation
-27.0
-76.3
171 Declaration of the Board of
Management and of the
(Part of Management Report)
170 Information on the Company's
Governing Constitution
CORPORATE GOVERNANCE
170-STATEMENT ON
The amount paid to former members of the Board of
Management and their dependants for the financial year
2014 was €5.8 million (2013: €4.7 million). The figure for
2014 includes continued payment of the fixed remunera-
tion of Dr Diess after leaving the Board of Management
amounting to €0.1 million. Pension obligations to former
members of the Board of Management, including Dr
Diess, and their surviving dependants are fully covered
by pension provisions amounting to €68.4 million (2013:
€58.0 million), computed in accordance with IAS 19.
In addition, an expense of €2.1 million (2013: €2.2 mil-
lion) was recognised in the financial year 2014 for current
members of the Board of Management for the period af-
ter the end of their service relationship, which relates to
the expense for allocations to pension provisions.
Matching component; provisional number or provisional monetary value calculated at
grant date (date on which the entitlement became binding in law). The final number
of matching shares is determined in each case when the requirement to invest in
BMW AG common stock has been fulfilled.
100.0
2.0
-0.7
34.5
100.0
1.9
0.7
35.4
-75.1
25.9
Apart from these, there are no contractual commitments
to pay compensation if a board member's mandate is
terminated early. Similarly, there are no commitments
to pay compensation for early termination in the event
of a change of control or a takeover offer. No members
of the Board of Management received any payments or
After leaving the Board of Management on 9 December
2014, an agreement was reached with Dr Diess for the
early termination of his service contract with effect from
30 June 2015. The agreement envisages the continued
payment of fixed remuneration amounting to €0.5 mil-
lion for the period from the termination of Dr Diess'
mandate to the expiry of the service contract. As settle-
ment of the variable cash remuneration relating to
the remainder of the contractual period, a payment of
€0.6 million, payable in 2015, was also agreed. A per-
formance-related bonus is no longer payable for this
period. The Company will make a final pension contri-
bution of €0.4 million on behalf of Dr Diess for the finan-
cial year 2014.
In conjunction with the amicable early termination of
Dr Reithofer's Board of Management mandate with
effect from the end of the Annual General Meeting 2015,
the Company also reached agreement with Dr Reithofer
concerning the early termination of his service contract
with effect from the end of the Annual General Meeting
2015. The contract termination agreement envisages
calculation of variable cash remuneration for prorated
activities in the financial year 2015 on the basis of the
target attainment for the financial year 2013, entitling
Dr Reithofer to an amount of €1.9 million, payable in
2015, i.e. in the period after he has left the Board of
Management. This arrangement ensures that – in the
event that Dr Reithofer is elected to the Supervisory
Board - he will not be involved in deciding on the level
of his own performance-related remuneration. As
settlement of the remuneration to which he is entitled
on the basis of the original term of his service con-
tract (i.e. up to 2016), the Company agreed to pay an
amount of €2.5 million to Dr Reithofer in 2015. The
Company will make a final pension contribution of
€0.7 million on behalf of Dr Reithofer for the financial
year 2015.
Termination benefits on premature termination of board
activities, benefits paid by third parties
special bonus
Monetary value
of matching
component
Total*
Possible
for share acquisition
Cash compensation
Bonus
Share-based compensation programme
Member of the Board of Management: €350,000-€400,000
Chairman of the Board of Management: €700,000
Pension contributions p.a.:
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
Pension of €120,000 (Chairman: €180,000) p.a. plus fixed amounts based on length of
Company and board service
Principal features
Contractual agreement, main points: use of company cars, insurance premiums,
contributions towards security systems, medical check-up
Once the four-year holding period requirement is fulfilled, Board of Management
members receive for each three common stock shares held either - at the Company's
option one further share of common stock or the equivalent amount in cash, unless
the employment relationship was ended before expiry of the agreed contractual period
(except where caused by death or invalidity).
Member of the Board of Management
Supervisory Board pursuant to
§161 AktG
in the first term of appointment
-700,000
applicable to senior heads of departments. Retired Chair-
men of the Board of Management are entitled, like senior
heads of departments, to use a BMW Group vehicle as a
company car and, depending on availability and as part
of an offset arrangement, use the BMW chauffeur services.
193 STATEMENT ON CORPORATE GOVERNANCE
*Including basic remuneration, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the
individual components.
5,500,000
9,850,000
-1,200,000
-1,500,000
800,000
-1,400,000
800,000
-1,400,000
3,500,000
6,000,000
Chairman of the Board of Management
or from fourth year in office
in the second term of appointment
Member of the Board of Management
4,925,000
1,000,000
-700,000
3,000,000
172 Members of the Board of
Management
173 Members of the Supervisory
- 3,614,295
(55,717)
(49,469)
(3,560,254)
-159,210
-103,493
(219,970)
(122,700)
411,815
-191,845
Norbert Reithofer -1,500,000 -30,152 -1,530,152 -5,563,800 -1,810 -151,207 -7,245,159
(1,500,000) (119,232) (1,619,232) (5,270,400) (1,886) (143,204) (7,032,836)
-750,000 68,555 -818,555 2,781,900 971 81,117 -3,681,572
(750,000) (98,213) (848,213) (2,635,200) (1,012) (76,841)
844,355 20,580 -864,935 2,749,360
(900,000) (19,210) (919,210) (3,074,400) (1,181) (89,673)
900,000 24,790 924,790 -3,245,550 -1,133 -94,651
(900,000) (26,374) (926,374) (3,074,400) (1,181) (89,673)
900,000
(900,000)
-46,371
46,765
(-)
(-)
(-)
394
92,633
Klaus Fröhlich
254,686
(91,437)
-172,000
(182,455)
(104,017)
(4,088,298)
(89,673)
363,844
-181,389
3,245,550 -1,133 94,651 -4,262,153
(3,074,400) (1,181)
(215,602)
(125,097)
(4,090,447)
407,415
-191,814
- 4,264,991
(162,052)
(4,083,283)
- Earmarked cash remuneration equivalent to the amount required to be invested in
BMW AG shares, plus taxes and social insurance contributions
-921,952
(924,225)
Friedrich Eichiner
Other
compen-
sation
compen-
sation
Basic
matching shares
Fixed compensation ·
in € or
number of
Compensation of the individual members of the Board of Management for the financial year 2014 (2013)
194
189 Compensation Report
184 Compliance in the BMW Group
Governance Practices
183 Information on Corporate
178 Work Procedures of the
Supervisory Board
176 Work Procedures of the
Board of Management
Board
Variable
cash com-
pensation
21,952
(24,225)
- Share-based -
Com-
pensation
Klaus Draeger
Milagros Caiña
Carreiro-Andree
Herbert Diess³
compensation
component in
accordance
with HGB
and IFRS2
share-based
31.12.2014 for
component
in year under
report in
accordance with
HGB and IFRS
compensation
share-based
Expense for - Provision at -
value
Number Monetary
(matching
component)1
component
Total
Total
compensation
- Requirement for Board of Management members to each invest an amount equivalent
to 20% of their total bonus (after tax) in BMW AG common stock
May be paid in justified circumstances on an appropriate basis, contractual basis, no
entitlement
- Criteria for the performance factor also include: innovation (economic and ecological,
e.g. reduction of CO2 emissions), customer orientation, ability to adapt, leadership ac-
complishments and attractiveness as employer, progress in implementing the diversity
concept and activities that foster corporate social responsibility
2 Monetary value calculated on the basis of the closing price of BMW common stock in the XETRA trading system on 30 December 2014 (€89.77) (fair value at reporting date).
3 Member of the Board of Management until 9 December 2014.
4 Member of the Board of Management since 9 December 2014.
5 Figures for the previous year include the remuneration of the member of the Board of Management who left office during the financial year 2013.
195 STATEMENT ON CORPORATE GOVERNANCE
Pension benefits of the individual members of the Board of Management
in €
Service cost
Service cost
in accordance with IFRS
for the financial year 20141
in accordance with HGB
for the financial year 2014¹
Present value of
pension obligations
(defined benefit plans),
in accordance
with IFRS2
Present value of
pension obligations
(defined benefit plans),
in accordance
with HGB2
Norbert Reithofer
Provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is
determined in each case when the requirement to invest in BMW AG common stock has been fulfilled. See note 20 to the Group Financial Statements for a description of the
accounting treatment of the share-based compensation component.
-281,278
(1,253,625)
2,108,284
lan Robertson
Peter
- 3,245,550
(3,074,400)
-750,000 -26,481 -776,481 -2,781,900
Schwarzenbauer- (562,500) (13,424) (575,924) (1,976,400)
Total 5
7,490,726 225,136 7,715,862 27,031,160
(7,537,500) (344,101) (7,881,601) (25,894,500)
- 900,000 -14,161 -914,161
(900,000) (14,401) (914,401)
−1,133 —94,651 -4,254,362
(1,181) (89,673) (4,078,474)
971 81,117 -3,639,498
(812) (57,603) (2,609,927)
8,258 690,152 35,437,174
(9,534) (719,863) (34,495,964)
-125,621
-266,831
(79,152)
(141,210)
31,055
-41,435
(10,380)
(10,380)
1,012,523
(712,103)
-202,917
(108,375)
-717,656
(233,100)
Friedrich Eichiner
-177,335
- 409,663
5,599,794
4,633,694
(174,279)
Klaus Fröhlich³
3,643
(407,482)
-2,747
(4,683,637)
(3,827,095)
2,138,633
-1,286,247
(-)
(3,694,976)
(313,038)
(4,086,628)
(162,426)
-9,600,845
(7,234,887)
-7,346,081
(6,036,606)
Milagros Caiña Carreiro-Andree
366,848
368,968
-990,507
(369,827)
(372,277)
(555,874)
989,277
(555,190)
Klaus Draeger
-147,483
409,663
5,359,750
4,485,792
(407,482)
(-)
94,542
(60,843)
(-)
b) Share-based remuneration component
(matching component)
a) Cash compensation component
Share-based remuneration programme
Special bonus payments
(corresponds to 50% of target bonus if target is 100%
achieved)
b) Performance-related bonus
(corresponds to 50% of target bonus if target is 100%
achieved)
a) Corporate earnings-related bonus
Bonus
Variable compensation
189 Compensation Report
184 Compliance in the BMW Group
183 Information on Corporate
Governance Practices
178 Work Procedures of the
Supervisory Board
176 Work Procedures of the
Board of Management
Other compensation
Board
Retirement and surviving dependants' benefits
Model
(only applies to board members appointed for the first
time before 1 January 2010; based on legal right to
receive the benefits already promised to them, this group
of persons is entitled to opt between (a) and (b))
- Formula: 50% of target bonus x performance factor
Primarily qualitative criteria, expressed in terms of a performance factor aimed at
measuring the board members' contribution to sustainable and long-term performance
and the future viability of the business
- The earnings factor is derived from the Group net profit and the Group post-tax return
on sales
- Formula: 50% of target bonus x earnings factor x dividend factor (common stock)
Quantitative criteria fixed in advance for a period of three financial years
- €3.00 million (Chairman of the Board of Management)
- €1.75 million (from second term of appointment onwards or fourth year in office)
- €1.50 million (first term of appointment)
Target bonuses p.a. (if target is 100% achieved):
- €1.50 million
- €0.90 million (from second term of appointment onwards or fourth year in office)
Chairman of the Board of Management:
- €0.75 million (first term of appointment)
Member of the Board of Management:
Remuneration caps (maximum remuneration)
in € p.a..
b) Defined contribution system with guaranteed minimum
rate of return
a) Defined benefits
-4,251,756
(1,100) (83,523) (4,076,511)
173 Members of the Supervisory
Supervisory Board pursuant to
§161 AktG
(-)
Harald Krüger
900,000
-18,071
(900,000) (18,588)
918,071
(918,588)
3,245,550
(3,074,400)
-1,055
4,623
(-)
88,135
223,388
-130
-130
(-)
(-)
(178,090)
191 STATEMENT ON CORPORATE GOVERNANCE
172 Members of the Board of
Management
Retirement and surviving dependants' benefits
The provision of retirement and surviving dependants'
benefits for Board of Management members was changed
to a defined contribution system with a guaranteed
minimum return with effect from 1 January 2010. How-
ever, given the fact that board members appointed for
the first time prior to 1 January 2010 had a legal right to
receive the benefits already promised to them, these
board members were given the option to choose between
the previous system and the new one.
When a mandate is terminated, the new defined contri-
bution system provides entitlements which can be paid
either (a) in the case of death or invalidity as a one-off
amount or over a maximum of ten years or (b) upon re-
tirement - depending on the wish of the ex-board mem-
ber concerned - in the form of a lifelong monthly pen-
sion, as a one-off amount, in a maximum of ten annual
instalments, or in a combined form (e.g. a combination
of a one-off payment and a proportionately reduced
lifelong monthly pension). Pensions are paid to former
members of the Board of Management who have either
reached the statutory retirement age for the state pen-
sion scheme in Germany or, if their mandate had termi-
nated earlier and had not been extended, to members
who have either reached the age of 60 or are perma-
nently unable to work, or who have entered into early
171 Declaration of the Board of
Management and of the
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company's
Governing Constitution
170-STATEMENT ON
Basic compensation p.a.
Parameter/measurement base
Component
Overview of compensation system and compensation components
192
Board of Management members who retire immediately
after their service on the board and who draw a retire-
ment pension are entitled to purchase vehicles and
other services of the BMW Group at conditions that also
apply in each relevant case for pensioners and to lease
BMW Group vehicles in accordance with the guidelines
Income earned on an employed or a self-employed ba-
sis up to the age of 63 is offset against the pension entitle-
ment. In addition, certain circumstances have been
specified, in the event of which the Company no longer
has any obligation to pay benefits. In such cases, no
transitional payments will be made.
Contributions falling due under the defined contribution
scheme are paid into an external fund in conjunction
with a trust model that is also used to fund pension ob-
ligations to employees.
In the case of invalidity or death, a minimum contribu-
tion of the potential annual contributions will be paid
until the person concerned would have reached the age
of 60.
Depending on the length of membership in the Board
of Management and previous activities, the annual con-
tribution to be paid amounts to between €350,000 and
€400,000 for each member of the Board of Management
and €700,000 for the Chairman of the Board of Manage-
ment. The contributions are credited, along with inter-
est earned, to the personal savings accounts of board
members in monthly amounts. The guaranteed minimum
rate of return p.a. corresponds to the maximum inter-
est rate used to calculate insurance reserves for life in-
surance policies (guaranteed interest on life insurance
policies). A Board of Management member entering of-
fice at 50 years of age and serving as member of the
Board of Management to the age of 60 can expect a re-
tirement savings capital of €4.2 million.
The amount of the retirement pension to be paid is
determined on the basis of the amount accrued in each
board member's individual pension savings account.
The amount on this account arises from annual contri-
butions paid in, plus interest earned depending on the
type of investment.
retirement in accordance with a special arrangement.
In addition, following the death of a retired board
member who has elected to receive a lifelong pension,
60% of that amount is paid as a lifelong widow's pen-
sion. Pensions are increased annually by an amount of
at least 1%.
In the event of the termination of mandate, Board of
Management members appointed for the first time prior
to 1 January 2010 are entitled to receive certain defined
benefits in accordance with the old pension scheme
rules. Pensions are paid to former members of the Board
of Management who have either reached the age of 65
or, if their mandate was terminated earlier and not ex-
tended, to members who have either reached the age of
60 or who are unable to work due to ill health or accident,
or who have entered into early retirement in accordance
with a special arrangement. The amount of the pension
is unchanged from the previous year and comprises a
basic monthly amount of €10,000 or €15,000 (Chairman
of the Board of Management) plus a fixed amount. The
fixed amount is made up of approximately €75 for each
year of service in the Company before becoming a mem-
ber of the Board of Management and between €400 and
€600 for each full year of service on the board (up to a
maximum of 15 years). Pension payments are adjusted
by analogy to the rules applicable for the adjustment of
civil servants' pensions: the pensions of members of
the Board of Management are adjusted when the civil
servants remuneration level B6 (excluding allowances)
is increased by more than 5% or in accordance with the
Company Pension Act.
(98,090)
(-)
-105,910
(-)
(-)
(-)
Robert W. Lane
-70,000
-8,000
-105,910
183,910
(70,000)
(10,000)
(98,090)
(-)
(178,090)
-70,000
-10,000
-105,910
-185,910
(70,000)
(98,090)
(178,090)
Willibald Löw¹
-70,000
-10,000
-105,910
Horst Lischka¹
-185,910
119,329
8,000
(70,000)
(10,000)
(98,090)
(178,090)
Susanne Klatten
-70,000
-10,000
105,910
-185,910
(70,000)
(10,000)
67,028
(98,090)
Renate Köcher
-70,000
-10,000
-105,910
185,910
(70,000)
(10,000)
(98,090)
(178,090)
Ulrich Kranz²
44,301
(178,090)
-185,910
(70,000)
(98,090)
Markus Schramm³
25,890
2,000
39,172
-67,062
(52,740)
(8,000)
(73,903)
(134,643)
Jürgen Wechsler¹
-70,000
(86,131)
-10,000
(70,000)
(6,000)
(98,090)
(174,090)
Werner Zierer¹
-70,000
-10,000
-105,910
-185,910
(70,000)
(10,000)
185,910
(10,000)
(46,761)
(33,370)
(178,090)
Wolfgang Mayrhuber
-70,000
8,000
-105,910
183,910
(70,000)
(8,000)
(98,090)
(176,090)
Dominique Mohabeer¹
(6,000)
-70,000
105,910
-185,910
(70,000)
(10,000)
(98,090)
(178,090)
Brigitte Rödig¹
-70,000
-10,000
-105,910
185,910
-10,000
-105,910
(10,000)
-70,000
Joachim Milberg (Chairman)
-210,000
-10,000
-317,730
(210,000)
(10,000)
(294,270)
537,730
(514,270)
Manfred Schoch (Deputy Chairman)¹
-140,000
-10,000
Total
211,820
(140,000)
(10,000)
(196,180)
(346,180)
Stefan Quandt (Deputy Chairman)
-140,000
-10,000
-211,820
361,820
(140,000)
(10,000)
361,820
- Variable
- Attendance fee
Fixed compensation
The Company also reimburses to each member of the
Supervisory Board reasonable expenses and any value-
added tax arising on the member's remuneration. The
amounts disclosed below are net amounts.
In order to be able to perform his duties, the Chairman
of the Supervisory Board is provided with secretariat
and chauffeur services.
Compensation of the Supervisory Board for the
financial year 2014 (total)
In accordance with § 15 of the Articles of Incorporation,
the compensation of the Supervisory Board for activities
during the financial year 2014 amounted to €4.8 million
(2013: €4.6 million). This includes fixed compensation
of €2.0 million (2013: €2.0 million) and variable compen-
sation of €2.8 million (2013: €2.6 million).
in € million
2014-
2013.
-10,000
in %
Fixed compensation
Variable compensation
Total compensation
2.0
41.7
2.0
43.5
2.8
4.8
58.3
2.6
- 56.5
100.0
4.6
100.0
Supervisory Board members did not receive any further
compensation or benefits from the BMW Group for
advisory and agency services personally rendered.
197 STATEMENT ON CORPORATE GOVERNANCE
Compensation of the individual members of the Supervisory Board for the financial year 2014 (2013)
in €
(196,180)
(346,180)
Amount Proportion - Amount Proportion
in %
-140,000
39,172
(70,000)
(10,000)
(98,090)
67,062
(178,090)
Franz Haniel
-70,000
-10,000
-105,910
185,910
(70,000)
(10,000)
(98,090)
(178,090)
Reinhard Hüttl
-70,000
8,000
-105,910
-183,910
(70,000)
(10,000)
(98,090)
(178,090)
Henning Kagermann
Stefan Schmid (Deputy Chairman)¹
2,000
25,890
52
(-)
Bertin Eichler 1,3
-211,820
361,820
(10,000)
(196,180)
(346,180)
Karl-Ludwig Kley (Deputy Chairman)
-140,000
6,000
-211,820
357,820
(140,000)
-10,000
(140,000)
(-)
(-)
119,329
67,028
(-)
44,301
Christiane Benner 1, 2
(344,180)
(196,180)
(8,000)
-8,000
22.8
-33,469
31,372
29,509
40,134
110,164
36,919
- 39,287
33,784
-28,555
28,084
-7,432
-101,086
88,997
-79,057
Equity
Equity ratio Group
- Current provisions and liabilities
Balance sheet total
- Non-current provisions and liabilities
-16,973
Cash Flow Statement
-101,953
-74,566
-27,010
24.4
67,013
62,009
-62,416
-56,619
50,514
47,556
Non-current assets
43,151
39,944
- 38,670
-19,130
-24.2
- 32,378
-7,767
Current assets
23,930
-19,915
-21.7
-19.5
46,100
45,119
20,273
20.1
41,526
-21,744
- 28,543
-7,454
4,204
-1,336
-107,539
-76,704
-106,575
-76,621
-105,798
-75,238
-Workforce at the end of year.
Personnel cost per employee
852
-197
-197
694
458
-1.30/1.32
-0.30/0.32
0.30/0.32
1.06/1.08
-0.70/0.72
419
0.64/ 0.66
Dividend
Dividend total
- Dividend per share of common stock/preferred stock
Balance Sheet
200-OTHER INFORMATION
-100,041
-75,612
2,393
96,230
-72,349
- Capital expenditure ratio (capital expenditure/revenues)
1,621
Cash and cash equivalents at balance sheet date
8,149
4,921
4,471
6,246
5,373
-6,184
3,263
3,471
4,267
4,313
3,993
5.4
6.8
-7.9
-7.6
8.8
8.6
Operating cash flow 5
Capital expenditure
Personnel
95,453
-83,141
200 BMW Group Ten-year Comparison
2,874
1,541,503
-104,396
1,366,838
-103,759
1,323,119
Automobiles
92,012
Motorcycles
3,190,353
3,085,946
3,031,935
2,629,949
66,233
61,202
-60,653
-51,257
2,270,528
44,010
2,087,368
40,428
Financial Services
Contract portfolio
- Business volume (based on balance sheet carrying amounts)² -
-7.0
-1,048
-1,439,918
-104,220
82,631
99,236
-1,258,417
200 BMW Group Ten-year Comparison
201 OTHER INFORMATION
2010
2009
2008
2007
2006
2005
Sales volume
1,461,166
Income Statement
1,286,310
87,306
1,435,876
-101,685
1,500,678
-102,467
1,373,970
-100,064
1,327,992
Automobiles
97,474
Motorcycles¹
Production volume
1,481,253
98,047
- 31.9
-2,239
Revenues
Profit before financial result
4,124
-3,793
3,287
8.0
0.8
0.7
-6.9
-8.4
-1,610
203
-21
-739
1,250
33.1
49.2
6.0
-19.1
30.3
- 3,243
210
330
3,134
3,873
351
413
4,853
- Profit before tax
- Return on sales (earnings before tax/revenues)
Income taxes
Effective tax rate
Net profit for the year
60,477
50,681
-53,197
-56,018
48,999
Gross profit margin Group"
46,656
-10.5
11.4
21.8
23.1
22.9
5,111
289
-921
4,212
4,050
18.1
202-BMW Group Locations
204
Glossary
S
Regional mix of purchase volumes - 40
Selling and administrative expenses
116
Change in cash and cash equivalents — 52
Sales volume 3, 26 et seq., 29, 67 et seq.
Financial liabilities
54
Segment information — 165 et seq.
Shareholdings of members of the Board of
Development of credit loss ratio — 37
Balance sheet structure - Automotive segment
Balance sheet structure - Group -
56
BMW Group value added - 59
Statement of Comprehensive Income
Stock 87 et seq.
90, 123
Risk management in the BMW Group - 70
Production and sales volume
Management and the Supervisory Board - 163
Sustainability - 45 et seq.
T
Tangible, intangible and investment
assets 102 et seq., 124 et seq.
- 56
Contract portfolio of Financial Services segment — 36
Contract portfolio retail customer financing of
Financial Services segment - 37
BMW Group new vehicles financed by
Financial Services segment - 36
Precious metals price trend - 25
Purchasing 40 et seq.
- 102 et seq., 126
207 OTHER INFORMATION
R
Index of Graphs
Finances
Rating
79, 88 et seq., 136
Receivables from sales financing.
BMW Group in figures -
5
Exchange rates compared to the euro — 24
55, 105, 129 et seq.
Value drivers
-20
162 et seq.
189 et seq.
Related party relationships
Remuneration system-
-117
Report of the Supervisory Board — 6 et seq.
Research and development 38 et seq.
Result from equity accounted investments
Return on sales - 20 et seq., 49 et seq.
Revenue reserves —
134 et seq.
Revenues 4, 27 et seq., 49, 59, 61, 68 et seq., 101, 116
Risks report - 70 et seq.
Oil price trend - 24
Steel price trend — 24
Trade payables - 148
Profit before tax- - 4, 26 et seq., 49 et seq., 67, 69
Property, plant and equipment
Trade receivables -57, 133 et seq.
Workforce
206 Index
207 Index of Graphs
208 Financial Calendar
209 Contacts
208
Financial Calendar
Annual Accounts Press Conference
Analyst and Investor Conference
Quarterly Report to 31 March 2015
Annual General Meeting
Quarterly Report to 30 June 2015
Quarterly Report to 30 September 2015
Annual Report 2015
Glossary
Annual Accounts Press Conference
Quarterly Report to 30 June 2016
Quarterly Report to 30 September 2016
18 March 2015
-19 March 2015
6 May 2015
13 May 2015
4 August 2015
3 November 2015
16 March 2016
16 March 2016
17 March 2016
3 May 2016
12 May 2016
2 August 2016
4 November 2016
Analyst and Investor Conference
Quarterly Report to 31 March 2016
Annual General Meeting
204
202 BMW Group Locations
200 BMW Group Ten-year Comparison
29
35
35
BMW Group apprentices at 31 December
Employee attrition rate at BMW AG - 45
Proportion of non-tariff female employees
44
45
Environment
Materiality matrix-46
-47
47
-47
CO2 emissions per vehicle produced
Energy consumed per vehicle produced
Process wastewater per vehicle produced
Water consumption per vehicle produced ― 47
Volatile organic compounds per vehicle produced – ― 48
Waste for disposal per vehicle produced ― 48
Stock
Development of BMW stock
Compliance
_
87
_
_
BMW Group Compliance Management System
- 185
This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.
200-OTHER INFORMATION
BMW Group - key automobile markets
BMW Group sales volume by region 29
BMW Group - key motorcycle markets
BMW sales volume of motorcycles
209 OTHER INFORMATION
4, 49 et seq.
Production network - 31 et seq.
Investments accounted for using the equity method
and other investments ― 104, 127 et seq.
Cash and cash equivalents -52 et seq., 106, 134
Cash flow
-
- 4, 52 et seq., 94 et seq., 112 et seq., 115,
K
161 et seq.
Key data
per
share -88
Inventories
_
94 et seq.,
161 et seq.
L
Cash flow statement
CFRP 32, 39, 41
_
CO2 emissions — 3, 27 et
Compensation Report
Compliance 184 et seq.
seq.,
189 et seq.
46 et seq., 68 et seq.
52 et seq.,
Intangible assets — 55 et seq., 102, 126
Capital expenditure -4, 50 et seq.
106, 132
202 BMW Group Locations
204
Glossary
206 - Index
207-Index of Graphs
208 Financial Calendar
209 Contacts
206
Index
A
Accounting policies
Apprentices 44
Automotive segment
B
G
Group tangible, intangible and investment
assets -
124 et seq.
101 et seq.
29 et seq.
|
Balance sheet structure — 56
Income statement
Income taxes
- 49, 90 et seq., 116 et seq.
50, 63, 106, 118 et seq., 145
Bonds 53 et seq., 145 et seq.
_
Connected Drive - 39, 42
Consolidated companies
Consolidation principles -
Contingent liabilities -149
Profit before financial result
99 et seq.
100
Cost of materials
Mandates of members of the Supervisory
Board -173 et seq.
Marketable securities - - 104 et seq., 130 et seq.
Motorcycles segment
N
-35
Net profit 4, 49 et seq.
New financial reporting rules - 109 et seq.
O
Other financial result - 118
-172
Other investments - 128
Other provisions - 144
Outlook - 65 et seq.
P
Pension provisions - 57, 63, 108, 136 et seq.
26 et seq.,
67 et seq.
Performance indicators - 20 et seq.,
Personnel costs
121
Production - 31 et seq.
Other operating income and expenses - 117
Management
Mandates of members of the Board of
M
- 58 et seq.
Cost of sales-49, 101 et seq., 116
D
Dealer organisation/dealerships - 19,41
Declaration with respect to the Corporate Governance
Code - 171
Dividend 88, 121
Dow Jones Sustainability Index World — 45 et seq.
E
Earnings per share -49, 102, 121
Efficient Dynamics -
-
38
Employees- -44 et seq.
Equity -
-57 et seq., 143 et seq.
Exchange rates - 23 et seq., 66, 78, 101, 159 et seq.
F
Financial assets 53, 55, 57, 105, 130 et seq.
Financial instruments - 104, 150 et seq.
Financial liabilities -55, 57, 107, 145 et seq.
Financial result - 50 et seq., 61
Financial Services segment
36 et seq.
Fleet emissions -3, 27 et seq., 47 et seq., 68 et seq.
Lease business - 36 et seq.
_
Leased products — 127
Locations 202 et seq.
Corporate Governance - 170 et seq.
Contacts
Business and Finance Press
Telephone
-C Contract production
BMW-SGL joint venture (2 plants)
Wackersdorf plant
Swindon plant, GB
Steyr plant, Austria
Spartanburg plant, USA
China (joint venture with Brilliance China
Automotive Holdings - 3 plants)
BMW Brilliance Automotive Ltd., Shenyang,
Rosslyn plant, South Africa
Regensburg plant
-S
Oxford plant, GB
Leipzig plant
Landshut plant
Hams Hall plant, GB
Rolls-Royce Motor Cars Limited)
Goodwood plant, GB (headquarters of
Eisenach plant
Dingolfing plant
Berlin plant
-P Production
S
Munich plant
Magna Steyr Fahrzeugtechnik, Austria
VDL Nedcar, Netherlands
-A
Assembly plants
Portugal
Poland
Netherlands
New Zealand
Norway
Germany
Great Britain
France
Finland
Denmark
Czech Republic
Canada
Belgium
Brazil
USA
Switzerland
Thailand
Sweden
Japan
Luxembourg
Malaysia
Malta
Mexico
Bulgaria
China
South Korea
Spain
Italy
Ireland
Argentina
Australia
Austria
Sales subsidiary markets/Locations Financial Services
CKD production Rayong, Thailand
CKD production Araquari, Brazil
CKD production Cairo, Egypt
CKD production Chennai, India
CKD production Jakarta, Indonesia
CKD production Kaliningrad, Russia
CKD production Kulim, Malaysia
CKD production Manaus, Brazil
-S
Romania
=S
-S
Headquarters
-H
The BMW Group is present in the world markets with
30 production and assembly plants, 42 sales subsidiaries
and a research and development network.
-S
-S
S
-A
-R
-S.
-S
-R
-P
-R
R
BMW Group
Locations
202
209 Contacts
Financial Calendar
208
Index of Graphs
207
206 Index
R
Research and Development
BMW Group Research and Innovation Centre (FIZ),
Munich, Germany
BMW Group Research and Technology, Munich,
Germany
-P
-S-P
-S
-P
S-
-C
-S
-S
S
S
-S
-R
203 OTHER INFORMATION
-R-S:
-S
BMW Group ConnectedDrive Lab China, Shanghai,
and BMW Group Designworks Studio Shanghai, China
BMW Group Engineering China, Beijing, China
BMW Group Engineering Japan, Tokyo, Japan
BMW Group Engineering USA, Woodcliff Lake, USA
BMW Group Engineering and Emission Test Center,
Oxnard, USA
BMW Group Technology Office USA, Mountain View,
USA
BMW Group Designworks, Newbury Park, USA
BMW Diesel Competence Centre, Steyr, Austria
Germany
BMW Innovation and Technology Centre, Landshut,
BMW Car IT, Munich, Germany
-S
Russia
Singapore
Slovakia
Slovenia
Subsidiaries
An integral component of all business ] processes. Following
enactment of the German Law on Control and Trans-
parency within Businesses (KonTraG), all companies
listed on a stock exchange in Germany are required to
set up a risk management system. The purpose of this
system is to identify risks at an early stage which could
have a significant adverse effect on the assets, liabilities,
financial position and results of operations, and which
could endanger the continued existence of the Company.
This applies in particular to transactions involving risk,
errors in accounting or financial reporting and violations
of legal requirements. The Board of Management is
required to set up an appropriate system, to document
that system and monitor it regularly with the aid of the
internal audit department.
Risk management
Pre-tax: Profit before tax as a percentage of revenues.
Post-tax: Profit as a percentage of revenues.
Return on sales
Standardised evaluation of a company's credit standing
which is widely accepted on the global capital markets.
Ratings are published by independent rating agencies,
e.g. Standard & Poor's or Moody's, based on their analysis
of a company.
Rating
Stock which receives a higher dividend than common
stock, but without voting rights.
Subsidiaries are those enterprises which, either directly
or indirectly, are under the uniform control of the
management of BMW AG or in which BMW AG, either
directly or indirectly
Preferred stock
Operating cash flow
200-OTHER INFORMATION
pro-
Indicator for water consumption
International Financial Reporting Standards, intended
to ensure global comparability of financial reporting
and consistent presentation of financial statements.
The IFRSS are issued by the International Accounting
Standards Board and include the International
Accounting Standards (IASS), which are still valid.
IFRSS
205 OTHER INFORMATION
Gross profit as a percentage of revenues.
Cash inflow from the operating activities of the Auto-
motive segment.
-
holds the majority of the voting rights
has the right to appoint or remove the majority of the
members of the Board of Management or equivalent
governing body, and in which BMW AG is at the same
time (directly or indirectly) a shareholder
Fax
E-mail
Investor Relations
Telephone
Fax
+49 89 382-2 45 44
+49 89 382-2 41 18
+49 89 382-2 44 18
presse@bmwgroup.com
+49 89 382-2 42 72
+49 89 382-2 53 87
+49 89 382-1 46 61
ir@bmwgroup.com
E-mail
The BMW Group on the Internet
Further information about the BMW Group is available online at www.bmwgroup.com.
Investor Relations information is available directly at www.bmwgroup.com/ir. Information
about the various BMW Group brands is available at www.bmw.com, www.mini.com
and www.rolls-roycemotorcars.com.
Sustainability, or sustainable development, gives equal
consideration to ecological, social and economic develop-
ment. In 1987 the United Nations "World Commission
on Environment and Development" defined sustainable
development as development that meets the needs of
the present without compromising the ability of future
generations to meet their own needs. The economic
relevance of corporate sustainability to the BMW Group
is evident in three areas: resources, reputation and risk.
Sustainability
Supplier relationship management (SRM) uses focused
procurement strategies to organise networked supplier
relationships, optimise processes for supplier qualifica-
tion and selection, ensure the application of uniform
standards throughout the Group and create efficient
sourcing and procurement processes along the whole value
added chain.
Supplier relationship management
has control (directly or indirectly) over another enter-
prise on the basis of a control agreement or a provision
in the statutes of that enterprise.
Gross margin
Free cash flow corresponds to the cash inflow from oper-
ating activities of the Automotive segment less the cash
outflow for investing activities of the Automotive seg-
ment adjusted for net investments in marketable securities
and term deposits.
The indicators for water consumption refer to the
duction sites of the BMW Group. The water consumption
includes the process water input for the production
as well as the general water consumption, e.g. for sani-
tation facilities.
The proportion of equity (= subscribed capital, reserves,
accumulated other equity and minority interest) to the
balance sheet total.
Combined heat and power (CHP) or cogeneration is
the simultaneous conversion of energy sources into
electricity and useful heating. In comparison to separate
generation of electricity in conventional power plants,
energy is converted more efficiently and with greater
flexibility. As a result, this technology helps to reduce
CO2 emissions.
Combined heat and power
Abbreviation for carbon-fibre reinforced polymer. CFRP
is a composite material, consisting of carbon-fibres sur-
rounded by a plastic matrix (resin). On a comparative
basis, CFRP is approximately 50% lighter than steel and
30% lighter than aluminium.
CFRP
Free cash flow
Glossary
204
209 Contacts
Financial Calendar
208
207 Index of Graphs
Index
206
204 - Glossary
202 BMW Group Locations
200 BMW Group Ten-year Comparison
200-OTHER INFORMATION
Sales locations only.
South Africa
Common stock
Stock with voting rights (cf. preferred stock).
Greece
Hungary
India
Indonesia
Under the term Connected Drive, the BMW Group
already unites a unique portfolio of innovative features
that enhance comfort, raise infotainment to new levels
and significantly boost safety in BMW Group vehicles.
Connected Drive
Financial products, whose measurement is derived
principally from market price, market price fluctuations
and expected market price changes of the underlying
instrument (e.g. indices, stocks or bonds).
DJSI World
Abbreviation for "Dow Jones Sustainability Index World".
A family of indexes created by Dow Jones and the Swiss
investment agency SAM Sustainability Group for com-
panies with strategies based on a sustainability concept.
The BMW Group has been one of the leading companies
in the DJSI since 1999.
EBIT
Abbreviation for “Earnings Before Interest and Taxes”.
The profit before income taxes, minority interest and
financial result.
EBITDA
Abbreviation for "Earnings Before Interest, Taxes, Depre-
ciation and Amortisation”. The profit before income
taxes, minority interest, financial result and depreciation/
amortisation.
Derivatives
Effectiveness
Efficient Dynamics
Deferred taxes
The aim of Efficient Dynamics is to reduce consumption
and emissions whilst simultaneously increasing dynamics
and performance. This involves a holistic approach to
achieving optimum automobile potential, ranging from
efficient engine technologies and lightweight construc-
tion to comprehensive energy and heat management
inside the vehicle.
Equity ratio
Abbreviation for "Deutscher Aktienindex", the German
Stock Index. The index is based on the weighted market
prices of the 30 largest German stock corporations (by stock
market capitalisation).
DAX
Comprises all expenditure to purchase raw materials
and supplies.
Cost of materials
The degree to which offsetting changes in fair value or
cash flows attributable to a hedged risk are achieved by
the hedging instrument.
Accounting for deferred taxes is a method of allocating
tax expense to the appropriate accounting period.
Paper from
responsible sources
www.fsc.org
MIX
FSC® C002390
A FURTHER CONTRIBUTION TOWARDS PRESERVING RESOURCES
The BMW Group Annual Report was printed on paper with the Blue Angel eco-label. The paper used was produced, climate-
neutrally and without optical brighteners and chlorine bleach, from recycled waste paper.
The CO2 emissions generated through print and production were neutralised by the BMW Group. To this end, the corresponding
amount of emissions allowances was erased, with the transaction identification EU241734 on 6 February 2015.
PUBLISHED BY
Bayerische Motoren Werke
Aktiengesellschaft
80788 Munich
Germany
Tel. +49 89 382-0
leading
flexible
reliable
FSC
unique
Asia
Capital employed corresponds to the sum of all current
and non-current operational assets, less liabilities that
do not incur interest (e.g. trade payables).
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
BMW Group
Profit before tax
The BMW Group continued to perform extremely well
in 2014 and achieved a new record Group profit before
tax of €8,707 million (2013: €7,893¹ million; +10.3%).
This result reflects the steep rise in the number of vehi-
cles sold. New models (such as the BMW X4) and new
series (such as the BMW 2 and 4 Series), combined with
a high-value model mix, ensured that the pre-tax profit
continued to develop positively despite ongoing intense
competition on international car markets and consider-
able levels of investment in new technologies.
As forecast for the financial year 2014, the Group's profit
before tax rose significantly and was therefore in line
with our expectations.
Workforce at year-end
The BMW Group's workforce increased to 116,324 em-
ployees during the year under report (2013: 110,351 em-
ployees; +5.4%). This solid increase mainly reflects
strong demand for the Group's cars and motorcycles, the
greater range of mobility services now offered and the
need for additional qualified staff in conjunction with
the development of electromobility.
64 Events after the End of the
As forecast for the financial year 2014, there was a solid
increase in the Group's workforce, which was therefore
in line with our expectations.
Sales volume
The BMW Group sold more cars in the year under report
than ever before. Despite a certain degree of volatility
on various markets, sales of BMW, MINI and Rolls-Royce
brand cars as a whole rose by a solid 7.9% to 2,117,965²
units (2013: 1,963,798² units). This growth was achieved
on the back of numerous new model launches on
international markets in 2014, thus ensuring that the
BMW Group remained the world's market leader in the
premium segment.
All three car brands made an important contribution to
this record sales volume performance. Sales of BMW
and Rolls-Royce brand cars increased to 1,811,719² units
(2013: 1,655,138² units; +9.5%) and 4,063 units (2013:
3,630 units; +11.9%) respectively, in both cases setting
new records. With a sales volume of 302,183 units, the
MINI brand was in line with previous year's high level
(2013: 305,030 units; -0.9%) despite the model change
in 2014.
In line with the forecast provided for the full year in the
quarterly report to 30 September 2014, the total number
of vehicles sold by the BMW Group rose by a solid
7.9%. In the Annual Report 2013 a “significant rise" in
deliveries to customers was predicted. The main reasons
for the difference were ongoing difficult political and
business conditions prevailing on some markets (such
as Russia) and shifts in the timing of production starts.
Moreover, market developments in China did not quite
live up to expectations.
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2013:
198,542 units, 2014: 275,891 units).
27 COMBINED MANAGEMENT REPORT
1
Fleet carbon emissions
The BMW Group is continually reducing the carbon
emissions of its fleet of vehicles by equipping them with
highly efficient engines and electrified drivetrain sys-
tems. Thanks to the rigorous deployment of Efficient
Dynamics technologies, our vehicles also set standards
in terms of dynamism and driving pleasure.
In 2014, the volume of carbon emissions produced by
our vehicle fleet sold in Europe¹ decreased slightly to
130 grams CO2/km (2013: 133 grams CO2/km; -2.3%).
The scale of the decrease in fleet emissions in 2014
was therefore not as pronounced as originally forecast,
mainly reflecting the impact of a higher-value model
mix on the one hand and the later-than-planned avail-
ability of the new MINI on the other. In the Annual
Report 2013, we had forecast a "moderate decrease" for
the financial year 2014.
Revenues
Revenues from the sale of BMW, MINI and Rolls-Royce
brand cars grew by 6.4% to €75,173 million (2013:
€70,6302 million) in line with the solid sales volume
rise. The increase was primarily attributable to the nu-
merous new models launched and the positive con-
sumer climate in major markets.
Automotive segment
As forecast for the full year in the Quarterly Report to
30 June 2014, automobile business revenues had a solid
increase despite the dampening effect of exchange
rates which had been mentioned in the previous year's
annual outlook as a potentially negative factor. In the
Annual Report 2013 a “significant increase” in revenues
was predicted.
of BMW AG
49 Results of Operations, Financial
Position and Net Assets
Car markets in the world's major emerging economies
also suffered from the effects of generally weak economic
performance in these regions in 2014. The Russian mar-
ket contracted by 10.2% to 2.3 million units, while the
number of registrations in Brazil fell by 7.1% to 3.3 mil-
lion units.
Motorcycle markets
The worldwide market for 500 cc plus class motorcycles
grew in 2014 for the first time in several years (+4.9%).
Despite ongoing economic uncertainties, motorcycle
registrations in Europe rose by 8.0%. The motorcycles
market in Germany was 9.0% up on the previous year,
while France and Italy both saw increases of 2.7%. The
US market also developed positively (+1.8%).
Financial Services
The global economy continued to recover in 2014, despite
the existence of uncertainties which held down growth,
particularly in the first half of the year. A strong eco-
nomic rally in the USA in the second half of the year
heralded a further tightening of monetary policies. The
US Reserve Bank's bond-buying programme, which
had already been reduced in scale over the course of the
year, was temporarily brought to a halt in October. The
Bank of Japan purchased government bonds in 2014,
with the aim of keeping inflation above 2% and stimu-
lating the domestic economy. Within the eurozone, the
European Central Bank (ECB) also endeavoured to
combat the risk of deflation by loosening its monetary
policies further and reducing its reference interest rate
yet again. At the end of the year, the ECB's reference
interest rate stood at a historical low of 0.05%.
Bad debt levels either remained stable or improved
slightly. The negative impact of some slight increases in
risk, such as in Ukraine, have so far remained localised.
Price levels on the world's used car markets in 2014
remained more or less stable across all regions, with
selling prices fluctuating within normal ranges.
26
Report on Economic Position
Overall Assessment by Management
In the following section, we report on the principal finan-
cial and non-financial performance indicators used as
the basis for managing the BMW Group and its segments.
61 Comments on Financial Statements As part of the review of operations and the financial
condition of the BMW Group, forecasts made in the pre-
vious year are compared with actual outcomes.
Financial and Non-financial Performance Indicators
18 General Information on the BMW Group
18 Business Model
20 Management System
23-Report on Economic Position
23 General and Sector-specific
Environment
Overall assessment by management
The 2014 financial year was a pleasing one for the BMW
Group in overall terms and in line with our expectations.
The picture was also extremely positive in terms of
results of operations, financial position and net assets.
This statement also takes into account events after the
end of the reporting period.
26-Overall Assessment by Management Financial and non-financial performance indicators
26-Financial and Non-financial
Performance Indicators
29 Review of Operations
18-COMBINED MANAGEMENT REPORT
EBIT margin and return on capital employed
The EBIT margin for the Automotive segment (profit
before financial result divided by revenues) came in at
9.6% (2013: 9.4%) as a result of the high-value model
mix. As forecast for the financial year 2014, the EBIT
margin from automobile business was within the target
range of between 8 and 10% and thus in line with our
expectations.
The return on capital employed (RoCE) amounted to
61.7% (2013: 63.02%). Contrary to our original ex-
pectations, the RoCE decreased only slightly due to
improved management of capital employed and the
increase in service contract volumes. In the Annual
Report 2013 a "significant drop" in ROCE was pre-
dicted. The rate achieved was well above the minimum
target of 26% referred to in the forecast for 2014.
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Comparison of 2014 forecasts with actual outcomes 2014
BMW Group
Profit before tax
Workforce at year end.
Automotive segment ·
Sales volume¹
Fleet emissions²
Revenues
Reporting Period
EBIT margin
Motorcycles segment
Sales volume
Forecast for 2014
in 2013 Annual Report
significant increase
solid increase
Forecast revision
during the year
Actual outcome
in 2014
€ million
-8,707 (+10.3%)
116,324 (+5.4%)
significant increase
- moderate decrease
significant increase
Q3: solid increase
Q3: slight decrease
Q2: solid increase
Return on capital employed-
64 Events after the End of the
of BMW AG
61 Comments on Financial Statements
Motorcycles segment
Sales volume
In a friendlier-than-expected market environment, BMW
Motorrad achieved a solid increase of 7.2% with a sales
volume of 123,495 units (2013: 115,215³ units). This per-
formance was therefore better than the "slight increase"
forecast in the Annual Report 2013. The forecast was
raised to "solid" in the quarterly report to 30 September
2014.
Return on capital employed
The return on capital employed (ROCE) in the Motor-
cycles segment stood at 21.8% (2013: 16.4%). The solid
increase in ROCE from motorcycles business reflects
higher-than-expected sales volume, the high-value
model mix and the first fruits of the segment's strategic
realignment. In the Annual Report 2013, it was pre-
dicted that the RoCE would be on par with the previous
year.
Financial Services segment
Return on equity
The Financial Services segment generated a return on
equity (ROE) of 19.4% in 2014 (2013: 20.02%), reflecting
continued favourable business conditions. The RoE was
therefore at a similar level to the previous year and re-
mained above the target level of 18%, in line with our
forecast for 2014. In the Annual Report 2013, a "slight
decrease" in RoE was predicted. The main reason for
1 EU-28.
2 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
3 Plus an additional 1,110 Husqvarna motorcycles (until 5 March 2013).
28
the better-than-expected RoE performance was the
stable risk situation, particularly in the area of residual
values.
The following overall picture arises for the principal
performance indicators utilised by the BMW Group and
its segments:
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26-Financial and Non-financial
Performance Indicators
29-Review of Operations
29-Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
Despite the value added tax hike in April, the Japanese
car market expanded by 3.2% to 5.4 million units.
units
Registration figures in Germany showed a 2.9% increase
to 3.0 million units. The European car market (exclud-
ing Germany) grew by 6.6% to a total of 10.0 million
registrations in 2014, the first increase posted since the
financial crisis. France (1.8 million units; +0.5%) and
Italy (1.4 million units; +4.6%) both returned to robust
growth after a number of years of contraction. However,
among the major European markets, it was Spain that
recorded the fastest growth rate (0.86 million units;
+18.4%). The UK market also saw above-average growth
(+9.3%) in 2014 with a total of 2.5 million new vehicles
registered.
Gold
Platinum
Japanese Yen
British Pound
US Dollar
Chinese
Renminbi
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
Russian Rouble
82 Internal Control System and Risk
10
Russian Rouble
Japanese Yen
British Pound
Source: Reuters.
11
Consolidated Financial Reporting Process over the course of the year, many emerging market
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
currencies - such as those of India, Brazil and South
Africa - lost further ground in 2014. The depreciation
of the Russian rouble was particularly pronounced at
the beginning of the Ukraine crisis and then again
towards the end of the year, when it fell to a value of
70.98 roubles to the euro.
Energy and commodity prices
21 COMBINED MANAGEMENT REPORT
Oil prices plummeted during the second half of 2014.
Although the average price of Brent Crude oil during
the twelve-month period was only slightly down at
US dollar 100 per barrel, its price tumbled from over
US dollar 110 to around US dollar 55 per barrel within
a period of six months. The story was similar for WTI
Crude oil with an annual average price of approxi-
mately US dollar 93 per barrel. Generally speaking,
metal prices fell slightly during the course of the year.
49 Results of Operations, Financial
Position and Net Assets
29 Review of Operations
Currency markets
The US dollar averaged an exchange rate of 1.33 to the
euro in 2014, similar to the previous year's level. How-
ever, the range of fluctuation was much greater, with
the US dollar initially losing value only then to surge
during the second half of the year to finish at US dollar
1.21 to the euro. The British pound also appreciated in
value, which is reflected in an annual average exchange
rate of 0.81 to the euro. These exchange rates were af-
fected by the expectation of reference interest rate in-
creases in these two currency blocks in 2015, a develop-
ment exacerbated by the European Central Bank's
decision to reduce interest rates again in 2014 and its
announcement to loosen its monetary policies further.
With its value coupled to that of the US dollar, the an-
nual average exchange rate of the Chinese renminbi
(8.19 to the euro) remained at a similar level to the pre-
vious year. With fluctuations in exchange rates following
the same pattern as the US dollar, the Chinese renminbi
also gained noticeably in value towards the end of the
year. In sharp contrast, the Japanese yen fell to an annual
average rate of 140 yen to the euro in the wake of Japan's
monetary policy. Despite showing some signs of stabilising
24
ཙ་
Exchange rates compared to the euro
(Index: December 2009 = 100)
160
150
18-COMBINED MANAGEMENT REPORT
18
18 General Information on the BMW Group
Business Model
80
140
130
23-Report on Economic Position
120
23-General and Sector-specific
Environment
110
26 Overall Assessment by Management
100
26 Financial and Non-financial
Performance Indicators
90
20 Management System
US Dollar
12
Chinese Renminbi
∙11
12
13
14
Price in US Dollar
Price in €
25 COMBINED MANAGEMENT REPORT
Precious metals price trend
(Index: December 2009 = 100)
250
225
10
200
150
125
100
75
Source: Reuters.
.10
11
12
13
14
Palladium
175
Source: Reuters.
50
60
Automobile markets
.13
14
The worldwide market for passenger cars and light com-
mercial vehicles grew once again in 2014, surpassing
the threshold of 80 million vehicles for the first time
Steel price trend
(Index: January 2010 = 100)
170
160
150
140
130
120
110
100
10
―11 ―12 13 -14
Source: Working Group for the Iron and Metal Processing Industry.
Oil price trend
Price per barrel of Brent Crude
120
110
100
90
80
70
(+4.1%). The two largest automobile markets, the
USA and China, again contributed strongly to this
growth. New registrations in China were up by 13.0%
to 18.4 million units, while the US market saw an in-
crease of 6.0% to 16.5 million units.
- g CO2/km
2,117,965 (+7.9%)
130 (-2.3%)
€ million
87 BMW Stock and Capital Markets
in units
part of the BMW 4 Series since the end of 2013. For this
reason, reported sales of the 3 Series in 2014 went
down by 4.0% to 480,214 units (2013: 500,332 units).
The BMW 4 Series has been highly successful since its
launch, with 119,580 units sold in the year under re-
port (2013: 14,763 units). A total of 373,053 customers
opted for the BMW 5 Series (2013: 366,992 units; +1.7%).
The BMW X family also continued to perform well in
2014. Following the launch of the third generation in
November 2013, sales of the BMW X5 rose by more than
a third to 147,381 units (2013: 107,231 units; +37.4%).
The BMW X3 recorded a sales volume of 150,915 units,
therefore not quite matching the previous year's high
level (2013: 157,303 units; -4.1%). Similarly, the BMW X1
sales volume figure of 156,471 units was slightly lower
than one year earlier (2013: 161,353 units; -3.0%). The
new X4 became available in July 2014 and achieved a
sales volume of 21,688 units by the end of the year.
2014
2013
Change
in %
Proportion of
BMW sales volume
2014 in %
BMW 1 Series
190,033
213,611
83 Disclosures Relevant for Takeovers
and Explanatory Comments
-11.0
BMW 2 Series
-41,038
-2.3
BMW 3 Series
480,214
500,332
-4.0
26.5
BMW 4 Series
119,580
-14,763
-10.5
6.6
Consolidated Financial Reporting Process Sales volume of BMW vehicles by model variant*
BMW* retains pole position in the premium segment
The BMW brand maintained its pole position in the
premium segment during the year under report. Signifi-
cant contributions to this achievement were made by
the highly successful BMW X5 as well as the BMW 3,4
and 5 Series, each of which was market leader in its
relevant segment.
Europe
thereof Germany
Asia
thereof China'
Americas
thereof USA
Other markets
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2010: 53,701 units, 2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units).
30
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
23 General and Sector-specific
Environment
At 190,033 units, sales of the BMW 1 Series were down
on the previous year's level (2013: 213,611 units; – 11.0%),
reflecting the fact that the Coupé and Convertible
body variants are now reported as part of the 2 Series.
Similarly, the Convertible and Coupé models previously
included in the BMW 3 Series have been reported as
26 Overall Assessment by Management
26 Financial and Non-financial
29-Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
rose by 5.1% to 272,345 units (2013: 259,219 units). The
BMW Group also performed extremely well in Great
Britain, with sales rising to a total of 205,071 units (2013:
189,121 units; +8.4%).
Performance Indicators
29-Review of Operations
BMW 5 Series
-373,053
366,992
8.1
BMW X6
-30,244
36,688
-17.6
-1.7
BMW Z4
10,802
-12,866
-16.0
0.6
37.4
BMW i
-311
1.0
BMW total
1,811,719
1,655,138
9.5
100.0
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2013: 198,542 units, 2014: 275,891 units).
MINI at previous year's level
The sales performance of the MINI brand in 2014 was
influenced by the market launch of the third-genera-
tion Hatch. The BMW Group delivered 302,183 MINI
brand cars to customers worldwide in the period under
report (2013: 305,030 units; -0.9%), with sales of the
new MINI Hatch up by 9.0% at 140,051 units (2013:
128,498 units) and sales of the MINI Countryman up by
5.0% at 106,995 units (2013: 101,897 units).
-17,793
107,231
147,381
BMW X5
-1.7
20.6
BMW 6 Series
-23,988
-27,687
-13.4
1.3
BMW 7 Series
-48,519
56,001
-13.4
2.7
BMW X1
156,471
161,353
-3.0
8.6
BMW X3
150,915
157,303
-4.1
8.3
BMW X4
-21,688
-1.2
2,118.0
1,963.8
1,845.2
1,669.0
Other
China
Italy
France
Great Britain
Germany
USA
21.6
France
3.2
18.7
Japan
Italy
Germany
Great Britain
12.9
Japan
3.0
9.7
Other
27.9
which the USA accounted for 396,961 units, 5.4% up on
the previous year (2013: 376,636 units). Thanks to the
more stable market environment in Europe, sales of the
Group's three brands grew by 6.4% to 914,587 units (2013:
859,546 units). The number of vehicles sold in Germany
BMW Group sales volume of vehicles by region and market
in 1,000 units
2,200
2,000
3.0
China
USA
as a percentage of sales volume
BMW Group-key automobile markets 2014
-75,173 (+6.4%)
target range between 8 and 10%
significant decrease
%
9.6 (+0.2%pts)
%
61.7 (-1.3%pts)
slight increase
Q3: solid increase
units
123,495 (+7.2%)
Return on capital employed ·
in line with last year's level
%
21.8 (+5.4%pts)
Financial Services segment
Return on equity
slight decrease
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 275,891 units).
2 EU-28.
%
19.4 (-0.6%pts)
29 COMBINED MANAGEMENT REPORT
Report on Economic Position
Review of Operations
AUTOMOTIVE SEGMENT
More than 2 million vehicles sold for the first time
The BMW Group sold a total of 2,117,965* BMW, MINI
and Rolls-Royce brand vehicles in 2014, thus surpassing
the two-million mark for the first time in its history
(2013: 1,963,798* units; +7.9%). All three brands con-
tributed to these excellent figures and helped the BMW
Group to retain its pole position in the premium seg-
ment worldwide. Sales of BMW brand cars were 9.5%
up on the previous year (2014: 1,811,719" units; 2013:
1,655,138 units). Despite the model change of its
best-selling model, the MINI Hatch, the MINI brand
achieved a sales volume of 302,183 units, almost match-
ing the previous year's high level (2013: 305,030 units;
-0.9%). Rolls-Royce Motor Cars sold 4,063 ultra-luxury
sedans, surpassing the previous year's strong sales per-
formance by 11.9% (2013: 3,630 units).
Double-digit sales volume growth in Asia
Markets in Asia continued to develop dynamically in
2014. Sales of BMW, MINI and Rolls-Royce brand
vehicles in this region rose significantly (+13.8%) to
658,384 units (2013: 578,678" units). China again
accounted for the lion's share with a sales volume of
456,732 units (2013: 391,713* units; +16.6%). The
number of vehicles sold in the Americas region climbed
by 4.0% to 482,257 units (2013: 463,822 units), of
1,800
With a slightly reduced growth rate of 7.4%, China re-
mained by far the most dynamic of the world's major
economies. By contrast, the performance of other major
emerging economies was generally disappointing. India,
for instance, managed a slightly improved growth rate
of 5.4% in 2014, still trailing against growth rates re-
ported in previous years. Brazil and Russia grew by 0.2%
and 0.6% respectively, not far short of recession.
1,600
1,200
233.6
327.3
391.7
456.7
Americas
329.7
380.3
425.3
463.8
482.3
―thereof USA
169.6
266.6
348.5
376.6
-397.0
Other markets
54.0
54.8
-61.1
61.8
62.7
Total
1,461.2
306.3
- thereof China
658.4
578.7
1,000
800
600
400
200
10
11
12
13
14
Europe
-791.2
858.4
865.4
859.5
914.6
―thereof Germany
267.2
285.3
287.4
259.2
272.3
-286.3
375.5
493.4
1,400
The Japanese economy was influenced by a mixture of
positive and negative factors in 2014, including a con-
tinuation of highly expansionary monetary policies on
the one hand, and a hike in the value added tax rate in
April on the other. The overall outcome was that growth
slipped to 0.3% in Japan in 2014.
Management System Relevant for the
The cyclical upturn in the USA gained further momen-
tum in 2014. Although the reported growth rate of 2.4%
was similarly high compared to the previous year, it was
2013
2014
Cost of capital (EC + DC)
2013
Value added Group
2014
2013
BMW Group
9,051
8,300
Earnings amount
2014
-5,212
- 3,839
3,639
Prior year figures have been adjusted in accordance with IAS 8, see note 9.
22
18-COMBINED MANAGEMENT REPORT
for these purposes corresponds to Group profit before
tax and adjusted for interest expense incurred in con-
junction with the pension provision and on the finan-
cial liabilities of the Automotive and Motorcycles
18-General Information on the BMW Group segments (earnings before interest expense and taxes).
-4,661
18 Business Model
in € million
Value added Group = earnings amount - cost of capital
= earnings amount - (cost of capital rate ×
capital employed)
-
Due to the key importance of the Automotive segment
for the Group as a whole, consideration is also given to
additional key value drivers which have a significant
impact on ROCE and hence on segment performance.
The most important of these additional value drivers are
deliveries to customers, segment revenues and - as the
key performance indicator for profitability – the operat-
ing return on sales (i.e. EBIT margin). Average carbon
emissions for the fleet are also taken into account, re-
flecting their potential impact on earnings in the short
term in the form of ongoing development expenses
and in the long term due to regulatory requirements.
For these purposes "carbon emissions for the fleet" cor-
responds to average emissions of CO2 for new car sales
in the EU-28 countries.
The use of additional key value drivers makes it easier
to identify the reasons for changes in the RoCE and
to define measures capable of influencing its develop-
ment.
Motorcycles segment
only the impact of the severe winter that prevented an
even better performance for the year as a whole. The
upturn was driven once again primarily by the private
sector, with the strongest stimulus coming from the
employment and property markets. At the same time,
the downward pressure on public-sector budgets and
the gradual scaling back of expansionary monetary
policies held down growth in the US economy slightly.
As with the Automotive segment, operating perfor-
mance for the Motorcycles segment is managed on the
basis of RoCE. Capital employed is measured using
the same procedures as in the Automotive segment.
The strategic target for the Motorcycles segment's
ROCE is 26%.
ROCE Motorcycles
Capital employed comprises the average amount of
Group equity employed during the year as a whole, the
financial liabilities of the Automotive and Motorcycles
segments and pension provisions. “Earnings amount"
Profit before financial result
Capital employed
Financial Services segment
As is common practice in the banking sector, the per-
formance of the Financial Services segment is measured
on the basis of return on equity (ROE). RoE for the
Financial Services segment is defined as segment profit
before taxes, divided by the average amount of equity
capital attributable to the segment. The target is a sus-
tainable return on equity of at least 18%.
RoE Financial
Services
Profit before tax
Equity capital
Strategic management at Group level
Strategic management of the Group is performed pri-
marily at Group level, including quantification of the
financial impact of strategic issues on long-term fore-
casting. The most significant performance indicators at
Group level are Group profit before tax and the size
of the Group's workforce at the year end. Group profit
before tax is a good overall measure of the Group's per-
formance after consolidation procedures, and provides
a transparent basis for comparing performance, par-
ticularly over time. The size of the Group's workforce is
monitored as an additional key non-financial perfor-
mance indicator.
The two key performance indicators - Group profit be-
fore tax and size of the workforce - are supplemented
by a measurement of value added. This highly aggregated
performance indicator provides an insight into capital
efficiency and the (opportunity) cost of capital required
to generate Group profit. Value added corresponds to
the amount of earnings over and above the cost of
capital and gives an indication of whether the Group is
meeting the minimum requirements for the rate of
return expected by capital providers. A positive value
added means that a company is creating more additional
value than the cost of capital.
The number of vehicles delivered to customers is also
taken into account as a non-financial value driver.
20-Management System
Reporting Period
23-General and Sector-specific
Consolidated Financial Reporting Process Operations in the Automotive and Motorcycles segments
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
are influenced, to a large extent, by project work. Pro-
jects have a substantial impact on future performance.
Project decisions are therefore a crucial component of
financial management for the BMW Group.
Decisions are taken on the basis of project calculations
measured in terms of the cash flows a project is expected
to generate. Calculations are made for the full term of
a project, i.e. for all future years in which the project
generates cash flows. Project decisions are taken on the
basis of the capital value and internal rate of return cal-
culated for the project.
The capital value of a project indicates the extent to
which a project will be able to generate a positive con-
tribution to earnings over and above the cost of capital.
A project with a positive capital value enhances value
added and therefore results in an increase in the value
of the business. The internal rate of return of the project
corresponds to the average return on capital employed
in the project and, in terms of scope, is equivalent to the
multi-year average RoCE for an individual project. It is
therefore entirely consistent with the principal key per-
formance indicator used for the Automotive and Motor-
cycles segments.
Value management used to control projects
The criteria used for taking decisions as well as the long-
term impact on periodic earnings is documented for
all project decisions and incorporated in the long-term
Report on Economic Position
As the largest European economy outside the eurozone,
the United Kingdom saw a continuation of its run of
good quarterly figures and recorded a growth rate of
2.6% for the year as a whole. Although bolstered by
monetary and fiscal policies implemented on a massive
scale, it appears that the UK economy has now found
a stronger footing to enable it to grow at a decent pace
over a sustained period of time.
After a two-year lull, the eurozone returned to growth
in 2014, albeit at a modest rate of 0.8%. The German
economy grew overall by 1.5%. France was once again
only able to report a very low growth rate of 0.4%. Italy's
economy contracted for the third year in succession,
this time at a less pronounced rate than in previous years
(-0.4%). By contrast, most of the other southern Euro-
pean economies recovered well and recorded positive
growth again after years of recession.
In line with its previous announcements, the US Reserve
Bank brought its bond-buying programme to an end
during the year under report, resulting – in spring 2014
- in considerable turmoil for the currencies of some of
the world's emerging market countries. However, so far,
this first step to scale back its highly expansionary
monetary policy has not had a major adverse impact,
either in the USA or in other countries.
23-Report on Economic Position
General economic environment in 2014
Overall, the global economy grew by 3.3% in 2014, with
significant differences in growth rates recorded from
region to region. After a weak start, the USA performed
strongly over the year as a whole. The growth rate in
China remained at a relatively high level, despite a
moderate slowdown in economic momentum. As a result
of the value added tax hike, Japan recorded a steeper
drop in growth than had been expected. Even though
recession was overcome in Europe as a whole, the re-
covery could hardly be described as dynamic, especially
in the major economies. The ongoing weak performance
of some major emerging markets, in particular Brazil
and Russia, also held down the global growth rate. Al-
though the Indian economy regained some momentum,
the growth rate was still lower than in recent years.
General and Sector-specific Environment
Group forecast. This system enables an analysis of the
periodic reporting impact of project decisions on earn-
ings and rates of return over the term of each project.
The overall result is a self-contained controlling model.
ard market procedures. The pre-tax average weighted
cost of capital for the BMW Group in 2014 was 12%, un-
changed from the previous year.
23 COMBINED MANAGEMENT REPORT
82 Internal Control System and Risk
The cost of capital is the minimum rate of return ex-
pected by capital providers in return for the capital em-
Management System Relevant for the
Environment
26 Financial and Non-financial
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
an equity capital element (e.g. share capital) and a debt
capital element (e.g. bonds), the overall cost of capital
rate is determined on the basis of the weighted average
Performance Indicators
of BMW AG
70 Report on Risks and Opportunities
65 Outlook
61 Comments on Financial Statements rates for equity and debt capital, measured using stand-
Opportunities
26 Overall Assessment by Management ployed by the Group. Since capital employed comprises
Reporting Period
64 Events after the End of the
65 Report on Outlook, Risks and
The new R nineT, S 1000 R, R1200 RT, R1200 GS Adven-
ture and K 1600 GTL Exclusive models presented in au-
tumn 2013 were all launched in time for the start of
the season in March 2014. Important contributions to
BMW Motorrad's success were made in particular by the
R 1200 GS Adventure and R 1200 RT models. The new
R nineT generated a highly positive response among cus-
tomers and media alike.
Three BMW motorcycles celebrated their world premieres
at the INTERMOT in Cologne: the S 1000 RR, the R 1200 R
and the R1200 RS. The latest version of the S 1000 RR
Supersports bike has an even better weight-to-power ra-
tio and a whole host of integrated technical innovations.
40
in 1,000 units
120
100
80
BMW Motorrad enters world of electromobility
In May 2014, the arrival of the new C evolution marked
the beginning of a new chapter in the urban mobility
segment for BMW Motorrad. The new electrically pow-
ered scooter fuses riding fun and dynamism with the
benefits of zero-emissions performance to create a whole
new experience on two wheels.
60
BMW sales volume of motorcycles²
as a percentage of sales volume
|||||
10 —11 ―12 13 14
98.0 104.3 106.4
115.2
123.5
BMW Group - key motorcycle markets 2014
Germany
USA
France
Italy
Other
Spain
Great Britain
Italy
Brazil
The number of motorcycles sold in Europe rose to 73,611
units (2013: 68,961 units), a solid growth rate of 6.7%.
With a sales volume of 21,714 units, business in Germany
edged up slightly on the previous year (2013: 21,473 units;
+1.1%). Motorcycle sales were also slightly higher (+2.5%)
in Italy, with 10,487 units handed over to customers
(2013: 10,230 units). Significant growth was achieved in
France, however, where we recorded a sales volume of
11,600 units (2013: 10,400 units; +11.5%). Motorcycle
sales in the USA, at 15,301 units, grew solidly compared
to the previous year (2013: 14,100 units; +8.5%).
20
Motorcycle sales up in all markets
64 Events after the End of the
Reporting Period
Solid sales volume growth for BMW Motorrad
26 Financial and Non-financial
Performance Indicators
29-Review of Operations
29-Automotive Segment
35-Motorcycles Segment
36 Financial Services Segment
38 Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
Germany
65 Report on Outlook, Risks and
The Motorcycles segment profited from a positive market
environment during the period under report. In total,
we sold 123,495 BMW motorcycles worldwide (2013:
115,215¹; +7.2%) and therefore outperformed the market
as a whole.
Opportunities
During the third quarter, series production of the
Rolls-Royce Ghost Series II commenced at the Rolls-Royce
plant in Goodwood (UK). Construction of a technology
and logistics centre for the plant was also announced.
The Goodwood plant meanwhile provides jobs for more
than 1,500 people, 100 of whom took up their posts
during the period under report.
The engine plants in Munich, Hams Hall (UK) and Steyr
(Austria) have continued to introduce a highly flexible,
demand-oriented production system. In June, the engine
Consolidated Financial Reporting Process production plant in Munich officially gave the green
82 Internal Control System and Risk
Management System Relevant for the
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
light for a production line for modular engines. In future,
the Group's main plant will therefore act internationally
as the leading plant for the production of the 3- and
4-cylinder petrol engines that form part of the Efficient
Dynamics family. The Munich plant produces up to
3,200 engines each day, 1,000 of which are modular. The
range comprises BMW 3-, 4-, 8- and 12-cylinder petrol
engines, BMW 6-cylinder diesel engines, and 8-cylinder
high-performance engines for the BMW M models. In
October, the engine plant in Steyr also launched a pro-
duction line for low-fuel-consumption 3- and 4-cylinder
modular engines. In what is currently the largest engine
plant operated by the BMW Group, up to 4,700 engines
are completed each day. The diesel engine development
centre, which is connected to the plant, is currently being
enlarged. The Hams Hall engine plant makes 3- and
4-cylinder petrol engines for BMW and MINI and is also
the exclusive manufacturer of 3-cylinder petrol engines
for the BMW i8.
Pilot projects for "Industrie 4.0" launched
During the year under report, the BMW Group initiated
new projects within its production network which will
ultimately pave the way towards the first intelligent plant.
The objective is to deploy new technologies as sensibly
as possible with the aim of providing production and
upstream preparation staff with the best possible
support. One good example is the innovative coopera-
tion between staff and robots in the Spartanburg and
Dingolfing plants, by which people and robots work
together effectively side by side.
35 COMBINED MANAGEMENT REPORT
MOTORCYCLES SEGMENT
ries Active Tourer.
USA
1 Plus an additional 1,110 Husqvarna motorcycles (until 5 March 2013).
2 Excluding Husqvarna, sales volume up to 2013: 59,776 units.
17.6
41 Sales and Marketing
The Financial Services segment is represented in more
than 50 countries, serving the dealer organisation as a
strong and reliable partner. Credit financing and the
lease of cars and motorcycles to retail and business cus-
tomers is the segment's largest line of business. Multi-
brand business, operated under the brand name
"Alphera", also covers the financing of vehicles of other
61 Comments on Financial Statements manufacturers. The Financial Services segment offers
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
fleet business services under the brand name "Alphabet".
It also supports the Group's dealer organisation by
providing financing for dealership vehicle inventories,
real estate and equipment. Supplementing its lease
Consolidated Financial Reporting Process and credit financing business, the segment also offers
its customers selected insurance and banking services.
82 Internal Control System and Risk
Management System Relevant for the
40 Purchasing
83 Disclosures Relevant for Takeovers
87 BMW Stock and Capital Markets
New business up again on previous year
Credit financing and leasing business with retail cus-
tomers once again made a significant contribution
to the segment's success in 2014. In total, 1,509,113
new contracts were signed during the reporting period,
slightly more (+2.6%) than one year earlier (2013:
1,471,385 contracts).
Leasing business grew year-on-year by 5.2%, credit
financing by 1.2%. As a proportion of new business,
leasing accounted for 34.7% and credit financing for
65.3%. The proportion of new BMW Group cars leased
or financed by the Financial Services segment was
41.7%, 2.3 percentage points lower than in the pre-
year (2013: 44.0%).
vious
Contract portfolio of Financial Services segment
31 COMBINED MANAGEMENT REPORT
Sales volume of MINI vehicles by model variant
in units
2014
2013
Change
in %
and Explanatory Comments
29 Automotive Segment
35 Motorcycles Segment
36-Financial Services Segment
38 Research and Development
29-Review of Operations
Performance Indicators
Brazil
6.1
-12.4
Great Britain
5.5
9.4
Spain
5.0
8.5
Other
35.5
The new R1200 RS succeeds in combining the qualities
of a touring bike with the dynamic performance of a
sports machine. The new R 1200 R continues in the tra-
dition of a "purist" BMW roadster combined with a tried-
and-tested boxer engine. The new models will become
available in spring 2015, in good time for the start of the
motorcycle season. BMW Motorrad also presented two
more new models at the EICMA Motorcycles Exhibition
in Milan - the S 1000 XR and the F 800 R. The S1000 XR
unites dynamic touring qualities, sporty performance
and high levels of comfort with outstanding everyday
usability. The new F 800 R Roadster offers sporty perfor-
mance, agile handling and even greater versatility.
BMW Motorrad's new brand strategy
The BMW Group launched its new brand strategy for BMW
Motorrad at the INTERMOT international motorcycle
show. The brand's new motto - MAKE LIFE A RIDE-
equates motorcycle riding with the joy of living. People
tell their (life) stories in a documentary style and, by air-
ing their emotions regarding all aspects of the motor-
cycle, raise enthusiasm worldwide for motorcycle riding.
Motorcycle production volume significantly up
on previous year
In total, 133,615 BMW motorcycles were manufactured
during the period under report (2013: 110,127³ units;
+21.3%), with the sharp increase primarily reflecting
the production starts of a number of new models. Up to
600 motorcycles (from various series) and maxi-scooters
are manufactured each day at the motorcycles plant in
Berlin. BMW Motorrad also continued to expand the in-
ternational reach of its production activities. Local motor-
cycle assembly facilities, such as those in Brazil and
Thailand, are becoming increasingly important.
23 General and Sector-specific
Environment
3 Plus an additional 1,569 Husqvarna motorcycles (until 5 March 2013).
36
FINANCIAL SERVICES SEGMENT
Financial Services segment remains on growth course
The Financial Services segment achieved its best figures
to date in 2014, despite a difficult market environment.
4,359,572 lease and credit financing contracts were in
place with dealers and retail customers at the end of the
reporting period (2013: 4,130,002 contracts; +5.6%).
Business volume in balance sheet terms grew by 14.3%
26 Overall Assessment by Management to stand at €96,390 million (2013: €84,347 million).
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
23 General and Sector-specific
Environment
26 Financial and Non-financial
France
The pressing plant in Swindon produces bodywork
components and assemblies for the Oxford plant. Since
July the plant has also supplied the MINI contract pro-
duction facilities at VDL Nedcar with body parts and
26 Overall Assessment by Management the Leipzig plant with pressed parts for the BMW 2 Se-
33 COMBINED MANAGEMENT REPORT
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
Spartanburg
Dadong¹
Tiexi¹
Oxford
Graz (Magna Steyr)²
Born (VDL Nedcar)2.
Goodwood
Assembly plants
BMW Group
1 Joint venture BMW Brilliance Automotive Ltd., Shenyang.
2 Contract production.
-228,126
247,330
-7.8
-10.5
-369,027
342,629
-7.7
-17.0
272,015
295,417
-7.9
12.6
211,434
-186,695
13.3
9.8
Leipzig
Rosslyn
-68,771
Regensburg
Munich
18 General Information on the BMW Group
23-Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29-Review of Operations
29-Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Dingolfing
May 2014, MSF manufactured its one-millionth vehicle
for the BMW Group.
-65,646
3.2
-2.4
7.9
100.0
day and almost 370,000 over the full year under report.
Production of the BMW 4 Series Gran Coupé began in
February. Assembly lines at the Dingolfing plant are
therefore now making a total of 17 models, belonging to
five different BMW series. In February the plant cele-
brated a production record following construction of
the nine-millionth BMW car at that location. As part of
the plant's modernisation, measures in 2014 included
further work on new bodymaking facilities at the site. A
new supply centre for vehicle assembly, a high-speed
servo press and a production facility for axle brackets
were all put into operation. Two new production lines
were added in October to manufacture high-voltage
power storage systems and electric motors for the BMW
Group's future plug-in hybrids.
The Leipzig plant continued to recruit new personnel
in order to keep pace with the increased expertise and
manpower capacity needed, both for BMW i models
and for conventional production. In July, the four-thou-
sandth employee was welcomed to the plant. In May,
series production of the BMW i8 commenced, followed
by the BMW 2 Series Active Tourer in July. In October,
the 1.5-millionth BMW was manufactured at the plant
since production first began in 2005. Production of the
BMW 2 Series Convertible began in November.
At the Regensburg plant, production of the BMW M3
Sedan began in February and the first BMW M4
Convertible models were manufactured there in July.
The enlargement of the pressing plant was completed
and the bodymaking facility expanded to include a
second production line. At the same time, a new supply
centre went into operation.
The BMW Group plant in Wackersdorf celebrated its
25th anniversary in 2014. In July, a new building and a
new production facility for processing CFRP matting
was taken into service.
Expansion work at the Eisenach plant also began in
July. The existing buildings and production floor space
are due to be enlarged to accommodate future vehicle
projects and new technologies. Moreover, a state-of-the-
art servo press is being installed.
The components plant in Landshut is making the electric
motor, the complete plastic outer skin, CFRP structural
body parts and lightweight metal die-cast parts for the
BMW i8 hybrid sports car. The plant's lightweight die-
cast metal facilities celebrated their 25th anniversary in
2014 and remain the only unit within the BMW Group
producing such parts. The components plant has adopted
Proportion of
a new, energy-saving strategy to optimise energy manage-
ment. Since 2014, the waste heat from the melting
plant has been fed into the site's own in-house hot water
system, which means it can be used for heating in win-
ter and cooling in summer.
Global presence strengthened
During the year under report, 48.5% of the BMW Group's
vehicles were manufactured abroad. The BMW 5 Series
long-wheelbase Sedan is manufactured at the Dadong
plant in China. The 500,000th vehicle was produced at
the plant in March 2014, while at the engine manufac-
turing plant in Shenyang, the 400,000th 4-cylinder petrol
engine was being produced for the Chinese market. At
the same time, preparations were initiated at the Tiexi¹
plant for a new engine manufacturing facility, including
a foundry, to supply local production capacities. It is
due to begin production in 2016. The first BMW 316Li
was manufactured at the Tiexi¹ plant in October.
At the Rosslyn manufacturing plant in South Africa,
the BMW Group concluded a contract with the energy
company Bio2Watt (Pty) Ltd. Under its terms, from
2015 onwards some 25 to 30% of the plant's electricity
requirements will be generated by a combined heat and
power plant that runs on landfill gas. The biogas used
will be recovered from the treatment of waste.
Almost 350,000 vehicles were manufactured at the
US plant in Spartanburg in 2014 - a new record for the
location. To coincide with the production plant's 20th
anniversary, in March the BMW Group announced ex-
pansion plans. Its manufacturing capacity is scheduled
to be raised to 450,000 vehicles per year. To date, the
BMW X3, X5, X5 M, X6 and X6 M models have been
manufactured at the competence centre for X vehicles.
Furthermore, production of the BMW X4 commenced
at the site in April. In October, a second painting facility
was also commissioned at the plant.
In July 2014 the construction of a new plant in San Luis
Potosí, Mexico, was announced. The scheduled annual
capacity of this plant is approximately 150,000 units.
This move underpins the BMW Group's strategic com-
mitment to maintaining a well-balanced global value-
added chain.
At Moses Lake, Washington (USA), the carbon fibre
manufacturing facility has been enlarged to include a
third production building. It should be ready to begin
operations by the beginning of 2015 and offers additional
capacity for two production lines capable of handling a
total volume of 3,000 tonnes per year.
In a parallel development, the BMW Group has built an
assembly plant in Araquari, Brazil. The first vehicles
were produced at the location in October 2014. The new
production facility will be fully completed in the course
of 2015. The manufacturing infrastructure will then
comprise bodymaking, painting and assembly. Manu-
facturing capacity is scheduled to reach up to 30,000 vehi-
cles per year. The production portfolio currently com-
prises the BMW 3 Series and the X1. The BMW 1 Series,
the X3 and the MINI Countryman are scheduled to fol-
low in the course of 2015.
At the Group's various assembly plants, which mostly
serve their regional markets, 52,368 vehicles were
produced overall during the period under report. The
plants are located in Araquari (Brazil), Rayong (Thailand),
Chennai (India), Kaliningrad (Russia), Cairo (Egypt),
Jakarta (Indonesia) and Kulim (Malaysia).
Thirteen
years after the relaunching of the MINI brand in
2001, the three-millionth vehicle has meanwhile rolled
off the assembly lines at the Oxford plant. During this
period, two million of the MINI brand cars manufac-
tured in the UK have been exported to over 110 coun-
tries around the world. The British production triangle
comprising the MINI plant in Oxford, the components
plant in Swindon and the engine production facility
in Hams Hall is a key part of the BMW Group's produc-
tion network. More than 900 units of the MINI are pro-
duced at the Oxford plant per day during peak times.
In order to secure greater capacity for planned growth,
since July the MINI Hatch is also being produced at
the Dutch carmaker VDL Nedcar bv in Born, the
Netherlands, under the terms of a contract with the
BMW Group. These new arrangements enable even
greater flexibility for the BMW Group's production net-
work worldwide. The MINI models Countryman and
Paceman are already being produced under contract by
Magna Steyr Fahrzeugtechnik (MSF) in Graz, Austria. In
1 Joint venture BMW Brilliance Automotive Ltd., Shenyang.
2 Joint operation SGL Automotive Carbon Fibers.
34
-1.7
4.8
51,504
2,006,366
0.2
349,949
297,326
17.7
16.2
143,390
-126,888
13.0
6.6
144,076
-88,032
63.7
6.7
179,318
-175,986
-1.9
- 8.3
113,401
-125,559
-9.7
5.2
-29,196
1.3
4,495
- 3,354
34.0
-52,368
2,165,566
MINI sales volume
2014 in %
106,995
MINI Convertible
26 Financial and Non-financial
Performance Indicators
29-Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38-Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
Research and development expenditure for the year de-
creased by 4.7% to €4,566 million (2013: €4,793* mil-
lion). The research and development ratio was 5.7%,
0.6 percentage points lower than in the previous year
(2013: 6.3%). The ratio of capitalised development costs
to total research and development costs for the period
(capitalisation ratio) was 32.8% (2013: 36.4%). Amortisa-
tion of capitalised development costs totalled €1,068 mil-
lion (2013: €1,069 million). Further information on re-
search and development expenditure is provided in the
Consolidated Financial Reporting Process section "Results of Operations, Financial Position and
Net Assets" and in note 11 to the Group Financial State-
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
ments.
Drive concepts: setting the course for the future
In line with our commitment to Efficient Dynamics, we
are working continuously to optimise both our range
of combustion engines featuring TwinPower turbo tech-
nology on the one hand and the various electric motors,
energy storage and energy management systems for
electric and plug-in hybrid vehicles developed for BMW
eDrive on the other. In the long term, the BMW Group
is also promoting the development of hydrogen-powered
fuel cell technology as a source of energy.
The new Efficient Dynamics family of engines, com-
prising 3-, 4- and 6-cylinder power units, reflects the
output of a rigorous and consistently applied develop-
ment process. Higher aluminium content plus the use
of magnesium (which is even lighter) has enabled the
BMW Group to significantly reduce the average weight
of its latest range of engines. The first of this new gen-
eration of engines is a 1.5-litre, 3-cylinder petrol engine,
which has found its first home in the BMW i8. The BMW
Group also presented the first 4-cylinder versions of
Prior year figures have been adjusted in accordance with IAS 8, see note 9.
the new engine family during the first half of 2014. Due
to commonalities in the design of our petrol and diesel
engines, the percentage of identical parts used can be as
high as 60%, while the structural similarities between
petrol and diesel engines are around 40%.
The BMW i8 combines the driving performance of a
sports car with the fuel consumption of a compact-class
model. The plug-in hybrid system developed for the
BMW i8 meets the very highest specifications in terms
of driving dynamics, efficiency, practical usefulness
and quality, thus underlining the BMW Group's techno-
logical leadership in the field of drive system develop-
ment. In the long term, the BMW Group also plans to
transfer eDrive technology to other core brand models.
The BMW 3 Series plug-in hybrid prototype unveiled in
2014 provides a preview of how extreme efficiency can
be combined with ultimate driving pleasure in the world's
most successful premium-class sedan. The prototype
features a 4-cylinder petrol engine from the new Efficient
Dynamics family with TwinPower turbo technology
combined with an electric drive system. The outcome is
a car that delivers sporty driving dynamics similar to
being behind the wheel of a conventionally powered
6-cylinder BMW 3 Series model, but with far lower fuel
consumption. The possible integration of a plug-in
hybrid system is already a firm part of our thinking when
new BMW and MINI models are being developed, thus
ensuring, among other things, that future model variants
equipped with hybrid drive technology will be just as
suitable for everyday use as their standard counterparts.
The BMW Group took a further step forward in the field
of powertrain electrification with its presentation in
2014 of the newly developed range of hybrid drive sys-
tems intended for high-performance electric drives
based on Power eDrive technology. In future-generation
plug-in hybrid vehicles, around two-thirds of the drive
system's output should come from the Power eDrive
electric system and around one-third from the TwinPower
turbo technology combustion engine. The BMW Group
is pressing ahead with the development of battery-
powered drive systems (as in the BMW i3) and plug-in
hybrids, as well as in other areas such as fuel-cell electric
technology and high-voltage electrified systems (Power
eDrive). With its wide range of drive systems, the BMW
Group can and will continue to be able to react flexibly
23 General and Sector-specific
Environment
39 COMBINED MANAGEMENT REPORT
Research and development play a vital role for the BMW
Group, given its broad range of products and the high
number of new models. Our vehicles and services also
set standards in terms of connecting car occupants
with the outside world. During 2014, a total of 11,779
employees were engaged throughout the BMW Group's
global research and innovation network at twelve loca-
26 Overall Assessment by Management tions spread over five countries, to deliver the best
product quality possible and develop innovative tech-
nologies for customers.
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
Europe/Middle East/Africa
Asia/Pacific
25.1
14.7
Dealer financing significantly up on previous year
The total volume of dealer financing amounted to
€14,710 million at the end of the reporting period, 12.2%
higher than one year earlier (2013: €13,110 million).
Deposit business volume at previous year's level
Deposit-taking represents an important element in the
BMW Group's refinancing strategy. The volume of cus-
tomer deposits worldwide at the end of the reporting
period stood at €12,466 million and thus on par with
the previous year (2013: €12,457 million; +0.1%).
Insurance business continues to grow
The Financial Services segment also operates an insur-
ance line of business. In addition to its financing and
leasing products, we also offer a wide range of insurance
coverage, addressing all aspects of individual mobility.
Demand for our insurance products remained high in
2014, with 1,085,781 new contracts signed during the
Development of credit loss ratio
in %
0.7
0.6
0.5
0.4
0.3
0.2
0.1
luu
10 11 ―12 13 14
period under report (2013: 1,041,530 contracts; +4.2%).
Overall, the portfolio increased to 2,874,158 contracts
(2013: 2,567,168 contracts; +12.0%).
Risk profile
The positive trend in the global economy and a some-
what quieter period in the euro crisis enabled the risk
profile relevant for the Financial Services segment's
total portfolio to improve again in 2014. Moreover, the
segment's well-established procedures for managing
credit risks continued to prove their worth. At 0.50%, the
overall credit loss ratio remained at a stable, low level
(2013: 0.46%). Reflecting the generally stable conditions
prevailing on international used car markets, sales prices
for our pre-owned cars developed robustly. Average re-
sidual value losses incurred on the resale of our vehicles
remained stable at the previous year's level.
Further information with respect to risks and opportu-
nities related to Financial Services can be found in the
section "Report on risks and opportunities".
0.67
0.49
0.48
0.46 0.50
38
RESEARCH AND DEVELOPMENT
30.4
29.8
to the needs of customers and new regulations stipulated
by legislators.
Highly automated driving at the limit
award and thus the highest accolade for trendsetting
design, the BMW i8, the 2 Series Coupé, the 3 Series
Gran Turismo, the 4 Series Coupé and Convertible and
the BMW R nineT all received prizes. Furthermore,
the new MINI received an "Honourable Mention". With
the "iF product design award", the BMW i8 was pre-
sented with a prize by Industrie Forum Design e. V. for
its innovative design. The greatest appreciation, how-
ever, was accorded to the BMW i3, which won the "iF
product design award Gold". Further awards went to
the X5, the 2 Series Coupé, the 4 Series Coupé, the 3 Se-
ries Gran Turismo and the BMW R nineT in the cate-
gory "Product, transportation design/special vehicles".
PURCHASING AND SUPPLIER NETWORK
The primary focus of the BMW Group's purchasing and
logistics activities is to achieve an optimal balance of
quality, innovation, flexible supply structures and com-
petitive cost. In this context, we therefore go to great
lengths to design the supply chain with our business
partners, thus ensuring that we can react rapidly and
flexibly at all times to fluctuations in order volumes, even
within a volatile environment.
Numerous model start-ups
2014 saw the start-up of 13 new BMW and MINI brand
models. Most of the BMW start-ups were concentrated
on Europe and the NAFTA region. The production start
of the new X4 at the Spartanburg plant resulted in a
broader supplier base within the NAFTA region. Close
collaboration with external business partners and the
BMW Group's own in-house component production
team resulted in the introduction of numerous innova-
tions, many of them relating to the BMW i8.
Increasing importance of NAFTA region
During the year under report, the construction of a new
plant in San Luis Potosí (Mexico) with a planned annual
manufacturing capacity of 150,000 units was announced.
This move is in line with the strategy of ensuring glob-
ally balanced growth. For the BMW Group, it will also
entail a further increase in NAFTA-based purchases in
the coming years, whilst at the same time contributing
to currency hedging. In view of these developments,
the BMW Group's decentralised organisational struc-
tures in the NAFTA region have been strengthened and
newly aligned.
Regional mix of BMW Group purchase volumes 2014
in %, basis: production material
Rest of
Western Europe
Africa
Asia/Australia
NAFTA
Eastern Europe
Germany
Germany
Eastern Europe.
47.2
17.2
NAFTA
Asia/Australia
14.5
3.7
Rest of Western Europe
15.9
Africa
-1.5
87 BMW Stock and Capital Markets
Intelligently designed lightweight construction
Lightweight construction is an essential component of
the BMW Group's Efficient Dynamics strategy and
firmly embedded in its basic understanding of modern
manufacturing. The consistent use of lightweight mate-
rials in vehicle design is particularly important with
electrically powered cars, as not only the battery capacity,
but also the total weight of the vehicle restrict their
range. In order to compensate for the added weight of
the electrical components, the BMW Group has devel-
oped its LifeDrive concept for BMW i series vehicles,
which is firmly committed to the use of lightweight de-
sign. In this context, the BMW Group has, for the first
time, achieved an innovative combination comprising
an aluminium chassis and a CFRP passenger compart-
ment. Specifically deployed, the material used helps re-
duce total vehicle weight, optimises its point of gravity
and increases the stability of the car's body. The BMW
Group is currently working on further possible applica-
tions, such as hybrid wheel rims comprising a mixture
of aluminium and CFRP. In the case of the BMW M3
and M4 models, the high rigidity and low weight of CFRP
allows the cardan shaft to be manufactured as a single
piece, without a centre bearing. In addition to achieving
a 40% weight-saving compared to the previous model,
a further benefit is that the rotating mass is reduced,
thus resulting in a further improvement in response be-
haviour. After more than ten years of intensive research
work and the continual optimisation of the processes,
materials, systems and tools involved, the BMW Group
is currently the only automotive manufacturer with
the required know-how to utilise CFRP on a large-scale
production basis.
83 Disclosures Relevant for Takeovers
and Explanatory Comments
The BMW Group won as many as eight prizes at last
year's "Red Dot Award for Product Design”. The “Red
Dot" went to seven BMW models. Apart from the
Consolidated Financial Reporting Process BMW i3, which took the "Red Dot: Best of the Best"
Precise, reliable control of a vehicle when driven at its
dynamic limit is a key aspect of highly automated driving.
Only a system that can safely master all dynamic situa-
tions, including those encountered when a vehicle is
driven at its technical limit, will be able to instil trust and
provide sustained and secure relief for the driver in tiring
situations.
The BMW Group has built an innovative, highly auto-
mated research prototype, which in 2014 demonstrated
the utmost safety at the vehicle's dynamic limit, thanks
to perfected control technology. On a closed-off race-
track, the BMW test vehicle additionally underlined the
efficiency of a new generation of control systems, which
can actively intervene in key driving decisions and
at the same time coordinate the electrically controlled
steering with the brake and accelerator. The system
therefore goes one decisive step further than any of its
predecessors. With BMW ActiveAssist, the BMW Group
is playing a pioneering role in implementing safety-re-
lated, highly automated systems. Back in October 2009,
in conjunction with the predecessor research project,
BMW Track Trainer, the BMW Group drove a highly au-
tomated vehicle through the racing line of the “Nord-
schleife” at the Nürburgring racetrack, one of the most
demanding circuits in the world. The BMW emergency
stop assistant research project has delivered further
valuable findings. If the driver fails to react, for example
due to a medical emergency such as a heart attack,
this feature can switch to the highly automated mode,
steer the vehicle safely to the roadside and automatically
send an emergency call. Back in 2011, the first BMW
test vehicle was already driven on a multi-lane motor-
way using the highly automated mode. Meanwhile, with
some 20,000 kilometres of testing behind them, the
development engineers have gathered valuable insights
into the behaviour and handling strategies of their highly
automated vehicles.
Research project "Virtual marketplace of the future"
Location Based Services enable users to receive infor-
mation on places of interest, services and events in the
surrounding area - anytime and anywhere. Even while
driving, location-based services and other information
can be a useful supplement, either en route or at your
destination. For that reason, BMW ConnectedDrive al-
ready offers users a whole range of location-based infor-
mation. In future, the vehicle will be able to present the
customer with information and items of interest along
the route, tailored to suit the situation and the user's
individual preferences. The premiere of the latest gen-
eration of the optional navigation system "Professional”
in the BMW 2 Series Convertible achieved an even
higher level of convenience and reliability in terms of
route guidance. The system, which was first presented
in 2014, updates its navigation data on a regular basis,
several times per year, assuming a new version of map
data is available. The user is required to pay neither
40
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
23 General and Sector-specific
Environment
licensing fees nor transmission costs. Via the SIM card
built into the car, the new map data are sent to the
vehicle via the mobile network (LTE), without having
to take the longer route via an external data carrier and
manual installation.
Outstanding technology and design
26 Overall Assessment by Management In the most recent competition for the prestigious “In-
26 Financial and Non-financial
Performance Indicators
29-Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38-Research and Development
40-Purchasing
41-Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
ternational Engine of the Year Award", the BMW Group
was awarded prizes in two different categories. For the
fourth time now, the 3.0-litre in-line 6-cylinder petrol
engine featuring BMW TwinPower turbo technology was
among the main prizewinners. The engine powers
numerous current BMW models. The 1.6-litre 4-cylinder
turbo engine, which is fitted in models such as the MINI
Cooper S Countryman and the MINI Cooper S Paceman,
was winner in its class for the eighth consecutive time.
82 Internal Control System and Risk
Management System Relevant for the
MINI Hatch
Americas
EU Bank
EU Bank
15,567
-14,687
6.0
302,183
-0.9
5.2
100.0
More than 4,000 Rolls-Royce sold for the first time
Rolls-Royce Motor Cars remained market leader in the
ultra-luxury segment in 2014. With 4,063 units sold,
the brand surpassed the 4,000-unit sales volume thresh-
old for the first time (2013: 3,630 units; +11.9%). The
Rolls-Royce Wraith, which became available in autumn
2013, achieved sales volume of 1,906 units (2013:
492 units). 1,555 units of the Rolls-Royce Ghost were
sold worldwide (2013: 2,284 units; -31.9%).
Sales volume of Rolls-Royce vehicles by model variant
in units
Phantom
Ghost
Wraith
Rolls-Royce total
2014
2013
Change in %
602
-854
1,555
2,284
-29.5
-31.9
1,906
492
4,063
3 7
3,630
-1.7
- 9,315
140,051
-128,498
9.0
46.3
17,327
21,167
-18.1
5.7
MINI Clubman
13,326
-21,030
-36.6
4.4
MINI Countryman -
-101,897
5.0
35.4
MINI Coupé
3,816
-8,436
-54.8
-1.3
MINI Roadster
MINI Paceman
MINI total
-5,101
-45.2
Americas
11.9
The most important events in the BMW Group's pro-
duction network during the year under report were the
numerous model start-ups, the beginning of series pro-
duction for the BMW i8 and the further expansion of
our international manufacturing network, which grew
to a total of 30 sites in 14 countries and set new records
in terms of production volumes.
3,200
in %
50
40
30
20
10
10 11 ―12 ―13 14
10
11 ―12 13 14
3,190 3,592 3,846 4,130 4,360
Financing
Leasing
24.1
20.0
24.1
21.1
20.7
19.7
22.5 20.8
21.5 20.9
37 COMBINED MANAGEMENT REPORT
Contract portfolio retail customer financing of
Financial Services segment 2014
as a percentage by region
Asia/Pacific
Europe/Middle
East/Africa
3,400
Production network running at full pace
3,600
4,000
Due to the brisk demand on international car markets,
in 2014 production volume rose to 2,165,566 units (2013:
2,006,366 units; +7.9%), comprising 1,838,268* BMW
(2013: 1,699,835*; +8.1%), 322,803 MINI (2013: 303,177;
+6.5%) and 4,495 Rolls-Royce (2013: 3,354; +34.0%)
brand cars.
More than one million vehicles produced in Germany
for fourth consecutive year
For the fourth year in a row, the BMW Group manu-
factured over one million vehicles at its German plants.
Around 950 vehicles rolled off production lines per
working day at the Group's main plant in Munich, in-
cluding the BMW 3 Series Sedan, the BMW 3 Series
Touring, the BMW 4 Series Coupé and, since February,
the BMW M4 Coupé.
In Dingolfing, production reached all-time high levels,
with an average of around 1,600 units manufactured per
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
(2013: 214,920 units, 2014: 287,466 units).
32
Vehicle production of the BMW Group by plant
in units
2014
2013
Change
Proportion of
3,800
in %
18-COMBINED MANAGEMENT REPORT
in 1,000 units
In the used car financing line of business, 334,289 new
contracts for BMW and MINI brand cars were signed
in 2014, 5.8% more than in the previous year (2013:
315,919 contracts).
The total volume of all new credit and leasing contracts
concluded with retail customers during the twelve-
month period under report amounted to €41,318 mil-
lion, an increase of 5.3% (2013: €39,241 million).
The increase in new retail customer business is reflected
in the overall contract portfolio. In total, 4,005,428 con-
tracts were in place with retail customers at 31 December
2014 (2013: 3,793,768 contracts; +5.6%). As in previous
years, growth was recorded across all regions, with in-
creases in the Europe/Middle East/Africa region (+6.5%),
the Americas region (+4.0%) and for the EU Bank (+0.4%).
The most significant rise was again recorded in the
Asia/Pacific region, where the contract portfolio grew
by 20.1%.
Further growth of fleet business
Alphabet, with its wide range of multi-brand products,
is one of the top four fleet service providers in Europe.
Alongside fleet management and financing, the broad
product range also includes full service leasing. In total,
a portfolio of 555,349 fleet vehicle contracts was being
managed at the end of the reporting period, up slightly by
3.7% compared to one year earlier (2013: 535,528 con-
tracts).
Decrease in multi-brand financing
The volume of multi-brand financing decreased mod-
erately in 2014. Against the background of continued
profitable portfolio growth and greater competition,
the number of new contracts fell by 8.7% to stand at
165,776 contracts (2013: 181,605 contracts). A portfolio
of 465,702 contracts (2013: 452,009 contracts; +3.0%)
was in place at 31 December 2014.
BMW Group new vehicles financed by
Financial Services segment
4,400
4,200
production in %
305,030
23-Report on Economic Position
10.0
In addition to its intelligent emergency call feature,
which already offers a broader range of functions than
the E-call required by EU legislation as from 2016, the
customer can benefit from a large number of innova-
tive services. These include the Concierge Call, which
is available around the clock and – if required - looks
up addresses and feeds them directly into the naviga-
tion system or makes reservations directly. In addi-
tion, the real-time traffic information (RTTI) or the re-
mote functions, for example, offer useful support for
the driver.
5.0
4.0
3.0
1.0
10 11 ―12 13 14
2.74
2.16
3.87
3.47
1.41
* Number of employees on unlimited employment contracts leaving the Company.
SUSTAINABILITY
Sustainable management
Sustainability for the BMW Group means making a
lasting positive contribution to economic success, thus
creating added value for the business. Manufacturing
with efficient and resource-friendly production pro-
cesses and offering customers state-of-the-art solutions
for sustainable individual mobility gives the BMW
Group a competitive advantage. Our employees play a
vital role in this context with their personal commit-
ment and ideas, a fact borne out, for example, by the
€31 million saved in 2014 alone in conjunction with
the ideas management system in place throughout the
BMW Group. Our commitment to sustainable manage-
ment and our aspiration for social responsibility along
the entire value chain are firmly embedded within the
BMW Group.
As well as requiring social and ecological aspects to be
taken into account in internal decision-making pro-
cesses, the BMW Group's sustainability management
system involves the systematic analysis of external fac-
tors and a continual dialogue with our stakeholders.
Materiality process
Global megatrends such as urbanisation or climate
change have an impact on both regulatory conditions
and customer requirements, causing new fields of
business to arise. In order to recognise any such
changes in good time, we regularly perform a review
using our materiality process. In this context, we ana-
lyse the importance of challenges on society, both from
the point of view of different stakeholder groups and
from an internal BMW Group perspective. The results
of the materiality analysis - shown in the materiality
matrix – form the basis for our regular verification of
the direction our sustainability strategy is taking.
Sustainability ratings
In 2014 the BMW Group was able to maintain its posi-
tion as most sustainable premium manufacturer in the
automotive industry and again secured excellent plac-
ings in widely regarded ratings. In the Dow Jones Sus-
tainability Indices (DJSI), for instance, the BMW Group
took first place in the Automobiles sector. The BMW
Group is therefore the only enterprise in this sector to
have been listed in the index without interruption since
its inception. In the Global 500 rating of the Carbon
Disclosure Project (CDP), we again achieved 100 out of
a possible 100 points for transparent reporting and the
best mark for climate protection measures, thus retaining
our leading position again in 2014. Based on this result,
the BMW Group is listed with the highest performance
score "A" in the global Climate Performance Leadership
46
Materiality matrix
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
23 General and Sector-specific
Environment
6.0
26 Overall Assessment by Management
26 Financial and Non-financial
7.0
At the same time, the workforce in Germany is also
becoming more international. In Munich alone, em-
ployees from 98 different countries work together
successfully. We also attach importance to a balanced
age structure in the workforce, with a view to promot-
ing exchanges between the generations and mitigating
the loss of know-how when older employees retire.
6.2
-6,823
6.2
-120
0.8
116,324
110,351
5.4
45 COMBINED MANAGEMENT REPORT
Proportion of non-tariff female employees at
BMW AG/BMW Group
in %
14
13
12
11
10
9
10 —11 ―12 ―13 14
BMW AG
BMW Group
8.8
11.1
9.1
11.8
10.0 10.9
12.7* 13.8
11.4
14.2
*Figure adjusted.
Employee attrition rate at BMW AG*
as a percentage of workforce
-2,726
Performance Indicators
29 Automotive Segment
⚫Human rights/Occupational health and safety
Further education and training.
Corporate Citizenship⚫
•Demographic change
•Biodiversity
Donations/sponsoring
⚫Corporate volunteering
•Diversity
Work-life balance
Consolidated Financial Reporting Process Index (CPLI).
- as the only automotive producer for five
consecutive years. The BMW Group was also included in
the British FTSE4Good Index again in 2014.
87 BMW Stock and Capital Markets
Clean production
The BMW Group improves resource efficiency by inte-
grating environmental management in all of its produc-
tion processes. Since 2006 we have reduced both the
volume of resources utilised and the emissions
cle produced by an average of 45.0%.*
The individual figures are as follows:
Energy consumption
Water consumption.
Process wastewater
Non-recyclable waste
Solvent emissions
CO₂ emissions
per vehi-
-34.2%
-33.1%
-42.7%
-74.0%
-48.6%
-37.1%
In 2014 we reduced both the volume of resources utilised
and the emissions per vehicle produced by an average
of 6.7% compared with the previous year, giving rise to
savings of €15.8 million.
*Including joint venture BMW Brilliance Automotive Ltd., Shenyang, excluding
contract production.
Importance for BMW Group
•Water
29-Review of Operations
•Alternative drivetrain
technologies
⚫CO2 emissions
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45-Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
83 Disclosures Relevant for Takeovers
and Explanatory Comments
Importance for stakeholders
Efficient use
Product
safety
of resources
and recycling
management
Environmental and social standards in the supply chain.
Anti-corruption/compliance.
Future mobility/mobility services.
•Energy supply
and climate change
The BMW Group again reduced the energy consump-
tion per vehicle produced by 4.7% to 2.25 MWh during
the period under report. One of the measures that con-
tributed towards the efficiency improvement was the
utilisation of intelligent energy data management. It is a
component of the BMW Group's "Industrie 4.0"
pro-
duction concept and based on intelligent electricity me-
ters that continually measure the energy consumption
levels of production facilities and robots and compare
them with a centralised corporate network for the pur-
pose of detecting and avoiding, at the earliest possible
stage, any deviations that lead to excessive electricity
consumption.
5.3
106,064
2,894
-7,245
121
40 Purchasing
38 Research and Development
36 Financial Services Segment
35 Motorcycles Segment
29 Automotive Segment
29-Review of Operations
Performance Indicators
26 Financial and Non-financial
Environment
23 General and Sector-specific
18 General Information on the BMW Group
23-Report on Economic Position
The BMW Group's worldwide workforce had grown to a
total of 116,324 employees at 31 December 2014 (2013:
110,351 employees; +5.4%). The increase was attribut-
able mainly to the expansion of our international produc-
tion network and the increased scale of development
activities to generate innovations and new technologies
26 Overall Assessment by Management for the future. Engineers and skilled staff were recruited
Workforce further increased
18-COMBINED MANAGEMENT REPORT
WORKFORCE
44
The use of some 1,900 Product Geniuses worldwide in
more than 1,000 dealerships has proved to be particu-
larly successful.
targeted support for dealerships, enabling customer
needs to be met even more effectively.
comprehensively improved dealerships, which offer
a premium experience, and
new and additional opportunities to make contact
with our brands (for example, the BMW and MINI
Driving Center in South Korea and BMW Brandstore
Brussels),
-
-
Future Retail comprises:
By 2017, the Future Retail programme will be imple-
mented worldwide with a view to enhancing the pre-
mium experience of our brands and products.
New premium experience in showrooms
41 Sales and Marketing
44-Workforce
Customer services remain on track in 2014
In 2014, sales of BMW and MINI spare parts, accessories
and services were well up on the previous year's level,
with the major markets in the USA, Germany and China
making a decisive contribution to this performance.
Growth was also registered in many other markets, such
as Russia, Korea and South Africa. The dynamic growth
in business goes hand in hand with investments in the
future logistics network and with many other measures
aimed at boosting customer satisfaction.
45-Sustainability
Position and Net Assets
11
10
750
1,500
2,250
3,000
3,750
4,500
BMW Group apprentices at 31 December
In Trendence's "European Graduate Barometer", too, the
BMW Group's ranking improved. In Trendence's “Young
Professional Barometer", the BMW Group occupied first
place for the third year in a row and even managed to
increase the gap to its competitors. Furthermore, in the
In 2014, the BMW Group further strengthened its posi-
tion as one of the most attractive employers in the world.
In "The World's Most Attractive Employers", published
by the agency "Universum”, the BMW Group was once
again ranked as the best German employer across all
sectors and the most attractive automotive company in
the world. It is now classified in the top 3 in the engineer-
ing category worldwide.
Further progress made as attractive employer
87 BMW Stock and Capital Markets
and Explanatory Comments
Steep rise in investment in employee training
Expenditure on basic and further training rose signifi-
Consolidated Financial Reporting Process cantly during the period under review to €335 million
(2013: €288 million; +16.3%), with the main focus of
training on electromobility, modern production tech-
niques and healthcare programmes.
Some 1,500 young people, including 1,200 in Germany,
began their vocational training with the BMW Group in
2014, representing a significant expansion in worldwide
training activities (2013: 1,363 apprentices). At the end
of the reporting period, 4,595 young people worldwide
were in vocational training and training programmes for
young talent with the BMW Group.
More apprentices worldwide
purpose.
specifically for this
83 Disclosures Relevant for Takeovers
Management System Relevant for the
82 Internal Control System and Risk
65 Report on Outlook, Risks and
Opportunities
64 Events after the End of the
Reporting Period
61 Comments on Financial Statements
of BMW AG
49 Results of Operations, Financial
-100,682
BMW i Ventures was founded back in 2011 to ensure
optimum conditions for the use and promotion of inno-
vative mobility services. Based in New York, BMW i
Ventures facilitates access to new technologies and opens
up new customer groups, thereby reinforcing the strate-
gic approach adopted by BMW i. Life360, MyCityWay,
JustPark, ChargePoint and ChargeMaster are examples
of some of BMW i Ventures' strategic investments.
DriveNow, the car-sharing service offered by BMW i,
MINI and Sixt, enables users to rent BMW and MINI
vehicles according to their needs. Via an app, the web-
site or directly on the road, it is a simple matter for users
to find, book and park the cars again in another part
of the city. The DriveNow service is currently available
in Munich, Berlin, Düsseldorf, Hamburg, Cologne, San
Francisco, Vienna and, since December 2014, in London,
too. The fleet currently consists of about 2,800 cars. At
the end of 2014, over 390,000 customers had benefited
from the premium car-sharing service. Under the brand
name AlphaCity, we also offer a car-sharing scheme
for businesses. Up to November 2014, 10,000 registered
employees had used the AlphaCity service.
35 Motorcycles Segment
29 Automotive Segment
29-Review of Operations
Performance Indicators
26 Financial and Non-financial
23 General and Sector-specific
Environment
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
and efficient 3- and 4-cylinder TwinPower turbo engines.
For the first time in its 55-year history, a five-door ver-
sion of the MINI has been available since October. The
two MINI models have received the highest acclaim
both in the media and from customers. The model up-
dates of the MINI Countryman and MINI Paceman were
both launched in July. In December, the BMW Group
26 Overall Assessment by Management announced the new John Cooper Works MINI, which will
be available on markets worldwide from spring 2015.
42
New MINI also available in five-door version
The third generation of the three-door MINI entered the
showrooms in March. The new MINI has been received
enthusiastically, with its new possibilities for connectivity
July saw the sales launch of the new BMW X4, a vehicle
that possesses the sporty elegance of a classic coupé,
superbly crossed with the typical characteristics of the
BMW X series. The model update of the BMW X3 fol-
lowed the same month. The new BMW 2 Series Active
Tourer and the BMW M4 Convertible have been on
display in dealership showrooms since September. The
new BMW 2 Series Active Tourer opens up completely
new customer groups, meeting their needs for versa-
tility, functionality and ample spaciousness in the com-
pact segment. The BMW M4 Convertible's design lan-
guage conveys an unmistakeably stylish and at the same
time muscular profile. The second-generation BMW X6,
which boasts a luxurious interior design and new fea-
tures with a wider range of standard equipment, has been
in the showrooms since December 2014.
12 13 -14
3,798 3,899 4,266 4,445 4,595
Trendence "Graduate Barometer Germany", with first
place in the Business category, second place in Engineer-
ing and third place in IT students, the BMW Group
achieved its best results since 2007.
Diversity ensures competitiveness
Diversity in our workforce makes a major contribution
to improving our competitiveness, by equipping us to
respond even better to our customers' specific needs
and requirements worldwide. We focus on three criteria
in this respect: gender, cultural background and age/
experience.
A number of steps were taken to promote diversity in
the BMW Group during 2014. The proportion of women
in the workforce as a whole, in management positions
and in training programmes for young talent, again rose
during the year under report. The proportion of women
in the BMW Group's workforce, which stood at 17.8%
(BMW AG: 14.8%) currently exceeds the target range of
15 to 17%. The proportion of women in BMW Group
management positions rose to 14.2% (BMW AG: 11.4%).
In the young talent groups, too, the proportion of women
rose in 2014. Female representation in trainee pro-
grammes is already above 50%, and over 27% of partici-
pants in student training programmes are women.
BMW Group employees
Automotive
Motorcycles
Financial Services
Other
BMW Group
31.12.2014
31.12.2013
Change
in %
36 Financial Services Segment
ParkNow is an app- and Web-based service, which helps
resolve parking problems for users. On the one hand,
parking spaces are available to customers in partner car
parks which can be booked online. On the other hand,
the service makes it easier to find roadside parking spots.
ChargeNow is the BMW i mobility service that sim-
plifies finding and using public charging stations run by
various suppliers belonging to an international net-
work. In 2014, a large proportion of BMW i customers
opted for this service. ChargeNow currently has over
24,000 charging points at its disposal in 19 markets.
38 Research and Development
41-Sales and Marketing
43 COMBINED MANAGEMENT REPORT
Beyond its innovative electric and hybrid cars, BMW i
also stands for sustainable mobility concepts. The aim
of the mobility services is to promote urban mobility,
irrespective of the means of transport used.
Premium services for individual mobility
To coincide with the market launch of the BMW i3 in
Europe and Japan, a direct sales model was successfully
introduced in these markets. Over 200 selected BMW i
partners offer BMW i brand vehicles. In addition, the
BMW i models are available in selected direct sales mar-
kets via new distribution channels - including via the
Customer Interaction Centre (CIC), which has been suc-
cessfully introduced in nine markets. In four markets
to start with, the Mobile Sales Advisor (MSA) has also
become a fixed component of the BMW i sales model.
The integrated BMW i online sales platform enables cus-
tomers to order their BMW i3 via the Internet, too. The
new sales channels provide customer-friendly access to
the BMW i range of products and services. In the show-
rooms, the Product Genius in operation at all BMW i
partners also contributes to comprehensive product
advice.
BMW i sales model
In addition, further distribution channels have been
established for mobility services. During the year under
report, the ConnectedDrive Store opened not only in
the pilot markets of Belgium and Luxembourg, but also
in Germany. For the first time in the premium segment,
services can therefore be ordered quickly and easily via
a PC or even directly from the vehicle, and used straight
away. The ConnectedDrive Store therefore grants ac-
cess not only to new vehicles but also to used vehicles
equipped with ConnectedDrive.
worldwide. In the meantime, 95% of all new vehicles in
the BMW fleet are equipped with an integrated SIM
card.
The BMW Group further extended its connected mobil-
ity services in 2014. In total, BMW ConnectedDrive ser-
vices were introduced in a further eleven markets, as a
result of which they are now available in 36 countries
Development of connected mobility
Successful launch of BMW i 360°ELECTRIC
With BMW i 360°ELECTRIC, BMW currently offers a
comprehensive package of products and services for
purely battery-powered and plug-in hybrid vehicles in
38 countries worldwide. The package is based on four
features: comfortable, rapid, emissions-free charging at
home; simple comprehensive access to public charging
stations; flexible mobility for long-distance journeys
and an Assistance Service for maintenance and repairs.
BMW offers two types of product for charging at home:
in addition to the Wallbox Pure for simple, safe charging,
the Wallbox Pro has been available since 2014 for more
rapid availability.
New approach to communications with #BMWstories
Consolidated Financial Reporting Process BMW is breaking new ground in communications
with #BMWstories. The online platform www.bmw.
com/BMWstories offers a broad spectrum of commu-
nication channels. These include films and photo gal-
leries depicting the special features of BMW models.
Since #BMWstories started in May 2014, the online
platform has received more than 3.5 million hits. Over
200 million interactions have already taken place in
social media. The published videos have been viewed
over 36 million times.
87 BMW Stock and Capital Markets
and Explanatory Comments
83 Disclosures Relevant for Takeovers
82 Internal Control System and Risk
Management System Relevant for the
65 Report on Outlook, Risks and
Opportunities
64 Events after the End of the
Reporting Period
61 Comments on Financial Statements In 2014, Rolls-Royce Motor Cars added ten dealerships
to its sales network, an important step in its aspiration
to strengthen its position in the ultra-luxury segment.
The Rolls-Royce Ghost Series II has been in the show-
rooms since the autumn with a moderately revised
design and continues to combine smooth, understated
performance with contemporary luxury.
Start-up of Rolls-Royce Ghost Series II
of BMW AG
Position and Net Assets
49 Results of Operations, Financial
45 Sustainability
44 Workforce
40 Purchasing
The utilisation of highly efficient, ecologically sustain-
able combined heat and power plants (CHPs) and the
use of electricity generated from renewable sources at
our production sites, as well as improved energy effi-
ciency measures, enabled us to reduce CO2 emissions
per vehicle produced by a further 2.9% year-on-year to
0.66 tonnes during the period under report.
2.0
The volume of non-recyclable production waste was
further reduced to 4.93 kg per vehicle produced in 2014,
an improvement of 14.0%. A number of measures con-
tributed towards this development, one of which was
an additional improvement in the treatment of washing
2014
2013
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income
-80,401
-76,059
-63,396
-60,791
17,005
15,268
-7,892
-7,257
-877
842
Other operating expenses
-872
-875
Profit before financial result
9,118
7,978
Result from equity accounted investments
Interest and similar income
All segments contributed to the increase in revenues.
External revenues from the sale of BMW, MINI and
Rolls-Royce brand cars grew by 6.0% on the back of
higher sales volumes. Adjusted for exchange rate fac-
tors, revenues went up by 7.3%. Compared to the
previous year, the BMW Group recorded a significant
rise (11.8%) in external revenues from its Motorcycles
business. External revenues generated with Financial
Services business was 4.4% up on the previous year.
Adjusted for exchange rate factors, revenues of the Motor-
cycles and Financial Services segments increased by
14.1% and 4.5% respectively.
Interest and similar expenses
Revenues comprise mainly the sale of vehicles and related
products (2014: €60,280 million; 2013: €56,812 million),
lease instalments (2014: €7,748 million; 2013: €7,296 mil-
lion), the sale of vehicles previously leased to customers
(2014: €6,716 million; 2013: €6,412 million) and interest
income on loan financing (2014: €2,881 million; 2013:
€2,868 million).
in € million
Position and Net Assets
10.49
8.49
6.47
5.73 4.93
*Excluding contract production.
*Excluding contract production.
61 Comments on Financial Statements Between 1995 and 2014, the average CO2 emissions of
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
83 Disclosures Relevant for Takeovers
and Explanatory Comments
the vehicles we sold in Europe fell by 38%. In 2014,
the BMW Group's fleet of new vehicles sold in Europe
(EU-28) consumed an average of 4.9 litres of diesel per
100 km and 6.0 litres of petrol respectively. CO2 emis-
Consolidated Financial Reporting Process sions averaged 130 grams per km. In Germany, too,
we led the field among premium-segment manufac-
turers with average CO2 emissions of 136 grams per
km. In 2014 the BMW Group's fleet included as many
as 53 models emitting less than 120 grams of CO2 per
km. Our efficient technologies have given us a com-
petitive edge, particularly in markets where a CO2-
based vehicle tax is levied.
87 BMW Stock and Capital Markets
Further information on the subject of sustainability in
the BMW Group is available in our online sustainability
report at: www.bmwgroup.com/sustainability. The
Sustainable Value Report 2014 was prepared in accord-
ance with the Global Reporting Initiative (GRI G3.1)
guideline and, at Level A+ (GRI-tested), fulfils the
highest application level of the GRI guideline. It will be
published in conjunction with the Annual Report 2014.
49 COMBINED MANAGEMENT REPORT
Report on Economic Position
Results of Operations, Financial Position and Net Assets
Earnings performance¹
The BMW Group is again able to report on an exceed-
ingly successful financial year. Business performance
remained on track, with sales volume, revenues and
earnings all coming in at record levels. The number of
BMW, MINI and Rolls-Royce brand vehicles sold rose
by 7.9% to 2,117,9652 units. The BMW brand was again
able to maintain its pole position at the head of the
premium segment.
The BMW Group recorded a net profit of €5,817 mil-
lion (2013: €5,329 million) for the financial year ended
31 December 2014. The post-tax return on sales was
7.2% (2013: 7.0%). Earnings per share of common and
preferred stock were €8.83 and €8.85 respectively (2013:
€8.08 and €8.10 respectively).
Revenues of the BMW Group increased year-on-year by
5.7% to a new record figure of €80,401 million (2013:
€76,059 million), driven primarily by the continued up-
ward trend in sales volume. The scale of the increase
was held down partly by higher inter-segment revenue
eliminations due to the growth of new lease business
and partly by the change in the average exchange rates
Group Income Statement
of a number of currencies, including the Japanese yen,
Russian rouble and South African rand. Adjusted for
exchange rate factors, revenues increased by 6.8%.
49-Results of Operations, Financial
Other financial result·
Profit before tax
Performance Indicators
29 Review of Operations
at the previous year's level (+0.9%). In China, the
higher proportion of sales generated by the joint ven-
ture, BMW Brilliance Ltd., Shenyang, resulted in a slight
61 Comments on Financial Statements decrease in revenues reported for this market. By con-
49 - Results of Operations, Financial
Position and Net Assets
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
trast, revenues generated in South Korea were up sig-
nificantly on the back of higher sales volume figures.
External revenue in Germany grew by 10.1%. In the
Rest of Europe region and in the Americas region, ex-
ternal revenues increased by 9.2% and 5.3% respec-
tively.
Group cost of sales were 4.3% higher than in the
pre-
vious year and comprise mainly manufacturing costs
(2014: €38,253 million; 2013: €36,578 million), cost of
sales directly attributable to financial services (2014:
€14,716 million; 2013: €14,044 million) and research
and development expenses (2014: €4,135 million; 2013:
€4,118 million). Changes in the average exchange rates
of some currencies as well as inter-segment elimina-
tions worked in the opposite direction.
Gross profit improved by 11.4% to €17,005 million, re-
sulting in a gross profit margin of 21.2% (2013: 20.1%).
The gross profit margin recorded by the Automotive
segment was 18.6% (2013: 18.2%), while that of the
Motorcycles segment was 18.7% (2013: 16.7%). In the
Financial Services segment, the gross profit margin
improved from 13.1% to 13.7%.
Compared to the previous year, research and develop-
ment expenses increased by €17 million to €4,135 mil-
lion. As a percentage of revenues, the research and
development ratio fell by 0.3 percentage points to 5.1%.
Research and development expenses include amorti-
sation of capitalised development costs amounting to
€1,068 million (2013: €1,069 million). Total research
and development expenditure amounted to €4,566 mil-
lion (2013: €4,793 million). This figure comprises re-
search costs, non-capitalised development costs and
capitalised development costs (excluding scheduled
amortisation). The research and development expend-
iture ratio was therefore 5.7% (2013: 6.3%). The pro-
portion of development costs recognised as assets was
32.8% (2013: 36.4%).
Compared to the previous year, selling and administra-
tive expenses increased by €635 million to €7,892 mil-
lion. Overall, selling and administrative expenses were
equivalent to 9.8% (2013: 9.5%) of revenues. Adminis-
trative expenses increased due to a number of factors,
including the higher workforce size and higher expenses
for centralised IT activities and new IT projects. Depre-
ciation and amortisation on property, plant and equip-
ment and intangible assets recorded in cost of sales and
in selling and administrative expenses amounted to
€4,170 million (2013: €3,741 million).
Other operating income and expenses improved from
a net expense of €33 million to a net income of €5 mil-
lion. The improvement was mainly attributable to gains
on the sale of assets, including those arising on the
deconsolidation of Noord Lease B.V., Groningen, and
the sale of marketable securities.
The profit before financial result (EBIT) came in at
€9,118 million (2013: €7,978 million).
The financial result for the twelve-month period was a
net negative amount of €411 million, a deterioration
of €326 million compared to the previous year. The net
expense for other financial result increased by €541 mil-
lion to €747 million, mostly reflecting the negative
impact of currency and commodity derivatives. Impair-
ment losses recognised on other investments, most
notably on the investment in SGL Carbon SE, Wiesbaden,
also contributed to the deterioration in other financial
result. By contrast, the result from equity accounted in-
vestments - which includes the Group's share of the
results of the joint ventures BMW Brilliance Automotive
Ltd., Shenyang, DriveNow GmbH & Co. KG, Munich,
and DriveNow Verwaltungs GmbH, Munich – improved
by €248 million.
Profit before tax increased to €8,707 million (2013:
€7,893 million). The pre-tax return on sales was 10.8%
(2013: 10.4%).
Income tax expense amounted to €2,890 million (2013:
€2,564 million), resulting in an effective tax rate of
33.2% (2013: 32.5%). The changed regional earnings
26 Financial and Non-financial
Financial result
Revenues in the Africa, Asia and Oceania region to-
26 Overall Assessment by Management talled €26,147 million (2013: €25,916 million), roughly
Environment
Income taxes
Net profit
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2013: 198,542 units, 2014: 275,891 units).
655
407
200
-183
-519
-469
-747
-206
-411
-85
8,707
7,893
-2,890
-2,564
5,817
5,329
At 2.18 m³ per vehicle produced, water consumption
was maintained at a stable low level. At 0.47 m³ the same
applies to the volume of process wastewater generated
per vehicle produced.
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23-Report on Economic Position
23 General and Sector-specific
As in the previous year, Group revenues are spread
across all regions, with the Europe region (including
Germany) accounting for 46.8% (2013: 45.2%), the
Americas region for 20.7% (2013: 20.7%) and the Africa,
Asia and Oceania region for 32.5% (2013: 34.1%) of
business.
45 Sustainability
50
41 Sales and Marketing
* Excluding contract production.
water used in the production of passenger car brake
discs at the Berlin plant.
Solvent emissions were sharply curtailed by 18.9%
to 1.29 kg per vehicle produced during 2014, which is
mainly due to the fact that in the Chinese plant in
Dadong the retrofitting of the paint shop with an ex-
haust air cleaning system was reflected in full-year
statistics for the first time.
*Joint venture BMW Brilliance Automotive Ltd., Shenyang.
Sustainability along the entire value chain
Sustainability criteria also play a major role in the selec-
tion and assessment of our suppliers as well as in the
field of transport logistics. The active management of
sustainability risks along the supplier chain reduces com-
pliance and image risks. With this in mind, the BMW
Group has integrated a comprehensive system of sustain-
ability management in its purchasing processes.
CO2 emissions per vehicle produced
The amount of energy needed for transportation world-
wide has risen considerably in recent years. In order to
keep CO2 emissions to an absolute minimum, we adhere
to the principle "production follows the market". More-
over, we are continually increasing the percentage of
low-carbon modes of transport we use. In total, 63.3%
of all new vehicles left our plants by rail during the twelve-
month period under report (2013: 60.7%).
Fleet CO2 emissions again reduced
For many years now, the use of our Efficient Dynamics
technologies in series production has enabled us to
continually reduce the CO2 emissions generated by our
vehicles. Again in 2014, further progress was made in
the electrification of our fleet with the introduction of
the BMW i8 plug-in hybrid sports car and the launching
of the BMW i3 in additional key markets. These meas-
ures form the basis for complying with legally stipulated
CO2 and fuel consumption limits going into the future.
Process wastewater* per vehicle produced
in m³/vehicle
in t/vehicle
0.90
0.85
0.80
0.75
0.70
0.65
10
11 ―12 13 14
0.89 0.75 0.72
0.68
0.66
* Excluding contract production, adjusted for CHP losses.
0.70
2.18
2.18
2.22
2.25
44 Workforce
47 COMBINED MANAGEMENT REPORT
Energy consumed* per vehicle produced
in MWh/vehicle
Water consumption per vehicle produced
in m³/vehicle
3.00
2.80
2.60
2.40
2.20
2.00
0.60
-10 —11 -12 ―13 14
2.43
2.41
2.36 2.25
*Excluding contract production, adjusted for CHP losses.
2.60
2.40
2.20
2.00
1.80
10 -11
12 13 14
2.40
2.72
0.50
2.80
0.30
7.5
5.0
26 Overall Assessment by Management
26 Financial and Non-financial
2.5
Performance Indicators
29-Review of Operations
29 Automotive Segment
10 —11 -12 ―13 14
2.00
1.75
1.50
1.25
1.00
10
1.66
1.75
1.78
1.59
1.29
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
0.40
40 Purchasing
23 General and Sector-specific
Environment
41 COMBINED MANAGEMENT REPORT
—11 ―12 13 14
The Purchasing and Supplier Network is also responsible
for component production throughout the BMW Group.
The importance of the Landshut plant as a competence
centre for lightweight construction was underlined by
the expansion of CFRP production facilities at the site.
The Landshut plant also serves as a centre for electro-
mobility-related components, including, for instance,
production of the electric motors and engine transmission
units for the BMW i3 and 18. Important chassis and
drive components for the BMW i models are produced
at the Dingolfing plant.
-10
0.20
High level of investment safeguards productivity
and technology lead
11
12
13 ―14
0.60
0.51
0.47 0.47
* Excluding contract production.
48
Waste for disposal" per vehicle produced
in kg/vehicle
0.57
Volatile organic compounds (VOC)*
15.0
The worldwide sales network currently consists of some
3,250 BMW, 1,550 MINI and 130 Rolls-Royce dealer-
ships. In China alone, more than 40 BMW and 30 MINI
dealerships were opened in 2014. The BMW i dealership
and agency network currently covers some 650 loca-
tions.
For the BMW Group, the year 2014 was dominated by
the introduction of a number of new models and model
updates. The new BMW 4 Series Convertible and the
model revision of the BMW X1 were both launched in
March. The BMW 4 Series Convertible excels with its
enhanced sports performance and quintessential ele-
gance. Since March 2014 customers have also been able
to enjoy the impressive driving dynamics of the new
BMW 2 Series Coupé. The BMW M3 Sedan and the
BMW M4 Coupé were first seen in the showrooms in
June. Our M models are a unique blend of genuine
sporting performance and perfect suitability for every-
day use. The BMW 4 Series Gran Coupé, the third body
variant of this series, came onto the market the same
month. It combines the attractive design of a two-door
coupé with the functionality of four doors and space
to spare. A particularly important event for the BMW
Group took place in June, namely the market launch of
the BMW i8 plug-in hybrid sports car, which offers the
dynamics of a high-performance sports model with low
fuel consumption and emissions levels.
18 General Information on the BMW Group
18-COMBINED MANAGEMENT REPORT
BMW extends its model range
12.5
in kg/vehicle
per vehicle produced
SALES AND MARKETING
in € million
20131
2014
Change
in € million
in %
20131
80,401
in %
98.7
-76,059
- 464
98.3
2014
-0.2
-156
in %
Bought-in costs
Net value added by the BMW Group in 2014 increased
by 7.3% to €20,620 million and was once again at a high
level.
Cost of materials²
Overall, the results of operations, financial position and
net assets position of the BMW Group continued to de-
velop positively during the financial year under report.
Compensation Report
-0.6
Deferred tax liabilities fell by €485 million to €1,974 mil-
lion as a result of lower fair values of derivative financial
instruments recognised directly in equity, remeasure-
ments of the net defined benefit liability for pension
plans and currency factors. The €729 million decrease
in current tax liabilities to €1,590 million was mainly at-
tributable to a tax payment in the USA.
The compensation of the Board of Management com-
prises both a fixed and a variable component. Benefits
are also payable - primarily in the form of pension
benefits - at the end of members' mandates. Further
details, including an analysis of remuneration by each
individual, are disclosed in the Compensation Report,
which can be found in the section "Statement on Corpo-
rate Governance". The Compensation Report is a sub-
section of the Combined Management Report.
Value added statement*
per-
Other expenses
The value added statement shows the value of work
formed less the value of work bought in by the BMW
Group during the financial year. Depreciation and amor-
tisation, cost of materials and other expenses are treated
as bought-in costs in the value added calculation. The
allocation statement applies value added to each of the
participants involved in the value added process. It
should be noted that the gross value added amount treats
depreciation as a component of value added which, in
the allocation statement, is treated as internal financing.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
59 COMBINED MANAGEMENT REPORT
BMW Group value added statement
Work performed
Revenues
Financial income
Other income
Total output
The bulk of the net value added (47.4%) is again applied
to employees. The proportion applied to providers of
finance fell to 8.4%, mainly due to the lower refinancing
costs on international capital markets for the financial
services side of the business. The government/public
sector (including deferred tax expense) accounted for
16.0%. The proportion of net value added applied to
shareholders, at 9.2%, was higher than in the previous
year. Minority interests take a 0.1% share of net value
added. The remaining proportion of net value added
(18.9%) will be retained in the Group to finance future
operations.
-877
-33.9
1.1
34.8
-26,264
7.9
Depreciation and amortisation
-7,724
-9.5
-7,047
9.1
Net value added
20,620
25.3
19,217
24.8
7.3
The €711 million increase in current other liabilities was
attributable to the expansion of service and leasing busi-
ness and the related impact on amounts recognised as
deferred income. In addition, value added tax payables
were higher than at the end of the previous financial
year as a result of the higher volume of vehicles sold.
Employees
Applied to
-28,344
1.1
Gross value added
3.9
81,434
100.0
77,365
100.0
5.3
44,078
54.1
42,681
55.2
-9,012
11.1
-8,420
10.9
53,090
65.2
51,101
66.1
32
Other provisions increased from €7,240 million to
€8,790 million during the year under report, mainly re-
flecting allocations to provisions for personnel-related
expenses and ongoing operational expenses as well as
the reclassification described in note 31.
54%
per-
Equity
18%
Non-current provisions and liabilities
54%
16%
43%
Current provisions and liabilities
42%
7%
9%
2013*
2013*
2014
79
73
73
79
42%
Prior year figures have been adjusted in accordance with IAS 8, see note 9.
46%
46%
Providers of finance
5%
6%
2014
2013*
2013*
2014
155
138
138
155
Balance sheet structure - Automotive segment
Total equity and liabilities in € billion
Non-current assets
Current assets
thereof cash and cash equivalents
2014
39%
The equity ratio of the BMW Group fell overall by 1.5
centage points to 24.2%. The equity ratio of the Auto-
motive segment was 39.2% (2013: 42.4%) and that of the
Financial Services segment was 8.8% (2013: 9.1%).
and equipment totalled €2,247 million at the end of the
reporting period.
of the joint venture BMW Brilliance Automotive Ltd.,
Shenyang.
Income and expenses relating to equity accounted in-
vestments and recognised directly in equity (before tax)
reduced equity by €48 million.
The dividend payment decreased equity by €1,707 mil-
lion. Minority interests increased by €29 million. A
portion of the Authorised Capital 2014 created at the
Annual General Meeting held on 14 May 2009 in con-
26 Overall Assessment by Management junction with the Employee Share Programme was used
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 - Results of Operations, Financial
Position and Net Assets
during the financial year under report to issue shares
of preferred stock to employees. An amount of €15 mil-
lion was transferred to capital reserves in conjunction
61 Comments on Financial Statements with this share capital increase.
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Environment
Investments accounted for using the equity method, at
€1,088 million, were €450 million higher than one year
earlier, mainly reflecting the strong earnings performance
23 General and Sector-specific
18 General Information on the BMW Group
18 Business Model
Deferred tax assets increased by €441 million to €2,061 mil-
lion, primarily reflecting lower fair values of derivative
financial instruments recognised directly in equity,
57 COMBINED MANAGEMENT REPORT
remeasurements of the net defined benefit liability for
pension plans and currency factors (in particular relating
to the US dollar).
At €6,499 million, the carrying amount of intangible as-
sets was €320 million higher than at 31 December 2013.
Within intangible assets, capitalised development costs
rose by €431 million. Investments in capitalised develop-
ment costs totalled €1,499 million in the year under re-
port and were thus significantly lower than in the pre-
vious year (2013: €1,744 million). In the previous year,
additions to intangible assets included licenses acquired
for €379 million which are being amortised on a straight-
line basis over a period of six years. The proportion of
development costs recognised as assets was 32.8% (2013:
36.4%). Adjusted for exchange rate factors, intangible
assets increased by 5.1%. In total, €1,561 million was in-
vested in intangible assets, most of which related to the
Automotive segment.
Total capital expenditure on intangible assets and prop-
erty, plant and equipment as a percentage of revenues
decreased to 7.6% (2013: 8.8%). Capital commitments
for intangible assets totalled €750 million at the end of
the reporting period.
Non-current financial assets decreased by €569 million
to €2,024 million, mainly due to lower fair values of cur-
rency derivatives.
Within current assets, receivables from sales financing
grew from €21,501 million to €23,586 million, mostly
reflecting the general growth of Financial Services busi-
ness on the one hand and currency factors on the other.
Compared to the end of the previous year, inventories
increased by €1,494 million (15.6%) to €11,089 million
and accounted for 7.2% (2013: 6.9%) of total assets. Most
of the increase related to finished goods, including the
impact of stocking up in conjunction with the introduc-
tion of new models. Adjusted for exchange rate factors,
the increase was 11.6%.
Current other assets were €780 million higher than one
year earlier, mainly due to increases in prepayments,
receivables from other companies in which an invest-
ment is held and other taxes as well as the reclassifica-
tion described in note 31. These increases were partly
offset by the decrease in collateral receivables included
in this line item.
Trade receivables - which accounted for 1.4% of total
assets (2013: 1.8%) - went down over the twelve-month
period by €296 million. Adjusted for exchange rate fac-
tors, they decreased by 15.8%.
At €7,688 million, cash and cash equivalents were
almost identical to their level one year earlier (2013:
€7,671 million).
The main increase on the equity and liabilities side of
the balance sheet in percentage terms related to pen-
sion provisions (99.9%). Increases were also recorded
for non-current and current financial liabilities (9.4%
and 21.5% respectively), equity (5.2%), current and
non-current other provisions (32.5% and 11.5% respec-
tively) and current and non-current other liabilities
(10.1% and 18.7% respectively). By contrast, current
tax and deferred tax liabilities went down by 31.4% and
19.7% respectively.
Pension provisions jumped by €2,301 million to
€4,604 million, mainly as a result of the lower discount
factors used in Germany, the UK and the USA.
Current and non-current financial liabilities increased
from €70,304 to €80,649 million over the twelve-month
period. Within financial liabilities, derivative instru-
ments went up from €1,103 million to €3,143 million,
mostly reflecting the negative impact of currency and
commodity derivatives. Additional increases within
financial liabilities included ABS transactions (7.5%),
bonds (16.9%) and liabilities to banks (34.5%). By con-
trast, commercial paper decreased by 11.0%. Adjusted
for exchange rate factors, non-current and current
financial liabilities increased by 5.0% and 17.1% respec-
tively.
Group equity rose by €1,837 million to €37,437 million,
increased primarily by the profit attributable to share-
holders of BMW AG (€5,798 million) and currency
translation differences (€764 million) and decreased
mainly by remeasurements of the net defined benefit
liability for pension plans (€2,298 million) mainly due
to the lower discount rates used in Germany, the United
Kingdom and the USA. Fair value measurement had a
negative impact in the case of derivative financial in-
struments (€2,194 million) and a positive impact in the
case of marketable securities (€40 million). Deferred
taxes on items recognised directly in equity increased
equity by €1,438 million.
58
18-COMBINED MANAGEMENT REPORT
20 Management System
23-Report on Economic Position
Government/public sector
-842
Group
%
-10.8
10.4
%
-7.2
-7.0
%
24.5
25.8
%
16.3
17.4
%
24.2
25.7
%
39.2
-10.5
42.4
11.3
-15.4
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Group pre-tax return on equity
Group post-tax return on equity
Group equity ratio
Automotive equity ratio
Group
Automotive
Motorcycles
Return on equity
Financial Services
%
21.2
20.1
%
16.5
%
65 Outlook
%
- 9.1
19.4
20.0
€ million
2,912
4,127
€ million
-6,116
-7,491
%
47.6
-55.1
€ million
€ million
-3,481
-14,223
3,003
-12,085
thereof cash and cash equivalents
%
8.8
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Coverage of cash outflow from investing activities by cash inflow from operating activities (Group)
Free cash flow of Automotive segment
Financial Services equity ratio
Coverage of intangible assets, property, plant and equipment by equity (Group)
%
158.1
-166.8
Return on capital employed
%
-20.8
21.4
%
61.7
63.0
%
-21.8
16.4
Cash inflow from operating activities (Group).
Cash outflow from investing activities (Group).
Net financial assets Automotive segment
Opportunities
65 Report on Outlook, Risks and
64 Events after the End of the
Reporting Period
11.5
3,894
18.9
-3,596
18.7
8.3
19
0.1
26
0.1
-26.9
20,620
100.0
19,217
100.0
7.3
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
8.9
BMW Group value added 2014
-1,707
-1,904
Minority interest
Net value added
9,764
47.4
-8,992
46.9
8.6
1,733
8.4
-1,813
9.4
-4.4
3,306
16.0
- 3,083
-16.0
-7.2
9.2
in %
Depreciation and amortisation
Other expenses
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23-Report on Economic Position
23 General and Sector-specific
Environment
Group gross margin
Group EBITDA margin
Group EBIT margin
Group pre-tax return on sales
26 Overall Assessment by Management Group post-tax return on sales
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49-Results of Operations, Financial
Position and Net Assets
61-Comments on Financial Statements
of BMW AG
2013"
2014
Key performance figures
60
Cost of materials
0
Net value added
Net value added
Cost of materials
25.3
54.1
Depreciation and amortisation -9.5
Other expenses
Shareholders
-11.1
- Employees
8.4%
Providers of finance
16.0% Government/public sector
9.2%
18.9%
Shareholders
Group
0.1%
Minority interest
47.4%
37%
18 General Information on the BMW Group
37%
The cash outflow from investing activities exceeded
the cash inflow from operating activities in 2014 by
Change in cash and cash equivalents
in € million
11,000
10,000
9,000
Cash inflow from financing activities totalled €3,133 mil-
lion (2013: €2,703 million). Proceeds from the issue of
bonds amounted to €10,892 million (2013: €8,982 mil-
lion), compared with an outflow of €7,249 million (2013:
€7,242 million) for the repayment of bonds. Non-cur-
rent other financial liabilities resulted in a cash inflow
of €5,900 million (2013: €6,626 million) and a cash
outflow of €5,697 million (2013: €4,996 million). The
net cash inflow for current other financial liabilities
was €2,132 million (2013: net cash outflow of €721 mil-
lion). The change in commercial paper gave rise to
a net cash outflow of €1,012 million (2013: net cash
inflow of €1,812 million). The payment of dividends
resulted in a cash outflow of €1,715 million (2013:
€1,653 million).
8,000
6,000
5,000
4,000
3,000
2,000
1,000
7,000
Cash and cash
Further information on investments is provided in the
section on the net assets position.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
18.4% down on the previous year, primarily reflecting a
€594 million reduction in investments in property, plant
and equipment and intangible assets (2014: €6,099 mil-
lion) and a €737 million reduction in the net outflow for
investments in marketable securities and term deposits
(2014: net outflow of €144 million).
70 Report on Risks and Opportunities
82 Internal Control System and Risk
and Explanatory Comments
87 BMW Stock and Capital Markets
Cash and cash equivalents in the cash flow statements
correspond to the amount disclosed in the balance
sheet.
Cash flows from operating activities are determined in-
directly, starting with Group and segment net profit.
By contrast, cash flows from investing and financing
activities are based on actual payments and receipts.
The cash inflow from operating activities in 2014 de-
creased by €1,215 million to €2,912 million. This dete-
rioration was mainly due to higher cash outflows for
taxes (up by €1,465 million) and included, among other
items, a tax payment in the USA.
The cash outflow for investing activities amounted to
€6,116 million (2013: €7,491 million) and was therefore
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
equivalents
Cash inflow
from operating
Cash outflow
from investing
Cash inflow from operating activities
Cash outflow from investing activities
Net investment in marketable securities and term deposits
Free cash flow Automotive segment
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2014
in € million
2013"
-9,964
-5,836
-7,998
-106
-1,037
3,481
-9,423
Free cash flow of the Automotive segment can be ana-
lysed as follows:
The cash flow statement for the Automotive segment
shows that the cash inflow from operating activities
exceeded the cash outflow from investing activities by
€3,587 million (2013: €1,966 million). Adjusted for net
proceeds from marketable securities and term deposits
amounting to €106 million (2013: net investments of
€1,037 million) – mainly in conjunction with securities
held for strategic liquidity purposes - the excess amount
was €3,481 million (2013: €3,003 million).
After adjusting for the effects of exchange-rate fluctua-
tions and changes in the composition of the BMW Group
with a total positive amount of €88 million (2013:
negative amount of €42 million), the various cash flows
resulted in an increase of cash and cash equivalents of
€17 million (2013: decrease of €703 million).
31.12.2013
7,671
activities
+2,912
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
activities
-6,116
Cash inflow
from financing
activities
+3,133
Currency trans-
lation, changes in
Group composition
+88
Cash and cash
equivalents
31.12.2014
7,688
53 COMBINED MANAGEMENT REPORT
€3,204 million. A similar constellation arose in the
same period last year, when the cash outflow from
investing activities had exceeded the cash inflow from
operating activities by €3,364.
49-Results of Operations, Financial
3,003
29 Review of Operations
26 Financial and Non-financial
-1,504
Motorcycles
-107
-76
Financial Services
20,599
1,679
-19,874
-1,723
-1,619
Other Entities
7
6
Other Entities
Financial Services
154
Motorcycles
6,886
38%
51 COMBINED MANAGEMENT REPORT
Revenues by segment
in € million
Profit/loss before tax by segment
in € million
6,561
2014
2014
2013*
Automotive
-75,173
-70,630
Automotive
2013*
-164
Eliminations
-15,955
Segment profit before tax improved by €31 million to
€107 million.
Financial Services segment revenues grew by 3.6% to
€20,599 million (by 3.8% adjusted for exchange rate
factors). The segment's performance reflects the growth
in the contract portfolio. The gross profit margin im-
proved year-on-year to 13.7% (2013: 13.1%). Selling and
administrative expenses were €82 million higher at
€1,035 million. The net negative amount from other oper-
ating income and expenses deteriorated by €17 million.
Overall the Financial Services segment reports profit
before tax of €1,723 million, 6.4% up on the previous
year (2013: €1,619 million).
Profit before tax in the Other Entities segment, at
€154 million, was €10 million lower than one year
earlier.
The negative impact on earnings at the level of profit
before tax reported in the Eliminations column de-
creased from €527 million in 2013 to €163 million in
2014, partly reflecting product mix improvements
52
18-COMBINED MANAGEMENT REPORT
Revenues of the Motorcycles segment climbed by 11.6%
compared to the previous year (by 14.0% adjusted for
exchange rate factors).
18 General Information on the BMW Group
18 Business Model
23 General and Sector-specific
Environment
within the leased products portfolio and partly due to
elimination reversal effects.
Financial position*
The consolidated cash flow statements for the Group
and the Automotive and Financial Services segments
show the sources and applications of cash flows for the
financial years 2014 and 2013, classified into cash flows
26 Overall Assessment by Management from operating, investing and financing activities.
20 Management System
23-Report on Economic Position
Overall, profit before tax amounted to €6,886 million
(2013: €6,561 million), resulting in an effective tax rate
of 34.3% (2013: 32.8%).
counted investments - which includes the segment's
share of the results of BMW Brilliance Automotive
Ltd., Shenyang, and the two DriveNow entities - im-
proved by €248 million.
The financial result of the Automotive segment was a
net negative amount of €358 million, a deterioration
of €270 million compared to the previous year. Other
financial result was adversely affected by currency
and commodity derivatives and fell to a net negative
amount of €724 million. This figure also includes im-
pairment losses recognised on other investments,
most notably on the investment in SGL Carbon SE,
Wiesbaden. By contrast, the result from equity ac-
Group
-17,057
80,401
*Prior year figures have been adjusted in accordance with IAS 8, see note 9.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Eliminations
-163
-527
Group
8,707
7,893
mix as well as intergroup pricing issues contributed to
the increase in the income tax expense for the year.
Earnings performance by segment
Revenues of the Automotive segment grew by 6.4% to
€75,173 million on the back of higher sales volume.
Adjusted for exchange rate factors, segment revenues
rose by 7.5%. The gross profit margin improved year-
on-year from 18.2% to 18.6%.
Compared to the previous year, selling and administra-
tive expenses increased by €531 million to €6,645 mil-
lion. Administrative expenses increased due to a num-
ber of factors, including the higher workforce size and
higher expenses for centralised IT activities and new
IT projects. Overall, selling and administrative expenses
were equivalent to 8.8% (2013: 8.7%) of revenues.
The net expense from other operating income and ex-
penses improved by €26 million (2013: net expense of
€89 million), mainly reflecting gains on the sale of mar-
ketable securities.
The profit before financial result (EBIT) amounted to
€7,244 million (2013: €6,649 million), giving an EBIT
margin of 9.6% (2013: 9.4%).
Performance Indicators
Cash outflows from operating activities of the Financial
Services segment are driven primarily by cash flows
relating to leased products and receivables from sales
financing and totalled €4,715 million (2013: €5,358 mil-
lion). Investing activities resulted in a cash outflow of
€297 million (2013: cash inflow of €324 million).
76,059
in € million
in € billion
Euro Medium Term Notes
Australian Medium Term Notes
Commercial paper
Amount utilised
30.9
6.1
Programme
The BMW Group's liquidity position is extremely robust,
with liquid funds totalling €11.7 billion on hand at 31 De-
cember 2014. The BMW Group also has access to a
syndicated credit line of €6 billion, with a term up to
October 2018. This credit line, which is provided on
attractive conditions by a consortium of 38 international
banks, had not been utilised at the end of the reporting
period.
Net assets position*
The Group balance sheet total increased by €16,426 mil-
lion (11.9%) compared to the end of the previous finan-
cial year to stand at €154,803 million at 31 December
2014. Adjusted for exchange rate factors, the balance
sheet total increased by 7.5%.
On the assets side of the balance sheet, the increase in
non-current assets related primarily to receivables
from sales financing (14.8%), leased products (16.4%),
property, plant and equipment (13.3%), investments
Prior year figures have been adjusted in accordance with IAS 8, see note 9.
accounted for using the equity method (70.5%), deferred
tax assets (27.2%) and intangible assets (5.2%). At the
same time, financial assets decreased by 21.9%.
Within current assets, increases were registered in par-
ticular for receivables from sales financing (9.7%), in-
ventories (15.6%), other assets (18.3%) and current tax
(65.6%). Trade receivables went down by 12.1%.
Further information with respect to financial liabilities
is provided in notes 35, 39 and 43 to the Group Finan-
cial Statements.
The growth in business reported by the Financial Ser-
vices segment is reflected in increases of €2,085 million
and €4,822 million in current and non-current receiv-
ables from sales financing respectively and in the higher
level of leased products (up by €4,251 million).
The regular issue of commercial paper also strengthens
the BMW Group's financial basis. The following table
provides an overview of amounts utilised at 31 Decem-
ber 2014 in connection with the BMW Group's money
and capital market programmes:
55 COMBINED MANAGEMENT REPORT
Liabilities from customer
deposits (banking)
Bonds
Bonds
-35,489
Liabilities from customer deposits (banking)
Liabilities to banks
-12,466
Germany, China and South Africa with a total volume
equivalent to €2.7 billion. Further funds were also raised
via new ABS conduit transactions in Brazil, Canada,
and Japan totalling €0.8 billion. Other existing trans-
actions remained in place in Switzerland, the UK, Korea
and Australia.
-11,554
-5,599
-3,143
-1,514
Asset backed financing transactions
Commercial paper
Derivative instruments
Other
-10,884
Non-current receivables from sales financing accounted
for 24.2% (2013: 23.6%) of total assets, current receiv-
ables from sales financing for 15.2% (2013: 15.5%). Total
receivables from sales financing relate to retail customer
and dealer financing (€45,849 million) and finance leases
(€15,175 million). Adjusted for exchange rate factors,
non-current receivables from sales financing grew by
9.1%, while current receivables from sales financing
went up by 4.8%. The currency impact was mainly at-
tributable to the appreciation in the value of a number
of currencies against the euro, most notably the US dol-
lar, the British pound and the Chinese renminbi.
At the end of the reporting period, leased products
accounted for 19.5% of total assets, above their level
one year earlier (18.7%). Adjusted for exchange rate
factors, leased products went up by 10.2%.
Property, plant and equipment increased by €2,014 mil-
lion compared to the previous year. The main focus in
2014 was on product investments for production start-
ups (including the BMW 2 Series Active Tourer, the
7 Series Sedan and the 2 Series Gran Tourer) and infra-
structure improvements. In total, €4,539 million (2013:
€4,494 million) was invested, most of which related
to the Automotive segment. Depreciation on property,
plant and equipment totalled €2,924 million (2013:
€2,494 million). At 31 December 2014, property, plant
and equipment accounted for 11.1% of total assets (2013:
11.0%). Adjusted for exchange rate factors, property,
plant and equipment increased by 10.8%. Capital com-
mitments for the acquisition of items of property, plant
56
Balance sheet structure - Group
Total equity and liabilities in € billion
Non-current assets
Current assets
63%
24%
62%
87 BMW Stock and Capital Markets
26%
38%
- Non-current provisions and liabilities
37%
38%
Net financial assets of the Automotive segment com-
prise the following:
Current provisions and liabilities
Equity
83 Disclosures Relevant for Takeovers
and Explanatory Comments
Management System Relevant for the
Consolidated Financial Reporting Process
70 Report on Risks and Opportunities
82 Internal Control System and Risk
18-COMBINED MANAGEMENT REPORT
18 Business Model
20 Management System
23-Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49-Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
Opportunities
65 Outlook
Liabilities to banks
Asset backed financing
transactions
65 Report on Outlook, Risks and
Other
-3,478
-1,859
14,223
12,085
Refinancing
Operating cash flow provides a stable financial basis for
the BMW Group. A broadly based range of instruments
transacted on international money and capital markets
13,944
is used to refinance worldwide operations. Almost all of
the funds raised are used to finance the BMW Group's
Financial Services business.
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23-Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
54
Performance Indicators
17,701
-8,583
Marketable securities and investment funds
Cash and cash equivalents
Derivative instruments
Commercial paper
Intragroup net financial receivables
Financial assets
Less: external financial liabilities²
4,411
Net financial assets
2 Excluding derivative financial instruments.
31.12.2014
31.12.20131
5,752
6,775
2,758
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
29 Review of Operations
3,366
5,000
in € million
BMW Group - financial liabilities
in € million
30,000
25,000
During 2014, the BMW Group issued five euro bench-
mark bonds with a total issue volume of €4.25 billion
on European capital markets. Bonds were also issued
in Canadian dollars, British pounds, US dollars, Aus-
tralian dollars and other currencies for a total amount
of €6.9 billion.
20,000
Nine ABS transactions were executed in 2014, including
two public transactions in the USA and one each in
15,000
Maturity (years)
within 1 - between 1 and 5
later than 5
37,974
37,482
5,193
10,000
BMW Group - financial liabilities
35,000
49 - Results of Operations, Financial
Position and Net Assets
1. the ability to act at all times by assuring permanent
access to strategically important capital markets,
2. autonomy through the diversification of refinancing
instruments and investors, and
3. focus on value by optimising financing costs.
Financing measures undertaken centrally ensure access
to liquidity for the Group's operating subsidiaries on
market-based and consistent loan conditions. Funds are
61 Comments on Financial Statements acquired with a view to achieving a desired structure
Thanks to its good ratings and the high level of accept-
ance it has on capital markets, the BMW Group was
again able to refinance operations during the financial
year 2014 at attractive conditions. In addition to the
issue of bonds and loan notes on the one hand and pri-
vate placements on the other, commercial paper was
also issued on good conditions. Additional funds were
raised via new securitised instruments and the prolon-
gation of existing instruments. As in previous years,
all issues were highly sought after by private and insti-
tutional investors.
of BMW AG
64 Events after the End of the
Reporting Period
The overall objective of Group financing is to ensure the
solvency of the BMW Group at all times. Achieving this
objective is tackled in three strategic areas:
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
for the composition of liabilities, comprising a finely
tuned mix of various financing instruments. The use
of longer-term financing instruments to finance the
Group's financial services business and the mainte-
nance of a sufficiently high liquidity reserve serves to
avoid the liquidity risk intrinsic to any large portfolio
of contracts. This prudent approach to financing also
supports BMW AG's ratings. Further information is
provided in the "Liquidity risks" section of the "Report
on outlook, risks and opportunities".
Apart from issuing commercial paper on the money
market, the BMW Group's financing companies also
issue bearer bonds. In addition, retail customer and
dealer financing receivables on the one hand and
leasing rights and obligations on the other are securi-
tised in the form of asset-backed securities (ABS) financ-
ing arrangements. Financing instruments employed
by the Group's in-house banks in Germany and the
USA (e.g. customer deposits) are also used as a supple-
mentary source of financing. Owing to the increased
use of international money and capital markets to raise
funds, the scale of funds raised in the form of loans
from international banks is relatively small.
65 Report on Outlook, Risks and
23 Report on Economic Position
26
20 Management System
18 General Information on the BMW Group
18 Business Model
18-COMBINED MANAGEMENT REPORT
66
Currencies which have the greatest impact on the BMW
Group's international business, such as the US dollar,
Currency markets
23 General and Sector-specific
Car registrations in Japan are forecast to be in the region
of 4.8 million units and hence about 10.0% lower than
in the previous year.
Economic growth in China is likely to slow down again
slightly in 2015 to a rate of 7.0%. The prerequisite for
this forecast is that price falls on the property market do
not have any lasting adverse impact on the macroeco-
nomic trend.
In view of the negative impact on Japan's economy
caused by the value added tax hike in 2014, the Japanese
government has decided to postpone the second step –
originally envisaged for 2015 - until 2017. Under these
circumstances, we forecast a growth rate of 1.0% for the
year 2015.
Despite the anticipated interest rate turnaround in the
USA, we expect growth to remain at its current high
level. A growth rate of 3.2% is forecast for 2015, reflect-
ing the expectation that the boom on the employment
and property markets will remain intact.
It seems likely that the upswing in the eurozone will
continue in 2015, albeit at a low level, based on an ex-
pected growth rate of 1.1%. Europe's largest economy,
Germany, is forecast to grow by approximately 1.4%.
France is likely to see an increase of around 0.9%. Italy
should come out of recession in 2015 with a positive
growth rate of 0.4%. The upswing in Spain seems set
to continue with growth edging up to 2.0%. The United
Kingdom's economy is likely to remain strong and grow
by a further 2.7% in 2015.
cant risk factors. Various uncertainties prevail in Europe,
in particular with respect to future developments in
Greece as well as in Russia and neighbouring countries.
In addition, an interest rate turnaround is likely to take
place in the USA. The global economy could also be
negatively impacted by high public debt levels in Europe,
the USA and Japan, as well as political developments in
the Middle East and East Asia. More detailed informa-
tion on these matters can be found in the section "Politi-
cal and global economic risks" in the risk report.
For the purposes of the outlook, we assume that the
global economy will continue its moderate upswing in
2015 and grow by 3.5%. Over-capacities and price
bubbles on the Chinese property market remain signifi-
Economic outlook for 2015
Environment
Our continuous forecasting process ensures that the
BMW Group is always ready to take advantage of oppor-
tunities as they arise and to react appropriately to un-
expected risks. The principal risks and opportunities
are described in detail in the section "Report on risks
and opportunities". The risks and opportunities dis-
cussed in that section are relevant for all of the BMW
Group's key performance indicators and could result
in variances between the outlook and actual outcomes.
The following outlook relates to a forward-looking
period of one year and is based on the composition of
the BMW Group during that period. The outlook takes
account of all information known up to the date on
which the financial statements are authorised for issue
and which could have a material impact on the course
of business of the BMW Group. The expectations con-
tained in the outlook are based on the BMW Group's
forecasts for 2015 and reflect the most recent status.
The basis for the preparation of and the principal as-
sumptions used in our forecasts, which take account
of consensual opinions of leading organisations, such
as economic research institutes and banks, are set out
below. The BMW Group's forecast is drawn up on the
basis of these assumptions.
Assumptions used in the outlook
Outlook
The Indian economy seems to be recovering now that
the presidential elections are over and should grow by
6.2% in 2015. The recovery in Brazil is only likely to be
a very modest 0.5%. Russia is being negatively impacted
in particular by lower oil prices and economic sanctions
imposed in the wake of the unresolved Ukraine con-
flict. Forecasts, which are currently being adjusted fur-
ther downwards, indicate a 4.1% drop in Russian GDP.
Overall Assessment by Management
83 Disclosures Relevant for Takeovers
Performance Indicators
is forecast to rise by 2.1% to 3.1 million. The French
market is expected to grow by 6.7% to 1.9 million units,
the Italian market by 2.1% to 1.4 million units. The
economic upturn in Spain should maintain momentum
and result in a further steep rise in car sales in the cur-
rent year (0.95 million units; +11.3%). The UK car market
is likely to remain flat in 2015, with registrations down
marginally by 0.5% to approximately 2.5 million units.
The majority of Europe's car markets should continue
to recover in 2015. The region's core markets, however,
are only likely to see growth on a modest scale. The
number of new registrations in Germany, for instance,
We expect global car markets to grow in the current year
by approximately 3.0% to 83.1 million units. The US
market is forecast to grow by around 2.9% to 17.0 mil-
lion units. Our prediction for passenger car registra-
tions in China is a rise of around 10.0% to 20.3 million
units.
The report on outlook, risks and opportunities contains
forward-looking assertions based on the BMW Group's
expectations and assessments, which are, by their nature,
subject to uncertainty. As a result, actual outcomes, in-
cluding those attributable to political and economic de-
velopments, could differ substantially - either positively
or negatively - from the expectations described below.
Further information can be found in the section "Report
on risks and opportunities".
Car markets
The currencies of many emerging economies are expected
to remain under pressure against the US dollar in the
foreseeable future, due to the normalisation of US mon-
etary policies, which is likely to get under way in 2015.
Countries with current account and fiscal deficits are
most likely to be affected. Due to the expansionary mon-
etary policies of the ECB, emerging market currencies
will tend to gain in value against the euro. The rouble
will remain on the weak side until political tensions have
eased.
term.
The current healthy state of the UK economy and the
expected turnaround in interest rates that the Bank of
England is likely to set in motion could well strengthen
the British pound somewhat in the short and medium
cies in the near future.
87 BMW Stock and Capital Markets
and Explanatory Comments
26 Financial and Non-financial
Management System Relevant for the
The Japanese yen, which has lost significant ground
against the euro since mid-2012, is not expected to see a
rapid recovery, given that the Japanese central bank is
Consolidated Financial Reporting Process unlikely to change its monetary and exchange rate poli-
kets in China are to be liberalised.
Opportunities
65-Outlook
65-Report on Outlook, Risks and
64 Events after the End of the
Reporting Period
of BMW AG
49 Results of Operations, Financial
Position and Net Assets
The Chinese renminbi is likely to remain relatively closely
coupled with the US dollar over the coming year. In the
long term, however, it seems likely that volatility will
61 Comments on Financial Statements increase, following the announcement that capital mar-
The expected interest rate turnaround in the USA, low
inflation in Europe and the fragile state of Europe's
economy, suggest that the US dollar will again tend to
perform strongly against the euro in 2015.
but also the Chinese renminbi, the British pound and
the Japanese yen, could well be subject to a significant
degree of fluctuation again in 2015.
29 Review of Operations
70 Report on Risks and Opportunities
82 Internal Control System and Risk
The report on outlook, risks and opportunities describes
the expected development of the BMW Group, together
with associated material risks and opportunities, from
the perspective of Group management. The outlook
covers a period of one year, in line with the Group's in-
ternal management system. By contrast, risks and oppor-
tunities are managed on the basis of a two-year assess-
ment. The report on risks and opportunities therefore
covers a period of two years.
Other liabilities fell from €285 million to €216 million,
mainly as a result of the expiry of option contracts.
65 COMBINED MANAGEMENT REPORT
Events after the End of the Reporting Period
Report on Economic Position
64
Liabilities to banks increased in conjunction with a
number of project-related loans.
At €4,784 million, trade payables were at a similar level
to the previous year (2013: €4,818 million).
Pension provisions, net of designated plan assets, de-
creased from €43 million to €12 million.
In order to secure obligations resulting from pre-retire-
ment part-time work arrangements and the Company's
pension obligations, assets have been transferred to
BMW Trust e. V., Munich, in conjunction with Contrac-
tual Trust Arrangements (CTA), on a trustee basis. The
assets concerned comprise mainly holdings in investment
fund assets and a receivable resulting from a so-called
"Capitalisation Transaction” (Kapitalisierungsgeschäft).
Fund assets are offset against the related guaranteed
obligations. The resulting surplus of assets over liabilities
is reported in the BMW AG balance sheet on the line
"Surplus of pension and similar plan assets over liabili-
ties".
Equity rose by €1,537 million to €12,066 million, while
the equity ratio improved from 31.2% to 35.2%.
Cash and cash equivalents went down by €684 million
to €3,073 million. This decrease mainly reflected the
repayment of intragroup borrowings, as a result of
which intragroup refinancing volumes also reduced
significantly.
Liquidity within the BMW Group is managed centrally by
BMW AG on the basis of a group-wide liquidity concept,
which revolves around the strategy of concentrating a
significant part of the Group's liquidity at the level of
BMW AG. An important instrument used to achieve this
aim is the cash pool headed by BMW AG. The liquidity
position reported by BMW AG therefore reflects the
global activities of BMW AG and other Group companies.
The decrease in other receivables and other assets to
€2,502 million (2013: €3,194 million) was mainly attribut-
able to the lower volume of genuine repurchase (repo)
transactions in place at the end of the reporting period.
18-COMBINED MANAGEMENT REPORT
At €3,859 million, inventories were practically identical
to the end of the previous year (2013: €3,863 million).
-582
-1,325
1,904
2,289
3,229
-45
-50
-1,629
5,163
In the case of car markets in major emerging econo-
mies, we predict some highly divergent developments.
Due to the prevailing economic and political situation,
Russia is expected to see a further 21.8% drop to 1.8 mil-
lion units. The Brazilian car market is also likely to con-
tract slightly again in 2015 by approximately 2.0% to
3.3 million units.
-1,884
3,963
1,707
Report on Outlook, Risks and Opportunities
Outlook
18 General Information on the BMW Group
18 Business Model
23-Report on Economic Position
KPMG AG Wirtschaftsprüfungsgesellschaft, Munich,
has issued an unqualified audit opinion on the financial
statements of BMW AG, of which the balance sheet and
the income statement are presented here. The BMW AG
financial statements for the financial year 2014 will be
submitted to the operator of the electronic version of the
German Federal Gazette and can be obtained via the
Company Register website. These financial statements
are available from BMW AG, 80788 Munich, Germany.
Events after the end of the reporting period
No events have occurred since the end of the reporting
period which could have a major impact on the results
of operations, financial position and net assets of
BMW AG or the BMW Group.
Due to its dominant role in the Group and its close ties
with Group entities, expectations for the BMW AG with
respect to the Company's financial and non-financial
performance indicators correspond largely to the BMW
Group's outlook for the Automotive segment, which is
described in detail in the "Report on Outlook, Risks
and Opportunities" section of the Combined Manage-
ment Report.
Outlook
BMW AG is integrated in the group-wide risk manage-
ment system and internal control system of the BMW
Group. Further information is provided in the “Internal
Control System and Risk Management System Relevant
for the Consolidated Financial Reporting Process" sec-
tion of the Combined Management Report.
87 BMW Stock and Capital Markets
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
70 Report on Risks and Opportunities
82 Internal Control System and Risk
65-Outlook
Opportunities
65-Report on Outlook, Risks and
20 Management System
Reporting Period
of BMW AG
49 Results of Operations, Financial
Position and Net Assets
on Outlook, Risks and Opportunities" section of the Com-
bined Management Report. As a general rule, BMW AG
participates in the risks entered into by Group entities
61-Comments on Financial Statements on the basis of the relevant shareholding percentage.
29 Review of Operations
Performance Indicators
26 Financial and Non-financial
Environment
BMW AG's performance is highly dependent on the
same set of risks and opportunities that affect the BMW
26 Overall Assessment by Management Group and which are described in detail in the “Report
Risks and opportunities
Deferred income went up by €582 million to €1,083 mil-
lion, mainly reflecting the increased volume of services
still to be performed for service and maintenance con-
tracts in conjunction with multi-component business.
23 General and Sector-specific
64-Events after the End of the
Motorcycle markets in 2015
EBIT margin
Financial Services sector in 2015
units
solid increase
-8,707
€ million
solid increase
-116,324
2015
Outlook
2014
Sales volume
Motorcycles segment
Return on capital employed -
Revenues
Fleet emissions²
Sales volume¹
Automotive segment
Profit before tax
Workforce at end of year
BMW Group
Principal performance indicators
thus reflecting the solid growth in sales volume and
revenues anticipated by the Automotive segment. At
the same time, we expect a slight decrease in carbon
emissions from our fleet of vehicles. We aim to achieve
profitable growth through a solid increase in the size
of the workforce across the Group. The Automotive seg-
ment's EBIT margin will remain within the target range
of between 8 and 10%. Based on the planned level of
capital expenditure, we expect a moderate decrease in
the Automobile segment's RoCE. The Financial Services
segment's RoE should remain in line with last year's
level. Both performance indicators will be nevertheless
higher than their long-term targets of 26% and 18%
respectively. For the Motorcycles segment, we forecast
a solid increase in sales volume and ROCE in line
with last year's level. Depending on the political and
economic situation and the outcome of the risks and
opportunities described below, actual business per-
formance could, however, differ from our current ex-
pectations.
Overall assessment by Group management for 2015
We forecast a continuation of the upward trend in 2015
and expect to achieve profitable growth on the back
of a range of factors, including the introduction of new
models. Despite the aforementioned challenges, Group
profit before tax is forecast to achieve a solid increase,
Return on equity in line with last year's level expected
Based on our assessment, the Financial Services segment
will continue to perform well in 2015. Despite rising
equity capital requirements worldwide, we forecast RoE
in line with last year's level (2014: 19.4%), thus remain-
ing ahead of the target of at least 18%.
Financial Services segment in 2015
2,117,965
g CO2/km
-130
€ million
Return on equity
-328
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 275,891 units).
2 EU-28.
Financial Services segment
Return on capital employed ·
in line with last year's level
-19.4
%
in line with last year's level
21.8
%
We expect the impetus provided by the new models
will help keep segment RoCE in line with last year's
level (2014: 21.8%).
solid increase
units
moderate decrease
unchanged between 8 and 10
solid increase
slight decrease
solid increase
61.7
%
-9.6
%
-75,173
123,495
The markets for 500 cc plus motorcycles are again likely
to continue their upward trend in 2015, albeit on a
modest scale. Registrations are expected to rise slightly
across Europe, including increases on a similar scale
for the major motorcycle markets in Germany, Italy and
France. The USA is also likely to see a continuation of
the positive trend.
Return on capital employed in line with last year's level
expected
* EU-28.
18 General Information on the BMW Group
18 Business Model
18-COMBINED MANAGEMENT REPORT
68
The new facelift of the BMW 1 Series, unveiled at the
Geneva Motor Show, will provide additional sales
momentum. With a fully revamped engine range: and
additional features that reduce fuel consumption and
In April, the four-wheel drive BMW X5 M and X6 M will
come onto the market. These high-performance models
combine the characteristic features of the successful
BMW X family - exclusivity, robustness, agility and every-
day usability - with the commitment to high perfor-
mance that defines an M car.
The new 2 Series Convertible was added to the BMW 2 Se-
ries with effect from the end of February. Its predeces-
sor, the 1 Series Convertible, achieved worldwide sales
of more than 130,000 units and was therefore the un-
disputed leader in its class.
Attractive new models and dynamic market conditions,
particularly in North America, should have a positive
impact on car sales. After some negative developments
in recent years, the European car markets are expected
to recover slightly overall. Nevertheless, the market en-
vironment is likely to remain challenging.
Deliveries to customers: solid increase expected
We expect the pace of growth in the Automotive seg-
ment to remain high in 2015. Assuming economic
conditions continue to be stable, we predict a solid rise
in deliveries to customers (2014: 2,117,965 units) to
achieve a new high level, which will, in all probability,
enable the BMW Group to maintain its position as the
world's foremost premium car manufacturer in 2015.
Automotive segment in 2015
The BMW Group will continue to recruit staff in 2015
and, based on our latest forecasts, we expect a solid in-
crease in the size of the workforce (2014: 116,324 em-
ployees), driven by car and motorcycle sales growth and
the rapid pace of innovation.
Workforce at year-end: solid increase expected
levels of upfront expenditure to safeguard business
viability going forward and future challenges arising in
the wake of the normalisation of the Chinese market.
A number of risks will also have to be faced, including
the precarious state of the Russian market and macro-
economic uncertainties in Europe (see the section "Po-
litical and global economic risks" in the risk report).
We expect our attractive model range to generate positive
momentum, which will help us achieve our target of
balanced growth on all major markets.
The BMW Group will remain on course in 2015 and
forecasts a solid increase in Group profit before tax
compared to the preceding year (2014: €8,707 million).
However, the scale of the increase during the forecast
period is likely to be held down by intense competition
on car markets, rising personnel costs, continued high
Profit before tax: solid increase expected
The BMW Group in 2015
Outlook for the BMW Group in 2015
Our highly flexible international production network
enables us to compensate for even substantial fluctua-
tions in demand. Investing in major growth markets
provides the basis for the continued success of the BMW
Group. We attach great importance to ensuring that
the global distribution of our sales remains balanced,
while simultaneously expanding the global presence of
the BMW Group.
As an enterprise with global operations, the BMW
Group is ideally placed to exploit opportunities that
arise and thus compensate for unfavourable develop-
ments in other regions. Thanks to its strong brands, we
forecast continued profitable growth for the BMW
Group in the current year. We will push ahead with in-
vestments in innovation, future technologies and the
further internationalisation of our production network
in 2015. As a manufacturer of premium vehicles, we will
continue to profit from strong worldwide demand in
this segment. Given all these factors, we forecast that
the BMW Group will remain the world's leading pre-
mium manufacturer in 2015.
Expected impact on the BMW Group in 2015
Future developments on international automobile mar-
kets also have a direct impact on the BMW Group.
While competition is likely to intensify in contracting
markets, new opportunities are opening in growth
regions. In some countries, sales volumes will be influ-
enced to a great extent by the way we tackle new com-
petitive challenges. After the uncertainties that have
dominated recent years, we expect Europe to generate
some positive momentum again, albeit on a slight scale.
North America and China are likely to see a continua-
tion of the positive trend in 2015. In contrast, the situa-
tion on the Russian car market can be expected to re-
main tense over the forecast period.
Stable conditions are also predicted for used car mar-
kets in Asia and Europe in 2015, while price levels in
North America are, at the most, only likely to fall
slightly.
67 COMBINED MANAGEMENT REPORT
We expect the pattern of credit risks worldwide to re-
main more or less stable during the current year.
The normalisation of monetary policies in the USA is
expected to continue throughout the coming year. The
first steps in the direction of a slight rise in interest
rates might be taken in summer 2015. The current debt
situation, however, precludes any rapid interest rate
increases in the USA. In Europe, by contrast, the ECB
will proceed with the plans it has already announced
for a large scale bond-buying programme as inflation
remains low in the first half of 2015. A weakly perform-
ing economy and a low inflation rate will maintain the
pressure on the Bank of Japan to intervene. We there-
fore expect it to retain its expansionary monetary poli-
cies and continue to buy government bonds. Reference
interest rates in the eurozone and Japan are therefore
set to remain at historically low levels at least until the
end of 2015.
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
Deliveries to customers: solid increase expected
We expect the Motorcycles segment's upward trend to
continue, helped by a positive contribution from the
new models - R 1200 R, R1200 RS, S 1000 RR, S 1000 XR
and F 800 R - presented at the autumn trade fairs. Within
a positive market environment, we forecast a solid in-
crease in BMW motorcycle sales in the forecast period
(2014: 123,495 units).
Motorcycles segment in 2015
We expect to see a moderate drop in segment ROCE
(2014: 61.7%). However, the long-term target RoCE of at
least 26% for the Automotive segment will be clearly
surpassed.
EBIT margin in target range between 8 and 10% expected
An EBIT margin within a range of between 8 and 10%
(2014: 9.6%) remains the target for the Automotive
segment.
The generally positive business trend predicted for the
BMW Group is also expected to have a positive impact
on Automotive segment revenues. Accordingly, we fore-
cast solid revenue growth for the forecast period (2014:
€ 75,173 million).
Revenues: solid increase expected
We will continue to work hard in the current year to re-
duce carbon emissions across the entire fleet. Overall,
we expect fleet emissions to decrease slightly in 2015
(2014: 130 grams CO2/km).
Carbon fleet emissions*: slight decrease expected
Regulations for vehicle carbon emissions are becoming
continually stricter worldwide. The BMW Group com-
mitted itself at an early stage to meeting future legal
requirements with the aid of its innovative Efficient
Dynamics technology package. The increasing scope of
electrification in our vehicle fleet is enabling us to play
a pioneering role in reducing both carbon emissions
and fuel consumption. At the same time, our vehicles
also set standards in terms of sporting flair and dynamic
driving pleasure.
The Araquari plant in Brazil commenced production of
BMW brand vehicles in autumn 2014. The completion
of the new production site is scheduled for 2015. The
plant will have a planned annual capacity of up to
30,000 units. The BMW Group is also increasing pro-
duction capacities in the USA. After the expansion
of the Spartanburg plant has been completed, up to
450,000 vehicles per year will roll off the production
lines as from the end of 2016.
We also expect the MINI brand to generate new sales
momentum in 2015, driven, among other factors, by the
low average age of its model I range (2.5 years). The new
MINI Clubman will be presented in 2015 and will excel
with a wide range of high-value details, plenty of room
for functionality and outstanding materials.
Preparations for the new BMW 7 Series are already
under way at the Dingolfing plant. Intelligent composite
construction in the new BMW 7 Series and the imple-
mentation of carbon fibre (CFRP) technology will set new
standards in the market.
69 COMBINED MANAGEMENT REPORT
The highly efficient BMW X5 xDrive40e comes onto the
market in 2015. It is the first BMW brand Sports Activity
Vehicle to combine the intelligent BMW xDrive all-wheel
drive system with a more advanced plug-in hybrid
system, and represents a further important step in the
transfer of innovative drivetrain systems from BMW i
models to the BMW Group's core brand.
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
70 Report on Risks and Opportunities
82 Internal Control System and Risk
65-Report on Outlook, Risks and
Opportunities
65-Outlook
64 Events after the End of the
Reporting Period
61 Comments on Financial Statements
of BMW AG
49 Results of Operations, Financial
Position and Net Assets
29 Review of Operations
Performance Indicators
26 Financial and Non-financial
26 Overall Assessment by Management multi-purpose vehicle segment.
emissions, the new BMW 1 Series will again be playing
a pioneering role in the introduction of newly devel-
oped BMW EfficientDynamics technologies. The seven-
seater BMW 2 Series Gran Tourer also made its world
debut in Geneva, heralding the BMW Group's entry
into a new vehicle segment. With its generous interior
spaciousness, versatility and flexibility, the BMW 2 Se-
ries Gran Tourer is the first BMW to be launched in the
The BMW 6 Series Coupé, Gran Coupé and Convertible
model upgrades were presented in January and will
come onto the market in spring 2015. The new 6 Series
satisfies the most exacting requirements for luxury-
segment sporting vehicles in terms of dynamic driving
performance, comfort, technology and elegance.
-449
26 Overall Assessment by Management
26 Financial and Non-financial
-741
49 Results of Operations, Financial
Position and Net Assets
29 Review of Operations
Performance Indicators
23 General and Sector-specific
Environment
20 Management System
23-Report on Economic Position
18 Business Model
18 General Information on the BMW Group
18-COMBINED MANAGEMENT REPORT
The carrying amount of investments decreased from
€3,377 million to €3,236 million, mainly as a result of an
impairment loss recognised in 2014.
production start-ups of new models increased year-on-
year. Depreciation and amortisation amounted to
€1,890 million (2013: €1,732 million).
62
42
Capital expenditure on intangible assets and property,
plant and equipment in the year under report amounted
to €3,150 million (2013: €3,203 million). The main
reason for this 1.7% decrease was the acquisition of
licences in the previous year. Product investments for
After deducting the expense for taxes, the Company
reports a net profit of €3,229 million compared to
€2,289 million in the previous year.
The expense for income taxes relates primarily to cur-
rent tax for the financial
year 2014.
The profit from ordinary activities increased from
€3,963 million to €5,163 million.
The financial result deteriorated year-on-year by €121 mil-
lion, mainly due to the impairment loss (€196 million)
recognised on the investment in SGL Carbon SE,
Wiesbaden, which was written down to its lower mar-
ket value at the end of the reporting period. Higher
interest income and lower interest expenses had a posi-
tive impact.
The decrease in net other operating income and ex-
penses was attributable mainly to the higher net nega-
tive impact of realised exchange rate factors on the
one hand and to higher allocations to provisions for
commodity and currency hedging contracts on the
other.
Research and development expenses fell by 4.8%, mainly
reflecting the production start of various development-
intensive vehicle projects in the previous year. Most of
the expense incurred for research and development ac-
tivities related to new vehicle models, drive systems and
innovative technologies.
Administrative expenses were 5.5% up on the previous
year, mainly as a result of higher expenses for centralised
IT activities and new IT projects.
At €3,533 million, selling expenses were at a similar level
to the previous year (2013: €3,528 million).
related to Europe and North America. Sales to Group
entities accounted for €50.7 billion or 76.1% of total
revenues of €66.6 billion. Cost of sales developed roughly
in line with revenues, as a result of which gross profit
increased by €1,380 million to €14,787 million.
Results of operations, financial position and net assets
Revenues increased by 10.1% compared to the previous
year, driven principally by higher sales volume on the
one hand and the positive impact of the model mix on
the other. In geographical terms, most of the increase
61-Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Investments
8,982
-10,304
Property, plant and equipment
474
405
2013
2014
Current assets
Cash and cash equivalents
Marketable securities
BMW AG develops, manufactures and sells cars and
motorcycles as well as spare parts and accessories manu-
factured by itself, foreign subsidiaries and external sup-
pliers. Sales activities are carried out through branches,
subsidiaries, independent dealers and importers. In
2014, BMW AG was able to increase its sales volume by
170,869 units to 2,166,772 units. This figure includes
287,466 units relating to series sets supplied to the joint
venture BMW Brilliance Automotive Ltd., Shenyang,
an increase of 72,517 units over the previous year. At
31 December 2014, BMW AG had 80,675 employees,
3,565 more than one year earlier.
Other receivables and other assets
Trade receivables
Inventories
Intangible assets
Assets
in € million
BMWAG Balance Sheet at 31 December
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Management System Relevant for the
Consolidated Financial Reporting Process
70 Report on Risks and Opportunities
82 Internal Control System and Risk
65 Outlook
Opportunities
Receivables from subsidiaries
3,236
Business environment and review of operations
The general and sector-specific environment in which
the BMW AG operates is the same as that for the BMW
Group and is described in the "Report on Economic
Position" section of the Combined Management Report.
Differences between the accounting policies used in the
BMW AG financial statements (prepared in accordance
with HGB) and the BMW Group Financial Statements
(prepared in accordance with IFRSS) arise primarily in
connection with the accounting treatment of intangible
assets, financial instruments, provisions and deferred
Risks and opportunities are assessed as a general rule
over a medium-term period of two years. All potential
risks of losses (individual and accumulated risks) are
monitored and managed from a risk management per-
spective. As a matter of principle, risks that pose a going-
concern threat are avoided. If there is no specific
reference to a segment, opportunities and risks relate
to the Automotive segment.
The prudent management of opportunities and risks is
a fundamental prerequisite for the ability to react appro-
priately to changes in political, legal, technical or eco-
nomic conditions. Identified opportunities and risks are
addressed in the Outlook Report if they are likely to
materialise. The following sections focus on potential
future developments or events, which could result in a
positive variance (opportunities) or a negative variance
(risks) in the BMW Group's outlook. The potential im-
pact of risks and opportunities is always presented sepa-
rately and without offset.
As a world-leading manufacturer of premium cars and
motorcycles and provider of premium financing and
mobility services, the BMW Group is exposed to numer-
ous uncertainties and changes. Making full use of the
opportunities that present themselves is the basis for its
corporate success. In order to achieve growth, profita-
bility, efficiency and sustainable levels of business in the
future, the BMW Group consciously takes certain risks.
87 BMW Stock and Capital Markets
83 Disclosures Relevant for Takeovers
and Explanatory Comments
Consolidated Financial Reporting Process
Management System Relevant for the
82 Internal Control System and Risk
70-Report on Risks and Opportunities
Opportunities
65 Outlook
65-Report on Outlook, Risks and
64 Events after the End of the
Reporting Period
61 Comments on Financial Statements
of BMW AG
49 Results of Operations, Financial
Position and Net Assets
29 Review of Operations
Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
26
23 General and Sector-specific
Environment
23 Report on Economic Position
20 Management System
18 General Information on the BMW Group
18 Business Model
18-COMBINED MANAGEMENT REPORT
70
The scope of entities covered by the report on risks
and opportunities corresponds to the scope of consoli-
dated entities included in the BMW Group Financial
Statements.
Risk management system
The objective of the risk management system and one of
the key functions of risk reporting is to identify, record
and actively manage internal and external risks which
pose a threat to the attainment of corporate targets. The
risk management system covers all significant risks to
the Group, or those which could pose a threat to its going-
concern status. With regard to the structure of the risk
management system, the responsibility for risk reporting
lies with each individual member of staff and manager –
in their various roles - and not with that of any central-
ised unit in particular. Each and every employee and
manager is required to report risks via the available re-
porting channels. This requirement is set out in guide-
lines that apply throughout the Group.
The Group risk management system comprises a de-
centralised network covering all parts of the business,
which is steered by a centralised risk management func-
tion. Each of the BMW Group's areas of responsibility
is represented within the risk management network by
so-called network representatives. The network's for-
mal organisational structure helps to strengthen its
visibility and underline the importance attached to risk
The main financial and non-financial performance in-
dicators relevant for BMW AG are largely identical and
synchronous with those of the Automotive segment
of the BMW Group and are described in detail in the
"Report on Economic Position" section of the Combined
Management Report.
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
which is based in Munich, Germany, is the parent com-
pany of the BMW Group. The comments on the BMW
Group and Automotive segment provided in earlier sec-
tions are also relevant for BMW AG, unless presented
differently in the following section. The Financial State-
ments of BMW AG are drawn up in accordance with
the provisions of the German Commercial Code (HGB)
and the relevant supplementary provisions contained
in the German Stock Corporation Act (AktG).
Comments on Financial Statements of BMW AG
Report on Economic Position
61 COMBINED MANAGEMENT REPORT
Board of Management
Supervisory Board
Group Audit
Risk Management
Steering Committee
Internal Control System
Monitoring
taxes.
①
Risk management
Analysis and
Measurement
Reporting
Identification
Group-wide risk management
Committee
Compliance
Completeness
Usefulness
Effectiveness
Risk management in the BMW Group
Controlling
373
-3,377
13,945
Gross profit
Cost of sales
Revenues
in € million
BMW AG Income Statement
63 COMBINED MANAGEMENT REPORT
33,765
34,236
Total equity and liabilities
- 501
1,083
Deferred income
15,361
13,736
285
-216
-8,795
6,872
4,818
4,784
-1,463
-1,864
7,342
Selling expenses
Administrative expenses
Research and development expenses
Other operating income and expenses
542
28
-4,362
-4,152
-2,141
-2,259
-3,528
-3,533
13,407
14,787
-47,067
7,320
-51,812
66,599
2013
2014
Unappropriated profit available for distribution
Transfer to revenue reserves
Net profit
Other taxes
Income taxes
Profit from ordinary activities
Financial result
Result on investments
60,474
Tangible, intangible and investment assets
-7,299
43
33,765
34,236
990
1,123
Surplus of pension and similar plan assets over liabilities
Total assets
-169
-265
Prepayments
19,773
18,903
3,757
-3,073
3,429
3,572
3,194
2,502
4,871
5,200
659
697
3,863
3,859
12,833
Equity and liabilities
Subscribed capital
Capital reserves
Revenue reserves
12
32
31
10,529
12,066
1,707
1,904
6,097
-7,422
2,069
2,084
-7,308
656
Liabilities
Other liabilities
Liabilities to subsidiaries
Trade payables
Liabilities to banks
Provisions
Other provisions
Pension provisions.
Registered profit-sharing certificates
Equity
Unappropriated profit available for distribution
656
Report on Outlook, Risks and Opportunities
Report on Risks and Opportunities
87 BMW Stock and Capital Markets
Like all internationally operating enterprises, the BMW
Group is confronted with legal disputes relating, in par-
ticular, to warranty claims, product liability, infringe-
ments of protected rights, and proceedings initiated
by government agencies. Any of these matters could,
among other outcomes, have an adverse impact on the
Group's reputation. Such proceedings are typical for
the sector and can arise as a consequence of realigning
product or purchasing strategies to suit changed market
conditions. Particularly in the US market, class action
lawsuits and product liability risks can have substantial
financial consequences and cause damage to the Group's
public image. The BMW Group recognises appropriate
levels of provision for lawsuits. A part of these risks,
The following table provides an overview of all risks and
opportunities and shows their significance for the BMW
Group.
Risks and opportunities
The implementation of identified opportunities is un-
dertaken on a decentralised basis. The significance of
opportunities for the BMW Group is classified in the
categories "material" or "not material".
The continuous optimisation of important business
processes and strict cost control are essential to ensure
good profitability and a high return on capital em-
ployed. The forecast is drawn up on the assumption that
profitability improvement measures will be imple-
mented. One example is the implementation of modu-
lar-based production and common architectures, which
enable a greater commonality of features between
different models and product lines. This, in turn, con-
tributes to improved profitability by reducing develop-
ment costs and investment on the series development
of new vehicles. The new approach has a positive im-
pact on production costs and helps increase production
flexibility. A more competitive cost basis opens up oppor-
tunities to engage in new market segments.
ment for consideration.
87 BMW Stock and Capital Markets
Neither at the balance sheet date nor at the date on which
the Group Financial Statements were authorised for
issue were any risks identified which could pose a
threat to the going-concern status of the BMW Group.
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
65 Outlook
Opportunities
the process of identifying opportunities. The Group's
product and service portfolio is permanently reviewed
in the light of these analyses and, as appropriate, new
70-Report on Risks and Opportunities product projects are presented to the Board of Manage-
65-Report on Outlook, Risks and
64 Events after the End of the
Reporting Period
of BMW AG
82 Internal Control System and Risk
Market, competition and scenario analyses are conducted
61 Comments on Financial Statements and evaluated and forecasts are drawn up as part of
Risks and opportunities
amount
- Foreign currencies
Raw materials
Liquidity
- Information, data protection and IT
Financial risks and opportunities
Pension obligations
Sales and marketing
Production and technology
- Purchasing
Risk
Risks and opportunities relating
to operations
Medium
Strategic and sector risks and
opportunities
Stable
High
Political and global economic risks
and opportunities
Change
compared to
prior year
Increased
the BMW Group.
Position and Net Assets
49 Results of Operations, Financial
Medium
Class
The significance of risks for the BMW Group is deter-
mined on the basis of risk amounts. The measure-
ment of the amount of a risk takes account of both its
impact (net of appropriate countermeasures) and the
likelihood of occurrence in each case. The amount of
a risk is approximated in the case of risks measured on
the basis of value-at-risk/cash-flow-at-risk models. In
this situation, the following assessment criteria are ap-
plied:
-> €500-2,000 million
-> €2,000 million
-> €0-500 million
Earnings impact
High
Low
Medium
High
The overall impact on results of operations based on the
assumption that the risk will materialise is measured
for the two-year assessment period and allocated to the
following categories:
In order to determine which risks can be considered
significant in relation to results of operations, financial
position and net assets and to identify changes in key
performance indicators used by the BMW Group, risks
are classified as high, medium or low.
Risk measurement
As a supplement to comprehensive risk management,
managing the business on a sustainable basis also repre-
sents one of the Group's core corporate principles. Any
risks or opportunities related to sustainability issues
are discussed by the Sustainability Committee. Strategic
options and measures open to the BMW Group are put
forward to the Sustainability Board, to which all mem-
bers of the Board of Management belong. Risk aspects
discussed at this level are integrated in the work of the
group-wide risk network. The composition of the Risk
Management Steering Committee on the one hand and
the Sustainability Committee on the other ensures that
risk and sustainability management are closely coordi-
nated.
The risk management system is tested regularly by
Internal Audit. By sharing experiences with other com-
panies on an ongoing basis, the BMW Group ensures
that new insights are incorporated in the risk manage-
ment system, thus ensuring continual improvement.
Regular basic and further training as well as information
events held throughout the BMW Group, and in par-
ticular within the risk management network, are invalu-
able ways of preparing people for new or additional
challenges with regard to the processes in which they
are involved.
Risks reported to the centralised risk management team
from within the network are firstly presented for review
to the Risk Management Steering Committee, for which
Group Controlling is responsible. After review, the risks
are reported to the Board of Management and to the
Supervisory Board. Significant and going-concern-
related risks are classified on the basis of the potential
scale of impact on the Group's results of operations,
financial position and net assets. The level of risk is quan-
tified, taking into account the probability of occurrence
and risk mitigation measures.
Class
Risk amount
-> €0-50 million
> €50-400 million
29 Review of Operations
Performance Indicators
26 Financial and Non-financial
26 Overall Assessment by Management cess of developing strategies and drawing up forecasts for
-
New opportunities regularly present themselves in the
dynamic business environment in which the BMW Group
operates. General economic trends and sector-specific
factors - including external regulations, suppliers, cus-
tomers and competitors – are monitored continuously.
Identifying opportunities is an integral part of the pro-
Opportunities management system and identification
of opportunities
Environment
23 General and Sector-specific
23 Report on Economic Position
20 Management System
18 General Information on the BMW Group
18 Business Model
18-COMBINED MANAGEMENT REPORT
72
-> €400 million
Medium
Stable
- High
Stable
23 General and Sector-specific
23 Report on Economic Position
20 Management System
18 General Information on the BMW Group
18 Business Model
18-COMBINED MANAGEMENT REPORT
74
Environment
Employees make a vital contribution to sustainable
growth and improved profitability through their inno-
vative skills. One prerequisite for this is a consistent
strategic approach to the management of human re-
sources, even in the event of changes in the legal frame-
work. The BMW Group has appropriate measures in
One of the main risks for the automobile industry is
the possible threat of short-term tightening of laws and
regulations, including local registration restrictions. In
some cases, changes in customer behaviour are not only
brought on by new regulations, but also through changes
of opinion, values and environmental issues. Among
other factors, global climate change is having an effect
on legislation, regulations and consumer behaviour. In
order to meet structural changes in the demand for
individual mobility that no longer necessarily entail
actually owning a vehicle, the BMW Group is offering
corresponding mobility services, such as the DriveNow
car-sharing model.
Strategic and sector risks
Strategic and sector risks and opportunities
New regulations and the development of fuel and energy
prices also influence various aspects of our business,
including customer behaviour. Medium- and long-term
targets have already been put in place in Europe, North
America, Japan, China and other countries to minimise
fuel consumption and CO2 emissions.
result in an improved quality of earnings. Changes in
the legal environment are monitored continuously at a
centralised level. At present, however, the BMW Group
does not see any significant political and/or global eco-
nomic opportunities, which could have a positive sus-
tainable impact on its earnings performance.
Despite the high level of risk involved, the BMW Group
sees an opportunity for above-average growth in the
Chinese market. In addition to the impact from eco-
nomic developments, the BMW Group's earnings can
also be positively affected in the short to medium term
by changes in the legal environment. A possible reduc-
tion in tariff barriers, import restrictions or direct ex-
cise duties could lower the cost of materials for the
BMW Group, also enabling products and services to be
offered to customers at lower prices. Another factor to
consider is that regulatory support for forward-looking
technologies, such as electromobility, help to make
the total cost of ownership more attractive for customers
in the form of incentives. Developments of this kind
open up opportunities to achieve faster market penetra-
tion for these technologies, which could, in turn, lead
to higher sales volumes and, all other things being equal,
Political and global economic opportunities
With its Efficient Dynamics concept, the BMW Group
is playing a pioneering role in the premium segment in
reducing both fuel consumption and emissions. With
effect from 2013, our range of products was expanded
to include electric powertrains in BMW i series vehicles.
These innovations also make an important contribution
in our endeavours to fulfil statutory rules and require-
ments in terms of CO2 emissions. The BMW Group is
investing in the development of sustainable drive tech-
nologies and materials, with the aim of providing highly
efficient vehicles for individual mobility in the premium
segment, both now and in the future.
place for such eventualities. Risk amounts and earnings
impact are measured on the basis of extensive scenario
analyses.
If risks from the strategic and sector category were to
materialise, they could have a medium impact on results
of operations over the two-year assessment period. The
amounts of risk attached to strategic and sector-specific
26 Overall Assessment by Management risks are classified as medium.
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
82 Internal Control System and Risk
65 Outlook
Opportunities
65-Report on Outlook, Risks and
Reporting Period
64 Events after the End of the
Additions to the product and mobility portfolio and
61 Comments on Financial Statements expansion in growth regions are seen as the most im-
portant opportunities for growth in the medium to
long term for the BMW Group.
Strategic and sector opportunities
of BMW AG
Position and Net Assets
49 Results of Operations, Financial
29 Review of Operations
Performance Indicators
26 Financial and Non-financial
If risks from this category were to materialise, they
could - due to sales volume fluctuations - have a high
impact on results of operations over the two-year as-
sessment period. Overall, the risk amounts attached
to political and global economic risks are classified as
high.
The risk management process is applied throughout
the Group and comprises the early identification and
penetration of risks, comprehensive analysis and risk
measurement, the coordinated use of suitable manage-
ment tools and also the monitoring and evaluation of
measures taken.
Any escalation of political conflicts (such as in Russia),
terrorist activities, natural disasters or possible pan-
demics could have a negative impact on the world econ-
omy and international capital markets. The BMW Group
counters these risks primarily by internationalising its
sales and production structures, in order to reduce the
potential impact of risk exposures in individual coun-
tries. Political and global economic risks are determined
by analysing historical data and applying a cash-flow-at-
risk approach.
The current high level of volatility prevailing in many
economies continues to have an unsettling impact on
markets and consumers. Many emerging economies are
currently performing below their full potential. The
eurozone is still having to cope with a range of structural
problems, such as those evident in Greece.
to the provision of financial services
Risks and opportunities relating
Stable
Low
Stable
High
Credit risk
Stable
Stable
Medium
Stable
High
Stable
High
High
High
Stable
Residual value
73 COMBINED MANAGEMENT REPORT
Individual mobility remains a key issue in a great many
countries, in terms of political regulation and national
industrial policymaking. Changing values in society are
constantly calling for new solutions in the field of mo-
bility. Unpredictable disturbances in economic interde-
pendencies, together with ever-greater competition,
may give rise to knock-on reactions that are practically
impossible to measure.
Political and global economic risks
As one of the world's leading providers of premium
products and services, the BMW Group faces a variety
of major challenges. The world is changing at great
speed. Resulting situations can give rise to risks on the
one hand and opportunities on the other.
Political and global economic risks and
opportunities
Risks and opportunities which could, from today's per-
spective, have a significant impact on the results of
operations, financial position and/or net assets of the
BMW Group are described in the following sections.
Legal risks
Stable
Stable
Medium
Low
Stable
Medium
Interest rate changes
-Liquidity/operational risks
Stable
High
The slowing of economic growth in China, one of the
BMW Group's principal markets, also continues to pose
a major risk. Upheavals in the property or banking sector
in this region could result in reduced demand for our
products and services.
Risk management process
Low
71 COMBINED MANAGEMENT REPORT
Price risks and opportunities relating to precious metals
(platinum, palladium, rhodium) and non-ferrous metals
(aluminium, copper, lead), and, to some extent, to steel
and steel ingredients (iron ore, coking coal) and energy
(gas, electricity) are hedged using financial derivatives
and/or supply contracts with fixed pricing arrangements.
A description of the methods applied for risk measure-
ment and hedging is provided in note 43 to the Group
Financial Statements.
If risks relating to raw materials were to materialise,
they could have a medium impact on the BMW Group's
results of operations over the two-year assessment
period. A high level of risk is attached to risks relating
to raw materials.
Conversely, significant opportunities can arise if prices
of raw materials develop favourably for the BMW Group.
If the relevant recognition criteria are fulfilled, deriva-
tives used by the BMW Group are accounted for as
hedging relationships. Further information on risks in
conjunction with financial instruments is provided in
note 43 to the Group Financial Statements.
Liquidity risks
Based on experience gained during the financial crisis,
a minimum liquidity concept has been developed and
is rigorously adhered to. Solvency is assured at all times
throughout the BMW Group by maintaining a liquidity
reserve and by the broad diversification of refinancing
sources. The liquidity position is monitored continu-
ously at a separate entity level and managed by means
Risks and opportunities relating to raw materials
Changes in prices of raw materials are monitored on the
basis of a set of well-defined management procedures.
The principal objective of these management processes
is to increase planning reliability for the BMW Group.
79 COMBINED MANAGEMENT REPORT
If liquidity risks were to materialise, they are only likely
to result in a low impact on the BMW Group's results
of operations over the two-year assessment period.
The risk of incurring liquidity risk is classified as low-
including the risk of the BMW Group's rating being
downgraded and any ensuing deterioration in financing
conditions.
If the relevant recognition criteria are fulfilled, deriva-
tives used by the BMW Group are accounted for as
hedging relationships. Further information on risks in
conjunction with financial instruments is provided in
note 43 to the Group Financial Statements.
Risks and opportunities relating to Financial Services
The categories of risk relating to the provision of finan-
cial services are credit and counterparty risk, residual
value risk, interest rate risk, liquidity risk and opera-
tional risk. In order to evaluate and manage these risks,
a variety of internal methods has been developed
based on regulatory environment requirements (such
as Basel III) and which comply with both national and
international standards. A set of strategic principles
and rules derived from regulatory requirements serves
as the basis for risk management within the Financial
Services segment. At the heart of the risk management
process is a clear division between front- and back-of-
fice activities and a comprehensive internal control sys-
tem. The key risk management tool employed within
the Financial Services segment is aimed at ensuring
that the Group's risk-bearing capacity is not exceeded.
In this context, all risks (defined as "unexpected losses")
must be covered at all times by an appropriate asset
cushion in the form of equity capital. Unexpected losses
are measured using a variety of value-at-risk techniques,
adapted to each relevant risk category. Risks are aggre-
gated after taking account of correlation effects. The
total amount of risks calculated in this way is then com-
pared with the resources available to cover risks (asset
cushion). The segment's risk-bearing capacity is moni-
tored continuously with the aid of an integrated limit
system which also differentiates between the various risk
categories. The segment's total risk exposure was
covered at all times during the past year by the available
risk-coverage volumes.
Credit and counterparty risks and opportunities
Credit and counterparty default risk arises within the
Financial Services segment if a contractual partner (i.e.
a customer or dealer) either becomes unable or is only
partially able to fulfil its contractual obligations, such
that lower income is generated or losses incurred. The
Financial Services segment uses a variety of rating
systems in order to assess the creditworthiness of its
contractual partners. Credit risks are managed at the
time of the initial credit decision on the basis of a calcu-
lation of the present value of standard risk costs and
subsequently, during the term of the credit, by using a
range of risk provisioning techniques to cover risks
emanating from changes in customer creditworthiness.
In this context, individual customers are classified by
category each month on the basis of their current con-
tractual status,
and appropriate levels of allowance
recognised in accordance with that classification. If
economies develop more favourably than assumed in
the outlook, there is a chance that credit losses may be
reduced and earnings improved accordingly.
If credit and counterparty risks were to materialise, they
could have a medium impact on the BMW Group's
results of operations over the two-year assessment pe-
riod. The level of risk attached to credit and counter-
party risks is classified as high. The BMW Group classi-
fies potential opportunities in this area as material.
of cash flow requirements and sourcing forecast sys-
tem in place throughout the Group. Liquidity risks may
be reflected in rising refinancing costs. They may also
manifest themselves in restricted access to funds as a
consequence of the general market situation or the de-
fault of individual banks. The major part of the Finan-
cial Services segment's credit financing and lease busi-
ness is refinanced on capital markets. Thanks to its
excellent creditworthiness, the BMW Group has good
access to financial markets and, as in previous years,
was able to raise funds at good conditions in 2014, re-
flecting a diversified refinancing strategy and the solid
liquidity and earnings base of the BMW Group. Inter-
nationally recognised rating agencies have additionally
confirmed the BMW Group's solid creditworthiness.
If the relevant recognition criteria are fulfilled, deriva-
tives used by the BMW Group are accounted for as
hedging relationships. Further information on risks in
conjunction with financial instruments is provided in
note 43 to the Group Financial Statements.
over the two-year assessment period. A high level of
risk is attached to currency risks. Significant opportuni-
ties can arise if currency developments are favourable
for the BMW Group.
If currency risks were to materialise, they could have a
high impact on the BMW Group's results of operations
of BMW AG
64 Events after the End of the
Reporting Period
65-Report on Outlook, Risks and
Opportunities
65 Outlook
70-Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
services and apps on offer to customers through BMW
ConnectedDrive is constantly being expanded and up-
dated.
The opportunities arising from the deployment of infor-
mation technology are not expected to have a material
positive impact during the two-year assessment period
compared to the assumptions made in the outlook.
management within the BMW Group. The duties, re-
sponsibilities, and tasks of the centralised risk manage-
ment unit and network representatives are clearly
described, documented and acted on. Group risk manage-
ment is geared towards meeting the following three
criteria: effectiveness, usefulness and completeness. In
view of the dynamic growth of business in recent years,
in-house thresholds and rules in place for risk reporting
purposes were reviewed in 2014 for effectiveness and
usefulness and modified as seen appropriate. In addition,
the design of the BMW Group's risk management net-
work was reviewed on the basis of the framework of the
internationally recognised Committee of Sponsoring
Organizations of the Treadway Commission (COSO). This
review was carried out in conjunction with the Com-
pliance Committee, Group Internal Audit, Internal
Control System and overall Group risk management
functions. Appropriate measures are in place to ensure
that these functions are coordinated seamlessly.
Currency risks and opportunities
As an internationally operating enterprise, the BMW
61 Comments on Financial Statements Group conducts business in a variety of currencies, thus
giving rise to currency risks and opportunities. Since a
substantial portion of Group revenues is generated out-
side the eurozone (particularly in China and the USA)
and the procurement of production material and funding
is also organised on a worldwide basis, fluctuations in
exchange rates can play a significant role for Group
earnings. Cash-flow-at-risk models and scenario analyses
are used to measure currency risks and opportunities.
Operational currency management is based on the results
provided by these tools. In 2014 the Chinese renminbi,
the US dollar, the British pound, the Russian rouble and
the Japanese yen constituted approximately 75% of the
total foreign currency exposure of the BMW Group, with
the Chinese renminbi and the US dollar accounting for
the lion's share of foreign currency transactions. The
BMW Group manages currency risks at both strategic
(medium and long term) and operating level (short
and medium term). Medium- and long-term measures
include increasing production volumes in non-euro-
region countries (natural hedging) and increasing pur-
chase volumes denominated in foreign currencies.
Constructing new plants in countries such as the USA,
China or Brazil have also helped reduce foreign cur-
rency exposures. Currency risks are managed in the
short to medium term and for operational purposes by
means of hedging. Hedging transactions are entered
into only with financial partners of good credit standing.
Opportunities are also secured through the deployment
of options. A description of the methods applied for
risk measurement and hedging is provided in note 43
to the Group Financial Statements. Counterparty risk
management procedures are carried out continuously
in order to monitor the creditworthiness of business
partners.
Residual value risks and opportunities
49 Results of Operations, Financial
Position and Net Assets
Risks and opportunities arise at the end of the contrac-
tual term of a lease if the market value of the leased vehi-
cle differs from the residual value calculated at the in-
ception of the lease and factored into the lease payments.
18-COMBINED MANAGEMENT REPORT
If residual value risks were to materialise, they could have
a high impact on Group earnings over the two-year
assessment period. The impact on the segments affected
would be on a medium scale. The level of risk is classi-
fied as high for the Group as a whole. The BMW Group
classifies potential residual value opportunities as
material.
Interest rate risks and opportunities
Interest rate risks in the Financial Services segment relate
to potential losses caused by changes in market interest
rates and can arise when fixed interest rate periods for
assets and liabilities recognised in the balance sheet do
not match. Interest rate risks in the Financial Services
line of business are managed by raising refinancing funds
with matching maturities and by employing interest rate
derivatives.
If interest rate risks were to materialise, they are only
likely to result in a low impact on the BMW Group's
results of operations over the two-year assessment
period. The level of risk attached to interest rate risks
is classified as medium.
The BMW Group classifies potential interest rate oppor-
sent value of risk costs. Market developments are ob-
served throughout the contractual period and the risk
assessment updated appropriately.
tunities as material.
Use of the "matched funding principle" to finance the
Financial Services segment's operations eliminates
liquidity risks to a large extent. Regular measurement
and monitoring ensure that cash inflows and outflows
from transactions in varying maturity cycles and curren-
cies offset each other. The relevant procedures are in-
corporated in the BMW Group's target liquidity concept.
Operational risks are defined in the Financial Services
segment as the risk of losses arising as a consequence of
the inappropriateness or failure of internal procedures
(process risks), people (personnel-related risks), systems
(infrastructure and IT risks) and external events (exter-
nal risks). These four categories of risk also include re-
lated legal and reputation risks. The comprehensive re-
cording and measurement of risk scenarios, loss events
and countermeasures in the Operational Risk Manage-
ment Suite (OpRisk-Suite) provides the basis for a system-
atic analysis and management of potential and/or actual
operational risks. Annual self-assessments are also car-
ried out.
If operational risks were to materialise, they are only
likely to result in a low impact on the BMW Group's
results of operations over the two-year assessment
period. The level of risk attached to operational risks
is classified as medium.
Legal risks
Compliance with the law is a basic prerequisite for the
success of the BMW Group. Current law provides the
binding framework for the BMW Group's various busi-
ness activities around the world. The growing interna-
tional scale of operations of the BMW Group, the com-
plexity of the business world and the whole gamut of
complex legal regulations increase the risk of laws not
being adhered to, simply because they are not known or
fully understood.
The BMW Group has established a Compliance Organi-
sation aimed at ensuring that its representative bodies,
managers and staff act in a lawful manner at all times.
Further information on the BMW Group's Compliance
Organisation can be found in the section “Corporate
Governance".
Liquidity and operational risks
87 BMW Stock and Capital Markets
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
70-Report on Risks and Opportunities
82 Internal Control System and Risk
A residual value risk exists if the expected market value
of the vehicle at the end of the contractual term is lower
than its residual value at the date the contract is entered
into. Each vehicle's market value is forecast on the basis
of historical external and internal data and used to pre-
dict the expected market value of the vehicle at the end
of the contractual period. As part of the process of
managing residual value risks, a calculation is performed
26 Overall Assessment by Management at the inception of each contract to determine the pre-
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65-Report on Outlook, Risks and
Opportunities
65 Outlook
80
29 Review of Operations
Financial risks and opportunities
26 Overall Assessment by Management
26 Financial and Non-financial
18-COMBINED MANAGEMENT REPORT
Performance Indicators
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
76
26 Financial and Non-financial
29 Review of Operations
49 Results of Operations, Financial
Opportunities relating to sales and marketing
Opportunities may arise due to other technical innova-
tions relating to products and processes and as a result
of organisational changes. In the field of lightweight
construction, for example, carbon was being put to use
in high volumes for the first time in the automobile in-
dustry in the construction of the BMW i3.
26 Overall Assessment by Management Since carbon could also be used in other vehicle projects,
we see further competitive advantages in terms of fuel
consumption and driving dynamics, which could, in
turn, have a positive impact on sales volume growth. The
61 Comments on Financial Statements opportunities will not have a material impact over the
assessment period on the results of operations of the
BMW Group.
Position and Net Assets
of BMW AG
Performance Indicators
64 Events after the End of the
If sales and marketing risks were to materialise, they
could have a high impact on the BMW Group's results
of operations over the two-year assessment period. The
level of risk attached to sales and marketing risks is
classified as high.
Risks relating to sales and marketing
70-Report on Risks and Opportunities Remaining on growth course depends above all else on
the ability to develop innovative products and bring
them to market. The launching of the BMW i brand opens
up new customer target groups for the BMW Group and
consolidates the position of BMW as a sustainable and
forward-looking brand. BMW i products can be seen as
"empowerment projects" for new technologies and pro-
cesses, which will also benefit other vehicle concepts.
The existing product portfolio has been expanded by the
addition of mobility services such as DriveNow, Charge-
Now and ParkNow. The general acceptance of, and
sales volumes generated with, planned future product
innovations could be better than predicted in the out-
look. In the short term, however, any potential positive
impact is classified as not material.
The long-term trend towards greater sustainability pro-
vides opportunities to boost sales of sustainable prod-
ucts and, under the right circumstances, achieve better
selling prices. Innovations - such as the BMW i3 and 18
in the field of electromobility or Efficient Dynamics
across the entire BMW Group product portfolio - pro-
vide excellent platforms for future growth. Potential
is also seen by engaging in new product and market
categories and by developing new customer target
groups. New business models and cooperation arrange-
ments with the BMW Group's growing network of
business partners often provide the best means to take
advantage of these opportunities. Good examples of
this are the implementation of the 360°ELECTRIC port-
folio in the field of electromobility, the partnership with
SIXT in the field of mobility services and collaboration
with Toyota on a hydrogen fuel cell system.
The BMW Group is constantly refining the tools it uses
to recruit employees, encourage career development and
bind employees to the enterprise. Within this environ-
ment, employees find the optimal situation in which to
develop their skills. If these measures generate greater
benefits than currently expected, the BMW Group's rev-
enues, results of operations and cash flows could be
positively impacted and forecasted figures surpassed.
Creating a successful performance culture and the devel-
opment of the expertise and skill sets of both staff and
managers alike throughout the organisation could also
have a positive impact on revenue and profitability.
Given the long lead times involved, the BMW Group's
earnings performance is unlikely to benefit over the as-
sessment period from efficiency improvements or from
the implementation of product and process developments
to a significantly greater extent than that already incor-
porated in the outlook.
Risks and opportunities relating to operations
Production and technology-related risks
Production stoppages and downtimes – in particular
due to fire, but also those attributable to manufacturing
equipment breakdowns, logistical disruptions or new
vehicle production line start-ups – represent risks which
the BMW Group counters with a broad range of appro-
priate measures. Production structures and processes
are designed from the outset with a view to reducing
potential damage and the probability of occurrence. In
addition to technical fire protection measures, the BMW
Group has implemented an array of strategies, including
preventative maintenance, land development measures
including contingencies against flooding, spare parts
management on a multi-site basis and backup plans
for alternative transportation. The level of risk is also
reduced by the deployment of flexible work-schedule
models and employee time accounts, but also by the
ability to build specific models at additional sites if
necessary. Moreover, risks arising from business inter-
ruption and loss of production as a consequence of fire
are also insured up to economically reasonable levels
with insurance companies of good credit standing.
If risks from the production and technology-related risks
category were to materialise, they could have a high im-
pact on the results of operations over the two-year as-
sessment period. The level of risk attached to prouction
and technology-related issues is classified as medium.
Changes in global economic conditions and increasingly
protectionist trends are among the factors that could
result in lower demand as well as fluctuations in the re-
gional spread and composition of sales in terms of vehi-
cles and mobility services. Risks relating to these
developments can be reduced with the aid of flexible
selling and production processes. At the same time, in-
creased pressure on selling prices and margins caused
by intense competition on the world's markets, particu-
larly in Western Europe, the USA and China, requires
constant analysis, including keeping an eye on develop-
ments in grey market volumes from the USA to China.
Selling price and margin risks are determined on the
basis of past experience and changing global economic
conditions, with risk exposures measured using a cash-
flow-at-risk model.
75 COMBINED MANAGEMENT REPORT
Compared to the outlook, efficiency improvements are
unlikely to have a significantly greater impact over
the two-year assessment period than that already incor-
porated in the outlook.
Purchasing risks
Close cooperation between carmakers and automotive
suppliers creates economic benefits on the one hand,
but also raises levels of dependency on the other. The
increasing trend towards modular-based production
with a set of common architectures covering various
models and product lines exacerbates the consequences
of the loss of a supplier or failure to supply on time.
As part of the supplier preselection process, the BMW
Group is careful to ensure that its future business part-
ners meet the same high ecological, social and corpo-
rate governance standards by which the BMW Group is
generally measured. Suppliers are assessed on the basis
of the BMW Group Sustainability Standard, which is
applied throughout our supplier network worldwide.
This set of fundamental principles and standards covers
both production and non-production aspects relevant
for the goods and services provided by suppliers, which
also includes compliance with internationally recognised
human rights and applicable labour and social stand-
ards. The principal tool for ensuring compliance with
the BMW Group Sustainability Standard is a three-
stage sustainability and risk management approach com-
prising a BMW Group-specific sustainability risk filter,
a sustainability questionnaire and a sustainability audit.
In addition, the technical and financial capabilities of
suppliers - especially those supplying for modular-based
production - are continuously monitored during both
the development and production phases of the Group's
vehicles. Particular attention is paid to the quality of the
parts. In order to attain the level of quality required, it
may become necessary to invest in new technological
concepts or discontinue planned innovations, with the
consequence that the cost of materials could exceed
levels incorporated in the outlook. Supplier sites are as-
sessed for exposure to natural hazards, such as floods
or earthquakes, in order to identify supply risks at an
early stage and implement appropriate countermeasures.
Production problems incurred by suppliers could have
adverse consequences for the BMW Group, ranging
from increased expenditure through to production in-
terruptions and a corresponding reduction in sales
volume.
Raw materials management procedures are in place to
mitigate the risk of a production interruption due to
shortages of supplies of critical raw materials. In order
to reduce supply risks, the BMW Group works hard
to reduce the input of raw materials or to use alternative
raw materials as a substitute.
If purchasing risks were to materialise, they could have
a high impact on the BMW Group's results of opera-
tions over the two-year assessment period. The level
of risk attached to supply risks is classified as high,
mainly due to the insufficient availability of raw materials
in Asia.
Production and technology-related opportunities
In addition to the risks involved, we firmly believe that
the choice of sites for new production facilities also
creates a wealth of opportunities. Selecting a new loca-
tion goes
hand in glove with the opportunity to shape
the local environment in a positive way (e.g. job crea-
tion, training, corporate social responsibility (CSR) pro-
jects). Our aim is to continue our commitment to sus-
tainability whenever a new site is selected. We therefore
endeavour to incorporate flagship projects at our pro-
duction sites that have a clear focus on sustainability
(e.g. wind turbines in Leipzig). The option of offsetting
capacities between BMW Group sites is always kept in
mind if production technologies can be employed to
achieve greater efficiency in the use of resources.
Reporting Period
18 General Information on the BMW Group
18 Business Model
Opportunities
The BMW Group could incur damage if the confiden-
tiality, integrity and/or availability of sensitive informa-
tion and data are not maintained. Great importance is
attached to the protection of business information and
of employee and customer data against unauthorised
access and/or misuse. Data security, based on Interna-
tional Security Standard ISO/IEC 27001, is an integral
component of all business processes. Personal data is
protected in accordance with the stringent requirements
of the EU Data Protection Directive and the Federal
Data Protection Act (Bundesdatenschutzgesetz - BDSG).
All employees are required to treat confidential infor-
mation (such as customer and employee data) in an ap-
propriate manner, ensure that information systems are
properly used and that risks are handled with the ut-
most transparency. Uniform requirements, documented
in a coordinated and comprehensive set of principles,
guidelines and work instructions, are applicable group-
wide. Regular communication and sensitisation-rais-
ing activities create a high degree of security and risk
awareness among the employees involved. Employees
receive training to ensure compliance with applicable
requirements and in-house rules.
Risk management procedures include systematic docu-
mentation of all information/data protection and IT
risks, regular monitoring and the implementation of
appropriate measures by the departments responsible.
Technical data protection procedures include virus scan-
ners, firewall systems, access controls at both operating
system and application level, regular data backups and
data encryption. Regular analyses and controls (in-
cluding the testing of data protection requirements) and
rigorous security management ensure a high level of
security.
Responsibility for data protection in each Group entity
lies with the Board of Management (of BMW AG) or
the relevant company management team. Local Data
Privacy Protection Officers are embedded in each of the
Group's entities. In the case of cooperation arrange-
ments and business partner relationships, the BMW
Group protects its intellectual property as well as cus-
tomer and employee data by stipulating clear instruc-
tions with regard to data protection and the use of
information technology. Information pertaining to key
areas of expertise as well as sensitive personal data
are subject to particularly stringent security measures.
In a clear signal to employees, customers and Europe's
data protection authorities that data protection is taken
very seriously, the Board of Management of BMW AG
resolved a set of Binding Corporate Rules (BCR) that
ensure the secure transfer of personal data throughout
the BMW Group's global organisation. The BMW Group
has become the first car manufacturer worldwide to
successfully complete the relevant BCR recognition pro-
cedures.
The requirements placed on IT facilities – both externally
and internally - are changing at a breathtaking pace in
the face of technological developments. Potential risks
are therefore investigated continuously and appropriate
measures put in place to prevent or minimise their im-
pact. Despite regular testing and the whole gamut of
preventative security measures employed, it is neverthe-
less impossible to rule out risks completely in this area.
The importance of electronically processed data con-
tinues to rise, with information technology (IT) playing
an increasingly crucial role in every aspect of the
business. These developments create opportunities on
the one hand, whilst also posing a source of risk on the
other.
If information, data protection and IT risks were to ma-
terialise, they are only likely to result in a minor impact
on the results of operations over the two-year assess-
ment period. The levels of risk attached to information,
data protection and IT risks are classified as medium.
78
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
65-Report on Outlook, Risks and
23 Report on Economic Position
23 General and Sector-specific
Environment
Information, data protection and IT opportunities
Conversely, the deployment of information technology
also
opens up many opportunities. New approaches
to production and energy supply systems that are cur-
rently being investigated in the context of "Industrie
4.0" are generating significant efficiency improvements
and resulting in greater sustainability. The: range
of
Information, data protection and IT risks
20 Management System
pen-
Further information on risks in conjunction with
sion provisions is provided in note 36 to the Group
Financial Statements.
65 Outlook
82 Internal Control System and Risk
Management System Relevant for the
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
The BMW Group focuses its selling capacities primarily
on markets with the greatest sales volume and revenue
Consolidated Financial Reporting Process potential and fastest growth rates. Investment in existing
and new marketing concepts is firmly aimed at inten-
sifying relationships with customers. A good example is
the new marketing concept for BMW i products and
services, which will be offered in selected markets in the
future via an innovative multi-channel model. There
will be no relaxing of efforts in the active search for new
opportunities to create even greater added value for
customers than currently expected, whilst at the same
time looking for ways to boost sales volumes and achieve
better selling prices. Developments in the field of digi-
tal communication and networking are also opening
up opportunities for marketing the BMW Group's
various brands. Consumers can meanwhile be reached
on a more targeted and individual basis, thus helping to
strengthen long-term relationships and brand loyalty.
The BMW Group keeps track of the latest developments
and trends in communication technology, including
the use of social media and networks, in order to extend
customer reach for its brands. Automotive-related busi-
ness activities of technology companies are also closely
followed (autonomous driving). The BMW Group's
brands are present on numerous platforms, such as
Facebook, YouTube and Twitter. Thanks to its intensive
efforts in this area, the BMW Group is registering faster
growth rates on the various platforms than its com-
petitors, measured in terms of the number of fans and
visits. The decisive advantage of digital communication
is that the brands are able to engage in a direct dia-
logue with customers and thus create a more intense
product and brand experience.
The BMW Group considers that these opportunities will
not have a material impact on the results of operations
over the two-year assessment period compared to the
assumptions made in the outlook.
70 - Report on Risks and Opportunities
The BMW Group's pension obligations to its employees
resulting from defined benefit plans are measured on
the basis of actuarial reports. Future pension payments
are discounted by reference to market yields on high-
quality corporate bonds. These yields are subject to mar-
ket fluctuation and therefore influence the level of pen-
sion obligations. Changes in other parameters, such as
rises in inflation and longer life expectancy, also impact
pension obligations and payments. Opportunities and
risks arise depending on the nature and scale of changes
in these parameters.
Most of the BMW Group's pension obligations are ad-
ministered in external pension funds or trust arrange-
ments and the related assets are kept separate from Com-
pany assets. The amount of funds required to finance
pension payments out of operations in the future is
therefore substantially reduced, since most of the Group's
pension obligations are settled out of pension fund as-
sets. The pension assets of the BMW Group comprise
interest-bearing securities, equities, real estate and other
investment classes. Pension fund assets are monitored
continuously and managed on a risk-and-yield basis.
A broad spread of investments also helps to reduce risk.
In order to reduce fluctuations in pension funding
shortfalls, investments are structured to coincide with
the timing of pension payments and the expected pat-
tern of pension obligations. Remeasurements on the
obligations and fund asset sides are recognised, net of
deferred taxes, in “Other comprehensive income” and
hence directly in equity (within revenue reserves).
If risks relating to pension obligations were to mate-
rialise, they could have a high impact on the BMW
Group's results of operations over the two-year assess-
ment period. The level of risk attached to risks relating
to pension obligations is classified as high.
Opportunities relating to pension obligations
Within a favourable capital market environment, the
return generated by pension assets may exceed expec-
tations and reduce the deficit of the relevant pension
plans. This, in turn, could have a materially favourable
77 COMBINED MANAGEMENT REPORT
Risks relating to pension obligations
impact on the net assets position and earnings perfor-
mance of the BMW Group.
-633
764
Currency translation foreign operations
-407
732
-48
-7
Other comprehensive income from equity accounted investments
-1,357
-2,194
Items expected to be reclassified to the income statement in the future
Financial instruments used for hedging purposes.
Deferred taxes
-706
Total comprehensive income attributable to minority interests
Total comprehensive income attributable to shareholders of BMW AG
Other comprehensive income for the period after tax
21-
-2,298
1,254
Total comprehensive income
3,519
6,583
19
26
35-
3,500
6,557
Prior year figures have been adjusted in accordance with IAS 8, see note 9.
8
318
40
601,995
936
Turbulent year for stock markets
International stock markets experienced broad fluctua-
tions in 2014, attributable primarily to the expansionary
monetary policies of the ECB and to political instability
in a number of countries.
At the beginning of the year, stock markets were bur-
dened by uncertainties surrounding the Ukraine crisis
and its likely negative economic impact. At the same
time, favourable economic data from Europe, the USA's
improved employment market and the US Reserve
Bank's continued policy of monetary expansion pro-
vided some positive momentum. Over the course of
the second and third quarters, the ECB's expansionary
monetary policies provided an additional boost. The in-
terest rate for the Eurosystem's main refinancing opera-
tions was reduced by 10 basis points in June to 0.15%
and by a further 10 basis points to 0.05% in September
and has remained at its new historical low since that
time. A state of nervousness prevailed on the world's
financial centres during the third quarter 2014. The
sharp loss in value of the rouble and the threat of state
bankruptcy in Ukraine caused the mood of investors
to deteriorate. In October the DAX fell to its low for the
year of 8,572 points. By the end of the year, however,
the more stable situation in the Ukraine crisis brought
about by agreement in the gas dispute with Russia,
combined with the fall in oil prices, helped markets to
steady and gather momentum. The DAX recorded a
Development of BMW stock compared to stock exchange
indices since 30 December 2009
in %
300
250
200
150
100
50
BMW
BMW
preferred stock common stock
295.0
Prime
Automobile
DAX
282.3
274.4
164.6
new all-time high of 10,087 points on 5 December,
before closing on the last day of trading below its high
level for the year at 9,806 points, thus achieving a gain of
254 points (+2.7%) over the volatile twelve-month period.
The EURO STOXX 50 recorded a gain of 1.2% in 2014
and closed on 31 December at 3,146 points.
The Prime Automobile Index performed even better,
gaining 7.0% over the year under report to reach
1,490 points.
After a weak start to the year, BMW common stock sub-
sequently climbed to a new high of €95.51 in June. After
falling back to a low for the year of €77.41 in October,
it returned to an upward trend in the fourth quarter and
finished the year at €89.77, 5.3% higher than one year
earlier. BMW preferred stock gained 9.3% in value com-
Development of BMW stock compared to stock exchange indices
(Index: December 2009 = 100)
325
300
275
BMW stocks rose to a new all-time high of €95.51 per
share of common stock in 2014. The BMW Group
continues to have the best ratings in the European
automobile sector, enabling it to continue benefiting
from excellent access to international capital markets.
250
BMW Stock and Capital Markets in 2014
The BMW Group has not concluded any compensation
agreements with members of the Board of Management
or with employees for situations involving a takeover
offer.
extraordinary right of termination which triggers the
immediate settlement of all current transactions in
the event that the creditworthiness of the party in-
volved is materially weaker following a direct or indi-
rect acquisition of beneficially owned equity capital
which confers the power to elect a majority of the
Supervisory Board of a contractual party or any other
ownership interest that enables the acquirer to exer-
cise control over a contractual party or which consti-
tutes a merger or a transfer of net assets.
Financing agreements in place with the European
Investment Bank (EIB) entitle the EIB to request early
repayment of the loan in the event of an imminent
or actual change in control at the level of BMW AG
(partially in the capacity of guarantor and partially in
the capacity of borrower), if the EIB has reason to as-
sume - after the change of control has taken place or
30 days after it has requested to discuss the situation -
that the change in control could have a significant
adverse impact, or, in all but one case, as an additional
alternative, if the borrower refuses to hold such dis-
cussions. A change in control of BMW AG arises if
one or more individuals take over or lose control of
BMW AG, with control being defined in the above-
mentioned financing agreements as (i) holding or
having control over more than 50% of the voting
rights, (ii) the right to stipulate the majority of the
members of the Board of Management or Supervisory
Board, (iii) the right to receive more than 50% of
dividends payable, and, in all but one case, as an ad-
ditional alternative (iv) other comparable controlling
influence over BMW AG.
BMW AG is party to an agreement with SGL Carbon
SE, Wiesbaden, relating to the joint operations SGL
Automotive Carbon Fibers LLC, Delaware, USA and
SGL Automotive Carbon Fibers GmbH & Co. KG,
Munich. The agreement includes call and put rights
in case - either directly or indirectly - 50% or more of
the voting rights relating to the relevant other share-
holder of the joint operations are acquired by a third
party, or if 25% of such voting rights have been ac-
quired by a third party if that third party is a com-
petitor of the party that has not been affected by the
acquisition of the voting rights. In the event of such
acquisitions of voting rights by a third party, the non-
86
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
affected shareholder has the right to purchase the
shares of the joint operations from the affected share-
holder or to require the affected party to acquire the
other shareholder's shares.
An engine supply agreement between BMW AG and
Toyota Motor Europe SA relating to the sale of diesel
engine entitles each of the contractual parties to give
extraordinary notification of termination in the event
that one of the contractual parties merges with an-
other company or is taken over by another company.
Compensation agreements with members of the
61 Comments on Financial Statements Board of Management or with employees in the event
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83-Disclosures Relevant for Takeovers
and Explanatory Comments
87-BMW Stock and Capital Markets
of a takeover bid
87 COMBINED MANAGEMENT REPORT
-
225
175
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87-BMW Stock and Capital Markets
employees in 2014 as part of this Programme.
In this context, and with the approval of the Supervisory
Board, BMW AG's share capital was increased by the
Board of Management by €239,757 from €656,254,983
to €656,494,740 by the issue of 239,757 new non-voting
BMW stock
shares of preferred stock. This increase was executed on
the basis of Authorised Capital 2014 in Article 4 (5) of
the Articles of Incorporation. The new shares of pre-
ferred stock carry the same rights as existing shares of
preferred stock and were issued to enable employees
to obtain an equity participation in the company. In ad-
dition, 20 shares of preferred stock were bought back
via the stock market in order to service the Employee
Share Programme.
Dividend increase
year,
In view of the strong earnings performance for the
the Board of Management and the Supervisory Board
will propose to the Annual General Meeting to use
BMW AG's unappropriated profit of €1,904 million to
pay a dividend of €2.90 for each share of common stock
(2013: €2.60) and a dividend of €2.92 for each share of
preferred stock (2013: €2.62), giving a distribution rate
of 32.7% for 2014 (2013: 32.0%).
2014
2013
2012
.2011
2010
Common stock
Number of shares in 1,000
601,995
601,995
601,995
601,995
Stock exchange price in €¹
Year-end closing price-
89.77
85.22
Reporting Period
200
64 Events after the End of the
Position and Net Assets
150
125
100
10
11
12
BMW preferred stock
BMW common stock
Prime Automobile
DAX
13
14
BMW preferred stock
BMW common stock
Prime Automobile
DAX
88
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
pared to its closing price at the end of the previous year.
Its price at the end of the stock market year was €67.84.
A new all-time high of €74.60 was recorded in July. At
the end of 2014, the BMW Group had a market capitali-
sation of approximately €58 billion, making it one of the
Top 10 of the most valuable stock corporations listed in
Germany.
26 Overall Assessment by Management Employee Share Programme
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
BMW AG has enabled its employees to participate in its
success for more than 40 years. Since 1989, this participa-
tion has taken the form of an Employee Share Programme.
61 Comments on Financial Statements In total, 239,777 shares of preferred stock were issued to
49 Results of Operations, Financial
of BMW AG
-72.93
A cooperation agreement concluded with Peugeot SA
relating to the joint development and production of
a new family of small (1 to 1.6 litre) petrol-driven en-
gines entitles each of the cooperation partners to give
extraordinary notification of termination in the event
of a competitor acquiring control over the other con-
tractual party and if any concerns of the other con-
tractual party concerning the impact of the change
of control on the cooperation arrangements are not
allayed during the subsequent discussion process.
BMW AG acts as guarantor for all obligations arising
from the joint venture agreement relating to BMW
Brilliance Automotive Ltd. in China. This agreement
grants an extraordinary right of termination to either
joint venture partner in the event that, either directly
or indirectly, more than 25% of the shares of the
other party are acquired by a third party or the other
party is merged with another legal entity. The termi-
nation of the joint venture agreement may result in
the sale of the shares to the other joint venture part-
ner or in the liquidation of the joint venture entity.
- Framework agreements are in place with financial in-
stitutions and banks (ISDA Master Agreements) with
respect to trading activities with derivative financial
instruments. Each of these agreements includes an
The BMW AG is party to the following major agreements
which contain provisions for the event of a change in
control or the acquisition of control as a result of a take-
over bid:
risk management system, as far as they relate to individ-
ual entity and Group financial reporting processes, are
described below.
Information and communication
One component of the internal control system is that of
"Information and Communication". It ensures that all
the information needed to achieve the objectives set for
the internal control system is made available to those
Consolidated Financial Reporting Process responsible in an appropriate and timely manner. The
70 Report on Risks and Opportunities
82-Internal Control System and Risk
Management System Relevant for the
83-Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
requirements relating to the provision of information
relevant for financial reporting at the level of BMW AG,
other consolidated Group entities and the BMW Group
are primarily set out in organisational manuals, in guide-
lines covering internal and external financial reporting
issues, in accounting manuals and through training.
These instructions, which can be accessed at all levels
via the BMW Group's intranet system, provide the frame-
work for ensuring that the relevant rules are applied
consistently throughout the Group. The quality and
relevance of these instructions are ensured by regular
review as well as by continuous communication between
the relevant departments.
Organisational measures
All financial reporting processes (including Group finan-
cial reporting processes) are structured in organisational
terms in accordance with the principle of segregation
of duties. These structures allow errors to be identified at
an early stage and prevent potential wrongdoing. Regu-
lar comparison of internal forecasts and external financial
reports improves the quality of financial reporting. The
internal audit department serves as a process-inde-
pendent function, testing and assessing the effectiveness
of the internal control system and proposing improve-
ments when appropriate.
Controls
Extensive controls are carried out by management in all
financial reporting processes at an individual entity and
Group level, thus ensuring that legal requirements and
internal guidelines are complied with and that all busi-
ness transactions are properly executed. Controls are
also carried out with the aid of IT applications, thus re-
ducing the incidence of process risks.
IT authorisations
All IT applications used in financial reporting processes
throughout the BMW Group are subject to access restric-
tions, allowing only authorised persons to gain access
to systems and data in a controlled environment. Access
authorisations are allocated on the basis of the nature
of the duties to be performed. In addition, IT processes
are designed and authorisations allocated using the dual
control principle, as a result of which, for instance, re-
quests cannot be submitted and approved by the same
person.
Internal control training for employees
All employees are appropriately trained to carry out
their duties and kept informed of any changes in regu-
lations or processes that affect them. Managers and
staff also have access to detailed best-practice descrip-
tions relating to risks and controls in the various pro-
cesses, thus increasing risk awareness at all levels.
As a consequence, the internal control system can be
evaluated regularly and further improved as necessary.
Employees can, at any time and independently, deepen
their understanding of control methods and design
using an information platform that is accessible through-
out the entire Group.
Evaluating the effectiveness of the internal
control system
Responsibilities for ensuring the effectiveness of the
internal control system in relation to individual entity
and Group financial reporting processes are clearly de-
fined and allocated to the relevant managers and pro-
cess owners. The BMW Group assesses the design and
effectiveness of the internal control system on the basis
of internal review procedures (e.g. management self-
audits, internal audit findings). Continuous revision
and further development of the internal control system
ensure its continued effectiveness. Group entities are
required to confirm regularly as part of their reporting
duties that the internal control system is functioning
properly. Effective measures are implemented when-
ever weaknesses are identified and reported.
*Disclosures pursuant to §289 (5) HGB and §315 (2) no. 5 HGB.
83 COMBINED MANAGEMENT REPORT
Disclosures Relevant for Takeovers and Explanatory Comments
Composition of subscribed capital
The subscribed capital (share capital) of BMW AG
amounted to €656,494,740 at 31 December 2014 (2013:
€656,254,983) and, in accordance with Article 4 no. 1
of the Articles of Incorporation, is sub-divided into
601,995,196 shares of common stock (91.70%) (2013:
601,995,196; 91.73%) and 54,499,544 shares of non-
voting preferred stock (8.30%) (2013: 54,259,787; 8.27%),
each with a par value of €1. The Company's shares
are issued to bearer. The rights and duties of share-
holders derive from the German Stock Corporation
Act (AktG) in conjunction with the Company's Articles
of Incorporation, the full text of which is available at
www.bmwgroup.com. The right of shareholders to have
their shares evidenced is excluded in accordance with
the Articles of Incorporation. The voting power at-
tached to each share corresponds to its par value. Each
€1 of par value of share capital represented in a vote
entitles the holder to one vote (Article 18 no. 1 of the
Articles of Incorporation). The Company's shares of pre-
ferred stock are shares within the meaning of § 139 et
seq. AktG, which carry a cumulative preferential right
in terms of the allocation of profit and for which voting
rights are normally excluded. These shares only confer
voting rights in exceptional cases stipulated by law, in
particular when the preference amount has not been
paid or has not been fully paid in one year and the ar-
rears are not paid in the subsequent year alongside the
full preference amount due for that year. With the ex-
ception of voting rights, holders of shares of preferred
stock are entitled to the same rights as holders of shares
of common stock. Article 24 of the Articles of Incorpo-
ration confers preferential treatment to the non-voting
shares of preferred stock with regard to the appropria-
tion of the Company's unappropriated profit. Accord-
ingly, the unappropriated profit is required to be
priated in the following order:
1 Disclosures pursuant to § 289 (4) HGB and §315 (4) HGB.
appro-
Outlook
(a) subsequent payment of any arrears on dividends on
non-voting preferred shares in the order of accrue-
ment,
65
65 Report on Outlook, Risks and
particularly regarding the US market, is insured where
this makes business sense. Some risks, however, cannot
be assessed in full or completely defy assessment. It
cannot be ruled out that losses from damages could
arise which are either not covered or not fully covered
by insurance policies or provisions.
Available-for-sale securities
81 COMBINED MANAGEMENT REPORT
The high quality of the Group's products, which is en-
sured by regular quality audits and ongoing improvement
measures, helps to reduce this risk. In comparison with
competitors, this can give rise to benefits and opportu-
nities for the BMW Group.
If legal risks were to materialise, they are only likely to
have a low impact on the BMW Group's results of opera-
tions over the two-year assessment period. The level of
risk attached to legal risks is classified as low. This assess-
ment also includes consideration of risks arising from
ongoing court and arbitration proceedings. However, it
cannot be ruled out that new legal risks, as yet uniden-
tified, could materialise which could have a high impact
on the BMW Group's results of operations and financial
condition.
Overall assessment of the risk and
opportunities situation
The overall risk assessment is based on a consolidated
view of all significant individual risks and opportunities.
In view of the growing level of strategic and sector-spe-
cific risks, the overall risk situation for the BMW Group
has increased marginally compared to the previous year.
In addition to the risk categories described above, it is
possible that unforeseeable events could have an ad-
verse impact on the BMW Group's results of operations,
financial position and net assets as well as its reputation.
We have created a comprehensive risk management
system that ensures we can master risks. In addition,
the opportunities described above could potentially
help the BMW Group to achieve its targets and fore-
casts.
-
From today's perspective, management does not see any
threat to the BMW Group's going-concern status. As
in the previous year, identified risks are considered to
be manageable, but could – just like opportunities -
have an impact on the BMW Group's forecasts if they were
to materialise. The BMW Group's liquidity is stable and
all cash requirements are currently covered by available
funds and accessible credit lines.
82
Internal Control System and Risk Management System Relevant for the
Consolidated Financial Reporting Process
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
The internal control system in place throughout the
BMW Group is aimed at ensuring the effectiveness of
operations. It makes an important contribution towards
ensuring compliance with the laws that apply to the
BMW Group as well as providing assurance on the pro-
priety and reliability of internal and external financial
reporting. The internal control system is therefore a sig-
nificant factor in the management of ]
process risks. The
26 Overall Assessment by Management principal features of the internal control system and the
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
Opportunities
- An agreement concluded with an international con-
sortium of banks relating to a syndicated credit line
(which was not being utilised at the balance sheet
date) entitles the lending banks to give extraordinary
notice to terminate the credit line (such that all out-
standing amounts, including interest, would fall due
immediately) if one or more parties jointly acquire
direct or indirect control of BMW AG. The term "con-
trol" is defined as the acquisition of more than 50%
of the share capital of BMW AG, the right to receive
more than 50% of the dividend or the right to direct
the affairs of the Company or appoint the majority of
members of the Supervisory Board.
(b) payment of an additional dividend of €0.02 per €1
par value on non-voting preferred shares and
(c) uniform payment of any other dividends on shares
on common and preferred stock, provided the
shareholders do not resolve otherwise at the Annual
General Meeting.
When the Company issues non-voting shares of pre-
ferred stock to employees in conjunction with its
Employee Share Programme, these shares are subject
as a general rule to a Company-imposed vesting period
of four years, measured from the beginning of the
calendar year in which the shares are issued.
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
of BMW AG
There are no shares with special rights which confer
control rights.
61 Comments on Financial Statements System of control over voting rights when employees
participate in capital and do not exercise their control
rights directly
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
Like all other shareholders, employees exercise their
control rights pertaining to shares they have acquired
in conjunction with the Employee Share Programme
Consolidated Financial Reporting Process and/or the share-based remuneration programme
82 Internal Control System and Risk
Management System Relevant for the
83-Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
directly on the basis of relevant legal provisions and the
Company's Articles of Incorporation.
Statutory regulations and Articles of Incorporation
provisions with regard to the appointment and removal
of members of the Board of Management and changes
to the Articles of Incorporation
The appointment or removal of members of the Board
of Management is based on the rules contained in
§ 84 et seq. AktG in conjunction with § 31 of the German
Co-Determination Act (MitbestG).
Amendments to the Articles of Incorporation must
comply with § 179 et seq. AktG. All amendments must
be decided upon by the shareholders at the Annual
General Meeting (§ 119 (1) no. 5, § 179 (1) AktG). The
Supervisory Board is authorised to approve amend-
ments to the Articles of Incorporation which only affect
its wording (Article 14 no. 3 of the Articles of Incorpora-
tion). Resolutions are passed at the Annual General
Meeting by simple majority of shares unless otherwise
explicitly required by binding provisions of law or,
when a majority of share capital is required, by simple
majority of shares represented in the vote (Article 20
no. 1 of the Articles of Incorporation).
Authorisations given to the Board of Management in
particular with respect to the issuing or buying back of
shares
The Board of Management is authorised to buy back
shares and sell repurchased shares in situations specified
in § 71 AktG, e.g. to avert serious and imminent damage
to the Company and/or to offer shares to persons em-
ployed or previously employed by BMW AG or one of its
affiliated companies.
In accordance with the resolution passed at the Annual
General Meeting on 15 May 2014, the Board of Manage-
ment is also authorised – up to 14 May 2019 - to acquire
shares of non-voting preferred stock of the Company
via the stock exchange, up to a maximum of 1% of the
share capital existing at the date of the resolution. The
consideration paid by the Company per share of non-
voting preferred stock (excluding transaction costs) may
not be more than 10% above or below the market price
determined by the opening auction on the date of trad-
ing of the stock in the XETRA trading system (or a suc-
cessor system having a comparable function). Moreover,
the Board of Management is authorised to use the ac-
quired Company's own shares of non-voting preferred
stock for all legally admissible purposes, specifically in-
cluding the right to offer and transfer shares to persons
employed by the Company or one of its affiliated com-
panies up to a proportionate amount of €5 million of
share capital. The subscription rights of existing share-
holders to the new shares of preferred stock used for
the purpose stated above are excluded. The authorisa-
tions may also be exercised in parts on more than one
occasion.
In accordance with Article 4 no. 5 of the Articles of
Incorporation, the Board of Management is authorised
with the approval of the Supervisory Board - to in-
crease BMW AG's share capital during the period until
14 May 2019 by up to €4,760,243 for the purposes of an
Employee Share Programme by issuing new non-voting
shares of preferred stock, which carry the same rights
as existing non-voting preferred stock, in return for
cash contributions (Authorised Capital 2014). Existing
shareholders may not subscribe to the new shares. No
conditional capital is in place at the reporting date.
85 COMBINED MANAGEMENT REPORT
Significant agreements entered into by the Company
subject to control change clauses in the event of
a takeover bid
Performance Indicators
Restrictions on voting rights or the transfer of shares
As well as shares of common stock, the Company has
also issued non-voting shares of preferred stock. Fur-
ther information relating to this can be found above in
the section "Composition of subscribed capital”.
26 Overall Assessment by Management Shares with special rights which confer control rights
Environment
Contractual holding period arrangements also apply to
shares of common stock required to be acquired by
Board of Management members and certain senior de-
partment heads in conjunction with the share-based
remuneration programmes (Compensation Report of
the Corporate Governance section; note 20 to the Group
Financial Statements).
Direct or indirect investments in capital exceeding
10% of voting rights
Based on the information available to the Company, the
following direct or indirect holdings exceeding 10% of
the voting rights at the end of the reporting period were
held at the date stated²:
AQTON SE, Bad Homburg v. d. Höhe, Germany
Direct share of
voting rights (%)
Indirect share of
voting rights (%)
17.4
Stefan Quandt, Germany
17.4
Johanna Quandt, Germany
0.4
-16.4
Johanna Quandt GmbH, Bad Homburg v. d. Höhe, Germany
16.4
Johanna Quandt GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany
Susanne Klatten, Germany
16.4
-12.6
Susanne Klatten Beteiligungs GmbH, Bad Homburg v. d. Höhe, Germany
12.6
2 Based on voluntary balance notifications provided by the listed shareholders at 31 December 2014.
84
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
The voting power percentages disclosed above may have
changed subsequent to the stated date if these changes
were not required to be reported to the Company. Due to
the fact that the Company's shares are issued to bearer,
the Company is generally only aware of changes in
shareholdings if such changes are subject to mandatory
notification rules.
51.76
26 Financial and Non-financial
-High
-519
-469
-620
-535
90-GROUP FINANCIAL STATEMENTS
90- Income Statements
90-Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
Other financial result
Financial result
Profit/loss before tax
Income taxes
Net profit/loss
Attributable to minority interest
16-
-747
-206
-724
-263
-411
-85
-358
-88
8,707
7,893
15-
6,886
Interest and similar expenses
331
Other operating income
13-
-877
842
749
-742
Other operating expenses.
13-
-872
-875
-812
-831
Profit/loss before financial result
9,118
7,978
7,244
6,649
Result from equity accounted investments
14-
655
407
655
407
Interest and similar income
15-
-200
-183
303
-6,114
6,561
-2,890
8.83
8.08
18-
8.85
- 8.10
of Comprehensive Income
124 Notes to the Balance Sheet
Prior year figures have been adjusted in accordance with IAS 8, see note 9.
149 Other Disclosures
165 Segment Information
Statement of Comprehensive Income for Group
in € million
Note
2014
2013'
Net profit
5,817
5,329
Remeasurement of the net defined benefit liability for pension plans
36
-2,298
1,308
Deferred taxes
-706
58.85
-1,592
-372
Items not expected to be reclassified to the income statement in the future
18-
17-
Diluted earnings per share of preferred stock in €
Diluted earnings per share of common stock in €
-2,564
-2,365
-2,153
5,817
5,329
4,521
4,408
35
-19
Attributable to shareholders of BMW AG
5,798
-26
5,303
-7
-17
4,514
4,391
96 Group Statement of Changes in
Equity
Basic earnings per share of common stock in €
18-
8.83
- 8.08
98 Notes
Basic earnings per share of preferred stock in €
Dilutive effects
18-
8.85
- 8.10
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
-6,645
35-
-7,892
Low
59.08
48.69
-35.70
32.01
21.45
Key data per share in €
Dividend
Common stock
2.902
2.60
2.50
2.30
1.30
Preferred stock
2.922
2.62
2.52
2.32
1.32
Earnings per share of common stock³
8.83
8.086
-7.77
-7.45
4.91
Earnings per share of preferred stock 4
41.90
8.85
-45.98
64.65
-73.76
-73.52
-85.42
95.51
-7,257
64.80
-Low
-77.41
63.93
53.16
45.04
28.65
Preferred stock
Number of shares in 1,000
54,500
54,260
53,994
53,571
53,163
Stock exchange price in €¹
Year-end closing price.
67.84
62.09
48.76
36.55
38.50
74.60
- 49.23
8.106
-High
-7.47
in € million
Note
Group
2014
2013*
Automotive
(unaudited supplementary information)
2014
2013*
Revenues
Cost of sales
10-
80,401
Selling and administrative expenses
-75,173
-70,630
11—
-63,396
-60,791
-61,221
-57,778
Gross profit
17,005
-7.79
12
15,268
13,952
12,852
Income Statements for Group and Segments
Statement of Comprehensive Income for Group
-76,059
54.256
15.196
-13.98
Income Statements for Group and Segments
-12.38
-12.45
Equity
57.03
Cash flow 5
- 46.35
41.34
4.93
36.53
1 Xetra closing prices.
14.36
3 Annual average weighted amount.
GROUP FINANCIAL STATEMENTS
2 Proposed by management.
The BMW Group continued to keep analysts, private
and institutional investors, and rating agencies up to
date throughout 2014 by means of its regular quarterly
and year-end financial reports. In addition, numerous
one-to-one discussions, group discussions and road-
shows addressed a broad range of capital market partici-
pants. These activities also included roadshows for in-
vestors interested in socially responsible investment
(SRI) and wishing to incorporate sustainability criteria
in their investment decisions as well as a series of events
for debt capital investors and credit analysts. Communi-
cation focused primarily on the launch of numerous
new models, BMW i and alternative drive systems, and
developments on the Chinese market. In addition to
presenting new models (including the BMW i8 and the
2 Series Active Tourer) and arranging various events
and test drives in the USA and Europe, we also organised
a Capital Markets Day in China for analysts and investors.
90
The BMW Group continues to have the best ratings in
the European automobile sector. Since December 2013,
BMW AG has a long-term rating of A+ (stable outlook)
and a short-term rating of A-1 from the rating agency
Standard & Poor's. The equivalent ratings from the
rating agency Moody's were A2 (stable outlook) and P-1.
These rating assessments underline the BMW Group's
robust financial profile and solid creditworthiness.
Thanks to these attributes, the company not only has
good access to international capital markets, it also bene-
fits from attractive refinancing conditions, which are
particularly helpful for the BMW Group's financial ser-
vices business.
Intensive communication with capital markets
89 COMBINED MANAGEMENT REPORT
6 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
5 Cash inflow from operating activities of the Automotive segment.
BMW Group
4 Stock weighted according to dividend entitlements.
Ratings remain at top level
1,509,113
-1,655,961
9.7
1 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units).
3 EU-28.
Key financial performance indicators
5 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2011: 98,241 units, 2012: 150,052 units, 2013: 214,920 units, 2014: 287,466 units, 2015: 287,755 units).
6 Excluding Husqvarna, production up to 2013: 59,426 units.
4
BMW Group in figures
BMW Group
Profit before tax
2012
2011
4 Excluding Husqvarna, sales volume up to 2013: 59,776 units.
5.2
Financial Services segment
-1,341,296
5.9
3,848
2,279,503
1,933,647
342,008
-14.4
5.3
Motorcycles segment
Production volume6
-1,471,385
BMW
-110,360
-113,811
-110,127
-133,615
151,004
13.0
-1,196,610
New contracts with retail customers
2013
ROCE
2015 -Change in %
9.2
-0.4
-% (change in %pts)
-77.3
-73.7
63.0
61.7
-72.2
10.5
Motorcycles segment
ROCE
1.8
1,838,268
322,803
-4,495
2,165,566
-10.2
% (change in %pts)
-13.8
-85,536
-75,173
9.6
-70,630
9.4
€ million
-7,383
-7,803
-7,893
-8,707
9,224
5.9
2014
Automotive segment
€ million
63,229
-70,208
EBIT margin
-% (change in %pts)
-11.8
-10.8
Revenues
1,699,835
303,177
- 3,354
2,006,366
-100,306
1,738,160
Workforce at year-end¹
-105,876
-110,351
-116,324
-122,244
5.1
Automotive segment
BMW Group
Sales volume2
-1,845,186
1,963,798
2,117,965
-2,247,485
6.1
Fleet emissions in g CO2/km³
145
1,668,982
143
Key non-financial performance indicators
2015
202
Glossary
16.4
200 BMW Group Locations
204
Index
206
Change in %
Financial Calendar
Contacts
3
BMW Group in figures
2011
2012
2013
2014
207
-1,547,057
311,490
3,279
1,861,826
133
127
301,526
3,575
1,845,186
-1,655,138
305,030
3,630
1,963,798
1,811,719
302,183
- 4,063
2,117,965
1,905,234
338,466
5.2
12.0
-3,785
1,668,982
-6.8
6.1
Production volume
BMW 5
MINI
Rolls-Royce
-1,440,315
-294,120
3,725
Total 5
2,247,485
130
285,060
-3,538
-1,380,384
-2.3
Motorcycles segment
Sales volume4
104,286
106,358
-115,215
-123,495
-1,540,085
-136,963
Further non-financial performance figures
Automotive segment
Sales volume
BMW²
MINI
Rolls-Royce
Total²
10.9
21.8
9.3
9.8
-1,248
-949
-437
-65
-575
Profit before tax
-7,383
-7,803
-7,893
8,707
9,224
5.9
Automotive
6,823
-7,170
169
-71
44
58
-9,118
9,593
5.2
-7,244
-7,836
-8.2
9
-6,561
1,763
-79
1,643
-112
1,756
182
62.5
1,981
12.8
-19
-1,558
-6,886
7,523
Motorcycles
Eliminations
-1,103
-937
-527
-163
-664
Income taxes
37.0
Net profit
Earnings per share in €
-7.45/7.47
-2,692
5,111
-7.75/7.77
-2,564
-5,329
-8.08/8.10
BMW Group Ten-year Comparison
-2,828
6,396
-9.70/9.72
-2,890
5,817
8.83/8.85
-2,476
4,907
-7,978
-6,649
211
-164
41
6
-76
107
-179
67.3
Financial Services
-154
-1,790
-1,619
1,723
1,975
14.6
Other Entities
-168
3
1,561
31.6
-7,599
Eliminations
3,541
-3,741
4,170
4,659
11.7
Operating cash flow Automotive segment
-8,110
9,167
-9,964
-9,423
11,836
25.6
Revenues
- Automotive
Motorcycles
3,646
Depreciation and amortisation
-3.4
5,890
Financial Services segment
RoE
% (change in %pts)
29.4
21.2
20.0
-19.4
- Financial Services
20.2
Further financial performance figures
in € million
Capital expenditure
3,692
5,240
-6,711
6,100
0.8
Other Entities
Eliminations
68,821
6
.7
-7
-13,359
-14,405
-15,955
-17,057
5
-19,097
Profit before financial result (EBIT)
-8,018
-8,275
Automotive
Motorcycles
- Financial Services
Other Entities
-12.0
-7,477
45
15.2
20,599
-76,848
-76,059
-80,401
-92,175
14.6
63,229
1,436
-17,510
5
-70,208
-23,739
-1,490
-70,630
1,504
-19,874
-75,173
-85,536
13.8
-1,679
1,990
-18.5
-19,550
198
5
197 Auditor's Report
105
90
75
60
45
30
15
Profit before tax
in € million
8,275 7,978 9,118 9,593
9,800
7,000
5,600
4,200
2,800
1,400
11 ―12 13 14 -15
68.8
76.8
76.1
8,400
8,018
12 -13 14 -15
· 11
in € billion
2,450
2,100
1,750
1,400
1,050
700
350
11 -12 -13 -14 -15
1,669.0 1,845.2 1,963.8 2,118.0 2,247.5
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
(2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units,
2015: 282,000 units).
Profit before financial result
in € million
9,800
8,400
7,000
5,600
4,200
2,800
1,400
|||||
80.4
Revenues
92.2
-12 -13 -14 ―15
In 2015, the Board of Management and the Supervisory Board again conducted an in-depth review of the
corporate governance standards currently in place in the BMW Group as well as the rules set out in the German
Corporate Governance Code. In the most recent Declaration of Compliance issued in December 2015, both
boards decided that the BMW Group should comply with all of the recommendations issued by the German
Government Corporate Governance Code Commission on 12 June 2015, except for the disclosure of Board of
Management members' compensation in prescribed model tables, as the Supervisory Board is of the opinion
that these tables do not improve the clarity and comprehensibility of the Compensation Report. The wording
of the Declaration of Compliance is contained in the Corporate Governance Report.
Both the Personnel Committee and the Supervisory Board again asked the Board of Management to
describe the state of progress in implementing the BMW Group's diversity concept. This programme not only
relates to gender diversity, it also promotes both cultural diversity and a balanced mixture of age groups
among staff. The Board of Management also reported on the percentage of and development of female execu-
tives at various management levels within the Group and the targets determined by the Board of Management
for the two executive levels immediately below it. In addition, the Board of Management reported to the
Supervisory Board on measures to develop young talent for future strategic fields of expertise.
The Supervisory Board also consulted on the consequences of legislation relating to the equal participation
of women and men in management positions in Germany for the BMW Group's two boards. As its target for
the proportion of women on the Board of Management by 31 December 2016, the Supervisory Board
has stipulated that the Board of Management should continue to have at least one female member. Assuming
the Board of Management continues to comprise eight members, this would correspond to a ratio of at least
12.5%. The fact that the Supervisory Board considers it desirable to increase the proportion of women on the
board further supports the Board of Management's current raft of measures, which is also aimed at increasing
the proportion of women at the highest executive management levels of the BMW Group.
The legal minimum of 30 per cent of female and male members in the Supervisory Board that came into
force on 1 January 2016 is already being complied with, both in terms of the Supervisory Board in its entirety
and also for both shareholder and employee representatives.
The Supervisory Board decided upon specific appointment objectives for its own composition based on
a detailed composition profile, a description of which is provided in the Corporate Governance Report. In
line with a new recommendation contained in the German Corporate Governance Code, the appointment
objectives have been supplemented to include a maximum length of office on the Supervisory Board. Based
on a self-assessment, the Supervisory Board determined that its composition at 31 December 2015 complied
with its appointment objectives.
In the financial year 2015, the Personnel Committee took the decision to disburse any costs to current and
former members of the Board of Management that could arise in connection with a civil action brought by a
former supplier in the USA. As a former member of the Board of Management, I did not personally vote on
this resolution, which was taken as a precautionary measure.
Apart from this matter, there were no indications of possible conflicts of interest on the part of Supervisory
Board members in the financial year 2015. Significant transactions with Supervisory Board members and
other related parties as defined by IAS 24, including close relatives and intermediate entities, are monitored
in the form of quarterly requests for relevant information.
The Supervisory Board endeavours to assess and continuously improve the efficiency of its work, including
that of its committees. Once a year, the efficiency examination is dealt with as a separate agenda point, at
10
Further information on the compensation of Board of Management members is provided in the Compen-
sation Report (see section "Statement on Corporate Governance").
which the members of the Board of Management are not present. Preparations for the examination are
facilitated by means of a questionnaire. As a result of the efficiency examination, suggestions for additional
topics of report were made during the year under report.
Description of Presiding Board activities and committee work In order to work more efficiently and
prepare complex issues and decisions with greater thoroughness, the Supervisory Board has established a
Presiding Board and several committees. A description of the duties, composition and working procedures
of these committees is provided in the Corporate Governance Report.
The relevant chairmen reported at length on the status of Presiding Board and committee work at the
subsequent Supervisory Board meeting.
In a total of four meetings, the Presiding Board focused mainly on preparing topics for the meetings of
the full Supervisory Board, unless these fell under the remit of one of the committees. The treatment of more
extensive issues, such as the Long-term Business Forecast and the Annual Strategic Review, was prepared by
the Presiding Board on the basis of written and oral reports provided by Board of Management members and
senior department heads. The Presiding Board selected further topics of discussion for Supervisory Board
meetings and made suggestions to the Board of Management regarding items to be included in its reports to
the full Supervisory Board.
The Audit Committee held four meetings and three telephone conference calls during 2015. In those
telephone conference calls, the Audit Committee deliberated with the Board of Management on each of the
BMW Group's Quarterly Reports, prior to their publication. Representatives of the external auditors were
present during the telephone conference call held to present the Interim Financial Report for the six-month
period ended 30 June 2015. The report had been subjected to review by the external auditors.
The Audit Committee meeting held in spring 2015 was primarily dedicated to preparing the Supervisory
Board meeting at which the financial statements were examined. Prior to proposing KPMG AG Wirtschafts-
prüfungsgesellschaft for election as Company and Group auditor at the Annual General Meeting 2015, the
Audit Committee obtained a Declaration of Independence from the proposed auditor. The Audit Committee
also considered the scope and composition of non-audit services, including tax advisory services provided by
KPMG entities to the BMW Group. There were no indications of conflicts of interest, grounds for exclusion
or lack of independence on the part of the auditor.
The fee proposals for the audit of the year-end Company and Group Financial Statements 2015 and the
review of the six-month Interim Financial Report were deemed appropriate by the Audit Committee. Sub-
sequent to the Annual General Meeting 2015, the Audit Committee therefore appointed KPMG AG for the
relevant engagements and specified audit focus areas.
The Head of Group Controlling reported to the Audit Committee on the current risk profile and on risk
management processes and developments within the BMW Group.
The Head of Group Financial Reporting provided a description of various aspects of the internal control
system (ICS) underlying financial reporting and explained measures being taken to further improve the system.
Testing performed during the year under report did not highlight any material ICS weaknesses that could
jeopardise the system's effectiveness.
2.1
10.0
9.9/9.8
Each of the five Supervisory Board meetings in 2015 was attended on average by 95 per cent of its members,
a fact that can be corroborated by the analysis of attendance fees for individual members, as disclosed in the
Compensation Report. None of the members of the Supervisory Board took part in only half or less than half
of the meetings of the Supervisory Board, the Presiding Board or the committees to which the members
belong during their terms of office in the period under report.
9 REPORT OF THE SUPERVISORY BOARD
Again in 2015, the Personnel Committee and the full Supervisory Board examined both the structure and
the amount of compensation that Board of Management members receive. In addition to reviewing trends
in business performance and board compensation on a multi-year basis, consideration was also given to the
development of the remuneration of senior management and employees of BMW AG within Germany over the
course of time. An external compensation consultant, independent of both the Board of Management and
BMW AG, was called upon to provide expert advice and assist the Supervisory Board in the evaluation of DAX
compensation studies. After a careful review, the Supervisory Board concluded that the level of compen-
sation of board members, including pension entitlements, is appropriate and that the compensation system
has proved its worth. The Supervisory Board therefore resolved not to propose any changes to the system of
Board of Management compensation in 2015.
The Supervisory Board deliberated on the annual budget presented by the Board of Management for the
financial year 2016, including the main external influencing factors identified.
7,383
7,803 7,893 8,707 9,224
6
Norbert Reithofer - Chairman of the Supervisory Board
7 REPORT OF THE SUPERVISORY BOARD
Dear Shareholders,
Despite the volatile conditions prevailing on various markets, the BMW Group finished the financial year
2015 with another outstanding earnings performance, reaffirming its position as market leader in the
premium segment.
The BMW Group is now headed by Harald Krüger, who became the new Chairman of the Board of
Management on 13 May 2015. With this carefully planned generational change at the top of the Board of
Management, the Supervisory Board has not only ensured personnel continuity, it has also made an
important contribution to shaping the future strategy of the BMW Group.
198 OTHER INFORMATION
In a total of five meetings, the Supervisory Board deliberated at great length on the current business and
financial situation of the Group. Further topics of particular focus and consultation at Supervisory Board
meetings were corporate strategy (including a whole range of key topics involving the future shape of
business), corporate forecasts and the strategy and management of the Financial Services segment. In addi-
tion, decisions were taken regarding personnel changes on the Board of Management and with respect to
corporate governance.
Furthermore, the Supervisory Board attentively monitored the BMW Group's business performance,
both at scheduled meetings and at other times, as the need arose. In particular, the Board of Management
provided regular reports on current sales and workforce figures. The Chairman of the Board of Management
kept the Chairman of the Supervisory Board well informed, both promptly and directly, on the progress
of important business projects and plans of strategic significance. In addition to scheduled meetings,
Dr Friedrich Eichiner, member of the Board of Management responsible for Finance, and Dr Karl-Ludwig Kley,
the Chairman of the Supervisory Board's Audit Committee, consulted with each other directly at other times.
In its regular reports on the financial condition of the Group, the Board of Management provided infor-
mation on sales volume developments, market competition issues relevant for the Automotive and Motorcycles
segments, and changes in the size of the workforce. The Board of Management also dealt with questions re-
garding economic developments and the prospects of the world's key regions. On the Financial Services side
of the business, the Board of Management provided regular updates on new business with retail customers
and changes in the portfolio of contracts with dealerships and retail customers as well as the total volume of
business. In its regular reports on the financial condition of the Group, the Board of Management also
reported to the Supervisory Board on any variances from budget.
Major transactions and projects were highlighted in the Board of Management's reports on business
developments, and deliberated on in subsequent discussions. For example, the Supervisory Board was kept
informed of the status of acquisition projects, such as the joint acquisition of the navigation data provider
HERE in conjunction with other partners as well as the purchase of a leasing company in China. Furthermore,
the Board of Management reported on the BMW Group's compliance with emissions limits and confirmed
that no distinction is made between “dyno mode" and on-road testing when measuring the exhaust emissions
of BMW Group vehicles. Over the course of the year under report, the two boards discussed at length eco-
nomic developments and business performance in China. Other subjects of discussion were progress in the
field of electric mobility, product quality and customer satisfaction.
Furthermore, the Board of Management provided detailed information on both the ongoing status and
its plans for expanding capacities at various BMW Group production sites.
8
At the first Supervisory Board meeting of the year, the Board of Management presented the new and
updated models scheduled for market launch in the course of 2015.
One of the Supervisory Board meetings was held at the Landshut (Germany) site, at which the focus was
placed on purchasing strategy and the significance of BMW component-producing plants in terms of pur-
chasing and production. The Board of Management also elaborated on the requirements that result from the
distribution of sales volume and production sites across the world for the Group's purchasing team and
discussed with the Supervisory Board the measures necessary to establish a capable supplier base in growth
markets. During its visit to the plant, the Supervisory Board inspected the foundry as well as the production
facilities for electric motors and CFRP components.
The main topics discussed at a two-day meeting of the Supervisory Board held during the second half of
the year were business and product strategy as well as long-term corporate planning.
During the first part of the meeting, the Board of Management reported on the results of the annual
Number ONE corporate strategy review. The Board of Management also provided information on the planned
further development of the Group's vehicle portfolio and its intention to continue its collaboration with
Toyota. In view of the increasing regulation of toxic emissions on key markets, the two boards discussed the
challenges facing the Group in the field of alternative drive technologies going forward and the strategic
importance of electric mobility. The Board of Management also reported in depth on topics relating to the
changing market environment and potential business opportunities emerging in connection with digitalisation
and vehicle connectivity, and provided an overview of its plans and activities in this field. The Supervisory
Board also gathered facts and figures on the BMW lightweight construction strategy.
As part of a series of vehicle presentations, members of the Supervisory Board took the opportunity to
drive selected BMW and MINI models on a test track, including the latest BMW 7 Series. Furthermore, the
current state of progress of selected vehicle development projects was presented and explained to the
Supervisory Board.
In the second part of the meeting, the Supervisory Board deliberated at length on the long-term corporate
forecast presented by the Board of Management for the years 2016 to 2021. The Board of Management also
described various crisis scenarios to the Supervisory Board. The Supervisory Board lauded the management
team's efforts to keep a tight control over fixed costs. After thorough examination and lengthy discussion,
the Supervisory Board; gave the plans its formal approval.
The performance and strategic direction of the Financial Services segment as well as risk management
in this area were also reported on. The consequences of stricter regulation of financial services were also
discussed.
11
in thousand units
Main emphases of the Supervisory Board's monitoring and advisory activities The Supervisory Board
performed the duties charged to it in accordance with the law and the Articles of Incorporation with the
utmost care. Throughout the financial year 2015, the Supervisory Board closely monitored the BMW Group's
business performance and macroeconomic developments on important markets, diligently supervised the
governance of the Board of Management and advised it on significant projects and plans.
BMW Group in figures
169
168
168-STATEMENT ON CORPORATE GOVERNANCE (§ 289 a HGB)-
Segment Information
Other Disclosures
163
147
122 Notes to the Balance Sheet
Comprehensive Income
(Part of the Combined Management Report)
Notes to the Statement of
Notes to the Income Statement
113
98
Accounting Principles and Policies
Notes to the Group Financial Statements
98
Income Statements for Group and Segments
Statement of Comprehensive Income for Group
Balance Sheets for Group and Segments
Cash Flow Statements for Group and Segments
96 Group Statement of Changes in Equity
94
92
121
Information on the Company's Governing Constitution
Declaration of the Board of Management
and of the Supervisory Board pursuant to § 161 AktG
Company's Legal Representatives
Sales volume of automobiles*
196-Responsibility Statement by the
Compensation Report
Compliance in the BMW Group
Applied beyond Mandatory Requirements
Information on Corporate Governance Practices
Disclosures pursuant to the Act on Equal Gender Participation
of BMW AG and its Committees
Composition and Work Procedures of the Supervisory Board
Management of BMW AG and its Committees
Composition and Work Procedures of the Board of
188
184
182
181
176
174
Members of the Supervisory Board
Members of the Board of Management
170
90
90
171
87 BMW Stock and Capital Markets in 2015
27
23
23
20
Report on Economic Position
Management System
General Information on the BMW Group
18 Business Model
18
18-COMBINED MANAGEMENT REPORT-
14 STATEMENT OF THE CHAIRMAN OF THE
BOARD OF MANAGEMENT
3- BMW GROUP IN FIGURES
Contents
Motor Cars Limited
Rolls-Royce
MINI
B
M
THE NEXT
100 YEARS
90-GROUP FINANCIAL STATEMENTS
ANNUAL REPORT 2015
BMW
GROUP
Overall Assessment by Management
27
6- REPORT OF THE SUPERVISORY BOARD
29
Report on Risks and Opportunities
Outlook
29
68
Report on Outlook, Risks and Opportunities
Events after the End of the Reporting Period
Internal Control System and Risk Management System
Relevant for the Financial Reporting Process
Disclosures Relevant for Takeovers
Net Assets
Results of Operations, Financial Position and
Review of Operations
Indicators
Comments on Financial Statements of BMW AG
Financial and Non-financial Performance
General and Sector-specific Environment
88
83
81
63
63
62
49
59
Proceeds from new non-current other financial liabilities
5,298
-8,787
452
Proceeds from the issue of bonds
Repayment of bonds
Interest paid
-429
-733
-773
-1,009
108
-521
-1,073
-7,671
-4,814
Repayment of non-current other financial liabilities
-719
-1,042
-3,343
Change in current other financial liabilities
Change in commercial paper
-6,130
-4,682
-136
10,028
-41
-264
-5,836
5,913
5,927
-387
-458
-5,406
3,881
-253
-170
-7,524
-140
-297
Cash inflow/outflow from operating activities
- Investment in intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investments
Proceeds from the disposal of investments
Investments in marketable securities and term deposits
- Proceeds from the sale of marketable securities and from matured term deposits
Cash inflow/outflow from investing activities
Issue/buy-back of treasury shares
Payments into equity
Payment of dividend for the previous year
Intragroup financing and equity transactions
23
-15
-1,917
-1,715
-2,840
-4,299
4,094
Cash inflow/outflow from financing activities
31 December 2014
70
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
96
BMW Group
Group Statement of Changes in Equity
in € million
1 January 2014
Dividends paid
Net profit
Other comprehensive income for the period after tax
Comprehensive income 31 December 2014
113 Notes to the Income Statement
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
1 January 2015
Dividends paid
Net profit
Other comprehensive income for the period after tax
Comprehensive income 31 December 2015
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2015
Note
Subscribed
Capital
capital
reserves
in € million
98 Accounting Principles and
Policies
98 Notes
Equity
39
-11
Effect of exchange rate on cash and cash equivalents
2
_
-424
904
Effect of changes in composition of Group on cash and cash equivalents
Change in cash and cash equivalents
-1,023
5,752
6,775
-1,783
3,952
5,752
1,359
879
1,783
- Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 - Group Statement of Changes in
18
-1,800
1
Joint operations and joint ventures are forms of joint
arrangements. Such an arrangement exists when the
BMW Group jointly carries out activities on the basis of
a contractual agreement with a third party that requires
the unanimous consent of both parties with respect to
all significant activities of the joint arrangement.
37,437
217
37,220
-480
141
-723
- Premium arising on capital increase relating to preferred stock -
Other changes
-10
-10
-15
15
- Subscribed share capital increase out of Authorised Capital
- Other comprehensive income for the period after tax
Comprehensive income 31 December 2014
3,519
19
3,500
-1,616
- Net profit
5,817
-2,298
-2,298
-1,616
6
904
904
31 December 2014
Accumulated other equity
-Equity
attributable to
shareholders
of BMW AG
Minority
interest
893
-893
-857
-117
-855
-6,396
27
6,369
Dividends paid
-1,904
-1,904
19
1 January 2015
217
37,220
-480
141
-723
-Derivative
financial
instruments
differences
translation
Securities
Currency
-Total
37,437
855
5,798
-1,707
22
-1,904
35,621
2,005
656
34-
Revenue reserves
- Capital
reserves
Subscribed
capital
Note
35,621
2,005
656
34-
4,206
-1,592
5,798
15
-1,707
33,122
1,990
-3,775
656
6,369
-1,012
7,381
-71
-1,707
1 January 2014
35,600
188
35,412
1,136
135
-1,627
Derivative
financial
instruments
differences
Securities
Dividends paid
Currency
translation
interest
attributable to
shareholders
-Total
Minority
Equity
Accumulated other equity
97 GROUP FINANCIAL STATEMENTS
41,027
2,027
657
34-
of BMW AG
In the case of a joint operation, the parties that have
joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating to the
arrangement. Assets, liabilities, revenues and expenses
of a joint operation are recognised proportionately
in the Group Financial Statements on the basis of the
BMW Group's rights and obligations.
-117
7,262
The joint ventures, BMW Brilliance Automotive Ltd.,
Shenyang, DriveNow GmbH & Co. KG, Munich, and
DriveNow Verwaltungs GmbH, Munich, are accounted
for using the equity method.
Together with SGL Carbon SE, Wiesbaden, the BMW
Group is party to three joint operations that manufacture
carbon fibres and carbon fibre fabrics used in vehicle
production. The joint operations - SGL Automotive
Carbon Fibers GmbH & Co. KG, Munich, SGL Automo-
tive Carbon Fibers Verwaltungs GmbH, Munich, and
SGL Automotive Carbon Fibers LLC, Dover, DE - are
consolidated proportionately on the basis of the BMW
Group's 49% shareholding.
41 subsidiaries (2014: 43), either dormant or generating
a negligible volume of business, and four joint opera-
tions (2014: 4) are not consolidated on the grounds
that their inclusion would not influence the economic
decisions of users of the Group Financial Statements.
Non-inclusion of operating subsidiaries and joint opera-
tions reduces total Group revenues by 0.3% (2014: 0.3%).
178
157
21
-18
-17
-7
-7
189
-167
22
- Total
Foreign
Germany
Included at 31 December 2015
No longer included in 2015
Included for the first time in 2015
Included at 31 December 2014
The number of subsidiaries - including the special
purpose securities fund and special purpose trusts -
consolidated in the Group Financial Statements
changed in 2015 as follows:
trusts (almost all used for asset-backed financing
transactions).
The BMW AG Group Financial Statements include,
besides BMW AG, all material subsidiaries, one spe-
cial purpose securities fund and 21 special purpose
As in the previous year, seven participations are not
consolidated using the equity method on the grounds of
immateriality. They are included in the Group balance
sheet in the line "Other investments", measured at cost
less - where applicable - accumulated impairment
losses.
A "List of Group Investments" pursuant to § 313 (2)
HGB will be submitted to the operator of the electronic
version of the German Federal Gazette. This list, along
with the "List of Third Party Companies which are not
of Minor Importance for the Group", will also be posted
on the BMW Group website at www.bmwgroup.com/ir.
No entities were consolidated fully for the first time in
the financial year 2015. LARGUS Grundstücks-Verwal-
tungsgesellschaft mbH & Co. KG, Munich, was merged
with LARGUS Grundstücks-Verwaltungsgesellschaft
mbH, Munich, and therefore ceased to be a separate
consolidated company. BMW Services Italia S.p.A., San
Donato Milanese, was merged with BMW Italia S.p.A.,
Milan, and ceased to be a separate consolidated com-
100
Receivables, payables, provisions, income and expenses
and profits between consolidated companies (intragroup
results) are eliminated on consolidation.
The equity of subsidiaries is consolidated in accordance
with IFRS 3 (Business Combinations). IFRS 3 requires
that all business combinations are accounted for using
the acquisition method, whereby identifiable assets and
liabilities acquired are measured at their fair value at
acquisition date. An excess of acquisition cost over the
Group's share of the net fair value of identifiable assets,
liabilities and contingent liabilities is recognised as good-
will in a separate balance sheet line item and allocated
to the relevant cash-generating unit (CGU).
4-Consolidation principles
THERE Holding B.V., Amsterdam, is included in the
BMW AG Group Financial Statements as an associated
company using the equity method and allocated for
segment reporting purposes to the Automotive segment.
In view of the proximity of the reporting date and on
the grounds of materiality, no fair value adjustments
were recorded in conjunction with the at-equity carry-
ing amount at 31 December 2015, with the consequence
that the Group's interest is accounted for at cost at that
date. The purchase price allocation is expected to be com-
pleted in the first quarter of 2016.
BMW, AUDI and Daimler jointly acquired HERE's map-
ping service with effect from 4 December 2015. Out of
the total purchase price of €2.6 billion (subject to pur-
chase price adjustments), an amount of €0.6 billion was
financed via bank loans taken up by the intermediary
acquiring entity. The remainder is being financed by the
three partners in equal parts. The BMW Group's share
of this amount was approximately €0.67 billion.
B.V., The Hague, the BMW Group has a 33.3% share-
holding in THERE Holding B.V., Amsterdam.
THERE Holding B.V., Amsterdam, is included in the
BMW AG Group Financial Statements for the
year
ended 31 December 2015 as an associated company using
the equity method (see also note 3).
THERE Holding B.V., Amsterdam, and its wholly owned
subsidiary, HERE International B.V., Amsterdam (until
28 January 2016: THERE Acquisition B.V., Amsterdam)
were founded in connection with the acquisition. HERE
International B.V., Amsterdam, acquired all of the shares
of the HERE Group. Via BMW International Holding
The HERE Group's digital maps are fundamental for the
next generation of mobility and location-based services,
providing the basis for new assistance systems and, ulti-
mately, fully autonomous driving. Using high-precision
digital maps in combination with real-time vehicle data,
it will be possible to increase road safety and facilitate the
development of innovative new products and services.
In August 2015, BMW AG (Munich), Daimler AG (Stutt-
gart) and AUDI AG (Ingolstadt) agreed with Nokia
Corporation, Helsinki, to acquire that entity's maps and
location-based services business (HERE Group), as part
of a joint strategy to secure the long-term availability of
HERE's products and services as an open, independent
and value-creating platform for cloud-based maps and
other mobility services.
3-Business acquisitions
The scope of the consolidated financial statements is
based on the application of IFRS 10 (Consolidated
Financial Statements) and IFRS 11 (Joint Arrangements).
pany. Furthermore, the non-consolidated entity, BMW
Forschung und Technik GmbH, Munich, was merged
with BMW AG.
of Comprehensive Income
113 Notes to the Income Statement
121 Notes to the Statement
98-Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
90
90-GROUP FINANCIAL STATEMENTS
Income Statements
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
-857
2-Consolidated companies
tronic version of the German Federal Gazette and
can be obtained via the Company Register website.
Printed copies will also be made available on re-
quest. In addition the Group Financial Statements
and the Combined Management Report can be
downloaded from the BMW Group website at www.
bmwgroup.com/ir.
Notes to the Group Financial Statements
Accounting Principles and Policies
BMW Group
98
31 December 2015
- Premium arising on capital increase relating to preferred stock -
Other changes
- Subscribed share capital increase out of Authorised Capital -
Other comprehensive income for the period after tax
Comprehensive income 31 December 2015
-Net profit
42,764
234
42,530
-1,337
24
132
-81
-10
-71
22
22
1
1
7,289
27
90-GROUP FINANCIAL STATEMENTS
Income Statements
90
90 Statement of
Comprehensive Income
The Group Financial Statements, drawn up in accord-
ance with § 315a HGB, and the Combined Manage-
ment Report for the financial year ended 31 December
2015 will be submitted to the operator of the elec-
All consolidated subsidiaries have the same year-end as
BMW AG with the exception of BMW India Private Ltd.,
Gurgaon, and BMW India Financial Services Private
Ltd., Gurgaon, both of whose year-ends are 31 March in
accordance with local legal requirements.
99 GROUP FINANCIAL STATEMENTS
Bayerische Motoren Werke Aktiengesellschaft has its
seat in Munich, Petuelring 130, and is registered in the
Commercial Register of the District Court of Munich
under the number HRB 42243.
The Group currency is the euro. All amounts are dis-
closed in millions of euros (€ million) unless stated
otherwise.
In addition to credit financing and leasing contracts, the
Financial Services segment also brokers insurance busi-
ness via cooperation arrangements entered into with
local insurance companies. These activities are not ma-
terial to the BMW Group as a whole.
In conjunction with the refinancing of financial services
business, a significant volume of receivables arising
from retail customer and dealer financing is sold. Simi-
larly, rights and obligations relating to leases are sold.
The sale of receivables is a well-established instrument
used by industrial companies. These transactions usually
take the form of asset-backed financing transactions
involving the sale of a portfolio of receivables to a trust
which, in turn, issues marketable securities to refinance
the purchase price. The BMW Group continues to "ser-
vice" the receivables and receives an appropriate fee for
these services. Such assets remain in the Group Finan-
cial Statements although they have been legally sold.
Gains and losses relating to the sale of such assets are
not recognised until the assets are removed from the
Group balance sheet. Special purpose trusts/entities
are included as consolidated companies in accordance
with IFRS 10 (Consolidated Financial Statements).
Inter-segment transactions - relating primarily to inter-
nal sales of products, the provision of funds and the
related interest – are eliminated in the “Eliminations"
column. Further information regarding the allocation
of activities of the BMW Group to segments and a
description of the segments is provided in note 49.
In order to facilitate the sale of its products, the BMW
Group provides various financial services - mainly loan
and lease financing – to both retail customers and dealers.
The inclusion of the financial services activities of the
Group therefore has an impact on the Group Financial
Statements.
In order to provide a better insight into the net assets,
financial position and performance of the BMW Group
and going beyond the requirements of IFRS 8 (Operat-
ing Segments), the Group Financial Statements also
include balance sheets and income statements for the
Automotive, Motorcycles, Financial Services and Other
Entities segments. The Group Cash Flow Statement is
supplemented by statements of cash flows for the Auto-
motive and Financial Services segments. This supple-
mentary information is unaudited.
A Statement of Comprehensive Income is presented at
Group level reconciling the net profit to comprehensive
income for the year.
The Board of Management authorised the Group
Financial Statements for issue on 18 February 2016.
notes.
The BMW Group and segment income statements are
presented using the cost of sales method. The Group
and segment balance sheets correspond to the classi-
fication provisions contained in IAS 1 (Presentation of
Financial Statements).
The Group Financial Statements comply with § 315a of
the German Commercial Code (HGB). This provision,
in conjunction with the Regulation (EC) No. 1606/2002
of the European Parliament and Council of 19 July
2002, relating to the application of International Finan-
cial Reporting Standards, provides the legal basis for
preparing consolidated financial statements in accord-
ance with international standards in Germany and
applies to financial years beginning on or after 1 January
2005.
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMWAG Group Finan-
cial Statements or Group Financial Statements) at 31 De-
cember 2015 have been drawn up in accordance with
International Financial Reporting Standards (IFRS) as
endorsed by the EU. The designation "IFRS" also in-
cludes all valid International Accounting Standards (IAS).
All Interpretations of the IFRS Interpretations Commit-
tee (IFRIC) mandatory for the financial year 2015 are
also applied.
1-Basis of preparation
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
113 Notes to the Income Statement
121 Notes to the Statement
98-Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
In order to improve clarity, various items are aggregated
in the income statements and balance sheets presented.
These items are disclosed and analysed separately in the
-6,498
Revenue reserves
144
22,268
21,895
-27,129
386
359
86,396
75,699
30,425
29,822
-47,194
1,913
-1,846
-26,396
-44,346
Other assets
Non-current assets
-453
383
-7
8
-139
128
-158
-137
Deferred tax
2,469
-20
25
2
5,966
5,808
-10,687
-10,516
41,865
- 37,438
Intangible assets
Property, plant and equipment
- Leased products
Investments accounted for using the equity method -
Other investments
Receivables from sales financing
-236
210
1,985
-1,751
-222
287
-205
-367
-599
-2,596
-384
Financial assets
1
-5,204
1
-23,586
978
870
122,029
106,316
78,841
68,174
-113,026
-99,688
Total assets
- Motorcycles
Current assets
(unaudited supplementary information)
2014
-Financial Services
(unaudited supplementary information)
2015
-2014
Other Entities
Equity and liabilities
Eliminations
(unaudited supplementary information)
2014
2015
-55,342
-65,832
Cash and cash equivalents
-1,048
1,121
-102
-1,104
898
618
-699
-514
Inventories
Trade receivables
Receivables from sales financing
Financial assets
Current tax
-1,359
592
511
35,633
3,953
1,783
30,617
45,379
-811
48,416
-36,682
-153
38,352
-65,133
-54,828
Other assets
28,178
1,354
37
2015
-6,183
-41,148
39
4,559
-4,275
5,545
5,445
Non-current provisions and liabilities
63,819
58,288
14,506
14,317
Other liabilities
Other provisions
5,009
-4,522
4,398
3,746
Current tax
37
1,441
-1,590
810
-1,050
36
1,933
2,621
43,167
-217
37,437
33,460
31,045
35
3,000
- 4,604
-1,770
-2,741
Other provisions
36
4,621
4,268
4,141
- 3,777
Deferred tax
16
-2,116
-1,974
429
-421
Financial liabilities
38
-49,523
Financial liabilities
35,366
38
37,482
2014
93 GROUP FINANCIAL STATEMENTS
Financial Services
(unaudited supplementary information)
2015
2014
Other Entities
(unaudited supplementary information)
2015
2014
2015
Eliminations
2015
2014
Assets
48
313
54
424
445
285
30
34
(unaudited supplementary information)
(unaudited supplementary information)
- Motorcycles
79,131
3,211
3,250
Trade payables
40
-7,773
-7,709
6,856
6,929
Other liabilities
39
-9,208
-7,775
20,111
-18,794
Current provisions and liabilities
65,591
59,078
35,386
33,769
Total equity and liabilities
172,174
154,803
83,352
-42,160
2014
(unaudited supplementary information)
2015
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Changes in working capital
Change in inventories
Change in trade receivables
-Change in trade payables
Change in other operating assets and liabilities
98 Accounting Principles and
Policies
Income taxes paid
Cash inflow/outflow from operating activities
-293
-551
298
-971
-566
379
-25
41
550
Interest received
98 Notes
Equity
96 Group Statement of Changes in
-2,720
Change in receivables from sales financing
-6,637
-3,898
Change in deferred taxes
-77
-116
Other non-cash income and expense items
-47
-331
Gain/loss on disposal of tangible and intangible assets and marketable securities
-144
-63
Result from equity accounted investments -
-518
-655
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94-Cash Flow Statements
323
-3,299
-3,323
43-
Repayment of bonds
Proceeds from new non-current other financial liabilities
Repayment of non-current other financial liabilities
Change in current other financial liabilities
-23
-1,917
15
-1,715
Change in commercial paper -
Cash inflow/outflow from financing activities
Effect of exchange rate on cash and cash equivalents
Proceeds from the issue of bonds
-264
-13,007
10,892
-8,908
-7,249
9,715
- 5,900
-8,802
-5,697
2,648
177
-133
Interest paid
Intragroup financing and equity transactions
Payment of dividend for the previous year
132
960
-137
2,912
Investment in intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investments
-5,889
-38
-6,099
36
-7461
-99
Proceeds from the disposal of investments
-215
-190
Investments in marketable securities and term deposits
-6,880
-4,216
Proceeds from the sale of marketable securities and from matured term deposits
Cash inflow/outflow from investing activities
43-
5,659
-7,603
-4,072
-6,116
Issue/buy-back of treasury shares
Payments into equity
-4,252
Change in leased products
-1,103
-296
14,695
401
.357
23,613
-23,680
582
595
46,169
43,801
31,471
-835
33,495
16,030
- 26,923
-4,499
-599
-25,835
-30,933
-3,538
-384
-25,258
-29,180
Pension provisions
Other provisions
Deferred tax
- Financial liabilities
- Other liabilities
Non-current provisions and liabilities
Other provisions
-51
28,755
58
-13
1,710
-1,130
31
28
Subscribed capital
Capital reserves
Revenue reserves
Accumulated other equity
Equity attributable to shareholders of BMW AG
Minority interest
=
9,948
9,357
15,225
12,031
-15,869
-14,996
Equity
45
-78
55
136
160
-313
-75
273
-6,158
5,078
Current tax
85
62
263
-99,688
Total equity and liabilities
94
BMW Group
Cash Flow Statements for Group and Segments
in € million
Note
2015
Group
2014
Net profit
6,396
5,817
Reconciliation between net profit and cash inflow/outflow from operating activities
Current tax
2,751
2,774
Other interest and similar income/expenses
-239
-127
Depreciation and amortisation of other tangible, intangible and investment assets
4,686
4,323
Change in provisions
-113,026
234
42,764
68,174
106,316
192
48
21
396
275
518
223
23,038
630
41,503
65,912
432
-162
-19,122
571
-32,871
53,158
8
408
-16,610
24
-282
378
-15,624
17
-699
-514
Financial liabilities
Trade payables
13,071
30,121
11,087
27,388
-65,525
-66,224
-54,998
-55,512
Other liabilities
Current provisions and liabilities
978
870
122,029
78,841
34-
4,540
Equity
-1,679
-1,542
-1,365
23,739
-20,586
20,599
7
7
-19,097
-17,783
-18,484
-1,990
-17,057
-16,973
Cost of sales
448
314
3,153
2,816
7
7
-613
-84
Gross profit
-Revenues
2015 2014
-2014
2015
-1,566
43-
Change in cash and cash equivalents
│ '།
༅། ས།
Effect of changes in composition of Group on cash and cash equivalents
86
73
3,133
5,004
43-
-1,012
-498
34-
91 GROUP FINANCIAL STATEMENTS
Motorcycles
Financial Services
Other Entities
Eliminations
(unaudited supplementary information) (unaudited supplementary information) (unaudited supplementary information) (unaudited supplementary information)
2015 2014
2015
2014
-239
17
-201
-1,035
-3
Profit/loss before financial result
Result from equity accounted investments
Interest and similar income
4
2,132
4
1,177
-1,295
-7
-29
-65
-1,080
-1,323
1,234
-1,430
1,332
Interest and similar expenses
-3
-8
-55
-15
-6
-33
42
-1,197
-575
71
169
-30
-28
19
-17
Selling and administrative expenses
-46
-73
238
136
-59
-81
- Other operating income
-27
182
-54
-98
-46
-44
-78
83
- Other operating expenses
112
1,981
1,756
-1,164
Cash and cash equivalents as at 1 January
-7,688
-7,671
Gain/loss on disposal of tangible and intangible assets and marketable securities-
Other non-cash income and expense items
Change in receivables from sales financing
Change in leased products
Depreciation and amortisation of other tangible, intangible and investment assets
Change in provisions
- Other interest and similar income/expenses
Reconciliation between net profit and cash inflow/outflow from operating activities
Current tax
56
60
-16
Result from equity accounted investments
-163
-15
371
-541
1
-907
367
-70
46
-552
-337
Pension provisions.
Changes in working capital
- Change in inventories
- Change in trade receivables
-134
36
-823
38
-6,021
-5,791
-4,715
-10,351
Interest received
-180
9,423
11,836
-132
Income taxes paid
-161
-133
-2,531
-2,595
Change in other operating assets and liabilities
858
-1,706
419
-2,295
Change in trade payables -
-655
-518
8
-5
159
-302
-40
-125
2,786
-2,893
Net profit
1,198
-1,447
4,521
-5,147
2014
2015
2014
2015
(unaudited supplementary information) (unaudited supplementary information)
- Financial Services
95 GROUP FINANCIAL STATEMENTS
Automotive
1 Expenditure for investments includes the acquisition of shares in THERE Holding B.V., Amsterdam, amounting to €668 million.
2 Interest relating to financial services business is classified as revenues/cost of sales.
7,688
6,122
Cash and cash equivalents as at 31 December
-12
83
-24²
4,230
-54
-138
-14
5
-5
316
Change in deferred taxes
383
579
-124
-369
-3,898
-6,637
-3,309
-4,026
-15
3
-109
172
-1,034
128
29
31
4,577
-89
14
1,975
5,384
4,859
3,952
-2,381
-1,906
-1,240
-1,186
-4,693
-5,038
-19,907
6,635
-19,231
-6,122
-7,688
3,952
5,752
61,831
56,844
43,022
42,706
Total assets
172,174
33
23,586
-28,178
-1,887
110,343
97,959
40,330
36,425
Inventories
Trade receivables
Receivables from sales financing
Financial assets
31.
32
27-
28
Current tax
29
30
| | | |
-11,071
-11,089
-10,611
-10,698
2,751
- 2,153
2,453
154,803
83,352
79,131
90-GROUP FINANCIAL STATEMENTS
2015
2014
Capital reserves
Accumulated other equity
3333
34-
657
656
34
-2,027
- 2,005
34-
-41,027
35,621
34.
-1,181
-1,062
Equity attributable to shareholders of BMWAG
34-
42,530
37,220
Minority interest
-98
2014
- 3,662
2015
Automotive
90
Income Statements
90 Statement of
Comprehensive Income
92-Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Other assets
Cash and cash equivalents
Current assets
Equity and liabilities
in € million
Subscribed capital
Note
Group
(unaudited supplementary information)
3,935
Revenue reserves
-1,568
1
73
1,426
1,187
137
104
-460
-80
༄།༄|ཉཋ| | |
༄། ༅| ཤྩ ༄| ་ ༄
1
-55
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Diluted earnings per share of common stock in € —
Diluted earnings per share of preferred stock in € -
92
BMW Group
Balance Sheets for Group and Segments at 31 December
Assets
Note
Group
Automotive
(unaudited supplementary information)
Attributable to minority interest.
11
-21
Net profit/loss
1,723
-1,094
211
154
-664
-163
Other financial result
Financial result
Profit/loss before tax
-34
-528
-73
-49
-204
83
Income taxes
73
1,447
1,198
138
105
-460
-80
in € million
2015
-525
2015
428
-408
5,147
5,110
Receivables from sales financing
27-
-41,865
37,438
Financial assets
28-
2,208
2,024
586
447
Deferred tax
-1,945
-2,061
4,114
-3,253
Other assets
30
2014
Non-current assets
26
Other investments
16
2,233
Intangible assets
22.
-1,088
-7,372
2014
-6,499
-5,999
Property, plant and equipment
23
-17,759
-17,182
-17,416
6,899
3
-2,233
Investments accounted for using the equity method
30,165
-34,965
25
24-
Leased products
-16,863
-1,088
No Significant in principle
EU
1.1.2018
12.11.2009/
Financial Instruments
IFRS 9
110
Date of
mandatory
application
Expected impact
on BMW Group
Insignificant
1 Mandatory application in annual periods beginning on or after 1 February 2015.
2 Mandatory application in annual periods beginning on or after 17 June 2014.
application
Date of
mandatory
Date of
issue by IASB
Standard/Interpretation
28.10.2010/
(b) Financial reporting pronouncements issued by the IASB, but not yet applied
IASB
16.12.2011/
Investment Entities: Applying the
24.7.2014
Acquisition of an Interest in a Joint Operation
-6.5.2014
IFRS 11
1.1.2015
IFRS 10, IFRS 12 and IAS 28)
IAS 28
Consolidation Exception (Amendments to
IFRS 12/
19.11.2013/
Insignificant
-1.1.2016
18.12.2014
IFRS 10/
Insignificant
No
-11.9.2014
Sale or Contribution of Assets between an
Investor and an Associate or Joint Venture
(Amendments to IFRS 10 and IAS 28)
IFRS 10/
IAS 28
No
1.7.2014
issue by IASB
Insignificant
Standard/Interpretation
2015:
(a) Financial reporting rules applied for the first time in the financial year 2015
The following Standards, Revised Standards, Amendments and Interpretations were applied for the first time in
the financial year
8-Financial reporting rules
Determining the scope of consolidated companies to be
included in the Group Financial Statements may involve
the use of judgement. In particular when the BMW
Group holds 50% or less of the voting rights, a detailed
assessment must be made as to whether sole control,
joint control or significant influence applies. For instance,
other contractual rights and/or other matters and cir-
cumstances could result in the conclusion that the BMW
entity concerned controls or jointly controls an entity
in which it has a participation. In the latter case, it must
then be decided whether the joint arrangement is a joint
operation or a joint venture. In making its judgement,
the BMW Group must take all contractual arrangements
and other circumstances into account, and not just the
structure and legal form of the entity. A new assessment
is made in the event of any indication of changes in the
previous assessment of (joint) control. Further informa-
tion is provided in note 2.
In addition, judgement is required in particular when
assessing whether the risks and rewards incidental to
ownership of a leased asset have been transferred for
the purposes of determining the classification of leasing
arrangements.
note 36. If the recognition and measurement criteria
relevant for provisions are not fulfilled and the possi-
bility of any outflow in settlement is remote,
the poten-
tial obligation is disclosed as a contingent liability.
In the event of involvement in legal proceedings or
when claims are brought against a Group entity, provi-
sions for litigation and liability risks are recognised
when an outflow of resources is probable and a reliable
estimate can be made of the amount of the obligation.
Management is required to make assumptions with re-
spect to the probability of occurrence, the amount in-
volved and the duration of the legal dispute. For these
reasons, the recognition and measurement of provi-
sions for litigation and liability risks are subject to un-
certainty. The outcome of legal proceedings is often
difficult to predict. Further information is provided in
Date of
depending on the product and sales market concerned.
Warranty provisions are recognised when the risks and
rewards of ownership of the goods are transferred to
the dealer or retail customer or when a new category of
warranty is introduced. In order to determine the level
of the provision, various factors are taken into considera-
tion, including estimations based on past experience
with the nature and amount of claims. These estima-
tions also involve assessing the future level of potential
repair costs and price increases per product and mar-
ket. Provisions for warranties are adjusted regularly to
take account of new circumstances and the impact of
any changes recognised in the income statement. Further
information is provided in note 36. Similar estimates
are also made in conjunction with the measurement of
expected reimbursement claims.
Estimations are required for the purposes of recognising
and measuring provisions for warranty obligations
(statutory, contractual and voluntary). In addition to
statutorily prescribed manufacturer warranties, the
BMW Group also offers various categories of warranty
note 35.
The calculation of pension provisions requires assump-
tions to be made with regard to discount factors, salary
trends, employee fluctuation and the life expectancy
of employees. As in previous years, discount factors are
determined by reference to market yields at the end
of the reporting period on high quality corporate bonds.
The salary level trend refers to the expected rate of
salary increase which is estimated annually depending
on inflation and the career development of employees
within the Group. Further information is provided in
Current income taxes are computed throughout the
BMW Group in accordance with tax legislation appli-
cable in each relevant country. In situations where a
permissible element of discretion has been applied
in determining the amount of a tax exposure to be
recognised in the financial statements, there is always
a possibility that local tax authorities reach a dif-
may
ferent conclusion.
note 16.
-1.1.2016
The calculation of deferred tax assets requires assump-
tions to be made with regard to the level of future tax-
able income and the timing of recovery of deferred tax
assets. These assumptions take account of forecast oper-
ating results and the impact on earnings of the reversal
of taxable temporary differences. Since future busi-
ness developments cannot be predicted with certainty
and to some extent cannot be influenced by the BMW
Group, the measurement of deferred tax assets is sub-
ject to uncertainty. Further information is provided in
in note 27.
109 GROUP FINANCIAL STATEMENTS
12.12.2013
Date of
mandatory
application
IASB
Impact
Insignificant
-17.6.2014²
1.2.20151
-1.7.2014
12.12.2013
1.1.2014
20.5.2013
Annual Improvements to IFRS 2011-2013
Annual Improvements to IFRS 2010-2012
Date of
mandatory
application
EU
Levies
Employee Contributions (Amendments to
IAS 19)
Insignificant
1.2.20151
1.7.2014
21.11.2013
Employment Benefits:-
IAS 19
on BMW Group
IFRIC 21
1.1.2016
1.1.2017
(Amendments to IFRS 11)
Agriculture: Bearer Plants -
IAS 16/-
IAS 41
(Amendments to IAS 16 and IAS 38)
Insignificant
1.1.2016
1.1.2016
12.5.2014
Clarification of Acceptable Methods of
Depreciation and Amortisation
30.6.2014
IAS 38
(Amendments to IAS 12)
for Unrealised Losses
Insignificant
No
19.1.2016
Recognition of Deferred Tax Assets
IAS 12
163 Segment Information
IAS 16/
147 Other Disclosures
1.1.2016
None
1 The mandatory effective date for the Amendments was deferred by the IASB for an indefinite period on 17 December 2015.
2 Interim standard IFRS 14 will not be endorsed into EU law.
these purposes, the main factors taken into consideration
are past experience, current market data (such as the
level of financing business arrears), rating classes and
scoring information. Further information is provided
- None
- No
1.1.2017
-21.5.2015
Insignificant
1.1.2016
1.1.2016
1.1.2016
Statements (Amendments to IAS 27)
Annual Improvements to IFRS 2012-2014
Amendments to "International Financial
Reporting Standard for Small and Medium-
sized Entities" (IFRS for SMEs)
None
1.1.2016
-1.1.2016
12.8.2014
Equity Method in Separate Financial
IAS 27
(Amendments to IAS 16 and IAS 41)
25.9.2014
Insignificant
Amendments to IAS 7)
of Comprehensive Income
92 Balance Sheets
Comprehensive Income
11.9.2015
90 Statement of
Income Statements
90
No Significant in principle
-1.1.2018
IFRS 16
28.5.2014/
IFRS 15-
90-GROUP FINANCIAL STATEMENTS
Insignificant
No²
-1.1.2016
30.1.2014
Regulatory Deferral Accounts
IFRS 14
Revenue from Contracts with Customers
122 Notes to the Balance Sheet
Leases
1.1.2019
Insignificant
No
1.1.2017
29.1.2016
Cash Flow Statements (Initiative to
Improve Disclosure Requirements -
IAS 7
113 Notes to the Income Statement
121 Notes to the Statement
Policies
13.1.2016
-Significant in principle
1.1.2016 Significant in principle
18.12.2014
Presentation of Financial Statements
(Initiative to Improve Disclosure Require-
ments Amendments to IAS 1)
98-Accounting Principles and
98-Notes
IAS 1
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
-No
-1.1.2016
the future lease payments and disclosed under other
financial liabilities.
the Group's share of the fair value of the individually
identifiable assets acquired and liabilities and contin-
gent liabilities assumed.
The BMW Group regularly checks the recoverability of
its leased products. One of the main assumptions re-
quired for leased products relates to their residual value
since this represents a significant portion of future cash
inflows. In order to estimate the level of prices likely to
be achieved in the future, the BMW Group incorpo-
rates internally available historical data, current market
data and forecasts of external institutions into its cal-
culations. Internal back-testing is applied to validate the
estimations made. Further information is provided in
note 24.
as attributable to each category of stock, by the average
number of outstanding shares. The net profit is accord-
ingly allocated to the different categories of stock. The
portion of the Group net profit for the year which is not
being distributed is allocated to each category of stock
based on the number of outstanding shares. Profits
available for distribution are determined directly on the
basis of the dividend resolutions passed for common
and preferred stock. Diluted earnings per share are dis-
closed separately.
Basic earnings per share are computed in accordance
with IAS 33 (Earnings per Share). Basic earnings per
share are calculated for common and preferred stock by
dividing the Group net profit after minority interests,
In accordance with IAS 20 (Accounting for Government
Grants and Disclosure of Government Assistance),
public sector grants are not recognised until there is rea-
sonable assurance that the conditions attaching to them
have been complied with and the grants will be received.
The resulting income is recognised in cost of sales over
the periods necessary to match them with the related
costs which they are intended to compensate.
Cost of sales comprises the cost of products sold and the
acquisition cost of purchased goods sold. In addition
to directly attributable material and production costs, it
also includes statutory and non-statutory warranty ex-
penses, research costs, non-capitalised development
costs, amortisation on capitalised development costs,
production-related overheads (including depreciation of
property, plant and equipment and amortisation of other
intangible assets relating to production), write-downs
on inventories, freight and insurance costs relating to
deliveries to dealers and agency fees on direct sales.
Expenses which are directly attributable to financial
services business (including depreciation on leased
products), the interest expense from refinancing the en-
tire financial services business as well as the expense
of risk provisions and write-downs relating to such busi-
ness are also reported in cost of sales.
of the lease. Interest income from finance leases and
from customer and dealer financing are recognised
using the effective interest method and reported as rev-
enues within the line item "Interest income on loan
financing". If the sale of products includes a determina-
ble amount for subsequent services (multiple-compo-
nent contracts), the related revenues are deferred and
recognised as income over the relevant service period.
Amounts are normally recognised as income by reference
to the pattern of related expenditure. Profits arising on
the sale of vehicles for which a Group company retains a
repurchase commitment (buy-back contracts) are not
recognised until such profits have been realised. The
difference between the sales and buy-back price is ac-
counted for as deferred income and recognised in in-
stalments as revenue over the contract term.
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
of Comprehensive Income
113 Notes to the Income Statement
121 Notes to the Statement
98-Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
90
90-GROUP FINANCIAL STATEMENTS
Income Statements
Share-based remuneration programmes which are ex-
pected to be settled in shares are, in accordance with
IFRS 2 (Share-based Payments), measured at their fair
value at grant date. The related expense is recognised
in the income statement (as personnel expense) over the
vesting period, with a contra (credit) entry recorded
against capital reserves.
Share-based remuneration programmes expected to be
settled in cash are revalued to their fair value at each
balance sheet date between the grant date and the settle-
ment date and on the settlement date itself. The ex-
pense for such programmes is recognised in the income
statement (as personnel expense) over the vesting pe-
riod of the programmes and recognised in the balance
sheet as a provision.
The share-based remuneration programme for Board
of Management members and senior heads of depart-
ment entitles BMW AG to elect whether to settle its
commitments in cash or with shares of BMW AG com-
mon stock. Following the decision to settle in cash,
this programme is accounted for as a cash-settled share-
based transaction. Further information on share-based
remuneration programmes is provided in note 19.
Purchased and internally-generated intangible assets
are recognised as assets in accordance with IAS 38
(Intangible Assets), where it is probable that the use of
the asset will generate future economic benefits and
where the costs of the asset can be determined reliably.
Such assets are measured at acquisition and/or manu-
facturing cost and, to the extent that they have a finite
useful life, amortised over their estimated useful lives.
With the exception of capitalised development costs,
intangible assets are generally amortised over their esti-
mated useful lives of between three and 20 years.
104
Where Group products are recognised by BMW Group
entities as leased products under operating leases, they
are measured at manufacturing cost. All other leased
products are measured at acquisition cost. All leased
products are depreciated over the period of the lease
using the straight-line method down to their expected
residual value. Changes in residual value expectations
are recognised - in situations where the recoverable
amount of the lease exceeds the asset's carrying amount –
by adjusting scheduled depreciation prospectively over
the remaining term of the lease contract. If the recover-
able amount is lower than the asset's carrying amount,
an impairment loss is recognised for the shortfall. A test
is carried out at each balance sheet date to determine
whether an impairment loss recognised in prior years no
longer exists or has decreased. In these cases, the carry-
ing amount of the asset is increased to the recoverable
amount. The higher carrying amount resulting from the
ties.
In accordance with IAS 17, assets leased under finance
leases are measured at their fair value at the inception of
the lease or at the present value of the lease payments,
if lower. The assets are depreciated using the straight-
line method over their estimated useful lives or over the
lease period, if shorter. The obligations for future lease
instalments are recognised as other financial liabili-
Non-current assets also include assets relating to leases.
The BMW Group uses property, plant and equipment as
lessee on the one hand and leases out vehicles produced
by the Group and other brands as lessor on the other.
IAS 17 (Leases) contains rules for determining, on the
basis of risks and rewards, the economic owner of the
assets. In the case of finance leases, the assets are at-
tributed to the lessee and in the case of operating leases
the assets are attributed to the lessor.
As a general rule, borrowing costs are not included in
acquisition or manufacturing cost. Borrowing costs that
are directly attributable to the acquisition, construction
or production of a qualifying asset are recognised as a
part of the cost of that asset in accordance with IAS 23
(Borrowing Costs).
The cost of internally constructed plant and equipment
comprises all costs which are directly attributable to the
manufacturing process as well as an appropriate pro-
portion of production-related overheads. This includes
production-related depreciation and an appropriate
proportion of administrative and social costs.
For machinery used in multiple-shift operations, depre-
ciation rates are increased to account for the additional
utilisation.
102
3 to 21
2 to 25
Other equipment, factory and office equipment
Factory and office buildings, residential buildings, fixed installations in buildings and outside facilities.
Plant and machinery.
Systematic depreciation is based on the following useful
lives, applied throughout the BMW Group:
All items of property, plant and equipment are consid-
ered to have finite useful lives. They are recognised at
acquisition or manufacturing cost less scheduled de-
preciation based on the estimated useful lives of the
assets. Depreciation on property, plant and equipment
reflects the pattern of their usage and is generally com-
puted using the straight-line method. Components of
items of property, plant and equipment with different
useful lives are depreciated separately.
in years
Goodwill arises on first-time consolidation of an ac-
quired business when the cost of acquisition exceeds
Development costs for vehicle and engine projects
are capitalised at manufacturing cost, to the extent
that attributable costs can be measured reliably and
both technical feasibility and successful marketing
are assured. It must also be probable that the devel-
opment expenditure will generate future economic
benefits. Capitalised development costs comprise all
expenditure that can be attributed directly to the de-
velopment process, including development-related
overheads. Capitalised development costs are amor-
tised systematically over the estimated product life
(usually four to eleven years) following the start of
production.
103 GROUP FINANCIAL STATEMENTS
8 to 50
the amount of revenue can be measured reliably, it is
probable that the economic benefits associated with the
transaction will flow to the entity and costs incurred or
to be incurred in respect of the sale can be measured
reliably. Revenues are stated net of settlement discount,
bonuses and rebates. Revenues also include lease rentals
and interest income earned in conjunction with finan-
cial services. Revenues from leasing instalments relate
to operating leases and are recognised in the income
statement on a straight line basis over the relevant term
Revenues from the sale of products are recognised
when the risks and rewards of ownership of the goods
are transferred to the dealer or customer, provided that
The financial statements of BMW AG and of its subsidi-
aries in Germany and elsewhere have been prepared for
consolidation purposes using uniform accounting poli-
cies in accordance with IFRS 10 (Consolidated Financial
Statements).
Russian Rouble
Japanese Yen
Chinese Renminbi
British Pound
US Dollar
2014
2015
Average rate
Korean Won
31.12.2015 ―31.12.2014
The exchange rates of those currencies which have a
material impact on the Group Financial Statements
were as follows:
statement are also recognised directly in accumulated
other equity.
counted for as a general rule using the equity method
when significant influence can be exercised (IAS 28
Investments in Associates and Joint Ventures). As a
general rule, there is a rebuttable assumption that the
Group has significant influence if it holds between 20%
and 50% of the associated company's or joint venture's
voting power.
The financial statements of consolidated companies
which are drawn up in a foreign currency are translated
using the functional currency concept (IAS 21 The
Effects of Changes in Foreign Exchange Rates) and the
modified closing rate method. The functional currency
of a subsidiary is determined as a general rule on the
basis of the primary economic environment in which it
operates and corresponds therefore usually to the rele-
vant local currency. Income and expenses of foreign
subsidiaries are translated in the Group Financial State-
ments at the average exchange rate for the year, and
assets and liabilities are translated at the closing rate.
Exchange differences arising from the translation of
shareholders' equity are recognised directly in accumu-
lated other equity. Exchange differences arising from the
use of different exchange rates to translate the income
5-Foreign currency translation
Investments accounted for using the equity method
(joint ventures and associated companies) are meas-
ured at the BMW Group's share of equity, taking
account of fair value adjustments. Any difference be-
tween the cost of investment and the Group's share of
equity is accounted for in accordance with the acquisi-
tion method. Investments in other companies are ac-
101 GROUP FINANCIAL STATEMENTS
In November 2009 the IASB issued IFRS 9 (Financial
Instruments) as part of a project to revise the accounting
for financial instruments. This Standard marks the first
Closing rate
90-GROUP FINANCIAL STATEMENTS
Income Statements
1.09
1.11
6-Accounting policies
51.03
-1,397.80
68.01
1,255.38
-70.98
-1,324.84
79.91
1,278.92
140.38
-134.28
144.95
1.21
130.74
6.97
-7.53
-7.07
0.81
0.73
0.78
0.74
1.33
8.19
90
90 Statement of
Comprehensive Income
of the balance sheet as "Liabilities in conjunction with
assets held for sale".
Assets held for sale and disposal groups held for sale
are presented separately in the balance sheet in accord-
ance with IFRS 5, if the carrying amount of the relevant
assets will be recovered principally through a sale trans-
action rather than through continuing use. This situa-
tion only arises if the assets can be sold immediately
in their present condition, the sale is expected to be
completed within one year from the date of classifica-
tion and the sale is highly probable. At the date of
classification, property, plant and equipment, intangible
assets and disposal groups which are being held for
sale are measured at the lower of their carrying amount
and their fair value less costs to sell and scheduled depre-
ciation/amortisation ceases. This does not apply, how-
ever, to items within the disposal group which are not
covered by the measurement rules contained in IFRS 5.
Simultaneously, liabilities directly related to the sale are
presented separately on the equity and liabilities side
Cash and cash equivalents comprise mainly cash on
hand and cash at bank with an original term of up to
three months.
Borrowing costs are not included in the acquisition or
manufacturing cost of inventories.
Work in progress and finished goods are stated at the
lower of average manufacturing cost and net realisable
value. Manufacturing cost comprises all costs which
are directly attributable to the manufacturing process
and an appropriate proportion of production-related
overheads. This includes production-related deprecia-
tion and an appropriate proportion of administrative
and social costs.
Inventories of raw materials, supplies and goods for
resale are stated at the lower of average acquisition cost
and net realisable value.
tax assets also include claims to future tax reductions
which arise from the expected usage of existing tax
losses available for carryforward to the extent that fu-
ture usage is probable. Deferred taxes are computed
using enacted or planned tax rates which are expected
to apply in the relevant national jurisdictions when
the amounts are recovered.
107 GROUP FINANCIAL STATEMENTS
Provisions for pensions are recognised using the pro-
jected unit credit method in accordance with IAS 19
(Employee Benefits). Under this method, not only obli-
gations relating to known vested benefits at the re-
porting date are recognised, but also the effect of future
increases in pensions and salaries. This involves taking
account of various input factors which are evaluated
on a prudent basis. The calculation is based on an inde-
pendent actuarial valuation which takes into account
all relevant biometric factors.
In accordance with IAS 12 (Income Taxes), deferred
taxes are recognised on all temporary differences be-
tween the tax and accounting bases of assets and lia-
bilities and on consolidation procedures. Deferred
The fair values of the derivative financial instruments
are measured using market information and recognised
valuation techniques. In those cases where hedge ac-
counting is applied, changes in fair value are recognised
either in profit or loss or in other comprehensive in-
come as a component of accumulated other equity, de-
pending on whether the transactions are classified as
fair value hedges or cash flow hedges. In the case of fair
value hedges, the results of the fair value measurement
of the derivative financial instruments and the related
hedged items are recognised in the income statement.
In the case of fair value changes in cash flow hedges
which are used to mitigate the future cash flow risk on
a recognised asset or liability or on forecast transactions,
unrealised gains and losses on the hedging instrument
are recognised initially directly in accumulated other
equity. Any such gains or losses are recognised subse-
quently in the income statement when the hedged
item (usually external revenue) is recognised in the in-
come statement. The portion of the gains or losses from
fair value measurement not relating to the hedged
item is recognised immediately in the income statement.
If, contrary to the normal case within the BMW Group,
hedge accounting cannot be applied, the gains or losses
from the fair value measurement of derivative finan-
cial instruments are recognised immediately in the in-
If there are no quoted prices on active markets for deriva-
tive financial instruments, credit risk is taken into ac-
count as an adjustment to the fair value of the financial
instrument. The BMW Group applies the option of
measuring the credit risk for a group of financial assets
and financial liabilities on the basis of its net exposure.
Portfolio-based value adjustments to the individual finan-
cial assets and financial liabilities are allocated using the
relative fair value approach (net method).
measured in accordance with IAS 39 at their fair value,
irrespective of their purpose or the intention for which
they are held.
All derivative financial instruments (such as interest,
currency and combined interest/currency swaps, for-
ward currency and forward commodity contracts) are
ments.
Derivative financial instruments are only used within
the BMW Group for hedging purposes in order to reduce
currency, interest rate, fair value and market price risks
from operating activities and related financing require-
Items are presented as financial assets to the extent
that they relate to financing transactions.
The recognition of impairment losses on receivables
relating to industrial business is also, as far as possible,
based on the same procedures applied to financial ser-
vices business. Impairment losses (write-downs and
allowances) on receivables are always recorded on
separate accounts and derecognised at the same time
the corresponding receivables are derecognised.
come statement.
Impairment losses on receivables relating to financial
services business are recognised using a uniform meth-
odology that is applied throughout the Group and meets
the requirements of IAS 39. This methodology results in
the recognition of impairment losses both on individual
assets and on groups of assets. If there is objective evi-
dence of impairment, the BMW Group recognises im-
pairment losses on the basis of individual assets. Within
the retail customer business, the existence of overdue
balances or the incidence of similar events in the past
are examples of such objective evidence. In the event of
overdue receivables, impairment losses are always rec-
ognised individually based on the length of period of
the arrears. In the case of dealer financing receivables,
the allocation of the dealer to a corresponding rating
category is also deemed to represent objective evidence
of impairment. If there is no objective evidence of im-
pairment, impairment losses are recognised on financial
assets using a portfolio approach based on similar groups
of assets. Company-specific loss probabilities and loss
ratios, derived from historical data, are used to measure
impairment losses on similar groups of assets.
Remeasurements of the net defined benefit liability
for pension plans are recognised, net of deferred tax,
directly in equity (revenue reserves).
statement.
Estimations are required to assess the recoverability of
a cash-generating unit (CGU). If the recoverability of an
asset is being tested at the level of a CGU, assumptions
must be made with regard to future cash inflows and
outflows, involving in particular an assessment of the
forecasting period to be used and of developments
after that period. For the purposes of determining future
cash inflows and outflows, management applies fore-
casting assumptions which are continually brought up
to date and regularly compared with external sources
of information. The assumptions used take account in
particular of expectations of the profitability of the
product portfolio, future market share developments,
macro-economic developments (such as currency, inter-
est rate and raw materials), the legal environment and
past experience.
The preparation of the Group Financial Statements in
accordance with IFRS requires management to make
certain assumptions and judgements and to use estimates
that can affect the reported amounts of assets and lia-
bilities, revenues and expenses and contingent liabilities.
Major items requiring assumptions and estimations
are described below. The assumptions used are con-
tinuously checked for their validity. Actual amounts
could differ from the assumptions and estimations used
if business conditions develop differently to the Group's
expectations.
7- Assumptions, judgements and estimations
has no liabilities which are held for trading. Liabilities
from finance leases are stated at the present value of
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
113 Notes to the Income Statement
121 Notes to the Statement
98-Accounting Principles and
Policies
98-Notes
Net interest expense on the net defined benefit liability
and/or net interest income on the net defined benefit
asset are presented separately within the financial result.
All other costs relating to allocations to pension pro-
visions are allocated to costs by function in the income
96 Group Statement of Changes in
Equity
92 Balance Sheets
Comprehensive Income
90 Statement of
90
90-GROUP FINANCIAL STATEMENTS
Income Statements
108
Financial liabilities are measured on first-time recogni-
tion at cost which corresponds to the fair value of the
consideration given. Transaction costs are also taken
into account except for financial liabilities allocated to
the category "financial liabilities measured at fair value
through profit or loss". Subsequent to initial recogni-
tion, liabilities are – with the exception of derivative
financial instruments - measured at amortised cost
using the effective interest method. The BMW Group
Other provisions are recognised when the BMW Group
has a present obligation (legal or constructive) arising
from past events, the settlement of which is probable
and when a reliable estimate can be made of the amount
of the obligation. Measurement of provisions is based
on the best estimate of the expenditure required to settle
the present obligation at the end of the reporting
period. Non-current provisions with a remaining period
of more than one year are discounted to the present
value of the expenditures expected to settle the obliga-
tion at the end of the reporting period.
94 Cash Flow Statements
The bad debt risk relating to receivables from sales
financing is assessed regularly by the BMW Group. For
Receivables from sales financing comprise receivables
from retail customer, dealer and lease financing.
113 Notes to the Income Statement
121 Notes to the Statement
A financial instrument is a contract that gives rise to a
financial asset of one entity and a financial liability or
equity instrument of another entity. Once a BMW Group
entity becomes party to such to a contract, the financial
instrument is recognised either as a financial asset or as
a financial liability.
classified. No held-for-trading financial assets are in-
cluded under this heading.
105 GROUP FINANCIAL STATEMENTS
Non-current marketable securities are measured accord-
ing to the category of financial asset to which they are
Investments in non-consolidated Group companies,
non-consolidated joint operations and interests in asso-
ciated companies, joint ventures and participations
not accounted for using the equity method, are reported
as Other investments, measured at their fair value. If
this value is not available or cannot be determined relia-
bly, they are measured at cost.
Investments accounted for using the equity method are
(except when the investment is impaired) measured at
the Group's share of equity taking account of fair value
adjustments on acquisition. As an exception from this
rule, the associated company, THERE Holding B.V.,
Amsterdam, is included in the Group Financial State-
ments for the financial year 2015 at its acquisition cost
(at 4 December 2015). Investments accounted for using
the equity method comprise joint ventures and signifi-
cant associated companies.
If the reason for a previously recognised impairment
loss no longer exists, the impairment loss is reversed
up to the level of the recoverable amount, capped at
the level of rolled-forward amortised cost. This does
not apply to goodwill: previously recognised impair-
ment losses on goodwill are not reversed. No reversals
of impairment losses were recorded in the financial
year 2015.
take account in particular of expectations of the profita-
bility of the product portfolio, future market share de-
velopments, macro-economic developments (such as
currency, interest rate and raw materials prices) as well
as the legal environment and past experience. Cash
flows of the Automotive and Motorcycles CGUs are dis-
counted using a risk-adjusted pre-tax weighted average
cost of capital (WACC) of 12.0% (2014: 12.0%). In the
case of the Financial Services CGU, a sector-compatible
pre-tax cost of equity capital of 13.4% (2014: 13.4%) is
applied. In conjunction with the impairment tests for
CGUs, sensitivity analyses are performed for the main
assumptions. Analyses performed in the year under re-
port confirmed, as in the previous year, that no impair-
ment loss was required to be recognised.
Financial assets are accounted for on the basis of the set-
tlement date. On initial recognition, they are measured
at their fair value. Transaction costs are included in the
fair value unless the financial assets are allocated to the
category "financial assets measured at fair value through
profit or loss".
The first step of the impairment test is to determine the
value in use of an asset. If the calculated value in use is
lower than the carrying amount of the asset, then its
fair value less costs to sell are also determined. If the lat-
ter is also lower than the carrying amount of the asset,
then an impairment loss is recorded, reducing the car-
rying amount to the higher of the asset's value in use or
fair value less costs to sell. The value in use is deter-
mined on the basis of a present value computation.
Cash flows used for the purposes of this calculation are
derived from long-term forecasts approved by manage-
ment. The long-term forecasts themselves are based on
detailed forecasts drawn up at an operational level and,
based on a planning period of six years, correspond
roughly to a typical product's life-cycle. For the pur-
poses of calculating cash flows beyond the planning pe-
riod, the asset's assumed residual value does not take
growth into account. Forecasting assumptions are con-
tinually brought up to date and regularly compared with
external sources of information. The assumptions used
reversal may not, however, exceed the rolled-forward
amortised cost of the asset.
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
113 Notes to the Income Statement
121 Notes to the Statement
98-Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
If there is any evidence of impairment of non-financial
assets (except inventories and deferred taxes), or if an
annual impairment test is required to be carried out –
i.e. for intangible assets not yet available for use, intan-
gible assets with an indefinite useful life and goodwill
acquired as part of a business combination – an impair-
ment test pursuant to IAS 36 (Impairment of Assets)
is performed. Each individual asset is tested separately
unless the cash flows generated by the asset cannot be
distinguished to a large degree from the cash flows
generated by other assets or groups of assets (cash-gen-
erating units/CGUs). For the purposes of the impair-
ment test, the asset's carrying amount is compared with
its recoverable amount, the latter defined as the higher
of the asset's fair value less costs to sell and its value in
use. An impairment loss is recognised when the recover-
able amount is lower than the asset's carrying amount.
Fair value is the price that would be received to sell an
asset in an orderly transaction between market partici-
pants at the measurement date. The value in use corre-
sponds to the present value of future cash flows ex-
pected to be derived from an asset or group of assets.
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
The Group's financial assets are allocated to either
cash funds or to the categories "loans and receivables",
"available-for-sale", "held for trading" or "fair value
The prerequisite for categorising an item as a “financial
asset measured at fair value through profit and loss" is
that
98-Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
90
option".
90-GROUP FINANCIAL STATEMENTS
Income Statements
With the exception of derivative financial instruments,
all receivables and other current assets relate to loans
and receivables which are not held for trading. All such
items are measured at amortised cost. Appropriate
impairment losses are recognised to take account of all
identifiable risks.
In accordance with IAS 39 (Financial Instruments:
Recognition and Measurement), assessments are made
regularly as to whether there is any objective evidence
that a financial asset or group of assets may be impaired.
Available-for-sale financial assets are written down if
there is objective evidence that impairment has occurred.
In the case of equity capital instruments that are listed
on a stock market, it is assumed that an item is impaired
if its fair value falls significantly (more than 20%) or on
a prolonged basis (more that 5% over nine months) be-
low acquisition cost. Impairment losses identified after
carrying out an impairment test are recognised as an ex-
pense. Gains and losses on available-for-sale financial
assets are recognised directly in other accumulated
equity until the financial asset is disposed of or is deter-
mined to be impaired, at which time the cumulative loss
previously recognised in other comprehensive income
is reclassified to profit or loss for the period.
Loans and receivables which are not held for trading
and held-to-maturity financial investments with a fixed
term are measured at amortised cost using the effec-
tive interest method. All financial assets for which pub-
lished price quotations in an active market are not avail-
able and whose fair value cannot be determined reliably
are required to be measured at cost.
Available-for-sale assets include non-current invest-
ments, securities and investment fund shares. This cate-
gory includes all non-derivative financial assets which
are not classified as "loans and receivables" or "held-to-
maturity investments" or as items measured "at fair value
through profit and loss".
value of available-for-sale financial assets is measured
using appropriate valuation techniques e.g. discounted
cash flow analysis based on market information available
at the balance sheet date.
Financial assets, for which the fair value option is ap-
plied, include other investments, and remain in the
relevant balance sheet line item after initial recognition.
Gains and losses are presented in the income statement
line item "Other financial result" and interest income
and expenses are presented within the net interest result.
Subsequent to initial recognition, financial assets which
are available-for-sale or held-for-trading or for which
the fair value option is applied, are measured at their fair
value. When market prices are not available, the fair
- a group of financial instruments is managed, and
its performance evaluated, on a fair value basis or
the financial instrument contains one or more
embedded derivatives that are required to be
separated.
- a measurement or recognition inconsistency ("ac-
counting mismatch") is eliminated or significantly
reduced or
106
of three phases of the IASB project to replace the exist-
ing IAS 39 (Financial Instruments: Recognition and
Measurement). The first phase deals initially only with
Foreign currency receivables and payables in the single
entity accounts of BMW AG and subsidiaries are re-
corded, at the date of the transaction, at cost. At the end
of the reporting period, foreign currency receivables
and payables are translated at the closing exchange rate.
The resulting unrealised gains and losses as well as the
subsequent realised gains and losses arising on settle-
ment are recognised in the income statement in accord-
ance with the underlying substance of the relevant
transactions.
2015
Netting relates to the offset of deferred tax assets and
liabilities within individual separate entities or tax
groups to the extent that they relate to the same tax
authorities.
increased to €2,234 million due to exchange rate factors
(2014: €2,112 million). As in previous years, deferred
tax assets recognised on these tax losses - amounting to
€402 million at the end of the reporting period (2014:
€422 million) – were fully written down since they can
only be utilised against future capital gains.
in € million
Capital losses available for carryforward in the United
Kingdom which do not relate to ongoing operations
Tax losses available for carryforward - for the most
part usable without restriction - amounted to €468 mil-
lion (2014: €469 million). This includes an amount of
€345 million (2014: €228 million), for which a valuation
allowance of €100 million (2014: €74 million) was rec-
ognised on the related deferred tax asset. For entities
with tax losses available for carryforward, a net surplus
of deferred tax assets over deferred tax liabilities is re-
ported at 31 December 2015 amounting to €104 mil-
lion (2014: €140 million). Deferred tax assets are recog-
nised on the basis of management's assessment of
whether it is probable that the relevant entities will gen-
erate sufficient future taxable profits, against which
deductible temporary differences can be offset.
Deferred tax assets on tax loss carryforwards and capital
losses before allowances totalled €548 million (2014:
€566 million). After valuation allowances of €502 million
(2014: €496 million), their carrying amount stood at
€46 million (2014: €70 million).
117 GROUP FINANCIAL STATEMENTS
Liabilities
-171
87
Net
1,974
2,116
2,061
1,945
Deferred taxes
-9,704
-9,988
-9,704
-9,988
Netting
-496
-502
Valuation allowance
11,678
12,104
12,261
12,435
690
Deferred taxes recognised directly in equity amounted
to €2,004 million (2014: €1,889 million), an increase of
€115 million (2014: €1,438 million) compared to the end
of the previous year. The change includes an increase
in deferred taxes recognised in conjunction with cur-
rency translation amounting to €43 million (2014: €9 mil-
lion).
Changes in deferred tax assets and liabilities during the
reporting period can be summarised as follows:
2015
2014
5,839.6
529.8
€ million
€ million
5,798.1
6,369.4
€ million
2014
2015
Profit attributable to preferred stock
Profit attributable to common stock
Net profit for the year after minority interest
17- Earnings per share
118
The tax returns of BMW Group entities are checked
regularly by German and foreign tax authorities. Taking
account of a variety of factors - including existing inter-
pretations, commentaries and legal decisions taken re-
lating to the various tax jurisdictions and the BMW
Group's past experience - adequate provision has, to
the extent identifiable and probable, been made for
potential future tax obligations.
-715
Deferred taxes are not recognised on retained profits of
€33.7 billion (2014: €30.7 billion) of foreign subsidiaries,
as it is intended to invest these profits to maintain and
expand the business volume of the relevant companies.
A computation was not made of the potential impact
of income taxes on the grounds of disproportionate ex-
pense.
-87
171
387
253
-1,429
-72
-116
-77
839
-87
Deferred taxes at 31 December (assets (-)/liabilities (+))
Exchange rate impact and other changes
Deferred tax expense (+)/income (-) recognised through income statement
Change in deferred taxes recognised directly in equity.
Deferred taxes at 1 January (assets (-)/liabilities (+))
Changes in deferred tax assets and liabilities include
changes relating to items recognised either through
the income statement or directly in equity as well as
the impact of exchange rate and other factors. Deferred
taxes recognised directly in equity increased in total
by €72 million (2014: €1,429 million). Of this amount,
€520 million (2014: €759 million) related to the fair
value measurement of derivative financial instruments
and marketable securities (recognised directly in equity),
shown in the summary above in the line items "Other
assets" and "Liabilities". Working in the opposite direc-
tion, deferred taxes relating to remeasurements of the
net defined benefit liability for pension plans (recognised
directly in equity), shown in the summary above in the
line item "Provisions", fell by €448 million (2014: increase
of €670 million).
2,945
3,281
Eliminations
Deferred tax liabilities -
Deferred tax assets -
The allocation of deferred tax assets and liabilities to
balance sheet line items at 31 December is shown in the
following table:
The line "Other variances" comprises primarily recon-
ciling items relating to the Group's share of results of
equity accounted investments.
Provisions
Tax loss carryforwards
Other assets
Other investments
Leased products
Property, plant and equipment
Intangible assets
in € million
Tax increases as a result of non-deductible expenses
and tax reductions due to tax-exempt income de-
creased significantly compared to one year earlier. As
in the previous year, tax increases as a result of non-
tax-deductible expenses were attributable primarily to
the impact of non-recoverable withholding taxes and
transfer price issues.
163 Segment Information
2015
147 Other Disclosures
of Comprehensive Income
121 Notes to the Statement
113-Notes to the Income Statement
98 Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
90
90-GROUP FINANCIAL STATEMENTS
Income Statements
33.2%
30.7%
122 Notes to the Balance Sheet
- 5,317.7
480.4
2014
2014
602
478
2,827
2,654
95
178
-4,175
4,187
- 566
548
2,687
2,109
-1,289
1,363
2015
11
5
5,486
-6,260
393
-367
400
-376
50
20
-1,706
1,977
11
10
-12
5
2,890
90-GROUP FINANCIAL STATEMENTS
Income Statements
90 Statement of
The fee expense shown for KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin, relates only to services
provided on behalf of BMW AG, Munich, and its
German subsidiaries.
The total fee comprises expenses recorded by BMW AG,
Munich, and all consolidated subsidiaries.
23
-6
-7
23
1
1
-3
2
2
4
3
4
-15
15
thereof KPMG AG Wirtschaftsprüfungsgesellschaft
thereof KPMG AG Wirtschaftsprüfungsgesellschaft-
Fee expense
thereof KPMG AG Wirtschaftsprüfungsgesellschaft-
Other services
Tax advisory services
- thereof KPMG AG Wirtschaftsprüfungsgesellschaft
Other attestation services
thereof KPMG AG Wirtschaftsprüfungsgesellschaft
Audit of financial statements
2014
2015
and its network of audit firms amounted to €23 mil-
lion (2014: €23 million) and consists of the following:
in € million
The fee expense pursuant to § 314 (1) no. 9 HGB recog-
nised in the financial year 2015 for the Group auditor
Fee expense
Government grants and government assistance
Income from asset-related and performance-related
grants, amounting to €33 million (2014: €30 million)
19-Share-based remuneration
The BMW Group operates three share-based remunera-
tion programmes, namely the Employee Share Pro-
gramme (for entitled employees), share-based com-
mitments to members of the Board of Management
and share-based commitments to senior heads of de-
partment.
In the case of the Employee Share Programme, non-
voting shares of preferred stock in BMW AG were
granted to qualifying employees during the financial
year 2015 at favourable conditions (see note 34 for the
number and price of issued shares). The holding pe-
riod for these shares is up to 31 December 2018. The
BMW Group recorded a personnel expense of €6 mil-
lion (2014: €6 million) for the Employee Share Pro-
2014
Further details on the remuneration of the Board of
Management are provided in the 2015 Compensation
Report, which is part of the Combined Management
Report.
The fair value of the programmes for Board of Manage-
ment members and senior heads of department at the
date of grant of the share-based remuneration compo-
nents was €1,605,147 (2014: €1,479,939), based on a
total of 18,143 shares (2014: 17,712 shares) of BMW AG
common stock or a corresponding cash-based settle-
ment measured at the relevant market share price pre-
vailing on the grant date.
The total expense recognised in 2015 for the share-based
remuneration component of current and former Board
of Management members and senior heads of depart-
ment was €1,892,994 (2014: €1,449,486).
The total carrying amount of the provision for the share-
based remuneration component of current and former
Board of Management members and senior heads of
department at 31 December 2015 was €4,989,668 (2014:
€3,096,674).
The cash-settlement obligation for the share-based re-
muneration component is measured at its fair value at
the balance sheet date (based on the closing price of
BMW AG common stock in Xetra trading at 31 Decem-
ber 2015).
The share-based remuneration component is measured
at its fair value at each balance sheet date between grant
and settlement date, and on the settlement date itself.
The appropriate amounts are recognised as personnel
expense on a straight-line basis over the vesting period
and reported in the balance sheet as a provision.
With effect from the financial year 2012, qualifying
senior heads of department are also entitled to opt for a
share-based remuneration component, which, in most
respects, is comparable to the share-based remunera-
tion arrangements for Board of Management members.
four years. Once the holding period is fulfilled, BMW AG
grants one additional share of BMW AG common stock
for each three held or, at its discretion, pays the equiva-
lent amount in cash (share-based remuneration com-
ponent). Special rules apply in the case of death or in-
validity of a Board of Management member or early
termination of the contractual relationship before ful-
filment of the holding period.
163 Segment Information
147 Other Disclosures
122 Notes to the Balance Sheet
of Comprehensive Income
121-Notes to the Statement
119 GROUP FINANCIAL STATEMENTS
113-Notes to the Income Statement
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
90
90-GROUP FINANCIAL STATEMENTS
Income Statements
120
Each Board of Management member is required to invest
20% of his/her total bonus (after tax) in shares of BMW AG
common stock, which are recorded in a separate custodian
account for each member concerned (annual tranche).
Each annual tranche is subject to a holding period of
For financial years beginning after 1 January 2011,
BMW AG has added a share-based remuneration com-
ponent to the existing compensation system for Board
of Management members.
gramme in 2015, corresponding to the difference between
the market price and the reduced price of the shares of
preferred stock purchased by employees. The Board of
Management reserves the right to decide anew each year
with respect to an Employee Share Programme.
A large part of these amount to public sector grants for
the promotion of regional structures and to subsidies
for plant expansion.
and €132 million (2014: €73 million) respectively, were
recognised in the income statement in 2015.
98 Accounting Principles and
Policies
The number of employees at the end of the reporting period is disclosed in the Combined Management Report.
113,303
119,688
8.83
9.70
€
54,259,767
54,499,460
number
601,995,196
number 601,995,196
- thereof pension costs: €1,250 million (2014: €991 million)
Personnel expenses
Social security, retirement and welfare costs
Wages and salaries
in € million
The income statement includes personnel costs as follows:
Personnel expenses
€
163 Segment Information
122 Notes to the Balance Sheet
of Comprehensive Income
113-Notes to the Income Statement
121 Notes to the Statement
18-Other disclosures relating to the income statement
Basic earnings per share of preferred stock are com-
puted on the basis of the number of preferred stock
shares entitled to receive a dividend in each of the
*Proposal by management.
Dividend per share of common stock
Dividend per share of preferred stock
Basic earnings per share of common stock
Basic earnings per share of preferred stock
Average number of common stock shares in circulation
Average number of preferred stock shares in circulation
98 Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
147 Other Disclosures
90
9.72
3.20
-7,560
-7,783
-105,743
111,905
2014
2015
year
number of employees during the
average
The
was:
Average number of employees
thereof 2 (2014: 2) at proportionately-consolidated entities
Apprentices and students gaining work experience
thereof 214 (2014: 186) at proportionately-consolidated entities
8.85
Employees
9,764
10,870
-1,670
1,983
8,094
8,887
2014
2015
share.
relevant financial years. As in the previous year, diluted
earnings per share correspond to basic earnings per
2.92
3.22
€
2.90
Personnel expenses include €48 million (2014: €42 mil-
lion) of expenditure incurred to adjust the workforce size.
2,828
Comprehensive Income
--91
Other operating expenses
Other operating income and expenses
Income and expenses relating to impairment losses and
write-downs (reversals and additions) relate primarily
to allowances on receivables.
13- Result from equity accounted investments
113-Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
The profit from equity accounted investments
amounted to €518 million (2014: €655 million)
14-Net interest result
in € million
-311
-334
-192
-225
-76
-86
-23
-25
-218
-202
-820
-872
94
5
Income from the reversal of provisions includes amounts
arising on the termination of legal disputes relating to
the Other Entities segment.
and includes primarily the Group's share of the result
of the BMW Brilliance Automotive Ltd., Shenyang,
joint venture.
2015
2014
Sundry operating expenses -
Losses on the disposal of assets
Expense for impairment losses and write-downs
Expense for additions to provisions
2014
Exchange gains
323
311
Income from the reversal of provisions
172
-184
Income from the reversal of impairment losses and write-downs
-27
30
Gains on the disposal of assets
-173
-101
Sundry operating income
Other interest and similar income
219
914
877
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
Other operating income
Exchange losses
-251
185
200
185
-597
Other financial result
-454
-747
The result on investments for the year under report
includes impairment losses on other investments total-
ling €25 million (2014: €153 million). In the previous
year, this line item was influenced by an impairment
loss of €152 million recognised on the investment in
SGL Carbon SE, Wiesbaden.
The improvement in other financial result was primarily
attributable to the lower net negative impact arising on
currency derivatives.
16- Income taxes
Taxes on income comprise the following:
in € million
Current tax expense
Deferred tax expense
Income taxes
2015
2014
2,751
-430
2,774
-116
2,890
Current tax expense includes €164 million (2014:
€275 million) relating to prior periods.
A deferred tax expense of €52 million (2014: €83 mil-
lion) is attributable to new temporary differences and
the reversal of temporary differences brought forward.
The tax expense was reduced by €64 million (2014:
€27 million) as a result of utilising tax losses/tax credits
brought forward, for which deferred assets had not
previously been recognised.
The change in the valuation allowance on deferred tax
assets relating to tax losses available for carryforward
and temporary differences resulted in a tax expense of
€105 million (2014: €49 million).
Deferred taxes are computed using enacted or planned
tax rates which are expected to apply in the relevant
national jurisdictions when the amounts are recovered.
A uniform corporation tax rate of 15.0% plus solidarity
surcharge of 5.5% applies in Germany, giving a tax rate of
15.8%, unchanged from the previous year. After taking
account of an average municipal trade tax multiplier rate
(Hebesatz) of 425.0% (2014: 425.0%), the municipal trade
tax rate for German entities is 14.9% (2014: 14.9%). The
overall income tax rate in Germany is therefore 30.7%
(2014: 30.7%). Deferred taxes for non-German entities
are calculated on the basis of the relevant country-spe-
cific tax rates and remained in a range of between 12.5%
and 46.9%. Changes in tax rates resulted in a deferred
tax expense of €36 million (2014: €22 million).
The actual tax expense for the financial year 2015 of
€2,828 million (2014: €2,890 million) is €4 million
(2014: €217 million higher) lower than the expected tax
expense of €2,832 million (2014: €2,673 million) which
would theoretically arise if the tax rate of 30.7%
116
(2014: 30.7%), applicable for German companies, was
applied across the Group.
The difference between the expected and actual tax ex-
pense is explained in the following reconciliation:
-153
in € million
-77
2,828
2015
-597
Losses and gains relating to financial instruments
Sundry other financial result
200
Net interest expense on the net defined benefit liability for pension plans
-123
-88
Expense relating to interest impact on other long-term provisions
-72
-105
Other interest and similar expenses
-423
-326
thereof to subsidiaries: €-5 million (2014: €-6 million)
-618
-519
Interest and similar expenses
-430
Net interest result
-319
115 GROUP FINANCIAL STATEMENTS
15-Other financial result
in € million
2015
2014
Income from investments in subsidiaries and participations
―thereof from subsidiaries: €- million (2014: €2 million)
Impairment losses on investments in subsidiaries and participations
1
3
-25
-153
Result on investments
-24
-150
-433
in € million
- thereof from subsidiaries: €19 million (2014: €18 million)
Interest and similar income
114
IFRS 15 - subject to EU endorsement – is mandatory for
the first time for annual periods beginning on or after
1 January 2018. Early adoption is permitted. In July 2015,
the IASB also published an Exposure Draft containing
clarifications to the Standard, as a consequence of which
the Standard may be amended. For this reason, the
potential impact of applying IFRS 15 cannot be reliably
assessed at present.
112
90-GROUP FINANCIAL STATEMENTS
Income Statements
90
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98-Accounting Principles and
Policies
113-Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
In January 2016, the IASB published the new Standard
IFRS 16 (Leases). IFRS 16 supersedes IAS 17 and the
related Interpretations (IFRIC 4 Determining whether
an Arrangement contains a Lease, SIC-15 Operating
Leases - Incentives and SIC-27 Evaluating the Substance
of Transactions involving the Legal Form of a Lease).
A major difference to the previous Standard is the in-
creased scope of discretion for estimates and the intro-
duction of thresholds that could influence the amount
and timing of revenue recognition.
The new Standard stipulates a completely new approach
to accounting for leases by lessees. Whereas under IAS 17,
the accounting treatment of a lease was determined on
the basis of the transfer of risks and rewards incidental
to ownership of the relevant asset, in the future, all
lease arrangements will be required as a general rule
to be accounted for by the lessee in a similar way to
finance leases.
The new Standard is mandatory for annual periods be-
ginning on or after 1 January 2019. Early adoption will
be permitted, provided that IFRS 15 is also adopted at
the same time.
Given that the BMW Group is still in a very early phase
of considering the implications of introducing IFRS 16
and the definitive version of the Standard was only pub-
lished at the beginning of 2016, the detailed impact of
the Standard on the IFRS Group Financial Statements
from the perspective of lessees and lessors, cannot be
foreseen at present.
In December 2014, the IASB issued Amendments to
IAS 1 (Presentation of Financial Statements) as part of
its disclosure initiative. The amendments relate pri-
marily to clarifications relating to the presentation of
financial reports.
Firstly, disclosures are only required to be made in the
notes if their inclusion is material for users of the finan-
cial statements. This also applies when an IFRS Stand-
ard explicitly specifies a minimum list of disclosures.
Secondly, items to be presented in the balance sheet, in-
come statement and comprehensive income can be
aggregated or disaggregated by using subtotals. Thirdly,
it clarifies that an entity's share of other comprehensive
income of equity-accounted entities is required to be
analysed - within the Statement of Comprehensive
Income - to show "components, which will be subse-
quently reclassified to profit and loss" and "compo-
nents, which will be not subsequently reclassified to
profit and loss". Fourthly, it is stressed that there is no
standard template for the notes and that the emphasis
should be on structuring the notes based on the rele-
vance for the specific reporting entity.
The Standard is mandatory for the first time for annual
periods beginning on or after 1 January 2016. Applica-
tion of the new rules will not have a material impact on
the Group Financial Statements.
Early adoption of all of the new IFRS requirements is
permitted. As things stand, the BMW Group does not
plan to adopt any of the new requirements early.
113 GROUP FINANCIAL STATEMENTS
BMW Group
Notes to the Group Financial Statements
Notes to the Income Statement
9-Revenues
Revenues by activity comprise the following:
in € million
Sales of products and related goods
By contrast, the accounting requirements for lessors, par-
ticularly in relation to the requirement to classify leases,
will remain largely unchanged.
5. Recognise revenue when a performance obligation is
satisfied.
4. Allocate the transaction price to separate performance
obligations
2. Identify the performance obligations in the contract
3. Determine the transaction price
Effective tax rate
Actual tax expense
12-Other operating income and expenses
Other variances
275
164
-150
42
Tax increases (+)/tax reductions (-) as a result of non-deductible expenses and tax-exempt income
Tax expense (+)/benefits (-) for prior years
-55
-119
Variances due to different tax rates
2,673
2,832
30.7%
30.7%
-8,707
1. Identify the contract with the customer
The new Standard is based on a five-step model, which
sets out the rules for revenue from contracts with cus-
tomers, with the exception – among other things - of
lease arrangements, insurance contracts, financial in-
struments and specified contractual rights and obliga-
tions relating to non-monetary transactions between
entities within the same sector. Revenue can be recog-
nised either over time or at a specific point in time.
The five-step model describes the five steps necessary
to recognise revenue on the basis of the transfer of
control:
a single Standard. The new Standard also stipulates uni-
form revenue recognition principles for all sectors and
all categories.
-
In May 2014 the IASB issued IFRS 15 (Revenue from
Contracts with Customers) together with the Financial
Accounting Standards Board. The objective of the new
Standard is to assimilate all the various existing require-
ments and Interpretations relating to revenue recogni-
tion (IAS 11 Construction Contracts, IAS 18 Revenue,
IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agree-
ments for the Construction of Real Estate, IFRIC 18
Transfers of Assets from Customers, SIC-31 Revenue -
Barter Transactions involving Advertising Services) in
In October 2010, additional rules for financial liabilities
were added to IFRS 9. The requirements for financial
liabilities contained in IAS 39 remain unchanged with
the exception of new requirements relating to the
measurement of an entity's own credit risk at fair value.
A package of amendments to IFRS 9 was announced
on 19 November 2013. On the one hand, the amend-
ments overhaul the requirements for hedge accounting
by introducing a new hedge accounting model. They
also enable entities to change the accounting for lia-
bilities they have elected to measure at fair value, such
that fair value changes due to changes in "own credit
risk" would not require to be recognised in profit or loss.
The mandatory effective date of 1 January 2015 was re-
moved and a new application date of 1 January 2018 set.
The impact of adoption of the Standard on the Group
Financial Statements is currently being investigated.
Based on analyses to date, the new rules are not expected
to have a material impact in terms of the classification
and measurement of financial instruments when the
Standard is adopted. As far as the accounting for hedging
relationships is concerned, analyses to date indicate
that it will be possible to account for the majority of
commodity hedging contracts using hedge accounting
rules. As a result, fluctuations in the price of hedging
contracts during their term will be presented as a com-
ponent of accumulated other equity, thus reducing vola-
tility in reported earnings.
Income from lease instalments
The new categorisation is based partly on the entity's
business model and partly on the contractual cash flow
characteristics.
financial assets. IFRS 9 amends the recognition and
measurement requirements for financial assets, in-
cluding various hybrid contracts.
111 GROUP FINANCIAL STATEMENTS
Profit before tax
Tax rate applicable in Germany
Expected tax expense
-9,224
Financial assets are measured at either amortised cost
or fair value. IFRS 9 harmonises the various rules con-
tained in IAS 39 and reduces the number of valuation
categories for financial instruments on the assets side
of the balance sheet.
Sales of products previously leased to customers
The impact of adoption of the new requirements on the
Group Financial Statements is currently being assessed.
In the case of multi-component contracts with variable
consideration components, it is possible that a change
in the allocation of transaction prices may result in an
earlier recognition of revenues. Buy-back arrangements
with customers could result in the need to change the
accounting treatment, with revenues being recognised
either earlier or later by the BMW Group, depending
on the individual case. Accounting for rights of return
could, under certain circumstances, result in the need
to record eliminations between the operating segments
at an earlier stage. Any such changes would only have
an impact at the moment of first-time adoption, not,
however, during the period in which the new rules are
adopted or in subsequent periods.
Interest income on loan financing
1,891
-1,451
-17,407
14,716
1,495
1,407
547
362
4,747
74,043
3,072
63,396
Group cost of sales include €19,449 million (2014:
€16,485 million) relating to Financial Services business.
Manufacturing costs include impairment losses on
intangible assets and property, plant and equipment
totalling €3 million (2014: €– million). Cost of sales
is reduced by public-sector subsidies in the form of
reduced taxes on assets and reduced consumption-
based taxes amounting to €71 million (2014: €54 mil-
lion).
4,135
Total research and development expenditure comprises
research costs, non-capitalised development costs and
capitalised development costs (excluding scheduled
amortisation). Total research and development expendi-
ture was as follows:
2014
Research and development expenses
Amortisation
New expenditure for capitalised development costs
Total research and development expenditure
4,271
4,135
-1,166
-1,068
2,064
-1,499
5,169
4,566
11-Selling and administrative expenses
Selling expenses amounted to €5,758 million (2014:
€5,344 million) and comprise mainly marketing, adver-
tising and sales personnel costs.
Administrative expenses amounted to €2,875 million
(2014: €2,548 million) and comprise expenses for
administration not attributable to development, pro-
duction or sales functions.
2015
4,271
in € million
6,716
Other income
Revenues
38,253
2015
2014
-68,643
60,280
8,965
-7,748
-8,181
3,253
- 2,881
3,133
92,175
80,401
-2,776
Cost of sales directly attributable to financial services
43,685
10-Cost of sales
Cost of sales comprises:
in € million
Manufacturing costs
Research and development expenses
Warranty expenditure
An analysis of revenues by segment and geographical region is shown in the segment information in note 49.
Interest expense relating to financial services business
Expense for risk provisions and write-downs for financial services business
Other cost of sales.
Cost of sales
2014
2015
17,759
3,318
1,420
17,182
32,338
Advance payments made and construction in progress -
Property, plant and equipment
43
238
3,536
3,277
7,301
510
34,965
6,804
29,930
208
1,5912
6
6
Other facilities, factory and office equipment
Plant and machinery
Land, titles to land, buildings, including buildings on
-third party land-
Intangible assets
Other intangible assets
Development costs
-613
660
1,941
204
30,165
- 2,014
Leased products
Depreciation and amortisation
62
-1,902
1.1.2014
Trans-
Other investments
Current
408
428
489
-Non-current marketable securities-
26
2
Investments in non-consolidated subsidiaries
Participations
244
245
411
164
-157
-2
12
398
-13
2
460
=
2
וי
וי
2,233
1,088
Investments accounted for using the equity method
-76
27
- 8,930
66
-5,625
31.12.
31.12.
2015
- Carrying amount-
2015
31.12.
Dis-
posals
year
Current
ences
differ-
lation
Trans-
1.1.20151
Depreciation and amortisation
123 GROUP FINANCIAL STATEMENTS
3 Including assets under construction of €1,679 million.
2 Prior year figures have been adjusted for changes in accordance with IAS 8 as described in note 9 of the Financial Statements 2014.
226
Changes
Participations
575
641
Non-current marketable securities
2014
Other investments
2
107
וי
57
867
1 Including first-time consolidations.
815
-9,593
3,888
883
5,915
4,515
25,876
-1,150
2,795
390
23,841
62
319
-77
-4,181
6,499
7,372
4,973
1,035
1,341
11
4,656
4,171
-6,351
- 5,453
.5
5
364
1,166
- 364
-763
-175
-152
797
657
-682
- Goodwill
lation
Present value of future minimum lease payments
not effect-
An analysis of changes in intangible assets is provided
No borrowing costs were recognised as a cost compo-
nent of intangible assets during the year under report.
As in the previous year, there was no requirement to
recognise impairment losses or reversals of impairment
losses on intangible assets in 2015.
Intangible assets amounting to €48 million (2014:
€46 million) are subject to restrictions on title.
will of €331 million (2014: €331 million) allocated to
the Financial Services CGU.
Other intangible assets include a brand-name right
amounting to €48 million (2014: €46 million), which is
allocated to the Automotive segment and is not sub-
ject to scheduled depreciation since its useful life is
deemed to be indefinite. The year-on-year change is due
entirely to currency factors. This line item also includes
goodwill of €33 million (2014: €33 million) allocated to
the Automotive cash-generating unit (CGU) and good-
Intangible assets mainly comprise capitalised develop-
ment costs on vehicle and engine projects as well as
subsidies for tool costs, licences, purchased development
projects, software and purchased customer bases.
Amortisation on intangible assets is presented in cost
of sales, selling expenses and administrative expenses.
22-Intangible assets
124
Other investments
553
408
459
16
in note 21.
57
264
- Non-current marketable securities
-166 Investments in non-consolidated subsidiaries
387 -Participations
Investments accounted for using the equity method
-164
244
397
57
152
188
62
-16
-76
638
1,088
153
90-GROUP FINANCIAL STATEMENTS
Income Statements
90
90 Statement of
57
22
due later than five years
due between one and five years
due within one year
due later than five years
due between one and five years
due within one year
Interest portion of the future minimum lease payments
due later than five years
due between one and five years
due within one year
Total of future minimum lease payments
31.12.2014
31.12.2015
Minimum lease payments of the relevant leases are as
follows:
ship is attributable to the BMW Group due to the na-
ture of the lease arrangements (finance leases). Leases
to which BMW AG is party, with a carrying amount
of €102 million (2014: €64 million), run for periods up
to 2030 at the latest and contain price adjustment
clauses in the form of index-linked rentals as well as
extension and purchase options. Assets leased by
BMW Tokyo Corp., Tokyo, with a carrying amount of
€7 million (2014: €2 million), have remaining terms
up to 2039 at the latest. BMW Osaka Corp., Osaka, is
party to a finance lease running until 2022 for an opera-
tional building with a carrying amount of €1 million at
the end of the reporting period (2014: €1 million).
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
Leased products
23-Property, plant and equipment
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
A break-down of the different classes of property, plant
and equipment disclosed in the balance sheet and
changes during the year are shown in note 21.
An impairment loss of €3 million (2014: €– million) was
recognised on plant and machinery in the Automotive
segment in 2015.
No borrowing costs were recognised as a cost compo-
nent of property, plant and equipment during the year
under report.
Property, plant and equipment include a total of
€110 million (2014: €67 million) relating to land and
operational buildings, for which economic owner-
in € million
113 Notes to the Income Statement
121 Notes to the Statement
30,165 25,914
6,804
3,462
- Development costs
6,179
6,499
4,654
1,917
1,246
10
5,315
-788
682
-761
92
-178
-10
665
369
- 5,022
Dis- 31.12.
posals
2014
differ-
ences
ing net
income
Carrying amount
31.12.
2014
Goodwill
31.12.
20132
1,068
1,825
3,888
5
5
5,453
364
4,645
year
Other intangible assets
Land, titles to land, buildings, including buildings on
third party land
3,401
293
6,572
Property, plant and equipment
Advance payments made and construction in progress -
Other facilities, factory and office equipment
-536
-2,0143 2,971
17,182 15,168
29,909
1,312
2,924
568
27,729
613
-1,897
145
-181
52
3,849
85
282
38
4,178
22,071
Intangible assets
431
- 23,834
5,625
-8,930
- 4,890
6,771
Plant and machinery
1,809
2,461
41
Available-for-sale securities
-240
fications
1.1.2015 Translation - Additions Reclassi--Disposals ―31.12.
differences
- Acquisition and manufacturing cost
in € million
21-Analysis of changes in Group tangible, intangible and investment assets 2015
Notes to the Group Financial Statements
Notes to the Balance Sheet
BMW Group
122
|
of €140 million) and within “Derivative financial instru-
ments" with a negative amount of €15 million (2014:
negative amount of €141 million).
Other comprehensive income arising at the level of equity
accounted investments is reported in the Statement of
Changes in Equity within "Translation differences" with
a positive amount of €90 million (2014: positive amount
-2,298
1,438
-764
-1,475
-719
47
-48
-764
-3,736
-706
-1,592
40
-34
6
-2,194
2015
Other comprehensive income from equity accounted investments
Currency translation foreign operations
Other comprehensive income
4
-75
-765
778
115
893
-71
-765
-2,298
Development costs.
2,064
Other facilities, factory and office equipment
35,469
-1,168
1,362
1,954
551
32,770
Plant and machinery
10,430
-75
-295
240
-164
9,806
third party land
Land, titles to land, buildings, including buildings on
12,345
Goodwill
369
Other intangible assets.
-1,445
15
146
9,341
Intangible assets
15
2,210
וי
883
-152
1,035
-10,522
-369
1,454
11,155
-2,517
1,012
-117
-842
-1,301
-26
40
-170
-1,592
1,012
-706
-401
-2,298
1,413
2014
2015
Other comprehensive income for the period after tax
Items expected to be reclassified to the income statement in the future
Currency translation foreign operations
Deferred taxes
Other comprehensive income from equity accounted investments
thereof reclassifications to the income statement
121 GROUP FINANCIAL STATEMENTS
BMW Group
Notes to the Group Financial Statements
Notes to the Statement of Comprehensive Income
20-Disclosures relating to the statement of total comprehensive income
Other comprehensive income for the period after tax comprises the following:
in € million
-109
Remeasurement of the net defined benefit liability for pension plans
Items not expected to be reclassified to the income statement in the future
13
thereof gains/losses arising in the period under report
thereof reclassifications to the income statement
Financial instruments used for hedging purposes -
- thereof gains/losses arising in the period under report-
Deferred taxes
459
-144
-1,301
Financial instruments used for hedging purposes
53
-170
-401
1,413
Remeasurement of the net defined benefit liability for pension plans
Available-for-sale securities
After
tax
taxes
2014
Deferred
Before
tax
After
tax
2015.
Deferred
taxes
tax
Before
in € million
Deferred taxes on components of other comprehensive income are as follows:
-2,298
-2,194
-2,619
-1,939
-1,318
-255
-71
-69
-48
-732
-765
-764
-119
-706
893
516
2
47
34
607
-28,843
Plant and machinery
9,803
51
428
407
207
8,812
Land, titles to land, buildings, including buildings on
third party land
11,153
1,923
1,443
93
369
5
9,341
Development costs
9,667
1,499
Goodwill
374
Other intangible assets
2,436
1,459
62
Intangible assets
11,500
15
1,561
1,825
15
in € million
Other facilities, factory and office equipment
65
Investments in non-consolidated subsidiaries
1,088
150
600
638
Investments accounted for using the equity method
36,969
12,047
14,576
1,954
32,486
Leased products
47,091
1,346
4,539
916
42,982
207
2,023
32
-1,145
-32,764
149
2,510
- 2,355
Advance payments made and construction in progress
37
1,489
-2,483
1
-2,014
Property, plant and equipment
-2,972
218
―31.12.
2014
differences
68
3
-226
Investments in non-consolidated subsidiaries
_
2,233
148
1,293
1,088
Investments accounted for using the equity method
42,266
14,452
18,011
1,738
36,969
Leased products
50,097
215
2,601
Advance payments made and construction in progress
- 2,020
4
1,268
64
-1,691
1,597
Property, plant and equipment
47,113
766
3,680
1,462
4
fications
-233
641
Acquisition and manufacturing cost
1.1.2014 Translation - Additions Reclassi--Disposals
Analysis of changes in Group tangible, intangible and investment assets 2014
2 Including assets under construction of €1,187 million.
1 Including mergers, see note 2.
147 Other Disclosures
163 Segment Information
122-Notes to the Balance Sheet
of Comprehensive Income
121 Notes to the Statement
113 Notes to the Income Statement
98 Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
Income Statements
-15
656
Non-current marketable securities
-28
28
Other investments
Participations
867
' |
ཝཾ།
64
917
90-GROUP FINANCIAL STATEMENTS
90
111
-69
1,129
-99
129 GROUP FINANCIAL STATEMENTS
ments (€12 million; 2014: €48 million) is reported under
"Other financial assets". Investment funds are held to
secure these obligations. These funds are managed by
BMW Trust e. V., Munich, as part of a Contractual Trust
Arrangement (CTA) and are therefore netted against
the corresponding settlement arrears for pre-retirement
part-time working arrangements.
The amount by which the value of the investment funds
exceeds obligations for part-time working arrange-
The rise in marketable securities and investment funds
results primarily from investments in fixed income
marketable securities.
The increase in derivative instruments was primarily
attributable to positive market price developments of
currency derivatives.
5,384
6,635
2,024
2,208
thereof current
thereof non-current
7,408
8,843
297
147
239
272
12
133
3,972
5,261
- 2,888
-3,030
31.12.2014
31.12.2015
The estimated fair value of collateral received for re-
ceivables on which impairment losses were recognised
totalled €26,992 million (2014: €25,443 million) at
the end of the reporting period. This collateral related
primarily to vehicles. The carrying amount of assets
held as collateral and taken back as a result of pay-
ment default amounted to €40 million (2014: €41 mil-
lion).
€13,321 million (2014: €10,808 million). No impairment
losses were recognised for these balances.
Marketable securities and investment funds relate to available-for-sale financial assets and comprise:
Financial assets
in € million
Stocks
3,872
4,700
532
344
2,745
595
699
3,657
Allowances for impairment and credit risk
Debt securities
due later than three months
due within three months
Other debt securities
due later than three months
due within three months
Fixed income securities
31.12.2015 ―31.12.2014
in € million
The contracted maturities of debt securities are as follows:
532
3,972
344
5,261
- 3,340
4,356
-100
561
Marketable securities and investment funds
Other debt securities
Fixed income securities
31.12.2015 31.12.2014
Other
Credit card receivables
Loans to third parties
-239
1,580
482
-1,098
group basis
specific item basis
- Total
Allowance for impairment recognised on a
Balance at 31 December
Exchange rate impact and other changes
Utilised
Allocated (+)/reversed (-)
Balance at 1 January
in € million
2014
128
1,493
530
963
-24
-7
17
-295
-341
-22
-319
30
265
41
-280
-371
-20
Marketable securities and investment funds
Derivative instruments
in € million
Financial assets comprise:
147 Other Disclosures
163 Segment Information
of Comprehensive Income
122-Notes to the Balance Sheet
121 Notes to the Statement
113 Notes to the Income Statement
28-Financial assets
Receivables from sales financing which were not over-
due at the end of the reporting period amounted to
At the end of the reporting period, impairment allow-
ances of €530 million (2014: €515 million) were recog-
nised on a group basis on gross receivables from sales
financing totalling €44,473 million (2014: €38,780 mil-
lion). Impairment allowances of €963 million (2014:
€1,000 million) were recognised at 31 December 2015
on a specific item basis on gross receivables from sales
financing totalling €13,742 million (2014: €12,951 million).
Balance at 1 January adjusted due to deconsolidation of entities.
98 Accounting Principles and
Policies
Receivables relating to credit card business comprise the following:
98-Notes
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
1,515
515
-46
12
34
1,000
-391
96 Group Statement of Changes in
Equity
-1,515
in € million
Gross carrying amount
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
6,132
6,261
902
966
-641
-711
412
412
-1,078
1,036
-1,055
-893
-721
-1,323
1,527
31.12.2014
31.12.2015
Other assets
98 Accounting Principles and
Policies
Sundry other assets
113 Notes to the Income Statement
121 Notes to the Statement
147 Other Disclosures
163 Segment Information
53
€29 million) were recognised in 2015 and resulted pri-
marily from accidents and natural disasters. No reversals
of write-down were recognised in the period under re-
port (2014: €3 million).
At 31 December 2015, inventories measured at their
net realisable value amounted to €1,054 million (2014:
€723 million) and are included in total inventories of
€11,071 million (2014: €11,089 million). Write-downs to
net realisable value amounting to €486 million (2014:
11,089
11,071
9,227
8,969
944
1,098
918
1,004
31.12.2014
31.12.2015
Work in progress, unbilled contracts
Finished goods and goods for resale
Inventories
Raw materials and supplies
in € million
Inventories comprise the following:
31-Inventories
Collateral receivables comprise mainly customary
collateral (banking deposits) arising on the sale of re-
ceivables.
Receivables from other companies in which an invest-
ment is held include €892 million (2014: €1,054 million)
due within one year.
5,038
4,693
1,094
-1,568
Receivables from subsidiaries include trade receivables
of €39 million (2014: €41 million) and financial receiva-
bles of €677 million (2014: €680 million). They include
€265 million (2014: €293 million) with a remaining term
of more than one year.
Prepayments of €1,527 million (2014: €1,323 million) re-
late mainly to prepaid interest and commission paid
to dealers. Prepayments of €795 million (2014: €674 mil-
lion) have a maturity of less than one year.
thereof non-current
thereof current
of Comprehensive Income
122-Notes to the Balance Sheet
Expected reimbursement claims
Collateral receivables
Other taxes
8
Balance at 31 December
Exchange rate impact and other changes
Utilised
Allocated (+)/reversed (-)
Balance at 1 January
in € million
2014
Balance at 31 December
Exchange rate impact and other changes
Utilised
Allocated (+)/reversed (-)
Balance at 1 January
- Total
Allowance for impairment recognised on a
specific item basis
group basis
in € million
2015
Allowances for impairment losses on receivables relating to credit card business developed as follows during the
year under report:
239
272
-8
-8
247
280
31.12.2014
Net carrying amount
Allowance for impairment
7.
8
1
8
Receivables from other companies in which an investment is held
Receivables from subsidiaries
Prepayments
in € million
Other assets comprise:
30-Other assets
ter more than twelve months. Some of the claims may
be settled earlier than this depending on the timing of
proceedings.
Income tax assets totalling €2,381 million (2014: €1,906
million) include claims amounting to €519 million
(2014: €653 million) which are expected to be settled af-
29-Income tax assets
130
8
8
-1
31.12.2015
1
-8
-6
6
9
9
-Total
8
1
8
-7
8
group basis
Allowance for impairment recognised on a
specific item basis
-8
515
716
Balance at 31 December
2015
2014
2015
-THERE¹
DriveNow
BMW Brilliance -
Disclosures relating to the balance sheet
in € million
126
2015
-THERE*
*No disclosure of income statement figures for 2015 on the grounds of immateriality. See also note 3.
-6
-1,339
147
1,081
-144
449
369
15
24
40
-5
-6
1,702
247
380
1,399
32
47
2014
-11,550
2015
Cash and cash equivalents
450
-589
Non-current provisions and liabilities
-48
-2,003
-12
202
365
19
32
-96
13
23
222
2,910
-3,853
Non-current financial liabilities
Equity
- 3,404
3,841
- 976
-1,663
-3,115
1
4,171
5,415
Current assets
Non-current assets
13,220
2014
2015
later than five years
between one and five years
within one year
31.12.2015 ―31.12.2014
cial services business. Minimum lease payments of
€16,527 million (2014: €14,712 million) from non-can-
cellable operating leases fall due as follows:
in € million
The BMW Group, as lessor, leases out its own products
and those of other manufacturers as part of its finan-
24-Leased products
125 GROUP FINANCIAL STATEMENTS
74
121
41
-72
28
37
5
12
སྰ༠༤
45
-12
8
25
-10
༄ 8སེ༅
119
190
-1,000
53
8,079
-7,267
8,445
-7,442
DriveNow
2015
BMW Brilliance -
Dividends received by the Group
Total comprehensive income.
Other comprehensive income
Income taxes
Interest expenses
Interest income
Profit/loss before financial result
Scheduled depreciation
Disclosures relating to the income statement
Revenues
in € million
1,093
The accounting treatment applied to investments ac-
counted for using the equity method is described in
note 6. Financial information relating to equity accounted
investments is aggregated in the following table:
cases with a 50.0% shareholding) is a car sharing pro-
vider which currently offers car-sharing services in major
German cities and, going forward, increasingly outside
Germany.
The joint ventures DriveNow GmbH & Co. KG, Munich,
and DriveNow Verwaltungs GmbH, Munich, (in both
The BMW Brilliance Automotive Ltd., Shenyang, joint
venture (in which the BMW Group has a 50.0% share-
holding) produces mainly BMW brand models for the
Chinese market and also has engine manufacturing
facilities, which supply the joint venture's two plants
with petrol engines.
25-Investments accounted for using the equity method
Investments accounted for using the equity method com-
prise the joint ventures BMW Brilliance Automotive Ltd.,
Shenyang (BMW Brilliance), DriveNow GmbH & Co. KG,
Munich, and DriveNow Verwaltungs GmbH, Munich
(DriveNow), as well as the associated company THERE
Holding B.V., Amsterdam (THERE).
note 21.
An analysis of changes in leased products is provided in
ment losses amounting to €24 million (2014: €44 million)
were recognised on leased products in 2015 as a con-
sequence of changes in residual value expectations.
Impairment losses amounting to €119 million (2014:
€137 million) and income from the reversal of impair-
Contingent rents of €54 million (2014: €56 million), based
principally on the distance driven, were recognised in
income. Some of the agreements contain price adjust-
ment clauses as well as extension and purchase options.
14,712
16,527
3
3
The associated company, THERE Holding B.V., Amsterdam,
(in which the BMW Group has a 33.3% shareholding),
wholly owns HERE International B.V., Amsterdam (until
28 January 2016: THERE Acquisition B.V., Amsterdam),
which, in turn, serves as the parent company of the HERE
Group. Further information is provided in note 3.
Current financial liabilities
Minimum lease payments
-236
-10,175
-11,572
4,898
5,429
16,706
18,924
-109
-134
5,366
-11,231
5,974
-12,816
Unrealised interest income
due later than five years
due between one and five years
due within one year
Present value of future minimum lease payments
due later than five years
due between one and five years
due within one year
Gross investment in finance leases
―31.12.2014
31.12.2015
customers and dealers and €17,128 million (2014:
€15,175 million) for finance leases. Finance leases are
analysed as follows:
in € million
Receivables from sales financing, totalling €70,043 mil-
lion (2014: €61,024 million), comprise €52,915 million
(2014: €45,849 million) for credit financing for retail
27-Receivables from sales financing
127 GROUP FINANCIAL STATEMENTS
A break-down of the different classes of other invest-
ments disclosed in the balance sheet and changes
during the year are shown in note 21.
-127
17,128
Impairment losses on participations - recognised with
income statement effect - related to the investment in
SGL Carbon SE, Wiesbaden, which was written down
on the basis of objective criteria, see also note 6.
-102
1,796
Utilised
Exchange rate impact and other changes
641
Allocated (+)/reversed (-)
Balance at 1 January
group basis
Total
Allowance for impairment recognised on a
specific item basis
in € million
2015
Allowances on receivables from sales financing - which only arise within the Financial Services segment - developed
as follows:
61,024
70,043
-1,515
-1,493
-71,536
Net carrying amount
Allowance for impairment
Gross carrying amount
―31.12.2014
31.12.2015
Receivables from sales financing include €41,865 mil-
lion (2014: €37,438 million) with a remaining term of
more than one year.
benefit of the lessor amounted to €165 million (2014:
€140 million).
in € million
Allowances for impairment and credit risk
Contingent rents recognised as income (generally relat-
ing to the distance driven) amounted to €1 million
(2014: €2 million). Impairment losses on finance leases
amounting to €174 million (2014: €183 million) were
measured and recognised on the basis of specific credit
risks. Non-guaranteed residual values that fall to the
1,531
15,175
Impairment losses on investments in non-consolidated
subsidiaries - recognised with income statement effect -
related primarily to BMW i Ventures B.V., Rijswijk.
62,539
The additions to investments in non-consolidated sub-
sidiaries relate to capital increases at the level of BMW
SLP S. A. de C.V., San Luis Potosí, BMW i Ventures B.V.,
Rijswijk, and BMW i Ventures, LLC, Wilmington, DE.
1,927
Group's interest in net assets
2,003
-12
-20
-2,910
-3,853
Net assets
1,477
-8
12
-4,665
5,403
1,455
Equity and liabilities
20
32
-7,575
Current provisions and liabilities
Assets
Reconciliation of aggregated financial information
384
8
12
-4,215
The additions to non-current marketable securities re-
late to the acquisition of part of a convertible bond,
issued by SGL Carbon SE, Wiesbaden, with a nominal
volume of €28 million. Disposals of investment in non-
consolidated subsidiaries result from the winding-up
of BMW Services Netherlands B.V., Rijswijk.
-48
4,814
3,480
143
9,256
668
Other investments relate to investments in non-consoli-
dated subsidiaries, joints ventures, joint operations and
associated companies, participations and non-current
marketable securities.
26-Other investments
3 The BMW Group holds 73.8% (2014: 50.0%) of net assets at 31 December 2015. Due to the allocation of voting rights within the decision-making bodies of the two entities,
operations remain subject to joint control.
2 Corresponds to the consolidated capital (provided by the shareholders) of Drive Now GmbH & Co. KG, Munich, and its subsidiaries.
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
98 Accounting Principles and
Policies
98-Notes
Equity
96 Group Statement of Changes in
94 Cash Flow Statements
Comprehensive Income
90 Statement of
113 Notes to the Income Statement
121 Notes to the Statement
92 Balance Sheets
90
Eliminations
Income Statements
-373
Carrying amount
1,551
1,082
-376
6
668
Carrying amounts as at acquisition date (4 December 2015). See also note 3.
90-GROUP FINANCIAL STATEMENTS
14
-6
-130
-7,734
-6,076
1,765
-1,333
- 405
-1,390
-283
- -275
-166
-212
- -990
-582
400
Payments to external funds
-295
-212
-295
Employee contributions
23
-294
-9,499 -7,409
449
-876
1,360
Expense (+)/income (-)
-48
Payments on account and pension payments
-53
-167
-159
173
-159
6
31 December
9,215
9,636
-7,855 -7,323
2,313
United Kingdom.
Defined benefit obligation
in € million
2015
-2014
Plan assets
2015 2014
Net liability
2015 -2014
1 January
Remeasurements
20
1,327
Payments on account and pension payments
949
Expense (+)/income (-)
-109
-74
-804-636
-30-28
Remeasurements
-133
257
38
-53
Payments to external funds
-87
-74
Employee contributions
3
3
-3
-3
48
Payments on account and pension payments
-47
1 January
-23 ― -20
-2015 2014
2015 2014
-326
― -294
Translation differences and other changes.
558
31 December
9,327
- 569
9,499
334
-446 ― -463
-8,153 -7,734
- 302
8
-8
112
1,174
-106
1,765
Other
in € million
Defined benefit-
obligation
Plan assets.
Effect of limiting the
Net liability
2015 -2014
net defined benefit
asset to the asset ceiling
―2015 -2014
53
145
4,601
-97
-24
-383
-383
-71
-71
Pensions and other benefits paid
-519
522
3
-24
Translation differences and other changes
20,462
-534
-15,861
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
679
experience adjustments
Gains (-) or losses (+) arising from
asset to the asset ceiling
-3
-66
-3
-3
Gains (-) or losses (+) arising from settlements
-8
-8
-8
Remeasurements
Gains (-) or losses (+) on plan assets, excluding
amounts included in interest income
-1,394
-1,394
Gains (-) or losses (+) arising from changes in
demographic assumptions
53
53
Gains (-) or losses (+) arising from changes in
financial assumptions
3,490
-3,490
Changes in the limitation of the net defined benefit
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
Net liability
2015 2014
1 January
Expense (+)/income (-).
9,636
518
-7,400
475
Remeasurements
-825
-1,872
-7,323
-155
-7
-6,749
--237
2,313
651
363
238
-351
-832
-1,521
Payments to external funds
-490
-97
-490
Plan assets
2015 2014
Employee contributions
2015 2014
in € million
121 Notes to the Statement
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Transfers to fund
Employee contributions
31 December 2014
thereof pension provision
thereof assets
-1,394
53
-3,490
-24
-383
3
144
4,603
4,604
-1
Net interest expense on the net defined benefit liability
is presented within the financial result. All other com-
ponents of pension expense are presented in the in-
come statement under cost of sales, selling and adminis-
trative expenses.
Remeasurements on the obligations side gave rise to
a negative amount of €1,834 million (2014: positive
amount of €3,519 million) and related mainly to the
higher discount rates used in Germany, the UK and
the USA.
139 GROUP FINANCIAL STATEMENTS
The net defined benefit liability for pension plans in Germany, the UK and other countries changed as follows:
Germany
Defined benefit obligation
47
thereof non-investment grade
Translation differences and other changes
Real estate
172
107
-783
- 683
105
105
1,060
895
-187
Cash and cash equivalents
11
24
9
41
- 20
Absolute return funds
554
424
-705
17
207
2
205
594
13,575
12,894
Debt instruments
-189
183
-207
-298
3
-12
399
493
thereof investment grade
-189
183
2
111
1
-12
192
306
-557
683
34
981
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
16,930 15,861
98 Accounting Principles and
Policies
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Employer contributions to plan assets are expected to
amount to €692 million in the coming year. Plan assets
of the BMW Group include own transferable financial
instruments amounting to €6 million (2014: €5 million).
The BMW Group is exposed to risks arising from defined
benefit plans on the one hand and defined contribution
plans with a minimum return guarantee on the other.
Pension obligations to employees under such plans are
measured on the basis of actuarial reports. Future pen-
sion payments are discounted by reference to market
yields on high quality corporate bonds. These yields are
subject to market fluctuation and influence the level
of pension obligations. Furthermore, changes in other
actuarial parameters, such as expected rates of inflation,
also have an impact on pension obligations.
A substantial portion of plan assets is invested in debt
instruments in order to minimise the effect of capital
market fluctuations on the net liability. The asset port-
folio also includes equity instruments, property and
alternative investments – asset classes capable of gen-
erating the higher rates of return necessary to cover
risks (such as changes in mortality tables) not taken into
account in the actuarial assumptions applied. The
financial risk of longer-than-assumed life expectancy is
hedged for the majority of participants of the BMW
Group's largest pension plan in the UK by means of a
so-called "longevity hedge".
In order to reduce currency exposures, a substantial
portion of plan assets are either invested in the same
currency as the underlying plan or hedged by means of
currency derivatives.
Pension fund assets are monitored continuously and
managed from a risk-and-yield perspective. Risk is re-
duced by ensuring a broad spread of investments. In
this context, the BMW Group continuously monitors
the degree of coverage of pension plans as well as ad-
herence to the stipulated investment strategy.
As part of the internal reporting procedures and for in-
ternal management purposes, financial risks relating
to the pension plans are reported on using a deficit-
value-at-risk approach. The investment strategy is also
subjected to regular review together with external con-
sultants, with the aim of ensuring that investments are
Past service cost-
113 Notes to the Income Statement
121 Notes to the Statement
804
922
7,734
Other
282
224
-183
-261
97
93
Total without quoted market price
1,214
949
1,902
1,808
239
210
562
3,355
-578
2,967
31 December
7,855
7,323
8,153
-1,293
5,926
6,251
6,374
Plan assets in Germany, the UK and other countries comprised the following:
Components of plan assets
in € million
Germany
United Kingdom
Other
-Total
2015 2014
2015 2014
140
2015 -2014
Equity instruments
-1,807
-1,865
-1,340
-1,230
224
203
-3,371
-3,298
2015 2014
Depending on the cash flow profile and risk structure of the pension obligations involved, pension plan assets are
invested in various investment classes.
525
465
125
110
-83
-71
31 December
1,384
1,327
-922
-804
2
525
-317
-79
46
-94
203
-87
-74
.5
42
38
Debt instruments -
4,834
- 4,509
-4,623
Money market funds
255
100
20
20
20
3
19
12
274
-112
Absolute return funds
33
26
-33
-26
Other
5
5
Total with quoted market price
6,641
3
61
Real estate
1,532
4,562
420
379
9,877
-9,450
thereof investment grade
3,525
3,271
4,437
-4,331
383
334
8,345
-7,936
thereof non-investment grade
-1,309
-1,238
186
231
37
45
-1,514
-88
In order to manage its capital structure, the BMW Group
uses various instruments including the amount of divi-
dends paid to shareholders and share buy-backs.
-540
Capital reserves
Capital reserves include premiums arising from the issue
of shares and totalled €2,027 million (2014: €2,005 mil-
lion). The change related to the share capital increase in
conjunction with the issue of shares of preferred stock
to employees.
Revenue reserves
Revenue reserves comprise the post-acquisition and non-
distributed earnings of consolidated companies. In
addition, remeasurements of the net defined benefit lia-
bility for pension plans are also presented in revenue
reserves.
Revenue reserves increased during the twelve-month
period under report to €41,027 million (31 December
2014: €35,621 million). They were increased by the
amount of the net profit attributable to shareholders of
BMW AG amounting to €6,369 million (2014: €5,798 mil-
lion) and reduced by the payment of the dividend for
2014 amounting to €1,904 million (for 2013: €1,707 mil-
lion). Revenue reserves also increased by €1,012 million
(2014: reduced by €1,592 million) as a result of re-
measurements of net defined benefit liability for pen-
sion plans (net of deferred tax recognised directly in
133 GROUP FINANCIAL STATEMENTS
equity). Other miscellaneous changes reduced revenue
reserves by €71 million (2014: €- million).
The unappropriated profit of BMW AG at 31 December
2015 amounts to €2,102 million and will be proposed
to the Annual General Meeting for distribution. This
amount includes €175 million relating to preferred stock.
The amount proposed for distribution represents an
amount of €3.22 per share of preferred stock and €3.20
per share of common stock. The proposed distribution
must be authorised by the shareholders at the Annual
General Meeting of BMW AG. It is therefore not recog-
nised as a liability in the Group Financial Statements.
amounting to nominal €5.0 million prior to 14 May 2019.
The share premium of €22.8 million arising on the share
capital increase was transferred to capital reserves.
Accumulated other equity
Minority interests
Equity attributable to minority interests amounted to
€234 million (2014: €217 million). This includes a mi-
nority interest of €27 million in the results for the year
(2014: €19 million).
Capital management disclosures
The BMW Group's objectives when managing capital
are to safeguard the Group's ability to continue as a
in € million
going concern in the long-term and to provide an ade-
quate return to shareholders.
The BMW Group manages the capital structure and
makes adjustments to it in the light of changes in eco-
nomic conditions and the risk profile of the underlying
assets.
The BMW Group is not subject to any external minimum
equity capital requirements. Within the Financial Ser-
vices segment, however, there are a number of individual
entities which are subject to equity capital requirements
set by regulatory banking agencies.
Accumulated other equity comprises all amounts recog-
nised directly in equity resulting from the translation
of the financial statements of foreign subsidiaries, the
effects of recognising changes in the fair value of deriva-
tive financial instruments and marketable securities
directly in equity and the related deferred taxes recog-
nised directly in equity.
Issued share capital increased by €0.3 million as a result
of the issue to employees of 309,860 shares of non-voting
preferred stock. The number of authorised shares and
the Authorised Capital of BMW AG amounted to 4.5 mil-
lion shares and €4.5 million respectively at the end of
the reporting period. The Company is authorised to
issue 5 million shares of non-voting preferred stock
Further information on share-based remuneration is
provided in note 19.
In 2015, a total of 309,944 shares of preferred stock was
sold to employees at a reduced price of €53.66 per share
in conjunction with the Company's Employee Share Pro-
gramme. These shares are entitled to receive dividends
with effect from the financial year 2016. 84 shares of
preferred stock were bought back via the stock exchange
in conjunction with the Company's Employee Share
Programme.
Common stock
2015
2014
54,259,787 -601,995,196
-239,777
20
54,499,544 601,995,196
601,995,196
601,995,196
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
At 31 December 2015 common stock issued by BMW AG
was divided, as at the end of the previous year, into
601,995,196 shares of common stock with a par-value of
€1.00. Preferred stock issued by BMW AG was divided
into 54,809,404 shares (2014: 54,499,544 shares) with a
par-value of €1.00. Unlike the common stock, no voting
rights are attached to the preferred stock. All of the
Company's stock is issued to bearer. Preferred stock bears
an additional dividend of €0.02 per share.
Moreover, the BMW Group pro-actively manages debt
capital, determining levels of debt capital transactions
with a target debt structure in mind. An important as-
pect of the selection of financial instruments is the ob-
jective to achieve matching maturities for the Group's
financing requirements. In order to reduce non-sys-
tematic risk, the BMW Group uses a variety of financial
instruments available on the world's capital markets to
achieve diversification.
54,809,404
The capital structure at the end of the reporting period
was as follows:
31.12.2014
Non-current financial liabilities
Current financial liabilities
Outlook
BMW AG has a long-term rating of A2 (with stable out-
look) and a short-term rating of P-1 from the rating
agency Moody's. In March 2015, Moody's raised the
outlook from "stable" to "positive" and at the same
time confirmed the long-term and short-term ratings
of A2 and P-1 respectively. This means that BMW AG
continues to enjoy the best ratings of all European car
manufacturers, clearly reflecting the financial strength
of the BMW Group.
Moody's
Standard & Poor's
A2
P-1
positive
A+
A-1
Company rating.
stable
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
90-GROUP FINANCIAL STATEMENTS
Since December 2013, the BMW AG has a long-term
rating of A+ (with stable outlook) and a short-term rating
of A-1 from the rating agency Standard & Poor's, cur-
rently the highest rating given by Standard & Poor's to
a European car manufacturer. Since July 2011, the
Equity attributable to shareholders of BMW AG increased
during the financial year by 0.1 percentage points,
primarily reflecting the increase in revenue reserves.
134
Equity attributable to shareholders of BMWAG
Proportion of total capital
Non-current financial liabilities
Current financial liabilities
Total financial liabilities
Proportion of total capital
Total capital
42,530
37,220
-31.7%
31.6%
49,523
43,167
42,160
37,482
91,683
80,649
-68.3%
68.4%
134,213
117,869
31.12.2015
84
309,944
54,499,544
-83
-76
Balance at 31 December
Exchange rate impact and other changes
Utilised
Allocated (+)/reversed (-)
Balance at 1 January
in € million
2014
36
Balance at 31 December
Utilised
Allocated (+)/reversed (-)
Balance at 1 January
group basis
specific item basis
- Total
Allowance for impairment recognised on a
in € million
2015
Exchange rate impact and other changes
43
-27
-28
83
7
76
-1
-1
-15
-15
-8
-2
-6
-107
9
98
group basis
Total
Allowance for impairment recognised on a
specific item basis
96
12
84
-2
-1
Allowances on trade receivables developed as follows during the year under report:
2,236
-83
2,153
-96
2,751
2,847
15
30
22
52
195
281
132
Receivables that are overdue by between one and 30 days
do not normally result in bad debt losses since the over-
due nature of the receivables is primarily attributable to
the timing of receipts around the month-end. In the case
33-Cash and cash equivalents
Cash and cash equivalents of €6,122 million (2014:
of trade receivables, collateral is generally held in the
form of vehicle documents and bank guarantees so that
the risk of bad debt loss is extremely low.
€7,688 million) comprise cash on hand and at bank, all
with an original term of up to three months.
34-Equity
Number of shares issued
Preferred stock
2015
2014
Shares issued/in circulation at 1 January
Shares issued in conjunction with Employee Share Programme
Less: shares repurchased and re-issued
Shares issued/in circulation at 31 December
-26
113 Notes to the Income Statement
121 Notes to the Statement
10
-20
Net carrying amount
Gross carrying amount
Allowance for impairment
31.12.2014
31.12.2015
million) include €53 million (2014: €47 million) due
later than one year.
in € million
Allowances for impairment and credit risk
Trade receivables totalling €2,751 million (2014: €2,153
32-Trade receivables
131 GROUP FINANCIAL STATEMENTS
Some trade receivables were overdue for which an impairment loss was not recognised. Overdue balances are
analysed into the following time windows:
in € million
1-30 days overdue
31-60 days overdue
61-90 days overdue
91-120 days overdue
More than 120 days overdue.
31.12.2015
31.12.2014
128
-100
-73
88
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
35-Pension provisions
Gains (-) or losses (+) arising from changes in
demographic assumptions
-224
Gains (-) or losses (+) arising from changes in
financial assumptions
-1,181
Changes in the limitation of the net defined benefit
asset to the asset ceiling
Gains (-) or losses (+) arising from
experience adjustments
-429
Gains (-) or losses (+) on plan assets, excluding
amounts included in interest income
494
-9
325
325
325
-224
-224
-1,181
-1,181
1
-123
-9
.9
494
-123
Defined benefit
obligation
plan. The committee members are nominated by the
management of the relevant participating US entities.
Plan committees act in a fiduciary capacity and are
subject to statutory framework conditions.
The change in the net defined benefit liability for pen-
sion plans can be derived as follows:
Plan assets
Total Limitation of
the net defined
benefit asset to
the asset ceiling
Net defined
benefit liability
20,462
-15,861
4,601
2
4,603
1 January 2015
Expense/income
Current service cost
Interest expense (+)/income (-)
Past service cost-
Remeasurements
494
591
-468
-429
in € million
-429
-872
in € million
1 January 2014
Expense/income
Current service cost·
Defined benefit
obligation
Plan assets
Total
-15,758
-13,461
138
2,297
Net defined
benefit liability
4
2,301
337
337
337
Interest expense (+)/income (-)
628
Limitation of
the net defined
benefit asset to
the asset ceiling
-1
3,000
thereof assets
-872
-872
Employee contributions
-79
-79
Pensions and other benefits paid
-540
-554
-14
-14
Translation differences and other changes
683
-529
154
154
31 December 2015
19,926
-16,930
2,996
2,999
thereof pension provision
Transfers to fund
Statutory minimum funding requirements apply to the
final salary pension plans. Plan participants are repre-
sented by a committee consisting of six members, which
is authorised to take all decisions pertaining to the
relevant pension plan, including plan structure, invest-
ments and selection of investment managers as well as
surviving dependants' benefits as well as post-retirement regular allocations and retrospective allocations to the
medical care benefits.
137 GROUP FINANCIAL STATEMENTS
3.40
3.83
3.48
2.43
-0.02
0.03
The following mortality tables are applied in countries, in which the BMW Group has significant defined benefit plans:
Germany
Mortality Table 2005 G issued by Prof. K. Heubeck (with invalidity rates reduced by 50%)
United Kingdom - S1PA tables weighted accordingly, and S1NA tables minus 2 years, both with a minimum long term annual improvement allowance
USA
RP2014 Mortality Table with collar adjustments projected with MP2015
3.58
2.43
In Germany, the so-called "pension entitlement trend"
(Festbetragstrend) also represents a significant actuarial
assumption for the purposes of determining benefits
payable at retirement and was left unchanged at 2.0%.
By contrast, the salary level trend assumption is subject
to a comparatively low level of sensitivity within the
BMW Group. The calculation of the salary level trend in
in € million
the UK also takes account of restrictions due to caps and
floors.
Based on the measurement principles contained in
IAS 19, the following balance sheet carrying amounts
apply to the Group's pension plans:
Germany -
2015 -2014
-United Kingdom -
-2015 -2014-2015 2014
- Other
-Total
2015
2014
31 December
-1.60
2.10
2.51
1.60
Pension provisions are recognised as a result of commit-
ments to pay future vested pension benefits and current
pensions to present and former employees of the BMW
Group and their dependants. Depending on the legal,
economic and tax circumstances prevailing in each coun-
try, various pension plans are used, based generally on
the length of service, salary and remuneration structure
of the employees involved. Due to similarity of nature,
the obligations of BMW Group companies in the USA
and of BMW (South Africa) (Pty) Ltd., Pretoria, for post-
retirement medical care are also accounted for as pen-
sion provisions in accordance with IAS 19.
Post-employment benefit plans are classified as either
defined contribution or defined benefit plans. Under
defined contribution plans an enterprise pays fixed
contributions into a separate entity or fund and does
not assume any other obligations. The total pension ex-
pense for defined contribution plans of the BMW Group
amounted to €71 million (2014: €60 million).
Employer contributions paid to state pension insurance
programmes totalled €571 million (2014: €517 million).
Under defined benefit plans the enterprise is required to
pay the benefits granted to present and past employees.
Defined benefit plans may be funded or unfunded, the
worthiness for short-term debt is also classified by the
rating agencies as very good, thus enabling it to obtain
refinancing funds on competitive conditions.
latter sometimes covered by accounting provisions.
Pension commitments in Germany are mostly covered
by assets contributed to BMW Trust e. V., Munich, in
conjunction with a contractual trust arrangement (CTA).
The main other countries with funded plans were the
UK, the USA, Switzerland, the Netherlands, Belgium
and Japan. In the meantime, most of the defined bene-
fit plans have been closed to new entrants.
In the case of externally funded plans, the defined bene-
fit obligation is offset against plan assets measured at
their fair value. Where the plan assets exceed the pen-
sion obligations and the BMW Group has a right of re-
imbursement or a right to reduce future contributions,
it reports an asset (within "Other financial assets") at
an amount equivalent to the present value of the future
economic benefits attached to the plan assets. If the plan
is externally funded, a liability is recognised under
pension provisions where the benefit obligation exceeds
fund assets.
Remeasurements of the net liability arise from changes
in the present value of the defined benefit obligation,
the fair value of the plan assets or the asset ceiling. Rea-
sons for remeasurements include changes in financial
and demographic assumptions as well as changes in the
detailed composition of beneficiaries. Remeasurements
are recognised immediately in "Other comprehensive
135 GROUP FINANCIAL STATEMENTS
income" and hence directly in equity (within revenue
reserves).
Past service cost arises where a BMW Group entity in-
troduces a defined benefit plan or changes the benefits
payable under an existing plan. These costs are recog-
nised immediately in the income statement. Similarly,
gains and losses arising on the settlement of a defined
benefit plan are recognised immediately in the income
statement.
The defined benefit obligation is calculated on an ac-
tuarial basis. The actuarial computation requires the
use of estimates and assumptions, which depend on the
economic situation in each particular country. The most
important assumptions applied by the BMW Group are
shown below. The following weighted average values
have been used for Germany, the United Kingdom and
other countries:
31 December
in %
Discount rate
Pension level trend
Germany
2015 2014
United Kingdom
2015 2014
-Other
2015 2014
Present value of defined benefit obligations
Fair value of plan assets
9,215 -9,636 9,327 -9,499 -1,384 -1,327 -19,926 -20,462
-7,855 7,323 -8,153 -7,734 922
804 16,930 -15,861
Effect of limiting net defined benefit asset to asset ceiling
Carrying amounts at 31 December
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
The decrease in defined benefit obligations results
mainly from the change in the discount rate used for
the actuarial computation in Germany, the UK and
the USA.
The provision for pension-like obligations for post-em-
ployment medical care in the USA and South Africa
amounts to €52 million (2014: €57 million) and is deter-
mined on a similar basis to the measurement of pension
obligations in accordance with IAS 19. Increased costs
do not have a direct impact on medical care obligations
relating to pensioners in the USA. In the case of South
Africa, however, it was assumed that costs would in-
crease in the long term by 8.4% (2014: 8.3%) p.a. The
expense recognised for obligations relating to post-em-
ployment medical care amounted to €10 million (2014:
€8 million).
Numerous defined benefit plans are in place through-
out the BMW Group, the most significant of which are
described below.
Germany
Both employer- and employee-funded benefit plans are
in place in Germany. Benefits paid in conjunction with
these plans comprise old-age retirement pensions as
well as invalidity and surviving dependants' benefits.
The Deferred Remuneration Retirement Plan is an em-
ployee-financed defined contribution plan with a mini-
mum rate of return. The fact that the plan involves a
minimum rate of return means that it is classified as a
defined benefit plan. Employees have the option to
waive payment of certain remuneration components in
return for a future benefit. Any employer social security
contributions saved are credited in the following year
to the individual's benefits account. The converted re-
muneration components and the social security contri-
butions saved are invested on capital markets. When
the benefit falls due, it is paid on the basis of the higher
of the value of the depot account or a guaranteed mini-
mum amount.
Defined benefit obligations also remain in Germany, for
which benefits are determined either by multiplying
a fixed amount by the number of years of service or on
the basis of an employee's final salary. The defined bene-
fit plans have been closed to new entrants. With effect
from 1 January 2014, new employees receive a defined
contribution entitlement with a minimum rate of return.
The assets of the German pension plans are adminis-
tered by BMW Trust e. V., Munich, (German registered
association) in accordance with a CTA. The repre-
sentative bodies of this entity are the Board of Directors
and the Members' General Meeting. BMW Trust e. V.,
Munich, currently has seven members and three Board
of Directors members elected by the Members' General
Meeting. The Board of Directors is responsible for in-
vestments, drawing up and deciding on investment
guidelines as well as monitoring compliance with those
guidelines. The members of the association can be em-
ployees, senior executives and members of the Board
of Directors. An ordinary Members' General Meeting
takes place once every calendar year, and deals with a
range of matters, including receiving and approving
the association's annual report, ratifying the activities of
the Board of Directors and adopting changes to the as-
sociation's statutes.
United Kingdom
In the United Kingdom, the BMW Group has defined
benefit plans, which are primarily employer-funded
combined with employee-funded components based on
the conversion of employee remuneration. These plans
are subject to statutory minimum recovery require-
ments. Benefits paid in conjunction with these plans
comprise old-age retirement pensions as well as inva-
lidity and surviving dependants' benefits. These de-
fined benefit plans have been closed to new entrants,
who, since 1 January 2014, are covered by a defined
contribution plan.
The pension plans are administered by BMW Pension
Trustees Limited, Hams Hall, and BMW (UK) Trustees
Limited, Hams Hall, both trustee companies which act
independently of the BMW Group. BMW (UK) Trustees
Limited, Hams Hall, is represented by 14 trustees and
BMW Pension Trustees Limited, Hams Hall, by five
trustees. A minimum of one third of the trustees must
be elected by plan participants. The trustees represent
the interests of plan participants and decide on invest-
ment strategies. Recovery contributions to the funds
are determined in agreement with the BMW Group.
USA
The BMW Group's defined benefit plans in the USA are
primarily employer-funded and include final salary
pension plans and a post-retirement medical care plan.
Benefits paid in conjunction with these plans comprise
old-age retirement pensions, early retirement benefits,
Comprehensive Income
With their current long-term ratings of A+ (Standard &
Poor's) and A2 (Moody's), the agencies continue to
confirm BMW AG's robust creditworthiness for debt
with a term of more than one year. BMW AG's credit-
90 Statement of
90-GROUP FINANCIAL STATEMENTS
Income Statements
3
1,360
2,313 1,174 1,765
465
2
525
3
2
2,999
4,603
thereof pension provision
thereof assets
-1,360 -2,313 -1,174 -1,765
466
526
3,000
4,604
-1
−1
-1
-1
136
90
187
299
123
6,254
structured to coincide with the timing of pension pay-
ments and the expected pattern of pension obligations.
In their own way, each of these measures helps to re-
duce fluctuations in pension funding shortfalls.
Other financial commitments
In addition to liabilities, provisions and contingent lia-
bilities, the BMW Group also has other financial com-
mitments, primarily under lease contracts for land,
buildings, plant and machinery, tools, office and other
facilities. These contracts run for periods of one to
49 years. Some of them contain extension and purchase
options as well as price adjustment clauses, based on
index-linked or graduated rentals, including adjust-
ments for inflation. In 2015 an amount of €315 million
(2014: €350 million) was recognised as expense in con-
junction with operating leases. All of these amounts re-
late to minimum lease payments.
The total of future minimum lease payments under non-
cancellable and other operating leases can be analysed
by maturity as follows:
31.12.2015
31.12.2014
due within one year
due between one and five years
due later than five years
Other financial obligations
371
299
1,003
adverse impact on the result of operations, financial
position and net assets of the Group.
888
603
2,190
1,790
Other financial commitments include €14 million (2014:
€7 million) in respect of obligations to non-consolidated
subsidiaries. No back-to-back operating leases were in
place at the end of the reporting period (2014: €1 million).
Purchase commitments amounted to €2,217 million
(2014: €2,247 million) for property, plant and equipment
and €757 million (2014: €750 million) for intangible
assets.
148
42-Financial instruments
The carrying amounts and fair values of financial instruments are assigned to IAS 39 categories and cash funds as
follows:1, 2
31 December 2015
in € million
Cash funds
-816
Held-to-maturity.
investments
in € million
In accordance with IAS 37, the BMW Group does not
disclose information relating to legal disputes and
risks relating to taxes and customs duties, if such dis-
closures could be expected to prejudice seriously the
position of the BMW Group or if disclosure is not
practicable.
129
-7,709
years amounts to €8,465 million (2014: €5,442 mil-
lion).
147 GROUP FINANCIAL STATEMENTS
BMW Group
Notes to the Group Financial Statements
Other Disclosures
41-Contingent liabilities and other financial commitments
Contingent liabilities
No provisions were recognised for the following contingent liabilities (stated at estimated amounts), since an out-
flow of resources is not considered to be probable:
in € million
31.12.2015
31.12.2014
From today's perspective, the BMW Group does not
expect any pending proceedings to have a significant
Guarantees
Other
Contingent liabilities
93
33
4
213
84
306
121
Contingent liabilities relate entirely to third parties.
Other contingent liabilities comprise mainly legal dis-
putes as well as risks relating to taxes and customs duties.
The BMW Group determines its best estimate of contin-
gent liabilities on the basis of the information available
at the date of preparation of the Group Financial State-
ments. This assessment may change over time and is
adjusted regularly on the basis of new information and
circumstances. A part of these risks is insured where
this makes business sense.
Performance guarantees
Loans
and receivables
Fair value
Carrying
amount
Trade receivables
Other assets
Total
Receivables from subsidiaries
Receivables from companies in which
an investment is held
Collateral receivables
Other
31 December 2015
in € million
Liabilities
Financial liabilities
Bonds
Cash and cash equivalents
Liabilities to banks
Commercial paper
Asset backed financing transactions
Derivative instruments
Cash flow hedges-
Fair value hedges
Other derivative instruments
Other
Trade payables
Other liabilities
Total
Payables to subsidiaries
Payables to other companies in which
Liabilities from customer deposits (banking)
Other
Credit card receivables
-Loans to third parties
Fair value
Carrying
amount
- Fair value
Carrying
amount
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147-Other Disclosures
163 Segment Information
Assets
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
- Marketable securities and investment funds
-7,580
later than
five years
-Total
Maturity
Payables to other companies in which an investment is held
5
5
Deferred income
1,894
3,373
221
5,488
Other
3,841
-193
-7
162
-4,041
7,775
4,026
249
12,050
Deferred income comprises the following items:
in € million
Deferred income from lease financing
Deferred income relating to service contracts
Grants
Other deferred income
Deferred income
31.12.2015
31.12.2014
Other liabilities
162
Payables to subsidiaries
768
9,208
4,328
231
13,767
31 December 2014
in € million
Maturity
within
one year
Maturity
between one
Maturity
later than
-Total
and five years
five years
Other taxes
929
Social security
69
Advance payments from customers
460
105
Deposits received
415
348
25
14
943
-78
565
-Total
an investment is held
thereof
due within
one year
thereof
due within
one year
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122-Notes to the Balance Sheet
147-Other Disclosures
163 Segment Information
Trade payables
92 Balance Sheets
31 December 2014
Trade payables
The total amount of financial liabilities, other liabili-
ties and trade payables with a maturity later than five
-7,701
Maturity
between one
and five years
Maturity
Total
later than
five years
72
-7,773
Maturity
within
one year
Maturity
between one
and five years
in € million
Comprehensive Income
90 Statement of
Income Statements
1,922
915
-1,685
-780
3,910
-1,397
3,370
-1,027
32
-306
31
55
-127
56
2,399
5,488
1,894
Deferred income relating to service contracts relates to
service and repair work to be provided under commit-
ments given at the time of the sale of a vehicle (multi-
component arrangements). Grants comprise primarily
public sector funds to promote regional structures
which have been invested in the production plants in
Brazil, Leipzig and Berlin. The grants for the two Ger-
man sites mentioned are subject to holding periods
for the assets concerned of up to five years and mini-
mum employment figures. All conditions attached to
the grants were complied with at 31 December 2015.
In accordance with IAS 20, grant income is recog-
nised over the useful lives of the assets to which they
relate.
146
40-Trade payables
31 December 2015
in € million
Maturity
within
one year
90-GROUP FINANCIAL STATEMENTS
90
-Total
Other liabilities
Other
-70,043
Receivables from subsidiaries
Receivables from companies in which
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
Other assets
113 Notes to the Income Statement
121 Notes to the Statement
122 Notes to the Balance Sheet
147-Other Disclosures
163 Segment Information
an investment is held
Collateral receivables
Other
Total
31 December 2014
in € million
Liabilities
Financial liabilities
Bonds
Fair value
Cash funds
Carrying
amount
of Comprehensive Income
Loans
and receivables
Trade receivables
- Other
Cash flow hedges
Other
Fair value hedges
Other derivative instruments
Trade payables
Other liabilities
-Payables to subsidiaries
-Payables to other companies in which
an investment is held
Other
4,550
Total
Cash and cash equivalents
150
in € million
Assets
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
- Marketable securities and investment funds
Loans to third parties.
Credit card receivables
31 December 2014
Fair value
Held-to-maturity
investments
Fair value
Carrying
amount
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
- Asset backed financing transactions
-Derivative instruments
Cash flow hedges
Fair value hedges
Other
Other derivative instruments
Trade payables
Carrying
amount
Other liabilities
- Payables to other companies in which
Total
an investment is held
Other
1 The carrying amounts of cash flow and fair value hedges are allocated to the category "Held for trading" for the sake of clarity.
2 Based on the fact that maturities are generally short, it is assumed for some items that fair value corresponds to the carrying amount.
3 Carrying amount corresponds to fair value.
Carrying
amount
Held-to-maturity
investments
Fair value
Carrying
amount
-Payables to subsidiaries
Fair value
and receivables
Loans
Carrying
amount
Fair value
62,642
61,024
-200
-200
-12
-12
-239
239
-297
297
-7,688
-7,688
- 2,153
-2,153
-721
-721
-1,055
1,055
412
412
8,100
8,100
971
68,290
971
66,672
Cash funds
Derivative instruments
Asset backed financing transactions
Commercial paper
Liabilities from customer deposits (banking)
Fair value
Carrying
amount
1 The carrying amounts of cash flow and fair value hedges are allocated to the category "Held for trading" for the sake of clarity.
2 Based on the fact that maturities are generally short, it is assumed for some items that fair value corresponds to the carrying amount.
3 Carrying amount corresponds to fair value.
149 GROUP FINANCIAL STATEMENTS
Other liabilities
Available-
for-sale
Fair value
option
Held for
trading
Fair value
Carrying
amount
Carrying
amount
Carrying
Carrying
amount³
amount³
amount 1,3
402
26
-830
1,194
-1,006
5,161
98
Carrying
Fair value
Carrying
amount
Fair value
100
100
133
133
-272
272
147
147
6,122
6,122
- 2,751
2,751
-716
-716
893
893
314
314
6,436
6,436
-1,050
78,371
-1,050
76,105
Cash funds
Loans
and receivables
Held-to-maturity.
investments
5,661
-72,309
Assets
Receivables from sales financing
amount 3
amount 1,3
40,701
-12,783
- 40,319
-12,720
13,543
-13,509
5,415
5,415
13,611
13,631
1,539
-7,773
amount³
-1,539
-7,773
86
-107
5,075
-107
5,075
100,633
100,174
2,535
- 563
-1,452
Liabilities
Financial liabilities
Bonds
Liabilities to banks
86
Carrying
Carrying
Carrying
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
141 GROUP FINANCIAL STATEMENTS
Loans to third parties
Credit card receivables
Other
Cash and cash equivalents
Trade receivables
Other assets
Receivables from subsidiaries
Receivables from companies in which
an investment is held
- Collateral receivables
Other
26
3,030
Total
Other liabilities
Available-
for-sale
Fair value
option
Held for
trading
Fair value 2
Carrying
amount
Other investments
4,478
Marketable securities and investment funds
-176
upon to
1.1.2015 - Translation -Additions -Reversal of
differences
discounting
Utilised Reversed - 31.12.2015
Obligations for personnel and social expenses
Obligations for ongoing operational expenses
Other obligations
-1,871
4,887
2,032
-7
283
54
-1,496
3,462
-677
1
-72
2
-1,414
-2,474
-604
-22
-419
Other provisions changed during the year as follows:
1,939
5,811
-1,880
Other provisions
8,790
344
5,635
75
-4,492
-722
9,630
Income from the reversal of other provisions amounting to €550 million (2014: €198 million) is recorded in cost of
sales and in selling and administrative expenses.
37-Income tax liabilities
Income tax liabilities totalling €1,441 million (2014:
€1,590 million) include obligations amounting to
€485 million (2014: €956 million) which are expected
to be settled after more than twelve months. Some of
the liabilities may be settled earlier than this depend-
ing on the timing of proceedings.
-281
Current tax liabilities of €1,441 million (2014: €1,590 mil-
lion) comprise €288 million (2014: €151 million) for
taxes payable and €1,153 million (2014: €1,439 million)
for tax provisions. Tax provisions totalling €8 million
were reversed in the year under report (2014: €1 mil-
lion).
Provisions for other obligations cover numerous specific
risks and obligations of uncertain timing and amount,
in particular for litigation and liability risks.
4,522
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Obligations for personnel and social expenses
Obligations for ongoing operational expenses.
Other obligations
Other provisions
Provisions for obligations for personnel and social ex-
penses comprise mainly performance-related remunera-
tion components, early retirement part-time working
arrangements and employee long-service awards. Obliga-
tions for performance-related remuneration components
are normally settled in the following financial year.
Provisions for obligations for ongoing operational ex-
penses relate primarily to warranty obligations and
comprise both statutorily prescribed manufacturer
warranties and other guaranties offered by the BMW
Group. Depending on when claims are made, it is
possible that the BMW Group may be called
in € million
-1,939
fulfil obligations over the whole period of the war-
ranty or guarantee. Expected reimbursement claims
amounted to €711 million at the end of the reporting
period (2014: €641 million). Also included are other
provisions for expected payments for bonuses, rebates
and other price deductions.
1,475
-1,442
5,811
2,430
4,887
-1,786
1,880
-1,104
-2,032
1,294
9,630
5,009
8,790
-1,871
143 GROUP FINANCIAL STATEMENTS
38-Financial liabilities
Financial liabilities include all liabilities of the BMW
Group at the relevant balance sheet dates relating to
-9,030
-3,194
496
-12,720
-9,719
- 3,657
-133
-13,509
-5,415
5,415
- 5,046
-8,585
40,319
13,631
2,245
-107
4,550
- 628
-325
586
1,539
42,160
41,289
8,234
91,683
Maturity
within
-2,198
-6,912
23,283
-10,124
31 December 2015
in € million
financing activities. Financial liabilities comprise the
following:
Maturity
within
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper-
Asset backed financing transactions
Derivative instruments
Other
Financial liabilities
31 December 2014
in € million
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Other
Financial liabilities
one year
Maturity
between one
and five years
Maturity
later than
five years
-Total
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
-112
1,384
1,327
The sensitivity analysis provided below shows the ex-
tent to which - based on an appropriate review - the
defined benefit obligation would have been affected by
changes in the relevant assumptions that were possible
at the end of the reporting period, if the other assump-
tions used in the calculation were kept constant. It is
only possible, however, to aggregate sensitivities to a
limited extent. Since the change in obligations does not
31 December
follow a linear pattern, all estimates made on the basis
of the specified sensitivities have to be made subject to
this restriction. The calculation of sensitivities using
ranges other than those specified could result in a non-
proportional changes in the defined benefit obligation.
The defined benefit obligation amounted to €19,926 mil-
lion at 31 December 2015.
Change in defined benefit obligation
2015
2014
in € million
in %
-115
in € million
Discount rate
increase of 0.75%
-2,577
-12.9
-2,888
-14.1
decrease of 0.75%
-3,253
16.3
-3,675
-18.0
Pension level trend
in %
2,607 2,996
9,327 9,499
9,636
9,215
-10
Most of the BMW Group's pension assets are adminis-
tered separately and kept legally segregated from
company assets using trust fund arrangements. As a
consequence, the level of funds required to finance
31 December
in € million
Current employees
Pensioners
Former employees with vested benefits
Defined benefit obligation
pension payments out of operations will be substan-
tially reduced in the future, since most of the Group's
pension obligations are settled out of the assets of
pension funds/trust fund arrangements.
The defined benefit obligation relates to current em-
ployees, former employees with vested benefits and
pensioners as follows:
Other
Germany
2015 -2014
United Kingdom
2015 2014
2015 2014
6,114
6,495
2,183 2,295
1,038
1,003
2,635
2,650
4,537
4,208
231
-212
-466
- 491
increase of 0.25%
Maturity
between one
655
-727
2015 2014
31 December
in years
Germany
2015 2014
Weighted duration of all pension obligations
-20.5
21.4
19.2
19.9
18.4
-19.2
2015 2014
142
to measure the level of funding. In conjunction with
these valuations, funding plans are drawn up and the
amount of any necessary special allocations determined.
36-Other provisions
Other provisions comprise the following items:
in € million
31.12.2015
31.12.2014
-Total
thereof
due within
one year
-Total
thereof
due within
one year
90-GROUP FINANCIAL STATEMENTS
Income Statements
90
Statutory minimum funding and recovery requirements
apply in the UK and the USA which may have an effect
on future amounts. Valuations are performed regularly
United Kingdom
Other
The weighted duration of all pension obligations in Ger-
many, the UK and other countries (based on present values
of the defined benefit obligation) developed as follows:
3.6
decrease of 0.25%
-610
-3.1
-679
-3.3
Average life expectancy.
increase of 1 year
-632
-3.2
-703
3.4
decrease of 1 year
-633
-3.2
-700
-3.4
Pension entitlement trend
increase of 0.25%
decrease of 0.25%
134
0.7
-152
-0.7
-128
-0.6
-146
In the UK, the sensitivity analysis for the pension level
trend also takes account of restrictions due to caps and
floors.
3.3
Maturity
later than
-0.7
one year
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
variable
- EUR 50 million
3.0
0.2
variable
USD 170 million
2.6
0.8
Other
fixed
INR 3,500 million
3.0
5.0
fixed
CAD 1,850 million
4.0
2.2
fixed
JPY 48,000 million
2.7
0.3
fixed
KRW 410,000 million
3.2
2.7
10.3
The following details apply to the commercial paper:
3.0
variable
fixed
EUR 4,340 million
4.5
-1.0
fixed
GBP 300 million
3.9
2.0
fixed
HKD 500 million
1.9
-1.4
AUD 700 million
fixed
2.6
0.2
-fixed
- NZD 100 million
-1.9
4.4
-fixed
USD 2,280 million
5.3
3.2
113 Notes to the Income Statement
121 Notes to the Statement
BMW Australia Finance Ltd., Melbourne, Victoria
JPY 30,000 million
Issuer
Issue volume
in relevant currency
(ISO-Code)
Social security
-71
17
-89
Advance payments from customers
681
121
802
Deposits received
492
374
871
1,080
Payables to subsidiaries
-86
Payables to other companies in which an investment is held
-107
107
Deferred income
2,399
-3,640
215
6,254
Other
-Total
-4,292
86
-1,080
Other taxes
-Total
Weighted
average maturity
period (in days)
-Weighted
average nominal
interest rate (in %)
BMW Finance N.V., The Hague
EUR 1,440 million
81
0.00
GBP 265 million
-74
0.62
BMW Malta Finance Ltd., Floriana
EUR 268 million
-13
BMW US Capital, LLC, Wilmington, DE
USD 3,645 million
23
0.32
145 GROUP FINANCIAL STATEMENTS
39-Other liabilities
Other liabilities comprise the following items:
31 December 2015
Maturity
in € million
within
one year
Maturity
between one
and five years
Maturity
later than
five years
98 Accounting Principles and
Policies
98-Notes
0.01
94 Cash Flow Statements
The main instruments used are corporate bonds, asset-
backed financing transactions, liabilities to banks and
liabilities from customer deposits (banking).
Customer deposit liabilities arise in the BMW Group's
banks, notably in Germany and the USA, which offer a
range of investment products.
144
Bonds comprise:
Issuer
Interest
Issue volume
in relevant currency
(ISO-Code)
Weighted
average maturity
period (in years)
Weighted
average nominal
interest rate (in %)
BMW Finance N.V., The Hague.
The BMW Group uses various short-term and long-term
refinancing instruments on money and capital markets
to finance its operations. This diversification enables it to
obtain attractive market conditions.
variable
2.2
0.2
variable
GBP 25 million
-1.0
-1.0
variable
SEK 4,700 million
2.5
0.0
-variable
USD 640 million
EUR 5,415 million
The increase in liabilities relating to derivatives results
from the fair value measurement of currency and com-
modity derivative instruments.
80,649
5,193
and five years
five years
96 Group Statement of Changes in
Equity
-8,561
22,817
4,111
-35,489
-7,784
-3,281
489
-9,157
3,309
-11,554
-12,466
- 5,599
5,599
- 3,825
-6,990
69
10,884
-1,930
-1,190
23
3,143
- 626
37,482
-501
1,514
37,974
-1.5
0.8
-387
AUD 500 million
BMW US Capital, LLC, Wilmington, DE
variable
EUR 1,500 million
2.6
0.2
variable
GBP 400 million
0.6
0.7
variable
SEK 500 million
-0.6
-0.0
Comprehensive Income
USD 2,100 million
-1.1
0.6
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
fixed
AUD 200 million
0.3
4.0
92 Balance Sheets
-fixed
90 Statement of
1.9
5.0
variable
-fixed
4.2
SEK 1,750 million
fixed
CHF 300 million
6.0
1.8
fixed
6.9
2.3
fixed
GBP 2,100 million
5.0
2.9
EUR 15,064 million
4.0
-2.8
-fixed
5.0
NOK 750 million
0.4
fixed
JPY 51,000 million
fixed
-1.6
3.0
HKD 500 million
2.5
31.12.2014
1,281
In the BMW Group, financial assets and liabilities re-
lating to derivative financial instruments would nor-
mally be required to be offset. No offsetting takes
place for accounting purposes, however, since the nec-
essary criteria are not met. Since legally enforceable
master netting agreements or similar contracts are in
place, actual offsetting would be possible in principle,
for instance in the case of insolvency. Offsetting would
have the following impact on the carrying amounts of
derivatives:
Offsetting of financial instruments
purposes, this was achieved using the discounted cash
flow method and taking account of the BMW Group's
own default risk; for this reason, the fair values calculated
can be allocated to Level 2.
470
*The amounts presented for derivative instruments in the previous year have been adjusted and are now based on risk classes.
As in the previous year, there were no reclassifications
within the level hierarchy during the financial year
61
981
1,846
in € million
2015.
Other investments (available-for-sale) amounting to
€184 million (2014: €177 million) are measured at amor-
tised cost since quoted market prices are not available
or cannot be determined reliably. These are therefore
not included in the level hierarchy shown above. In ad-
dition, other investments amounting to €244 million
(2014: €231 million) are measured at fair value since
quoted market prices are available. These items are in-
cluded in Level 1.
Balance sheet amounts as reported
-1,392
In situations where a fair value was required to be
measured for a financial instrument only for disclosure
-1,285
Reported on
assets side
-1,660
-3,265
-1,915
1,745
-1,228
-1,228
-1,285
3,143
2,888
4,550
3,030
- Reported on
equity and
liabilities side
Reported on
assets side
Reported on
equity and
liabilities side
31.12.2015
Gross amount of derivatives which can be offset in case of insolvency
Net amount after offsetting
Raw materials price risks
Raw materials price risks
Interest rate risks
- Raw materials price risks
Currency risks
Interest rate risks
Derivative instruments (liabilities)
Currency risks
Interest rate risks
244
1,939
-1,086
- 5,259
Marketable securities, investment fund shares and collateral assets - available-for-sale
Other investments - available-for-sale/fair value option
Level hierarchy in accordance with IFRS 13-
Level 1
Level 2
Level 3
The following table shows the amounts allocated to
each measurement level at the end of the reporting
period:
3. using input factors not based on observable market
data (Level 3).
154
1. measured at their fair values in an active market for
identical financial instruments (Level 1),
2. measured at their fair values in an active market for
comparable financial instruments or using measure-
ment models whose main input factors are based on
observable market data (Level 2), or
Derivative instruments (assets)
Currency risks
5
-2,136
Derivative instruments (liabilities)*
- Raw materials price risks
-Currency risks
Interest rate risks
Derivative instruments (assets)*
Level 3
Level 2
-1,352
231
Marketable securities, investment fund shares and collateral assets - available-for-sale
Other investments - available-for-sale/fair value option
Level 1
Level hierarchy in accordance with IFRS 13
in € million
31 December 2014
153 GROUP FINANCIAL STATEMENTS
-1,062
-3,772
Gains and losses on financial instruments
-506
in € million
-278
-345
in € million
Impairment losses of €13 million (2014: €152 million)
were recognised in the income statement in 2015 on
Net interest expenses from interest rate and interest
rate/currency swaps amounted to €22 million (2014: net
interest income of €101 million).
Such credit-risk related changes in fair values are calcu-
lated as a general rule by deducting market-related
changes in fair value from the overall change in fair value.
Net losses arising from other investments measured us-
ing the fair value option amounted to €2 million. The
fair value option is applied for non-current marketable
securities with embedded derivatives. No changes in
fair values arose, either during the year under report or
on an accumulated basis since acquisition, which were
attributable to changes in the default risk.
Gains/losses from the use of derivatives relate primarily to
fair value gains or losses arising on stand-alone derivatives.
Income/expenses
Other liabilities
Other income/expenses
Impairment losses/reversals of impairment losses
of Comprehensive Income
122 Notes to the Balance Sheet
147-Other Disclosures
163 Segment Information
113 Notes to the Income Statement
121 Notes to the Statement
98 Accounting Principles and
Policies
-77
32
238
available-for-sale securities accounted for as participa-
tions, for which fair value changes had previously been
recognised directly in equity. No reversals of impair-
ment losses on marketable securities were recognised
directly in equity in the under report (2014: €7 mil-
lion).
-1,318
are
-1,616
-857
-1,136
-480
Balance at 31 December
98-Notes
thereof reclassified to the income statement
Balance at 1 January
2014
2015
The effect of cash flow hedges on accumulated other
equity was as follows:
Cash flow hedges
The disclosure of interest income resulting from the un-
winding of interest on future expected receipts would
normally only be relevant for the BMW Group where as-
sets have been discounted as part of the process of de-
termining impairment losses. However, as a result of
the assumption that most of the income that is subse-
quently recovered is received within one year and the
fact that the impact is not material, the BMW Group
does not discount assets for the purposes of determining
impairment losses.
year
Total changes during the year-
The following table shows the net gains and losses arising for each of the categories of financial instrument defined
by IAS 39:
Equity
94 Cash Flow Statements
1
Net income from participations and investments
-65
129
Gains and losses on sale and fair value measurement of marketable securities held for sale
(including investments in subsidiaries and participations measured at cost)
Available-for-sale
-2
Gains/losses on investments measured at fair value through profit and loss
Fair value option
-971
-717
Gains/losses from the use of derivative instruments
Held for trading
2014
2015
3
Accumulated other equity
Balance at 1 January
-141
92 Balance Sheets
Comprehensive Income
90 Statement of
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
Loans and receivables
96 Group Statement of Changes in
-141
-69
-144
thereof recognised in the income statement during the period under report
Balance at 31 December
6
-117
Total change during the year
-135
-24
Financial instruments measured at fair value are allo-
cated to different measurement levels in accordance
with IFRS 13. This includes financial instruments that
Other assets
43.05
76.45
1,507.00
561.70
amount1,3
amount3
amount 3
-Carrying
Carrying
Carrying
Carrying
amount
Fair value
Held for
trading
Fair value
option
for-sale
Available-
Other liabilities
Other
an investment is held
Collateral receivables
· 36,083
-11,636
12,487
35,489
-11,554
12,466
- 5,599
-10,886
Financial liabilities
Liabilities
89,663
90,362
4,281
4,281
5
Receivables from companies in which
5
162
1,514
-7,709
-1,514
-7,709
1,120
-721
-1,302
5,599
10,884
-162
Bonds
Receivables from subsidiaries
Trade receivables
amount 1,3
amount 3
amount³
Carrying
Carrying
Carrying
Carrying
amount
Fair value
trading
option
for-sale
Held for
Fair value
Available-
-255
408
-708
1,294
-886
-Cash and cash equivalents
Other
- Credit card receivables
Loans to third parties
- Marketable securities and investment funds
Other derivative instruments
Fair value hedges
Total
Cash flow hedges
Financial assets
Receivables from sales financing
Other investments-
Assets
2,888
4,180
3,772
Derivative instruments
-71.75
110.00
-1,852.50
591.00
Liabilities to banks
Commercial paper
90
90-GROUP FINANCIAL STATEMENTS
31.12.2014
31.12.2015
Commodity derivatives were measured on the basis of
the following quoted market prices:
Raw material
Interest rates taken from interest rate curves were ad-
justed, where necessary, to take account of the credit
quality and risk of the underlying financial instrument.
3.31
0.43
2.03
2.20
1.02
3.26
0.17
-1.59
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
USD/t
USD/oz
USD/t
USD/t
in € million
31 December 2015.
Derivative financial instruments are measured at their
fair value. The fair values of derivative financial instru-
ments are determined using measurement models, as a
consequence of which there is a risk that the amounts
calculated could differ from realisable market prices on
disposal. Observable financial market price spreads are
taken into account in the measurement of derivative
financial instruments. The supply of data to the model
used to calculate fair values also takes account of tenor
and currency basis spreads, thus helping to minimise
differences between the carrying amounts of the in-
struments and the amounts that can be realised on the
financial markets on their disposal. In addition, the
Group's own default risk and that of counterparties is
taken into account in the form of credit default swap
contracts which have matching terms and which can
be observed on the market.
Palladium
1.72
Aluminium
Iron ore
of Comprehensive Income
122 Notes to the Balance Sheet
147-Other Disclosures
163 Segment Information
113 Notes to the Income Statement
121 Notes to the Statement
98 Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
Coke/coal
Liabilities from customer deposits (banking).
0.33
0.12
152
Total
3,143
Other
an investment is held
Payables to other companies in which
Payables to subsidiaries
Other liabilities
Trade payables
Other
Other derivative instruments.
Fair value hedges
Cash flow hedges
Derivative instruments
Asset backed financing transactions
Fair value measurement of financial instruments
The fair values shown are computed using market in-
formation available at the balance sheet date, on the
basis of prices quoted by the contract partners or using
ISO Code
in %
EUR
appropriate measurement methods, e.g. discounted cash
flow models. In the latter case, amounts were discounted
at 31 December 2015 on the basis of the following inter-
est rates:
0.84
0.85
-0.06
3.08
-0.16
0.83
0.70
3.07
-0.04
Interest rate for five years
Interest rate for one year
Interest rate for six months
CNY
JPY
GBP
USD
Interest rate for ten years
-1,337
159 GROUP FINANCIAL STATEMENTS
155 GROUP FINANCIAL STATEMENTS
of Comprehensive Income
113 Notes to the Income Statement
121 Notes to the Statement
98 Accounting Principles and
Policies
98-Notes
Other liabilities
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
6
68
37
122 Notes to the Balance Sheet
147-Other Disclosures
163 Segment Information
Currency risk for the BMW Group is concentrated on the
currencies referred to above.
Interest rate risks
4,220
-12,087
10,742
-17,535
21,785
Chinese Renminbi
Japanese Yen
British Pound
99
US Dollar
―31.12.2014
31.12.2015
The fair values of the Group's interest rate portfolios for
the five main currencies were as follows at the end of
the reporting period:
These risks arise when funds with differing fixed-rate
periods or differing terms are borrowed and invested.
All items subject to, or bearing, interest are exposed to
interest rate risk. Interest rate risks can affect either
side of the balance sheet.
in € million
terest rates.
The BMW Group's financial management system involves
the use of standard financial instruments such as short-
term deposits, investments in variable and fixed-income
securities as well as securities funds. The BMW Group is
therefore exposed to risks resulting from changes in in-
Euro
5,091
66
-73
-1,584
1,985
4,818
5,396
- 4,743
4,770
10,937
9,973
Euro/Japanese Yen
Euro/Korean Won
Euro/British Pound
Euro/US Dollar
Euro/Chinese Renminbi
31.12.2014
31.12.2015
1,162
1,004
In the next stage, these exposures are compared to all
hedges that are in place. The net cash flow surplus
represents an uncovered risk position. The cash-flow-at-
risk approach involves allocating the impact of potential
-48
-173
163
Euro/Japanese Yen
Euro/Korean Won
Euro/British Pound
Euro/US Dollar
-86
Euro/Chinese Renminbi
year,
The following table shows the potential negative impact
for the BMW Group - measured on the basis of the cash-
flow-at-risk approach - attributable to unfavourable
changes in exchange rates. The impact for the principal
currencies, in each case for the following financial
is as follows:
taken into account when the risks are aggregated, thus
reducing the overall risk.
in € million
The potential negative impact on earnings is computed
for each currency for the following financial year on
the basis of current market prices and exposures to a con-
fidence level of 95% and a holding period of up to one
year. Correlations between the various currencies are
exchange rate fluctuations to operating cash flows on
the basis of probability distributions. Volatilities and
correlations serve as input factors to assess the relevant
probability distributions.
158
31.12.2015 ―31.12.2014
The starting point for analysing currency risk with this
model is the identification of forecast foreign currency
transactions or "exposures". At the end of the reporting
period, the principal exposures for the relevant coming
year were as follows:
1,006
536
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
90
90-GROUP FINANCIAL STATEMENTS
Income Statements
160
The cash flows from investing and financing activities
are based on actual payments and receipts. By con-
trast, the cash flow from operating activities is derived
indirectly from the net profit for the year. Under this
method, changes in assets and liabilities relating to op-
erating activities are adjusted for currency translation
effects and changes in the composition of the Group. The
changes in balance sheet positions shown in the cash
flow statement do not therefore agree directly with the
months from the end of the reporting period and are
subject to an insignificant risk of changes in value.
Cash and cash equivalents included in the cash flow
statement comprise cash on hand, cheques, and cash at
bank, to the extent that they are available within three
The cash flow statements show how the cash and cash
equivalents of the BMW Group and of the Automotive
and Financial Services segments have changed in the
course of the year as a result of cash inflows and cash
outflows. In accordance with IAS 7 (Statement of Cash
Flows), cash flows are classified into cash flows from op-
erating, investing and financing activities.
43-Explanatory notes to the cash flow statements
230
155
Cash flow at risk
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
amounts shown in the Group and segment balance
sheets.
Stefan Quandt is a shareholder and Deputy Chairman of
the Supervisory Board of BMW AG. He is also the sole
shareholder and Chairman of the Supervisory Board of
Business transactions between BMW Group entities and
other associated companies are small in scale, arise in
the normal course of business and are conducted on the
basis of arm's length principles.
Transactions of BMW Group companies with the asso-
ciated company THERE Holding B.V., Amsterdam, and
that entity's subsidiaries, all arise in the normal course
of business and are conducted on the basis of arm's
length principles. The BMW Group did not sell any goods
or services to THERE Holding B.V., Amsterdam, or its
subsidiaries during the period from 4 to 31 December
2015. Goods or services totalling €7 million were pur-
chased by BMW Group entities from THERE Holding
B.V., Amsterdam, during the period from 4 to 31 De-
cember 2015. At 31 December 2015, payables of BMW
Group entities to THERE Holding B.V., Amsterdam,
and that entity's subsidiaries totalled €3 million.
All relationships of BMW Group entities with the joint
ventures DriveNow GmbH & Co. KG, Munich, and
DriveNow Verwaltungs GmbH, Munich, are conducted
on the basis of arm's length principles. Transactions
with these entities arise in the normal course of business
and are small in scale.
sold goods and services to BMW Brilliance Automotive
Ltd., Shenyang, during the financial year under report
for an amount of €4,815 million (2014: €4,417 million).
At 31 December 2015, receivables of Group companies
from BMW Brilliance Automotive Ltd., Shenyang, to-
talled €892 million (2014: €943 million). Trade and finan-
cial payables of Group companies to BMW Brilliance
Automotive Ltd., Shenyang, amounted to €107 million
(2014: €– million). Group companies received goods
and services from BMW Brilliance Automotive Ltd.,
Shenyang, in 2015 for an amount of €43 million (2014:
€34 million).
Income taxes paid and interest received are classified
as cash flows from operating activities in accordance
with IAS 7.31 and IAS 7.35. Interest paid is presented
on a separate line within cash flows from financing
activities. Dividends received in the financial year 2015
amounted to €1 million (2014: €1 million).
the lessor) is also reported within cash flows from
operating activities.
31.12.2014
Transactions of BMW Group companies with the joint
venture BMW Brilliance Automotive Ltd., Shenyang, all
arise in the normal course of business and are conducted
on the basis of arm's length principles. Group companies
In the financial year 2015, the disclosure requirements
contained in IAS 24 affect the BMW Group with regard
to business relationships with non-consolidated sub-
sidiaries, joint ventures and associated companies as
well as with members of the Board of Management and
Supervisory Board of BMW AG.
In accordance with IAS 24 (Related Party Disclosures),
related individuals or entities which have the ability to
control the BMW Group or which are controlled by the
BMW Group, must be disclosed unless such parties
are already included in the Group Financial Statements
of BMW AG as consolidated companies. Control is de-
fined as ownership of more than one half of the voting
power of BMW AG or the power to direct, by statute or
agreement, the financial and operating policies of the
management of the BMW Group. In addition, the dis-
closure requirements of IAS 24 also cover transactions
with associated companies, joint ventures and indi-
viduals that have the ability to exercise significant in-
fluence over the financial and operating policies of
the BMW Group. This also includes close relatives and
intermediary entities. Significant influence over the
financial and operating policies of the BMW Group is
presumed when a party holds 20% or more of the voting
power of BMW AG. In addition, the requirements con-
tained in IAS 24 relating to key management personnel
and close members of their families or intermediary
entities are also applied. In the case of the BMW Group,
this applies to members of the Board of Management
and Supervisory Board.
of Comprehensive Income
122 Notes to the Balance Sheet
147-Other Disclosures
163 Segment Information
113 Notes to the Income Statement
121 Notes to the Statement
44-Related party relationships
The net change in receivables from sales financing
(including finance leases, where the BMW Group is
Cash inflows and outflows relating to operating leases,
where the BMW Group is the lessor, are aggregated and
shown on the line "Change in leased products" within
cash flows from operating activities.
The BMW Group maintains normal business relation-
ships with non-consolidated subsidiaries. Transactions
with these companies are small in scale, arise in the
normal course of business and are conducted on the ba-
sis of arm's length principles.
574
31.12.2015
posure to a confidence level of 95% and a holding
period of up to one year. Correlations between the
various categories of raw materials are taken into ac-
count when the risks are aggregated, thus reducing
the overall risk.
398
472
Japanese Yen
Chinese Renminbi
British Pound
US Dollar
Euro
31.12.2015 ―31.12.2014
approach - are compared with the expected value for
the interest-rate-sensitive exposures of the BMW Group:
in € million
In the following table the potential volumes of fair value
fluctuations - measured on the basis of the value-at-risk
and to manage interest rate risks. This is based on a state-
of-the-art historical simulation, in which the potential
future fair value losses of the interest rate portfolios are
compared across the Group with expected amounts
measured on the basis of a holding period of 250 days
and a confidence level of 99.98%. Aggregation of these
results creates a risk reduction effect due to correlations
between the various portfolios.
As stated there, the BMW Group applies a group-wide
value-at-risk approach for internal reporting purposes
Interest rate risks can be managed by the use of interest
rate derivatives. The interest rate contracts used for
hedging purposes comprise mainly swaps which are ac-
counted for on the basis of whether they are designated
as a fair value hedge or as a cash flow hedge. A descrip-
tion of the management of interest rate risks is provided
in the Combined Management Report.
-113
449
347
186
-108
in € million
The potential negative impact on earnings is computed
for each raw material category for the following finan-
cial year on the basis of current market prices and ex-
In the next stage, these exposures are compared to all
hedges that are in place. The net cash flow surplus
represents an uncovered risk position. The cash-flow-at-
risk approach involves allocating the impact of potential
raw materials fluctuations to operating cash flows on
the basis of probability distributions. Volatilities and cor-
relations serve as input factors to assess the relevant
probability distributions.
3,770
-3,720
31.12.2014
31.12.2015
The following table shows the potential negative impact
for the BMW Group - measured on the basis of the
cash-flow-at-risk approach – attributable to fluctuations
in prices across all categories of raw materials. The risk
at each reporting date for the following financial year was
as follows:
Raw materials price exposures
The first step in the analysis of the raw materials price
risk is to determine the volume of planned purchases of
raw materials (and components containing those raw
materials). These amounts, which represent the gross
exposure, were as follows at each reporting date for the
following financial year:
The BMW Group is exposed to the risk of price fluctua-
tions for raw materials. A description of the management
of these risks is provided in the Combined Management
Report.
Raw materials price risk
-11
-12
44
33
in € million
model.
A description of the management of this risk is provided
in the Combined Management Report. The BMW
Group measures currency risk using a cash-flow-at-risk
At 31 December 2015 derivative financial instruments,
mostly in the form of forward currency and option
contracts, were in place to hedge the main currencies.
Liquidity risk
Further disclosures relating to credit risk - in particular
with regard to the amounts of impairment losses recog-
nised - are provided in the explanatory notes to the
relevant categories of receivables in notes 27, 28 and 32.
A concentration of credit risk with particular borrowers
or groups of borrowers has not been identified in con-
junction with financial instruments.
The credit risk relating to derivative financial instruments
is minimised by the fact that the Group only enters into
such contracts with parties of first-class credit standing.
The general credit risk on derivative financial instru-
ments utilised by the BMW Group is therefore not con-
sidered to be significant.
Total
Other financial liabilities
Trade payables
Derivative instruments
Asset backed financing transactions
Liabilities from customer deposits (banking)
Commercial paper
Liabilities to banks
Bonds
31 December 2015
in € million
Creditworthiness testing is an important aspect of the
BMW Group's credit risk management. Every borrower's
creditworthiness is tested for all credit financing and
lease contracts entered into by the BMW Group. In the
case of retail customers, creditworthiness is assessed
using validated scoring systems integrated into the pur-
chasing process. In the area of dealer financing, credit-
worthiness is assessed by means of ongoing credit
monitoring and an internal rating system that takes ac-
count not only of the tangible situation of the borrower
but also of qualitative factors such as past reliability in
business relations.
Impairment losses are recorded as soon as credit risks
are identified on individual financial assets, using a
methodology specifically designed by the BMW Group.
More detailed information regarding this methodology
is provided in the section on accounting policies (note 6).
The following table shows the maturity structure of ex-
pected contractual cash flows (undiscounted) for finan-
cial liabilities:
Maturity
within
one year
Maturity
between one
and five years
-5,416
5,416
-13,928
-133
- 3,990
- 9,805
-13,354
in the relevant market. The assets involved are generally
vehicles which can be converted into cash at any time
via the dealer organisation.
405
-9,464
42,245
-7,230
-24,241
-10,774
Total
Maturity
later than
five years
- 3,485
-5,195
147-Other Disclosures
163 Segment Information
of Comprehensive Income
-359
10
369
-269
-276
7
Ineffectiveness of fair value hedges
Gains/losses on hedging instruments designated as part of a fair value hedge relationship
Gains/losses from hedged items
31.12.2015 ―31.12.2014
The following table shows gains and losses on hedging
instruments and hedged items which are deemed to be
part of a fair value hedge relationship:
Fair value hedges
At 31 December 2015 the BMW Group held derivative
financial instruments (mostly commodity swaps) with
terms of up to 58 months (2014: 59 months) to hedge
raw materials price risks attached to future transactions
over the coming 58 months. The income statement im-
pact of the hedged cash flows will be recognised as a
general rule in the same periods in which the derivative
matures. It is expected that €127 million of net losses,
recognised in equity at the end of the reporting period,
will be reclassified to profit and loss in the new finan-
cial year (2014: €54 million).
The BMW Group did not hold any derivative financial
instruments at 31 December 2015, which had been
designated as cash flow hedges to hedge against inter-
est-rate risks.
revenues are recognised. It is expected that €623 million
of net losses, recognised in equity at the end of the re-
porting period, will be reclassified to profit and loss in
the new financial year (2014: losses of €278 million).
in € million
At 31 December 2015 the BMW Group held derivative
financial instruments (mainly forward currency and
option contracts) with terms of up to 55 months (2014:
60 months) in order to hedge currency risks attached
to future transactions. These derivative instruments are
intended to hedge forecast sales denominated in a foreign
currency over the coming 55 months. The income state-
ment impact of the hedged cash flows will be recognised
as a general rule in the same periods in which external
An amount of €8 million (2014: €– million) attributable
to forecasting errors (and the resulting over-hedging of
currency exposures) was recognised as a loss in "Finan-
cial Result" in the period under report. Gains attributable
to the ineffective portion of cash flow hedges amount-
ing to €9 million were recognised in “Financial Result”
(2014: losses of €27 million). No gains or losses were
recognised in "Financial Result” in 2015 in connection
with forecasting errors relating to cash flow hedges for
commodities (2014: losses of €6 million). Losses attribut-
able to the ineffective portion of cash flow hedges
amounting to €13 million were also recognised in "Finan-
cial Result" (2014: gains of €6 million).
Fair value gains and losses recognised on derivatives and
recorded initially in accumulated other equity are re-
classified to cost of sales when the derivatives mature.
The difference between the gains/losses on hedging
instruments (mostly interest rate swaps) and the results
recognised on hedged items represents the ineffective
portion of fair value hedges.
Fair value hedges are mainly used to hedge the market
prices of bonds, other financial liabilities and receivables
from sales financing.
Bad debt risk
Notwithstanding the existence of collateral accepted,
the carrying amounts of financial assets generally take
account of the maximum credit risk arising from the
possibility that the counterparties will not be able to
fulfil their contractual obligations. The maximum credit
risk for irrevocable credit commitments relating to
credit card business amounts to €2,011 million (2014:
€1,181 million). The equivalent figure for dealer financ-
ing is €24,733 million (2014: €22,025 million).
121 Notes to the Statement
113 Notes to the Income Statement
98 Accounting Principles and
Policies
98-Notes
Equity
96 Group Statement of Changes in
94 Cash Flow Statements
122 Notes to the Balance Sheet
92 Balance Sheets
90 Statement of
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
156
Within the financial services business, the financed items
(e.g. vehicles, equipment and property) in the retail cus-
tomer and dealer lines of business serve as first-ranking
collateral with a recoverable value. Security is also put
up by customers in the form of collateral asset pledges,
asset assignment and first-ranking mortgages, supple-
mented where appropriate by warranties and guarantees.
If an item previously accepted as collateral is acquired,
it undergoes a multi-stage process of repossession and
disposal in accordance with the legal situation prevailing
In the case of performance relationships underlying
non-derivative financial instruments, collateral will be
required, information on the credit-standing of the
counterparty obtained or historical data based on the
existing business relationship (i.e. payment patterns to
date) reviewed in order to minimise the credit risk, all
depending on the nature and amount of the exposure
that the BMW Group is proposing to enter into.
Comprehensive Income
-8,849
-14,044
-2,564
39,785
-434
-177
45,942
-7,710
-129
-7,581
3,418
1,317
-2,100
11,185
-7,226
- 3,882
-5,601
5,601
-12,686
500
5,299
1,111
91,026
The cash flows shown comprise principal repayments
and the related interest. The amounts disclosed for de-
rivatives comprise only cash flows relating to derivatives
As an enterprise with worldwide operations, business
is conducted in a variety of currencies, from which cur-
rency risks arise. Since a significant portion of Group
revenues is generated outside the euro currency re-
gion and the procurement of production material and
funding is also organised on a worldwide basis, the
currency risk is an extremely important factor for Group
earnings.
Currency risks
Further information is provided in the "Report on out-
look, risks and opportunities" section of the Combined
Management Report.
The scope of permitted transactions, responsibilities,
financial reporting procedures and control mechanisms
used for financial instruments are set out in internal
guidelines. This includes, above all, a clear separation of
duties between trading and processing. Currency, inter-
est rate and raw materials price risks of the BMW Group
are managed at a corporate level.
actions.
maining after netting. Financial instruments are only
used to hedge underlying positions or forecast trans-
in € million
-3,461
Protection against such risks is provided in the first
instance through natural hedging which arises when
the values of non-derivative financial instruments have
matching maturities and amounts (netting). Derivative
financial instruments are used to reduce the risk re-
Market risks
Also reducing liquidity risk, additional secured and un-
secured lines of credit are in place with international
banks, including a syndicated credit line totalling €6 bil-
lion (2014: €6 billion). Intra-group cash flow fluctua-
tions are evened out by the use of daily cash pooling
arrangements.
Short-term liquidity is managed primarily by issuing
money market instruments (commercial paper). In
this area too, competitive refinancing conditions can
be achieved thanks to Moody's and Standard & Poor's
short-term ratings of P-1 and A-1 respectively.
Solvency is assured at all times by managing and moni-
toring the liquidity situation on the basis of a rolling
cash flow forecast. The resulting funding requirements
are secured by a variety of instruments placed on the
world's financial markets. The objective is to minimise
risk by matching maturities for the Group's financing
requirements within the framework of the target debt
structure. The BMW Group has good access to capital
markets as a result of its solid financial position and a
diversified refinancing strategy. This is underpinned
by the longstanding long- and short-term ratings issued
by Moody's and Standard & Poor's.
At 31 December 2015 irrevocable credit commitments
to dealers which had not been called upon at the end of
the reporting period amounted to €7,552 million (2014:
€7,247 million).
157 GROUP FINANCIAL STATEMENTS
that have a negative fair value at the balance sheet date.
The principal market risks to which the BMW Group is
exposed are currency risk, interest rate risk and raw
materials price risk.
-9,225
-12,031
-489
Bonds
in € million
31 December 2014
1,203
104,067
8,512
44,375
51,180
Liabilities to banks
570
-261
-7,773
-72
-7,701
-6,104
-174
3,366
-372
-480
Liabilities from customer deposits (banking)
Asset backed financing transactions
-3,432
-8,110
37,284
4,232
23,786
-9,266
Total
Commercial paper
Maturity
later than
five years
one year
Maturity
between one
Maturity
within
Total
Other financial liabilities
Trade payables
Derivative instruments
and five years
151 GROUP FINANCIAL STATEMENTS
96 Group Statement of Changes in
Equity
(since 14.05.2015)
non-current assets relates to property, plant and equip-
ment, intangible assets and leased products. Elimina-
tions disclosed for non-current assets relate to leased
products.
In the case of information by geographical region, ex-
ternal sales are based on the location of the customer's
registered office. Revenues with major customers were
not material overall. The information disclosed for
Information by region
167 GROUP FINANCIAL STATEMENTS
154,803
172,174
Total Group assets
-99,688
-113,026
Elimination of inter-segment items
- 28,488
-31,817
Liabilities of Automotive and Motorcycles segments not subject to interest
39,449
41,932
Non-operating assets - Automotive and Motorcycles segments
96,959
112,081
Total liabilities - Financial Services segment
-6,658
-7,132
- Non-operating assets - Other Entities segment
82,937
92,238
Total for reportable segments
Reconciliation of segment assets
in € million
- Non-current
assets
External
revenues
2015
-2,961
3,361
Rest of the Americas
-11,643
-13,099
24,635
-28,617
Rest of Europe
25
23
-15,002
-15,856
31.12.2015 ―31.12.2014
China
-21,000
-13,666
-18,155
USA
27,137
28,786
-12,992
-13,394
Germany
2014
2015
2014
-17,093
in € million
7,571
8,195
2015
Segment figures can be reconciled to the corresponding
Group figures as follows:
The information disclosed for capital expenditure and
depreciation and amortisation relates to non-current
property, plant and equipment, intangible assets and
leased products.
The Other Entities' segment result includes interest
and similar income amounting to €1,177 million (2014:
€1,295 million) and interest and similar expenses
amounting to €1,080 million (2014: €1,197 million) as
well as impairment losses on other investments totalling
€7 million (2014: €- million).
Interest and similar income of the Financial Services
segment amounting to €4 million (2014: €4 million) and
interest and similar expenses amounting to €7 million
(2014: €29 million) are included in the segment result.
Reconciliation of segment result
in € million
The segment result of the Financial Services segment is
stated after impairment losses of €406 million (2014:
€268 million) recognised on leased products and €3 mil-
lion on other investments (2014: €– million). Reversals
of impairment losses on leased products amounted to
€81 million (2014: €169 million).
Impairment losses and fair value changes on other in-
vestments amounting to €17 million (2014: €153 million)
relating to the Automotive segment and recognised in the
financial result are not included in the segment result.
Write-downs on inventories to their net realisable value
amounting to €486 million (2014: €29 million) were
recognised by the Automotive segment in the financial
year 2015 and resulted primarily from accidents and
natural disasters. No reversals of write-downs were rec-
ognised in the period under report (2014: €3 million).
An impairment loss of €3 million (2014: €– million) was
recognised on plant and machinery in the Automotive
segment in 2015.
147 Other Disclosures
163-Segment Information
2014
122 Notes to the Balance Sheet
121 Notes to the Statement
113 Notes to the Income Statement
98 Accounting Principles and
Policies
98-Notes
Equity
96 Group Statement of Changes in
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
Income Statements
90
of Comprehensive Income
2,053
Total for reportable segments
9,233
Total Group depreciation and amortisation on non-current assets
-4,112
-5,119
Elimination of inter-segment items
-11,683
-13,314
Total for reportable segments
Reconciliation of depreciation and amortisation on non-current assets
20,676
23,901
-4,621
-5,672
-10,204
25,297
Total Group capital expenditure on non-current assets
Elimination of inter-segment items
Total for reportable segments
Reconciliation of capital expenditure on non-current assets
8,707
9,224
Group profit before tax
-163
-664
-363
-316
Financial result of Automotive segment and Motorcycles segment
Elimination of inter-segment items
29,573
2,050
Other
-12,792
- - Allianz Deutschland AG
Mandates
Dr. Friedrich Eichiner (born 1955)
Finance
(until 15.05.2015)
BMW Motoren GmbH (Chairman)
(until 13.05.2015)
BMW (South Africa) (Pty) Ltd. (Chairman)
Mandates
(until 13.05.2015)
Production
(since 13.05.2015)
Chairman
― FESTO Aktiengesellschaft
Harald Krüger (born 1965)
170
188 Compensation Report
184 Compliance in the BMW Group
Governance Practices
182 Information on Corporate
on Equal Gender Participation
176 Work Procedures of the
Supervisory Board
174 Work Procedures of the
Board of Management
Board
171-Members of the Supervisory
Management
170-Members of the Board of
Members of the Board of Management
Supervisory Board pursuant to
§161 AktG
BMW Brilliance Automotive Ltd. (Deputy Chairman)
FESTO Management Aktiengesellschaft
(until 13.05.2015)
Dr. Jürgen Reul
General Counsel:
(since 15.05.2015)
BMW Motoren GmbH (Chairman)
BMW (South Africa) (Pty) Ltd. (Chairman)
Mandates
(since 13.05.2015)
Production
Oliver Zipse (born 1964)
- Rolls-Royce Motor Cars Limited (Chairman)
Mandates
Peter Schwarzenbauer (born 1959)
MINI, Motorcycles, Rolls-Royce,
Aftersales BMW Group
Dr.-Ing. Dr.-Ing. E. h. Norbert Reithofer (born 1956)
Chairman
-Membership of equivalent national or foreign boards of business enterprises.
--Other mandates.
Dr.-Ing. Klaus Draeger (born 1956)
Purchasing and Supplier Network
- Dyson James Group Limited (until 31.12.2015)
Mandates
Sales Channels BMW Group
Dr. Ian Robertson (HonDSc) (born 1958)
Sales and Marketing BMW,
HERE International B.V. (since 05.12.2015)
Mandates
Klaus Fröhlich (born 1960)
Development
Milagros Caiña Carreiro-Andree (born 1962)
Human Resources, Industrial Relations Director
- Henkel AG & Co. KGaA (Shareholders' Committee)
Siemens Aktiengesellschaft
Mandates
-Membership of other statutory supervisory boards.
90-GROUP FINANCIAL STATEMENTS
169 Declaration of the Board of
Management and of the
CORPORATE GOVERNANCE
168-STATEMENT ON
STATEMENT ON CORPORATE GOVERNANCE
168
Oliver Zipse
Peter Schwarzenbauer
Dr. Ian Robertson (HonDSc)
Klaus Fröhlich
Dr. Friedrich Eichiner
Dr.-Ing. Klaus Draeger
Milagros Caiña Carreiro-Andree
Harald Krüger
The Board of Management
CORPORATE GOVERNANCE
(Part of Management Report)
168-Information on the Company's
Governing Constitution
169-Declaration of the Board of
Aktiengesellschaft
Munich, 18 February 2016
53,846
60,096
80,401
92,175
Group
-5,204
-6,183
Eliminations
-1,102
1,318
-11,145
Bayerische Motoren Werke
(Part of Management Report)
168 Information on the Company's
Governing Constitution
Management and of the
Supervisory Board pursuant to
§161 AktG
171 Members of the Supervisory
Board
168-STATEMENT ON
Chairman
Harald Krüger
On behalf of the
Board of Management
Dr.-Ing. Dr.-Ing. E. h.
Norbert Reithofer
Chairman
On behalf of the
Supervisory Board
Bayerische Motoren Werke
Aktiengesellschaft
Munich, December 2015
3. It is recommended in section 4.2.5 sentences 5 and 6
of the Code that specified information pertaining to
management board compensation be disclosed in the
Compensation Report. These recommendations have
not been and will not be complied with, due to un-
certainties with respect to their interpretation and
doubts as to whether the supplementary use of model
tables would be instrumental in making the BMW AG's
Compensation Report transparent and generally un-
derstandable in accordance with generally applicable
financial reporting requirements (see section 4.2.5 sen-
tence 3 of the Code).
2. BMW AG will in future comply with all of the recom-
mendations published officially on 12 June 2015 in
the Federal Gazette (Code version dated 5 May 2015),
with the exception of section 4.2.5 sentences 5 and 6.
1. Since issuance of the last Declaration in December
2014, BMW AG has complied with all of the recommen-
dations published officially on 30 September 2014
in the Federal Gazette (Code version dated 24 June
2014), as announced with the exception of section
4.2.5 sentences 5 and 6.
The Board of Management and Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft
("BMW AG") declare the following regarding the recom-
mendations of the "Government Commission on the
German Corporate Governance Code":
170 Members of the Board of
Management
Declaration of the Board of Management and of the
Supervisory Board of Bayerische Motoren Werke
Aktiengesellschaft with respect to the recommendations
of the "Government Commission on the German
Corporate Governance Code" pursuant to § 161 German
Stock Corporation Act
The Corporate Governance Code for the BMW Group,
together with the Declaration of Compliance, Articles
of Incorporation and other information, can be viewed
and/or downloaded from the BMW Group's website at
www.bmwgroup.com/ir under the menu items "Facts
about the BMW Group" and "Corporate Governance".
The Board of Management and the Supervisory Board
approved the Group's own Corporate Governance Code
based on the GCGC in previous years in order to pro-
vide interested parties with a comprehensive and stand-
alone document covering the corporate governance
practices applied by the BMW Group. A coordinator
responsible for all corporate governance issues reports
directly and on a regular basis to the Board of Manage-
ment and Supervisory Board.
Management and supervisory boards of companies listed
in Germany are required by law (§ 161 German Stock
Corporation Act) to report once a year whether the offi-
cially published and relevant recommendations issued
by the "Government Commission on the German Cor-
porate Governance Code", as valid at the date of the
declaration, have been, and are being, complied with.
Companies affected are also required to state which of
the recommendations of the Code have not been or
are not being applied, stating the reason or reasons. The
full text of the declaration, together with explanatory
comments, is shown on the following page of this Annual
Report.
Declaration of Compliance and the BMW Group
Corporate Governance Code
The close interaction between Board of Management
and Supervisory Board in the interests of the enterprise
as described above is also known as a “two-tier board
structure".
In accordance with the requirements of the German
Co-determination Act for companies that generally em-
ploy more than 20,000 people, the Supervisory Board
of BMW AG is required to comprise ten shareholder
representatives elected at the Annual General Meeting
(Supervisory Board members representing equity or
shareholders) and ten employees elected in accordance
with the provisions of the Co-determination Act (Super-
visory Board members representing employees). The
ten Supervisory Board members representing employees
comprise seven Company employees, including one
executive staff representative, and three members elected
following nomination by unions.
Information on the Company's Governing Constitution
The designation "BMW Group" comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and its
group entities. BMW AG is a stock corporation (Aktien-
gesellschaft) based on the German Stock Corporation
Act (Aktiengesetz) and has its registered office in
Munich, Germany. It has three representative bodies:
the Annual General Meeting, the Supervisory Board
and the Board of Management. The duties and authori-
ties of those bodies derive from the Stock Corporation
Act and the Articles of Incorporation of BMW AG.
Shareholders, as the owners of the business, exercise
their rights at the Annual General Meeting. The Annual
General Meeting decides in particular on the utilisation
of unappropriated profit, the ratification of the acts
of the members of the Board of Management and of the
Supervisory Board, the appointment of the external
auditor, changes to the Articles of Incorporation, speci-
fied capital measures and elects the shareholders'
representatives to the Supervisory Board. The Board of
Management manages the enterprise under its own
responsibility. Within this framework, it is monitored
and advised by the Supervisory Board. The Supervisory
Board appoints the members of the Board of Manage-
ment and can, at any time, revoke an appointment if
there is an important reason. The Board of Manage-
ment keeps the Supervisory Board informed of all sig-
nificant matters regularly, promptly and comprehen-
sively, following the principles of conscientious and
faithful accountability and in accordance with prevailing
law and the reporting duties allocated to it by the Super-
visory Board. The Board of Management requires
the approval of the Supervisory Board for certain major
transactions. The Supervisory Board is not, however,
authorised to undertake management measures itself.
Good corporate governance - acting in accordance with
the principles of responsible management aimed at in-
creasing the value of the business on a sustainable basis -
is an essential requirement for the BMW Group em-
bracing all areas of the business. Corporate culture within
the BMW Group is founded on transparent reporting and
internal communication, a policy of corporate governance
aimed at the interests of stakeholders, fair and open
dealings between the Board of Management and the
Supervisory Board as well as among employees and
compliance with the law. The Board of Management and
Supervisory Board report in this statement on important
aspects of corporate governance pursuant to § 289 a HGB
and section 3.10 of the German Corporate Governance
Code (GCGC).
184 Compliance in the BMW Group
188 Compensation Report
Governance Practices
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
169 STATEMENT ON CORPORATE GOVERNANCE
166
181 Disclosures pursuant to the Act
-1,088
-154,803
For the purposes of presenting segment information, the
activities of the BMW Group are divided into operating
segments in accordance with IFRS 8 (Operating Seg-
ments). Operating segments are identified on the same
basis that is used internally to manage and report on per-
formance and takes account of the organisational struc-
ture of the BMW Group based on the various products
and services of the reportable segments.
49-Explanatory notes to segment information
Information on reportable segments
Notes to the Group Financial Statements
Segment Information
BMW Group
163 GROUP FINANCIAL STATEMENTS
In addition, the Dutch entities, BMW International Holding
B.V., The Hague, and Alphabet Nederland B.V., Breda,
apply the exemption provision contained in Article 2:403
of the Civil Code of the Netherlands.
- Rolls-Royce Motor Cars GmbH, Munich
MITEC Mikroelektronik Mikrotechnik Informatik
GmbH, Munich
BMW Verwaltungs GmbH, Munich
Automobile, Munich
BMW M GmbH Gesellschaft für individuelle
BMW INTEC Beteiligungs GmbH, Munich
BMW Hams Hall Motoren GmbH, Munich
BMW Fahrzeugtechnik GmbH, Eisenach
BMW Beteiligungs GmbH & Co. KG, Munich
Bavaria Wirtschaftsagentur GmbH, Munich
· Alphabet International GmbH, Munich
-
-
-
-
-
-
-
The following German entities apply the exemption
available in § 264 (3) and § 264b HGB with regard to
publication:
The activities of the BMW Group are broken down into
the operating segments Automotive, Motorcycles, Finan-
cial Services and Other Entities.
The Automotive segment develops, manufactures, as-
sembles and sells cars and off-road vehicles, under the
brands BMW, MINI and Rolls-Royce as well as spare
parts and accessories. BMW and MINI brand products
are sold in Germany through branches of BMW AG
and by independent, authorised dealers. Sales outside
Germany are handled primarily by subsidiary compa-
nies and by independent import companies in a num-
ber of markets. Rolls-Royce brand vehicles are sold in
the USA, China and Russia via subsidiary companies and
elsewhere by independent, authorised dealers.
The BMW Motorcycles segment develops, manufactures,
assembles and sells motorcycles as well as spare parts
and accessories.
The principal lines of business of the Financial Services
segment are car leasing, multi-brand financing, fleet
business, retail customer and dealer financing, customer
deposit business and insurance activities.
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
in € million
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
Result from equity accounted investments
Segment result
Total revenues
Inter-segment revenues
External revenues
in € million
Further details about the remuneration of current mem-
bers of the Board of Management and the Supervisory
Board can be found in the Compensation Report, which
is part of the Combined Management Report.
Segment information by operating segment
164
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
ments.
The performance of the Other Entities segment is as-
sessed on the basis of profit or loss before tax. The
corresponding measure of segment assets used to
manage the Other Entities segment is total assets less
asset-side income tax items and intragroup invest-
The performance of the Financial Services segment is
measured on the basis of return on equity (RoE), with
profit before tax therefore representing the measure of
segment result used. For this reason, the measure of
segment assets in the Financial Services segment corre-
sponds to net assets, defined as total assets less total
liabilities.
The performance of the Automotive and Motorcycles
segments is managed on the basis of return on capital
employed (ROCE). The relevant measure of segment
results used is therefore profit before financial result.
Capital employed is the corresponding measure of
segment assets used to determine how to allocate re-
sources and comprises all current and non-current
operational assets after deduction of liabilities used
operationally which are not subject to interest (e.g.
trade payables).
The role of "chief operating decision maker” with re-
spect to resource allocation and performance assess-
ment of the reportable segment is embodied in the full
Board of Management. In order to assist the decision-
taking process, various measures of segment perfor-
mance as well as segment assets have been set for the
various operating segments.
the Group Financial Statements. The only exceptions to
this general principle is the treatment of inter-segment
warranties (the earnings impact of which is allocated
to the Automotive and Financial Services segments on
the basis used internally to manage the business) and
cross-segment impairment losses on investments in
subsidiaries. Inter-segment receivables and payables,
provisions, income, expenses and profits are eliminated
in the column "Eliminations". Inter-segment sales take
place at arm's length prices.
Internal management and reporting
Segment information is prepared in conformity with the
accounting policies adopted for preparing and presenting
Holding and Group financing companies are included in
the Other Entities segment. This segment also includes
operating companies - BMW Services Ltd., Farnborough,
BMW (UK) Investments Ltd., Farnborough, Bavaria Lloyd
Reisebüro GmbH, Munich, and MITEC Mikroelektronik
Mikrotechnik Informatik GmbH, Munich, - which are
not allocated to one of the other segments.
Segment information by operating segment is as follows:
The compensation systems for members of the Super-
visory Board do not include any stock options, value
appreciation rights comparable to stock options or any
other stock-based compensation components. Apart
from vehicle lease contracts entered into on customary
market conditions, no advances or loans were granted
to members of the Board of Management and the Super-
visory Board, nor were any contingent liabilities entered
into on their behalf.
Pension obligations to former members of the Board
of Management and their surviving dependants are
covered by pension provisions amounting to €71.8 mil-
lion (2014: €68.4 million), computed in accordance
with IAS 19.
- Rolls-Royce Motor Cars GmbH, Munich
Benefits in conjunction with the termination of an employment relationship
Compensation
Post-employment benefits
Share-based remuneration component.
Short-term employment benefits
2014
2015
€43.6 million (2014: €46.1 million) and comprised the
following:
in € million
The total compensation of the current members of
the Board of Management and the Supervisory Board
of BMW AG for the financial year 2015 amounted to
47-Compensation of members of the Board of
Management and Supervisory Board
162
15.00% are held by Mr. Quandt and Mrs. Klatten indi-
rectly in a so-called “undivided community of heirs",
with the consequence that the 15.00% shareholding
is attributed to both in full. As at the end of the pre-
vious financial year, shareholdings of members of the
BMW AG Board of Management account, in total, for
less than 1% of issued shares.
39.5
ant to § 161 of the German Stock Corporation Act. It is
reproduced in the Annual Report 2015 of the BMW
Group and is also available to shareholders on the BMW
Group website at www.bmwgroup.com/ir.
BMW Trust e. V., Munich, administers assets on a
trustee basis to secure obligations relating to pensions
and pre-retirement part-time working arrangements in
Germany and is therefore a related party of the BMW
Group in accordance with IAS 24. This entity, which is
a registered association (eingetragener Verein) under
German law, does not have any assets of its own. It did
not have any income or expenses during the period
under report. BMW AG bears expenses on a minor scale
and renders services on behalf of BMW Trust e. V.,
Munich.
Apart from vehicle lease contracts concluded on an arm's
length basis, companies of the BMW Group have not
entered into any contracts with members of the Board
of Management or Supervisory Board of BMW AG. The
same applies to close members of the families of those
persons.
and Deputy Chairman of the Supervisory Board of
Altana AG, Wesel. Altana AG, Wesel, acquired vehicles
from the BMW Group during the financial year 2015,
mostly in the form of lease contracts, generating lease
revenue of €3 million (2014: €3 million) for the BMW
Group. The lease contracts all arise in the normal course
of business and are conducted on the basis of arm's
length principles. The BMW Group purchased goods or
services amounting to €324 thousand (2014: €230 thou-
sand) from Altana AG, Wesel, during the financial
year 2015. BMW Group companies had no payables to
Altana AG, Wesel at the end of the reporting period
(2014: €4 thousand), while receivables amounted to
€312 thousand (2014: €50 thousand).
The members of the Supervisory Board of BMW AG hold
in total 43.00% (2014: 27.61%) of the issued common
and preferred stock shares, of which 31.26% (2014:
16.06%) relates to Stefan Quandt, Germany, and 26.74%
(2014: 11.54%) to Susanne Klatten, Germany, whereby
46-Shareholdings of members of the Board of
Management and Supervisory Board
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft have
issued the prescribed Declaration of Compliance pursu-
45-Declaration with respect to the Corporate
Governance Code
Susanne Klatten is a shareholder and member of the
Supervisory Board of BMW AG and also a shareholder
Stefan Quandt is also the indirect majority shareholder of
Solarwatt GmbH, Dresden. Cooperation arrangements
are in place between BMW AG and Solarwatt GmbH,
Dresden, within the field of electromobility. The focus
of this collaboration is on providing complete photovol-
taic solutions for rooftop systems and carports to BMW i
customers. The BMW Group purchased goods or ser-
vices amounting to €3 thousand (2014: €222 thousand)
from Solarwatt GmbH, Dresden, during the financial
year 2015. Solarwatt GmbH, Dresden, leased vehicles
from the BMW Group in 2015, generating lease revenue
of €287 thousand (2014: €223 thousand) for the BMW
Group. All of the above-mentioned services, cooperation
and lease contracts arise in the normal course of business
and are conducted on the basis of arm's length principles.
Receivables of BMW Group entities from Solarwatt GmbH,
Dresden, at 31 December 2015 amounted to €7 thou-
sand (2014: €- thousand). As in the previous financial
year, there were no payables from Group entities to So-
larwatt GmbH, Dresden, at 31 December 2015.
DELTON AG, Bad Homburg v. d. H., which, via its sub-
sidiaries, performed logistic-related services for the
BMW Group during the financial year 2015 amounting
to €23 million (2014: €26 million). In addition, com-
panies of the DELTON Group used vehicles provided
by the BMW Group, mostly in the form of leasing con-
tracts. Income recognised by the BMW Group on these
transactions during the financial year 2015 amounted
to €3 million (2014: €3 million). Amounts payable to
DELTON Group entities at the end of the reporting pe-
riod totalled €3 million (2014: €2 million). Group com-
panies had no receivables from DELTON Group entities
at the end of the reporting period (2014: €– million).
161 GROUP FINANCIAL STATEMENTS
Investments accounted for using the equity method —
Segment assets
For disclosures relating to key management personnel
pursuant to IAS 24.17, please see note 47 and the Com-
pensation Report.
96 Group Statement of Changes in
Equity
1.1
2.6
- BMW M GmbH Gesellschaft für individuelle
Automobile, Munich
Alphabet International GmbH, Munich
Bavaria Wirtschaftsagentur GmbH, Munich
BMW Fahrzeugtechnik GmbH, Eisenach
BMW Hams Hall Motoren GmbH, Munich
-
-
-
A number of companies and incorporated partnerships
(as defined by $264a HGB) which are consolidated sub-
sidiaries of BMW AG and for which the Group Financial
Statements of BMW AG represent exempting consoli-
dated financial statements, apply the exemptions avail-
able in § 264 (3) and § 264b HGB with regard to the draw-
ing up of a management report. The exemptions have
been applied by:
48-Application of exemption provisions
The remuneration of former members of the Board
of Management and their dependants amounted to
€8.0 million (2014: €5.8 million).
The compensation of the members of the Supervisory
Board for the financial year 2015 amounted to €5.1 mil-
lion (2014: €4.8 million). This comprised fixed compo-
nents of €2.0 million (2014: €2.0 million) and variable
components of €3.1 million (2014: €2.8 million).
The total compensation of the current Board of Manage-
ment members for 2015 amounted to €35.9 million
(2014: €35.7 million). This comprised fixed components
of €7.7 million (2014: €7.7 million), variable compo-
nents of €27.1 million (2014: €27.0 million) and a share-
based compensation component totalling €1.1 million
(2014: €1.0 million). Pension obligations to current mem-
bers of the Board of Management are covered by provi-
sions amounting to €23.2 million (2014: €31.3 million),
computed in accordance with IAS 19 (Employee Benefits).
of Comprehensive Income
122 Notes to the Balance Sheet
147-Other Disclosures
163-Segment Information
113 Notes to the Income Statement
121 Notes to the Statement
-1.0
98 Accounting Principles and
Policies
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
46.1
43.6
3.5
2.1.
98-Notes
98-Notes
39.9
113 Notes to the Income Statement
-1,723
1,975
Total revenues
80,401
92,175
-17,057
-19,097
7
7
20,599
23,739
Inter-segment revenues
-211
-17,057
4
5
-1,526
1,595
External revenues
-80,401
92,175
3
2
-19,073
22,144
2014
-19,097
2015
-154
-526
-172,174
98 Accounting Principles and
Policies
-71,866
-79,936
-61,516
-71,709
9,357
-9,948
2,233
31.12.2015 - 31.12.2014 - 31.12.2015 - 31.12.2014 - 31.12.2015 - 31.12.2014 - 31.12.2015 - 31.12.2014
Group
Reconciliation to -
Group figures
-980
Other Entities
Depreciation and amortisation on non-current assets -
Result from equity accounted investments
-655
20,676
-7,571
Segment result
-8,707
9,224
-518
-23,901
8,195
-4,621
-4,112
-5,672
-5,119
-7,539
8,686
-19,206
23,689
Financial
Services
2014
Capital expenditure on non-current assets
2014
-7,244
-7,836
8
1,679
1,990
75,173
85,536
6
-15,519
-17,491
1,671
1,984
59,654
182
-68,045
Motorcycles
2015
-Automotive
2015
See note 3.
Investments accounted for using the equity method
Segment assets
163-Segment Information
147 Other Disclosures
122 Notes to the Balance Sheet
2015
121 Notes to the Statement
of Comprehensive Income
2014
-112
2014
-655
2015
518
2015
Group figures
Services
Group
2014
Other Entities
Financial
165 GROUP FINANCIAL STATEMENTS
575
557
-11,489
1,088
Reconciliation to
-2,233*
10,024
5,792
92
69
4,559
- 4,080
-6,022
64
31.12.2015 - 31.12.2014 - 31.12.2015 - 31.12.2014
Automotive
-Motorcycles —
-69
The Supervisory Board examines the efficiency of its
activities on a regular basis. Joint discussions are also
held at plenum meetings, prepared on the basis of a
questionnaire previously devised by and distributed to
the members of the Supervisory Board.
Each member of the Supervisory Board of BMW AG is
bound to act in the best interest of the organisation as
a whole. Members of the Supervisory Board may not
pursue personal interests in their decisions or take ad-
vantage of business opportunities intended to benefit
the BMW Group.
Members of the Supervisory Board are obliged to inform
the full Supervisory Board of any conflicts of interest
which may result from a consultant or directorship func-
tion with clients, suppliers, lenders or other business
partners, enabling the Supervisory Board to report to
the shareholders at the Annual General Meeting on
how it has dealt with such issues. Material conflicts of
interest which are not merely temporary in nature, re-
sult in the termination of the mandate of the relevant
Supervisory Board member.
With regard to nominations for the election of members
of the Supervisory Board, care is taken that the Super-
visory Board in its entirety has the required knowledge,
skills and expertise to perform its tasks in a proper
manner.
The Supervisory Board has set out specific targets for
its own composition (see section “Composition targets
for the Supervisory Board").
The members of the Supervisory Board are responsible
for undertaking appropriate basic and further training
measures, if such measures are deemed necessary to
competently perform the tasks assigned to them. The
Company provides appropriate assistance to members
of the Supervisory Board in this respect.
171 Members of the Supervisory
Board
The composition of the Presiding Board and the com-
mittees is based on legal requirements, BMW AG's
Articles of Incorporation, terms of reference and corpo-
rate governance principles. The expertise and technical
skills of its members is also taken into account.
According to the relevant terms of reference, the Chair-
man of the Supervisory Board is, in this capacity, auto-
matically a member of the Presiding Board, the Person-
nel Committee and the Nomination Committee, and
also chairs these committees.
The number of meetings held by the Presiding Board
and the committees depends on current requirements.
The Presiding Board, the Personnel Committee and
the Audit Committee normally hold several meetings in
the course of the year (see “Report of the Supervisory
Board" for details of the number of meetings held in
2015).
170 Members of the Board of
Management
In line with the terms of reference for the activities of
the plenum, the Supervisory Board has also set out terms
of reference for the Presiding Board and the various
committees. The committees are only quorate if all mem-
bers are present. Resolutions taken by the committees
are passed by a simple majority, unless stipulated other-
wise by law.
178
168-STATEMENT ON
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
Taking into account the specific circumstances of the
BMW Group and the number of board members, the
Supervisory Board has set up a Presiding Board and
four committees, namely the Personnel Committee, the
Audit Committee, the Nomination Committee and the
Mediation Committee (see "Overview of Supervisory
Board committees and their composition"). Such com-
mittees serve to raise the efficiency of the Supervisory
Board's work and facilitate the handling of complex
issues. The establishment and function of a mediation
committee is prescribed by law. The person chairing a
committee reports in detail on its work at each plenum
meeting.
Members of the Supervisory Board of BMW AG are re-
quired to ensure that they have sufficient time to perform
their mandate. If members of the Supervisory Board of
BMW AG are also members of the management board
of a listed company, they may not accept more than a to-
tal of three mandates on non-BMW Group supervisory
boards of listed companies or in other bodies with com-
parable requirements.
BMW AG's Supervisory Board, comprising ten share-
holder representatives (elected by the Annual General
Meeting) and ten employee representatives (elected in
accordance with the Co-Determination Act), has the
task of advising and supervising the Board of Manage-
ment in its governance of the BMW Group. It is in-
volved in all decisions of fundamental importance for
the BMW Group. The Supervisory Board appoints
the members of the Board of Management and decides
upon the level of compensation they receive. The Super-
visory Board can revoke appointments for important
After its meetings, the Supervisory Board is generally
provided with information on new vehicle models in the
form of a short presentation.
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
174 Work Procedures of the
Board of Management
176-Work Procedures of the
Supervisory Board
168-STATEMENT ON
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176-Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
Following the election of a new Supervisory Board mem-
ber, the Corporate Governance Officer informs the
new member of the principal issues affecting his or her
duties - in particular those enshrined in the BMW Group
Corporate Governance Code - including the duty to
cooperate when a transaction or event triggers reporting
requirements or is subject to the approval of the Super-
visory Board.
184 Compliance in the BMW Group
188 Compensation Report
reasons.
Together with the Personnel Committee and the Board
of Management, the Supervisory Board ensures that
long-term successor planning is in place. In their assess-
ment of candidates for a post on the Board of Manage-
ment, the underlying criteria applied by the Supervisory
Board for determining the suitability of candidates are
their expertise in the relevant area of board responsi-
bility, outstanding leadership qualities, a proven track
record, and an understanding of the BMW Group's
business. The Supervisory Board takes diversity into ac-
count when assessing, on balance, which individual
would best complement the Board of Management, in
view of the fact that it is a representative body of the
Company. "Diversity" in the context of the decision-
making process is understood by the Supervisory Board
to encompass various complementary individual pro-
files, work and life experience at both national and in-
ternational level and also the appropriate representa-
tion of both genders. As its target for the proportion of
women on the Board of Management by 31 December
2016, the Supervisory Board has stipulated that the
Board of Management should continue to have at least
one female member. Assuming that the Board of
Management continues to comprise eight members,
this would correspond to a ratio of at least 12.5%.
The Supervisory Board considers that it would be de-
sirable to further increase the proportion of women on
the board, and therefore supports the Board of Manage-
ment's current raft of measures aimed at increasing the
proportion of women at the highest executive manage-
ment levels of the BMW Group. The Board of Manage-
ment reports to the Personnel Committee and the Super-
visory Board at regular intervals on the proportion of,
and changes in, management positions held by women,
in particular within senior executive level and at upper-
most management level. When actually selecting an
individual for a post on the Board of Management, the
Supervisory Board decides in the best interest of the
Group and after amply considering all of the relevant
circumstances.
The Supervisory Board holds a minimum of two meet-
ings in each of the first and second six-month periods
of the calendar year. Normally, five plenary meetings
are held per calendar year. One meeting each year is
planned to cover a number of days and is used, among
other things, to enable an in-depth exchange on strategic
and technological matters. The main emphases of meet-
ings in the period under report are described in the
Report of the Supervisory Board. As a general rule, the
shareholder representatives and employee representa-
tives prepare the Supervisory Board meetings separately
and, if necessary, together with members of the Board
of Management. In particular, members of the Super-
visory Board are legally bound to maintain secrecy with
respect to any confidential reports they receive and any
confidential discussions in which they partake.
The Chairman of the Supervisory Board coordinates
work within the Supervisory Board, chairs its meetings,
handles the external affairs of the Supervisory Board
and represents it in its dealings with the Board of
Management.
The Supervisory Board is quorate if all members have
been invited to the meeting and at least half of its mem-
bers participate in the vote on a particular resolution.
A resolution relating to an agenda item not included in
the invitation is only valid if none of the members of
the Supervisory Board who were not present at the
meeting object to the resolution and if a minimum of
two-thirds of the members are present.
As a basic rule, resolutions are passed by the Super-
visory Board by a simple majority. The German Co-
determination Act contains specific requirements with
regard to majority voting and technical procedures, par-
ticularly with regard to the appointment and revoca-
tion of the appointment of management board mem-
bers and the election of a supervisory board chairman
or deputy chairman. In the event of a tied vote in the
Supervisory Board, the Chairman of the Supervisory
Board has two votes in a renewed vote, assuming it also
results in a tie.
In practice, resolutions are taken by the Supervisory
Board and its committees at the relevant meetings. If a
Supervisory Board member is not present at a meeting,
that member can have his/her vote cast by another
Supervisory Board member, assuming an appropriate
request has been made in writing, by fax or in electronic
form. This rule also applies to the casting of the second
vote by the Chairman of the Supervisory Board. The
Chairman of the Supervisory Board can also accept the
retrospective casting of votes by any members not
present at a meeting if this is done within the time limit
177 STATEMENT ON CORPORATE GOVERNANCE
previously set. In special cases, resolutions may also be
taken outside of meetings, i.e. in writing, by fax or by
electronic means. Minutes are taken of all resolutions
and meetings, which are then signed by the relevant
Chairman.
Composition and work procedures of the Supervisory
Board of BMW AG and its committees
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
preparation of proposals for election of external auditor at Annual General Meeting, engagement
of external auditor and compliance of audit engagement, determination of areas of audit emphasis
and fee agreements with external auditor
Members of the Supervisory Board may not delegate their
duties. However, the Supervisory Board, the Presiding
Board and the committees may call on experts and
other suitably informed persons to attend meetings to
give advice on specific matters.
-
preparation of Supervisory Board's resolution on Company and Group Financial Statements
- discussion of interim reports with Board of Management prior to publication
- decision on approval for utilisation of Authorised Capital 2014
- amendments to Articles of Incorporation only affecting wording
- establishment in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of reference
Nomination Committee
- identification of suitable candidates (male/female) as shareholder representatives on the
Supervisory Board to be put forward for inclusion in the Supervisory Board's proposals for
election at the Annual General Meeting
- establishment in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of reference
- supervision of external audit, in particular auditor independence and additional work performed
by external auditor
Mediation Committee
Norbert Reithofer¹ (since 13.05.2015)
Joachim Milberg1 (until 13.05.2015)
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Norbert Reithofer (since 13.05.2015)
Joachim Milberg (until 13.05.2015)
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Karl-Ludwig Kley 1,2
Norbert Reithofer (since 13.05.2015)
Joachim Milberg (until 13.05.2015)
Manfred Schoch
Stefan Quandt
Stefan Schmid
176
Norbert Reithofer (since 13.05.2015)
Joachim Milberg (until 13.05.2015)
Susanne Klatten
Karl-Ludwig Kley
Stefan Quandt
- proposal to Supervisory Board if resolution for appointment of Board of Management member
has not been carried by the necessary two-thirds majority of Supervisory Board members' votes
- committee required by law
184 Compliance in the BMW Group
188 Compensation Report
- supervision of the financial reporting process, the effectiveness of the internal control system,
the risk management system, internal audit arrangements and compliance as well as the
performance of Supervisory Board duties in connection with audits pursuant to § 20 of the
German Securities Trading Act (WPHG)
- set up in accordance with the recommendation contained in the German Corporate Governance
Code, activities based on terms of reference
The Supervisory Board, the Presiding Board and the
committees also meet without the Board of Management
if deemed necessary.
BMW AG ensures that the Supervisory Board and its
committees are sufficiently equipped to carry out their
duties, including the services provided by a centralised
secretariat to support the chairmen in coordinating the
work of the Supervisory Board.
In accordance with the relevant terms of reference, the
Presiding Board comprises the Chairman of the Super-
visory Board and board deputies. The Presiding Board
prepares Supervisory Board meetings to the extent
that the subject matter to be discussed does not fall
within the remit of any of the committees. This in-
cludes, for example, preparing the annual Declaration
of Compliance with the German Corporate Governance
Code and the Supervisory Board's efficiency exami-
nation.
The Personnel Committee prepares the decisions of the
Supervisory Board with regard to the appointment
and revocation of appointment of members of the Board
of Management and, together with the full Supervisory
Board and the Board of Management, ensures that
long-term successor planning is in place. The Personnel
Committee also prepares the decisions of the Super-
visory Board with regard to the Board of Management's
compensation and the Supervisory Board's regular
review of the Board of Management's compensation
system. In conjunction with the resolutions taken by
the Supervisory Board regarding the compensation
of the Board of Management, the Personnel Committee
is responsible for drawing up, amending and revoking
service/employment contracts or, when necessary,
other relevant contracts with members of the Board of
Management. In specified cases, the Personnel Com-
mittee also has the authority to grant the necessary ap-
proval for a particular transaction (instead of the Super-
visory Board). This includes loans to members of the
Board of Management or Supervisory Board, specified
contracts with members of the Supervisory Board (in
each case taking account of the consequences of related
parties) and other activities of members of the Board
of Management, including the acceptance of non-BMW
Group supervisory board mandates.
The Audit Committee deals in particular with issues re-
lating to the supervision of the financial reporting pro-
cess, the effectiveness of the internal control system,
the risk management system, internal audit arrange-
ments and compliance as well as the performance of
Supervisory Board duties in connection with audits
pursuant to § 20 of the German Securities Trading Act
(WpHG). It also monitors the external audit, auditor
independence and any additional work performed by
the external auditor. It prepares the proposal for the
election of the external auditor at the Annual General
Meeting, makes a recommendation regarding the elec-
tion of the external auditor, issues the audit engage-
ment letter and agrees on points of audit focus as well
as the auditor's fee. The Audit Committee prepares the
Supervisory Board's resolution relating to the Company
and Group Financial Statements and discusses interim
reports with the Board of Management prior to publi-
cation. The Audit Committee also decides on the Super-
visory Board's agreement to use Authorised Capital
2014 (Article 4 no. 5 of the Articles of Incorporation)
and on amendments to the Articles of Incorporation
which only affect its wording.
In line with the recommendations of the German Cor-
porate Governance Code, the Chairman of the Audit
Committee is independent, and not a former Chairman
of the Board of Management, and has specific knowledge
and experience in applying financial reporting stand-
ards and internal control procedures. He or she also ful-
fils the requirement of being an independent financial
expert as defined by § 100 (5) and § 107 (4) AktG.
The Nomination Committee is charged with the task
of finding suitable candidates for election to the Super-
visory Board (as shareholder representatives) and for
inclusion in the Supervisory Board's proposals for elec-
tion at the Annual General Meeting. In line with the
recommendations of the German Corporate Governance
Code, the Nomination Committee comprises only share-
holder representatives.
The establishment and composition of a mediation com-
mittee are prescribed by the German Co-determination
Act. The Mediation Committee has the task of making
proposals to the Supervisory Board if a resolution for
the appointment of a member of the Board of Manage-
ment has not been carried by the necessary two-thirds
majority of members' votes. In accordance with statutory
requirements, the Mediation Committee comprises the
Chairman and the Deputy Chairman of the Supervisory
Board, one member selected by shareholder repre-
sentatives and one by employee representatives.
179 STATEMENT ON CORPORATE GOVERNANCE
Audit Committee
Overview of Supervisory Board committees and their composition
basis for activities
Members
Presiding Board
- preparation of Supervisory Board meetings to the extent that the subject matter to be discussed
does not fall within the remit of a committee
- activities based on terms of reference
Personnel Committee
- preparation of decisions relating to the appointment and revocation of appointment of mem-
bers of the Board of Management, the compensation and the regular review of the Board of
Management's compensation system
- conclusion, amendment and revocation of employment contracts (in conjunction with the
resolutions taken by the Supervisory Board regarding the compensation of the Board of
Management) and other contracts with members of the Board of Management
- decisions relating to the approval of ancillary activities of Board of Management members,
including acceptance of non-BMW Group supervisory mandates as well as the approval of trans-
actions requiring Supervisory Board approval by dint of law (e.g. loans to Board of Management
or Supervisory Board members)
Principal duties,
The Board of Management is represented by its Chair-
man in its dealings with the Supervisory Board. The
Chairman of the Board of Management maintains
regular contact with the Chairman of the Supervisory
Board and keeps him informed of all important mat-
ters. The Supervisory Board has passed a resolution
specifying the information and reporting duties of the
Board of Management. As a general rule, in the case
of reports required by dint of law, the Board of Manage-
ment submits its reports to the Supervisory Board in
writing. To the extent possible, documents required as
a basis for taking decisions are sent to the members of
the Supervisory Board in good time before the relevant
meeting. Regarding transactions of fundamental im-
portance, the Supervisory Board has stipulated specific
transactions which require the approval of the Super-
visory Board. Whenever necessary, the Chairman of
the Board of Management obtains the approval of the
Supervisory Board and ensures that reporting duties
to the Supervisory Board are complied with. In order
to fulfil these tasks, the Chairman is supported by all
members of the Board of Management. The fundamen-
tal principle followed when reporting to the Supervisory
Board is that the latter should be kept informed regu-
larly, without delay and comprehensively of all signifi-
cant matters relating to planning, business performance,
risk exposures, risk management and compliance, as
well as any major variances between actual and budgeted
figures.
Simone Menne (born 1960)
The Board's Committee for Executive Management
Matters deals with enterprise-wide issues affecting ex-
ecutive managers of the BMW Group, either in their
entirety or individually (such as the executive manage-
ment structure, potential candidates for executive
management, nominations for or promotions to senior
-Membership of equivalent national or foreign boards of business enterprises.
--Other mandates.
173 STATEMENT ON CORPORATE GOVERNANCE
Wolfgang Mayrhuber (born 1947)
Member from 2004 until 13.05.2015
Chairman of the Supervisory Board of
Deutsche Lufthansa Aktiengesellschaft
Mandates
Deutsche Lufthansa Aktiengesellschaft (Chairman)
Infineon Technologies AG (Chairman)
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München
HEICO Corporation
Werner Zierer¹ (born 1959)
Member since 2001
Chairman of the Works Council, Regensburg
-
-
Member since 13.05.2015
Member of the Board of Management, Finance,
of Deutsche Lufthansa Aktiengesellschaft
Mandates
· Delvag Luftfahrtversicherungs-AG (Chairman)
Deutsche Post AG
LSG Lufthansa Service Holding AG (Chairman)
- Lufthansa Cargo AG
- Lufthansa Technik AG
-Membership of other statutory supervisory boards.
3 Employee representatives (members of senior management).
2 Employee representatives (union representatives).
1 Employee representatives (company employees).
Governance Practices
(In line with the recommendations of the German
Corporate Governance Code, the Nomination
Committee comprises only shareholder repre-
sentatives.)
184 Compliance in the BMW Group
188 Compensation Report
-
Franz Haniel & Cie. GmbH (until 25.04.2015)
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München
Susanne Klatten (born 1962)
Member since 1997
Entrepreneur
Mandates
ALTANA AG (Deputy Chairman)
-
SGL Carbon SE (Chairman)
Horst Lischka² (born 1963)
Member since 2009
General Representative of IG Metall Munich
Mandates
KraussMaffei Group GmbH
MAN Truck & Bus AG
· Städtisches Klinikum München GmbH
Willibald Löw (born 1956)
Member since 1999
Chairman of the Works Council, Landshut
UnternehmerTUM GmbH (Chairman)
--
FWB Frankfurter Wertpapierbörse (Exchange Council)
Miles & More GmbH (Chairman Advisory Board)
184 Compliance in the BMW Group
188 Compensation Report
Composition and work procedures of the Board of
Management of BMW AG and its committees
The Board of Management governs the enterprise under
its own responsibility, acting in the interests of the BMW
Group with the aim of achieving sustainable growth
in value. The interests of shareholders, employees and
other stakeholders are also taken into account in the
pursuit of this aim.
The Board of Management determines the strategic
orientation of the enterprise, agrees upon it with the
Supervisory Board and ensures its implementation.
The Board of Management is responsible for ensuring
that all provisions of law and internal regulations are
complied with. Further details about compliance within
the BMW Group can be found in the "Corporate
Governance" section of the Annual Report. The Board
of Management is also responsible for ensuring that
appropriate risk management and risk controlling sys-
tems are in place throughout the Group.
During their period of employment for BMW AG, mem-
bers of the Board of Management are bound by a com-
prehensive non-competition clause. They are required
to act in the enterprise's best interests and may not
pursue personal interests in their decisions or take ad-
vantage of business opportunities intended for the
enterprise. They may only undertake ancillary activities,
in particular supervisory board mandates outside
the BMW Group, with the approval of the Supervisory
Board's Personnel Committee. Each member of the
Board of Management of BMW AG is obliged to disclose
conflicts of interest to the Supervisory Board without
delay and inform the other members of the Board of
Management accordingly.
Following the appointment of a new member to the Board
of Management, the BMW Group Corporate Governance
Officer informs the new member of the framework con-
ditions under which the board member's duties are to
be carried out - in particular those enshrined in the
BMW Group's Corporate Governance Code - as well as
the duty to cooperate when a transaction or event triggers
reporting requirements or requires the approval of the
Supervisory Board.
The Board of Management consults and takes decisions
as a collegiate body in meetings of the Board of Manage-
ment, the Sustainability Board, the Operations Com-
mittee and the Committee for Executive Management
Matters. At its meetings, the Board of Management
defines the overall framework for business strategies
and the use of resources, takes decisions regarding the
implementation of strategies and deals with issues of
particular importance to the BMW Group. The full board
also takes decisions at a basic policy level relating to the
Group's automobile product strategies and product
projects inasmuch as these are relevant for all brands.
The Board of Management and its committees may, as
required and depending on the subject matters being
discussed, invite non-voting advisers to participate at
meetings.
Terms of reference approved by the Board of Manage-
ment contain a planned allocation of divisional respon-
sibilities between the individual board members. These
terms of reference also incorporate the principle that
the full Board of Management bears joint responsibility
for all matters of particular importance and scope. In
addition, members of the Board of Management manage
the relevant portfolio of duties under their responsi-
bility, whereby case-by-case rules can be put in place
for cross-divisional projects. Board members continually
provide the Chairman of the Board of Management
with all information regarding major transactions and
developments within their area of responsibility. The
Chairman of the Board of Management coordinates
cross-divisional matters with the overall targets and plans
of the BMW Group, involving other board members to
the extent that divisions within their area of responsi-
bility are affected.
Governance Practices
The Board of Management takes its decisions at meet-
ings generally held on a weekly basis which are con-
vened, coordinated and headed by the Chairman of the
Board of Management. At the request of the Chairman,
decisions can also be taken outside of board meetings if
none of the board members object to this procedure. A
meeting is quorate if all Board of Management members
are invited to the meeting in good time. Members unable
to attend any meeting are entitled to vote in writing,
by fax or by telephone. Votes cast by phone must be
subsequently confirmed in writing. Except in urgent
cases, matters relating to a division for which the re-
sponsible board member is not present will only be dis-
cussed and decided upon with that member's consent.
In the event that the Chairman of the Board of Manage-
ment is not present or is unable to attend a meeting, the
175 STATEMENT ON CORPORATE GOVERNANCE
member of the board responsible for Finance will
represent him.
Minutes are taken of all meetings and the Board of
Management's resolutions and signed by the Chairman.
Decisions taken by the Board of Management are
binding for all employees.
The rules relating to meetings and resolutions taken
by the full Board of Management are also applicable for
its committees.
Members of the Board of Management not represented
in a committee are provided with the agendas and
minutes of committee meetings. Committee matters are
dealt with in full board meetings if the committee con-
siders it necessary or at the request of a member of the
Board of Management.
A secretariat for Board of Management matters has been
established to assist the Chairman and other board
members with the preparation and follow-up work con-
nected with board meetings.
At meetings of the Operations Committee (generally
held every two weeks), decisions are reached in connec-
tion with automobile product projects, based on the
strategic orientation and decision framework stipulated
at Board of Management meetings. The Operations
Committee comprises the Board of Management mem-
ber responsible for Development (who also chairs the
meetings), together with the board members responsible
for the following areas: Purchases and Supplier Network;
Production; Sales and Marketing BMW, Sales Channels
BMW Group; and MINI, Motorcycles, Rolls-Royce,
Aftersales BMW Group. If the committee chairman is
not present or unable to attend a meeting, the member
of the board responsible for Production represents
him. Resolutions taken at meetings of the Operations
Committee are made online.
The full board usually convenes twice a year in its func-
tion as Sustainability Board in order to define strategy
with regard to sustainability and decide upon measures
to implement that strategy. The Head of Corporate
Affairs and the Representative for Sustainability and
Environmental Protection participate in these meetings
in an advisory capacity.
Unless stipulated otherwise by law or in BMW AG's
statutes, the Board of Management makes decisions on
the basis of a simple majority of votes cast at meetings.
Outside of board meetings, decisions are taken on
the basis of a simple majority of board members. In the
event of a tied vote, the Chairman of the Board of
Management has the casting vote. Any changes to the
board's terms of reference must be passed unanimously.
A board meeting may only be held if more than half of
the board members are present.
management positions). This committee has, on the
one hand, an advisory and preparatory role (e.g.
making suggestions for promotions to the two remu-
neration groups below board level and preparing
decisions to be taken at board meetings with regard to
human resources principles with the emphasis on
executive management issues) and a decision-taking
function on the other (e.g. deciding on appointments
to senior management positions and promotions to
higher remuneration groups or the wording of human
resources principles decided on by the full board).
The Committee has two members who are entitled to
vote at meetings, namely the Chairman of the Board of
Management (who also chairs the meetings) and the
board member responsible for Human Resources. The
Head of "Human Resources Management and Services"
as well as the Head of "Human Resources Executive
Management" also participate in these meetings in an
advisory function. At the request of the Chairman,
resolutions may also be passed outside of committee
meetings by casting votes in writing, by fax or by tele-
phone if the other member entitled to vote does not ob-
ject immediately. The Committee for Executive Manage-
ment Matters convenes up to ten times a year.
182 Information on Corporate
174-Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
-
Dr. Dominique Mohabeer1 (born 1963)
Member since 2012
Member of the Works Council, Munich
Brigitte Rödig (born 1963)
Member since 2013
Member of the Works Council, Dingolfing
Jürgen Wechsler² (born 1955)
Member since 2011
181 Disclosures pursuant to the Act
on Equal Gender Participation
Regional Head of IG Metall Bavaria
Schaeffler AG (Deputy Chairman)
Siemens Healthcare GmbH (since 29.06.2015)
174
168-STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
Mandates
Norbert Reithofer (since 13.05.2015)
Joachim Milberg (until 13.05.2015)
Manfred Schoch
Stefan Quandt
Stefan Schmid
Prof. Dr.-Ing. Dr. h. c. Dr.-Ing. E. h.
Joachim Milberg (born 1943)
1 Chair.
Mandates
- Bertelsmann Management SE
― Bertelsmann SE & Co. KGaA
- Deutsche Lufthansa Aktiengesellschaft
(In accordance with statutory requirements, the
Mediation Committee comprises the Chairman
and Deputy Chairman of the Supervisory Board
and one member each selected by shareholder
representatives and employee representatives.)
1 Employee representatives (company employees).
2 Employee representatives (union representatives).
3 Employee representatives (members of senior management).
-Membership of other statutory supervisory boards.
-Membership of equivalent national or foreign boards of business enterprises.
--Other mandates.
Christiane Benner2 (born 1968)
Member since 2014
Second Chairman of IG Metall
Mandates
· Robert Bosch GmbH
172
Franz Haniel (born 1955)
Member since 2004
Entrepreneur
Mandates
DELTON AG (Deputy Chairman)
Franz Haniel & Cie. GmbH (Chairman)
Heraeus Holding GmbH
Metro AG (Chairman) (until 19.02.2016)
TBG Limited
Prof. Dr. rer. nat. Dr. h. c. Reinhard Hüttl (born 1957)
Member since 2008
Chairman of the Executive Board of
Helmholtz-Zentrum Potsdam Deutsches
Chairman of the Executive Management of
Merck KGaA
Deputy Chairman
Member since 2008
Dr. jur. Karl-Ludwig Kley (born 1951)
182 Information on Corporate
-
-
171 STATEMENT ON CORPORATE GOVERNANCE
Members of the Supervisory Board
Dr.-Ing. Dr.-Ing. E. h. Norbert Reithofer (born 1956)
Member and Chairman since 13.05.2015
Former Chairman of the Board of
Management of BMW AG
Mandates
Siemens Aktiengesellschaft
Henkel AG & Co. KGaA (Shareholders' Committee)
Stefan Quandt (born 1966)
Member since 1997
Deputy Chairman
Entrepreneur
Mandates
DELTON AG (Chairman)
GeoForschungszentrum - GFZ
AQTON SE (Chairman)
Member from 2002 until 13.05.2015
Chairman until 13.05.2015
Chairman of the Board of Trustees of
BMW Stiftung Herbert Quandt
Former Chairman of the Board of
Management of BMW AG
Mandates
Bertelsmann Management SE (Deputy Chairman)
Bertelsmann SE & Co. KGaA (Deputy Chairman)
Deere & Company
Manfred Schoch (born 1955)
Member since 1988
Deputy Chairman
Chairman of the European and
General Works Council
Industrial Engineer
Stefan Schmid (born 1965)
Member since 2007
Deputy Chairman
Chairman of the Works Council, Dingolfing
Entrust Datacard Corp.
University Professor
Verizon Communications Inc. (since 05.11.2015)
Director of Institut für Demoskopie Allensbach
Gesellschaft zum Studium der öffentlichen
Meinung mbH
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
The time schedule set by the Supervisory Board for
achieving the above-mentioned composition targets is
the period up to 31 December 2016. Future proposals
for nomination made by the Supervisory Board at the
Annual General Meeting - insofar as they apply to
shareholder Supervisory Board members - should take
account of these objectives in such a way that they can
be achieved with the support of the appropriate reso-
lutions at the Annual General Meeting. The Annual
General Meeting is not bound by nominations for elec-
tion proposed by the Supervisory Board. The freedom
of employees to vote for the employee members of
the Supervisory Board is also protected. Under the
Supervisory Board members should not, as a general
rule, hold office in the Supervisory Board for an over-
all period longer than up to the end of the Annual
General Meeting at which the shareholders vote on
the ratification of the member's activities for the 14th
financial year since the beginning of the first period
of office, excluding the financial year in which the
first period of office began. This rule does not apply
to natural persons, who either directly or indirectly
hold significant investments in the Company. It may
also be in the Company's interest to diverge from
the general maximum period, e.g. in order to work
towards another composition target, in particular
gender diversity and diversified professional and per-
sonal backgrounds.
As a general rule, the age limit for membership of the
Supervisory Board should be set at 70 years. In ex-
ceptional cases, members may be allowed to remain
on the Board up until the end of the Annual General
Meeting following their 73rd birthday, in order to
fulfil legal requirements or to facilitate smooth succes-
sion in the case of persons with key roles or specialist
qualifications.
No persons carrying out directorship functions or ad-
visory tasks for important competitors of the BMW
Group may belong to the Supervisory Board. In com-
pliance with prevailing legislation, the members of
the Supervisory Board will strive to ensure that no
persons will be nominated for election with whom a
serious conflict of interests could arise (other than
temporarily) due to other activities and functions
carried out by them outside the BMW Group; this in-
cludes in particular advisory activities or director-
ships with customers, suppliers, creditors or other
business partners.
Two independent members of the Supervisory Board
should have expert knowledge of accounting or
auditing.
-
-
At least twelve of the 20 members of the Supervisory
Board should be independent members within the
meaning of section 5.4.2 of the German Corporate
Governance Code, including at least six members
representing the Company's shareholders.
When seeking suitably qualified individuals for the
Supervisory Board whose specialist skills and leader-
ship qualities are most likely to strengthen the Board
as a whole, consideration should also be given to
diversity. When preparing nominations, the extent to
which the work of the Supervisory Board would bene-
fit from diversified professional and personal back-
grounds (including international aspects) and from
an appropriate representation of both genders should
also be taken into account. It is the joint responsibility
of all persons and groupings participating in the
nomination and election process to ensure that the
Supervisory Board includes an appropriate number
of qualified women.
- Ideally, three members of the Supervisory Board should
be figures from the worlds of business, science or
research who have gained experience in areas relevant
to the BMW Group, e.g. chemistry, energy supply, in-
formation technology, or who have acquired spe-
cialist knowledge in subjects relevant for the future of
the BMW Group, e.g. customer requirements, mobility,
resources or sustainability.
- If possible, three of the shareholder representatives
in the Supervisory Board should be entrepreneurs
or persons who have already gained experience in
the management or supervision of another medium
or large-sized company.
174 Work Procedures of the
To this end, the Supervisory Board has formally speci-
fied the following concrete objectives regarding its com-
position, taking into account the recommendations
contained in the German Corporate Governance Code:
- If possible, four of the members of the Supervisory
Board should have international experience or spe-
cialist knowledge with regard to one or more of the
non-German markets important to the BMW Group.
If possible, the Supervisory Board should include
seven members who have acquired in-depth knowl-
edge and experience from within the enterprise.
The Supervisory Board should not, however, include
more than two former members of the Board of
Management.
184 Compliance in the BMW Group
188 Compensation Report
Governance Practices
182 Information on Corporate
181 Disclosures pursuant to the Act
on Equal Gender Participation
Supervisory Board
176-Work Procedures of the
174 Work Procedures of the
Board of Management
171 Members of the Supervisory
Board
170 Members of the Board of
Management
Prof. Dr. rer. pol. Renate Köcher (born 1952)
Member since 2008
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
168-STATEMENT ON
180
2 Independent financial expert within the meaning of §100 (5) AktG and § 107 (4) AktG.
Composition objectives of the Supervisory Board
The Supervisory Board must be composed in such a way
that its members as a group possess the knowledge,
skills and experience required to properly complete its
tasks.
Board
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
Management
Mandates
171 Members of the Supervisory
Allianz SE
- Infineon Technologies AG
- Nestlé Deutschland AG
· Robert Bosch GmbH
Ulrich Kranz³ (born 1958)
Member since 2014
Head of Product Line BMWi
Prof. Dr. rer. nat. Dr.-Ing. E. h.
Henning Kagermann (born 1947)
Member since 2010
President of acatech - Deutsche Akademie der
Technikwissenschaften e. V.
Mandates
on Equal Gender Participation
Member since 2009
Dr. h. c. Robert W. Lane (born 1949)
Management and of the
169 Declaration of the Board of
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
168-STATEMENT ON
Deutsche Post AG
170 Members of the Board of
-
Former Chairman and Chief Executive Officer of
Deere & Company
Deutsche Bank AG
Mandates
Supervisory Board pursuant to
§161 AktG
Northern Trust Corporation (until 21.04.2015)
Verizon Communications Inc. (until 07.05.2015)
General Electric Company
It goes without saying that the BMW Group abides by
these fundamental principles and rights worldwide.
Employees have therefore been sensitised to this issue
since 2005 by means of regular internal communica-
tions and further training on recent developments in
this area. Two dedicated helplines - the “Human Rights
Contact" and the BMW Group SpeakUP Line - are
available to employees wishing to raise queries or com-
plaints relating to human rights issues. The UN Guiding
Principles for Business and Human Rights provide a
framework for critical reflection and continuous improve-
ment in our endeavours to ensure that human rights
are respected throughout the organisation.
174 Work Procedures of the
Board of Management
171 Members of the Supervisory
Board
170 Members of the Board of
Management
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
168-STATEMENT ON
184
We also work in close partnership with our suppliers
and promote their commitment to sustainability.
Activities can only be sustainable, however, if they
cover the entire value-added chain. That is why the
BMW Group not only sets high standards for itself, but
also expects its suppliers and partners to meet the
ecological and social standards it sets and strives con-
tinually to improve the efficiency of processes, measures
and activities. For instance, we consistently require our
dealers and importers to comply with ecological and
social standards on a contractual basis. Moreover, cor-
responding criteria are embedded throughout the entire
purchasing system - including in enquiries to suppliers,
in the sector-wide OEM Sustainability Questionnaire,
in our purchasing terms and in our evaluation of sup-
pliers - in order to promote sustainability aspects in
line with the BMW Group Sustainability Standard. The
BMW Group expects suppliers to ensure that the
BMW Group's sustainability criteria are also adhered
to by their sub-suppliers. Purchasing terms and con-
ditions and other information relating to purchasing
can be found in the publicly available section of the
BMW Group Partner Portal at https://b2b.bmw.com.
Further information on social responsibility to employees
can be found in the section "Workforce".
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
Independence
The BMW Group stands by its social responsibilities.
Our corporate culture combines the drive for success
with a willingness to be open, trustworthy and trans-
parent. We are well aware of our responsibility towards
society. Our models for sustainable social responsibility
towards employees and for ensuring compliance with
international social standards are based on various in-
ternationally recognised guidelines. The BMW Group
is committed to adhering to the OECD's guidelines for
multinational companies and the contents of the ICC
Business Charter for Sustainable Development. De-
tails of the contents of these guidelines and other rele-
vant information can be found at www.oecd.org and
www.iccwbo.org. The Board of Management signed the
United Nations Global Compact in 2001 and, in 2005,
together with employee representatives, issued a “Joint
Declaration on Human Rights and Working Conditions
in the BMW Group". This Joint Declaration was recon-
firmed in 2010. With the signature of these documents,
we have given our commitment to abide worldwide by
internationally recognised human rights and with the
fundamental working standards of the International
Labour Organization (ILO). The most important of
these are freedom of employment, the prohibition of
discrimination, the freedom of association and the right
Social responsibility towards employees and along
the supplier chain
The core principles are also available at www.bmwgroup.
com under the menu items “Careers” and “Working at
the BMW Group".
We secure the corporate independence of the BMW
Group through sustained profitable growth.
176 Work Procedures of the
Supervisory Board
Social responsibility is an integral part of our corporate
self-image.
Society
In our view, sustainability constitutes a lasting contribu-
tion to the success of the Company. This is the basis upon
which we assume ecological and social responsibility.
Sustainability
Every manager must lead by example.
Leading by example
to collective bargaining, the prohibition of child labour,
the right to appropriate remuneration, regulated working
times and compliance with work and safety regulations.
The complete text of the UN Global Compact and the
recommendations of the ILO and other relevant in-
formation can be found at www.unglobalcompact.org
and www.ilo.org. The Joint Declaration on Human
Rights and Working Conditions in the BMW Group
can be found at www.bmwgroup.com under the menu
item “Responsibility" and "Supply Chain Manage-
ment".
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184-Compliance in the BMW Group
188 Compensation Report
Annual
This principle has been embedded in BMW's internal
rules of conduct for many years. In order to protect itself
systematically against compliance-related and reputa-
tional risks, the Board of Management created a Com-
pliance Committee several years ago, mandated to es-
tablish a worldwide Compliance Management System
throughout the BMW Group.
185 STATEMENT ON CORPORATE GOVERNANCE
A coordinated set of instruments and measures is em-
ployed to ensure that the BMW Group, its representative
bodies, its managers and staff act in a lawful manner.
Particular emphasis is placed on compliance with anti-
trust legislation and the avoidance of corruption risks.
Compliance measures are supplemented by a whole
range of internal policies, guidelines and instructions,
which in part reflect applicable legislation. The BMW
Group Policy "Corruption Prevention" and the BMW
Group Instruction "Corporate Hospitality and Gifts"
The Board of Management keeps track of and analyses
compliance-related developments and trends on the
basis of the Group's compliance reporting and input
from the BMW Group Compliance Committee. Meas-
ures to improve the Compliance Management System
are initiated on the basis of identified requirements.
Compliance
Training
Compliance
Communication
Annual
Compliance
Reporting
Compliance
Governance and
Processes
Contact and
SpeakUP Line
Compliance
Compliance
Instruments and
Measures of
the BMW Group
Legal Compliance
Code and Regulations
Compliance Risk
Analysis
Network
Compliance
Reporting
Compliance
Investigations
and Controls
BMW Group Compliance Committee Office
BMW Group Compliance Committee
Annual
Report
Board of Management BMW AG
Report
Supervisory Board BMWAG ←
BMW Group Compliance Management System
The Chairman of the BMW Group Compliance Commit-
tee keeps the Audit Committee (which is part of the
Supervisory Board) informed on the current status of
compliance activities within the BMW Group, both on
a regular and a case-by-case basis as the need arises.
The BMW Group Compliance Committee reports regu-
larly to the Board of Management on all compliance-
related issues, including the progress made in refining
the BMW Group Compliance Management System,
details of investigations performed, known infringements
of the law, sanctions imposed and corrective/preven-
tative measures implemented. This ensures that the
Board of Management is immediately notified of any
cases of particular significance. The decisions taken by
the BMW Group Compliance Committee are drafted in
concept, and implemented operationally, by the BMW
Group Compliance Committee Office. The BMW Group
Compliance Committee Office comprises ten employees
and is allocated in organisational terms to the Chairman
of the Board of Management.
The BMW Group Compliance Committee comprises
the heads of the following departments: Legal Affairs,
Corporate and Governmental Affairs, Corporate Audit,
Group Reporting, Organisational Development and
Corporate Human Resources. It manages and monitors
activities necessary to avoid non-compliance with the
law. These activities include training, information and
communication measures, compliance controls and
following up cases of non-compliance.
Compliance in the BMW Group
Responsible and lawful conduct is fundamental to the
success of the BMW Group. It is an integral part of
our corporate culture and the reason why customers,
shareholders, business partners and the general public
place their trust in us. The Board of Management and
the employees of the BMW Group are obliged to act
responsibly and in compliance with applicable laws and
regulations.
Company-wide Compliance
-
Compliance measures are determined and prioritised on
the basis of a group-wide compliance risk assessment
covering all 346 business units and functions worldwide
within the BMW Group. The assessment of compliance
risks is updated annually. Measures are realised with
the aid of a regionally structured compliance manage-
ment team covering all parts of the BMW Group, which
oversees a network of more than 200 Compliance Respon-
sibles.
189 STATEMENT ON CORPORATE GOVERNANCE
Variable cash remuneration, in particular bonuses
Variable cash remuneration consists of a cash bonus and
share-based remuneration component equivalent to
20% of a board member's total bonus after taxes, which
the board member is required to invest in BMW AG com-
mon stock. Taxes and social insurance relating to the
share-based remuneration are also borne by the Com-
pany. In substantiated cases, the Supervisory Board also
has the option of paying an additional special bonus.
The variable remuneration of Board of Management
members comprises variable cash remuneration on the
one hand and a share-based remuneration component
on the other.
Variable remuneration
The basic remuneration of members of the Board of
Management is unchanged from the previous year,
namely €0.75 million p.a. for a board member during
the first period of office, €0.9 million p.a. for a board
member from the second term of appointment or fourth
year of office onwards and €1.5 million p.a. for the
Chairman of the Board of Management.
Fixed remuneration consists of a base salary (paid
monthly) and other remuneration elements, which
comprise mainly the use of Company and leased cars as
well as the payment of insurance premiums, contribu-
tions towards security systems and an annual medical
check-up. Members of the Board of Management are
also entitled to purchase vehicles and other services of
the BMW Group at conditions that also apply in each
relevant case for employees.
Fixed remuneration
The bonus comprises two components, each equally
weighted, namely a corporate earnings-related bonus
and a personal performance-related bonus. The tar-
get bonus (100 %) for a Board of Management member,
for both components of variable compensation, totals
€1.5 million p.a., rising to €1.75 million p.a. from the
second term of appointment or fourth year of office on-
wards. The equivalent figure for the Chairman of the
Board of Management is €3 million p.a. The bonus
figure is capped for all Board of Management members
at 200% of the relevant target bonus.
Compensation system, compensation components
The compensation of the Board of Management com-
prises both fixed and variable remuneration as well as
a share-based component. Retirement and surviving
dependants' benefit entitlements are also in place.
The compensation of members of the Board of Manage-
ment is determined by the full Supervisory Board on
the basis of performance criteria and after taking into
account any remuneration received from Group com-
panies. The principal performance criteria are the na-
ture of the tasks allocated to each member of the Board
of Management, the economic situation and the per-
formance and future prospects of the BMW Group. The
Supervisory Board sets ambitious and relevant para-
meters as the basis for variable compensation. It also
ensures that variable components based on multi-year
assessment criteria take account of both positive and
negative developments and that the package as a whole
encourages a long-term approach to business perfor-
mance. Targets and other parameters may not be changed
retrospectively. The Supervisory Board reviews the ap-
The compensation system for the Board of Management
at BMW AG is designed to encourage a management
approach focused on the sustainable development of
the BMW Group. One further principle applied when
designing remuneration systems at BMW is that of con-
sistency at different levels. In other words, compensation
systems for the Board of Management, senior manage-
ment and employees of BMW AG should all have a
similar structure and contain similar components. The
Supervisory Board carries out regular checks to ensure
that all Board of Management compensation compo-
nents are appropriate, both individually and in total,
and do not encourage the Board of Management to take
inappropriate risks on behalf of the BMW Group. At the
same time, the compensation model used for the Board
of Management needs to be sufficiently attractive for
highly qualified executives in a competitive environment.
Principles of compensation
The Supervisory Board is responsible for determining
and regularly reviewing the Board of Management's
compensation. The Personnel Committee plays a pre-
paratory role in this process.
1. Board of Management compensation
Responsibility
The following section describes the principles govern-
ing the compensation of the Board of Management and
the stipulations set out in the statutes relating to the
compensation of the Supervisory Board. In addition to
explaining the compensation system, the components
of compensation are also disclosed in absolute figures.
Furthermore, the compensation of each member of the
Board of Management and the Supervisory Board for
the financial year 2015 is disclosed by individual mem-
ber and analysed in its component parts.
Compensation Report
propriateness of the compensation system annually.
In preparation, the Personnel Committee also consults
remuneration studies. The Supervisory Board reviews
the appropriateness of the compensation system in hori-
zontal terms by comparing compensation paid by
other DAX companies and in vertical terms by compar-
ing board compensation with the salaries of executive
managers and with the average salaries of employees of
BMW AG based in Germany, in both cases with regard
to their various levels and to changes over time. Recom-
mendations made by an independent external remuner-
ation expert and suggestions made by investors and
analysts are also considered in the consultative process.
184 Compliance in the BMW Group
188-Compensation Report
The corporate earnings-related bonus is based on the
BMW Group's net profit and post-tax return on sales
(which are combined in a single earnings factor) and
the level of the dividend (common stock). The corpo-
rate earnings-related bonus is derived by multiplying
the target amount fixed for each member of the Board
of Management by the earnings factor and by the divi-
dend factor. In exceptional circumstances, for instance
when there have been major acquisitions or disposals,
the Supervisory Board may adjust the level of the corpo-
rate earnings-related bonus.
The personal performance-related bonus is derived by
multiplying the target amount set for each member of
the Board of Management by a performance factor. The
Supervisory Board sets the performance factor on the
basis of its assessment of the contribution of the rele-
vant Board of Management member to sustainable and
long-term oriented business development. In setting the
factor, equal consideration is given to personal perfor-
mance, decisions taken in previous forecasting periods,
key decisions affecting the future development of the
business and the effectiveness of measures taken in re-
sponse to changing external conditions as well as other
activities aimed at safeguarding the future viability of the
Supervisory Board pursuant to
§161 AktG
169 Declaration of the Board of
Management and of the
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
168-STATEMENT ON
Basic compensation p.a.
Parameter/measurement base
Component
An earnings and dividend factor of 1.00 would give rise
to an earnings-based bonus of €0.75 million for the
financial year 2015 for a member of the Board of Manage-
ment during the first period of office and €0.875 million
during the second term of appointment or from the
fourth year in office. The equivalent bonus for the Chair-
man of the Board of Management is €1.5 million. The
earnings factor is 1.00 in the event of a Group net profit
of €3.1 billion and a post-tax return on sales of 5.6 %.
The dividend factor is 1.00 in the event that the dividend
paid on the shares of common stock is between 101 and
110 cents. If the Group net profit were below €1 billion,
or if the post-tax return on sales were less than 2%, the
earnings factor for the financial year 2015 would be
zero. In this case, no corporate earnings-related bonus
would be paid.
Overview of compensation system and compensation components
In the event of the termination of mandate, Board of
Management members appointed for the first time prior
to 1 January 2010 are entitled to receive certain defined
new one.
Retirement and surviving dependants' benefits
The provision of retirement and surviving dependants'
benefits for Board of Management members was changed
to a defined contribution system with a guaranteed
minimum return with effect from 1 January 2010. How-
ever, given the fact that board members appointed for
the first time prior to 1 January 2010 for the most part
had a legal right to receive the benefits already prom-
ised to them, these board members were given the
option to choose between the previous system and the
This programme envisages a share-based remuneration
component equivalent to 20% of the board member's
total bonus after taxes, which the board member is re-
quired to invest in BMW AG common stock. Taxes and
social insurance relating to the share-based remunera-
tion component are borne by the Company. As a general
rule, the shares must be held for a minimum of four
years. As part of a matching plan, at the end of the
holding period the Board of Management members will
normally receive from the Company either one addi-
tional share of common stock or an equivalent cash
amount for three shares of common stock held, to be
decided at the discretion of the Company (share-based
remuneration component/matching component). Spe-
cial rules apply in the case of death or invalidity of a
Board of Management member or early termination of
the contractual relationship before fulfilment of the
holding period.
The compensation system includes a share-based remu-
neration programme, in which the level of share-based
remuneration is based on the amount of bonus paid.
The system is aimed at creating further long-term incen-
tives to encourage
sustainable
governance.
Share-based remuneration programme
business to the extent not included directly in the basis
of measurement. Performance factor criteria include
innovation (economic and ecological, e.g. reduction of
carbon emissions), customer focus, ability to adapt,
leadership accomplishments, contributions to the Com-
pany's attractiveness as an employer, progress in imple-
menting the diversity concept, and activities that foster
corporate social responsibility. The target bonus and the
key figures used to determine the corporate earnings-
related bonus are fixed in advance for a period of three
financial years, during which time they may not be
amended retrospectively.
190
170 Members of the Board of
Management
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
171 Members of the Supervisory
Board
website within the BMW Group's intranet, where em-
ployees can find compliance-related information and
have access to training materials in both German and
English. The website contains a special service area where
various practical tools are made available to employees
to help them deal with typical compliance-related mat-
ters. Since mid-2015, BMW Group employees have also
had access to an IT system, which helps them verify
legal admissibility and approve and document benefits,
especially in connection with corporate hospitality.
To avoid this, BMW Group employees are kept fully up-
to-date with the instruments and measures used by the
Compliance Management System via various internal
channels. As of 2014, all new staff receive a welcome
email underscoring the BMW Group's special commit-
ment to compliance when they join the Company. The
central means of communication is the Compliance
It is essential that employees are aware of and comply
with applicable legal regulations. The BMW Group does
not tolerate violations of the law by its employees. Cul-
pable violations of the law result in employment-con-
tract sanctions and may involve personal liability conse-
quences for the employee involved.
Compliance with and implementation of the Legal Com-
pliance Code are audited regularly by Corporate Audit
and subjected to control checks by Corporate Security
and the BMW Group Compliance Committee Office.
As part of its regular activities, Corporate Audit carries
out on-site audits. The BMW Group Compliance Com-
mittee also engages Corporate Audit to perform com-
pliance-specific checks. In addition, four BMW Group
Compliance Spot Checks, sample tests specifically de-
signed to identify potential corruption risks, were carried
out in 2015. Compliance control activities are coordi-
nated by the BMW Group Panel Compliance Controls.
Any necessary follow-up measures are organised by the
BMW Group Compliance Committee Office.
Through the group-wide reporting system, Compliance
Responsibles throughout the BMW Group report on
compliance-relevant issues to the Compliance Commit-
tee on a regular basis, and, if necessary, on an ad hoc
basis. This includes reporting on the compliance status
of the relevant entities, on identified legal risks and in-
cidences of non-compliance, as well as on corrective/pre-
ventative measures implemented.
Compliance-related queries and concerns are docu-
mented and followed up by the BMW Group Compliance
Committee Office using an electronic Case Manage-
ment System. If necessary, Corporate Audit, Corporate
Security, the Works Council and legal departments may
be called upon to assist in the investigation process.
Group SpeakUP Line about possible breaches of the law
within the Company. The BMW Group SpeakUP Line is
available in a total of 34 languages and can be reached
via local toll-free numbers in all countries in which BMW
Group employees are engaged in activities.
In the same way that the BMW Group is committed to
lawful and responsible conduct, it expects no less from
its business partners. In 2012, the BMW Group devel-
oped a new Business Relations Compliance programme
aimed at ensuring the reliability of its business relations.
Relevant business partners are checked and evaluated
with a view to identifying potential compliance risks.
These procedures are particularly relevant for relations
with sales partners and service providers, such as agen-
cies and consultants. Depending on the results of the
evaluation, appropriate measures - such as communica-
tion measures, training and possible monitoring – are
implemented to manage compliance risks. The Business
Relations Compliance programme has already been in-
troduced in 37 units since its launch and, over the com-
ing years, will be rolled out successively throughout the
BMW Group's worldwide sales organisation. In 2015, the
Company also continued integrating compliance clauses
to protect contractual relationships into dealer and im-
porter contracts.
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184-Compliance in the BMW Group
188 Compensation Report
171 Members of the Supervisory
Board
170 Members of the Board of
Management
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
168-STATEMENT ON
186
Employees also have the opportunity to submit informa-
tion-anonymously and confidentially - via the BMW
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
Compliance is also an important factor in safeguarding
the future of the BMW Group workforce. With this in
mind, the Board of Management and the national and in-
ternational employee representative bodies of the BMW
Group have agreed on a binding set of Joint Principles
for Lawful Conduct. In doing so, all parties involved
made a commitment to the principles contained in the
BMW Group Legal Compliance Code and to trustful co-
operation in all matters relating to compliance. Employee
representatives are therefore regularly involved in the
process of refining compliance measures within the
BMW Group.
187 STATEMENT ON CORPORATE GOVERNANCE
170 Members of the Board of
Management
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
168-STATEMENT ON
188
Under the terms of the Employee Share Programme, in
2015 employees were entitled to acquire packages of
between five and twelve shares of non-voting preferred
stock with a discount of €20.83 (2014: €25.00) per share
compared to the market price (average closing price in
Xetra trading during the period from 5 to 11 November
2015: €74.49). All employees of BMW AG and its (di-
rectly or indirectly) wholly owned German subsidiaries
(if agreed to by the directors of those entities) were en-
titled to participate in the programme. Employees were
required to have been in an uninterrupted employment
relationship with BMW AG or the relevant subsidiary
for at least one year at the date on which the alloca-
tion for the year was announced. Shares of preferred
stock acquired in conjunction with the Employee Share
Programme are subject to a vesting period of four
years, starting from 1 January of the year in which the
employees acquired the shares. A total of 309,944 (2014:
239,777) shares of preferred stock were acquired by em-
ployees under the programme in 2015; 309,860 (2014:
239,757) of these shares were drawn from Authorised
Capital 2014, the remainder were bought back via the
stock exchange. Every year the Board of Management of
BMW AG decides whether the programme is to be con-
tinued. Further information is provided in notes 19
and 34 to the Group Financial Statements.
we ever make.
In the interest of investor protection and to ensure that
the BMW Group complies with regulations relating to
potential insider information, the Board of Management
appointed an Ad Hoc Committee back in 1994, consist-
ing of representatives of various specialist departments,
whose members examine the relevance of issues for
Under the terms of this programme, participants give a
commitment to invest an amount equivalent to 20% of
their performance-based bonus in BMW common stock
and to hold the shares so acquired for four years. In re-
turn for this commitment, BMW AG pays 100% of the in-
vestment amount as a net subsidy. Once the four-year
holding period requirement has been fulfilled, the par-
ticipants receive - for each three common stock shares
held and at the Company's option – one further share
of common stock or the equivalent amount in cash.
programme for Board of Management members is de-
scribed in detail in the Compensation Report (see also
the "Share-based remuneration" section in the Com-
pensation Report and note 19 to the Group Financial
Statements).
Share-based compensation programmes for
employees and members of the Board of Management
Three share-based remuneration programmes were in
place at BMW AG during the year under report, namely
the Employee Share Programme (under which entitled
employees of BMW AG have been able to participate
in the enterprise's success since 1989 in the form of non-
voting shares of preferred stock), a share-based remu-
neration programme for Board of Management mem-
bers, and a share-based remuneration programme for
senior heads of department (relating in both cases to
shares of common stock). The share-based remuneration
The members of the Supervisory Board of BMW AG hold
a total of 43.00% of the Company's shares of common
and preferred stock (2014: 27.61%), of which 31.26%
(2014: 16.06%) relates to Stefan Quandt, Germany, and
26.74% (2014: 11.54%) to Susanne Klatten, Germany,
whereby 15.00% are held by Mr Quandt and Ms Klatten
indirectly in a so-called "undivided community of heirs",
with the consequence that the 15.00% shareholding
is attributed to both in full. The shareholdings of the
members of the Board of Management total less than
1% of all issued shares.
Shareholdings of members of the Board of Management
and the Supervisory Board
Pursuant to § 15 a of the German Securities Trading Act
(WPHG), members of the Board of Management and
the Supervisory Board, and any persons related to those
members, are required to give notice to BMW AG and
the Federal Agency for the Supervision of Financial
Services of transactions with BMW stock or related finan-
cial instruments if the total sum of such transactions
reaches or exceeds an amount of €5,000 during any
given calendar year. BMW AG publishes such informa-
tion without delay and communicates it to the Com-
panies Register for archiving. Notice of publication is
issued to the Federal Agency for the Supervision of
Financial Services. Securities transactions notified to
BMW AG during the financial year 2015 were also re-
ported on the Company's website.
Reportable securities transactions
("Directors Dealings")
ad hoc disclosure purposes. All persons working on be-
half of the Company who have access to insider informa-
tion in accordance with existing rules have been, and
continue to be, included in a corresponding, regularly
updated list and informed of the duties arising from in-
sider rules.
The share-based remuneration programme for qualify-
ing senior heads of department, introduced with effect
for financial years beginning after 1 January 2012, is
closely based on the programme for Board of Manage-
ment members and is aimed at rewarding a long-term,
entrepreneurial approach to running the business on
a sustainable basis.
deserve particular mention: these documents deal with
lawful handling of gifts and benefits and define appro-
priate assessment criteria and approval procedures for
specified actions.
171 Members of the Supervisory
174 Work Procedures of the
Board of Management
-700,000
3,000,000
in the first term of appointment
Member of the Board of Management
Total*
Possible
special bonus
Monetary value
of matching
component
-700,000
for share acquisition
-Bonus
Share-based compensation programme
Member of the Board of Management: €350,000-€400,000
Chairman of the Board of Management: €500,000-€700,000
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
Pension contributions p.a.:
Pension of €120,000 p.a. plus fixed amounts based on length of Company and board
service
Principal features
Contractual agreement, main points: use of Company cars, insurance premiums,
contributions towards security systems, medical check-up
Cash compensation
Once the four-year holding period requirement is fulfilled, Board of Management mem-
bers receive for each three common stock shares held either - at the Company's option -
one further share of common stock or the equivalent amount in cash.
-1,000,000
Member of the Board of Management
The various elements of the BMW Group Compliance
Management System are shown in the diagram on the
previous page and are applicable for all BMW Group
entities worldwide. To the extent that additional com-
pliance requirements apply to individual countries or
specific lines of business, these are covered by supple-
mentary compliance measures.
The BMW Group Legal Compliance Code is the corner-
stone of the Group's Compliance Management System,
spelling out the Board of Management's commitment
to compliance as a joint responsibility ("tone from the
top"). This document, which was revised and expanded
in 2014, explains the significance of legal compliance
and provides an overview of the various areas relevant
for the BMW Group. It is available both as a printed
brochure and for download in German and English. In
addition, translations into nine other languages are avail-
able in the BMW Group intranet.
Managers in particular bear a high degree of responsi-
bility and must set a good example with regard to pre-
venting infringements. Managers throughout the BMW
Group acknowledge this principle by signing a written
declaration, in which they also undertake to inform staff
working for them of the content and significance of the
Legal Compliance Code and make them aware of legal
risks. Managers must, at regular intervals and on their
own initiative, verify compliance with the law and com-
municate regularly with staff on this issue. Any indication
of non-compliance with the law must be rigorously in-
vestigated.
More than 31,500 managers and staff worldwide have
received training in essential compliance matters since
the introduction of the BMW Group Compliance Man-
agement System. The training material is available on
an Internet-based training platform in German and
English and includes a final test. Successful completion
of the training programme, which is documented by a
certificate, is mandatory for all BMW Group managers.
Appropriate processes are in place to ensure that all
newly recruited managers and promoted staff undergo
compliance training. In this way, the BMW Group en-
sures full training coverage for its managers in com-
pliance matters.
In addition to this basic training, more in-depth training
is also provided to certain groups of staff on specific
compliance issues. Since early 2014, a total of 1,900 em-
ployees at BMW AG branches received further training
as anti-money-laundering measures were upgraded.
Antitrust law training was also expanded in 2013, tar-
geting employees who come into contact with antitrust-
related issues as a result of their functions within sales
and marketing, purchasing, production or develop-
ment. Around 10,100 employees have already com-
pleted this training. The relevant divisions also imple-
mented and stepped up further antitrust compliance
measures and processes in 2015 to make employees
who participate in meetings with competitors or work
with suppliers or sales partners sufficiently aware of
antitrust risks.
individual components.
4,925,000
*Including basic remuneration, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the
-1,200,000
-1,500,000
800,000
-1,400,000
.800,000
-1,400,000
3,500,000
-6,000,000
Chairman of the Board of Management
or from fourth year in office
in the second term of appointment
5,500,000
-9,850,000
Board
- Earmarked cash remuneration equivalent to the amount required to be invested in
BMW AG shares, plus taxes and social insurance contributions
May be paid in justified circumstances on an appropriate basis, contractual basis, no
entitlement
Other compensation
b) Share-based remuneration component
(matching component)
a) Cash compensation component
Share-based remuneration programme
Special bonus payments
(corresponds to 50% of target bonus if target is 100%
achieved)
b) Performance-related bonus
Retirement and surviving dependants' benefits
Model
(corresponds to 50% of target bonus if target is 100%
achieved)
Bonus
Variable compensation
184 Compliance in the BMW Group
188-Compensation Report
Governance Practices
182 Information on Corporate
181 Disclosures pursuant to the Act
on Equal Gender Participation
176 Work Procedures of the
Supervisory Board
a) Corporate earnings-related bonus
- Requirement for Board of Management members to each invest an amount equivalent
to 20% of their total bonus (after tax) in BMW AG common stock
a) Defined benefits
b) Defined contribution system with guaranteed minimum
rate of return
- Criteria for the performance factor also include: innovation (economic and ecological,
e.g. reduction of CO2 emissions), customer orientation, ability to adapt, leadership ac-
complishments and attractiveness as employer, progress in implementing the diversity
concept and activities that foster corporate social responsibility
- Formula: 50% of target bonus x performance factor
Primarily qualitative criteria, expressed in terms of a performance factor aimed at
measuring the board members' contribution to sustainable and long-term performance
and the future viability of the business
- The earnings factor is derived from the Group net profit and the Group post-tax return
on sales
- Formula: 50% of target bonus x earnings factor x dividend factor (common stock)
Quantitative criteria fixed in advance for a period of three financial years
- €3.00 million (Chairman of the Board of Management)
(only applies to board members appointed for the first
time before 1 January 2010; based on legal right to
receive the benefits already promised to them, this group
of persons is entitled to opt between (a) and (b))
- €1.75 million (from second term of appointment onwards or fourth year in office)
Target bonuses p.a. (if target is 100% achieved):
- €1.50 million
- €0.90 million (from second term of appointment onwards or fourth year in office)
Chairman of the Board of Management:
- €0.75 million (first term of appointment)
Member of the Board of Management:
in € p.a.
Remuneration caps (maximum remuneration)
- €1.50 million (first term of appointment)
People make companies. Our employees are the
strongest factor in our success, which means our per-
sonnel decisions will be among the most important
Additional compliance coaching has also been imple-
mented for international sales and financial service loca-
tions. These multi-day classroom seminars strengthen
the understanding of compliance in selected units and
enhance cooperation between the central BMW Group
Compliance Committee Office and decentralised com-
pliance offices. In 2015, market coaching was conducted
in Belgium, Denmark, Finland, Italy, Norway, Portugal,
Spain and Sweden.
183 STATEMENT ON CORPORATE GOVERNANCE
Proportion of female executives within management/
function level I and II at BMW AG
At 31 December 2015, the proportion of female execu-
tives within management/function level I stood at 9.6%
and within management/function level II at 5.5%.
Top management within the BMW Group is structured
in terms of functions, following a cohesive job evalua-
tion system based on Mercer.
The Board of Management has established target
ranges of 10 to 12% for executive management level I
and 6 to 8% for executive management level II, each to
be reached by 31 December 2016. The targets set out
are relatively modest in view of the imminence of the
deadline.
comprise eight members, this would correspond to a
proportion of at least 12.5%. The Supervisory Board
considers it desirable to increase the proportion of
women on the board and supports the Board of Manage-
ment's current raft of measures, which is also aimed
at increasing the proportion of women at the highest
executive management levels of the BMW Group.
184 Compliance in the BMW Group
188 Compensation Report
Governance Practices
181 Disclosures pursuant to the Act
on Equal Gender Participation
182-Information on Corporate
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
171 Members of the Supervisory
Board
170 Members of the Board of
Management
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
in %
168 Information on the Company's
Governing Constitution
CORPORATE GOVERNANCE
168-STATEMENT ON
As its target for the proportion of women on the Board
of Management by 31 December 2016, the Supervisory
Board has stipulated that the Board of Management
should continue to have at least one female member.
Assuming that the Board of Management continues to
Under the new legislation, the Supervisory Board of
BMW AG is required to set a target for the proportion
of women on its Board of Management and a time limit
for meeting this target. Likewise, the Board of Manage-
ment of BMW AG is required to establish targets and
time limits for attaining these targets with respect to
the two executive management levels below the Board
of Management. In each case, the first of these time
limits may be no later than 30 June 2017. Since the Com-
pany's financial year corresponds to the calendar year,
the Supervisory Board and the Board of Management
have each decided to set 31 December 2016 as the date
of the first time limit for attaining these targets.
The Act on Equal Participation of Women and Men in
Executive Positions in the Private and the Public Sector
("Act on Equal Gender Participation") was passed into
German law in 2015.
Disclosures pursuant to the Act on Equal Gender
Participation - targets for the proportion of women at
executive management levels I and II
to any of the Supervisory Board members. Employees
holding office in the Supervisory Board are protected by
law when performing their duties. At any rate, all other
Supervisory Board members have a sufficient degree of
economic independence from the Company. Business
with entities, in which the members of the Supervisory
Board carry out a significant function, is conducted on
an arm's length basis. Overall, the Supervisory Board
has concluded that all of its members are independent.
At least three members meet the requirements for
being designated as an independent financial expert.
At the end of the reporting period, the Supervisory
Board had six female members (30%), comprising three
shareholder representatives and three employee repre-
sentatives. The Supervisory Board has 14 male mem-
bers (70%), comprising seven shareholder representa-
tives and seven employee representatives. The Company
therefore complies with the statutory gender quota of
at least 30% female members applicable in Germany
with effect from 1 January 2016. The Supervisory Board
does not currently have any members more than 70 years
old. The principles specified by the Supervisory Board
regarding the length of office of its members will be
taken into account in all future proposals for election.
In the Supervisory Board's opinion, its composition as
at 31 December 2015 fulfilled the composition objec-
tives detailed above. In order to make it easier to assess
actual composition and composition targets, brief
curricula vitae of the current members of the Super-
visory Board are available on the Company's website at
www.bmwgroup.com. Information relating to mem-
bers' practised professions and to mandates in other
statutory supervisory boards and equivalent national or
foreign company boards, including the length of their
periods of service on the Supervisory Board, is provided
in the section "Statement on Corporate Governance".
Judging from this information, it is evident that the
Supervisory Board of BMW AG is extremely diversified,
with significantly more than the targeted four members
having international experience or specialist knowledge
with regard to one or more of the non-German markets
important to the Company. In-depth knowledge and
experience from within the enterprise are provided by
seven employee representatives and the Supervisory
Chairman himself. Only one previous Board of Manage-
ment member holds office in the Supervisory Board.
At least four members of the Supervisory Board have
experience in managing another entity. The Super-
visory Board also has three entrepreneurs as members.
Most of the members of the Supervisory Board – in-
cluding the employee representatives – have some ex-
perience in supervising another medium-sized or large
company. Moreover, more than three members of the
Supervisory Board have experience and specialist
knowledge in subjects relevant for the future of the
BMW Group, such as customer requirements, mobility,
resources, sustainability and information technology.
For the purpose of assessing the independence of its
members, the Supervisory Board follows the recommen-
dations of the German Corporate Governance Code.
In the opinion of the Supervisory Board, the fact that a
member has a substantial shareholding in the Com-
pany, or holds office as an employee representative, or
was previously a member of the Board of Manage-
ment, does not rule out that he or she is independent.
A "substantial and not merely temporary conflict of
interests" within the meaning of section 5.4.2 of the
German Corporate Governance Code does not apply
procedural rules stipulated by the German Co-Deter-
mination Act, the Supervisory Board does not have the
right to nominate employee representatives for elec-
tion. The objectives which the Supervisory Board has
set itself with regard to its composition are therefore not
intended to be instructions to those entitled to vote or
restrictions on their freedom to vote.
181 STATEMENT ON CORPORATE GOVERNANCE
In order to avoid legal risks, all members of staff can
discuss compliance matters with their managers and
with the relevant departments within the BMW Group,
in particular Legal Affairs, Corporate Audit and Cor-
porate Security. The BMW Group Compliance Contact
serves as a further point of contact for both employees
and non-employees for any questions regarding com-
pliance.
Employees
(Part of Management Report)
10
182
6
We treat each other with respect. Leadership is based on
mutual trust. Trust is rooted in fairness and reliability.
8
As we strive to find the best solution, it is each em-
ployee's duty to express any opposing opinions they
may have. The solutions we agree upon will then be
consistently implemented by all those involved.
Frankness
In order to ensure our long-term success we must adapt
to new challenges with speed and flexibility. We there-
fore see change as an opportunity - adaptability is essen-
tial to be able to capitalise on it.
Adaptability
Effectiveness
Every BMW Group employee has the personal responsi-
bility for the Company's success. When working in a
team, each employee must assume personal responsibility
for his or her actions. We are fully aware that we are
working to achieve the Company's goals. For this reason,
we work together in the best interests of the Company.
Responsibility
We aim to be the best - a challenge to which all of us
must rise. Each and every employee must be prepared
to deliver peak performance. We strive to be among
the elite, but without being arrogant. It is the Company
and its products that count - and nothing else.
Peak performance
The success of our Company is determined by our cus-
tomers. They are at the heart of everything we do.
The results of all our activities must be valued in terms
of the benefits they will generate for our customers.
The only results that count for the Company are those
which have a sustainable impact. In assessing leader-
ship, we must consider the effectiveness of performance
on results.
Within the BMW Group, the Board of Management, the
Supervisory Board and the employees base their actions
on twelve core principles which are the cornerstone of
the success of the BMW Group:
4
2
Customer focus
Function level I
Function level II
9.6
5.5
Respect, trust, fairness
The deployment of diverse, complementary talents in
the workforce increases both the ability of a company to
perform and its customer orientation. Sufficient diver-
sity in the BMW Group makes a major contribution to
improving competitiveness. Promoting an appropriate
gender balance is a key part of this skill mix. The aim of
the Board of Management therefore continues to be to
increase the proportion of women at all management
levels.
The proportion of women has risen further during the
financial year 2015, both in the workforce as a whole
and in management positions, accompanied also by
a large number of programmes, dialogues and infor-
mation events. Further information on the social di-
versity in the BMW Group can be found in the section
"Workforce".
Information on corporate governance practices applied
beyond mandatory requirements
Core principles
The BMW Group's premium brands (BMW, MINI and
Rolls-Royce) are widely known and highly admired
around the globe for their innovative technologies
and state-of-the-art design. The BMW Group provides
the full spectrum of individual mobility, ranging from
premium-segment small vehicles through to highly luxu-
rious and powerful vehicles. The MINI brand is a veritable
icon in the premium small car segment, offering un-
rivalled driving pleasure in its class. Rolls-Royce has a
long tradition in the ultra-luxury segment stretching
back over 112 years. Our core BMW brand caters to a
broad array of customer wishes, ranging from fuel-
efficient and innovative models equipped with Efficient
Dynamics through to high-performance, efficient
BMW M vehicles, which help bring the flair of motor-
sport to the roads. All BMW vehicles share one thing in
common - their impressive driving dynamics.
At the same time, the BMW Group continues to push
the boundaries of "premium" to a new level with its
BMW i models. Inspired to the core by the desire for even
greater sustainability, the BMW i epitomises the vehicle
of the future - with its electric drivetrain, revolutionary
lightweight construction, exceptional design and an en-
tirely newly conceived range of mobility services.
BMW Motorrad also focuses on the premium segment
with its range of products, comprising motorcycles for
the Sport, Tour, Roadster, Heritage, Adventure and
Urban Mobility segments. A wide range of accessories
and equipment is also available to provide customers
with additional safety and comfort.
The Financial Services segment comprises more than
50 entities and cooperation arrangements with local
financial services providers and importers on all conti-
nents, making it one of the world's leading financial
service providers in the automobile sector. Its main line
of business is providing credit financing and leasing for
BMW Group brand cars and motorcycles to retail cus-
tomers. It also provides customers with access to a wide
range of insurance and banking products. The BMW
Group's international multi-brand fleet business,
operating under the brand name “Alphabet", provides
fleet financing products and comprehensive manage-
ment services for corporate car fleets in 18 countries.
Within the multi-brand financing line of business, credit
financing, leasing and other services are marketed to
retail customers under the brand name “Alphera”. Pro-
viding support to the dealer organisation, such as by
financing dealership vehicle inventories, rounds off the
segment's product range.
20
18-COMBINED MANAGEMENT REPORT
The worldwide distribution network currently consists
of around 3,310 BMW, 1,550 MINI and 140 Rolls-Royce
dealerships. In China alone, around 60 BMW dealerships
were opened in 2015. Products and services are sold in
Germany through BMW Group branches and by inde-
pendent authorised dealers. Sales outside Germany are
handled primarily by subsidiary companies and by in-
dependent import companies in a number of markets.
The dealership and agency network for BMW i currently
covers some 950 locations. The BMW motorcycles sales
network is organised in a similar way to that of the
Group's automobile business. Currently, there are
around 1,150 BMW Motorrad dealerships worldwide.
The business management system applied by the
BMW Group follows a value-based approach, with a
clear focus on achieving profitable growth, increasing
the value of the business for capital providers and
18-General Information on the BMW Group safeguarding jobs. Corporate autonomy can only be
18 Business Model
Environment
23 Report on Economic Position
23 General and Sector-specific
General Information on the BMW Group
Management System
20-Management System
Bayerische Motoren Werke G. m. b. H. came into being
in 1917. Having been originally founded in 1916 as
Bayerische Flugzeugwerke AG (BFW), it finally became
Bayerische Motoren Werke Aktiengesellschaft (BMW AG)
in 1918. The BMW Group comprises BMW AG itself
and all subsidiaries over which BMW AG has either direct
or indirect control. BMW AG is also responsible for
managing the BMW Group as a whole. General condi-
tions on the world's automobile and motorcycle markets
(such as the competitive situation, government policies,
statutory regulations), underlying trends within society
as well as changes in raw materials prices, exchange
rates and interest rates are some of the major external
factors that exert influence on business performance.
The Rolls-Royce Phantom, Ghost, Wraith and - since the
end of 2015 - the Dawn Convertible models are manu-
factured exclusively at the Goodwood plant (United
Kingdom).
ensured in the long term if the available capital is
profitably employed. For this to be the case, the profit
generated must sustainably exceed the cost of equity
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
based in Munich, Germany, is the parent company of
59 Comments on Financial Statements the BMW Group. The primary business objective of the
BMW Group is the development, manufacture and sale
of engines as well as all vehicles equipped with those
engines. The BMW Group is subdivided into the Auto-
motive, Motorcycles, Financial Services and Other Enti-
ties segments (the latter primarily comprising holding
companies and Group financing companies).
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
The BMW Group is one of the most successful makers of
cars and motorcycles worldwide and among the largest
industrial companies in Germany. With BMW, MINI
and Rolls-Royce, the BMW Group owns three of the
strongest premium brands in the automotive industry.
The vehicles manufactured by the BMW Group set ex-
ceptionally high standards in terms of aesthetics, dynam-
ics, technology and quality and are the culmination of
concerted expertise in engineering and innovation. In
addition to its strong position in the motorcycles market,
the BMW Group also offers its customers a successful
range of financial services. In recent years, it has also
established itself as a leading provider of premium ser-
vices for individual mobility. At the end of the reporting
period, the BMW Group employed a workforce of
122,244 people worldwide.
Long-term thinking and responsible action have long
been the cornerstones of the BMW Group's success.
Striving for ecological and social sustainability along the
entire value-added chain, taking full responsibility for
products and giving an unequivocal commitment to pre-
serving resources are prime objectives firmly embedded
in the BMW Group's corporate strategy. As a result of
these endeavours, the BMW Group has ranked among
the most sustainable companies in the automotive in-
dustry for many years.
The BMW Group operates on a global scale and is repre-
sented in more than 150 countries worldwide. Its research
and innovation network spans 13 locations in five
countries. At 31 December 2015, the Group's production
network comprised a total of 30 locations in 14 countries.
BMW 3 Series and 4 Series models as well as petrol and
diesel engines are manufactured at the BMW Group
plant in Munich. BMW 1, 3 and 4 Series models as well
as the 2 Series Gran Tourer, the Z4 Roadster and the X1
are produced at the Regensburg plant. The BMW 3 Series
Gran Turismo, the BMW 4 Series Gran Coupé, models
of the BMW 5, 6 and 7 Series and also hybrid BMW 5 and
7 Series vehicles are manufactured at the BMW Group
plant in Dingolfing. Chassis and drive components are
also produced at this plant. Models of the BMW 1 and
2 Series as well as the electrically powered BMW i3 and
the BMW i8 hybrid sports car are manufactured at the
Group's Leipzig site. The BMW 3 Series Sedan is assem-
bled at the plant in Rosslyn (South Africa). The BMW X3,
X4, X5 and X6 models are all manufactured at the Group's
plant in Spartanburg (USA). The BMW X1 and various
models of the BMW 3 and 5 Series are built exclusively
for the Chinese market at the two plants operated by
the BMW Brilliance Automotive Ltd. joint venture in
Shenyang (China). Various models are also produced at
the BMW Group plants in Chennai (India) and Rayong
(Thailand). Production at the BMW Group's newest plant
in Araquari (Brazil) currently includes the BMW 3 Series
Sedan, the 1 Series 5-door model, the X3 and the X1 as
well as the MINI Countryman.
A variety of components that supply the Group's world-
wide production network are manufactured at the
plants in Landshut and Wackersdorf. The Eisenach site
makes special-purpose metalworking tools for the pro-
duction network. The manufacturing sites in Moses Lake
(USA) and Wackersdorf - both part of the SGL Auto-
motive Carbon Fibers (ACF) joint operations - supply
carbon fibre and carbon fibre fabrics for the production
of BMW i models and the new BMW 7 Series. The BMW
Group's largest engine manufacturing plant in Steyr
(Austria) makes both petrol and diesel engines for the
various BMW and MINI plants. In 2016, the joint venture
BMW Brilliance Automotive Ltd. opened an engine plant
19 COMBINED MANAGEMENT REPORT
in Shenyang (China), which supplies petrol engines to
its neighbouring plants.
The primary function of the BMW Group's partner plants
is to serve nearby regional markets. BMW and MINI cars
are currently also produced in Jakarta (Indonesia), Cairo
(Egypt), Kaliningrad (Russia) and Kulim (Malaysia).
MINI 3- and 5-door models and the MINI Clubman are
currently manufactured at the site in Oxford (United
Kingdom). The UK production triangle also includes the
components plant in Swindon and the engine plant at
Hams Hall, where petrol engines are manufactured for
MINI and BMW. In Graz (Austria), Magna Steyr Fahr-
zeugtechnik manufactures the MINI Countryman and,
since 2012, the MINI Paceman for the BMW Group.
The Dutch car manufacturer, VDL Nedcar bv (Born),
has been producing the MINI 3-door since 2014 and
the MINI Convertible since 2015 on behalf of the BMW
Group.
BMW motorcycles are manufactured primarily at the
BMW Group plant in Berlin. Car brake discs are also pro-
duced at this location. Two further motorcycle produc-
tion plants are located in Manaus (Brazil) and Rayong
(Thailand).
27 Overall Assessment by Management and debt capital.
Capital employed
Performance Indicators
Expenses
Revenues
Capital turnover
Cost of capital
Business model
Average weighted cost
of capital rate
Profit
Due to the extremely high aggregate impact of vari-
ous factors, it is difficult to manage a business pro-
actively simply by focusing on value added. This
key indicator therefore only serves for intermediate
reporting purposes.
In the case of project-related decisions, the system
incorporates a project-oriented control logic focused on
value-based and return-based performance indicators,
which provide a crucial basis for decision-making.
Management of operating performance at segment level
Operating performance at segment level is managed in
its most aggregated form on the basis of capital rates of
return. Depending on the business model, the segments
are measured on the basis of total return or the return on
equity capital, namely the return on capital employed
(ROCE) for the Automotive and Motorcycles segments
and the return on equity (ROE) for the Financial Ser-
vices segment. As an overall reflection of profitability
(return on sales), capital efficiency (capital turnover)
and other factors, these key performance indicators
provide a cohesive insight into segment performance
and changes in the value of the business.
Automotive segment
The most aggregated key performance indicator used
for the Automotive segment is the RoCE. This indicator
provides useful information on the success with which
capital is being employed as well as on operational
profitability. The RoCE is measured on the basis of seg-
ment profit before financial result and the average
amount of capital employed in segment operations. The
strategic target for the Automotive segment's RoCE is
26%.
ROCE Automotive
Profit before financial result
Capital employed
Relevant value drivers which could have a significant
impact on profitability and the value of the business are
defined for each controlling level. The financial and
non-financial value drivers referred to above are reflected
in the key performance indicators used to manage the
business.
Return on sales
and foremost at segment level. In order to manage long-
term performance and assess strategic issues, addi-
tional key performance figures are taken into account at
Group level for controlling purposes. In this context,
the contribution made to business value growth during
the financial year is measured in terms of "value added".
This approach is translated for operational purposes
at both Group and segment level by means of key finan-
cial and non-financial performance indicators ("value
drivers”). The link between value added and the rele‐
vant value drivers is shown in a simplified form in the
following diagram.
Return on capital
(ROCE/ROE)
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
The BMW Group's internal management system is based
on a multilayered structure, with varying degrees of
59 Comments on Financial Statements detail applicable, depending on the level of aggregation.
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Operating performance, for instance, is managed first
Value added
27 Financial and Non-financial
General information on the BMW Group is provided be-
low. There have been no significant changes compared
to the previous year.
At the 2015 Consumer Electronics Show (CES) in Las Vegas we presented our self-driving BMW i3, which is
able to avoid obstacles and park itself. At the CES 2016, we showcased the BMW i8 Vision Future Interaction,
62 Events after the End of the
13 REPORT OF THE SUPERVISORY BOARD
The Supervisory Board also examined the proposal of the Board of Management to use the unappropriated
profit to pay an increased dividend of €3.20 per share of common stock and €3.22 per share of non-voting
preferred stock. The Supervisory Board considers the proposal appropriate and therefore concurs with it.
Expression of appreciation by the Supervisory Board The financial year 2015 has again been a record
year for the BMW Group. The Supervisory Board wishes to thank the members of the Board of Management
and the entire staff of the BMW Group worldwide for their outstanding work and concerted performance.
Munich, 9 March 2016
On behalf of the Supervisory Board
Yours
M
Norbert Reithofer
Chairman of the Supervisory Board
Based on thorough examinations at both Audit Committee and full Supervisory Board level, the Super-
visory Board concurred with the results of the external audit. In accordance with the conclusion reached after
the examination by the Audit Committee and Supervisory Board, no objections were raised. The Group and
Company Financial Statements of Bayerische Motoren Werke Aktiengesellschaft for the financial year 2015
prepared by the Board of Management were approved at the Supervisory Meeting held on 9 March 2016. The
separate financial statements have therefore been adopted.
14
15 STATEMENT OF THE CHAIRMAN OF THE BOARD OF MANAGEMENT
Dear Shareholders,
The 7 March 2016 marked an historic milestone in the history of our company. 100 years of Bayerische
Motoren Werke is the achievement of all the company's associates since its founding in 1916 right up until
today. Our experiences and strengths establish the foundation for our future. However, we also know that
it is not past accomplishments but profitable growth, strength in innovation and competitiveness that deter-
mine the success of a company. This is why we are using the occasion of our centenary as a springboard for
"The Next 100 Years". This makes it clear that the company's strategy is and remains geared towards the
long term.
Successful development continued in the financial year 2015 The financial year 2015 was a successful
year for the BMW Group. We achieved new all-time highs for performance indicators such as sales, Group
revenues, Group profit before tax and net profit.
The strength of our premium brands is the backbone of our success Our three premium brands fascinate
people all around the world. In 2015, more than 2.2 million customers chose a BMW, MINI or Rolls-Royce,
more than in any other year. This was a solid increase of 6.1 per cent over the previous year. For the first time
in our corporate history, the BMW brand sold more than 1.9 million vehicles. With almost 137,000 motor-
cycles and scooters, BMW Motorrad also achieved a new record in sales. The MINI brand also reported the
best year ever, with over 338,400 vehicles sold. Rolls-Royce Motor Cars delivered 3,785 vehicles to customers,
making 2015 the second-best year in its 112-year history.
We continue to strive for a globally balanced distribution of value creation We continue to pursue a balanced
distribution of sales between the world's three major regions, Europe, Asia and America. In view of the
heterogeneous and volatile development of the markets, our distribution strategy allows us to respond more
swiftly to fluctuations and to avoid overdependence on any single region. Europe is still our largest sales region.
Last year we surpassed the mark of one million vehicles sold there for the very first time. Overall, close to
45 per cent of our cars were delivered to customers in Europe. Asia accounted for approximately 30 per cent
of sales, the Americas for 22 per cent.
We are strategically expanding our global production network of currently 30 sites in 14 countries. Our
second engine plant in Shenyang opened in January 2016. In Mexico, preparations for the construction of our
new plant in San Luis Potosí are proceeding according to schedule. On top of that, we are currently expanding
the company's largest production site in Spartanburg, USA in order to be able to meet the high demand
for our premium sports activity vehicles.
Harald Krüger - Chairman of the Board of Management
Positive sales development reflected in key financials Our successful development in sales is reflected in
our key financials: with over 92 billion euros in sales revenues, the BMW Group posted a significant growth
of 14.6 per cent over the previous year. As forecasted, the Group profit before tax achieved solid growth of
per cent to a new high of 9.2 billion euros. The annual net profit increased by 10 per cent to around 6.4 billion
euros. The EBIT margin in the Automotive segment stands at 9.2 per cent and therefore remains within our
strategic target range.
The Financial Statements and the Combined Management Report, the long-form audit reports of the
external auditors and the Board of Management's profit distribution proposal were made available to all
members of the Supervisory Board in a timely manner.
Examination of financial statements and the profit distribution proposal KPMG AG Wirtschaftsprüfungs-
gesellschaft conducted a review of the abridged Interim Group Financial Statements and Interim Group
Management Report for the six-month period ended 30 June 2015. The results of the review were presented
to the Audit Committee by representatives of KPMG AG Wirtschaftsprüfungsgesellschaft. No issues were iden-
tified that might indicate that the abridged Interim Group Financial Statements and Interim Group Manage-
ment Report had not been prepared, in all material respects, in accordance with the applicable provisions.
11 REPORT OF THE SUPERVISORY BOARD
The Chairman of the BMW Group Compliance Committee reported to the Audit Committee on the
current compliance situation, which, as in the previous year, was deemed satisfactory overall. None of the
information received relating to potential non-compliance or actual incidences of non-compliance identified
in specific cases give any indication of serious or systematic non-compliance with applicable requirements.
Moreover, the Audit Committee requested and received information regarding the further expansion of the
BMW Group Compliance Organisation.
The Head of Group Internal Audit reported to the Audit Committee on significant findings of audits con-
ducted by Group Internal Audit on the industrial and financial services sides of the business. In addition,
he provided information on the main topics of planned audits in both areas.
The Audit Committee has already obtained detailed information regarding audit reforms within the EU,
particularly with respect to preparing the selection of the auditor.
The Audit Committee and Supervisory Board obtained an auditor's assurance report regarding compliance
with regulatory requirements for off-market transactions made by BMW AG involving derivatives. The effec-
tiveness of the system that BMW AG currently employs to ensure compliance with regulatory requirements
was confirmed. With an addition to its procedural rules, the Supervisory Board transferred tasks related to
examinations of this type to the Audit Committee.
The Audit Committee concurred with the decision of the Board of Management to raise the Company's
share capital in accordance with § 4 (5) of the Articles of Incorporation (Authorised Capital 2014) by €309,860
and to issue a corresponding number of new non-voting bearer shares of preferred stock, each with a par value
of €1, at favourable conditions to employees.
The Personnel Committee convened four times during the financial year 2015. One of its tasks is to prepare
decisions relating to the composition of the Board of Management. In one case, the Personnel Committee
gave its approval for a member of the Board of Management to accept a mandate for membership of the
supervisory board of a non-BMW Group entity.
The Group and Company Financial Statements of Bayerische Motoren Werke Aktiengesellschaft for the
year ended 31 December 2015 and the Combined Management Report – as authorised for issue by the
Board of Management on 18 February 2016 – were audited by KPMG AG Wirtschaftsprüfungsgesellschaft
and given an unqualified audit opinion.
The Nomination Committee convened twice in 2015 to deliberate on successor planning for mandates of
the shareholders' representatives and adopt recommendations for proposals for election at the 2015 and
2016 Annual General Meetings, taking the composition objectives stipulated by the Supervisory Board into
due account.
Composition and organisation of the Board of Management After the Annual General Meeting held
on 13 May 2015, I resigned from the Board of Management as previously announced and Harald Krüger took
over as Chairman of the Board of Management. The Supervisory Board had previously appointed Oliver Zipse
as member of the Board of Management for the first time with effect from the end of the Annual General
Meeting. Mr Zipse has worked for the BMW Group since 1991, most recently as head of Group Planning and
Product Strategy. He took over responsibility for Production from Harald Krüger. In the financial year 2015,
the Supervisory Board resolved to extend the mandate of one Board of Management member.
Composition of the Supervisory Board, the Presiding Board and Supervisory Board Committees In
order to facilitate the generational change at the top of the Board of Management and the Supervisory Board,
which he both planned and personally supported, Professor Joachim Milberg resigned from the Supervisory
Board immediately after the 2015 Annual General Meeting. As previously announced, he will be playing a
leading role in the worldwide social engagement and philanthropic work of BMW AG, in particular as Chair-
man of the Board of Trustees of the BMW Foundation Herbert Quandt. Professor Milberg has faithfully served
and had a major influence on the BMW Group over a period of many years, beginning in 1993, first as
12
member and then as Chairman of the Board of Management from 1999. As from 2002 he served firstly as
member and finally, from 2005, as Chairman of the Supervisory Board. The Supervisory Board wishes to
take this opportunity to express its great respect for, and appreciation of, Professor Milberg's achievements.
Wolfgang Mayrhuber also resigned from the Supervisory Board at his own request at the end of the 2015
Annual General Meeting. The Supervisory Board wishes to thank Mr Mayrhuber for his more than ten years
of valuable, trusted cooperation.
Simone Menne was elected to the Supervisory Board as new shareholder representative. Professor Dr
Henning Kagermann was re-elected as member of the Supervisory Board at the Annual General Meeting in
2015.
After my election to the Supervisory Board by the Annual General Meeting in 2015, the Supervisory Board
members elected me as their new Chairman. In this capacity, and in accordance with the relevant terms of
reference, I remained Chairman of the Personnel and Nomination Committees. I was also elected member of
the Audit Committee. The Corporate Governance Report contains a summary of the composition of the
Supervisory Board and its committees.
The statutory Mediation Committee was not required to convene during the financial year 2015.
Reporting Period
5.9
The Motorcycle segment is profitable due to its successful growth strategy. Based on an operating result
of 182 million euros in 2015, the segment reported an EBIT margin of 9.1 per cent.
18
COMBINED MANAGEMENT REPORT
General Information on the BMW Group
Business Model
18-COMBINED MANAGEMENT REPORT
This Combined Management Report incorporates the
management reports of Bayerische Motoren Werke
Aktiengesellschaft (BMW AG) and the BMW Group.
18-General Information on the BMW Group General information on the BMW Group
18-Business Model
Chairman of the Board of Management
20 Management System
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
of BMW AG
23 Report on Economic Position
With over 1.65 million new contracts with customers and a profit before tax of 1.98 billion euros, the
Financial Services segment once again made a significant contribution to the Group result. The EBT in the
segment grew significantly to 14.6 per cent and stands well above the previous year's level.
Harald Krüger
Yours
Therefore, we achieved the goals we set for the 2015 financial year and we managed to do so in an environ-
ment characterised by intense competition as well as economic and political volatility.
16
We continue to fascinate our customers with new models and technologies In 2015, we launched a total
of 15 new models and model revisions in the market, among them the new BMW 2 Series Gran Tourer, the
new BMW X1 and the new MINI Clubman. At Rolls-Royce, the new Drophead Coupe called Dawn celebrated
its world premiere at the International Motor Show in Frankfurt. The model is scheduled to be introduced
in 2016. Most importantly, the model year 2015 was marked by the launch of the sixth generation of the new
BMW 7 Series. With its high-end innovations, our flagship has set new benchmarks in driving dynamics,
efficiency as well as driver assistance systems.
BMW i attracts new customer groups to the BMW brand With Efficient Dynamics technology and especially
with the BMW i models, the BMW Group has irreversibly charted the course towards sustainable mobility.
At the end of 2015, average emissions for our new car fleet stood at 127 grams of CO2 per kilometre. Last
year, we sold close to 30,000 BMW i vehicles – up around 66 per cent year-on-year. The fully electric BMW i3 is
already available in 50 countries; it is also the only vehicle with a certified carbon balance for the supply chain,
production, use and recycling. It has attracted new customers to the BMW brand - 80 per cent of i3 buyers
have never driven a BMW before. We have repeatedly stressed that electromobility is not a sprint but a mara-
thon. In order to enable access to e-mobility to many people, the BMW i3 has been included in our DriveNow
car-sharing fleet. Furthermore, the BMW Group and its partners support the establishment of a comprehensive
charging infrastructure in Europe, China and the USA.
Consistent technology transfer from BMW i to the BMW core brand The technologies developed for BMW i
are now also being incorporated in the models of our BMW core brand. This includes battery cells, the elec-
tronic control unit and electric drives from the i3 and i8 as well as our expertise in lightweight construction.
A good example of this technology transfer is the Carbon Core of the new BMW 7 Series, a mixed-material
design for the car body structure made of carbon fibre reinforced plastics (CFRP), aluminum and steel. This
Carbon Core received the EuroCarBody Award 2015, the world's most prestigious recognition for innova-
tions in car body construction.
A broad range of innovative, efficient drivetrains plays a crucial role in adhering to the increasingly strin-
gent requirements for the reduction of emissions. BMW's first plug-in hybrid series model has already been
released: the X5 xDrive40e. As of July 2016, all BMW plug-in hybrid models will be offered under the label of
"iPerformance" - from the BMW 2 Series Active Tourer to the BMW 7 Series. Furthermore, our iPerformance
customers will benefit from a 360° Electric offer, including a wall-mounted charging box and more.
Realignment of the company with Strategy NUMBER ONE>NEXT Our Strategy Number ONE has been
the guideline for our actions since autumn 2007. Since the global economic and financial crisis, the company
has developed successfully. At the same time, our environment has changed at a rapid pace. Digitalisation,
in particular, has brought about new technological opportunities for the automobile industry, ranging from
automated driving to connectivity in production.
H. 35″
Long-term growth targets up to 2020 In the light of these developments, we have revised and updated our
strategy for the future. We are operating from a solid basis: the BMW Group successfully combines financial
strength, innovation and profitability with further growth, and we intend to pursue this path further with
Strategy NUMBER ONE>NEXT.
Highly automated driving is becoming a part of the intelligent car of the future With BMW ConnectedDrive,
the BMW Group has been in a leading position when it comes to driver assistance systems for the past two
decades. These systems improve safety and comfort for our customers.
17 STATEMENT OF THE CHAIRMAN OF THE BOARD OF MANAGEMENT
which can be integrated into our customers' digital lifestyle via a cloud-based set-up and various mobile end
devices. The vehicle provides the personalised digital assistant BMW Connected that makes it possible, among
other things, to control smart-home functions. The BMW Group is the first car company to offer such a com-
prehensive digital service package.
Connectivity is one of the major trends in our industry. Vehicles, their drivers and their environment will
be even more closely connected in the future. The next logical step is highly and then fully automated driving.
Once again, we see ourselves here as both a driver and an innovator. The new BMW 7 Series is the first series
vehicle that offers fully automated parking. Many things are technologically feasible today. However, beyond
the technical dimension we also require fundamental legal and transport-related policy decisions that will
clearly define the rights and obligations of an extended mobile value chain. The BMW Group takes a clear
position: we want to assist drivers in certain situations. We also want to improve people's safety. And by
protecting their data, we protect their privacy as well.
Strategic acquisition of the map service HERE Highly and fully automated driving is based on high-accuracy
maps. Together with partners, we acquired the map service HERE in 2015 to safeguard our access to cloud-
based real-time maps and location-based services. We want HERE to become an independent platform for
the automotive industry and remain accessible beyond that. The combination of high-accuracy maps and
data from the vehicle's environment makes driving safer and more comfortable for everyone. Already today,
HERE provides maps and location-based data for almost 200 countries in over 50 languages.
Our highly motivated associates are our number one success factor Individual mobility satisfies a fundamen-
tal human need and will remain a strong trend. To ensure our further growth, we need capable and motivated
people as well as new ideas and skills. In 2015, the BMW Group recruited more than 5,900 new associates.
At the end of last year, 4,700 young people were in vocational training with the BMW Group, more than ever
before. On behalf of the Board of Management, I would like to thank all of our 122,244 associates for their
accomplishments in the business year 2015. I would also like to thank our business partners and our suppliers
as well as the entire dealership organisation. We can only deliver on our premium claim thanks to the close
and trustful cooperation with our partners and dealers.
Dear Shareholders Due to its financial strength and the long-term focus of its Strategy NUMBER ONE>NEXT,
the BMW Group will continue to be an attractive investment. We want our shareholders to continue to par-
ticipate in our success. For the financial year 2015, the Board of Management and the Supervisory Board will
propose to the Annual General Meeting to make our anniversary year 2016 the first time in the company's
history to pay dividends totalling over two billion euros. I would like to thank all our shareholders for their vote
of confidence and hope that you will continue to accompany us on our journey into the future.
Our business model will continue to focus on individual mobility in the premium segment – combined
with attractive mobility services. The customer is at the heart of everything we do. We are setting out long-
term targets that will guide us up to 2020 and are gradually implementing the related action plan.
In a first step, the Audit Committee dutifully examined and discussed these documents at a meeting held
on 25 February 2016. The Supervisory Board subsequently examined the relevant drafts of the Board of
Management at its meeting on 9 March 2016, after hearing the committee chairman's report on the meeting of
the Audit Committee. In both meetings, the Board of Management gave a detailed explanation of the fi-
nancial reports it had prepared. Representatives of the external auditors attended both meetings, reported
on significant findings and answered any additional questions raised by the members of the Supervisory
Board. They also confirmed that the risk management system established by the Board of Management is
capable of identifying any events or developments that might impair the going-concern status of the Company
and that no material weaknesses in the internal control system and risk management system were found
with regard to the financial reporting process. Similarly, they confirmed that they had not identified any facts
in the course of their audit work that were inconsistent with the contents of the Declaration of Compliance
issued jointly by the two boards.
We are looking ahead - to the next 100 years of the BMW Group At the BMW Group, we regard every
day as a new opportunity to challenge ourselves and to excel. At our official centenary ceremony on 7 March
2016, we deliberately chose to look forward to the future: how will people move about 30 years from now?
Obviously, no one can predict precisely how our mobility behavior is going to develop. However, those who
do not try to imagine the future will simply not have one. We are presenting our ideas for mobility of the
future with our vision vehicle, the BMW VISION NEXT 100.
BMW Group ConnectedDrive Lab China, Shanghai,
and BMW Group Designworks Studio Shanghai, China
BMW Group Engineering China, Beijing, China
BMW Group Engineering Japan, Tokyo, Japan
BMW Group Engineering USA, Woodcliff Lake, USA
BMW Technology, Chicago, USA
-70,000
-10,000
-116,960
-196,960
(70,000)
(10,000)
(105,910)
(185,910)
Jürgen Wechsler³
-70,000
8,000
-116,960
-194,960
(70,000)
(10,000)
(105,910)
(185,910)
Werner Zierer³
Total 6
-70,000
-10,000
-116,960
196,960
Brigitte Rödig³
(70,000)
(185,910)
(10,000)
Wolfgang Mayrhuber
25,507
2,000
(70,000)
(8,000)
Simone Menne5
-44,685
-8,000
-74,662
42,618
(105,910)
(185,910)
(183,910)
-127,347
-70,125
(-)
(-)
(-)
(-)
Dominique Mohabeer³
-70,000
-10,000
-116,960
-196,960
(70,000)
(105,910)
(105,910)
(10,000)
(185,910)
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
196
Responsibility Statement by the Company's Legal Representatives
Statement pursuant to § 37y No. 1 of the Securities
Trading Act (WPHG) in conjunction with § 297 (2)
sentence 4 and § 315 (1) sentence 6 of the German
Commercial Code (HGB)
"To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position and profit of the
Group, and the Group Management Report includes
a fair review of the development and performance of
the business and the position of the Group, together
with a description of the principal opportunities and
risks associated with the expected development of the
Group."
Munich, 18 February 2016
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
Harald Krüger
Milagros Caiña Carreiro-Andree
Dr.-Ing. Klaus Draeger
Dr. Friedrich Eichiner
Klaus Fröhlich
Dr. Ian Robertson (HonDSc)
Peter Schwarzenbauer
Oliver Zipse
197
BMW Group
Auditor's Report
We have audited the consolidated financial statements
prepared by Bayerische Motoren Werke Aktiengesell-
schaft, comprising the income statement for group
and
statement of comprehensive income for group, the
balance sheet for group, cash flow statement for group,
group statement of changes in equity and the notes to
the group financial statements and its report on the
position of the Company and the Group for the business
year from 1 January to 31 December 2015. The prepara-
tion of the consolidated financial statements and group
management report in accordance with IFRSS, as
adopted by the EU, and the additional requirements of
German commercial law pursuant to § 315 a (1) HGB
(Handelsgesetzbuch "German Commercial Code") are
the responsibility of the parent company's management.
Our responsibility is to express an opinion on the con-
solidated financial statements and on the group manage-
ment report based on our audit.
We conducted our audit of the consolidated financial
statements in accordance with § 317 HGB and German
generally accepted standards for the audit of financial
statements promulgated by the Institut der Wirtschafts-
prüfer (Institute of Public Auditors in Germany) (IDW).
Those standards require that we plan and perform the
audit such that misstatements materially affecting the
presentation of the net assets, financial position and
results of operations in the consolidated financial state-
ments in accordance with the applicable financial report-
ing framework and in the group management report
are detected with reasonable assurance. Knowledge of
the business activities and the economic and legal
environment of the Group and expectations as to possi-
ble misstatements are taken into account in the deter-
mination of audit procedures. The effectiveness of the
accounting-related internal control system and the evi-
dence supporting the disclosures in the consolidated
financial statements and in the group management
report are examined primarily on a test basis within the
framework of the audit. The audit also includes assess-
ing the annual financial statements of those entities
included in consolidation, the determination of entities
to be included in consolidation, the accounting and
consolidation principles used and significant estimates
made by the management, as well as evaluating the
overall presentation of the consolidated financial state-
ments and group management report. We believe that
our audit provides a reasonable basis for our opinion.
181 Disclosures pursuant to the Act
on Equal Gender Participation
(105,910)
176 Work Procedures of the
Supervisory Board
Board
1,820,768
190,000
3,042,241
5,053,009
(1,820,382)
(190,000)
(2,754,240)
(4,764,622)
1 Member and Chairman of the Supervisory Board since 13.05.2015.
2 Member and Chairman of the Supervisory Board until 13.05.2015.
3 These employee representatives have - in line with the guidelines of the Deutsche Gewerkschaftsbund - requested that their remuneration be paid into the
Hans Böckler Foundation.
4 Member of the Supervisory Board until 13.05.2015.
5 Member of the Supervisory Board since 13.05.2015.
6 Figures for the previous year include the remuneration of members of the Supervisory Board who left office during the financial year 2014.
3. Other
Apart from vehicle lease contracts entered into on cus-
tomary market conditions, no advances and loans were
granted by the Company to members of the Board of
Management and the Supervisory Board, nor were any
contingent liabilities entered into on their behalf.
168-STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
174 Work Procedures of the
Board of Management
Our audit has not led to any reservations.
(10,000)
-196,960
(119,329)
Franz Haniel
-70,000
-10,000
-116,960
-196,960
(70,000)
(10,000)
(105,910)
(185,910)
Reinhard Hüttl
-70,000
-10,000
-116,960
196,960
(70,000)
(8,000)
(105,910)
(183,910)
Henning Kagermann
-70,000
-10,000
-116,960
(67,028)
-196,960
(8,000)
196,960
(361,820)
Stefan Schmid (Deputy Chairman)³
-140,000
-10,000
233,920
383,920
(140,000)
(10,000)
(211,820)
(361,820)
Karl-Ludwig Kley (Deputy Chairman)
-140,000
4,000
-233,920
377,920
(140,000)
(6,000)
(211,820)
(357,820)
Christiane Benner³
-70,000
10,000
-116,960
(44,301)
(70,000)
(70,000)
(105,910)
(119,329)
Robert W. Lane
-70,000
-10,000
-116,960
196,960
(70,000)
(8,000)
(105,910)
(183,910)
Horst Lischka³
-70,000
-8,000
-116,960
194,960
(70,000)
(10,000)
(105,910)
(185,910)
Willibald Löw³
-70,000
-10,000
-116,960
(67,028)
(10,000)
(8,000)
-196,960
(185,910)
Susanne Klatten
-70,000
-10,000
-116,960
-196,960
(70,000)
(10,000)
(105,910)
(185,910)
Renate Köcher
-70,000
10,000
-116,960
-196,960
(70,000)
(10,000)
(105,910)
(185,910)
Ulrich Kranz
-70,000
10,000
-116,960
(44,301)
(211,820)
In our opinion, based on the findings of our audit, the
consolidated financial statements comply with IFRSS,
as adopted by the EU, the additional requirements of
German commercial law pursuant to § 315 a (1) HGB and
give a true and fair view of the net assets, financial
position and results of operations of the Group in ac-
cordance with these requirements. The group manage-
ment report is consistent with the consolidated finan-
cial statements and as a whole provides a suitable
view of the Group's position and suitably presents the
opportunities and risks of future development.
KPMG AG
Operating cash flow Automotive segment4
€ million
11,836
9,423
-9,964
9,167
Capital expenditure
€ million
5,890
6,100
-6,711
5,240
Capital expenditure ratio (capital expenditure/revenues)
-%
6.4
-7.6
8.8
6.8
Personnel
Workforce at year-end 5.
Personnel cost per employee
Dividend
Dividend total
8,370
Dividend per share of common stock/preferred stock
-7,671
-6,122
30,606
%
€ million
-24.8
-63,819
24.2
25.7
23.2
58,288
51,643
52,834
€ million
65,591
59,078
-51,134
48,395
€ million
172,174
154,803
138,377
-131,835
Cash Flow Statement
Cash and cash equivalents at balance sheet date
€ million
-7,688
35,600
122,244
-97,136
-110,351
89,869
1,668,982
-104,286
-1,461,166
1,286,310
98,047
-87,306
1,435,876
-101,685
1,500,678
-102,467
1,373,970
-100,064
Sales volume
Automobiles
- Motorcycles¹
Production volume
-1,738,160
-1,481,253
1,258,417
1,439,918
1,541,503
1,366,838
Automobiles
-110,360
99,236
-82,631
104,220
2006
-116,324
92,337
2007
2009
-105,876
89,161
€ million
€
2,102
3.20€/3.226
-1,904
2.90/2.92
-1,707
2.60/2.62
-1,640
-2.50/2.52
198-OTHER INFORMATION
198-BMW Group Ten-year Comparison
200 BMW Group Locations
202 Glossary
204 Index
205 Index of Graphs
206
Financial Calendar
207 Contacts
1 Excluding Husqvarna, sales volume up to 2013: 59,776 units; production up to 2013: 59,426 units.
2 Amount computed on the basis of balance sheet figures: until 2007 from the Group balance sheet, from 2008 onwards from the Financial Services segment balance sheet.
3 Research and development expenses included in cost of sales with the effect from 2008.
4 Figures are reported in the cash flow statement up to 2006 as cash inflow from operating activities of Industrial Operations.
5 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.
6 Proposal by management.
199 OTHER INFORMATION
2011
2010
2008
Munich, 25 February 2016
37,437
€ million
units
units
-2,279,503
-151,004
- 2,165,566
-133,615
2,006,366
-110,127
-1,861,826
113,811
contracts
€ million
-4,718,970
111,191
4,359,572
96,390
4,130,002
-84,347
- 3,846,364
80,974
Revenues
€ million
-92,175
80,401
-76,059
-76,848
Gross profit margin Group³
Profit before financial result
Profit before tax
%
-19.7
21.2
1,845,186
106,358
20.1
-1,963,798
-115,215
-2,247,485
136,963
Wirtschaftsprüfungsgesellschaft
Pastor
Wirtschaftsprüfer
Feege
Wirtschaftsprüfer
198
OTHER INFORMATION
BMW Group Ten-year Comparison
Sales volume
Automobiles
Motorcycles¹
Production volume
Automobiles
Motorcycles¹
Financial Services
Contract portfolio
Business volume (based on balance sheet carrying amounts)² -
Income Statement
2015
2014
2013
2012
units
units
2,117,965
-123,495
-42,764
-20.2
9,593
€ million
6,396
5,817
-5,329
5,111
Balance Sheet
Non-current assets
Current assets
Equity
Equity ratio Group
Non-current provisions and liabilities
Current provisions and liabilities
Balance sheet total
€ million
-110,343
97,959
86,193
81,305
€ million
61,831
56,844
52,184
50,530
Net profit for the year
€ million
34.5
33.2
9,118
-7,978
-8,275
€ million
9,224
8,707
-7,893
-7,803
Return on sales (earnings before tax/revenues)
%
-10.0
-10.8
-10.4
10.2
Income taxes
€ million
2,828
- 2,890
-2,564
-2,692
Effective tax rate
%
30.7
32.5
(10,000)
(140,000)
-383,920
(46,765)
(172,000)
(52)
(4,623)
lan Robertson
900,000
-14,501
(900,000)
181 Disclosures pursuant to the Act
on Equal Gender Participation
Peter
182 Information on Corporate
Governance Practices
Schwarzenbauer
Oliver Zipse
184 Compliance in the BMW Group
188-Compensation Report
(14,161)
-750,000 31,101
(750,000) (26,481)
475,806
(-)
-914,501
(914,161)
- 3,293,863
-1,092
96,107
3,721,739 - 3,645,082
(223,388)
-4,304,471
(218,765)
4,208,364
(3,245,550)
(394)
(1,133)
(46,371)
871
-4,314,767
4,218,660
-23,982
(924,790)
923,982
(3,245,550)
(1,133)
(94,651)
(4,264,991)
(4,170,340)
- 3,293,863
-1,092
(900,000)
(21,952)
(921,952)
(3,245,550)
(1,133)
96,107
(94,651)
-4,313,952 -4,217,845
(4,262,153) (4,167,502)
Klaus Fröhlich
-750,000
-71,792
-821,792
-2,823,290
-76,657
96,107
(94,651)
(4,159,711)
8,032
(8,258)
715,278
(690,152)
35,472,904
(35,437,174)
34,757,626
(34,747,022)
1 Provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is
determined in each case when the requirement to invest in BMW AG common stock has been fulfilled. See note 19 to the Group Financial Statements for a description of the
accounting treatment of the share-based compensation component.
2 Value of benefits allocated in financial year 2015 for work performed on the Board of Management during the financial year 2015. No share-based remuneration component
(matching component) from previous years fell due for payment in the financial year 2015, since holding period requirements had not yet been fulfilled.
3 Member of the Board of Management until 13.05.2015.
4 In line with agreed terms, the variable cash remuneration of Dr Reithofer for the financial year 2015 was calculated based on target attainment for the financial year 2013.
5 Member of the Board of Management since 13.05.2015.
6 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2014.
193 STATEMENT ON CORPORATE GOVERNANCE
In addition, an expense of €2.6 million (2014: €2.1 mil-
lion) was recognised in the financial year 2015 for
current members of the Board of Management for the
period after the end of their service relationship,
which relates to the expense for allocations to pension
provisions.
Total benefits paid to former members of the Board
of Management and their surviving dependants for the
financial year 2015 amounted to €8.0 million (2014:
€5.8 million). This amount includes the above-men-
tioned settlement of €2.5 million paid to Dr Reithofer.
Pension obligations to former members of the Board of
Management, including Dr Reithofer, and their surviv-
ing dependants are fully covered by pension provisions
amounting to €71.8 million (2014: €68.4 million), com-
puted in accordance with IAS 19.
Share-based compensation component of the individual
members of the Board of Management for the financial year
2015 (2014)
in €.
Harald Krüger
Norbert Reithofer²
Expense in 2015
in accordance
with HGB and
IFRS
Provision at
31.12.2015 in
accordance with
HGB and IFRS¹
27,105,316
(27,031,160)
(4,254,362)
(-)
(-)
-781,101
-2,823,311
936
(776,481)
(2,781,900)
(971)
82,377
(81,117)
- 3,686,789
3,604,412
(3,639,498) (3,558,381)
44,089
(-)
Total6
7,333,870
(7,490,726)
318,440
(225,136)
- 519,895
(-)
7,652,310
(7,715,862)
-1,791,119
-457
48,602
2,359,616 -2,311,014
(-)
(-)
(-)
-166,581
(94,542)
-1,092
-924,797
21.8
compensation
27.1
-76.3
27.0
-76.3
Share-based compen-
sation component
Total compensation
-0.7
2.0
-0.7
-1.9
35.5
100.0
35.4
100.0
Matching component; provisional number or provisional monetary value calculated at
grant date (date on which the entitlement became binding in law). The final number
of matching shares is determined in each case when the requirement to invest in
BMW AG common stock has been fulfilled.
in € or
number of
matching shares
Fixed compensation
Basic
compen-
sation
Other
compen-
sation
Compensation of the individual members of the Board of Management for the financial year 2015 (2014)
Share-based compensation
component
(matching component)]
Number Monetary
value
-7.7
Variable
cash com-
pensation
-21.7
Fixed compensation
Variable cash
benefits in accordance with the rules of an older (de-
fined benefit) pension plan. Under the defined benefit
plan, the entitlement to retirement benefits arises at the
earliest on reaching the age of 60 or in case of invalidity.
The amount of the pension comprises a basic monthly
amount of €10,000 plus a fixed amount. The fixed amount
is made up of approximately €75 for each year of ser-
vice in the Company before becoming a member of the
Board of Management and between €400 and €600 for
each full year of service on the board (up to a maximum
of 15 years). Pension payments are adjusted based on
the rules applicable for the adjustment of civil servants'
pensions, i.e. the pensions of members of the Board of
Management are adjusted when the civil servants re-
muneration level B6 (excluding allowances) is increased
by more than 5% or in accordance with the Company
Pension Act.
If a mandate is terminated, the new defined contribution
system provides entitlements which can be paid either
(a) in case of death or invalidity as a one-off amount, in
instalments, or (b) upon retirement – depending on the
wish of the ex-board member concerned - optionally
in the form of a lifelong monthly pension, as a one-off
amount, or in instalments, or in a combined form (e.g.
a combination of a one-off payment and a proportion-
ately reduced lifelong monthly pension). Former mem-
bers of the Board of Management are entitled to receive
the retirement benefit at the earliest upon reaching the
age of 60, or in the case of entitlements awarded after
1 January 2012, upon reaching the age of 62.
The amount of the benefits to be paid is determined
on the basis of the amount accrued in each board mem-
ber's individual pension savings account. The amount
on this account arises from annual contributions paid
in, plus interest earned depending on the type of
investment.
If a member of the Board of Management with a vested
entitlement dies prior to the commencement of benefit
payments, a surviving spouse or otherwise surviving
children - in the latter case depending on their age and
education - are entitled to receive benefits as surviving
dependants. In case of invalidity or death, a minimum
benefit based on the potential annual contributions (up
to a maximum of 10) will be paid until the person con-
cerned would have reached the age of 60. In addition,
following the death of a retired board member who has
elected to receive a lifelong pension, 60% of that amount
is paid as a lifelong widow's pension. Pensions are in-
creased annually by at least 1%.
Depending on the length of membership in the Board
of Management and the board member's previous ac-
tivities, the annual contribution to be paid amounts
to between €350,000 and €400,000 for a member of
the Board of Management and between €500,000 and
€700,000 for its Chairman. The guaranteed minimum
rate of return p.a. corresponds to the maximum interest
rate used to calculate insurance reserves for life insur-
ance policies (guaranteed interest on life insurance poli-
cies). When granting pension entitlements, the Super-
visory Board considers the targeted level of pension
provision in each case as well as the resulting expense
for the BMW Group.
Contributions falling due under the defined contribution
model are paid into an external fund in conjunction
with a trust model that is also used to fund pension ob-
ligations to employees.
Income earned on an employed or a self-employed basis
up to the age of 63 may be offset against pension entitle-
ments. In addition, certain circumstances have been
specified, in the event of which the Company no longer
has any obligation to pay benefits. In such cases, no
transitional payments will be made.
Board of Management members who retire immediately
after their service on the board and who draw a retire-
ment pension are entitled to purchase vehicles and
other BMW Group services at conditions that also apply
in each relevant case for pensioners and to lease BMW
Group vehicles in accordance with the guidelines appli-
cable to senior heads of departments. Retired Chairmen
of the Board of Management are entitled to use a BMW
Group vehicle as a Company car on a similar basis to
senior heads of departments, and depending on availa-
bility and against payment, use BMW chauffeur services.
Termination benefits on premature termination of board
activities, benefits paid by third parties
In conjunction with the amicable early termination
of Dr Reithofer's Board of Management mandate with
effect from the end of the Annual General Meeting
2015, the Company also reached an agreement with
Dr Reithofer concerning the early termination of his
service contract with effect from the end of the Annual
General Meeting 2015. The contract termination agree-
ment envisages the calculation of variable cash remu-
neration for prorated activities in the financial year 2015
based on target attainment for the financial year 2013.
This arrangement ensures that, having been elected to
the Supervisory Board, he will not be involved in decid-
192
ing on the level of his own performance-related remu-
neration. Other entitlements resulting from the service
contract were settled subsequent to Dr Reithofer leaving
the Board of Management, in line with agreed terms, by
a payment of €2.5 million in 2015. The Company made
a final pension contribution of €0.7 million on behalf of
Dr Reithofer for the financial
year 2015.
No commitments or agreements exist to pay compensa-
tion if a board member's mandate is terminated early in
the event of a change of control or a takeover offer. No
members of the Board of Management received any pay-
ments or benefits from third parties in 2015 on account
of their activities as members of the Board of Manage-
ment of BMW AG.
Remuneration caps
The Supervisory Board has stipulated caps for all variable
remuneration components and for the remuneration of
Board of Management members in total. The caps are
shown in the table "Overview of compensation system
and compensation components".
Total compensation of the Board of Management for the
financial year 2015 (2014)
year
The total compensation of the current members of the
Board of Management of BMW AG for the financial
2015 amounted to €35.5 million (2014: €35.4 million),
of which €7.7 million (2014: €7.7 million) relates to fixed
components (including other remuneration). Variable
components amounted to €27.1 million (2014: €27.0 mil-
lion) and the share-based remuneration component to
€0.7 million (2014: €0.7 million).
in € million
2015
2014
- Amount Proportion - Amount Proportion
in %
in %
-7.7
- 3,293,863
Com-
pensation
of benefits
(30,152)
(1,530,152)
(5,563,800)
(1,810)
Milagros Caiña
Carreiro-Andree
-825,000 -74,717
-899,717
3,058,588
-1,014
(151,207)
89,242
(7,245,159)
(7,093,952)
-4,047,547
3,958,305
Klaus Draeger
Friedrich Eichiner
(750,000) (68,555)
900,000 -24,797
(900,000) (24,790)
900,000
(818,555)
(2,781,900)
(971)
(81,117)
(3,681,572)
(3,600,455)
(1,500,000)
- Total value
2,505,052
- 6,088,892
Total
Total
allocated in
financial year
Harald Krüger
-1,280,645
168-STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
(900,000)
21,809
(18,071)
Norbert Reithofer³
552,419
11,652
1,302,454
(918,071)
- 564,071
- 4,786,438
(3,245,550)
-1,940,9814
-1,478
(1,055)
-130,079
(88,135)
-6,218,971
(4,251,756)
2,505,052
(4,163,621)
- 369,498
(202,917)
278,201
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188-Compensation Report
2. Supervisory Board compensation
Responsibilities, regulations pursuant to the Articles of
Incorporation
The compensation of the Supervisory Board is specified
either by a resolution of the shareholders at the Annual
General Meeting or in the Articles of Incorporation. The
compensation regulation valid for the financial year un-
der report was resolved by shareholders at the Annual
General Meeting on 14 May 2013 and is set out in Arti-
cle 15 of BMW AG's Articles of Incorporation, which can
be viewed and/or downloaded at www.bmwgroup.com/ir
under the menu items "Facts about the BMW Group"
and "Corporate Governance".
Compensation principles, compensation components
The Supervisory Board of BMW AG receives a fixed
compensation component as well as a corporate perfor-
mance-related compensation component, which is ori-
ented toward sustainable growth and based on a multi-
year assessment. The corporate performance-related
component is based on average earnings per share of
common stock for the remuneration
year and the two
preceding financial years.
These two interacting components are intended to ensure
that the compensation of Supervisory Board members
is commensurate overall in relation to the tasks performed
and the Company's financial condition and also takes
account of business performance over several years.
In accordance with the Articles of Incorporation, each
member of BMW AG's Supervisory Board receives, in ad-
dition to the reimbursement of reasonable expenses, a
fixed amount of €70,000 (payable at the end of the year)
as well as a corporate performance-related compensation
of €170 for each full €0.01 by which the average amount
of (undiluted) earnings per share (EPS) of common stock
reported in the Group Financial Statements for the re-
muneration year and the two preceding financial years
exceeds a minimum amount of €2.00 (payable after the
Annual General Meeting held in the following year). An
upper limit corresponding to twice the amount of the
fixed compensation (€140,000) is in place for the corpo-
rate performance-related compensation.
With this combination of fixed compensation elements
and a corporate performance-related compensation
component oriented toward sustainable growth, the
compensation structure in place for BMW AG's Supervi-
sory Board complies with the recommendation on su-
pervisory board compensation contained in section
5.4.6 paragraph 2 sentence 2 of the German Corporate
Governance Code (version dated 5 May 2015).
The German Corporate Governance Code also recom-
mends in section 5.4.6 paragraph 1 sentence 2 that the
exercising of chair and deputy chair positions in the
Supervisory Board as well as the chair and membership
of committees should also be considered when deter-
mining the level of compensation.
Accordingly, the Articles of Incorporation of BMW AG stip-
ulate that the Chairman of the Supervisory Board shall
receive three times the amount and each Deputy Chair-
man shall receive twice the amount of the remuneration
of a Supervisory Board member. Provided the relevant
committee convened for meetings on at least three days
during the financial year, each chairman of the Super-
visory Board's committees receives twice the amount and
each member of a committee receives one-and-a-half times
the amount of the remuneration of a Supervisory Board
member. If a member of the Supervisory Board exercises
more than one of the functions referred to above, the
compensation is measured only on the basis of the func-
tion that is remunerated with the highest amount.
In addition, each member of the Supervisory Board re-
ceives an attendance fee of €2,000 for each full meeting
of the Supervisory Board (Plenum) that the member has
attended (payable at the end of the financial year). At-
tendance at more than one meeting on the same day is
not remunerated separately.
The Company also reimburses to each member of the
Supervisory Board reasonable expenses and any value-
added tax arising on the member's remuneration. The
amounts disclosed below are net amounts.
In order to be able to perform his duties, the Chairman
of the Supervisory Board is provided with secretariat
and chauffeur services.
Compensation of the Supervisory Board for the financial year
2015 (total)
In accordance with Article 15 of the Articles of Incor-
poration, the compensation of the Supervisory Board for
activities during the financial year 2015 amounted to €5.1
million (2014: €4.8 million). This amount includes fixed
compensation of €2.0 million (2014: €2.0 million) and
variable compensation of €3.1 million (2014: €2.8 million).
168-STATEMENT ON
in € million
194
5 Service cost differs due to the different valuation bases used to measure pension obligations for HGB purposes (expected settlement amount) and for IFRS purposes
(present value of the defined benefit obligation).
(371,398)
-221,667
(688,271)
(687,570)
-1,188,313
-1,187,721
(-)
(-)
(-)
(-)
Total4
2,301,249
(1,922,497)
2,888,441
(3,054,178)
23,198,892
(31,334,919)
22,343,033
(25,028,384)
Norbert Reithofer²
354,143
(281,278)
8,232,832
(9,600,845)
8,232,832
(7,346,081)
1 Provisional number or provisional monetary value calculated on the basis of the closing price of BMW common stock in the Xetra trading system on 30 December 2015 (€97.63)
(fair value at reporting date).
-715,679
(717,656)
2 Member of the Board of Management until 13.05.2015.
3 Member of the Board of Management since 13.05.2015.
191 STATEMENT ON CORPORATE GOVERNANCE
6 Based on a legal right to receive the benefits already promised to them, Board of Management members appointed for the first time prior to 1 January 2010 were given the option
of choosing between the previous defined benefit model and the new defined contribution model.
221,667
2015-
Amount Proportion - Amount Proportion
in %
(-)
(-)
Joachim Milberg (Chairman)² -
-76,521
(210,000)
-2,000
(10,000)
-127,855
206,376
(317,730)
(537,730)
Manfred Schoch (Deputy Chairman)³
-140,000
-10,000
233,920
383,920
(140,000)
(10,000)
(211,820)
(361,820)
Stefan Quandt (Deputy Chairman).
-140,000
-10,000
-233,920
(-)
2014
(-)
-223,986
in %
Fixed compensation
Variable compensation
Total compensation
2.0
39.2
2.0
3.1
60.8
5.1
100.0
2.8
4.8
41.7
58.3
100.0
Supervisory Board members did not receive any further
compensation or benefits from the BMW Group for ad-
visory and/or agency services personally rendered.
195 STATEMENT ON CORPORATE GOVERNANCE
Compensation of the individual members of the Supervisory Board for the financial year 2015 (2014)
in €
Fixed
compensation
Attendance fee
Variable
compensation
-Total
Norbert Reithofer (Chairman)¹
-134,055
-8,000
366,041
Oliver Zipse³
(369,234)
1,081,155
Peter Schwarzenbauer
59,311
-100,747
(31,055)
(41,435)
Oliver Zipse³
9,915
9,915
(-)
(-)
Total4
1,106,057
(1,012,523)
2,959,655
(1,253,625)
Pension benefits of the individual members of the Board of Management
in €
Service cost
Service cost
in accordance with HGB
in accordance with IFRS
for the financial year 20155 for the financial year 20155
Present value of
pension obligations
(defined benefit plans),
in accordance with IFRS6
Present value of
pension obligations
(defined benefit plans),
in accordance with HGB6
Harald Krüger
(266,831)
-175,287
(125,621)
-224,354
690,016
(191,845)
(411,815)
Milagros Caiña Carreiro-Andree
-109,760
268,970
(103,493)
(159,210)
Klaus Draeger
90,275
- 497,690
(191,814)
(407,415)
Friedrich Eichiner
-133,415
497,259
(181,389)
(363,844)
Klaus Fröhlich
34,245
(130)
34,375
(130)
lan Robertson
491,185
-358,331
(220,609)
(359,256)
(4,633,694)
Klaus Fröhlich
350,000
350,000
-1,510,725
-1,510,706
(3,643)
(2,747)
(2,138,633)
(1,286,247)
lan Robertson
448,139
-411,555
- 3,279,690
-2,968,379
(356,067)
(414,827)
(3,029,448)
(2,395,377)
Peter Schwarzenbauer
-360,305
- 364,312
1,081,408
(5,599,794)
(409,663)
5,163,692
-5,465,539
3,993,819
(3,927,671)
3,992,702
(3,204,346)
Milagros Caiña Carreiro-Andree
360,767
-364,656
-1,427,599
-1,427,072
(366,848)
(368,968)
(990,507)
(989,277)
104,396
Klaus Draeger
- 408,960
-5,251,799
5,011,606
(147,483)
(409,663)
(5,359,750)
(4,485,792)
Friedrich Eichiner
- 201,018
(177,335)
-408,960
-184,066
-103,759
4 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2014.
3,592,093
Balance Sheet
Non-current assets
Current assets
-Equity
Equity ratio Group
- Non-current provisions and liabilities
- Current provisions and liabilities
Balance sheet total
Cash Flow Statement
Cash and cash equivalents at balance sheet date
Operating cash flow Automotive segment4
8.8
Capital expenditure ratio (capital expenditure/revenues)
-100,306
84,887
95,453
-83,141
-96,230
-72,349
-100,041
-75,612
-107,539
-76,704
-106,575
-76,621
-Workforce at year-end 5
Personnel cost per employee
-1,508
2.30/2.32
852
Personnel
-7.6
-7.9
6.8
-101,086
88,997
-79,057
-7,776
-7,432
-7,767
-7,454
2,393
-1,336
8,110
8,149
-4,921
4,471
6,246
5,373
3,692
3,263
3,471
4,204
4,267
- 4,313
5.4
5.4
-197
-101,953
-197
458
-R
-A
S
-S
-S
The BMW Group is present in the world markets with
30 production and assembly plants, 42 sales subsidiaries
and a research and development network.
-H
Headquarters
-R
Research and Development
-S.
-S
BMW Group Research and Technology, Munich,
Germany
BMW Car IT, Munich, Germany
BMW Innovation and Technology Centre, Landshut,
Germany
BMW Diesel Competence Centre, Steyr, Austria
BMW Group Designworks, Newbury Park, USA
BMW Group Technology Office USA, Mountain View, USA
BMW Group Engineering and Emission Test Center,
Oxnard, USA
Motorcycles
20.1
BMW Group Research and Innovation Centre (FIZ),
Munich, Germany
S
-R
S
-1.30/1.32
0.30/0.32
-0.30/0.32
1.06/1.08
0.70/0.72
Dividend
Dividend total
- Dividend per share of common stock/preferred stock
200
BMW Group
Locations
R
-R
R
-P
198-OTHER INFORMATION
198 BMW Group Ten-year Comparison
200 - BMW Group Locations
202 Glossary
204 Index
205 Index of Graphs
206
Financial Calendar
207 Contacts
694
110,164
- Capital expenditure
28,555
- 23.1
Gross profit margin Group3
-8,018
5,111
289
921
4,212
4,050
-7,383
4,853
413
351
3,873
4,124
-10.7
- 8.0
-0.8
-0.7
-6.9
- 8.4
2,476
-1,610
-203
21.8
21
11.4
-18.1
3,190,353
3,085,946
3,031,935
2,629,949
2,270,528
-75,245
66,233
61,202
-60,653
-51,257
44,010
Financial Services
-123,429
- Business volume (based on balance sheet carrying amounts)² -
68,821
60,477
- 50,681
-53,197
56,018
48,999
Income Statement
Revenues
21.1
-10.5
-739
Contract portfolio
33.5
-28,543
27,103
23,930
-19,915
- 20,273
-21,744
-19,130
22.0
-21.7
-19.5
-24.4
24.2
49,113
46,100
-45,119
41,526
31,372
47,213
40,134
- 36,919
1,250
39,287
33,784
50,514
- 56,619
32,378
33,469
39,944
6.0
49.2
- 38,670
-19.1
-4,907
3,243
-33.1
210
330
3,134
-2,874
30.3
Profit before financial result
-62,416
- 62,009
43,151
-74,425
49,004
-67,013
Effective tax rate
Income taxes
-Return on sales (earnings before tax/revenues)
Profit before tax
Net profit for the year
_ 184
This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.
198-OTHER INFORMATION
198 BMW Group Ten-year Comparison
200 BMW Group Locations
202 Glossary
207 - Contacts
205 Index of Graphs
206 Financial Calendar
Quarterly Report to 30 September 2016
206
Financial Calendar
Annual Accounts Press Conference
Analyst and Investor Conference
Quarterly Report to 31 March 2016
Annual General Meeting
Quarterly Report to 30 June 2016
BMW Group Compliance Management System
204 Index
Compliance
Workforce
36
Development of credit loss ratio - 38
Annual Report 2016-
Regional mix of purchase volumes - 41
Change in cash and cash equivalents — 52
Financial liabilities - 54
Balance sheet structure - Automotive segment — 56
Balance sheet structure - Group - 56
BMW Group value added - 58
Risk management in the BMW Group - 68
Development of BMW stock - 87
Production and sales volume
BMW Group - key automobile markets
BMW Group sales volume by region 29
BMW Group - key motorcycle markets - 35
BMW Group sales volume of motorcycles
BMW Group apprentices at 31 December
Employee attrition rate at BMW AG - 45
Proportion of non-tariff female employees
Proportion of female executives — 182
Environment
Materiality matrix - 46
Stock
35
44
45
29
Annual Accounts Press Conference
+49 89 382-2 53 87
Quarterly Report to 30 June 2017
Quarterly Report to 30 September 2017
Fax
E-mail
The BMW Group on the Internet
+49 89 382-1 46 61
ir@bmwgroup.com
Further information about the BMW Group is available online at www.bmwgroup.com.
Investor Relations information is available directly at www.bmwgroup.com/ir. Information
about the various BMW Group brands is available at www.bmw.com, www.mini.com
and www.rolls-roycemotorcars.com
A FURTHER CONTRIBUTION
TOWARDS PRESERVING
RESOURCES
The BMW Group Annual Report was printed on paper with the Blue Angel
eco-label. The paper used was produced, climate-neutrally and without
optical brighteners and chlorine bleach, from recycled waste paper.
The corresponding emissions were compensated by additional climate
protection measures as part of a hydroelectric project (certificate
number: ID53152-1602-1014).
FSC
www.fsc.org
RECYCLED
Paper made from
recycled material
FSC® C002390
Climate Partner
climate neutral
Print | ID53152-1602-1014
Contract portfolio retail customer financing of
Financial Services segment -37
+49 89 382-2 42 72
Analyst and Investor Conference
Quarterly Report to 31 March 2017
Annual General Meeting
presse@bmwgroup.com
+49 89 382-2 41 18
16 March 2016
17 March 2016
3 May 2016
12 May 2016
2 August 2016
4 November 2016
21 March 2017
21 March 2017
22 March 2017
4 May 2017
11 May 2017
3 August 2017
7 November 2017
207 OTHER INFORMATION
Contacts
Business and Finance Press
Telephone
Fax
E-mail
Investor Relations
Telephone
+49 89 382-2 45 44
+49 89 382-2 44 18
Contract portfolio of Financial Services segment
BMW Group new vehicles financed by
Financial Services segment - 37
—114
Steel price trend - 24
Sustainability, or sustainable development, gives equal
consideration to ecological, social and economic develop-
ment. In 1987 the United Nations "World Commission
on Environment and Development" defined sustainable
development as development that meets the needs of
the present without compromising the ability of future
generations to meet their own needs. The economic
relevance of corporate sustainability to the BMW Group
is evident in three areas: resources, reputation and risk.
Sustainability
Supplier relationship management (SRM) uses focused
procurement strategies to organise networked supplier
relationships, optimise processes for supplier qualifica-
tion and selection, ensure the application of uniform
standards throughout the Group and create efficient
sourcing and procurement processes along the whole value
added chain.
Supplier relationship management
has control (directly or indirectly) over another enter-
prise on the basis of a control agreement or a provision
in the statutes of that enterprise.
has the right to appoint or remove the majority of the
members of the Board of Management or equivalent
governing body, and in which BMW AG is at the same
time (directly or indirectly) a shareholder
holds the majority of the voting rights
-
Subsidiaries are those enterprises which, either directly
or indirectly, are under the uniform control of the
management of BMW AG or in which BMW AG, either
directly or indirectly
Subsidiaries
enactment of the German Law on Control and Trans-
parency within Businesses (KonTraG), all companies
listed on a stock exchange in Germany are required to
set up a risk management system. The purpose of this
system is to identify risks at an early stage which could
have a significant adverse effect on the assets, liabilities,
financial position and results of operations, and which
could endanger the continued existence of the Company.
This applies in particular to transactions involving risk,
errors in accounting or financial reporting and violations
of legal requirements. The Board of Management is
required to set up an appropriate system, to document
that system and monitor it regularly with the aid of the
internal audit department.
An integral component of all business processes. Following
Risk management
Return on sales
Pre-tax: Profit before tax as a percentage of revenues.
Post-tax: Profit as a percentage of revenues.
Standardised evaluation of a company's credit standing
which is widely accepted on the global capital markets.
Ratings are published by independent rating agencies,
e.g. Standard & Poor's or Moody's, based on their analysis
of a company.
Rating
Stock which receives a higher dividend than common
stock, but without voting rights.
Preferred stock
Cash inflow from the operating activities of the Auto-
motive segment.
Operating cash flow
The indicators for water consumption refer to the pro-
duction sites of the BMW Group. The water consumption
includes the process water input for the production
as well as the general water consumption, e.g. for sani-
tation facilities.
198-OTHER INFORMATION
Indicator for water consumption
198 BMW Group Ten-year Comparison
202 Glossary
Income taxes
113 et seq.
seq.,
- 49, 59, 90 et
Income statement
|
- 29 et seq.
Group tangible, intangible and investment
assets -
122 et seq.
G
101 et seq.
B
Automotive segment
Accounting policies -
Apprentices —44
A
Index
204
207 Contacts
Financial Calendar
206
205-Index of Graphs
204 - Index
200 BMW Group Locations
International Financial Reporting Standards, intended
to ensure global comparability of financial reporting
and consistent presentation of financial statements.
The IFRS are issued by the International Accounting
Standards Board and include the International
Accounting Standards (IAS), which are still valid.
IFRS
203 OTHER INFORMATION
Connected Drive
Stock with voting rights (cf. preferred stock).
Common stock
Combined heat and power (CHP) or cogeneration is
the simultaneous conversion of energy sources into
electricity and useful heating. In comparison to separate
generation of electricity in conventional power plants,
energy is converted more efficiently and with greater
flexibility. As a result, this technology helps to reduce
CO2 emissions.
Combined heat and power
Abbreviation for carbon-fibre reinforced polymer. CFRP
is a composite material, consisting of carbon-fibres sur-
rounded by a plastic matrix (resin). On a comparative
basis, CFRP is approximately 50% lighter than steel and
30% lighter than aluminium.
CFRP
Glossary
202
207 Contacts
206 Financial Calendar
205 Index of Graphs
204 Index
202-Glossary
200 BMW Group Locations
198 BMW Group Ten-year Comparison
198-OTHER INFORMATION
Sales locations only.
South Africa
Indonesia
Slovenia
Under the term Connected Drive, the BMW Group
already unites a unique portfolio of innovative features
that enhance comfort, raise infotainment to new levels
and significantly boost safety in BMW Group vehicles.
Cost of materials
Comprises all expenditure to purchase raw materials
and supplies.
DAX
Gross profit as a percentage of revenues.
Gross margin
Free cash flow corresponds to the cash inflow from oper-
ating activities of the Automotive segment less the cash
outflow for investing activities of the Automotive seg-
ment adjusted for net investments in marketable securities
and term deposits.
Free cash flow
The proportion of equity (= subscribed capital, reserves,
accumulated other equity and minority interest) to the
balance sheet total.
management
Equity ratio
The aim of Efficient Dynamics is to reduce consumption
and emissions whilst simultaneously increasing dynamics
and performance. This involves a holistic approach to
achieving optimum automobile potential, ranging from
efficient engine technologies and lightweight construc-
tion to comprehensive energy and heat
inside the vehicle.
Efficient Dynamics
The degree to which offsetting changes in fair value or
cash flows attributable to a hedged risk are achieved by
the hedging instrument.
50, 107, 115 et seq., 142
Effectiveness
EBITDA
Abbreviation for “Earnings Before Interest and Taxes”.
The profit before income taxes, minority interest and
financial result.
EBIT
Abbreviation for "Dow Jones Sustainability Index World".
A family of indexes created by Dow Jones and the Swiss
investment agency SAM Sustainability Group for com-
panies with strategies based on a sustainability concept.
The BMW Group has been one of the leading companies
in the DJSI since 1999.
DJSI World
Financial products, whose measurement is derived
principally from market price, market price fluctuations
and expected market price changes of the underlying
instrument (e.g. indices, stocks or bonds).
Derivatives
Accounting for deferred taxes is a method of allocating
tax expense to the appropriate accounting period.
Deferred taxes
Abbreviation for "Deutscher Aktienindex", the German
Stock Index. The index is based on the weighted market
prices of the 30 largest German stock corporations (by stock
market capitalisation).
Abbreviation for "Earnings Before Interest, Taxes, Depre-
ciation and Amortisation". The profit before income
taxes, minority interest, financial result and depreciation/
amortisation.
Precious metals price trend — 25
Balance sheet structure - 56
Capital expenditure - 4, 50 et seq.
Rating 89, 134
R
Index of Graphs
205 OTHER INFORMATION
Purchasing- 41
Profit before tax -4 et seq., 27 et seq., 49 et seq., 65, 67
Property, plant and equipment - 103
Profit before financial result - 4 et seq., 49 et seq.
Production network - 31 et seq.
Production - 31 et seq.
65 et seq.
Pension provisions - 56, 60, 107, 134 et seq.
Performance indicators -20 et seq., 27 et seq.,
Personnel expenses 118
P
Fleet emissions -3, 27 et seq., 47, 66 et seq.
36 et seq.
Financial liabilities -55, 107 et seq., 143
Financial result ― 50 et seq., 60
Financial Services segment
Financial instruments - 105 et seq., 148 et seq.
Financial assets - 55, 106, 128 et seq.
F
Outlook 65 et seq.
-142
Other provisions -
Receivables from sales financing.
Other operating income and expenses -
Finances
5
Oil price trend - 24
Exchange rates compared to the euro — 24
90, 121
Trade receivables - 60 et seq., 131
Trade payables - 146
assets 103, 122 et seq.
Tangible, intangible and investment
T
Sustainability - 45 et seq.
Statement of Comprehensive Income
Stock 87 et seq.
Sales volume 3, 27 et seq., 29, 65 et seq.
Segment information — 163 et seq.
Selling and administrative expenses 113
Shareholdings of members of the Board of
Management and the Supervisory Board - 161
S
Risks report - 68 et seq.
Revenues ― 4 et seq., 27 et seq., 49 et seq., 59, 66 et seq.,
101 et seq., 113
Result from equity accounted investments — 114
Return on sales - 20 et seq., 49 et seq.
Revenue reserves — 132
Report of the Supervisory Board — 6 et seq.
Research and development - 38 et seq.
188 et seq.
Remuneration system-
Related party relationships 160 et seq.
Value drivers - 20
55, 106, 127 et seq.
BMW Group in figures
Other investments - 126
Other financial result - 115
O
Dividend 89, 118
Declaration with respect to the Corporate Governance
Code-169
Dealer organisation/dealerships — 19, 42
50, 102, 113
- 57
D
Cost of sales
Cost of materials
Corporate Governance 168 et seq.
Consolidated companies - 99 et seq.
Consolidation principles - 100 et seq.
Contingent liabilities -147
Connected Drive - 38, 42, 46, 76
188 et seq.
Compliance 184 et seq.
Compensation Report
CO2 emissions -3, 27 et seq., 47, 66 et seq.
Cash flow 4, 51 et seq., 94 et seq., 159 et seq.
Cash flow statement -51 et seq., 94 et seq., 159 et seq.
CFRP-33 et seq.
and other investments-125 et seq.
Investments accounted for using the equity method
Inventories - 107, 130
Intangible assets -55 et seq., 102, 124
Cash and cash equivalents -51 et seq., 132
Dow Jones Sustainability Index World - 46
E
Earnings per share - 49, 102, 118
Efficient Dynamics -
New financial reporting rules - 109 et seq.
Net profit 4, 49 et seq.
N
Motorcycles segment - 35 et seq.
Marketable securities 105
Supervisory Board - 171 et seq.
Mandates of members of the
-170
Management
Mandates of members of the Board of
Bonds 54, 143 et seq.
M
Leased products — 125
Lease business - 36 et seq.
L
per share -88
Key data
K
Exchange rates - 23 et seq., 64, 77, 101, 157 et seq.
Equity- -55 et seq., 132 et seq.
39
Employees ― 44 et seq.
Locations 200 et seq.
Slovakia
Singapore
Finland
Partner plant, Kulim, Malaysia
Thailand
Switzerland
Luxembourg
Malaysia
Brazil
Belgium
Partner plant, Jakarta, Indonesia
Sweden
Bulgaria
Japan
Partner plant, Graz, Austria
South Korea
Spain
Italy
Ireland
Argentina
Australia
Partner plant, Cairo, Egypt
Partner plant, Born, Netherlands
Sales subsidiary markets/Locations Financial Services
Austria
-S
Malta
Canada
Russia
Romania
Portugal
Poland
Norway
India
Hungary
Greece
USA
Great Britain
France
Denmark
Partner plant, Manaus, Brazil
New Zealand
Netherlands
Mexico
Czech Republic
China
Germany
Partner plants
Partner plant, Kaliningrad, Russia
SGL Automotive Carbon Fibers (joint operation - 2 plants)
-S
-S
-S P
-P
S-
-A
-S
S
201 OTHER INFORMATION
S
-R
-P
-A
-R-S
PUBLISHED BY
Bayerische Motoren Werke
Aktiengesellschaft
80788 Munich
Germany
Tel. +49 89 382-0
=S
-S
AS
S
-S
BMW Brilliance Automotive, China (joint venture - 3 plants)
Rolls-Royce Manufacturing Plant, Goodwood, GB
BMW Group plant Wackersdorf
BMW Group plant Steyr, Austria
BMW Group plant Spartanburg, USA
BMW Group plant Rosslyn, South Africa
BMW Group plant Rayong, Thailand
BMW Group plant Regensburg
BMW Group plant Oxford, GB
BMW Group plant Munich
BMW Group plant Swindon, GB
BMW Group plant Landshut
BMW Group plant Hams Hall, GB
BMW Group plant Chennai, India
BMW Group plant Dingolfing
BMW Group plant Eisenach
BMW Group plant Araquari, Brazil
BMW Group plant Berlin
Production
-P
BMW Group plant Leipzig
-S
327.3
259.2
272.3
286.1
Asia*
375.5
493.4
685.8
658.4
-thereof China
233.6
287.4
391.7
578.7
285.3
13
-1,000.4
914.6
859.5
865.4
858.4
Europe
15
-14
12
11
200
400
600
456.7
―thereof Germany
464.1
and BMW Motorrad's attractive model range, mild
weather conditions at the end of the year also gave the
strong performance additional tailwind.
380.3
800
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units).
Other markets
thereof USA
Americas
thereof China'
Asia
thereof Germany
Europe
2,247.5
2,118.0
1,963.8
1,845.2
1,669.0
Total
65.4
-62.7
425.3
463.8
482.3
495.9
- thereof USA
306.3
Americas
348.5
397.0
405.7
Other markets
54.8
61.1
-61.8
376.6
1,000
%
1,400
Review of Operations
Report on Economic Position
29 COMBINED MANAGEMENT REPORT
2 EU-28.
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2015: 282,000 units).
-20.2 (+0.8%pts)
30
in line with last year's level
Financial Services segment
Return on equity
31.6 (+9.8%pts)
%
Q2: slight increase
-in line with last year's level
136,963 (+10.9%)
AUTOMOTIVE SEGMENT
units
-72.2 (+10.5 %pts)
9.2 (-0.4%pts)
-127 (-2.3%)
85,536 (+13.8%)
%
moderate decrease
%
target range between 8 and 10%
€ million
Q1: significant increase
solid increase
-2,247,485 (+6.1%)
units
- g CO2/km
slight decrease
solid increase
solid increase
Solid sales volume growth
The BMW Group sold 2,247,485* BMW, MINI and
Rolls-Royce brand vehicles worldwide in 2015, thereby
setting a new record for the fifth year in succession
(2014: 2,117,965* units; +6.1%). Sales of BMW models
climbed by a solid 5.2% to 1,905,234* units (2014:
1,811,719 units). MINI recorded even more impressive
growth, with sales rising by 12.0% to 338,466 units (2014:
302,183 units). Rolls-Royce Motor Cars sold 3,785 ultra-
luxury sedans, moderately down on the previous year's
high level (2014: 4,063 units; -6.8%).
Europe showing good signs of recovery
1,600
1,800
2,000
2,200
2,400
BMW Group sales volume of vehicles by region and market
in 1,000 units
brands in Asia during the year under report (2014:
658,384* units; +4.2%). The sales volume figure of
464,086 units for China was slightly up on one year
earlier (2014: 456,732* units; +1.6%). Sales in the
- 28.5
Other
10.3
3.1
Japan
12.7
3.2
Italy
18.1
3.5
In a mostly friendly market environment in Europe,
sales of BMW, MINI and Rolls-Royce brand vehicles rose
by 9.4% to a total of 1,000,427 units, surpassing the one-
million threshold for the first time (2014: 914,587 units).
The number of vehicles sold in Germany was 5.0% up
on the previous year (286,098 units; 2014: 272,345 units).
Business in Great Britain also developed very posi-
tively, with sales rising to a total of 230,982 units (2014:
205,071 units; +12.6%). The pace of growth in Asia
slowed somewhat, mainly reflecting the anticipated
normalisation of the Chinese automobile market. The
BMW Group sold a total of 685,792* units of its three
BMW Group - key automobile markets 2015
as a percentage of sales volume
China
USA
Germany
Great Britain
1,200
China
Japan
Italy
France
Great Britain
Germany
USA
20.6
France
Other
18-COMBINED MANAGEMENT REPORT
157,144
23-Report on Economic Position
BMW i
0.4
-26.4
-10,802
-7,950
BMW Z4
2.4
53.1
30,244
46,305
BMW X6
8.8
14.1
147,381
-29,513
168,143
2.9
21,688
55,050
BMW X4
-7.3
-8.7
150,915
137,810
BMW X3
6.3
-23.3
-156,471
120,011
BMW X1
BMW X5
-17,793
65.9
-1.5
-Actual outcome
€ million
solid increase
solid increase
Forecast revision
during the year
in 2014 Annual Report
Forecast for 2015
Return on capital employed.
Sales volume
Motorcycles segment
Return on capital employed ·
EBIT margin
Revenues
Fleet emissions²
Sales volume¹
Automotive segment ·
Workforce at year-end
BMW total
1,905,234
1,811,719
5.2
100.0
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 275,891 units, 2015: 282,000 units).
-1.9
The BMW X family also continued to perform well in
2015, with worldwide deliveries to customers totalling
527,319 units (2014: 506,699 units; +4.1%). Sales of
the BMW X5 rose by 14.1% to 168,143 units (2014:
147,381 units). With 137,810 units sold in 2015, the
BMW X3 remained below its previous year's level (2014:
150,915 units; -8.7%). The BMW X4 more than doubled
Financial Services segment
Return on equity
The return on equity (ROE) generated by the Financial
Services segment improved to 20.2% in the year under
report (2014: 19.4%; +0.8 percentage points), helped by
a strong operating performance and a stable risk
pro-
file. As predicted in the Annual Report 2014, ROE was
in line with the previous year's level and therefore re-
mained ahead of the minimum target of 18%.
The following overall picture arises for the principal per-
formance indicators utilised by the BMW Group and its
segments:
Comparison of 2015 forecasts with actual outcomes 2015
BMW Group
Profit before tax
sales volume during the twelve-month period
(55,050 units; 2014: 21,688 units). As a result of the
model change, sales of the BMW X1, at 120,011 units,
were lower than one year earlier (2014: 156,471 units;
-23.3%). The second-generation BMW X1 first appeared
in showrooms at the end of October 2015 and is set to
continue its predecessor's success story in 2016.
18 General Information on the BMW Group
-25.1
-36,364
period under report (2014: 41,038 units). Sales figures
for the BMW 3 Series were also nominally down year-on-
year, at 444,338 units, reflecting the fact that the Coupé
and Convertible body variants are now reported as
part of the BMW 4 Series (2014: 480,214 units; -7.5%).
Customers took delivery of a total of 152,390 units of
the BMW 4 Series during the period under report (2014:
119,580 units; +27.4%). Now nearing the end of its life
cycle, at 347,096 units, sales of the BMW 5 Series did
not quite match the previous year's high figure (2014:
373,053 units; -7.0%). Owing to the model change at
the end of 2015, worldwide sales of the BMW 7 Series
fell to 36,364 units (2014: 48,519 units; - 25.1%). Now
in its sixth generation, this luxury class model has at-
tracted extremely positive feedback from the trade
press and from customers alike, raising expectations
of a perceptible resurgence in sales figures during
2016.
in units
Sales volume of BMW vehicles by model variant*
87 BMW Stock and Capital Markets
83 Disclosures Relevant for Takeovers
and Explanatory Comments
Return on capital employed
81 Internal Control System and Risk
63 Report on Outlook, Risks and
Opportunities
Reporting Period
62 Events after the End of the
59 Comments on Financial Statements ries has been a highly popular customer choice since its
launch, with 157,144 units sold during the twelve-month
With the Coupé and Convertible body variants now re-
ported as part of the new 2 Series, sales of the BMW 1 Se-
ries, at 182,158 units, were nominally below the previous
year's level (2014: 190,033 units; −4.1%). The BMW 2 Se-
of BMW AG
Position and Net Assets
2015
49 Results of Operations, Financial
44 Workforce
42 Sales and Marketing
41 Purchasing
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
29-Automotive Segment
29-Review of Operations
27 Overall Assessment by Management performance in the premium segment during the year
under report. The BMW X5 as well as the BMW 4,5
and 6 Series, for instance, all continued to head their
relevant segments.
The BMW brand marked another highly successful
Solid growth for the BMW brand*
Americas region increased by 2.8% to 495,897 units
(2014: 482,257 units), the USA accounting for
405,715 units, 2.2% up on the previous year (2014:
396,961 units).
Performance Indicators
27 Financial and Non-financial
Environment
23 General and Sector-specific
45 Sustainability
2014
Change
in %
Proportion of
BMW sales volume
BMW 7 Series
1.1
-12.6
23,988
-20,962
BMW 6 Series
-18.2
-7.0
-373,053
347,096
BMW 5 Series
8.0
27.4
-119,580
-152,390
BMW 4 Series
23.3
2015 in %
BMW 1 Series
-182,158
-190,033
-4.1
9.6
48,519
BMW 2 Series
41,038
8.3
BMW 3 Series
444,338
480,214
-7.5
-9,224 (+5.9%)
-122,244 (+5.1%)
in 2015
Management System Relevant for the
Financial Reporting Process
The return on capital employed (RoCE) amounted to
72.2% (2014: 61.7%; +10.5 percentage points). The
higher-than-expected increase in ROCE reflects the
pleasing upward trend in earnings on the one hand
and the rigorous management of capital employed on
the other. A number of other factors also influenced
ROCE, including transactions with other segments, the
higher volume of business with service and Connected
59 Comments on Financial Statements Drive contracts as well as efficiency improvements in
60
70
80
90
100
110
120
Price per barrel of Brent Crude
Oil price trend
50
Source: Working Group for the Iron and Metal Processing Industry.
After a brief decrease at the beginning of the year,
price of Brent crude oil - the most relevant benchmark
for Europe - picked up again during the first half of
2015. In stark contrast, the price then proceeded to
plummet during the second six months of the year.
The average price per barrel over the year as a whole
70
80
the
90
100
110
120
130
60
(Index: January 2011 = 100)
40
11
Platinum
Palladium
Gold
Source: Reuters.
60
70
80
90
100
Source: Reuters.
110
130
(Index: December 2010 = 100)
Precious metals price trend
25 COMBINED MANAGEMENT REPORT
Price in US Dollar
Price in €
15
14
13
12
120
11
Steel price trend
15
British Pound
US Dollar
Japanese Yen
Russian Rouble
49 Results of Operations, Financial
Position and Net Assets
70
29 Review of Operations
85
Performance Indicators
27 Financial and Non-financial
Chinese
100
115
Environment
23-General and Sector-specific
130
23-Report on Economic Position
145
20 Management System
18 Business Model
160
27 Overall Assessment by Management
was US dollar 54, down 46% on the previous year. WTI,
the benchmark for crude oil in the USA, followed a
similar trend.
Renminbi
of BMW AG
14
Chinese Renminbi
-13
Energy and raw materials prices
The euro was stronger in 2015 compared to many of the
emerging market currencies, including those of Russia
and Brazil. Its annual average exchange rate increased by
approximately 19% against the Brazilian real and by as
much as 33% against the Russian rouble.
US Dollar
The Japanese yen gained moderately in value against
the euro during 2015, primarily due to the expansion
of money supply within the eurozone, and recorded an
annual average exchange rate of 134 yen to the euro.
12
Source: Reuters.
59 Comments on Financial Statements
British Pound
Russian Rouble
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Management System Relevant for the
Financial Reporting Process
68 Report on Risks and Opportunities
81 Internal Control System and Risk
63 Outlook
Opportunities
63 Report on Outlook, Risks and
Reporting Period
62 Events after the End of the
Japanese Yen
18 General Information on the BMW Group
12
14
28
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014:
275,891 units, 2015: 282,000 units).
2 EU-28.
Segment revenues rose by 13.8% to €85,536 million
(2014: €75,173 million), driven by a strong sales volume
performance and favourable currency factors. The re-
vised forecast for the year from a solid increase to a
significant increase, as communicated in the Quarterly
Report to 31 March 2015, was therefore borne out. In
the Annual Report 2014, the forecast had been a solid in-
crease in Automotive segment revenues.
Revenues
As predicted in the outlook for the full year 2015, carbon
fleet emissions fell slightly and were therefore in line
with forecast.
The BMW Group continually strives to reduce fuel con-
sumption and carbon emissions by deploying innovative
technologies developed in conjunction with the Group's
Efficient Dynamics strategy. The outcome of these en-
deavours is highly efficient combustion engines and
electric drive systems that set standards in terms of both
dynamic flair and driving pleasure. The volume of car-
bon emissions produced by our vehicle fleet sold in
Europe was reduced slightly to 127 grams CO2/km
(2014: 130 grams CO2/km; -2.3%) during the year un-
der report.
Fleet carbon emissions²
As predicted in the Annual Report 2014 for the finan-
cial year 2015, the total number of cars sold by the
BMW Group rose by 6.1% and was therefore in line
with expectations.
The number of BMW brand vehicles sold during the
twelve-month period increased to 1,905,234¹ units (2014:
1,811,719¹ units; +5.2%). MINI recorded a significant
sales volume increase of 12.0% during the year under
report (338,466 units; 2014: 302,183 units). Rolls-Royce
Motor Cars sold 3,785 units (2014: 4,063 units; -6.8%).
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
creasing normalisation of the market in China and the
tense geopolitical situation worldwide, most notably
the conflict hot spots in the Middle East, sales of BMW,
MINI and Rolls-Royce brand vehicles grew by a solid
6.1% to 2,247,485¹ units (2014: 2,117,965¹ units). The
upward trend reflects the success of numerous new
models, including the expanded range of BMW 2 Series
models launched internationally during the year under
report. The MINI 3- and 5-door models introduced in
2014 also made an important contribution. This perfor-
mance enabled the BMW Group to retain a leading posi-
tion in the premium segment worldwide.
Automotive segment
Sales volume
As predicted in the outlook for the financial year 2015,
there was a solid increase in size of the BMW Group's
workforce, which was therefore in line with expectations.
At the end of 2015, the BMW Group employed a work-
force of 122,244 people (2014: 116,324 people; +5.1%).
This solid increase in the workforce mainly reflects
strong demand for the BMW Group's brands of automo-
biles and motorcycles as well as the broader range of
mobility services now on offer. The BMW Group also
recruited skilled staff aimed at the increasingly digitali-
sation and at driving the continued development of
electric mobility.
Workforce at year-end
As predicted in the outlook for the financial year 2015,
the Group's profit before tax achieved a solid growth
and was therefore in line with expectations.
Despite facing strong competition on the world's auto-
mobile markets and investing heavily in new technologies
as well as in the expansion of its production network, the
BMW Group remained firmly on course in 2015. Profit
before tax came in at a new all-time high of €9,224 mil-
lion (2014: €8,707 million; +5.9%). In addition to gen-
erally strong demand for the Group's brands, earnings
also increased on the back of favourable currency fac-
tors. Good contributions to earnings also came from the
BMW X6 and X4 models launched at the end of 2014,
as well as from the BMW 2 Series with its various new
models and from the new MINI 3- and 5-door models.
Profit before tax
BMW Group
Financial and non-financial performance indicators
In the following section, we report on the principal finan-
cial and non-financial performance indicators used as
the basis for managing the BMW Group and its segments.
As part of the review of operations and the financial
condition of the BMW Group, forecasts made the pre-
vious year for the financial year 2015 are compared with
actual outcomes in 2015.
The Automotive segment sold a record number of ve-
hicles for the fifth year in succession. Despite the in-
The BMW Group has every reason to be satisfied with its
performance in 2015. The overall picture was pleasing
in terms of results of operations, financial position and
net assets. Overall, management expectations for the
period were therefore met. This assessment also takes
into account events after the end of the reporting period.
23 General and Sector-specific
Environment
Performance Indicators
29-Review of Operations
87 BMW Stock and Capital Markets
investing activities. In the Annual Report 2014, a
moderate decrease in ROCE was predicted. The rate
achieved by the Automotive segment was therefore
well above the minimum target of 26%.
Motorcycles segment
Sales volume
In a highly favourable market environment, most notably
in Europe, BMW Motorrad achieved a significant in-
crease of 10.9% with a sales volume of 136,963 units
(2014: 123,495 units). This performance was therefore
better than the solid increase forecast in the Annual
Report 2014. Apart from the robust market environment
83 Disclosures Relevant for Takeovers
and Explanatory Comments
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
63 Report on Outlook, Risks and
Opportunities
Reporting Period
27 Overall Assessment by Management
27-Financial and Non-financial
62 Events after the End of the
49 Results of Operations, Financial
Position and Net Assets
45 Sustainability
44 Workforce
42 Sales and Marketing
The EBIT margin in the Automotive segment (profit be-
fore financial result divided by revenues) came in at 9.2%
(2014: 9.6%; -0.4 percentage points). As predicted, the
EBIT margin from automobile business was within the
target range of between 8 and 10% and thus in line with
forecasts.
EBIT margin and return on capital employed
41 Purchasing
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
29-Automotive Segment
of BMW AG
13
Overall assessment of business performance
Overall Assessment by Management
The ECB launched a large-scale bond-buying programme
in March 2015, with the dual objective of propping up
the eurozone's economy and combating low inflation.
Helped by a combination of the low price of oil, a weak
27-Overall Assessment by Management euro and low interest rates, the euro zone managed to
interest rate rise. The reference interest rate was finally
increased by 0.25% in December 2015, the first rise
announced for almost ten years.
20 Management System
18 Business Model
18 General Information on the BMW Group
18-COMBINED MANAGEMENT REPORT
26
After a slow start to the year, the US economy and em-
ployment market returned to an upward trend as from
the second quarter. The rate of inflation remained ex-
tremely low throughout the year, initially prompting the
Fed to adopt a "wait-and-see" approach regarding an
Financial services markets
While the majority of industrialised countries witnessed
an improvement in economic fundamentals in 2015,
market conditions were highly unfavourable for some of
the world's major emerging economies.
23-Report on Economic Position
The world's motorcycle markets in the 500 cc plus class
grew by 4.7% in 2015. Motorcycle registrations in Europe
were up by 8.5%, mainly due to a sharp recovery in
southern Europe. Italy recorded double-digit growth,
with registrations 11.3% up on the previous year. Ger-
many's motorcycle market reported a 4.5% increase,
while France finished at a similar level to the previous
year (+0.3%). The US market grew by 3.6%.
Automobile markets in major emerging economies
continued to suffer from recession in 2015. The Russian
market shrank by more than one-third (1.5 million
units; -36.0%) and the Brazilian market by a good quar-
ter (2.5 million units; -25.7%).
Japan's automobile market contracted in 2015, with
new registrations falling and totalling only 4.9 million
units (-9.8%).
dynamic performance in Spain (1.0 million units;
+20.9%). Registrations in the United Kingdom were
6.3% higher at 2.6 million units.
Automobile markets in Europe picked up where they had
left off the previous year, growing by 9.2% (14.2 million
units) during the period under report. Excluding registra-
tions in Germany, the European market fared slightly
better with a 10.3% increase to 11.0 million units. The
German automobile market grew by 5.6% to 3.2 million
units and therefore accounted for nearly a quarter of all
new registrations in Europe (22.6%). France (1.9 million
units; +6.8%) and Italy (1.6 million units; +15.5%) both
saw robust growth, which also contributed to the re-
covery. Europe's growth was also helped by a repeated
Worldwide registrations of passenger cars and light com-
mercial vehicles grew by 3.3% to 82.4 million units.
The two largest automobile markets, the USA and China,
were once again the mainstays driving this outcome.
Registration figures in China, for instance, increased by
8.9% to 20.5 million units. Although this number points
to a weaker performance than one year earlier, the
Chinese market nevertheless increased the gap between
itself and the US market, which grew by 5.7% to 17.5 mil-
lion units.
Automobile markets
There was no sign of a turnaround on the world's steel
markets during the period under report. Here, too,
the general slide in raw materials prices was reflected
in lower steel prices year-on-year.
Precious metals prices stabilised for a short period at the
beginning of the year, before continuing their long-term
downward trend for the remainder of the twelve-month
period. The drop in prices reflects overcapacities on
the supply side, combined with weak demand on world
markets.
15
Motorcycle markets
Financial and Non-financial Performance Indicators
23-General and Sector-specific
27-Financial and Non-financial
Report on Economic Position
27 COMBINED MANAGEMENT REPORT
ranges.
Moderate price increases were observable in the premium
segment of Europe's used car markets in 2015, while
prices in Asia remained stable and even fell slightly in
North America. Selling prices fluctuated within normal
The export-dependent Japanese economy suffered from
the slower rate of growth in China and a return to more
cautious consumer spending during the twelve-month
period under report. The Bank of Japan's expansive mon-
etary policies helped the country avoid slipping into re-
cession in 2015.
A continuation of the economic slowdown in 2015, ac-
companied by high volatility on the Shanghai stock ex-
change, led to the Chinese economy contributing less to
global economic growth than in the previous year. The
Chinese central bank intervened with a series of interest
rate cuts, curtailing the renminbi's upward trend.
The UK economy grew at a stable pace in 2015. The Bank
of England nevertheless refrained from increasing its
reference interest rate, mainly in light of the persistently
low rate of inflation.
stage a moderate economic recovery. The hoped-for in-
crease in inflation rates, however, proved elusive, mainly
due to lower energy prices.
87 BMW Stock and Capital Markets
Environment
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
Opportunities
63 Report on Outlook, Risks and
Reporting Period
62 Events after the End of the
59 Comments on Financial Statements
of BMW AG
Position and Net Assets
49 Results of Operations, Financial
29 Review of Operations
Performance Indicators
63 Outlook
18-COMBINED MANAGEMENT REPORT
11 ―12 13 14 -15
190
Earnings amount
2015 ―2014
Cost of capital (EC+ DC)
2015
-2014
Value added Group
2015 - 2014
9,723
9,051
6,040
-5,212
BMW Group
3,683
22
18-COMBINED MANAGEMENT REPORT
18-General Information on the BMW Group
18 Business Model
20-Management System
23-Report on Economic Position
23-General and Sector-specific
Environment
3,839
The cost of capital is the minimum rate of return ex-
pected by capital providers in return for the capital em-
ployed by the Group. Since capital employed com-
prises an equity capital element (e.g. share capital) and
a debt capital element (e.g. bonds), the overall cost of
capital rate is determined on the basis of the weighted
average rates for equity and debt capital, measured
using standard market procedures. The pre-tax average
in € million
earnings amount - cost of capital
= earnings amount - (cost of capital rate ×
capital employed)
175
The Motorcycles segment generated a return on capital
employed (ROCE) of 31.6% in the year under report
(2014: 21.8%; +9.8 percentage points), a solid increase
on the previous year. In the Quarterly Report at 30 June
2015, the outlook was for a slight increase in RoCE
(outlook in the Annual Report 2014: ROCE in line with
the previous year's level). Contributing factors for the
improved performance were higher sales volume, a sus-
tained high-value model mix and the positive impact
of the new brand strategy embarked upon in 2014.
21 COMBINED MANAGEMENT REPORT
Capital employed corresponds to the sum of all current
and non-current operational assets, less liabilities that
do not incur interest (e.g. trade payables). Non-interest-
bearing liabilities are those capital shares which are
available to the operative business without interest. These
include, for example, trade payables.
Due to the key importance of the Automotive segment
for the Group as a whole, consideration is also given
to additional key performance indicators, with varying
degrees of detail, which have a significant impact on
ROCE and hence on segment performance. The most
important of these value drivers are deliveries to cus-
tomers, segment revenues and – as the key performance
indicator for segment profitability – the operating re-
turn on sales. Average carbon emissions for the fleet
are also taken into account, reflecting their potential
impact on earnings in the short term in the form of
ongoing development expenses, and, in the long term,
the consequences of meeting regulatory requirements.
For these purposes, "carbon emissions for the fleet"
corresponds to average emissions of CO2 for new cars
sold in the EU-28 countries.
Managing the business on the basis of key value drivers
makes it easier to identify the reasons for changes in
ROCE and to define suitable measures to influence its
development.
Motorcycles segment
As with the Automotive segment, operating performance
for the Motorcycles segment is managed on the basis of
ROCE. Capital employed is measured using the same
procedures as in the Automotive segment. The strategic
target for the Motorcycles segment's ROCE is 26%.
Capital employed comprises the average amount of
Group equity employed during the year as a whole, the
financial liabilities of the Automotive and Motorcycles
segments, and pension provisions. "Earnings amount"
for these purposes corresponds to Group profit before
tax, adjusted for interest expense incurred in conjunc-
tion with the pension provision and on the financial
liabilities of the Automotive and Motorcycles segments
(earnings before interest expense and taxes).
ROCE Motorcycles
The number of vehicles delivered to customers is also
taken into account as a non-financial value driver.
Financial Services segment
As is common practice in the banking sector, the per-
formance of the Financial Services segment is measured
on the basis of return on equity. RoE is defined as seg-
ment profit before taxes, divided by the average amount
of equity capital attributable to the Financial Services
segment. The target is a sustainable return on equity
of at least 18%.
RoE Financial
Services
Profit before tax
Equity capital
Strategic management at Group level
Strategic management, including quantification of the
financial impact of strategic issues on long-term fore-
casting, is performed primarily at Group level. The
most significant performance indicators for these pur-
poses are Group profit before tax and the size of the
Group's workforce at the year-end. Group profit before
tax is a good overall measure of the Group's perfor-
mance after consolidation procedures, and provides a
transparent basis for comparing performance, particu-
larly over time. The size of the Group's workforce is
monitored as an additional key non-financial perfor-
mance indicator.
Value added Group =
Profit before financial result
Capital employed
27 Overall Assessment by Management weighted cost of capital for the BMW Group in 2015
Information provided by these two key performance in-
dicators is supplemented by the measurement of value
added. This highly aggregated performance indicator
provides an insight into capital efficiency and the (op-
portunity) cost of capital required to generate Group
profit. Value added corresponds to the amount of earn-
ings over and above the cost of capital and gives an in-
dication of whether the Group is meeting the minimum
requirements for the rate of return expected by capital
providers. A positive value added means that a com-
pany is generating more additional value than the cost
of capital.
Performance Indicators
General and Sector-specific Environment
General economic environment in 2015
The world economy grew at a rate of 3.1% in 2015. The
USA recorded robust growth, while the Chinese govern-
ment's plan to transform the country's economy to a
more stable, sustainable level continued to take effect.
Falling demand in China held down the growth rate, ex-
erting a particularly crippling impact on the economies
of raw material exporting countries such as Brazil and
Russia. Moreover, the prospect of the US Federal Reserve
Bank tightening its monetary policy additionally damp-
ened the outlook for emerging economies. These factors
resulted in further capital outflows, lower investment
and currency devaluation in many developing countries.
Despite signs of a resurgence of Greece's problems, mar-
kets in the eurozone continued to recover.
After some initial doubt regarding the robustness of the
economy, the US Federal Reserve Bank set the expected
interest rate turnaround in motion. The upheavals on
capital markets feared by the financial market only had
a limited impact.
In the eurozone, economic output grew more strongly
than one year earlier, with a gross domestic product
(GDP) increase of 1.5%, helped by the monetary policies
of the European Central Bank (ECB). At 1.7%, Germany
again played an important role in driving the European
economy. France (+1.1%) and Italy (+0.7%) also recorded
higher growth rates for the twelve-month period.
Similarly, the majority of southern Europe's economies
showed a year-on-year improvement. For example,
Spain at 3.2% and Portugal, at 1.5%, both contributed
towards the continued economic recovery of the
eurozone.
At 2.2%, the UK economy grew more slowly than one
year earlier. Nevertheless, as in all years since 2011, the
growth rate was higher than that of the eurozone. The
UK government made good use of the positive economic
environment to reduce the budget deficit to its lowest
level since 2007. Domestic consumer spending again
served as a pillar of the economy.
The cyclical upturn in the USA gained further momen-
tum in 2015. The growth rate stood at 2.4%, marginally
higher than one year earlier. The upward trend of the
US economy, now reaching as far back as 2010, con-
tinues to benefit from robust levels of consumer spending.
The stable economic situation on one hand and the
The Japanese economy was unable to gain any signifi-
cant momentum in 2015. With GDP growth at only
0.6%, it was the weakest of all the G7 countries. The
Bank of Japan continued its expansionary monetary
policies throughout 2015.
In China, the realigned economic strategy introduced
by the government led to a moderate slowdown in the
pace of economic growth (+6.9%), with the growth
rate falling below the 7% mark for the first time since
1990. Despite the ongoing transformation from an
investment to a consumer-oriented economy and
sharp stock market corrections in both mid-2015 and
early 2016, the Chinese economy has shown itself to
be stable.
Apart from India at 7.4%, the other BRIC states failed to
live up to expectations for growth in 2015. Brazil and
Russia, both of which rely on the export of raw materials,
recorded negative growth of 3.6% and 3.8% respectively.
Neither of these countries was able to find a way out
of the currently difficult situation and remained in re-
cession.
Currency markets
The US dollar averaged an exchange rate of 1.11 to
the euro in 2015 and was therefore significantly stronger
than in the previous year. The different direction in
monetary policy currently being pursued by the Euro-
pean Central Bank and the US Federal Bank (Fed) caused
the US dollar to appreciate in value against the euro
from US$ 1.16 to US$ 1.09 (based on monthly averages)
over the course of the twelve-month period.
The British pound also gained in value, rising to an
average annual exchange rate of 0.73 to the euro. Unlike
the Fed, the Bank of England (BOE) has not yet seen any
acute need to raise reference interest rates.
As its value is coupled to that of the US dollar, at 6.97,
the Chinese renminbi also gained in value against the
euro compared to the previous year. The upward trend
was temporarily halted when Chinese stock markets
witnessed a turbulent phase, only for some of the lost
ground to be regained by the end of the year.
24
27 Financial and Non-financial
(Index: December 2010 = 100)
Exchange rates compared to the euro
Report on Economic Position
23 COMBINED MANAGEMENT REPORT
expected rise in inflation on the other hand prompted
the Federal Reserve Bank to usher in the interest rate
turnaround in December 2015.
indicators.
Position and Net Assets
The criteria used for taking decisions as well as the
long-term impact on periodic earnings is documented
for all project decisions and incorporated in the long-
term Group forecast. This system enables an analysis of
the periodic reporting impact of project decisions on
earnings and rates of return over the term of each project.
The overall result is a cohesive controlling model.
was 12%, unchanged from the previous year.
Value management used to control projects
59 Comments on Financial Statements Operations in the Automotive and Motorcycles seg-
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
of BMW AG
63 Outlook
The capital value of a project indicates the extent to
which a project will be able to generate a positive contri-
bution to earnings over and above the cost of capital.
A project with a positive capital value enhances value
added and therefore results in an increase in the value
of the business. The internal rate of return of the project
corresponds to the average return on capital employed
in the project and, in terms of scope, is equivalent to
the multi-year average RoCE for an individual project. It
is therefore consistent with one of the key performance
Decisions are taken on the basis of project calculations
measured in terms of the cash flows each individual
project is expected to generate. Calculations are made
for the full term of a project, i.e. for all future years in
which the project generates cash flows. Project deci-
sions are taken on the basis of the capital value and in-
ternal rate of return calculated for the project.
29 Review of Operations
ments are shaped, to a large extent, by life-cycle-driven
project work. Projects have a substantial influence on
future performance. Project decisions are therefore a
crucial component of financial management for the
BMW Group.
49 Results of Operations, Financial
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
68 Report on Risks and Opportunities
81 Internal Control System and Risk
87 BMW Stock and Capital Markets
Proportion of
-13,326
4.2
8,003
-17,327
65.6
58.5
140,051
-221,982
14,145
MINI sales volume
2015 in %
-18.4
MINI Coupé
2014
2015
MINI total
MINI Paceman
MINI Roadster
MINI Countryman
MINI Clubman
MINI Convertible
-39.9
Sales volume of MINI vehicles by model variant
in units
MINI 3- and 5-door
Change
in %
2.4
Rolls-Royce moderately down on previous year's
high level
106,995
Rolls-Royce total
140,051 units; +58.5%). Sales of the MINI Countryman
totalled 80,230 units (2014: 106,995 units; - 25.0%).
The new MINI Clubman became available towards the
end of October, since then approximately 8,000 units
have been sold.
Wraith
Ghost
Phantom
Sales volume of Rolls-Royce vehicles by model variant
in units
the sale of 1,688 units (2014: 1,906; -11.4%). Sales of the
Rolls-Royce Ghost rose slightly by 3.5% to 1,609 units
(2014: 1,555 units).
In sales volume terms, Rolls-Royce Motor Cars reported
the second-best year in its history (3,785 units; 2014:
4,063 units; -6.8%). The Rolls-Royce Wraith recorded
100.0
12.0
302,183
2.4
-47.0
-15,567
-8,247
338,466
0.9
-39.7
-5,101
3,075
0.8
-27.0
- 3,816
-2,784
23.7
-25.0
80,230
MINI sales grew by 12.0% worldwide to 338,466 units
(2014: 302,183 units), helped primarily by the popularity
of the new MINI 3- and 5-door models, of which a total
of 221,982 units were delivered to customers (2014:
Digitalisation in particular will contribute towards help-
ing the network produce even more flexibly and effi-
ciently. The use of IT-supported technologies in produc-
tion and logistics makes it possible to design even highly
complex workflows, such as through the use of flexible
robot systems, intelligent tools for staff, simulation, and
automated data collection and analysis.
31 COMBINED MANAGEMENT REPORT
In Rosslyn (South Africa) the one-millionth BMW 3 Series
vehicle rolled off the production line in February 2015.
In 1973, the plant was opened as the BMW Group's first
international manufacturing facility and is now an im-
portant part of the network. Within the next few years,
the plant will discontinue production of the BMW 3 Se-
ries and begin making the successor to the current
BMW X3.
In Shenyang (China), BMW Brilliance Automotive Ltd.
(BBA) produced its one-millionth vehicle during the
period under report. BBA is a joint venture of the BMW
Group and its partner Brilliance China Automotive
Holdings Ltd. Its two plants in Dadong and Tiexi manu-
facture the BMW 3 Series long-wheelbase version, the
BMW 3 Series Sedan, the BMW 5 Series long-wheelbase
version, the BMW 5 Series Plug-in Hybrid and the
BMW X1 for the Chinese market.
The manufacturing sites in Chennai (India) and Rayong
(Thailand) complete the BMW Group's production net-
work. Last year, the plant in Thailand celebrated its 15th
anniversary and expansion work was continued at the
plant at the same time. It is the only production facility
within the network that produces not only BMW and
MINI vehicles, but also BMW motorcycles.
At the Group's partner plants, which mostly serve
their regional markets, a total of 27,216 vehicles were
produced during the period under report. These part-
ner plants include those in Kaliningrad (Russia), Cairo
(Egypt), Jakarta (Indonesia) and Kulim (Malaysia).
Introduction of modular engine concept practically
completed
In January 2016, the new engine manufacturing plant,
which includes a foundry, was commissioned in Shen-
yang (China) and now supplies engines for vehicle pro-
duction for the Chinese market. With Munich, Hams
Hall (United Kingdom) and Steyr (Austria), the BMW
Group now manufactures engines at a total of four lo-
cations. Moreover, since 2014 the new modular engine
has been introduced in the engine plants step by step,
expanding options for a flexible production system with
uniform production and process standards.
Production of modular engines at the Steyr plant was
increased in 2015. At the same time, the development
centre for diesel engines, which is connected with the
plant, is currently being expanded. The Hams Hall en-
gine plant makes 3- and 4-cylinder petrol engines for
BMW and MINI and is also the exclusive manufacturer
of 3-cylinder petrol engines for the BMW i8.
Strong production base in Germany
Apart from the expansion of the international production
network, the German plants are an important focus of
ongoing development. For the fifth time in succession,
the BMW Group produced a total of over one million
vehicles at its plants in Munich, Dingolfing, Regensburg
and Leipzig.
Thanks to their innovative strength, the plants in Ger-
many play a leading role within the international pro-
duction network and are often the inspiring source
of impetus for the global network as a whole. Digitalisa-
tion, modular concepts and intelligent composite manu-
facture are examples that demonstrate the outstanding
expertise of the production network.
2015
convert and expand the plant throughout 2015. The BMW
Group is investing in a new single-line production system
at this site as the basis for ensuring the brand's innova-
tive product strategy in the long term. The new tech-
nology and logistics centre in Bognor Regis near Good-
wood was opened as planned. Moreover, Rolls-Royce
Motor Cars recruited 100 new employees during the
period under report.
With the production start-up of the new BMW 7 Series,
employees at the Dingolfing plant have proved that
innovation can be combined with complex production
processes. The intelligent composite manufacture is
particularly obvious in the new BMW 7 Series, where
carbon-fibre reinforced polymer (CFRP) is exclusively
used in the passenger compartment. The body struc-
ture, known as Carbon Core, is based on a technology
transfer from the BMW i models. The utilisation of ultra-
lightweight CFRP material and a comprehensive light-
weight design concept make the new 7 Series models
up to 130 kg lighter than their predecessors.
34
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
23 General and Sector-specific
Environment
27 Financial and Non-financial
Performance Indicators
29-Review of Operations
29-Automotive Segment
35-Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
Despite the BMW 7 Series model change, with a total
of around 360,000 units manufactured in 2015, the
Dingolfing plant registered the second-highest annual
production figure in its history. At the same time,
33 COMBINED MANAGEMENT REPORT
At the home of Rolls-Royce in Goodwood (United King-
dom), important construction work was carried out to
In order to secure greater capacity for the planned growth,
since 2014 the MINI 3-door model is also being pro-
duced for the BMW Group at the Dutch carmaker VDL
Nedcar in Born. Since 2015, VDL Nedcar has also been
producing the MINI Convertible. The MINI Countryman
and MINI Paceman models are being produced under
contract by the company Magna Steyr Fahrzeugtechnik
in Graz, Austria. This additional capacity with external
partners provides the BMW Group's production network
with even greater flexibility.
-179,318
12.2
8.8
-82,655
-113,401
57,019
-29,196
95.3
2.5
3,848
- 4,495
-14.4
0.2
-27,216
2,279,503
35,916
2,165,566
-24.2
-1.2
5.3
100.0
network with the aim of ensuring a balanced distribution
of value added along the production chain.
In North America, the expansion of the plant in Spartan-
burg, USA, continues to make good progress. A new,
state-of-the-art vehicle body manufacturing facility is
currently under construction, as part of the investment
programme announced in 2014. Annual production at
the plant achieved a new record of over 400,000 units in
the year under report. In terms of production volume,
the Spartanburg plant is therefore the largest in the BMW
Group's network.
In San Luis Potosí, Mexico, preparations for constructing
the new plant are running on schedule. A local train-
ing centre has already been opened at the site and the
first employees recruited. The plant is due to commence
operations in 2019.
The comprehensive expansion of the BMW Group plant
in Araquari, Brazil, was completed in September 2015.
The manufacturing infrastructure at the site now in-
cludes body-making, a paint shop and assembly facilities.
The BMW 1 Series 5-door version, the BMW 3 Series Se-
dan, the BMW X1, the X3 and the MINI Countryman are
currently built in Araquari. Only one year after produc-
tion officially began, the 10,000th vehicle has already
rolled off the production lines.
In Europe, the British production triangle comprising
the MINI plant in Oxford, the components plant in
Swindon and the engine production facility in Hams
Hall is a fundamental element of the BMW Group's pro-
duction network. At the end of 2015, production at
the Oxford plant comprised the MINI 3- and 5-door ver-
sions and the new MINI Clubman.
Significant increase for the MINI brand
2014
48.5
488
9.7
Dingolfing
360,804
369,027
-2.2
15.8
Regensburg
-304,509
272,015
11.9
13.4
-2.7
Leipzig
211,434
10.5
10.3
Rosslyn
-71,353
68,771
3.8
3.1
Spartanburg
400,904
349,949
233,656
14.6
228,126
Munich
44 Workforce
+5.3%), comprising 1,933,647* BMW (2014: 1,838,268*
units; +5.2%), 342,008 MINI (2014: 322,803 units; +5.9%)
and 3,848 Rolls-Royce brand vehicles (2014: 4,495 units;
-14.4%).
Internationalisation of production network making
good progress
Following global market developments, the BMW Group
has continued to expand its international production
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
(2014: 287,466 units, 2015: 287,755 units).
32
Vehicle production of the BMW Group by plant
in units
2015
2014
Change
Proportion of
-221,998
in %
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29-Review of Operations
29-Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
production in %
17.6
Dadong¹
142,767
87 BMW Stock and Capital Markets
Chennai
Oxford
The network set new production volume records in 2015,
making a total of 2,279,503* units (2014: 2,165,566* units;
Graz (Magna Steyr)²
Born (VDL Nedcar)².
Goodwood
Partner plants
BMW Group
1 Joint venture BMW Brilliance Automotive Ltd., Shenyang.
2 Contract production.
-7,716
4,824
83 Disclosures Relevant for Takeovers
and Explanatory Comments
60.0
201,206
High capacity utilisation throughout production network
Strong demand and the production start-up of numerous
new models resulted in very high capacity utilisation
levels throughout the BMW Group's production net-
work. At the same time, the process of expanding inter-
national production sites was continued арасе. The
production network comprises 30 locations in 14 coun-
tries worldwide.
-6.8
4,063
3,785
-18.9
3.5
-11.4
-1,906
1,688
-1,555
1,609
602
-0.3
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
63 Report on Outlook, Risks and
Opportunities
Reporting Period
-143,390
-0.4
6.3
Tiexi¹
-144,988
-144,076
0.6
6.4
42 Sales and Marketing
44 Workforce
Rayong
-8,928
-6,012
-0.4
45 Sustainability
Araquari
9,936
- 5,616
-76.9
0.4
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Change in %
expansion and modification work at the Dingolfing plant,
which has been ongoing since the end of 2012, made
good progress during the year under report. The BMW
Group is currently investing substantial amounts in the
Dingolfing site in preparation for future vehicle models
and upcoming technologies.
18-COMBINED MANAGEMENT REPORT
45 Sustainability
In line with the new growth strategy, during the
year un-
der report the decision was taken to expand the BMW
motorcycle manufacturing plant in Berlin. Moreover, a
new, state-of-the-art logistics centre is due to be con-
structed right next to the Berlin plant.
Financial Services segment continues to grow
The Financial Services segment remained on course in
2015, delivering another good performance within a diffi-
cult market environment. In balance sheet terms, busi-
ness volume grew by 15.4% to stand at €111,191 million
(2014: €96,390 million), partly as a result of favourable
currency factors. The contract portfolio under manage-
ment at 31 December 2015 comprised 4,718,970 con-
tracts (2014: 4,359,572 contracts; +8.2%).
Further growth in new business
As in the previous year, credit financing and leasing busi-
ness with retail customers was an important part of the
segment's success in 2015. In total, 1,655,961 new con-
tracts were signed during the period under report, 9.7%
more than in the previous year (2014: 1,509,113 con-
tracts). Leasing business registered a significant in-
crease, growing year-on-year by 11.5%. Credit financing
increased by 8.8%. As a proportion of new business, leas-
ing accounted for 35.3% and credit financing for 64.7%.
The proportion of new BMW Group vehicles" leased or
financed by the Financial Services segment was 46.3%,
an increase of 4.6 percentage points over the previous
year (2014: 41.7%).
In the BMW and MINI brand pre-owned vehicle financ-
ing and leasing lines of business, the number of new
contracts signed by the segment fell slightly (−2.1%) to
327,391 contracts (2014: 334,289 contracts).
*The calculation only includes automobile markets, in which the Financial Services
segment is represented by a consolidated entity.
Contract portfolio of Financial Services segment
in 1,000 units
4,900
4,200
3,500
2,800
2,100
1,400
700
11
12 -13
14 -15
3,592
3,846 4,130 4,360 4,719
37 COMBINED MANAGEMENT REPORT
Contract portfolio retail customer financing of
Financial Services segment 2015
as a percentage by region
Americas
Significant increase in motorcycle production
Overall, the BMW Group produced 151,004 motor-
cycles during the year under report (2014: 133,615 units;
+13.0%). This significant rise partly reflects the growing
importance of BMW's production plants in Brazil, where
8,555 motorcycles were assembled (2014: 5,996 units;
+42.7%) and in Thailand, where production more than
doubled to reach 2,712 units (2014: 1,169 units).
EU Bank
87 BMW Stock and Capital Markets
Management System Relevant for the
Financial Reporting Process
The R nineT Scrambler, G 310 R, F 700 GS and F 800 GS
models were all on display for the first time at the
EICMA. The F 700 GS and F 800 GS will both be avail-
able to customers in time for the beginning of the 2016
motorcycling season. Apart from their powerful engines,
they promise exceptional riding pleasure, both on- and
off-road. Like its successful R nineT sister model, the
R nineT Scrambler - which is due to go on sale in the
summer - offers plenty of ways for owners to give it
their own personal touch. Also scheduled for a summer
launch is the G 310 R, which will deliver a combination
of great dynamics and comfort, whether in town or
out cruising on country roads. This innovative machine
signals BMW Motorrad's entry into the under-500 cc
segment as part of the strategic realignment of the
Motorcycles segment, which is aiming for further growth
and increasing internationalisation.
With its eRR concept study, BMW Motorrad is drawing
attention to the many possibilities of a fully electric-
powered supersport motorcycle. In terms of design and
chassis technology, the eRR has taken its lead from
the S 1000 RR supersport machine, but with an electric
drive, and is an outstanding example of the possibilities
of sustainable mobility.
Further international growth for BMW Motorrad
The aim of BMW Motorrad's strategic realignment is to
achieve additional growth going forward. With this in
mind, the Motorcycles segment is planning to engage in
36
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
23 General and Sector-specific
Environment
27 Financial and Non-financial
0.6
Performance Indicators
further markets in Asia and Latin America. The new
model initiative will also be expanded, including the ad-
dition of products that provide greater urban mobility.
Sales volume growth should also benefit from the new
premium models in the under-500 cc segment and a
significantly expanded dealership network. The market
launch of the G 310 R in the second half of 2016 will
27 Overall Assessment by Management be an initial step in this direction. This motorcycle is
designed to appeal to new markets and a younger tar-
get group and will be produced in cooperation with
the TVS Motor Company in India.
29-Review of Operations
29 Automotive Segment
35-Motorcycles Segment
36-Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
83 Disclosures Relevant for Takeovers
and Explanatory Comments
36.1
Asia/Pacific
East/Africa
Development of credit loss ratio
in %
0.7
49 Results of Operations, Financial
45 Sustainability
44 Workforce
42 Sales and Marketing
Purchasing
41
38-Research and Development
36-Financial Services Segment
35 Motorcycles Segment
29 Automotive Segment
29-Review of Operations
0.1
Performance Indicators
0.2
27 Financial and Non-financial
27 Overall Assessment by Management
0.3
23 General and Sector-specific
Environment
0.4
23-Report on Economic Position
0.5
18 General Information on the BMW Group
38
Europe/Middle
Significant growth in insurance business
Demand for insurance products remains high. In addition
to the Group's financing and leasing products, customers
can select from a broad range of insurance arrange-
ments, addressing all aspects of individual mobility. Sig-
nificant growth was recorded in 2015, with the num-
ber of new insurance contracts signed up by 11.2% to
1,207,196 contracts (2014: 1,085,781 contracts). At 31 De-
cember 2015, the insurance contract portfolio com-
prised 3,200,742 contracts (2014: 2,874,158 contracts;
+11.4%).
Dealership financing significantly up on previous year
As in the previous year, the total volume of dealer finan-
cing increased significantly again year-on-year, growing
by 16.6% to stand at €17,156 million at the end of the
reporting period (2014: €14,710 million).
EU Bank
Americas
30.4
28.5
Europe/Middle East/Africa
Asia/Pacific
24.8
-16.3
EU Bank comprises BMW Bank GmbH, its branches in Italy, Spain and Portugal, and
its subsidiary in France.
The total volume of new credit and leasing contracts
concluded with retail customers during the twelve-
month period under report was €50,606 million, sig-
nificantly up (+22.5%) on the previous year's figure
(2014: €41,318 million).
The dynamic increase in new retail customer business
is also reflected in the overall size of the contract port-
folio. In total, 4,326,631 contracts were in place with re-
tail customers at 31 December 2015 (2014: 4,005,428 con-
tracts), a solid year-on-year increase of 8.0%. In regional
terms, the Asia/Pacific region continued to enjoy strong
BMW Group new vehicles financed by
Financial Services segment
in %
50
40
30
20
10
11 ―12 13 14 ―15
Financing
Leasing
20.0
21.1
20.7 22.5
19.7 21.5
20.8 24.2
20.9 22.1
growth with a 19.4% increase in the number of contracts
being managed at the end of the reporting period. The
Americas region (+8.0%), Europe/Middle East/Africa
(+6.7%) and the EU Bank* (+3.5%) also recorded year-on-
year growth.
Further solid growth in fleet business
The BMW Group is one of the leading leasing and full-
service providers of fleet management services in Europe.
Lease and financing arrangements as well as other ser-
vices are provided to commercial customers under the
brand name "Alphabet". At 31 December 2015 the
segment was managing a total portfolio of 602,303 fleet
contracts, 8.5% more than in the previous year (2014:
555,349 contracts).
Slight decrease in multi-brand financing
Multi-brand financing saw a slight decrease (-1.8%)
in the number of new contracts signed in 2015
(162,870 contracts), compared to the previous year
(2014: 165,776 contracts). At 31 December 2015, the
total portfolio comprised 470,150 contracts, slightly
more than one year earlier (2014: 465,702 contracts;
+1.0%).
Solid increase in deposit business
Deposit business provides an important source of fund-
ing for the Financial Services segment. The volume of
customer deposits held at the year-end grew by a solid
8.4% to €13,509 million (2014: €12,466 million).
27 Overall Assessment by Management Extensive refurbishment measures were also commenced
at the main plant in Munich in 2015. By mid-2017, a
state-of-the-art painting line will be completed that
meets the utmost standards in terms of profitability and
efficient use of resources. The new building is part of an
extensive investment programme that also includes the
enlargement of the body-making section and vehicle
assembly as well as parts of the logistics department. At
the present time, around 1,000 vehicles a day are rolling
59 Comments on Financial Statements off production lines at the BMW Group's Munich plant,
including the BMW 3 Series Sedan, the BMW 3 Series
Touring, the BMW 4 Series Coupé, the BMW M4 Coupé
and, since the end of 2015, the BMW 3 Series Plug-in
Hybrid.
Other
Brazil
40
20
|||||
11 ―12 13 14 -15
104.3 106.4 115.2 123.5 137.0
*Excluding Husqvarna, sales volume up to 2013: 59,776 units.
BMW Group - key motorcycle markets 2015
as a percentage of sales volume
Other
Brazil
Great Britain
Italy
Spain
Germany
USA
France
Germany
USA
17.4
Spain
5.8
-12.0
Great Britain
-5.8
France
In the “International Engine of the Year Award", the most
prestigious engine competition worldwide, the BMW
Group was winner in three different classes as well as
overall winner. The new BMW TwinPower Turbo 3-cylin-
der petrol engine, which powers the BMW i8, was win-
ner in its class. The complete drivetrain of the BMW i8
also won the "best new engine" award. The successful
combination of electric motor and petrol engine also won
the overall award. Winner in the 2.5- to 3.0-litre category
was the M TwinPower Turbo in-line 6-cylinder petrol
engine. The quadruple triumph for the BMW Group at
the "International Engine of the Year Award" in 2015
additionally underscores the outstanding efficiency of
the Efficient Dynamics technology package, which, since
2007, has enabled the BMW Group to continually in-
crease the sheer driving pleasure and reduce consump-
tion and emission levels at the same time.
The BMW Group won three "Golden Steering Wheels"
during the year under report: for the BMW 7 Series in the
luxury class, for the new BMW X1 among the medium-
sized SUVs, and for the BMW 2 Series Gran Tourer in
the family class, making BMW the most successful brand
in this year's Golden Steering Wheel competition.
60
Awards and prizes in 2015
80
120
49 Results of Operations, Financial
Position and Net Assets
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
The BMW Group's Regensburg plant raised production
volume by almost 12% year-on-year, manufacturing more
than 300,000 units during the period under report. In the
course of the year, the six-millionth vehicle rolled off
the production line since the plant was first opened in
1986. Furthermore, production of three new models,
the BMW 1 Series, the 2 Series Gran Tourer and the X1
all started during 2015.
At the Leipzig plant, growing demand for electric vehicles
worldwide resulted in annual production of the BMWi
vehicles increasing to over 30,000 units. The BMW i3 is
one of the three best-selling electric vehicles both in the
USA and on markets worldwide. The team in Leipzig is
currently producing around 120 BMW i models daily. After
the success of the BMW i8, since 2015 the BMW 225xe
Active Tourer is the second model featuring a plug-in
hybrid drive system to be manufactured at the plant.
Production of the new BMW M2 also started in Leipzig
in 2015, with vehicles produced for the most part in
a flexible mix with all other models of the BMW 1 and
2 Series.
The growing demand for passenger vehicles also resulted
in high-capacity utilisation at the Landshut plant during
the year under report. The main focus during 2015
was on the start-up of components production for the
BMW brand's flagship model, the BMW 7 Series, includ-
ing production of structural components, light metal die-
cast engine components, CFRP body structure parts,
bumpers and other plastic add-on components. Further-
more, the new strategy for the plant continued to make
good progress. The aim is to make the components plant
even more flexible and thus increase the site's long-term
competitiveness. Trendsetting lightweight construction
technologies will play a key role in achieving this end.
The Wackersdorf Innovation Park is the logistical hub for
materials management and just-in-sequence supply to
BMW Group plants in ten different countries. Further-
more, the dashboards for several plants are produced in
Wackersdorf.
SGL Automotive Carbon Fibers (SGL ACF), the joint
operation of the BMW Group with the SGL Group, is
also based in Wackersdorf. In Moses Lake, USA, SGL
ACF operates a carbon fibre production plant that is
powered by hydroelectricity and supplies carbon fibres
to the SGL ACF plant in Wackersdorf, where they are
processed into textile parts.
The expansion of the BMW Group's Eisenach plant con-
tinued as planned in 2015. The site is being extended to
include new buildings and additional production floor
space. Moreover, a state-of-the-art Servo tryout press is
being installed. The project is scheduled for completion
in 2016. The Eisenach plant is one of the three BMW
Group locations worldwide that builds pressing tools.
In addition, some 250 employees at the Eisenach plant
manufacture the majority of the outer body parts
from sheet metal, aluminium and stainless steel for the
Rolls-Royce plant in Goodwood (United Kingdom) as
well as parts for the production of BMW motorcycles in
Berlin.
35 COMBINED MANAGEMENT REPORT
MOTORCYCLES SEGMENT
BMW Motorrad reports significant growth in business
The Motorcycles segment profited from a positive market
environment during the period under report, achieving a
new sales volume record for the fifth year in succession.
The number of BMW motorcycles sold to customers world-
wide rose by 10.9% to 136,963 units (2014: 123,495 units).
Motorcycle sales particularly strong in Europe
The number of motorcycles sold in Europe in 2015 to-
talled 81,834 units (2014: 73,611 units), an increase of
11.2%. In Germany, BMW Motorrad reported a solid in-
crease of 9.7% with a sales volume of 23,823 units (2014:
21,714 units). Italy also saw a year-on-year improvement,
with sales 6.3% up at 11,150 units (2014: 10,487 units).
Deliveries to customers in France, at 12,550 units, were
also higher than one year earlier (2014: 11,600 units;
+8.2%), even though the market as a whole remained
flat. The Motorcycles segment sold 16,501 units in the
USA (2014: 15,301 units; +7.8%).
New models performing well
A number of new models helped the Motorcycles seg-
ment deliver another outstanding performance in 2015.
The F 800 R was launched in time for the beginning of
the 2015 motorcycling season, followed by the R 1200 R,
R 1200 RS, S1000 XR and S 1000 RR models over the
course of the year. December 2015 saw the market launch
of the C 650 Sport and C 650 GT model updates, both of
which had previously been presented at the EICMA in-
ternational motorcycle trade fair in Milan. Thanks to an
extensively modified drivetrain, more comfortable sus-
pension settings and revamped controls, these two dy-
namic maxi-scooters offer the ideal combination of sport-
ing flair, smooth touring comfort and urban mobility.
BMW Group sales volume of motorcycles
in 1,000 units
140
100
-5.6
The BMW Group has also installed numerous innova-
tions for added driving convenience and assistance in
the latest BMW 7 Series. For example, infotainment
and communication features can be controlled from the
back seat by means of a tablet. Self-configured or pre-
configured functions can be controlled by hand gestures
made within the vehicle. Using the new display key,
the vehicle can be remotely and driverlessly manoeuvred
in and out of tight parking spaces.
Innovations included in series vehicles
legislators going forward. With efficient petrol- and
diesel-driven engines, plug-in hybrid systems, battery-
powered drives and also, in future, hydrogen fuel cell
electric vehicles, the BMW Group is looking to provide
suitable technologies for every segment and require-
ment.
39 COMBINED MANAGEMENT REPORT
In the course of 2015, the Group integrated hybrid tech-
nologies in further BMW brand models. In parallel, en-
gineers continued development work on highly-efficient
combustion engines. In the medium and long term, the
BMW Group is also developing a fuel cell electric vehi-
cle (FCEV). With these varying drive systems, the BMW
Group is well prepared for the challenges of the future
and will also be able to flexibly cater to both the require-
ments of customers and the standards dictated by
Broadly diversified drive system research
Given the pace of technological innovation, cooperation
arrangements in the field of research and development
are commonplace in the automotive industry. The BMW
Group also enters into cooperation agreements with
selected partners. The aim of these research and devel-
opment activities, which may also include cross-sector
input, is to help find innovative solutions for individual
mobility. The focus is currently on next-generation
technologies, such as digitalisation and alternative drive
systems.
Expenditure for research and development rose by 13.2%
to €5,169 million, mostly for projects aimed at securing
the Group's future (2014: €4,566 million). The research
and development ratio stood at 5.6% and therefore at a
similar level to the previous year (2014: 5.7%). The ratio
of capitalised development costs to total research and
development expenditure for the period (capitalisation
ratio) was 39.9% (2014: 32.8%). Amortisation of capi-
talised development costs totalled €1,166 million (2014:
€1,068 million; +9.2%). Further information on research
and development expenditure is provided in the section
"Report on Economic Position" (Results of Operations)
and in note 10 to the Group Financial Statements.
Research and development are absolutely essential for
the BMW Group to maintain competitiveness as a pre-
mium manufacturer. As part of the Efficient Dynamics
strategy, the Group works continually on additionally
improving energy efficiency and reducing the emissions
of the entire range of automobiles and motorcycles it
sells. Under the catchword "Connected Drive", the BMW
Group works on the connectivity of driver, vehicle and
the outside world. Both concepts embrace forward-
looking technologies in vehicles and are testimony to
the BMW Group's innovative strength. Going forward,
the BMW Group will no doubt continue to set standards
in the field of connectivity on the roads. At 31 Decem-
ber 2015, a total of 12,669 people at 13 locations in five
countries worldwide were working in the BMW Group's
research and development network to achieve this end.
RESEARCH AND DEVELOPMENT
The positive trend in the global economy and the on-
going lull in the euro crisis enabled the risk profile rele-
vant for the Financial Services segment's total portfolio
to improve again in 2015. The positive trend in bad
debt levels continued in 2015, both for retail and corpo-
rate customers. The risk profile in the credit line of busi-
ness improved slightly compared to the previous year.
The credit loss ratio incurred on the segment's total credit
portfolio decreased by 13 basis points to 0.37% (2014:
0.50%). Reflecting the generally stable conditions pre-
vailing on the international used car markets, sales prices
for BMW and MINI brand pre-owned cars developed
robustly. Average residual value losses incurred on the
resale of these vehicles were marginally higher than in
the previous year. Further information on the risk profile
is provided in the section "Report on risks and oppor-
tunities".
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
63 Report on Outlook, Risks and
Opportunities
Reporting Period
62 Events after the End of the
of BMW AG
59 Comments on Financial Statements Risk profile improved
0.37
0.50
0.46
0.48
0.49
11 ―12 13 ―14 15
Position and Net Assets
Italy
-9.2
-8.1
In a prototype presented in 2015, a direct water injec-
tion system was used for turbocharged petrol engines
for the first time. This innovative technology greatly
reduces the temperature in the combustion process,
thereby raising the efficiency factor. Moreover, the
technology reduces fuel consumption during higher
performance requirements. The newly developed
BMW 2 Series Active Tourer Plug-in Hybrid is fitted
with a 3-cylinder front-wheel-drive petrol engine, a
high-voltage generator installed at the front and an
electric motor that transfers power to the rear wheels.
The result is a road-linked all-wheel-drive system
unique in its segment.
In 2015, a new lighting technology known as organic
light-emitting diodes, or OLEDs, were installed in a
series model for the first time. OLEDs consume less
electricity and therefore help further reduce CO2 emis-
sions. Unlike the point-like light emitted by LEDs,
OLEDs illuminate entire areas and are also smaller.
The hydrogen fuel cell electric drive system is destined
to become an integrated component of the Group's
Efficient Dynamics strategy. The diversity of drive tech-
nologies that can be flexibly coordinated to suit varying
vehicle concepts, customer requirements and statutory
framework conditions on international markets is there-
fore growing. The hydrogen fuel cell electric drive sys-
tem, which converts hydrogen to electricity and steam,
enables locally emissions-free, electrically powered
driving with the dynamic flair typical for the BMW brand,
high suitability for covering long distances, and short
refuelling times, therefore representing a further key
option in the range of BMW eDrive technologies. The
BMW Group has been conducting research and develop-
ment work in the field of hydrogen fuel cell electric ve-
hicles for over 15 years.
Assistance systems increase both safety and conveni-
ence levels while driving, although the degree of driver
support differs. Fully automated assistance systems of-
fer the highest degree of automation. Fully automated
functions are those which no longer need to be moni-
tored by the driver. As with the fully automated Remote
Valet Parking Assistant, the driver does not even need
to be in the vehicle. Highly automated systems are the
stage before fully automated systems and do not need
to be constantly monitored by the driver. They con-
trol both the longitudinal (driving forwards and back-
wards) and latitudinal (driving to the left or right by
steering) movements of the vehicle. By contrast, al-
limit, are always displayed in the same position above
the steering wheel, regardless of the driver's head move-
ments, ensuring that other road users or possible dan-
gers are not hidden from view. Navigation arrows vir-
tually projected onto the road assist the driver by
ensuring that he or she continually concentrates on
the surrounding traffic. If required, the glasses can
also be adjusted to show places of interest or even free
parking spaces en route. A camera installed on the
side of the vehicle assists the driver when parking, en-
abling the driver to check both the obstacles in his or
her line of vision and the distance to the kerb, which is
displayed in their field of vision. The glasses also pro-
vide the driver with a virtual view through parts of the
bodywork by making the A-pillar invisible, for instance,
hence improving all-round vision.
87 BMW Stock and Capital Markets
83 Disclosures Relevant for Takeovers
and Explanatory Comments
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
63 Report on Outlook, Risks and
Opportunities
62 Events after the End of the
Reporting Period
59 Comments on Financial Statements
of BMW AG
49 Results of Operations, Financial
Position and Net Assets
45 Sustainability
44 Workforce
42 Sales and Marketing
35 Motorcycles Segment
36 Financial Services Segment
38-Research and Development
41-Purchasing
29 Automotive Segment
29-Review of Operations
Performance Indicators
27 Financial and Non-financial
Environment
23 General and Sector-specific
18 General Information on the BMW Group
23-Report on Economic Position
MINI presents Augmented Reality glasses
The MINI Augmented Reality glasses presented at the
Auto Shanghai 2015 supplement reality by superimpos-
ing the wearer's field of vision with additional useful
digital information on events in and around the vehicle,
offering the user not only increased safety, but also
greater convenience. Information relevant for driving,
27 Overall Assessment by Management such as the current speed of the vehicle and the speed
18-COMBINED MANAGEMENT REPORT
40
At the CES, a further research vehicle was presented
featuring a fully automated system that warns the driver
in the event of an imminent collision and automatically
triggers a braking manoeuvre precise to the last centi-
metre if required. Up to a certain speed, the test vehicle
makes it practically impossible for the driver to collide
with another obstacle. In order to achieve this feat, cam-
eras, radar and laser sensors record the entire surround-
ings of the vehicle. Collision-free driving forms the basis
for taking a crucial step towards achieving accident-free
individual mobility and for that reason the BMW Group
has been working for many years to implement this vi-
sion. Assistance systems such as Active Cruise Control
with a stop-and-go feature (ACC) are already built into
the latest BMW models and react to vehicles driving
ahead. They are radar- and camera-based and apply the
brakes, even until the vehicle comes to a halt if necessary.
At the Consumer Electronics Show (CES) in Las Vegas
in 2015, the BMW Group presented a BMW i3 research
vehicle that demonstrated how parking spaces can be
found in a multi-storey car park with a fully automated,
driverless vehicle. The advantages are less vehicle
damage and far better use of the available parking
space. Laser scanners installed on the vehicle create an
exact picture of the surroundings. The Remote Valet
Parking Assistant links this information with the digital
floor plan of the car park and, based on this data, is capa-
ble of automatically driving the vehicle to a free space
and parking it. When the driver wishes to leave again,
he or she calls the vehicle (via smartwatch, for example)
and it automatically drives to the car park exit, ready to
continue to its next destination, without having to rely
on a GPS signal. As the research vehicle is fitted not only
with its own laser sensors but also with its own computers
and the required algorithms, it can calculate its exact
position in the car park, perfectly monitor its surround-
ings and independently navigate, fully automatically.
Multi-storey car parks do not need to be elaborately
equipped with special infrastructure. The new BMW 7 Se-
ries can already park straight in and out of a parking
space via remote control. The fully automated Parking
Assistant demonstrated in the prototype is a logical con-
tinuation of this innovative technological progress.
though semi-automated systems are capable of con-
trolling both the longitudinal and latitudinal move-
ments of the vehicle (e.g. congestion assistant), they
need to be continually monitored by the driver. As-
sisted systems (such as ACC) on the other hand, only
support the driver when driving forwards or steering
left or right.
Highly and fully automated driving
FINANCIAL SERVICES SEGMENT
3.6
-27.1
5.0
Financial Services
Other
BMW Group
31.12.2015
- 31.12.2014
Change
in %
-111,410
3,021
-106,064
2,894
4.4
-7,697
-7,245
6.2
-116
122,244
-121
-4.1
116,324
5.1
45 COMBINED MANAGEMENT REPORT
Proportion of non-tariff female employees at
BMW AG/BMW Group
in %
Motorcycles
Automotive
BMW Group employees
The proportion of women in the workforce as a whole,
both in management functions and in training pro-
grammes for young employees and interns, continued
to increase. The figure for women as a percentage of
the total BMW Group workforce improved to 18.1%
(BMW AG: 15.3%), ahead of the internal target range
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
with the BMW Group in the course of 2015. At the end
of the reporting period, 4,700 young people were in
vocational training and training programmes for promis-
ing talent (2014: 4,595 apprentices; +2.3%).
High level of investment to promote employee skill sets
At €352 million, expenditure on basic and further
training was 5.1% higher than one year earlier (2014:
€335 million). Further training mainly focused on-
advanced production techniques and new vehicle de-
velopment technologies.
Further progress made as attractive employer
The BMW Group retained its status as one of world's
most attractive employers in 2015. In the latest "World's
Most Attractive Employers" rankings published by the
agency Universum, the BMW Group was once again
named best German employer across all sectors and
the most attractive automotive company in the world.
The BMW Group again improved its ranking according
to the Trendence agency's "European Graduate Barome-
BMW Group apprentices at 31 December
4,500
3,750
3,000
2,250
1,500
750
11
-12 ―13 14 15
3,899 4,266 4,445 4,595 4,700
ter". In Trendence's "Young Professional Barometer
Germany", the BMW Group occupied first place for the
fourth
year:
in a row. In Universum's "Young Profes-
sionals Study Germany", the BMW Group achieved its
best results since 2007, taking first place in the "Engi-
neering” and “Business” categories and coming third in
the "IT" category.
Diversity as a competitive factor
Diversity constitutes a key factor in ensuring the BMW
Group's continued competitiveness going forward,
focusing on the three aspects of gender, origin/cultural
background, and age/experience. Equal opportunities
for all employees must be ensured, and diversity in
the workforce encouraged and put to good use. In 2015,
various measures were implemented with the aim of
promoting diversity within the Group.
14
13
12
11
2.08
Number of employees on unlimited employment contracts leaving the Company.
SUSTAINABILITY
The BMW Group safeguards the future viability of its
business model and its long-term growth through sus-
tainable activity. In terms of sustainability, the BMW
Group focuses on three broad areas: the development
of products and services for sustainable individual
mobility (e.g. electric mobility and services such as
DriveNow), the efficient handling of resources along
the entire value-added chain, and its responsibility
towards both its employees and society as a whole.
The personal commitment and creative ideas of our em-
ployees are key factors in achieving sustainable success.
This fact is underlined, for example, by the €17.5 mil-
lion saved in 2015 alone through the CREATE ideas
management system.
With its host of sustainability measures, the BMW Group
is supporting the implementation of the UN's Sustain-
able Development Goals (SDGs), which were adopted in
September 2015. Even before the final version was pub-
lished, the SDGs were taken into account when draw-
ing up the list of topics for the Group's 2015 materiality
analysis.
Stakeholder dialogues and materiality analysis
As a globally operating organisation, the BMW Group
engages in constant exchange with a variety of stake-
holders, both in Germany and abroad. This dialogue
helps identify trends at an early stage, increase the
scope of social engagement, and work better towards
achieving sustainability targets. The BMW Group seeks
contact with selected stakeholders in Europe, Asia and
North America at events held under the banner of the
BMW Group Dialogue. The resulting discussions enable
the impact of current trends on the business environ-
ment to be identified and provide useful feedback on
activities undertaken by the BMW Group in this area.
In order to identify significant sustainability topics as
early as possible, the BMW Group also carries out regu-
lar materiality analyses. In this context, it analyses the
importance of various challenges on society, both from
the point of view of different stakeholder groups as
well as from an internal BMW Group perspective. The
results of the materiality analysis, which are shown in
the materiality matrix, form a sound base for verifying
the direction of the BMW Group's sustainability strategy.
The matrix and other details are described in greater
depth in the Sustainability Report 2015.
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29-Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
44 Workforce
1.41
62 Events after the End of the
Reporting Period
3.47
2.16
10
9
11 ―12 ―13 14 ―15
BMW AG
BMW Group
9.1
11.8
10.0
12.7
10.9
13.8
11.4
14.2
11.9
14.5
of 15 to 17%. The number of women in management
positions rose to 14.5% for the BMW Group as a whole
and 11.9% for BMW AG. Female representation in pro-
grammes for young employees and interns in the year
under report was approximately 44% for employee
trainee programmes and 25% for student training pro-
grammes.
The workforce in Germany is becoming increasingly
international in character, amply borne out by the fact
that employees from over 100 countries work together
successfully at the Munich site alone. Furthermore, a
balanced age structure in the workforce encourages an
exchange of skills and information between generations
and plays an active role in reducing loss of know-how
when employees retire.
Employee attrition rate at BMW AG*
as a percentage of workforce
7.0
6.0
4.0
3.0
2.0
1.0
11 ―12 13 ―14 ―15
3.87
of BMW AG
Position and Net Assets
49 Results of Operations, Financial
15.9
Africa
1.4
42
SALES AND MARKETING
The Group's worldwide distribution network cur-
rently consists of around 3,310 BMW, 1,550 MINI and
140 Rolls-Royce dealerships. In China alone, around
60 BMW dealerships were opened in 2015. Products
and services are sold in Germany through BMW Group
branches and by independent authorised dealers. Sales
outside Germany are handled primarily by subsidiary
27 Overall Assessment by Management companies and, in a number of markets, by independent
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
23 General and Sector-specific
Environment
27 Financial and Non-financial
Performance Indicators
29-Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42-Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
NAFTA
-4.6
-15.8
Rest of Western Europe
Asia/Australia
41 COMBINED MANAGEMENT REPORT
PURCHASING AND SUPPLIER NETWORK
Ideal balance between quality, innovation, flexibility
and costs
The underlying objective of the BMW Group's pur-
chasing, quality assurance and component production
functions is to achieve the ideal balance between
quality, innovation, flexible supply structures and com-
petitive costs. At all levels - production materials, raw
materials, services and capital goods - arrangements
are in place to ensure that the BMW Group is able to
react flexibly to fluctuations in demand, especially
when operating within a volatile market environment.
Increasing pace of globalisation
Increased globalisation, the interconnected nature of
supplier markets and the widespread expansion of
BMW Group sales and production operations around
the world mean that the distribution of purchase
volumes is changing continuously. In the coming years,
the NAFTA region in particular will be the focus of
growth, given the increasing volume of production
planned for the Spartanburg plant in the USA. The
addition of the BMW Group's new plant in San Luis
Potosí, Mexico, which is scheduled to open in 2019,
will reinforce this shift. The BMW Group remains com-
mitted to achieving globally balanced growth in terms
of sales, production and purchase volumes. This strategy
also makes an important contribution to natural cur-
rency hedging.
Investments safeguard productivity and
technology leadership
The Purchasing and Supplier Network is also responsi-
ble for component production throughout the BMW
Group. Investing in state-of-the-art manufacturing facili-
ties and efficient structures increases the competitive-
ness of in-house component production. During the
financial year under report, the cornerstone was laid for
a new lightweight design centre at the BMW Group's
component production plant in Landshut. When com-
pleted, the centre will house facilities for some 160 engi-
neers, who will research innovative materials, composite
construction concepts and manufacturing processes
for future vehicle generations.
Regional mix of BMW Group purchase volumes 2015
of BMW AG
in %, basis: production material
Asia/Australia
Rest of
Western Europe
NAFTA
Eastern Europe
Germany
Germany
42.6
Eastern Europe
19.7
Africa
45-Sustainability
62 Events after the End of the
63 Report on Outlook, Risks and
Opportunities
At the IAA, Rolls-Royce Motor Cars officially introduced
a luxury convertible, the Rolls-Royce Dawn. The specially
designed roof of the Dawn reduces noise in the vehicle's
interior to a minimum. Rolls-Royce also announced its
intention to develop an all-terrain vehicle.
44
WORKFORCE
Workforce numbers higher
At 31 December 2015, the BMW Group employed a work-
force of 122,244 people worldwide, 5.1% more than one
year earlier (2014: 116,324 employees). The enlargement
mainly reflects the ongoing expansion of the Group's
international production network in addition to the tar-
geted recruitment of the engineers, IT specialists and
27 Overall Assessment by Management skilled workers it needs to forge ahead with continually
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
23 General and Sector-specific
Environment
27 Financial and Non-financial
Performance Indicators
29-Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
44-Workforce
developing new technologies.
Dual vocational training expanded worldwide
The BMW Group expanded its international training
activities in 2015 with the addition of new vocational
training centres in Brazil, Mexico and Thailand. The
number of new entrants at German sites offering voca-
tional training remained constant at 1,200 apprentices.
59 Comments on Financial Statements All told, some 1,500 apprentices commenced training
45-Sustainability
Rolls-Royce presents new luxury convertible
Also in October, MINI presented the new version of the
Convertible, which remains the only model of its kind
in the small car premium segment. The fully automatic
textile top, featuring a totally automated opening and
closing mechanism and sliding roof function, can be
opened in 18 seconds, even while driving at speeds of
up to 30 km/h.
New models for the third-generation MINI
The new MINI John Cooper Works has been available
since April 2015. The new MINI Clubman followed at
the end of October 2015. With its increased size and ad-
ditional functionality, the Clubman has taken on a new
dimension and now easily fits the bill as a household's
first car. The model's outstanding chassis technology de-
livers a high degree of driving comfort.
Moreover, market launches were underpinned by select
communication media, showcasing trendsetting inno-
vations with a range of state-of-the-art technologies to
highlight the exclusive luxury and exceptional comfort
of the new BMW 7 Series. For example, Gesture Control,
the new Display Key, BMW Touch Command, Executive
Lounge, Ambient Lighting and the outstanding quality
of materials were presented and described with all their
special features.
import companies. The dealership and agency network
for BMW i currently covers some 950 locations.
Connected mobility and digital services expanded
In 2015, the BMW Group stepped up its activities in the
world of connected mobility. With Connected Drive,
the BMW Group occupies a leading position as provider
of online-based services in vehicles and the connectivity
59 Comments on Financial Statements of driver, vehicle and environment. Connected Drive is
meanwhile available in 45 markets. Comprehensive
connectivity via the on-board SIM card features in more
than 95% of all new BMW cars. Besides its well-known
functions, such as the intelligent emergency call, the
Concierge Call or the real-time traffic information fea-
ture, Connected Drive also includes new highlights
such as a Wi-Fi hotspot in the new BMW 7 Series. It is
also possible to integrate apps from external providers.
All Connected Drive functions can be ordered either
conveniently from home or directly in the vehicle itself
via the Connected Drive Store, which is meanwhile
available in 18 markets.
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
The "Digital Services and Business Models" unit has
been set up to make better use of the opportunities of-
fered by digitalisation and to highlight the significance
of connected mobility beyond the vehicle. The objective
of this new customer-oriented function is to create a
comprehensive range of integrated digital services for
state-of-the-art mobility and to manage the expansion
of those services going forward.
BMW i now well-established
Under the brand name BMW i, the BMW Group offers
solutions for urban mobility that include not only the
vehicles themselves, but also services such as car sharing,
parking and battery charging. Two years on from its
sales launch, the BMW i3 has meanwhile established
itself among the front runners in its segment and is
now one of the three best-selling electric vehicles in the
world. BMW i vehicles are currently on sale in 50 coun-
tries. Over 80% of BMW i buyers are first-time customers
for the BMW Group.
The BMW i8 stands for a responsible attitude that com-
bines sustainability and an exclusive lifestyle. With
this in mind, the BMW i Pure Impulse Experience
programme has been created under the name "Next
Premium". The programme gives participants an exclu-
sive insight into innovative and future-oriented trends
from the worlds of design, innovation, culture, cuisine
and travel.
The global dealership and agency network for BMW i
currently covers some 950 locations. A total of 438 se-
lected BMW i partners are currently offering this brand
on the direct sales markets of Europe and Japan. The
i models are also being offered in ten direct sales markets
via new sales channels, one of which is the "Customer
Interaction Center". Furthermore, the "Mobile Sales
Advisor" sales channel has meanwhile become an inte-
gral component of the BMW i sales model in seven mar-
kets. The BMWi online sales platform gives customers
in the Netherlands, Belgium and Luxembourg the oppor-
tunity to order a BMW i3 via the Internet.
Reporting Period
With BMW i 360° ELECTRIC, the BMW Group pro-
vides a comprehensive product and service portfolio
for charging both battery-driven vehicles and plug-in
hybrids worldwide. The BMW i wall boxes and an in-
stallation service are available for simple, quick, emis-
sions-free home charging. As an on-the-road solution,
BMW i is offering the ChargeNow mobility service with
the most wide-ranging network of public charging
stations globally. With over 38,000 charging points in
25 countries, ChargeNow is the largest service provider
of its kind in the world.
ChargeNow makes public charging simple and transpar-
ent and is therefore an important feature of sustainable
electric mobility. With a single customer card, BMW i
customers have access to a worldwide charging network.
The stations are displayed via the Connected Drive ser-
vices in the navigation unit, via the ChargeNow app or
on the ChargeNow website. ParkNow is a service that
facilitates parking, both on the street and in multi-storey
car parks. Spaces in car parks can be found, booked and
paid for, either online or via an app.
43 COMBINED MANAGEMENT REPORT
BMW i Ventures invests in start-ups and growing com-
panies that concentrate on mobility requirements in
large urban areas. To date, the BMW i Ventures port-
folio comprises 14 investments.
BMW continues new model offensive
The BMW brand forged ahead with its new model offen-
sive in 2015. As successor to the 1 Series Convertible,
the new BMW 2 Series Convertible has been on sale
since February 2015. The BMW X5 M and X6 M models
were launched in March. The updated models of the
BMW 6 Series and M6 vehicles as well as the BMW 1 Se-
ries have also been available since March. In the com-
pact class, the facelifted BMW 1 Series excels with its sig-
nificantly changed, more dynamic design. It is now
available for the first time with powerful, highly efficient
3-cylinder petrol and diesel engines.
Launched in June 2015, the new BMW 2 Series Gran
Tourer is the first BMW to enter the multipurpose vehi-
cle segment. It offers up to seven seats and space for
three children's seats in the second row as a new stand-
ard feature. The updated BMW 3 Series Sedan, the 3 Se-
ries Touring and the M3 have all been on the market
since the end of July. The new-look design highlights
the sporting flair of the 3 Series, while new engines de-
liver instant power more efficiently than ever before.
The second generation of the BMW X1 was launched in
October 2015. Alongside best values to date in terms of
dynamics and efficiency, this highly successful model
also comes with numerous optional features – a com-
bination that will surely enable this new generation to
continue where its predecessor left off. The extremely ef-
ficient BMW X5 xDrive40e arrived on showroom floors
in the USA in early October and launched worldwide in
November. It is the first BMW Sports Activity Vehicle
to combine the BMW xDrive all-wheel drive system with
a more advanced plug-in hybrid system. This vehicle
represents the next step in the process of transferring
innovative drivetrain systems from BMW i models to the
core BMW brand.
New integrated marketing approach adopted for
BMW 7 Series market launch
With the sixth generation of its 7 Series, the BMW Group
is heralding a new era in the luxury segment. As the
year's most important market launch, the 7 Series not
only strengthens the brand, it also delivers an innovative
interpretation of luxury. The new BMW 7 Series cele-
brated its world debut at the International Motor Show
(IAA) in Frankfurt in September and its market launch
at the end of October 2015.
For the first time ever, exclusive product presentations
were deployed to address potential customers well in
advance of official announcements. For example, several
months prior to market launch, more than 26,000 exist-
ing and potential customers from several countries were
invited to stylish presentations, where they had the
opportunity to acquaint themselves with upcoming vehi-
cles and their many new features.
Premium services for individual mobility
Since 2011, the BMW Group and Sixt SE have operated
the car-sharing service DriveNow in the form of a joint
venture. The integration of electric vehicles in these
operations is seen as an increasingly important aspect
of the business. For this reason, over 800 BMW i3 vehi-
cles were added to various DriveNow fleets during the
period under report. Electric vehicles accounted for
approximately 20% of the DriveNow fleet at 31 De-
cember 2015 and DriveNow was being used by some
580,000 customers worldwide. With AlphaCity, com-
panies can offer their staff an alternative car-sharing op-
tion for both business and private use.
49 Results of Operations, Financial
5.0
59 Comments on Financial Statements
Other financial result
Financial result
Profit before tax
Position and Net Assets
Net profit
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 275,891 units, 2015: 282,000 units).
2015
2014
-92,175
-80,401
-74,043
-63,396
18,132
17,005
-8,633
-7,892
914
-877
-820
-872
9,593
Interest and similar expenses
Interest and similar income
Result from equity accounted investments
Profit before financial result
and Explanatory Comments
87 BMW Stock and Capital Markets
Guidelines of the Global Reporting Initiative (GRI G4),
the most commonly used set of guidelines for sustain-
ability reporting. The Sustainable Value Report 2015 is
drawn up in accordance with the "comprehensive op-
tion" and is published at the same time as the Annual
Report 2015.
49 COMBINED MANAGEMENT REPORT
Report on Economic Position
Results of Operations, Financial Position and Net Assets
Earnings performance
Once again, the BMW Group achieved year-on-year
growth in revenues, sales volume and profit before
tax in the financial year 2015. The number of BMW,
MINI and Rolls-Royce brand cars sold rose by 6.1% to
2,247,485* units.
The BMW Group recorded a net profit of €6,396 million
for the financial year ended 31 December 2015 (2014:
€5,817 million). The post-tax return on sales was 6.9%
(2014: 7.2%). Earnings per share of common and pre-
ferred stock were €9.70 and €9.72 respectively (2014:
€8.83 and €8.85 respectively).
BMW Group revenues increased by 14.6% year-on-year
to reach €92,175 million (2014: €80,401 million). The
main growth drivers were higher sales volume and fa-
vourable currency factors. Adjusted for exchange rate
factors, revenues rose by 7.7%.
9,118
Revenues mainly comprise the sale of vehicles and re-
lated products (2015: €68,643 million; 2014: €60,280 mil-
lion), lease instalments (2015: €8,965 million; 2014:
€7,748 million), the sale of vehicles previously leased to
in € million
customers (2015: €8,181 million; 2014: €6,716 million)
and interest income on loan financing (2015: €3,253 mil-
lion; 2014: €2,881 million).
External revenues recorded by the segments were
generally up on the previous year's figure. Revenues
from the sale of BMW, MINI and Rolls-Royce brand cars
were significantly higher (14.1%) than one year earlier.
Adjusted for exchange rate factors, revenues grew by
7.4% and therefore slightly faster than sales volume.
The positive currency impact was mainly attributable
to the change in the average exchange rates of the US
dollar, the Chinese renminbi and the British pound
against the euro. The BMW Group recorded a significant
year-on-year rise (18.7%) in external revenues from its
Motorcycles business. External revenues generated
with Financial Services business were 16.1% up on the
previous year. Adjusted for exchange rate factors, exter-
nal revenues for the Motorcycles and Financial Services
segments increased by 15.6% and 8.0% respectively.
Group revenues are spread across all regions, with the
Europe region (including Germany) accounting for
45.6% (2014: 46.8%), the Americas region for 23.3%
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income
Other operating expenses
Group Income Statement
83 Disclosures Relevant for Takeovers
518
185
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
to €28,648 million (2014: €26,147 million). Particularly
in China and South Korea, revenues increased on the
back of higher sales volume figures and favourable cur-
rency
factors.
The Group's cost of sales was 16.8% higher year-on-
year, due to sales volume and currency factors. This
line item mainly comprises manufacturing costs (2015:
€43,685 million; 2014: €38,253 million), the cost of
sales directly attributable to financial services (2015:
€17,407 million; 2014: €14,716 million) and research and
development expenses (2015: €4,271 million; 2014:
€4,135 million).
Gross profit improved by 6.6% to €18,132 million, re-
sulting in a gross profit margin of 19.7% (2014: 21.2%).
The Automotive segment recorded a gross profit mar-
gin of 17.7% (2014: 18.6%), while that of the Motor-
cycles segment rose from 18.7% to 22.5%. In the Finan-
cial Services segment, the gross profit margin came in
at 13.3% (2014: 13.7%).
Compared to the previous year, research and develop-
ment expenses increased by €136 million to €4,271 mil-
lion. As a percentage of revenues, the research and de-
velopment ratio fell by 0.5 percentage points to 4.6%.
Research and development expenses include amortisa-
tion of capitalised development costs amounting to
€1,166 million (2014: €1,068 million). Total research and
development expenditure - comprising research costs,
non-capitalised development costs and capitalised de-
velopment costs (excluding systematic amortisation
thereon) - amounted to €5,169 million (2014: €4,566 mil-
lion). The research and development expenditure ratio
was therefore 5.6% (2014: 5.7%). The proportion of
development costs recognised as assets was 39.9% (2014:
32.8%).
Compared to the previous year, selling and administra-
tive expenses increased by €741 million to €8,633 million.
Overall, selling and administrative expenses were
equivalent to 9.4% (2014: 9.8%) of revenues. Adminis-
trative expenses increased due to a number of factors,
including the increased size of the workforce and
higher expenses for new IT projects. Depreciation and
amortisation on property, plant and equipment and
intangible assets recorded in cost of sales and in selling
and administrative expenses amounted to €4,659 mil-
lion (2014: €4,170 million).
The net positive amount from other operating income
and expenses improved from €5 million to €94 mil-
lion, mainly reflecting gains on the sale of marketable
securities.
Profit before financial result (EBIT) amounted to
€9,593 million (2014: €9,118 million).
The financial result for the twelve-month period was a
net negative amount of €369 million, an improvement
of €42 million compared to the previous year. The
result from equity-accounted investments, comprising
the Group's share of the results of the joint ventures
BMW Brilliance Automotive Ltd., Shenyang, DriveNow
GmbH & Co. KG, Munich, and DriveNow Verwaltungs
GmbH, Munich, fell by €137 million to €518 million.
The net interest expense also deteriorated year-on-year,
rising by €114 million to €433 million. This increase
was partly attributable to higher net interest expenses
from defined benefit pension plans. Other financial
result in 2015 was a negative amount of €454 million,
mostly arising in connection with the fair value meas-
urement of currency and commodity derivatives. Com-
pared to the previous year, other financial result im-
proved by €293 million, mainly thanks to the lower
negative impact of currency derivatives. In the previous
year, impairment losses recognised on other investments,
most notably on the investment in SGL Carbon SE,
Wiesbaden, had also negatively impacted other finan-
cial result.
Profit before tax increased to €9,224 million (2014:
€8,707 million). The pre-tax return on sales was 10.0%
(2014: 10.8%).
Income tax expense amounted to €2,828 million
(2014: €2,890 million), corresponding to an effective
tax rate of 30.7% (2014: 33.2%). The lower income tax
expense for the twelve-month period was partly due
to the changed regional earnings mix as well as inter-
group pricing issues.
Earnings performance by segment
Revenues of the Automotive segment grew by 13.8% to
€85,536 million on the back of higher sales volume
and the positive currency impact. Adjusted for exchange
Position and Net Assets
49-Results of Operations, Financial
29 Review of Operations
Performance Indicators
200
-618
-519
-454
-747
-369
-411
9,224
8,707
-2,828
655
-2,890
5,817
50
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
(2014: 20.7%) and the Africa, Asia and Oceania region
for 31.1% (2014: 32.5%) of business.
External revenues in Germany edged up by 3.1%. In
the Rest of Europe region and in the Americas region, ex-
ternal revenues increased by 16.2% and 29.4% respec-
tively. Good contributions to the increase in Europe were
made by Great Britain, France, Spain and Italy. Reve-
27 Overall Assessment by Management nues in the Africa, Asia and Oceania region grew 9.6%
20 Management System
23-Report on Economic Position
23 General and Sector-specific
Environment
27 Financial and Non-financial
6,396
Management System Relevant for the
Financial Reporting Process
Income taxes
63 Report on Outlook, Risks and
Opportunities
― Attractive workplace, talent attraction and retention
-Diversity and equal opportunity
― Employee development and training
-Socio-economic impacts in society
- Customer satisfaction
― Design for recycling and resource efficiency
-Responsible marketing and product communication
-Responsible financial services
― Employee-management relations
-Involvement with local communities
- Biodiversity
- Corporate volunteering
-Donations and philanthropy
― Corporate Citizenship
-Efficient use of materials in operations and supply chain
Less important
Importance for the BMW Group ►
Low materiality
Medium materiality
High materiality
-Political involvement
Absolute crucial
Sustainability ratings
-Connected and autonomous driving
-Mobility concepts and services
- Data protection
In 2015, the BMW Group maintained its position among
the world's leading carmakers in terms of sustainability
and again secured excellent placings in widely regarded
ratings. In the Dow Jones Sustainability Indices (DJSI),
the BMW Group took first place in the Automobiles sec-
tor and remains the only enterprise in this sector to have
been consecutively listed in the index since its inception.
-Alternative drivetrain technologies
-Product safety
- Human rights
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Less important
Importance for the stakeholders ►
46
Materiality matrix
Absolute crucial
-Water consumption
-Vehicle efficiency and CO2 emissions
-Air emissions of operations
and supply chain
Waste and water pollution
81 Internal Control System and Risk
-Energy use and GHG emissions
of operations and supply chain
-Air emissions of vehicles
- Occupational health and safety
― Environmental and social standards
in the supply chain/sustainable sourcing
- Prevention of corruption and
anticompetitive behaviour
In the Global 500 rating of the Carbon Disclosure Project
(CDP), the BMW Group achieved 100 out of a possible
100 points for transparent reporting for the third time
in a row and the top mark “A” for climate protection
measures, making it one of only three companies to have
achieved the CDP's top mark "A" six times running. The
BMW Group was also included in the British FTSE4Good
Index again in 2015.
-Use of urban space
Fleet carbon emissions again reduced
18 General Information on the BMW Group
23-Report on Economic Position
larger donations to the BMW Foundation Herbert Quandt
and to the Eberhard von Kuenheim Foundation.
Further information on the subject of sustainability
within the BMW Group and the main topics is provided
in the Sustainability Report, which can be accessed on-
line at http://www.bmwgroup.com. The Sustainable
27 Overall Assessment by Management Value Report 2015 was drawn up in accordance with the
23 General and Sector-specific
Environment
27 Financial and Non-financial
Performance Indicators
29-Review of Operations
29 Automotive Segment
18-COMBINED MANAGEMENT REPORT
35 Motorcycles Segment
42 Sales and Marketing
44 Workforce
45-Sustainability
49 - Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
47 COMBINED MANAGEMENT REPORT
36 Financial Services Segment
38 Research and Development
48
41 Purchasing
Social engagement
The development of sustainable products and services
is an important aspect of the BMW Group's business
model. CO2 emissions levels are continually being re-
duced by incorporating Efficient Dynamics technolo-
gies in all of the Group's vehicles. The scope of electri-
fication within the fleet was further increased in 2015.
These measures form the basis for complying with le-
gally stipulated CO2 and fuel consumption limits moving
forward. Between 1995 and 2015, the average amount of
CO2 emitted by the Group's three brands sold in Europe
fell by 39.5%. In 2015, the BMW Group's fleet of new
vehicles sold in Europe (EU-28) consumed an average
of 4.7 litres of diesel per 100 km and 5.7 litres of petrol
respectively. CO2 emissions averaged 127 grams per km.
The BMW Group expended a total of €39.1 million
(2014: €34.5 million) for social engagement in 2015, in-
cluding €17.1 million (2014: €10.2 million) in the form
of donations. The sharp increase in overall expenditure
for social engagement compared to 2014 mainly reflects
Clean production
The efficient use of resources is an important aspect of
running the business on a sustainable basis. When
applied to all production-related processes, resource
efficiency helps protect the environment and minimise
costs. Since 2006, the consumption of resources and
emissions per vehicle produced has been reduced by an
average of 48.1%. The individual figures are as follows:
Energy consumption
-36.0%
-31.3%
Process wastewater
-45.1%
Non-recyclable waste
-78.9%
Solvent emissions
Water consumption
-51.4%
-45.7%
In 2015, the BMW Group reduced the consumption of
resources and emissions per vehicle produced by an
average of 7.0% compared with the previous year, giving
rise to savings of €8.2 million. The BMW Group again
cut the energy consumption per vehicle produced by
2.7% to 2.19 MWh during the period under report (2014:
2.25 MWh). The utilisation of highly efficient, ecologically
sustainable combined heat and power plants (CHPs)
and electricity generated from renewable sources at our
production sites, as well as improved energy efficiency
measures, enabled production-related CO2 emissions
per vehicle produced to be forced down by another 13.6%
year-on-year to 0.57 tonnes during the period under re-
port (2014: 0.66 tonnes). At 2.24 m³ per vehicle produced,
water consumption was slightly higher than one year
earlier, largely due to increased cooling requirements
caused by the hot summer in Germany (2014: 2.18 m³;
+2.8%). At 0.45 m³, the volume of process wastewater
per vehicle produced fell by 4.3% (2014: 0.47m³). The
volume of non-recyclable production waste was further
reduced to 4.00 kg per vehicle produced in 2015 (2014:
4.93 kg; -18.9%). Solvent emissions were successfully
curtailed by 5.4% to 1.22 kg per vehicle produced during
2015 (2014: 1.29 kg).
Sustainability along the entire value-added chain
Sustainability criteria are not only a vital aspect of in-
house production, they also play a major role in the
selection and assessment of suppliers as well as in the
field of transport logistics. The active management
of sustainability risks along the supply chain mitigates
compliance and image risks. With this in mind, the
BMW Group has integrated a comprehensive system of
sustainability management in its purchasing processes.
The amount of energy required for transportation world-
wide has continued to rise sharply in recent years. In
order to keep CO2 emissions to an absolute minimum,
the principle "production follows the market" is applied.
In addition, the proportion of CO2-efficient modes of
transport is being increased continually.
In the year under report, for instance, the proportion
of goods transported by air freight was significantly re-
duced. At 63.1%, the proportion of new vehicles leaving
BMW Group plants by rail was maintained at a high
level (2014: 63.3%).
Competitive thanks to sustainable human
CO₂ emissions
In 2015, the BMW Group reinforced its position as one
of the most attractive employers in the world. The
prominent role played in the field of sustainability helps
employees identify with the business and its products.
This strong sense of identification is one of the factors
contributing to the low attrition rate within the BMW
Group, in turn helping to keep personnel recruitment
expenses on the low side.
resources policies
-17,057
1,723
Other Entities.
7
7
Other Entities
Group
-154
Eliminations
-19,097
92,175
-664
1,975
Eliminations
211
Financial Services
6,886
23,739
Financial Services
-107
-179
Motorcycles
-1,679
1,990
Motorcycles
-7,523
Automotive
-75,173
-163
Automotive
85,536
20,599
80,401
29 Review of Operations
9,224
Reporting Period
2014
62 Events after the End of the
of BMW AG
The cash inflow from operating activities in 2015 de-
creased by €1,952 million to €960 million (2014:
€2,912 million), mainly reflecting a €2,739 million
59 Comments on Financial Statements increase in receivables from sales financing offset by
a €298 million decrease in inventories (2014: increase
of €971 million).
Cash flows from operating activities are determined
indirectly, starting with Group and segment net profit.
By contrast, cash flows from investing and financing
activities are based on actual payments and receipts.
operating, investing and financing activities. Cash and
cash equivalents in the cash flow statements correspond
to the amount disclosed in the balance sheet.
Position and Net Assets
49-Results of Operations, Financial
Performance Indicators
27 Overall Assessment by Management
27 Financial and Non-financial
23 General and Sector-specific
Environment
20 Management System
23-Report on Economic Position
18 General Information on the BMW Group
18 Business Model
Group
18-COMBINED MANAGEMENT REPORT
The consolidated cash flow statements for the Group and
the Automotive and Financial Services segments show
the sources and applications of cash flows for the finan-
cial years 2015 and 2014, classified into cash flows from
Financial position
The negative impact on earnings at the level of profit be-
fore tax reported in the Eliminations column increased
from €163 million in 2014 to €664 million in 2015,
mainly due to an increase in new leasing business and
changes in the leased products portfolio. The previous
year's figures had also benefited from elimination re-
versal effects.
Profit before tax in the Other Entities segment, at
€211 million, was €57 million higher than one year
earlier.
Financial Services segment revenues grew by 15.2% to
€23,739 million. Adjusted for exchange rate factors, rev-
enues went up by 7.6%. The segment's revenue perfor-
mance primarily reflects the growth of its contract port-
folio. The gross profit margin, at 13.3%, was roughly
in line with the previous year (2014: 13.7%). Selling and
administrative expenses were €129 million higher at
€1,164 million. Other operating income and expenses
improved by €17 million to a net expense of €8 million.
Overall, the Financial Services segment reports profit
before tax of €1,975 million, 14.6% up on the previous
year (2014: €1,723 million).
Segment profit before tax improved by €72 million to
€179 million on the back of higher sales volume.
Motorcycles segment revenues were 18.5% up on the
previous year. Adjusted for exchange rate factors, the in-
crease was 15.4%.
Overall, the Automotive segment reports a solid rise in
profit before tax to €7,523 million (2014: €6,886 million).
The financial result of the Automotive segment was a
net negative amount of €313 million, an improvement
of €45 million compared to the previous year. The result
from equity-accounted investments, comprising the
segment's share of the results of the BMW Brilliance
Automotive Ltd., Shenyang, joint venture and the two
DriveNow entities, was €137 million lower than one
year earlier. The interest result for the year deteriorated
by €146 million to a net expense of €435 million. This
was partly attributable to higher net interest expenses
from defined benefit pension plans. Other financial
result in 2015 was a negative amount of €396 million,
mostly arising in connection with the fair value meas-
urement of currency and commodities derivatives.
Compared to the previous year, other financial result
improved by €328 million, mainly thanks to the lower
negative impact of currency derivatives. In the previous
year, impairment losses recognised on other investments,
most notably on the investment in SGL Carbon SE,
Wiesbaden, had also negatively impacted other finan-
cial result.
Profit before financial result (EBIT) amounted to
€7,836 million (2014: €7,244 million), giving an EBIT
margin of 9.2% (2014: 9.6%).
Other operating income and expenses deteriorated by
€19 million to a net expense of €82 million.
Compared to the previous year, selling and administra-
tive expenses s increased by €574 million to €7,219 mil-
lion. Administrative expenses increased due to a number
of factors, including the increased size of the workforce
and higher expenses for new IT projects. Overall, selling
and administrative expenses were equivalent to 8.4%
(2014: 8.8%) of revenues.
rate factors, the increase was 6.3%. The gross profit
margin was at a similar level to the previous year at
17.7% (2014: 18.6%).
8,707
52
2015
BMW Group value added statement
2015
49 Results of Operations, Financial
Position and Net Assets
ing to the start-up of the new 7 Series), the development
of drive systems and work on other innovations. Over-
all, research and development expenses increased by
59-Comments on Financial Statements 14.6% year-on-year.
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
The net positive amount of other operating income and
expenses improved by €156 million to €184 million,
and included primarily realised exchange rate gains and
losses as well as reversals of and allocations to provisions.
The financial result deteriorated by €594 million, mainly
as a result of lower gains on the fair value measurement
of designated plan assets and the reduction in the dis-
count interest rate used in conjunction with pension and
other non-current personnel provisions. Lower write-
downs on investments worked in the opposite direction.
The profit from ordinary activities decreased from
€5,163 million to €4,572 million.
29 Review of Operations
The expense for income taxes relates primarily to cur-
rent tax for the financial year 2015.
Financial and net assets position
Capital expenditure on intangible assets and property,
plant and equipment in the year under report amounted
to €2,748 million (2014: €3,150 million), down by 12.8%
compared to the previous year. Depreciation and amor-
tisation amounted to €2,072 million (2014: €1,890 mil-
lion).
At €3,250 million, the carrying amount of investments
was similar to one year earlier (2014: €3,236 million).
Inventories increased to €4,267 million (2014: €3,859 mil-
lion) due to higher business volumes generally and
stocking up in conjunction with the introduction of new
models.
Receivables from subsidiaries climbed by €1,029 million
to €6,229 million, largely in conjunction with intragroup
financing receivables.
The decrease in other receivables and other assets to
€1,820 million (2014: €2,502 million) was mainly at-
tributable to a lower volume of genuine repurchase
(repo) transactions in place at the end of the reporting
period and lower tax receivables.
Liquidity within the BMW Group is managed centrally by
BMW AG on the basis of a group-wide liquidity concept,
which revolves around the strategy of concentrating a
significant part of the Group's liquidity at the level of
BMW AG. An important instrument used to achieve this
aim is the cash pool headed by BMW AG. The liquidity
position reported by BMW AG therefore reflects the
global activities of BMW AG and other Group companies.
Cash and cash equivalents went down by €595 million
to €2,478 million. This decrease over the twelve-month
period was mainly due to the increase in funds invested
in marketable securities as a strategic liquidity reserve.
At the same time, intragroup refinancing volumes at the
level of BMW AG were also reduced.
Equity rose by €861 million to €12,927 million, while the
equity ratio improved from 35.2% to 37.0%.
In order to secure obligations resulting from pre-retire-
ment part-time working arrangements and pension obli-
gations, investments in fund assets totalling €496 million
were transferred to BMW Trust e.V., Munich, in con-
junction with a Contractual Trust Arrangement (CTA).
Fund assets are offset against the related guaranteed ob-
ligations. The resulting surplus of assets over liabilities
is reported in the BMW AG balance sheet on the line "Sur-
plus of pension and similar plan assets over liabilities".
Pension provisions, net of designated plan assets, in-
creased from €12 million to €82 million.
The increase in other provisions related mainly to sales-
related obligations, pending losses on commodity and
currency contracts, warranties and personnel-related
obligations.
63 Report on Outlook, Risks and
After deducting the expense for taxes, the Company
reports a net profit of €2,741 million, compared to
€3,229 million in the previous year.
2014
Performance Indicators
Research and development expenses related mainly to
27 Overall Assessment by Management new vehicle models (including relevant expenses relat-
in € million
Profit/loss before tax by segment
in € million
Revenues by segment
51 COMBINED MANAGEMENT REPORT
Income taxes
Other taxes
Net profit
-1,782
-1,884
-49
-50
2,741
3,229
27 Financial and Non-financial
Transfer to revenue reserves
-1,325
Unappropriated profit available for distribution
2,102
1,904
60
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23-Report on Economic Position
23 General and Sector-specific
Environment
At €3,427 million, selling expenses were slightly lower
than one year earlier (2014: €3,533 million).
Administrative expenses went up by 15.5% to €2,610 mil-
lion, mainly as a result of new IT projects and the higher
workforce size.
-639
Work performed
Opportunities
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
1,918
8.5
-1,733
-8.4
10.7
Government/public sector
3,340
14.8
- 3,306
16.0
-1.0
Shareholders
2,102
9.3
-1,904
9.2
10.4
Group
4,267
19.0
3,894
18.9
9.6
Minority interest
27
Net value added
22,524
0.1
100.0
19
Providers of finance
11.3
47.4
- 9,764
12.2
-9,012
11.1
62,543
53,090
65.2
17.8
Bought-in costs
Gross value added
-30,746
33.0
-28,344
34.8
8.5
0.1
Depreciation and amortisation of total tangible,
8,222
8.8
-7,724
9.5
Net value added
22,524
24.2
20,620
25.3
9.2
Applied to
Employees
10,870
-48.3
intangible and investment assets
11,398
42.1
100.0
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Depreciation and amortisation
Other expenses
0
Cost of materials
Depreciation and amortisation -8.8
Net value added
Cost of materials
24.2
54.8
Other expenses
Key performance figures
12.2
2015
2014
%
19.7
21.2
Group gross margin
Group EBITDA margin
Group EBIT margin
%
15.5
-16.5
%
10.4
Opportunities
63 Report on Outlook, Risks and
Reporting Period
62 Events after the End of the
9.2
* Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
58
BMW Group value added 2015
in %
48.3%
Employees
Net value added
8.5%
14.8%
Providers of finance
Government/public sector
9.3%
Shareholders
19.0%
20,620
Group
Minority interest
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23-Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 - Results of Operations, Financial
Position and Net Assets
59-Comments on Financial Statements
of BMW AG
0.1%
54.1
44,078
-54.8
Current assets
Non-current assets
Total equity and liabilities in € billion
Balance sheet structure - Automotive segment
172
155
155
172
2015
2014
2014
2015
5%
4%
thereof cash and cash equivalents
38%
37%
36%
Current provisions and liabilities
38%
38%
- Non-current provisions and liabilities
37%
Equity
24%
63%
25%
64%
Current assets
48%
40%
46%
39%
The bulk of the net value added (48.3%) is applied to
employees. The proportion applied to providers of
finance was at a similar level to the previous year (8.5%).
The government/public sector (including deferred tax
expense) accounted for 14.8%. The proportion of net
value added applied to shareholders was at a similar level
to the previous year (9.3%). Minority interests take a
0.1% share of net value added. The remaining proportion
of net value added (19.0%) will be retained in the Group
to finance future operations.
Net valued added by the BMW Group in 2015 in-
creased by 9.2% to €22,524 million and was once
again at a high level.
The value added statement shows the value of work per-
formed, less the value of work bought in by the BMW
Group during the financial year. Depreciation and
amortisation, cost of materials, and other expenses are
treated as bought-in costs in the value added calcula-
tion. The allocation statement applies value added to
each of the participants involved in the value added
process. It should be noted that the gross value added
amount treats depreciation as a component of value
added which, in the allocation statement, is treated as
internal financing.
Value added statement
Report is a subsection of the Combined Management
Report.
57 COMBINED MANAGEMENT REPORT
The compensation of the Board of Management com-
prises both a fixed and a variable component. Bene-
fits are also payable – primarily in the form of pension
benefits - at the end of members' mandates. Further
details, including an analysis of remuneration by
each individual, are disclosed in the Compensation
Report, which can be found in the section "Statement
on Corporate Governance". The Compensation
Compensation Report
Overall, the results of operations, financial position and
net assets position of the BMW Group continued to de-
velop positively during the year under report.
The Group equity ratio at the end of the reporting period
was 24.8% (31 December 2014: 24.2%). The equity ratio
of the Automotive segment was 40.1% (31 December
2014: 39.2%) and that of the Financial Services segment
was 8.2% (31 December 2014: 8.8%).
83
79
79
83
Balance sheet structure - Group
Total equity and liabilities in € billion
Non-current assets
-2015
7%
2014
2015
5%
thereof cash and cash equivalents
43%
Current provisions and liabilities
43%
54%
52%
18%
- Non-current provisions and liabilities
17%
Equity
2014
56
87 BMW Stock and Capital Markets
83 Disclosures Relevant for Takeovers
and Explanatory Comments
Total output
Cost of materials*
Other expenses
2015
in € million
2015
in %
2014
2014
Change
in € million
in %
in %
92,175
98.8
Other income
-80,401
200
0.2
-156
0.2
914
1.0
877
-1.1
93,289
100.0
81,434
100.0
14.6
51,145
98.7
11.3
Financial income
The growth in business reported by the Financial Services
segment is reflected in increases of €4,592 million and
€4,427 million in current and non-current receivables
from sales financing respectively and in the higher level
of leased products (up by €4,800 million). At 31 Decem-
ber 2015, leased products accounted for 20.3% of total
assets (2014: 19.5%). Adjusted for exchange rate factors,
leased products increased by 10.6%. Non-current re-
ceivables from sales financing accounted for 24.3%
(2014: 24.2%) of total assets, current receivables from
sales financing for 16.4% (2014: 15.2%). Adjusted for ex-
change rate factors, non-current receivables from sales
financing went up by 7.7%, current receivables from
sales financing by 14.5%.
Management System Relevant for the
Financial Reporting Process
81 Internal Control System and Risk
68 Report on Risks and Opportunities
63 Outlook
Opportunities
63 Report on Outlook, Risks and
Reporting Period
62 Events after the End of the
of BMW AG
59 Comments on Financial Statements
Position and Net Assets
49-Results of Operations, Financial
29 Review of Operations
Performance Indicators
Revenues
27 Overall Assessment by Management
27 Financial and Non-financial
23 General and Sector-specific
20 Management System
23-Report on Economic Position
18 Business Model
18 General Information on the BMW Group
18-COMBINED MANAGEMENT REPORT
Pension provisions decreased from €4,604 million to
€3,000 million over the twelve-month period, mainly as
a result of the higher discount factors used in Germany,
the UK and the USA.
Current other liabilities went up by €1,433 million to
€9,208 million, partly due to increases in deposits re-
ceived, advance payments from customers, and in-
creases in other taxes. The change in deferred income
due to greater volumes of service contracts, Connected
Drive offers and leasing business also contributed to
the increase.
Group equity rose by €5,327 million to €42,764 million,
increased primarily by the profit attributable to share-
holders of BMW AG (€6,369 million). The dividend paid
by BMW AG reduced equity by €1,904 million. Equity
increased as a result of the positive impact arising on
the currency translation of foreign subsidiaries' finan-
cial statements (€765 million) and on remeasurements
of the net defined benefit liability for pension plans
(€1,413 million), the latter attributable primarily to the
higher discount rates applied in Germany, the UK and
the USA. In addition, deferred taxes on items recognised
directly in equity increased equity by €115 million.
Group equity was reduced by net fair value losses on
derivative financial instruments (€1,301 million) and
on marketable securities (€170 million). Other items in-
creased equity by €40 million.
Non-current and current financial liabilities increased
from €80,649 million to €91,683 million over the twelve-
month period. Adjusted for currency factors, the in-
crease was 10.1%. The execution of new ABS transac-
tions and the issue of new bonds were the main factors
driving the increase in non-current and current finan-
cial liabilities.
On the equity and liabilities side of the balance sheet,
increases were recorded for non-current and current
financial liabilities (14.7% and 12.5% respectively),
Group equity (14.2%) and current other provisions
(18.4%). By contrast, pension provisions decreased
by 34.8%.
Cash and cash equivalents went down by €1,566 million
to €6,122 million, due to investments made in mar-
ketable securities. Changes in cash and cash equiva-
lents are described in the "Financial position" section.
creased by 21.1%, mainly as a result of the purchase of
marketable securities.
Other current financial assets went up by €1,251 million
compared to 31 December 2014 to stand at €6,635 mil-
lion and accounted for 3.9% (2014: 3.5%) of total assets.
Adjusted for exchange rate factors, financial assets in-
Investments accounted for using the equity method were
€1,145 million higher at €2,233 million, whereby the
increase was mainly attributable to the first-time con-
solidation of THERE Holding B.V., Amsterdam, and the
BMW Group's share of earnings of the BMW Brilliance
Automotive Ltd., Shenyang, joint venture.
Environment
63 Outlook
Group pre-tax return on sales
10.0
63 Report on Outlook, Risks and
62 Events after the End of the
Reporting Period
of BMW AG
Position and Net Assets
49-Results of Operations, Financial
source of financing. Owing to the increased use of in-
ternational money and capital markets to raise funds,
the scale of funds raised in the form of loans from in-
59 Comments on Financial Statements ternational banks is relatively small.
29 Review of Operations
Performance Indicators
27 Financial and Non-financial
23 General and Sector-specific
Environment
20 Management System
23-Report on Economic Position
18 General Information on the BMW Group
18 Business Model
Apart from issuing commercial paper on the money
market, the BMW Group's financing companies also
issue bearer bonds. In addition, retail customer and
dealer financing receivables on the one hand and leas-
ing rights and obligations on the other are securitised
in the form of asset-backed securities (ABS) financing
arrangements. Financing instruments employed by the
Group's in-house banks in Germany and the USA (e.g.
27 Overall Assessment by Management customer deposits) are also used as a supplementary
18-COMBINED MANAGEMENT REPORT
54
Financing measures undertaken centrally ensure access
to liquidity for the Group's operating subsidiaries on
market-based and consistent conditions. Funds are ac-
quired with a view to achieving a desired structure for
the composition of liabilities, comprising a finely tuned
mix of financing instruments. The use of longer-term
financing instruments to finance the Group's financial
services business and the maintenance of a sufficiently
high liquidity reserve serves to avoid the liquidity risk
intrinsic to any large portfolio of contracts. This prudent
approach to financing also bolsters BMW AG's ratings.
Further information is provided in the "Liquidity risks"
section of the "Report on outlook, risks and opportu-
nities".
3. Focus on value by optimising financing costs.
2. Autonomy through the diversification of refinancing
instruments and investors, and
1. The ability to act at all times by assuring permanent
access to strategically important capital markets,
The overall objective of Group financing is to ensure the
solvency of the BMW Group at all times. Achieving this
objective is tackled in three strategic areas:
A broadly based range of instruments transacted on in-
ternational money and capital markets is used to refi-
nance worldwide operations. Practically all of the funds
raised are used to finance the BMW Group's Financial
Services business.
Refinancing
14,223
16,911
-3,478
-2,645
17,701
19,556
-8,583
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Thanks to its good ratings and the high level of accept-
ance it has on capital markets, the BMW Group was
again able to refinance operations during the financial
year 2015 on debt capital markets. In addition to the
issue of bonds and loan notes on the one hand and
private placements on the other, commercial paper was
also issued. Additional funds were raised via new secu-
ritised instruments and the prolongation of existing in-
struments. As in previous years, all issues were highly
sought after by both private and institutional investors.
Liabilities from customer deposits (banking)
-13,631
Asset-backed financing transactions
40,319
Bonds
Bonds
Asset-backed financing
transactions
deposits (banking)
Liabilities from customer
The regular issue of commercial paper also strengthens
the BMW Group's financial basis. The following table
provides an overview of amounts utilised at 31 December
2015 in connection with the BMW Group's money and
capital market programmes:
Nine public ABS transactions were executed in 2015, in-
cluding three in the USA, two each in Germany and
China, and one each in Canada and France, with a total
volume equivalent to €5.7 billion. Further funds were
also raised via new ABS conduit transactions in Canada,
Japan and Switzerland totalling €1.1 billion. Other exist-
ing transactions remained in place in various countries,
including the UK, South Korea, South Africa, Brazil and
Australia.
lion on European capital markets. Bonds were also
issued in British pounds, US dollars, Australian dollars,
South Korean won and other currencies for a total
amount of €6.35 billion.
8,234
41,289
-11,278
42,160
within 1 between 1 and 5
Maturity (years)
15,000
7,500
22,500
30,000
37,500
in € million
45,000
BMW Group - financial liabilities
Liabilities to banks
Derivative instruments
Commercial paper
Other
in € million
BMW Group - financial liabilities
In the course of 2015, the BMW Group issued eight euro
benchmark bonds with a total issue volume of €6.75 bil-
later than 5
Liabilities to banks
3,366
5,752
Currency trans-
lation, changes in
Group composition
activities
+5,004
Cash inflow
from financing
Cash outflow
from investing
activities
-7,603
+960
activities
7,688
Cash inflow
from operating
Cash and cash
equivalents
31.12.2014
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
in € million
Change in cash and cash equivalents
The cash flow statement for the Automotive segment
shows that the cash inflow from operating activities ex-
ceeded the cash outflow from investing activities by
€4,312 million (2014: €3,587 million). Adjusted for net
investments in marketable securities and term deposits
with longer terms totalling €1,092 million (2014: outflow
of €106 million), mainly in conjunction with strategic
After adjusting for the effects of exchange rate fluc-
tuations and changes in the composition of the BMW
Group with a total positive amount of €73 million
(2014: €88 million), the various cash flows resulted in
a decrease of cash and cash equivalents of €1,566 mil-
lion (2014: increase of €17 million).
The cash outflow from investing activities exceeded the
cash inflow from operating activities by €6,643 million
in 2015. A similar constellation arose in the previous
year, when the shortfall had amounted to €3,204 million.
Cash inflow from financing activities totalled €5,004 mil-
lion (2014: €3,133 million). Proceeds from the issue of
bonds brought in €13,007 million (2014: €10,892 mil-
lion), compared with an outflow of €8,908 million (2014:
€7,249 million) for the repayment of bonds. Non-cur-
rent other financial liabilities resulted in a cash inflow
of €9,715 million (2014: €5,900 million) and a cash
outflow of €8,802 million (2014: €5,697 million). The net
cash inflow for current other financial liabilities was
€2,648 million (2014: €2,132 million). The change in
commercial paper gave rise to a net cash outflow of
€498 million (2014: €1,012 million). The payment of
dividends resulted in a cash outflow of €1,917 million
(2014: €1,715 million).
Further information on investments is provided in the
section on the net assets position.
The cash outflow for investing activities amounted to
€7,603 million (2014: €6,116 million) and was thus 24.3%
higher than in the previous year. The principal reasons
for the higher cash outflow were a €647 million increase
in expenditure for investments (2014: €99 million)
relating to the acquisition of a shareholding in THERE
Holding B.V., Amsterdam, (accounted for at equity) for
an amount of €668 million and a €1,077 million increase
in the net outflow for investments in marketable secu-
rities and term deposits with longer terms (2015: out-
flow of €1,221 million). The net outflow for these items
comprises investments in marketable securities and
term deposits on the one hand, and proceeds from the
sale of marketable securities and the expiry of term de-
posits on the other.
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
+73
Cash and cash
equivalents
31.12.2015
6,122
53 COMBINED MANAGEMENT REPORT
3,952
31.12.2014
31.12.2015
*Excluding derivative financial instruments.
Net financial assets Automotive segment
Less: external financial liabilities*
Financial assets
Intragroup net financial assets
Marketable securities and investment funds
Cash and cash equivalents
in € million
Net financial assets of the Automotive segment comprise
the following:
from financing activities went up by €4,101 million to
€10,028 million, mainly influenced by the change in
other financial liabilities.
Cash outflows for operating activities in the Financial
Services segment are driven primarily by cash flows re-
lating to leased products and receivables from sales fi-
nancing and totalled €10,351 million (2014: €4,715 mil-
lion). Overall, cash outflows from investing activities
totalled €140 million (2014: €297 million). Cash inflows
4,326
3,481
-106
1,092
-5,836
-7,524
9,423
11,836
2014
2015
Net investment in marketable securities and term deposits
Free cash flow Automotive segment
Cash outflow from investing activities
Cash inflow from operating activities -
in € million
Free cash flow for the Automotive segment was as
follows:
liquidity planning, the excess amount was €5,404 mil-
lion (2014: €3,481 million).
5,404
Commercial paper
-13,509
-12,720
5,415
Derivative instruments
%
-72.2
61.7
Automotive
%
-31.6
21.8
Motorcycles
Return on equity
Financial Services
Cash inflow from operating activities (Group)
Cash outflow from investing activities (Group)
Coverage of cash outflow from investing activities by cash inflow from operating activities (Group)
Free cash flow of Automotive segment
Net financial assets Automotive segment
%
20.2
19.4
€ million
960
2,912
€ million
-7,603
-6,116
%
-12.6
47.6
€ million
5,404
Group
20.8
19.3
%
-10.8
%
6.9
-7.2
Group post-tax return on sales
Group pre-tax return on equity
Group post-tax return on equity-
%
-24.6
24.5
%
17.1
16.3
%
- 3,481
24.8
Group equity ratio
%
-40.1
39.2
- Automotive equity ratio
%
8.2
8.8
Financial Services equity ratio
Coverage of intangible assets, property, plant and equipment by equity (Group)
%
169.9
158.1
Return on capital employed
24.2
€ million
16,911
-14,223
Other operating income and expenses
184
28
Result on investments
-1,606
-741
Financial result
-1,043
-449
Profit from ordinary activities
4,572
5,163
Within current assets, increases were registered in par-
ticular for receivables from sales financing (19.5%) and
financial assets (23.2%). By contrast, cash and cash
equivalents decreased by 20.4%.
The increase in non-current assets on the assets side of
the balance sheet related primarily to leased products
(15.9%), receivables from sales financing (11.8%) and
investments accounted for using the equity method
(105.2%).
-4,152
The Group balance sheet total increased by €17,371 mil-
lion (11.2%) compared to the end of the previous finan-
cial
year
to stand at €172,174 million at 31 December
2015. Adjusted for exchange rate factors, the balance
sheet total increased by 7.7%. The currency impact
was mainly attributable to the appreciation in the value
of a number of currencies against the euro, most nota-
bly the US dollar, the British pound and the Chinese
renminbi.
Further information with respect to financial liabilities
is provided in notes 34, 38 and 42 to the Group Financial
Statements.
55 COMBINED MANAGEMENT REPORT
Liquid funds stood at a high level of €11.4 billion at
31 December 2015. The BMW Group also has access to
a syndicated credit line of €6 billion, with a term up to
October 2018. This credit line, which is provided by a
consortium of 38 international banks, had not been
utilised at the end of the reporting period.
5.6
0.3
36.3
Amount utilised
Australian Medium Term Notes
Commercial paper
Euro Medium Term Notes
in € billion
Programme
-1,539
4,550
Other
Net assets
%
-4,758
-2,259
59 COMBINED MANAGEMENT REPORT
Report on Economic Position
Comments on Financial Statements of BMW AG
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
based in Munich, Germany, is the parent company of
the BMW Group. The comments on the BMW Group
and Automotive segment provided in earlier sections
are also relevant for BMW AG, unless presented differ-
ently in the following section. The Financial Statements
of BMW AG are drawn up in accordance with the pro-
visions of the German Commercial Code (HGB) and
the relevant supplementary provisions contained in
the German Stock Corporation Act (AktG).
The main financial and non-financial performance indi-
cators relevant for BMW AG are largely identical and
synchronous with those of the Automotive segment
of the BMW Group and are described in detail in the
"Report on Economic Position" section of the Combined
Management Report.
Differences between the accounting policies used in the
BMW AG financial statements (prepared in accordance
with HGB) and the BMW Group Financial Statements
(prepared in accordance with IFRS) arise primarily in
connection with the accounting treatment of intangible
assets, financial instruments, provisions and deferred
taxes.
Business environment and review of operations
The general and sector-specific environment in which
the BMW AG operates is the same as that for the
BMW Group and is essentially described in the “Report
on Economic Position" section of the Combined Manage-
ment Report.
BMW AG develops, manufactures and sells cars and
motorcycles as well as spare parts and accessories manu-
factured by itself, foreign subsidiaries and external
suppliers. Sales activities are carried out primarily
through branches, subsidiaries, independent dealers
and importers. In 2015, BMW AG increased sales vol-
ume by 108,595 units to 2,275,367 units. This figure
includes 287,755 units relating to series sets supplied
to the joint venture BMW Brilliance Automotive Ltd.,
Shenyang, an increase of 289 units over the previous
year. At 31 December 2015, BMW AG employed a work-
force of 84,860 people, 4,185 more than one year earlier.
Results of operations
Revenues increased by 8.7% compared to the previous
year, primarily as a result of higher sales volume. In geo-
graphical terms, most of the increase related to North
America and Europe. Sales to Group entities accounted
for €55.5 billion or 76.7% of total revenues of €72.4 billion.
Cost of sales increased by 11.5% to €57,764 million and
therefore at a more pronounced rate than the increase in
revenues, mainly reflecting higher purchase prices from
production sites outside Germany and the intragroup
transfer of prior-year warranty expenses from one of the
Group's sales company to BMW AG. As a result, gross
profit decreased by €167 million to €14,620 million.
BMW AG Income Statement
Research and development expenses
in € million
2014
Revenues
Cost of sales
Gross profit
66,599
-57,764
-51,812
14,620
14,787
Selling expenses
-3,427
-3,533
Administrative expenses
-2,610
2015
-72,384
67.0
14,619
The objective of the risk management system, and one
of the key functions of risk reporting, is to identify,
record and actively manage any internal or external
risks that could pose a threat to the attainment of the
Group's corporate targets. The risk management system
covers all significant risks to the Group and any which
could I pose a threat to its going-concern status. In terms
of the structure of the risk management system, the re-
sponsibility for risk reporting lies with each individual
employee and manager in their various roles - and not
with any centralised unit in particular. Every person
employed by the Group is required to report any risks
identified via the available reporting channels. This re-
quirement is set out in guidelines that apply throughout
the Group.
Risk management system
The scope of entities covered by the report on risks and
opportunities corresponds to the scope of consolidated
entities included in the BMW Group Financial Statements.
segment, opportunities and risks relate to the Auto-
motive segment.
As a general rule, opportunities and risks are assessed
over a medium-term period of two years. All potential
risks of losses (individual and accumulated risks) are
monitored and managed from a risk management per-
spective. As a matter of principle, any risks capable of
posing a threat to the going-concern status of the BMW
Group are avoided. If there is no specific reference to a
87 BMW Stock and Capital Markets
83 Disclosures Relevant for Takeovers
and Explanatory Comments
Management System Relevant for the
Financial Reporting Process
68 - Report on Risks and Opportunities
81 Internal Control System and Risk
63 Outlook
Opportunities
The Group risk management system comprises a decen-
tralised network covering all parts of the business and
is steered by a centralised risk management function.
Each of the BMW Group's fields of responsibility is
represented within the risk management network by
The prudent management of opportunities and risks is
a fundamental prerequisite for the Group's ability to
59 Comments on Financial Statements react appropriately to changes in political, legal, techni-
cal or economic conditions. All opportunities and risks
identified are addressed in the Outlook Report, if they
seem likely to materialise. The following sections focus
on potential future developments or events, which could
result in a positive variance (opportunities) or a nega-
tive variance (risks) in the BMW Group's outlook. The
potential impact of risks and opportunities is assessed
separately as a general rule, i.e. without set-off.
Reporting Period
62 Events after the End of the
of BMW AG
Position and Net Assets
49 Results of Operations, Financial
29 Review of Operations
Performance Indicators
27 Financial and Non-financial
27 Overall Assessment by Management consciously takes certain risks.
As a worldwide leading manufacturer of premium cars
and motorcycles and provider of premium financing
and mobility services, the BMW Group is exposed to
numerous uncertainties and changes. Making full use of
the opportunities that present themselves is the basis for
its entrepreneurial success. In order to achieve growth,
drive profitability, boost efficiency and maintain sustain-
able levels of business going forward, the BMW Group
Environment
63-Report on Outlook, Risks and
Risk management in the BMW Group
Effectiveness
Usefulness
In addition to comprehensive risk management, manag-
ing the business on a sustainable basis also constitutes
one of the Group's core corporate principles. Any risks
or opportunities relating to sustainability issues are ex-
amined and discussed by the Sustainability Committee.
Strategic options and measures open to the BMW Group
are put forward to the Sustainability Board, which in-
cludes the entire Board of Management. Risk aspects
discussed at this level are integrated in the work of the
group-wide risk network. The overall composition of
the Risk Management Steering Committee and the Sus-
tainability Committee ensures that risk and sustainability
management are closely coordinated.
The risk management system is regularly examined by
the Internal Audit. By sharing experiences with other
companies on an ongoing basis, the BMW Group en-
deavours to incorporate new insights in the risk manage-
ment system, thus ensuring continual improvement.
Regular basic and further training as well as information
events held throughout the BMW Group, particularly
within the risk management network, are invaluable ways
of preparing people for new or additional challenges re-
lating to the processes in which they are involved.
measures.
Risks reported from within the network are firstly pre-
sented for review to the Risk Management Steering
Committee, for which Group Controlling is responsible.
After review, the risks are reported to the Board of
Management and the Supervisory Board. Any significant
or going-concern-related risks are classified according
to their potential to impact the Group's results of opera-
tions, financial position and net assets. The level of risk
is then quantified in each case, depending on its proba-
bility of occurrence and the respective risk mitigation
The risk management process applies throughout the
Group and comprises the early identification and pene-
tration of risks, comprehensive analysis and risk meas-
urement, the coordinated use of suitable management
tools and also the monitoring and evaluation of any
measures taken.
Risk management process
Risk management for the Group as a whole falls under
the remit of the Risk Management Steering Committee,
the Compliance Committee, the Internal Control System
and the Group Internal Audit.
Risks are also potentially capable of damaging the BMW
Group's reputation. Although reputational risks are dif-
ficult to quantify, their importance is constantly grow-
ing, particularly in view of an increasingly critical gen-
eral public and the speed with which information can
be distributed online. With this in mind, a new concept
has been developed (and validated with the aid of exter-
nal experts), aimed at strengthening links between the
BMW Group's risk management and its corporate com-
munication functions. In order to take better account
of reputational risks in the overall risk assessment, the
Head of Group Communication Strategy, Corporate
and Market Communication is now also a member of
the Risk Management Steering Committee. A further
focus was placed on checking the skill sets of staff and
managers involved in risk management throughout the
BMW Group. The revamped intranet portal used for
centralised risk management provides helpful support
for those working in this field, whilst ensuring that risk
reporting is complete.
"Network Representatives". The network's formal or-
ganisational structure helps promote its visibility and
underline the importance of risk management within
the BMW Group. The duties, responsibilities, and tasks
of the centralised risk management unit and the above-
mentioned Network Representatives are clearly de-
scribed, documented and accepted. Group risk manage-
ment is geared towards meeting the following three
criteria: effectiveness, usefulness and completeness.
69 COMBINED MANAGEMENT REPORT
Group Audit
Board of Management
Risk Management
Steering Committee
Supervisory Board
Internal Control System
Monitoring
①
Controlling
Risk management
Analysis and
Measurement
Reporting
Identification
Group-wide risk management
Compliance
Committee
Completeness
23 General and Sector-specific
Risk measurement
23 Report on Economic Position
18 General Information on the BMW Group
18 Business Model
-g CO2/km
slight increase
-2,247,485
units
slight increase
122,244
slight increase
9,224
€ million
2016
Outlook
2015
127
Return on capital employed -
Revenues
Fleet emissions²
Sales volume¹
Automotive segment
Workforce at year-end
Profit before tax-
BMW Group
Principal performance indicators
pected to increase slightly on the back of a slight in-
crease in deliveries to customers. Simultaneously, a
slight decrease in fleet carbon emissions is predicted.
The Group's targets are to be met with only a slight rise
in staff numbers worldwide. The Automotive segment's
EBIT margin is set to remain within the target range
of between 8 and 10%, although its ROCE is likely to de-
crease moderately. The Financial Services segment's
ROE will be broadly in line with the previous year. Never-
theless, both performance indicators will be higher than
their long-term targets of 26% (ROCE) and 18% (ROE)
respectively. Motorcycles segment sales are also forecast
to grow slightly, accompanied by a slight drop in RoCE.
Depending on the political and economic situation and
the outcomes of the risks and opportunities described
below, actual business performance could, however, dif-
fer from current expectations.
Overall assessment by Group management
Business is expected to develop well in the financial year
2016, with the introduction of new models and the ex-
pansion of individual mobility-related services promising
further profitable growth. Despite the many challenges
described above, Group profit before tax is forecast to
increase slightly. Automotive segment revenues are ex-
Return on equity expected at previous year's level
The Financial Services segment is likely to continue
forming well in 2016. Segment RoE is expected to come
in at a similar level to the previous year (2015: 20.2%),
thus remaining ahead of the minimum target of 18%.
EBIT margin
slight decrease
€ million
-85,536
18-COMBINED MANAGEMENT REPORT
Report on Outlook, Risks and Opportunities
Report on Risks and Opportunities
68
in line with last year's level
20.2
%
slight decrease
slight increase
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2015: 282,000 units).
2 EU-28.
Return on equity.
Financial Services segment
Return on capital employed.
Sales volume
Motorcycles segment
31.6
-%
-136,963
units
moderate decrease
-72.2
%
between 8 and 10
9.2
-%
slight increase
20 Management System
In order to determine which risks can be considered
significant in relation to results of operations, financial
position and net assets and to identify changes in key
performance indicators used by the BMW Group, risks
are classified as high, medium or low. The impact of
risks is measured and reported net of risk mitigation
measures (net basis).
The overall impact on results of operations based on the
assumption that the risk will materialise is measured
for the two-year assessment period and allocated to the
following categories:
Class
Stable
High
- Foreign currencies
Stable
Insignificant
Stable
Medium
Stable
Significant
Stable
High
Significant
Financial risks and opportunities
Pension obligations
Stable
Insignificant
Stable
High
Stable
-Stable
Insignificant
Insignificant
Stable
Reduced
Medium
Sales and marketing
Information, data protection and IT -
Stable
Raw materials
High
Low
Legal risks
Stable
Stable
Significant
Stable
Significant
Stable
Increased
High
Medium
Liquidity/operational risks
Interest rate changes
-High
Residual value
Stable
Significant
Stable
-High
Credit risk
Risks and opportunities relating to the provision of financial services
Stable
Low
-Liquidity
Stable
Significant
Stable
-Purchasing
Medium
Stable
Stable
Insignificant
Insignificant
68-Report on Risks and Opportunities
81 Internal Control System and Risk
63 Outlook
Opportunities
63-Report on Outlook, Risks and
Reporting Period
62 Events after the End of the
of BMW AG
59 Comments on Financial Statements
49 Results of Operations, Financial
Position and Net Assets
29 Review of Operations
Performance Indicators
27 Financial and Non-financial
27 Overall Assessment by Management
23 General and Sector-specific
Environment
23 Report on Economic Position
20 Management System
18 General Information on the BMW Group
18 Business Model
18-COMBINED MANAGEMENT REPORT
70
The significance of risks for the BMW Group is deter-
mined on the basis of risk amounts. The measurement
of the amount of a risk takes account of both its impact
For the sake of simplicity, the overall impact on results
of operations, financial position and net assets is referred
to in the Report on Risks and Opportunities as "earnings
impact".
-> €500-2,000 million
-> €2,000 million
-> €0-500 million
Earnings impact
Low
Medium
High
Management System Relevant for the
Financial Reporting Process
per-
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Class
Stable
Increased
High
High
-Change com-
pared to prior year
Opportunities
Change com-
pared to prior year
Risk amount
Production and technology.
Risks and opportunities relating to operations
Political and global economic risks and opportunities
Strategic and sector risks and opportunities
Risks and opportunities
Any risks or opportunities which could, from today's
perspective, have a significant impact on the results of
operations, financial position and/or net assets of the
BMW Group are described in the following sections.
Neither at the balance sheet date nor at the date on
which the Group Financial Statements were authorised
for issue were any risks identified that could pose a
threat to the going-concern status of the BMW Group.
The following table provides an overview of all risks
and opportunities and illustrates their significance for
the BMW Group.
Risks and opportunities
The implementation of identified opportunities is un-
dertaken on a decentralised basis. The significance
of opportunities for the BMW Group is classified in
the categories "material" or "not material".
a high return on capital employed. Any profitability im-
provement measures likely to be implemented are in-
corporated in the forecast. One example is the imple-
mentation of modular-based production and common
architectures, which enable a greater commonality of
features between different models and product lines.
This strategy, in turn, contributes to improved profita-
bility by reducing development costs and other invest-
ment on the series development of new vehicles. The
new approach helps cut production costs and increase
production flexibility. Moreover, a more competitive cost
basis opens up opportunities to engage in new market
segments.
The continuous improvement of important business pro-
cesses and strict cost controls are essential in the Group's
ongoing endeavours to ensure good profitability and
The Group's product and service portfolio is continually
reviewed on the strength of these analyses and new
product projects are presented to the Board of Manage-
ment for consideration, as deemed appropriate.
up
New opportunities regularly present themselves in the
dynamic business environment in which the BMW
Group operates. General economic trends and sector-
specific factors - including external regulations, sup-
pliers, customers and competitors - are monitored on a
continuous basis. Identifying opportunities is an integral
part of the process of developing strategies and drawing
forecasts for the BMW Group.
Opportunities management system and
identifying opportunities
-> €0-50 million
> €50-400 million
> €400 million
Risk amount
Medium
High
Low
(net of appropriate countermeasures) and its likelihood
of occurrence in each case. The amount of a risk is
ap-
proximated in the case of risks measured on the basis of
"value-at-risk” and “cash-flow-at-risk" models. In this
situation, the following assessment criteria are applied:
Stable
Financial Services segment
67 COMBINED MANAGEMENT REPORT
-1,343
7,320
7,699
-7,308
-7,617
-12
82
31
-30
12,066
12,927
-1,864
-1,904
-7,422
-8,061
-2,084
2,107
656
657
Total equity and liabilities
Deferred income
Liabilities
Other liabilities
Liabilities to subsidiaries
2,102
4,500
4,784
6,690
BMW AG is integrated in the group-wide risk manage-
ment system and internal control system of the BMW
Group. Further information is provided in the “Internal
BMW AG's performance is highly dependent on the
same set of risks and opportunities that affect the BMW
Group and which are described in detail in the “Report
on Outlook, Risks and Opportunities" section of the Com-
bined Management Report. As a general rule, BMW AG
participates in the risks entered into by Group entities
on the basis of the relevant shareholding percentage.
Risks and opportunities
Position and Net Assets
49 Results of Operations, Financial
29 Review of Operations
Performance Indicators
27 Overall Assessment by Management
27 Financial and Non-financial
23 General and Sector-specific
Environment
20 Management System
23-Report on Economic Position
18 General Information on the BMW Group
18 Business Model
18-COMBINED MANAGEMENT REPORT
Events after the End of the Reporting Period
Report on Economic Position
62
Deferred income went up by €466 million to €1,549 million
and comprised mainly amounts relating to services still to
be performed for service and maintenance contracts.
Liabilities to banks decreased as a result of the repay-
ment of project-related loans.
34,236
-1,083
1,549
34,977
13,736
12,772
216
239
6,872
Trade payables
59-Comments on Financial Statements Control System and Risk Management System Relevant
Liabilities to banks
Other provisions
3,859
4,267
Current assets
Cash and cash equivalents
Marketable securities
Other receivables and other assets
Receivables from subsidiaries
Trade receivables
Inventories
13,945
Tangible, intangible and investment assets
628
3,236
Investments
10,304
11,016
Property, plant and equipment
405
353
Intangible assets
Assets
2014
2015
in € million
-3,250
697
6,229
-5,200
Pension provisions
Registered profit-sharing certificates
Equity
Unappropriated profit available for distribution
Revenue reserves
Capital reserves
Subscribed capital
Equity and liabilities
34,236
34,977
Total assets
-1,123
-722
Surplus of pension and similar plan assets over liabilities
265
303
Prepayments
18,903
19,333
3,073
-2,478
-3,572
3,911
2,502
-1,820
Provisions
of BMW AG
62-Events after the End of the
Reporting Period
20 Management System
18 General Information on the BMW Group
18 Business Model
18-COMBINED MANAGEMENT REPORT
66
Workforce at year-end: slight increase expected
The BMW Group will continue to recruit staff in 2016,
spurred by growth in the automobile and motorcycle
lines of business on the one hand and the expansion of
its financial and mobility services on the other. Based
on our latest forecasts, we expect a slight increase in the
size of the workforce (2015: 122,244 employees) during
the coming twelve-month period.
Nevertheless, the BMW Group expects to remain firmly
on course for growth in 2016. Attractive products and
services, covering the entire spectrum of individual mo-
bility, will continue making a substantial contribution
to further improving earnings. This upward trend will,
however, be held down by rising personnel expenses
and high levels of investment in projects that ultimately
help safeguard future competitiveness. Overall, Group
profit before tax is expected to increase slightly year-on-
year (2015: €9,224 million).
Profit before tax: slight increase expected
Competition on international automobile markets is set
to remain fierce in the current year. Furthermore, con-
tinuing normalisation on the Chinese market and develop-
ments in Russia are likely to influence the pace of earn-
ings growth. Political and macroeconomic uncertainties
in Europe may also play a role (see the section "Political
and global economic risks" in the risk report).
Outlook for the BMW Group
BMW Group
Due to its global business model, the BMW Group is well
placed to exploit opportunities, including those arising
at short notice. Outstanding coordination between the
Group's sales and production networks also helps cush-
ion the impact of unforeseeable developments in its
various regions. Investing in markets with good future
prospects is also a basis for further growth, while simul-
taneously expanding the global presence of the BMW
Group. Thanks to its three strong brands - BMW, MINI
and Rolls-Royce - there is every reason to assume that
the BMW Group will continue performing successfully
during the current year.
in 2016. The Americas region should see a continua-
tion of the upward trend of previous years. Despite
the ongoing process of normalisation on the Chinese
market, sales volumes in Asia could well pick up
again.
Expected consequences for the BMW Group
Future developments on international automobile
markets also have a direct influence on outcomes for
the BMW Group. Whereas competition might intensify
in contracting markets, new opportunities beckon in
growth regions. Sales volumes in some countries are
likely to be affected by a range of new competitive chal-
lenges. The dynamic growth seen on European mar-
kets in 2015 is not expected to maintain the same pace
Automotive segment
The Japanese economy is again only likely to see slow
growth in 2016. Even though consumer spending vol-
umes should rise on the back of the Bank of Japan's ex-
pansionary monetary policy, other unfavourable factors,
such as weak demand from China, could stand in the
way of a sustainable upturn.
In the eurozone, interest rates are set to remain low over
the coming year. Factors such as stubbornly low infla-
tion rates, steady economic recovery and uncertainty re-
garding economic developments on major emerging
markets could persuade the ECB to continue its bond-
buying programme.
In the USA, stable economic growth, the improving em-
ployment situation and higher inflation could induce
the Fed to raise interest rates moderately over the course
of the year.
The trend towards more normal rates of growth in
China, together with weaker signals coming from other
emerging markets, is bound to have an influence on
global trade, and hence on export-oriented industrialised
countries in 2016. While the Chinese central bank will
no doubt be directing its attention to measures aimed at
stabilising the domestic economy, other key central
banks are likely to focus on achieving price stability.
Financial services markets
year. The positive trend in the USA is expected to
continue.
65 COMBINED MANAGEMENT REPORT
Markets for 500 cc plus motorcycles are likely to con-
tinue growing slightly in 2016. Registration figures for
Europe as a whole are also expected to rise slightly,
including a minor increase in Germany. Italy and
France are set to remain at similar levels to the past
Motorcycle markets
Automobile markets in major emerging economies are
likely to remain under pressure in the current year. Due
to the prevailing unfavourable economic and political
situation, Russia is expected to see a further drop of
15.4% to 1.2 million units. The situation in Brazil seems
unlikely to stabilise after the decrease recorded in 2015,
with the market expected to contract by a further 7.6%
to 2.3 million units.
The market in Japan is forecast to grow by 7.3% to 5.2 mil-
lion units year-on-year.
The majority of Europe's markets are likely to continue
recovering in 2016, growing overall by approximately
1.4% to 14.4 million units. Excluding Germany, the pic-
ture across Europe is similar, with market volume also
expected to grow by 1.4% to 11.2 million units. The re-
gion's core markets, however, are only likely to see rela-
tively weak growth. Registration figures in Germany, for
instance, are predicted to increase by 1.4% to 3.3 mil-
lion units. The French market is expected to grow by
3.3% to 1.9 million units and the Italian market by 3.0%
to 1.6 million units. By contrast, demand in Spain is
expected to show even more vitality than in 2015 and
grow by 9.7% to 1.1 million units.
Depending on rates of growth and inflation on the
domestic front and developments in key emerging
economies, the UK could well see a first interest rate
rise at some point in 2016. Uncertainties prevailing
prior to the referendum on a possible exit from the EU
could, however, forestall a return to more accustomed
monetary policies.
Deliveries to customers: slight increase expected
The BMW Group forecasts successful sales volume per-
formances for all three of its brands in 2016. Apart
from aiming for evenly balanced growth in the various
regions, a sharp eye is also always kept on profitability.
Based on these forecasts, the BMW Group is set to re-
main at the forefront of the premium segment in 2016.
27 Overall Assessment by Management Assuming economic conditions remain stable, deliveries
to customers are expected to rise slightly to a new re-
cord level (2015: 2,247,485¹ units).
23 Report on Economic Position
23 General and Sector-specific
2 EU-28.
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
(2015: 282,000 units).
Return on capital employed: slight decrease expected
Segment RoCE is forecast to decrease slightly in 2016
(2015: 31.6%), mainly reflecting the scheduled build-up
of inventory levels due to the Indian partner entity, TVS,
Deliveries to customers: slight increase expected
The BMW Group expects the upward trend in the Motor-
cycles segment to continue. The new R NineT Scrambler
and G 310 R models unveiled at last autumn's trade fairs
will broaden the product portfolio and attract new cus-
tomer groups. Overall, deliveries of BMW motorcycles to
customers are forecast to increase slightly year-on-year
(2015: 136,963 units).
Motorcycles segment
Segment RoCE is forecast to decrease moderately (2015:
72.2%). However, the long-term target RoCE of at least
26% for the Automotive segment will be easily surpassed.
EBIT margin in target range between 8 and 10% expected
An EBIT margin in a range between 8 and 10% (2015:
9.2%) remains the target for the Automotive segment.
The positive business performance predicted for the
BMW Group will also be reflected in Automotive seg-
ment revenues. A slight increase in segment revenues
is therefore predicted for the forecast period (2015:
€85,536 million).
Revenues: slight increase expected
Carbon fleet emissions²: slight decrease expected
Regulations governing vehicle carbon emissions are be-
coming stricter all around the world. Developing highly
efficient combustion engines and increasing the scope
of electrification in its fleet of vehicles are key aspects in
the BMW Group's constant efforts to reduce fuel con-
sumption and carbon emissions, without compromising
its excellent standards in terms of sporting flair and
dynamic driving performance. Fleet emissions are fore-
cast to improve slightly in 2016, thus continuing the
trend seen in previous years (2015: 127 grams CO2/km).
the Rolls-Royce Dawn, will become available during the
first half of the year.
Further additions to the model range will also be made
in the course of 2016. February saw the launch of the
new BMW X4 M40i. The premium small car segment
was enriched by the addition of the new version of the
MINI Convertible in early March. A luxury convertible,
A good contribution to overall sales performance in 2016
is expected to come from the new models available since
mid-2015, including the new seven-seater BMW 2 Series
Gran Tourer and the model updates of the BMW 3 Series
Sedan, the 3 Series Touring and the M3. The second
generation of the extremely successful BMW X1 was
launched in October 2015. The highly efficient BMW X5
xDrive40e has been in showrooms since the end of
2015. This plug-in hybrid vehicle represents the next
step in the process of transferring innovative drivetrain
system technologies from BMW i models to the core
BMW brand. At the end of October 2015, the sixth gen-
eration of the BMW 7 Series heralded the beginning of a
new era in the luxury segment. The new MINI Clubman
has also been on the market since the end of October
2015.
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
59 Comments on Financial Statements Although the overall pace of growth may be marginally
weaker than one year earlier, the combination of attrac-
tive new models and good market conditions, particu-
larly in Europe, should nevertheless provide additional
impetus for vehicle sales. Most notably, the previous
year's upward trend on southern European markets is
set to continue. By contrast, the situation on the Russian
car market is likely to remain tense over the forecast pe-
riod. Despite progressive normalisation on the Chinese
market, Asia as a whole is expected to provide a certain
degree of momentum for growth. Sales volume in the
USA is also forecast to rise slightly.
68 Report on Risks and Opportunities
81 Internal Control System and Risk
63-Report on Outlook, Risks and
Opportunities
63-Outlook
Reporting Period
62 Events after the End of the
of BMW AG
49 Results of Operations, Financial
Position and Net Assets
29 Review of Operations
Performance Indicators
27 Financial and Non-financial
Environment
Worldwide demand for automobiles is forecast to grow by
approximately 1.9% in the current year to an estimated
84.0 million units. Breaking that figure down, the BMW
Group forecasts slightly lower growth in the USA than
in 2015, with market volume edging up by around 1.3%
to 17.7 million units. China is expected to see a further
drop in the pace of vehicle registration growth, slowing
to around 6.9% or 22.0 million units.
Automobile markets
The onset of normalisation with respect to US mone-
tary policies suggests that the currencies of numerous
emerging economies will remain under pressure in the
foreseeable future. Countries that export raw materials
and are faced with current account and fiscal deficits
are most likely to be affected.
Owing to the robust state of the UK economy, and fanned
by speculation that the Bank of England is on the verge
of raising interest rates, the British pound could either
remain at its current level or even gain additional ground
in the short to medium term.
The US economy is likely to maintain its current high
pace of growth. Despite the increase in benchmark in-
terest rates, and hence a less expansive monetary policy,
growth of 2.4% is predicted for 2016. The low price of
oil is highly likely to have a positive impact on consumer
spending.
Growth in the UK will probably be somewhat weaker,
although again in 2016 the expected GDP growth of
2.2% is well above that of the eurozone. The referendum
on the UK remaining in the EU, which must be held by
the end of 2017, can take place at the earliest in the
second half of 2016 and is therefore a source of additional
uncertainty.
In southern Europe, the reforms implemented in recent
years are contributing to an economic recovery, enabling
Spain and Portugal to continue growing on the back of
the general upturn and are likely to grow by 2.7% and
1.6% respectively, according to forecasts.
Economic recovery in the eurozone is expected to con-
tinue at a growth rate of 1.6% in 2016. Similar to the
previous year, the German economy is predicted to play
a major role and grow by 1.8%. The economies of both
France (1.4%) and Italy (1.3%) are set to record higher
growth rates than one year earlier.
monetary policy in the USA, the political instability in
Europe, the high levels of sovereign debt being amassed
in Japan and over-capacities in various industrial sectors
in China pose the greatest risks for global economic
growth. Unsolved geopolitical conflicts and problems
resulting from the high number of people seeking refuge,
particularly in Europe, could possibly lead to nationalis-
tic interests becoming a major issue, with correspond-
ingly negative consequences for world trade. Further in-
formation on political and global economic risks can be
found in the risk report.
The upturn in the world economy is likely to continue
and generate growth of 3.4% in 2016. A more restrictive
Economic outlook
The continuous forecasting process ensures that the
BMW Group is always ready to take advantage of op-
portunities as they arise and to react appropriately to
unexpected risks. The principal risks and opportuni-
ties are described in detail in the section "Report on
Risks and Opportunities". The risks and opportunities
discussed in that section are relevant for all of the
BMW Group's key performance indicators and could
result in variances between the outlook and actual
outcomes.
The following outlook relates to a forward-looking pe-
riod of one year and is based on the composition of the
BMW Group during that period. The outlook takes ac-
count of all information known up to the date on which
the financial statements are authorised for issue and
which could have a material effect on the overall perfor-
mance of the BMW Group. The expectations contained
in the outlook are based on the BMW Group's forecasts
for 2016 and reflect the most recent status. The basis for
the preparation of and the principal assumptions used in
the forecasts - which consider the consensual opinions
of leading organisations, such as economic research in-
stitutes and banks - are set out below. The BMW Group's
forecast is drawn up on the basis of these assumptions.
Assumptions used in the outlook
Outlook
The report on outlook, risks and opportunities contains
forward-looking assertions based on the BMW Group's
expectations and assessments, which are, by their very
nature, subject to uncertainty. As a result, actual out-
comes, including those attributable to political and eco-
nomic developments, could differ substantially - either
positively or negatively - from the expectations de-
scribed below. Further information can be found in the
section “Report on Risks and Opportunities”.
The report on outlook, risks and opportunities describes
the expected development of the BMW Group, including
the associated material risks and opportunities, from a
Group management perspective. The outlook covers
a period of one year, in line with the Group's internal
management system. However, risks and opportunities
are managed on the basis of a two-year assessment.
The report on risks and opportunities therefore covers a
period of two years.
Report on Outlook, Risks and Opportunities
Outlook
63 COMBINED MANAGEMENT REPORT
KPMG AG Wirtschaftsprüfungsgesellschaft, Munich,
has issued an unqualified audit opinion on the financial
statements of BMW AG, of which the balance sheet and
the income statement are presented here. The BMW AG
financial statements for the financial year 2015 will be
submitted to the operator of the electronic version of the
German Federal Gazette and can be obtained via the
Company Register website. These financial statements
are available from BMW AG, 80788 Munich, Germany.
Events after the end of the reporting period
No events have occurred since the end of the reporting
period which could have a major impact on the result
of operations, financial position and net assets of BMW AG
or the BMW Group.
Due to its dominant role in the Group and its close ties
with Group entities, expectations for the BMW AG with
respect to the Company's financial and non-financial
performance indicators correspond largely to the BMW
Group's outlook for the Automotive segment, which is
described in detail in the “Report on Outlook, Risks and
Opportunities" section of the Combined Management
Report.
Outlook
for the Financial Reporting Process" section of the Com-
bined Management Report.
87 BMW Stock and Capital Markets
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
63-Outlook
Opportunities
63-Report on Outlook, Risks and
In Japan, the central bank is again set to continue its
"cheap money" policy in 2016 and therefore guarantee
companies attractive financing conditions, which is
likely to give the Japanese economy sufficient momen-
tum to warrant 1.0% growth.
commencing production and the plants in Brazil and
Thailand raising production volumes.
In China, economic growth is again expected to weaken
slightly in 2016, resulting in a growth rate in the region
of 6.5%. The realignment of the Chinese economy to-
wards a more consumption-oriented society is designed
to lead to greater stability, even if growth rates are likely
18-COMBINED MANAGEMENT REPORT
As the Bank of Japan and the ECB seem set to continue
their expansionary monetary policies for the time be-
ing, the rate of the Japanese yen is unlikely to fluctuate
greatly in relation to the euro.
Given that the Chinese renminbi will probably remain
closely coupled to the US dollar in the short term, there
is a considerable likelihood that its value against the
euro will tend upwards in 2016. If, on the other hand,
the Chinese central bank continues to intervene in cur-
rency markets, thus halting the upward trend, the value
of the renminbi may possibly move sideways. In the
long term, however, capital markets in China are likely
to become more liberalised, as a result of which the con-
vertibility of the renminbi with other currencies would
increase.
The US dollar is again likely to remain generally strong
against the euro in 2016. This assumption is supported
by the interest rate turnaround initiated in the USA in
December 2015, highlighting the different approaches
to monetary policies taken by the Fed and the ECB.
Another factor is that economic recovery in Europe is
likely to proceed at a slower pace than in the USA.
Currencies which have the greatest influence on the
BMW Group's international business, i.e. the US dollar,
the Chinese renminbi, the Japanese yen and the British
pound, may well be subject to a significant degree of
fluctuation again in 2016.
87 BMW Stock and Capital Markets
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
63-Report on Outlook, Risks and
Opportunities
63-Outlook
62 Events after the End of the
Reporting Period
of BMW AG
59 Comments on Financial Statements Currency markets
sion in 2016, with persistently low prices for raw mate-
rials exerting a detrimental effect on growth.
Position and Net Assets
49 Results of Operations, Financial
29 Review of Operations
Performance Indicators
27 Financial and Non-financial
27 Overall Assessment by Management in 2015, both economies are likely to remain in reces-
In India, investment-friendly economic policies are likely
to continue in 2016, helping to generate a growth rate
of 7.6%. The outlook for Russia (-0.2%) and Brazil
(-2.6%) is far less bright. After drops in economic output
to be weaker in the short term. It cannot be ruled out,
however, that economic output in China may slow down
more than currently expected.
Environment
23 General and Sector-specific
23 Report on Economic Position
20 Management System
18 General Information on the BMW Group
18 Business Model
64
BMW AG Balance Sheet at 31 December
61 COMBINED MANAGEMENT REPORT
If risks relating to pension obligations were to materialise,
they could have a high negative earnings impact over
the two-year assessment period. The level of risk relating
to pension obligations is classified as high.
As an internationally operating enterprise, the BMW
Group conducts business in a variety of currencies, thus
giving rise to currency risks and opportunities. Since a
substantial portion of Group revenues is generated out-
side the eurozone (particularly in China and the USA)
and the procurement of production material and fund-
ing is also organised on a worldwide basis, fluctuations
in exchange rates can play a significant role for Group
earnings. Cash-flow-at-risk models and scenario analyses
are used to measure currency risks and opportunities.
Operational currency management is based on the results
provided by these tools. In 2015 the Chinese renminbi,
the US dollar, the British pound, the Russian rouble and
the Japanese yen constituted approximately 70% of the
total foreign currency exposure of the BMW Group.
Currency risks and opportunities
Financial risks and risks relating to the use of financial
instruments
assessment period compared to the assumptions made
in the outlook.
77 COMBINED MANAGEMENT REPORT
The BMW Group does not expect these opportunities
to have a material earnings impact over the two-year
The BMW Group manages currency risks at both strate-
gic (medium and long term) and operating levels (short
and medium term). Medium- and long-term measures
include increasing production volumes in non-euro-re-
gion countries (natural hedging) and increasing purchase
volumes denominated in foreign currencies. Construct-
ing new plants in countries such as the USA, China or
Brazil has also helped reduce foreign currency expo-
sures. Currency risks are managed in the short to me-
dium term and for operational purposes by means of
hedging. Hedging transactions are entered into only with
financial partners of good credit standing. Opportunities
are also secured through the deployment of options.
Counterparty risk management procedures are carried
out continuously in order to monitor the creditworthi-
ness of business partners.
Information, data protection and IT opportunities
Conversely, the deployment of information technology
also opens up a great many opportunities for the BMW
Group. New approaches to production and energy sup-
ply systems currently being investigated in the context
of the Industrial Internet ("Industrie 4.0") are generat-
ing significant efficiency improvements and resulting in
greater sustainability. The range of services and apps
on offer to customers via Connected Drive is constantly
being expanded and updated. The BMW 7 Series offers
the comfort of partially automated driving functions with
the optional Driving Assistant Plus feature. The pur-
chase of a stake in HERE mapping service was an im-
portant step for the next generation of mobility and
location-based services. For the automobile sector, it
serves as the basis for a variety of new customer-oriented
functions, ranging from innovative assistance systems
through to fully automated driving.
data.
Responsibility for data protection in each Group entity
lies with the Board of Management (of BMW AG) or the
relevant company management team. Local Data Privacy
Protection Officers are embedded in each of the Group's
entities. In the case of cooperation arrangements and
business partner relationships, the BMW Group protects
its intellectual property as well as customer and em-
ployee data by stipulating clear instructions with regard
to data protection and the use of information technology.
Information pertaining to key areas of expertise as well
as sensitive personal data are subject to particularly strin-
gent security measures. In a clear signal to employees,
customers and Europe's data protection authorities that
data protection is taken very seriously, the Board of
Management of BMW AG has resolved a set of Binding
Corporate Rules governing the handling of employee
receive training to ensure compliance with the applicable
requirements and in-house rules.
All employees are required to treat confidential infor-
mation (such as customer and employee data) in an ap-
propriate manner, ensure that information systems are
properly used and that risks are handled with the ut-
most transparency. Uniform requirements, documented
in a coordinated and comprehensive set of principles,
guidelines and work instructions, are applicable group-
wide. Regular communication and awareness-raising
activities create a high degree of security and risk con-
sciousness among the employees involved. Employees
Great emphasis is placed on protecting both business
information and employee and customer data from un-
authorised access and/or misuse. Data security based
on International Security Standard ISO/IEC 27001 is
an integral component in all business processes. Per-
sonal data is protected in accordance with the stringent
requirements of the EU Data Protection Directive and
the Federal Data Protection Act (Bundesdatenschutz-
gesetz BDSG).
The demands placed on IT facilities, both externally and
internally, are changing at a breathtaking pace in the
face of technological developments. Potential risks are
therefore investigated continuously and appropriate
measures put in place in order to either prevent them
or minimise their impact. Despite regular testing and
the whole gamut of preventative security measures em-
ployed, it is nevertheless impossible to rule out risks
completely in this area.
If information, data protection and IT risks were to
materialise, they could have a medium earnings impact
over the two-year assessment period. The levels of risk
attached to information, data protection and IT risks are
classified as medium.
ups and data encryption. Regular analyses and controls
(for example the testing of data protection requirements)
and rigorous security management ensure a high level
of security.
If currency risks were to materialise, they could have a
high earnings impact over the two-year assessment
period. A high level of risk is attached to currency risks.
Risks and opportunities relating to raw materials
Changes in prices of raw materials are monitored on the
basis of a set of well-defined management procedures.
23 Report on Economic Position
A description of the methods applied for risk measure-
ment and hedging in conjunction with currency and
commodity risks is provided in note 42 of the Group
Financial Statements. If the relevant recognition criteria
are fulfilled, derivatives used by the BMW Group as
27 Overall Assessment by Management hedges are accounted for as hedging relationships.
being downgraded and any ensuing deterioration in
financing conditions.
20 Management System
18 General Information on the BMW Group
18 Business Model
18-COMBINED MANAGEMENT REPORT
Significant opportunities can arise if currency develop-
ments are favourable for the BMW Group.
78
Based on experience gained during the financial crisis,
a minimum liquidity concept has been developed and is
rigorously adhered to. Solvency is assured at all times
throughout the BMW Group by maintaining a liquidity
reserve and by the broad diversification of refinancing
sources. The liquidity position is monitored continu-
ously at a separate entity level and managed by means
of a cash flow requirements and sourcing forecast system
in place throughout the Group. Liquidity risks may
be reflected in rising refinancing costs. They may also
manifest themselves in restricted access to funds as a
consequence of the general market situation or the de-
fault of individual banks. The major part of the Finan-
cial Services segment's credit financing and lease busi-
ness is refinanced on capital markets. Thanks to its
excellent creditworthiness, the BMW Group has good
access to financial markets and, as in previous years,
was able to raise funds at good conditions during the
year under report, reflecting a diversified refinancing
strategy and the solid liquidity and earnings base of the
BMW Group. Internationally recognised rating agencies
have additionally confirmed the BMW Group's strong
creditworthiness.
Liquidity risks
Conversely, significant opportunities can arise if
prices of raw materials develop favourably for the
BMW Group.
If risks relating to raw materials were to materialise,
they could have a medium earnings impact over the
two-year assessment period. A high level of risk is at-
tached to risks relating to raw materials.
Price risks and opportunities relating to precious metals
(platinum, palladium, rhodium) and non-ferrous
metals (aluminium, copper, lead) and, to some extent,
to steel and steel ingredients (iron ore, coke/coal) and
energy (gas, electricity) are hedged using financial
derivatives and/or supply contracts with fixed pricing
arrangements.
The principal objective of these management processes
is to increase planning reliability for the BMW Group.
If liquidity risks were to materialise, they could have a
low earnings impact over the two-year assessment
period. The risk of incurring liquidity risk is classified
as low - including the risk of the BMW Group's rating
23 General and Sector-specific
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
68-Report on Risks and Opportunities
81 Internal Control System and Risk
18 Business Model
18 General Information on the BMW Group
18-COMBINED MANAGEMENT REPORT
76
The BMW Group could incur damage if the confiden-
tiality or integrity of sensitive information, data and
systems were to be compromised and/or availability re-
stricted. One of the direct consequences of such an
eventuality would be additional expense incurred to re-
cover data and restore systems. Such eventualities could
Information, data protection and IT risks
20 Management System
Information technology (IT) is used to an increasing
extent in every aspect of the business. In this context,
the significance of electronically processed data and
the availability of IT systems is constantly growing.
These developments create opportunities on the one
hand, whilst also posing a source of risk on the other.
Further information on risks in conjunction with pen-
sion provisions is provided in note 35 of the Group
Financial Statements.
Within a favourable capital market environment, the
return generated by pension assets may exceed expecta-
tions and reduce the deficit of the relevant pension
plans. This, in turn, could have a materially favourable
impact on the net assets position and earnings perfor-
mance of the BMW Group.
and the related assets are kept separate from those of
the Group. The amount of funds required to finance pen-
sion payments out of operations in the future is there-
fore substantially reduced, since most of the Group's
pension obligations are settled out of pension fund
assets. The pension assets of the BMW Group comprise
interest-bearing securities, equities, real estate and
other investment classes. Assets held by pension funds
and trust arrangements are monitored continuously
and managed on a risk-and-yield basis. A broad spread
of investments also helps to mitigate risk. In order to re-
duce fluctuations in pension funding shortfalls, invest-
ments are structured to coincide with the timing of
pension payments and the expected pattern of pension
obligations. Remeasurements on the obligations and
fund asset sides are recognised, net of deferred taxes, in
"Other comprehensive income" and hence directly in
equity (within revenue reserves).
Most of the BMW Group's pension obligations are
managed in external pension funds or trust arrangements
Risks and opportunities relating to pension obligations
The BMW Group's pension obligations to its employees
resulting from defined benefit plans are measured on
the basis of actuarial reports. Future pension payments
are discounted by reference to market yields on high-
quality corporate bonds. These yields are subject to
market fluctuation and therefore influence the level of
pension obligations. Changes in other parameters, such
as rises in inflation and longer life expectancy, also im-
pact pension obligations and payments. Opportunities
and risks arise depending on the nature and scale of
changes in these parameters.
The BMW Group considers that these opportunities will
not have a material earnings impact over the two-year
assessment period compared to the assumptions made
in the outlook.
Risks and opportunities relating to information, data
protection and IT systems
Management System Relevant for the
Financial Reporting Process
23 Report on Economic Position
Environment
63 Outlook
Opportunities
63-Report on Outlook, Risks and
Reporting Period
62 Events after the End of the
of BMW AG
23 General and Sector-specific
49 Results of Operations, Financial
Position and Net Assets
29 Review of Operations
Performance Indicators
27 Financial and Non-financial
27 Overall Assessment by Management lar monitoring, and the implementation of appropriate
Risk management procedures include the systematic
documentation of all informational and IT risks, regu-
also possibly have a negative impact on operating per-
formance due to the non-availability of products and
services or even downtimes in the production of spare
parts and/or vehicles. Indirectly, the BMW Group could
also be exposed to unquantifiable reputational risks.
measures by the departments responsible. Technical
data protection procedures include virus scanners, fire-
wall systems, access authorisation controls at both oper-
59 Comments on Financial Statements ating system and application level, regular data back-
Opportunities relating to sales and marketing
The BMW Group focuses its selling capacities primarily
on markets with the greatest sales volume and revenue
potential and fastest growth rates. Developments in the
field of digital communication and connectivity are also
opening up opportunities for marketing the BMW
Group's various brands. Consumers can meanwhile be
reached on a more targeted and individual basis, thus
helping to strengthen long-term relationships and
brand loyalty. Investment in both existing and new mar-
keting concepts is firmly aimed at intensifying relation-
ships with customers. A new online sales platform was
introduced in Great Britain, for example, which enables
customers to select, finance and buy their vehicles
online. There will be no relaxing of efforts in the ac-
tive search for new opportunities to create even greater
added value for customers than currently expected,
whilst at the same time looking for ways to boost sales
volumes and achieve better selling prices. The BMW
Group keeps track of the latest developments and trends
in communication technology, including the use of social
media and networks, in order to extend customer reach
for its brands. The automotive-related business activities
of technology companies are also closely followed (e.g.
automated driving). The BMW Group's brands are present
on numerous platforms, such as Facebook, YouTube
and Twitter. Digital communication can result in a more
intense product and brand experience for customers,
which could, in turn, have a positive impact on revenues
and earnings.
Environment
Performance Indicators
Performance Indicators
27 Financial and Non-financial
27 Overall Assessment by Management from damages could arise that are either not covered or
business sense. The application of more rigorous con-
sumer regulations or the stricter interpretation of exist-
ing regulations could result in a greater number of recalls.
Some risks, however, either cannot be estimated or only
to a limited extent. In other cases, the incurrence of ex-
penses or losses may only be considered possible, but
not probable. Such items are reported as contingent lia-
bilities. It cannot be ruled out, however, that losses
Environment
23 General and Sector-specific
29 Review of Operations
23 Report on Economic Position
18 General Information on the BMW Group
18 Business Model
18-COMBINED MANAGEMENT REPORT
80
The BMW Group recognises appropriate levels of pro-
vision for lawsuits. A part of these risks, particularly re-
garding the US market, is insured where this makes
Like all internationally operating enterprises, the BMW
Group is confronted with legal disputes relating, in
particular, to warranty claims, product liability, infringe-
ments of protected rights and proceedings initiated
by government agencies. Any of these matters could,
among other outcomes, have an adverse impact on the
Group's reputation. Such proceedings are typical for
the sector and can arise as a consequence of realigning
product or purchasing strategies to suit changed market
conditions. Particularly in the US market, class action
lawsuits and product liability risks can have substantial
financial consequences and cause damage to the Group's
public image. The high quality of the Group's products,
which is ensured by regular quality audits and ongoing
improvement measures, helps reduce this risk.
The BMW Group has established a Compliance Organi-
sation aimed at ensuring that its representative bodies,
managers and staff act in a lawful manner at all times.
Further information on the BMW Group's Compliance
Organisation can be found in the section “Corporate
Governance".
20 Management System
Compliance with the law is a basic prerequisite for the
success of the BMW Group. Current law provides the
binding framework for the BMW Group's various busi-
ness activities around the world. The growing interna-
tional scale of the BMW Group's operations, the com-
plexity of the business world and the whole gamut of
complex legal regulations increase the risk of laws not
being adhered to, simply because they are either not
known or not fully understood.
49 Results of Operations, Financial
Position and Net Assets
not fully covered by insurance policies or provisions, or
which are only reported as contingent liabilities. In ac-
cordance with IAS 37 (Provisions, Contingent Liabilities
59 Comments on Financial Statements and Contingent Assets), the required information is
not provided if the BMW Group concludes that disclosure
of the information could seriously prejudice the out-
come of the relevant legal proceedings. Further informa-
68-Report on Risks and Opportunities tion on contingent liabilities is provided in note 41 to
the Group Financial Statements.
From today's perspective, management does not see any
threat to the BMW Group's going-concern status. As in
the previous year, identified risks are considered to be
manageable, but could - just like opportunities – have
an impact on the BMW Group's forecasts if they were to
materialise. The BMW Group's liquidity is stable and all
cash requirements are currently covered by available
funds and accessible credit lines.
on the BMW Group's results of operations, financial
position and net assets, as well as on its reputation. A
comprehensive risk management system is in place to
ensure that the BMW Group successfully manages risks
to the greatest extent possible. In addition, the opportu-
nities described above could potentially help the BMW
Group to achieve its targets and forecasts.
In addition to the risk categories described above, un-
foreseeable events could possibly have a negative impact
The overall risk assessment is based on a consolidated
view of all significant individual risks and opportuni-
ties. In terms of strategic and sector-specific risks, the
BMW Group has identified a higher level of risk, par-
ticularly in connection with the trend towards stricter
statutory regulations. Operational risks on the purchas-
ing side are decreasing, thanks to the successful imple-
mentation of cost-cutting measures. The level of risk
attached to the category "Risks relating to the Financial
Services segment" has increased as a result of the grow-
ing size of the portfolio. In view of these changes, the
overall risk situation for the BMW Group has increased
compared to the previous year.
Overall assessment of the risk and
opportunities situation
If legal risks were to materialise, they could have a low
earnings impact over the two-year assessment period.
The level of risk attached to legal risks is classified as
low. However, it cannot be ruled out that new legal
risks, as yet unidentified, could materialise that could
have a high impact on the BMW Group's results of
operations and financial condition.
of BMW AG
87 BMW Stock and Capital Markets
Financial Reporting Process
Management System Relevant for the
81-Internal Control System and Risk
63 Outlook
63-Report on Outlook, Risks and
Opportunities
62 Events after the End of the
Reporting Period
83 Disclosures Relevant for Takeovers
and Explanatory Comments
27 Financial and Non-financial
Legal risks
include related legal and reputational risks. The com-
prehensive recording and measurement of risk scenarios,
loss events and countermeasures in the Operational
Risk Management Suite (OpRisk-Suite) provides the ba-
sis for a systematic analysis and management of poten-
tial and/or actual operational risks. Annual self-assess-
ments are also carried out.
81 Internal Control System and Risk
63 Outlook
The categories of risk relating to the provision of finan-
68-Report on Risks and Opportunities cial services are credit and counterparty risk, residual
Risks and opportunities relating to the Financial
Services segment
Further information on risks in conjunction with finan-
cial instruments is provided in note 42 to the Group
Financial Statements.
Opportunities
Management System Relevant for the
Financial Reporting Process
63-Report on Outlook, Risks and
62 Events after the End of the
of BMW AG
59 Comments on Financial Statements
Position and Net Assets
49 Results of Operations, Financial
29 Review of Operations
Reporting Period
If operational risks were to materialise, they could have
a low earnings impact over the two-year assessment
period. The level of risk attached to operational risks is
classified as medium.
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Credit and counterparty risks and opportunities
Credit and counterparty default risk arises within the
Financial Services segment if a contractual partner (i.e.
a customer or dealer) either becomes unable or only
partially able to fulfil its contractual obligations, such
that either lower income is generated or losses are in-
curred. The Financial Services segment uses a variety of
rating systems in order to assess the creditworthiness
of its contractual partners. Credit risks are managed at
the time of the initial credit decision on the basis of a
calculation of the present value of standard risk costs
and subsequently, during the term of the credit, by
using a range of risk provisioning techniques to cover
risks emanating from changes in customer creditworthi-
ness. In this context, individual customers are classified
by category each month on the basis of their current
contractual status, and appropriate levels of allowance
recognised in accordance with that classification. If
economies develop more favourably than assumed in the
outlook, there is a chance that credit losses may be re-
duced and earnings improved accordingly.
Use of the "matched funding principle" to finance the
Financial Services segment's operations eliminates li-
quidity risks to a large extent. Regular measurement
and monitoring ensure that cash inflows and outflows
from transactions in varying maturity cycles and cur-
rencies offset each other. The relevant procedures are
incorporated in the BMW Group's target liquidity con-
cept. Operational risks are defined in the Financial
Services segment as the risk of losses arising as a conse-
quence of the inappropriateness or failure of internal
procedures (process risks), people (personnel-related
risks), systems (infrastructure and IT risks) and external
events (external risks). These four categories of risk also
Financial Services segment
Liquidity and operational risks in the
If the relevant recognition criteria are fulfilled, deriva-
tives used by the BMW Group are accounted for as
hedging relationships. Further information on risks in
conjunction with financial instruments is provided in
note 42 to the Group Financial Statements.
If risks relating to interest rate risks were to materialise,
they could have a medium earnings impact over the
two-year assessment period. The level of risk attached
to interest rate risks is classified as high.
Interest rate risks in the Financial Services segment re-
late to potential losses caused by changes in market
interest rates and can arise when fixed interest rate pe-
riods for assets and liabilities recognised in the balance
sheet do not match. Interest rate risks in the Financial
Services line of business are managed by raising refi-
nancing funds with matching maturities and by em-
ploying interest rate derivatives.
value risk, interest rate risk, liquidity risk and opera-
tional risk. In order to identify, measure, manage and
monitor these risks, a variety of internal methods has
been developed based on regulatory environment re-
quirements (such as Basel III) and which comply with
both national and international standards. The adopted
risk strategy, in combination with a set of strategic prin-
ciples and rules derived from regulatory requirements,
serve as the basis for risk management within the Finan-
cial Services segment. At the heart of the risk manage-
ment process is a clear division between front- and
back-office activities and a comprehensive internal con-
trol system. The key risk management tool employed
within the Financial Services segment is aimed at en-
suring that the Group's risk-bearing capacity is not ex-
ceeded. In this context, all risks (defined as "unexpected
losses") must be covered at all times by an appropriate
asset cushion in the form of equity capital. Unexpected
losses are measured using a variety of value-at-risk tech-
niques that have been developed for each risk category.
The appropriateness of these techniques is tested at reg-
ular intervals. Risks are aggregated after taking account
of correlation effects. The total amount of risks calculated
in this way is then compared with the so-called "risk
coverage amount", i.e. the resources allocated to cover
risks. The risk coverage amount is determined on the
basis of the Financial Services segment's willingness to
take risks. The segment's risk-bearing capacity is moni-
tored continuously with the aid of an integrated limit
system that also differentiates between the various risk
categories. The segment's total risk exposure was covered
at all times during the past year by the available risk-
coverage volumes.
Interest rate risks and opportunities
If residual value risks were to materialise, they could
have a high earnings impact over the two-year assess-
ment period. A medium earnings impact would then
arise for the segments affected (Financial Services and
Automotive). The level of risk is classified as high for
the Group as a whole.
79 COMBINED MANAGEMENT REPORT
A residual value risk exists if the expected market value
of the vehicle at the end of the contractual term is lower
than its estimated residual value at the date the contract
is entered into. Each vehicle's estimated residual value
is calculated on the basis of historical external and inter-
nal data and used to predict the expected market value
of the vehicle at the end of the contractual period. As
part of the process of managing residual value risks, a
calculation is performed at the inception of each con-
tract to determine the net present value of risk costs.
Market developments are observed throughout the con-
tractual period and the risk assessment updated appro-
priately.
Risks and opportunities arise in conjunction with lease
contracts if the market value of a leased vehicle at the
end of the contractual term of a lease differs from the
residual value estimated at the inception of the lease
and factored into the lease payments.
Residual value risks and opportunities
If credit and counterparty risks were to materialise, they
could have a medium earnings impact over the two-
year assessment period. The level of risk attached to
credit and counterparty risks is classified as high. The
BMW Group classifies potential opportunities in this
area as significant.
The BMW Group classifies potential residual value op-
portunities as significant.
75 COMBINED MANAGEMENT REPORT
Interest rate developments that are positive compared
to the forecast constitute interest rate opportunities which
the BMW Group classifies as significant.
Changes in global economic conditions and increasingly
protectionist trends are among the factors that could
result in lower demand as well as fluctuations in the re-
gional spread and composition of sales in terms of
vehicles and mobility services. Risks relating to these
developments can be reduced with the aid of flexible
selling and production processes. At the same time, in-
creased pressure on selling prices and margins caused
by intense competition on the world's markets, particu-
larly in western Europe, the USA and China, requires
constant analysis, including keeping an eye on develop-
ments in grey market volumes from the USA to China.
Selling price and margin risks are measured using a
scenario approach, based on a bottom-up survey of the
key sales markets and an analysis of historical data.
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
of BMW AG
62 Events after the End of the
Reporting Period
63-Report on Outlook, Risks and
Opportunities
63 Outlook
68-Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
are not only brought on by new regulations, but also
through changes in public opinion, values, environmen-
tal issues and fuel/energy prices. There is a clear move
59 Comments on Financial Statements towards increasingly stringent vehicle emissions regu-
lations, particularly for conventional drive systems, not
only in the developed markets of Europe and North
America, but also in emerging markets such as China.
The BMW Group counters this risk with its Efficient
Dynamics technology and continues to play a pioneering
role in the premium segment by continually reducing
both fuel consumption and emissions. Since 2013, elec-
tric drive systems built into BMW i vehicles have in-
creasingly broadened the mix on offer, thus bolstering
the BMW Group's efforts to comply with statutory car-
bon emissions regulations and requirements. The BMW
Group is investing in the development of sustainable
drive technologies and materials, with the aim of pro-
viding highly efficient vehicles for individual mobility in
the premium segment, both now and in the future.
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Further significant risks could be triggered by the
tightening of existing import and export regulations, re-
sulting primarily in additional expenses, but also in re-
strictions in the import and export of vehicles and/or
parts. Changes in the legal business environment are
monitored and assessed regularly by the relevant central-
ised departments, thus ensuring that the BMW Group
always complies with statutory requirements. The impact
of legislation that has either been enacted or is likely to
be enacted is taken into account in the outlook.
Employees make a vital contribution to sustainable
growth and improved profitability through their innova-
tive skills. One prerequisite in this regard is a consistent
strategic approach to the management of human re-
sources, even in the event of changes in the legal frame-
work. The BMW Group has put appropriate measures in
place for such eventualities. Risk amounts and earnings
impact in this category are measured on the basis of ex-
tensive scenario analyses.
If strategic and sector category risks were to materialise,
they could have a high earnings impact over the two-
year assessment period. The amounts of risk attached to
strategic and sector-specific risks are classified as high.
Strategic and sector opportunities
Additions to the product and mobility portfolio and ex-
pansion in growth regions are seen as the most im-
portant opportunities for growth in the medium to long
term.
Performance Indicators
27 Financial and Non-financial
27 Overall Assessment by Management recalls. In some cases, changes in customer behaviour
Risks arising from the tightening of laws and regulations
One of the greatest risks for the automobile industry is
the possible threat of short-term tightening of laws
and regulations, as they could give rise to significantly
higher levels of investment and ongoing expenses, and
perhaps more importantly, result in changes in cus-
tomer behaviour. The potential tightening of consumer
protection laws could also result in a greater number of
If sales and marketing risks were to materialise, they
could have a high negative earnings impact over the
two-year assessment period. The level of risk attached
to sales and marketing risks is classified as high.
71 COMBINED MANAGEMENT REPORT
Political and global economic risks and opportunities
As one of the world's leading providers of premium
products and services, the BMW Group faces a variety
of major challenges. The world is changing at great
speed and the resulting situations can give rise to risks
on the one hand and opportunities on the other.
many
Political and global economic risks
Efficient individual mobility remains a key issue in
countries, in terms of the political regulation of both
national environmental and industrial policymaking.
Changing values in society call for innovative mobility
and service solutions. The potential effect of unforesee-
able disturbances in global economic interdependen-
cies, increasingly fierce competition among established
manufacturers and the emergence of new competitors
is extremely difficult to predict.
Shifts between volatile and stable economic phases, com-
bined with the ready availability of information, also
contribute to the uncertainty experienced by both mar-
kets and consumers. Although the US and UK econo-
mies may currently appear to be robust, the underlying
macroeconomic risks - such as misallocations between
asset price classes - have not become any less real com-
pared to the previous year. The transition of the Chinese
economy from an investment-driven to a consumer-
driven market will entail slower growth rates and greater
instability on financial markets. Apart from precipitat-
ing a decline in automobile sales, this process may also
result in lower demand for commodities, which is most
likely to hurt mainly emerging economies such as
Brazil or Russia. A further drop in commodities prices
could result in political and economic upheavals and
hence lead to lower aggregate demand from the coun-
tries affected.
The threat of distortions on the Chinese property, stock
and banking markets on the one hand and/or an overly
rapid hike in interest rates by the US Federal Bank pose
considerable risks for global financial market stability.
Unsolved structural problems in the eurozone or a re-
newed deterioration in the economic climate, for instance
in Greece, could potentially dampen growth prospects
for the BMW Group. At a political level, the current
refugee crisis poses a threat to European integration
and hopes of further expanding or at least maintaining
a single economic and monetary area.
Increasing political unrest, military conflicts, terrorist
activities, natural disasters and/or pandemics could
have a lasting negative impact on the global economy
and international capital markets. The risks referred to
above could curtail purchasing power in the countries
and regions involved and, among other things, lead to
reduced demand for the products and services offered
by the BMW Group. The Group counters these risks
primarily by internationalising its sales and production
structures, in order to minimise the extent to which
earnings are dependent on the outcomes of risks in in-
dividual countries and regions. The regular monitoring
of macroeconomic data, which serve as the basis for
sales volume and production planning, ensures that
market changes are identified at an early stage. The ex-
tent of political and global economic risks is determined
by analysing historical data and applying a cash-flow-at-
risk approach.
Remaining on growth course depends above all on the
ability to develop innovative products and bring them
to market. The introduction of the BMW i brand opens
up new customer target groups for the Group and con-
solidates the position of BMW as a sustainable, forward-
looking brand. BMWi products can be seen as "empower-
ment projects" for new technologies and processes, which
may also benefit other vehicle concepts. The existing
product portfolio has been expanded to include mobility
services such as DriveNow, ChargeNow and ParkNow.
In 2015, the BMW Group entered new segments with
the BMW 2 Series Active Tourer and the 2 Series Gran
Tourer. The market acceptance and sales volumes of
product innovations that are either planned for the future
or have recently been launched could turn out to be
greater than predicted in the outlook. In the short term,
however, any potentially positive impact is classified as
insignificant.
If risks from this category were to materialise, they
could due to sales volume fluctuations - have a high
earnings impact over the two-year assessment period.
Overall, the risk amounts attached to political and global
economic risks are classified as high.
Any political and/or global economic opportunities
capable of having a positive sustainable impact on
earnings are currently classified by the BMW Group
as insignificant.
Strategic and sector risks and opportunities
New regulations and rising fuel and energy prices can
also influence customer behaviour. Medium- and
long-term targets have already been put in place in
Europe, North America, Japan, China and other coun-
tries to minimise both fuel consumption and carbon
emissions.
72
18-COMBINED MANAGEMENT REPORT
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
Political and global economic opportunities
Economic conditions influence the operations, financial
position and results of operations of the BMW Group.
Should the global economy develop significantly better
than reflected in the outlook, the revenues and earnings
of the BMW Group could be significantly higher than
originally predicted. A better-than-expected perfor-
mance of the global economy with stronger growth in
China, the introduction of economic stimulus pro-
grammes, the implementation of structural reforms
within the eurozone and robust consumer spending in
the USA could - despite higher financing costs - result
in significantly stronger sales volume growth, reduced
competitive pressure and the possibility of achieving
better selling prices. Economic opportunities present
themselves for the BMW Group through the focused
identification of, and engagement in, growth markets.
The long-term trend towards greater sustainability pro-
vides opportunities to boost sales of sustainable products
and, under the right circumstances, achieve better sell-
ing prices. Innovations such as the BMW i3 and i8 in the
field of electric mobility or Efficient Dynamics across the
entire product portfolio provide excellent platforms for
future growth. Potential also exists in engaging in new
product and market categories and developing new cus-
tomer target groups. New business models and coopera-
tion arrangements with the BMW Group's growing
network of business partners often provide the best
means to exploit these opportunities. Good examples
are the implementation of the 360° ELECTRIC portfolio
in the field of electric mobility, the partnership with
Sixt in the field of mobility services, and collaboration
with Toyota on developing a hydrogen fuel cell system.
18 General Information on the BMW Group
73 COMBINED MANAGEMENT REPORT
Position and Net Assets
of BMW AG
62 Events after the End of the
Reporting Period
63-Report on Outlook, Risks and
Opportunities
63 Outlook
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
-
planned innovations, with the consequence that the cost
of materials could exceed levels incorporated in the
forecast. Supplier sites are assessed for exposure to nat-
ural hazards, such as floods or earthquakes, in order to
identify supply risks at an early stage and implement
appropriate countermeasures. Fire risks at series sup-
pliers are evaluated by means of questionnaires and
selective site inspections. Raw materials management
procedures are in place to mitigate the risk of a produc-
tion interruption due to shortages of supplies of critical
raw materials. In order to reduce supply risks, the
BMW Group works hard to minimise the input of raw
materials or to use alternative raw materials as a sub-
stitute. The increasingly complex nature of the supplier
network, especially at the level of sub-suppliers, whose
operations can only be indirectly influenced by the
BMW Group, is a further potential cause of downtimes
at supplier locations. Production problems incurred
by suppliers could have adverse consequences for the
BMW Group, ranging from increased expenditure to
production interruptions and a corresponding reduc-
tion in sales volume.
Purchasing opportunities
Global sourcing is seen as a key area for generating
opportunities within the Purchasing and Supplier Net-
work, whereby the BMW Group benefits from effi-
ciency improvements and access to innovative solutions
developed by suppliers, in some cases leading to a
broader range of products.
By observing and playing a proactive role in developing
global supplier markets, the BMW Group continuously
strives to increase its competitiveness by working to-
gether with the best providers in the global marketplace
for products and services. Opportunities arise particu-
larly in conjunction with the introduction of new and
innovative production technologies and by capitalising
on favourable location-specific cost factors that present
themselves when local supplier structures are devel-
oped nearby new and existing BMW Group production
plants.
The integration of previously unidentified innovations
from the supplier market in the product range is a fur-
ther source of opportunities. Innovative suppliers are
offered a variety of options when drawing up contracts,
in order to make it more attractive for those developing
innovative solutions. At regular intervals, the BMW
Group honours its most inventive supplier entities with
the Supplier Innovation Award.
The BMW Group does not expect these opportunities
to have a material earnings impact over the two-year as-
sessment period when compared to the assumptions
made in the outlook.
The BMW Group is constantly refining the tools it uses
to recruit staff, encourage career development and re-
tain employees within the Group. This environment of-
fers people the ideal situation in which to develop their
skills. If these measures generate greater benefits than
currently expected, the BMW Group's revenues, results
of operations and cash flows can be positively impacted
Risks relating to sales and marketing
49 Results of Operations, Financial
29 Review of Operations
If purchasing risks were to materialise, they could have
a high negative earnings impact over the two-year as-
sessment period. The level of risk attached to supply risk
is classified as medium.
27 Financial and Non-financial
and forecasted figures surpassed. Creating a successful
performance culture and developing the expertise and
skill sets of both staff and managers alike throughout
the organisation can also have a positive impact on both
revenue and profitability.
Overall, strategic and sector opportunities capable of
having a positive and sustainable impact on earnings
are currently classified by the BMW Group as insignifi-
cant.
Risks and opportunities relating to operations
Production- and technology-related risks
Production stoppages and downtimes – in particular due
to fire, but also to manufacturing and control equipment
breakdowns or transportation and logistical disruptions
- pose risks against which the BMW Group has put suit-
able measures in place. From the outset, production
structures and processes are designed with a view to
minimising any potential damage and its probability of
occurrence. The broad array of measures taken includes
technical fire protection solutions, land development
measures including contingencies against flooding, pre-
ventative maintenance, spare parts management on a
multi-site basis, and backup plans for alternative trans-
portation. The level of risk is also reduced by the deploy-
ment of flexible work-schedule models and employee
time accounts, but also by the ability to develop indi-
vidual models at additional sites if necessary, thus en-
abling any backlog arising from production interruptions
to be clawed back within a short time. Moreover, risks
arising from business interruption and loss of production
due to fire are also insured up to economically reason-
able levels with underwriters of good credit standing.
The development and production of technologically com-
plex vehicles in high volumes is technically challenging
and a source of potential quality risks. In order to
achieve the outstanding level of quality expected of the
BMW Group's products and minimise both statutory
and non-statutory warranty costs, it may possibly be
necessary to incur a higher level of expenditure than
originally forecast. There is also a risk of limited avail-
ability of products, particularly around the time of new
vehicle production start-ups. These risks are mitigated
through quality assurance activities in the form of regu-
lar audits and the continual improvement of quality
management systems. The BMW Group also recognises
appropriate provisions for both statutory and non-
statutory warranty obligations. These provisions reduce
the risk to the BMW Group's earnings, a fact already
taken into account in the forecast. Further information
on risks in conjunction with provisions for statutory
and non-statutory warranty obligations is provided in
note 36 of the Group Financial Statements.
If risks from the production- and technology-related
risks category were to materialise, they could have a
high negative earnings impact over the two-year assess-
ment period. The level of risk attached to production-
and technology-related issues is classified as medium.
Production- and technology-related opportunities
Opportunities could arise as a result of product- or pro-
cess-related technological innovations, or from organi-
sational changes designed to improve efficiency or
increase competitiveness. In the field of lightweight
construction, for example, carbon is being utilised in
high volumes for the first time in the automobile indus-
try in the construction of the BMW i3. During the year
under report, the BMW Group went one step further
by introducing the use of carbon in the BMW 7 Series,
thereby generating competitive benefits in the form of
lower fuel consumption and better driving dynamics
through reduced vehicle weight.
The BMW Group's earnings can be positively affected in
the short to medium term by changes in the legal envi-
ronment. A possible reduction in tariff barriers, import
restrictions or direct excise duties could lower the cost
of materials for the BMW Group, also enabling products
and services to be offered to customers at lower prices.
Purchasing risks
Given the long lead times involved in developing new
products and processes, the BMW Group does not
expect these opportunities to have a material impact on
earnings during the forecast period.
74
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
non-production aspects relevant for bought-in goods
and services, serves as the basis for the supplier net-
work, including the requirement to comply with inter-
nationally recognised human rights and applicable
labour and social standards. The principal tool for en-
suring compliance with the BMW Group Sustainability
Standard is a three-stage sustainability and risk manage-
ment approach comprising a BMW Group-specific sus-
27 Overall Assessment by Management tainability risk filter, a sustainability questionnaire and
a sustainability audit. In addition, the technical and
financial capabilities of suppliers - especially those sup-
plying for modular-based production – are continuously
59 Comments on Financial Statements monitored during both the development and the pro-
duction phases of the Group's vehicles. Particular atten-
tion is paid to the quality of parts. In order to attain the
level of quality required, it may become necessary to
68-Report on Risks and Opportunities invest in new technological concepts or discontinue
Close cooperation between carmakers and automotive
suppliers in the development and production of vehicles
and the provision of services generates economic bene-
fits, but also raises levels of dependency. The increasing
trend towards modular-based production with a set
of common architectures covering various models and
product lines exacerbates the consequences of the loss
of an individual supplier or failure to supply on time.
As part of the supplier preselection process, the BMW
Group is careful to ensure that its future business part-
ners meet the same high ecological, social and corporate
governance standards by which the BMW Group itself
expects to be measured. The BMW Group Sustain-
ability Standard, which contains a set of fundamental
principles and standards covering both production and
Performance Indicators
187.9
Development of BMW stock compared to stock exchange indices
(Index: December 2010 = 100)
the authorisation of a further rescue package. However,
the Chinese government's announcement of its inten-
tion to devalue the renminbi triggered further shock
waves on the world's capital markets. Moreover, news
of the manipulation of competitors' diesel and petrol
engines at the end of the third quarter had a negative
effect on investor sentiment with respect to the auto-
mobile industry as a whole. The general mood on stock
markets proceeded to turn yet again during the final
three months of the year. The ECB's announcement that
it is was considering expanding the scale of cheap money
within the euro region and the news of a renewed re-
duction in the reference interest rate by the Chinese
government fuelled the hopes of investors that the global
economy could pick up. As a consequence, the DAX
and the EURO STOXX 50 finished the year with a tangi-
ble gain, despite the losses arising in the interim period.
155.4
BMW
preferred stock common stock
DAX
Prime
Automobile
201.1
250
BMW
40
165.9
225
12
175
150
125
100
75
50
11
13
BMW preferred stock
Prime Automobile
BMW common stock
DAX
80
14
200
120
of BMW AG
200
15
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
-
In accordance with the agreement between BMW AG,
Daimler AG and AUDI AG pertaining to the acqui-
sition of entities of the HERE Group and the related
foundation of There Holding B.V., each contractual
party is required to offer its shares in There Holding
B.V. for sale to the other shareholders in the event
of a change in control. If neither of the other two
parties acquire these shares, these other parties are
entitled to resolve that There Holding B.V. be dis-
solved.
Compensation agreements with members of the
59 Comments on Financial Statements Board of Management or with employees in the event
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63
Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83-Disclosures Relevant for Takeovers
and Explanatory Comments
87-BMW Stock and Capital Markets
of a takeover bid
The BMW Group has not concluded any compensation
agreements with members of the Board of Management
or with employees for situations involving a takeover
offer.
87 COMBINED MANAGEMENT REPORT
BMW Stock and Capital Markets in 2015
BMW shares of common stock climbed to a new record
high of €122.60 during 2015. The BMW Group contin-
ues to have the best ratings in the European automobile
sector, enabling it to benefit from excellent access to in-
ternational capital markets.
Volatile stock markets in 2015
The 2015 stock market year was influenced by the slow-
down of the Chinese economy, the weakness of the
euro against the US dollar and the depreciation in value
of the Chinese renminbi. The Greek debt crisis and the
monetary policies pursued by the US Federal Reserve
Bank were sources of additional uncertainty for inves-
tors. Even the bond-buying programme put in place by
the ECB in the first quarter, initially lauded by capital
markets, was unable to fully counteract the negative con-
sequences of these events. However, thanks to the im-
proved mood towards the year-end, most stock markets
recorded a gain for the twelve-month period.
At the beginning of 2015, the ECB's expansionary mone-
tary policies prompted an upturn in Europe's capital
markets. The loss in value of the euro against the US
dollar provided a boost for European exports and con-
tributed to a more amenable stock market climate. This
initial momentum was overshadowed in the second
quarter by the renewed flare-up of the debt crisis in
Greece, news of China's faltering economy, and the
Ukraine crisis. The Chinese government revised down
its growth forecast for the domestic economy for 2015
from 7.5% to 7.0%. The Greek sovereign debt crisis took
another turn for the worse in June, putting a further
dampener on sentiment among investors. The financial
situation in Greece eased in the third quarter, following
Development of BMW stock compared to stock exchange
indices since 30 December 2010
in %
240
160
BMW preferred stock
Prime Automobile
BMW common stock
DAX
97.63
18-COMBINED MANAGEMENT REPORT
Common stock
Number of shares in 1,000
601,995
601,995
601,995
601,995
601,995
Stock exchange price in €¹
Year-end closing price-
23 Report on Economic Position
-89.77
85.22
-72.93
51.76
High
122.60
95.51
85.42
-73.76
-73.52
- Low
-75.68
-77.41
-63.93
53.16
45.04
Preferred stock
Number of shares in 1,000
54,809
2011
88
2012
2014
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
Against this background, the DAX reached a new all-
time high of 12,375 points in April. The slowdown of
the Chinese economy and the debate regarding the
manipulation of exhaust emissions of competitors had a
strong negative subsequent influence on the index. The
low for the year of 9,428 points was recorded in Sep-
tember. Following an upturn in the market environment,
the DAX finished the year at 10,743 points, up 9.6% for
27 Overall Assessment by Management the twelve-month period.
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63
Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87-BMW Stock and Capital Markets
The EURO STOXX 50 recorded a gain of 3.9% in 2015,
closing at 3,268 points on 31 December.
The Prime Automobile Index performed even better, gain-
ing 7.1% over the year under report to reach 1,596 points.
In March, BMW common stock climbed initially to reach
a new high of €122.60. After falling back to a low for the
year of €75.68 in September, it regained momentum in
BMW stock
the fourth quarter, finishing the year at €97.63, 8.8%
higher than at the end of 2014. BMW preferred stock
gained 14.1% in value compared to its closing price at
the end of the previous year. At the end of the stock
market year it stood at €77.41 after recording a new all-
time high of €92.19 in March.
With a market capitalisation of approximately €63 bil-
lion, the BMW Group was among the ten most valuable
German enterprises listed on the stock market at the
end of 2015.
Employee Share Programme
BMW AG has enabled its employees to participate in
its success for more than 40 years. Since 1989, this
participation has taken the form of an Employee Share
Programme. A total of 309,944 shares of preferred stock
were issued to employees as part of this programme in
2015.
2015
2013
20 Management System
23 General and Sector-specific
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18-COMBINED MANAGEMENT REPORT
82
*Disclosures pursuant to § 289 (5) HGB and §315 (2) no. 5 HGB.
Responsibilities for ensuring the effectiveness of the in-
ternal control system in relation to individual entity
Evaluating the effectiveness of the internal
control system
All employees are appropriately trained to carry out
their duties and kept informed of any changes in regula-
tions or processes that affect them. Managers and staff
also have access to detailed best-practice descriptions
relating to risks and controls in the various processes,
thus increasing risk awareness at all levels. As a conse-
quence, the internal control system can be evaluated
regularly and further improved as necessary. Employees
can, at any time and independently, deepen their un-
derstanding of control methods and design using an
information platform that is accessible throughout the
entire Group.
Internal control training for employees
All IT applications used in financial reporting processes
throughout the BMW Group are subject to access re-
strictions, allowing only authorised persons to gain ac-
cess to systems and data in a controlled environment.
Access authorisations are allocated on the basis of the
nature of the duties to be performed. In addition, IT
processes are designed and authorisations allocated
using the dual control principle, as a result of which, for
instance, requests cannot be submitted and approved
by the same person. Technical monitoring procedures
are also in place to ensure appropriate authorisation
security throughout all IT systems.
IT authorisations
Extensive controls are carried out by managers and staff
in all financial reporting processes at an individual
entity and Group level, thus ensuring that legal require-
ments and internal guidelines are complied with and
that all business transactions are properly executed. Con-
trols are also carried out with the aid of IT applications,
thus reducing the incidence of process risks. Moreover,
the performance of controls on accounts deemed to
be exposed to risk are subject to additional monitoring.
Controls
All financial reporting processes (including Group finan-
cial reporting processes) are structured in organisa-
tional terms in accordance with the principle of segrega-
tion of duties, thus making an important contribution
to the early identification of errors and the prevention
of potential wrongdoing. Regular comparison of inter-
nal forecasts and external financial reports, for example,
improves the quality of financial reporting. Moreover,
the internal audit department, in its capacity as a pro-
cess-independent function, tests and assesses the effec-
tiveness of the internal control system and proposes
improvements where appropriate.
Organisational measures
One component of the internal control system is that of
"Information and Communication". It ensures that all
the information needed to achieve the objectives set for
the internal control system is made available to those
responsible in an appropriate and timely manner. Infor-
mation relevant for the various financial reporting pro-
cesses - at BMW AG, other consolidated Group entities
and for the BMW Group as a whole – is set out pri-
marily in organisational manuals, internal and external
financial reporting guidelines, accounting manuals and
training documentation. This information, which can
be accessed at all levels via the BMW Group's intranet
system, provide the framework for ensuring that the
relevant rules are applied consistently throughout the
Group. The quality and relevance of these instructions
are ensured by regular review as well as by continuous
communication between the relevant departments.
-
Information and communication
The internal control system in place throughout the
BMW Group is aimed at ensuring the effectiveness of
operations. It makes an important contribution towards
ensuring compliance with the laws that apply to the
BMW Group as well as providing assurance on the
priety and reliability of internal and external financial
reporting. The internal control system is therefore a
significant factor in the management of process risks.
The principal features of the internal control system
and the risk management system, as far as they relate
to individual entity and Group financial reporting pro-
cesses, are described below.
pro-
Internal Control System and Risk Management System Relevant for the Financial Reporting Process
81 COMBINED MANAGEMENT REPORT
When the Company issues non-voting shares of pre-
ferred stock to employees in conjunction with its Em-
ployee Share Programme, these shares are subject as a
general rule to a company-imposed vesting period of
four years, measured from the beginning of the calen-
in which the shares are issued.
dar
year
Contractual holding period arrangements also apply to
shares of common stock required to be acquired by
Board of Management members and certain senior de-
partment heads in conjunction with the share-based
remuneration programmes (Compensation Report of
the Corporate Governance section; note 19 to the
Group Financial Statements).
Direct or indirect investments in capital exceeding
10% of voting rights
Based on the information available to the Company, the
following direct or indirect holdings exceeding 10% of
the voting rights at the end of the reporting period were
held at the date stated²:
Stefan Quandt, Germany
Susanne Klatten, Germany
18 Business Model
AQTON SE, Bad Homburg v. d. Höhe, Germany
20 Management System
23 General and Sector-specific
Restrictions on voting rights or the transfer of shares
As well as shares of common stock, the Company has
also issued non-voting shares of preferred stock. Fur-
ther information relating to this can be found above in
the section “Composition of subscribed capital".
(b) payment of an additional dividend of €0.02 per €1
par value on non-voting preferred shares and
(c) uniform payment of any other dividends on shares
on common and preferred stock, provided the
shareholders do not resolve otherwise at the Annual
General Meeting.
(a) subsequent payment of any arrears on dividends on
non-voting preferred shares in the order of accrue-
ment,
The Company's shares of preferred stock are shares
within the meaning of § 139 et seq. AktG, which carry a
cumulative preferential right in terms of the allocation
of profit and for which voting rights are normally ex-
cluded. These shares only confer voting rights in excep-
tional cases stipulated by law, in particular when the
preference amount has not been paid or has not been
fully paid in one year and the arrears are not paid in the
subsequent year alongside the full preference amount
due for that year. With the exception of voting rights,
holders of shares of preferred stock are entitled to the
same rights as holders of shares of common stock.
Article 24 of the Articles of Incorporation confers pref-
erential treatment to the non-voting shares of preferred
stock with regard to the appropriation of the Com-
pany's unappropriated profit. Accordingly, the unap-
propriated profit is required to be appropriated in the
following order:
The rights and duties of shareholders derive from the
German Stock Corporation Act (AktG) in conjunction
with the Company's Articles of Incorporation, the full
text of which is available at www.bmwgroup.com. The
right of shareholders to have their shares evidenced is
excluded in accordance with the Articles of Incorpora-
tion. The voting power attached to each share corre-
sponds to its par value. Each €1 of par value of share
capital represented in a vote entitles the holder to one
vote (Article 18 no. 1 of the Articles of Incorporation).
The subscribed capital (share capital) of BMW AG
amounted to €656,804,600 (2014: €656,494,740) at
31 December 2015 and, in accordance with Article 4
no. 1 of the Articles of Incorporation, is sub-divided
into 601,995,196 shares of common stock (91.66%)
(2014: 601,995,196; 91.70%) each with a par value of
€1, and 54,809,404 (8.34%) (2014: 54,499,544; 8.30%)
shares of non-voting preferred stock, each with a par
value of €1. The Company's shares are issued to bearer.
Composition of subscribed capital
Disclosures Relevant for Takeovers and Explanatory Comments
83 COMBINED MANAGEMENT REPORT
and reported.
trol system is functioning properly. Effective measures
are implemented whenever weaknesses are identified
81 - Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83-Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
68 Report on Risks and Opportunities
54,500
63 Outlook
Opportunities
63 Report on Outlook, Risks and
Reporting Period
62 Events after the End of the
of BMW AG
59 Comments on Financial Statements
Position and Net Assets
49 Results of Operations, Financial
29 Review of Operations
Performance Indicators
27 Financial and Non-financial
27 Overall Assessment by Management as part of their reporting duties that the internal con-
and Group financial reporting processes are clearly de-
fined and allocated to the relevant managers and are
subject to internal audits (e.g. management self-audits,
internal audit department findings). Data analysis tools
are also employed to identify risks relating to business
transactions. Continuous revision and further develop-
ment ensures the effectiveness of the internal control
system. Group entities are required to confirm regularly
Environment
23 Report on Economic Position
18 General Information on the BMW Group
18 Business Model
Johanna Quandt GmbH, Bad Homburg v. d. Höhe, Germany
Susanne Klatten Beteiligungs GmbH, Bad Homburg v. d. Höhe, Germany
63
Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83-Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Like all other shareholders, employees exercise their
control rights pertaining to shares they have acquired
in conjunction with the Employee Share Programme
and/or the share-based remuneration programme
directly on the basis of relevant legal provisions and the
Company's Articles of Incorporation.
Statutory regulations and Articles of Incorporation
provisions with regard to the appointment and removal
of members of the Board of Management and changes
to the Articles of Incorporation
The appointment or removal of members of the Board
of Management is based on the rules contained in
§ 84 et seq. AktG in conjunction with § 31 of the German
Co-Determination Act (MitbestG).
Amendments to the Articles of Incorporation must
comply with § 179 et seq. AktG. All amendments must
be decided upon by the shareholders at the Annual
General Meeting (§ 119 (1) no. 5, § 179 (1) AktG). The
Supervisory Board is authorised to approve amend-
ments to the Articles of Incorporation which only affect
its wording (Article 14 no. 3 of the Articles of Incorpo-
ration). Resolutions are passed at the Annual General
Meeting by simple majority of shares unless otherwise
explicitly required by binding provisions of law or, when
a majority of share capital is required, by simple majority
of shares represented in the vote (Article 20 no.1 of the
Articles of Incorporation).
Authorisations given to the Board of Management
in particular with respect to the issuing or buying back
of shares
The Board of Management is authorised to buy back
shares and sell repurchased shares in situations specified
in § 71 AktG, e.g. to avert serious and imminent damage
to the Company and/or to offer shares to persons em-
ployed or previously employed by BMW AG or one of its
affiliated companies.
In accordance with the resolution passed at the Annual
General Meeting on 15 May 2014, the Board of Manage-
ment is also authorised – up to 14 May 2019 - to acquire
shares of non-voting preferred stock of the Company
via the stock exchange, up to a maximum of 1% of the
share capital existing at the date of the resolution. The
consideration paid by the Company per share of non-
voting preferred stock (excluding transaction costs) may
not be more than 10% above or below the market price
determined by the opening auction on the date of trad-
ing of the stock in the Xetra trading system (or a suc-
cessor system having a comparable function). Moreover,
the Board of Management is authorised to use the ac-
quired Company's own shares of non-voting preferred
stock for all legally admissible purposes, specifically in-
cluding the right to offer and transfer shares to persons
employed by the Company or one of its affiliated com-
panies up to a proportionate amount of €5 million of
share capital. The subscription rights of existing share-
holders to the new shares of preferred stock used for
the purpose stated above are excluded. The authorisa-
tions may also be exercised in parts on more than one
occasion.
In accordance with § 4 no. 5 of the Articles of Incorpo-
ration, the Board of Management is authorised – with
the approval of the Supervisory Board – to increase
BMW AG's share capital during the period until 14 May
2019 by up to €4,450,383 for the purposes of an Em-
ployee Share Programme by issuing new non-voting
shares of preferred stock, which carry the same rights
as existing non-voting preferred stock, in return for
cash contributions (Authorised Capital 2014). Existing
shareholders may not subscribe to the new shares. No
conditional capital is in place at the reporting date.
Significant agreements entered into by the Company
subject to control change clauses in the event of a
takeover bid
The BMW AG is party to the following major agreements
which contain provisions for the event of a change in
control or the acquisition of control as a result of a take-
over bid:
-
An agreement concluded with an international con-
sortium of banks relating to a syndicated credit line
85 COMBINED MANAGEMENT REPORT
(which was not being utilised at the balance sheet
date) entitles the lending banks to give extraordinary
notice to terminate the credit line (such that all out-
standing amounts, including interest, would fall due
immediately) if one or more parties jointly acquire
direct or indirect control of BMW AG. The term "con-
trol" is defined as the acquisition of more than 50%
of the share capital of BMW AG, the right to receive
more than 50% of the dividend or the right to direct
the affairs of the Company or appoint the majority of
members of the Supervisory Board.
- A cooperation agreement concluded with Peugeot SA
relating to the joint development and production of
a new family of small (1 to 1.6 litre) petrol-driven en-
gines entitles each of the cooperation partners to give
extraordinary notification of termination in the event
of a competitor acquiring control over the other con-
tractual party and if any concerns of the other con-
tractual party concerning the impact of the change
of control on the cooperation arrangements are not
allayed during the subsequent discussion process.
BMW AG acts as guarantor for all obligations arising
from the joint venture agreement relating to BMW
Brilliance Automotive Ltd. in China. This agreement
grants an extraordinary right of termination to either
joint venture partner in the event that, either directly
or indirectly, more than 25% of the shares of the
other party are acquired by a third party or the other
party is merged with another legal entity. The termi-
nation of the joint venture agreement may result in
the sale of the shares to the other joint venture part-
ner or in the liquidation of the joint venture entity.
- Framework agreements are in place with financial in-
stitutions and banks (ISDA Master Agreements) with
respect to trading activities with derivative financial
instruments. Each of these agreements includes an
extraordinary right of termination which triggers the
immediate settlement of all current transactions in
the event that the creditworthiness of the party in-
volved is materially weaker following a direct or indi-
rect acquisition of beneficially owned equity capital
which confers the power to elect a majority of the
Supervisory Board of a contractual party or any other
ownership interest that enables the acquirer to exer-
cise control over a contractual party or which consti-
tutes a merger or a transfer of net assets.
- Financing agreements in place with the European
Investment Bank (EIB) entitle the EIB to request early
repayment of the loan in the event of an imminent
or actual change in control at the level of BMW AG
-
-
(partially in the capacity of guarantor and partially in
the capacity of borrower), if the EIB has reason to
assume – after the change in control has taken place
or 30 days after it has made a request to discuss the
situation – that the change in control could have a
significantly adverse impact or if the borrower refuses
to hold any such discussions. A change in control of
BMW AG arises if one or more individuals take over or
lose control of BMW AG, with control being defined
in the above-mentioned financing agreements as
(i) holding or having control over more than 50% of
the voting rights, (ii) the right to stipulate the majority
of the members of the Board of Management or
Supervisory Board, (iii) the right to receive more than
50% of dividends payable or (iv) any other comparable
controlling influence over BMW AG.
BMW AG is party to an agreement with SGL Carbon
SE, Wiesbaden, relating to the joint operations SGL
Automotive Carbon Fibers LLC, Delaware, USA and
SGL Automotive Carbon Fibers GmbH & Co. KG,
Munich. The agreement includes call and put rights
in case- either directly or indirectly - 50% or more of
the voting rights relating to the relevant other share-
holder of the joint operations are acquired by a third
party, or if 25% of such voting rights have been ac-
quired by a third party if that third party is a com-
petitor of the party that has not been affected by the
acquisition of the voting rights. In the event of such
acquisitions of voting rights by a third party, the non-
affected shareholder has the right to purchase the
shares of the joint operations from the affected share-
holder or to require the affected party to acquire the
other shareholder's shares.
The framework cooperation agreement entered into
by BMW AG and Sixt SE (as well as other BMW and
Sixt entities), relating to the foundation and operation
of the car sharing joint venture DriveNow, may be
terminated by Sixt SE if a car hire company acquires
more than 50% of the shares of common stock of
BMW AG. In the event of such a termination, Sixt SE
may, at its own discretion, stipulate the sale of BMW's
interest in the joint venture to Sixt SE or the pur-
chase of Sixt's interest in the joint venture by BMW AG
or one its subsidiaries.
An engine supply agreement between BMW AG and
Toyota Motor Europe SA relating to the sale of diesel
engines entitles each of the contractual parties to give
extraordinary notification of termination in the event
that one of the contractual parties merges with an-
other company or is taken over by another company.
86
Opportunities
Johanna Quandt GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany
63 Report on Outlook, Risks and
62 Events after the End of the
1 Disclosures pursuant to §289 (4) HGB and §315 (4) HGB.
2 Based on voluntary notifications provided by the listed shareholders as at 31 December 2015.
Direct share of
voting rights (%)
Indirect share of
voting rights (%)
0.2
0.2
33,83,4
28.93,5
17.4
16.46
16.4
-12.6
3 Voting rights held indirectly by the joint heirs of the Johanna Quandt estate are attributed in full in both cases to Stefan Quandt and Susanne Klatten.
4 Controlled entities, of which 3% or more are attributed: Johanna Quandt GmbH, Johanna Quandt GmbH & Co. KG für Automobilwerte, AQTON SE.
5 Controlled entities, of which 3% or more are attributed: Johanna Quandt GmbH, Johanna Quandt GmbH, Johanna Quandt GmbH & Co. KG für Automobilwerte,
Susanne Klatten Beteiligungs GmbH.
6 Controlled entities, of which 3% or more are attributed: Johanna Quandt GmbH & Co. KG für Automobilwerte.
84
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
Environment
27 Financial and Non-financial
The voting power percentages disclosed above may have
changed subsequent to the stated date if these changes
were not required to be reported to the Company. Due
to the fact that the Company's shares are issued to bearer,
the Company is generally only aware of changes in
shareholdings if such changes are subject to mandatory
notification rules.
27 Overall Assessment by Management Shares with special rights which confer control rights
There are no shares with special rights which confer
control rights.
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
of BMW AG
59 Comments on Financial Statements System of control over voting rights when employees
participate in capital and do not exercise their control
rights directly
Reporting Period
-54,260
-9.70
53,571
-369
-411
-313
-358
9,224
8,707
7,523
6,886
16-
-2,828
-2,890
-2,376
-2,365
-724
6,396
5,147
4,521
34-
27
-19
5
-7
34-
6,369
5,798
5,142
4,514
3,500
5,817
-396
-747
-454
Interest and similar income
14-
185
200
327
331
Interest and similar expenses
14-
-618
-519
-762
-620
90-GROUP FINANCIAL STATEMENTS
90 Income Statements
90-Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
Other financial result
Financial result
Profit/loss before tax
Income taxes
Net profit/loss
Attributable to minority interest
Attributable to shareholders of BMW AG
15-
7,262
34-
Total comprehensive income attributable to shareholders of BMW AG
19
Deferred taxes
-2,298
1,413
35
Remeasurement of the net defined benefit liability for pension plans.
5,817
6,396
Net profit
2014
2015
Note
in € million
Statement of Comprehensive Income for Group
163 Segment Information
147 Other Disclosures
122 Notes to the Balance Sheet
of Comprehensive Income
- 8.85
9.72
17-
Diluted earnings per share of preferred stock in €
113 Notes to the Income Statement
121 Notes to the Statement
8.83
9.70
17-
Diluted earnings per share of common stock in €
- 8.83
8.85
9.72
17-
-401
655
-706
1,012
27
Total comprehensive income attributable to minority interests
3,519
7,289
Total comprehensive income
-2,298
893
20-
Other comprehensive income for the period after tax
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
-706
-119
Items expected to be reclassified to the income statement in the future
-764
765
Currency translation foreign operations
-732
516
Deferred taxes
-48
-71
Other comprehensive income from equity accounted investments
-2,194
-1,301
Financial instruments used for hedging purposes
40
-170
Available-for-sale securities
-1,592
Items not expected to be reclassified to the income statement in the future
53,994
518
518
Earnings per share of common stock³
9.70
8.83
8.08
-7.77
-7.45
Earnings per share of preferred stock 4
9.72
8.85
8.10
7.79
-7.47
Operating cash flow Automotive segment
18.02
14.35
-15.19
-13.98
-12.38
Equity
65.03
57.03
54.25
46.66
41.34
1 Xetra closing prices.
2 Proposed by management.
3 Annual average weighted amount.
4 Stock weighted according to dividend entitlements.
89 COMBINED MANAGEMENT REPORT
2.32
In this context, and with the approval of the Super-
visory Board, the Board of Management increased
BMW AG's share capital by €309,860 from €656,494,740
to €656,804,600 by issuing 309,860 new non-voting
shares of preferred stock. The increase was executed on
the basis of Authorised Capital 2014 in Article 4 (5) of
the Articles of Incorporation. The new shares of pre-
ferred stock carry the same rights as existing shares of
preferred stock and were issued to enable employees to
obtain an equity participation in the Company. In addi-
tion, 84 shares of preferred stock were bought back via
the stock market in order to service the Employee Share
Programme.
2.52
2.92
Stock exchange price in €¹
Year-end closing price.
-77.41
67.84
62.09
48.76
36.55
-High
92.19
-74.60
-64.65
-49.23
45.98
Low
58.96
59.08
48.69
35.70
32.01
Key data per share in €
Dividend
Common stock
3.202
2.90
2.60
2.50
2.30
Preferred stock
3.222
2.62
655
Proposed dividend increase
Ratings remain at top level
18,132
17,005
15,137
13,952
Selling and administrative expenses
11
-8,633
-7,892
-7,219
-6,645
Other operating income
12-
-914
877
689
17-
Other operating expenses.
12-
-820
-872
-771
-812
Profit/loss before financial result
9,593
9,118
7,836
7,244
Result from equity accounted investments
13-
-61,221
Reflecting the good earnings performance, the Board of
Management and the Supervisory Board will propose
to the Annual General Meeting to use BMW AG's un-
appropriated profit of €2,102 million (2014: €1,904 mil-
lion) to pay a dividend of €3.20 for each share of com-
mon stock (2014: €2.90) and a dividend of €3.22 for each
share of preferred stock (2014: €2.92), a distribution rate
of 32.9% for 2015 (2014: 32.7%).
-70,399
-74,043
The BMW Group continues to have the best ratings in
the European automobile sector. Since December 2013,
BMW AG has had a long-term rating of A+ (stable out-
look) and a short-term rating of A-1 from the rating
agency Standard & Poor's, currently the highest rating
given by Standard & Poor's to a European car manufac-
turer.
On 24 March 2015, Moody's raised the outlook for
BMW AG's rating from "stable" to "positive". At the same
time, it confirmed BMW AG's long-term rating (A2) and
its short-term rating (P-1), both of which represent the
best ratings currently awarded in the European automo-
bile sector.
The rating assessments underline the BMW Group's ro-
bust financial condition and excellent creditworthiness.
Thanks to these attributes, the Group not only has good
access to international capital markets, it also benefits
from attractive refinancing conditions, which are par-
ticularly helpful for the BMW Group's financial services
business.
Intensive communication with capital markets
The BMW Group continued to keep analysts, investors
and rating agencies up to date throughout 2015 with
regular quarterly and year-end financial reports. As in
previous years, numerous one-to-one discussions,
group discussions and dedicated Socially Responsible
Investment (SRI) roadshows were held for investors
wishing to incorporate sustainability criteria in their in-
vestment decisions. This comprehensive communication
with relevant capital market participants was supple-
mented by debt roadshows for capital debt investors
and credit analysts. Communication focused primarily
on developments on the Chinese market, digitalisation
and other technological trends in the automobile in-
dustry, and the relevance of alternative drive systems.
Events organised during the year included a Capital
Markets Day for analysts and investors at the BMW
Group's Spartanburg plant in the USA.
90
GROUP FINANCIAL STATEMENTS
BMW Group
Income Statements for Group and Segments
Statement of Comprehensive Income for Group
Income Statements for Group and Segments
in € million
Note
2015
-63,396
-749
2014
Automotive
(unaudited supplementary information)
-2015
2014
Revenues
Cost of sales
Gross profit
9
92,175
80,401
85,536
-75,173
10
Group
The Board of Management reported to us comprehensively on the performance, risk situation
and business strategies of the Financial Services segment. It also provided information on the
current status of regulatory proceedings involving a locally based financial services company.
Towards the end of the year under report, we studied the annual budget for the financial year
2017 presented to us by the Board of Management. We carefully reviewed the opportunities and
risks attached to the budget and discussed them thoroughly with the Board of Management.
On the second day of the meeting, we focused on the long-term corporate plan for the years
2017-2022. The Board of Management also took the opportunity to point out various risk
scenarios, such as a possible further tightening of emissions regulations. The long-term plan
was approved after exhaustive analysis and consultation. We urged the Board of Management to
maintain close control over fixed costs and profitability in order to secure the necessary levels
of future investment.
145,555
→Page 140
Notes to the Statement of Comprehensive Income
Notes to the Balance Sheet
→Page 161
Other Disclosures
→ Page 175
Segment Information
→ Page 180 List of Investments at 31 December 2016
→Page 4 BMW Group in Figures
→Page 8 Report of the Supervisory Board
→ Page 16 Statement of the Chairman of the Board of Management
1
1
BMW Group
in Figures
Report of the
Supervisory Board
Statement of
the Chairman of
the Board of
Management
→ BMW Group
in Figures
BMW GROUP IN FIGURES
Key non-financial performance indicators
→ 01
BMW GROUP
2012
2013
2014
2015
→ Page 139
Notes to the Income Statement
→ Page 133
→ Page 120
→Page 192
Members of the Board of Management
→Page 193
Members of the Supervisory Board
→Page 196
Composition and Work Procedures of the Board of
Management of BMW AG and its Committees
→Page 198 Composition and Work Procedures of the
Supervisory Board of BMW AG and its Committees
→ Page 204 Disclosures pursuant to the Act on Equal
Gender Participation
→ Page 205 Information on Corporate Governance Practices Applied
beyond Mandatory Requirements
→ Page 207
→Page 212
Compliance in the BMW Group
Compensation Report
→Page 223
Responsibility Statement by the
Company's Legal Representatives
2016
→ Page 224 Auditor's Report
OTHER INFORMATION
→Page 226 BMW Group Ten-year Comparison
→Page 228 Glossary
→Page 230 Index
→ Page 232 Index of Graphs
→Page 233 Financial Calendar
→Page 234 Contacts
3
GROUP FINANCIAL
STATEMENTS
→ Page 112 Income Statements for Group and Segments
→ Page 112 Statement of Comprehensive Income for Group
→ Page 114 Balance Sheets for Group and Segments
→ Page 116 Cash Flow Statements for Group and Segments
→ Page 118 Group Statement of Changes in Equity
→ Page 120 Notes to the Group Financial Statements
Accounting Principles and Policies
5
Change in %
Workforce at year-end¹
105,876
2014
2015
2016
Change in %
Sales volume
BMW2
MINI
Rolls-Royce
Total²
1,540,085
301,526
3,575
1,845,186
1,655,138
305,030
3,630
1,963,798
1,811,719
302,183
4,063
2,117,965
2013
1,905,234
338,466
3,785
2,247,485
5.2
360,233
6.4
4,011
6.0
2,367,603
5.3
Production volume
BMW 5
MINI
Rolls-Royce
1,547,057
311,490
3,279
Total5
2,003,359
Information on the Company's Governing Constitution
Declaration of the Board of Management and of the
Supervisory Board pursuant to § 161 AktG
2012
→ 02
110,351
116,324
122,244
124,729
2.0
AUTOMOTIVE SEGMENT
Sales volume2
1,845,186
1,963,798
2,117,965
2,247,485
2,367,603
Fleet emissions in g CO2/km³
AUTOMOTIVE SEGMENT
143
130
127
124
5.3
-2.4
MOTORCYCLES SEGMENT
Sales volume4
106,358
115,215
123,495
136,963
145,032
5.9
Further non-financial performance figures
133
→ Page 191
→ Page 190
→Page 107 BMW Stock and Capital Markets in 2016
85,536
86,424
1.0
EBIT margin in % (change in %pts)
10.8
9.4
9.6
9.2
8.9
-0.3
ROCE in % (change in %pts)
73.7
63.0
75,173
61.7
74.3
2.1
MOTORCYCLES SEGMENT
ROCE in % (change in %pts)
1.8
21.8
31.6
33.0
1.4
FINANCIAL SERVICES SEGMENT
RoE in % (change in %pts)
21.2
20.0
72.2
19.4
70,630
-3.6
151,004
Revenues in € million
AUTOMOTIVE SEGMENT
4.8
9,665
9,224
8,707
7,893
7,803
Change in %
2016
2015
2014
70,208
2013
Profit before tax in € million
BMW GROUP
→ 03
Key financial performance indicators
5 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2012: 150,052 units, 2013: 214,920 units, 2014: 287,466 units, 2015: 287,755 units, 2016: 305,726 units).
6 Excluding Husqvarna, production up to 2013: 59,426 units.
* Excluding Husqvarna, sales volume up to 2013: 59,776 units.
1 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units, 2016: 316,200 units).
3 EU-28.
9.4
1,811,157
1,655,961
1,509,113
1,471,385
1,341,296
2012
1,861,826
20.2
1.0
CONTENTS
→Page
→Page
1
4 BMW Group in Figures
8 Report of the Supervisory Board
→Page 16 Statement of the Chairman of the
Board of Management
4
CORPORATE
GOVERNANCE
→ Page 190 Statement on Corporate Governance (§289a HGB)
(Part of the Combined Management Report)
2
Motor Cars Limited
COMBINED
→Page 22 General Information on the BMW Group
→Page 22 Organisational Structure and Business Model
→Page 24 Locations
→Page 29 Management System
→Page 34 Report on Economic Position
→Page 34 General and Sector-specific Environment
→ Page 38 Overall Assessment by Management
→Page 39 Financial and Non-financial Performance Indicators
→Page 42 Review of Operations
→Page 63 Results of Operations, Financial Position and Net Assets
→Page 76 Comments on Financial Statements of BMW AG
→Page 82 Report on Outlook, Risks and Opportunities
→Page 82 Outlook
→Page 88 Risks and Opportunities
→ Page 101 Internal Control System and Risk Management
System Relevant for the Financial Reporting Process
→Page 103 Disclosures Relevant for Takeovers
MANAGEMENT REPORT
21.2
Rolls-Royce
W
Further financial performance figures
→ 04
in € million
2012
2013
2014
2015
2016
Change in %
Capital expenditure
5,240
6,711
6,100
MINI
5,890
−1.1
Depreciation and amortisation
3,541
3,741
4,170
4,659
4,806
ANNUAL REPORT
2016
A New Era Begins
BMW
GROUP
Mo 25 592
THE NEXT
100 YEARS
M
5,823
1,699,835
303,177
3,354
2,006,366
16.4
1,933,647
342,008
3,848
2,279,503
60
in Figures
Sales volume of automobiles*
→ 05
in 1,000 units
We also took the opportunity to personally test-drive a variety of series vehicles on a test track,
including the current BMW plug-in hybrid vehicles and other individual models currently
being developed. In addition, selected vehicle models were presented and explained to us. In
this context, the new brand strategy, a key element of Strategy NUMBER ONE > NEXT, was
considered at length.
Together with the Board of Management, we also debated at length on the topic of digitalisation
in sales and production and the related requirements. After thorough deliberation, the members
of the Supervisory Board approved the Strategy NUMBER ONE > NEXT.
Corporate strategy and long-term corporate planning were considered in a meeting held over
two days. In the first part of the meeting we discussed the Strategy NUMBER ONE > NEXT in
great detail, including the implementation measures developed by the Board of Management.
The Board of Management elaborated on topics that included the measures adopted for defined
key areas of technology, such as Efficient Dynamics NEXT.
One Supervisory Board meeting was held in Goodwood, England, the headquarters and location
of the Rolls-Royce Motor Cars manufacturing plant. In the course of this meeting we dealt
with several topics, including a Board of Management report on product quality and customer
satisfaction. The Board of Management described various existing and planned emissions
requirements on key markets and presented measures designed to ensure compliance with
those requirements, including the further electrification of the BMW Group's fleet of vehicles.
Furthermore, the Board of Management explained the strategy and risk management measures
in place for Group financing. While visiting the Rolls-Royce manufacturing plant, we gathered
information on topics such as the implementation of individual customer requirements as a way
of optimising customer orientation.
The Board of Management kept us up-to-date at all times on the further development of the
Group's corporate strategy. Based on a thorough analysis of the changing environment in
which the BMW Group operates, the Board of Management set out the strategic targets of
Strategy NUMBER ONE > NEXT, which is designed to reconcile the need to ensure operational
excellence, invest in forward-looking areas and maintain profitability at a stable level. After the
various presentations, we discussed individual points of strategy with the Board of Management,
including digitalisation, electric mobility and lightweight construction.
We reviewed business developments on various key markets in some depth, particularly those
in China and the USA. The referendum held in the United Kingdom on the country leaving the
European Union prompted us to obtain an assessment from the Board of Management regarding
possible future consequences for the BMW Group.
Supervisory Board
→ Report of the
5
10
In its regular business status reports, the Board of Management kept us well informed regarding
the progress of important current projects and transactions, which we then deliberated upon in
greater detail. For example, the Board of Management briefed us on the BMW Group's collabo-
ration with Mobileye and Intel aimed at developing technologies for highly and fully automated
driving. It also provided information on the planned joint venture with other automobile
manufacturers to establish a charging infrastructure for electric vehicles that is compatible with
every brand. Other items reported on included the complete acquisition of the parking space
service provider ParkMobile and the enlargement of the group of shareholders for the HERE
mapping service. The Board of Management also informed us on the impact of an earthquake
in Japan on security of supply for certain components.
The Board of Management reported to us regularly and comprehensively on the BMW Group's
financial condition, providing information on sales volume developments, market competition
issues relevant for the Automotive and Motorcycles segments, and changes in the size of the
workforce. It also kept us informed of economic developments in the world's key regions and
the prospects for business in each of them. The Board of Management provided us with regular
updates on new business with retail customers and business volumes in the Financial Services
segment, including explanations of variances against the forecast.
At the beginning of the year, the Board of Management presented us with a summary of new
and revised vehicle models scheduled for market launch in 2016.
We carefully monitored the overall performance of the BMW Group, both at scheduled meetings
and at other times as the situation required. The Board of Management informed us of all key sales
and workforce figures on a regular basis. The Chairman of the Board of Management informed
me personally and in a prompt manner regarding all important transactions and key projects.
Similarly, Dr Karl-Ludwig Kley, the Chairman of the Audit Committee, and Dr Friedrich Eichiner,
member of the Board of Management responsible for Finance, consulted on matters directly,
both at scheduled meetings and as the need arose.
One of the main areas of emphasis with regard to reporting and our consultations in 2016 was
the enhanced development of the BMW Group's corporate strategy. We also deliberated at length
on succession planning for the Board of Management. Corporate planning was a further key
area of focus. We discussed the current performance and financial position of the BMW Group
at each of our five Supervisory Board meetings.
Main emphases of the Supervisory Board's monitoring and advisory activities
Throughout the financial year 2016, we performed the duties incumbent on the Supervisory
Board in accordance with the law and the Articles of Association. We continuously monitored
the Board of Management's governance of the business and provided advice on important
projects and plans.
In 2016, BMW AG celebrated its 100th anniversary. Quite fittingly, the BMW Group finished its
centenary year with record earnings. With its Strategy NUMBER ONE > NEXT, the BMW Group
is moving forward with a sense of purpose into the challenging era of digitalisation and
electrification and fully intends to continue playing an active role in shaping technological
change within the automobile industry.
Dear Shareholders,
Norbert Reithofer
Chairman of the Supervisory Board
Supervisory Board
→ Report of the
8
the Chairman of
the Board of
Management
9
Statement of
7.7/7.7
2.6
8.0
Financial Services
1,561
1,619
1,723
1,975
2,166
9.7
Other Entities
Eliminations
3
-937
164
154
211
10.45/10.47
-527
-664
170
-772
-19.4
-16.3
Income taxes
Net profit
-2,692
5,111
Earnings per share in €
7.75/7.77
-2,564
5,329
8.08/8.10
-2,890
5,817
8.83/8.85
-2,828
6,396
9.70/9.72
-2,755
6,910
-163
3.4
Report of the
Supervisory Board
STATEMENT OF THE
CHAIRMAN OF THE
92.2 94.2
1,838,268
322,803
4,495
2,165,566
100
80.4
76.8
76.1
50
2012
2013
1
2014
2015
2016
in € billion
Profit before tax
in € million
9,665
10,000
9,224
8,707
7,803
7,893
5,000
2012
2013
2014
2015
2016
→ 08
BOARD OF MANAGEMENT
→ 07
2016
REPORT OF THE
SUPERVISORY BOARD
2,500
2,367.6
2,247.5
2,118.0
1,963.8
1,845.2
1,250
2012
2013
2014
2015
2016
Revenues
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
Profit before financial result
→ 06
in € million
9,593 9,386
10,000
9,118
8,275
7,978
5,000
2012
2013
2014
2015
(2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units,
2016: 316,200 units).
185
→ BMW Group
107
Automotive
Revenues
-3.1
11,464
11,836
9,423
9,964
9,167
Operating cash flow Automotive segment
3.2
133,615
110,127
113,811
New contracts with retail customers
FINANCIAL SERVICES SEGMENT
BMW
Production volume6
MOTORCYCLES SEGMENT
3.5
2,359,756
8.6
4,179
3.1
352,580
3.6
-14.3
-14,405
76,848
76,059
80,401
92,175
85,536
86,424
1.0
Motorcycles
Financial Services
1,490
1,504
1,679
1,990
2,069
4.0
19,550
19,874
-15,955
20,599
25,681
8.2
Other Entities
Eliminations
5
6
7
7
6
70,208
179
2.2
94,163
23,739
-17,057
-19,097
-20,017
44
71
169
-17
Eliminations
-949
-437
-65
-575
-663
-15.3
Profit before tax
7,803
58
7,893
9,224
9,665
4.8
Automotive
7,170
6,561
6,886
7,523
7,916
5.2
Motorcycles
6
76
8,707
75,173
Other Entities
2,184
-4.8
Profit before financial result (EBIT)
8,275
7,978
9,118
9,593
9,386
-2.2
Automotive
7,599
6,649
7,244
7,836
10.2
7,695
Motorcycles
9
79
112
182
187
2.7
Financial Services
1,558
1,643
1,756
2,002,997
1,981
-1.8
70,630
Information, data protection and IT
A description of the methods applied for risk measure-
ment and hedging in conjunction with currency and
→ see commodity risks is provided in → note 37 to the Group
Financial Statements. If the relevant recognition crite-
ria are fulfilled, derivatives used by the BMW Group
as hedges are accounted for as hedging relationships.
Further information on risks in conjunction with
→see financial instruments is provided in → note 37 to the
Group Financial Statements.
95
95
network, including the requirement to comply with
internationally recognised human rights and appli-
cable labour and social standards. The principal tool
for ensuring compliance with the BMW Group Sus-
tainability Standard is a three-stage risk management
system for sustainability. In addition, the technical
and financial capabilities of suppliers - especially
those supplying for modular-based production - are
monitored. Supplier sites are assessed for exposure
to natural hazards, such as floods or earthquakes, in
order to identify supply risks at an early stage and
implement appropriate safeguards. Fire risks at series
suppliers are evaluated by means of questionnaires
and selective site inspections. In order to minimise
supply risks, the BMW Group works hard to reduce
the input of raw materials or to use alternative raw
materials as a substitute.
The BMW Group pays particular attention to the qual-
ity of the parts built into its vehicles. In order to attain
a very high level of quality, it may become necessary
to invest in new technological concepts or discontinue
planned innovations, with the consequence that the
cost of materials could exceed levels accounted for in
the outlook. By monitoring and developing global sup-
plier markets, the BMW Group continuously strives
to increase its competitiveness by working together
with the world's best product and service providers.
Within the Purchasing and Supplier Network
opportunities emerge above all in the area of global
sourcing through increased efficiency and the use
of innovations developed by suppliers, which can
lead to a broader range of products. Introduction
of new and innovative production technologies and
location-specific cost factors, in particular through
local supplier structures in close proximity to new
and existing BMW Group production plants, can lead
to lower cost of materials for the BMW Group. The
integration of previously unidentified innovations
from the supplier market into the product range is
a further source of opportunities. The BMW Group
offers innovative suppliers numerous possibilities for
creating specific contractual arrangements which are
attractive for those developing innovative solutions.
At regular intervals, the BMW Group honours its
most inventive suppliers with the Supplier Innova-
tion Award. The BMW Group does not expect these
opportunities to have a significant earnings impact
over the two-year assessment period as compared to
the assumptions made in the outlook.
Risks and opportunities relating to
sales and marketing
The BMW Group employs a global sales network,
primarily comprising independent dealers, branches,
subsidiaries and importers to sell its products and
services. Any threat to the continued activities of
parts of the sales network would entail risks for the
BMW Group. If sales and marketing risks were to
materialise, they are likely to have low earnings impact
over the two-year assessment period. The risk level
is classified as low.
New opportunities for the BMW Group's brands are
opening up in particular as a result of developments
in the field of digital communication and connectivity.
Additional opportunities could also arise if new sales
channels contribute to greater brand reach to addi-
tional customer groups than currently envisaged in
the forecast. Digital communication and connectivity
enables consumers to be reached on a more targeted
and individualised basis, thus strengthening long-term
relationships and brand loyalty. The outcome is often
a more intense product and brand experience for cus-
tomers, which could lead to higher sales volume and
have a positive impact on revenues and earnings. The
BMW Group invests in advanced marketing concepts
in order to intensify customer relationships. In 2016,
for example, customers in the United Kingdom were
able to access an online sales platform, enabling them
to select, finance and buy their vehicle online. The
BMW Group's brands are also present on numerous
platforms, such as Facebook, YouTube and Twitter.
The BMW Group estimates the earnings impact as
insignificant over the two-year assessment period as
compared to the assumptions made in the outlook.
96
96
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
46
The advance of digitalisation across all areas of the
business raises the need for increasingly stringent
requirements for the confidentiality, integrity and
availability of electronically processed data and in
information technology (IT) in general. The increased
threat of cybercrime has changed the risk exposure
of the BMW Group. In addition to intellectual prop-
erty theft, BMW Group must protect itself against
attacks on data integrity and availability. At the same
time, regulations covering the handling of personal
data are also becoming more stringent, for example
with the adoption of the EU General Data Protection
Regulation by the European Parliament in April 2016.
If information, data protection and IT risks were to
materialise, they could have a high earnings impact
over the two-year assessment period. Risk levels
attached to these risks are classified as high.
In addition to IT attacks and direct physical inter-
vention, lack of knowledge or misconduct on the
part of employees may also represent a danger to the
confidentiality, integrity and availability of data and
systems. Direct consequences of information, data
protection and IT risks include expenses required
for rapid data, information and systems recovery.
Negative impacts on operational performance due
to the non-availability of products and services or
disruptions in spare-part or vehicle production could
also be possible. A further indirect result could be
reputational damage.
Based on the experience of the financial crisis, a
minimum liquidity concept has been developed and
is rigorously adhered to. Use of the “matched funding
principle" to finance the Financial Services segment's
operations eliminates liquidity risks to a large extent.
Solvency is assured at all times throughout the
BMW Group by maintaining a liquidity reserve and
by the broad diversification of refinancing sources.
Regular measurement and monitoring ensure that
cash inflows and outflows from transactions in
varying maturity cycles and currencies offset each
other. The relevant procedures are incorporated in the
BMW Group's target liquidity concept. The liquidity
position is monitored continuously and managed
by means of a cash flow requirement and sourcing
forecast system in place throughout the Group. A
diversified refinancing strategy reduces dependency
on any specific type of instrument. Moreover, the
BMW Group's solid financial and earnings position
results in the high creditworthiness ratings issued by
internationally recognised rating agencies.
rising refinancing costs. They may also manifest them-
selves in restricted access to funds as a consequence of
the general market situation or the failure of individual
banks. If liquidity risks were to materialise, they would
be likely to have a low earnings impact over the two-
year assessment period. The risk of incurring liquidity
risk, including the risk of the BMW Group's rating
being downgraded and any ensuing deterioration in
financing conditions, is classified as low.
The major part of the Financial Services segment's
credit financing and lease business is refinanced on
capital markets. Liquidity risks may be reflected in
Liquidity risks
note 37
Changes in commodity prices are monitored on the
basis of a well-defined management process. The
principal objective is to increase planning reliability
for the BMW Group. Price fluctuations for precious
metals (platinum, palladium, rhodium) and non-fer-
rous metals (aluminium, copper, lead), and, to some
extent, on steel and steel ingredients (iron ore, coke-
coal) and energy (gas, electricity) are hedged using
financial derivatives and supply contracts with fixed
pricing arrangements.
note 37
Risks and opportunities relating to raw materials
As a large-scale manufacturing company, the
BMW Group is exposed to purchase price risks, par-
ticularly in relation to raw materials used in vehicle
production. Basis for the analysis of raw material
price risk are planned purchases of raw materials and
components containing those raw materials. If risks
relating to raw material prices were to materialise, they
would likely have a low earnings impact over the two-
year assessment period. A low risk level is attached
to these risks. Significant opportunities could arise
if raw material prices developed favourably for the
BMW Group.
As an internationally operating enterprise, the
BMW Group conducts business in a variety of
currencies, thus giving rise to currency risks and
opportunities. A substantial portion of Group revenue
generation, purchasing and funding occur outside
the eurozone (particularly in China and the USA).
Cash-flow-at-risk models and scenario analyses are
used to measure currency risks and opportunities. If
currency risks were to materialise, they could have a
high earnings impact over the two-year assessment
period. The risk level attached to currency risks is
medium. Significant opportunities can arise if curren-
cy developments are favourable for the BMW Group.
Currency risks and opportunities
Financial risks and risks relating to
the use of financial instruments
The use of information technology in new products
and services, production or communication with
customers opens up new opportunities. Under the
slogan Industry 4.0, new approaches to production are
being tested which could generate significant improve-
ments in process and energy efficiency. The range
of services and apps on offer to customers via BMW
ConnectedDrive is constantly being expanded and
updated. The purchase together with other companies
of the firm HERE lays the foundation for the next
generation of mobility and location-based services.
For the automobile sector, it serves as the basis for
new customer-oriented functions, such as innovative
assistance systems through to fully automated driving.
The BMW Group expects these opportunities to have
an insignificant earnings impact over the two-year
assessment period compared to the assumptions made
in the outlook.
requirements and in-house rules. The BMW Group
protects its intellectual property as well as customer
and employee data in cooperations and business
partnerships by stipulating clear instructions with
regard to data protection and the use of information
technology. Information pertaining to key areas of
expertise as well as sensitive personal data are subject
to particularly strict security measures. Technical data
protection incorporates industry-wide standards and
best practices. Responsibility for data and information
protection lies for each Group entity with the Board
of Management or relevant management team.
Great importance is attached to protecting the
confidentiality, integrity and availability of business
information and employee and customer data, for
instance against unauthorised access and misuse. Data
security based on the International Standard ISO/IEC
27001 is an integral component of all business pro-
cesses. As part of risk management procedures, data
protection, information and IT risks are systematically
documented, allocated appropriate measures by the
departments responsible and regularly monitored in
terms of threat level and risk mitigation. Regular anal-
yses and controls and rigorous security management
ensure an appropriate level of security. Despite regular
testing and preventative security measures, it is impos-
sible to eliminate risks completely in this area. All
employees are required to treat carefully information
such as confidential business, customer and employee
data, to use securely information systems and handle
risks with transparency. Group-wide requirements
are documented in a comprehensive set of principles,
guidelines and instructions, such as, for example, the
Binding Corporate Rules for handling of employee
data. Regular communication and information activ-
ities create a high degree of security and risk aware-
ness among employees involved. Employees receive
training to ensure compliance with the applicable
Operational currency management is based on the
results of currency risk analyses. The BMW Group
manages currency risk at both the strategic (medium
and long term) and operational level (short and medi-
um term). Medium- and long-term measures include
increasing production volumes and purchase volumes
in foreign currency regions (natural hedging). Cur-
rency risks are managed in the short to medium term
and for operational purposes by means of hedging on
financial markets. Hedging transactions are entered
into only with financial partners of good credit stand-
ing. Opportunities are also secured through the use
of options during specific market phases.
97
Management
Report
98
Interest rate risks and opportunities
Interest rate risks in the Financial Services segment
relate to potential losses caused by changes in market
interest rates. They can arise when fixed interest
rate periods for assets and liabilities recognised in
the balance sheet do not match. If risks relating to
interest rate risk were to materialise, they could
have a medium earnings impact over the two-year
assessment period. The risk level is classified as
low. The BMW Group classifies potential interest
rate opportunities as material.
Interest rate risks in the Financial Services line of
business are managed by raising refinancing funds
with matching maturities and by employing inter-
est-rate derivatives.
If the relevant recognition criteria are fulfilled, deriv-
atives used by the BMW Group are accounted for as
hedging instruments. Further information on risks in
conjunction with financial instruments is provided in
→ note 37 to the Group Financial Statements.
→ see
note 37
Operational risks in the Financial Services
Each vehicle's estimated residual value is calculated
on the basis of historical external and internal data
and used to estimate the expected market value of
the vehicle at the end of the contractual period. As
part of the process of managing residual value risks,
a calculation is performed at the inception of each
contract to determine the net present value of risk
costs. Market developments are observed through-
out the contractual period and the risk assessment
updated.
segment
Legal risks
Compliance with the law is a basic prerequisite for the
success of the BMW Group. Current legislation pro-
vides the binding framework for the BMW Group's
various business activities around the world. As a
result of its worldwide operations, the BMW Group
is exposed to a wide range of legal risks. If legal risks
were to materialise, they could have a high earnings
impact over the two-year assessment period. The risk
level attached to significant identified legal risks is
classified as medium. However, it cannot be ruled
out that new legal risks, as yet unforeseen, could
materialise that could have a high earnings impact
for the BMW Group.
The growing international scope of the BMW Group's
operations and of business interdependencies in
general, combined with the variety and complexity
of legal provisions, including increasingly import and
export regulations, give rise to an increased risk that
laws may be violated simply through lack of aware-
ness. The BMW Group has established a Compliance
Organisation aimed at ensuring that its represen-
tative bodies, managers and staff act lawfully at all
times. Further information on the BMW Group's
Compliance Organisation can be found in the section
"Corporate Governance".
99
100
Close cooperation between carmakers and automotive
suppliers in the development and production of vehi-
cles and the provision of services generates economic
benefits, but also raises levels of dependency. Potential
reasons for the failure of individual suppliers could
include non-compliance with sustainability or quality
standards, lack of financial strength on the part of a
supplier, the occurrence of natural hazards, IT-related
risks, fires or insufficient supply of raw materials.
As part of the supplier pre-selection process, the
BMW Group is careful to ensure compliance with the
sustainability standards stipulated for the supplier
Operational risks are defined in the Financial Ser-
vices segment as the risk of losses arising as a conse-
quence of the inappropriateness or failure of internal
procedures (process risks), people (personnel-related
risks), systems (infrastructure and IT risks) and exter-
nal events (external risks). These four categories of
risk also include related legal and reputation risks.
The comprehensive recording and measurement of
risk scenarios, loss events and countermeasures in
the operational risk management system provides
the basis for a systematic analysis and management
of potential or materialised operational risks. Annual
self-assessments are also carried out. If operational
risks were to materialise, they would be likely to have
a low earnings impact over the two-year assessment
period. The risk level is classified as low.
Risks and opportunities arise in conjunction with
lease contracts if the market value of a leased vehicle
at the end of the contractual term of a lease differs
from the residual value estimated at the inception
of the lease and factored into the lease payments. A
residual value risk exists if the expected market value
of the vehicle at the end of the contractual term is
lower than its estimated residual value at the date the
contract is entered into. If residual value risks were to
materialise, they could have a high earnings impact
over the two-year assessment period. A high and
medium earnings impact would then arise for the
affected Financial Services and Automotive segments,
respectively. The risk level is classified as medium for
the Group as a whole. Opportunities can arise out of
a positive deviation between the actual market and
the original residual value forecast. The BMW Group
classifies potential residual value opportunities as
significant.
Residual value risks and opportunities
Credit and counterparty risks and opportunities
Credit and counterparty default risk arises with-
in the Financial Services segment if a contractual
partner (i.e. a customer or dealer) either becomes
unable or only partially able to fulfil its contractual
obligations, such that lower income is generated or
losses incurred. If credit and counterparty risks were
to materialise, they could have a medium earnings
impact over the two-year assessment period. The risk
level is classified as medium. The BMW Group classi-
fies potential opportunities in this area as significant.
As part of its credit and counterparty risk manage-
ment system, the Financial Services segment uses
a variety of rating systems in order to assess the
creditworthiness of its contractual partners. Credit
risks are managed at the time of the initial credit
decision on the basis of a calculation of the pres-
ent value of standard risk costs and subsequently,
during the term of the credit, by using a range of
risk provisioning techniques to cover risks resulting
from changes in customer creditworthiness. In this
context, individual customers are classified by cate-
gory each month on the basis of their current con-
tractual status, and appropriate levels of allowance
recognised in accordance with that classification. If
economies develop more favourably than assumed
in the outlook, credit losses may be reduced, leading
to a positive earnings impact.
Combined
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
Risks and opportunities relating to
pension obligations
Pension obligations are influenced in particular by
fluctuations of market yields on corporate bonds, as
well as by other economic and demographic parame-
ters. Opportunities and risks arise depending on the
nature and scale of changes in these parameters. If
risks relating to pension obligations materialised, they
could have a high earnings impact over the two-year
assessment period. The risk level relating to pension
obligations is classified as medium. Within a favoura-
ble capital market environment, the return generated
by pension assets may exceed expectations and reduce
the deficit of the relevant pension plans. This could
have a significantly favourable impact on the net asset
position of the BMW Group.
Future pension payments are discounted by reference
to market yields on high-quality corporate bonds.
These yields are subject to market fluctuation and
therefore influence the level of pension obligations.
Changes in other parameters, such as rises in infla-
tion and longer life expectancy, also impact pension
obligations and payments. Most of the BMW Group's
pension obligations are managed in external pension
funds or trust arrangements and the related assets are
kept separate from those of the Group. The amount
of funds required to finance pension payments out
of operations in the future is therefore substantially
reduced, since most of the Group's pension obli-
gations are settled out of pension fund assets. The
pension assets of the BMW Group comprise inter-
est-bearing securities, equities, real estate and other
investment classes. Assets held by pension funds and
trust arrangements are monitored continuously and
managed on a risk-and-yield basis. Diversification
of investments also helps to mitigate risk. In order
to reduce fluctuations in pension funding shortfalls,
investments are structured to match the timing of
pension payments and the expected pattern of pen-
sion obligations. Remeasurements on the liability and
fund asset sides are recognised, net of deferred taxes,
in "Other comprehensive income" and hence directly
in equity (within revenue reserves).
Further information on risks in conjunction with
pension provisions is provided in → note 30 to the see
Group Financial Statements.
note 30
Risks and opportunities relating to
the Financial Services segment
The categories of risk relating to the provision of
financial services comprise credit and counterparty
risk, residual value risk, interest rate risk, operational
risks and liquidity risk. Evaluation of liquidity risk
for the Financial Services segment is included in
the liquidity risk category for the Group as a whole.
The segment's total risk exposure was covered at all
times during the 2016 financial year by the available
risk-covering assets, thus ensuring the Financial
Services segment's risk-bearing capacity.
96
Risks and opportunities relating to purchasing
Purchasing risks relate primarily to supply risks
caused by the failure of a supplier to deliver as well
as risks associated with the quality of bought-in parts.
Production problems incurred by suppliers could have
adverse consequences for the BMW Group, ranging
from increased expenditure through to production
interruptions and a corresponding reduction in sales
volume. The increasingly complex nature of the
supplier network, especially at the level of lower tier
suppliers, whose operations can only be indirectly
influenced by the BMW Group, is a further potential
cause of downtimes at supplier locations. Purchas-
ing risks, if materialised, could have a high earnings
impact over the two-year assessment period. The
risk level attached to purchasing risks is classified
as medium.
High
note 31
Combined
Management
Report
Stable
Insignificant
Stable
Medium
Stable
Insignificant
Stable
Low
Stable
Insignificant
Stable
High
Foreign currencies
Increased
Stable
Medium
Stable
Significant
Stable
Raw materials
Low
Stable
Significant
Stable
Liquidity
Low
Stable
Insignificant
Financial risks and opportunities
Information, data protection and IT
Sales and marketing
Risks and opportunities
The following table provides an overview of all risks
and opportunities and illustrates their significance
for the BMW Group.
Overall, neither at the balance sheet date nor at the
date on which the Group Financial Statements were
prepared were any risks identified that could pose a
threat to the going-concern status of the BMW Group.
Risks and opportunities which could, from today's
perspective, have a significant impact on the results
of operations, financial position and net assets of the
BMW Group are described in the following sections.
91
Risk level
Change compared
to prior year*
Opportunities
Change compared
to prior year
RISKS AND OPPORTUNITIES
Macroeconomic risks and opportunities
High
Stable
Insignificant
Stable
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
Medium
Stable
Insignificant
Stable
Market developments
High
Stable
Insignificant
Stable
Risks and opportunities relating to operations
Production and technology
Purchasing
Pension obligations
Medium
Stable
Significant
The Brexit plan could have a long-term adverse
impact on the BMW Group, particularly as a result of
increased trade barriers in relation to the European
single market. In the short and medium term, too,
uncertainty regarding the outcome of the negotiations
with the EU could lead to reduced customer spending
and trigger further unfavourable currency effects.
Unresolved structural problems in the eurozone, a
potential increase in anti-globalisation political sen-
timent and a possible renewed economic downturn
could potentially hold down growth prospects for the
BMW Group. European integration with a unified
economic and currency area remains an important
pillar of economic stability in Europe.
The transition of the Chinese economy from an invest-
ment-driven to a consumer-driven market is likely to
entail slower growth rates and greater instability on
financial markets. If the Chinese economy were to
grow at a significantly slower pace than expected, the
consequence could be not only a decline in automo-
bile sales, but also, potentially, lower demand for raw
materials, which would have a negative impact above
all on emerging economies such as Brazil or Russia.
Any renewed drop in raw material prices could result
in lower demand from these countries. The threat of
turmoil on the Chinese property, stock and banking
markets and an overly rapid hike in interest rates by
the US Federal Reserve pose considerable risks for
global financial market stability.
Furthermore, increasing political unrest, military
conflicts, terrorist activities, natural disasters or
pandemics could have a lasting negative impact on
the global economy and international capital markets.
The BMW Group counters macroeconomic risks pri-
marily by internationalising its sales and production
structures, in order to minimise the extent to which
earnings depend on risks in individual countries and
regions. Flexible sales and production processes across
the BMW Group increase the ability to react quickly
to regional economic developments.
Should the global economy develop significantly
better than reflected in the outlook, macroeco-
nomic opportunities could arise with a potentially
favourable impact on the revenues and earnings of
the BMW Group. Stronger Chinese growth, econo-
my-boosting structural reforms within the eurozone,
growth stimulus through infrastructure investment
in the USA or more robust consumer spending by
US households despite rising financing costs, could
result in significantly stronger sales volume growth,
reduced competitive pressures and improved pricing.
Macroeconomic opportunities that could generate a
sustainable impact on earnings are currently classified
by the BMW Group as insignificant.
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
Abrupt introduction of tightened new laws and regu-
lations represents a significant risk for the automobile
industry, particularly in relation to emissions, safety
and consumer protection, as well as taxes on vehicle
purchases and use. Country- and sector-specific trade
barriers can also change at short notice. Unfavourable
developments in any of these areas can necessitate
significantly higher levels of investment and ongoing
expenses or influence customer behaviour. Risks from
changes in legislation and regulatory requirements
could have a low impact on earnings over the two-year
assessment period. The risk level attached to these
risks is classified as medium.
The BMW Group sees a clear move towards increasing-
ly stringent vehicle emissions regulations, particularly
for conventional drive systems, not only in the devel-
oped markets of Europe and North America, but also
in emerging markets such as China. The introduction
of new measurement procedures to represent stand-
ard driving cycles, combined with significantly lower
emissions thresholds, represents a major challenge for
the automotive sector. The BMW Group counters this
risk with its Efficient Dynamics concept and continues
to play a pioneering role within the premium segment
in reducing both fuel consumption and emissions.
Electric drive systems are being built into a growing
number of models, namely in BMW i vehicles since
2013 and following the introduction of the X5 in
2015 - in models using plug-in-hybrid technologies,
thus contributing to the BMW Group's effort to comply
with statutory carbon emissions requirements.
Further risks can result from the tightening of existing
import and export regulations. These lead primarily to
additional expenses, but can also restrict the import
and export of vehicles or parts. Increased taxes on
high-value consumer goods have also been proposed
in a number of regions. Taxes of this kind in major
markets of the BMW Group, such as China, could have
a negative impact on regional demand and margins
on BMW Group vehicles in the automobile segments
concerned.
Setting the regulatory framework for innovative mobil-
ity solutions and providing state-funded incentives
are important prerequisites for developing mobility
services and introducing product innovations, such
as autonomous driving. If the necessary public meas-
ures are implemented globally at a faster
pace than
expected, opportunities will arise for the BMW Group
to expand new business segments more quickly.
Alternative mobility services, such as DriveNow,
ChargeNow and ParkNow, could benefit from sup-
portive regulatory measures, for example through
systematic application in German cities of car-sharing
legislation that comes into force in September 2017.
Access restrictions for inefficient vehicles with lower
environmental standards could provide a competitive
advantage and hence an opportunity for BMW Group
vehicles equipped with Efficient Dynamics technol-
ogies and for BMW i and iPerformance vehicles with
alternative drive systems. The market acceptance and
sales volumes of product innovations that are either
planned for the future or have recently been launched
could turn out to be greater than predicted in the
outlook. Good examples of such opportunities are
implementation of the 360° ELECTRIC portfolio in the
field of electric mobility, achieving growth in the field
of mobility services, and collaborating with Toyota on
developing a hydrogen fuel cell system.
The BMW Group's earnings could also be positively
affected in the short to medium term by changes in
trading policies. A possible reduction in tariff barriers,
import restrictions or direct excise duties could lower
the cost of materials for the BMW Group, also enabling
products and services to be offered to customers at
lower prices. Further opportunities from changes in
legislation and regulatory requirements compared
to the outlook for the earnings performance of the
BMW Group are classified as insignificant.
Market development
In addition to the potential impact of macroeconomic
factors and sector-specific political framework condi-
tions, it is also extremely difficult to predict the impact
of increasingly fierce competition among established
manufacturers and the emergence of new competitors.
Unforeseen consumer preferences and changes in how
brands are perceived can give rise to opportunities
and risks. If market risks were to materialise, they
could have a high earnings impact over the two-year
assessment period. The risk level is classified as high.
Fierce competition, particularly in Western Europe,
the USA and China, is a potential reason for lower
demand and for fluctuations in the regional distri-
bution and composition of demand for vehicles and
mobility services. Greater competition could potential-
ly put pressure on selling prices and margins. Changes
in customer behaviour can also be brought about by
changes in public opinion, values, environmental
issues and fuel or energy prices. Selling price and
margin risks are measured using a scenario approach,
based on a bottom-up survey of the key sales markets
and an analysis of historical data. The BMW Group's
flexible selling and production processes enable risks
to be reduced and opportunities in market and prod-
uct segments to be taken.
Local restrictions affecting product usage in specific
sectors may limit BMW Group sales volumes in indi-
vidual markets. In some urban areas, for instance,
local measures have been or are being introduced
which impose entry restrictions, road use charges
or, in some situations, highly restrictive registration
rules. These restrictions may affect local demand for
the BMW Group vehicles affected and hence have
negative repercussions on sales volume and margins.
The BMW Group's endeavours to counter this risk
include offering locally emission-free vehicles (such
as the BMW i3), which benefit from state subsidies
and exemption rules.
New opportunities are continuously being sought to
create even greater added value for customers than
currently expected, and thereby realise significant
opportunities with respect to sales volumes and pric-
ing. Further development of the product and mobility
portfolio and expansion in growth regions are seen
as the most important growth opportunities for the
BMW Group in the medium to long term. Continued
growth depends above all on the ability to develop
innovative products and bring them to market. The
range of services on offer was further expanded in
2016, including the establishment of new mobility ser-
vices by ReachNow in North America and the expan-
sion of the DriveNow offering introduced in additional
European cities. Furthermore, vehicle-related services
were brought onto the market. The new BMW 5 and
93
94
94
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
7 Series models, for instance, include the optional
Driving Assistant Plus which, as a future-oriented
product innovation, offers the comfort of partially
autonomous driving. The BMW Group does not expect
these opportunities to have a material earnings impact
over the two-year assessment period compared to the
assumptions made in the outlook.
Risks and opportunities relating to operations
Risks and opportunities relating to
production and technology
Risks relating to production and technology often
manifest themselves in the form of potential sources
of production interruptions or additional expenses
necessary to comply with quality standards under
changed environmental conditions. If risks from the
production and technology category were to materi-
alise, they could have a high earnings impact over the
two-year assessment period. The risk level attached
to production and technology is classified as high.
Production stoppages and downtimes, in particular
due to fire, but also to machinery and tooling-related
breakdowns, IT disruptions, power failures, transpor-
tation and logistical disruptions, pose risks, against
which the BMW Group has put suitable measures
in place. Production structures and processes are
designed from the outset with a view to minimising
any potential damage and the probability of occur-
rence. The broad array of measures taken include
technical fire protection solutions, land development
measures including contingencies against flooding
when facilities are expanded or new buildings added,
the interchangeability of production facilities, pre-
ventative maintenance, the ability to manage spare
parts across sites, and predictive planning of trans-
portation alternatives. The risk level is also reduced by
deploying flexible working hour models and working
time accounts, but also as appropriate through split
arrangements or by building engine types at addition-
al sites. This makes it possible to recover quickly any
backlog arising from production interruptions. More-
over, risks arising from interruptions and production
downtime due to fire are also appropriately insured
with insurance companies of good credit standing.
In order to attain the outstanding level of quality
expected of the BMW Group's products and corre-
spondingly high external ratings (e.g. for product
safety) and reduce statutory and non-statutory
warranty obligations, it may be necessary to incur a
higher level of expenditure than originally forecast.
In addition, availability of products may be limited,
particularly at the start of production of new vehicles.
These risks are mitigated through regular audits and
the continual improvement of the quality management
system, which ensures a high standard of quality. The
BMW Group also recognises appropriate accounting
provisions for statutory and non-statutory warranty
obligations. Such provisions reduce the risk to earn-
ings, as they are already included in the outlook.
Further information on risks in conjunction with
provisions for statutory and non-statutory warranty
→ see obligations is provided in → note 31 to the Group
Financial Statements.
The possible introduction of trade barriers by the new
US administration could have an adverse impact on the
BMW Group's operations in the form of less favourable
conditions for importing vehicles. Moreover, counter-
measures by the USA's trading partners could slow
down global economic growth and consequently have
an adverse impact on the export of vehicles produced
in the USA. The BMW Group's production strategy
involves local production both in the USA and in other
important trading regions. The strategy of regional
production reduces the existing risk of trade barriers.
Nevertheless, any increase in trade barriers would
have an adverse impact on the BMW Group.
The BMW Group sees opportunities relating to produc-
tion and technology primarily in the competitive edge
accruing from mastering new and complex technolo-
gies. Opportunities could arise as a result of product-
or process-related technological innovations, as well
as from organisational changes designed to improve
efficiency and increase competitiveness. In the field of
lightweight construction, for example, carbon is being
utilised in high volumes for the first time in the auto-
mobile industry for the production of the BMW i3. In
2015, the BMW Group then introduced carbon for the
BMW 7 Series. This has generated competitive bene-
fits in the form of lower fuel consumption and better
driving dynamics through reduced vehicle weight.
Given the long lead times involved in developing new
products and processes, additional opportunities are
expected to have insignificant impact on earnings
during the forecast period.
→ Risks and
Opportunities
Management
Report
Risks and opportunities relating to the provision of financial services
Credit risk
Medium
Stable
Significant
Stable
Residual value
Medium
Stable
Significant
Stable
Interest rate changes
Low
Stable
Significant
Stable
Operational risks
Low
Stable
Legal risks
* Prior-year classifications have been amended in line with the revision of the risk catalogue described in the section "Risk Management System" and the measurement of risk amount described in the section
"Risk measurement".
Medium
Stable
Macroeconomic risks and opportunities
Economic conditions influence business performance
and hence the results of operations, financial posi-
tion and net assets of the BMW Group. Unforeseen
disruptions in global economic ties can have highly
unpredictable effects. Macroeconomic risks can lead
to reduced purchasing power in the countries and
regions involved and lead to reduced demand for the
products and services offered by the BMW Group.
If macroeconomic risks were to materialise, they
could - due to sales volume fluctuations have a
high earnings impact over the two-year assessment
period. Overall, the risk level attached to macroeco-
nomic risks is classified as high. Macroeconomic risks
are evaluated on the basis of historical data and by
means of a cash-flow-at-risk approach, supplemented
by scenario analyses.
-
Given the political events that have occurred during
the financial year under report, future global economic
developments are currently subject to a high degree
of uncertainty, in particular with respect to potential
barriers that could affect global trade. The outcome
of the elections in the USA in November 2016, the
planned exit of the UK from the EU and possible
election wins for anti-globalisation parties in the EU
in the coming years could result in higher tariff and
non-tariff barriers to trade.
42
92
Combined
Report on Outlook,
Risks and
Opportunities
Report on Outlook,
Risks and
Opportunities
Stable
Like all internationally operating entities, the
BMW Group is confronted with legal disputes relat-
ing in particular to warranty claims, product liability,
infringements of protected rights and proceedings
initiated by government agencies. Any of these mat-
ters could, amongst others, have an adverse impact
on the Group's reputation. Such proceedings are
typical for the sector and can arise as a consequence
of realigning product or purchasing strategies to suit
changed market conditions. Particularly in the US
market, class action lawsuits and product liability
risks can have substantial financial consequences
and cause damage to the Group's public image. The
application of more rigorous consumer regulations
or the stricter interpretation of existing regulations
could result in a greater number of recalls. The high
quality of the Group's products, which is ensured
by regular quality audits and ongoing improvement
measures, helps reduce this risk.
From today's perspective, management does not see
any threat to the BMW Group's going-concern status.
As in the previous year, identified risks are considered
to be manageable, but could - like the opportuni-
ties - have an impact on the BMW Group's forecasts if
they were to materialise. The BMW Group's financial
position is stable and cash needs are currently covered
by available liquidity and credit lines.
In addition to the risk categories described above,
unforeseen events could have a negative impact on
business operations and hence on the BMW Group's
results of operations, financial position and net assets,
and on its reputation. A comprehensive risk manage-
ment system is in place to ensure that the BMW Group
successfully manages these risks.
The overall risk assessment is based on a consolidated
view of all significant individual risks and opportu-
nities. The exposure to risks in the individual risk
categories is essentially stable. In view of the growing
importance of data and IT systems for its business, the
BMW Group sees an increased need for protection in
the area of information, data protection and IT systems.
In view of these changes, the overall risk level for the
BMW Group has increased slightly compared to the
previous year. Overall, there has been no significant
change in the opportunities situation compared to
the previous year.
opportunities situation
Overall assessment of the risk and
→ see
note 36
The BMW Group recognises appropriate levels
of provision for lawsuits. A part of these risks is
insured where this makes business sense. Some
risks, however, either cannot be estimated or only
to a limited extent. In other cases, the incurrence
of expenses or losses may be considered unlikely.
Such items are reported as contingent liabilities.
It cannot be ruled out, however, that losses from
damages could arise that are either not covered or
not fully covered by insurance policies or provisions,
or as contingent liabilities. In accordance with IAS 37
(Provisions, Contingent Liabilities and Contingent
Assets), the required information is not provided if
the BMW Group concludes that disclosure of the
information could seriously prejudice the outcome of
the relevant legal proceedings. Further information
on contingent liabilities is provided in → note 36 to
the Group Financial Statements.
→ Internal Control
System and Risk
Management System
Relevant for the
Financial Reporting
Process
→ Risks and
Opportunities
In accordance with Article 4 no. 5 of the Articles of
Incorporation, the Board of Management is author-
ised – with the approval of the Supervisory Board – to
increase BMW AG's share capital during the period
until 14 May 2019 by up to €4,145,383 for the pur-
poses of an Employee Share Scheme by issuing new
non-voting shares of preferred stock, which carry the
same rights as existing non-voting preferred stock,
in return for cash contributions (Authorised Capital
2014). Subscription rights of existing shareholders to
the new shares are excluded. No conditional capital
is in place at the reporting date.
Significant agreements entered into by the
Company subject to control change clauses in the
event of a takeover bid
BMW AG is party to the following major agreements,
which contain provisions that would apply in the event
of a change in control or the acquisition of control as
a result of a takeover bid:
-
An agreement concluded with an international
consortium of banks relating to a syndicated
credit line (which was not being utilised at the
balance sheet date) entitles the lending banks to
give extraordinary notice to terminate the credit
line (such that all outstanding amounts, includ-
ing interest, would fall due immediately) if one
or more parties jointly acquire direct or indirect
control of BMW AG. The term "control" is
defined as the acquisition of more than 50% of
the share capital of BMW AG, or the right to
receive more than 50% of the dividend or the
right to direct the affairs of the Company, or
appoint the majority of the members of the
Supervisory Board.
A cooperation agreement concluded with Peu-
geot SA relating to the joint development and
production of a new family of small (1- to
1.6-litre) petrol engines entitles each of the
cooperation partners to give extraordinary noti-
fication of termination in the event of a compet-
itor acquiring control over the other contractual
party and if any concerns of the other contrac-
tual party concerning the impact of the change
of control on the cooperation arrangements are
not allayed during the subsequent discussion
process.
105
Framework agreements are in place with finan-
cial institutions and banks (ISDA Master Agree-
ments) with respect to trading activities with
derivative financial instruments. Each of these
agreements includes an extraordinary right of
termination, which triggers the immediate settle-
ment of all current transactions in the event that
the creditworthiness of the party involved is
materially weaker following a direct or indirect
acquisition of beneficially owned equity capital
that confers the power to elect a majority of the
Supervisory Board of a contractual party or any
other ownership interest that enables the acquir-
er to exercise control over a contractual party, or
which constitutes a merger or a transfer of net
assets.
Financing agreements in place with the European
Investment Bank (EIB) entitle the EIB to request
early repayment of the loan in the event of an
imminent or actual change in control at the level
of BMW AG (partially in the capacity of guarantor
and partially in the capacity of borrower), if the
EIB has reason to assume - after the change in
control has taken place or 30 days after it has
made a request to discuss the situation - that the
change in control could have a significantly
adverse impact, or if the borrower refuses to hold
any such discussions. A change in control of
BMW AG arises if one or more individuals take
over or lose control of BMW AG, with control
being defined in the above-mentioned financing
agreements as (i) holding or having control over
more than 50% of the voting rights, (ii) the right
to stipulate the majority of the members of the
Board of Management or Supervisory Board, (iii)
the right to receive more than 50% of dividends
payable or (iv) any other comparable controlling
influence over BMW AG.
to offer and transfer shares to persons employed by
the Company or one of its affiliated companies up to
a proportionate amount of €5 million of share capital.
The subscription rights of existing shareholders to the
new shares of preferred stock used for the purpose
stated above are excluded. The authorisations may
also be exercised in parts on more than one occasion.
106
Combined
Management
Report
BMW AG acts as guarantor for all obligations aris-
ing from the joint venture agreement relating to
BMW Brilliance Automotive Ltd. in China. The
agreement grants an extraordinary right of termi-
nation to either joint venture partner in the event
that, either directly or indirectly, more than 25%
of the shares of the other party are acquired by a
third party, or if the other party is merged with
another legal entity. The termination of the joint
venture agreement may result in either the sale of
the shares to the other joint venture partner or in
the liquidation of the joint venture entity.
In accordance with the resolution passed at the
Annual General Meeting on 15 May 2014, the Board of
Management is also authorised – up to 14 May 2019 -
to acquire shares of non-voting preferred stock of the
Company via the stock exchange, up to a maximum
of 1% of the share capital existing at the date of the
resolution. The consideration paid by the Company
per share of non-voting preferred stock (excluding
transaction costs) may not be more than 10% above
or below the market price determined by the opening
auction on the date of trading of the stock in the
Xetra trading system (or a successor system having a
comparable function). Moreover, the Board of Man-
agement is authorised to use the acquired Company's
own shares of non-voting preferred stock for all legally
admissible purposes, specifically including the right
Amendments to the Articles of Incorporation must
comply with § 179 et seq. AktG. All amendments must
be decided upon by the shareholders at the Annual
The Board of Management is authorised to buy back
shares and sell repurchased shares in situations spec-
ified in § 71 AktG, e.g. to avert serious and imminent
damage to the Company and/or to offer shares to
persons employed or previously employed by BMW AG
or one of its affiliated companies.
16.43
16.4
0.2
12.64
12.6
The voting power percentages disclosed above may
have changed subsequent to the stated date if these
changes were not required to be reported to the
Company. Due to the fact that the Company's shares
are issued to bearer, the Company is generally only
aware of changes in shareholdings if such changes are
subject to mandatory notification rules.
-
Shares with special rights which confer control
rights
System of control over voting rights when
employees participate in capital and do not
exercise their control rights directly
Like all other shareholders, employees exercise their
control rights pertaining to shares they have acquired
in conjunction with the Employee Share Programme
and/or the share-based remuneration programme
directly on the basis of relevant legal provisions and
the Company's Articles of Incorporation.
Statutory regulations and Articles of Incorporation
provisions with regard to the appointment and
removal of members of the Board of Management
and changes to the Articles of Incorporation
The appointment or removal of members of the Board
of Management is based on the rules contained in § 84
et seq. AktG in conjunction with § 31 of the German
Co-Determination Act (MitbestG).
→ Disclosures Relevant
for Takeovers
General Meeting (§ 119 (1) no. 5, § 179 (1) AktG). The
Supervisory Board is authorised to approve amend-
ments to the Articles of Incorporation which only
affect its wording (Article 14 no. 3 of the Articles of
Incorporation). Resolutions are passed at the Annual
General Meeting by simple majority of shares unless
otherwise explicitly required by binding provisions of
law or, when a majority of share capital is required,
by simple majority of shares represented in the vote
(Article 20 no. 1 of the Articles of Incorporation).
Authorisations given to the Board of Management
in particular with respect to the issuing or buying
back of shares
There are no shares with special rights which confer
control rights.
and Explanatory
Comments
The framework cooperation agreement entered
into by BMW AG and Sixt SE amongst others,
relating to the foundation and operation of the
car-sharing joint venture DriveNow, may be ter-
minated by Sixt SE if a car hire company
acquires more than 50% of the shares of com-
mon stock of BMW AG. In the event of such a
termination, Sixt SE may, at its own discretion,
stipulate the sale of BMW's interest in the joint
venture to Sixt SE or the purchase of Sixt's
interest in the joint venture by BMW AG or one
its subsidiaries.
-
108
107
At the beginning of the year, speculation about the
cooling of the Chinese economy had a negative impact
on stock market indices worldwide. At 8,753 points,
the German stock exchange (DAX) reached its low for
the year on 11 February, 18.5% down on its closing
level on 31 December 2015. The ECB's decision to con-
tinue its expansionary monetary policies and, starting
8 June, to buy euro-denominated investment-grade
corporate bonds, had a positive impact on investor
sentiment. However, following the Brexit vote on
23 June and the uncertainties it triggered, indices
around the world slumped again. During the summer
months, stock markets proceeded to recover after the
difficult first half year. The active role of the Bank
of England was well received by investors. Reducing
the reference interest rate to a record low of 0.25%
and the bank's decision to purchase GBP 60 billion
worth of UK government bonds were interpreted as
positive signals. Good labour market figures coming
from the USA and the UK generated further gains
over the summer. During the last three months of
the year, the focus was on the US elections and the
ECB's decision to extend its bond-buying programme
until December 2017. Stock markets generally tended
positively during this phase, with the consequence
that the DAX - despite a turbulent start to the year -
recorded a 6.9% gain for the twelve-month period,
closing at 11,481 points on 30 December 2016. The
EURO STOXX 50 recorded a gain of 0.7% in 2016,
closing at 3,291 points on 30 December.
Political uncertainties weigh on stock markets
The stock market year 2016 was dominated by con-
cerns relating to political developments. During the
first half of the year, the approaching Brexit vote had
a negative impact on international financial markets.
Additionally, the US election on 8 November unsettled
markets towards the year-end. Uncertainties regard-
ing the economic situation in China also dampened
investor sentiment. The active role of central banks
over the course of the year tended to counteract these
influences, so that many stock exchanges closed - at
the end of a volatile year – higher than their previous
year's level.
Auto-
mobile
DAX
Prime
BMW
BMW
preferred common
stock
stock
120
171.5
194.6
198.9
240
219.1
Capital markets and BMW stock were both impacted by
major political and economic uncertainties during the
past year. Thanks to its consistent focus on the future
and solid financials, the BMW Group continues to enjoy
the best ratings in the European automobile sector and
a high standing on international capital markets.
in %
-
BMW AG is party to an agreement with SGL Car-
bon SE, Wiesbaden, relating to the joint operations
SGL Automotive Carbon Fibers LLC, Delaware,
USA and SGL Automotive Carbon Fibers GmbH &
Co. KG, Munich. The agreement includes call and
put rights in case - either directly or indirectly -
50% or more of the voting rights relating to the rel-
evant other shareholder of the joint operations are
acquired by a third party, or if 25% of such voting
rights have been acquired by a third party if that
third party is a competitor of the party that has not
been affected by the acquisition of the voting
rights. In the event of such acquisitions of voting
rights by a third party, the non-affected sharehold-
er has the right to purchase the shares of the joint
operations from the affected shareholder or to
require the affected party to acquire the other
shareholder's shares.
17.4
Several supply and development contracts
between BMW AG and various industrial cus-
tomers, all relating to the sale of components for
drivetrain systems, grant an extraordinary right
of termination to the relevant industrial custom-
er in specified cases of a change in control at
BMW AG (e.g. BMW AG merges with a third
party or is taken over by a third party; an auto-
mobile manufacturer acquires more than 50% of
the voting rights or share capital of BMW AG).
-
In accordance with the agreement between
BMW AG, Daimler AG and AUDI AG pertaining
to the acquisition of entities of the HERE Group
and the related foundation of There Holding
B.V., each contractual party is required to offer
its shares in There Holding B.V. for sale to the
other shareholders in the event of a change in
control. If neither of the other two parties
acquires these shares, these other parties are
entitled to resolve that There Holding B. V. be
dissolved.
→ BMW Stock and
Capital Markets in
2016
The development cooperation agreement
between BMW AG, Intel Corporation and Mobil-
eye Vision Technologies Ltd., relating to the
development of technologies deployed in highly
and fully automated vehicles, may be terminat-
ed by any of the contractual parties if a competi-
tor of one of the parties acquires and
subsequently holds at least 30% of the voting
shares of one of the contractual parties.
The BMW Group has not concluded any compensation
agreements with members of the Board of Manage-
ment or with employees for situations involving a
takeover offer.
BMW STOCK
AND CAPITAL MARKETS
IN 2016
→ www.bmwgroup.com/ir
Development of BMW stock compared to stock
market indices since 30 December 2011
→ 56
Compensation agreements with members of the
Board of Management or with employees in the
event of a takeover bid
17.42
2 Controlled entities, of which 3% or more are attributed: AQTON SE.
Indirect share of
voting rights
The rights and duties of shareholders derive from the
German Stock Corporation Act (AktG) in conjunction
with the Company's Articles of Incorporation, the
full text of which is available at www.bmwgroup.com. The
right of shareholders to have their shares evidenced
is excluded in accordance with the Articles of Incor-
poration. The voting power attached to each share
corresponds to its par value. Each €1 of par value
of share capital represented in a vote entitles the
holder to one vote (Article 18 no. 1 of the Articles of
Incorporation).
The subscribed capital (share capital) of BMW AG
amounted to €657,109,600 at 31 December 2016
(2015: €656,804,600) and, in accordance with Article 4
no. 1 of the Articles of Incorporation, is sub-divided
into 601,995,196 shares of common stock (91.61%)
(2015: 601,995,196; 91.66%) and 55,114,404 shares of
non-voting preferred stock (8.39%) (2015: 54,809,404;
8.34%), each with a par value of €1. The Company's
shares are issued to bearer.
Composition of subscribed capital
DISCLOSURES RELEVANT
FOR TAKEOVERS* AND
EXPLANATORY COMMENTS
Responsibilities for ensuring the effectiveness of
the internal control system in relation to individual
entity and Group financial reporting processes are
clearly defined and allocated to the relevant managers
and are subject to internal audits (e.g. management
self-audits, internal audit department findings). Data
analysis tools are also employed to identify risks relat-
ing to business transactions. Continuous revision and
further development ensures the effectiveness of the
internal control system. Group entities are required
to confirm regularly as part of their reporting duties
that the internal control system is functioning prop-
erly. Effective measures are implemented whenever
weaknesses are identified and reported.
Evaluating the effectiveness of the internal
control system
All employees are appropriately trained to carry out
their duties and kept informed of any changes in
regulations or processes that affect them. Managers
and staff also have access to detailed best-practice
descriptions relating to risks and controls in the var-
ious processes, thus increasing risk awareness at all
levels. As a consequence, the internal control system
can be evaluated regularly and further improved
as necessary. Employees can, at any time and inde-
pendently, deepen their understanding of control
methods and design using an information platform
that is accessible throughout the entire Group.
Internal control training for employees
and Explanatory
Comments
→ Disclosures Relevant
for Takeovers
→ Internal Control
System and Risk
Management System
Relevant for the
Financial Reporting
Process
Combined
Management
Report
102
101
All IT applications used in financial reporting pro-
cesses throughout the BMW Group are subject to
access restrictions, allowing only authorised persons
to gain access to systems and data in a controlled envi-
ronment. Access authorisations are allocated on the
basis of the nature of the duties to be performed. In
addition, IT processes are designed and authorisations
allocated using the dual control principle, as a result of
which, for instance, requests cannot be submitted and
approved by the same person. Technical monitoring
procedures and internal audits are also in place to
ensure appropriate authorisation security throughout
all IT systems.
IT authorisations
Extensive controls are carried out by managers and
staff in all financial reporting processes at an individ-
ual entity and Group level, thus ensuring that legal
requirements and internal guidelines are complied
with and that all business transactions are properly
executed. Controls are also carried out with the aid
of IT applications, thus reducing the incidence of
process risks. Moreover, the performance of controls
on accounts deemed to be exposed to risk are subject
to additional monitoring.
stable
INTERNAL CONTROL
SYSTEM* AND RISK
MANAGEMENT SYSTEM
RELEVANT FOR THE
FINANCIAL REPORTING
PROCESS
Disclosures
pursuant to
§ 289 (5) HGB
and § 315 (2)
no. 5 HGB.
*Disclosures
pursuant to
reporting. Moreover, the internal audit department,
in its capacity as a process-independent function,
tests and assesses the effectiveness of the internal
control system and proposes improvements where
appropriate.
Information and communication
-
One component of the internal control system is that
of “Information and Communication”. It ensures that
all the information needed to achieve the objectives
set for the internal control system is made available
to those responsible in an appropriate and timely
manner. Information relevant for the various finan-
cial reporting processes
at BMW AG, other consol-
idated Group entities and for the BMW Group as a
whole - is set out primarily in organisational manuals,
internal and external financial reporting guidelines,
accounting manuals and training documentation. This
information, which can be accessed at all levels via the
BMW Group's intranet system, provide the framework
for ensuring that the relevant rules are applied consist-
ently throughout the Group. The quality and relevance
of these instructions are ensured by regular review as
well as by continuous communication between the
relevant departments.
Organisational measures
All financial reporting processes (including Group
financial reporting processes) are structured in
organisational terms in accordance with the principle
of segregation of duties, thus making an important
contribution to the early identification of errors and
the prevention of potential wrongdoing. Regular com-
parison of internal forecasts and external financial
reports, for example, improves the quality of financial
Controls
The internal control system in place throughout the
BMW Group is aimed at ensuring the effectiveness
of operations. It makes an important contribution
towards ensuring compliance with the laws that apply
to the BMW Group as well as providing assurance on
the propriety and reliability of internal and external
financial reporting. The internal control system is
therefore a significant factor in the management of
process risks. The principal features of the internal
control system and the risk management system, as far
as they relate to individual entity and Group financial
reporting processes, are described below.
0.2
§ 289 (4) HGB
and § 315 (4)
HGB.
(a) subsequent payment of any arrears on dividends
on non-voting preferred shares in the order of
Direct share of
voting rights
3 Controlled entities, of which 3% or more are attributed: Johanna Quandt GmbH & Co. KG für Automobilwerte.
4 Controlled entities, of which 3% or more are attributed: Susanne Klatten Beteiligungs GmbH.
Combined
Management
Report
1 Based on voluntary notifications provided by the listed shareholders as at 31 December 2016.
Susanne Klatten Beteiligungs GmbH, Bad Homburg v.d. Höhe, Germany
Susanne Klatten, Germany
Johanna Quandt GmbH & Co. KG für Automobilwerte, Bad Homburg v.d. Höhe, Germany
Johanna Quandt GmbH, Bad Homburg v.d. Höhe, Germany
AQTON SE, Bad Homburg v.d. Höhe, Germany
Stefan Quandt, Germany
in %
the following direct or indirect holdings exceeding
10% of the voting rights at the end of the reporting
period were held at the stated reporting date:¹
Based on the information available to the Company, 1
10% of voting rights
Direct or indirect investments in capital exceeding
and Explanatory
Comments
for Takeovers
accruement
(b) payment of an additional dividend of €0.02 per
€1 par value on non-voting preferred shares
(c) uniform payment of any other dividends on
shares on common and preferred stock, provid-
ed the shareholders do not resolve otherwise
at the Annual General Meeting
103
→ see
The Company's shares of preferred stock are shares
within the meaning of § 139 et seq. AktG, which
carry a cumulative preferential right in terms of the
allocation of profit and for which voting rights are
excluded. These shares only confer voting rights in
exceptional cases stipulated by law, in particular when
the preference amount has not been paid or has not
been fully paid in one year and the arrears are not paid
in the subsequent year alongside the full preference
amount due for that year. With the exception of voting
rights, holders of shares of preferred stock are entitled
to the same rights as holders of shares of common
stock. Article 24 of the Articles of Incorporation con-
fers preferential treatment to the non-voting shares of
preferred stock with regard to the appropriation of the
Company's unappropriated profit. Accordingly, the
unappropriated profit is required to be appropriated
in the following order:
note 39
As well as shares of common stock, the Company has
also issued non-voting shares of preferred stock. Fur-
ther information relating to this can be found above
in the section "Composition of subscribed capital”.
When the Company issues non-voting shares of
preferred stock to employees in conjunction with its
Employee Share Programme, these shares are subject
as a general rule to a company-imposed blocking peri-
od of four years, measured from the beginning of the
calendar year in which the shares are issued.
Contractual holding period arrangements also apply to
shares of common stock acquired by Board of Manage-
ment members and certain senior department heads
in conjunction with the share-based remuneration
programmes (Compensation Report of the Corporate
Governance section; → note 39 to the Group Financial
Statements).
104
Combined
Management
Report
→ Disclosures Relevant
Restrictions on voting rights or the transfer
of shares
→ BMW Stock and
On 25 January 2017, Moody's raised its long-term
rating for BMW AG from A2 (positive outlook) to
A1 (stable outlook). The P-1 short-term rating was
reaffirmed. The main reasons for the improved ratings
were the forthcoming launches of attractive products,
the good position of the BMW Group with regard
to the challenges faced by the automobile industry,
a consistently strong operating performance and a
robust financing and capital structure.
Development of BMW stock compared to stock market indices
Preferred stock
3.522
3.22
2.92
2.62
2.52
2.50
Earnings per share of common stock³
9.70
8.83
8.08
7.77
Earnings per share of preferred stock4
10.47
10.45
2.60
2.90
3.20
48.76
74.15
92.19
74.60
64.65
49.23
56.53
58.96
59.08
48.69
35.70
KEY DATA PER SHARE IN €
Dividend
Common stock
3.502
9.72
62.09
8.85
7.79
→ BMW Stock and
Capital Markets in
2016
Ratings remain at top level
The BMW Group continues to have the best ratings
in the European automobile sector. Since Decem-
ber 2013, BMW AG has had a long-term rating of A+
(stable outlook) and a short-term rating of A-1 from
the rating agency Standard & Poor's, currently the
highest rating given by Standard & Poor's to a Euro-
pean car manufacturer.
Company rating
Moody's
Standard &
Poor's
Combined
Management
Report
Non-current financial liabilities
Current financial liabilities
Outlook
P-1
stable
The BMW Group continued to inform analysts, inves-
tors, and rating agencies throughout 2016 with regular
quarterly and year-end financial reports. The compre-
hensive information programme provided for relevant
capital market participants also included numerous
one-on-one and group meetings, dedicated socially
responsible investment (SRI) roadshows for investors
using sustainability criteria in their investment deci-
sions, and debt roadshows for fixed-income investors
and credit analysts. Communication focused on the
new Strategy NUMBER ONE > NEXT, the profitability
of future business models, digitalisation and other
technological trends in the automobile industry, and
the relevance of alternative drive systems. In addition
to participating in various conferences and roadshows,
a series of product presentations and a technology
workshop were held for analysts and investors.
The ratings underline the BMW Group's robust
financial condition and excellent creditworthiness.
Thanks to these attributes, it not only has good access
to international capital markets, but also benefits from
attractive refinancing conditions.
Capital Markets in
2016
Intensive communication with capital markets
continued
A1
110
109
4 Stock weighted according to dividend entitlements.
Operating cash flow Automotive segment
17.45
18.02
14.35
15.19
13.98
Equity
72.08
65.11
57.03
54.25
46.66
1 Xetra closing prices.
2 Proposed by management.
³ Annual average weighted amount.
8.10
67.84
A+
A-1
77.41
BMW common stock followed the downward trend for
the sector index during the first half of the year, at one
stage falling 33% below its previous year's closing level.
It performed significantly better during the second
half of the year, closing at €88.75 (-9.1%) thanks to
strong gains. BMW preferred stock fell by 6.1% in
value compared to its closing price at the end of the
previous year and stood at €72.70 at the end of the
stock market year 2016. With a market capitalisation
of approximately €57 billion, the BMW Group was
among the ten most valuable German enterprises
listed on the stock market.
Employee Share Programme
BMW AG has enabled its employees to participate in
its success for more than 40 years. Since 1989, this
participation has taken the form of an Employee Share
Programme. A total of 305,029 shares of preferred
stock were issued to employees as part of this pro-
gramme in 2016.
In this context, and with the approval of the Super-
visory Board, the Board of Management increased
BMW AG's share capital by €305,000 from €656,804,600
to €657,109,600 by issuing 305,000 new non-voting
shares of preferred stock. This increase was executed
on the basis of Authorised Capital 2014 in Article 4
(5) of the Articles of Incorporation. The new shares
of preferred stock carry the same rights as existing
shares of preferred stock. The newly issued shares of
preferred stock for employees are entitled to receive
dividends with effect from the financial year 2017. In
addition, 29 shares of preferred stock were bought
back via the stock market.
Dividend increase proposed
Reflecting the strong earnings performance, the
Board of Management and the Supervisory Board
will propose to the Annual General Meeting to use
BMW AG's unappropriated profit of €2,300 million ¬
The Prime Automobile Index lost about one third of
its value towards the middle of the year, with subdued
demand for automobile stocks. The index recovered
during the second half of the year, finishing the report-
ing period at 1,506 points, 5.6% below its closing level
on 30 December 2015.
(2015: €2,102 million) to pay a dividend of €3.50 for
each share of common stock (2015: €3.20) and a divi-
dend of €3.52 for each share of preferred stock (2015:
€3.22), a pay-out ratio of 33.3% for 2016 (2015: 32.9%).
2016
2015
2014
2013
2012
COMMON STOCK
BMW stock
→ 58
Number of shares in 1,000
Source: Reuters.
2016
200
150
→ 57
200
Prime Automobile
BMW preferred stock
DAX
150
2017
BMW common stock
50
50
2012
2013
2014
2015
100
601,995
100
601,995
63.93
53.16
PREFERRED STOCK
Number of shares in 1,000
55,114
54,809
54,500
54,260
53,994
Stock exchange price in €1
Year-end closing price
High
Low
601,995
72.70
77.41
75.68
Index: December 2011 = 100
73.76
601,995
65.10
601,995
Year-end closing price
High
Low
88.75
Stock exchange price in €1
89.77
85.22
72.93
92.25
85.42
122.60
95.51
97.63
-498
Cash and cash equivalents as at 1 January
-1,566
1,758
Change in cash and cash equivalents
38
Effect of exchange rate on cash and cash equivalents
73
17
Cash inflow/outflow from financing activities
5,004
4,393
Effect of changes in composition of Group on cash and cash equivalents
6,122
Automotive
Cash and cash equivalents as at 31 December
5,441
2015
2016
2015
information)
(unaudited supplementary
7,688
Financial Services
information)
(unaudited supplementary
-1,632
1 Interest relating to financial services business is classified as revenues/cost of sales.
6,122
7,880
2016
2,648
13,007
-8,802
Payment of dividend for the previous year
Payments into equity
Issue/buy-back of treasury shares
-7,603
-5,863
Cash inflow/outflow from investing activities
Intragroup financing and equity transactions
5,659
Proceeds from the sale of marketable securities and investment funds
-6,880
-3,592
Investments in marketable securities and investment funds
5,147
215
3,740
4,135
Interest paid
Repayment of bonds
-8,443
9,715
8,952
-8,908
-10,374
13,974
Proceeds from the issue of bonds
-264
23
-1,917
-2,121
20
Change in commercial paper
Change in current other financial liabilities
Repayment of non-current other financial liabilities
-118
Proceeds from new non-current other financial liabilities
-138
1,447
-337
50
46
-758
367
2
1
-43
-541
-12
-15
629
-163
60
60
-246
2,295
-5,699
140
-10,351
-9,844
1
132
11,836
-172
11,464
-133
164
-2,595
-1,997
-1,706
-283
142
-518
-441
-5
128
970
31
29
4,577
4,876
139
11
302
283
-125
-117
2,893
2,787
121
1,777
172
-3,532
-1
9
-3
5
11
316
3
11
275
-369
-187
-6,637
-8,368
-4,026
579
Proceeds from the disposal of investments
in € million
-338
43,439
72,363
630
41,503
65,912
14,107
24
16,610
24
-630
-699
13,362
27,545
13,071 -67,136 -65,525
30,121 -67,766 -66,224
Pension provisions
Other provisions
Deferred tax
Financial liabilities
Other liabilities
Non-current provisions and liabilities
Other provisions
Current tax
Financial liabilities
Statements for Group
Cash Flow
→ BMW Group
Statements
Group
Financial
116
702
115
78,841 -121,780 -113,026
82,795
122,029
137,728
Current provisions and liabilities
Trade payables
Other liabilities
Total equity and liabilities
23,038
27,368
408
36,328
16,030
17,718
31
28
48
6,158
29,413
6,755
313
353
1,130
1,516
-5,791
38
55
13
and Segments
23,613
54,316
49
223
255
8
3
518
601
599
-599
-25,835
-30,933
-4,499
-4,748
-583
-31,629
-36,960
31,471
835
33,495
38,506
46,169
Minority interest
Equity
-746
BMW GROUP
Group
Changes in working capital
Change in inventories
Change in trade receivables
Change in trade payables
Change in other operating assets and liabilities
Income taxes paid
-104
-293
-749
298
-93
-566
738
-25
1,229
550
-2,417
Expenditure for investments
38
10
Proceeds from the disposal of intangible assets and property, plant and equipment
-5,889
-5,823
-518
Investment in intangible assets and property, plant and equipment
3,173
Cash inflow/outflow from operating activities
132
142
Interest received
-3,323
960
-441
Result from equity accounted investments
-144
4,998
Depreciation and amortisation of other tangible, intangible and investment assets
239
131
Other interest and similar income/expenses
2,751
4,686
2,670
Reconciliation between net profit and cash inflow/outflow from operating activities
6,396
6,910
Net profit
2015
2016
Current tax
CASH FLOW STATEMENTS FOR GROUP AND SEGMENTS
Change in provisions
296
-4
Gain/loss on disposal of tangible and intangible assets and marketable securities
47
-15
Other non-cash income and expense items
77
883
85
-6,637
-8,368
Change in receivables from sales financing
-3,299
-2,526
Change in leased products
Change in deferred taxes
-10
Capital
reserves
-122
6,863
47
6,910
-303
28
1,415
-189
-189
-303
28
1,415
6,674
47
6,721
20
-14
-26
Minority
Equity
attributable to
shareholders
Derivative
financial
instruments
Securities
translation
differences
Currency
-2,102
Accumulated other equity
255
47,108
78
52
-171
20
-40
47,363
-2,102
42,764
234
657
29
-71
22
7,381
1,012
2,027
6,369
35,621
2,005
656
29
Revenue
reserves
Subscribed
capital
-1,904
of BMW AG
41,027
Equity
42,530
-1,337
24
132
Total
interest
Accumulated other equity
of BMWAG
Securities
Minority
shareholders
attributable to
Derivative
financial
Currency
translation
differences
instruments
Note
interest
-723
Other comprehensive income for the period after tax
Comprehensive income 31 December 2016
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2016
1 January 2015
Dividends paid
Net profit
Other comprehensive income for the period after tax
Comprehensive income 31 December 2015
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2015
119
120
↑
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
77
The Board of Management authorised the Group
Financial Statements for issue on 14 February 2017.
note 44
In order to provide a better insight into the net
assets, financial position and performance of the
BMW Group, and going beyond the requirements of
IFRS 8 (Operating Segments), the Group Financial
Statements also include balance sheets and income
statements for the Automotive, Motorcycles, Financial
Services and Other Entities segments. The Group
Cash Flow Statement is supplemented by statements
of cash flows for the Automotive and Financial Ser-
vices segments. This supplementary information is
unaudited. Inter-segment transactions relate primarily
to internal sales of products, the provision of funds
for Group companies and the related interest. These
items are eliminated in the relevant "Eliminations"
columns. A description of the nature of the BMW
Group's business and operating activities of segments
→ see is provided in → note 44 ("Explanatory notes to seg-
ment information").
The BMW Group and segment income statements are
presented using the cost of sales method.
The Group currency is the euro. All amounts are dis-
closed in millions of euros (€ million) unless stated
otherwise.
Net profit
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMW AG Group
Financial Statements or Group Financial Statements)
at 31 December 2016 have been drawn up in accord-
ance with International Financial Reporting Standards
(IFRS), as endorsed by the European Union (EU), and
the supplementary requirements of § 315a (1) of the
German Commercial Code (HGB). The Group Finan-
cial Statements will be submitted to the operator of
the electronic version of the German Federal Gazette
and can be obtained via the Company Register website.
Bayerische Motoren Werke Aktiengesellschaft, which
has its seat at Petuelring 130, Munich, is registered
in the Commercial Register of the District Court of
Munich under the number HRB 42243.
01
ACCOUNTING PRINCIPLES
AND POLICIES
THE GROUP
FINANCIAL
STATEMENTS
BMW GROUP
NOTES TO
Policies
Accounting
Principles and
Basis of preparation
Dividends paid
1 January 2016
42,764
893
-857
-117
855
6,396
27
855
6,369
-1,904
37,437
217
37,220
-480
141
-1,904
Total
-117
7,262
234
42,530
-1,337
24
132
-81
-857
-10
22
22
1
1
893
7,289
27
-71
44,445
2,047
657
-7,671
-720
-719
4,425
195
3,343
-5,225
-6,130
11,601
10,028
10
18
21
39
25
11
842
-1,800
Change in provisions
Change in leased products
Depreciation and amortisation of other tangible, intangible and investment assets
Reconciliation between net profit and cash inflow/outflow from operating activities
Current tax
Other interest and similar income/expenses
Net profit
1,359
3,046
-7,215
3,952
1,783
1,359
5,752
3,952
-424
1,687
4,794
-521
-520
8,787
-102
-7,524
-5,432
253
304
5,406
-140
3,436
-396
-6,498
-3,196
144
140
-823
-387
Change in receivables from sales financing
20
-2,121
8,295
108
67
-773
-1,160
429
23
870
-118
5,913
6,191
-2,840
-1,833
-1,917
-264
Change in deferred taxes
Other non-cash income and expense items
Gain/loss on disposal of tangible and intangible assets and marketable securities
Result from equity accounted investments
31 December 2015
Premium arising on capital increase relating to preferred stock
Other changes
Subscribed share capital increase out of Authorised Capital
Other comprehensive income for the period after tax
Comprehensive income 31 December 2015
Net profit
Dividends paid
Subscribed
1 January 2015
31 December 2016
Premium arising on capital increase relating to preferred stock
Other changes
Subscribed share capital increase out of Authorised Capital
Other comprehensive income for the period after tax
Comprehensive income 31 December 2016
Net profit
Dividends paid
in € million
1 January 2016
Capital
Note
29
-14
20
5,534
-1,329
6,863
Revenue
-2,102
2,027
657
29
reserves
reserves
capital
41,027
6
in € million
BMW GROUP
Issue/buy-back of treasury shares
Proceeds from the sale of marketable securities and investment funds
Cash inflow/outflow from investing activities
Investments in marketable securities and investment funds
Proceeds from the disposal of investments
Expenditure for investments
Investment in intangible assets and property, plant and equipment
Payments into equity
Cash inflow/outflow from operating activities
Income taxes paid
Change in other operating assets and liabilities
Change in trade payables
Change in trade receivables
Change in inventories
Changes in working capital
Interest received
GROUP STATEMENT OF CHANGES IN EQUITY
Payment of dividend for the previous year
Interest paid
Changes in Equity
→ BMW Group
Group Statement of
Statements
Group
Financial
118
117
Intragroup financing and equity transactions
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
Effect of changes in composition of Group on cash and cash equivalents
Effect of exchange rate on cash and cash equivalents
Cash inflow/outflow from financing activities
Repayment of non-current other financial liabilities
Change in current other financial liabilities
Change in commercial paper
Proceeds from new non-current other financial liabilities
Proceeds from the issue of bonds
Repayment of bonds
Change in cash and cash equivalents
-15,869
Proceeds from the disposal of intangible assets and property, plant and equipment
15,225
2015
information)
(unaudited supplementary
Other Entities
2016
information)
(unaudited supplementary
Financial Services
27
7,262
6,674
29
Total comprehensive income attributable to shareholders of BMW AG
47
Total comprehensive income attributable to minority interests
7,289
6,721
Total comprehensive income
893
-189
2016
17
Eliminations
information)
-613
-712
7
6
3,153
3,546
18,484
19,305
-20,586
-22,135
-19,097
-20,017
7
6
23,739
25,681
2015
2016
2015
(unaudited supplementary
-1,294
Other comprehensive income for the period after tax
1,140
Remeasurement of the net defined benefit liability for pension plans
6,396
6,910
Net profit
2015
2016
Note
in € million
Statement of Comprehensive Income for Group
→ 60
9.72
10.47
13
Diluted earnings per share of preferred stock in €
9.70
10.45
13
Diluted earnings per share of common stock in €
Dilutive effects
9.72
30
-119
-1,858
Deferred taxes
Items expected to be reclassified to the income statement in the future
765
-230
Currency translation foreign operations
516
-721
Deferred taxes
71
43
Other comprehensive income from equity accounted investments
-1,301
-170
40
2,008
Financial instruments used for hedging purposes
Available-for-sale securities
1,012
-401
529
-1,329
Items not expected to be reclassified to the income statement in the future
1,413
10.47
-1,164
-30
1,426
1,740
1
21
37
-460
-561
138
121
1,447
1,777
204
211
-73
-49
-528
-389
-664
-772
121
211
137
-460
→ BMW Group
Statements
Group
Financial
114
113
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
Attributable to shareholders of BMW AG
Attributable to minority interest
Net profit/loss
Income taxes
Profit/loss before tax
Financial result
Result from equity accounted investments
Interest and similar income
Interest and similar expenses
Other financial result
Profit/loss before financial result
Other operating expenses
Other operating income
Selling and administrative expenses
Gross profit
Revenues
Cost of sales
-561
-30
170
2,166
-663
169
-17
1,981
2,184
78
141
-46
-103
-54
-103
-59
-118
238
110
46
35
19
26
-575
1,975
11
1,250
-89
-109
42
187
-6
-18
-55
-57
-3
-5
1,234
1,216
-1,080
-1,006
-7
-24
-1,323
-1,325
1,177
4
13
Basic earnings per share of preferred stock in €
9.70
1,990
2,069
85,536
86,424
92,175
94,163
6
Revenues
2015
2016
2015
information)
(unaudited supplementary
Motorcycles
2016
2015
2016
Note
information)
Cost of sales
Group
7
-74,043
-239
-256
-7,219
-7,604
-8,633
-9,158
8
Selling and administrative expenses
448
430
15,137
15,451
18,132
18,721
Gross profit
-1,542
-1,639
-70,399
-70,973
-75,442
Other operating income
(unaudited supplementary
in € million
Segment Information
→Page 175
Other Disclosures
→ Page 161
Notes to the Balance Sheet
→ Page 140
→ Page 139
→Page 133
→ Page 120
→ Page 120
Notes to the Statement of Comprehensive Income
Notes to the Income Statement
Notes to the Group Financial Statements
Accounting Principles and Policies
→Page 118 Group Statement of Changes in Equity
→Page 116 Cash Flow Statements for Group and Segments
→ Page 114 Balance Sheets for Group and Segments
→ Page 112 Statement of Comprehensive Income for Group
→ Page 112 Income Statements for Group and Segments
GROUP FINANCIAL
STATEMENTS
→ Page 180
Automotive
List of Investments at 31 December 2016
3
→ 59
Income Statements for Group and Segments
STATEMENT OF COMPREHENSIVE INCOME FOR GROUP
INCOME STATEMENTS FOR GROUP AND SEGMENTS
BMW GROUP
for Group
prehensive Income
→ Statement of Com-
for Group and
Segments
Income Statements
→ BMW Group
Group
Financial
Statements
112
Notes
Cash Flow
Statements
Balance Sheets
Income
Income Statements
Statement of
Comprehensive
Group Financial
Statements
3
9
670
914
-55
-53
-2,376
-2,475
-2,828
-2,755
12
179
185
7,523
7,916
9,224
9,665
-3
-2
-313
221
-369
279
Net profit/loss
-396
6,910
5,441
10.45
13
Basic earnings per share of common stock in €
124
-17,054
5,142
5,431
6,369
6,863
29
Attributable to shareholders of BMW AG
5
10
27
47
Attributable to minority interest
124
132
5,147
6,396
193
-454
131
Result from equity accounted investments
182
187
7,836
7,695
9,593
9,386
Profit/loss before financial result
-27
-14
-771
-768
-820
-847
9
Other operating expenses
27
689
616
22
441
518
441
11
Income taxes
Profit/loss before tax
Financial result
Other financial result
-3
-2
-762
-673
Balance Sheets for
-618
10
Interest and similar expenses
327
260
185
196
10
Interest and similar income
518
-489
Group and Segments
132
BMW GROUP
396
449
35,386
35,398
65,591
67,989
Current provisions and liabilities
48
56
20,111
20,477
9,208
10,198
34
Other liabilities
263
303
6,856
7,483
at 31 December
7,773
188,535
88,715
(unaudited supplementary
Eliminations
41,148
45,134
29
30
424
405
2016
2015
information)
(unaudited supplementary
Other Entities
2016
information)
Financial Services
(unaudited supplementary
978
1,077
83,352
172,174
information)
8,512
3,211
16,693
63,819
73,183
Non-current provisions and liabilities
401
442
5,545
6,530
4,559
5,357
34
Other liabilities
2,621
1,942
49,523
55,405
33
Financial liabilities
429
14,506
35
628
Other provisions
1,481
42,160
42,326
33
Trade payables
Financial liabilities
810
770
1,441
1,074
32
Current tax
85
90
4,398
5,187
5,009
5,879
31
582
740
2015
2015
ASSETS
78,841 -121,780 -113,026
82,795
122,029
137,728
-67,305 -65,832
48,416
47,046
35,633
40,422
-65,133
-66,675
-699
-630
1,121
1,104
45,379
811
44,782
40
1,359
3,046
4,540
Intangible assets
5,417
Property, plant and equipment
Investments accounted for using the equity method
16,744
9,948
11,049
Equity attributable to shareholders of BMW AG
Accumulated other equity
Capital reserves
Revenue reserves
EQUITY AND LIABILITIES
Subscribed capital
Total assets
Cash and cash equivalents
Current assets
Financial assets
Current tax
Other assets
Receivables from sales financing
Trade receivables
Inventories
Non-current assets
Other assets
Deferred tax
Financial assets
Receivables from sales financing
Other investments
Leased products
2016
894
44
205
263
222
389
-583
1,985
1,780
236
221
41,865
48,032
-10,687
-11,223
5,966
6,585
2
3
-6,183
-7,345
-2,635
37
3,093
27,120
1,329
1,354
1,504
28,178
30,228
1
158
178
7
5
-47,194
-54,475
30,425
35,749
86,396
97,306
-599
-2,596
-27,129
-32,689
22,268
2,469
2,116
Total equity and liabilities
12
30,228
28,178
Financial assets
24
7,065
6,635
4,862
4,859
Current tax
25
1,938
2,381
1,000
1,240
Other assets
23
26
Receivables from sales financing
144
386
Inventories
27
11,841
11,071
11,344
10,611
492
453
Trade receivables
28
2,825
2,751
2,502
2,453
139
439
5,087
21,561
1,077
978
EQUITY AND LIABILITIES
Subscribed capital
29
657
Capital reserves
29
2,047
2,027
Revenue reserves
29
44,445
41,027
Accumulated other equity
83,352
4,693
88,715
188,535
19,907
2
Cash and cash equivalents
7,880
6,122
4,794
3,952
Current assets
66,864
61,831
46,063
43,022
638
592
Total assets
172,174
40,330
42,652
110,343
7,372
7,705
2,795
46
48
Property, plant and equipment
20
17,960
17,759
17,566
17,416
365
313
Leased products
21
8,157
37,789
19
2015
BALANCE SHEETS FOR GROUP AND
SEGMENTS AT 31 DECEMBER 2016
in € million
ASSETS
Automotive
(unaudited supplementary
information)
Group
Note
2016
2015
2016
Motorcycles
(unaudited supplementary
information)
2015
2016
Intangible assets
34,965
Investments accounted for using the equity method
22
12
2,327
1,945
4,310
4,114
Other assets
Non-current assets
26
1,595
1,568
4,043
3,935
28
25
121,671
Deferred tax
586
1,287
2,208
2,546
2,233
2,546
2,233
Other investments
560
428
29
5,195
Receivables from sales financing
23
48,032
41,865
Financial assets
24
2,705
5,147
-41
6,899
Equity attributable to shareholders of BMW AG
-1,181
Deferred tax
136
103
4,141
4,570
4,621
5,039
31
Other provisions
45
83
1,770
2,911
657
36,624
42,764
Pension provisions
33,460
30
4,587
Equity
Minority interest
42,530
47,108
234
29
255
47,363
3,000
Investments in non-consolidated subsidiaries, non-con-
solidated joint operations and interests in associated
companies, joint ventures and participations not
accounted for using the equity method, are reported
as other investments, measured at their fair value. If
this value is not available or cannot be determined
reliably, they are measured at cost.
A financial instrument is a contract that gives rise to a
financial asset of one entity and a financial liability or
equity instrument of another entity. Financial assets
are accounted for on the basis of the settlement date.
3 to 21
8 to 50
On initial recognition, financial assets are measured
at their fair value. Transaction costs are included in
the fair value unless the financial assets are allocated
to the category "financial assets measured at fair value
through profit or loss".
Other equipment, factory and office equipment
The Group's financial assets are allocated to either
cash funds or to the categories "loans and receivables",
"available-for-sale", "held for trading” or “fair value
option".
The fair value option is applied by the BMW Group
for non-current marketable securities with embedded
derivatives. The related gains and losses are presented
in the income statement line item "Other financial
result". Related interest income and expenses are
presented in the net interest result.
Subsequent to initial recognition, financial assets
which are available-for-sale or held-for-trading or for
which the fair value option is applied, are measured at
their fair value. The fair values shown are computed
using market information available at the balance
sheet date, on the basis of prices quoted by the
contract partners or using appropriate measurement
methods, e.g. discounted cash flow models.
Non-derivative financial assets that are not classified
as "loans and receivables" or "held-to-maturity invest-
ments" or as items measured "at fair value through
profit and loss" are classified as "available-for-sale”.
Financial assets that are classified as loans and receiva-
bles are measured at amortised cost using the effective
interest method. All financial assets for which pub-
lished price quotations in an active market are not
available and whose fair value cannot be determined
reliably are measured at cost.
An assessment is made on a regular basis whether
there is any objective evidence that a financial asset
or group of assets may be impaired. For the purposes
of assessing possible impairment, the BMW Group
takes account of all available information, such as
market conditions and prices as well as the length
of time and the scale of the decline in value. In the
case of equity capital instruments that are listed on a
stock market, it is assumed that an item is impaired if
its fair value falls significantly (more than 20%) or on
a prolonged basis (more than 5% over nine months)
below acquisition cost.
125
126
Investments accounted for using the equity method are
(except when the investment is impaired) measured
at the Group's share of equity, taking account of fair
value adjustments on acquisition.
2 to 25
Standard/Interpretation
Plant and machinery
Financial Services
2016
2015
12.0
12.0
12.0
12.0
13.4
↑
13.4
All items of property, plant and equipment are measured
at acquisition or manufacturing cost less accumulated
depreciation and accumulated impairment losses. The
cost of internally constructed plant and equipment
comprises all costs which are directly attributable
to the manufacturing process as well as an appro-
priate proportion of production-related overheads.
This includes production-related depreciation and
amortisation as well as an appropriate proportion
of administrative and social costs. As a general rule,
borrowing costs are not included in acquisition or
manufacturing cost unless they are directly attrib-
utable to the asset. The carrying amount of items of
depreciable property, plant and equipment is written
down recording scheduled usage-based depreciation -
as a general rule on a straight-line basis - over the
useful lives of the assets. Depreciation is recorded as
an expense in the income statement.
The following uniform useful lives are applied through-
out the BMW Group:
For machinery used in multiple-shift operations,
depreciation rates are increased to account for the
additional utilisation. If there is any indication of
impairment of property, plant and equipment, an
impairment test is performed as described above for
intangible assets.
The use of judgement is required when the BMW Group
enters into lease arrangements, in particular when
assessing the transfer of economic ownership of a
leased item.
Leased items of property, plant and equipment that are allo-
cated to the BMW Group on the grounds of economic
ownership (finance leases) are measured on initial rec-
ognition at their fair value or at the net present value
of the minimum lease payments, if lower. The assets
are depreciated using the straight-line method over
their estimated useful lives or over the lease period, if
shorter. The obligations for future lease instalments
are recognised as other financial liabilities, measured
at their net present value.
Where Group products are recognised by BMW Group
entities as leased products under operating leases,
they are measured at manufacturing cost, plus any
initial direct costs. All other leased products are
measured at acquisition cost. All leased products are
depreciated over the period of the lease using the
straight-line method down to their expected residual
value. Changes in residual value expectations are rec-
ognised - in situations where the recoverable amount
of the lease exceeds the asset's carrying amount - by
adjusting scheduled depreciation prospectively over
the remaining term of the lease. If the recoverable
amount is lower than the asset's carrying amount,
an impairment loss is recognised for the shortfall.
A test is carried out at each balance sheet date to deter-
mine whether an impairment loss recognised in prior
years no longer exists or has decreased. In these cases,
the carrying amount of the asset is increased to the
recoverable amount, at a maximum up to the amount
of the asset's amortised cost. Assumptions need to
be made regarding future residual values, given that
they represent a significant portion of future cash
inflows. In this context, internally available historical
data, current market data and forecasts of external
institutions are taken into account. The assumptions
applied are regularly validated by comparison with
external data.
in years
Factory and office buildings, residential buildings, fixed
installations in buildings and outside facilities
The risk-adjusted interest rates, calculated using a
CAPM model, also take into account specific peer-
group information relating to beta-factors, capital
structure data and borrowing costs. In conjunction
with the impairment tests for cash-generating units,
sensitivity analyses are performed for the main
assumptions in order to rule out that conceivable
changes to the assumptions used to determine the
recoverable amount would result in the requirement
to recognise an impairment loss.
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
Accounting
Principles and
Other provisions are recognised when the BMW Group
has a present obligation (legal or constructive) arising
from past events, the settlement of which is proba-
ble and when a reliable estimate can be made of the
amount of the obligation. Provisions with a remaining
period of more than one year are measured at their
net present value.
The measurement of provisions for statutory and
non-statutory warranty obligations (statutory, contractual
and voluntary) involves estimations. In addition to
statutorily prescribed manufacturer warranties, the
BMW Group also offers various categories of guar-
antee depending on the product and sales market
concerned. These provisions are recognised when
the risks and rewards of ownership of the goods are
transferred to the dealership or retail customer or
when a new category of warranty is introduced. In
order to determine the level of the provision, various
factors are taken into consideration, including estima-
tions based on past experience with the nature and
amount of claims. The future level of potential repair
costs and price increases per product and market are
also taken into account. Provisions for warranties are
adjusted regularly to take account of new circumstanc-
es and the impact of any changes recognised in the
income statement. Specific and expected warranty
items, such as vehicle recall actions, are also included.
Similar estimates are also made in conjunction with
the measurement of expected reimbursement claims,
which, if recognised, are presented as separate assets.
The recognition and measurements of provisions for
litigation and liability risks necessitates making assump-
tions regarding the probability of occurrence, the
amount involved and the duration of the legal dispute.
These assumptions, especially the assumption about
the outcome of legal proceedings, are subject to a high
degree of uncertainty.
If the recognition and measurement criteria relevant
for provisions are not fulfilled and the outflow of
resources to settle the matter is not probable, the
potential obligation is disclosed as a contingent liability.
Financial liabilities are measured on first-time recogni-
tion at their fair value. Transaction costs are also taken
into account, except for financial liabilities allocated to
the category "financial liabilities measured at fair value
through profit or loss". Subsequent to initial recogni-
tion, liabilities are – with the exception of derivative
financial instruments measured at amortised cost
using the effective interest method.
-
Related party disclosures comprise information on
related individuals or entities which control
the BMW Group or which are controlled by the
BMW Group, unless such parties are already included
in the Group Financial Statements of BMW AG as con-
solidated companies. Control is defined as ownership
of more than one half of the voting power of BMW AG
or the power to direct, by statute or agreement, the
financial and operating policies of the management of
the Group. In addition, the disclosure requirements
also cover transactions with associated companies,
joint ventures and individuals that have the ability
to exercise significant influence over the financial
and operating policies of the BMW Group. This also
includes close relatives and intermediary entities.
Significant influence over the financial and operating
policies of the BMW Group is presumed when a party
holds 20% or more of the voting power of BMW AG.
In addition, the requirements contained in IAS 24
relating to key management personnel and close
members of their families or intermediary entities
are also applied. In the case of the BMW Group, this
applies to members of the Board of Management and
the Supervisory Board. Non-consolidated subsidiaries,
joint ventures and associated companies also qualify
as related parties. Details relating to these entities
are provided in the list of investments in → note 45.
→ see
note 45
Share-based remuneration programmes which are expect-
ed to be settled in shares are measured at their fair
value at grant date. The related expense is recognised
in the income statement (as personnel expense)
over the vesting period, with a contra (credit) entry
recorded against capital reserves. Share-based remu-
neration programmes expected to be settled in cash
are revalued to their fair value at each balance sheet
date between the grant date and the settlement date
and on the settlement date itself. The expense for such
programmes is recognised in the income statement
(as personnel expense) over the vesting period of the
programmes and presented in the balance sheet as
a provision.
The share-based remuneration programmes for
Board of Management members and senior heads of
department entitles BMW AG to elect whether to settle
its commitments in cash or with shares of BMW AG
common stock. Following the decision to settle in cash,
the share-based remuneration programmes for Board
of Management members and senior heads of depart-
ment are accounted for as cash-settled, share-based
remuneration programmes. Further information on
share-based remuneration programmes is provided
→ see in note 39.
note 39
129
↑
130
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
Accounting
Principles and
Remeasurements of the net liability arise from
changes in the present value of the defined benefit
obligation, the fair value of the plan assets or the asset
ceiling. Reasons for remeasurements include changes
in financial and demographic assumptions as well as
changes in the detailed composition of beneficiaries.
Remeasurements are recognised immediately in
"Other comprehensive income" and hence directly
in equity (within revenue reserves).
Motorcycles
in the income statement.
Net interest expense on the net obligation and/or
net interest income on the net fund assets of defined
benefit plans are presented separately within the
financial result. All other costs relating to allocations
to pension provisions are allocated to costs by function
in the income statement.
Policies
Receivables from sales financing are measured at amor-
tised cost using the effective interest rate method.
Impairment allowances are recognised both on a
specific-item and a group basis. For these purposes,
the main factors taken into consideration are past
experience, current market data (such as the level
of arrears), rating classes and scoring information.
Specific allowances are recognised if there is objective
evidence of impairment. In the retail customer credit
financing and leasing lines of business, the existence
of overdue balances or the incidence of similar events
in the past are examples of such objective evidence.
In the event of overdue receivables, allowances are
always recognised individually based on the length
of period of the arrears. In the case of dealership
financing receivables, the allocation of the dealership
to a corresponding rating category is also deemed to
represent objective evidence of impairment. If there is
no objective evidence of impairment, allowances are
recognised using a portfolio approach based on similar
groups of assets. Company-specific loss probabilities
and loss ratios, derived from historical data, are used
to measure allowances on similar groups of assets.
The recognition of impairment losses on receivables
relating to the industrial side of the business is also,
as far as possible, based on the same procedures
applied to financial services business. The impair-
ment losses are recorded in separate accounts and
are derecognised at the same time the corresponding
written-down receivables are derecognised.
Derivative financial instruments are used within the
BMW Group for hedging purposes in order to reduce
currency, interest rate, fair value and market price
risks arising from operating activities and the relat-
ed financing requirements. All derivative financial
instruments are measured at their fair value. The fair
values of derivative financial instruments are deter-
mined using measurement models, as a consequence
of which there is a risk that the amounts calculated
could differ from realisable market prices on disposal.
Observable financial market price spreads are taken
into account in the measurement of derivative finan-
cial instruments. The supply of data to the model used
to calculate fair values also takes account of tenor and
currency basis spreads.
In addition, the Group's own default risk and that of
counterparties is taken into account on the basis of
credit default swap values for market contracts with
matching terms. The BMW Group applies the option
of measuring the credit risk for a group of financial
assets and financial liabilities on the basis of its net
exposure. Portfolio-based value adjustments to the
individual financial assets and financial liabilities are
allocated using the relative fair value approach (net
method).
In those cases where hedge accounting is applied,
changes in fair value are recognised in the income
statement or in other comprehensive income as a
component of accumulated other equity, depending
on whether the hedging relationship is classified as
a fair value hedge or a cash flow hedge. In the case
of a fair value hedge, the results of the fair value
measurement of the derivative financial instruments
and the related hedged items are recognised in the
income statement. Fair value hedges are mainly used
to hedge the market prices of bonds, other financial
liabilities and receivables from sales financing. In the
case of a cash flow hedge, the effective portion of
the fair value gain or loss on the derivative financial
instrument is recognised directly in accumulated other
equity. The ineffective portion of the fair value gain or
loss is recognised in the income statement. Amounts
recorded in accumulated other equity are recognised
subsequently in the income statement when the
hedged item (usually external revenue) is recognised
in the income statement. If, contrary to the normal
case within the BMW Group, hedge accounting cannot
be applied, the gains or losses arising on the fair value
measurement of derivative financial instruments are
recognised immediately in the income statement.
Deferred taxes are recognised on all temporary dif-
ferences between the tax and accounting bases of
assets and liabilities and on consolidation procedures.
Deferred tax assets also include claims to future tax
reductions which arise from the expected usage of
existing tax losses available for carryforward to the
extent that future usage is probable. The calculation of
deferred tax assets requires assumptions to be made
with regard to the level of future taxable income and
the timing of recovery of deferred tax assets. These
assumptions take account of forecast operating results
and the impact on earnings of the reversal of taxable
temporary differences. Since future business devel-
opments cannot be predicted with certainty and to
some extent cannot be influenced by the BMW Group,
the measurement of deferred tax assets is subject to
uncertainty.
Current income taxes are computed throughout the
BMW Group in accordance with tax legislation appli-
cable in each relevant country. In situations where
judgement was necessary to determine the amount
of a tax exposure to be recognised in the financial
statements, there is always a possibility that local tax
authorities may reach a different conclusion.
Inventories of raw materials, supplies and goods for
resale are stated at the lower of average acquisition
cost and net realisable value.
Work in progress and finished goods are stated at
the lower of manufacturing cost and net realisable
value. Manufacturing cost comprises all costs which
are directly attributable to the manufacturing process
as well as an appropriate proportion of production-re-
lated overheads. This includes production-related
depreciation and amortisation and an appropriate
proportion of administrative and social costs. Bor-
rowing costs are not included in the acquisition or
manufacturing cost of inventories.
Cash and cash equivalents, comprising mainly cash on
hand and cash at bank with an original term of up to
three months, are measured at fair value.
Assets held for sale and disposal groups held for sale are
presented separately in the balance sheet in accord-
ance with IFRS 5, if the carrying amount of the rel-
evant assets will be recovered principally through a
sale transaction rather than through continuing use.
This situation only arises if the assets can be sold
immediately in their present condition, the sale is
expected to be completed within one year from the
date of classification and the sale is highly probable.
At the date of classification, property, plant and equip-
ment, intangible assets and disposal groups which are
being held for sale are measured at the lower of their
carrying amount and their fair value less costs to sell
and scheduled depreciation/amortisation ceases. This
does not apply, however, to items within the disposal
group which are not covered by the measurement
rules contained in IFRS 5. Simultaneously, liabilities
directly related to the sale are presented separately on
the equity and liabilities side of the balance sheet as
"Liabilities in conjunction with assets held for sale".
Provisions for pensions and similar obligations are meas-
ured using the projected unit credit method. Under
this method, not only obligations relating to known
vested benefits at the reporting date are recognised,
but also the effect of future expected increases in
pensions and salaries. The calculation is based on
an independent actuarial valuation which takes into
account all relevant biometric factors.
In the case of externally funded plans, the pension
obligation is offset against plan assets measured at
their fair value. If the plan assets exceed the pension
obligation, the surplus is tested for recoverability. In
the event that the BMW Group has a right of reim-
bursement or a right to reduce future contributions,
it reports an asset (within "Other financial assets"),
measured on the basis of the present value of the
future economic benefits attached to the plan assets.
If the plan is externally funded, a liability is recog-
nised under pension provisions where the obligation
exceeds fund assets.
127
128
↑
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
The calculation of the amount of the provision requires
assumptions to be made with regard to discount
factors, salary trends, employee fluctuation and the
life expectancy of employees. Discount factors are
determined by reference to market yields at the end
of the reporting period on high quality fixed-interest
corporate bonds. The salary level trend refers to the
expected rate of salary increase which is estimated
annually depending on inflation and the career devel-
opment of employees within the Group.
Past service cost arises where a BMW Group compa-
ny introduces a defined benefit plan or changes the
benefits payable under an existing plan. This cost
is recognised immediately in the income statement.
Similarly, gains and losses arising on the settlement
of a defined benefit plan are recognised immediately
Automotive
in %
factors:
7
7
21
178
199
121
122
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
03
Foreign currency translation
The financial statements of consolidated companies
which are drawn up in a foreign currency are trans-
lated using the modified closing rate method. Under
this method, assets and liabilities are translated at the
closing exchange rate, whilst income and
expenses are
translated at the average exchange rate. Differences
arising on foreign currency translation are presented
in "Accumulated other equity".
Foreign currency receivables and payables in the sin-
gle entity accounts of BMW AG and subsidiaries are
measured on initial recognition using the exchange
rate prevailing at the date of first-time recognition.
At the end of the reporting period, foreign currency
receivables and payables are measured using the clos-
ing exchange rate. The resulting unrealised gains and
losses, as well as the subsequent realised gains and
losses arising on settlement, are recognised in the
income statement in accordance with the underlying
substance of the relevant transactions.
The exchange rates of currencies which have a material
impact on the Group Financial Statements were as
follows:
↑
US Dollar
British Pound
28
28
178
157
02
Group reporting entity and
consolidation principles
The BMW Group Financial Statements include
BMW AG, all material subsidiaries including one spe-
cial purpose securities fund and 40 structured entities,
over which BMW AG - either directly or indirectly.
exercises control. The structured entities are used
exclusively in conjunction with the BMW Group's
asset-backed financing arrangements.
All consolidated subsidiaries have the same year-end as
BMW AG with the exception of BMW India Private Ltd.
and BMW India Financial Services Private Ltd., whose
year-ends are 31 March in accordance with local legal
requirements.
When assessing whether an investment gives rise to
a controlled entity, an associated company, a joint
operation or a joint venture, the BMW Group consid-
ers all relevant contractual arrangements and other
circumstances, and not just the structure and legal
form of the entity. The ultimate classification may
require the use of judgement. A new assessment is
made whenever there is an indication of a change
in the previous assessment regarding (joint) control.
An entity is deemed to be controlled if BMW AG -
either directly or indirectly - has power over it, is
exposed or has rights to variable returns from its
involvement with the entity and has the ability to
influence those returns through its power over the
entity.
-
An entity is classified as an associated company if
BMW AG either directly or indirectly - has the
ability to exert significant influence over the entity's
operating and financial policies. As a general rule,
there is a rebuttable assumption that the Group has
significant influence if it holds between 20% and 50%
of the associated company's voting power.
Joint operations and joint ventures are forms of joint
arrangements. Such an arrangement exists when a
BMW Group entity jointly carries out activities on the
basis of a contractual agreement with a third party.
Chinese Renminbi
In the case of a joint operation, the parties that have
joint control of the arrangement have rights to the
assets and obligations for the liabilities, relating to the
arrangement. Assets, liabilities, revenues and expens-
es of a joint operation are recognised proportionately
in the Group Financial Statements on the basis of the
BMW Group entity's rights and obligations (propor-
tionate consolidation). Together with SGL Carbon SE,
Wiesbaden, companies of the BMW Group are party to
three joint operations that manufacture carbon fibres
and carbon fibre cores used in vehicle production.
In the case of a joint venture, the parties which have
joint control only have rights to the net assets of the
arrangement.
As a general rule, associated companies and joint
ventures are accounted for using the equity method,
with measurement on initial recognition based on
acquisition cost.
The following changes took place in the Group report-
ing entity in the financial year 2016:
Included at
31 December 2015
Included for the
first time in 2016
No longer included
in 2016
Included at
31 December 2016
Germany
Foreign
Total
21
The BMW Group is also collaborating with Toyota
Motor Corporation, Toyota City, to develop a sports
car. This collaboration is accounted for as a joint
operation.
Japanese Yen
Korean Won
Closing rate
Profits arising on the sale of vehicles, for which a
Group company retains a repurchase commitment
(buyback contracts), are not immediately recognised.
The difference between the sales and buyback price is
accounted for as deferred income and recognised in
instalments as revenue over the contract term.
Revenues relating to operating lease arrangements
are recognised on a straight-line basis over the lease
term. Interest income arising on finance leases and
on retail customer/dealership financing is recognised
using the effective interest method.
Public sector grants are not recognised until there is
reasonable assurance that the conditions attaching
to them have been complied with and the grants
will be received. The resulting income is recognised
in cost of sales over the periods necessary to match
them with the related costs which they are intended
to compensate.
Earnings per share are calculated as follows: Basic
earnings per share are calculated for common and
preferred stock by dividing the net profit after minor-
ity interests, as attributable to each category of stock,
by the average number of outstanding shares. The net
profit is accordingly allocated to the different catego-
ries of stock. The portion of the Group net profit for
the year which is not being distributed is allocated
to each category of stock based on the number of
outstanding shares. Profits available for distribution
are determined directly on the basis of the dividend
resolutions passed for common and preferred stock.
Diluted earnings per share are calculated and sepa-
rately disclosed in accordance with IAS 33.
Purchased and internally-generated intangible assets
are recognised as assets where it is probable that the
use of the asset will generate future economic benefits
and where the costs of the asset can be determined
reliably. Such assets are measured at acquisition
and/or manufacturing cost, as a general rule without
borrowing costs, and, to the extent that they have a
finite useful life, amortised on a straight-line basis
over their estimated useful lives. With the exception
of capitalised development costs, intangible assets
are amortised as a general rule over their estimated
useful lives of between three and 20 years.
Development costs for vehicle and engine projects are
capitalised at manufacturing cost, to the extent that
attributable costs (including development-related
overhead costs) can be measured reliably and both
technical feasibility and successful marketing are
assured. It must also be probable that the development
expenditure will generate future economic benefits.
Capitalised development costs are amortised system-
atically over the estimated product life (usually four to
eleven years) following the start of production.
Goodwill arises on first-time consolidation of an
acquired business when the cost of acquisition
exceeds the Group's share of the fair value of the
individually identifiable assets acquired and liabilities
and contingent liabilities assumed.
If there is any indication of impairment of intangible
assets, or if an annual impairment test is required to
be carried out (i.e. intangible assets with an indef-
inite useful life, intangible assets during the devel-
opment phase and goodwill), an impairment test is
performed. Each individual asset is tested separately
unless the cash flows generated by the asset cannot
be distinguished to a large degree from the cash flows
generated by other assets or other groups of assets.
In this case, impairment is tested at the level of a
cash-generating unit.
If the sale of products includes a determinable amount
for services ("multiple-component contracts"), the
related revenues are deferred and recognised as
income over the service period. Amounts are normally
recognised as income by reference to the pattern of
related expenditure.
For the purposes of the impairment test, the carrying
amount of an asset (or a cash-generating unit) is com-
pared with the recoverable amount. The first step of
the impairment test is to determine the value in use.
If the value in use is lower than the carrying amount,
the next step is to determine the fair value less costs to
sell and compare the amount so determined with the
asset's carrying amount. If the fair value is lower than
the carrying amount, an impairment loss is recognised,
reducing the carrying amount to the higher of the
asset's value in use or fair value less costs to sell.
As part of the process of assessing recoverability, it is
generally necessary to apply estimations and assump-
tions - in particular regarding future cash inflows and
outflows and the length of the forecast period – which
could differ from actual amounts. Actual amounts
may differ from the assumptions and estimations
used if business conditions develop differently to the
BMW Group's expectations.
The value in use is determined on the basis of a present
value computation. Cash flows used for the purposes
of this calculation are derived from long-term forecasts
approved by management. The long-term forecasts
themselves are based on detailed forecasts drawn up
at an operational level and, based on a planning period
of six years, correspond roughly to a typical product's
life cycle. For the purposes of calculating cash flows
beyond the planning period, the asset's assumed
residual value does not take growth into account.
Forecasting assumptions are continually brought up
to date and regularly compared with external sources
of information. The assumptions used take account
in particular of expectations of the profitability of the
product portfolio, future market share developments,
macroeconomic developments (such as currency,
interest rate and raw materials prices) as well as the
legal environment and past experience.
123
124
↑
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
Cash flows of the Automotive and Motorcycles
cash-generating units are discounted using a risk-ad-
justed pre-tax cost of capital (WACC). In the case of
the Financial Services cash-generating unit, a sec-
tor-compatible pre-tax cost of equity capital is used.
Calculations were based on the following discount
If the reason for a previously recognised impairment
loss no longer exists, the impairment loss is reversed
up to the level of the recoverable amount, capped at
the level of rolled-forward amortised cost. Impairment
losses on goodwill are not reversed.
Policies
Revenues from the sale of products are recognised
when the risks and rewards of ownership of the goods
are transferred to the dealership or customer, provided
that the amount of revenue can be measured reliably,
it is probable that the economic benefits associated
with the transaction will flow to the entity and costs
incurred or to be incurred in respect of the sale can
be measured reliably. Revenues are stated net of set-
tlement discount, bonuses and rebates.
04
Average rate
31.12.2016
31.12.2015
2016
2015
1.06
1.09
1.11
1.11
0.85
Accounting policies; assumptions, judgements
and estimations
0.74
0.73
7.34
7.07
7.35
6.97
123.34
1,274.34
130.74
1,278.92
120.25
1,283.86
134.28
1,255.38
0.82
05
(b) Financial reporting pronouncements issued by
the IASB that are significant for the BMW Group,
but have not yet been applied:
(a) Standards and Revised Standards significant for
the BMW Group and applied for the first time in
the financial year
2016:
Date of
issue by
IASB
Date of
mandatory
application
IASB
Date
of mandatory
application
EU
24.7.2014
1.1.2018
28.5.2014
Leases
1.1.2018
11.9.2015
12.4.2016
13.1.2016
1.1.2019
No
IFRS 9 (Financial Instruments) contains new require-
ments for the classification and measurement of
financial assets that are based on the reporting
entity's business model and its contractual cash flow
characteristics ("Solely Payments of Principal and
Interest" (SPPI) criterion). IFRS 9 also gives rise to
a new model for determining impairment based on
expected credit losses. Furthermore, the requirements
for hedge accounting were revised with the aim of
bringing the accounting treatment more into line with
the reporting entity's risk management activities.
Financial reporting rules
1.1.2018
1.1.2018
IFRS 16
The impact of adoption of IFRS 9 on the Group Finan-
cial Statements is currently being investigated. Based
on analyses to date, the accounting treatment for
specific financial assets that do not comply with the
stipulated cash flow criteria may have to be changed,
by reclassifying them from the "measured at amortised
cost" category to the "measured at fair value” cate-
gory. Based on the current assessment, the change
would only affect a limited volume of assets, with the
consequence that the impact on measurement is not
expected to be material.
IFRS 15
Date of
issue by
IASB
Date of
mandatory
application
IASB
Date
of mandatory
application
EU
Revenue from Contracts with Customers
Presentation of Financial Statements
(Initiative to Improve Disclosure Requirements - Amendments to IAS 1)
IAS 1
1.1.2016
1.1.2016
The Amendments to IAS 1 (Presentation of Financial
Statements) relate primarily to clarifications concern-
ing the presentation of, and disclosures in, financial
statements. The amendments emphasise the principle
that it is only necessary to disclosure information if it
is material for users of the financial statements, even
in cases where specific disclosures in an IFRS are
explicitly defined as minimum requirements.
7
In this context, the BMW Group has examined the
contents of the Notes to the Group Financial State-
ments and the Combined Management Report and
applied the principle of materiality in the Group
Financial Statements for the year ended 31 Decem-
ber 2016, mainly by revising the presentation and
eliminating redundancies.
Standard/Interpretation
IFRS 9
Financial Instruments
18.12.2014
1,891
Service contracts
1,435
1,325
Telematics and roadside assistance
583
446
Selling expenses amounted to €6,030 million (2015:
€5,758 million) and comprise mainly marketing,
advertising and sales personnel costs.
3,067
2,976
Cost of sales
75,442
74,043
08
Selling and administrative expenses
Other cost of sales
2,165
thereof: Interest expense relating
4,271
Administrative expenses amounted to €3,128 million
(2015: €2,875 million) and relate mainly to personnel
and IT costs.
2016
2015
Manufacturing costs
43,175
43,685
Cost of sales relating to financial services
business
20,723
19,449
to financial services business
1,638
1,495
Research and development expenses
4,294
Warranty expenditure
134
Income from investments in subsidiaries
and participations
Statements
262
323
thereof from subsidiaries:
13
Income from the reversal of provisions
115
172
Impairment losses on investments in
subsidiaries and participations
-192
-25
Income from the reversal of impairment
losses and write-downs
51
27
Exchange gains
1
13
in € million
BMW Group
Notes to the Group
Financial Statements
→ Notes to the
Income Statement
09
Other operating income and expenses
Group
Financial
Other operating income and expenses comprise the
following items:
11
Other financial result
in € million
2016
2015
2016
2015
in € million
Cost of sales comprises:
92,175
07
Notes to the
Income Statement
The new Standard IFRS 16 (Leases) stipulates a
completely new approach to accounting for leases
by lessees. Whereas under IAS 17, the accounting
treatment of a lease was determined on the basis of
the transfer of risks and rewards incidental to own-
ership of the asset, in the future, all leases will be
required to be accounted for as a general rule by the
lessee in a similar way to finance leases. Recognition
exemptions are available for short-term leases and for
leasing assets with a low value.
The accounting requirements for lessors, particularly
in relation to the requirement to classify leases, will
remain largely unchanged.
Given that the BMW Group is still in a very early phase
of considering the implications of introducing IFRS 16,
the impact of the Standard on the Group Financial
Statements from a lessee and lessor perspective cannot
be wholly foreseen at present. Similarly, the transi-
tion method to be used on first-time adoption of the
Standard has not yet been stipulated.
Early adoption of all of the new IFRS requirements is
permitted. Currently, the BMW Group does not intend
to adopt any of the new requirements early.
NOTES TO THE INCOME
STATEMENT
06
Revenues
Revenues by activity comprise the following:
in € million
2016
2015
Warranty expenses include the accrued expense for
vehicle recall actions, the cost of which is expected to
exceed amounts previously recognised. Accordingly,
a further amount of €678 million was allocated to
the warranty provision for various issues, including
airbags supplied by the Takata group of companies,
the ISOFIX attachment system used for child car seats,
and costs relating to the provision of the network
service for telematics (2G).
Cost of sales is reduced by public-sector subsidies
in the form of reduced taxes on assets and reduced
consumption-based taxes amounting to €69 million
(2015: €71 million).
Policies
Research and development expenditure was as
follows:
Notes to the Group
Financial Statements
Accounting
Principles and
Group
Financial
Statements
Implementation of the new impairment model requires
substantial modifications to existing processes and
systems, especially for the Financial Services segment.
These modifications have been stipulated centrally
and implemented to a large extent at subsidiary level.
The overall impact cannot be quantified reliably as
yet, however, given that the procedures for providing
data by the subsidiaries still requires validation and
some of the major implementation aspects of the
new standard – in particular the transfer criterion for
impairment levels - are not expected to be definitively
established until a later stage in the financial year 2017.
Based on preliminary findings, significant changes to
impairment amounts are not expected.
-
As far as the accounting for hedging relationships is
concerned, analyses to date indicate that it will be pos-
sible to account for the majority of commodity hedg-
ing contracts using hedge accounting rules. Moreover,
changes in the time value of options are required to be
recognised as "cost of hedging" in accumulated other
equity during the hedging period. This approach to
accounting for hedging relationships could significant-
ly reduce the volatility in the amounts reported for
financial result and Group earnings. The presentation
of the cost of hedging in the income statement has not
yet been definitively clarified. It is therefore possible
that shifts could arise between the line items "Profit
before financial result” and “Financial result".
IFRS 9 contains a requirement that it should be
applied retrospectively for classification and meas-
urement, whereas the new rules for hedge accounting
are generally required to be applied prospectively. The
BMW Group intends to apply the exception granted
by the Standard not to restate comparatives for earlier
periods for classification and measurement (including
impairment).
The objective of the new Standard IFRS 15 (Revenue
from Contracts with Customers) is to assimilate all the
various existing requirements and Interpretations
relating to revenue recognition into a single Standard.
The new Standard also stipulates uniform revenue
recognition principles for all sectors and all categories.
The new Standard is based on a five-step model, which
sets out the rules for revenue from contracts with
customers. Revenues are required to be recognised
either over time or at a specific point in time.
A major difference to the previous Standard is the
increased scope of discretion for estimates and the
introduction of thresholds, thus influencing the
amount and timing of revenue recognition.
Accounting for buyback arrangements and rights
of return for vehicles sold, but which the Financial
Services segment will subsequently lease to customers,
will result in the earlier recognition of eliminations.
The adoption of IFRS 15 will result in a one-time
reduction in equity, which will be recognised retro-
spectively as of the date of the beginning of the first
accounting period presented on the basis of the new
requirements. The actual impact of adopting the new
Standard will depend on the level of inventories of
vehicles held by dealerships, the expected number of
leases to be concluded and the amount of inter-seg-
ment profits requiring to be eliminated at the date
of first-time adoption. Based on analyses to date and
the assumptions applied, it is estimated that equity
at 31 December 2016 will be reduced by €650 mil-
lion. The impact in the period following first-time
adoption and in subsequent periods is not expected
to be significant.
In the case of multi-component contracts with variable
consideration components, changes in the allocation
of transaction prices will result in higher amounts
being recognised for vehicle sales and a lower level
of amounts deferred for service contracts. However,
the shift in the timing of revenue recognition is not
expected to have a significant impact at the date of
first-time adoption or in subsequent periods.
A different accounting treatment may be required if
buyback arrangements are in place with customers,
resulting in a shift in the timing of revenue recognition.
The resulting impact is not expected to be significant.
The BMW Group intends to apply the new Standard
entirely retrospectively at the adoption date.
131
132
↑
↑
BMW Group
133
Sales of products and related goods
68,681
4,294
4,271
Amortisation
-1,222
-1,166
New expenditure for capitalised
development costs
2,092
2,064
An analysis of revenues by segment and region is
shown in the segment information in → note 44.
→ see
Total research and development
expenditure
5,164
5,169
note 44
Research and development expenses
94,163
Revenues
3,133
68,643
Income from lease instalments
9,507
8,965
Sales of products previously
leased to customers
9,258
Cost of sales
8,181
3,455
3,253
in € million
2016
2015
Other income
3,262
Interest income on loan financing
Result on investments
Corporation tax rate including solidarity
-24
-170
79
-26
thereof reclassifications to the income statement
Financial instruments used for hedging purposes
thereof gains/losses arising in the period under report
thereof reclassifications to the income statement
-39
-144
2,008
40
-1,301
-2,619
550
1,318
Other comprehensive income from equity accounted investments
Deferred taxes
43
71
-721
516
Currency translation foreign operations
-230
1,458
thereof gains/losses arising in the period under report
Available-for-sale securities
1,012
2
The fee expense shown for KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin, relates only to services
provided on behalf of BMW AG and its German
subsidiaries.
123,755
119,688
The number of employees at the end of the reporting
period is disclosed in the Combined Management
Report.
16
Government grants and government assistance
Income from asset-related and performance-related
grants, amounting to €31 million (2015: €33 million)
and €126 million (2015: €132 million) respectively,
were recognised in the income statement in 2016.
A large part of these amounts relate to public sector
grants for the promotion of regional structures and
to subsidies received for plant expansions.
NOTES TO THE STATEMENT
OF COMPREHENSIVE
INCOME
17
Disclosures relating to the statement of total
comprehensive income
Other comprehensive income for the period after tax
comprises the following:
in € million
2016
2015
Remeasurement of the net defined benefit liability for pension plans
Deferred taxes
-1,858
1,413
529
-401
Items not expected to be reclassified to the income statement in the future
-1,329
765
Items expected to be reclassified to the income statement in the future
1,140
-119
-170
53
-117
Financial instruments used for hedging purposes
2,008
-680
1,328
-1,301
459
-842
Other comprehensive income from equity accounted investments
43
-29
14
71
4
75
Currency translation foreign operations
-230
-230
765
765
Other comprehensive income
28
7
-12
Available-for-sale securities
Other comprehensive income for the period after tax
-189
-179
Deferred taxes on components of other comprehen-
sive income are as follows:
in € million
2016
2015
Before
tax
Deferred
taxes
After
Before
tax
tax
Deferred
taxes
After
tax
Remeasurement of the net defined benefit liability for pension plans
-1,858
529
-1,329
1,413
-401
1,012
40
3
8
23
diluted earn-
ings per share correspond to basic earnings per share.
138
个个
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
Notes to the
financial years. As in the previous year,
Income Statement
Statement of
Comprehensive
Income
14
Personnel expenses
The income statement includes personnel expenses
as follows:
in € million
2016
2015
15
→ Notes to the
Earnings per share of preferred stock are computed
on the basis of the number of preferred stock shares
entitled to receive a dividend in each of the relevant
3.22
3.52*
2016
2015
€ million
6,862.9
6,369.4
€ million
€ million
6,289.2
573.7
5,839.6
529.8
number
number
601,995,196 601,995,196
54,809,375
54,499,460
€
10.45
9.70
€
10.47
9.72
€
3.50*
3.20
€
Fee expense for the Group auditor
The fee expense pursuant to § 314 (1) no. 9 HGB
recognised in the financial year 2016 for the Group
auditor and its network of audit firms amounted to
€23 million (2015: €23 million) and consists of the
following:
Wages and salaries
9,581
proportionately-consolidated entities
204
214
Apprentices and students gaining work
experience
7,913
7,783
thereof at
proportionately-consolidated entities
Average number of employees
2016
2015
15
15
4
4
5
4
4
2
21
3
1
1
thereof at
23
111,905
Employees
8,887
Pension and welfare expenses
1,152
1,250
Social insurance expenses
Personnel expenses
802
733
in € million
11,535
10,870
Personnel expenses include €61 million (2015: €48 mil-
lion) of costs incurred to adjust the workforce size.
The total pension expense for defined contribution
plans of the BMW Group amounted to €90 million
(2015: €71 million). Employer contributions paid to
state pension insurance schemes totalled €607 million
(2015: €571 million).
The average number of employees during the
year was:
2016
2015
Audit of financial statements
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Other attestation services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Tax advisory services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Other services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Fee expense
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
115,842
Dividend per share of common stock
Dividend per share of preferred stock
*Proposal by management.
-192
778
2,064
883
10,522
369
152
1,035
1,454
12,345
Land, titles to land, buildings, including
buildings on third party land
9,806
2,210
164
295
75
10,430
Plant and machinery
32,770
551
1,954
1,362
1,168
35,469
240
15
11,155
146
2
377
58
1,238
1 Including first-time consolidation.
2 Including assets under construction of €1,760 million.
Analysis of changes in Group tangible, intangible and investment assets 2015
in € million
Acquisition and manufacturing cost
1.1.20151
Translation
differences
Additions
Reclassi-
fications
Disposals
31.12.2015
Development costs
Goodwill
Other intangible assets
Intangible assets
9,341
369
1,445
15
Other facilities, factory and office equipment
2,517
47
218
2,233
Investments in non-consolidated subsidiaries
226
3
68
Participations
641
Non-current marketable securities
Other investments
68
64
233
15
656
28
28
867
3
111
64
917
1 Including mergers.
2 Including assets under construction of €1,187 million.
148
917
1,293
the equity method
34
215
2,601
Advance payments made and construction in progress
2,020
4
1,268
-1,691
4
1,597
Property, plant and equipment
47,113
766
3,680
1,462
50,097
Leased products
36,969
1,738
18,011
14,452
42,266
Investments accounted for using
1,088
-189
Other investments
28
Intangible assets
10,522
2,092
369
1,455
2
100
12,346
-2
2,192
Other intangible assets
1,130
369
58
1,495
1,188
13,348
Land, titles to land, buildings, including
buildings on third party land
10,458
-15
300
11,484
Goodwill
Development costs
31.12.2016
115
893
Other comprehensive income arising at the level
of equity accounted investments is reported in the
Statement of Changes in Equity within "Currency
translation foreign operations" with a negative amount
of €73 million (2015: positive amount of €90 million)
and within "Financial instruments used for hedging
purposes" with a positive amount of €87 million (2015:
negative amount of €15 million).
139
140
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
NOTES TO THE BALANCE SHEET
18
Analysis of changes in Group tangible, intangible and investment assets 2016
Acquisition and manufacturing cost
in € million
1.1.20161
Translation
differences
Additions
Reclassi-
fications
Disposals
231
34
10,940
Plant and machinery
42,334
316
18,339
15,401
45,588
Investments accounted for using
the equity method
2,233
513
200
2,546
Investments in non-consolidated subsidiaries
233
2
321
56
500
Participations
656
56
2
710
Non-current marketable securities
Leased products
28
51,789
3,631
35,497
-185
1,510
691
1,589
35,924
Other facilities, factory and office equipment
2,606
22
234
32
222
2,672
Advance payments made and construction in progress
1,600
23
1,587
-954
3
2,253
Property, plant and equipment
50,161
-155
1,848
Basic earnings per share of common stock
Basic earnings per share of preferred stock
893
Average number of common stock shares in circulation
14.9
German income tax rate
30.7
30.7
Current tax expense includes tax income of €174 mil-
lion (2015: tax expenses of €164 million) relating to
prior periods.
The tax expense was reduced by €49 million (2015*: *Previous year's
figures adjusted.
€41 million) as a result of utilising tax loss carryfor-
wards, for which deferred assets had not previously
been recognised and in conjunction with previously
unrecognised tax credits and temporary differences.
The change in the valuation allowance on deferred tax
assets relating to tax losses available for carryforward
and temporary differences resulted in a tax expense
of €38 million (2015*: €82 million).
7
14.9
Deferred taxes for non-German entities are calculated
on the basis of the relevant country-specific tax rates,
ranging in the financial year 2016 between 12.5% and
45.0% (2015: between 12.5% and 46.9%). Changes
in tax rates resulted in a deferred tax expense of
€70 million (2015: €36 million).
in € million
2016
2015
Profit before tax
Tax rate applicable in Germany
Expected tax expense
9,665
9,224
The difference between the expected tax expense
based on the underlying tax rate for Germany and
actual tax expense is explained in the following
reconciliation:
30.7%
Municipal trade tax rate
15.8
2015
differences
80
52
thereof relating to tax loss
Corporation tax rate
15.0
15.0
15.8
carryforwards and tax credits
25
Solidarity surcharge
5.5
5.5
Income taxes
2,755
2,828
surcharge
5
30.7%
2,967
2,832
Tax increases as a result of non-deductible expens-
es and tax reductions due to tax-exempt income
increased compared to one year earlier. As in the
previous year, tax increases as a result of non-tax-de-
ductible expenses were attributable primarily to the
impact of non-recoverable withholding taxes and
transfer price issues.
Tax income relating to prior years resulted primarily
from adjustments to income tax receivables and pro-
visions for prior years.
7
The line "Other variances" comprises various recon-
ciling items, including the Group's share of taxes on
the earnings of companies accounted for using the
equity method.
The allocation of deferred tax assets and liabilities to
balance sheet line items at 31 December is shown in
the following table:
in € million
Intangible assets
Property, plant and equipment
Income Statement
Leased products
Sundry other assets
Tax loss carryforwards and capital losses
Provisions
Liabilities
Eliminations
Valuation allowances on tax loss carryforwards and capital losses
Netting
Deferred taxes
Other investments
→ Notes to the
BMW Group
Notes to the Group
Financial Statements
Group
Financial
Statements
Variances due to different tax rates
-119
-119
Tax increases (+)/tax reductions (-) as a result of non-deductible expenses and tax-exempt income
Tax expense (+)/benefits (-) for prior years
78
42
-174
164
Other variances
3
-91
Actual tax expense
2,755
2,828
28.5%
30.7%
Effective tax rate
135
136
2016
Net
in %
77
Expense for additions to provisions
-303
-192
Expense for impairment losses and
write-downs
-28
-76
Sundry operating expenses
-454
-267
Other operating expenses
-847
-820
Other operating income and expenses
-177
94
Income from the reversal of impairment losses and
expenses for the recognition of impairment losses
relate primarily to impairment allowances on receiv-
ables.
10
-241
Net interest result
131
-311
Gains on the disposal of assets
46
173
Income (+) and expenses (-) from
Sundry operating income
196
219
financial instruments
Other financial result
310
Other operating income
670
914
Sundry other financial result
310
-430
Exchange losses
-249
-430
in € million
2016
2015
Interest and similar expenses
-489
-618
Net interest result
-293
-433
12
Income taxes
-5
Taxes on income comprise the following:
2016
2015
Deferred taxes are computed using enacted or planned
tax rates which are expected to apply in the relevant
national jurisdictions when the amounts are recov-
ered. After taking account of an average municipal
trade tax multiplier rate (Hebesatz) of 425.0% (2015:
425.0%), the underlying income tax rate for Germany
was as follows:
Current tax expense
Deferred tax expense
2,670
85
2,751
in € million
-4
thereof to subsidiaries:
-423
Other interest and similar income
196
185
Average number of preferred stock shares in circulation
12
19
Interest and similar income
196
185
Expense relating to interest impact
on other long-term provisions
-84
-72
Net interest expense on the net defined
benefit liability for pension plans
-78
-123
Other interest and similar expenses
-327
thereof relating to temporary
Deferred tax assets
thereof from subsidiaries:
6,987
Deferred tax expense (+)/income (-) recognised through income statement
Deferred taxes at 1 January (assets (−)/liabilities (+))
in € million
Changes in deferred tax assets and liabilities during
the reporting period can be summarised as follows:
7
Deferred taxes recognised directly in equity amounted
to €1,812 million (2015: €2,004 million).
137
Netting relates to the offset of deferred tax assets and
liabilities within individual entities or tax groups to
the extent that they relate to the same tax authorities.
Change in deferred taxes recognised directly in equity
-
€468 million). This includes an amount of €464 million
(2015: €345 million), for which a valuation allowance
of €158 million (2015: €100 million) was recognised
on the related deferred tax asset. For entities with
tax losses available for carryforward, a net surplus
of deferred tax assets over deferred tax liabilities is
reported at 31 December 2016 amounting to €90 mil-
lion (2015: €104 million). Deferred tax assets are
recognised on the basis of management's assessment
of whether it is probable that the relevant entities
will generate sufficient future taxable profits, against
which deductible temporary differences can be offset.
-
Tax loss carryforwards – for the most part usable with-
out restriction amounted to €637 million (2015:
-
171
2,116
2,795
468
-9,988
Capital losses available for carryforward in the United
Kingdom which do not relate to ongoing operations
decreased to €1,926 million (2015: €2,234 million) due
to currency factors. As in previous years, deferred tax
assets recognised on these tax losses - amounting to
€327 million at the end of the reporting period (2015:
€402 million) – were fully written down since they can
only be utilised against future capital gains.
thereof relating to fair value gains and losses on financial instruments and marketable securities recognised directly in equity
thereof relating to the remeasurements of net liabilities for defined benefit pension plans
Exchange rate impact and other changes
Deferred taxes at 31 December (assets (-)/ liabilities (+))
2016
The tax returns of BMW Group entities are checked
regularly by German and foreign tax authorities. Tak-
ing account of a variety of factors - including existing
interpretations, commentaries and legal decisions
taken relating to the various tax jurisdictions and the
BMW Group's past experience - adequate provision
has, to the extent identifiable and probable, been
made for potential future tax obligations.
7
Deferred taxes are not recognised on retained prof-
its of €38.7 billion (2015: €33.7 billion) of foreign
subsidiaries, as it is intended to invest these profits
to maintain and expand the business volume of the
relevant companies. A computation was not made of
the potential impact of income taxes on the grounds
of disproportionate expense.
Deferred taxes recognised directly in equity in the
financial year 2016 decreased by an additional €29 mil-
lion (2015: increased by €43 million) on currency
translation.
171
468
253
49
448
-561
-520
724
-72
163
77
85
-87
171
2015
-10,888
-9,988
1,945
2,327
-10,888
1,977
26
20
305
376
467
367
184
6,260
3
5
17
11
1,448
1,363
2,861
2,109
536
548
2,234
13
10
2015
-502
-485
12,104
13,683
12,435
13,700
715
797
3,281
3,481
478
298
2,654
2,760
178
Deferred tax liabilities
2016
2015
2016
13
Earnings per share
Net profit for the year after minority interest
Profit attributable to common stock
4,966
4,187
Profit attributable to preferred stock
3,480
33
32
Provisions and liabilities
5,505
5,403
1,562
1,477
18
535
Net assets
4,678
3,853
1,832
2,003
15
20
Group's interest in net assets
2,339
3,394
12
9,256
Assets
Non-current provisions and liabilities
670
589
1,044
1,093
Current financial liabilities
87
641
10,183
73
Current provisions and liabilities
4,835
4,814
518
384
18
12
RECONCILIATION OF AGGREGATED FINANCIAL
INFORMATION
48
1,927
611
102
2016
Allowance for impairment
recognised on a
specific
item basis
group basis
Total
and dealerships
Allowances on receivables from sales financing -
which only arise within the Financial Services seg-
ment developed as follows:
Finance lease receivables
sales financing
61,602
52,915
in € million
16,658
17,128
Balance at 1 January*
963
Receivables from
1,498
31.12.2015
Credit financing for retail customers
20
142
Eliminations
-414
-376
Carrying amount
1,925
1,551
31.12.2016
611
10
14
1 Corresponds to the consolidated equity capital provided by the shareholders of DriveNow GmbH & Co. KG and its subsidiaries.
2 The BMW Group holds 67.2% (2015: 73.8%) of the net assets at 31 December 2016. Due to the allocation of voting power within the decision-making bodies of the two entities,
operations remain subject to joint control.
23
Receivables from sales financing
Receivables from sales financing comprise the fol-
lowing:
in € million
668
668
Intangible assets amounting to €42 million (2015:
€48 million) are subject to restrictions on title.
78,260
Gross investment in finance leases
due within one year
5,921
5,974
due between one and five years
12,574
12,816
Fixed income securities
Stocks
due later than five years
32
18,527
134
18,924
Other debt securities
4,449
4,356
→ Notes to the
Balance Sheet
734
Financial Statements
31.12.2016
78,260
70,043
The estimated fair value of collateral received for receiv-
ables on which impairment losses were recognised
totalled €30,542 million (2015: €26,992 million). This
collateral related primarily to vehicles. The carrying
amount of assets held as collateral and taken back as
a result of payment default amounted to €153 million
(2015: €40 million).
145
146
Group
Financial
Statements
BMW Group
Finance leases are analysed as follows:
Marketable securities and investment funds relate to
available-for-sale financial assets and comprise:
in € million
Notes to the Group
31.12.2016
31.12.2015
in € million
31.12.2015
561
104
344
1,869
1,796
24
Financial assets
Financial assets comprise:
in € million
Fixed income securities
due within three months
780
699
due later than three months
3,669
3,657
Other debt securities
due within three months
Unrealised interest income
31.12.2015
31.12.2016
in € million
Marketable securities and
investment funds
5,287
5,261
Present value of future minimum
lease payments
due within one year
5,348
Net carrying amount
due between one and five years
5,429
11,572
The contracted maturities of debt securities are as
follows:
due later than five years
32
127
16,658
17,128
11,278
13,321
12,270
allowances
1,401
in € million
31.12.2016
31.12.2015
Gross carry amount of items with
in € million
2015
Allowance for impairment
recognised on a
specific
item basis
group basis
Total
impairment allowances recognised
on a specific-item basis
467
934
Balance at 31 December
25
70,043
Allocated (+)/reversed (-)
248
-25
223
Utilised
-304
14,440
-41
Non-guaranteed residual values that fall to the ben-
efit of the lessor amounted to €118 million (2015:
€165 million).
Impairment allowances
* Balance at 1 January adjusted due to deconsolidation of entities.
Exchange rate impact
and other changes
27
-2
-345
598
13,742
Balance at 1 January
7
24
impairment allowances recognised
Balance at 31 December
963
530
on a group basis
1,493
52,951
44,473
Impairment allowances recognised
on a group basis
-467
-530
Carrying amount without impairment
17
Exchange rate impact
and other changes
Gross carrying amount of items with
-341
1,000
515
1,515
on a specific-item basis
-934
-963
Allocated (+)/reversed (-)
Impairment allowances recognised
265
295
thereof for finance lease receivables
-141
-174
Utilised
-319
-22
30
525
30
151
127
due later than five years
69
73
due between one and five years
22
23
Total of future minimum lease payments
due within one year
31.12.2015
31.12.2016
in € million
Minimum lease payments are as follows:
99
Property, plant and equipment include a total of
€107 million (2015: €110 million) relating to land and
buildings, for which economic ownership is attribut-
able to the BMW Group (finance leases). Leases to
which BMW AG is party, with a carrying amount of
€90 million (2015: €102 million), run for periods up
to 2030 at the latest and contain price adjustment
clauses in the form of index-linked rentals as well as
extension and purchase options.
No impairment losses were recognised in 2016 (2015:
€3 million).
Property, plant and equipment
20
As in the previous year, no borrowing costs were
recognised as a cost component of intangible assets
in 2016.
1,150
25,876
9,593
8,930
1,902
43
204
208
As in the previous year, no borrowing costs were
recognised as a cost component of property, plant
and equipment in 2016.
1,941
223
Interest portion of the future minimum
lease payments
Leased products
21
121
126
72
77
due later than five years
37
37
due between one and five years
12
12
190
due within one year
69
97
27
50
due later than five years
104
32
36
due between one and five years
10
11
due within one year
Present value of future minimum lease
payments
660
613
Land, titles to land, buildings, including
buildings on third party land
Investments in non-consolidated subsidiaries
13
411
245
244
Participations
2
26
460
2
27
489
164
428
Non-current marketable securities
Other investments
141
142
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
19
Intangible assets
Intangible assets mainly comprise capitalised develop-
ment costs on vehicle and engine projects as well as
subsidies for tool costs, licences, purchased develop-
ment projects, software and purchased customer lists.
Other intangible assets include a brand-name right
amounting to €42 million (2015: €48 million) which
is allocated to the Automotive segment and is not
subject to scheduled amortisation since its useful life
is deemed to be indefinite. The year-on-year change
is due entirely to currency factors. This line item also
includes goodwill of €33 million (2015: €33 million)
allocated to the Automotive cash-generating unit
(CGU) and goodwill of €331 million (2015: €331 mil-
lion) allocated to the Financial Services CGU.
408
157
76
232
Plant and machinery
Other facilities, factory and office equipment
6
6
1,5912
29,930
510
3,318
1,420
32,338
17,759
2,014 Advance payments made and construction in progress
17,182
Property, plant and equipment
6,804
238
3,536
3,277
7,301
34,965
30,165
Leased products
2,233
1,088
Investments accounted for using
the equity method
62
2
12
398
Minimum lease payments of non-cancellable oper-
ating leases amounting to €17,850 million (2015:
€16,527 million) fall due as follows:
in € million
31.12.2016
31.12.2015
2015
2016
DriveNow
THERE
BMW Brilliance
144
134
-6
-15
-171
1,081
1,061
2016
-4
As in the previous year, there was no requirement to
recognise impairment losses or reversals of impair-
ment losses on intangible assets in 2016.
3
369
363
22
15
2
1
40
30
-6
-15
150
2015
2016
2015
32
23
235
2,003
1,832
3,853
4,678
Non-current financial liabilities
Equity
33
365
592
3,841
4,405
Current assets
20
96
209
1,663
2,106
Cash and cash equivalents
3,115
2,802
5,415
5,779
Non-current assets
DISCLOSURES RELATING TO THE BALANCE SHEET
-149
201
1,399
52
144
143
In December 2016, THERE Holding B.V. signed
contracts for the sale of a total of 25% of the shares
of HERE International B.V. The contract relating to
the sale of 15% of the shares to Intel Holdings B.V.,
Schiphol-Rijk, was completed in January 2017. 10%
of the shares were sold to a consortium comprising
NavInfo Co. Ltd., Beijing, Tencent Holdings Ltd.,
Shenzhen, and GIC Private Ltd., Singapore. After
receipt of the approval of the relevant regulatory
agencies, the transaction is expected to be completed
during the first half of 2017.
THERE is included in the BMW AG Group Financial
Statements as an associated company using the equity
method and allocated for segment reporting purposes
to the Automotive segment. In view of the proximity
of the reporting date and on the grounds of imma-
teriality, no fair value adjustments were recorded in
conjunction with the at-equity carrying amount at
31 December 2015, at which stage the investment
was accounted for at cost. During 2016, the Group's
share of earnings was accounted for with one month's
delay, which was caught up at 31 December 2016. The
purchase price allocation was completed during the
first quarter of 2016.
THERE Holding B.V. and its wholly owned subsidi-
ary, HERE International B.V. (until 28 January 2016:
THERE Acquisition B.V.) were founded in connection
with the acquisition. HERE International B. V. acquired
all of the shares of the HERE Group. Via BMW Inter-
national Holding B.V., the BMW Group has a 33.3%
shareholding in THERE Holding B.V. THERE acquired
the HERE Group with effect from 4 December 2015.
The total purchase price of €2.6 billion was financed by
using capital contributions (€2.0 billion) and via bank
loans taken up by HERE International B.V. (€0.6 bil-
lion). The BMW Group's share of the purchase price
was approximately €0.67 billion.
In August 2015, BMW AG, Daimler AG, Stuttgart,
and AUDI AG, Ingolstadt, agreed with Nokia Cor-
poration, Helsinki, to acquire that entity's maps and
location-based services business (HERE Group). The
HERE Group's digital maps are fundamental for the
next generation of mobility and location-based ser-
vices, providing the basis for new assistance systems
and, ultimately, fully autonomous driving.
2,795
DriveNow (in which the BMW Group has a 50.0%
shareholding) offers car-sharing services in major
German cities and abroad.
BMW Brilliance (in which the BMW Group has a 50.0%
shareholding) produces mainly BMW brand models
for the Chinese market and also has engine manufac-
turing facilities, which supply the joint venture's two
plants with petrol engines.
Investments accounted for using the equity method
comprise the joint venture BMW Brilliance Auto-
motive Ltd. (BMW Brilliance), the joint ventures
DriveNow GmbH & Co. KG and DriveNow Ver-
waltungs GmbH (DriveNow) and the interest in the
associated company THERE Holding B.V. (THERE).
Investments accounted for using the equity
method
22
Financial information relating to equity accounted
investments is aggregated in the following tables:
Impairment losses amounting to €384 million (2015:
€119 million) were recognised on leased products in
2016 as a consequence of changes in residual value
expectations. No income was recognised in 2016 from
the reversal of impairment losses (2015: €24 million).
3
16,527
17,850
Minimum lease payments
4
later than five years
8,445
9,154
between one and five years
8,079
8,692
within one year
Contingent rents of €46 million (2015: €54 million),
based principally on the distance driven, were rec-
ognised in income. The agreements have, in part,
extension and purchase options.
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
47
58
1,240
13,220
380
12,991
486
2015
2016
2015
2016
2015
2016
DriveNow
THERE
BMW Brilliance
in € million
Dividends received by the Group
Total comprehensive income
Other comprehensive income
Income taxes
Interest expenses
Interest income
Profit/loss before financial result
Scheduled depreciation
Revenues
DISCLOSURES RELATING TO THE INCOME STATEMENT
in € million
→ Notes to the
Balance Sheet
1,328
344
23,841
Debt securities
The equity ratio attributable to shareholders of
BMW AG increased during the financial year by
0.8 percentage points, primarily reflecting the
increase in revenue reserves.
134,213
144,839
68.3%
67.5%
Proportion of total capital
Total capital
91,683
97,731
Total financial liabilities
42,160
42,326
Current financial liabilities
5,625
49,523
Non-current financial liabilities
31.7%
32.5%
Proportion of total capital
42,530
47,108
of BMW AG
Equity attributable to shareholders
31.12.2015
31.12.2016
in € million
was as follows:
55,405
5,915
4,515
62
6,351
5,453
5
5
364
364
763
11
175
152
797
657
682
4,656
11
1,341
1,035
4,973
7,372
6,499
Development costs
Goodwill
Other intangible assets
Intangible assets
4,181
77
319
The capital structure at the end of the reporting period
4,171
In order to manage its capital structure, the
BMW Group uses various instruments, including the
amount of dividends paid to shareholders and share
buybacks. Moreover, the BMW Group pro-actively
manages debt capital, determining levels of debt
capital transactions with a target debt structure in
mind. An important aspect of the selection of finan-
cial instruments is the objective to achieve matching
maturities for the Group's financing requirements. In
order to reduce non-systematic risk, the BMW Group
uses a variety of financial instruments available on
the world's capital markets to achieve diversification.
The BMW Group manages the capital structure and
makes adjustments to it in the light of changes in
economic conditions and the risk profile of the under-
lying assets.
29
Less: shares repurchased and re-issued
305,029
Shares issued in conjunction with Employee Share Programme
54,809,404
Shares issued/in circulation at 1 January
2016
2015
Common stock
2016
Preferred stock
Number of shares issued
54,499,544
309,944
84
Number of shares issued
29
Receivables that are overdue by between one and
30 days do not normally result in bad debt losses
since the overdue nature of the receivables is primar-
ily attributable to the timing of receipts around the
month-end. In the case of trade receivables, collateral
is generally held in the form of vehicle documents
and bank guarantees so that the risk of bad debt loss
is extremely low.
195
307
Balance at 31 December
22
64
More than 120 days overdue
15
17
91-120 days overdue
10
Equity
Shares issued/in circulation at 31 December
55,114,404
54,809,404
The BMW Group's objectives when managing capital
are to safeguard the Group's ability to continue as
a going concern in the long-term and to provide an
adequate return to shareholders.
Capital management disclosures
Balance Sheet
→ Notes to the
Notes to the Group
Financial Statements
BMW Group
Group
Financial
Statements
150
149
Accumulated other equity comprises all amounts rec-
ognised directly in equity resulting from the transla-
tion of the financial statements of foreign subsidiaries,
the effects of recognising changes in the fair value
of derivative financial instruments and marketable
securities directly in equity and the related deferred
taxes recognised directly in equity.
Accumulated other equity
The proposed distribution was not recognised as a
liability in the Group Financial Statements.
Distribution of a dividend of €3.50 per share of
common stock (€2,107 million).
Distribution of a dividend of €3.52 per share of
preferred stock (€193 million).
A proposal will be made that the unappropriated profit
of BMW AG for the financial year 2016 amounting to
€2,300 million be utilised as follows:
revenue reserves.
Revenue reserves comprise the post-acquisition and
non-distributed earnings of consolidated companies.
In addition, remeasurements of the net defined ben-
efit liability for pension plans are also presented in
Revenue reserves
Capital reserves include premiums arising from the
issue of shares and totalled €2,047 million (2015:
€2,027 million). The change related to the share cap-
ital increase arising in conjunction with the issue of
shares of preferred stock to employees amounting to
€20.1 million.
Capital reserves
Issued share capital increased by €0.3 million as a
result of the issue to employees of 305,000 shares of
non-voting preferred stock. The number of author-
ised shares and the Authorised Capital of BMW AG
amounted to 4.2 million shares and €4.2 million
respectively at the end of the reporting period. The
Company is authorised to issue 5 million shares of
non-voting preferred stock amounting to nominal
€5.0 million prior to 14 May 2019.
In 2016, a total of 305,029 shares of preferred stock
was sold to employees at a reduced price of €44.14 per
share in conjunction with the Company's Employee
Share Programme. These shares are entitled to receive
dividends with effect from the financial year 2017.
29 shares of preferred stock were bought back in
2016 via the stock exchange in conjunction with the
Company's Employee Share Programme.
All of the Company stock is issued to bearer and each
share has a par value of €1.00. Preferred stock, to
which no voting rights are attached, bears an addi-
tional dividend of €0.02 per share.
601,995,196 601,995,196
601,995,196
601,995,196
2015
The BMW Group is not subject to any external
minimum equity capital requirements. Within the
Financial Services segment, however, there are a
number of individual entities which are subject to
equity capital requirements set by relevant regulatory
banking agencies.
29
883
3,888
1,188
5,191
8,157
7,372
Development costs
Goodwill
Other intangible assets
Intangible assets
4,516
-28
320
4
26
657
4,786
5,915
25,891
-100
2,865
2
1,566
27,092
8,832
9,593
Land, titles to land, buildings, including
buildings on third party land
Plant and machinery
1,942
6,154
572
923
58
390
Depreciation and amortisation
Carrying amount
Translation
1.1.20161
differences
Current year
Reclassi-
fications
Disposals
31.12.2016
31.12.2016 31.12.2015
1,222
4,171
5
797
3
181
4,973
3
1,403
1,130
4,263
7,221
6,351
5
364
364
9
1,166
218
214
411
76
3
484
226
245
Participations
2
2
26
26
489
Investments in non-consolidated subsidiaries
192
678
560
428
Non-current marketable securities
Other investments
Depreciation and amortisation
Carrying amount
1.1.20151
Translation
differences
Current year
Reclassi-
fications
Disposals 31.12.2015 31.12.2015 31.12.2014
3
157
308
192
1,951
721
660
Other facilities, factory and office equipment
2
2
2,2532
32,351
-119
3,403
1,806
33,829
17,960
1,591 Advance payments made and construction in progress
17,759
Property, plant and equipment
7,308
19
3,306
2,834
7,799
37,789
34,965
2,546
2,233
Leased products
Investments accounted for using
the equity method
76
116
4
due later than three months
61-90 days overdue
23
966
828
Sundry other assets
-8
412
387
Collateral receivables
8
716
422
Receivables from subsidiaries
8
1
711
Expected reimbursement claims
1,036
1,135
Other taxes
Total
group basis
item basis
893
1,217
an investment is held
specific
Receivables from companies in which
779
Other assets
6,682
6,261
Allocated (+)/reversed (-)
8
Balance at 1 January
Total
group basis
item basis
specific
Allowance for impairment
recognised on a
2015
in € million
Balance at 31 December
other changes
Exchange rate impact and
-8
Utilised
8
Allocated (+)/reversed (-)
8
Balance at 1 January
4,693
5,087
thereof current
1,568
1,595
thereof non-current
9
9
1,527
7
1,914
recognised on a
2,705
thereof current
thereof non-current
8,843
9,770
Financial assets
147
145
Other
133
129
Loans to third parties
2,208
272
Credit card receivables
3,030
3,922
Derivative instruments
5,261
5,287
investment funds
Marketable securities and
31.12.2015
31.12.2016
4,700
4,553
287
7,065
6,635
The amount by which the value of investment funds
exceeds obligations for part-time working arrange-
ments (€17 million; 2015: €12 million) is reported
under other financial assets. Investment funds are
held to secure obligations relating to pre-retirement
part-time work arrangements. These funds are man-
aged by BMW Trust e. V., Munich, as part of Con-
tractual Trust Arrangements (CTA) and are therefore
netted against the corresponding settlement arrears
for pre-retirement part-time work arrangements.
Allowance for impairment
2016
31.12.2015
31.12.2016
in € million
in € million
Other assets comprise:
Other assets
26
Allowances for impairment losses on receivables
relating to credit card business developed as follows
during the year under report:
Income tax assets totalling €1,938 million (2015:
€2,381 million) include claims amounting to €351 mil-
lion (2015: €519 million), which are expected to be
settled after more than twelve months. Some of the
claims may be settled earlier than this depending on
the timing of proceedings.
Income tax assets
25
272
287
-8
-9
280
296
31.12.2015
31.12.2016
Net carrying amount
Allowance for impairment
Gross carrying amount
in € million
Receivables relating to credit card business comprise
the following:
Allowances for impairment and credit risk
Prepayments
20
Utilised
8
7
36
Allocated (+)/reversed (-)
Utilised
83
7
76
Balance at 1 January
Total
group basis
item basis
specific
Allowance for impairment
recognised on a
43
2015
31.12.2015
31.12.2016
in € million
Trade receivables comprise the following:
Trade receivables
28
The expense recorded in conjunction with inven-
tories during the financial year 2016 amounted to
€55,129 million (2015: €55,536 million).
At 31 December 2016, inventories measured at their
net realisable value amounted to €871 million (2015:
€1,054 million). Write-downs to net realisable value
amounting to €101 million (2015: €486 million) were
recognised in 2016. The write-down recorded in the
previous year resulted primarily from accidents and
natural disasters.
57
11
46
Balance at 31 December
in € million
-27
-1
-28
31-60 days overdue
128
174
1-30 days overdue
31.12.2015
31.12.2016
in € million
2,751
2,825
Net carrying amount
-96
-57
Allowance for impairment
2,847
2,882
Gross carrying amount
Some trade receivables were overdue for which an
impairment allowance was not recognised. Overdue
balances are analysed into the following time windows:
28
96
12
84
Balance at 31 December
-2
-1
-1
other changes
Exchange rate impact and
2
-8
2
Exchange rate impact
31.12.2015
31.12.2016
Balance Sheet
→ Notes to the
in € million
Financial Statements
Inventories comprise the following:
Inventories
27
Notes to the Group
BMW Group
Statements
The impairment allowance on trade receivables devel-
oped during the year under report as follows:
Group
Financial
147
Collateral receivables comprise mainly customary
collateral (banking deposits) arising on the sale of
receivables.
Prepayments relate mainly to prepaid interest and
commission paid to dealerships. Prepayments of
€1,018 million (2015: €795 million) have a maturity
of less than one year.
8
8
Balance at 31 December
1
1
other changes
Exchange rate impact and
-8
7
148
2016
Allowance for impairment
recognised on a
-20
-1
-19
Utilised
-21
-21
Allocated (+)/reversed (-)
11,071
11,841
96
12
84
Balance at 1 January
1,004
1,000
Raw materials and supplies
Inventories
1,098
1,157
Work in progress, unbilled contracts
Total
group basis
item basis
specific
in € million
8,969
9,684
Finished goods and goods for resale
and other changes
8,512
78
Pension provisions
Provisions for other obligations cover numerous spe-
cific risks and obligations of uncertain timing and
amount, in particular for litigation and liability risks.
Provisions for obligations for on-going operational
expenses comprise primarily warranty obligations.
Depending on when claims are made, it is possible
that the BMW Group may be called upon to fulfil
obligations over the whole period of the warranty
or guarantee. Expected reimbursement claims at
31 December 2016 amounted to €779 million at the
end of the reporting period (2015: €711 million). Also
included are other provisions for expected payments
for bonuses, rebates and other price deductions.
Provisions for obligations for personnel and social
expenses comprise mainly performance-related
remuneration components, early retirement part-time
working arrangements and employee long-service
awards.
5,879
10,918
-595
Income from the reversal of other provisions amount-
ing to €480 million (2015: €550 million) is recorded
in cost of sales and in selling and administrative
expenses.
-4,111
5,862
74
9,630
Other provisions
1,394
2,200
58
-283
32
Current income tax liabilities totalling €1,074 million
(2015: €1,441 million) include €33 million (2015: 485
€million), which is expected to be settled after more
than twelve months. Some of the liabilities may be
settled earlier than this depending on the timing of
proceedings.
9,242
Bonds
Total
Maturity later
than five years
Maturity between
one and five years
one year
Income tax liabilities
in € million
31.12.2016
BMW Group at the relevant balance sheet dates
relating to financing activities. Financial liabilities
comprise the following:
Financial liabilities include all liabilities of the
Financial liabilities
33
Current income tax liabilities of €1,074 million
(2015: €1,441 million) comprise €269 million (2015:
€288 million) for taxes payable and €805 million (2015:
€1,153 million) for tax provisions.
Maturity within
-362
6
938
5
1,939
expenses
Obligations for personnel and social
thereof due
31.12.2016 within one year
Reversed
1,705
Utilised
Additions
differences
1.1.2016
Translation
in € million
Balance Sheet
Reversal of
discounting
1
-1,436
-23
21
1,880
Other obligations
2,824
6,527
-289
-2,313
51
3,219
48
5,811
expenses
Obligations for ongoing operational
1,661
2,191
25,496
Other provisions changed during the year as follows:
9,683
Asset backed financing transactions
496
3,194
9,030
Liabilities to banks
13,631
8,585
12,720
5,046
40,319
6,912
23,283
10,124
Bonds
Total
Asset backed financing transactions
Maturity later
than five years
Liabilities from customer deposits (banking)
3,657
586
325
628
4,550
107
2,245
9,719
2,198
Derivative instruments
5,415
5,415
Commercial paper
13,509
133
Other
Maturity between
one and five years
one year
Maturity within
Commercial paper
13,512
133
3,316
10,063
Liabilities from customer deposits (banking)
3,852
14,892
3,997
10,251
Liabilities to banks
16,474
9,709
6,765
644
3,852
Derivative instruments
1,656
31.12.2015
in € million
97,731
11,261
44,144
42,326
1,249
622
130
497
Financial liabilities
Other
3,331
179
1,496
44,421
Other provisions
31
→ Notes to the
Germany
Defined benefit obligation
Former employees with vested benefits
Pensioners
Current employees
in € million
United Kingdom
The defined benefit obligation relates to current
employees, former employees with vested benefits
and pensioners as follows:
The BMW Group is exposed to risks arising from
defined benefit plans on the one hand and defined
contribution plans with a minimum return guarantee
on the other. The discount rates used to calculate
pension obligations are subject to market fluctuation
and therefore influence the level of the obligations.
Furthermore, changes in other actuarial parameters,
such as expected rates of inflation, also have an impact
on pension obligations. In order to reduce currency
exposures, a substantial portion of plan assets is either
invested in the same currency as the underlying plan
or hedged by means of currency derivatives. As part
of the internal reporting procedures and for internal
management purposes, financial risks relating to the
pension plans are reported on using a deficit-value-
at-risk approach. The investment strategy is also
subjected to regular review together with external
Employer contributions to plan assets are expected to
amount to €1,190 million in the coming year.
16,930
18,315
922
958
consultants, with the aim of ensuring that investments
are structured to coincide with the timing of pen-
sion payments and the expected pattern of pension
obligations. Each of these measures helps to reduce
fluctuations in pension funding shortfalls.
8,153
Other
31.12.2016
17.5
48.6
43.1
28.6
27.8
75.0
31.12.2016 31.12.2015
79.1
26.7
66.3
67.3
31.12.2015
31.12.2016
31.12.2015
23.4
8,714
7,855
8,643
1,115
1,210
34
46
705
745
Other
376
Absolute return funds
41
27
1
24
9
419
316
282
65
31 December
3,355
3,626
239
224
1,902
1,924
1,214
1,478
Total without quoted market price
562
432
97
51
183
16.7
4.9
5.1
30.2
-3.7
-854
decrease of 1 year
3.2
632
3.7
-633
853
-3.1
-610
-3.1
-713
decrease of 0.25%
3.3
30
-3.2
increase of 0.25%
165
Financial Statements
Notes to the Group
BMW Group
Statements
Group
Financial
156
155
-0.6
-128
-0.7
-158
decrease of 0.25%
0.7
134
0.7
655
1,539
3.3
16.3
Pension level trend
Discount rate
does not follow a linear pattern, estimates made on
the basis of the specified sensitivities are only possible
with this restriction. The calculation of sensitivities
using ranges other than those specified could result
in a non-proportional change in the defined benefit
obligation.
It is only possible, however, to aggregate sensitivities
to a limited extent. Since the change in obligations 7
The sensitivity analysis provided below shows the
extent to which changes in individual factors at the
end of the reporting period influence the defined
benefit obligation.
100.0
Average life expectancy
100.0
100.0
100.0
100.0
8.3
3.4
28.0
100.0
Pension entitlement trend
In the UK, the sensitivity analysis for the pension
level trend also takes account of restrictions due to
caps and floors.
Change in defined benefit obligation
3,253
17.6
4,031
decrease of 0.75%
increase of 0.25%
-12.9
-2,577
-12.8
-2,939
increase of 0.75%
in %
in € million
in %
31.12.2015
in € million
31.12.2016
747
17
Financial liabilities
41,289
Social security
99
99
Payables to subsidiaries
615
615
Other
Payables to other companies in which an investment is held
807
893
387
501
977
130
807
847
Other liabilities
21
Other taxes
Deposits received
Advance payments from customers
Deferred income
in € million
15,555
71
434
10,198
4,816
10
147
4,659
92
4,923
7,256
419
4,238
20
USD 2,722 million
BMW US Capital, LLC
-0.30
13
EUR 350 million
0.67
0.37
GBP 300 million
BMW Malta Finance Ltd.
BMW Finance N. V.
-0.32
76
EUR 380 million
74
BMW India Financial Services Private Ltd.
INR 14,000 million
91
2,599
Other taxes
Deposits received
Advance payments from customers
Deferred income
Total
Maturity later
than five years
Maturity between
one and five years
Maturity within
one year
31.12.2016
in € million
Other liabilities comprise the following items:
Other liabilities
34
7.33
Payables to other companies in which an investment is held
(in %)
Payables to subsidiaries
Other
Deferred income relating to service contracts
in € million
Deferred income comprises the following items:
→ Other Disclosures
Balance Sheet
→ Notes to the
Deferred income from lease financing
Financial Statements
BMW Group
Statements
Group
Financial
160
159
13,767
Notes to the Group
231
Grants
Deferred income
Trade payables
Maturity later than five years
7,701
72
Maturity between one and five years
8,512
Maturity within one year
Other deferred income
31.12.2015
in Mio. €
Trade payables have the following maturities:
Trade payables
35
Grants comprise primarily public sector funds to
promote regional structures and which have been
invested in the production plants in Brazil, Mexico,
Leipzig and Berlin. The grants are partly subject to
holding periods for the assets concerned of up to five
years and/or minimum employment figures. Grant
income is recognised over the useful lives of the assets
to which they relate.
Deferred income relating to service contracts arises
in conjunction with service and repair work as well
as telematics services and roadside assistance to be
provided under commitments given at the time of
the sale of a vehicle (multi-component arrangements).
Deferred income from lease financing relates primarily
to upfront lease payments.
31.12.2016
4,328
9,208
4,478
681
6,254
215
3,640
2,399
Total
121
Maturity later
than five years
one year
Maturity within
31.12.2015
accounts.
Sundry other liabilities include mainly bonuses for
services already performed as well as sales promotions,
commission payable and credit balances on customers'
Other liabilities
Maturity between
one and five years
802
492
374
10
176
4,292
89
1
17
71
86
86
107
107
1,080
1,080
871
5
Social security
Weighted average
nominal interest rate
Weighted average
maturity period
(in days)
in relevant currency
(ISO-Code)
2.5
5.2
GBP 2,700 million
fixed
2.0
7.2
fixed
EUR 15,214 million
4.2
3.0
CNH 300 million
fixed
1.8
6.0
fixed
CHF 300 million
HKD 1,093 million
1.9
variable
1.9
5.0
SEK 1,750 million
fixed
BMW Finance N. V.
4.1
2.1
NOK 1,650 million
fixed
0.4
3.7
JPY 49,100 million
fixed
3.9
fixed
4.0
5.4
Interest
Balance Sheet
→ Notes to the
Issuer
Notes to the Group
Financial Statements
Bonds comprise:
Issue volume
in relevant currency
(ISO-Code)
BMW Group
Group
Financial
158
157
Customer deposit liabilities arise in the BMW Group's
banks, notably in Germany and the USA, which offer
a range of investment products.
91,683
8,234
Statements
Weighted average
maturity period
(in years)
Weighted average
nominal interest rate
AUD 690 million
fixed
0.0
3.0
SEK 1,950 million
variable
0.7
1.0
GBP 67 million
variable
0.1
2.2
EUR 6,101 million
variable
(in %)
EUR 1,500 million
3.2
0.0
variable
AUD 700 million
variable
2.1
4.6
CAD 1,600 million
fixed
3.0
BMW Canada Inc.
2.7
CAD 500 million
variable
2.3
6.2
USD 8,210 million
0.9
2.4
fixed
CNY 2,000 million
Issue volume
Issuer
paper:
The following details apply to the commercial
2.8
3.9
KRW 260,000 million
fixed
Other
10.3
5.0
INR 3,500 million
fixed
3.3
3.0
fixed
42,160
BMW US Capital, LLC
3.0
3.8
AUD 130 million
fixed
1.4
3.0
USD 1,295 million
2.8
variable
3.0
NZD 30 million
variable
0.7
1.8
GBP 250 million
2.9
fixed
EUR 3,500 million
6.6
NZD 100 million
fixed
0.2
3.0
JPY 30,000 million
fixed
1.6
3.0
HKD 834 million
fixed
2.0
5.0
GBP 300 million
fixed
0.9
4.4
17
increase of 1 year
1,060
31.12.2016
31.12.2015
31.12.2016
31.12.2015
31.12.2016
Other
United Kingdom
Germany
United Kingdom
Germany
31.12.2015
The following mortality tables are applied in countries,
in which the BMW Group has significant defined
benefit plans:
Pension level trend
Discount rate
in %
The assumptions stated below, all of which depend
on the economic situation in the relevant country,
are used to measure the defined benefit obligation
of each pension plan. The following weighted aver-
age values have been used for Germany, the United
Kingdom and other countries:
In the meantime, most of the defined benefit plans
have been closed to new entrants.
Gains (-) or losses (+) arising from changes in the discount factor
Gains (-) or losses (+) arising from changes in demographic assumptions
4,093
4,093
4,093
-40
Weighted duration of all pension obligations in years
-40
1.80
2.51
31.12.2016
United Kingdom
Germany
in € million
Based on the measurement principles contained in
IAS 19, the following balance sheet carrying amounts
apply to the Group's pension plans:
7
In Germany, the so-called “pension entitlement trend"
(Festbetragstrend) also represents a significant actu-
arial assumption for the purposes of determining
benefits payable at retirement and was left unchanged
at 2.0%.
SP2 tables with weightings
Mortality Table 2005 G issued by Prof. K. Heubeck (with invalidity rates reduced by 50%)
0.02
18.4
2.51
17.6
20.9
20.5
21.3
2.43
2.55
1.60
1.78
3.83
3.70
3.58
19.2
-40
Gains (-) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the
asset ceiling
-118
in € million
1 January 2015
EXPENSE/INCOME
Current service cost
Interest expense (+)/income (-)
Past service cost
557
REMEASUREMENTS
Gains (-) or losses (+) on plan assets, excluding amounts included
in interest income
Defined
benefit
obligation
thereof assets
Plan assets
the net defined
benefit asset to
the asset ceiling
Limitation of
Net defined
benefit liability
20,462
-15,861
4,601
494
494
591
-468
Total
4,587
thereof pension provision
4,587
-118
-118
Transfers to fund
-827
-827
-827
Employee contributions
85
-85
Pensions and other benefits paid
-643
676
33
33
Translation differences and other changes
-1,339
1,166
-173
-173
31 December 2016
22,899
-18,315
4,584
31.12.2015
31.12.2016
Other
Total
Past service cost
Interest expense (+)/income (−)
Current service cost
EXPENSE/INCOME
1 January 2016
in € million
plans can be derived as follows:
The change in the net defined benefit liability for pension
The pension plans are administered by BMW Pen-
sion Trustees Limited, Hams Hall, and BMW (UK)
Trustees Limited, Hams Hall, both trustee companies
which act independently of the BMW Group. BMW
(UK) Trustees Limited, Hams Hall, is represented
by 11 trustees and BMW Pension Trustees Limited,
Hams Hall, by five trustees. A minimum of one
third of the trustees must be elected by plan partic-
ipants. The trustees represent the interests of plan
participants and decide on investment strategies.
Recovery contributions to the funds are determined
in agreement with the BMW Group.
In the United Kingdom, the BMW Group has defined
benefit plans, which are primarily employer-funded
combined with employee-funded components based
on the conversion of employee remuneration. These
plans are subject to statutory minimum recovery
requirements. Benefits paid in conjunction with
these plans comprise old-age retirement pensions as
well as invalidity and surviving dependents' benefits.
The defined benefit plans have been closed to new
entrants, who, since 1 January 2014, are covered by
a defined contribution plan.
Gains (-) or losses (+) arising from settlements
United Kingdom
In the case of defined benefit plans, the BMW Group
is required to pay the benefits it has granted to pres-
ent and past employees. Defined benefit plans may
be funded or unfunded, the latter sometimes covered
by accounting provisions. Pension commitments in
Germany are mostly covered by assets contributed
to BMW Trust e. V., Munich, in conjunction with a
contractual trust arrangement (CTA). The main other
countries with funded plans were the UK, the USA,
Switzerland, the Netherlands, Belgium and Japan. ¬
The defined benefit plans have been closed to new
entrants. With effect from 1 January 2014, new
employees receive a defined contribution entitle-
ment with a minimum rate of return. Under the
motto "THE NEXT 100 YEARS", this entitlement was
enhanced by a special centenary bonus to employees,
made in the form of a starting contribution to a new
BMW supplementary benefit plan.
Cash and cash equivalents
Both employer- and employee-funded benefit plans
are in place in Germany. Benefits paid in conjunction
with these plans comprise old-age retirement pen-
sions as well as invalidity and surviving dependents'
benefits. The Deferred Remuneration Retirement
Plan is an employee-financed defined contribution
plan with a minimum rate of return. The fact that the
plan involves a minimum rate of return means that
it is classified as a defined benefit plan. Employees
have the option to waive payment of certain remu-
neration components in return for a future benefit.
When the benefit falls due, it is paid on the basis
of the higher of the value of the depot account or a
guaranteed minimum amount. Defined benefit obli-
gations also remain in Germany, for which benefits
are determined either by multiplying a fixed amount
by the number of years of service or on the basis of
an employee's final salary.
Germany
The most significant of the BMW Group's pension
plans are described below.
Under the motto "THE NEXT 100 YEARS", almost
all of the workforce received a special bonus in
conjunction with the BMW Group's centenary
anniversary. Depending on opportunities available
in each country, the bonus was contributed to the
relevant pension plan or paid to the recipient in a
one-off amount.
Numerous defined benefit plans are in place through-
out the BMW Group.
→ Notes to the
Balance Sheet
BMW Group
Notes to the Group
Financial Statements
The assets of the German pension plans are admin-
istered by BMW Trust e. V., Munich, (German reg-
istered association) in accordance with a CTA. The
representative bodies of this entity are the Board
of Directors and the Members' General Meeting.
BMW Trust e. V., Munich, currently has seven mem-
bers and three Board of Directors members elected
by the Members' General Meeting. The Board of
Directors is responsible for investments, drawing
up
and deciding on investment guidelines as well as
monitoring compliance with those guidelines. The
members of the association can be employees, senior
executives and members of the Board of Directors.
An ordinary Members' General Meeting takes place
once every calendar year, and deals with a range
of matters, including receiving and approving the
association's annual report, ratifying the activities
of the Board of Directors and adopting changes to
the association's statutes.
REMEASUREMENTS
Defined
benefit
obligation
Plan assets
557
-479
7,773
-171
-171
-8
-8
Limitation of
the net defined
benefit asset to
the asset ceiling
Net defined
benefit liability
3
2,999
557
78
-171
-8
Gains (-) or losses (+) on plan assets, excluding amounts included
in interest income
-1,836
-1,836
-1,836
2,996
-16,930
19,926
Total
Statements
123
Group
Financial
151
16,930
19,926
22,899
18,315
922
958
8,153
8,714
7,855
8,643
Fair value of plan assets
Effect of limiting net defined benefit
1,384
9,327
10,311
9,215
11,112
Present value of defined benefit
obligations
31.12.2015
31.12.2016
31.12.2015
31.12.2016
31.12.2015
1,476
asset to asset ceiling
3
3
-1
-1
thereof assets
3,000
4,587
466
521
1,174
1,597
1,360
2,469
thereof pension provision
2,999
4,587
465
521
1,174
1,597
1,360
2,469
Carrying amounts at 31 December
3
3
152
-9
Gains (-) or losses (+) arising from settlements
2
3,752
3,525
5,564
4,437
422
383
9,738
8,345
thereof non-investment grade
1,687
1,309
507
thereof investment grade
186
37
2,230
1,532
Real estate
25
20
25
20
Money market funds
26
255
11
36
31.12.2016
31.12.2015
thereof due
11,968
9,877
2,399
6,254
2,599
7,256
55
123
58
221
32
299
30
382
915
1,922
1,037
2,241
1,397
3,910
1,474
4,412
within one year
Total
within one year
Total
thereof due
19
420
37
Absolute return funds
1
1
198
192
thereof mixed funds
(funds without a rating)
348
178
179
527
178
thereof non-investment grade
2
227
2
2
229
207
Real estate
183
172
697
783
123
105
1,003
205
2
189
195
82
33
-
82
33
Other
5
5
Total with quoted market price
7,165
6,641
6,790
6,251
734
683
14,689
13,575
Debt instruments
543
367
408
207
3
3
954
577
thereof investment grade
274
-9
458
6,071
14
Translation differences and other changes
683
-529
154
154
31 December 2015
19,926
-16,930
2,996
3
2,999
14
thereof pension provision
3,000
-1
153
154
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
Past service cost results from a change in the defined
benefit pension plan in Germany. In future, 12 month-
ly pension payments will be paid to all plan benefi-
ciaries, with a guaranteed 1% increase in pension
entitlements for benefits awarded since 1999.
7
Depending on the cash flow profile and risk structure
of the pension obligations involved, pension plan
assets are invested in various investment classes.
thereof assets
554
-
-
4,603
494
123
-9
325
325
325
Gains (-) or losses (+) arising from changes in the discount factor
Gains (-) or losses (+) arising from changes in demographic assumptions
-1,181
-1,181
-1,181
-224
-224
-224
Gains (-) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the
asset ceiling
-429
-429
-429
1
Transfers to fund
-872
-872
-872
Employee contributions
Pensions and other benefits paid
79
-540
-79
Plan assets in Germany, the UK and other countries
comprised the following:
4,623
557
2015
Other
Total
2016
2015
2016
2015
2016
2015
2016
COMPONENTS OF PLAN ASSETS
Equity instruments
1,726
1,807
611
1,340
235
224
2,572
3,371
Debt instruments
in € million
5,439
4,834
United Kingdom
Germany
Cash flow hedges
The impact of cash flow hedges on accumulated other
equity is analysed as follows:
Net income from participations and investments
Impairment losses of €76 million (2015: €13 million)
were recognised in the income statement in 2016 on
available-for-sale securities accounted for as partici-
pations, for which fair value changes had previously
been recognised directly in equity. As in the previous
year, no reversals of impairment losses on marketable
securities occurred.
13
Accumulated other equity
Net interest expenses from interest rate and interest
rate/currency swaps amounted to €120 million (2015:
€22 million).
in the default risk. Such credit-risk related changes in
fair values are calculated as a general rule by deducting
market-related changes in fair value from the overall
change in fair value.
In the case of financial instruments for which the
fair value option is applied, no significant changes in
fair values arose in the financial year 2016 or on an
accumulated basis which were attributable to changes
Gains/losses from the use of derivatives relate primar-
ily to fair value gains or losses arising on stand-alone
derivatives.
32
586
-77
-38
-345
-210
Income/expenses
Other liabilities
Other income/expenses
Impairment losses/reversals of impairment losses
Loans and receivables
24
52
Balance at 31 December
-144
-39
thereof recognised in the income statement during the period under report
-117
28
Total change during the year
141
24
Balance at 1 January
1
The disclosure of interest income resulting from the
unwinding of interest on future expected receipts
would normally only be relevant for the BMW Group
where assets have been discounted as part of the pro-
cess of determining impairment losses. However, as
a result of the assumption that most of the income
that is subsequently recovered is received within one
year and the fact that the impact is not material, the
BMW Group does not discount assets for the purposes
of determining impairment losses.
2.94
-155
Interest rates taken from interest rate curves were
adjusted, where necessary, to take account of the
credit quality and risk of the underlying financial
instrument.
4.85
0.23
1.25
2.37
0.67
4.44
Commodity derivatives were measured on the basis
of the following quoted market prices:
0.08
1.98
0.08
3.77
0.02
0.55
1.18
-0.20
0.87
Raw material
31.12.2016
31.12.2015
Other investments - available-for-sale/fair value option
Marketable securities, investment funds and collateral assets - available-for-sale
Level 2
Level 1
Level hierarchy in accordance with IFRS 13
31.12.2016
in € million
The following table shows the amounts allocated to
each measurement level at the end of the reporting
period:
3. using input factors not based on observable mar-
ket data (Level 3).
2. measured at their fair values in an active market
for comparable financial instruments or using
measurement models whose main input factors
are based on observable market data (Level 2), or
1. measured at their fair values in an active market
for identical financial instruments (Level 1),
are
Financial instruments measured at fair value are allo-
cated to different measurement levels in accordance
with IFRS 13. This includes financial instruments that
43.05
76.45
1,507.00
561.70
USD/t
79.65
USD/t
230.00
USD/t 1,695.13
USD/oz
680.96
Palladium
Iron ore
Coke/coal
Aluminium
in € million
Derivative instruments (assets)
-0.20
1.21
44,421
45,140
70,043
72,309
78,260
81,621
Carrying amount
40,701
Fair value
Fair value
31.12.2015
31.12.2016
Interest rate for five years
Interest rate for ten years
Interest rate for one year
Interest rate for six months
in %
Carrying amount
40,319
14,942
14,892
-0.23
CNY
JPY
GBP
USD
EUR
ISO Code
13,631
13,611
16,474
16,556
13,509
13,543
13,512
13,545
12,720
12,783
0.60
Interest rate risks
Currency risks
Raw materials price risks
Reported on equity
and liabilities side
Reported on
assets side
31.12.2015
Reported on Reported on equity
assets side and liabilities side
31.12.2016
Held for trading
in € million
3,922
arising for each of the categories of financial instru-
ment defined by IAS 39:
Gains and losses on financial instruments
Gross amount of derivatives which can be offset in case of insolvency
Net amount after offsetting
Balance sheet amounts as reported
in € million
master netting agreements or similar contracts are in
place, actual offsetting would be possible in principle,
for instance in the case of insolvency. Offsetting would
have the following impact on the carrying amounts
of derivatives:
In the BMW Group, financial assets and liabilities
relating to derivative financial instruments would
normally be required to be offset. No offsetting takes
place for accounting purposes, however, since the nec-
essary criteria are not met. Since legally enforceable
Offsetting of financial instruments
The following table shows the net gains and losses
3,331
3,030
-1,169
Gains and losses on sale and fair value measurement of marketable securities held for sale
(including investments in subsidiaries and participations measured at cost)
Available-for-sale
-2
Gains/losses on investments measured at fair value through profit and loss
Fair value option
-717
1,265
Gains/losses from the use of derivative instruments
2015
2016
3,265
1,745
2,162
2,753
-1,285
-1,285
-1,169
BMW Group
Notes to the Group
Financial Statements
→ Other Disclosures
Group
Financial
Statements
166
165
1,842
1,933
Raw materials price risks
Currency risks
Interest rate risks
Derivative instruments (liabilities)
Raw materials price risks
Currency risks
Interest rate risks
Marketable securities, investment funds and collateral assets - available-for-sale
Other investments - available-for-sale/fair value option
Derivative instruments (assets)
in € million
213
5,387
Raw materials price risks
Currency risks
Interest rate risks
Derivative instruments (liabilities)
147
129
1,402
450
In situations where a fair value was required to be
measured for a financial instrument only for disclosure
purposes, this was achieved using the discounted cash
flow method and taking account of the BMW Group's
own default risk. For this reason, the fair values cal-
culated can be allocated to Level 2.
As in the previous year, there were no reclassifications
within the level hierarchy during the financial year
2016.
Other investments (available-for-sale) amounting to
€347 million (2015: €184 million) are measured at
amortised cost since quoted market prices are not
available or cannot be determined reliably. These are
therefore not included in the level hierarchy shown
above. In addition, other investments amounting to
€213 million (2015: €244 million) are measured at fair
value since quoted market prices are available. These
items are included in Level 1.
Level 3
Level 3
1,062
2,136
1,352
5
1,086
1,939
Level 2
244
5,259
Level 1
Level hierarchy in accordance with IFRS 13
31.12.2015
1,479
2016
In the next stage, these exposures are compared to all
hedges that are in place. The net cash flow surplus
represents an uncovered risk position. The cash-
flow-at-risk approach involves allocating the impact
of potential exchange rate fluctuations to operating
cash flows on the basis of probability distributions.
Volatilities and correlations serve as input factors to
assess the relevant probability distributions.
Balance at 1 January
Asset backed financing transactions
42,245
7,230
24,241
10,774
Bonds
Total
Maturity later
than five years
one and five years
one year
in € million
Maturity between
Maturity within
31.12.2015
111,438
11,568
851
601
178
46,957
52,913
72
5,195
8,849
14,044
Liabilities to banks
5,416
5,416
Other financial liabilities
Total
Commercial paper
6,104
174
3,366
2,564
Derivative instruments
7,773
3,853
72
Trade payables
13,928
133
3,990
9,805
Liabilities from customer deposits (banking)
13,354
405
3,485
9,464
7,701
261
51,180
3,853
Other financial liabilities
9,954
Bonds
Total
Maturity later
than five years
Maturity between
one and five years
one year
Maturity within
31.12.2016
in € million
The following table shows the maturity structure of
expected contractual cash flows (undiscounted) for
financial liabilities:
Liquidity risk
Further disclosures relating to credit risk – in particu-
lar with regard to the amounts of impairment losses
recognised - are provided in the explanatory notes
to the relevant categories of receivables in → notes 23,
24 and 28.
A concentration of credit risk with particular borrow-
ers or groups of borrowers has not been identified in
conjunction with financial instruments.
The credit risk relating to derivative financial instru-
ments is minimised by the fact that the Group only
enters into such contracts with parties of first-class
credit standing. The general credit risk on derivative
financial instruments utilised by the BMW Group is
therefore not considered to be significant.
→ see
note 4
→ see
notes 23,24
and 28
Creditworthiness testing is an important aspect of
the BMW Group's credit risk management. Every
borrower's creditworthiness is tested for all credit
financing and lease contracts entered into by the
BMW Group. In the case of retail customer financing,
creditworthiness is assessed using validated scoring
systems integrated into the purchasing process. In
the area of dealership financing, creditworthiness is
assessed by means of ongoing credit monitoring and
an internal rating system that takes account not only
of the tangible situation of the borrower, but also of
qualitative factors such as past reliability in business
relations.
Impairment losses are recorded as soon as credit risks
are identified on individual financial assets, using a
methodology specifically designed by the BMW Group.
More detailed information regarding this methodol-
ogy is provided in the section on accounting policies
(→ note 4).
Within the financial services business, the financed
items (e.g. vehicles, equipment and property) in
the retail customer and dealership lines of business
serve as first-ranking collateral with a recoverable
value. Security is also put up by customers in the
form of collateral asset pledges, asset assignment
and first-ranking mortgages, supplemented where
appropriate by warranties and guarantees. If an
item previously accepted as collateral is acquired, it
undergoes a multi-stage process of repossession and
disposal in accordance with the legal situation pre-
vailing in the relevant market. The assets involved are
generally vehicles which can be converted into cash
at any time via the dealership organisation.
In the case of performance relationships underlying
non-derivative financial instruments, collateral will
be required, information on the credit standing of
the counterparty obtained or historical data based
on the existing business relationship (i.e. payment
patterns to date) reviewed in order to minimise the
credit risk, all depending on the nature and amount
of the exposure that the BMW Group is proposing
to enter into.
Fair value measurement of financial instruments
The following interest rate structures were used to
discount financial instruments at 31 December 2016:
26,766
10,089
46,809
Asset backed financing transactions
Commercial paper
4,565
187
2,395
1,983
Derivative instruments
8,512
8,512
Trade payables
13,719
Total
133
10,140
Liabilities from customer deposits (banking)
16,030
558
4,234
11,238
Liabilities to banks
17,099
9,938
7,161
3,446
2015
372
1,203
-24
7
The difference between the gains/losses on hedging
instruments (mostly interest rate swaps and com-
bined interest rate/currency swaps) and the results
recognised on hedged items represents the ineffective
portion of fair value hedges.
168
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ Other Disclosures
Credit risk
Notwithstanding the existence of collateral accepted,
the carrying amounts of financial assets generally take
account of the maximum credit risk arising from the
possibility that the counterparties will not be able to
fulfil their contractual obligations. The maximum cred-
it risk for irrevocable credit commitments relating to
credit card business amounts to €1,461 million (2015:
€2,011 million). The equivalent figure for dealership
financing is €27,494 million (2015: €24,733 million).
the currencies referred to above.
Currency risk for the BMW Group is concentrated on
68
70
99
30
86
134
48
278
163
276
134
Gains/losses from hedged items
Ineffectiveness of fair value hedges
-269
-1,337
-480
Total changes during the year
1,415
-857
thereof reclassified to the income
statement
Balance at 31 December
550
78
1,318
-1,337
denominated in a foreign currency over the coming
44 months (2015: 55 months). The income statement
impact of the hedged cash flows will be recognised as
a general rule in the same periods in which external
revenues are recognised. It is expected that €113 mil-
lion of net losses, recognised in equity at the end of
the reporting period, will be reclassified to the income
statement in the new financial year (2015: net losses
of €623 million).
249
The BMW Group did not hold any derivative financial
instruments at 31 December 2016, which had been
designated at cash flow hedges to hedge against
interest-rate risks.
Fair value hedges
The following table shows gains and losses on hedging
instruments and hedged items which are deemed to
be part of a fair value hedge relationship:
167
Fair value gains and losses recognised on derivatives
and recorded initially in accumulated other equity
are reclassified to cost of sales when the derivatives
mature.
An amount of €2 million (2015: €8 million) attributable
to forecasting errors (and the resulting over-hedging
of currency exposures) was recognised as a loss in
"Financial Result" in the year under report. Losses
attributable to the ineffective portion of cash flow
hedges amounting to €11 million were recognised in
“Financial Result" (2015: gains of €9 million). As in
the previous year, no gains or losses were recognised
in "Financial Result" in 2016 in connection with
forecasting errors relating to cash flow hedges for
commodities. Gains attributable to the ineffective
portion of cash flow hedges amounting to €17 million
were recognised in "Financial Result" (2015: losses of
€13 million).
At 31 December 2016, the BMW Group held deriva-
tive financial instruments (mainly forward currency
contracts) in order to hedge currency risks attached
to future or existing transactions/items. These deriv-
ative instruments are intended to hedge forecast sales
in € million
31.12.2016 31.12.2015
Gains/losses on hedging instruments
designated as part of a fair value hedge
relationship
-158
At 31 December 2016, the BMW Group held deriva-
tive financial instruments (mostly commodity swaps)
with terms of up to 58 months (2015: 58 months) to
hedge raw materials price risks. The income statement
impact of the hedged cash flows will be recognised
as a general rule in the same periods in which the
derivative instruments mature. It is expected that
€94 million of net losses, recognised in equity at the
end of the reporting period, will be reclassified to the
income statement in the new financial year (2015: net
losses of €127 million).
570
31.12.2015
Euro/Japanese Yen
A description of the management of this risk is pro-
vided in the Combined Management Report. The
BMW Group measures currency risk using a cash-
flow-at-risk model.
At 31 December 2016, derivative financial instruments,
mostly in the form of forward currency contracts, were
in place.
As an enterprise with worldwide operations, business
is conducted in a variety of currencies, from which
currency risks arise. Since a significant portion of
Group revenues is generated outside the euro currency
region and the procurement of production materials
and funding is also organised on a worldwide basis,
the currency risk is an extremely important factor for
Group earnings.
Currency risks
Further information is provided in the "Report on
Outlook, Risks and Opportunities" section of the
Combined Management Report.
The
scope of permitted transactions, responsibilities,
financial reporting procedures and control mecha-
nisms used for financial instruments are set out in
detailed internal guidelines. This includes, above
all, a clear separation of duties between trading and
processing. Currency, interest rate and raw materi-
als price risks of the BMW Group are managed at a
corporate level.
Protection against such risks is provided in the first
instance through natural hedging which arises when
the values of non-derivative financial instruments
have matching maturities and amounts (netting).
Derivative financial instruments are used to reduce
the risk remaining after netting. Financial instruments
are only used to hedge underlying positions or forecast
transactions.
The principal market risks to which the BMW Group
is exposed are currency risk, interest rate risk and raw
materials price risk.
Market risks
BMW Group
Notes to the Group
Financial Statements
→ Other Disclosures
Group
Financial
Statements
170
169
Also reducing liquidity risk, additional secured and
unsecured lines of credit are in place with internation-
al banks, including a syndicated credit line totalling
€6 billion (2015: €6 billion). Intra-group cash flow
fluctuations are evened out by the use of daily cash
pooling arrangements.
These refinancing activities are underpinned by the
longstanding long- and short-term ratings issued by
Moody's and Standard & Poor's.
BMW Group issues commercial paper on the money
markets, corporate bonds and asset-backed financial
securities in various currencies. Customer deposits
at the Group's in-house banks are also used as a
supplementary source of financing.
Solvency is assured at all times by managing and mon-
itoring the liquidity situation on the basis of a rolling
cash flow forecast. The resulting funding requirements
are secured by a variety of instruments placed on the
world's financial markets. The objective is to minimise
risk by matching maturities for the Group's financing
requirements within the framework of the target debt
structure. The BMW Group has good access to capital
markets as a result of its solid financial position and
a diversified refinancing strategy. Depending on
financing requirements and market conditions, the
The cash flows shown comprise principal repayments
and the related interest. The amounts disclosed for
derivatives comprise only cash flows relating to
derivatives that have a negative fair value at the bal-
ance sheet date. At 31 December 2016, irrevocable
credit commitments to dealerships which had not
been called upon at the end of the reporting period
amounted to €9,194 million (2015: 7,552 million).
104,067
8,512
44,375
The starting point for analysing currency risk with
this model is the identification of forecast foreign
currency transactions or "exposures". At the end of
the reporting period, the principal exposures for the
relevant coming year were as follows:
in € million
Euro/US Dollar
31.12.2016
Euro/Korean Won
Euro/British Pound
Euro/US Dollar
Euro/Chinese Renminbi
in € million
The following table shows the potential negative
impact for the BMW Group - measured on the basis
of the cash-flow-at-risk approach - attributable to
unfavourable changes in exchange rates. The impact
for the principal currencies, in each case for the fol-
lowing financial year, is as follows:
The potential negative impact on earnings is computed
for each currency for the following financial year on
the basis of current market prices and exposures to a
confidence level of 95% and a holding period of up to
one year. Correlations between the various currencies
are taken into account when the risks are aggregated,
thus reducing the overall risk.
Euro/Japanese Yen
Euro/Korean Won
Euro/British Pound
31.12.2016
1,162
1,985
1,926
5,396
4,785
4,770
3,319
9,973
10,467
Euro/Chinese Renminbi
31.12.2015
1,510
Asset-backed financing transactions
4,550
Liabilities to banks
31.12.2016
31.12.2015
31.12.2016
Loans and receivables
Cash funds
31.12.2015
31.12.2016
31.12.2015
Available for sale
Other assets
Trade receivables
Cash and cash equivalents
534
Other
Loans to third parties
Marketable securities and investment funds
Other derivative instruments
Fair value hedges
Cash flow hedges
Derivative instruments
Financial assets
Receivables from sales financing
Other investments
ASSETS
in € million
The carrying amounts of financial instruments are
assigned to IAS 39 categories and cash funds as fol-
lows:*
Credit card receivables
Financial instruments
402
70,043
1,124
Other
98
100
314
287
Collateral receivables
893
1,217
Receivables from companies in which an investment is held
716
422
78,260
Receivables from subsidiaries
2,825
6,122
7,880
147
145
272
287
133
129
5,161
5,287
100
2,751
37
→ Other Disclosures
Notes to the Group
Financial Statements
31.12.2016
in € million
306
541
Contingent liabilities
213
474
Other
Performance guarantees
Guarantees
The total of future minimum payments under non-
cancellable leases and rental contracts can be analysed
by maturity as follows:
In the financial year 2016, an amount of €432 million
(2015: €315 million) was recognised as expense in
conjunction with operating leases.
31.12.2015
In addition to liabilities, provisions and contingent lia-
bilities, the BMW Group also has other financial com-
mitments, primarily under rental and lease contracts
for land, buildings, plant and machinery, tools, office
and other facilities. These contracts run for periods of
one to 85 years. Some of them contain extension and
purchase options as well as price adjustment clauses,
based on index-linked or graduated rentals, including
adjustments for inflation.
93
67
31.12.2015
31.12.2016
in € million
balance sheet date:
The following contingent liabilities existed at the
Contingent liabilities
commitments
Contingent liabilities and other financial
36
OTHER DISCLOSURES
Other financial obligations
Other contingent liabilities comprise mainly legal
disputes as well as risks relating to taxes and customs
duties.
Regulatory agencies have ordered the BMW Group
to recall various vehicle models that are fitted with
airbags supplied by the Takata group of companies.
Provision for the costs involved has been recognised
within warranty provisions. It cannot be ruled out,
however, that further BMW Group vehicles will be
affected by future recall actions. Further disclosures
pursuant to IAS 37.86 cannot be provided at present
in view of the fact that technical tests have not yet
been completed.
In June 2016, Germany's Federal Cartel Agency con-
ducted searches at various carmakers and suppliers,
including the BMW AG, as part of an investigation
into the purchase of steel in the automotive industry.
The investigations have not yet been completed. More
detailed information is currently not available.
BMW Group
Statements
Group
Financial
162
161
757
1,363
Purchase commitments for
intangible assets
2,217
3,141
Purchase commitments for
property plant and equipment
31.12.2015
31.12.2016
in € million
The following obligations also existed for the
BMW Group at the end of the reporting period:
Other financial obligations
2,190
2,444
816
895
1,003
1,102
due between one and five years
due later than five years
371
447
due within one year
The BMW Group determines its best estimate of
contingent liabilities on the basis of the information
available at the date of preparation of the Group
Financial Statements. This assessment may change
over time and is adjusted regularly on the basis of new
information and circumstances. Some of the risks are
insured. In accordance with IAS 37, the BMW Group
does not disclose information relating to legal disputes
and risks relating to taxes and customs duties, if such
disclosures could be expected to prejudice seriously
the position of the BMW Group or if disclosure is not
practicable. From today's perspective, the BMW Group
does not expect these proceedings to have a significant
adverse impact on the results of operations, financial
position or net assets of the Group.
1,050
Total
Liabilities from customer deposits (banking)
6,436
Receivables from subsidiaries
Other assets
Trade receivables
Cash and cash equivalents
Other
Credit card receivables
Loans to third parties
Marketable securities and investment funds
Other derivative instruments
Fair value hedges
Cash flow hedges
Derivative instruments
Receivables from companies in which an investment is held
Financial assets
Other investments
ASSETS
4,550
3,331
100,174
109,161
5,075
5,535
107
615
86
99
Receivables from sales financing
Collateral receivables
Other
Total
8,167
Bonds
Receivables from sales financing
in € million
The following table shows the fair values and carrying
amounts of financial assets and liabilities that are
measured at cost or amortised cost and whose carrying
amounts differ from their fair value. Based on the
BMW Group
Notes to the Group
Financial Statements
→ Other Disclosures
Group
Financial
Statements
164
163
Total
Other
Payables to other companies in which an investment is held
Payables to subsidiaries
Other liabilities
Trade payables
Other
Other derivative instruments
Fair value hedges
Cash flow hedges
Derivative instruments
Asset backed financing transactions
Commercial paper
Liabilities from customer deposits (banking)
Liabilities to banks
Bonds
Financial liabilities
LIABILITIES
7,773
1,539
fact that maturities of some balance sheet items are
generally short, it is assumed in this case that their
fair value corresponds to the carrying amount.
1,452
Other liabilities
31.12.2016
Fair value option
*The carrying amounts of cash flow and fair value hedges are allocated to the category "Held for trading" for the sake of clarity.
Total
Other
Payables to other companies in which an investment is held
Payables to subsidiaries
Other liabilities
Trade payables
Other
Other derivative instruments
31.12.2015
Fair value hedges
Derivative instruments
Asset backed financing transactions
Commercial paper
Liabilities from customer deposits (banking)
Liabilities to banks
Bonds
Financial liabilities
LIABILITIES
5,661
76,105
84,409
1,249
8,512
Cash flow hedges
31.12.2016
5,921
26
563
26
2,535
1,694
13,631
16,474
5,415
3,852
13,509
13,512
12,720
14,892
40,319
870
3,030
26
26
44,421
Held for trading
31.12.2015
31.12.2016
767
1,758
949
1,006
830
1,194
1,215
3,922
31.12.2015
31.12.2015
31.12.2016
31.12.2015
31.12.2015
31.12.2016
Financial Services
Motorcycles
Automotive
in € million
31.12.2016
Segment assets
10,024
600
557
11,049
Investments accounted for using the equity method
2,546
2,233
Other Entities
2016
2015
8,686
Reconciliation to Group figures
2016
9,411
9,948
Capital expenditure on non-current assets
69
85,536
Group
2,069
1,990
25,681
23,739
7,695
7,836
187
182
2,166
9,606
1,975
441
518
5,699
5,792
114
92
25,105
Depreciation and amortisation on non-current assets
4,702
4,559
75
Result from equity accounted investments
2015
8,195
2016
31.12.2016
31.12.2015
31.12.2016
31.12.2015
31.12.2016
31.12.2015
SEGMENT INFORMATION
BY OPERATING SEGMENT
External revenues
Inter-segment revenues
Total revenues
Segment result
Result from equity accounted investments
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
Group
75,363
92,112
79,936
188,535
2,546
172,174
Segment assets
2,233
Investments accounted for using the equity method
177
178
Group
Financial
86,424
71,709
Reconciliation to Group figures
Other Entities
518
23,901
2
2
94,163
92,175
4
55
-20,017
-19,097
6
7
-20,017
-19,097
94,163
92,175
170
211
-553
-980
9,665
441
9,224
-6,756
-5,672
-6,271
-5,119
24,162
8,112
2015
Segment result
2.0
1,595
Board of Management
37.6
35.9
Fixed remuneration
7.8
7.7
Variable remuneration
29.0
27.1
Share-based remuneration component
0.8
Compensation to members of the
1.1
2.8
2.6
Benefits in conjunction with the
termination of an employment relationship
1.1
Compensation to members of the
Supervisory Board
5.4
5.1
Fixed compensation and attendance fees
2.0
Allocation to pension provisions
2015
2016
in € million
The fair value of the programmes for Board of Man-
agement members and senior heads of department
at the date of grant of the share-based remuneration
components was €1,950,853 (2015: €1,605,147), based
on a total of 21,201 shares (2015: 18,143 shares) of
BMW AG common stock or a corresponding cash-
based settlement measured at the relevant market
share price prevailing on the grant date.
Further details on the remuneration of the Board
of Management are provided in the Compensation
Report for the financial
year 2016.
40
Declaration with respect to the Corporate
Governance Code
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft have
173
174
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ Other Disclosures
→ Segment Information
issued the prescribed Declaration of Compliance pur-
suant to § 161 of the German Stock Corporation Act.
It is reproduced in the Annual Report 2016 of the
BMW Group and is also available to shareholders on
the BMW Group website at www.bmwgroup.com/ir.
41
Shareholdings of members of the Board of
Management and Supervisory Board
The members of the Supervisory Board of BMW AG
hold in total 27.99% (2015: 43.00%) of the issued
common and preferred stock shares, of which 16.25%
(2015: 31.26%) relates to Stefan Quandt, Germany, and
11.73% (2015: 26.74%) to Susanne Klatten, Germany.
The differences compared to the previous year resulted
almost entirely from the fact that the shares held by
Johanna Quandt GmbH & Co. KG für Automobilwerte,
Bad Homburg v.d. Höhe, are no longer attributed to
Stefan Quandt and Susanne Klatten following the
dissolution of the community of heirs. As at the end of
the previous financial year, shareholdings of members
of the BMW AG Board of Management account, in
total, for less than 1% of issued shares.
The total remuneration of former members of the
Board of Management and their dependants amount-
ed to €6.5 million (2015: €8.0 million).
Pension obligations to current members of the Board
of Management are covered by provisions amounting
to €23.6 million (2015: €23.2 million), computed in
accordance with IAS 19 (Employee Benefits). Pen-
sion obligations to former members of the Board of
Management and their surviving dependants, also
computed in accordance with IAS 19, amounted to
€86.4 million (2015: €71.8 million).
The compensation systems for members of the Super-
visory Board do not include any stock options, value
appreciation rights comparable to stock options or any
other stock-based compensation components. Apart
from vehicle lease and financing contracts entered
into on customary market conditions, no advances
or loans were granted to members of the Board of
Management and the Supervisory Board of BMW AG
or its subsidiaries, nor were any contingent liabilities
entered into on their behalf.
Further details about the remuneration of current
members of the Board of Management and the
Supervisory Board can be found in the Compensation
Report, which is part of the Combined Management
Report.
42
Compensation of members of the Board of
Management and Supervisory Board
The total compensation of the current members of the
Board of Management and the Supervisory Board of
BMW AG for the financial year 2016 in accordance
with IFRS amounted to €46.9 million (2015: €43.6 mil-
lion) and comprised the following:
43
Events after the end of the reporting period
No events have occurred since the end of the financial
year which could have a major impact on the results
of operations, financial position and net assets of
BMW AG and the BMW Group.
Statements
Total revenues
Variable compensation
3.1
Automotive
Motorcycles
2016
2015
2016
Financial Services
2015
2016
2015
SEGMENT INFORMATION
BY OPERATING SEGMENT
in € million
External revenues
68,045
2,062
1,984
24,122
22,144
Inter-segment revenues
18,447
17,491
7
6
1,559
67,977
Segment information by operating segment is as
follows:
→ Segment Information
Notes to the Group
Financial Statements
Total expense
46.9
43.6
thereof due within one year
43.3
39.9
SEGMENT INFORMATION
44
Explanatory notes to segment information
Information on reportable segments
For the purposes of presenting segment information,
the activities of the BMW Group are divided into oper-
ating segments in accordance with IFRS 8 (Operating
Segments). Operating segments are identified on the
same basis that is used internally to manage and report
on performance. The allocation also takes account of
the organisational structure of the BMW Group based
on the various products and services of the reportable
segments.
The activities of the BMW Group are broken down
into the operating segments Automotive, Motorcycles,
Financial Services and Other Entities.
The Automotive segment develops, manufactures,
assembles and sells cars and off-road vehicles, under
the brands BMW, MINI and Rolls-Royce as well as
spare parts, accessories and mobility services. BMW
and MINI brand products are sold in Germany
through branches of BMW AG and by independent,
authorised dealerships. Sales outside Germany are
handled primarily by subsidiary companies and
by independent import companies in a number of
markets. Rolls-Royce brand vehicles are sold in the
USA, China and Russia via subsidiary companies and
elsewhere by independent, authorised dealerships.
The Motorcycles segment develops, manufactures,
assembles and sells motorcycles as well as spare parts
and accessories.
The principal lines of business of the Financial Servic-
es segment are car leasing, fleet business, multi-brand
business, retail customer and dealership financing,
customer deposit business and insurance activities.
Holding and Group financing companies are includ-
ed in the Other Entities segment. This segment also
includes operating companies - BMW Services Ltd.,
BMW (UK) Investments Ltd., Bavaria Lloyd Reise-
büro GmbH, and MITEC Mikroelektronik Mikro-
technik Informatik GmbH - which are not allocated
to one of the other segments.
Internal management and reporting
Segment information is prepared as a general rule in
conformity with the accounting policies adopted for
preparing and presenting the Group Financial State-
ments. The only exceptions to this general principle
are the treatment of inter-segment warranties (the
earnings impact of which is allocated to the Automo-
tive and Financial Services segments on the basis used
internally to manage the business) and cross-segment
impairment losses on investments in subsidiaries.
Inter-segment receivables and payables, provisions,
income, expenses and profits are eliminated in the
column "Eliminations". Inter-segment sales take place
at arm's length prices.
The role of "chief operating decision maker" with
respect to resource allocation and performance
assessment of the reportable segment is embodied
in the full Board of Management. In order to assist
the decision-taking process, different measures of
segment performance as well as segment assets have
been set for the operating segments.
The performance of the Financial Services segment is
measured on the basis of return on equity (ROE), with
profit before tax therefore representing the measure
of segment result used. For this reason, the measure
of segment assets in the Financial Services segment
corresponds to net assets, defined as total assets less
total liabilities.
The performance of the Other Entities segment is
assessed on the basis of profit or loss before tax. The
corresponding measure of segment assets used to
manage the Other Entities segment is total assets less
asset-side income tax items and intragroup invest-
ments.
175
176
Group
Financial
Statements
BMW Group
3.4
BMW Group
Notes to the Group
Financial Statements
not subject to interest
Write-downs on inventories to their net realisable
value amounting to €101 million (2015: €486 million)
were recognised by the Automotive segment in the
financial year 2016. The write-down recorded in the
previous year resulted primarily from accidents and
natural disasters.
Alphabet Fuhrparkmanagement GmbH, Munich
Rolls-Royce Motor Cars GmbH, Munich 4, 5, 6
BMW Vermögensverwaltungs GmbH, Munich
BMW Fahrzeugtechnik GmbH, Eisenach 3, 5, 6
BMW Anlagen Verwaltungs GmbH, Munich 3,6
BMW Vertriebszentren Verwaltungs GmbH, Munich
Parkhaus Oberwiesenfeld GmbH, Munich
Bürohaus Petuelring GmbH, Munich
LARGUS Grundstücks-Verwaltungsgesellschaft mbH, Munich
Bavaria Wirtschaftsagentur GmbH, Munich 3, 5, 6
BAVARIA-LLOYD Reisebüro GmbH, Munich
FOREIGN²
Alphabet International GmbH, Munich 4, 5, 6
Equity
Profit/loss
in € million
Capital invest-
ment in %
5,794
.5
100
3,558
100
1,988
100
325
100
in € million
MITEC Mikroelektronik Mikrotechnik Informatik GmbH, Munich 4,6
BMW M GmbH Gesellschaft für individuelle Automobile, Munich 3, 5, 6
BMW Hams Hall Motoren GmbH, Munich 4,5,6
Group
94,163
92,175
63,906
60,096
180
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ List of Investments
at 31 December 2016
LIST OF INVESTMENTS AT
31 DECEMBER 2016
45
List of investments at 31 December 2016
The List of Investments of BMW AG pursuant to § 285
and § 313 HGB is presented below. Figures for equity
and earnings are not disclosed if they are of "minor ¬
significance" for the results of operations, financial
position and net assets of BMW AG pursuant to § 286
(3) sentence 1 no. 1 HGB or if financial statements
for a company are not yet available. It is also shown
in the list which subsidiaries apply the exemptions
available in § 264 (3) and § 264 b HGB with regard
to the publication of annual financial statements
and the drawing up of a management report and/or
notes to the financial statements (footnotes 5 and 6).
The Group Financial Statements of BMW AG serve
as exempting consolidated financial statements for
these companies.
BMW AG's subsidiary at 31 December 2016
→ 61
Companies
DOMESTIC¹
BMW Beteiligungs GmbH & Co. KG, Munich6
BMW INTEC Beteiligungs GmbH, Munich 3,6
BMW Bank GmbH, Munich³
BMW Finanz Verwaltungs GmbH, Munich
BMW Verwaltungs GmbH, Munich 3, 6
153
-6,183
100
100
BMW Malta Finance Ltd., Floriana
1,366
48
100
BMW Motoren GmbH, Steyr
948
179
100
BMW Financial Services (GB) Ltd., Farnborough
881
282
100
100
775
14
100
BMW (UK) Holdings Ltd., Farnborough
749
460
100
BMW (UK) Manufacturing Ltd., Farnborough
723
136
100
BMW España Finance S. L., Madrid
73
1,541
BMW Malta Ltd., Floriana
100
100
100
100
100
100
100
100
100
100
100
100
51
Europe 13
BMW Holding B.V., The Hague
BMW International Holding B.V., Rijswijk11
14,696
1,180
100
7,898
100
BMW Österreich Holding GmbH, Steyr
2,502
267
100
100
→ Segment Information
-7,345
121
23,901
Reconciliation of depreciation and
amortisation on non-current assets
Total for reportable segments
Elimination of inter-segment items
Total Group depreciation and
amortisation on non-current assets
14,383
13,314
-6,271
-5,119
8,112
8,195
in € million
Reconciliation of segment assets
Total for reportable segments
Non-operating assets -
Other Entities segment
24,162
31.12.2016
96,423
92,238
7,432
7,132
Total liabilities -
Financial Services segment
126,679
112,081
Non-operating assets -
Automotive and Motorcycles segments
45,923
31.12.2015
on non-current assets
Total Group capital expenditure
-5,672
Impairment losses and fair value changes on oth-
er investments amounting to €174 million (2015:
€17 million) relating to the Automotive segment and
recognised in the financial result are not included in
the segment result.
Financial Services segment result was negatively
impacted by impairment losses totalling €384 million
(2015: €406 million) recognised on leased products.
Income from the reversal of impairment losses on
leased products amounted to €211 million (2015:
€81 million). No impairment losses were recognised
on other financial assets in the year under report
(2015: €3 million).
The Other Entities' segment result includes interest
and similar income amounting to €1,250 million (2015:
€1,177 million) and interest and similar expenses
amounting to €1,006 million (2015: €1,080 million)
as well as impairment losses on other investments
totalling €18 million (2015: €7 million).
The information disclosed for capital expenditure and
depreciation and amortisation relates to non-current
property, plant and equipment, intangible assets and
leased products.
Segment figures can be reconciled to the correspond-
ing Group figures as follows:
in € million
on non-current assets
2016
2015
Reconciliation of segment result
Total for reportable segments
Financial result of Automotive
segment and Motorcycles segment
Elimination of inter-segment items
10,218
10,204
219
-316
-772
-664
Group profit before tax
9,665
9,224
Reconciliation of capital expenditure
Total for reportable segments
30,918
29,573
Elimination of inter-segment items
-6,756
41,932
Eliminations
Liabilities of Automotive
The total expense recognised in 2016 for the share-
based remuneration component of current and former
Board of Management members and senior heads of
department was €1,443,227 (2015: €1,892,994).
USA
16,000
18,155
23,249
21,000
Rest of Europe
30,544
28,617
13,910
13,099
Rest of Asia
23
10,466
1,439
1,197
Rest of the Americas
3,507
3,361
2,628
2,053
Other regions
3,251
3,210
261
9,582
23
15,856
16,619
33,858
31,817
Elimination of inter-segment items
-121,780
-113,026
Total Group assets
188,535
172,174
In the case of information by geographical region,
external sales are based on the location of the custom-
er's registered office. Revenues with major customers
were not material overall. The information disclosed
for non-current assets relates to property, plant and
equipment, intangible assets and leased products.
Eliminations disclosed for non-current assets relate
to leased products.
179
Information by region
in € million
External revenues
2016
Non-current assets
2015
2016
2015
Germany
13,776
13,394
29,741
28,786
China
and Motorcycles segments
The total carrying amount of the provision for the
share-based remuneration component of current
and former Board of Management members and
senior heads of department at 31 December 2016 was
€5,473,219 (2015: €4,989,668).
23,689
The share-based remuneration component is measured
at its fair value at each balance sheet date between
grant and settlement date, and on the settlement date
itself. The appropriate amounts are recognised as per-
sonnel expense on a straight-line basis over the vesting
period and reported in the balance sheet as a provision.
Statements
Group
Financial
cial year was as follows:
The risk at each reporting date for the following finan-
172
The potential negative impact on earnings is computed
for each raw materials category for the following finan-
cial year on the basis of current market prices and
exposure to a confidence level of 95% and a holding
period of up to one year. Correlations between the
various categories of raw materials are taken into
account when the risks are aggregated, thus reducing
the overall risk.
In the next stage, these exposures are compared to all
hedges that are in place. The net cash flow surplus
represents an uncovered risk position. The cash-
flow-at-risk approach involves allocating the impact
of potential fluctuations in raw materials prices to
operating cash flows on the basis of probability dis-
tributions. Volatilities and correlations serve as input
factors to assess the relevant probability distributions.
3,720
3,150
31.12.2015
31.12.2016
Raw materials price exposures
in € million
The first step in the analysis of the raw materials price
risk is to determine the volume of planned purchases
of raw materials (and components containing those
raw materials). These amounts, which represent the
gross exposure, were as follows at each reporting date
for the following financial year:
The BMW Group is exposed to the risk of price fluc-
tuations for raw materials. A description of the man-
agement of these risks is provided in the Combined
Management Report.
Raw materials price risk
As stated there, the BMW Group applies a Group-wide
value-at-risk approach for internal reporting purpos-
es and to manage interest rate risks. This is based
on a state-of-the-art historical simulation, in which
the potential future fair value losses of the interest
rate portfolios are compared across the Group, with
expected amounts measured on the basis of a holding
period of 250 days and a confidence level of 99.98%.
Aggregation of these results creates a risk reduction
effect due to correlations between the various port-
folios.
BMW Group
Notes to the Group
Financial Statements
→ Other Disclosures
The following table shows the potential negative
impact for the BMW Group - measured on the basis
of the cash-flow-at-risk approach - attributable to fluc-
tuations in prices across all categories of raw materials. ¬
in € million
Receivables
at 31 December
2016
2015
received
Supplies and services
A significant proportion of the BMW Group's transac-
tions with related parties relates to the joint venture
BMW Brilliance Automotive Ltd. and the associated
company THERE Holding B. V.
155
135
Interest rate risks can be managed by the use of inter-
est rate derivatives. The interest rate contracts used
for hedging purposes comprise mainly swaps, which,
if hedge accounting is applied, are accounted for as
fair value hedges. A description of the management
of interest rate risks is provided in the Combined
Management Report.
31.12.2015
Cash flow at risk
7
2016
Supplies and services
performed
in € million
Transactions of Group entities with related parties
arise, without exception, in the normal course of the
business of each of the parties concerned and are
conducted on the basis of arm's length principles.
Related party relationship
38
31.12.2016
536
571
1,006
449
545
475
532
31.12.2015
31.12.2016
* Previous year's figures adjusted.
Chinese Renminbi
Japanese Yen
244
British Pound
Euro*
in € million
In the following table the potential volumes of fair
value fluctuations - measured on the basis of the val-
ue-at-risk approach - are compared with the expected
value for the interest-rate-sensitive exposures of the
BMW Group:
The fair values of the Group's interest rate portfolios
for the five main currencies were as follows at the end
of the reporting period:
Interest rate risks arise when funds with differing
fixed-rate periods or differing terms are borrowed and
invested. All items subject to, or bearing, interest are
exposed to interest rate risk. Interest rate risks can
affect either side of the balance sheet.
The BMW Group's financial management system
involves the use of standard financial instruments
such as short-term deposits, investments in variable
and fixed-income securities as well as securities funds.
The BMW Group is therefore exposed to risks resulting
from changes in interest rates.
Interest rate risks
The cash-settlement obligation for the share-based
remuneration component is measured at its fair
value at the balance sheet date (based on the closing
price of BMW AG common stock in Xetra trading at
31 December 2016).
US Dollar
Payables
186
33
3,124
4,220
5,708
10,742
14,340
25,772
28,063
31.12.2016 31.12.2015
16
*Previous year's figures adjusted.
Chinese Renminbi
British Pound
US Dollar
Euro*
in € million
171
12
14
Japanese Yen
at 31 December
The performance of the Automotive and Motorcycles
segments is managed on the basis of return on capital
employed (ROCE). The relevant measure of segment
results used is therefore profit before financial result.
Capital employed is the corresponding measure of
segment assets used to determine how to allocate
resources and comprises all current and non-current
operational assets after deduction of liabilities used
operationally which are not subject to interest (e.g.
trade payables).
2016
324
458
2,764
2,690
ALTANA AG
7
1
3
287
309
SOLARWATT GmbH
2,476
1,331
37
64
22,818
22,554
337
312
50
UnternehmerTUM GmbH
2015
With effect from the financial year 2012, qualifying
heads of department are also entitled to opt for a
share-based remuneration component, which, in most
respects, is comparable to the share-based remunera-
tion arrangements for Board of Management members.
Each Board of Management member is required to
invest 20% of his/her total bonus (after tax) in shares of
BMW AG common stock, which are recorded in a sep-
arate custodian account for each member concerned
(annual tranche). Each annual tranche is subject to a
For financial years beginning after 1 January 2011,
BMW AG has added a share-based remuneration
component to the existing compensation system for
Board of Management members.
In the case of the Employee Share Programme,
non-voting shares of preferred stock in BMW AG were
granted to qualifying employees during the financial
year 2016 at favourable conditions (see → note 29 for → see
the number and price of issued shares). The holding
period for these shares is up to 31 December 2019. In
the financial year 2016, the BMW Group recorded a
personnel expense of €7 million (2015: €6 million) for
the Employee Share Programme, corresponding to the
difference between the market price and the reduced
price of the shares of preferred stock purchased by
employees. The Board of Management reserves the
right to decide anew each year with respect to an
Employee Share Programme.
note 29
note 42
Three share-based remuneration programmes are in
place within the BMW Group, namely the Employee
Share Programme (for entitled employees of the
BMW Group), a share-based remuneration programme
for members of the Board of Management and a share-
based remuneration programme for senior heads of
department of BMW AG.
3,617
Share-based remuneration
For disclosures relating to key management personnel,
please see → note 42 and the Compensation Report. see
BMW Trust e. V., Munich, administers assets on a
trustee basis to secure obligations relating to pensions
and pre-retirement part-time working arrangements
in Germany and is therefore a related party of the
BMW Group in accordance with IAS 24. This entity,
which is a registered association (eingetragener Vere-
in) under German law, does not have any assets of its
own. It did not have any income or expenses during
the period under report. BMW AG bears expenses on
an immaterial scale and performs services for BMW
Trust e. V., Munich.
Apart from vehicle leasing and credit financing con-
tracts concluded on an arm's length basis, companies
of the BMW Group have not entered into any contracts
with members of the Board of Management or Super-
visory Board of BMW AG. The same applies to close
members of the families of those persons.
276
585
769
1,227
29
39
3,546
holding period of four years. Once the holding period
is fulfilled, BMW AG grants one additional share of
BMW AG common stock for each three held or pays
the equivalent amount in cash (share-based remuner-
ation component). Special rules apply in the case of
death or invalidity of a Board of Management member
or early termination of the contractual relationship
before fulfilment of the holding period.
2015
Business relationships of the BMW Group with other
associated companies and joint ventures as well as
with non-consolidated subsidiaries are small in scale.
3
9
7
58
107
892
1,215
2015
43
50
4,815
5,316
BMW Brilliance Automotive Ltd.
THERE Holding B.V.
2015
2016
DELTON AG
Stefan Quandt, Germany, is a shareholder and Deputy
Chairman of the Supervisory Board of BMW AG. He is
also the sole shareholder and Chairman of the Super-
visory Board of DELTON AG, Bad Homburg v.d.H.,
which, via its subsidiaries, performed logistic-related
services for the BMW Group during the financial year
2016. In addition, companies of the DELTON Group
acquired vehicles from the BMW Group by way of
leasing.
Stefan Quandt, Germany, is also the indirect majority
shareholder of SOLARWATT GmbH, Dresden. Coop-
eration arrangements are in place between BMW AG
and SOLARWATT GmbH, Dresden, within the field
of electric mobility. The focus of this collaboration
is on providing complete photovoltaic solutions for
rooftop systems and carports to BMWi customers.
SOLARWATT GmbH, Dresden, leased vehicles from
the BMW Group in 2016.
615
Susanne Klatten, Germany, is a shareholder and
member of the Supervisory Board of BMW AG and
also a shareholder and Deputy Chairman of the Super-
visory Board of ALTANA AG, Wesel. ALTANA AG,
Wesel, acquired vehicles from the BMW Group during
the financial year 2016, mostly in the form of lease
2016
7
2016
2015
at 31 December
at 31 December
Payables
Receivables
2016
2015
received
contracts.
Supplies and services
2016
Supplies and services
performed
in € thousand
Seen from the BMW Group's perspective, the transac-
tions of BMW Group companies with the above-men-
tioned entities were as follows:
Susanne Klatten, Germany, is also the sole share-
holder and Chairwoman of the Supervisory Board
of UnternehmerTUM GmbH, Garching. During
the financial year 2016, the BMW Group bought in
services from UnternehmerTUM GmbH, Garching,
primarily in the form of consultancy and workshop
services.
2015
100
100
Africa
BMW Automobile Distributors (Pty) Ltd., Midrand
BPF Midrand Property Holdings (Pty) Ltd., Midrand
Multisource Properties (Pty) Ltd., Midrand
100
100
100
BMW Financial Services Singapore Pte Ltd., Singapore
BMW Finance (United Arab Emirates) Ltd., Dubai
BMW Financial Services Hong Kong Limited, Hong Kong
BMW India Leasing Pvt. Ltd., Gurgaon
BMW Insurance Services Korea Co. Ltd., Seoul
BMW Philippines Corp., Manila
Herald International Financial Leasing Co., Ltd., Tianjin
THEPSATRI Co., Ltd., Bangkok⁹
100
100
Asia
100
100
100
60
100
100
100
100
90
The Americas
217-07 Northern Boulevard Corporation, Wilmington, Delaware
100
BMW Experience Centre Inc., Richmond Hill, Ontario
BMW Leasing de Argentina S.A., Buenos Aires
BMW Operations Corp., Wilmington, Delaware
BMW Technology Corporation, Wilmington, Delaware
Designworks/USA, Inc., Newbury Park, California
MINI Business Innovation, LLC, Wilmington, Delaware
Reach Now, LLC, Wilmington, Delaware
Toluca Planta de Automoviles, S.A. de C.V., Mexico City
100
100
100
100
BMW i Ventures, LLC, Wilmington, Delaware
100
DriveNow Verwaltungs GmbH, Munich
100
-2
50
50
FOREIGN
BMW Brilliance Automotive Ltd., Shenyang
Associated companies - equity accounted
FOREIGN
THERE Holding B.V., Amsterdam³
Joint operations - proportionately-consolidated entities
DOMESTIC
SGL Automotive Carbon Fibers GmbH & Co. KG, Munich
SGL Automotive Carbon Fibers Verwaltungs GmbH, Munich³
FOREIGN
SGL Automotive Carbon Fibers, LLC, Dover, Delaware
Not equity accounted or proportionately-consolidated entities
DOMESTIC¹
Encory GmbH, Unterschleißheim
38
85888287
Capital invest-
ment in %
in € million
70
100
49
185
186
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ List of Investments
at 31 December 2016
BMW AG's associated companies, joint ventures and joint operations at 31 December 2016
→ 63
Companies
Joint ventures - equity accounted
DOMESTIC
DriveNow GmbH & Co. KG, Munich³
Equity
Profit/loss
in € million
100
John Cooper Garages Ltd., Farnborough
U.T.E. Alphabet España-Bujarkay, Sevilla
100
100
100
100
100
100
FOREIGN7
Europe
Alphabet Insurance Services Polska Sp. z o.o., Warsaw
BMW (GB) Ltd., Farnborough
BMW (P+A) Ltd., Farnborough
BMW (UK) Pensions Services Ltd., Hams Hall
BMW Car Club Ltd., Farnborough
BMW Drivers Club Ltd., Farnborough
BMW Group Benefit Trust Ltd., Farnborough
BMW i Ventures B.V., 's-Gravenhage
BMW Motorsport Ltd., Farnborough
Capital invest-
ment in %
Cobalt Holdings Ltd., Basingstoke
in € million
in € million
184
BMW AG's non-consolidated companies at 31 December 2016
→ 62
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ List of Investments
at 31 December 2016
Companies
DOMESTIC7
Alphabet Fleetservices GmbH, Munich
Automag GmbH, Munich
Bavaria Betriebs-Gastronomie GmbH, Munich4
BMW Car IT GmbH, Munich4
ParkNow GmbH, Munich
PM Parking Ventures GmbH, Munich
Equity
Profit/loss
100
Cobalt Telephone Technologies Ltd., Basingstoke
Digital Energy Solutions GmbH & Co. KG, Munich
Park-line Holding B.V., 's-Gravenhage
100
Park-Mobile (UK) Limited, Basingstoke
100
Parkmobile Belgium BvBa, Antwerpen
100
Parkmobile Benelux B.V., Amsterdam
100
Parkmobile France SAS, Versailles
100
Parkmobile Group BV, Amsterdam
Parkmobile Group Holding BV, Amsterdam
Parkmobile Hellas SA, Athens
Parkmobile Licenses B.V., Amsterdam
Parkmobile Limited, Basingstoke
Parkmobile Software BV, Amsterdam
Parkmobile Suisse SA, Bulle
100
Content4all BV, Amsterdam
Park-line B.V., 's-Gravenhage
Park-line Aqua B.V., 's-Gravenhage
100
100
100
100
100
100
100
100
100
100
100
100
100
John Cooper Works Ltd., Farnborough
100
000 BMW Leasing, Moscow
100
100
The Retail Performance Company GmbH, Munich
Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern
PDB-Partnership for Dummy Technology and Biomechanics GbR, Gaimersheim
8 The amounts shown for entities accounted for using the equity method and for proportionately consolidated entities correspond to the annual financial statements drawn up in accordance with uniform IFRS
rules. Equity not denominated in euro is translated into euro using the closing exchange rate at the balance sheet date, earnings are translated using the average rate.
⁹ Including power to appoint representative bodies.
10 Significant influence.
¹¹Exemption pursuant to Article 2:403 of the Civil Code of the Netherlands applied.
12 First-time consolidation.
13 First-time consolidation in the financial year 2016: BMW Leasing (GB) Ltd., Farnborough.
187
188
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ List of Investments
at 31 December 2016
Munich, 14 February 2017
Bayerische Motoren Werke
Aktiengesellschaft
7 These entities are neither consolidated nor accounted for using the equity method due to their overall immateriality for the Group Financial Statements.
The Board of Management
6 Exemption from publication of financial statements applied in accordance with § 264 (3) and § 264 b HGB.
4 Profit and Loss Transfer Agreement with a subsidiary of BMW AG.
10.6
1.1
3.6
0.3
3.3
1.1
16.9
18.6
9.1
11.8
1.7
0.9
2.7
2.6
1.2
2 The amounts shown for the foreign subsidiaries correspond to the annual financial statements drawn up in accordance with uniform IFRS rules. Equity and earnings not denominated in euro are translated into
euro using the closing exchange rate at the balance sheet date.
3 Profit and Loss Transfer Agreement with BMW AG.
Exemption from drawing up a management report applied in accordance with § 264 (3) and § 264 b HGB.
Harald Krüger
Milagros Caiña Carreiro-Andree Markus Duesmann
Klaus Fröhlich
Corporate
Governance
Company's Govern-
ing Constitution
Board of
Management
Supervisory Board
Compliance
Compensation
Report
190
Statement on
Corporate
Governance
→Information on the
Company's
Governing
Constitution
STATEMENT ON
CORPORATE
GOVERNANCE
Good corporate governance - acting in accordance
with the principles of responsible management aimed
at increasing the value of the business on a sustainable
basis - is an essential requirement for the BMW Group
embracing all areas of the business. Corporate culture
within the BMW Group is founded on transparent
reporting and communication, corporate governance
in the interest of all stakeholders, fair and open coop-
eration between the Board of Management and the
Supervisory Board as well as among employees, and
compliance with existing laws. The Board of Manage-
ment and Supervisory Board report in this statement
on important aspects of corporate governance pursuant
to §§ 289, 315 (5) HGB and section 3.10 of the German
Corporate Governance Code (GCGC).
Information on the Company's
Governing Constitution
The designation "BMW Group" comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and
its group entities. BMW AG is a stock corporation
(Aktiengesellschaft) based on the German Stock
Corporation Act (Aktiengesetz) and has its registered
office in Munich, Germany. It has three representative
bodies: the Annual General Meeting, the Superviso-
ry Board and the Board of Management. The duties
and authorities of those bodies derive from the Stock
Corporation Act and the Articles of Incorporation of
BMW AG. Shareholders, as the owners of the business,
exercise their rights at the Annual General Meeting.
The Annual General Meeting decides in particular on
the utilisation of unappropriated profit, the ratification
of the acts of the members of the Board of Management
and the Supervisory Board, the appointment of the
external auditor, changes to the Articles of Incorpo-
ration and specified capital measures, and elects the
shareholders' representatives to the Supervisory Board.
The Board of Management manages the enterprise
under its own responsibility. Within this framework,
it is monitored and advised by the Supervisory Board.
The Supervisory Board appoints the members of the
Board of Management and can, at any time, revoke
an appointment for important reasons. The Board of
Management keeps the Supervisory Board informed of
all significant matters regularly, promptly and compre-
hensively, following the principles of conscientious and
faithful accountability and in accordance with prevail-
ing law and the reporting duties allocated to it by the
Supervisory Board. The Board of Management requires
the approval of the Supervisory Board for certain major
transactions. The Supervisory Board is not, however,
authorised to undertake management measures itself.
4
4
→Page 224 BMW Group Auditor's Report
→ Page 223 Responsibility Statement by the Company's
Legal Representatives
Dr. Nicolas Peter
Dr. Ian Robertson (HonDSc)
Peter Schwarzenbauer
Oliver Zipse
CORPORATE
GOVERNANCE
→ Page 190 Statement on Corporate Governance (§289a HGB)
(Part of the Combined Management Report)
→ Page 190 Information on the Company's Governing Constitution
→Page 191 Declaration of the Board of Management and
of the Supervisory Board pursuant to § 161 AktG
Members of the Board of Management
→ Page 192
→ Page 193
6.7
→ Page 196
Composition and Work Procedures of the Board of Management
of BMW AG and its Committees
→ Page 198 Composition and Work Procedures of the Supervisory Board
of BMW AG and its Committees
→ Page 204
→ Page 205
Disclosures pursuant to the Act on Equal Gender Participation
Information on Corporate Governance
Practices Applied beyond Mandatory Requirements
→Page 207 Compliance in the BMW Group
→Page 212 Compensation Report
Members of the Supervisory Board
12.0
1.5
1 The amounts shown for the German subsidiaries correspond to the annual financial statements drawn up in accordance with German accounting requirements (HGB).
50
50
25
20
40
40
50
30
25
18
46
20
BMW AG's participations at 31 December 2016
→ 64
Companies
DOMESTIC
183
50
49
2
44
FOREIGN¹
BMW Albatha Leasing LLC, Dubai
BMW Albatha Finance PSC, Dubai
BMW AVTOTOR Holding B.V., Amsterdam
Stadspasparkeren B.V., Deurne
IP Mobile N.V., Brussels
Parkmobile International Holding BV, Utrecht 10
Mini Urban X Accelerator SPV, LLC, Wilmington, Delaware
GSB Sonderabfall-Entsorgung Bayern GmbH, Baar-Ebenhausen
Bavarian & Co. Ltd., Incheon
1,061
50
2,003
33
43
10
49
49
4,678
Abgaszentrum der Automobilindustrie GbR, Weissach
Hubject GmbH, Berlin
Joblinge gemeinnützige AG Berlin, Berlin
Gios Holding B.V., Oss
JustPark Parking Limited, London
Parkopedia Ltd., Birmingham
Carbon, Inc., Wilmington, Delaware
ChargePoint, Inc., Wilmington, Delaware
Desktop Metal, Inc., Wilmington, Delaware
Life360, Inc., Dover, Delaware
Nauto, Inc., Dover, Delaware
Rever Moto, Inc., Wilmington, Delaware
RideCell, Inc., Wilmington, Delaware
Scoop Technologies, Inc., Wilmington, Delaware
Srividya Tech, Inc., Wilmington, Delaware
striVB Labs., Inc., Camden, Delaware
Turo, Inc., Dover, Delaware
Zendrive, Inc., Dover, Delaware
ZIRX Technologies, Inc., Dover, Delaware
Moovit App Global Ltd., St. Ness Ziona
Chargemaster Plc., Luton
FOREIGN7
18.3
9.1
Joblinge gemeinnützige AG Leipzig, Leipzig
Joblinge gemeinnützige AG München, Munich
RA Rohstoffallianz GmbH i.L., Berlin
Racer Benchmark Group GmbH, Landsberg am Lech
SGL Carbon SE, Wiesbaden
Equity
in € million
Profit/loss
IVM Industrie-Verband Motorrad GmbH & Co. Dienstleistungs KG, Essen
in € million
4.6
3.1
16.7
18.9
9.8
16.7
6.2
10.5
Capital invest-
ment in %
100
100
100
Statements
BMW Group
Notes to the Group
Financial Statements
→ List of Investments
at 31 December 2016
BMW Den Haag B.V., The Hague
Oy BMW Suomi AB, Helsinki
BMW Madrid S.L., Madrid
BMW Milano S.r.I., San Donato Milanese
Alphabet Luxembourg S.A., Leudelange
Société Nouvelle WATT Automobiles SARL, Rueil-Malmaison
BMW (UK) Investments Ltd., Farnborough
BMW (UK) Capital plc, Farnborough
Riley Motors Ltd., Farnborough
BMW Central Pension Trustees Ltd., Farnborough
Triumph Motor Company Ltd., Farnborough
BLMC Ltd., Farnborough
100
Group
Financial
100
182
100
BMW Services Belgium N.V., Bornem
BMW Roma S.r.l., Rome
BMW Financial Services Polska Sp. z o.o., Warsaw 12
BMW Distribution S.A.S., Montigny-le-Bretonneux
BMW Danmark A/S, Copenhagen
BMW Nederland B.V., Rijswijk
100
100
100
100
100
100
100
100
100
100
100
100
Park Lane Ltd., Farnborough
100
100
1,007
-49
100
BMW of North America, LLC, Wilmington, Delaware
558
353
100
BMW US Capital, LLC, Wilmington, Delaware
BMW Financial Services NA, LLC, Wilmington, Delaware
BMW SLP, S.A. de C.V., Villa de Reyes 12
BMW do Brasil Ltda., São Paulo
BMW Financeira S.A. Credito, Financiamento e Investimento, São Paulo
BMW de Mexico, S.A. de C.V., Mexico D.F.
BMW de Argentina S.A., Buenos Aires
BMW Financial Services de Mexico S.A. de C.V. SOFOM, Mexico City
BMW Manufacturing Indústria de Motos da Amazônia Ltda., Manaus 12
332
Financial Services Vehicle Trust, Wilmington, Delaware
100
100
1,429
100
100
100
100
100
100
100
The Americas
BMW (US) Holding Corp., Wilmington, Delaware
2,339
667
100
BMW Bank of North America, Inc., Salt Lake City, Utah
1,545
148
100
BMW Manufacturing Co., LLC, Wilmington, Delaware
289
BMW Automotive (Ireland) Ltd., Dublin
BMW Renting (Portugal) Lda., Porto Salvo
BMW Amsterdam B.V., Amsterdam
100
Alphabet Belgium Long Term Rental NV, Aartselaar
112
21
100
BMW International Investment B.V., 's-Gravenhage
104
156
100
BMW Austria Bank GmbH, Salzburg
APD Industries plc, Farnborough
BMW Financial Services Belgium S.A./N.V., Bornem
BMW Austria Ges.m.b.H., Salzburg
Alphabet UK Ltd., Glasgow
Bavaria Reinsurance Malta Ltd., Floriana
BMW Vertriebs GmbH, Salzburg
BMW Bank OOO, Moscow
94
BMW Finanzdienstleistungen (Schweiz) AG, Dielsdorf
119
100
The close interaction between Board of Management
and Supervisory Board in the interests of the enterprise
as described above is also known as a "two-tier board
structure".
136
16
Alphabet Nederland B.V., Breda 11
135
59
BMW Finance N.V., The Hague
134
26900
100
100
100
8
100
BMW Austria Leasing GmbH, Salzburg
123
7
BMW Russland Trading 000, Moscow
Swindon Pressings Ltd., Farnborough
BMW Sverige AB, Stockholm
BMW Financial Services (Ireland) DAC, Dublin
100
100
100
100
BMW Retail Nederland B.V., Delft
100
100
100
100
100
BMW Hellas Trade of Cars A.E., Kifissia
BMW Financial Services Denmark A/S, Copenhagen
Alphabet Austria Fuhrparkmanagement GmbH, Salzburg
Alphabet Polska Fleet Management Sp. z o.o., Warsaw
Alphabet Fuhrparkmanagement (Schweiz) AG, Dielsdorf
BMW Portugal Lda., Porto Salvo
Alphabet Italia Fleet Management S.p.A., Rome
100
100
100
100
BMW Norge AS, Fornebu
Alphabet España Fleet Management S.A.U., Madrid
BMW Services Ltd., Farnborough
BMW Financial Services B.V., Rijswijk
Alphabet France Fleet Management S.N.C., Rueil-Malmaison
Alphabet France SAS, Rueil-Malmaison
103
60
59
100
100
100
100
100
100
100
100
100
100
100
315
555
100
100
100
100
100
100
100
100
100
Rolls-Royce Motor Cars Ltd., Farnborough
12
180
BMW Financial Services Scandinavia AB, Sollentuna
100
36
202
ALPHABET (GB) Ltd., Farnborough
74
100
100
51
66
100
320
54
100
310
151
100
196
20
108
83
287
100
100
100
100
100
65
213
BMW (UK) Ltd., Farnborough
BMW Italia S. p.A., San Donato Milanese
BMW Finance S.N.C., Guyancourt
BMW France, Montigny-le-Bretonneux
BMW Coordination Center V.o.F., Bornem
BMW (Schweiz) AG, Dielsdorf
181
-12
100
BMW Australia Ltd., Melbourne
194
20
100
BMW Financial Services New Zealand Ltd., Auckland
100
BMW New Zealand Ltd., Auckland
100
BMW Sydney Pty. Ltd., Sydney
BMW Iberica S.A., Madrid
719
49
49
21
277
BMW Belgium Luxembourg S.A./N.V., Bornem
100
24
302
100
35
100
345
40
364
100
39
374
100
592
100
100
BMW Melbourne Pty. Ltd., Melbourne
160
58
BMW FS Securities LLC, Wilmington, Delaware
BMW FS Funding Corp., Wilmington, Delaware
BMW Manufacturing LP, Woodcliff Lake, New Jersey
BMW FS Receivables Corp, Wilmington, Delaware
BMW Receivables 2 Inc., Richmond Hill, Ontario
BMW Receivables Limited Partnership, Richmond Hill, Ontario
BMW Receivables 1 Inc., Richmond Hill, Ontario
BMW Canada Inc., Richmond Hill, Ontario
100
100
100
100
100
100
100
100
100
100
100
100
BMW Facility Partners, LLC, Wilmington, Delaware
100
BMW Auto Leasing, LLC, Wilmington, Delaware
SB Acquisitions, LLC, Wilmington, Delaware
100
197
-31
100
100
100
100
100
100
100
BMW of Manhattan, Inc., Wilmington, Delaware
BMW Leasing do Brasil, S.A., São Paulo
BMW Insurance Agency, Inc., Wilmington, Delaware
BMW Leasing de Mexico S.A. de C.V., Mexico City
BMW Acquisitions Ltda., São Paulo
Rolls-Royce Motor Cars NA, LLC, Wilmington, Delaware
BMW Consolidation Services Co., LLC, Wilmington, Delaware
BMW Extended Service Corporation, Wilmington, Delaware
100
100
100
BMW Malaysia Sdn Bhd, Kuala Lumpur
BMW Asia Pte. Ltd., Singapore
BMW India Private Ltd., Gurgaon
BMW Leasing (Thailand) Co., Ltd., Bangkok
BMW China Services Ltd., Beijing
PT BMW Indonesia, Jakarta
BMW Asia Technology Centre Sdn Bhd, Kuala Lumpur
BMW Asia Pacific Capital Pte Ltd., Singapore
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Tokyo Corp., Tokyo
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur
107
BMW Holding Malaysia Sdn Bhd, Kuala Lumpur
BMW Osaka Corp., Osaka
Oceania
987
154
BMW Manufacturing (Thailand) Co., Ltd., Rayong
BMW India Financial Services Private Ltd., Gurgaon
BMW (Thailand) Co., Ltd., Bangkok
BMW Korea Co., Ltd., Seoul
100
100
100
Africa
BMW (South Africa) (Pty) Ltd., Pretoria
BMW Financial Services (South Africa) (Pty) Ltd., Midrand
Asia
BMW Automotive Finance (China) Co., Ltd., Beijing
535
682
100
177
5
100
BMW China Automotive Trading Ltd., Beijing
BMW Japan Finance Corp., Chiba
BMW Financial Services Korea Co., Ltd., Seoul
BMW Japan Corp., Tokyo
63
384
394
BMW Australia Finance Ltd., Mulgrave
The Head of Group Internal Audit reported on internal audit matters, including a description
of the significant internal audit findings and the planned areas of focus on the industrial and
financial services sides of the business.
→ Report of the
Supervisory Board
Composition of the Supervisory Board, the Presiding Board
and Supervisory Board Committees
In 2016, the Annual General Meeting re-elected Simone Menne to the Supervisory Board for
a term of five years. Ulrich Kranz resigned his mandate as executive staff representative with
effect from the end of 2016. As elected substitute member, Ralf Hattler became a member of
the Supervisory Board with effect from 1 January 2017. We thank Mr Kranz for the trusting and
constructive working relationship within the Supervisory Board.
The composition of the Presiding Board and the committees of the Supervisory Board remained
unchanged during the financial year 2016. The Corporate Governance Report contains a summary
of the composition of the Supervisory Board and its committees.
Examination of financial statements and the profit distribution proposal
KPMG AG Wirtschaftsprüfungsgesellschaft conducted a review of the abridged Interim Group
Financial Statements and Interim Group Management Report for the six-month period ended
30 June 2016. The results of the review were presented to the Audit Committee by representatives
of KPMG AG Wirtschaftsprüfungsgesellschaft. No issues were identified that might indicate
that the abridged Interim Group Financial Statements and Interim Group Management Report
had not been prepared, in all material respects, in accordance with the applicable provisions.
The Group and Company Financial Statements of Bayerische Motoren Werke Aktiengesellschaft
for the year ended 31 December 2016 and the Combined Management Report
- as author-
ised for issue by the Board of Management on 14 February 2017 – were audited by KPMG AG
Wirtschaftsprüfungsgesellschaft and given an unqualified audit opinion.
-
KPMG AG Wirtschaftsprüfungsgesellschaft is the external auditor for BMW AG and the
BMW Group. The Auditor's Report has been signed with effect from the financial year 2016 by
Christian Sailer, as independent auditor (Wirtschaftsprüfer), and with effect from the financial
year 2014 by Andreas Feege, as independent auditor (Wirtschaftsprüfer), responsible for the
performance of the engagement.
The Financial Statements and the Combined Management Report, the long-form audit reports
of the external auditors and the Board of Management's profit distribution proposal were made
available to all members of the Supervisory Board in a timely manner.
Based on thorough examination by the Audit Committee and the full Supervisory Board, we
concurred with the results of the external audit. In accordance with the conclusion reached after
the examination by the Audit Committee and the full Supervisory Board, no objections were
raised. The Group and Company Financial Statements of Bayerische Motoren Werke Aktien-
gesellschaft for the financial year 2016 prepared by the Board of Management were approved at
the Supervisory Board meeting held on 9 March 2017. The separate financial statements have
therefore been adopted.
We also examined the proposal of the Board of Management to use the unappropriated profit to
pay an increased dividend of €3.50 per share of common stock and €3.52 per share of non-voting
preferred stock. We consider the proposal appropriate and therefore concur with it.
Expression of appreciation by the Supervisory Board
The Supervisory Board wishes to thank the members of the Board of Management and the entire
staff of the BMW Group worldwide for their efforts and hard work, which contributed to the
overall success of the BMW Group in its centenary year.
Pro-actively shaping change
The Group corporate culture, the spirit of innovation, and the passionate commitment of our
workforce provide a strong foundation for taking on the challenges of the future. Building on
this firm base, the BMW Group will continue to play a formative and leading role in shaping
technological change, with the clear aim of emerging on the winning side.
Munich, 9 March 2017
On behalf of the Supervisory Board
Yours
Men
Norbert Reithofer
Chairman of the Supervisory Board
15
16
→ Statement of the
Chairman
of the Board of
14
13
We would like to extend our special thanks to Dr Draeger and Dr Eichiner for their many years
of dedicated work in the interests of the BMW Group, both in highly successful years and during
the challenging period of the global financial and economic crisis. We equally wish to thank
them for their personal contribution to the BMW Group's long-term success.
With effect from 1 January 2017, we appointed Dr Nicolas Peter as member of the Board of
Management. Dr Peter joined BMW AG in 1991 and most recently worked as head of the European
sales region. He took over board responsibility for Finances from Dr Friedrich Eichiner, who
retired from the Board of Management with effect from the end of 2016.
In both the Personnel Committee and the full Supervisory Board, we examined not only the
structure, but also the amounts of compensation paid to the various members of the Board of
Management. In this context, we reviewed trends in business performance and board compen-
sation over a period of several years. We also gave general consideration to the remuneration
paid to executive managers and employees of BMW AG within Germany over the course of time.
A compensation consultant, independent of both the Board of Management and BMW AG, was
called upon to provide expert advice and assist us in our evaluation of DAX-related compensation
studies. We concluded that the level of compensation paid to board members, including their
pension entitlements, is appropriate and in keeping with other DAX-listed companies. The
Supervisory Board therefore resolved not to propose any changes to the system of Board of
Management compensation in 2016. Further information on the amounts of compensation
paid to the members of the Board of Management is provided in the Compensation Report (see
section "Statement on Corporate Governance").
Together with the Board of Management, we undertook an in-depth review of the corporate
governance standards currently in place within the BMW Group as well as the rules set out
in the German Corporate Governance Code. The latest Declaration of Compliance, issued in
December 2016, is included in the Annual Report.
We also discussed with the Board of Management the probable impact of technological changes
on future workforce requirements. We were informed about the range of measures implemented
to incorporate Strategy NUMBER ONE > NEXT in the BMW Group's corporate culture and
brought up to date on activities aimed at attracting young talent. The Board of Management
also provided details of actual and planned additions to the workforce in defined growth areas.
The Board of Management also reported on the latest status of the BMW Group's diversity concept.
The report presented figures for the percentage of female executives in the BMW Group, in par-
ticular the proportions in the two executive management levels below the Board of Management,
the targets set, and the latest status of these two levels.
We again decided upon a target for the proportion of female members on the Board of Manage-
ment, including a time frame for target attainment. As its target for the period from 1 January 2017
to 31 December 2020, we stipulated that the Board of Management should continue to have at
least one female member. We consider it a key aim to increase the proportion of women on the
Board of Management and fully support the Board's endeavours to increase the percentage of
women employed at the highest executive management levels within the BMW Group. Moreover,
we developed a diversity concept for the composition of the Board of Management.
The composition targets for the Supervisory Board, which represent the basis for a diversity
concept, were not changed during the financial year 2016. Compliance with the composition
targets set for 31 December 2016 was determined by way of self-assessment.
No conflicts of interest arose on the part of members of either of the two boards during the
year under report. Significant transactions with Supervisory Board members and other related
parties as defined by IAS 24, including close relatives and intermediary entities, are examined
on a quarterly basis.
The Supervisory Board also assessed the efficiency of its own work with the aim of further
improving its internal procedures and the work of its committees. With this point in mind, I
also conducted individual discussions with the members of the Supervisory Board. The matter
was also considered at a meeting of the full Supervisory Board. Additional topics for report were
identified as part of the overall conclusion reached.
11
12
→ Report of the
Supervisory Board
Each of the five Supervisory Board meetings during the financial year 2016 was attended on
average by over 90% of its members, a fact that can be tied in to the analysis of attendance fees
for individual members disclosed in the Compensation Report. During their term of office in
the period under report, none of the members of the Supervisory Board took part in only half or
less than half of the meetings of the Supervisory Board, the Presiding Board or the committees
to which any given member belongs.
Description of Presiding Board activities and committee work
The Supervisory Board has established a Presiding Board and four committees. The chairpersons
of the various committees reported to the Supervisory Board in depth on any committee meetings
held since the previous meeting of the full Supervisory Board. I brought the representatives
of the shareholders up to date regarding the deliberations of the Nomination Committee. A
detailed description of the duties, composition and work procedures of the various committees
is provided in the Corporate Governance Report.
The Presiding Board convened four times during the year under report. Assuming no other
committee was responsible, the Presiding Board prepared the detailed agenda for the meetings of
the full Supervisory Board, including the careful preparation of topics on the basis of written and
oral reports provided by members of the Board of Management and senior heads of department.
We also stipulated further topics for full Supervisory Board meetings and made suggestions for
reports submitted to the Supervisory Board.
The Audit Committee held four meetings and three telephone conference calls during the financial
year 2016. In the course of those conference calls, together with the Board of Management we
deliberated on the Quarterly Financial Reports prior to their publication. Representatives of the
external auditors were present during the telephone conference call held in conjunction with
the Half-year Financial Report.
The Audit Committee Meeting held in spring 2016 focused primarily on preparing for the
Supervisory Board meeting at which the financial statements were to be examined. Before
recommending to the full Supervisory Board that KPMG AG Wirtschaftsprüfungsgesellschaft
be elected as Company and Group auditor at the Annual General Meeting 2016, we obtained a
Declaration of Independence from KPMG AG Wirtschaftsprüfungsgesellschaft. We also consid-
ered the scope and composition of non-audit services, including tax advisory services provided
by KPMG entities to the BMW Group. There were no indications of conflicts of interest, grounds
for exclusion or lack of independence on the part of the auditor.
The fee proposals for the audit of the year-end Company and Group Financial Statements 2016 and
the review of the Half-year Financial Report were deemed appropriate. Subsequent to the Annual
General Meeting 2016, we therefore appointed KPMG AG Wirtschaftsprüfungsgesellschaft for
the relevant engagements and specified audit focus areas.
As in previous years, the Head of Group Controlling reported during the financial year 2016
on the current risk profile of the BMW Group and provided an overview of the changes made
to the risk management system in view of new internal and external requirements.
The Head of Group Financial Reporting informed us about the internal control system (ICS)
underlying financial reporting and explained measures being taken to develop the system further.
No material ICS weaknesses were identified which would jeopardise the system's effectiveness.
The BMW Group Compliance Committee chairman provided information on the current status of
compliance within the Group as well as changes in the BMW Group Compliance Organisation aimed
at strengthening local compliance management, including the next steps to be taken in this area.
On repeated occasions, the Audit Committee dealt with the new requirements for financial year-
end audits, particularly the rules applying to non-audit-related services provided by the auditor
and the procedure for changing the external auditor. In accordance with statutory requirements,
we approved a list of non-audit-related services that may be provided by the external auditor.
Furthermore, we performed our statutory duties in connection with the mandatory audit of
over-the-counter trading with derivatives pursuant to § 20 of the Securities Trading Act (WpHG).
An external auditor confirmed the effectiveness of the system that BMW AG currently employs
to ensure compliance with regulatory requirements. Furthermore, in the Audit Committee we
concurred with the decision of the Board of Management to raise the Company's share capital
in accordance with § 4 (5) of the Articles of Incorporation (Authorised Capital 2014) by €305,000
and, in conjunction with the Employee Share Programme, to issue a corresponding number
of new non-voting bearer shares of preferred stock, each with a par value of €1, at favourable
conditions to employees.
The Personnel Committee convened five times during the financial year 2016. One of the
principal duties of this committee is to prepare decisions of the full Supervisory Board relating
to the composition of the Board of Management. In specific cases, we also gave our approval for
members of the Board of Management to accept non-BMW Group mandates.
The Nomination Committee convened twice during the financial year 2016. At these meetings, we
deliberated on succession planning for mandates of the shareholders' representatives and, taking
account of the composition targets set, made one recommendation for a proposed nomination
of a candidate for election at the Annual General Meeting 2017.
The statutory Mediation Committee was not required to convene during the financial year 2016.
Composition and organisation of the Board of Management
During the period under report, the composition of the Board of Management changed as part
of the process of amicably agreed succession planning.
With effect from 1 October 2016, the Supervisory Board appointed Markus Duesman as member
of the Board of Management. Mr Duesmann has many years of management experience in the
automobile industry and has been with BMW AG since 2007. Most recently, he was head of
powertrain and the related process chain within the development area. Mr Duesmann took over
board responsibility for the Purchasing and Supplier Network from Dr Klaus Draeger, whose
mandate ended on 30 September 2016.
Management
Harald Krüger
Chairman of the Board of Management
In a first step, the Audit Committee diligently examined and discussed these documents at a
meeting held on 24 February 2017. The Supervisory Board subsequently examined the relevant
drafts of the Board of Management at its meeting on 9 March 2017, after hearing the committee
chairman's report on the meeting of the Audit Committee. In both meetings, the Board of
Management gave a detailed explanation of the financial reports it had prepared. Representatives
of the external auditors attended both meetings, reported on significant findings and answered
any additional questions raised by the members of the Supervisory Board. They confirmed that
the risk management system established by the Board of Management is capable of identifying
developments at an early stage that might impair the Company's going-concern status. They
also confirmed that no material weaknesses in the internal control system and risk management
system were found with regard to the financial reporting process. Similarly, they confirmed that
they had not identified any issues in the course of their audit work that were inconsistent with
the contents of the Declaration of Compliance issued jointly by the two boards.
A new era has begun for your company: in this, the first year of our “Next 100″, we are embarking
on a new age of individual mobility. Everything we do is for our customers. For them, we are
creating a new kind of premium mobility geared entirely towards their individual needs, and
which will continue to thrill and excite them moving ahead.
The BMW Group continues to benefit from its balanced distribution of sales across the world's
three major market regions: Europe, Asia and the Americas. We are making targeted investments
in our production network of 31 sites in 14 countries on five continents to enhance performance
and flexibility.
The desirability of our brands and products is reflected in rankings and awards. The BMW Group
was once again the highest-ranked automobile manufacturer in Fortune Magazine's 2017 "World's
Most Admired Companies" and is the only German company in the top 50. With the "World
Car Award" and "Best Car" for the BMW 7 Series and "Golden Steering Wheel" for the BMW i3,
the BMW Group earned several of the world's top honours in 2016.
Targets met for financial year 2016
We achieved our goals for 2016. We succeeded despite increasing uncertainties in the political
and economic environment and strong competition on the global auto markets.
The BMW Group posted record revenues of over 94.1 billion euros in 2016. Profit before tax also
reached a new high of more than 9.6 billion euros.
EBT rose slightly as forecast - by 4.8 per cent year-on-year. Annual net profit increased by
8.0 per cent to more than 6.9 billion euros. The EBIT margin in the Automotive segment stands
at 8.9 per cent and therefore remains within our target range.
The company is also one of the leading financial services providers in the automotive sector. Our
Financial Services division concluded more than 1.8 million new contracts with retail customers
in 2016. For the first time, the segment Financial Services posted pre-tax earnings of more than
2.1 billion euros and therefore once again made a major contribution to the Group result.
Highly motivated associates are the key to our success
The company employed a total of 124,729 people at the end of 2016. This represents a slight
year-on-year increase of 2.0 per cent. In addition to specialists in alternative drivetrains and
automated driving, we are also recruiting experts for our financial services business and expansion
in mobility services. The BMW Group continues to benefit from its status as a highly attractive
employer, as shown in numerous rankings amongst engineering, IT and business graduates. This
helps us attract the young talent we need to implement digitalisation in all our business segments.
In 2016, we once again invested more than 350 million euros in vocational and professional
training for associates. The BMW Group is also training more than 4,600 young people. This
reflects the company's sense of responsibility towards future generations.
On behalf of the Board of Management, as well as personally, I would like to thank all our
associates worldwide for their dedication during the financial year 2016. I would also like to
thank our business partners and suppliers, as well as the entire retail organisation. You all play
a direct part in our success!
19
19
20
→ Statement of the
Chairman
Dear Shareholders,
2017 model offensive
In the 2017 financial year, we will offer customers more than 20 new BMW, MINI and Rolls-Royce
models. For BMW, a highlight for the current financial year will be the arrival of the most innova-
tive BMW 5 Series of all time. This status has been confirmed by awards such as "Best Connected
Car of the Year". Our 5 Series customers can choose from options ranging from a plug-in hybrid
variant to the M Performance model. Our current MINI line-up is young and striking, with five
models full of character that appeal to different target groups. The new MINI Countryman is
our second spearhead in the fast-growing premium compact segment. Motorcycle fans can also
look forward to new models this year with 14 market launches from BMW Motorrad.
Dear Shareholders,
We firmly believe that the diverse challenges of tomorrow's mobility open up new opportunities
for further growth and technological progress which we will pursue in the interest of our
customers. In doing so, we combine fresh thinking, operational excellence and profitability. For
the past seven years, the EBIT margin in the Automotive segment has been within or above our
target range of eight to ten per cent.
-
In early 2017, the rating agency Moody's upgraded our long-term credit rating to A1 – giving the
BMW Group the best rating of any European automobile manufacturer and the second-highest
worldwide. This financial stability forms the basis for our investments in the future.
It is only right that our shareholders share in our success. In the 101st year of BMW AG, the
Board of Management and Supervisory Board will therefore propose to the Annual General
Meeting the highest dividend in the history of the company for the financial year 2016, with
a total payout of 2.3 billion euros. Associates of BMW AG in Germany will also share in the
company's positive performance through our profit-sharing programme.
I would like to thank all of our shareholders and debt investors. You, dear shareholders and
investors, accompany us as we embark upon a new age of mobility. With our strategy, we have
shown you our roadmap for the future and we are consistently implementing the measures
accordingly. Your commitment is a sign of your appreciation and trust. We will do everything
in our power to ensure that BMW AG remains an attractive investment and a reliable and
future-oriented company that justifies your trust.
Yours
H. 35"
Harald Krüger
Chairman of the Board of Management
Rolls-Royce delivered 4,011 vehicles to customers and reported the second-best year in its
113-year history.
cycles and scooters sold.
of the Board of
Management
New all-time highs for BMW, MINI and BMW Motorrad brands
The BMW brand sold more than two million vehicles for the first time in a single year. Demand
for the X models, the BMW 2 Series and the new BMW 7 Series was particularly strong. The MINI
brand also achieved record sales of 360,233 vehicles; as did BMW Motorrad, with 145,032 motor-
Our Vision Vehicles fascinate people the world over
2016 was our centenary year. And you could see the reports everywhere: "The BMW Group is
not resting on its laurels – it is actively shaping the future." The response of many people when
they saw our BMW, MINI, Rolls-Royce and BMW Motorrad Vision Vehicles for the first time,
was unequivocally enthusiastic: "The BMW Group's Vision Vehicles are unlike anything we've
seen before." I experienced this excitement myself in Munich, Beijing and Los Angeles. With
our Vision Vehicles, we are providing a glimpse of mobility beyond 2030, when autonomous
driving, connectivity, electro-mobility and services will be part of everyday life.
Becoming a tech company for premium mobility and premium services
with Strategy NUMBER ONE > NEXT
With its bold, entrepreneurial spirit and ground-breaking innovations, the BMW Group has
always shaped individual mobility - constantly evolving in the process. Through Strategy
NUMBER ONE, we grew from a manufacturer of premium automobiles to a provider of premium
mobility and mobility services. Strategy NUMBER ONE > NEXT maps out the company's
further evolution towards a tech company for premium mobility and premium services. To
achieve this, we will continue to expand our mobility services: DriveNow, ReachNow, ParkNow
and ChargeNow.
Cooperation for faster technological breakthroughs
Our aspiration to be a technology leader in mobility is firmly anchored in Strategy
NUMBER ONE > NEXT. To achieve this, we need to focus even more on a cooperative spirit.
In the digital age, new players from the IT world are bringing their business model to the
automotive sector - proving once again that individual mobility is an attractive field for
Our acquisition, together with other German manufacturers, of map service HERE was followed
by another important strategic decision in 2016: the BMW Group is joining forces with Intel
and sensor specialist Mobileye to advance highly-automated and autonomous driving.
Autonomous driving opens up new possibilities for customers
Autonomous driving will be a key technology for the future of mobility, opening up totally new
possibilities for our customers. Above all, people will be able to reclaim the time they previously
spent behind the wheel concentrating on the traffic. With all our products and services, we
offer various forms of mobility that generate individual excitement, creative space, are intuitive
to use and, at the same time, fully integrated into our customers' lives. As the vehicle becomes
more familiar with its owner, it offers tailored recommendations to make everyday life easier.
17
18
→ Statement of the
Chairman
of the Board of
Management
Semi-automated driving with the new BMW 7 Series and BMW 5 Series
The transition to fully-autonomous driving, from around 2030, will see responsibility shift from
driver to machine in five stages. We already have around 8.5 million connected vehicles on the
road today. Our customers are already benefitting from state-of-the-art driver assistance systems
in the BMW 7 Series and the new BMW 5 Series. We are directing all our efforts towards the next
technological leap, which will bring highly-automated driving and further future technologies
to the road with the iNext in 2021.
future business.
We are developing and testing highly-automated and autonomous vehicles at our new Research
and Development Centre for Autonomous Driving near Munich. This was also decided as part
of Strategy NUMBER ONE > NEXT.
BMW Group remains the world's leading premium car company in 2016
In its centenary year 2016, the BMW Group continued its successful business development. For
the sixth consecutive year, sales reached a new all-time high. With a solid increase of 5.3 per cent
over the previous year, sales climbed to more than 2.3 million vehicles. The BMW Group therefore
remains the leading car company in the global premium segment.
Campus for highly-automated and autonomous vehicles
We are creating common platforms and architectures for economical industrialisation of com-
bustion engines with Efficient Dynamics technology and electrification across all brands and
model series.
The BMW Group is currently the world's most successful premium provider of plug-in hybrid
vehicles. In 2017, we will release two more models: the BMW 5 Series iPerformance and the
MINI Countryman. These will be followed in 2018 by the BMW i8 Roadster. A year later, we will
launch an all-electric MINI and in 2020, an all-electric BMW X3.
to deliver a further 100,000 electrified vehicles. Our customers can choose between seven
different models.
Between the launch of the BMW i3 in 2013 and 2016, we sold more than 100,000 BMW i models
Our goal: to sell 100,000 electrified vehicles in 2017
and BMW plug-in hybrid models. In 2017, we intend to go one better: this year alone, we aim
Demand will increase with more models and greater range - as shown by the example of our
BMW i3 with its new 94-amp-hour battery. We delivered a total of more than 62,000 BMW i
vehicles and BMW plug-in hybrids to customers in 2016. The BMW i3 is one of the leading electric
vehicles available, while the BMW X5 is the top-selling plug-in hybrid. At our car-sharing service
DriveNow, operated with Sixt SE, BMW i3s already make up 20 per cent of the European fleet.
We see this as a great opportunity to make people, especially young people, excited about
electric driving.
Alongside digitalisation, emission-free mobility is another huge task for our industry. By 2025,
we expect around 15 to 25 per cent of BMW Group sales to be electrified vehicles. To achieve
this, we continue to expand the share of electrified models across all our brands and series.
Firmly on course for sustainable mobility
Later this year, we will begin testing autonomous driving in city centres with a fleet of 40 com-
puter-operated vehicles. Customer safety will naturally be our top priority.
The Board of Management takes its decisions at
meetings generally held on a weekly basis which are
convened, coordinated and headed by the Chairman
of the Board of Management. At the request of the
Chairman, decisions can also be taken outside of
board meetings if none of the board members object
to this procedure. A meeting is quorate if all Board
of Management members are invited to the meeting
in good time. Members unable to attend any meeting
are entitled to vote in writing, by fax or by telephone.
Votes cast by phone must be subsequently confirmed
in writing. Except in urgent cases, matters relating to
a division for which the responsible board member is
not present will only be discussed and decided upon
with that member's consent.
The rules relating to meetings and resolutions taken
by the full Board of Management are also applicable
unanimously. A board meeting may only be held if
more than half of the board members are present.
of Management, the Sustainability Board, the Oper-
ations Committee and the Committee for Executive
Management Matters. At its meetings, the Board
of Management defines the overall framework for
business strategies and the use of resources, takes
decisions regarding the implementation of strategies
and deals with issues of particular importance to the
BMW Group. The full board also takes decisions at a
basic policy level relating to the Group's automobile
product strategies and product projects inasmuch as
these are relevant for all brands. The Board of Man-
agement and its committees may, as required and
depending on the subject matters being discussed,
invite non-voting advisers to participate at meetings.
In the event that the Chairman of the Board of
Management is not present or is unable to attend
a meeting, the member of the board responsible for
Finance will represent him.
Minutes are taken of all meetings and the Board of
Management's resolutions and signed by the Chair-
man. Decisions taken by the Board of Management
are binding for all employees.
Unless stipulated otherwise by law or in BMW AG's
statutes, the Board of Management makes decisions
on the basis of a simple majority of votes cast at meet-
ings. Outside of board meetings, decisions are taken
on the basis of a simple majority of board members.
In the event of a tied vote, the Chairman of the Board
of Management has the casting vote. Any changes
to the board's terms of reference must be passed
for its committees.
The Board's Committee for Executive Management
Matters deals with enterprise-wide issues affecting
executive managers of the BMW Group, either in
A secretariat for Board of Management matters has
been established to assist the Chairman and other
board members with the preparation and follow-up
work connected with board meetings.
At meetings of the Operations Committee (general-
ly held every two weeks), decisions are reached in
connection with automobile product projects, based
on the strategic orientation and decision framework
stipulated at Board of Management meetings. The
Operations Committee comprises the Board of
Management member responsible for Development
(who also chairs the meetings), together with the
board members responsible for the following areas:
Purchasing and Supplier Network; Production; Sales
and Marketing BMW, Sales Channels BMW Group;
and MINI, Motorcycles, Rolls-Royce, Aftersales BMW
Group. If the committee chairman is not present or
unable to attend a meeting, the member of the board
responsible for Production represents him. Resolu-
tions taken at meetings of the Operations Committee
are made online.
The full board usually convenes up to twice a year in
its function as Sustainability Board in order to define
strategy with regard to sustainability and decide upon
measures to implement that strategy. The Head of
Corporate Affairs and the Representative for Sus-
tainability and Environmental Protection participate
in these meetings in an advisory capacity.
their entirety or individually (such as the executive
management structure, potential candidates for exec-
utive management, nominations for or promotions to
senior management positions). This committee has,
on the one hand, an advisory and preparatory role
(e.g. making suggestions for promotions to the two
remuneration groups below board level and preparing
decisions to be taken at board meetings with regard
to human resources principles with the emphasis on
executive management issues) and a decision-taking
function on the other (e.g. deciding on appointments
to senior management positions and promotions to
higher remuneration groups or the wording of human
resources principles decided on by the full board).
The Committee has two members who are entitled to
vote at meetings, namely the Chairman of the Board
of Management (who also chairs the meetings) and
the board member responsible for Human Resources.
The Head of "Human Resources Management and
Services" as well as the Head of "Human Resources
Executive Management" also participate in these
meetings in an advisory function. At the request of
the Chairman, resolutions may also be passed outside
of committee meetings by casting votes in writing,
by fax or by telephone if the other member entitled
to vote does not object immediately. The Committee
for Executive Management Matters convenes up to
six times a year.
The Board of Management consults and takes deci-
sions as a collegiate body in meetings of the Board
197
The Board of Management is represented by its Chair-
man in its dealings with the Supervisory Board. The
Chairman of the Board of Management maintains
regular contact with the Chairman of the Supervisory
Board and keeps him informed of all important mat-
ters. The Supervisory Board has passed a resolution
specifying the information and reporting duties of
the Board of Management. As a general rule, in the
case of reports required by dint of law, the Board of
Management submits its reports to the Supervisory
Board in writing. To the extent possible, documents
required as a basis for taking decisions are sent to
the members of the Supervisory Board in good time
before the relevant meeting. Regarding transactions
of fundamental importance, the Supervisory Board
has stipulated specific transactions which require
the approval of the Supervisory Board. Whenever
necessary, the Chairman of the Board of Management
obtains the approval of the Supervisory Board and
ensures that reporting duties to the Supervisory Board
are complied with. In order to fulfil these tasks, the
Chairman is supported by all members of the Board
of Management. The fundamental principle followed
when reporting to the Supervisory Board is that the
latter should be kept informed regularly, without delay
and comprehensively of all significant matters relating
to planning, business performance, risk exposures,
risk management and compliance, as well as any major
variances between actual and budgeted figures.
Members of the Board of Management not represent-
ed in a committee are provided with the agendas and
minutes of committee meetings. Committee matters
are dealt with in full board meetings if the committee
considers it necessary or at the request of a member
of the Board of Management.
Following the appointment of a new member to the
Board of Management, the BMW Group Corporate
Governance Officer informs the new member of the
framework conditions under which the board mem-
ber's duties are to be carried out - in particular those
enshrined in the BMW Group's Corporate Govern-
ance Code - as well as the duty to cooperate when a
transaction or event triggers reporting requirements
or requires the approval of the Supervisory Board.
-
The Board of Management determines the strategic
orientation of the enterprise, agrees upon it with the
Supervisory Board and ensures its implementation.
The Board of Management is responsible for ensuring
that all provisions of law and internal regulations are
complied with. Further details about compliance with-
in the BMW Group can be found in the "Corporate
Governance" section of the Annual Report. The Board
of Management is also responsible for ensuring that
appropriate risk management and risk controlling
systems are in place throughout the Group.
Jürgen Wechsler² (*1955)
198
Member since 2011
Regional Head of IG Metall Bavaria
Mandates
Schaeffler AG (Deputy Chairman)
Siemens Healthcare GmbH (Deputy Chairman)
Werner Zierer¹ (*1959)
Member since 2001
Chairman of the Works Council, Regensburg
195
196
Statement on
Corporate
Governance
→Composition and
Work Procedures
of the Board of
Management of
BMW AG and its
Committees
COMPOSITION AND WORK
PROCEDURES OF THE
BOARD OF MANAGEMENT
OF BMW AG AND ITS
COMMITTEES
The Board of Management governs the enterprise
under its own responsibility, acting in the interests
of the BMW Group with the aim of achieving sustain-
able growth in value. The interests of shareholders,
employees and other stakeholders are also taken into
account in the pursuit of this aim.
During their period of employment for BMW AG,
members of the Board of Management are bound by
a comprehensive non-competition clause. They are
required to act in the enterprise's best interests and
may not pursue personal interests in their decisions
or take advantage of business opportunities intended
for the enterprise. They may only undertake ancillary
activities, in particular supervisory board mandates
outside the BMW Group, with the approval of the
Supervisory Board's Personnel Committee. Each
member of the Board of Management of BMW AG is
obliged to disclose conflicts of interest to the Super-
visory Board without delay and inform the other
members of the Board of Management accordingly.
Statement on
Corporate
Governance
The Chairman of the Supervisory Board coordinates
work within the Supervisory Board, convenes and
chairs its meetings, handles the external affairs of the
Supervisory Board and represents it before the Board
of Management.
Work Procedures of
the Supervisory
Board of BMWAG
In line with the rules of procedure for the activities of
the plenum, the Supervisory Board has set out proce-
dural rules for the Presiding Board and committees.
Committees only have a quorum when all members
participate. Committee resolutions are passed by a
simple majority, unless otherwise stipulated by law.
Members of the Supervisory Board may not delegate
their duties to others. However, the Supervisory Board,
the Presiding Board and the committees may call on
experts and informed persons to attend meetings and
advise on specific matters.
The Supervisory Board, the Presiding Board and com-
mittees also meet without the Board of Management
when necessary.
BMW AG ensures that the Supervisory Board and its
committees are appropriately equipped to carry out
their duties. This includes providing a central Super-
visory Board office to support Chairpersons in their
coordination work.
In accordance with rules of procedure, the Presiding
Board comprises the Chairman of the Supervisory Board
and Deputies. The Presiding Board prepares Superviso-
ry Board meetings to the extent that the subject matter
does not fall within the remit of a committee. This
includes, for example, preparing the annual Declaration
of Compliance with the German Corporate Governance
Code and assessment of Supervisory Board efficiency.
199
200
Statement on
Corporate
Governance
→ Composition and
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
The Personnel Committee prepares decisions of the
Supervisory Board with regard to the appointment and,
where applicable, removal of members of the Board of
Management and, together with the full Supervisory
Board and the Board of Management, ensures long-
term succession planning. The Personnel Committee
also
prepares s decisions of the Supervisory Board with
regard to Board of Management compensation and the
regular review of the compensation system for the Board
of Management. In conjunction with resolutions taken
by the Supervisory Board regarding the compensation
of the Board of Management, the Personnel Committee
is responsible for drawing up, amending and revoking
employment contracts or, when necessary, to prepare
and conclude other relevant contracts with members
of the Board of Management. In certain cases, the
Personnel Committee is also authorised to grant the
necessary approval of a business transaction on behalf of
the Supervisory Board. This includes cases of providing
loans to members of the Board of Management or Super-
visory Board, certain contractual arrangements with
members of the Supervisory Board, taking into account
related parties, as well as ancillary activities of members
of the Board of Management, including acceptance of
non-BMW Group supervisory board mandates.
The Audit Committee deals in particular with the super-
vision of the financial reporting process, effectiveness
of the internal control system, the risk management
system, internal audit system and compliance as well
as the performance of Supervisory Board duties in
connection with audits pursuant to § 20 of the German
Securities Trading Act (WpHG). It also oversees the
audit of financial statements, auditor independence
and any additional work performed by the auditor. It
prepares the proposal for the election of the auditor
at the Annual General Meeting, makes a relevant
recommendation, issues the audit engagement and
agrees on points of audit focus as well as the auditor's
fee. The Audit Committee prepares the Supervisory
Board's resolution relating to the Company and Group
Financial Statements and discusses interim reports
with the Board of Management prior to publication.
The Audit Committee also decides on the Supervisory
Board's agreement on the use of Authorised Capital
2014 (Article 4 no. 5 of the Articles of Incorporation)
and on amendments to the Articles of Incorporation
which only affect its wording.
In line with the recommendations of the German Cor-
porate Governance Code, the Chairman of the Audit
Committee is independent, and not a former Chairman
of the Board of Management, and has special knowledge
and experience in the application of financial reporting
standards and internal control procedures. He also
fulfils the requirement of being a financial expert as
defined by § 100 (5) and § 107 (4) AktG.
The Nomination Committee is charged with the task of
finding suitable candidates for election to the Super-
visory Board as shareholder representatives and to
propose them to the Supervisory Board for election at
the Annual General Meeting. In line with the recom-
mendations of the German Corporate Governance Code,
the Nomination Committee is exclusively composed of
shareholder representatives.
The establishment and composition of a mediation com-
mittee are prescribed by the German Co-determination
Act. The Mediation Committee has the task of making
proposals to the Supervisory Board if a resolution for the
appointment of a member of the Board of Management
has not been carried by the necessary two-thirds major-
ity of members' votes. In accordance with statutory
requirements, the Mediation Committee comprises the
Chairman and the Deputy Chairman of the Supervisory
Board, one member selected by shareholder represent-
atives and one by employee representatives.
Member of the Works Council, Dingolfing
The number of meetings held by the Presiding Board
and committees depends on requirements. The Pre-
siding Board, the Personnel Committee and the Audit
Committee generally hold several meetings in the course
of the year (see "Report of the Supervisory Board" for
details of the number of meetings held in 2016).
→ Composition and
According to the rules of procedure, the Chairman of the
Supervisory Board is, by virtue of this function, member
and Chairman of the Presiding Board, the Personnel
Committee and the Nomination Committee.
Taking into account the specific circumstances of the
BMW Group and the number of Board members, the
Supervisory Board has set up a Presiding Board and
four committees: the Personnel Committee, the Audit
Committee, the Nomination Committee and the Medi-
ation Committee (see "Overview of Supervisory Board
committees and their composition"). These serve to
raise the efficiency of the Supervisory Board's work and
facilitate handling of complex issues. Establishment and
function of a mediation committee is prescribed by law.
Committee chairpersons report in detail on committee
work at each plenary meeting of the Supervisory Board.
and its Committees
COMPOSITION AND WORK
PROCEDURES OF THE
SUPERVISORY BOARD OF
BMW AG AND ITS
COMMITTEES
BMW AG's Supervisory Board is composed of ten share-
holder representatives (elected by the Annual General
Meeting) and ten employee representatives (elected in
accordance with the Co-Determination Act). The ten
Supervisory Board members representing employees
comprise seven Company employees, including one
executive staff representative, and three members elect-
ed following nomination by unions. The Supervisory
Board has the task of advising and supervising the Board
of Management in its management of the BMW Group.
It is involved in all decisions of fundamental importance
for the BMW Group. The Supervisory Board appoints
the members of the Board of Management and decides
upon the level of compensation they receive. The Super-
visory Board can revoke appointments for important
reasons.
The Supervisory Board holds a minimum of two meet-
ings per calendar half-year. Normally, five plenary
meetings are held per calendar year. One meeting each
year is planned to extend to several days and is used,
among other things, to enable an in-depth exchange on
strategic and technological matters. The main topics of
meetings in the period under report are summarised
in the Report of the Supervisory Board. Shareholder
representatives and employee representatives generally
prepare Supervisory Board meetings separately and
occasionally with members of the Board of Manage-
ment. Members of the Supervisory Board are specif-
ically legally bound to maintain secrecy with respect
to confidential reports they receive and confidential
discussions in which they partake.
The Supervisory Board has a quorum if all members
have been invited to the meeting and at least half the
members of whom it is required to comprise partic-
ipate in the vote. A resolution relating to an agenda
item not included in the invitation is only valid if none
of the members of the Supervisory Board who were
not present at the meeting object to the resolution
and if a minimum of two-thirds of the members are
present.
Resolutions of the Supervisory Board are generally
passed by a simple majority. The German Co-determina-
tion Act contains specific legal requirements with regard
to majorities and technical procedures, particularly with
regard to the appointment and removal of management
board members and the election of Chairman or Deputy
Chairman of the Supervisory Board. In the event of a
tied vote in the Supervisory Board, the Chairman of
the Supervisory Board has two votes in a renewed vote,
assuming it also results in a tie.
In practice, resolutions are regularly passed by the
Supervisory Board and its committees at meetings.
Supervisory Board members who are not present can
submit their vote in written, fax or electronic form via
another Supervisory Board member. This rule also
applies for the second vote of the Chairman of the
Supervisory Board. The Chairman of the Supervisory
Board can also grant a period of time in which all mem-
bers not present at a meeting may retrospectively vote.
In special cases, resolutions may also be passed outside
of meetings, in particular in writing, by fax or by elec-
tronic means. Resolutions and meetings are recorded
in minutes, which are signed by the relevant Chairman.
Following its meetings, the Supervisory Board generally
requests information on new vehicle models in the form
of a short presentation.
Following the election of a new Supervisory Board
member, the Corporate Governance Officer informs
the new member of the main framework for performing
duties, in particular the BMW Group Corporate Gov-
ernance Code and individual contributions required in
circumstances which trigger reporting obligations or are
subject to Supervisory Board approval.
Members of the Supervisory Board of BMW AG take
care to ensure that they have sufficient time to perform
their mandate. If members of the Supervisory Board of
BMW AG are also members of the management board of
a listed company, they may not accept more than three
mandates on non-BMW Group supervisory boards of
listed companies or in other bodies with comparable
requirements.
The Supervisory Board regularly assesses the efficiency
of its activities. To this end, shared discussion is con-
ducted within the Supervisory Board and individual
meetings held with the Chairman, prepared on the basis
of a questionnaire sent in advance, which is drawn up
by the Supervisory Board.
Members of the Supervisory Board of BMW AG are
obliged to act in the best interest of the organisation as
a whole. They may not pursue personal interests in their
decisions or take advantage of business opportunities
intended to benefit the BMW Group.
Members of the Supervisory Board are obliged to inform
the Supervisory Board of any conflicts of interest, in
particular those resulting from a consulting or executive
role with clients, suppliers, lenders or other business
partners, so that the Supervisory Board can report to
the shareholders at the Annual General Meeting on
its treatment of the issue. Material and non-temporary
conflicts of interest of a Supervisory Board member
result in a termination of mandate.
In proposing candidates for election as members of the
Supervisory Board, care is taken that the Supervisory
Board collectively has the required knowledge, skills and
expertise to perform its tasks appropriately.
The Supervisory Board has stated specific targets for its
composition (see section “Composition targets for the
Supervisory Board").
Members of the Supervisory Board are responsible for
undertaking any training required for the performance
of their duties. The Company provides them with appro-
priate assistance therein.
Composition of the Presiding Board and the committees
is based on legal requirements, the Articles of Incor-
poration, rules of procedure and corporate governance
principles, while taking into particular account the
expertise of Board members.
Member since 2013
Terms of reference approved by the Board of Man-
agement contain a planned allocation of divisional
responsibilities between the individual board mem-
bers. These terms of reference also incorporate the
principle that the full Board of Management bears
joint responsibility for all matters of particular impor-
tance and scope. In addition, members of the Board of
Management manage the relevant portfolio of duties
under their responsibility, whereby case-by-case rules
can be put in place for cross-divisional projects. Board
members continually provide the Chairman of the
Board of Management with all information regarding
major transactions and developments within their
area of responsibility. The Chairman of the Board
of Management coordinates cross-divisional matters
with the overall targets and plans of the BMW Group,
involving other board members to the extent that divi-
sions within their area of responsibility are affected.
Member of the Works Council, Munich
Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer (*1956)
MEMBERS OF THE
SUPERVISORY BOARD
Dr. Jürgen Reul
General Counsel:
--- Other mandates.
Membership of equivalent national or foreign boards of business enterprises.
- Membership of other statutory supervisory boards.
BMW (South Africa) (Pty) Ltd. (Chairman)
BMW Motoren GmbH (Chairman)
Mandates
Oliver Zipse (*1964)
Production
FESTO Management Aktiengesellschaft
(Deputy Chairman, until 1 January 2017)
BMW Brilliance Automotive Ltd.
FESTO Aktiengesellschaft
Allianz Deutschland AG (until 30 June 2016)
Allianz SE (since 4 May 2016)
-
Mandates
(until 31 December 2016)
Finance
Dr. Friedrich Eichiner (*1955)
Rolls-Royce Motor Cars Limited (Chairman)
Member since 2015
Chairman
Former Chairman of the Board of
Management of BMW AG
Industrial Engineer
and General Works Council
Chairman of the European
Deputy Chairman
Member since 1988
Manfred Schoch¹ (*1955)
Robert Bosch GmbH
Mandates
Second Chairman of IG Metall
Member since 2014
Mandates
Christiane Benner² (*1968)
Bertelsmann Management SE (until 9 May 2016)
Bertelsmann SE & Co. KGaA (until 9 May 2016)
Deutsche Lufthansa Aktiengesellschaft
E.ON SE (Chairman, since 8 June 2016)
Mandates
Chairman of the Supervisory Board of the E.ON SE
(since 8 June 2016)
Deputy Chairman
Member since 2008
Dr. jur. Karl-Ludwig Kley (*1951)
Henkel AG & Co. KGaA (Shareholders' Committee)
Siemens Aktiengesellschaft
Brigitte Rödig¹ (*1963)
Verizon Communications Inc.
MINI, Motorrad, Rolls-Royce,
Aftersales BMW Group
Peter Schwarzenbauer (*1959)
BMW Motoren GmbH (until 7 November 2016)
Klaus Fröhlich (*1960)
Development
BOARD OF MANAGEMENT
MEMBERS OF THE
Supervisory Board
→ Members of the
Board of
Management
→Members of the
Statement on
Corporate
Governance
192
Harald Krüger
Chairman
Mandates
On behalf of the
Board of Management
Dr.-Ing. Dr.-Ing. E. h.
Norbert Reithofer
On behalf of the
Supervisory Board
Bayerische Motoren Werke
Aktiengesellschaft
Munich, December 2016
191
3. It is recommended in section 4.2.5 sentences 5
and 6 of the Code that specified information per-
taining to management board compensation be
disclosed in the Compensation Report. These rec-
ommendations have not been and will not be
complied with, due to uncertainties with respect
to their interpretation and doubts as to whether
the supplementary use of model tables would be
instrumental in making the BMW AG's Compen-
sation Report transparent and generally under-
standable in accordance with generally applicable
financial reporting requirements (see section 4.2.5
sentence 3 of the Code).
2. BMW AG will in future comply with all of the rec-
ommendations published officially on 12 June
2015 in the Federal Gazette (Code version dated
5 May 2015), with the exception of section 4.2.5
sentences 5 and 6.
1. Since issuance of the last Declaration in December
2015, BMW AG has complied with all of the rec-
ommendations published officially on 12 June 2015
in the Federal Gazette (Code version dated 5 May
2015), as announced with the exception of sec-
tion 4.2.5 sentences 5 and 6.
The Board of Management and Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft
("BMW AG") declare the following regarding the rec-
ommendations of the "Government Commission on
the German Corporate Governance Code":
Declaration of the Board of Management and of the
Supervisory Board of Bayerische Motoren Werke
Aktiengesellschaft with respect to the recommen-
dations of the "Government Commission on the
German Corporate Governance Code" pursuant to
§ 161 German Stock Corporation Act
Chairman
Franz Haniel (*1955)
HERE International B.V.
Dr. Nicolas Peter (*1962)
Finance
Mandates
(since 1 October 2016)
Purchasing and Supplier Network
Markus Duesmann (*1969)
(since 25 February 2016)
Weybourne Management Limited
(since 25 February 2016)
Weybourne Investments Holdings
Weybourne Limited (since 3 January 2017)
Weybourne Group Limited (since 25 February 2016)
Mandates
Harald Krüger (*1965)
Chairman
Sales Channels BMW Group
Dr. Ian Robertson (HonDSc) (*1958)
TÜV SÜD AG (since 15 July 2016)
-
Mandates
Dr.-Ing. Klaus Draeger (*1956)
Purchasing and Supplier Network
(until 30 September 2016)
Milagros Caiña Carreiro-Andree (*1962)
Human Resources, Industrial Relations Director
(Deputy Chairman, since 1 January 2017)
BMW Brilliance Automotive Ltd.
Mandates
(since 1 January 2017)
Sales and Marketing BMW,
Member since 2004
Mandates
Mandates
Entrepreneur
Member since 2015
Simone Menne (*1960)
Member from 2014 to 31 December 2016
Head of Product Line BMWi
Ulrich Kranz³ (*1958)
Robert Bosch GmbH
Allianz SE (until 3 May 2017)
Infineon Technologies AG
Nestlé Deutschland AG
Mandates
Director of Institut für Demoskopie
Allensbach Gesellschaft zum Studium der
öffentlichen Meinung mbH
Prof. Dr. rer. pol. Renate Köcher (*1952)
Member since 2008
Chairman of the Works Council, Landshut
Member since 1999
Willibald Löw¹ (*1956)
Städtisches Klinikum München GmbH
MAN Truck & Bus AG
KraussMaffei Group GmbH
Mandates
General Representative of IG Metall Munich
Member since 2009
Horst Lischka² (*1963)
General Electric Company
Ingelheim Gruppe, Finance
Mandates
(since 1 September 2016)
-
Dr. Dominique Mohabeer¹ (*1963)
Member since 2012
Other mandates.
Membership of equivalent national or foreign boards of business enterprises.
Membership of other statutory supervisory boards.
³ Employee representatives (members of senior management).
² Employee representatives (union representatives).
1 Employee representatives (company employees).
Miles & More GmbH (Chairman Advisory Board)
(until 31 August 2016)
(until 31 August 2016)
(Exchange Council)
FWB Frankfurter Wertpapierbörse
(until 31 December 2016)
Lufthansa Technik AG
(until 31 December 2016)
Lufthansa Cargo AG
(until 31 December 2016)
LSG Lufthansa Service Holding AG (Chairman)
Deutsche Post AG
Delvag Luftfahrtversicherungs-AG (Chairman)
(until 31 August 2016)
-
-
Mandates
Deere & Company
Member of Management of Boehringer
Member since 2009
2 Employee representatives (union representatives).
1 Employee representatives (company employees).
Deutsches GeoForschungsZentrum - GFZ
University Professor
of Helmholtz-Zentrum Potsdam
Chairman of the Executive Board
Member since 2008
Prof. Dr. rer. nat. Dr. h.c. Reinhard Hüttl (*1957)
Chairman of the Works Council, Dingolfing
Deputy Chairman
Member since 2007
³ Employee representatives (members of senior management).
Stefan Schmid¹ (*1965)
Member since 1 January 2017
Ralf Hattler³ (*1968)
AQTON SE (Chairman)
Entrust Datacard Corp.
DELTON AG (Chairman)
Mandates
Entrepreneur
Stefan Quandt (*1966)
Member since 1997
Deputy Chairman
TBG Limited
Former Chairman and Chief Executive Officer of
-
Head of Indirect Purchasing
Membership of other statutory supervisory boards.
DELTON AG (Deputy Chairman)
Franz Haniel & Cie. GmbH (Chairman)
Heraeus Holding GmbH
---Other mandates.
Membership of equivalent national or foreign boards of business enterprises.
UnternehmerTUM GmbH (Chairman)
SGL Carbon SE (Chairman)
ALTANA AG (Deputy Chairman)
Mandates
Entrepreneur
Dr. h.c. Robert W. Lane (*1949)
Susanne Klatten (*1962)
Aktiengesellschaft in München
Münchener Rückversicherungs-Gesellschaft
Deutsche Post AG
Member since 1997
-
Mandates
der Technikwissenschaften e. V.
President of acatech - Deutsche Akademie
Prof. Dr. rer. nat. Dr.-Ing. E.h.
Henning Kagermann (*1947)
Member since 2010
→ Members of the
Supervisory Board
Statement on
Corporate
Governance
194
193
Deutsche Bank AG
To this end, the Supervisory Board has approved the
following concrete objectives for its composition, tak-
ing into account recommendations contained in the
German Corporate Governance Code. These objectives
also describe the concept for achieving diversity in
the composition of the Supervisory Board (diversity
concept):
Of the 20 members of the Supervisory Board at
least twelve should be independent members
within the meaning of section 5.4.2 of the Ger-
man Corporate Governance Code, including
at least six as representatives of the Company's
shareholders.
-
Four members of the Supervisory Board should
if possible have international experience or
specialist knowledge of one or more non-German
markets important to the BMW Group.
When seeking qualified individuals for the
Supervisory Board whose specialist skills and
leadership qualities are most likely to strength-
en the Board as a whole, consideration is also
to be given to diversity. When preparing nomi-
nations, the extent to which the work of the
Supervisory Board would benefit from diversi-
fied professional and personal backgrounds
(including international aspects) and from an
appropriate gender representation is also to be
taken into account. It is the joint responsibility
of all those participating in the nomination and
election process to ensure that qualified wom-
en are considered for Supervisory Board mem-
bership.
Three of the shareholder representatives in the
Supervisory Board should if possible be entre-
preneurs or persons who have previous experi-
ence in the management or supervision of
another medium or large-sized company.
-
Three members of the Supervisory Board should
if possible be figures from the worlds of busi-
ness, science or research who have experience
in areas relevant to the BMW Group, e.g. chem-
istry, energy supply, information technology, or
who have specialist knowledge in fields relevant
for the future of the BMW Group, e.g. custom-
er requirements, mobility, resources or sustain-
ability.
The Supervisory Board should include if possi-
ble seven members who have acquired in-depth
knowledge and experience within the
BMW Group, though no more than two former
members of the Board of Management.
The Supervisory Board is to be composed in such a way
that its members collectively possess the knowledge,
skills and experience required to properly perform
its tasks.
-
When selecting an individual for a particular Board of
Management position, the Supervisory Board decides
in the best interest of the Group and after due con-
sideration of all relevant circumstances.
In accordance with the recommendation of the
German Corporate Governance Code, the
Supervisory Board has set a standard age limit
for Board of Management membership. This
aims at a retirement age of 60. Consideration is
also given to achieving an appropriate age-mix
within the Board of Management.
The Supervisory Board has stipulated a target
for the proportion of women on the Board of
Management. This is outlined in the section
“Disclosures pursuant to the Act on Equal Gen-
der Participation”. The Board of Management
reports to the Personnel Committee and the
Supervisory Board at regular intervals on the
proportion and development of women in
senior management positions, in particular at
executive levels.
The Board of Management should collectively
have extensive experience in the fields of devel-
opment, production, sales and marketing,
finances and human resources.
At least two members of the Board of Manage-
ment should have a technical background.
At least two members should have international
management experience.
The members of the Board of Management
should have a long-standing track record of
management experience, ideally with experi-
ence in different professional fields.
-
Two independent members of the Supervisory
Board should have expert knowledge of
accounting or auditing.
-
Composition objectives of the Supervisory Board,
diversity concept
No persons carrying out directorship functions
or advisory tasks for important competitors of
the BMW Group may belong to the Supervisory
Board. In compliance with applicable legisla-
tion, members of the Supervisory Board are to
take care that no persons will be nominated
for election with whom a serious, non-temporary
conflict of interests could arise due to other
activities and functions carried out by them out-
side the BMW Group, in particular advisory
activities or directorships with customers, sup-
pliers, creditors or other business partners.
DISCLOSURES PURSUANT
TO THE ACT ON EQUAL
GENDER PARTICIPATION -
TARGETS FOR THE PROPOR-
TION OF WOMEN ON THE
BOARD OF MANAGEMENT
AND AT EXECUTIVE MAN-
AGEMENT LEVELS I AND II
As a general rule, members of the Supervisory
Board should not hold office for longer than
until the end of the Annual General Meeting at
which the resolution is passed ratifying the
member's activities for the 14th financial year
after the beginning of the member's first period
of office. This excludes the financial year in
which the first period of office began. This rule
does not apply to natural persons who either
directly or indirectly hold significant investments
in the Company. In the Company's interest,
deviation from the general maximum period is
possible, for instance in order to work towards
another composition target, in particular diversi-
ty of gender and technical, professional and per-
sonal backgrounds.
-
12
in %
→ 65
at BMW AG
Proportion of female executives within
management/function levels I and II
Top management within the BMW Group is structured
in terms of functions, following a consistent job eval-
uation system based on Mercer.
For the next target attainment time frame, which has
been selected to run to 31 December 2020, the Board
of Management has set target ranges of 10.2 - 12% for
the first level of executive management and 8 – 10%
for the second.
stood at 10.2% and 6.3% respectively. The targets were
therefore achieved within the stipulated time frame.
For the first target attainment time frame up to
31 December 2016, target ranges of 10 to 12% and 6 to
8% respectively were set by the Board of Management
for the proportion of women to be represented in the
first and second levels of executive management. On
31 December 2016, the proportion of women within
the first and second executive management levels
An age limit for membership of the Supervisory
Board of 70 years should generally be applied.
In exceptional cases, members may remain on
the Board until the end of the next Annual Gen-
eral Meeting after reaching the age of 73, in
order to fulfil legal requirements or to facilitate
smooth succession in the case of key roles or
specialist qualifications.
As its target for the proportion of women on the Board
of Management for the time frame from 1 January 2017
to 31 December 2020, the Supervisory Board has stip-
ulated that the Board of Management should continue
to have at least one female member. Assuming that
the Board of Management continues to comprise eight
members, this would correspond to a proportion of
at least 12.5%. The Supervisory Board considers it
desirable to increase the proportion of women on the
Board of Management and fully supports the Board of
Management's endeavours to increase the proportion
of women at the highest executive management levels
within the BMW Group.
The Act on Equal Participation of Women and Men
in Executive Positions in the Private and the Public
Sector ("Act on Equal Gender Participation") was
passed into German law in 2015.
Board, is provided in the section “Statement on Cor-
porate Governance". Based on this information, it
is evident that the Supervisory Board of BMW AG
very diversified, with significantly more than the
targeted four members having international experi-
ence or specialist knowledge with regard to one or
more of the non-German markets important to the
BMW Group. In-depth knowledge and experience
from within the enterprise are provided by seven
employee representatives, as well as the Chairman
of the Supervisory Board. Only one previous Board of
Management member holds office in the Supervisory
Board. At least four members of the Supervisory Board
have experience in managing another company. The
Supervisory Board also has three entrepreneurs as
members. Most of the members of the Supervisory
Board – including employee representatives – have
experience in supervising another medium-sized or
large company. Moreover, more than three members
of the Supervisory Board have experience and special-
ist knowledge in subjects relevant for the future of the
BMW Group, such as customer requirements, mobility,
resources, sustainability and information technology.
For the purpose of assessing the independence of its
members, the Supervisory Board follows the recom-
mendations of the German Corporate Governance
Code. In the opinion of the Supervisory Board, the
fact that a member has a substantial shareholding
in the Company, or holds office as an employee
representative, or was previously a member of the
Board of Management, does not rule out that he or
she is independent. A substantial and not merely
temporary conflict of interests within the meaning
of section 5.4.2. of the German Corporate Governance
Code does not apply to any of the Supervisory Board
members. Employees holding office in the Supervi-
sory Board are protected by law when performing
their duties. All other Supervisory Board members
have a sufficient degree of economic independence
from the Company. Business with entities, in which
the members of the Supervisory Board carry out a
significant function, is conducted on an arm's length
basis. The Supervisory Board has therefore concluded
that all of its members are independent. At least three
members meet the requirements for being designated
as an independent financial expert. At the end of
the reporting period, the Supervisory Board had six
female members (30%), comprising three shareholder
representatives and three employee representatives.
The Supervisory Board has 14 male members (70%),
comprising seven shareholder representatives and
seven employee representatives. The Company there-
fore complies with the statutory gender quota of at
least 30% female members applicable in Germany
since 1 January 2016. The Supervisory Board does not
currently have any members more than 70
years old.
is
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
→ Disclosures Pursuant
to the Act on Equal
Gender Participation-
Targets for the
Proportion of Women
on the Board of
Management and at
Executive Manage-
ment Levels I and II
→ Information on Cor-
porate Governance
Practices applied
Beyond Mandatory
Requirements
→Composition and
Statement on
Corporate
Governance
204
203
In the Supervisory Board's opinion, its composition
as at 31 December 2016 fulfilled the composition
objectives detailed above. In order to make it easier to
assess the actual composition and composition targets,
brief curricula vitae of the current members of the
Supervisory Board are available on the Company's
website at → www.bmwgroup.com. Information relating to
members' practised professions and to mandates in
other statutory supervisory boards and equivalent
national or foreign company boards, including the
length of their periods of service on the Supervisory
The time schedule set by the Supervisory Board for
achieving the above-mentioned composition targets
is the period up to 31 December 2017. Proposals for
nomination made by the Supervisory Board at the
Annual General Meeting - insofar as they apply to
shareholder Supervisory Board members - should
take account of these objectives in such a way that
they can be achieved with the support of the appro-
priate resolutions at the Annual General Meeting. The
Annual General Meeting is not bound by nominations
for election proposed by the Supervisory Board. The
freedom of employees to vote for the employee mem-
bers of the Supervisory Board is also protected. Under
the rules stipulated by the German Co-Determination
Act, the Supervisory Board does not have the right
to nominate employee representatives for election.
The objectives which the Supervisory Board has set
itself with regard to its composition are therefore not
intended to be instructions to those entitled to vote
or restrictions on their freedom to vote.
In accordance with this legislation, the Supervisory
Board of BMW AG is required to set a target for the
proportion of women on its Board of Management
and a time frame for meeting this target. Likewise, the
Board of Management of BMW AG is required to estab-
lish targets and a time frame for attaining these targets
with respect to the two executive management levels
below the Board of Management. As its target for the
Board of Management through to 31 December 2016,
the Supervisory Board had stipulated that the Board
of Management should continue to have at least one
female member. This target was achieved: the Board
of Management has one female member (12.5%).
The Supervisory Board, in collaboration with the
Personnel Committee and the Board of Management,
ensures long-term succession planning. In their assess-
ment of candidates for Board of Management posi-
tions, the underlying suitability criteria applied by the
Supervisory Board are expertise in the relevant function,
outstanding leadership qualities, proven track record
and knowledge of the Company. The Supervisory Board
has adopted a diversity concept for the composition
of the Board of Management, which is also aligned
with recommendations of the German Corporate
Governance Code. In considering which individuals
would best complement the Board of Management, the
Supervisory Board also takes diversity into account. The
criteria diversity is taken by the Supervisory Board to
encompass in particular different, mutually comple-
mentary profiles, professional and life experiences also
at the international level and an appropriate gender
representation. In reaching its decisions, the Supervi-
sory Board also considers the following:
6.3
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
of areas of audit emphasis and fee agreements with external auditor
preparation of proposals for election of external auditor at Annual General Meeting,
engagement of external auditor and compliance of audit engagement, determination
-
― supervision of external audit, in particular auditor independence and additional work
performed by external auditor
supervision of the financial reporting process, the effectiveness of the internal control
system, the risk management system, internal audit arrangements and compliance as
well as the performance of Supervisory Board duties in connection with audits pursuant
to § 20 of the German Securities Trading Act (WpHG)
AUDIT COMMITTEE
Norbert Reithofer¹
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
― set up in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of reference
members, including acceptance of non-BMW Group supervisory mandates as well as the
approval of transactions requiring Supervisory Board approval by dint of law (e.g. loans
to Board of Management or Supervisory Board members)
conclusion, amendment and revocation of employment contracts (in conjunction with
the resolutions taken by the Supervisory Board regarding the compensation of the Board
of Management) and other contracts with members of the Board of Management
― decisions relating to the approval of ancillary activities of Board of Management
preparation of decisions relating to the appointment and revocation of appointment of
members of the Board of Management, the compensation and the regular review of the
Board of Management's compensation system
-
Norbert Reithofer¹
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Members
preparation of Supervisory Board meetings to the extent that the subject matter to be
discussed does not fall within the remit of a committee
-activities based on terms of reference
-
PRESIDING BOARD
Principal duties, basis for activities
and their composition
Overview of Supervisory Board committees
10.2
preparation of Supervisory Board's resolution on Company and
Group Financial Statements
discussion of interim reports with Board of Management prior to publication
― decision on approval for utilisation of Authorised Capital 2014
→ Composition and
Statement on
Corporate
Governance
202
201
2 (Independent) financial expert within the meaning of §§ 100 (5) and 107 (4) AktG, no. 5.3.2 GCGC.
1 Chair.
(In accordance with statutory requirements, the Mediation Committee
comprises the Chairman and Deputy Chairman of the Supervisory Board
and one member each selected by shareholder representatives and
employee representatives.)
Manfred Schoch
Stefan Quandt
Stefan Schmid
Norbert Reithofer
― committee required by law
Board of Management succession planning,
diversity concept
proposal to Supervisory Board if resolution for appointment of Board of Management
member has not been carried by the necessary two-thirds majority of Supervisory Board
members' votes
MEDIATION COMMITTEE
(In line with the recommendations of the German Corporate Governance
Code, the Nomination Committee comprises only shareholder representa-
tives.)
Norbert Reithofer¹
Susanne Klatten
Karl-Ludwig Kley
Stefan Quandt
― establishment in accordance with the recommendation contained in the German Corpo-
rate Governance Code, activities based on terms of reference
― identification of suitable candidates (male/female) as shareholder representatives on the
Supervisory Board to be put forward for inclusion in the Supervisory Board's proposals for
election at the Annual General Meeting
NOMINATION COMMITTEE
German Corporate Governance Code, activities based on terms of reference
establishment in accordance with the recommendation contained in the
- amendments to Articles of Incorporation only affecting wording
Karl-Ludwig Kley 1,2
Norbert Reithofer
Manfred Schoch
Stefan Quandt
Stefan Schmid
-
Function levell
PERSONNEL COMMITTEE
Additional compliance coaching has also been imple-
mented for international sales and financial service
locations in local markets. These multi-day classroom
seminars strengthen the understanding of compliance
in selected organisational units and enhance cooper-
ation between the central BMW Group Compliance
Committee Office and decentralised compliance
offices. In 2016, market coaching was conducted in
Italy, Belgium, Austria, China and Japan.
Managers in particular bear a high degree of respon-
sibility and must set a good example with regard to
preventing infringements. Managers throughout the
BMW Group acknowledge this principle by signing
a written declaration, in which they also undertake
to inform staff working for them of the content and
significance of the Legal Compliance Code and make
them aware of legal risks. Managers must, at regular
intervals and on their own initiative, verify compliance
with the law and communicate regularly with staff on
this issue. Any indication of non-compliance with the
law must be rigorously investigated.
The BMW Group Legal Compliance Code is the corner-
stone of the Group's Compliance Management System,
spelling out the Board of Management's commitment
to compliance as a joint responsibility ("tone from
the top"). This document, which was revised and
expanded in 2016, explains the significance of legal
compliance and provides an overview of the various
areas relevant for the BMW Group. It is available both
as a printed brochure and for download in German
and English. In addition, translations into nine other
languages are available in the BMW Group intranet.
The various elements of the BMW Group Compliance
Management System are shown in the diagram on the
previous page and are applicable for all BMW Group
organisational units worldwide. To the extent that
additional compliance requirements apply to indi-
vidual countries or specific lines of business, these
are covered by supplementary compliance measures.
Compliance measures are determined and priori-
tised on the basis of a group-wide compliance risk
assessment covering all 340 organisational units and
functions worldwide within the BMW Group. The
assessment of compliance risks is updated annually.
Measures are realised with the aid of a regionally
structured compliance management team covering
all parts of the BMW Group, which oversees a network
of more than 210 Compliance Responsibles.
A coordinated set of instruments and measures is
employed to ensure that the BMW Group, its repre-
sentative bodies, its managers and staff act in a lawful
manner. Particular emphasis is placed on compliance
with antitrust legislation and the avoidance of corrup-
tion risks. Compliance measures are supplemented
by a whole range of internal policies, guidelines and
instructions, which in part reflect applicable legisla-
tion. The BMW Group Policy "Corruption Prevention"
and the BMW Group Instruction "Corporate Hospi-
tality and Gifts" deserve particular mention: these
documents deal with lawful handling of gifts and
benefits and define appropriate assessment criteria
and approval procedures for specified actions. In 2016
a new BMW Group Policy "Antitrust Compliance",
was introduced in 2016 to establish binding rules of
conduct for all employees across the BMW Group to
prevent unlawful restriction of competition.
The Board of Management keeps track of and analyses
compliance-related developments and trends on the
basis of the Group's compliance reporting and input
from the BMW Group Compliance Committee. Meas-
ures to improve the Compliance Management System
are initiated on the basis of identified requirements.
In 2016, to strengthen local compliance manage-
ment, local compliance functions were established
at 69 BMW Group affiliated companies. Their activi-
ties follow a standardised management process with
clearly defined tasks and responsibilities.
The Chairman of the BMW Group Compliance Com-
mittee keeps the Audit Committee (which is part of the
Supervisory Board) informed on the current status of
compliance activities within the BMW Group, both on
a regular and a case-by-case basis as the need arises.
→ Compliance in the
BMW Group
Statement on
Corporate
Governance
208
The decisions taken by the BMW Group Compliance
Committee are drafted in concept, and implement-
ed operationally, by the BMW Group Compliance
Committee Office. The BMW Group Compliance
Committee Office comprises 13 employees and is
allocated in organisational terms to the Chairman of
the Board of Management.
Compliance
Governance and
Processes
Compliance
Training
SpeakUP Line
Contact and
Compliance
Compliance
Reporting
Compliance
Communication
Legal Compliance Code
and Regulations
More than 32,500 managers and staff worldwide have
received training in essential compliance matters
since the introduction of the BMW Group Compli-
ance Management System. The training material is
available on an Internet-based training platform in
German and English and includes a final test. Suc-
cessful completion of the training programme, which
is documented by a certificate, is mandatory for all
BMW Group managers. Appropriate processes are in
place to ensure that all newly recruited managers and
promoted staff undergo compliance training. In this
way, the BMW Group ensures full training coverage
for its managers in compliance matters.
Compliance Instruments and
Measures of the BMW Group
In addition to this basic training, more in-depth
training is also provided to certain groups of staff on
specific compliance issues. Since 2013, employees
have been trained related to an extended Antitrust
law training, targeting employees who come into con-
tact with antitrust-related issues as a result of their
functions within sales and marketing, purchasing,
production or development. Around 16,900 employees
have already completed this training. The relevant
divisions also implemented and stepped up further
antitrust compliance measures and processes in 2016
to make employees who participate in meetings with
competitors or work with suppliers or sales partners
sufficiently aware of antitrust risks.
Employees also have the opportunity to submit infor-
mation - anonymously and confidentially - via the
BMW Group SpeakUP Line about possible breaches
of the law within the company. The BMW Group
SpeakUP Line is available in a total of 34 languages
and can be reached via local toll-free numbers in
all countries in which BMW Group employees are
engaged in activities.
Function level II
Shareholdings of members of the Board of
Management and the Supervisory Board
The members of the Supervisory Board of BMW AG
hold in total 27.99% of the Company's shares of com-
mon and preferred stock (2015: 43.00%), of which
16.25% (2015: 31.26%) relates to Stefan Quandt,
Germany, and 11.73% (2015: 26.74%) to Susanne
Klatten, Germany. The change from the previous
year is almost entirely due to shares held by Johanna
Quandt GmbH & Co. KG für Automobilwerte no
longer being attributed to Stefan Quandt and Susanne
Klatten following the dissolution of the community of
heirs. The shareholdings of the members of the Board
of Management total less than 1% of all issued shares.
Pursuant to Article 19 of the EU Market Abuse Regu-
lation (MAR), members of the Board of Management
and the Supervisory Board and any persons closely
related to those members are required to give notice
to BMW AG and the Federal Agency for the Super-
vision of Financial Services (BaFin) of transactions
with equity or debt instruments of BMW AG or with
related derivatives or other financial instruments, if
the total sum of such transactions reaches or exceeds
an amount of €5,000 during any given calendar year.
BMW AG publishes such information without delay
and communicates it to the Companies Register
for archiving. Notice of publication is issued to the
Federal Agency for the Supervision of Financial Ser-
vices. Securities transactions notified to BMW AG
during the financial year 2016 are also reported on
the Company's website.
Reportable securities transactions
("Managers' transactions")
In the interest of investor protection and to ensure
that the BMW Group complies with regulations
relating to potential insider information, the Board of
Management appointed an Ad-hoc Committee back in
1994, consisting of representatives of various specialist
departments, whose members examine the relevance
of issues for ad-hoc disclosure purposes. All persons
working on behalf of the company who have access
to insider information in accordance with existing
rules have been, and continue to be, included in a
corresponding, regularly updated list and informed
of the duties arising from insider rules.
Compliance is also an important factor in safeguarding
the future of the BMW Group workforce. With this
in mind, the Board of Management and the national
and international employee representative bodies
of the BMW Group have agreed on a binding set of
Joint Principles for Lawful Conduct. In doing so, all
parties involved made a commitment to the principles
contained in the BMW Group Legal Compliance Code
and to trustful cooperation in all matters relating to
compliance. Employee representatives are therefore
regularly involved in the process of refining compli-
ance measures within the BMW Group.
The BMW Group underlined its position back in 2005
with the Joint Declaration on Human Rights and
Working Conditions at the BMW Group. This was
followed by systematic introduction and upgrading of
measures to protect human rights. Henceforth, these
already established measures were integrated into the
BMW Group's group-wide Compliance Management
System in 2016.
The BMW Group is committed to respecting inter-
nationally recognised human rights, in particular
the UN Guiding Principles on Business and Human
Rights, the ten principles of the UN Global Compact
and the ILO Core Labour Conventions. The company
focuses on topics and areas of activity where it can
leverage its influence as a commercial enterprise.
→ Compliance in the
BMW Group
Statement on
Corporate
Governance
210
209
In the same way that the BMW Group is committed
to lawful and responsible conduct, it expects no less
from its business partners. In 2012, the BMW Group
developed a new Business Relations Compliance pro-
gramme aimed at ensuring the reliability of its business
relations. Relevant business partners are checked and
evaluated with a view to identifying potential compli-
ance risks. These procedures are particularly relevant
for relations with sales partners and service providers,
such as agencies and consultants. Depending on the
results of the evaluation, appropriate measures - such
as communication measures, training and possible
monitoring - are implemented to manage compliance
risks. The Business Relations Compliance programme
has already been introduced in 37 organisational units
since its launch and, over the coming years, will be
rolled out successively throughout the BMW Group's
worldwide sales organisation. In 2016, the company
also continued integrating compliance clauses to pro-
tect contractual relationships into dealer and importer
contracts. An IT system to verify customer integrity
was developed and introduced in 20 markets under
expanded anti-money-laundering measures.
To avoid this, BMW Group employees are kept fully
up-to-date with the instruments and measures used
by the Compliance Management System via various
internal channels. As of 2014, all new staff receive
a welcome email underscoring the BMW Group's
special commitment to compliance when they join
the company. The central means of communication
is the Compliance website within the BMW Group's
intranet, where employees can find compliance-
related information and access training materials
in both German and English. The website contains a
special service area where various practical tools are
made available to employees to help them deal with
typical compliance-related matters. Since mid-2015,
BMW Group employees have also had access to an
IT system, which helps them verify legal admissibility
and approve and document benefits, especially in
connection with corporate hospitality.
It is essential that employees are aware of and comply
with applicable legal regulations. The BMW Group
does not tolerate violations of the law by its employees.
Culpable violations of the law result in employment-
contract sanctions and may involve personal liability
consequences for the employee involved.
Compliance Controls. Any necessary follow-up meas-
ures are organised by the BMW Group Compliance
Committee Office.
Compliance with and implementation of the Legal
Compliance Code are audited regularly by Corporate
Audit and subjected to control checks by Corporate
Security and the BMW Group Compliance Committee
Office. As part of its regular activities, Corporate Audit
carries out on-site audits. The BMW Group Compli-
ance Committee also engages Corporate Audit to
perform compliance-specific checks. In addition, three
BMW Group Compliance Spot Checks, sample tests
specifically designed to identify potential corruption
risks, were carried out in 2016. Compliance control
activities are coordinated by the BMW Group Panel
Through the group-wide reporting system, Com-
pliance Responsibles throughout the BMW Group
report on compliance-relevant issues to the Compli-
ance Committee on a regular basis, and, if necessary,
on an ad hoc basis. This includes reporting on the
compliance status of the relevant organisational units,
on identified legal risks and incidences of non-com-
pliance, as well as on corrective or preventative
measures implemented.
Compliance-related queries and concerns are
documented and followed up by the BMW Group
Compliance Committee Office using an electronic
Case Management System. If necessary, Corporate
Audit, Corporate Security, the Works Council and
legal departments may be called upon to assist in the
investigation process.
In order to avoid legal risks, all members of staff are
expected to discuss compliance matters with their
managers and with the relevant departments within
the BMW Group, in particular Legal Affairs, Corporate
Audit and Corporate Security. The BMW Group Com-
pliance Contact serves as a further point of contact for
both employees and non-employees for any questions
regarding compliance.
Annual
Compliance
Reporting
207
Company-wide Compliance
→Information on Cor-
porate Governance
Practices applied
Beyond Mandatory
Requirements
Statement on
Corporate
Governance
206
205
We are excited by change and open to new opportu-
nities. We learn from our mistakes.
Openness
We trust and rely on each other. This is essential if we
are to act swiftly and achieve our goals.
Trust
Network
→ Compliance in the
Transparency
Appreciation
We take consistent decisions and commit to them
personally. This allows us to work freely and more
effectively.
Responsibility
Within the BMW Group, the Board of Management,
the Supervisory Board and the employees base their
actions on five core values which are the cornerstone
of the success of the BMW Group:
Core values
CORPORATE GOVERNANCE
PRACTICES APPLIED
BEYOND MANDATORY
REQUIREMENTS
INFORMATION ON
During 2016, the proportion of women in both the
workforce as a whole and in management positions
increased, reflecting the positive impact of long-term
measures, dialogue and information events. Further
information on the topic of diversity within the
BMW Group can be found in the section "Workforce".
Diversity contributes to greater competitiveness
and innovation at BMW Group. Working together
in mixed, complementary teams raises performance
levels and helps sharpen the focus on the customer.
The requirement of an appropriate gender balance is
seen as an essential component of the BMW Group's
diversity concept. Further increase in the proportion
of women therefore remains an objective of the Board
of Management.
We reflect on our actions, respect each other, offer
clear feedback and celebrate success.
BMW Group
We acknowledge concerns and identify inconsisten-
cies in a constructive way. We act with integrity.
Compliance
Investigations
and Controls
Social responsibility towards employees and
along the supplier chain
BMW Group Compliance Committee
Annual
Report
Board of Management BMW AG
Annual
Report
Supervisory Board BMW AG
Compliance
Risk Analysis
BMW Group Compliance Management System
→ 66
The BMW Group Compliance Committee comprises
the heads of the following departments: Legal Affairs,
Corporate and Governmental Affairs, Corporate Audit,
Group Reporting, Organisational Development and
Corporate Human Resources. It manages and moni-
tors activities necessary to avoid non-compliance with
the law. These activities include training, information
and communication measures, compliance controls
and following up cases of non-compliance.
The BMW Group Compliance Committee reports
regularly to the Board of Management on all compli-
ance-related issues, including the progress made in
refining the BMW Group Compliance Management
System, details of investigations performed, known
infringements of the law, sanctions imposed and
corrective/preventative measures implemented. This
ensures that the Board of Management is immediately
notified of any cases of particular significance.
Responsible and lawful conduct is fundamental to the
success of the BMW Group. It is an integral part of
our corporate culture and the reason why customers,
shareholders, business partners and the general public
place their trust in us. The Board of Management and
the employees of the BMW Group are obliged to act
responsibly and in compliance with applicable laws
and regulations.
COMPLIANCE IN THE
BMW GROUP
We also work in close partnership with our suppliers
and promote their commitment to sustainability.
Sustainable business management can only be
effective, however, if it covers the entire value-added
chain. That is why the BMW Group not only sets high
standards for itself, but also expects its suppliers and
partners to meet the ecological and social standards it
sets and strives continually to improve the efficiency
of processes, measures and activities. For instance,
we consistently require our dealers and importers
to comply with ecological and social standards on a
contractual basis. Moreover, corresponding criteria
are embedded throughout the entire purchasing
system - including in enquiries to suppliers, in the
sector-wide OEM Sustainability Questionnaire, in our
purchasing terms and in our evaluation of suppli-
ers in order to promote sustainability aspects in
line with the BMW Group Sustainability Standard.
The BMW Group expects suppliers to ensure that the
BMW Group's sustainability criteria are also adhered
to by their sub-suppliers. Purchasing terms and con-
ditions and other information relating to purchasing
can be found in the publicly available section of the
BMW Group Partner Portal at → https://b2b.bmw.com.
Further information on social responsibility towards
employees can be found in the section "Workforce".
For the BMW Group, worldwide compliance of these
fundamental principles and rights is self-evident.
Since 2005 employees' awareness of this issue has
therefore been raised by means of regular internal
communications and training on recent developments
in this area. The “Compliance Contact” helpline
and the BMW Group SpeakUP Line are available to
employees wishing to raise queries or complaints
relating to human rights issues. With effect from 2016,
human rights have been incorporated as an integral
component of the BMW Group's worldwide Compli-
ance Management System, representing a further step
in the systematic implementation of the UN Guiding
Principles on Business and Human Rights.
The Board of Management signed the United Nations
Global Compact in 2001 and, in 2005, together with
employee representatives, issued a "Joint Declaration
on Human Rights and Working Conditions in the
BMW Group". This Joint Declaration was reconfirmed
in 2010. With the signature of these documents, we
have given our commitment to abide worldwide by
internationally recognised human rights and with the
fundamental working standards of the International
Labour Organization (ILO). These include in particular
freedom of employment, the principle of non-dis-
crimination, freedom of association and the right to
collective bargaining, the prohibition of child labour,
appropriate remuneration, regulated working times
and compliance with work and safety regulations.
The complete text of the UN Global Compact and
the recommendations of the ILO and other relevant
information can be found at → www.unglobal.compact.org and
→ www.ilo.org. The Joint Declaration on Human Rights
and Working Conditions in the BMW Group can
be found at www.bmwgroup.com under the menu items
"Downloads" and "Responsibility".
The BMW Group stands by its social responsibilities.
Our corporate culture combines the drive for success
with openness, trust and transparency. We are well
aware of our responsibility towards society. Socially
sustainable human resource policies and compliance
with social standards are based on various interna-
tionally recognised guidelines. The BMW Group is
committed to the OECD's guidelines for multinational
companies and the contents of the ICC Business
Charter for Sustainable Development. Details of the
contents of these guidelines and other relevant infor-
mation can be found at → www.oecd.org and www.iccwbo.org.
This principle has been embedded in BMW Group's
internal rules of conduct for many years. In order to
protect itself systematically against compliance-relat-
ed and reputational risks, the Board of Management
created a Compliance Committee several years ago,
mandated to establish a worldwide Compliance
Management System throughout the BMW Group.
BMW Group Compliance Committee ←
Office
1,752
(1,478)
1,097
(1,014)
288
823
(1,092)
Total value of
benefits
allocated in
financial year²
(-)
Friedrich Eichiner5
18,719 1,518,719 5,947,178
(21,809) (1,302,454) (4,786,438)
74,461 974,461 3,469,214
(74,717) (899,717) (3,058,588)
29,440 704,440 2,601,910
(24,797) (924,797) (3,293,863)
743,403
900,000
(-)
201,429
Harald Krüger
675,000
(900,000)
187,500
Markus Duesmann4
Klaus Draeger³
(825,000)
900,000
Milagros Caiña Carreiro-Andree
(1,280,645)
1,500,000
Number Monetary value
25,413
13,929
925,413 3,469,214
Present value of
pension obliga-
tions (defined
benefit plans),
in accordance
(900,000)
Compensation
Total
(31,101)
(750,000)
1,058
895,189 3,345,313
32,689
862,500
Peter Schwarzenbauer
(1,092)
(914,501) (3,293,863)
(14,501)
(900,000)
1,097
918,735 3,469,214
(871)
876
807,311 2,973,589
(821,792) (2,823,290)
750,000 57,311
(750,000) (71,792)
900,000 18,735
Ian Robertson
Klaus Fröhlich
(1,092)
(923,982) (3,293,863)
(23,982)
1,097
compensation component
(matching component)
No commitments or agreements exist to pay com-
pensation for early termination of a board member's
mandate in the event of a change of control or a take-
over offer. No members of the Board of Management
received any payments or benefits from third parties
in 2016 on account of their activities as members of
the Board of Management.
Total
7.7
20.8
7.8
Variable cash compensation
Fixed compensation
Proportion in %
Amount
Proportion in %
Amount
2015
21.7
2016
The total compensation of the current members
of the Board of Management of BMW AG for the
financial year 2016 amounted to €37.6 million (2015:
€35.5 million), of which €7.8 million (2015: €7.7 mil-
lion) relates to fixed components (including other
remuneration). Variable components amounted to
€29.0 million (2015: €27.1 million) and the share-
based remuneration component to €0.8 million (2015:
€0.7 million).
Total compensation of the Board of Management for
the financial year 2016 (2015)
The Supervisory Board has stipulated caps for variable
remuneration components and for the remuneration
of Board of Management members in total. The caps
are shown in the table "Overview of compensation
system and compensation components".
Remuneration caps
(781,101) (2,823,311)
contractual period. The Company will make a final
pension contribution of €0.167 million on behalf of
Dr Eichiner for the financial year 2017.
Termination benefits on premature termination of
board activities, benefits paid by third parties
In conjunction with the consensual early termina-
tion of Dr Eichiner's Board of Management mandate
with effect from the expiry of 31 December 2016, the
Company also reached an agreement with Dr Eichiner
concerning an amendment to his service contract,
which ends on 31 May 2017. For the period from
the termination of his board mandate through to
31 May 2017, he continues to receive fixed compen-
sation of €0.38 million. A payment of €0.75 million,
payable in 2017, was agreed to settle all other com-
pensation entitlements for the remainder of the
Board of Management members who retire immedi-
ately after their service on the board and who draw a
retirement pension are entitled to purchase vehicles
and BMW Group services at conditions that also apply
for Company pensioners and to lease BMW Group
vehicles in accordance with the guidelines applicable
to senior heads of departments. Retired Chairmen
of the Board of Management are entitled to use a
BMW Group vehicle as a company car on a similar
basis to senior heads of departments, and depend-
ing on availability and against payment, use BMW
chauffeur services.
been specified, in the event of which the Company no
longer has any obligation to pay benefits. Transitional
payments are no longer provided.
Report
in € million
Variable cash
compensation
29.0
27.1
compensation
compensation
number of matching shares
Other
Basic
in € or
Fixed compensation
Share-based
of the Board of Management for the
financial year 2016 (2015)
Compensation of the individual members
77.1
* Matching component; provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is determined in
each case when the requirement to invest in BMW AG common stock has been fulfilled.
35.5
100.0
37.6
Total compensation
2.0
0.7
2.1
0.8
Share-based compensation component*
76.3
100.0
(936)
(166,581)
Total6
(9,915)
(9,915)
71,285
61,370
(100,747)
(59,311)
196,362
95,615
(491,185)
(224,354)
829,579
435,753
(34,375)
(34,245)
111,253
76,878
(497,259)
(133,415)
489,900
127,176
(-)
2,130
68,865
2,130
2,614,266
(2,959,655)
Present value of
pension obliga-
tions (defined
benefit plans),
financial year 20165 financial year 20165
Service cost in
accordance with
HGB for the
IFRS for the
Service cost in
accordance with
Klaus Draeger4
Total³
Oliver Zipse
Peter Schwarzenbauer
Ian Robertson
(1,106,057)
Klaus Fröhlich
Markus Duesmann¹
Milagros Caiña Carreiro-Andree
Harald Krüger
in €
Pension entitlements
5 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2015.
"Member of the Board of Management until 31 December 2016.
3 Member of the Board of Management since 1 October 2016.
² Member of the Board of Management until 30 September 2016.
1 Provisional number or provisional monetary value calculated on the basis of the closing price of BMW common stock in the Xetra trading system on 30 December 2016 (88.75 €)
(fair value at reporting date).
Friedrich Eichiner²
(497,690)
(90,275)
465,494
→ Compensation
Statement on
Corporate
Governance
218
217
Pension obligations to former members of the Board of
Management and their surviving dependants are cov-
ered by pension provisions amounting to €86.4 million
(2015: €71.8 million), recognised in accordance with
IAS 19.
Total benefits paid to former members of the Board of
Management and their surviving dependants for the
financial year 2016 amounted to €6.5 million (2015:
€8.0 million).
In addition, an expense of €2.8 million (2015: €2.6 mil-
lion) was recognised in the financial year 2016 for
current members of the Board of Management for
the period after the end of their service relationship,
which relates to the expense for allocations to pension
provisions.
6 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2015.
5 Member of the Board of Management until 31 December 2016.
4 Member of the Board of Management since 1 October 2016.
Report
3 Member of the Board of Management until 30 September 2016.
(715,278) (35,472,904) (34,757,626)
(8,032)
(4,313,952) (4,217,845)
3,861,711 3,780,900
(3,721,739) (3,645,082)
4,495,825 4,492,451
(-)
161,622 7,627,519 7,545,122
(130,079) (6,218,971) (6,088,892)
101,198 4,544,873 4,443,675
(89,242) (4,047,547) (3,958,305)
75,922 3,382,272 3,404,174
(96,107) (4,314,767) (4,218,660)
21,629 966,461 944,832
(-)
101,198
(96,107)
80,811
(76,657)
101,198 4,489,147 4,483,005
(96,107) (4,304,471) (4,208,364)
97,601 4,338,103 4,240,502
(82,377) (3,686,789) (3,604,412)
80,811 3,919,094 3,838,283
(48,602) (2,359,616) (2,311,014)
821,990 37,625,005 37,172,944
8,964
(457)
876
750,000 114,694 864,694 2,973,589
(475,806) (44,089) (519,895) (1,791,119)
7,425,000 385,391 7,810,391 28,992,624
(7,333,870) (318,440) (7,652,310) (27,105,316)
1 Provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is determined in each case when the
requirement to invest in BMW AG common stock has been fulfilled. See note 39 to the Group Financial Statements for a description of the accounting treatment of the share-based compensation component.
² Value of benefits granted for work performed on the Board of Management during the financial year 2016 plus the amount falling due for payment in conjunction with a share-based remuneration component
granted in a previous year and for which the holding period requirements were met.
Share-based component of the individual members
of the Board of Management for the
financial year 2016 (2015)
102,338
(268,970)
(109,760)
284,247
15,276
(369,498)
→ Compensation
557,844
279,932
Provision at
31.12.2016 in
accordance with
HGB and IFRS¹
in accordance with
HGB and IFRS
Expense in 2016
Total5
Oliver Zipse
Peter Schwarzenbauer
Ian Robertson
Klaus Fröhlich
Friedrich Eichiner4
Markus Duesmann³
Klaus Draeger²
Milagros Caiña Carreiro-Andree
Harald Krüger
in €
Oliver Zipse
Statement on
Corporate
Governance
a) Defined benefits
215
(358,331)
(3,993,819)
(3,992,702)
358,490
360,785
1,879,851
1,879,263
(360,767)
(364,656)
(1,427,599)
(175,287)
(1,427,072)
87,500
622,236
620,307
(-)
(-)
189,754
407,706
6,856,658
5,622,284
(201,018)
87,500
(408,960)
4,763,838
510,811
The compensation of members of the Board of Man-
agement is determined by the full Supervisory Board
on the basis of performance criteria and after taking
into account any remuneration received from Group
companies. The principal performance criteria are the
nature of the tasks allocated to each member of the
Board of Management, the economic situation and the
performance and future prospects of the BMW Group.
The Supervisory Board sets ambitious and relevant
parameters as the basis for variable compensation.
It also ensures that variable components based on
multi-year assessment criteria take account of both
The compensation system for the Board of Man-
agement at BMW AG is designed to encourage a
management approach focused on the sustainable
development of the BMW Group. One further prin-
ciple applied when designing remuneration systems
at BMW is that of consistency at different levels. This
means that compensation systems for the Board of
Management, senior management and employees
of BMW AG are composed of similar elements. The
Supervisory Board carries out regular checks to ensure
that all Board of Management compensation compo-
nents are appropriate, both individually and in total,
and do not encourage the Board of Management to
take inappropriate risks on behalf of the BMW Group.
At the same time, the compensation model used for
the Board of Management needs to be sufficiently
attractive for highly qualified executives in a compet-
itive environment.
Principles of compensation
The full Supervisory Board is responsible for deter-
mining and regularly reviewing Board of Management
compensation. The necessary preparation for these
tasks is undertaken by the Supervisory Board's Per-
sonnel Committee.
Responsibilities
1. Board of Management compensation
The following section describes the principles govern-
ing the compensation of the Board of Management
and the stipulations set out in the statutes relating
to the compensation of the Supervisory Board. In
addition to explaining the compensation system, the
components of compensation are also disclosed in
absolute figures. Furthermore, the compensation
of each member of the Board of Management and
the Supervisory Board for the financial year 2016 is
disclosed per individual member and analysed in its
component parts.
COMPENSATION REPORT
Report
→ Compensation
4,764,941
Statement on
Corporate
Governance
211
Under the terms of the Employee Share Programme,
in 2016 employees were entitled to acquire packages
of between four and eleven shares of non-voting pre-
ferred stock with a discount of €22.72 (2015: €20.83)
per share compared to the market price (average
closing price in Xetra trading during the period from
4 to 9 November 2016: €66.86). All employees of
BMW AG and its (directly or indirectly) wholly owned
German subsidiaries (if agreed to by the directors
of those entities) were entitled to participate in the
programme. Employees were required to have been
in an uninterrupted employment relationship with
BMW AG or the relevant subsidiary for at least one
year at the date on which the allocation for the year
was announced. Shares of preferred stock acquired
in conjunction with the Employee Share Programme
are subject to a blocking period of four years, starting
from 1 January of the year in which the employees
acquired the shares. A total of 305,029 (2015: 309,944)
shares of preferred stock were acquired by employees
under the programme in 2016; 305,000 (2015: 309,860)
of these shares were drawn from Authorised Capital
2014, the remainder were bought back via the stock
exchange. Every year the Board of Management of
BMW AG decides whether the scheme is to be con-
tinued. Further information is provided in → notes 29
and 39 to the Group Financial Statements.
→ see
notes
29 and 39
→ see
note 39
-
Under the terms of the programme, participants give
a commitment to invest an amount equivalent to 20%
of their performance-based bonus in BMW common
stock and to hold the shares so acquired for a min-
imum of four years. In return for this commitment,
BMW AG pays 100% of the investment amount as a net
subsidy. Once the four-year holding period require-
ment has been fulfilled, the participants receive – for
each three common stock shares held and at the
Company's option one further share of common
stock or the equivalent amount in cash.
The share-based remuneration programme for qual-
ifying heads of department, introduced with effect
for financial years beginning after 1 January 2012, is
closely based on the programme for Board of Manage-
ment members and is aimed at rewarding a long-term,
entrepreneurial approach to running the business on
a sustainable basis.
Three share-based remuneration schemes were
in place at BMW AG during the year under report,
namely the Employee Share Programme (under which
entitled employees of BMW AG have been able to
participate in the enterprise's success since 1989 in
the form of non-voting shares of preferred stock), a
share-based remuneration programme for Board of
Management members, and a share-based remuner-
ation programme for senior heads of department
(relating in both cases to shares of common stock).
The share-based remuneration programme for Board
of Management members is described in detail in
the Compensation Report (see also the "Share-based
remuneration" section in the Compensation Report
and → note 39 to the Group Financial Statements).
Share-based compensation programmes for
employees and members of the Board of
Management
507,444
212
positive and negative developments and that the pack-
age as a whole encourages a long-term approach to
business performance. Targets and other parameters
may not be changed retrospectively. The Supervisory
Board reviews the appropriateness of the compensa-
tion system annually. In preparation, the Personnel
Committee also consults remuneration studies. The
Supervisory Board reviews the appropriateness of the
compensation system in horizontal terms by compar-
ing compensation paid by other DAX companies and
in vertical terms by comparing board compensation
with the salaries of executive managers and with the
average salaries of employees of BMW AG based in
Germany, in both cases with regard to their various
levels and to changes over time. Recommendations
made by an independent external remuneration
expert and suggestions made by investors and analysts
are also considered in the consultative process.
(5,465,539)
354,365
(221,667)
(221,667) (1,188,313)
(1,187,721)
2,634,212
(2,301,249)
2,849,067 23,630,940
(2,888,441) (23,198,892)
21,425,612
(22,343,033)
174,793
(184,066)
407,706
(408,960)
7,864,591
1,620,978
5,649,230
(5,011,606)
1 Member of the Board of Management since 1 October 2016.
2 Member of the Board of Management until 31 December 2016.
3 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2015.
4 Member of the Board of Management until 30 September 2016.
5 Service cost differs due to the different valuation bases used to measure pension obligations for HGB purposes (expected settlement amount) and for IFRS purposes
(present value of the defined benefit obligation).
6 Based on a legal right to receive the benefits already promised to them, Board of Management members appointed for the first time prior to 1 October 2010 were given the option of choosing between the
previous defined benefit model and the new defined contribution model.
219
220
Statement on
Corporate
Governance
(5,251,799)
(5,163,692)
1,621,507
355,045
356,743
1,935,142
1,935,142
(350,000)
(350,000)
(1,510,725) (1,510,706)
424,411
408,564
4,469,471
3,502,860
357,410
(448,139)
(3,279,690)
(2,968,379)
357,203
359,548
1,481,134
1,480,940
(360,305)
(364,312)
(1,081,408)
(1,081,155)
(411,555)
Compensation system, compensation components
The compensation of the Board of Management com-
prises both fixed and variable remuneration as well as
a share-based component. Retirement and surviving
dependants' benefit entitlements are also in place.
Fixed remuneration
Fixed remuneration consists of a base salary (paid
monthly) and other remuneration elements, which
comprise mainly the use of company and leased cars
as well as the payment of insurance premiums, con-
tributions towards security systems and an annual
medical check-up. Members of the Board of Manage-
ment are also entitled to purchase vehicles and other
services of the BMW Group at conditions that also
apply in each relevant case for employees.
acquisition
Bonus
Cash compen-
sation for share
Share-based compensation programme
Chairman of the Board of Management
in the second term of appointment or from fourth year in office
Member of the Board of Management
in the first term of appointment
Member of the Board of Management
in € p. a.
Monetary value
of matching
component
REMUNERATION CAPS (MAXIMUM REMUNERATION)
Pension contributions p. a.:
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
Pension of €120,000 p. a. plus fixed amounts based on length of Company
and board service
b) Defined contribution system with guaranteed minimum rate of return
(only applies to board members appointed for the first time before
1 January 2010; based on legal right to receive the benefits already
promised to them, this group of persons is entitled to opt between
(a) and (b)
Principal features
Model
RETIREMENT AND SURVIVING DEPENDANTS' BENEFITS
Contractual agreement, main points: use of Company cars, insurance premiums,
contributions towards security systems, medical check-up
OTHER COMPENSATION
Member of the Board of Management: €350,000-€400,000
Chairman of the Board of Management: €500,000
Once the four-year holding period requirement is fulfilled, Board of Management mem-
bers receive for each three common stock shares held either - at the Company's option -
one further share of common stock or the equivalent amount in cash
Possible
special bonus
3,000,000
Income earned on an employed or a self-employed
basis up to the age of 63 may be offset against pension
entitlements. In addition, certain circumstances have
Contributions falling due under the defined con-
tribution model are paid into an external fund in
conjunction with a trust model that is also used to
fund pension obligations to employees.
Depending on the length of membership in the Board
of Management and previous activities, the annual
contribution to be paid amounts to between €350,000
and €400,000 for each member of the Board of Man-
agement and €500,000 for the Chairman of the Board
of Management. The guaranteed minimum rate of
return p. a. corresponds to the maximum interest rate
used to calculate insurance reserves for life insurance
policies (guaranteed interest on life insurance policies).
When granting pension entitlements, the Supervisory
Board considers the targeted level of pension provision
in each case as well as the resulting expense for the
BMW Group.
the number of annual contributions possible up to
the age of sixty (up to a maximum of 10). In addition,
following the death of a retired board member who
has elected to receive a lifelong pension, 60% of that
amount is paid as a lifelong widow's pension. Pensions
are increased annually by at least 1%.
If a member of the Board of Management with a
vested entitlement dies prior to the commencement
of benefit payments, a surviving spouse or otherwise
surviving children - in the latter case depending on
their age and education – are entitled to receive ben-
efits as surviving dependants. In case of invalidity or
death, the minimum benefit promised is based on
The amount of the benefits to be paid is determined
on the basis of the amount accrued in each board
member's individual pension savings account. The
amount on this account arises from annual contribu-
tions paid in, plus interest earned depending on the
type of investment.
If a mandate is terminated, the new defined contribu-
tion system provides entitlements which can be paid
either (a) in case of death or invalidity as a one-off
amount or in instalments, or (b) upon retirement –
depending on the wish of the ex-board member con-
cerned in the form of a lifelong monthly pension,
as a one-off amount, in instalments, or in a combined
form (for instance a combination of a one-off payment
and a proportionately reduced lifelong monthly pen-
sion). Former members of the Board of Management
are entitled to receive the retirement benefit at the
earliest upon reaching the age of 60, or in the case
of entitlements awarded after 1 January 2012, upon
reaching the
age of 62.
*Including basic remuneration, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the individual components.
9,850,000
1,500,000
Total*
1,400,000
6,000,000
5,500,000
1,200,000
800,000
800,000
3,500,000
4,925,000
1,000,000
700,000
700,000
1,400,000
Earmarked cash remuneration equivalent to the amount required to be invested in
BMW AG shares, plus taxes and social insurance contributions
Requirement for Board of Management members to each invest an amount equivalent to
20% of their total bonus (after tax) in BMW AG common stock
May be paid in justified circumstances on an appropriate basis, contractual basis,
no entitlement
full year of service on the board (up to a maximum
of 15 years). Pension payments are adjusted based
on the rules applicable for the adjustment of civil
servants' pensions, i.e. the pensions of members of
the Board of Management are adjusted when the civil
servants remuneration level B6 (excluding allowances)
is increased by more than 5% or in accordance with
the Company Pension Act.
Overview of compensation system and
compensation components
defined benefit plan, the entitlement to retirement
benefits arises at the earliest on reaching the age of
60 or in case of invalidity. The amount of the pen-
sion comprises a basic monthly amount of €10,000
plus a fixed amount. The fixed amount is made up
of approximately €75 for each year of service in the
Company before becoming a member of the Board of
Management plus between €400 and €600 for each 7
→ Compensation
Report
Statement on
Corporate
Governance
214
213
In the event of the termination of mandate, Board
of Management members appointed for the first
time prior to 1 January 2010 are entitled to receive
certain defined benefits in accordance with the rules
of an older (defined benefit) pension plan. Under the
Retirement and surviving dependants' benefits
The provision of retirement and surviving depend-
ants' benefits for Board of Management members
was changed to a defined contribution system with a
guaranteed minimum return with effect from 1 Janu-
ary 2010. However, given the fact that board members
appointed for the first time prior to 1 January 2010 for
the most part had a legal right to receive the benefits
already promised to them, these board members were
given the option to choose between the previous sys-
tem and the new one.
This programme envisages a share-based remuner-
ation component equivalent to 20% of the board
member's total bonus after taxes, which the board
member is required to invest in BMW AG common
stock. Taxes and social insurance relating to the share-
based remuneration component are borne by the
Company. As a general rule, the shares must be held
for a minimum of four years. As part of a matching
plan, at the end of the holding period the Board of
Management members will normally receive from
the Company either one additional share of common
stock or an equivalent cash amount for three shares
of common stock held, to be decided at the discretion
of the Company (share-based remuneration compo-
nent/matching component). Special rules apply in the
case of death or invalidity of a Board of Management
member or early termination of the contractual rela-
tionship before fulfilment of the holding period.
Component
The compensation system includes a share-based
remuneration programme, in which the level of share-
based remuneration is based on the amount of bonus
paid. The system is aimed at creating further long-term
incentives to encourage sustainable governance.
at safeguarding the future viability of the business
to the extent not included directly in the basis of
measurement. Performance factor criteria include
innovation (economic and ecological, e.g. reduction
of carbon emissions), customer focus, ability to adapt,
leadership accomplishments, shaping corporate cul-
ture and promoting integrity, contributions to the
Company's attractiveness as an employer, progress
in implementing the diversity concept, and activities
that foster corporate social responsibility. The target
bonus and the key figures used to determine the cor-
porate earnings-related bonus are fixed in advance for
a period of three financial years, during which time
they may not be amended retrospectively.
The personal performance-related bonus is derived by
multiplying the target amount set for each member
of the Board of Management by a performance factor.
The Supervisory Board sets the performance factor
on the basis of its assessment of the contribution
of the relevant Board of Management member to
sustainable and long-term oriented business devel-
opment. In setting the factor, equal consideration is
given to personal performance and decisions taken
in previous planning periods, key decisions affecting
the future development of the business and the effec-
tiveness of measures taken in response to changing
external conditions as well as other activities aimed
An earnings and dividend factor of 1.00 would give
rise to an earnings-based bonus of €0.75 million for
the financial year 2016 for a member of the Board
of Management during the first period of office and
one of €0.875 million during the second term of
appointment or from the fourth year in office. The
equivalent bonus for the Chairman of the Board of
Management is €1.5 million. The earnings factor is
1.00 in the event of a Group net profit of €3.1 billion
and a post-tax return on sales of 5.6%. The dividend
factor is 1.00 in the event that the dividend paid on
the shares of common stock is between 101 and 110
cents. If the Group net profit were below €2 billion,
or if the post-tax return on sales were less than 2%,
the earnings factor for the financial year 2016 would
be zero. In this case, no corporate earnings-related
bonus would be paid.
The corporate earnings-related bonus is based on the
BMW Group's net profit and post-tax return on sales
(which are combined in a single earnings factor) and
the level of the dividend (common stock). The corpo-
rate earnings-related bonus is derived by multiplying
the target amount fixed for each member of the Board
of Management by the earnings factor and by the
dividend factor. In exceptional circumstances, for
instance when there have been major acquisitions or
disposals, the Supervisory Board may adjust the level
of the corporate earnings-related bonus.
The bonus comprises two components, each equally
weighted, namely a corporate earnings-related bonus
and a personal performance-related bonus. The target
bonus (100%) for a Board of Management member,
for both components of variable compensation, totals
€1.5 million p. a., rising to €1.75 million p. a. from the
second term or fourth year of office onwards. The
equivalent figure for the Chairman of the Board of
Management is €3 million p. a. The bonus figure is
capped for all Board of Management members at 200%
of the relevant target bonus.
Supervisory Board also has the option of paying an
additional special bonus.
Variable cash remuneration, in particular bonuses
Variable cash remuneration consists of a cash bonus
and share-based remuneration component equiva-
lent to 20% of a board member's total bonus after
taxes, which the board member is required to invest
in BMW AG common stock. Taxes and social insur-
ance relating to the share-based remuneration are
also borne by the Company. In justified cases, the
The variable remuneration of Board of Management
members comprises variable cash remuneration on
the one hand and a share-based remuneration com-
ponent on the other.
Variable remuneration
The basic remuneration of members of the Board of
Management was unchanged from the previous year,
namely €0.75 million p. a. for a board member during
the first term of office, €0.9 million p.a. for a board
member from the second term of office or fourth
year of office onwards and €1.5 million p. a. for the
Chairman of the Board of Management.
Share-based remuneration programme
BASIC COMPENSATION P. A.
Parameter/measurement base
Member of the Board of Management:
Criteria for the performance factor also include: innovation (economic and ecological,
e.g. reduction of CO2 emissions), customer orientation, ability to adapt, leadership
accomplishments, corporate culture and promoting integrity, attractiveness as employer,
progress in implementing the diversity concept and activities that foster corporate social
responsibility
Formula: 50% of target bonus x performance factor
Primarily qualitative criteria, expressed in terms of a performance factor aimed at
measuring the board members' contribution to sustainable and long-term performance
and the future viability of the business
Quantitative criteria fixed in advance for a period of three financial years
Formula: 50% of target bonus x earnings factor x dividend factor (common stock)
The earnings factor is derived from the Group net profit and the Group post-tax return
on sales
with HGB6
€1.75 million (from second term of appointment onwards or fourth year in office)
€3.00 million (Chairman of the Board of Management)
€1.50 million (first term of appointment)
-
Target bonuses p. a. (if target is 100% achieved):
(matching component)
b) Share-based remuneration component
a) Cash compensation component
Share-based remuneration programme
Special bonus payments
(corresponds to 50% of target bonus if target is 100% achieved)
b) Performance-related bonus
(corresponds to 50% of target bonus if target is 100% achieved)
a) Corporate earnings-related bonus
Bonus
VARIABLE COMPENSATION
€1.50 million
- €0.90 million (from second term of appointment onwards or fourth year in office)
Chairman of the Board of Management:
€0.75 million (first term of appointment)
216
in accordance
with IFRS6
Report
For performance of his duties, the Chairman of the
Supervisory Board has the use of an office with admin-
istrative support, as well as the BMW car service.
The Company also reimburses to each member of
the Supervisory Board reasonable expenses and any
value-added tax arising on the member's remunera-
tion. The amounts disclosed below are net amounts.
In addition, each member of the Supervisory Board
receives an attendance fee of €2,000 for each full
meeting of the Supervisory Board (Plenum) which
the member has attended (payable at the end of the
financial year). Attendance of more than one meeting
on the same day is not remunerated separately.
Accordingly, the Articles of Incorporation of BMW AG
stipulate that the Chairman of the Supervisory Board
shall receive three times the amount and each Deputy
Chairman shall receive twice the amount of the remu-
neration of a Supervisory Board member. Provided the
relevant committee convened for meetings on at least
three days during the financial year, each chairman
of the Supervisory Board's committees receives twice
the amount and each member of a committee receives
one-and-a-half times the amount of the remuneration
of a Supervisory Board member. If a member of the
Supervisory Board exercises more than one of the
functions referred to above, the compensation is
measured only on the basis of the function that is
remunerated with the highest amount.
The German Corporate Governance Code also recom-
mends in section 5.4.6 paragraph 1 sentence 2 that
the exercising of chair and deputy chair positions in
the Supervisory Board as well the chair and member-
ship of committees should also be considered when
determining the level of compensation.
With this combination of fixed compensation ele-
ments and a Company performance-related com-
pensation component oriented toward sustainable
growth, the compensation structure in place for
BMW AG's Supervisory Board complies with the rec-
ommendation on supervisory board compensation
contained in section 5.4.6 paragraph 2 sentence 2 of
the German Corporate Governance Code (version
dated 5 May 2015).
In accordance with the Articles of Incorporation, each
member of BMW AG's Supervisory Board receives, in
addition to the reimbursement of reasonable expens-
es, a fixed amount of €70,000 (payable at the end of
the year) as well as a Company performance-related
compensation of €170 for each full €0.01 by which
the average amount of (undiluted) earnings per s share
(EPS) of common stock reported in the Group Finan-
cial Statements for the remuneration year and the two
preceding financial years exceed a minimum amount
of €2.00 (payable after the Annual General Meeting
held in the following year). An upper limit correspond-
ing to twice the amount of the fixed compensation
is in place for the Company performance-related
compensation. The limit for a member of the Supervi-
sory Board with no additional compensation-relevant
function is therefore set at €140,000.
Compensation principles, compensation components
The Supervisory Board of BMW AG receives a fixed
compensation component as well as a Company per-
formance-related compensation component, which is
oriented toward sustainable growth and based on a
multi-year assessment. The Company performance-
related component is based on average earnings per
share of common stock for the remuneration year and
the two preceding financial years.
The fixed and performance-related components in
combination are intended to ensure that the compen-
sation of Supervisory Board members is appropriate
in relation to the tasks of Supervisory Board members
and the Company's financial condition and also takes
account of business performance over several years.
Responsibilities, regulation pursuant to
Articles of Incorporation
2. Supervisory Board compensation
→ Compensation
The compensation of the Supervisory Board is specified
either by a resolution of the shareholders at the Annu-
al General Meeting or in the Articles of Incorporation.
The compensation regulation valid for the financial
year under report was resolved by shareholders at the
Annual General Meeting on 14 May 2013 and is set
out in Article 15 of BMW AG's Articles of Incorpo-
ration, which can be viewed and/or downloaded at
→ www.bmwgroup.com/ir under the menu items "Facts about
the BMW Group" and "Corporate Governance".
Feege
Wirtschaftsprüfer
→Page 230 Index
→ Page 232 Index of Graphs
→ Page 233 Financial Calendar
→Page 234 Contacts
→Page 228 Glossary
→ Page 226 BMW Group Ten-year Comparison
OTHER
INFORMATION
Wirtschaftsprüfer
→ 63, 77, 112 et seq., 133 et seq.
Wirtschaftsprüfungsgesellschaft
KPMG AG
Munich, 24 February 2017
In our opinion, based on the findings of our audit,
the consolidated financial statements comply with
IFRSS, as adopted by the EU, the additional require-
ments of German commercial law pursuant to § 315 a
Abs. 1 HGB and give a true and fair view of the net
assets, financial position and results of operations of
the Group in accordance with these requirements.
The group management report is consistent with the
consolidated financial statements, complies with
the German statutory requirements, and as a whole
provides a suitable view of the Company's position
and suitably presents the opportunities and risks of
future development.
5
Our audit has not led to any reservations.
financial statements in accordance with the applica-
ble financial reporting framework and in the group
management report are detected with reasonable
assurance. Knowledge of the business activities and
the economic and legal environment of the Group and
expectations as to possible misstatements are taken
into account in the determination of audit procedures.
The effectiveness of the accounting-related internal
control system and the evidence supporting the dis-
closures in the consolidated financial statements and
the group management report are examined primarily
on a test basis within the framework of the audit. The
audit includes assessing the annual financial state-
ments of those entities included in consolidation, the
determination of entities to be included in consoli-
dation, the accounting and consolidation principles
used and significant estimates made by management,
as well as evaluating the overall presentation of the
consolidated financial statements and group man-
agement report. We believe that our audit provides a
reasonable basis for our opinion.
We conducted our audit of the consolidated financial
statements in accordance with § 317 HGB [Handels-
gesetzbuch "German Commercial Code"] and German
generally accepted standards for the audit of financial
statements promulgated by the Institut der Wirtschaft-
sprüfer [Institute of Public Auditors in Germany]
(IDW). Those standards require that we plan and
perform the audit such that misstatements materially
affecting the presentation of the net assets, financial
position and results of operations in the consolidated
We have audited the consolidated financial statements
prepared by the Bayerische Motoren Werke Aktien-
gesellschaft, comprising the income statement for
group and statement of comprehensive income
for group, the balance sheet for group, cash flow
statement for group, group statement of changes in
equity and the notes to the group financial statements,
together with the group management report for the
business year from 1 January to 31 December 2016.
The preparation of the consolidated financial state-
ments and the group management report in accord-
ance with IFRSs, as adopted by the EU, and the
additional requirements of German commercial law
pursuant to § 315 a Abs. 1 HGB [Handelsgesetzbuch
"German Commercial Code"] are the responsibility
of the parent company's management. Our respon-
sibility is to express an opinion on the consolidated
financial statements and on the group management
report based on our audit.
BMW GROUP
AUDITOR'S REPORT
Sailer
5
Financial Calendar
Ten-year
Comparison
2014
2015
2016
Motorcycles¹
Automobiles
PRODUCTION VOLUME
Motorcycles¹
Automobiles
SALES VOLUME
Other
Information
TEN-YEAR COMPARISON
Comparison
→ BMW Group
Ten-year
Other
Information
226
Contacts
→ BMW Group
Auditor's Report
Index of Graphs
Index
Glossary
BMW GROUP
Statement on
Corporate
Governance
Klaus Fröhlich
223
1,820,000
Total²
(196,960)
(116,960)
(10,000)
(70,000)
210,220
130,220
10,000
70,000
Werner Zierer¹
(194,960)
(116,960)
(8,000)
(70,000)
208,220
130,220
8,000
70,000
3,385,720
5,393,720
(1,820,768)
(190,000)
Oliver Zipse
Peter Schwarzenbauer
Dr. Ian Robertson (HonDSc)
Dr. Nicolas Peter
2013
Milagros Caiña Carreiro-Andree Markus Duesmann
Harald Krüger
The Board of Management
Aktiengesellschaft
224
Bayerische Motoren Werke
"To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position and profit of the
Group, and the Group Management Report includes
a fair review of the development and performance of
the business and the position of the Group, together
with a description of the principal opportunities and
risks associated with the expected development of
the Group."
Statement pursuant to § 37y No. 1 of the
Securities Trading Act (WpHG) in conjunction
with § 297 (2) sentence 4 and § 315 (1) sentence
6 of the German Commercial Code (HGB)
RESPONSIBILITY
STATEMENT BY THE
COMPANY'S LEGAL
REPRESENTATIVES
Management and the Supervisory Board of BMW AG
or its subsidiaries, nor were any contingent liabilities
entered into on their behalf.
Apart from vehicle lease and financing contracts
entered into on customary conditions, no advances
or loans were granted to members of the Board of
3. Other
1 These employee representatives have - in line with the guidelines of the Deutsche Gewerkschaftsbund - requested that their remuneration be paid into the Hans Böckler Foundation.
² Figures for the previous year include the remuneration of members of the Supervisory Board who left office during the financial year of 2015.
(5,053,009)
(3,042,241)
Munich, 14 February 2017
units
units
2,165,566 2,006,366
133,615 110,127
2,117,965 1,963,798
123,495 115,215
Capital expenditure ratio (capital expenditure/revenues)
Capital expenditure (excluding capitalised development costs)
Current assets
Non-current assets
BALANCE SHEET
5,329
5,817
6,396
6,910
€ million
Net profit for the year
32.5
33.2
30.7
28.5
%
2,564
2,890
2,828
Equity
Equity ratio
Non-current provisions and liabilities
Current provisions and liabilities
5.7
4.2
4.0
%
4,967
4,601
3,826
3,731
€ million
2,755
52,184
61,831
66,864
€ million
86,193
97,959
110,343
121,671
€ million
Balance sheet total
56,844
€ million
Income taxes
10.4
80,401
92,175
94,163
€ million
Revenues
INCOME STATEMENT
84,347
4,130,002
4,359,572
96,390
76,059
4,718,970
111,191
€ million
Business volume (based on balance sheet carrying amounts)²
contracts
Contract portfolio
FINANCIAL SERVICES
(196,960)
2,279,503
151,004
2,359,756
145,555
units
units
5,114,906
123,394
2,367,603 2,247,485
145,032 136,963
Gross profit margin³
19.9
10.8
10.0
10.3
%
Return on sales (earnings before tax/revenues)
7,893
8,707
9,224
9,665
%
€ million
7,978
9,118
9,593
9,386
€ million
Earnings before financial result
20.1
21.2
19.7
Earnings before tax
6.5
(116,960)
(70,000)
(140,000)
410,440
260,440
10,000
140,000
Stefan Schmid (Deputy Chairman)¹
(383,920)
(233,920)
(10,000)
(140,000)
410,440
260,440
10,000
140,000
Stefan Quandt (Deputy Chairman)
(383,920)
(233,920)
(10,000)
(140,000)
410,440
260,440
(10,000)
10,000
(233,920)
Karl-Ludwig Kley (Deputy Chairman)
130,220
8,000
70,000
Franz Haniel
(196,960)
(116,960)
(10,000)
(70,000)
210,220
130,220
10,000
70,000
Christiane Benner¹
(377,920)
(233,920)
(4,000)
(140,000)
408,440
260,440
8,000
140,000
(383,920)
140,000
Manfred Schoch (Deputy Chairman)¹
(366,041)
3.4
39.2
2.0
37.0
2.0
Proportion in %
Amount
Proportion in %
Amount
2015
2016
Supervisory Board members did not receive any
ther compensation or benefits from the BMW Group
for advisory and/or agency services personally ren-
dered.
fur-
Total compensation
Variable compensation
Fixed compensation
in € million
221
€5.4 million (2015: €5.1 million). This amount includes
fixed compensation of €2.0 million (2015: €2.0 million)
and variable compensation of €3.4 million (2015:
€3.1 million).
In accordance with Article 15 of the Articles of Incor-
poration, the compensation of the Supervisory Board
for activities during the financial year 2016 totalled ¬
Total compensation of the Supervisory Board for the
2016 financial year
63.0
3.1
60.8
5.4
(223,986)
(8,000)
(134,055)
610,660
390,660
10,000
210,000
Total
Variable
compensation
Attendance fee
208,220
compensation
Norbert Reithofer (Chairman)
in €
Compensation of the individual members of the Supervisory Board for the financial year 2016 (2015)
→ Responsibility
Statement by the
Company's Legal
Representatives
→ Compensation
Report
Statement on
Corporate
Governance
222
100.0
5.1
100.0
Fixed
(10,000)
(70,000)
(116,960)
(116,960)
(10,000)
(70,000)
210,220
130,220
10,000
70,000
Willibald Löw¹
(194,960)
(116,960)
(8,000)
(70,000)
210,220
130,220
10,000
70,000
Horst Lischka¹
(196,960)
(116,960)
(10,000)
(70,000)
(196,960)
208,220
Simone Menne
10,000
208,220
130,220
8,000
70,000
Jürgen Wechsler¹
Brigitte Rödig¹
(196,960)
(116,960)
(10,000)
(70,000)
210,220
130,220
10,000
70,000
Dominique Mohabeer¹
(127,347)
(74,662)
(8,000)
(44,685)
210,220
130,220
70,000
130,220
8,000
70,000
70,000
Susanne Klatten
(196,960)
(116,960)
(10,000)
(70,000)
208,220
130,220
8,000
70,000
Henning Kagermann
(196,960)
(116,960)
(10,000)
(70,000)
210,220
130,220
10,000
70,000
Reinhard Hüttl
(196,960)
10,000
130,220
210,220
(70,000)
Robert W. Lane
(196,960)
(116,960)
(10,000)
(70,000)
210,220
130,220
10,000
70,000
Ulrich Kranz
(10,000)
(196,960)
(10,000)
(70,000)
210,220
130,220
10,000
70,000
Renate Köcher
(196,960)
(116,960)
(10,000)
(116,960)
€ million
47,363
42,764
0.30/0.32
0.30/0.32
1.30/1.32
694
197
197
852
1,508
2.30/2.32
2.50/2.52
1,640
107,539
76,704
100,041
75,612
96,230
72,349
83,141
84,887
95,453
100,306
105,876
89,161
6,246
4,471
4,921
1.06/1.08
8,149
Gross profit margin³
Earnings before tax
Other
Information
228
227
Dividend per share of common stock/preferred stock
DIVIDEND
Dividend total
Personnel cost per employee
Workforce at year-end5
PERSONNEL
Cash and cash equivalents at balance sheet date
Operating cash flow Automotive segment4
CASH FLOW STATEMENT
Balance sheet total
Current provisions and liabilities
Non-current provisions and liabilities
Equity
Equity ratio
Capital expenditure ratio (capital expenditure/revenues)
Capital expenditure (excluding capitalised development costs)
Non-current assets
Current assets
BALANCE SHEET
Net profit for the year
Income taxes
Effective tax rate
Return on sales (earnings before tax/revenues)
Earnings before financial result
8,110
9,167
2,393
21.7
22.0
23.2
21,744
20,273
19,915
23,930
27,103
30,606
5.2
5.6
4.7
3.8
4.0
5.4
2,933
2,980
2,383
2,312
2,720
4,151
19.5
20.1
24.4
52,834
7,454
7,767
7,432
7,776
8,370
88,997
101,086
101,953
110,164
123,429
→ Glossary
131,835
39,287
36,919
40,134
47,213
48,395
33,469
41,526
45,119
46,100
49,113
33,784
32,378
GLOSSARY
Short-term debt instruments with a term of less than
one year which are usually sold at a discount to their
face value.
Fleet emissions
Financial Services segment
Financial result → 65,78
Financial liabilities → 70, 157 et seq.
Financial assets
Financial instruments → 162 et seq.
→ 80, 146 et seq., 162 et seq.
F
→ 122 et seq.
Automotive segment
Accounting policies
Apprentices → 57
A
INDEX
→ Index
Other
Information
230
229
Research and non-capitalised development costs as a
percentage of Group revenues.
Research and development expense ratio
The sum of research and non-capitalised development
cost and capitalised development cost (not including
the associated scheduled amortisation).
Research and development expenditure
revenues.
→ 42 et seq.
Group profit/loss before tax as a percentage of Group
G
→ 4, 39, 61, 86
Intangible assets
Income taxes
Income statement
→ 121
→ 121
→133
Cost of sales
Cost of materials
Corporate Governance
Consolidated companies
Consolidation principles
Contingent liabilities
→ 52 et seq.
Connected Drive
Compensation Report → 212 et seq.
Compliance → 207 et seq.
Cash flow statement → 67 et seq., 116 et seq.
CO2 emissions → 4, 39, 61, 86 et seq.
Capital expenditure → 5, 65 et seq.
Cash and cash equivalents
Cash flow → 5, 68 et seq., 116 et seq.
→ 67 et seq., 162 et seq.
C
Group tangible, intangible and investment
assets → 124, 140 et seq.
→ 70, 157 et seq.
→ 72
Balance sheet structure
Bonds
B
→ 49 et seq.
Pre-tax return on sales
Group net profit as a percentage of Group revenues.
Post-tax return on sales
Abbreviation for "Earnings Before Interest and Taxes",
equivalent in the BMW Group income statement to
"Profit/loss before financial result".
EBIT
Liquid funds generated (cash inflows) or used (cash
outflows) during a reporting period.
Cash flow
Basic earnings per share are calculated for common
and preferred stock by dividing the net profit after
minority interests, as attributable to each category of
stock, by the average number of shares in circulation.
Earnings per share of preferred stock are computed
on the basis of the number of preferred stock shares
entitled to receive a dividend in each of the relevant
financial years.
Earnings per share (EPS)
Capitalised development costs as a percentage of
research and development expenditure.
Capitalisation rate
revenues.
Investments in property, plant and equipment and
other intangible assets (excluding capitalised
development costs) as a percentage of Group
Capital expenditure ratio
Financial swap agreements, under which creditors of
securities (usually bonds) pay premiums to the seller
of the CDS to hedge against the risk that the issuer of
the bond will default. As with credit default insurance
agreements, the party receiving the premiums gives
a commitment to compensate the bond creditor in
the event of default.
Credit default swap (CDS)
The process of combining separate financial state-
ments of Group entities into Group Financial State-
ments, depicting the financial position, net assets
and results of operations of the Group as a single
economic entity.
Consolidation
The sum of the balance sheet line items “Leased prod-
ucts" and "Receivables from sales financing" (current
and non-current), as reported in the balance sheet for
the Financial Services segment.
Business volume in balance sheet terms
A securitised debt instrument in which the issuer
certifies its obligation to repay the nominal amount
at the end of a fixed term and to pay a fixed or variable
rate of interest.
Bond
A form of corporate financing involving the sale of
receivables to a financing company.
Asset-backed financing transactions
Cash flow at risk
Similar to "value at risk" (see definition below).
EBIT margin
Profit/loss before financial result as a percentage of
Gross profit as a percentage of Group revenues.
Gross margin
A measure of the potential maximum loss in value of
an item during a set time period, based on a specified
probability.
Value at risk
Goodwill corresponds to the consideration paid to
acquire an entity, less the fair value of the separate
assets acquired and liabilities assumed. The buyer
is willing to pay the additional amount in return for
future expected earnings.
Goodwill
RoE in the Financial Services segment is calculated as
segment profit before taxes, divided by the average
amount of equity capital attributable to the Financial
Services segment.
Return on Equity (ROE)
ROCE in the Automotive and Motorcycles segments
is measured on the basis of relevant segment profit
before financial result and the average amount of
capital employed in the segment concerned. Capital
employed corresponds to the sum of all current and
non-current operational assets, less liabilities that do
not incur interest.
Return on Capital Employed (ROCE)
Commercial paper
A hedge against exposures to fluctuations in the fair
value of a balance sheet item.
The amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing
parties in an arm's length transaction.
Fair value
total.
Equity capital as a percentage of the balance sheet
Equity ratio
The effective tax rate is calculated by dividing the
income tax expense by the Group profit before tax.
Effective tax rate
A hedge against exposures to the variability in fore-
casted cash flows, particularly in connection with
exchange rate fluctuations.
Cash flow hedge
revenues.
Fair value hedge
38,670
39,944
43,151
11,836
11,464
€ million
Operating cash flow Automotive segment4
7,671
7,688
6,122
7,880
€ million
Cash and cash equivalents at balance sheet date
CASH FLOW STATEMENT
138,377
154,803
172,174
188,535
€ million
51,134
59,078
65,591
67,989
→ 80, 142
9,423
Inventories → 71, 80, 148
9,964
Workforce at year-end5
3 Research and development expenses included in cost of sales with effect from 2008.
1 Excluding Husqvarna, sales volume up to 2013: 59,776 units; production up to 2013: 59,426 units.
² Amount computed on the basis of balance sheet figures: until 2007 from the Group balance sheet, from 2008 onwards from the Financial Services segment balance sheet.
1,707
2.60/2.62
2.90/2.92
3.20/3.22
3.506/3.526
1,904
2,102
2,300
89,869
110,351
116,324
92,337
122,244
97,136
124,729
99,575
€
€ million
€
Dividend per share of common stock/preferred stock
Dividend total
DIVIDEND
Personnel cost per employee
PERSONNEL
Investments accounted for using the equity method
and other investments → 143 et seq.
K
Key data
Mandates of members of the Supervisory Board
→ 193 et seq.
Marketable securities → 67 et seq., 125, 140 et seq.
→ 48
Motorcycles segment
N
Net profit
5,63
New financial reporting rules
→ 130 et seq.
€ million
51,643
58,288
63,819
73,183
€ million
25.7
24.2
24.8
25.1
%
35,600
37,437
Mandates of members of the Board of Management
→ 192
M
List of investments → 180 et seq.
Locations → 24 et seq.
per share
→ 109
→ 190 et seq.
L
→ 161
→74 et seq.
D
Dealer organisation/dealerships → 23,55
Declaration with respect to the
Corporate Governance Code
4 Figures are reported in the cash flow statement up to 2006 as cash inflow from operating activities of Industrial Operations.
→ 191
Dow Jones Sustainability Index World
E
Earnings per share → 5, 137
EBIT margin/return on sales
Efficient Dynamics → 52
Employees 4, 39, 57 et seq., 85
Equity →73, 149
Exchange rates
→ 35, 84, 97, 122, 170
→ 61
5, 29 et seq., 40, 65, 86
Lease business
Leased products
→ 49 et seq.
→ 143
Digitalisation → 23, 45, 51, 55, 85, 96
Dividend → 109, 137
5 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.
6 Proposal by management.
2012
6.9
0.7
0.8
8.0
10.7
10.2
3,873
351
413
4,853
7,383
7,803
4,212
921
289
5,111
8,018
8,275
21.8
11.4
10.5
2,692
2,476
1,610
203
49,004
50,530
56,619
62,416
62,009
67,013
74,425
81,305
3,134
330
18.1
210
4,907
5,111
19.1
6.0
49.2
33.1
33.5
34.5
739
21
3,243
→ 65, 135 et seq., 156
21.1
56,018
82,631
99,236
1,258,417
1,481,253
1,738,160
110,360
1,861,826
113,811
PRODUCTION VOLUME
Motorcycles¹
SALES VOLUME
Automobiles
1,500,678
102,467
1,435,876
101,685
1,286,310
87,306
98,047
1,461,166
1,668,982
104,286
1,845,186
106,358
2007
2008
2009
2010
2011
1,439,918
104,220
1,541,503
104,396
Automobiles
Motorcycles¹
53,197
50,681
60,477
68,821
76,848
Revenues
INCOME STATEMENT
Business volume (based on balance sheet carrying amounts)²
51,257
60,653
20.2
61,202
75,245
80,974
Contract portfolio
2,629,949
3,031,935
3,085,946
3,190,353
3,592,093
3,846,364
FINANCIAL SERVICES
66,233
188,000
Effective tax rate
Development of credit loss ratio
→ 50
Contract portfolio retail customer financing of
Financial Services segment 2016
BMW Group new vehicles financed or leased by
Financial Services segment → 49
→ 49
Contract portfolio of Financial Services segment
→ 29
→ 6
BMW Group Value drivers
BMW Group in Figures
Finances
→ 51
INDEX OF GRAPHS
↑↑
→ Index of Graphs
Other
Information
232
231
→ 148 et seq.
→160
Trade payables
Trade receivables
→ 140 et seq.
Tangible, intangible and investment assets
Financial Calendar
Regional mix of BMW Group purchase volumes
2016
→ 54
BMW Group Change in cash and cash equivalents
→ 68
→ 36
Exchange rates compared to the euro
Further information
→ 60
Sustainability
→205
Proportion of female executives within management
→ 59
Employee attrition rate at BMW AG
→ 57
BMW Group apprentices at 31 December
Proportion of female employees in management
functions at BMW AG/BMW Group → 58
Workforce
→ 48
→ 42
BMW Group - key automobile markets 2016
BMW Group sales volume of motorcycles → 48
BMW Group-key motorcycle markets 2016
→ 24 et seq.
BMW Group Locations
Sales volume and locations
→ 72
→ 88
→ 207
BMW Group Financial liabilities
Balance sheet structure - Group → 72
Balance sheet structure - Automotive segment
BMW Group value added 2016 → 75
Risk management in the BMW Group
Development of BMW stock → 107, 108
BMW Group Compliance Management System
→ 70
T
→112, 139
Sustainability → 59 et seq.
Stock → 107 et seq.
Purchasing
Property, plant and equipment
Profit before tax → 5 et seq., 39, 65, 85, 87
65 et seq.
Profit before financial result → 5 et seq., 63 et seq.,
Production network → 24 et seq., 44 et seq.
→ 138
→ 4 et seq., 29 et seq., 39 et seq.,
73, 80, 127, 151 et seq.
Production → 44 et seq.
Personnel expenses
85 et seq.
Performance indicators
Pension provisions
P
→ 134
→156
Outlook → 82 et seq.
Other provisions
Other operating income and expenses
Other investments →165
Other financial result → 134
0
→ 54
Oil price trend
Precious metals price trend
Steel price trend → 37
→ 142
Rating → 110
Statement of Comprehensive Income
ment and the Supervisory Board → 174
Shareholdings of members of the Board of Manage-
Selling and administrative expenses →65,133
Segment information → 175 et seq.
→ 4, 39 et seq., 42 et seq., 48, 86 et seq.
Sales volume
S
→ 88 et seq.
→ 5,30 et seq., 41, 87
RoE
ROCE → 5, 29 et seq., 40, 86
Risks and opportunities
Revenues → 5,40 et seq., 63, 66 et seq., 78, 86 et seq., 133
→ 65
Revenue reserves → 149
Return on sales → 5,29 et seq., 40, 65, 86
Remuneration system → 212 et seq.
Report of the Supervisory Board → 8 et seq.
Research and development →51 et seq.
Result from equity accounted investments
→ 172 et seq.
→ 71, 145 et seq.
Related party relationships
Refinancing → 69 et seq.
Receivables from sales financing
R
→ 36
Materiality matrix
FINANCIAL CALENDAR
www.rolls-roycemotorcars.com.
and
Information about the various BMW Group brands
is available at www.bmw.com, www.mini.com
at www.bmwgroup.com/ir.
Investor Relations information is available directly
Further information about the BMW Group is
available online at → www.bmwgroup.com.
The BMW Group on the Internet
ir@bmwgroup.com
+49 89 382-1 46 61
+49 89 382-2 53 87
E-mail
Fax
Telephone +49 89 382-3 16 84
Investor Relations
presse@bmwgroup.com
A further contribution
towards preserving resources
The BMW Annual Report was printed on paper produced in accordance with the internation-
al FSC® Standard: the pulp is sourced from sustainably managed forests.
Telephone +49 89 382-0
Germany
80788 Munich
Aktiengesellschaft
Bayerische Motoren Werke
PUBLISHED BY
This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.
+49 89 382-2 44 18
print production
carbon neutral
FSC® C002727
Paper from
responsible sources
MIX
www.fsc.org
→ 35
The corresponding CO₂ emissions were compensated by additional environmental and cli-
mate protection measures as part of a reforestation project in collaboration with Bergwald-
projekt e. V. (certificate number: DE-141-217903).
natureOffice.com | DE-141-217903
Fax
E-mail
FSC
Business and Finance Press
Telephone +49 89 382-2 45 44
21 March 2018
2018
Quarterly Report to 30 September 2017
7 November 2017
Quarterly Report to 30 June 2017
3 August 2017
Annual General Meeting
11 May 2017
4 May 2017
Analyst and Investor Conference
22 March 2017
Annual Accounts Press Conference
21 March 2017
2017
+49 89 382-2 41 18
Annual Report 2017
21 March 2018
Quarterly Report to 31 March 2017
22 March 2018
CONTACTS
Annual Accounts Press Conference
→ Contacts
Other
Information
234
Quarterly Report to 30 September 2018
7 November 2018
233
2 August 2018
Analyst and Investor Conference
Annual General Meeting
17 May 2018
Quarterly Report to 31 March 2018
Quarterly Report to 30 June 2018
4 May 2018
Oxnard, USA
SGL Automotive Carbon Fibers
(joint operation-2 plants)
Partner plants
outside Europe
Partner plant, Hosur, India
Partner plant, Jakarta, Indonesia
Partner plant, Cairo, Egypt
Partner plant, Kaliningrad, Russia
Partner plant, Kulim, Malaysia
▲ Research and development
network outside Europe
BMW Group Technology Office USA,
Mountain View, USA
BMW Group Engineering and
Great Britain
Emission Test Center,
BMW Group Designworks, Newbury
Park, USA
Ireland
France
Finland¹
Denmark
Czech
Republic¹
Poland¹
Belgium
Austria
Switzerland
Slovakia¹
BMW Group ConnectedDrive Lab
Sweden
China, Shanghai, and BMW Group
Designworks Studio Shanghai, China
BMW Group Engineering China,
Beijing, China
→ 10
BMW Group Engineering USA,
Woodcliff Lake, USA
Netherlands
Spain
Germany
Norway
25
25
BMW Group locations in Europe
Australia
Indonesia¹
Singapore¹
Malaysia
Thailand
Hong Kong”
Japan
South Korea
China
India
2 Financial Services only.
1 Sales locations only.
Sales subsidiaries and
Financial Services
locations worldwide
BMW Technology, Chicago, USA
BMW Group Engineering Japan,
Tokyo, Japan
Portugal
BMW Group plant Leipzig
Slovenia¹
Average
Automotive
Average capital
employed
Profit before
financial result
ROCE Automotive =
The most comprehensive key performance indica-
tor used for the Automotive segment is RoCE. This
indicator provides information on profitability of
capital employed and on operational business. ROCE
is measured on the basis of segment profit before
financial result and the average amount of capital
employed in segment operations. The strategic target
for the Automotive segment's RoCE is 26%.
Automotive segment
Financial Services segment. As an overall reflection
of profitability (return on sales) and capital efficiency
(capital turnover), these key performance indicators
provide a wide range of information into the factors
driving segment performance and changes in the
value of the business.
Outlook
Profit before financial result in € million
Performance
→ 12
Return on Capital Employed
→ Operating performance at segment level is managed
at its highest level on the basis of return on capital.
Depending on the business model, the segments are
measured on the basis of return on total capital or
equity. Specifically, the return on capital employed
(ROCE) is used for the Automotive and Motorcycles
segments and the return on equity (ROE) for the
Management of operating performance
at segment level
Due to the high level of aggregation involved, it is
impractical to manage the business on the basis of
value added. This key indicator therefore only serves
for reporting purposes. Relevant value drivers which
could have a significant impact on business perfor-
mance and enterprise value are defined for each
controlling level. The financial and non-financial
value drivers are reflected in the key performance
indicators used to manage the business. In the case
of project-related decisions, the system incorporates a
project-oriented control logic focused on value-based
and return-based performance indicators, which
therefore provide a sound basis for decision-making.
→ Page 22 Organisational Structure and Business Model
→Page 22 General Information on the BMW Group
REPORT
COMBINED MANAGEMENT
→ see sections
Indicators and
capital employed in € million
Return on capital employed in %
2016
Malta
■Production in Europe
BMW Group plant Berlin
BMW Group plant Dingolfing
BMW Group plant Eisenach
BMW Group plant Landshut
Managing the business on the basis of key value
drivers makes it easier to identify the reasons for
changes in ROCE and define suitable measures to
drive its development.
Due to its key importance for the Group as a whole,
the Automotive segment is managed on the basis of
additional key performance indicators with varying
degrees of detail, which have a significant impact on
ROCE and hence on segment performance. These
value drivers are sales volume, segment revenues and
the operating return on sales (EBIT margin: profit/loss
before financial result as a percentage of revenues) as
the key performance indicator for segment profitabil-
ity. Average CO2 emissions for the fleet are also taken
into account, due to its impact on ongoing develop-
ment expenses
and the significant long-term impact
of regulatory requirements on Group performance.
Fleet emissions corresponds to average CO2 emissions
of new cars sold in the EU-28 countries.
Capital employed corresponds to the sum of all cur-
rent and non-current operational assets, less liabilities
that do not incur interest (e.g. trade payables and
other provisions).
72.2
74.3
10,854
BMW Group plant Manaus, Brazil
BMW Group plant Rayong, Thailand
BMW Group plant Rosslyn, South Africa
BMW Group plant Spartanburg, USA
BMW Brilliance Automotive, China
(joint venture-3 plants)
10,361
7,836
7,695
2015
2016
2015
2016
2015
Italy
BMW Group plant Chennai, India
Russia
outside Europe
Germany
Brazil
Germany
India
Products
Country
Wackersdorf
Swindon
Steyr
Rosslyn
Spartanburg
Regensburg
Rayong
Oxford
Manaus
Munich
Landshut
Leipzig
Hams Hall
Germany
Eisenach
Chennai
Berlin
Araquari
BMW GROUP PLANTS
Locations
The 19 BMW Group plants comprise 13 automobile
and engine plants, two plants for BMW motorcycles,
three sites for the production of components, pressed
parts and tools and one supply centre.
throughout the BMW Group production network
worldwide.
At the end of the reporting period, the Group's pro-
duction network comprised a total of 31 locations in 14
countries. The 31 locations comprise 19 BMW Group
manufacturing facilities, five plants belonging to joint
ventures/operations, five partner plants and two con-
tract production plants. The same quality, safety and
sustainability standards are applicable for all plants
Structure and
Business Model
General Information
on the BMW Group
→ Organisational
Combined
Management
Report
26
Greece
Bulgaria¹
Dingolfing
United Kingdom
Germany
Germany
Brazil
Germany
Rolls-Royce Manufacturing Plant Goodwood
Rolls-Royce Phantom, Ghost, Wraith, Dawn
Processing of carbon fibre components
Petrol and diesel engines for BMW and MINI,
Production of core engine parts
High performance engines for M-models
Pressed parts and bodywork components
Distribution center for parts and components
Cockpit assembly
BMW X3, BMW X4, BMW X5, BMW X6
M-models: BMW X5 M, BMW X6 M
Plug-in-hybrid vehicles: BMW X5
BMW 3 Series
BMW 1 Series, BMW 2 Series, BMW 3 Series, BMW 4 Series,
BMW X1, BMW Z4
M-models: BMW M3, BMW M4
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X4, BMW X5, MINI Countryman
Motorcycles
MINI Hatch, MINI Clubman
Petrol and diesel engines, high-performance engines for M-models
Production of core engine parts
Plug-in-hybrid vehicles: BMW 3 Series
M-models: BMW M4
BMW 3 Series, BMW 4 Series
Motorcycles
Electric vehicles: BMW i3
■BMW Group plant Araquari, Brazil
BMW 1 Series, BMW 2 Series
M-models: BMW M2
United Kingdom
Thailand
Germany
South Africa
USA
Austria
United Kingdom
Romania¹
Germany
BMW motorcycles, Maxi-Scooter, car brake discs
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X5
BMW 3 Series, BMW 4 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series
M-models: BMW M5, BMW M6
Plug-in-hybrid vehicles: BMW 5 Series, BMW 7 Series
Chassis and drivetrain components
Components for electric mobility
Rolls-Royce bodywork, pressed parts
Toolmaking, outer body parts for Rolls-Royce, aluminium tanks for BMW Motorrad
Petrol engines for BMW, MINI
BMW i8 Plug-in-hybrid engines
Production of core engine parts
Components and electric drive systems
BMW 3 Series, BMW X1, BMW X3, BMW X4
Hungary¹
Sales subsidiaries and
Financial Services
locations Europe
BMW Group Research and
Technology, Munich, Germany
BMW Car IT, Munich, Germany
BMW Innovation and Technology
Centre, Landshut, Germany
BMW Diesel Competence Centre,
Steyr, Austria
→Page 57 Workforce
Capital Markets
BMW Stock and
General Information
Economic Position
Outlook, Risks and
Opportunities
Combined
Management
Report
2
Sales and Marketing
→ Page 55
Purchasing and Supplier Network
→Page 54
Research and Development
→ Page 51
Financial Services Segment
→ Page 49
Motorcycles Segment
→ Page 48
Automotive Segment
BMW Group plant Munich
→ Page 24 Locations
→ Page 29 Management System
→ Page 34
Report on Economic Position
→ Page 34
→ Page 59
General and Sector-specific Environment
Overall Assessment by Management
→ Page 39
Financial and Non-financial Performance Indicators
→ Page 42
Review of Operations
→ Page 42
→ Page 38
United Kingdom
Sustainability
→Page 76 Comments on Financial Statements of BMW AG
BMW Group Research and Innovation
Centre (FIZ), Munich, Germany
network in Europe
▲ Research and development
Partner plant, Born,
Netherlands
Partner plant, Graz,
Austria
Partner plants
in Europe
BMW Group plant Oxford, GB
BMW Group plant Swindon, GB
Rolls-Royce Manufacturing Plant,
Goodwood, GB
BMW Group plant Hams Hall, GB
BMW Group plant Steyr, Austria
BMW Group plant Wackersdorf
BMW Group plant Regensburg
This Combined Management Report incorporates the
management reports of Bayerische Motorenwerke
Aktiengesellschaft (BMW AG) and the BMW Group.
ORGANISATIONAL
STRUCTURE AND
BUSINESS MODEL
→ www.bmwgroup.com/company
Distribution network enlarged
Digitalisation and connectedness
consistently increased
THE NEXT 100 YEARS -
shaping the future
BMW GROUP
GENERAL
INFORMATION
ON THE
→ Page 82 Report on Outlook, Risks and Opportunities
→Page 82 Outlook
→ Page 88
Risks and Opportunities
→ Page 101 Internal Control System and Risk Management
System Relevant for the Financial Reporting Process
→Page 103 Disclosures Relevant for Takeovers
→ Page 107 BMW Stock and Capital Markets in 2016
→ Page 63 Results of Operations, Financial Position and Net Assets
2
22
Combined
Management
Report
General Information
on the BMW Group
→ Organisational
Structure and
Business Model
22
The plants in Shenyang (China) are operated together
with the joint venture partner, Brilliance China Auto-
motive Holdings Ltd., manufacturing exclusively for
Plug-in-hybrid vehicles: BMW 2 Series, BMW i8
Locations
→ BMW Group is also working on an integrated digital → see section
concept, Connected Drive, to bring together driver
and vehicle. Through this service, the vehicle becomes
an intelligent companion, digitally integrated and
adapted to the individual needs of each user. The
BMW iNEXT is scheduled to enter the market in 2021,
electrically powered, autonomously driven and fully
→ The BMW Group is also among the leading pro-
viders of financial services in the automobile sector,
segment operating more than 50 entities and cooperation
arrangements with local financial services providers
and importers worldwide. Credit financing and the
leasing of BMW Group brand cars and motorcycles
to retail customers represent the segment's main line
of business. It also provides customers with access
to a wide range of insurance and banking products.
Operating under the brand name "Alphabet”, the
BMW Group's international multi-brand fleet business
provides fleet financing products and comprehensive
management services for corporate car fleets in 19
countries. Within the multi-brand financing line of
business, credit financing, leasing and other services
are marketed to retail customers under the brand
name “Alphera”. Providing support to the dealership
organisation, such as by financing dealership vehicle
inventories, rounds off the segment's product range.
→ The motorcycles business is also focused on the
premium segment, with the model range currently
comprising motorcycles for the Sport, Tour, Roadster,
Heritage, Adventure and Urban Mobility segments.
BMW Motorrad also offers a broad range of equip-
ment options designed to enhance rider safety and
comfort. The motorcycles business sales network is
organised similarly to that of the automobile business.
Currently, around 1,180 BMW Motorrad dealerships
operate worldwide.
The Automotive segment's worldwide distribution net-
work currently consists of around 3,400 BMW, 1,580
MINI and 140 Rolls-Royce dealerships. In Germany,
products and services are sold through BMW Group
branches and by independent authorised dealers.
Sales outside Germany are handled primarily by
subsidiary companies and by independent import
companies in a number of markets. The BMW i deal-
ership and agency network currently covers more
than 1,300 locations.
The MINI brand is a veritable icon in the premium
small car segment, offering unrivalled driving pleasure
in its class. Rolls-Royce has a tradition in the ultra-lux-
ury segment stretching back over more than 100 years.
Research and
Development
→ Long-term thinking and responsible action have
long been the cornerstones of the BMW Group's Sustainability
success. Ecological and social sustainability along
the entire value-added chain, full responsibility for
its products and a clear commitment to preserving
resources are prime objectives firmly embedded in
the BMW Group's corporate strategy. The BMW Group
has ranked among the most sustainable companies in
the automotive industry for many years.
→ see section
Financial
Services
→ see sections
Workforce and
→ see section
Motorcycles
segment
The BMW Group is one of the most successful makers
of passenger cars and motorcycles worldwide and
among the largest industrial companies in Germany.
With BMW, MINI and Rolls-Royce, the BMW Group
owns three of the strongest premium brands in the
automotive industry. The vehicles manufactured by
the BMW Group set exceptionally high standards in
terms of aesthetics, dynamics, technology and quality,
and are the culmination of expertise in engineering
and innovation. Its research and innovation network
spans 13 locations in five countries. In addition to its
strong position on international motorcycle markets,
the BMW Group also offers its customers a successful
range of financial services. In recent years, it has also
established itself as a leading provider of premium
services in the field of individual mobility.
NUMBER ONE > NEXT is a commitment to consistent
future-oriented activity, focusing on developing prod-
ucts, brands and services for individual mobility in the
premium segment. New technologies, digitalisation
and connectedness as well as social responsibility are
further areas of strategic focus.
23
the Chinese market. The Shenyang site comprises
the Dadong and Tiexi automobile plants as well as
an engine plant complete with foundry.
connected.
Under the motto "THE NEXT 100 YEARS", the
BMW Group celebrated its centenary in March
2016, showcased by a major centenary event held
in Munich. The four concept vehicles unveiled over
the course of the year for the brands BMW, MINI,
Rolls-Royce and BMW Motorrad provided visionary
insights into the future of individual mobility. At
the same time, the BMW Group also presented its
Strategy NUMBER ONE > NEXT, which builds on
the existing strategy and expands its contents on the
basis of recent developments. At the heart of Strategy
Organisational Structure and Business Model
Bayerische Motoren Werke Aktiengesellschaft
(BMW AG), based in Munich, Germany, is the parent
company of the BMW Group. The general purpose
of the Corporation is the development, production
and sale of engines, engine-equipped vehicles, related
accessories and products of the machinery and metal-
working industry as well as the rendering of services
related to the aforementioned items. The BMW Group
is sub-divided into the Automotive, Motorcycles,
Financial Services and Other Entities segments (the
latter primarily comprising holding companies and
Group financing companies). The BMW Group oper-
ates on a global scale and is represented in more than
150 countries worldwide. At the end of the reporting
period, the BMW Group employed a workforce of
124,729 people.
General information on the BMW Group is provided
below. There have been no significant changes com-
pared to the previous year.
General information on the BMW Group
→ Management System
General Information
on the BMW Group
Combined
Management
Report
30
29
29
Revenues
Expenses
Average weighted
cost of capital rate
Capital employed
Profit
Originally founded in 1916 as Bayerische Flugzeug-
werke AG (BFW), it emerged as Bayerische Motoren
Werke G.m.b.H. in 1917, before finally becoming Bay-
erische Motoren Werke Aktiengesellschaft (BMW AG)
in 1918. The BMW Group comprises BMW AG itself
and all subsidiaries over which BMW AG has either
direct or indirect control. BMW AG is also responsible
for managing the BMW Group as a whole.
Automotive
segment and
Marketing
→ The core BMW brand caters to a broad array of → see sections
customer wishes, ranging from fuel-efficient and
innovative models equipped with Efficient Dynam- Sales and
ics through to efficient, high-performance BMW M
vehicles, which help bring a touch of the flair of motor-
sport to the roads. At the same time, the BMW Group
continues to push the boundaries of “premium” to
new levels with its BMW i models. Designed to the core
for even greater sustainability, the BMWi embodies
the vehicle of the future – with its electric drivetrain,
intelligent lightweight construction, exceptional
design and newly developed range of mobility services.
Production
☐
New Zealand
South Africa
Argentina¹
Brazil
Emirates
United Arab
Mexico
USA
Canada
Headquarters
Research and
development
locations
13
Production and
assembly plants
31
Financial Services
locations worldwide
24
24
Combined
Management
Report
General Information
on the BMW Group
··
→ Organisational
Business Model
→ Locations
BMW Group locations worldwide
→ 09
43
7 Sales subsidiaries and
Structure and
Cost of capital
23
Return on sales
The primary function of the four partner plants of
the BMW Group is to serve nearby regional markets.
During the year under report, BMW and MINI vehicles
were also manufactured in Kaliningrad (Russia), Cairo
Business Model
→ Organisational
Structure and
General Information
on the BMW Group
Combined
Management
Report
28
27
27
Carbon fibre fabrics
Carbon fibres
Products
Germany
USA
Country
Wackersdorf
Capital turnover
SGL AUTOMOTIVE CARBON FIBERS
JOINT VENTURE BMW BRILLIANCE
AUTOMOTIVE HOLDINGS LTD.
Dadong (Shenyang)
Tiexi (Shenyang)
Tiexi (Shenyang)
Country
China
7
China
Products
BMW 5 Series Extended-Wheelbase Version
Plug-in-hybrid vehicles: BMW 5 Series Extended-Wheelbase Version
BMW 2 Series, BMW 3 Series (+Extended-Wheelbase Version),
BMW X1 Extended-Wheelbase Version
Plug-in-hybrid vehicles: BMW X1 Extended-Wheelbase Version
Petrol engines, production of core engine parts
SGL Automotive Carbon Fibers (SGL ACF) is a joint
operation of the BMW Group with the SGL Group.
At the Moses Lake site in the US State of Washington,
carbon fibres are produced for subsequent use in the
production of carbon fibre fabrics in Wackersdorf.
Locations
JOINT OPERATION
China
(Egypt), Jakarta (Indonesia) and Kulim (Malaysia). In
addition, BMW motorcycles were manufactured by the
cooperation partner, TVS Motor Company, in Hosur
(India).
Moses Lake
Locations
Country
Netherlands
Austria
Products
MINI Hatch, MINI Convertible, MINI Countryman
MINI Countryman, MINI Paceman
MANAGEMENT SYSTEM
Graz
The BMW Group's internal management system is
based on a multi-layered structure, with varying ¬
→ 11
degrees of detail, depending on the level of
aggre-
gation. Operating performance, for instance, is
managed primarily at segment level. In order to
manage long-term performance and assess strate-
gic issues, additional key performance figures are
taken into account at Group level. In this context,
with effect from the beginning of the 2017 financial
year, the pre-tax return on sales will be used as an
additional indicator of earnings quality throughout
the BMW Group. The contribution made to enter-
prise value during the financial year continues to be
measured in terms of value added. This approach is
translated into operational processes at both Group
and segment level in the form of key financial and
non-financial performance indicators (value drivers).
The link between value added and the relevant value
drivers is shown in a simplified form in the following
diagram.
Return on capital
Value added
(ROCE/ROE)
→ Management System
BMW Group - value drivers
Born
The business management system applied by the
BMW Group follows a value-based approach, with
a clear focus on achieving profitability, consistent
growth, increasing the value of the business for cap-
ital providers and safeguarding jobs. Achieving the
desired degree of corporate autonomy can only be
ensured in the long term if available capital is prof-
itably employed. The prerequisite for this is that the
amount of profit generated sustainably exceeds the
cost of equity and debt capital.
CONTRACT PRODUCTION
PARTNER PLANTS
Hosur
Jakarta
Cairo
Kaliningrad
Country
India
Indonesia
Egypt
Russia
Malaysia
Kulim
Products
Motorcycles
BMW 3 Series, BMW 5 Series, BMW 7 Series, BMW X1, BMW X3, BMW X5
BMW 3 Series, BMW 5 Series, BMW 7 Series, BMW X3, BMW X4, BMW X5, BMW X6
BMW 3 Series, BMW 5 Series, BMW X1, BMW X3, BMW X4, BMW X5, BMW X6
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X4, BMW X5, BMW X6, MINI Countryman
The BMW Group also awards production contracts to
external partners for specific vehicle types. During
the period under report, various MINI models were 7
produced by Magna Steyr Fahrzeugtechnik in Graz
(Austria) and VDL Nedcar in Born (Netherlands).
Locations
Return on Equity
33.0
31.6
In view of the increasing strategic importance of the
Motorcycles segment, the EBIT margin will be added
as a key performance indicator with effect from the
beginning of the 2017 financial year. In conjunction
Financial Services segment
As is common practice in the banking sector, the
performance of the Financial Services segment is
measured on the basis of return on equity. RoE is
defined as segment profit before taxes, divided by the
average amount of equity capital attributable to the 7
576
→ 14
Financial Services
Financial Services segment. The strategic RoE target
for the Financial Services segment is at least 18%.
RoE Financial
Services
Profit before tax
Average equity capital
2016
Profit before tax in € million
566
with the non-financial value driver sales volume, this
will enable ROCE development to be understood in
greater detail.
182
Return on Capital Employed
2015
Average equity capital in € million
Motorcycles segment
As with the Automotive segment, operating perfor-
mance for the Motorcycles segment is managed on the
basis of RoCE. Capital employed is measured on the
same basis as in the Automotive segment. The strategic
RoCE target for the Motorcycles segment is 26%.
→ 13
Motorcycles
Profit before
financial result
187
ROCE
Motorcycles
Average capital
employed
Profit before financial result in € million
2016
2015
Average
capital employed in € million
2016
Return on capital employed in %
2015
2016
7
Return on equity in %
Report on
2016
Steel price trend
→ 18
Index: January 2012 = 100
Automobile markets
The positive trend on international automobile mar-
kets seen in the previous year continued in 2016.
Worldwide registrations of passenger cars and light
commercial vehicles grew by 5.9% to 87.4 million
units. Strong momentum from China (24.1 million
units; +17.4%) and Europe (15.2 million units; +6.6%)
made significant contributions to growth. By contrast,
the USA recorded only a slight increase (17.6 million
units; +0.4%).
Europe's automobile markets presented a mixed
picture. After a strong performance in the previous
year, the UK saw only comparatively low growth in
the number of new registrations in 2016 (2.7 million
units; +2.3%). The French automobile market was in
even better shape than one year earlier, recording a
5.3% increase to 2.0 million registrations, ahead of
Germany's growth rate of 4.5% (3.4 million units).
Italy (1.8 million units; +16.2%) and Spain (1.1 million
units; +10.9%) both recorded double-digit percentage
increases.
Japan was unable to turn around the previous year's
negative trend, with the market contracting by a
further 1.6% to 4.8 million units.
Automobile markets in major emerging economies
continued to suffer from recession in 2016. Russia saw
a 4.7% drop to 1.2 million units, while registrations
in Brazil slumped by nearly one third (-32.2%) to
1.7 million units.
85
110
60
2012
2013
2014
2015
2016
Source: Working Group for the Iron and Metal Processing Industry.
2017
Motorcycle markets
Since the beginning of the financial year 2016, market
analysis has been expanded from the half-litre class
(500 cc) to cover the entire 250 cc plus class. This fol-
lows BMW Motorrad's entrance with the entry-level
G 310 R model into a new market segment within the
250 cc plus class.
Global motorcycle markets in the 250 cc plus class
were flat year-on-year, mainly reflecting weaker per-
formance in some overseas regions (+/-0.0%). The
European market grew by 12.4% overall, benefiting
primarily from the significant recovery in Southern
Europe. While the French market grew by an encour-
aging 6.7%, markets in Germany, Italy and Spain all
recorded double-digit increases, expanding by 13.9%,
12.8% and 23.5% respectively. The US market finished
3.8% down year-on-year.
33
37
88
38
Combined
Management
Report
Steel markets saw at times sharp price rises. During
the course of the year, the USA and the EU imposed
anti-dumping duties on Asian steel products, while
the USA did likewise on European steel products.
The situation was further exacerbated by the Chinese
government's decision to cut working hours in coal-
mines. The price of coal, an important cost factor in
the production of steel, rose accordingly.
Report on
After dropping to new lows at the turn of 2015/2016,
precious metals prices stabilised in the course of 2016
at higher levels. The lower prices seen in preced-
ing years have resulted in manufacturers reducing
over-capacities, while at the same time demand has
recovered.
-
2012
2013
2014
2015
2016
2017
Source: Reuters.
Precious metals price trend
→ 17
Index: December 2011 = 100
150
100
50
Source: Reuters.
150
Palladium
100
Gold
Platinum
50
0
2012
2013
2014
2015
2016
2017
Raw materials prices
The price of Brent crude oil – the most relevant bench-
mark for Europe - fell at the beginning of the year for a
short time to below the level of 30 US dollars per barrel.
A subsequent volatile upward trend saw the price rise
to a high of 57 US dollars per barrel, bolstered by the
agreement reached by the Organisation of Petroleum
Exporting Countries (OPEC) and Russia to cut back oil
production. Despite these developments, the average
price of Brent crude oil fell to 44 US dollars per barrel,
compared to 52 US dollars per barrel in the previous
year. WTI, the benchmark for crude oil in the USA,
followed a similar trend.
30
Economic Position
→ Overall Assessment
(2016: 316,200 BMW, the Group's core brand, reported a solid 5.2%
increase to 2,003,359¹ units (2015: 1,905,234¹ units),
taking it over the two-million-unit threshold for the
first time in a single year. MINI also recorded solid
growth, with deliveries to customers up by 6.4% to
360,233 units (2015: 338,466 units). Rolls-Royce Motor
Cars sold 4,011 units (2015: 3,785 units; +6.0%).
2 EU-28.
In the Annual Report 2015, the outlook for the full year
2016 had foreseen a slight increase in sales volume.
The generally positive sentiment among consumers,
especially in Europe, but also in Asia, helped the
BMW Group to exceed its original forecast.
Fleet carbon dioxide (CO2) emissions²:
slight decrease
-
-
The fleet-wide deployment of Efficient Dynamics
technologies including drivetrain electrification
contributes to the efficient reduction of carbon dioxide
emissions. CO2 emissions produced by the vehicle
fleet sold in Europe (EU-28) decreased slightly to
124 grams CO2/km (2015: 127 grams CO2/km; -2.4%)
in the year under report.
As foreseen in the outlook for the full year 2016, fleet
carbon emissions fell slightly and were therefore in
line with forecast.
39
Combined
Management
Report
Report on
Economic Position
→ Financial and Non-
financial Perfor-
mance Indicators
Revenues: slight increase
Automotive segment revenues edged up by 1.0%
to a new record figure of €86,424 million (2015:
€85,536 million), with currency exchange effects
holding down the scale of the increase. The forecast
of a slight rise in Automotive segment revenues made
in the Annual Report 2015 therefore was confirmed.
EBIT margin in target range of between 8 and 10%
The EBIT margin in the Automotive segment (profit
before financial result divided by revenues) came
in at 8.9% (2015: 9.2%; -0.3 percentage points). As
foreseen for the financial year 2016, the EBIT mar-
gin from automobile business was within the target
range of between 8 and 10% and therefore in line
with expectations.
Return on capital employed (RoCE): slight increase
The return on capital employed (RoCE) amounted to
74.3% (2015: 72.2%; +2.1 percentage points). Amongst
other factors, transactions with other segments and
the expansion of business with service and Connected
Drive contracts made positive contributions to ROCE
for the Automotive segment.
The outlook for RoCE, which was already raised in
the Quarterly Report to 30 June 2016 from a mod-
erate decrease to a slight decrease, was once more
exceeded. In the Annual Report 2015, a moderate
decrease in ROCE was foreseen. The rate achieved by
the Automotive segment in 2016 was therefore once
again well above the minimum target of 26%.
Motorcycles segment
Deliveries to customers: solid increase
In a highly favourable market environment, most nota-
bly in Europe, BMW Motorrad reported a solid 5.9%
increase, with 145,032 units sold (2015: 136,963 units).
These figures benefited from unexpectedly good sales
figures for Europe and Latin America.
The forecast increase, upgraded in the Quarterly
Report to 30 June 2016 from slight to solid, was
therefore realised. In the Annual Report 2015, only
a slight increase in deliveries to customers had been
foreseen for the Motorcycles segment.
Return on capital employed: slight increase
The Motorcycles segment generated a return on capital
employed (ROCE) of 33.0% in the year under report
(2015: 31.6%; +1.4 percentage points), slightly above
the previous year, mainly reflecting effective working
capital management and the improvement in earnings.
The reported figures also benefited from the trend
towards high-value models and the new brand strategy
initiated in 2014.
2015
10
40
In 2016, the Automotive segment sold a record number
of vehicles for the sixth year in succession. Dynamic
market conditions, particularly in Europe, influenced
automobile sales volumes more strongly than expect-
ed. Consumer spending in the UK in 2016 remained
stable, despite the Brexit decision. The upward trend
from the previous year in southern European coun-
tries also continued unbroken. Despite growing polit-
ical and economic uncertainties in the international
environment, deliveries to customers increased by a
solid 5.3% to a total of 2,367,603¹ BMW, MINI and
Rolls Royce brand vehicles (2015: 2,247,485¹ units).
→ General and Sector-
specific Environment
Deliveries to customers: solid increase
282,000 units).
↑
by Management
Financial and Non-
financial Perfor-
mance Indicators
Financial services markets
The global economy grew at a moderate pace in 2016,
with conditions for financial services business gener-
ally tending to be favourable.
Interest levels remained low in the world's indus-
trialised countries. The US Federal Reserve initially
refrained from tightening its monetary policies, before
finally deciding to raise the benchmark interest rate
by 0.25% in December.
In March 2016, the European Central Bank (ECB)
resolved to broaden the scope of its expansionary
monetary policies with a comprehensive package of
measures to generate economic growth through more
favourable lending conditions.
In a bid to prevent a severe economic downturn after
the Brexit decision, the Bank of England lowered its
reference interest rate in August and announced addi-
tional expansionary measures, including extending its
bond purchasing programme.
High public-sector spending and expansionary mon-
etary policies adopted by the Chinese central bank
only partially absorbed the slowdown of the Chinese
economy, resulting in a further normalisation of GDP
growth over the course of the year. The Japanese cen-
tral bank broadened the scope of its expansionary
monetary policies in 2016 in order to stimulate the
economy and reverse deflationary tendencies.
Prices in the premium segment of mainland Europe's
pre-owned car markets rose slightly at the beginning
of 2016, before settling at a similar level to the previous
year in the course of the year. Pre-owned car market
prices in the UK were slightly down year-on-year. Price
levels remained stable on Asian markets. The slight
downward trend continued in North America, despite
a stronger performance during the summer months.
OVERALL ASSESSMENT
BY MANAGEMENT
Overall assessment of business performance
The BMW Group can look back on a successful
business performance in 2016, despite increased
competition and growing uncertainties in the inter-
national environment. The overall picture was positive
in terms of results of operations, financial position
and net assets. Overall, management expectations
for the period were therefore met. This assessment
also takes into account events after the end of the
reporting period.
FINANCIAL AND NON-
FINANCIAL PERFORMANCE
INDICATORS
The following section provides information on the key
financial and non-financial performance indicators
used as the basis for managing the BMW Group and
its segments. As part of the analysis of operations and
the financial condition of the BMW Group, forecasts
made the previous year for the financial year 2016 are
compared with actual outcomes in 2016.
BMW Group
Profit before tax: slight increase
During the financial year 2016, the BMW Group
continued to invest in innovative technologies and
its production network to ensure future sustainabil-
ity. The Group nevertheless remained on course in
terms of earnings. With a Group profit before tax of
€9,665 million (2015: €9,224 million; +4.8%), earn-
ings reached a new high, despite the continuation
of intensive competition on the world's automobile
markets. In addition to an excellent sales volume
performance, Group earnings also benefited from
an improved financial result.
As foreseen in the outlook for the financial year 2016,
the Group's profit before tax was slightly higher than
one year earlier and therefore in line with expectations.
Workforce at year-end: slight increase
As at 31 December 2016, the BMW Group employed
a workforce of 124,729 (2015: 122,244; +2.0%) world-
wide. The slight company-wide increase was due to
the need for additional qualified staff for the develop-
ment of electric mobility and other technology fields
and the growth of the financial services business.
The systematic expansion of mobility services also
contributed to the increase in the workforce size.
As foreseen in the outlook for the financial year
2016, there was a slight increase in the size of the
BMW Group's workforce, in line with expectations.
1 Including the
joint venture
BMW Brilliance
Automotive Ltd.,
Shenyang
units, 2015:
Automotive segment
30
The forecast RoCE, which had already been changed
from a slight decrease to "at the previous year's level"
in the Quarterly Report to 30 June 2016, was therefore
once again exceeded. In the Annual Report 2015, a
slight decrease in ROCE had been foreseen.
90
2016
2015
10,000
9,723
6,407
6,040
3,593
3,683
Capital employed comprises the average amount of
Group equity employed during the year as a whole, the
financial liabilities of the Automotive and Motorcycles
segments, and pension provisions. The earnings meas-
ure for these purposes corresponds to Group profit
before tax, adjusted for interest expense incurred in
conjunction with the pension provision and on the
financial liabilities of the Automotive and Motorcycles
segments (earnings before interest expense and taxes).
The cost of capital is the minimum rate of return
expected by capital providers in return for the capital
employed. Since capital employed comprises an equity
capital element (e.g. share capital) and a debt capital
element (e.g. bonds), the overall cost of capital rate is
determined on the basis of the weighted average rates
for equity and debt capital, measured using standard
market procedures. The pre-tax average weighted
cost of capital for the BMW Group in 2016 was 12%,
unchanged from the previous year.
Value-based project management
Operational business in the Automotive and Motor-
cycles segments is largely shaped by its life-cycle-
dependent project character. Projects have a sub-
stantial influence on future business performance.
Project decisions are therefore a crucial component
of financial management for the BMW Group.
Project decisions are taken on the basis of calculations
measured in terms of the cash flows each individual
project is expected to generate. Calculations are made
for the full term of a project, incorporating all future
years in which the project is expected to generate cash
flows. Project decisions are taken on the basis of net
present value and internal rate of return calculated
for the project.
Value added Group
The net present value of a project indicates the extent
to which a project will be able to generate a positive
contribution to earnings over and above the cost of
capital. A project with a positive net present value
enhances value added and therefore results in an
increase in the value of the business. The internal
rate of return of the project corresponds to the aver-
age return on capital employed in the project and, in
terms of significance, is equivalent to the multi-year
average RoCE for an individual project. It is therefore
consistent with one of the key performance indicators.
33
33
34
==
Combined
Management
Report
Economic Position
→ General and Sector-
specific Environment
REPORT
ON ECONOMIC
POSITION
Centenary year sees best Company
performance
The criteria used for taking decisions as well as the
long-term impact on periodic earnings is document-
ed for all project decisions and incorporated in the
long-term Group forecast. This approach enables an
analysis of the periodic reporting impact of project
decisions on earnings and rates of return over the
term of each project. The overall result is a cohesive
controlling model.
2015
2016
2015
60
2015
2015
2,166
1,975
10,236
9,756
21.2
20.2
31
32
32
Combined
Management
Report
General Information
on the BMW Group
→ Management System
Strategic management at Group level
Strategic management and quantification of the
financial impacts as part of the long-term corporate
planning are performed primarily at Group level. The
most significant performance indicators for these
purposes are Group profit before tax and the size of
the Group's workforce at the year-end. Group profit
before tax provides a comprehensive measure of the
Group's overall performance after consolidation
effects and a transparent basis for comparing perfor-
mance, particularly over time. The size of the Group's
workforce is monitored as an additional non-financial
performance indicator.
Information provided by these two key performance
indicators is reported with the performance indi-
cators, pre-tax return on sales and value added. Value
added, as a highly aggregated performance indicator,
provides an insight into capital efficiency and the
(opportunity) cost of capital required to generate
Group profit. Value added corresponds to the amount
of earnings over and above the cost of capital and gives
an indication of whether the Group is meeting the
minimum requirements for the rate of return expected
by capital providers. A positive value added means
that a company is generating more additional value
than the cost of capital.
Value added
Group
= earnings amount —
cost of capital
earnings amount —
(cost of capital rate ×
capital employed)
in € million
BMW Group
Earnings amount
Cost of capital
2016
Record sales volumes for automobiles
and motorcycles - expectations
exceeded
Record results in operational
segments
2016
71 +4.8%
2017
200
150
Russian Rouble
Japanese Yen
British Pound
100
Chinese Renminbi
US Dollar
35
36
Combined
Management
Report
Report on
Economic Position
→ General and Sector-
specific Environment
Oil price trend
→ 16
Price per barrel of Brent Crude
120
90
00
60
120
Price in US Dollar
Price in €
€9,665 million
Source: Reuters.
2016
35
2014
Group profit before tax
at record level
2015
General economic environment
The global economy grew at a relatively stable pace
in the face of external influences at a rate of 3.1%
in 2016. Against a background of multiple political
uncertainties, global growth seems relatively robust.
The eurozone continued to record moderate economic
growth, helped among other factors by favourable
conditions on the job market. Although the pace of
the economy in China slowed, the decrease was only
marginal. The USA recorded slight growth in 2016. By
contrast, the emerging economies of Russia and Brazil
contracted again in 2016, despite Russia benefiting
from rising raw materials prices.
Gross domestic product (GDP) in the eurozone grew
by 1.7% year-on-year. The European Central Bank
(ECB) continued to pursue its expansive monetary
policies. Boosted by strong exports and robust domes-
tic demand, the German economy grew by 1.8%, its
fastest rate for five years. France (+1.2%) and Italy
(+0.9%) saw growth at similar levels to the previous
year. In both countries, structural reforms designed to
stimulate the economy remain in the implementation
phase.
In the UK, the year 2016 was marked by the Brexit
decision, the economic impact of which is expected to
be felt from 2017 onwards. For the year under report,
a robust GDP growth rate of 2.0% was recorded. Polit-
ical uncertainty did not have an adverse impact on
household spending. The growth rate also benefited
from falling unemployment. The increase in invest-
ments by companies was significantly lower than in
previous years, while the rise in government spending
was below average. Despite the massive devaluation
of the British pound after the referendum, exports fell
far short of matching the high growth rate recorded
one year earlier.
The new strategic direction adopted for China's econ-
omy presented significant challenges for the country's
government. In response to the stock market slump
at the beginning of the year and fears that econom-
ic growth was set to slow down, the government
imposed measures to stimulate the economy. The
6.7% GDP growth rate in China for the full year was
slightly down on the previous year, though within the
pursued target range.
The US economy continued to show a solid perfor-
mance, growing year-on-year by 1.6%. The unem-
ployment rate fell by 0.4 percentage points to 4.9%.
At the same time, however, domestic spending rose
at a slightly lower rate than one year earlier. Exports
only grew slightly as a result of the strong US dollar.
In view of these developments and in anticipation of
a rising inflation rate, the US Federal Reserve (Fed)
raised its benchmark interest rate in December 2016.
The domestic economy in Japan was held down in
particular by high debt levels and the appreciation
of the yen in 2016. After a two-year downward trend,
household spending increased, albeit at a moderate
rate, while exports remained weak. Ultimately, only
economic stimulus programmes prevented Japan from
stagnating in 2016, with the GDP growth rate finishing
at a modest 0.9%.
Thanks to its economic reforms, India posted a GDP
growth rate of 7.0%, achieving growth of at least 7.0%
for the third year in succession. By contrast, Russia
and Brazil failed once again to pull out of recession.
Although industrial production picked up in Russia,
domestic consumption fell sharply, causing economic
output to fall overall (-0.6%). Brazil, however, recorded
its second consecutive year of deep recession (−3.4%).
Figures for consumption expenditure (household and
public sector) and business investments dropped to
new lows.
7
Currency markets
The British pound weakened significantly in the wake
of the Brexit decision. Compared to its average rate
of 0.78 to the euro during the first half of the year,
it fell sharply during the second half of the year to
0.86 to the euro. The Bank of England reacted to
increasing post-referendum uncertainty by lowering
interest rates, thus contributing to the weakening of
the pound.
GENERAL AND
SECTOR-SPECIFIC
ENVIRONMENT
Despite volatility during the course of the year, the
US dollar remained unchanged compared to the pre-
vious year at an average exchange rate of 1.11 to the
euro in 2016. The Fed shifted only moderately from
its expansionary monetary policies during the year
under report.
The Chinese renminbi lost in value compared to the
previous year, finishing with an average exchange rate
for the
year of 7.35 renminbi to the euro.
LLL LL
100
150
2012
Index: December 2011=100
200
→ 15
Exchange rates compared to the euro
Currencies in emerging economies reflected a mixed
picture. While the Brazilian real was down by approx-
imately 4% against the euro, the Russian rouble was
up by approximately 9% against the euro after a strong
rally.
The Japanese yen appreciated by approximately 10%
in 2016, despite the expansion of money supply by
the Bank of Japan. The average exchange rate for the
year was 120.25 yen to the euro.
2013
2,359,756
2,279,503
1.4
3.5
Strong production base in Germany
45
45
Flexibility, quality and efficiency are key characteris-
tics of the Group's production system. Its great ability
to adapt enables the BMW Group to respond rapidly
to changing market situations and fluctuations in
regional sales volumes by adapting production plans.
Digitalisation, standardised modules and intelligent
composite construction methods demonstrate the
high performance of the Group's production net-
work. At the same time, the production system offers
customers an impressive level of individualisation,
allowing changes in order specifications up to six days
prior to delivery. The production expertise within
the BMW Group thus gives it a crucial competitive
advantage that contributes to the profitability and
sustainable success of the Company.
18.5
The German plants play a leading role within the
Group's international network. For the sixth year
in succession, the BMW Group produced over one
million vehicles at its German plants in Munich,
Dingolfing, Regensburg and Leipzig.
100.0
27,216
3.7
2.3
-35.2
82,655
53,528
53.6
57,019
87,609
0.2
8.6
3,848
4,179
In November 2016, the BMW Group began manufactur-
ing the seventh generation of the BMW 5 Series at its
Dingolfing assembly plant, which underwent numerous
conversion and building measures to prepare for the
new model. Dingolfing therefore remains the centre of
competence for producing the top BMW model series.
32,256
Extensive expansion work is also progressing at the
main plant in Munich. By mid-2017, a state-of-the-art
painting line will be completed that meets the very
highest standards in efficiency and economical use of
resources. The new building is part of an extensive
investment project that also includes the enlargement
of the body-making section and vehicle assembly as
well as parts of the logistics system.
→ 26
Combined
Management
Report
Combined
BMW Group sales volume of motorcycles*
48
During the period under report, a total of 32,256 auto-
mobiles were produced at the Group's various partner
plants, which mainly serve their regional markets.
The manufacturing sites in Chennai (India) and Ray-
ong (Thailand) complete the BMW Group's interna-
tional production network. In 2016, the plant in India
produced the 50,000th BMW for the local market. The
BMW plant in Thailand is the only facility within the
production network that manufactures not only BMW
and MINI automobiles, but also BMW motorcycles.
In Shenyang (China), the BBA plants in Dadong and
Tiexi produced over 305,000 units, setting a new record
in the process. Comprehensive expansion work at the
Dadong plant has been continued. The extension will
improve the flexibility of the plant and prepare it for
the manufacture of future models.
In Rosslyn (South Africa), preparations are already
underway for producing the next generation of the
BMW X3. In May 2016, work began on the body-mak-
ing facility, which is being enlarged by 50%.
Important work was carried out to convert and expand
the Rolls-Royce manufacturing plant in Goodwood
(UK) during the period under report. For future mod-
els, the BMW Group is investing in a new production
system on one line at the plant. The new Technology
and Logistics Centre in Bognor Regis, near Goodwood,
was opened in January 2016.
In Europe, the British production cluster comprising
the MINI assembly facility in Oxford, the pressing
plant in Swindon and the engine manufacturing plant
in Hams Hall is a key element in the BMW Group's
production network. In order to secure greater capac-
ity for forecast growth, the MINI 3-door model, the
MINI Convertible and the MINI Countryman are also
being produced for the BMW Group at the automotive
manufacturer VDL NedCar in Born, the Netherlands.
In San Luis Potosí (Mexico), preparations for construct-
ing the new plant are running on schedule and a local
training centre has already been opened at the site. The
plant is due to commence operations in 2019.
In North America, expansion work has been con-
tinued at the BMW plant in Spartanburg (USA). In
2016, the plant set a new annual record, turning out
over 411,000 units. In terms of production volume,
the Spartanburg plant is therefore the largest in the
BMW Group's network.
By expanding its international production network,
the BMW Group follows global market developments
with the aim of ensuring a balanced distribution of
added value.
Internationalisation of BMW production network
progresses
47
47
The BMW Group develops and manufactures battery
cell modules, high-voltage storage systems and electric
motors at a total of five locations. The most important
electric drivetrain technologies and components are
developed at the prototype construction facility in
Munich and produced at the Dingolfing and Landshut
plants. The Dingolfing plant manufactures battery
cell modules and installs them in high-voltage storage
systems for the BMW i3, the BMW i8 and the Group's
plug-in hybrid models. The electric motors and range
extenders for the BMWi models are made at the
Landshut plant. The Spartanburg plant in the USA
produces and installs high-voltage storage systems
for the BMW X5 iPerformance. The BBA joint venture
plant in Shenyang is currently building a new centre
for high-voltage storage systems.
The BMW Group's largest engine plant, located in
Steyr, produces 3-, 4- and 6-cylinder diesel engines as
well as 3-, 4- and 6-cylinder petrol engines. Engines
made in Steyr are installed in more than half of
all BMW vehicles and in over one third of all MINI
vehicles. In September 2016, the development centre
for diesel engines, which adjoins the manufacturing
plant, took the first new, state-of-the-art engine testing
facilities into service. The Steyr plant established a
new production record of 1,261,449 engines in 2016.
In 2016, the joint venture BBA opened a new engine
plant in Shenyang (China) to produce the latest gen-
eration of BMW TwinPower Turbo 3- and 4-cylinder
petrol engines. The new light metal foundry, which
was opened at the same time, is designed for sus-
tainable production. Both the engine plant and the
light metal foundry meet state-of-the-art production
standards and supply the BMW Brilliance manufac-
turing plants in Dadong and Tiexi. The BMW Group
now manufactures engines at a total of four locations:
Munich (Germany), Hams Hall (UK), Steyr (Austria)
and Shenyang (China).
Four engine production plants worldwide
During the year under report, the BMW Group plant
in Eisenach commissioned a state-of-the-art servo
tryout press. Eisenach is one of three BMW Group
plants worldwide specialised in making pressing
tools. Moreover, some 250 employees at the plant
manufacture the majority of the outer body parts from
sheet metal, aluminium and stainless steel for the
Rolls-Royce plant in Goodwood (UK) as well as parts
for BMW motorcycle production in Berlin.
SGL Automotive Carbon Fibers (SGL ACF), the joint
operation between the BMW Group and the SGL
Group, is also based in Wackersdorf. In Moses Lake
(USA), SGL ACF operates a carbon fibre production
plant that is powered by hydroelectricity and supplies
carbon fibres to the SGL ACF plant in Wackersdorf,
where they are processed into textile cores.
The Wackersdorf Innovation Park is the logistical hub
for materials management and just-in-sequence deliv-
ery to BMW Group assembly plants in ten different
countries. For the first time, a fleet of ten self-driving
Smart Transport robots is being used in Wackersdorf
to transport components within the logistics centre.
These self-driving transport robots are capable of driv-
ing freely within the logistics centre and transporting
loads of up to 500 kilograms.
Since its opening, some 160 engineers have been
engaged in research at the Lightweight and Engineer-
ing Center in Landshut, designing innovative hi-tech
materials and composite concepts for the vehicles of
the future. The think tank, built near the production
facilities, concentrates lightweight construction know-
how at the Landshut plant.
The BMW Group plant in Leipzig produced over 29,000
BMW i model vehicles during the period under report.
The BMW i3 is one of the three best-selling electric
vehicles worldwide. In addition to the Munich plant,
Leipzig is now the second BMW Group site to utilise
electric trucks, powered exclusively by electricity gen-
erated via renewable sources, to transport its materials
on public roads. In 2016, a total of 246,550 vehicles
rolled off production lines in Leipzig, the highest
figure to date for the plant.
In 2016, the BMW Group plant in Regensburg cele-
brated its 30th anniversary. The highly flexible plant
manufactures eight different models on one line.
During the reporting period, production volume was
boosted to over 346,000 units, approximately 14% up
on the previous year.
Economic Position
Review of Operations
→ Automotive segment
Report on
46
0.4
9.2
7,716
246,550
14.4
-5.8
360,804
339,769
14.7
13.7
304,509
346,291
17.4
2.6
400,904
233,656
411,171
Change in %
2015
2016
1 Joint Venture BMW Brilliance Automotive Ltd., Shenyang.
2 Contract production.
BMW Group
Partner plants (Jakarta, Cairo, Kaliningrad, Kulim)
Graz (Magna Steyr)²
Born (VDL Nedcar)²
Goodwood
Chennai
Management
Araquari
Proportion of
production in %
5.5
10.4
216,769
8,568
0.6
55.1
9,936
15,408
0.7
99.9
8,928
17,844
2.7
-11.5
71,353
63,117
6.1
0.7
142,767
143,825
6.9
11.7
144,988
161,901
8.9
4.9
201,206
210,971
-2.4
221,998
11.0
Report
is represented by
a consolidated
Economic Position
2015
2014
2013
2012
20.8
24.2
22.5
Financing 20.7
27.3
25
20.9
Leasing 19.7
2016
21.5
22.3
40.4
41.7
44.0
46.3
49.6
50
in %
→ 29
BMW Group new vehicles financed or
leased by Financial Services segment*
2016
2015
22.1
2014
*Until 2015 excluding Rolls-Royce.
49
Rayong
Demand for insurance products remained high in
2016, with the number of new insurance contracts
signed rising by 4.6% to 1,262,973 (2015: 1,207,196
contracts). At 31 December 2016, the contract port-
folio comprised 3,411,872 contracts (2015: 3,200,742
contracts; +6.6%).
Growth in insurance business
The BMW Group is one of Europe's foremost leasing
and full-service providers. The Financial Services
segment's fleet management line of business offers
leasing and financing arrangements as well as other
fleet-related services to commercial customers under
the brand name "Alphabet". The number of new con-
tracts signed rose by 7.0% during the financial year
2016. At 31 December 2016, the segment was thus
managing a portfolio of 644,420 fleet contracts (2015:
602,303 contracts).
Fleet business expanded
* EU Bank comprises BMW Bank GmbH, its branches in Italy, Spain and Portugal, and its
subsidiary in France.
27.6 EU Bank*
29.9 Americas
Middle East/
Africa 24.8
Europe/
Deposit business volume at previous year's level
Customer deposits provide an important source of
refinancing for the Financial Services segment. The
volume of deposits at the end of the reporting period
stood at €13,512 million, in line with the previous
year's level (2015: €13,509 million; +/− 0.0%).
The total volume of dealer financing increased in 2016,
growing by 6.7% to €18,307 million at the end of the
reporting period (2015: €17,156 million).
49
es BMW Bank
GmbH, its branch-
es in Italy, Spain
and Portugal, and
its subsidiary in
France.
in % per region
→ 30
of Financial Services segment 2016
Contract portfolio retail customer financing
Multi-brand financing saw a moderate decrease
(-5.9%) in the number of new contracts signed in
2016, which fell to 153,297 (2015: 162,870 contracts).
At 31 December 2016, the total portfolio comprised
466,436 contracts, in line with the previous year (2015:
470,150 contracts; -0.8%).
Decrease in multi-brand financing
The increase in credit financing and leasing business
with retail customers is reflected in the overall contract
portfolio. A total of 4,703,417 contracts were in place
with retail customers at 31 December 2016 (2015:
4,326,631 contracts; +8.7%). By region, Asia/Pacific
continued to enjoy significant growth, recording an
18.0% increase in the contract portfolio, mainly driv-
en by greater demand in China. The Europe/Middle
East/Africa region (+8.6%), the Americas region
(+7.1%) and the EU Bank* region (+5.3%) also record- *EU Bank compris Dealer financing up year-on-year
ed year-on-year growth.
→ Research and
Development
Economic Position
Review of Operations
→ Financial Services
segment
Report on
Combined
Management
Report
50
Asia/Pacific 17.7
2013
2012
The total volume of new credit and leasing contracts
concluded with retail customers during the twelve-
month period under report grew by 9.3% year-on-year
to €55,327 million (2015: €50,606 million).
Internationalisation continues
as a percentage of sales volume
→ 27
BMW Group - key motorcycle markets 2016
* Excluding Husqvarna, sales volume up to 5 March 2013: 59,776 units.
2016
2015
2014
2013
2012
Sales of motorcycles in Europe grew by 7.5% to
87,983 units (2015: 81,834 units) year-on-year. These
figures include 24,894 units sold in Germany (2015:
23,823 units; +4.5%), 12,300 units in Italy (2015:
11,150 units; +10.3%) and 13,350 units in France (2015:
12,550 units; +6.4%). Market conditions in the USA
remained very difficult. The number of motorcycles
sold dropped significantly to 13,730 units (2015:
16,501 units; -16.8%).
Dynamic growth in Europe
Production of the G 310 R commenced at the
Group's cooperation partner TVS Motor Company
in India during the year under report. Operations
at the Group's partner plant in Thailand were also
ramped up. Following the takeover of production in
Manaus (Brazil) in October 2016, for the first time,
BMW Motorrad now operates its own manufacturing
facilities at a location outside Europe.
106.4
123.5
137.0
145.0
75
150
in 1,000 units
Solid sales volume growth for BMW Motorrad
The Motorcycles segment profited from a favourable
market environment during the period under report,
particularly in Europe and Latin America, thereby
achieving a record sales volume performance for the
sixth year in succession. Deliveries of BMW motor-
cycles to customers worldwide rose by a solid 5.9%
to 145,032 units (2015: 136,963 units).
Motorcycles segment
→ Financial Services
segment
segment
→ Motorcycles
Review of Operations
115.2
Motorcycle production slightly down on
previous year
A total of 145,555 motorcycles rolled off production
lines during the year under report (2015: 151,004 units;
-3.6%). The slight drop was largely attributable to the
higher number of new model production start-ups in
the second half of 2016 compared to one year earlier.
Started in 2015, expansion work on the BMW Group
plant in Berlin continued during the year under report.
In addition to measures to increase production capac-
ity, a state-of the-art logistics centre is being built near
the Berlin plant and scheduled to begin operations
from the end of 2017.
In the BMW and MINI pre-owned vehicle financing
and leasing lines of business, the number of new con-
tracts signed by the segment increased significantly
entity. in 2016 (+10.5 %) to 361,928 contracts (2015: 327,391
contracts).
Almost every second new BMW Group vehicle (49.6%)
was leased or financed by the Financial Services seg-
ment in the financial year 2016, 3.3 percentage points
more than one year earlier (2015: 46.3%).*
Credit financing and leasing business with retail
customers remain a major factor for the success of
the Financial Services segment. During the period
from January to December 2016, 1,811,157 new cred-
it financing and leasing contracts were concluded
with customers, 9.4% up on the previous year (2015:
1,655,961 contracts). This increase reflected a signif-
icant 11.1% rise in credit financing and a solid 6.2%
rise in leasing contracts. Overall, leasing accounted
for 34.2% of new business (2015: 35.3%), with credit
financing at 65.8% (2015: 64.7%).
Growth in new business volumes
Services segment
the Financial
markets, in which
* The calculation
only includes
automobile
|||||
3,846
4,130
4,360
4,719
5,115
- 3,000
6,000
in 1,000 units
→ 28
Contract portfolio of
Financial Services segment
Financial services business continues to grow
As in the previous year, the Financial Services segment
continued to perform well in 2016, despite the volatile
market environment. In balance sheet terms, business
volume grew by 11.0% to €123,394 million (2015:
€111,191 million). The contract portfolio under man-
agement at 31 December 2016 comprised 5,114,906
contracts and therefore grew 8.4% year-on-year (2015:
4,718,970 contracts).
Financial Services segment
8.5 Italy
6.6 Spain
9.2 France
9.5 USA
17.2 Germany
Great Britain 5.8
Other 43.2
Report on
Rosslyn
464.1
Tiexi¹
865.4
298.9
286.1
272.3
259.2
287.4
252.2
859.5
231.0
189.1
174.5
460.4
495.9
482.3
463.8
425.3
205.1
366.5
914.6
1,092.2
Great Britain 10.7
BMW Group sales volume of vehicles by region and market
→ 21
in 1,000 units
15.5 USA
12.6 Germany
2016
1,000.4
2015
2013
2012
Europe
thereof Germany
thereof Great Britain
Americas
thereof USA
2014
France 3.6
405.7
376.6
2,247.5
2,118.0
1,963.8
1,845.2
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 316,200 units, 2015: 282,000 units, 2014: 275,891 units, 2013: 198,542 units, 2012: 141,165 units).
BMW* brand exceeds the two-million threshold,
again taking a top position in the premium
segment
The BMW brand exceeded the two-million threshold
for the first time in 2016, selling 2,003,359 units.
2,367.6
The BMW 1 Series fell just short of its previous year's
performance with a sales volume of 176,032 units in
the year under report (2015: 182,158 units; -3.4%). By
Sales volume of BMW vehicles by model variant*
→ 22
sales of the new BMW 7 Series were over two thirds up
on the previous year (61,514 units; 2015: 36,364 units;
+69.2%).
The BMW X family remained extremely popular in
2016, with sales rising by more than one fifth world-
wide to 644,992 units (2015: 527,319 units; + 22.3%).
Sales volume growth of the BMW X1 was particularly
pronounced with a jump of 83.6% to 220,378 units
(2015: 120,011 units). The BMW X3 also saw a sig-
nificant year-on-year rise in deliveries to customers
(157,017 units; 2015: 137,810 units; +13.9%). At
166,219 units, sales of the BMW X5 were only slight-
ly lower than one year earlier (2015: 168,143 units;
-1.1%).
in units
2016
2015
contrast, at 196,183 units, sales of the BMW 2 Series
were nearly a quarter higher (2015: 157,144 units;
+24.8%). Sales figures for the BMW 3 Series fell
year-
on-year to 411,844 units (2015: 444,338; -7.3%). Near-
ing the end of its life cycle, sales of the BMW 5 Series
at 331,410 units narrowly missed the previous year's
high figure (2015: 347,096 units; -4.5%). Worldwide
397.0
Total*
61.8
348.5
Asia*
747.3
685.8
658.4
578.7
493.4
61.1
thereof China*
456.7
391.7
327.3
Other markets
67.7
65.4
62.7
516.8
Change in %
Japan 3.2
Italy 3.5
Dynamic growth in Europe and Asia, challenges on
the US market
slight decrease
slight increase
target range
between 8 and 10
moderate decrease
Q2: slight decrease
Revenues
EBIT margin
Return on capital employed
slight increase
MOTORCYCLES SEGMENT
Return on capital employed
FINANCIAL SERVICES SEGMENT
Return on equity
in line with last year's level
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 316,200 units).
2 EU-28.
Actual outcome
in 2016
Sales volume
€ million
Fleet emissions²
slight increase
Financial Services segment
Return on equity: slight increase
Growth in business volumes and an improved risk
profile in the Financial Services segment had a posi-
tive impact on segment return on equity (RoE) in 2016.
At 21.2%, the RoE was slightly higher than expected
(2015: 20.2%; +1.0 percentage point).
7
Comparison of 2016 forecasts with actual outcomes 2016
In the Annual Report 2015, ROE was forecast to be
at the previous year's level. As expected, it remained
ahead of the long-term target of 18%.
The following overall picture arises for the key per-
formance indicators used by the BMW Group and its
segments:
Sales volume¹
→ 19
in 2015 Annual Report
Forecast revision
during the year
BMW GROUP
Profit before tax
Workforce at year-end
AUTOMOTIVE SEGMENT
slight increase
Forecast for 2016
Within a generally favourable market environment,
the BMW Group surpassed the one-million mark for
sales of BMW, MINI and Rolls-Royce brand vehicles in
Europe for the second year in succession in 2016 with
1,092,155 units sold (2015: 1,000,427 units; +9.2%).
Sales figures for Germany were up 4.5% year-on-year
to 298,928 units (2015: 286,098 units). Despite the
Brexit decision, automobile business in Great Britain
9,665 (+4.8%)
124,729 (+2.0%)
2,367,603 (+5.3%)
Combined
Management
Report
Report on
Economic Position
→ Review of Operations
→ Automotive segment
REVIEW OF OPERATIONS
Automotive segment
42
Solid growth in deliveries to customers
under report,
also developed positively during the year
with sales rising to a total of 252,205 units (2015:
230,982 units; +9.2%). Sales volume growth was again
recorded in Asia. Overall, sales of the Group's three
brands in the region totalled 747,291* units (2015:
685,792* units; +9.0%), including 516,785* units sold
in China, 11.4% more than one year earlier (2015:
464,086* units). Total sales of BMW, MINI and Rolls-
Royce brand vehicles on the American continent were
down year-on-year within a highly competitive market
environment, falling by 7.2% to 460,398 units (2015:
495,897 units). Sales in the USA fell by 9.7% to 366,493
units (2015: 405,715 units).
BMW Group - key automobile markets 2016
→ 20
as a percentage of sales volume
Other 29.1
21.8 China
The BMW Group sold 2,367,603* BMW, MINI and
Rolls-Royce brand vehicles worldwide in 2016, thereby
setting a new record for the sixth year in succession
(2015: 2,247,485* units; +5.3%). The BMW brand
recorded a solid 5.2% increase to 2,003,359* units,
thereby exceeding the two-million threshold for
the first time (2015: 1,905,234* units). MINI also
achieved a solid 6.4% increase to 360,233 units (2015:
338,466 units). Rolls-Royce Motor Cars delivered
4,011 luxury automobiles to customers during the
year under report (2015: 3,785 units; +6.0%). A new
all-time high was therefore not only recorded at Group
level, but also for the BMW and MINI brands.
units
g CO2/km
Dadong1
21.2 (+1.0%pts)
124 (-2.4%)
€ million
86,424 (+1.0%)
%
8.9 (-0.3%pts)
%
74.3 (+2.1 %pts)
41
slight increase
units
145,032 (+5.9%)
slight decrease
year's level
%
33.0 (+1.4%pts)
%
Q2: solid increase
Q2: in line with last
Proportion of
BMW sales volume
2016 in %
42
BMW 2 Series
8.3
63,509
8,003
17.6
68,301
88,477
-22.8
50.2
19.0
338,466
6.4
100.0
Strong performance by Rolls-Royce
Rolls-Royce Motor Cars enjoyed the second-best year
in its history, with 4,011 luxury automobiles delivered
to customers (2015: 3,785 units; +6.0%). This perfor-
mance includes an all-time quarterly high contribution
of 1,386 units in the fourth quarter (2015: 1,181 units;
+17.4%). A high proportion of these sales related to
the new Rolls-Royce Dawn, of which 1,283 units were
sold worldwide after its mid-year launch.
Sales volume of Rolls-Royce vehicles
by model variant
360,233
→ 24
20,004
55.1
The MINI brand also set a new sales volume record
in 2016 with a total of 360,233 units sold (2015:
338,466 units; +6.4%). Positive contributions to this per-
formance came from the new Convertible (29,758 units;
Sales volume of MINI vehicles by model variant
→ 23
in units
MINI Hatch (3- and 5-door)
MINI Convertible/Coupé / Roadster
MINI Clubman
30,050
MINI Countryman/Paceman
2016
2015
Change in %
Proportion of
MINI sales volume
2016 in %
198,373
221,982
-10.6
MINI total
MINI sets new sales volume record
in units
2015
In 2016, buoyant customer demand and various new
model start-ups resulted in high capacity utilisation
throughout the BMW Group production network. At
the same time, rapid progress was made in expanding
the Group's international manufacturing locations.
The production network currently comprises 31 loca-
tions in 14 countries worldwide.
* Including the
joint venture
BMW Brilliance
Automotive Ltd.,
Shenyang
(2016: 305,833
units, 2015:
287,755 units).
New production records were set in 2016, with a
total of 2,359,756* BMW, MINI and Rolls-Royce
brand vehicles manufactured (2015: 2,279,503* units;
+3.5%), comprising 2,002,997* BMW (2015: 1,933,647*
units; +3.6%), 352,580 MINI (2015: 342,008 units;
+3.1%) and 4,179 Rolls-Royce brand vehicles (2015:
3,848 units; +8.6%).
Vehicle production of the BMW Group by plant
High capacity utilisation throughout
production network
→ 25
Spartanburg
Regensburg
Dingolfing
Leipzig
Munich
Oxford
BMW 1 Series
in units
2016
6.0
4,011
Change in %
Phantom (incl. Coupé,
Drophead Coupé,
Extended Wheelbase)
389
488
-20.3
3,785
7
1,175
1,609
-27.0
Wraith/Dawn
Rolls-Royce total
2,447
1,688
45.0
Ghost
Report on
Economic Position
Review of Operations
→ Automotive segment
2015: 14,145 units) and the new Clubman (63,509 units;
2015: 8,003 units). With 198,373 units sold, the MINI
Hatch 3- and 5-door models fell short of the previous
year's high level (2015: 221,982 units; -10.6%).
0.7
46,305
43,323
8.3
−1.1
168,143
166,219
2.9
-6.4
5.5
58,055
7.8
13.9
137,810
157,017
11.0
83.6
55,050
220,378
2.2
7,950
44
43
BMW 3 Series
43
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 316,200 units, 2015: 282,000 units).
100.0
5.2
5,432
1,905,234
BMW total
1.5
-0.8
29,513
29,280
0.3
-31.7
2,003,359
3.1
120,011
36,364
69.2
8.8
-3.4
182,158
176,032
BMW i
BMW Z4
157,144
BMW X6
BMW X4
BMW X3
BMW X1
BMW 7 Series
BMW 6 Series
BMW 5 Series
BMW 4 Series
BMW X5
24.8
196,183
411,844
61,514
Combined
Management
Report
-36.1
20,962
9.8
16.5
-4.5
347,096
13,400
6.6
-12.5
152,390
133,272
20.5
-7.3
444,338
331,410
in %
functions and
16
→ 35
Proportion of female employees in manage-
ment functions at BMW AG/BMW Group*
The proportion of women in the workforce, management
young talent
programmes continued to
increase during the year under report. The percentage of
women in the total BMW Group workforce rose to 18.7%
(BMW AG: 15.8%), above the internal target range of 15 to
17%. The proportion of women in management positions
rose to 15.3% for the BMW Group as a whole and 13.3%
for BMW AG. Female representation in programmes for
young employees and interns in the year under report
was approximately 44% for trainee programmes and 29%
for student training programmes.
Diversity represents a key factor in ensuring the
BMW Group's continued competitiveness going forward,
focusing on the three aspects of gender, cultural back-
ground, and age/experience. The aim is to ensure equal
opportunities for all employees. A variety of measures
were implemented in 2016 to promote and benefit from
diversity in the workforce.
Diversity as a competitive factor
Demographic and economic conditions relevant for
the provision of pension benefits are changing at an
increasingly rapid pace. In 2016, the BMW Group there-
fore enhanced the Company pension plan to make it
more sustainable and viable for the future. To mark the
occasion of its centenary, nearly all employees of the
BMW Group were awarded a one-time centenary bonus.
BMW AG employees received the bonus mainly in the
form of a starting contribution to the new BMW sup-
plementary benefit plan, which serves as an additional
component in the Company pension plan.
5555
51
→ www.bmwgroup.com/careers
Slight increase in workforce
At 31 December 2016, the BMW Group employed a
workforce of 124,729 worldwide, 2.0% more than one
year earlier (2015: 122,244 employees). The increase
was primarily due to the expansion of the internation-
al production network and financial services business.
Moreover, skilled workers and IT specialists were
increasingly recruited for future-oriented areas, such
as software architecture and development, artificial
intelligence and autonomous driving.
BMW Group employees
→ 33
Automotive
31.12.2016
31.12.2015
Change in %
112,869
111,410
1.3
Motorcycles
3,351
3,021
Risk profile improved
Despite ongoing political and economic uncertain-
ties, including the UK's decision to leave the EU, the
stable trend in the global economy during the year
under report contributed to an improvement in the
risk situation of the Financial Services segment's total
portfolio. The risk profile for the segment's credit
financing portfolio also improved slightly. The credit
loss ratio on the total credit portfolio for the twelve-
month period decreased to 0.32%, slightly down on
the previous year's level (2015: 0.37%).
Development of credit loss ratio
→ 31
Research and development expenditure totalled
€5,164 million during the year under report, in
line with the previous twelve-month period (2015:
€5,169 million; -0.0%). At 5.5%, the research and
development expenditure ratio was also practically
identical to that of the preceding year (2015: 5.6%).
The ratio of capitalised development costs to total
research and development expenditure for the period
(capitalisation ratio) was 40.5% (2015: 39.9%). Amor-
tisation of capitalised development costs totalled
€1,222 million (2015: €1,166 million; +4.8%). Further
information on research and development expendi-
ture is provided in the "Report on Economic Position
→see (Results of Operations)" and in → note 7 to the Group
Financial Statements.
Research and development are of central importance
for the BMW Group as a premium manufacturer. As
part of the Efficient Dynamics strategy, continual
efforts are undertaken to improve energy efficiency
and reduce emissions across the full range of auto-
mobiles and motorcycles. In line with its Connected
Drive strategy, the BMW Group is engaged in work on
the connectedness of driver, vehicle and the outside
world. The Group seeks to take a leading position in
the field of autonomous driving. At 31 December 2016,
a total of 13,103 people at 13 locations in five coun-
tries worldwide were employed in the BMW Group's
research and innovation network.
→ www.bmwgroup.com/innovation
Research and Development
Average sales proceeds per vehicle, generated from
remarketing pre-owned BMW and MINI brand vehi-
cles, reflected the marginally less favourable situation
on international pre-owned markets, and were there-
fore slightly down on the previous year. Residual value
losses on such vehicles rose moderately year-on-year,
mainly due to greater competition in North America.
Further information on the risk profile is provided in
the section "Risks and Opportunities".
2016
2015
2014
10.9
2013
0.32
0.37
0.25
0.46
0.5
0.48
0.50
in %
2012
15.3
Financial Services
7,697
2014
2015
2016
58
Combined
Management
Report
Report on
Economic Position
Review of Operations
→ Workforce
→ Sustainability
High level of investment to bolster
employee skill sets
At €352 million, expenditure on basic and further
training remained unchanged at a high level. By
improving the skill sets of its workforce for example
in electric mobility, hydrogen and fuel cell technology,
lightweight construction and robot technology, the
BMW Group is creating a solid foundation for future
activities.
Highly attractive employer
The BMW Group retained its status as one of world's
most attractive employers in 2016. In the latest
"World's Most Attractive Employers" rankings pub-
lished by the agency Universum, the BMW Group was
once again named best German employer across all
sectors and the most attractive automotive company
in the world.
The BMW Group came top in Trendence's “Young
Professional Barometer Germany" for the fifth year
in succession. It also improved its position again in
the Trendence "Graduate Barometer Germany - IT
Edition" for highly sought-after IT specialists, taking
second place in 2016. In Universum's "Young Profes-
sionals Study Germany", the BMW Group took top
spot in both the “Engineering" and "Business" cate-
gories and came third in the "IT" category, confirming
the excellent results of the previous year. Overall, the
BMW Group finished as the best-placed company in
the study.
BMW supplementary benefit plan
and centenary bonus
2013
2012
2,500
4,266
9.1
Other
115
116
-0.9
BMW Group
124,729
122,244
8,394
2.0
The new Rolls-Royce Dawn has been available since
mid-2016. The Dawn was first presented to the media
in March 2016 amid high acclaim. The luxury con-
vertible boasts a special in-house designed roof that
reduces interior noise levels to a minimum. During
the year under report and to celebrate the end of the
vehicle's life cycle, a special edition of 50 Rolls-Royce
Phantoms was built – the Phantom Zenith Collection.
Dual vocational training expanded worldwide
The BMW Group increased its international appren-
ticeship activities during the year under report, due
amongst others to the higher number of apprentices
employed at plants, for example in the USA and
Thailand. The number of new entrants at German
sites remained constant at 1,200 apprentices. At the
end of the reporting period, 4,613 young people were
engaged in vocational training and other training pro-
grammes designed to promote young talent within
the BMW Group (2015: 4,700).
BMW Group apprentices at 31 December
→ 34
5,000
4,445 4,595
4,700
4,613
Rolls-Royce Dawn launched
14.3
Absolutely
crucial
13.0
Attractive workplace, talent attraction and retention
Data protection
Mobility concepts
and services
Product safety
Connected and autonomous driving
Alternative drivetrain technologies
Prevention of corruption and
anticompetitive behaviour
Human rights
Environmental and social standards
in the supply chain/sustainable sourcing
Occupational health and safety
Diversity and equal opportunity
Employee development and training
Socio-economic impacts in society
Air emissions of vehicles
Air emissions of operations
and supply chain
Medium
materiality
Vehicle efficiency and CO2 emissions
materiality
High
Importance for the stakeholders
Absolutely
crucial
In order to identify important sustainability topics at
an early stage, the BMW Group also conducts mate-
riality analyses on a regular basis. Moreover, social
challenges are continually monitored and analysed
in order to gauge their significance, from the point
of view of both external and internal stakeholders.
The materiality analysis is used to create a materi-
ality matrix, which is used as a basis to check the
strategic direction of sustainability management. The
materiality matrix is described in greater detail in the
Sustainable Value Report 2016.
7
Energy use and GHG emissions
of operations and supply chain
→ 37
Customer satisfaction
Low
→
Importance for the BMW Group
←
Political involvement
Efficient use of materials in operations
and supply chain
Employee-management relations
Responsible financial services
Responsible marketing and product communication
Corporate Citizenship
Design for recycling and resource efficiency
Donations and philanthropy
Biodiversity
Involvement with local communities
Use of urban space
Waste and water pollution
Water consumption
Less
important
important
Less
materiality
Corporate volunteering
Materiality matrix
The BMW Group is in continual dialogue with a large
number of stakeholders, both in Germany and abroad.
Dialogue helps the Company to recognise global trends
at an early stage, achieve sustainability objectives
more effectively and strengthen social commitment.
In the course of this dialogue, the BMW Group gains
a clear picture of how current trends are changing the
business environment and what role the BMW Group
can play. For example, stakeholder dialogue events
on the topic of urban mobility were held in Seattle,
Boston, Madrid, Tokyo and Barcelona during the
period under report.
Social dialogue and materiality analysis as a basis
for sustainability management
3.5
7.0
as a percentage of workforce
→ 36
Employee attrition rate at BMW AG*
At the same time, the workforce in Germany is becoming
more international. Employees from over 100 countries
work together successfully at the Munich site alone.
Moreover, a balanced age structure in the workforce
encourages an exchange between generations and plays
a role in reducing the loss of know-how when employees
retire.
59
59
* Reporting on the proportion of women in management was changed in 2016 and is now
based on the criterion "management function" rather than individual employee
classification. Prior year figures have been adjusted accordingly.
3.87
2016
2014
2013
2012
10.6
11.3
12.5
note 7
BMW Group 12.1
BMWAG 10.0
13.3
2015
3.47
2.08
2.70
Report on
Economic Position
Review of Operations
Sustainability
Combined
Management
Report
60
60
Further information on the subject of sustainability
within the BMW Group and related topics is provided
in the Sustainable Value Report 2016, published online
at → www.bmwgroup.com. The Sustainable Value Report is
drawn up in accordance with the Guidelines of the
Global Reporting Initiative (GRI G4), the most wide-
ly used set of guidelines for sustainability reporting
worldwide. The Sustainable Value Report corresponds
to the "comprehensive" option, in which all relevant
information and indicators of the aspects identified
as essential are reported on. It will be published at
the same time as the Annual Report 2016.
Through its sustainability policy, the BMW Group is
supporting the achievement of the UN's Sustainable
Development Goals (SDG), which were adopted in
September 2015.
responsibility towards employees and society in
general
the efficient use of resources along the entire
value chain
the development of products and services for
sustainable individual mobility (for example
electric mobility and services such as DriveNow
and ReachNow)
Economic success, the responsible use of resources
and the assumption of social responsibilities form the
basis for long-term growth within the BMW Group.
The Group secures the future of its business model
through sustainable activity. In promoting sustaina-
bility, the BMW Group concentrates on three areas:
→ www.bmwgroup.com/responsibility
Sustainability
* Number of employees on unlimited employment contracts leaving the Company.
2016
2015
2014
2013
2012
0
1.41
Üli
13.5
Given the pace of technological change, collaboration
in the field of research and development is customary
in the automotive industry. The BMW Group also
enters into collaboration arrangements with selected
partners. The aim of these research and development
activities, which may also include cross-sector cooper-
ation, is to help find innovative solutions for individual
mobility. The focus is on future-oriented technologies
such as digitalisation and alternative drive systems.
BMW continues electrification strategy with
iPerformance
Management
Report
55
Under the name 360° ELECTRIC, BMWi provides a
comprehensive range of products and services for both
all-electric vehicles and plug-in hybrids worldwide.
A new generation of the BMWi wallbox has been
launched for quick, easy charging at home. It can
now charge vehicles at up to three times the previous
speed. While on the road, drivers can now use the
BMW i service ChargeNow with over 65,000 charging
points in 29 different countries.
The global dealership and agency network for BMW i
currently covers over 1,300 locations. In addition,
BMWi models are offered via new channels, such
as the Customer Interaction Center. Moreover, the
Mobile Sales Advisor is now established as a core
element of the sales model in six markets. The BMWi
online store gives customers in the Netherlands, Bel-
gium, Luxembourg, Austria and Italy the opportunity
to order their BMW i3 via the Internet.
The BMW i8 plug-in hybrid sports car continues to
be the best-selling vehicle in its class since its market
launch in 2014. The eDrive technology of the BMW i8
is also integrated in the new BMW iPerformance mod-
els of the 2, 3 and 7 Series as well as in the X5.
Since first going on sale in 2013, the BMW i3 has
established itself as the front runner in its segment.
Over 80% of BMW i3 buyers are first-time customers
for the BMW Group. Since summer 2016, the BMW i3
has been optionally available with a battery that pro-
vides 50% more capacity and a range of around 300
kilometres in the European driving cycle.
Under the brand name BMW i, the BMW Group offers
a range of electric mobility solutions that include not
only the vehicles, but also services such as journey
planning using different modes of transport and
charging of electric vehicles. Over 100,000 electric
and electrified vehicles have been sold to customers
since the BMW i brand was launched. BMW i vehicles
are meanwhile available in 52 countries worldwide.
BMW i becoming further established
In 2016, the BMW Group continued to digitalise its
processes in both sales and marketing. The aim is to
make customer contact possible at an earlier stage
and provide individualised offers for vehicle sales and
services. Moreover, online sales help to attract new
customer groups. For example, at the end of 2015 a
nationwide online pilot project began across the UK.
Over the course of the year under report, the sale
of new vehicles via the Internet established itself as
a further sales channel to supplement on-location
dealership sales. This method enables customers to
purchase any BMW model online. The service covers
all aspects of the purchase, including selecting the
right model, fully customised vehicle configuration,
financing and payment. It is even possible to trade in
a used vehicle online. If required, customers can also
receive personal advice from a vehicle specialist (BMW
Product Genius) or take up direct contact with a dealer.
55
Digitalisation continued
In March 2016, the company celebrated its 100th anni-
versary with the slogan THE NEXT 100 YEARS. The
anniversary year kicked off with a major centenary
event in Munich for employees and the general public.
The four vision vehicles of BMW, MINI, Rolls-Royce
and BMW Motorrad, presented over the course of the
year, provided the international public with a visionary
glimpse into the future of individual mobility.
100th anniversary of BMW
The BMW Group's sales and distribution network
comprises some 3,400 BMW, 1,580 MINI and 140
Rolls-Royce dealerships worldwide. Products and
services are sold by independent authorised dealer-
ships, BMW Group branches and subsidiaries, as well
as independent importers in certain markets. The
dealership and agency network for BMW i currently
covers over 1,300 locations.
→ www.bmwgroup.com/brands
Sales and Marketing
20.6 Eastern Europe
39.8 Germany
1.3 Africa
The BMW VISION NEXT 100 demonstrates how
driving pleasure could look in the future. The MINI
VISION NEXT 100 offers an individualised, continu-
ally available form of urban mobility. The Rolls-Royce
VISION NEXT 100 provides an insight into the future
world of highly customised automotive luxury. Future
motorcycling pleasure with the BMW Motorrad
VISION NEXT 100 promises unlimited freedom.
99
56
Combined
Management
Report
Combined
Workforce
The new MINI Convertible has been on the market
since March 2016. The new model was launched fea-
turing five different versions of the new generation
of engines with MINI TwinPower Turbo technology.
The sports version, the MINI John Cooper Works
Convertible, became available in May. The new MINI
Convertible keeps up the tradition of highly dynamic
driving pleasure and continues to offer its owners the
typical MINI go-kart feeling.
MINI launches new convertible
As the first concrete steps in implementing the Strat-
egy NUMBER ONE > NEXT, numerous new concepts
and innovations have been presented to the public,
such as the BMW i8 Spyder, which celebrated its world
premiere at the Consumer Electronics Show (CES) in
Las Vegas, followed by the M Performance model of
the BMW 7 Series at the Geneva International Motor
Show. The China version of the BMW X1 was present-
ed at the show in Beijing and the BMW Concept X2
at the Paris Motor Show (Mondial de l'Automobile).
52
57
The first official information on the seventh generation
of the new BMW 5 Series was published in mid-Octo-
ber 2016. The new 5 Series Sedan had its worldwide
debut in Detroit in January 2017 and has been on sale
since mid-February 2017. The success story of the
BMW 5 Series in the sporty business class is being
continued with this dynamic, efficient, innovative
vehicle.
both
The revised model of the BMW 3 Series Gran Turismo
has been available since July 2016. The new modular
engines and Connected Drive range of services com-
bine the sporting flair typical of BMW with superb
efficiency and a high level of connectedness. The
BMW 1 Series and the 2 Series Convertible and Coupé
models have also been available as M Performance
versions since July 2016. In the course of the year,
the BMW X1 and the BMW 1 Series were launched
in China. Since autumn 2016, the BMW M2 Coupé
has been on sale in the compact high-performance
sports car segment.
In early 2016, BMW presented the first iPerformance
model, the plug-in version of the 3 Series. With emis-
sions of only 44g CO2/km and an electric range of
up to 40 km, the iPerformance Sedan combines the
driving dynamics of the 3 Series with the advantages
of an electric drive system. A plug-in hybrid version
of the current 7 Series was launched in July. With
only 45 g CO2/km, the efficient, powerful 4-cylinder
engine sets new standards in the luxury segment. The
BMW 2 Series Active Tourer is also available as an
iPerformance model. With its 3-cylinder combustion
engine and 100 kW/136 hp of power output and a
65 kW/88 hp electric motor, it emits 46 g CO2/km.
With ChargeNow, the BMW Group provides easy
access to a constantly growing network of public
charging stations that currently includes over 65,000
charging points in 29 countries. Customers can locate
the BMWi partner charging stations directly via the
navigation system integrated in the vehicle, via the
ChargeNow app or via the website. ChargeNow inte-
grates the charging stations of various operators to
form one large, expanding network.
ParkNow is a comprehensive parking solution for Web,
app and navigation systems. When parking on the
street, payment is made cash-free via smartphone.
When parking in multi-storey car parks, ParkNow
provides support in finding, reserving, booking and
paying for parking spaces. ParkNow was launched in
Germany, Austria and France during the year under
report.
In April 2016, the BMW Group launched ReachNow
in Seattle (USA), a further development of car sharing.
The ReachNow fleet in Seattle and Portland now com-
prises 800 BMW and MINI brand vehicles. Electrically
powered BMW i3 vehicles make up 20% of the fleet. In
addition to Seattle and Portland, in November 2016
Brooklyn/New York became the third US city to
launch ReachNow. Currently, membership amounts
to more than 32,000 in the three cities. In Decem-
ber 2016, ReachNow began offering Ride in Seattle,
its new mobility service, which enables members to
order a vehicle optionally with a driver. In residential
areas, Fleet Solutions offers the exclusive use of a fleet
of premium vehicles that are permanently available
on location. The ReachNow Reserve service makes it
possible to book a specific vehicle for longer periods
of between two and five days and have it delivered
at the time and place of the customer's choice. Via
ReachNow Share, MINI owners will be able in the
future to rent out their vehicle when they do not need
it themselves.
The DriveNow premium car-sharing service, a joint
venture between BMW AG and Sixt SE, now has over
750,000 customers in seven countries and is repre-
sented in eleven European cities. Around 20% of
DriveNow vehicles in Europe are electrically powered
and the number is scheduled to grow. With Alphacity,
the BMW Group also provides car-sharing services
for companies.
The BMW Group has been developing its range of
mobility services under the brand NOW since 2011.
In Europe, the USA and China, the BMW Group now
offers its customers individually tailored solutions
for urban mobility. The range includes car sharing,
on-demand mobility such as DriveNow and Reach-
Now as well as parking and charging solutions such
as ParkNow and ChargeNow.
Premium services for individual mobility
→ Sales and Marketing
→ Workforce
Economic Position
Review of Operations
NAFTA 17.2
Rest of Western
Europe 15.4
Report on
in %, basis: production material
Next generation of the Air Touch virtual
touchscreen
Digital connectivity has also become a key topic for
the Group's motorcycles. With its optionally avail-
able "Intelligent Emergency Call", BMW Motorrad
has announced that eCall for urgent help in case of
emergency or accidents will also be added as a feature
of its motorcycles as from 2017.
With BMW Connected, the BMW Group presented
a comprehensive digital concept that facilitates
individual mobility. Based on a flexible platform,
BMW Connected seamlessly combines the vehicle
with the digital life of the user through user devices
such as smartphones. The functions of existing BMW
ConnectedDrive apps will be integrated in BMW
Connected. The security and anonymisation of data
have the highest priority for the BMW Group, both
internally and for its customers.
BMW Connected digital platform presented
52
52
At the same time, the BMW Group is conducting
research into highly automated systems that do not
need to be permanently monitored by the driver and
fully automated systems that no longer require the
driver to monitor them at all. At the end of 2016,
some 600 BMW Group employees were engaged in
the development of highly automated driving tech-
nologies. Beginning in 2017, the BMW Group plans
to concentrate its expertise in the field of vehicle
connectivity and automated driving at one location.
With extended functions built into the optionally avail-
able Active Cruise Control (ACC) and the steering and
lane control assistant, the BMW 5 Series represents
a further step towards automated driving, including
recognition of speed limits, which the optional Speed
Limit Assist shows the driver. The assistance system
supports the driver in keeping a correct distance at
speeds up to 210 km/h as well as at accelerating and
braking. These features offer drivers a significant ben-
efit in terms of convenience, particularly at low speeds
and in slow-moving traffic. The optional Remote
Parking feature of the BMW 5 Series Sedan enables
drivers to manoeuvre the vehicle into the tightest of
parking spaces using a remote-control car key.
The BMW Group made further progress in the field
of interaction between the driver and the vehicle
during the year under report. Following up on BMW
Gesture Control, which is already available for the
new BMW 5 and 7 Series, in 2016 the Group pre-
sented its enhanced AirTouch system, which enables
drivers to use simple gestures with an open hand to
activate command fields on a large panorama screen
on the dashboard. At the beginning of 2017, the BMW
HoloActive Touch system was presented to the public
for the first time. The innovative interface between
driver and vehicle is similar to a virtual touchscreen,
which is operated using finger gestures on a screen
that appears to float freely in space.
Driver assistance systems, highly and fully
automated driving
For the medium and long term, the BMW Group is also
developing a fuel cell electric vehicle (FCEV). The fuel
cell electric drive system, which converts hydrogen to
electricity and steam, combines locally emission-free,
electrically powered driving with the dynamic flair
typical of the BMW brand, capability for covering long
distances, and short refuelling times. Battery and fuel
cell technology can be combined in one vehicle.
With its C-evolution, BMW Motorrad presented in
2016 the second edition of an all-electric "Maxi Scoot-
er” with greatly improved range and higher top speed.
In 2016, an additional version of the BMW i3 was
launched, featuring significantly greater battery
capacity. The vehicle is also available with or without
a range extender. During the reporting year, plans
were laid for both the first all-electric MINI and for
an electrically powered BMW X3. In 2017, the new
BMW 5 Series and the MINI Countryman are both due
to be launched as plug-in hybrid versions. A roadster
version of the BMW i8 has also been announced for
2018.
The BMW Group is consistently extending its portfolio
of electrically powered vehicles. At the end of 2016,
it included the BMW i3 all-electric, battery-powered
vehicle, six plug-in hybrid vehicles for the global
market, and an additional plug-in hybrid exclusively
developed for the Chinese market.
Expertise in drivetrain technology
Economic Position
Review of Operations
→ Research and
Development
Asia/Australia 5.7
Report on
At the same time, the BMW Group continues to work
on enhancing its existing range of highly efficient
combustion engines. 2016 saw the launch of the new
BMW 7 Series, featuring a newly developed inline
6-cylinder diesel engine that combines high perfor-
mance with low fuel consumption. The BMW 1 and 2
Series M Performance models were presented with a
new, powerful inline 6-cylinder petrol engine in 2016.
Extreme lightweight construction in the BMW HP4
BMW Motorrad demonstrated with the exclusive BMW
HP4 RACE experimental motorcycle how extreme
lightweight construction can be realised based on
carbon fibre technology. Among other features, this
motorcycle, which is fit for racing, is equipped with a
highly innovative frame structure made of pure carbon
as well as carbon wheel-rims.
The new BMW 5 Series offers drivers extensive sup-
port with a variety of assistance systems. It is fitted
with a stereo camera as standard, which monitors
the vehicle's environment together with optionally
available radar and ultrasound sensors. New features
in the BMW 5 Series include an avoidance assistant,
a crossing-traffic warning, a lane-change assistant
and a lane control assistant with active side collision
protection, which monitors the driving lanes and
developments next to the vehicle and actively supports
the driver in the event of imminent collision with a
corrective steering intervention.
The BMW Group won over 50 national and interna-
tional awards during the year under report. Among
other honours, the BMW 7 Series was named World
Luxury Car at the renowned World Car Awards.
→ 32
Regional mix of BMW Group
purchase volumes 2016
Numerous awards for innovations
During the period under report, the new Lightweight
and Engineering Center was opened in Landshut,
the Group's most important components plant. In
future, research will be conducted at the centre on
new materials, composite material concepts and
production processes for future vehicle generations,
encompassing a wide range of technologies.
A further important area is the production of key
components for BMW Group vehicles. Investments in
state-of-the-art manufacturing facilities and efficient
structures ensure the competitiveness of in-house
component production.
Investments ensure expertise in productivity
and technology
Continually rising vehicle sales and production vol-
umes outside Europe are also changing the regional
distribution of purchasing volumes, for example due to
the expansion of production capacities in the Group's
plant in Spartanburg, USA, or the construction of
the BMW Group plant in San Luis Potosí, Mexico,
which is scheduled to begin production in 2019. The
BMW Group remains committed to its strategy of
maintaining a regionally balanced growth in sales
volume, production and purchasing volumes. This
strategy also makes an important contribution to
natural hedging against currency risks.
Charting a course in a volatile environment
Despite the increasingly volatile environment, the Pur-
chasing and Supplier Network ensures that the Group
is capable of flexibly responding to fluctuations in
demand when purchasing production materials, raw
materials, capital goods and services. The main focus
is on high quality standards, innovation, a flexible
and reliable supply structure and competitive costs.
Purchasing and Supplier Network
→Sales and Marketing
Connecting procurement markets
Supplier Network
Review of Operations
→ Purchasing and
Economic Position
Report on
Combined
Management
Report
54
53
The BMW i3 won the "Golden Steering Wheel" award
in the "Alternative drives" category. In 2016, the
BMW Group won numerous design awards, includ-
ing the International Forum Design Awards for its
Rolls-Royce Dawn, MINI Clubman, MINI Convertible,
BMW M2, BMW X1 and BMW 7 Series.
At the "International Engine of the Year Award", the
most prestigious engine competition worldwide, the
drivetrain of the BMW i8 was winner in the 1.4- to
1.8-litre category. At the Automotive Innovations
Award, jointly awarded by the Center of Automotive
Management and the auditing and consulting firm
PricewaterhouseCoopers, BMW drivetrains were
adjudged to be the most innovative conventional
systems across all models.
from customer
* Measured at ex- The following table provides an overview of amounts*
utilised at 31 December 2016 in connection with the
BMW Group's money and capital market programmes:
deposits (banking)
13,512
change rates at
31.12.2016.
Bonds
44,421
Twelve public ABS transactions were executed in 2016,
including three in the USA, two each in Germany,
South Africa and China, and one each in Canada,
South Korea and France, with a total volume equiv-
alent to €7.3 billion. Further funds were also raised
via new ABS conduit transactions in Japan and the
USA totalling €1.4 billion. Other existing transactions
remained in place in various countries, including
Germany, Switzerland, the UK, South Korea, South
Africa and Australia.
In the course of 2016, the BMW Group issued four euro
benchmark bonds on the European capital market
with a total issue volume of €2.75 billion. For the first
time, it also issued bonds on the US capital market
with a total issue volume of US Dollar 6.25 billion.
Bonds were also issued in British pounds, Chinese
renminbi, Canadian and Australian dollars and Nor-
wegian krone for a total amount €1.9 billion. Private
placements totalling €4.3 billion were also issued.
Liabilities
Other 1,249
Commercial paper 3,852
Report on
in € million
→ 45
BMW Group financial liabilities
Thanks to its excellent ratings and the high level
of acceptance it receives on capital markets, the
BMW Group was again able to refinance operations
on debt capital markets during the financial
year 2016.
In addition to the issue of bonds and loan notes and
private placements, commercial paper was also issued.
Additional funds were raised via new securitised
instruments and the prolongation of existing instru-
ments. As in previous years, all issues were highly
sought after by private and institutional investors alike.
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Economic Position
Combined
Management
Report
70
Liabilities to banks
Apart from issuing commercial paper on the money
market, the BMW Group's financing companies also
issue bearer bonds. In addition, retail customer and
dealer financing receivables on the one hand and leas-
ing rights and obligations on the other are securitised
in the form of asset-backed securities (ABS) financing
arrangements. Financing instruments employed by
the Group's in-house banks in Germany and the USA
(e.g. customer deposits) are also used as a supplemen-
tary source of financing. Loans are also taken out with
international banks.
Derivate instruments 3,331
14,892
Amount
→ 46
Financing measures undertaken centrally ensure
access to liquidity for the Group's operating subsidiar-
ies at market-based, consistent conditions. Funds are
acquired with a view to achieving a desired structure
for the composition of liabilities, comprising a finely
tuned mix of financing instruments. The use of longer-
term financing instruments to finance the Group's
financial services business and the maintenance of
a sufficiently high liquidity reserve serves to avoid
the liquidity risk intrinsic to any large portfolio of
contracts. This prudent approach to financing also
bolsters BMW AG's ratings. Further information is
provided in the section “Liquidity risks" within the
"Report on Outlook, Risks and Opportunities".
Euro Medium Term Notes
in € billion
16,474
utilised
Programme
framework
Programme
financing
transactions
Asset-backed
than 5
BMW Group financial liabilities
1-5
later
within between
Maturity (years)
0
11,261
25,000
42,326
44,144
50,000
in € million
1
3. Focus on value by optimising financing costs
Australian Medium Term Notes
Commercial Paper
kets
investment funds
Marketable securities and
842
3,952
4,794
Cash and cash equivalents
Change
2015
2016
in € million
4,147
Net financial assets of the Automotive segment com-
prise the following:
50.0
34.4
1.7
0.3
13.8
3.9
At 31 December 2016, liquid funds stood at a solid
level of €13.2 billion. The BMW Group also has access
to a syndicated credit line of €6 billion, with a term
up to October 2018. This credit line, provided by a
consortium of 38 international banks, was not being
utilised at the end of the reporting period.
Further information with respect to financial liabili-
→ see ties is provided in → notes 29, 33 and 37 to the Group
Financial Statements.
notes 29, 33
and 37
Cash outflows from operating activities in the Finan-
cial Services segment are driven primarily by cash
flows relating to leased products and receivables from
sales financing and totalled €9,844 million (2015:
€10,351 million). The cash outflow from investing
activities totalled €102 million (2015: €140 million).
Cash inflows from financing activities went up by
€1,573 million to €11,601 million, mainly influenced
by the change in other financial liabilities.
4,326
-179
Intragroup net financial
1. The ability to act at all times by assuring perma-
nent access to strategically important capital mar-
The overall objective of Group financing is to ensure
the solvency of the BMW Group at all times. Achieving
this objective is tackled in three strategic areas:
A broadly based range of instruments transacted on
international money and capital markets is used to
refinance worldwide operations. Close to all of the
funds raised are used to finance the BMW Group's
Financial Services business.
Refinancing
* Excluding derivative financial instruments.
2,609
16,911
19,520
Automotive segment
Net financial assets
1,147
-2,645
-1,498
liabilities*
Less: external financial
1,462
19,556
21,018
Financial assets
799
11,278
12,077
assets
2. Autonomy through the diversification of refi-
nancing instruments and investors
Warranty expenses include the accrued expense for
vehicle recall actions, the cost of which is expected to
exceed amounts previously recognised. Accordingly,
a further amount of €678 million was allocated to the
warranty provision for various issues, including airbags
supplied by the Takata group of companies, the ISOFIX
attachment system used for child car seats, and costs
relating to the provision of the network service for
telematics (2G). Expenses relating to telematics and
roadside assistance have increased, primarily due to
the greater volume of service contracts and Connected
Drive products.
-611
69
Top rankings in sustainability ratings
69
28.8
27.6
Americas (including USA)
20.7
23.3
3.4
3.5
100.0
100.0
Other regions
Group
*Includes the joint venture BMW Brilliance Automotive, Shenyang Ltd. (2016:
316,200 units, 2015: 282,000 units).
64
Combined
Management
Report
Report on
Economic Position
The BMW Group again achieved top rankings in
prestigious ratings on the topic of sustainability in
2016, thus maintaining its leading position as a sus-
tainable automotive manufacturer. In the 2016 rating
for the Dow Jones Sustainability Indices (DJSI), the
BMW Group again headed the Automobiles sector
and is therefore the only carmaker to have been listed
consecutively since the inception of the index.
In the Carbon Disclosure Project (CDP), the Group
achieved the best evaluation for its efforts in the field
of climate protection. The BMW Group is therefore
one of only two companies worldwide to have reached
the highest category seven times in a row. Moreover,
the BMW Group was again included in the British
FTSE4Good Index in 2016.
Clean production
Integrated sustainability management in production
processes ensures the efficient use of resources. Since
2006, the consumption of resources and emissions per
vehicle produced has been reduced by an average of
50.0%. The individual figures are as follows:
62
62
61
Despite record temperatures and long, hot periods at
some assembly plants in 2016, at 2.25 m³ per vehicle
produced, water consumption was in line with the
previous year (2015: 2.24 m³; +0.4%). At 0.42 m³, the
volume of process wastewater generated per vehicle
produced fell by 6.7% (2015: 0.45 m³). The volume of
non-recyclable production waste was further reduced
to 3.51 kg per vehicle produced during the year under
report (2015: 4.00 kg; -12.3%). Solvent emissions were
cut by 6.6% to 1.14 kg per vehicle produced during
2016 (2015: 1.22 kg).
Despite the slight increase in the average amount
of energy consumed per vehicle, the use of highly
efficient, ecologically sustainable combined heat and
power plants and electricity generated from renewable
sources at production sites enabled the Company to
reduce production-related CO₂ emissions per vehicle
by a further 5.3% year-on-year to 0.54 tonnes during
the period under report (2015: 0.57 tonnes).
In 2016, at 2.21 MWh per vehicle produced, the
amount of energy consumed rose slightly compared
with the previous year (2015: 2.19 MWh; +0.9%). The
higher figure is due amongst others to the start-up of
the new engine plant in Shenyang, China. In addition,
the construction of a new, more efficient painting line
in Munich made it necessary to run two painting lines
in parallel for a certain period.
In 2016, the BMW Group's fleet of new vehicles sold
in Europe (EU-28) consumed an average of 4.6 litres of
diesel and 5.6 litres of petrol per 100 km respectively.
CO2 emissions averaged 124 grams per km.
The development of sustainable products and services
is an integral part of the BMW Group's business model.
The fleet-wide deployment of Efficient Dynamics tech-
nologies is helping to continually reduce CO2 emission
levels. The electrification of the fleet continued to
progress in 2016. Due to the expansion of the mod-
el range, annual sales of electrified BMW vehicles
increased strongly, surpassing the 62,000-unit mark
in the course of 2016. These measures form the basis
for complying with the legally stipulated CO2 and fuel
consumption limits going forward. Between 1995 and
2016, the average CO2 emissions of the three brands
sold by the BMW Group in Europe fell by 41.0%.
Fleet carbon dioxide emissions reduced
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
-48.6%
-81.5%
-48.8%
-31.0%
-35.4%
2016
Solvent emissions
CO₂ emissions
Non-recyclable waste
Energy consumption
Water consumption
Process wastewater
in %
-54.6%
BMW Group cost of sales
→ 40
in € million
Service contracts, telematics and roadside assistance
Other cost of sales
Cost of sales
2,165
1,891
14.5
2,018
1,771
13.9
Warranty expenses
3,067
3.1
75,442
74,043
1.9
The Group's cost of sales was slightly higher than in the
previous year, due to sales volume and portfolio factors.
Cost of sales relating to financial services business rose
by €1,274 million to €20,723 million, reflecting the
increased portfolio size. Research and development
expenses were at a similar level to the previous year
in absolute terms and, with an expense ratio of 4.6%,
also in relative terms. Total research and development
expenditure – comprising research costs, non-capital-
ised development costs and capitalised development
costs (excluding systematic amortisation thereon),
amounted to €5,164 million in the year under report
(2015: €5,169 million). As a result of the continuous
expansion and revision of the BMW Group's various
model series, research and development expenditure
remains at a generally constant level. These factors
resulted in a research and development expenditure
ratio of 5.5% (2015: 5.6%) and a capitalisation ratio of
40.5% (2015: 39.9%).
Gross profit came in slightly higher (+3.2%) at
€18,721 million, reflecting sales volume growth in the
Automotive segment and increased business volumes
in the Financial Services segment. The gross profit
margin was 19.9% (2015: 19.7%).
Sales and administrative expenses rose by €525 million
year-on-year to €9,158 million, resulting in an expense
ratio of 9.7% (2015: 9.4%). The increase was due to a
number of factors, including the larger workforce and
higher expenses for IT projects.
Depreciation and amortisation on property, plant
and equipment and intangible assets recorded in cost
of sales and in selling and administrative expenses
totalled €4,806 million (2015: €4,659 million). The slight
increase compared to the previous year was mainly
attributable to investments and capitalised develop-
ment costs recorded in previous accounting periods.
The net amount of other operating income and
expenses deteriorated from a net positive amount
of €94 million to a negative amount of €177 million,
mainly due to lower gains on the disposal of assets and
higher expenses for provisions. A donation to a BMW
foundation also increased other operating expenses.
2,976
Combined
4.8
1,222
Manufacturing costs
2016
2015
Change in %
43,175
43,685
-1.2
Cost of sales relating to financial services business
20,723
1,166
19,449
thereof interest expense relating to financial services business
1,638
1,495
9.6
Research and development expenses
4,294
4,271
0.5
thereof amortisation of capitalised development costs
6.6
Profit before financial result (EBIT) amounted
to €9,386 million in the year under report (2015:
€9,593 million), slightly down on the previous year,
with the positive effect of greater volumes offset by
higher expenses and lower other operating income.
Management
Report
Economic Position
9,665
-369
279
-454
131
Profit before tax
Financial result
Other financial result
20.9
-618
-489
Interest and similar expenses
5.9
185
196
Interest and similar income
-14.9
518
441
9,224
4.8
Income taxes
-2,755
45.6
47.1
Europe (including Germany)
2015
2016
in %
→ 39
BMW Group revenues by region
region were as follows:
Result from equity accounted investments
African rand against the euro. Group revenues by
Profit before tax for the financial year 2016 was slightly
up year-on-year. At 10.3%, the pre-tax return on sales
was similar to one year earlier (2015: 10.0%).
63
6
8.0
6,396
6,910
Net profit
2.6
-2,828
BMW Group revenues increased slightly by 2.2% year-
on-year to reach €94,163 million (2015: €92,175 mil-
lion). The primary drivers of this performance were
the higher volume of BMW, MINI and Rolls-Royce
brand vehicles sold and the growth in size of the
Financial Services segment's contract portfolio.
Continued fierce competition and negative currency
factors held down the scale of revenue growth. The
negative currency impact on revenues was mainly
attributable to changes in the average exchange rates
of the British pound, Chinese renminbi and South
-2.2
9,593
9,386
Gross profit
Cost of sales
Revenues
in € million
→ 38
BMW Group Income Statement
MINI and Rolls-Royce brand cars sold rose by a solid
5.3% to 2,367,603* units.
Once again, the BMW Group achieved year-on-year
growth in revenues, sales volume and profit before
tax in the financial year 2016. The number of BMW, 7
Results of operations
Selling and administrative expenses
RESULTS OF OPERATIONS,
FINANCIAL POSITION AND
NET ASSETS
A key reason for the BMW Group's long-term suc-
cess and an example for the high level of employee
identification with it are the personal engagement
and the ideas brought forward by staff members,
demonstrated by the €25.1 million saved in 2016 in
conjunction with the idea management programme
In 2016, the BMW Group continued to consolidate
its position as one of the most attractive employers
worldwide. Its leading role in terms of sustainability
is a key reason for the high degree of employee loyalty
within the BMW Group and one of the reasons for
the low staff attrition rate, enabling the BMW Group
to maintain a low level of personnel recruitment
expenditure. Further information on the attrition rate
is provided in the section "Workforce".
Sustainability in human resources policies
In 2016, the BMW Group contributed a total of
€87.8 million for social engagement (2015: €39.1 mil-
lion), including €70.4 million for donations (2015:
€17.1 million). The significant increase in the Com-
pany's centenary year was mainly due to a donation
to a BMW foundation.
Social engagement
Sustainability criteria also play a key role when select-
ing and assessing suppliers as well as in the field of
transport logistics. The BMW Group has therefore
integrated a comprehensive sustainability manage-
ment strategy in its purchasing processes. The positive
business performance in recent years has also caused a
significant rise in the Group's transportation require-
ments worldwide. The principle adhered to by the
BMW Group that "production follows the market" is
an effective method of significantly reducing the need
for transportation, therefore keeping CO2 emissions
as low as possible.
Sustainability along the value chain
Although energy and water consumption per vehicle
produced rose slightly, both the use of resources and
the production-related emissions fell by an average of
4.9% in 2016. However, the slight increase in energy
and water consumption per vehicle produced gave rise
to additional costs totalling €2.8 million. The reduction
in resource consumption and production-related emis-
sions
per vehicle produced since 2006 corresponds to
a cost saving of €155.3 million.
Review of Operations
→ Sustainability
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
CREATE.
Report on
Other operating income
Profit before financial result
-3.3
-820
-847
-26.7
914
670
-6.1
-8,633
-9,158
Other operating expenses
3.2
18,721
-1.9
-74,043
2.2
92,175
94,163
-75,442
Change in %
2015
2016
18,132
The financial result was a net positive amount of
€279 million, an improvement of €648 million com-
pared to the previous year, mainly thanks to net gains
on commodity derivatives on the one hand and lower
losses on currency derivatives on the other. Interest
and similar expenses improved by €129 million to
a net negative amount of €489 million year-on-year,
mainly reflecting lower interest expense on pension
obligations and lower other refinancing costs. The
result from equity accounted investments includes the
Group's share of the results of the joint ventures BMW
Brilliance Automotive Ltd. and the two DriveNow enti-
ties, DriveNow GmbH & Co. KG and DriveNow Ver-
waltungs GmbH. The figure also includes the Group's
share of the result of the associated company THERE
Holding B.V. Compared to the previous year, the result
from equity accounted investments fell by €77 mil-
lion to €441 million. This deterioration was primarily
attributable to the inclusion of THERE Holding B.V.,
with a negative impact of €56 million, largely reflecting
scheduled depreciation and amortisation on purchase
price allocations on the one hand and transaction costs
on the other. At €507 million, the contribution made
by BMW Brilliance Automotive Ltd. was slightly down
on the previous year (2015: €522 million), partly due
to currency factors, including the fact that costs were
incurred for model revisions of vehicles already adapt-
ed for the local market (BMW X1 and BMW 5 Series) as
well as for the localisation of further products.
Asia (including China)
Profit before tax increased to €9,665 million (2015:
€9,224 million), helped by a number of factors, includ-
ing higher volumes and the improved financial result.
+55
+4,393
+3,173
12,000
31.12.2015
Cash and
cash
equivalents
6,122
- 4,000
8,000
12,000
in € million
→ 44
BMW Group Change in cash and cash equivalents
After adjustment for the effects of exchange rate
fluctuations and changes in the composition of the
BMW Group totalling a positive amount of €55 million
(2015: €73 million), the various cash flows resulted in
an increase in cash and cash equivalents of €1,758 mil-
lion (2015: decrease of €1,566 million).
7
The cash outflow from investing activities exceeded the
cash inflow from operating activities by €2,690 million
in the financial year 2016. A similar constellation arose
in the previous year, when the shortfall amounted to
€6,643 million.
The Group's financing activities resulted in inflows
and outflows in conjunction with bonds amounting
to €967 million and €1,466 million respectively.
Economic Position
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Report on
Combined
Management
Report
98
68
The result on investments for the year
under report
includes impairment losses on other investments
totalling €192 million (2015: €25 million).
7,880
8,000
-5,863
Cash inflow
Cash outflow from investing activities
-372
11,836
11,464
Cash inflow from operating activities
Change
2015
2016
4,000
in € million
Free cash flow for the Automotive segment was as
follows:
The decrease in cash outflows from the Group's
investing activities primarily reflects lower net
investments in marketable securities and investment
funds in connection with the Group's liquidity reserve
(€1,369 million). The net outflow for these items
comprises investments in marketable securities and
investment funds on the one hand, and proceeds from
the sale of marketable securities and investment funds
on the other.
31.12.2016
cash
Group composition
changes in
Cash and
Currency
translation,
Cash inflow
from
financing
activities
activities
activities
from
investing
from
operating
Cash outflow
equivalents
The increase in cash flows from the Group's operating
activities was primarily attributable to the higher net
profit for the year (€514 million), higher depreciation
and amortisation (€312 million), provisions (€587 mil-
lion) and the change in other operating assets and
liabilities (€679 million).
3,324
-1,566
Selling and administrative expenses in the segment
went up by €130 million to €1,294 million, mainly
due to the increased size of the workforce and greater
expense for new IT projects.
Higher business volumes and a slightly improved
credit risk situation contributed to the solid increase
in the Financial Services segment's profit before tax.
Other Entities segment/Eliminations
Profit before tax in the Other Entities segment was sig-
nificantly lower than one year earlier. The net positive
result from other operating income and expenses
fell
from €192 million to €7 million year-on-year, mainly
due to lower income from the reversal of provisions
in 2016. The decrease was cushioned by the improve-
ment in the net interest result, which was due to lower
refinancing costs.
Inter-segment eliminations reduced Group profit
before tax, partly reflecting higher eliminations trig-
gered by the growth in new leasing business and the
ensuing increase in leased products.
Financial position
The consolidated cash flow statements for the Group
and the Automotive and Financial Services segments
show the sources and applications of cash flows for
the financial years 2016 and 2015, classified into cash
flows from operating, investing and financing activities.
Cash and cash equivalents in the cash flow statements
correspond to the amounts disclosed in the balance
sheet.
Cash flows from operating activities are determined
indirectly, starting with Group and segment net profit.
By contrast, cash flows from investing and financing
activities are based on actual payments and receipts.
BMW Group financial position
→ 43
in € million
The Financial Services segment revenues showed
a solid growth on the back of a dynamic operating
performance, clearly reflected in the upward trend
of its contract portfolio.
2016
Change
Cash inflow from operating
activities
3,173
960
2,213
Cash outflow from invest-
ing activities
-5,863
-7,603
1,740
Cash inflow from financing
activities
4,393
2015
-5,432
Financial Services segment
Motorcycles segment
1,758
-18
73
55
2,166
1,975
9.7
170
211
-19.4
-772
Motorcycles segment revenues increased slightly
compared to the previous year. The gross profit
margin dropped from 22.5% to 20.8%, mainly due
to higher expenses incurred in conjunction with the
implementation of the segment's new strategy and the
expansion of its model range. The increased workforce
size is reflected in higher selling and administrative
expenses. As a result of income from the reversal of
write-downs, the Motorcycles segment recorded a
slightly higher profit before tax than one year earlier.
-664
9,665
9,224
4.8
Automotive segment
Automotive segment revenues grew slightly on the
back of higher sales volumes, with currency factors
holding revenue growth down. The gross profit mar-
gin increased slightly to 17.9% year-on-year (2015:
17.7%).
At €7,604 million, selling and administrative expens-
es were €385 million higher than the previous year.
Administrative expenses increased due to a number
of factors, including the larger workforce, a new
allocation of expenses relating to internal activities,
and higher expenses for IT projects. Overall, as a
percentage of revenues, the expense ratio was 8.8%
(2015: 8.4%).
The net negative amount of other operating income
and expenses deteriorated by €70 million to €152 mil-
lion, mainly due to lower gains on the disposal of
assets and higher expenses for provisions. A donation
to a BMW foundation also increased other operating
expenses.
Due to the various factors described above, at
€7,695 million (2015: €7,836 million), profit before
financial result was slightly down on the previous
year. The EBIT margin came in at 8.9% (2015: 9.2%).
The main factors for the decrease were tougher com-
petition and increased costs, partially countered by
the positive impact of sales volume growth.
Overall, the Automotive segment reported a solid
increase in pre-tax profit. This outcome was largely
due to the improved financial result, which benefited
from net gains on commodity derivatives, reduced
refinancing costs and lower interest expense on pen-
sion obligations.
67
62
-16.3
-7,524
2,092
3.4
1,990
4.0
5.6
25,681
23,739
8.2
9.9
6
7
-14.3
-14.3
-20,017
-19,097
-4.8
94,163
92,175
2.2
4.3
Eliminations
Group
*The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year's figures.
Profit/loss before tax by segment
→ 42
2,069
3.1
1.0
85,536
Income tax expense amounted to €2,755 million (2015:
€2,828 million), corresponding to an effective tax rate
of 28.5% (2015: 30.7%). The lower income tax expense
was partly attributable to transfer pricing and the
revaluation of tax-related items.
The post-tax return on sales was 7.3% (2015: 6.9%).
65
69
99
66
Combined
Management
Report
Report on
Economic Position
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Results of operations by segment
in € million
Revenues by segment
in € million
Automotive
Motorcycles
Financial Services
Other Entities
Currency adjusted
2016
2015
Change in %
change* in %
86,424
→ 41
5,004
Automotive
Financial Services
Net investment in marketable securities and investment funds
-240
1,092
-1,332
Free cash flow Automotive segment
5,792
5,404
388
Motorcycles
179
Effects of exchange rate
and composition of Group
Change in cash and cash
equivalents
185
Other Entities
Eliminations
Group
2016
2015
Change in %
7,916
7,523
5.2
36%
36%
38% Current provisions and liabilities
thereof cash and cash equivalents 4%
72
2016
2015
2016
Current assets 35%
22
4%
2015
37% Non-current provisions and liabilities
39%
Combined
Management
Report
Report on
Economic Position
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Balance sheet structure - Group
→ 48
66
Total equity and liabilities in € billion
189
189
172
25%
25% Equity
133
Non-current assets 65%
64%
200
172
Non-current assets 48%
Balance sheet structure - Automotive segment
200
0.9
875
98.8
92,175
98.4
94,163
Other expenses
Cost of materials*
Total output
0.2
Other income
Revenues
WORK PERFORMED
Change in %
in %
in € million
2015
2015
2016
in %
in € million
2016
Financial income
670
0.7
914
31,927
71
Gross value added
2.0
67.0
62,543
66.6
63,781
Bought-in costs
12.2
11,398
14.1
13,502
54.8
51,145
52.5
50,279
2.6
100.0
93,289
100.0
95,708
1.0
→ 50
33.4
BMW Group value added statement
applied to employees. The remaining portion will be
retained in the Group to finance future operations. It
should be noted that the gross value added amount
treats depreciation as a component of value added
which, in the allocation statement, is treated as inter-
nal financing.
19%
99
66
52%
2016
||||
40% Equity
41%
100
66
17% Non-current provisions and liabilities
133
33
48%
66
83
83
89
89
100
Total equity and liabilities in € billion
→ 49
200
33
40%
5%
The value added statement shows the value of work
performed, less the value of work bought in by the
BMW Group during the financial year. Depreciation
and amortisation, cost of materials, and other expens-
es are treated as bought-in costs in the net value added
calculation. The allocation statement applies value
added to each of the participants involved in the value
added process. The bulk of the net value added is
Value added statement
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Economic Position
Report on
Combined
Management
Report
74
73
Overall, the results of operations, financial position
and net assets position of the BMW Group continued
to develop positively during the year under report.
The increase in trade payables mainly reflects higher
production volumes.
The sharp rise in other liabilities reflects the increased
scale of service contracts and Connected Drive prod-
ucts, advance payments received from leasing custom-
ers, and the expected higher level of payments due to
dealerships and importers for bonuses, rebates and
other price deductions.
The year-on-year increase in financial liabilities was
primarily attributable to the issue of bonds and higher
liabilities to banks, in both cases securing favourable
refinancing conditions on a long-term basis. In addition,
new ABS transactions were concluded including the
USA and Germany. Lower commercial paper volumes
and the more favourable development of derivatives
kept the increase in financial liabilities down.
Other provisions also increased significantly compared
to 31 December 2015, mostly reflecting the higher level
of warranty provisions for vehicle recall actions, the
cost of which is expected to exceed amounts previously
recognised. Accordingly, a further amount of €678 mil-
lion was allocated to the warranty provision for various
issues, including airbags supplied by the Takata group
of companies, the ISOFIX attachment system used for
child car seats, and costs relating to the provision of
the network service for telematics (2G).
Pension provisions increased significantly compared
to the end of the financial year 2015, mainly due to the
lower discount factors applied in Germany and the UK.
The Group equity ratio at the end of the reporting
period was 25.1% (31 December 2015: 24.8%). The
equity ratio for the Automotive segment was 41.3%
(31 December 2015: 40.1%) and that for the Financial
Services segment stood at 8.0% (31 December 2015:
8.2%).
Group equity rose by €4,599 million to €47,363 million.
Equity increased year-on-year as a result of the net prof-
it attributable to shareholders of BMW AG amounting
to €6,863 million and fair value gains on derivative
financial instruments amounting to €2,008 million.
Decreases in equity arose in particular in connection
with the dividend payment of €2,102 million and
the negative impact of remeasurements of the net
defined benefit liability for pension plans amounting to
€1,858 million, the latter due mainly to lower discount
rates applied in Germany and the UK.
thereof cash and cash equivalents 5%
Current assets 52%
0
43% Current provisions and liabilities
2015
2016
2015
Net valued added by the BMW Group in the financial
year 2016 remained at a high level.
ber 2016.
2,546
Inventories went up by a solid 7.0% compared to the
end of 2015, with most of the increase relating to fin-
ished goods, reflecting general business growth and
stocking up in the various markets.
Cash and cash equivalents
Other assets
Trade receivables
6.3
7.0
7.0
11,071
11,841
Inventories
2.3
-3.2
-1.4
4,326
4,265
Deferred and current tax
5.2
9.9
428
30.8
30.5
0.3
Receivables from sales financing
78,260
Total assets
70,043
12.3
41.5
Financial assets
9,770
8,843
10.5
11.7
2,825
2,751
2.7
Equity
47,363
42,764
10.8
13.6
25.1
EQUITY AND LIABILITIES
Pension provisions
3,000
52.9
60.9
2.4
Other provisions
10,918
4,587
560
100.0
9.5
5.4
1.5
6,682
6,261
6.7
6.2
9.5
3.5
6,122
28.7
27.6
4.2
188,535
172,174
7,880
Other investments
1.4
14.0
8,512
Trade payables
51.8
5.5
6.6
91,683
7,773
97,731
2.1
3.9
88
3,557
3,869
Deferred and current tax
Financial liabilities
5.8
9.5
4.5
The growth in business reported by the Financial Ser-
vices segment is reflected in the significant increase
in receivables from sales financing and a solid rise in
the volume of leased products. A total of 1,811,157 new
contracts were concluded with retail customers (leasing
and credit financing) in 2016, 9.4% more than one year
earlier. The credit financing contract portfolio grew
by 9.5% to 3,022,904 contracts, with growth reported
primarily in China and the USA. The lease contract
portfolio increased by 7.3% to stand at 1,680,513 con-
tracts at 31 December 2016.
The balance sheet total of the BMW Group increased
by a solid 9.5% compared to 31 December 2015. The
changes in individual balance sheet items caused by
currency factors relate primarily to changes in the
exchange rates of the US dollar, British pound, South
African rand and Chinese renminbi against the euro.
100.0
9.5
9.5
172,174
10.5
188,535
8.3
12.1
13.0
13,767
15,555
Other liabilities
Total equity and liabilities
Cash and cash equivalents went up by €1,758 million,
thus ensuring a solid level of liquid funds at 31 Decem-
13.0
BMW Group condensed balance sheet at 31 December
17,759
1.1
1.1
9.5
Leased products
37,789
17,960
34,965
7.3
20.0
Investments accounted for using the equity method
30,746
2,233
14.0
8.1
Net assets
Property, plant and equipment
11.4
→ 47
in € million
ASSETS
Group
Currency adjusted
2016
4.3
2015
change in %
Proportion of
balance sheet
total in %
Intangible assets
8,157
7,372
10.6
Change in %
33.0
19.0
Depreciation and amortisation of total tangible,
Marketable securities
3.8
Cash and cash equivalents
Current assets
4,260
4,267
667
628
6,001
6,229
2,525
1,820
3,846
3,911
Other receivables and other assets
2,676
19,975
19,333
Prepayments
430
303
Surplus of pension and similar plan assets over liabilities
1,183
722
Total assets
36,299
34,977
EQUITY AND LIABILITIES
Subscribed capital
19
2,478
Receivables from subsidiaries
Trade receivables
Inventories
Report on
Economic Position
→ Comments on
Financial Statements
of BMW AG
As a consequence of the first-time application of the
Financial Reporting Implementation Act (BilRUG) in
2016, the previous year's figures are only comparable
to a limited extent with those of the financial year
under report. In particular, the amounts reported for
revenues, cost of sales, expenses by function, other
operating income and expenses are affected by the
new, extended definition of "revenues" and the nec-
essary reclassification of expenses related to revenues.
Revenues increased by 4.1% year-on-year, mainly
reflecting higher sales volumes of the BMW X1 and
BMW 7 Series. In geographical terms, most of the
increase related to Asia and Europe. Sales to Group
entities accounted for €56,412 million or 74.9% of
total revenues of €75,350 million.
Cost of sales increased by 5.5% to €60,946 million,
mostly due to the higher cost of materials. As a result,
gross profit decreased by €216 million to €14,404 mil-
lion.
Selling and administrative expenses increased overall
year-on-year, partly reflecting the cost of the larger
workforce and IT projects.
Research and development expenses related mainly
to new vehicle models (including relevant expenses
relating to the start-up of the new BMW 5 Series),
the development of drive systems and work on other
innovations. Compared to the previous year, research
and development expenses decreased by 5.3%.
The net amount of other operating income and expens-
es deteriorated by €321 million to a negative amount
of €137 million, whereby the year-on-year decrease
mainly reflected the reclassification of income from
other services to the line item "Revenues" in conjunc-
tion with the first-time application of BilRUG. Higher
income from the reversal of provisions and the lower
expense for allocations to provisions, in particular
for commodity and currency contract risks, worked
in the opposite direction.
The result on investments was down on the previous
year due to lower profit transfers from Group com-
panies. By contrast, the financial result improved by
€1,008 million, mainly due to the higher gains arising
on the fair value measurement of designated plan
assets and lower interest expenses for pensions. In
the latter case, the improvement was attributable to
a change in legislation concerning the methodology
required to be applied to determine the discount factor
for pension provisions.
The expense for income taxes relates primarily to
current tax for the financial
year 2016.
After deducting the expense for taxes, the Company
reports a net profit of €3,277 million, compared to
€2,741 million in the previous year.
Financial and net assets position
BMW AG Balance Sheet at 31 December
→ 53
in € million
2016*
14,619
14,711
Tangible, intangible and investment assets
3,250
3,238
Investments
79
11,016
Property, plant and equipment
353
310
Intangible assets
ASSETS
2015
11,163
Capital reserves
Revenue reserves
Unappropriated profit available for distribution
239
12,382
12,772
Deferred income
2,066
1,549
Total equity and liabilities
36,299
34,977
*German Accounting Directive Implementation Act (BilRUG) applied with effect from the beginning of the financial year 2016. Comparative figures for 2015 have not been adjusted.
80
60
Combined
Management
Report
Report on
Economic Position
→ Comments on
Financial Statements
of BMW AG
Capital expenditure on intangible assets and prop-
erty, plant and equipment in the year under report
totalled €2,346 million (2015: €2,748 million), down
by 14.6% compared to the previous year. Depreciation
and amortisation amounted to €2,233 million (2015:
€2,072 million).
9,630
Deferred income went up by €517 million to
€2,066 million and comprised mainly amounts relat-
ing to services still to be performed for service and
maintenance contracts.
Liabilities to banks decreased as a result of the repay-
ment of project-related loans.
Other provisions were at a similar level to the previous
year and comprise mainly obligations for person-
nel-related expenses, warranties, selling activities,
litigation and liability risks as well as risks relating
to commodity and currency contracts.
Pension provisions, net of designated plan assets,
increased from €82 million to €93 million.
Under the motto “THE NEXT 100 YEARS", almost all
of the workforce received a special bonus in conjunc-
tion with the BMW AG's centenary anniversary. For
the most part, the bonus was paid in the form of a
starting contribution to a new defined contribution
component of the BMW pension plan. In future, 10%
of the annual profit share payable by BMW AG will
be paid into the plan, for which a minimum rate of
return is guaranteed.
406
In order to secure obligations resulting from pre-re-
tirement part-time work arrangements and pension
obligations, investments in fund assets totalling
€490 million were transferred to BMW Trust e. V.,
Munich, in conjunction with a Contractual Trust
Arrangement (CTA). Fund assets are offset against the
related guaranteed obligations. The resulting surplus
of assets over liabilities is reported in the BMW AG
balance sheet on the line "Surplus of pension and
similar plan assets over liabilities”.
Cash and cash equivalents went up by €198 million
to €2,676 million. At the same time, intragroup refi-
nancing volumes at the level of BMW AG were reduced.
Liquidity within the BMW Group is managed centrally
by BMW AG on the basis of a group-wide liquidity
concept, which revolves around the strategy of con-
centrating a significant part of the Group's liquidity
at the level of BMW AG. An important instrument
used to achieve this aim is the cash pool headed by
BMW AG. The liquidity position reported by BMW AG
therefore reflects the global activities of BMW AG and
other Group companies.
The increase in other receivables and other assets
to €2,525 million (2015: €1,820 million) was mainly
attributable to higher receivables from companies with
which an investment relationship exists. Tax receiv-
ables and genuine repurchase (repo) transactions in
place at the end of the reporting period also increased
year-on-year.
Receivables from subsidiaries, most of which relate
to intragroup financing receivables, decreased slightly
by €228 million to €6,001 million.
At €4,260 million, inventories were practically identical
to the end of the previous year (2015: €4,267 million).
At €3,238 million, the carrying amount of investments
was similar to one year earlier (2015: €3,250 mil-
lion). Further shares in SGL Carbon SE, Wiesbaden,
were purchased during the financial year 2016. An
impairment loss of €64 million (2015: €13 million)
was recognised in the year under report, reflecting
the decreased fair value in the investment in SGL
Carbon SE at 31 December 2016.
Equity rose by €1,195 million to €14,122 million, tak-
ing the equity ratio from 37.0% to 38.9%.
Combined
Management
Report
6,690
4,500
Equity
Registered profit-sharing certificates
Pension provisions
Other provisions
Provisions
657
657
2,127
2,107
9,038
8,061
2,300
2,102
14,122
12,927
30
30
5,030
1,343
995
Liabilities
Other liabilities
Liabilities to subsidiaries
5,951
Trade payables
7,699
7,699
7,617
7,606
82
93
Liabilities to banks
78
13.4
* German Accounting Directive Implementation Act (BilRUG) applied with effect from the beginning of the financial year 2016. Comparative figures for 2015 have not been adjusted.
76
66
75
15
-0.2% Minority interest
19.3% Group
9.7% Shareholders
13.7% Government/public sector
8.3% Providers of finance
24.7 Net value added
48.8% Employees
C
Cost of materials 52.5
14.1 Other expenses
Depreciation and
amortisation 8.7
in %
→ 51
BMW Group value added 2016
* Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
4.9
100.0
Combined
22,524
Management
Report
Economic Position
Result on investments
Other operating income and expenses
Research and development expenses
Administrative expenses
Selling expenses
Gross profit
Cost of sales
Revenues
in € million
→ 52
BMW AG Income Statement
Results of operations
BMW AG develops, manufactures and sells cars and
motorcycles as well as spare parts and accessories
manufactured in-house, by foreign subsidiaries and
by external suppliers, and performs services related to
these products. Sales activities are carried out primarily
through branches, subsidiaries, independent dealer-
ships and importers. In 2016, BMW AG increased auto-
mobile sales volume by 80,359 units to 2,355,726 units.
This figure includes 305,726 units relating to series sets
supplied to the joint venture BMW Brilliance Automo-
tive Ltd., Shenyang, an increase of 17,971 units over
the previous year. At 31 December 2016, BMW AG
employed a workforce of 85,754 people, 894 more than
one year earlier.
Business environment and review of operations
The general and sector-specific environment in
which BMW AG operates is the same as that for the
BMW Group and is described in the “Report on Eco-
nomic Position" section of the Combined Management
Report.
The German Accounting Directive Implementation Act
(BilRUG) was applied for the first time with effect from
the beginning of the 2016 financial year. Comparative
figures have not been restated where this gave rise to
changes in the presentation of items in the balance
sheet or income statement. Further information
regarding the impact of BilRUG and the comparabil-
ity of individual income statement line items for the
financial year 2016 with those of the previous year
is provided in the notes to the Financial Statements
of BMW AG.
Differences between the accounting policies used
in the BMW AG financial statements (prepared in
accordance with HGB) and the BMW Group Finan-
cial Statements (prepared in accordance with IFRS)
arise primarily in connection with the capitalisation
of intangible assets, the creation of valuation units,
the recognition and measurement of financial instru-
ments and provisions and the recognition of deferred
tax assets. Differences also arise in the presentation
of assets and liabilities in the balance sheet and of
income and expense items in the income statement.
The key financial and non-financial performance
indicators relevant for BMW AG are largely identical
and synchronous with those of the Automotive seg-
ment of the BMW Group and are described in detail
in the "Report on Economic Position" section of the
Combined Management Report.
Bayerische Motoren Werke Aktiengesellschaft
(BMW AG), based in Munich, Germany, is the parent
company of the BMW Group. The comments on the
BMW Group and Automotive segment provided in
earlier sections are also relevant for BMW AG, unless
presented differently in the following section. The
Financial Statements of BMW AG are drawn up in
accordance with the provisions of the German Com-
mercial Code (HGB) and the relevant supplementary
provisions contained in the German Stock Corpora-
tion Act (AktG).
COMMENTS ON FINANCIAL
STATEMENTS OF BMW AG
Financial Statements
of BMW AG
→ Comments on
Report on
100.0
23,623
74.1
48.8
11,535
Net value added
Minority interest
Group
Shareholders
Government/public sector
Providers of finance
Employees
APPLIED TO
4.9
24.2
22,524
24.7
23,623
Net value added
8.8
8,222
8.7
8,304
intangible and investment assets
10,870
48.3
6.1
1,965
0.1
27
0.2
47
6.9
4,267
19.3
4,563
9.4
9.3
Financial result
2,102
2,300
-3.8
14.8
77
13.7
3,213
2.5
8.5
1,918
8.3
9.7
Income taxes
3,340
72,384
1,606
1,015
184
-4,758
-4,504
-2,610
-2,504
-3,427
-3,635
14,620
14,404
-57,764
-60,946
75,350
2015
2016*
Net profit
Other taxes
Profit after income tax
-35
-1,043
-137
-1,782
-1,308
2,300
Unappropriated profit available for distribution
-977
Transfer to revenue reserves
2,741
-639
-49
-19
2,790
3,296
3,277
2,102
between 8 and 10
9.0
%
74.3
slight decrease
units
145,032
%
in line with last year's level
21.2
%
Return on equity
FINANCIAL SERVICES SEGMENT
between 8 and 10
33.0
%
8.9
significant increase
%
The uncertain political situation in the UK following
the Brexit vote could lead to capital exports and
encourage the Bank of England to retain its expan-
sionary monetary policy. If the UK economy slows
down at a more pronounced rate than expected in
2017, the Bank of England could adopt additional
measures to increase the money supply. As a result,
the British pound could either stabilise at its current
level or continue to lose value in the short term.
86,424
Sales volume
EBIT margin
Return on capital employed
2016
2017 Outlook
€ million
9,665
124,729
slight decrease
slight increase
The central bank in Japan could continue to pursue its
highly expansionary monetary policy for the foresee-
able future. This policy could result in the yen hardly
changing in value against the euro or even losing in
value, given that monetary policy in the eurozone is
currently not expected to be expanded.
units
2,367,603
slight increase
g CO2/km
124
slight decrease
€ million
slight increase
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 316,200 units).
2 EU-28.
80
87
Class
When a risk materialises, the overall impact on the
results of operations, financial position and net assets
is measured for the two-year assessment period and
allocated according to the following categories:
In order to determine which risks can be considered
significant in relation to results of operations, financial
position and net assets and to performance indica-
tors of the BMW Group, risks are classified as high,
medium or low. The impact of risks is measured and
reported net of risk mitigation measures (net basis).
Risk measurement
Risk management procedures in place in the Financial
Services segment also address regulatory issues and
requirements, such as Basel III. Internal methods used
to identify, measure, manage and monitor risks within
the Financial Services segment comply with national
and international standards. The adopted risk strategy,
in combination with a set of strategic principles and
guidelines, serves as the basis for risk management
within the Financial Services segment. At the heart
of the risk management process is a clear division
between front- and back-office activities and a compre-
hensive internal control system. The main instrument
of risk management within the Financial Services
segment is ensuring that the Group's risk-bearing
capacity is not exceeded. All risks (defined as unex-
pected losses) must be covered at all times in line
with risk appetite by an asset cushion in the form
of equity capital. Unexpected losses are measured
according to various value-at-risk models, which are
validated at regular intervals. Risks are aggregated
after taking account of correlation effects. In addition
to assessing the Group's ability to bear risk under nor-
mal circumstances, stress scenarios are also taken into
consideration. The segment's risk-bearing capacity is
monitored regularly with the aid of an integrated limit
system that also differentiates between the various
risk categories.
→ Risks and
Opportunities
Report on Outlook,
Risks and
Opportunities
Combined
Management
Report
90
90
In addition to comprehensive risk management, man-
aging the business on a sustainable basis also consti-
tutes one of the Group's core corporate principles.
Any risks or opportunities relating to sustainability
issues are examined and discussed by the Sustain-
ability Committee. Resulting strategic options and
measures for the BMW Group are put forward to
the Sustainability Board, which includes the entire
Board of Management. Risk aspects discussed are
integrated within the Group-wide risk network. The
overall composition of the Risk Management Steering
Committee and the Sustainability Committee ensures
that risk and sustainability management are closely
coordinated.
The risk management system is regularly examined by
the Internal Audit. By sharing experiences with other
companies on an ongoing basis, the BMW Group
endeavours to incorporate new insights in the
risk management system, thus ensuring continual
improvement. Regular training and further develop-
ment programmes as well as information events at
the BMW Group, particularly within the risk man-
agement network, are invaluable ways of preparing
those involved in the process for new or additional
challenges.
measures.
Risks reported from within the network are firstly
presented for review to the Risk Management
Steering Committee, chaired by Group Controlling.
After review, the risks are reported to the Board
of Management and the Supervisory Board. Risks
which are significant or which threaten the Group's
going-concern status are classified according to their
potential to impact the Group's results of operations,
financial position and net assets. The level of risk is
then quantified in each case according to its proba-
bility of occurrence and the respective risk mitigation
The risk management process applies throughout the
Group and comprises the early identification and
assessment of risks, comprehensive analysis and risk
measurement, the coordinated use of suitable man-
agement tools and also the monitoring and evaluation
of any measures taken.
Low
Medium
High
Earnings impact
> €0-500 million
> €500-2,000 million
The implementation of identified opportunities is
undertaken on a decentralised basis within the rel-
evant functions. The significance of opportunities
for the BMW Group is classified in the categories
"significant" and "insignificant".
The continuous optimisation of important business
processes and strict cost controls are essential to
ensuring profitability and a high return on capital
employed. Probable measures to increase profitability
are incorporated in the outlook. One example is the
implementation of modular-based production and
common architectures, which enable a greater com-
monality between different models and product lines.
This strategy contributes to improved profitability by
reducing development costs and other investment on
the series development of new vehicles. This supports
economies of scale in production costs and increases
production flexibility. Moreover, a more competitive
cost basis opens up opportunities to engage in new
market segments.
New opportunities regularly present themselves in
the dynamic business environment in which the
BMW Group operates. Macroeconomic trends and
sector-specific and general business environment,
including external regulations, suppliers, customers
and competitors, are monitored on a continual basis.
Identifying opportunities is an integral part of the
process of developing strategies and drawing up
forecasts for the BMW Group. The Group's product
and service portfolio is continually reviewed on the
strength of these analyses and new product projects,
for example, presented to the Board of Management
for consideration.
> €400 million
> €50-400 million
> €0-50 million
Risk amount
Risk management process
Opportunity management system and
opportunity identification
Low
Medium
Class
Overall, the following criteria apply for the purposes
of classifying the risk level:
of occurrence. The risk level is approximated in the
case of risks measured on the basis of "value at risk"
and "cash flow at risk" models. These approximations
flow into the assessment of the significance of the
risks, resulting in increased comparability between
risk categories compared to the previous year.
The significance of risks for the BMW Group is deter-
mined on the basis of risk level. The measurement of
risk level takes account of both earnings impact (net
of appropriate countermeasures) and the likelihood
In the following sections, the term “earnings impact"
is used consistently to cover the overall impact on the
results of operations, financial position and net assets.
> €2,000 million
High
MOTORCYCLES SEGMENT
Risk management for the Group as a whole falls under
the remit of the Risk Management Steering Commit-
tee, the Compliance Committee, the Internal Control
System and the Group Internal Audit.
In view of the dynamic growth of business of the
BMW Group and the increasingly volatile environ-
ment in which it operates, one of the key areas con-
sidered in developing the risk management system
has been the ability to assess the overall risk situation
of the BMW Group. A risk-bearing capacity model has
been developed for the BMW Group, based on the
established controlling models used in the Financial
Services segment as in the banking sector to ensure
risk-bearing capacity. Using a limit control system
to manage significant financial risks on a month-by-
month basis, measures are in place to ensure that
the asset cover, in the form of equity and forecast
Group earnings for the next twelve months, always
exceeds the prevailing risk situation and the risk level
associated with the business strategy currently being
pursued. These controls facilitate the early identifica-
tion of developments which could pose a threat to the
BMW Group's going-concern status. The results of the
calculations of risk bearing capacity are incorporated
in the assessment of the overall risk situation. The
processes and methodologies used to report risks are
regularly reviewed. During the financial year 2016,
the risk catalogue introduced three years earlier was
tested for effectiveness and revised as appropriate.
Identified risks are aggregated into risk categories on
the basis of the risk catalogue. Improved reporting
channels ensure effective systematic risk control and
earlier reporting of risks. Transparency of external
reporting has also been increased, including the
introduction of an additional sub-category "Market
development" to the category "Sales and marketing”,
which enables a distinction to be made between mar-
ket risks typical for the sector and operational risks
relating to the BMW Group's specific sales network
→ 55
Risk management in the BMW Group
The objective of the risk management system, and one
of the key functions of risk reporting, is to identify,
record and actively manage any internal or external
risks that could pose a threat to the attainment of
the Group's corporate targets. The risk management
system covers all significant risks to the Group and
any which could pose a threat to its going-concern
status. In terms of structure, the responsibility for
risk reporting lies with each individual employee
and manager in their specific roles - and not with
a centralised unit. Every employee and manager is
required to report any risks identified via the relevant
reporting channels. This requirement is set out in
guidelines that apply throughout the Group.
Risk management system
Opportunities and risks are assessed as a general rule
over a medium-term period of two years. As part of
the risk management process, all potential risks of
loss (individual and accumulated risks) that represent
a threat to the company are monitored and managed.
As a matter of principle, any risks capable of posing a
threat to the going-concern status of the BMW Group
are avoided. If there is no specific reference to a seg-
ment, opportunities and risks relate to the Automotive
segment. The scope of entities covered by the report
on risks and opportunities corresponds to the scope
of consolidated entities included in the BMW Group
Financial Statements.
7
Management of opportunities and risks is a funda-
mental prerequisite for the Group's ability to react
appropriately to changes in political, legal, technical
or economic conditions. All identified opportunities
and risks are addressed in the Outlook Report, if
likely to materialise. The following sections focus
on potential future developments or events, which
could result in a positive deviation (opportunities)
or a negative deviation (risk) from the BMW Group's
outlook. As a general rule, the earnings impact of
risks and opportunities is assessed separately, i.e.
without off-setting.
As a worldwide-leading manufacturer of premium cars
and motorcycles and provider of premium financing
and mobility services, the BMW Group is exposed
to numerous uncertainties and changes. Making full
use of the opportunities arising out of change is a
fundamental aspect of the Group's corporate success.
In order to achieve growth, drive profitability, boost
efficiency and maintain sustainable levels of business
going forward, the BMW Group consciously takes
certain risks.
RISKS AND
OPPORTUNITIES
→ Risks and
Opportunities
Risks and
Opportunities
Report on Outlook,
Combined
Management
Report
88
88
Effectiveness
Usefulness
Compliance
Committee
Reporting/
Monitoring
The Group risk management system comprises
a decentralised network covering all parts of the
business and is steered by a centralised risk manage-
ment function. Each of the BMW Group's divisions
is represented within the risk management network
by so-called Network Representatives. The network is
embedded within the formal organisational structure.
This promotes its visibility and underlines the impor-
tance of risk management within the BMW Group. The
duties, responsibilities and tasks of the centralised risk
management unit and the Network Representatives
are clearly described, documented and understood.
Group risk management is geared towards meeting
the following three criteria: effectiveness, usefulness
and completeness.
89
99
Group
Audit
Board of
Management
Board
Supervisory
structure.
Risk
Management
Steering
Committee
Measures
Analysis and
Measurement
Internal Control System
risk management
Group-wide
Identification
Completeness
Controlling
Return on capital employed
slight increase
Revenues
Expected consequences for the BMW Group
Future developments on international automobile
markets also have a direct impact on the BMW Group.
Whereas competition is likely to intensify in con-
tracting markets, new opportunities appear in
growth regions. Sales volumes in some countries
are likely to be significantly affected by challenges
in the competitive environment. Europe's markets
are not expected to maintain the pace of growth
seen in 2016. Demand in the Americas region is
likely to remain flat. Asia is expected to continue
its upward trend.
Japan's central bank may have few tools left to stimu-
late the country's economy and rate of inflation. Public
sector spending is therefore expected to increase as a
means to kick-start growth.
Growth in China is set to cool further in 2017, with
the Chinese central bank expected to implement a raft
of measures to accompany the transformation process
for the domestic economy.
The UK economy is expected to come under more
pressure as a consequence of the Brexit vote. The Bank
of England has already announced its intention to
take appropriate measures as necessary.
The Fed is expected to continue raising interest rates in
the course of 2017. The expansionary monetary poli-
cies of the ECB are likely to be continued in 2017, with
a slightly reduced volume of monthly bond purchases.
The pace of global economic growth is expected to pick
up slightly in 2017. With the exception of the USA,
central banks in industrialised countries are likely to
maintain their expansionary course.
Financial Services markets
The world's motorcycle markets in the 250 cc plus class
are forecast to grow slightly in 2017. In Europe, the
positive trend is set to continue in the major markets
of Germany, France, Italy and Spain. The BMW Group
expects the US market to remain at the previous year's
level during the current financial year.
Due to its global business model, the BMW Group
is well placed at all times to exploit opportunities,
including those arising at short notice. Coordination
between the Group's sales and production networks
also helps cushion the impact of unforeseeable
developments in the various regions. Investments
in markets important for the future are also a basis
for further growth, while simultaneously expanding
the global presence of the BMW Group. Thanks to
its three strong brands BMW, MINI and Rolls-
Royce the BMW Group is expected to remain on
course for success during the current year.
Motorcycle markets
The automobile market in Japan is likely to contract
further in 2017. Registrations are forecast to be in the
region of 4.7 million units and hence 1.6% down on
the previous year.
Despite the region's continued economic revival,
automobile markets in Europe are not expected to
grow significantly. The trend in Germany is expected
to remain flat (3.4 million). Registrations in France are
forecast to fall slightly (-1.7%) to around 1.95 million
units. After its strong performance in 2016, the Italian
automobile market is expected to grow at a modest
0.7% to around 1.86 million units.
Overall, the world's automobile markets are forecast
to grow by around 1.8% to an estimated 89.0 mil-
lion units in 2017. The US market is expected to
grow by 0.3% to 17.6 million units. The forecast for
China points to an increase of around 5.7% to some
25.5 million units. The country's interior provinces
are expected to contribute significantly to growth as
they catch up.
Automobile markets
Risks and opportunities
BMW AG's performance is highly dependent on the
same set of risks and opportunities that affect the
BMW Group and which are described in detail in the
"Report on Outlook, Risks and Opportunities" section
of the Combined Management Report. As a general
rule, BMW AG participates in the risks entered into by
Group entities on the basis of the relevant shareholding
percentage.
BMW AG is integrated in the group-wide risk man-
agement system and internal control system of the
BMW Group. Further information is provided in the
"Internal Control System and Risk Management System
Relevant for the Financial Reporting Process" section
of the Combined Management Report.
As US monetary policies continue to normalise, the
currencies of numerous emerging economies are
likely to remain under pressure in the short term.
Countries that export raw materials and have current
account and fiscal deficits, such as South Africa or
Brazil, are most likely to be affected. Any increase in
raw materials prices would generally have a positive
impact on these economies.
After dropping back in 2016, the automobile markets
in the world's major emerging economies are expected
to recover in 2017, with registrations predicted to grow
by 4.1% to 1.3 million units in Russia and by 3.0% to
1.7 million units in Brazil.
Due to its dominant role in the Group and its close ties
with Group entities, expectations for BMW AG with
respect to the Company's financial and non-financial
performance indicators correspond largely to the
BMW Group's outlook for the Automotive segment,
which is described in detail in the "Report on Outlook,
Risks and Opportunities" section of the Combined
Management Report.
-
Outlook for the BMW Group
Fleet carbon dioxide emissions²:
slight decrease expected
Important contributions to continued growth will
come in particular from new models. The all-new
BMW 5 Series Sedan has been available since mid-Feb-
ruary 2017. The BMW 5 Series iPerformance and M
Performance models followed in March. The BMW
5 Series iPerformance model as a plug-in hybrid
is now available worldwide. The model revisions
of the BMW 4 Series and the BMW M4 Coupé and
Convertible were also launched in March. The new
BMW 5 Series Touring is scheduled for launch in mid-
June. The second generation of its highly successful
MINI Countryman model was introduced in February.
Towards the middle of year, a John Cooper Works and
a plug-in hybrid will be added to the MINI Country-
man range. Further new models are planned for the
second half of 2017.
Deliveries to customers: slight increase expected
The BMW Group expects a further year-on-year
increase in sales of BMW, MINI and Rolls-Royce brand
vehicles and aims to achieve again in 2017 a leading
position in the global premium segment. Balanced
growth in major sales regions will help to even out
volatilities in individual markets. Assuming economic
conditions do not deteriorate, deliveries to custom-
ers are forecast to rise slightly to a new high (2016:
2,367,603¹ units) in 2017.
Automotive segment
→ Outlook
Opportunities
Report on Outlook,
Risks and
Report
-
Combined
Management
98
85
85
Workforce size at year-end: slight increase expected
Based on current forecasts, the BMW Group's work-
force is again expected to grow slightly in 2017 (2016:
124,729 employees). The main factors driving the
expected increase will be projects aimed at securing
the Group's future, growth of automobile and motor-
cycles business and the expansion of financial and
mobility services.
Nevertheless, the BMW Group intends to continue its
growth course in 2017. New vehicles such as the new
BMW 5 Series and the new MINI Countryman and
new motorcycles such as the two R NineT models as
well as services are expected to make a contribution
to earnings growth. Investments in future-oriented
projects, including vehicle electrification, digitalisa-
tion and the expansion of the production network,
will, however, counteract the general upward trend.
Overall, Group profit before tax is expected to increase
slightly year-on-year (2016: €9,665 million).
Competition on international automobile markets
is set to remain intense during the current year. The
situation is likely to be exacerbated by political and
macroeconomic uncertainties in Europe as well as the
unforeseeable consequences of the Brexit decision in
the UK. Moreover, the strategy of the new US admin-
istration regarding economic policy remains unclear.
Further information is provided in the sections on
political and economic risks in the section "Risks and
Opportunities".
Profit before tax: slight increase expected
BMW Group
86
The BMW Group is continuing its efforts to reduce
fuel consumption and carbon dioxide emissions.
According to forecasts, carbon dioxide emissions
for the vehicle fleet will decrease slightly during the
outlook period, thus continuing the trend seen in
previous years (2016: 124 grams CO2/km).
KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, has
issued an unqualified audit opinion on the financial
statements of BMW AG, of which the balance sheet and
the income statement are presented here. The BMW AG
financial statements for the financial year 2016 will
be submitted to the operator of the electronic version
of the German Federal Gazette and can be obtained
via the Company Register website. These financial
statements are available from BMW AG, 80788 Munich,
Germany.
82
It is currently assumed that the UK government will
give notice of its intention to leave the EU during the
first half of 2017, thus triggering the start of official
negotiations. Uncertainty regarding the future rela-
tionship is currently influencing both investment
and consumer spending levels in the UK. As a result
of the current situation, it is expected that the UK
economy will see a distinct loss of momentum, with
a significantly lower year-on-year growth rate of 1.2%.
In China, economic growth is again predicted to
weaken slightly in the current year, resulting in a
growth rate of around 6.4%. Reducing over-capaci-
ties in various industrial sectors and the controlled
reduction of high debt levels will present the Chinese
government with significant challenges in 2017. The
risk of a significant economic downturn in China
therefore cannot be ruled out.
Despite uncertainty regarding the country's future
political and economic course, GDP in the USA is
expected to grow faster in 2017 than in the preced-
ing year (+2.3%). The US Federal Reserve is likely to
continue its policy of moderate interest rate rises in
2017. After decreasing in 2016, industrial production is
predicted to grow significantly in 2017, with a positive
impact on GDP growth.
According to forecasts, Japan can expect a GDP growth
rate of 1.0% in 2017, with rising exports potentially
providing renewed economic momentum. An expect-
ed increase in domestic consumer spending could also
help revive the Japanese economy.
The Indian economy is forecast to expand by 7.4%
in 2017, boosted by the gradual implementation of
business-friendly structural reforms. After a number
of years of deep recession, Russia (+1.2%) and Brazil
(+0.6%) could return to growth in 2017, helped by
rising raw materials prices.
83
83
84
of 1.7%.
Combined
Report on Outlook,
Risks and
Opportunities
→ Outlook
Currency markets
Currencies of particular importance for the interna-
tional operations of the BMW Group are the Chinese
renminbi, the US dollar, the British pound and the
Japanese yen. These major currencies could be subject
to a significant degree of fluctuation again in 2017.
Given that the Chinese renminbi is likely to continue
to move in the same direction as the US dollar in the
short term, it is likely to appreciate slightly against the
euro in 2017. If, however, the Chinese central bank
decides to intervene in the currency markets, it could
result in a relatively narrow fluctuation range.
A more restrictive monetary policy in the USA would
boost the value of the US dollar against the euro.
Continued economic recovery in the eurozone, com-
bined with rising inflation, could prompt the ECB to
implement a gradual reduction in government bond
purchases. In that case, the loss in value of the euro
against the US dollar would be less pronounced.
Management
Report
81
Economic growth in the eurozone is forecast to slow
down slightly to 1.5% in 2017. Germany, Europe's
largest economy, is expected to grow at a similar rate
(+1.5%). In macroeconomic terms, the prospects of the
other eurozone countries are also expected to develop
positively. GDP growth rates in France (+1.3%) and
Italy (+0.8%) in 2017 are expected to be similar to the
preceding year. The Spanish economy is forecast to
grow by 2.4% and therefore faster than the eurozone
average. Greece also is expected to achieve growth
Economic outlook
62
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Outlook
REPORT ON OUT-
LOOK, RISKS AND
OPPORTUNITIES
Despite greater political uncertainty, the global
economy is forecast to grow by around 3.4% in 2017,
slightly faster than in the preceding year. A number of
factors make uncertainty likely to persist with regard
to future economic and political developments. These
include the negotiations between the UK and the EU
following the Brexit vote and the future course of the
new US administration. Moreover, the existing risks to
financial stability due to high sovereign debt levels in
Europe and Japan, more restrictive monetary policies
in the USA and high levels of corporate debt in China
have not diminished compared to the previous year.
Further information on political and global economic
risks can be found in the section "Risks and Oppor-
tunities".
Positive Company performance
expected to continue in 2017
Outlook foresees increase in
revenues and profit
World economy expected to grow
despite risks
OUTLOOK
The report on outlook, risks and opportunities describes
the expected development of the BMW Group, includ-
ing the associated material risks and opportunities,
from a Group management perspective. In line with
the Group's internal management system, the out-
look covers a period of one year. However, risks and
opportunities are managed on the basis of a two-year
assessment. The report on risks and opportunities
therefore covers a period of two years.
The report on outlook, risks and opportunities
contains forward-looking assertions based on the
BMW Group's expectations and assessments, which
are subject to uncertainty. As a result, actual outcomes
can deviate, for example on account of political and
economic developments - either positively or nega-
tively - from the expectations described below. Further
information can be found in the section "Risks and
Opportunities".
Assumptions used in the outlook
The following outlook relates to a forecast period
of one year and is based on the composition of the
BMW Group during that period. The outlook takes
account of all information known up to the date on
which the financial statements were prepared for issue
and which could have an effect on the overall perfor-
mance of the Group. The expectations contained in
the outlook are based on the BMW Group's forecasts
for 2017 and reflect its most recent status. The basis
for the preparation of and the principal assumptions
used in the forecasts - which consider the consensus
opinions of leading organisations, such as economic
research institutes and banks - are set out below. The
BMW Group's forecast is based on these assumptions.
The continuous forecasting process ensures that the
BMW Group is ready to take advantage of oppor-
tunities as they arise and to react appropriately to
unexpected risks. The principal risks and opportuni-
ties are described in detail in the section "Risks and
Opportunities". The risks and opportunities discussed
in that section are relevant for all of the BMW Group's
performance indicators and could result in variances
between the outlook and actual outcomes.
Automobile and motorcycle sales
expected to reach new record levels
EBIT margin
Revenues: slight increase expected
Automotive segment revenues are expected to rise
slightly in line with sales volume. The Company
expects that segment revenues will increase slightly
in 2017 (2016: €86,424 million).
An EBIT margin within a range of 8 to 10% (2016:
8.9%) remains the target for the Automotive segment.
Fleet emissions²
Sales volume¹
AUTOMOTIVE SEGMENT
Workforce at year-end
Profit before tax
BMW GROUP
Depending on the political and economic situation
and the outcomes of the risks and opportunities
described below, actual business performance could,
however, differ from current expectations.
in deliveries to customers, Automotive segment rev-
enues are also expected to increase slightly in 2017.
At the same time, a slight decrease in fleet carbon
dioxide emissions is expected. The Group's targets are
to be met with a slight rise in the workforce size. The
Automotive segment's EBIT margin in 2017 is set to
remain within the target range of between 8 and 10%,
while its ROCE is forecast to decrease slightly. A slight
fall is also forecast for the RoE in the Financial Services
segment. Both performance indicators will be above
their long-term targets of 26% (RoCE) and 18% (ROE)
respectively. Deliveries to customers in the Motor-
cycles segment are forecast to rise significantly, with
an EBIT margin within the target range of between 8
and 10% and ROCE at the previous year's level.
→ 54
Key performance indicators
Overall assessment by Group management
Business is expected to develop positively in the
financial year 2017. The introduction of numerous
new automobile and motorcycle models as well as the
expansion of individual mobility-related services give
reason to expect that profitable growth will contin-
ue in the current year. Despite the many challenges
described above, Group profit before tax is forecast to
grow slightly. Based on the forecast of a slight increase
Return on equity: slight decrease expected
According to forecasts, the Financial Services segment
is likely to continue performing well in 2017. However,
it is expected that regulatory requirements for equity
capital will be tightened and the risk situation will
normalise in the forecast period. The segment RoE is
therefore expected to decrease slightly year-on-year
(2016: 21.2%). The target of at least 18% is neverthe-
less likely to be exceeded again.
EBIT margin in target range between 8 and 10%
expected
Financial Services segment
Outlook
Return on capital employed expected at previous
year's level
In this context, a target range of 8 to 10% has also been
set for the Motorcycles segment. The EBIT margin for
the Motorcycles segment is expected to lie within this
range in 2017 (2016: 9.0%).
With effect from the beginning of the financial
year 2017, the EBIT margin will also serve as a key
performance indicator for the Motorcycles segment.
Accordingly, segment performance will also be man-
aged based on the operating return on sales (EBIT
margin) in future. Further information can be found
in the description of the Group management system in
the section "General Information on the BMW Group".
EBIT margin in target range between 8 and 10%
expected
2 EU-28.
The BMW Group expects the upward trend in the
Motorcycles segment to continue. New models, includ-
(2016: 316,200 ing the R NineT Pure, the R NineT Racer, the K 1600 B
and the G 310 GS were unveiled at international trade
fairs held in autumn 2016. Together with updated
versions of the R 1200 GS, the S 1000 R, the S 1000 RR,
the K 1600 GT and the luxury GTL, the new models
will expand the product portfolio significantly and
appeal to new customer groups. Overall, deliveries of
BMW motorcycles to customers are forecast to increase
significantly year-on-year (2016: 145,032 units).
significant increase expected
Motorcycles segment
Deliveries to customers:
Segment RoCE in 2017 is forecast to be in line with
the previous year (2016: 33.0%). The long-term target
ROCE of 26% for the Motorcycles segment will there-
fore be surpassed.
slight decrease expected
Return on capital employed:
units).
BMW Brilliance
Automotive,
Shenyang Ltd.
1 Includes the
joint venture
Segment RoCE is forecast to decrease slightly (2016:
74.3%). However, the long-term target RoCE of at
least 26% for the Automotive segment will be easily
surpassed.
50
76.1
80.4
94.2
92.2
100
98.7
in € billion
2017
2015
2014
2013
5,500
7,978
2013
9,880
9,593
9,118
The new era of electric mobility requires visionaries
and people of action. Find out in our image brochure
how BMW Group is shaping the mobility of the future.
2016
9,386
2015
2016
BOARD OF MANAGEMENT
BMW STOCK AND
CAPITAL MARKETS IN 2017
1
To Our
Shareholders
BMW Group in
Figures
CHAIRMAN OF THE
Report of the
Supervisory Board
Statement of
the Chairman of
the Board of
Management
80
To Our
Shareholders
→ Report of the
Supervisory Board
Norbert Reithofer
Chairman of the Supervisory Board
BMW Stock and
Capital Markets
2014
STATEMENT OF THE
2017
2017
BMW Group profit before tax
→ 08
in € million
10,655
11,000
REPORT OF THE
SUPERVISORY BOARD
9,665
7,893
5,500
2013
2014
2015
2016
8,707
9,224
Motor Cars Limited
→Page 4 BMW Group in Figures
27,567
25,681
23,739
20,599
19,874
Financial Services
10.3
2,283
2,069
1,990
1,679
1,504
Motorcycles
2.5
88,581
86,424
85,536
75,173
70,630
Automotive
4.8
98,678
94,163
92,175
80,401
7.3
76,059
Other Entities
7
2.2
7,863
7,695
7,836
7,244
6,649
Automotive
5.3
9,880
9,386
9,593
9,118
7,978
Profit before financial result (EBIT)
1.3
-19,760
-20,017
-19,097
-17,057
-15,955
Eliminations
16.7
7
6
7
6
Revenues
-23.0
4,459
21.2
20.2
19.4
20.0
RoE in % (change in %pts)
FINANCIAL SERVICES SEGMENT
1.0
34.0
33.0
31.6
21.8
16.4
0.1
9.1
9.0
9.1
6.7
5.3
ROCE in % (change in %pts)
EBIT margin in % (change in %pts)
MOTORCYCLES SEGMENT
4.3
78.6
74.3
72.2
18.1
-3.1
Further financial performance figures
→ 04
5,792
5,404
3,481
3,003
Free cash flow Automotive segment
0.3
4,822
4,806
4,659
4,170
3,741
Depreciation and amortisation
Motorcycles
22.1
5,823
5,890
6,100
6,711
Total capital expenditure¹
Change in %
2017
2016
2015
2014
2013
in € million
7,112
79
112
182
10.3
10.0
10.8
10.4
25.6/25.5
13.12/13.14
10.45/10.47
26.0
29.3
-1,949
8,706
-2,755
6,910
-2,828
6,396
9.70/9.72
-2,890
5,817
8.83/8.85
-2,564
5,329
8.08/8.10
2 Group profit before tax as a percentage of Group revenues.
1 Expenditure for capitalised development costs, other intangible assets and property, plant and equipment.
Pre-tax return on sales² in % (change in %pts)
Earnings per share in €
Net profit
Income taxes
31.6
-528
-772
-664
-163
10.8
0.5
5
60
11,000
in € million
BMW Group profit before financial result (EBIT)
→ 06
(2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units, 2016: 316,200 units,
2017: 384,124 units).
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
2017
2016
2015
2014
2013
0
1,250
-527
1,963.8
2,247.5
2,463.5
2,367.6
2,500
in 1,000 units
→ 07
BMW Group revenues
→ 05
BMW Group deliveries of automobiles*
→ BMW Group
in Figures
Shareholders
To Our
2,118.0
61.7
Eliminations
80
8,707
7,893
Profit before tax (EBT)
40.0
-398
-663
-575
-65
-437
Eliminations
14
-17
169
71
44
Other Entities
0.5
2,194
1,981
1,756
1,643
Financial Services
10.7
207
187
9,224
9,665
10,655
10.2
170
211
154
164
Other Entities
1.9
2,207
2,166
1,975
1,723
1,619
Financial Services
-52.9
10.8
185
179
107
76
Motorcycles
9.8
8,691
7,916
7,523
6,886
6,561
Automotive
205
63.0
2,184
8.9
BMW Group in
Figures
To Our
Shareholders
1
TO OUR SHAREHOLDERS
Further information on official fuel consumption figures and specific CO₂ emissions values
of new passenger cars is included in the "Guideline for fuel consumption, CO₂ emissions
and electric power consumption of new passenger cars", which can be obtained free of
charge from all dealerships and at https://www.dat.de/en/offers/publications/
guideline-for-fuel-consumption.html.
were determined according to the European Regulation (EC) 715/2007 in the version appli-
cable. The figures refer to a vehicle with basic configuration in Germany and the range
shown considers the different sizes of the selected wheels/tyres and the selected items of
optional equipment.
The fuel consumption, CO₂ emissions, power consumption and operating range figures
http://annual-report2017.bmwgroup.com
Our Annual Report is also available
in digital form under:
TOWARDS
THE FUTURE
→ Page 188 List of Investments at 31 December 2017
→Page 183 Segment Information
→Page 167 Other Disclosures
Notes to the Statement of Comprehensive Income
Notes to the Balance Sheet
→ Page 146
→ Page 145
→Page 139
Notes to the Income Statement
→Page 126 Accounting Principles and Policies
→ Page 126 Notes to the Group Financial Statements
→Page 124 Statement of Changes in Equity
→Page 122 Cash Flow Statement
→Page 120 Balance Sheet
→ Page 118 Statement of Comprehensive Income
→Page 118 Income Statement
Report of the
Supervisory Board
Statement of
the Chairman of
the Board of
Management
GROUP FINANCIAL
STATEMENTS
BMW Stock and
Capital Markets
→ Page 18 Statement of the Chairman of the Board of Management
2,117,965
1,963,798
Deliveries²
AUTOMOTIVE SEGMENT
4.2
129,932
124,729
122,244
116,324
110,351
Workforce at year-end¹
Change in %
2017
2016
2015
2014
2013
GROUP
→ 01
Key non-financial performance indicators
BMW GROUP IN FIGURES
→ BMW Group
in Figures
To Our
Shareholders
1
→Page 24 BMW Stock and Capital Markets in 2017
→Page 8 Report of the Supervisory Board
3
→Page 256 Contacts
→Page 255 Financial Calendar
MANAGEMENT REPORT
COMBINED
2
Members of the Supervisory Board
→ Page 201
Members of the Board of Management
→ Page 200
→Page 199
→ Page 198
→ Page 198 Statement on Corporate Governance
(Part of the Combined Management Report)
Information on the Company's Governing Constitution
Declaration of the Board of Management and of the
Supervisory Board pursuant to § 161 AktG
GOVERNANCE
CORPORATE
4
→Page 24 BMW Stock and Capital Markets in 2017
Board of Management
→Page 18 Statement of the Chairman of the
Report of the Supervisory Board
8
4 BMW Group in Figures
TO OUR SHAREHOLDERS
1
→ Page
→ Page
CONTENTS
ROCE in % (change in %pts)
→ Page 30 General Information and Group Profile
→Page 30 Organisation and Business Model
→ Page 40 Management System
→Page 44 Report on Economic Position
→ Page 44 General and Sector-specific Environment
→Page 248 BMW Group Ten-year Comparison
→Page 250 Glossary - Explanation of Key Figures
→Page 252 Index
OTHER INFORMATION
5
→ Page 240 Independent Auditor's Report
Company's Legal Representatives
→Page 239 Responsibility Statement by the
(Part of the Combined Management Report)
Compensation Report
→Page 221
→ Page 216
→Page 214 Information on Corporate Governance Practices Applied
beyond Mandatory Requirements
Compliance in the BMW Group
Supervisory Board of BMW AG and its Committees
→ Page 213 Disclosures pursuant to the Act on Equal
Gender Participation
2,247,485
→Page 206 Composition and Work Procedures of the
→Page 204
→Page 112 Disclosures Relevant for Takeovers
Internal Control System Relevant for Accounting and
Financial Reporting Processes
→ Page 111
→ Page 96
Risks and Opportunities
→ Page 90 Report on Outlook, Risks and Opportunities
→Page 90 Outlook
→ Page 86 Comments on Financial Statements of BMW AG
→ Page 72 Results of Operations, Financial Position and Net Assets
→Page 52 Review of Operations
→ Page 49 Financial and Non-financial Performance Indicators
→Page 48 Overall Assessment by Management
Composition and Work Procedures of the Board of
Management of BMW AG and its Committees
2,367,603
→Page 254 Index of Graphs
Fleet emissions in g CO2/km³
* Excluding Husqvarna, deliveries up to 2013: 59,776 units.
1 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units, 2016: 316,200 units, 2017: 384,124 units).
3 EU-28.
1.0
1,828,604
1,811,157
1,655,961
1,509,113
BMW
GROUP
THE NEXT
100 YEARS
WE ARE SHAPING
THE MOBILITY
OF THE FUTURE
ANNUAL REPORT 2017
THE FUTURE
IS ELECTRIC.
B
M
MINI
Rolls-Royce
1,471,385
27.6
185,682
145,555
151,004
133,615
110,127
New contracts with retail customers
5 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2013: 214,920 units, 2014: 287,466 units, 2015: 287,755 units, 2016: 305,726 units, 2017: 396,749 units).
* Excluding Husqvarna, production up to 2013: 59,426 units.
→ 03
GROUP
Profit before tax in € million
8.9
2,463,526
9.2
9.6
9.4
EBIT margin in % (change in %pts)
2.5
88,581
86,424
85,536
75,173
70,630
FINANCIAL SERVICES SEGMENT
Revenues in € million
10.2
10,655
9,665
9,224
8,707
7,893
Change in %
2017
2016
2015
2014
2013
AUTOMOTIVE SEGMENT
BMW
Key financial performance indicators
MOTORCYCLES SEGMENT
MINI
BMW2
Deliveries
Change in %
2017
2016
2015
2014
2013
AUTOMOTIVE SEGMENT
Further non-financial performance figures
13.2
Rolls-Royce
164,153
136,963
123,495
115,215
Deliveries4
MOTORCYCLES SEGMENT
4.1
-1.6
122
124
127
Production volume6
130
133
145,032
Total²
→ 02
1,655,138
305,030
3,630
6.2
-20.8
3,308
2,505,741
7.3
6.0
2,123,947
378,486
2,002,997
352,580
4,179
2,359,756
1,933,647
342,008
3,848
2,279,503
2,006,366
Total5
1,699,835
303,177
3,354
Rolls-Royce
MINI
1,838,268
322,803
4,495
2,165,566
4.2
Production volume
4.1
-16.2
3,362
2,463,526
1,963,798
3.2
1,811,719
302,183
4,063
2,117,965
2,088,283
371,881
2,003,359
360,233
4,011
2,367,603
1,905,234
338,466
3,785
2,247,485
BMW5
slight increase
between 8 and 10
g CO2/km
%
9.2
8.9
€ million
slight decrease
122
85,742
88,581
122
78.6
%
77.7
34.0
units
164,153
164,153
solid increase
%
9.1
9.1
%
between 8 and 10
%
slight increase
34.0
slight increase
significant decrease
2,463,526
AUTOMOTIVE SEGMENT
units
Profit before tax
18.1
GROUP
Workforce at year-end
Deliveries to customers4
Fleet emissions5
Revenues
EBIT margin
Return on capital employed
MOTORCYCLES SEGMENT
Deliveries to customers
EBIT margin
Return on capital employed
2,463,526
FINANCIAL SERVICES SEGMENT
1 Adjusted with effect from the financial year 2018.
² Adjusted in accordance with IFRS 15.
3 Based on adjusted outlook.
4 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 384,124 units).
5 EU-28.
2017
reported
20172
adjusted
2018
Outlook³
€ million
10,655
129,932
10,675
129,932
in line with last
year's level
slight increase
Return on equity
18.1
Class
95
Board
Board of
Management
Group
Audit
Group risk management is organised formally as a
decentralised, company-wide network and is steered
by a centralised risk management function. Every
BMW Group division is represented within the risk
management organisation by Network Represen-
tatives. This formal structure reinforces the network's
visibility and underlines the importance of risk
management within the BMW Group. Roles, respon-
sibilities and tasks of the central risk management
function and the Network Representatives are clearly
described, documented and understood. In view of
the dynamic growth of business and the increasingly
volatile environment, the BMW Group regularly
reviews its risk management system for effectiveness
and appropriateness.
Risk management as a whole comprises the Risk
Management Steering Committee, the Compliance
Committee, the Internal Control System and Group
Internal Audit.
Risk management process
The risk management process covers the entire Group
and comprises early identification of risks, detailed
analysis and risk assessment, the coordinated use of
relevant management tools as well as monitoring and
evaluation of measures taken.
Significant risks reported from within the network are
firstly presented for review to the Risk Management
Steering Committee, chaired by Group Controlling.
After review, the risks are reported to the Board of
Management and the Supervisory Board. Risks are
classified according to the magnitude of impact on
the Group's results of operations, financial position
and net assets. The magnitude of risk is measured in
each case after risk mitigation measures and according
to the probability of occurrence.
The risk management system is regularly examined by
Group Internal Audit. Regular monitoring of external
practice ensures that new insights are incorporated
in the risk management system of the BMW Group,
thus providing for continual improvement. Training
sessions, development programmes and information
events are regularly conducted across the BMW Group,
particularly within the risk management network.
These measures are essential ways of preparing those
involved in the process for new or additional demands.
In addition to comprehensive risk management,
sustainable business practice constitutes one of the
core strategic principles of the company. Risks or
opportunities relating to sustainability issues are
considered by the Sustainability Committee. Result-
ing strategic options and measures are put forward
to the Sustainability Board, which comprises the
entire Board of Management. Where necessary,
risk
aspects may be integrated within the Group-wide risk
network. The composition of the Risk Management
Steering Committee and the Sustainability Committee
ensures that risk and sustainability management are
closely coordinated.
In order to comply with the CSR Directive Imple-
mentation Act, a review of risks with impact on
the non-financial aspects referred to in the law was
conducted as part of the reporting process for the
Group's Non-Financial Declaration. Significant risks
within the meaning of the law are those relating
to business activities, business relationships and
products and services of the BMW Group which are
highly likely to have a serious adverse impact. No
significant risks were identified during the review.
The Group's Non-Financial Declaration is provided in
the Sustainable Value Report 2017, which is available
on the internet at → https://www.bmwgroup.com/svr.
In the Financial Services segment risk management
also addresses regulatory requirements, such as Basel
III. Internal methods to identify, measure, manage and
monitor risks within the Financial Services segment
comply with national and international standards. The
risk strategy, in combination with a set of strategic
principles and guidelines, serves as the basis for risk
management in the Financial Services business. The
risk management process is ensured organisationally
through a clear division between front- and back-office
activities and a comprehensive internal control system.
The main instrument of risk management within the
Financial Services segment is ensuring the Group's
risk-bearing capacity. At all times, risks in the sense of
unexpected losses must be covered. This is achieved by
means of an asset cushion in the form of equity capital
derived from the entity's risk appetite. Unexpected
losses are measured according to various value-at-risk
models, which are validated at regular intervals. Risks
are aggregated after taking account of correlation
effects. In addition to assessing the Group's ability to
bear risk under normal circumstances, stress scenarios
are also examined. The segment's risk-bearing capacity
is regularly controlled through an integrated limit
system for the various risk categories.
46
Supervisory
97
98
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
Risk measurement
Risks are classified as high, medium or low, based on
their significance with respect to results of operations,
financial position and net assets and to performance
indicators of the BMW Group. The impact of risks
is measured and reported net of risk mitigation
measures (net basis).
The overall impact of a risk's occurrence on the results
of operations, financial position and net assets for the
two-year assessment period is classified as follows:
Low
Medium
High
Earnings impact
> €0-500 million
> €500-2,000 million
→ 61
> €2,000 million
96
slight decrease
Risk
Management
Steering
Committee
Internal Control System
95
96
96
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
RISKS AND
OPPORTUNITIES
As a worldwide-leading provider of premium cars,
motorcycles and mobility services, as well as related
financial services, the BMW Group is exposed to
numerous uncertainties and change. Making full
use of the opportunities arising out of change is a
fundamental basis of the Group's corporate success.
In order to achieve growth, profitability, efficiency
and continued sustainable activities going forward,
the BMW Group must consciously assume risk.
Management of opportunities and risks is essential for
the Group to react appropriately to changes in political,
economic, technical or legal conditions. Opportunities
and risks which are likely to materialise are taken into
account in the Outlook Report. The following sections
focus on potential future developments or events,
which could result in a positive (opportunity) or a
negative deviation (risk) from the BMW Group's out-
look. The earnings impact of risks and opportunities is
assessed separately without offsetting. Opportunities
and risks are assessed with respect to a medium-term
period of two years.
Risk management in the BMW Group
Controlling
→ 62
As part of the risk management process, all individual
and cumulative risks that represent a threat to the
success of the business are monitored and managed.
Any risks capable of posing a threat to the going-
concern status of the BMW Group are generally
avoided. Where no specific reference is made, oppor-
tunities and risks relate to the Automotive segment.
The scope of entities consolidated in the Report on
Risks and Opportunities corresponds to the scope of
consolidated entities in the BMW Group Financial
Statements.
Risk management system
The objective of the risk management system, and the
main function of risk reporting, is to identify, record
and actively manage internal or external risks that
could threaten the attainment of the Group's corpo-
rate targets. The risk management system covers all
significant and existential risks to the Group. Group
risk management focuses on the criteria of effective-
ness, practicability and completeness. Responsibility
for risk reporting is not allocated to a central function,
but is part of the task of each employee and manager,
according to their individual function. According to
Group-wide rules, every employee and manager has
a duty to report risks through the relevant reporting
channels.
Effectiveness
Identification
Practicability
Compliance
Committee
Reporting/
Monitoring
Completeness
Group-wide
risk management
Analysis and
Measurement
Measures
7
BMW Group key performance indicators
Liabilities to banks decreased as a result of the repay-
ment of project-related loans.
should grow slightly based on the forecast of a slight
increase in deliveries to customers. At the same
time, fleet carbon dioxide emissions are forecast to
decrease slightly. The Group's targets are to be met
with a slight increase in workforce. The Automotive
segment's EBIT margin in 2018 is set to remain within
the target range of between 8 and 10%, while its ROCE
is forecast to decrease significantly. A slight decrease
is also forecast for the RoE in the Financial Services
segment. However, both performance indicators will
be above their long-term targets of 26% (ROCE) and
14% (ROE¹) respectively. Deliveries to customers in
the Motorcycles segment are forecast to show a solid
increase, with an EBIT margin within the target range
of between 8 and 10% and RoCE slightly up on the
previous year.
Outlook foresees increase in deliveries
and revenues
OUTLOOK
The report on outlook, risks and opportunities describes
the expected development of the BMW Group, includ-
ing the significant risks and opportunities, from a
Group management perspective. In line with the
Group's internal management system, the outlook cov-
ers a period of one year. Risks and opportunities are
managed on the basis of a two-year assessment. The
report on risks and opportunities therefore addresses
a period of two years.
The report on outlook, risks and opportunities con-
tains forward-looking statements. These are based
on the BMW Group's expectations and assessments
and are subject to uncertainty. As a result, actual out-
comes can deviate either positively or negatively - for
example on account of political and economic devel-
opments from the expectations described below.
Further information is provided in the section Risks
and Opportunities.
-
Assumptions used in the outlook
The following outlook relates to a forecast period
of one year and is based on the composition of the
BMW Group during that time. The outlook takes
account of all information available at the time of
reporting and which could have an effect on the overall
performance of the Group. The expectations contained
in the outlook are based on the BMW Group's forecasts
for 2018 and reflect its most recent status. The basis
and principal assumptions of the forecasts are set
out below. They represent a consensus of opinions
of leading organisations, such as economic research
institutes and banks. These assumptions flow into the
planning basis of the BMW Group.
The continuous forecasting process ensures the
BMW Group's ability to exploit opportunities quickly
and systematically as they arise and react in a similar
way to unexpected risks. The principal risks and
opportunities are described in detail in the section
Risks and Opportunities. The risks and opportu-
nities discussed therein are relevant for all of the
BMW Group's performance indicators and could result
in variances between the outlook and actual outcomes.
Economic outlook
Despite an array of uncertainties, particularly in
the area of international trade, the overall outlook
for the world economy is positive. Global economic
growth is forecast to be around 3.9% in 2018. The
exit negotiations between the EU and the UK and the
current US administration's future trade policy remain
factors that could at least significantly slow down the
current upward trend in the event of unfavourable
developments. Moreover, financial market stability
could be jeopardised by over-restrictive monetary
policies in the USA, high levels of corporate debt in
China and excessive sovereign debt in Japan as well
as some eurozone countries. Further information on
political and global economic risks is also available in
the section Risks and Opportunities.
After a year of robust expansion, economic growth
in the eurozone is forecast to slow down slightly to
2.2% in 2018. Germany, Europe's largest economy, is
expected to grow at a similar rate (+2.3%). Economic
growth of the other member states in the eurozone
is also predicted to develop positively. France (+ 2.0%)
and Italy (+1.4%) are likely to see an increase in GDP
over the outlook period. Based on an expected growth
rate of 2.7%, the Spanish economy is set to
grow faster
than the eurozone average. The economies of both
Portugal and Greece are also expected to grow at
around 2.1%, enabling a reduction in unemployment.
The UK's economic performance in the outlook period
will be influenced significantly by the progress of EU
exit negotiations. In view of the official leaving date
in March 2019 and with negotiations making slow
progress to date, the UK economy is preparing for
various scenarios. British companies are considering,
amongst others, relocation of operations to the EU.
The lack of planning certainty is weighing on compa-
nies and private households alike. Consequently, the
economy is expected to slow further with a growth
rate of only 1.4% for the current year.
In the USA, the administration's tax-cutting pro-
gramme is likely to give companies greater flexibility
for investment and thereby boost business expansion.
These factors are expected to have a slightly positive
impact on the economy, which is expected to expand
by 2.6% in 2018. The US Federal Reserve will most
likely continue pursuing a more restrictive monetary
policy. The prerequisite is that domestic demand in
private households as well as corporate and public
sectors remains robust and prices rise.
Strong business performance
expected to continue in 2018
In 2018, China is likely to focus on reducing credit
growth and stimulating the services sector. Greater
diversification of economic sectors could lead to a
reduction in overcapacities. Against this backdrop,
GDP is forecast to rise by 6.5%. Many Chinese indus-
trial companies are confronted with high debt levels,
a situation that could also threaten financial market
stability. Safeguarding market stability therefore
remains one of the most urgent tasks for the Chinese
government. The risk of a significant economic down-
turn in China cannot therefore be ruled out.
If India succeeds in implementing further reforms
aimed at promoting growth, economic output could
rise by even more than the 7.3% forecast for 2018.
Economic growth is also forecast for Russia (+1.9%)
and Brazil (+2.5%), supported by higher raw material
prices and solid corporate investment.
91
42
92
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Outlook
Currency markets
Currencies of particular importance for the interna-
tional operations of the BMW Group are the US dollar,
the Chinese renminbi, the Japanese yen and the Brit-
ish pound. All of these major currencies are expected
to remain volatile in 2018.
A significantly more restrictive monetary policy
on the part of the US Federal Reserve as well as
economic stimulus through tax cuts for companies
and private households could raise the value of the
US dollar against the euro. However, a simultaneous
economic upturn in the eurozone, falling unemploy-
ment and rising inflation rates could lead the ECB
to gradually scale down its expansionary monetary
policy. As a result, the euro would probably remain at
a similar value against the US dollar as in the second
half of 2017.
The Japanese economy is expected to grow by 1.3%
in 2018. Moderate demand for capital goods as well
as consumer spending could help drive growth. The
weak yen is also likely to create momentum for exports.
The strong economic ties between China and the USA
make it likely that the Chinese renminbi will follow
a similar trend to the US dollar. As a result, the ren-
minbi/euro exchange rate is likely to move sideways
in 2018, subject to volatility.
global economy
REPORT ON OUT-
LOOK, RISKS AND
OPPORTUNITIES
In the following sections, earnings impact is used
consistently to cover the overall impact on results of
operations, financial position and net assets.
99
89
At €4,643 million, inventories were higher than at the
end of the previous year (2016: €4,260 million), due
to an increase in finished goods.
Receivables from subsidiaries, most of which relate to
intragroup financing receivables, rose to €7,641 mil-
lion (2016: €6,001 million).
The increase in other receivables and other assets to
€2,827 million (2016: €2,525 million) was mainly due
to higher receivables from companies in which an
investment is held, as well as higher tax receivables.
Equity increased by €924 million to €15,046 million.
The equity ratio fell from 38.9% to 36.3%, mainly due
to the increased balance sheet total.
In order to secure pension obligations, investments
in fund assets totalling €498 million were transferred
to BMW Trust e. V., Munich, in conjunction with a
Contractual Trust Arrangement (CTA). Fund assets are
offset against the related guaranteed obligations. The
resulting surplus of assets over liabilities is reported in
the BMW AG balance sheet on the line item Surplus of
pension and similar plan assets over liabilities.
Provisions for pensions increased from €93 million
to €139 million, after offsetting of pension liabilities
with pension assets.
Other provisions increased year on year, mainly due
to increased provisions for pre-retirement part-time
arrangements. With effect from 2017, fund assets
relating to pre-retirement part-time working arrange-
ments are secured by bank guarantees, with the result
that at the reporting date no offsetting amount was
recorded for corresponding assets. Also, provisions
were increased as a result of further additions to the
provision for litigation and liability risks.
Liabilities to subsidiaries comprise mainly intragroup
financial liabilities.
Deferred income increased by €619 million to
€2,685 million and included mainly amounts relating
to services still to be performed related to service and
maintenance contracts.
Liquidity within the BMW Group is managed centrally
by BMW AG on the basis of a group-wide liquidity
concept. This involves concentrating a significant part
of the Group's liquidity at BMW AG. An important
instrument in this context is the cash pool based at
BMW AG. The liquidity position reported by BMW AG
therefore reflects the global activities of BMW AG and
other Group companies.
Positive overall outlook for
Cash and cash equivalents increased by €1,542 million
to €4,218 million, mainly due to the surplus from
operational activities and the increase in financial
liabilities. Investment in tangible, intangible and
investment assets and in marketable securities, as
well as payment of the dividend from the previous
year, had an offsetting effect.
BMW AG's performance is essentially dependent on
the same set of risks and opportunities that affect the
BMW Group and which are described in detail in the
Report on Outlook, Risks and Opportunities section
of the Combined Management Report. As a general
rule, BMW AG participates in the risks entered into
by Group companies in proportion to the respective
shareholding percentage.
BMW AG is integrated in the group-wide risk man-
agement system and internal control system of the
BMW Group. Further information is provided in the
section Internal Control System Relevant for Account-
ing and Financial Reporting Processes within the
Combined Management Report.
Outlook
Due to its significance in the Group and its close ties
with Group companies, expectations for BMW AG with
respect to its financial and non-financial performance
indicators correspond largely to the BMW Group's
outlook for the Automotive segment. This is described
in detail in the Report on Outlook, Risks and Oppor-
tunities section of the Combined Management Report.
KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin,
has issued an unqualified audit opinion on the finan-
cial statements of BMW AG, of which the balance sheet
and the income statement are presented here. The
BMW AG financial statements for the financial year
2017 will be submitted to the operator of the electronic
version of the German Federal Gazette and can be
obtained via the Company Register website. These
financial statements are available from BMW AG,
80788 Munich, Germany.
90
90
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Outlook
Risks and opportunities
Depending on the political and economic situation
and the risks and opportunities described below,
actual business performance could differ from current
expectations.
The performance of the British pound will be deter-
mined largely by the progress made in negotiations
between the EU and the UK. If the negotiating parties
are able to agree on withdrawal terms and successfully
conclude talks on trade relations for the period after
March 2019 or for a transition period, the pound could
appreciate moderately against the euro. If, on the
other hand, planning uncertainty persists, the pound
may come under additional downward pressure.
Currencies in numerous emerging economies are like-
ly to remain under pressure against the US dollar as a
result of the ongoing normalisation of US monetary
policy. This applies in particular to countries that
export raw materials, such as Russia, Brazil and South
Africa. By contrast, any increase in raw material prices
will tend to have a positive impact on these economies.
→ Outlook
Automotive segment
Deliveries to customers: slight increase expected
The BMW Group expects a further year-on-year
increase in sales of BMW, MINI and Rolls-Royce
brand vehicles and aims to occupy a leading posi-
tion in the global premium segment again in 2018.
Balanced growth in major sales regions will help to
even out volatilities in individual markets. Assuming
economic conditions do not deteriorate, deliveries to
customers are forecast to rise slightly to a new high
(2017: 2,463,526¹ units).
Important contributions to sustained growth can be
expected, amongst others, from the new BMW 6 Series
Gran Turismo, the new BMW X3 (both launched in
November 2017) and the BMW X2 (available since
March 2018). The extended-wheelbase version of the
BMW 5 Series in China will also provide additional
impetus. The new BMW X4, model revisions of the
BMW 2 Series Active Tourer and Gran Tourer (includ-
ing the Active Tourer plug-in hybrid) (BMW 225xe
iPerformance Active Tourer: fuel consumption in
1/100 km (combined) 2.5-2.3//CO₂ emissions in
g/km (combined) 57-52//Electric power consump-
tion in kWh/100 km (combined) 13.7-13.4) and the
BMW i8 Coupé (BMW i8 Coupé: fuel consumption in
1/100 km (combined) 1.9//CO2 emissions in g/km
(combined) 42//Electric power consumption in
kWh/100 km (combined) 14.0) will go on sale during
the spring. The launch of the new BMW i8 Roadster
(BMW i8 Roadster: fuel consumption in 1/100 km (com-
bined) 2.1//CO2 emissions in g/km (combined) 46//
Electric power consumption in kWh/100 km (com-
bined) 14.5) and the BMW 8 Series Coupé are set
to follow later in the year. Model revisions of the
MINI Hatch (3- and 5-door) and MINI Convertible
should also boost demand. The eighth generation of
the Rolls-Royce Phantom has been available since
January 2018.
Fleet CO2 emissions²: slight decrease expected
The BMW Group is continuing in its efforts to reduce
both fuel consumption and CO2 emissions. In addition,
the share of electrified vehicles in total deliveries is
expected to increase. Accordingly, CO2 emissions
across the vehicle fleet as a whole are expected to
decrease slightly during the outlook period, and
continue the trend seen in previous years (2017:
122 g CO2/km).
Revenues: slight increase expected
Automotive segment revenues should benefit from
growth in deliveries. Accordingly, a slight increase in
segment revenues is forecast for 2018 (2017 adjusted:
€85,7423 million).
EBIT margin in target range between 8 and 10%
expected
An EBIT margin again within a range of 8 to 10%
is expected for the Automotive segment (2017
Adjusted in adjusted: 9.24%).
accordance with
IFRS 15.
1 Includes the
joint venture
BMW Brilliance
Automotive,
Shenyang Ltd.
(2017: 384,124
units).
2 EU-28.
Opportunities
³ Adjusted in
accordance with
IFRS 15.
significant decrease expected
Segment RoCE is forecast to lie significantly below
the previous year's level (2017 adjusted: 77.74%).
The decrease is attributable, among other things, to
increasing investments in the electrification of the
vehicle fleet, digitalisation and the expansion and
renewal of the model portfolio. However, the long-
term target RoCE of at least 26% for the Automotive
segment will be significantly surpassed.
In view of the introduction of IFRS 16 (Leases) as of
1 January 2019, the future significance of RoCE as a
performance indicator, as opposed to an operational
management tool, is under review.
Motorcycles segment
Deliveries to customers: solid increase expected
The BMW Group expects the positive trend in the
Motorcycles segment to continue. The renewal of the
product range in the previous year, and new models
introduced at the EICMA 2017, such as the F 750 GS,
F 850 GS and K 1600 Grand America, should all have
a positive impact. Furthermore, the Scooter C 400 X
expands the product range for urban environments.
Overall, a solid increase in deliveries of BMW motor-
cycles to customers is forecast (2017: 164,153 units).
EBIT margin in target range between 8 and 10%
expected
The segment EBIT margin in 2018 is expected to
lie within the target range between 8 and 10%
(2017: 9.1%).
Return on capital employed: slight increase
expected
The Motorcycles segment RoCE is expected to increase
slightly year-on-year (2017: 34.0%). The long-term
target RoCE of 26% for the Motorcycles segment will
therefore be surpassed.
Financial Services segment
Return on equity: slight decrease expected
The BMW Group expects the Financial Services seg-
ment to continue its successful performance in 2018. In
view of increasing regulatory requirements worldwide,
more equity capital will be required in the segment
going forward. Accordingly, segment RoE is expected
to decrease slightly (2017: 18.1%). In this context, with
effect from the 2018 financial year the sustainable
target return will be changed from its current level of
at least 18% to a new level of at least 14%.
Overall assessment by Group management
Business is expected to show a stable development in
the financial year 2018, with significant contributions
from numerous new automobile and motorcycle mod-
els as well as expansion of individual mobility-related
services. Group profit before tax is expected to be
in line with last year's level, due to the challenges
described above. Automotive segment revenues
7
Return on capital employed:
The central bank in Japan continues to pursue a highly
expansionary monetary policy. For this reason, the
value of the yen against the euro is likely to be almost
unchanged compared to the year-end closing rate or
only slightly lower.
Risks and
Report
International automobile markets
New registrations are forecast to increase slightly
by around 1.5% worldwide to 89.0 million units in
2018, with growth expected from emerging markets
in particular.
The automobile market in Europe is unlikely to benefit
from the global economic recovery, and registrations
are predicted to fall slightly overall (15.6 million
units; -0.6%). New registrations in Germany are
forecast to decrease by 1.2% to 3.4 million units.
The French market is forecast to be flat (2.1 million
units; -0.4%). In Italy, the automobile market is set to
slow after a strong year, with growth in 2018 expected
at only 1.2% (2.0 million units). In the UK the forecast
for new registrations is negative. A further fall of
approximately 4.5% to around 2.4 million units is
expected here.
According to forecasts, the downward trend in the USA
is set to continue. New registrations are expected to
be down by 2.5% to 16.8 million units.
In China, a 3.3% increase is expected in passenger
car registrations to around 25.5 million units. The
automobile market in Japan is likely to see moderate
contraction in 2018. Registrations are forecast to be
down 2.7% year-on-year to approximately 4.9 million
units.
Registrations in Russia are expected to rise by around
10% in 2018 to 1.6 million units on the back of eco-
nomic recovery. In Brazil, registration figures are also
expected to increase in the current year by about 10%
to 2.0 million units.
International motorcycle markets
The world's motorcycle markets in the 250 cc plus class
are expected to remain stable overall in 2018, with
individual markets continuing to develop divergently.
In Europe, the BMW Group expects the major markets
of France, Italy and Spain to continue their positive
trend, while the German market is likely to show a
stable development compared to the previous year.
Markets in the UK and the USA could see a further
slight contraction after the previous year's decline.
93
International interest rate environment
The global economic upturn is expected to gain further
momentum in 2018. While successive rises in bench-
mark interest rates seem likely in the USA, tightening
of monetary policies in other industrialised countries
is likely to be carried out with great caution.
The US Federal Reserve is expected to raise interest
rates in three or four increments in the course of 2018
in line with its policy of increasing interest rates.
Report on Outlook,
The ECB is predicted to maintain its expansionary
monetary policy in 2018, while continuing to reduce
the volume of monthly bond purchases.
Growth in China could weaken moderately in 2018.
Japan's central bank is likely to maintain its ultra-
expansive monetary policy in order to drive inflation
and stimulate the economy.
Expected consequences for the BMW Group
Future developments on international automobile
markets have a direct impact on the BMW Group.
While competition could intensify in contracting mar-
kets, new opportunities may appear in growth regions.
Challenges in the competitive environment will have a
significant effect on sales volumes in some countries.
Due to its global business model, the BMW Group is
well placed at all times to exploit opportunities, even at
short notice. Coordination between the Group's sales
and production networks also enables it to balance
out the impact of unforeseeable developments in the
various regions. Investments in markets important for
the future also form a basis for further growth, while
simultaneously strengthening the global presence of
the BMW Group. Thanks to its three premium brands -
BMW, MINI and Rolls-Royce the BMW Group
expects to continue performing successfully in 2018.
Outlook for the BMW Group
Application of International Financial Reporting
Standards IFRS 9 (Financial Instruments) and IFRS 15
(Revenue from Contracts with Customers) is mandato-
ry with effect from 1 January 2018. While application
of IFRS 15 requires adjusted comparative figures for
the financial year 2017, no adjustment of comparative
figures is required in the case of IFRS 9. In order to
ensure a transparent presentation of changes in key
financial performance indicators, the outlook shows
values adjusted in accordance with IFRS 15 as well as
those actually reported for 2017. With regard to key
financial performance indicators for 2018, the outlook
is based on values for 2017 adjusted in accordance
with IFRS 15. Further information on IFRS 9 and
→ see IFRS 15 is provided in → note 5 of the Group Financial
Statements.
note 5
Group
Profit before tax expected at previous year's level
Competition on international automobile markets
is set to remain intense during the current year.
Furthermore, political and economic developments
in Europe remain uncertain. Above all, this is due
to the unforeseeable effects of Brexit negotiations
between the EU and the UK. The economic policy
of the US administration also remains difficult to
predict. Further information is provided in Risks and
Opportunities in the section Macroeconomic risks
and opportunities.
Nevertheless, the BMW Group intends to continue
its strong business performance in 2018. Notable
contributions are likely to come from new vehicles
as well as successful established models. At the same
time, investments in future-oriented projects remain
high, including continued electrification of vehicles,
digitalisation and autonomous driving, amongst
others. The production network will also be further
expanded during the outlook period. Due to the
challenges, Group profit before tax is expected to be
in line with the previous year's level (2017 adjusted:
Adjusted in €10,675* million).
accordance with
IFRS 15.
Workforce size at year-end: slight increase expected
The need for qualified staff across the BMW Group
will remain high in 2018. Above all, projects relating
to vehicle electrification and autonomous driving,
growth in the automobile and motorcycle business
and the expansion of financial and mobility services
will lead to a slight increase in the workforce, accord-
ing to current estimates (2017: 129,932 employees).
94
Combined
Management
The uncertainty surrounding the ongoing Brexit nego-
tiations is expected to continue to weigh on the UK
economy in 2018. The Bank of England is expected
to adopt initially a cautious approach and intervene
where necessary.
The risk amount is the basis for the classification of
risk levels at the BMW Group. The measurement of
risk amount takes account of both earnings impact
(net of appropriate countermeasures) and the proba-
bility of occurrence. In the case of risks measured on
the basis of value at risk and cash flow at risk models,
the risk amount is determined through approximation.
These approximations flow into the classification of
risk levels.
93
High
> €400 million
> €50-400 million
> €0-50 million
Risk amount
Medium
Low
Class
The continuous optimisation of major business
processes and strict cost controls are essential for
ensuring strong profitability and return on capital
employed. Probable measures to increase profitability
are incorporated in the outlook. The implementation
of modular and common architectures, for instance,
allows identical components to be deployed increas-
ingly across models and product lines. This reduces
development costs and investment on the series devel-
opment of new vehicles and contributes positively to
profitability. In addition, it also supports economies
of scale in production costs and increases production
flexibility. Moreover, a more competitive cost basis
opens up opportunities to enter new market segments.
A dynamic market environment also gives rise to
opportunities. The BMW Group continually monitors
macroeconomic trends as well as developments within
the sector and overall environment. This includes
external regulations, suppliers, customers and com-
petitors. Identifying opportunities is an integral part of
the strategic planning process of the BMW Group. The
Group's product and service portfolio is continually
reviewed on the basis of these analyses. This results,
for example, in new product projects being presented
to the Board of Management for consideration.
opportunity identification
Opportunity management system and
Overall, the following criteria apply for the purposes
of classifying the risk amount:
The implementation of identified opportunities is
undertaken on a decentralised basis within the rele-
vant functions. The significance of opportunities for
the BMW Group is classified on a qualitative basis in
the categories "significant” and “insignificant".
The BMW Group pays particular attention to the qual-
ity of parts built into its vehicles. In order to attain a
very high level of quality, it may become necessary to
invest in new technological concepts or discontinue
planned innovations, with the result that the cost of
materials could exceed levels accounted for in the
outlook. By monitoring and developing global sup-
plier markets, the BMW Group continuously strives
to optimise its competitiveness by working together
with the world's best product and service providers.
Within the Purchasing and Supplier Network,
opportunities arise above all in the area of global
sourcing through increased efficiency and the use
of innovations developed by suppliers, which can
lead to a broader range of products. Making full
use of location-specific cost factors, in particular
through local supplier structures in close proximity
to new and existing BMW Group production plants
and the introduction of new, innovative production
technologies, could lead to lower cost of materials for
the BMW Group. The new supply centre opened in
Landshut in 2017 represents a further step in ensuring
efficient and flexible logistics processes. Integration of
previously unidentified innovations from the supplier
market in the Group's product range could provide
a further source of opportunities. The BMW Group
offers innovative suppliers numerous possibilities for
creating specific contractual arrangements which are
attractive for those developing innovative solutions.
At regular intervals, the BMW Group honours its
most inventive suppliers with the Supplier Innovation
Award. The BMW Group expects these opportuni-
ties to have no significant earnings impact over the
assessment period as compared to the assumptions
made in the outlook.
Close cooperation between carmakers and suppliers
in the development and production of vehicles and
the provision of services generates economic benefits,
but also increased dependency. Potential reasons for
the failure of individual suppliers include in particular
increased IT-related risk, non-compliance with sus-
tainability or quality standards, insufficient financial
strength of a supplier, the occurrence of natural haz-
ards, fires and insufficient supply of raw materials. As
part of supplier pre-selection, the BMW Group checks
for compliance with the sustainability standards
for the supplier network. This includes compliance
with internationally recognised human rights and
applicable labour and social standards. The principal
means for ensuring compliance with the Sustainability
Standard is a three-stage risk management system for
sustainability. In addition, the technical and financial
capabilities of suppliers are monitored, especially
where modular-based production is concerned.
Supplier sites are assessed for exposure to natural
hazards, such as floods or earthquakes, in order to
identify supply risks at an early stage and implement
appropriate precautions. Fire risks at series suppliers
are evaluated by means of questionnaires and selective
site inspections. In order to minimise supply risks, the
BMW Group draws up measures to reduce the use of
raw materials or to substitute alternative raw materials.
Medium
Report on Outlook,
Risks and
Opportunities
Risks and opportunities relating to
sales and marketing
Combined
Management
Report
→ Risks and
Opportunities
In order to sell its products and services, the
BMW Group employs a global sales network, com-
prising primarily independent dealerships, branches,
subsidiaries and importers. Any threat to the contin-
ued activities of parts of the sales network would entail
risks for the BMW Group. The occurrence of sales
and marketing risks is associated with a low earnings
impact over the two-year assessment period. The risk
amount is classified as low.
ment team.
Information, data protection and IT
Increasing digitalisation across all areas of business
places considerable demands on the confidentiality,
integrity and availability of electronically processed
data and the associated use of information technology
(IT). In addition to the increased threat of cybercrime,
regulations covering the handling of personal data are
becoming more stringent, for example as a result of
the EU General Data Protection Regulation. If risks
relating to information security, data protection and
IT were to materialise, they could have a high earnings
impact over the two-year assessment period. Despite
extensive security measures, the risks in this area are
classified as high.
In addition to cyber attacks and direct physical
intervention, lack of awareness or misconduct on
the part of employees may also represent a danger
to the confidentiality, integrity and availability of
information, data and systems. Direct consequences
include expenditure required for rapid information,
data and systems recovery. Negative impacts on oper-
ational performance due to the non-availability of
products and services or disruptions in the production
of components or vehicles are also possible. A further
indirect result could be reputational damage.
Great importance is attached to the protection of the
confidentiality, integrity and availability of business
information as well as employee and customer data,
for instance against unauthorised access or misuse.
Data security is an integral component of business
processes and is aligned with the International
Standard ISO/IEC 27001. As part of risk management,
information security, data protection and IT risks are
systematically documented, allocated appropriate
measures by the departments concerned and contin-
uously monitored with regard to threat level and risk
mitigation. Regular analyses and controls as well as
rigorous security management ensure an appropriate
level of security. Despite continuous testing and
preventative security measures, it is impossible to
eliminate risks completely in this area. All employees
are required to treat with care information such as
confidential business, customer and employee data,
to use information systems securely and handle
risks with transparency. Group-wide requirements
are documented in a comprehensive set of principles,
guidelines and instructions, such as, for example, the
Privacy Corporate Rules for handling personal data.
Regular communication and awareness-raising meas-
ures create a high level of security and risk awareness
among those involved. Employees receive training
to ensure compliance with the legal requirements
and internal rules. With regard to cooperations and
business partnerships, the BMW Group protects its
intellectual property as well as customer and employ-
ee data through clear instructions on information
security and data protection and the use of informa-
tion technology. Information pertaining to key areas of
expertise as well as sensitive personal data are subject
to particularly stringent security measures. Technical
data protection incorporates industry-wide standards
and good practices. Responsibility for information
security and data protection lies for each Group entity
with the Board of Management or relevant manage-
104
With the advance of digitalisation, the BMW Group
is improving the customer experience and its existing
lines of business. At the same time, new digital busi-
ness segments are emerging, which are mainly focused
on information technology. The development and
provision of digital services for customers, increased
vehicle connectivity and autonomous driving solu-
tions are opening up new opportunities. Through
BMW ConnectedDrive and BMW CarData the range of
services and apps on offer to customers is constantly
being expanded and updated. The BMW Group
expects these opportunities to have no significant
earnings impact over the assessment period compared
to the assumptions made in the outlook.
105
New developments in the field of digital communi-
cation and connectivity in particular offer new oppor-
tunities for the BMW Group's brands. BMW CarData
has made it possible since 2017 to provide customised
service offers to BMW drivers based on data from the
vehicle. If customers wish to use a specific service
and actively consent to the release of their telematics
data, requesting companies receive the data they need
for the service in encrypted form via BMW's secure
backend database. This information provides the basis
for customised, data-driven and innovative service
solutions. Additional opportunities could arise if new
sales channels contribute to greater brand reach to
customer groups than currently envisaged in the
outlook. Digital communication and connectivity
enables consumers to be reached on a more targeted
and individualised basis, thus strengthening long-
term relationships and brand loyalty. This can lead
to a more intense product and brand experience for
customers, which could lead to higher sales volume
and have a positive impact on revenues and earn-
ings. The BMW Group invests in advanced marketing
concepts in order to intensify customer relationships.
The BMW Group estimates the earnings impact as
insignificant over the two-year assessment period as
compared to the assumptions made in the outlook.
103
New opportunities are continuously being sought to
create even greater added value for customers than
currently expected, and thereby to realise significant
opportunities with respect to sales growth and pricing.
Further development of the product and mobility port-
folio and expansion in growth regions offer the most
important medium- to long-term growth opportunities
for the BMW Group. Continued growth depends above
all on the ability to develop innovative products and
bring them to market. The range of services on offer
was further expanded in 2017, particularly in the area
of electric mobility. ChargeNow customers have access
to more than 130,000 charging points in 29 countries.
A new digital business field was created under the
name BMW Energy Services. The BMW Group expects
these opportunities to have no significant earnings
impact over the two-year assessment period compared
to the assumptions made in the outlook.
The BMW Group sees opportunities in production
processes and technology fields primarily through
the competitive edge gained from mastering new and
complex technologies. Opportunities could arise as a
result of further technological innovations related to
products or processes, as well as from organisational
changes which improve efficiency or increase com-
petitiveness. For example, the BMW Group has been
using since 2017 a fully automated quality control
system in the paint shop newly opened in 2017 at the
BMW Group plant in Munich. The data obtained pro-
vides valuable feedback on the precision of upstream
painting processes. These can be continuously opti-
mised, potential sources of error promptly identified
and rework avoided. Given the long lead times in
developing new products and processes, additional
opportunities within the reporting period are con-
sidered insignificant for the results of operations of
the BMW Group.
Further risks can result from the tightening of existing
import and export regulations. These lead primarily
to additional expenses, but can also restrict imports
and exports of vehicles or parts.
101
102
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
An established regulatory framework for innovative
mobility solutions as well as government incentives
are important prerequisites for introducing product
innovations, such as autonomous driving, and for
scaling up the range of electric mobility offerings. For
BMWi and iPerformance vehicles with alternative
drivetrain systems a faster expansion of charging
infrastructure could increase acceptance and help
boost sales of planned or recently introduced prod-
uct innovations compared to forecast. This includes
implementation of the 360° ELECTRIC portfolio in
the field of electric mobility and collaboration with
Toyota on hydrogen fuel cell technology.
The BMW Group's earnings could also be positively
affected in the short to medium term by changes in
trading policies. A possible reduction in tariff barriers,
import restrictions or direct excise duties could lower
the cost of materials for the BMW Group, and enable
products and services to be offered to customers at
lower prices. Further opportunities for the earnings
performance of the BMW Group from changes in
legislation and regulatory requirements compared
to the outlook are classified as insignificant.
Market development
In addition to the economic factors and sector-specific
political conditions, increasingly fierce competition
among established manufacturers and the emergence
of new competitors could also have effects which are
difficult to predict. Unforeseen consumer preferences
and changes in brand perceptions can give rise to
opportunities and risks. If market risks were to mate-
rialise, they could have a high earnings impact over
the two-year assessment period. The risk amount is
classified as high.
Intense competition, particularly in Western Europe,
the USA, China, Japan and Korea is a potential cause
for lower demand and for fluctuations in the regional
distribution and composition of demand for BMW,
MINI and Rolls-Royce brand vehicles and for mobility
services. Greater competition could put pressure on
selling prices and margins. Changes in customer
behaviour can also be brought about by changes in
attitudes, values, environmental factors and fuel or
energy prices. For example, the ongoing political and
public discussion on diesel engines could adversely
affect demand for diesel vehicles. At the same time,
however, this could lead to increased demand for vehi-
cles with petrol engines or alternative drivetrains. In
order to determine price and margin risks, a scenario
approach is used. The BMW Group's flexible sales and
production processes enable risks to be reduced and
newly arising opportunities in market and product
segments to be taken.
Local restrictions affecting product usage in specific
sectors may limit BMW Group sales in individual mar-
kets. In some urban areas, for instance, local measures
have been, or are being, introduced, including entry
restrictions, congestion charges or, in some situations,
highly restrictive registration rules. These may affect
local demand for the BMW Group vehicles affected
and hence have a negative impact on sales, margins
and, possibly, the residual value of these vehicles. The
BMW Group addresses this risk by offering locally
emissions-free vehicles, such as the BMW i3, which
benefit from state subsidies and exemptions.
106
Risks and opportunities relating to operations
Risks and opportunities relating to production
and technologies
Risks relating to production processes and technology
fields are particularly apparent in potential sources
of interruptions in production or additional costs to
comply with quality standards under changed market
conditions. If risks arising from production processes
and technologies were to materialise, they could have
a high earnings impact over the two-year assessment
period. The corresponding risk amounts are classified
as medium. By dealing with risk issues at the planning
stage and taking appropriate measures, the risk has
been reduced.
Production stoppages and downtimes due to fire,
machine and tooling breakdowns, IT disruptions,
damage to infrastructure, power failures, transporta-
tion and logistical disruptions represent risks which
the BMW Group addresses through appropriate pre-
cautions. Production structures and processes are
designed from the outset with measures to minimise
potential damage and the probability of occurrence.
Measures taken include technical fire protection,
land development with regard to flooding risks when
facilities are expanded or new buildings added, inter-
changeability of production facilities, preventative
maintenance, management of spare parts across sites,
and predictive planning of transportation alterna-
tives. Risk is also reduced through flexible working
hour models and working time accounts as well as
the ability to build individual split models or engine
types at other sites within the production network.
As a result, backlogs arising from production inter-
ruptions can be quickly recovered. Risks arising from
interruptions and production downtime due to fire are
also appropriately covered with insurance companies
of good credit standing.
In order to meet high standards in product quality and
achieve favourable external ratings (e.g. for product
safety), reduce statutory and non-statutory warranty
obligations and keep down follow-up costs arising
from other changes in planning assumptions, it may
be necessary to incur a higher level of expenditure
than originally forecast. In addition, availability of
products may be limited, particularly at the start of
production of new vehicles. These risks are mitigated
through regular audits and the continual improve-
ment of quality management, which ensures the high
standard of quality. The BMW Group also recognises
appropriate accounting provisions for statutory and
non-statutory warranty obligations. These reduce
the risk to earnings, as they are already taken into
account in the outlook. Further information on risks
related to provisions for statutory and non-statutory
warranty obligations is provided in → note 31 of the → see
Group Financial Statements.
note 31
Risks and opportunities relating to purchasing
Purchasing risks relate primarily to supply risks caused
by the failure of a supplier as well as risks associated
with the quality of bought-in parts. Production prob-
lems incurred by suppliers could lead to increased
expenditure for the BMW Group through to interrup-
tions in production and a corresponding reduction
in sales. The increasing complexity of the supplier
network, especially at the level of lower tier suppliers,
whose operations can only be indirectly influenced
by the BMW Group, is a further potential cause of
downtimes at supplier locations. The increased threat
of IT attacks on the supplier network in particular
has resulted in a more critical assessment of the
risk situation. If purchasing risks materialised, they
could have a high earnings impact over the two-year
period. The risk amount attached to purchasing risks
is classified as high.
Combined
Management
Report
Operational currency management is based on the
results of currency risk analyses. The BMW Group
manages currency risks at both strategic (medium
and long term) and operational level (short and
medium term). Medium- and long-term measures
include increasing production volumes and purchase
volumes in foreign currency regions (natural hedging).
Currency risks are managed in the short to medi-
um term and for operational purposes by means of
hedging on financial markets. The principal objective
of this currency management process is to increase
planning reliability for the BMW Group. Hedging
transactions are entered into only with financial
partners of good credit standing. Opportunities are
also secured through the use of options during specific
market phases.
→ Risks and
Credit and counterparty risks and opportunities
relating to the Financial Services segment
Credit and counterparty default risk arises within the
Financial Services segment if a contractual partner
(e.g. a customer or dealer) either becomes unable or
only partially able to fulfil its contractual obligations,
so that lower income is generated or losses incurred.
If credit and counterparty risks were to materialise,
they could have a medium earnings impact over
the two-year assessment period. The risk amount
is classified as medium. The BMW Group classifies
potential opportunities in this area as significant.
As part of its credit and counterparty risk manage-
ment, the Financial Services segment uses rating
systems in order to assess the creditworthiness of
its contractual partners. Credit risks are managed at
the time of the initial credit decision on the basis of a
calculation of the present value of standard risk costs
and subsequently, during the term of the credit, by risk
provisioning to cover risks resulting from changes in
customer creditworthiness. Individual customers are
hereby classified by category each month on the basis
of their current contractual status, and appropriate
levels of allowance recognised in accordance with
that classification. If macroeconomic developments
are more favourable than assumed in the outlook,
credit losses may be reduced, leading to a positive
earnings impact.
108
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
Residual value risks and opportunities relating
to the Financial Services segment
times.
Risks and opportunities arise in conjunction with
leasing contracts if the market value of a leased vehicle
at the end of the contractual term of a lease differs
from the residual value estimated at the inception
of the lease and factored into the lease payments. A
residual value risk exists if the expected market value
of the vehicle at the end of the contractual term is
lower than its estimated residual value at the date
the contract is entered into. If residual value risks
were to materialise, they could have a high earnings
impact from the Group's perspective over the two-
year assessment period. A high and medium earnings
impact would then arise for the affected Financial
Services and Automotive segments, respectively. The
risk amount is classified as medium for the Group
as a whole. Opportunities can arise out of a positive
deviation between the actual market value and the
original residual value forecast. The BMW Group
classifies potential residual value opportunities as
significant.
Interest rate risks and opportunities relating
to the Financial Services segment
Interest rate risks in the Financial Services segment
relate to potential losses caused by changes in market
interest rates. These can arise when fixed interest
rate periods do not match for assets and liabilities
recognised in the balance sheet. If risks relating to
interest rate risks were to materialise, they could
have a medium earnings impact over the two-year
assessment period. The risk amount is classified as
low. The BMW Group classifies potential interest rate
opportunities compared to the outlook as significant.
Interest rate risks in the Financial Services business
are managed by matching maturities for refinancing
and by employing interest-rate derivatives. If the
relevant recognition criteria are fulfilled, derivatives
used by the BMW Group are accounted for as hedging
instruments. Further information on risks in con-
junction with financial instruments is provided in
→ note 37 of the Group Financial Statements.
→ see
note 37
Operational risks in the Financial
Services segment
Operational risks are defined in the Financial Services
segment as the risk of losses arising as a consequence
of unsuitability or failure of internal procedures (pro-
cess risks), people (personnel-related risks), systems
(infrastructure and IT risks) and external events
(external risks). The recording and measurement of
risk scenarios, loss events and countermeasures in
the operational risk management system provide the
basis for a systematic analysis and management of
potential or materialised operational risks. Annual
self-assessments are also carried out. If operational
risks were to materialise, they would be likely to have
a low earnings impact over the two-year assessment
period. The risk amount is classified as low.
Stable
Each vehicle's estimated residual value is calculated
on the basis of historical external and internal data.
This estimation provides the expected market value
of the vehicle at the end of the contractual period. As
part of the management of residual value risks, the
net present value of risk costs is calculated at con-
tract inception. Market developments are observed
throughout the contractual period and the risk assess-
ment updated.
The segment's total risk exposure was covered at all
times during the 2017 financial year by the available
risk-covering assets. As a result, the Financial Services
segment's risk-bearing capacity was assured at all
The categories of risk relating to financial services
comprise credit and counterparty risk, residual value
risk, interest rate risk, operational risks and liquidity
risk. Evaluation of liquidity risk for the Financial
Services segment is included in the liquidity risk
category for the Group as a whole.
the Financial Services segment
Opportunities
Financial risks and risks relating to the use of
financial instruments
Currency risks and opportunities
As an internationally operating enterprise, the
BMW Group conducts business in a variety of cur-
rencies, thus giving rise to currency risks and oppor-
tunities. A substantial portion of Group revenues,
purchasing and funding occur outside the eurozone
(particularly in China and the USA). Cash-flow-at-risk
models and scenario analyses are used to measure cur-
rency risks and opportunities. If currency risks were
to materialise, they could be associated with a high
earnings impact over the two-year assessment period.
The risk level attached to currency risks is medium.
Significant opportunities can arise if currency devel-
opments are favourable for the BMW Group.
At present, the BMW Group sees increasingly restric-
tive vehicle emissions regulations, particularly for
conventional drivetrain systems, not only in the devel-
oped markets of Europe and North America, but also
in growth markets such as China. The introduction of
new measurement procedures to represent standard
driving cycles, combined with significantly lower
emissions thresholds, represents a major challenge
for the automotive sector. The BMW Group is address-
ing this risk with its Efficient Dynamics concept and
is playing a pioneering role in reducing both fuel
consumption and emissions within the premium
segment. The product range has been increasingly
expanded with electric drivetrain systems in BMWi
vehicles since 2013 and plug-in-hybrid technologies in
a growing number of series models since 2015. These
technologies have contributed to fulfilment of legal
requirements with regard to CO2 emissions.
Risks and opportunities relating to raw materials
As a large-scale manufacturing company, the
BMW Group is exposed to purchase price risks, par-
ticularly in relation to raw materials used in vehicle
production. The analysis of raw material price risk
is based on planned purchases of raw materials and
components containing those raw materials. If risks
relating to raw material prices were to materialise, they
would likely have a low earnings impact over the two-
year assessment period. A low risk level is attached
to these risks. Significant opportunities could arise
if raw material prices developed favourably for the
BMW Group.
Changes in commodity prices are monitored on the
basis of a well-defined management process. The
principal objective is to increase planning reliability
for the BMW Group. Price fluctuations for precious
metals (platinum, palladium, rhodium), non-ferrous
metals (aluminium, copper, lead, nickel) and, to some
extent, for steel and steel ingredients (iron ore, coking
coal) and energy (gas, electricity) are hedged using
financial derivatives or supply contracts with fixed
pricing arrangements.
Liquidity risks
Based on the experience of the financial crisis, a
minimum liquidity concept has been developed and
is rigorously adhered to. Use of the "matched funding
principle" to finance the Financial Services segment's
operations eliminates liquidity risks to a large extent.
Solvency is assured at all times throughout the
BMW Group by maintaining a liquidity reserve and
by the broad diversification of refinancing sources.
Regular measurement and monitoring ensure that
cash inflows and outflows for the various maturities
and currencies offset each other. This approach is
incorporated in the BMW Group's target liquidity
concept. The liquidity position is monitored contin-
uously and managed through Group-wide planning
of financial requirements and funding. A diversified
refinancing strategy reduces dependency on any spe-
cific type of instrument. Moreover, the BMW Group's
solid financial and earnings position results in high
credit ratings from internationally recognised rating
agencies. A description of the methods applied for
risk measurement and hedging in conjunction with
currency and commodity risks is provided in → note 37
of the Group Financial Statements. If the relevant
recognition criteria are fulfilled, derivatives used by
the BMW Group as hedges are generally accounted for
as hedging relationships. Further information on risks
in conjunction with financial instruments is provided
→ see in → note 37 of the Group Financial Statements.
→ see
note 37
note 37
17
107
Risks and opportunities relating to
pension obligations
Pension obligations are influenced in particular by
fluctuations of market yields on corporate bonds, as
well as by other economic and demographic para-
meters. Opportunities and risks arise depending
on changes in these parameters. If risks relating to
pension obligations materialised, they could have a
high earnings impact over the two-year assessment
period. The risk amounts relating to pension obliga-
tions are classified as medium. Within a favourable
capital market environment, the return generated by
growth-oriented pension assets may exceed expecta-
tions and reduce the deficit of the relevant pension
plans. This could have a significantly favourable
impact on the net asset position of the BMW Group.
Future pension payments are discounted on the basis
of market yields on high-quality corporate bonds.
These yields are subject to market fluctuation and
therefore influence the level of pension obligations.
Changes in other parameters, such as rises in infla-
tion and longer life expectancy, also impact pension
obligations and payments. The BMW Group's pension
obligations are mainly held in external pension funds
or trust arrangements with the related assets legally
separated from those of the Group. The amount of
funds required to finance pension payments out
of operations in the future is substantially reduced
by the fact that the Group's pension obligations
are mainly settled out of pension fund assets. The
pension assets of the BMW Group comprise interest-
bearing securities, equities, real estate and other
investment classes. Assets held by pension funds and
trust arrangements are monitored continuously and
managed on a risk-and-return basis. Diversification
of investments also helps to mitigate risk. In order
to reduce fluctuations in pension funding shortfalls,
investments are structured to match the timing of
pension payments and the expected development of
pension obligations. Remeasurements on the liability
and fund asset sides are recognised net of deferred
taxes in other comprehensive income and hence
directly in equity (within revenue reserves).
Further information on risks in conjunction with
pension provisions is provided in → note 30 of the
Group Financial Statements.
→ see
note 30
Risks and opportunities relating to
Report on Outlook,
Risks and
Opportunities
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
The sudden introduction of more stringent legislation
and regulations, particularly with regard to emissions,
safety and consumer protection and regional vehicle-
related purchase and usage taxes, represents a signif-
icant risk for the automobile industry. Country- and
sector-specific trade barriers can also change at short
notice. A sudden tightening of regulations in any of
these areas can necessitate significantly higher invest-
ments and ongoing expenses or influence customer
behaviour. Risks from changes in legislation and
regulatory requirements could have a medium impact
on earnings over the two-year assessment period. The
risk amount attached to these risks is classified as
high. In particular, risks arising from the tightening
of emission laws have resulted in the assessment of
the risk level being raised.
The major part of the Financial Services segment's
credit financing and leasing business is refinanced
on capital markets. Liquidity risks may arise in the
form of rising refinancing costs or from restricted
access to funds as a consequence of the general market
situation or the failure of individual banks. If liquidity
risks were to materialise, they would be likely to have
a low earnings impact over the two-year assessment
period. The risk amount associated with liquidity risk,
including the risk of the BMW Group's credit rating
being downgraded, which would lead to an increase
in financing costs, is classified as low.
The BMW Group addresses macroeconomic risks pri-
marily by internationalising its sales and production
structures, in order to minimise the extent to which
earnings depend on risks in individual countries
and regions. Flexible sales and production processes
within the BMW Group increase the ability to react
quickly to regional economic developments.
High
Market developments
Stable
Insignificant
Increased
High
Changes in legislation and regulatory requirements
Strategic and sector risks and opportunities
Stable
Insignificant
Stable
Stable
Macroeconomic risks and opportunities
to prior year
Change compared
Opportunities
classification
Change compared
to prior year
classification
Risks
RISKS AND OPPORTUNITIES
Risks and opportunities which could, from today's
perspective, have a significant impact on the results
of operations, financial position and net assets of the
BMW Group are described below.
7
High
Overall, no risks which could threaten the continued
existence of the BMW Group were identified either
at the balance sheet date or at the date on which the
Group Financial Statements were drawn up.
Stable
Production and technology
Foreign currencies
Should the global economy develop significantly better
than presented in the outlook, macroeconomic oppor-
tunities could arise for the BMW Group's revenues
and earnings. Significantly stronger GDP growth in
China, consumer-oriented reforms within the euro-
zone, a cancellation of Brexit plans and intensified
trade relations between the EU and the UK, growth
stimulus through the tax reform in the USA or more
robust consumer spending in emerging markets due to
rising raw material prices could result in significantly
stronger sales volume growth, reduced competitive
pressures and corresponding improvement in pricing.
Macroeconomic opportunities that could generate a
sustainable impact on earnings are currently classified
by the BMW Group as insignificant.
Financial risks and opportunities
Stable
Insignificant
Stable
High
Stable
Insignificant
Stable
Risks and opportunities relating to operations
Low
Insignificant
Increased
High
Stable
Insignificant
Decreased
Medium
Information, data protection and IT
Sales and marketing
Purchasing
Stable
The following table provides an overview of all risks
and opportunities and indicates their significance for
the BMW Group.
Insignificant
Significant
Low
Stable
Significant
Stable
Operational risks
Low
Stable
Legal risks
Medium
99
100
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
Macroeconomic risks and opportunities
Economic conditions influence business performance
and hence the results of operations, financial position
and net assets of the BMW Group. Unforeseen dis-
ruptions in global economic relations can have highly
unpredictable effects. Macroeconomic risks can lead
to reduced purchasing power in the countries and
regions affected and lead to reduced demand for the
products and services offered by the BMW Group.
Macroeconomic risks could - due to sales volume
fluctuations have a high earnings impact over the
two-year assessment period. Overall, the risk amounts
attached to macroeconomic risks are classified as high.
Macroeconomic risks are evaluated on the basis of
historical data and by means of a cash-flow-at-risk
approach, supplemented by scenario analyses.
In view of the political events of recent years, global
economic developments continue to be subject to a
high degree of uncertainty, in particular with respect
to potential barriers to global trade. For example, a
reorientation of the USA's economic policy, the
planned exit of the UK from the EU and possible elec-
tion wins for anti-globalisation parties in EU countries
could result in higher tariff and non-tariff barriers to
trade in the coming years.
A possible introduction of trade barriers, including
anti-dumping customs duties, by the US adminis-
tration could have an adverse impact on the
BMW Group's operations through less favourable
conditions for importing vehicles. Moreover, counter-
measures by the USA's trading partners could slow
down global economic growth and have an adverse
impact on the export of vehicles produced in the USA.
The BMW Group's "production follows the market"
strategy involves local production both in the USA
and with other important trade partners. Regional
production reduces the existing risk of trade barriers.
Nevertheless, any increase in trade barriers would
have an adverse impact on the BMW Group.
The planned Brexit could have a long-term adverse
impact on the BMW Group, particularly as a result of
increased trade barriers in the form of customs duties
in relation to the European single market. Any such
trade barriers could have a negative impact on volumes
and costs both for vehicles and components produced
in the EU for the UK as well as those produced in
the UK for the European market. In extreme cases,
this could lead to interruptions in production due
to the processing of customs formalities. In addition,
Brexit could lead to reduced customer spending in the
wake of weaker economic performance, particularly
in the UK. In the short and medium term, uncertainty
regarding the outcome of the negotiations with the
EU could exacerbate these factors and cause further
negative currency effects. A possible further economic
downturn within the EU could also potentially reduce
growth prospects for the BMW Group. European inte-
gration with a unified economic and currency area is
an important pillar of economic stability in Europe.
Risks and opportunities
The ongoing transition in China from an invest-
ment-driven to a consumer-driven economy is
associated with slower growth rates and potentially
greater instability on financial markets. If the Chinese
economy were to grow at a significantly slower pace
than expected, the consequence would be not only
a decline in automobile sales, but also, potentially,
lower demand for raw materials, which would have a
negative impact above all on emerging economies such
as Brazil, Russia or South Africa. Any further drop in
raw material prices could result for the BMW Group
in lower demand from these countries. Turmoil on
the Chinese property, stock and banking markets
and an overly rapid increase in interest rates by the
US Federal Reserve could pose considerable risks for
global financial market stability.
Furthermore, increasing political unrest, military
conflicts, terrorist activities, natural disasters or
pandemics could have a lasting negative impact on
the global economy and international capital markets.
Interest rate changes
Stable
Stable
Significant
Stable
Raw materials
Low
Stable
Significant
Stable
Liquidity
Stable
Pension obligations
Medium
Stable
Low
Stable
Risks and opportunities relating to the provision of financial services
Credit risk
Medium
Stable
Significant
Stable
Residual value
Significant
Stable
Medium
-1,214
720
670
675
9
4
27
Other operating expenses
9
616
Other operating income
474
-256
-7,604
-7,927
-9,158
-9,560
8
Selling and administrative expenses
-1,639
430
18,721
16,315
15,451
-847
-256
-1,200
10
-15
-530
19,934
-489
-412
Interest and similar expenses
260
325
196
201
10
Interest and similar income
441
738
441
738
22
Result from equity accounted investments
187
207
7,695
7,863
9,386
9,880
Profit/loss before financial result
-14
-768
Gross profit
Segment Information
-70,973
STATEMENT OF COMPREHENSIVE INCOME
INCOME STATEMENT
BMW GROUP
prehensive Income
→ Statement of Com-
Income Statement
→ BMW Group
Statements
Group
Financial
118
Notes
Balance Sheet
Cash Flow
Statement
Income
Income Statement
Statement of
Comprehensive
Group Financial
Statements
3
3
→ Page 188 List of Investments at 31 December 2017
Notes to the Statement of Comprehensive Income
Notes to the Balance Sheet
→Page 183
Other Disclosures
→Page 167
→ Page 146
→ Page 145
-673
Income Statements for Group and Segments
-1,809
→ 63
Automotive
-72,266
-75,442
-78,744
7
Cost of sales
2,069
2,283
86,424
88,581
94,163
98,678
6
Revenues
2016
2017
2016
information)
Motorcycles
(unaudited supplementary
2017
2016
2017
Note
information)
Group
(unaudited supplementary
in € million
-2
630
Financial result
40
39
Available-for-sale securities
529
-1,329
475
Items not expected to be reclassified to the income statement in the future
-218
Deferred taxes
-1,858
693
30
Remeasurement of the net defined benefit liability for pension plans
6,910
8,706
Net profit
2016
2017
Note
in € million
→ 64
Statement of Comprehensive Income for Group
10.47
13.14
13
Diluted earnings per share of preferred stock in €
Financial instruments used for hedging purposes
10.45
1,914
Other comprehensive income from equity accounted investments
6,674
9,250
29
Total comprehensive income attributable to shareholders of BMW AG
47
86
Total comprehensive income attributable to minority interests
6,721
9,336
Total comprehensive income
-189
→Page 139
17
Other comprehensive income for the period after tax
1,140
155
Items expected to be reclassified to the income statement in the future
-230
-1,171
Currency translation foreign operations
-721
-597
Deferred taxes
43
-30
2,008
Other financial result
13.12
Diluted earnings per share of common stock in €
-63
-2,475
-3,415
-2,755
-1,949
12
185
205
7,916
8,691
9,665
10,655
-2
-2
221
828
279
775
193
295
131
248
11
Income taxes
Profit/loss before tax
-53
13
Net profit/loss
6,910
Dilutive effects
10.47
13.14
13
Basic earnings per share of preferred stock in €
10.45
13.12
13
Basic earnings per share of common stock in €
132
142
5,431
5,254
6,863
8,620
29
10
22
47
86
Attributable to minority interest
132
142
5,441
5,276
8,706
→ Page 126
Attributable to shareholders of BMW AG
Notes to the Income Statement
Indirect share of
Direct share of
voting rights
3 Controlled entities, of which 3% or more are attributed: Johanna Quandt GmbH & Co. KG für Automobilwerte.
4 Controlled entities, of which 3% or more are attributed: Susanne Klatten Beteiligungs GmbH.
2 Controlled entities, of which 3% or more are attributed: AQTON SE.
1 Based on voluntary notifications provided by the listed shareholders as at 31 December 2017.
Susanne Klatten Beteiligungs GmbH, Bad Homburg v.d. Höhe, Germany
Susanne Klatten, Germany
Johanna Quandt GmbH & Co. KG für Automobilwerte, Bad Homburg v.d. Höhe, Germany
Johanna Quandt GmbH, Bad Homburg v.d. Höhe, Germany
AQTON SE, Bad Homburg v.d. Höhe, Germany
Stefan Quandt, Germany
voting rights
in %
Based on the information available to the Company, 1
10% of voting rights
Direct or indirect investments in capital exceeding
Contractual holding period arrangements also apply to
shares of common stock acquired by Board of Manage-
ment members and certain senior department heads
in conjunction with the share-based remuneration
programmes (Compensation Report of the Corporate
Governance section; → note 39 of the Group Financial
Statements).
When the Company issues non-voting shares of
preferred stock to employees in conjunction with its
Employee Share Programme, these shares are gener-
ally subject to a company-imposed blocking period
of four years, calculated from the beginning of the
calendar year in which the shares are issued.
As well as shares of common stock, the Company
has also issued non-voting shares of preferred stock.
Further information can be found in the section
"Composition of subscribed capital".
Restrictions on voting rights or the transfer
of shares
note 39
→ see
(c) uniform payment of any other dividends on
shares of common and preferred stock, provided
the shareholders do not resolve otherwise at
the Annual General Meeting
(b) payment of an additional dividend of €0.02 per
€1 par value on non-voting preferred shares
the following direct or indirect holdings exceeding
10% of the voting rights at the end of the reporting
period were held at the stated reporting date:¹
0.2
17.42
17.4
BMW AG is party to the following major agreements,
which contain provisions that would apply in the event
of a change in control or the acquisition of control as a
result of a takeover bid:
Significant agreements of the Company taking
effect in the event of change in control following a
takeover bid
In accordance with Article 4 no. 5 of the Articles of
Incorporation, the Board of Management is author-
ised, with the approval of the Supervisory Board, to
increase in return for cash contributions BMW AG's
share capital during the period until 14 May 2019 by
up to €3,654,383 for the purposes of an Employee
Share Programme by issuing new non-voting shares of
preferred stock, which carry the same rights as exist-
ing non-voting preferred stock (Authorised Capital
2014). Subscription rights of existing shareholders
are excluded. No conditional capital is in place at the
reporting date.
In accordance with the resolution passed at the
Annual General Meeting on 15 May 2014, the Board of
Management is also authorised up until 14 May 2019
to acquire shares of non-voting preferred stock of the
Company via the stock exchange, up to a maximum
of 1% of the share capital existing at the date of the
resolution. The consideration paid by the Company
per share of non-voting preferred stock (excluding
transaction costs) may not be more than 10% above
or below the market price of the stock determined
by the opening auction on the date of trading in the
Xetra trading system (or a successor system having a
comparable function). Moreover, the Board of Man-
agement is authorised to use the acquired own shares
of non-voting preferred stock for all legally admissible
purposes, specifically including the right to offer for
sale and transfer shares to persons employed by the
Company or one of its affiliated companies up to a
proportionate amount of €5 million of share capital.
The subscription rights of existing shareholders to the
new shares of preferred stock used for the purpose
stated above are excluded. The authorisations may
also be exercised in parts over several transactions.
The Board of Management is authorised to buy back
shares and sell repurchased shares in situations spec-
ified in § 71 AktG, for example to avert serious and
imminent damage to the Company and/or to offer
shares to persons employed or previously employed
by BMW AG or one of its affiliated companies.
particular with respect to the issuing or buying
back of shares
Authorisations of the Board of Management in
and Explanatory
Comments
for Takeovers
→ Disclosures Relevant
Combined
Management
Report
114
113
Amendments to the Articles of Incorporation must
comply with $179 ff. AktG. Amendments must be
decided upon by the shareholders at the Annual
General Meeting (§ 119 (1) no. 5, § 179 (1) AktG). The
Supervisory Board is authorised to approve amend-
ments to the Articles of Incorporation which only affect
its wording (Article 14 no. 3 of the Articles of Incorpo-
ration). Resolutions are passed at the Annual General
Meeting by simple majority of shares exercised unless
otherwise explicitly required by binding provisions of
law or, when a majority of share capital is required,
by simple majority of shares represented in the vote
(Article 20 no. 1 of the Articles of Incorporation).
Statutory regulations and Articles of Incorporation
provisions with regard to the appointment and
removal of members of the Board of Management
and changes to the Articles of Incorporation
The appointment or removal of members of the Board
of Management is based on the rules contained in
§ 84 ff. AktG in conjunction with § 31 of the German
Co-Determination Act (MitbestG).
Like all other shareholders, employees exercise their
control rights pertaining to shares they have acquired
in conjunction with the Employee Share Programme
and/or the share-based remuneration programme
directly on the basis of relevant legal provisions and
the Company's Articles of Incorporation.
Control of voting rights when employees
participate in capital and do not exercise their
control rights directly
There are no shares with special rights which confer
control rights.
Shares with special rights which confer control
rights
The voting percentages disclosed above may have
changed subsequent to the stated date if these changes
were not required to be reported to the Company.
As the Company's shares are issued to bearer, the
Company is generally aware of changes in sharehold-
ings only if such changes are subject to mandatory
notification rules.
12.6
12.64
0.2
16.4
16.43
accruement
(a) subsequent payment of any arrears on dividends
on non-voting preferred shares in the order of
The Company's shares of preferred stock are shares
within the meaning of § 139 ff. AktG, which carry a
cumulative preferential right in terms of the allocation
of profit and for which voting rights are excluded.
These shares confer voting rights only in exceptional
cases stipulated by law, in particular when the prefer-
ence amount has not been paid or has not been fully
paid in one year and the arrears are not paid in the
subsequent year alongside the full preference amount
due for that year. With the exception of voting rights,
holders of shares of preferred stock are entitled to
the same rights as holders of shares of common stock.
Article 24 of the Articles of Incorporation confers
preferential treatment to the non-voting shares of
preferred stock with regard to the appropriation of the
Company's unappropriated profit. Accordingly, the
unappropriated profit is required to be appropriated
in the following order:
The rights and duties of shareholders derive from the
German Stock Corporation Act (AktG) in conjunction
with the Company's Articles of Incorporation, the
full text of which is available at www.bmwgroup.com. The
right of shareholders to have their shares evidenced
is excluded in accordance with the Articles of Incor-
poration. The voting power attached to each share
corresponds to its par value. Each €1 of par value
of share capital represented in a vote entitles the
holder to one vote (Article 18 no. 1 of the Articles of
Incorporation).
INTERNAL CONTROL
From today's perspective, management does not see
any threat to the BMW Group's status as a going
concern. As in the previous year, identified risks are
considered to be manageable, but could - like the
opportunities - have an impact on the BMW Group's
outlook if they were to materialise. The BMW Group's
financial position is stable and cash needs are currently
covered by available liquidity and credit lines.
The overall risk assessment is based on a consolidated
view of all significant individual risks and opportuni-
ties. Exposure to risks in the individual risk categories
remains essentially stable. The combination of more
stringent emissions requirements worldwide and the
possibility that related laws and regulations may be
brought forward results in a higher risk level in that
area. In addition, the increased threat of IT attacks
in the supplier network has led to an increased esti-
mation of the risk in purchasing. By contrast, the risk
level for production has been reduced by the imple-
mentation of measures. Overall, there has been no
significant change in the overall risk or opportunities
level compared to the previous year.
opportunities situation
Overall assessment of the risk and
Process
Financial Reporting
System Relevant for
Accounting and
→ Internal Control
Opportunities
→ Risks and
Risks and
Opportunities
Report on Outlook,
Combined
Management
Report
110
109
The BMW Group recognises appropriate levels of
provision for lawsuits. In addition, a part of these
risks is insured where this makes business sense.
Some risks, however, either cannot be estimated or
only to a limited extent, or may lead to costs only in
an unlikely event. Such items are reported as contin-
gent liabilities. It cannot be ruled out, however, that
damages could arise that are either not covered or not
fully covered by insurance policies or provisions or
reported as contingent liabilities. In accordance with
IAS 37 (Provisions, Contingent Liabilities and Contin-
gent Assets), the required information is not provided
if the BMW Group concludes that disclosure of the
information could seriously prejudice the outcome of
the relevant legal proceedings. Further information
on contingent liabilities is provided in → note 36 of
the Group Financial Statements.
→ see
note 36
note 36
Possible risks for the BMW Group related to com-
petition and antitrust law cannot be predicted or
quantified at present. Further information on cur-
rent developments with regard to antitrust risks and
→ see contingent liabilities can be found in → note 36 of the
Group Financial Statements.
Like all entities with international operations, the
BMW Group is confronted with legal disputes, claims
relating to warranties and product liability or rights
infringements and proceedings initiated by govern-
ment agencies. Any of these could, amongst others,
have an adverse impact on the Group's reputation.
Such proceedings are essentially typical for the sector
or a consequence of realigning product or purchasing
strategies to changed market conditions. Particularly
in the US market, class action lawsuits and product
liability risks can have substantial financial conse-
quences and cause damage to the Group's public
image. More rigorous application or interpretation
of existing regulations could result in a greater number
of recalls. The high quality of the Group's products,
which is ensured by regular quality audits and ongoing
improvement measures, helps reduce this risk.
The increasing globalisation of the BMW Group's
operations and of business interdependencies in
general, combined with the variety and complexity
of legal provisions, including increasingly import and
export regulations, give rise to an increased risk of
non-compliance with applicable law. A Compliance
Management System is in place at BMW Group to
ensure that the representative bodies, managers and
staff consistently act in a lawful manner. Further
information on the BMW Group's Compliance
Management System can be found in the section
Corporate Governance.
Compliance with the law is a basic prerequisite for the
success of the BMW Group. Applicable law provides
the binding framework for the BMW Group's world-
wide activities. As a result of its global operations,
the BMW Group is exposed to various legal risks. If
legal risks were to materialise, they could have a high
earnings impact over the two-year assessment period.
The risk amount attached to significant identified legal
risks is classified as medium. However, it cannot be
ruled out that new legal risks, as yet unforeseen, could
materialise that could have a high earnings impact for
the BMW Group.
Legal risks
→ Page 126
SYSTEM* RELEVANT FOR
ACCOUNTING AND
-
FINANCIAL REPORTING
PROCESSES
-
The subscribed capital (share capital) of BMW AG
amounted to €657,600,600 at 31 December 2017
(2016: €657,109,600) and, in accordance with Article 4
no. 1 of the Articles of Incorporation, is subdivided
into 601,995,196 shares of common stock (91.54%)
(2016: 601,995,196; 91.61%) and 55,605,404 shares of
non-voting preferred stock (8.46 %) (2016: 55,114,404;
8.39%), each with a par value of €1. The Company's
shares are issued to bearer.
Composition of subscribed capital
EXPLANATORY COMMENTS $315 (1) HGB.
suant to § 289 a
(1) HGB and
*Disclosures pur-
FOR TAKEOVERS* AND
DISCLOSURES RELEVANT
and Explanatory
Comments
for Takeovers
→ Disclosures Relevant
Combined
Management
Report
112
111
Responsibilities for ensuring the effectiveness of the
internal control system in relation to individual entity
and Group accounting and financial reporting pro-
cesses are clearly defined and allocated to the relevant
line and process managers. These report annually on
their assessment of the effectiveness of the internal
control system for accounting and financial reporting.
The assessment also includes the results of inter-
nal and external audits as well as of ongoing data
analysis. In this context, the Group's units confirm
the effectiveness of the internal control system for
accounting and financial reporting. The results of
the assessment are gathered and documented with
the aid of tools. Weaknesses in the control system are
eliminated, taking into account their potential impact
on accounting processes. The Board of Management
and Audit Committee are briefed annually on the
assessment of the effectiveness of the internal control
system for accounting and financial reporting. The
Board of Management and, where applicable, the
Supervisory Board, are informed immediately in the
event of any significant changes in the effectiveness
of the internal control system.
As part of the ongoing development of accounting and
financial reporting processes at individual entity or
Group level, such controls are adapted to take account
of new requirements and opportunities arising with
advances in information technology. In addition, the
BMW Group uses data analysis tools to ensure that
any control weaknesses are quickly identified and
eliminated.
Controls are integrated into the accounting and finan-
cial reporting processes, at both individual entity and
Group level. These are both preventive and detective
in nature and take account, where appropriate, of
the principle of the separation of duties. Important
accounting-related IT systems incorporate controls
which, amongst others, prevent business transactions
from being recorded incorrectly and ensure that
business transactions are recorded completely and
measured properly in accordance with applicable
requirements. Controls are also in place to test the
appropriateness of consolidation procedures. The
recording of items requiring disclosure is also per-
formed largely through IT systems.
§ 289 (5) HGB
and § 315 (2)
no. 5 HGB.
pursuant to
*Disclosures
Guidelines for recognising, measuring and allocating
items to accounts are available to all employees via
the intranet. New accounting standards are assessed
for their impact on the BMW Group's accounting
and financial reporting. Accounting guidelines and
processes are reviewed continuously and revised at
least once a year or more frequently, if necessary.
The internal control system is subject to continuous
improvement, with system effectiveness assessed
regularly on the basis of centralised and decentralised
process analyses, analyses of data within the various
financial systems and audit procedures. The principal
features of the internal control system, as far as they
relate to individual entity and Group accounting and
financial reporting processes, are described below.
process-independent monitoring measures.
organisational measures incorporating the
principle of separation of duties, and
controls integrated into processes and
IT systems,
Group-wide mandatory accounting guidelines,
The internal control system relevant for accounting
and financial reporting processes has the task of
ensuring that accounting and financial reporting by
the BMW Group is both correct and reliable. Inter-
nationally recognised standards for internal control
systems have been taken into account in the design of
the components of the BMW Group's internal control
system. The system comprises:
An agreement concluded with an international
consortium of banks relating to a syndicated
credit line, which was not being utilised at the
balance sheet date, entitles the lending banks to
give extraordinary notice to terminate the credit
line, such that all outstanding amounts, includ-
ing interest, would fall due immediately if one or
more parties jointly acquire direct or indirect
control of BMW AG. The term control is defined
as the acquisition of more than 50% of the share
capital of BMW AG, or the right to receive more
than 50% of the dividend or the right to direct
the affairs of the Company, or appoint the major-
ity of the members of the Supervisory Board.
In addition to the risk categories described above,
unforeseen events could have a negative impact on
business operations and hence on the BMW Group's
results of operations, financial position and net assets,
and its reputation. A comprehensive risk management
system is in place to ensure that the BMW Group
successfully manages these risks.
115
and Explanatory
Comments
→ Disclosures Relevant
for Takeovers
Combined
Management
Report
116
-
The framework cooperation agreement entered
into amongst others by BMW AG and Sixt SE,
relating to the foundation and operation of the
car-sharing joint venture DriveNow, may be ter-
minated by Sixt SE if a car hire company acquires
more than 50% of the shares of common stock
of BMW AG. In the event of such a termination,
Sixt SE may, at its own discretion, stipulate the
sale of BMW's interest in the joint venture to
Sixt SE or the purchase of Sixt's interest in the
joint venture by BMW AG or one its subsidiaries.
On 29 January 2018, the BMW Group concluded
with Sixt SE a contract for the purchase of all
shares in DriveNow, which, subject to approval by
the antitrust authority, is expected to take effect
in March 2018. On completion, the framework
cooperation agreement ceases to be effective.
BMW AG was until 11 January 2018 party to an
agreement with SGL Carbon SE, Wiesbaden,
relating to the joint operations SGL Automotive
Carbon Fibers LLC, Delaware, USA and SGL
Automotive Carbon Fibers GmbH & Co. KG,
Munich. The agreement included call and put
rights in case - either directly or indirectly – 50%
or more of the voting rights relating to the rele-
vant other shareholder of the joint operations were
acquired by a third party, or if 25% of such voting
rights were acquired by a third party if that third
party was a competitor of the party unaffected
by the acquisition of the voting rights. In the event
of such acquisitions of voting rights by a third
party, the non-affected shareholder had the right
to purchase the shares of the joint operations from
the affected shareholder or to require the affected
party to acquire the other shareholder's shares.
This agreement was revoked on 11 January 2018 in
conjunction with the sale, on the same date, of
BMW Group's investment in SGL Automotive
Carbon Fibers GmbH & Co. KG, Munich to
SGL Carbon SE, Wiesbaden.
-
Notes to the Group Financial Statements
Accounting Principles and Policies
Several supply and development contracts
between BMW AG and various industrial custom-
ers, all relating to the sale of components for
drivetrain systems, grant an extraordinary right
of termination to the relevant industrial cus-
tomer in specified cases of a change in control
at BMW AG (for example BMW AG merges with
a third party or is taken over by a third party; an
automobile manufacturer acquires more than
50% of the voting rights or share capital of
BMW AG).
Financing agreements in place with the European
Investment Bank (EIB) entitle the EIB to request
early repayment of the loan in the event of an
imminent or actual change in control of
BMW AG, if the EIB has reason to assume - after
the change in control or 30 days after it has
made a request to discuss the situation - that the
change in control could have a significantly
adverse impact, or if the borrower refuses to hold
any such discussions. A change in control of
BMW AG arises if one or more individuals take
over or lose control of BMW AG, with control
being defined in the above-mentioned financing
agreements as (i) holding or having control over
more than 50% of the voting rights, (ii) the right
to appoint the majority of the members of the
Board of Management or Supervisory Board, (iii)
the right to receive more than 50% of dividends
payable or (iv) any other comparable controlling
influence over BMW AG.
Framework agreements are in place with financial
institutions and banks (ISDA Master Agreements)
relating to trading activities with derivative finan-
cial instruments. These agreements include an
extraordinary right of termination which triggers
the immediate settlement of all current trans-
actions in the event that the creditworthiness of
the party involved is significantly weaker follow-
ing a direct or indirect acquisition of beneficially
owned equity capital that confers the power to
elect a majority of the Supervisory Board of a con-
tractual party or any other ownership interest
that enables the acquirer to exercise control over
a contractual party, or which constitutes a
merger or a transfer of net assets.
BMW AG acts as guarantor for all obligations aris-
ing from the joint venture agreement relating to
BMW Brilliance Automotive Ltd. in China. The
agreement grants an extraordinary right of ter-
mination to either joint venture partner in the event
that - either directly or indirectly-
- 
more than 25%
of the shares of the other party are acquired by a
third party, or if the other party is merged with
another legal entity. The termination of the joint
venture agreement may result in the sale of the
shares to the other joint venture partner or in the
liquidation of the joint venture entity.
A cooperation agreement concluded with Peugeot
SA relating to the joint development and pro-
duction of a new family of small (1- to 1.6-litre)
petrol engines entitles each of the cooperation
partners to give extraordinary notification of
termination in the event of a competitor acquir-
ing control over the other contractual party and
if any concerns of the other contractual party
concerning the impact of the change of control
on the cooperation arrangements are not resolved
during the subsequent discussion
process.
BMW AG is party to the shareholder agreement
relating to THERE Holding B.V., which is the
majority shareholder of the HERE Group. In
accordance with the shareholder agreement,
each contractual party is required to offer its
directly or indirectly held shares in THERE
Holding B. V. for sale to the other shareholders
in the event of a change in control. A change
in control of BMW AG arises if a person takes over
or loses control of BMW AG, with control defined
as (i) holding or having control over more than
50% of the voting rights, (ii) the possibility to
control more than 50% of voting rights exercisable
at Annual General Meetings on all or nearly all
matters, or (iii) the right to determine the majority
of members of the Board of Management or the
Supervisory Board. Furthermore, a change in
control occurs if competitors of the HERE Group
or certain potential competitors of the HERE
Group from the technology sector acquire more
than 25% of BMW AG. If none of the other share-
holders acquire these shares, the other sharehold-
ers are entitled to resolve that THERE Holding B.V.
be dissolved.
The development collaboration agreement
between BMW AG, Intel Corporation and
Mobileye Vision Technologies Ltd., relating to
the development of technologies used in highly
and fully automated vehicles, may be terminated
by any of the contractual parties if a competitor
of one of the parties acquires and subsequently
holds at least 30% of the voting shares of one
of the contractual parties.
Compensation agreements with members of the
Board of Management or with employees in the
event of a takeover bid
The BMW Group has not concluded any compensation
agreements with members of the Board of Manage-
ment or with employees for situations involving a
takeover offer.
GROUP FINANCIAL
STATEMENTS
→Page 118 Income Statement
→ Page 118 Statement of Comprehensive Income
→Page 120 Balance Sheet
→Page 122 Cash Flow Statement
→Page 124 Statement of Changes in Equity
-
-
2016
54,316
2017
2016
information)
(unaudited supplementary
Eliminations
45,134
44,285
33
29
405
425
2017
-8,028
-7,345
2
3
35,008
35,749
-53,185
-54,475
24
5
152
178
97,306
1
32,113
30,228
1,531
1,504
1,163
55
44
797
1
96,766
-583
-2,635
-32,689
-31,778
7,160
6,585 -11,457
-11,223
48,321
48,032
176
221
1,089
1,780
-198
442
389
130
263
-1,724
3,082
3,093
26,628
27,120
2016
information)
(unaudited supplementary
Other Entities
6,530
487
442
Non-current provisions and liabilities
69,888
73,183
16,456
16,693
6,793
657
Other provisions
31
6,313
5,879
5,656
5,187
99
90
628
Current tax
5,357
34
5,039
4,980
4,570
101
103
Deferred tax
12
2,241
5,410
2,795
740
Financial liabilities
33
53,548
55,405
832
1,942
Other liabilities
1,446
32
1,124
1,074
56
Current provisions and liabilities
69,047
67,989
37,968
35,398
573
449
119
Total equity and liabilities
188,535
93,865
88,715
1,230
1,077
Financial Services
(unaudited supplementary
information)
2017
193,483
20,477
21,975
10,198
874
770
Financial liabilities
33
41,100
42,326
947
1,481
Trade payables
35
9,731
8,512
8,516
7,483
355
303
Other liabilities
34
10,779
5,331
5,417
-69,205 -67,305
3,046
Total equity and liabilities
82,795 -122,390 -121,780
82,950
137,728
137,828
Current provisions and liabilities
Trade payables
Other liabilities
Current tax
Financial liabilities
Other provisions
Non-current provisions and liabilities
Other liabilities
Deferred tax
Financial liabilities
Other provisions
Pension provisions
13,362 -69,702 -67,136
27,545 -70,009 -67,766
121
-630
122
Statements
2,670
2,558
Current tax
Reconciliation between net profit and cash inflow/outflow from operating activities
6,910
8,706
Net profit
2016
2017
Group
in € million
CASH FLOW STATEMENT
BMW GROUP
Cash Flow Statement
→ BMW Group
Group
Financial
Other interest and similar income/expenses¹
-307
15,607
11
13,167
28,811
36,328
601
38,506
1,516
356
353
4,302
6,755
38
13
48
17,819
17,718
35,095
28,835
29,413
198
51,384
-3,545
-198
-30,903
-34,646
14,107
24
-4,748
Minority interest
Equity
72,363
71,704
702
43,439
45,220
849
27,368
24,853
49
17
255
233
3
9
599
549
-583
-31,629
-36,960
1,856
65
Depreciation and amortisation of tangible, intangible and investment assets
Investments accounted for using the equity method
Other investments
Receivables from sales financing
Financial assets
Deferred tax
Other assets
Non-current assets
Inventories
Trade receivables
Receivables from sales financing
Financial assets
Current tax
Other assets
Cash and cash equivalents
Current assets
Total assets
EQUITY AND LIABILITIES
Leased products
Subscribed capital
Property, plant and equipment
ASSETS
45,963
18
1,329
894
44,782
-307
-630
-68,898 -66,675
40
41,062
40,422
47,942
47,046
36,037
137,828
137,728
82,950
82,795 -122,390 -121,780
Intangible assets
131
Capital reserves
Revenue reserves
Equity attributable to shareholders of BMW AG
85
-609
706
Change in deferred taxes
-8,368
-7,440
Change in receivables from sales financing
-2,526
-1,134
Change in leased products
883
696
Change in provisions
4,998
4,822
Other non-cash income and expense items
Accumulated other equity
-249
Gain/loss on disposal of tangible and intangible assets and marketable securities
14,740
11,049
18,102
16,744
-17,735
-17,054
72
77
5,437
Changes in working capital
-441
-738
Result from equity accounted investments
-4
-43
-15
31
ASSETS
83
3,079
2,327
1,927
12
1,287
1,302
2,705
Change in inventories
Financial Services
(unaudited supplementary
information)
2017
Other Entities
(unaudited supplementary
information)
4,310
2016
26
1,595
11,841
12,707
27
Inventories
439
477
42,652
42,835
121,671
121,901
Non-current assets
28
32
4,043
3,671
1,635
12,103
2017
(unaudited supplementary
-443
-712
-1,370
-1,294
-27
-30
20
26
96
35
130
110
-185
-118
-113
6
Eliminations
7
3,581
information)
2016
2017
2016
27,567
25,681
7
6
-19,760
-20,017
-23,986
-22,135
-
19,317
19,305
3,546
-103
11,344
492
EQUITY AND LIABILITIES
1,077
1,230
88,715
93,865
188,535
193,483
Total assets
638
753
46,063
51,030
66,864
71,582
Current assets
Subscribed capital
8
29
29
-41
47,108
54,112
114
44,445
2,047
2,084
51,256
657
658
22222
29
Equity attributable to shareholders of BMW AG
29
Accumulated other equity
29
Revenue reserves
Capital reserves
580
4,794
7,880
7,965
24
Financial assets
30,228
32,113
23
Receivables from sales financing
144
160
2,502
2,354
2,825
2,667
28
Trade receivables
7,065
7,157
5,578
Current tax
9,039
Cash and cash equivalents
2
5
21,561
23,124
5,087
5,525
26
Other assets
1,000
714
1,938
1,566
25
4,862
Other provisions
-96
210
19
9,464
8,157
8,981
7,705
57
46
Property, plant and equipment
20
18,471
17,960
18,050
17,566
388
365
Intangible assets
Leased products
2016
2016
at 31 December
BMW GROUP
AT 31 DECEMBER 2017
in € million
Automotive
(unaudited supplementary
information)
Group
Note
2017
2016
2017
Motorcycles
(unaudited supplementary
information)
2017
→ BMW Group
Balance Sheet
21
37,789
24
2,369
Equity
Pension provisions
436
54,548
255
47,363
39,441
36,624
30
3,252
4,587
2,405
2,911
69
48,032
36,257
48,321
2222
Investments accounted for using the equity method
22
2,767
2,546
2,767
2,546
Other investments
690
560
4,985
5,195
Receivables from sales financing
Financial assets
Deferred tax
Other assets
23
-103
Statements
120
11
-5
-58
-57
13
-18
66
187
-130
-109
2,207
2,166
80
170
-528
1,216
-772
1,116
-986
141
2,194
2,184
14
-17
-398
-663
12
11
1,110
1,250
-1,246
-1,325
-10
-24
-1,006
Group
Financial
1,840
-19
Gross profit
Selling and administrative expenses
Other operating income
Other operating expenses
Profit/loss before financial result
Result from equity accounted investments
Interest and similar income
Interest and similar expenses
Other financial result
Financial result
Profit/loss before tax
Income taxes
Net profit/loss
Attributable to minority interest
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
119
Revenues
Cost of sales
-389
-561
121
-49
-292
211
4,047
1,777
61
121
-820
-561
64
37
Minority interest
3,983
1,740
61
-820
Change in trade receivables
BALANCE SHEET
Change in other operating assets and liabilities
1
Dividends paid
Other comprehensive income for the period after tax
Comprehensive income 31 December 2017
Net profit
1 January 2017
-2,300
-2,300
630
9,336
86
9,250
1,437
41
-1,323
630
1
1,437
-1,323
8,706
86
8,620
47,363
255
47,108
78
52
-171
Total
interest
of BMWAG
instruments
41
Securities
37
16
6,910
47
17
6,863
42,764
234
42,530
-1,337
24
132
Total
interest
of BMW AG
Minority
37
Equity
attributable to
shareholders
Securities
translation
differences
Currency
Accumulated other equity
31 December 2017
54,548
436
54,112
1,515
93
-1,494
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
111
95
Derivative
financial
instruments
Minority
shareholders
financial
657
29
Revenue
reserves
reserves
capital
Note
Capital
Subscribed
31 December 2016
Premium arising on capital increase relating to preferred stock
Other changes
Subscribed share capital increase out of Authorised Capital
Dividends paid
Other comprehensive income for the period after tax
Comprehensive income 31 December 2016
Net profit
2,047
1 January 2016
31 December 2017
Premium arising on capital increase relating to preferred stock
Other changes
Subscribed share capital increase out of Authorised Capital
Dividends paid
Other comprehensive income for the period after tax
Comprehensive income 31 December 2017
Net profit
1 January 2017
in € million
STATEMENT OF CHANGES IN EQUITY
BMW GROUP
Changes in Equity
→ BMW Group
Statement of
Statements
Group
Financial
in € million
44,445
8,620
475
9,095
attributable to
Derivative
Currency
translation
differences
Equity
Accumulated other equity
44,445
2,047
657
29
-14
20
-2,102
5,534
-1,329
6,863
41,027
2,027
-2,300
37
16
29
658
2,084
-303
51,256
Subscribed
capital
Capital
reserves
Revenue
reserves
29
657
Change in trade payables
124
28
-189
Japanese Yen
Chinese Renminbi
British Pound
US Dollar
1 Euro =
The exchange rates of currencies which have a material
impact on the Group Financial Statements were as
follows:
are measured on initial recognition using the exchange
rate prevailing at the date of first-time recognition.
At the end of the reporting period, foreign currency
receivables and payables are measured using the clos-
ing exchange rate. The resulting unrealised gains and
losses, as well as realised gains and losses arising on
settlement, are recognised in the income statement.
In the single entity accounts of BMW AG and its sub-
sidiaries, foreign currency receivables and payables &
Foreign currency translation and measurement
The financial statements of consolidated companies
which are presented in a foreign currency are trans-
lated using the modified closing rate method. Under
this method, assets and liabilities are translated at the
closing exchange rate, whilst income and expenses are
translated at the average exchange rate. Differences
arising on foreign currency translation are presented
in "Accumulated other equity".
03
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
Statements
Group
Financial
128
Korean Won
127
187
21
31 December 2017
Included at
12
11
1
in 2017
No longer included
21
20
1
first time in 2017
Included for the
208
199
Closing rate
31.12.2017
Earnings per share are calculated as follows: Basic
earnings per share are calculated for common and
preferred stock by dividing the net profit after minority
interest, as attributable to each category of stock, by the
average number of outstanding shares. The net profit
is accordingly allocated to the different categories
of stock. The portion of the Group net profit for the
year which is not being distributed is allocated to each
category of stock based on the number of outstanding
shares. Profits available for distribution are determined
directly on the basis of the dividend resolutions passed
for common and preferred stock. Diluted earnings
per share are calculated and separately disclosed in
accordance with IAS 33.
Public sector grants are not recognised until there is
reasonable assurance that the conditions attaching to
them have been complied with and the grants will be
received. The resulting income is recognised in cost of
sales over the same periods as the costs occur which
they are intended to compensate.
Revenues relating to operating lease arrangements
are recognised on a straight-line basis over the lease
term. Interest income arising on finance leases and
on retail customer/dealership financing is recognised
using the effective interest method.
Profits arising on the sale of vehicles for which a
Group company retains a repurchase commitment
(buyback agreements) are not recognised immediately.
The difference between the sales and buyback price is
accounted for as deferred income and recognised in
instalments as revenue over the contract term.
If the sale of products includes a determinable amount
for services ("multiple-component contracts"), the
related revenues are deferred and recognised as
income over the service period. Amounts are normally
recognised as income by reference to the pattern of
related expenditure.
Revenues from the sale of products and services are
recognised when the risks and rewards of ownership
are transferred to the dealership or customer, provided
that the amount of revenue can be measured reliably,
it is probable that the economic benefits associated
with the transaction will flow to the entity and costs
incurred or to be incurred in respect of the sale can
be measured reliably. Revenues are stated net of set-
tlement discount, bonuses and rebates.
Accounting policies; assumptions, judgements
and estimations
04
1,283.86
1,276.47
1,274.34
120.25
126.68
123.34
Average rate
134.93
1,281.41
7.63
7.34
7.80
0.82
0.88
0.85
0.89
1.11
1.13
1.06
1.20
2016
2017
31.12.2016
7.35
178
21
31 December 2016
Notes to the Group
Statements
Group
Financial
126
125
31 December 2016
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
Dividends paid
Other comprehensive income for the period after tax
Comprehensive income 31 December 2016
Net profit
1 January 2016
47,363
255
47,108
Financial Statements
78
-171
20
-40
-26
-14
20
-2,102
-2,102
6,721
47
6,674
1,415
28
-303
-189
52
→ Accounting
Principles and
Policies
Included at
Total
Foreign
Germany
The following changes took place in the Group report-
ing entity in the financial year 2017:
Associated companies and joint ventures are account-
ed for using the equity method, with measurement on
initial recognition based on acquisition cost.
In the case of a joint venture, the parties which have
joint control only have rights to the net assets of the
arrangement.
The BMW Group is also party to a cooperation with
Toyota Motor Corporation, Toyota City, for the devel-
opment of a sports car. This cooperation is accounted
for as a joint operation.
gradual acquisition of the BMW Group's 49 percent
shareholding. Accordingly, between the beginning
of 2018 and the end of 2020 at the latest, SGL Car-
bon SE will become the sole owner of the hitherto
joint operations. As a consequence of the transaction,
the joint operations will cease to be proportionately
consolidated in the BMW Group Financial Statements
with effect from the financial year 2018.
In the case of a joint operation, the parties that have
joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating
to the arrangement. Assets, liabilities, revenues
and expenses of a joint operation are recognised
proportionately in the Group Financial Statements
on the basis of the BMW Group entity's rights and
obligations (proportionate consolidation). Together
with SGL Carbon SE, companies of the BMW Group
are party to joint operations for the manufacture of
carbon fibres and carbon fibre fabrics used in vehicle
production. In November 2017, an agreement was
signed with SGL Carbon SE concerning that entity's
Joint operations and joint ventures are forms of joint
arrangements. Such an arrangement exists when a
BMW Group entity jointly carries out activities with
a third party on the basis of a contractual agreement.
An entity is classified as an associated company if
BMW AG - either directly or indirectly - has the abil-
ity to exercise significant influence over the entity's
operating and financial policies. As a general rule,
the Group is assumed to have significant influence
if it holds 20% or more of the entity's voting power.
An entity is deemed to be controlled if BMW AG -
either directly or indirectly - has power over it, is
exposed or has rights to variable returns from it and
has the ability to influence those returns.
assessment.
When assessing whether an investment gives rise to
a controlled entity, an associated company, a joint
operation or a joint venture, the BMW Group con-
siders contractual arrangements and other circum-
stances, as well as the structure and legal form of the
entity. Discretionary decisions may also be required.
If indications exist of a change in the judgement of
(joint) control, the BMW Group undertakes a new
All consolidated subsidiaries have the same year-end as
BMW AG with the exception of BMW India Private Ltd.
and BMW India Financial Services Private Ltd., whose
year-ends are 31 March in accordance with local legal
requirements.
The BMW Group Financial Statements include
BMW AG and all material subsidiaries over which
BMW AG - either directly or indirectly - exercises
control. This also includes 57 structured entities,
consisting of asset-backed securities entities and
special-purpose funds.
NOTES TO
THE GROUP
FINANCIAL
STATEMENTS
ACCOUNTING PRINCIPLES
AND POLICIES
01
Basis of preparation
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMW Group
Financial Statements or Group Financial State-
ments) at 31 December 2017 have been drawn up in
accordance with International Financial Reporting
Standards (IFRS), as endorsed by the European Union,
and the supplementary requirements of § 315 a (1)
of the German Commercial Code (HGB). The Group
Financial Statements and Combined Management
Report will be submitted to the operator of the elec-
tronic version of the German Federal Gazette and
can be obtained via the Company Register website.
Bayerische Motoren Werke Aktiengesellschaft, which
has its seat at Petuelring 130, Munich, is registered
in the Commercial Register of the District Court of
Munich under the number HRB 42243.
1,415
The Group currency is the euro. All amounts are dis-
closed in millions of euros (€ million) unless stated
otherwise.
In order to provide a better insight into the results
of operations, financial position and net assets of
the BMW Group, and going beyond the require-
ments of IFRS 8 (Operating Segments), the Group
Financial Statements also include income statements
and balance sheets for the Automotive, Motorcycles,
Financial Services and Other Entities segments. The
Group Cash Flow Statement is supplemented by state-
ments of cash flows for the Automotive and Financial
Services segments. This supplementary information is
unaudited. Inter-segment transactions relate primarily
to internal sales of products, the provision of funds
for Group companies and the related interest. These
items are eliminated in the relevant "Eliminations"
columns. A description of the nature of the business
and major operating activities of the BMW Group's
→ see segments is provided in → note 43 (“Explanatory notes
to segment information").
note 43
On 15 February 2018, the Board of Management
granted approval for publication of the Group Finan-
cial Statements.
02
Group reporting entity
and consolidation principles
The BMW Group and segment income statements are
presented using the cost of sales method.
123
Note
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
705
-283
-1,896
-1,997
-315
164
125
142
10,848
11,464
-6,384
-9,844
-246
-6,972
-5,699
9
-15
-10
2
-482
-122
-
1,037
140
970
-3,810
-3,196
28
-1,362
60
162
-187
-1,872
275
25
11
46
11
-41
-3
-2
-1
-738
-441
78
-172
161
50
-1,179
-758
-20
2
43
-43
19
-12
1,214
629
-231
-396
3,655
3,436
195
-1,859
-5,225
4,334
11,601
-82
10
-141
21
25
64
11
2,363
842
-1,190
1,687
4,794
3,952
3,046
1,359
7,157
4,794
1,856
3,046
Net profit
Reconciliation between net profit and cash inflow/outflow from operating activities
Current tax
-129
906
4,425
-720
211
304
-6,544
-5,432
937
-102
38
20
-2,324
-2,121
567
-1,833
4,315
6,191
-165
-118
552
-489
870
-1,160
67
11,385
8,295
-48
-520
-7,119
-7,215
73
-4,181
Other interest and similar income/expenses¹
-8,368
-3,532
Investments in marketable securities and investment funds
-4,041
-3,592
Proceeds from the sale of marketable securities and investment funds
3,866
3,740
-6,163
-5,863
Cash inflow/outflow from investing activities
Payments into equity
Payment of dividend for the previous year
Intragroup financing and equity transactions
140
Interest paid¹
Repayment of bonds
Proceeds from new non-current other financial liabilities
Repayment of non-current other financial liabilities
Change in current other financial liabilities
Change in commercial paper
Cash inflow/outflow from financing activities
Effect of exchange rate on cash and cash equivalents
Effect of changes in composition of Group on cash and cash equivalents
Change in cash and cash equivalents
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
1 Interest relating to financial services business is classified as revenues/cost of sales.
Proceeds from the issue of bonds
1,2362
Proceeds from the disposal of investment assets and other business units
-338
Income taxes paid
166
-104
-1,293
-749
45
-93
1,414
738
1,285
1,229
-2,301
-2,417
Interest received¹
125
142
Cash inflow/outflow from operating activities
5,909
3,173
Investments in intangible assets and property, plant and equipment
-7,112
-5,823
Proceeds from the disposal of intangible assets and property, plant and equipment
30
10
Expenditure for investment assets
-142
2 Includes €969 million from the sale of receivables from sales financing (multibrand portfolio) amounting to €939 million and other receivables and
payables amounting to €22 million (2016: € - million) as well as dividends received from investment assets amounting to €258 million (2016: €134 million).
38
-2,324
Financial Services
(unaudited supplementary
information)
2016
2017
2016
5,276
5,441
4,047
1,777
2,699
2,787
-114
-117
89
283
-5
12
4,699
4,876
35
29
988
970
225
139
-1,855
The reconciliation of liabilities from financing activities is presented in note 33.
-7,440
information)
Automotive
20
-2,121
-165
-118
12,061
13,974
-9,374
-10,374
11,894
8,952
-7,427
-8,443
-4,084
4,135
953
-1,632
1,572
4,393
-223
17
64
38
1,159
1,758
7,880
6,122
9,039
7,880
(unaudited supplementary
Depreciation and amortisation of tangible, intangible and investment assets
2017
Changes in working capital
Change in provisions
Change in leased products
Change in receivables from sales financing
Change in deferred taxes
Other non-cash income and expense items
Gain/loss on disposal of tangible and intangible assets and marketable securities
Result from equity accounted investments
Change in inventories
Change in trade receivables
Change in trade payables
Change in other operating assets and liabilities
Income taxes paid
Interest received¹
Cash inflow/outflow from operating activities
Change in cash and cash equivalents
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investment assets
Investments in intangible assets and property, plant and equipment
Effect of changes in composition of Group on cash and cash equivalents
Effect of exchange rate on cash and cash equivalents
Proceeds from new non-current other financial liabilities
Repayment of non-current other financial liabilities
Change in current other financial liabilities
Change in commercial paper
Proceeds from the issue of bonds
Repayment of bonds
Cash inflow/outflow from financing activities
Interest paid¹
Intragroup financing and equity transactions
Payment of dividend for the previous year
Payments into equity
Proceeds from the disposal of investment assets and other business units
Investments in marketable securities and investment funds
Proceeds from the sale of marketable securities and investment funds
Cash inflow/outflow from investing activities
Date of
mandatory
application
1.1.2017
29.1.2016
Disclosures Initiative - Reconciliation of Liabilities From Financing Activities
(Amendments to IAS 7)
EU
1.1.2017
Date of
mandatory
application
IASB
Financial reporting rules
Date of
issue by
IAS 7
Standard/Interpretation
(a) Standards and Revised Standards significant for
the BMW Group applied for the first time in the
financial year 2017:
05
The amendments to IAS 7 (Statement of Cash Flows)
require a reconciliation between the opening and
closing balances of liabilities arising from financing 7
IASB
Leased items of property, plant and equipment whose
economic ownership is attributed to the BMW Group
(finance leases) are measured on initial recognition
at fair value or, if lower, at the net present value of
minimum lease payments. The assets are depreciated
using the straight-line method over their estimated
useful lives or, if shorter, over the contractual lease
period. The obligations for future lease payments are
recognised at their net present value in other financial
liabilities.
(b) Financial reporting pronouncements issued by
the IASB that are significant for the BMW Group,
but have not yet been applied:
activities, for which cash inflows and outflows are
presented in the Statement of Cash Flows. The rec-
onciliation is presented in → note 33.
The BMW Group will apply IFRS 9 for the first time
with effect from 1 January 2018. An exception is made
in the accounting treatment of fair value hedging of
a portfolio against interest rate risk, for which the
requirements of IAS 39 will continue to be applied.
IFRS 9 requires retrospective application in the areas
of classification and measurement, while the new
rules for hedge accounting are required to be applied
prospectively, with few exceptions. The BMW Group
will apply the exemption contained in IFRS 9, allowing
unadjusted comparative information for prior periods.
The new requirements for the classification and
measurement of financial assets and financial lia-
bilities result in a number of cases to a change in
measurement category for the BMW Group. In future,
changes in the value of equity instruments falling
within the scope of IFRS 9 which are held at the date
of adoption, will be recognised through the income
statement. Due to the change in the measurement
category, an increase in the revenue reserves amount-
ing to approximately €78 million is recognised at the
date of adoption of the new rules, net of the deferred
tax effect of approximately €1 million. This includes
approximately €76 million for equity instruments
which gives rise to a reduction in accumulated other
equity of the same amount.
135
136
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
Implementation of the new impairment model has
required substantial modifications to existing process-
es and systems, especially for the Financial Services
segment. Receivables from sales financing have been
measured using the three-stage model stipulated by
IFRS 9. Operating lease receivables represent an
exception, in which the simplified approach has
been applied. For these receivables, expected losses
are calculated for the remaining term. The transfer
criteria for the three-stage impairment model is based
in principle on a comparison of default probabilities
pursuant to the definitions used in the internal risk
management system for each financial instrument.
In addition, qualitative indicators are taken into
account in the transfer criteria, such as overdue period
or significant changes in the internal credit rating.
Impairment allowances are calculated in a central
application. The risk models used were determined
on the basis of internal historical default information
and macroeconomic factors.
For trade receivables, the simplified approach has
been applied. The parameters used to calculate impair-
ment allowances are determined specifically for each
portfolio.
Overall, the introduction of the new impairment
model across the BMW Group with effect from
1 January 2018 results in a reduction in impairment
allowances and an increase in revenue reserves of
approximately €82 million net of deferred tax effects
of approximately €31 million. Of this amount, approx-
imately €86 million relates to receivables from sales
financing net of deferred tax effects of approximately
€33 million.
With regard to the accounting treatment of hedging
relationships, it is expected that it will be possible in
future to apply hedge accounting rules to the majority
of commodity hedging instruments. Moreover, chang-
es in the time value of options are required to be
recognised as "cost of hedging" in accumulated other
equity during the hedging period. These changes are
expected to result in a significant reduction in the
volatility of amounts reported for financial result and
Group earnings.
In future, costs arising in conjunction with hedging
will be reported in total in the income statement as
part of the profit before financial result (EBIT). As the
cost of options to hedge foreign currency exposures
is currently reported in the financial result, this will
have a negative impact on the Automotive segment's
EBIT. The scale of the impact will depend on the future
volume of option contracts. The volume of option
contracts at 31 December 2017 is not material.
At the date of the first-time application, the new
accounting requirements for interest rate hedging
instruments will result in an increase in revenue
reserves of approximately €18 million, net of deferred
tax effects of approximately €6 million.
The new Standard IFRS 15 (Revenue from Contracts
with Customers) is aimed to assimilate the numerous
existing requirements and interpretations relating to
revenue recognition into a single Standard. The new
Standard also stipulates uniform revenue recognition
principles for all sectors and all categories.
The Standard will be applied retrospectively in its
entirety with effect from 1 January 2018, meaning that
all comparative information for prior periods will be
adjusted in accordance with IFRS 15. The exemption
provision, allowing contracts fulfilled prior to 1 Janu-
ary 2017 not to be newly assessed in accordance with
IFRS 15, has been applied.
IFRS 9 (Financial Instruments) contains new require-
ments for the classification and measurement of
financial assets that are based on the reporting entity's
business model for the management of these financial
instruments and the characteristics of its contractual
cash flows ("Solely Payments of Principal and Inter-
est" (SPPI) criterion). IFRS 9 also gives rise to a new
model for determining impairment, which is based on
expected credit losses. To date, impairments have been
recognised when corresponding objective evidence
existed. Furthermore, the requirements for hedge
accounting were revised with the aim of bringing
the accounting treatment more into line with risk
management activities.
1.1.2019
1.1.2019
13.1.2016
Standard/Interpretation
IFRS 9
Financial Instruments
IFRS 15
Revenue from Contracts with Customers
IFRS 16
Leases
Date of
issue by
IASB
→ see
note 33
Date of
mandatory
application
IASB
EU
24.7.2014
1.1.2018
28.5.2014
1.1.2018
1.1.2018
1.1.2018
11.9.2015
12.4.2016
Date of
mandatory
application
The new Standard is based on a five-step model, which
sets out the rules for revenue from contracts with
customers. Revenues are required to be recognised
either over time or at a specific point in time.
Purchased and internally-generated intangible assets
are recognised as assets where it is probable that the
use of the asset will generate future economic benefits
and where the costs of the asset can be determined
reliably. Such assets are measured at acquisition
or manufacturing cost, as a general rule without
borrowing costs, and, to the extent that they have
a finite useful life, amortised on a straight-line basis
over their estimated useful lives. With the exception
of capitalised development costs, intangible assets
are amortised as a general rule over their estimated
useful lives of between three and 20 years.
Goodwill arises on first-time consolidation of an
acquired business when the cost of acquisition exceeds
the Group's share of the net fair value of the assets
identified during the acquisition, liabilities and con-
tingent liabilities.
Inventories of raw materials, supplies and goods for
resale are stated at the lower of average acquisition
cost and net realisable value.
Current income taxes are calculated within the
BMW Group on the basis of tax legislation applicable
in the relevant countries. To the extent that judgement
was necessary to determine the treatment and amount
of tax items presented in the financial statements,
there is in principle a possibility that local tax author-
ities may take a different position.
Deferred taxes are recognised on all temporary dif-
ferences between the tax and accounting bases of
assets and liabilities and on consolidation procedures.
The recoverability of deferred tax assets is assessed
at each balance sheet date on the basis of planned
taxable income in future financial years. If with a
probability of more than 50 percent future tax ben-
efits will not be realised, either in part or in total, a
valuation allowance is recognised on the deferred tax
assets. The calculation of deferred tax assets requires
assumptions to be made with regard to the level of
future taxable income and the timing of recovery of
deferred tax assets. These assumptions take account of
forecast operating results and the impact on earnings
of the reversal of taxable temporary differences. Since
future business developments cannot be predicted
with certainty and to an extent cannot be influenced
by the BMW Group, the measurement of deferred tax
assets is subject to uncertainty. Deferred taxes are cal-
culated on the basis of tax rates which are applicable or
expected to apply in the relevant national jurisdictions
when the amounts are recovered.
be applied, the gains or losses arising on the fair value
measurement of derivative financial instruments are
recognised in the income statement.
Where hedge accounting is applied, changes in fair val-
ue are recognised in the income statement or in other
comprehensive income as a component of accumulat-
ed other equity, depending on whether the hedging
relationship is classified as a fair value hedge or a
cash flow hedge. In the case of a fair value hedge, the
results of the fair value measurement of the derivative
financial instruments and the related hedged items
are recognised in the income statement. Fair value
hedges are mainly used to hedge the market prices of
bonds, other financial liabilities and receivables from
sales financing. In the case of a cash flow hedge, the
effective portion of the fair value gain or loss on the
derivative financial instrument is recognised directly
in accumulated other equity. The ineffective portion of
the fair value gain or loss is recognised in the income
statement. Amounts recorded in accumulated other
equity are recognised in the income statement when
the hedged item or external revenue item is recognised
in the income statement. If, contrary to the usual prac-
tice within the BMW Group, hedge accounting cannot
In addition, the Group's own credit risk and that of
counterparties is taken into account on the basis of
credit default swap values for market contracts with
matching terms. The BMW Group applies the option
of measuring the credit risk for a group of financial
assets and financial liabilities on the basis of the net
exposure of long and short positions. Portfolio-based
value adjustments to the individual financial assets
and financial liabilities are allocated using the relative
fair value approach (net method).
Derivative financial instruments are used within the
BMW Group for hedging purposes in order to reduce
currency, interest rate, fair value and market price
risks arising from operating activities and the relat-
ed financing requirements. All derivative financial
instruments are measured at their fair value. The
fair values of derivative financial instruments are
determined using measurement models and are
therefore subject to the risk that they could differ
from realisable market prices on disposal. Observ-
able financial market price spreads are taken into
account in the measurement of derivative financial
instruments. The supply of data for the model used
to calculate fair values also takes account of tenor
and currency basis spreads.
The recognition of allowances on receivables relating
to the industrial business is also based, as far as pos-
sible, on the same procedures applied in the financial
services business. The impairment allowances are
recorded in separate accounts and are derecognised
at the same time the corresponding written-down
receivables are derecognised.
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
Group
Financial
Statements
132
131
Receivables from sales financing are measured at amor-
tised cost using the effective interest rate method. This
also includes receivables arising on vehicle finance
leases. Impairment allowances are recognised both on
a specific-item and a group basis. For these purposes,
the main factors taken into consideration are past
experience and current market data (such as the level
of arrears), as well as information on rating classes
and scoring. Consideration is also given to current
market data and macroeconomic conditions that could
have an impact on the general creditworthiness of
customers as well as the overall market environment
for pre-owned vehicles. The market value of vehicles
which serve as collateral changes when prices on pre-
owned vehicle markets fall. Specific allowances are
recognised if there is objective evidence of impairment.
In the retail credit financing and leasing business,
the existence of overdue balances or the incidence
of similar events in the past are examples of such
evidence. In the event of overdue receivables, allow-
ances are always recognised individually based on
the duration of the arrears. In the case of dealership
financing receivables, the allocation to a correspond-
ing rating category also represents objective evidence
of impairment. If no objective evidence of impairment
exists, allowances are recognised using a portfolio
approach based on similar groups of assets. Company-
specific loss probabilities and loss ratios, derived from
historical data, are used to measure allowances on
similar groups of assets.
Assessments are regularly made as to whether mate-
rial objective evidence indicates that a financial asset
or portfolio of assets is impaired. For the purposes
of assessing possible impairment, the BMW Group
takes account of all available information, such as
market conditions and prices as well as the duration
and magnitude of the decline in value. In the case of
equity instruments that are listed on a stock market,
it is assumed that an item is impaired if, for example,
its fair value falls below acquisition cost significantly
(more than 20%) or on a prolonged basis (more than
5% over nine months).
Those non-derivative financial assets that are not
classified as "loans and receivables" or "held-to-
maturity investments" or as items measured "at
fair value through profit and loss" are classified as
"available-for-sale". Financial assets that are classified
as loans and receivables are measured at amortised
cost using the effective interest method. All financial
assets for which published price quotations in an active
market are not available and whose fair value cannot
be determined reliably are measured at cost.
Subsequent to initial recognition, financial assets
which are available-for-sale or held-for-trading or for
which the fair value option is applied, are measured at
their fair value. The fair values shown are determined
on the basis of market information available at the
balance sheet date, prices quoted by the contract
partners or appropriate measurement methods, e.g.
discounted cash flow models.
The fair value option is applied by the BMW Group
for non-current marketable securities with embed-
ded derivatives and non-current loans receivable
from third parties. The related gains and losses are
presented in the income statement line item Other
financial result. Related interest income and expenses
are presented in net interest result.
Work in progress and finished goods are stated at
the lower of manufacturing cost and net realisable
value. Manufacturing cost comprises all costs which
are directly attributable to the manufacturing process
as well as an appropriate proportion of production-
related overheads. This includes production-related
depreciation and amortisation and an appropriate
proportion of administrative and social costs. Financ-
ing costs are not included in the acquisition or man-
ufacturing cost of inventories.
Cash and cash equivalents comprise mainly cash on hand
and cash at bank with an original term of up to three
months, and are measured at face value.
Assets held for sale and disposal groups held for sale
are presented separately in the balance sheet in
accordance with IFRS 5 if the carrying amount of the
relevant assets will be recovered principally through
a sale transaction rather than through continuing
use. This applies only in cases in which the assets
can be sold immediately in their present condition,
the sale is expected to be completed within one year
from the date of classification and the sale is highly
probable. At the date of classification, property, plant
and equipment, intangible assets and disposal groups
which are being held for sale are measured at the
lower of their carrying amount and their fair value
less costs to sell, and are no longer subject to sched-
uled depreciation/amortisation. This does not apply,
however, to items within the disposal group which
are not covered by the measurement rules contained
in IFRS 5. At the same time, liabilities directly related
to the sale are presented separately on the equity and
liabilities side of the balance sheet as Liabilities in
conjunction with assets held for sale.
Provisions for pensions are measured using the pro-
jected unit credit method. Under this method, not
only obligations relating to known vested benefits
at the reporting date are recognised, but also the
effect of future expected increases in pensions and
salaries. The calculation is based on independent
actuarial valuations which take into account relevant
biometric factors.
Share-based remuneration programmes which are expect-
ed to be settled in shares are measured at their fair
value at grant date. The related expense is recognised
as personnel expense in the income statement over
the vesting period and offset against capital reserves.
Share-based remuneration programmes expected to
be settled in cash are revalued to their fair value at
each balance sheet date between the grant date and
the settlement date and on the settlement date itself.
The expense is recognised as personnel expense in
the income statement over the vesting period and
presented in the balance sheet as a provision.
notes 38
and 44
Related party disclosures comprise information on
associated companies, joint ventures and non-con-
solidated subsidiaries as well as individuals which
have the ability to exercise a controlling or significant
influence over the financial and operating policies
of the BMW Group. This includes all persons in key
positions of the Company, as well as close members
of their families or intermediary entities. In the case
of the BMW Group, this also applies to members of
the Board of Management and the Supervisory Board.
Details relating to these individuals and entities are
→ see provided in → note 38 and in the list of investments
disclosed in → note 44.
Financial liabilities are measured on first-time recog-
nition at their fair value. Transaction costs are also
taken into account, except in the case of financial
liabilities allocated to the category "measured at fair
value through profit or loss". Subsequent to initial
recognition, liabilities are - with the exception of
derivative financial instruments - measured at amor-
tised cost using the effective interest method.
If the recognition and measurement criteria relevant
for provisions are not fulfilled and the outflow of
resources on fulfilment is not unlikely, the potential
obligation is disclosed as a contingent liability.
The recognition of provisions for litigation and liability
risks necessitates making assumptions in order to
determine the probability of liability, the amount
of claim and the duration of the legal dispute. The
assumptions made, especially the assumption about
the outcome of legal proceedings, are subject to a
high degree of uncertainty. The appropriateness of
assumptions is regularly reviewed, based on assess-
ments undertaken both by management and external
experts, such as lawyers. If new developments arise
in the future that result in a different assessment,
provisions are adjusted accordingly.
The measurement of provisions for statutory and non-
statutory warranty obligations (statutory, contractual and
voluntary) involves estimations. In addition to manu-
facturer warranties prescribed by law, the BMW Group
offers various categories of guarantee depending on
the product and sales market. These provisions are
recognised when the risks and rewards of ownership
of the goods are transferred to the dealership or
retail customer or when a new category of warranty
is introduced. With respect to the level of the provi-
sion, estimations are made in particular based on past
experience of damage claims and processes. Future
potential repair costs and price increases per product
and market are also taken into account. Specific and
expected warranty items, such as vehicle recalls, are
also included. Provisions for warranties for all compa-
nies of the BMW Group are adjusted regularly to take
account of new information, with the impact of any
changes recognised in the income statement. Similar
estimates are made in conjunction with the measure-
ment of expected reimbursement claims, which are
presented as separate assets.
Other provisions are recognised when the BMW Group
has a present legal or factual obligation towards a
third party arising from past events, the settlement
of which is probable, and when the amount of the
obligation can be reliably estimated. Provisions with
a remaining term of more than one year are measured
at their net present value.
The Group's financial assets are allocated to either
cash funds or to the categories "loans and receivables",
"available-for-sale", "held for trading" or "fair value
option".
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
134
133
Remeasurement of the net liability can result from
changes in the present value of the defined benefit
obligation, the fair value of the plan assets or the
asset ceiling. Remeasurement can result, amongst
others, from changes in financial and demographic
parameters, as well as changes following the portfolio
development. Remeasurements are recognised imme-
diately in other comprehensive income and hence
directly in equity (within revenue reserves).
Past service cost arises when a BMW Group compa-
ny introduces a defined benefit plan or changes the
benefits payable under an existing plan. This cost
is recognised immediately in the income statement.
Similarly, gains and losses arising on the settlement
of a defined benefit plan are recognised immediately
in the income statement.
income statement.
Net interest expense on the net defined benefit lia-
bility and net interest income on net defined benefit
assets are presented separately within the financial
result. All other costs relating to allocations to pension
provisions are allocated to costs by function in the
The calculation of the amount of the provision requires
assumptions to be made with regard to discount rates,
salary trends, employee fluctuation and the life expec-
tancy of employees. Discount rates are determined by
reference to market yields at the end of the reporting
period on high quality fixed-interest corporate bonds.
The salary trend relates to the expected future rate of
salary increase which is estimated annually based on
inflation and the career development of employees
within the Group.
In the case of funded plans, the pension obligation is
offset against plan assets measured at their fair value.
If the plan assets exceed the pension obligation, the
surplus is tested for recoverability. In the event that
the BMW Group has a right of reimbursement or a
right to reduce future contributions, it reports an asset
(within Other financial assets), measured on the basis
of the present value of the future economic benefits
attached to the plan assets. For funded plans, in cases
where the obligation exceeds plan assets, a liability is
recognised under pension provisions.
Group
Financial
Statements
Development costs for vehicle, module and architecture
projects are capitalised at manufacturing cost, to the
extent that attributable costs (including develop-
ment-related overhead costs) can be measured reliably
and both technical feasibility and successful marketing
are assured. It must also be sufficiently probable that
the development expenditure will generate future
economic benefits. Capitalised development costs are
amortised on a straight-line basis following the start
of production over the estimated product life cycle
(usually five to 12 years).
On initial recognition, financial assets are measured
at their fair value. Transaction costs are included
unless the financial assets are allocated to the category
"financial assets measured at fair value through profit
or loss".
Financial assets reported as other investments are recog-
nised and measured at their fair value in accordance
with the requirements of IAS 39. If this value is not
available or cannot be determined reliably, they are
measured at cost. Subsidiaries, joint arrangements
and associated companies included in other invest-
ments, but which are not material to the BMW Group,
do not fall within the scope of IAS 39.
2016
2017
Financial Services
Motorcycles
Automotive
in %
Amounts are discounted on the basis of a market-re-
lated cost of capital rate. Impairment tests for the
Automotive and Motorcycles cash-generating units
are performed using a risk-adjusted pre-tax cost of
capital (WACC). In the case of the Financial Services
cash-generating unit, a pre-tax cost of equity capital
is used, as is customary in the sector. The following
discount factors were applied:
→ Accounting
Principles and
Policies
Notes to the Group
Financial Statements
Group
Financial
Statements
130
129
The BMW Group determines the value in use on
the basis of a present value calculation. Cash flows
used for this calculation are derived from long-term
forecasts approved by management. These forecasts
are based on detailed forecasts drawn up at the oper-
ational level and, with a planning period of six years,
correspond roughly to the typical product life cycle of
vehicle projects. For the purposes of calculating cash
flows beyond the planning period, a residual value
is assumed which does not take growth into account.
Forecasting assumptions are continually adjusted to
current information and regularly compared with
external sources. The assumptions used take account
in particular of expectations of the profitability of the
product portfolio, future market share development,
macroeconomic developments (such as currency,
interest rate and raw materials prices) as well as the
legal environment and past experience.
As part of the assessment of recoverability, it is general-
ly necessary to apply estimations and assumptions - in
particular regarding future cash inflows and outflows
and the length of the forecast period - which could
differ from actual amounts. Actual amounts may differ
from the assumptions and estimations used if business
conditions develop differently to the expectations.
If the reason for a previously recognised impairment
loss no longer exists, the impairment loss is reversed
up to the level of the recoverable amount, but no high-
er than the amortised acquisition or manufacturing
cost. Impairment losses on goodwill are not reversed.
For the purpose of the impairment test, the carrying
amount of an asset (or a cash-generating unit) is com-
pared with the recoverable amount. The first step of
the impairment test is to determine the value in use.
If the value in use is lower than the carrying amount,
the next step is to determine the fair value less costs to
sell and compare the amount so determined with the
asset's carrying amount. If the fair value is lower than
the carrying amount, an impairment loss is recognised,
reducing the carrying amount to the higher of the
asset's value in use or fair value less selling cost.
If there is any indication of impairment of intangible
assets, or if an annual impairment test is required
(i.e. intangible assets with an indefinite useful life,
intangible assets during the development phase and
goodwill), an impairment test is performed. Each
individual asset is tested separately unless the cash
flows generated by the asset are not sufficiently inde-
pendent from the cash flows generated by other assets
or other groups of assets. In this case, impairment is
tested at the level of a cash-generating unit.
12.0
12.0
12.0
12.0
Investments accounted for using the equity method are rec-
ognised at the Group's share of their revalued equity
capital, provided no impairment has been recognised.
2 to 25
3 to 21
8 to 50
Other equipment, factory and office equipment
Plant and machinery
Factory and office buildings, residential buildings, fixed
installations in buildings and outside facilities
in years
A financial instrument is a contract that gives rise to a
financial asset of one entity and a financial liability or
equity instrument of another entity. Financial assets
are accounted for on the basis of the settlement date.
Assumptions and estimations are required regarding
future residual values, since these represent a sig-
nificant part of future cash inflows. Relevant factors
to be considered include the trend in market prices
and demand on the pre-owned vehicle market. The
assumptions are based on internally available histor-
ical and current market data as well as on forecasts of
external institutions. Furthermore, assumptions are
regularly validated by comparison with external data.
note 39
With respect to lease arrangements of the BMW Group,
use of judgement is required, in particular with regard
to the transfer of economic ownership of a leased item.
For machinery used in multiple-shift operations,
depreciation rates are increased to account for the
additional utilisation. If there is any indication of
impairment of property, plant and equipment, an
impairment test is performed as described above for
intangible assets.
The following useful lives are applied throughout the
BMW Group:
Items of property, plant and equipment are measured at
acquisition or manufacturing cost less accumulated
depreciation and accumulated impairment losses. The
cost of internally constructed plant and equipment
comprises all costs which are directly attributable
to the manufacturing process as well as an appro-
priate proportion of production-related overheads.
This includes production-related depreciation and
amortisation as well as an appropriate proportion
of administrative and social costs. Financing costs
are not included in acquisition or manufacturing cost
unless they are directly attributable to the asset. The
carrying amount of items of depreciable property,
plant and equipment is written down according to
scheduled usage-based depreciation - as a general
rule on a straight-line basis - over the useful lives of
the assets. Depreciation is recorded as an expense in
the income statement.
The risk-adjusted discount rate, calculated using a
CAPM model, takes into account specific peer-group
information relating to beta-factors, capital structure
data and borrowing costs. In conjunction with the
impairment tests for cash-generating units, sensitivity
analyses are performed for the main assumptions, in
order to rule out that possible changes to the assump-
tions used to determine the recoverable amount would
result in the requirement to recognise an impairment
loss.
13.4
13.4
Group products recognised by BMW Group entities as
leased products under operating leases are measured at
manufacturing cost, including any initial direct costs.
All other leased products are measured at acquisition
cost. All leased products are depreciated over the peri-
od of the lease using the straight-line method down to
their expected residual value. Where the recoverable
amount of a lease exceeds the asset's carrying amount,
changes in residual value expectations are recognised
by adjusting scheduled depreciation prospectively
over the remaining term of the lease. If the recoverable
amount is lower than the asset's carrying amount, an
impairment loss is recognised for the shortfall. A test
is carried out at each balance sheet date to determine
whether an impairment loss recognised in prior years
no longer exists or has decreased. In such cases, the
carrying amount of the asset is increased to the recov-
erable amount, at maximum up to the amount of the
asset's amortised cost.
The share-based remuneration programme for Board
of Management members and senior heads of depart-
ment entitles BMW AG to elect whether to settle its
commitments in cash or with shares of BMW AG
common stock. Based on the decision to settle in cash,
the share-based remuneration programmes for Board
of Management members and senior heads of depart-
ment are accounted for as cash-settled, share-based
remuneration programmes. Further information on
share-based remuneration programmes is provided
A major difference to the previous Standard is the
increased scope of discretion for estimates and the
introduction of thresholds, thus influencing the
amount and timing of revenue recognition.
In the case of multi-component contracts with variable
consideration components, changes in the allocation
of transaction prices will result for the Automotive
segment in higher amounts being recognised for
vehicle sales and a lower level of amounts deferred
for service contracts. The shift in the timing of rev-
enue recognition results in a retrospective increase
in Group revenue reserves as at 1 January 2017 of
approximately €89 million, net of deferred taxes of
approximately €38 million (1 January 2018: increase
in revenue reserves of approximately €112 million, net
of deferred taxes of approximately €42 million). The
shift is not expected to have a significant impact on
the income statement during the period of first-time
application.
Automotive
89
23
112
78
Automotive/Other
82
Automotive/Financial Services
18
Financial Services/Other
-410
-312
-263
Eliminations
1 Includes the effect of the adjustment relating to entities accounted for using the equity method.
137
138
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
→ Notes to the
Income Statement
The new Standard IFRS 16 (Leases) sets out a new
approach to accounting for leases by lessees. While
under IAS 17, the accounting treatment of a lease was
determined on the basis of the transfer of risks and
rewards incidental to ownership of the asset, in the
future, all leases in general are to be accounted for by
the lessee in a similar way to finance leases.
The BMW Group will use the grandfather clause
available for existing leases and apply the available
exemptions regarding the recognition of short-
term leases and low value leasing assets. The new
Standard will be applied for the first time using the
modified retrospective method. Intragroup leasing
arrangements are not reflected in the internal man-
agement system or in internal reporting pursuant
to IFRS 16 and therefore, in accordance with IFRS 8,
do not result in any changes in the presentation of
segment information. Early adoption of IFRS 16 is
not planned.
The accounting requirements for lessors, particularly
in relation to the requirement to classify leases, will
remain largely unchanged.
The impact on the BMW Group's results of operations,
financial position and net assets is currently being
analysed as part of a Group-wide implementation
project. A reliable quantitative measurement of the
impact is not possible at present, in particular because
the compilation and assessment of contracts across the
Group has not yet been completed. The BMW Group
expects a slight increase in the balance sheet total and
the result before financial result, as well as a slight
improvement in the net cash flow from operating
activities and a slight deterioration in the net cash
flow from financing activities.
Other financial reporting standards issued by the IASB
and not yet applied are not expected to have a signif-
icant impact on the BMW Group Financial Statements.
As a result of the accounting treatment of buyback
arrangements and rights of return for sales of vehicles
which the Financial Services segment will subsequently
lease to customers, intragroup eliminations within
the BMW Group will be subject to earlier recognition.
The application of IFRS 15 results in a retrospective
decrease in Group revenue reserves as at 1 Janu-
ary 2017 amounting to approximately €499 million,
net of deferred taxes of approximately €239 million
(1 January 2018: reduction of revenue reserves by
approximately €553 million, net of deferred taxes of
approximately €192 million). No significant impact
is expected to arise during the period of first-time
application.
2 Includes effects relating to the reduction of the US federal corporate tax rate from 35% to 21 % with effect from 1 January 2018. The pre-tax profit impact amounts to € + 20 million.
-553
→ see in note 39.
-499
-54
In accordance with IFRS 15, costs relating to sales
promotion measures in the Automotive segment,
such as sales support or residual value subsidies are
to be treated as variable components of consideration
and will therefore in future be recognised as revenue
deductions. A part of these costs have been reported
to date within cost of sales. The change in presenta-
tion in the income statement will result in a decrease
As a result of the adjustments described above, the
Automotive segment's EBIT margin for 2017 will
improve by 0.3 percentage points to 9.2%.
A different accounting treatment may be required if
buyback arrangements are in place with customers,
resulting in a shift in the timing of revenue recognition.
The resulting impact is not expected to be significant.
Buyback arrangements between the Automotive and
Financial Services segments are not reflected in the
internal management system or reporting and there-
fore, in accordance with IFRS 8, do not result in any
changes in the presentation of segment information.
The following table shows a summary of the estimated
effect on revenue reserves of the first-time application
of IFRS 9 and IFRS 15.
in € million
Amendment
IFRS 15
Elimination of buyback arrangements and rights
IFRS 15
Change in transaction prices relating to
multi-component contracts¹
IFRS 9
in both revenues and cost of sales. For the financial
year 2017, the amount subject to changed accounting
presentation in the Automotive segment amounts
to approximately €2.9 billion, and is insignificant
for the Group.
IFRS 9
Segment
1.1.2018
2017
1.1.2017
Change in measurement category
Impact on
net profit
Impact on
revenue reserves
Impact on
Total impact of first-time application
Hedge accounting
IFRS 9
Introduction of impairment model
revenue reserves
3,631
-155
50,161
Property, plant and equipment
23
3
-954
1,587
223
2,253
1,848
15,401
Leased products
42,334
316
18,339
45,588
Investments accounted for using
the equity method
2,233
513
200
2,546
51,789
1,600
-185
2,672
58
1,188
11,484
369
1,495
13,348
Land, titles to land, buildings, including
buildings on third party land
10,458
-15
300
231
34
10,940
Advance payments made and construction in progress
Plant and machinery
Investments in non-consolidated subsidiaries
1,510
691
1,589
35,924
Other facilities, factory and office equipment
2,606
22
234
32
222
35,497
233
2
321
943
4,556
8,409
7,221
5
5
380
364
928
-16
191
1,236
28
675
572
5,196
-16
1,427
971
5,636
9,464
8,157
Development costs
Goodwill
Other intangible assets
1,075
2
31.12.2017 31.12.2017 31.12.2016
Value
adjustments³
56
500
Participations
656
56
2
710
Non-current marketable securities
28
28
Other investments
Disposals
917
58
1,238
1 Including first-time consolidation.
2 Including assets under construction of €1,760 million.
Depreciation and amortisation
Carrying amount
Translation
Reclassi-
1.1.20171
differences Current year
fications
377
4,263
147
4,516
4,973
181
3
797
5
4,171
1,222
31.12.2016 31.12.2016 31.12.2015
Disposals
Reclassi-
Value
fications adjustments
Current year
Translation
1.1.20161 differences
Carrying amount
Depreciation and amortisation
g| | | g|
690
596
29
-1
412
249
189
408
་།ཎ།
678
2
3
484
1,403
subsidiaries
97
Present value of future minimum lease
payments
due within one year
Intangible assets
7,372
8,157
5,191
1,188
Other intangible assets
657
572
923
58
Goodwill
Development costs
364
364
5
6,351
7,221
4,263
1,130
Other investments
Non-current marketable securities
Participations
Investments in non-consolidated
82
192
2,546
8,995
27,838
1,548
5
2,820
-531
27,092
6,154
6,122
4,966
37
-5
337
-115
126
110
77
60
due later than five years
37
41
due between one and five years
12
9
Intangible assets
8,832
Investments accounted for using
the equity method
1,952
238
2,767
Leased products
37,789
36,257
7,886
3,169
3,633
-379
7,801
721 Other facilities, factory and office equipment
Advance payments made and
construction in progress
Property, plant and equipment
Plant and machinery
buildings on third party land
Land, titles to land, buildings, including
17,960
18,471
34,774
1,743
3,395
-708
33,830
2,253
2,5252
829
1,970
158
-62
4,786
50
due later than five years
33,829
17,960
1,591
17,759
Land, titles to land, buildings, including
buildings on third party land
Plant and machinery
660 Other facilities, factory and office equipment
Advance payments made and
construction in progress
Property, plant and equipment
7,308
19
3,306
2,834
7,799
37,789
34,965
Leased products
2,546
2,233
Investments accounted for using
the equity method
Investments in non-consolidated
76
116
192
308
157
subsidiaries
1,806
411
3,403
32,351
-28
320
4
26
4,786
6,154
5,915
25,891
-100
2,865
2
1,566
27,092
8,832
9,593
1,942
1,130
9
218
-4
214
1,951
721
2
2,2532
-119
40
76
484
No impairment losses were recognised in 2017, as in
the previous year.
As in the previous year, no borrowing costs were
recognised as a cost component of property, plant
and equipment in 2017.
Property, plant and equipment include an amount of
€94 million (2016: €107 million) relating to land and
buildings, for which economic ownership is attribut-
able to the BMW Group (finance leases). Leases to
which BMW AG is party, with a carrying amount of
€78 million (2016: €90 million), run for periods up
to 2030 at the latest and contain price adjustment
clauses in the form of index-linked rentals as well as
extension and purchase options.
Minimum lease payments are as follows:
in € million
31.12.2017
31.12.2016
Total of future minimum lease payments
due within one year
19
23
due between one and five years
73
73
due later than five years
100
127
192
223
Interest portion of the future minimum
lease payments
due within one year
10
11
due between one and five years
32
36
Property, plant and equipment
3
20
As in the previous year, there was no requirement to
recognise impairment losses or reversals of impair-
ment losses on intangible assets in 2017.
226
245
Participations
2
2
26
26
Non-current marketable securities
489
192
3
678
560
428
Other investments
148
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
19
Intangible assets
Intangible assets mainly comprise capitalised devel-
opment costs on vehicle, module and architecture
projects as well as subsidies for tool costs, licences,
purchased development projects, software and pur-
chased customer lists.
Other intangible assets include a brand-name right
amounting to €41 million (2016: €42 million) which
is allocated to the Automotive segment and is not
subject to scheduled amortisation since its useful life
is deemed to be indefinite. The year-on-year change
is solely due to currency effects. Intangible assets also
include goodwill of €33 million (2016: €33 million)
allocated to the Automotive cash-generating unit
(CGU) and goodwill of €347 million (2016: €331 mil-
lion) allocated to the Financial Services CGU.
Intangible assets amounting to €41 million (2016:
€42 million) are subject to restrictions on title.
As in the previous year, no borrowing costs were
recognised as a cost component of intangible assets
in 2017.
2,092
thereof relating to tax loss
-2
€
13.14
10.47
€
4.00*
3.50
4.02*
3.52
Earnings per share of preferred stock are calculated
on the basis of the number of shares of preferred stock
entitled to receive a dividend in each of the relevant
financial years. As in the previous year, diluted earn-
ings per share correspond to basic earnings per share.
The average number of employees during the year was:
2017
2016
Employees
119,611
115,842
10.45
thereof at
13.12
54,809,375
Basic earnings per share of common stock
Basic earnings per share of preferred stock
Dividend per share of common stock
Dividend per share of preferred stock
*Proposal by management.
2017
2016
€ million
8,619.9
6,862.9
€ million
7,895.9
6,289.2
€ million
724.0
573.7
number
number
601,995,196 601,995,196
55,114,290
€
14
Personnel expenses
The income statement includes personnel expenses
as follows:
Social insurance expenses
819
Personnel expenses
12,052
802
11,535
Personnel expenses include €54 million (2016:
€61 million) of costs relating to workforce measures.
The total pension expense for defined contribution
plans of the BMW Group amounted to €105 million
(2016: €90 million). Employer contributions paid to
state pension insurance schemes totalled €630 million
(2016: €607 million).
The number of employees at the end of the reporting
period is disclosed in the Combined Management
Report.
143
144
↑ ↑
Group
Financial
Statements
Notes to the Group
Financial Statements
Notes to the
Income Statement
→ Notes to the
Statement of
Comprehensive
1,152
1,211
Pension and welfare expenses
9,581
proportionately-consolidated entities
Average number of employees
proportionately-consolidated entities
Apprentices and students gaining work
experience
182
204
7,913
7,913
thereof at
Average number of common stock shares in circulation
Average number of preferred stock shares in circulation
1
127,524
123,755
in € million
2017
2016
Wages and salaries
10,022
1
Income
Profit attributable to common stock
Profit attributable to preferred stock
Earnings per share
797
12,442
13,700
12,254
13,683
Valuation allowances on tax loss carryforwards and capital losses
-502
Netting
-10,013
Deferred taxes
1,927
-485
-10,888
2,327
Net
-10,013
2,241
314
-10,888
691
2,795
3,481
298
10
17
613
1,448
3,629
2,861
608
536
5,192
4,966
78
184
2,431
2,760
403
3,016
468
142
Group
Financial
Statements
163
thereof relating to fair value gains and losses on financial instruments and marketable securities recognised directly in equity
thereof relating to the remeasurements of net liabilities for defined benefit pension plans
Exchange rate impact and other changes
2,192
724
181
-561
-317
49
Deferred taxes at 31 December (assets (-)/liabilities (+))
314
468
As a result of currency translation, deferred taxes
recognised directly in equity in the financial year
decreased by €43 million (2016: €29 million).
Deferred taxes are not recognised on retained prof-
its of €42.8 billion (2016: €38.7 billion) of foreign
subsidiaries, as it is intended to invest these profits
to maintain and expand the business volume of the
relevant companies. No calculation was made of the
potential impact of income taxes on the grounds of
proportionality.
The tax returns of BMW Group entities are checked
regularly by German and foreign tax authorities.
Taking account of numerous factors including
interpretations, commentaries and legal decisions
relating to the various tax jurisdictions as well as past
experience - adequate provision has been made, to the
extent identifiable and probable, for potential future
tax obligations.
13
772
Change in deferred taxes recognised directly in equity
85
-609
Notes to the Group
Financial Statements
→ Notes to the
Income Statement
-
Tax loss carryforwards - for the most part usable with-
out restriction amounted to €928 million (2016:
€637 million). This includes an amount of €548 million
(2016: €464 million), for which a valuation allowance
of €186 million (2016: €158 million) was recognised on
the related deferred tax asset. For entities with tax loss-
es available for carryforward, a net surplus of deferred
tax assets over deferred tax liabilities is reported at
31 December 2017 amounting to €131 million (2016:
€90 million). Deferred tax assets are recognised on the
basis of the management's assessment that there is
material evidence that the entities will generate future
taxable profits, against which deductible temporary
differences can be offset.
Capital losses available for carryforward in the United
Kingdom which do not relate to ongoing operations
decreased to €1,854 million (2016: €1,926 million) due
to currency factors. As in previous years, deferred tax
assets recognised on these tax losses - amounting to
€315 million at the end of the reporting period (2016:
€327 million) - were fully written down since they can
only be utilised against future capital gains.
Net profit attributable to the shareholders of BMW AG
Netting relates to the offset of deferred tax assets and
liabilities within individual entities or tax groups to
the extent that they relate to the same tax authorities.
Deferred taxes recognised directly in equity amounted
to €997 million (2016: €1,812 million).
in € million
2017
2016
Deferred taxes at 1 January (assets (-)/ liabilities (+))
468
171
Deferred tax expense (+)/income (-) recognised through income statement
Changes in deferred tax assets and liabilities during
the reporting period can be summarised as follows:
15
Fee expense for the Group auditor
The fee expense pursuant to § 314 (1) no. 9 HGB recog-
nised in the financial year 2017 for the Group auditor
and its network of audit firms amounted to €25 million
(2016: €23 million) and consists of the following:
Remeasurement of the net defined benefit liability for pension plans
693
-218
Available-for-sale securities
39
2
475
41
-1,858
529
-1,329
40
-12
28
Financial instruments used for hedging purposes
1,914
tax
-568
After
Before
tax
Items expected to be reclassified to the income statement in the future
155
1,140
Other comprehensive income for the period after tax
630
-189
Deferred taxes on components of other comprehen-
sive income are as follows:
in € million
2017
2016
Before
tax
Deferred
taxes
After
tax
Deferred
taxes
Other comprehensive income from equity accounted investments
-30
-31
NOTES TO THE BALANCE SHEET
146
Group
Financial
Statements
Notes to the Group
Financial Statements
18
→ Notes to the
Balance Sheet
Analysis of changes in Group tangible, intangible and investment assets 2017
in € million
Development costs
Goodwill
Other intangible assets
Acquisition and manufacturing cost
145
(2016: € 73 million) and within derivative finan-
cial instruments used for hedging purposes with an
amount of €91 million (2016: €87 million).
Other comprehensive income arising from equity
accounted investments is reported in the Statement
of Changes in Equity within currency translation
differences with an amount of € −152 million
-189
1,346
-61
2,008
-680
1,328
43
-29
14
-230
Currency translation foreign operations
Other comprehensive income
1,445
-815
-1,171
630
-230
3
-230
-192
-1,171
-1,171
Currency translation foreign operations
-721
4
4
32
2
4
2
1
25
23
9
8
Services provided by KPMG AG Wirtschaftsprüfungs-
gesellschaft, Berlin, on behalf of BMW AG and sub-
sidiaries under its control relate to the audit of the
financial statements, other attestation services, tax
advisory services and other services.
The audit of financial statements comprises mainly the
audit of the Group financial statements and Company
financial statements of BMW AG and its subsidiaries,
and, following the introduction of new regulations,
all work related thereto, including the review of the
Group Interim Financial Statements.
Other attestation services include mainly project-relat-
ed audits, comfort letters as well as legally prescribed,
contractually agreed or voluntarily commissioned
attestation work.
Tax advisory services were performed particularly in
conjunction with tax compliance.
4
5
* Prior year figures have been adjusted.
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
in € million
2017
2016*
17
16
16
Government grants and government assistance
Income from asset-related and performance-related
grants, amounting to €30 million (2016: €31 million)
and €112 million (2016: €126 million) respectively,
was recognised in the income statement in 2017.
Other services include mainly preparation of studies.
These amounts mainly relate to public sector grants
aimed at the promotion of regional structures as well
as subsidies received for plant expansions.
Other attestation services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Tax advisory services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Other services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Fee expense
Audit of financial statements
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
3
NOTES TO THE STATEMENT
OF COMPREHENSIVE
INCOME
Disclosures relating to the statement of
comprehensive income
Financial instruments used for hedging purposes
thereof gains/losses arising in the period under report
thereof reclassifications to the income statement
-44
-39
1,914
2,008
2,017
1,458
-103
550
Other comprehensive income from equity accounted investments
Deferred taxes
-30
43
-597
thereof reclassifications to the income statement
79
83
40
Other comprehensive income for the period after tax
comprises the following:
in € million
2017
2016
Remeasurement of the net defined benefit liability for pension plans
693
-1,858
17
Deferred taxes
529
Items not expected to be reclassified to the income statement in the future
475
-1,329
Available-for-sale securities
thereof gains/losses arising in the period under report
39
-218
Translation
3
4,655
282
Exchange gains
2016
2017
in € million
Other operating income and expenses comprise the
following items:
Other operating income and expenses
09
→ see
note 43
Administrative expenses amounted to €3,393 million
(2016: €3,128 million) and relate mainly to personnel
and IT costs.
Selling expenses amounted to €6,167 million (2016:
€6,030 million) and comprise mainly marketing,
advertising and sales personnel costs.
Selling and administrative expenses
Cost of sales comprises:
Cost of sales
07
262
An analysis of revenues by segment and region is
shown in the segment information in → note 43.
in € million
2016
business
46
80
Gains on the disposal of assets
Cost of sales relating to financial services
51
8
losses and write-downs
43,175
43,877
Manufacturing costs
Income from the reversal of impairment
115
138
Income from the reversal of provisions
2017
94,163
98,678
Revenues
6,108
expenditure
Total research and development
2,092
2,424
development costs
New expenditure for capitalised
-1,222
-1,236
Amortisation
4,294
4,920
Research and development expenses
2016
2017
5,164
2017
2016
08
3,262
3,491
Other income
3,455
3,720
Interest income on loan financing
9,507
22,932
9,816
9,258
10,208
leased to customers
Sales of products previously
68,681
71,443
Sales of products and related goods
Income from lease instalments
in € million
20,723
212
12
The expense for additions to provisions includes liti-
gation and other legal risks. Income from the reversal
of provisions includes legal disputes that have been
resolved.
Income from the reversal of and expenses for the rec-
ognition of impairment losses and write-downs relate
primarily to impairment allowances on receivables.
Income Statement
→ Notes to the
Notes to the Group
Financial Statements
Group
Financial
Statements
140
139
Cost of sales is reduced by public-sector subsidies
in the form of reduced taxes on assets and reduced
consumption-based taxes amounting to €61 million
(2016: €69 million).
-177
-494
Other operating income and expenses
-847
-1,214
Income taxes
Other operating expenses
Taxes on income of the BMW Group comprise the
following:
2017
80
-553
differences
thereof relating to temporary
85
-609
deferred tax income (-)
Deferred tax expense (+)/
2,670
2,558
Current tax expense
in € million
Net interest result
10
2016
in € million
75,442
78,744
Cost of sales
-249
-246
Exchange losses
4,294
4,920
Research and development expenses
1,638
-56
1,801
to financial services business
670
720
Other operating income
thereof: Interest expense relating
196
Service contracts, telematics and roadside
Expense for additions to provisions
-580
-303
-267
-359
Sundry operating expenses
3,067
2,893
Other cost of sales
-28
Sundry operating income
-29
Expense for impairment losses and
2,165
2,041
Warranty expenditure
2,018
2,081
assistance
write-downs
Research and development expenditure was as follows:
in € million
Revenues by activity comprise the following:
Tax increases (+)/tax reductions (-) as a result of non-deductible expenses and tax-exempt income
Tax expense (+)/benefits (-) for prior years
Other variances
Actual tax expense
Effective tax rate
2017
2016
10,655
9,665
30.7%
30.7%
3,271
2,967
-1,071
-119
58
Variances due to different tax rates
78
Expected tax expense
Profit before tax
310
German income tax rate
30.7
30.7
Sundry other financial result
234
310
Other financial result
248
131
Deferred taxes for non-German entities are calculat-
ed on the basis of the relevant country-specific tax
rates. These range in the financial year 2017 between
9.0% and 45.0% (2016: between 12.5% and 45.0%).
Changes in tax rates resulted in deferred tax income
of €824 million (2016: €70 million). The principal
reason for this development was the reduction in the 7
US federal corporate income tax rate from 35.0% to
21.0% with effect from 1 January 2018.
The difference between the expected tax expense
based on the underlying tax rate for Germany and
actual tax expense is explained in the following
reconciliation:
141
in € million
Tax rate applicable in Germany
-104
-174
-205
Eliminations
Deferred tax assets
Deferred tax liabilities
2017
2016
2017
2016
18
13
2,593
88
26
195
473
467
Liabilities
Provisions
Tax loss carryforwards and capital losses
Sundry other assets
3
1,949
2,755
18.3%
28.5%
Variances due to different tax rates were influenced in
particular by the reduction in the US federal corporate
income tax rate, which was required to be taken into
account in the measurement of deferred taxes as of
31 December 2017. This resulted in a reduction in tax
expense of €977 million.
Tax increases as a result of non-deductible expenses
and tax reductions due to tax-exempt income decreased
compared to one year earlier. As in the previous year,
tax increases as a result of non-tax-deductible expenses
were attributable mainly to the impact of non-recover-
able withholding taxes and transfer price issues.
234
7
Other variances comprise various reconciling items,
including the Group's share of earnings of companies
accounted for using the equity method.
The allocation of deferred tax assets and liabilities to
balance sheet line items at 31 December is shown in
the following table:
in € million
Intangible assets
Property, plant and equipment
Leased products
Other investments
Tax income relating to prior years resulted primarily
from adjustments to income tax receivables and pro-
visions for prior years.
financial instruments
14.9
14.9
-66
-84
Net interest expense on the net defined
benefit liability for pension plans
-81
-78
Other interest and similar expenses
-265
-327
thereof subsidiaries:
-2
Interest and similar expenses
-412
-4
-489
Net interest result
on other long-term provisions
Expense relating to interest impact
196
201
Revenues
06
NOTES TO THE INCOME
STATEMENT
5
Income taxes
1,949
2,755
-211
2017
Other interest and similar income
201
196
thereof from subsidiaries:
9
12
Interest and similar income
2016
2,234
305
6,987
-293
Other financial result
15.0
subsidiaries and participations
-192
Solidarity surcharge
5.5
5.5
Result on investments
14
-179
Corporation tax rate including solidarity
surcharge
15.8
15.8
Income (+) and expenses (-) from
Municipal trade tax rate
15.0
Corporation tax rate
Impairment losses on investments in
13
in € million
2017
2016
Current tax expense includes tax income of €104 mil-
lion (2016: €174 million) relating to prior periods.
The tax expense was reduced by €91 million (2016:
€49 million) as a result of utilising tax loss carryfor-
wards, for which deferred assets had not previously
been recognised and in conjunction with previously
unrecognised tax credits and temporary differences.
The tax expense resulting from the change in the val-
uation allowance on deferred tax assets relating to tax
losses available for carryforward and temporary dif-
ferences amounted to €67 million (2016: €38 million).
Deferred taxes are determined on the basis of tax
rates which are are currently applicable or expected
to apply in the relevant national jurisdictions when
the amounts are recovered. After taking account of an
average municipal trade tax multiplier rate (Hebesatz)
of 425.0% (2016: 425.0%), the underlying income tax
rate for Germany was as follows:
11
Income from investments in subsidiaries
14
13
in %
2017
2016
thereof from subsidiaries:
13
and participations
1.1.20171 differences
591
Reclassi-
fications
11,088
35,924
-681
2,123
1,027
1,560
36,833
Other facilities, factory and office equipment
2,674
-91
314
52
70
2,799
Advance payments made and construction in progress
2,255
-97
1,694
-1,325
2
2,525
Property, plant and equipment
51,793
-1,168
168
4,402
228
-299
carryforwards and tax credits
Additions
Disposals
31.12.2017
11,484
386
1,530
-37
286
13,400
-38
271
2,710
943
12,965
385
29
1,750
972
15,100
Intangible assets
Land, titles to land, buildings, including
buildings on third party land
10,940
2,424
1,782
Plant and machinery
Leased products
-15
192
130
1,286
ཟ་རྗ། མ། ལྷ།
Analysis of changes in Group tangible, intangible and investment assets 2016
in € million
Development costs
Goodwill
Intangible assets
Acquisition and manufacturing cost
| | གླ
1.1.2016¹
Additions
Reclassi-
fications
Disposals
31.12.2016
10,522
369
1,455
-2
53,245
100
12,346
Translation
differences
28
Other intangible assets
118
45,595
820
18,281
16,686
44,143
Investments accounted for using
the equity method
2,546
639
418
2,767
Investments in non-consolidated subsidiaries
Participations
-3,047
Other investments
1 Including first-time consolidation.
2 Including assets under construction of €2,010 million.
³ Including €3 million recognised through the income statement and €76 million directly in equity.
-8
74
129
438
710
-7
Non-current marketable securities
recognised on a
Allowance for impairment
2017
Impairment allowances on trade receivables devel-
oped during the year under report as follows:
→ Notes to the
31.12.2017
Balance Sheet
Finished goods and goods for resale
in € million
31.12.2016
10,436
Total
in € million
specific
item basis
group basis
Work in progress, unbilled contracts
1,125
1,157
Raw materials and supplies
Inventories
1,146
1,000
Financial Statements
9,684
Notes to the Group
Balance at 1 January
Group
Financial
Balance at 1 January
8
Allocated (+)/reversed (-)
8
Utilised
-8
8
8
-8
Exchange rate impact
and other changes
1
1
Balance at 31 December
9
9
Prepayments relate mainly to prepaid interest, com-
mission paid to dealerships and amounts paid in
advance to suppliers and contract manufacturers.
Prepayments of €1,136 million (2016: €1,018 million)
have a maturity of less than one year.
Collateral receivables comprise mainly customary
collateral (banking deposits) arising on the sale of
receivables.
153
154
27
Inventories
Inventories comprise the following:
Statements
46
Notes to the Group
Financial Statements
57
2,723
Allowance for impairment
-56
2,882
-57
Net carrying amount
2,667
2,825
in € million
2016
Allowance for impairment
recognised on a
specific
item basis
group basis
Balance at 1 January
84
12
96
Allocated (+)/reversed (-)
Utilised
-21
-21
-19
Total
Gross carrying amount
31.12.2016
31.12.2017
in € million
12,707
11,841
Allocated (+)/reversed (-)
8
-2
6
Utilised
-4
-1
-5
Exchange rate impact
11
and other changes
-1
-2
Balance at 31 December
49
7
56
Out of the total amount recognised for inventories
at 31 December 2017, inventories measured at net
realisable value amounted to €541 million (2016:
€871 million). Write-downs to net realisable value
amounting to €27 million (2016: €101 million) were
recognised in 2017.
The expense recorded in conjunction with inven-
tories during the financial year 2017 amounted to
€55,969 million (2016: €55,129 million).
28
Trade receivables
Trade receivables comprise the following:
-1
group basis
Other taxes
specific
Gross carrying amount
258
Allowance for impairment
-10
296
-9
Net carrying amount
248
287
25
Income tax assets
Income tax assets totalling €1,566 million (2016:
€1,938 million) include claims amounting to €364 mil-
lion (2016: €351 million), which are expected to be
settled after more than one year. Claims may be
settled earlier than this depending on the timing of
proceedings.
Allowances for impairment losses on receivables
relating to credit card business developed as follows
during the year under report:
26
Other assets
Other assets comprise:
in € million
31.12.2017
31.12.2016
2017
Allowance for impairment
recognised on a
Prepayments
2,018
31.12.2016
1,914
31.12.2017
Receivables relating to credit card business comprise
the following:
Derivative instruments
4,341
3,922
Credit card receivables
248
287
Loans to third parties
114
129
Other
184
145
Financial assets
10,334
9,770
thereof non-current
thereof current
2,369
2,705
7,965
7,065
With effect from the financial year 2017, credit
balances arising in conjunction with pre-retirement
part-time working arrangements are secured by
bank guarantees. For this reason, the corresponding
assets are not reported at the balance sheet date. In
the previous year, the amount by which the value of
investment funds exceeded obligations for part-time
working arrangements (€17 million) was reported
under other financial assets.
Allowances for impairment and credit risk
in € million
item basis
-1
1,135
Sundry other assets
832
828
Exchange rate impact and
other changes
-1
-1
Other assets
7,160
6,682
Balance at 31 December
10
10
thereof non-current
thereof current
1,635
1,595
5,525
5,087
in € million
2016
Allowance for impairment
recognised on a
-9
1,537
-9
422
specific
Receivables from companies in which
in € million
item basis
group basis
Total
an investment is held
1,334
1,217
Expected reimbursement claims
847
779
Balance at 1 January
9
9
Collateral receivables
316
387
Allocated (+)/reversed (-)
11
11
Receivables from subsidiaries
276
Utilised
-20
Capital reserves include premiums arising from the
issue of shares and totalled €2,084 million (2016:
€2,047 million). The change related to the share
capital increase arising in conjunction with the issue
of shares of preferred stock to employees amounting
to €37 million.
2
17.6
Mortality Table 2005 G issued by Prof. K. Heubeck (with invalidity rates reduced by 50%)
S2PA tables and S2PA light tables with weightings
In Germany, the so-called "pension entitlement trend"
(Festbetragstrend) also represents a significant actuari-
al assumption for the purposes of determining benefits
payable at retirement and was left unchanged at 2.0%.
Based on the measurement principles contained in
IAS 19, the following balance sheet carrying amounts
apply to the Group's pension plans:
in € million
Germany
United Kingdom
Other
Total
31.12.2017
31.12.2016
31.12.2017
31.12.2016 31.12.2017
31.12.2016
31.12.2017
31.12.2016
Present value of defined benefit
obligations
11,641
11,112
9,594
10,311
1,475
18.3
1,476
20.9
21.3
The following mortality tables are applied in countries,
in which the BMW Group has significant defined
benefit plans:
Germany
United Kingdom
Germany
United Kingdom
Other
31.12.2017
31.12.2016
31.12.2017
31.12.2016
31.12.2017
31.12.2016
1.79
1.80
2.34
2.51
3.13
3.70
1.82
1.78
2.44
2.55
20.8
21.3
Weighted duration of all pension obligations in years
22,710
9,604
1,597
513
521
3,252
4,587
thereof assets
-16
-16
157
158
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
Numerous defined benefit plans exist within the
BMW Group.
The most significant of the BMW Group's pension
plans are described below.
Germany
Both employer- and employee-funded benefit plans
exist in Germany. Benefits paid in conjunction with
these plans comprise old-age retirement pensions as
well as invalidity and surviving dependants' benefits.
The defined benefit plans have been closed to new
entrants. With effect from 1 January 2014, new
employees receive a defined contribution entitlement
with a minimum rate of return. In addition, employees
are given the option of transferring deferred remuner-
ation to a "deferred remuneration retirement plan”.
The fact that the plan involves a minimum rate of
return means that both the defined contribution
entitlement and the deferred remuneration retire-
ment plan are classified in accordance with IAS 19 as
defined benefit plans. In the case of defined benefit
plans involving the payment of a pension, the amount
of benefits to be paid is determined by multiplying a
fixed amount by the number of years of service.
The assets of the German pension plans are adminis-
tered by BMW Trust e. V., Munich, in accordance with
a CTA. The representative bodies of this entity are the
Board of Directors and the Members' General Meeting.
BMW Trust e. V., Munich, currently has seven mem-
bers and three members of the Board of Directors
elected by the Members' General Meeting. The Board
of Directors is responsible for investments, drawing
up and deciding on investment guidelines as well as
monitoring compliance with those guidelines. The
members of the association can be employees, senior
executives and members of the Board of Directors. An
ordinary Members' General Meeting takes place once
every calendar year, and deals with a range of matters,
including receiving and approving the association's
annual report, ratifying the activities of the Board of
Directors and adopting changes to the association's
statutes.
United Kingdom
In the United Kingdom, the BMW Group has defined
benefit plans, which are primarily employer-funded
combined with employee-funded components based
on the conversion of employee remuneration. These
plans are subject to statutory minimum funding
requirements. Benefits paid in conjunction with these
plans comprise old-age retirement pensions as well
as invalidity and surviving dependants' benefits. On
30 September 2017, the defined benefit plans were
closed for all plan participants, with vested benefits
remaining in place. New benefits will be covered by
contributions made to a defined contribution plan.
The pension plans are administered by BMW Pension
Trustees Limited, Hams Hall, and BMW (UK) Trustees
Limited, Hams Hall, both trustee companies which
act independently of the BMW Group. BMW (UK)
Trustees Limited, Hams Hall, is represented by nine
trustees, and BMW Pension Trustees Limited, Hams
Hall, by five trustees. A minimum of one third of the
trustees must be elected by plan participants. The
trustees represent the interests of plan participants
and decide on investment strategies. Funding con-
tributions are determined in agreement with the
BMW Group.
702
Fair value of plan assets
2,469
thereof pension provision
8,643
8,908
in € million
8,714
965
958
19,477
22,899
18,315
Effect of limiting net defined benefit
asset to asset ceiling
3
3
3
3
Carrying amounts at 31 December
2,037
2,469
686
1,597
513
521
3,236
4,587
2,037
Pension level trend
Discount rate
in %
Equity
Number of shares issued
Preferred stock
2017
Shares issued/in circulation at 1 January
Shares issued in conjunction with Employee Share Programme
55,114,404
Less: shares repurchased and re-issued
Shares issued/in circulation at 31 December
Common stock
2016
2017
2016
491,114
114
54,809,404
305,029
29
601,995,196
601,995,196
55,605,404
55,114,404
601,995,196
601,995,196
All Company stock is issued to bearer and each share
has a par value of €1.00. Preferred stock, to which no
voting rights are attached, bear an additional dividend
of €0.02 per share.
In 2017, a total of 491,114 shares of preferred stock
was sold to employees at a reduced price of €55.05 per
share in conjunction with the Company's Employee
Share Programme. These shares are entitled to receive
dividends for the first time with effect from the finan-
cial year 2018.
29
Issued share capital increased by €0.5 million as a
result of the issue to employees of 491,000 shares of
non-voting preferred stock. BMW AG is authorised up
to 14 May 2019 to issue 5 million shares of non-voting
preferred stock amounting to nominal €5.0 million.
At the end of the reporting period, 3.7 million of
these shares amounting to nominal €3.7 remained
available for issue.
In the case of trade receivables, collateral is generally
held in the form of vehicle documents and bank guar-
antees so that the risk of bad debt loss is very limited.
349
2
Balance at 31 December
46
11
57
In addition, trade receivables exist which are overdue
but for which no impairment allowance has been rec-
ognised. Receivables that are overdue by between one
and 30 days do not normally result in bad debt losses
since the overdue nature of the receivables is mainly
due to the timing of receipts. Overdue balances fall
into the following time windows:
in € million
31.12.2017
31.12.2016
1-30 days overdue
31-60 days overdue
187
43
174
61-90 days overdue
19
91-120 days overdue
25
More than 120 days overdue
Balance at 31 December
75
g|༢|གླ←༄
23
17
64
307
In addition, 114 previously issued shares of preferred
stock were acquired and re-issued to employees.
Capital reserves
5,287
36.4%
32.5%
Non-current financial liabilities
53,548
55,405
Current financial liabilities
Total financial liabilities
41,100
42,326
94,648
97,731
Proportion of total capital
Total capital
63.6%
67.5%
148,760
144,839
The equity ratio attributable to shareholders of
BMW AG increased during the financial year by
3.9 percentage points, primarily reflecting the increase
in revenue reserves.
30
Pension provisions
In the case of defined benefit plans, the BMW Group
is required to pay the benefits it has granted to present
and past employees. Defined benefit plans may be
covered by provisions or pension assets. Pension
commitments in Germany are mostly covered by
assets contributed to BMW Trust e. V., Munich, in
conjunction with a contractual trust arrangement
(CTA). Funded plans also exist in the UK, the USA, ¬
Switzerland, Belgium and Japan. In the meantime,
most defined benefit plans have been closed to new
entrants.
The assumptions stated below, which depend on the
economic situation in the relevant country, are used
to measure the defined benefit obligation of each
pension plan. The following weighted average values
have been used for Germany, the United Kingdom
and other countries:
Proportion of total capital
47,108
54,112
Equity attributable to shareholders
of BMW AG
Revenue reserves
Revenue reserves comprise the non-distributed earn-
ings of companies consolidated in the Group financial
statements. In addition, remeasurements of the net
defined benefit liability for pension plans are also
presented in revenue reserves.
It is proposed that the unappropriated profit of
BMW AG for the financial year 2017 amounting
to €2,630 million according to HGB be utilised as
follows:
Distribution of a dividend of €4.02 per share of
preferred stock (€222 million).
Distribution of a dividend of €4.00 per share of
common stock (€2,408 million).
The proposed distribution was not recognised as a
liability in the Group Financial Statements.
Accumulated other equity
Accumulated other equity comprises amounts recog-
nised directly in equity resulting from the translation
of the financial statements of foreign subsidiaries,
changes in the fair value of derivative financial
instruments and marketable securities and the related
deferred taxes.
155
156
Group
Financial
Statements
Exchange rate impact and
other changes
Notes to the Group
Financial Statements
Balance Sheet
Capital management disclosures
The BMW Group's objectives with regard to capital
management are to safeguard over the long-term the
Group's ability to continue as a going concern and to
provide an adequate return to shareholders.
The capital structure is managed in order to meet
needs arising from changes in economic conditions
and the risks of the underlying assets.
The BMW Group is not subject to any unified external
minimum equity capital requirements. Within the
Financial Services segment, however, there are a
number of individual entities which are subject to
equity capital requirements of relevant regulatory
banking authorities.
In order to manage its capital structure, the
BMW Group uses various instruments, including the
amount of dividends paid to shareholders and share
buybacks. Moreover, the BMW Group actively manag-
es its debt capital, carrying out funding activities with
a target debt structure in mind. A key aspect in the
selection of financial instruments is the objective to
achieve matching maturities for the Group's financing
requirements. In order to reduce non-systematic risk,
the BMW Group uses a variety of financial instru-
ments available on the world's capital markets to
achieve diversification.
The capital structure at the end of the reporting period
was as follows:
in € million
31.12.2017
31.12.2016
→ Notes to the
5,447
Total
Marketable securities and
Other comprehensive income
513
thereof from discontinued operations
-1
-151
thereof from continuing operations
-10
-15
-17
-167
362
1,031
1,337
Profit/loss after tax
2
3
363
454
Income taxes
22
2
Interest expenses
1
-121
30
2
-4
2016
2017
2016
2017
2016
2017
IONITY
DriveNow
THERE
BMW Brilliance
DISCLOSURES RELATING TO
30
in € million
134
258
Dividends received by the Group
-10
-15
-17
-171
364
1,061
1,216
Total comprehensive income
* Revenues relate only to the month of January up to the time of loss of control of HERE.
46
Interest income
-12
THERE
BMW Brilliance
Financial information relating to equity accounted
investments is summarised in the following tables:
7
in € million
Balance Sheet
impact on the results of operations, financial position
and net assets of the BMW Group.
→ Notes to the
Notes to the Group
Financial Statements
Group
Financial
Statements
150
DriveNow
149
It was planned to sell a 10% stake in HERE to a consor-
tium consisting of NavInfo Co. Ltd., Beijing, Tencent
Holdings Ltd., Shenzhen, and GIC Private Ltd. of
Singapore. The sale will not be completed, howev-
er, as no practicable approach was found to obtain
approval from the relevant authorities during a regu-
latory review process. The transaction will therefore
not be pursued.
In December 2016, THERE signed contracts relating
to the sale of shares in HERE International B.V.,
Amsterdam (HERE). The sale of 15% of the shares to
Intel Holdings B.V., Schiphol-Rijk was completed on
31 January 2017. The sale of the shares resulted in a
loss of control, as defined by IFRS 10, at the level of
THERE. For this reason, at 31 December 2016 THERE
reported its investment in HERE as "held-for-sale".
Since THERE continues to have a significant influ-
ence over HERE, the latter is included in THERE'S
consolidated financial statements as an associated
company using the equity method. The loss of control
and the subsequent deconsolidation of HERE and its
subsidiaries led to a positive earnings effect at the
level of THERE. The BMW Group portion amounted
to €183 million, which was recognised in the result
from equity accounted investments.
In the financial year 2015, BMW AG, Daimler AG
and AUDI AG, Ingolstadt (Audi AG) jointly acquired
the mapping and location-based services business
(HERE Group) of Nokia Corporation, Helsinki. HERE'S
digital maps are laying the foundations for the next
generation of mobility and location-based services,
providing the basis for new assistance systems and,
ultimately, fully automated driving.
During the financial year under report, the
BMW Group, Daimler AG, Stuttgart (Daimler AG),
the Ford Motor Company and the Volkswagen Group,
each with equal shareholdings, founded the joint
venture IONITY Holding GmbH & Co. KG. IONITY'S
business model envisages the construction and opera-
tion of high-performance charging stations for battery
electric vehicles in Europe. The plan is to build some
400 fast-charging stations by 2020 in order to support
electric mobility on long-haul routes and thereby
establish the market.
The BMW Group maintains the joint ventures
DriveNow GmbH & Co. KG and Drive Now Verwal-
tungs GmbH together with Sixt SE, Pullach. DriveNow
offers car-sharing services in major German cities and
abroad. In January 2018, the BMW Group signed an
agreement with Sixt SE for the complete acquisition
of the shares in DriveNow. The agreement was signed
subject to the approval of the antitrust authorities.
DriveNow is valued at €418 million in total. Apart
from a one-time positive earnings impact, the pur-
chase is not expected to have a significant impact on
the results of operations, financial position or net
assets of the BMW Group.
BMW Brilliance produces mainly BMW brand models
for the Chinese market and also has engine manufac-
turing facilities, which supply the joint venture's two
plants with petrol engines.
Investments accounted for using the equity method
Investments accounted for using the equity
method comprise the joint venture BMW Brilliance
Automotive Ltd. (BMW Brilliance), the joint ven-
tures DriveNow GmbH & Co. KG and DriveNow
Verwaltungs GmbH (DriveNow), the joint venture
IONITY Holding GmbH & Co. KG (IONITY) and
the interest in the associated company THERE
Holding B.V. (THERE).
22
Impairment losses amounting to €148 million (2016:
€384 million) were recognised on leased products in
2017 as a consequence of changes in residual value
expectations. No income was recognised in 2017 from
the reversal of impairment losses (2016: € – million).
Contingent rents of €52 million (2016: €46 million),
based principally on the distance driven, were rec-
ognised in income. The agreements have, in part,
extension and purchase options.
4
In December 2017, BMW AG, Audi AG and Daimler AG
signed contracts for the sale of shares in THERE. It
is planned to sell 5.9% stakes each to Robert Bosch
Investment Nederland B. V., Boxtel, and Continental
Automotive Holding Netherlands B.V., Maastricht.
The sale is to be executed in equal parts by BMW AG,
Audi AG and Daimler AG. Completion of the transac-
tion depends on approval from the relevant authori-
ties and is expected to take place in the first quarter
of 2018. The sale is expected to have no significant
2017
IONITY
2016
-15
-17
-149
1,328
1,619
Profit/loss before financial result
52
486
58
71
1,240
2017
71*
14,628
637
Scheduled depreciation
Revenues
THE INCOME STATEMENT
DISCLOSURES RELATING TO
2016
2017
2016
2017
2016
2017
12,991
17,850
2016
Non-current assets
611
22
102
10
Eliminations
-666
-414
Carrying amount
2,023
1,925
732
611
2
10
10
1 Corresponds to the consolidated equity capital provided by the shareholders of Drive Now GmbH & Co. KG and its subsidiaries.
² The BMW Group holds 52.8% (2016: 67.2%) of the net assets at 31 December 2017. Due to the allocation of voting power within the decision-making
bodies of the two entities, operations remain subject to joint control.
23
Receivables from sales financing
Receivables from sales financing comprise the fol-
lowing:
Allowances on receivables from sales financing, which
arise only within the Financial Services segment,
developed as follows:
in € million
Credit financing for retail customers
and dealerships
732
2,339
2,689
Group's interest in net assets
Assets
investment funds
11,122
10,183
2,195
3,394
26
33
50
Provisions and liabilities
5,745
Finance lease receivables
5,505
22
18
10
Net assets
5,377
4,678
2,195
1,832
4
15
40
1,562
Receivables from
sales financing
31.12.2017
4,678
5,377
Equity
46
33
26
592
289
4,405
5,212
Current assets
2,195
45
9
209
289
2,106
2,617
Cash and cash equivalents
4
2,802
1,906
5,779
5,910
20
THE BALANCE SHEET
1,832
151
31.12.2016
2017
Allowance for impairment
recognised on a
INFORMATION
AGGREGATED FINANCIAL
RECONCILIATION OF
10
18
22
518
4,835
41
4,783
73
87
6
Current financial liabilities
1,044
670
962
Non-current provisions and liabilities
525
Non-current financial liabilities
40
Current provisions and liabilities
17,982
-166
13
31.12.2017
31.12.2016
Gross investment in finance leases
due within one year
6,122
due between one and five years
13,772
5,921
12,574
Fixed income securities
4,662
4,449
Stocks and other equity
capital instruments
534
734
due later than five years
21
32
Other debt securities
in € million
31.12.2016
31.12.2017
Marketable securities and investment funds relate to
available-for-sale financial assets and comprise:
59,588
52,951
Impairment allowances recognised
on a group basis
-446
-467
Carrying amount without impairment
allowances
9,010
12,270
251
The estimated fair value of collateral for receivables
on which impairment losses were recognised totalled
€35,060 million (2016: €30,542 million) at the report-
ing date. This collateral related primarily to vehicles.
The carrying amount of assets held as collateral and
taken back as a result of payment default amounted
to €45 million (2016: €153 million).
80,434
78,260
151
152
Group
Financial
Statements
Finance leases are analysed as follows:
→ Notes to the
Balance Sheet
Net carrying amount
104
19,915
18,527
in € million
31.12.2017
31.12.2016
Fixed income securities
due within three months
628
780
due later than three months
4,034
Financial assets comprise:
3,669
due within three months
251
104
due later than three months
Debt securities
4,913
4,553
31.12.2017
31.12.2016
Other debt securities
on a group basis
Financial assets
1,869
Marketable securities and
investment funds
5,447
5,287
Present value of future minimum
lease payments
due within one year
5,655
due between one and five years
24
12,358
The contracted maturities of debt securities are as
follows:
due later than five years
20
Minimum lease payments
18,033
16,658
in € million
Unrealised interest income
1,882
5,348
11,278
impairment allowances recognised
32
-141
-8
-345
Exchange rate impact
and other changes
-48
-17
-65
Balance at 31 December
701
446
1,147
Non-guaranteed residual values that fall to the ben-
efit of the lessor amounted to €140 million (2016:
€118 million).
In December 2017, the Financial Services segment
sold a multi-brand portfolio amounting to €939 mil-
lion for strategic reasons.
Utilised
Impairment allowances
in € million
2016
Allowance for impairment
recognised on a
specific
item basis
group basis
Total
in € million
31.12.2017
31.12.2016
Balance at 1 January
963
*Balance at 1 January adjusted due to initial consolidation of entities.
535
145
143
later than five years
8,692
9,154
Gross carrying amount of items with
9,383
between one and five years
8,586
within one year
31.12.2016
31.12.2017
in € million
Leased products
Minimum lease payments of non-cancellable oper-
ating leases amounting to €17,982 million (2016:
€17,850 million) fall due as follows:
21
62,401
2
61,602
specific
item basis
group basis
Total
18,033
16,658
Balance at 1 January*
943
469
1,412
80,434
78,260
Allocated (+)/reversed (-)
in € million
1,498
-337
248
-701
-934
Balance at 31 December
934
467
-2
27
Allocated (+)/reversed (-)
-105
and other changes
Impairment allowances recognised
on a specific-item basis
thereof for finance lease receivables
1,401
14,440
12,983
on a specific-item basis
impairment allowances recognised
-345
-41
-304
Utilised
Gross carrying amount of items with
223
-25
Exchange rate impact
25
2016
2016
2017
COMPONENTS OF PLAN ASSETS
Equity instruments
1,682
1,726
478
611
222
235
2017
2016
United Kingdom
Other
33
-1,339
1,166
-173
-173
22,899
-18,315
4,584
4,587
4,587
Allocations to pension plans in the financial year 2017
include a transfer from plan assets for pre-retirement
part-time working arrangements to plan assets for
pension plans amounting to €353 million.
159
Total
160
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
Gains on plan settlements resulted from the closure of
defined benefit plans in the UK. Vested benefits from
these plans will be increased in line with inflation in
the future. Compensation amounting to €140 million
was paid in conjunction with the closure of the plans.
The net gain arising on plan settlement amounted to
€72 million.
7
Depending on the cash flow profile and risk structure
of the pension obligations involved, pension plan
assets are invested in various investment classes.
Plan assets in Germany, the UK and other countries
comprised the following:
in € million
Germany
2,382
2017
2016
2017
Group
Financial
Statements
2,572
5,734
5,668
26
33
191
Money market funds
25
93
25
93
Real estate funds
2,230
3,092
36
35
507
620
1,687
2,437
thereof non-investment grade
9,738
9,399
422
42
11
233
37
5,439
6,354
6,071
469
458
12,491
11,968
thereof investment grade
3,231
3,752
Debt instruments
5,564
5
5
5
5
Other
82
51
82
51
Absolute return funds
434
676
the net defined
benefit asset to
the asset ceiling
-85
-134
Gains (-) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the
asset ceiling
-152
-152
-152
322
322
322
Gains (-) or losses (+) arising from changes in financial assumptions
Gains (-) or losses (+) arising from changes in demographic assumptions
-134
18
-548
450
-98
-98
22,710
-19,477
3,233
3,236
3,252
18
-134
Transfers to fund
Employee contributions
Total with quoted market price
637
-619
-86
86
-1,165
-1,165
-1,165
REMEASUREMENTS
Gains (-) or losses (+) arising from settlements
Past service cost
Interest expense (+)/income (−)
Current service cost
EXPENSE/INCOME
1 January 2016
in € million
thereof assets
thereof pension provision
31 December 2017
Translation differences and other changes
Pensions and other benefits paid
Defined
benefit
obligation
-643
Plan assets
19,926
4,093
4,093
4,093
-40
-40
-40
-118
-118
-118
Gains (-) or losses (+) arising from changes in financial assumptions
Gains (-) or losses (+) arising from changes in demographic assumptions
Gains (-) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the
asset ceiling
Transfers to fund
Pensions and other benefits paid
Translation differences and other changes
31 December 2016
thereof pension provision
thereof assets
-827
-827
-827
85
Employee contributions
-1,836
-1,836
-1,836
-16,930
2,996
-16
Limitation of
Net defined
benefit liability
3
2,999
557
557
557
557
-479
78
78
-171
-171
-171
-8
-8
-8
Gains (-) or losses (+) on plan assets, excluding amounts included
in interest income
Total
7,350
100.0
7,074
Liabilities to banks
10,251
3,997
644
14,892
Commercial paper
3,852
3,852
13,512
Derivative instruments
1,656
1,496
179
3,331
497
130
622
1,249
Other
Financial liabilities
133
10,063
Maturity within
Maturity between
Maturity later
in € million
one year
one and five years
than five years
Total
3,316
Bonds
25,496
9,683
44,421
Asset-backed financing transactions
6,765
9,709
16,474
Liabilities from customer deposits (banking)
9,242
31.12.2016
42,326
11,261
Additions
Translation
differences
1.1.2017
in € million
Balance Sheet
Other provisions changed during the year as follows:
Other provisions
31
Reversal of
discounting
→ Notes to the
Notes to the Group
Statements
Group
Financial
162
161
-0.7
-158
-0.7
Financial Statements
44,144
thereof due
Reversed
-590
97,731
-19
2,191
social expenses
Obligations for personnel and
1,300
4,825
Utilised
-70
43
2,221
-307
4,813
obligations, product guarantees
Statutory and non-statutory warranty
within one year
31.12.2017
-1,875
-155
94,648
43,865
Other provisions
10,918
-526
6,347
43
-4,572
-460
11,750
1,342
6,313
Provisions for obligations for personnel and social
expenses comprise mainly performance-related
remuneration components, early retirement part-time
working arrangements and employee long-service
awards.
Provisions for other obligations cover numerous spe-
cific risks and uncertain obligations, in particular for
litigation and liability risks.
Other obligations for ongoing operational expenses
include in particular expected payments for bonuses
and other price deductions.
Income from the reversal of other provisions amount-
ing to €322 million (2016: €480 million) is recorded
in cost of sales and in selling and administrative
expenses.
32
Income tax liabilities
Current income tax liabilities totalling €1,124 million
(2016: €1,074 million) include liabilities of €68 million
(2016: €33 million) which are expected to be settled
after more than twelve months. Liabilities may be
settled earlier than this depending on the timing of
proceedings.
Depending on when claims occur, it is possible that the
BMW Group may be called upon to fulfil the warranty
or guarantee obligations over the whole period of
the warranty or guarantee. Expected reimbursement
claims at 31 December 2017 amounted to €847 million
(2016: €779 million).
33
1,620
-614
2,261
-1,624
-27
2,782
1,933
Other obligations
2,200
-81
-116
1,110
-247
2,523
1,738
Other obligations for ongoing
operational expenses
1,714
-119
755
-459
9,683
Financial liabilities
in € million
3,170
1,048
12,658
Commercial paper
Derivative instruments
Other
Financial liabilities
4,461
8,440
4,461
544
173
1,090
513
150
469
1,132
41,100
373
Financial liabilities of the BMW Group comprises the
following:
Liabilities to banks
132
31.12.2017
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
Total
Bonds
11,132
13,572
25,887
44,880
Asset-backed financing transactions
6,037
10,818
16,855
Liabilities from customer deposits (banking)
10,144
3,296
7,861
decrease of 0.25%
0.7
165
316
354
Other
1,210
1,372
46
47
745
141
617
708
Absolute return funds
27
27
1
1
9
10
419
17
65
51
958
966
8,714
8,908
8,643
9,603
31 December
3,626
86
4,222
135
1,924
1,834
1,478
2,253
Total without quoted market price
432
581
224
19,477
16
1,003
1
2
195
198
thereof investment grade
954
1,340
3
198
408
543
935
Debt instruments
14,689
15,255
734
831
6,790
404
Cash and cash equivalents
198
(funds without a rating)
902
123
697
662
183
240
Real estate
229
thereof mixed funds
1
227
thereof non-investment grade
527
1,141
179
404
348
737
2
18,315
Employer contributions to plan assets are expected to
amount to €573 million in the coming year.
The BMW Group is exposed to risks arising both from
defined benefit plans and defined contribution plans
with a minimum return guarantee. The discount rates
used to calculate pension obligations are subject to
market fluctuation and therefore influence the level of
the obligations. Furthermore, changes in other actu-
arial parameters, such as expected rates of inflation,
also have an impact on pension obligations. In order
to reduce currency exposures, a substantial portion
of plan assets is either invested in the same currency
as the underlying plan or hedged by means of cur-
rency derivatives. As part of the internal reporting
procedures and for internal management purposes,
financial risks relating to the pension plans are report-
ed using a value-at-risk approach by reference to the
pension deficit. The investment strategy is also subject
17.6
4,031
17.1
3,878
decrease of 0.75%
increase of 0.25%
-12.8
-2,939
-13.5
712
-3,055
in %
in € million
in %
31.12.2016
in € million
31.12.2017
Change in defined benefit obligation
In the UK, the sensitivity analysis for the pension
level trend also takes account of restrictions due to
caps and floors.
increase of 0.75%
Pension entitlement trend
3.1
3.3
0.7
162
increase of 0.25%
-3.7
-854
-3.8
-855
decrease of 1 year
747
3.7
3.8
856
increase of 1 year
-3.1
-713
-3.0
-672
decrease of 0.25%
853
Average life expectancy
Pension level trend
Discount rate
23.9
67.3
66.6
31.12.2016
31.12.2017
31.12.2016
31.12.2017
31.12.2017 31.12.2016
26.7
Other
Germany
Defined benefit obligation
Former employees with vested benefits
Pensioners
Current employees
in %
The defined benefit obligation relates to current
employees, pensioners and former employees with
vested benefits as follows:
to regular review together with external consultants,
with the aim of ensuring that investments are struc-
tured to match the timing of pension payments and
the expected development of pension obligations. In
this way, fluctuations in pension funding shortfalls
are reduced.
United Kingdom
78.5
79.1
28.3
follows a non-linear pattern, estimates made on the
basis of the specified sensitivities are only possible
with this restriction. The calculation of sensitivities
using ranges other than those specified could result
in a disproportional change in the defined benefit
obligation.
It is only possible, however, to aggregate sensitivities
to a limited extent. Since the change in obligation 7
The sensitivity analysis provided below shows the
extent to which changes in individual factors at the
end of the reporting period influence the defined
benefit obligation.
100.0
100.0
100.0
100.0
100.0
3.4
3.7
30.2
31.1
4.9
5.1
17.5
17.8
43.1
45.0
27.8
7,165
-590
4,276
-212
variable
GBP 925 million
1.8
0.8
fixed
CNY 2,000 million
3.0
3.3
fixed
INR 8,000 million
2.0
8.0
fixed
GBP 250 million
2.5
4.5
Other
fixed
KRW 380,000 million
3.6
2.7
The following details apply to commercial
Issuer
paper:
Issue volume
in relevant currency
(ISO-Code)
Weighted average
maturity period
(in days)
Weighted average
nominal interest rate
(in %)
BMW Finance N.V.
1.1
EUR 1,125 million
3.0
variable
EUR 2,500 million
7.6
3.2
fixed
GBP 300 million
5.0
2.0
20
fixed
HKD 334 million
3.0
2.0
fixed
JPY 30,000 million
AUD 500 million
3.0
BMW US Capital, LLC
fixed
USD 9,270 million
6.1
2.1
variable
CAD 300 million
3.0
2.2
BMW Canada Inc.
fixed
CAD 1,850 million
4.2
2.0
0.2
60
-0.4
BMW International Investment B.V.
5
856
Payables to other companies in which an investment is held
744
744
Payables to subsidiaries
129
129
Social security
75
23
98
Other
Other liabilities
346
5,031
7
5,198
10,779
4,927
483
16,189
31.12.2016
Maturity within
in € million
one year
Maturity between
one and five years
Maturity later
than five years
Total
Deferred income
160
505
Deposits received
934
GBP 450 million
59
0.5
BMW US Capital, LLC
USD 3,325 million
22
1.4
BMW India Financial Services Private Ltd.
INR 4,500 million
155
7.1
34
Other liabilities
Other liabilities comprise the following items:
in € million
31.12.2017
Maturity within
934
Other taxes
1,056
122
934
7,174
fixed
471
Advance payments from customers
Deferred income
Total
Maturity later
than five years
Maturity between
one and five years
one year
2,427
2,599
2.8
AUD 130 million
16,855
13,572
12,658
4,461
Financial liabilities towards companies in which an
investment is held
615
124
739
Other (excluding interest payable)
811
-156
151
-88
44,880
718
94,577
4,023
151
-4,541
-328
1
93,883
163
164
Group
Financial
Statements
Bonds comprise:
Notes to the Group
Financial Statements
→ Notes to the
Issuer
Liabilities relating to financing activities
Balance Sheet
1
953
in € million
Liabilities related to financing activities can be rec-
onciled as follows:
Cash inflows/
1.1.2017
outflows
Changes due to
the acquisition
or disposal of
companies
Changes due to
exchange rate
factors
Changes in
fair values
Other changes
31.12.2017
Bonds
44,421
2,687
-344
-1,901
Asset-backed financing transactions
16,474
1,338
-957
Liabilities from customer deposits (banking)
13,512
656
-596
Liabilities to banks
14,892
-1,579
-655
Commercial paper
3,852
-328
Interest
Issue volume
in relevant currency
(ISO-Code)
Weighted average
fixed
HKD 1,842 million
4.2
2.0
fixed
JPY 19,100 million
5.8
0.4
fixed
NOK 2,400 million
3.8
1.9
BMW Finance N.V.
fixed
2.3
SEK 1,750 million
1.9
variable
EUR 1,500 million
3.0
0.1
variable
NZD 30 million
3.0
1.9
variable
USD 958 million
3.9
1.4
fixed
5.0
6.2
GBP 1,900 million
fixed
maturity period
(in years)
Weighted average
nominal interest rate
(in %)
variable
EUR 6,519 million
2.1
0.0
variable
GBP 220 million
1.1
0.6
variable
USD 40 million
2.0
2.1
fixed
AUD 490 million
1.5
6.8
EUR 17,450 million
fixed
4.3
3.0
3.5
CNH 1,300 million
2.6
4.0
USD 300 million
fixed
3.8
5.9
fixed
4,238
419
7,256
Available for sale
31.12.2016
31.12.2017
31.12.2016
Cash funds
Loans and receivables
31.12.2017
31.12.2016
31.12.2017
366
534
80,434
78,260
5,447
Trade receivables
5,287
129
248
287
184
145
9,039
7,880
2,667
2,825
Other assets
Receivables from subsidiaries
276
422
Receivables from companies in which an investment is held
112
1,334
Cash and cash equivalents
Credit card receivables
2,444
In addition, the following commitments exist for the
BMW Group at the reporting date:
in € million
31.12.2017
31.12.2016
Purchase commitments for
property, plant and equipment
4,137
3,141
Purchase commitments for
intangible assets
1,804
1,363
167
168
Group
Financial
Statements
Other
Notes to the Group
Financial Statements
37
Financial instruments
The carrying amounts of financial instruments are
assigned to IAS 39 categories and cash funds as fol-
lows:*
in € million
ASSETS
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Marketable securities and investment funds
Loans to third parties
→ Other Disclosures
1,217
Collateral receivables
219
1 January 2017
EXPENSE/INCOME
Current service cost
Interest expense (+)/income (-)
Past service cost
Gains (-) or losses (+) arising from settlements
REMEASUREMENTS
Gains (-) or losses (+) on plan assets, excluding amounts included
in interest income
Defined
benefit
obligation
Plan assets
Total
22,899
-18,315
4,584
in € million
Limitation of
the net defined
benefit asset to
the asset ceiling
3
4,587
581
581
581
489
-408
81
81
-2
-2
-2
-212
-212
Net defined
benefit liability
plans can be derived as follows:
The change in the net defined benefit liability for pension
*The carrying amounts of cash flow and fair value hedges are allocated to the category "Held for trading" for the sake of clarity.
287
97
100
Other
1,108
1,124
Total
9,258
8,167
86,363
84,409
5,910
5,921
LIABILITIES
Financial liabilities
Bonds
Liabilities to banks
Total
Other
Payables to other companies in which an investment is held
Payables to subsidiaries
Other liabilities
Trade payables
2,474
Other
Fair value hedges
Cash flow hedges
Derivative instruments
Asset-backed financing transactions
Commercial paper
Liabilities from customer deposits (banking)
Other derivative instruments
895
849
1,102
Deferred income comprises the following items:
166
Group
Financial
Statements
Notes to the Group
Financial Statements
Notes to the
Balance Sheet
→ Other Disclosures
in € million
Deferred income relating to service contracts
Deferred income from lease financing
Grants
Other deferred income
Deferred income
Deferred income relating to service contracts com-
prises service and repair work as well as telematics
services and roadside assistance agreed to as part of
the sale of a vehicle (in some cases multi-component
arrangements). Deferred income from lease financing
relates primarily to down payments on leases.
165
Grants comprise mainly public sector funds to support
regional structures and which have been invested
in the production plants in Brazil, Mexico, Leipzig
and Berlin. The grants are partly subject to holding
periods for the assets concerned of up to five years
and/or minimum employment figures. Grant income
is recognised in the income statement over the useful
lives of the assets to which they relate.
Trade payables
Trade payables have the following maturities:
in € million
31.12.2017
31.12.2016
Maturity within one year
9,731
8,512
Maturity between one and five years
Maturity later than five years
Trade payables
9,731
8,512
31.12.2017
35
accounts.
Sundry other liabilities include mainly bonuses for
services already performed as well as sales promotions,
commission payable and credit balances on customers'
15,555
Advance payments from customers
847
130
977
Other taxes
807
807
Deposits received
501
387
5
893
Payables to other companies in which an investment is held
615
615
Payables to subsidiaries
99
434
4,923
10,198
Other liabilities
4,816
10
31.12.2016
147
Other
92
21
71
Social security
99
4,659
-590
Total
thereof due
399
204
199
Guarantees*
10
11
Other
203
249
Contingent liabilities
816
485
* Prior year's figure has been adjusted.
Other contingent liabilities comprise mainly risks
relating to taxes and customs duties.
26
The BMW Group determines its best estimate of con-
tingent liabilities on the basis of information available
at the reporting date. This assessment may change
over time and is adjusted regularly on the basis of
new information and circumstances. A part of risks
is covered by insurance.
In July 2017, cartel allegations against five German car
manufacturers appeared in the press. The BMW Group
subsequently launched an internal investigation,
which has not yet been completed. In October 2017,
the European Commission began an inspection at the
BMW Group. A number of class action lawsuits were
brought in the USA and Canada. Possible risks for the
BMW Group cannot be quantified at present; further
disclosures pursuant to IAS 37.86 cannot be provided
at present.
Regulatory agencies have ordered the BMW Group
to recall various vehicle models in connection with
airbags supplied by the Takata group of companies.
Provision for the costs involved has been recognised
within warranty provisions. In addition to the risks
already covered by warranty provisions, it cannot be
ruled out that further BMW Group vehicles will be
affected by future recall actions. Further disclosures
pursuant to IAS 37.86 cannot be provided at present.
Other financial commitments
In addition to liabilities, provisions and contingent
liabilities, other financial commitments consist in
particular of rental and leasing contracts for buildings,
property, machinery, tools, offices and other facilities.
Contracts have a term of between one and 84 years
and include in part renewal and purchase options
or price adjustments in the form of index-linked or
graduated rent, for example to compensate inflation.
In 2017, an expense amounting to €430 million (2016:
€432 million) was recognised for payments on oper-
ating leases.
The total minimum future leasing payments from
uncancellable rental contracts and operating leases
is represented by maturity as follows:
in € million
31.12.2017
31.12.2016
due within one year
446
447
due between one and five years
due later than five years
Other financial obligations
1,179
In June 2016, Germany's Federal Cartel Agency con-
ducted searches at various carmakers and suppliers,
including BMW AG, in relation to the purchase of steel.
The respective official investigations have not yet been
completed. Further disclosures pursuant to IAS 37.86
cannot be provided at present.
31.12.2016
31.12.2017
Litigation
Total
within one year
4,167
1,371
4,412
1,474
2,361
973
2,241
1,037
332
28
382
30
314
55
221
Investment subsidies
in € million
balance sheet date:
The following contingent liabilities existed at the
Contingent liabilities
commitments
thereof due
within one year
Contingent liabilities and other financial
OTHER DISCLOSURES
2,599
7,256
2,427
7,174
58
36
Customer deposit liabilities arise in the BMW Group's
own banks, notably in Germany and the USA, which
offer deposit and investment products.
7
Raw material
Other liabilities
Other income/expenses
Impairment losses/reversals of impairment losses
Loans and receivables
Balance at 31 December
52
93
-39
-44
thereof recognised in the income statement during the period under report
28
41
Total change during the year
24
52
Balance at 1 January
Accumulated other equity
13
14
Net income from participations and investments in subsidiaries
-155
48
Gains and losses on sale and fair value measurement of marketable securities held for sale
(including investments in subsidiaries and participations measured at cost)
Available-for-sale
3
Gains/losses on investments measured at fair value through profit and loss
Fair value option
1,265
961
Income/expenses
Gains/losses from the use of derivative instruments
-162
-94
Fair value gains and losses recognised on derivatives
and recorded initially in accumulated other equity
are reclassified to cost of sales when the derivatives
mature.
78
1,515
Balance at 31 December
550
-103
thereof reclassified to the income
statement
-1,337
1,415
1,437
Total changes during the year
78
Balance at 1 January
2016
2017
in € million
The impact of cash flow hedges on accumulated other
equity is shown as follows:
Cash flow hedges
The disclosure of interest income resulting from the
unwinding of discount on future expected receipts
applies at BMW Group only where assets have been
discounted as part of the process of determining
impairment losses of financial assets. Due to the
assumption that the major part of income that is
subsequently recovered is received within one year,
the discounted interest is considered insignificant and
is not taken into account in determining impairment
losses.
No impairment losses were recorded in the income
statement during the year under report (2016:
€76 million) on available-for-sale marketable securities
reported as investments for which value changes are
recognised directly in equity. Reversals of impairment
losses on marketable securities reported as invest-
ments amounting to €67 million (2016: € - million)
were recognised directly in equity.
Notes to the Group
Financial Statements
→ Other Disclosures
Group
Financial
Statements
174
Net interest expenses from interest rate and interest
rate/currency swaps amounted to €108 million (2016:
€120 million).
in the default risk. Such credit-risk related changes in
fair values are calculated as a general rule by deducting
changes relating to the market risk from the change
in fair value.
In the case of financial instruments for which the
fair value option is applied, no significant changes in
fair values arose in the financial year 2017 or on an
accumulated basis which were attributable to changes
Gains/losses from the use of derivatives relate primari-
ly to fair value gains or losses arising on stand-alone
derivatives.
586
162
-38
-210
At 31 December 2017, the BMW Group held deriva-
tive financial instruments (mainly forward currency
contracts) in order to hedge currency risks attached
to future or existing transactions. These derivative
instruments are intended to hedge forecast sales
denominated in a foreign currency over the coming
32 months (2016: 44 months). The income statement
impact of the hedged cash flows will be recognised as
a general rule in the same periods in which external
revenues are recognised. It is expected that €336 mil-
lion of net gains, recognised in equity at the end of
the reporting period, will be reclassified to profit
and loss in the new financial year (2016: net losses
of €113 million).
2016
2,162
-7
-1
-6
3
3
8
8
105
Financial Instru-
ments Level 3
2
103
Options on
unquoted equity
instruments
Convertible bonds
Unquoted equity
instruments
of the previous financial year.
No Level 3 financial instruments existed at the end
31. December 2017
Currency translation differences
Gains (+)/losses (-) recognised in accumulated other equity
Gains (+)/losses (-) recognised in the income statement
Disposals
Additions
1. January 2017
in € million
The balance sheet carrying amount of Level 3 financial
instruments developed as follows:
Detailed listing and quantification of potential sen-
sitivities of the input parameters is not considered
meaningful in view of the valuation methodology
applied. An increase in input parameters would
generally also lead to a similar increase in valuation.
7
Level 3 financial assets relate to investments within a
private equity fund that was newly established dur-
ing the financial year under report. Private equity
companies are valued on the basis of net asset value,
which is determined using relevant information that
is not available in the public domain. The fund man-
ager assesses the underlying individual companies
in accordance with the guidelines for international
private equity and venture capital valuations (IPEV).
2
Options on unquoted equity instruments
105
2017
2
109
2,753
255
3,506
-1,169
-1,169
-835
-835
3,331
3,922
1,090
4,341
Reported on equity
and liabilities side
Reported on
assets side
and liabilities side
31.12.2016
Reported on Reported on equity
assets side
31.12.2017
Held for trading
in € million
arising for each of the categories of financial instru-
ment defined by IAS 39:
The following table shows the net gains and losses
Gains and losses on financial instruments
Gross amount of derivatives which can be offset in case of insolvency
Net amount after offsetting
Balance sheet amounts as reported
in € million
173
netting agreements or similar contracts are in place,
actual offsetting would be possible in principle, for
instance in the case of insolvency. Offsetting would
have the following impact on the carrying amounts
of derivatives:
In the BMW Group, offsetting of financial assets and
liabilities relating to derivative financial instruments is
generally to be considered. No offsetting is recognised
in the financial statements, however, as the necessary
criteria are not met. Since legally enforceable master &
Offsetting of financial instruments
2
Company performance
Contractual rights by share class
Exercise price
As in the previous year, the BMW Group held no
derivative financial instruments at 31 December 2017
which were designated as cash flow hedges to hedge
against interest rate risks.
Fair value hedges
17,099
9,938
7,161
Asset-backed financing transactions
46,809
10,089
26,766
9,954
Bonds
Total
Maturity later
than five years
Maturity between
one and five years
one year
in € million
Maturity within
31.12.2016
109,115
9,748
46,004
53,363
752
451
191
110
1,214
111
637
466
Total
Liabilities to banks
Other financial liabilities
11,238
558
As a further reduction of risk, a syndicated credit
line totalling €8 billion (2016: €6 billion) assured by
a consortium of international banks is available to
the BMW Group. Intra-group cash flow fluctuations
are balanced out by the use of daily cash pooling
arrangements.
Depending on financing requirements and market
conditions, the BMW Group issues commercial paper
and corporate bonds in various currencies. Asset-
backed securities also continue to be issued in various
currencies. Refinancing is supplemented by customer
deposits at the Group's own banks and loans from
international banks.
This is supported by the longstanding long- and short-
term ratings issued by Moody's and Standard & Poor's.
Solvency is assured at all times by managing and moni-
toring the liquidity situation on the basis of a rolling
cash flow forecast. The resulting funding requirements
are secured by a variety of instruments placed on the
world's financial markets, with the aim to minimise
risk by matching maturities with financing require-
ments and in alignment with a dynamic target debt
structure. The BMW Group enjoys favourable access
to capital markets as a result of its continued solid
financial position and a diversified refinancing strategy.
The cash flows comprise principal repayments and
the related interest. The amounts disclosed for deriv-
ative instruments comprise only cash flows relating
to derivatives that have a negative fair value at the
balance sheet date. At 31 December 2017, irrevocable
credit commitments to dealerships which had not
been called upon at the end of the reporting period
amounted to €8,812 million (2016: €9,194 million).
111,438
11,568
851
601
178
46,957
72
52,913
4,565
187
2,395
1,983
Other financial liabilities
Total
Derivative instruments
3,853
3,853
Commercial paper
8,512
8,512
Trade payables
13,719
133
3,446
10,140
Liabilities from customer deposits (banking)
16,030
4,234
At 31 December 2017, the BMW Group held deriva-
tive financial instruments, mainly commodity swaps,
with terms of up to 46 months (2016: 58 months) to
hedge raw materials price risks. The income statement
impact of the hedged cash flows will be recognised
as a general rule in the same periods in which the
derivative instruments mature. It is expected that
€55 million of net gains, recognised in equity at the
end of the reporting period, will be reclassified to
profit and loss in the new financial year (2016: net
losses of €94 million).
Derivative instruments
4,463
Notes to the Group
Financial Statements
→ Other Disclosures
Group
Financial
Statements
176
175
-
Further disclosures relating to credit risk - in particu-
lar with regard to the amounts of impairment losses
recognised are provided in the explanatory notes
to the relevant categories of receivables in → notes 23,
24 and 28.
A concentration of credit risk with particular borrow-
ers or groups of borrowers has not been identified in
conjunction with financial instruments.
The credit risk relating to derivative financial instru-
ments is minimised by the fact that the Group only
enters into such contracts with parties of first-class
credit standing. The general credit risk on derivative
financial instruments utilised by the BMW Group is
therefore considered to be insignificant.
→ see
note 4
→ see
notes 23, 24
and 28
Creditworthiness testing is an important aspect of
the BMW Group's credit risk management. Every
borrower's creditworthiness is tested for all credit
financing and lease contracts entered into by the
BMW Group. In the case of retail customer financing,
creditworthiness is assessed using validated scoring
systems integrated into the acquisition process. In
the area of dealership financing, creditworthiness is
assessed by means of ongoing credit monitoring and
an internal rating system that takes account not only
of the material credit standing of the borrower, but
also of qualitative factors such as past reliability in
business relations.
→ note 4.
Impairment losses are recorded as soon as credit risks
are identified on individual financial assets, using a
methodology specifically designed by the BMW Group.
More detailed information regarding this methodol-
ogy is provided in the section on accounting policies
Within the financial services business, in the retail
customer and dealership areas, financed items, for
example vehicles, equipment and property, serve
as first-ranking collateral with a recoverable value.
Security is also put up in the form of collateral asset
pledges, asset assignment and first-ranking mortgages,
supplemented where appropriate by warranties and
guarantees. If an item previously accepted as collat-
eral is acquired, it undergoes a multi-stage process
of repossession and disposal in accordance with the
legal situation prevailing in the relevant market. As
the assets involved are mainly vehicles, they can be
converted into cash at any time through the dealership
organisation.
In the case of all relationships underlying primary
financial instruments, in order to minimise the cred-
it risk and depending on the nature and amount of
exposure, collateral is required, credit information and
references obtained or historical data based on the
existing business relationship, in particular payment
behaviour, reviewed.
Notwithstanding the existence of collateral, the
carrying amounts of financial assets generally take
account of the maximum credit risk arising from
the possibility that counterparties will not be able
to fulfil their contractual obligations. The maximum
credit risk for irrevocable credit commitments
amounts to €1,217 million for the credit card busi-
ness (2016: €1,461 million) and €27,953 million (2016:
€27,494 million) for dealership financing.
Credit risk
The difference between the gains/losses on hedging
instruments, mainly interest rate swaps and combined
interest rate/currency swaps, and the results recog-
nised on the underlying hedged items represents the
ineffective portion of fair value hedges.
-24
-7
134
-158
-335
328
31.12.2016
31.12.2017
Gains/losses on hedging instruments
designated as part of a fair value hedge
relationship
in € million
No effects were recognised in financial result in 2017
in connection with forecasting errors and resulting
overhedging (2016: losses of €2 million). Gains due
to the ineffective portion of cash flow hedges amount-
ing to €17 million were recognised in financial result
(2016: losses of €11 million). As in the previous year,
no effects were recognised in financial result in con-
nection with forecasting errors relating to cash flow
hedges for commodities. Losses attributable to the
ineffective portion of cash flow hedges amounting to
€1 million were recognised in financial result (2016:
gains of €17 million).
The following table shows gains and losses from fair
value hedge relationships on hedging instruments
and hedged items:
Liquidity risk
4,463
The following table shows the maturity structure of
expected contractual cash flows (undiscounted) for
financial liabilities:
Commercial paper
9,731
9,731
Trade payables
13,773
130
3,418
10,225
Liabilities from customer deposits (banking)
13,973
771
3,656
9,546
Liabilities to banks
17,988
10,901
7,087
Asset-backed financing transactions
47,221
8,285
27,201
11,735
Bonds
Total
Maturity later
than five years
Maturity between
one and five years
one year
Maturity within
31.12.2017
in € million
Market risks
Price per share
Contractual rights by share class
Liabilities to banks
Bonds
Receivables from sales financing
in € million
some balance sheet items it is assumed, due to their
generally short maturity, that their fair value corre-
sponds to the carrying amount.
The following table shows the fair values and carry-
ing amounts of financial assets and liabilities that
are measured at cost or amortised cost and whose
carrying amounts differ from their fair value. For
Notes to the Group
Financial Statements
→ Other Disclosures
Group
Financial
Statements
170
169
Total
Other
Payables to other companies in which an investment is held
3,331
1,090
109,161
110,111
5,535
5,949
615
744
99
129
Payables to subsidiaries
Other liabilities
Trade payables
8,512
9,731
Other
Liabilities from customer deposits (banking)
1,249
Asset-backed financing transactions
in %
16,474
16,556
16,855
17,005
13,512
13,545
13,572
13,588
14,892
14,942
12,658
12,724
44,421
45,140
44,880
45,566
78,260
81,621
80,434
83,853
Carrying amount
Fair value
Carrying amount
31.12.2016
Fair value
31.12.2017
Interest rate for five years
Interest rate for ten years
Interest rate for one year
Interest rate for six months
Fair value measurement of financial instruments
The following interest rate curves were used to dis-
count financial instruments at 31 December 2017:
ISO Code
1,132
767
Other investments
ASSETS
3,922
4,341
1,758
949
1,215
2,187
814
1,340
16,474
16,855
3,852
4,461
13,512
13,572
14,892
12,658
44,421
44,880
31.12.2017
31.12.2016
31.12.2016
Held for trading
26
31
26
29
31.12.2017
31.12.2016
Other liabilities
31.12.2017
Fair value option
Receivables from sales financing
Other derivative instruments
Financial assets
Cash flow hedges
329
Fair value hedges
870
571
Cash flow hedges
1,694
190
Derivative instruments
Asset-backed financing transactions
Commercial paper
Liabilities from customer deposits (banking)
Liabilities to banks
Bonds
Financial liabilities
LIABILITIES
Total
Other
Collateral receivables
Receivables from companies in which an investment is held
Receivables from subsidiaries
Other assets
Trade receivables
Cash and cash equivalents
Other
Credit card receivables
Loans to third parties
Marketable securities and investment funds
Other derivative instruments
Fair value hedges
Derivative instruments
Last financing round
Milestone analysis (quantitative and
qualitative factors)
Consideration of exercise price
EUR
GBP
Level 2
5,387
213
Level 1
Level hierarchy in accordance with IFRS 13
91
221
778
31.12.2016
2
534
2,008
1,797
2
105
Level 3
In situations where a fair value was required for dis-
closure purposes only, this was determined using the
discounted cash flow method and taking account of
the BMW Group's own credit risk. For this reason,
the fair values calculated can be allocated to Level 2.
As in the previous year, there were no reclassifica-
tions within the level hierarchy during the financial
year 2017.
Raw materials price risks
Currency risks
Interest rate risks
Derivative instruments (liabilities)
Other risks
Raw materials price risks
Currency risks
Interest rate risks
Derivative instruments (assets)
Loans to third parties
Other investments - available-for-sale/fair value option
Marketable securities, investment funds and collateral assets - available-for-sale
1,933
1,842
in € million
147
1,479
Company performance
qualitative factors)
Milestone analysis (quantitative and
Last financing round
2
Price per share
Company performance
Contractual rights by share class
Price per share
qualitative factors)
Milestone analysis (quantitative and
Last financing round
105
Input Parameter
Valuation method
Level 3. Fair values are determined in accordance with
the following table:
31.12.2017
Fair value
7
Convertible bonds
Unquoted equity instruments
in € million
Financial instruments recognised at fair value for
which no market price is available are allocated to
→ Other Disclosures
Notes to the Group
Financial Statements
Group
Financial
Statements
172
171
Level 3
450
1,402
USD
Raw materials price risks
Interest rate risks
USD/t 2,258.75
Aluminium
USD/t 7,212.25 5,537.00
Copper
31.12.2017 31.12.2016
Commodity derivatives were measured on the basis
of the following quoted market prices:
Interest rates taken from interest rate curves were
adjusted, where necessary, to take account of the
credit quality and risk of the underlying financial
instrument.
4.88
0.33
1.29
2.40
0.91
4.74
0.12
1.04
2.24
0.32
4.71
0.03
0.65
1.88
-0.26
4.87
-0.08
0.86
1.82
-0.33
CNY
JPY
1,695.13
Currency risks
Palladium
Platinum
Derivative instruments (liabilities)
Other risks
Raw materials price risks
Currency risks
Interest rate risks
5,544
284
Derivative instruments (assets)
Loans to third parties
Other investments - available-for-sale/fair value option
Marketable securities, investment funds and collateral assets - available-for-sale
Level 2
Level hierarchy in accordance with IFRS 13
Level 1
31.12.2017
in € million
The following table shows the amounts allocated to
each measurement level at the end of the reporting
period:
3. using input factors not based on observable
market data (Level 3).
2. measured at their fair values in an active market
for comparable financial instruments or using
measurement models whose main input factors
are based on observable market data (Level 2), or
1. measured at their fair values in an active market
for identical financial instruments (Level 1),
are
Financial instruments measured at fair value are allo-
cated to different measurement levels in accordance
with IFRS 13. This includes financial instruments that
79.65
72.40
680.96
903.50
230.00
265.00
USD/t
USD/t
Iron ore
Coking coal
925.00
USD/oz
USD/oz 1,057.00
The principal market risks to which the BMW Group
is exposed are currency risk, interest rate risk and raw
materials price risk.
Gains/losses from hedged items
Ineffectiveness of fair value hedges
The scope of action, responsibilities, financial report-
ing procedures and control mechanisms used for
financial instruments are set out in detailed internal
guidelines. This includes, in particular, a clear sepa-
ration of duties between trading and processing of
transactions. Currency, interest rate and raw materi-
als price risks of the BMW Group are managed at a
corporate level.
British Pound
US Dollar
Euro
in € million
The following table shows for interest-rate-sensitive
exposures of the BMW Group the potential fair value
fluctuation compared with the expected value, meas-
ured on the basis of the value-at-risk approach:
571
691
3,124
4,326
5,708
Chinese Renminbi
5,262
15,454
28,063
28,374
31.12.2017 31.12.2016
Japanese Yen
Chinese Renminbi
British Pound
US Dollar
Euro
in € million
14,340
Japanese Yen
Raw material price risk
31.12.2017
Protection against such risks is provided in the first
instance through natural hedging which arises when
the values of non-derivative financial instruments
have matching maturities and amounts (netting).
Derivative financial instruments are used to reduce
the risk remaining after netting. Financial instruments
are used exclusively to hedge underlying positions or
planned transactions.
The potential negative impact on earnings is calculated
at the reporting date for each raw materials category
for the following financial year on the basis of current
market prices and exposure with a confidence level of
95% and a holding period of up to one year. The risk
mitigating effect of correlations between the various
categories of raw materials is taken into account when
the risks are aggregated.
These exposures are compared to all hedges that are in
place. The net cash flow surplus represents an uncov-
ered risk position. The cash-flow-at-risk approach
involves allocating the impact of potential fluctuations
in raw material prices to operating cash flows on the
basis of probability distributions. Volatilities and
correlations serve as input factors to determine the
relevant probability distributions.
3,150
3,969
31.12.2016
31.12.2017
Raw material price exposures
in € million
As stated there, the BMW Group applies a value-at-risk
approach throughout the Group for internal reporting
purposes and to manage interest rate risks. This is
based on an advanced historical simulation, in which
the potential future fair value losses of the interest
rate portfolios compared to expected amounts are
measured throughout the Group on the basis of a
holding period of 250 days and a confidence level
of 99.98%. Through the aggregation, risk reduction
effects are identified which are due to correlations
between the various portfolios.
Interest rate risks can be managed by the use of inter-
est rate derivatives. The interest rate contracts used
for hedging purposes comprise mainly swaps, which,
if hedge accounting is applied, are accounted for as
fair value hedges. A description of the management
of interest rate risks is provided in the Combined
Management Report.
The starting point for the analysis of raw materials
price risk are planned purchases of raw materials or
components containing raw materials, i.e. the expo-
sure. At the reporting date exposures for the following
financial
year amounted to:
14
19
16
29
244
253
545
504
532
557
31.12.2016
The fair values of the Group's interest rate portfolios
for the five main currencies were as follows at the end
of the reporting period:
Interest rate risks arise when funds are borrowed and
invested with differing fixed-rate periods or differing
terms. All items subject to interest are exposed to
interest rate risk. Interest rate risks can affect either
side of the balance sheet.
The BMW Group is exposed to the risk of price fluc-
tuations for raw materials. A description of the man-
agement of these risks is provided in the Combined
Management Report.
Interest rate risks
These exposures are compared to all hedges that
are in place. The net cash flow surplus represents
an uncovered risk position. The cash-flow-at-risk
approach involves allocating the impact of potential
exchange rate fluctuations to operating cash flows on
the basis of probability distributions. Volatilities and
correlations serve as input factors to determine the
relevant probability distributions.
3,319
1,152
1,510
1,618
Euro/Japanese Yen
Euro/US Dollar
1,926
2,460
4,785
4,425
The potential negative impact on earnings is calculated
at the reporting date for each currency for the follow-
ing financial year on the basis of current market prices
and exposures with a confidence level of 95% and a
holding period of up to one year. The risk mitigating
effect of correlations between the various currencies
is taken into account when the risks are aggregated.
10,467
Euro/Chinese Renminbi
Euro/British Pound
Euro/Korean Won
31.12.2016
31.12.2017
in € million
A description of the management of this risk is
pro-
vided in the Combined Management Report. The
BMW Group measures currency risk using a cash-
flow-at-risk model.
contracts.
In order to hedge currency risks, the BMW Group
holds, as at 31 December 2017, derivative financial
instruments mostly in the form of forward currency
As an enterprise with worldwide operations, the
BMW Group conducts business in a variety of cur-
rencies, from which currency risks arise. Since a
significant portion of Group revenues is generated
outside the euro currency region and procurement of
production materials and funding is also carried out
on a worldwide basis, currency risk is an extremely
important factor for Group earnings.
Currency risks
The BMW Group's financial management involves
the use of standard financial instruments such as
short-term deposits, investments in variable and
fixed-income securities as well as securities funds.
The BMW Group is therefore exposed to risks resulting
from changes in interest rates.
10,160
The following table shows the potential negative
impact for the BMW Group resulting from unfavour-
able changes in exchange rates, measured on the
basis of the cash-flow-at-risk approach. The impact
for the main currencies, in each case for the following
financial year, is as follows:
The starting point for analysis of currency risk in this
model are the planned foreign currency transactions
or "exposures". At the end of the reporting period,
the main exposures for the relevant coming year were
as follows:
Euro/Chinese Renminbi
Notes to the Group
Financial Statements
→ Other Disclosures
in € million
Group
Financial
Statements
178
177
the currencies referred to above.
Currency risk for the BMW Group is concentrated on
30
35
Euro/Korean Won
278
50
Further information is provided in the "Report on
outlook, risks and opportunities" section of the Com-
bined Management Report.
Euro/US Dollar
31.12.2017
193
Euro/British Pound
154
249
Euro/Japanese Yen
98
70
134
31.12.2016
BMW Coordination Center V.o.F., Bornem
BMW (Schweiz) AG, Dielsdorf
BMW (UK) Manufacturing Ltd., Farnborough
BMW Malta Ltd., Floriana
100
45
794
BMW Motoren GmbH, Steyr
172
879
728
100
261
894
BMW Financial Services (GB) Ltd., Farnborough
100
100
29
594
603
110
Total revenues
Segment result
Result from equity accounted investments
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
75,121
75,363
100
91,932
188,535
2,546
100
2
100
g|ལ
SEGMENT INFORMATION
BY OPERATING SEGMENT
External revenues
Inter-segment revenues
94
193,483
2,767
92,112
100
BMW España Finance S. L., Madrid
51
100
100
100
100
100
100
100
100
100
100
100
153
100
326
100
31.12.2016
100
999
100
FOREIGN²
100
413
1,489
BMW (UK) Holdings Ltd., Farnborough
100
824
3,026
BMW Österreich Holding GmbH, Steyr
100
15
7,913
BMW International Holding B.V., Rijswijk 10
100
1,959
16,655
BMW Holding B.V., The Hague
Europe 12
100
31.12.2017
11,072
Group
Motorcycles
Financial Services
31.12.2017
31.12.2016
31.12.2017
31.12.2016
31.12.2017
Automotive
31.12.2016
9,411
618
600
14,740
11,049
2,767
2,546
1,988
Investments accounted for using the equity method
Segment assets
in € million
Result from equity accounted investments
738
441
Capital expenditure on non-current assets
6,972
5,699
125
114
25,024
25,105
Depreciation and amortisation on non-current assets
4,699
4,702
88
75
9,992
9,606
Other Entities
31.12.2016
2017
Reconciliation to Group figures
-553
10,655
9,665
738
-6,728
-6,756
-6,324
298
-6,271
441
24,162
8,112
Other Entities
Reconciliation to Group figures
31.12.2017
31.12.2016
31.12.2017
25,393
8,455
170
80
94,163
2017
Group
2016
2016
2017
3
2
98,678
94,163
4
4
-19,760
-20,017
7
6
-19,760 -20,017
98,678
2016
100
Other regions
100
123,088
Financial Services segment
Total liabilities-
7,432
7,829
Other Entities segment
Non-operating assets -
126,679
96,423
Total for reportable segments
31.12.2016
31.12.2017
Reconciliation of segment assets
in € million
8,112
8,455
101,551
Non-operating assets -
Automotive and Motorcycles segments
48,193
External revenues
in € million
Information by region
187
plant and equipment, intangible assets and leased
products. Eliminations disclosed for non-current
assets relate to leased products.
In the information by region, external sales are based
on the location of the customer. Revenues with major
customers were not material overall. The information
disclosed for non-current assets relates to property,
188,535
193,483
Total Group assets
-122,390 -121,780
Elimination of inter-segment items
33,858
35,212
not subject to interest
and Motorcycles segments
Liabilities of Automotive
45,923
-6,271
2017
-6,324
14,779
2016
2017
Total for reportable segments
Reconciliation of segment result
in € million
The total of the segment figures can be reconciled to
the corresponding Group figures as follows:
The information disclosed on capital expenditure and
depreciation and amortisation relates to non-current
property, plant and equipment, intangible assets and
leased products.
10,357
The Other Entities' segment result includes interest
and similar income amounting to €1,110 million (2016:
€1,250 million) and interest and similar expenses
amounting to €986 million (2016: €1,006 million).
The segment result includes no impairment losses
on other investments (2016: €18 million).
Write-downs on inventories to their net realisable
value amounting to €27 million (2016: €101 million)
were recognised by the Automotive segment in the
financial year 2017. The write-downs recorded in the
previous year related mainly to accidents and natural
disasters.
Notes to the Group
Financial Statements
→ Segment Information
Group
Financial
Statements
186
185
Investments accounted for using the equity method
Segment assets
Financial Services segment result was negatively
impacted by impairment losses totalling €215 million
(2016: €384 million) recognised on leased products.
Income from the reversal of impairment losses on leased
products totalled €11 million (2016: €211 million).
10,218
Financial result of Automotive
segment and Motorcycles segment
Elimination of inter-segment items
826
Reconciliation of depreciation and
amortisation on non-current assets
Total for reportable segments
Elimination of inter-segment items
Total Group depreciation and
amortisation on non-current assets
24,162
25,393
on non-current assets
-6,756
-6,728
30,918
32,121
Total for reportable segments
Elimination of inter-segment items
Total Group capital expenditure
on non-current assets
Reconciliation of capital expenditure
9,665
10,655
Group profit before tax
-772
-528
219
14,383
Non-current assets
2016
2017
BMW Finanz Verwaltungs GmbH, Munich
BMW Bank GmbH, Munich³
BMW INTEC Beteiligungs GmbH, Munich³,6
BMW Beteiligungs GmbH & Co. KG, Munich
DOMESTIC 1,12
Companies
Affiliated companies (subsidiaries) of BMW AG at 31 December 2017
→ 65
BMW Verwaltungs GmbH, Munich 3,6
if they are of "minor significance" for the results
of operations, financial position and net assets of
BMW AG pursuant to § 286 (3) sentence 1 no. 1 HGB
and §313 (3) sentence 4 HGB. It is also shown in
the list which subsidiaries apply the exemptions
available in § 264 (3) and § 264 b HGB with regard
to the publication of annual financial statements
and the drawing up of a management report and/or
notes to the financial statements (footnotes 5 and 6).
The Group Financial Statements of BMW AG serve
as exempting consolidated financial statements for
these companies.
44
LIST OF INVESTMENTS AT
31 DECEMBER 2017
→ List of Investments
at 31 December 2017
Notes to the Group
Financial Statements
Group
Financial
Statements
188
63,906
List of investments at 31 December 2017
The List of Investments of BMW AG pursuant to § 285
and § 313 HGB is presented below. Disclosures for
equity and earnings and for investments are not made
Alphabet International GmbH, Munich 4,5,6
Alphabet Fuhrparkmanagement GmbH, Munich4
Parkhaus Oberwiesenfeld GmbH, Munich
.5
5,289
Capital invest-
ment in %
Profit/loss
in € million
in € million
Equity
BMW M GmbH Gesellschaft für individuelle Automobile, Munich 3,5,6
BMW Vermögensverwaltungs GmbH, Munich
Rolls-Royce Motor Cars GmbH, Munich 4,5,6
BAVARIA-LLOYD Reisebüro GmbH, Munich
Bavaria Wirtschaftsagentur GmbH, Munich 3,5,6
BMW Anlagen Verwaltungs GmbH, Munich 3,6
Bürohaus Petuelring GmbH, Munich
BMW Fahrzeugtechnik GmbH, Eisenach 3,5,6
BMW Vertriebszentren Verwaltungs GmbH, Munich
LARGUS Grundstücks-Verwaltungsgesellschaft mbH, Munich
BMW High Power Charging Beteiligungs GmbH, Munich 4,6,11
BMW Hams Hall Motoren GmbH, Munich 4,5,6
64,192
94,163
98,678
-7,345
31,473
Rest of Europe
23,249
20,766
16,000
17,110
USA
23
29,741
31,678
85
16,619
18,295
China
13,776
13,553
Germany
2016
30,544
3,558
14,807
Rest of Asia
-8,028
Group
Eliminations
261
355
3,251
2,975
2,166
2,628
2,941
3,507
3,838
Rest of the Americas
1,439
1,588
10,466
11,434
13,910
2,207
Group
Financial
207
360
458
296
2,690
2,421
ALTANA AG
1
5
309
36
SOLARWATT GmbH
1,331
4,464
64
94
22,554
29,816
3,546
3,393
DELTON AG
2016
2017
Payables
at 31 December
2016
187
337
at 31 December
36
UnternehmerTUM GmbH
The cash-settlement for the share-based remuneration
component is measured at its fair value at the balance
sheet date (based on the closing price of BMW AG
common stock on the Xetra system at 31 Decem-
ber 2017).
The share-based remuneration component is measured
at its fair value at each balance sheet date between
grant and settlement date, and on the settlement date.
The amounts are recognised as personnel expense
on a straight-line basis over the vesting period and
reported in the balance sheet as a provision.
With effect from the financial year 2012, qualifying
senior heads of department are also entitled to select
a share-based remuneration component, which is
largely comparable to the share-based remuneration
arrangements for Board of Management members.
Each member of the Board of Management is required
to invest 20% of his or her total bonus after tax in
shares of BMW AG common stock, which are record-
ed in a custodian account of the member concerned
(annual tranche). Each annual tranche is subject to a
holding period of four years. On completion of the
holding period, BMW AG grants one additional share
of BMW AG common stock for every three held or pays
the equivalent amount in cash (share-based remuner-
ation component). Separate rules apply in the case of
death or invalidity of a Board of Management member
or early termination of the contractual relationship
before fulfilment of the holding period.
For financial years beginning after 1 January 2011,
BMW AG has added a share-based remuneration
component to the existing compensation system for
Board of Management members.
As part of the Employee Share Programme, non-voting
shares of preferred stock in BMW AG were granted
in 2017 to qualifying employees at favourable con-
→ see ditions (see → note 29 for the number and price of
issued shares). The holding period for these shares is
up to 31 December 2020. In the financial year 2017,
the BMW Group recorded a personnel expense of
€10 million (2016: €7 million) for the Employee Share
Programme, corresponding to the difference between
the market price and the reduced price of the shares
of preferred stock purchased by employees. The Board
of Management reserves the right to decide anew each
year with respect to an Employee Share Programme.
The BMW Group provides three share-based pro-
grammes: the Employee Share Programme for enti-
tled employees of the BMW Group, a share-based
remuneration programme for members of the Board
of Management and a share-based remuneration pro-
gramme for senior heads of department of BMW AG.
Share-based remuneration
39
note 29
note 41
For disclosures relating to key management personnel,
please see → note 41 and the Compensation Report. → see
BMW Trust e. V., Munich, administers assets on a
trustee basis to secure obligations relating to pen-
sions in Germany and is therefore a related party
of the BMW Group in accordance with IAS 24. This
entity has no assets of its own. It had no income or
expenses during the period under report. BMW AG
bears expenses on an immaterial scale and performs
services for BMW Trust e. V., Munich.
Apart from vehicle leasing and financing contracts
at usual conditions, companies of the BMW Group
concluded no further transactions with members of
the Board of Management or Supervisory Board of
BMW AG. This also applies to close members of the
families of those persons.
5
5
97
106
Entrust Datacard Corp.
585
255
1,227
1,435
29
27
50
Receivables
2016
2017
2016
at 31 December
at 31 December
Payables
Receivables
2017
2016
received
Supplies and services
A significant proportion of the BMW Group's transac-
tions with related parties relates to the joint venture
BMW Brilliance Automotive Ltd.
135
409
31.12.2016
31.12.2017
Cash flow at risk
in € million
the following financial year was as follows:
7
2017
Supplies and services
performed
in € million
Transactions of Group entities with related parties
were carried out without exception in the normal
course of business of each of the parties concerned
and at market conditions.
Related parties
38
The following table shows the potential negative
cost impact for the BMW Group resulting from
fluctuations in prices across all categories of raw
materials, measured on the basis of the cash-flow-
at-risk approach. The risk at the reporting date for ¬
2017
2016
2017
2016
2016
Supplies and services
received
2017
Supplies and services
performed
in € thousand
the volume of transactions with the above-mentioned
entities was as follows:
Seen from the perspective of BMW Group entities,
Notes to the Group
Financial Statements
→ Other Disclosures
Group
Financial
Statements
180
179
In addition, Susanne Klatten, Germany, and Stefan
Quandt, Germany, are indirectly sole shareholders of
Entrust Datacard Corp., Shakopee, Minnesota. Stefan
Quandt is also a member of the supervisory board of
this entity. In 2017, Entrust Datacard Corp., Shakopee,
Minnesota, acquired vehicles from the BMW Group
by way of leasing.
The total carrying amount of the provision for the
share-based remuneration component of current
and former Board of Management members and
senior heads of department at 31 December 2017 was
€6,301,785 (2016: €5,473,219).
Susanne Klatten, Germany, is also the sole share-
holder and Chairwoman of the Supervisory Board
of UnternehmerTUM GmbH, Garching. In 2017,
the BMW Group bought in services from Unterne-
hmerTUM GmbH, Garching, mainly in the form of
consultancy and workshop services.
Stefan Quandt, Germany, is also the indirect major-
ity shareholder of SOLARWATT GmbH, Dresden. A
cooperation exists between BMW Group and SOLAR-
WATT GmbH, Dresden, within the field of electric
mobility. The focus of the cooperation is the provision
of complete photovoltaic solutions for rooftop systems
and carports to BMW i customers. In 2017, SOLAR-
WATT GmbH, Dresden, acquired vehicles from the
BMW Group by way of leasing.
Stefan Quandt, Germany, is a shareholder and Deputy
Chairman of the Supervisory Board of BMW AG. He is
also the sole shareholder and Chairman of the Super-
visory Board of DELTON AG, Bad Homburg v.d.H.,
which, via its subsidiaries, performed logistic-related
services for the BMW Group during the financial year
2017. In addition, companies of the DELTON Group
acquired vehicles from the BMW Group by way of
leasing.
Business relationships of the BMW Group with other
associated companies and joint ventures as well as
with non-consolidated subsidiaries are small in scale.
615
739
1,215
1,333
50
63
5,316
5,946
BMW Brilliance Automotive Ltd.
Susanne Klatten, Germany, is a shareholder and
member of the Supervisory Board of BMW AG and
also a shareholder and Deputy Chairwoman of the
Supervisory Board of ALTANA AG, Wesel. In 2017,
ALTANA AG, Wesel, acquired vehicles from the
BMW Group, mainly by way of leasing.
The total expense recognised in 2017 for the share-
based remuneration component of current and former
Board of Management members and senior heads of
department was €1,642,936 (2016: €1,443,227).
2017
Further details on the remuneration of the Board
of Management are provided in the Compensation
Report for the financial year 2017.
2017
2016
2017
Motorcycles
Automotive
in € million
follows:
Segment information by operating segment is as
→ Segment Information
Notes to the Group
Financial Statements
Statements
184
183
The success of the Other Entities segment is assessed
on the basis of profit or loss before tax. The corre-
sponding measure of segment assets used to manage
the Other Entities segment is total assets less asset-
side income tax items and intragroup investments.
The success of the Financial Services segment is meas-
ured on the basis of return on equity (RoE). Profit
before tax therefore represents the relevant measure
of segment earnings. The measure of segment assets
in the Financial Services segment corresponds to net
assets, defined as total assets less total liabilities.
The Automotive and Motorcycles segments are
managed on the basis of return on capital employed
(ROCE). The relevant measure of segment earnings
is therefore profit before financial result. Capital
employed is the corresponding measure of segment
assets used to assess allocation of resources and com-
prises all current and non-current operational assets
after deduction of liabilities used operationally which
are not subject to interest (e.g. trade payables).
The role of "chief operating decision maker" with
respect to resource allocation and performance
assessment of the reportable segment is embodied
in the full Board of Management. For this purpose,
different measures of segment performance as well as
segment assets are taken into account in the operating
segments.
Segment information is prepared as a general rule
in conformity with the accounting policies adopted
for preparing and presenting the Group Financial
Statements. Exceptions to this general principle are
the treatment of inter-segment warranties, the earn-
ings impact of which is allocated to the Automotive
and Financial Services segments on the basis used
internally to manage the business, and cross-segment
impairment losses on investments in subsidiaries.
Inter-segment receivables and payables, provisions,
income, expenses and profits are eliminated upon
consolidation. Inter-segment sales take place at mar-
ket prices.
Internal management and reporting
Holding and Group financing companies are report-
ed in the Other Entities segment. This segment also
includes operating companies BMW Services Ltd.,
BMW (UK) Investments Ltd. and Bavaria Lloyd Rei-
sebüro GmbH, which are not allocated to one of the
other segments.
Automobile leasing, fleet business, multi-brand busi-
ness, retail and dealership financing, customer deposit
business and insurance activities are the main activities
allocated to the Financial Services segment.
Activities relating to the development, manufacture,
assembly and sale of motorcycles as well as spare
parts and accessories are reported in the Motorcycles
segment.
Within the Automotive segment the BMW Group devel-
ops, manufactures, assembles and sells automobiles
and off-road vehicles, under the brands BMW, MINI
and Rolls-Royce as well as spare parts, accessories
and mobility services. BMW and MINI brand products
are sold in Germany through branches of BMW AG
and by independent, authorised dealerships. Sales
outside Germany are handled mainly by subsidiary
companies and by independent import companies in
some markets. Rolls-Royce brand vehicles are sold in
the USA, China, Korea, Italy and Russia via subsidiary
companies and elsewhere by independent, authorised
dealerships.
The activities of the BMW Group are broken down
into the operating segments Automotive, Motorcycles,
Financial Services and Other Entities.
For the purposes of presenting segment information,
the activities of the BMW Group are divided into oper-
ating segments in accordance with IFRS 8 (Operating
Segments). The segmentation follows the internal
management and reporting system and takes account
of the organisational structure of the BMW Group
based on the various products and services of the
reportable segments.
Financial Services
2016
2017
2016
The fair value of the programmes for Board of Man-
agement members and senior heads of department
at the date of grant of the share-based remuneration
components was €2,311,946 (2016: €1,950,853), based
on a total of 25,694 shares (2016: 21,201 shares) of
BMW AG common stock or a corresponding cash-
based settlement measured at the relevant market
share price on the grant date.
7,863
25,681
27,567
2,069
2,283
86,424
88,581
Segment result
Total revenues
1,559
1,710
Explanatory notes to segment information
Information on reportable segments
7
18,447
18,035
Inter-segment revenues
24,122
25,857
2,062
2,272
67,977
70,546
External revenues
BY OPERATING SEGMENT
SEGMENT INFORMATION
11
43
7,695
Further details on the remuneration of current mem-
bers of the Board of Management and the Supervisory
Board can be found in the Compensation Report,
which is part of the Combined Management Report.
31.7
Variable remuneration
7.8
7.7
Fixed remuneration
37.6
40.2
Board of Management
Compensation to members of the
2016
2017
in € million
No events have occurred since the end of the financial
year which could have a major impact on the results
of operations, financial position and net assets of
BMW AG and the BMW Group.
Events after the end of the reporting period
42
The total compensation of the current members of
the Board of Management and the Supervisory Board
of BMW AG expensed for the financial year 2017 in
accordance with IFRS comprised the following:
Compensation of members of the Board of
Management and Supervisory Board
41
Notes to the Group
Financial Statements
→ Other Disclosures
→ Segment Information
Group
Financial
Statements
181
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft have
issued the prescribed Declaration of Compliance
pursuant to § 161 of the German Stock Corporation
Act. It is reproduced in the Annual Report 2017 of
the BMW Group and is also permanently available
to shareholders on the BMW Group website at
→ www.bmwgroup.com/ir.
Declaration with respect to the Corporate
Governance Code
40
SEGMENT INFORMATION
29.0
Share-based remuneration component
182
0.8
The compensation systems for members of the
Supervisory Board include no stock options, value
appreciation rights comparable to stock options or
other stock-based compensation components. Apart
from vehicle lease and financing contracts at custom-
ary conditions, no advances or loans were granted
to members of the Board of Management and the
Supervisory Board of BMW AG or its subsidiaries, nor
were any contingent liabilities entered into on their
behalf.
0.8
Pension obligations to current members of the Board
of Management are covered by provisions amounting
to €22.0 million (2016: €23.6 million), determined in
accordance with IAS 19 (Employee Benefits). Pen-
sion obligations to former members of the Board of
Management and their surviving dependants, also
determined in accordance with IAS 19, amounted to
€90.1 million (2016: €86.4 million).
The total remuneration of former members of the
Board of Management and their dependants amount-
ed to €6.7 million (2016: €6.5 million).
45.9
thereof due within one year
46.9
49.8
Total expense
3.4
3.6
Variable compensation
2.0
43.3
Fixed compensation and attendance fees
2.0
Allocation to pension provisions
2.8
termination of an employment relationship
0.9
Benefits in conjunction with the
Compensation to members of the
Supervisory Board
5.6
5.4
1.1
3.1
Within the Personnel Committee and Supervisory Board, we closely examined the structure
and amounts of compensation for members of the Board of Management. In our review, we
took into account the development of the Group, as well as compensation of the executive
management and the overall workforce in Germany over time. In addition, we consulted studies
of the compensation at DAX-listed companies. We were assisted here by an independent external
compensation consultant. After a detailed examination and discussion, we concluded that
the compensation of the Board of Management for the financial year 2017, including pension
entitlements, is appropriate.
While leaving the existing overall upper limits unchanged, we have revised the compensation
system for the Board of Management. Apart from an increase in Board members' base salary,
the focus was on revising the system for variable remuneration. We have paid special attention
to linking variable remuneration even more closely to sustainable business development and
the long-term business plan. A new multi-year component has been introduced, in the form of
a performance cash plan. Other provisions contained in the standard service contract for Board
members were also updated. With the agreement of its members, all Board of Management
service contracts have been amended with effect from 1 January 2018. Further information on
Board of Management compensation and on the new compensation system with effect from
the financial year 2018 is provided in the Compensation Report (see section Statement on
Corporate Governance).
Together with the Board of Management, we gave careful consideration to the corporate governance
standards of the BMW Group as well as the provisions of the German Corporate Governance
Code. The same also applies to the proposal that the Chairman of the Supervisory Board should
engage in dialogue with investors on subjects specific to the Supervisory Board. As a result of the
revision of the compensation system with effect from the financial year 2018, it was necessary to
retrospectively cancel the previous performance targets for variable compensation for the years 2018
and 2019 and replace them with the new, more ambitious target system. The current Declaration
of Compliance pursuant to § 161 AktG is included in the Corporate Governance Report.
The Supervisory Board had already adopted detailed targets for its own composition which
included competence-related criteria. These targets were confirmed in the form of the “competency
profile". Based on a self-review conducted by the Supervisory Board, it was concluded that the
current composition of the Supervisory Board is in line with the targets of the diversity concept
and competency profile, as well as other targets set for its composition at 31 December 2017.
A further topic reported on by the Board of Management was the current status of the diversity
concept. The Board informed us on the targets they have set for increasing the proportion
of women in the workforce, particularly in the management, and the current level of target
achievement. In addition, the Board of Management explained the measures it has taken to
encourage cultural diversity and a mixed age structure in the workforce.
11
12
To Our
Shareholders
→ Report of the
Supervisory Board
The Audit Committee held five meetings and two telephone conference calls during the finan-
cial year 2017. In the course of those conference calls and at one meeting together with the
Board of Management, we reviewed the Quarterly Financial Reports prior to their publication.
Representatives of the external auditors were present during the presentation of the Half-Year
Financial Report.
Following a detailed efficiency examination in the previous year, the Supervisory Board reviewed
the efficiency of its activities in 2017 on the basis of a structured questionnaire. Moreover, mem-
bers of the Supervisory Board had the opportunity to discuss matters with me individually. The
self-review was discussed in the full Supervisory Board. Overall, the work of the Supervisory Board
was deemed efficient. No significant need for change was identified. Proposals, for example with
respect to the reports provided by the Board of Management, were taken into account.
Average attendance of the five Supervisory Board meetings held in the financial year 2017 was 94%.
An individualised overview of attendance at meetings of the Supervisory Board and its committees
for the financial year 2017 has been published on the BMW Group's website. All members of the
Supervisory Board attended more than half of the meetings of the Supervisory Board and those
committees to which they belonged during their term of office in the financial year 2017.
Description of Presiding Board activities and committee work
In order to increase efficiency and ensure better preparation of its plenary meetings, the Super-
visory Board has established a Presiding Board and four committees. Committee chairpersons
reported in detail and in a timely manner on Presiding Board and committee work at the following
meeting of the Supervisory Board. The shareholder representatives were informed by myself of
the activities of the Nomination Committee. A detailed description of the duties, composition
and work procedures of the various committees is provided in the Corporate Governance Report.
The Presiding Board convened five times during the financial year under report. Assuming
no other committee was responsible, the focus of our activities was on preparing the detailed
agenda for the meetings of the full Supervisory Board. Complex and wide-ranging topics, such
as the long-term plan, were prepared together in detail with the Board of Management and
senior heads of department on the basis of written and oral reports. We also selected further
topics for full Supervisory Board meetings and made suggestions for reports submitted to
the full Supervisory Board.
The Audit Committee's meeting in spring 2017 focused primarily on preparing for the Supervisory
Board meeting at which the financial statements were to be examined. Before recommending
to the full Supervisory Board that KPMG AG Wirtschaftsprüfungsgesellschaft be elected as
Company and Group auditor at the Annual General Meeting 2017, we obtained a Declaration
of Independence from KPMG. We also considered the scope and composition of non-audit
services, including tax advisory services provided by KPMG entities to the BMW Group. We
found no indications of grounds for exclusion, conflicts of interest, or risk to the independence
of the auditor.
The fee proposals for the audit of the year-end Company and Group Financial Statements 2017 and
the review of the Half-year Financial Report were deemed appropriate. Subsequent to the Annual
General Meeting 2017, we therefore appointed KPMG AG Wirtschaftsprüfungsgesellschaft for
the relevant engagements and specified additional audit focus areas.
During the financial year 2017, the Head of Group Controlling reported to the Audit Committee
on the current risk profile of the BMW Group. In this context, we reviewed in depth a number
of individual topics, such as risk management with regard to suppliers.
The Head of Group Financial Reporting presented to us current developments in the internal
control system (ICS) underlying financial reporting. The tests performed highlighted no material
ICS weaknesses which would jeopardise the system's effectiveness.
Furthermore, the Board of Management reported in detail on the performance, risk situation
and business strategies of the Financial Services segment. It described the measures in place
to comply with regulatory requirements and provided information on the status of regulatory
proceedings against a locally based financial services company.
The Head of Group Internal Audit presented the main findings of Group internal audits per-
formed during the year under report and outlined the areas of focus for planned audits. He also
informed us about an external quality assessment of Group audit activities, which concluded
that the relevant German and international standards were met.
No conflicts of interest arose on the part of Members of the Board of Management or Supervisory
Board during the year under report. Significant transactions with Supervisory Board members
and other related parties as defined by IAS 24, including close relatives and intermediary entities,
were examined on a quarterly basis.
In addition, the Board of Management addressed the allegations made against BMW in various
media outlets with regard to emissions treatment and confirmed that the BMW Group engages
in no activities or technical measures to influence the test mode for measurement of emissions.
Regarding the Chinese market, the Board of Management provided us with detailed information
on business developments and specific local requirements and explained the strategy pursued
in this region.
At our final meeting of the financial year 2017, the Board of Management presented the annual
planning for the financial year 2018. We reviewed in detail the opportunities and risks and
discussed them with the Board of Management.
A key focus of the Audit Committee's work was on compliance. The Chairman of the BMW Group
Compliance Committee informed us about the status of compliance within the Group, initially
in the regular report at the end of June. He presented here new IT systems designed to support
compliance management. Immediately after the appearance of media reports on cartel allegations
at the end of July in connection with the so-called "circle of five", we held a meeting of the Presiding
Board and the Audit Committee. The Board of Management informed us in detail of the status of
the internal investigation that it had immediately launched and which is being conducted with the
support of an international law firm. The Head of Legal Affairs and Patents explained the legal
background of the allegations. We also discussed the BMW Group Compliance Management's
existing preventive measures with respect to antitrust compliance. The progress of the internal
investigation was analysed in detail at the two subsequent Audit Committee meetings, both of
which were attended by a representative of the appointed law firm. As a precautionary measure,
the Chairman of the Audit Committee also had the representative of the appointed law firm
report on the progress of the investigation without members of the Board of Management or
myself being present. These issues were discussed at length at the subsequent meetings of the
Supervisory Board.
Dear Shareholders,
The BMW Group sold more than 100,000 electrified vehicles during the past year. With the
move towards electrification of the fleet and the biggest model offensive ever undertaken in the
company's history, the BMW Group is getting ready for the future. The BMW Group delivered
an outstanding earnings performance in the financial year 2017 and once again confirmed its
leading position in the premium segment with record deliveries.
Monitoring and advisory activities of the Supervisory Board
Throughout the financial year 2017, the Supervisory Board performed its duties with the utmost
care in accordance with the law and the Articles of Incorporation. We provided the Board
of Management in their strategic development and management of the BMW Group with
constructive advice and closely and continuously monitored its running of the business.
The Board of Management reported regularly to us on the implementation of Strategy
NUMBER ONE > NEXT. Key areas of focus included the BMW Group's strategy for drivetrain
technology and progress in the field of electric mobility. Further major activities were the revised
Board of Management compensation system and the Group business plan. At each of our five
Supervisory Board meetings, we discussed in detail the current situation of the BMW Group
with the Board of Management.
The Company's situation and development have been continually in our focus, also outside of
meetings. The Board of Management reported to us regularly on the latest sales and workforce
figures and provided us with information on matters of particular importance as they arose.
Between meetings, the Chairman of the Board of Management, Mr Harald Krüger, informed
me directly and promptly in our regular consultations on the current state of major business
transactions and projects.
Furthermore, when necessary, the Chairman of the Audit Committee, Dr Karl-Ludwig Kley,
liaised directly with the Member of the Board of Management responsible for Finance, Dr Nicolas
Peter, outside scheduled meetings.
In its regular reports on the BMW Group's current situation, the Board of Management provided
us with information on the deliveries trend and the competitive environment in the Automotive
and Motorcycles segments as well as the development of new contracts and business volumes
in the Financial Services segment, also explaining any variances against forecast. The Board of
Management also provided us with the latest workforce figures, reported on developments on
key markets and explained business forecasts.
The Board of Management also highlighted in its situation reports important current transactions
and projects, which we then followed up in our in-depth discussions. These included, for
example, progress made in the areas of product quality and customer satisfaction. The Board of
Management also reported on events such as the "diesel summit” in Berlin and the International
Motor Show (IAA Cars) in Frankfurt. In addition, the Board of Management explained the status
of various cooperation negotiations and transactions, such as the establishment of a joint venture
with other manufacturers to build a European network of fast charging stations.
9
10
To Our
Shareholders
→ Report of the
Supervisory Board
At the beginning of the year, the Board of Management presented to us the new models and
model revisions due for market launch in 2017.
One Supervisory Board meeting was held at the Dingolfing plant. A major focus of this
meeting was the report of the Board of Management on the development of the worldwide
production network, highlighting in particular international cooperation between the plants.
It also explained how Industry 4.0 innovations are being applied in production, for example
in the field of logistics, where components tracking increases supply reliability. The Group
has already been exploiting the possibilities of additive manufacturing (3D printing) in pro-
duction for several years. A further topic of the meeting was BMW Group's strategy in the
area of taxes and customs duties. The Board of Management presented a range of scenarios
on the operational and financial impact for the BMW Group of the United Kingdom's exit
from the European Union. We were also briefed by the Board on the US administration's
announcements regarding taxes and duties and the possible consequences for the BMW Group.
We also discussed the CSR Directive Implementation Act and its impact on non-financial
reporting for the BMW Group. In this context, the Supervisory Board has amended its rules
of procedure and expanded the tasks of the Audit Committee. We commissioned the audit
firm PricewaterhouseCoopers GmbH to perform a voluntary, limited assurance review of the
separate report on non-financial information. During a guided tour of the Dingolfing plant,
we were able to learn about the future production of the BMW i NEXT, amongst others.
The two-day Supervisory Board meeting focused in particular on the Group's strategy and the
long-term corporate plan.
During the first part of the meeting we discussed the annual review of Strategy NUMBER ONE > NEXT
with the Board of Management. The Board of Management explained the decisions taken in each
strategic area, such as the expansion of digital services and products and developments in the
field of autonomous driving. It also presented various scenarios for the development of drivetrain
systems and outlined the measures it has taken to respond flexibly to customer requirements. The
Board of Management also provided us with a detailed account of the competitive environment
in the electric mobility sector. We support the Board of Management's initiatives to expand the
charging infrastructure.
In the course of a vehicle presentation, we had the opportunity to drive the current BMW Group
models with various drivetrain concepts on a test track. We were able to see for ourselves
the progress made in the field of autonomous driving. Selected vehicles, including various
battery-electric vehicles (BEVs), and technologies were also presented and explained to us
through models and exhibits.
In the second part of the meeting, we reviewed in detail the long-term corporate plan for the
years 2018 to 2023 and discussed in depth various risk scenarios with the Board of Management.
The Board of Management explained the Performance NEXT programme, which will support
the financing of future topics by leveraging potential on the performance and cost side. After
careful examination and discussion, we approved the plan and urged the Board to implement
systematically the measures proposed and to drive ahead with electric mobility at the BMW Group,
in order to act from a position of strength.
We also took a close look at the BMW Group's IT strategy. The Board of Management explained
the steps already taken towards further digitalisation of the BMW Group. At the same time, it
informed us on the threat of cyberattacks and outlined the safeguards and defence measures
within the IT security management system.
With respect to vehicle architecture, the Board of Management explained measures taken to
implement the electrification strategy and presented the specific benefits.
13
15
To Our
Shareholders
The representatives of the external auditor confirmed that the risk management system estab-
lished by the Board of Management is capable of identifying at an early stage developments that
might threaten the Company's going-concern status. They confirmed that no material weaknesses
in the internal control system and risk management system with regard to the financial reporting
process were identified. Similarly, they did not identify in the course of their audit work any
facts that were inconsistent with the contents of the Declaration of Compliance pursuant to
§ 161 AktG, issued by the Board of Management and the Supervisory Board.
Based on thorough examination by the Audit Committee and the full Supervisory Board, we
concurred with the results of the external audit. In accordance with the conclusion reached
after the examination by the Audit Committee and the full Supervisory Board, no objections
were raised. The Group and Company Financial Statements of BMW AG for the financial year
2017 prepared by the Board of Management were approved at the Supervisory Board meeting
held on 8 March 2018. The financial statements have therefore been adopted.
We also examined the proposal of the Board of Management to use the unappropriated profit to
pay an increased dividend of €4.00 per share of common stock and €4.02 per share of non-voting
preferred stock. We consider the proposal appropriate and have therefore approved it.
On presentation of the Sustainable Value Report, the Audit Committee and the Supervisory
Board also reviewed the separate non-financial report of BMW AG (Company and Group) at
31 December 2017, which has been drawn up for the first time by the Board of Management. The
audit firm PricewaterhouseCoopers GmbH has performed a “limited assurance" review of these
reports and issued an unqualified opinion thereon. The documents were carefully examined
by the Audit Committee at its meeting on 26 February 2018 and by the Supervisory Board at
its meeting on 8 March 2018. The Board of Management gave a detailed explanation of the
reports at both meetings. Representatives of the auditors attended both meetings, reported on
significant findings and answered additional questions raised by the members of the Supervisory
Board. The Supervisory Board acknowledged and approved the separate non-financial report
(Company and Group) drawn up by the Board of Management.
Expression of appreciation by the Supervisory Board
14
Munich, 8 March 2018
On behalf of the Supervisory Board
Yours
The Supervisory Board examined the relevant drafts of the Board of Management at its meeting
on 8 March 2018, after hearing the committee chairman's report on the meeting of the Audit
Committee. In both meetings, the Board of Management gave a detailed explanation of the
financial reports it had prepared. Representatives of the external auditor were present at both
meetings. They reported on the main findings of their audit, explained the key audit matters in
the audits of the Company and Group Financial Statements and answered additional questions
of members of the Supervisory Board.
Man
Chairman of the Supervisory Board
17
18
To Our
Shareholders
→ Statement of the
Chairman
of the Board of
Management
Harald Krüger
Chairman of the Board of Management
Norbert Reithofer
The Audit Committee closely examined and discussed these documents at a meeting held on
26 February 2018. The Audit Committee reviewed in detail the key audit matters raised in
the auditor's report of the Company and Group Financial Statements and the related audit
procedures performed by KPMG.
We wish to express our appreciation to the members of the Board of Management and the
entire workforce worldwide of the BMW Group for their joint efforts and hard work, which have
contributed to the outstanding performance for the financial year 2017.
The Group and Company Financial Statements of BMW AG for the year ended 31 December 2017
and the Combined Management Report - as authorised for issue by the Board of Management
on 15 February 2018 – were audited by KPMG AG Wirtschaftsprüfungsgesellschaft and given
an unqualified audit opinion.
→ Report of the
Supervisory Board
The Auditor's Report has been signed since the financial year 2016 by Christian Sailer, as
independent auditor (Wirtschaftsprüfer), and since the financial year 2014 by Andreas Feege,
as independent auditor (Wirtschaftsprüfer) responsible for the performance of the engagement.
The financial statements for the financial year 2017, the Combined Management Report, the
reports of the external auditors and the Board of Management's profit distribution proposal
were made available to all members of the Supervisory Board in a timely manner.
An independent auditor engaged by us to conduct the mandatory audit of over-the-counter
derivative transactions confirmed the effectiveness of the system that BMW AG currently employs
to ensure compliance with regulatory requirements.
In conjunction with the Employee Share Programme, the Audit Committee approved the decision
of the Board of Management to raise the Company's share capital in accordance with § 4 (5) of
the Articles of Incorporation (Authorised Capital 2014) by €491,000 and to issue a corresponding
number of new non-voting bearer shares of preferred stock, each with a par value of €1, at
favourable conditions to employees.
The Personnel Committee convened four times during the financial year 2017. The meetings
focused on preparations for revising the Board of Management compensation system and related
service contracts.
The Personnel Committee also undertook the preparatory work for the Supervisory Board's
decision to appoint a new Board of Management member to head the Sales and Brand BMW,
Aftersales BMW Group, taking account of the requirements profile and diversity concept agreed
upon for the Board of Management.
In individual cases, we also gave our approval to Board of Management members to assume
mandates outside the Group.
The Nomination Committee convened once during the financial year 2017. We reviewed the
succession planning for shareholder representatives and made recommendations for the proposal
of candidates for the Supervisory Board election of the Annual General Meeting 2018, taking
into account the composition targets previously resolved by the Supervisory Board.
The statutory Mediation Committee did not need to convene during the financial year 2017.
Composition of the Board of Management
The composition of the Board of Management changed at the turn of the year following the appoint-
ment of Pieter Nota as a Member of the Board of Management with effect from 1 January 2018.
Mr Nota has joined the BMW Group with a wealth of international experience in the areas of sales
and marketing. He succeeds Dr Ian Robertson as Board member responsible for Sales and Brand
BMW, Aftersales BMW Group. In agreement with the Supervisory Board, Dr Robertson retired
from the Board of Management with effect from the end of 31 December 2017. He will continue
to support the BMW Group with his expertise as ambassador of the BMW Group in the United
Kingdom until 30 June 2018. With his energy and commitment, Dr Robertson contributed to the
BMW Group's outstanding growth and success during an almost ten-year term of office on the
Board. We wish to express our appreciation and thank Dr Robertson for his dedicated services.
Another area of focus for the Audit Committee was preparing for the change in external auditor
with effect from the 2019 financial year. In this context, we organised a tender procedure in
accordance with new statutory requirements and, after carefully examining the applicants,
made a recommendation to the full Supervisory Board. The non-audit services provided by the
auditor were also regularly scrutinised.
Composition of the Supervisory Board,
In addition, we decided in three cases to renew the appointment of members of the Board of
Management.
→ Report of the
To Our
Shareholders
16
Supervisory Board
The composition of the Presiding Board and the committees of the Supervisory Board remained
unchanged during the financial year. The Corporate Governance Report includes a summary
of the composition of the Supervisory Board and its committees.
In view of the applicable age limit, with effect from the end of the Annual General Meeting
2017, Professor Henning Kagermann stepped down from the Supervisory Board, of which he
had been a member since 2010. We thank Professor Kagermann for his valuable work and the
trustful cooperation with which he served on the Supervisory Board. At the Annual General
Meeting 2017, Dr.-Ing. Heinrich Hiesinger was elected as new shareholder representative for
a five-year term of office.
the Presiding Board and Supervisory Board Committees
Examination of financial statements and the profit distribution proposal
KPMG AG Wirtschaftsprüfungsgesellschaft has audited the Company and Group Financial
Statements of Bayerische Motoren Werke Aktiengesellschaft (BMW AG). It also conducted a
review of the abridged Interim Group Financial Statements and Interim Group Management
Report for the six-month period ended 30 June 2017. The results of the review were presented
to the Audit Committee by representatives of KPMG AG Wirtschaftsprüfungsgesellschaft. No
issues were identified that might indicate that the abridged Interim Group Financial Statements
and Interim Group Management Report had not been prepared in all material respects in
accordance with the applicable provisions.
→Information on the
Company's
Board of
Management
Supervisory Board
Compliance
Compensation
Report
198
Statement on
Corporate
Governance
Governing
Information on the Company's
STATEMENT ON
CORPORATE
GOVERNANCE
Good corporate governance - acting in accordance
with the principles of responsible management aimed
at increasing the value of the business on a sustainable
basis - is an essential requirement for the BMW Group
embracing all areas of the business. Corporate culture
within the BMW Group is founded on transparent
reporting and communication, corporate governance
in the interest of all stakeholders, trustful cooperation
both of the Board of Management and the Supervisory
Board as well as among employees, and compliance
with applicable law. The Board of Management and
Supervisory Board report in this statement on impor-
tant aspects of corporate governance pursuant to
§§ 289 f, § 315 d HGB and section 3.10 of the German
Corporate Governance Code (GCGC).
Governing Constitution
its
The designation BMW Group comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and
group entities. BMW AG is a stock corporation
(Aktiengesellschaft) within the meaning of the
German Stock Corporation Act (Aktiengesetz) and
has its registered office in Munich, Germany. It has
three representative bodies: the Annual General
Meeting, the Supervisory Board and the Board of
Management. The duties and powers of those bodies
derive from the Stock Corporation Act and the
Articles of Incorporation of BMW AG. Shareholders,
as the owners of the business, exercise their rights at
the Annual General Meeting. The Annual General
Meeting decides in particular on the utilisation of
unappropriated profit, the ratification of the acts of
the members of the Board of Management and the
Supervisory Board, the appointment of the external
auditor, changes to the Articles of Incorporation and
certain capital measures, and elects the shareholders'
representatives to the Supervisory Board. The Board of
Management is responsible for managing the Company
and is monitored and advised by the Supervisory
Board. The Supervisory Board appoints the members
of the Board of Management and can, for an important
reason, revoke an appointment at any time. The Board
of Management informs the Supervisory Board and
reports to it regularly, promptly and comprehensively,
in line with the principles of conscientious and faithful
accounting and in accordance with the law and the
reporting duties determined by the Supervisory Board.
The Board of Management requires the approval of
the Supervisory Board for certain major transactions.
The Supervisory Board is not, however, authorised to
undertake management measures itself.
The close interaction between Board of Management
and Supervisory Board in the interests of the Company
as described above is also known as a "two-tier board
structure".
Company's Govern-
ing Constitution
Constitution
Corporate
Governance
100
4
Statements
Notes to the Group
Financial Statements
→ List of Investments
at 31 December 2017
BMW Madrid S.L., Madrid
BMW Milano S.r.I., San Donato Milanese
Société Nouvelle WATT Automobiles SARL, Rueil-Malmaison
Alphabet Luxembourg S.A., Leudelange
BMW (UK) Investments Ltd., Farnborough
BMW Malta Finance Ltd., Floriana
BiV Carry ISCS, Senningerberg11
BMW (UK) Capital plc, Farnborough
Riley Motors Ltd., Farnborough
BMW Central Pension Trustees Ltd., Farnborough
Triumph Motor Company Ltd., Farnborough
BLMC Ltd., Farnborough
Bavarian Sky FTC, Pantin 14
Bavarian Sky UK 1 PLC, London 14
Bavarian Sky UK A Limited, London 14
Bavarian Sky S.A., Compartment German Auto Loans 3, Luxembourg 14
Bavarian Sky S.A., Compartment German Auto Loans 4, Luxembourg 14
Bavarian Sky S.A., Compartment German Auto Loans 5, Luxembourg 14
Bavarian Sky S.A., Compartment German Auto Loans 6, Luxembourg 14
Bavarian Sky S.A., Compartment German Auto Loans 7, Luxembourg 14
Bavarian Sky S.A., Compartment German Auto Leases 4, Luxembourg 14
Bavarian Sky S.A., Compartment A, Luxembourg 14
Bavarian Sky S.A., Compartment B, Luxembourg 14
Bavarian Sky Europe S.A. Compartment A, Luxembourg 14
Bavarian Sky Europe S.A., Luxembourg 14
100
100
Group
Financial
100
190
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
BMW Den Haag B.V., The Hague
100
100
100
1,431
303
100
1,358
121
100
1,135
247
100
333
41
100
226
10
100
BMW SLP, S.A. de C.V., Villa de Reyes
187
-84
100
BMW of North America, LLC, Wilmington, Delaware
-288
-679
100
BMW Extended Service Corporation, Wilmington, Delaware
220
100
2,280
2,320
100
100
100
100
100
100
0
0
0
0
0
0
0
0
0
0
0
0
0
The Americas
BMW Financial Services NA, LLC, Wilmington, Delaware
BMW (US) Holding Corp., Wilmington, Delaware
BMW Manufacturing Co., LLC, Wilmington, Delaware
BMW Bank of North America, Inc., Salt Lake City, Utah
Financial Services Vehicle Trust, Wilmington, Delaware
BMW US Capital, LLC, Wilmington, Delaware
BMW do Brasil Ltda., São Paulo
2,444
100
100
Oy BMW Suomi AB, Helsinki
BMW Roma S.r.l., Rome
210
19
100
BMW Finance N.V., The Hague
154
20
100
BMW Austria Leasing GmbH, Salzburg
136
13
100
Rolls-Royce Motor Cars Ltd., Farnborough
Alphabet Nederland B.V., Breda 10
BMW Russland Trading 000, Moscow
135
24
100
131
41
100
130
150
100
BMW i Ventures SCS SICAV-RAIF, Senningerberg11
115
BMW Iberica S.A., Madrid
-3
100
218
BMW Finance S.N.C., Guyancourt
BMW Italia S.p.A., San Donato Milanese
BMW (UK) Ltd., Farnborough
419
56
100
360
15
100
330
77
100
BMW Belgium Luxembourg S.A./N.V., Bornem
298
22
100
ALPHABET (GB) Ltd., Farnborough
244
50
100
BMW France, Montigny-le-Bretonneux
223
23
100
BMW Financial Services Scandinavia AB, Sollentuna
11
BMW Danmark A/S, Copenhagen
100
115
BMW Financial Services Belgium S.A./N.V., Bornem
100
Swindon Pressings Ltd., Farnborough
BMW Financial Services (Ireland) DAC, Dublin
BMW Financial Services B.V., Rijswijk
BMW Norge AS, Fornebu
Alphabet France Fleet Management S.N.C., Rueil-Malmaison
BMW Services Ltd., Farnborough
Alphabet Italia Fleet Management S.p.A., Rome
BMW Portugal Lda., Porto Salvo
Alphabet Austria Fuhrparkmanagement GmbH, Salzburg
BMW Retail Nederland B.V., Delft
BMW Hellas Trade of Cars A. E., Kifissia
Alphabet Fuhrparkmanagement (Schweiz) AG, Dielsdorf
BMW Nederland B.V., Rijswijk
BMW Financial Services Polska Sp. z o.o., Warsaw
BMW Automotive (Ireland) Ltd., Dublin
Alphabet France SAS, Rueil-Malmaison
BMW Amsterdam B.V., Amsterdam
Alphabet Polska Fleet Management Sp. z o.o., Warsaw
BMW Financial Services Denmark A/S, Copenhagen
Park Lane Ltd., Farnborough
BMW Distribution S.A.S., Montigny-le-Bretonneux
BMW Services Belgium N.V., Bornem
BMW Renting (Portugal) Lda., Porto Salvo
100
BMW Austria Bank GmbH, Salzburg
100
BMW Northern Europe AB, Stockholm
12
100
Alphabet Belgium Long Term Rental NV, Aartselaar
113
17
100
BMW International Investment B.V., The Hague
107
7
BMW Vertriebs GmbH, Salzburg
102
27
100
Bavaria Reinsurance Malta Ltd., Floriana
100
APD Industries plc, Farnborough
100
BMW Austria Ges.m.b.H., Salzburg
100
Alphabet UK Ltd., Glasgow
100
100
BMW Bank 000, Moscow
Alphabet España Fleet Management S.A.U., Madrid
BMW Finanzdienstleistungen (Schweiz) AG, Dielsdorf
100
189
Rolls-Royce Motor Cars NA, LLC, Wilmington, Delaware
BMW Auto Leasing, LLC, Wilmington, Delaware
2015-2 ABL, Tokyo 14
2016-1 ABL, Tokyo 14
2016-2 ABL, Tokyo 14
2017-1 ABL, Tokyo 14
2017-2 ABL, Tokyo 14
0
0
0
John Cooper Garages Ltd., Farnborough
Content4all BV, Amsterdam
Cobalt Telephone Technologies Ltd., Basingstoke
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2015-1 ABL, Tokyo 14
100
2014-2 ABL, Tokyo 14
Bavarian Sky China 2017-2, Beijing 14
122
10
100
114
88
100
106
63
100
100
100
100
100
100
100
100
100
༄༄ ༅g 6「 g རྞ g g g| g g g| g| g g| ༠༐ ༠༐ ༠༐ ༠」
100
192
Group
Financial
Statements
Notes to the Group
Financial Statements
→ List of Investments
at 31 December 2017
Bavarian Sky China 2016-2, Beijing 14
Bavarian Sky China 2017-1, Beijing 14
Bavarian Sky China 2017-3, Beijing 14
100
100
Capital invest-
ment in %
BMW Car IT GmbH, Munich4
Digital Charging Solutions GmbH, Munich
Automag GmbH, Munich
BMW i Ventures GmbH, Munich
Alphabet Fleetservices GmbH, Munich
DOMESTIC7
Companies
→ 66
BMW AG's non-consolidated companies at 31 December 2017
BMW Australia Trust, Mulgrave, Victoria 14
BMW Melbourne Pty. Ltd., Melbourne
BMW Sydney Pty. Ltd., Sydney
BMW New Zealand Ltd., Auckland
BMW Financial Services New Zealand Ltd., Auckland
BMW Australia Ltd., Melbourne
BMW Australia Finance Ltd., Mulgrave
Oceania
2017-3 ABL, Tokyo 14
0
0
0
0
0
0
0
ParkNow GmbH, Munich
100
PM Parking Ventures GmbH, Munich
Europe
in € million
Profit/loss
in € million
Equity
0
100
100
100
100
100
15
134
100
13
380
Cobalt Holdings Ltd., Basingstoke
BMW Motorsport Ltd., Farnborough
BMW i Ventures B.V., The Hague
BMW Group Benefit Trust Ltd., Farnborough
BMW Drivers Club Ltd., Farnborough
BMW Car Club Ltd., Farnborough
BMW (UK) Pensions Services Ltd., Hams Hall
BMW (P+A) Ltd., Farnborough
BMW (GB) Ltd., Farnborough
Alphabet Insurance Services Polska Sp. z o.o., Warsaw
FOREIGN7
100
16
100
100
100
BMW Financeira S.A. Credito, Financiamento e Investimento, São Paulo
BMW Receivables 2 Inc., Richmond Hill, Ontario
100
191
BMW Receivables Limited Partnership, Richmond Hill, Ontario
BMW Receivables 1 Inc., Richmond Hill, Ontario
BMW of Manhattan, Inc., Wilmington, Delaware
BMW Canada Inc., Richmond Hill, Ontario
BMW Vehicle Lease Trust 2015-2, Wilmington, Delaware 14
BMW Vehicle Lease Trust 2016-1, Wilmington, Delaware 14
BMW Vehicle Lease Trust 2016-2, Wilmington, Delaware 14
BMW Vehicle Lease Trust 2017-1, Wilmington, Delaware14
BMW Vehicle Lease Trust 2017-2, Wilmington, Delaware 14
BMW Vehicle Lease Trust 2016-A, Wilmington, Delaware 14
BMW Vehicle Lease Trust 2017-A, Wilmington, Delaware¹4
BMW Vehicle Owner Trust 2014-A, Wilmington, Delaware 14
BMW Vehicle Owner Trust 2016-A, Wilmington, Delaware 14
BMW Floorplan Master Owner Trust, Wilmington, Delaware 14
BMW Canada 2015-A, Richmond Hill, Ontario 14
BMW Canada Auto Trust 2015, Richmond Hill, Ontario 14
BMW Canada Auto Trust 2016, Richmond Hill, Ontario 14
BMW Canada Auto Trust 2017-1, Richmond Hill, Ontario 14
100
100
100
100
100
0
0
0
0
0
0
0
100
0
100
100
100
BMW Facility Partners, LLC, Wilmington, Delaware
BMW FS Securities LLC, Wilmington, Delaware
BMW FS Funding Corp., Wilmington, Delaware
BMW Manufacturing LP, Woodcliff Lake, New Jersey
BMW FS Receivables Corp, Wilmington, Delaware
SB Acquisitions, LLC, Wilmington, Delaware
BMW Consolidation Services Co., LLC, Wilmington, Delaware
BMW Acquisitions Ltda., São Paulo
BMW Leasing de Mexico S.A. de C.V., Mexico City
BMW Insurance Agency, Inc., Wilmington, Delaware
BMW Manufacturing Indústria de Motos da Amazônia Ltda., Manaus
BMW Leasing do Brasil, S.A., São Paulo
BMW de Argentina S.A., Buenos Aires
BMW Financial Services de Mexico S.A. de C.V. SOFOM, Mexico City
BMW de Mexico, S.A. de C.V., Mexico City
100
100
100
100
100
100
100
100
100
100
214
0
0
Bavarian Sky Korea 2017-1, Seoul 14
Bavarian Sky China 2016-1, Beijing 14
721
54
100
167
-6
100
0
0
1,860
289
58
799
752
100
475
68
100
414
63
280
18
100
0
Bavarian Sky Korea 2016-1, Seoul 14
0
Bavarian Sky Korea Auto Receivable 1 Pte. Ltd., Singapore 14
BMW Tokyo Corp., Tokyo
0
0
0
Africa
BMW (South Africa) (Pty) Ltd., Pretoria
BMW Financial Services (South Africa) (Pty) Ltd., Midrand
Bavarian Sky South Africa (RF) Ltd., Johannesburg 14
SuperDrive Investments (RF) Limited, Cape Town 14
Asia
BMW Automotive Finance (China) Co., Ltd., Beijing
BMW China Automotive Trading Ltd., Beijing
BMW Financial Services Korea Co., Ltd., Seoul
BMW Japan Finance Corp., Chiba
BMW Japan Corp., Tokyo
BMW Korea Co., Ltd., Seoul
BMW India Financial Services Private Ltd., Gurgaon
BMW (Thailand) Co., Ltd., Bangkok
BMW Manufacturing (Thailand) Co., Ltd., Rayong
Herald International Financial Leasing Co., Ltd., Tianjin 11
BMW Malaysia Sdn Bhd, Kuala Lumpur
BMW Asia Pte. Ltd., Singapore
BMW Leasing (Thailand) Co., Ltd., Bangkok
BMW India Private Ltd., Gurgaon
BMW China Services Ltd., Beijing
BMW Asia Technology Centre Sdn Bhd, Kuala Lumpur
BMW Holding Malaysia Sdn Bhd, Kuala Lumpur
PT BMW Indonesia, Jakarta
BMW Asia Pacific Capital Pte Ltd., Singapore
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur
0
0
Asia
The Americas
U.T.E. Alphabet España-Bujarkay, Sevilla
ParkNow Suisse SA, Bulle
Parkmobile Software BV, Amsterdam
Parkmobile Ltd., Basingstoke
Parkmobile Licenses B.V., Amsterdam
Parkmobile Hellas SA, Athens
Parkmobile Group Holding BV, Amsterdam
Parkmobile Group BV, Amsterdam
ParkNow France SAS, Versailles
Parkmobile International Holding B.V., Utrecht
Parkmobile International B.V., Utrecht
Parkmobile (UK) Ltd., Basingstoke
Parkmobile Belgium BvBa, Antwerpen
Parkmobile Benelux B.V., Amsterdam
Park-line Holding B.V., The Hague
Park-line B.V., The Hague
Park-line Aqua B.V., The Hague
BMW Russland Automotive 000, Kaliningrad
90
100
217-07 Northern Boulevard Corporation, Wilmington, Delaware
100
BMW Experience Centre Inc., Richmond Hill, Ontario
BMW i Ventures, Inc., Wilmington, Delaware
100
100
100
100
100
100
100
100
100
100
Toluca Planta de Automoviles, S.A. de C.V., Mexico City
Parkmobile Electronic Parking Solutions Canada, Inc., Vancouver
Parkmobile USA, Inc., Atlanta, Georgia
Parkmobile Montgomery County, LLC, Baltimore, Maryland 13
Parkmobile, LLC, Wilmington, Delaware 13
MINI Business Innovation, LLC, Wilmington, Delaware
Mini Urban X Accelerator SPV, LLC, Wilmington, Delaware
Reach Now, LLC, Wilmington, Delaware
BMW Operations Corp., Wilmington, Delaware
BMW Technology Corporation, Wilmington, Delaware
Designworks/USA, Inc., Newbury Park, California
BMW Leasing de Argentina S.A., Buenos Aires
BMW i Ventures, LLC, Wilmington, Delaware
100
100
60
52
9
49
41
2
49
50
50
50
25
20
40
40
50
2222
30
25
33
100
John Cooper Works Ltd., Farnborough
100
100
100
100
100
100
100
100
100
100
100
100
100
193
100
100
100
100
000 BMW Leasing, Moscow
65
65
100
Associated companies - equity accounted
50
1,337
5,377
BMW Brilliance Automotive Ltd., Shenyang³
FOREIGN
25
-11
39
50
50
-2
42
Capital invest-
ment in %
in € million
in € million
Profit/loss
FOREIGN
Equity
THERE Holding B.V., Amsterdam
DOMESTIC
DSP Concepts, Inc., Dover, Delaware
IP Mobile N.V., Brussels
Stadspasparkeren B.V., Deurne
BMW AVTOTOR Holding B.V., Amsterdam
BMW Albatha Finance PSC, Dubai
BMW Albatha Leasing LLC, Dubai
FOREIGN7
PDB - Partnership for Dummy Technology and Biomechanics GbR, Gaimersheim
Abgaszentrum der Automobilindustrie GbR, Weissach
The Retail Performance Company GmbH, Munich
Digital Energy Solutions GmbH & Co. KG, Munich
Encory GmbH, Unterschleißheim
DOMESTIC7
Not equity accounted or proportionately consolidated entities
SGL Automotive Carbon Fibers, LLC, Dover, Delaware
FOREIGN
SGL Automotive Carbon Fibers GmbH & Co. KG, Munich
Joint operations - proportionately consolidated entities
Drive Now Verwaltungs GmbH, Munich³
IONITY Holding GmbH & Co. KG, Munich
DriveNow GmbH & Co. KG, Munich³
DOMESTIC
Herald Hezhong (Beijing) Automotive Trading Co., Ltd., Beijing
BMW Philippines Corp., Manila
BMW Insurance Services Korea Co. Ltd., Seoul
BMW India Foundation, Gurgaon
BMW India Leasing Pvt. Ltd., Gurgaon
BMW Financial Services Singapore Pte Ltd., Singapore
BMW Hong Kong Services Limited, Hong Kong
BMW Finance (United Arab Emirates) Ltd., Dubai
BMW Financial Services Hong Kong Limited, Hong Kong
362
100
100
100
BPF Midrand Property Holdings (Pty) Ltd., Midrand
Multisource Properties (Pty) Ltd., Midrand
BMW Automobile Distributors (Pty) Ltd., Midrand
Africa
100
100
THEPSATRI Co., Ltd., Bangkok
100
51
100
Joint ventures - equity accounted
Companies
BMW AG's associated companies, joint ventures and joint operations at 31 December 2017
→ 67
at 31 December 2017
Notes to the Group
Financial Statements
→ List of Investments
Statements
Group
Financial
194
20
100
Oceania
49
100
70
100
100
100
100
Parkmobile International (Australia) Pty. Ltd., Sydney
20
BMW AG's participations at 31 December 2017
→ 68
Peter Schwarzenbauer
Dr. Nicolas Peter
Pieter Nota
Klaus Fröhlich
Milagros Caiña Carreiro-Andree Markus Duesmann
Harald Krüger
The Board of Management
Bayerische Motoren Werke
Aktiengesellschaft
Munich, 15 February 2018
at 31 December 2017
→ List of Investments
Notes to the Group
Financial Statements
Group
Financial
Statements
196
195
14 Control on basis of economic dependence.
13 100% acquisition on 3 January 2018.
Oliver Zipse
12 Deconsolidation in the financial year 2017: BMW Osaka Corp., Tokyo, MITEC Mikroelektronik Mikrotechnik Informatik GmbH, Munich (merger).
Bavarian & Co. Ltd., Incheon
CORPORATE
GOVERNANCE
→ Page 240 Independent Auditor's Report
→ Page 239 Responsibility Statement by the Company's
Legal Representatives
(Part of the Combined Management Report)
→Page 221 Compensation Report
→Page 216 Compliance in the BMW Group
Practices Applied beyond Mandatory Requirements
Disclosures pursuant to the Act on Equal Gender Participation
Information on Corporate Governance
→ Page 214
→ Page 213
→ Page 206 Composition and Work Procedures of the Supervisory Board
of BMW AG and its Committees
Composition and Work Procedures of the Board of Management
of BMW AG and its Committees
Members of the Supervisory Board
of the Supervisory Board pursuant to § 161 AktG
Members of the Board of Management
→ Page 204
→ Page 201
→ Page 200
→Page 198 Statement on Corporate Governance
(Part of the Combined Management Report)
→ Page 198 Information on the Company's Governing Constitution
→Page 199 Declaration of the Board of Management and
4
11 First-time consolidation.
2,195
⁹ Including power to appoint representative bodies.
Profit/loss
in € million
Capital invest-
ment in %
DOMESTIC
Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern
GSB Sonderabfall-Entsorgung Bayern GmbH, Baar-Ebenhausen
Hubject GmbH, Berlin
IVM Industrie-Verband Motorrad GmbH & Co. Dienstleistungs KG, Essen
Joblinge gemeinnützige AG Berlin, Berlin
Joblinge gemeinnützige AG Leipzig, Leipzig
Joblinge gemeinnützige AG München, Munich
RA Rohstoffallianz GmbH i.L., Berlin
Racer Benchmark Group GmbH, Landsberg am Lech
SGL Carbon SE, Wiesbaden
FOREIGN7
4.6
1 The amounts shown for the German subsidiaries correspond to the annual financial statements drawn up in accordance with German accounting requirements (HGB).
1º Exemption pursuant to Article 2:403 of the Civil Code of the Netherlands (Burgerlijk Wetboek).
in € million
Equity
Gios Holding B.V., Oss
3.1
8 The amounts shown for entities accounted for using the equity method and for proportionately consolidated entities correspond to the annual financial statements drawn up in accordance with uniform
7 These entities are neither consolidated nor accounted for using the equity method due to their overall immateriality for the Group Financial Statements.
6 Exemption from publication of financial statements applied in accordance with § 264 (3) and § 264 b HGB.
5 Exemption from drawing up a management report applied in accordance with § 264 (3) and § 264 b HGB.
Companies
3 Profit and Loss Transfer Agreement with BMW AG.
2 The amounts shown for the foreign subsidiaries correspond to the annual financial statements drawn up in accordance with uniform IFRS rules. Equity and earnings not denominated in euro are translated into
euro using the closing exchange rate at the balance sheet date.
12.0
4 Profit and Loss Transfer Agreement with a subsidiary of BMW AG.
9.1
10.5
6.2
16.7
9.8
18.9
17.8
18.3
IFRS rules. Equity not denominated in euro is translated into euro using the closing exchange rate at the balance sheet date, earnings are translated using the average rate.
→ see "Overview
of Supervisory
Board commit-
tees and their
composition"
"Composition
targets for the
Supervisory
Board"
Composition of the Presiding Board and the committees
is based on legal requirements, the Articles of Incor-
poration, rules of procedure and corporate governance
principles, while taking into particular account the
expertise of Board members.
→ Taking into account the specific circumstances of
the BMW Group and the number of Board members,
the Supervisory Board has set up a Presiding Board
and four committees: the Personnel Committee, the
Audit Committee, the Nomination Committee and the
Mediation Committee. These serve to raise the efficiency
of the Supervisory Board's work and facilitate handling
of complex issues. Establishment and function of a
mediation committee is prescribed by law. Committee
chairpersons report in detail on committee work at each
plenary meeting of the Supervisory Board.
Members of the Supervisory Board are responsible for
undertaking any training required for the performance
of their duties. The Company provides them with appro-
priate assistance therein.
→ The Supervisory Board has stated specific targets → see section
for its composition, agreed to a diversity concept and
determined a competency profile.
The Supervisory Board regularly assesses the efficiency
of its activities. To this end, shared discussion is con-
ducted within the Supervisory Board and individual
meetings held with the Chairman, prepared on the basis
of a questionnaire sent in advance, which is drawn up
by the Supervisory Board.
→ see Report of
the Supervisory
Board for the
In proposing candidates for election as members of the
Supervisory Board, care is taken that the Supervisory
Board collectively has the required knowledge, skills and
expertise to perform its tasks appropriately.
Members of the Supervisory Board are obliged to inform
the Supervisory Board of any conflicts of interest, in
particular those resulting from a consulting or executive
role with clients, suppliers, lenders or other business
partners, so that the Supervisory Board can report to
the shareholders at the Annual General Meeting on
its treatment of the issue. Material and non-temporary
conflicts of interest of a Supervisory Board member
result in a termination of mandate.
Members of the Supervisory Board of BMW AG are
obliged to act in the best interest of the organisation as
a whole. They may not pursue personal interests in their
decisions or take advantage of business opportunities
intended to benefit the BMW Group.
According to the rules of procedure, the Chairman of the
Supervisory Board is, by virtue of this function, member
and Chairman of the Presiding Board, the Personnel
Committee and the Nomination Committee.
Members of the Supervisory Board of BMW AG take
care to ensure that they have sufficient time to perform
their mandate. If members of the Supervisory Board of
BMW AG are also members of the management board of
a listed company, they may not accept more than three
mandates on non-BMW Group supervisory boards of
listed companies or in other bodies with comparable
requirements.
number of
meetings during
the year 2017
→ The number of meetings held by the Presiding Board
and committees depends on requirements. The Pre-
siding Board, the Personnel Committee and the Audit
Committee generally hold several meetings in the course
of the year.
Statement on
Corporate
Governance
Members of the Supervisory Board may not delegate
their duties to others. However, the Supervisory Board,
the Presiding Board and the committees may call on
experts and informed persons to attend meetings and
advise on specific matters.
Following the election of a new Supervisory Board
member, the Corporate Governance Officer informs
the new member of the main framework for performing
duties, in particular the BMW Group Corporate Gov-
ernance Code and individual contributions required in
circumstances which trigger reporting obligations or are
subject to Supervisory Board approval.
The establishment and composition of a mediation com-
mittee are prescribed by the German Co-determination
Act. The Mediation Committee has the task of making
proposals to the Supervisory Board if a resolution for the
appointment of a member of the Board of Management
has not been carried by the necessary two-thirds major-
ity of members' votes. In accordance with statutory
requirements, the Mediation Committee comprises the
Chairman and the Deputy Chairman of the Supervisory
Board, one member selected by shareholder represent-
atives and one by employee representatives.
The Nomination Committee is charged with the task of
finding suitable candidates for election to the Super-
visory Board as shareholder representatives and to
propose them to the Supervisory Board for election at
the Annual General Meeting. In line with the recom-
mendations of the German Corporate Governance Code,
the Nomination Committee is exclusively composed of
shareholder representatives.
In line with the recommendations of the German Cor-
porate Governance Code, the Chairman of the Audit
Committee is independent, and not a former Chairman
of the Board of Management, and has special knowledge
and experience in the application of financial reporting
standards and internal control procedures. He also
fulfils the requirement of being a financial expert as
defined by § 100 (5) and § 107 (4) AktG.
The Audit Committee deals in particular with the super-
vision of the financial reporting process, effectiveness
of the internal control system, the risk management
system, internal audit system and compliance as well
as the performance of Supervisory Board duties in
connection with audits pursuant to § 32 of the German
Securities Trading Act (WpHG). It also oversees the
audit of financial statements, auditor independence
and any additional work performed by the auditor. It
prepares the proposal for the election of the auditor at
the Annual General Meeting, makes a relevant recom-
mendation, issues the audit engagement and agrees on
additional areas of audit focus as well as the auditor's fee.
The Audit Committee prepares the Supervisory Board's
resolution relating to the Company and Group Financial
Statements and discusses interim reports with the Board
of Management prior to publication. Additionally, the
Audit Committee deals with the non-financial report-
ing, prepares the audit of the Supervisory Board and
the engagement of an external auditor and issues the
audit engagement. The Audit Committee also decides
on the Supervisory Board's agreement on the use of
Authorised Capital 2014 (Article 4 no. 5 of the Articles
of Incorporation) and on amendments to the Articles
of Incorporation which only affect its wording.
The Personnel Committee prepares decisions of the
Supervisory Board with regard to the appointment and,
where applicable, removal of members of the Board of
Management and, together with the full Supervisory
Board and the Board of Management, ensures long-
term succession planning. The Personnel Committee
also
prepares s decisions of the Supervisory Board with
regard to Board of Management compensation and the
regular review of the compensation system for the Board
of Management. In conjunction with resolutions taken
by the Supervisory Board regarding the compensation
of the Board of Management, the Personnel Committee
is responsible for drawing up, amending and revoking
employment contracts or, when necessary, to prepare
and conclude other relevant contracts with members
of the Board of Management. In certain cases, the
Personnel Committee is also authorised to grant the
necessary approval of a business transaction on behalf of
the Supervisory Board. This includes cases of providing
loans to members of the Board of Management or Super-
visory Board, certain contractual arrangements with
members of the Supervisory Board, taking into account
related parties, as well as ancillary activities of members
of the Board of Management, in particular acceptance
of non-BMW Group supervisory board mandates.
In line with the rules of procedure for the activities of
the plenum, the Supervisory Board has set out proce-
dural rules for the Presiding Board and committees.
Committees are quorate only when all members par-
ticipate. Committee resolutions are passed by a simple
majority, unless otherwise stipulated by law.
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
208
207
In accordance with rules of procedure, the Presiding
Board comprises the Chairman of the Supervisory Board
and Deputies. The Presiding Board prepares Superviso-
ry Board meetings to the extent that the subject matter
does not fall within the remit of a committee. This
includes, for example, preparing the annual Declaration
of Compliance with the German Corporate Governance
Code and assessment of Supervisory Board efficiency.
coordination work.
BMW AG ensures that the Supervisory Board and its
committees are appropriately equipped to carry out
their duties. This includes providing a central Supervi-
sory Board office to support the chairpersons in their
The Supervisory Board, the Presiding Board and com-
mittees also meet without the Board of Management
when necessary.
→ Composition and
Following its meetings, the Supervisory Board generally
requests information on new vehicle models in the form
of a short presentation.
Statement on
Corporate
Governance
Resolutions of the Supervisory Board are generally
passed by a simple majority. The German Co-determina-
tion Act contains specific legal requirements with regard
to majorities and technical procedures, particularly with
regard to the appointment and removal of management
Board members and the election of Chairman or Deputy
Chairman of the Supervisory Board. In the event of a
tied vote in the Supervisory Board, the Chairman of
the Supervisory Board has two votes in a renewed vote,
assuming it also results in a tie.
The Board of Management consults and takes
decisions as a collegiate body in meetings of the
Board of Management, the Sustainability Board,
Following the appointment of a new member to the
Board of Management, the BMW Group Corporate
Governance Officer informs the new member of the
framework conditions under which the Board mem-
ber's duties are to be carried out - in particular those
enshrined in the BMW Group's Corporate Govern-
ance Code - as well as the duty to cooperate when a
transaction or event triggers reporting requirements
or requires the approval of the Supervisory Board.
During their period of employment for BMW AG,
members of the Board of Management are bound by
a comprehensive non-competition clause. They are
required to act in the enterprise's best interests and
may not pursue personal interests in their decisions
or take advantage of business opportunities intended
for the enterprise. They may only undertake ancillary
activities, in particular supervisory board mandates
outside the BMW Group, with the approval of the
Supervisory Board's Personnel Committee. Each
member of the Board of Management of BMW AG is
obliged to disclose conflicts of interest to the Super-
visory Board without delay and inform the other
members of the Board of Management accordingly.
The Board of Management determines the strategic
orientation of the enterprise, agrees upon it with the
Supervisory Board and ensures its implementation.
The Board of Management is responsible for ensuring
that all provisions of law and internal regulations are
complied with. Further details about compliance
within the BMW Group can be found in the Corporate
Governance section of the Annual Report. The Board
of Management is also responsible for ensuring that
appropriate risk management and risk controlling
systems are in place throughout the Group.
The Board of Management manages the enterprise
under its own responsibility, acting in the interests
of the BMW Group with the aim of achieving sustain-
able growth in value. The interests of shareholders,
employees and other stakeholders are also taken into
account in the pursuit of this aim.
COMPOSITION AND WORK
PROCEDURES OF THE
BOARD OF MANAGEMENT
OF BMW AG AND ITS
COMMITTEES
Management of
BMW AG and its
Committees
→Composition and
Work Procedures
of the Board of
Statement on
Corporate
Governance
204
203
Membership of equivalent national or foreign boards of business enterprises.
Membership of other statutory supervisory boards.
3 Employee representatives (members of senior management).
2 Employee representatives (union representatives).
1 Employee representatives (company employees).
Chairman of the Works Council, Regensburg
Member since 2001
Werner Zierer¹ (*1959)
Siemens Healthcare GmbH (Deputy Chairman)
Schaeffler AG (Deputy Chairman)
-
Mandates
Terms of reference approved by the Board of Man-
agement contain a planned allocation of divisional
responsibilities between the individual Board mem-
bers. These terms of reference also incorporate the
principle that the full Board of Management bears
joint responsibility for all matters of particular impor-
tance and scope. In addition, members of the Board of
Management manage the relevant portfolio of duties
under their responsibility, whereby case-by-case rules
can be put in place for cross-divisional projects. Board
members continually provide the Chairman of the
Board of Management with all information regarding
major transactions and developments within their
area of responsibility. The Chairman of the Board
of Management coordinates cross-divisional matters
with the overall targets and plans of the BMW Group,
involving other Board members to the extent that divi-
sions within their area of responsibility are affected.
In practice, resolutions are regularly passed by the
Supervisory Board and its committees at meetings.
Supervisory Board members who are not present can
submit their vote via another Supervisory Board member
in written, fax or electronic form. This rule also applies
for the second vote of the Chairman of the Supervisory
Board. The Chairman of the Supervisory Board can also
grant a period of time in which all members not present
at a meeting may retrospectively vote. In special cases,
resolutions may also be passed outside of meetings, in
particular in writing, by fax or by electronic means.
Resolutions and meetings are recorded in minutes,
which are signed by the relevant Chairman.
In the financial year 2017, the Board of Management
made its decisions at meetings generally held on a
weekly basis which were convened, coordinated and
headed by the Chairman of the Board of Management.
consent.
The Supervisory Board is quorate if all members have
been invited to the meeting and at least half the mem-
bers of whom it is required to comprise participate
in the vote. A resolution relating to an agenda item
not included in the invitation is only valid if none of
the members of the Supervisory Board who were not
present at the meeting object to the resolution and if
a minimum of two-thirds of the members are present.
The Chairman of the Supervisory Board coordinates
work within the Supervisory Board, convenes and
chairs its meetings, handles the external affairs of the
Supervisory Board and represents it before the Board
of Management.
The Supervisory Board holds a minimum of two meet-
ings per calendar half-year. Normally, five plenary
meetings are held per calendar year. One meeting each
year is planned to extend to several days and is used,
among other things, to enable an in-depth exchange on
strategic and technological matters. The main topics of
meetings in the period under report are summarised
in the Report of the Supervisory Board. Shareholder
representatives and employee representatives generally
prepare Supervisory Board meetings separately and
occasionally with members of the Board of Manage-
ment. Members of the Supervisory Board are specif-
ically legally bound to maintain secrecy with respect
to confidential reports they receive and confidential
discussions in which they partake.
reasons.
BMW AG's Supervisory Board is composed of ten share-
holder representatives (elected by the Annual General
Meeting) and ten employee representatives (elected in
accordance with the Co-Determination Act). The ten
Supervisory Board members representing employees
comprise seven Company employees, including one
executive staff representative, and three members elect-
ed following nomination by unions. The Supervisory
Board has the task of advising and supervising the Board
of Management in its management of the BMW Group.
It is involved in all decisions of fundamental importance
for the BMW Group. The Supervisory Board appoints
the members of the Board of Management and decides
upon the level of compensation they receive. The Super-
visory Board can revoke appointments for important
COMPOSITION AND WORK
PROCEDURES OF THE
SUPERVISORY BOARD OF
BMW AG AND ITS
COMMITTEES
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
→ Composition and
206
205
The Board of Management is represented by its Chair-
man in its dealings with the Supervisory Board. The
Chairman of the Board of Management maintains
regular contact with the Chairman of the Supervisory
Board and keeps him informed of all important mat-
ters. The Supervisory Board has passed a resolution
specifying the information and reporting duties of the
Board of Management. As a general rule, in the case
of reports required by law, the Board of Management
submits its reports to the Supervisory Board in writing.
To the extent possible, documents required as a basis
for taking decisions are sent to the members of the
Supervisory Board in good time before the relevant
meeting. Regarding transactions of fundamental
importance, the Supervisory Board has resolved
that a specific approval from the Supervisory Board
is required. Whenever necessary, the Chairman of
the Board of Management obtains the approval of
the Supervisory Board and ensures that reporting
duties to the Supervisory Board are complied with. In
order to fulfil these tasks, the Chairman is supported
by all members of the Board of Management. The
fundamental principle followed when reporting to
the Supervisory Board is that the latter should be kept
informed regularly, without delay and comprehen-
sively of all significant matters relating to planning,
business performance, risk exposures, risk manage-
ment and compliance, as well as any major variances
between actual business development and plans and
targets, and the relevant reasons.
their entirety or individually (such as the executive
management structure, potential candidates for exec-
utive management, nominations for or promotions to
senior management positions). This committee has,
on the one hand, an advisory and preparatory role
(e.g. making suggestions for promotions to the two
remuneration groups below Board level and preparing
decisions to be taken at Board meetings with regard
to human resources principles with the emphasis on
executive management issues) and a decision-making
function on the other (e.g. deciding on appointments
to senior management positions and promotions to
higher remuneration groups or the wording of human
resources principles decided on by the full Board). The
Committee has two members who are entitled to vote
at meetings, namely the Chairman of the Board of
Management (who also chairs the meetings) and the
Board member responsible for Human Resources. The
Head of Human Resources Management and Services
as well as the Head of Human Resources Executive
Management also participate in these meetings in an
advisory function. At the request of the Chairman,
resolutions may also be passed outside of committee
meetings by casting votes in writing, by fax or by
telephone if the other member entitled to vote does
not object immediately. The Committee for Executive
Management Matters convenes up to six times a year.
The Board's Committee for Executive Management
Matters deals with enterprise-wide issues affecting
executive managers of the BMW Group, either in
The full Board usually convenes up to twice a year in
its function as Sustainability Board in order to define
strategy with regard to sustainability and decide upon
measures to implement that strategy. The Head of
Corporate Affairs and the Representative for Sus-
tainability and Environmental Protection participate
in these meetings in an advisory capacity.
At meetings of the Operations Committee (general-
ly held every two weeks), decisions are reached in
connection with automobile product projects, based
on the strategic orientation and decision framework
stipulated at Board of Management meetings. The
Operations Committee comprises the Board of
Management member responsible for Development
(who also chairs the meetings), together with the
Board members responsible for the following areas:
Purchasing and Supplier Network; Production; Sales
and Brand BMW, Aftersales BMW Group (until 28 Feb-
ruary 2018); and MINI, Rolls-Royce, BMW Motorrad,
Customer Engagement and Digital Business Innovation
BMW Group (until 28 February 2018). If the committee
chairman is not present or unable to attend a meeting,
the member of the Board responsible for Production
represents him. Resolutions taken at meetings of the
Operations Committee are made online.
A secretariat for Board of Management matters has
been established to assist the Chairman and other
Board members with the preparation and follow-up
work connected with Board meetings.
Members of the Board of Management not represent-
ed in a committee are provided with the agendas and
minutes of committee meetings. Committee matters
are dealt with in full Board meetings if the committee
considers it necessary or at the request of a member
of the Board of Management.
for its committees.
The rules relating to meetings and resolutions taken
by the full Board of Management are also applicable
Minutes are taken of all meetings and the Board of
Management's resolutions and signed by the Chair-
man. Decisions taken by the Board of Management
are binding for all employees.
In the event that the Chairman of the Board of
Management is not present or is unable to attend
a meeting, the member of the Board responsible for
Finance will represent him.
unanimously. A Board meeting may only be held if
more than half of the Board members are present.
Unless stipulated otherwise by law or in BMW AG's
statutes, the Board of Management makes decisions
on the basis of a simple majority of votes cast at meet-
ings. Outside of Board meetings, decisions are taken
on the basis of a simple majority of Board members.
In the event of a tied vote, the Chairman of the Board
of Management has the casting vote. Any changes
to the Board's terms of reference must be passed
At the request of the Chairman, decisions can also
be taken outside of Board meetings if none of the
Board members object to this procedure. A meeting
is quorate if all Board of Management members are
invited to the meeting in good time. Members unable
to attend any meeting are entitled to vote in writing,
by fax or by telephone. Votes cast by phone must be
subsequently confirmed in writing. Except in urgent
cases, matters relating to a division for which the
responsible Board member is not present will only
be discussed and decided upon with that member's
the Operations Committee and the Committee for
Executive Management Matters. At its meetings, the
Board of Management defines the overall framework
for business strategies and the use of resources, takes
decisions regarding the implementation of strategies
and deals with issues of particular importance to the
BMW Group. The full Board also takes decisions at a
basic policy level relating to the Group's automobile
product strategies and product projects inasmuch as
these are relevant for all brands. The Board of Man-
agement and its committees may, as required and
depending on the subject matters being discussed,
invite non-voting advisers to participate at meetings.
Member since 2015
Regional Head of IG Metall Bavaria
Siemens Aktiengesellschaft
Mandates
Management of BMW AG
Declaration of the Board of Management and of the
Supervisory Board of Bayerische Motoren Werke
Aktiengesellschaft with respect to the recommen-
dations of the "Government Commission on the
German Corporate Governance Code" pursuant to
§ 161 German Stock Corporation Act
The Board of Management and Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft
("BMW AG") declare the following regarding the
recommendations of the "Government Commission
on the German Corporate Governance Code":
1. Since issuance of the last Declaration in Decem-
ber 2016, BMW AG has complied with all of the
recommendations published officially on 12 June
2015 in the Federal Gazette (Code version dated
5 May 2015), with the exception - as previously
reported of section 4.2.5 sentences 5 and 6.
-
2. BMW AG will in future comply with all of the recom-
mendations published officially on 24 April 2017 in
the Federal Gazette (Code version dated 7 February
2017), with the exception of section 4.2.3 sentence 9
and section 4.2.5 sentences 5 and 6.
3. It is recommended in section 4.2.3 sentence 9 of
the Code that subsequent amendments to per-
formance targets or comparison parameters for
variable remuneration components be excluded.
BMW AG remains committed to this principle.
A one-off departure from the recommendation is,
however, planned for the financial year 2018 in
conjunction with the implementation of a new
remuneration system for the Board of Manage-
ment: in order to implement the new remuneration
system with effect from the coming financial
year 2018 rather than with effect from the finan-
cial year 2020 – it is intended to cancel the targets
previously set for the variable remuneration com-
ponents for the financial years 2018 and 2019
and to replace them for the financial
year 2018
onwards with targets based on the target system
specified in the new remuneration system.
4. It is recommended in section 4.2.5 sentences 5
and 6 of the Code that specified information
pertaining to management board compensation
be disclosed in the Compensation Report. These
recommendations have not been and will not be
complied with, due to uncertainties as to whether
the supplementary use of model tables - -particularly
in view of the transition from one remuneration
system to a new system - would be instrumental
in making the BMW AG's Compensation Report
transparent and generally understandable in
accordance with generally applicable financial
reporting requirements (see section 4.2.5 sen-
tence 3 of the Code).
Munich, December 2017
Bayerische Motoren Werke
Aktiengesellschaft
On behalf of the
Supervisory Board
Dr.-Ing. Dr.-Ing. E. h.
Norbert Reithofer
Chairman
On behalf of the
Board of Management
Harald Krüger
Chairman
Henkel AG & Co. KGaA (Shareholders' Committee)
Manfred Schoch¹ (*1955)
Member since 1988
Deputy Chairman
TBG Limited
Heraeus Holding GmbH
Franz Haniel & Cie. GmbH (Chairman)
DELTON AG (Deputy Chairman)
-
Mandates
Franz Haniel (*1955)
Member since 2004
Entrepreneur
Second Chairman of IG Metall
Christiane Benner² (*1968)
Member since 2014
199
Verizon Communications Inc. (until 3 May 2018)
― E.ON SE (Chairman)
Mandates
Chairman of the Supervisory Board of the E.ON SE
and of the Deutsche Lufthansa Aktiengesellschaft
Deputy Chairman
Member since 2008
Dr. jur. Karl-Ludwig Kley (*1951)
Industrial Engineer
and General Works Council
Chairman of the European
Deutsche Lufthansa Aktiengesellschaft
200
Statement on
Corporate
Governance
→ Members of the
Klaus Fröhlich (*1960)
Development
Mandates
HERE International B.V. (until 28 February 2018)
Peter Schwarzenbauer (*1959)
MINI, Rolls-Royce, BMW Motorrad,
Customer Engagement and
Digital Business Innovation BMW Group
Mandates
Scout24 AG (since 8 June 2017)
Rolls-Royce Motor Cars Limited (Chairman)
Purchasing and Supplier Network
Pieter Nota (*1964)
Oliver Zipse (*1964)
Production
Mandates
BMW (South Africa) (Pty) Ltd. (Chairman)
BMW Motoren GmbH (Chairman)
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
General Counsel:
Dr. Jürgen Reul
MEMBERS OF THE
SUPERVISORY BOARD
Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer (*1956)
Sales and Brand BMW, Aftersales BMW Group
(since 1 January 2018)
Stefan Quandt (*1966)
Markus Duesmann (*1969)
(until 19 October 2017)
Board of
Management
→ Members of the
Supervisory Board
MEMBERS OF THE
BOARD OF MANAGEMENT
Dr. Nicolas Peter (*1962)
Finance
Mandates
BMW Brilliance Automotive Ltd.
Weybourne Management Limited
(Deputy Chairman)
Harald Krüger (*1965)
Chairman
Milagros Caiña Carreiro-Andree (*1962)
Human Resources, Industrial Relations Director
Former Chairman of the Board of
Sales and Brand BMW,
Aftersales BMW Group
(until 31 December 2017)
Mandates
Weybourne Limited (from 3 January 2017
until 19 October 2017)
Weybourne Group Limited
Weybourne Investments Holdings
BMW Nederland B.V. (until 14 February 2017)
Chairman
Member since 1997
Deputy Chairman
Mandates
Member since 2008
Prof. Dr. rer. pol. Renate Köcher (*1952)
UnternehmerTUM GmbH (Chairman)
SGL Carbon SE (Chairman)
ALTANA AG (Deputy Chairman)
Mandates
Entrepreneur
Member since 1997
Susanne Klatten (*1962)
Chairman of the Works Council, Landshut
Member since 1999
Willibald Löw¹ (*1956)
Städtisches Klinikum München GmbH
MAN Truck & Bus AG
KraussMaffei Group GmbH
Mandates
General Representative of IG Metall Munich
Member since 2009
Horst Lischka² (*1963)
Director of Institut für Demoskopie
Allensbach Gesellschaft zum Studium der
öffentlichen Meinung mbH
Mandates
Allianz SE (until 3 May 2017)
Infineon Technologies AG
Member since 2011
Jürgen Wechsler² (*1955)
Member of the Works Council, Dingolfing
Member since 2013
Brigitte Rödig¹ (*1963)
Member of the Works Council, Munich
Dr. Dominique Mohabeer¹ (*1963)
Member since 2012
Membership of equivalent national or foreign boards of business enterprises.
Membership of other statutory supervisory boards.
Aktiengesellschaft in München
³ Employee representatives (members of senior management).
Employee representatives (company employees).
- Deutsche Post AG
Mandates
Boehringer Ingelheim Gruppe
Former Member of Management of
Member since 2015
Simone Menne (*1960)
Robert Bosch GmbH
Nestlé Deutschland AG
2 Employee representatives (union representatives).
Münchener Rückversicherungs-Gesellschaft
Deutsche Post AG
Deutsche Bank AG
3 Employee representatives (members of senior management).
2 Employee representatives (union representatives).
1 Employee representatives (company employees).
thyssenkrupp Elevator AG (Chairman)
thyssenkrupp Steel Europe AG (Chairman)
thyssenkrupp (China) Ltd. (Chairman)
Mandates
of thyssenkrupp AG
Chairman of the Board of Management
Member since 11 May 2017
Dr.-Ing. Heinrich Hiesinger (*1960)
Membership of other statutory supervisory boards.
Chairman of the Works Council, Dingolfing
Member since 2007
Stefan Schmid¹ (*1965)
Raw Material, Production Partner
Head of Purchasing Indirect Goods and Services,
Member since 2017
Ralf Hattler³ (*1968)
Entrust Datacard Corp.
AQTON SE (Chairman)
DELTON AG (Chairman)
Deputy Chairman
Entrepreneur
Membership of equivalent national or foreign boards of business enterprises.
202
-
Mandates
Technikwissenschaften e. V.
President of acatech - Deutsche Akademie der
Member from 2010 until 11 May 2017
Henning Kagermann (*1947)
Prof. Dr. rer. nat. Dr.-Ing. E.h.
General Electric Company (until 8 October 2017)
Mandates
201
Former Chairman and Chief Executive Officer of
Deere & Company
Dr. h.c. Robert W. Lane (*1949)
Deutsches GeoForschungsZentrum - GFZ
University Professor
of Helmholtz-Zentrum Potsdam
Chairman of the Executive Board
Member since 2008
Prof. Dr. rer. nat. Dr. h.c. Reinhard Hüttl (*1957)
Supervisory Board
→ Members of the
Statement on
Corporate
Governance
Member since 2009
Dr. Ian Robertson (HonDSc) (*1958)
(Chairman, since 25 September 2017)
Various internal channels and means of communi-
cation, including newsletters, employee newspapers
and intranet portals, are used to keep BMW Group
employees fully up-to-date with the instruments and
measures employed by the Compliance Management
System. The central communications channel is the
compliance website within the BMW Group intranet,
where employees can find compliance-related infor-
mation, training materials and where they can access
trainings in both German and English. The website
contains a special service area where various practical
tools are made available to employees to help them
deal with typical compliance-related situations. A
group-wide communications campaign was launched
in 2017 to boost employee awareness of the impor-
tance of creating a culture of transparency and trust.
Three of the shareholder representatives in the
Supervisory Board should if possible be entrepre-
neurs or persons who have previous experience in
the management or supervision of another
medium or large-sized company.
The Supervisory Board should include if possible
seven members who have acquired in-depth
knowledge and experience within the
BMW Group, though no more than two former
members of the Board of Management.
-
-
-
Four members of the Supervisory Board should
if possible have international experience or
specialist knowledge of one or more non-German
markets important to the BMW Group.
To this end, the Supervisory Board of BMW AG has
approved the following objectives for its composition,
including a competency profile. These objectives also
describe the concept for achieving diversity in the com-
position of the Supervisory Board (diversity concept):
The Supervisory Board is to be composed in such a way
that its members collectively possess the knowledge,
skills and experience required to properly perform
its tasks.
Composition objectives of the Supervisory Board,
competency profile, diversity concept
When selecting an individual for a particular Board
of Management position, the Supervisory Board
decides in the best interests of the Group and after
due consideration of all relevant circumstances. The
Personnel Committee takes into account the diversity
concept described above when selecting candidates,
in order to ensure that the Board of Management has
a diverse composition. In the Supervisory Board's
opinion, the composition of the Board of Management
as at 31 December 2017 is in line with the defined
diversity concept. For ease of comparison with the
diversity concept, the curricula vitae of members of
the Board of Management are available on the inter-
net. In particular, the Board of Management has one
female member and the various work, educational
and life experiences of the members of the Board of
Management complement each other.
In accordance with the recommendation of the
German Corporate Governance Code, the
Supervisory Board has set a standard age limit
for Board of Management membership. This
aims at a retirement age of 60. Consideration is
also given to achieving an appropriate age: mix
within the Board of Management.
The Supervisory Board has stipulated a target
for the proportion of women on the Board of
Management. This is outlined in the section
"Disclosures pursuant to the Act on Equal
Gender Participation”. The Board of Management
reports to the Personnel Committee and the
Supervisory Board at regular intervals on the
proportion and development of women in
senior management positions, in particular at
executive levels.
The Board of Management should collectively
have extensive experience in the fields of deve-
lopment, production, sales and marketing, fi-
nances and human resources.
At least two members of the Board of Manage-
ment should have a technical background.
At least two members should have international
management experience.
The members of the Board of Management should
have a long-standing track record of manage-
ment experience, ideally with experience in
different professional fields.
-
-
-
Three members of the Supervisory Board should
if possible be persons from the fields of business,
science or research who have experience in areas
relevant to the BMW Group, for example chem-
istry, energy supply, information technology, or
who have specialist knowledge in fields relevant
for the future of the BMW Group, for example
customer requirements, mobility, resources or
sustainability.
When seeking qualified individuals for the Super-
visory Board whose specialist skills and leader-
ship qualities are most likely to strengthen the
Board as a whole, consideration is also to be
given to diversity. When preparing nominations,
the extent to which the work of the Supervisory
Board benefits from diversified professional and
personal backgrounds (including international
aspects) and from an appropriate gender repre-
sentation is also to be taken into account. It is
the joint responsibility of all those participating
in the nomination and election process to ensure
that qualified women are considered for Super-
visory Board membership.
Of the 20 members of the Supervisory Board at
least 12 should be independent members within
the meaning of section 5.4.2 of the German
Corporate Governance Code, including at least
six as representatives of the Company's share-
holders.
Two independent members of the Supervisory
Board should have expert knowledge of account-
ing or auditing.
7.5
8.0
.......................
in %
→ 69
Proportion of female executives within
management/function levels I and II
at BMW AG
Management level is defined in terms of functional
level and follows a comprehensive job evaluation
system based on Mercer.
DISCLOSURES PURSUANT
TO THE ACT ON EQUAL
GENDER PARTICIPATION -
TARGETS FOR THE PROPOR-
TION OF WOMEN ON THE
BOARD OF MANAGEMENT
AND AT EXECUTIVE MAN-
AGEMENT LEVELS I AND II
Business with entities, in which the members of the
Supervisory Board carry out a significant function, is
conducted on an arm's length basis. The Supervisory
Board has therefore concluded that all of its mem-
bers are independent. These are: Dr.-Ing. Norbert
Reithofer, Manfred Schoch, Stefan Quandt, Stefan
Schmid, Dr. Karl-Ludwig Kley, Christiane Benner,
Franz Haniel, Ralf Hattler, Dr.-Ing. Heinrich
Hiesinger, Prof. Dr. Reinhard Hüttl, Susanne Klatten,
Prof. Dr. Renate Köcher, Dr. Robert W. Lane, Horst
Lischka, Willibald Löw, Simone Menne, Dr. Dominique
Mohabeer, Brigitte Rödig, Jürgen Wechsler and Werner
Zierer. At least two members meet the requirements
of an independent financial expert. These are
Dr. Karl-Ludwig Kley and Simone Menne. At the end
of the reporting period, the Supervisory Board had six
female members (30%), comprising three shareholder
representatives and three employee representatives.
The Supervisory Board has 14 male members (70%),
comprising seven shareholder representatives and
seven employee representatives. The Company there-
fore complies with the statutory gender quota of at
least 30% female members applicable in Germany
since 1 January 2016. At present, no member of the
Supervisory Board is older than 70 years.
-
knowledge in subjects relevant for the future of the
BMW Group, such as customer requirements, mobility,
resources, sustainability and information technology.
For the purpose of assessing the independence of its
members, the Supervisory Board follows the recom-
mendations of the German Corporate Governance
Code. In the opinion of the Supervisory Board, nei-
ther ownership of a substantial shareholding in the
Company, or office as an employee representative, or
previous membership of the Board of Management,
rules out independence of a Supervisory Board mem-
ber. A substantial and not merely temporary conflict
of interests within the meaning of section 5.4.2 of the
German Corporate Governance Code does not apply
to any of the Supervisory Board members. Employees
holding office in the Supervisory Board are protected
by applicable law when performing their duties. All
other Supervisory Board members have a sufficient
degree of economic independence from the Company.
-
The time schedule set by the Supervisory Board for
achieving the above-mentioned composition targets is
the period up to 31 December 2018. The nomination
committee of the Supervisory Board already takes
into account the composition targets in its proposal
of potential candidates as representatives of the share-
holders. This enables diversity in the composition of
the Supervisory Board and ensures that the Super-
visory Board collectively possesses the knowledge,
skills and experience required to properly perform
its duties. Proposals for nomination made by the
Supervisory Board to the Annual General Meeting -
insofar as they apply to shareholder Supervisory Board
members should take account of these objectives in
such a way that they can be achieved with the support
of the appropriate resolutions of the Annual General
Meeting. The Annual General Meeting is not bound
by proposed nominations for election. The voting
freedom of employees in the vote for the employee
members of the Supervisory Board is also protected.
Under the rules stipulated by the German Co-Determi-
nation Act, the Supervisory Board does not have
the right to nominate employee representatives for
election. The objectives which the Supervisory Board
has set itself with regard to its composition are there-
fore not intended to be instructions to those entitled
to vote or restrictions on their voting freedom.
Composition and
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
→ Disclosures pursuant
to the Act on Equal
Gender Participation-
Targets for the
Proportion of Women
on the Board of
Management and at
Executive Manage-
ment Levels I and II
Statement on
Corporate
Governance
212
211
As a general rule, members of the Supervisory
Board should not hold office for longer than
until the end of the Annual General Meeting at
which the resolution is passed ratifying the
member's activities for the 14th financial year
after the beginning of the member's first period
of office. This excludes the financial year in which
the first period of office began. This rule does
not apply to natural persons who either directly
or indirectly hold significant investments in the
Company. In the Company's interest, deviation
from the general maximum period is possible,
for instance in order to work towards another
composition target, in particular diversity of
gender and technical, professional and personal
backgrounds.
An age limit for membership of the Supervisory
Board of 70 years is generally to be applied. In
exceptional cases, members may remain on the
Board until the end of the next Annual General
Meeting after reaching the age of 73, in order to
fulfil legal requirements or to facilitate smooth
succession in the case of key roles or specialist
qualifications.
No persons carrying out directorship functions
or advisory tasks for important competitors of
the BMW Group may belong to the Supervisory
Board. In compliance with applicable law, mem-
bers of the Supervisory Board are to take care
that no persons will be nominated for election
for whom a significant, non-temporary conflict
of interests could arise due to other activities
and functions carried out by them outside the
BMW Group, in particular advisory activities
or directorships with customers, suppliers, credi-
tors or other business partners.
In the Supervisory Board's opinion, its composition
as at 31 December 2017 fulfilled the composition
objectives detailed above. For ease of comparison
with composition targets, brief curricula vitae of
the current members of the Supervisory Board are
available on the Company's website at → www.bmwgroup.com.
Information relating to members' practised profes-
sions and mandates in other statutory supervisory
boards and equivalent national or foreign company
boards, including the length of periods of service on
the Supervisory Board, is provided in the section
Statement on Corporate Governance. Based on this
information, it is evident that the Supervisory Board of
BMW AG is highly diversified, with significantly more
than the targeted four members having international
experience or specialist knowledge with regard to one
or more of the non-German markets important to the
BMW Group. In-depth knowledge and experience
from within the Company are provided by seven
employee representatives, as well as the Chairman
of the Supervisory Board. Only one previous Board of
Management member holds office in the Supervisory
Board. At least four members of the Supervisory Board
have experience in managing another company. The
Supervisory Board also has three entrepreneurs as
members. Most of the members of the Supervisory
Board - including employee representatives - have
experience in supervising another medium-sized or
large company. Moreover, more than three members of
the Supervisory Board have experience and specialist
The Act on Equal Participation of Women and Men
in Executive Positions in the Private and the Public
Sector ("Act on Equal Gender Participation") was
passed into German law in 2015.
The Supervisory Board, in collaboration with the
Personnel Committee and the Board of Management,
ensures long-term succession planning. In their assess-
ment of candidates for Board of Management posi-
tions, the underlying suitability criteria applied by the
Supervisory Board are expertise in the relevant function,
outstanding leadership qualities, proven track record
and knowledge of the Company. The Supervisory Board
has adopted a diversity concept for the composition
of the Board of Management, which is also aligned
with recommendations of the German Corporate
Governance Code. In considering which individuals
would best complement the Board of Management, the
Supervisory Board also takes diversity into account. The
criteria diversity is taken by the Supervisory Board to
encompass in particular different, mutually comple-
mentary profiles, professional and life experiences also
at the international level and an appropriate gender
representation. In reaching its decisions, the Supervi-
sory Board also considers the following:
→ Composition and
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
preparation of proposals for election of external auditor at Annual General Meeting,
engagement of external auditor and compliance of audit engagement, determination of
additional areas of audit emphasis and fee agreements with external auditor
preparation of Supervisory Board's resolution on Company and
― supervision of external audit, in particular auditor independence and additional work
performed by external auditor
supervision of the financial reporting process, the effectiveness of the internal control
system, the risk management system, internal audit arrangements and compliance as
well as the performance of Supervisory Board duties in connection with audits pursuant
to § 32 of the German Securities Trading Act (WpHG)
AUDIT COMMITTEE
Norbert Reithofer¹
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
― set up in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of reference
members, including acceptance of non-BMW Group supervisory mandates as well as the
approval of transactions requiring Supervisory Board approval by dint of law (e.g. loans
to Board of Management or Supervisory Board members)
conclusion, amendment and revocation of employment contracts (in conjunction with
the resolutions taken by the Supervisory Board regarding the compensation of the Board
of Management) and other contracts with members of the Board of Management
― decisions relating to the approval of ancillary activities of Board of Management
preparation of decisions relating to the appointment and revocation of appointment of
members of the Board of Management, the compensation and the regular review of the
Board of Management's compensation system
-
PERSONNEL COMMITTEE
Norbert Reithofer¹
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Members
preparation of Supervisory Board meetings to the extent that the subject matter to be
discussed does not fall within the remit of a committee
-activities based on terms of reference
-
PRESIDING BOARD
Principal duties, basis for activities
and their composition
Overview of Supervisory Board committees
Group Financial Statements
discussion of interim reports with Board of Management prior to publication
preparation of the Supervisory Board's audit of the non-financial reporting, preparation of
the selection of the auditor for non-financial reporting and engagement of the auditor
― decision on approval for utilisation of Authorised Capital 2014
Statement on
Corporate
Governance
210
209
2 (Independent) financial expert within the meaning of §§ 100 (5) and 107 (4) AktG, no. 5.3.2 GCGC.
1 Chair.
(In accordance with statutory requirements, the Mediation Committee
comprises the Chairman and Deputy Chairman of the Supervisory Board
and one member each selected by shareholder representatives and
employee representatives.)
Manfred Schoch
Stefan Quandt
Stefan Schmid
Norbert Reithofer
- committee required by law
Board of Management succession planning,
diversity concept
proposal to Supervisory Board if resolution for appointment of Board of Management
member has not been carried by the necessary two-thirds majority of Supervisory Board
members' votes
(In line with the recommendations of the German Corporate Governance
Code, the Nomination Committee comprises only shareholder
representatives.)
Norbert Reithofer¹
Susanne Klatten
Karl-Ludwig Kley
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley 1,2
Norbert Reithofer
Manfred Schoch
Stefan Quandt
― establishment in accordance with the recommendation contained in the German Corpo-
rate Governance Code, activities based on terms of reference
- identification of suitable candidates (male/female) as shareholder representatives on the
Supervisory Board to be put forward for inclusion in the Supervisory Board's proposals for
election at the Annual General Meeting
NOMINATION COMMITTEE
― establishment in accordance with the recommendation contained in the
German Corporate Governance Code, activities based on terms of reference
― amendments to Articles of Incorporation only affecting wording
MEDIATION COMMITTEE
In accordance with this legislation, the Supervisory
Board of BMW AG is required to set a target for the
proportion of women on its Board of Management
and a time frame for meeting this target. Likewise,
the Board of Management of BMW AG is required to
establish targets for the two executive management
levels below the Board of Management and a time
frame for attaining these targets. As its target for
the Board of Management for the time frame from
1 January 2017 to 31 December 2020, the Supervisory
Board has stipulated that the Board of Management
should continue to have at least one female member.
Assuming that the Board of Management continues
to comprise eight members, this would correspond to
a proportion of at least 12.5%. At 31 December 2017,
the Board of Management had one female member
(12.5%). The Supervisory Board considers it desirable
to increase the proportion of women on the Board of
Management and fully supports the Board of Man-
agement's endeavours to increase the proportion of
women at the highest executive management levels
within the BMW Group.
10
Function levell
Compliance
Governance and
Processes
Compliance
Training
SpeakUP Line
Contact and
Compliance
Compliance
Reporting
Compliance
Communication
Legal Compliance Code
and Regulations
Compliance Instruments and
Measures of the BMW Group
Annual
Compliance
Reporting
Network
Company-wide Compliance
BMW Group Compliance Committee
Office
BMW Group Compliance Committee
Annual
Report
Board of Management BMW AG
Annual
Report
For the time frame from 11 January 2017 to 31 Decem-
ber 2020, the Board of Management has set a target
range of 10.2% to 12.0% for the first level of executive
management and 8.0% to 10.0% for the second. At
31 December 2017, the proportion of women within
the first executive management level stood at 8.0%
and at 7.5% within the second.
Compliance
Investigations
and Controls
The Board of Management keeps track of and analyses
compliance-related developments and trends on the
basis of the Group's compliance reporting and advice
from the BMW Group Compliance Committee. Meas-
ures to improve the Compliance Management System
are initiated on the basis of identified requirements.
The Chairman of the BMW Group Compliance
Committee reports to the Audit Committee of the
Supervisory Board on the current status of compliance
activities within the BMW Group, both on a regular
and a case-by-case basis.
The decisions taken by the BMW Group Compliance
Committee are drafted in concept, and implemented
operationally, by the BMW Group Compliance Com-
mittee Office. The BMW Group Compliance Com-
mittee Office comprises 14 employees and reports
organisationally to the Chairman of the Board of
Management.
The BMW Group Compliance Committee Office is
supported by local compliance functions, especially
in connection with operational implementation of
compliance topics. Establishment of 72 local compli-
ance functions was completed in 2017. Their activities
follow a standardised management process with
clearly defined tasks and responsibilities. The heads
of these functions serve as the Compliance Officer
for the respective organisational unit.
For example, since 2017, all exchanges with compet-
itors must be documented and approved in a special
compliance IT system. All employees can also use IT
tools to verify legal admissibility and documentation
of benefits, especially in connection with corporate
hospitality.
The BMW Group also uses an IT-based Business
Relations Compliance programme aimed at ensur-
ing the reliability of its business relations. Relevant
business partners are checked and evaluated with a
view to identifying potential compliance risks. These
procedures are particularly relevant for relations with
sales partners and service providers, such as agencies
and consultants. Depending on the results of the eval-
uation, appropriate measures are taken to prevent
compliance risks, such as communication measures,
training and possible monitoring.
As part of expanded anti-money-laundering measures,
an IT system has been developed to verify customer
integrity and introduced in around 30 organisational
units.
Through the group-wide compliance reporting system,
compliance responsibles throughout the BMW Group
provide information on compliance-relevant issues to
the Compliance Committee on a regular basis, and, if
necessary, on an ad hoc basis. This includes reporting
on the compliance status of the relevant organisa-
tional units, on identified legal risks or incidences of
non-compliance, as well as sanctions and corrective
or preventative measures implemented.
All compliance-related queries and concerns are
documented and processed by the BMW Group
Compliance Committee Office using an electronic
Case Management System. If necessary, Corporate
Audit, Corporate Security, the legal departments or
the Works Council may be consulted to assist with
investigations.
Employees also have the opportunity to submit infor-
mation about possible compliance violations within
the company - anonymously and confidentially - via
the BMW Group SpeakUP Line. The BMW Group
SpeakUP Line is available in a total of 34 languages
and can be reached via local toll-free numbers in all
countries in which BMW Group employees are in
operation.
Any member of staff with questions or concerns
relating to compliance may discuss these matters
with their managers and with the relevant depart-
ments within the BMW Group, in particular Legal
Affairs, Corporate Audit and Corporate Security. The
BMW Group Compliance Contact serves as a further
point of contact for both employees and external
partners for any questions regarding compliance.
Communication with the BMW Compliance Contact
may remain anonymous, if preferred.
→ Compliance in the
BMW Group
Compliance
Risk Analysis
Statement on
Corporate
Governance
217
The BMW Group held its first global Compliance Con-
ference in 2017. The event was attended by around
120 Compliance Officers and staff with compliance-re-
lated responsibilities from roughly 50 organisational
units. The main focus was on strengthening the
compliance network and sharing ideas on current
and future compliance topics.
Additional compliance coaching has also been imple-
mented for international sales and financial service
units in local markets. These multi-day classroom
seminars strengthen the awareness in selected organ-
isational units and enhance cooperation between the
central BMW Group Compliance Committee Office
and the local compliance functions. In 2017, mar-
ket coaching was conducted in Australia, Belgium,
China, Ireland, the Netherlands, Austria, Poland,
Switzerland, Thailand, the UK and the US.
Additional classroom training has also been provid-
ed to make employees who participate in meetings
with competitors or work with suppliers or sales
partners sufficiently aware of antitrust risks. In 2017,
over 1,900 managers and staff attended these face-to-
face training sessions.
In addition to basic learning, training for specific
target groups is also provided on special compliance
issues, such as antitrust compliance. Since 2011, a
total of more than 24,000 managers and staff whose
functions or specific tasks involve exchange with com-
petitors have completed online training in antitrust
compliance.
More than 41,000 managers and staff worldwide have
received training in essential compliance matters since
the introduction of the BMW Group Compliance Man-
agement System. The training material is available on
an Internet-based training platform in German and
English and includes a final test. Successful comple-
tion of the training programme, which is documented
by a certificate, is mandatory for all BMW Group man-
agers. Appropriate human resources processes are in
place to ensure that all newly recruited managers and
promoted staff undergo compliance training. In this
way, the BMW Group ensures full training coverage
for its managers in compliance matters.
Compliance measures are determined and priori-
tised on the basis of a group-wide compliance risk
assessment that is updated annually. Measures are
realised with the aid of a regionally structured com-
pliance management team, covering all parts of the
BMW Group and oversees a network of more than
210 compliance responsibles with 72 local compliance
functions.
The BMW Group Legal Compliance Code is supple-
mented by a range of internal policies, guidelines and
instructions, which in part reflect applicable legal
requirements. The BMW Group Policy “Corruption
Prevention" and the BMW Group Instruction "Corpo-
rate Hospitality and Gifts" deserve particular mention:
these documents explain lawful handling of gifts and
benefits and define appropriate assessment criteria
and approval procedures. The BMW Group Policy
"Antitrust Compliance" establishes binding rules of
conduct for all employees across the BMW Group
to prevent unlawful restriction of competition. In
response to the entry into force of the EU's Fourth
Anti-Money-Laundering Directive, specific anti-
money-laundering rules have been revised or intro-
duced locally in 13 organisational units.
The various elements of the BMW Group Compliance
Management System are shown in the diagram on the
previous page and are applicable to all BMW Group
organisational units worldwide. The BMW Group
Legal Compliance Code forms the core of the Group's
Compliance Management System, in which the Board
of Management affirms its joint commitment to com-
pliance ("tone from the top"). The Code also explains
the significance of legal compliance and provides an
overview of the various areas of relevance for the
BMW Group. It is available both as a printed brochure
and for download in German and English. In addition,
translations into nine other languages are available
in the BMW Group intranet.
218
→ 70
Supervisory Board BMW AG
The BMW Group Compliance Committee reports
regularly to the Board of Management on all compli-
ance-related issues, including the progress made in
refining the BMW Group Compliance Management
System, details of investigations performed, known
infringements of the law, sanctions imposed and cor-
rective or preventative measures implemented. This
also ensures that the Board of Management is imme-
diately notified of any cases of particular significance.
We reflect on our actions, respect each other, offer
clear feedback and celebrate success.
Appreciation
BMW Group Compliance Management System
Responsibility
Within the BMW Group, the Board of Management,
the Supervisory Board and the employees base their
actions on five core values which are the cornerstone
of the success of the BMW Group:
Core values
Observation and implementation of compliance rules
and processes are audited regularly by Corporate
Audit and subject to control checks by Corporate
Security and the BMW Group Compliance Commit-
tee Office. As part of its regular activities, Corporate
Audit carries out on-site audits. The BMW Group
Compliance Committee also engages Corporate Audit
to perform compliance-specific checks. In addition,
two BMW Group Compliance spot checks - sam-
ple tests specifically designed to identify potential
corruption and antitrust risks - were carried out in
2017. Compliance control activities are coordinated
by the BMW Group Panel Compliance Controls. Any
necessary follow-up measures are organised by the
BMW Group Compliance Committee Office.
BEYOND MANDATORY
REQUIREMENTS
CORPORATE GOVERNANCE
PRACTICES APPLIED
INFORMATION ON
Practices Applied
Beyond Mandatory
Requirements
→Information on Cor-
porate Governance
Governance
Statement on
Corporate
214
213
The proportion of women in the workforce as a whole
increased again during the financial year under report,
as a result of long-term measures, dialogue and infor-
mation events. Further information on the topic of
diversity within the BMW Group can be found in the
section "Workforce".
Diversity contributes to greater competitiveness and
innovation at the BMW Group. Working together in
mixed, complementary teams raises performance
levels and increases customer focus. Promoting
an appropriate gender ratio is seen as an essential
component of the BMW Group's diversity concept.
Increasing the proportion of women therefore remains
an objective of the Board of Management.
Function level II
Transparency
We acknowledge concerns and identify inconsisten-
cies in a constructive way. We act with integrity.
We take consistent decisions and commit to them
personally. This allows us to work freely and more
effectively.
We trust and rely on each other. This is essential if we
are to act swiftly and achieve our goals.
The BMW Group Compliance Committee comprises
the heads of the following departments: Legal Affairs,
Corporate and Governmental Affairs, Corporate
Audit, Group Reporting, Organisational Development
and Corporate Human Resources. It manages and
monitors activities necessary to avoid violations of
the law. These include communication and training
measures, compliance controls and subsequent sanc-
tions in cases of non-compliance.
The BMW Group Compliance Management System
consists of a programme of instruments and measures,
employed to ensure that the BMW Group, its repre-
sentative bodies, its managers and staff act in a lawful
manner. Particular emphasis is placed on measures to
avoid risks relating to antitrust legislation, corruption
and money laundering.
In order to protect itself systematically against com-
pliance-related and reputational risks, the Board of
Management created a Compliance Committee several
years ago and mandated the establishment of a Com-
pliance Management System within the BMW Group.
Responsible and lawful conduct is fundamental to the
success of the BMW Group. It is an integral part of
our corporate culture and the reason why customers,
shareholders, business partners and the general public
place their trust in us. The Board of Management and
all employees of the BMW Group are obliged to act
responsibly and in compliance with applicable laws
and regulations. The BMW Group expects its competi-
tors and business partners to do the same.
COMPLIANCE IN THE
BMW GROUP
Trust
→ Compliance in the
Governance
Statement on
Corporate
216
BMW Group
We also work in close partnership with our suppliers
and promote their commitment to sustainability.
215
We are excited by change and open to new opportu-
nities. We learn from our mistakes.
Social responsibility towards employees and
along the supplier chain
The BMW Group stands by its social responsibilities.
Our corporate culture combines the drive for success
with openness, trust and transparency. We are well
aware of our responsibility towards society. Socially
sustainable human resource policies and compliance
with social standards are based on various interna-
tionally recognised guidelines. The BMW Group is
committed to the OECD's guidelines for multinational
companies and the contents of the ICC Business
Charter for Sustainable Development. Details of the
contents of these guidelines and other relevant infor-
mation can be found at → www.oecd.org and www.iccwbo.org.
Openness
For the BMW Group, worldwide compliance of these
fundamental principles and rights is self-evident.
Since 2005 employees' awareness of this issue has
therefore been raised by means of regular internal
communications and training on recent developments
in this area. The "Compliance Contact" helpline
and the BMW Group SpeakUP Line are available to
employees wishing to raise queries or complaints
relating to human rights issues. With effect from 2016,
human rights have been incorporated as an integral
component of the BMW Group's worldwide Compli-
ance Management System, representing a further step
in the systematic implementation of the UN Guiding
Principles on Business and Human Rights.
Further information on social responsibility towards
employees can be found in the section "Workforce".
Sustainable business management can only be
effective, however, if it covers the entire value-added
chain. That is why the BMW Group not only sets high
standards for itself, but also expects its suppliers and
partners to meet the ecological and social standards it
sets and strives continually to improve the efficiency
of processes, measures and activities. For instance,
we consistently require our dealers and importers
to comply with ecological and social standards on a
contractual basis. Moreover, corresponding criteria
are embedded throughout the entire purchasing
system – including in enquiries to suppliers, in the
sector-wide OEM Sustainability Questionnaire, in our
purchasing terms and in our evaluation of suppli-
ers in order to promote sustainability aspects in
line with the BMW Group Sustainability Standard.
The BMW Group expects suppliers to ensure that
the BMW Group's sustainability criteria are also
adhered to by their sub-suppliers. A spot check of
supplier facilities is conducted with sustainability
audits and assessments. In 2017, the Human Rights
Contact Supply Chain was established for reporting of
sustainability infringements in the supply chain. Pur-
chasing terms and conditions and other information
relating to purchasing can be found in the publicly
available section of the BMW Group Partner Portal
at https://b2b.bmw.com.
The Board of Management signed the United Nations
Global Compact in 2001 and, in 2005, together with
employee representatives, issued a "Joint Declaration
on Human Rights and Working Conditions in the
BMW Group". This Joint Declaration was reconfirmed
in 2010. With the signature of these documents, we
have given our commitment to abide worldwide by
internationally recognised human rights and with the
fundamental working standards of the International
Labour Organization (ILO). These include in particular
freedom of employment, the principle of non-dis-
crimination, freedom of association and the right to
collective bargaining, the prohibition of child labour,
appropriate remuneration, regulated working times
and compliance with work and safety regulations.
The complete text of the UN Global Compact and
the recommendations of the ILO and other relevant
information can be found at www.unglobal.compact.org and
→ www.ilo.org. The Joint Declaration on Human Rights
and Working Conditions in the BMW Group can
be found at www.bmwgroup.com under the menu items
"Downloads" and "Responsibility".
In addition to these communications measures, appro-
priate IT systems also support BMW Group employees
with the assessment, approval and documentation of
compliance-relevant matters.
Criteria for the performance factor include: innovation (economic and ecological, for
example in the reduction of carbon dioxide emissions), the Group's market position
compared to its competitors, customer focus, ability to adapt, leadership, corporate
culture, promotion of compliance and integrity, contribution to the Group's attractiveness
as an employer, progress in implementing the diversity concept, and activities that
foster corporate social responsibility
Contractual agreement, main points: use of Company cars, insurance premiums,
contributions towards security systems
OTHER REMUNERATION
Once the four-year holding period requirement is fulfilled, Board of Management members
receive for each three common stock shares held either - at the Company's option - one
further share of common stock or the equivalent amount in cash
Requirement for Board of Management members to each invest an amount equivalent to
20% of their total bonus (after tax) in BMW AG common stock
b) Share-based remuneration component
(matching component)
a) Cash compensation component
Share-based remuneration programme
Payment possible in justified cases on basis of appropriateness, contractual basis,
no entitlement
Earmarked cash remuneration equivalent to the amount required to be invested in
BMW AG shares, plus taxes and social insurance contributions
• Quantitative criteria, fixed in advance for a period of three financial years
Formula: 50% target amount x earnings factor x dividend factor (common stock)
Earnings factor is derived from Group net profit and Group post-tax return on sales
Earn-
ings-based
approx. 29
Base salary
Performance
Cash Plan
approx. 25
Share-based remuneration
approx. 17
in %
→ 72
Overview of compensation system financial year
2018: simplified depiction of split of cash remu-
neration (target remuneration)*
Earnings-
related bonus
approx. 28
component of
approx. 29
Performance-
related bonus
approx. 28
Share-based remuneration
approx. 15
in %
→ 71
Overview of compensation system financial year
2017: simplified depiction of split of cash remu-
neration (target remuneration)*
As previously, Board of Management compensation
comprises fixed and variable cash elements as well as
a share-based component. The compensation compo-
nents are described in more detail below. Retirement
and surviving dependants' benefits remain unchanged
in the new compensation system applicable from
1 January 2018.
Compensation system, compensation components
for financial years from 2018 onwards
In December 2017, the Supervisory Board resolved
to revise the compensation system for financial years
from 2018 onwards. A focus was to align the remuner-
ation structure even more strongly with sustainable
Company development. The base salary, which had
remained at the same level since 1 January 2012, was
raised. The bonus was revised, both in terms of its
structure and target setting. Targets values for the
parameters Group net income and post-tax return on
sales used to determine the earnings-related bonus
were adjusted in line with the Group's current business
plan and revised. The dividend is no longer included
as a parameter, thus ensuring that the earnings-related
bonus is even more closely aligned to business per-
formance. A new multi-year and future-oriented com-
ponent was introduced in the form of a performance
cash plan, in order to further strengthen the long-term
orientation of the compensation system. The overall
upper limits remain unchanged. The appropriateness
of the planned levels of compensation was reviewed
by an independent external compensation expert.
The changes apply to all members of the Board of
Management with effect from the financial year 2018.
Service contracts of the Board of Management have
been modified in agreement with Board members
with effect from 1 January 2018.
Revised system of Board of Management compensa-
tion for financial years from 2018 onwards
Base salary
the bonus
approx. 9
Performance component
of the bonus approx. 20
The performance-related component is calculated
using a performance factor which the Supervisory
Board sets for each member of the Board of Manage-
ment and which is multiplied by 70% of the target
bonus amount. The Supervisory Board sets the perfor-
mance factor on the basis of a detailed evaluation of
the contribution made by Board members to sustaina-
ble and long-term business development over a period
of at least three financial years. The evaluation by the
Supervisory Board is based on predefined criteria that
take into account the Group's long-term success, the
interests of shareholders, the interests of employees
and social responsibility.
An earnings factor of 1.0 would give rise to an earn-
ings-related component of €0.255 million for a mem-
ber of the Board of Management in the first period of
office, €0.3 million from the second period of office or
the fourth year of mandate, and €0.54 million for the
Chairman of the Board of Management. The earnings
factor is 1.0, for instance, in the event of Group net
profit of €5.3 billion and a post-tax return on sales of
5.6%. If the Group net profit were below €3 billion or
the post-tax return on sales below 3%, the earnings
factor would be zero. In this case, an earnings-related
component would not be paid. The maximum value of
the earnings factor is reached in the event of a Group
net profit of €11 billion and a post-tax return on sales
of 9%. As before, in exceptional circumstances, for
instance major acquisitions or disposals, the Super-
visory Board may adjust the earnings factor.
In order to calculate the earnings-related component,
an earnings factor is determined on the basis of the
target parameters and multiplied by 30% of the target
bonus amount. The level of the earnings-related com-
ponent depends on the degree to which the targets
set by the Supervisory Board for Group net profit and
post-tax return on sales are achieved. The degree of
achievement is expressed in an earnings factor. The
underlying measurement values are determined in
advance for a period of three financial years and may
not be changed retrospectively. The earnings factor is
capped at a maximum value of 1.8.
The structure and target amounts of the previous
bonus system have been revised and the weighting
of the earnings-related and performance-related com-
ponents included in the target changed. In future, for
100% target achievement, the bonus will comprise
an earnings-related component of 30% and perfor-
mance-related component of 70%. Compared to the
bonus payable in the previous compensation system,
the target bonus (100%) for a member of the Board
of Management in the first period of office has been
reduced for both components of the bonus to a total
of €0.85 million p.a. and to a total of €1.0 million p.a.
from the second period of office or the fourth year of
mandate. In future, the bonus payable to the Chairman
of the Board of Management will amount to €1.8 mil-
lion p.a. The upper limit has been reduced for all Board
members to 180% of the respective target bonus.
Bonus
The weighting of individual components included
in the target is shown in the overview. The new
compensation system does not include the option of
paying a discretionary additional bonus. An upper
limit has been set for each component of variable
remuneration (see "Overview of compensation system
and compensation components for financial years
from 2018 onwards").
share-based remuneration.
Performance Cash Plan and
bonus,
-
-
The variable remuneration of the Board of Manage-
ment comprises in future three components:
Variable remuneration
Fixed remuneration consists, as before, of a base
salary, which is paid monthly, and fringe benefits
(other remuneration elements such as the use of
company cars, the payment of insurance premiums
and contributions towards security systems). From
the financial year 2018, the base salary of Board of
Management members amounts to €0.8 million p.a.
during the first period of office, €0.95 million p.a.
from the second period of office or the fourth year of
mandate and €1.8 million p.a. for the Chairman of
the Board of Management.
Fixed remuneration
Report
→ Compensation
Statement on
Corporate
Governance
224
*Simplified depiction of target amounts for the cash remuneration of the Chairman of the
Board of Management. Excludes other remuneration. Based on the assumption that the
share price remains unchanged for the calculation of the matching component.
223
This programme specifies that each member of the
Board of Management is required to invest in BMW AG
common stock an amount equivalent to 20% of the
Board member's total bonus after taxes, which the
Board member receives as an additional cash compo-
nent from the Company with the related taxes and
social insurance. As a general rule, the shares must
be held for four years. Under a matching plan, at the
end of the holding period the Board of Management
members receive from the Company, for every three
shares of common stock held, either one additional
share of common stock or an equivalent cash amount,
to be decided at the discretion of the Company
(share-based remuneration component/matching
component). Special rules apply in the case of death
or invalidity of a Board of Management member or
premature termination of the contractual relationship
before fulfilment of the holding period.
구
Share-based remuneration programme
The compensation system also includes a share-based
remuneration programme, which is based on the
amount of bonus paid. The system is aimed at creating
further long-term incentives to encourage sustainable
governance.
An earnings factor and dividend factor of 1.0 would
give rise to an earnings-related bonus of €0.75 million
for a member of the Board of Management in the first
period of office, €0.875 million from the second period
of office or the fourth year of mandate and €1.5 mil-
lion for the Chairman of the Board of Management.
The earnings factor is 1.0 for example in the event of a
Group net profit of €3.1 billion and a post-tax return
on sales of 5.6%. The dividend factor is 1.0 when the
dividend paid on shares of common stock is between
101 and 110 cents. If the Group net profit were below
€2 billion or the post-tax return on sales below 2%, the
earnings factor for 2017 would be zero. In this case,
no earnings-related bonus would be payable.
Under the terms of the Employee Share Programme,
in 2017 employees were entitled to acquire packages
of between seven and 17 shares of non-voting pre-
ferred stock with a discount of €20.00 (2016: €22.72)
per share compared to the market price (average
closing price in Xetra trading during the period from
8 to 13 November 2017: €75.05). All employees of
BMW AG and its (directly or indirectly) wholly owned
German subsidiaries (if agreed to by the directors
of those entities) were entitled to participate in the
programme. Employees were required to have been
in an uninterrupted employment relationship with
BMW AG or the relevant subsidiary for at least one
year at the date on which the allocation for the year
was announced. Shares of preferred stock acquired in
conjunction with the Employee Share Programme are
subject to a blocking period of four years, starting from
1 January of the year in which the employees acquired
the shares. A total of 491,114 (2016: 305,018) shares of
preferred stock were acquired by employees under the
programme in 2017; 491,000 (2016: 305,000) of these
shares were drawn from Authorised Capital 2014, the
remainder were acquired via the stock exchange or
as a result of cancelled employee purchases relating
to the previous year. Every year the Board of Man-
agement of BMW AG decides whether the scheme is
to be continued. Further information is provided in
→ notes 29 and 39 to the Group Financial Statements.
→ see
notes
29 and 39
→ see
note 39
-
Under the terms of the programme, participants give
a commitment to invest an amount equivalent to 20%
of their performance-based bonus in BMW common
stock and to hold the shares so acquired for a min-
imum of four years. In return for this commitment,
BMW AG pays 100% of the investment amount as a net
subsidy. Once the four-year holding period require-
ment has been fulfilled, the participants receive - for
each three common stock shares held and at the
Company's option one further share of common
stock or the equivalent amount in cash.
The share-based remuneration programme for qual-
ifying heads of department, introduced with effect
for financial years beginning after 1 January 2012, is
closely based on the programme for Board of Manage-
ment members and is aimed at rewarding a long-term,
entrepreneurial approach to running the business on
a sustainable basis.
Three share-based remuneration schemes were
in place at BMW AG during the year under report,
namely the Employee Share Programme (under which
entitled employees of BMW AG have been able to
participate in the enterprise's success since 1989 in
the form of non-voting shares of preferred stock), a
share-based remuneration programme for Board of
Management members, and a share-based remuner-
ation programme for senior heads of department
(relating in both cases to shares of common stock).
The share-based remuneration programme for Board
of Management members is described in detail in
the Compensation Report (see also the "Share-based
remuneration" section in the Compensation Report
and → note 39 to the Group Financial Statements).
Share-based compensation programmes for
employees and members of the Board of
Management
Pursuant to Article 19 of the EU Market Abuse Regu-
lation (MAR), members of the Board of Management
and the Supervisory Board and any persons closely
related to those members are required to give notice
to BMW AG and the Federal Agency for the Super-
vision of Financial Services (BaFin) of transactions
with equity or debt instruments of BMW AG or with
related derivatives or other financial instruments, if
the total sum of such transactions reaches or exceeds
an amount of €5,000 during any given calendar year.
BMW AG publishes such information without delay
and communicates it to the Companies Register
for archiving. Notice of publication is issued to the
Federal Agency for the Supervision of Financial Ser-
vices. Securities transactions notified to BMW AG
during the financial year 2017 are also reported on
the Company's website.
COMPENSATION REPORT
(PART OF THE COMBINED
MANAGEMENT REPORT)
Reportable securities transactions
("Managers' transactions")
Statement on
Corporate
Governance
220
219
To ensure that the BMW Group complies with reg-
ulations relating to insider information, the Board
of Management established an Ad-hoc Committee
back in 1994, consisting of representatives of various
specialist departments, whose members determine
whether information displays the characteristics of
insider information, which is required to be disclosed,
and handle the publication and legal notices required
by law. All persons who perform duties on behalf of
BMW AG through which they have access to insid-
er information are included on an insider list and
informed of the duties arising from insider rules.
Compliance is also an important factor in safeguard-
ing the future of the BMW Group workforce. With
this in mind, the Board of Management and the
national and international employee representative
bodies of the BMW Group have agreed on a binding
set of Joint Principles for Lawful Conduct. In doing
so, all parties involved made a commitment to the
principles contained in the BMW Group Legal Com-
pliance Code and to trustful cooperation in matters
relating to compliance. Employee representatives are
therefore regularly consulted in the process of refining
compliance measures within the BMW Group.
The BMW Group clarified its position back in 2005,
with the Joint Declaration on Human Rights and
Working Conditions at the BMW Group. This was
followed by systematic introduction and continuous
upgrading of measures to protect human rights. These
measures, which were already firmly established
within the organisation, were integrated into the
BMW Group's group-wide Compliance Management
System in 2016. A group-wide human rights compli-
ance assessment was conducted in 2017.
The BMW Group is committed to respecting interna-
tionally recognised human rights, in particular as set
out in the ten principles of the UN Global Compact
and the ILO Core Labour Conventions. The Com-
pany's due diligence process is aligned with the UN
Guiding Principles on Business and Human Rights,
focusing on topics and areas of activity where it can
leverage its influence as a commercial enterprise.
It is essential for compliance in the BMW Group that
employees are aware of and comply with applicable
legal requirements. The BMW Group does not tolerate
any violations of the law by its employees. Culpable
violations of the law result in employment law-related
sanctions and may lead to personal liability of relevant
employees.
Managers have a particular responsibility and role
model function with regard to preventing infringe-
ments. Managers throughout the BMW Group
acknowledge this principle by signing a written
declaration and undertaking to inform their staff of
the content and significance of the Legal Compliance
Code, to convey the values it embodies and make
employees aware of legal risks. Managers must, at
regular intervals and on their own initiative, verify
compliance with the law and communicate with staff
on this issue. They signal to employees that they take
compliance risks seriously and that relevant infor-
mation is extremely valuable. In their dealings with
staff members, managers remain open to discussion
and listen to differing opinions. Any indication of
non-compliance with the law must be rigorously
investigated.
→ Compliance in the
BMW Group
→ Compensation
Report
The following section describes the principles govern-
ing the compensation of the Board of Management
for the financial year 2017 and, in its revised form, for
financial years from 2018 onwards. A description of the
stipulations set out in the statutes relating to the com-
pensation of the Supervisory Board is also provided.
In addition to explaining the system of compensation,
details of components of compensation are also pro-
vided with figures. Furthermore, the compensation of
each individual member of the Board of Management
and the Supervisory Board for the financial year 2017
is disclosed with its component parts.
1. Board of Management compensation
Responsibilities
The earnings-related bonus is based on Group
net profit and post-tax return on sales, which are
combined in a single earnings factor, and
up to
the financial year 2017 – on the dividend (common
stock). The earnings-related bonus is derived from a
target amount defined for each member of the Board
of Management multiplied by the earnings factor and
the dividend factor. In exceptional circumstances, for
instance major acquisitions or disposals, the Super-
visory Board may adjust the earnings-related bonus.
-
The bonus comprises two components, each equally
weighted: an earnings-related bonus and a perfor-
mance-related bonus. The target bonus (100%) for a
Board of Management member in the first period of
office is €1.5 million p.a. in total for the two compo-
nents of variable compensation and €1.75 million p.a.
from the second period of office or the fourth year
of mandate. For the Chairman of the Board of Man-
agement the amount is €3 million p.a. The bonus is
capped for all Board of Management members at 200%
of the respective target bonus.
tional bonus.
Variable cash remuneration, in particular bonuses
Variable cash remuneration consists of a bonus and a
cash component for investment in BMW AG common
stock equivalent to 20% of a Board member's total
bonus after taxes, which the Board member receives
from the Company along with the related taxes and
social insurance. Furthermore, up to 31 Decem-
ber 2017, the Supervisory Board could, in justified
cases, stipulate the payment of a discretionary addi-
The variable remuneration of Board of Management
members comprises variable cash remuneration and
a share-based remuneration component.
Variable remuneration
→ Compensation
Report
Statement on
Corporate
Governance
222
221
The base salary of members of the Board of Mana-
gement remained unchanged in 2017 from the
previous year. The base salary is €0.75 million p.a.
for a Board member during the first period of office,
€0.9 million p.a. for a Board member from the second
period of office or the fourth year of mandate and
€1.5 million p.a. for the Chairman of the Board of
Management.
Fixed remuneration consists of a base salary, which is
paid monthly, and fringe benefits (other remuneration
elements such as the use of company cars, insurance
premiums and contributions towards security sys-
tems). Members of the Board of Management are also
entitled to purchase vehicles and other products and
services of the BMW Group at conditions that also
apply for employees.
Fixed remuneration
The compensation of the Board of Management com-
prises both fixed and variable elements as well as a
share-based component. Provisions are also in place
for retirement and surviving dependants' entitlements.
Compensation system, compensation components
up to the financial year 2017
and relevant parameters as the basis for variable
compensation. It also ensures that variable compo-
nents based on multi-year criteria take account of
both positive and negative developments and that
the overall incentive is on the long term. As a general
rule, targets and comparative parameters may not
be changed retrospectively. In conjunction with the
revised compensation system for the Board of Manage-
ment (see the section "Revised Board of Management
compensation system for financial years from 2018
onwards"), the targets originally set for the variable
compensation components for the financial years 2018
and 2019 were revoked exceptionally and replaced
by the more ambitious targets stipulated in the new
compensation system. The Supervisory Board reviews
the appropriateness of the compensation system
annually. In preparation, the Personnel Committee
also consults remuneration studies. In order to check
that the compensation system is in line with peers, the
Supervisory Board compares compensation paid by
other DAX companies. For a vertical view, it compares
Board compensation with the salaries of executive
managers and with the average salaries of employees
of BMW AG based in Germany, also with regard to the
development over time. Recommendations made by
an independent external remuneration expert and
suggestions made by investors and analysts are also
considered in the consultative process.
The compensation of members of the Board of Man-
agement is determined by the full Supervisory Board
on the basis of performance criteria and after taking
into account any remuneration received from Group
companies. The principal performance criteria are
the tasks and exercise of mandate of the member of
the Board of Management, the economic situation
and the performance and future prospects of the
BMW Group. The Supervisory Board sets ambitious
The compensation system for the Board of Management
at BMW AG is designed to encourage a management
approach focused on the sustainable development
of the BMW Group. A further principle of the remu-
neration system at BMW Group is that of consistency.
This means that compensation systems for the Board
of Management, senior management and employees
of BMW AG are composed of similar elements. The
Supervisory Board performs an annual review to
ensure that all Board of Management compensation
components are appropriate, individually and in total,
and do not encourage the Board of Management to
take inappropriate risks for the BMW Group. At the
same time, the compensation model for the Board of
Management needs to be attractive for highly qualified
executives in a competitive environment.
Principles of compensation
The full Supervisory Board is responsible for deter-
mining and regularly reviewing Board of Management
compensation. The preparation for these tasks is
undertaken by the Supervisory Board's Personnel
Committee.
The performance-related bonus is derived by multi-
plying the target amount set for each member of the
Board of Management by a performance factor. The
Supervisory Board sets the performance factor on
the basis of a detailed assessment of the contribution
made by members of the Board of Management to
sustainable and long-term oriented business devel-
opment. In setting the factor, consideration is given
to performance and decisions over the previous
three financial years, as well as strategic decisions
affecting the future development of the business,
the effectiveness and efficiency of measures taken in
response to changing external conditions and other
activities aimed at safeguarding the future viability
of the business which cannot be directly measured
in values. Accordingly, performance factor criteria
include innovation (economic and ecological, for
example the reduction of carbon dioxide emissions),
customer focus, ability to adapt, leadership, corporate
culture, promotion of compliance and integrity, con-
tributions to the Group's attractiveness as an employer,
progress in implementing the diversity concept and
activities that foster corporate social responsibility.
The target bonus and the criteria used to determine
the earnings-related bonus are fixed in advance for a
period of three financial years. During this time, as
a general rule, target bonuses and the key criteria
applied may not be amended retrospectively.
― The earnings factor is 1.0, for instance in the event of a Group net profit of €3.1 billion
and a post-tax return on sales of 5.6%
The criteria correspond to the measurement values
used previously for the performance bonus and
include in particular innovation (economic and
ecological, for example in the reduction of carbon
dioxide emissions), the Group's market position
compared to its competitors, customer focus, ability
to adapt, leadership, corporate culture, promotion of
compliance and integrity, contribution to the Group's
attractiveness as an employer, progress in implement-
ing the diversity concept, and activities that foster
corporate social responsibility. The performance factor
lies between zero and a maximum of 1.8.
Bonus overview
228
227
In the event of termination of mandate, a member
of the Board of Management appointed for the first
time prior to 1 January 2010 has pension entitlements
based on the older (defined benefit) pension plan.
The entitlement to receive benefits under the defined
benefit plan arises at the earliest on reaching the age
of 60 or in the case of invalidity. The amount of the
pension comprises a basic monthly amount of €8,000
plus an additional fixed amount. The fixed amount is
€400 for each full year of service on the Board up to a
maximum of 15 years. Pension payments are adjusted
in line with the adjustment of civil servants' pensions
following an increase of more than 5% in the pay
group B6 (excluding allowances) or in accordance
with the Company Pension Act.
Retirement and surviving dependants' benefits
With effect already from 1 January 2010, the provision
of retirement and surviving dependants' benefits
for Board of Management members was changed
to a defined contribution system with a guaranteed
minimum return. Commitments previously made are
in part subject to legal protection, therefore Board
members appointed for the first time prior to 1 Jan-
uary 2010 were given the option to choose between
the previous system and the new one. Retirement and
surviving dependants' benefits remain unchanged as
part of the new compensation system from 1 Janu-
ary 2018 onwards, as they are appropriate and in line
with customary market practice.
A one-year post-contractual non-competition clause
has been agreed with Board members for specified
cases. During that one-year period, the former Board
member is entitled to receive monthly compensation
equivalent to 60% of his or her previous monthly basic
remuneration, reduced by any amount of other income
exceeding 40% of the basic remuneration. The Compa-
ny may unilaterally waive the requirement to comply
with the post-contractual non-competition clause.
In the event of death or invalidity, special rules apply
for early payment of performance cash plans and
share-based remuneration components based on
the target amounts. Insofar as the service contract
is prematurely terminated and the Company has an
extraordinary right of termination, or if the Board
member resigns without the Company's agreement,
entitlements to amounts as yet unpaid relating to per-
formance cash plans and share-based remuneration
are forfeited.
Other
As before, at the end of the holding period, Board
members receive from the Company, for every three
shares of common stock held, either one additional
share of common stock or the cash equivalent, to
be decided at the Company's discretion (matching
component). Upper limits have been defined for both
the investment component and the matching compo-
nent (see "Compensation system and compensation
components for financial years from 2018 onwards").
Members of the Board of Management continue to
receive a cash compensation (investment component)
for the specific purpose of investment after tax and
contributions in BMW AG common stock. In future,
the investment component will correspond to 45% of
the
gross
bonus. Shares of common stock purchased
in this way by members of the Board of Management
are to be held, as before, for a period of four years.
Statement on
Corporate
Governance
Share-based remuneration
Forecast trend in business development
Value between 0.9-1.1
Individual contribution to profitability
- Status of compliance in each Board member's
area of responsibility
Trend in business development
multi-year performance factor:
- Value between 0-1.8
Group post-tax return on sales
- Based on Group net profit and
Measurement based on
In accordance with a mutually agreed modification to
their contracts with effect from 1 January 2018, Board
members will receive advance payments out of the
Performance Cash Plan 2018 and the Performance
Cash Plan 2019 in the years 2019 and 2020. At the end
of the evaluation period, the advance payment will be
set off or reclaimed, depending on the amount then
determined. The advance payment for each year will
be €0.5 million for a member of the Board of Mana-
gement in the first period of office and €0.6 million
from the second period of office or the fourth year of
mandate. For the Chairman of the Board of Manage-
ment the amount is €0.9 million
p.a.
Average earnings factor
Overview of compensation system and compensation
components for the financial year 2017
Component
Capped at 200% of target amount
€3.00 million (Chairman of the Board of Management)
€1.75 million (from 2nd period of office or 4th year of mandate)
€1.50 million (1st period of office)
Target amount p.a. (at 100% target achievement):
Possible special bonus payment
(at 100% target achievement corresponds to 50% of target amount)
b) Performance-related bonus
(at 100% target achievement corresponds to 50% of target amount)
→ Compensation
Report
a) Earnings-related bonus
Bonus
VARIABLE REMUNERATION
€1.50 million
Chairman of the Board of Management:
- €0.90 million (from 2nd period of office or 4th year of mandate)
€0.75 million (1st period of office)
Member of the Board of Management:
Parameter/measurement base
BASE SALARY P.A.
(sum of earnings-related bonus and performance-related bonus)
225
X
MULTI-YEAR PERFORMANCE FACTOR
With effect from the financial year 2018, variable
cash compensation will include a multi-year and
future-oriented Performance Cash Plan (PCP). The
PCP is calculated at the end of a three-year evaluation
period, by multiplying a predefined target amount by
a factor that is based on multi-year target achievement
(the PCP factor). PCP entitlements are paid in cash.
The PCP target amount (100%) amounts to €0.85 mil-
lion p.a. for a Board member in the first period of
office, €0.95 million p.a. for a Board member from the
second period of office or the fourth year of mandate.
The target amount for the Chairman of the Board
of Management is €1.6 million p.a. The maximum
amount that can be paid to a Board member is capped
at 180% of the PCP target amount p.a.
Performance Cash Plan
- Capped at 180%
of target amount
Cash payment
TOTAL
- Value between 0-1.8
Qualitative, mainly non-financial parameters
Contribution to sustainable and long-term
business development over a period of
at least three financial years
Basis for performance factor:
the
x 0.7 of target amount
PERFORMANCE COMPONENT
- Value between 0-1.8
Group post-tax return on sales
Group net profit
Basis for earnings factor:
x 0.3 of target amount
Earnings factor
EARNINGS COMPONENT BONUS
→ 73
Performance factor
PCP FACTOR
The PCP evaluation period comprises three years,
grant year and the two subsequent years. The PCP is
paid out after the end of the three-year evaluation
period.
In order to determine the multi-year earnings factor,
an earnings factor is calculated for each year of the
three-year evaluation period and an average is then
calculated for the evaluation period. As for the earn-
ings-related component of the bonus, the earnings
factor for each individual year within the evaluation
period is determined on the basis of Group net profit
and post-tax return on sales for the relevant year. The
maximum earnings factor is 1.8.
MULTI-YEAR EARNINGS FACTOR
Capped at 180% of target amount
Cash payment at end of evaluation period
CASH PAYMENT
TARGET AMOUNT
→ 75
PCP factor overview
PCP FACTOR
→ 74
In order to determine the PCP factor, a multi-year
earnings factor is multiplied by a multi-year perfor-
mance factor. The PCP factor is capped at a maximum
value of 1.8.
Performance Cash Plan overview
→ Compensation
Governance
Statement on
Corporate
226
In addition to the multi-year earnings factor, the
Supervisory Board also determines a multi-year per-
formance factor after the end of the evaluation period.
To this end, the Supervisory Board takes account in
particular of the business development during the
evaluation period, the forecast trend in the business
development, the Board member's individual contri-
bution to profitability and the status of compliance
within the Board member's area of responsibility.
The multi-year performance factor can be between
0.9 and 1.1.
Report
·Primarily qualitative, non-financial criteria, expressed in terms of a performance factor
aimed at measuring the Board members' contribution to sustainable and long-term
business development over a period of at least three financial years
Formula: 50% target amount x performance factor
Pension obligations to former members of the Board of
Management and their surviving dependants are cov-
ered by pension provisions amounting to €90.1 million
(2016: €86.4 million), recognised in accordance with
IAS 19.
Total benefits paid to former members of the Board of
Management and their surviving dependants for the
financial year 2017 amounted to €6.7 million (2016:
€6.5 million).
233
234
Statement on
Corporate
Governance
→ Compensation
Report
* Matching component; provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is determined in
each case when the requirement to invest in BMW AG common stock has been fulfilled.
4 Disclosures for the previous year include amounts relating to members of the Board of Management who left office during the financial year 2016.
special bonus
Possible
Monetary value
of matching
component
acquisition
Bonus
Cash compen-
sation for share
Share-based compensation programme
Chairman of the Board of Management
in the second period of office or from fourth year of mandate
Member of the Board of Management
in the first period of office
Member of the Board of Management
in € p. a.
Total*
REMUNERATION CAPS (MAXIMUM REMUNERATION)
Member of the Board of Management: €350,000 - €400,000
Pension contributions p.a.:
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
Pension of €120,000 p. a. plus fixed amounts based on length of Company
and Board service
Principal features
b) Defined contribution system with guaranteed minimum rate of return
(only applies to Board members appointed for the first time before
1 January 2010; based on legal right to receive the benefits already
promised to them, this group of persons is entitled to opt between
(a) and (b)
a) Defined benefits
Model
RETIREMENT AND SURVIVING DEPENDANTS' BENEFITS
Overview of compensation system and compensation
components for the financial year 2017
Report
→ Compensation
Chairman of the Board of Management: €500,000
3,000,000
700,000
700,000
Member of the Board of Management: €350,000 - €400,000
Pension contributions p. a.:
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
Pension of €120,000 p. a. plus fixed amounts based on length of Company
and Board service
b) Defined contribution system with guaranteed minimum rate of return
(only applies to Board members appointed for the first time before
1 January 2010; based on legal right to receive the benefits already
promised to them, this group of persons is entitled to opt between
(a) and (b)
a) Defined benefit
Principal features
Model
RETIREMENT AND SURVIVING DEPENDANTS' BENEFITS
Overview of compensation system and compensation
components for the financial year 2018 onwards
Depending on the length of membership in the Board
of Management and previous activities, the annual
contribution paid by the Company for each member
of the Board of Management is between €350,000 and
€400,000, and €500,000 for the Chairman of the Board
of Management. The guaranteed minimum rate of
return p.a. corresponds to the maximum interest rate
used to calculate insurance reserves for life insurance
policies (guaranteed interest on life insurance policies).
When granting pension entitlements, the Supervisory
Board considers the targeted level of pension provision
in each case as well as the resulting expense for the
BMW Group.
In the case of death or invalidity, a minimum benefit is
payable based on the number of annual contributions
possible up to the age of sixty (up to a maximum
of ten). Furthermore, in the case of a commitment
made before 2016 and election of a lifelong pension,
a 60% widow's pension is paid following the death of
a retired member of the Management Board. Pensions
are increased annually by at least 1%.
If a member of the Board of Management with a vested
entitlement dies prior to the commencement of bene-
fit payments, a surviving spouse or registered partner,
or otherwise surviving children – in the latter case
depending on their age and education - are entitled
to receive benefits as surviving dependants.
The amount of the benefits to be paid is determined
on the basis of the amount accrued in each Board
member's individual pension savings account. The
amount on this account results from annual contri-
butions paid in, plus interest earned depending on
the type of investment.
If a mandate is terminated, the new defined con-
tribution system provides, in the case of death or
invalidity, for amounts accumulated on individual
pension accounts to be paid out as a one-off amount
or in instalments. The option to receive payment as a
lifelong pension or in a combined form only applies to
entitlements arising before 2016. Former members of
the Board of Management are entitled to receive the
retirement benefit at the earliest upon reaching the
age of 60, or in the case of entitlements awarded after
1 January 2012, upon reaching the age of 62.
* Including base salary, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the individual components.
9,850,000
1,500,000
1,400,000
1,400,000
6,000,000
5,500,000
1,200,000
800,000
800,000
3,500,000
4,925,000
1,000,000
Statement on
Corporate
Governance
230
229
Contractual agreement, main points: use of Company car, insurance premiums, contributions
towards security systems
€1.0 million (from 2nd period of office or 4th year of mandate)
€0.85 million (1st period of office)
-
-
Target amount p.a. (at 100% target achievement):
b) Share-based remuneration component
(matching component)
a) Cash remuneration component
Share-based remuneration programme
b) Multi-year performance factor
a) Multi-year earnings factor
Performance Cash Plan
Possible special bonus payments
(at 100% target achievement corresponds to 70% of target amount)
b) Performance component
(at 100% target achievement corresponds to 30% of target amount)
a) Earnings-related bonus
(sum of earnings component and performance component)
Bonus
VARIABLE REMUNERATION
€1.8 million
Chairman of the Board of Management:
- €0.95 million (from 2nd period of office or 4th year of mandate)
€0.80 million (1st period of office)
Member of the Board of Management:
Parameter/measurement base
BASE SALARY P.A.
Component
Overview of compensation system and compensation
components for the financial year 2018 onwards
Board of Management and the Supervisory Board by
BMW AG or its subsidiaries, nor were any contingent
liabilities entered into on their behalf.
€1.8 million (Chairman of the Board of Management)
Chairman of the Board of Management: €500,000
Capped at 180% of target amount
Formula: 30% target amount x earnings factor
OTHER REMUNERATION
Once the four-year holding period requirement is fulfilled, Board of Management members
receive for each three common stock shares held either - at the Company's option - one
further share of common stock or the equivalent amount in cash
Earmarked cash remuneration amounting to 45% of the gross bonus
Requirement for Board of Management members to invest an amount of 45% of the
gross bonus after tax and contributions in BMW AG common stock
Criteria include in particular the trend in business development during the evaluation peri-
od, the forecast trend in business development, individual contribution to profitability and
the status of compliance within the Board member's area of responsibility
Multi-year performance factor can be between 0.9 and 1.1
Determined by Supervisory Board at end of evaluation period
Average for evaluation period calculated
Earnings factor for each year may not exceed 1.8
and Group post-tax return on sale
Earnings factor for each year of three-year evaluation period derived from Group net profit
PCP factor may not exceed 1.8
PCP factor: multi-year earnings factor x multi-year performance factor
Formula: PCP factor x target amount
Capped at 180% of target amount
3-year evaluation period
€1.6 million (Chairman of the Board of Management)
€0.95 million (from 2nd period of office or 4th year of mandate)
€0.85 million (1st period of office)
-
| | || |
Target amount p.a. (at 100% target achievement):
No longer applicable
Performance factor may not exceed 1.8
Formula: 70% target amount x performance factor
-
― Primarily qualitative, non-financial criteria, expressed in terms of a performance factor aimed
at measuring the Board member's contribution to the sustainable and long-term develop-
ment and the future viability of the Company over a period of at least three financial years
Criteria for the performance factor include: innovation (economic and ecological, for
example in the reduction of carbon dioxide emissions), the Group's market position
compared to its competitors, customer focus, ability to adapt, leadership, corporate
culture, promotion of compliance and integrity, contribution to the Group's attractiveness
as an employer, progress in implementing the diversity concept, and activities that
foster corporate social responsibility
Earnings factor may not exceed 1.8
The earnings factor is 1.0 in the event of a Group net profit of €5.3 billion and a post-tax
return on sales of 5.6%
Earnings factor is derived from Group net profit and Group post-tax return on sales
Quantitative criteria fixed in advance for a period of three financial years
REMUNERATION CAPS (MAXIMUM REMUNERATION)
in € p. a.
Member of the Board of Management
Markus Duesmann
(1,097)
2,017
(1,752)
1,263
21,464 1,521,464 6,679,776
(18,719) (1,518,719) (5,947,178)
75,775 975,775 3,896,565
(74,461) (974,461) (3,469,214)
(900,000)
900,000
Milagros Caiña Carreiro-Andree
(1,500,000)
1,500,000
Harald Krüger
Number Monetary value
Total value of
benefits
allocated in
financial year²
Compensation
Total
compensation component
(matching component)'
Variable cash
compensation
Total
Other
compensation
Base salary
number of matching shares
in € or
Fixed compensation
Share-based
Compensation of the individual members
of the Board of Management for the
financial year 2017 (2016)
Share-based component of the individual members
100.0
37.6
100.0
40.3
Total compensation
750,000
2.1
(187,500)
750,000
3 Member of the Board of Management until 31 December 2017.
1 Provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is determined in each case when the
requirement to invest in BMW AG common stock has been fulfilled. See note 39 to the Group Financial Statements for a description of the accounting treatment of the share-based compensation component.
² Value of benefits granted for work performed on the Board of Management during the financial year 2017 plus the amount falling due for payment in conjunction with a share-based remuneration component
granted in a previous year and for which the holding period requirements were met.
(8,964)
(821,990) (37,625,005) (37,172,944)
113,645 4,927,368 4,914,391
(101,198) (4,489,147) (4,483,005)
113,645 4,951,164 4,837,519
(97,601) (4,338,103) (4,240,502)
90,700 4,206,340 4,115,640
(80,811) (3,919,094) (3,838,283)
891,973 40,262,725 39,608,356
1,263
(1,097)
1,263
(1,058)
1,008
(876)
9,913
40,954 940,954 3,896,565
(32,689) (895,189) (3,345,313)
750,000 25,752 775,752 3,339,888
(750,000) (114,694) (864,694) (2,973,589)
7,200,000 441,704 7,641,704 31,729,048
(7,425,000) (385,391) (7,810,391) (28,992,624)
Total4
Oliver Zipse
(862,500)
900,000
Peter Schwarzenbauer
917,158 3,896,565
(918,735) (3,469,214)
(18,735)
(900,000)
17,158
900,000
Ian Robertson³
(80,811) (3,861,711) (3,780,900)
90,700 4,272,838 4,182,138
1,008
842,250 3,339,888
92,250
750,000
Nicolas Peter
(21,629) (966,461) (944,832)
90,700 4,246,471 4,155,771
181,490 8,382,730 8,295,070
(161,622) (7,627,519) (7,545,122)
113,645 4,985,985 4,915,446
(101,198) (4,544,873) (4,443,675)
97,448 4,289,829 4,192,381
1,083
(288)
1,008
(876)
102,468 852,468 3,339,913
(13,929) (201,429) (743,403)
65,883 815,883 3,339,888
(57,311) (807,311) (2,973,589)
(750,000)
Klaus Fröhlich
An expense of €3.1 million (2016: €2.8 million) was
recognised in the financial year 2017 for current
members of the Board of Management for the period
after the end of their service relationship. This relates
to the expense for allocations to pension provisions.
0.8
0.9
Income earned on an employed or a self-employed
basis up to the age of 63 may be offset against pension
entitlements. In addition, certain circumstances have
been specified, in the event of which the Company no
longer has any obligation to pay benefits. Transitional
payments are no longer provided.
Contributions falling due under the defined con-
tribution model are paid into an external fund in
conjunction with a trust model that is also used to
fund pension obligations to employees.
*Including base salary, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the individual components.
9,850,000
729,000
1,458,000
2,880,000
3,240,000
5,500,000
405,000
810,000
1,710,000
1,800,000
4,925,000
344,500
688,500
1,530,000
1,530,000
Total*
Monetary value
of matching
component
acquisition
Cash compen-
sation for share
Performance
Cash Plan
Bonus
Share-based compensation programme
Chairman of the Board of Management
in the second period of office or from fourth year of mandate
Member of the Board of Management
in the first period of office
In the event of the death of a member of the Board
of Management during the service contract term, the
base salary for the month of death and a maximum
of three further calendar months are paid to entitled
surviving dependants.
2.2
Board of Management members who retire imme-
diately after their service on the Board are entitled
to acquire vehicles and other BMW Group products
and services at conditions that also apply to BMW
pensioners and to lease BMW Group vehicles in
accordance with the guidelines applicable to senior
heads of department. Retired Chairmen of the Board
of Management are entitled to use a BMW Group
vehicle as a company car on a similar basis to senior
heads of department, and depending on availability
and against payment, use BMW chauffeur services.
232
Share-based compensation component*
77.1
29.0
78.7
31.7
20.8
7.8
19.1
7.7
Variable cash compensation
Fixed compensation
Proportion in %
Amount
Proportion in %
Amount
2016
2017
in € million
The total compensation of the current members of the
Board of Management of BMW AG for the financial
year 2017 amounted to €40.3 million (2016: €37.6 mil-
lion), of which €7.7 million (2016: €7.8 million) relates
to fixed components including other remuneration.
Variable components amounted to €31.7 million (2016:
€29.0 million) and the share-based remuneration com-
ponent amounted to €0.9 million (2016: €0.8 million).
As in the previous year, the option of paying a special
bonus in 2017 was not exercised.
Total compensation of the Board of Management for
the financial year 2017 (2016)
The Supervisory Board has stipulated upper limits
for all variable remuneration components and for the
remuneration of Board of Management members in
total. These upper limits are shown in the tables Over-
view of compensation system and compensation com-
ponents for the financial year 2017 and Overview of
compensation system and compensation components
for financial years from 2018 onwards. The overall
upper limits have not been changed in conjunction
with the revised compensation system for financial
years from 2018 onwards.
Remuneration caps
No commitments or agreements exist for payment of
compensation in the event of early termination of a
Board member's mandate due to a change of control or
a takeover offer. No members of the Board of Manage-
ment received any payments or relevant commitment
from third parties in 2017 on account of their activities
as members of the Board of Management.
7
In accordance with the recommendation of the German
Corporate Governance Code, Board of Management
service contracts provide for severance pay to be paid
to the Board member in the event of premature ter-
mination by the Company without important reason,
the amount of which is limited to a maximum of two
years' compensation (severance payment cap). If the
remaining term of the contract is less than two years,
the severance payment is reduced proportionately.
For these purposes, annual compensation comprises
the basic remuneration, the target bonus amount and
the target PCP amount for the last full financial year
before termination.
Termination benefits on premature termination of
Board activities, benefits paid by third parties
In conjunction with the agreed early termination of
Dr Robertson's Board of Management mandate with
effect from 31 December 2017, the Company also
agreed with Dr Robertson on an amendment to his
service contract, which ends on 30 June 2018. For the
period from the termination of his Board mandate
through to 30 June 2018, he continues to receive fixed
compensation totalling €0.45 million. During this
time, Dr Robertson is supporting the Company as
a BMW Group ambassador in the UK. An amount of
€0.875 million, payable in 2018, was agreed to settle all
further compensation entitlements for the remainder
of the contractual period. The Company will make a
final pension contribution of €0.2 million on behalf
of Dr Robertson for the financial year 2018.
Report
→ Compensation
Statement on
Corporate
Governance
231
of the Board of Management for the
Apart from vehicle lease and financing contracts
entered into on customary market conditions, no
advances or loans were granted to members of the
in €
140,355
89,570
6,000
44,785
Heinrich Hiesinger²
(-)
(-)
220,000
140,000
(-)
10,000
Ralf Hattler
(208,220)
(130,220)
(8,000)
(70,000)
220,000
140,000
10,000
70,000
70,000
(-)
Reinhard Hüttl
70,000
220,000
140,000
10,000
70,000
Susanne Klatten
(208,220)
(130,220)
(8,000)
(70,000)
78,209
50,806
2,000
25,403
Henning Kagermann³
(210,220)
(130,220)
(10,000)
(70,000)
189,780
109,7804
10,000
Franz Haniel
(210,220)
financial year 2017 (2016)
(10,000)
(260,440)
(10,000)
(140,000)
430,000
280,000
10,000
140,000
Stefan Quandt (Deputy Chairmann)
(410,440)
(260,440)
(10,000)
(140,000)
430,000
280,000
10,000
140,000
Manfred Schoch (Deputy Chairmann)1
(610,660)
(390,660)
(10,000)
(210,000)
(410,440)
(70,000)
Stefan Schmid (Deputy Chairmann)¹
10,000
(70,000)
216,000
140,000
6,000
70,000
Christiane Benner¹
(408,440)
(260,440)
(8,000)
(140,000)
430,000
280,000
10,000
140,000
Karl-Ludwig Kley (Deputy Chairmann)
(410,440)
(260,440)
(10,000)
(140,000)
430,000
280,000
140,000
640,000
(10,000)
(210,220)
(8,000)
(70,000)
218,000
140,000
8,000
70,000
Jürgen Wechsler¹
(208,220)
(130,220)
(130,220)
(8,000)
220,000
140,000
10,000
70,000
Brigitte Rödig¹
(210,220)
(130,220)
(10,000)
(70,000)
(70,000)
(208,220)
Werner Zierer¹
70,000
3. Other
5 Disclosures for the previous year include amounts relating to a member of the Supervisory Board who left office during the financial year 2016.
"Due to the requirements of his employer, Prof. Dr. Hüttl has waived his Supervisory Board compensation until further notice, to the extent that this would exceed the amount of €200,000 (excluding value added tax) p.a.
The share of the Supervisory Board compensation for the 2016 financial year, which exceeds this amount and should therefore be reimbursed, has been offset against the earnings-related component of
Supervisory Board compensation for the 2017 financial year.
3 Member of Supervisory Board until 11 May 2017.
1 These employee representatives have - in line with the guidelines of the Deutsche Gewerkschaftsbund-requested that their remuneration be paid into the Hans Böckler-Stiftung.
2 Member of Supervisory Board since 11 May 2017.
(5,393,720)
(3,385,720)
(188,000)
(1,820,000)
5,618,344
3,610,156
188,000
1,820,188
Total5
(210,220)
(130,220)
(10,000)
(70,000)
220,000
140,000
10,000
220,000
140,000
10,000
70,000
10,000
70,000
Horst Lischka¹
(208,220)
(130,220)
(8,000)
(70,000)
218,000
140,000
8,000
70,000
Robert W. Lane
(210,220)
(130,220)
(10,000)
(70,000)
220,000
140,000
10,000
70,000
Renate Köcher
140,000
(130,220)
220,000
(10,000)
Dominique Mohabeer¹
(210,220)
(130,220)
(10,000)
(70,000)
218,000
140,000
8,000
70,000
Simone Menne
(210,220)
(130,220)
(10,000)
(70,000)
220,000
140,000
10,000
70,000
Willibald Löw¹
(210,220)
(130,220)
(70,000)
420,000
(130,220)
210,000
5,558,607
510,702
505,281
with HGB2
Present value of
pension obliga-
tions (defined
benefit plans),
in accordance
Present value of
pension obliga-
tions (defined
benefit plans),
in accordance
with IFRS2
financial year 2017¹ financial year 20171
Service cost in
accordance with
HGB for the
IFRS for the
5,558,200
Service cost in
accordance with
Oliver Zipse
Peter Schwarzenbauer
Ian Robertson³
Nicolas Peter
Klaus Fröhlich
Markus Duesmann
Milagros Caiña Carreiro-Andree
Harald Krüger
in €
Total4
(507,444)
(510,811)
(4,764,941)
2,373,842
2,373,842
356,949
353,136
(620,307)
(622,236)
(87,500)
(87,500)
1,018,857
1,020,053
359,521
355,840
(1,879,263)
(1,879,851)
(360,785)
(358,490)
2,346,906
2,347,166
359,275
355,527
(4,763,838)
Pension entitlements
(354,365)
Disclosures for the previous year include amounts relating to members of the Board of Management who left office during the financial year 2016.
(2,614,266)
(284,247)
(15,276)
303,169
63,120
(557,844)
(279,932)
515,677
54,038
Provision at
31.12.2017 in
accordance with
HGB and IFRS¹
41,001
in accordance with
HGB and IFRS
Total³
Oliver Zipse
Peter Schwarzenbauer
Ian Robertson²
Nicolas Peter
Klaus Fröhlich
Markus Duesmann
Milagros Caiña Carreiro-Andree
Harald Krüger
Expense in 2017
43,131
(2,130)
(2,130)
(829,579)
2,215,688
800,435
(71,285)
(61,370)
193,769
122,484
(196,362)
(95,615)
382,640
186,278
(435,753)
(68,865)
474,439
141,903
29,175
29,175
(111,253)
(76,878)
273,688
162,436
10,000
(356,743)
1 Provisional number or provisional monetary value calculated on the basis of the closing price of BMW common stock in the Xetra trading system on 29 December 2017 (€86.83) (fair value at reporting date)
² Member of the Board of Management until 31 December 2017.
(1,935,142)
2.0
Proportion in %
Amount
Proportion in %
Amount
2016
2017
Supervisory Board members did not receive any fur-
ther compensation or benefits from the BMW Group
for advisory or agency services personally rendered.
Fixed compensation
Variable compensation
Total compensation
35.7
in € million
compensation of €2.0 million (2016: €2.0 million)
and variable compensation of €3.6 million (2016:
€3.4 million). The earnings-related compensation for
the financial year 2017 was capped at the maximum
amount stipulated in the Articles of Incorporation.
In accordance with Article 15 of the Articles of Incor-
poration, the compensation of the Supervisory Board
for activities during the financial year 2017 totalled
€5.6 million (2016: €5.4 million). This includes fixed
Total compensation of the Supervisory Board for the
financial year 2017
In order to perform his duties, the Chairman of the
Supervisory Board has the use of an office, with
administrative support, as well as access to the BMW
car service.
The Company also reimburses to each member of the
Supervisory Board reasonable expenses and any value-
added tax arising on the member's remuneration. The
amounts disclosed below are net amounts.
In addition, each member of the Supervisory Board
receives an attendance fee of €2,000 for each full
meeting of the Supervisory Board (Plenum) which
the member has attended, payable at the end of the
financial year. Attendance at more than one meeting
on the same day is not remunerated separately.
of the remuneration of a Supervisory Board mem-
ber, provided the relevant committee convened for
meetings on at least three days during the financial
year. If a member of the Supervisory Board exercises
more than one of the functions referred to above, the
compensation is measured only on the basis of the
function that is remunerated with the highest amount.
Accordingly, the Articles of Incorporation of BMW AG
stipulate that the Chairman of the Supervisory Board
shall receive three times the amount and each Dep-
uty Chairman shall receive twice the amount of the
remuneration of a Supervisory Board member. Each
chairman of the Supervisory Board's committees
receives twice the amount and each member of a
committee receives one-and-a-half times the amount
The German Corporate Governance Code also recom-
mends in section 5.4.6 paragraph 1 sentence 2 that
the exercising of chair and deputy chair positions in
the Supervisory Board as well the chair and member-
ship of committees should also be considered in the
compensation.
237
37.0
3.6
64.3
Norbert Reithofer (Chairmann)
(1,935,142)
Total
compensation
Attendance fee
compensation
in €
Variable
Fixed
Compensation of the individual members of the Supervisory Board for the financial year 2017 (2016)
→ Responsibility
Statement by the
Company's Legal
Representatives
→Compensation
Report
Governance
Statement on
Corporate
238
100.0
5.4
100.0
5.6
63.0
3.4
With fixed compensation elements and an earnings-re-
lated compensation component oriented toward sus-
tainable growth, the compensation structure in place
for BMW AG's Supervisory Board complies with the
recommendation on supervisory board compensation
contained in section 5.4.6 paragraph 2 sentence 2 of
the German Corporate Governance Code, in the
version dated 7 February 2017.
a fixed amount of €70,000, payable at the end of the
year, as well as earnings-related compensation of €170
for each full €0.01 by which the average amount of
(undiluted) earnings per share (EPS) of common stock
reported in the Group Financial Statements for the
remuneration year and the two preceding financial
years exceed a minimum amount of €2.00, payable
after the Annual General Meeting held in the fol-
lowing year. An upper limit corresponding to twice
the amount of the fixed compensation is in place for
the Group performance-related compensation. The
limit for a member of the Supervisory Board with no
additional compensation-relevant function is there-
fore set at €140,000.
2.0
The fixed and earnings-related components in combi-
nation are intended to ensure that the compensation of
Supervisory Board members is appropriate in relation
to the tasks of Supervisory Board members and the
Company's financial condition and also takes account
of the Company's performance over several years.
353,536
(1,480,940)
(1,481,134)
(359,548)
(357,203)
1,893,216
1,893,252
357,918
354,117
(408,564)
(424,411)
4,052,788
4,965,162
407,941
508,865
(-)
(-)
1,757,454
1,757,459
In accordance with the Articles of Incorporation, each
member of BMW AG's Supervisory Board receives, in
addition to the reimbursement of reasonable
expenses,
350,000
357,339
2,071,748
(4,469,741) (3,502,860)
2,071,560
Compensation principles, compensation components
The Supervisory Board of BMW AG receives a fixed
compensation component as well as an earnings-re-
lated compensation component, which is oriented
toward sustainable growth. The earnings-related
component is based on average earnings per share
of common stock for the remuneration year and the
two preceding financial years.
The compensation of the Supervisory Board is speci-
fied by resolution of the shareholders at the Annual
General Meeting or in the Articles of Incorporation.
The compensation provisions valid for the financial
year under report were resolved by shareholders at
the Annual General Meeting on 14 May 2013 and are
set out in Article 15 of BMW AG's Articles of Incorpo-
ration, which can be viewed and/or downloaded at
→ www.bmwgroup.com/ir under the menu items "Facts about
the BMW Group" and "Corporate Governance".
Incorporation
Responsibilities, provisions of Articles of
2. Supervisory Board compensation
Report
→ Compensation
Statement on
Corporate
Governance
236
235
* Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2016.
350,000
(357,410)
2 Based on a legal right to receive the benefits already promised to them, one member of the Board of Management appointed for the first time prior to 1 January 2010 was given the option of choosing between
the previous defined benefit model and the new defined contribution model.
1 Service cost differs due to the different valuation bases used to measure pension obligations for HGB purposes (expected settlement amount) and for IFRS purposes
(present value of the defined benefit obligation).
(21,425,612)
(23,630,940)
(2,849,067)
3,059,645 21,987,289 21,072,823
(1,621,507) (1,620,978)
3 Member of the Board of Management until 31 December 2017.
(355,045)
3,136,302
(2,634,212)
3,826
3,731
4,688
€ million
€ million
61,831
4,601
66,864
71,582
56,844
%
€ million
4.0
4.2
5.7
54,548
47,363
42,764
37,437
25.1
28.2
4.8
%
33.2
110,343
24.8
28.5
30.7
Net profit for the year
€ million
8,706
6,910
6,396
5,817
BALANCE SHEET
97,959
Non-current assets
Capital expenditure (excluding capitalised development costs)
Capital expenditure ratio (capital expenditure/revenues)
Equity
Equity ratio
Non-current provisions and liabilities
Current provisions and liabilities
Balance sheet total
€ million
121,901
121,671
Current assets
24.2
1,904
2.90/2.92
69,888
Workforce at year-end²
Personnel cost per employee
DIVIDEND
Dividend total
Dividend per share of common stock/preferred stock
1 Excluding Husqvarna, deliveries up to 2013: 59,776 units; production up to 2013: 59,426 units.
€
129,932
100,760
124,729
99,575
122,244
97,136
PERSONNEL
116,324
€ million
2,630
2,300
€
4.00³/4.023
3.50/3.52
2,102
3.20/3.22
2 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.
3 Proposal by management.
18.3
92,337
€ million
3,481
4,459
73,183
63,819
58,288
€ million
69,047
67,989
65,591
59,078
€ million
193,483
5,792
188,535
154,803
CASH FLOW STATEMENT
Cash and cash equivalents at balance sheet date
€ million
9,039
7,880
6,122
7,688
Free cash flow Automotive segment
€ million
172,174
%
5,404
2,890
Other information
The parameters underlying the measurement for
current income tax liabilities in relation to transfer
pricing risk are appropriate as a whole.
Our conclusions
For sales companies selected according to risk, we
examined whether risks that had not previously
been considered in the determination of the current
income tax liabilities could be identified on the basis
of the margins generated. We mathematically verified
the income tax liabilities amount resulting from the
difference between the margin and the arm's length
values.
Using inquiries, we obtained an understanding of the
parameters set. We compared arm's length values with
available benchmark studies, empirical values and the
results of past tax audits, as well as with completed
mutual agreement procedures. Furthermore, we
inspected the correspondence with tax authorities
related to concluded mutual agreement procedures
and tax audits and evaluated whether their consid-
eration in the determination of transfer pricing was
appropriate.
In order to audit the current income tax liabilities in
relation to transfer pricing, we involved staff special-
ising in transfer pricing law and those specialising in
national and international tax law.
Our audit approach
There is a risk for the financial statements that the
current income tax liabilities in relation to transfer
pricing were not measured at an appropriate amount.
Transfer pricing is calculated by exercising judgement
on the determination of the related parameters and
requires discretionary interpretation of the prevailing-
regulatory frameworks of countries concerned in
respect of the transfer pricing utilised.
The business operations of BMW Group in respect of
the production and sale of vehicles require extensive
cross-border relationships with affiliated companies.
In this regard, the varying requirements under tax
legislation as well as the specifications of the respon-
sible tax authorities for the respective countries must
be observed; the corresponding tax determinations
are subject to review by the competent tax authorities
over several years.
In the consolidated financial statements of BMW Group,
current income tax liabilities in the amount of
EUR 1,124 million are reported as at 31 December 2017,
which also include risks arising from transfer pricing.
Financial statement risk
The “accounting principles and policies" as well as
the assumptions, judgements and estimations made
are disclosed in the notes to the consolidated finan-
cial statements in note 4. Disclosure of "income tax
liabilities” is provided in the notes to the consolidated
financial statements in note 32.
Valuation for current income tax liabilities in
relation to transfer pricing risks
The method for the valuation of provisions for statu-
tory and non-statutory warranty obligations and
product guarantees is appropriate and has been
applied consistently. The measurement parameters
and assumptions applied are appropriate as a whole.
Our conclusions
Selecting specific vehicle models, the computational
accuracy of the valuation model used across the Group
including a tool for rate-based planning was verified
with the support of our actuaries. The measurement
parameters included therein, such as cost items, were
reconciled with actual costs. We evaluated the assump-
tions concerning the extent to which the historical
values are representative for the expected damage
susceptibility, for the expected value of damage per
vehicle in terms of material and labour cost and for
the anticipated claim.
We compared the amount of provisions from prior
year with expenses selected according to risk and
which actually arose for damage claims, as well as with
technical measures, in order to arrive at a conclusion
on the forecast accuracy.
In order to evaluate the appropriateness of the val-
uation method used for the determination of the
provisions for statutory and non-statutory warranty
obligations and product guarantees including the
assumptions and parameters, through discussions
with the departments responsible, we primarily
obtained an understanding of the process for deter-
mining the assumptions and parameters. We audited
the appropriateness and effectiveness of controls to
determine the assumptions and parameters. With
the involvement of our IT specialists, we reviewed
the IT systems utilised to verify their appropriateness.
Our audit approach
There is a risk for the financial statements that the
valuation of provisions for statutory and non-statutory
warranty obligations and product guarantees is not
appropriate.
of provisions is associated with unavoidable estima-
tion uncertainties, is complex and is subject to a high
degree of risk of change, depending on factors such
as detected deficiencies becoming known and claims
made by vehicle owners.
BMW Group is responsible for the legally prescribed
product liability and the warranty in the respective
sales market. Moreover, additional warranties are
granted to differing extents. In order to assess the
liabilities arising from warranty, guarantee and
goodwill for vehicles sold, information on the type
and volume of damages arising and on remedial
measures is recorded and evaluated at vehicle model
level. The expected amount of obligations arising
from warranty claims is extrapolated from costs of
the past and provided for. For specific or anticipated
individual circumstances, for example recalls, addi-
tional provisions are set aside provided they have not
already been taken into account. The determination
Provisions for statutory and non-statutory warranty
obligations and product guarantees are included in
the consolidated financial statements of BMW Group
as a significant component in “Other provisions". The
provisions for statutory and non-statutory warranty
obligations and product guarantees amounted to
EUR 4,825 million on 31 December 2017.
Financial statement risk
Valuation of provisions for statutory and non-statutory
warranty obligations and product guarantees
The "accounting principles and policies" as well as the
assumptions, judgements and estimations made are
disclosed in the notes to the consolidated financial
statements in note 4. Disclosure of "Other provisions"
is provided in the notes to the consolidated financial
statements in note 31.
The assumptions and parameters incorporated in the
determination of receivables from sales financing are
appropriate as a whole.
The legal representatives are responsible for the other
information. Other information includes:
Our conclusions
-
the remaining parts of the annual report, with
the exception of the audited consolidated
financial statements and group management
report as well as our Independent
Auditor's Report
From the matters communicated with those charged
with governance, we determine those matters that
were of most significance in the audit of the consoli-
dated financial statements of the current period and
are therefore the key audit matters. We describe these
matters in our auditor's report unless law or regulation
precludes public disclosure about the matter.
We also provide those charged with governance with
a statement that we have complied with the relevant
independence requirements, and communicate with
them all relationships and other matters that may
reasonably be thought to bear on our independence,
and where applicable, the related safeguards.
We communicate with those charged with governance
regarding, among other matters, the planned scope
and timing of the audit and significant audit findings,
including any significant deficiencies in internal con-
trol that we identify during our audit.
― Perform audit procedures on the prospective in-
formation presented by management in the
group management report. On the basis of suf-
ficient appropriate audit evidence we evaluate,
in particular, the significant assumptions used
by management as a basis for the prospective
information, and evaluate the proper derivation
of the prospective information from these as-
sumptions. We do not express a separate opin-
ion on the prospective information and on the
assumptions used as a basis. There is a substan-
tial unavoidable risk that future events will dif-
fer materially from the prospective information.
Evaluate the consistency of the group manage-
ment report with the consolidated financial
statements, its conformity with [German] law,
and the view of the Group's position it pro-
vides.
Obtain sufficient appropriate audit evidence re-
garding the financial information of the entities
or business activities within the Group to express
opinions on the consolidated financial statements
and on the group management report. We are
responsible for the direction, supervision and per-
formance of the group audit. We remain solely
responsible for our opinions.
Evaluate the overall presentation, structure and
content of the consolidated financial statements,
including the disclosures, and whether the con-
solidated financial statements present the under-
lying transactions and events in a manner that
the consolidated financial statements give a true
and fair view of the assets, liabilities, financial
position and financial performance of the Group
in compliance with IFRSS as adopted by the EU
and the additional requirements of German com-
mercial law pursuant to Section 315e (1) HGB.
Conclude on the appropriateness of manage-
ment's use of the going concern basis of account-
ing and, based on the audit evidence obtained,
whether a material uncertainty exists related to
events or conditions that may cast significant
doubt on the Group's ability to continue as a go-
ing concern. If we conclude that a material un-
certainty exists, we are required to draw attention
in the auditor's report to the related disclosures
in the consolidated financial statements and in
the group management report or, if such disclo-
sures are inadequate, to modify our respective
opinions. Our conclusions are based on the
audit evidence obtained up to the date of our au-
ditor's report. However, future events or condi-
tions may cause the Group to cease to be able to
continue as a going concern.
Evaluate the appropriateness of accounting pol-
icies used by management and the reason-
ableness of estimates made by management
and related disclosures.
- Obtain an understanding of internal control
relevant to the audit of the consolidated finan-
cial statements and of arrangements and meas-
ures (systems) relevant to the audit of the group
management report in order to design audit
procedures that are appropriate in the circum-
stances, but not for the purpose of expressing
an opinion on the effectiveness of these systems.
Identify and assess the risks of material misstate-
ment of the consolidated financial statements
and of the group management report, whether
due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropri-
ate to provide a basis for our opinions. The risk
of not detecting a material misstatement result-
ing from fraud is higher than for one resulting
from error, as fraud may involve collusion, for-
gery, intentional omissions, misrepresentations,
or the override of internal control.
We exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with Section 317 HGB and the EU Audit Regulation
and in compliance with German Generally Accepted
Standards for Financial Statement Audits promulgated
by the Institut der Wirtschaftsprüfer (IDW) will always
detect a material misstatement. Misstatements can
arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of
users taken on the basis of these consolidated financial
statements and this group management report.
Our objectives are to obtain reasonable assurance
about whether the consolidated financial statements
as a whole are free from material misstatement,
whether due to fraud or error, and whether the
group management report as a whole provides an
appropriate view of the Group's position and, in all
material respects, is consistent with the consolidated
financial statements and the knowledge obtained in
the audit, complies with the German legal require-
ments and appropriately presents the opportunities
and risks of future development, as well as to issue
an auditor's report that includes our opinions on the
consolidated financial statements and on the group
management report.
Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements and of the
Group Management Report
The Supervisory Board is responsible for overseeing
the Group's financial reporting process for the prepa-
ration of the consolidated financial statements and of
the group management report.
Furthermore, management is responsible for the
preparation of the group management report that, as
a whole, provides an appropriate view of the Group's
position and is, in all material respects, consistent
with the consolidated financial statements, complies
with German legal requirements, and appropriately
presents the opportunities and risks of future devel-
opment. In addition, management is responsible for
such arrangements and measures (systems) as they
have considered necessary to enable the preparation
of a group management report that is in accordance
with the applicable German legal requirements, and
to be able to provide sufficient appropriate evidence
for the assertions in the group management report.
In preparing the consolidated financial statements,
management is responsible for assessing the Group's
ability to continue as a going concern. They also
have the responsibility for disclosing, as applicable,
matters related to going concern. In addition, they
are responsible for financial reporting based on the
going concern basis of accounting unless there is an
intention to liquidate the Group or to cease operations,
or there is no realistic alternative but to do so.
Responsibilities of Management and the
Supervisory Board for the Consolidated Financial
Statements and the Group Management Report
Management is responsible for the preparation of the
consolidated financial statements that comply, in all
material respects, with IFRSS as adopted by the EU and
the additional requirements of German commercial
law pursuant to Section 315e (1) HGB and that the
consolidated financial statements, in compliance
with these requirements, give a true and fair view of
the assets, liabilities, financial position, and financial
performance of the Group. In addition, management
is responsible for such internal controls as they have
determined necessary to enable the preparation of
consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
→ Independent
Auditor's Report
Statement on
Corporate
Governance
244
Effective tax rate
otherwise appears to be materially misstated.
is materially inconsistent with the consolidated
financial statements, with the group manage-
ment report or our knowledge obtained in the
audit, or
In connection with our audit, our responsibility is
to read the other information and, in so doing, to
consider whether the other information
Our opinions on the consolidated financial statements
and on the group management report do not cover
the other information, and consequently we do not
express an opinion or any other form of assurance
conclusion thereon.
the Statement on Corporate Governance and
A key component of our audit was to assess the appro-
priateness of the risk classification procedures as well
as the risk provisioning parameters used, which are
derived from historical default probabilities and loss
rates. We also analysed the validations of parameters
that are regularly conducted. To assess the default
risk, we also used purposive sampling of individual
cases to verify that the attributes for assignment to the
respective risk categories were suitably available and
the impairment losses had been calculated using the
parameters defined for these risk categories.
We audited the appropriateness and effectiveness of the
internal control system in relation to the risk classifica-
tion procedures. In addition, we evaluated the relevant
IT systems and internal processes. The audit included
a review by our IT specialists of the appropriateness
of the systems concerned and associated interfaces to
ensure the completeness of data as well as the audit
of automated controls for data processing.
Auditor's Report
the accompanying consolidated financial state-
ments comply, in all material respects, with the
IFRSS as adopted by the EU, and the additional
requirements of German commercial law pursu-
ant to Section 315e (1) HGB and, in compliance
with these requirements, give a true and fair view
of the assets, liabilities, and financial position
of the Group as at 31 December 2017, and of its
financial performance for the financial year from
1 January to 31 December 2017, and
-
In our opinion, on the basis of the knowledge obtained
in the audit,
group and the notes to the group financial state-
ments including accounting principles and policies. In
addition, we have audited the combined management
report (subsequently referred to as group manage-
ment report) for the financial year from 1 January to
31 December 2017. In accordance with the German
legal requirements we have not audited the content
of the statement on Corporate Governance which is
included in section "Statement on Corporate Gov-
ernance (§ 289 f HGB)" [Handelsgesetzbuch: German
Commercial Code] of the group management report.
We have audited the consolidated financial statements
prepared by Bayerische Motoren Werke Aktien-
gesellschaft, Munich, and its subsidiaries (Group or
BMW Group, respectively), comprising the balance
sheet for group, income statement for group and
statement of comprehensive income for group, group
statement of changes in equity, cash flow statement
for
Opinions
Report on the Audit of the Consoli-
dated Financial Statements and the
Group Management Report
To Bayerische Motoren Werke
Aktiengesellschaft, Munich
AUDITOR'S REPORT
INDEPENDENT
→ Independent
Auditor's Report
Statement on
Corporate
Governance
240
239
Oliver Zipse
Peter Schwarzenbauer
Dr. Nicolas Peter
Pieter Nota
Klaus Fröhlich
Milagros Caiña Carreiro-Andree Markus Duesmann
Harald Krüger
The Board of Management
Aktiengesellschaft
Bayerische Motoren Werke
Munich, 15 February 2018
Statement pursuant to § 37y No. 1 of the
Securities Trading Act (WpHG) in conjunction
with § 297 (2) sentence 4 and § 315 (1) sentence
6 of the German Commercial Code (HGB)
"To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position and profit of the
Group, and the Group Management Report includes
a fair review of the development and performance of
the business and the position of the Group, together
with a description of the principal opportunities and
risks associated with the expected development of
the Group."
RESPONSIBILITY
STATEMENT BY THE
COMPANY'S LEGAL
REPRESENTATIVES
the accompanying group management report as
a whole provides an appropriate view of the
Group's position. In all material respects, this
group management report is consistent with
the consolidated financial statements, complies
with German legal requirements and appro-
priately presents the opportunities and risks of
future development. Our opinion on the group
management report does not cover the contents
of the corporate governance statement men-
tioned above.
Pursuant to Section 322 (3) sentence 1 HGB, we declare
that our audit has not led to any reservations relating
to the legal compliance of the consolidated financial
statements and of the group management report.
Basis for the Opinions
We conducted our audit of the consolidated financial
statements and of the group management report in
accordance with Section 317 HGB and the EU Audit
Regulation No. 537/2014 (referred to subsequently
as "EU Audit Regulation") and in compliance with
German Generally Accepted Standards for Financial
Statement Audits promulgated by the Institut der
Wirtschaftsprüfer [Institute of Public Auditors in
Germany] (IDW). Our responsibilities under those
requirements and principles are further described
in the “Auditor's Responsibilities for the Audit of
the Consolidated Financial Statements and of the
Group Management Report" section of our auditor's
report. We are independent of the group entities in
accordance with the requirements of European law
and German commercial and professional law, and we
have fulfilled our other German professional respon-
sibilities in accordance with these requirements. In
addition, in accordance with Article 10 (2) point (f)
of the EU Audit Regulation, we declare that we have
not provided non-audit services prohibited under
Article 5 (1) of the EU Audit Regulation. We believe
that the evidence we have obtained is sufficient and
appropriate to provide a basis for our opinions on the
consolidated financial statements and on the group
management report.
→ Independent
Statement on
Corporate
Governance
242
241
By means of inquiries, inspecting internal calcula-
tion methods and analysis, among other methods,
we obtained a comprehensive understanding of the
development of credit portfolios, the associated
counterparty-related risks and the business processes
for the identification, management, monitoring and
measurement of counterparty risks.
Our audit approach
There is a risk for the financial statements that the
creditworthiness of the dealerships, importers and
end customers, as well as any loss rates, is estimated
incorrectly, the risk provisioning parameters are
derived incorrectly and an impairment loss required
on receivables from sales financing is not recognised
or not recognised in a sufficient amount.
The determination of impairment losses requires
considerable judgement due to a number of value
determinants such as risk classifications, the deter-
mination of default probabilities as well as loss rates.
BMW Group offers end customers, dealerships and
importers various financing models for vehicles
and other assets. In this regard, current and non-
current receivables from sales financing totalling
EUR 80.434 million were recognised as at the reporting
date. Impairment losses amounting to EUR 1,147 mil-
lion were recognised on these receivables as at the
reporting date.
Financial statement risk
statements in note 23.
The methods and processes for determining the
expected residual values of the leased products under-
lying the valuation are appropriate. The assumptions
and parameters incorporated in the forecast model for
the residual value are appropriate as a whole.
Valuation of receivables from sales financing
The "accounting principles and policies" as well as the
assumptions, judgements and estimations made are
disclosed in the notes to the consolidated financial
statements in note 4. Disclosure of "sales financing"
is provided in the notes to the consolidated financial
Our conclusions
245
developments and residual value forecasts as well as
the validation results. Furthermore, we evaluated the
processes for processing external forecast values from
market research institute. We ensured the computa-
tional accuracy of the forecast values by verifying key
calculation steps.
We reviewed the appropriateness and effectiveness of
the internal control system, particularly in relation to
the determination of expected residual values. This
included the audit of the compliance of the relevant IT
systems as well as the implemented interfaces therein
by our IT specialists.
By means of inquiries, inspecting internal calcula-
tion methods and analysing the disposal proceeds
of vehicles, among other methods, we obtained an
understanding of the development of leased prod-
ucts, the underlying residual value risks as well as
the business processes for the identification, man-
agement, monitoring and measurement of residual
value risks.
Our audit approach
amounts.
There is a risk for the financial statements that the
residual values expected for the end of the lease terms
are not appropriately assessed and the impairment
losses or reversal of impairment losses required for
the leased products are not recognised in sufficient
The estimation of future residual values is subject
to judgement and complex due to the large number
of assumptions to be made and the amount of data
incorporated in the determination. For the residual
value forecasts, BMW Group uses internally avail-
able data on historical values, current market data
as well as forecasts from external market research
institutes.
The key estimated value for the purposes of subse-
quent measurement is the expected residual value at
the end of the lease term.
BMW Group leases vehicles to end customers as part
of operating leases. As at the reporting date, the value
of leased products amounted to EUR 36,257 million.
Financial statement risk
The "accounting principles and policies" are disclosed
in the notes to the consolidated financial statements
in note 4. Disclosure of "leased products" is provided
in the notes to the consolidated financial statements
in note 21.
Valuation of residual values of leased products
Key audit matters are those matters that, in our pro-
fessional judgment, were of most significance in our
audit of the consolidated financial statements for the
financial year from 1 January to 31 December 2017.
These matters were addressed in the context of our
audit of the consolidated financial statements as a
whole, and in forming our opinion thereon, we do not
provide a separate opinion on these matters.
Key Audit Matters in the Audit of the Consolidated
Financial Statements
In addition, we evaluated the appropriateness of
the forecasting methods, the model assumptions as
well as the parameters used for the determination of
the residual values based on the validations carried
out by BMW Group. For this purpose, we inquired
with BMW Group's experts responsible for the
management and monitoring of residual value risks
and inspected the internal analysis on residual value
246
243
INCOME STATEMENT
Ten-year
Comparison
Glossary-
Explanation
of Key Figures
Index
Index of Graphs
Financial Calendar
Contacts
248
Other
Information
→ BMW Group
Ten-year
Comparison
BMW GROUP
TEN-YEAR COMPARISON
DELIVERIES
Automobiles
Motorcycles¹
PRODUCTION VOLUME
Automobiles
Motorcycles¹
2017
2016
2015
2014
Other
Information
5
→Page 256 Contacts
→ Page 255 Financial Calendar
Statement on
Corporate
Governance
→ Independent
Auditor's Report
Other Legal and Regulatory
Requirements
Further Information pursuant to Article 10 of the
EU Audit Regulation
We were elected as group auditor by the annual
general meeting on 11 May 2017 for the financial
year from 1 January to 31 December 2017 and on
22 June 2017 we were engaged by the audit commit-
tee of the supervisory board. Taking into consider-
ation the Article 41 (1) EU APrVO we have been the
group auditor of the Bayerische Motoren Werke
Aktiengesellschaft without interruption for more
than 30 years.
We declare that the opinions expressed in this audi-
tor's report are consistent with the additional report
to the audit committee pursuant to Article 11 of the
EU Audit Regulation (long-form audit report).
Certified Public Auditor Responsible
for the Engagement
The Certified Public Auditor responsible for the
engagement is Andreas Feege.
Munich, 26 February 2018
units
KPMG AG
Sailer
Wirtschaftsprüfer
[Certified Public Auditor]
Feege
Wirtschaftsprüfer
[Certified Public Auditor]
OTHER
INFORMATION
→Page 248 BMW Group Ten-year Comparison
→Page 250 Glossary - Explanation of Key Figures
→Page 252 Index
→ Page 254 Index of Graphs
Wirtschaftsprüfungsgesellschaft
units 2,463,526 2,367,603 2,247,485 2,117,965
164,153 145,032 136,963 123,495
5
2,505,741
185,682
Earnings before tax
€ million
9,880
9,386
9,593
9,118
€ million
10,655
9,665
9,224
Earnings before financial result
8,707
%
10.8
10.3
10.0
10.8
Income taxes
€ million
1,949
2,755
units
units
Return on sales (earnings before tax/revenues)
21.2
2,828
2,359,756
145,555
19.7
2,279,503
151,004
2,165,566
133,615
FINANCIAL SERVICES
Contract portfolio
contracts
Business volume (based on balance sheet carrying amounts)
5,380,785 5,114,906
124,719 123,394
4,718,970
111,191
4,359,572
96,390
€ million
Revenues
€ million
98,678
19.9
94,163
92,175
80,401
Gross profit margin
%
20.2
Finances
BMW Group in figures
Development of BMW stock
BMW Group value drivers
→ 6
→ 59
→ 40
Contract portfolio of Financial Services segment
BMW Group new vehicles financed or leased by
Financial Services segment → 59
INDEX OF GRAPHS
→ 24,25
Financial Calendar
→74, 139
→ 118, 145
→ Index of Graphs
Other
Information
254
253
→ 154
→166
Trade payables
Trade receivables
→ 146 et seq.
Tangible, intangible and investment assets
Contract portfolio retail customer financing of
Financial Services segment 2017
→ 60
T
↑ ↑
→ 61
BMW Group locations → 38 et seq.
Regional mix of BMW Group purchase volumes
2017 → 63
Materiality matrix
Sustainability
→ 213
Proportion of female executives within manage-
ment/function levels I and II at BMW AG
67
management
→ 67
→ 66
BMW Group apprentices at 31 December
Employee attrition rate at BMW AG
Proportion of female employees in
functions at BMW AG/BMW Group
Workforce
Development of credit loss ratio
→ 58
BMW Group -key automobile markets 2017
BMW Group deliveries of motorcycles → 58
BMW Group - key motorcycle markets 2017
Sales volume and locations
→ 96
Risk management in the BMW Group
→ 85
→ 82
Balance sheet structure - Automotive segment
BMW Group value added 2017
BMW Group Financial liabilities by maturity → 80
Balance sheet structure - Group → 82
→ 78
BMW Group change in cash and cash equivalents
→ 52
Sustainability → 34, 68 et seq.
Equity 83, 155 et seq.
→ 4,49 et seq., 52 et seq., 58, 94 et seq.
Performance indicators
Pension provisions
P
→ 139 et seq.
Outlook → 90 et seq.
Other provisions →162
Other operating income and expenses
Other investments → 171
→ 140
Other financial result
0
→ 5
Net profit
N
Motorcycles segment → 58
→ 78, 131
Marketable securities
→45 et seq., 91 et seq., 106, 128, 177 et seq.
→ 5 et seq., 41 et seq.,
Exchange rates
→ 69
Employees → 4, 30, 49, 66 et seq., 93
→ 32
93 et seq.
Segment information → 183 et seq.
Selling and administrative expenses
Statement of Comprehensive Income
Stock → 24 et seq.
Personnel expenses
83, 89, 157 et seq.
Sales volume
S
→ 5, 40 et seq., 51,95
ROE
ROCE → 5, 40 et seq., 50 et seq., 94
→ 96 et seq.
Risks and opportunities
Revenues → 5, 50 et seq., 72 et seq., 75 et seq., 87, 94 et seq., 139
→ 32 et seq., 61 et seq.
→ 8 et seq.
Revenue reserves → 155
Related party relationships → 179 et seq.
Remuneration system → 221 et seq.
Report of the Supervisory Board
Research and development
→151 et seq.
Refinancing → 79 et seq.
Receivables from sales financing
→148
Rating → 26
R
Property, plant and equipment
Purchasing → 63
Profit before tax → 5 et seq., 49, 72, 74, 93, 95
Production network → 38 et seq., 54 et seq.
Profit before financial result → 5 et seq., 74
→ 143
→ 4 et seq., 40 et seq., 49 et seq.,
Production → 54 et seq.
Further information
Telephone +49 89 382-3 16 84
Precious metals price trend
Aktiengesellschaft
Bayerische Motoren Werke
PUBLISHED BY
This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.
print production
natureOffice.com | DE-250-830816
carbon neutral
FSC C014340
Paper from
responsible sources
MIX
www.fsc.org
FSC
The corresponding CO₂ emissions were compensated by additional environmental and cli-
mate protection measures as part of a reforestation project in collaboration with Bergwald-
projekt e. V. (certificate number: DE-250-830816).
al FSC® Standard: the pulp is sourced from sustainably managed forests.
The BMW Annual Report was printed on paper produced in accordance with the internation-
towards preserving resources
A further contribution
www.rolls-roycemotorcars.com.
and
Information about the various BMW Group brands
is available at www.bmw.com, www.mini.com
at www.bmwgroup.com/ir.
Investor Relations information is available directly
Further information about the BMW Group is
available online at → www.bmwgroup.com.
80788 Munich
The BMW Group on the Internet
Germany
82,631
104,220
2013
2012
2011
2010
2009
2008
1,963,798 1,845,186 1,668,982
115,215 106,358 104,286
1,461,166
1,286,310
98,047
87,306
1,435,876
101,685
DELIVERIES
Automobiles
Motorcycles¹
PRODUCTION VOLUME
2,006,366
110,127
1,861,826 1,738,160
113,811 110,360
1,481,253
1,258,417
1,439,918
99,236
Telephone +49 89 382-0
Exchange rates compared to the euro
Oil price trend → 46
ir@bmwgroup.com
+49 89 382-2 53 87
20 March 2019
2019
Quarterly Report to 30 September 2018
7 November 2018
Quarterly Report to 30 June 2018
2 August 2018
Annual General Meeting
17 May 2018
Quarterly Report to 31 March 2018
4 May 2018
Analyst and Investor Conference
22 March 2018
Annual Accounts Press Conference
21 March 2018
2018
FINANCIAL CALENDAR
→ 223
Overview of compensation system of the Board of
Management
→ 216
BMW Group Compliance Management System
→ 45
Steel price trend → 47
→ 46
Annual Report 2018
+49 89 382-1 46 61
20 March 2019
21 March 2019
E-mail
Fax
50 et seq., 74 et seq., 94 et seq.
Efficient Dynamics
Investor Relations
presse@bmwgroup.com
+49 89 382-2 44 18
Fax
E-mail
+49 89 382-2 41 18
Business and Finance Press
Telephone +49 89 382-2 45 44
CONTACTS
→ Contacts
Other
Information
256
255
Quarterly Report to 30 September 2019
6 November 2019
Quarterly Report to 30 June 2019
1 August 2019
Annual General Meeting
16 May 2019
Quarterly Report to 31 March 2019
7 May 2019
Analyst and Investor Conference
Annual Accounts Press Conference
EBIT margin/return on sales
Automobiles
Earnings per share
20.1
51,643
52,834
49,113
46,100
45,119
41,526
51,134
48,395
47,213
40,134
36,919
39,287
138,377
131,835
19.5
21.7
22.0
23.2
2,720
2,312
2,383
2,980
6.5
5.4
4.0
123,429
3.8
5.6
35,600
30,606
23,930
19,915
20,273
25.7
4.7
4,151
110,164
101,086
1,707
2.60/2.62
1,640
2.50/2.52
1,508
2.30/2.32
852
197
197
1.30/1.32
0.30/0.32
0.30/0.32
INCOME STATEMENT
Revenues
Gross profit margin
Earnings before financial result
Earnings before tax
Return on sales (earnings before tax/revenues)
100,041
75,612
96,230
72,349
83,141
84,887
7,671
8,370
7,776
7,432
7,767
7,454
3,003
101,953
3,809
4,471
1,456
197
110,351
89,869
105,876
89,161
100,306
95,453
3,166
4,967
38,670
39,944
60,477
50,681
53,197
20.1
20.2
21.1
18.1
10.5
11.4
7,978
8,275
8,018
5,111
289
921
68,821
76,848
76,059
Business volume (based on balance sheet carrying amounts)
→ 5,143
Motorcycles¹
FINANCIAL SERVICES
4,130,002
3,846,364
3,592,093
3,190,353
7,893
3,085,946
Contract portfolio
84,347
80,974
75,245
66,233
61,202
60,653
3,031,935
7,803
7,383
4,853
5,329
5,111
4,907
3,243
210
330
86,193
6.0
81,305
67,013
62,009
62,416
52,184
50,530
49,004
43,151
74,425
Income taxes
Effective tax rate
49.2
33.5
413
351
10.4
10.2
10.7
8.0
0.8
33.1
0.7
2,692
2,476
1,610
203
21
32.5
34.5
2,564
Net profit for the year
27,103
Capital expenditure (excluding capitalised development costs)
G
→ 59 et seq.
B
Balance sheet structure
Bonds → 80, 164
→ 82
Group tangible, intangible and investment
assets → 146 et seq.
C
Capital expenditure → 5, 74 et seq.
Cash and cash equivalents → 77 et seq., 122 et seq.
Cash flow → 5,78 et seq., 122 et seq.
CO2 fleet emissions → 4, 49, 70, 94 et seq.
Compensation Report → 221 et seq.
Compliance → 216 et seq.
Connected Drive
→ 32
Consolidated companies
Consolidation principles
Contingent liabilities
→ 52 et seq.
Financial Services segment
→74,87
Financial result
251
252
Other
Information
→ Index
INDEX
A
Accounting policies
Corporate Governance
Apprentices
Automotive segment
→ 128 et seq.
F
→ 82, 88, 152 et seq.
Financial assets
Financial instruments → 168 et seq.
Financial liabilities → 80, 83, 163 et seq.
Financial reporting rules → 135 et seq.
→ 66
→ 127
→ 127
→167
Key data
L
BALANCE SHEET
Non-current assets
Current assets
→ 27
Lease business
→ 59 et seq.
Leased products → 149
K
Locations → 38 et seq.
M
→ 188 et seq.
Mandates of members of the Board of Management
→ 200
Mandates of members of the Supervisory Board
→ 201 et seq.
Dow Jones Sustainability Index World
E
List of investments
Research and development expenditure ratio
Research and development expenditure as a percent-
age of Group revenues.
Investments accounted for using the equity method
and other investments → 149 et seq.
Intangible assets → 129, 148
→ 198 et seq.
Cost of materials → 84 et seq.
Cost of sales
D
→73, 139
Dealer organisation/dealerships 31,64
Declaration with respect to the
Inventories → 82, 89, 154
Corporate Governance Code
Dividend → 26, 143 et seq.
→ 199
→ 70
Income statement
→72, 87, 118 et seq., 139 et seq.
Income taxes
→74, 140 et seq., 162
Digitalisation → 32, 61, 64
The sum of research and non-capitalised development
cost and capitalised development cost (not including
the associated scheduled amortisation).
per share
revenues.
Commercial paper
Short-term debt instruments with a term of less than
one year which are usually sold at a discount to their
face value.
Asset-backed financing transactions
A form of corporate financing involving the sale of
receivables to a financing company.
Consolidation
The process of combining separate financial state-
ments of Group entities into Group Financial State-
ments, depicting the financial position, net assets
and results of operations of the Group as a single
economic entity.
Bond
GLOSSARY EXPLANATION
OF KEY FIGURES
A securitised debt instrument in which the issuer
certifies its obligation to repay the nominal amount
at the end of a fixed term and to pay a fixed or variable
rate of interest.
The sum of the balance sheet line items “Leased prod-
ucts” and “Receivables from sales financing" (current
and non-current), as reported in the balance sheet for
the Financial Services segment.
Capital expenditure ratio
Investments in property, plant and equipment and
other intangible assets (excluding capitalised
development costs) as a percentage of Group
revenues.
Capitalisation rate
Capitalised development costs as a percentage of
research and development expenditure.
Cash flow
Business volume in balance sheet terms
Liquid funds generated (cash inflows) or used (cash
outflows) during a reporting period.
-
→ Glossary-
Explanation
Research and development expenditure
Capital expenditure ratio (capital expenditure/revenues)
Equity
Equity ratio
Non-current provisions and liabilities
Current provisions and liabilities
Balance sheet total
CASH FLOW STATEMENT
of Key Figures
Cash and cash equivalents at balance sheet date
Free cash flow Automotive segment
Personnel cost per employee
DIVIDEND
Dividend total
Dividend per share of common stock/preferred stock
249
250
Other
Information
Workforce at year-end²
Cash flow at risk
PERSONNEL
Credit default swap (CDS)
ROCE in the Automotive and Motorcycles segments
is measured on the basis of relevant segment profit
before financial result and the average amount of
capital employed in the segment concerned. Capital
employed corresponds to the sum of all current and
non-current operational assets, less liabilities that do
not incur interest.
Return on equity (ROE)
RoE in the Financial Services segment is calculated as
segment profit before taxes, divided by the average
amount of equity capital attributable to the Financial
Services segment.
Goodwill
Goodwill corresponds to the consideration paid to
acquire an entity, less the fair value of the separate
assets acquired and liabilities assumed. The buyer
is willing to pay the additional amount in return for
future expected earnings.
Value at risk
A measure of the potential maximum loss in value of
an item during a set time period, based on a specified
probability.
Gross margin
Gross profit as a percentage of Group revenues.
Liquidity
Post-tax return on sales
Group net profit as a percentage of Group revenues.
Pre-tax return on sales
Similar to "value at risk" (see definition below).
Group profit/loss before tax as a percentage of Group
Return on capital employed (ROCE)
A hedge against exposures to fluctuations in the fair
value of a balance sheet item.
Cash and cash equivalents as well as marketable secu-
rities and investment funds.
The amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing
parties in an arm's length transaction.
Financial swap agreements, under which creditors of
securities (usually bonds) pay premiums to the seller
of the CDS to hedge against the risk that the issuer of
the bond will default. As with credit default insurance
agreements, the party receiving the premiums gives
a commitment to compensate the bond creditor in
the event of default.
Earnings per share (EPS)
Fair value hedge
EBIT
Abbreviation for "Earnings Before Interest and Taxes",
equivalent in the BMW Group income statement to
"Profit/loss before financial result”.
EBIT margin
Profit/loss before financial result as a percentage of
revenues.
Basic earnings per share are calculated for common
and preferred stock by dividing the net profit after
minority interests, as attributable to each category of
stock, by the average number of shares in circulation.
Earnings per share of preferred stock are computed
on the basis of the number of preferred stock shares
entitled to receive a dividend in each of the relevant
financial years.
A hedge against exposures to the variability in fore-
casted cash flows, particularly in connection with
exchange rate fluctuations.
Effective tax rate
The effective tax rate is calculated by dividing the
income tax expense by the Group profit before tax.
Fair value
Equity ratio
Cash flow hedge
total.
Equity capital as a percentage of the balance sheet
Yours
Over the course of 2017, capital markets were influ-
enced by a favourable global economy. Positive growth
signals coming from emerging markets as well as robust
economic developments in industrialised countries
made for an encouraging year on worldwide exchanges.
Development of BMW stock compared to stock
market indices since 28 December 2012
→ 09
in %
200
172.9
100
→ www.bmwgroup.com/ir
153.1
119.1
Till
BMW
preferred
stock
169.7
significant increase
BMW STOCK
AND CAPITAL
MARKETS
IN 2017
Ratings at top level
in 2017
BMW Stock and
Capital Markets
Shareholders
To Our
14
24
23
Chairman of the Board of Management
Harald Krüger
H. 35"
company with a promising future.
BMW
common
stock
Dividend proposal foresees
Prime
Auto-
mobile
50
Favourable year on stock markets
Investor uncertainty caused the Prime Automobile
Index to lose ground significantly during the first half
of the year, driven by doubt as to whether the business
models of German automobile manufacturers will
remain profitable going forward. The debate about
diesel engines had a further negative impact on the
German automobile sector. The IAA motor show in
Frankfurt am Main in September 2017 strengthened
confidence on capital markets with the presentation
of numerous initiatives in the field of electric mobility.
The improvement in investor sentiment was reflect-
ed in the sector index, which finished the
year at
1,687 points, 12.0% up over the previous year.
We will continue to follow our path, taking advantage of the opportunities that arise. By doing
so, we can ensure that BMW AG remains an attractive investment over the long term and a
The EURO STOXX 50 recorded a 6.5% rise over the
same period, finishing the year at 3,504 points.
The DAX remained above the previous year's closing
level throughout the year. After the elections in the
Netherlands and France, the index rose in June 2017
to its then high for the year of 12,889 points before
retreating somewhat during the summer months.
Thanks to a strong upturn lasting through to early
October, the DAX closed the year at 12,918 points,
posting a significant gain for the period (+12.5%).
25
25
Source: Reuters.
2018
2017
2016
2015
2014
2013
50
100
BMW common stock
150
BMW preferred stock
Prime Automobile
DAX
200
250
100
150
200
250
Index: December 2012 = 100
→ 10
BMW AG development of stock
A variety of factors influenced developments on
stock markets during the period under report. The
year began with considerable political uncertainty
concerning future developments in the European
Union (EU). Consequently, the German stock index
(DAX) recorded its low point for the year in February at
11,510 points. Concerns about the stability of the EU
abated following the strong election performance of
pro-European parties in the Netherlands and France,
providing the DAX with renewed upward momentum
towards the middle of the year. Nevertheless, the
ongoing tension between the USA and North Korea
dampened the mood on stock markets perceptibly.
In the autumn months, positive economic and job
market figures in Germany contributed to an upswing
on the stock market. Despite uncertainty surrounding
the formation of a new government in Germany, the
DAX remained stable during the final months of the
year. Furthermore, the European Central Bank's (ECB)
decision to keep benchmark interest rates low- and
thus maintain its expansionary monetary policy - had
a beneficial impact on investor sentiment. In the USA,
the Federal Reserve gradually raised the reference
interest rate. Likewise, the Bank of England increased
interest rates for the first time in a decade. The reform
bill passed to cut tax rates in the USA also fuelled
hopes of further economic growth.
DAX
Our sharp focus on the future, combined with solid financials, enables us to have easier
access to international capital markets. Moody's has upgraded BMW AG's long-term rating to
A1. Our company also has the highest Standard & Poor's rating of any European automobile
manufacturer.
Significantly higher dividend
Of course, dear shareholders, that also means ensuring your company remains profitable. The
BMW Group has the financial resources to fund these upfront investments in the future – which
gives us a clear competitive edge. Our R&D ratio will increase in 2018, from 6.5 to 7 percent, or
around 7 billion euros. Expenditure will also remain high in 2019. For the past eight years, we
have kept the EBIT margin in the Automotive segment within our target range of 8 to 10 percent,
or higher, from one quarter to the next. We intend to maintain this high-level of consistency.
Dear shareholders, your company remains on track for success - and it is only fitting that you
should share in that success. The Board of Management and Supervisory Board will therefore
propose to the Annual General Meeting that the unappropriated profit of BMW AG for the
financial year 2017 be used to issue a dividend of 4.00 euros per share of common stock and
4.02 euros per share of preferred stock. That is the highest dividend the company has ever paid.
BMW AG associates in Germany will also benefit from the company's positive performance
through our profit-sharing programme.
The Group financial statements also reflect the positive impact of the tax reform in the US. The
EBIT margin in the Automotive segment stands at 8.9 per cent and therefore remains within
our target range. The Financial Services segment once again made a significant contribution to
the Group result, with pre-tax earnings of more than 2 billion euros.
In the financial year 2017, Group revenues rose slightly to reach a new all-time high of 98.7 billion
euros. Earnings before tax posted a significant increase of 10.2 percent year-on-year and exceeded
10 billion euros for the first time. Annual net profit was up 26 percent to 8.7 billion euros.
Financial indicators reach new highs
In San Luis Potosí, Mexico, plant construction is proceeding according to schedule. We are already
qualifying young specialists at our new training centre there. Over the next few years, we will
see different types of drivetrains on the roads. We are preparing our sites for this diversity by
creating flexible architectures and plants. This will allow us to produce models with efficient
combustion engines alongside electric vehicles and plug-in hybrids. From 2020 on, the use of
scalable modular electric construction kits will enable us to fit all model series with any type of
drivetrain. This will make us extremely flexible, whichever way demand develops.
The high flexibility of our global production network lays the foundation for the BMW Group's
continued growth. In 2017, twice as many vehicles came off the production line than in 2009.
The company currently operates 31 facilities in 14 countries, and we continue to invest in our
locations in Germany and worldwide. A good example of this is the major expansion of our
Dadong plant in Shenyang, China, which we operate as part of our joint venture with Brilliance
China Automotive Holdings Ltd.
Our value creation is as global as it is flexible
Asia was the main growth driver in 2017 and China the most important single market. In
Mainland China, deliveries climbed to more than 590,000 vehicles. In Europe, sales remained
on a par with the previous year, at around 1.1 million units, despite a downturn in the UK,
with ongoing Brexit negotiations. In the Americas and the US, we saw slight decreases, with
total sales of around 450,000 vehicles for the region. However, the trend has reversed in the US
since late 2017.
It is part of our philosophy that every customer counts – and so does every market. We aim for a
balanced distribution of sales across the main market regions of Europe, Asia and the Americas.
This enables us to balance out regional market fluctuations.
Every customer and every market counts
of the Board of
Management
→ Statement of the
Chairman
Shareholders
To Our
20
19
In 2017, we delivered 103,080 cars with electrified drivetrains to customers. Overall, sales of our
BMW i models together with BMW iPerformance and MINI Electric plug-in hybrids increased
by two-thirds over the previous year.
Electric mobility is currently our main strategic focus. We reached an important milestone
on the road to sustainable mobility last year, when I presented the 100,000th electrified
vehicle sold by the BMW Group to its new owner at BMW Welt in Munich. It was a BMW i3,
purchased by an 80-year-old customer – which just goes to show that it is never too late to
switch to an electric car.
Milestone: over 100,000 electrified vehicles sold
MINI sales climbed more than 3 percent to over 370,000 vehicles. BMW Motorrad saw a significant
increase, with deliveries of motorcycles and scooters up more than 13 percent to 164,000 units.
In the ultra-luxury segment, Rolls-Royce was unable to match the previous year's strong result.
With the Phantom model changeover and in a difficult environment, sales decreased by around
16 percent to 3,362 vehicles.
All-time highs for BMW, BMW M, MINI and BMW Motorrad
Our core BMW brand once again sold more than two million vehicles in 2017 - over four percent
more than the previous year. BMW M GmbH also contributed to this, reporting record deliveries
of more than 80,000 M and M Performance models for the first time.
Our strong, emotional brands are extremely desirable to customers. In Fortune Magazine's
"World's Most Admired Companies", the BMW Group is now the highest-ranked automobile
manufacturer in the top 20 and the most admired European company.
More and more customers are buying vehicles built by the BMW Group. Our customers have made
this company a leading manufacturer in the global premium segment for the past 14 years. For
the seventh consecutive year, sales reached a new all-time high in 2017. As forecast, automotive
deliveries rose slightly to 2.46 million vehicles. This represents an increase of 4.1 percent in a
highly competitive environment.
BMW Group leads global premium segment in 2017
At the BMW Group, we stand by our promises. And we deliver! We achieved our targets for the
financial year 2017, with new all-time highs for automobile and motorcycle deliveries, as well as
Group pre-tax earnings.
Financial year 2017: goals accomplished
Progress is not possible without change. Change is a constant in all of our lives. The BMW Group
charts its own course - with innovation, determination and foresight. We want to offer
solutions for the challenges of today and tomorrow. Each and every one of our associates is
giving their all. Our corporate culture encourages values of openness and transparency in
our everyday actions.
Dear Shareholders,
BMW common stock followed the downward trend
of the sector index during the first seven months of
the year, finishing July 12.4% down on the previous
year-end level. Its value picked up after the IAA, rising
to an interim high of €89.97 in November 2017. After
losing some ground during the remainder of the year,
BMW common stock closed at €86.83, 2.2% down over
the year. BMW preferred stock finished the year at
€74.64, 2.7% up on its market price one year earlier.
21
24
The momentum will continue in financial year 2018
Phase II of the biggest model offensive in our history
Your company delivers consistently high profitability
According to our most recent employee survey, 90 percent of our associates say they are proud
to work for the BMW Group. More than 80 percent say they are familiar with the target and
content of our strategy. This shared understanding will give us even greater momentum. We all
want the BMW Group to be the first place customers turn to for individual premium mobility
experiences. We aim to be the clear number one.
Our associates stand behind Strategy NUMBER ONE > NEXT
These examples show how we are successfully shaping the future of mobility in all its different
facets. With your support, we are transforming ourselves into a tech company for mobility
with a clear focus on customers and service. You have given us your backing for our long-term
approach with Strategy NUMBER ONE > NEXT. For that, I would like to thank you personally,
and on behalf of the entire Board of Management and our associates worldwide.
Dear Shareholders,
Finding a parking space is a problem for many drivers. Earlier this year, the BMW Group acquired
Parkmobile LLC, in a move that makes us the largest provider of mobile parking services in
North America and Europe, with 22 million customers in 1,000 cities.
Systematic expansion of our mobility services is firmly anchored in our Strategy NUMBER ONE > NEXT.
In early 2018, we signed a contract to acquire 100 percent of DriveNow. Our premium car-sharing
service already has over a million customers in 13 cities. A growing number of older people,
families and business travellers are also using DriveNow. Our ReachNow service is available in
the US and, since late 2017, also in China, in collaboration with a local partner.
Global expansion of the NOW family
Ten million BMW Group vehicles are already connected via Connected Drive. It takes about
25 million test kilometres to get an autonomous vehicle ready for series production. In 2018, our
fleet of autonomous BMW 7 Series models will continue to collect data on the roads, mainly in
Germany, Israel and California.
We will officially open our campus for autonomous driving, just outside Munich, in spring 2018.
Here, we will work with our partners, Intel and Mobileye, to develop autonomous driving – which
we see as one of the main driving forces for the mobility of tomorrow. A growing number of
renowned companies from different industries are joining our shared platform. We believe
that security is vital to autonomous driving – not just with respect to the vehicles themselves,
but also customer data.
The future belongs to autonomous driving
22
22
Against this backdrop, we are actively supporting infrastructure development. We aim to be a
system provider for electric mobility: with ChargeNow and IONITY for charging infrastructure,
the new BMW Energy Services business segment and our Battery Cell Competence Centre
in Munich.
Top-rated European automobile manufacturer
Developing electric mobility infrastructure
→ Statement of the
Chairman
To Our
Shareholders
By stepping up the pace on sustainable drivetrains, we are also reducing our fleet CO2 emissions.
This was also the case in 2017, even though the percentage of diesel vehicles decreased, partly
due to the current discussions in Germany. Emissions figures for our new vehicle fleet in Europe
currently stand at 122 grams of CO2 per kilometre. We have a clear objective to meet the European
Union's emissions requirements from 2021.
European fleet CO2 emissions continue to fall
Electrification pays off:
This concept car was one of the stars of the Frankfurt Motor Show in 2017. In the BMW i Vision
Dynamics, we are targeting an electric range of 600 kilometres – fifth-generation storage and
battery technology will make this possible.
BMW i Vision Dynamics eagerly awaited
All our brands will gradually be electrified. All electrified BMW models will become part of
BMW i. We have a clear roadmap to 2025: in 2019, a battery-electric MINI; in 2020, the first fully
electric model from the core BMW brand, the X3. These will be followed in 2021 by the iNEXT,
our new technology flagship, which the whole company will learn from.
When the BMW i3 was released in 2013, not many would have believed that the BMW Group
would today be leading the market for electrified vehicles in Europe. Today, in this growing
segment, we already have a much larger market share than in traditional drivetrains.
Electrification will remain a top priority for us over the coming years. We aim to sell more than
140,000 electrified vehicles in 2018 and have half a million electrified BMWs and MINIs on the
roads by the end of 2019.
Half a million electrified vehicles in total by the end of 2019
2018 will also be our “X year”, with the expansion of our highly successful BMW X family. As
well as the X7, this will include the new X3 available since late last year, the cool new X2 and
the new X4. I am sure our new X vehicles will totally appeal to our customers.
We are focusing on two segments in particular: first, the highly profitable luxury class. Here, we
will be launching new luxury models like the BMW 8 Series, the BMW X7 and the Rolls-Royce
Phantom onto the market. These will bring us closer to our goal of occupying the leading position
in the luxury segment.
In 2018, we will enter the second year of the biggest model offensive in our history. We will
continue moving forward, with highly emotional new models like the BMW i8 Roadster and
the BMW Z4.
of the Board of
Management
At the end of 2017, with market capitalisation amount-
ing to some €56.3 billion, the BMW Group was among
the ten most valuable German enterprises listed on
the stock market.
A1
To Our
Shareholders
Earnings per share of common stock³
2.62
2.92
3.22
3.52
4.022
Preferred stock
2.60
2.90
3.20
3.50
4.00²
Common stock
Dividend
KEY DATA PER SHARE IN €
48.69
59.08
58.96
56.53
67.29
64.65
74.60
92.19
74.15
78.89
62.09
67.84
77.41
72.70
13.12
74.64
10.45
8.08
26
The BMW Group continued to inform analysts, inves-
tors, and rating agencies throughout 2017 with regular
quarterly and year-end financial reports. The com-
prehensive information package provided for capital
market participants included numerous one-on-one
and group meetings, dedicated socially responsible
investment (SRI) roadshows for investors using sustain-
ability criteria in their investment decisions, and debt
roadshows for fixed-income investors and credit ana-
lysts. Communication focused on the BMW Group's
new model offensive and answers to the challenges
facing the automobile industry going forward. Topics
discussed included autonomous driving and electric
mobility. A further focus was the profitability of the
BMW Group's business models. In addition to partici-
pating in various conferences and roadshows, product
presentations and a technology workshop were held
for analysts and investors in Munich.
Intensive communication with capital markets
continued
in 2017
BMW Stock and
Capital Markets
To Our
Shareholders
28
4 Stock weighted according to dividend entitlements.
3 Weighted average number of shares for the year.
2 Proposed by management.
1 Xetra closing prices.
54.25
57.03
65.11
72.08
82.95
Equity
4.58
5.30
8.23
8.81
6.78
Free cash flow Automotive segment
8.10
8.85
9.72
10.47
13.14
Earnings per share of preferred stock4
9.70
Low
8.83
Year-end closing price
Number of shares in 1,000
COMMON STOCK
2013
2014
2015
2016
2017
→ 11
BMW stock
Due to the positive earnings development, the
Board of Management and the Supervisory Board
are proposing to the Annual General Meeting to use
the net profit of BMW AG of €2,630 million (2016:
€2,300 million) for the payment of a dividend of
€4.00 per share of common stock (2016: €3.50) and a
dividend of €4.02 per share of preferred stock (2016:
€3.52). The payout ratio for the year 2017 therefore
stands at 30.2% (2016: 33.3%).
Significant increase in dividend
In this context, and with the approval of the Super-
visory Board, the Board of Management increased
BMW AG's share capital in 2017 by €491,000 from
€657,109,600 to €657,600,600 by issuing 491,000 new
non-voting shares of preferred stock. This increase
was executed on the basis of Authorised Capital 2014
in Article 4 (5) of the Articles of Incorporation. The
new shares of preferred stock carry the same rights as
existing shares of preferred stock. The newly issued
shares of preferred stock for employees are entitled to
receive dividends with effect from the financial year
2018. In addition, 114 shares of preferred stock were
acquired via the stock market or as a result of cancelled
employee purchases relating to the previous year.
For more than 40 years, BMW AG has enabled its
employees to participate in its success. Since 1989,
this participation has taken the form of an Employee
Share Programme. A total of 491,114 shares of pre-
ferred stock were issued to employees as part of this
programme in 2017.
The ratings underline the BMW Group's robust
financial profile and excellent creditworthiness. As
a result, the Company not only enjoys good access to
international capital markets, but also benefits from
attractive refinancing conditions.
In January 2017, Moody's raised its long-term rating
for BMW AG from A2 (positive outlook) to A1 (stable
outlook). The P-1 short-term rating was confirmed.
The improved assessment reflects the attractive
product launches as part of the model offensive, the
good position of the BMW Group with regard to the
challenges faced by the automobile industry, a con-
sistently strong operating performance and a solid
financial and capital structure.
Since December 2013, BMW AG has had a long-term
rating of A+ (stable outlook) and a short-term rating
of A-1 from the rating agency Standard & Poor's.
This represents currently the highest rating given by
Standard & Poor's to a European car manufacturer.
stable
stable
A+
A-1
P-1
Non-current financial liabilities
Current financial liabilities
Outlook
Standard &
Poor's
Moody's
Company rating
Thanks to its consistent future-oriented approach and
solid financials, the BMW Group continues to be the
best-rated carmaker in Europe.
Ratings remain at top level
in 2017
High
BMW Stock and
Capital Markets
601,995
601,995
Employee Share Programme
601,995
65.10
75.68
77.41
63.93
27
PREFERRED STOCK
77.71
Number of shares in 1,000
55,114
54,809
54,500
601,995
54,260
Stock exchange price in €1
55,605
85.42
27
95.51
601,995
Year-end closing price
High
Low
86.83
88.75
Stock exchange price in €¹
89.77
85.22
90.83
92.25
122.60
97.63
Moses Lake
SGL AUTOMOTIVE CARBON FIBERS
JOINT OPERATION
Locations
In November 2017, the SGL Group and the BMW Group
signed an agreement, under which SGL Carbon SE will
gradually acquire the BMW Group's 49% stake in the
joint operation SGL ACF. At the same time, an agreement
exists for the continuation of the business relationship
in future projects involving the use of carbon.
7
SGL Automotive Carbon Fibers (ACF) is a joint oper-
ation of the BMW Group and the SGL Group. At the
Moses Lake site in the state of Washington, USA, carbon
fibres are produced for subsequent use in manufactur-
ing carbon fibre fabrics in Wackersdorf.
BMW 5 Series Extended-Wheelbase Version
BMW 1 Series, BMW 2 Series, BMW 3 Series (and Extended-Wheelbase Version),
BMW X1 Extended-Wheelbase Version
Petrol engines, production of core engine parts
China
China
Tiexi (Shenyang)
China
Wackersdorf
Tiexi (Shenyang)
Country
Products
Germany
Egypt
Dadong (Shenyang)
Indonesia
Country
Kaliningrad
Kulim
Cairo
USA
Jakarta
Locations
manufactured in Kaliningrad (Russia), Cairo (Egypt),
Jakarta (Indonesia) and Kulim (Malaysia).
The main function of the BMW Group's four part-
ner plants is to serve regional markets. During the
year under report, BMW and MINI vehicles were 7
Carbon fibre fabrics
Carbon fibres
Products
PARTNER PLANTS
Products
BMW 3 Series, BMW X1, BMW X3, BMW X4
BMW motorcycles, Maxi-Scooters, car brake discs
Country
Petrol and diesel engines, high-performance engines for M models
BMW 3 Series, BMW 4 Series, BMW M
Motorcycles
Lightweight construction components, electric drivetrain systems and special engines
BMW 1 Series, BMW 2 Series, BMW i, BMW M
Petrol engines for BMW, MINI
BMW i8 plug-in hybrid engines
Core engine parts
Toolmaking, outer body parts for Rolls-Royce, aluminium tanks for BMW Motorrad
Core engine parts
Chassis and drivetrain components
Components for electric mobility
Rolls-Royce bodywork, pressed parts
BMW 3 Series, BMW 4 Series, BMW 5 Series, BMW 6 Series,
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X5
United Kingdom
Rolls-Royce Manufacturing Plant Goodwood
Germany
BMW 3 Series, BMW 5 Series, BMW 7 Series, BMW X1, BMW X3, BMW X5
BMW 3 Series, BMW 5 Series, BMW X1, BMW X3, BMW X4, BMW X5, BMW X6
Russia BMW 3 Series, BMW 5 Series, BMW 7 Series, BMW X1, BMW X3, BMW X4, BMW X5, BMW X6
Malaysia
BMW 7 Series, BMW M
MINI Hatch, MINI Clubman
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X4, BMW X5
Motorcycles
BMW 1 Series, BMW 2 Series, BMW 3 Series, BMW 4 Series,
BMW X1, BMW X2, BMW M
BMW 3 Series
JOINT VENTURE BMW BRILLIANCE
AUTOMOTIVE HOLDINGS LTD.
Locations
The plants in Shenyang (China) are operated within
the joint venture with Brilliance China Automotive
Holdings Ltd. The Shenyang site comprises the ¬
→ Production Network
Organisation and
Business Model
General Information
and Group Profile
Combined
Management
Report
36
36
35
35
Rolls-Royce Phantom, Ghost, Wraith, Dawn
Processing of carbon fibre components
Pressed parts and bodywork components
Distribution centre for parts and components
Cockpit assembly
BMW X3, BMW X4, BMW X5, BMW X6, BMW M
Petrol and diesel engines for BMW and MINI
Core engine parts
High-performance engines for M models
Dadong and Tiexi automobile plants as well as an
engine plant complete with foundry and battery
factory.
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X4, BMW X5, BMW X6, MINI Countryman
India
Steyr AG & Co KG, Graz (Austria) and VDL Nedcar
bv, Born (Netherlands). In addition, BMW motorcycles
were manufactured by TVS Motor Company Limited,
Hosur (India).
BMW Group Engineering and
Emission Test Center,
BMW Group Technology Office USA,
Mountain View, USA
BMW Group Designworks, Newbury
Park, USA
▲ Research and development
network outside Europe
Partner plants
outside Europe
Partner plant, Hosur, India
Partner plant, Jakarta, Indonesia
Partner plant, Cairo, Egypt
Partner plant, Kaliningrad, Russia
Partner plant, Kulim, Malaysia
SGL Automotive Carbon Fibers
(joint operation-2 plants)
Oxnard, USA
BMW Group plant Manaus, Brazil
BMW Group plant Rayong, Thailand
BMW Group plant Rosslyn, South Africa
BMW Group plant Spartanburg, USA
BMW Brilliance Automotive, China
(joint venture-3 plants)
■BMW Group plant Araquari, Brazil
outside Europe
Production
☐
New Zealand
South Africa
BMW Group plant Chennai, India
BMW Group ConnectedDrive Lab
China, Shanghai, China, and
BMW Group Designworks Studio
Shanghai, China
BMW Group Technology Office,
Shanghai, China
Singapore*
Malaysia
Thailand
Hong Kong
Japan
South Korea
China
United Kingdom
Russia
*Sales locations only.
Sales subsidiaries and
Financial Services
locations worldwide
BMW Technology, Chicago, USA
BMW Group Engineering USA,
Woodcliff Lake, USA
BMW Group Engineering Japan,
Tokyo, Japan
BMW Group Engineering China,
Beijing, China
Argentina*
The BMW Group also awards production contracts
to external partners for specific vehicle types and
motorcycles. During the period under report, BMW
and/or MINI models were produced by Magna
Brazil
United Arab
88
37
36
Motorcycles
BMW 5 Series Sedan
MINI Hatch, MINI Convertible, MINI Countryman, BMW X1
38
Products
Netherlands
Austria
Country
Hosur
Graz
Born
CONTRACT PRODUCTION
India
Combined
Management
Report
General Information
and Group Profile
Mexico
USA
Canada
Headquarters
Research and
development
locations
16
Production and
assembly plants
31
Financial Services
locations worldwide
7 Sales subsidiaries and
43
→ 12
BMW Group locations worldwide
Business Model
→ Organisation and
Emirates
USA
Austria
One of the strategic objectives of the BMW Group
is to continuously optimise the energy efficiency
of automobiles and motorcycles, including elec-
trification of the product range across all brands.
Under the term Efficient Dynamics, the
BMW Group has been successfully working on
reducing fuel consumption and vehicle emissions
through the development of highly efficient com-
bustion engines, increasing electrification of drive-
trains, intelligent lightweight construction,
improved aerodynamics and coordinated energy
management.
Germany
Bayerische Motoren Werke Aktiengesellschaft
(BMW AG), based in Munich, Germany, is the parent
company of the BMW Group. The general purpose of
the Company is the production and sale of engines,
engine-equipped vehicles, related accessories and
products of the machinery and metal-working
industry as well as the rendering of services related
to the aforementioned items. The BMW Group is
subdivided into the Automotive, Motorcycles and
Financial Services operating segments. The seg-
ment Other Entities primarily comprises holding
companies and Group financing companies. The
BMW Group operates on a global scale and is rep-
resented in more than 150 countries. At the end of
the reporting period, the BMW Group employed a
workforce of 129,932 people.
General information on the BMW Group is provided
below. There have been no significant changes com-
pared to the previous year.
This Combined Management Report incorporates the
management reports of Bayerische Motoren Werke
Aktiengesellschaft (BMW AG) and the BMW Group.
→ www.bmwgroup.com/company
ORGANISATION AND
BUSINESS MODEL
significantly
Founded in 1916 as Bayerische Flugzeugwerke AG
(BFW), Bayerische Motoren Werke G.m.b.H. came
into being in 1917 before finally becoming Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) in 1918.
The BMW Group comprises BMW AG and all subsidi-
aries over which BMW AG has either direct or indirect
control. BMW AG is also responsible for managing the
BMW Group as a whole.
Research and develop-
ment expenditure up
€6,108 million
Fleet CO2 emissions again reduced
AND GROUP
PROFILE
GENERAL
INFORMATION
→ Organisation and
Business Model
General Information
and Group Profile
71 +18.3%
Management
Report
With the three automobile brands BMW, MINI and
Rolls-Royce, as well as the motorcycles business
BMW Motorrad and the Financial Services busi-
ness, the BMW Group gives its customers and their
demands always the highest priority. The BMW Group
is therefore one of the most successful makers of
automobiles and motorcycles worldwide and among
the largest industrial companies in Germany. It is the
only manufacturer that focuses exclusively on the
premium segment with all its brands. With BMW,
MINI and Rolls-Royce, the BMW Group owns three
of the best-known premium brands in the automotive
industry. In addition to its strong market position in
the premium segment of the global motorcycles sector,
the BMW Group is also successful in the financial
In 2016, the BMW Group presented its Strategy
NUMBER ONE > NEXT. This builds on the previous
strategy and expands its scope in light of new develop-
ments and the social responsibility of the BMW Group.
At the heart of Strategy NUMBER ONE > NEXT is a
commitment to future-oriented activity with develop-
ment of products, brands and services in the premium
segment for individual mobility. New technologies such
as alternative drivetrains, digitalisation and connec-
tivity are further key areas of focus. The BMW Group
is currently in the process of transformation from a
traditional automobile maker to a customer-oriented
mobility company. This means that customer focus will
be given greater emphasis. All activities of the Group
are oriented towards the customer.
32
32
31
The BMW Group is also a leading provider of finan-
cial services in the automobile sector, operating
more than 50 entities and cooperation arrangements
with local financial services providers and importers
worldwide. The segment's main business is credit
financing and the leasing of BMW Group brand cars
and motorcycles to retail customers. Customers can
also choose from an attractive array of insurance and
banking products. Operating under the brand name
Alphabet, the BMW Group's international multi-brand
fleet business provides financing and comprehen-
sive management services for corporate car fleets
in 19 countries. Through its multi-brand business
Alphera, the BMW Group provides credit financing,
leasing and other services to retail customers. The
segment also supports the BMW Group's dealership
organisation, for example by financing dealership
vehicle inventories.
Financial Services segment
The Motorcycles business is also clearly focused on
the premium segment. The model range currently
comprises motorcycles for the Sport, Tour, Roadster,
Heritage, Adventure and Urban Mobility segments.
BMW Motorrad also offers a broad range of equip-
ment options to enhance rider safety and comfort.
The motorcycles sales network is organised similarly
to that of the automobiles business. Currently, BMW
motorcycles are sold by more than 1,200 dealerships
and importers in over 90 countries.
services business. Moreover, the BMW Group has
developed in recent years into one of the leading
providers of premium services for individual mobility.
Motorcycles segment
100
The MINI brand is an icon promising supreme
driving pleasure in the premium small car segment.
Rolls-Royce is the strongest brand in the ultra-luxury
segment with a tradition stretching back well over
years. Rolls-Royce Motor Cars is specialised in
bespoke customer experiences and offers the highest
level of quality and service.
The core BMW brand caters to a broad array of cus-
tomer requirements, ranging from fuel-efficient and
innovative models equipped with Efficient Dynamics
to efficient, high-performance BMW M vehicles. At the
same time, the BMW Group continues to redefine the
boundaries of premium with BMW i. With an even
greater focus on innovation and sustainability, BMWi
embodies the vehicle of the future, with electric drive-
train, intelligent lightweight construction, exceptional
design and newly developed mobility services.
Automotive segment
In order to provide a better insight into the Group, this
report also includes a presentation of the operating
segments Automotive, Motorcycles and Financial
Services.
Presentation of segments
The global sales network of the automobile business
currently comprises around 3,400 BMW, 1,580 MINI
and 140 Rolls-Royce dealerships. Within Germany, sales
are conducted through branches of the BMW Group
and independent authorised dealerships. Sales outside
Germany are handled primarily by subsidiary compa-
nies and by independent import companies in some
markets. The BMWi dealership and agency network
currently covers more than 1,500 locations.
Combined
30
2
2
→Page 52 Review of Operations
Financial and Non-financial Performance Indicators
→ Page 49
General and Sector-specific Environment
Overall Assessment by Management
→Page 48
Combined
Management
Report
→Page 44
→Page 40 Management System
→ Page 30 Organisation and Business Model
→Page 30 General Information and Group Profile
REPORT
COMBINED MANAGEMENT
Indonesia*
→Page 44 Report on Economic Position
General Information
and Group Profile
Economic Position
Outlook, Risks and
Opportunities
→Page 52 Automotive Segment
→Page 112 Disclosures Relevant for Takeovers
→ Page 111 Internal Control System Relevant for Accounting
and Financial Reporting Processes
→Page 96 Risks and Opportunities
→ Page 90 Report on Outlook, Risks and Opportunities
→Page 90 Outlook
→ Page 86 Comments on Financial Statements of BMW AG
→Page 72 Results of Operations, Financial Position and Net Assets
→Page 68 Sustainability
→Page 66 Workforce
→Page 64 Sales and Marketing
→Page 63 Purchasing and Supplier Network
Research and Development
→Page 61
→ Page 59
Financial Services Segment
→ Page 58 Motorcycles Segment
Combined
Management
Report
General Information
and Group Profile
Organisation and
Business Model
→ Research and
Development
Research and Development
Chennai
Berlin
Araquari
BMW GROUP PLANTS
Products
Country
Dingolfing
Locations
7
At the end of the reporting period, the Group's pro-
duction network totalled 31 locations in 14 countries.
These comprise 19 BMW Group plants, five joint
ventures, four partner plants and three contract
production plants. The same quality, safety and sus-
tainability standards apply for all plants throughout
the BMW Group production network worldwide.
Production Network
Further information on sustainability and human
resources can be found in the sections "Workforce"
and "Sustainability" in the Group Management Report
and in the Sustainable Value Report 2017 published
on the Company's website at → https://www.bmwgroup.com/svr.
The principles and importance of sustainable business
management are emphasised in the new Strategy
NUMBER ONE > NEXT, which includes a clear com-
mitment to preserving resources. The BMW Group
remains fully committed to ecological and social
sustainability along the entire value chain as well as
to comprehensive product responsibility.
For several years now, the BMW Group has supported
intercultural exchange. In partnership with the UN
Alliance of Civilizations, the BMW Group presents
the Intercultural Innovation Award for exemplary
projects in this field.
The 19 BMW Group plants comprise 13 automobile and
engine plants, two plants for BMW motorcycles, three
sites for producing components, pressed parts and
tools and one supply centre. In 2017, the BMW Group
was already producing electrified vehicles at a total
of nine locations.
Eisenach
Hams Hall
Landshut
Thailand
United Kingdom
Germany
Germany
Brazil
Germany
Germany
United Kingdom
Germany
Brazil
Germany
India
Wackersdorf
Swindon
Steyr
Rosslyn
Spartanburg
Regensburg
Oxford
Rayong
Munich
Manaus
Leipzig
The BMW Group attaches great importance to training
and development of its workforce. In 2017, investment
in training and development programmes across the
Group amounted to €349 million (2016: €352 million).
In addition, 1,554 trainees were hired worldwide. A
total of 4,750 young people are currently undergoing
vocational training or participating in internal pro-
grammes to develop young talent.
South Africa
In view of increasingly complex supplier relationships,
it is important for the BMW Group to work together
with suppliers to increase transparency and resource
efficiency along the supply chain. The aim is to require
suppliers to comply with environmental and social
standards across the value chain.
Since 1995, the BMW Group has cut the CO2 emis-
sions of new cars sold in Europe (EU-28) by more than
42%. Average CO2 emissions in Europe (EU-28) in 2017
amounted to 122 g/km (2016: 124 g/km; −1.6%). The
systematic expansion of the Group's vehicle fleet with
alternative drivetrains as well as innovative mobility
services have contributed significantly to the progress
made. In 2017, for the first time more than 100,000
electrified vehicles were sold in one year.
pro-
4. Services
The Vision 100 study presented for the Rolls-Royce
brand in 2016 gave customers a first glimpse into
the future of automobile luxury powered by electric
drivetrains.
With its MINI Electric, MINI is reinterpreting the
urban tradition of the brand for the electric age
and reinventing individual mobility for the city.
The market launch of the first plug-in hybrid of
the MINI brand (MINI Cooper S E Countryman
ALL4: fuel consumption in 1/100 km (com-
bined) 2.3-2.1//CO2 emissions in g/km (com-
bined) 52-49//Electric power consumption
in kWh/100 km (combined) 14.0 – 13.2) in sum-
mer 2017 was followed by the presentation of
the all-electric MINI Electric Concept at the IAA
Cars in 2017. The series launch of all-electric
MINI vehicles is scheduled to begin in 2019.
As part of the BMW i brand, the BMW iPerformance
range forms a model family of its own with plug-in
hybrid drivetrains. All BMW iPerformance models
are equipped with a smart energy management
system that ensures ideal interaction between the
combustion engine and the electric motor. The
option to drive all-electric, added efficiency gained
through electric assistance features and the
spontaneous response characteristics provided by
the additional electric drivetrain lead to a new
harmony of driving pleasure and sustainability.
The flexibility of the technologies used makes
it possible to rapidly expand the broad range of
iPerformance models to include further series
as required.
The BMW i brand reflects Efficient Dynamics in its
most systematic form. Flexible vehicle architec-
ture, innovative electric and plug-in hybrid drive-
trains and the use of new materials are the results
of an integrated approach that is also reflected in
a resource-efficient selection of materials and the
intensive use of renewable energy in the production
process. This contributes to a very favourable
environmental footprint in BMW i vehicles over the
entire product life cycle.
The fourth strategic direction relates to individual
mobility services. The BMW Group aims to be
the leading provider of premium mobility services
going forward. To achieve this, it is essential to
understand clearly the needs of its customers
worldwide. This knowledge is the basis for
viding customers with an attractive, comprehen-
sive range of services. This includes easy-to-use,
digitally supported mobility services that also
feature bring-and-collect services or help custom-
ers find free parking spaces in urban environ-
ments. Further information can be found in the
section "Sales and Marketing".
3. Electrified
2. Connected
Since 2017, the BMW Group has pooled its devel-
opment expertise in the fields of vehicle connec-
tivity and autonomous driving at its own develop-
ment centre. More than 600 BMW Group
employees are now working in cooperation with
other partners at a campus near Munich, thereby
developing and expanding the open platform
for autonomous driving. By the end of the expan-
sion, more than 2,000 employees will be work-
ing at the new site towards achieving fully auto-
nomous driving in fields ranging from software
development to road testing.
1. Autonomous
Accordingly, the BMW Group's R&D activities include
the following four topics:
With its Strategy NUMBER ONE > NEXT, the
BMW Group is focusing on the topics of electric
mobility, digitalisation and autonomous driving. The
key trends of individual mobility are summarised
at the BMW Group in the term ACES (Autonomous,
Connected, Electrified, Services).
A major factor in the success of the BMW Group is
its consistent focus on the future. A long tradition of
innovation is not only the basis of the BMW Group's
economic success, but an integral part of its corporate
philosophy. Shaping individual mobility and finding
innovative solutions today for the needs of tomorrow
is a key driving force for the BMW Group. Research
and development (R&D) are therefore of key import-
ance for the BMW Group as a premium provider.
The second strategic direction is summarised un-
der the term Connected Drive, an integrated digi-
tal concept in which the driver, the vehicle and
the outside world are all able to interact with one
another. The vehicle can be attuned to the individ-
ual needs of each driver, thus making it a smart
companion. In future, transferring certain tasks to
the vehicle will broaden the range of options avail-
able to the customer when driving. The time saved
can be used for other purposes. This results in
increased comfort for the driver and greater safety
for road users in general. Numerous safety and
comfort features already exist in BMW, MINI and
Rolls-Royce brand automobiles as well as BMW
Motorrad brand motorcycles. In 2021, the
BMW iNEXT will take to the roads with an elec-
tric drivetrain and full connectivity. It will also
reach a new level on the way to autonomous
driving.
Against a backdrop of rapid technological change
within the automotive industry, the BMW Group
also enters into specific cooperation agreements with
selected technology partners. The aim of collabor-
ation with external partners, also across sectors, is
to combine expertise in order to bring innovations to
customers within the shortest time possible.
A total of 14,047 people at 16 locations in five coun-
tries worked in the BMW Group's global research and
development network at 31 December 2017.
Research and development expenditure rose sig-
nificantly year-on-year to €6,108 million (2016:
€5,164 million; +18.3%). The research and develop-
ment expenditure ratio stood at 6.2% (2016: 5.5%).
The ratio of capitalised development costs to total
research and development expenditure for the peri-
od (capitalisation rate) stood at 39.7% (2016: 40.5%).
Amortisation of capitalised development costs totalled
€1,236 million (2016: €1,222 million; +1.1%). Further
information on research and development expendi-
ture is provided in the Report on Economic Position
→ see (Results of Operations) and in → note 7 of the Group
Financial Statements.
The BMW Group takes a holistic approach to sus-
tainability management that encompasses the entire
value chain. Apart from reduction of CO2 emissions,
key components of the sustainability strategy include
operational environmental protection, sustainability
in the supply chain, employee orientation and social
commitment.
For years, the BMW Group has ranked among t the most
sustainable companies in the automotive industry and
is the only carmaker to have been listed consecutively
in the renowned Dow Jones Sustainability Index since
1999.
Long-term thinking and responsible action have long
been the foundations of the BMW Group's identi-
ty and its economic success. As early as 1973, the
BMW Group appointed an environmental officer in
what was then a pioneering development within the
automobile sector. Today, the Sustainability Board,
comprising all members of the Board of Management,
sets the strategic direction along with binding targets.
Since 2001, the BMW Group has been committed to
the United Nations Environment Programme, the
UN Global Compact and the Cleaner Production
Declaration.
Sustainability
→ Production Network
Organisation and
Business Model
Sustainability
General Information
and Group Profile
Management
Report
Combined
↑↑
34
33
33
In 2017, numerous awards and prizes once again
underscored the BMW Group's high level of inno-
vation competence, above all in the areas of design,
the use of innovative technologies and intelligent
connectivity.
note 7
The BMW Group has set itself the goal of being a
leader in the use of renewable energy in production
and the value chain. In 2017, 81% (2016: 63%) of
the BMW Group's electricity worldwide came from
renewable sources.
Australia
Locations
2017
General Information
and Group Profile
→Management System
Motorcycles segment
As with the Automotive segment, the Motorcycles
segment is managed on the basis of RoCE. Capital
employed is determined on the same basis as in the
Automotive segment. The strategic RoCE target for
the Motorcycles segment is 26%.
Return on capital employed
→ 16
Motorcycles
Profit before
financial result
ROCE
Motorcycles
7
Average capital
employed
Profit before financial result in € million
Average
capital employed in € million
Return on capital employed in %
2017
2016
2016
Combined
Management
Report
42
42
41
Profit before financial result in € million
capital employed in € million
Return on capital employed in %
2017
2016
2017
2016
2017
2017
2016
7,695
10,009
10,361
78.6
74.3
Capital employed corresponds to the sum of all cur-
rent and non-current operational assets, less liabilities
that do not incur interest (e.g. trade payables and
other provisions).
Due to its key importance for the Group as a whole,
the Automotive segment is managed on the basis of
additional key performance indicators which have a
significant impact on RoCE and hence on segment
performance. These value drivers are sales volume,
segment revenues and the operating return on sales
(EBIT margin: profit/loss before financial result as
a percentage of revenues) as the key performance
indicator for segment profitability. The management
system also takes into account average CO2 emissions
for the fleet, which, through their influence on ongoing
development costs and due to regulatory requirements,
can have a significant long-term impact on Group
performance. Fleet emissions correspond to average
CO2 emissions of new cars sold in the EU-28 countries.
By managing the business on the basis of key value
drivers, it is possible to gain a better understanding
of the causes of changes in the RoCE and to define
suitable measures to influence it.
7,863
Average
2016
187
2,207
2,166
12,167
10,236
18.1
21.2
Strategic management at Group level
Strategic management and quantification of financial
implications within the long-term corporate planning
are performed primarily at Group level. The key
performance indicators are Group profit before tax
and the size of the Group's workforce at the year-end.
Group profit before tax provides a comprehensive
measure of the Group's overall performance after
consolidation effects and a transparent basis for com-
paring performance, particularly over time. The size of
the Group's workforce is monitored as an additional
key non-financial performance indicator.
The information provided by these two key perfor-
mance indicators is further complemented by pre-tax
return on sales and value added. Value added, as
a highly aggregated performance indicator, also
provides an insight into capital efficiency and the
(opportunity) cost of capital required to generate
Group profit. A positive value added means that a
company is generating more value than the cost of
capital.
Value added
Group
=
-
earnings amount
cost of capital
-
= earnings amount
(cost of capital rate ×
capital employed)
2016
2017
2016
2017
609
566
34.0
33.0
In view of the increasing strategic importance of the
segment, the operating return on sales (EBIT margin:
profit/loss before financial result as a percentage of
revenues) was adopted in the year under report as a
key performance indicator. The long-term target range
is between 8 and 10%. In conjunction with the non-
financial value driver sales volume, this will enable
ROCE development to be understood in greater detail.
Financial Services segment
As is common practice in the banking sector, the
Financial Services segment is managed on the basis ¬
Return on equity
207
→ 17
RoE Financial
Services
Profit before tax
Average equity capital
Financial Services
Profit before tax in € million
Average equity capital in € million
Return on equity in %
2017
of return on equity. RoE is defined as segment profit
before tax, divided by the average amount of equity
capital in the Financial Services segment. In view
of generally increasing regulatory requirements, a
greater amount of equity capital will be allocated to
the segment in future, which will result in a lower
RoE. In this context, the long-term target return will
be changed with effect from 2018 from at least 18%
currently to at least 14%.
Automotive
Average capital
employed
ROCE Automotive
BMW Group plant Munich
BMW Group plant Regensburg
BMW Group plant Wackersdorf
BMW Group plant Steyr, Austria
BMW Group plant Hams Hall, UK
BMW Group plant Oxford, UK
BMW Group plant Swindon, UK
Rolls-Royce Manufacturing Plant,
Goodwood, UK
Partner plants
in Europe
Partner plant, Born,
Netherlands
Partner plant, Graz,
Austria
▲ Research and development
network in Europe
BMW Group Research and Innovation
Centre (FIZ), Munich, Germany
BMW Group Research and
Technology, Munich, Germany
BMW Group Autonomous Driving
Campus, Unterschleißheim, Germany
BMW Group Designworks, Munich,
Germany
BMW Car IT, Munich, Germany
BMW Innovation and Technology
Centre, Landshut, Germany
BMW Diesel Competence Centre,
Steyr, Austria
Sales subsidiaries and
Financial Services
locations Europe
Sweden
Finland*
BMW Group plant Leipzig
BMW Group plant Landshut
BMW Group plant Eisenach
BMW Group plant Dingolfing
The BMW Group can look back on a successful
business performance in 2017, despite growing
uncertainties in the international environment and
increased competition. The overall picture for the
results of operations, financial position and net assets
was positive. Overall, the business development met
or even exceeded management expectations. This
assessment also takes into account events after the
end of the reporting period.
BMW Group locations in Europe
→ 13
Norway
Germany
Netherlands
UK
Ireland
Denmark
Belgium
Switzerland
Spain
Portugal
Italy
Slovenia*
Malta
■ Production in Europe
BMW Group plant Berlin
France
Czech
Republic*
Poland*
Capital turnover
Cost of capital
Profit
Capital employed
Average weighted
cost of capital rate
Expenses
Revenues
Due to the high level of aggregation, it is impractical
to manage the business on the basis of value added.
This key indicator therefore only serves for reporting
purposes. Relevant value drivers having a significant
impact on business performance and therefore on
enterprise value are defined for each controlling level.
The financial and non-financial value drivers are
reflected in the key performance indicators used to
manage the business. In the case of project decisions,
the system provides a project-oriented management
logic based on value or profitability measures. These
provide a fundamental basis for decision-making.
Return on sales
Management of operating performance
at segment level
Performance
→ Operating performance at segment level is managed
at an aggregated level on the basis of returns on capi-
tal. Depending on the business model, the segments Outlook
are measured on the basis of return on total capital
or equity. Specifically, return on capital employed
(ROCE) is used for the Automotive and Motorcycles
segments and return on equity (ROE) for the Financial &
Return on capital employed
→ 15
Services segment. These indicators combine a wide
range of relevant economic information, such as prof-
itability (return on sales) and capital efficiency (capital
turnover), to provide a measurement of segment
performance and the development of enterprise value.
Automotive segment
The most comprehensive key performance indica-
tor used for the Automotive segment is RoCE. This
indicator provides information on the profitability of
capital employed and the operational business. ROCE
is measured on the basis of segment profit before
financial result and the average capital employed in
the segment. The strategic target for the Automotive
segment's RoCE is 26%.
Profit before
financial result
→ see sections
Indicators and
in € million
Return on capital
(ROCE or ROE)
degrees of detail, depending on the level of aggre-
gation. Operating management occurs primarily at
segment level. In order to manage long-term Company
performance and assess strategic issues, additional
key performance indicators are taken into account
within the management system at Group level. In this
context, with effect from the beginning of the 2017
financial year, the pre-tax return on sales has been
introduced as a new indicator of earnings quality for
the BMW Group as a whole. Value added continues
to serve as an indicator for the contribution made
to enterprise value during the financial year. This
approach is made operational at both Group and
segment level through key financial and non-finan-
cial performance indicators (value drivers). The link
between value added and the relevant value drivers
is shown in simplified form in the following diagram.
Austria
Slovakia*
Hungary*
Romania*
Bulgaria*
Greece
39
10
Value added
40
Management
Report
General Information
and Group Profile
→ Management System
MANAGEMENT SYSTEM
The business management system applied by the
BMW Group follows a value-based approach, with a
clear focus on profitability, consistent growth, value
increase for capital providers and safeguarding jobs.
To ensure the desired degree of corporate autonomy,
the Company's available capital is to be profitably
employed. The prerequisite is that the amount of
profit generated sustainably exceeds the cost of the
Company's equity and debt capital.
The BMW Group's internal management system
is based on a multi-layered structure with varying ¬
BMW Group - value drivers
→ 14
Combined
BMW Group
2016
Cost of capital (equity + debt capital)
150
Palladium
100
Gold
Platinum
50
0
0
2013
2014
2015
2016
2017
2018
Energy and raw materials prices
The agreement reached between the Organisation
of Petroleum Exporting Countries (OPEC) and other
countries to cut back crude oil production proved
stable during the year under report and was extended
at the end of 2017. Against this backdrop, the price
of Brent crude oil per barrel rose from an average of
44 US dollars in 2016 to 54 US dollars in 2017.
The robust economy also boosted demand for precious
and non-ferrous metals in 2017. The average price of
raw materials relevant for the BMW Group increased
in part significantly by between 15 and 40% year-on-
year. On the production side, stricter environmental
regulations and severe weather events resulted in
reduced supply availability.
50
100
Earnings amount
Source: Reuters.
Price per barrel of Brent Crude
150
100
50
Source: Reuters.
Price in US Dollar
Price in €
2013
2014
Steel markets developed similarly, with prices for
the input materials iron ore and coking coal rising
again in 2017. In addition, both the USA and the EU
continued to apply protectionist measures on steel
products from various countries. At the same time, the
wave of consolidation in the steel industry continued.
2015
2017
2018
Precious metals price trend
→ 20
Index: December 2012 = 100
150
100
50
2016
Steel price trend
→ 21
Index: January 2013 = 100
Report on
Economic Position
→ General and Sector-
specific Environment
→ Overall Assessment
by Management
↑
Financial and Non-
financial Perfor-
mance Indicators
International interest rate environment and
development of pre-owned vehicle prices in the
premium segment
Report
The global economy gained momentum in 2017. Major
central banks supported this development with their
continued expansionary policy. Over the course of
the year, however, they also took measures partly to
tighten monetary policy.
High import costs brought about by the weakening
of the British pound since the Brexit decision caused
inflation in the UK to rise above its target of 2% over
the course of the year. In a bid to counteract this devel-
opment, the Bank of England decided in November
to raise its interest rate by 25 basis points to 0.5%.
During 2017, the US Federal Reserve continued the
process of normalising its monetary policy. In the
course of the year, it resolved on three occasions to
raise the benchmark interest rate, in each case by 0.25%
and to gradually reduce the size of its balance sheet.
After a strong performance in the first half of the
year, economic momentum in China dropped slightly
in the second half. At the same time, inflation rose
moderately, driven by rising raw material prices. After
repeated increases in money market interest rates,
the Chinese central bank decided against any further
tightening of its monetary policy in the second half
of the year.
The Japanese economy gained pace in 2017 and unem-
ployment fell to a 20-year low. As the inflation rate
remained well below the target of 2%, the Japanese
central bank decided to retain its highly expansionary
monetary policy.
In some European countries, in particular Germany
and the UK, diesel engines were often the subject of
political discussions in 2017. Pre-owned car markets
in the premium segment responded here with price
declines for diesel vehicles. In mainland Europe,
prices for petrol vehicles remained stable or even
rose slightly, resulting in stable price levels overall.
In the UK a similar effect was seen for pre-owned
diesel and petrol vehicles, however the overall market
for pre-owned premium vehicles was slightly down on
previous years. Prices for pre-owned vehicles were also
slightly down in North America. Markets in Asia have
so far been unaffected by discussions about types of
engine. Prices in this region were stable in 2017 and
even slightly up in China.
OVERALL ASSESSMENT
BY MANAGEMENT
Overall assessment of business performance
The ECB, on the other hand, continued its monetary
policy. In October, it announced it would halve the
volume of its bond purchases with effect from Janu-
ary 2018. This news was perceived by capital markets
as a sign of a less expansionary monetary policy rather
than a turnaround.
→ 19
Management
48
120
90
60
2013
2014
2015
2016
2017
Combined
Source: Working Group for the Iron and Metal Processing Industry.
International automobile markets
Registrations of passenger cars and light commercial
vehicles on international automobile markets grew by
1.9% to 87.7 million units in 2017. The overall positive
trend from the previous year therefore continued,
albeit at a less dynamic pace. Momentum came pri-
marily from Europe (15.6 million units; +3.3%) and
China (24.7 million units; +2.4%). By contrast, regis-
trations in the USA fell by 1.8% to 17.2 million units.
In Europe, Italy (2.0 million units; +8.0%) and Spain
(1.2 million units; +7.7%) recorded robust growth.
French and German markets both performed better
than one year earlier, recording increases of 4.8%
to 2.1 million units and 2.7% to 3.4 million units
respectively. The UK automobile market was domi-
nated during the year under report by uncertainty
regarding the Brexit negotiations, causing the number
of registrations to drop by 5.7% to 2.5 million units.
Japan saw a turnaround on the domestic automobile
market in 2017, with new registrations rising signifi-
cantly by 5.5% to 5.0 million units.
Automobile markets in major emerging economies
came out of recession in much stronger health in 2017.
Russia saw a 16.1% increase to 1.5 million units, while
registrations in Brazil grew by 9.9% to 1.9 million units.
International motorcycle markets
Motorcycle markets in the 250 cc plus class developed
inconsistently in 2017. Worldwide, motorcycle registra-
tions were slightly down on the previous year (-1.5%).
Motorcycle registrations in Europe increased by 1.8%.
However, declining markets in Germany (-12.9%) and
the UK (-2.1%) had a dampening effect on the overall
performance. By contrast, increases were recorded
for Spain (+3.8%) and France (+6.6%). A particularly
strong rise of 14.3% was registered in Italy. The abso-
lute number of new registrations in Italy was therefore
higher than in Germany for the first time since 2012.
The US market fell short of the previous year's level
for the second year in succession (-5.4%).
47
2018
Oil price trend
150
→ General and Sector-
Management
Report
Report on
Economic Position
→ General and Sector-
specific Environment
REPORT
ON ECONOMIC
POSITION
Best-ever sales volume for
automobiles and motorcycles
€10,655 million
7 +10.2%
Group profit up
significantly
GENERAL AND
SECTOR-SPECIFIC
ENVIRONMENT
General economic environment
Compared to the previous year, the global economy
improved noticeably during the period under report
with a growth rate of 3.7%. The economic upturn
extended to all regions of the world, regardless of
political uncertainties. The Chinese economy also
grew at a faster rate.
The eurozone recorded its fourth consecutive year of
growth in 2017. At 2.5%, the region even registered
its biggest increase in gross domestic product (GDP)
since the financial crisis. With economic output up in
Germany (+2.2%), France (+1.9%), Italy (+1.5%) and
Spain (+3.1%), GDP growth within the eurozone was
broadly based. The favourable order-book levels of
industrial companies, rising exports and an increased
willingness to invest contributed to this positive
development. This led, amongst others, to a drop in
unemployment from recent high levels to their low-
est level for several years. Despite rising government
spending, the debt ratio for the 19 eurozone countries
dropped slightly to 88% of GDP.
In the United Kingdom, uncertainty regarding the
country's future relations with the EU continued to
dominate. Previously favourable consumer sentiment
within private households subsided perceptibly and
the public sector was able to make only a moderate
contribution to economic growth. As a consequence,
economic growth slowed for the third time in succes-
sion to stand at 1.8%. The situation was aggravated by
the Bank of England's raising interest rates in order
to dampen price inflation. The weak pound, on the
other hand, caused exports to pick up significantly
during the period under report and restricted import
growth, resulting in a lower current account deficit.
Combined
44
specific Environment
For all project decisions, the project criteria and
long-term periodic results impact are measured and
incorporated in the long-term Group forecast. This
approach enables an analysis of the impact of pro-
ject decisions on periodic earnings and profitability
over the term of each project. The overall result is a
cohesive management model.
Value added Group
2017
2016
2017
2016
2017
2016
10,958
Economic output in the USA continued to expand
at a robust rate of 2.3% in 2017. Private domestic
demand, boosted in part by low unemployment, was
a key source of momentum for the economy. Exports
and industrial production also grew strongly. In light
of these factors, the US Federal Reserve raised interest
rates further over the course of the year and changed
its reinvestment policy for securities.
10,000
6,407
4,115
3,593
Capital employed comprises the average amount of
Group equity employed during the year as a whole,
the financial liabilities of the Automotive and Motor-
cycles segments, and pension provisions. The earnings
amount corresponds to Group profit before tax, adjust-
ed for interest expense incurred in conjunction with
the pension provision and on the financial liabilities of
the Automotive and Motorcycles segments (earnings
before interest expense and taxes). The cost of capital
is the minimum rate of return expected by capital
providers in return for the capital employed. Since
capital employed comprises an equity capital (e.g.
share capital) and a debt capital element (e.g. bonds),
the overall cost of capital rate is determined on the
basis of the weighted average rates for equity and debt
capital, measured using standard market procedures.
The pre-tax average weighted cost of capital for the
BMW Group in 2017 was 12%, unchanged from the
previous year.
Value-based project management
Operational business in the Automotive and Motor-
cycles segments is largely shaped by its life-cycle-
dependent project character. Projects have a substantial
influence on future business performance. Project
decisions are therefore a crucial component of financial
management in the BMW Group.
Project decisions are based on calculations derived
from the expected cash flows of the individual project.
Calculations are made for the full term of a project,
incorporating future years in which the project is
expected to generate cash flows. Project decisions
are taken on the basis of net present value and the
internal rate of return calculated for the project.
The net present value of a project indicates the extent
to which a project will be able to generate a positive
contribution to earnings over and above the cost of
capital. A project with a positive net present value
enhances value added and therefore results in an
increase in enterprise value. The internal rate of return
of the project corresponds to the average return on
capital employed in the project. It is equivalent to the
multi-year average RoCE for an individual project. It is
therefore consistent with one of the key performance
indicators.
6,843
China's GDP grew by 6.9% in 2017, driven by further
year-on-year growth in industrial production. Demand
from private households remained at a similarly high
level to previous years. However, rising levels of debt
within the private sector prompted the central bank to
tighten monetary policy. As a result, the increase in the
price of real estate in China's largest cities was halved.
43
Solid GDP growth was also registered for emerging
markets overall. Russia (+1.5%) and Brazil (+0.9%)
both returned to growth. The upswing in Russia
was broadly based, with private demand picking
up noticeably and both investment and industrial
production also recovering. By contrast, economic
growth in Brazil was able to gain only moderate
momentum. Although industrial production rose
moderately, domestic consumer spending remained
flat and investment spending even fell for the fourth
year in succession.
British Pound
Chinese Renminbi
US Dollar
100
50
50
2013
2014
2016
Japanese Yen
2017
Source: Reuters.
46
Combined
Management
Report
Report on
Economic Position
At 1.7%, the Japanese economy grew far more dy-
namically in 2017 than in previous years. Consumer
spending and demand for capital goods increased,
in part substantially. Exports also increased strongly
due to the weak yen. Industrial production grew at
the fastest rate since 2010.
2018
45
2015
The Chinese renminbi again lost value year-on-year,
with an average exchange rate of 7.63 renminbi to the
euro for the period. The Japanese yen fell by about
5% in 2017. The average exchange rate for the year
was 127 yen to the euro.
45
7
Currency markets
The US dollar/euro exchange rate fluctuated between
1.04 and 1.20 US dollars to the euro during 2017 and
weakened slightly on average to 1.13 US dollars to the
euro. As announced, the US Federal Reserve raised its
benchmark interest rates during the year under report,
thus continuing on its less expansionary monetary
course. The ECB reduced the volume of its purchases
of securities during the same period.
Fluctuations in the value of the British pound currently
also reflect political uncertainty. At the beginning of
2017, the pound was able to regain some ground. With
new elections resulting in a minority government,
doubts emerged regarding the United Kingdom's
future political course and its economic performance.
The value of the British currency fell from 0.84 to an
interim rate of 0.93 pounds to the euro, ending the
year with an average rate of 0.88 pounds to the euro.
By contrast, the currencies of major emerging econ-
omies rose in value during the reporting period. The
Russian rouble and the Brazilian real gained some
12% and 7% respectively against the euro. The Indian
rupee appreciated by just 1% against the euro.
Exchange rates compared to the euro
After a relatively weak first half of 2017 in India, due
to the impact of the switch to new banknotes, the
economy experienced a turnaround during the second
half of the year. Over the year as a whole, the Indian
economy recorded a 6.6% increase in GDP.
Index: December 2012= 100
→ 18
250
200
150
100
Russian Rouble
250
200
150
International production network
Economic Position
Review of Operations
→ Automotive Segment
By expanding its international production network,
the BMW Group follows global market developments
with the aim of ensuring a balanced distribution of
added value.
Report on
In May 2017, a new paint shop was commissioned at
the BMW Group Munich plant. The facility is not only
highly efficient, it also sets new standards for sustain-
able production. The consumption of electricity, gas
and water, as well as the production of waste air, have
been significantly reduced.
56
25 years ago the BMW Group announced its decision
to build a plant in the USA, in Spartanburg, South
Carolina. Marking that anniversary, the first third-
generation BMW X3 came off the production line
in 2017. More than four million vehicles have been
produced at the plant to date.
99
Combined
Management
Report
In San Luis Potosí (Mexico), preparations for con-
structing the new plant are progressing according to
plan. In 2017, the new training centre was opened in
the first of the buildings to be completed at the plant,
which is due to become operational in 2019.
In 2017, the BMW Group plants in Dingolfing and
Landshut celebrated their 50th anniversary. The two
locations play a key role within the BMW Group as
competence centres for the future technologies light-
weight construction and electric mobility. Dingolfing
and Landshut are the Group's plants for electric drive-
trains. Battery production and the BMW Group's new
lightweight and engineering centre are also located
there.
In 2017, production of the new Rolls-Royce Phantom
began at the Rolls-Royce manufacturing plant in
Goodwood (UK). Important construction work was
also carried out at the site during the reporting period.
In order to accommodate future models, Rolls-Royce
Motor Cars is investing in a new single-line production
system at the plant. Furthermore, the technology and
logistics centre in Bognor Regis near Goodwood was
expanded in 2017.
In Rosslyn (South Africa), preparations are currently
underway for producing the next generation of the
BMW X3. The necessary expansion and modification
measures are being carried out during the ongoing
production of the BMW 3 Series.
In Shenyang (China), the two plants of the joint
venture BMW Brilliance Automotive Ltd. (BBA) in
Dadong and Tiexi produced over 396,000 units of five
BMW models, setting a new record in the process. The
new large-scale northern extension at the Dadong
plant was opened in 2017. During the opening cer-
emony, the first extended-wheelbase version of the
new BMW 5 Series Sedan rolled off the production
line. As a result of the expansion, space has been
created at the plant to add a sixth BMW model to the
line-up, the new BMW X3. BBA also opened the High
Voltage Battery Centre in Tiexi during the year under
report. This will also supply batteries to the Dadong
plant, where the BMW 5 Series plug-in hybrid will
be produced for the local market from 2018 onwards.
57
52
Production competence in Germany
The German plants play a leading role within the
Group's international network. For the seventh
year
in succession, the BMW Group produced over one
million vehicles at its German plants in Munich,
Dingolfing, Regensburg and Leipzig.
At the end of 2017, production of the BMW X2 started
at the BMW Group plant in Regensburg. At the highly
flexible Regensburg plant eight models are produced
on a single production line.
55
In Europe, the British production cluster compris-
ing the plant in Oxford, the engine plant at Hams
Hall and the pressing plant in Swindon forms part
of the BMW Group's production network. The
MINI Hatch and the MINI Clubman are produced in
Oxford. In order to keep pace with forecast growth,
the MINI Hatch, the MINI Convertible and the
MINI Countryman are also produced under contract
for the BMW Group at the automobile manufacturer
VDL Nedcar bv, Born, the Netherlands. In total,
MINI production increased by 7.4% year-on-year to
378,486 units.
55
Profit before tax: significant increase
success.
The BMW Group profited among other things from
strong volume growth in the Automotive and Motor-
cycles segments. The significantly higher financial
result also played an important role. This included a
substantial contribution from the result from equity
accounted investments, which grew as a result of
improved performance of the joint venture BMW
Brilliance Automotive Ltd., Shenyang, as well as
valuation effects arising from the participation of new
investors in the HERE mapping service. Furthermore,
commodity derivatives gave rise to further positive
valuation effects in other financial result, particularly
in the final quarter of the year.
The BMW Group's Leipzig plant put into operation
a battery storage farm, demonstrating how batteries
can be both sustainably and profitably reused after
vehicles reach the end of their life cycle. Using on-site
wind turbines, the BMW Group as a major industrial
consumer combines its own decentralised renewable
energy generation with local energy storage. The plant
reached further milestones with the production of the
100,000th BMW i3 and the 15,000th BMW i8 during
the year under report.
Group profit before tax increased significantly year-
on-year by 10.2% to €10,655 million and therefore
surpassed expectations (2016: €9,665 million). In
the Quarterly Report to 30 September 2017, the
BMW Group predicted a solid increase in Group
profit before tax. In the Annual Report 2016, a slight
increase had been foreseen.
Group
The following section provides information on the key
financial and non-financial performance indicators for
the Group and segments. They are used as the basis for
internal management of the BMW Group. As part of
the analysis of operations and the financial condition
of the BMW Group, forecasts made the previous year
for the financial year 2017 are compared with the
actual business development in 2017.
FINANCIAL PERFORMANCE
INDICATORS
FINANCIAL AND NON-
-6.1
2.0
168,969
87,609
92.9
6.7
38,064
2,505,741
32,256
18.0
1.5
2,359,756
6.2
100.0
The BMW Group's leading production system is well
positioned for the future with its unique flexibility.
In line with the Strategy NUMBER ONE > NEXT, the
system is characterised in particular by efficiency
and robust processes. Production competence thus
provides a crucial competitive edge and contributes
to the BMW Group's profitability and sustained
Flexibility, quality and adaptability are key character-
istics of the Group's production system. Its flexibility
enables the BMW Group to respond rapidly to chang-
ing market situations and fluctuations in regional
sales volumes by adapting its production plans.
Digitalisation, standardised modules and intelligent
composite construction demonstrate the competence
of the Group's production network. At the same time,
the production system offers customers a high degree
of customisation.
The BMW Group Eisenach plant celebrated its 25th
anniversary in 2017. Apart from its toolmaking exper-
tise, the Eisenach plant has specialised in recent years
in the production of almost all sheet metal, aluminium
and stainless steel outer body parts for the Rolls-Royce
plant in Goodwood (UK).
50,272
The engine plants in Munich, Hams Hall (UK) and
Steyr (Austria) supply diesel and petrol engines
for the worldwide network. The Shenyang (China)
engine plant supplies local production facilities. The
BMW Group's largest engine plant in Steyr has pro-
duced engines for 35 years. In 2017, the 20 millionth
engine came off the production line.
2013
2014
2015
2016
2017
* Excluding Husqvarna, sales volume up to 5 March 2013: 59,776 units.
BMW Group - key motorcycle markets 2017
→ 31
as a percentage of sales volume
115.2
16.2 Germany
Other 44.1
Motorcycles production significantly expanded
A total of 185,682 motorcycles rolled off production
lines during the year under report (2016:
145,555 units; +27.6%). The significant increase
in output was mainly driven by high demand
and the start of production by the Indian partner,
TVS Motor Company Limited. Expansion work at the
BMW Group plant in Berlin was largely completed
during the reporting period and will be finalised in
2018. The latest measures will create the capacities
required to achieve planned growth.
R nineT family now complete
BMW Motorrad completed the R nineT product family
line-up in 2017 with the launch of the R nineT Pure,
R nineT Racer and R nineT Urban G/S models. In
August 2017, the K 1600 B was introduced to keep up
with demand on the US motorcycle market. It will be
followed in March 2018 by the K 1600 Grand America,
which was presented at the EICMA motorcycle trade
show. All in all, BMW Motorrad launched six new
motorcycle models and five model revisions during
the period under report.
8.8 Italy
8.3 USA
UK 5.7
6.8 Spain
Workforce at year-end: slight increase
10.1 France
123.5
137.0
145.0
Drivetrain production for electrified vehicles is spread
over various locations within the production network.
The technologies used in making electric drivetrain
components are developed at the Prototype Con-
struction Centre in Munich. As competence centres,
Dingolfing and Landshut take a leading role in the
production of electric drivetrain systems. Electric
motors for the BMW Group's electrified vehicles are
also produced at these plants. The batteries required
are produced at the three battery factories in Din-
golfing, Spartanburg and Shenyang. The battery
factory in Shenyang was opened in 2017. At the end
of 2017, the foundation stone was laid in Munich for
a battery cell competence centre, which is scheduled
for completion by the beginning of 2019. The aim is
to continue developing battery cell technology.
58
Combined
Management
Report
Report on
Economic Position
Review of Operations
→ Motorcycles
Segment
→Financial Services
Segment
Motorcycles Segment
BMW Motorrad grows significantly
In 2017, the Motorcycles segment profited amongst
others from the launch of numerous attractive new
models and model revisions. Deliveries of BMW
motorcycles worldwide were significantly higher than
the previous year, rising by 13.2% to 164,153 units
(2016: 145,032 units). The segment thus surpassed
the 150,000-unit mark for the first time, setting a new
sales volume record for a financial year.
Dynamic growth in Europe
Motorcycle sales in Europe grew strongly in
2017, exceeding 100,000 units for the first time.
BMW Motorrad delivered a total of 101,524 units to
customers (2016: 87,983 units; +15.4%). In Germany,
sales volume was up by 7.1% to 26,664 units (2016:
24,894 units), despite a contracting motorcycles
market. Sales growth in Italy (14,430 units, 2016:
12,300 units; +17.3%) and Spain (11,193 units, 2016:
9,520 units; 17.6%) was even in the double digits.
Sales in France were particularly strong, with
deliveries up by almost one-quarter to 16,607 units
(2016: 13,350 units; +24.4%). In the USA sales at
13,546 units fell just short of the previous year's
level (2016: 13,730 units; -1.3%) in a difficult mar-
ket environment. However, the market recorded
an upturn in the fourth quarter (3,346 units; 2016:
2,782 units; +20.3%).
BMW Group deliveries of motorcycles*
→ 30
in 1,000 units
180
-90
164.2
Worldwide network for drivetrain production
The BMW Group workforce consisted of 129,932 employ-
ees at the end of the reporting period (31 Decem-
ber 2016: 124,729 employees; +4.2%). Projects relating
to the electrification of vehicles, autonomous driving
and the new model offensive played a major role in
the workforce increase. Growth in automobile and
motorcycle business and the expansion of financial
and mobility services also contributed to the higher
head count.
53,528
joint venture
339,769
376,580
Proportion of
production in %
Change in %
2016
2017
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 396,749 units, 2016: 305,833 units).
2 Joint Venture BMW Brilliance Automotive Ltd., Shenyang.
3 Contract production.
Partner plants (Jakarta, Cairo, Kaliningrad, Kulim)
Group
Born (VDL Nedcar)³
Graz (Magna Steyr)³
Goodwood
Chennai
Araquari
Rayong
Rosslyn
Oxford
Dadong²
Tiexi²
Munich
Leipzig
Regensburg
Spartanburg
Dingolfing
10.8
in units
15.0
411,171
223,817
5.1
-11.4
143,825
127,440
10.8
66.3
161,901
269,309
7.9
-9.4
216,769
196,455
9.8
-0.2
246,550
246,043
13.5
-2.3
346,291
338,259
14.8
-9.7
371,316
210,971
→ 29
BMW, MINI and Rolls-Royce brand vehicles manu-
factured (2016: 2,359,756¹ units; +6.2%), comprising
2,123,9471 BMW (2016: 2,002,997¹ units; +6.0%),
378,486 MINI (2016: 352,580 units; +7.3%) and 3,308
Rolls-Royce brand vehicles (2016: 4,179 units; - 20.8%).
Rolls-Royce total
-17.1
2,447
2,029
Wraith/Dawn
-6.6
1,175
1,098
Ghost
-39.6
389
235
Change in %
2016
2017
Phantom
in units
→ 27
Deliveries of Rolls-Royce vehicles
by model variant
Rolls-Royce affected by political uncertainties
Sales volume development at Rolls-Royce Motor Cars
in 2017 was influenced primarily by ongoing political
uncertainties in the Middle East and unfavourable
market conditions in the USA. Moreover, the top-of-
the-range model, the Phantom, was no longer fully
available. Deliveries of the successor model began in
January 2018 (Rolls-Royce Phantom: fuel consumption
in l/100 km (combined) 13.9//CO2 emissions in g/km
(combined) 318-319). In 2017, Rolls-Royce Motor Cars
delivered 3,362 vehicles to customers worldwide (2016:
4,011 units; -16.2%).
100.0
3.2
360,233
3,362
Vehicle production of the BMW Group by plant
4,011
With a total of 103,080 BMW i, BMW iPerformance and
MINI Electric vehicles, deliveries of electrified vehicles
to customers were approximately two-thirds up on the
previous year (2016: 62,255 units; +65.6%). BMW i and
BMW iPerformance deliveries grew by more than one-
half to 97,281 vehicles (2016: 62,255 units; +56.3%).
The BMW i3 (BMW i3 (94 Ah) with fully electric eDrive:
electric power consumption in kWh/100 km (com-
bined) 13.6-13.1//CO2 emissions in g/km (combined) 0)
continued to be in high demand, with deliveries to
customers rising by well over a fifth to 31,482 vehicles
(2016: 25,528 units; +23.3%). A significant contribution
came from the sporty version, the BMW i3s, which
was launched in summer 2017 (BMW i3s (94 Ah) with
fully electric eDrive: electric power consumption in
kWh/100 km (combined) 14.3//CO2 emissions in g/km
(combined) 0). Deliveries of BMW plug-in hybrid mod-
els sold under the iPerformance brand almost doubled
to 63,605 units (2016: 32,975 units; +92.9%). Between
launch in June 2017 and the end of the year under
report, 5,799 units of the MINI Electric were delivered
In 2017, strong customer demand and new model
launches resulted in high capacity utilisation across
the BMW Group production network. New production
records were set in 2017, with a total of 2,505,741¹ 7
High capacity utilisation across production
network
65.6
62,255
103,080
5,799
92.9
32,975
63,605
BMW iPerformance
MINI Electric
Total
15.0
29,280
33,676
BMWi
Change in %
2016
2017
in units
→ 28
Deliveries of electrified models
The BMW Group achieved its target of delivering more
than 100,000 electrified vehicles in 2017, underlining
its position as a worldwide market leader in terms
of combined sales of all-electric and plug-in hybrid
vehicles and market leader in Europe.
For the first time, more than 100,000 electrified
vehicles sold
to customers.
-16.2
371,881
6.1
19
As predicted in the Annual Report 2016, the return
on equity of the Financial Services segment was lower
than one year earlier, at 18.1% (2016: 21.2%; -3.1 per-
centage points). The slight decrease mainly reflected
the impact of more stringent regulatory requirements
for equity capital. Nevertheless, the internal RoE tar-
get of at least 18% was once more achieved.
The key performance indicators of the BMW Group
and its segments can be summarised as below:
BMW Group comparison of 2017 forecasts with actual outcomes 2017
→ 22
Forecast for 2017
in 2016 Annual Report
Forecast revision
during the year
Actual outcome
in 2017
GROUP
Profit before tax
slight increase
Q3: solid increase
€ million
Workforce at year-end
slight increase
10,655 (+10.2%)
129,932 (+4.2%)
AUTOMOTIVE SEGMENT
Deliveries to customers'
slight increase
units
Fleet emissions²
Revenues
Return on equity: slight decrease
EBIT margin
Financial Services segment
The return on capital employed (ROCE) of the Motorcy-
cles segment increased slightly by 1.0 percentage point
to 34.0% (2016: 33.0%), mainly reflecting effective
working capital management and the improvement
in earnings.
As foreseen in the outlook for the financial year 2017,
Automotive segment sales volumes increased slightly
and were therefore in line with expectations.
Fleet carbon dioxide (CO2) emissions²:
slight decrease
The fleet-wide deployment of Efficient Dynamics
technologies and the increasing proportion of
electrified automobiles are effectively reducing
vehicle CO2 emissions. CO2 emissions from the vehi-
cle fleet sold in Europe (EU-28) decreased slightly
in the year under report to 122 g CO2/km (2016:
124 g CO2/km; −1.6%).
As foreseen in the outlook for the full year 2017, fleet
carbon emissions fell slightly and were therefore in
line with forecast.
49
50
Combined
Management
Report
Report on
Economic Position
→ Financial and Non-
financial Perfor-
mance Indicators
Revenues: slight increase
Automotive segment revenues rose by 2.5% in 2017 to
a new high level of €88,581 million and were therefore
slightly up on the previous year (2016: €86,424 million).
The favourable translation effects on foreign currencies,
which led to an upward revision of the outlook for
revenues at the end of the first half-year, could not
be realised, as reported in the Quarterly Report to
30 September 2017.
The forecast of a slight rise in Automotive segment
revenues made in the Annual Report 2016 was there-
fore confirmed.
EBIT margin in target range of between 8 and 10%
The EBIT margin in the Automotive segment (profit
before financial result divided by revenues) came in
unchanged at 8.9% compared to the previous year. As
foreseen for the financial year 2017, the EBIT margin
in the Automotive segment was therefore within the
target range of between 8 and 10% and in line with
expectations.
Return on capital employed: slight increase
The return on capital employed (ROCE) increased to
78.6% (2016: 74.3%; +4.3 percentage points), reflect-
ing the improvement in capital employed and the
positive segment earnings development, which was
better than expected. Higher deferred income from
Connected Drive and service contracts also had an
impact.
The outlook for RoCE, which had already been raised
in the Quarterly Report to 30 June 2017 from a slight
decrease to in line with last year's level was once more
exceeded. The RoCE of the Automotive segment in
2017 was therefore once again well above the mini-
mum target of 26%.
Motorcycles segment
Deliveries to customers: significant increase
The Motorcycles segment reported significant growth
in 2017, with deliveries to customers rising by 13.2% to
164,153 units (2016: 145,032 units). This performance
not only set a new record, it also took the single-year
sales volume figure above the 150,000 mark for the
first time.
As foreseen in the outlook for the financial year 2017,
Motorcycles segment sales volumes increased signif-
icantly and were therefore in line with expectations.
EBIT margin in target range of between 8 and 10%
The EBIT margin in the Motorcycles segment (profit
before financial result divided by revenues) came in at
9.1% (2016: 9.0%; +0.1 percentage point). As foreseen
for the financial year 2017, the EBIT margin was within
the target range of between 8 and 10% and therefore
in line with expectations.
Return on capital employed: slight increase
The outlook for RoCE, which had been raised in the
Quarterly Report to 30 June 2017 from in line with
last year's level to a slight increase, was achieved. In
the Annual Report 2016, RoCE in line with last year's
level had been foreseen.
8.9
Return on capital employed
g CO2/km
Q2: slight increase
%
34.0 (+1.0%pts)
FINANCIAL SERVICES SEGMENT
Return on equity
-20.8
4,179
3,308
0.4
4.5
8,568
8,952
0.5
-17.1
15,408
12,768
0.9
18.2
17,844
21,084
2.1
-15.9
63,117
53,105
in line with last year's level
slight decrease
9.1 (+0.1%pts)
target range
between 8 and 10
2,463,526 (+4.1%)
122(-1.6%)
slight increase
Q2: solid increase
Q3: slight increase
€ million
88,581 (+2.5%)
target range
between 8 and 10
%
8.9 (-)
Q2: in line with
slight decrease
last year's level
%
78.6 (+4.3%pts)
MOTORCYCLES SEGMENT
Deliveries to customers
EBIT margin
0.1
Return on capital employed
51
555
significant increase
units
164,153 (+13.2%)
%
Sales of the core BMW brand increased slightly by
4.2% to 2,088,283¹ units in the year under report
(2016: 2,003,359¹ units). MINI also recorded slight
growth, with deliveries up by 3.2% to 371,881 units
(2016: 360,233 units). Rolls-Royce Motor Cars sold
3,362 units (2016: 4,011 units; -16.2%).
22.8
68,301
464.1
516.8
595.0
thereof China*
578.7
658.4
685.8
747.3
848.8
Asia*
376.6
397.0
405.7
366.5
353.8
thereof USA
463.8
482.3
495.9
460.4
451.1
189.1
205.1
456.7
231.0
391.7
61.8
Change in %
2016
2017
in units
→ 25
Deliveries of BMW vehicles by model variant*
53
Demand for the BMW X family was strong in 2017,
with worldwide sales up by 9.6% to 706,741 units
(2016: 644,992 units). Growth was particularly signifi-
cant for the BMW X1 with sales up by almost one-third
to 286,743 units (2016: 220,378 units; +30.1%). The
BMW X3 model change did not take place until
November 2017, which resulted in sales falling short
of the previous year's high figure (146,395 units; 2016:
157,017 units; - 6.8%). Deliveries of the BMW X5 rose
solidly to 180,905 units (2016: 166,219 units; +8.8%).
up on the previous year (2016: 331,410 units; +4.8%),
with an 11.7% increase in the second half of 2017.
Customers took delivery of 64,311 units of the
BMW 7 Series worldwide (2016: 61,514 units; +4.5%).
Sales of the BMW 1 Series rose significantly by 14.7% to
201,968 units (2016: 176,032 units). By contrast, deliv-
eries of the BMW 2 Series were down year-on-year to
181,113 units (2016: 196,183 units; -7.7%). Sales of the
BMW 3 Series at 409,005 units were close to the
pre-
vious year's level (2016: 411,844 units; -0.7%). Deliv-
eries of the new BMW 5 Series at 347,313 units were 7
In 2017, the number of BMW brand vehicles deliv-
ered to customers worldwide grew slightly by 4.2%
to 2,088,283 units (2016: 2,003,359), thereby setting
a new deliveries record. Major contributions came
from the BMW 1 Series, the new BMW 5 Series, the
BMW 7 Series, the BMW X1, the BMW X5 and BMW i.
BMW* brand sales at record level
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 384,124 units, 2016: 316,200 units, 2015: 282,000 units, 2014: 275,891 units, 2013: 198,542 units).
1,963.8
2,118.0
2,247.5
2,367.6
2,463.5
Total*
61.8
62.7
65.4
67.7
Other markets
Proportion of
BMW sales volume
2017 in %
252.2
259.2
The BMW Group reported further significant sales
volume growth on Asian markets in 2017. In total,
it sold 848,826* BMW, MINI and Rolls-Royce brand
vehicles, achieving a double-digit increase of 13.6%
(2016: 747,291* units). The Chinese market made
an important contribution to this performance
with 595,020* units delivered to customers (2016:
516,785* units; +15.1 %).
Dynamic growth in Asia, volatility on European
and US markets
as a percentage of deliveries
→ 23
BMW Group - key automobile markets 2017
The highly competitive market environment on the
American continent dampened the Group's sales per-
formance, particularly during the first nine months
of 2017. Deliveries fell by 2.0% to 451,136 units
(2016: 460,398 units). Sales in the USA fell slightly
by 3.5% to 353,819 units (2016: 366,493 units). In the
fourth quarter of 2017, however, a turnaround was
perceptible in both the USA (98,137 units; fourth
quarter 2016: 96,609 units; +1.6%) and on the conti-
nent as a whole (124,547 units; fourth quarter 2016:
122,393 units; +1.8%).
of its three brands, matching the previous year's high
figure (2016: 1,092,155 units; +0.9%). In Germany,
deliveries to customers fell slightly year-on-year to
295,805 units (2016: 298,928 units; -1.0%). In the UK,
sales volume at 241,674 units was also down on the
previous year (2016: 252,205 units; -4.2%).
The BMW Group sold 2,463,526* BMW, MINI and
Rolls-Royce brand vehicles worldwide in 2017, thereby
setting a new record for the seventh year in succession
(2016: 2,367,603* units; +4.1%). BMW brand sales
increased slightly by 4.2% to 2,088,283* units (2016:
2,003,359* units). The number of MINI brand vehicles
sold also grew slightly by 3.2% to 371,881 units (2016:
360,233 units). Rolls-Royce Motor Cars delivered 3,362
limousines to its customers during the period under
report (2016: 4,011 units; -16.2%). A new all-time
high was thus not only recorded at Group level, but
also for the BMW and MINI brands.
Deliveries up slightly to new record level
Automotive Segment
REVIEW OF OPERATIONS
→ Automotive Segment
→ Review of Operations
Economic Position
Report on
slight decrease
Combined
Management
Report
52
52
18.1 (-3.1%pts)
%
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 384,124 units).
2 EU-28.
As foreseen in the outlook for the financial year
2017, there was a slight increase in the size of the
BMW Group's workforce, which was thus in line with
expectations.
Within Europe, the diesel debate in Germany and the
UK and uncertainty surrounding the Brexit negoti-
ations weighed on the generally positive deliveries
trend. The BMW Group sold a total of 1,101,760 units
241.7
Other 29.2
→ 24
272.3
286.1
298.9
295.8
859.5
914.6
1,000.4
1,092.2
1,101.8
Americas
thereof UK
thereof Germany
Europe
2013
2014
2015
2016
2017
12.0 Germany
14.4 USA
Japan 3.2
Italy 3.5
France 3.7
UK 9.8
24.2 China
in 1,000 units
BMW Group deliveries of vehicles by region and market
24.3
BMW 1 Series
176,032
Economic Position
Review of Operations
→ Automotive Segment
Report on
Combined
Management
Report
54
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 384,124 units, 2016: 316,200 units).
100.0
4.2
2,003,359
2,088,283
BMW total
1.6
15.0
29,280
33,676
BMW i
0.1
-73.9
5,432
1,416
BMW Z4
1.9
-6.4
43,323
Increased deliveries at MINI
40,531
The MINI brand also set a new sales volume record
in 2017, with worldwide deliveries up by 3.2%
to 371,881 units (2016: 360,233 units). The new
MINI Countryman made an important contribution,
with growth of almost one-quarter (84,888 units; 2016: ¬
Deliveries of MINI vehicles by model variant
→ 26
84,888
16.0
-6.2
63,509
59,572
9.0
11.0
30,050
52.2
-2.2
198,373
194,070
2017 in %
Change in %
2016
2017
Proportion of
MINI sales volume
MINI total
MINI Countryman/Paceman
MINI Clubman
MINI Convertible
MINI Hatch (3- and 5-door)
in units
68,301 units; + 24.3%). The Convertible also remained
successful in 2017 with 33,351 units sold (2016:
30,050 units; +11.0%). The MINI Hatch (3- and 5-door
models) fell slightly short of the previous year's level
with 194,070 units sold (2016: 198,373 units; -2.2%).
201,968
BMW X6
88
BMW 6 Series
16.6
4.8
331,410
347,313
BMW 5 Series
6.3
-1.2
133,272
131,688
19.6
-0.7
411,844
409,005
BMW 4 Series
BMW 3 Series
8.7
-7.7
196,183
181,113
BMW 2 Series
9.7
14.7
11,052
8.7
13,400
0.5
166,219
180,905
BMW X5
2.5
-10.1
58,055
52,167
BMW X4
7.0
-6.8
157,017
146,395
BMW X3
13.7
30.1
220,378
286,743
BMW X1
3.1
4.5
61,514
64,311
BMW 7 Series
-17.5
2 EU-28.
33,351
Automotive Ltd.,
BMW Brilliance
units, 2016:
316,200 units).
(2017: 384,124
Automotive segment
In 2017, the Automotive segment sold a record number
of vehicles for the seventh year in succession. Despite
growing political and economic uncertainties in the
international environment, deliveries to customers
* Including the increased slightly by 4.1% to a total of 2,463,5261
BMW, MINI and Rolls-Royce brand vehicles (2016:
2,367,603¹ units). Dynamic market conditions, par-
ticularly in Asia, had a positive impact on automobile
sales volumes. In Europe, sales volume remained at
the previous year's high level despite slightly lower
deliveries to customers in Germany and the UK. Sales
volume in the Americas region, however, was slightly
down on the previous year.
Deliveries to customers: slight increase
Shenyang
Through ChargeNow, the BMW Group provides easy
access to a constantly growing network of public
charging stations. With more than 130,000 charging
points in 29 countries, ChargeNow provides access
to the world's largest charging network. Customers
can locate the charging stations directly via the
ConnectedDrive navigation system integrated in the
vehicle, via the ChargeNow app or via the internet
99
65
In 2017, the MINI brand achieved its third record-
breaking year in succession for sales volume. The
successful market launch of the new Countryman
generation in the first quarter 2017 played a major
role in this performance. The second edition of the
popular Countryman range also went on sale as a
plug-in hybrid version in summer of 2017, making
it the first MINI plug-in hybrid in series production.
MINI reports another record year
A highlight of the year 2017 was the presentation
of the new Rolls-Royce Phantom in London in
July. With its Black Badge Edition, Rolls-Royce
Motor Cars is targeting new customer groups
in the super-luxury class. After launching the
Black Badge models Ghost and Wraith, the Dawn
Black Badge was added as a third version in 2017
(Rolls-Royce Ghost Black Badge: fuel consumption
in 1/100 km (combined) 14.6//CO₂ emissions in g/km
(combined) 333; Rolls-Royce Wraith Black Badge:
fuel consumption in 1/100 km (combined) 14.6//
CO2 emissions in g/km (combined) 333; Rolls-Royce
Dawn Black Badge: fuel consumption in 1/100 km
(combined) 14.7//CO2 emissions in g/km (com-
bined) 337).
The year 2017 was the strongest in the history of
BMW M GmbH for sales of M and M Performance
models. In view of growing demand in the high-perfor-
mance automobile segment, the dealership network is
being systematically enlarged. In 2017, the number of
BMW M certified dealerships grew to 850 worldwide,
representing a doubling in size over the last four years.
Record year for BMW M
Other markets are set to follow.
99
Growth in service business
During the period under report, the BMW brand reju-
venated its range with six new models and 15 model
revisions. The market launch of the seventh generation
of the BMW 5 Series played a significant role, with the
Sedan (in February), the extended-wheelbase version
for China and the Touring version (both in June). The
5 Series also includes iPerformance, M Performance
and M5 models. The new BMW 6 Series Gran Turismo
and the new X3 were launched in November. The model
initiative includes revised models of the BMW 1 Series,
2 Series and 4 Series. The revised BMW i3 and the new
BMW i3s came onto the market in autumn 2017.
On 1 December 2017, "ReachNow powered by
EvCard" was launched in Chengdu, China, offering
in cooperation with local partner EvCard a fleet of
100 BMW i3 vehicles for hire. The vehicles can be
picked up or returned at 25 central locations in the
urban area.
BMW rejuvenates model range
In February 2017, the BMW Group founded the
company "Digital Charging Solutions", which sells
access to the ChargeNow charging network, as well as
related services, also to third parties. Groupe PSA was
one of ChargeNow's first corporate customers during
the period under report. PSA will provide its electric
vehicle customers in France with charging access via
the network established by ChargeNow.
website.
ParkNow is the BMW Group's digital parking service.
It enables ticket-free, cashless parking via app, both
at roadside and in multi-storey car parks. In Janu-
ary 2018, the BMW Group acquired Parkmobile LLC,
the largest provider of mobile parking services in
North America. Parkmobile Group Europe, which
also owns ParkNow amongst its brands, has been
wholly owned by the BMW Group since April 2016.
In Europe and North America, Parkmobile reaches
over 22 million customers and offers digital parking
solutions in more than 1,000 towns and cities.
During the year under report, the BMW Group's
service business was strengthened by investment in
the future logistics network and by measures aimed
at ensuring a high level of customer satisfaction.
Digitalisation of offerings is playing a crucial role in
these developments. Business with spare parts has
also been expanded. The creation of the joint venture
Encory by the BMW Group and the ALBA Group in
September 2016, with additional offerings in reuse
of automotive spare parts, is making a valuable con-
tribution to the BMW Group's sustainability strategy.
A pilot project was initiated in Spain in mid-2017.
66
Report on
4,445
5,000
Change in %
31.12.2016
31.12.2017
→ 38
BMW Group apprentices at 31 December
In the context of digitalisation and technological
change, the BMW Group has initiated a strategic
realignment of its dual vocational training. As well
as promoting STEM subjects (science, technology,
engineering and mathematics), the focus is also
on introducing new digital forms of teaching and
learning. In this context, the BMW Group has initi-
ated the process of adapting existing career profiles
and introducing new ones across its national and
international training network. The total number
of apprentices and participants in development
programmes for young talent increased slightly to
4,750 (2016: 4,613; +3.0%).
Combined
Management
Report
Realignment of dual vocational training
BMW Group employees
The BMW Group's worldwide workforce increased
to a total of 129,932 employees at the end of the
reporting period (2016: 124,729 employees; +4.2%).
The increase mainly reflects the expansion of the
BMW Group's international production network.
Moreover, in conjunction with the implementation
of the Group's Strategy NUMBER ONE > NEXT, an
increasing number of experts in future-oriented fields
such as artificial intelligence and autonomous driving,
electric mobility, smart production and logistics, data
analysis and software development were hired.
Slight increase in workforce
→ www.bmwgroup.com/careers
Workforce
→ Workforce
Review of Operations
the USA.
→ 37
Economic Position
New Rolls-Royce Phantom presented
At 31 December 2017, the DriveNow premium car
sharing service had over one million customers in 13
major European cities. The percentage of electrically
powered vehicles in these fleets stands at around
15% and is due to increase. Since introduction of the
first electrified vehicles into the DriveNow fleet more
than 16 million kilometres with zero local emissions
have been driven. This corresponds to a CO₂ saving
of around 2,500 tonnes.
→ 36
Regional mix of BMW Group
purchase volumes 2017
The BMW Group remains committed to its strategy of
maintaining a regional balance with regard to growth
in sales volume, production and purchasing volumes.
The strategy makes an important contribution to nat-
ural hedging against currency fluctuations.
Connecting procurement markets
With its globally oriented organisation, the Purchasing
and Supplier Network ensures access to all necessary
external resources in an environment that remains
highly volatile. Activities include the procurement and
quality assurance of production materials, raw materi-
als, capital goods and services. External suppliers are
selected systematically on the basis of competitiveness
according to the criteria of quality, innovation, flex-
ibility and cost. More recently, activities have been
focused particularly on the ability to respond quickly
to changing demand for various types of drivetrain
technology.
Ensuring access to resources in a
volatile environment
Purchasing and Supplier Network
The joint project is examining every aspect of fast
charging in practice, with the aim of introducing
the required technologies on an industrial scale. The
overall system is to be implemented in prototypes and
presented to the public in the course of the current year.
In July 2016, under the leadership of the BMW Group,
the "FastCharge" project was begun together with
Allego GmbH, Phoenix Contact E-Mobility GmbH,
Dr. Ing. h.c. F. Porsche AG and Siemens AG. The aim
of the three-year project is to conduct research on
electric vehicles with far shorter charging times and
the required charging infrastructure. A further aim
is to demonstrate ways of implementing the findings
for everyday use.
Research project on fast charging technology
Lifestyle-related services allow the vehicle to be
integrated in the digital life of the user. For example,
third-party services such as entertainment, news or
music can be seamlessly and easily integrated.
Mobility-related services help users to reach their
destinations conveniently and as quickly as possible.
These services help users find the most pleasant route,
not only when in the vehicle, but also when nearby.
For example, drivers can use their smartphones to dis-
play the best time to begin their next journey. Parking
and charging options at the selected destination can
also be displayed via the vehicle's navigation system.
The vehicle-related services field is already extensive
and includes functions such as automatic climate con-
trol via smartphone or a 3D view of the vehicle from
a remote location. It also includes services such as
reminders of the next vehicle service appointment or
individual financial services. Going forward, services
for personalised vehicle settings will also be available,
so that each vehicle will automatically adapt to the
current user and situation.
The customer is the central focus of the Group's per-
sonalised digital services. The range is divided into
four fields: vehicle-related services, lifestyle-related
services, mobility-related services and the integration
of digital assistants.
Connectivity and digital services expanded
At the BMW Innovation Days 2017, the BMW Group
presented the current level of progress and the latest
developments with regard to integrating vehicles in
the customer's digital world. In the context of digitali-
sation, connectivity is a key pillar in the BMW Group's
strategy for the future, NUMBER ONE > NEXT. Today,
around 10 million BMW Group vehicles are already
connected worldwide through Connected Drive.
Review of Operations
→Research and
Development
Purchasing and
Supplier Network
Economic Position
Report on
Management
Report
in %, basis: production material
Asia 7.7
NAFTA 14.5
Rest of Western
Europe 17.7
In the context of the Group's corporate strategy
NUMBER ONE > NEXT, mobility services are given
increasing emphasis. Since 2011, the BMW Group
has offered a growing range of services for individual
mobility, including mobility services such as DriveNow
in Europe and ReachNow in the USA and China. In
addition, ParkNow and ChargeNow provide custom-
ers with digital solutions for parking and charging.
Premium services for individual mobility
During the year under report, the BMW Group togeth-
er with other automobile manufacturers founded the
joint venture IONITY with the aim of establishing a
high-performance, fast-charging network in Europe
along key transport routes. The BMW Digital Charging
Service uses Connected Drive to integrate the vehicle
in the customer's charging infrastructure and automat-
ically charges at the cheapest times, taking electricity
prices into account. The service also provides a con-
stant overview of the vehicle's energy requirements
as well as ongoing and completed charging activities.
Under the brand name BMWi, the BMW Group
has offered customers a range of electric mobility
solutions since 2013. The brand covers BMWi and
BMW iPerformance vehicles as well as a wide array
of services. Under the name 360° ELECTRIC, BMW i
provides a comprehensive range of products and
services for all-electric vehicles and plug-in hybrids
worldwide. In 2016 and 2017, the second generation
of the BMWi Wallbox was introduced for quick and
easy charging at home.
BMW i continues to grow
The BMW Group's sales and distribution network
comprises some 3,400 BMW, 1,580 MINI and
140 Rolls-Royce dealerships worldwide. Sales are
conducted by independent authorised dealerships,
BMW Group branches and subsidiaries, and inde-
pendent importers in certain markets. The dealership
and agency network for BMW i currently comprises
over 1,500 locations.
→ www.bmwgroup.com/brands
Sales and Marketing
Economic Position
Review of Operations
→ Sales and Marketing
In January 2018, the BMW Group signed an agreement
with Sixt SE for the complete acquisition of the shares
in the car sharing provider DriveNow. The agreement
was signed subject to the approval of the antitrust
authorities.
Report on
64
63
80
21.5 Eastern Europe
37.6
Germany
1.0 Other
During the period under report, logistics processes
at the Group's most important component plant in
Landshut were significantly simplified with the open-
ing of the new supply centre, thus achieving another
important milestone.
Alongside purchasing and quality assurance, the
third pillar of the Purchasing and Supplier Network's
activities remains in-house production of key vehicle
components. In order to ensure over the long term the
flexibility and competitiveness of internal component
production, the BMW Group invests in state-of-the-art
production facilities and efficient structures.
Investments ensure expertise in productivity and
technology
Combined
Management
Report
In 2016, the BMW Group launched the ReachNow
service in the USA, where it is currently available
in Seattle, Portland and Brooklyn. Apart from car
sharing, ReachNow is also offering as a pilot project
in Seattle a service that enables customers to book a
premium vehicle with a driver (ReachNow Ride). Cus-
tomers can also reserve the use of a vehicle for several
days, including delivery of the vehicle to the desired
location (ReachNow Reserve). Moreover, ReachNow
offers individual small fleets for residential complexes
or company solutions (ReachNow Fleet Solutions).
ReachNow currently has around 80,000 members in
4,595 4,700
4,613 4,750
2016
2015
2014
2013
BMWAG 10.6
11.3
12.5
13.3
13.5
2017
BMW Group 13.0
14.3
16
15.3
16.0
in %
2017
2016
2015
2014
14.0
2013
* Number of employees on unlimited employment contracts leaving the Company.
67
In order to identify key sustainability topics at an early
stage, the BMW Group also conducts materiality anal-
yses on a regular basis. Moreover, social challenges
are continually monitored and analysed in order to
gauge their significance, from the point of view of both
external and internal stakeholders. The materiality
analysis is used to create a materiality matrix, which
is used as a basis to monitor the strategic direction of
sustainability management. The materiality matrix is
described in greater detail in the Sustainable Value
Report 2017.
The BMW Group is in continual dialogue with a large
number of stakeholders, both in Germany and abroad.
Dialogue helps the Company to recognise global trends
at an early stage, achieve sustainability objectives
more effectively and strengthen social commitment.
In the course of this dialogue, the BMW Group gains
a clear picture of how current trends are changing the
business environment and which role the BMW Group
can play. For example, stakeholder dialogue events on
the topic of urban mobility were held during 2017 in
Milan, Chicago, Hangzhou, Mexico City and Delhi.
Stakeholder dialogues and materiality analysis as
basis for sustainability management
The combined separate non-financial report is avail-
able online within the Sustainable Value Report 2017
at: https://www.bmwgroup.com/svr.
In accordance with the stipulations of the German
CSR Directive Implementation Act, BMW AG is
required to publish a non-financial declaration at
both Company and Group level for the first time
for the reporting year 2017. The declaration is pub-
lished jointly for BMW AG and the BMW Group as a
combined separate non-financial report within the
Sustainable Value Report. The information required
by law is included in the sub-chapters preceding the
voluntary reporting in accordance with GRI standards
and is marked accordingly.
Further information on sustainability within the
BMW Group and related topics is provided in the
Sustainable Value Report, which is published online
at → https://www.bmwgroup.com/svr at the same time as the
Annual Report. The Sustainable Value Report is
drawn up in accordance with the "Comprehensive"
option of the Standards of the Global Reporting
Initiative (GRI) and subject of a limited assurance
engagement in accordance with IASE 3000 (Inter-
national Standard on Assurance Engagements 3000
(Revised): "Assurance Engagements other than Audits
or Reviews of Historical Financial Information").
Through its sustainability policy, the BMW Group
supports the achievement of the UN's Sustainable
Development Goals (SDG), which were adopted in
September 2015.
Responsibility towards employees and society
The efficient use of resources along the entire
value chain
*Since 2017 including maternity leave.
The development of products and services for
sustainable individual mobility (for example
electric mobility and services such as DriveNow
and ReachNow)
Economic success, the responsible use of resources
and the assumption of social responsibility form the
basis for long-term growth within the BMW Group.
Through sustainable activity, the Company secures the
future of its business model. With regard to sustain-
ability, the BMW Group concentrates on three areas:
→ www.bmwgroup.com/responsibility
Sustainability
Report on
Economic Position
Review of Operations
Sustainability
Combined
Management
Report
98
68
The workforce at the Group's locations within
Germany is becoming increasingly international.
Employees from over 110 countries work together
successfully in Munich. Moreover, a balanced age
structure in the workforce encourages an exchange
of ideas and knowledge between generations and
plays a key role in reducing the loss of know-how
when valuable employees retire.
62
-
Combined
ill
2.64
124,729
129,932
Group
1.7
115
117
Other
2,500
3.0
4.2
8,394
Financial Services
4.6
3,351
3,506
Motorcycles
4.2
112,869
117,664
Automotive
8,645
2.08
0
2014
2.70
1.41
3.5
3.47
7.0
→ 40
Proportion of female employees in manage-
ment functions at BMW AG/BMW Group*
The proportion of women in the workforce as a
whole, as well as in management functions and
young talent development programmes, increased
during the financial year under report. The percent-
age of women in the total BMW Group workforce
rose to 19.3% (BMW AG: 16.1%), above the internal
target range of 15 to 17%. The proportion of women
in management positions rose to 16.0% across the
BMW Group (BMW AG: 14.0%). In the year under
report, female representation on the BMW Group's
trainee programme and in student programmes stood
at approximately 44% and 31% respectively.
Diversity will remain a key factor in ensuring the
BMW Group's continued competitiveness in future.
Focus is given to the three aspects of gender, cultural
background and age/experience. The aim is to ensure
equal opportunities for all employees and at the same
time utilise and promote the diversity of the Group's
workforce. Over the year, the BMW Group again
implemented a broad array of measures to promote
diversity. Further information on this topic is also
provided in the Sustainable Value Report 2017.
2013
Diversity as a competitive factor
→ 39
Employee attrition rate at BMW AG*
The BMW Group also came out top in the Trendence
Young Professional Barometer Germany. Moreover,
the Group again improved its position in the Trend-
ence Barometer Study for engineering graduates in
Germany, moving up to first place in 2017. In addition,
the Group again achieved strong results in the Uni-
versum study "Young Professionals Germany" with
placings one, three and five in the categories Business,
Engineering and IT respectively. The BMW Group was
therefore among the best-ranked companies in the
studies across all sectors.
In 2017, the BMW Group was once again ranked
among the world's most attractive employers. In the
latest "World's Most Attractive Employers" rankings
published by the agency Universum, the BMW Group
was once again named best German employer across
all sectors and the most attractive automotive company
in the world. In 2017, BMW Group China was named
for the first time most attractive employer across all
sectors in China.
The BMW Group remains a highly attractive
employer
High level of investment in employee qualification
At €349 million, spending on training and develop-
ment remained high (2016: €352 million; -0.9%). By
training its workforce in areas such as electric mobility,
hydrogen, fuel cells, lightweight construction and
robotics, the BMW Group is creating an important
foundation for future activities. Expansion of digital
and agile competences is a further area of focus.
2017
2016
2015
as a percentage of workforce
62
The range of supporting services also includes integra-
tion of digital assistants from the user's environment,
for example the already familiar concierge services.
61
Report on
Combined
Management
Report
60
60
*Until 2015 excluding Rolls-Royce.
2017
2016
2015
2014
2013
0
25
25
26.0
27.3
24.2
20.8
HII
20.8
Economic Position
22.3
Review of Operations
→Financial Services
Segment
The total portfolio of credit financing and leasing con-
tracts with retail customers developed positively again
during the financial year 2017, with a slight increase
of 4.7% year-on-year. In total, 4,926,228 contracts were
in place with retail customers at 31 December 2017
(2016: 4,703,417 contracts). The Asia/Pacific region
continued to grow in 2017, with a 9.6% increase in
the contract portfolio. The Europe/Middle East/Africa
region (+8.8%) and the EU Bank* (+5.1%) also regis- *The EU Bank
tered solid year-on-year growth, while the Americas
region saw a slight decrease in the contract portfo- its branches in
lio (-2.7%).
The BMW Group is one of Europe's foremost leasing
and full-service providers. The Financial Services
segment's fleet management business, under the
brand name Alphabet, offers commercial customers
leasing and financing arrangements as well as specific
services. The number of fleet contracts rose by 5.5%
during the financial year 2017. At 31 December 2017,
the segment was thus managing a portfolio of 679,895
fleet contracts (2016: 644,420 contracts).
Solid growth in fleet business
Solid growth in insurance brokerage business
With a solid increase of 5.9% in 2017, the number of
new brokered insurance contracts grew to 1,337,652
contracts (2016: 1,262,973 contracts). At 31 Decem-
ber 2017, the total number of brokered insurance
contracts amounted to 3,649,362 (2016: 3,411,872 con-
tracts; +7.0%).
* EU Bank comprises BMW Bank GmbH, its branches in Italy, Spain and Portugal, and its
subsidiary in France.
27.8 Americas
EU Bank* 21.1
Deposit business volume at previous year's level
Customer deposits represent an important source of
refinancing for the Financial Services segment. The
volume of deposits stood at €13,572 million at the end
of the reporting period, in line with the previous year
(2016: €13,512 million; +0.4%).
32.6 Europe/
Middle East/Africa
Asia/Pacific 18.5
in % per region
The total volume of dealership financing increased
to €19,161 million in the period under report (2016:
€18,307 million; +4.7%).
Dealership financing up year-on-year
62
Contract portfolio in multi-brand financing
business decreases
Italy, Spain and
Portugal, and its
subsidiary in
France.
comprises
BMW Bank GmbH,
→ 34
of Financial Services segment 2017
Contract portfolio retail customer financing
→ Research and
Development
22.1
41.7
20.9
Credit financing and leasing business with retail
customers remain a key element of the success of the
Financial Services segment. During the period under
report, 1,828,604 new credit financing and leasing
contracts were concluded with customers, slightly
up (+1.0%) on the previous year (2016: 1,811,157 con-
tracts). Credit financing grew slightly by 2.8%, while
the number of new leasing contracts fell slightly by
2.6%. Overall, leasing accounted for 33.0% and credit
financing for 67.0% of new business.
Slight growth in new business
4,360
4,130
4,719
5,115
5,381
3,000
6,000
in 1,000 units
→ 32
Financial Services segment
Contract portfolio of
The Financial Services segment continued to perform
well within a highly competitive market environment
and concluded a successful financial year 2017. In
balance sheet terms, business volume grew by 1.1%
to €124,719 million (2016: €123,394 million). Adjusted
for exchange rate factors, business volume amounted
to €131,995 million (+7.0%). The contract portfolio
under management at 31 December 2017 comprised
5,380,785 contracts and therefore grew by 5.2% year-
on-year (2016: 5,114,906 contracts).
Financial Services segment
Continued growth for the
Financial Services Segment
59
59
The proportion of BMW Group new vehicles leased
or financed by the Financial Services segment in the
financial year 2017 amounted to 46.8%, 2.8 percentage
*The calculation points down on the previous year (2016: 49.6%).* The
decrease was due to a cap on new business volume
in China, through which the People's Bank of China
segment is repre- regulates the banking and financial services sector.
only includes
automobile mar-
kets in which the
Financial Services
Financing 22.5
Leasing 21.5
46.8
46.3
49.6
44.0
50
in %
→ 33
Risk profile
BMW Group new vehicles financed or
leased by Financial Services segment*
2016
2015
2014
2013
0
The total volume of new credit financing and leasing
contracts concluded with retail customers during the
period under report amounted to €55,049 million,
in line with the previous year (2016: €55,327 mil-
lion; -0.5%).
In the pre-owned financing and leasing business for
BMW and MINI brand vehicles, the segment record-
ed a solid increase in the number of new contracts
signed, which was up by 7.2% to 387,937 contracts
(2016: 361,928 contracts).
solidated entity.
sented by a con-
2017
Despite ongoing political and economic uncertainties
and the debate, particularly in some European coun-
tries, about exhaust emissions from diesel vehicles,
the global economy continued to develop positively
in 2017. This contributed to the continued low level of
risk in the overall Financial Services portfolio.
The Financial Services segment recorded a slight
increase (+2.8%) in the number of new multi-brand
financing contracts in 2017, with 157,626 contracts
(2016: 153,297 contracts). As a result of a portfolio
sale, the total contract portfolio comprised 406,813
contracts at 31 December 2017, significantly lower
than one year earlier (2016: 466,436 contracts; -12.8%).
→ 35
New development centre for autonomous driving
At the end of 2016, around 600 BMW Group employees
were already working on developing highly automated
driving technologies. In 2017, the BMW Group began
to pool its entire expertise in vehicle connectivity and
autonomous driving at a new campus near Munich.
→ www.bmwgroup.com/innovation
Research and Development
Further information on the risk situation is provided
in the section Risks and Opportunities.
Sales proceeds generated from BMW and MINI brand
vehicles showed a solid increase from the previous
year, due to volume and mix effects. Despite the
positive development, the level of residual value
losses on remarketed vehicles rose year-on-year. The
expected increase was mainly due to the debate on
diesel engines in parts of Europe. The situation was
also affected by continuing challenges on the North
American pre-owned vehicle market.
The risk profile of the segment's credit financing port-
folio also remained stable at a low level. The credit loss
ratio on the total credit portfolio amounted to 0.34%,
marginally higher than one year earlier (2016: 0.32%).
2017
2016
2015
2014
2013
0.34
0.32
0.37
0.25
0.46
0.5
0.50
in %
The new development centre aims to promote col-
laboration across companies and individual deci-
sion-making competence. This is achieved through flat
organisational structures, lean processes and teams
working in close proximity. At the new location, more
than 2,000 employees will work across disciplines on
development of the next steps towards fully autono-
mous driving.
During the year under report, 40 BMW 7 Series test
vehicles were used to conduct trials for highly auto-
mated and autonomous driving on motorways and
in urban environments. These vehicles were tested at
worldwide locations, in particular at the sites of Intel
(USA), Mobileye (Israel) and the BMW Group (Munich).
The joint further development of these BMW 7 Series
prototypes will lead to the BMW Group's first highly
automated series-produced vehicle: the BMW iNext,
which is due to be launched in 2021.
Development of credit loss ratio
76
The increase in cash inflow from the Group's operat-
ing activities was mainly due to the higher net profit
for the year (€1,796 million) and lower additions to
leased products (€1,392 million), compared to the
previous year.
The increase in cash outflow from the Group's invest-
ing activities mainly reflects higher overall invest-
ments in intangible assets and property, plant and
equipment (€1,289 million), partially offset by higher
cash proceeds from the disposal of investments and
other business units (€1,096 million).
The Group's financing activities show a €1,913 million
reduction in cash inflows from the issue of bonds and
a €1,000 million decrease in cash outflows for bond
repayment. In addition, cash inflows from other finan-
cial liabilities decreased by €4,261 million. Changes
in commercial paper gave rise to net cash inflow of
€953 million (2016: net cash outflow of €1,632 million).
The cash outflow from investing activities exceeded
the cash inflow from operating activities by €254 mil-
lion in the financial year 2017. In the previous year,
the shortfall was higher at €2,690 million.
2017
2016
Change
5,909
3,173
Segment selling and administrative expenses increased
by €76 million to €1,370 million, mainly due to higher
personnel and IT project costs.
The Financial Services segment recorded solid reve-
nue growth due to positive development in the credit
financing business and the higher volume of returned
leasing vehicles sold. The risk profile remained at a
historically favourable level in the year under report.
Financial Services segment
Profit before tax rose significantly compared to the
previous year thanks to the positive business devel-
opment.
The net amount of other operating income and
expenses deteriorated by €24 million to a net amount
of €−11 million. The previous year's figure benefit-
ed in particular from higher income arising on the
reversal of write-downs than in the year under report.
Motorcycles segment revenues rose significantly,
mainly reflecting year-on-year volume growth. Higher
sales of optional equipment, spare parts and acces-
sories as well as improved pricing also contributed.
Change in cash and cash equivalents
Effects of changes in exchange rate and composition of Group
2,736
Cash inflow/outflow from financing activities
66
Inter-segment eliminations reduced Group profit
before tax by €528 million. The amount of elimina-
tions was lower than in the previous financial year as
a result of the lower volume of new leasing business
in 2017 and the positive effect of reversals in the
portfolio of leased products (2016: negative impact
of €772 million).
net interest result.
Profit before tax in the Other Entities segment fell
significantly year-on-year, mainly due to the lower
Other Entities segment/Eliminations
Profit before tax in the Financial Services segment
was slightly up on the previous year, mainly reflecting
business volume growth and the improved net amount
of other operating income and expenses.
Motorcycles segment
Financial position
The cash flow statements for the Group and the
Automotive and Financial Services segments show
the sources and applications of cash flows for the
financial years 2017 and 2016. Cash flows are classi-
fied according to operating, investing and financing
activities. Cash and cash equivalents in the cash flow
→ 49
statements correspond to the amounts disclosed in
the balance sheet.
Cash flows from operating activities are determined
indirectly, starting with Group and segment net profit.
By contrast, cash flows from investing and financing
activities are based on actual payments and receipts.
77
in € million
Cash inflow/outflow from operating activities
Cash inflow/outflow from investing activities
BMW Group financial position
The financial result improved by €31 million to a net
amount of €13 million, due, amongst others, to higher
fair value measurement gains within other financial
result.
Overall, the Automotive segment reported a solid
increase in pre-tax profit.
Profit before financial result increased slightly to
€7,863 million (2016: €7,695 million). The positive
effect of volume growth was offset by increases in
research and development expenses, selling and
administrative expenses and other operating expenses.
2,166
2,207
10.8
185
205
9.8
7,916
8,691
Change in %
2016
2017
EBIT margin
Gross profit margin
Motorcycles
EBIT margin
Gross profit margin
Automotive
in %
→ 48
BMW Group margins by segment
Group
Eliminations
Other Entities
Financial Services
Motorcycles
Automotive
in € million
1.9
At €828 million, the financial result was significantly
higher than one year earlier. In addition to the effects
from result from equity accounted investments and
other financial result described above, the net interest
result also had a positive impact on the Automotive
segment's financial result. Thanks to lower year-on-
year interest and similar expenses, the net interest
result improved significantly to a net amount of
€-205 million (2016: €-413 million).
The net amount of other operating income and expens-
es improved by €51 million to €-17 million. Income
from the reversal of provisions, amongst others, had
a positive effect.
170
Automotive segment revenues grew slightly due to
higher sales volumes, with currency factors and a
continued highly competitive business environment
holding revenue growth down. Cost of sales increased
slightly in line with sales volume growth. The gross
profit margin was in line with the previous year.
Automotive segment
Economic Position
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Report on
Management
Report
Combined
15
75
0.1
9.0
9.1
20.8
20.8
8.9
8.9
0.5
17.9
18.4
Change in %pts
2016
2017
10.2
9,665
10,655
31.6
-528
-52.9
80
-6,163
22
-300
Change
2016
2017
in € million
Net financial assets of the Automotive segment com-
prise the following:
investments in intangible assets and property, plant
and equipment.
The decrease in cash inflow from the Automotive seg-
ment's operating activities was mainly due to higher
net outflow for other operating assets and liabilities.
Cash outflow from investing activities was influenced
in particular by the overall €1,273 million increase in
-1,333
5,792
395
-1,112
-616
11,464
-5,432
-240
155
4,459
-6,544
10,848
Change
2016
2017
0
5,000
Cash and cash equivalents
Marketable securities and investment funds
Intragroup net financial assets
7,157
72
* Excluding derivative financial instruments.
267
19,520
19,787
Net financial assets Automotive segment
18
-1,498
-1,480
Less: external financial liabilities*
Net investment in marketable securities and investment funds
Free cash flow Automotive segment
249
21,267
Financial assets
-2,303
12,077
9,774
189
4,147
4,336
2,363
4,794
21,018
-5,863
Cash inflow/outflow from investing activities
in € million
+5,909
15,000
in € million
→ 50
tion and Net Assets
→ Results of Opera-
tions, Financial Posi-
Economic Position
Report on
Management
Report
BMW Group change in cash and cash equivalents
Combined
78
-599
1,758
1,159
-214
55
-159
-2,821
4,393
1,572
10,000
7,880
-6,163
5,000
Free cash flow for the Automotive segment was as
follows:
cash
equivalents
31.12.2017
Cash and
changes in
Currency
translation,
Group composition
activities
financing
Cash inflow
from
Cash outflow
from
investing
activities
Cash inflow/outflow from operating activities
activities
from
operating
Cash inflow
Cash and
cash
equivalents
-159
→ 47
10,000
9,039
+1,572
15,000
0
31.12.2016
BMW Group profit/loss before tax by segment
-772
5.1
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income and expenses
Profit before financial result
Financial result
Profit before tax
2017
2016
Change in %
98,678
-78,744
94,163
-75,442
4.8
-4.4
in € million
19,934
Corporate volunteering
*The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year's figures.
-51.2
-79.6
-59.0
-61.0
In 2017, at 2.17 MWh per vehicle produced, the
BMW Group slightly reduced energy consumed in
the production process compared with the previous
year (2016: 2.21 MWh; -1.8%). This was mainly due
to the implementation of new production structures
at Group plants in Shenyang and the installation of
LED lighting throughout the entire Group production
network.
Through measures to boost energy efficiency and the
purchase and in-house generation of electricity from
renewable sources at BMW Group production sites,
production-related CO2 emissions fell significantly
by 24.1% to 0.41 tonnes per vehicle produced in 2017
compared with the previous year (2016: 0.54 tonnes).
The substantial improvement in CO2 efficiency was
mainly due to improvement in energy efficiency and,
above all, sourcing of power supplies in Germany, the
UK and Austria exclusively from renewable sources.
In 2017, at 2.22 m³ per vehicle produced, water
consumption was slightly below the previous year's
level (2016: 2.25 m³; -1.3%). At 0.40 m³, the volume of
process wastewater per vehicle produced fell by 4.8%
(2016: 0.42 m³). The amount of non-recyclable waste
from production processes increased from a very low
level the previous year to 3.86 kg per vehicle produced
(2016: 3.51 kg; +10.0%) in the period under report.
Solvent emissions were cut by 9.6% to 1.03 kg per
vehicle produced during 2017 (2016: 1.14 kg).
Overall in 2017, the BMW Group reduced resource
usage and emissions per vehicle in the production
process by an average of 5.3%, equivalent to a total
cost reduction of €161 million, mainly due to a slight
improvement in the energy efficiency ratio.
Sustainability along the value chain
Sustainability criteria also play a key role in the
selection and evaluation of suppliers as well as in
the field of transport logistics. The BMW Group has
therefore integrated comprehensive sustainability
management in its purchasing processes. The Group's
positive business performance in recent years has also
caused a significant rise in transportation require-
ments worldwide. The BMW Group principle that
production follows the market is an effective method
of significantly reducing the need for transportation,
thus keeping CO2 emissions as low as possible.
Sustainability in human resources policies
In 2017, the BMW Group continued to consolidate
its position as one of the most attractive employers
worldwide. Its leading role in terms of sustainability
contributes significantly to the high degree of employ-
ee loyalty within the BMW Group and is one of the
reasons for the low staff attrition rate. This enables
the BMW Group to maintain a low level of personnel
recruitment expenditure. Further information on the
attrition rate is provided in the section "Workforce".
A key reason for the BMW Group's ongoing success
and an example of the high level of employee identi-
fication are the personal engagement and the ideas
brought forward by staff members. This is demonstrat-
ed by the €18.2 million saved in 2017 in conjunction
with the ideas management programme CREATE.
Social engagement
In 2017, the BMW Group contributed a total of €33.4 mil-
lion for social engagement (2016: €87.8 million), includ-
ing €16.2 million for donations (2016: €70.4 million).
The significant decrease compared to 2016 was due to
a one-time donation to the BMW Foundation in honour
of the Company's centenary year 2016.
71
→ 42
-31.9
18,721
-9,560
26.0
Earnings per share of common stock in €
13.12
10.45
25.6
Earnings per share of preferred stock in €
13.14
10.47
25.5
in %
Pre-tax return on sales
Post-tax return on sales
Gross margin
Effective tax rate
Profit before tax for the financial year 2017 was
significantly higher year-on-year.
6,910
6.5
8,706
-2,755
-9,158
-4.4
-494
-177
9,880
9,386
5.3
775
279
10,655
9,665
10.2
Income taxes
Net profit
-1,949
29.3
-36.5
2017
Non-recyclable waste
Solvent emissions
CO₂ emissions
in the supply chain/sustainable sourcing*
Environmental and social standards
Connected and autonomous driving*
Product safety*
Alternative drivetrain technologies*
Occupational health and safety*
Pollutant emissions
of vehicles*
Energy efficiency and CO2 emissions
from value creation*
Fuel efficiency and CO2 emissions
of vehicles*
Low
relevance
relevance
←
Relevance for the stakeholders
High
materiality
High
relevance
Human rights*
→ 41
Prevention of corruption and
anticompetitive behaviour*
and services*
Biodiversity
Development of local companies
Responsible marketing and product communication
Use of urban space
Water consumption Waste and water waste
Design for Recycling*
Socio-economic impacts on society*
Employee development and training*
Customer satisfaction*
Diversity and equal opportunity*
Low
materiality
Air emissions from value creation*
Medium
materiality
Attractive workplace, talent attraction and retention*
Data protection*
Mobility concepts
Materiality matrix
Low
Combined
69
69
70
Combined
Management
Report
Report on
Economic Position
Review of Operations
Sustainability
Top rankings in sustainability ratings
pres-
The BMW Group again achieved top rankings in
tigious sustainability ratings in 2017, thereby under-
lining its leading position as a sustainable company.
In the Dow Jones Sustainability Indices (DJSI) rating,
the BMW Group is the only German automobile maker
to have been included once again in the two indices
"World" and "Europe" and the only company in the
sector to have been continuously represented since
the indices were established.
In the CDP rating (formerly the Carbon Disclosure
Project), the Group achieved the best rating for its cli-
mate protection efforts. The BMW Group is therefore
one of only two companies worldwide to have been
listed in the highest category eight times in succes-
sion. The BMW Group also achieved the best rating
in the CDP water rating, which assesses companies'
responsible use of water resources. The Group was
again listed in the British FTSE4Good Index in 2017.
Fleet carbon dioxide emissions reduced
The development of sustainable products and services
is an integral part of the BMW Group's business mod-
el. The fleet-wide deployment of Efficient Dynamics
technologies is contributing to a continual reduction
in CO2 emissions. The electrification of the fleet con-
tinued to make significant progress in 2017. Due to the
expansion of the model range, annual sales of electri-
fied BMW Group vehicles increased significantly and,
with 103,080 units, surpassed the announced target of
100,000 units. Efficient Dynamics and electrification
form the basis for future compliance with legal CO2
and fuel consumption requirements. Between 1995
and 2017, average CO2 emissions of vehicles of the
Group's three brands sold in Europe fell by 42%.
In 2017, the BMW Group's fleet of new vehicles sold
in Europe (EU-28) consumed an average of 4.6 litres of
diesel and 5.6 litres of petrol per 100 km respectively.
CO2 emissions averaged 122 g/km.
Clean production
Integrated sustainability management in production
processes ensures that resources are used efficiently.
Since 2006, the consumption of resources and emis-
sions per vehicle produced have been reduced by
an average of 53.2%. The individual figures for the
development since 2006 are as follows:
in %
Energy consumption
Water consumption
Process wastewater
High
relevance
*These areas were rated highly material, as they were among the three topics the respondent stakeholder groups considered most important.
Political involvement
Relevance for the BMW Group
Management
Report
Report on
Economic Position
Review of Operations
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
2017
RESULTS OF OPERATIONS,
FINANCIAL POSITION AND
NET ASSETS
In the financial year 2017, the BMW Group again
achieved year-on-year growth in revenues, deliveries
and profit before tax. The number of BMW, MINI and
Rolls-Royce brand vehicles delivered to customers rose
slightly by 4.1% to 2,463,526* units.
BMW Group condensed income statement
Corporate citizenship
Responsible financial services
Employee-management relations
Efficient use of resources in value creation
Results of operations
2016
Donations and philanthropy
10.8
Profit before financial result (EBIT) increased solidly
and amounted to €9,880 million (2016: €9,386 million).
The net amount of other operating income and expens-
es in 2017 was €-494 million (2016: €-177 million),
with, amongst others, higher allocations to provisions
for litigation and other legal risks contributing to the
year-on-year change.
Depreciation and amortisation on property, plant
and equipment and intangible assets recorded in cost
of sales and in selling and administrative expenses
totalled €4,822 million (2016: €4,806 million).
Selling and administrative expenses were €402 mil-
lion higher at €9,560 million, mainly as a result of
the increased workforce and higher marketing and
IT expenses.
Overall, gross profit amounted to €19,934 million,
reflecting a solid improvement over the previous year.
Due to the continued product offensive, vehicle electri-
fication and development work on autonomous driving,
research and development expenses at €4,920 million
(2016: €4,294 million) were significantly up on the pre-
vious year. As a result, total research and development
expenditure – comprising research costs, non-capital-
ised development costs and capitalised development
costs (excluding amortisation thereon) - amounted
to €6,108 million in the year under report (2016:
€5,164 million). The capitalised development costs
were mainly related to the production start of new
models and modules.
-0.8
40.5
39.7
0.7
5.5
6.2
0.4
4.6
5.0
→ see
note 12
Research and development expenses as a percentage of revenues
Research and development expenditure ratio
Capitalisation rate
At €775 million, the financial result was significantly
higher than one year earlier. This was mainly driven
by a €297 million increase in the result from equity
accounted investments to €738 million. This was due,
amongst others, to a €183 million positive earnings
effect following the sale of 15% of the shares in HERE
International B.V., Amsterdam, by THERE Holding B.V.,
Amsterdam. The earnings contribution from BMW Bril-
liance Automotive Ltd. also increased, driven by sales
volume within a stable competitive environment. In
addition, other financial result improved by €117 mil-
lion to €248 million. In contrast to the previous year, the
result on investments in 2017 included no impairment
losses on other investments. Furthermore, the net inter-
est result improved by €82 million to a net amount of
€−211 million. This was mainly due to the lower interest
expense arising from the unwinding of the discount
on non-current provisions and higher liquidity, which
resulted in lower financing requirements in selected
countries.
The income tax expense for the year amounted to
€1,949 million (2016: €2,755 million). The significantly
lower year-on-year tax expense was mainly due to the
reduction in the US federal corporate income tax rate
from 35% to 21% with effect from 1 January 2018,
which was taken into account in the measurement of
deferred taxes at 31 December 2017. The revaluation
of deferred taxes had an overall positive impact of
€977 million on net profit for the year. Further infor-
mation is provided in → note 12 of the Group Financial
Statements.
2,283
3.9
2.5
88,581
Financial Services
Motorcycles
Automotive
Currency adjusted
change* in %
Change in %
2016
2017
in € million
→ 46
BMW Group revenues by segment
Results of operations by segment
Overall, profit before tax increased significantly year-
on-year to €10,655 million (2016: €9,665 million).
2,069
in %
BMW Group performance indicators relating to research and development expenses
14.6
2,893
-5.7
2,165
2,041
Other cost of sales
Warranty expenses
3.1
2,018
2,081
Service contracts, telematics and roadside assistance
1.1
1,222
1,236
thereof amortisation of capitalised development costs
3,067
→ 45
-5.7
Change in %pts
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Economic Position
Report on
Report
Management
Combined
Change in %pts
2016
2017
74
73
The Group's cost of sales was slightly higher than in
the previous year due to volume and mix effects. Costs
relating to the Group's Financial Services business,
which were significantly higher than the previous
year, also contributed. Revenue growth from the sale
of returned leasing vehicles had a corresponding effect
on cost of sales. Currency effects held down the scale
of the increase.
4.4
75,442
78,744
Cost of sales
10.3
86,424
27,567
2016
45.6
47.1
30.1
28.8
Americas
21.2
20.7
7
Other regions
3.1
3.4
11.1
100.0
100.0
2017
Europe
Asia
in %
→ 43
10.3
0.5
8.8
7.3
1.5
20.2
19.9
BMW Group cost of sales
0.3
28.5
-10.2
*Includes the joint venture BMW Brilliance Automotive, Shenyang Ltd.
(2017: 384,124 units, 2016: 316,200 units).
BMW Group revenues increased slightly by 4.8% year-
on-year to reach €98,678 million (2016: €94,163 mil-
lion). This was mainly driven by higher sales volume
of BMW Group vehicles, growth in the leasing and
credit financing contract portfolio and increased sales
of returned leasing vehicles in the Financial Services
business.
Negative currency effects held down revenue growth.
Currency effects were mainly the result of develop-
ments in the average exchange rates of the British
pound and the Chinese renminbi.
Group revenues by region were as follows:
BMW Group revenues by region
18.3
→ 44
Group
2017
1.3
in € million
-20,017
-19,760
Group
Eliminations
94,163
16.7
4,294
7
Other Entities
8.7
7.3
25,681
6
4,920
98,678
Research and development expenses
2016
Change in %
Manufacturing costs
43,877
43,175
1.6
4.8
22,932
Cost of sales relating to financial services business
10.7
thereof interest expense relating to financial services business
1,801
1,638
10.0
20,723
-1.8
1.4
2,825
-5.6
2,667
94
6.6
11.1
Cash and cash equivalents
89
Trade receivables
9,039
6.1
14.7
200
Balance sheet total in € billion
→ 54
Balance sheet structure - Group
Cash and cash equivalents grew significantly by
€1,159 million, compared to one year earlier.
Financial assets increased solidly compared to
31 December 2016, mainly due to the positive devel-
opment of currency and commodity derivatives.
A solid increase in inventories was recorded compared
to the end of 2016. Adjusted for currency effects the
increase was significant. The increase was primarily due
to finished goods, mainly relating to stocking up effects
in connection with the introduction of new models,
amongst others, the 5 Series and the X3 and X1 models.
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Report on
Economic Position
Combined
Management
Report
193
62
Receivables from sales financing were slightly higher
compared to 31 December 2016. Adjusted for currency
effects, however, there was a solid increase, particu-
larly in the UK and China. A total of 1,224,546 new
credit financing contracts were signed in 2017 and the
contract portfolio grew by 5.3% to 3,181,931 contracts.
Leased products decreased slightly compared to
31 December 2016. Adjusted for currency effects,
however, they increased slightly. The portfolio of
leasing contracts grew by 3.8% to 1,744,297 contracts,
with increases recorded in particular in France, Spain
and Germany.
Intangible assets increased significantly compared
to the end of 2016. Within this item, the carrying
amount of capitalised development costs rose by
€1,188 million as a result of the continued product
offensive, vehicle electrification and development
work on autonomous driving.
The balance sheet total of the BMW Group increased
slightly compared to 31 December 2016. Adjusted for
currency effects, the increase was solid. Currency
effects arose primarily from the period-end exchange
rates of the US dollar, Chinese renminbi and British
pound against the euro.
4
81
*The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year's figures.
100.0
7.6
2.6
82
188,535
193
189
94
Balance sheet total in € billion
→ 55
Balance sheet structure - Automotive segment
2016
2017
2016
2017
4%
thereof cash and cash equivalents 5%
189
36% Current provisions and liabilities
35%
Current assets 37%
66
39% Non-current provisions and liabilities
36%
65%
Non-current assets 63%
133
25% Equity
28%
36%
193,483
Total equity and liabilities
8.4
Other provisions
1.7
-27.4
-29.1
4,587
3,252
Pension provisions
28.2
19.1
15.2
11,750
47,363
Equity
EQUITY AND LIABILITIES
100.0
7.6
2.6
188,535
193,483
Total assets
4.7
18.2
54,548
10,918
7.6
13.0
10.0
4.1
15,555
16,189
Other liabilities
5.0
16.7
14.3
8,512
9,731
Trade payables
48.9
1.8
-3.2
97,731
94,648
Financial liabilities
1.7
10.3
-13.0
3,869
3,365
Deferred and current tax
7,880
100
between
1-5
in € million
9,464
8,157
16.0
16.2
4.9
Property, plant and equipment
18,471
Intangible assets
17,960
5.3
9.5
Leased products
36,257
37,789
-4.1
2.0
2.8
18.7
balance sheet
total in %
2017
change* in %
→ see
notes 29,
33 and 37
At 31 December 2017, liquidity stood at a solid level
of €14.5 billion.
The BMW Group also has access to a syndicated credit
line which was newly agreed in July 2017. The syn-
dicated credit line of €8 billion has a minimum term
to July 2022 and is made available by a consortium of
44 international banks. The credit line was not being
utilised at 31 December 2017.
Further information with respect to financial liabilities
is provided in → notes 29, 33 and 37 of the Group
Financial Statements.
In 2017, the BMW Group issued four euro bench-
mark bonds on the European capital market with
a total issue volume of €3.75 billion, as well as
bonds on the US capital market with a total issue
volume of US$2.20 billion. Bonds were also issued in
British pounds, US dollars, Canadian dollars, Indian
rupees, South Korean won and Norwegian krone for
a total amount of €1.17 billion. Private placements
totalling €4.50 billion were also issued.
Net assets
Proportion of
BMW Group condensed balance sheet at 31 December
in € million
ASSETS
Group
Currency adjusted
2017
2016
Change in %
→ 53
2016 2017
Investments accounted for using the equity method
2,546
5.3
Deferred and current tax
3,493
4,265
-18.1
-6.4
1.8
6.8
Other assets
7,160
6,682
7.2
10.0
3.7
89
12,707
Inventories
2,767
5.8
10,334
8.7
8.7
1.4
Other investments
690
560
23.2
9,770
24.1
Receivables from sales financing
80,434
78,260
2.8
9.1
41.6
Financial assets
0.4
2016 2017
2016 2017
later
than 5
The overall objective of Group financing is to ensure at
all times the solvency of the BMW Group. This leads
to three areas of focus:
1. Ability to act through permanent access to strate-
gically important capital markets
2. Autonomy through the diversification of refi-
nancing instruments and investors
3. Focus on value through optimisation of financing
costs
Financing measures undertaken centrally ensure
access to liquidity for the Group's operating subsid-
iaries at standard market conditions and consistent
credit terms. Funds are acquired in line with a target
liability structure, comprising a balanced mix of financ-
ing instruments. The use of longer-term financing
instruments to finance the Group's financial services
business and the maintenance of a sufficiently high
liquidity reserve serves to avoid liquidity risk in the
portfolio. This conservative financial approach also
supports the Group's rating. Further information
is provided in the section Liquidity risks within the
Report on Outlook, Risks and Opportunities.
Thanks to its good ratings and the high level of accept-
ance it enjoys on capital markets, the BMW Group
was again able to refinance operations at favourable
conditions on debt capital markets during the finan-
cial year 2017. In addition to the issue of bonds, loan
notes and private placements, commercial paper
was also issued. As in previous years, all issues were
in high demand, not only from private but also in
particular from institutional investors. In addition,
retail customer and dealership financing receivables
and rights and obligations from leasing contracts
are securitised in the form of asset-backed securi-
ties (ABS) financing arrangements. Specific banking
instruments, such as customer deposits used by the
Group's own banks in Germany and the USA, are
also used for financing. Loans are also taken out with
international banks.
A broad range of instruments on international money
and capital markets is used to refinance worldwide
operations. Funds raised are used almost exclusively to
finance the BMW Group's Financial Services business.
60
Combined
Management
Report
Report on
Economic Position
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
BMW Group composition financial liabilities
→ 51
80
in € million
Refinancing
79
Cash inflow/outflow from operating activities
Cash inflow/outflow from investing activities
Cash inflow/outflow from financing activities
Net
2017
2016
Change
-6,384
937
-9,844
3,460
Cash outflow from operating activities in the Finan-
cial Services segment is driven primarily by the cash
flows relating to leased products and receivables from
sales financing. Cash inflow from investing activities
results mainly from cash proceeds from the disposal
of investments and other business units (€970 million).
Cash inflow from financing activities is mainly driven
by the change in other financial liabilities.
-102
4,334
11,601
-7,267
-1,113
1,655
-2,768
19
1,039
Derivate instruments 1,090
Commercial paper 4,461
Liabilities to banks
34.7
1.6
0.3
13.0
4.4
50,000
25,000
50.0
0
42,326 41,100
44,144 43,865
II
within
1
11,261
9,683
Maturity (years)
* Measured at exchange rates at the relevant transaction dates.
Commercial Paper
Australian Medium Term Notes
12,658
Liabilities
from customer
deposits (banking)
13,572
Other 1,132
Bonds
44,880
Asset-backed
financing
transactions
A total of twelve public ABS transactions were exe-
cuted in 2017, including three in China, two each
in Germany and the USA, and one each in Canada,
South Korea, South Africa, the UK and Switzerland,
with a total volume equivalent to €6.9 billion. Fur-
ther funds were also raised via new ABS conduit
transactions in Japan, the UK and the USA totalling
€2.4 billion. Other transactions remain in place in
Germany, Switzerland, South Korea, South Africa
and Australia, amongst others.
The following table provides an overview of amounts*
utilised at 31 December 2017 in connection with the
BMW Group's money and capital market programmes:
16,855
BMW Group financial liabilities by maturity
→ 52
in € million
Programme
Programme
framework
Amount
utilised*
in € billion
Euro Medium Term Notes
Net cash inflows and outflows for the Financial Ser-
vices segment were as follows:
Non-current assets 46%
5,030
66
Selling and administrative expenses increased over-
all year-on-year, reflecting an increase in workforce,
IT projects and increased marketing costs.
Cost of sales increased by 3.1% to €62,817 million,
mostly due to the higher cost of materials. Gross profit
improved by €1,994 million to €16,398 million.
Revenues rose by 5.1% year-on-year, mainly reflecting
increased deliveries of the BMW 5 Series. In geograph-
ical terms, the increase mainly related to Asia and
Europe. Revenues amounted to €79,215 million (2016:
€75,350 million), of which Group internal revenues
accounted for €59,736 million (2016: €56,412 million)
or 75.4% (2016: 74.9%).
2,300
2,630
-977
-567
3,277
3,197
-19
-16
3,296
3,213
-1,308
-1,563
-35
-541
1,015
1,081
Research and development expenses related mainly to
new vehicle models in conjunction with the product
offensive (including new X models), expenses for the
development of drivetrain systems and innovations,
for example in connection with the electrification of
vehicles and the further development of autonomous
driving. Compared to the previous year, research and
development expenses increased by 14.7%.
-137
The net amount of other operating income and
expenses deteriorated by €166 million to € - 303 mil-
lion, with the year-on-year change mainly attributable
to higher net expenses for financial transactions as
well as legal disputes.
The expense for income taxes relates primarily to
current tax for the financial year 2017.
ASSETS
2016
2017
in € million
→ 60
BMW AG Balance Sheet at 31 December
Financial and net assets position
Financial Statements
of BMW AG
→ Comments on
Economic Position
Report on
Report
Management
Combined
88
88
87
848
After deducting the expense for taxes, the Company
reported a net profit of €3,197 million compared to
€3,277 million in the previous year.
Results on investments benefited from higher profit
transfers from Group companies. By contrast, the
financial result deteriorated by €506 million, mainly
due to higher interest expenses for pension liabilities
and lower income from the corresponding plan assets.
The reversal of impairment losses on the investment
in SGL Carbon SE, however, had a positive impact on
the financial result.
-303
-4,504
-5,168
Gross profit
Cost of sales
Revenues
in € million
→ 59
BMW AG Income Statement
Results of operations
BMW AG develops, manufactures and sells automobiles
and motorcycles as well as spare parts and accessories
manufactured in-house, by foreign subsidiaries and by
external suppliers, and performs services related to
these products. Sales activities are carried out primar-
ily through branches, subsidiaries, independent deal-
erships and importers. In 2017, BMW AG increased
deliveries by 138,389 units to 2,494,115 units. This
figure includes 396,749 units relating to series sets
supplied to the joint venture BMW Brilliance Automo-
tive Ltd., Shenyang, an increase of 91,023 units over
the previous year. At 31 December 2017, BMW AG
employed a workforce of 87,940 people, 2,186 more
than one year earlier.
Business environment and review of operations
The general and sector-specific environment of BMW AG
is essentially the same as that of the BMW Group and is
described in the Report on Economic Position section
of the Combined Management Report.
Differences between the accounting treatment of the
German Commercial Code and International Financial
Reporting Standards (IFRS), according to which the
BMW Group Financial Statements are prepared, are
mainly to be found in connection with the capitali-
sation of intangible assets, the creation of valuation
units, the recognition and measurement of financial
instruments and provisions, and the recognition
of deferred tax assets. Differences also arise in the
presentation of assets and liabilities and of items in
the income statement.
The key financial and non-financial performance
indicators for BMW AG are essentially identical and
concurrent with those of the Automotive segment
of the BMW Group. These are described in detail
in the Report on Economic Position section of the
Combined Management Report.
Bayerische Motoren Werke Aktiengesellschaft
(BMW AG), based in Munich, Germany, is the parent
company of the BMW Group. The comments on the
BMW Group and Automotive segment provided in
earlier sections apply to BMW AG, unless presented
differently in the following section. The Financial
Statements of BMW AG are drawn up in accordance
with the provisions of the German Commercial Code
(HGB) and the relevant supplementary provisions of
the German Stock Corporation Act (AktG).
COMMENTS ON FINANCIAL
STATEMENTS OF BMW AG
Financial Statements
of BMW AG
→ Comments on
Economic Position
Report on
Report
Management
Selling expenses
Administrative expenses
Research and development expenses
Other operating income and expenses
-2,504
-2,733
-3,635
-3,958
14,404
16,398
-60,946
-62,817
75,350
Intangible assets
79,215
2017
Unappropriated profit available for distribution
Transfer to revenue reserves
Net profit
Other taxes
Profit after income tax
Income taxes
Financial result
Result on investments
2016
Combined
288
Property, plant and equipment
7,699
8,608
7,606
8,469
93
139
30
29
14,122
15,046
2,300
2,630
9,038
9,605
2,127
2,153
657
658
Provisions
Liabilities to banks
Other provisions
Trade payables
Other liabilities
11,841
The carrying amount of investments increased to
€3,676 million (2016: €3,238 million), mainly as a
result of a share capital increase at BMW Automotive
Finance (China) Co., Ltd., Beijing. A previously rec-
ognised impairment loss of €70 million on the invest-
ment in SGL Carbon SE, Wiesbaden, was reversed
in 2017, since the reasons for valuing the investment
at the lower market value no longer existed at the
balance sheet date.
Capital expenditure on intangible assets and prop-
erty, plant and equipment in the year under report
amounted to €2,628 million (2016: €2,346 million),
up by 12.0% compared to the previous year. Depre-
ciation and amortisation amounted to €2,350 million
(2016: €2,233 million).
36,299
41,472
2,066
2,685
12,382
15,104
406
333
5,951
8,187
5,619
995
965
Total equity and liabilities
Deferred income
Liabilities
Liabilities to subsidiaries
Pension provisions
Registered profit-sharing certificates
Equity
6,001
7,641
Marketable securities
Other receivables and other assets
Receivables from subsidiaries
667
766
4,260
4,643
Trade receivables
Inventories
14,711
15,419
Tangible, intangible and investment assets
3,238
3,676
Investments
11,163
11,455
2,827
2,525
4,185
3,846
Unappropriated profit available for distribution
Revenue reserves
Capital reserves
Subscribed capital
EQUITY AND LIABILITIES
36,299
41,472
Total assets
1,183
310
1,290
430
483
Prepayments
19,975
24,280
2,676
4,218
Current assets
Cash and cash equivalents
Surplus of pension and similar plan assets over liabilities
86
98
85
in € million
2016
2017
in %
in € million
2017
year 2017.
Net valued added by the BMW Group remained at a
high level in the financial
the net value added is related to employees. The
proportion remaining in the Group is retained to
finance future operations. The gross value added
amount treats depreciation as a component of value
added which, in the allocation statement, would be
treated as internal financing.
→ 57
BMW Group value added statement
The value added statement shows the value of work
performed by the BMW Group during the financial
year, less the value of work bought in. Deprecia-
tion and amortisation, cost of materials, and other
expenses are treated as bought-in costs in the net
value added calculation. The allocation statement
shows the value added of each of the participants
involved in the value added process. The bulk of
Value added statement
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Economic Position
Report on
Combined
Management
Report
84
883
2.7
2016
in %
8.0
Change
in %
Revenues
100.0
100,521
0.7
670
0.7
720
0.9
875
1.1
1,123
98.4
94,163
98.2
98,678
Other expenses
Cost of materials*
Total output
Other income
Financial income
WORK PERFORMED
10.7
0.7
41.3
66
99
100
40% Current provisions and liabilities
19% Non-current provisions and liabilities
2016
2017
2016
5%
40%
18%
52%
2017
thereof cash and cash equivalents 8%
Current assets 54%
||||
41% Equity
42%
33
33
200
133
66
42.0
3.1
25.1
28.2
Change in %pts
31.12.2016
31.12.2017
Overall, the results of operations, financial position
and net assets position of the BMW Group continued
to develop positively during the year under report.
The significant increase in trade payables mainly
reflects higher production volumes and model start-
ups.
95,708
Financial liabilities fell slightly compared to 31 Decem-
ber 2016. Adjusted for currency effects, they increased
slightly. The increase was mainly due to the issue of
bonds and commercial paper. In addition, new ABS
transactions were concluded in various countries.
Changes in derivatives and lower liabilities to banks
kept down the increase in financial liabilities.
Financial Services segment
Automotive segment
Group
in %
plans amounting to €693 million, due mainly to the
revaluation of plan assets. The dividend payment of
€2,300 million, negative currency translation effects
of foreign operations amounting to €1,171 million
and deferred taxes on fair value changes recognised
directly in equity amounting to €815 million had a
negative impact on equity.
→ 56
BMW Group equity ratio
Group equity rose by €7,185 million to €54,548 mil-
lion. Equity increased year-on-year mainly as a result
of the net profit attributable to shareholders of
BMW AG amounting to €8,620 million, fair value gains
on derivative financial instruments amounting to
€1,914 million and the positive impact of remeasure-
ments of the net defined benefit liability for pension
99
Pension provisions decreased significantly compared
to the end of the financial year 2016. The decrease
was mainly due to gains on plan assets as well as
gains from the closing of defined benefit plans in the
UK. A transfer from plan assets for pre-retirement
part-time working arrangements to plan assets for
pension plans brought about a further reduction in
pension provisions.
100.0
5.0
51,043
0.3
86
31.3
19.3
4,563
24.0
5,990
14.3
9.7
2,300
10.5
2,630
-33.0
13.7
3,213
8.6
2,154
5.1
8.3
47
0.2
83.0
24,978
95
-0.3% Minority interest
24.0% Group
10.5% Shareholders
8.6% Government/public sector
8.3% Providers of finance
24.8 Net value added
48.3% Employees
C
1,965
Cost of materials 50.8
Depreciation and amortisation 8.4
in %
→ 58
BMW Group value added 2017
* Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
5.7
100.0
23,623
100.0
16.0 Other expenses
48%
8.3
4.5
4.7
33.4
31,927
33.2
33,433
Gross value added
5.2
66.6
63,781
66.8
67,088
Bought-in costs
14.1
13,502
16.0
16,045
52.5
50,279
50.8
Depreciation and amortisation of total tangible,
intangible and investment assets
8,455
8.4
48.8
11,535
48.3
12,052
Net value added
Minority interest
Group
Shareholders
Government/public sector
2,066
Providers of finance
ALLOCATION
5.7
24.7
23,623
24.8
24,978
Net value added
8.7
8,304
Employees
7.3
-5.6
Supervisory Board
4,107
22.2
2,490,664
1.1
Production volume
BMW5
MINI
Rolls-Royce
Total 5
1,838,268
322,803
4,495
2,165,566
1,933,647
342,008
3,848
2,279,503
2,002,997
352,580
4,179
2,359,756
2,123,947
378,486
3,308
2,505,741
2,168,496
2.1
368,685
-2.6
4,353
2,541,534
31.6
1.4
MOTORCYCLES SEGMENT
Production volume
BMW
FINANCIAL SERVICES SEGMENT
New contracts with retail customers
133,615
151,004
145,555
-2.8
361,531
1.8
2,125,026
2,490,664
1.1
128
MOTORCYCLES SEGMENT
Deliveries
123,495
136,963
145,032
164,153
165,566
0.9
Further non-financial performance figures
→ 02
AUTOMOTIVE SEGMENT
185,682
2014
2016
2017
2018
Change in %
Deliveries
BMW2
MINI
Rolls-Royce
1,811,719
302,183
4,063
Total²
2,117,965
1,905,234
338,466
3,785
2,247,485
2,003,359
360,233
4,011
2,367,603
2,088,283
371,881
3,362
2,463,526
2015
162,687
-12.4
1,509,113
9.2
8.9
9.2
7.2
-2.0
ROCE¹ in % (change in %pts)
61.7
72.2
74.3
77.7
49.8
-27.9
MOTORCYCLES SEGMENT
EBIT margin in % (change in %pts)
9.6
ROCE¹ in % (change in %pts)
9.1
9.0
9.1
8.1
-1.0
21.8
31.6
33.0
34.0
28.4
FINANCIAL SERVICES SEGMENT
RoE in % (change in %pts)
19.4
20.2
6.7
2,463,526
1284
EBIT margin¹ in % (change in %pts)
85,846
1,655,961
1,811,157
1,828,604
1,908,640
4.4
Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 275,891 units, 2015: 282,000 units, 2016: 316,200 units, 2017: 384,124 units, 2018: 459,581 units).
3 EU-28.
Adjusted value based on planned conversion to WLTP (Worldwide Harmonised Light Vehicles Test Procedure).
5 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 287,466 units, 2015: 287,755 units, 2016: 305,726 units, 2017: 396,749 units, 2018: 491,872 units).
Key financial performance indicators
→ 03
GROUP
Profit before tax¹ in € million
2014
2015
0.1
2016
2018
Change in %
8,707
9,224
9,665
10,675
9,815
-8.1
AUTOMOTIVE SEGMENT
Revenues¹ in € million
75,173
85,536
86,424
85,742
2017
21.2
124
130
2
COMBINED
MANAGEMENT REPORT
→Page 26 General Information and Group Profile
→Page 26 Organisation and Business Model
→Page 36 Management System
→ Page 40 Report on Economic Position
→ Page 40 General and Sector-specific Environment
→Page 44 Overall Assessment by Management
→ Page 65 Results of Operations, Financial Position and Net Assets
→ Page 80 Comments on Financial Statements of BMW AG
→ Page 84 Report on Outlook, Risks and Opportunities
→Page 84 Outlook
→Page 90 Risks and Opportunities
→Page 103 Internal Control System Relevant for Accounting and
Financial Reporting Processes
→ Page 104 Disclosures Relevant for Takeovers and
Explanatory Comments
Composition and Work Procedures of the Board of
Management of BMW AG and its Committees
→Page 208 Composition and Work Procedures of the
Supervisory Board of BMW AG and its Committees
→ Page 215 Disclosures Pursuant to the Act on Equal
Gender Participation
→Page 216 Information on Corporate Governance Practices Applied
beyond Mandatory Requirements
Compliance in the BMW Group
→Page 218
→Page 223 Compensation Report
(Part of the Combined Management Report)
→ Page 239 Responsibility Statement by the
Company's Legal Representatives
→ Page 240 Independent Auditor's Report
5
OTHER INFORMATION
→Page 248 BMW Group Ten-year Comparison
→Page 250 Glossary - Explanation of Key Figures
→Page 252 Index
→Page 254 Index of Graphs
→Page 206
Members of the Supervisory Board
→ Page 203
Members of the Board of Management
ANNUAL REPORT 2018
#Milestones
in Future Mobility
BMW
GROUP
THE NEXT
100 YEARS
B
M
M
MINI
Rolls-Royce
Motor Cars Limited
We are inventing the mobility of the future,
in which we think and work in new ways.
We invite you to learn more about how we
see the future today.
CONTENTS
→ Page
→Page 255 Financial Calendar
1
4 BMW Group in Figures
→ Page
8
Report of the Supervisory Board
→Page 16 Statement of the Chairman of the
Board of Management
4
CORPORATE
GOVERNANCE
→Page 200 Statement on Corporate Governance
(Part of the Combined Management Report)
Information on the Company's Governing Constitution
Declaration of the Board of Management and of the
Supervisory Board Pursuant to § 161 AktG
→ Page 200
→ Page 201
→Page 20 BMW AG Stock and Capital Markets in 2018
→ Page 202
TO OUR SHAREHOLDERS
→Page 256 Contacts
3
GROUP FINANCIAL
→Page 4 BMW Group in Figures
→Page 8 Report of the Supervisory Board
→ Page 16 Statement of the Chairman of the Board of Management
→Page 20 BMW AG Stock and Capital Markets in 2018
1
To Our
Shareholders
→ BMW Group
in Figures
BMW GROUP IN FIGURES
Key non-financial performance indicators
→ 01
GROUP
2014
2015
2016
Report of the
Supervisory Board
Statement of
the Chairman of
the Board of
Management
BMW AG Stock and
Capital Markets
2017
Change in %
Workforce at year-end¹
116,324
Norbert Reithofer
Chairman of the Supervisory Board
124,729
129,932
134,682
3.7
AUTOMOTIVE SEGMENT
Deliveries²
2,117,965
2,247,485
2,367,603
Fleet emissions in g CO2/km³
2018
127
BMW Group in
Figures
1
STATEMENTS
→Page 110 Income Statement
→ Page 110 Statement of Comprehensive Income
→Page 112 Balance Sheet
→Page 114
Cash Flow Statement
→ Page 116
Statement of Changes in Equity
→ Page 118
Notes to the Group Financial Statements
→Page 118
Accounting Principles and Policies
→ Page 139
Notes to the Income Statement
To Our
Shareholders
→ Page 145
→ Page 146
Notes to the Balance Sheet
→Page 167
Other Disclosures
→Page 184 Segment Information
→Page 190 List of Investments at 31 December 2018
MILESTONES
IN FUTURE MOBILITY
Our Annual Report is also available
in digital form under:
www.annual-report2018.bmwgroup.com
The figures for fuel consumption, CO₂ emissions and power consumption are calculated
based on the measurement methods stipulated in the current version of Regulation
(EU) 715/2007. This information is based on a vehicle with basic equipment in Germany;
ranges take into account differences in wheel and tire size selected as well as optional
equipment and can change based on configuration. Fuel consumption and CO₂ emissions
information are available on page 108.
The figures have been calculated based on the new WLTP test cycle and adapted to NEDC
for comparison purposes. In these vehicles, different figures than those published here may
apply for the assessment of taxes and other vehicle-related duties which are (also) based
on CO2-emissions. These figures are provisional.
For further details of the official fuel consumption figures and official specific CO2 emissions
of new cars, please refer to the "Manual on fuel consumption, CO₂ emissions and power
consumption of new cars", available at www.dat.de/co2/.
TO OUR SHAREHOLDERS
Notes to the Statement of Comprehensive Income
18.1
122,244
-3.3
5,817
8.83/8.85
6,396
6,910
8,675
9.70/9.72
10.45/10.47
13.07/13.09
7,207
10.82/10.84
-16.9
-17.2/-17.2
Pre-tax return on sales ¹³ in % (change in %pts)
10.8
10.0
10.3
10.9
10.1
-0.8
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
² Expenditure for capitalised development costs, other intangible assets and property, plant and equipment.
3 Group profit before tax as a percentage of Group revenues.
5
60
To Our
Shareholders
→ BMW Group
in Figures
BMW Group deliveries of automobiles¹
→ 05
BMW Group revenues
→ 07
Earnings per share¹ in €
Group net profit¹
-33
Loss from discontinued operations
2,166
2,207
2,161
-2.1
Other Entities
154
211
170
80
-45
Eliminations¹
-163
-664
-772
in 1,000 units
-534
Group income taxes¹
-2,890
-2,828
-2,755
-2,000
-2,575
-28.8
Profit from continuing operations
5,817
6,396
6,910
8,675
7,240
-16.5
553
2,500
2,367.6
2,463.5 2,490.7
2016
20172 2018
BMW Group profit before tax
→ 08
in € million
10,675
11,000
9,665
9,815
9,224
8,707
5,500
2014
2015
2015
2016
1
REPORT OF THE
SUPERVISORY BOARD
STATEMENT OF THE
CHAIRMAN OF THE
To Our
Shareholders
BMW Group in
Figures
Report of the
Supervisory Board
Statement of
the Chairman of
the Board of
Management
BMW AG Stock and
Capital Markets
BOARD OF MANAGEMENT
BMW AG STOCK AND
CAPITAL MARKETS IN 2018
80
To Our
Shareholders
→ Report of the
14.8
20172 2018
1,975
2014
80.4
2,247.5
2,118.0
1,250
0
2014
2015
2016
2017
2018
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
(2014: 275,891 units, 2015: 282,000 units, 2016: 316,200 units, 2017: 384,124 units,
2018: 459,581 units).
BMW Group profit before financial result (EBIT)
→ 06
in € million
11,000
50
9,593
9,118
9,386
9,121
5,500
2014
2015
2016
20172 2018
2 Prior year figures adjusted due to first-time application of IFRS 15,
see note 6 to the Group Financial Statements.
in € billion
98.3
97.5
100
94.2
92.2
9,899
1,723
→Page 45 Comparison of Forecasts for 2018 with Actual Results in 2018
→Page 48 Review of Operations
-17.6
98,282
97,480
-0.8
Automotive¹
75,173
85,536
86,424
85,742
85,846
0.1
Motorcycles¹
Financial Services
1,679
1,990
94,163
2,069
2,173
-4.4
20,599
23,739
25,681
27,567
28,165
2.2
Other Entities
7
7
6
7
6
2,272
-14.3
92,175
-39.2
Financial Services
Further financial performance figures
→ 04
in € million
2014
2015
2016
2017
2018
Change in %
Total capital expenditure²
6,100
5,890
5,823
80,401
7,112
12.7
Depreciation and amortisation
4,170
4,659
4,806
4,822
5,113
6.0
Free cash flow Automotive segment
3,481
5,404
5,792
4,459
2,713
8,013
Eliminations1
Group revenues¹
-19,097
169
-17
14
-27
Eliminations¹
-65
-575
-663
-404
601
Group profit before tax (EBT)1
8,707
9,224
10,675
71
9,815
Automotive1
6,886
7,523
7,916
8,717
6,977
-20.0
Motorcycles¹
107
179
185
-17,057
169
205
-8.1
Other Entities
9,665
9,121
-18,710
-0.2
-8.1
Group profit before financial result (EBIT)1
9,118
9,593
9,386
9,899
-20,017
-7.9
Automotive¹
7,244
7,836
-17,306
7,888
7,695
1,756
-21.6
Motorcycles¹
112
182
187
207
175
-15.5
Financial Services
6,182
1,981
2,184
2,190
2,194
Significant risks reported from within the network are
firstly presented for review to the Risk Management
Steering Committee, chaired by Group Controlling.
After review, the risks are reported to the Board of
Management and the Supervisory Board. Risks are
classified according to their potential impact on
earnings and risk-bearing capacity. The expected risk
and worst-case amounts are assessed in each case net
of risk mitigation measures.
During 2018, the risk management system focused
on two main areas. Firstly, generic risk models were
developed for all aspects of the business with a view
to ensuring that recurring individual risks are better
assessed. These risk models were validated by mea-
suring specific risks.
Risk management process
Secondly, procedures to ensure that all risk scenarios
are considered were further tightened. Instead of
quantifying risks by means of a single-point estimate
based on the net loss and probability of occurrence,
risks are assessed using the loss distribution approach
based on expected and worst-case values, thereby
enabling better comparability of risk categories for
both internal and external reporting purposes.
The risk management process covers the entire Group
and comprises the early identification of risks, detailed
analysis and risk assessment, the coordinated use of
relevant management tools as well as monitoring and
evaluation of measures taken.
Overall risk assessment is performed in conjunction
with the calculation of risk-bearing capacity. For this
purpose, worst-case risks are aggregated using a
value-at-risk model, taking correlation effects into
account and compared with the asset cushion. The
segment's risk-bearing capacity is regularly controlled
through an integrated limit system for the various
risk categories.
Effectiveness
In addition to comprehensive risk management,
sustainable business practice constitutes one of the
core strategic principles of the company. Risks or
opportunities relating to sustainability issues are
considered by the Sustainability Committee. Resulting
strategic options and measures are put forward to
the Sustainability Board, which comprises the entire
Board of Management. Where necessary, risk aspects
may be integrated within the Group-wide risk net-
work. The composition of the Risk Management
Steering Committee and the Sustainability Committee
ensures that risk and sustainability management are
closely coordinated.
In order to comply with the CSR Directive Imple-
mentation Act, a review of risks with impact on
non-financial aspects referred to in the law was
conducted as part of the reporting process for the
Group's Non-Financial Declaration. Significant risks
within the meaning of the law are those relating
to business activities, business relationships and
products and services of the BMW Group which are
highly likely to have a serious adverse impact. No
significant risks were identified during the review.
The Group's Non-Financial Declaration is provided in
the Sustainable Value Report 2018, which is available
on the Internet at www.bmwgroup.com/svr.
91
42
92
Risk management as a whole comprises the Risk
Management Steering Committee, the Compliance
Committee, the Internal Control System and the
Group Internal Audit.
Combined
Management
Report
The risk management system is regularly examined
by Group Internal Audit. An ongoing exchange of
experience with other companies ensures that new
insights are incorporated in the risk management
system of the BMW Group, thus providing for con-
tinual improvement. Training sessions, development
programmes and information events are regularly
conducted across the BMW Group, particularly within
the risk management network. These measures are
essential ways of preparing those involved in the
process for new or additional demands.
The Group risk management system is organised
formally as a decentralised, company-wide network
and is steered by a centralised risk management
function. Every BMW Group division is represented
within the risk management organisation by Network
Representatives. This formal structure reinforces the
network's visibility and underlines the importance
of risk management within the BMW Group. Roles,
responsibilities and tasks of the centralised risk man-
agement function and the Network Representatives
are clearly described, documented and understood.
In view of the dynamic growth of business and the
increasingly volatile environment, the BMW Group
regularly reviews its risk management system for
effectiveness and appropriateness.
Compliance
Committee
Board of
Management
Report on Outlook,
Risks and
Opportunities
Identification
Practicability
Reporting/
Monitoring
Completeness
Group-wide
Group
Audit
risk management
Measures
Internal Control System
Controlling
Risk
Management
Steering
Committee
Supervisory
Board
Analysis and
Measurement
→ Risks and
RISKS AND OPPORTUNITIES
In the Financial Services segment risk management
also addresses regulatory requirements, such as Basel
III. Internal methods to identify, measure, manage and
monitor risks within the Financial Services segment
comply with national and international standards.
Risk management in the Financial Services business is
based on the risk strategy, the Internal Capital Adequacy
Assessment Process Framework and a set of rules
comprising strategic principles and guidelines. The
risk management process is ensured organisationally
through a clear division between front- and back-office
activities and a comprehensive internal control system.
The main instrument of risk management within the
Financial Services segment is ensuring the Group's
risk-bearing capacity. At all times, risks in the sense of
unexpected losses must be covered. This is achieved by
means of an asset cushion in the form of equity capital
derived from the entity's risk appetite. Unexpected
losses are measured according to various value-at-risk
models, which are validated at regular intervals. Risks
are aggregated after taking account of correlation
effects. In addition to assessing the Group's ability to
bear risk under normal circumstances, stress scenarios
are also examined. The segment's risk-bearing capacity
is regularly controlled through an integrated limit
system for the various risk categories.
> €50-400 million
> € 400 million
A dynamic market environment also gives rise to
opportunities. The BMW Group continually monitors
macroeconomic trends as well as developments within
the sector and overall environment. This includes
external regulations, suppliers, customers and com-
petitors. Identifying opportunities is an integral part
of the strategic planning process of the BMW Group.
The Group's product and service portfolio is continually
reviewed on the basis of these analyses. This results,
for example, in new product projects being presented
to the Board of Management for consideration.
Continuous monitoring of major business processes
and strict cost controls are essential for ensuring strong
profitability and return on capital employed. Probable
measures to increase profitability are incorporated in
the outlook. The implementation of modular-based
and common architectures, for instance, allows iden-
tical components to be deployed increasingly across
models and product lines. This reduces development
costs and investment on the series development of
new vehicles and contributes positively to profitability.
In addition, it also supports economies of scale in
production costs and increases production flexibility.
Moreover, a more competitive cost basis opens up
opportunities to enter new market segments.
The implementation of identified opportunities is
undertaken on a decentralised basis within the rele-
vant functions. The significance of opportunities for
the BMW Group is classified on a qualitative basis in
the categories "significant" and "insignificant".
Risks and opportunities
> €0-50 million
The following table provides an overview of all risks
and opportunities and indicates their significance
for the BMW Group. Overall, no risks which could
threaten the continued existence of the BMW Group
were identified either at the balance sheet date or at
the date on which the Group Financial Statements
were drawn
up.
Risks or opportunities which could, from today's
perspective, have a significant impact on the results
of operations, financial position and net assets of the
BMW Group are described below.
Risks
Opportunities
Classification of Change compared
risk amount
to prior year*
The objective of the risk management system, and
the main function of risk reporting, is to identify,
measure and, where possible, actively manage internal
or external risks that could threaten the attainment of
the Group's corporate targets. The risk management
system covers all significant and existential risks
to the Group. Group risk management focuses on
the criteria of effectiveness, practicability and com-
pleteness. Responsibility for risk reporting is not
allocated to a centralised function, but is part of the
task of each employee and manager, according to their
individual function. According to Group-wide rules,
every employee and manager has a duty to report risks
through the relevant reporting channels.
7
Risk amount
purposes
Opportunity management system and
opportunity identification
Risk measurement
Risks are classified as high, medium or low, based on
their significance with respect to results of operations,
financial position and net assets and to performance
indicators of the BMW Group. The impact of risks is
measured and reported net of risk mitigation mea-
sures (net basis).
The overall impact of a risk's occurrence on the results
of operations, financial position and net assets on
the basis of worst-case scenarios for the two-year
assessment period is classified as follows:
Class
Low
Medium
High
Potential earnings impact
> €0-500 million
> €500-2,000 million
> €2,000 million
In the following sections, earnings impact is used
consistently to cover the overall impact on results of
operations, financial position and net assets.
The risk amount is the basis for the classification
of risk levels at the BMW Group. These have been
revised as part of the further development of the risk
management system. The risk amount corresponds to
the average earnings impact, taking into account prob-
ability of occurrence and risk mitigation measures.
Overall, the following criteria apply for the
of classifying the risk amount:
Class
Low
Medium
High
Opportunities
Risk management system
Depending on the political and economic situation
and the risks and opportunities described below,
actual business performance could differ from current
expectations.
7
1 Adjusted with effect from the financial year 2018.
² Adjusted in accordance with IFRS 16.
3 Based on adjusted outlook.
4 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 459,581 units).
5 EU-28.
2018
reported
Return on equity
20182
adjusted
Outlook³
€ million
9,815
9,627
significant decrease
134,682
2019
FINANCIAL SERVICES SEGMENT
Return on capital employed
EBIT margin
Fleet emissions5
Deliveries to customers4
AUTOMOTIVE SEGMENT
Workforce at year-end
Profit before tax
GROUP
Growing uncertainty, particularly with regard to
political developments - such as Brexit and inter-
national trade and customs policies may cause
economic developments in many regions to deviate
from expected trends and outcomes. This would also
have a significant impact on the business performance
of the BMW Group.
Classification
year's level. However, both performance indicators
will be above their long-term targets of 26% (RoCE)
and 14% (ROE¹) respectively. Deliveries to customers
in the Motorcycles segment are forecast to show a solid
increase, with an EBIT margin within the target range
of between 8 and 10% and the RoCE also showing a
solid increase on the previous year.
→ 64
BMW Group key performance indicators
Business is expected to be more volatile in the finan-
cial year 2019. While numerous new automobile and
motorcycle models as well as an expanded range of
individual mobility-related services will provide addi-
tional momentum, the various challenges described
above are likely to have an offsetting impact. Research
and development expenses will remain at a high level in
view of future-oriented projects. Accordingly, Group
profit before tax is forecast to decrease significantly.
Automobiles segment deliveries to customers should
increase slightly and reach a new record level. At the
same time, fleet carbon dioxide emissions are forecast
to drop slightly. The Group's targets are to be met
with a workforce size at the previous year's level.
The Automotive segment's EBIT margin in 2019 is
expected to lie within the range of between 6 and 8%.
A significant decrease is forecast for the RoCE of the
Automobiles segment. The RoE for the Financial
Services segment should remain at the previous
Overall assessment by Group management
MOTORCYCLES SEGMENT
Deliveries to customers
in line with last
year's level
units
2,490,664
slight increase
year's level
89
90
90
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
RISKS AND
OPPORTUNITIES
As a worldwide-leading provider of premium cars,
motorcycles and mobility services, as well as related
financial services, the BMW Group is exposed to
numerous uncertainties and change. Making full
use of the opportunities arising out of change is a
fundamental basis of the Group's corporate success.
In order to achieve growth, profitability, efficiency
and continued sustainable activities going forward,
the BMW Group must consciously assume risks.
Management of opportunities and risks is essential for
the Group to react appropriately to changes in political,
economic, technical or legal conditions. Opportunities
and risks which are likely to materialise are taken into
account in the Outlook Report. The following sections
focus on potential future developments or events,
which could result in a positive (opportunity) or a
negative (risk) deviation from the BMW Group's out-
look. The earnings impact of risks and opportunities is
assessed separately without offsetting. Opportunities
and risks are assessed with respect to a medium-term
period of two years.
Risk management in the BMW Group
→ 65
in line with last
As part of the risk management process, all individual
and cumulative risks that represent a threat to the
success of the business are monitored and managed.
Any risks capable of posing a threat to the going-
concern status of the BMW Group are generally
avoided. Where no specific reference is made, oppor-
tunities and risks relate to the Automotive segment.
The scope of entities consolidated in the Report on
Risks and Opportunities corresponds to the scope
of consolidated entities included in the BMW Group
Financial Statements.
solid increase
14.8
g CO2/km
128
slight reduction
%
7.2
%
49.8
between 6 and 8
significant decrease
units
165,566
%
8.1
%
28.4
%
solid increase
between 8 and 10
Change compared
to prior year
Stable*
93
The transition in China from an investment-driven to
a consumer-driven economy is associated with slower
growth rates and, potentially, greater instability in
the short to medium term on financial markets. If the
Chinese economy were to grow at a significantly slower
pace than expected, the consequence would be not
only a decline in automobile sales, but also, potentially,
lower demand for raw materials, which would have a
negative impact above all on emerging economies such
as Brazil, Russia or South Africa. Any further drop in
raw material prices could result for the BMW Group
in lower demand from these countries. Turmoil on
the Chinese property, stock and banking markets
and an overly rapid increase in interest rates by the
US Federal Reserve could pose considerable risks for
global financial market stability. Such developments
could lead to greater currency fluctuations and have
a negative impact on emerging markets in particular.
Furthermore, increasing political unrest, military
conflicts, terrorist activities, natural disasters or
pandemics could have a lasting negative impact on
the global economy and international capital markets.
The BMW Group addresses macroeconomic risks pri-
marily by internationalising its sales and production
structures, in order to minimise the extent to which
earnings depend on risks in individual countries
and regions. Flexible sales and production processes
within the BMW Group increase the limited ability
to react quickly to regional economic developments.
Should the global economy develop significantly bet-
ter than presented in the outlook, macroeconomic
opportunities could arise for the BMW Group's
revenues and earnings. Significantly stronger GDP
growth in China, demand-oriented reforms within the
eurozone, a cancellation of Brexit and intensified trade
relations between the EU and the UK, further growth
stimulus through the tax reform in the USA or more
robust consumer spending in emerging markets due to
rising raw material prices could result in significantly
stronger sales volume growth, reduced competitive
pressures and corresponding improvement in pricing.
The planned expansion of production capacities will
enable emerging opportunities to be exploited to a
greater degree. Macroeconomic opportunities that
could generate a sustainable impact on earnings are
currently classified by the BMW Group as insignificant.
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
The sudden introduction of more stringent legislation
and regulations, particularly with regard to emissions,
safety and consumer protection as well as regional
vehicle-related purchase and usage taxes, represents
a significant risk for the automobile industry. Country-
and sector-specific trade barriers can also change at
short notice. A sudden tightening of regulations in
any of these areas can necessitate significantly higher
investments and ongoing expenses or influence cus-
tomer behaviour. Risks from changes in legislation
and regulatory requirements could have a high impact
on earnings over the two-year assessment period.
Compared to the previous year, the potential impact
on earnings has increased. The risk amount attached
to these risks is classified as high. Compared with the
previous year, risks arising from the further tightening
of emissions laws are assessed as being stable.
95
The impending Brexit could have a long-term adverse
impact on the BMW Group, particularly as a result
of increased trade barriers in the form of customs
duties in relation to the European single market. Any
such trade barriers could have a negative impact on
volumes and costs both for vehicles and components
produced in the EU for the UK as well as those pro-
duced in the UK for the European market. In extreme
cases, this could also result in production losses due
to delays in customs clearance. In addition, Brexit
could lead to reduced customer spending in the wake
of weaker economic performance, particularly in
the UK. In the short and medium term, uncertainty
regarding the outcome of the negotiations with the
EU could exacerbate these factors and cause further
negative currency effects. A possible further economic
downturn of countries in the EU could also potentially
reduce growth prospects for the BMW Group. European
integration with a unified economic and currency area
is an important pillar of economic stability in Europe.
95
Further risks can result from the tightening of existing
import and export regulations. These lead primarily
to additional expenses but can also restrict imports
and exports of vehicles or parts.
An established regulatory framework for innovative
mobility solutions as well as government incentives
are important prerequisites for introducing product
innovations, such as autonomous driving, and for
scaling up the range of electric mobility offerings. For
the electrified vehicles of the BMW Group a faster
expansion of charging infrastructure could increase
acceptance and help boost sales of planned or recently
introduced product innovations compared to forecast.
This includes implementation of the 360° ELECTRIC
portfolio in the field of electric mobility and collabo-
ration with Toyota on hydrogen fuel cell technology.
information are
available on
page 108.
The BMW Group's earnings could also be positively *Fuel consumption
affected in the short to medium term by changes in and CO2 emissions
trading policies. A possible reduction in tariff barriers,
import restrictions or direct excise duties could lower
the cost of materials for the BMW Group, and enable
products and services to be offered to customers at
lower prices. Further opportunities for the earnings
performance of the BMW Group from changes in
legislation and regulatory requirements compared
to the outlook are classified as insignificant.
Market development
In addition to economic factors and sector-specific
political conditions, increasingly fierce competition
among established manufacturers and the emergence
of new competitors could also have effects which are
difficult to predict. Unforeseen consumer preferences
and changes in brand perceptions can give rise to
opportunities and risks. If market risks were to mate-
rialise, they could have a high earnings impact over
the two-year assessment period. The risk amount is
classified as high.
At present, the BMW Group sees increasingly
restrictive vehicle emissions regulations, particularly
for conventional drivetrain systems, not only in the
world's major markets (Europe, North America and
China), but also in other markets such as India and
Brazil. In particular, the combination of newly intro-
duced measurement procedures to reflect standard
driving cycles (WLTP) and Real Driving Emissions
(RDE) tests to reflect actual emissions on the road
on the one hand, and significantly lower emissions
thresholds on the other, pose major challenges to the
automotive sector. The BMW Group is addressing this
risk with its Efficient Dynamics concept and is playing
a pioneering role in reducing both fuel consumption
and emissions within the premium segment. One
area of focus of the BMW Group is the systematic
electrification of all brands and model series. The
product range has been increasingly expanded with
electric drivetrain systems in BMWi vehicles since
2013 and with plug-in-hybrid technologies since 2015.
These technologies have contributed to the fulfilment
of legal standards and requirements with regard to
vehicle emissions.
favourable conditions for importing vehicles. Moreover,
countermeasures by the USA's trading partners
could slow down global economic growth and have
a greater-than-expected adverse impact on the export
of vehicles produced in the USA. The BMW Group's
"production follows the market" strategy involves local
production both in the USA and with other important
trade partners. Regional production reduces the exist-
ing risk of trade barriers. Nevertheless, any increase
in trade barriers would have an adverse impact on
the BMW Group.
Opportunities
→ Risks and
Medium
Stable
* Prior year classifications have been amended in line with the revision of the risk modelling described in the "Risk management system" section and the revision of the measurement of risk amount described in
the "Risk measurement" section. In the case of risks for which prior year amounts have been reclassified, risk amounts have been classified to a higher level than reported in the Annual Report 2017.
Macroeconomic risks and opportunities
Economic conditions influence business performance
and hence the results of operations, financial position
and net assets of the BMW Group. Unforeseen dis-
ruptions in global economic relations can have highly
unpredictable effects. Macroeconomic risks can lead
to reduced purchasing power in the countries and
regions affected and lead to reduced demand for the
products and services offered by the BMW Group.
Macroeconomic risks could due to sales volume
fluctuations have a high earnings impact over the
two-year assessment period. Overall, the risk amounts
attached to macroeconomic risks are classified as high.
Macroeconomic risks are evaluated on the basis of
historical data and cash-flow-at-risk scenario analyses.
-
-
In view of the political events of recent years, global
economic developments continue to be subject to a
high degree of uncertainty, in particular with respect
to potential barriers to global trade. A reorientation
of US economic policy, changes within the EU and
possible economic agendas by parties in EU countries
that are critical of globalisation and could therefore
jeopardise stability could lead to more restrictive trade
practices in the coming years.
A possible introduction of further trade barriers,
including anti-dumping customs duties and duties
aimed at protecting national security by the US
administration, could have a significantly adverse
impact on the BMW Group's operations through less
44
94
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
Intense competition, particularly in Western Europe,
the USA and China, is a potential cause for lower
demand and for fluctuations in the regional distribu-
tion and composition of demand for BMW, MINI and
Rolls-Royce brand vehicles and for mobility services.
Greater competition could put pressure on selling
prices and margins. The BMW Group successfully
completed the conversion to the new WLTP test pro-
cedure in 2018. Markets in Europe were nevertheless
subject to a high degree of distortion on the supply
side and pressure on selling prices as a result of the
conversion. Changes in customer behaviour can also
be brought about by changes in attitudes, values,
environmental factors, and fuel or energy prices. In
order to determine price and margin risks, a scenario
approach is used. The BMW Group's flexible sales and
production processes enable risks to be reduced and
newly arising opportunities in market and product
segments to be taken.
Legal risks
Local restrictions affecting product usage in specific
sectors may limit BMW Group sales in individual mar-
kets. In some urban areas, for instance, local measures
are being introduced, including entry restrictions,
congestion charges or, in some situations, highly
restrictive registration rules. These may impact local
demand for the BMW Group vehicles affected and
hence have a negative impact on sales, margins and,
possibly, the residual values of these vehicles. The
BMW Group addresses this risk by offering locally
emissions-free vehicles, such as the BMW i3*, which
benefit from state subsidies and exemptions.
96
Within the Purchasing and Supplier Network, oppor-
tunities arise above all in the area of global sourcing
through increased efficiency and the use of innova-
tions developed by suppliers, which can lead to a
broader range of products. Making full use of location-
specific cost factors, in particular through local supplier
structures in close proximity to new and existing
BMW Group production plants and the introduction
of new, innovative production technologies, could lead
to lower cost of materials for the BMW Group. One
goal of the BMW Group is to manufacture battery cells
in Europe and to establish the relevant value chain for
cell production. In order to secure the BMW Group's
electrification strategy, a contract was signed with
CATL (Contemporary Amperex Technology) for the
supply of battery cells. The plant is currently under
construction in Thuringia. Integration of previously
unidentified innovations from the supplier market
in the Group's product range could provide a further
source of opportunities. The BMW Group offers inno-
vative suppliers numerous possibilities for creating
specific contractual arrangements which are attractive
46
97
96
98
Combined
Management
Report
BMW Group checks for compliance with the sus-
tainability standards for the supplier network. This
includes compliance with internationally recognised
human rights and applicable labour and social stan-
dards. The principal means for ensuring compliance
with the Sustainability Standards is a three-stage risk
management system for sustainability. In addition,
the technical and financial capabilities of suppliers
are monitored, especially where modular-based
production is concerned. Supplier sites are assessed
for exposure to natural hazards, such as floods or
earthquakes, in order to identify supply risks at an
early stage and implement appropriate precautions.
Fire risks at series suppliers are evaluated by means
of questionnaires and selective site inspections. In
order to minimise supply risks of raw materials, the
BMW Group draws up measures to reduce the use of
raw materials or to substitute alternative raw materials.
Report on Outlook,
Risks and
Opportunities
for those developing innovative solutions. At regular
intervals, the BMW Group honours its most inventive
suppliers with the Supplier Innovation Award. The
BMW Group expects these opportunities to have no
significant earnings impact over the assessment period
as compared to the assumptions made in the outlook.
Risks and opportunities relating to sales and marketing
In order to sell its products and services, the
BMW Group employs a global sales network, com-
prising primarily independent dealerships, branches,
subsidiaries and importers. Any threat to the contin-
ued activities of parts of the sales network would entail
risks for the BMW Group. The occurrence of sales
and marketing risks is associated with a low earnings
impact over the two-year assessment period. The risk
level is classified as low. New developments in the
field of digital communication and connectivity in par-
ticular offer new opportunities for the BMW Group's
brands. Since 2017 BMW CarData has made it possible
to provide customised service offers to BMW drivers
based on data from the vehicle. If customers wish
to use a specific service and actively consent to the
release of their telematics data, requesting companies
receive the data they need for the service in encrypted
form via BMW's secure backend database. This infor-
mation provides the basis for customised, data-based
and innovative service options. Additional opportu-
nities could arise if new sales channels contribute to
greater brand reach to customer groups than currently
envisaged in the outlook. Digital communication
and connectivity enable consumers to be reached
on a more targeted and individualised basis, thus
strengthening long-term relationships and brand
loyalty. This can lead to a more intense product and
brand experience for customers, which could result
in higher sales volume and have a positive impact on
revenues and earnings. The BMW Group invests in
advanced marketing concepts in order to intensify
customer relationships. The BMW Group estimates
the earnings impact as insignificant over the two-year
assessment period as compared to the assumptions
made in the outlook.
Information, data protection and IT
Increasing digitalisation across all areas of business
places considerable demands on the confidentiality,
integrity and availability of electronically processed
data and the associated use of information technology
(IT). In addition to the increased threat of cybercrime,
regulations covering the handling of personal data are
becoming more stringent, for example as a result of
the EU General Data Protection Regulation. If risks
relating to information security, data protection and
IT were to materialise, they could have a high earnings
impact over the two-year assessment period. Despite
extensive security measures, the risks in this area are
classified as high.
In addition to cyberattacks and direct physical inter-
vention, lack of knowledge or misconduct on the
part of employees may also represent a danger to the
confidentiality, integrity and availability of informa-
tion, data and systems. Direct consequences include
expenditure required to limit the immediate damage
and to restore systems promptly. Negative impacts on
revenue due to the non-availability of products and
services or disruptions in the production of compo-
nents or vehicles are also possible. A further indirect
result could be reputational damage.
Great importance is attached to the protection of the
confidentiality, integrity and availability of business
information as well as employee and customer data,
for instance as a result of unauthorised access or
misuse. Data security is an integral component of
all business processes and is aligned with the Inter-
national Standard ISO/IEC 27001. As part of risk
management, information security, data protection
and IT risks are systematically documented, allocated
appropriate measures by the departments concerned
and continuously monitored with regard to threat
level and risk mitigation. Regular analyses and controls
as well as rigorous security management ensure an
appropriate level of security. Despite continuous
testing and preventative security measures, it is impos-
sible to eliminate risks completely in this area. All
employees are required to treat with care information
such as confidential business, customer and employee
data, to use information systems securely and handle
risks with transparency. Group-wide requirements
are documented in a comprehensive set of principles,
guidelines and instructions, such as, for example, the
Privacy Corporate Rules for handling personal data.
Regular communication and awareness-raising mea-
sures create a high level of security and risk awareness
among those involved. Employees receive training to
ensure compliance with the applicable requirements
and internal rules. With regard to cooperations and
business partnerships, the BMW Group protects its
intellectual property as well as customer and employee
data through clear instructions on information secu-
rity and data protection and the use of information
technology. Information pertaining to key areas of
expertise as well as sensitive personal data are subject
to particularly stringent security measures. Technical
data protection incorporates industry-wide standards
and good practices. Responsibility for information
security and data protection lies for each Group
entity with the Board of Management or relevant
management team.
→ Risks and
Opportunities
Close cooperation between carmakers and suppli-
ers in the development and production of vehicles
and the provision of services generates economic
benefits, but also increased dependency. Potential
reasons for the failure of individual suppliers include
in particular increased IT-related risk, non-compliance
with sustainability or quality standards, insufficient
financial strength of a supplier, the occurrence of
natural hazards, fires and insufficient supply of raw
materials. In order to ensure a uniform level of security
for all parties concerned along the added value/supply
chain, the BMW Group focuses on obtaining evi-
dence of appropriate IT security certification from
its suppliers. As part of supplier pre-selection, the
Purchasing risks relate primarily to supply risks
caused by the failure of a supplier as well as risks
associated with the quality of bought-in parts. Pro-
duction problems incurred by suppliers could lead to
increased expenditure for the BMW Group through
to interruptions in production and a corresponding
reduction in sales. The increasing complexity of the
supplier network, especially at the level of lower tier
suppliers, whose operations can only be indirectly
influenced by the BMW Group, is a further poten-
tial cause of downtimes at supplier locations. The
increased threat of cyberattacks along the supplier
chain also give cause for a more critical assessment of
the risk situation, in this case in anticipation of future
potential risks relating to security of supply and the
protection of internal know-how. If purchasing risks
were to materialise, they could have a high earnings
impact over the two-year assessment period. The risk
amount attached to purchasing risks is classified as high.
Risks and opportunities relating to purchasing
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
New opportunities are continuously being sought to
create even greater added value for customers than
currently expected, and thereby to realise signif-
icant opportunities with respect to sales growth and
pricing. Further development of the product and
mobility portfolio and expansion in growth regions
offer the most important medium- to long-term
growth opportunities for the BMW Group. Continued
growth depends above all on the ability to develop
innovative products and services and bring them to
market. In this context, the BMW Group will focus
on developing autonomous driving and on expanding
mobility services via the planned joint venture with
the Daimler Group. If the negative impact of the cur-
rent competitive situation is reduced more quickly
than expected, additional opportunities will arise
for the BMW Group. Compared to the assumptions
made in the outlook, the BMW Group expects these
opportunities to have no significant earnings impact
over the two-year assessment period.
Risks and opportunities relating to operations
Risks and opportunities relating to production
and technologies
Risks relating to production processes and technology
fields are particularly apparent in potential sources
of interruptions in production or additional costs to
comply with quality standards under changed market
conditions. If risks arising from production processes
and technologies were to materialise, they could have
a high earnings impact over the two-year assessment
period. The corresponding risk amounts are classified
as medium.
Production stoppages and downtimes due to fire,
machine and tooling breakdowns, IT disruptions,
damage to infrastructure, power failures, transporta-
tion and logistical disruptions represent risks which
the BMW Group addresses through appropriate
precautions.
Production structures and processes are designed
from the outset with measures to minimise potential
damage and the probability of occurrence. The inter-
changeability of production facilities, preventative
maintenance and management of spare parts across
sites play an important role within the production
network. Risk is also reduced through flexible working
hour models and working time accounts as well as the
ability to build individual split models or engine types
with a high degree of flexibility - either additionally or
alternatively - at plants of the BMW Group, depend-
ing on requirements. These various features enable
pro-
customer wishes to be met appropriately and allow any
backlogs caused by temporary interruptions in
duction to be made up within a short to medium time
frame. Other measures worthy of mention include the
technical fire protection and anti-flooding measures
undertaken at the San Luis Potosí plant in Mexico.
Risks arising from business interruptions due to fire
in production facilities or at suppliers are also appro-
priately covered with insurance companies of good
credit standing. Measures taken in connection with
the current challenges posed by Brexit include build-
ing up adequate levels of safety stocks and increasing
flexibility along the supply chain.
In order to meet high standards in product quality
and achieve favourable external ratings (e.g. for
product safety), reduce statutory and non-statutory
warranty obligations and keep down follow-up costs
arising from other changes in planning assumptions,
it may be necessary to incur a higher level of expen-
diture than originally forecast. If warranty expenses,
including provisions for recalls, were to exceed the
amounts previously recognised and expected, higher
allocations to provisions in connection with goodwill
and warranty measures would have a negative impact
on the BMW Group. Such an allocation, for example,
to the warranty provision was made in 2018, among
other things in connection with the exhaust gas recir-
culation cooler. In addition, availability of products
may be limited, particularly at the start of production
for new vehicle projects. These risks are mitigated
through regular audits and the continual improve-
ment of quality management, which ensures the high
standard of quality. The BMW Group also recognises
appropriate accounting provisions for statutory and
non-statutory warranty obligations. These reduce the
risk to earnings, as they are already taken into account
in the outlook. It cannot be ruled out, however, that
damages could arise that are either not covered or not
fully covered by provisions.
Further information on risks related to provisions for
statutory and non-statutory warranty obligations is pro-
→ see vided in → note 33 to the Group Financial Statements.
notes 33
The BMW Group sees opportunities in production
processes and technology fields primarily through
the competitive edge gained from mastering new
and complex technologies. Opportunities could
arise as a result of further technological innovations
related to products or processes, as well as from
organisational changes which improve efficiency or
increase competitiveness of the BMW Group. The
early integration of WLTP-related requirements into
production and sales planning systems, for instance,
enabled the BMW Group to offer its fleet customers
the usual product range without interruption. Given
the long lead times in developing new products and
processes, additional opportunities are not expected
to have a significant impact on earnings during the
outlook period.
96
Stable*
Medium
Operational risks
Stable
Insignificant
Stable
Purchasing
High
Stable
Medium
Insignificant
Sales and marketing
Low
Stable
Insignificant
Stable
Information, data protection and IT
Stable
Production and technology
Risks and opportunities relating to operations
Stable
Macroeconomic risks and opportunities
High
Stable
Insignificant
Stable
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
High
Stable
Insignificant
Stable
Market developments
High
Stable
Insignificant
High
Stable
Insignificant
Stable
Risks and opportunities relating to the provision of financial services
Credit risk
Medium
Stable
Significant
Stable
Residual value
High
Significant
Stable
Interest rate changes
Medium
Stable*
Significant
Stable
Stable
93
Significant
High
Financial risks and opportunities
Foreign currencies
High
Stable*
Significant
Stable
Raw materials
Medium
Stable*
Significant
Stable
Liquidity
Low
Stable
Pension obligations
Stable*
The BMW Group pays particular attention to the quality
of the parts built into its vehicles. In order to attain a
very high level of quality, it may become necessary to
invest in new technological concepts or discontinue
planned innovations, with the result that the cost of
materials could exceed levels accounted for in the
outlook. By monitoring and developing global supplier
markets, the BMW Group continuously strives to
optimise its competitiveness by working together
with the world's best product and service providers.
Return on capital employed
EBIT margin
other joint venture partner or in the liquidation
of the joint venture entity.
The Board of Management is authorised to buy back
shares and sell repurchased shares in situations speci-
fied in §71 AktG, for example to avert serious and
imminent damage to the Company and/or to offer
shares to persons employed or previously employed
by BMW AG or one of its affiliated companies.
In accordance with the resolution passed at the
Annual General Meeting on 15 May 2014, the Board of
Management is also authorised up until 14 May 2019
to acquire shares of non-voting preferred stock of the
Company via the stock exchange, up to a maximum
of 1% of the share capital existing at the date of the
resolution. The consideration paid by the Company
per share of non-voting preferred stock (excluding
transaction costs) may not be more than 10% above
or below the market price of the stock determined
by the opening auction on the date of trading in the
Xetra trading system (or a successor system having a
comparable function). Moreover, the Board of Man-
agement is authorised to use the acquired own shares
of non-voting preferred stock for all legally admissible
purposes, specifically including the right to offer for
sale and transfer shares to persons employed by the
Company or one of its affiliated companies up to a
proportionate amount of €5 million of share capital.
The subscription rights of existing shareholders to the
new shares of preferred stock used for the purpose
stated above are excluded. The authorisations may
also be exercised in parts over several transactions.
In accordance with Article 4 no. 5 of the Articles of
Incorporation, the Board of Management is authorised,
with the approval of the Supervisory Board, to increase
for cash contributions BMW AG's share capital during
the period until 14 May 2019 by up to €3,132,883 for
the purposes of an Employee Share Programme by
issuing new non-voting shares of preferred stock,
which carry the same rights as existing non-voting
preferred stock (Authorised Capital 2014). Subscrip-
tion rights of existing shareholders are excluded. No
conditional capital is in place at the reporting date.
Significant agreements of the Company taking
effect in the event of change in control following a
takeover bid
BMW AG is party to the following major agreements,
which contain provisions that would apply in the event
of a change in control or the acquisition of control as a
result of a takeover bid:
An agreement concluded with an international
consortium of banks relating to a syndicated
credit line, which was not being utilised at the
balance sheet date, entitles the lending banks
to give extraordinary notice to terminate the credit
line, such that all outstanding amounts, including
interest, would fall due immediately if one or more
parties jointly acquire direct or indirect control
of BMW AG. The term control is defined as the
acquisition of more than 50% of the share capital
of BMW AG, or the right to receive more than 50%
of the dividend or the right to direct the affairs
of the Company or appoint the majority of the
members of the Supervisory Board.
― A cooperation agreement concluded with
Peugeot SA relating to small (1- to 1.6-litre)
petrol engines entitles each of the cooperation
partners to give extraordinary notification of
termination in the event of a competitor acquiring
control over the other contractual party and if
any concerns of the other contractual party re-
garding the impact of the change of control on
the cooperation arrangements are not resolved
during the subsequent discussion process.
BMW AG acts as guarantor for all obligations aris-
ing from the joint venture agreement relating
to BMW Brilliance Automotive Ltd. in China. This
agreement grants an extraordinary right of termi-
nation to either joint venture partner in the event
that - either directly or indirectly - more than 25%
of the shares of the other party are acquired by a
third party, or if the other party is merged with
another legal entity. The termination of the joint
venture agreement may result in the sale of the
shares to the other joint venture partner or in the
liquidation of the joint venture entity.
Framework agreements are in place with financial
institutions and banks (ISDA Master Agreements)
relating to trading activities with derivative finan-
cial instruments. These agreements include an
extraordinary right of termination which triggers
actions in the event that the creditworthiness of
the party involved is significantly weaker following
a direct or indirect acquisition of beneficially
owned equity capital that confers the power to elect
a majority of the Supervisory Board of a contrac-
tual party or any other ownership interest that
enables the acquirer to exercise control over a
contractual party, or which constitutes a merger
or a transfer of net assets.
Financing agreements in place with the European
Investment Bank (EIB) entitle the EIB to request
early repayment of the loan in the event of an
imminent or actual change in control of BMW AG,
if the EIB has reason to assume - after the change
in control or 30 days after it has made a request
to discuss the situation - that the change in control
could have a significantly adverse impact, or if
the borrower refuses to hold any such discussions.
A change in control of BMW AG arises if one
or more individuals take over or lose control of
BMW AG, with control being defined in the
above-mentioned financing agreements as
(i) holding or having control over more than 50%
of the voting rights, (ii) the right to appoint the
majority of the members of the Board of Man-
agement or Supervisory Board, (iii) the right to
receive more than 50% of dividends payable
or (iv) any other comparable controlling influence
over BMW AG.
On the basis of a Business Combination Agree-
ment concluded on 28 March 2018, BMW AG
and Daimler AG have established five operating
joint ventures in the areas of car sharing, ride
hailing, parking, charging and multimodality, into
which BMW has contributed a number of busi-
nesses, including DriveNow, Parkmobile, Digital
Charging Solutions and ReachNow. The Frame-
work Joint Venture Agreement entitles Daimler AG
and BMW AG (principals) each to initiate a bid-
ding process in the event that (i) a shareholder
or third party notifies the other principal
pursuant to § 33 WPHG that voting rights, includ-
ing those attributed pursuant to § 34 WPHG,
have reached the threshold of 50% or pursuant
to § 20 AktG that a shareholding of more than
50% exists, or (ii) a shareholder or a third party
holds more than 50% of the voting rights or
shares in the other principal, including those at-
tributed pursuant to § 30 WPHG (iii) a share-
holder or third party entered into a domination
agreement with the other principal, who is the
dominated entity. Such a bidding process is re-
quired to be carried out for each of the above-
mentioned business divisions as well as for the
special-purpose entity holding the relevant
trademark rights, whereby the highest bidding
principal for the respective business division
or special-purpose entity wins the relevant bid.
Several supply and development contracts between
BMW AG and various industrial customers, all
relating to the sale of components for drivetrain
systems, grant an extraordinary right of ter-
mination to the relevant industrial customer in
specified cases of a change in control at BMW AG
(for example BMW AG merges with a third party
or is taken over by a third party; an automobile
manufacturer acquires more than 50% of the voting
rights or share capital of BMW AG).
BMW AG is party to the shareholder agreement
relating to There Holding B.V., which is the
majority shareholder of the HERE Group. In
accordance with the shareholder agreement,
each contractual party is required to offer its
directly or indirectly held shares in There
Holding B. V. for sale to the other shareholders
in the event of a change in control. A change
in control of BMW AG arises if a person takes
over or loses control of BMW AG, with control
defined as (i) holding or having control over
more than 50% of the voting rights, (ii) the
possibility to control more than 50% of voting
rights exercisable at Annual General Meetings
on all or nearly all matters, or (iii) the right to
determine the majority of members of the
Board of Management or the Supervisory Board.
Furthermore, a change in control occurs if
competitors of the HERE Group or certain potential
competitors of the HERE Group from the tech-
nology sector acquire at least 25% of BMW AG.
If none of the other shareholders acquire these
shares, the other shareholders are entitled to
resolve that There Holding B. V. be dissolved.
The development collaboration agreement between
BMW AG, Intel Corporation and Mobileye Vision
Technologies Ltd., relating to the development of
technologies used in highly and fully automated
vehicles, may be terminated by any of the con-
tractual parties if a competitor of one of the
parties acquires and subsequently holds at least
30% of the voting shares of one of the contrac-
tual parties.
The development collaboration agreement between
BMW AG, FCA US LLC and FCA Italy S.p.A.,
relating to the development of technologies used
in automated vehicles, may be terminated by
any of the contractual parties if certain competi-
tors in the technology sector acquire and sub-
sequently hold at least 30% of the voting shares
of the other contractual party.
107
108
Combined
Management
Report
→ Disclosures Relevant
for Takeovers
and Explanatory
Comments
BMW AG has agreed with Great Wall Motor
Company Limited to establish the joint venture
Spotlight Automotive Ltd. in China. The
agreement grants an extraordinary right of
termination to either joint venture partner
in the event that - either directly or indirectly -
more than 25% of the shares of the other
party are acquired by a third party or the other
party is merged with another legal entity.
The termination of the joint venture agreement
may result in the sale of the shares to the
Authorisations of the Board of Management in
particular with respect to the issuing or buying
back of shares
and Explanatory
Comments
for Takeovers
→ Disclosures Relevant
4 Controlled entities, of which 3% or more are attributed: AQTON GmbH & Co. KG für Automobilwerte.
5 Controlled entities, of which 3% or more are attributed: Susanne Klatten Beteiligungs GmbH.
Direct share of
voting rights
Indirect share of
voting rights
0.2
25.62
9.0
16.63
16.64
16.6
0.2
20.75
20.7
The voting percentages disclosed above may have
changed subsequent to the stated date if these changes
were not required to be reported to the Company.
As the Company's shares are issued to bearer, the
Company is generally aware of changes in sharehold-
ings only if such changes are subject to mandatory
notification rules.
Shares with special rights which confer control
rights
There are no shares with special rights which confer
control rights.
Control of voting rights when employees
participate in capital and do not exercise their
control rights directly
Like all other shareholders, employees exercise their
control rights pertaining to shares they have acquired
in conjunction with the Employee Share Programme
and/or the share-based remuneration programme
directly on the basis of relevant legal provisions and
the Company's Articles of Incorporation.
Statutory regulations and Articles of Incorporation
provisions with regard to the appointment and
removal of members of the Board of Management
and changes to the Articles of Incorporation
The appointment or removal of members of the Board
of Management is based on the rules contained in
§ 84 f. AktG in conjunction with § 31 of the German
Co-Determination Act (MitbestG).
Amendments to the Articles of Incorporation must
comply with § 179 ff. AktG. Amendments must be
decided upon by the shareholders at the Annual
General Meeting (§ 119 (1) no.5, § 179 (1) AktG). The
Supervisory Board is authorised to approve amend-
ments to the Articles of Incorporation which only affect
its wording (Article 14 no. 3 of the Articles of Incorpo-
ration). Resolutions are passed at the Annual General
Meeting by simple majority of shares exercised unless
otherwise explicitly required by binding provisions of
law or, when a majority of share capital is required,
by simple majority of shares represented in the vote
(Article 20 no. 1 of the Articles of Incorporation).
105
106
7
Compensation agreements with members of the
Board of Management or with employees in the
event of a takeover bid
The BMW Group has not concluded any compensation
agreements with members of the Board of Manage-
ment or with employees for situations involving a
takeover offer.
Fuel consumption and CO2 emissions information
9.1
8.5
209
198
10.8-10.7
246-243
9.1
207-206
2.5-2.4
56-55
13.7-13.2
15
341
14.5-14.4
330-328
0
0
13.1
14.6-14.0
1.8
42
14.0
2.0
46
14.5
227-224
3 Controlled entities, of which 3% or more are attributed: AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
10.0-9.8
in kWh/100 km
→ 66
Model
BMW
BMW M2 Competition
BMW M3
BMW M3 CS
BMW M5/Competition
BMW X3 M40i
MINI
MINI Cooper SE Countryman ALL4
ROLLS-ROYCE
Cullinan
Phantom
BMW ELECTRIFIED MODELS
BMW i3 (120 Ah) with pure electric drive BMW eDrive
BMW i3s (120 Ah) with pure electric drive BMW eDrive
BMW i8 Coupé
BMW i8 Roadster
Fuel consumption
CO2 emissions
in l/100 km
(combined)
in g/km
(combined)
Electric power
consumption
(combined)
2 Controlled entities, of which 3% or more are attributed: AQTON SE, AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
Combined
Management
Report
Susanne Klatten Beteiligungs GmbH, Bad Homburg v. d. Höhe, Germany
Interest rate risks and opportunities relating
to the Financial Services segment
Interest rate risks in the Financial Services segment
relate to potential losses caused by changes in market
interest rates. These can arise when fixed interest rate
periods do not match for assets and liabilities recog-
nised in the balance sheet. If interest rate risks were
to materialise, they could have a medium earnings
impact over the two-year assessment period. The risk
amount is classified as medium. The BMW Group
classifies potential interest rate opportunities com-
pared to the outlook as significant. Interest rate risks
in the Financial Services business are managed by
matching maturities for refinancing and by employing
interest-rate derivatives. If the relevant recognition cri-
teria are fulfilled, derivatives used by the BMW Group
are accounted for as hedging instruments. Further
information on risks in conjunction with financial
→ see instruments is provided in → note 39 to the Group
Financial Statements.
notes 39
Operational risks in the Financial
Services segment
Operational risks are defined in the Financial Services
segment as the risk of losses arising as a consequence
of unsuitability or failure of internal procedures
(process risks), people (personnel-related risks), sys-
tems (infrastructure and IT risks) and external events
(external risks). The recording and measurement of
risk scenarios, loss events and countermeasures in
the operational risk management system provide the
basis for a systematic analysis and management of
potential or materialised operational risks. Annual
self-assessments are also carried out. If operational
risks were to materialise, they would be likely to have
a low earnings impact over the two-year assessment
period. The risk amount is classified as medium.
101
102
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
→ Internal Control
System Relevant for
Accounting and
Financial Reporting
Process
Legal risks
The BMW Group is exposed to various legal risks, not
least as a result of its global operations. Legal risks may
result from non-compliance with laws or other legal
requirements or from legal disputes with business
partners or other market participants. If legal risks
were to materialise, they could have a high earnings
impact over the two-year assessment period. The risk
amount attached to significant identified legal risks
is classified as medium. However, it cannot be ruled
out that new legal risks, as yet unforeseen, could
materialise that could have a high earnings impact
for the BMW Group.
The increasing globalisation of the BMW Group's
operations and of business interdependencies in
general, combined with the variety and complexity
of legal provisions, including, increasingly, import
and export regulations, give rise to an increased risk
of non-compliance with applicable law. A Compliance
Management System is in place at BMW Group to
ensure that the representative bodies, managers
and staff across the globe consistently act in a lawful
manner. Further information on the BMW Group's
Compliance Management System can be found in the
section Corporate Governance.
Like all entities with international operations, the
BMW Group is confronted with legal disputes, claims
particularly relating to warranties and product liability
or rights infringements and proceedings initiated by
government agencies. Any of these could, amongst
other consequences, have an adverse impact on the
Group's reputation. Such proceedings are typical
for the sector and may result as a consequence of
realigning product or purchasing strategies to changed
market conditions. Particularly in the US market,
class action lawsuits and product liability risks can
have substantial financial consequences and cause
damage to the Group's public image. More rigorous
application or interpretation of existing consumer
protection regulations could result in a greater number
of recalls. The high quality of the Group's products,
which is ensured by regular quality audits and ongoing
improvement measures, helps reduce this risk.
Possible risks for the BMW Group related to competi-
tion and antitrust law cannot in detail be predicted or
quantified at present. Further information on current
developments with regard to identified antitrust risks
and contingent liabilities can be found in → note 38
to the Group Financial Statements.
→ see
note 38
→ see
notes 38
The BMW Group recognises appropriate levels of
provision for lawsuits. In addition, a part of these
risks is insured where this makes business sense.
Such items are reported as contingent liabilities. It
cannot be ruled out, however, that damages could
arise that are either not covered or not fully covered
by insurance policies or provisions or reported as
contingent liabilities. In accordance with IAS 37
(Provisions, Contingent Liabilities and Contingent
Assets), the required information is not provided
if the BMW Group concludes that disclosure of the
information could seriously prejudice the outcome of
the relevant legal proceedings. Further information
on contingent liabilities is provided in → note 38 to
the Group Financial Statements.
1 Based on voluntary notifications provided by the listed shareholders as at 31 December 2018.
Residual value risks and opportunities relating
to the Financial Services segment
Risks and opportunities arise in conjunction with
leasing contracts if the market value of a leased vehicle
at the end of the contractual term of a lease differs
from the residual value estimated at the inception
of the lease and factored into the lease payments. A
residual value risk exists if the expected market value
of the vehicle at the end of the contractual term is
lower than its estimated residual value at the date
the contract is entered into. If residual value risks
were to materialise, they could have a high earnings
impact from the Group's perspective over the two-year
assessment period. A high earnings impact would
then arise for the affected Financial Services and
Automotive segments. The risk amount is classified
as high for the Group as a whole. Opportunities can
arise out of a positive deviation from the original
residual value forecast. The BMW Group classifies
potential residual value opportunities as significant.
Each vehicle's estimated residual value is calculated
on the basis of historical external and internal data.
This estimation provides the expected market value
of the vehicle at the end of the contractual period.
Developments on pre-owned car markets represent
an important factor. In 2018, diesel engines were
again the subject matter of political discussions in
the European region. Pre-owned car markets in the
Initial and continuous creditworthiness testing is
an important aspect of the BMW Group's credit
risk management. For this reason, every borrower's
creditworthiness is tested for all credit financing
and lease contracts entered into by the BMW Group.
Opportunities can arise when the managed portfolio
presents itself over time better than as was estimated
at the provision of the credit. An intense management
of the purchase process and the securities evaluation
as well as the development of macroeconomic factors
can strengthen the opportunities. In the case of retail
customer financing, creditworthiness is assessed
using validated scoring systems integrated into the
purchasing process. In the area of dealership financing,
creditworthiness is assessed by means of ongoing
credit monitoring and an internal rating system that
takes account not only of the material credit standing
of the borrower, but also of qualitative factors such
as past reliability in business relations. Changes in
the creditworthiness of customers arising during the
credit term are covered by risk provisioning proce-
dures. The credit risk of the individual customers is
quantified on a monthly basis and, depending on
the outcome, taken into account within the risk
pro-
visioning system. Macroeconomic developments are
currently subject to a higher degree of volatility. If
developments are more favourable than assumed in
the outlook, credit losses may be reduced, leading to
a positive earnings impact.
Credit and counterparty risks and opportunities
relating to the Financial Services segment
Credit and counterparty default risk arises within the
Financial Services segment if a contractual partner
(e.g. a customer or dealer) either becomes unable or
only partially able to fulfil its contractual obligations,
so that lower income is generated or losses incurred.
If credit and counterparty risks were to materialise,
they could have a medium earnings impact over the
two-year assessment period. The risk amount is clas-
sified as medium. The BMW Group classifies potential
opportunities in this area as significant.
With the advance of digitalisation, the BMW Group
is improving the customer experience and its existing
lines of business. At the same time, new digital busi-
ness segments are emerging, which are mainly focused
on information technology. The development and
provision of digital services for customers, increased
vehicle connectivity and autonomous driving solutions
are opening up new opportunities. Through BMW
ConnectedDrive and BMW CarData the range of
services and apps on offer to customers is constantly
being expanded and updated. Starting in March 2019,
the BMW Intelligent Personal Assistant will provide
customers with an intelligent, digital character that
enables voice access to functions and information. The
BMW Group expects these opportunities to have no
significant earnings impact over the assessment period
as compared to the assumptions made in the outlook.
Financial risks and risks relating to the use of
financial instruments
Currency risks and opportunities
As an internationally operating enterprise, the
BMW Group conducts business in a variety of cur-
rencies, thus giving rise to currency risks and oppor-
tunities. A substantial portion of Group revenues,
purchasing and funding occur outside the eurozone
(particularly in China and the USA). Cash-flow-at-
risk models and scenario analyses are used and
continuously developed to measure currency risks
and opportunities. If currency risks were to materi-
alise, they could be associated with a high earnings
impact over the two-year assessment period. The risk
level attached to currency risks is high. Significant
opportunities can arise if currency developments are
favourable for the BMW Group.
Operational currency management is based on the
results of currency risk analyses. The BMW Group
manages currency risks at both strategic (medium
and long term) and operational level (short and
medium term). Medium- and long-term measures
include increasing production volumes and purchase
volumes in foreign currency regions (natural hedging).
Currency risks are managed in the short to medium
term and for operational purposes by means of hedg-
ing on financial markets. The principal objective of
this currency management process is to increase
planning reliability for the BMW Group. Hedging
transactions are entered into only with financial
partners of good credit standing. Opportunities are
also secured through the use of options during specific
market phases.
Risks and opportunities relating to raw materials
As a large-scale manufacturing company, the BMW Group
is exposed to purchase price risks, particularly in rela-
tion to raw materials used in vehicle production.
The analysis of raw material price risk is based on
planned purchases of raw materials and components
containing those raw materials. If risks relating to raw
materials prices were to materialise, they could have
a medium earnings impact over the two-year assess-
ment period. A medium risk level is attached to risks.
Significant opportunities could arise if raw materials
prices developed favourably for the BMW Group.
Changes in commodity prices are monitored on the
basis of a well-defined management process. The
principal objective is to increase planning reliability
for the BMW Group. Price fluctuations for precious
metals (platinum, palladium, rhodium), non-ferrous
metals (aluminium, copper, lead, nickel) and, to some
extent, for steel and steel ingredients (iron ore, coking
coal) and energy (gas, electricity) are hedged using
financial derivatives and supply contracts with fixed
pricing arrangements.
Liquidity risks
The major part of the Financial Services segment's
credit financing and leasing business is refinanced on
capital markets. Liquidity risks can arise in the form
of rising refinancing costs or from restricted access to
funds as a consequence of the general market situation.
If liquidity risks were to materialise, they would be
likely to have a low earnings impact over the two-year
assessment period. The risk amount associated with
liquidity risk, including the risk of the BMW Group's
rating being downgraded, which would lead to an
increase in financing costs, is classified as low.
99
100
Overall assessment of the risk and opportunities
situation
Combined
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
Based on the experience of the financial crisis, a min-
imum liquidity concept has been drawn up, which is
rigorously adhered to and continuously developed.
Use of the "matched funding principle" to finance the
Financial Services segment's operations eliminates
liquidity risks to a large extent. Solvency is assured at
all times throughout the BMW Group by maintaining
a liquidity reserve and by the broad diversification
of refinancing sources. Regular measurement and
monitoring ensure that cash inflows and outflows for
the various maturities and currencies offset each other.
This approach is incorporated in the BMW Group's
target liquidity concept. The liquidity position is moni-
tored continuously and managed through Group-wide
planning of financial requirements and funding. A
diversified refinancing strategy reduces dependency
on any specific type of instrument. Moreover, the
BMW Group's solid financial and earnings position
results in high credit ratings from internationally
recognised rating agencies.
Further information on risks in conjunction with
financial instruments is provided in → note 39 to the → see
Group Financial Statements.
Risks and opportunities relating to pension obligations
Pension obligations are influenced in particular by
fluctuations of market yields on corporate bonds, as
well as by other economic and demographic para-
meters. Opportunities and risks arise depending
on changes in these parameters. If risks relating to
pension obligations materialised, they could have a
high earnings impact over the two-year assessment
period. Despite the high level of external funding,
the risk amounts relating to pension obligations are
classified as high. Within a favourable capital market
environment, the return generated by growth-oriented
pension assets may exceed expectations and reduce
the deficit of the relevant pension plans. This could
have a significantly favourable impact on the net asset
position of the BMW Group.
Future pension payments are discounted on the basis
of market yields on high-quality corporate bonds.
These yields are subject to market fluctuation and
therefore influence the level of pension obligations.
Changes in other parameters, such as rises in infla-
tion and longer life expectancy, also impact pension
obligations and payments. Regulatory requirements
can influence the amount of pension obligations.
The BMW Group's pension obligations are mainly
held in external pension funds or trust arrangements
and the related assets legally separated from those of
note 39
the Group. The amount of funds required to finance
pension payments out of operations in the future is
substantially reduced by the fact that the Group's
pension obligations are mainly settled out of pension
fund assets. The pension assets of the BMW Group
comprise interest-bearing securities, equities, real
estate and other investment classes. Assets held by
pension funds and trust arrangements are monitored
continuously and managed on a risk-and-return basis.
Diversification of investments also helps to mitigate
risk. In order to reduce fluctuations in pension fund-
ing shortfalls, investments are structured to match
the timing of pension payments and the expected
development of pension obligations. Remeasurements
on the liability and fund asset sides are recognised
net of deferred taxes in other comprehensive income
and hence directly in equity (within revenue reserves).
Further information on risks in conjunction with pen-
→ see sion provisions is provided in → note 32 to the Group
Financial Statements.
notes 32
Risks and opportunities relating to the Financial
Services segment
The categories of risk relating to financial services
comprise credit and counterparty risk, residual value
risk, interest rate risk, operational risks and liquidity
risk. Evaluation of liquidity risk for the Financial Services
segment is included in the liquidity risk category for
the Group as a whole. The segment's total risk expo-
sure was covered at all times during the 2018 financial
year by the available risk-covering assets. As a result,
the Financial Services segment's risk-bearing capacity
was assured at all times.
Management
Report
The overall risk assessment is based on a consolidated
view of all significant individual risks and opportu-
nities. The overall risk level for the BMW Group as a
whole has increased slightly compared to the previous
year, while there has been no significant change in
the opportunity situation. Exposure to risks in the
individual risk categories remains essentially stable.
premium segment responded here with price declines
for diesel vehicles. As part of the management of resid-
ual value risks, the net present value of risk costs is
calculated at contract inception. Market developments
are observed throughout the contractual period and
the risk assessment updated.
In addition to the risk categories described above,
unforeseen events could have a negative impact on
business operations and hence on the BMW Group's
results of operations, financial position and net assets
as well as on its reputation. A comprehensive risk
management system is in place to ensure that the
BMW Group successfully manages these risks.
The rights and duties of shareholders derive from the
German Stock Corporation Act (AktG) in conjunction
with the Company's Articles of Incorporation, the
full text of which is available at www.bmwgroup.com. The
right of shareholders to have their shares evidenced
is excluded in accordance with the Articles of Incor-
poration. The voting power attached to each share
corresponds to its par value. Each €1 of par value
of share capital represented in a vote entitles the
holder to one vote (Article 18 no. 1 of the Articles of
Incorporation).
*Disclosures
pursuant to
§ 289 (5) and
§ 315 (2) No. 5
HGB.
The Company's shares of preferred stock are shares
within the meaning of § 139 ff. AktG, which carry a
cumulative preferential right in terms of the allocation
of profit and for which voting rights are excluded.
These shares confer voting rights only in exceptional
cases stipulated by law, in particular when the prefer-
ence amount has not been paid or has not been fully
paid in one year and the arrears are not paid in the
subsequent year alongside the full preference amount
due for that year. With the exception of voting rights,
holders of shares of preferred stock are entitled to
the same rights as holders of shares of common stock.
Article 24 of the Articles of Incorporation confers
preferential treatment to the non-voting shares of
preferred stock with regard to the appropriation of the
Company's unappropriated profit. Accordingly, the
unappropriated profit is required to be appropriated
in the following order:
(a) subsequent payment of any arrears on dividends
on non-voting preferred shares in the order of
accruement
(b) payment of an additional dividend of €0.02 per
€1 par value on non-voting preferred shares
(c) uniform payment of any other dividends on
shares of common and preferred stock, provided
the shareholders do not resolve otherwise at
the Annual General Meeting
→ see
Restrictions on voting rights or the transfer
of shares
The subscribed capital (share capital) of BMW AG
amounted to €658,122,100 at 31 December 2018
(2017: €657,600,600) and, in accordance with Article 4
no. 1 of the Articles of Incorporation, is subdivided
into 601,995,196 shares of common stock (91.47%)
(2017: 601,995,196; 91.54%) and 56,126,904 shares of
non-voting preferred stock (8.53%) (2017: 55,605,404;
8.46%), each with a par value of €1. The Company's
shares are issued to bearer.
As well as shares of common stock, the Company
has also issued non-voting shares of preferred stock.
Further information can be found in the section
"Composition of subscribed capital".
Contractual holding period arrangements also apply to
shares of common stock acquired by Board of Manage-
ment members and certain senior department heads
in conjunction with the share-based remuneration
programmes (Compensation Report of the Corporate
Governance section; → note 41 of the Group Financial
Statements).
Direct or indirect investments in capital exceeding
10% of voting rights
Based on the information available to the Company, 1
the following direct or indirect holdings exceeding
10% of the voting rights at the end of the reporting
period were held at the stated reporting date:¹
in %
Stefan Quandt, Germany
AQTON SE, Bad Homburg v. d. Höhe, Germany
AQTON Verwaltung GmbH, Bad Homburg v. d. Höhe, Germany
AQTON GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany
Susanne Klatten, Germany
When the Company issues non-voting shares of
preferred stock to employees in conjunction with its
Employee Share Programme, these shares are gener-
ally subject to a company-imposed blocking period
of four years, calculated from the beginning of the
calendar year in which the shares are issued.
Composition of subscribed capital
note 41
DISCLOSURES RELEVANT
FOR TAKEOVERS* AND
EXPLANATORY COMMENTS
INTERNAL CONTROL
SYSTEM* RELEVANT FOR
ACCOUNTING AND
FINANCIAL REPORTING
PROCESSES
The internal control system relevant for accounting
and financial reporting processes has the task of
ensuring that accounting and financial reporting by
the BMW Group is both correct and reliable. Inter-
nationally recognised standards for internal control
systems have been taken into account in the design of
the components of the BMW Group's internal control
system. The system comprises:
-
Group-wide mandatory accounting guidelines,
controls integrated into processes and
IT systems,
organisational measures incorporating the
principle of separation of duties, and
process-independent monitoring measures.
The internal control system is subject to continuous
improvement, with system effectiveness assessed
regularly on the basis of centralised and decentralised
process analyses, analyses of data within the various
financial systems and audit procedures. The principal
features of the internal control system, as far as they
relate to individual entity and Group accounting and
financial reporting processes, are described below.
Guidelines for recognising, measuring and allocating
items to accounts are available to all employees via
the intranet. New accounting standards are assessed
for their impact on the BMW Group's accounting
and financial reporting. Accounting guidelines and
processes are reviewed continuously and revised at
least once a year or more frequently, if necessary.
From today's perspective, management does not see
any threat to the BMW Group's status as a going
concern. As in the previous year, identified risks are
considered to be manageable, but could - like the
opportunities - have an impact on the underlying key
performance indicators, which could then, as a result,
deviate from the outlook if they were to materialise.
The BMW Group's financial position is stable and cash
needs are currently covered by available liquidity and
credit lines.
pursuant to
§ 289 (5)
and § 315 (2)
no. 5 HGB.
Controls are integrated into the accounting and finan-
cial reporting processes, at both individual entity and
Group level. These are both preventive and detective
in nature and take account, where appropriate, of
the principle of the separation of duties. Important
accounting-related IT systems incorporate controls
which, amongst others, prevent business transactions
from being recorded incorrectly and ensure that
business transactions are recorded completely and in
good time and measured properly in accordance with
applicable requirements. Controls are also in place to
test the appropriateness of consolidation procedures.
The recording of items requiring disclosure is also
performed largely through IT systems.
As part of the ongoing development of accounting and
financial reporting processes at individual entity or
Group level, such controls are adapted to take account
of new requirements and opportunities arising with
advances in information technology. In addition, the
BMW Group uses data analysis tools to ensure that
any control weaknesses are quickly identified and
eliminated.
Responsibilities for ensuring the effectiveness of
the internal control system in relation to individual
entity and Group accounting and financial reporting
processes are clearly defined and allocated to the
relevant line and process managers. These report
annually on their assessment of the effectiveness of the
internal control system for accounting and financial
reporting to the Board of Management. The assessment
also includes the results of internal and external audits
as well as of ongoing data analysis. In this context,
the Group's units confirm the effectiveness of the
internal control system for accounting and financial
reporting. The results of the assessment are gathered
and documented with the aid of tools. Weaknesses in
the control system are eliminated, taking into account
their potential impact on accounting processes. The
Board of Management and Audit Committee are
briefed annually on the assessment of the effective-
ness of the internal control system for accounting and
financial reporting. The Board of Management and,
where applicable, the Supervisory Board are informed
immediately in the event of any significant changes
in the effectiveness of the internal control system.
103
104
Combined
Management
Report
→ Disclosures Relevant
for Takeovers
and Explanatory
Comments
Disclosures
Cash inflow/outflow from financing activities
3,761
3,866
Cash inflow/outflow from investing activities
Payments into equity
Change in other financial liabilities4
Intragroup financing and equity transactions
Interest paid²
Proceeds from non-current financial liabilities³
Repayment of non-current financial liabilities³
Proceeds from the sale of marketable securities and investment funds
Payment of dividend for the previous year
-4,041
6235
Investments in marketable securities and investment funds
969
Proceeds from the sale of subsidiaries and other business units
267
Proceeds from the disposal of investment assets and other business units
-209
Acquisitions of subsidiaries and other business units
-142
-164
Expenditure for investment assets
30
-3,725
Effect of exchange rate on cash and cash equivalents
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
Interest relating to financial services business is classified as revenues/cost of sales.
Change in cash and cash equivalents
107
³ Proceeds/Repayment of bonds are recognised under Proceeds/Repayment of non-current financial liabilities. Prior year figures adjusted accordingly.
Cash and cash equivalents as at 31 December
Cash and cash equivalents as at 1 January
1,159
1,940
64
-25
-223
-19
1,572
Effect of changes in composition of Group on cash and cash equivalents
4,296
-1,161
-16,801
-22,564
23,955
30,762
-165
-136
38
-2,324
25
-2,630
-6,163
-7,363
-3,131
Proceeds from the disposal of intangible assets and property, plant and equipment
4,047
Proceeds from subsidies for intangible assets and property, plant and equipment
-1,693
Change in leased products
-559
355
Change in deferred taxes
-43
-34
Gain/loss on disposal of tangible and intangible assets and marketable securities
-739
-632
Result from equity accounted investments
-1,134
-249
Other non-cash income and expense items
4,822
5,113
Depreciation and amortisation of tangible, intangible and investment assets
65
-199
Other interest and similar income/expenses²
125
170
Interest received²
4 The change in commercial paper is recognised under change in other financial liabilities. Prior year figures adjusted accordingly.
111
21
Change in receivables from sales financing
-7,440
-7,112
-7,777
Total investment in intangible assets and property, plant and equipment
5,909
5,051
1,211
697
752
-82
1,414
-328
-5,670
45
-1,293
-357
Cash inflow/outflow from operating activities
Change in other operating assets and liabilities
Change in provisions
Change in trade payables
Change in trade receivables
Change in inventories
166
-573
Changes in working capital
112
5 Includes dividends received from investment assets amounting to €384 million (2017: €258 million).
-231
7,880
705
-1,259
-1,468
175
225
-13
1,069
344
162
109
1,214
-427
19
60
43
59
-20
7
-1,179
-390
161
176
78
9,352
10,848
-6,790
-6,384
3,655
3,562
-2,301
-63
-3,810
-3,692
969
1
2
1,037
1,210
-758
-209
-145
2
2
28
105
3
18
-15
-13
-6,972
-7,618
-482
-7,440
-5,670
-1,855
-299
-1,896
-1,751
-114
308
2,699
1,886
33
4,047
1,653
5,299
-315
5,091
2018
20171
2018
information)
(unaudited supplementary
Financial Services
information)
(unaudited supplementary
Automotive
9,039
10,979
2017
9,039
170
-
-1,783
-1,872
28
909
-71
-2
1
-41
-35
-739
-632
125
46
25
83
35
34
4,699
4,982
-5
1
89
-165
-
33
-1,972
128
2,558
152
91
24
17
-52,902
-61,233
35,008
41,340
96,766
99,153
-198
-1,436
-31,783
-40,610
26,628
33,956
3,082
3,562
-1,964
130
28
442
483
-39
1,089
38,674
32,113
1,325
1,531
14,740
14,919
82,950 -127,818 -120,147
91,596
137,828
146,808
47,942 -66,585 -67,245
50,256
41,062
47,655
18
695
351
1,985
-66,487 -66,938
-307
-98
1,163
797
45,963
48,775
5,331
5,484
460
669
55
79
1,856
176
138
48,321
2018
information)
Financial Services
(unaudited supplementary
1 The opening balance sheet figures have been adjusted, based on the first-time application of IFRS 15 and IFRS 9, see notes 6 and 7.
² Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
1,230
1,276
93,645
97,118
195,506
195,586
208,980
Other Entities
Total equity and liabilities
636
37,910
40,306
71,765
71,762
70,909
Current provisions and liabilities
62
62
2
Liabilities in conjunction with assets held for sale
573
20,683
(unaudited supplementary
2017
48,109
-11,457
-10,765
7,160
6,660
2
1
-8,028
-7,855
20172
44,285
information)
46,427
30
1
1
425
403
2018
2017
information)
(unaudited supplementary
Eliminations
2018
33
Income taxes paid
18,102
-18,096
Deferred tax
Other provisions
Pension provisions
Equity
Minority interest
Equity attributable to shareholders of BMW AG
Accumulated other equity
Revenue reserves
Capital reserves
Subscribed capital
EQUITY AND LIABILITIES
Total assets
Current assets
Cash and cash equivalents
Assets held for sale
Financial assets
Current tax
Other assets
Receivables from sales financing
Trade receivables
Inventories
Non-current assets
Other assets
Deferred tax
Financial assets
Receivables from sales financing
Financial liabilities
Other liabilities
Non-current provisions and liabilities
Other provisions
2,220
33
8,675
7,207
Current tax
Loss from discontinued operations
Net profit
20171
2018
Group
in € million
Other investments
CASH FLOW STATEMENT
Cash Flow Statement
→ BMW Group
Statements
Group
Financial
114
113
Total equity and liabilities
Current provisions and liabilities
Liabilities in conjunction with assets held for sale
Trade payables
Other liabilities
Current tax
Financial liabilities
BMW GROUP
Investments accounted for using the equity method
Leased products
Property, plant and equipment
-30,981
-34,818
-198
-3,639
-3,843
-39
-40,257
-44,139
35,095
198
36,037
45,942
51,384
60,506
1,168
28,835
36,333
532
44,624
19,170
38
22
4,302
4,611
356
343
706
199
72
49
17,819
-17,292
549
9
Intangible assets
ASSETS
82,950 -127,818 -120,147
91,596
137,828
146,808
28,811 -66,387 -67,233
24,971
71,704
71,383
-66,289 -66,926
9
-307
15,607
11
13,167
12,339
11
12,595
849
45,220
43,988
950
24,853
25,705
17
17
233
208
-98
211
out of Authorised Capital
-6,544
2018
2017*
2018
Motorcycles
(unaudited supplementary
information)
2017*
2018
2017*
Revenues
8
Cost of sales
Gross profit
97,480
9 -78,924
18,556
98,282 85,846
-78,329 -71,918
85,742
2,173
2,272
-69,402
-1,738
-1,798
19,953
13,928
Note
information)
Group
(unaudited supplementary
Notes to the Statement of Comprehensive Income
Notes to the Balance Sheet
→Page 184 Segment Information
→ Page 190 List of Investments at 31 December 2018
3
3
Group Financial
Statements
Income Statement
Statement of
Comprehensive
Income
Balance Sheet
Cash Flow
Statement
Notes
110
16,340
Group
Financial
→ BMW Group
Income Statement
→ Statement of Com-
prehensive Income
BMW GROUP
INCOME STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
Income Statements for Group and Segments
→ 67
in € million
Automotive
Statements
435
474
Selling and administrative expenses
175
207
Result from equity accounted investments
24
632
739
632
739
Interest and similar income
12
397
7,888
201
325
Interest and similar expenses
12
-386
-412
-533
-530
-6
Other financial result
13
51
567
Other Disclosures
6,182
9,121
10
-9,558
-9,560
-7,880
-7,927
-263
-256
Other operating income
11
774
720
9,899
810
4
4
Other operating expenses
11
-651
-1,214
-676
-1,200
-1
-15
Profit/loss before financial result
675
248
→Page 167
→ Page 145
Subscribed share capital increase
Dividend payments
Net profit*
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2017
(adjusted according to IFRS 15)*
54,107
436
53,671
1,515
93
-1,494
110
95
15
37
37
1
1
-2,300
-2,300
9,305
86
9,219
1,437
41
out of Authorised Capital
Premium arising on capital increase
relating to preferred stock
Other changes*
31 December 2017*
GROUP FINANCIAL
STATEMENTS
→Page 110 Income Statement
→Page 110 Statement of Comprehensive Income
cial Statements.
On 19 February 2019, the Board of Management
granted approval for publication of the Group Finan-
note 45
In order to provide a better insight into the results of
operations, financial position and net assets of the
BMW Group, and going beyond the requirements of
IFRS 8 (Operating Segments), the Group Financial
Statements also include income statements and bal-
ance sheets for the Automotive, Motorcycles, Financial
Services and Other Entities segments. The Group
Cash Flow Statement is supplemented by the state-
ments of cash flows for the Automotive and Financial
Services segments. This supplementary information is
unaudited. Inter-segment transactions relate primarily
to internal sales of products, the provision of funds
for Group companies and the related interest. These
items are eliminated in the relevant "Eliminations"
columns. A description of the nature of the business
and the major operating activities of the BMW Group's
→ see segments is provided in → note 45 ("Explanatory notes
to segment information").
The BMW Group and segment income statements are
presented using the cost of sales method.
The Group currency is the euro. All amounts are
disclosed in millions of euros (€ million) unless stated
otherwise.
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMW Group
Financial Statements or Group Financial Statements)
at 31 December 2018 have been drawn up in accord-
ance with International Financial Reporting Standards
(IFRS), as endorsed by the European Union (EU), and
the supplementary requirements of § 315 a (1) of the
German Commercial Code (HGB). The Group Finan-
cial Statements and Combined Management Report
will be submitted to the operator of the electronic
version of the German Federal Gazette and can be
obtained via the Company Register website. Bayerische
Motoren Werke Aktiengesellschaft, which has its
seat at Petuelring 130, Munich, is registered in the
Commercial Register of the District Court of Munich
under the number HRB 42243.
Basis of preparation
-1,323
01
ACCOUNTING PRINCIPLES
NOTES TO
THE GROUP
FINANCIAL
STATEMENTS
Policies
Principles and
→ Accounting
Financial Statements
Notes to the Group
Statements
Group
Financial
118
117
AND POLICIES
8,675
630
630
1,437
Costs of
hedging
financial
instruments
Securities
Translation
differences
Derivative
Accumulated other equity
58,088
529
57,559
-569
558
Equity
attributable to
shareholders
of BMW AG
-127
-130
-2
-51
34
→Page 114 Cash Flow Statement
→ Page 116 Statement of Changes in Equity
Notes to the Group Financial Statements
Accounting Principles and Policies
Notes to the Income Statement
→ Page 118
→ Page 118
→Page 139
3
→ Page 146
Minority
interest
Dividend payments
41
-1,323
86
8,589
1 January 2017 (adjusted according to IFRS 15)
46,954
255
46,699
78
52
-171
Total
1 January 2017 (as originally reported)
Effects from the first-time application of IFRS 15
-409
255
→Page 112 Balance Sheet
47,108
78
52
-171
31 December 2018
Other changes
Premium arising on capital increase
relating to preferred stock
Subscribed share capital increase
out of Authorised Capital
47,363
-409
129
295
Financial result
Statements
Group
Financial
116
115
The reconciliation of liabilities from financing activities is presented in note 35.
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
Change in cash and cash equivalents
Effect of changes in composition of Group on cash and cash equivalents
Effect of exchange rate on cash and cash equivalents
Cash inflow/outflow from financing activities
Proceeds from non-current financial liabilities³
Repayment of non-current financial liabilities³
Change in other financial liabilities4
Interest paid²
Intragroup financing and equity transactions
Payment of dividend for the previous year
Payments into equity
Acquisitions of subsidiaries and other business units
Proceeds from the disposal of investment assets and other business units
Proceeds from the sale of subsidiaries and other business units
Investments in marketable securities and investment funds
Proceeds from the sale of marketable securities and investment funds
Cash inflow/outflow from investing activities
Expenditure for investment assets
Total investment in intangible assets and property, plant and equipment
Proceeds from subsidies for intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
1,653
Change in other operating assets and liabilities
Change in provisions
Change in trade payables
Change in trade receivables
→ BMW Group
Statement of
Changes in Equity
BMW GROUP
STATEMENT OF CHANGES IN EQUITY
Premium arising on capital increase
119
Subscribed share capital increase
Dividend payments
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2017
(adjusted according to IFRS 15)*
Net profit*
1 January 2017 (adjusted according to IFRS 15)
Effects from the first-time application of IFRS 15
1 January 2017 (as originally reported)
in € million
31 December 2018
Change in inventories
Other changes
Premium arising on capital increase
out of Authorised Capital
Subscribed share capital increase
Dividend payments
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2018
Net profit
1 January 2018 (adjusted according to IFRS 9)
31 December 2017 (adjusted according to IFRS 15)
Effects from the first-time application of IFRS 9
Effect from the first-time application of IFRS 15
31 December 2017 (as originally reported)
in € million
relating to preferred stock
Changes in working capital
Change in receivables from sales financing
Change in leased products
6,793
-1,859
-4,310
827
73
-2
-1,053
-7,608
-12,071
-48
-410
11,937
4,334
12,940
-165
-136
4,315
5,097
567
2,099
-2,324
38
25
-2,630
937
130
1
Note
-31
-141
Change in deferred taxes
Gain/loss on disposal of tangible and intangible assets and marketable securities
Other non-cash income and expense items
Result from equity accounted investments
Depreciation and amortisation of tangible, intangible and investment assets
Other interest and similar income/expenses²
Interest received²
Income taxes paid
Current tax
Loss from discontinued operations
Net profit
1,856
-82
1,985
8,631
3,046
1,856
4,794
7,157
-1,190
129
2,363
1,474
64
-25
7,157
Subscribed
capital
Capital
reserves
31 December 2017 (adjusted according to IFRS 15)
Effects from the first-time application of IFRS 9
54,107
101
101
5
-82
436
53,671
1,515
93
-1,494
31 December 2017 (as originally reported)
Effect from the first-time application of IFRS 15
-1,494
54,548
-441
436
54,112
1,515
93
-1,494
Total
interest
of BMW AG
Minority
shareholders
Costs of
hedging
-441
financial
instruments
11
5
694
34
-1,326
-2,630
-2,630
Net profit
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2018
7,207
-604
6,603
90
6,513
-572
-906
1,515
-12
-604
-572
-906
-12
168
90
7,117
1 January 2018 (adjusted according to IFRS 9)
54,208
436
53,772
168
-6,769
Securities
attributable to
Note
56,121
2,118
658
31
-77
34
-2,630
7,835
718
7,117
Subscribed
capital
50,993
658
178
50,815
2,084
658
-441
51,256
2,084
658
31
Revenue
reserves
2,084
Translation
differences
Capital
Revenue
reserves
Derivative
Equity
Accumulated other equity
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
50,815
2,084
658
31
31 December 2017*
15
Other changes*
reserves
37
-2,300
9,064
475
8,589
44,036
2,047
657
44,445
-409
2,047
657
31
relating to preferred stock
187
Cash inflow/outflow from operating activities
-
2,194
-27
14
601
-404
12
12
1,178
1,110
-1,360
-1,246
-14
-10
-1,145
-986
1,312
1,116
-27
11
-51
-58
-29
13
-18
66
-48
-130
2,161
2,207
2,190
-45
210
-96
6
7
-18,710
-17,306
-24,541
-23,986
19,273
16,857
3,624
3,581
6
7
563
-449
-1,352
-1,370
-79
-27
16
20
42
96
126
130
-208
-185
-124
-113
-80
230
80
553
-534
874
933
1,124
1,124
1,158
34
Current tax
99
101
5,710
5,436
6,367
6,367
6,078
33
Other provisions
657
640
16,374
17,034
69,634
69,616
79,983
Non-current provisions and liabilities
487
506
6,506
7,549
5,045
Financial liabilities
35
38,825
41,097
-508
1,840
-36
-19
-133
-340
1,653
4,047
-81
61
420
21,863
24,636
13,443
27,567
13,443
36
Other liabilities
355
348
8,516
8,360
9,731
9,731
9,669
37
Trade payables
947
879
41,100
15,117
5,045
28,165
2018
124
142
Attributable to minority interest
90
86
30
22
Attributable to shareholders of BMW AG
31
7,117
8,589
5,061
5,277
124
142
Basic earnings per share of common stock in €
15
10.82
13.07
Basic earnings per share of preferred stock in €
15
10.84
13.09
Dilutive effects
Diluted earnings per share of common stock in €
15
10.82
13.07
Diluted earnings per share of preferred stock in €
5,299
15
5,091
7,207
829
-6
-2
Profit/loss before tax
9,815
10,675
6,977
8,717
169
205
Income taxes
14
-2,575
-2,000
-1,853
-3,418
-45
-63
Profit/loss from continuing operations
7,240
8,675
5,124
5,299
124
142
Loss from discontinued operations
-33
-33
Net profit/loss
8,675
10.84
13.09
Statement of Comprehensive Income for Group
192
-1,171
-1,322
155
19
-604
630
Total comprehensive income
Total comprehensive income attributable to minority interests
6,603
90
9,305
Total comprehensive income attributable to shareholders of BMW AG
31
6,513
86
9,219
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
Financial Services
(unaudited supplementary
information)
2018
Other Entities
(unaudited supplementary
information)
2017
2018
Eliminations
(unaudited supplementary
information)
2017
Other comprehensive income for the period after tax
Items that can be reclassified to the income statement in the future
Currency translation foreign operations
-597
→ 68
in € million
Note
2018
2017*
Net profit
Remeasurement of the net defined benefit liability for pension plans
Deferred taxes
Items not expected to be reclassified to the income statement in the future
Marketable securities (at fair value through other comprehensive income)
Financial instruments used for hedging purposes
Costs of hedging
Other comprehensive income from equity accounted investments
Deferred taxes
7,207
2017*
8,675
935
693
-217
-218
718
475
-30
39
-1,381
1,914
-620
-157
-30
674
32
795
5,299
Other liabilities
216
2,369
2,369
1,010
26
Financial assets
48,321
48,475
48,109
25
Receivables from sales financing
4,985
4,843
690
690
739
Other investments
2,769
2,624
2,769
2,769
2,624
36,257
36,257
38,572
23
388
399
18,050
1,302
19,372
Deferred tax
1,590
12,462
12,707
12,707
13,047
20
Trade receivables
29
Inventories
477
527
42,615
45,655
121,964
122,090
125,442
Non-current assets
32
33
3,671
5,085
1,630
1,630
2,026
28
Other assets
2,857
3,043
1,993
1,965
14
18,471
18,471
19,801
→ BMW Group
Statements
Group
Financial
112
111
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
Attributable to minority interest
Profit/loss from continuing operations
Loss from discontinued operations
Net profit/loss
Financial result
Profit/loss before tax
Income taxes
Other financial result
Result from equity accounted investments
Interest and similar income
Interest and similar expenses
Profit/loss before financial result
Other operating expenses
Other operating income
Selling and administrative expenses
Gross profit
Revenues
Cost of sales
-874
420
61
-81
3,983
1,593
64
60
-874
420
61
-81
Balance Sheet
at 31 December 2018
BMW GROUP
BALANCE SHEET AT 31 DECEMBER 2018
22
222
24
Investments accounted for using the equity method
Leased products
Property, plant and equipment
57
95
8,981
10,472
9,464
9,464
10,971
21
12,103
Intangible assets
2018
20172
information)
Motorcycles
(unaudited supplementary
2018
information)
(unaudited supplementary
Automotive
1.1.20181 31.12.2017²
2018
Note
Group
ASSETS
in € million
20172
36
568
30
39,778
54,107
54,208
58,088
Equity
436
436
529
Minority interest
50,815
114
53,671
53,772
57,559
31
Equity attributable to shareholders of BMWAG
37
-1,338
31
Accumulated other equity
50,993
56,121
31
Revenue reserves
2,084
2,084
2,118
31
Capital reserves
658
658
39,361
658
Pension provisions
2,330
832
1,017
53,548
53,521
64,772
35
Financial liabilities
1,456
1,016
2,157
2,166
1,806
14
Deferred tax
101
70
5,175
5,363
5,632
5,632
5,776
33
Other provisions
69
64
2,405
2,089
3,252
-874
32
31
Subscribed capital
EQUITY AND LIABILITIES
9,790
28
Other assets
714
618
1,566
1,566
1,366
27
Current tax
5,578
4,988
7,965
7,949
6,675
26
Financial assets
32,113
32,087
38,674
25
Receivables from sales financing
160
167
2,354
2,287
2,667
2,663
2,546
7,485
7,485
22,016
23,124
1,230
1,276
93,645
97,118
195,506
195,586
208,980
Total assets
753
749
51,030
51,463
73,542
73,496
580
83,538
461
461
2
Assets held for sale
8
12
7,157
8,631
9,039
9,039
10,979
Cash and cash equivalents
5
2
Current assets
776
3,252
Related party disclosures comprise information on
associated companies, joint ventures and non-con-
solidated subsidiaries as well as individuals which
have the ability to exercise a controlling or significant
influence over the financial and operating policies
of the BMW Group. This includes all persons in key
positions of the Company, as well as close members
of their families or intermediary entities. In the case
of the BMW Group, this also applies to members of
the Board of Management and the Supervisory Board.
Details relating to these individuals and entities are
provided in → note 40 and in the list of investments
disclosed in → note 46.
Purchased and internally-generated intangible assets
are recognised as assets where it is probable that the
use of the asset will generate future economic benefits
and where the costs of the asset can be determined
reliably. Such assets are measured at acquisition
or manufacturing cost, as a general rule without
financing costs, and, to the extent that they have a
finite useful life, amortised on a straight-line basis
over their estimated useful lives. With the exception
of capitalised development costs, intangible assets
are amortised as a general rule over their estimated
useful lives of between three and 20 years.
Development costs for vehicle, module and architecture
projects are capitalised at manufacturing cost, to the
extent that attributable costs (including development-
related overhead costs) can be measured reliably and
both technical feasibility and successful marketing
are assured. It must also be sufficiently probable that
the development expenditure will generate future
economic benefits. Capitalised development costs are
amortised on a straight-line basis following the start
of production over the estimated product life cycle
(usually five to 12 years).
Goodwill arises on first-time consolidation of an
acquired business when the cost of acquisition
exceeds the Group's share of the net fair value of the
assets, liabilities and contingent liabilities identified
during the acquisition.
If there is any indication of impairment of intangible
assets, or if an annual impairment test is required
(i.e. intangible assets with an indefinite useful life,
intangible assets during the development phase and
goodwill), an impairment test is performed. Each
individual asset is tested separately unless the cash
flows generated by the asset are not sufficiently inde-
pendent from the cash flows generated by other assets
or other groups of assets. In this case, impairment is
tested at the level of a cash-generating unit.
For the purpose of the impairment test, the carrying
amount of an asset (or a cash-generating unit) is com-
pared with the recoverable amount. The first step of
the impairment test is to determine the value in use.
If the value in use is lower than the carrying amount,
the next step is to determine the fair value less costs to
sell and compare the amount so determined with the
asset's carrying amount. If the fair value is lower than
the carrying amount, an impairment loss is recognised,
reducing the carrying amount to the higher of the
asset's value in use or fair value less costs to sell.
If the reason for a previously recognised impairment
loss no longer exists, the impairment loss is reversed
up to the level of the recoverable amount, but no higher
than the amortised acquisition or manufacturing cost.
Impairment losses on goodwill are not reversed.
As part of the process of assessing recoverability, it is
generally necessary to apply estimations and assump-
tions - in particular regarding future cash inflows and
outflows and the length of the forecast period - which
could differ from actual amounts. Actual amounts
may differ from the assumptions and estimations
used if business conditions develop differently to
expectations.
The BMW Group determines the value in use on the
basis of a present value computation. Cash flows
used for this calculation are derived from long-term
forecasts approved by management. These long-term
forecasts are based on detailed forecasts drawn up
at an operational level and, with a planning period
of six years, correspond roughly to a typical product
life cycle of vehicle projects. For the purposes of cal-
culating cash flows beyond the planning period, a
residual value is assumed which does not take growth
into account. Forecasting assumptions are continually
adjusted to current information and regularly com-
pared with external sources. The assumptions used
take account in particular of expectations of the prof-
itability of the product portfolio, future market share
development, macroeconomic developments (such
as currency, interest rate and raw materials prices)
as well as the legal environment and past experience.
Amounts are discounted on the basis of a market-
related cost of capital rate. Impairment tests for the
Automotive and Motorcycles cash-generating units
are performed using a risk-adjusted pre-tax cost of
capital (WACC). In the case of the Financial Services
cash-generating unit, a pre-tax cost of equity capital
is used, as is customary in the sector. The following
discount factors were applied:
in %
Automotive
Motorcycles
Earnings per share are calculated as follows: Basic
earnings per share are calculated for common and
preferred stock by dividing the net profit for the year
after minority interests and attributable to each cate-
gory of stock, by the average number of outstanding
shares. Net profit for the year is accordingly allocated
to the different categories of stock. The portion of
net profit that is not being distributed is allocated
to each category of stock based on the number of
outstanding shares. Profits available for distribution
are determined directly on the basis of the dividend
resolutions passed for common and preferred stock.
Diluted earnings per share are calculated and sepa-
rately disclosed in accordance with IAS 33.
Financial Services
2017
12.0
12.0
12.0
12.0
13.4
13.4
The risk-adjusted discount rate, calculated using a
CAPM model, also takes into account specific peer-
group information relating to beta-factors, capital
structure data and borrowing costs. In conjunction
with the impairment tests for cash-generating units,
sensitivity analyses are performed for the main
assumptions in order to rule out that possible changes
to the assumptions used to determine the recoverable
amount would result in the requirement to recognise
an impairment loss.
123
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
All items of property, plant and equipment are measured
at acquisition or manufacturing cost less accumulated
depreciation and accumulated impairment losses. The
cost of internally constructed plant and equipment
comprises all costs which are directly attributable
to the manufacturing process as well as an appro-
priate proportion of production-related overheads.
This includes production-related depreciation and
amortisation as well as an appropriate proportion
of administrative and social costs. Financing costs
are not included in acquisition or manufacturing cost
unless they are directly attributable to the asset. The
carrying amount of items of depreciable property,
plant and equipment is written down according to
scheduled usage-based depreciation - as a general
rule on a straight-line basis - over the useful lives of
the assets. Depreciation is recorded as an expense in
the income statement.
2018
The following useful lives are applied throughout the
BMW Group:
Public sector grants are not recognised until there is
reasonable assurance that the conditions attaching to
them have been complied with and the grants will be
received. The resulting income is recognised in cost
of sales over the periods in which the costs occur that
they are intended to compensate.
Revenues from the sale of vehicles, for which repur-
chase arrangements are in place, are not recognised
immediately in full. Instead, revenues are either recog-
nised proportionately or the difference between the
sales and repurchase price recognised in instalments
over the term of the contract depending on the nature
of the agreement. This includes in particular revenues
from vehicle sales, where it is expected that vehicles
will return to the Group as leased vehicles in the
subsequent period. In this case, assets and liabilities
relating to rights of return are recognised.
1,271.07
1,281.41
1,298.78
1,276.47
79.72
69.04
74.07
65.91
16.45
14.81
15.62
15.04
Revenues also include lease rentals and interest
income from financial services. Income from lease
instalments arising on operating leases is recognised
on a straight-line over the lease term. Interest income
arising on finance leases as well as on retail customer
and dealership financing is recognised using the effec-
tive interest method and reported as interest income
on loan financing within revenues.
1.14
1.18
1.13
121
122
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
04
Accounting policies, assumptions, judgements
and estimations
Revenues from contracts with customers include in
particular revenues from the sale of products and
leased assets as well as from services. Revenue is
recognised when control is transferred to the deal-
ership or retail customer. This is usually the case
at the point in time when the risks and rewards of
ownership are transferred. In the case of services,
control is transferred over time. Revenues are stated
net of settlement discount, bonuses and rebates as well
as interest and residual value subsidies. Variable con-
sideration components, such as bonuses and interest
subsidies, are measured at the expected value and, in
the case of multi-component contracts, allocated to all
performance obligations unless directly attributable
to the sale of a vehicle. The consideration arising from
these sales usually falls due for payment immediately
or within 30 days. In exceptional cases, a longer pay-
ment may also be agreed.
Consideration for the rendering of services to customers
usually falls due for payment at the beginning of a
contract and is deferred as a contract liability under
deferred income. The deferred amount is released over
the service period and recognised as revenue in the
income statement. Reflecting the fact that expenses
are incurred over the period in which services are ren-
dered, deferred income is released on the basis of the
expected cost trend. If the sale of products includes a
determinable amount for services (multiple-component
contracts), the related revenues are deferred and
recognised as income in the same way.
1.20
in years
Factory and office buildings, residential buildings, fixed
installations in buildings and outside facilities
Plant and machinery
Inventories of raw materials, supplies and goods for
resale are stated at the lower of average acquisition
cost and net realisable value.
Work in progress and finished goods are stated at
the lower of manufacturing cost and net realisable
value. Manufacturing cost comprises all costs which
are directly attributable to the manufacturing process
as well as an appropriate proportion of production-
related overheads. This includes production-related
depreciation and amortisation and an appropriate
proportion of administrative and social costs. Financ-
ing costs are not included in the acquisition or man-
ufacturing cost of inventories.
Cash and cash equivalents comprise mainly cash on hand
and cash at bank with an original term of up to three
months. With the exception of money market funds,
cash and cash equivalents are measured at amortised
cost.
Provisions for pensions are measured using the projected
unit credit method. Under this method, not only
obligations relating to known vested benefits at the
reporting date are recognised, but also the effect of
future expected increases in pensions and salaries. The
calculation is based on independent actuarial valua-
tions which take into account relevant biometric factors.
In the case of funded plans, the pension obligation is
offset against plan assets measured at their fair value.
If the plan assets exceed the pension obligation, the
surplus is tested for recoverability. In the event that
the BMW Group has a right of reimbursement or a
right to reduce future contributions, it reports an asset
(within Other financial assets), measured on the basis
of the present value of the future economic benefits
attached to the plan assets. For funded plans, in cases
where the obligation exceeds plan assets, a liability is
recognised under pension provisions.
The calculation of the amount of the provision
requires assumptions to be made with regard to
discount rates, salary trends, employee fluctuation
and the life expectancy of employees. Discount rates
are determined by reference to market yields at the
end of the reporting period on high quality fixed-in-
terest corporate bonds. The salary trend relates to
the expected future rate of salary increase which is
estimated annually based on inflation and the career
development of employees within the Group.
Net interest expense on the net defined benefit lia-
bility and net interest income on net defined benefit
assets are presented separately within the financial
result. All other costs relating to allocations to pension
provisions are allocated to costs by function in the
income statement.
Past service cost arises where a BMW Group com-
pany introduces a defined benefit plan or changes
the benefits payable under an existing plan. This cost
is recognised immediately in the income statement.
Similarly, gains and losses arising on the settlement
of a defined benefit plan are recognised immediately
in the income statement.
Remeasurement of the net liability can result from
changes in the present value of the defined benefit
obligation, the fair value of the plan assets or the
asset ceiling. Remeasurement can result, amongst
others, from changes in financial and demographic
parameters, as well as changes following the portfolio
development. Remeasurements are recognised imme-
diately in other comprehensive income and hence
directly in equity (within revenue reserves).
Other provisions are recognised when the BMW Group
has a present legal or factual obligation towards a third
party arising from past events, the settlement of which
is probable, and when the amount of the obligation
can be reliably estimated. Provisions with a remaining
period of more than one year are measured at their
net present value.
The measurement of provisions for statutory and
non-statutory warranty obligations (statutory, contractual
and voluntary) involves estimations. In addition to manu-
facturer warranties prescribed by law, the BMW Group
offers various further standard (assurance-type) war-
ranties depending on the product and sales market.
No provisions are recognised for additionally pur-
chased service packages that are treated as separate
performance obligations.
127
Current income taxes are calculated within the
BMW Group on the basis of tax legislation applicable
in the relevant countries. To the extent that judgement
was necessary to determine the treatment and amount
of tax items presented in the financial statements,
there is in principle a possibility that local tax author-
ities may take a different position.
128
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
Provisions for statutory and non-statutory warranties
are recognised at the point in time when control over
the goods is transferred to the dealership or retail
customer or when a new category of warranty is
introduced. With respect to the level of the provi-
sion, estimations are made in particular based on past
experience of damage claims and processes. Future
potential repair costs and price increases per product
and market are also taken into account. Provisions
for warranties for all companies of the BMW Group
are adjusted regularly to take account of new infor-
mation, with the impact of any changes recognised
in the income statement. Further information is
pro-
vided in note 33. Similar estimates are also made → see
in conjunction with the measurement of expected
reimbursement claims.
The recognition and measurement of provisions
for litigation and liability risks necessitates making
assumptions in order to determine the probability of
liability, the amount of claim and the duration of the
legal dispute. The assumptions made, especially the
assumption about the outcome of legal proceedings,
are subject to a high degree of uncertainty. The appro-
priateness of assumptions is regularly reviewed, based
on assessments undertaken both by management and
external experts, such as lawyers. If new developments
arise in the future that result in a different assessment,
provisions are adjusted accordingly.
If the recognition and measurement criteria relevant
for provisions are not fulfilled and the outflow of
resources on fulfilment is not unlikely, the potential
obligation is disclosed as a contingent liability.
note 33
→ see
not 41
→ see
note 40 and 46
Share-based remuneration programmes which are expected
to be settled in shares are measured at their fair value
at grant date. The related expense is recognised as
personnel expense in the income statement over the
vesting period and offset against capital reserves.
Share-based remuneration programmes expected to
be settled in cash are revalued to their fair value at
each balance sheet date between the grant date and
the settlement date and on the settlement date itself.
The expense is recognised as personnel expense in
the income statement over the vesting period and
presented in the balance sheet as a provision.
The share-based remuneration programme for Board
of Management members and senior heads of depart-
ment entitles BMW AG to elect whether to settle its
commitments in cash or with shares of BMW AG
common stock. Based on the decision to settle in cash,
the share-based remuneration programmes for Board
of Management members and senior heads of depart-
ment are accounted for as cash-settled, share-based
remuneration programmes. Further information on
share-based remuneration programmes is provided
in note 41.
Group
Financial
Statements
Deferred taxes are recognised on all temporary differ-
ences between the tax and accounting bases of assets
and liabilities and on consolidation procedures. The
recoverability of deferred tax assets is assessed at each
balance sheet date on the basis of planned taxable
income in future financial years. If with a probabil-
ity of more than 50 percent future tax benefits will
not be realised, either in part or in total, a valuation
allowance is recognised on the deferred tax assets. The
calculation of deferred tax assets requires assumptions
to be made with regard to the level of future taxable
income and the timing of recovery of deferred tax
assets. These assumptions take account of forecast
operating results and the impact on earnings of the
reversal of taxable temporary differences. Since future
business developments cannot be predicted with cer-
tainty and to some extent cannot be influenced by the
BMW Group, the measurement of deferred tax assets
is subject to uncertainty. Deferred taxes are calculated on
the basis of tax rates which are applicable or expected
to apply in the relevant national jurisdictions when
the amounts are recovered.
In the case of raw materials hedges that are accounted
for as cash flow hedges, the hedging instruments are
designated in full as part of the hedging relationship.
As an exception to this general rule, the interest
component of raw materials derivative instruments
redesignated in conjunction with the first-time
application of IFRS 9 was not designated as part of the
hedging relationship. Changes in the fair value of
this component are recorded as costs of hedging
on a separate line within accumulated other equity.
Amounts recorded in accumulated other equity are
included in the carrying amount of inventories on
initial recognition.
The time values of option transactions and the interest
component of forward currency contracts are not des-
ignated as part of the hedging relationship in the case
of currency hedges accounted for as cash flow hedges.
Changes in the market value of such components are
recorded as costs of hedging on a separate line within
accumulated other equity. Amounts accumulated in
other equity from currency hedges are reclassified to
cost of sales when the related hedged item is recog-
nised in profit or loss.
8 to 50
3 to 21
Other equipment, factory and office equipment
2 to 25
For machinery used in multiple-shift operations,
depreciation rates are increased to account for the
additional utilisation. If there is any indication of
impairment of property, plant and equipment, an
impairment test is performed as described above for
intangible assets.
With respect to lease arrangements of the BMW Group,
use of judgement is required, in particular with regard
to the transfer of economic ownership of a leased item.
Leased items of property, plant and equipment whose
economic ownership is attributed to the BMW Group
(finance leases) are measured on initial recognition at
their fair value or, if lower, at the net present value of
minimum lease payments. The assets are depreciated
using the straight-line method over their estimated
useful lives or, if shorter, over the contractual lease
period. Obligations for future lease payments are
recognised at their net present value in other financial
liabilities.
Group products recognised by BMW Group entities as
leased products under operating leases are measured at
manufacturing cost, including any initial direct costs.
All other leased products are measured at acquisition
cost. All leased products are depreciated over the period
of the lease using the straight-line method down to
their expected residual value. Where the recoverable
amount of a lease exceeds the asset's carrying amount,
changes in residual value expectations are recognised
by adjusting scheduled depreciation prospectively
over the remaining term of the lease. If the recoverable
amount is lower than the asset's carrying amount,
an impairment loss is recognised for the shortfall. A
test is carried out at each balance sheet date to deter-
mine whether an impairment loss recognised in prior
periods no longer exists or has decreased. In such
cases, the carrying amount of the asset is increased
to the recoverable amount, at a maximum up to the
amount of the asset's amortised cost.
Assumptions and estimations are required regarding
future residual values, since these represent a signif-
icant part of future cash inflows. Relevant factors
to be considered include the trend in market prices
and demand on the pre-owned vehicle market. The
assumptions are based on internally available historical
data and current market data as well as on forecasts of
external institutions. Furthermore, assumptions are
regularly validated by comparison with external data.
-
Investments accounted for using the equity method are
measured provided no impairment has been recog-
nised at cost of investment adjusted for the Group's
share of earnings and changes in equity capital.
The Group's financial assets include in particular other
investments, receivables from sales financing, mar-
ketable securities and investment funds, derivative
financial assets, trade receivables and cash and
cash equivalents. Non-derivative financial assets are
accounted for on the basis of the settlement date.
Depending on the business model and the structure of
contractual cash flows, financial assets are classified
as measured at amortised cost, at fair value through
comprehensive income or at fair value through profit
or loss. The category "at fair value through compre-
hensive income" at the BMW Group comprises mainly
marketable securities and investment funds used for
liquidity management purposes. Selected marketable
securities and investment fund, money market funds
within cash and cash equivalents as well as convertible
bonds are recognised at fair value through profit or
loss, as their contractual cash flows do not solely
represent payments of principal and interest.
The market values of financial instruments measured
at fair value are determined on the basis of market
information available at the balance sheet date, such
as quoted prices or using appropriate measurement
methods, in particular the discounted cash flow method.
Items reported under other investments within the
scope of IFRS 9 are measured at fair value through
profit or loss. Investments in subsidiaries, joint
arrangements and associated companies that are not
material to the BMW Group and which do not fall
within the scope of IFRS 9 are also included in other
investments.
Receivables from sales financing are measured at amor-
tised cost using the effective interest rate method. This
also includes receivables arising on vehicle finance
leases.
With the exception of operating lease and trade
receivables, the BMW Group applies the general
approach described in IFRS 9 to determine impairment
of financial assets. Under the general approach, loss
allowances are measured on initial recognition on the
basis of the expected 12-month credit loss (stage 1). If
the credit loss risk at the end of the reporting period
has increased significantly since initial recognition,
the impairment allowance is measured on the basis
of lifetime expected credit losses (stage 2 – general
approach). The BMW Group applies the simplified
approach described in IFRS 9 to operating lease
and trade receivables, whereby the amount of the
loss allowance is measured subsequent to the initial
recognition of the receivable on the basis of lifetime
expected credit losses (stage 2 – simplified approach).
For the purposes of allocating an item to stage 2, it
is irrelevant whether the credit risk of the asset
concerned has increased significantly since initial
recognition. In the case of credit-impaired assets
which had not been credit-impaired at the time they
were acquired or originated, an impairment allowance
is recognised at an amount equal to lifetime expected
credit losses (stage 3). This is the case regardless of
whether the general or simplified approach is applied.
As a general rule, the BMW Group assumes that a
receivable is in default if it is more than 90 days
overdue or if there are objective indications of insol-
vency. Credit-impaired assets are identified as such
on the basis of this definition of default. In the case
of stage 3 assets, interest income is calculated on the
asset's carrying amount less any impairment loss.
Loss allowances on receivables from sales financing
are determined primarily on the basis of past expe-
rience with credit losses, current data on overdue
receivables, rating classes and scoring information.
Forward-looking information (for instance forecasts of
key performance indicators) is also taken into account
if, based on past experience, such indicators show a
substantive correlation to actual credit losses.
The measurement of the change in default risk is based
on a comparison of the default risk at the date of initial
recognition and at the end of the reporting period.
The default risk at the end of each reporting period
is determined on the basis of credit checks, current
key economic indicators and any overdue payments.
Loss allowances on trade receivables are determined
primarily on the basis of information relating to over-
due amounts. In the case of marketable securities and
investment funds, the BMW Group usually applies
the option not to allocate financial assets with a low
default risk to different stages. Accordingly, assets
with an investment grade rating are always allocated to
stage 1. The loss allowance on these assets is calculated
using the input factors available on the market, such
as ratings and default probabilities.
The BMW Group writes off financial assets when it has
no reasonable expectation of recovering the amounts
concerned. This may be the case, for instance, if the
debtor is deemed not to have sufficient assets or other
sources of income to service the debt.
125
126
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
Derivative financial instruments are used within the
BMW Group for hedging purposes in order to reduce
currency, interest rate, fair value and market price
risks. All derivative financial instruments are mea-
sured at their fair value. Fair values are determined
on the basis of valuation models. Observable market
price, tenor and currency basis spreads are taken into
account in the measurement of derivative financial
instruments. Furthermore, the Group's own credit
risk and that of counterparties is taken into account
on the basis of credit default swap values for market
contracts with matching terms.
The BMW Group applies the option to recognise the
credit risks arising from the fair values of a group of
derivative financial assets and liabilities on the basis
of their total net amount. Portfolio-based valuation
adjustments (credit valuation adjustments and debit
valuation adjustments) to the individual derivative
financial assets and financial liabilities are allocated
using the relative fair value approach (net method).
Where hedge accounting is applied, changes in fair value
are recognised in the income statement in sundry other
financial result or in other comprehensive income as
a component of accumulated other equity, depending
on whether the hedging relationship is classified as a
fair value hedge or a cash flow hedge. Fair value hedges
are mainly used to hedge interest rate risks relating to
bonds, other financial liabilities and receivables from
sales financing. Cross currency basis spreads are not
designated as part of the hedging relationship in the
case of interest rate hedges accounted for as fair value
hedges. Accordingly, changes in the market value of
such instruments are recorded as costs of hedging
within accumulated other equity. Amounts recorded
in equity are reclassified to the income statement over
the term of the hedging relationship.
126.68
130.36
124
125.77
15
15
23
194
217
The BMW Group previously operated the joint ven-
tures DriveNow GmbH & Co. KG and DriveNow
Verwaltungs GmbH (DriveNow) together with Sixt SE,
Pullach. DriveNow offers car-sharing services in major
German cities and abroad. In January 2018, the
BMW Group signed an agreement with Sixt SE for
the complete acquisition of the shares in DriveNow.
119
120
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Accounting
22
Principles and
Policies
services.
DriveNow GmbH & Co. KG and DriveNow Verwal-
tungs GmbH and their foreign subsidiaries DriveNow
Austria GmbH, DriveNow UK Limited, DriveNow
Sverige AB, DriveNow Belgium S.p.r.l. and DriveNow
Italy S.r.l. have been fully consolidated since the first
quarter of 2018.
DriveNow's equity prior to the acquisition stood at
a negative amount of €2 million. As a result of the
step acquisition, the shares already held by BMW
were remeasured to their fair value, giving rise to a
gain of €209 million, which is included in the result
on investments. The fair value of shares already held
amounts to €209 million.
The following table shows the purchase price allocation:
in € million
IDENTIFIED ASSETS
Intangible assets
Fair values at
acquisition date
111
22
9
7
Following approval by the antitrust authorities and
with effect from 9 March 2018, the BMW Group
acquired the remaining 50% of the shares of the
DriveNow companies together with their subsidiaries
for a purchase price of €209 million. The purchase
price was settled by the transfer of cash funds. The
acquisition expands the BMW Group's strategic
options for the further development of mobility
31 December 2018
Included at
No longer included
in 2018
02
Group reporting entity
and consolidation principles
134.93
All consolidated subsidiaries have the same year-end as
BMW AG with the exception of BMW India Private Ltd.
and BMW India Financial Services Private Ltd., whose
year-ends are 31 March in accordance with local legal
requirements.
When assessing whether an investment gives rise to a
controlled entity, an associated company, a joint oper-
ation or a joint venture, the BMW Group considers
contractual arrangements and other circumstances, as
well as the structure and legal form of the entity. Discre-
tionary decisions may also be required. If indications
exist of a change in the judgement of (joint) control, the
BMW Group undertakes a new assessment.
An entity is deemed to be controlled if BMW AG -
either directly or indirectly - has power over it, is
exposed or has rights to variable returns from it and
has the ability to influence those returns.
An entity is classified as an associated company if
BMW AG - either directly or indirectly – has the abil-
ity to exercise significant influence over the entity's
operating and financial policies. As a general rule,
the Group is assumed to have significant influence
if it holds 20% or more of the entity's voting power.
Joint operations and joint ventures are forms of joint
arrangements. Such an arrangement exists when a
BMW Group entity jointly carries out activities with
a third party on the basis of a contractual agreement.
In the case of a joint operation, the parties that have
joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating to the
arrangement. Assets, liabilities, revenues and expenses
of a joint operation are recognised proportionately in
the Group Financial Statements on the basis of the
BMW Group entity's rights and obligations (propor-
tionate consolidation). Together with SGL Carbon SE,
companies of the BMW Group were previously party
to joint operations for the manufacture of carbon
fibres and carbon fibre fabrics used in vehicle pro-
duction. In November 2017, an agreement was signed
with SGL Carbon SE concerning that entity's gradual
acquisition of the BMW Group's 49% shareholding.
Accordingly, between the beginning of 2018 and the
end of 2020 at the latest, SGL Carbon SE will become
the sole owner of the hitherto joint operations. As a
consequence of the transaction, the joint operations
are no longer consolidated proportionately in the
BMW Group Financial Statements and are no longer
consolidated entities with effect from the financial
year 2018. SGL Composites LLC continues to be held
as an investment.
The BMW Group is also party to a cooperation with
Toyota Motor Corporation, Toyota City, for the devel-
opment of a sports car. This cooperation is accounted
for as a joint operation.
In the case of a joint venture, the parties which have
joint control only have rights to the net assets of the
arrangement.
Associated companies and joint ventures are accounted
for using the equity method, with measurement on
initial recognition based on acquisition cost.
The following changes took place in the Group report-
ing entity in the financial year 2018:
Included at
31 December 2017
Included for the
Germany
Foreign
Total
21
187
208
22
24
first time in 2018
2
1
5
The BMW Group Financial Statements include BMW AG
and all material subsidiaries over which BMW AG -
either directly or indirectly - exercises control. This
also includes 58 structured entities, consisting of asset-
backed securities entities and special-purpose funds.
Trade receivables
The financial statements of consolidated compa-
nies which are presented in a foreign currency are 7
translated using the modified closing rate method.
Under this method, assets and liabilities are translat-
ed at the closing exchange rate, whilst income and
expenses are translated at the average exchange rate.
Differences arising on foreign currency translation are
presented in "Accumulated other equity".
In the single entity accounts of BMW AG and its sub-
sidiaries, foreign currency receivables and payables
are measured on initial recognition using the exchange
rate prevailing at the date of first-time recognition.
At the end of the reporting period, foreign currency
receivables and payables are measured using the clos-
ing exchange rate. The resulting unrealised gains and
losses, as well as realised gains and losses arising on
settlement, are recognised in the income statement.
Non-monetary balance sheet items denominated in
foreign currencies are rolled forward on the basis of
historical exchange rates.
The exchange rates of currencies which have a mate-
rial impact on the Group Financial Statements were
as follows:
1 Euro =
British Pound
Chinese Renminbi
Japanese Yen
Korean Won
Russian Rubel
South African Rand
US-Dollar
Argentina has fulfilled the definition of a hyperinfla-
tionary economy since 1 July 2018. For this reason,
IAS 29 (Financial Reporting in Hyperinflationary
Economies) is being applied for the BMW subsidiary in
Argentina with effect from the financial year 2018. The
price indices published by the Federación Argentina
de Consejos Profesionales de Ciencias Económicas
(FACPCE) are used to adjust non-monetary assets and
liabilities and items in the income statement. The
resulting effects are not significant for the BMW Group
and for this reason prior year figures have not been
adjusted.
Foreign currency translation and measurement
Closing rate
31.12.2018
31.12.2017
2018
2017
0.89
0.89
0.88
0.88
7.87
7.81
7.63
Trademarks
Average rate
03
7.80
In December 2017, BMW AG, Audi AG, Ingolstadt,
and Daimler AG, Stuttgart, signed agreements to sell
shares in THERE Holding B.V. (THERE) to Robert
Bosch Investment Nederland B.V., Boxtel, and to
Continental Automotive Holding Netherlands B.V.,
Maastricht. Each of these two parties acquired 5.9% of
the shares, which were sold in equal parts by BMW AG,
Audi AG and Daimler AG. The transactions were
completed during the first quarter of 2018. The sale
does not have a significant impact on the results of
operations, financial position and net assets of the
BMW Group.
The other changes to the Group reporting entity do
not have a material impact on the results of operations,
financial position and net assets of the Group.
Inventories
Cash and cash equivalents
IDENTIFIED LIABILITIES
Provisions
16
Trade payables
5
Deferred tax liabilities
34
Other liabilities
3
Total identified net assets
Other receivables
40
97
Following approval by the antitrust authorities and
with effect from 31 January 2019, the BMW Group
has now completed the agreement with the Daimler
Group regarding the merger of certain business units
that provide mobility services. Existing on-demand
mobility offerings in the areas of car sharing, ride-
hailing, parking, charging and multi-modality will
be combined and strategically expanded. The
BMW Group and the Daimler Group each hold equal
shares in the joint ventures that comprise the mobility
services referred to above.
As a result of the merger, the investments in the
companies previously held by BMW will be remea-
sured to their fair value. This will give rise to a one-off
positive effect on Group earnings in the region of
between €100 million and €300 million. Due to the
fact that the transaction was completed shortly after
the BMW Group's year-end, the work on opening
balance sheets at the merger date and the calculation
of the final purchase prices have not yet been finalised.
For this reason, the final purchase prices cannot yet
be determined definitively. Similarly, purchase price
allocations have not yet been finalised. The disclosures
made should be regarded as provisional since no fur-
ther information is available at present.
Assets and liabilities totalling €461 million and
€62 million respectively are reported as discontin-
ued operations at 31 December 2018. These items are
disclosed separately in the Group Balance Sheet and
allocated to the Automotive segment. The loss after
tax from discontinued operations for the financial
year 2018 amounted to €33 million. This amount is
also disclosed separately in the Income Statements
for the Group and Segments.
On 28 March 2018, the BMW Group signed an agree-
ment with Daimler - subject to anti-trust approval.
regarding the merger of certain business units that
provide mobility services. DriveNow is part of this
agreement and is therefore accounted for as a dis-
continued operation.
321
97
Total identified net assets
418
Consideration transferred (purchase price)
GOODWILL CALCULATION
Goodwill
Credit card receivables
-8
-10
-18
Marketable securities and investment funds
-56
-4
-60
-2
Trade receivables
-1,019
IAS 39
-1,147
Receivables from sales financing
1.1.2018
IFRS 9
IFRS 9
allowance due to
Impairment
allowances
Adjustment to
impairment
Impairment
allowances
31.12.2017
in € million
→ 75
-2
The following table shows the adjustments made to
impairment allowances in the Group Balance Sheet as
a result of the first-time application of IFRS 9.
128
BMW Group reconciliation of impairment allowances
98,678
-1,213
BMW Group change in presentation of cash flow statement
for the period 1 January to 31 December 2017
(h) Some of the money market funds with a fixed
net asset value were reclassified from cash to
the category "at fair value through profit or loss".
They do not meet the criteria for measurement
at amortised cost in accordance with IFRS 9 be-
cause their contractual cash flows do not solely
represent payments of principal and interest on
the principal amount outstanding. There was
no difference between carrying amounts pursuant
to IAS 39 and fair values at 1 January 2018.
Total comprehensive income attributable to shareholders of BMW AG
→ 73
in € million
Net profit
Change in provisions
Change in deferred taxes
Other
Cash inflow/outflow from operating activities
The effects of the first-time application of IFRS 15
on equity are shown in the Statement of Changes
in Equity.
As originally
reported
Total
Adjustment
Adjusted
according to
IFRS 15
-396
98,282
-78,744
415
-78,329
19,934
19
19,953
9,880
-1,099
114
IFRS 15
(g) Specific listed bonds were reclassified to the cat-
egory "at amortised cost". At the date of first-
time application of IFRS 9, the BMW Group uses
a business model for these bonds, the objective
of which is to collect contractual cash flows that
solely represent payments of principal and interest
on the principal amount outstanding. The market
value of these instruments at 31 December 2018
amounted to €680 million (31 December 2017:
€738 million). If the reclassification to other
comprehensive income had not taken place in
the period under report, a fair value loss of
€2 million would have been recognised through
other comprehensive income.
Collateral assets
7
Trade receivables
Cash and cash equivalents
Credit card receivables
Other
Loans to third parties
이
b)
Marketable securities and investment funds
Other derivative instruments
Fair value hedges
Cash flow hedges
Derivative instruments
Financial assets
Receivables from sales financing
f)
e)
a
FINANCIAL ASSETS
Other investments
7
-30
7
-30
155
-30
-77
Total comprehensive income
Other assets
(f) Adjustment of the amount and presentation of
impairment allowances in accordance with the
new requirements of IFRS 9.
Receivables from subsidiaries
23
(e) Specific investments in debt instruments were
reclassified to the category "at fair value
through profit or loss" because their contractual
cash flows do not solely represent payments
of principal and interest on the principal amount
outstanding.
(d) The new accounting requirements for interest rate
hedges reduce the carrying amount of financial
liabilities designated as hedged items within a
hedge relationship by €30 million and increase
accumulated other equity by €5 million. At the
date of adoption of the new requirements, rev-
enue reserves increased by €18 million, after offset
of deferred tax.
(c) Adjustment of impairment allowances in accor-
dance with the new requirements of IFRS 9.
(b) Selected non-current marketable securities and
loans to third parties, for which the fair value
option available under IAS 39 was previously used,
were reclassified to the category "at fair value
through profit or loss" because their contractual
cash flows do not solely represent payments of
principal and interest on the principal amount
outstanding. There was no difference between
carrying amounts pursuant to IAS 39 and fair
values at 1 January 2018.
(a) Financial investments in equity instruments were
reclassified to the category "at fair value through
profit or loss". There was no difference between
carrying amounts pursuant to IAS 39 and fair
values at 1 January 2018.
The impact of the various changes arising in con-
junction with the first-time application of IFRS 9 is
explained below:
Income Statement
→ Notes to the
Policies
→ Accounting
Principles and
Notes to the Group
Financial Statements
Statements
Group
Financial
138
Total impact on equity
Total financial liabilities
137
178
-77
23
Trade payables
Other liabilities
Financial liabilities
FINANCIAL LIABILITIES
Total financial assets
Other assets
Receivables from companies
in which an investment is held
Net profit
in which an investment is held
→ 72
1,927
66
1,993
1,635
-5
1,630
71,582
1,960
73,542
5,525
1,960
7,485
193,483
2,023
195,506
EQUITY AND LIABILITIES
Total equity
54,548
-441
54,107
thereof equity attributable to shareholders of BMW AG
54,112
-441
53,671
thereof revenue reserves
2,769
51,256
2
121,964
37
116
5,916
10,198
2,203
12,401
188,535
1,731
190,266
BMW Group change in presentation of balance sheet at 31 December 2017
→ 70
in € million
ASSETS
Total non-current assets
thereof investments accounted for using the equity method
thereof deferred tax
thereof other assets
Total current assets
thereof other assets
Total assets
As originally
reported
Adjustment
IFRS 15
Adjusted
according to
IFRS 15
121,901
63
2,767
in € million
-441
Total non-current provisions and liabilities
2,023
195,506
133
BMW Group change in presentation of income statement
for the period 1 January to 31 December 2017
134
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
→ 71
in € million
Revenues
Cost of sales
Gross profit
Profit/loss before financial result
Profit/loss before tax
Income taxes
Net profit/loss
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
BMW Group change in presentation of statement of comprehensive income
for the period 1 January to 31 December 2017
193,483
50,815
13,443
10,779
69,888
-254
69,634
thereof other provisions
5,437
195
5,632
thereof deferred tax
thereof other liabilities
Total current provisions and liabilities
thereof other provisions
thereof other liabilities
Total equity and liabilities
2,241
-84
2,157
5,410
-365
5,045
69,047
2,718
71,765
6,313
54
6,367
2,664
-8
814
-6
Derivative instruments
Financial assets
Receivables from sales financing
Other investments
IFRS 9
IAS 39
Category
FINANCIAL ASSETS
in € million
Policies
Principles and
Available-for-sale
Fair value option
Loans and receivables
→ Accounting
Notes to the Group
→ 74
BMW Group reclassification of financial instruments at 1 January 2018
Statements
Group
Financial
136
135
The following table shows the reconciliation of the
categories and carrying amounts of financial instru-
ments as well as the impact on Group equity of the
first-time application of IFRS 9.
The rules for hedge accounting contained in IAS 39
required an effectiveness test to be performed for
corresponding hedging relationships, based on fixed
ranges, in order to demonstrate the retrospective
effectiveness of the hedge. It was not permitted under
IAS 39 to designate all risk components separately.
→ see
note 4
The IAS 39 impairment model was based on a regular
determination of whether objective evidence indicated
that impairment had already occurred. For the pur-
poses of assessing possible impairment, all available
information, such as market conditions and prices as
well as the length of time and the scale of the decline
in value were taken into account.
Financial Statements
Cash flow hedges
Fair value hedges
Other derivative instruments
Held for trading
5,879
814
Hedge accounting
Hedge accounting
2,187
2,187
Hedge accounting
Hedge accounting
80,562
80,434
At amortised cost
29
395
366
Fair value through profit or loss
IFRS 9
IAS 39
Carrying amount
Trade receivables
Cash and cash equivalents
Other
Credit card receivables
Loans to third parties
Marketable securities and investment funds
Prior to the adoption of IFRS 9, financial instruments
were accounted for in accordance with IAS 39. In
accordance with those requirements, the Group's
financial assets were allocated to either cash funds
or to the categories "loans and receivables", "available-
for-sale”, “held for trading” or “fair value option”.
Financial liabilities were allocated to the categories
"financial liabilities at fair value through profit or loss"
or "other financial liabilities". On initial recognition,
financial instruments accounted for in accordance
with IAS 39 were measured at fair value, whereby
transaction costs were taken into account except in the
case of financial instruments allocated to the category
"at fair value through profit or loss". Subsequent to
initial recognition, available-for-sale financial assets,
held-for-trading financial instruments and financial
assets for which the fair value option was applied
were measured at their fair value. Financial assets
that were classified as loans and receivables and
financial liabilities (with the exception of derivative
financial instruments) were subsequently measured
at amortised cost using the effective interest method.
The new requirements contained in IFRS 9 (Finan-
cial Instruments) relating to the classification and
measurement of financial instruments were applied
retrospectively by the BMW Group in the financial
year 2018. The available exemption not to adjust
comparative information for previous periods was
applied. Accordingly, only the opening balance sheet
at 1 January 2018 was adjusted. Apart from a small
number of exceptions, the requirements for hedge
accounting were applied prospectively in the financial
year 2018. The one exception to this is hedge accounting
for the fair value of a portfolio against interest rate
risk, for which the requirements of IAS 39 continue to
be applied. Information on accounting in accordance
with IFRS 9 is provided in the Accounting Policies
section in note 4.
First-time application of IFRS 9
07
Adjustment
IFRS 15
As originally
reported
13.09
-0.05
13.14
13.07
-0.05
13.12
13.09
-0.05
13.14
13.07
-0.05
13.12
8,589
-31
8,620
8,675
-31
8,706
-2,000
-51
-1,949
10,675
20
Adjusted
according to
Fair value through profit or loss
IFRS 15
-31
5,909
5,909
-2,959
-75
-2,884
-559
50
-609
752
56
696
8,675
-31
8,706
IFRS 15
Adjusted
according to
Adjustment
IFRS 15
As originally
reported
9,219
-31
9,250
9,305
-31
9,336
8,675
8,706
1,340
1,340
Available-for-sale
Differences through
111,171
111,201
6,822
6,822
At amortised cost
Other liabilities
9,731
9,731
At amortised cost
Other liabilities
94,618
94,648
At amortised cost
Other liabilities
Total impact on equity
Total financial liabilities
Other liabilities
Trade payables
Financial liabilities
FINANCIAL LIABILITIES
106,011
105,903
1,108
1,108
new
At amortised cost
measurement
evaluation
-2
22
.6
2
-2
5
5
c)
93
b)
a)
76
-76
-8
-35
128
Note
Revenue
reserves
other equity
Deferred taxes
Accumulated
Equity effects
-8
measurement
category
change of
3
Loans and receivables
Other assets
At amortised cost
Cash
184
184
At amortised cost
Loans and receivables
240
248
At amortised cost
Loans and receivables
2
2
Fair value through profit or loss
Fair value option
112
112
At amortised cost
Loans and receivables
730
At amortised cost
3,919
5,447
Fair value directly through equity
790
Fair value through profit or loss
8,407
Total financial assets
9,039
632
97
97
Fair value directly through equity
Available-for-sale
219
219
At amortised cost
Cash
Collateral assets
1,334
1,334
19
At amortised cost
Loans and receivables
276
276
At amortised cost
Loans and receivables
Receivables from companies
Receivables from subsidiaries
Other assets
2,663
2,667
At amortised cost
Loans and receivables
Fair value through profit or loss
70,229
revenue reserves
67,989
1.1.2019
2018
1.1.2018
revenue reserves
Impact on
After-tax
earnings impact
10,655
Impact on
Segment
Change
The following table provides an overview of the
expected effects on revenue reserves from the first-
time application of IFRS 16 and the related change
in the methods used to account for leases as a lessor:
Services segment in accordance with the requirements
applicable to manufacturers or dealers. For this reason,
in future, revenues and cost of sales arising on the
sale of vehicles which will subsequently be leased to
customers under finance lease arrangements will be
recognised at a later date. Revenues and cost of sales
relating to vehicle sales will no longer be recognised at
the time of sale, but rather at the commencement date
of the lease. Revenues will be recognised on the basis
of the leased asset's fair value, reduced by any unguar-
anteed residual value of vehicles that are expected
to be returned to the Group. Cost of sales will also be
reduced for unguaranteed residual values. In addition,
initial direct costs incurred by the Financial Services
segment will be recognised at Group level as cost of
sales. Overall, this results in a retrospective decrease
in Group revenue reserves as at 1 January 2018 of
€15 million, after offset of deferred tax amounting to
€4 million (31 December 2018: decrease of revenue
reserves of €146 million, after offset of deferred tax
amounting to €44 million). The adoption of these
requirements will not have a material impact on the
accounting in the Automotive and Financial Services
segments.
The first-time application of IFRS 16 with effect from
1 January 2019, in conjunction with IFRS 15, will also
require the BMW Group to account for finance leases
concluded with retail customers via the Financial
As a result of the revised definition of initial direct costs
contained in IFRS 16, the BMW Group will change the
timing of income statement recognition for volume-
dependent bonuses relating to Financial Services
segment sales promotions. Rather than being spread
over the term of the underlying lease, in future these
costs will be recognised as an expense in full in the
period in which the entitlement to the bonus arises.
This results in a retrospective decrease in Group
revenue reserves at 1 January 2018 of €101 million,
after offset of deferred tax amounting to €44 million
(31 December 2018: reduction of revenue reserves of
€113 million, after offset of deferred tax amounting
to €49 million).
In conjunction with the adoption of IFRS 16, the methods
used to account for leases as a lessor have also been
reviewed, resulting in a change of accounting policy
as described below with effect from the financial year
2019. The change in accounting policy will be applied
retrospectively, with comparative figures restated. In
this context, it will be necessary to restate the opening
balance sheet as at 1 January 2018 and figures for the
financial year 2018.
Principles and
Policies
Notes to the Group
Financial Statements
→ Accounting
Group
Financial
Statements
in € million
130
Lessee
Measurement of right-of-use assets as if IFRS 16 had
been applied from the inception of the contract
First-time application of requirements applicable to
finance leases of manufacturers or dealers
06
Other financial reporting standards issued by the IASB
and not yet applied are not expected to have any
significant impact on the BMW Group Financial
Statements.
-291
-143
-116
Total impact
-113
-12
Lessor
-101
Changes in timing of income statement recognition of
volume-dependent bonuses
Lessor
-146
-131
-15
Eliminations
-32
Automotive
Financial Services
129
The impact on the BMW Group's results of operations,
financial position and net assets is currently being
analysed as part of a Group-wide implementation
project. A new IT system has been introduced to
account for right-of-use assets and lease liabilities in
the future. At the date of initial adoption, the balance
sheet total is expected to increase by approximately
€2.3 billion as a result of leases previously classified
as operating leases. The reclassification results in a
slight decline in the equity ratio. For a small number of
contracts, the carrying amount of a right-of-use asset
will be determined as if IFRS 16 had been applied from
the inception of the lease. After offsetting deferred
tax effects amounting to €13 million, this results in
a reduction of approximately €32 million in Group
revenue reserves at 1 January 2019. In subsequent
periods, the BMW Group expects a slightly positive
impact on profit before financial result and on cash
inflows/outflows from operating activities and a
slightly negative impact on cash inflows/outflows
from financing activities.
The BMW Group will use the grandfather clause
available for existing leases and apply the available
exemptions regarding the recognition of short-term
leases and low-value leasing assets. The new Standard
will be applied for the first time using the modified
retrospective method. Intragroup leasing arrange-
ments are not reflected in the internal management
system or in internal reporting pursuant to IFRS 16
and therefore, in accordance with IFRS 8, do not
result in any changes in the presentation of segment
information. IFRS 16 has not been adopted prior to
the mandatory application date.
28.5.2014
11.9.2015
EU
Date of
mandatory
application
Date of
mandatory
application
IASB
issue by
IASB
Date of
Foreign Currency Transactions and Advance Consideration
Financial Instruments
1.1.2018
IFRS 9
IFRIC 22
IFRS 15
Standard/Interpretation
2018:
financial year
(a) Standards and Revised Standards significant for
the BMW Group applied for the first time in the
Financial reporting rules
05
2,240
Revenue from Contracts with Customers
1.1.2018
12.4.2016
24.7.2014
8.12.2016
The new Standard IFRS 16 (Leases) sets out a new
approach to accounting for leases by lessees. While
under IAS 17, the accounting treatment of a lease
was determined on the basis of the transfer of risks
and rewards incidental to ownership of the asset, in
the future, each lease arrangement will, as a general
rule, be accounted for by the lessee in a similar way
to finance leases.
1.1.2019
1.1.2019
13.1.2016
EU
Date of
mandatory
application
Date of
mandatory
application
IASB
Date of
issue by
IASB
Leases
IFRS 16
Standard/Interpretation
a foreign currency is recognised, any payments or
receipt of advance consideration should be based on
the exchange rate prevailing at the date of payment.
This situation is relevant in individual cases within
the BMW Group.
7
→ see
note 6 and 7
(b) Financial reporting pronouncements issued by
the IASB that are significant for the BMW Group,
but have not yet been applied:
The Interpretation IFRIC 22 clarifies that when
a non-monetary asset or liability denominated in
Changes due to the new accounting standards IFRS 15
and IFRS 9 are described in → notes 6 and 7.
1.1.2018
1.1.2018
1.1.2018
1.1.2018
First-time application of IFRS 15
The new Standard IFRS 15 (Revenue from Contracts with
Customers) assimilates the numerous requirements
and interpretations relating to revenue recognition
into a single Standard. The new Standard also stip-
ulates uniform revenue recognition principles for all
sectors and all categories.
9,899
Revenue recognition from contracts with customers
is based on a five-stage model. Revenues are required
to be recognised either over time or at a specific point
in time. A major difference to the previous Standard
is the increased scope of discretion for estimates and
the introduction of thresholds, thus influencing the
amount and timing of revenue recognition.
44,445
thereof revenue reserves
46,699
-409
47,108
thereof equity attributable to shareholders of BMW AG
46,954
-409
-409
47,363
EQUITY AND LIABILITIES
Total assets
190,266
1,731
188,535
6,596
1,509
5,087
Total equity
68,373
44,036
73,183
5,076
In accordance with the transitional provisions con-
tained in IFRS 15, the BMW Group has applied the
new requirements for revenue from contracts with
customers in the 2018 financial year using the full
retrospective option. For this reason, the opening bal-
ance sheet at 1 January 2017, the figures reported for
the previous year and the balance sheet at 31 Decem-
ber 2017 have been adjusted and made comparable.
The exemption provision, allowing contracts fulfilled
prior to 1 January 2017 not to be newly assessed in
accordance with IFRS 15, has been applied. The impact
of applying the exemption is classified as insignificant
due to the fact that it only affects the BMW Group in
a few individual cases.
-281
5,357
2,821
26
2,795
Total equity and liabilities
Total non-current provisions and liabilities
thereof other liabilities
thereof other liabilities
thereof deferred tax
5,194
155
5,039
thereof other provisions
73,083
-100
Total current provisions and liabilities
1,509
thereof other provisions
1,589
BMW Group change in presentation of balance sheet at 1 January 2017
comprehensive income and cash flow statement for
the financial year 2017:
as well as on the income statement, statement of 7
The following tables show the impact on the balance
sheets at 1 January 2017 and 31 December 2017,
Policies
Principles and
→ Accounting
Notes to the Group
Financial Statements
→ 69
Statements
132
131
A different accounting treatment may be required if
buyback arrangements are in place with customers,
resulting in a shift in the timing of revenue recogni-
tion. The resulting impact was not significant.
As a result of the retrospective adjustments described
above, the Automotive segment's EBIT margin for
the financial year 2017 improved by 0.3 percentage
points to 9.2%.
If the sale of products includes a determinable amount
for services (multiple-component contracts), the related
revenues are deferred and recognised as income
over time. Variable consideration to be received for
multi-component contracts is allocated across all
service obligations unless it is directly attributable
to the sale of the vehicle. As a result of the change
in accounting policy for multi-component contracts
with variable consideration components, changes
in the allocation of transaction prices result for the
Automotive segment in higher amounts being recog-
nised for vehicle sales and a lower level of amounts
deferred for service contracts. The shift in the timing
of revenue recognition resulted in a retrospective
increase in Group revenue reserves at 1 January 2017
of €89 million, after offset of deferred tax amounting to
€38 million (31 December 2017: increase in Group rev-
enue reserves of €112 million, after offset of deferred
tax amounting to €42 million). The impact on earnings
in the financial year 2018 was not significant.
Accounting for buyback arrangements and rights
of return for vehicles sold, but which the Financial
Services segment will subsequently lease to customers,
results in the earlier recognition of intragroup elimina-
tions. The adoption of IFRS 15 results in a retrospective
decrease in Group equity at 1 January 2017 amounting
to €498 million, after offset of deferred tax amount-
ing to €239 million (31 December 2017: reduction
of revenue reserves by €553 million, after offset of
deferred tax amounting to €192 million). The lower
amount of deferred tax at 31 December 2017 results
from the reduction of the US federal corporate tax
rate with effect from 1 January 2018. The earlier date
for consolidating intragroup transactions also results
in the recognition of assets and liabilities relating to
rights of return, causing other current assets and other
current liabilities to increase. The impact on earnings
in the financial year 2018 was not significant.
66,864
In accordance with IFRS 15, costs incurred for sales
promotion measures in the Automotive segment,
such as sales support or residual value subsidies,
are required to be treated as variable components of
consideration and therefore have the effect of reducing
revenue. Variable consideration is measured on the
basis of the amount of consideration to which the
BMW Group expects to be entitled. Some of these
costs were previously reported as cost of sales. The
change in classification in the income statement
results in a decrease in both revenues and cost of
sales. For the financial year 2017, the retrospective
reclassification recorded by the Automotive segment
amounted to €2.9 billion, which did not, however,
have a significant impact at Group level.
Group
Financial
in € million
Buyback arrangements between the Automotive and
Financial Services segments are not reflected in the
internal management system or reporting and there-
fore, in accordance with IFRS 8, do not result in any
changes in the presentation of segment information.
Total non-current assets
2,553
ASSETS
-6
226
1,595
2,548
2
2,546
121,893
2,327
121,671
Adjusted
according to
IFRS 15
Adjustment
IFRS 15
As originally
reported
thereof other assets
Total current assets
thereof other assets
thereof investments accounted for using the equity method
222
thereof deferred tax
17,173
12
161
15,100
12
3,145
385
959
14,990
125
1,798
1,084
2,984
1,750
Additions
12,965
Balance Sheet
Intangible assets
NOTES TO THE BALANCE SHEET
20
Analysis of changes in Group tangible, intangible and investment assets 2018
Acquisition and manufacturing cost
385
in € million
Translation
differences
Reclassi-
fications
Disposals 31.12.2018
Development costs
Goodwill
Other intangible assets
1.1.2018
Land, titles to land, buildings, including
2,990
11,088
2,525
18
1,409
-1,551
6
2,395
Advance payments made and construction in progress
Property, plant and equipment
314
4,868
3,123
55,304
Leased products
→ Notes to the
53,245
183
60
294
75
277
372
82
11,730
Plant and machinery
36,833
201
2,888
1,119
2,852
38,189
Other facilities, factory and office equipment
2,799
20
buildings on third party land
Notes to the Group
Financial Statements
718
Group
Financial
After
Before
taxes
tax
tax
Deferred
taxes
Deferred
After
tax
935
-217
44,143
693
-218
475
Remeasurement of the net defined benefit liability for pension plans
Marketable securities (at fair value through other comprehensive income)
Before
tax
2018
353
-157
-30
674
-597
192
2017
-1,171
155
Other comprehensive income for the period after tax
Deferred taxes on components of other comprehen-
sive income are as follows:
in € million
-604
630
-1,322
Statements
-30
-12
192
Other comprehensive income
-1,061
457
192
-604
-30
-1,171
1,445
-124
-31
-815
-1,171
630
Other comprehensive income arising from equity
accounted investments is reported in the State-
ment of Changes in Equity within currency trans-
lation differences with an amount of € - 24 million
(2017: € -152 million), within financial instruments
used for hedging purposes with an amount of €39 mil-
lion (2017: €91 million) and within costs of hedging
with an amount of € -139 million (2017: € - million).
145
146
-61
18
33
Other comprehensive income from equity accounted investments
Currency translation foreign operations
39
2
41
Financial instruments used for hedging purposes
-1,381
436
-157
-945
-568
1,346
Costs of hedging
-620
187
-433
1,914
735
Disposals 31.12.2017
16,956
-217
Deferred taxes
693
935
Remeasurement of the net defined benefit liability for pension plans
2017
-218
2018
Other comprehensive income for the period after tax
comprises the following:
Disclosures relating to the statement of
comprehensive income
19
NOTES TO THE STATEMENT
OF COMPREHENSIVE
INCOME
The audit of financial statements comprises mainly the
audit of the Group financial statements and Company
financial statements of BMW AG and its subsidiaries,
Services provided by KPMG AG Wirtschaftsprüfungs-
gesellschaft, Berlin, during the financial year 2018 on
behalf of BMW AG and subsidiaries under its control
relate to the audit of the financial statements, other
attestation services, tax advisory services and other
services.
in € million
9
Items not expected to be reclassified to the income statement in the future
475
-44
-29
83
-1
Items that can be reclassified to the income statement in the future
Currency translation foreign operations
718
Other comprehensive income from equity accounted investments
Deferred taxes
thereof gains/losses arising in the period under report
Costs of hedging
thereof gains/losses arising in the period under report
thereof reclassifications to the income statement
thereof gains/losses arising in the period under report
thereof reclassifications to the income statement
Financial instruments used for hedging purposes
-30
Marketable securities (at fair value through other comprehensive income)
thereof reclassifications to the income statement
-1,381
7
25
Other services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Tax advisory services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Other attestation services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Audit of financial statements
These amounts relate mainly to public sector grants
aimed at the promotion of regional structures as well
as to subsidies received for plant expansions.
Government grants and government assistance
Income from asset-related and performance-related
grants, amounting to €29 million (2017: €30 million)
and €83 million (2017: €112 million) respectively, was
recognised in the income statement in 2018.
18
The fee expense pursuant to § 314 (1) no. 9 HGB
recognised in the financial year 2018 for the Group
auditor and its network of audit firms amounted to
€24 million (2017: €25 million) and consists of the
following:
Fee expense for the Group auditor
17
in € million
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Fee expense
2017
24
1
2
2
2
3
2018
22
3
5
5
17
17
17
4
18,421
1,914
2,017
938
Non-current marketable securities
28
28
1,286
12
444
123
1,410
Other investments
1 Including assets under construction of €2,017 million.
2 Including €74 million recognised through the income statement
Analysis of changes in Group tangible, intangible and investment assets 2017
in € million
11
Development costs
|
115
46,343
Investments accounted for using
the equity method
2,769
547
692
56
2,624
438
3
8
Participations
820
9
Investments in non-consolidated subsidiaries
-333
Goodwill
Intangible assets
-38
2,710
972
15,100
Land, titles to land, buildings, including
buildings on third party land
13,400
10,940
271
228
52
11,088
-103
-1,048
-299
Other intangible assets
1,750
286
Acquisition and manufacturing cost
Translation
1.1.20171 differences
Additions
Reclassi-
fications
11,484
29
2,424
12,965
386
-1
385
1,530
-37
943
39
-16
Other services include mainly IT consulting, bench-
mark analyses as well as advisory work relating to
production processes.
142
Other variances comprise various reconciling items,
including the Group's share of earnings of companies
accounted for using the equity method.
Tax income relating to prior years resulted primarily
from adjustments to income tax receivables and pro-
visions for prior years.
Tax increases as a result of non-deductible expenses
and tax reductions due to tax-exempt income
increased compared to one year earlier. As in the
previous year, tax increases as a result of non-tax-
deductible expenses were attributable primarily to
the impact of non-recoverable withholding taxes and
transfer price issues.
In the previous year, variances due to different tax
rates were influenced in particular by the reduction
in the US federal corporate income tax rate, which
was required to be taken into account in the mea-
surement of deferred taxes as of 31 December 2017.
This resulted in a reduction in the tax expense of
€977 million.
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
Actual tax expense
Effective tax rate
Deferred taxes for non-German entities are calcu-
lated on the basis of the relevant country-specific tax
rates. These range in the financial year 2018 between
9.0% and 45.0% (2017: between 9.0% and 45.0%).
30.7
30.8
Group
Financial
Statements
German income tax rate
15.0
Municipal trade tax rate
15.8
15.8
surcharge
Corporate tax rate including solidarity
5.5
5.5
Solidarity surcharge
15.0
14.9
15.0
Notes to the Group
Financial Statements
Income Statement
171
2,593
3,077
18
22
2017*
2018
2017*
2018
Deferred tax liabilities
→ Notes to the
Deferred tax assets
Liabilities
Provisions
Tax loss carryforwards and capital losses
Sundry other assets
Other investments
Leased products
Property, plant and equipment
Intangible assets
in € million
The allocation of deferred tax assets and liabilities to
balance sheet line items at 31 December is shown in
the following table:
Eliminations
Corporate tax rate
2017
2018
68,194
69,417
Manufacturing costs
43,262
43,442
Sales of products previously
leased to customers
10,467
10,208
Cost of sales relating to financial services
business
Sales of products and related goods
23,383
Income from lease instalments
9,691
9,816
thereof: Interest expense relating
to financial services business
2,051
1,801
Interest income on loan financing
3,744
3,720
22,932
2017*
2018
in € million
in %
Deferred taxes are determined on the basis of tax
rates which are currently applicable or expected to
apply in the relevant national jurisdictions when the
amounts are recovered. After taking account of an
average municipal trade tax multiplier rate (Hebesatz)
of 428.0% (2017: 425.0%), the underlying income tax
rate for Germany was as follows:
The tax expense resulting from the change in the
valuation allowance on deferred tax assets relating to
tax losses available for carryforward and temporary dif-
ferences amounted to €24 million (2017: €67 million).
The tax expense was reduced by €41 million (2017:
€91 million) as a result of utilising tax loss carryfor-
wards, for which deferred assets had not previously
been recognised and in conjunction with previously
unrecognised tax credits and temporary differences.
Current tax expense includes tax income of €16 mil-
lion (2017: €104 million) relating to prior periods.
18.7%
26.2%
2,000
2,575
-205
-214
Other variances
NOTES TO THE INCOME
STATEMENT
Interest income on loan financing includes interest
calculated on the basis of the effective interest method
totalling €3,623 million. This interest income is not
reported separately in the income statement as it is
not significant compared to total Group revenues.
08
Revenues
Revenues by activity comprise the following:
in € million
09
Cost of sales
Cost of sales comprises:
2018
2017*
88
359
195
487
74
-8
501
2,769
418
639
2,548
3 Including €3 million recognised through the income statement and €76 million directly in equity.
2 Including assets under construction of €2,010 million.
1 Including first-time consolidation and changes in accordance with IFRS 15.
129
Other investments
Participations
Investments in non-consolidated subsidiaries
the equity method
Investments accounted for using
44,143
16,686
18,281
-3,047
45,595
Leased products
Non-current marketable securities
438
710
-7
956
1,414
4,556
31.12.2018 31.12.2017
31.12.2018
Disposals
Value
adjustments²
Reclassi-
fications
differences Current year
1.1.2018
Translation
Carrying amount
Depreciation and amortisation
1,286
130
192
-15
1,239
28
28
820
|
118
53,245
Revenues from service contracts,
1,782
-1,168
3,180
428
620
2,415
2,570
78
29
5,192
5,323
608
3,222
891
3,254
613
1,185
10
20
3
3
4,655
5,210
473
3,629
981
706
13,832
51,793
Property, plant and equipment
2,525
2
-1,325
1,694
-97
2,255
Advance payments made and construction in progress
2,799
168
70
314
-91
2,674
Other facilities, factory and office equipment
36,833
1,560
1,027
2,123
-681
35,924
Plant and machinery
4,402
5,014
Research and development expenses
4,920
Other operating expenses
-651
-1,214
Income from investments in subsidiaries
and participations
278
Other operating income and expenses
123
-494
thereof from subsidiaries:
9
-359
13
13
Expenses from investments in subsidiaries
and participations
-122
Result on investments
156
14
14
Income from the reversal of and expenses for the
recognition of impairment allowances and write-
downs relate mainly to impairment allowances on
receivables.
Impairment losses recognised on receivables from
contracts with customers amounted to €47 million
(2017: €29 million).
The expense for additions to provisions includes
litigation and other legal risks. Income from the
reversal of provisions includes legal disputes that
have been concluded.
14
Income (+) and expenses (-) from
financial instruments
Sundry other financial result
-275
2017
96
80
Sundry operating income
262
212
Other operating income
774
720
13
Exchange losses
Sundry operating expenses
-135
Other financial result
Expense for additions to provisions
-193
-580
Expense for impairment losses and
write-downs
-48
-29
in € million
2018
-246
-105
234
-105
2018
2017*
-286
-56
Income taxes
2,575
2,000
Profit before tax
9,815
10,675
in € million
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
30.8%
30.7%
3,023
3,277
Variances due to different tax rates
Tax increases (+)/tax reductions (-) as a
result of non-deductible expenses and
tax-exempt income
-359
-1,026
141
58
Tax expense (+)/benefits (-) for prior
years
Tax rate applicable in Germany
Expected tax expense
carryforwards and tax credits
thereof relating to tax loss
-502
234
Other financial result
51
248
14
Income taxes
Taxes on income of the BMW Group comprise the
following:
in € million
Current tax expense
2018
2017*
Changes in tax rates resulted in a deferred tax
expense of €90 million (2017: deferred tax income
of €796 million). The principal reason for this devel-
opment in the previous year was the reduction in
the US federal corporate income tax rate from 35.0%
to 21.0% with effect from 1 January 2018.
The difference between the expected tax expense
based on the underlying tax rate for Germany and
actual tax expense is explained in the following
reconciliation:
141
2,220
2,558
Deferred tax expense (+)/
deferred tax income (-)
355
-558
thereof relating to temporary
differences
641
Gains on the disposal of assets
-211
11
Net interest result
The major part of revenues expected to arise from the
Group's order book at the end of the reporting period
relates to the sale of vehicles. Revenues resulting from
those sales will be recognised in the short term. The
services included in vehicle sale contracts that will be
recognised as revenues in subsequent years represent
only an insignificant portion of expected revenues.
Accordingly, use has been made of the practical
expedient contained in IFRS 15.121, permitting an
entity not to disclose information on a quantitative
basis due to the short-term nature of items and the
lack of informational value of such disclosures.
Cost of sales is reduced by public-sector subsidies
in the form of reduced taxes on assets and reduced
consumption-based taxes amounting to €88 million
(2017: €61 million).
Expenses for impairment losses for receivables from
sales financing recognised in the income statement
for the financial year 2018 amounted to €142 million.
Because the impairments are of minor importance
compared to the total Group cost of sales, a separate
disclosure has not been provided in the income
statement.
Research and development expenditure was as follows:
in € million
2018
2017
Research and development expenses
Amortisation
5,320
An analysis of revenues by segment is shown in the
segment information provided in → note 45. Revenues → see
from the sale of products and related goods are gene-
rated primarily in the Automotive segment and, to a
lesser extent, in the Motorcycles segment. Revenues
from sales of products previously leased to customers,
income from lease instalments and interest income on
loan financing are allocated to the Financial Services
segment. Other income relates mainly to the Auto-
motive segment and the Financial Services segment.
4,920
-1,236
New expenditure for capitalised
development costs
2,984
2,424
Total research and development
expenditure
6,890
6,108
139
140
-1,414
note 45
Revenues recognised from contracts with customers
in accordance with IFRS 15 totalled €82,024 million
(2017: €82,894 million).
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
telematics and roadside assistance
1,640
1,737
Expenses for service contracts, telematics
and roadside assistance
Other income
2,234
2,081
3,744
3,384
Warranty expenditure
1,729
2,097
Revenues
97,480
98,282
Other cost of sales
2,996
2,857
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
Cost of sales
78,924
78,329
Group
Financial
Statements
5,320
Notes to the Group
→ Notes to the
2017
Net interest expense on the net defined
benefit liability for pension plans
Other interest and similar expenses
-62
-81
-233
-265
thereof subsidiaries:
-2
-2
Exchange gains
2018
185
Income from the reversal of provisions
216
138
Interest and similar expenses
-386
-412
Income from the reversal of impairment
losses and write-downs
15
8
282
in € million
-66
-91
Income Statement
10
Selling and administrative expenses
Selling and administrative expenses relate mainly to
expenses for marketing, personnel and IT.
12
Net interest result
in € million
2018
2017
Other interest and similar income
397
201
thereof from subsidiaries:
8
9
11
Other operating income and expenses
Interest and similar income
397
201
Other operating income and expenses comprise the
following items:
Expense relating to interest impact
on other long-term provisions
Financial Statements
-104
9,976
5
Tax loss carryforwards - for the most part usable
without restriction – amounted to €2,045 million
(2017: €928 million). This includes an amount of
€542 million (2017: €548 million), for which a valu-
ation allowance of €185 million (2017: €186 million)
was recognised on the related deferred tax asset. For
entities with tax losses available for carryforward,
a net surplus of deferred tax assets over deferred
tax liabilities is reported at 31 December 2018
amounting to €234 million (2017: €131 million).
Deferred tax assets are recognised on the basis of
management's assessment that there is material
evidence that the entities will generate future tax-
able profits, against which deductible temporary
differences can be offset.
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
164
2,157
1,806
216
Net
-10,137
-11,744
-10,137
1,993
1,590
Capital losses available for carryforward in the United
Kingdom which do not relate to ongoing operations
Deferred taxes
Netting
-502
-498
Valuation allowances on tax loss carryforwards and capital losses
12,294
13,550
12,632
Impairment losses amounting to €235 million (2017:
€148 million) were recognised on leased products in
2018 as a consequence of changes in residual value
expectations. Income from the reversal of impairment
losses amounted to €92 million (2017: € - :
- 
million).
Contingent rents of €92 million (2017: €52 million),
based principally on the distance driven, were
recognised in income. The agreements have, in part,
extension and purchase options.
17,982
-11,744
18,880
decreased to €1,841 million (2017: €1,854 million) due
to currency factors. As in previous years, deferred tax
assets recognised on these tax losses - amounting to
€313 million at the end of the reporting period (2017:
€315 million) - were fully written down since they can
only be utilised against future capital gains.
Deferred taxes recognised directly in equity amounted
to €1,457 million (2017: €1,000 million).
43
-2
thereof from currency translation
181
222
591
-677
thereof relating to fair value gains and losses on financial instruments and marketable securities recognised directly in equity
thereof relating to the remeasurements of net liabilities for defined benefit pension plans
815
-457
Netting relates to the offset of deferred tax assets
and liabilities within individual entities or tax
groups to the extent that they relate to the same
tax authorities.
Change in deferred taxes recognised directly in equity
355
Deferred tax expense (+)/income (-) recognised through income statement
268
201
Deferred taxes at 1 January (assets (-)/ liabilities (+))
20172
2018¹
in € million
as follows:
Changes in deferred tax assets and liabilities
during the reporting period can be summarised
-558
Minimum lease payments
13
37
due within one year
Present value of future minimum lease
payments
82
73
40
38
32
26
due between one and five years
due later than five years
10
9
9
lease payments
Interest portion of the future minimum
192
178
100
85
73
75
due between one and five years
due later than five years
19
due within one year
9
due between one and five years
due later than five years
49
later than five years
9,383
9,863
between one and five years
8,586
8,980
within one year
31.12.2017
31.12.2018
in € million
Minimum lease payments of non-cancellable oper-
ating leases amounting to €18,880 million (2017:
€17,982 million) fall due as follows:
Leased products
Property, plant and equipment include a total of
€89 million (2017: €94 million) relating to land and
buildings, for which economic ownership is attribut-
able to the BMW Group (finance leases). The principal
leases are held by BMW AG, have a carrying amount
of €70 million (2017: €78 million) and run for peri-
ods up to 2030 at the latest. The leases contain price
adjustment clauses in the form of index-linked rentals
as well as extension and purchase options.
As in the previous year, no financing costs were
recognised as a cost component of property, plant
and equipment in 2018.
No impairment losses were recognised in 2018, as in
the previous year.
Property, plant and equipment
22
23
110
105
60
47
41
Exchange rate impact and other changes
Deferred taxes at 31 December (assets (-)/liabilities (+))
-620
1 The figures at 1.1.2018 adjusted due to first-time application of IFRS 9, see note 7.
→ Notes to the
Income Statement
Financial Statements
Notes to the
↑ ↑
Notes to the Group
Statements
Group
Financial
144
Personnel expenses include €45 million (2017:
€54 million) of costs relating to workforce measures.
The total pension expense for defined contribution
plans of the BMW Group amounted to €122 million
(2017: €105 million). Employer contributions paid to
state pension insurance schemes totalled €645 million
(2017: €630 million).
* Distribution to wages and salaries and pension and welfare expenses adjusted in previous
year figures.
Statement of
12,052
Personnel expenses
819
843
Social insurance expenses
1,295
1,387
Pension and welfare expenses
9,938
10,249
2017*
12,479
Comprehensive
Income
The average number of employees during the
Tax advisory services were performed particularly in
conjunction with tax compliance.
Other attestation services include mainly project-
related audits, comfort letters as well as legally
prescribed, contractually agreed or voluntarily
commissioned attestation work.
and, in accordance with current requirements, all
work related thereto, including the review of the
Group Interim Financial Statements.
The number of employees at the end of the reporting
period is disclosed in the Combined Management
Report.
127,524
131,565
1
proportionately-consolidated entities
Average number of employees
thereof at
7,913
8,228
experience
Apprentices and students gaining work
thereof at
Employees
182
119,611
123,337
2017
2018
proportionately-consolidated entities
year was:
2018
18
Wages and salaries
The income statement includes personnel expenses
as follows:
7,867.6
6,514.5
602.9
€ million
€ million
Profit attributable to common stock
Profit attributable to preferred stock
8,589.0
7,117.4
€ million
Net profit attributable to the shareholders of BMW AG
20171
721.4
2018
15
143
The tax returns of BMW Group entities are checked
regularly by German and foreign tax authorities. Taking
account of numerous factors - including interpretations,
commentaries and legal decisions relating to the various
tax jurisdictions as well as past experience - adequate
provision has been made, to the extent identifiable and
probable, for potential future tax obligations.
7
Deferred taxes are not recognised on retained profits
of €48.2 billion (2017: €42.8 billion) of foreign sub-
sidiaries, as it is intended to invest these profits to
maintain and expand the business volume of the
relevant companies. No computation was made of
the potential impact of income taxes on the grounds
of proportionality.
164
216
-361
117
² Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
Earnings per share
Average number of common stock shares in circulation
Average number of preferred stock shares in circulation
Basic/diluted earnings per share of common stock
Personnel expenses
16
Basic/diluted earnings per share from continuing
operations amounted to €10.87 per share of common
stock and €10.89 per share of preferred stock.
Earnings per share of preferred stock are computed
on the basis of the number of preferred stock shares
entitled to receive a dividend in each of the relevant
financial years. As in the previous year, diluted earn-
ings per share correspond to basic earnings per share.
4.02
3.522
€
4.00
3.502
€
13.09
10.84
€
13.07
10.82
55,114,290
601,995,196
601,995,196
55,605,380
number
number
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
2 Proposal by management.
Dividend per share of preferred stock
Dividend per share of common stock
Basic/diluted earnings per share of preferred stock
in € million
8,409
Total of future minimum lease payments
due within one year
31.12.2018
1
480
73
-1
408
subsidiaries
249
253
191
189
596
Investments in non-consolidated
2,769
2,624
Leased products
36,257
38,572
7,771
3,556
3,328
113
7,886
Investments accounted for using
the equity method
829 Other facilities, factory and office equipment
Advance payments made and
construction in progress
Property, plant and equipment
74
739
5,196
191
-16
928
4,263
5
31.12.2017 31.12.2016
31.12.2017
Disposals
Value
adjustments³
Reclassi-
fications
671
Current year
1.1.20171
Carrying amount
Depreciation and amortisation
Other investments
690
Non-current marketable securities
29
Participations
412
|སྒྱུ| |
Translation
differences
Plant and machinery
buildings on third party land
Land, titles to land, buildings, including
29
4,966
Intangible assets
Other intangible assets
Development costs
Goodwill
9,464
10,971
6,202
1,048
1,609
348
5
675
615
1,183
92
195
5
1,075
380
380
5
5,636
33
5,310
6,420
18,471
19,801
35,503
2,975
3,504
200
34,774
2,525
2,3951
908
2,082
175
270
17
1,970
8,995
10,078
28,111
2,767
2,886
154
27,838
6,122
-16
1,427
1,236
943
Participations
226
412
408
-76
484
subsidiaries
308
249
189
2
192
Investments accounted for using
the equity method
2,546
2,769
Leased products
37,789
36,257
7,886
3,169
3,633
-379
Investments in non-consolidated
-3
-1
29
in € million
Minimum lease payments are as follows:
As in the previous year, no financing costs were recog-
nised as a cost component of intangible assets in 2018.
As in the previous year, there was no requirement to
recognise impairment losses or reversals of impair-
ment losses on intangible assets in 2018.
Intangible assets amounting to €41 million (2017:
€41 million) are subject to restrictions on title.
Other intangible assets include a brand-name right
amounting to €41 million (2017: €41 million) which
is allocated to the Automotive segment and is not
subject to scheduled amortisation since its useful life is
deemed to be indefinite. Intangible assets also include
goodwill of €33 million (2017: €33 million) allocated
to the Automotive cash-generating unit (CGU) and
goodwill of €347 million (2017: €347 million) allocated
to the Financial Services CGU.
Intangible assets mainly comprise capitalised devel-
opment costs on vehicle, module and architecture
projects as well as subsidies for tool costs, licences,
purchased development projects, software and pur-
chased customer lists.
Intangible assets
21
Balance Sheet
→ Notes to the
Notes to the Group
Financial Statements
Group
Financial
Statements
148
147
Other investments
560
690
596
-79
678
Non-current marketable securities
26
7,801
31.12.2017
Advance payments made and
construction in progress
Property, plant and equipment
Plant and machinery
-5
337
-115
4,786
Intangible assets
8,157
9,464
5,636
971
Other intangible assets
37
572
1,075
28
Goodwill
Development costs
364
380
5
7,221
8,409
4,556
675
4,966
6,122
6,154
Land, titles to land, buildings, including
buildings on third party land
2,253
17,960
18,471
34,774
1,743
3,395
-708
33,830
2,5252
829
1,970
158
238
-62
1,952
8,832
8,995
27,838
1,548
5
2,820
-531
27,092
721 Other facilities, factory and office equipment
-973
Impairment allowances
-1,165
Other assets comprise:
5,316
5,447
in € million
31.12.2018
31.12.2017*
In 2017, stocks and other equity capital instruments
related entirely to investment funds. In accordance
with IFRS 9, these assets are required to be classified
as debt capital instruments and are therefore reported
as other debt securities with effect from the financial
year 2018.
The contracted maturities of debt securities are as
follows:
Return right assets for future
leased products
3,261
Other assets
1,962
2,167
2,018
Receivables from companies in which
an investment is held
1,916
1,334
Other taxes
1,747
1,537
Receivables from subsidiaries
295
Prepayments
251
957
534
Financial assets
7,685
10,334
27
thereof non-current
thereof current
1,010
2,369
6,675
7,965
Marketable securities and investment funds relate to
available-for-sale financial assets and comprise:
Income tax assets
Income tax assets totalling €1,366 million (2017:
€1,566 million) include claims amounting to €222 mil-
lion (2017: €364 million), which are expected to
be settled after more than one year. Claims may be
settled earlier than this depending on the timing of
proceedings.
in € million
Fixed income securities
Stocks and other equity
capital instruments
Other debt securities
Marketable securities and
investment funds
31.12.2018
31.12.2017
4,359
4,662
28
276
184
Collateral assets
316
5,316
4,913
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
Prepayments relate mainly to prepaid interest, com-
mission paid to dealerships and amounts paid in
advance to contract manufacturers. Prepayments of
€1,227 million (2017: €1,136 million) have a maturity
of less than one year.
Collateral assets comprise mainly customary collateral
(banking deposits) arising on the sale of receivables.
Impairment allowances on trade receivables according
to IFRS 9 developed during the financial
as follows:
year 2018
29
Inventories
Inventories comprise the following:
Debt securities
in € million
Allocated (+)
Reversed (-)
2018
60
21
-26
-1
in € million
31.12.2018
31.12.2017
Utilised
Balance at 1 January*
due later than three months
251
957
Expected reimbursement claims
933
847
Sundry other assets
1,204
825
Other assets
11,816
9,115
in € million
31.12.2018
31.12.2017
thereof non-current
2,026
1,630
thereof current
9,790
7,485
Fixed income securities
due within three months
due later than three months
787
3,572
628
4,034
Other debt securities
due within three months
293
Exchange rate impact and other changes
128
114
due between one and five years
6,811
15,480
6,122
13,772
Allocated (+)/reversed (-)
143
2
145
due later than five years
24
21
Utilised
1,412
-337
-345
22,315
19,915
Exchange rate impact
and other changes
-48
-17
-65
Impairment allowances
Present value of future minimum
lease payments
at 31 December 2017
701
-8
469
943
at 1 January 2017
-1
26
30
Other changes
-54
-24
2
15
-61
Impairment allowances at 31 December 2018
363
175
12
482
1,032
The impairment allowances according to IAS 39 in the
financial year 2017 developed as follows:
Finance leases are analysed as follows:
in € million
31.12.2018
31.12.2017
in € million
specific
item basis
group basis
Total
Gross investment in finance leases
due within one year
446
Other
1,147
6,238
31.12.2017
in € million
31.12.2017
Marketable securities and
Gross carrying amount
262
258
investment funds
5,316
5,447
Allowance for impairment
31.12.2018
-18
Derivative instruments
1,977
4,341
Net carrying amount
244
248
Credit card receivables
244
248
Loans to third parties
20
-10
the following:
Receivables relating to credit card business comprise
Allowances for impairment and credit risk
5,655
due between one and five years
due later than five years
14,001
12,358
23
20
20,262
18,033
Unrealised interest income
2,053
1,882
Impairment allowances include €113 million (2017:
€105 million) on credit-impaired receivables relating
to finance leases.
The estimated fair value of vehicles held as collateral
for credit-impaired receivables at the end of the
reporting period totalled €506 million. The carrying
amount of assets held as collateral and taken back as
a result of payment default amounted to €42 million
(2017: €45 million).
151
152
Group
Financial
Statements
Notes to the Group
26
Financial assets
Financial assets comprise:
Financial Statements
Balance Sheet
in € million
→ Notes to the
due within one year
Finished goods and goods for resale
10,592
10,436
-7
-121
-250
Other comprehensive income
513
thereof from discontinued operations
-151
-337
1,338
1,561
thereof from continuing operations
2
-10
-17
-6
362
-337
1,338
1,561
Profit/loss after tax
2
3
454
535
-15
Total comprehensive income
1,311
1,217
The BMW Group is not subject to any unified external
minimum equity capital requirements. Within the
Financial Services segment, however, there are a
number of individual entities which are subject to
equity capital requirements of relevant regulatory
banking authorities.
In order to manage its capital structure, the BMW Group
uses various instruments, including the amount of
dividends paid to shareholders and share buybacks.
Moreover, the BMW Group actively manages debt
capital, carrying out funding activities with a target
debt structure in mind. A key aspect in the selection
of financial instruments is the objective to achieve
matching maturities for the Group's financing require-
ments. In order to reduce non-systematic risk, the
BMW Group uses a variety of financial instruments
available on the world's capital markets to achieve
diversification.
→ see
notes 6 and 7
The capital structure at the end of the reporting period
was as follows:
in € million
31.12.2018 31.12.2017*
Equity attributable to shareholders
of BMW AG
57,559
53,671
Proportion of total capital
35.7%
36.2%
Non-current financial liabilities
64,772
53,548
Current financial liabilities
384
Dividends received by the Group
-10
-15
-17
-6
364
-344
Income taxes
The capital structure is managed in order to meet
needs arising from changes in economic conditions
and the risks of the underlying assets.
Interest expenses
62
BMW Brilliance
THE INCOME STATEMENT
DISCLOSURES RELATING TO
in € million
Balance Sheet
Financial information relating to equity accounted
investments is summarised in the following tables:
→ Notes to the
Financial Statements
Notes to the Group
Group
Financial
Statements
150
THERE
149
In December 2017, BMW AG, Audi AG and Daimler AG
signed contracts for the sale of shares in THERE. Stakes
of 5.9% each were sold to Robert Bosch Investment
Nederland B.V., Boxtel, and Continental Automotive
Holding Netherlands B.V., Maastricht, whereby the
sale was executed in equal parts by BMW AG, Audi AG
and Daimler AG. Closure of these transactions did
not have a significant effect on earnings in the finan-
cial year 2018.
In December 2016, THERE signed contracts relating
to the sale of shares in HERE International B.V.,
Amsterdam (HERE). The sale of 15% of the shares to
Intel Holdings B.V., Schiphol-Rijk, was completed in
January 2017. The sale of the shares resulted in a loss
of control, as defined by IFRS 10, at the level of THERE.
Since THERE continues to have a significant influence
over HERE, the latter has been included since then
in THERE's consolidated financial statements as an
associated company using the equity method. The
loss of control and the subsequent deconsolidation of
HERE and its subsidiaries led to a positive earnings
effect at the level of THERE. The BMW Group portion
amounted to €183 million, which was recognised in
the result from equity accounted investments in the
financial
year 2017.
In the financial year 2015, BMW AG, Daimler AG and
AUDI AG, Ingolstadt (Audi AG) jointly acquired the
mapping and location-based services business (HERE
Group) of Nokia Corporation, Helsinki. HERE'S
digital maps are laying the foundations for the next
generation of mobility and location-based services,
providing the basis for new assistance systems and,
ultimately, fully automated driving.
electric vehicles in Europe. The plan is to build some
400 fast-charging stations by 2020 in order to support
electric mobility on long-haul routes and thereby
establish the market.
note 2
In the financial year 2017, the BMW Group,
Daimler AG, Stuttgart (Daimler AG), the Ford
Motor Company and the Volkswagen Group, each
with equal shareholdings, founded the joint venture
IONITY Holding GmbH & Co. KG. IONITY's business
model envisages the construction and operation of
high-performance charging stations for battery
The BMW Group previously maintained the joint
ventures DriveNow GmbH & Co. KG and DriveNow
Vewaltungs GmbH together with Sixt SE, Pullach.
DriveNow offers car-sharing services in major German
cities and abroad. Following approval by the antitrust
authorities and with effect from 9 March 2018, the
agreement with SIXT regarding the full acquisition
of shares in DriveNow by the BMW Group was com-
pleted. The total valuation for DriveNow amounts
to €418 million. Further information relating to this
transaction is provided in → note 2 to the Group → see
Financial Statements.
The BMW Group intends to increase its stake in
the BMW Brilliance joint venture from 50% to 75%.
On 11 October 2018, the BMW Group signed an
agreement with its joint venture partner, a wholly
owned subsidiary of Brilliance China Automotive
Holdings Ltd. (CBA), to acquire an additional 25%
shareholding in BMW Brilliance. The two partners
agreed on a purchase price of an equivalent of €3.6 bil-
lion. The contractual term of the joint venture, which
would currently expire in 2028, is to be extended
to 2040 as part of the agreement. The prerequisite
for the extension is the acquisition of the additional
shares as agreed. The agreement was approved at
the CBA shareholders' meeting on 18 January 2019
and remains subject to the approval of the relevant
authorities. The transaction is scheduled to close
in 2022. The closing will result in BMW Brilliance
being fully consolidated in the BMW Group Financial
Statements and is expected to result in the recognition
of a significant valuation gain in the financial year in
which the transaction closes.
BMW Brilliance produces mainly BMW brand models
for the Chinese market and also has engine manu-
facturing facilities, which supply the joint venture's
two plants with petrol engines.
Investments accounted for using the equity method
Investments accounted for using the equity method com-
prise the joint venture BMW Brilliance Automotive Ltd.
(BMW Brilliance), until 9 March 2018 the joint ven-
tures DriveNow GmbH & Co. KG and DriveNow
Verwaltungs GmbH (DriveNow), the joint venture
IONITY Holding GmbH & Co. KG (IONITY) and the
interest in the associated company THERE Holding
B.V. (THERE).
24
Capital increases were made at the level of THERE in
June and November 2018, with BMW AG participating
with an amount of €31 million on each occasion. As a
result, BMW AG's stake in THERE increased in steps
by 0.2% to 29.6%.
DriveNow
2018
20171
Interest income
-12
-18
-17
-6
1,620
1,922
Profit/loss before financial result
1
637
636
Scheduled depreciation
71
14
712
14,627
17,766
Revenues
2017
2018
2017
IONITY
2018
2017
2018
46
The BMW Group's objectives with regard to capital
management are to safeguard over the long-term the
Group's ability to continue as a going concern and to
provide an adequate return to shareholders.
Capital management disclosures
Further information regarding the transition effects
recognised directly in equity on the first-time application
of IFRS 15 and IFRS 9 is provided in → notes 6 and 7.
-34
Net carrying amount
2,546
2,667
The impairment allowances according to IAS 39 in the
financial year 2017 developed as follows:
in € million
2017
Allowance for impairment
recognised on a
specific
item basis
Allowances for impairment of stage 3
group basis
Balance at 1 January
46
11
57
Allocated (+)/reversed (-)
Utilised
8
-2
6
-4
-1
-5
Total
-20
simplified procedure
Allowances for impairment of stage 2 -
Balance at 31 December
54
Work in progress, unbilled contracts
1,208
1,125
Raw materials and supplies
1,247
1,146
* The difference between the closing balance at 31 December 2017 and the opening balance
at 1 January 2018 corresponds to the adjustment recorded in accordance with IFRS 9.
Inventories
13,047
12,707
Out of the total amount recognised for inventories
at 31 December 2018, inventories measured at net
realisable value amounted to €680 million (2017:
€673 million¹). Write-downs to net realisable value * Prior year figure
amounting to €54 million (2017: €36 million¹) were
recognised in 2018, reversal of impairment losses
amounted to €22 million (2017: €6 million).
The expense recorded in conjunction with inven-
tories during the financial year 2018 amounted to
€58,079 million (2017: €55,969 million).
has been adjusted.
30
Trade receivables
Trade receivables comprise the following:
in € million
31.12.2018
31.12.2017
Gross carrying amount
Allowance for impairment
2,600
2,723
-56
Exchange rate impact and
other changes
−1
−1
2017
521,524
24
55,114,404
491,114
114
601,995,196
601,995,196
56,126,904
55,605,404
601,995,196
601,995,196
All Company stock is issued to bearer and each share
has a par value of €1.00. Preferred stock, to which no
voting rights are attached, bear an additional dividend
of €0.02 per share.
In 2018, a total of 521,524 shares of preferred stock
was sold to employees at a reduced price of €46.26 per
share in conjunction with the Company's Employee
Share Programme. These shares are entitled to
receive dividends for the first time with effect from
the financial
year 2019.
Issued share capital increased by €0.5 million as a
result of the issue to employees of 521,500 new shares
of non-voting preferred stock. BMW AG is authorised
up to 14 May 2019 to issue 5 million shares of non-
voting preferred stock amounting to nominal €5.0 mil-
lion. At the end of the reporting period, 3.1 million
of these amounting to nominal €3.1 million remained
available for issue.
In addition, 24 previously issued shares of preferred
stock were acquired and re-issued to employees.
Capital reserves
Capital reserves include premiums arising from the
issue of shares and totalled €2,118 million (2017:
€2,084 million). The change related to the share cap-
ital increase arising in conjunction with the issue of
shares of preferred stock to employees amounting
to €34 million.
Revenue reserves
Revenue reserves comprise the non-distributed earn-
ings of companies consolidated in the Group Financial
Statements. In addition, remeasurements of the net
defined benefit obligation for pension plans are also
presented in revenue reserves.
It is proposed that the unappropriated profit of BMW AG
for the financial year 2018 amounting to €2,303 mil-
lion according to HGB be utilised as follows:
Distribution of a dividend of 3.52 per
preferred stock (€196 million)
share of
Distribution of a dividend of 3.50 per share of
common stock (€2,107 million)
The proposed distribution was not recognised as a
liability in the Group Financial Statements.
Accumulated other equity
Accumulated other equity comprises amounts recog-
nised directly in equity resulting from the translation
of the financial statements of foreign subsidiaries,
changes in the fair value of derivative financial instru-
ments and marketable securities, costs of hedging
recognised directly in equity as well the related
deferred taxes.
2018
1
2017
Shares issued/in circulation at 31 December
-2
Balance at 31 December*
49
7
56
* The difference between the closing balance at 31 December 2017 and the opening balance
at 1 January 2018 corresponds to the adjustment recorded in accordance with IFRS 9.
In the case of trade receivables, collateral is generally
held in the form of vehicle documents and bank guar-
antees so that the risk of bad debt loss is very limited.
Expenses for impairment losses and income from
the reversal of impairment losses is not significant in
relation to total Group expenses and is therefore not
reported separately in the income statement.
153
154
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
31
Equity
Number of shares issued
Balance Sheet
Preferred stock
2018
Shares issued/in circulation at 1 January
Shares issued in conjunction with Employee Share Programme
55,605,404
Less: shares repurchased and re-issued
Common stock
4
31.12.2018
-129
1 January 2018
in € million
plans can be derived as follows:
The change in the net defined benefit obligation for pension
Balance Sheet
→ Notes to the
Notes to the Group
Financial Statements
Group
Financial
Statements
158
157
The pension plans are administered by BMW Pension
Trustees Limited, Farnborough, and BMW (UK) Trustees
Limited, Farnborough, both trustee companies which
act independently of the BMW Group. BMW (UK)
Trustees Limited, Farnborough, is represented by
ten trustees and BMW Pension Trustees Limited,
Farnborough, by five trustees. A minimum of one
third of the trustees must be elected by plan partic-
ipants. The trustees represent the interests of plan
participants and decide on investment strategies.
Funding contributions to the funds are determined
in agreement with the BMW Group.
EXPENSE/INCOME
United Kingdom
Defined benefit plans exist in the United Kingdom
which are closed for all plan participants. Vested
benefits remain in place. New benefits are covered
by contributions made to a defined contribution plan.
The defined benefit plans have been closed to new
entrants. Defined contribution plans with a minimum
rate of return, comprising employer- and employee-
funded components, continue to exist. The fact that
the plan involves a minimum rate of return means that
the defined contribution entitlements are classified
in accordance with IAS 19 as defined benefit plans.
In the case of defined benefit plans involving the
payment of a pension, the amount of benefits to be
paid is determined by multiplying a fixed amount by
the number of years of service.
Both employer- and employee-funded benefit plans
exist in Germany. Benefits paid in conjunction with
these plans comprise old-age retirement pensions as
well as invalidity and surviving dependents' benefits.
Germany
The most significant of the BMW Group's pension
plans are described below.
Numerous defined benefit plans exist within the
BMW Group.
-16
-17
-16
-15
-2
thereof assets
The assets of the German pension plans are invested
by BMW Trust e. V., Munich, in accordance with a
CTA. The representative bodies of this entity are
the Board of Directors and the Members' General
Meeting. BMW Trust e. V., Munich, currently has
seven members and three members of the Board of
Directors elected by the Members' General Meeting.
The Board of Directors is responsible for investments,
drawing up and deciding on investment guidelines as
well as monitoring compliance with those guidelines.
The members of the association can be BMW Group
employees, senior executives and members of the
Board of Management. An ordinary Members' General
Meeting takes place once every calendar year, and
deals with a range of matters, including receiving and
approving the association's annual report, ratifying
the activities of the Board of Directors and adopting
changes to the association's statutes.
Current service cost
Interest expense (+)/income (−)
Past service cost
59
59
59
62
62
-413
475
508
508
508
3,236
3
benefit liability
Net defined
of the net defined
benefit asset to the
asset ceiling
Effect of limitation
3,233
-19,477
22,710
Total
Plan assets
Defined
benefit
obligation
Changes in risk parameters
REMEASUREMENTS
Gains (-) or losses (+) arising from settlements
3,252
-10
2,330
382
9,721
Fair value of plan assets
1,428
9,594
8,277
11,641
11,542
obligations
Present value of defined benefit
31.12.2018 31.12.2017
31.12.2017
9,604
31.12.2018
31.12.2018
31.12.2017
31.12.2018
Total
Other
United Kingdom
Germany
S2PA tables and S2PA light tables with weightings
Mortality Table 2018 G issued by Prof. K. Heubeck (with invalidity rates reduced by 70%)
18.3
17.2
31.12.2017
8,167
8,908
1,049
702
125
2,037
1,823
thereof pension provision
3,236
2,313
513
382
686
-16
110
2,037
1,821
Carrying amounts at 31 December
3
3
3
3
Effect of limiting net defined benefit
asset to asset ceiling
19,477
18,937
22,710
21,247
1,475
965
513
-10
-10
999
-152
-152
322
322
322
Gains (-) or losses (+) arising from changes in financial assumptions
Gains (-) or losses (+) arising from changes in demographic assumptions
-590
-590
-590
Gains (-) or losses (+) on plan assets, excluding amounts included
in interest income
REMEASUREMENTS
-152
-212
-212
-2
-2
-2
81
81
-408
489
581
581
581
-212
Gains (-) or losses (+) arising from experience adjustments
-134
-134
3,252
3,236
3,233
-19,477
22,710
-98
-98
450
-548
18
18
637
-619
-1,165
-1,165
-86
86
thereof assets
thereof pension provision
31 December 2017
Translation differences and other changes
Pensions and other benefits paid
Employee contributions
Transfers to fund
Changes in the limitation of the net defined benefit asset to the
asset ceiling
-134
4,587
3
Net defined
benefit liability
of the net defined
benefit asset to the
asset ceiling
-632
-73
73
-658
-658
thereof assets
thereof pension provision
31 December 2018
Translation differences and other changes
Pensions and other benefits paid
Employee contributions
Transfers to fund
-264
-264
-264
Gains (-) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the
asset ceiling
-416
-416
-416
-1,274
-1,274
-1,274
Gains (-) or losses (+) arising from changes in financial assumptions
Gains (-) or losses (+) arising from changes in demographic assumptions
999
999
689
21.3
57
8
Effect of limitation
4,584
-18,315
22,899
Total
Plan assets
obligation
Defined
benefit
Gains (-) or losses (+) arising from settlements
Past service cost
Interest expense (+)/income (−)
Current service cost
EXPENSE/INCOME
1 January 2017
in € million
-17
-658
2,330
2,313
3
2,310
-18,937
21,247
14
14
57
19.0
Gains (-) or losses (+) on plan assets, excluding amounts included
in interest income
20.2
2,691
522
732
23
37
10
Eliminations
-898
-666
-
Carrying amount
2,963
2,065
522
732
2
37
10
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
2 Corresponds to the consolidated equity capital provided by the shareholders of Drive Now GmbH & Co. KG and its subsidiaries.
3 The share of the BMW Group on net assets at 31 December 2017 amounted to 52.8%. Due to the allocation of voting power within decision-making bodies of the two entities,
operations remain subject to joint control.
25
Receivables from sales financing
Receivables from sales financing comprise the fol-
lowing:
2,025
Group's interest in net assets
40
149
6
RECONCILIATION OF
AGGREGATED FINANCIAL
INFORMATION
Assets
13,284
11,121
1,765
2,195
26
158
50
Provisions and liabilities
7,358
5,739
1
22
9
10
Net assets
5,926
5,382
1,764
2,195
4
in € million
81
Credit financing for retail customers
31.12.2017
3
20.8
-4
-21
Reclassification to Stage 2
-7
79
-21
51
Reclassification to Stage 3
-4
Reclassification to Stage 1
-23
110
Derecognition and origination of receivables
59
-10
-17
33
Write off of receivables
-3
-20
-1
-105
138
1,019
450
12
Unguaranteed residual values amount to €1,392 mil-
* Prior year figure lion (2017: €1,240 million *).
has been adjusted.
Impairment allowances on receivables from sales
financing in accordance with IFRS 9, which only arise
within the Financial Services segment, developed in
the financial year 2018 as follows:
and dealerships
Finance lease receivables
Receivables from
sales financing
in Mio. €
66,521
62,401
20,262
18,033
86,783
80,434
7
Stage 1
Stage 2
Stage 3
General
Simplified
Total
Impairment allowances at 1 January 2018
365
192
31.12.2018
thereof current financial liabilities
-20
6
most of the defined benefit plans have been closed
to new entrants.
In the case of defined benefit plans, the BMW Group
is required to pay the benefits it has granted to
present and past employees. Defined benefit plans
may be covered by provisions or pension assets. In
Germany, pension entitlements are mostly covered
by assets transferred to BMW Trust e. V., Munich, in
conjunction with a Contractual Trust Arrangement
(CTA). Funded plans also exist in the UK, the USA,
Switzerland, Belgium and Japan. In the meantime,
Pension provisions
32
→ Notes to the
Balance Sheet
Notes to the Group
Financial Statements
Group
Financial
Statements
156
155
reserves.
The equity ratio attributable to shareholders of
BMW AG increased during the financial year by
7.2%, primarily reflecting the increase in revenue
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
148,319
161,156
Total capital
63.8%
64.3%
Proportion of total capital
94,648
103,597
Total financial liabilities
41,100
38,825
258
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
The assumptions stated below, which depend on
the economic situation in the relevant country, are
used to measure the defined benefit obligation
of each pension plan. In Germany, the so-called
“pension entitlement trend” (Festbetragstrend)
remained at 2.0%. The following weighted average
values have been used for Germany, the UK and
other countries:
2 Revenues relate only to the month of January up to the time of loss of control of HERE.
in %
Pension level trend
10
2.44
2.25
1.82
1.62
3.13
3.66
2.34
2.69
1.79
1.91
31.12.2017
31.12.2017
31.12.2018
31.12.2017
31.12.2018
Other
United Kingdom
Germany
in € million
Based on the measurement principles contained in
IAS 19, the following balance sheet carrying amounts
apply to the Group's pension plans:
United Kingdom
Germany
The following mortality tables are applied in countries,
in which the BMW Group has significant defined
benefit plans:
Weighted duration of all pension obligations in years
Discount rate
in € million
31.12.2018
THERE
2,617
2
289
9
102
45
Equity
5,926
5,382
1,764
2,195
2,937
42
40
Non-current financial liabilities
71
Non-current provisions and liabilities
960
Current provisions and liabilities
6,094
4,779
3
BMW Brilliance
22
149
thereof cash and cash equivalents
1,193
110
IONITY
46
DriveNow
2018
20171
2018
2018
2017
2018
2017
DISCLOSURES RELATING TO
THE BALANCE SHEET
Non-current assets
2017
5,211
2
6,714
6,570
Current assets
26
289
48
1,906
1,763
5,910
4
Regulatory authorities have ordered the BMW Group
to recall various vehicle models in conjunction with
airbags supplied by the Takata group of companies.
Provision for the costs involved has been recognised
within warranty provisions. In addition to the risks
already covered by warranty provisions, it cannot be
ruled out that further BMW Group vehicles will be
affected by future recall actions. Further disclosures
pursuant to IAS 37.86 cannot be provided at present.
203
In July 2017, cartel allegations against five German
car manufacturers appeared in the press. Internal
investigations were initiated by the BMW Group
and have not yet been completed. In October 2017,
the European Commission began an inspection at
the BMW Group, and in September of the current
financial 1 year opened formal proceedings pertaining
to specific matters. A number of class actions were
brought in the USA and Canada. Possible risks for
the BMW Group can neither be foreseen in detail nor
quantified at present. Further disclosures pursuant to
IAS 37.86 cannot be provided at present.
In June 2016, Germany's Federal Cartel Agency con-
ducted searches at various carmakers and suppliers,
including BMW AG, in relation to the purchase of
steel. The respective investigations have not yet been
completed. More extensive disclosures pursuant to
IAS 37.86 cannot be provided at present.
The BMW Group determines its best estimate of
contingent liabilities on the basis of the information
available at the reporting date. This assessment may
change over time and is adjusted regularly on the basis
of new information and circumstances. A part of the
risks is covered by insurance.
Other contingent liabilities comprise mainly risks
relating to taxes and customs duties.
816
765
Contingent liabilities
399
204
10
14
125
275
31.12.2017
Other
Other financial commitments
31.12.2018
351
In addition to liabilities, provisions and contingent
liabilities, other financial commitments consist in
particular of rental and leasing contracts for build-
ings, property, machinery, tools, offices and other
facilities. Contracts have terms of up to 121 years and
include in part renewal and purchase options or price
adjustments in the form of index-linked or graduated
rent, for example to compensate inflation.
916
Total minimum future lease payments from non-can-
cellable rental contracts by maturity is as follows:
4,137
3,486
Guarantees
Purchase commitments for
property, plant and equipment
31.12.2017
31.12.2018
in € million
In addition, the following commitments exist for the
BMW Group at the end of the reporting period:
2,474
In the financial year 2018, an expense of €483 million
(2017: €430 million) was recognised for payments on
operating leases.
2,694
1,179
1,310
due between one and five years
due later than five years
Other financial obligations
446
468
due within one year
31.12.2017
31.12.2018
in € million
849
Litigation
28
in € million
332
27
337
973
2,361
1,092
2,764
1,228
3,659
1,534
Grants
Deferred income from lease financing
Deferred income relating to service contracts
within one year
Total
thereof due
thereof due
within one year
Purchase commitments for
intangible assets
Total
Other deferred income
Investment subsidies
557
314
balance sheet date:
The following contingent liabilities existed at the
Contingent liabilities
commitments
Contingent liabilities and other financial
38
OTHER DISCLOSURES
As in the previous year, trade payables are due within
one year.
Trade payables
37
Grants comprise mainly public sector funds to
promote regional structures and which have been
invested in the production plants in Brazil, Mexico,
Leipzig and Berlin. The grants are partly subject to
holding periods for the assets concerned of up to five
years and/or minimum employment figures. Grant
income is recognised in the income statement over
the useful lives of the assets to which it relates.
Deferred income relating to service contracts com-
prises service and repair work as well as telematics
services and roadside assistance agreed to be part of
the sale of a vehicle (in some cases multi-component
arrangements). Deferred income from lease financing
relates primarily to down payments on leases.
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
2,284
6,666
2,771
7,484
Deferred income
55
118
1,554
3,671
167
Asset-backed financing transactions
2,480
Commercial paper
14,359
Liabilities from customer deposits (banking)
13,196
Liabilities to banks
53,346
Bonds
Financial liabilities
LIABILITIES
4,264
104,435
1,444
293
1,916
295
2,546
885
17,335
10,094
Derivative instruments
Fair value hedges
31.12.2017*
*The carrying amounts of cash flow hedges and fair value hedges are categorised as at fair value through profit or loss for the sake of clarity. Receivables from sales financing are shown including finance leases.
1,675
118,129
Total
5,665
781
Other
an investment is held
92
422
1,206
9,669
697
556
Payables to other companies in which
Payables to subsidiaries
Other liabilities
Trade payables
Other
Other derivative instruments
Cash flow hedges
1,804
128
3
Credit card receivables
Loans to third parties
Marketable securities and investment funds
Other derivative instruments
Fair value hedges
Cash flow hedges
Derivative instruments
Financial assets
Receivables from sales financing
Other investments
ASSETS
in € million
The carrying amounts of financial instruments are
assigned to IFRS 9 categories* in the following table.
Financial instruments
39
Notes to the Group
Financial Statements
→ Other Disclosures
Statements
Group
Financial
168
Other
244
Cash and cash equivalents
Other assets
17
970
3,671
675
483
654
840
429
86,783
At fair value
through profit
or loss
At amortised cost prehensive income
At fair value
through other com-
31.12.2018
Total
Other
Collateral assets
an investment is held
Receivables from companies in which
Receivables from subsidiaries
Trade receivables
31.12.2018
3,826
→ Other Disclosures
31.12.2018
following:
Financial liabilities of the BMW Group comprise the
Financial liabilities
35
Balance Sheet
→ Notes to the
Notes to the Group
Financial Statements
Group
Financial
Statements
162
161
Current income tax liabilities totalling €1,158 million
(2017: €1,124 million) include €96 million (2017:
€68 million) which are expected to be settled after
more than twelve months. Liabilities may be settled
earlier than this depending on the timing of pro-
ceedings.
Income tax liabilities
34
Income from the reversal of other provisions amoun-
ting to €516 million (2017: €322 million) is recorded
in cost of sales and in selling and administrative
expenses.
Other obligations for ongoing operational expenses
include in particular expected payments for bonuses
and other price deductions.
Provisions for other obligations cover numerous
specific risks and uncertain obligations, in particular
for litigation and liability risks.
Provisions for obligations for personnel and social
expenses comprise mainly performance-related
remuneration components, early retirement part-time
working arrangements and employee long-service
awards.
Depending on when claims occur, it is possible that the
BMW Group may be called upon to fulfil the warranty
or guarantee obligations over the whole period of
the warranty or guarantee. Expected reimbursement
claims at 31 December 2018 amounted to €933 million
(2017: €847 million).
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
6,078
11,854
-732
-4,715
59
5,133
110
in € million
11,999
Maturity within
one year
Maturity later
than five years
646
2,480
2,480
Financial liabilities
Other
Derivative instruments
Commercial paper
13,196
1,225
3,293
8,678
Liabilities to banks
14,359
109
3,289
10,961
Liabilities from customer deposits (banking)
17,335
11,603
5,732
Asset-backed financing transactions
53,346
10,992
32,592
9,762
Bonds
Total
Maturity between
one and five years
Other provisions
1,540
1,790
Statutory and non-statutory warranty
thereof due
31.12.2018 within one year
Reversed
Utilised
Reversal of
discounting
Additions
Translation
differences
1.1.2017*
in € million
Other provisions changed during the year as follows:
Other provisions
33
In the UK, the sensitivity analysis for the pension
level trend also takes account of restrictions due to
caps and floors.
-0.7
-155
-0.7
-147
decrease of 0.25%
0.7
162
0.7
156
increase of 0.25%
-3.8
-855
-3.7
-779
obligations, product guarantees
5,074
85
1,959
-77
-481
694
34
1,620
operational expenses
Other obligations for ongoing
1,310
2,087
-625
-454
653
-10
915
2,523
1,861
2,819
-30
-1,761
1,827
1
2,782
social expenses
Obligations for personnel and
1,367
5,158
-2,019
59
Other obligations
decrease of 1 year
114
566
2,480
13,196
14,359
3
17,335
53,346
8
40
-2,021
4,461
Commercial paper
-141
679
12,658
Liabilities to banks
227
557
13,572
Liabilities from customer deposits (banking)
192
288
16,855
Asset-backed financing transactions
-33
707
in € million
44,880
Financial liabilities towards companies in which an
Bonds
investment is held
-210
Bonds
31.12.2017
Other changes
Changes in
fair values
Changes due to
exchange rate
factors
Changes due to
the acquisition
or disposal of
companies
Cash inflows/
outflows
1.1.2017
in € million
101,976
26
-33
626
15
38
105
529
1,063
7,037
93,883
Liabilities relating to financing activities
-31
604
Other (excluding interest payable)
-9
114
Liabilities from finance lease contracts
739
31.12.2018
Other changes
fair values
132
3,296
10,144
Liabilities from customer deposits (banking)
16,855
10,818
6,037
Asset-backed financing transactions
44,880
7,861
25,887
11,132
Bonds
Total
Maturity later
than five years
Maturity between
one and five years
one year
in € million
Maturity within
31.12.2017
103,597
12,921
51,851
38,825
1,206
481
159
13,572
Liabilities to banks
8,440
3,170
Changes in
Changes due to
exchange rate
factors
Changes due to
the acquisition
or disposal of
companies
outflows
Cash inflows/
1.1.2018
in € million
Liabilities related to financing activities can be rec-
onciled as follows:
94,648
9,683
43,865
41,100
1,132
1,675
469
513
1,090
173
544
373
Financial liabilities
Other
Derivative instruments
4,461
4,461
Commercial paper
12,658
1,048
150
3.8
856
3.6
935
1,009
Debt instruments
15,255
14,450
831
879
7,074
6,402
7,350
7,169
Total with quoted market price
5
15
5
15
Other
51
233
268
42
47
195
Absolute return funds
191
221
|י
270
Money market funds
404
1,280
902
1,039
36
662
678
240
325
Real estate
1
55
1
54
thereof non-investment grade
1,141
918
404
216
737
702
(funds without a rating)
thereof mixed funds
198
307
198
307
thereof investment grade
1,340
1
93
93
93
2,144
222
172
478
407
1,682
1,565
Equity instruments
COMPONENTS OF PLAN ASSETS
2017
2018
2017
2018
2017
2018
2017
2018
Total
Other
United Kingdom
Germany
in € million
Plan assets in Germany, the UK and other countries
comprised the following:
Depending on the cash flow profile and risk structure
of the pension obligations involved, pension plan
assets are invested in a diversified portfolio.
in the United Kingdom. The revision of German mor-
tality tables had an offsetting effect.
The gains arising from changes in demographic
assumptions relate mainly to revised mortality tables
Past service cost in the financial year 2018 results
mainly from the estimated effects of a court order
made in October 2018 in the UK. The court ruling
related to gender equality in state-guaranteed min-
imum pension (GMP) plans and requires existing
pension entitlements to be adjusted.
2,382
Debt instruments
5,604
5,668
93
Real estate funds
3,092
2,786
35
34
620
550
2,437
2,202
thereof non-investment grade
(funds without a rating)
thereof mixed funds
Cash and cash equivalents
9,399
434
518
5,734
5,224
3,231
3,402
thereof investment grade
12,491
11,930
469
552
6,354
5,774
9,144
12
16
10
It is only possible to aggregate sensitivities to a lim-
ited extent. Since the change in obligation follows
The sensitivity analysis provided below shows the
extent to which changes in individual factors at the
end of the reporting period influence the defined
benefit obligation.
100.0
100.0
100.0
100.0
100.0
100.0
3.7
3.9
31.1
51.5
5.1
4.8
17.8
18.8
45.0
48.5
28.3
29.3
78.5
77.3
23.9
66.6
65.9
31.12.2017
31.12.2018
a non-linear pattern, estimates made on the basis
of the specified sensitivities are only possible with
this restriction. The calculation of sensitivities using
ranges other than those specified could result in
a disproportional change in the defined benefit
obligation.
Discount rate
Pension level trend
Average life expectancy
770
increase of 1 year
-3.0
-672
-2.7
-567
3.1
712
2.8
597
increase of 0.25%
decrease of 0.25%
17.1
3,878
31.12.2017
15.7
-13.5
-3,055
-12.5
-2,652
increase of 0.75%
decrease of 0.75%
in %
in € million
in %
31.12.2017
in € million
31.12.2018
Change in defined benefit obligation
Pension entitlement trend
3,334
44,421
31.12.2018
31.12.2018
86
67
67
170
1,834
1,765
2,253
2,552
Total without quoted market price
141
212
354
537
Other
1,372
1,339
47
65
617
605
708
669
Absolute return funds
27
13
1
1
816
581
135
4,487
Other
United Kingdom
Germany
Defined benefit obligation
Former employees with vested benefits
Pensioners
Current employees
in %
The defined benefit obligation relates to current
employees, pensioners and former employees with
vested benefits as follows:
Balance Sheet
→ Notes to the
Notes to the Group
Financial Statements
Group
Financial
Statements
31.12.2017
160
procedures and for internal management purposes,
financial risks relating to the pension plans are reported
using a value-at-risk approach by reference to the
pension deficit. The investment strategy is also subject
to regular review together with external consultants,
with the aim of ensuring that investments are struc-
tured to match the timing of pension payments and
the expected development of pension obligations. In
this way, fluctuations in pension funding shortfalls
are reduced.
The BMW Group is exposed to risks arising both from
defined benefit plans and defined contribution plans
with a minimum return guarantee. The discount rates
used to calculate pension obligations are subject to
market fluctuation and therefore influence the level of
the obligations. Furthermore, changes in other actu-
arial parameters, such as expected rates of inflation,
also have an impact on pension obligations. In order
to reduce currency exposures, a substantial portion
of plan assets is either invested in the same cur-
rency as the underlying plan or hedged by means of
currency derivatives. As part of the internal reporting
Employer contributions to plan assets are expected to
amount to €526 million in the coming year.
19,477
18,937
966
1,049
8,908
8,167
9,603
9,721
31 December
4,222
159
2,687
7,784
-328
15,117
4,828
471
20,416
in € million
-1,901
31.12.2017*
Maturity within
Other liabilities
one year
Maturity later
than five years
Total
Deferred income
Refund liabilities for future leased products
Bonuses and sales aides
2,284
3,954
428
Maturity between
one and five years
2,000
8
87
3.9
CAD 1,400 million
fixed
2.7
2.6
CAD 500 million
variable
BMW Canada Inc.
2.8
3.5
AUD 130 million
fixed
2.0
5.0
GBP 300 million
fixed
2.0
3.0
1,905
6,666
2,807
2,807
3,097
Sundry
1,934
160
7
2,101
Other liabilities
13,443
4,605
440
18,488
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
Sundry other liabilities include mainly commission
payable and credit balances on customers' accounts.
Other liabilities include contract liabilities relating to
contracts with customers amounting to €4,985 million
(31 December 2017: €4,820 million).
An amount of €2,134 million (2017: €2,294 million)
was released from contract liabilities in the financial
year and recognised as revenues from contracts with
customers.
165
Deferred income comprises the following items:
166
Group
Financial
Statements
Notes to the Group
129
2.0
129
98
3,097
Other taxes
934
934
Advance payments from customers
934
122
1,056
Deposits received
505
346
5
856
Payables to other companies in which an investment is held
744
744
Social security
75
23
Payables to subsidiaries
Financial Statements
Notes to the
Other
GBP 1,175 million
4,311
7,484
453
4,260
2,771
Other taxes
Bonuses and sales aides
Refund liabilities for future leased products
4,311
Deferred income
Maturity later
than five years
Maturity between
one and five years
Maturity within
one year
31.12.2018
in € million
Other liabilities comprise the following items:
Other liabilities
36
Total
2,940
2,940
945
92
Payables to subsidiaries
102
26
76
Social security
781
781
Payables to other companies in which an investment is held
850
10
280
560
Deposits received
911
175
736
Advance payments from customers
945
7.9
44
INR 4,500 million
BMW India Financial Services Private Ltd.
fixed
8.0
2.5
INR 8,000 million
fixed
4.4
3.0
CNY 8,000 million
fixed
2.6
3.0
KRW 120,000 million
fixed
0.3
3.0
SEK 500 million
variable
1.1
2.2
NOK 1,000 million
variable
10.0
fixed
0.9
59
GBP 350 million
BMW International Investment B.V.
-0.3
140
EUR 2,030 million
BMW Finance N.V.
(in %)
Weighted average
nominal interest rate
Weighted average
maturity period
(in days)
in relevant currency
(ISO-Code)
Issue volume
paper:
Issuer
The following details apply to commercial
1.6
4.6
GBP 850 million
3.3
92
Sundry
EUR 21,150 million
4.7
HKD 1,342 million
fixed
1.8
5.0
SEK 1,750 million
fixed
2.1
4.3
CNY 2,300 million
fixed
1.8
3.8
NOK 2,400 million
fixed
0.4
3.0
5.8
fixed
5.8
3.0
EUR 500 million
variable
2.8
USD 3,608 million
variable
BMW US Capital, LLC
GBP 1,150 million
3.3
AUD 290 million
fixed
2.5
4.0
USD 300 million
fixed
1.5
6.9
0.0
JPY 19,100 million
1.0
Issue volume
in relevant currency
(ISO-Code)
Interest
Issuer
Bonds comprise:
→ Notes to the
Notes to the Group
Financial Statements
Statements
Weighted average
Group
Financial
163
93,883
-328
-4,541
151
4,023
94,577
164
fixed
maturity period
(in years)
(in %)
6.3
fixed
1.2
2.0
GBP 20 million
variable
2.8
Weighted average
nominal interest rate
1.3
variable
0.0
2.1
EUR 6,100 million
variable
BMW Finance N.V.
Balance Sheet
USD 130 million
variable
2.5
3.0
-655
Commercial paper
3,852
953
-344
1
44,880
16,855
13,572
Liabilities relating to financing activities
604
88
-1,579
12,658
151
-143
684
Other (excluding interest payable)
114
-13
127
Liabilities from finance lease contracts
739
124
615
investment is held
NZD 30 million
Financial liabilities towards companies in which an
14,892
-596
2.0
fixed
USD 13,450 million
5.7
2.7
fixed
EUR 2,500 million
7.6
1.0
fixed
Liabilities to banks
HKD 334 million
Asset-backed financing transactions
16,474
1,338
-957
Liabilities from customer deposits (banking)
13,512
656
Balance Sheet
4,461
Financial Instru-
103
2
8
unquoted equity
instruments
Convertible bonds
ments Level 3
-6
105
-835
Unquoted equity
instruments
8
3
3
-1
-7
2
109
Offsetting of financial instruments
Derivative financial instruments of the BMW Group
are subject to legally enforceable master netting agree-
ments or similar contracts. However, receivables and 7
payables relating to derivative financial instruments
are not netted due to non-fulfilment of the stipulated
criteria. Offsetting would have the following impact
on the carrying amounts of derivatives:
in € million
105
Balance sheet amounts as reported
31.12.2017
Reported on Reported on equity
assets side
and liabilities side
Reported on
assets side
Reported on equity
and liabilities side
1,977
1,675
4,341
1,090
-913
-913
-835
Gross amount of derivatives which can be offset in case of insolvency
Net amount after offsetting
Options on
2
4
31 December 2018
Currency translation differences
Gains (+)/losses (-) recognised in the income statement
Gains (+)/losses (-) recognised in accumulated other equity
Disposals
Additions
1 January 2018*
in € million
Notes to the Group
Financial Statements
→ Other Disclosures
Statements
Group
Financial
106
172
171
Company performance
Contractual rights by share class
Exercise price
*Opening balance adjusted due to first-time application of IFRS 9.
in € million
1 January 2017
Additions
-2
3
103
2
111
ments Level 3
Financial Instru-
Price per share
unquoted equity
instruments
Unquoted equity
instruments
Options on
31 December 2017
Currency translation differences
Gains (+)/losses (-) recognised in the income statement
Gains (+)/losses (-) recognised in accumulated other equity
Disposals
Convertible bonds
272
Last financing round
Milestone analysis (quantitative and
qualitative factors)
Consideration of exercise price
Level 3 financial assets relate mainly to investments in
a venture capital fund. The private equity companies
are valued on the basis of their net asset value which
is determined using relevant information that is not
available in the public domain. The fund manager
assesses the underlying individual companies in
accordance with the guidelines for international
private equity and venture capital valuations (IPEV).
An increase in input parameters would normally also
lead to a similar increase in valuation.
The allocation to measurement levels at 31 Decem-
ber 2018 takes account of the reclassifications of
financial instruments made in conjunction with the
first-time application of IFRS 9 see → note 7. There
were no reclassifications within the level hierarchy
either in the financial year 2017 or in the financial
year 2018.
91
221
778
2
1,064
115
-6
45
2
47
10
10
265
3
→ see
note 7
Where the fair value was required for a financial
instrument for disclosure purposes, the discounted ¬
cash flow method was used, taking account of the
BMW Group's own credit risk; for this reason, the fair
values calculated can be allocated to Level 2. Finan-
cial instruments recognised at fair value for which
no market price is available are allocated to Level 3.
Fair values are determined in accordance with the
following table:
4
Options on unquoted equity instruments
Expected Company performance
Risk adequate discounted
Income-based approach
3
Company performance
Contractual rights by share class
qualitative factors)
interest rate
Price per share
265
Input Parameter
Valuation method
Fair value
31.12.2018
Convertible bonds
Unquoted equity instruments
in € million
Last financing round
Milestone analysis (quantitative and
The balance sheet carrying amount of Level 3 financial
instruments developed as follows:
Credit card receivables
Other investments
13,572
13,277
13,196
12,724
12,658
At 31 December 2018 the financial assets and liabil-
ities measured at fair value according to IFRS 9 are 7
classified as follows in the measurement levels in
accordance with IFRS 13.
in € million
Marketable securities, investment funds and collateral assets
Other investments
Cash equivalents
Loans to third parties
Derivative instruments (assets)
Interest rate risks
Currency risks
Raw material market price risks
Other risks
2,008
13,588
Derivative instruments (liabilities)
14,359
16,855
Carrying amount
Fair value
Carrying amount
Receivables from sales financing
Bonds
Asset-backed financing transactions
Liabilities from customer deposits (banking)
Liabilities to banks
90,445
86,783
83,853
80,434
53,831
53,346
45,566
44,880
17,443
17,335
17,005
14,374
Interest rate risks
Currency risks
Raw materials market price risks
Marketable securities, investment funds and collateral assets - available-for-sale
Other investments - available-for-sale/fair value option
5,544
284
Cash equivalents
Loans to third parties
Derivative instruments (assets)
Interest rate risks
Currency risks
Raw material market price risks
Other risks
Derivative instruments (liabilities)
Interest rate risks
Currency risks
Raw materials market price risks
Level 3
105
-
2
1,797
Level 2
Level hierarchy in accordance with IFRS 13
Level 1
31.12.2017
in € million
31.12.2018
Level hierarchy in accordance with IFRS 13
Level 1
Level 2
Level 3
4,641
164
265
885
Fair value
3
713
191
4
923
409
343
The classification of financial assets and liabili-
ties measured at fair value according to IAS 39 to
measurement levels in accordance with IFRS 13 at
31 December 2017 was as follows:
1,069
31.12.2018
31.12.2017
amounts differ from their fair value. For some balance
sheet items, fair value corresponds to the carrying
amount due to their short maturity.
Commercial paper
Asset-backed financing transactions
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Other
31.12.2017
Cash funds
Loans and
receivables
Available for sale
Fair value option
Other liabilities
Held for trading
366
29
80,434
5,447
112
Liabilities from customer deposits (banking)
Liabilities to banks
Bonds
Financial liabilities
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Marketable securities and investment funds
Loans to third parties
Other
2
Cash and cash equivalents
Other assets
Receivables from subsidiaries
Receivables from companies in which
an investment is held
Collateral assets
Other
Total
534
LIABILITIES
Trade receivables
ASSETS
248
9,039
Other liabilities
Payables to subsidiaries
Payables to other companies in which
an investment is held
Other
129
744
5,949
Total
110,111
1,090
*The carrying amounts of cash flow hedges and fair value hedges are categorised as held for trading for the sake of clarity. Receivables from sales financing are shown including finance leases.
169
170
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Other Disclosures
The following table shows the fair values and carrying
amounts of financial assets and liabilities that are
measured at cost or amortised cost and whose carrying
in € million
Trade payables
9,731
1,132
329
2,667
276
1,334
219
97
1,108
9,258
86,363
5,910
184
31
12,658
13,572
4,461
16,855
2,187
814
1,340
4,341
190
571
44,880
762
26,256
255
Raw materials price risk
* Prior year figure adjusted due to the fact that the entire interest rate risk is considered, not just
the significant interest rate portfolios.
1,180
31.12.2017*
1,123
31.12.2018
Value at risk
in € million
The following table shows for interest-rate-sensitive
exposures of the BMW Group the potential fair value
fluctuation compared with the expected value, mea-
sured on the basis of the value-at-risk approach:
The BMW Group is exposed to market price risks on
raw materials. In order to hedge these risks, the Group
mainly used forward commodity contracts. As part of
the implementation of the risk management strategy,
the extent to which risk exposures should be hedged
is decided at regular intervals and the corresponding
hedging ratio defined.
The BMW Group applies a value-at-risk approach
throughout the Group for internal reporting purposes
and to manage interest rate risk. This approach is
based on a historical simulation in which the potential
future fair value losses of the interest rate portfolios are
compared across the Group with expected amounts
on the basis of a holding period of 250 days and a
confidence level of 99.98%. The risk mitigating effect
of correlations between the various portfolios is taken
into account when the risks are aggregated.
Interest rate risk is managed through the use of inter-
est rate derivatives. As part of the implementation
of the risk management strategy, interest rate risks
are monitored and managed at regular intervals. The
interest rate contracts used for hedging purposes
comprise mainly swaps, which, if hedge accounting
is applied, are accounted for as fair value hedges. The
economic relationship between the hedged item and
the hedging instrument is based on the fact that the
main parameters of the hedged item and the related
hedging instrument, such as start date, term and
currency, are the same.
This exposure is compared to all hedges that are in
place. The net cash flow surplus represents an uncov-
ered risk position. The cash-flow-at-risk approach
involves showing the impact of potential exchange
rate fluctuations on operating cash flows on the basis
* Prior year figure adjusted, due to the fact that entire currency risk is shown, not just of the
significant currencies.
29,203
28,407
31.12.2017*
31.12.2018
Currency exposure
in € million
For selected fixed-interest assets, part of the interest
rate risk is hedged on a portfolio basis. In this case,
swaps are used as the hedging instrument. Hedge
relationships are terminated and redesignated on a
monthly basis at the end of each reporting period,
thereby taking account of the constantly changing
content of each portfolio.
The economic relationship between the hedged item
and the hedging instrument is based essentially on
the fact that they have the same basis and term. The
BMW Group designates only the commodity price
index-linked raw material surcharge as a hedged item.
Other price components contained in the contract are
not designated as being part of the hedge relationship
as no effective hedging instruments exist for these
components.
The starting point for analysing raw materials price
risk is to identify planned purchases of raw materials
or components containing raw materials, the so-called
"exposure". At each reporting date, the exposure
the following financial year amounted to:
in € million
Disclosures on hedging measures
Statements
Group
Financial
178
177
409
327
31.12.2017
31.12.2018
Cash flow at risk
in € million
The following table shows the potential negative impact
for the BMW Group resulting from fluctuations in
prices across all categories of raw materials, measured
on the basis of the cash-flow-at-risk approach. The
risk at each reporting date for the following financial
year was as follows:
The potential negative impact on earnings is calculated
at the reporting date for each raw materials category
for the following financial year on the basis of current
market prices and exposure with a confidence level of
95%. The risk mitigating effect of correlations between
the various categories of raw materials is taken into
account when the risks are aggregated.
exposure is compared to all hedges that are in
place. The net cash flow surplus represents an uncovered
risk position. The cash-flow-at-risk approach involves
showing the impact of potential raw materials market
price fluctuations on operating cash flows on the basis
of probability distributions. Volatilities and corre-
lations serve as input factors to assess the relevant
probability distributions.
3,969
4,174
31.12.2017
31.12.2018
for
This
Raw material price exposures
* Prior year figure adjusted, due to the fact that entire interest rate risk is shown, not just of
the significant interest rate portfolios.
60,790
60,356
31.12.2017*
Group
Financial
Statements
176
175
Further information is provided in the "Results of
Operations, Financial Position and Net Assets" section
and in the “Risks and Opportunities” section of the
Combined Management Report.
As a further reduction of risk, a syndicated credit line
totalling €8 billion (2017: €8 billion) from a consortium
of international banks is available to the BMW Group.
Intragroup cash flow fluctuations are balanced out by
the use of daily cash pooling arrangements.
Solvency is assured at all times by managing and
monitoring the liquidity situation on the basis of
a rolling cash flow forecast. The resulting funding
requirements are covered by a variety of instruments
placed on the world's financial markets, with the aim
to minimise risk by matching maturities with financ-
ing requirements and in alignment with a dynamic
target debt structure.
The cash flows from non-derivative liabilities comprise
principal repayments and the related interest. The
amounts disclosed for derivative instruments com-
prise only cash flows relating to derivatives that have
a negative fair value at the balance sheet date. At
31 December 2018 credit commitments to dealerships
which had not been called upon at the end of the
reporting period amounted to €9,010 million (2017:
€8,812 million).
109,115
9,748
46,004
752
451
191
110
53,363
1,214
111
637
466
Other financial liabilities
Total
Derivative instruments
4,463
Notes to the Group
Financial Statements
→ Other Disclosures
Currency risks
Market risks
Protection against such risks is provided in the first
instance though natural hedging which arises when
the values or cash flows of non-derivative financial
instruments have matching maturities and amounts
(netting). Derivative financial instruments are used
to reduce the risk remaining after netting.
31.12.2018
Fair values of interest rate portfolios
in € million
The fair values of the Group's interest rate portfolios
were as follows at the end of the reporting period:
Interest rate risks arise when funds are borrowed and
invested with differing fixed-rate periods or differing
terms. At the BMW Group, all items subject to, or
bearing, interest are exposed to interest rate risk and
can therefore affect both the assets and liabilities side
of the balance sheet.
Interest rate risk
* Prior year figure adjusted, due to the fact that entire currency risk is considered, not just of
the significant currencies.
581
431
31.12.2018 31.12.2017*
Cash flow at risk
in € million
The following table shows the potential negative
impact for the BMW Group for the following year
resulting from unfavourable changes in exchange
rates, measured on the basis of the cash-flow-at-risk
approach.
The potential negative impact on earnings is calcu-
lated at the reporting date for each currency for the
following financial year on the basis of current market
prices and exposures with a confidence level of 95%.
The risk mitigating effect of correlations between the
various currencies is taken into account when the
risks are aggregated.
of probability distributions. Volatilities and correla-
tions serve as the main input factors to determine the
relevant probability distributions.
The BMW Group measures currency risk using a
cash-flow-at-risk model. The analysis of currency
risk in this model is based on the planned foreign
currency transactions or "exposures". At the end of
the reporting period, the currency exposure - in each
case for the following year – was as follows:
As part of the implementation of the risk management
strategy, the extent to which risk exposures should
be hedged is decided at regular intervals and the
corresponding hedging ratio defined. The economic
relationship between the hedged item and the hedging
instrument is based essentially on the fact that they
are denominated in the same currency and have the
same maturities.
As an enterprise with worldwide operations, the
BMW Group conducts business in a variety of cur-
rencies, from which currency risks arise. In order to
hedge currency risks, the BMW Group holds, as at
31 December 2018, derivative financial instruments
mostly in the form of forward currency contracts and
currency swaps.
Currency risks
Further information is provided in the "Report on
outlook, risks and opportunities" section of the Com-
bined Management Report.
Currency, interest rate and raw materials price risks
of the BMW Group are managed at a corporate level.
The principal market risks to which the BMW Group
is exposed are currency risk, interest rate risk and raw
materials price risk.
Average
hedging rates
Notes to the Group
Financial Statements
The following disclosures on hedging measures include
derivatives of fully consolidated companies before
offset of deferred tax.
651
in € million
Change in fair value
of designated
components
Liabilities
Assets
Nominal amounts
Fair Values
Assets
Fair Values
The following table provides information on the nominal
amounts, carrying amounts and fair value changes of
contracts designated as hedging instruments:
945
745
5,279
1,784
1,797
7
The accumulated amount of hedge-related fair value
adjustments is €15 million for assets and €243 million
for liabilities.
Interest rate risks
Fair Value Hedges
Raw material price risks
Currency risks
363
Cash Flow Hedges
121
189
relationships
Terminated hedge
24
27
-33
49,846
8,930
-262
453
941
-119
relationships
Continuing hedge
Change in value
of hedged items
Liabilities
Balances in accumulated other equity
556
654
52,580
-453
334
3,667
4,463
in € million
Interest rate risks
Currency risks
hedging rates
Raw material price risks
Average
Maturity later
than five years
Maturity
between one
and five years
one year
Maturity within
in € million
125.29
1,288.91
0.79
1.17
8.26
EUR/JPY
EUR/KRW
The nominal amounts of hedging instruments at
31 December 2018 were as follows:
EUR/GBP
→ Other Disclosures
EUR/USD
EUR/CNY
17,159
The following table summarises key information on
hedged items for each risk category and shows the
balances of designated components within accumu-
lated other equity:
9,097
4,619
Fair Value Hedges
Raw material price risks
Currency risks
Cash Flow Hedges
in € million
The average hedging rates of hedging instruments
used by the BMW Group at 31 December 2018 were
as follows:
Platinum (EUR/oz)
12,059
35,501
23,304
Palladium (EUR/oz)
Nominal amounts of
hedging intruments
Copper (EUR/t)
Lead (EUR/t)
Aluminium (EUR/t)
32
2,109
1,526
Raw material price risks
12,027
24,295
Interest rate risks
3,506
Commercial paper
9,731
At 31 December 2017 trade receivables existed that
were overdue but for which no impairment allowance
was recognised in accordance with IAS 39. The over-
due amounts can be grouped in the following ranges:
2,600
96
29
34
375
2,066
31.12.2018
61-90 days overdue
More than 90 days overdue
Total
in € million
31-60 days overdue
Not overdue
in € million
The credit risk on trade receivables is assessed main-
ly on the basis of information relating to overdue
amounts. The gross carrying amounts of these receiv-
ables are allocated at 31 December 2018 in accordance
with IFRS 9 to overdue ranges used for management
purposes as follows:
구
Within the financial services business, items financed
for retail customers and dealerships (such as vehicles,
facilities and property) serve as first-ranking collateral
with a recoverable value. Security is also put up by
customers in the form of collateral asset pledges, asset
assignment and first-ranking mortgages, supplemented
where appropriate by warranties and guarantees.
Items previously held as collateral that are subsequently
acquired relate mainly to vehicles. These assets can
usually be converted into cash at short notice through
the dealership organisation. Creditworthiness testing
is an important aspect of the BMW Group's credit
risk management. Every borrower's creditworthiness
is tested for all credit financing and lease contracts
entered into by the BMW Group. In the case of retail
customer financing, creditworthiness is assessed
using validated scoring systems integrated into the
acquisition process. In the area of dealership financing,
creditworthiness is assessed by means of ongoing
credit monitoring and an internal rating system that
takes account not only of the material credit standing
of the borrower, but also of qualitative factors such as
past reliability in business relations.
The credit risk relating to cash deposits and derivative
financial instruments is minimised by the fact that the
Group only enters into such contracts with parties of
first-class credit standing.
In the case of trade receivables, customers are regularly
assessed with regard to their credit risk. Depending
on contractual status, necessary measures, such as
dunning procedures, are initiated in good time.
In the case of all relationships underlying non-deriva-
tive financial instruments, in order to minimise the
credit risk and depending on the nature and amount
of exposure, collateral is required, credit information
and references obtained or historical data based on the
existing business relationship, in particular payment
behaviour, reviewed.
Notes to the Group
Financial Statements
→ Other Disclosures
1-30 days overdue
1-30 days overdue
31-60 days overdue
61-90 days overdue
91-120 days overdue
More than 120 days overdue
Balance at 31 December
31.12.2017
187
Gross carrying amount of financial assets
with medium credit ratings
269
80,768
420
751
79,597
Gross carrying amount of financial assets
with good credit ratings
Expected
credit loss
Total
Stage 3
Simplified
General
Stage 2
Stage 1
in € million
Receivables from financial services (including credit
card business receivables) are allocated to internally
defined rating categories based on credit risk. The
related gross carrying amounts in accordance with
IFRS 9 were allocated at 31 December 2018 as follows:
349
75
25
19
43
Group
Financial
Statements
174
173
Notwithstanding the existence of collateral accepted,
the carrying amount of financial assets (with the
exception of derivative financial instruments) generally
represents the maximum credit risk. In addition, the
credit risk is increased by additional unutilised loan
commitments for credit card business and dealership
financing. Total credit risk in these two lines of business
amounts to €1,148 million (2017: €1,217 million) and
€29,403 million (2017: €27,953 million) respectively.
(including investments in subsidiaries and participations measured at cost)
Gains and losses on sale and fair value measurement of marketable securities held for sale
Available-for-sale
Gains/losses on investments measured at fair value through profit and loss
Fair value option
Gains/losses from the use of derivative instruments
Held for trading
in € million
The following table shows the net gains and losses
arising on financial instruments in the financial year
2017 pursuant to IAS 39:
Interest expenses from financial liabilities measured
at amortised cost amounted to €1.8 billion.
Interest income from financial assets measured at
amortised cost relates mainly to interest income from
loan financing which is reported as revenues. Interest
income and interest expense from financial assets
at fair value through other comprehensive income
amounted to €58 million and €47 million respectively.
155
203
-150
2018
Financial liabilities measured at amortised cost
Financial assets measured at amortised cost
Financial instruments measured at fair value through profit or loss
in € million
The following table shows the net gains and losses
arising on financial instruments in the financial year
2018 pursuant to IFRS 9:
Gains and losses on financial instruments
Net income from participations and investments in subsidiaries
4,382
Accumulated other equity
Total change during the year
The BMW Group is exposed to counterparty credit
risks if contractual partners, for example a retail
customer or a dealership, are unable or only partially
able to meet their contractual obligations. Information
on the management of credit risk for receivables
from financial services is provided in the Combined
Management Report (see section Report on Outlook,
Risks and Opportunities).
Credit risk
162
-94
-162
93
-44
41
52
14
48
3
961
2017
Income/expenses
Other liabilities
Other income/expenses
Impairment losses/reversals of impairment losses
Loans and receivables
Balance at 31 December
thereof recognised in the income statement during the period under report
Balance at 1 January
1,059
52
52
Maturity within
31.12.2017
119,396
13,088
54,576
51,732
792
454
318
20
2,237
81
1,180
976
Total
Other financial liabilities
Derivative instruments
2,478
2,478
Commercial paper
9,669
in € million
9,669
one year
Maturity later
than five years
Trade payables
13,773
130
3,418
10,225
Liabilities from customer deposits (banking)
13,973
771
3,656
9,546
Liabilities to banks
17,988
10,901
7,087
Asset-backed financing transactions
47,221
8,285
27,201
11,735
Bonds
Total
Maturity between
one and five years
9,731
Trade payables
107
Liquidity risk
notes 25,
26 and 30
to the relevant categories of receivables in → notes 25, → see
26 and 30.
lar with regard to the amounts of impairment losses
recognised - are provided in the explanatory notes
Further disclosures relating to credit risk – in particu-
1,050
88,077
987
509
2,415
84,166
Total
592
1,816
987
37
605
187
Gross carrying amount of financial assets
with poor credit ratings
189
5,493
The following table shows the maturity structure of
expected contractual cash flows (undiscounted) for
financial liabilities:
14,485
31.12.2018
Maturity within
one year
3,368
11,010
Liabilities from customer deposits (banking)
14,552
900
3,804
9,848
Liabilities to banks
18,652
11,710
6,942
Asset-backed financing transactions
56,531
11,546
34,196
10,789
Bonds
Total
Maturity later
than five years
one and five years
Maturity between
in € million
For the financial year 2017, items are allocated by
category in accordance with the requirements of
IAS 39* as applied in that year:
31.12.2018
2018
5
1
1
36
22
SOLARWATT GmbH
2,235
4,464
94
34
29,816
23,386
3,393
3,536
DELTON Health AG (formerly DELTON AG)
DELTON Logistics S.à r.l.
2017
2018
2017
2018
2017
Payables
at 31 December
Receivables
at 31 December
2018
ALTANA AG
2017
2,322
341
Group
Financial
Statements
182
note 43
For disclosures relating to key management personnel,
please see → note 43 and the Compensation Report. → see
BMW Trust e. V., Munich, administers assets on a
trustee basis to secure obligations relating to pen-
sions in Germany and is therefore a related party
of the BMW Group in accordance with IAS 24. This
entity has no assets of its own. It had no income or
expenses during the period under report. BMW AG
bears expenses on an immaterial scale and performs
services for BMW Trust e. V., Munich.
Apart from vehicle leasing and financing contracts
at usual conditions, companies of the BMW Group
concluded no further transactions with members of
the Board of Management or Supervisory Board of
BMW AG. This also applies to close members of the
families of those persons.
15
2
106
103
Entrust Datacard Corp.
255
36
56
367
1,435
1,527
27
58
UnternehmerTUM GmbH
360
401
296
2,421
Notes to the Group
Financial Statements
→ Other Disclosures
Supplies and services
received
performed
at 31 December
at 31 December
Payables
Receivables
2018
2017
received
Supplies and services
A significant proportion of the BMW Group's transac-
tions with related parties relates to the joint venture
BMW Brilliance Automotive Ltd.
7
2018
Supplies and services
performed
in € million
Transactions of Group entities with related parties
were carried out without exception in the normal
course of business of each of the parties concerned
and at market conditions.
Related party relationships
40
-7
328
-335
31.12.2017
Gains/losses on hedging instruments designated as
part of a fair value hedge relationship
Gains/losses from hedged items
Ineffectiveness of fair value hedges
in € million
The following table shows gains and losses from fair
value hedge relationships on hedging instruments and
hedged items in the financial year 2017:
2017
2018
2018
2018
Supplies and services
in € thousand
181
Seen from the perspective of BMW Group entities,
the volume of transactions with the above-mentioned
entities was as follows:
In addition, Susanne Klatten, Germany, and Stefan
Quandt, Germany, are indirectly sole shareholders of
Entrust Datacard Corp., Shakopee, Minnesota. Stefan
Quandt is also a member of the supervisory board of
this entity. In 2018, Entrust Datacard Corp., Shakopee,
Minnesota, acquired vehicles from the BMW Group
by way of leasing.
the BMW Group bought in services from Unter-
nehmerTUM GmbH, Garching, mainly in the form
of consultancy and workshop services.
Susanne Klatten, Germany, is also the sole share-
holder and Chairwoman of the Supervisory Board
of UnternehmerTUM GmbH, Garching. In 2018,
Susanne Klatten, Germany, is a shareholder and
member of the Supervisory Board of BMW AG and
also a shareholder and Deputy Chairwoman of the
Supervisory Board of ALTANA AG, Wesel. In 2018,
ALTANA AG, Wesel, acquired vehicles from the
BMW Group, mainly by way of leasing.
cooperation is on the provision of complete photo-
voltaic solutions for rooftop systems and carports
to BMWi customers. In 2018, SOLARWATT GmbH,
Dresden, acquired vehicles from the BMW Group by
way of leasing.
Stefan Quandt, Germany, is also the indirect major-
ity shareholder of SOLARWATT GmbH, Dresden.
Cooperation arrangements are in place between
BMW Group and SOLARWATT GmbH, Dresden,
within the field of electric mobility. The focus of this
its subsidiaries, performed logistic-related services for
the BMW Group during the financial year 2018. In
addition, the companies acquired vehicles from the
BMW Group, mainly by way of leasing.
Stefan Quandt, Germany, is a shareholder and Deputy
Chairman of the Supervisory Board of BMW AG.
He is also the sole shareholder and Chairman of
the Supervisory Board of DELTON Health AG,
Bad Homburg v.d.H., as well as sole shareholder of
DELTON Logistics S.à r.l., Grevenmacher, which, via
Business relationships of the BMW Group with other
associated companies and joint ventures as well as
with non-consolidated subsidiaries are small in scale.
739
772
1,333
1,829
63
99
5,946
7,691
BMW Brilliance Automotive Ltd.
2017
2017
Fair value hedges
41
The BMW Group provides three share-based pro-
grammes: the Employee Share Programme for enti-
tled employees of the BMW Group, a share-based
remuneration programme for members of the Board
of Management and a share-based remuneration pro-
gramme for senior heads of department of BMW AG.
The activities of the BMW Group are broken down
into the operating segments Automotive, Motorcycles,
Financial Services and Other Entities.
For the purposes of presenting segment information,
the activities of the BMW Group are divided into oper-
ating segments in accordance with IFRS 8 (Operating
Segments). The segmentation follows the internal
management and reporting system and takes account
of the organisational structure of the BMW Group
based on the various products and services of the
reportable segments.
Explanatory notes to segment information
Information on reportable segments
45
SEGMENT INFORMATION
→ Segment Information
Notes to the Group
Financial Statements
Statements
Group
Financial
184
183
No events have occurred since the end of the financial
year which could have a major impact on the results
of operations, financial position and net assets of
BMW AG and the BMW Group.
Events after the end of the reporting period
44
The compensation arrangements applicable for
members of the Supervisory Board for the financial
year 2018 do not include any stock options, value
appreciation rights comparable to stock options or
any other stock-based compensation components.
Apart from vehicle lease and financing contracts at
customary conditions, no advances or loans were
granted to members of the Board of Management and
Pension obligations to current members of the Board
of Management are covered by provisions amounting
to €19.7 million (2017: €22.0 million), determined
in accordance with IAS 19. Pension obligations to
former members of the Board of Management and
their surviving dependants, also determined in
accordance with IAS 19, amounted to €91.0 million
(2017: €90.1 million).
The total remuneration of former members of the
Board of Management and their dependants amounted
to €9.2 million (2017: €6.7 million).
With effect from the financial year 2018, variable cash
compensation includes a multi-year and future-oriented
Performance Cash Plan.
45.9
30.7
thereof due within one year
49.8
41.7
Within the Automotive segment the BMW Group devel-
ops, manufactures, assembles and sells automobiles
and off-road vehicles, under the brands BMW, MINI
and Rolls-Royce as well as spare parts, accessories
and mobility services. BMW and MINI brand products
are sold in Germany through branches of BMW AG
and by independent, authorised dealerships. Sales
outside Germany are handled mainly by subsidiary
companies and by independent import companies in
some markets. Rolls-Royce brand vehicles are sold in
the USA as well as in China, Korea, Italy and Russia via
subsidiary companies and elsewhere by independent,
authorised dealerships.
Total expense
Activities relating to the development, manufacture,
assembly and sale of motorcycles as well as spare
parts and accessories are reported in the Motorcycles
segment.
Holding and Group financing companies are reported in
the Other Entities segment. This segment also includes
the operating companies BMW (UK) Investments Ltd.
and Bavaria Lloyd Reisebüro GmbH, which are not
allocated to one of the other segments.
2018
2017*
Financial Services
2018
2017*
2018
Motorcycles
Automotive
in € million
follows:
Segment information by operating segment is as
→ Segment Information
Notes to the Group
Financial Statements
Statements
Group
Financial
186
185
The success of the Other Entities segment is assessed
on the basis of profit or loss before tax. The corre-
sponding measure of segment assets used to manage
the Other Entities segment is total assets less asset-
side income tax items and intragroup investments.
The success of the Financial Services segment is mea-
sured on the basis of return on equity (RoE). Profit
before tax therefore represents the relevant measure
of segment earnings. The measure of segment assets
in the Financial Services segment corresponds to net
assets, defined as total assets less total liabilities.
The Automotive and Motorcycles segments are
managed on the basis of return on capital employed
(ROCE). The relevant measure of segment results used
is therefore profit before financial result. Capital
employed is the corresponding measure of segment
assets used to determine how to allocate resources
and comprises all current and non-current operational
assets after deduction of liabilities used operationally
which are not subject to interest (e.g. trade payables).
The role of "chief operating decision maker" with
respect to resource allocation and performance
assessment of the reportable segment is embodied
in the full Board of Management. For this purpose,
different measures of segment performance as well as
segment assets are taken into account in the operating
segments.
Segment information is prepared as a general rule
in conformity with the accounting policies adopted
for preparing and presenting the Group Financial
Statements. Exceptions to this general principle are
the treatment of inter-segment guarantees, the earn-
ings impact of which is allocated to the Automotive
and Financial Services segments on the basis used
internally to manage the business, and cross-segment
receivables and investments in subsidiaries for which
no impairment losses have been recognised. A further
exception is the treatment of intragroup buyback
arrangements between the Automotive and Financial
Services segments. Inter-segment receivables and
payables, provisions, income, expenses and profits
are eliminated upon consolidation. Inter-segment
revenues are based on market prices. Centralised
functions are included in the segments concerned.
Expenses for centralised administrative functions
allocated to the Financial Services segment are not
settled in cash.
Internal management and reporting
Automobile leasing, fleet business, multi-brand
business, retail and dealership financing, customer
deposit business and insurance activities are the main
activities allocated to the Financial Services segment.
Share-based remuneration
3.6
Variable compensation
Board of Management
Compensation to members of the
Further details about the remuneration of current
members of the Board of Management and the
Supervisory Board can be found in the Compensation
Report, which is part of the Combined Management
Report.
the Supervisory Board of BMW AG or its subsidiaries,
nor were any contingent liabilities entered into on
their behalf.
2017
2018
in € million
The total compensation of the current members of
the Board of Management and the Supervisory Board
of BMW AG expensed for the financial year 2018 in
accordance with IFRS comprised the following:
Compensation of members of the Board of
Management and Supervisory Board
43
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft have
issued the prescribed Declaration of Compliance pur-
suant to § 161 of the German Stock Corporation Act.
It is reproduced in the Annual Report 2018 of the
BMW Group and is also available to shareholders on
the BMW Group website at www.bmwgroup.com.
Declaration with respect to the Corporate
Governance Code
42
Further details on the remuneration of the Board
of Management are provided in the Compensation
Report for the financial
year 2018.
The fair value of the programmes for Board of Man-
agement members and senior heads of department
at the date of grant of the share-based remuneration
components was €1,919,680 (2017: €2,311,946), based
on a total of 22,245 shares (2017: 25,694 shares) of
BMW AG common stock or a corresponding cash-
based settlement measured at the relevant market
share price prevailing on the grant date.
The total expense recognised in 2018 for the share-
based remuneration component of current and former
Board of Management members and senior heads of
department was €609,890 (2017: €1,642,936).
The total carrying amount of the provision for the
share-based remuneration component of current
and former Board of Management members and
senior heads of department at 31 December 2018 was
€4,745,518 (2017: €6,301,785).
The cash-settlement obligation for the share-based
remuneration component is measured at its fair value at
the balance sheet date (based on the closing price of
BMW AG common stock in Xetra trading at 31 Decem-
ber 2018).
The share-based remuneration component is measured
at its fair value at each balance sheet date between
grant and settlement date, and on the settlement date.
The amounts are recognised as personnel expense
on a straight-line basis over the vesting period and
reported in the balance sheet as a provision.
→ see
note 31
Members of the Board of Management continue to
receive a cash compensation for the specific purpose
of investment after tax and contributions in BMW AG
common stock. For financial years from 2018 onwards,
the investment component corresponds to 45% of the
gross bonus. Shares of common stock purchased in
this way by Board members are required to be held for
a period of four years. At the end of the holding period,
Board members receive from BMW AG, for every three
shares of common stock held, either one additional
share of common stock or the cash equivalent, to be
decided at BMW AG's discretion. In the event of death
or invalidity, special rules apply for early payment
of share-based remuneration components based on
the target amounts. Insofar the service contract is
prematurely terminated and the Company has an
extraordinary right of termination, or if the Board
member resigns without the Company's agreement,
entitlements to amounts as yet unpaid relating to
share-based remuneration are forfeited. With effect
from the financial year 2012, qualifying senior heads
of department are also entitled to select a share-based
remuneration component, which is largely comparable
to the share-based remuneration arrangements for
Board of Management members.
For financial years beginning after 1 January 2011,
BMW AG has added a share-based remuneration
component to the existing compensation system for
Board of Management members. This compensation
component was revised for financial years from 2018
onwards.
As part of the Employee Share Programme, non-voting
shares of preferred stock in BMW AG were granted in
2018 to qualifying employees at favourable conditions
(see note 31 for the number and price of issued
shares). The holding period for these shares is up
to 31 December 2021. In the financial year 2018,
the BMW Group recorded a personnel expense of
€10 million (2017: €10 million) for the Employee Share
Programme, corresponding to the difference between
the market price and the reduced price of the shares
of preferred stock purchased by employees. The Board
of Management reserves the right to decide anew each
year
with respect to an Employee Share Programme.
28.8
3.6
40.2
8.2
2.0
2.0
Fixed compensation and attendance fees
5.6
5.6
Supervisory Board
Compensation to members of the
0.9
3.9
termination of board activity
Benefits in conjunction with the
3.1
3.4
Allocation to pension provisions
0.8
0.3
Share-based remuneration component
5.3
thereof Performance Cash Plan
31.7
20.3
Variable remuneration
7.7
Fixed remuneration
At 31 December 2017, the BMW Group held derivative
financial instruments, mainly commodity swaps, with
terms of up to 46 months to hedge raw materials price
risks. It was expected that €55 million of net gains,
recognised in equity at 31 December 2017 would be
reclassified to profit and loss in the financial year 2018.
Furthermore, the BMW Group held no derivative
financial instruments at 31 December 2017 which
were designated as cash flow hedges to hedge against
interest rate risks.
denominated in a foreign currency over the coming
32 months. It was expected that €336 million of net
gains, recognised in equity at 31 December 2017,
would be reclassified to profit and loss in the financial
year 2018.
34,643
34,489
Non-operating assets - Motorcycles
45
40
Liabilities of Motorcycles segment
not subject to interest
613
572
Total liabilities -
Financial Services segment
131,889
123,088
Non-operating assets -
Other Entities segment
7,084
7,829
Elimination of inter-segment items
-127,818
-120,147
Total Group assets
208,980
195,506
47,933
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
48,639
101,702
Total for reportable segments
32,608
32,121
Elimination of inter-segment items
-6,174
-6,728
Total Group capital expenditure
on non-current assets
26,434
25,393
Reconciliation of depreciation and
amortisation on non-current assets
Total for reportable segments
Elimination of inter-segment items
Total Group depreciation and
amortisation on non-current assets
15,041
14,779
-6,600
-6,324
8,441
8,455
in € million
31.12.2018
31.12.2017*
Reconciliation of segment assets
Total for reportable segments
113,885
Non-operating assets - Automotive
Liabilities of Automotive segment
not subject to interest
on non-current assets
2017
in € million
Opening balance at 1 January 2018
1,875
6
Change in fair value during the reporting period
120
-966
-20
235
-453
14
Reclassification to profit or loss
for continuing hedge relationships
-987
319
for terminated hedge relationships
-68
33
Reclassification to acquisition costs for inventories
Closing balance at 31 December 2018
7
-51
-2
940
-614
of hedging
Hedge relationships give rise to following effects:
Costs
Costs
of hedging
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
Designated components and costs of hedging within
accumulated other equity changed as follows:
Change of
designated com-
ponents in other
comprehensive
income
Costs of
hedging in other
comprehensive
income
Hedge
ineffectiveness
recognised in
income statement
-931
-497
-614
12
-19
-6
Currency risks
Interest rate risk
Raw materials price risk
in € million
Designated
component
Costs
of hedging
Designated
component
Reconciliation of capital expenditure
10,675
9,815
2
3
97,480
98,282
4
4
-18,710
-17,306
6
7
-18,710
-17,306
97,480
98,282
-45
80
1,342
293
9,815
10,675
632
-6,174
-6,728
2018
26,434
2017*
Group
At 31 December 2017, the BMW Group held deriva-
tive financial instruments (mainly forward currency
contracts) in order to hedge currency risks attached
to future or existing transactions. These derivative
instruments were intended to hedge forecast sales
No effects were recognised in financial result in the
financial year 2017 in connection with forecasting
errors and resulting overhedging. Gains due to the
ineffective portion of cash flow hedges amounting
to €17 million were recognised in financial result.
No effects were recognised in financial result in the
financial year 2017 in connection with forecasting
errors relating to cash flow hedges for commodities.
Losses attributable to the ineffective portion of cash
flow hedges amounting to €1 million were recognised
in financial result.
1,515
-103
thereof reclassified to the income statement
Balance at 31 December
1,437
Total changes during the year
Balance at 1 January
2017
in € million
The impact of cash flow hedges on accumulated other
equity was as follows:
Cash flow hedges
Notes to the Group
Financial Statements
→ Other Disclosures
Group
Financial
Statements
180
179
The following section shows disclosures relevant for
hedging instruments used in the financial year 2017
in accordance with IAS 39.
Changes in fair value include additional effects from
the application of the modified closing rate method.
12
-262
-13
Reconciliation to Group figures
2018
2017*
739
25,393
-6,600
-6,324
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Segment Information
Write-downs on inventories to their net realisable value
amounting to €54 million (2017: €36 million¹) were
recognised by the Automotive segment in the financial
year 2018. The reversal of impairment losses increased
the segment result of the Automotive segment by an
amount of €22 million (2017: €6 million).
The result of the Financial Services segment was
negatively impacted by impairment losses totalling
€302 million (2017: €215 million) recognised on leased
products. Income from the reversal of impairment
losses on leased products amounted to €118 million
(2017: €11 million).
The Other Entities' segment result includes interest
and similar income amounting to €1,178 million (2017:
€1,110 million) and interest and similar expenses
amounting to €1,145 million (2017: €986 million).
The information disclosed for capital expenditure and
depreciation and amortisation relates to non-current
property, plant and equipment, intangible assets and
leased products.
1 Prior year figure
has been adjusted.
The total of the segment figures can be reconciled to
the corresponding Group figures as follows:
in € million
Reconciliation of segment result
2018
2017*
Total for reportable segments
Financial result of Automotive segment
Financial result of Motorcycles segment
8,473
10,382
795
829
-6
-2
Elimination of inter-segment items
553
-534
Group profit before tax
188
187
Investments accounted for using the equity method
2,769
8,441
8,455
Other Entities
Reconciliation to Group figures
31.12.2018
31.12.2017
31.12.2018
Group
31.12.2017*
31.12.2018
31.12.2017*
2017
SEGMENT INFORMATION
BY OPERATING SEGMENT
Total revenues
Segment result
Result from equity accounted investments
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
84,512
75,121
95,095
93,804
208,980
2,624
195,506
Segment assets
External revenues
Inter-segment revenues
SEGMENT INFORMATION
78
125
9,992
9,962
88
4,699
4,982
Depreciation and amortisation on non-current assets
25,024
24,608
147
6,972
7,853
Capital expenditure on non-current assets
739
632
in € million
Result from equity accounted investments
2,161
207
175
7,888
6,182
27,567
28,165
2,272
2,173
85,742
85,846
Segment result
Total revenues
1,710
2,207
Segment assets
97
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
BY OPERATING SEGMENT
External revenues
Investments accounted for using the equity method
70,152
2,176
2,270
Other Entities
26,355
Inter-segment revenues
16,899
15,590
-3
1,810
2
25,857
14,740
68,947
618
Automotive
Motorcycles
14,919
31.12.2018
31.12.2017*
31.12.2018
Financial Services
31.12.2018
31.12.2017
13,836
2,624
11,223
2,769
618
31.12.2017
In addition to the status reports, the Supervisory Board focused on a number of specific areas
in greater detail. For example, the Board of Management reported on the current status and
strategy of Group financing. Further topics focused on were market developments and business
performance in North America, in the course of which trade risks and financial challenges in
the region were also addressed. Moreover, the Board of Management reported in detail on the
current status of and the overall strategy regarding the BMW brand.
The Supervisory Board discussed the current situation and strategy regarding the Group's
direct operations and joint ventures in China. In particular, the Board of Management
described its plans to expand local production through the BMW Brilliance Automotive Ltd.
joint venture (BBA) and its intention to increase its stake in BBA. The Supervisory Board
supports the Board of Management's strategically significant plan to increase the BMW Group's
stake in BBA's share capital by 25 percentage points to 75% by 2022 and gave its approval
for the transaction.
The Board of Management explained the current status of the customer ecosystem to the
Supervisory Board and provided an outlook on the further development of the Digital Services
and Mobility Services business fields. In the process, questions of data sovereignty and data
security regarding data collected within the Group's vehicles were also a topic of debate.
Furthermore, the Supervisory Board discussed the Group's global added value strategy across
the production network and the criteria influencing the decision to locate the planned new
production site in Eastern Europe.
The Supervisory Board held lengthy discussions with the Board of Management regarding
the current status of the Strategy NUMBER ONE > NEXT and the decisions taken in previous
months to implement it. In particular, the Board of Management discussed recent changes in
the market environment (such as customs duty increases, restrictive trade policies and Brexit
scenarios) and explained how the current strategy enables the BMW Group to respond to the
respective challenges. Among other matters, strategies regarding the electrification of the product
range, drivetrain technology and digitalisation as well as autonomous driving were presented
in detail. The Supervisory Board emphatically supports the continued implementation of the
Strategy NUMBER ONE > NEXT.
The Supervisory Board examined the structure and the level of compensation paid to the
members of the Board of Management. In this context, we took into account trends in business
performance, executive manager compensation and the remuneration of the workforce in
Germany over time. Based on comparative studies conducted by an external compensation
consultant, we concluded that the compensation of the members of the Board of Management
is commensurate. Detailed information on the compensation of Board of Management members
is provided in the Compensation Report.
We also gave lengthy consideration to the business performance, risk situation and strategy of
the Financial Services segment. The strategy for the further development of the MINI brand and
cooperation with the Chinese company Great Wall Motor in this respect were also the subject
of our deliberations. In addition, the Board of Management reported on the current status of
diversity concepts for the Company.
The new compensation system in place since the beginning of 2018 was approved by the
Annual General Meeting in May 2018. The structure of compensation systems for members of
the Board of Management and reporting thereon is currently the subject of draft amendments
to the German Stock Corporation Act and the German Corporate Governance Code. For
this reason, we have decided not to make any changes to the compensation system for the
BMW Group's Board of Management decided on as recently as 2017, but to await the results of
the above-mentioned reforms.
Supervisory Board
We also discussed corporate governance within the BMW Group and the application of the
recommendations contained in the German Corporate Governance Code. In December, the
Board of Management and the Supervisory Board issued their Declaration of Compliance with
the German Corporate Governance Code. We comply with all of the recommendations of
the current version of the Code with only one exception (the use of model tables for Board of
Management compensation). The wording of the Declaration of Compliance is shown in the
Corporate Governance Report.
We also deliberated intensively on the BMW Group's forecasts for the period from 2019 to 2024.
In this context, the Board of Management addressed the volatile nature of global economic
and political conditions and their influence on planning. Risk scenarios and their possible
effects on long-term planning were also presented. After thorough review, the Supervisory
Board approved the BMW Group's long-term corporate plan. Based on this plan, the Board of
Management presented the annual budget for the financial year 2019, which we also discussed
at great length.
→ Report of the
The meeting of the Audit Committee held in February 2018 focused primarily on preparing for
the Supervisory Board meeting at which the financial statements were to be examined. Before
recommending to the full Supervisory Board that KPMG AG Wirtschaftsprüfungsgesellschaft
(KPMG) be re-elected as Company and Group auditor at the Annual General Meeting 2018,
the Audit Committee obtained a Declaration of Independence from KPMG and, in this context,
also considered the scope of non-audit services provided by KPMG entities to the BMW Group.
There were no indications of conflicts of interest, grounds for exclusion or lack of independence
on the part of the auditor.
10
9
The status reports also included information on other current transactions and projects of key
importance, which the Supervisory Board considered in detail. These topics included important
cooperation projects such as the joint venture with Great Wall Motor, in particular regarding the
production of all-electric MINI vehicles in China, the joint venture with Daimler in the field of
mobility services and collaboration in the field of autonomous driving. The Supervisory Board also
discussed the possible introduction of driving bans for certain diesel-powered vehicles in individual
cities in Europe and the future prospects of diesel engines in general. Furthermore, the Board of
Management reported on the temporary market disruptions caused by discount campaigns initiated
by competitors in the run-up to the introduction of the new WLTP measurement procedures.
It informed the Supervisory Board about the increased extent of statutory and non-statutory warranty
measures as well as major vehicle recalls. International trade conflicts, trade risks and their impact
on the BMW Group were repeatedly the subject of the status reports provided.
In its regular reports on the BMW Group's current situation, the Board of Management provided us
with information about new vehicle models, delivery volume trends and market developments in the
Automotive and Motorcycles segments as well as new and total business volumes in the Financial
Services segment, in each case highlighting any planning variances. The Board of Management
also presented us with the latest workforce figures and reported on economic developments in
key markets.
The work of the Supervisory Board focused in particular on the strategic development of the
BMW Group's business models against the backdrop of digitalisation, drivetrain electrification
and other key trends. We also debated exhaustively on the challenges posed by trade conflicts,
the imminent Brexit crisis and supply distortions resulting from the difficulties encountered by
some of our competitors in converting to the new European WLTP testing cycle.
The Chairman of the Supervisory Board also held individual discussions with representatives of
various investors as well as with a shareholders' association. Topics of these consultations included
the treatment of strategy by the Supervisory Board, the involvement of the Supervisory Board in
sustainability issues and the new compensation system for the Board of Management.
In our capacity as Supervisory Board, we provided the Board of Management with in-depth advice
on matters relating to the management and further development of the BMW Group and monitored
the Board of Management's running of the business, both continuously and thoroughly. The full
Supervisory Board met five times in the course of the year, including one two-day meeting, and on
each occasion deliberated in detail with the Board of Management on the Group's performance. In
addition to these meetings, the Board of Management provided us with information on matters of
particular significance. Furthermore, the Chairman of the Supervisory Board was in frequent contact
with the Chairman of the Board of Management, as was the Chairman of the Audit Committee with
the Chief Financial Officer, in order to deal with current topics as they arose.
Monitoring and advisory activities of the Supervisory Board
Dear Shareholders,
We also reviewed existing targets for the composition of the Supervisory Board and the competence
profile set out for its members. We concluded that the composition of the Supervisory Board at
31 December 2018 was in line with the targets stipulated in the diversity concept, the competency
profile and other composition targets. We have decided to continue using the competency profile
and the targets for the composition of the Supervisory Board for the financial
year 2019.
To Our
Shareholders
No conflicts of interest arose on the part of members of the Supervisory Board during the year
under report. Significant transactions with Supervisory Board members and other related
parties as defined by IAS 24, including close relatives and intermediary entities, are examined
on a quarterly basis.
In the course of 2018, our company had to tackle a variety of challenges within its business
environment. However, we were able to master them and achieve a good result, despite the adversities.
At the same time, the Group is systematically laying the foundations for long-term success going
forward. The continuous expansion of our range of electrified vehicles is one good example of this
strategy. Particularly in these times of fundamental change, the BMW Group maintains a leading
position in the automotive industry, shaping technological transformation with determination,
passion and professional excellence.
Description of Presiding Board activities and committee work
Uncertainty is part of our business
We are creating new mobility offerings and digital services that will enable customers to bring
their digital world into the car. Combining our mobility services in a joint venture with the
Daimler Group will allow us to offer customers a single source for all their mobility needs with
a single touch.
Mobility services from a single source
We are moving autonomous driving forward with a combination of enthusiasm and sound
judgement. Safety is for us an absolute priority in this area. In 2021, we will release the
BMW iNEXT, a vehicle that brings together several future technologies: a futuristic interior, full
connectivity and an electric range of up to 700 km. This marks the beginning of highly automated
driving. At the same time, we are also testing autonomous driving with a fleet of 500 iNEXT
vehicles in urban settings.
iNEXT ' – a building block for the future
-
Digitalisation is changing every industry and every aspect of our lives. We have set ourselves a
clear goal: to be a leading tech company for premium mobility by 2025 - and we are developing
our business model in this direction. Our Strategy NUMBER ONE > NEXT has three main
approaches: profitability, growth and future all of them geared towards our customers'
ever-evolving needs and desires.
Individual mobility, in all its facets, remains our core competence. We are reminded, time and
again, that long-term success demands fresh thinking and bold action.
2018 was a challenging year for our industry, due to trade conflicts and the uncertainty
surrounding Brexit: vehicle sales declined across the globe for the first time since the global
economic and financial crisis.
Tech company in the premium mobility sector
Dear Shareholders,
Harald Krüger
Chairman of the Board of Management
Management
of the Board of
→ Statement of the
Chairman
Shareholders
To Our
16
On behalf of the Board of Management and our nearly 135,000 associates worldwide, I would
like to thank you for joining the BMW Group on its journey into the future.
Volatile markets, tough competition and various operating conditions in different countries
are all part of our business. The BMW Group has had to overcome difficult hurdles many
times in its history. In such moments, we have always stayed the course with a steady hand
at the wheel.
WLTP systematically implemented
We reviewed the efficiency of our work in the Supervisory Board, having prepared the related
discussion at the full Supervisory Board meeting on the basis of a questionnaire. Overall, the work
of the Supervisory Board was deemed efficient. No significant need for change was identified.
Average attendance at the five Supervisory Board meetings was 94%. An individualised overview
of attendance at meetings of the Supervisory Board and its committees for the financial year
2018 has been published on the BMW Group's website. All members of the Supervisory Board
attended more than half of the meetings of the Supervisory Board and those committees to
which they belonged during their term of office in the financial year 2018.
The heart of an electric vehicle is the electric motor and the battery. We produce both the
electric drive and the high-voltage battery in-house. In the summer, we will open the new
BMW Group Battery Cell Competence Centre in Munich, where we will develop so-called
build-to-print prototypes. For production of base cells, we will be working with the world's
largest manufacturer of automotive battery cells, CATL, from China, and with Northvolt in
a European consortium.
By the end of 2020, we will have more than ten new and revised models with an electrified
drive train. Thanks to flexible vehicle architectures, our plants will be able to build different
drive types.
And there's more coming on the electric side: 2019 will bring plug-in hybrid variants of the
new BMW 3 Series, X5 and 7 Series. The X3 will also be available for the first time with a hybrid
drive train. These will be joined by the first fully electric MINI and, in 2020, by the first fully
electric BMW - the iX3.
We are also number one worldwide in registrations of plug-in hybrid vehicles. This technology
not only gives our customers access to electric driving, it is also a quick and pragmatic way to
improve air quality in cities. Studies show that plug-in hybrids with an electric range of at least
60 km are driven in electric mode just as often as pure-electric models.
The trend is clear: in Europe, no other manufacturer sells more electrified vehicles than the
BMW Group. Between 2015 and 2018, sales of our electric models and plug-in hybrids increased
more than fourfold.
The future belongs to electric mobility - there is no doubt in my mind about that. But it's certainly
not a sprint, it's a marathon. By late 2019, we aim to have half a million electrified BMW Group
vehicles on the roads.
Systematic electrification for emissions-free driving
Dear Shareholders, your company is on a very solid footing and possesses considerable financial
strength. This means we can continue to invest in new technologies, services and our locations
as our springboard to the future.
With an EBIT margin of 7.2 percent in the Automotive segment, we exceeded our adjusted target.
This figure only partially includes our China business, as is usual. The Group EBT margin of
10.1 percent was above our 10 percent target for the eighth consecutive year. Once again, our
financial services business made a significant contribution to the Group result.
Group earnings before tax and annual net profit were both the second-highest in our history. As
previously announced, earnings before tax were moderately lower than last year's record figure.
Despite tough headwinds, second-best result in our history
For the first time, BMW M GmbH broke through the 100,000 unit sales mark with its M and
M Performance models.
Because customers around the world value our cars and motorcycles so much, the BMW Group
was able to post record sales for the eighth consecutive year. The BMW Group has been number
one in the global premium segment for the past 15 years. Our brands BMW, Rolls-Royce and
BMW Motorrad achieved new all-time highs, while MINI reported its second-highest sales
result ever.
Eighth consecutive sales record
of the Board of
Management
→ Statement of the
Chairman
To Our
Shareholders
18
17
15
Norbert Reithofer
Chairman of the Supervisory Board
A current example of this is the switch to the new WLTP test procedure in Germany and Europe.
We implemented the new requirements in our vehicles systematically and early. That is how we
operate as a company. We will also continue to meet ambitious targets to reduce CO2 emissions
in Europe and the rest of the world.
On behalf of the Supervisory Board
The Mediation Committee, which is prescribed by law, did not need to convene during the
financial year 2018.
The Nomination Committee convened twice during the financial year 2018. At those meetings, we
deliberated on succession planning for shareholder representatives and made recommendations
for proposed nominations of candidates for election to the Supervisory Board at the Annual
General Meetings 2018 and 2019, taking into account the composition targets previously decided
upon by the Supervisory Board.
The Personnel Committee convened four times during the financial year 2018 and held two
telephone conferences. In particular, it dealt with the change in the Board of Management for
the Purchasing and Supplier Network and prepared the relevant decisions of the Supervisory
Board. The Personnel Committee also discussed issues relating to the compensation of the
Board of Management and gave members of the Board of Management their approval to accept
mandates outside the Group in a number of cases.
The Audit Committee concurred with the decision of the Board of Management to raise the Com-
pany's share capital in accordance with Article 4 (5) of the Articles of Incorporation (Authorised
Capital 2014) by €521,500 and, in conjunction with the Employee Share Programme, to issue a
corresponding number of new non-voting bearer shares of preferred stock.
The Audit Committee continued to make preparations for the change in external auditor for the
financial year 2019 in line with plan. It also regularly examined the non-audit services provided
by the current auditor. An independent auditor engaged to conduct the mandatory audit of
over-the-counter derivative transactions confirmed the effectiveness of the system that BMW AG
currently employs to ensure compliance with regulatory requirements.
Furthermore, the Audit Committee dealt with the main results of the audits conducted by
Group Internal Audit and with further audit planning. The Audit Committee also discussed risk
management and the assessment of current risks. Other topics included the internal control
system, export control and the report on major legal disputes.
The Board of Management reported to the Audit Committee on engine control software for certain
earlier model versions of two vehicle types, which, in the BMW Group's opinion, was originally
developed correctly, but later fitted with a software module not intended for this type of vehicle.
The BMW Group attributes the software error to a manual, human error in an update and not
to a deliberate manipulation of the engine control and exhaust gas cleaning systems. The Board
of Management also explained this process at the Annual General Meeting in 2018. The Public
Prosecution Office Munich delivered a decision on 25 February 2019 regarding notice of a fine
of €8.5 million due to a minor offence. The investigation of the Public Prosecution Office found
no evidence of use of a deactivation device in emissions testing, fraud, or deliberate statutory
violations. The Company has accepted the penalty.
The Committee received continuous and detailed information on the status of the internal
investigations and the EU Commission's investigation into the antitrust allegations in connection
with the former working groups of several German automobile manufacturers. A representative
of the law firm engaged by the company also regularly took part in the discussions.
Composition of the Board of Management
During the year under report, the Audit Committee again dealt intensively with the topic
of compliance in the BMW Group. In his regular report, the Chairman of the Compliance
Committee provided us with a summary of ongoing compliance-related proceedings. He also
explained the results of a voluntary external audit of the BMW Group's compliance management
system in the context of antitrust law with the aim of verifying its appropriateness. On this
basis, the Compliance Committee submitted a concept to develop the Compliance Management
System, which was confirmed by the Board of Management. The Audit Committee discussed
the concept at length and supports the corresponding further development of the Compliance
Management System.
Supervisory Board
→ Report of the
To Our
Shareholders
12
11
The Audit Committee held five meetings and three telephone conference calls during the financial
year 2018. In the course of those conference calls, together with the Board of Management we
examined and discussed the Quarterly Financial Reports prior to their publication. Representatives
of the external auditors were present when discussing the Half-Year Financial Report.
The Presiding Board convened four times during the year under report. Assuming no committee
was responsible, the focus of our activities was on preparing the detailed agenda for the meetings
of the full Supervisory Board. Together with the Board of Management and senior heads of
department, we prepared the various items on the agenda for Supervisory Board meetings in a
thorough manner and made suggestions for reports to be submitted to the full Supervisory Board.
Yours
The fees proposed by KPMG for the audits of the year-end Company and Group Financial
Statements 2018 and for the review of the Half-Year Financial Report were deemed appropriate.
Subsequent to the Annual General Meeting held in May 2018, the Audit Committee therefore
appointed KPMG for the relevant engagements and specified audit focus areas.
Pieter Nota was appointed to the Board of Management with effect from 1 January 2018. He
succeeded Dr Ian Robertson as member of the Board of Management responsible for Sales and
Brand BMW, Aftersales BMW Group.
The Supervisory Board has established a Presiding Board and four committees. Committee
chairpersons reported in detail on Presiding Board and committee work at the subsequent
meetings of the full Supervisory Board. A detailed description of the duties, composition and
working procedures of the Presiding Board and the committees is provided in the Corporate
Governance Report.
On 24 July 2018, the Supervisory Board resolved to revoke the appointment of Markus Duesmann
as a member of the Board of Management and release him from his duties for the remaining
term of his contract. Mr Duesmann had previously informed the Chairman of the Supervisory
Board of his intention to move to the management board of a competitor. The Purchasing and
Supplier Network headed by Mr Duesmann was temporarily taken over by Oliver Zipse, member
of the Board of Management responsible for Production. With effect from 1 October 2018, the
Supervisory Board appointed Dr Andreas Wendt to the Board of Management as member with
responsibility for Purchasing and Supplier Network. Previously, he was head of the largest
German BMW Group plant in Dingolfing.
Munich, 15 March 2019
We wish to express our appreciation to the members of the Board of Management and the entire
workforce of the BMW Group worldwide for their dedication, their ideas and their achievements
during the financial year 2018, which form the bedrock of the enduring success and sustainability
of our Company - both now and in the future.
Furthermore, in conjunction with the presentation of the Sustainable Value Report, the
Audit Committee and the Supervisory Board reviewed the separate non-financial report of
BMW AG (Company and Group) at 31 December 2018, which has been drawn up by the Board
of Management. The audit firm PricewaterhouseCoopers GmbH has performed a “limited
assurance" review of these reports and issued an unqualified statement thereon. The documents
were carefully examined by the Audit Committee at its meeting on 27 February 2019 and by the
Supervisory Board at its meeting on 15 March 2019. The Board of Management provided an
in-depth explanation of the reports at both meetings. Representatives of the auditors attended
both meetings, reported on significant findings and answered additional questions raised by
members of the Supervisory Board. The Supervisory Board acknowledged and approved the
separate non-financial report (Company and Group) drawn up by the Management Board.
The Supervisory Board also examined the proposal of the Board of Management to use the
unappropriated profit to pay a dividend of €3.50 per share of common stock and €3.52 per
share of non-voting preferred stock. We consider the proposal appropriate and have therefore
approved it.
Based on a thorough examination conducted by the Audit Committee and the full Supervisory
Board, we concurred with the results of the external audit. In accordance with the conclusion
reached after the examination by the Audit Committee and the Supervisory Board, no objections
were raised. The Group and Company Financial Statements of BMW AG for the financial year
2018 prepared by the Board of Management were approved at the Supervisory Board meeting
held on 15 March 2019. The financial statements have therefore been adopted.
The representatives of the external auditor confirmed that the risk management system estab-
lished by the Board of Management is capable of identifying at an early stage any developments
that might threaten the Company's going-concern status. They confirmed that no material
weaknesses in the internal control system and risk management system with regard to the
financial reporting process were identified. Similarly, they did not identify in the course of their
audit work any facts that were inconsistent with the contents of the Declaration of Compliance
pursuant to Section 161 of the German Stock Corporation Act (AktG) issued by the Board of
Management and the Supervisory Board.
At its meeting held on 15 March 2019, the full Supervisory Board discussed in depth the draft
of the Company and Group Financial Statements submitted by the Board of Management. In
both meetings, the Board of Management gave a detailed explanation of the financial reports it
had prepared. Representatives of the external auditor were also present at both meetings. They
reported on the main findings of their audit, explained the key audit matters in the audits of
the Company and Group Financial Statements and answered additional questions of members
of the Supervisory Board.
The Audit Committee carefully examined and discussed these documents at its meeting held
on 27 February 2019. The Audit Committee reviewed in detail the key audit matters raised in
the auditor's report of the Company and Group Financial Statements and the related audit
procedures performed by the independent auditor.
Examination of financial statements and the profit distribution proposal
The Company and Group Financial Statements of the Company for the financial year 2018 were
audited by KPMG AG Wirtschaftsprüfungsgesellschaft. KPMG also conducted a review of the
abridged Interim Group Financial Statements and Interim Group Management Report for the
six-month period ended 30 June 2018. The results of the review were presented to the Audit
Committee by representatives of KPMG AG. No issues were identified that might indicate that
the abridged Interim Group Financial Statements and Interim Group Management Report had
not been prepared in all material respects in accordance with the applicable provisions.
The Group and Company Financial Statements for the year ended 31 December 2018 and the
Combined Management Report - as authorised for issue by the Board of Management on
19 February 2019 – were audited by KPMG AG and given an unqualified audit opinion.
The Auditor's Report has been signed since the financial year 2016 by Christian Sailer, as
independent auditor (Wirtschaftsprüfer), and since the financial year 2014 by Andreas Feege,
as independent auditor (Wirtschaftsprüfer) responsible for the performance of the engagement.
The financial statements for the financial year 2018, the Combined Management Report, the
reports of the external auditors and the Board of Management's profit distribution proposal
were made available to all members of the Supervisory Board in a timely manner.
Supervisory Board
Expression of appreciation by the Supervisory Board
→ Report of the
To Our
Shareholders
14
13
The composition of the Presiding Board and the committees of the Supervisory Board remained
unchanged during the financial year. The Corporate Governance Report contains a summary
of the composition of the Supervisory Board and its committees.
Dr Robert Lane resigned from the Supervisory Board with effect from the end of the Annual
General Meeting 2018. He resigned his mandate in mutual agreement with the Company. We
wish to thank Dr Lane for his valuable contributions and steadfast cooperation during his nine
years on the Supervisory Board. The Annual General Meeting elected the former Chairman of
the Board of Management of BASF SE, Dr Kurt Bock, as new member of the Supervisory Board.
The Supervisory Board members Professor Reinhard Hüttl, Dr Karl-Ludwig Kley and Professor
Dr Renate Köcher were re-elected as members of the Supervisory Board.
the Presiding Board and the Supervisory Board's committees
Composition of the Supervisory Board,
Oceania
Alphabet Fleetservices GmbH, Munich
Automag GmbH, Munich
Blitz 18-353 GmbH, Munich
Blitz 18-354 GmbH, Munich
BMW i Ventures GmbH, Munich
DOMESTIC
Digital Charging Solutions GmbH, Munich
ParkNow GmbH, Munich
BMW Car IT GmbH, Munich4
Companies
BMW Melbourne Pty. Ltd., Melbourne
BMW AG's non-consolidated companies at 31 December 2018
Bavarian Sky Australia Trust A, Mulgrave 13
BMW Australia Trust 2011-2, Mulgrave 13
BMW Australia Finance Ltd., Mulgrave
BMW Sydney Pty. Ltd., Sydney
BMW New Zealand Ltd., Auckland
BMW Financial Services New Zealand Ltd., Auckland
PM Parking Ventures GmbH, Munich
BMW Australia Ltd., Melbourne
Bavarian Sky China 2018-2, Beijing 13
→ 77
FOREIGN7
0
Alphabet Insurance Services Polska Sp. z o.o., Warsaw
0
0
0
0
0
0
0
0
0
0
Europe
0
0
0
Bavarian Sky China 2018-1, Beijing 13
100
BMW Group Benefit Trust Ltd., Farnborough
BMW Drivers Club Ltd., Farnborough
BMW Car Club Ltd., Farnborough
BMW Bulgaria EOOD, Sofia
BMW (UK) Pensions Services Ltd., Hams Hall
BMW (GB) Ltd., Farnborough
0
Bavarian Sky China 2017-3, Beijing 13
2017-1 ABL, Tokyo 13
2017-2 ABL, Tokyo 13
Bavarian Sky Korea 2nd Asset Securitization Speciality Company, Seoul 13
Bavarian Sky Korea 3rd Asset Securitization Speciality Company, Seoul 13
BMW Insurance Agency Inc., Wilmington, Delaware
BMW de Argentina S.A., Buenos Aires
100
BMW SLP, S.A. de C.V., Villa de Reyes
100
BMW of Manhattan, Inc., Wilmington, Delaware
100
BMW Financial Services de Mexico S.A. de C.V. SOFOM, Mexico City
100
BMW de Mexico S.A. de C.V., Mexico City
100
BMW Financeira S.A. Credito, Financiamento e Investimento, São Paulo
100
2,670
-116
BMW of North America LLC, Wilmington, Delaware
100
-24
175
BMW do Brasil Ltda., Joinville
100
85
190
BMW Leasing de Mexico S.A. de C.V., Mexico City
BMW Leasing do Brasil S.A., São Paulo
BMW Financial Services NA LLC, Wilmington, Delaware
Rolls-Royce Motor Cars NA LLC, Wilmington, Delaware
100
100
100
100
100
100
193
BMW Canada Auto Trust 2017-1, Richmond Hill, Ontario 13
BMW Canada Auto Trust 2018-1, Richmond Hill, Ontario 13
BMW Canada Auto Trust 2016, Richmond Hill, Ontario 13
BMW Canada 2018-A, Richmond Hill, Ontario 13
BMW Canada 2015-A, Richmond Hill, Ontario 13
BMW Floorplan Master Owner Trust Series 2018-1, Wilmington, Delaware 13
BMW Receivables Ltd. Partnership, Richmond Hill, Ontario
BMW Receivables 2 Inc., Richmond Hill, Ontario
BMW Extended Service Corp., Wilmington, Delaware
BMW Vehicle Lease Trust 2016-2, Wilmington, Delaware 13
BMW Vehicle Lease Trust 2017-1, Wilmington, Delaware 13
BMW Vehicle Lease Trust 2017-2, Wilmington, Delaware 13
BMW Vehicle Lease Trust 2018-1, Wilmington, Delaware 13
BMW Vehicle Lease Trust 2017-A, Wilmington, Delaware 13
BMW Vehicle Owner Trust 2016-A, Wilmington, Delaware13
BMW Vehicle Owner Trust 2018-A, Wilmington, Delaware 13
BMW Receivables 1 Inc., Richmond Hill, Ontario
BMW FS Securities LLC, Wilmington, Delaware
BMW FS Funding Corp., Wilmington, Delaware
BMW Manufacturing LP, Woodcliff Lake, New Jersey
BMW FS Receivables Corp., Wilmington, Delaware
BMW Facility Partners LLC, Wilmington, Delaware
BMW Auto Leasing LLC, Wilmington, Delaware
SB Acquisitions LLC, Wilmington, Delaware
BMW Manufacturing Indústria de Motos da Amazônia Ltda., Manaus
BMW Acquisitions Ltda., São Paulo
BMW Consolidation Services Co. LLC, Wilmington, Delaware
100
100
100
100
100
100
228
0
0
0
Bavarian Sky UK B Ltd., London 13
Bavarian Sky UK A Ltd., London 13
Bavarian Sky UK 2 plc, London 13
Bavarian Sky UK 1 plc, London 13
Bavarian Sky FTC, Compartment French Auto Leases 3, Paris 13
Bavarian Sky FTC, Compartment French Auto Leases 2, Paris 13
Bavarian Sky Europe S.A., Compartment Swiss Auto Leases 2, Luxembourg 13
Bavarian Sky Europe S.A. Compartment A, Luxembourg 13
Bavarian Sky S.A., Compartment B, Luxembourg 13
0
0
0
→ List of Investments
at 31 December 2018
0
100
100
100
100
100
100
0
-35
0
0
100
134
513
100
164
1,445
100
340
1,530
100
270
1,817
100
2,599
4,991
BMW US Capital LLC, Wilmington, Delaware
BMW Canada Inc., Richmond Hill, Ontario
BMW (US) Holding Corp., Wilmington, Delaware
BMW Manufacturing Co. LLC, Wilmington, Delaware
Financial Services Vehicle Trust, Wilmington, Delaware
BMW Bank of North America Inc., Salt Lake City, Utah
The Americas
0
0
0
0
0
Bavarian Sky China 2017-2, Beijing 13
100
100
BMW Asia Technology Centre Sdn Bhd, Kuala Lumpur
BMW India Private Ltd., Gurgaon
BMW Holding Malaysia Sdn Bhd, Kuala Lumpur
100
BMW China Services Ltd., Beijing
74
BMW Leasing (Thailand) Co. Ltd., Bangkok
51
BMW Malaysia Sdn Bhd, Kuala Lumpur
100
BMW Manufacturing (Thailand) Co. Ltd., Rayong
100
87
108
BMW (Thailand) Co. Ltd., Bangkok
100
7
123
BMW India Financial Services Private Ltd., Gurgaon, Haryana
100
27
173
BMW Korea Co. Ltd., Seoul
BMW Asia Pte. Ltd., Singapore
58
PT BMW Indonesia, Jakarta
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur
2018-3 ABL, Tokyo 13
2018-2 ABL, Tokyo 13
2018-1 ABL, Tokyo 13
2017-3 ABL, Tokyo 13
0
2016-2 ABL, Tokyo 13
2016-1 ABL, Tokyo 13
2015-2 ABL, Tokyo 13
2015-1 ABL, Tokyo 13
BMW Tokyo Corp., Tokyo
at 31 December 2018
Notes to the Group
Financial Statements
→ List of Investments
Group
Financial
Statements
194
100
100
100
100
100
100
100
100
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Asia Pacific Capital Pte Ltd., Singapore
100
13
Herald International Financial Leasing Co., Ltd., Tianjin
63
719
BMW (South Africa) (Pty) Ltd., Pretoria
Africa
0
0
ooo
0
0
0
0
0
0
0
0
0
0
0
100
100
100
100
100
100
197
BMW Financial Services (South Africa) (Pty) Ltd., Midrand
SuperDrive Investments (RF) Ltd., Cape Town 13
4
100
93
337
BMW Japan Corp., Tokyo
100
62
482
BMW Japan Finance Corp., Tokyo
100
47
530
BMW Financial Services Korea Co. Ltd., Seoul
100
480
557
58
248
2,107
BMW China Automotive Trading Ltd., Beijing
BMW Automotive Finance (China) Co. Ltd., Beijing
Asia
0
100
149
403
LIST OF INVESTMENTS AT
31 DECEMBER 2018
28
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
90
100
100
100
100
100
100
60
100
100
100
100
100
100
100
100
100
100
100
100
FOREIGN
Joint operations - proportionately consolidated entities
BMW Brilliance Automotive Ltd., Shenyang
FOREIGN
IONITY Holding GmbH & Co. KG, Munich
DOMESTIC
Associated companies - equity accounted
Companies
→ 78
BMW AG's associated companies, joint ventures
and joint operations at 31 December 2018
Parkmobile International (Australia) Pty. Ltd., Sydney
Oceania
BMW Financial Services Hong Kong Ltd., Hongkong
Herald Hezhong (Beijing) Automotive Trading Co. Ltd., Beijing
BMW India Leasing Private Ltd., Gurgaon
BMW Middle East Retail Competency Centre DWC-LLC, Dubai
BMW Finance (United Arab Emirates) Ltd., Dubai
100
100
196
Group
Financial
Statements
Notes to the Group
Financial Statements
→ List of Investments
at 31 December 2018
100
Asia
BMW Financial Services Singapore Pte Ltd., Singapore
BMW Philippines Corp., Manila
BMW India Foundation, Gurgaon
BMW Hong Kong Services Ltd., Hongkong
BMW Insurance Services Korea Co. Ltd., Seoul
BMW Mobility Services Ltd., Sichuan Tianfu New Area (Chengdu Section)
THEPSATRI Co. Ltd., Bangkok⁹
100
100
100
Parkmobile Licenses B.V., Amsterdam
Parkmobile International Holding B.V., Amsterdam
Parkmobile International B.V., Amsterdam
Parkmobile Hellas S.A., Athens
Parkmobile Group Holding B.V., Amsterdam
Parkmobile Group B.V., Amsterdam
Parkmobile Benelux B.V., Amsterdam
Parkmobile Belgium BvBa, Antwerp
Park-Mobile (UK) Ltd., Basingstoke
Park-line Holding B.V., The Hague
Park-line B.V., The Hague
Park-line Aqua B.V., The Hague
000 BMW Leasing, Moscow
John Cooper Works Ltd., Farnborough
John Cooper Garages Ltd., Farnborough
Content4all B.V., Amsterdam
Cobalt Telephone Technologies Ltd., Basingstoke
100
100
100
100
100
100
Parkmobile Ltd., Basingstoke
100
BMW Manufacturing Hungary Kft., Vecsés
BMW Merger S.R.L., Bukarest
BMW Merger, distribucija motornih vozil, d.o.o., Ljubljana
BMW Motorsport Ltd., Farnborough
BMW Russland Automotive 000, Kaliningrad
Cobalt Holdings Ltd., Basingstoke
BMW i Ventures B.V., The Hague
Parkmobile Software B.V., Amsterdam
ParkNow Austria GmbH, Vienna
ParkNow France S.A.S., Versailles
BMW Automobile Distributors (Pty) Ltd., Midrand
BPF Midrand Property Holdings (Pty) Ltd., Midrand
Multisource Properties (Pty) Ltd., Midrand
195
100
100
100
Africa
100
100
100
100
100
100
100
100
THERE Holding B.V., Amsterdam
Toluca Planta de Automoviles S.A. de C.V., Mexico City
ParkNow LLC, Wilmington, Delaware
ParkNow Suisse S.A., Bulle
RingGo (GB) Ltd., Basingstoke
U.T.E. Alphabet España-Bujarkay, Sevilla
The Americas
217-07 Northern Boulevard Corp., Wilmington, Delaware
BMW Experience Centre Inc., Richmond Hill, Ontario
ReachNow LLC, Wilmington, Delaware
BMW i Ventures Inc., Wilmington, Delaware
BMW Leasing de Argentina S.A., Buenos Aires
BMW Operations Corp., Wilmington, Delaware
BMW Technology Corp., Wilmington, Delaware
Designworks/USA Inc., Newbury Park, California
Digital Charging Solution Corp., Atlanta, Georgia
MINI Business Innovation LLC, Wilmington, Delaware
Mini Urban X Accelerator SPV LLC, Wilmington, Delaware
Parkmobile Electronic Parking Solutions Canada Inc., Vancouver
Parkmobile Montgomery County LLC, Baltimore, Maryland
Parkmobile USA Inc., Atlanta, Georgia
Parkmobile LLC, Wilmington, Delaware
BMW i Ventures LLC, Wilmington, Delaware
179
Not equity accounted or proportionately consolidated entities
Encory GmbH, Unterschleißheim
Group
Financial
Statements
198
197
13 Control on basis of economic dependence.
12 Deconsolidation in the financial year 2018: BMW Malta Finance Ltd., St. Julians.
11 First-time consolidation.
1º Exemption pursuant to Article 2:403 of the Civil Code of the Netherlands (Burgerlijk Wetboek).
⁹ Including power to appoint representative bodies.
IFRS rules. Equity not denominated in euro is translated into euro using the closing exchange rate at the balance sheet date, earnings are translated using the average rate.
8 The amounts shown for entities accounted for using the equity method and for proportionately consolidated entities correspond to the annual financial statements drawn up in accordance with uniform
7 These entities are neither consolidated nor accounted for using the equity method due to their overall immateriality for the Group Financial Statements.
6 Exemption from publication of financial statements applied in accordance with § 264 (3) and § 264b HGB.
5 Exemption from drawing up a management report applied in accordance with § 264 (3) and § 264 b HGB.
4 Profit and Loss Transfer Agreement with a subsidiary of BMW AG.
3 Profit and Loss Transfer Agreement with BMW AG.
2 The amounts shown for the foreign subsidiaries correspond to the annual financial statements drawn up in accordance with uniform IFRS rules. Equity and earnings not denominated in euro are translated into
euro using the closing exchange rate at the balance sheet date.
12.0
49.0
Capital invest-
ment in %
4.6
3.1
17.8
18.9
9.8
Notes to the Group
Financial Statements
16.7
9.1
18.3
FOREIGN7
Gios Holding B.V., Oss
SGL Composites LLC, Dover, Delaware
1 The amounts shown for the German subsidiaries correspond to the annual financial statements drawn up in accordance with German accounting requirements (HGB).
6.2
in € million
→ List of Investments
Munich, 19 February 2019
27
100
100
53
100
100
100
100
100
0
0
Equity
in € million
Profit/loss
in € million
Capital invest-
ment in %
100
100
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
Harald Krüger
Milagros Caiña Carreiro-Andree Klaus Fröhlich
Pieter Nota
Dr. Nicolas Peter
at 31 December 2018
Peter Schwarzenbauer
Oliver Zipse
100
100
100
100
100
Dr.-Ing. Andreas Wendt
in € million
Profit/loss
Equity
Capital invest-
100
51
100
100
100
100
100
100
100
100
70
100
49
in € million
in € million
Profit/loss
Digital Energy Solutions GmbH & Co. KG, Munich
The Retail Performance Company GmbH, Munich
PDB - Partnership for Dummy Technology and Biomechanics GbR, Gaimersheim
FOREIGN7
Bavarian & Co. Ltd., Incheon
BMW Albatha Finance PSC, Dubai
ment in %
BMW Albatha Leasing LLC, Dubai
Critical TW S.A., Porto
DSP Concepts Inc., Dover, Delaware
IP Mobile N.V., Brussels
Rever Moto Inc., Wilmington, Delaware
Stadspasparkeren B.V., Deurne
Equity
BMW AVTOTOR Holding B.V., Amsterdam
149
-15
25
30
BMW AG's participations at 31 December 2018
→ 79
Companies
DOMESTIC
Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern
20
GSB Sonderabfall-Entsorgung Bayern GmbH, Baar-Ebenhausen
IVM Industrie-Verband Motorrad GmbH & Co. Dienstleistungs KG, Essen
Joblinge gemeinnützige AG Berlin, Berlin
Joblinge gemeinnützige AG Leipzig, Leipzig
Joblinge gemeinnützige AG München, Munich
Racer Benchmark Group GmbH, Landsberg am Lech
SGL Carbon SE, Wiesbaden
Hubject GmbH, Berlin
DOMESTIC
20
51
5,926
1,561
50
1,764
-337
29.6
252223
50
50
20
20
40
40
50
50
100
100
100
100
100
100
100
100
100
100
100
100
192
Group
Financial
Statements
Notes to the Group
Financial Statements
→ List of Investments
at 31 December 2018
BMW Madrid S.L., Madrid
Alphabet Polska Fleet Management Sp. z o.o., Warsaw
BMW Slovenská republika s.r.o., Bratislava11
100
BMW Milano S.r.I., Milan
Alphabet Italia Fleet Management S.p.A., Rome
Alphabet Austria Fuhrparkmanagement GmbH, Salzburg
Alphabet France Fleet Management S.N.C., Rueil-Malmaison
BMW Hellas Trade of Cars A.E., Kifissia
BMW Danmark A/S, Copenhagen
BMW Roma S.r.I., Rome
BMW Czech Republic s.r.o., Prague¹¹
BMW Services Belgium N.V., Bornem
Oy BMW Suomi AB, Helsinki
Alphabet France S.A.S., Rueil-Malmaison
100
BMW Renting (Portugal) Lda., Porto Salvo
Park Lane Ltd., Farnborough
BMW Distribution S.A.S., Vélizy-Villacoublay
BMW Automotive (Ireland) Ltd., Dublin
BMW Amsterdam B.V., Amsterdam
BMW Nederland B.V., Rijswijk
BMW Financial Services Denmark A/S, Copenhagen
BMW Portugal Lda., Porto Salvo
BMW Financial Services (Ireland) DAC, Dublin
Alphabet Fuhrparkmanagement (Schweiz) AG, Dielsdorf
BMW Retail Nederland B.V., The Hague
BMW Den Haag B.V., The Hague
Alphabet Luxembourg S.A., Leudelange
DriveNow Sverige AB, Sollentuna¹¹
BMW Finanzdienstleistungen (Schweiz) AG, Dielsdorf
BMW Bank 000, Moscow
Bavaria Reinsurance Malta Ltd., Floriana
BMW Austria GmbH, Salzburg
100
Alphabet UK Ltd., Glasgow
100
100
100
2
101
100
100
69
19
123
16
128
BMW Financial Services Belgium S.A./N.V., Bornem
BMW (UK) Investments Ltd., Farnborough
BMW Northern Europe AB, Stockholm
BMW Norge AS, Fornebu
DriveNow Austria GmbH, Vienna¹¹
BMW Coordination Center V.o.F., Bornem
BiV Carry ISCS, Senningerberg
BMW (UK) Capital plc, Farnborough
Riley Motors Ltd., Farnborough
BMW Central Pension Trustees Ltd., Farnborough
Triumph Motor Company Ltd., Farnborough
BLMC Ltd., Farnborough
DriveNow Belgium S.p.r.l., Brussels¹¹
DriveNow Italy S.r.I., Milan¹¹
DriveNow UK Ltd., London 11
Bavarian Sky S.A., Compartment German Auto Loans 4, Luxembourg 13
Bavarian Sky S.A., Compartment German Auto Loans 5, Luxembourg 13
Bavarian Sky S.A., Compartment German Auto Loans 6, Luxembourg 13
Bavarian Sky S.A., Compartment German Auto Loans 7, Luxembourg 13
Bavarian Sky S.A., Compartment German Auto Loans 8, Luxembourg 13
Bavarian Sky S.A., Compartment A, Luxembourg 13
100
BMW Financial Services Polska Sp. z o.o., Warsaw
BMW Services Ltd., Farnborough
Swindon Pressings Ltd., Farnborough
BMW Financial Services B.V., Rijswijk
Alphabet España Fleet Management S.A.U., Madrid
100
100
100
85
USA
Rest of Europe
Rest of Asia
Rest of the Americas
Other regions
Eliminations
16,088
16,726
21,361
20,766
31,415
30,925
15,526
14,807
11,071
11,400
90
1,508
18,268
China
100
The reconciliation of segment figures to the corre-
sponding total Group figures shows the elimination
of inter-segment items. Revenues with other segments
result mainly from the sale of vehicles, for which the
Financial Services segment has concluded a financing
or lease contract. Eliminations of inter-segment items
in the reconciliation to the Group profit before tax,
capital expenditure, depreciation and amortization
mainly result from the sale of vehicles in the Automo-
tive segment, which are subsequently accounted for
as leased vehicles in the Financial Services segment. 7
In the reconciliation of segment assets to Group assets,
eliminations relate mainly to intragroup financing
balances.
In the information by region, external sales are based
on the location of the customer. Revenues with major
customers were not material overall. The information
disclosed for non-current assets relates to property,
plant and equipment, intangible assets and leased
products. Eliminations disclosed for non-current
assets relate to leased products.
Information by region
in € million
External revenues
2018
Non-current assets
2017*
2018
2017*
Germany
13,596
14,299
34,883
31,678
19,008
1,588
3,606
3,689
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
3,435
2,941
2,696
2,975
396
355
-7,855
-8,028
100
Group
98,282
69,344
64,192
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
189
190
Group
Financial
Statements
Notes to the Group
Financial Statements
97,480
29
Société Nouvelle WATT Automobiles S.A.R.L., Rueil-Malmaison
100
100
100
100
100
100
100
100
100
100
100
100
100
100
153
100
326
100
100
1,988
100
100
385
1,889
100
838
3,064
BMW (UK) Holdings Ltd., Farnborough
BMW Österreich Holding GmbH, Steyr
100
58
7,971
100
2,106
17,761
BMW International Holding B.V., Rijswijk 10
BMW Holding B.V., The Hague
Europe 12
100
100
100
3,558
100
BMW INTEC Beteiligungs GmbH, Munich 3, 6
BMW Bank GmbH, Munich³
BMW Beteiligungs GmbH & Co. KG, Munich6
DOMESTIC¹
Companies
→ 76
Affiliated companies (subsidiaries) of BMW AG at 31 December 2018
if they are of "minor significance" for the results of
operations, financial position and net assets of
BMW AG pursuant to § 286 (3) sentence 1 no. 1 HGB
and § 313 (3) sentence 4 HGB. It is also shown in the list
which subsidiaries apply the exemptions available in
§ 264 (3) and § 264 b HGB with regard to the publication
of annual financial statements and the drawing up of
a management report and/or notes to the financial
statements (footnotes 5 and 6). The Group Financial
Statements of BMW AG serve as exempting consoli-
dated financial statements for these companies.
The List of Investments of BMW AG pursuant to § 285
and § 313 HGB is presented below. Disclosures for
equity and earnings and for investments are not made
List of investments at 31 December 2018
46
100
100
100
100
100
100
100
BMW Finanz Verwaltungs GmbH, Munich
BMW Verwaltungs GmbH, Munich³,6
Parkhaus Oberwiesenfeld GmbH, Munich
Alphabet Fuhrparkmanagement GmbH, Munich 4
129
5,497
Capital invest-
ment in %
Profit/loss
in € million
in € million
Equity
FOREIGN²
LARGUS Grundstücks-Verwaltungsgesellschaft mbH, Munich
100
DriveNow Verwaltungs GmbH, Munich 11
BMW Vertriebszentren Verwaltungs GmbH, Munich
BMW Vermögensverwaltungs GmbH, Munich
BMW Anlagen Verwaltungs GmbH, Munich 3,6
Bürohaus Petuelring GmbH, Munich
Bavaria Wirtschaftsagentur GmbH, Munich 3, 5, 6
BAVARIA-LLOYD Reisebüro GmbH, Munich
Rolls-Royce Motor Cars GmbH, Munich 4, 5, 6
BMW Fahrzeugtechnik GmbH, Eisenach 3, 5, 6
BMW Hams Hall Motoren GmbH, Munich 4, 5, 6
DriveNow GmbH & Co. KG, Munich¹¹
BMW High Power Charging Beteiligungs GmbH, Munich 4,6
Alphabet International GmbH, Munich 4, 5, 6
BMW M GmbH Gesellschaft für individuelle Automobile, Munich 3, 5, 6
BMW España Finance S. L., Madrid
-13
22
BMW Finance N.V., The Hague
100
19
213
BMW Iberica S.A., Madrid
100
43
218
BMW i Ventures SCS SICAV-RAIF, Senningerberg
100
11
222
BMW Financial Services Scandinavia AB, Sollentuna
100
27
225
BMW France S.A.S., Montigny-le-Bretonneux
205
19
Rolls-Royce Motor Cars Ltd., Farnborough
195
20
1,020
100
75
22
156
157
BMW Malta Ltd., Floriana
100
APD Industries plc, Birmingham
BMW Vertriebs GmbH, Salzburg
BMW Austria Bank GmbH, Salzburg
100
Alphabet Nederland B.V., Breda 10
BMW Austria Leasing GmbH, Salzburg
BMW Russland Trading O00, Moscow
100
71
Alphabet Belgium Long Term Rental NV, Aartselaar
64
100
ALPHABET (GB) Ltd., Farnborough
BMW (UK) Manufacturing Ltd., Farnborough
100
9
588
BMW International Investment B.V., The Hague
100
55
BMW (Schweiz) AG, Dielsdorf
561
100
963
BMW Motoren GmbH, Steyr
100
269
1,014
284
BMW Financial Services (GB) Ltd., Farnborough
100
176
105
895
100
100
304
BMW (UK) Ltd., Farnborough
100
16
316
BMW Belgium Luxembourg S.A./N.V., Bornem
100
84
388
BMW Italia S.p.A., San Donato Milanese
100
57
476
BMW Finance S.N.C., Guyancourt
61
191
and its Committees
The Supervisory Board is quorate if all members have
been invited to the meeting and at least half the mem-
bers of whom it is required to comprise participate
in the vote. A resolution relating to an agenda item
not included in the invitation is only valid if none
of the members of the Supervisory Board who were
present at the meeting object to the resolution and if
a minimum of two-thirds of the members are present.
The Chairman of the Supervisory Board coordinates
work within the Supervisory Board, convenes and
chairs its meetings, handles the external affairs of the
Supervisory Board and represents it before the Board
of Management.
The Supervisory Board holds a minimum of two meet-
ings per calendar half-year. Normally, five plenary
meetings are held per calendar year. One meeting each
year is planned to extend to several days and is used,
among other things, to enable an in-depth exchange on
strategic and technological matters. The main topics of
meetings in the period under report are summarised
in the Report of the Supervisory Board. Shareholder
representatives and employee representatives generally
prepare Supervisory Board meetings separately and
occasionally with members of the Board of Manage-
ment. Members of the Supervisory Board are specif-
ically legally bound to maintain secrecy with respect
to confidential reports they receive and confidential
discussions in which they partake.
COMPOSITION AND WORK
PROCEDURES OF THE
SUPERVISORY BOARD OF
BMW AG AND ITS
COMMITTEES
BMW AG's Supervisory Board is composed of ten share-
holder representatives (elected by the Annual General
Meeting) and ten employee representatives (elected in
accordance with the Co-Determination Act). The ten
Supervisory Board members representing employees
comprise seven Company employees, including one
executive staff representative, and three members elect-
ed following nomination by unions. The Supervisory
Board has the task of advising and supervising the Board
of Management in its management of the BMW Group.
It is involved in all decisions of fundamental importance
for the BMW Group. The Supervisory Board appoints
the members of the Board of Management and decides
upon the level of compensation they receive. The Super-
visory Board can revoke appointments for important
Resolutions of the Supervisory Board are generally
passed by a simple majority. The German Co-determi-
nation Act contains specific legal requirements with
regard to majorities and technical procedures, particu-
larly with regard to the appointment and removal of
members of the Board of Management and the election
of Chairman or Deputy Chairman of the Supervisory
Board. In the event of a tied vote in the Supervisory
Board, the Chairman of the Supervisory Board has two
votes in a renewed vote if it also results in a tie.
Supervisory Board
reasons.
In practice, resolutions are regularly passed by the
Supervisory Board and its committees at meetings.
Supervisory Board members who are not present can
submit their vote via another Supervisory Board member
in written, fax or electronic form. This rule also applies
for the second vote of the Chairman of the Supervisory
Board. The Chairman of the Supervisory Board can also
grant a period of time in which all members not present
at a meeting may retrospectively vote. In special cases,
resolutions may also be passed outside of meetings, in
particular in writing, by fax or by electronic means.
Resolutions and meetings are recorded in minutes,
which are signed by the relevant Chairman.
Statement on
Corporate
Governance
Following the election of a new Supervisory Board
member, the Corporate Governance Officer informs
the new member of the main framework for performing
duties, in particular the BMW Group Corporate Gov-
ernance Code and individual contributions required in
circumstances which trigger reporting obligations or are
subject to Supervisory Board approval.
All members of the Supervisory Board of BMW AG take
care to ensure that they have sufficient time to perform
their mandate. If members of the Supervisory Board of
BMW AG are also members of the management board of
a listed company, they may not accept more than three
mandates on non-BMW Group supervisory boards of
listed companies or in other bodies with comparable
requirements.
202
201
Chairman
Dr.-Ing. Dr.-Ing. E. h.
Norbert Reithofer
Chairman
Harald Krüger
On behalf of the
Board of Management
Following its meetings, the Supervisory Board is generally
shown information on new vehicle models in the form
of a short presentation.
the Supervisory
Board of BMWAG
At the request of the Chairman, decisions can also be
taken outside of Board meetings if none of the Board
members object to this procedure. A meeting is quorate
if all Board of Management members are invited to the
meeting in good time. Members unable to attend any
particular meeting are entitled to vote in writing, by fax
or by telephone. Votes cast by telephone must be sub-
sequently confirmed in writing. Except in urgent cases,
matters relating to a division for which the responsible
Board member is not present will only be discussed and
decided
with that member's consent.
upon
→ Composition and
At its meetings, the Board of Management defines the
overall framework for developing business strategies
and the use of resources, takes decisions regarding
the implementation of strategies and deals with issues
of particular importance to the BMW Group. The full
Board also takes decisions at basic policy level relating
to the Group's automobile product strategies and
product projects, inasmuch as these are relevant for
all of the Group's brands. The Board of Management
and its committees may, as required and depending on
the subject matters being discussed, invite non-voting
advisers to participate at meetings.
On behalf of the
Terms of procedure approved by the Board of Manage-
ment contain a plan for the allocation of divisional
responsibilities among the individual Board members.
These terms of procedure also incorporate the prin-
ciple that the full Board of Management bears joint
responsibility for all matters of particular importance
and scope. In addition, members of the Board of
Management manage the relevant portfolio of duties
under their responsibility, whereby case-by-case
rules can be put in place for cross-divisional projects.
Board members continually provide the Chairman
of the Board of Management with all the required
information pertaining to major transactions and
developments within their sphere of responsibility.
The Chairman of the Board of Management coordi-
nates cross-divisional matters with the overall targets
and plans of the BMW Group, involving other Board
members to the extent that divisions within their area
of responsibility are affected.
The Board of Management makes its decisions at meet-
ings which are convened, coordinated and headed by
the Chairman of the Board of Management. Generally,
two to three Board meetings were held per month
during the financial year 2018.
Unless stipulated otherwise by law or in BMW AG's
statutes, the Board of Management makes decisions
based on a simple majority of votes cast at meetings.
Outside of Board meetings, decisions are taken on
the basis of a simple majority of Board members. In
the event of a tied vote, the Chairman of the Board
of Management has the casting vote. Any changes
to the Board's terms of procedure must be passed
unanimously. A Board meeting may only be held if
more than half of the Board members are present.
In the event that the Chairman of the Board of
Management is not present or is unable to attend
a meeting, the member of the Board responsible for
Finance will represent him.
Minutes are taken of all meetings and of the Board of
Management's resolutions and signed by the Chair-
man. Decisions taken by the Board of Management
are binding for all employees.
The rules relating to meetings and resolutions taken
by the full Board of Management are also applicable
for its committees.
Members of the Board of Management not represented
in a committee are provided with the agendas and
minutes of committee meetings. Committee matters
are dealt with in full Board meetings if the committee
considers it necessary or at the request of a member
of the Board of Management.
A secretariat for Board of Management matters has
been established to assist the Chairman and other
Board members with the preparation and follow-up
work connected with Board meetings.
The Operations Committee generally meets every
two weeks. At these meetings, decisions are reached
concerning automobile product projects, based on the
strategic orientation and decision-making framework
stipulated at Board of Management meetings. The
Operations Committee has three members who are
entitled to vote at meetings, namely the Board member
for Development (who also chairs the meetings), the
Board member for Production and the Board member
responsible for Purchasing and the Supplier Network.
Up to 28 February 2018, the Board member for Sales
and Brand BMW and Aftersales BMW Group as well
as the Board member for MINI, Rolls-Royce, BMW
Motorrad, Customer Engagement and Digital Business
Innovation BMW were also members of the Operations
Committee. If the committee chairman is not present
or unable to attend, meetings are chaired by the Board
member for Production. The Head of Corporate Qual-
ity as well as the Head of Maturity Management, Sign
Off and Product Validation participate in Operations
Committee meetings in an advisory capacity.
The full Board usually convenes up to twice a year
in its function as Sustainability Board in order to
define strategy and use of resources with regard to
sustainability and decide upon measures to imple-
ment that strategy. The Head of Corporate Affairs
and the Representative for Sustainability and Envi-
ronmental Protection participate in these meetings
in an advisory capacity.
The Board's Committee for Executive Management
Matters deals with corporate issues affecting executive
managers of the BMW Group, either in their entirety or
individually (such as potential candidates for executive
management or nominations for senior management
positions). This committee has, firstly, an advisory and
preparatory role (e.g. in connection with fundamen-
tal issues relating to human resources policies, such
as compensation systems and planning, personnel
development and tools for assessing performance)
and secondly the function of a decision-making body
(e.g. the appointment of senior executives).
The Committee has two members who are entitled to
vote at meetings, namely the Chairman of the Board
of Management (who also chairs the meetings) and
the Board member for Human Resources. The Head
of Human Resources Management and Services as
well as the Head of Human Resources Executive
Management also participate in these meetings in
an advisory function. In addition, further participants
can be invited when needed for special topics. At
the request of the Chairman, resolutions may also
be passed outside of committee meetings by casting
votes in writing, by fax or by telephone if the other
member entitled to vote does not object immediately.
Normally, the Committee for Executive Management
Matters convenes between five and ten times a year.
The Board of Management is represented by its Chair-
man in its dealings with the Supervisory Board. The
Chairman of the Board of Management maintains regu-
lar contact with the Chairman of the Supervisory Board
and keeps him informed of all important matters. The
Supervisory Board has passed a resolution specifying
the information and reporting duties of the Board of
Management. As a general rule, in the case of reports
required by law, the Board of Management submits
its reports to the Supervisory Board in writing. To the
greatest extent possible, documents required as a basis
for taking decisions are sent to the members of the
Supervisory Board in good time prior to the relevant
meeting. Regarding transactions of fundamental
importance, the Supervisory Board has resolved that
its specific approval is required. Whenever necessary,
the Chairman of the Board of Management obtains
the approval of the Supervisory Board and ensures
that reporting duties to the Supervisory Board are
complied with. The Chairman is supported by all
members of the Board of Management in the ful-
filment of these tasks. The fundamental principle
followed when reporting to the Supervisory Board
is that the information should be provided regularly,
comprehensively and without delay regarding all
significant matters relating to planning, business
performance, risk exposures, risk management and
compliance, as well as any major variances between
actual business development and plans and targets,
and the relevant reasons.
207
208
Statement on
Corporate
Governance
Work Procedures of
Bayerische Motoren Werke
Aktiengesellschaft
→ Page 203
Furthermore, in its draft revision of the Code
dated 25 October 2018 (published on 6 Novem-
ber 2018), the Government Commission on the
German Corporate Governance Code has now
proposed to delete the aforementioned recom-
mendation, as the planned amendment to the
German Stock Corporation Act to implement the
second EU Shareholder Rights Directive con-
tains comprehensive and detailed requirements
for compensation reports, thus obviating the
need for recommendations in the Code. The cor-
responding amendments to the Code are due
to be made in the course of the financial year
2019. Continuity of reporting is therefore a fur-
ther argument for not using the model tables as
a one-off solution in the BMW Group's Compen-
sation Report for the financial year 2018 prior
to the new statutory reporting requirements
coming into force.
4
4
→ Page 240 Independent Auditor's Report
→ Page 239 Responsibility Statement by the Company's
Legal Representatives
(Part of the Combined Management Report)
→Page 223 Compensation Report
→Page 218 Compliance in the BMW Group
Practices Applied beyond Mandatory Requirements
→Page 215 Disclosures Pursuant to the Act on Equal Gender Participation
→Page 216 Information on Corporate Governance
of BMW AG and its Committees
→ Page 208 Composition and Work Procedures of the Supervisory Board
Composition and Work Procedures of the Board of Management
of BMW AG and its Committees
→ Page 206
Members of the Supervisory Board
→ Page 202
of the Supervisory Board Pursuant to § 161 AktG
Members of the Board of Management
→Page 200 Statement on Corporate Governance
(Part of the Combined Management Report)
→ Page 200 Information on the Company's Governing Constitution
→Page 201 Declaration of the Board of Management and
CORPORATE
GOVERNANCE
The Board of Management consults and takes decisions as
a collegiate body in meetings of the Board of Management,
the Sustainability Board, the Operations Committee and
the Committee for Executive Management Matters.
Company's Govern-
ing Constitution
Board of
Management
Supervisory Board
Compliance
Compensation
4. It is recommended in section 4.2.5 sentences 5
and 6 of the Code that specified information
pertaining to management board compensation
be disclosed in a Compensation Report. These
recommendations have not been and will not be
complied with, due to uncertainties as to whether
the additional disclosure of this information and
the use of model tables would add to the de-
sired transparency and understandability of the
BMW Group's Compensation Report in accord-
ance with generally applicable financial report-
ing requirements (see section 4.2.5 sentence 3
of the Code).
3. It is recommended in section 4.2.3 sentence 9 of
the Code that subsequent amendments to per-
formance targets or comparison parameters for
variable remuneration components relating to
the Board of Management shall be excluded. As
previously reported, this recommendation was
deviated from on a one-time basis in order to im-
plement the new compensation system with
effect from the financial year 2018, rather than
with effect from the financial year 2020. Accor-
dingly, it was necessary to cancel the targets
previously set for the variable remuneration com-
ponents for the financial years 2018 and 2019
and replace them for the financial year 2018 on-
wards with targets based on the new compen-
sation system. The recommendation will, however,
be complied with again in the future.
2. In future, BMW AG will comply with all the recom-
mendations published officially in the Federal
Gazette on 24 April 2017 (Code version dated
7 February 2017), with the exception of section
4.2.5 sentences 5 and 6.
1. Since the last Declaration was issued in De-
cember 2017, BMW AG has complied with all the
recommendations published officially in the
Federal Gazette on 24 April 2017 (Code version
dated 7 February 2017) with the exception - as
previously reported - of section 4.2.3 sentence 9
and section 4.2.5 sentences 5 and 6.
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft
("BMW AG") declare the following regarding the
recommendations of the "Government Commission
on the German Corporate Governance Code":
Declaration of the Board of Management and the
Supervisory Board of Bayerische Motoren Werke
Aktiengesellschaft regarding the recommenda-
tions of the "Government Commission on the
German Corporate Governance Code" Pursuant
to § 161 German Stock Corporation Act
The close interaction between Board of Management
and Supervisory Board in the interests of the Company
as described above is also known as a "two-tier board
structure".
The designation BMW Group comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and
group entities. BMW AG is a stock corporation
(Aktiengesellschaft) within the meaning of the
German Stock Corporation Act (Aktiengesetz) and
has its registered office in Munich, Germany. It has
three representative bodies: the Annual General
Meeting, the Supervisory Board and the Board of
Management. The duties and powers of those bodies
derive from the Stock Corporation Act and the
Articles of Incorporation of BMW AG. Shareholders,
as the owners of the business, exercise their rights at
the Annual General Meeting. The Annual General
Meeting decides in particular on the utilisation of
unappropriated profit, the ratification of the acts of
the members of the Board of Management and the
Supervisory Board, the appointment of the external
auditor, changes to the Articles of Incorporation and
certain capital measures, and elects the shareholders'
representatives to the Supervisory Board. The Board of
Management is responsible for managing the Company
and is monitored and advised by the Supervisory
Board. The Supervisory Board appoints the members
of the Board of Management and can, for an important
reason, revoke an appointment at any time. The Board
of Management informs the Supervisory Board and
reports to it regularly, promptly and comprehensively,
in line with the principles of conscientious and faithful
accountability and in accordance with the law and the
reporting duties determined by the Supervisory Board.
The Board of Management requires the approval of
the Supervisory Board for certain major business
proceedings. The Supervisory Board is not, however,
authorised to undertake management measures itself.
its
Munich, December 2018
Governing Constitution
Good corporate governance - acting in accordance
with the principles of responsible management aimed
at increasing the value of the business on a sustainable
basis - is an essential requirement for the BMW Group
embracing all areas of the business. Corporate culture
within the BMW Group is founded on transparent
reporting and communication, corporate governance
in the interest of all stakeholders, trustful cooperation
both of the Board of Management and the Supervisory
Board as well as among employees, and compliance
with applicable law. The Board of Management and
Supervisory Board report in this statement on impor-
tant aspects of corporate governance pursuant to
§§ 289 f, § 315 d HGB and section 3.10 of the German
Corporate Governance Code (GCGC).
CORPORATE
GOVERNANCE
STATEMENT ON
Constitution
Governing
→Information on the
Company's
Statement on
Corporate
Governance
200
Report
Information on the Company's
When a new member is appointed to the Board of Manage-
ment, the BMW Corporate Governance Officer is required
to inform that new member of the framework conditions
under which their duties are to be carried out in
par-
ticular those enshrined in the BMW Group's Corporate
Governance Code - as well as the duty to cooperate when
a transaction or event triggers reporting requirements or
requires the approval of the Supervisory Board.
Corporate
Governance
During their period of employment for BMW AG, mem-
bers of the Board of Management are bound by a com-
prehensive non-competition clause. They are required to
act in the enterprise's best interests and may not pursue
personal interests in their decisions or take advantage
of business opportunities intended for the benefit of
the enterprise. They may undertake ancillary activi-
ties, particularly supervisory board mandates outside
the BMW Group, only with the prior approval of the
Supervisory Board's Personnel Committee. Individual
members of the Board of Management of BMW AG
are required to disclose any conflicts of interest to the
Supervisory Board without delay and inform the other
members of the Board of Management accordingly.
Mandates
Siemens Aktiengesellschaft
Henkel AG & Co. KGaA (Shareholders' Committee)
Dr. jur. Karl-Ludwig Kley (*1951)
Member since 2008
Deputy Chairman
Chairman of the Supervisory Board of E.ON SE
and of the Deutsche Lufthansa Aktiengesellschaft
Mandates
― E.ON SE (Chairman)
Deutsche Lufthansa Aktiengesellschaft (Chairman)
Verizon Communications Inc. (until 3 May 2018)
Christiane Benner² (*1968)
Member since 2014
Second Chairman of IG Metall
Mandates
(Deputy Chairman, since 1 March 2018)
Manfred Schoch¹ (*1955)
Member since 1988
Deputy Chairman
Chairman of the European
and General Works Council
Industrial Engineer
Dr. rer. pol. Kurt Bock (*1958)
Member since 17 May 2018
Management of BMW AG
Former Chairman of the Board of
Former Chairman of the Board of
Member since 2015
Milagros Caiña Carreiro-Andree (*1962)
Human Resources, Industrial Relations Director
Markus Duesmann (*1969)
Purchasing and Supplier Network
(until 24 July 2018)
Dr.-Ing. Andreas Wendt (*1958)
Purchasing and Supplier Network
(since 1 October 2018)
Mandates
Pöttinger Landtechnik GmbH
(Chairman, until 29 October 2018)
Klaus Fröhlich (*1960)
Development
Mandates
E.ON SE (since 9 May 2018)
HERE International B.V. (until 28 February 2018)
Oliver Zipse (*1964)
Production
Mandates
BMW (South Africa) (Pty) Ltd. (Chairman)
BMW Motoren GmbH (Chairman)
Pieter Nota (*1964)
Sales and Brand BMW, Aftersales BMW Group
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
General Counsel:
Dr. Jürgen Reul
MEMBERS OF THE
SUPERVISORY BOARD
Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer (*1956)
Chairman
Rolls-Royce Motor Cars Limited (Chairman)
Management of BASF SE
Fresenius Management SE
1 Employee representatives (company employees).
2 Employee representatives (union representatives).
3 Employee representatives (members of senior management).
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
203
204
Statement on
Corporate
Governance
→ Members of the
Supervisory Board
Dr.-Ing. Heinrich Hiesinger (*1960)
Member since 2017
Former Chairman of the Board of Management
of thyssenkrupp AG
Mandates
thyssenkrupp Elevator AG
(Chairman, until 6 July 2018)
thyssenkrupp Steel Europe AG
(Chairman, until 6 July 2018)
thyssenkrupp (China) Ltd.
(Chairman, until 6 July 2018)
Dr. h.c. Robert W. Lane (*1949)
Member since 2009 until 17 May 2018
Former Chairman and Chief Executive Officer of
Deere & Company
Horst Lischka² (*1963)
Member since 2009
-
Head of Purchasing Indirect Goods and Services,
Raw Material, Production Partner
Mandates
Member since 2017
Chairman of the Works Council, Dingolfing
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft (since 25 April 2018)
Stefan Quandt (*1966)
Member since 1997
Deputy Chairman
Entrepreneur
Mandates
DELTON Health AG (Chairman)
DELTON Technology SE
(Chairman, since 19 November 2018)
AQTON SE (Chairman)
Entrust Datacard Corp.
Franz Haniel (*1955)
Member since 2004
Entrepreneur
Mandates
- DELTON Health AG
-
(Deputy Chairman, until 31 December 2018)
Franz Haniel & Cie. GmbH (Chairman)
Heraeus Holding GmbH
TBG AG
Stefan Schmid¹ (*1965)
Member since 2007
Deputy Chairman
Ralf Hattler³ (*1968)
Scout24 AG
― Continental AG
Customer Engagement and Digital Business
Innovation BMW Group
2 Employee representatives (union representatives).
3 Employee representatives (members of senior management).
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
205
206
Statement on
Corporate
Governance
→Composition and
Work Procedures
of the Board of
1 Employee representatives (company employees).
Management of
BMW AG and its
Committees
The Board of Management determines the strategic
orientation of the enterprise, agrees upon it with the
Supervisory Board and ensures its implementation.
The Board of Management is also responsible for
ensuring that all provisions of law and internal regula-
tions are complied with. Further details on compliance
within the BMW Group are available in the Corporate
Governance section of the Annual Report. The Board
of Management is also responsible for ensuring that
appropriate risk management and risk controlling
systems are in place throughout the Group.
(since 7 March 2018)
Johnson Controls International plc
(since 23 April 2018)
Springer Nature AG & Co. KGaA
Deutsche Post AG
Mandates
Member of supervisory boards
The Board of Management manages the enterprise
under its own responsibility, acting in the best inter-
ests of the BMW Group with the aim of achieving
sustainable growth in value. The interests of share-
holders, employees and other stakeholders are also
taken into account in the pursuit of this aim.
Chairman of the Works Council, Regensburg
Member since 2001
Werner Zierer¹ (*1959)
Mandates
Russell Reynolds Associates Inc.
(since 19 January 2019)
Employee representatives (company employees).
2 Employee representatives (union representatives).
³ Employee representatives (members of senior management).
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
Dr. Dominique Mohabeer¹ (*1963)
Member since 2012
Member of the Works Council, Munich
Brigitte Rödig¹ (*1963)
Member since 2013
Member of the Works Council, Dingolfing
Jürgen Wechsler² (*1955)
Member since 2011
Former Regional Head of IG Metall Bavaria
Mandates
Schaeffler AG (Deputy Chairman)
Siemens Healthcare GmbH (Deputy Chairman)
Member since 2015
Simone Menne (*1960)
COMPOSITION AND WORK
PROCEDURES OF THE
BOARD OF MANAGEMENT
OF BMW AG AND ITS
COMMITTEES
Dr. Nicolas Peter (*1962)
Prof. Dr. rer. nat. Dr. h.c. Reinhard Hüttl (*1957)
Städtisches Klinikum München GmbH
KraussMaffei Group GmbH
Mandates
General Representative of IG Metall Munich
→Members of the
Board of
Management
→ Members of the
Supervisory Board
MEMBERS OF THE
BOARD OF MANAGEMENT
Robert Bosch GmbH
Finance
Mandates
BMW Brilliance Automotive Ltd.
(Deputy Chairman)
Harald Krüger (*1965)
Chairman
Mandates
Deutsche Telekom AG (since 17 May 2018)
Peter Schwarzenbauer (*1959)
MINI, Rolls-Royce, BMW Motorrad,
Member since 2008
Chairman of the Executive Board
MAN Truck & Bus AG
Deutsches GeoForschungsZentrum - GFZ
University Professor
Nestlé Deutschland AG
Infineon Technologies AG
Mandates
Allensbach Gesellschaft zum Studium der
öffentlichen Meinung mbH
Director of Institut für Demoskopie
Prof. Dr. rer. pol. Renate Köcher (*1952)
Member since 2008
of Helmholtz-Zentrum Potsdam
ALTANA AG (Deputy Chairman)
SGL Carbon SE (Chairman)
UnternehmerTUM GmbH (Chairman)
Member since 1999
Willibald Löw¹ (*1956)
Entrepreneur
Member since 1997
Susanne Klatten (*1962)
Chairman of the Works Council, Landshut
Mandates
-
-
Four members of the Supervisory Board should
if possible have international experience or
specialist knowledge of one or more non-German
markets important to the BMW Group.
To this end, the Supervisory Board of BMW AG has
approved the following objectives for its composition,
including a competency profile. These objectives also
describe the concept for achieving diversity in the com-
position of the Supervisory Board (diversity concept):
The Supervisory Board is to be composed in such a way
that its members collectively possess the knowledge,
skills and experience required to properly perform
its tasks.
Composition objectives of the Supervisory Board,
competency profile, diversity concept
The Board of Management should collectively
have extensive experience in the fields of devel-
opment, production, sales and marketing, fi-
nances and human resources.
In accordance with the recommendation of the
German Corporate Governance Code, the
Supervisory Board has set a standard age limit
for Board of Management membership. This
aims at a retirement age of 60. Consideration is
also given to achieving an appropriate age mix
within the Board of Management.
-
The Supervisory Board has stipulated a target
for the proportion of women on the Board of
Management. This is outlined in the section
"Disclosures pursuant to the Act on Equal
Gender Participation". The Board of Management
reports to the Personnel Committee and the
Supervisory Board at regular intervals on the
proportion and development of women in
senior management positions, in particular at
executive levels.
-
The members of the Board of Management should
have a long-standing track record of manage-
ment experience, ideally with experience in
different professional fields.
At least two members should have international
management experience.
At least two members of the Board of Manage-
ment should have a technical background.
When selecting an individual for a particular Board of
Management position, the Supervisory Board decides
in the best interests of the Group and after due con-
sideration of all relevant circumstances. The Personnel
Committee takes into account the diversity concept
described above when selecting candidates, in order
to ensure that the Board of Management has a diverse
composition. In the Supervisory Board's opinion,
the composition of the Board of Management as at
31 December 2018 is in line with the defined diversity
concept. In particular, the Board of Management has
one female member and the various work, educational
and life experiences of the members of the Board of
Management complement each other. For ease of
comparison with the diversity concept, the curricula
vitae of members of the Board of Management are
available on the Internet.
The Supervisory Board should include if possible
seven members who have acquired in-depth
knowledge and experience within the
BMW Group, though no more than two former
members of the Board of Management.
An age limit for membership of the Supervisory
Board of 70 years is generally to be applied. In
exceptional cases, members may remain on the
Board until the end of the next Annual General
Meeting after reaching the age of 73, in order to
fulfil legal requirements or to facilitate smooth
succession in the case of key roles or specialist
qualifications.
Composition of the Presiding Board and the committees
is based on legal requirements, the Articles of Incor-
poration, rules of procedure and corporate governance
principles, while taking into particular account the
expertise of Board members.
Two independent members of the Supervisory
Board should have expert knowledge of account-
ing or auditing.
Of the 20 members of the Supervisory Board at
least 12 should be independent members within
the meaning of section 5.4.2 of the German
Corporate Governance Code, including at least
six as representatives of the Company's share-
holders.
When seeking qualified individuals for the Super-
visory Board whose specialist skills and leader-
ship qualities are most likely to strengthen the
Board as a whole, consideration is also to be
given to diversity. When preparing nominations,
the extent to which the work of the Supervisory
Board benefits from diversified professional and
personal backgrounds (including international
aspects) and from an appropriate gender repre-
sentation is also to be taken into account. It is
the joint responsibility of all those participating
in the nomination and election process to ensure
that qualified women are considered for Super-
visory Board membership.
Three members of the Supervisory Board should
if possible be persons from the fields of business,
science or research who have experience in areas
relevant to the BMW Group, for example chem-
istry, energy supply, information technology, or
who have specialist knowledge in fields relevant
for the future of the BMW Group, for example
customer requirements, mobility, resources or
sustainability.
Three of the shareholder representatives in the
Supervisory Board should if possible be entrepre-
neurs or persons who have previous experience in
the management or supervision of another
medium or large-sized company.
-
The Supervisory Board regularly assesses the efficiency
of its activities. To this end, shared discussion is con-
ducted within the Supervisory Board and individual
meetings held with the Chairman, prepared on the basis
of a questionnaire sent in advance, which is drawn up
by the Supervisory Board.
Members of the Supervisory Board of BMW AG are
obliged to act in the best interest of the organisation as
a whole. They may not pursue personal interests in their
decisions or take advantage of business opportunities
intended to benefit the BMW Group.
Members of the Supervisory Board are obliged to inform
the Supervisory Board of any conflicts of interest, in
particular those resulting from a consulting or executive
role with clients, suppliers, lenders or other business
partners, so that the Supervisory Board can report to
the shareholders at the Annual General Meeting on
its treatment of the issue. Material and non-temporary
conflicts of interest of a Supervisory Board member
result in a termination of mandate.
In proposing candidates for election as members of the
Supervisory Board, care is taken that the Supervisory
Board collectively has the required knowledge, skills and
expertise to perform its tasks appropriately.
→ see Report of
the Supervisory
Board for the
number of
meetings during
the year 2018
→ The Supervisory Board has stated specific targets → see section
for its composition, agreed to a diversity concept and
determined a competency profile.
Members of the Supervisory Board are responsible for
undertaking any training required for the performance
of their duties. The Company provides them with appro-
priate assistance therein.
→ Taking into account the specific circumstances of
the BMW Group and the number of Board members,
the Supervisory Board has set up a Presiding Board
and four committees: the Personnel Committee, the
Audit Committee, the Nomination Committee and the
Mediation Committee. These serve to raise the efficiency
of the Supervisory Board's work and facilitate handling
of complex issues. Establishment and function of a
mediation committee is prescribed by law. Committee
chairpersons report in detail on committee work at each
plenary meeting of the Supervisory Board.
"Composition
targets for the
Supervisory
Board"
-
- discussion of interim reports with Board of Management prior to publication
preparation of the Supervisory Board's audit of the non-financial reporting, preparation of
the selection of the auditor for non-financial reporting and engagement of the auditor
Board of Management succession planning,
diversity concept
preparation of decisions relating to the appointment and revocation of appointment of
members of the Board of Management, the compensation and the regular review of the
Board of Management's compensation system
-
PERSONNEL COMMITTEE
Norbert Reithofer¹
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Members
― activities based on terms of procedure
preparation of Supervisory Board meetings to the extent that the subject matter to be
discussed does not fall within the remit of a committee
-
PRESIDING BOARD
Principal duties, basis for activities
and their composition
Overview of Supervisory Board committees
The establishment and composition of a mediation com-
mittee are prescribed by the German Co-determination
Act. The Mediation Committee has the task of making
proposals to the Supervisory Board if a resolution for the
appointment of a member of the Board of Management
has not been carried by the necessary two-thirds major-
ity of members' votes. In accordance with statutory
requirements, the Mediation Committee comprises the
Chairman and the Deputy Chairman of the Supervisory
Board, one member selected by shareholder represent-
atives and one by employee representatives.
The Nomination Committee is charged with the task of
finding suitable candidates for election to the Super-
visory Board as shareholder representatives and to
propose them to the Supervisory Board for election at
the Annual General Meeting. In line with the recom-
mendations of the German Corporate Governance Code,
the Nomination Committee is exclusively composed of
shareholder representatives.
In line with the recommendations of the German Cor-
porate Governance Code, the Chairman of the Audit
Committee is independent, and not a former Chairman
of the Board of Management, and has special knowledge
and experience in the application of financial reporting
standards and internal control procedures. He also
fulfils the requirement of being a financial expert as
defined by § 100 (5) and § 107 (4) AktG.
The Audit Committee deals in particular with the super-
vision of the financial reporting process, effectiveness
of the internal control system, the risk management
system, as well as the performance of Supervisory Board
duties in connection with audits pursuant to § 32 of the
German Securities Trading Act (WPHG). It also oversees
the audit of financial statements, auditor independence
and any additional work performed by the auditor. It
prepares the proposal for the election of the auditor at
the Annual General Meeting, makes a relevant recom-
mendation, issues the audit engagement and agrees on
additional areas of audit focus as well as the auditor's fee.
The Audit Committee prepares the Supervisory Board's
resolution relating to the Company and Group Financial
Statements and discusses interim reports with the Board
of Management prior to publication. Additionally, the
Audit Committee deals with the non-financial report-
ing, prepares the audit of the Supervisory Board and
the engagement of an external auditor and issues the
audit engagement. Furthermore, the Audit Committee
deals with the supervision of the internal audit system
and compliance as well as the audit and supervision
of any needs for action related to possible violations
of duties by members of the Board of Management in
preparation of a resolution in the Supervisory Board.
The Audit Committee also decides on the Supervisory
Board's agreement on the use of Authorised Capital
2014 (Article 4 no. 5 of the Articles of Incorporation)
and on amendments to the Articles of Incorporation
which only affect its wording.
The Personnel Committee prepares decisions of the
Supervisory Board with regard to the appointment and,
where applicable, removal of members of the Board of
Management and, together with the full Supervisory
Board and the Board of Management, ensures long-
term succession planning. The Personnel Committee
also
prepares s decisions of the Supervisory Board with
regard to Board of Management compensation and the
regular review of the compensation system for the Board
of Management. In conjunction with resolutions taken
by the Supervisory Board regarding the compensation
of the Board of Management, the Personnel Committee
is responsible for drawing up, amending and revoking
employment contracts or, when necessary, to prepare
and conclude other relevant contracts with members
of the Board of Management. In certain cases, the
Personnel Committee is also authorised to grant the
necessary approval of a business transaction on behalf of
the Supervisory Board. This includes cases of providing
loans to members of the Board of Management or Super-
visory Board, certain contractual arrangements with
members of the Supervisory Board, taking into account
related parties, as well as ancillary activities of members
of the Board of Management, in particular acceptance
of non-BMW Group supervisory board mandates.
As a general rule, members of the Supervisory
Board should not hold office for longer than
until the end of the Annual General Meeting at
which the resolution is passed ratifying the
member's activities for the 14th financial year
after the beginning of the member's first period
of office. This excludes the financial year in which
the first period of office began. This rule does
not apply to natural persons who either directly
or indirectly hold significant investments in the
Company. In the Company's interest, deviation
from the general maximum period is possible,
for instance in order to work towards another
composition target, in particular diversity of
gender and technical, professional and personal
backgrounds.
coordination work.
BMW AG ensures that the Supervisory Board and its
committees are appropriately equipped to carry out
their duties. This includes providing a central Supervi-
sory Board office to support the chairpersons in their
The Supervisory Board, the Presiding Board and com-
mittees also meet without the Board of Management
when necessary.
Members of the Supervisory Board may not delegate
their duties to others. However, the Supervisory Board,
the Presiding Board and the committees may call on
experts and informed persons to attend meetings and
advise on specific matters.
In line with the rules of procedure for the activities of
the plenum, the Supervisory Board has set out proce-
dural rules for the Presiding Board and committees.
Committees are quorate only when all members par-
ticipate. Committee resolutions are passed by a simple
majority, unless otherwise stipulated by law.
conclusion, amendment and revocation of employment contracts (in conjunction with
the resolutions taken by the Supervisory Board regarding the compensation of the Board
of Management) and other contracts with members of the Board of Management
― decisions relating to the approval of ancillary activities of Board of Management
→ The number of meetings held by the Presiding Board
and committees depends on requirements. The Pre-
siding Board, the Personnel Committee and the Audit
Committee generally hold several meetings in the course
of the year.
→ see "Overview
of Supervisory
Board commit-
tees and their
composition"
In accordance with rules of procedure, the Presiding
Board comprises the Chairman of the Supervisory Board
and Deputies. The Presiding Board prepares Superviso-
ry Board meetings to the extent that the subject matter
does not fall within the remit of a committee. This
includes, for example, preparing the annual Declaration
of Compliance with the German Corporate Governance
Code and assessment of Supervisory Board efficiency.
209
210
Statement on
Corporate
Governance
→ Composition and
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
According to the rules of procedure, the Chairman of the
Supervisory Board is, by virtue of this function, member
and Chairman of the Presiding Board, the Personnel
Committee and the Nomination Committee.
members, including acceptance of non-BMW Group supervisory mandates as well as the
approval of transactions requiring Supervisory Board approval by dint of law (e.g. loans
to Board of Management or Supervisory Board members)
― set up in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of procedure
Norbert Reithofer¹
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Norbert Reithofer¹
Susanne Klatten
Karl-Ludwig Kley
Stefan Quandt
(In line with the recommendations of the German Corporate Governance
Code, the Nomination Committee comprises only shareholder
representatives.)
MEDIATION COMMITTEE
-
proposal to Supervisory Board if resolution for appointment of Board of Management
member has not been carried by the necessary two-thirds majority of Supervisory Board
members' votes
- committee required by law
Norbert Reithofer
Manfred Schoch
Stefan Quandt
Stefan Schmid
Norbert Reithofer
Manfred Schoch
Stefan Quandt
Stefan Schmid
1 Chair.
2 (Independent) financial expert within the meaning of §§ 100 (5) and 107 (4) AktG, no. 5.3.2 GCGC.
211
212
→ Composition and
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
(In accordance with statutory requirements, the Mediation Committee
comprises the Chairman and Deputy Chairman of the Supervisory Board
and one member each selected by shareholder representatives and
employee representatives.)
The Supervisory Board, in collaboration with the
Personnel Committee and the Board of Management,
ensures long-term succession planning. In their
assessment of candidates for Board of Management
positions, the underlying suitability criteria applied
by the Supervisory Board are expertise in the relevant
function, outstanding leadership qualities, proven
track record and knowledge of the Company. The
Supervisory Board has adopted a diversity concept
for the composition of the Board of Management
which is also aligned with recommendations of the
German Corporate Governance Code. In considering
which individuals would best complement the Board
of Management, the Supervisory Board also takes
diversity into account. The criteria diversity is taken
by the Supervisory Board to encompass in particular
different, mutually complementary profiles, profes-
sional and life experiences also at the international
level and an appropriate gender representation. In
reaching its decisions, the Supervisory Board also
considers the following:
Karl-Ludwig Kley 1,2
― identification of suitable candidates (male/female) as shareholder representatives on the
Supervisory Board to be put forward for inclusion in the Supervisory Board's proposals for
election at the Annual General Meeting
AUDIT COMMITTEE
-
-
-
supervision of the financial reporting process, the effectiveness of the internal control
system, the risk management system, as well as the performance of Supervisory
Board duties in connection with audits pursuant to § 32 of the German Securities Trading
Act (WPHG)
supervision of external audit, in particular auditor independence and additional work
performed by external auditor
― establishment in accordance with the recommendation contained in the German Corpo-
rate Governance Code, activities based on terms of procedure
preparation of proposals for election of external auditor at Annual General Meeting,
engagement (recommendation) of external auditor and compliance of audit
engagement, determination of additional areas of audit emphasis and fee agreements
with external auditor
Group Financial Statements
― supervision of internal audit system and compliance as well as the audit and supervision of
any needs for action related to possible violations of duties by members of the Board of
Management in preparation of a resolution in the Supervisory Board
decision on approval for utilisation of Authorised Capital 2014
-
- amendments to Articles of Incorporation only affecting wording
― establishment in accordance with the recommendation contained in the
German Corporate Governance Code, activities based on terms of procedure
NOMINATION COMMITTEE
preparation of Supervisory Board's resolution on Company and
213
No persons carrying out directorship functions
or advisory tasks for important competitors of
the BMW Group may belong to the Supervisory
Board. In compliance with applicable law, mem-
bers of the Supervisory Board are to take care
that no persons will be nominated for election
for whom a significant, non-temporary conflict
of interests could arise due to other activities
and functions carried out by them outside the
BMW Group, in particular advisory activities
or directorships with customers, suppliers, credi-
tors or other business partners.
Statement on
Corporate
Governance
BEYOND MANDATORY
REQUIREMENTS
Core values and Principles of Action
Within the BMW Group, the Board of Management,
the Supervisory Board and the employees base their
actions on five core values which are the cornerstone
of the success of the BMW Group:
Responsibility
We take consistent decisions and commit to them
personally. This allows us to work freely and more
effectively.
Appreciation
We reflect on our actions, respect each other, offer
clear feedback and celebrate success.
Transparency
We acknowledge concerns and identify inconsisten-
cies in a constructive way. We act with integrity.
CORPORATE GOVERNANCE
PRACTICES APPLIED
Trust
Openness
We are excited by change and open to new opportu-
nities. We learn from our mistakes.
Social responsibility towards employees and
along the supplier chain
The BMW Group stands by its social responsibilities.
Our corporate culture combines the drive for success
with openness, trust and transparency. We are well
aware of our responsibility towards society. Socially
sustainable human resource policies and compliance
with social standards are based on various interna-
tionally recognised guidelines. The BMW Group is
committed to the OECD's guidelines for multinational
companies and the contents of the ICC Business
Charter for Sustainable Development. Details of the
contents of these guidelines and other relevant infor-
mation can be found at www.oecd.org and → www.iccwbo.org
and → www.ohchr.org. The Board of Management signed
the United Nations Global Compact in 2001 and, in
2005, together with employee representatives, issued
a Joint Declaration on Human Rights and Working
Conditions in the BMW Group. This Joint Declaration
was reconfirmed in 2010. With the signature of these
documents, we have given our commitment to abide
worldwide by internationally recognised human rights
and the fundamental working standards of the Inter-
national Labour Organization (ILO). These include
in particular freedom of employment, the principle
of non-discrimination, freedom of association and
the right to collective bargaining, the prohibition of
child labour, appropriate remuneration, regulated
working times and compliance with work and safety
regulations. In 2018 we published the BMW Codex
on Human Rights and Working Conditions, which
supplements the Declaration on Human Rights and
Working Conditions from 2010. The Codex is based
on a diligence process, which allows the BMW Group
to identify relevant aspects and define measures. It
reinforces attention to the consideration of human
rights and clarifies how the BMW Group promotes
human rights and implements the ILO Core Labour
Conventions globally in its business activity.
The complete text of the UN Global Compact and
the recommendations of the ILO and other relevant
information can be found at www.unglobalcompact.org and
→ www.ilo.org. The Joint Declaration on Human Rights
and Working Conditions in the BMW Group can
be found at www.bmwgroup.com under the menu items
"Downloads" and "Responsibility".
For the BMW Group, worldwide compliance of these
fundamental principles and rights is self-evident.
Since 2005 employees' awareness of this issue has
therefore been raised by means of regular internal
communications and training on recent developments
in this area. The "Compliance Contact" helpline
and the BMW Group SpeakUP Line are available to
employees wishing to raise queries or complaints
relating to human rights issues. With effect from 2016,
human rights have been incorporated as an integral
component of the BMW Group's worldwide Compli-
ance Management System, representing a further step
in the systematic implementation of the UN Guiding
Principles on Business and Human Rights.
Further information on social responsibility towards
employees can be found in the section "Workforce".
Sustainable business management can only be
effective, however, if it covers the entire value-added
chain. That is why the BMW Group not only sets high
standards for itself, but also expects its suppliers and
partners to meet the ecological and social standards it
sets and strives continually to improve the efficiency
of processes, measures and activities. For instance,
we consistently require our dealers and importers
to comply with ecological and social standards on a
contractual basis. Moreover, corresponding criteria
are embedded throughout the entire purchasing
system – including in enquiries to suppliers, in the
sector-wide OEM Sustainability Questionnaire, in our
purchasing terms and in our evaluation of suppli-
ers in order to promote sustainability aspects in
line with the BMW Group Sustainability Standard.
The BMW Group expects suppliers to ensure that
the BMW Group's sustainability criteria are also
adhered to by their sub-suppliers. A spot check of
supplier facilities is conducted with sustainability
audits and assessments. In 2017, the Human Rights
Contact Supply Chain was established for reporting of
sustainability infringements in the supply chain. Pur-
chasing terms and conditions and other information
relating to purchasing can be found in the publicly
available section of the BMW Group Partner Portal
at https://b2b.bmw.com.
We trust and rely on each other. This is essential if we
are to act swiftly and achieve our goals.
INFORMATION ON
Beyond Mandatory
Requirements
Practices Applied
214
Proportion of female executives within
management/function levels I and II
at BMW AG
→ 80
in %
.......................
10
8.0
7.8
The Act on Equal Participation of Women and Men
in Executive Positions in the Private and the Public
Sector ("Act on Equal Gender Participation") was
passed into German law in 2015.
In accordance with this legislation, the Supervisory
Board of BMW AG is required to set a target for the
proportion of women on its Board of Management
and a time frame for meeting this target. Likewise,
the Board of Management of BMW AG is required to
establish targets for the two executive management
levels below the Board of Management. As its target
for the Board of Management for the time frame from
1 January 2017 to 31 December 2020, the Supervisory
Board has stipulated that the Board of Management
should continue to have at least one female member.
Assuming that the Board of Management continues
to comprise eight members, this would correspond to
a proportion of at least 12.5%. At 31 December 2018,
the Board of Management had one female member
(12.5%). The Supervisory Board considers it desirable
to increase the proportion of women on the Board of
Management and fully supports the Board of Man-
agement's endeavours to increase the proportion of
women at the highest executive management levels
within the BMW Group.
For the time frame from 1 January 2017 to 31 Decem-
ber 2020, the Board of Management has set a target
range of 10.2% to 12.0% for the first level of execu-
tive management and 8% to 10% for the second. At
31 December 2018, the proportion of women within
the first executive management level stood at 8.0%
and at 7.8% within the second.
Function levell
Function level II
Diversity contributes to greater competitiveness and
innovation at the BMW Group. Working together in
mixed, complementary teams raises performance
levels and increases customer focus. Promoting an
appropriate gender ratio is seen as an essential com-
ponent of the BMW Group's diversity concept. Further
increasing the proportion of women therefore remains
an objective of the Board of Management.
The proportion of women in the workforce as a whole
increased again during the financial year under report,
as a result of long-term measures, dialogue and infor-
mation events. Further information on the topic of
diversity within the BMW Group can be found in the
section "Workforce".
215
216
Statement on
Corporate
Governance
→Information on Cor-
porate Governance
We also work in close partnership with our suppliers
and promote their commitment to sustainability.
217
Statement on
Corporate
Governance
Statement on
Corporate
Network
Compliance Instruments
of the BMW Group
Compliance Academy and Culture
Annual
Compliance
Reporting Run
Compliance Strategy
Legal Compliance
Monitoring and Trends
Compliance
Risks and
Preventive Efforts
Internal Rules
and Regulations
The Board of Management keeps track of and analyses
compliance-related developments and trends on
the basis of the Group's compliance reporting and
input from the BMW Group Compliance Committee.
Measures to improve the Compliance Management
System are initiated on the basis of identified
requirements.
The Chairman of the BMW Group Compliance
Committee keeps the Audit Committee (which is
part of the Supervisory Board) informed on the
current status of compliance activities within the
BMW Group as well as relevant proceedings both on
a regular and a case-by-case basis as the need arises.
Management level is defined in terms of functional
level and follows a comprehensive job evaluation
system based on Mercer.
DISCLOSURES PURSUANT
TO THE ACT ON EQUAL
GENDER PARTICIPATION -
TARGETS FOR THE PROPOR-
TION OF WOMEN ON THE
BOARD OF MANAGEMENT
AND AT EXECUTIVE MAN-
AGEMENT LEVELS I AND II
knowledge in subjects relevant for the future of the
BMW Group, such as customer requirements, mobility,
resources, sustainability and information technology.
For the purpose of assessing the independence of its
members, the Supervisory Board follows the recom-
mendations of the German Corporate Governance
Code. In the opinion of the Supervisory Board, nei-
ther ownership of a substantial shareholding in the
Company, or office as an employee representative, or
previous membership of the Board of Management,
rules out independence of a Supervisory Board mem-
ber. A substantial and not merely temporary conflict
of interests within the meaning of section 5.4.2 of
the German Corporate Governance Code does not
apply to any of the Supervisory Board members.
Employees holding office in the Supervisory Board
are protected by applicable law when performing their
duties. All other Supervisory Board members have a
sufficient degree of economic independence from the
Company. Business with entities in which the mem-
bers of the Supervisory Board carry out a significant
function is conducted on an arm's length basis. The
Supervisory Board has therefore concluded that all
of its members are independent. At the end of the
reporting period these are: Dr.-Ing. Norbert Reithofer,
Manfred Schoch, Stefan Quandt, Stefan Schmid,
Dr. Karl-Ludwig Kley, Christiane Benner, Dr. Kurt
Bock, Franz Haniel, Ralf Hattler, Dr.-Ing. Heinrich
Hiesinger, Prof. Dr. Reinhard Hüttl, Susanne Klatten,
Prof. Dr. Renate Köcher, Horst Lischka, Willibald Löw,
Simone Menne, Dr. Dominique Mohabeer, Brigitte
Rödig, Jürgen Wechsler and Werner Zierer. At least
three members meet the requirements of an inde-
pendent financial expert. These are Dr. Kurt Bock,
Dr. Karl-Ludwig Kley and Simone Menne. At the end
of the reporting period, the Supervisory Board had six
female members (30%), comprising three shareholder
representatives and three employee representatives.
The Supervisory Board has 14 male members (70%),
comprising seven shareholder representatives and
seven employee representatives. The Company there-
fore complies with the statutory gender quota of at
least 30% female members applicable in Germany
since 1 January 2016. At present, no member of the
Supervisory Board is older than 70 years.
In the Supervisory Board's opinion, its composition
as at 31 December 2018 fulfilled the composition
objectives detailed above. For ease of comparison
with composition targets, brief curricula vitae of
the current members of the Supervisory Board are
available on the Company's website at → www.bmwgroup.com.
Information relating to members' practised profes-
sions and mandates in other statutory supervisory
boards and equivalent national or foreign company
boards, including the length of periods of service on
the Supervisory Board, is provided in the section
Statement on Corporate Governance. Based on this
information, it is evident that the Supervisory Board of
BMW AG is highly diversified, with significantly more
than the targeted four members having international
experience or specialist knowledge with regard to one
or more of the non-German markets important to the
BMW Group. In-depth knowledge and experience
from within the Company are provided by seven
employee representatives, as well as the Chairman
of the Supervisory Board. Only one previous Board of
Management member holds office in the Supervisory
Board. At least four members of the Supervisory Board
have experience in managing another company. The
Supervisory Board also has three entrepreneurs as
members. Most of the members of the Supervisory
Board - including employee representatives - have
experience in supervising another medium-sized or
large company. Moreover, more than three members of
the Supervisory Board have experience and specialist
-
The time schedule set by the Supervisory Board for
achieving the above-mentioned composition targets is
the period up to 31 December 2019. The nomination
committee of the Supervisory Board already takes
into account the composition targets in its selection
of potential candidates as representatives of the share-
holders. This enables diversity in the composition of
the Supervisory Board and ensures that the Super-
visory Board collectively possesses the knowledge,
skills and experience required to properly perform
its duties. Proposals for nomination made by the
Supervisory Board to the Annual General Meeting -
insofar as they apply to shareholder Supervisory Board
members should take account of these objectives in
such a way that they can be achieved with the support
of the appropriate resolutions of the Annual General
Meeting. The Annual General Meeting is not bound
by proposed nominations for election. The voting
freedom of employees in the vote for the employee
members of the Supervisory Board is also protected.
Under the rules stipulated by the German Co-Determi-
nation Act, the Supervisory Board does not have
the right to nominate employee representatives for
election. The objectives which the Supervisory Board
has set itself with regard to its composition are there-
fore not intended to be instructions to those entitled
to vote or restrictions on their voting freedom.
Composition and
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
→ Disclosures Pursuant
to the Act on Equal
Gender Participation-
Targets for the
Proportion of Women
on the Board of
Management and at
Executive Manage-
ment Levels I and II
218
Company-wide Compliance
Compliance Processes
and IT Systems
Compliance Communication
Compliance Reporting
Governance
Compliance Case
Management
BMW Group
COMPLIANCE IN THE
BMW GROUP
BMW Group Compliance Management System
→ Compliance in the
Responsible and lawful conduct is fundamental to the
success of the BMW Group. It is an integral part of
our corporate culture and the reason why customers,
shareholders, business partners and the general public
place their trust in us. The Board of Management and
the employees of the BMW Group are obliged to act
responsibly and in compliance with applicable laws and
regulations. The BMW Group also expects its business
partners to conduct themselves in the same manner.
In order to protect itself systematically against legal
and reputational risks, the Board of Management
created a Compliance Committee several years ago,
mandated to establish a Compliance Management
System throughout the BMW Group.
The BMW Group Compliance Management System
consists of a coordinated set of instruments and topics
designed to ensure that the BMW Group, its repre-
sentative bodies, its managers and staff act in a lawful
manner. Particular emphasis is placed on measures to
ensure compliance with antitrust legislation and avoid
the risk of corruption or money laundering.
The BMW Group Compliance Committee comprises
the heads of the following departments: Legal Affairs,
Corporate and Governmental Affairs, Corporate
Audit, Group Reporting, Organisational Development
and Corporate Human Resources. It manages and
monitors activities necessary to avoid non-compliance
with the law, including, for example, legal monitoring,
internal compliance regulations, communications and
training activities, complaint and case management,
compliance reporting, compliance controls and follow-
ing through with sanctions in cases of non-compliance.
→ 81
The BMW Group Compliance Committee reports
regularly to the Board of Management on all compli-
ance-related issues, including the progress made in
refining the BMW Group Compliance Management
System, details of investigations performed, known
infringements of the law, sanctions imposed and cor-
rective/preventative measures implemented. This also
ensures that the Board of Management is immediately
notified of any cases of particular significance.
Supervisory Board BMW AG
Annual
Report
Board of Management BMW AG
Annual
Report
BMW Group Compliance Committee
Compliance Controls
BMW Group Compliance Committee ←
Office
Statement on
Corporate
Governance
→ Compliance in the
BMW Group
→ Compensation
Share-based compensation programmes for
employees and members of the Board of
Management
The share-based remuneration programme for qual-
ifying heads of department, introduced with effect
for financial years beginning after 1 January 2012, is
closely based on the programme for Board of Manage-
ment members and is aimed at rewarding a long-term,
entrepreneurial approach to running the business on
a sustainable basis.
Three share-based remuneration schemes were
in place at BMW AG during the year under report,
namely the Employee Share Programme (under which
entitled employees of BMW AG have been able to
participate in the enterprise's success since 1989 in
the form of non-voting shares of preferred stock), a
share-based remuneration programme for Board of
Management members, and a share-based remuner-
ation programme for senior heads of department
(relating in both cases to shares of common stock).
The share-based remuneration programme for Board
of Management members is described in detail in
the Compensation Report (see also the "Share-based
remuneration" section in the Compensation Report
and → note 41 to the Group Financial Statements).
Report
222
Compliance with and implementation of the com-
pliance rules and processes are audited regularly
by Corporate Audit and subjected to control checks
by Corporate Security and the BMW Group Compli-
ance Committee Office. As part of its regular activi-
ties, Corporate Audit carries out on-site audits. The
BMW Group Compliance Committee also engages
Corporate Audit to perform compliance-specific
checks. In addition, a BMW Group Compliance Spot
Check, a sample test specifically designed to identify
potential corruption risks, was carried out in 2018.
Antitrust Compliance Validation was another new
measure introduced in 2018 to identify and audit
possible antitrust risks at the Company. Compliance
control activities are coordinated by the BMW Group
Panel Compliance Controls. Any necessary follow-up
measures are organised by the BMW Group Compli-
ance Committee Office.
To ensure that the BMW Group complies with regu-
lations relating to insider information, the Board
of Management appointed an Ad-hoc Committee
back in 1994, consisting of representatives of various
specialist departments, whose members determine
whether information displays the characteristics
of publishable insider information and handle the
publication and legal notices required by law. All
persons who perform duties on behalf of BMW AG
and have access to insider information are included
in an insider list and informed of the duties arising
from insider rules.
Compliance is also an important factor in safeguard-
ing the future of the BMW Group workforce. With
this in mind, the Board of Management and the
national and international employee representative
bodies of the BMW Group have agreed on a binding
set of Joint Principles for Lawful Conduct. In doing
so, all parties involved made a commitment to the
principles contained in the BMW Group Legal Com-
pliance Code and to trustful cooperation in all matters
relating to compliance. Employee representatives are
therefore regularly involved in the process of refining
compliance measures within the BMW Group.
was updated in 2010. This was followed by systematic
introduction and continuous upgrading of measures
to protect human rights. These measures, which were
already firmly established within the organisation,
were integrated into the BMW Group's group-wide
Compliance Management System in 2016. A group-
wide human rights compliance assessment was
conducted in 2017. In the year under review, the
BMW Group published its Code on Human Rights
and Working Conditions, which clarifies how the
Joint Declaration on Human Rights and Working
Conditions at the BMW Group from 2010 should be
implemented. The Code confirms the BMW Group's
commitment to human rights and outlines how the
Company promotes human rights and implements
the core labour standards of the ILO.
The BMW Group stated its position clearly back in
2005, with the Joint Declaration on Human Rights
and Working Conditions at the BMW Group, which
The BMW Group is committed to respecting interna-
tionally recognised human rights, as set out in the
ten principles of the UN Global Compact and the
ILO Core Labour Conventions. The Company's due
diligence process is geared towards the UN Guiding
Principles on Business and Human Rights, focusing
on topics and areas of activity where it can leverage
its influence as a commercial enterprise.
It is essential for compliance in the BMW Group that
employees are aware of and comply with applicable
legal regulations. The BMW Group does not toler-
ate violations of the law by its employees. Culpable
violations of the law result in employment-contract
sanctions and may involve personal liability conse-
quences for the employee involved.
Managers, in particular, bear a high degree of respon-
sibility and must set a good example with regard to
preventing infringements. Managers throughout the
BMW Group acknowledge this principle by signing
a written declaration, in which they also undertake
to inform staff working for them of the content and
significance of the Legal Compliance Code, to convey
the values it embodies and make employees aware
of legal risks. Managers must, at regular intervals
and on their own initiative, verify compliance with
the law and communicate with staff on this issue. It
is important to signal to employees that they take
compliance risks seriously and that relevant infor-
mation is extremely valuable. In their dealings with
staff members, managers remain open to discussion
and listen to differing opinions. Any indication of
non-compliance with the law must be rigorously
investigated.
Through the group-wide reporting system, compli-
ance responsibles across all organisational units
of the BMW Group report on compliance-relevant
issues to the Compliance Committee on a regular
basis, and, if necessary, also on an ad hoc basis. This
includes reporting on the compliance status of the
relevant organisational units, on identified legal
risks and incidences of non-compliance, as well as
on sanctions and corrective/preventative measures
implemented.
The IT system used to verify customer integrity has
been expanded and has so far been introduced in
56 organisational units under enhanced anti-money
laundering measures.
The BMW Group also uses an IT-based Business Rela-
tions Compliance programme aimed at ensuring the
reliability of its business relations. Relevant business
partners are checked and evaluated with a view to
identifying potential compliance risks. These proce-
dures are particularly relevant for relations with sales
partners and service providers, such as agencies and
consultants. Depending on the results of the evalua-
tion, appropriate measures - such as communication
measures, training and possible monitoring – are
implemented to manage compliance risks.
Under the terms of the programme, participants give
a commitment to invest an amount equivalent to 20%
of their performance-based bonus in BMW common
stock and to hold the shares so acquired for a mini-
mum of four years. In return for this commitment,
BMW AG pays 100% of the investment amount as a net
subsidy. Once the four-year holding period require-
ment has been fulfilled, the participants receive - for
each three common stock shares held and at the
Company's option - one further share of common
stock or the equivalent amount in cash.
221
→ see
note 41
in %
31 and 41
Base salary
approx. 27
approx. 14
remuneration
Share-based
Pension contribution
approx. 8
For example, since 2017, all exchange activities with
competitors must be documented and approved
in a special compliance IT system. All employees
have access to IT tools to help them verify the legal
admissibility of and document benefits, especially in
connection with corporate hospitality.
→ 82
Overview of compensation system for financial
year 2018: simplified depiction of allocation to
cash benefits (target compensation) and pension
contribution¹
Compensation system, compensation components
Board of Management compensation comprises fixed
and variable cash elements as well as a share-based
component. The compensation components are
described in more detail below. Retirement benefits
remained unchanged in the revised compensation
system applicable from 1 January 2018.
→ Compensation
Report
Statement on
Corporate
Governance
→ see
notes
224
Revised Board of Management compensation
system for financial years from 2018 onwards
In December 2017, the Supervisory Board resolved
to revise the compensation system for financial years
from 2018 onwards. A focus was to align the remu-
neration structure even more strongly on sustainable
corporate development. The base salary, which had
remained at the same level since 1 January 2012, was
raised. The bonus was revised, both in terms of its
structure and the target setting. Target values for the
parameters Group net profit and post-tax return on
sales used to determine the earnings-related bonus
were adjusted in line with the Group's current business
plan and revised. A new multi-year and future-ori-
ented component was introduced in the form of a
performance cash plan, in order to further strengthen
the long-term orientation of the compensation system.
The overall upper limits are unchanged. The changes
apply to all members of the Board of Management
for financial years with effect from 1 January 2018.
compensation. It also ensures that variable compo-
nents based on multi-year criteria take account of
both positive and negative developments and that
the overall incentive is on the long term. As a general
rule, targets and comparative parameters may not
be changed retrospectively. In connection with the
revised compensation system for the Board of Manage-
ment (see the section Revised Board of Management
compensation system for financial years from 2018
onwards), the targets originally set for the variable
compensation components for the financial years 2018
and 2019 were revoked exceptionally and replaced
by the more ambitious targets stipulated in the new
compensation system applicable from 2018 onwards.
The Supervisory Board reviews the appropriateness
of the compensation system annually. In preparation,
the Personnel Committee also consults remuneration
studies. In order to check that the compensation sys-
tem is in line with peers, the Supervisory Board com-
pares compensation paid by other DAX companies.
For a vertical view, it compares Board compensation
with the salaries of executive managers and with the
average salaries of employees of BMW AG based in
Germany, also with regard to the development over
time. Recommendations made by an independent
external remuneration expert and suggestions made
by investors and analysts are also considered in the
consultative process.
The compensation of members of the Board of Man-
agement is determined by the full Supervisory Board
on the basis of performance criteria and after taking
into account any remuneration received from Group
companies. The principal performance criteria are
the tasks and exercise of mandate of the member of
the Board of Management, the economic situation as
well as the performance and future prospects of the
BMW Group. The Supervisory Board sets ambitious
and relevant parameters as the basis for variable
The compensation system for the Board of Management
at BMW AG is designed to encourage a management
approach focused on the sustainable development of
the BMW Group. A further principle of the compen-
sation system at the BMW Group is that of consistency.
This means that compensation systems for the Board
of Management, senior management and employees
of BMW AG are composed of similar elements. The
Supervisory Board performs an annual review to
ensure that all Board of Management compensation
components are appropriate, individually and in total,
and do not encourage the Board of Management to take
inappropriate risks for the BMW Group. At the same
time, the compensation model used for the Board of
Management needs to be attractive for highly qualified
executives in a competitive environment.
Principles of compensation
The full Supervisory Board is responsible for deter-
mining and regularly reviewing Board of Management
compensation. The preparation for these tasks is
undertaken by the Supervisory Board's Personnel
Committee.
Responsibilities
1. Board of Management compensation
The following section describes the principles governing
the compensation of the Board of Management for
financial years from 2018 onwards. A description of the
stipulations set out in the statutes relating to the com-
pensation of the Supervisory Board is also provided.
In addition to explaining the system of compensation,
details of components of compensation are also pro-
vided with figures. Furthermore, the compensation of
each individual member of the Board of Management
and the Supervisory Board for the financial year 2018
is disclosed with its component parts.
COMPENSATION REPORT
(PART OF THE COMBINED
MANAGEMENT REPORT)
Under the terms of the Employee Share Programme,
in 2017 employees were entitled to acquire packages
of 7, 12 or 17 shares of non-voting preferred stock
with a discount of €20.00 (2017: €20.00) per share
compared to the market price (average closing price
in Xetra trading during the period from 5 to 8 Novem-
ber 2018: €66.26). All employees of BMW AG and
its (directly or indirectly) wholly owned German
subsidiaries (if agreed to by the directors of those
entities) were entitled to participate in the programme.
Employees were required to have been in an uninter-
rupted employment relationship with BMW AG or the
relevant subsidiary for at least one year at the date
on which the allocation for the year was announced.
Shares of preferred stock acquired in conjunction
with the Employee Share Programme are subject to
a blocking period of four years, starting from 1 Janu-
ary of the year in which the employees acquired the
shares. A total of 521,524 (2017: 491,114) shares of
preferred stock were acquired by employees under the
programme in 2018; 521,500 (2017: 491,000) of these
shares were drawn from Authorised Capital 2014, the
remainder were acquired via the stock exchange or as
a result of cancelled employee purchases relating to
the previous year. Every year the Board of Mana-
gement of BMW AG decides whether the scheme is
to be continued. Further information is provided in
→ notes 31 and 41 to the Group Financial Statements.
223
In addition to these communication measures, appro-
priate IT systems also support BMW Group employees
with the assessment, approval and documentation of
compliance-relevant matters.
(sum of earnings-related bonus and performance-related bonus)
Quantitative criteria fixed in advance for a period of three financial years
Component
→ Compensation
Report
components
Overview of compensation system and compensation
Statement on
Corporate
Governance
228
227
A one-year post-contractual non-competition clause
has been agreed with Board members under specified
circumstances. During that one-year period, the for-
mer Board member is entitled to receive monthly
compensation equivalent to 60% of his or her
vious monthly basic remuneration, reduced by any
amount of other income exceeding 40% of the basic
remuneration. The Company may unilaterally waive
the requirement to comply with the post-contractual
non-competition clause.
pre-
In the event of death or invalidity, special rules apply for
early payment of performance cash plans and share-
based remuneration components based on the target
amounts. Insofar the service contract is prematurely
terminated and the Company has an extraordinary
right of termination, or if the Board member resigns
without the Company's agreement, entitlements to
amounts as yet unpaid relating to performance cash
plans and share-based remuneration are forfeited.
Other
BASE SALARY P.A.
At the end of the holding period, Board members receive
from the Company, as previously, for every three shares
of common stock held, either one additional share of
common stock or the cash equivalent, to be decided
at the Company's discretion (matching component).
Upper limits have been defined for both the invest-
ment component and the matching component (see
Overview of compensation system and compensation
components).
Share-based remuneration
Members of the Board of Management receive advance
payments out of the Performance Cash Plan 2018 and
the Performance Cash Plan 2019 in the years 2019
and 2020. At the end of evaluation period, the advance
payment will be set off or refunded, depending on the
amount then determined. The advance payment for
each year is €0.5 million for a Board member in the
first period of office and €0.6 million from the second
period of office or the fourth year of mandate. For the
Chairman of the Board of Management the amount
is €0.9 million p.a.
PCP FACTOR
- Capped at 180% of target amount
Cash payment at end of evaluation period
CASH PAYMENT
Value between 0.9 and 1.1
Individual contribution to profitability
Forecast trend in business development
area of responsibility
-
-
Members of the Board of Management receive a cash
compensation (investment component) for the specific
purpose of investment after tax and contributions in
BMW AG common stock. For financial years from 2018
onwards, the investment component corresponds to
45% of the gross bonus. Shares of common stock pur-
chased in this way by Board members are required to
be held for a period of four years.
Earnings factor is derived from Group net profit and Group post-tax return on sales
Parameter/measurement base
€0.80 million (1st period of office)
€0.30 million (from 2nd period of office or 4th year of mandate)
€0.54 million (Chairman of the Board of Management)
€0.255 million (1st period of office)
Base amount p.a. (30% target amount per bonus):
Formula: 30% target amount x earnings factor
Capped at 180% of target amount, see section Remuneration caps
-
-
-
-
€1.8 million (Chairman of the Board of Management)
-
Member of the Board of Management:
€1.0 million (from 2nd period of office or 4th year of mandate)
Target amount p.a. (at 100% target achievement):
(at 100% target achievement corresponds to 70% of target amount)
b) Performance-related bonus
(at 100% target achievement corresponds to 30% of target amount)
a) Earnings-related bonus
Performance
Bonus
VARIABLE REMUNERATION
€1.80 million
Chairman of the Board of Management:
€0.95 million (from 2nd period of office or 4th year of mandate)
€0.85 million (1st period of office)
Cash Plan
2 Simplified depiction of target amounts for the variable cash remuneration of the Chairman
of the Board of Management. Excludes basic salary, other remuneration and pension
contribution. Based on the assumption that the share price remains unchanged for the
calculation of the matching component.
Earn-
ings-based
component of
the bonus
approx. 8
Base amount p.a. (70% target amount per bonus):
Formula: 70% target amount x performance factor
- €0.972 million (Chairman of the Board of Management)
€0.54 million (from 2nd period of office or 4th year of mandate)
€0.459 million (1st period of office)
Maximum amount of earnings-related bonus p.a.:
Earnings factor may not exceed 1.8
The earnings factor is 1.0 in the event of a Group net profit of €5.3 billion and a post-tax
return on sales of 5.6%
- Status of compliance in each Board member's
Trend in business development
MULTI-YEAR PERFORMANCE FACTOR
Measurement based on
multi-year performance factor:
- Value between 0 and 1.8
Group post-tax return on sales
Based on Group net profit and
Average earnings factor
MULTI-YEAR EARNINGS FACTOR
PCP FACTOR
→ 86
PCP factor overview
TARGET AMOUNT
Performance Cash Plan overview
→ 85
In addition to the multi-year earnings factor, the
Supervisory Board also determines a multi-year
performance factor after the end of the evaluation
period. To this end, the Supervisory Board takes
account of in particular the business development
during the evaluation period, the forecast trend in the
business development for subsequent years, the Board
member's individual contribution to profitability and
the status of compliance within the Board member's
area of responsibility. The multi-year performance
factor can be between 0.9 and 1.1.
In order to determine the multi-year earnings factor,
an earnings factor is calculated for each year of the
three-year evaluation period and an average is then
calculated for the evaluation period. As for the earn-
ings-related component of the bonus, the earnings
factor for each individual year within the evaluation
period is determined on the basis of Group net profit
and post-tax return on sales for the relevant year.
The maximum earnings factor is 1.8. The underlying
measurement values are determined in advance for
a period of three financial years and may not be
changed retrospectively.
€0.595 million (1st period of office)
€0.70 million (from 2nd period of office or 4th year of mandate)
€1.26 million (Chairman of the Board of Management)
Primarily qualitative, non-financial criteria, expressed in terms of a performance factor
aimed at measuring the Board member's contribution to the sustainable and long-term
development and the future viability of the Company over a period of at least three finan-
cial years
Criteria for the performance factor include: innovation (economic and ecological, for
example in the reduction of carbon dioxide emissions), the Group's market position
compared to its competitors, customer focus, ability to adapt, leadership, corporate
culture, promotion of compliance and integrity, contribution to the Group's attractiveness
as an employer, progress in implementing the diversity concept, and activities that
foster corporate social responsibility
All compliance-related queries and concerns are
documented and followed up by the BMW Group
Compliance Committee Office using an electronic
Case Management System. If necessary, Corporate
Audit, Corporate Security, the legal departments or
the Works Council may be called upon to assist in
the investigation process.
in activities.
Employees also have the opportunity to submit infor-
mation about possible breaches of the law within the
Company anonymously and confidentially - via
the BMW Group SpeakUP Line. The BMW Group
SpeakUP Line is available in a total of 34 languages
and can be reached via local toll-free numbers in all
countries where BMW Group employees are engaged
Any member of staff with questions or concerns
relating to compliance is expected to discuss these
matters with their managers and with the relevant
departments within the BMW Group: in particular
with Legal Affairs, Corporate Audit and Corporate
Security. The BMW Group Compliance Contact serves
as a further point of contact for both employees and
non-employees for any questions regarding compli-
ance. Non-employees may also use this reporting
system. This communication may remain anonymous,
if preferred.
Additional compliance coaching was also imple-
mented for international sales and financial ser-
vice companies in local markets. These multi-day
classroom seminars strengthen the understanding
of compliance in selected organisational units
and enhance cooperation between the central
BMW Group Compliance Committee Office and
decentralised compliance functions. In 2018, market
coaching was conducted in Australia, Austria, Brazil,
Canada, China, Denmark, France, Germany, Italy,
the Netherlands, New Zealand, Russia, Singapore,
Sweden, Switzerland, Thailand and the US.
→ Compliance in the
BMW Group
Statement on
Corporate
Governance
220
219
Additional classroom training was also offered for key
compliance topics. The main emphasis here was on
providing training in antitrust law for employees who
participate in meetings with competitors or work with
suppliers or sales partners.
Online training in antitrust compliance was restruc-
tured in 2018. This training is also mandatory for
managers and staff whose functions or assignments
expose them to antitrust risks. A total of 22,000 man-
agers and associates worldwide have so far completed
antitrust compliance training and currently hold a
valid certificate.
구
matters.
Training plays an important role in reinforcing com-
pliance in the corporate culture. In 2018, training
management for online training in Compliance
Essentials and Antitrust Compliance, both available
in German and English, was switched to a central
training platform. These training modules must be
repeated by the required target groups every two
years and include a final test. Successful completion
of the test is confirmed by a certificate.
Compliance measures are determined and priori-
tised on the basis of a group-wide compliance risk
assessment that is updated annually. In 2018, this was
further refined to create a Compliance Risk and Per-
formance Management Concept, which supports the
recognition of compliance risks and the identification
of appropriate preventative IT measures. Through the
function Compliance Coordination in the Financial
Services segment the specific Compliance risks of
the segment are taken into consideration. Measures
are realised with the aid of a regionally structured
compliance management team covering all parts
of the BMW Group, which oversees a network of
around 240 compliance responsibles with 77 local
compliance functions.
The BMW Group Legal Compliance Code is supple-
mented by a whole range of internal policies,
guidelines and instructions, which in part reflect
applicable legislation. The BMW Group Policy "Cor-
ruption Prevention" and the BMW Group Instruc-
tion "Corporate Hospitality and Gifts" deserve
particular mention: these documents deal with
lawful handling of gifts and benefits and define
appropriate assessment criteria and approval pro-
cedures. The BMW Group Policy "Antitrust Com-
pliance" establishes binding rules of conduct for
all employees across the BMW Group to prevent
unlawful restriction of competition.
The various elements of the BMW Group Compli-
ance Management System are shown in the dia-
gram on the previous page and are applicable to all
BMW Group organisational units worldwide. The
BMW Group Legal Compliance Code forms the core
of the Group's Compliance Management System,
spelling out the Board of Management's commitment
to compliance as a joint responsibility ("tone from
the top"). The Code also explains the significance
of legal compliance and provides an overview of
the various areas of relevance for the BMW Group.
It is available both as a printed brochure in German
and English and for download. In addition, trans-
lations into 11 other languages are available in the
BMW Group intranet.
The BMW Group Compliance Committee Office is
supported by local compliance functions, especially
in connection with operational implementation of
compliance topics. Installation of 77 local compliance
functions was completed in 2018. Their activities
follow a standardised management process with
clearly defined tasks and responsibilities. The heads
of these functions serve as the Compliance Officer
for the respective organisational unit.
The decisions taken by the BMW Group Compliance
Committee are drafted in concept and implemented
operationally by the BMW Group Compliance Com-
mittee Office. The BMW Group Compliance Commit-
tee Office comprises 19 employees and is allocated in
organisational terms to the Chairman of the Board of
Management.
€2.268 million (Chairman of the Board of Management)
€1.26 million (from 2nd period of office or 4th year of mandate)
€1.071 million (1st period of office)
Maximum amount of performance-related bonus p.a.:
Performance factor may not exceed 1.8
More than 44,000 managers and staff worldwide have
so far received training in the basic principles of
compliance and are in possession of a valid training
certificate. Successful completion of the training pro-
gramme is mandatory for all BMW Group managers.
Appropriate processes are in place to ensure that
all newly recruited managers and promoted staff
undergo compliance training and repeat it every two
years. In this way, the BMW Group ensures nearly
full training coverage for its managers in compliance
of 1.8.
In order to determine the PCP factor, a multi-year
earnings factor is multiplied by a multi-year perfor-
mance factor. The PCP factor is capped at a maximum
The PCP evaluation period comprises three years, the
grant year and the two subsequent years. The PCP is
paid out after the end of the three-year evaluation period.
were below €3 billion or the post-tax return on sales
below 3%, the earnings factor would be zero. In this
case, an earnings-related component would not be paid.
The maximum value of the earnings factor is reached
in the event of a Group net profit of €11 billion and a
post-tax return on sales of 9%. In exceptional circum-
stances, for instance major acquisitions or disposals,
the Supervisory Board may adjust the earnings factor.
An earnings factor of 1.0 would give rise to a earnings-
related component of €0.255 million for a Board member
in the first period of office, €0.3 million from the
second period of office or the fourth year of mandate
and €0.54 million for the Chairman of the Board of
Management. The earnings factor is 1.0, for instance,
in the event of a Group net profit of €5.3 billion and a
post-tax return on sales of 5.6%. If the Group net profit
In order to calculate the earnings-related component,
an earnings factor is determined on the basis of the
target parameters and multiplied by 30% of the target
bonus amount. The level of the earnings-related com-
ponent depends on the degree to which the targets
set by the Supervisory Board for Group net profit and
post-tax return on sales are achieved. The degree of
achievement is expressed in an earnings factor. The
underlying measurement values are determined in
advance for a period of three financial years and may
not be changed retrospectively. The earnings factor is
capped at a maximum of 1.8.
In the case of 100% target achievement, the bonus
comprises an earnings-related component of 30% and
performance-related component of 70%. The target
bonus (100%) is €0.85 million p.a. for a Board member
during the first period of office, €1.0 million p.a.
from the second period of office or the fourth year
of mandate and €1.8 million p.a. for the Chairman
of the Board of Management. For all Board members,
the upper limit of the bonus is set at 180% of the
relevant target bonus.
Bonus
approx. 29
Performance
component
of the bonus
Earnings-based
component
of the bonus
approx. 12
approx. 37
Performance
Cash Plan
Share-based remuneration
approx. 22
The performance-related component is calculated
using a performance factor which the Supervisory
Board sets for each member of the Board of Manage-
ment and which is multiplied by 70% of the target
bonus amount. The Supervisory Board sets the perfor-
mance factor on the basis of a detailed evaluation of
the contribution made by Board members to sustainable
and long-term business development over a period of
at least three financial years. The evaluation by the
Supervisory Board is based on predefined criteria that
take into account the Group's long-term success, the
interests of shareholders, the interests of employees
and social responsibility.
in %
Overview of compensation system: simplified
depiction of variable remuneration (target
compensation)²
1 Simplified depiction of target amounts for the variable cash remuneration of the Chairman
of the Board of Management. Excludes other remuneration. Based on the assumption that
the share price remains unchanged for the calculation of the matching component.
Performance component
of the bonus approx. 19
Payment of a discretionary additional bonus is not fore-
seen. An upper limit has been set for each component of
variable remuneration (see Overview of compensation
system and compensation components).
share-based remuneration
Performance Cash Plan and
bonus
The variable remuneration of the Board of Manage-
ment comprises three components:
Variable remuneration
Fixed remuneration consists of a base salary, which is
paid monthly, and fringe benefits (other remuneration
elements such as the use of Company cars, insurance
premiums and contributions towards security sys-
tems). With effect from the financial year 2018, the
base salary is €0.8 million p.a. for a Board member
during the first period of office, €0.95 million p.a. for
a Board member from the second period of office or
the fourth year of mandate and €1.8 million p.a. for
the Chairman of the Board of Management.
Fixed remuneration
→ 83
approx. 24
The criteria include in particular innovation (economic
and ecological, for example in the reduction of carbon
dioxide emissions), the Group's market position
compared to its competitors, customer focus, ability
to adapt, leadership, corporate culture, promotion of
compliance and integrity, contribution to the Group's
attractiveness as an employer, progress in implement-
ing the diversity concept, and activities that foster
corporate social responsibility. The individual perfor-
mance factor lies between zero and a maximum of 1.8.
Bonus overview
With effect from the financial year 2018, variable cash
compensation includes a multi-year and future-oriented
Performance Cash Plan (PCP). The PCP is calculated at
the end of a three-year evaluation period, by multi-
plying a predefined target amount by a factor that
is based on multi-year target achievement (the PCP
factor). PCP entitlements are paid in cash. The PCP
target amount (100%) amounts to €0.85 million p.a.
for a Board member in the first period of office,
€0.95 million p.a. from the second period of office
or the fourth year of mandate and €1.6 million p.a.
for the Chairman of the Board of Management. The
maximum amount that can be paid to a Board member
is capped at 180% of the PCP target amount p.a.
Performance Cash Plan
Report
→ Compensation
Statement on
Corporate
Governance
226
of target amount
· Capped at 180%
Cash payment
TOTAL
Qualitative, mainly non-financial parameters
Value between 0 and 1.8
225
Contribution to sustainable and long-term
business development over a period of
x 0.7 of target amount
Performance factor
PERFORMANCE COMPONENT
Value between 0 and 1.8
Group post-tax return on sales
Group net profit
Basis for earnings factor:
x 0.3 of target amount
Earnings factor
EARNINGS COMPONENT BONUS
→ 84
Basis for performance factor:
at least three financial years
Managers were the main focus of additional training
on the topic of compliance culture, including how to
be a good role model, management style and dealing
with contradictions and crises.
Various internal channels and means of communi-
cation, including newsletters, employee newspapers
and intranet portals, are used to keep BMW Group
employees fully up-to-date with the instruments
and measures used by the Compliance Management
System. The central communications channel is
the compliance website within the BMW Group's
intranet, where employees can find compliance-
related information and training materials in both
German and English. The website contains a special
service area where various practical tools are made
available to employees to help them deal with typical
compliance-related situations. A group-wide com-
munications campaign was implemented in 2018
to boost employee awareness of the importance
of creating a culture of transparency and trust.
Total6
Expense in 2018
in accordance with
HGB and IFRS
Provision at
31.12.2018 in
accordance with
HGB and IFRS2
30,821
458,341
(54,038)
(515,677)
46,218
268,257
(63,120)
(303,169)
78,614
121,745
(41,001)
(43,131)
354,125
32,264
(29,175)
(29,175)
80,987
51,812
Oliver Zipse
(-)
23,661
23,661
(273,688)
(162,436)
254,591
-19,0974
(-)
Andreas Wendt5
Peter Schwarzenbauer
Nicolas Peter
Nicolas Peter
Pieter Nota
Klaus Fröhlich
Markus Duesmann5
Milagros Caiña Carreiro-Andree
Harald Krüger
Peter Schwarzenbauer
(4,115,640)
90,288 2,800,522
(90,700) (4,206,340)
782,828 24,014,510 23,461,748
(891,973) (40,262,725) (39,608,356)
1,045
(1,008)
9,087
(9,913)
(-)
612,359
634,004
(4,837,519)
2,710,234
(186,278)
Andreas Wendt6
Total7
Pieter Nota
Klaus Fröhlich
Markus Duesmann³
Milagros Caiña Carreiro-Andree
Harald Krüger
in €
Oliver Zipse
financial year 2018 (2017)¹
Share-based component of the individual members
Report
→ Compensation
Statement on
Corporate
Governance
234
233
of the Board of Management for the
2,941,756
(382,640)
1,632
2,660,630
(353,136)
(356,949)
(2,373,842)
(2,373,842)
Pieter Nota
350,000
350,000
350,276
350,041
(-)
Nicolas Peter
353,119
356,382
2,004,567
2,004,567
(350,000)
132,500
Andreas Wendt²
(1,893,216)
(1,893,252)
(357,918)
(354,117)
2,660,630
2,188,159
356,382
353,119
Peter Schwarzenbauer
(1,757,454)
(1,757,459)
(350,000)
2,188,161
356,382
353,119
Klaus Fröhlich
* Disclosures for the previous year include amounts relating to a member of the Board of Management who left office with effect from the end of the financial year 2017.
5 Member of the Board of Management since 1 October 2018.
4 Amount based on the revaluation of share price at balance sheet date.
Provisional number or provisional monetary value calculated on the basis of the closing price of BMW common stock in the Xetra trading system on 28 December 2018 (€70.70) (fair value at reporting date).
3 Member of the Board of Management until 24 July 2018.
1 The share-based remuneration component (matching component) for the financial year 2017 was calculated in accordance with the compensation system applicable for that year.
(2,215,688)
Pension entitlements
(800,435)
274,927
(193,769)
(122,484)
222,771
29,002
(-)
1,786,110
1,632
in €
IFRS for the
(2,346,906)
2,560,943
2,561,031
(5,558,200)
5,753,776
509,486 5,753,913
(510,702) (5,558,607)
357,468
(359,275) (2,347,166)
Service cost in
accordance with
354,224
(355,527)
Milagros Caiña Carreiro-Andree
Harald Krüger
Defined Benefit
Obligation HGB
Defined Benefit
Obligation IFRS
financial year 2018' financial year 2018¹
Service cost in
accordance with
HGB for the
504,831
(505,281)
132,500
2,983,015
(4,951,164)
277
1,101,600
495,720
(750,000)
(92,250)
(842,250)
(2,783,250)
(556,638)
1,597,320
(3,339,888)
Peter Schwarzenbauer
950,000
51,777
1,001,777
1,296,000
583,200
1,879,200
(40,954)
(940,954)
Oliver Zipse
(-)
(-)
399,330
123,930
275,400
838,612
213,029
200,000
Andreas Wendt6
(3,896,565)
(-)
(649,440)
(3,247,125)
13,029
38,612
800,000
Nicolas Peter
1,879,200
583,200
1,296,000
1,014,033
64,033
950,000
(750,000)
Klaus Fröhlich
(556,663)
(2,783,250)
(852,468)
(102,468)
(750,000)
609,490
(3,339,913)
900,000
(65,883)
(2,783,250)
(-)
(-)
(-)
(-)
(-)
1,597,320
(815,883)
495,720
890,369
90,369
800,000
Pieter Nota
(3,339,888)
(556,638)
1,101,600
(113,645)
21,645
24,994
1,231,200
1,135,233
1,102,142
(1,083)
(97,448)
(4,289,829)
(4,192,381)
1,100
95,040
2,988,273
2,893,233
(1,008)
(90,700) (4,246,471)
(4,155,771)
1,004
86,746
2,574,435
2,487,689
(1,263)
102,038
1,181
(4,272,838) (4,182,138)
(90,700)
(1,008)
33,091
2,435,932
80,784
935
(-)
(-)
(-)
(-)
2,516,716
383
(4,915,446)
(4,985,985)
4,657,922
10,350,938
8,222,822
(7,641,704)
(441,704)
(7,200,000)
421,209
(26,440,875)
7,801,613
(556,638)
(2,783,250)
(775,752)
(25,752)
(750,000)
554,040
Total'
924,994
(5,288,173)
(3,339,888)
(113,645)
(1,263)
2,985,294
3,006,202
The expense of the PCP for the financial year 2018
recognised in accordance with IAS 19 amounted to
€5.3 million.
For financial years from 2018 onwards, a new variable
compensation component was introduced in the form
of the Performance Cash Plan. The PCP is paid out
after the end of the relevant three-year evaluation
period. In the case of PCP for the financial year 2018,
this covers the financial years 2018 to 2020. Due to
the fact that the criteria for the evaluation period 2018
to 2020 have not yet been fully met, it is not included
in variable compensation for the financial year 2018.
1,785,240
7 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office with effect from the end of the financial year 2017.
5 Member of the Board of Management until 24 July 2018.
3 Provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is determined in each case when the
requirement to invest in BMW AG common stock has been fulfilled. See note 41 to the Group Financial Statements for a description of the accounting treatment of the share-based remuneration component.
4 Value of benefits granted for work performed on the Board of Management during the financial year 2018 plus the amount falling due for payment in conjunction with a share-based remuneration component
granted in a previous year and for which the holding period requirements were met.
2 New variable remuneration components from the financial year 2018. Payment to be made for the first time after the end of the first three-year evaluation period 2018 to 2020.
1 Remuneration for the financial year 2017 was paid in accordance with the compensation system applicable for that year, at which stage arrangements for base remuneration, variable remuneration and target
amounts were structured differently.
(31,729,048)
15,008,860
6 Member of the Board of Management since 1 October 2018.
1,886,766
1,886,766
Oliver Zipse
(70,000)
(10,000)
(140,000)
(220,000)
Renate Köcher
70,000
10,000
140,000
220,000
(70,000)
(10,000)
(140,000)
(220,000)
Robert W. Lane³
26,532
2,000
53,065
(220,000)
(140,000)
(10,000)
(70,000)
220,000
140,000
218,000
10,000
Horst Lischka¹
(218,000)
(140,000)
(8,000)
(70,000)
81,597
70,000
140,000
8,000
70,000
Heinrich Hiesinger
(220,000)
(140,000)
(10,000)
(70,000)
220,000
70,000
140,000
70,000
Ralf Hattler
(220,000)
(140,000)
(10,000)
(70,000)
10,000
Willibald Löw¹
10,000
220,000
Susanne Klatten
(189,780)
(109,780)
(10,000)
(70,000)
200,000
140,000
120,0004
70,000
Reinhard Hüttl
(140,355)
(89,570)
(6,000)
(44,785)
10,000
218,000
70,000
140,000
218,000
(70,000)
(8,000)
(140,000)
(218,000)
Werner Zierer¹
70,000
10,000
140,000
220,000
(70,000)
(10,000)
(140,000)
(220,000)
Total5
1,820,188
188,000
advances or loans were granted to members of the
Board of Management and the Supervisory Board by
BMW AG or its subsidiaries, nor were any contingent
liabilities entered into on their behalf.
Apart from vehicle lease and financing contracts
entered into on customary market conditions, no
3. Other
5 Disclosures for the previous year include amounts relating to a member of the Supervisory Board who left office during the financial year 2017.
* Due to the requirements of his employer, Prof. Dr. Hüttl has waived his Supervisory Board compensation until further notice, to the extent that such compensation exceeds the amount of €200,000
(excluding value added tax) p.a.
3 Member of the Supervisory Board until 17 May 2018.
140,000
2 Member of the Supervisory Board since 17 May 2018.
(5,618,344)
(3,610,156)
(188,000)
(1,820,188)
5,628,565
3,620,377
1 These employee representatives have - in line with the guidelines of the Deutscher Gewerkschaftsbund - requested that their remuneration be paid into the Hans Böckler-Stiftung.
8,000
70,000
Jürgen Wechsler¹
(218,000)
(140,000)
(8,000)
(70,000)
218,000
140,000
Dominique Mohabeer¹
8,000
Simone Menne
(220,000)
(140,000)
(10,000)
(70,000)
220,000
70,000
10,000
70,000
140,000
(220,000)
(140,000)
(10,000)
(70,000)
220,000
140,000
10,000
10,000
Brigitte Rödig¹
(220,000)
(140,000)
(10,000)
(70,000)
220,000
70,000
140,000
8,000
70,000
Total compensation of the Supervisory Board for the
financial year 2018
In accordance with Article 15 of the Articles of Incor-
poration, the compensation of the Supervisory Board
for activities during the financial year 2018 totalled
€5.6 million (2017: €5.6 million). This includes fixed
compensation of €2.0 million (2017: €2.0 million)
and variable compensation of €3.6 million (2017:
€3.6 million). The earnings-related compensation for
the financial year 2018 was capped at the maximum
amount stipulated in the Articles of Incorporation.
237
in € million
Fixed compensation
Variable compensation
Total compensation
Supervisory Board members did not receive
any further
compensation or benefits from the BMW Group for
advisory or agency services personally rendered.
2018
2017
Amount
Proportion in %
Amount
Proportion in %
Statement on
Corporate
238
100.0
5.6
100.0
5.6
In order to perform his duties, the Chairman of the
Supervisory Board has the use of an office, with
administrative support, as well as access to the BMW
car service.
64.3
64.3
3.6
35.7
2.0
35.7
2.0
3.6
The Company also reimburses to each member of the
Supervisory Board reasonable expenses and any value-
added tax arising on the member's remuneration. The
amounts disclosed below are net amounts.
In addition, each member of the Supervisory Board
receives an attendance fee of €2,000 for each full
meeting of the Supervisory Board (Plenum) which
the member has attended, payable at the end of the
financial year. Attendance at more than one meeting
on the same day is not remunerated separately.
Accordingly, the Articles of Incorporation of BMW AG
stipulate that the Chairman of the Supervisory Board
shall receive three times the amount and each Deputy
Chairman shall receive twice the amount of the remu-
neration of a Supervisory Board member. Each chairman
of the Supervisory Board's committees receives twice
the amount and each member of a committee receives
one-and-a-half times the amount of the remuneration of
a Supervisory Board member, provided the relevant
committee convened for meetings on at least three
days during the financial year. If a member of the
Supervisory Board exercises more than one of the
functions referred to above, the compensation is
measured only on the basis of the function that is
remunerated with the highest amount.
(1,018,857)
1,521,192
1,521,226
(1,020,053)
620,741
(359,521)
617,548
(355,840)
Markus Duesmann4
'Service cost differs due to the different valuation bases used to measure pension obligations for HGB purposes (expected settlement amount) and for IFRS purposes
(present value of the performance-based pension obligation).
2,298,405
2,754,201
(3,136,302)
Total³
(353,536)
(-)
(-)
356,550
353,289
2,298,444
(357,339) (2,071,748) (2,071,560)
2,775,150 19,703,788 19,703,287
(3,059,645) (21,987,289) (21,072,823)
Governance
² Member of the Board of Management since 1 October 2018.
235
The German Corporate Governance Code also recom-
mends in section 5.4.6 paragraph 1 sentence 2 that
the exercising of chair and deputy chair positions in
the Supervisory Board as well the chair and member-
ship of committees should also be considered in the
compensation.
With fixed compensation elements and an earnings-
related compensation component oriented toward
sustainable growth, the compensation structure in
place for BMW AG's Supervisory Board complies with
the recommendation on supervisory board compensa-
tion contained in section 5.4.6 paragraph 2 sentence 2
of the German Corporate Governance Code, in the
version dated 7 February 2017.
In accordance with the Articles of Incorporation, each
member of BMW AG's Supervisory Board receives, in
addition to the reimbursement of reasonable expenses,
a fixed amount of €70,000, payable at the end of the
year, as well as earnings-related compensation of €170
for each full €0.01 by which the average amount of
(undiluted) earnings per share (EPS) of common stock
reported in the Group Financial Statements for the
remuneration year and the two preceding financial
years exceed a minimum amount of €2.00, pay-
able after the Annual General Meeting held in the
following year. An upper limit corresponding to
twice the amount of the fixed compensation is in
place for the earnings-related compensation. The
limit for a member of the Supervisory Board with
no additional compensation-relevant function is
therefore set at €140,000.
The fixed and earnings-related components in combi-
nation are intended to ensure that the compensation of
Supervisory Board members is appropriate in relation
to the tasks of Supervisory Board members and the
Company's financial condition and also takes account
of the Company's performance over several years.
The Supervisory Board of BMW AG receives a fixed
compensation component as well as an earnings-related
compensation component, which is oriented toward
sustainable growth. The earnings-related component
is based on average earnings per share of common
stock for the remuneration year and the two preceding
financial years.
compensation components
3 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office with effect from the end of the financial year 2017.
* Member of the Board of Management until 24 July 2018.
Compensation principles,
Responsibilities, provisions of Articles of
Incorporation
2. Supervisory Board compensation
Report
→ Compensation
Statement on
Corporate
Governance
236
The compensation of the Supervisory Board is specified
either by a resolution of the shareholders at the Annual
General Meeting or in the Articles of Incorporation.
The compensation provisions valid for the financial
year under report were resolved by shareholders at
the Annual General Meeting on 14 May 2013 and are
set out in Article 15 of BMW AG's Articles of Incor-
poration, which are available at → www.bmwgroup.com within
the section "Company" (menu items "Company
Portrait" and "Corporate Governance") as well as in
"BMW Group Download Centre”.
→Compensation
Report
→ Responsibility
Statement by the
Company's Legal
Representatives
Compensation of the individual members of the Supervisory Board for the financial year 2018 (2017)
(10,000)
(140,000)
430,000
280,000
10,000
140,000
(280,000)
Karl-Ludwig Kley (Deputy Chairman)
(280,000)
(10,000)
(140,000)
428,000
280,000
8,000
(430,000)
140,000
(430,000)
70,000
Franz Haniel
(-)
138,968
87,312
8,000
43,656
Christiane Benner¹
Kurt Bock2
(140,000)
(6,000)
(70,000)
218,000
140,000
8,000
(216,000)
189,152
Stefan Schmid (Deputy Chairman)¹
(280,000)
(10,000)
(210,000)
640,000
420,000
10,000
210,000
(420,000)
Norbert Reithofer (Chairman)
compensation
Attendance fee
compensation
in €
Variable
Fixed
Total
(430,000)
(640,000)
140,000
(10,000)
(140,000)
430,000
280,000
10,000
140,000
Manfred Schoch (Deputy Chairman)¹
Stefan Quandt (Deputy Chairman)
(280,000)
(10,000)
(140,000)
430,000
280,000
10,000
(430,000)
420,338
(900,000)
(75,775)
2.2
Total compensation
24.0
100.0
40.3
100.0
*Matching component; provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is determined in
each case when the requirement to invest in BMW AG common stock has been fulfilled.
232
→ Compensation
Report
Compensation of the individual members
of the Board of Management for the
financial year 2018 (2017)¹
Fixed compensation
in € or
number of matching shares
Base salary
Other
compensation
Total
Bonus
Variable cash compensation
Share-based
compensation
component (invest-
ment component)
0.9
Performance
3.3
Share-based compensation component*
The Supervisory Board has stipulated upper limits
for all variable remuneration components and for the
remuneration of Board of Management members in
total. The upper limits are shown in the table Over-
view of compensation system and compensation
components. The overall upper limits (caps) have not
changed in conjunction with the revised compensa-
tion system for financial years from 2018 onwards.
Total compensation of the Board of Management for
the financial year 2018 (2017)
The total compensation of the current members of the
Board of Management of BMW AG for the financial
year 2018 amounted to €24.0 million (2017: €40.3 mil-
lion), of which €8.2 million (2017: €7.7 million) relates
to fixed components including other remuneration.
Variable components amounted to €15.0 million (2017:
€31.7 million) and the share-based remuneration com-
ponent amounted to €0.8 million (2017: €0.9 million).
231
2018
2017
in € million
Amount
Proportion in %
Amount
Proportion in %
Fixed compensation
Variable cash compensation
8.2
34.2
7.7
19.1
15.0
62.5
31.7
78.7
0.8
Cash Plan
2018-2020²
Total
Harald Krüger
41,039
492,652
An expense of €3.4 million (2017: €3.1 million) was
recognised in the financial year 2018 for current mem-
bers of the Board of Management for the period after
the end of their service relationship. This relates to
the expense for allocations to pension provisions in
accordance with IAS 19.
Total benefits paid to former members of the Board of
Management and their surviving dependants for the
financial year 2018 amounted to €9.2 million (2017:
€6.7 million). This includes the above-mentioned
payments to Mr Duesmann.
Pension obligations to former members of the Board
of Management and their surviving dependants
are covered by pension provisions amounting to
€91.0 million (2017: €90.1 million), recognised in
accordance with IAS 19.
Share-based
compensation component
(matching component)³
Compensation
Total
Total value of
benefits allocated
in financial year¹
Number
Monetary value
1,981
(2,017)
171,158
5,376,110
5,293,109
(181,490)
(8,382,730)
(8,295,070)
1,181
102,038
451,613
Markus Duesmann5
(3,896,565)
(649,440)
1,800,000
22,392
1,822,392
2,332,800
1,049,760
3,382,560
(1,500,000)
(21,464)
(1,521,464)
(5,566,500)
Remuneration caps
(1,113,276)
Milagros Caiña Carreiro-Andree
950,000
74,964
1,024,964
1,296,000
583,200
1,879,200
(900,000)
(975,775)
(3,247,125)
(6,679,776)
No commitments or agreements exist for payment of
compensation in the event of early termination of a
Board member's mandate due to a change of control or
a takeover offer. No members of the Board of Manage-
ment received any payments or relevant commitment
from third parties in 2018 on account of their activities
as members of the Board of Management.
Statement on
Corporate
Governance
contract for the financial years 2019 and 2020 amounts
to €3.0 million.
Determined by Supervisory Board at end of evaluation period
Criteria include in particular the trend in business development during the evaluation
period, the forecast trend in business development, individual contribution to profitability
and the status of compliance within the Board member's area of responsibility
Multi-year performance factor can be between 0.9 and 1.1
Requirement for Board of Management members to invest an amount of 45% of the
gross bonus after tax and contributions in BMW AG common stock
Requirement for Board of Management members to hold the acquired shares of common
stock for four years
Earmarked cash remuneration amounting to 45% of the gross bonus
Cash remuneration p.a. at 100% target achievement of the bonus:
€0.3825 million (1st period of office)
€0.45 million (from 2nd period of office or 4th year of mandate)
€0.81 million (Chairman of the Board of Management)
Maximum remuneration, see section Remuneration caps
Maximum remuneration, see section Remuneration caps
OTHER REMUNERATION
Contractual agreement, main points: non-cash benefits from use of Company car, insurance
premiums, contributions towards security systems
229
230
Statement on
Corporate
Governance
→ Compensation
Report
Overview of compensation system and compensation
components onwards
Average for evaluation period calculated
Earnings factor for each year may not exceed 1.8
and Group post-tax return on sale
Earnings factor for each year of three-year evaluation period derived from Group net profit
Formula: PCP factor xtarget amount
Capped at 180% of target amount, see section Remuneration caps
3-year evaluation period
€0.95 million (from 2nd period of office or 4th year of mandate)
€1.6 million (Chairman of the Board of Management)
€0.85 million (1st period of office)
-
| ||
-
| | | |
-
RETIREMENT AND SURVIVING DEPENDANTS' BENEFITS
Target amount p.a. (at 100% target achievement):
a) Cash remuneration component
(investment component)
Share-based remuneration programme
b) Multi-year performance factor
a) Multi-year earnings factor
VARIABLE REMUNERATION
Performance Cash Plan
Parameter/measurement base
Component
In accordance with the recommendation of the German
Corporate Governance Code, Board of Management
service contracts provide for severance pay to be paid
to the Board member in the event of premature ter-
mination by the Company without important reason,
the amount of which is limited to a maximum of two
years' compensation (severance payment cap). If the
remaining term of the contract is less than two years,
the severance payment is reduced proportionately.
For these purposes, annual compensation comprises
the basic remuneration, the target bonus amount and
the target PCP amount for the last full financial year
before termination.
PCP factor: multi-year earnings factor x multi-year performance factor
PCP factor may not exceed 1.8
b) Share-based remuneration component
(matching component)
Model
Once the four-year holding period requirement is fulfilled, Board of Management mem-
bers receive for each three common stock shares held either - at the Company's option -
one further share of common stock or the equivalent amount in cash
Principal features
1,710,000
810,000
405,000
Termination benefits on premature termination of
Board activities, benefits paid by third parties
Mr Duesmann left the Board of Management Board
at the end of 24 July 2018 and was released from his
duties for the remaining term of his service contract
(until the end of 30 September 2019), with remunera-
tion continuing to be paid until that date. For the
period from 25 July 2018 to 31 December 2018, he
received a base remuneration of €0.348 million and
other remuneration of €0.015 million. The bonus for
this period amounts to €0.324 million, the proportion-
ate cash remuneration component of the share-based
remuneration programme (investment component)
amounts to €0.146 million. The proportionate share-
based remuneration component of the share-based
remuneration programme (matching component)
has a provisional monetary value of €0.025 million;
the provisional number of matching shares is 295
(calculated in each case at the grant date). The final
number of matching shares is determined when the
requirement to invest in BMW AG common stock has
been fulfilled. The Company paid a proportionate pen-
sion contribution of €0.152 million. The base remu-
neration from 1 January 2019 to 30 September 2019
amounts to €0.6 million. The pension contribution for
this period amounts to €0.263 million. The expense
for these and other entitlements relating to the service 7
5,500,000
Board of Management members who retire imme-
diately after their service on the Board are entitled
to acquire vehicles and other BMW Group products
and services at conditions that also apply to BMW
pensioners and to lease BMW Group vehicles in
accordance with the guidelines applicable to senior
heads of departments. Retired Chairmen of the Board
of Management are entitled to use a BMW Group
vehicle as a company car on a similar basis to senior
heads of departments, and depending on availability
and against payment, use BMW chauffeur services.
Defined contribution system with guaranteed minimum rate of return
In the event of the death of a member of the Board
of Management during the service contract term,
the base remuneration for the month of death and a
maximum of three further calendar months are paid
to entitled surviving dependants.
Income earned on an employed or a self-employed
basis
up to the age of 63 may be offset against instal-
ment payments. In addition, certain circumstances
have been specified, in the event of which the Com-
pany no longer has any obligation to pay benefits.
Transitional payments are not provided.
Contributions falling due under the defined con-
tribution model are paid into an external fund in
conjunction with a trust model that is also used to
fund pension obligations to employees.
Retirement benefits
The annual contribution paid by the Company is
€350,000 for a Board member and €500,000 for the
Chairman of the Board of Management. The guaran-
teed minimum rate of return p.a. corresponds to the
maximum interest rate used to calculate insurance
reserves for life insurance policies (guaranteed interest
on life insurance policies). When granting pension
entitlements, the Supervisory Board considers the
targeted level of pension provision in each case as well
as the resulting expense for the BMW Group.
depending on their age and education - are entitled
to receive benefits as surviving dependants.
If a member of the Board of Management with a vested
entitlement dies prior to the commencement of benefit
payments, a surviving spouse or registered partner,
or otherwise surviving children - in the latter case
The amount of the benefits to be paid is determined
on the basis of the amount accrued in each Board
member's individual pension savings account. The
amount on this account results from annual contri-
butions paid in, plus interest earned depending on
the type of investment.
If a mandate is terminated, the defined contribution
system provides, in the case of death or invalidity, for
amounts accumulated on individual pension accounts
to be paid out as a one-off amount or in instalments.
Former members of the Board of Management are
entitled to receive the retirement benefit at the earliest
upon reaching the age of 60, or in the case of entitle-
ments awarded after 1 January 2012, upon reaching
the age of 62.
3,240,000
2,880,000
1,458,000
729,000
9,850,000
*Including base salary, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the individual components.
In the case of death or invalidity, a minimum benefit
is payable based on the number of contributions
possible up to the age of 60 (subject to maximum of
ten contributions).
4,925,000
1,800,000
688,500
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
Pension contributions p. a.:
Member of the Board of Management: €350,000
Chairman of the Board of Management: €500,000
REMUNERATION CAPS (MAXIMUM REMUNERATION)
in € p.a.
Member of the Board of Management
in the first period of office
Member of the Board of Management
in the second period of office or from fourth year of mandate
Chairman of the Board of Management
Bonus
344,500
Performance
Cash Plan
Share-based compensation programme
Monetary value
of matching
component
Total*
1,530,000
1,530,000
Cash compen-
sation for share
acquisition
With effect from 1 January 2010, the provision of retire-
ment benefits for members of the Board of Management
was changed to a defined contribution system with
a guaranteed minimum return. Retirement benefits
remain unchanged as part of the new compensation
system applicable for financial years from 2018 onwards,
as they are appropriate and in line with customary
market practice.
€ million
Net profit for the year
6,396
6,910
8,675
7,207
Balance sheet total
Non-current assets
30.7
83,538
€ million
110,343
121,671
121,964
125,442
€ million
Current provisions and liabilities
Non-current provisions and liabilities
Equity ratio
Equity
Capital expenditure ratio (capital expenditure/revenues)
Capital expenditure (excluding capitalised development costs)
Current assets
BALANCE SHEET
28.5
Revenues
26.2
€ million
Earnings before financial result
19.7
19.9
20.3
19.0
%
Gross profit margin
92,175
94,163
98,282
97,480
€ million
INCOME STATEMENT
5,114,906 4,718,970
111,191
123,394
5,380,785
124,719
5,235,207
133,210
73,542
9,121
9,899
9,386
9,593
%
Effective tax rate
2,828
2,755
2,000
2,575
€ million
Income taxes
10.0
18.7
10.3
10.1
%
Return on sales (earnings before tax/revenues)
9,224
9,665
10,675
9,815
€ million
Earnings before tax
10.9
66,864
of Key Figures
€ million
Dividend total
DIVIDEND
Personnel cost per employee
Workforce at year-end³
PERSONNEL
5,404
Dividend per share of common stock/preferred stock
5,792
2,713
€ million
Free cash flow Automotive segment
6,122
7,880
9,039
4,459
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
² Excluding Husqvarna, deliveries up to 2013: 59,776 units; production up to 2013: 59,426 units.
€
€ million
4 Proposal by management.
3 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.
2,102
3.20/3.22
2,300
3.50/3.52
2,630
4.00/4.02
3.504/3.524
2,303
€
€ million
97,136
122,244
124,729
99,575
129,932
100,760
134,682
101,178
10,979
€ million
Cash and cash equivalents at balance sheet date
CASH FLOW STATEMENT
%
42,764
47,363
54,107
58,088
€ million
4.2
4.0
4.8
5.2
%
3,826
3,731
4,688
5,029
27.8
61,831
27.7
24.8
172,174
188,535
195,506
208,980
€ million
65,591
67,989
71,765
70,909
€ million
63,819
73,183
69,634
79,983
€ million
25.1
Business volume (based on balance sheet carrying amounts)
the corporate governance statement and
Contract portfolio
We also audited the appropriateness and effectiveness
of the internal control system in relation to the risk
classification procedures as well as the derivation of
the significant rise in credit risk from changes in risk
classification. In addition, we evaluated the relevant
IT systems and internal processes. The audit included
a review by our IT specialists of the appropriateness
of the systems concerned and associated interfaces to
ensure the completeness of data as well as the audit
of automated controls for data processing.
We also assessed the methodology for determining the
expected loss on a yearly basis or for the remaining
term to maturity, default rates and the credit expo-
sure in the event of default and for determining and
presenting the 'transfer between stages' of receivables
based on significant changes in the credit risk of a
borrower.
By means of inquiries, inspecting internal calculation
methods and analysis, among other methods, we
obtained a comprehensive understanding of the
development of credit portfolios, the associated
counterparty-related risks and the business processes
for the identification, management, monitoring and
measurement of counterparty credit risks.
Our audit approach
→ Independent
Auditor's Report
Statement on
Corporate
Governance
242
A key component of our audit was to assess the
appropriateness of the risk classification procedures,
transfer between stages and the risk provisioning
parameters used, which are derived based on histori-
cal default probabilities and loss given default by
taking account of the anticipated effects of future
trends in relevant macroeconomic criteria. We also
analysed the validations of parameters that are reg-
ularly conducted. To assess the default risk, we also
used purposive sampling of individual cases to verify
that the attributes for assignment to the respective
risk categories were suitably available and the impair-
ment losses had been calculated using the parameters
defined for these risk categories. In addition we
assessed loans for correct risk classification based
on random samples.
241
Impairment losses have been determined on the basis
of expected credit losses since financial year 2018.
This method takes into account probabilities of default
and loss given default, estimates of the amount receiv-
able in the event of default, setting criteria for the
transfer between stages for determining a significant
change in the default risk of borrowers, assumptions
on future cash flows and macroeconomic scenarios,
the determination of which is subject to considerable
judgement and estimation uncertainties in each case.
BMW Group offers end customers, dealerships and
importers various financing models for vehicles
and other assets. In this regard, current and non-
current receivables from sales financing totalling
EUR 86,783 million were recognised as at the reporting
date. Impairment losses amounting to EUR 1,032 mil-
lion were recognised on these receivables as at the
reporting date.
The financial statement risk
note 25.
Valuation of receivables from sales financing
Please refer to note 4 "accounting policies as well
as assumptions, judgements and estimates" in the
notes to the consolidated financial statements, for
"Receivables from sales financing" please refer to
The methods and processes for determining the
expected residual values of the leased products under-
lying the valuation are appropriate. The assumptions
and parameters incorporated in the forecast model for
the residual value are appropriate as a whole.
Our observations
There is a risk for the financial statements that the
creditworthiness of dealerships, importers and end
customers is assessed incorrectly, the risk provisioning
parameters are derived incorrectly and an impairment
loss required on receivables from sales financing is not
recognised or not recognised in a sufficient amount.
Our observations
The risk provisioning methodology, internal processes
and the assumptions and risk parameters used for the
determination of receivables from sales financing are
suitable for the early identification of credit risks and
determining impairment losses in accordance with the
applicable financial reporting standards.
Valuation of provisions for statutory and non-statutory
warranty obligations and product guarantees
contracts
Our opinions on the consolidated financial statements
and on the group management report do not cover
the other information, and consequently we do not
express an opinion or any other form of assurance
conclusion thereon.
the remaining parts of the annual report, with
the exception of the audited consolidated finan-
cial statements and group management report
and our auditor's report.
-
Management is responsible for the other information.
The other information comprises:
Other Information
The method for the valuation of provisions for
statutory and non-statutory warranty obligations
and product guarantees is appropriate and has been
applied consistently. The measurement parameters
and assumptions applied are appropriate as a whole.
Our observations
Based on a deliberate sample of vehicle models,
the computational accuracy of the valuation model
used across the Group including a tool for rate-
based planning was verified with the support of our
actuaries. The measurement parameters included
therein, such as cost components, were reconciled
with actual costs. We evaluated the assumptions
concerning the extent to which the historical values
are representative for the expected damage sus-
ceptibility, for the expected value of damage per
vehicle in terms of material and labour cost and for
the anticipated claim.
We compared the amount of provisions from the prior
year with expenses selected according to risk and
which actually arose for damage claims, as well as with
technical measures, in order to arrive at a conclusion
on the forecast accuracy.
In order to evaluate the appropriateness of the
valuation method used for the determination of the
provisions for statutory and non-statutory warranty
obligations and product guarantees including the
assumptions and parameters, through discussions
with the departments responsible, we primarily
obtained an understanding of the process for deter-
mining the assumptions and parameters. We audited
the appropriateness and effectiveness of controls to
determine the assumptions and parameters. With
the involvement of our IT specialists, we reviewed
the IT systems utilised to verify their appropriateness.
Our audit approach
There is a risk for the financial statements that the
valuation of provisions for statutory and non-statutory
warranty obligations and product guarantees is not
appropriate.
BMW Group is responsible for the legally prescribed
product liability and the warranty in the respective
sales market. Moreover, additional warranties are
granted to differing extents. In order to assess the
liabilities arising from warranty, guarantee and
goodwill for vehicles sold, information on the type
and volume of damages arising and on remedial
measures is recorded and evaluated at vehicle model
level. The expected amount of obligations arising
from warranty claims is extrapolated from costs of
the past and provided for. For specific or anticipated
individual circumstances, for example recalls, addi-
tional provisions are set aside provided they have not
already been taken into account. The determination of
provisions is associated with unavoidable estimation
uncertainties, is complex and is subject to a high
degree of risk of change, depending on factors such
as detected deficiencies becoming known and claims
made by vehicle owners.
Provisions for statutory and non-statutory warranty
obligations and product guarantees are included in
the consolidated financial statements of BMW Group
as a significant component in ‘Other provisions'. The
provisions for statutory and non-statutory warranty
obligations and product guarantees amounted to
EUR 5,158 million as at 31 December 2018.
The financial statement risk
Please refer to note 4 "accounting policies as well as
assumptions, judgements and estimates" in the notes
to the consolidated financial statements, for "Other
provisions" please refer to note 33.
research institutes. We ensured the computational
accuracy of the forecast values by verifying key cal-
culation steps.
In addition, we evaluated the appropriateness of the
forecasting methods, the model assumptions as well
as the parameters used for the determination of the
residual values based on the validations carried out
by BMW Group. For this purpose, we inquired with
BMW Group's experts responsible for the management
and monitoring of residual value risks and inspected
the internal analysis on residual value developments
and residual value forecasts as well as the validation
results. Furthermore, we evaluated the processes
for processing external forecast values from market
We reviewed the appropriateness and effectiveness of
the internal control system, particularly in relation to
the determination of expected residual values. This
included the audit of the compliance of the relevant IT
systems as well as the interfaces implemented therein
by our IT specialists.
By means of inquiries, inspecting internal calcula-
tion methods and analysing the disposal proceeds
of vehicles, among other methods, we obtained an
understanding of the development of leased products,
the underlying residual value risks and business pro-
cesses for the identification, management, monitoring
and measurement of residual value risks.
INDEPENDENT
→ Independent
Auditor's Report
Statement on
Corporate
Governance
240
239
Oliver Zipse
Dr.-Ing. Andreas Wendt
Peter Schwarzenbauer
Dr. Nicolas Peter
Pieter Nota
Milagros Caiña Carreiro-Andree Klaus Fröhlich
Harald Krüger
The Board of Management
Bayerische Motoren Werke
Aktiengesellschaft
Munich, 19 February 2019
Statement pursuant to § 117 No. 1 of the
Securities Trading Act (WpHG) in conjunction
with § 297 (2) sentence 4 and § 315 (1) sentence
5 of the German Commercial Code (HGB)
"To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position and profit of the
Group, and the Group Management Report includes
a fair review of the development and performance of
the business and the position of the Group, together
with a description of the principal opportunities and
risks associated with the expected development of
the Group."
RESPONSIBILITY
STATEMENT BY THE
COMPANY'S LEGAL
REPRESENTATIVES
AUDITOR'S REPORT
is materially inconsistent with the consolidated
financial statements, with the group manage-
ment report or our knowledge obtained in the
audit, or
To Bayerische Motoren Werke
Aktiengesellschaft, Munich
Opinions
Our audit approach
There is a risk for the financial statements that the
residual values expected for the end of the lease terms
are not appropriately assessed and the impairment
losses or reversal of impairment losses required for
the leased products are not recognised in sufficient
amounts.
The estimation of future residual values is subject to
judgement and is complex due to the large number
of assumptions to be made and the amount of data
incorporated in the determination. For the residual
value forecasts, BMW Group uses internally avail-
able data on historical values, current market data
as well as forecasts from external market research
institutes.
The key estimated value for the purposes of subse-
quent measurement is the expected residual value
at the end of the lease term.
BMW Group leases vehicles to end customers as part
of operating leases. As at the reporting date, the value
of leased products amounted to EUR 38,572 million.
The financial statement risk
Please refer to note 4 "accounting policies as well as
assumptions, judgements and estimates" in the notes
to the consolidated financial statements, for "Leased
products" please refer to note 23.
Valuation of residual values of leased products
Key audit matters are those matters that, in our pro-
fessional judgement, were of most significance in our
audit of the consolidated financial statements for the
financial year from 1 January to 31 December 2018.
These matters were addressed in the context of our
audit of the consolidated financial statements as a
whole, and in forming our opinion thereon, we do not
provide a separate opinion on these matters.
Key Audit Matters in the Audit of the Consolidated
Financial Statements
We conducted our audit of the consolidated financial
statements and of the group management report in
accordance with Section 317 HGB and EU Audit
Regulation No 537/2014 (referred to subsequently
as "EU Audit Regulation") and in compliance with
German Generally Accepted Standards for Financial
Statement Audits promulgated by the Institut der
Wirtschaftsprüfer (IDW) [Institute of Public Audi-
tors in Germany]. Our responsibilities under those
requirements and principles are further described
in the "Auditor's Responsibilities for the Audit of
the Consolidated Financial Statements and of the
Group Management Report" section of our auditor's
report. We are independent of the group entities in
accordance with the requirements of European law
and German commercial and professional law, and we
have fulfilled our other German professional respon-
sibilities in accordance with these requirements. In
addition, in accordance with Article 10 (2) (f) of
the EU Audit Regulation, we declare that we have
not provided non-audit services prohibited under
Article 5 (1) of the EU Audit Regulation. We believe
that the evidence we have obtained is sufficient and
appropriate to provide a basis for our opinions on the
consolidated financial statements and on the group
management report.
Basis for the Opinions
Pursuant to Section 322 (3) sentence 1 HGB, we declare
that our audit has not led to any reservations relating
to the legal compliance of the consolidated financial
statements and of the group management report.
the accompanying group management report as
a whole provides an appropriate view of the
Group's position. In all material respects, this
group management report is consistent with
the consolidated financial statements, complies
with German legal requirements and appro-
priately presents the opportunities and risks of
future development. Our opinion on the group
management report does not cover the content
of the corporate governance statement men-
tioned above.
the accompanying consolidated financial state-
ments comply, in all material respects, with the
IFRSS as adopted by the EU, and the additional
requirements of German commercial law pursu-
ant to Section 315e (1) HGB [Handelsgesetz-
buch: German Commercial Code] and, in com-
pliance with these requirements, give a true
and fair view of the assets, liabilities, and finan-
cial position of the Group as at 31 December
2018, and of its financial performance for the
financial year from 1 January to 31 Decem-
ber 2018, and
In our opinion, on the basis of the knowledge obtained
in the audit,
We have audited the consolidated financial statements
of Bayerische Motoren Werke Aktiengesellschaft,
Munich, and its subsidiaries (the Group or BMW Group),
which comprise the consolidated balance sheet as
at 31 December 2018, and the consolidated income
statement, consolidated statement of comprehensive
income, consolidated statement of changes in equity
and consolidated statement of cash flows for the finan-
cial year from 1 January to 31 December 2018, and
notes to the consolidated financial statements, includ-
ing a summary of significant accounting policies. In
addition, we have audited the combined management
report of Bayerische Motoren Werke Aktiengesellschaft
(hereinafter referred to as the "group management
report”) for the financial year from 1 January to
31 December 2018. In accordance with German legal
requirements we have not audited the content of the
corporate governance statement which is included
in the section “Corporate Governance Statement
(Section 289f HGB)" of the group management report.
Report on the Audit of the Consoli-
dated Financial Statements and of
the Group Management Report
otherwise appears to be materially misstated.
In connection with our audit, our responsibility is
to read the other information and, in so doing, to
consider whether the other information
244
Other
Information
248
Financial Calendar
Contacts
Index of Graphs
Index
Glossary-
Explanation
Ten-year
Comparison
→ BMW Group
Ten-year
Other
Information
5
→Page 256 Contacts
→ Page 255 Financial Calendar
→ Page 254 Index of Graphs
→Page 252 Index
→Page 250 Glossary - Explanation of Key Figures
243
5
Comparison
BMW GROUP
TEN-YEAR COMPARISON
FINANCIAL SERVICES
2,359,756 2,279,503
145,555 151,004
2,505,741
185,682
2,541,534
162,687
units
units
2,490,664 2,463,526 2,367,603 2,247,485
165,566 164,153 145,032 136,963
units
units
2015
2016
20171
2018
Motorcycles²
Automobiles
PRODUCTION VOLUME
Motorcycles²
Automobiles
DELIVERIES
OTHER
INFORMATION
[German Public Auditor]
→Page 248 BMW Group Ten-year Comparison
[German Public Auditor]
Feege
Wirtschaftsprüfer
evaluate the overall presentation, structure and
content of the consolidated financial statements,
including the disclosures, and whether the con-
solidated financial statements present the under-
lying transactions and events in a manner that
the consolidated financial statements give a true
and fair view of the assets, liabilities, financial
position and financial performance of the Group
in compliance with IFRSS as adopted by the EU
and the additional requirements of German com-
mercial law pursuant to Section 315e (1) HGB.
conclude on the appropriateness of manage-
ment's use of the going concern basis of account-
ing and, based on the audit evidence obtained,
whether a material uncertainty exists related to
events or conditions that may cast significant
doubt on the Group's ability to continue as a go-
ing concern. If we conclude that a material un-
certainty exists, we are required to draw attention
in the auditor's report to the related disclosures
in the consolidated financial statements and in
the group management report or, if such disclo-
sures are inadequate, to modify our respective
opinions. Our conclusions are based on the au-
dit evidence obtained up to the date of our audi-
tor's report. However, future events or condi-
tions may cause the Group to cease to be able to
continue as a going concern.
evaluate the appropriateness of accounting poli-
cies used by management and the reason-
ableness of estimates made by management and
related disclosures.
obtain an understanding of internal control
relevant to the audit of the consolidated finan-
cial statements and of arrangements and meas-
ures (systems) relevant to the audit of the group
management report in order to design audit
procedures that are appropriate in the circum-
stances, but not for the purpose of expressing
an opinion on the effectiveness of these systems.
identify and assess the risks of material misstate-
ment of the consolidated financial statements
and of the group management report, whether
due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropri-
ate to provide a basis for our opinions. The risk
of not detecting a material misstatement result-
ing from fraud is higher than for one resulting
from error, as fraud may involve collusion, for-
gery, intentional omissions, misrepresentations,
or the override of internal controls.
We exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in
accordance with Section 317 HGB and the EU Audit
Regulation and in compliance with German Generally
Accepted Standards for Financial Statement Audits
promulgated by the Institut der Wirtschaftsprüfer
(IDW) will always detect a material misstatement.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of
these consolidated financial statements and this group
management report.
Our objectives are to obtain reasonable assurance
about whether the consolidated financial statements
as a whole are free from material misstatement,
whether due to fraud or error, and whether the
group management report as a whole provides an
appropriate view of the Group's position and, in all
material respects, is consistent with the consolidated
financial statements and the knowledge obtained in
the audit, complies with the German legal require-
ments and appropriately presents the opportunities
and risks of future development, as well as to issue
an auditor's report that includes our opinions on the
consolidated financial statements and on the group
management report.
Group Management Report
Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements and of the
The Supervisory Board is responsible for overseeing
the Group's financial reporting process for the prepa-
ration of the consolidated financial statements and of
the group management report.
Furthermore, management is responsible for the
preparation of the group management report that,
as a whole, provides an appropriate view of the
Group's position and is, in all material respects, con-
sistent with the consolidated financial statements,
complies with German legal requirements, and
appropriately presents the opportunities and risks
of future development. In addition, management is
responsible for such arrangements and measures
(systems) as they have considered necessary to ena-
ble the preparation of a group management report
that is in accordance with the applicable German
legal requirements, and to be able to provide suffi-
cient appropriate evidence for the assertions in the
group management report.
In preparing the consolidated financial statements,
management is responsible for assessing the Group's
ability to continue as a going concern. They also
have the responsibility for disclosing, as applicable,
matters related to going concern. In addition, they
are responsible for financial reporting based on the
going concern basis of accounting unless there is an
intention to liquidate the Group or to cease operations,
or there is no realistic alternative but to do so.
Responsibilities of Management and the
Supervisory Board for the Consolidated Financial
Statements and the Group Management Report
Management is responsible for the preparation of
consolidated financial statements that comply, in
all material respects, with IFRSS as adopted by the
EU and the additional requirements of German
commercial law pursuant to Section 315e (1) HGB
and that the consolidated financial statements, in
compliance with these requirements, give a true and
fair view of the assets, liabilities, financial position,
and financial performance of the Group. In addition,
management is responsible for such internal control
as they have determined necessary to enable the
preparation of consolidated financial statements
that are free from material misstatement, whether
due to fraud or error.
→ Independent
Auditor's Report
Statement on
Corporate
Governance
evaluate the consistency of the group manage-
ment report with the consolidated financial
statements, its conformity with [German] law,
and the view of the Group's position it provides.
- perform audit procedures on the prospective in-
formation presented by management in the
group management report. On the basis of suf-
ficient appropriate audit evidence we evaluate,
in particular, the significant assumptions used
by management as a basis for the prospective
information, and evaluate the proper derivation
of the prospective information from these as-
sumptions. We do not express a separate opin-
ion on the prospective information and on the
assumptions used as a basis. There is a substan-
tial unavoidable risk that future events will dif-
fer materially from the prospective information.
We communicate with those charged with governance
regarding, among other matters, the planned scope
and timing of the audit and significant audit findings,
including any significant deficiencies in internal con-
trol that we identify during our audit.
obtain sufficient appropriate audit evidence re-
garding the financial information of the entities
or business activities within the Group to express
opinions on the consolidated financial state-
ments and on the group management report. We
are responsible for the direction, supervision
and performance of the group audit. We remain
solely responsible for our opinions.
From the matters communicated with those charged
with governance, we determine those matters that
were of most significance in the audit of the consoli-
dated financial statements of the current period and
are therefore the key audit matters. We describe these
matters in our auditor's report unless law or regulation
precludes public disclosure about the matter.
Wirtschaftsprüfer
Sailer
Wirtschaftsprüfungsgesellschaft
KPMG AG
Munich, 27 February 2019
We also provide those charged with governance with
a statement that we have complied with the relevant
independence requirements, and communicate with
them all relationships and other matters that may
reasonably be thought to bear on our independence,
and where applicable, the related safeguards.
German Public Auditor Responsible
for the Engagement
We declare that the opinions expressed in this audi-
tor's report are consistent with the additional report
to the Audit Committee pursuant to Article 11 of the
EU Audit Regulation (long-form audit report).
The German Public Auditor responsible for the
engagement is Mr Andreas Feege.
Further Information pursuant to Article 10 of the
EU Audit Regulation
Other Legal and Regulatory
Requirements
Auditor's Report
→ Independent
Statement on
Corporate
Governance
246
245
We were elected as group auditor for the financial year
from 1 January to 31 December 2018 at the annual
general meeting on 17 May 2018. We were engaged
by the Audit Committee of the Supervisory Board
on 7 June 2018. Taking into account the transitional
provisions of Article 41 (2) of the EU Audit Regula-
tion, we have been the group auditor of Bayerische
Motoren Werke Aktiengesellschaft for more than 30
consecutive years.
→ 215
2010
2014
2013
2012
2011
2009
→ 61
1,963,798 1,845,186 1,668,982 1,461,166
115,215 106,358 104,286
98,047
BMW Group in figures
→ 6
Development of BMW AG stock
→ 20,21
BMW Group value drivers → 36
Contract portfolio of Financial Services segment
→ 54
BMW Group new vehicles financed or leased by
Financial Services segment → 54
Contract portfolio retail customer financing of
Financial Services segment 2018 → 55
Development of credit loss ratio
Regional mix of BMW Group purchase volumes
2018
→ 58
→ 55
BMW Group change in cash and cash equivalents
→ 71
BMW Group composition financial liabilities
BMW Group financial liabilities by maturity
Balance sheet structure - Group → 76
Balance sheet structure - Automotive segment
BMW Group value added 2018
→ 74
→ 74
→ 76
→ 79
Risk management in the BMW Group
→ 90
Sales volume and locations
BMW Group locations → 34 et seq.
-
BMW Group key automobile markets 2018
BMW Group deliveries of motorcycles → 53
BMW Group - key motorcycle markets 2018
RoE in the Financial Services segment is calculated as
segment profit before taxes, divided by the average
amount of equity capital attributable to the Financial
Services segment.
Return on equity (ROE)
ROCE in the Automotive and Motorcycles segments
is measured on the basis of relevant segment profit
before financial result and the average amount of
capital employed in the segment concerned. Capital
employed corresponds to the sum of all current and
non-current operational assets, less liabilities that do
not incur interest.
Return on capital employed (ROCE)
Finances
A hedge against exposures to fluctuations in the fair
value of a balance sheet item.
INDEX OF GRAPHS
↑ ↑
Report of the Supervisory Board
Research and development
Revenue reserves → 154
→ 8 et seq.
→ 28 et seq., 57
Revenues → 5, 45 et seq., 65 et seq., 68 et seq., 81, 139
Risks and opportunities
→ 90 et seq.
ROCE → 5, 37 et seq., 46 et seq., 88
ROE
→ 5,37 et seq., 47, 88
S
Sales volume
→ 4, 46 et seq., 48 et seq., 53, 88 et seq.
Segment information → 184 et seq.
Selling and administrative expenses
Statement of Comprehensive Income
Stock → 20 et seq.
Sustainability → 30 et seq., 63 et seq.
→ 67,140
→ 110, 145
T
Tangible, intangible and investment assets
→ 146 et seq.
Trade payables
Trade receivables
→166
→153
253
254
Other
Information
→ Index of Graphs
Financial Calendar
Related party relationships → 180 et seq.
Remuneration system → 224 et seq.
Fair value hedge
Fair value
Asset-backed financing transactions
Short-term debt instruments with a term of less than
one year which are usually sold at a discount to their
face value.
Commercial paper
GLOSSARY EXPLANATION
OF KEY FIGURES
-
of Key Figures
→ Glossary-
Explanation
Information
Other
250
249
Dividend per share of common stock/preferred stock
DIVIDEND
Dividend total
Personnel cost per employee
Workforce at year-end³
PERSONNEL
Cash and cash equivalents at balance sheet date
Free cash flow Automotive segment
CASH FLOW STATEMENT
Balance sheet total
Current provisions and liabilities
Non-current provisions and liabilities
Equity
Equity ratio
Capital expenditure ratio (capital expenditure/revenues)
Capital expenditure (excluding capitalised development costs)
BALANCE SHEET
Non-current assets
Current assets
Net profit for the year
Income taxes
Effective tax rate
A form of corporate financing involving the sale of
receivables to a financing company.
The amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing
parties in an arm's length transaction.
Consolidation
Bond
total.
Equity capital as a percentage of the balance sheet
Equity ratio
The effective tax rate is calculated by dividing the
income tax expense by the Group profit before tax.
Effective tax rate
A hedge against exposures to the variability in fore-
casted cash flows, particularly in connection with
exchange rate fluctuations.
revenues.
Profit/loss before financial result as a percentage of
EBIT margin
Abbreviation for "Earnings Before Interest and Taxes",
equivalent in the BMW Group income statement to
"Profit/loss before financial result”.
EBIT
Basic earnings per share are calculated for common
and preferred stock by dividing the net profit after
minority interests, as attributable to each category of
stock, by the average number of shares in circulation.
Earnings per share of preferred stock are computed
on the basis of the number of preferred stock shares
entitled to receive a dividend in each of the relevant
financial years.
Earnings per share (EPS)
Financial swap agreements, under which creditors of
securities (usually bonds) pay premiums to the seller
of the CDS to hedge against the risk that the issuer of
the bond will default. As with credit default insurance
agreements, the party receiving the premiums gives
a commitment to compensate the bond creditor in
the event of default.
Credit default swap (CDS)
Similar to "value at risk" (see definition below).
Cash flow at risk
Liquid funds generated (cash inflows) or used (cash
outflows) during a reporting period.
Cash flow
Capitalised development costs as a percentage of
research and development expenditure.
Capitalisation rate
revenues.
Investments in property, plant and equipment and
other intangible assets (excluding capitalised
development costs) as a percentage of Group
Capital expenditure ratio
The sum of the balance sheet line items “Leased prod-
ucts” and “Receivables from sales financing" (current
and non-current), as reported in the balance sheet for
the Financial Services segment.
Business volume in balance sheet terms
A securitised debt instrument in which the issuer
certifies its obligation to repay the nominal amount
at the end of a fixed term and to pay a fixed or variable
rate of interest.
The process of combining separate financial state-
ments of Group entities into Group Financial State-
ments, depicting the financial position, net assets
and results of operations of the Group as a single
economic entity.
Return on sales (earnings before tax/revenues)
Refinancing →73 et seq.
Receivables from sales financing
E
Dow Jones Sustainability Index World
→ 201
→ 27,59
Dealer organisation/dealerships
Declaration with respect to the
Corporate Governance Code
Digitalisation → 28, 59 et seq.
Dividend → 22, 143 et seq.
D
List of investments → 190 et seq.
Locations → 34 et seq.
→ 148
→ 54 et seq.
Leased products
Lease business
→23
per share
L
Key data
K
Investments accounted for using the equity method
and other investments → 149 et seq.
Inventories → 76, 83, 153
Intangible assets → 123, 148
Income taxes → 67, 141 et seq., 161
→65, 81, 110 et seq., 139 et seq.
Income statement
Cost of materials → 78 et seq.
Cost of sales → 66, 139
→ 200 et seq.
→167
→ 119 et seq.
Earnings per share → 5,143
→ 119 et seq.
→ 29
→ 77, 154 et seq.
→ 4 et seq., 36 et seq., 45 et seq.,
77,83, 156 et seq.
Production → 51 et seq.
Personnel expenses
87 et seq.
Performance indicators
Pension provisions
→ 140 et seq.
P
Outlook → 84 et seq.
Other provisions → 161
Other operating income and expenses
Other investments → 146 et seq.
→ 140
Other financial result
0
→ 71, 125
→ 53
Net profit 5,81
N
Marketable securities
Motorcycles segment
→ 203 et seq.
Mandates of members of the Supervisory Board
Mandates of members of the Board of Management
→ 202
M
→ 41 et seq., 86 et seq., 99, 121, 176 et seq.
→ 5, 37, 45 et seq., 88 et seq.
→ 63
EBIT margin/return on sales
Efficient Dynamics
Employees 4, 45, 61 et seq., 87
Equity
Exchange rates
→ 151
→ 223 et seq.
Consolidated companies
Consolidation principles
Contingent liabilities
Other
Information
252
251
Research and development expenditure ratio
Research and development expenditure as a percent-
age of Group revenues.
The sum of research and non-capitalised development
cost and capitalised development cost (not including
the associated scheduled amortisation).
Research and development expenditure
revenues.
Group profit/loss before tax as a percentage of Group
Pre-tax return on sales
Group net profit as a percentage of Group revenues.
Post-tax return on sales
Cash and cash equivalents as well as marketable secu-
rities and investment funds.
Liquidity
Gross profit as a percentage of Group revenues.
Gross margin
A measure of the potential maximum loss in value of
an item during a set time period, based on a specified
probability.
Value at risk
Goodwill corresponds to the consideration paid to
acquire an entity, less the fair value of the separate
assets acquired and liabilities assumed. The buyer
is willing to pay the additional amount in return for
future expected earnings.
Goodwill
2,117,965
123,495
→ 143
Production network → 32 et seq., 51 et seq.
Profit before financial result → 5 et seq., 67
Profit before tax → 5 et seq., 45, 65, 66, 87, 89
Property, plant and equipment
Purchasing → 58
→148
R
Rating → 22
→ Index
Corporate Governance
INDEX
Financial assets
→ 28
Compliance → 218 et seq.
Connected Drive
CO2 fleet emissions → 4, 31 et seq., 46, 63 et seq., 88
Compensation Report
Capital expenditure 5, 67 et seq.
Cash and cash equivalents
Cash flow → 5, 71 et seq., 114 et seq.
→ 70 et seq., 114 et seq.
C
Group tangible, intangible and investment
assets → 146 et seq.
Bonds →74, 164
→ 76
Balance sheet structure
B
→ 54 et seq.
→ 129 et seq.
G
→ 48 et seq.
Financial Services segment
→ 67,81
Financial result
Financial reporting rules
→ 168 et seq.
→74, 77, 162 et seq.
Financial liabilities
Financial instruments
→ 76, 83, 152 et seq.
→ 122 et seq.
Automotive segment
Accounting policies
Apprentices → 61
A
F
Earnings before tax
Cash flow hedge
Gross profit margin
Quarterly Report to 30 June 2020
4 November 2020
Quarterly Report to 30 September 2020
255
256
Other
Information
→ Contacts
CONTACTS
Business and Finance Press
Telephone +49 89 382-2 45 44
+49 89 382-2 41 18
Fax
E-mail
+49 89 382-2 44 18
presse@bmwgroup.com
Investor Relations
Telephone +49 89 382-2 53 87
Fax
E-mail
→ 48
+49 89 382-1 46 61
ir@bmwgroup.com
The BMW Group on the Internet
Further information about the BMW Group is
available online at www.bmwgroup.com.
Investor Relations information is available directly
at → www.bmwgroup.com/ir.
Information about the various BMW Group brands
is available at www.bmw.com, www.mini.com
and → www.rolls-roycemotorcars.com
A further contribution
5 August 2020
towards preserving resources
Annual General Meeting
Quarterly Report to 31 March 2020
7 May 2019
Quarterly Report to 31 March 2019
16 May 2019
Annual General Meeting
1 August 2019
Quarterly Report to 30 June 2019
6 November 2019
Automobiles
Earnings before financial result
1,286,310
87,306
2,165,566
133,615
2,006,366 1,861,826
110,127 113,811
1,738,160
110,360
1,481,253
99,236
1,258,417
82,631
DELIVERIES
Automobiles
Motorcycles²
Quarterly Report to 30 September 2019
2020
18 March 2020
Annual Report 2019
18 March 2020
Annual Accounts Press Conference
19 March 2020
Analyst and Investor Conference
6 May 2020
14 May 2020
Analyst and Investor Conference
The BMW Annual Report was printed on paper produced in accordance with the international
FSC® Standard: the pulp is sourced from sustainably managed forests.
FSC
www.fsc.org
20.2
20.1
21.2
50,681
60,477
68,821
76,848
76,059
80,401
Revenues
INCOME STATEMENT
Business volume (based on balance sheet carrying amounts)
61,202
66,233
75,245
80,974
84,347
96,390
Contract portfolio
3,085,946
3,190,353
3,592,093
3,846,364
4,130,002
4,359,572
FINANCIAL SERVICES
Motorcycles²
21.1
The corresponding CO₂ emissions were compensated by additional environmental and climate
protection measures as part of a reforestation project in collaboration with Bergwaldprojekt e. V.
(certificate number: DE-141-436949).
18.1
9,118
MIX
Paper from
responsible sources
FSC® C002727
carbon neutral
natureOffice.com | DE-141-436949
print production
This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.
PUBLISHED BY
Bayerische Motoren Werke
Aktiengesellschaft
80788 Munich
Germany
Telephone +49 89 382-0
→ 53
Workforce
BMW Group apprentices at 31 December
Employee attrition rate at BMW AG → 62
Proportion of female employees in management
functions at BMW AG/BMW Group → 62
Proportion of female executives within manage-
ment/function levels I and II at BMW AG
413
4,853
7,383
7,803
7,893
8,707
289
5,111
8,018
8,275
7,978
10.5
21 March 2019
PRODUCTION VOLUME
20 March 2019
37,437
35,600
30,606
27,103
23,930
19,915
24.2
25.7
23.2
22.0
21.7
19.5
58,288
51,643
52,834
49,113
46,100
4.7
45,119
3.8
5.4
74,425
67,013
62,009
56,844
52,184
50,530
49,004
43,151
39,944
4,601
4,967
4,151
2,720
2,312
2,383
5.7
6.5
4.0
59,078
51,134
48,395
92,337
110,351
89,869
105,876
89,161
100,306
95,453
96,230
84,887
83,141
72,349
1,904
2.90/2.92
1,707
2.60/2.62
1,640
2.50/2.52
1,508
2.30/2.32
852
197
1.30/1.32
0.30/0.32
116,324
1,456
4,471
3,166
47,213
40,134
36,919
154,803
138,377
131,835
123,429
110,164
81,305
101,953
7,671
8,370
7,776
7,432
7,767
3,481
3,003
3,809
7,688
Annual Accounts Press Conference
86,193
210
10.7
10.2
10.4
10.8
Exchange rates compared to the euro
2019
Overview of compensation system of the Board
of Management: variable remuneration → 224
Overview of compensation system of the Board
of Management: cash benefits and pension
contribution → 224
→ 42
→218
BMW Group Compliance Management System
→ 41
→ 42
97,959
Oil price trend
Precious metals price trend
Steel price trend → 43
8.0
0.8
FINANCIAL CALENDAR
2,564
4,907
3,243
2,890
5,111
5,329
5,817
49.2
33.1
Further information
34.5
32.5
33.2
203
1,610
2,476
2,692
33.5
24
72.08
23
5 Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
3 Weighted average number of shares for the year.
57.03
65.11
82.305
8.85
5.30
8.23
8.81
6.78
4.12
9.72
10.47
14
88.26
To Our
→Page 44 Overall Assessment by Management
→ BMW AG Stock and
Page 84
→ Page 84 Report on Outlook, Risks and Opportunities
→Page 80 Comments on Financial Statements of BMW AG
→Page 65 Results of Operations, Financial Position and Net Assets
13.095
→Page 63 Sustainability
→Page 61 Workforce
→ Page 59 Sales and Marketing
→Page 58 Purchasing and Supplier Network
→Page 57 Research and Development
→ Page 54 Financial Services Segment
→ Page 53 Motorcycles Segment
Shareholders
→Page 48 Automotive Segment
→Page 45 Comparison of Forecasts for 2018 with Actual Results in 2018
→Page 40 General and Sector-specific Environment
→Page 40 Report on Economic Position
→Page 36 Management System
→Page 26 Organisation and Business Model
→Page 26 General Information and Group Profile
REPORT
COMBINED MANAGEMENT
The BMW Group continued to inform investors, ana-
lysts and rating agencies throughout 2018 with regular
quarterly and year-end financial reports. The com-
prehensive information package provided for capital
market participants included numerous one-on-one
and group meetings, dedicated socially responsible
investment (SRI) roadshows for investors using sus-
tainability criteria in their investment decisions, and
roadshows as well as conferences for debt investors
and credit analysts. Topics discussed included busi-
ness model developments, digitalisation and other
technological trends in the automobile industry as
well as the relevance of alternative drivetrain systems.
Apart from participating in various conferences and
roadshows, product presentations and a technology
workshop were held for analysts and investors in
Munich during the course of the year. Further infor-
mation on the BMW Group's capital market commu-
nications is available at www.bmwgroup.com/ir.
Intensive communication with capital markets
continued
in 2018
Capital Markets
→Page 48 Review of Operations
Stock weighted according to dividend entitlements.
→ Organisation and
Business Model
→Page 90 Risks and Opportunities
The MINI brand is an icon that promises superior
driving fun in the premium small car segment.
Rolls-Royce is the ultimate marque in the ultra-luxury
segment with a tradition stretching back over more
than 100 years. Rolls-Royce Motor Cars specialises in
bespoke customer experiences and offers the highest
level of both quality and service.
The global sales network of the automobile business
currently comprises around 3,500 BMW, 1,600 MINI
and 140 Rolls-Royce dealerships. Within Germany,
sales are conducted through branches of the
BMW Group and independent authorised dealer-
ships. Sales outside Germany are handled primarily
by subsidiary companies and by independent import
companies in some markets.
Motorcycles segment
The Motorcycles business is also clearly focused on
the premium segment. The model range currently
comprises motorcycles for the Sport, Tour, Roadster,
Heritage, Adventure and Urban Mobility (with
scooter models) segments. BMW Motorrad also offers
a broad range of equipment options to enhance rider
safety and comfort. The motorcycles business sales
network is organised similarly to that of the auto-
mobiles business. Currently, BMW motorcycles are
sold by more than 1,200 dealerships and importers
in over 90 countries.
Financial Services segment
The BMW Group is also a leading provider of financial
services in the automobile sector, operating more
than 50 entities and cooperation arrangements with
local financial services providers and importers
worldwide. The segment's main business is credit
financing and the leasing of BMW Group brand cars
and motorcycles to retail customers. Customers can
also choose from an attractive array of insurance
and banking products. Operating under the brand
name Alphabet, the BMW Group's international
multi-brand fleet business provides financing and
comprehensive management services for corporate
car fleets in 19 countries. In addition, international
customers are serviced by Alphabet cooperation
partners in numerous other countries. Through
its multi-brand business Alphera, the BMW Group
provides credit financing, leasing and other services
to retail customers.
The segment also supports the BMW Group's dealer-
ship organisation, for example by financing dealer-
ship vehicle inventories.
28
Combined
Management
Report
General Information
and Group Profile
Organisation and
Business Model
→ Research and
Development
The core BMW brand caters to a very broad array of
customer requirements, ranging from fuel-efficient
and innovative models fitted with Efficient Dynamics
to outstanding high-performance BMW M vehicles. A
wide
range of plug-in hybrid vehicles is also available
and being continuously expanded. At the same time,
the BMW Group continues to redefine the meaning
of premium with its BMW i models. With an even
greater focus on innovation and sustainability, BMWi
embodies the vehicle of the future, with electric
drivetrains, connectivity, intelligent lightweight con-
struction, exceptional design and newly developed
mobility services.
Research and Development
As part of its Strategy NUMBER ONE > NEXT, the
BMW Group is focusing on the topics of electric
mobility, digitalisation and autonomous driving.
When developing new technologies, the emphasis
is always on creating added benefit for customers.
Anticipating the needs and wishes of customers in all
fields of technology and implementing developments
in a way that adds value for the customer are also
key prerequisites for the Group's success going for-
ward. The BMW Group summarises the major trends
of individual mobility in the term D+ACES (Design,
Autonomous, Connected, Electrified, Services).
Accordingly, the BMW Group's R&D activities include
the following five key topics:
1. Design
The BMW Group sees design as the characteristic
combination of aesthetics and technology. Out-
standing design involves focusing keenly on the
requirements of customers and anticipating
their wishes, enabling the BMW Group to con-
tinue finding ideal solutions for the (mobility)
needs of its customers. As a premium provider,
the BMW Group not only aspires to meeting its
customers' requirements, but also to exceeding
their expectations in every respect. A ground-
breaking design underlines the distinctive charac-
ter of each new vehicle and thus strengthens all
of the Group's brands.
2. Autonomous
Since 2018, the BMW Group has pooled its con-
siderable development expertise in the fields of
state-of-the-art driver assistance systems and
highly or fully autonomous driving at its own de-
velopment centre. During the final phase of de-
velopment, some 1,800 people will be working
there. The clear aim is to create an open plat-
form for highly and fully automated driving that
will serve as an industry standard going forward.
Today already, the BMW Group offers driver assis-
tant systems for partially automated driving.
With the BMW iNEXT, the Group will offer highly
automated driving for the first time from 2021.
3. Connected
Digital change is of great significance for the au-
tomobile industry. One of the most important
effects of digitalisation is that the vehicle itself
becomes the focal point of the customer's digital
experience. The BMW Group recognised cus-
tomer trends at an early stage and, with BMW
Connected and a growing range of digital of-
ferings, it is well prepared to meet demand aris-
ing in this field. This is not merely developing
and integrating new technologies and services
for the vehicle. The focus is very much on cus-
tomers and their aspirations for modern-day mo-
bility. Digital services that the customer is used
to should be available seamlessly and without
restriction - both inside and outside the vehicle.
The option of using BMW Group services almost
anywhere and at any time is the basic prerequi-
site for offering a range of digital services geared
solely to customers and their personal needs.
These include, for example, the availability of
personalised and context-based information
within the vehicle.
For customers, the experience begins before pur-
chasing the vehicle, for example through virtual
reality options that offer new ways to configure
the vehicle and explore products interactively.
The customer can also be kept in the loop while
waiting for the new vehicle to be manufactured,
thus ensuring greater involvement in the produc-
tion process from an early stage. The BMW Con-
nectedDrive Store enables customers to reserve
new services at any time for a specified period.
The BMW Intelligent Personal Assistant has been
available in BMW vehicles since March 2019.
Autonomous driving, electrification and ever-
greater connectivity will open up opportunities
for completely new experiences and ways to
shape travel in the future. At the same time,
however, those opportunities will also change
people's wishes and lifestyles. Precisely this
development is supported by the BMW Group's
intelligent platform, which will enable drivers
to switch seamlessly and without restrictions from
one vehicle to the next with just one customer
profile, across each vehicle's life cycle. Moreover,
in future all products and services relating to
individual mobility will be bundled here and grad-
ually developed to form a comprehensive digital
ecosystem.
10.84
A major factor in the success of the BMW Group is
its consistent focus on the future. A long tradition
of innovation is an integral part of its corporate phi-
losophy. Shaping individual mobility and finding
innovative solutions today for the needs of tomorrow
is a key driving force. Research and development
(R&D) are therefore of key importance for the
BMW Group as a premium supplier and ensure its
long-term economic success.
Outlook
Automotive segment
Presentation of segments
→ Page 103 Internal Control System Relevant for Accounting
and Financial Reporting Processes
→ Page 104 Disclosures Relevant for Takeovers and Explanatory Comments
2
2
Combined
Management
Report
General Information
and Group Profile
Economic Position
Outlook, Risks and
Opportunities
26
Combined
Management
Report
General Information
and Group Profile
GENERAL
INFORMATION
AND GROUP
PROFILE
In order to provide a better insight into the Group,
this report also includes a presentation of the
operating segments Automotive, Motorcycles and
Financial Services.
Over 140,000 electrified vehicles
delivered
Customer in focus with innovative
offerings
High investments in the flexibility of
the production network
ORGANISATION AND
BUSINESS MODEL
→ www.bmwgroup.com/company
This Combined Management Report incorporates the
management reports of Bayerische Motoren Werke
Aktiengesellschaft (BMW AG) and the BMW Group.
General information on the BMW Group is provided
below. There have been no significant changes com-
pared to the previous year.
Bayerische Motoren Werke Aktiengesellschaft
(BMW AG), based in Munich, Germany, is the parent
company of the BMW Group. The general purpose of
the Company is the production and sale of engines,
engine-equipped vehicles, related accessories and
products of the machinery and metal-working
industry as well as the rendering of services related
to the aforementioned items. The BMW Group is
sub-divided into the Automotive, Motorcycles and
Financial Services operating segments. The seg-
ment Other Entities primarily comprises holding
companies and Group financing companies. The
BMW Group operates on a global scale and is rep-
resented in more than 140 countries worldwide. At
the end of the reporting period, the BMW Group
employed a workforce of 134,682 people.
Founded in 1916 as Bayerische Flugzeugwerke AG
(BFW), Bayerische Motoren Werke G.m.b.H. came
into being in 1917 before finally becoming Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) in 1918.
The BMW Group comprises BMW AG itself and all
subsidiaries over which BMW AG has either direct
or indirect control. BMW AG is also responsible for
managing the BMW Group as a whole.
The BMW Group is one of the most successful mak-
ers of automobiles and motorcycles worldwide and
among
the largest industrial companies in Germany.
It is the only manufacturer that focuses exclusively on
the premium segment with all its brands. With BMW,
MINI and Rolls-Royce, the BMW Group owns three of
the best-known premium brands in the automotive
industry. In addition to its strong market position
in the premium segment of the global motorcycles
sector, the BMW Group is also successful in the
financial services business. Moreover, in recent years
the BMW Group has evolved into one of the leading
providers of premium services for individual mobility.
27
27
In 2016, the BMW Group presented its Strategy
NUMBER ONE > NEXT. At the heart of Strat-
egy NUMBER ONE > NEXT is a commitment to
future-oriented activity with the development of
products, brands and services in the premium seg-
ment for individual mobility. New technologies such
as alternative drivetrains, digitalisation and connec-
tivity are further key areas of focus. Furthermore,
the strategy emphasises the increasing importance
of a customer-oriented approach.
Increasing R&D expenditure
secures future business
8.83
77.71
10.45
European Commission President Juncker at the end
of July, which raised hopes of a possible rapproche-
ment in the trade dispute, seemed to ease the situ-
ation and helped drive up share prices temporarily.
However, renewed rumours of tariff hikes between
the EU and the US in November again caused market
unease. In addition to trade policy issues, the budget
debate in Italy as well as discussions regarding the
potential repercussions of Brexit darkened the mood
on capital markets during the fourth quarter. Towards
the end of the year, market sentiment was influenced
by the US Federal Reserve's (Fed) monetary policies.
A further rise in the key interest rate prior to the
year-end caused share prices to fall once again.
24
21
Source: Reuters.
2019
2018
2017
2016
The DAX closed the stock exchange year at
10,559 points, down 18.3% compared to the end of
2017 (12,918 points). Compared to its high for the
year (13,560 points), the DAX lost 22.1% in value by
the end of the year.
2015
50
50
BMW common stock
Prime Automobile
100
BMW preferred stock
DAX
150
2014
The EURO STOXX 50 fared slightly better than the
DAX, finishing the year 14.3% lower at 3,001 points.
From May onwards, the Prime Automobile Index was
significantly weaker on account of the factors referred
to above. Higher upfront expenditure by automotive
companies for future technologies and possible trade
conflicts between the USA and China on the one hand
and the USA and Europe on the other dampened
market sentiment. The transition to a new emissions
standard (Worldwide Harmonised Light Vehicle Test
Procedure, WLTP) led to delivery bottlenecks for some
automobile manufacturers. These developments were
also reflected in the prices of auto stocks. As a result,
the sector index fell by 27.2% over the course of the
year, closing at 1,228 points.
The assessment of both rating agencies reflects
the attractive product launches that are part of the
current model offensive, the excellent positioning
of the BMW Group with respect to the challenges
faced by the automobile industry and a strong
operating performance. BMW AG's solid capital
structure and prudent financial approach also under-
pins the dependable financial profile and excellent
creditworthiness of the BMW Group as a whole.
Consequently, the Company not only has good access
to international capital markets, but also benefits
from attractive refinancing conditions.
Since December 2013, BMW AG has had a long-term
rating of A+ (stable outlook) and a short-term rating
of A-1 from the rating agency Standard & Poor's.
This represents the highest rating currently given by
Standard & Poor's to a European car manufacturer.
In January 2017, Moody's raised its long-term rating
for BMW AG from A2 (positive outlook) to A1 (stable
outlook). The P-1 short-term rating was confirmed.
stable
stable
A+
A-1
P-1
A1
Non-current financial liabilities
Current financial liabilities
Outlook
Standard &
Poor's
Moody's
Company rating
The BMW Group continues to be the best-rated car-
maker in Europe.
Ratings remain at top level
At the end of 2018, with a market capitalisation of
some €46 billion, the BMW Group remained among
the ten most valuable German enterprises listed on
the stock market.
→BMWAG Stock and
Capital Markets
in 2018
Shareholders
To Our
Although affected by the generally unfavourable mar-
ket environment, BMW stock held its value relatively
well, particularly in comparison with the sector index.
BMW stock initially bucked the downward trend in
the first quarter of 2018. Since the second quarter,
however, BMW stock partially succumbed to the
general sector trend and also registered price losses.
Despite the challenging conditions currently facing
the automobile industry, which also resulted in the
BMW Group adjusting its outlook for the year in
September, BMW stock nevertheless outperformed
the market as a whole in the third quarter. Uncer-
tainties in the fourth quarter, exacerbated by fears
of a disorderly Brexit and an escalation in the trade
disputes between the USA and China and the USA
and Europe, exerted downward pressure on share
prices. Accordingly, BMW stock closed the year
with a performance similar to that of the DAX. BMW
common stock finished the year at €70.70, down by
18.6% since the beginning of the year. BMW preferred
stock performed similarly to BMW common stock,
finishing the year at €62.10, 16.8% lower than the
closing price recorded one year earlier.
200
Employee Share Programme
100
200
Capital Markets
→ BMW AG Stock and
Shareholders
To Our
20
20
19
19
in 2018
Chairman of the Board of Management
H. 35"
Yours
We aim to ensure that your Company remains an attractive investment as we move towards
the future.
Above all, we are committed to focusing all our efforts on bringing the EBIT margin in the
Automotive segment back within our target range of 8 to 10 percent.
At the BMW Group, we continue to navigate our own course. Our aim remains to be both a
driving force and an innovator, able to lead individual mobility into a new era for our customers:
one that is sustainable, connected and autonomous.
Dear Shareholders,
Your Company is innovative, profitable and versatile. This year, the Board of Management
and Supervisory Board will propose a dividend of 3.50 euros per share of common stock and
3.52 euros per share of preferred stock. This is the second-highest dividend the company has
ever paid in its history. BMW AG associates in Germany will also benefit from the company's
positive performance through our profit-sharing programme.
The current business and political environment remains complex and challenging, overshadowed
by uncertainty. That is not going to change any time soon. But we do not shy away from such
challenges. This is what spurs us to give our best and search for new and innovative solutions.
It also applies in our competition with both new and established companies.
Harald Krüger
BMW AG STOCK
AND CAPITAL
MARKETS
IN 2018
Political uncertainties unsettle
capital markets
BMW AG stock outperforms sector
Index: December 2013 = 100
9.70
BMW AG development of stock
Negative impact on capital markets in 2018
At the beginning of the 2018 stock exchange year,
markets benefited initially from the prospect of robust
global growth and an easing of political tensions on
the Korean peninsula. Accordingly, the German stock
index (DAX) recorded an all-time high of 13,560 points
in January 2018. Subsequently, however, stock market
developments were negatively affected by the results
of parliamentary elections in Italy and the intensifi-
cation of the trade dispute between China and the
USA. Initial fears were confirmed at the beginning of
the third quarter when higher tariffs were introduced
in July on goods traded between China and the USA.
Uncertain prospects of a rapprochement in the trade
dispute caused prices to fluctuate more widely as
the year progressed, resulting in a generally volatile
market environment. Alongside the US-China trade
conflict, American import duties on steel and alumini-
um coming from the European Union (EU) also caused
uncertainty as from the end of the second quarter.
Moreover, there were discussions regarding a potential
increase in US import duties on European automobile
imports which had a dampening effect on stock mar-
kets. A meeting between US President Trump and
mobile
DAX
Prime
Auto-
BMW
BMW
preferred common
stock
stock
60
83.0
88.1
100.0
120
110.5
in %
Development of BMW AG stock compared to
stock market indices since 30 December 2013
→ 09
Numerous political uncertainties unsettled capital mar-
kets over the course of 2018 and dampened the mood
on stock markets. In particular, global trade disputes
and political uncertainties in Europe dominated stock
market developments and negatively impacted investor
sentiment. Since the introduction of higher customs
tariffs on goods traded between China and the USA on
6 July 2018, the American-Chinese trade dispute had a
particularly negative effect on global stock exchanges
and therefore also on auto stocks worldwide.
→ www.bmwgroup.com/ir
Ratings remain at top level
150
For more than 40 years, BMW AG has enabled its
employees to participate in its success. Since 1989,
this participation has taken the form of an Employee
Share Programme. In 2018, a total of 521,524 shares
of preferred stock were issued to employees under
the terms of this programme.
→ 10
Dividend below previous year
56.53
67.29
60.70
74.60
92.19
74.15
78.89
82.50
58.96
67.84
72.70
74.64
62.10
Low
High
Year-end closing price
Stock exchange price in €1
54,500
77.41
59.08
KEY DATA PER SHARE IN €
Common stock
In this context, and with the approval of the Super-
visory Board, in 2018 the Board of Management
increased BMW AG's share capital by €521,500 from
€657,600,600 to €658,122,100 by issuing 521,500 new
non-voting shares of preferred stock. This increase
was implemented on the basis of Authorised Capital
2014 contained in Article 4 (5) of the Articles of Incor-
poration. The new shares of preferred stock carry the
same rights as existing shares of preferred stock. The
newly issued shares of preferred stock for employees
are entitled to receive dividends with effect from the
financial year 2019. In addition, 24 shares of preferred
stock were repurchased via the stock market or were
acquired as a result of cancelled employee purchases
relating to the previous year.
13.075
10.82
2.92
3.22
3.52
4.02
3.522
2.90
3.20
3.50
4.00
3.50²
2 Proposed by management.
1 Xetra closing prices.
Free cash flow Automotive segment
Equity
Earnings per share of preferred stock4
Earnings per share of common stock³
Preferred stock
54,809
55,114
Dividend
56,127
601,995
601,995
Number of shares in 1,000
COMMON STOCK
2014
2015
2016
2018
601,995
→ 11
22
22
tion of IFRS 15,
see note 6 to the
Group Financial
Statements.
first-time applica-
adjusted due to
* Prior year figures 32.0% (2017: 30.3 %*).
55,605
The Board of Management and the Supervisory Board
are proposing to the Annual General Meeting to use
BMW AG's unappropriated profit of €2,303 million
(2017: €2,630 million) for the payment of a dividend
of €3.50 per share of common stock (2017: €4.00) and
a dividend of €3.52 per share of preferred stock (2017:
€4.02). The payout ratio for 2018 therefore stands at
BMW AG stock
601,995
2017
95.51
601,995
77.41
75.68
65.10
69.86
122.60
92.25
90.83
PREFERRED STOCK
96.26
89.77
97.63
88.75
86.83
70.70
Low
High
Year-end closing price
Stock exchange price in €¹
Number of shares in 1,000
☐
New Zealand
Production
BMW Group Technology Office,
Shanghai, China
Argentina¹
Brazil
outside Europe
United Arab
Emirates
South Africa
■BMW Group plant Araquari, Brazil
BMW Group ConnectedDrive Lab
BMW Group plant Spartanburg, USA
BMW Brilliance Automotive, China
(joint venture-3 plants)
Partner plants
outside Europe
Partner plant, Chongqing, China
Partner plant, Hosur, India
Partner plant, Jakarta, Indonesia
Partner plant, Cairo, Egypt
Partner plant, Kaliningrad, Russia
Partner plant, Kulim, Malaysia
▲ Research and development
network outside Europe
BMW Group Designworks, Newbury
Park, USA
BMW Group Technology Office USA,
Mountain View, USA
BMW Group Engineering and
Emission Test Center,
China, Shanghai, China, and
BMW Group Designworks Studio
Shanghai, China
Mexico
BMW Group plant Chennai, India
BMW Group plant Manaus, Brazil
BMW Group plant Rayong, Thailand
BMW Group plant Rosslyn, South Africa
BMW Group plant San Luis Potosí²,
Mexico
USA
33
Headquarters
BMW Group Engineering China,
Beijing, China
MINI Hatch, MINI Convertible, MINI Countryman, BMW X1
Scooter
BMW 5 Series, BMW Z4
Motorcycles
33
34
Combined
Management
Report
General Information
and Group Profile
→ Organisation and
Business Model
BMW Group locations worldwide
→ 12
43
7 Sales subsidiaries and
Financial Services
locations worldwide
31
Production and
assembly plants
16
Research and
development
locations
Canada
BMW Group Engineering Japan,
Tokyo, Japan
Partner plants
in Europe
BMW Technology, Chicago, USA
Portugal
Italy
Slovenia¹
Malta
■ Production in Europe
BMW Group plant Berlin
BMW Group plant Dingolfing
BMW Group plant Eisenach
BMW Group plant Landshut
BMW Group plant Leipzig
BMW Group plant Munich
BMW Group plant Regensburg
BMW Group plant Wackersdorf
BMW Group plant Steyr, Austria
BMW Group plant Hams Hall, UK
BMW Group plant Oxford, UK
BMW Group plant Swindon, UK
Rolls-Royce Manufacturing Plant,
Goodwood, UK
Partner plant, Born,
Netherlands
Partner plant, Graz,
Austria
▲ Research and development
network in Europe
BMW Group Research and Innovation
Centre (FIZ), Munich, Germany
Products
Spain
BMW Group Engineering USA,
Woodcliff Lake, USA
Switzerland
Belgium
Sales subsidiaries and
Financial Services
locations worldwide
1 Sales locations only.
² 2018 only pre-series production, plant opens in 2019.
Russia
India
China
South Korea
Japan
Hong Kong
Thailand
Malaysia
Singapore¹
Indonesia¹
Australia
BMW Group locations in Europe
→ 13
Norway
Germany
Netherlands
UK
Ireland
France
India
Oxnard, USA
China
2017
2018
2017
2018
Return on capital employed in %
Average
capital employed in € million
Profit before financial result in € million
Average capital
employed
7
ROCE
Motorcycles
Profit before
financial result
→ 16
Return on capital employed*
As with the Automotive segment, the Motorcycles
segment is managed on the basis of RoCE. Capital
employed is determined on the same basis as in the
Automotive segment. The strategic RoCE target for
the Motorcycles segment is 26%.
Motorcycles segment
→Management System
General Information
and Group Profile
12,420
10,147
49.8
77.7
Capital employed corresponds to the sum of all
current and non-current operational assets, less
liabilities that do not incur interest (e.g. trade payables
and other provisions).
Due to its key importance for the Group as a whole,
the Automotive segment is managed on the basis of
additional key performance indicators which have a
significant impact on RoCE and hence on segment
performance. These value drivers are the number of
vehicle deliveries and the operating return on sales
(EBIT margin: segment-related profit/loss before
financial result as a percentage of segment revenues)
as the key performance indicator for segment prof-
itability. The management system also takes into
account average CO2 emissions for the fleet, which,
through their influence on ongoing development
costs and due to regulatory requirements, can have
2018
a significant long-term impact on Group performance.
Fleet emissions correspond to average CO2 emissions
of new cars sold in the EU-28 countries.
36
37
88
38
Combined
Management
Report
By managing the business on the basis of key value
drivers, it is possible to gain a better understanding
of the causes of changes in the RoCE and to define
suitable measures to influence it.
7,888
2017
175
29
18.1
14.8
12,167
14,630
2,207
2,161
2017
2018
2017
2018
2017
2018
Return on equity in %
Average equity capital in € million
Profit before tax in € million
Financial Services
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
207
616
609
28.4
34.0
Motorcycles
In view of its increasing strategic importance, the
Motorcycles segment adopted the operating return
on sales (EBIT margin: segment-related profit/loss
before financial result as a percentage of segment
revenues) as a key performance indicator with effect
from the financial year 2017. The long-term target
range is between 8 and 10%. Used in combination
with the number of motorcycle deliveries as a non-
financial value driver, the segment can exert a greater
influence on the development of RoCE.
As is common practice in the banking sector, the
Financial Services segment is managed on the basis
Return on equity
→ 17
of return on equity. RoE is defined as segment profit
before tax, divided by the average amount of equity
capital in the Financial Services segment. In view
of generally increasing regulatory requirements, a
greater volume of equity capital will be allocated to
the segment in future, which will result in a lower
RoE. In this context, the long-term target return was
changed with effect from the 2018 financial year from
at least 18% to at least of 14%.
Profit before tax
Average equity capital
Financial Services segment
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
6,182
Automotive
7
The business management system applied by the
BMW Group follows a value-based approach that
focuses on profitability, consistent growth, value
enhancement for capital providers and job security.
Capital is considered to be employed profitably when
the amount of profit generated sustainably exceeds
the cost of equity and debt capital. In this way, the
desired degree of corporate autonomy is also secured
in the long term.
MANAGEMENT SYSTEM
→ Management System
General Information
and Group Profile
Report
Management
Combined
36
35
35
Greece
Bulgaria¹
Romania¹
Hungary¹
Slovakia¹
Austria
Austria
BMW Group Research and
Technology, Munich, Germany
BMW Group Autonomous Driving
Campus, Unterschleißheim, Germany
BMW Group Designworks, Munich,
Germany
BMW Car IT, Munich, Germany
BMW Group Lightweight
Construction and Technology Center,
Landshut, Germany
The BMW Group's internal management system is
based on a multi-layered structure. Operating manage-
ment occurs primarily at segment level. In order to
manage long-term corporate performance and assess
strategic issues, additional key performance indicators
are taken into account within the management system
at Group level. In this context, value added serves as
one of several indicators for the contribution made
to enterprise value during the financial year. This
approach is made operational at both Group and
segment level through key financial and non-finan-
cial performance indicators (value drivers). The link
between value added and the relevant value drivers
is shown in a simplified form below.
BMW Group Diesel Competence
Centre, Steyr, Austria
Sweden
Finland¹
Denmark
Czech
Republic¹
Poland
Sales subsidiaries and
Financial Services
locations Europe
BMW Group - value drivers
→ 14
Value added
Profit before
financial result
ROCE Automotive
=
Average capital
employed
Average
Profit before financial result in € million
The most comprehensive key performance indica-
tor used for the Automotive segment is RoCE. This
indicator provides information on the profitability of
capital employed and the operational business. ROCE
is measured on the basis of segment profit before
financial result and the average capital employed in
the segment. The strategic target for the Automotive
segment's RoCE is 26%.
capital employed in € million
2018
2017
2018
2017
2018
2017
Return on capital employed in %
29
Automotive segment
→ 15
Return on capital
(ROCE or RoE)
×
Return on sales
Capital turnover
Cost of capital
Profit
and return on equity (ROE) for the Financial Services
segment. These indicators combine a wide range of
relevant economic information, such as profitabil-
ity (return on sales) and capital efficiency (capital
turnover) to provide a measurement of segment
performance and the development of enterprise value.
Capital employed
Expenses
Revenues
Due to the high level of aggregation, it is impractical
to manage the business on the basis of value added.
This key indicator therefore only serves for reporting
purposes. Relevant value drivers having a significant
impact on business performance and therefore on
enterprise value are defined for each controlling
level. The financial and non-financial value drivers
are reflected in the key performance indicators used
to manage the business. In the case of project-related
decisions, the system follows a project-oriented
management logic that is based on value added and/or
profitability, thereby providing a fundamental basis
for decision-making.
Management of operating performance
at segment level
Operating performance at segment level is managed at
an aggregated level on the basis of returns on capital.
Depending on the business model, the segments are
measured on the basis of return on total capital or
equity. Specifically, return on capital employed (ROCE)
is used for the Automotive and Motorcycles segments
Return on capital employed*
Average weighted
cost of capital rate
Alongside automated driving, systematically
enhancing the scope of connectivity on the road
to a digital, emission-free future is one of the
key areas in which the BMW Group is helping
transform the mobility sector with its Strategy
RoE Financial
Services
4. Electrified
The Group addresses current social challenges, pri-
marily where its strengths make it the most effective.
The main focus here is on problem-solving approaches
that are internationally applicable and have a tangi-
ble long-term impact according to the principle of
"helping people to help themselves”. For this purpose,
the BMW Group works together with the BMW Foun-
dation Herbert Quandt.
BMW Foundation Herbert Quandt
In 1959, Herbert Quandt secured the independence of
BMW AG, thus laying the foundation for the successful
development of the BMW Group. In recognition of
his entrepreneurial achievements, in 1970 BMW AG
established the "BMW Stiftung Herbert Quandt”,
which has meanwhile been renamed the "BMW Foun-
dation Herbert Quandt" with expanded endowment
capital. With its Responsible Leadership programmes,
a global network and impact-oriented investments,
the BMW Foundation Herbert Quandt supports the
sustainable development goals of the United Nations'
Agenda 2030.
Further information on the topics of sustainability
and human resources within the BMW Group is
available in the sections Sustainability and Workforce,
respectively, of the Group Management Report and
in the Sustainable Value Report 2018 published on
the Company's website at www.bmwgroup.com/svr.
31
32
32
Combined
Management
Report
General Information
and Group Profile
Organisation and
Business Model
→ Production Network
Production Network
The production network comprises a total of 31 loca-
tions in 15 countries, whereby 20 of the 31 locations
are BMW Group plants. Three locations belong to the
BMW Brilliance Automotive joint venture in China.
Eight production sites are operated by partners or
contract manufacturers. The same standards of
quality, safety and sustainability apply at all loca-
tions within the BMW Group's production network
worldwide.
Social engagement is also an integral part of the
BMW Group's understanding of its corporate respon-
sibility. For several years now, the BMW Group has
firmly supported intercultural exchange. In part-
nership with the UN Alliance of Civilizations, the
BMW Group presents the Intercultural Innovation
Award for exemplary projects in this field. Since 2011,
the Company has presented the "BMW Group Award
for Social Commitment" every year to employees who
have made an exceptional contribution through their
outstanding volunteer work.
Locations
Products
BMW GROUP PLANTS
Araquari
Berlin
Chennai
Dingolfing
Eisenach
Hams Hall
Landshut
Leipzig
Manaus
Munich
Oxford
Rayong
Regensburg
Rosslyn
Country
San Luis Potosí¹
The BMW Group attaches great importance to training
and developing its workforce. In 2018, investment in
training and development programmes across the
Group amounted to €373 million (2017: €349 million).
In addition, 1,656 trainees were hired worldwide.
A total of 4,964 young people are currently under-
going vocational training or participating in internal
programmes to develop young talent.
With effect from September 2018, all vehicles in the
EU are required to be approved in accordance with
the new WLTP testing cycle. However, the calculation
of CO2 fleet emissions by the EU Commission will
not be converted to WLTP until 2021. Therefore, for
reporting purposes up to and including 2020, WLTP
fleet emissions must be translated back to the previ-
ously applicable values calculated in accordance with
the outgoing New European Driving Cycle (NEDC).
Due to the changed test conditions used for WLTP
purposes, values for emissions are higher when trans-
lated back to a NEDC basis (NEDC-correlated). In
order to ensure comparability, CO₂ fleet emissions for
2017 (122 g CO2/km according to NEDC) were con-
verted to a correlated NEDC value of 128 g CO2/km
under WLTP test conditions and published in the
Quarterly Report to 30 June 2018. The conversion
to WLTP at the BMW Group went according to plan.
at the IAA Cars in the same year. The series
launch of all-electric MINI vehicles is scheduled
to begin in 2019.
The Vision 100 study presented for the Rolls-Royce
brand in 2016 gave customers a first glimpse into
the future of automobile luxury powered by elec-
tric drivetrains.
5. Services
The BMW Group aims to be the leading provider
of premium mobility services going forward.
To achieve this goal, it is essential to have a clear
understanding of the needs of customers world-
wide. This knowledge is the basis for providing
an attractive, comprehensive range of services.
These include easy-to-use, digitally supported
mobility services that also feature bring-and-
collect services or help customers find free park-
ing spaces in urban environments.
At 31 December 2018, over 15,000 people at 16 locations
in five countries were working in the BMW Group's
global research and innovations network.
Year-on-year, research and development expenditure
rose significantly to €6,890 million (2017: €6,108 mil-
lion; +12.8%). The R&D expenditure ratio stood at
7.1% (2017: 6.2%). The ratio of capitalised development
costs to total research and development expenditure
(capitalisation ratio) stood at 43.3% for the period
under report (2017: 39.7%). Amortisation of capitali-
sed development costs totalled €1,414 million (2017:
€1,236 million; 14.4%). Further information on R&D
expenditure is provided in the "Report on Economic
→see Position (Results of Operations)" and in → note 9 to
the Group Financial Statements.
note 9
* Fuel
consumption
and CO₂ emis-
sions informa-
tion are available
on page 108.
In 2018, numerous awards and prizes once again
underscored the BMW Group's high level of innovative
expertise, particularly in design, the use of innovative
technologies as well as the intelligent connectivity of
drivers, vehicles and environment.
30
Combined
Management
Report
General Information
and Group Profile
The BMW Group has set itself the goal of being a
leader in the use of renewable energy in production
and the value chain. In 2018, 79% (2017: 81%) of
the BMW Group's bought-in electricity worldwide
came from renewable sources. In view of increasingly
complex supplier relationships, it is important for
the BMW Group to work together with suppliers to
increase transparency and resource efficiency along
the supply chain. The BMW Group requires suppliers
to comply with environmental and social standards
across the value chain.
Organisation and
Business Model
→ Sustainability
Cooperation Agreements and
Partnerships
In order to secure the success of the business in the long
term, the BMW Group enters into specific cooperation
agreements and partnerships with companies both
from the automotive sector but also with technology
leaders in other industries. Against a backdrop of
rapid technological change, the aim of collaborating
with external partners is to combine expertise in order
to bring innovations to customers within the shortest
time possible.
The BMW Group and Daimler AG are merging their
mobility services in a new joint venture in order
to achieve dynamic growth in a highly competitive
environment. In this way, both companies are pro-
moting the vision of pure electric and autonomous on-
demand mobility simultaneously. The aim is to further
expand existing offerings in the areas of car-sharing,
ride-hailing, parking, charging und multimodality
and to interlock even more closely with one another
in the long term. The new mobility offering is to be
accessible, intuitive and aligned towards the needs
of the user. The newly founded company seeks to
increase the quality of urban life and to prepare the
way for a world with autonomous vehicles.
To coincide with the 15th anniversary of BBA, the
joint venture announced extensive investments in
new and existing plant structures in order to cover
future market requirements. The BMW Group intends
to increase its stake in BBA from 50 to 75%. During
an anniversary celebration, the BMW Group signed
an agreement to that effect with its partner Brilliance
China Automotive Holdings Ltd. (CBA). The contrac-
tual term of the joint venture, which is due to end in
2028, is to be extended up to 2040. After approval
by the Annual General Meeting of CBA on 18 Janu-
ary 2019, the agreement is also subject to regulatory
approvals.
Additionally, the BMW Group signed an agreement
with the Chinese manufacturer Great Wall Motor
Company Limited for the production of electric MINI
vehicles in China in a 50-50 joint venture. In addition
to electric MINI Vehicles, the joint venture, Spotlight
Automotive Limited, will also produce electric vehicles
for Great Wall Motor. The formal establishment of
the new company remains subject to approval from
the relevant Chinese authorities. Together with the
planned increase of share in BBA, the BMW Group
is significantly expanding its presence in China and
underscoring its local engagement.
1 EU-28
Sustainability
The BMW Group is a pioneer of sustainability not only
within the automotive industry, but across other sec-
tors, too. Long-term thinking and responsible action
have long been the foundations of the BMW Group's
distinct identity and its economic success. As early as
1973, the BMW Group was among the first to appoint
an environmental officer in the automobile sector.
Today, the Sustainability Board, comprising all mem-
bers of the Board of Management, sets the strategic
direction along with binding targets. Since 2001,
the BMW Group has been committed to the United
Nations Environment Programme, the UN Global
Compact and the Cleaner Production Declaration.
The principles and importance of managing the busi-
ness on a sustainable basis are emphasised in the
new Strategy NUMBER ONE > NEXT, which includes
a clear commitment to preserving resources. The
BMW Group remains fully committed to ecological
and social sustainability along the entire value chain
as well as to comprehensive product responsibility.
The BMW Group takes a holistic approach to sustaina-
bility management that encompasses the entire value
chain. Apart from the reduction of CO2 emissions,
key components of the Group's sustainability strategy
include operational environmental protection, sus-
tainability in the supply chain, employee orientation
and social commitment.
Since 1995, the BMW Group has cut the CO2 emis-
sions of its new vehicles sold in Europe¹ by more
than 42%. Average CO2 emissions in Europe¹ in
2018 amounted to 128 g CO2/km (adjusted value for
2 Value according 2017: 128 g CO2/km)². In 2018, more than 140,000
electrified vehicles were sold within one year for
the first time.
to planned
conversion to
WLTP
→ Cooperation
Agreements and
Partnerships
Spartanburg
Steyr
Swindon
Tiexi (Shenyang)
China
Tiexi (Shenyang)
China
Products
BMW 5 Series, BMW X3
BMW 1 Series, BMW 2 Series, BMW 3 Series, BMW X1
Petrol engines, production of core engine parts
The main function of the BMW Group's four partner
plants is to serve regional markets. During the year
under report, BMW and MINI vehicles were also
manufactured in Jakarta (Indonesia), Cairo (Egypt),
Kaliningrad (Russia) and Kulim (Malaysia).
Locations
PARTNER PLANTS
Jakarta
Cairo
Kaliningrad
Kulim
China
Country
Indonesia
Egypt
BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X5, MINI Countryman
BMW 3 Series, BMW 5 Series, BMW 7 Series, BMW X1, BMW X3, BMW X5, BMW X6
Russia BMW 3 Series, BMW 5 Series, BMW 7 Series, BMW X1, BMW X3, BMW X4, BMW X5, BMW X6
Malaysia
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X4, BMW X5, MINI Countryman
The BMW Group also awards production contracts to
external partners for specific types of vehicle as well as
motorcycles. During the period under report, Magna
Steyr Fahrzeugtechnik produced the BMW 5 Series
Sedan and BMW Z4 in Graz (Austria). Moreover, ¬
various MINI models and the BMW X1 were assembled
at VDL Nedcar in Born (Netherlands). BMW motor-
cycles and scooters were also manufactured by the part-
ner companies TVS Motor Company in Hosur (India)
and Loncin Motor Co., Ltd in Chongqing (China).
Locations
CONTRACT PRODUCTION
Born
Chongqing
Graz
Hosur
Country
Netherlands
Products
Dadong (Shenyang)
JOINT VENTURE BMW BRILLIANCE
AUTOMOTIVE HOLDINGS LTD.
Country
Wackersdorf
Brazil
Germany
India
Germany
Germany
United Kingdom
Germany
Germany
Brazil
Germany
United Kingdom
Thailand
Germany
South Africa
Mexico
USA
Austria
United Kingdom
Germany
United Kingdom
BMW 3 Series, BMW X1, BMW X3, BMW X4
BMW motorcycles, Maxi-Scooters, car brake discs
BMW 3 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X4, BMW X5, MINI Countryman
BMW 3 Series, BMW 4 Series, BMW 5 Series, BMW 6 Series,
BMW 7 Series, BMW 8 Series, BMW M
Chassis and drivetrain components
Components for electric mobility
Rolls-Royce bodywork, pressed parts
Toolmaking, outer body parts for Rolls-Royce, aluminium tanks for BMW Motorrad
Petrol engines for BMW, MINI
BMW i8 plug-in hybrid engines
Core engine parts
Lightweight construction components, electric drivetrain systems and special engines
BMW 1 Series, BMW 2 Series, BMW i, BMW M
Motorcycles
Locations
automobile plants. Tiexi also has an engine plant with
a foundry and a battery factory.
The plants in Shenyang (China) are operated by the
joint venture BMW Brilliance Automotive (BBA).
The Shenyang site comprises the Dadong and Tiexi ¬
2 Fuel consumption and CO2 emissions information are available on page 108.
1 2018 only pre-series production, plant opens in 2019.
Rolls-Royce Manufacturing Plant Goodwood
With its MINI Electric, MINI is reinterpreting the
urban tradition of the brand for the electric age
and reinventing individual mobility for the city.
The market launch of the MINI* brand's first
plug-in hybrid in 2017 was followed by the pre-
sentation of the all-electric MINI Electric Concept
Pressed parts and bodywork components
Distribution centre for parts and components
Cockpit assembly
Processing of carbon fibre components
Rolls-Royce Phantom², Ghost, Wraith, Dawn, Cullinan²
BMW X3, BMW X4, BMW X5, BMW X6, BMW X7, BMW M
Petrol and diesel engines for BMW and MINI
Core engine parts
BMW 1 Series, BMW 2 Series, BMW 3 Series, BMW 4 Series,
BMW X1, BMW X2, BMW M
BMW 3 Series, BMW X3
BMW 3 Series
BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X4, BMW X5
Motorcycles
MINI Hatch, MINI Clubman
Petrol and diesel engines, high-performance engines for M models
Core engine parts
NUMBER ONE > NEXT.
High-performance engines for M models
As an important pillar of the BMW brand, vehi-
cles equipped with plug-in hybrid drivetrains
represent a good alternative product offering for
customers. All plug-in models are equipped with
a smart energy management system that ensures
ideal interaction between the combustion engine
and the electric motor. The option to drive fully
electrically, added efficiency gained through elec-
tric assistance features, and the spontaneous re-
sponse characteristics provided by the additional
electric drivetrain lead to a new harmony of dri-
ving pleasure and sustainability. The flexibility of
the technologies used makes it possible to extend
the broad range of models fitted with plug-in
hybrid drivetrains as required.
BMW 3 Series, BMW 4 Series, BMW M
Another topic of strategic importance for the
BMW Group is the continuous optimisation of
the energy efficiency of its automobiles and
motorcycles, including the electrified vehicles
manufactured for the BMW, MINI, Rolls Royce
and BMW Motorrad brands. Under the term
Efficient Dynamics, the BMW Group has been
successfully working for years on reducing fuel
consumption and vehicle emissions through the
development of highly efficient combustion
engines, the electrification of drivetrains, intelli-
gent lightweight construction, improved aero-
dynamics and coordinated energy management
in vehicles.
The BMW i brand reflects Efficient Dynamics in
its most systematic form. Vehicle architectures
customised for electric mobility, innovative elec-
tric and plug-in hybrid drivetrains, and the use
of new types of materials are the results of an inte-
grated approach that is also reflected in a re-
source-efficient selection of materials and the
intensive use of renewable energy in the pro-
duction process. This strategy contributes to a
very favourable environmental footprint made
by BMW i vehicles over their entire product life
cycle.
48
Combined
Management
Report
Report on
Economic Position
→ Review of Operations
→ Automotive Segment
REVIEW OF OPERATIONS
Automotive Segment
Deliveries rise to new record level
The BMW Group delivered 2,490,664* BMW, MINI and
Rolls-Royce brand vehicles worldwide in 2018, thereby
setting a new record for the eighth year in succession
(2017: 2,463,526* units; +1.1%), comprising 2,125,026*
BMW (2017: 2,088,283* units; +1.8%), 361,531 MINI
(2017: 371,881 units; -2.8%) and 4,107 Rolls-Royce
(2017: 3,362 units; +22.2%) brand vehicles.
Asia and Americas slightly up, Europe at
previous year's level
The BMW Group continued to grow its business in
Asia in 2018, recording a 3.3% increase in deliveries
of BMW, MINI and Rolls-Royce brand vehicles to a
total of 876,614* units (2017: 848,826* units). In China,
sales figures developed positively, mainly due to a
strong second half-year, rising to 640,803* units (2017:
595,020 units; +7.7%).
In Europe, the BMW Group's sales performance
was dampened by various factors, including the
diesel debate in some countries. Nevertheless, with
deliveries of 1,098,523 units of its three brands, the
BMW Group came very close to the previous year's &
On the American continent, market conditions were
characterised by intense competition and fluctuations
in demand, in some cases on a high scale. Nevertheless,
the BMW Group increased deliveries in the region by
1.5% to 457,715 units (2017: 451,136 units). Business
in the USA remained at the previous year's level, with
355,993 units delivered (2017: 353,819 units; +0.6%).
47
BMW Group - key automobile markets 2018
→ 24
as a percentage of deliveries
Other 28.3
Japan 3.1
Italy 3.1
France 3.5
UK 9.6
25.7 China
14.2 USA
12.5 Germany
BMW Group deliveries of vehicles by region and market
→ 25
high level (2017: 1,101,760 units; -0.3%). Deliveries in
Germany increased by 4.9% to 310,441 units (2017:
295,805 units). In the UK, volumes fell slightly year-
on-year to 238,308 units (2017: 241,674 units; -1.4%),
not least due to the ongoing uncertainty about the
outcome of the Brexit negotiations.
slight decrease
14.8 (-3.3%pts)
%
= earnings amount
(cost of capital rate x
capital employed)
-
-
earnings amount
cost of capital
=
Value added
Group
return on sales and value added. Value added, as
a highly aggregated performance indicator, also
provides an insight into capital efficiency and the
(opportunity) cost of capital required to generate
Group profit. A positive value added means that
a company is generating more value than the cost
of capital.
The information provided by these two key perfor-
mance indicators is further complemented by pre-tax
Strategic management and quantification of financial
implications for long-term corporate planning are
performed primarily at Group level. The key perfor-
mance indicators are Group profit before tax and the
size of the Group's workforce at the year-end. Group
profit before tax provides a comprehensive measure
of the Group's overall performance after consolida-
tion effects and a transparent basis for comparing
performance, particularly over time. The size of the
Group's workforce is monitored as an additional key
non-financial performance indicator.
Strategic management at Group level
year's level
between 8 and 10
in 1,000 units
%
slight increase
Q1: in line with last
28.4 (-5.6%pts)
year's level
%
moderate decrease
FINANCIAL SERVICES SEGMENT
Return on equity
slight decrease
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 459,581 units).
3 EU-28.
8.1 (-1.0%pts)
2018
2017
2016
405.7
397.0
Asia*
876.6
848.8
747.3
685.8
658.4
thereof China*
640.8
595.0
516.8
366.5
464.1
Other markets
57.9
61.8
67.7
65.4
62.7
Total*
2,490.7
2,463.5
2,367.6
2,247.5
2,118.0
456.7
Value added Group*
353.8
thereof USA
2015
2014
Europe
thereof Germany
thereof UK
Americas
1,098.5
1,101.8
1,092.2
1,000.4
914.6
310.4
356.0
295.8
286.1
272.3
238.3
241.7
252.2
231.0
205.1
457.7
451.1
460.4
495.9
482.3
298.9
→ 18
in € million
Earnings amount
150
Price per barrel of Brent Crude
→ 20
Oil price trend
The currencies of major emerging economies fell
during 2018. The Russian rouble and the Brazilian
real lost 12% and 20% respectively against the euro.
The Indian rupee depreciated by 10% against the euro.
twelve-month period. The Japanese yen also continued
to depreciate year-on-year with an average exchange
rate of 130 yen to the euro during the year under
report.
The Chinese renminbi continued to lose value com-
pared to the previous year, recording an average
exchange rate of 7.81 renminbi to the euro for the
The British pound's fluctuations against the euro
reflected the progress of difficult negotiations towards
an orderly Brexit. The value of the British currency fell
temporarily to 0.91 pounds to the euro before finishing
the year at an average rate of 0.89 pounds to the euro.
Economic Position
→ General and Sector-
specific Environment
Report on
Combined
Management
Report
42
100
42
Source: Reuters.
2019
2018
2017
2016
2015
2014
50
50
US Dollar
Japanese Yen
Chinese Renminbi
41
100
50
150
2018
2015
2014
100
100
600
Platinum
Palladium
1,200
Gold
1,800
600
Source: Reuters.
1,200
Price in US Dollar
→ 21
Precious metals price trend
2019
2018
2017
2016
2015
2014
50
Price in US Dollar
Price in €
100
1,800
British Pound
150
200
Management
Report
Combined
40
10
39
For all project decisions, the project criteria and
long-term periodic results impact are measured and
incorporated in the long-term Group forecast. This
approach enables an analysis of the impact of project
decisions on periodic earnings and rates of return for
each year during the term of the project. The overall
result is a cohesive management model.
The net present value of a project indicates the extent
to which a project will be able to generate a positive
contribution to earnings over and above the cost of
capital. A project with a positive net present value
enhances value added and therefore results in an
increase in enterprise value. The internal rate of return
of the project corresponds to the average return on
capital employed in the project. It is equivalent to the
multi-year average RoCE for an individual project. It is
therefore consistent with one of the key performance
indicators.
Project decisions are based on calculations derived
from expected cash flows of the individual project.
Calculations are made for the full term of a project,
incorporating future years in which the project is
expected to generate cash flows. Project decisions
are taken on the basis of net present value and the
internal rate of return calculated for the project.
Value-based project management
Operational business in the Automotive and Motor-
cycles segments is largely shaped by its life-cycle-
dependent project character. Projects have a substantial
influence on future business performance. Project
decisions are therefore a crucial component of financial
management in the BMW Group.
Capital employed comprises the average amount
of Group equity employed during the year as a
whole, the financial liabilities of the Automotive
and Motorcycles segments, and pension provisions.
The earnings amount corresponds to Group profit
before tax, adjusted for interest expense incurred in
conjunction with the pension provision and on the
financial liabilities of the Automotive and Motor-
cycles segments (earnings before interest expense
and taxes). The cost of capital is the minimum rate of
return expected by capital providers in return for the
capital employed. Since capital employed comprises
an equity capital (e.g. share capital) and a debt capital
element (e.g. bonds), the overall cost of capital rate
is determined on the basis of the weighted average
rates for equity and debt capital, measured using
standard market procedures. The pre-tax average
weighted cost of capital for the BMW Group in 2018
was 12%, unchanged from the previous year.
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
10,086
Report on
BMW Group
2,788
6,804
7,298
10,978
2017
2018
2017
2018
2017
2018
Value added Group
Cost of capital (equity + debt capital)
4,174
Economic Position
→ General and Sector-
specific Environment
Russian Rouble
- 100
150
200
Index: December 2013=100
The US dollar/euro exchange rate fluctuated between
1.13 and 1.25 US dollars to the euro during 2018, fin-
ishing the twelve-month period at an average rate of
1.18 US dollars to the euro. As previously announced,
the US Federal Reserve continued to raise key interest
rates during the period under report. With effect
from the end of the year, the ECB discontinued its
purchases of securities, sending out the first clear
signals that its highly expansionary monetary policy
is coming to an end.
Currency markets
Emerging markets remained on a stable growth course
with GDP up overall against the previous year, includ-
ing rises in Russia (+2.3%), Brazil (+1.3%) and India
(+7.3%). The upward trend in Russia was driven
by a number of sectors. Investment and industrial
production increased markedly. Domestic consumer
spending was at a similar level to the previous year.
The positive trend benefited from a further drop
in unemployment. Economic recovery in Brazil
remained sluggish. Although private consumer
spending developed positively in 2018, the country's
high unemployment rate was only reduced slightly.
Government spending also increased. The Indian
economy grew at a steady rate. Apart from strong
growth in private spending, the manufacturing sector
also made a positive contribution.
with the growth rate almost halved compared to one
year earlier. The export sector slowed down in 2018
after a strong previous year.
→ 19
Exchange rates compared to the euro
In Japan, the growth rate for 2018 fell sharply to 0.8%,
mainly due to a significant decline in private consumer
spending. In addition, various natural catastrophes
temporarily curtailed production. Furthermore,
demand for capital goods only increased moderately,
Economic growth in China came in at 6.6% in 2018,
slightly down on the previous year. Demand from
private households remained at a similarly high
level to previous years. By contrast, the willingness
of companies to invest fell significantly, reflected in
a growth rate of only 5.9% in 2018. This outcome
was a desired development and in line with the
gov-
ernment's intended transformation of the Chinese
economy to one of sustainable economic growth and
greater financial market stability. Over the course of
the year, however, tariff increases imposed by the USA
on Chinese products exacerbated the factors holding
down the domestic economy, causing the Chinese
government to undertake fiscal measures to prevent
the economy from slowing too quickly.
GDP in the USA rose for the ninth consecutive year in
2018, growing by 2.9% on the back of strong domestic
demand. Alongside increased household spending
encouraged by the tax reform, government-related
demand also increased considerably. Consumer
sentiment within private households was shored
up by a historically low unemployment rate of less
than 4% and rising wages. Corporate investments
and industrial production also grew robustly. Strong
economic growth combined with an inflation rate of
2.4% provided impetus for the Fed to raise interest
rates over the course of 2018.
Economic performance in the United Kingdom was
dominated by continuing uncertainty regarding the
terms of Brexit and hence the country's future relation-
ship with the EU. Despite a further slight decline in
the unemployment rate, private consumer sentiment
declined further. Similarly, the public sector had only
a limited degree of leverage to counter the overall
slowdown in market momentum. As a consequence,
economic growth in the reporting period slowed for
the fourth year in succession to stand at 1.3%. The
situation was exacerbated by the Bank of England
raising its benchmark interest rates in an attempt to
hold down price inflation.
The eurozone economy continued to grow. At around
1.9%, however, the increase was below the previous
year's rate. Key economies in the region remained
on growth course, with economic output up in
Germany (+1.5%), France (+1.6%), Italy (+1.0%) and
Spain (+2.5%). Increased investment activity, rising
exports and robust domestic demand from both
private consumers and the state contributed to the
positive economic development. Within this favoura-
ble environment, the unemployment rate continued to
fall and is now at its lowest level since 2008. As a result
of the related rise in inflation, the European Central
Bank (ECB) decided to phase out its securities purchase
programme by December 2018 and to reinvest only
principal repayments from maturing securities.
The global economy grew by 3.7% in 2018, similar to
the previous year. Despite political uncertainties, all
regions saw economic growth, albeit with varying
degrees of strength. While momentum slowed in
Europe and China, economic output in the USA grew
at a significantly faster pace than in 2017, thereby bol-
stering the growth of global gross domestic product.
General economic environment
SECTOR-SPECIFIC
ENVIRONMENT
GENERAL AND
✓ -8.1%
€9,815 million
Group profit before tax
down moderately
Business performance impacted by
various factors
Automobile and motorcycle deliveries
reach record levels
ON ECONOMIC
POSITION
REPORT
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 459,581 units, 2017: 384,124 units, 2016: 316,200 units, 2015: 282,000 units, 2014: 275,891 units).
2017
2016
The following section provides information on the key
financial and non-financial performance indicators
for the Group and its segments, which is used as the
basis for the internal management of the BMW Group.
markets.
In addition, continuing international trade con-
flicts were aggravating the market situation and
feeding uncertainty. These circumstances resulted
in greater-than-expected distortions in demand
and unexpected pressure on pricing in several
Increased goodwill and warranty measures re-
sulted in significantly higher additions to provi-
sions in the Automotive segment.
The BMW Group implemented the requirements
of the WLTP regulations at an early stage. How-
ever, the industry-wide shift to the new WLTP
test cycle resulted in significant supply distor-
tions on several European markets and unexpect-
edly intense competition. In line with its flexible
production and sales strategy, the BMW Group
responded to these circumstances by reducing
its volume planning with a clear focus on earn-
ings quality.
-
-
In an ad hoc announcement issued on 25 Septem-
ber 2018, the BMW Group reported on its decision to
revise its forecast for the financial year 2018 in light
of a new assessment. The main reasons given for the
revision are stated below:
As part of the analysis of operations and the financial
condition of the BMW Group, forecasts made the pre-
vious year for the financial year 2018 are compared
with the actual outcomes in 2018.
COMPARISON OF
FORECASTS FOR 2018
WITH ACTUAL RESULTS
IN 2018
Overall assessment of business performance
Despite challenging conditions and volatility on
international markets, the BMW Group can look
back on an overall positive business performance
in 2018. Despite some downward trends in figures
in the past financial year, the BMW Group's results
of operations, financial position and net assets are all
indicative of the enterprise's solid financial condition.
Overall, despite the various economic challenges,
business developed in line with management's
revised expectations. This assessment also takes into
account events after the end of the reporting period.
BY MANAGEMENT
OVERALL ASSESSMENT
In the UK, the market for pre-owned premium vehicles
was slightly down on previous years. North American
markets developed positively. So far, markets in Asia
have been largely unaffected by discussions about
types of engine.
In some European countries, in particular Germany
and to some extent in Southern Europe, diesel
engines were the subject of political debate in 2018.
In Germany, the first driving bans were imposed on
older diesel vehicles. Although markets for pre-owned
cars in the premium segment reacted across the board
with price decreases for diesels, only a small number
of the affected vehicles remain in the BMW Group's
portfolio. By contrast, prices for petrol vehicles in the
premium segment remained stable.
The pace of economic growth in Japan slowed during
2018, partly due to the numerous natural disasters.
With inflation well below the target rate of 2%, the
Japanese central bank decided to retain its highly
expansionary monetary policy.
The Chinese economy lost a certain amount of
momentum in 2018. Despite the trade dispute with
the USA, the People's Bank of China (PBOC) retained
its interest rate policy and left the benchmark interest
rate unchanged.
Despite the trade dispute with China, the US Federal
Reserve maintained its strategy of normalising mon-
etary policy during 2018. Over the course of the year,
it resolved on four occasions to raise the benchmark
interest rate, in each case by 0.25%, taking it to a
range of 2.25 -2.50%.
Against this background, the BMW Group adjusted its
outlook for the financial year 2018 as follows:
In the Automotive segment, revenues are fore-
cast to be slightly lower than the previous year
(previously: slight year-on-year increase).
The EBIT margin in the Automotive segment is
expected to be at least 7% (previously: 8 to
10%).
Group profit before tax is expected to show a
moderate year-on-year decrease (previously:
in line with the previous year).
Automotive segment
Forecasts for 2018
with Actual Results
in 2018
Economic Position
→ Comparison of
Report on
Management
Report
Combined
46
45
After a weak first six-month period, the UK economy
recorded stronger-than-expected growth during the
second half of 2018. In August, the Bank of England
(BOE) decided to raise key interest rates in view of solid
growth figures and to counter inflationary pressures.
45
In the period under report, the size of the workforce
increased slightly by 3.7% to 134,682 employees (2017:
129,932 employees). Projects relating to vehicle elec-
trification and autonomous driving were the main
reason for the workforce increase. Operating growth
at segment level and the expansion of financial and
mobility services also contributed to the higher
headcount.
Group profit before tax fell moderately and was thus
in line with adjusted expectations, as revised in the
Quarterly Report to 30 September 2018.
have been
adjusted due to
the first-time
application of
IFRS 15, see
note 6 to the
Group Financial
At €9,815 million, Group profit before tax in 2018
was the second-best figure in the company's history
and moderately down on the previous year's record
*Prior year figures level (2017: €10,675* million; -8.1%). In the Annu-
al Report 2017 it was expected that profit before
tax would remain at the previous year's level. The
factors described above had a dampening effect on
the BMW Group's earnings performance during the
Statements. twelve-month period under report.
Profit before tax: moderate decrease
Group
The BMW Group remains fully committed to its goal
of spearheading the transformation of the industry. It
continues to strive for sustained high profitability as
the cornerstone of its Strategy NUMBER ONE > NEXT.
In addition to continuing the current product roll-
out, ongoing cost and efficiency measures will also
be intensified.
These circumstances had a significant impact on
Group profit before tax and the EBIT margin of the
Automotive segment both in the third quarter and in
the fourth quarter.
As foreseen in the outlook for the financial year 2018,
there was a slight increase in the size of the workforce,
which was thus in line with expectations.
The ECB's policy of monetary expansion remained
largely unchanged. The volume of bond purchases
was reduced from €30 billion to €15 billion in Octo-
ber 2018 and the purchase programme definitively
ended with effect from the end of the year.
International interest rate environment and
development of pre-owned vehicle prices
The global economy continued to grow robustly in
2018. With the exception of the Fed, major central
banks supported this development with their con-
tinued expansionary approach.
in 2018
Vehicle registrations in major emerging markets rose
for the second year in succession in 2018. Russia
recorded growth of 10.3% to 1.6 million units. New
registrations in Brazil went up by 12.1% (2.1 million
units).
Overall, European automobile markets finished at
the previous year's level (15.6 million units; 0.0%). A
look at individual markets, however, shows a mixed
picture for registrations. While Spain (1.3 million
units; +7.0%) and France (2.2 million units; +3.0%)
again saw year-on-year growth, new registrations were
down in Italy (1.9 million units; -3.3%) and Germany
(3.4 million units; -0.2%). The automobile market in
the UK continues to suffer from uncertainties related
to the progress of Brexit, with registrations down by
6.8% to 2.4 million units.
The upward trend of the previous years on inter-
national automotive markets failed to continue in
2018, with registration figures for passenger cars and
light commercial vehicles falling worldwide by 2.2%
to 85.8 million vehicles. New registration figures
fell for the first time in years in China (23.1 mil-
lion units; -6.3%) and were flat in both the USA
(17.3 million units; +0.3%) and Japan (5.1 million
units; +0.7%).
International automobile markets
........
100
140
Index: January 2014=100
International motorcycle markets
→ 22
On oil markets, concerns regarding a state bank-
ruptcy in Venezuela and the reintroduction of export
sanctions against Iran fuelled fears of a possible
under-supply. Overall, the average price per barrel
rose significantly from 54 US dollars to 72 US dollars
year-on-year. WTI, the benchmark for crude oil in the
USA, followed a similar trend, with an average price of
around 65 US dollars per barrel for the year as a whole.
Prices for lithium and cobalt, which are used as raw
materials in batteries, were highly volatile during 2018.
Whereas multi-year highs were still being recorded in
the first half of the year, prices fell sharply during the
second six-month period.
increase.
Prices for precious and non-ferrous metals fell mar-
kedly overall towards the end of 2018. Only palladium,
which is mainly used in petrol engines, saw a price
Steel markets experienced some sharp price rises
during 2018, especially in the USA. The US Admin-
istration increased tariffs on steel by 25%, making
this particular raw material more expensive for the
domestic market. In addition, the price of coking coal
went up by around 10%. Moreover, both the USA and
the EU continued to apply protectionist measures on
steel products from various countries.
Energy and raw materials prices
Source: Reuters.
2019
Steel price trend
Deliveries to customers: slight increase
Motorcycle markets in the 250 cc plus class generally
performed well during 2018. The number of new
registrations worldwide increased 3.1 % year-on-year.
European markets in particular developed well, grow-
ing at an overall rate of 7.4%. Germany registered
growth of 8.6%. Increases in new registrations were
also recorded in Italy (+6.3%) and Spain (+16.3%).
The French motorcycle market was 6.0% up on the
previous year. The US market continued to perform
weakly and contracted by 4.5%.
2014
Forecasts for 2018
with Actual Results
Comparison of
→ Overall Assessment
by Management
↑ ↑ ↑
Economic Position
→ General and Sector-
specific Environment
Report on
Report
Management
60
Combined
43
33
Source: Working Group for the Iron and Metal Processing Industry.
2019
2018
2017
2016
2015
44
have been
Workforce at year-end: slight increase
Q3: slight decrease
€ million
adjusted due to
slight increase
g CO2/km
units
slight decrease
slight increase
Actual outcome
slight increase
Q3: moderate decrease
in line with last year's level
in 2017 Annual Report
Forecast revision
Forecast for 2018
Return on capital employed
EBIT margin
€ million
Deliveries to customers
in 2018
134,682 (+3.7%)
slight increase
in line with last
165,566 (+0.9%)
units
Q1: slight increase
solid increase
49.8 (-27.9%pts)
significant decrease
%
9,815(-8.1%)
moderate decrease
%
between 8 and 10
significant decrease
7.2 (-2.0%pts)
in line with last
year's level
85,846 (+0.1%)
in line with last
year's level
128 (0.0%)
2,490,664 (+1.1%)
slight increase
Q3: at least 7
MOTORCYCLES SEGMENT
during the year
EBIT margin
Return on capital employed: significant decrease
The Automobile segment's RoCE in 2018 fell to 49.8%
(2017: 77.73%; -27.9 percentage points), mainly
reflecting earnings developments. The main reasons
for the decrease were higher investments in the
electrification of the BMW Group's vehicle fleet,
digitalisation and the expansion and rejuvenation of
the model portfolio as well as the expansion of the
production network. However, the long-term target
ROCE for the Automotive segment was well above the
minimum target of 26%.
The EBIT margin (profit before financial result divided
by revenues) came in at 7.2% (2017: 9.23%; −2.0 per-
centage points). As forecast in the Quarterly Report
to 30 September 2018, the EBIT margin exceeded 7%
and was therefore in line with revised expectations. In
the Annual Report 2017 an EBIT margin in the range
of 8 to 10% was originally expected.
EBIT margin: at least 7%
Return on capital employed
In the Quarterly Report to 30 September 2018, the
original forecast for segment revenues was revised
from a slight increase to a slight decrease. Thanks
to the slightly higher number of vehicles delivered,
actual revenues were in line with the previous year's
level and therefore exceeded the most recent forecast.
2 EU-28.
joint venture
BMW Brilliance
Automotive Ltd.,
Shenyang
(2018: 459,581
units, 2017:
384,124 units).
As foreseen in the outlook for the financial
year
2018, the RoCE decreased significantly, in line with
expectations.
CO2 emissions from fleet vehicles delivered in Europe
in 2018 amounted to 128 g CO2/km (adjusted value
for 2017: 128 g CO2/km; 0.0%) and were therefore in
line with the previous year. This was achieved despite
a further decline in the share of diesel vehicles and
also thanks to the significant growth in deliveries of
electrified models. The original forecast had foreseen
a slight decrease.
As foreseen in the outlook for the financial
year 2018,
Automotive segment deliveries increased slightly and
were therefore in line with expectations.
Deliveries of the core BMW brand in 2018 totalled
2,125,026¹ units (2017: 2,088,283¹ units; +1.8%),
thereby setting a new volume record. MINI remained
slightly below the previous year's record figure and,
with 361,531 units, achieved its second highest num-
ber of deliveries to date (2017: 371,881 units; -2.8%).
Rolls-Royce Motor Cars achieved a new record level
of 4,107 units (2017: 3,362 units; +22.2%).
In 2018, the BMW Group delivered a record num-
ber of vehicles to customers for the eighth year in
succession. Despite significant ongoing political
and economic uncertainties due to trade disputes,
regulatory requirements and the unclear outcome of
the Brexit negotiations, deliveries of BMW, MINI and
Rolls-Royce brand vehicles worldwide increased slight-
ly by 1.1% to 2,490,664¹ units (2017: 2,463,526¹ units). 'Including the
Favourable market conditions in Asia had a positive
impact on automobile deliveries. In Europe, volume
figures matched the previous year's high level despite
fewer deliveries in the UK and Italy. In the Americas
region, the BMW Group recorded a slight increase in
the number of deliveries.
note 6 to the
Group Financial
Statements.
3 Prior year figures with the previous year's level (2017: €85,742³ million;
+0.1%), whereby the translation of foreign currencies
the first-time
had a negative impact, particularly in the first quarter.
application of
IFRS 15, see The various adverse factors described above also held
down revenues.
At €85,846 million, segment revenues were in line
Revenues: in line with previous year's level
Fleet carbon dioxide (CO2) emissions²:
in line with previous year's level
Motorcycles segment
Going forward, the BMW Group intends to place
greater emphasis on the quality of earnings in its
management of the business. Given that the EBIT
margin already takes account of revenues, segment
revenues will no longer be reported as one of the key
performance indicators going forward.
In the Quarterly Report to 31 March 2018, a slight
increase was forecast for the full twelve-month period.
Due to the limited availability of products in conjunc-
tion with various model changes, deliveries in 2018
were only in line with the previous year's level. The
original forecast in the Annual Report 2017 expected
a solid increase in deliveries of motorcycles.
Revenues
Fleet emissions³
Deliveries to customers: in line with previous year's level
In 2018, deliveries of motorcycles reached a new record
level of 165,566 units (2017: 164,153 units; +0.9%).
AUTOMOTIVE SEGMENT
Workforce at year-end
Profit before tax
GROUP
→ 23
Deliveries to customers²
The key performance indicators of the BMW Group
and its segments can be summarised as below.
Return on equity slightly below previous year's level
As expected in the Annual Report 2017, the return on
equity generated by the Financial Services segment in
2018 was slightly lower than one year earlier at 14.8%
(2017: 18.1%; -3.3 percentage points). The decrease
was due to more stringent regulatory requirements for
equity capital. Nevertheless, the internal RoE target
of at least 14% was achieved.
Financial Services segment
on the previous year's level (2017: 34.01%; -5.6 per-
centage points). In the original forecast in the Annual
Report 2017, a slight increase was expected. The most
recent forecast in the Quarterly Report to 30 Septem-
ber 2018 still assumed that ROCE would be in line with
the previous year's level. The shortfall was attributable
to the ramp-up situation in the segment due to various
model changes. The long-term target RoCE of 26% for
the Motorcycles segment was surpassed.
Return on capital employed: moderate decrease
The return on capital employed (RoCE) for the Motor-
cycles segment in 2018 was 28.4%, moderately down ¬
EBIT margin in target range of between 8 and 10%
The EBIT margin in the Motorcycles segment (profit
before financial result divided by revenues) came in
at 8.1% (2017: 9.11%; -1.0 percentage points). As
foreseen for the financial year 2018, the EBIT margin
was within the target range of between 8 and 10% and
therefore in line with expectations.
BMW Group comparison of 2018 forecasts with actual outcomes 2018
49.6
60
60
in %
→ 34
BMW Group new vehicles financed or
leased by Financial Services segment*
2018
2017
2014
2015
The total volume of new credit financing and leasing
contracts concluded with retail customers during
the twelve-month period under report amounted to
€55,817 million, slightly higher than one year earlier
(2017: €55,049 million; +1.4%) and despite negative
exchange rate effects.
segment is repre- In the pre-owned financing and leasing business
sented by a con- for BMW and MINI, the segment recorded a slight
increase in the number of new contracts signed in the
period under report, up by 2.2% to 396,610 contracts
(2017: 387,937 contracts).
solidated entity.
Financial Services
50.0
only includes
automobile mar-
kets in which the
2016
46.3
27.3
41.7
The proportion of new BMW Group vehicles either
leased or financed by the Financial Services segment
in the financial year 2018 amounted to 50.0%, 3.2 per-
*The calculation centage points up on the previous year (2017: 46.8%)*,
mainly due to growth in credit financing in China.
Leasing 20.9
30
Financing 20.8
24.2
26.0
28.8
0
2014
2015
2016
2017
20.8
22.1
21.2
145.0
22.3
46.8
Credit financing and leasing business with retail
customers remain key elements in the success of the
Financial Services segment. During the period under
report, 1,908,640 new credit financing and leasing
contracts were concluded with customers, slightly
up (+4.4%) on the previous year (2017: 1,828,604
contracts). A slight increase in new contracts was
recorded for both credit financing (+4.3%) and leasing
business (+4.5%). Overall, leasing accounted for 33.1%
and credit financing for 66.9% of new business.
2016
3,000
8.5 Italy
Other 46.5
10.0 France
14.4 Germany
137.0
2015
123.5
8.4 USA
BMW Motorrad presented a total of eight new models
at the international motorcycle trade shows in Cologne
(INTERMOT) and Milan (EICMA), comprising the
R 1250 GS, R 1250 GS Adventure, R 1250 RT, R 1250 R,
R 1250 RS, C 400 GT, F 850 GS Adv. and S 1000 RR. In
the case of the third generation of the S 1000 RR, BMW
Motorrad's customers can now select a BMW M package
for the first time. The R 1250 models are also equipped
with new engines that generate more power, especially
at lower speeds, and help improve energy efficiency.
A total of 162,687 motorcycles rolled off BMW Motor-
rad's production lines at five locations during the year
under report (2017: 185,682 units; -12.4%). Since
July 2018, BMW Motorrad scooters have also been
manufactured by BMW Motorrad's partner Loncin
Motor Co., Ltd in Chongqing, China.
Motorcycle production down year-on-year due to
model changes
as a percentage of sales volume
→ 32
BMW Group - key motorcycle markets 2018
2018
2017
Eight new models introduced
6.7 Spain
UK 5.5
53
4,360
4,719
5,381
5,115
5,708
6,000
in 1,000 units
→ 33
Contract portfolio of
Financial Services segment
Continued growth for Financial Services
As in the previous year, the Financial Services segment
continued to perform very well within a highly com-
petitive market environment and therefore remained
firmly on growth course. In balance sheet terms, busi-
ness volume grew by 6.8% to stand at €133,210 mil-
lion (2017: €124,719 million). The contract portfolio
under management at 31 December 2018 comprised
5,708,032 contracts and therefore grew solidly by 6.1%
year-on-year (2017: 5,380,785 contracts).
Financial Services Segment
Segment
Review of Operations
→Financial Services
Economic Position
Report on
Combined
Management
Report
54
Slight growth in new business
2014
22.4
90
MINI Convertible
MINI Clubman
MINI Countryman
MINI total
Proportion of
MINI sales volume
2018
MINI Hatch (3- and 5-door)
2017
2018 in %
182,189
194,070
-6.1
50.4
32,356
33,351
Change in %
-3.0
in units
Deliveries of MINI vehicles by model variant
11.5
1.8
BMW total
2,125,026
2,088,283
1.8
100.0
→ 27
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 459,581 units, 2017: 384,124 units).
Combined
Management
Report
Report on
Economic Position
Review of Operations
→ Automotive Segment
MINI achieves second-best year
2018 was the second-best year in MINI's history.
Worldwide deliveries totalled 361,531 units (2017:
371,881 units; -2.8%). Deliveries of the MINI Countryman 7
increased by almost one fifth to 99,750 units (2017:
84,888 units; +17.5%). The MINI Hatch (3- and 5-door)
achieved a volume of 182,189 units (2017: 194,070
units; -6.1%).
50
33,676
8.9
59,572
830
235
Ghost
958
1,098
-12.8
Wraith/Dawn
Phantom*
1,775
-12.5
Cullinan*
544
Rolls-Royce total
4,107
3,362
22.2
2,029
47,236
Change in %
2018
-20.7
13.1
99,750
84,888
17.5
27.6
361,531
2017
371,881
100.0
Rolls-Royce with record deliveries
year
In 2018, Rolls-Royce Motor Cars marked its best
in over 100 years of corporate history with 4,107 deliv-
eries worldwide (2017: 3,362 units; +22.2%). The
Rolls-Royce Phantom* (830 units; 2017: 235 units)
and the new Rolls-Royce Cullinan* (544 units), the
latter of which has been available to customers since
November 2018, contributed substantially to this
performance.
Deliveries of Rolls-Royce vehicles
by model variant
→ 28
in units
-2.8
Delivery target of 140,000 electrified automobiles
achieved
37,545
1.6
181,113
-16.0
7.2
BMW 3 Series
366,475
409,005
-10.4
152,215
17.2
109,887
133,104
-17.4
5.2
BMW 5 Series
382,753
347,313
BMW 4 Series
10.2
BMW 2 Series
-1.0
BMW* deliveries rise to new record level
In 2018, BMW brand deliveries rose to 2,125,026 units
(2017: 2,088,283; +1.8%), reaching a new record high
for the eighth year in succession. The BMW 5 Series,
the BMW 6 Series and the X Family all made
major contributions to this result. Moreover, the
fleet of electrified vehicles is continually gaining
in significance.
At 199,980 units, deliveries of the BMW 1 Series
were almost at their previous year's level (2017:
201,968 units; -1.0%). Now nearing the end of its
model life cycle, deliveries of the BMW 3 Series were
down on the previous year, in line with expectations
(366,475 units; 2017: 409,005 units; -10.4%). The new
BMW 3 Series Sedan celebrated its world première
in autumn 2018, amid great acclaim from customers
and media alike. Deliveries of the BMW 5 Series 7
rose significantly by 10.2% to 382,753 units (2017:
347,313 units). The BMW 6 Series benefited from the
new Gran Turismo model and achieved a volume of
26,606 units worldwide (2017: 11,052 units).
The BMW X family again enjoyed high demand
in 2018. Worldwide deliveries of 792,605 X units
represented a significant 12.1% increase year-on-
year (2017: 706,741 units). The BMW X3 made an
important contribution to this performance, with
deliveries up by more than one third to 201,637 units
(2017: 146,395 units; +37.7%). Now coming to the
end of its life cycle, BMW X5 deliveries fell short
of the previous year, in line with expectations
(155,575 units; 2017: 180,905 units; -14.0%). The
successor to the X5 has been available since Novem-
ber 2018 and will generate additional impetus from
2019 onwards.
49
Deliveries of BMW vehicles by model variant*
9.4
→ 26
2018
2017
Change in %
Proportion of
BMW sales volume
2018 in %
BMW 1 Series
199,980
201,968
in units
BMW i
18.0
26,606
37.7
9.5
BMW X4
45,950
52,167
-11.9
2.2
146,395
BMW X5
180,905
-14.0
7.3
BMW X6
35,040
40,531
-13.5
155,575
BMW 6 Series
201,637
3.2
11,052
1.3
BMW 7 Series
56,037
64,311
-12.9
2.6
BMW X3
BMW 8 Series
BMW X1
286,827
286,743
0.0
13.5
BMW X2
67,576
923
164.2 165.6
The BMW Group succeeded in reaching its target of
delivering more than 140,000 electrified vehicles in
the financial year 2018, underlining its leading posi-
tion worldwide in terms of combined deliveries of
all-electric and plug-in hybrid vehicles and as market
leader in Europe.
Deliveries of electrified models
→ 29
63
64,431
50,272
28.2
2.5
42,660
38,064
8.3
12.1
2,541,534
2,505,741
1.4
100.0
Goodwood
San Luis Potosí²
Tiexi (BBA)³
1.7
Dadong (BBA)³
25.3
211,660
12,768
-39.3
0.3
4,353
3,308
31.6
0.2
168,969
308
269,309
11.4
11.8
191,888
127,440
50.6
7.6
299,939
7,752
Born (VDL Nedcar)4
Partner plants
In the future, the Group intends to concentrate its
battery cell expertise in an in-house competence cen-
tre. The aim is to continue developing the technology
and to fully analyse and understand the value-added
processes of the battery cell. The competence centre
is due to be opened in 2019.
International production network
By expanding its international production network,
the BMW Group follows global market developments
with the aim of ensuring a balanced distribution of
added value. In 2018, the Group announced the
construction of a new plant in Hungary in order to
increase capacity in its global production network in
the long term.
In 2018, the Group's largest plant in Spartanburg
(USA) began producing the first BMW X7 and the
new BMW X4 and BMW X5 models. The plant, which
specialises in the BMW X Series ranging from the X3
to the X7, produces a total of five different models for
the world market.
Due to the high global demand for these models,
the plants in Dadong (China) and Rosslyn (South
Africa) have also been producing the BMW X3 since
2018. Previously, the Rosslyn plant had produced the
BMW 3 Series for over 35 years. The new BMW Group
plant in San Luis Potosí (Mexico) will take over these
capacities going forward. The first BMW 3 Series
Sedans have already been successfully produced there
as pre-series models. The plant in Mexico is due to be
officially opened in mid-2019.
In 2018, the BMW Group celebrated the 15th anniver-
sary of the successful BMW Brilliance Automotive
(BBA) joint venture in Shenyang (China). A total of six
BMW models are manufactured at the two BBA plants
in Dadong and Tiexi. The BMW X2 will become the
seventh model in 2019.
Worldwide network for conventional drivetrain
production
The ability to produce electric drivetrain systems,
batteries and prototypes for battery cells in-house
gives the BMW Group a decisive competitive edge
that enables it to secure valuable knowledge of new
technologies, gain important system expertise and
leverage cost advantages.
The engine manufacturing plants in Munich, Hams
Hall (UK), Steyr (Austria) and Shenyang (China) sup-
ply both diesel and petrol engines for the production
network. The BMW Group's largest engine plant in
Steyr also serves as the development centre for diesel
engines worldwide. In Steyr, more than 700 techni-
cians and engineers are working on making the drive-
trains of the future generate even fewer emissions and
operate more efficiently and powerfully with the help
of state-of-the-art testing and measuring technology.
Motorcycle deliveries increase
Deliveries of motorcycles reached a new record level
of 165,566 units in 2018 (2017: 164,153 units; +0.9%),
marking the eighth successive year of growth.
Effect of model change felt particularly in Europe
The model change in the mid-class segment had a
particularly significant impact on the European mar-
ket, causing motorcycle deliveries to fall slightly by
3.3% to 98,144 units in 2018 (2017: 101,524 units). At
23,824 units, deliveries to customers in Germany were
down year-on-year (2017: 26,664 units; -10.7%).
Italy saw a slight decrease, with deliveries falling to
14,110 units (2017: 14,430 units; -2.2%). By contrast,
volumes remained similar to the previous year's level
in Spain (11,124 units; 2017: 11,193 units; −0.6%)
and France (16,615 units; 2017: 16,607 units; 0.0%).
In the USA, BMW Motorrad reported a slight increase
of 2.2% to 13,842 units despite difficult market con-
ditions (2017: 13,546 units).
BMW Group deliveries of motorcycles
→ 31
in 1,000 units
180
Motorcycles Segment
Graz (Magna Steyr)4
The technologies used in making electric drivetrain
components and batteries are developed at the proto-
type construction centre in Munich. The Dingolfing
and Landshut plants play a leading role as centres of
competence for the production of electric drivetrain
systems. Electric motors for the BMW Group's elec-
trified vehicles are also produced at these plants. The
batteries required are produced at the three battery
factories in Dingolfing (Germany), Spartanburg (USA)
and Shenyang (China). In Thailand, the BMW Group
works closely with a partner that manufactures bat-
teries for electrified vehicles produced locally.
German plants play leading role within network
Overall, the Group's German manufacturing plants
in Munich, Dingolfing, Regensburg and Leipzig again
produced over one million vehicles in 2018.
Group
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 491,872 units, 2017: 396,749 units).
2 2018 only pre-series production, plant opens in 2019.
3 Joint Venture BMW Brilliance Automotive Ltd., Shenyang.
4 Contract production.
The BMW Group's production system is based on
the Strategy NUMBER ONE > NEXT and is ideally
prepared for the future. The system is characterised
by unique flexibility, outstanding efficiency and
robust processes, enabling the BMW Group to
respond rapidly to changing market situations
and fluctuations in regional demand. This level of
manufacturing expertise gives the Group a crucial
competitive edge and makes a key contribution to
its overall profitability.
Its production network leverages innovative technolo-
gies from the fields of digitalisation and Industry 4.0,
standardised modules and intelligent mixed manu-
facturing methods. The production system ensures
consistent premium quality and enables a high level
of customisation for customers. MINI buyers, for
example, can optionally design selected components
to suit their individual tastes.
At the same time, important innovations are being
further developed and tested at these plants. Moreover,
they are playing a key role in integrating e-mobility
throughout the BMW Group's production network.
In 2018 alone, more than €1 billion were invested in
the Group's German production sites for continu-
ous modernisation projects and to prepare them for
electric mobility.
To ensure full capacity utilisation of its production
network in the long term and to be capable of
responding rapidly and flexibly to changing customer
requirements, the BMW Group pursues the strategy of
integrating the production of all-electric and plug-in
hybrid vehicles in its existing manufacturing system.
In 2018, the Group produced electrified vehicles at
ten different locations worldwide. In the future, every
BMW Group production plant in Europe will also
manufacture electrified vehicles.
52
Combined
Management
Report
Report on
Economic Position
Review of Operations
→ Automotive Segment
→ Motorcycles
Segment
52
With a total of 142,617 units, deliveries of BMW Group
electrified vehicles rose by more than a third in 2018
(2017: 103,080 units; +38.4%). Deliveries of BMWi
and BMW plug-in hybrid models increased by one
third to 129,398 units in the year under report (2017:
97,281 units; +33.0%). With a total of 91,853 units,
BMW plug-in hybrids made an important contribu-
tion to this performance (2017: 63,605 units; +44.4%).
Deliveries of the electrified MINI Countryman*, avail-
able since June 2017, totalled 13,219 units during the
year under report (2017: 5,799 units).
0.4
8,952
Production reaches new all-time high
A new production volume record of 2,541,534¹ units
(2017: 2,505,741¹ units; +1.4%) was set during the
year under report, comprising 2,168,496¹ BMW 7
Vehicle production of the BMW Group by plant
→ 30
(2017: 2,123,947¹ units; +2.1%), 368,685 MINI (2017:
378,486 units; -2.6%) and 4,353 Rolls-Royce brand
vehicles (2017: 3,308 units; +31.6%).
in units
Spartanburg
*Fuel consumption and CO2 emissions information are available on page 108.
Dingolfing
Leipzig
Oxford
Munich
Rosslyn
Rayong
Chennai
Araquari
Regensburg
2018
38.4
142,617
in units
2018
2017
Change in %
BMW i
37,545
33,676
103,080
11.5
91,853
63,605
44.4
MINI Electric
13,219
5,799
Total
BMW iPerformance
2018
2017
Proportion of
production in %
4.8
9.2
157,799
196,455
-19.7
6.2
50,224
223,817
53,105
2.0
15,612
21,084
-26.0
0.6
06
10,956
-5.4
Change in %
234,501
-0.7
51
555
356,749
371,316
-3.9
14.0
328,862
9.6
376,580
12.9
319,592
338,259
-5.5
12.7
244,248
246,043
-12.7
*Until 2015 excluding Rolls-Royce.
22.4 Eastern Europe
Contract portfolio retail customer financing
of Financial Services segment 2018
Research and Development
→ www.bmwgroup.com/innovation
In 2018 the research and development division at the
BMW Group faced a series of challenges, which were
successfully met. Firstly, as part of the model offensive,
the Company developed new vehicles and vehicle
concepts. Secondly, it played a key role in advancing
the technologies that will drive tomorrow's world,
such as autonomous driving, battery research and
electric mobility as well as software development
and connectivity. Moreover, the transition to the new
WLTP testing cycle was successfully completed during
the course of the year.
Autonomous Driving Campus working at full speed
In May 2018, the BMW Group celebrated the official
opening of its Autonomous Driving Campus in Unter-
schleißheim near Munich. On 23,000 square metres
of office space, the BMW Group is rapidly developing
state-of-the-art driver assistance systems as well as
highly and fully automated driving technology. The
campus has created many new jobs, particularly for
IT specialists and software developers in the fields
of artificial intelligence, machine learning and data
analysis.
At the end of 2018, around 1,300 experts from the
BMW Group as well as from external partners such as
Fiat Chrysler Automobiles, Intel and Mobileye were
already working in Unterschleißheim. On campus,
the associates actively practise an open, agile way of
working (Large Scale Scrum - LeSS), enabling the
teams to tackle the high complexity of their tasks more
quickly and with greater efficiency. This approach
enables the BMW Group to focus keenly on developing
new key technologies such as artificial intelligence
and driving simulation.
Driver assistance and autonomous driving continue to
play key roles in the BMW Group's forward-oriented
strategy. During the year under report, a total of
80 vehicles were deployed to test the new technolo-
gies on highways and in urban environments across
Europe, the USA and China.
Substantial expansion of R&D activities in China
As part of its corporate strategy, the BMW Group
took a number of decisive steps in 2018 in the field of
research and development to secure the future of the
enterprise as a whole. China is playing an increasingly
significant role for the BMW Group as a driver of
innovation and future mobility.
Following the R&D centre in Shenyang, the BMW Group
opened a new location in Beijing in May 2018, where
topics such as requirements management, testing and
validation as well as the development of systems and
services are now handled. In June, the BMW Group
added a third location - Shanghai - to its Chinese
R&D network. The R&D centre in Shanghai will focus
on autonomous driving, digital services and futuristic
design and expand existing collaboration arrangements
with leading high-tech companies. The R&D team
comprises over 200 technical specialists and design-
ers. The two new locations are intended to bolster the
BMW Group's local innovative strength in China.
Furthermore, in May 2018 the BMW Group became
the first international automotive manufacturer to
obtain a test licence for autonomous driving within
China. Level 4 functions (fully automated driving) are
being trialled by a test fleet comprising the latest mod-
els of the current BMW 7 Series on approximately six
kilometres of designated test routes in the Chinese city
of Shanghai. The development team, which is made
up of more than 60 experts, is currently collecting data
that reflect urban traffic in all its complexity. These
data will serve as the basis for developing machine
learning algorithms capable of depicting highly auto-
mated driving strategies.
58
Combined
Management
Report
Report on
Economic Position
Review of Operations
52
→ Purchasing and
Supplier Network
Purchasing and Supplier Network
Ensuring access to resources in a
volatile environment
With its globally oriented organisation, the Purchasing
and Supplier Network ensures access to all necessary
external resources in an environment that remains
highly volatile. Activities include the procurement
and quality assurance of production materials, raw
materials, capital goods and services as well as the
manufacturing of vehicle components produced
in-house. External suppliers are selected systematically
according to the criteria of quality, innovation, flexibil-
ity and cost. In 2018, procurement activities focused
on components for the fast-growing percentage of
electrified vehicles.
Connecting procurement markets
The BMW Group remains committed to its strategy of
maintaining a regional balance with regard to growth
in delivery, production and purchasing volumes. The
strategy makes an important contribution to natural
hedging against currency fluctuations. The global
distribution of purchasing volumes for production
materials and raw materials is closely linked to pro-
duction volumes in the BMW Group's global plant
network. Global distribution remained largely stable
in the financial year 2018.
Global trade policy influences purchasing
Global trade policy is increasingly influencing the
BMW Group's purchasing activities as well as its
globally interlinked supply chains. With its pur-
chasing strategy, the Group is pursuing the goal of
increasing its own competitiveness and at the same
time contributing towards cutting customs costs. This
is achieved, for example, through localisation in free
trade areas with minimum requirements in terms
of local value creation and through the intelligent
controlling of material flows within a global network.
The BMW Group's purchasing function also works
to ensure the greatest possible flexibility to allow for
short-term changes in trade policy.
Regional mix of BMW Group
purchase volumes 2018
→ 37
in %, basis: production material
Asia 6.5
14.9
North America
Rest of Western
Europe 17.0
→Sales and Marketing
1.2 Other
57
Proceeds generated from the sale of BMW and MINI
brand vehicles again rose slightly in the financial year
2018 due to volume and mix effects. Market values sta-
bilised in North America. By contrast, the European
pre-owned vehicle market experienced a downward
trend, in line with expectations, mainly in the wake
of the diesel engine debate.
The total portfolio of financing and leasing contracts
with retail customers developed positively again in
2018, with a solid increase of 6.3% year-on-year. In
total, 5,235,207 contracts were in place with retail
customers at 31 December 2018 (2017: 4,926,228
contracts) in the Financial Services segment. The
China region recorded the fastest growth rate of all
regions, significantly growing its contract portfolio by
25.6% year-on-year. The Europe/Middle East/Africa
region (+7.0%), the EU Bank* region (+6.2%) and
the Americas region (+2.2%) also registered solid
or slight year-on-year growth respectively, whereas
the Asia/Pacific region saw a slight decrease in its
contract portfolio (−2.5%).
*EU Bank comprises BMW Bank GmbH, its branches in Italy, Spain and Portugal, and its
subsidiary in France.
Slight growth in fleet business
The BMW Group is one of Europe's foremost leasing
and full-service providers. The Financial Services
segment's fleet management business, under the
brand name Alphabet, offers leasing and financing
arrangements as well as specific services to com-
mercial customers. The number of fleet contracts
rose by 3.0% during the financial year 2018. At
31 December 2018, the segment was thus managing
a portfolio of 700,080 fleet contracts (2017: 679,895
contracts).
55
55
99
56
Combined
Management
Report
Report on
Economic Position
Review of Operations
→Financial Services
Segment
→ Research and
Further information on the risk situation is provided
in the section Risks and Opportunities.
Development
Despite ongoing political and economic uncertainties,
such as the diesel debate in European countries con-
cerning higher levels of emissions from diesel vehicles
as well as Brexit and trade conflicts, the risk profile
across the Financial Services segment's total portfolio
remained stable at a low level.
0.25
Development of credit loss ratio
→ 36
in %
0.5
15
0.50
!!!!!
2014
2015
2016
2017
2018
Risk profile
38.0
Germany
The risk profile of the segment's credit financing port-
folio also remained stable at a low level. The credit
loss ratio on the total credit portfolio amounted to
0.25% at 31 December 2018, and therefore below the
previous year's level (2017: 0.34%).
in % per region
Asia/Pacific 8.7
32.8 Europe/
Middle East/Africa
Solid year-on-year growth in dealership financing
The total volume of dealership financing continued
to grow during the financial year 2018, standing at
€20,438 million at the end of the reporting period
(2017: €19,161 million; +6.7%).
Multi-brand financing in the Financial Services seg-
ment registered a significant drop (-13.5%) in new
business in 2018, with the number of new contracts
falling to 136,283 contracts (2017: 157,626 contracts).
The total portfolio comprised 401,007 contracts at
31 December 2018, slightly lower than one year earlier
(2017: 406,813 contracts; -1.4%). The reason for the
decline was a stronger focus on the Group's own
brands within this line of business.
Decrease in multi-brand financing
Deposit business volume up on previous year
Customer deposits represent an important source of
refinancing for the Financial Services segment. The
volume of deposits stood at €14,359 million at the end
of the reporting period, representing a solid increase
over one year earlier (2017: €13,572 million; +5.8%).
China 10.7
26.7 Americas
→ 35
Growth in insurance brokerage business
With an increase of 3.2% in 2018, the number of
newly brokered insurance contracts grew to 1,381,093
contracts (2017: 1,337,652 contracts). At 31 Decem-
ber 2018, the total number of brokered insurance
contracts stood at 3,906,550 (2017: 3,649,362 con-
tracts; + 7.0%).
EU Bank✶ 21.1
98,282
-0.8
1.2
2018
20171
14.0
97,480
11.1
-8.1
-17,306
-18,710
-7.6
-14.3
7
Change in %
6,977
2,207
-20.0
2018
-8.1
10,675
9,815
-534
553
8,717
80
-2.1
6
2,161
-17.6
205
169
-45
4.5
2.2
27,567
→ 48
BMW Group margins by segment
Group
Eliminations
Other Entities
Financial Services
Motorcycles
Automotive
in € million
→ 47
BMW Group profit/loss before tax by segment
Group
Eliminations
Other Entities
Financial Services
Motorcycles
Automotive
in € million
→ 46
in %
20171
Automotive
EBIT margin
28,165
-1.4
-4.4
2,272
2,173
2.2
0.1
85,742
85,846
change² in %
Change in %
20171
2018
Currency adjusted
2 The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year figures.
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
EBIT margin
Gross profit margin
Motorcycles
Gross profit margin
Change in %pts
-2.0
19.1
2018
2017
2016
2015
2014
¡III
1.41
18
2.08
3.5
7.0
as a percentage of workforce
in %
→ 41
Proportion of female employees in manage-
ment functions at BMW AG/BMW Group*
The proportion of women in the workforce as a whole,
as well as in management functions and young talent
development programmes, increased during the finan-
cial
year under report. The percentage of women in the
total BMW Group workforce rose to 19.9% (BMW AG:
16.5%), above the internal target range of 15 to 17%.
The number of women in management functions rose
to 17.2% across the BMW Group (BMW AG: 15.1%).
In the year under report, female representation in the
BMW Group's trainee and student programmes stood
at 44% and 28% respectively.
2.70 2.64 2.78
17.2
16.0
15.3
13.3
12.5
BMWAG 11.3
2014
2015
2016
2017
2018
*Since 2017 including maternity leave.
* Number of employees on unlimited employment contracts leaving the Company.
The Group's workforce is becoming increasingly
international. Employees from over 110 countries
work together successfully for BMW AG. Moreover, a
balanced age structure in the workforce encourages
an exchange of ideas and knowledge between gen-
erations and plays a key role in reducing the loss of
know-how when valuable employees retire.
Sustainability
→ www.bmwgroup.com/responsibility
In order to secure its future existence, the BMW Group
consistently integrates sustainability in its business
model. The Company sees global challenges such as
climate change and urbanisation as opportunities
to drive innovation. In its constant endeavours, the
BMW Group concentrates on three main fields:
The development of products and services
that provide sustainable individual mobility
(e.g. electric mobility and services such as
DriveNow and ReachNow)
14.3
15.1
Diversity is a key factor in ensuring the BMW Group's
continued competitiveness. Emphasis is placed on
the three aspects of gender, cultural background and
age/experience. The aim is to ensure equal opportu-
nities for all employees and at the same time utilise
and promote the diversity of the Group's workforce.
To achieve this end, a broad array of measures was
implemented within the BMW Group during 2018.
Further information on this topic is also provided in
the Sustainable Value Report 2018. → www.bmwgroup.com/svr
16.2
Diversity as a competitive factor
Employee attrition rate at BMW AG*
134,682
Group
1.7
117
119
Other
4,750
129,932
4,613
-0.9
20.9
20.0
BMW Group 13.5
9.2
7.2
-2.9
8.1
3.7
2,500
2014
The Group also came out top again in Trendence's
Young Professional Barometer Germany. In the Tren-
dence Graduate Study Germany, the BMW Group
retained first place in the business management and
engineering target groups and improved its position
for the IT target group, where it moved into second
place. It also improved its rankings in the Universum
study "Young Professionals Germany”, finishing first,
second and third in the categories Business, Engineer-
ing and IT respectively. Based on the overall results of
studies across all sectors, the BMW Group remained
one of the world's highest-ranked companies in 2018.
In the period under report, BMW Group China was
also named the most attractive employer in the auto-
motive industry in both the local Universum Students
Survey and the Zhaopin Most Attractive Employer
Award.
BMW Group remains a highly attractive employer
In 2018, the BMW Group was once again ranked
among the world's most attractive employers. In the
latest "World's Most Attractive Employers" rankings
published by the agency Universum, the BMW Group
was once again named the most attractive automotive
company in the world.
→ Sustainability
Review of Operations
→ Workforce
Economic Position
Report on
Combined
Management
Report
62
62
BMW Group revenues by segment
61
High level of investment in employee qualification
Spending on training and development increased to
€373 million year-on-year (2017: €349 million; +6.9%).
By training its workforce in areas such as electric
mobility, robotics, data analysis and artificial intel-
ligence, the BMW Group is creating an important
foundation for the future success of its Strategy
NUMBER ONE > NEXT. Managers are also closely
involved in training and are prepared in the areas
of transformation process design and leadership in
agile organisations.
2018
2017
2016
2015
→ 40
Results of operations by segment
68
Economic Position
-16.5
8,675
7,240
-28.8
-2,000
-2,575
Profit from continuing operations
Income taxes
-8.1
10,675
9,815
Loss from discontinued operations
-10.6
4,700
-1.0
9.1
694
Profit before tax
Financial result
-7.9
9,899
9,121
-494
123
776
-33
Net profit
7,207
20.3
19.0
Gross margin
-1.4
8.8
7.4
Post-tax return on sales
-0.8
10.9
10.1
Pre-tax return on sales
Change in %pts
2017*
2018
in %
-17.2
13.09
10.84
-17.2
13.07
10.82
Earnings per share of preferred stock in €
Earnings per share of common stock in €
-16.9
8,675
-9,560
-9,558
-7.0
19,953
Through measures to boost energy efficiency and
the purchase and in-house generation of electricity
from renewable sources at BMW Group manufactur-
ing sites, production-related CO2 emissions fell by
2.4% to 0.40 tonnes per vehicle produced in the year
under report compared with the previous year (2017:
0.41 tonnes).
In 2018, at 2.12 MWh per vehicle produced, the
BMW Group slightly reduced the amount of energy
consumed in the production process compared with
the previous year (2017: 2.17 MWh; -2.3%). This was
mainly due to the use of a new painting technology
at various locations, such as at the Munich plant, and
the installation of LED lighting throughout the entire
production network.
Clean production
In 2018, the BMW Group's fleet of new vehicles sold
in Europe (EU-28) had an average fuel consumption of
4.9 litres of diesel and 6.0 litres of petrol per 100 km
respectively. CO2 emissions averaged 128 g/km
(adjusted value for 2017: 128 g/km). Despite a further
decline in the share of diesel vehicles, the figure was in
line with the previous year, also thanks to a significant
growth in deliveries of electrified models.
→ Sustainability
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Review of Operations
Economic Position
Report on
Combined
Management
Report
64
63
63
Fleet CO2 emissions at previous year's level
The development of sustainable products and services
is an integral part of the BMW Group's business model.
The fleet-wide deployment of Efficient Dynamics
technologies and electrification are contributing to a
continual reduction in CO2 emissions. The electrifica-
tion of the fleet continued to make progress in 2018.
Due to the expansion of the model range, deliveries
of electrified BMW Group vehicles in 2018 increased
significantly and, at 142,617 units, surpassed the pre-
viously announced target of 140,000 units. Efficient
Dynamics and electrification form the basis for future
compliance with statutory CO2 and fuel consumption
limits going forward. The BMW Group has reduced
the CO2 emissions of its newly sold vehicles in Europe
by approximately 42% between 1995 and 2018.
The BMW Group again achieved top rankings in
prestigious sustainability ratings in 2018, thereby
underlining its leading position as a sustainable
enterprise. In the Dow Jones Sustainability Indices
(DJSI) rating, the BMW Group is the only German
automobile maker to have been included once again
in the two indices "World" and "Europe" and has
been continuously represented since the indices were
established in 1999. In the CDP rating (formerly the
Carbon Disclosure Project), the Group achieved the
category "Leadership" with a rating of A- in the year
under report. Furthermore, the Group was again listed
in the British FTSE4Good Index in 2018.
Top rankings in sustainability ratings
As part of a regular materiality analysis, social chal-
lenges are continually monitored and analysed in
order to gauge their significance, from the point of
view of both external and internal stakeholders. The
results of the materiality analysis are described in
greater detail in the Sustainable Value Report 2018.
The BMW Group is in continual dialogue with a large
number of stakeholders, both in Germany and abroad.
Stakeholder feedback provides the BMW Group with
a clear picture of how current trends are changing
the business environment and is incorporated in the
strategic considerations of the Company. For example,
in the course of 2018, stakeholder dialogue events on
the topics of urban mobility and digitalisation were
held in Los Angeles, Melbourne, Shenzhen, Rotter-
dam and Berlin.
Stakeholder dialogues and materiality analysis as
basis for sustainability management
at www.bmwgroup.com/svr.
The separate combined non-financial report is availa-
ble online within the Sustainable Value Report 2018
Based on the requirements of the German CSR Direc-
tive Implementation Act, BMW AG has been required
since the financial year 2017 to publish a non-financial
declaration at both Company and Group level. The
declaration is published jointly for BMW AG and the
BMW Group as a separate combined non-financial
report within the Sustainable Value Report.
The Sustainable Value Report is published together
with the Annual Report and is drawn up in accordance
with the "Comprehensive" option of the standards
of the Global Reporting Initiative (GRI). This is the
highest level of transparency set out in the GRI stand-
ards, in which all relevant information and indicators
of the aspects identified as material are reported on.
The Sustainable Value Report is drawn up subject to
a limited assurance engagement in accordance with
IASE 3000 (International Standard on Assurance
Engagements 3000 (Revised): “Assurance Engage-
ments other than Audits or Reviews of Historical
Financial Information").
Through its sustainability policy, the BMW Group
supports the achievement of the UN's Sustainable
Development Goals (SDG), which were adopted in
September 2015.
• Responsibility towards employees and society
Further information on sustainability within the
BMW Group and related topics is provided in the
Sustainable Value Report 2018, which is published
online at www.bmwgroup.com/svr.
The efficient use of resources along the entire
value chain
In 2018, at 2.39 m³ per vehicle produced, water
consumption was slightly higher than the previous
year's level (2017: 2.22 m³; +7.7%). This was mainly
due to above-average temperatures at the sites, which
had a direct impact on water consumption. The non-
recyclable waste from production processes rose to
4.27 kg per vehicle produced during the reporting
period (2017: 3.86 kg; +10.6%). This was mainly due
to a change in the structure of the waste disposal
companies at the Shenyang site. As a result, specific
waste streams, such as sludge from the wastewater
treatment plant, could not be recycled in the year
under report. Additionally, the high moisture content
from household waste at the plant in Rosslyn, South
Africa hindered recycling.
-1.3
Sustainability along the value chain
Sustainability in human resources policies
18,556
-0.8
-78,329
-78,924
-0.8
98,282
97,480
Change in %
2017*
2018
Profit before financial result
Selling and administrative expenses
Other operating income and expenses
Gross profit
Cost of sales
Revenues
in € million
figure includes 459,581 units (2017: 384,124 units)
manufactured by the joint venture BMW Brilliance
Automotive Ltd., Shenyang.
→ 42
BMW Group condensed income statement
Deliveries of BMW, MINI and Rolls-Royce brand
vehicles during the financial year 2018 increased
slightly by 1.1% year-on-year to 2,490,664 units. The
Results of operations
RESULTS OF OPERATIONS,
FINANCIAL POSITION AND
NET ASSETS
Social engagement is firmly anchored in the
BMW Group's understanding of its corporate role.
As a globally operating company, the BMW Group
assumes responsibility and is concerned with current
social challenges. Its commitment focuses on long-
term solutions that are internationally applicable and
have a long-term impact according to the principle of
"helping people to help themselves". In doing so, the
company concentrates on its core competencies, such
as intercultural understanding, social inclusion and
the conservation of resources.
Social engagement
In 2018, the BMW Group continued to consolidate
its position as one of the most attractive employers
worldwide. Its leading role in terms of sustainability
contributes significantly to the high degree of employee
loyalty within the BMW Group and is one of the
reasons for the low staff attrition rate. This enables
the BMW Group to maintain a low level of personnel
recruitment expenditure. Further information is
provided in the section Workforce.
Sustainability criteria also play a key role in the selec-
tion and assessment of suppliers. The BMW Group has
therefore comprehensively integrated sustainability
management in its purchasing processes. This also
includes greater transparency, which results from
close collaboration between the Group and its sup-
pliers. The BMW Group is also involved in initiatives
aimed at standardising sustainability requirements
and establishing verification mechanisms for critical
raw materials.
Effective tax rate
26.2
18.7
2018
in %
year.
→ 45
BMW Group performance indicators relating to research and development expenses
financial services business were offset by positive
currency effects. Inter-segment eliminations reduced
the Group's warranty expense for the
The Group's cost of sales were in line with the
previous year. Higher research and development
expenses as well as higher cost of sales relating to 7
0.8
78,329
78,924
4.9
2,857
2,996
-17.5
2,097
1,729
Cost of sales
Other cost of sales
Warranty expenses
7.4
2,081
2,234
14.4
1,236
1,414
2017*
thereof amortisation of capitalised development costs
Service contracts, telematics and roadside assistance
Change in %pts
5.5
Report on
Report
Combined
Management
98
The income tax expense for the year amounted to
€2,575 million (2017: €2,000 million).
Overall, profit before tax decreased moderately to
€9,815 million (2017: €10,675 million).
The financial result dropped by €82 million to €694 mil-
lion and was therefore significantly down on the pre-
vious year, partly due to a €107 million deterioration
in the result from equity accounted investments.
The main factors here were the €183 million positive
earnings effect in the previous year arising on the
sale of shares in HERE International B.V., Amsterdam,
offset by a €107 million improvement in the earnings
contribution from BMW Brilliance Automotive Ltd.
on the back of higher volumes. The financial result
for the financial year 2018 was also influenced by the
change in other financial result. The previous year's
figure contained the positive effect of fair value meas-
urement gains on commodity derivatives totalling
€236 million. As a result of the first-time application of
IFRS 9, most of these effects - without the adjustment
to comparative figures – are now recognised directly
in equity. Unlike the result from equity accounted
investments and the other financial result, both the
result on investments and the net interest result had
a positive impact on earnings in the financial year
under report. The result on investments included a
gain of €209 million arising in conjunction with the
revaluation of the DriveNow companies.
Profit before financial result (EBIT) fell by €778 million
to €9,121 million (2017: €9,899 million).
The net amount of other operating income and
expenses improved significantly from negative
€494 million to positive €123 million, mainly due to
lower allocations to provisions for litigation.
Depreciation and amortisation on property, plant
and equipment and intangible assets recorded in cost
of sales and in selling and administrative expenses
totalled €5,113 million (2017: €4,822 million).
At €9,558 million, selling and administrative expenses
were similar to one year earlier.
Due to a continuation of the product initiative, vehicle
electrification and development work on autonomous
driving, research and development expenses amount-
ed to €5,320 million (2017: €4,920 million), a solid
increase over the previous year. As a result, total
research and development expenditure - comprising
research costs, non-capitalised development costs and
capitalised development costs (excluding amortisation
thereon) – amounted to €6,890 million in the year
under report (2017: €6,108 million). The higher level
of capitalised development costs was mainly related
to the production start of new models, modules and
architectures.
62
67
*Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
3.6
39.7
43.3
Capitalisation rate
0.9
6.2
7.1
Research and development expenditure ratio
0.5
5.0
Research and development expenses as a percentage of revenues
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
8.1
5,320
30.2
30.9
46.0
46.1
2017*
2018
Europe
Asia
in %
→ 43
BMW Group revenues by region
Group revenues by region were as follows:
Due to currency effects, BMW Group revenues
remained at a similar level to the previous year.
Adjusted for currency factors, revenues grew slightly
on the back of higher delivery volumes and a good
financing portfolio performance. The positive impact
of volume growth was held down by intense compe-
tition on the markets. The unexpectedly high level
of competition was due in particular to the reaction of
competitors to the early implementation of WLTP
regulations. Trade conflicts and uncertainties also
exacerbated the situation and had an unfavourable
impact on selling prices.
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Economic Position
Report on
Combined
Management
Report
66
99
65
69
positive effect of the growth in vehicle deliveries. The
currency impact was mainly attributable to changes in
the exchange rates of the US dollar, Chinese renminbi,
Russian rouble and Australian dollar against the euro.
The net amount reported for other operating income
and expenses had a positive effect. Profit before tax
for the year ended 31 December 2018 was moderately
down on the previous year.
Gross profit for the twelve-month period under report
fell moderately year-on-year. A combination of higher
research and development expenses, intense com-
petition and currency effects more than offset the
The BMW Group had a worldwide workforce of
134,682 employees at the end of the reporting period
(31 December 2017: 129,932 employees).
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
7.5
Americas
4,920
20.2
7
Research and development expenses
13.9
1,801
2,051
thereof interest expense relating to financial services business
2.0
22,932
23,383
Cost of sales relating to financial services business
-0.4
43,442
43,262
Manufacturing costs
Change in %
2017*
2018
in € million
→ 44
BMW Group cost of sales
100.0
100.0
Group
3.0
2.8
Other regions
20.8
4,595
→ Workforce
Apart from the M vehicles, BMW M GmbH also offers
special driving safety training courses under the brand
name BMW Driving Experience. During the financial
year 2018, more than 25,000 participants completed
training courses in Germany alone. Demand for the
training courses also grew internationally. Accordingly,
the international network partner of BMW M was
expanded to include China and South Africa. Alto-
gether, the BMW Driving Experience trained around
105,000 participants at international training locations
In December 2018, at the beginning of the fifth sea-
son, BMW i Andretti Motorsport entered the ABB
FIA Formula E Championship as a works team. The
drivetrain of the racing car was developed in close
collaboration with the engineers of BMW i and BMW
Motorsport and embodies the technology transfer
between motor racing and series development like
no other motorsport project before it. Apart from
its sporting commitment, BMWi remains an official
partner of Formula E and, within the scope of this
partnership, provides the support vehicle fleet, includ-
ing the BMW i8 Coupé* as a safety car for the races.
BMW enters Formula E
In September 2018, the BMW Group introduced
the Intelligent Personal Assistant, which has been
available in the first vehicles and in the Connected
app as from March 2019. It explains the workings
of the vehicle to the customer and enables access to
functions and information by voice control. The assis-
tant supports drivers, learns their preferences and
knows their preferred settings, such as seat heating or
frequently used navigation destinations. The abilities
of the self-learning personal assistant are supported
by artificial intelligence and continuously enhanced.
BMW Intelligent Personal Assistant
Since 2018, MINI Yours Customized has enabled its
customers to personalise their interior products via
3D printing and order them directly online. This
service was given the German Innovation Award in
the category "Excellence in Business to Consumer".
In these times of digitalisation, the focus is on the
mobility and service requirements of premium
customers. Using digitalised channels such as BMW
Connected, customers are able to view their vehicle
status and also make use of functions outside the
vehicle. Offers and interactions connected with
services, maintenance and repairs can therefore be
synchronised via all customer channels (physically,
online or via the vehicle).
and CO2 emis-
sions informa-
tion are available
on page 108.
The BMW Group's services business again recorded
significant growth in the year under report. In
order to achieve this, continuous investments are
being made in a sustainable, flexible, global logistics
network that can optimally supply customers with
spare parts, accessories and lifestyle products on a
worldwide basis.
Enhancement and customisation
of the services business
Launched in November 2018, the new Cullinan* is
the first Rolls-Royce to exhibit outstanding driving
characteristics both on and off the road. At its world
première in May and the press event in October, the
Cullinan* was extremely well received by customers
and international media representatives alike. The
top-of-the-range model, the Rolls-Royce Phantom*,
which has been on the market since the beginning
of 2018, is extremely popular and contributed sig-
nificantly to the record year for Rolls-Royce Motor
Cars. At Rolls-Royce Motor Cars, the term bespoke
refers to equipment configurations with which the
vehicles are highly individualised in accordance with
customer requirements. The result is the creation of
unique vehicles that make a major contribution to
the company's success and secure Rolls-Royce Motor
Cars an outstanding position in the luxury segment.
Workforce
Rolls-Royce Cullinan* successfully
takes to the road
In 2018, due to external factors, the MINI brand was
unable to quite match the high level of deliveries seen
the previous year. In particular, a changed competitive
environment caused by the conversion to the new
WLTP testing cycle played a decisive role. Uncertainty
also arose from ongoing trade disputes. In several
markets, this led to considerable sales disruptions
and unexpectedly fierce competition. Nevertheless,
MINI managed to increase its share for small and
compact cars in the premium segment compared to
the previous year in more than 60% of its markets.
MINI achieves second-best year
Economic Position
Review of Operations
→ Sales and Marketing
Report on
Combined
Management
Report
60
60
in 2018.
Highest-ever number of deliveries for BMW M
The year 2018 was the most successful in the history
of BMW M GmbH. The main contributors to BMW M
deliveries in the High Performance segment, apart
from the M2*, were again the BMW M3 and M4 models
as well as the new BMW M5*. Within the Performance
segment, the new BMW X3 M40i* accounted for the
majority of deliveries. The strong demand at BMW M
also led to growth in BMW M certified dealerships.
During 2018, their number grew to more than 1,000
certified dealerships worldwide.
of five new models and also introduced two model
revisions as well as two new variants of BMW M
vehicles worldwide. The new BMW X2 went on
sale at dealerships in March 2018, followed by the
i8 Roadster* in May. The new X4 became available
to customers in July. The fourth generation of the
successful BMW X5 model and the new BMW 8 Series
Coupé were both launched in November. The Active
Tourer and Gran Tourer models of the BMW 2 Series
both underwent model revisions in the year under report,
and BMW M GmbH added the M2 and M5 Competition
as well as the M3 CS* variants to its portfolio.
The second generation of the MINI Countryman in
particular remains a cornerstone of the MINI brand.
Deliveries increased significantly year-on-year, with
the highly successful plug-in hybrid model making
a key contribution. Moreover, the MINI Convertible
was one of the best-selling vehicles of its kind in a
competitive market. Demand for the John Cooper
Works models also remained high, with a new record
share of total MINI deliveries.
→ www.bmwgroup.com
Slight increase in workforce
At 31 December 2018, the BMW Group had a world-
wide workforce of 134,682 employees, a slight increase
(+3.7%) compared to the end of previous financial
year (2017: 129,932 employees). The increase was
partly attributable to the further expansion of the
global production network. Moreover, in conjunction
with the implementation of the Group's Strategy
NUMBER ONE > NEXT, a growing number of experts
continued to be hired in future-oriented fields such as
artificial intelligence and autonomous driving, electric
mobility, smart production and logistics, as well as
data analysis, software architecture, agile software
development and innovative drivetrain systems.
5,000
4,964
2.5
8,645
8,860
Financial Services
5.8
3,506
3,709
Motorcycles
3.7
117,664
121,994
Automotive
→ 39
Change in %
31.12.2017
31.12.2018
BMW Group apprentices at 31 December
The realignment of the dual vocational training system
launched in the previous year moved to the implemen-
tation phase during 2018. At the start of training in
2018, three new training profiles were introduced at
the German plant locations, namely for IT applications
development, IT systems integration, and electronics
for automation technology. Moreover, a new training
programme was established with twelve dual courses
of study, in which recruits can acquire a bachelor's
degree in STEM subjects (science, technology, engi-
neering and mathematics). At the same time, new
teaching content was added to existing job profiles
and appropriate technical equipment acquired. Meas-
ures were also initiated at international locations to
restructure fields of expertise, focusing on automation
technology, robotics and additive manufacturing
processes. The total number of apprentices and
participants in development programmes for young
talent increased slightly to 4,964 (2017: 4,750; +4.5%).
Realignment of dual vocational training
→ 38
BMW Group employees
During the year under report, BMW launched a total
BMW broadens model range
* Fuel
consumption
Digitisation promotes individual mobility
In line with its Strategy NUMBER ONE > NEXT, the
BMW Group is increasingly investing in digital services.
The aim is to develop and successfully operate new
digital business models with a rigorously customer-
oriented approach. This enables the BMW Group to
additionally differentiate itself and underscores the
attractiveness of its vehicle portfolio. A directly acces-
sible customer base makes it possible to disseminate
offers of new products and services, which customers
can also benefit from after purchasing their vehicles.
Currently, the range of digital offerings is focused on
the areas MyCar (e.g. remote access to vehicle func-
tions such as air conditioning), MyJourney (e.g. real-
time traffic information and parking services), MyLife
(e.g. music streaming services) and MyAssistant (BMW
Intelligent Personal Assistant). The level of interest
in digital services has grown steadily in recent years.
59
59
→ www.bmwgroup.com/brands
The BMW Group's sales and distribution network
currently comprises some 3,500 BMW, 1,600 MINI
and 140 Rolls-Royce dealerships worldwide. Sales are
conducted via independent authorised distributors,
branch offices of the BMW Group, subsidiaries, and
independent import companies in some markets.
BMW i remains on road to success
Sales and Marketing
on page 108.
The BMWi offers not only trendsetting vehicle con-
cepts but also connected mobility services and a new
understanding of premium, which is determined in
particular by sustainability. The all-electric BMW i3* *Fuel
has meanwhile established itself as one of the most
successful electric vehicles in its segment. With a cell
capacity increased to 120 ampere hours (Ah) and a
current gross energy content of 42.2 kilowatt hours
(kWh), a new generation of high-voltage batteries
is helping the BMW i3* and its sporty sister model
the BMW i3s* to extend its reach by about 30% to
travel longer distances of up to 260 km. The entire
production chain is supplied with green energy for
both of these models and they are also 95% recyclable.
Since its market launch in 2014, the BMW i8 has been
one of the best-selling hybrid sports cars. Launched
in 2018, the new BMW i8 Roadster* offers an emotional
combination of electric mobility and the experience of
open-top driving. Apart from its remarkable design,
pioneering technologies and sustainable mobility
concept, it stands above all for the driving pleasure
typically epitomised by BMW.
In addition to its BMWi vehicles, in 2018 the
BMW Group successfully offered a range of six BMW
plug-in hybrid models and one MINI plug-in* world-
wide. The BMW Group is committed to providing flex-
ible platforms where customers have the free choice of
drivetrain system depending on their personal pref-
erence. The advantage for the BMW Group lies in its
flexible response to uncertain demand developments
and the best possible utilisation of plant capacity.
As a systems provider, BMW i provides its customers
with solutions that go far beyond the vehicle itself:
BMWi 360° ELECTRIC and ChargeNow are compre-
hensive service offerings for charging both at home
and away from home. Energy services such as grid
integration for electric vehicles and battery storage
applications are also available. Additional offerings
include charging technologies such as inductive charg-
ing as well as charging infrastructure projects such as
the super-fast charging network Ionity.
consumption
and CO₂ emis-
sions informa-
tion are available
2018
10,848
9,352
Cash inflow (+)/outflow (-) from operating activities
Change
2017
0
cash
equivalents
31.12.2018
in € million
→ 51
Free cash flow Automotive segment
Free cash flow for the Automotive segment was as
follows:
Cash inflow (+)/outflow (-) from investing activities
Cash and
5,000
-6,769
4,459
Adjustment for net investment in marketable securities and investment funds
Free cash flow Automotive segment
In the Automotive segment, net financial assets com-
prised the following:
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Economic Position
Report on
Management
Report
Combined
72
22
71
The decrease in cash inflow from the Automotive
segment's operating activities was mainly due to a
combination of lower net profit for the year and higher
working capital. Cash outflow from investing activities
was influenced in particular by higher disbursements
for investments in intangible assets and property,
plant and equipment.
-1,496
-225
-25
-1,746
Currency
translation,
changes in
2,713
155
130
-6,544
-7,363
-159
-1,200
10,979
-44
10,000
0
Cash and
cash
equivalents
31.12.2017
Cash inflow
from
operating
activities
Cash outflow
from
Cash inflow
from
investing
activities
Net financial assets Automotive segment
financing
activities
Group composition
+4,296
-6,163
15,000
+5,051
4,296
1,572
2,724
-44
115
1,940
1,159
781
BMW Group change in cash and cash equivalents
→ 50
in € million
15,000
10,000
9,039
-5,000
-7,363
-858
→ 52
Cash and cash equivalents
→ see
notes 31,
35 and 39
later
than 5
12,921
9,683
2.4
13.1
1.5
36.6
50.0
38,825
41,100
43,865
51,851
30,000
60,000
in € million
*Measured at exchange rates at the relevant transaction dates.
Asset-backed financing
transactions 17,335
Other 1,206
Bonds
53,346
A total of nine public ABS transactions were executed
in 2018, including three in the USA, two in China and
one each in Germany, France, Canada and the UK with
a total volume equivalent to €5.9 billion. Further funds
were also raised via new ABS conduit transactions in
Japan, the UK, Germany, Canada, Australia and the
USA amounting to €2.7 billion. Other transactions
remain in place in Germany, Switzerland, South
Korea, South Africa and Australia, amongst others.
The following table provides an overview of amounts
utilised at 31 December 2018 in connection with the
BMW Group's money and capital market programmes:
Programme
At 31 December 2018, liquidity remained at a solid
level of €16.3 billion.
Programme
framework
in € billion
Euro Medium Term Notes
Australian Medium Term Notes
Commercial Paper
BMW Group financial liabilities by maturity
→ 55
Amount
utilised*
Liabilities from
customer deposits
(banking) 14,359
The BMW Group also has access to a syndicated credit
line, which was newly agreed upon in July 2017. The
syndicated credit line of €8 billion has a minimum
term up to July 2023 and is being made available by a
consortium of 44 international banks. The credit line
was not being utilised at 31 December 2018.
0
Maturity (years)
7.2
18,471
19,801
Property, plant and equipment
5.2
15.8
15.9
9,464
10,971
Intangible assets
15
75
balance sheet
total in %
2018
Proportion of
change² in %
Change in %
20171
within
1
between
1-5
2017 2018
2017 2018
2017 2018
In 2018, the BMW Group issued four euro bench-
mark bonds on the European capital market with a
total issue volume of €7.3 billion, as well as bonds
on the US capital market with a total issue volume
of US$ 7 billion. Bonds were also issued in British
pounds, Canadian dollars and Chinese renminbi for
a total amount of €1.8 billion. Private placements
totalling €4.1 billion were also issued.
Further information with respect to financial liabilities
is provided in → notes 31, 35 and 39 to the Group
Financial Statements.
Net assets
→ 56
in € million
ASSETS
Group
Currency adjusted
2018
BMW Group condensed balance sheet at 31 December
Liabilities to banks
13,196
Commercial paper 2,480
Derivate instruments 1,675
322
-1,480
-1,158
-621
21,267
20,646
-2,080
9,774
7,694
-15
4,336
4,321
1,474
7,157
8,631
Change
2017
Marketable securities and investment funds
Intragroup net financial assets
Financial assets
Less: external financial liabilities*
Net financial assets Automotive segment
*Excluding derivative financial instruments.
19,488
Net cash inflows and outflows for the Financial Ser-
vices segment were as follows:
→ 53
in € million
Cash inflow (+)/outflow (-) from operating activities
Cash inflow (+)/outflow (-) from investing activities
Cash inflow (+)/outflow (-) from financing activities
Net
The increase in cash outflow from the Financial Ser-
vices segment's operating activities was mainly due to
the lower net profit for the year. The decrease in cash
inflow from investing activities was largely attributable
to cash proceeds received in the previous year from
the disposal of investments and other business units
(€970 million). Cash inflow from financing activities
was mainly driven by new loans raised and an increase
in asset-backed securities financing.
2018
Net cash flows for the Financial Services segment
19,787
-299
2018
2. Autonomy through the diversification of refi-
nancing instruments and investors
3. Focus on value through the optimisation of
financing costs
Financing measures undertaken at corporate level
ensure access to liquidity for the Group's operating
subsidiaries at standard market conditions and con-
sistent credit terms. Funds are acquired in line with
a target liability structure, comprising a balanced
mix of financing instruments. The use of longer-term
instruments to fund the Group's Financial Services
business and the maintenance of a sufficiently high
liquidity reserve serves to avoid the liquidity risk in
the portfolio. This conservative financial approach
also helps the Group's rating. Further information
is provided in the section Liquidity risks within the
"Report on Outlook, Risks and Opportunities".
On account of its good ratings and the high level
of acceptance it enjoys on capital markets, the
BMW Group was again able to refinance operations
at favourable conditions on debt capital markets
during the financial year 2018. In addition to bonds,
loan notes and private placements, the Group also
issued commercial paper. As in previous years, all
issues were in high demand, not only from private
investors but also in particular from institutional
investors. In addition, retail customer and dealership
financing receivables as well as rights and obligations
from leasing contracts are securitised in the form of
asset-backed securities (ABS) financing arrangements.
Specific banking instruments, such as the customer
deposits used by the Group's own banks in Germany
and the USA, are also employed for financing purposes.
In addition, loans are taken from international banks.
73
74
1. The ability to act through permanent access
to strategically important capital markets
Combined
Report on
Economic Position
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
BMW Group composition financial liabilities
→ 54
in € million
Management
Report
in € million
The overall objective of Group financing is to ensure
the solvency of the BMW Group at all times, focusing
on three areas:
Refinancing
2017
Change
-6,790
-6,384
-406
130
A broad range of instruments on international money
and capital markets is used to refinance worldwide
operations. Funds raised are used almost exclusively to
finance the BMW Group's Financial Services business.
937
6,793
4,334
2,459
133
-1,113
1,246
-807
5,909
54,107
Change
62%
Non-current assets 60%
140
196
209
210
70
10
140
210
Balance sheet total in € billion
→ 57
Balance sheet structure - Group
Other assets were significantly higher than one year ear-
lier. The increase was attributable, among other items,
to the higher volume of return right assets for future
leased vehicles in conjunction with the introduction of
IFRS 15, higher receivables from companies in which
an investment is held and an increase in prepayments.
Further information relating to IFRS 15 is provided in
→ note 6 to the Group Financial Statements.
→ see
note 6
7
Financial assets decreased significantly compared
to 31 December 2017, mainly due to changes in the
volume of currency derivatives and their fair value
measurement. Lower fair values as well as a change in
the volume of commodity derivatives also contributed
to this development.
Economic Position
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Report on
Combined
Management
Report
76
66
Receivables from sales financing increased solidly
over the twelve-month period, mainly due to larger
credit financing volumes in the USA, the UK and
China. A total of 1,277,207 new credit financing
contracts were signed during the financial year 2018.
Compared to the end of the previous financial
year,
the contract portfolio under management grew by
7.0% to 3,889,344 contracts.
-70
Leased products also went up solidly year-on-year
on the back of portfolio growth in various countries,
including Germany and France. Adjusted for currency
factors, leased products increased slightly.
Current assets 40%
209
EQUITY AND LIABILITIES
Equity
97
- 33
66
46%
Non-current assets 47%
97
100
Balance sheet total in € billion
→ 58
Balance sheet structure - Automotive segment
2017*
2018
2017*
2018
5%
thereof cash and cash equivalents 5%
34%
H
196
38%
28%
38%
100.0
Property, plant and equipment rose solidly compared
to the previous financial year, with investments in the
X5 and X7 models as well as in the 3 Series in particular
contributing to the increase.
The balance sheet total of the BMW Group increased
solidly compared to 31 December 2017.
103,597
Financial liabilities
1.4
-14.4
-9.7
3,281
2,964
Deferred and current tax
5.7
-2.0
-1.2
11,999
11,854
Other provisions
1.1
-28.6
-28.4
3,252
2,330
Pension provisions
27.8
7.6
7.4
94,648
Intangible assets were significantly higher than one
year earlier, mainly due to the increase in capitalised
development costs.
9.5
49.6
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
2 The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year figures.
100.0
6.1
6.9
195,506
208,980
Total equity and liabilities
0.0
62
Liabilities in conjunction with assets held for sale
9.8
9.7
10.4
18,488
20,416
Other liabilities
66
4.6
-1.0
-0.6
9,731
9,669
Trade payables
8.2
6.1
6.9
195,506
Despite unfavourable foreign currency translation
effects, Financial Services segment revenues rose
slightly year-on-year on the back of portfolio growth.
Financial Services segment
Profit before tax for the twelve-month period was
significantly lower than one year earlier.
Motorcycles segment revenues decreased slightly year-
on-year, mainly due to the ramp-up situation caused
by multiple model changes and compounded by a
combination of product mix and currency effects.
58,088
Profit before tax for the year was significantly lower
than one year earlier.
At €795 million, the Automotive segment's financial
result was slightly down on the previous year, influ-
enced by the factors described above for the Group.
The net amount of other operating income and
expenses improved from negative €525 million to
positive €134 million in the year under report, mainly
due to lower allocations to provisions for litigation.
At €7,880 million, selling and administrative expenses
were similar to one year earlier.
Automotive segment revenues remained at a similar
level to the previous year due to currency factors.
Adjusted for currency factors, they rose slightly, par-
tially as a result of higher delivery volumes. Despite
the volume growth achieved, market competition
intensified to an unexpectedly high level, mainly
reflecting the reaction of competitors to the early
implementation of WLTP regulations. Trade conflicts
and other uncertainties also exacerbated the situation
and had an unfavourable impact on selling prices. The
segment's cost of sales went up slightly year-on-year,
with higher research and development expenses as
well as raw materials costs contributing to the increase.
Additions to provisions in connection with goodwill
and warranty measures also had an effect on cost of
sales. Warranty expenses include the accrued expense
for vehicle recall actions, the cost of which is expected
to exceed amounts previously recognised. In this
context, a figure of €793 million was allocated to the
warranty provision, partially in connection with the
exhaust gas recirculation cooler. The lower volume
of ongoing warranty expenditure compared with the
previous year had a positive impact.
Automotive segment
6.7
9.5
Leased products
38,572
36,257
6.4
4.6
18.5
Investments accounted for using the equity method
2,624
2,769
-5.2
Cost of sales relating to financial services business
increased by €555 million (2017: €23,986 million).
-5.2
The net amount of other operating income and
expenses deteriorated from negative €17 million to
negative €82 million. The decline was mainly due to
higher expenses for litigation.
Profit before tax in the Financial Services segment was
slightly down on the previous year, primarily due to
negative foreign currency translation effects.
2017
2018
The cash outflow from investing activities exceeded the
cash inflow from operating activities by €2,312 million
in the financial year 2018. In the previous year, the
shortfall had been lower at €254 million.
The increase in cash inflow from the Group's financing
activities resulted mainly from the issue of bonds and
from new loans taken up. The repayment of commer-
cial paper had an offsetting effect.
The higher level of cash outflow from the Group's
investing activities mainly reflects a rise in invest-
ments in intangible assets and property, plant and
equipment, increased expenditure for investment
assets (primarily relating to the acquisition of the
DriveNow companies) and lower proceeds from the
disposal of investment assets. The decreased level of
investments in marketable securities and investment
funds had an offsetting effect.
The decrease in cash inflow from the Group's operat-
ing activities was due to the lower net profit for the
year and higher working capital. The lower increase
in receivables from financial services compared to the
previous year had an offsetting effect.
Effects of exchange rate and changes in composition of Group
Change in cash and cash equivalents
Cash inflow (+)/outflow (-) from financing activities
Cash inflow (+)/outflow (-) from operating activities
Cash inflow (+)/outflow (-) from investing activities
in € million
Cash flows from operating activities are determined
indirectly, starting with Group and segment net profit.
By contrast, cash flows from investing and financing
activities are based on actual payments and receipts.
statements correspond to the amounts disclosed in
the balance sheet.
BMW Group cash flows
→ 49
The consolidated cash flow statements for the Group
and the Automotive and Financial Services segments
show the sources and applications of cash flows
for the financial years 2018 and 2017, classified
according to operating, investing and financing
activities. Cash and cash equivalents in the cash flow
Financial position
Economic Position
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Report on
Combined
Management
Report
70
69
69
Profit before tax in the Other Entities segment fell
significantly year-on-year. Among other things, higher
administrative expenses arising in connection with
the adjustment to the existing pension obligation
in the UK (Guaranteed Minimum Pension) had a
negative impact. In addition, lower market interest
rates caused the net interest result to deteriorate.
Inter-segment eliminations increased Group profit
before tax by €553 million in the financial year 2018,
a year-on-year improvement of €1,087 million. This
was mainly due to the positive impact of reversals in
conjunction with the strong portfolio growth of prior
years for leased products and the favourable effect of
lower margin eliminations in 2018.
Other Entities segment/Eliminations
The segment's risk profile remained stable during the
financial year 2018. Whereas price levels on the North
American pre-owned vehicle market improved slightly,
residual values for pre-owned vehicles in Germany
dropped slightly, mainly because of the debate on
diesel bans in a number of cities.
1.3
Other investments
739
29.6
5.7
13,047
12,707
2.7
2.7
6.2
2,546
2,667
-4.5
-4.5
1.2
Cash and cash equivalents
Assets held for sale
Total assets
10,979
9,039
21.5
21.8
5.3
461
0.2
208,980
29.6
9,115
11,816
Trade receivables
690
7.1
6.0
0.4
Receivables from sales financing
86,783
80,434
7.9
7.2
41.4
Financial assets
5,051
7,685
-25.6
-26.0
3.7
Deferred and current tax
2,956
3,559
-16.9
-19.2
1.4
Other assets
Inventories
10,334
Motorcycles segment
94
94
33,187
33.4
33,452
33.4
-0.8
Depreciation and amortisation of total tangible,
intangible and investment assets
8,441
Gross value added
8.5
8.4
-0.2
Net value added
24,746
24.9
24,997
25.0
-1.0
8,455
-0.9
66.6
66,673
7.5
99,243
100.0
100,125
100.0
-0.9
53,132
53.5
51,043
51.0
4.1
12,924
13.1
15,630
15.6
-17.3
Bought-in costs
66,056
66.6
ALLOCATION
0.7
Employees
Government/public sector
19.5
5,959
23.8
-19.2
Minority interest
90
0.4
86
4,814
4.7
24,746
100.0
24,997
100.0
-1.0
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
² Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
94
Net value added
-12.4
10.5
2,630
Shareholders
Group
12,479
50.4
12,052
48.2
3.5
2,283
9.2
2,066
8.3
10.5
2,777
11.2
2,204
8.9
26.0
2,303
9.3
Providers of finance
720
0.3
774
33
Group equity rose by €3,981 million to €58,088 million,
increased primarily by the profit of €7,117 million
attributable to shareholders of BMW AG and decreased
by the dividend payment of €2,630 million.
BMW Group equity ratio
→ 59
in %
31.12.2018
31.12.2017*
Change in %pts
60
27.8
0.1
Group
Automotive segment
41.0
42.0
-1.0
Financial Services segment
10.2
27.7
66
100
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
0.8
41%
18%
28% Equity
35% Non-current provisions and liabilities
37% Current provisions and liabilities
#] ||
Current assets 53%
54%
41%
17% Non-current provisions and liabilities
41% Current provisions and liabilities
0
thereof cash and cash equivalents 9%
8%
2018
2017*
2018
2017*
10.7
-0.5
42% Equity
Pension provisions decreased significantly compared
to the end of the financial year 2017. Higher discount
rates and lower inflation expectations in Germany and
the UK as well as a revision of mortality tables in the
UK contributed to this development.
in %
Change
in %
WORK PERFORMED
Revenues
Financial income
Other income
Total output
Cost of materials²
Other expenses
97,480
98.2
98,282
98.2
-0.8
1.0
1,123
1.1
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
-11.9
in € million
20171
989
2018
in %
20171
The line items "Assets held for sale" and "Liabilities
in connection with assets held for sale" relate to the
discontinued operations of the DriveNow companies.
Further information is provided in → note 2 to the
Group Financial Statements.
Overall, the results of operations, financial position
and net assets position of the BMW Group remained
stable during the year under report.
→ see
note 2
Financial liabilities increased solidly compared to the
end of the previous year, mainly due to the issue of
new long-term bonds.
77
78
Combined
Management
Report
Report on
→ see
note 6
Economic Position
in € million
2018
Net valued added by the BMW Group remained at a
high level in the financial year 2018.
added benefits employees. The remaining proportion
in the Group is retained to finance future operations.
The
gross value added amount treats depreciation as
a component of value added which, in the allocation
statement, would be treated as internal financing.
The significant increase in other liabilities includes
the effect of higher return right liabilities for future
leased vehicles in conjunction with the introduction of
IFRS 15. Further information is provided in → note 6
to the Group Financial Statements.
The value added statement shows the value of work
performed by the BMW Group during the financial
year, less the value of work bought in. Deprecia-
tion and amortisation, cost of materials, and other
expenses are treated as bought-in costs in the value
added calculation. The allocation statement applies
value added to each of the participants involved in
the value added process. The bulk of the net value
Value added statement
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
BMW Group value added statement
→ 60
Equity increased by €195 million to €15,241 million.
The equity ratio changed from 36.3% to 33.5 %, mainly
due to the increased balance sheet total.
KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, has
issued an unqualified audit opinion on the financial
statements of BMW AG, of which the balance sheet and
the income statement are presented here. The BMW AG
financial statements for the financial year 2018 will be
submitted to the operator of the electronic version of
the German Federal Gazette and can be obtained via the
Company Register website. These financial statements
are available from BMW AG, 80788 Munich, Germany.
Due to its significance in the Group and its close ties
with Group companies, expectations for BMW AG
with respect to its financial and non-financial
performance indicators correspond largely to the
BMW Group's outlook for the Automotive segment.
This is described in detail in the Report on Outlook,
Risks and Opportunities section of the Combined
Management Report.
Outlook
BMW AG is integrated in the group-wide risk man-
agement system and internal control system of the
BMW Group. Further information is provided in the
section Internal Control System Relevant for Accounting
and Financial Reporting Processes within the Combined
Management Report.
BMW AG's performance is essentially dependent on
the same set of risks and opportunities that affect the
BMW Group and which are described in detail in the
Report on Outlook, Risks and Opportunities section
of the Combined Management Report. As a general
rule, BMW AG participates in the risks entered into
by Group companies in proportion to the respective
shareholding percentage.
Risks and opportunities
Cash and cash equivalents increased by €2,324 million
Liquidity within the BMW Group is managed centrally
by BMW AG on the basis of a group-wide liquidity
concept. This involves concentrating a significant part
of the Group's liquidity at the level of BMW AG. An
important instrument in this context is the cash pool
based at BMW AG. The liquidity position reported
by BMW AG therefore reflects the global activities of
BMW AG and other Group companies.
The increase in liabilities to subsidiaries in the amount of
€4,483 million was mainly due to intragroup refinancing.
Deferred income increased by €483 million to
€3,168 million and included mainly amounts for
services still to be performed relating to service and
maintenance contracts.
The increase in other receivables and other assets to
€3,595 million (2017: €2,827 million) was mainly due
to higher receivables from companies with which
an investment relationship exists and to higher tax
receivables.
Other provisions decreased year on year, mainly due
to a change in the valuation method used for provisions
for warranties, goodwill and product guarantees as
well as to a reduction in litigation and liability risks.
Additions to provisions for selling and marketing
obligations had an offsetting effect.
Provisions for pensions increased from €139 million
to €214 million, after offsetting of pension liabilities
with pension assets.
In order to secure pension obligations, cash funds
totalling €550 million were transferred to BMW Trust
e. V., Munich, in conjunction with a Contractual Trust
Arrangement (CTA), to be invested in plan assets. Plan
assets are offset against the related guaranteed obliga-
tions. The resulting surplus of assets over liabilities is
reported in the BMW AG balance sheet on the line item
Surplus of pension and similar plan assets over liabilities.
883
to €6,542 million, mainly due to the surplus from
operating activities and as a result of the higher level
of financial liabilities to subsidiaries. The repayment
of loans as well as the payment of the dividend for
the previous financial year had an offsetting effect.
Liabilities to banks decreased by €420 million, mainly
as a result of the repayment of project-related loans.
Growth in deliveries planned
Combined
In the UK, the ongoing uncertainties in connection with
the Brexit negotiations are impairing the reliability of
forecasts drawn up by businesses. This applies to the
BMW Group as well, which could be further adversely
affected due to the necessary preparations. Notwith-
standing these difficulties, the assumption is that the
UK will leave the EU in an orderly manner.
The following outlook relates to a forecast period
of one year and is based on the composition of the
BMW Group during that time. The outlook takes
account of all information available at the time of
reporting, and any which could have an effect on the
overall performance of the Group. The expectations con-
tained in the outlook are based on the BMW Group's
forecasts for 2019 and reflect its most recent status.
Along with other inputs, they represent a consensus
of opinions of leading organisations, such as economic
research institutes and banks. The basis and principal
assumptions of the forecast are set out below:
Receivables from subsidiaries, most of which relate to
intragroup financing receivables, rose to €8,570 million
(2017: €7,641 million).
Assumptions used in the outlook
The continuous forecasting process ensures the
BMW Group's ability to exploit opportunities quickly
and systematically as they arise and react in a similar
way to unexpected risks. The principal risks and
opportunities are described in detail in the section
Risks and Opportunities. The matters discussed
therein are relevant for all of the BMW Group's key
performance indicators and could result in variances
between the outlook and actual outcomes.
The report on outlook, risks and opportunities con-
tains forward-looking statements. These are based
on the BMW Group's expectations and assessments
and are subject to uncertainty. As a result, actual out-
comes can deviate either positively or negatively from
the expectations described below - for example on
account of political and/or economic developments.
The report on outlook, risks and opportunities describes
the expected development of the BMW Group, includ-
ing the significant risks and opportunities, from a
Group management perspective. In line with the
Group's internal management system, the outlook
covers a period of one year. Risks and opportunities
are managed on the basis of a two-year assessment.
The report on risks and opportunities therefore
addresses a period of two years.
OUTLOOK
Business environment remains
volatile
of 6 to 8%
EBIT margin in the range
REPORT ON OUT-
LOOK, RISKS AND
OPPORTUNITIES
→ Outlook
Opportunities
Risks and
Report on Outlook,
Management
Report
84
At €4,811 million (2017: €4,643 million), inventories
were higher than one year earlier due to an increase
in goods for resale.
Trade payables
Capital expenditure on intangible assets and prop-
erty, plant and equipment in the year under report
totalled €2,975 million (2017: €2,628 million), up by
13.2% compared to the previous year. Depreciation
and amortisation amounted to €2,470 million (2017:
€2,350 million).
8,038
8,469
7,824
139
214
29
28
8,608
15,046
2,630
2,303
9,605
10,103
2,153
The BMW Group also anticipates that trade tensions
between the USA and China will continue to be a
source of uncertainty. The Group also assumes that
trade between the EU and the USA will not be subject
to additional tariffs.
2,177
15,241
The carrying amount of investments decreased to
€3,559 million (2017: €3,676 million), mainly as a result
of an impairment loss of €119 million (2017: reversal
of impairment losses of €70 million) recognised on the
investment in SGL Carbon SE, Wiesbaden in order to
reduce its carrying amount to the lower market value.
Liabilities to banks
Other liabilities
41,472
2,685
3,168
45,535
15,104
19,060
333
285
Liabilities to subsidiaries
8,187
5,619
5,560
965
545
Total equity and liabilities
Deferred income
Liabilities
12,670
The BMW Group and Daimler AG are merging their
mobility services in a new joint venture. Following
approval by the antitrust authorities, the agreement
between the two companies was concluded with effect
from 31 January 2019. It is currently assumed that the
impact on earnings during the forecast period will be
of minor significance.
The BMW Group holds a leading position among com-
petitors in various new fields of technology, including
digitalisation and autonomous driving. Given its firm
intention to expand in these areas, investments in
future-oriented projects will remain at a high level.
The BMW Group also plans to electrify drivetrain
systems across its entire model portfolio. Additional
challenges are likely to arise in the future as a conse-
quence of new regulatory measures. The production
network will also be further expanded during the
outlook period. Due to these external challenges and
the upfront expenditure necessary to secure future
operations, the Group's pre-tax profit is expected to
decrease significantly (2018 adjusted: €9,627 million).
Global economic growth is currently forecast at just
over 3% in 2019. At the same time, the outlook for
the global economy remains exposed to an array of
uncertainties. These include above all the exit negotia-
tions between the EU and the UK as well as the future
foreign trade policy of the US administration. In the
event of unfavourable developments, global growth
could be significantly affected. The debt situation of
Chinese companies as well as the high level of national
debt in Japan and some eurozone countries could
also jeopardise stability on financial markets. Last
but not least, the global economy could also be neg-
atively impacted by excessively restrictive monetary
policies imposed by the Fed in the USA and the ECB
in Europe. Further information on political and global
economic risks is also available in the section Risks
and Opportunities.
Opportunities
Risks and
Report on Outlook,
Report
Combined
Management
88
88
→ Outlook
87
note 5
→ see
Application of International Financial Reporting Stan-
dard IFRS 16 (Leases) is mandatory with effect from
1 January 2019. Comparative figures for the year 2018
are required to be adjusted accordingly. In order to
ensure a transparent presentation of changes in key
financial performance indicators, the outlook shows
values adjusted in accordance with IFRS 16 as well as
the actual values reported for 2018. With regard to key
financial performance indicators for 2019, the outlook
is based on values for 2018 adjusted in accordance with
IFRS 16. Further information on IFRS 16 is provided in
→ note 5 to the Group Financial Statements.
Outlook for the BMW Group
In connection with the projects referred to above, the
need for suitably qualified staff across the BMW Group
will remain high during the current year. According
to current estimates, the size of the workforce is
expected to remain at the previous year's level (2018:
134,682 employees).
Workforce size at year-end expected at previous
year's level
Profit before tax: significant decrease expected
Competition on international automobile markets
is set to remain fierce in 2019. Furthermore, politi-
cal and economic developments in Europe remain
increasingly uncertain. Above all, this is due to the
currently unforeseeable impact of Brexit. In addition,
it is difficult to predict how trade tensions between the
USA and the EU on the one hand and the USA and
China on the other are likely to develop. Volatilities
on international currency and raw materials markets
could also have a negative impact on Group profit
before tax. Further information is provided in the
macroeconomic risks and opportunities section of
the Risks and Opportunities Report.
88
Group
Automotive segment
The BMW 8 Series Coupé launched in November 2018
and the new X5 models are expected to contribute
to sustained growth. Moreover, in autumn 2018 the
BMW Group announced the launching of numerous
new models during the first quarter of 2019. These
include the seventh generation of the BMW 3 Series
Sedan, the new BMW 8 Series Convertible and the
new BMW X7 and Z4 models. Other new models
will follow over the course of 2019. The Rolls-Royce
Cullinan², which has been available to customers since
November 2018, is expected to stimulate demand and
make an important contribution to the success of the
Company.
658
Return on capital employed: solid increase expected
Due to the product initiatives described above, the
Motorcycles segment is expected to generate a solid
year-on-year increase in RoCE in 2019 (2018: 28.4%).
The long-term target RoCE of 26% for the Motorcycles
segment will therefore be surpassed.
The EBIT margin in the Motorcycles segment in 2019
is forecast to lie within the target range between 8 and
10% (2018: 8.1%).
EBIT margin in target range between 8 and 10%
expected
Deliveries to customers: solid increase expected
The BMW Group expects business in the Motorcycles
segment to develop positively in the current year.
Business is predicted to benefit from the extensive
measures taken to rejuvenate the segment's product
range in the previous year as well as from the array
of new models presented at international motorcy-
cle trade fairs in autumn 2018. The addition of the
mid-class C 400 GT Scooter has also expanded the
segment's product range designed for the urban
environment. Overall, a solid increase in deliveries
of BMW motorcycles to customers is forecast for 2019
(2018: 165,566 units).
3 EU-28
2 Fuel consumption
and CO₂ emis-
sions information
are available
on page 108.
Deliveries to customers: slight increase expected
The BMW Group expects a further year-on-year
increase in deliveries of BMW, MINI and Rolls-Royce
brand vehicles and aims to occupy a leading posi-
tion in the global premium segment again in 2019.
Balanced growth in major sales regions will help to
compensate for volatilities in individual markets.
Assuming economic conditions do not deteriorate,
deliveries to customers are forecast to rise slightly to
a new high (2018: 2,490,664¹ units).
units).
The Automotive segment's RoCE is expected to drop
significantly in 2019 (2018: 49.8%). The decrease is
partly due to the introduction of IFRS 16 (Leases).
Further reasons are higher investments in the elec-
trification of the vehicle fleet, digitalisation, the expan-
sion and rejuvenation of the model portfolio and the
expansion of the production network. Furthermore,
the segment's earnings trend is likely to have a damp-
ening effect on RoCE. However, the long-term target
ROCE of at least 26% for the Automotive segment will
be surpassed.
1 Includes the
joint venture
BMW Brilliance
Automotive,
Shenyang Ltd.
As stated in the Annual Report 2017, the use of
return on capital employed (RoCE) as a performance
indicator was due to be reviewed, partly in connec-
tion with the introduction of IFRS 16 (Leases). The
review confirmed the significance of ROCE as a key
performance indicator, in particular with a view to
managing profitability and capital efficiency. The use
of this indicator is also closely linked to the Group's
project-oriented management logic.
Return on capital employed: significant decrease
expected
Against the background of the challenges referred
to above, an EBIT margin within a range of 6 to 8%
is expected for the Automotive segment the core
business of the BMW Group - for the 2019 financial
year (2018: 7.2%).
EBIT margin in target range between 6 and 8%
expected
Fleet CO2 emissions³: slight decrease expected
Given that the effects of the conversion to WLTP and
the further course of the diesel debate are difficult to
assess, any forecast for 2019 is subject to a particu-
larly high degree of uncertainty. Nevertheless, the
BMW Group aims to reduce its average fleet CO2 emis-
sions slightly for the year 2019 (2018: 128 g CO2/km).
(2018: 459,581 Motorcycles segment
In view of increasingly unpredictable political devel-
opments, actual economic performance in some
regions may deviate from expected trends and out-
comes. Potential sources of political unpredictability
include policies affecting trade and customs tariffs,
security developments and possible further interna-
tional trade conflicts.
-
to continue.
Currencies of particular importance for the interna-
tional operations of the BMW Group are the US dollar,
the Chinese renminbi, the Japanese yen and the
British pound. All of these currencies are expected
to remain volatile in 2019.
Currency markets
→ Outlook
Opportunities
Risks and
Report on Outlook,
Combined
Management
Report
The US economy is likely to remain strong in 2019,
potentially giving the US Federal Reserve more scope
for further interest rates hikes. The Fed has announced,
however, that it will take a more cautious approach in
2019 than in previous years. After ending its securities
purchasing programme, the ECB indicated the possi-
bility of an interest rate increase in the third quarter
2019 at the earliest, which would mean a departure
from its highly expansive monetary policy. In this
context, the euro could gradually appreciate in value
against the US dollar over the course of 2019.
86
85
Emerging markets could see growth on a par with the
previous year, with economic expansion predicted
for India (+7.3%), Russia (+1.4%) and Brazil (+2.4%).
The Japanese economy is forecast to grow by only
1.0% in 2019. Demand for capital goods as well as
domestic consumer spending could help drive growth.
The weak yen is also likely to bolster exports.
In China, reducing overcapacities and strengthening
domestic consumption will continue to have priority
in 2019. Against this backdrop, GDP is still forecast
to rise by 6.2%. Achieving a balance between short-
term measures aimed at stabilising the economy and
restructuring the Chinese economy on a long-term
basis will remain the government's most difficult task.
Therefore, the risk of a significant economic downturn
in China cannot be entirely ruled out.
Economic momentum in the USA is expected to weaken
only slightly compared with the previous year. The
high employment rate, combined with the ongoing
economic stimulus from the tax reform, should con-
tinue to have a positive impact on economic activity in
2019, as a result of which the economy is expected to
grow by 2.4%. The US Federal Reserve will most likely
continue pursuing a moderately restrictive monetary
policy. Unexpected developments, in particular in US
domestic policy, could result in a less favourable outlook.
The UK's economic performance in the outlook period
will be influenced significantly by the progress of EU
exit negotiations. The lack of planning certainty con-
tinues to weigh on companies and private households
alike. Consequently, GDP growth of only 1.4% is
forecast for 2019. Uncertainty remains at a high level.
Gross domestic product in the eurozone is only
expected to grow by around 1.5% in 2019. Germany's
economy should see growth on a similar scale (+1.4%).
The growth prospects of other member states in the
eurozone are expected to be on the modest side.
France (+1.4%) and Italy (+0.7%) are likely to see an
increase in GDP over the outlook period. Based on an
expected growth rate of 2.2%, the Spanish economy
is set to grow faster than the eurozone average.
98
The economic links between the USA and China sug-
gest that the Chinese renminbi is likely to develop
relatively synchronously to the US dollar. For this
reason, the renminbi is expected to depreciate slightly
against the euro in 2019.
The value of the British pound is currently being
determined to a large extent by the progress of Brexit
negotiations. Accordingly, the most likely scenario is
a volatile sideways movement of the pound against
the euro.
The Japanese central bank's highly expansionary
monetary policy is unlikely to change in 2019, so
that the euro/yen exchange rate will probably follow
a sideways trend. However, it cannot be ruled out
that the euro will appreciate slightly against the yen.
Expected consequences for the BMW Group
Future developments on international automobile
markets also have a direct impact on the BMW Group.
While competition could intensify further in contract-
ing markets, new opportunities may appear in growth
regions. Challenges in the competitive environment
will have a significant effect on sales volumes in
some countries. Due to its global business model, the
BMW Group is well placed at all times to capitalise
on any opportunities that present themselves, even at
short notice. Coordination between the Group's sales
and production networks also enables it to balance
out the impact of unforeseeable developments in the
various regions. Investments in markets important for
the future also form a basis for further growth, while
simultaneously strengthening the global presence of
the BMW Group. Thanks to its three premium brands –
BMW, MINI and Rolls-Royce the BMW Group
expects the positive development in vehicle deliveries
Japan's central bank is likely to maintain its ultra-ex-
pansive monetary policy in order to drive inflation
and stimulate the economy.
In China, fiscal policy will focus on safeguarding the
country's financial stability. In order to bolster the
economy in the event of an aggressive trade war, the
Chinese central bank could reduce the minimum
reserve ratio and cut taxes further.
The US Federal Reserve is likely to pursue a more
restrictive monetary policy again in 2019.
The uncertainty surrounding the ongoing Brexit nego-
tiations will continue to weigh on the UK economy
in 2019. The Bank of England's monetary policy over
the coming months will be geared to managing the
economic impact of the Brexit negotiations.
In view of significantly increasing economic risks,
low inflation and political pressure to maintain loose
monetary policies, the ECB is not expected to raise
its benchmark interest rate from the current record
low of zero per cent until the economic climate has
brightened.
A moderate slowdown is predicted for the global
economy in 2019. The main reasons for slower growth
are the weaker impact of fiscal incentives in the USA
accompanied by tighter monetary policies in many
emerging markets. Unemployment in many indus-
trialised countries is at a low level.
International interest rate environment
The BMW Group expects the world's motorcycle mar-
kets in the 250 cc plus class to grow slightly in 2019.
In Europe, the upward trend is expected to continue
in the major markets of Germany, France, Italy and
Spain. Conversely, the US motorcycle market is fore-
cast to see a slight fall in new registrations in 2019.
International motorcycle markets
Registrations in Russia are expected to rise by around
8.4% in 2019 to 1.8 million units on the back of
economic recovery. In Brazil, registration figures are
also expected to increase by 11.6% to 2.3 million units
in the current year.
Additionally, the forecast for China is a decrease of
0.6% in passenger car registrations to 23.0 million
units. The downward trend on the Japanese auto-
mobile market is set to continue in 2019 (5.0 million
units; -2.4%).
The USA is unlikely to maintain a sustainable recovery
in 2019 after the previous year's dip. Based on current
forecasts, the downward trend in US registrations is
likely to continue (17.0 million units; −1.6%).
Europe's automobile markets are forecast to see a
slight increase (15.8 million units; +1.0%), with contri-
butions to growth coming particularly from Germany
(3.5 million units; +1.9%). In France (2.2 million
units; -0.3%) and Italy (1.9 million units; -0.2%),
automobile markets are likely to contract slightly
in 2019. For the UK, registration forecasts are also
negative (2.3 million units; -2.3%).
After a weaker performance in 2018, a reversal of
this trend in 2019 is not expected for registrations
on international automobile markets (85.5 million
units; -0.3%).
International automobile markets
The currencies of numerous emerging markets could
come under pressure against the US dollar and the
euro, due to the continuing normalisation of monetary
policies in the USA and Europe, which could result in
capital outflows from emerging markets. This applies in
particular to countries such as Russia, Brazil and India.
Economic outlook
658
Other taxes
Other provisions
Other operating income and expenses
-5,168
-5,859
Research and development expenses
-2,733
-2,803
Administrative expenses
1,026
-3,958
16,398
14,514
-62,817
-63,841
79,215
78,355
Selling expenses
-4,078
Gross profit
-303
2,344
-16
-19
Unappropriated profit available for distribution
Transfer to revenue reserves
Net profit
Financial Services segment
3,213
Result on investments
2,820
-1,563
-872
Income taxes
-541
-1,452
Financial result
1,081
Profit after income tax
2,801
Cost of sales
81
Combined
79
-0.4% Minority interest
19.5% Group
9.3% Shareholders
11.2% Government/public sector
9.2% Providers of finance
Management
Report
24.9 Net value added
C
Cost of materials 53.5
13.1 Other expenses
Depreciation and amortisation 8.5
in %
→ 61
BMW Group value added 2018
50.4% Employees
4
Report on
→ Comments on
2017
2018
in € million
→ 62
BMW AG Income Statement
Results of operations
80
Economic Position
60
BMW AG develops, manufactures and sells automo-
biles and motorcycles as well as spare parts and acces-
sories manufactured in-house, by foreign subsidiaries
and by external suppliers, and performs services
related to these products. Sales activities are carried
out primarily through branches, subsidiaries, inde-
pendent dealerships and importers. In 2018, BMW AG
increased automobile deliveries by 25,782 units to
2,519,897 units. This figure includes 490,582 units
relating to series sets supplied to the joint venture
BMW Brilliance Automotive Ltd., Shenyang, an
increase of 93,833 units over the previous year.
Business environment and review of operations
The general and sector-specific environment of BMW AG
is essentially the same as that of the BMW Group and is
described in the Report on Economic Position section
of the Combined Management Report.
Differences between the accounting treatment of the
German Commercial Code and International Financial
Reporting Standards (IFRS), according to which the
BMW Group Financial Statements are prepared, are
mainly to be found in connection with the capitali-
sation of intangible assets, the creation of valuation
units, the recognition and measurement of financial
instruments and provisions as well as the recognition
of deferred tax assets. Differences also arise in the
presentation of assets and liabilities and of items in
the income statement.
The key financial and non-financial performance
indicators for BMW AG are essentially identical and
concurrent with those of the Automotive segment of
the BMW Group. These are described in detail in the
Report on Economic Position section of the Combined
Management Report.
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
based in Munich, Germany, is the parent company of
the BMW Group. The comments on the BMW Group
and Automotive segment provided in earlier sections
apply to BMW AG, unless presented differently in
the following section. The Financial Statements of
BMW AG are drawn up in accordance with the pro-
visions of the German Commercial Code (HGB) and
the relevant supplementary provisions contained in
the German Stock Corporation Act (AktG).
COMMENTS ON FINANCIAL
STATEMENTS OF BMW AG
Financial Statements
of BMW AG
At 31 December 2018, BMW AG employed a workforce
of 89,842 people (31 December 2017: 87,940 people).
3,197
-498
-567
6,542
Current assets
Cash and cash equivalents
4,185
4,080
2,827
3,595
4,218
7,641
766
947
Marketable securities
Other receivables and other assets
Receivables from subsidiaries
Trade receivables
4,643
8,570
4,811
28,545
Prepayments
Pension provisions
Registered profit-sharing certificates
Equity
Unappropriated profit available for distribution
Revenue reserves
Capital reserves
Subscribed capital
24,280
EQUITY AND LIABILITIES
45,535
Total assets
1,290
668
Surplus of pension and similar plan assets over liabilities
483
535
41,472
Inventories
15,419
15,787
BMW AG Balance Sheet at 31 December
Financial and net assets position
62
82
After deducting the expense for taxes, the Company
reported a net profit of €2,801 million, compared to
€3,197 million in the previous year.
The expense for income taxes relates primarily to
current tax for the financial year 2018.
Results on investments benefited from higher income
arising under profit transfer arrangements with Group
companies. By contrast, the financial result deteriorated
year-on-year by €911 million, mainly due to higher
interest expenses for pension liabilities and expenses
incurred for the corresponding plan assets as well as
an impairment loss recognised on the investment in
SGL Carbon SE, Wiesbaden.
Combined
The net amount of other operating income and
expenses improved by €1,329 million to a net positive
amount of €1,026 million. The year-on-year change
resulted mainly from the reversal of provisions for
warranty, goodwill and product guarantees due to the
changed valuation method as well as to lower alloca-
tions or higher reversals to provisions for litigation
and liability risks.
Research and development expenses related mainly to
new vehicle models in conjunction with the continued
product offensive (including the new 3 Series and
X models), expenses for the development of refer-
ence architectures and drivetrain systems as well as
Selling and administrative expenses went up
year-on-year, partly reflecting the impact of the larger
workforce as well as higher expenses for selling and
marketing obligations.
overall
Cost of sales increased by 1.6% to €63,841 million,
mostly due to the higher number of deliveries and the
rise in cost of materials. The change in the valuation
method used for provisions for warranties, goodwill
and product guarantees had an offsetting effect. Gross
profit decreased by €1,884 million to €14,514 million.
Despite the higher number of deliveries, revenues
were 1.1% lower than in the previous financial
year. The decrease was mainly due to exchange-rate
effects, selling price adjustments and the change in
the valuation method used to measure provisions for
warranties, goodwill and product guarantees. In geo-
graphical terms, the decrease mainly related to Europe
and the USA. Revenues totalled €78,355 million (2017:
€79,215 million), of which Group internal revenues
accounted for €58,707 million (2017: €59,736 million)
or 74.9% (2017: 75.4%).
2,630
2,303
higher expenditure for the electrification of vehicles
and autonomous driving. Compared to the previous
year, research and development expenses increased
by 13.4%.
Management
Report
Report on
Economic Position
Tangible, intangible and investment assets
3,676
3,559
Investments
11,455
11,976
Property, plant and equipment
288
252
Intangible assets
ASSETS
2017
2018
in € million
→ 63
Financial Statements
of BMW AG
→ Comments on
Provisions
Return on equity expected at previous year's level
The BMW Group forecasts a stable business per-
formance for the Financial Services segment in the
financial year 2019. The return on equity is expected
to remain at the previous year's level (2018: 14.8%).
Revenues
9,593
5,100
21.6
2,538,367
11,000
2.2
Production volume
BMW6
MINI
Rolls-Royce
Total6
1,933,647
342,008
3,848
2,279,503
2,002,997
352,580
4,179
2,359,756
2,123,947
378,486
3,308
2,505,741
2,168,496
368,685
4,353
2,541,534
2,205,841
1.7
162,687
185,682
145,555
151,004
New contracts with retail customers
FINANCIAL SERVICES SEGMENT
-4.6
BMW
MOTORCYCLES SEGMENT
0.9
25.3
5,455
2,564,025
-4.3
352,729
Production volume
187,116
347,474
2,185,793
2,483,292
128
2,538,367
127
2.2
-0.8
MOTORCYCLES SEGMENT
Deliveries
136,963
145,032
164,153
165,566
175,162
5.8
Further non-financial performance figures
→ 02
AUTOMOTIVE SEGMENT
2015
2016
2,114,963
364,135
4,194
2,483,292
2,093,026
372,194
3,438
2,468,658
1,989,817
358,586
4,037
2,352,440
2,257,851
Total 2,3
1,913,213
340,880
3,758
3.3
Rolls-Royce³
BMW 2,3
Deliveries
Change in %
2019
2018
2017
MINI³
2,468,658
128
15.0
1,811,157
74.3
77.7
49.8
29.0
-20.8
MOTORCYCLES SEGMENT
EBIT margin in % (change in %pts)
9.1
9.0
9.1
8.1
8.2
0.1
ROCE in % (change in %pts)
31.6
33.0
34.0
in € million
→ 04
Further financial performance figures
0.2
15.0
14.8
72.2
18.1
20.2
RoE in % (change in %pts)
FINANCIAL SERVICES SEGMENT
1.0
29.4
28.4
21.2
1,655,961
ROCE in % (change in %pts)
4.9
1,828,604
1,908,640
2,003,782
5.0
1 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time working arrangements and low income earners.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2015: 281,357 units, 2016: 311,473 units, 2017: 385,705 units, 2018: 455,581 units, 2019: 538,612 units).
3 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjustments is a review of sales data in prior periods for the BMW Group's most important markets
(China, USA, Germany, UK, Italy and Japan). The retrospective adjustment enables better comparability. Additional information can be found in the section "Comparison of Forecasts for 2019
with Actual Results in 2019".
4 EU-28.
5 From 2018, adjusted value based on planned conversion to WLTP (Worldwide Harmonised Light Vehicles Test Procedure).
Rolls-Royce
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2015: 287,755 units, 2016: 305,726 units, 2017: 396,749 units, 2018: 491,872 units, 2019: 536,509 units).
Key financial performance indicators
→ 03
GROUP
2015
2016
2017
2018
2019
7.2
9.2
8.9
9.2
EBIT margin in % (change in %pts)
AUTOMOTIVE SEGMENT
-2.3
-26.1
9,627
10,675
9,665
9,224
Profit before tax¹ in € million
Change in %
7,118
2015
2,352,440
124
Fleet emissions in g CO2/km 4,5
Statement of Changes in Equity
→ Page 116
Notes to the Group Financial Statements
→ Page 116
Accounting Principles and Policies
→ Page 133
Notes to the Income Statement
→ Page 141
→ Page 142
Notes to the Statement of Comprehensive Income
Notes to the Balance Sheet
→Page 164
Other Disclosures
→Page 184
Segment Information
→ Page 190
List of Investments at 31 December 2019
4
Corporate Governance Statement
→Page 202
→Page 202 Declaration of Compliance
Shareholders and Annual General Meeting
→Page 202
Internal Control System Relevant for Accounting and
Financial Reporting Processes
→Page 114
→ Page 101
→ Page 201
(Part of the Combined Management Report)
Information on the Company's Governing Constitution
Board of Management
→ Page 201
→ Page 200
→Page 200 Corporate Governance
CORPORATE
GOVERNANCE
Supervisory Board
→ Page 102 Disclosures Relevant for Takeovers and
→Page 112 Cash Flow Statement
→Page 110
CONTENTS
→Page
→Page
1
TO OUR SHAREHOLDERS
4 BMW Group in Figures
8 Report of the Supervisory Board
→Page 18 Statement of the Chairman of the
Board of Management
Page 22 BMW AG Stock and Capital Markets in 2019
→Page 24 Financial Calendar
→Page 24 Contacts
2
COMBINED
MANAGEMENT REPORT
→Page 26 General Information and Group Profile
→Page 26 Organisation and Business Model
Statement of Comprehensive Income
→Page 108
→Page 108 Income Statement
GROUP FINANCIAL
STATEMENTS
3
→ Page 88 Risks and Opportunities
Balance Sheet
→ Page 82 Report on Outlook, Risks and Opportunities
→Page 82 Outlook
→Page 64 Review of Operations
→Page 53 Comparison of Forecasts for 2019 with Actual Results in 2019
→Page 52 Overall Assessment by Management
→ Page 48 General and Sector-specific Environment
→Page 48 Report on Economic Position
→ Page 44 Management System
→Page 76 Comments on Financial Statements of BMW AG
127
Explanatory Comments
Members of the Board of Management
→Page 22 BMW AG Stock and Capital Markets in 2019
→Page 24 Financial Calendar
→Page 24 Contacts
1
To Our
Shareholders
BMW Group in
Figures
Report of the
Supervisory Board
Statement of
the Chairman of
the Board of
Management
BMW AG Stock and
Capital Markets
To Our
Shareholders
→ BMW Group
in Figures
BMW GROUP IN FIGURES
Key non-financial performance indicators
→ 01
GROUP
Workforce at year-end¹
2015
2,257,851
Deliveries 2,3
AUTOMOTIVE SEGMENT
-0.7
133,778
134,682
→ Page 18 Statement of the Chairman of the Board of Management
129,932
122,244
Change in %
2019
2018
2017
2016
124,729
→ Page 203
→Page 8 Report of the Supervisory Board
TO OUR SHAREHOLDERS
→ Page 204
Members of the Supervisory Board
→ Page 207
Overview of Supervisory Board committees
and their composition
→Page 208
→ Page 211
→Page 242
→ Page 246
Compliance and Human Rights in the BMW Group
Compensation Report
(Part of the Combined Management Report)
Glossary - Explanation of Key Figures
Responsibility Statement by the
Company's Legal Representatives
→Page 247 Independent Auditor's Report
5
OTHER INFORMATION
→Page 256 BMW Group Ten-year Comparison
→ annualreport.bmwgroup.com/2019
Discover the Power of Choice from Rob, Faith and
Sachiko as well as our financial year 2019 in our
digital Annual Report.
themselves what
they want and
desire. That's the
Power of Choice.
Ultimately, they
decide for
mobility demands.
Our customers
across the globe
have different
→Page 4 BMW Group in Figures
For further details of the official fuel consumption figures and official specific CO2 emissions
of new cars, please refer to the "Manual on fuel consumption, CO₂ emissions and power
consumption of new cars", available at www.dat.de/co2/.
The figures for fuel consumption, CO₂ emissions and power consumption are calculated
based on the measurement methods stipulated in the current version of Regulation
(EU) 715/2007. This information is based on a vehicle with basic equipment in Germany;
ranges take into account differences in wheel and tire size selected as well as optional
equipment and can change based on configuration. Fuel consumption and CO2 emissions
information are available on page 70.
ROB VAN ROON
NETHERLANDS
SOUTH AFRICA
FAITH MKHOMBE
JAPAN
TADAMI SACHIKO
The figures have been calculated based on the new WLTP test cycle and adapted to NEDC
for comparison purposes. In these vehicles, different figures than those published here may
apply for the assessment of taxes and other vehicle-related duties which are (also) based
on CO₂ emissions.
2016
Motor Cars Limited
2018
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
(2015: 281,357 units, 2016: 311,473 units, 2017: 385,705 units, 2018: 455,581 units,
2019: 538,612 units).
² Delivery figures have been adjusted retrospectively going back to 2015. The basis for the
adjustments is a review of sales data in prior periods for the BMW Group's most important
markets (China, USA, Germany, UK, Italy and Japan). The retrospective adjustment en-
ables better comparability. Additional information can be found in the section "Comparison
of Forecasts for 2019 with Actual Results in 2019".
BMW Group profit before financial result (EBIT)
→ 06
in € million
Norbert Reithofer
Chairman of the Supervisory Board
Supervisory Board
2019
→ Report of the
To Our
80
BMW AG Stock and
Capital Markets
the Board of
Management
the Chairman of
of
Statement
Report of the
Supervisory Board
Shareholders
2018
2017
2016
2 Expenditure for capitalised development costs, other intangible assets and property, plant and equipment.
3 Group profit before tax as a percentage of Group revenues.
5
60
To Our
Shareholders
→ BMW Group
in Figures
BMW Group deliveries of automobiles 1,2
→ 05
BMW Group revenues
→ 07
in 1,000 units
2,600
2,257.9
2,352.4
2,468.7 2,483.3 2,538.4
1,300
0
2015
BMW Group in
Figures
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
To Our
Shareholders
CONTACTS
2015
55
96.9
92.2 94.2
98.3
110
104.2
in € billion
2016
³ Prior year's figures adjusted due to a change in accounting policy in connection with the
adoption of IFRS 16; see note 6 to the Group Financial Statements. In addition, figures for
the prior year have been adjusted due to changes in presentation of selected items, which
are not material overall.
2017
2016
2015
5,500
7,411
8,933
9,386
9,899
2018³ 2019
2017
20183 2019
BMW Group profit before tax
FINANCIAL CALENDAR
CAPITAL MARKETS IN 2019
BMW AG STOCK AND
BOARD OF MANAGEMENT
STATEMENT OF THE
CHAIRMAN OF THE
REPORT OF THE
SUPERVISORY BOARD
20182 2019
2017
2016
2015
5,500
7,118
9,224
9,627
9,665
11,000
10,675
in € million
→ 08
1
1 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
-3.1
6.8
7,523
7,916
8,717
6,977
4,467
-36.0
Motorcycles
179
2,194
185
169
187
10.7
Financial Services¹
1,975
2,166
2,207
2,143
205
2,172
2,312
6.4
7,118
9,627
10,675
9,665
9,224
Group profit before tax (EBT)1
-12.5
377
431
-404
-663
-575
Eliminations¹
29
-27
14
-17
169
Other Entities
2,272
6.0
Other Entities
211
Group net profit'
Earnings per share¹ in €
6,396
9.70/9.72
6,910
10.45/10.47
8,675
13.07/13.09
7,097
-33
7,064
4,978
15.4
-29.9
44
10.60/10.62
5,022
7.47/7.49
-28.9
-29.5/-29.5
Pre-tax return on sales ¹³ in % (change in %pts)
10.0
10.3
10.9
9.9
Profit/loss from discontinued operations
2,184
8,675
6,396
170
80
-45
-96
Eliminations¹
-664
-772
-534
383
288
-24.8
Group income taxes¹
-2,828
-2,755
2017
-2,000
-2,530
-2,140
Profit/loss from continuing operations¹
6,910
-26.1
Automotive
7,411
-17,306
-20,017
-19,097
Eliminations1
-16.7
5
6
7
6
Other Entities
6.8
29,598
27,705
27,567
25,681
23,739
9.0
2,368
2,173
2,272
2,069
-18,875
1,990
-19,443
Group profit before financial result (EBIT)1
1,981
Financial Services¹
10.9
194
175
207
187
182
Motorcycles
-27.2
4,499
6,182
7,888
7,695
7,836
Automotive
-17.0
8,933
9,899
9,386
9,593
-3.0
Financial Services¹
7
6.8
2,713
4,459
5,792
5,404
Free cash flow Automotive segment
17.7
6,017
5,113
4,822
4,806
Motorcycles
Depreciation and amortisation
-2.9
7,784
8,013
7,112
5,823
5,890
Total capital expenditure²
Change in %
2019
2,567
-5.4
4,659
92,175
Group revenues¹
91,682
85,846
85,742
86,424
85,536
Automotive
104,210
96,855
98,282
ANNUAL REPORT 2019
Power of Choice
7.6
THE NEXT
100 YEARS
GEORGIAS
HT 3616A
EG
B
M
MINI
94,163
BMW
GROUP
As an internationally operating enterprise, the
BMW Group conducts business in a variety of cur-
rencies, thus giving rise to currency risks and oppor-
tunities. A substantial portion of Group revenues,
purchasing and funding occur outside the eurozone
(particularly in China and the USA). Regularly up-
dated cash-flow-at-risk models and scenario analyses
are used to measure currency risks and opportunities.
If currency risks were to materialise, they could be
associated with a medium earnings impact over
the two-year assessment period. The risk amount
attached to currency risks is classified as medium.
Significant opportunities can arise if currency devel-
opments are favourable for the BMW Group.
96
96
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
Currency risks and opportunities
With the advance of digitalisation, the BMW Group
is improving the customer experience in its existing
lines of business. At the same time, new business
segments are emerging, which have only become
feasible as a result of innovation in the area of
information technology. The development and pro-
vision of digital services for customers, increased
vehicle connectivity and automated driving solu-
tions are opening up new opportunities. Via BMW
ConnectedDrive and BMW CarData, the range of
services and apps on offer to customers is constantly
being expanded and updated. Since March 2019,
the BMW Intelligent Personal Assistant enables
customers to access functions and information by
voice interaction with an intelligent, digital charac-
ter. The BMW Group expects these opportunities
to have no significant earnings impact over the
assessment period as compared to the assumptions
made in the outlook.
Risks and opportunities relating to
raw material prices
Financial risks and risks relating to the use of
financial instruments
Operational currency management is based on the
results of currency risk analyses. The BMW Group
manages currency risks at both strategic (medium and
long term) and operational level (short and medium
term). Medium- and long-term measures include
increasing production volumes and purchase volumes
in foreign currency regions (natural hedging). Currency
risks are managed in the short to medium term and for
operational purposes by means of hedging on financial
markets. The principal objective is to increase planning
reliability for the BMW Group. Hedging transactions
are entered into only with financial partners of good
credit standing. Opportunities are also secured through
the use of options during specific market phases.
In addition to cyberattacks and direct physical inter-
vention, lack of knowledge or misconduct on the
part of employees may also represent a danger to the
confidentiality, integrity and availability of informa-
tion, data and systems. Direct consequences include
expenditure required to limit the immediate damage
and to restore systems promptly. Negative impacts on
revenue due to the non-availability of products and
services or disruptions in the production of compo-
nents or vehicles are also possible. A further indirect
result could be reputational damage.
Great importance is attached to the protection of the
confidentiality, integrity and availability of business
information as well as employee and customer data,
for instance as a result of unauthorised access or mis-
use. Data security is an integral component of all busi-
ness processes and is aligned with the International
Standard ISO/IEC 27001. As part of risk management,
information security, data protection and IT risks are
systematically documented, allocated appropriate
measures by the departments concerned and contin-
uously monitored with regard to threat level and risk
mitigation. Regular analyses and controls as well as
rigorous security management ensure an appropri-
ate level of security. Despite continuous testing and
preventative security measures, it is impossible to
eliminate risks completely in this area. All employees
are required to treat with care information such as
confidential business, customer and employee data,
to use information systems securely and to handle
risks with transparency. Group-wide requirements
are documented in a comprehensive set of principles,
guidelines and instructions, such as, for example, the
Privacy Corporate Rules for handling personal data.
Regular communication and awareness-raising mea-
sures create a high level of security and risk awareness.
With regard to cooperation agreements and business
partnerships, the BMW Group protects its intellec-
tual property as well as customer and employee data
through clear instructions on information security
and data protection and the use of information
technology. Information pertaining to key areas of
expertise as well as sensitive personal data are subject
to particularly stringent security measures. Technical
data protection incorporates industry-wide standards
and good practices. Responsibility for information
security and data protection lies for each Group
entity with the Board of Management or relevant
management team.
Increasing digitalisation across all areas of business
places considerable demands on the confidentiality,
integrity and availability of electronically processed
data and the associated use of information technology
(IT). In addition to the increased threat of cybercrime,
regulations covering the handling of personal data are
becoming more stringent, for example as a result of
the EU General Data Protection Regulation. If risks
relating to information security, data protection and
IT were to materialise, they could have a high earnings
impact over the two-year assessment period. Despite
extensive security measures and constant efforts to
ensure compliance with applicable data protection
legislation, the risks in this area are classified as high.
Close cooperation between carmakers and suppliers in
the development and production of vehicles and the
provision of services generates economic benefits, but
also raises levels of dependency. Potential reasons for
the failure of individual suppliers include in particular
IT-related risks, non-compliance with sustainability or
New developments in the field of digital commu-
nication and connectivity in particular offer new
opportunities for the BMW Group's brands. Based
on data from the vehicle, customers can elect to use a
specified service, at which stage they will be required to
consent to the transfer of the relevant telematics data.
Service providers that are requested to perform the
work receive the necessary data via the BMW Group's
secure back-end. This information provides the basis
for customised, data-based and innovative service
options. Additional opportunities could arise if new
sales channels contribute to greater brand reach to
customer groups than currently envisaged in the
outlook. Compared to the assumptions made in the
outlook, the BMW Group expects these opportunities
to have no significant earnings impact over the two-
year assessment period.
Risks and opportunities relating to the sales network
In order to sell its products and services, the BMW Group
employs a global sales network, comprising primarily
independent dealerships, branches, subsidiaries and
importers. In addition, a pilot project for direct sales
will be launched in South Africa in 2020. Any threat
to the continued activities of parts of the sales network
would entail risks for the BMW Group. The occur-
rence of sales and marketing risks is associated with
a low earnings impact over the two-year assessment
period. The risk amount is classified as low.
Within the Purchasing and Supplier Network, oppor-
tunities arise above all in the area of global sourcing
and associated efficiency improvements. Making
good use of suppliers' innovations is an important
prerequisite for developing future-oriented mobility
products and services. Similarly, favourable loca-
tion-specific cost factors, in particular those arising
in connection with local supplier structures in close
proximity to new and existing BMW Group produc-
tion plants as well as the introduction of innovative
production technologies, could lead to lower cost
of materials for the BMW Group. One goal of the
BMW Group is to have battery cells manufactured
in Europe. A key prerequisite for this is the further
development of battery cell technology and exper-
tise of the processes for cell production. Contracts
have been concluded with various suppliers as part
of the electrification strategy. Integration of previ-
ously unidentified innovations from the supplier
market in the Group's product range could provide
a further source of opportunities. The BMW Group
offers innovative suppliers numerous possibilities for
creating specific contractual arrangements which are
attractive for those developing innovative solutions.
Compared to the assumptions made in the outlook,
the BMW Group does not expect such additional
opportunities to have a significant earnings impact
over the two-year assessment period.
By monitoring and developing global supplier markets,
the BMW Group continuously strives to optimise its
competitiveness by working together with the world's
best product and service providers.
In addition, the technical and financial capabilities
of suppliers are monitored, especially where mod-
ular-based production is concerned. Supplier sites
are assessed for exposure to natural hazards, such as
floods or earthquakes, in order to identify supply risks
regarding parts and materials at an early stage and
implement appropriate precautions. Fire risks at series
suppliers are evaluated by means of questionnaires,
compliance with a defined set of criteria and selective
site inspections. The risks associated with the supply
of raw materials are countered by reducing the use
of raw materials or substituting them with alternative
raw materials.
As part of supplier preselection, the BMW Group
checks for compliance with the sustainability standards
for the supplier network. This includes consideration of
and compliance with internationally recognised human
rights and applicable labour and social standards.
quality standards, insufficient financial strength of a
supplier, the occurrence of natural hazards, fires and
insufficient supply of raw materials.
95
95
If purchasing risks were to materialise, they could have
a high earnings impact over the two-year assessment
period. The level of risk attached to purchasing risks
is classified as medium. Through an intensified imple-
mentation of measures regarding fire protection and
protection from cyberattacks at the level of suppliers,
the risk has decreased compared to the previous year.
Risks and opportunities relating to purchasing
Purchasing risks relate primarily to supply risks caused
by the failure of a supplier as well as to threats to
BMW Group-relevant know-how within the supplier
network. Production problems at the level of suppliers
could lead to consequences from increased expendi-
ture for the BMW Group to production interruptions
and a corresponding reduction in sales volume.
The increasing complexity of the supplier network,
especially at the level of lower tier suppliers, whose
operations can only be influenced indirectly by the
BMW Group, is a further potential cause of down-
times at supplier locations. Moreover, the increased
threat of cyberattacks along the value chain affects
supply security maintenance and the protection of
BMW Group-relevant know-how. In order to ensure
a uniform level of information security for all parties
concerned along the value chain, the BMW Group
impresses on suppliers the importance of obtaining
appropriate IT security certification. The BMW Group
employs a comprehensive set of monitoring and
proactive control measures to ensure that supply
industry participants are able to rise to the current
challenges facing them.
As a large-scale manufacturing company, the
BMW Group is exposed to purchase price risks, par-
ticularly in relation to raw materials used in vehicle
production. The analysis of raw material price risk
is based on planned purchases of raw materials and
components containing those raw materials. If risks
relating to raw materials prices were to materialise,
they could have a medium earnings impact over
the two-year assessment period. The risk amount is
classified as medium. Significant opportunities could
arise if raw materials prices developed favourably for
the BMW Group.
Given the long lead times in developing new prod-
ucts and processes, additional opportunities are not
expected to have a significant impact on earnings
during the outlook period.
The BMW Group sees opportunities in production
processes and technology fields primarily through
the competitive edge gained from mastering new
and complex technologies. Digitalisation within the
production area is being driven by technological and
IT innovations. Lean processes will remain the basis
for efficient production systems in the future. Digital
solutions invariably offer added value if they add to
the efficiency of serial processes. A good example of
this in the field of production logistics is the use of
smart transport robots, which help optimise processes
relating to parts handling and order picking.
Information, data protection and IT
Changes in commodity prices are monitored on the
basis of a well-defined management process. The
principal objective is to increase planning reliability
for the BMW Group. Price fluctuations for precious
metals (platinum, palladium, rhodium), non-ferrous
metals (aluminium, copper, lead, nickel) and, to some
extent, for steel and steel ingredients (iron ore, coking
coal) and energy (gas, electricity) are hedged using
financial derivatives and supply contracts with fixed
pricing arrangements.
of new competitors could also have effects which are
difficult to predict. Unforeseen consumer preferences
and changes in brand perceptions can give rise to
opportunities and risks. If market risks were to mate-
rialise, they could have a high earnings impact over
the two-year assessment period. The risk amount is
classified as high.
The major part of the Financial Services segment's
credit financing and leasing business is refinanced on
capital markets. Liquidity risks can arise in the form
of rising refinancing costs or from restricted access to
funds as a consequence of the general market situation.
If liquidity risks were to materialise, they would be
likely to have a low earnings impact over the two-year
assessment period. The risk amount associated with
liquidity risk, including the risk of the BMW Group's
rating being downgraded, is classified as low.
Interest rate risks in the Financial Services segment
relate to potential losses caused by changes in market
interest rates. These can arise when fixed interest rate
periods do not match for assets and liabilities recog-
nised in the balance sheet. If interest rate risks were
to materialise, they could have a medium earnings
impact over the two-year assessment period. The risk
amount is classified as medium. Favourable interest
rate developments compared to the outlook represent
opportunities which the BMW Group classifies as
significant. Interest rate risks in the Financial Services
business are managed by matching maturities for
refinancing and by employing interest-rate deriva-
tives. If the relevant recognition criteria are fulfilled,
derivatives used by the BMW Group are accounted for
as hedging instruments. Further information on risks
in conjunction with financial instruments is provided
in → note 39 to the Group Financial Statements.
→ see
note 33
Interest rate risks and opportunities relating to the
Financial Services segment
Each vehicle's estimated residual value is calculated
on the basis of historical external and internal data.
This estimation provides the expected market value
of the vehicle at the end of the contractual period.
Developments on pre-owned car markets represents
an important factor for the BMW Group. In 2019, the
electrification of vehicles also played a major role in
the public debate. Prices in pre-owned vehicle markets
in the premium segment remained within the normal
range. As part of the management of residual value
risks, the net present value of risk costs is calculated
at contract inception. Market developments are
observed throughout the contractual period and the
risk assessment updated.
Automotive segments. The risk amount is classified
as high for the Group as a whole. Opportunities can
arise out of a positive deviation between the actual
market value and the original residual value forecast.
The BMW Group classifies potential residual value
opportunities as significant.
→ see
note 39
Risks and opportunities arise in conjunction with
leasing contracts if the market value of a leased vehicle
at the end of the contractual term of a lease differs
from the residual value estimated at the inception
of the lease and factored into the lease payments. A
residual value risk exists if the expected market value
of the vehicle at the end of the contractual term is
lower than its estimated residual value at the date
the contract is entered into. If residual value risks
were to materialise, they could have a high earnings
impact from the Group's perspective over the two-year
assessment period. A high earnings impact would
then arise for the affected Financial Services and
Residual value risks and opportunities relating to the
Financial Services segment
Initial and continuous creditworthiness testing is
an important aspect of the BMW Group's credit risk
management. For this reason, every borrower's credit-
worthiness is tested for all credit financing and leasing
contracts entered into by the BMW Group. Opportu-
nities may arise if the managed portfolio performs
better over time than estimated when the credits were
granted. Intensive management of purchasing pro-
cesses and collateral assessment as well as favourable
macroeconomic developments could boost these
opportunities. In the case of retail customer financing,
creditworthiness is assessed using validated scoring
systems integrated into the purchasing process. In
the area of dealership financing, creditworthiness is
assessed by means of ongoing credit monitoring and
an internal rating system that takes account not only
of the material credit standing of the borrower, but
also of qualitative factors such as past reliability in
business relations. Changes in the creditworthiness of
customers arising during the credit term are covered
by risk provisioning procedures. The credit risk of the
individual customers is quantified on a monthly basis
and, depending on the outcome, taken into account
within the risk provisioning system. Macroeconomic
developments are currently subject to a higher degree
of volatility. If developments are more favourable than
assumed in the outlook, credit losses may be reduced,
leading to a positive earnings impact.
Credit and counterparty risks and opportunities
relating to the Financial Services segment
Credit and counterparty default risk arises within the
Financial Services segment if a contractual partner
(e.g. a customer or dealer) either becomes unable or
only partially able to fulfil its contractual obligations,
so that lower income is generated or losses incurred.
If credit and counterparty risks were to materialise,
they could have a medium earnings impact over the
two-year assessment period. The risk amount is clas-
sified as medium. The BMW Group classifies potential
opportunities in this area as insignificant.
→ Risks and
Opportunities
Report on Outlook,
Risks and
Opportunities
Management
Report
Combined
98
96
97
up,
Based on the experience of the financial crisis, a
liquidity concept has been drawn
which is rigor-
ously adhered to and continuously developed. Use
of the "matched funding principle" to finance the
Financial Services segment's operations generally
eliminates liquidity risks. Solvency is assured at all
times throughout the BMW Group by maintaining a
liquidity reserve and by the broad diversification of
refinancing sources. Regular measurement and mon-
itoring ensure that cash inflows and outflows for the
various maturities and currencies offset each other.
This approach is incorporated in the BMW Group's
liquidity concept. The liquidity position is monitored
continuously and managed through Group-wide
planning of financial requirements and funding. A
diversified refinancing strategy reduces dependency
on any specific type of instrument. Moreover, the
BMW Group's solid financial and earnings position
results in high credit ratings from internationally
recognised rating agencies.
Further information on risks in conjunction with
financial instruments is provided in → note 39 to the → see
Group Financial Statements.
Risks and opportunities relating to
pension obligations
Pension obligations are influenced in particular by
fluctuations of market yields on corporate bonds, as
well as by other economic and demographic para-
meters. Opportunities and risks arise depending
on changes in these parameters. If risks relating to
pension obligations materialised, they could have a
high earnings impact over the two-year assessment
period. Despite the high level of external funding,
the risk amounts relating to pension obligations are
classified as high. Within a favourable capital mar-
ket environment, the return generated by growth-
oriented pension assets may exceed expectations and
reduce the deficit of the relevant pension plans. This
could have a significantly favourable impact on the
net asset position of the BMW Group.
note 39
Liquidity risks
Future pension payments are discounted on the basis
of market yields on high-quality corporate bonds.
These yields are subject to market fluctuation and
therefore influence the level of pension obligations.
Changes in other parameters, such as rises in infla-
tion and longer life expectancy, also impact pension
obligations and payments.
Further information on risks in conjunction with
→ see pension provisions is provided in → note 32 of the
Group Financial Statements.
note 32
Risks and opportunities relating to the
Financial Services segment
The categories of risk relating to financial services
comprise credit and counterparty risk, residual value
risk, interest rate risk, operational risks and liquidity
risk. Evaluation of liquidity risk for the Financial
Services segment is included in the liquidity risk
category for the Group as a whole.
The segment's total risk exposure was covered at all
times during the 2019 financial year by the avail-
able risk-covering assets. As a result, the Financial
Services segment's risk-bearing capacity was assured
at all times.
46
Regulatory requirements can influence the amount
of pension obligations. The BMW Group's pension
obligations are mainly held in external pension funds
or trust arrangements and the related assets legally
separated from those of the Group. The amount of
funds required to finance pension payments out
of operations in the future is substantially reduced
by the fact that the Group's pension obligations
are mainly settled out of pension fund assets. The
pension assets of the BMW Group comprise inter-
est-bearing securities, equities, real estate and other
investment classes. Assets held by pension funds and
trust arrangements are monitored continuously and
managed on a risk-and-return basis. Diversification
of investments also helps to mitigate risk. In order
to reduce fluctuations in pension funding shortfalls,
investments are structured to match the timing of
pension payments and the expected development of
pension obligations. Remeasurements on the liability
and fund asset sides are recognised net of deferred
taxes in other comprehensive income and hence
directly in equity (within revenue reserves).
The BMW Group recognises appropriate provisions
for statutory and non-statutory warranty obligations.
It cannot be ruled out, however, that additional costs
could arise in connection with vehicle recall actions
that are either not covered or not fully covered by pro-
visions. Despite thorough quality assurance processes,
such risks can always arise if materials and/or
processing procedures used prove insufficient, in
some cases years after the launch of a product. Further
information on risks relating to provisions for statutory
and non-statutory warranty obligations is provided in
→ note 33 of the Group Financial Statements.
Vehicles may be damaged or destroyed due to natural
hazards or other risks during transport from produc-
tion plants to the sales regions. As a consequence
of the growing number of major claims, deductible
amounts included in transport insurance policies have
already risen significantly. In fact, as more and more
insurance companies withdraw from this market seg-
ment, there is a risk that it could become economically
unviable to take out insurance, as a result of which the
BMW Group would be required to bear the losses itself.
Targeted cyberattacks could cause damage to pro-
duction facilities, resulting in long downtimes and,
consequently, substantial losses. This threat is being
countered by the rollout of new detection, analysis
and response measures.
Raw materials
Liquidity
Pension obligations
Risks and opportunities relating to the provision of financial services
Credit risk
Residual value
Interest rate changes
Foreign currencies
Operational risks
Medium
Decreased
Significant
Stable
Medium
Stable
Significant
Legal risks
Financial risks and opportunities
Information, data protection and IT
Stable
High
Increased
Insignificant
Stable
Local restrictions affecting product usage in specific
sectors may limit BMW Group sales in individual mar-
kets. In some urban areas, for instance, local measures
Medium
Decreased
Insignificant
Stable
Sales network
Low
Stable
Insignificant
Stable
High
Stable
Insignificant
Stable
Low
Stable
High
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
The withdrawal of the UK from the EU could have
a long-term adverse impact on the BMW Group,
particularly as a result of increased trade barriers in
the form of customs duties in relation to the Euro-
pean single market. Any such trade barriers could
have a negative impact on volumes and costs both
for vehicles and components produced in the EU
for the UK as well as those produced in the UK for
the European market. In extreme cases, this could
result in production losses due to delays in customs
clearance. In addition, it cannot be ruled out that
Brexit could lead to reduced customer spending in the
wake of weaker economic performance, particularly
in the UK, but also in parts of the EU. In the short and
medium term, uncertainty regarding the outcome of
the negotiations with the EU on a trade agreement by
31 December 2020 is likely to exacerbate these factors
and cause further unfavourable currency effects. A
possible further economic downturn in countries of
the EU could also potentially reduce growth prospects
for the BMW Group. European integration with a
unified economic and currency area is an important
pillar of economic stability in Europe.
The transition in China from an investment-driven to
a consumer-driven economy is associated with slower
growth rates and, potentially, greater instability in
the short to medium term on financial markets. If
the Chinese economy were to grow at a significantly
slower pace than expected, the consequence would
be not only a decline in automobile sales, but also,
potentially, lower demand for raw materials, which
would have a negative impact above all on emerging
economies such as Brazil, Russia or South Africa.
A drop in raw material prices could result for the
BMW Group in lower demand from these countries,
while at the same time bringing down raw material
procurement costs for the BMW Group. Turmoil on
the Chinese property, stock and banking markets
as well as the pursuit of overly restrictive monetary
policies by the US Federal Reserve could pose consid-
erable risks for global financial market stability, such
as increased currency fluctuations and unfavourable
consequences for emerging markets in particular.
Furthermore, increasing political unrest, military con-
flicts, terrorist activities, natural disasters or pandemics
could have a lasting negative impact on the global
economy and international capital markets.
The enormous uncertainty currently regarding the
global spread and impact of the coronavirus makes
it difficult to make an accurate forecast of vehicle
deliveries. If the sales situation across all markets
does not normalise after a few weeks, further effects
on the BMW Group's vehicle deliveries to customers
as well as on upstream and downstream processes
may materialise that cannot be assessed in terms of
either their duration or negative impact. The Group
is observing the situation closely and is taking appro-
priate measures.
Should the global economy develop significantly
better than presented in the outlook, opportunities
could arise for the BMW Group's revenues and earn-
ings. Significantly stronger GDP growth in China,
demand-oriented reforms within the eurozone, the
intensification of trade relations between the EU and
the UK, de-escalation of the trade dispute between
the USA and its trading partners or more robust
consumer spending in emerging markets due to ris-
ing raw material prices could result in significantly
stronger sales volume growth, reduced competitive
pressures and corresponding improvement in pric-
ing. The planned expansion of production capacities
will enable emerging opportunities to be exploited.
Macroeconomic opportunities that could generate
a sustainable impact on earnings are currently clas-
sified by the BMW Group as insignificant.
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
The sudden introduction of more stringent legis-
lation and regulations, particularly with regard to
emissions, safety and consumer protection as well
as regional vehicle-related purchase and usage taxes,
represents a significant risk for the automobile indus-
try. Country- and sector-specific trade barriers may
also change at short notice. A sudden tightening
of regulations in any of these areas may necessi-
tate significantly higher investments and ongoing
expenses or influence customer behaviour. If the risk
of market disruptions as a result of unforeseeable
short-term changes in legislation and regulations
were to materialise, this could have a high negative
impact on earnings over the two-year assessment
period and beyond. The risk amount attached to
these risks is classified as high.
At present, the BMW Group can observe a continu-
ous trend towards more stringent vehicle emissions
regulations, particularly in relation to conventional
drivetrain systems. The BMW Group is addressing this
risk on the one hand through its ongoing systematic
development of highly efficient combustion engines,
with the aim of further reducing fuel consumption and
emissions. At the same time, it is pressing ahead with
its plan for electrified vehicles across all brands and
model series. A main focus area of the BMW Group is
the systematic electrification of all brands and model
series. By the end of 2021, the BMW Group aims to
have more than one million electrified vehicles on
the roads.
Further risks can result from the tightening of existing
import and export regulations. These lead primarily
to additional expenses, but can also restrict imports
and exports of vehicles or parts.
An established regulatory framework for innovative
mobility solutions as well as government incentives
are important prerequisites for introducing product
innovations, such as automated driving, and for
scaling up the range of electric mobility offerings.
In the case of BMW Group electrified vehicles, a
faster expansion of charging infrastructure could
increase acceptance and help boost sales of planned
or recently introduced product innovations com-
pared to forecast. This includes implementation of
the 360° ELECTRIC portfolio in the field of electric
mobility and collaboration with Toyota on hydrogen
fuel cell technology.
The BMW Group's earnings could also be positively
affected in the short to medium term by changes in
trade policies. A possible reduction in tariff barri-
ers, import restrictions or direct excise duties could
lower the cost of materials or enable products and
services to be offered to customers at lower prices.
Further opportunities for the earnings performance
of the BMW Group from changes in legislation and
regulatory requirements compared to the outlook are
classified as insignificant.
Market development
In addition to economic factors and sector-specific
political conditions, increasingly fierce competition
among established manufacturers and the
emergence
Combined
Production and technology
92
A possible introduction of further trade barriers,
including anti-dumping customs duties and duties
aimed at protecting national security by the
US administration, could have a significantly adverse
impact on the BMW Group's operations through
less favourable conditions for importing vehicles.
Moreover, countermeasures by the USA's trading
partners could slow down global economic growth
and have a sustained adverse impact on the export
of vehicles produced in the USA. The BMW Group's
"production follows the market" strategy involves
local production both in the USA and with other
important trade partners. Local production reduces
the existing risk of trade barriers. Nevertheless, any
increase in trade barriers would have an adverse
impact on the BMW Group.
Stable
Significant
Stable
Medium
High
Medium
Medium
Medium
Stable Insignificant
Stable Significant
Stable Significant
Stable
Stable
Decreased
Stable
Stable
91
97
Macroeconomic risks and opportunities
Economic conditions influence business performance
and hence the results of operations, financial posi-
tion and net assets of the BMW Group. Unforeseen
disruptions in global economic relations can have
highly unpredictable effects. Economic risks can
result in lower purchasing power in the countries
and regions affected and cause reduced demand for
the products and services offered by the BMW Group,
while at the same time having a negative impact on
production. Macroeconomic risks could - due to sales
volume fluctuations have a high earnings impact
over the two-year assessment period. Overall, the
risk amounts attached to macroeconomic risks are
classified as high.
In view of the political events of recent years, global
economic developments continue to be subject to a
high degree of uncertainty, in particular with respect
to potential barriers to global trade. A reorientation
of US economic policy, changes within the EU and
possible economic agendas by parties within the EU
that are critical of globalisation and could therefore
jeopardise stability could lead to more restrictive trade
practices in the coming years.
42
Risks and opportunities relating to operations
Stable
Insignificant
Alongside comprehensive risk management, sustain-
able business practice also constitutes a core strategic
principle for the BMW Group. Sustainability-related
risks are therefore also integrated in the Group-wide
risk network. In accordance with the CSR Directive
Implementation Act, risks that can have an impact on
the non-financial aspects referred to in the law were
reviewed as part of the reporting process. Significant
risks in this context are defined as risks from business
activities, business relationships and products/ser-
vices of the BMW Group that are highly likely to
have a serious adverse impact. No significant risks
were identified during the review. The Group's Non-
Financial Declaration is provided in the Sustainable
Value Report 2019, which is available on the Internet
at → www.bmwgroup.com/svr.
In the Financial Services segment risk management also
addresses regulatory requirements, such as Basel III.
Internal methods to identify, measure, manage and
monitor risks within the Financial Services segment
comply with national and international standards.
Risk management within the Financial Services busi-
ness is built on the prevailing risk culture, the defined
risk strategy, the internal capital adequacy assessment
process framework and a set of rules comprising prin-
ciples and guidelines. The risk management process
is ensured in organisational terms by means of a clear
division between front- and back-office activities and
a comprehensive internal control system. The main
tool used to manage risks within the Financial Services
segment is ensuring the segment's risk-bearing capac-
ity. Risks - in the sense of unexpected losses - must
be covered at all times. This is achieved by means of
risk-covering assets (asset cushions) in the form of
equity capital derived from the entity's risk appetite.
Unexpected losses are measured according to various
value-at-risk models, which are validated at regular
intervals. Risks are also aggregated after taking
account of correlation effects. In addition to assessing
the Group's ability to bear risk, stress scenarios are
also examined. The segment's risk-bearing capacity
is also regularly monitored by means of an integrated
limit system for the various risk categories.
89
90
90
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
Risk measurement
Based on their significance with respect to the results
of operations, financial position and net assets of the
BMW Group, risks are classified as high, medium or
low. The impact of risks is measured and reported net
of risk mitigation measures that are already taking
effect (net basis).
In the following sections, "earnings impact" is used
consistently to cover the overall impact on results of
operations, financial position and net assets.
The potential earnings impact arising on the occur-
rence of a risk, measured on the basis of a worst-case
scenario over the two-year assessment period, is
classified as follows:
Class
have been, or are being, introduced, including entry
restrictions, congestion charges or, in some situations,
highly restrictive registration rules. These may impact
local demand for the BMW Group vehicles affected
and hence have a negative impact on sales, margins
and, possibly, the residual values of these vehicles.
The BMW Group is addressing this risk, for example,
by broadening its range of electrified vehicles.
Low
Medium
High
Potential earnings impact
in a worst case scenario
The risk management system is regularly examined
by Group Internal Audit. The incorporation of
new insights and requirements ensures continual
improvement to the system. Training programmes
and information events are regularly conducted
across the BMW Group, particularly within the risk
management network. These measures are essential
ways of preparing those involved in the process for
new or additional demands.
> €0-500 million
The risk-bearing capacity is regularly monitored by
means of an integrated limit system for individual
risk categories.
Significant risks reported from within the network are
firstly presented for review to the Risk Management
Steering Committee, chaired by Group Controlling.
After review, the risks are reported to the Board of
Management and the Supervisory Board. All risks
are assessed using a loss distribution approach,
thereby enabling better comparability of risks for
both internal and external reporting purposes. Risks
are classified according to the extent of their average
earnings impact, taking into account the probability of
occurrence (risk amount) or the risk-bearing capacity
(potential worst-case earnings impact).
Technical fire protection systems, rapid response by
on-site fire brigades and appropriate employee train-
ing represent the three key strategies for preventing
or reducing potential damage from fires. Furthermore,
policies are in place with insurance companies of high
credit standing for fire-related events that lead to
significant production interruptions at the Group's
or at suppliers' premises. Measures undertaken in
conjunction with the latest challenges posed by Brexit
include appropriate increases in levels of safety stocks,
enhancing flexibility along the supply chain and estab-
lishing specific IT solutions to handle related financial
and logistics processing issues. In addition, in order
to counter the risk of limited availability of products,
particularly at the start of production for new vehicle
projects, appropriate quality management processes
are in place to monitor and secure their success.
Risk is also reduced through flexible working hour
models and working time accounts as well as the
ability to build individual vehicle models or engine
types with a high degree of flexibility - either addi-
tionally or alternatively - at other sites, depending on
requirements. The focus is on ensuring that customers
can take delivery of their vehicle, both on time and
in the premium quality expected.
Opportunities
→ Risks and
Report on Outlook,
Risks and
Opportunities
Combined
Management
Report
94
93
Potential causes of production downtimes include fire,
machine and tooling breakdowns, IT malfunctions,
temporary disruption in utility supply or transporta-
tion and logistical disruptions. All production units
have a variety of measures in place to deal with
potential production interruptions and downtimes,
some of which are integrated into the planning
process and can be implemented operationally with
a high degree of flexibility. These measures are highly
relevant in terms of both the amount of damage and
the probability of occurrence of risks. Examples
include the interchangeability of production facilities,
preventive maintenance of production facilities, the
maintenance of adequate safety stock levels and the
management of spare parts across the plant network.
Risks relating to production processes and technology
fields can lead to unplanned interruptions in produc-
tion or additional costs due to vehicle recall actions.
If risks arising from production processes and tech-
nologies were to materialise, they could have a high
earnings impact over the two-year assessment period.
The corresponding risk amounts are classified as high.
During the process of expanding the division-based
perspective by a process-oriented perspective, the
individual risks were combined to create an overall
view of the development and production process. As
a result, the risk assessment was increased compared
to the previous year.
Risks and opportunities relating to operations
Risks and opportunities relating to production
and technologies
New opportunities are being sought to create added
value for customers, and thereby to realise significant
opportunities with respect to sales growth and pric-
ing. Further development of the product and mobil-
ity portfolio and expansion in growth regions offer
the most important medium- to long-term growth
opportunities for the BMW Group. Continued growth
depends above all on the ability to develop innovative
products and services and bring them to market. If the
negative impact of the current competitive situation
is reduced more quickly than expected, additional
opportunities will arise for the BMW Group. Com-
pared to the assumptions made in the outlook, the
BMW Group expects these opportunities to have no
significant earnings impact over the two-year assess-
ment period.
This formal structure reinforces the network's visibility
and underlines the importance of risk management
within the BMW Group. Responsibilities and tasks
of the centralised risk management function and the
Network Representatives are clearly documented and
accepted. In view of the dynamic growth of business
and the increasingly volatile environment in which it
operates, the BMW Group's Corporate Audit reviews
its risk management system for effectiveness and
appropriateness on an annual basis.
Other functions such as compliance (see the section
Corporate Governance) and the internal control sys-
tem (see the section Internal Control System) form
key interfaces with the risk management system.
As an independent part of the organisation, Group
Internal Audit also ensures the appropriateness and
effectiveness of these functions.
During 2019, the risk management system was fur-
ther enhanced by focusing on the concept of simula-
tion-based risk aggregation and by looking at risks not
only from the perspective of areas of responsibility, but
also from a process-oriented perspective, with a view to
improving the informative value of risk-bearing capac-
ity and in order to gain a better insight into the chains
of effects between individual risks. For this purpose,
individual risks from different areas of responsibil-
ity were allocated to the relevant process steps and
dependencies between individual risks mapped out.
Risk management process
The risk management process covers the entire Group
and comprises the early identification of risks, detailed
analysis and risk assessment, the coordinated use of
relevant management tools as well as monitoring and
evaluation of measures taken.
Risk assessment for the BMW Group is performed in
conjunction with the calculation of risk-bearing capac-
ity. For this purpose, risks measured on a worst-case
basis are aggregated using a value-at-risk model
(99% confidence level) with correlation effects taken
into account, and compared with the asset cushion.
A potential further intensification in competition
could put pressure on sales volumes, selling prices and
margins. For instance, the planned introduction of the
RDE II standard could result in market distortions -
similar to those which arose on the conversion to the
new WLTP test procedure in 2018 – even though the
BMW Group is compliant with the new requirements.
Changes in customer behaviour can also be brought
about by changes in attitudes, values, environmental
factors and fuel or energy prices. The BMW Group's
flexible sales and production processes enable risks to
be reduced and newly arising opportunities in market
and product segments to be taken.
> €500-2,000 million
The risk amount, which indicates the significance of
risks for the BMW Group, corresponds to the average
earnings impact, taking into account probability of
occurrence and risk mitigation measures that are
already taking effect.
risk amount
to prior year
Classification
RISKS AND OPPORTUNITIES
Macroeconomic risks and opportunities
High
Stable
Insignificant
Stable
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
High
Stable
Insignificant
Stable
Market developments
High
Stable
Classification of Change compared
> €2,000 million
Risks
Opportunities
The following criteria apply for the purposes of clas-
sifying the risk amount:
Opportunities management system and
opportunity identification
A dynamic market environment also gives rise to
opportunities. The BMW Group continually monitors
macroeconomic trends as well as developments within
the sector and overall environment. This includes
external regulations, suppliers, customers and com-
petitors. Identifying opportunities is an integral part of
the strategic planning process of the BMW Group. The
Group's product and service portfolio is continually
reviewed on the basis of these analyses. This results,
for example, in new product projects being presented
to the Board of Management for consideration. Prob-
able measures aimed at increasing profitability are
already incorporated in the outlook.
Continuous monitoring of major business processes
and strict cost controls are essential for ensuring
strong profitability and return on capital employed.
In order to be able to compete successfully in the long
term and at the same time help advance the move
towards climate neutrality that is being demanded by
politicians and society alike, it is the BMW Group's
policy to design flexible platforms for rear- and front-
wheel drive vehicles, enabling it to produce different
drivetrain systems on the back of a single architecture
and therefore optimise plant structures.
The implementation of identified opportunities is
undertaken on a decentralised basis within the rele-
vant functions. The significance of opportunities for
the BMW Group is classified on a qualitative basis in
the categories "significant" and "insignificant".
Class
Low
Medium
High
Risk amount
> €0-50 million
> €50-400 million
> € 400 million
Risks and opportunities
The following table provides an overview of all risks
and opportunities and indicates their significance
for the BMW Group. Overall, no risks which could
threaten the continued existence of the BMW Group
were identified either at the balance sheet date or at
the date on which the Group Financial Statements
were drawn up.
Change compared
to prior year
Purchasing
387
6,370
The development collaboration agreement between
BMW AG, FCA US LLC and FCA Italy S.p.A.,
relating to the development of technologies used
in automated vehicles, may be terminated by
any of the contractual parties if certain competi-
tors in the technology sector acquire and sub-
sequently hold at least 30% of the voting shares
of the other contractual party.
The collaboration agreement between BMW AG
and Mercedes-Benz AG relating to the develop-
ment of technologies for second-generation auto-
mated driving (from 2024) may be terminated by
either party if a third party - directly or indirectly -
acquires at least 30% of the voting rights in one
of the contractual parties (§ 29 (2) and § 30 of the
German Securities Acquisition and Takeover
Act (WPÜG)).
BMW AG has agreed with Great Wall Motor
Company Limited to establish the joint venture
Spotlight Automotive Ltd. in China. The agree-
ment grants an extraordinary right of termina-
tion to either joint venture partner in the event
that – either directly or indirectly - more than
25% of the shares of the other party are acquired
by a third party or the other party is merged
with another legal entity. The termination of the
joint venture agreement may result in the sale
of the shares to the other joint venture partner
or in the liquidation of the joint venture entity.
105
106
Combined
Management
Report
→ Disclosures Relevant
for Takeovers
and Explanatory
Comments
The development collaboration agreement between
BMW AG, Intel Corporation and Mobileye Vision
Technologies Ltd., relating to the development of
technologies used in highly and fully automated
vehicles, may be terminated by any of the con-
tractual parties if a competitor of one of the
parties acquires and subsequently holds at least
30% of the voting shares of one of the contrac-
tual parties.
Compensation agreements with members of the
Board of Management or with employees in the
event of a takeover bid
GROUP FINANCIAL
STATEMENTS
→ Page 108 Income Statement
→ Page 108 Statement of Comprehensive Income
→Page 110 Balance Sheet
→Page 112 Cash Flow Statement
→ Page 114 Statement of Changes in Equity
→ Page 116
Notes to the Group Financial Statements
Accounting Principles and Policies
Notes to the Income Statement
BMW AG has not concluded any compensation
agreements with members of the Board of Manage-
ment or with employees for situations involving a
takeover offer.
→ Page 116
BMW AG is party to the shareholder agreement
relating to There Holding B.V., which is the
majority shareholder of the HERE Group. In
accordance with the shareholder agreement,
each contractual party is required to offer its
directly or indirectly held shares in There
Holding B.V. for sale to the other shareholders
in the event of a change in control. A change
in control of BMW AG arises if a person or entity
takes over or loses control of BMW AG, with
control defined as (i) holding or having control
over more than 50% of the voting rights, (ii)
the possibility to control more than 50% of vot-
ing rights exercisable at Annual General Meet-
ings on all or nearly all matters, or (iii) the right
to determine the majority of members of the
Board of Management or the Supervisory Board.
Furthermore, a change in control occurs if com-
petitors of the HERE Group or certain potential
competitors of the HERE Group from the tech-
nology sector acquire at least 25% of BMW AG.
If none of the other shareholders acquire these
shares, the other shareholders are entitled to
resolve that There Holding B.V. be dissolved.
-
Statutory regulations and Articles of Incorporation
provisions with regard to the appointment and
removal of members of the Board of Management
and changes to the Articles of Incorporation
The appointment or removal of members of the Board
of Management is based on the rules contained in
§84f. AktG in conjunction with § 31 of the German
Co-Determination Act (MitbestG).
Amendments to the Articles of Incorporation must
comply with $179 ff. AktG. Amendments must be
decided upon by the shareholders at the Annual
General Meeting (§ 119 (1) no.5, § 179 (1) AktG). The
Supervisory Board is authorised to approve amend-
ments to the Articles of Incorporation which only affect
its wording (Article 14 no. 3 of the Articles of Incorpo-
ration). Resolutions are passed at the Annual General
Meeting by simple majority of votes exercised unless
otherwise explicitly required by binding provisions
of law or, when a majority of share capital is required,
by simple majority of shares represented in the vote
(Article 20 no. 1 of the Articles of Incorporation).
Authorisations of the Board of Management in
particular with respect to the issuing or buying
back of shares
The Board of Management is authorised to buy back
shares and sell repurchased shares in situations spec-
ified in § 71 AktG, for example to avert serious and
imminent damage to the Company and/or to offer
shares to persons employed or previously employed
by BMW AG or one of its affiliated companies.
In accordance with Article 4 no. 5 of the Articles of
Incorporation, the Board of Management is authorised,
with the approval of the Supervisory Board, to increase
for cash contributions BMW AG's share capital during
the period until 15 May 2024 by up to €4,259,600 for
the purposes of an Employee Share Programme by
issuing new non-voting shares of preferred stock,
which carry the same rights as existing non-voting
preferred stock (Authorised Capital 2019). Subscrip-
tion rights of existing shareholders are excluded. No
conditional capital is in place at the reporting date.
103
104
Combined
Management
Report
→ Disclosures Relevant
Several supply and development contracts between
BMW AG and various industrial customers, all
relating to the sale of components for drivetrain
systems, grant an extraordinary right of ter-
mination to the relevant industrial customer in
specified cases of a change in control at BMW AG
(for example BMW AG merges with a third party
or is taken over by a third party; an automobile
manufacturer acquires more than 50% of the voting
rights or share capital of BMW AG).
for Takeovers
Significant agreements of the Company taking
effect in the event of a change in control following
a takeover bid
BMW AG is party to the following major agreements,
which contain provisions that would apply in the event
of a change in control or the acquisition of control as a
result of a takeover bid:
-
An agreement concluded with an international
consortium of banks relating to a syndicated
credit line, which was not being utilised at the
balance sheet date, entitles the lending banks
to give extraordinary notice to terminate the credit
line, such that all outstanding amounts, including
interest, would fall due immediately if one or more
parties jointly acquire direct or indirect control
of BMW AG. The term control is defined as the
acquisition of more than 50% of the share capital
of BMW AG, the right to receive more than 50% of
the dividend or the right to direct the affairs of
the Company or appoint the majority of mem-
bers of the Supervisory Board.
A cooperation agreement concluded with
Peugeot SA relating to small (1- to 1.6-litre)
petrol engines entitles each of the cooperation
partners to give extraordinary notification of
termination in the event of a competitor acquiring
control over the other contractual party and if
any concerns of the other contractual party re-
garding the impact of the change of control on
the cooperation arrangements are not resolved
during the subsequent discussion process.
BMW AG acts as guarantor for all obligations aris-
ing from the joint venture agreement relating
to BMW Brilliance Automotive Ltd. in China. This
agreement grants an extraordinary right of termi-
nation to either joint venture partner in the event
that - either directly or indirectly - more than 25%
of the shares of the other party are acquired by a
third party or the other party is merged with
another legal entity. The termination of the joint
venture agreement may result in the sale of the
shares to the other joint venture partner or in the
liquidation of the joint venture entity.
Framework agreements are in place with finan-
cial institutions and banks (ISDA Master Agree-
ments) with respect to trading activities with
derivative financial instruments. These agree-
ments include an extraordinary right of termina-
tion which triggers actions in the event that the
creditworthiness of the party involved is signifi-
cantly weaker following a direct or indirect acqui-
sition of beneficially owned equity capital that
confers the power to elect a majority of the Super-
visory Board of a contractual party or any other
ownership interest that enables the acquirer to
exercise control over a contractual party or which
constitutes a merger or a transfer of net assets.
Financing agreements in place with the European
Investment Bank (EIB) entitle the EIB to request
early repayment of the loans in the event of an
imminent or actual change in control of BMW AG,
if the EIB has reason to assume - after the change
in control has taken place or 30 days after it has
made a request to discuss the situation - that the
change in control could have a significantly
adverse impact, or if the borrower refuses to hold
any such discussions. A change in control of
BMW AG arises if one or more individuals take
over or lose control of BMW AG, with control
being defined in the above-mentioned financ-
ing agreements as (i) holding or having control
over more than 50% of the voting rights, (ii) the
right to appoint the majority of the members of
the Board of Management or Supervisory Board,
(iii) the right to receive more than 50% of divi-
dends payable or (iv) any other comparable con-
trolling influence over BMW AG.
BMW AG and Daimler AG have entered into a
Joint Venture Agreement relating to mobility
services in the areas of car sharing, ride hailing,
parking, charging and multimodality, which
entitles both Daimler AG and BMW AG (here-
after principals) to initiate a bidding procedure
in the event that (i) the other principal receives
notice in accordance with § 33 of the German
Securities Trading Act (WpHG) that - including
shares attributed pursuant to § 34 WPHG - a
shareholding of more than 50% has been attained
or, in accordance with § 20 AktG of the German
Stock Corporation Act (AktG) that a sharehold-
ing of more than 50% has been attained or (ii)
a shareholder or a third party - including shares
attributed pursuant to § 30 WPHG - holds more
than 50% of the voting rights or shares in the
other principal, or (iii) the other principal has
concluded a control agreement as dependent
company. The outcome of such a bidding pro-
cedure is that the joint venture will go to the
principal making the highest bid.
and Explanatory
Comments
→Page 133
→ Page 141
→Page 142
(unaudited supplementary
Group
information)
Note
2019
2018¹
2019
Motorcycles
(unaudited supplementary
information)
Automotive
2018
2018
Revenues
Cost of sales
7
104,210
96,855
91,682
85,846
2,368
2019
in € million
→ 63
Income Statement for Group and Segments
→Page 164
Other Disclosures
Notes to the Statement of Comprehensive Income
Notes to the Balance Sheet
3
Group Financial
Statements
Income Statement
Statement of
Comprehensive
Income
Balance Sheet
Cash Flow
Statement
Notes
→Page 184 Segment Information
→ Page 190 List of Investments at 31 December 2019
108
Group
Financial
Statements
→ BMW Group
Income Statement
→ Statement of Com-
prehensive Income
BMW GROUP
INCOME STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
Like all other shareholders, employees exercise their
control rights pertaining to shares they have acquired
in conjunction with the Employee Share Programme
and/or the share-based remuneration programme
directly on the basis of relevant legal provisions and
the Company's Articles of Incorporation.
2,173
Control of voting rights when employees
participate in capital and do not exercise their
control rights directly
Shares with special rights which confer
control rights
The assessment of overall risk situation is based on a
consolidated view of all significant individual risks.
The overall risk situation for the BMW Group remains
unchanged compared to the previous year. Similarly,
there has also been no significant change in the
opportunities situation.
In addition to the risk categories described above,
unforeseen events could have a negative impact on
business operations and hence on the BMW Group's
results of operations, financial position and net assets
as well as on its reputation. A comprehensive risk
management system is in place to ensure that the
BMW Group successfully manages these risks.
Management of the BMW Group does not see any
threat to the BMW Group's status as a going concern.
As in the previous year, identified risks are considered
to be manageable. Were they to materialise, however,
they could like the opportunities - have an impact
on the underlying key performance indicators, which
could therefore result in deviations from the outlook.
The BMW Group's financial position is stable, with
liquidity requirements currently covered by available
liquidity and credit lines.
INTERNAL CONTROL
SYSTEM* RELEVANT FOR
ACCOUNTING AND
FINANCIAL REPORTING
PROCESSES
The internal control system relevant for accounting
and financial reporting processes has the task of
ensuring that accounting and financial reporting by
the BMW Group is both accurate and reliable. Inter-
nationally recognised standards for internal control
systems have been taken into account in the design
of the components of the BMW Group's internal
control system. The system comprises:
Group-wide mandatory accounting guidelines,
controls integrated into processes and
IT systems,
organisational measures incorporating the
principle of the separation of duties, and
Overall assessment of the risk and opportunities
situation
process-independent monitoring measures.
Guidelines for recognising, measuring and allocating
items to accounts are available to all employees via
the intranet. New accounting standards are assessed
for their impact on the BMW Group's accounting
and financial reporting. Accounting guidelines and
processes are reviewed continuously and revised at
least once a year or more frequently, if necessary.
* Disclosures
pursuant to § 289
and § 315 HGB.
Controls are integrated into accounting and financial
reporting processes at both individual entity and
Group level, taking account of the principle of the
separation of duties. Important accounting-related
IT systems incorporate controls which, among others,
prevent business transactions from being recorded
incorrectly and ensure that business transactions are
recorded completely and in good time and measured
properly in accordance with applicable requirements.
Controls are also in place to test the appropriateness
of consolidation procedures.
As part of the ongoing development of IT systems for
accounting and financial reporting processes, whether
at individual entity or Group level, such controls are
adapted to take account of new requirements and
opportunities arising with advances in information
technology. In addition, the BMW Group uses data
analysis tools to identify and subsequently eliminate
any control weaknesses.
Responsibilities for ensuring the effectiveness of
the internal control system in relation to individual
entity and Group accounting and financial reporting
processes are clearly defined and allocated to the rele-
vant line and process managers. These report annually
on their assessment of the effectiveness of the internal
control system for accounting and financial reporting.
The assessment also includes the results of internal
and external audits as well as of ongoing data analysis.
In this context, the Group's units confirm the effec-
tiveness of the internal control system for accounting
and financial reporting. The results of the assessment
are gathered and documented with the aid of appro-
priate tools. Weaknesses in the control system are
eliminated, taking into account their potential impact
on accounting processes. The Board of Management
and Audit Committee are briefed annually on the
assessment of the effectiveness of the internal control
system for accounting and financial reporting. The
Board of Management and, where appropriate, the
Supervisory Board are informed immediately in the
event of any significant changes in the effectiveness
of the internal control system.
101
102
Combined
Management
The internal control system is subject to continuous
improvement, with system effectiveness assessed
regularly on the basis of centralised and decentralised
process analyses, analyses of data within the various
financial systems and audit procedures. The principal
features of the internal control system, as far as they
relate to individual entity and Group accounting and
financial reporting processes, are described below.
Report
note 38
Processes
99
99
Operational risks relating to the
Financial Services segment
Operational risks are defined in the Financial Services
segment as the risk of losses arising as a consequence
of unsuitability or failure of internal procedures
(process risks), people (personnel-related risks), sys-
tems (infrastructure and IT risks) and external events
(external risks). The recording and measurement of
risk scenarios, loss events and countermeasures in
the operational risk management system provide the
basis for a systematic analysis and management of
potential or materialised operational risks. Annual
self-assessments are also carried out. If operational
risks were to materialise, they would be likely to have
a low earnings impact over the two-year assessment
period. The risk amount is classified as medium.
Legal risks
The BMW Group is exposed to various legal risks, not
least as a result of its global operations. Legal risks may
result from non-compliance with laws or other legal
requirements or from legal disputes with business
partners or other market participants. If legal risks
were to materialise, they could have a high earnings
impact over the two-year assessment period. The risk
amount attached to significant identified legal risks
is classified as medium. However, it cannot be ruled
out that new legal risks, as yet unforeseen, could
materialise that could have a high earnings impact
for the BMW Group.
The increasing globalisation of the BMW Group's
operations and of business interdependencies in
general, combined with the variety and complexity
of legal provisions, including, increasingly, import
and export regulations, give rise to an increased risk
of non-compliance with applicable law. A Compliance
Management System is in place at BMW Group to
ensure that the representative bodies, managers
and staff across the globe consistently act in a lawful
manner. In 2019 the system was further enhanced,
particularly with a focus on the characteristics of
the roles and responsibilities in the Group-wide
Compliance Management as well as the monitoring
of compliance trainings and additional preventative
activities. Further information on the BMW Group's
Compliance Management System can be found in the
section Corporate Governance.
Like all entities with international operations, the
BMW Group is confronted with legal disputes, alleged
claims (particularly relating to warranties and product
liability or rights infringements) and proceedings
initiated by government agencies. Any of these could,
amongst other consequences, have an adverse impact
on the Group's reputation. Such proceedings are
The BMW Group recognises appropriate levels of
provision for lawsuits. In addition, a part of these
risks is insured where this makes business sense. Any
additional risks from legal proceedings are reported
as other contingent liabilities. It cannot be ruled out,
however, that damages could arise that are either not
covered or not fully covered by insurance policies
or provisions or reported as contingent liabilities.
In accordance with IAS 37 (Provisions, Contingent
Liabilities and Contingent Assets), the required infor-
mation is not provided if the BMW Group concludes
that disclosure of the information could seriously
prejudice the outcome of the relevant legal proceed-
ings. Further information on contingent liabilities
is provided in → note 38 to the Group Financial see
Statements.
typical for the sector or may result as a consequence
of realigning product or purchasing strategies to
changed market conditions. Particularly in the US
market, class action lawsuits and product liability
risks can have substantial financial consequences
and cause damage to the Group's public image.
More rigorous application or interpretation of exist-
ing regulations could result in a greater number of
recalls. The high quality of the Group's products,
which is ensured by regular quality audits and ongo-
ing improvement measures, helps reduce this risk.
The BMW Group has reviewed the objections and
the case information from the EU Commission.
In December 2019 the BMW Group submitted a
detailed reply to the objections of the Commission.
The EU Commission will examine the response and,
on the basis of that, determine the next procedural
steps. Therefore, the financial impacts cannot yet be
definitively assessed.
100
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
→ Internal Control
System Relevant for
Accounting and
Financial Reporting
Compared with the risk situation presented in the
Group Management Report 2018, the assessment
of legal risks in conjunction with antitrust allega-
tions made against five German car manufacturers
has become more concrete following receipt of the
Statement of Objections from the EU Commission.
The EU Commission alleges that the manufacturers
colluded with the aim of restricting innovation and
competition with regard to certain exhaust treatment
systems for diesel- and petrol-driven passenger vehi-
cles. The current investigations are solely concerned
with possible infringements of competition law. The
EU Commission is not alleging that the BMW Group
conducted a deliberate and unlawful manipulation
of the emissions control system. The Statement of
Objections leads the BMW Group to believe that it
is probable ("more likely than not") that the Com-
mission will issue a significant fine. The BMW Group
will contest the Commission's allegations with all
legal means at its disposal if necessary. A provision
of approximately €1.4 billion was recognised in
accordance with International Financial Reporting
Standards for negative financial impacts that cannot
yet be definitively assessed.
→ Disclosures Relevant
for Takeovers
and Explanatory
Comments
Susanne Klatten, Germany
Susanne Klatten Beteiligungs GmbH, Bad Homburg v. d. Höhe, Germany
1 Based on voluntary notifications provided by the listed shareholders as at 31 December 2018.
2 Controlled entities, of which 3% or more are attributed: AQTON SE, AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
3 Controlled entities, of which 3% or more are attributed: AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
4 Controlled entities, of which 3% or more are attributed: AQTON GmbH & Co. KG für Automobilwerte.
5 Controlled entities, of which 3% or more are attributed: Susanne Klatten Beteiligungs GmbH.
Direct share of
voting rights
Indirect share of
AQTON GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany
voting rights
25.62
9.0
16.63
16.64
16.6
0.2
20.75
20.7
The voting percentages disclosed above may have
changed subsequent to the stated date if these changes
were not required to be reported to the Company.
As the Company's shares are issued to bearer, the
Company is generally aware of changes in sharehold-
ings only if such changes are subject to mandatory
notification rules.
0.2
AQTON Verwaltung GmbH, Bad Homburg v. d. Höhe, Germany
AQTON SE, Bad Homburg v. d. Höhe, Germany
Stefan Quandt, Germany
DISCLOSURES RELEVANT
FOR TAKEOVERS* AND
EXPLANATORY COMMENTS
Composition of subscribed capital
The subscribed capital (share capital) of BMW AG
amounted to €658,862,500 at 31 December 2019
(2018: €658,122,100) and, in accordance with Article 4
no. 1 of the Articles of Incorporation is sub-divided
into 601,995,196 shares of common stock (91.37%)
(2018: 601,995,196; 91.47%) and 56,867,304 shares of
non-voting preferred stock (8.63%) (2018: 56,126,904;
8.53%), each with a par value of €1. The Company's
shares are issued to bearer.
The rights and duties of shareholders derive from the
German Stock Corporation Act (AktG) in conjunction
with the Company's Articles of Incorporation, the
full text of which is available at www.bmwgroup.com. The
right of shareholders to have their shares evidenced
is excluded in accordance with the Articles of Incor-
poration. The voting power attached to each share
corresponds to its par value. Each €1 of par value
of share capital represented in a vote entitles the
holder to one vote (Article 18 no. 1 of the Articles of
Incorporation).
*Disclosures
pursuant to
§ 289a and
§315a HGB.
The Company's shares of preferred stock are shares
within the meaning of § 139 ff. AktG, which carry a
cumulative preferential right in terms of the allocation
of profit and for which voting rights are excluded.
These shares confer voting rights only in exceptional
cases stipulated by law, in particular when the prefer-
ence amount has not been paid or has not been fully
paid in one year and the arrears are not paid in the
subsequent year alongside the full preference amount
due for that year. With the exception of voting rights,
holders of shares of preferred stock are entitled to
the same rights as holders of shares of common stock.
Article 24 of the Articles of Incorporation confers
preferential treatment to the non-voting shares of
preferred stock with regard to the appropriation of the
Company's unappropriated profit. Accordingly, the
unappropriated profit is required to be appropriated
in the following order:
(a) subsequent payment of any arrears on dividends
on non-voting shares of preferred stock in the
order of accruement
(b) payment of an additional dividend of €0.02 per
€1 par value on non-voting preferred shares
(c) uniform payment of any other dividends on
shares of common and preferred stock, provided
the shareholders do not resolve otherwise at
the Annual General Meeting
→ see
note 41
Restrictions affecting voting rights or the transfer
of shares
As well as shares of common stock, the Company
has also issued non-voting shares of preferred stock.
Further information can be found in the section
"Composition of subscribed capital".
When the Company issues non-voting shares of
preferred stock to employees in conjunction with its
Employee Share Programme, these shares are gener-
ally subject to a Company-imposed blocking period
of four years, calculated from the beginning of the
calendar year in which the shares are issued.
Contractual holding period arrangements also apply to
shares of common stock acquired by Board of Manage-
ment members and certain senior department heads
in conjunction with the share-based remuneration
programmes (Compensation Report of the Corporate
Governance section; → note 41 to the Group Financial
Statements).
Direct or indirect investments in capital exceeding
10% of voting rights
Based on the information available to the Company,
the following direct or indirect holdings exceeding
10% of the voting rights at the end of the reporting
period were held at the stated reporting date:¹
in %
There are no shares with special rights which confer
control rights.
² Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
8
-78,477
124
Basic earnings per share of common stock in €
14
7.47
10.60
Basic earnings per share of preferred stock in €
14
7.49
10.62
131
Dilutive effects
14
7.47
10.60
14
7.49
10.62
1 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
Statement of Comprehensive Income for Group
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
→ 64
5,061
6,974
Profit/loss from discontinued operations
44
-33
44
-33
Net profit/loss
5,022
7,064
3,157
3,127
5,091
124
Attributable to minority interest
107
90
30
30
Attributable to shareholders of BMW AG
31
4,915
131
in € million
Note
2019
-3
-157
171
674
544
192
173
-1,322
19
-620
-694
Total comprehensive income
4,328
6,460
Total comprehensive income attributable to minority interests
107
90
Total comprehensive income attributable to shareholders of BMW AG
31
4,221
-604
125
Other comprehensive income for the period after tax
Items that can be reclassified to the income statement in the future
20182
Net profit
Remeasurement of the net defined benefit liability for pension plans
Deferred taxes
Items not expected to be reclassified to the income statement in the future
Marketable securities (at fair value through other comprehensive income)
Derivative financial instruments
32
5,022
-1,254
7,064
935
-217
-867
718
42
-30
-706
-1,381
Costs of hedging
Other comprehensive income from equity accounted investments
Deferred taxes
Currency translation foreign operations
124
-86,147
131
3,113
2
4
Other operating expenses
10
-2,316
-651
-2,335
-676
-1
810
-1
7,411
8,933
4,499
6,182
194
175
Result from equity accounted investments
24
136
Profit/loss before financial result
632
976
1,031
-78,062
-71,918
-1,911
-1,738
Gross profit
18,063
18,378
13,620
13,928
774
457
Selling and administrative expenses
9
-9,367
-9,568
-7,762
-7,880
-263
Other operating income
10
435
136
632
Interest and similar income
-7
-6
Profit/loss before tax
7,118
9,627
4,467
6,977
187
169
795
Income taxes
-2,140
-2,530
-1,354
-1,853
-56
-45
Profit/loss from continuing operations
4,978
7,097
13
-32
694
-293
11
179
397
420
567
1
Interest and similar expenses
11
-499
-386
-737
-533
-8
-6
Other financial result
Financial result
12
-109
51
149
129
5,124
-264
2,118
92
26,938
25,705
17,239
943
50,829
950
43,990
12
23,171
12,339
11
12,595
-13
-98
-91,119 -65,585
17
79,193
40,552
24,971
-91,132 -65,683
156,500
146,221
112,897
91,596 -155,872 -127,273
ASSETS
Intangible assets
Property, plant and equipment
71,181
75
208
184
102
106
3,804
4,576
34
18,170
19,170
49,865
39,639
36,333
102
61,762
60,234
50,373
22
44,624
1,168
45,942
-3,749
-68
-43,139
-46,956
-3,841
-39
-40,272
-44,152
299
328
55
9
Leased products
128
Investments accounted for using the equity method
Receivables from sales financing
Current tax
Financial liabilities
Trade payables
Other liabilities
Liabilities in conjunction with assets held for sale
Current provisions and liabilities
Total equity and liabilities
111
112
Group
Financial
Statements
→ BMW Group
Other provisions
Cash Flow Statement
CASH FLOW STATEMENT
Group
in € million
2019
20181
Net profit
Profit/loss from discontinued operations
Current tax expense
5,022
7,064
BMW GROUP
Non-current provisions and liabilities
Other liabilities
Financial liabilities
Financial assets
Deferred tax
Other assets
Non-current assets
Inventories
Trade receivables
Receivables from sales financing
Financial assets
Current tax
Other assets
Cash and cash equivalents
Assets held for sale
Current assets
Total assets
EQUITY AND LIABILITIES
Subscribed capital
Capital reserves
Revenue reserves
Accumulated other equity
Equity attributable to shareholders of BMW AG
Minority interest
Equity
Pension provisions
Other provisions
Deferred tax
Other investments
-44
372
47
2018
information)
(unaudited supplementary
Eliminations
2019
2018¹
information)
(unaudited supplementary
Other Entities
2019
2019
information)
Financial Services
-49
-20
139
138
1,168
695
-68
-39
512
(unaudited supplementary
2018¹
29,598
27,705
42
73
16
24
-79
-24
-1,362
-1,341
393
321
6
5
3,616
3,660
19,268
19,764
-
-24,089
-25,938
-18,875
-19,443
6
5
485
49
84
-1,853
5,106
5,081
64,692
2,075
1,985
873
48,775
351
-91,677
-65,968
50,592
-98
47,882
50,256 -91,690 -66,066
156,500
146,221
112,897
91,596 -155,872 -127,273
15,545
14,806
21,972
20,683 -17,784
-17,438
65,878
-13
460
669
187
125
-1,918
3,351
2,835
38,919
33,956
-43,184
-40,610
105,908
98,339
47,019
41,340
-64,182
-61,207
808
609
103
91
41,407
38,700
1,009
1,325
84
91
28
33
3,316
2,218
-1,751
-345
-299
91
170
☐
61
-165
3
1
-1,984
5,853
54
34
-262
83
23
33
-136
-632
3
-35
4,982
308
1,602
1,886
12,036
10,979
1 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
2 With the exception of interest from lease liabilities, interest relating to financial services business is classified as revenues/cost of sales.
³ Includes dividends received from investment assets amounting to €643 million (2018: €384 million).
4 Gross cash flows presented, which were presented as net amounts in the prior year.
Automotive
(unaudited supplementary
information)
Financial Services
(unaudited supplementary
information)
2019
2018¹
2019
20181
3,157
5,091
1,600
1,641
-44
33
1,638
1
Cash and cash equivalents as at 31 December
-284
-930
51,079
-1,198
9,690
9,352
-5,345
-6,790
-6,734
-7,618
-19
-13
187
50
2
3
31
105
1
2
-1,557
-145
-209
1,087
18
683
-7
-59
24
-3,600
-1,732
-3,589
-5,726
-831
-758
-222
130
-1,255
-390
-193
-39
43
59
-11
60
381
-427
-18
109
1,745
332
-71
9,039
10,979
Cash and cash equivalents as at 1 January
Change in receivables from sales financing
-3,560
-5,724
Changes in working capital
Change in inventories
Change in trade receivables
Change in trade payables
Change in provisions
Change in other operating assets and liabilities
Cash inflow/outflow from operating activities
-1,642
Total investment in intangible assets and property, plant and equipment
-619
-1,560
-403
14
112
429
-328
1,512
-88
1,096
-1,117
-3,825
Change in leased products
312
Income taxes paid
-3,389
-1,972
Interest received²
91
170
Other interest and similar income/expenses²
51
-199
Depreciation and amortisation of tangible, intangible and investment assets
6,017
5,113
Other non-cash income and expense items
-200
111
Result from equity accounted investments
-136
-632
Gain/loss on disposal of tangible and intangible assets and marketable securities
4
-34
Change in deferred taxes
-1,176
940
3,662
5,051
-6,902
Change in other financial liabilities
Cash inflow/outflow from financing activities
-7,284
3,761
-7,363
33
-2,366
25
-2,630
-199
150,517
-143,500
-136
30,762
-22,564
305
-1,161
4,790
4,296
Effect of exchange rate on cash and cash equivalents
Effect of changes in composition of Group on cash and cash equivalents
-28
-19
-83
-25
Change in cash and cash equivalents
1,057
1,940
Repayment of non-current financial liabilities4
173
Proceeds from non-current financial liabilities4
Intragroup financing and equity transactions
-7,777
Proceeds from subsidies for intangible assets and property, plant and equipment
50
21
Proceeds from the disposal of intangible assets and property, plant and equipment
32
107
Expenditure for investment assets
-1,598
-164
Acquisitions of subsidiaries and other business units
-209
Proceeds from the disposal of investment assets and other business units³
1,087
623
Investments in marketable securities and investment funds
-775
-3,725
Proceeds from the sale of marketable securities and investment funds
822
Cash inflow/outflow from investing activities
Payments into equity
Payment of dividend for the previous year
Interest paid²
126
-193
-208
Other liabilities
35
Financial liabilities
Deferred tax
Other provisions
Pension provisions
39,778
40,174
57,829
57,797
23236
59,907
529
529
583
Minority interest
57,300
57,268
59,324
31
Equity attributable to shareholders of BMWAG
-1,338
Equity
3,335
2,330
2,330
5,100
1,017
2,680
64,772
66,744
70,647
1,016
543
1,773
1,762
632
13
70
81
5,354
5,605
5,530
5,530
5,788
64
96
2,089
2,820
-1,338
5,293
-1,163
Accumulated other equity
461
461
84,736
84,738
90,630
Current assets
463
Assets held for sale
12
11
8,631
64,973
9,077
10,979
12,036
Cash and cash equivalents
2
1
21,859
33,492
9,749
9,749
11,614
10,979
51,915
877
749
55,862
55,830
57,667
31
Revenue reserves
2,118
2,161
31
Capital reserves
658
658
659
31
Subscribed capital
EQUITY AND LIABILITIES
1,276
1,447
97,118
113,062
208,938
211,304
228,034
Total assets
31
5,293
7,929
7,558
2019
information)
(unaudited supplementary
Financial Services
1 The figures to 1 January 2019 have been adjusted, based on the first-time application of IFRS 16, see note 6 to the Group Financial Statements.
2 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
1,276
1,447
97,118
113,062
208,938
Other Entities
211,304
Total equity and liabilities
636
701
40,306
53,311
71,411
71,848
82,625
Current provisions and liabilities
62
228,034
(unaudited supplementary
information)
2018²
-10,765
-11,289
6,660
6,847
1
1
-7,855
-7,739
20182
46,114
50,348
30
89
1
1
403
389
2019
2018
information)
(unaudited supplementary
Eliminations
2019
62
64
Liabilities in conjunction with assets held for sale
187
1,158
963
34
Current tax
101
105
5,433
6,962
5,871
5,871
7,421
33
Other provisions
640
746
17,034
19,577
79,698
81,659
85,502
Non-current provisions and liabilities
506
569
1,158
28
704
Financial liabilities
183
24,639
34,902
15,826
15,826
17,966
36
Other liabilities
348
413
8,360
8,814
9,669
9,669
10,182
37
879
1,929
38,825
39,260
46,093
35
Trade payables
933
1,210
Other assets
1,000
Profit/loss from continuing operations
Profit/loss from discontinued operations
Financial result
Profit/loss before tax
Income taxes
Other financial result
Profit/loss before financial result
Result from equity accounted investments
Interest and similar income
Interest and similar expenses
Other operating expenses
Other operating income
Selling and administrative expenses
Gross profit
Revenues
Cost of sales
289
Net profit/loss
201
-67
1,581
1,523
60
77
289
201
-81
-67
1,641
-81
Attributable to minority interest
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
109
2018
2019
2018
information)
Motorcycles
(unaudited supplementary
2019
information)
(unaudited supplementary
Automotive
1.1.20191 31.12.2018²
2019
Note
Group
ASSETS
in € million
BALANCE SHEET AT 31 DECEMBER 2019
BMW GROUP
at 31 December 2019
Balance Sheet
→ BMW Group
Statements
Group
Financial
110
1,600
Intangible assets
289
-81
-1,145
-1,419
-14
-7
-1,360
-1,761
1,178
1,515
12
4
1,672
431
-27
29
2,172
2,312
230
225
-80
-125
-124
-80
377
1,312
-37
-27
-67
1,641
1,600
-94
-87
-36
29
-502
-672
383
288
-45
-96
2,143
2,272
-48
-89
-18
-125
-29
-40
-51
-221
201
21
11,729
10,971
679
13,071
14,404
14,248
14,248
15,891
29
Inventories
527
570
568
45,203
124,202
126,566
137,404
Non-current assets
33
36
4,633
2,203
847
847
48,089
Trade receivables
30
2,518
1,378
1,378
1,209
27
Current tax
4,988
4,772
6,675
6,675
5,955
26
Financial assets
38,700
38,700
41,407
25
Receivables from sales financing
167
186
2,287
2,228
2,546
2,546
1,325
28
Other assets
3,043
2,624
3,199
24
Investments accounted for using the equity method
38,259
38,259
42,609
23
Leased products
399
407
19,372
22,749
19,801
22,163
23,245
22
Property, plant and equipment
95
127
10,472
11,212
10,971
2,624
618
3,199
Other investments
3,451
1,638
1,640
2,194
13
Deferred tax
216
131
1,010
1,010
1,370
26
Financial assets
48,313
48,313
51,030
25
Receivables from sales financing
4,843
5,144
739
739
703
2,624
57
118
168
1
1
-2,366
-63
-2,303
Net profit
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2019
5,022
-694
4,328
107
4,221
128
-551
30
566
-694
128
-551
30
566
107
4,915
1 January 2019 (adjusted according to IFRS 16)
57,797
529
57,268
-569
558
-1,326
43
43
-760
29
53,772
-116
5
1,515
11
-1,494
Total
Minority
interest
Equity
attributable to
shareholders
of BMW AG
Costs of
hedging
financial
instruments
Securities
Translation
differences
Derivative
Effects from the first-time application of IFRS 16
Accumulated other equity
Other changes
Premium arising on capital increase
relating to preferred stock
Subscribed share capital increase
out of Authorised Capital
Dividend payments
59,907
583
59,324
-447
104
10
94
-6
8
15
31 December 2019
31 December 2018 (as adjusted
due to accounting policy change)
57,829
-32
-32
31
31 December 2018*
-77
Other changes
34
34
relating to preferred stock
Premium arising on capital increase
out of Authorised Capital
Subscribed share capital increase
-2,630
7,692
718
658
6,974
2,084
658
Dividend payments
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2018*
Net profit*
due to accounting policy change)
1 January 2018 (as adjusted
-116
50,993
2,084
658
31
Effects of accounting policy change*
50,877
436
2,118
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
529
57,300
-569
558
-1,326
31 December 2018 (as originally reported)
Effects of accounting policy change*
58,088
-259
-259
529
57,559
-569
558
-1,326
55,862
Total
of BMW AG
hedging
Minority
shareholders
Costs of
financial
instruments
Securities
differences
Translation
attributable to
Derivative
Equity
Accumulated other equity
interest
1 January 2018 (as originally reported)
54,208
-116
11
207
186
21
31 December 2019
Included at
2
in 2019
No longer included
first time in 2019
Included for the
217
194
23
31 December 2018
Included at
16
16
Total
Foreign
Germany
In relation to fully consolidated companies, the follow-
ing changes took place in the Group reporting entity
in the financial year 2019:
The BMW Group Financial Statements include BMW AG
and all material subsidiaries over which BMW AG -
either directly or indirectly - exercises control. This
also includes 56 structured entities, consisting of asset-
backed securities entities and special-purpose funds.
Group reporting entity and
consolidation principles
02
The presentation of selected items (such as the reclas-
sification of vehicles held for sale in the financial
services business) has been changed in the financial
year 2019. The items affected are not significant
overall. The changes in presentation are explained
in the notes relating to the relevant balance sheet and
income statement line items. Prior year figures have
been adjusted accordingly.
spread of the coronavirus, the Board of Management
on 16 March 2020 adjusted the original outlook for
the BMW Group, the assumptions regarding the
development of the global economy and the economic
risks and opportunities for the financial year 2020
in the Combined Management Report, as well as the
statement regarding the Events after the end of the
reporting period and once again gave approval for
the publication of the Group Financial Statements.
On 10 March 2020, the Board of Management granted
approval for publication of the Group Financial State-
ments. Based on current developments regarding the
24
26
24
|
Foreign currency translation and measurement
The financial statements of consolidated companies
which are presented in a foreign currency are trans-
lated using the modified closing rate method. Under
this method, assets and liabilities are translated at the
closing exchange rate, whilst income and expenses are
translated at the average exchange rate. Differences
arising on foreign currency translation are presented
in "Accumulated other equity".
03
The other changes to the Group reporting entity do
not have a material impact on the results of operations,
financial position and net assets of the Group.
The YOUR NOW companies were contributed into a
holding company with effect from 31 December 2019.
As a result of the contribution, the BMW Group and
the Daimler Group each held equal shares in Blitz
18-353 GmbH (renamed YOUR NOW Holding GmbH
in January 2020), Munich. The contribution was
accounted for as an exchange transaction without
economic substance and executed on the basis of
carrying amounts.
The work on opening balance sheets at the merger
date and the calculation of the final purchase prices
have not yet been finalised. For this reason, the final
purchase prices cannot yet be determined definitively.
Similarly, purchase price allocations have not yet
been finalised.
Since 1 February 2019, the joint ventures are accounted
for in the BMW Group Financial Statements using the
equity method. The BMW Group's share of the loss
recorded for the YOUR NOW companies during the
financial year 2019 amounted to €662 million. This
figure includes impairment losses totalling €277 million.
Revised business expectations gave rise to an indication
of impairment, thereby triggering an impairment test.
As part of this process, impairment losses totalling
€240 million were recognised in the BMW Group Finan-
cial Statements on the carrying amount of individual
YOUR NOW companies. These impairment losses are
included in the line item “Result on investments".
The amounts recognised as impairment losses partly
reflect decisions taken at the level of ShareNow and
ReachNow not to serve certain markets in the future.
In this context, the result from equity accounted
investment also includes expenses arising from the
recognition of provisions and impairment losses.
activities.
As a result of the merger, the investments in the com-
panies previously held by the BMW Group were remea-
sured to their fair value. DriveNow GmbH & Co. KG,
Munich, including its subsidiaries and DriveNow
Verwaltungs GmbH, Munich (DriveNow), are part
of the agreement. These entities were contributed
in kind to Car2Go Deutschland GmbH, Berlin, on a
fully realised profit basis, in return for shares in that
company. Up to 31 January 2019, DriveNow was
accounted for as a discontinued operation. Profit
after tax amounted to €44 million and resulted pri-
marily from the contribution of DriveNow to Car2Go
Deutschland GmbH. This amount is reported in the
income statement as part of the result from discon-
tinued operations. The remaining BMW companies
included in the agreement were not previously fully
consolidated on the grounds of immateriality. The
transaction gave rise to a preliminary positive impact
of €329 million which is included in the result on
investments. This amount comprises sale proceeds
of €232 million and revaluation gains of €97 million
arising on the remaining shares. The transaction
resulted in a total cash outflow of €890 million, com-
prising an inflow of €295 million and an outflow of
€1,185 million. The items described above relating
to YOUR NOW also have an impact on the Group's
and Automotive segment's cash flows from investing
On 28 March 2018, the BMW Group signed an agree-
ment with the Daimler Group regarding the merger of
certain business units that provide mobility services.
Following approval by the relevant antitrust author-
ities, the transaction was closed on 31 January 2019.
Existing on-demand mobility offerings in the areas of
car sharing, ride-hailing, parking, charging and multi-
modality have been combined with future strategic
expansion in mind. As a result of the business com-
bination, following the final signing of contracts,
the BMW Group and the Daimler Group each held
equal shares in Car2Go Deutschland GmbH, Berlin
(ShareNow), Blitz 18-353 GmbH, Munich (FreeNow),
Parkmobile Group Holding B.V., Amsterdam
(ParkNow), Digital Charging Solutions GmbH, Berlin
(ChargeNow) and Moovel Group GmbH, Berlin
(ReachNow). The joint ventures are combined under
the name YOUR NOW.
Associated companies and joint ventures are accounted
for using the equity method, with measurement on
initial recognition based on acquisition cost.
In the case of a joint venture, the parties which have
joint control only have rights to the net assets of the
arrangement.
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
Group
Financial
Statements
In order to provide a better insight into the results of
operations, financial position and net assets of the
BMW Group, and going beyond the requirements of
IFRS 8 (Operating Segments), the Group Financial
Statements also include an income statement and a
balance sheet for the Automotive, Motorcycles, Finan-
cial Services and Other Entities segments. The Group
Cash Flow Statement is supplemented by a statement
of cash flows for the Automotive and Financial Services
segments. Inter-segment transactions relate primarily
to internal sales of products, the provision of funds for
Group companies and the related interest. A description
of the nature of the business and the major operating
activities of the BMW Group's segments is provided in
→ note 45 ("Explanatory notes to segment information").
118
The BMW Group has also signed an agreement
with the Chinese automobile manufacturer
Great Wall Motor Company Limited (Great Wall)
for the joint development and production of
electric vehicles in China. Vehicle development
and production will be carried out by the
jointly controlled company Spotlight Automotive
Limited (Spotlight). Spotlight was founded on
27 December 2019 following approval by the
Chinese authorities. The BMW Group and
Great Wall each hold 50% of the joint operation's
equity. In addition to electric MINI vehicles,
Spotlight will also develop and produce electric
vehicles for Great Wall. At 31 December 2019,
the joint development and production arrange-
ments with Spotlight are included in the Group
Financial Statements on a proportionate basis.
The BMW Group and Daimler AG are working
together on a long-term strategic cooperation in
the field of highly automated driving systems.
The BMW Group is party to a cooperation
with Toyota Motor Corporation, Toyota City,
which developed a sports car.
-
The following three major arrangements are accounted
for as joint operations:
In the case of a joint operation, the parties that have
joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating
to the arrangement. Assets, liabilities, revenues
and expenses of a joint operation are recognised
proportionately in the Group Financial Statements
on the basis of the BMW Group entity's rights and
obligations (proportionate consolidation).
Joint operations and joint ventures are forms of joint
arrangements. Such an arrangement exists when a
BMW Group entity jointly carries out activities with
a third party on the basis of a contractual agreement.
An entity is classified as an associated company if
BMW AG - either directly or indirectly - has the abil-
ity to exercise significant influence over the entity's
operating and financial policies. As a general rule,
the Group is assumed to have significant influence
if it holds 20% or more of the entity's voting power.
An entity is deemed to be controlled if BMW AG -
either directly or indirectly - has power over it, is
exposed or has rights to variable returns from it and
has the ability to influence those returns.
assessment.
If indications exist of a change in the judgement of
(joint) control, the BMW Group undertakes a new
When assessing whether an investment gives rise to
a controlled entity, an associated company, a joint
operation or a joint venture, the BMW Group con-
siders contractual arrangements and other circum-
stances, as well as the structure and legal form of the
entity. Discretionary decisions may also be required.
All consolidated subsidiaries have the same year-end as
BMW AG with the exception of BMW India Private Ltd.
and BMW India Financial Services Private Ltd., whose
year-ends are 31 March in accordance with local legal
requirements.
117
The income statement for the BMW Group and seg-
ments is presented using the cost of sales method.
Key figures presented in the report have been rounded
in accordance with standard commercial practise. In
certain cases, this may mean that values do not add
up exactly to the stated total and that percentages
cannot be derived from the values shown.
The Group currency is the euro. All amounts are dis-
closed in millions of euros (€ million) unless stated
otherwise.
34
-2,630
-2,630
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2018*
6,460
90
6,370
-572
-906
-12
-604
-604
-572
34
-906
168
Net profit*
7,064
90
6,974
1 January 2018 (as adjusted
due to accounting policy change)
Effects of accounting policy change*
1 January 2018 (as originally reported)
54,092
436
53,656
5
1,515
-12
-1,494
-51
-1,326
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMW Group
Financial Statements or Group Financial Statements)
at 31 December 2019 were drawn up in accordance
with International Financial Reporting Standards
(IFRS), as endorsed by the European Union (EU), and
the supplementary requirements of §315e (1) of the
German Commercial Code (HGB). The Group Finan-
cial Statements and Combined Management Report
will be submitted to the operator of the electronic
version of the German Federal Gazette and can be
obtained via the Company Register website. Bayerische
Motoren Werke Aktiengesellschaft, which has its
seat at Petuelring 130, Munich, is registered in the
Commercial Register of the District Court of Munich
under the number HRB 42243.
Basis of preparation
01
AND POLICIES
ACCOUNTING PRINCIPLES
→ see
note 45
NOTES TO
THE GROUP
FINANCIAL
STATEMENTS
Policies
Principles and
→ Accounting
Financial Statements
Notes to the Group
Statements
-2
Group
Financial
115
31 December 2018*
Other changes
Premium arising on capital increase
relating to preferred stock
out of Authorised Capital
Subscribed share capital increase
Dividend payments
-127
57,829
529
3
-130
57,300
-569
558
116
Revenue
reserves
48,333
Subscribed
capital
2,075
-507
8,631
9,077
1,856
1,985
1,985
7,157
129
90
1,474
446
-25
28
8,631
6
Net profit
Current tax expense
Change in trade payables
Change in trade receivables
Change in inventories
Changes in working capital
Change in receivables from sales financing
Change in leased products
Profit/loss from discontinued operations
Change in deferred taxes
Result from equity accounted investments
Other non-cash income and expense items
Depreciation and amortisation of tangible, intangible and investment assets
Other interest and similar income/expenses²
Interest received²
Income taxes paid
Gain/loss on disposal of tangible and intangible assets and marketable securities
-31
-22
827
6,793
-2,366
25
33
130
129
-6,769
-2,630
-7,165
356
3,562
465
-63
-268
-3,692
199
877
-197
2,099
-136
5,300
-1,053
-2,085
491
-2
12,940
-12,071
-133,089
-410
-605
132,408
1
173
-1
5,097
5,491
Change in provisions
Change in other operating assets and liabilities
2
Total investment in intangible assets and property, plant and equipment
Proceeds from subsidies for intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
31 December 2019
in € million
Subscribed
Revenue
Note
capital
Changes in Equity
reserves
31
658
2,118
56,121
-259
658
reserves
Other changes
relating to preferred stock
Premium arising on capital increase
Cash inflow/outflow from operating activities
BMW GROUP
STATEMENT OF CHANGES IN EQUITY
in € million
31 December 2018 (as originally reported)
Effects of accounting policy change*
31 December 2018 (as adjusted
due to accounting policy change)
Effects from the first-time application of IFRS 16
1 January 2019 (adjusted according to IFRS 16)
Net profit
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2019
Dividend payments
Subscribed share capital increase
out of Authorised Capital
2,118
55,862
Capital
658
113
The reconciliation of liabilities from financing activities is presented in note 35.
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
Change in cash and cash equivalents
Effect of changes in composition of Group on cash and cash equivalents
Effect of exchange rate on cash and cash equivalents
Cash inflow/outflow from financing activities
Proceeds from non-current financial liabilities4
Repayment of non-current financial liabilities4
Change in other financial liabilities
Interest paid²
Intragroup financing and equity transactions
Payment of dividend for the previous year
-32
Proceeds from the disposal of investment assets and other business units³
Investments in marketable securities and investment funds
Proceeds from the sale of marketable securities and investment funds
Cash inflow/outflow from investing activities
Acquisitions of subsidiaries and other business units
Expenditure for investment assets
114
Group
Payments into equity
Statements
2,118
Financial
55,830
-867
4,048
-2,303
43
4,915
31
659
2,161
57,667
→ BMW Group
Statement of
Note
Capital
reserves
Notes to the Group
Financial Statements
Statements
Group
Financial
128
Other financial reporting standards issued by the
IASB and not yet applied are not expected to have
any significant impact on the BMW Group Financial
Statements. With the exception of the benchmark
interest rate reform, the BMW Group has not applied
any other new accounting rules before their manda-
tory date.
Other accounting rules required to be applied for
the first time in the financial year 2019 did not have
any significant impact on the BMW Group Financial
Statements.
IFRIC 23 clarifies the accounting for uncertainties
regarding income tax issues and transactions. Due
to accounting practises previously followed, based on
the consistent application of IAS 12, the BMW Group
is not affected by IFRIC 23.
→ see
note 6
→ Accounting
Principles and
Policies
The amendments to IFRS 9, IAS 39 and IFRS 7 pro-
vide relief with regard to the expected impact of the
interest rate benchmark reform on hedge accounting
and are being applied early by the BMW Group. The
amendments provide temporary relief from applying
specific hedge accounting requirements in the case of
hedging relationships directly affected by the interest
rate benchmark reform. Accordingly, hedge account-
ing requirements must be applied as if the benchmark
interest rate, on which the hedged cash flows and cash
flows from the hedging instrument are based, were
not changed by the benchmark interest rate reform.
Consequently, the amendments to IFRS 9 and IAS 39
ensure that hedge accounting is not required to be
discontinued specifically as a result of the bench-
mark interest rate reform. The relief is applied to all
BMW Group hedging relationships affected by the
uncertainties arising from the benchmark interest
rate reform.
127
06
-
(a) First-time application of IFRS 16 - Accounting
for leases as lessee
Up to 31 December 2018, the accounting treatment of
a lease was determined in accordance with IAS 17 on
the basis of the extent to which the risks and rewards
attached to the leased item were transferred to the
lessee. Leased items of property, plant and equip-
ment whose economic ownership was attributed to
the BMW Group (finance leases) were measured on
initial recognition at their fair value or, if lower, at the
net present value of minimum lease payments. The
assets were depreciated using the straight-line method
over their estimated useful lives or, if shorter, over the
contractual lease period. Obligations for future lease
payments were recognised at their net present value
in other financial liabilities. In the case of leases that
did not transfer substantially all the risks and rewards
incidental to ownership from the Group to the lessee
(operating leases), lease payments were previously
recognised in the income statement on a straight-line
basis over the lease term.
The new Standard IFRS 16 (Leases) requires a new
approach to accounting for leases by lessees. In prin-
ciple, every lease is now required to be accounted for
at the level of the lessee as a financing transaction,
reflecting the fact that the distinction between ope-
rating and finance leases has been eliminated.
The new Standard has been applied with effect from
1 January 2019 using the modified retrospective
method. On transition to the new Standard, the
BMW Group applied the following practical expe-
dients permitted for lessees by IFRS 16:
- no reassessment was made at the date of initial
application as to whether or not existing con-
tracts constituted a lease based on IFRS 16.
Instead, the previous assessment made under
IAS 17 and IFRIC 4 was retained.
-
An impairment review of individual right-of-
use assets was not performed. Instead, the
assessment of the existence of onerous leases in
accordance with IAS 37 (Provisions, Contin-
gent Liabilities and Contingent Assets) is used
as a practical expedient. No provisions for
onerous leases were recognised at 31 Decem-
ber 2018.
Leases expiring no later than 31 December 2019
are accounted for as short-term leases regardless
of the original lease term.
Initial direct costs were not taken into account
when measuring right-of-use assets at the time
of initial application.
05
Current information is taken into account when
determining the lease term if the contract con-
tains options to extend or terminate the lease.
At the date of initial application, the balance sheet
total increased by €2,407 million as a result of leases
previously classified as operating leases. The reclas-
sification resulted in a slight decline in the equity
ratio. For a small number of real estate contracts,
the carrying amount of right-of-use assets has been
determined as if IFRS 16 had been applied from the
commencement of the lease. After offsetting deferred
tax effects amounting to €13 million, this resulted in
a reduction of approximately €32 million in Group
revenue reserves at 1 January 2019. The BMW Group's
profit before financial result for the financial year
2019 benefited from a positive effect of €27 million.
Furthermore, cash flows from operating activities
increased and cash flows from financing activities
decreased by €494 million.
Changes due to the new accounting standard IFRS 16
are described in → note 6.
Changes in accounting policy for leases
1.1.2019
Interest Rate Benchmark Reform
7.6.2017
The calculation of the amount of the provision requires
assumptions to be made with regard to discount rates,
salary trends, employee fluctuation and the life ex-
pectancy of employees. Discount rates are determined
by reference to market yields at the end of the report-
ing period on high quality fixed-interest corporate
bonds. The salary trend relates to the expected future
rate of salary increase which is estimated annually
based on inflation and the career development of
employees within the Group.
In the case of funded plans, the pension obligation is
offset against plan assets measured at their fair value.
If the plan assets exceed the pension obligation, the
surplus is tested for recoverability. In the event that
the BMW Group has a right of reimbursement or a
right to reduce future contributions, it reports an asset
(within Other financial assets), measured on the basis
of the present value of the future economic benefits
attached to the plan assets. For funded plans, in cases
where the obligation exceeds plan assets, a liability is
recognised under pension provisions.
Provisions for pensions are measured using the
jected unit credit method. Under this method, not
only obligations relating to known vested benefits
at the reporting date are recognised, but also the
effect of future expected increases in pensions and
salaries. The calculation is based on independent
actuarial valuations which take into account the
relevant biometric factors.
pro-
Financial liabilities, with the exception of lease liabil-
ities, are measured on first-time recognition at their
fair value. For these purposes, transaction costs are
taken into account except in the case of financial
liabilities allocated to the category "measured at fair
value through profit or loss". Subsequent to initial
recognition, liabilities are - with the exception of
derivative financial instruments - measured at amor-
tised cost using the effective interest method.
Cash and cash equivalents comprise mainly cash on
hand and cash at bank with an original term of up to
three months. With the exception of money market
funds, cash and cash equivalents are measured at
amortised cost.
Work in progress and finished goods, as well as vehi-
cles held for sale in the financial services business,
are stated at the lower of manufacturing cost and net
realisable value. Manufacturing cost comprises all
costs which are directly attributable to the manufac-
turing process as well as an appropriate proportion
of production-related overheads. This includes
production-related depreciation and amortisation
and an appropriate proportion of administrative and
social costs. Financing costs are not included in the
acquisition or manufacturing cost of inventories.
Net interest expense on the net defined benefit lia-
bility and net interest income on net defined benefit
assets are presented separately within the financial
result. All other costs relating to allocations to pension
provisions are allocated to costs by function in the
Inventories of raw materials, supplies and goods for
resale are stated at the lower of average acquisition
cost and net realisable value.
Current income taxes are calculated within the
BMW Group on the basis of tax legislation applicable
in the relevant countries. To the extent that judgement
was necessary to determine the treatment and amount
of tax items presented in the financial statements,
there is in principle a possibility that local tax author-
ities may take a different position.
Deferred tax liabilities on taxable temporary differences
arising from investments in subsidiaries, branches and
associated companies and interests in joint arrange-
ments are not recognised if the Group is able to control
the timing of the reversal and it is probable that the
temporary difference will not reverse in the foreseeable
future. This is particularly the case if it is intended that
profits will not be distributed, but rather will be used
to maintain the substance and expand the volume of
business of the entities concerned.
The recoverability of deferred tax assets is assessed at
each balance sheet date on the basis of planned tax-
able income in future financial years. If with a proba-
bility of more than 50 percent future tax benefits will
not be realised, either in part or in total, a valuation
allowance is recognised on the deferred tax assets. The
calculation of deferred tax assets requires assumptions
to be made with regard to the level of future taxable
income and the timing of recovery of deferred tax
assets. These assumptions take account of forecast
operating results and the impact on earnings of the
reversal of taxable temporary differences. Since future
business developments cannot be predicted with cer-
tainty and to some extent cannot be influenced by the
BMW Group, the measurement of deferred tax assets
is subject to uncertainty.
In the case of raw materials hedges that are accounted
for as cash flow hedges, the hedging instruments are
designated in full as part of the hedging relationship.
As an exception to this general rule, the interest
component of raw materials derivative instruments
redesignated in conjunction with the first-time
application IFRS 9 was not designated as part of
the hedging relationship. Changes in the fair value
of this component are recorded as costs of hedging
on a separate line within accumulated other equity.
Amounts recorded in accumulated other equity are
included in the carrying amount of inventories on
initial recognition.
The time values of option transactions and the interest
component - including the currency basis - of forward
currency contracts are not designated as part of the
hedging relationship in the case of currency hedges
accounted for as cash flow hedges. Changes in the
market value of such components are recorded as
costs of hedging on a separate line within accumulated
other equity. Amounts recorded in accumulated other
equity from currency hedges are reclassified to cost
of sales when the related hedged item is recognised
in profit or loss. Ineffectiveness is recognised directly
in cost of sales.
Where hedge accounting is applied, changes in fair
value of derivate financial instruments are presented
as part of other financial result in the income state-
ment or within other comprehensive income as a
component of accumulated other equity, depending
on whether the hedging relationship is classified as
a fair value hedge or a cash flow hedge. Fair value
hedges are mainly used to hedge interest rate risks
relating to bonds, other financial liabilities and receiv-
ables from sales financing. For selected fixed-interest
assets, part of the interest rate risk is hedged on a
portfolio basis in accordance with IAS 39. In this case,
swaps are used as the hedging instrument. Hedge
relationships are terminated and redesignated on a
monthly basis at the end of each reporting period,
thereby taking account of the constantly changing
content of each portfolio. The currency basis is not
designated as part of the hedging relationship in the
case of interest rate hedges accounted for as fair value
hedges. Accordingly, changes in the market value of
such instruments are recorded as costs of hedging
within accumulated other equity. Amounts accumu-
lated in equity are reclassified to other financial result
within income statement over the term of the hedging
relationship. Ineffectiveness of hedging relationships
is also recognised in other financial result.
The BMW Group applies the option to recognise the
credit risks arising from the fair values of a group
of
derivative financial assets and liabilities on the basis
of their total net amount. Portfolio-based valuation
adjustments (credit valuation adjustments and debit
valuation adjustments) to the individual derivative
financial assets and financial liabilities are allocated
using the relative fair value approach (net method).
As a general rule, each income tax treatment is consid-
ered independently when accounting for uncertainties
in income taxes. If it is not considered probable that an
income tax treatment will be accepted by the local
tax authorities, the BMW Group uses the most likely
amount of the tax treatment when determining tax-
able profit and the tax base.
Derivative financial instruments are used within the
BMW Group for hedging purposes in order to reduce
currency, interest rate, fair value and market price
risks. Derivative financial instruments are recognised
as of the trade date, measured at their fair value. Fair
values are determined on the basis of valuation models.
Observable market price, tenor and currency basis
spreads are taken into account in the measurement
of derivative financial instruments. Furthermore, the
Group's own credit risk and that of counterparties is
taken into account on the basis of credit default swap
values for market contracts with matching terms.
income statement.
126
The share-based remuneration programme for Board
of Management members and senior heads of depart-
ment entitles BMW AG to elect whether to settle its
commitments in cash or with shares of BMW AG
common stock. Based on the decision to settle in cash,
the share-based remuneration programmes for Board
of Management members and senior heads of depart-
ment are accounted for as cash-settled, share-based
remuneration programmes. Further information on
share-based remuneration programmes is provided
Share-based remuneration programmes which are ex-
pected to be settled in shares are measured at their fair
value at grant date. The related expense is recognised
as personnel expense in the income statement over
the vesting period and offset against capital reserves.
Share-based remuneration programmes expected to
be settled in cash are revalued to their fair value at
each balance sheet date between the grant date and
the settlement date and on the settlement date itself.
The expense is recognised as personnel expense in
the income statement over the vesting period and
presented in the balance sheet as a provision.
→ see
note 41
note 33
The recognition and measurements of provisions
for litigation and liability risks necessitates making
assumptions in order to determine the probability of
liability, the amount of claim and the duration of the
Provisions for statutory and non-statutory warranties
are recognised at the point in time when control over
the goods is transferred to the dealership or retail
customer or when it is decided to introduce new
warranty measures. With respect to the level of the
provision, estimations are made in particular based
on past experience of damage claims and processes.
Future potential repair costs and price increases
per product and market are also taken into account.
Provisions for warranties for all companies of the
BMW Group are adjusted regularly to take account
of new information, with the impact of any changes
recognised in the income statement. Further infor-
mation is provided in → note 33. Similar estimates → see
are also made in conjunction with the measurement
of expected reimbursement claims.
notes 40 and 46
125
Related party disclosures comprise information on
associated companies, joint ventures and non-con-
solidated subsidiaries as well as individuals which
have the ability to exercise a controlling or significant
influence over the financial and operating policies
of the BMW Group. This includes all persons in key
positions of the Company, as well as close members
of their families or intermediary entities. In the case
of the BMW Group, this also applies to members of
the Board of Management and the Supervisory Board.
Details relating to these individuals and entities are
→ see provided in → note 40 and in the list of investments
disclosed in → note 46.
legal dispute. The assumptions made, especially the
assumption about the outcome of legal proceedings,
are subject to a high degree of uncertainty. The appro-
priateness of assumptions is regularly reviewed, based
on assessments undertaken both by management
and external experts, such as lawyers. If new devel-
opments arise in the future that result in a different
assessment, provisions are adjusted accordingly.
The measurement of provisions for statutory and
non-statutory warranty obligations (statutory, contrac-
tual and voluntary) involves estimations. In addition
to manufacturer warranties prescribed by law, the
BMW Group offers various further standard (assur-
ance-type) warranties depending on the product
and sales market. No provisions are recognised for
additionally offered service packages that are treated
as separate performance obligations.
Other provisions are recognised when the BMW Group
has a present legal or constructive obligation towards
a third party arising from past events, the settlement
of which is probable, and when the amount of the
obligation can be reliably estimated. Provisions with a
remaining period of more than one year are measured
at their net present value.
Remeasurement of the net liability can result from
changes in the present value of the defined benefit
obligation, the fair value of the plan assets or the
asset ceiling. Remeasurement can result, amongst
others, from changes in financial and demographic
parameters, as well as changes following the portfolio
development. Remeasurements are recognised imme-
diately in other comprehensive income and hence
directly in equity (within revenue reserves).
Past service cost arises where a BMW Group com-
pany introduces a defined benefit plan or changes
the benefits payable under an existing plan. This cost
is recognised immediately in the income statement.
Similarly, gains and losses arising on the settlement
of a defined benefit plan are recognised immediately
in the income statement.
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
Group
Financial
Statements
If the recognition and measurement criteria relevant
for provisions are not fulfilled and the outflow of
resources on fulfilment is not unlikely, the potential
obligation is disclosed as a contingent liability.
1.1.2019
The BMW Group writes off financial assets when it has
no reasonable expectation of recovering the amounts
concerned. This may be the case, for instance, if the
debtor is deemed not to have sufficient assets or other
sources of income to service the debt.
Group
Financial
Statements
Standards and Revised Standards significant for the
BMW Group applied for the first time in the finan-
cial year 2019:
Standard/Interpretation
IFRS 16
Leases
IFRS 9, IAS 39,
IFRS 7
IFRIC 23
Financial reporting rules
(Amendments to IFRS 9, IAS 39, IFRS 7)
Uncertainty Over Income Tax Treatments
Date of
mandatory
application
IASB
Date of
mandatory
application
EU
13.1.2016
26.9.2019
1.1.2019
1.1.2020
1.1.2019
1.1.2020
Date of
issue by
IASB
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
In the case of leased items of property, plant and equip-
ment, a right-of-use asset and a liability for the out-
standing lease payments are recognised with effect
from the date on which the leased asset becomes
available for use by the BMW Group. The acquisition
cost for the right-of-use asset is calculated as the sum
of the present value of the future lease payments, any
lease payments made at or before the commencement
date, any initial direct costs incurred by the lessee
and the estimated costs of dismantling, removing or
restoring the leased asset. Lease incentives granted
by the lessor are deducted. Right-of-use assets are
depreciated on a straight-line basis over the shorter
of the useful life of the leased asset and the expected
lease term. If ownership of the leased asset is auto-
matically transferred at the end of the lease term or
the exercise of a purchase option is reflected in the
lease payments, the right-of-use asset is amortised
on a straight-line basis over the expected useful life
of the leased asset. Right-of-use assets are reported
in the balance sheet within the relevant line items
for property, plant and equipment. The amortisation
expense on right-of-use assets is reported in the
income statement in cost of sales as well as in selling
and administrative expenses.
The lease payments to be taken into account to
measure the right-of-use asset and the lease liability
comprise fixed payments, variable lease payments
that depend on an index or an interest rate as well
as amounts expected to be payable under residual
value guarantees. If it is reasonably certain that a
purchase or lease extension option will be exercised,
the relevant payments are also included. Payments
for periods for which the lessee has an option to
terminate a lease unilaterally are only included in
the lease payments if it is reasonably certain that
the termination option will not be exercised. For the
purposes of assessing options, the BMW Group takes
account of all facts and circumstances that create
an economic incentive to exercise or not to exercise
the option.
124
123
The measurement of the change in default risk is based
on a comparison of the default risk at the date of initial
recognition and at the end of the reporting period.
The default risk at the end of each reporting period is
determined on the basis of credit checks, current key
performance indicators and any overdue payments.
Loss allowances on trade receivables are determined
primarily on the basis of information relating to over-
due amounts. In the case of marketable securities and
investment funds, the BMW Group usually applies
the option not to allocate financial assets with a low
default risk to different stages. Accordingly, assets
with an investment grade rating are always allocated to
stage 1. The loss allowance on these assets is calculated
using the input factors available on the market, such
as ratings and default probabilities.
With the exception of receivables from operating
leases and trade receivables, the BMW Group applies
the general approach described in IFRS 9 to deter-
mine impairment of financial assets. Under the general
approach, loss allowances are measured on initial
recognition on the basis of the expected 12-month
credit loss (stage 1). If the credit loss risk at the end
of the reporting period has increased significantly
since initial recognition, the impairment allowance
is measured on the basis of lifetime expected credit
losses (stage 2 - general approach). The BMW Group
applies the simplified approach described in IFRS 9
to operating lease and trade receivables, whereby the
amount of the loss allowance is measured subsequent
to the initial recognition of the receivable on the basis
of lifetime expected credit losses (stage 2 – simplified
approach). For the purposes of allocating an item to
stage 2, it is irrelevant whether the credit risk of the
assets concerned has increased significantly since
initial recognition. In the case of credit-impaired assets
which had not been credit-impaired at the time they
were acquired or originated, an impairment allowance
is recognised at an amount equal to lifetime expected
credit losses (stage 3). This is the case regardless of
whether the general or simplified approach is applied.
As a general rule, the BMW Group assumes that a
receivable is in default if it is more than 90 days
overdue or if there are objective indications of insol-
vency. Credit-impaired assets are identified as such
on the basis of this definition of default. In the case
of stage 3 assets, interest income is calculated on the
asset's carrying amount less any impairment loss.
Loss allowances on receivables from sales financing
are determined primarily on the basis of past expe-
rience with credit losses, current data on overdue
receivables, rating classes and scoring information.
Forward-looking information (for instance forecasts of
key performance indicators) is also taken into account
if, based on past experience, such indicators show a
substantive correlation to actual credit losses.
Receivables from sales financing are measured at amor-
tised cost using the effective interest rate method. This
also includes receivables from vehicle finance leases
which are measured at an amount equal to the net
investment in the lease.
Items reported under other investments within the scope
of IFRS 9 are measured at fair value through profit or
loss. Investments in subsidiaries, joint arrangements
and associated companies that are not material to the
BMW Group and which do not fall within the scope of
IFRS 9 are also included in other investments.
The market values of financial instruments measured
at fair value are determined on the basis of market
information available at the balance sheet date, such as
quoted prices or using appropriate measurement meth-
ods, in particular the discounted cash flow method.
The lease liability is measured on initial recognition at
the present value of the future lease payments. Sub-
sequent to initial recognition, the carrying amount of
the lease liability is increased to reflect interest on the
lease liability and reduced, without income statement
impact, by the lease payments made. Lease liabilities
are reported within financial liabilities, while interest
expense is reported as part of net interest result. In
the cash flow statement, both the repayment portion
and the interest portion of lease payments are shown
as cash outflows from financing activities.
Depending on the business model and the structure of
contractual cash flows, financial assets are classified
as measured at amortised cost, at fair value through
other comprehensive income or at fair value through
profit or loss. The category "at fair value through other
comprehensive income" at the BMW Group comprises
mainly marketable securities and investment funds
used for liquidity management purposes. Selected
marketable securities and investment funds, money
market funds within cash and cash equivalents as
well as convertible bonds are recognised at fair value
through profit or loss, as their contractual cash flows
do not solely represent payments of principal and
interest. The BMW Group does not make use of the
option to measure equity instruments at fair value
through other comprehensive income or debt instru-
ments at fair value through profit or loss.
Investments accounted for using the equity method are
measured provided no impairment has been recog-
nised - at cost of investment adjusted for the Group's
share of earnings and changes in equity capital. If
there is any indication that an investment is impaired,
an impairment test is performed on the basis of a
discounted cash flow method. An indication exists, for
example, in the event of a serious shortfall compared
to budget, the loss of an active market or if funds are
required to avoid insolvency.
-
Assumptions and estimations are required regard-
ing future residual values, since these represent
a significant part of future cash inflows. Relevant
factors to be considered include the trend in market
prices and demand on the pre-owned vehicle market.
The assumptions are based on internally available
historical data and current market data as well as
on forecasts of external institutions. Furthermore,
assumptions are regularly validated by comparison
with external data.
Group products recognised by BMW Group entities as
leased products under operating leases are measured at
manufacturing cost, including any initial direct costs.
All other leased products are measured at acquisition
cost. All leased products are depreciated over the
period of the lease using the straight-line method
down to their expected residual value. Where the
recoverable amount of a lease exceeds the asset's car-
rying amount, changes in residual value expectations
are recognised by adjusting scheduled depreciation
prospectively over the remaining term of the lease.
If the recoverable amount is lower than the asset's
carrying amount, an impairment loss is recognised for
the shortfall. A test is carried out at each balance sheet
date to determine whether an impairment loss recog-
nised in prior years no longer exists or has decreased.
In such cases, the carrying amount of the asset is
increased to the recoverable amount, at a maximum
up to the amount of the asset's amortised cost.
As lessee, the BMW Group makes use of the applica-
tion exemptions available for short-term leases and
leases of low-value assets.
Determining which items are to be counted as lease
payments including the issue of the lease term
underlying those payments - and which discount rate
to apply involves using estimates and assumptions
that may
differ from actual outcomes.
IFRS 16 requires that lease payments are discounted
as a general rule using the interest rate implicit in
the lease. However, since the interest rate in leases
entered into by the BMW Group cannot readily be
determined, amounts are discounted on the basis
of the incremental borrowing rate, comprising the
risk-free interest rate in the relevant currency for
matching maturities plus a premium for the credit
risk. Specific risks attached to an asset are generally
not taken into account, given that collateral received
in the context of alternative financing arrangements
is not relevant within the BMW Group.
The Group's financial assets include in particular other
investments, receivables from sales financing, mar-
ketable securities and investment funds, derivative
financial assets, trade receivables and cash and cash
equivalents. As a general rule, non-derivative finan-
cial assets are accounted for on the settlement date.
Deferred income taxes are recognised for all temporary
differences between the tax and accounting bases of
assets and liabilities, including differences arising on
consolidation procedures, as well as on unused tax
losses and unused tax credits. Deferred tax assets
and liabilities are measured at the tax rates that are
expected to apply to the period when the asset is
realised or the liability settled, based on tax rates
and tax laws that have been enacted or substantively
enacted by the balance sheet date.
innote 41.
settlement, are recognised in the income statement.
Non-monetary balance sheet items denominated in
foreign currencies are rolled forward on the basis of
historical exchange rates.
11.5
12.0
10.9
12.0
10.9
2018
2019
Financial Services
Motorcycles
Automotive
in %
Amounts are discounted on the basis of a market-
related cost of capital rate. Impairment tests are
performed for accounting and financial reporting pur-
poses for the Automotive and Motorcycles cash-gener-
ating units using a risk-adjusted pre-tax cost of capital
(WACC) that is updated annually. In the case of the
Financial Services cash-generating unit, a pre-tax cost
of equity capital is used, as is customary in the sector.
The following discount factors were applied:
The BMW Group determines the value in use on the
basis of a present value computation. Cash flows
used for this calculation are derived from long-term
forecasts approved by management. These long-term
forecasts are based on detailed forecasts drawn up
at an operational level, covering a planning period
of six years. For the purposes of calculating cash
flows beyond the planning period, a residual value
is assumed which does not take growth into account.
Forecasting assumptions are continually adjusted to
current information and regularly compared with
external sources. The assumptions used take account
in particular of expectations of the profitability of the
product portfolio, future market share development,
macroeconomic developments (such as currency,
interest rate and raw materials prices) as well as the
legal environment and past experience.
As part of the process of assessing recoverability, it is
generally necessary to apply estimations and assump-
tions - in particular regarding future cash inflows and
outflows and the length of the forecast period – which
could differ from actual amounts. Actual amounts
may differ from the assumptions and estimations
used if business conditions develop differently to
expectations.
If the reason for a previously recognised impairment
loss no longer exists, the impairment loss is reversed
up to the level of the recoverable amount, but no
higher than the amortised acquisition or manu-
facturing cost. Impairment losses on goodwill are
not reversed.
For the purpose of the impairment test, the carrying
amount of an asset (or a cash-generating unit) is com-
pared with the recoverable amount. The first step of
the impairment test is to determine the value in use.
If the value in use is lower than the carrying amount,
the next step is to determine the fair value less costs
to sell and compare the amount so determined with
the asset's carrying amount. If the fair value is lower
than the carrying amount, an impairment loss is
recognised, reducing the carrying amount to the
higher of the asset's value in use or fair value less
costs to sell.
If there is any indication of impairment of intangible
assets, or if an annual impairment test is required
(i.e. intangible assets with an indefinite useful life,
intangible assets during the development phase and
goodwill), an impairment test is performed. Each
individual asset is tested separately unless the cash
flows generated by the asset are not sufficiently inde-
pendent from the cash flows generated by other assets
or other groups of assets. In this case, impairment is
tested at the level of a cash-generating unit.
Goodwill arises on first-time consolidation of an ac-
quired business when the cost of acquisition exceeds
the Group's share of the net fair value of the assets,
liabilities and contingent liabilities identified during
the acquisition.
Development costs are capitalised if all of the criteria
specified by IAS 38 are met. They are measured on the
basis of direct costs and directly attributable overhead
costs. Project-related capitalised development costs
are amortised on a straight-line basis following the
start of production over the estimated product life
cycle (usually eight to twelve years).
Intangible assets are measured at acquisition or manu-
facturing cost. Intangible assets with finite useful lives
are amortised on a straight-line basis over their useful
lives of between three and 20 years. Impairment losses
are recognised where necessary. Intangible assets with
indefinite useful lives are tested annually for impair-
ment. Internally generated intangible assets mainly
comprise development costs for vehicle, module and
architecture projects.
Earnings per share are calculated as follows: Basic
earnings per share are calculated for common and
preferred stock by dividing the net profit for the year
after minority interests and attributable to each cate-
gory of stock, by the average number of outstanding
shares. Net profit for the year is accordingly allocated
to the different categories of stock. The portion of the
net profit that is not being distributed is allocated
to each category of stock based on the number of
outstanding shares. Profits available for distribution
are determined directly on the basis of the dividend
resolutions passed for common and preferred stock.
Diluted earnings per share are calculated and sepa-
rately disclosed in accordance with IAS 33.
Public sector grants are not recognised until there is
reasonable assurance that the conditions attaching to
them have been complied with and the grants will be
received. The resulting income is recognised in cost
of sales over the periods in which the costs occur that
they are intended to compensate.
Revenues also include interest income from financial
services. Interest income arising on finance leases as
well as on retail customer and dealership financing
is recognised using the effective interest method
and reported as interest income on credit financing
within revenues.
13.4
In order to determine a target internal rate of return,
risk-adjusted cost of capital rates are averaged for the
recent past. For the purposes of long-term product and
investment decisions, the following target internal
rates of return are used:
in %
Automotive
Motorcycles
In the single entity accounts of BMW AG and its sub-
sidiaries, foreign currency receivables and payables
are measured on initial recognition using the exchange
rate prevailing at the date of first-time recognition.
At the end of the reporting period, foreign currency
receivables and payables are measured using the clos-
ing exchange rate. The resulting unrealised gains and
losses, as well as realised gains and losses arising on 7
→ Accounting
Principles and
Policies
Notes to the Group
Financial Statements
Group
Financial
Statements
121
For machinery used in multiple-shift operations,
depreciation rates are increased to account for the
additional utilisation. If there is any indication of
impairment of property, plant and equipment, an
impairment test is performed as described above for
intangible assets.
3 to 21
2 to 25
8 to 50
Other equipment, factory and office equipment
Plant and machinery
Factory and office buildings, residential buildings, fixed
installations in buildings and outside facilities
Revenues from leases of own-manufactured vehicles
are recognised at Group level in accordance with
the requirements for manufacturer or dealer lessors.
In the case of operating leases, revenues from lease
payments are recognised on a straight-line basis
over the lease term. In the case of finance leases,
revenues are recognised at the lease commencement
date at the amount of the fair value of the leased
asset and reduced by any unguaranteed residual
value of vehicles that are expected to be returned to
the Group at the end of the lease term. Similarly, cost
of sales is reduced for unguaranteed residual values.
In addition, initial direct costs are recognised as cost
of sales at the lease commencement date.
in years
The following useful lives are applied throughout the
BMW Group:
All items of property, plant and equipment are measured
at acquisition or manufacturing cost less accumulated
depreciation and accumulated impairment losses. The
cost of internally constructed plant and equipment
comprises all costs which are directly attributable
to the manufacturing process as well as an appro-
priate proportion of production-related overheads.
This includes production-related depreciation and
amortisation as well as an appropriate proportion
of administrative and social costs. Financing costs
are not included in acquisition or manufacturing
cost unless they are directly attributable to the asset.
The carrying amount of items of depreciable property,
plant and equipment is written down according to
scheduled usage-based depreciation - as a general
rule on a straight-line basis - over the useful lives of
the assets. Depreciation is recorded as an expense
in the income statement.
13.4
13.4
12.0
12.0
12.0
12.0
2018
2019
Financial Services
The risk-adjusted discount rate, calculated using a
CAPM model, also takes into account specific peer-
group information relating to beta-factors, capital
structure data and borrowing costs. In conjunction
with the impairment tests for cash-generating units,
sensitivity analyses are performed for the main
assumptions in order to rule out that possible changes
to the assumptions used to determine the recoverable
amount would result in the requirement to recognise
an impairment loss.
Principles and
Policies
122
Group
Financial
Statements
7.81
7.73
7.87
7.82
0.88
0.88
0.89
0.85
2018
2019
31.12.2018
31.12.2019
Average rate
Closing rate
US-Dollar
Thai Baht
Russian Rubel
Korean Won
Japanese Yen
Chinese Renminbi
1 Euro =
Notes to the Group
Financial Statements
→ Accounting
The exchange rates of currencies which have a material
impact on the Group Financial Statements were as
follows:
121.81
125.77
British Pound
130.36
122.06
Revenues from the sale of products, for which
repurchase arrangements or rights of return are in
place, are not recognised immediately in full. Instead,
revenues are either recognised proportionately, or
the difference between the sales and repurchase
price is recognised in instalments over the term of the
contract depending on the nature of the agreement.
In the case of vehicles sold to a dealership that are
expected to be repurchased in a subsequent period
as part of leasing operations, revenues are not recog-
nised at Group level at the time of the sale of the
vehicle. Instead, assets and liabilities relating to the
right of return vehicles are recognised.
the beginning of a contract and is therefore deferred
as a contract liability. The deferred amount is released
over the service period and recognised as revenues in
the income statement. As a rule, amounts are released
on the basis of the expected expense trend, as this
best reflects the performance of the service. If the
sale of products includes a determinable amount for
services (multiple-component contracts), the related
revenues are deferred and recognised as income in the
same way. Variable consideration components, such
as bonuses, are measured at the expected value, and,
in the case of multiple-component contracts allocated
to all performance obligations unless directly attrib-
utable to the sale of a vehicle.
120
Revenues from contracts with customers include in
particular revenues from the sale of products (primar-
ily new and pre-owned vehicles and related products)
as well as revenues from services. Revenue is recog-
nised when control is transferred to the dealership
or retail customer. In the case of sales of products,
this is usually at the point in time when the risks and
rewards of ownership are transferred. Revenues are
stated net of settlement discount, bonuses and rebates
as well as interest and residual value subsidies. The
consideration arising from these sales usually falls
due for payment immediately or within 30 days. In
exceptional cases, a longer payment period may also
be agreed. In the case of services, control is trans-
ferred over time. Consideration for the rendering of
services to customers usually falls due for payment at
Accounting policies, assumptions, judgements
and estimations
04
Argentina has fulfilled the definition of a hyperinfla-
tionary economy since 1 July 2018. For this reason,
IAS 29 (Financial Reporting in Hyperinflationary
Economies) is being applied for the BMW subsidiary
in Argentina. The price indices published by the
Federación Argentina de Consejos Profesionales de
Ciencias Económicas (FACPCE) are used to adjust
non-monetary assets and liabilities and items in
the income statement. The resulting effects are not
material for the BMW Group.
1.18
1.12
1.14
1.12
119
34.76
38.15
1,304.68
1,298.78
69.60
1,271.07
72.43
74.07
33.40
37.01
79.72
1,297.79
780
Capital Losses
171
53
3,077
3,186
22
17
Provisions
2018*
Other investments
Sundry other assets
Leased products
Property, plant and equipment
Intangible assets
2019
2018*
2019
Deferred tax liabilities
Deferred tax assets
359
Tax loss carryforwards
in € million
3,254
489
2,570
The allocation of deferred tax assets and liabilities to
balance sheet line items at 31 December is shown in
the following table:
3,544
Eliminations
Liabilities
29
42
5,323
6,239
313
324
329
306
3,454
1,185
1,125
20
22
3
3
5,175
4,085
578
Other variances include various reconciling items.
Actual tax expense
Tax increases as a result of non-deductible expenses
and tax reductions due to tax-exempt income increased
compared to one year earlier. The tax increases were
due to provisions and impairment losses on invest-
ments that are non-deductible for tax purposes as well
as to non-deductible withholding tax.
-56
-100
Other variances
90
-17
Effects from tax rate changes
-16
-162
Tax expense (+)/benefits (-)
for prior years
-158
5
Equity accounted
314
909
Non-deductible expenses
-173
-314
Tax-exempt income
Tax increases (+)/tax reductions (-) due to:
-436
647
in %
2019
2018
2,140
Deferred taxes for non-German entities are calculated
on the basis of the relevant country-specific tax rates.
These ranged in the financial year 2019 between 9.0%
and 40.0% (2018: between 9.0% and 45.0%).
30.8
30.8
German income tax rate
15.0
15.0
Municipal trade tax rate
15.8
15.8
surcharge
Tax income relating to prior years resulted primarily
from adjustments to income tax receivables and pro-
visions for prior years, which were largely attributable
to the successful conclusion of intergovernmental tax
treaties covering the topic of transfer pricing.
Corporate tax rate including solidarity
5.5
5.5
Solidarity surcharge
15.0
15.0
Corporate tax rate
26.3%
30.1%
Effective tax rate
2,530
* Prior year's figures adjusted.
620
thereof relating to fair value gains and losses on financial instruments and marketable securities recognised directly in equity
thereof relating to the remeasurements of net liabilities for defined benefit pension plans
3,226
2019
Earnings per share
14
The tax returns of BMW Group entities are checked
regularly by German and foreign tax authorities.
Taking account of numerous factors - including
interpretations, commentaries and legal decisions
relating to the various tax jurisdictions as well as
past experience - adequate provision has been made,
to the extent identifiable and probable, for potential
future tax obligations.
of income taxes on the grounds of proportionality.
Deferred tax liabilities on expected dividends amount
to €64 million and relate primarily to dividends from
foreign subsidiaries and joint ventures.
Taxable temporary differences relating to invest-
ments in subsidiaries, associated companies and
joint ventures amount to €21,215 million (2018:
€17,051 million). No deferred taxes are recognised
on these taxable temporary differences because the
BMW Group is able to determine the timing of the
reversal of the temporary differences and it is prob-
able that the temporary differences will not reverse
in the foreseeable future, in particular in view of
the fact that there is no intention to distribute the
profits, but rather to use them to maintain their
substance and reinvest in the companies concerned.
No computation was made of the potential impact
135
-1,562
116
50
2 The figures to 1 January 2019 have been adjusted, based on the first-time application of IFRS 16, see note 6.
1 Prior year's figures adjusted.
Deferred taxes at 31 December (assets (-)/ liabilities (+))
Exchange rate impact and other changes
-2
-12
thereof from currency translation
222
-376
-677
-170
20181
Net profit attributable to the shareholders of BMW AG
€ million
4,914.5
€
10.60
7.47
€
1 Prior year's figures adjusted.
Dividend per share of preferred stock
Dividend per share of common stock
4|4|
Basic/diluted earnings per share of preferred stock
Basic/diluted earnings per share of common stock
-373
55,605,380
601,995,196
56,122,857
number
number
Average number of preferred stock shares in circulation
Average number of common stock shares in circulation
6,383.6
590.8
4,494.4
420.1
€ million
€ million
Profit attributable to common stock
Profit attributable to preferred stock
6,974.4
601,995,196
3,883
-457
Change in deferred taxes recognised directly in equity
* Prior year's figures adjusted.
Net
-13,123
632
1,638
2,194
Deferred taxes
-11,744
-13,123
Netting
-313
-329
Valuation allowances on capital losses
-185
-177
Valuation allowances on tax loss carryforwards
13,517
13,755
13,880
15,823
983
1,539
1,562
-11,744
1,773
135
-
Tax loss carryforwards - all relating to foreign opera-
tions amounted to €954 million (2018: €2,045 mil-
lion). This includes one tax loss carryforward
amounting to €519 million (2018: €542 million), on
which a valuation allowance of €177 million (2018:
€185 million) was recognised on the related deferred
tax asset. The decrease in tax losses available for
carryforward was mainly attributable to tax reform
in the USA. For entities with tax losses available for
carryforward, a net surplus of deferred tax assets
over deferred tax liabilities is reported amounting
to €292 million (2018: €234 million). Deferred tax
assets are recognised on the basis of management's
assessment that there is material evidence that the
entities will generate future taxable profits, against
which deductible temporary differences can be offset.
It is expected for instance that tax-allowable start-up
losses incurred for the plant opened in 2019 in San
Luis Potosí, Mexico, can be utilised against future
planned income.
312
-1,176
Deferred tax expense (+)/income (-) recognised through income statement
164
122
Deferred taxes at 1 January (assets (-)/ liabilities (+))²
2018¹
2019
Income Statement
in € million
-558
Deferred taxes recognised directly in equity amounted
to €2,015 million (2018: €1,457 million).
Financial Statements
Notes to the Group
Group
Financial
Statements
138
137
Deferred tax assets and deferred tax liabilities are
netted for each relevant tax entity if they relate to the
same tax authorities.
The deferred tax amount reported in the position
eliminations relates mostly to the balance sheet line
item Leased products.
Capital losses available for carryforward in the United
Kingdom which do not relate to ongoing operations
increased to €1,938 million (2018: €1,841 million) due
to currency factors. As in previous years, deferred tax
assets recognised on these tax losses – amounting to
€329 million (2018: €313 million) -
- 
were fully written
down since they can only be utilised against future
capital gains.
than 3
Tax loss carryforwards amounting to €553 million
(2018: €1,551 million) can be used indefinitely, while
€401 million (2018: €494 million) expire after more
years.
→ Notes to the
Variances due to different tax rates
13
2,192
3,720
3,711
Administrative expenses
5,848
5,656
Selling expenses
2018*
2019
in € million
Selling and administrative expenses relate mainly to
expenses for marketing, personnel and IT.
Selling and administrative expenses
09
123
-1,285
Other operating income and expenses
-651
-2,316
Other operating expenses
-275
-230
Sundry operating expenses
Total selling and administrative
6,890
expenses
9,568
thereof from subsidiaries:
278
387
and participations
Income from investments in subsidiaries
2018
2019
in € million
Other financial result
12
in € million
Net interest result
11
The BMW Group has examined the objections and
gained access to the documents in the EU Commission's
investigation file. In December 2019, the BMW Group
submitted a detailed response to the EU Commission,
which the latter will now examine before determining
the next steps in the proceedings. Consequently, it
is not yet possible to assess the ultimate financial
impact definitively.
In an ad hoc announcement dated 5 April 2019,
the BMW Group reported that the EU Commission
had informed it of a "Statement of Objections" in
conjunction with ongoing antitrust proceedings.
The EU Commission alleges that the manufacturers
colluded with the aim of restricting innovation and
competition with regard to certain exhaust treat-
ment systems for diesel- and petrol-driven passenger
vehicles. The allegation concerns selective catalytic
reduction (SCR) systems and the use of petrol par-
ticulate filters (OPF). The Commission's preliminary
view is that the conduct objected to may be in breach
of EU competition rules. The Statement of Objections
leads the BMW Group to conclude that it is probable
("more likely than not") that the EU Commission will
issue a significant fine. The resulting requirement
to recognise a provision increased other operating
expenses by approximately €1.4 billion in 2019.
The expense for additions to provisions includes
litigation and other legal risks. Income from the
reversal of provisions includes income arising on
the reassessment of risks from legal disputes.
Impairment losses recognised on receivables from
contracts with customers amounted to €48 million
(2018: €47 million).
Income from the reversal of and expenses for the
recognition of impairment allowances and write-
downs relate mainly to impairment allowances on
receivables.
→ see
note 6
The previous year's figure has been adjusted due to
the change in accounting policy for volume-dependent
bonuses (see → note 6).
* Prior year's figures adjusted.
9,367
6,419
-48
-173
2019
in € million
96
41
Gains on the disposal of assets
15
8
losses and write-downs
Income from the reversal of impairment
216
433
Income from the reversal of provisions
185
148
Exchange gains
2018
2019
in € million
Other operating income and expenses comprise the
following items:
Other operating income and expenses
10
7.49
Sundry operating income
401
262
write-downs
Total research and development
expenditure
Expense for impairment losses and
2,984
2,134
development costs
-193
-1,732
Expense for additions to provisions
New expenditure for capitalised
13
-135
Exchange losses
-1,414
-1,667
Amortisation
5,320
5,952
Research and development expenses
774
1,031
Other operating income
-181
9
Expenses from investments in subsidiaries
and participations
-307
carryforwards and tax credits
thereof relating to tax loss
596
-1,439
differences
thereof relating to temporary
312
-1,176
deferred tax income (-)
Deferred tax expense (+)/
2,218
3,316
Current tax expense
2018*
2019
in € million
€
2.502
3.50
€
2.522
263
-284
Income taxes
2,140
30.8%
30.8%
Tax rate applicable in Germany
Expected tax expense
9,627
7,118
2018*
2019
Profit before tax
in € million
The difference between the expected tax expense
based on the underlying tax rate for Germany and
actual tax expense is explained in the following
reconciliation:
3.52
Deferred taxes are determined on the basis of tax
rates which are currently applicable or expected to
apply in the relevant national jurisdictions when the
amounts are recovered. After taking account of an
average municipal trade tax multiplier rate (Hebesatz)
of 428.0 (2018: 428.0), the underlying income tax rate
for Germany was as follows:
The tax expense was reduced by €30 million (2018:
€41 million) as a result of utilising tax loss carry-
forwards, for which deferred tax assets had not
previously been recognised and in conjunction with
previously unrecognised tax credits and temporary
differences.
Income Statement
Notes to the Group
Financial Statements
→ Notes to the
Group
Financial
Statements
136
135
The previous year's figures have been adjusted due to
the change in accounting policy for volume-dependent
bonuses and for manufacturer lessors (see → note 6).
→ see
note 6
* Prior year's figures adjusted.
2,530
The tax expense resulting from the change in the
valuation allowance on deferred tax assets relating
to tax losses available for carryforward and temporary
differences amounted to €7 million (2018: €24 million).
2,965
2 Proposal by management.
Income taxes
9
thereof from subsidiaries:
397
179
Other interest and similar income
51
-109
Other financial result
2018
2019
-105
-189
Sundry other financial result
-105
-189
financial instruments
Income (+) and expenses (-) from
156
80
Result on investments
-122
8
Interest and similar income
179
397
Sundry other financial result comprises mainly in-
come and expenses arising on the measurement of
stand-alone derivatives and fair value hedge rela-
tionships, as well as income and expenses from the
measurement and sale of marketable securities and
shares in investment funds.
note 2
The result on investments includes revaluation effects
relating to YOUR NOW. Further information is pro-
→ see vided in → note 2 to the Group Financial Statements.
The figure reported for the previous year included
a positive valuation effect relating to the DriveNow
companies amounting to €209 million.
11
-2
-386
-320
Net interest result
-499
Interest and similar expenses
4
Taxes on income of the BMW Group comprise the
following:
thereof subsidiaries:
-232
Other interest and similar expenses
-62
-41
benefit liability for pension plans
Net interest expense on the net defined
-91
-226
on other long-term provisions
Expense relating to interest impact
-233
2018
10.62
2,026
2,195
Other income
Cost of sales comprises:
Cost of sales
2,784
2,820
telematics and roadside assistance
Revenues from service contracts,
08
3,728
3,996
and finance leases
Interest income on loan financing
9,995
10,746
Income from lease instalments
10,163
11,020
leased to customers
Sales of products previously
68,029
2,156
73,433
Revenues
96,855
5,952
Research and development expenses
2,035
2,288
to financial services business
thereof: interest expense relating
22,042
23,623
business
Cost of sales relating to financial services
44,558
48,690
Manufacturing costs
The major part of revenues expected to arise from the
Group's order book at the end of the reporting period
relates to the sale of vehicles. Revenues resulting from
those sales will be recognised in the short term. The
services included in vehicle sale contracts that will be
recognised as revenues in subsequent years represent
only an insignificant portion of expected revenues.
Accordingly, use has been made of the practical
expedient contained in IFRS 15, permitting an entity
not to disclose information on a quantitative basis
due to the short-term nature of items and the lack of
informational value of such disclosures.
An analysis of revenues by segment is shown in the
explanatory comments on segment information
provided in → note 45. Revenues from the sale of see
products and related goods are generated primarily in
the Automotive segment and, to a lesser extent, in the
Motorcycles segment. Revenues from sales of products
previously leased to customers, income from lease
instalments and interest income on loan financing and
finance leases are allocated to the Financial Services
segment. Other income relates mainly to the Auto-
motive segment and the Financial Services segment.
note 45
Revenues recognised from contracts with customers
in accordance with IFRS 15 totalled €89,610 million
(2018: €81,871 million).
2018*
2019
* Prior year's figures adjusted.
in € million
104,210
5,320
Sales of products and related goods
Comparative figures for the previous financial year
have been adjusted to reflect the change in accounting
→ see policy for manufacturer lessors (see → note 6) and
the change in the presentation of amortisation of
initial direct costs for finance leases and receivables
originated. These were previously recorded as cost
of sales and are now reported as reductions of rev-
enues (amount adjusted for the financial year 2018:
€460 million).
-5,670
310
355
7,064
-143
7,207
5,051
5,051
As amended
Impact of
accounting
policy changes
As originally
reported
6,370
-143
6,513
6,460
-143
6,603
7,064
-143
7,207
As amended
20
133
-5,650
-12
Interest income on loan financing and finance leases
includes interest calculated on the basis of the effec-
tive interest method totalling €3,687 million (2018:
€3,423 million). This interest income is not reported
separately in the income statement as it is not signif-
icant compared to total Group revenues.
note 6
2018*
Other
Application of practical expedients for leases of low-value assets and short-term leases
Change in assessment of leases
Financial obligations for operating leases at 31 December 2018
in € million
129
→ 65
Reconciliation of opening balance
Starting with financial obligations for operating leases
at 31 December 2018, lease liabilities can be reconciled
to the opening balance at 1 January 2019 as follows:
2019
in € million
Revenues by activity comprise the following:
Revenues
07
NOTES TO THE INCOME
STATEMENT
877
180
697
-94
-82
accounting
policy changes
Expenses for service contracts, telematics
1,641
ASSETS
Total non-current assets
thereof receivables from sales financing
thereof deferred tax
thereof other assets
Total current assets
thereof current tax
thereof other assets
Total assets
122,090
-105
121,985
48,475
-18
48,457
1,965
6
1,971
1,630
-93
1,537
As amended
73,496
Impact of
accounting
policy changes
in € million
-108
2,665
-258
2,407
105
2,512
Lease liabilities were discounted using a weighted
average incremental interest rate of 1.94% at 1 Jan-
uary 2019.
(b) Changes in methods used to account
for leases as lessor
In conjunction with the adoption of IFRS 16, the meth-
ods used to account for leases as a lessor have also
been reviewed, resulting in a change of accounting
policy as described below with effect from the finan-
cial year 2019. The change in accounting policy has
been applied retrospectively in accordance with IAS 8,
with comparative figures adjusted. In this context, the
opening balance sheet at 1 January 2018 and figures
for the financial year 2018 have been adjusted.
As a result of the revised definition of initial direct
costs contained in IFRS 16, the BMW Group has
changed the timing of income statement recognition
for volume-dependent bonuses relating to Financial
Services segment sales promotions. Rather than being
spread over the term of the underlying lease, these
costs are now recognised as an expense in full in the
period in which the entitlement to the bonus arises.
This resulted in a retrospective decrease in Group
revenue reserves at 1 January 2018 of €101 million,
after offset of deferred tax amounting to €44 million
(31 December 2018: reduction of revenue reserves of
€113 million, after offset of deferred tax amounting
to €49 million).
The BMW Group is also required to account for
finance leases concluded with retail customers via the
Financial Services segment in accordance with the
requirements applicable to manufacturers or dealers.
For this reason, revenues and cost of sales arising on
the sale of vehicles which will subsequently be leased
to customers under finance lease arrangements are
now recognised at a later date. Revenues and cost of
sales relating to vehicle sales are no longer recognised
at the time of sale, but rather at the commencement
of the lease. Revenues are recognised on the basis of
the leased asset's fair value, reduced by any unguar-
anteed residual value of vehicles that are expected
to be returned to the Group. Similarly, cost of sales
is reduced for unguaranteed residual values. In addi-
tion, initial direct costs incurred by the Financial
Services segment are recognised at Group level as
cost of sales. Overall, this resulted in a retrospective
decrease in Group revenue reserves at 1 January 2018
of €15 million, after offset of deferred tax amounting
to €4 million (31 December 2018: decrease of revenue
reserves of €146 million, after offset of deferred tax
amounting to €44 million). The adoption of these
requirements did not have any significant impact
on the accounting in the Automotive and Financial
Services segments.
130
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
The tables below show the impact of accounting pol-
icy changes on the balance sheets at 1 January 2018
and 31 December 2018, as well as on the income
statement, statement of comprehensive income and
cash flow statement for the financial year 2018.
BMW Group change in presentation of balance sheet at 1 January 2018
→ 66
As originally
reported
and roadside assistance
-34
1,566
thereof other provisions
→ see
note 6
Research and development expenditure was as follows:
Comparative figures for the previous financial year
have been adjusted to reflect the change in accounting
policy for volume-dependent bonuses and for manu-
facturer lessors (see → note 6) as well as the change in
the presentation of amortisation of initial direct costs
for finance leases and receivables originated. These
were previously recorded as cost of sales and are now
reported as reductions of revenues (amount adjusted
for the financial year 2018: €460 million).
Income Statement
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
→ Notes to the
Group
Financial
Statements
134
Expenses for impairment losses on receivables from
sales financing recognised in the income statement
for the financial year 2019 amounted to €219 million
(2018: €142 million). Because the impairments are of
minor importance compared to total Group cost of
sales, a separate disclosure has not been provided in
the income statement.
Cost of sales is reduced by public-sector subsidies
in the form of reduced taxes on assets and reduced
consumption-based taxes amounting to €105 million
(2018: €88 million).
* Prior year's figures adjusted.
78,477
86,147
Cost of sales
2,996
3,675
Other cost of sales
1,717
2,566
Warranty expenditure
1,844
69,585
73,462
-31
Total non-current provisions and liabilities
11
1,577
7,485
-45
7,440
195,586
-139
195,447
EQUITY AND LIABILITIES
Total equity
54,208
-116
54,092
thereof equity attributable to shareholders of BMW AG
53,772
-116
53,656
thereof revenue reserves
50,993
-116
50,877
69,616
reported
-45
Impact of
Total current provisions and liabilities
71,762
8
71,770
thereof other provisions
thereof other liabilities
Total equity and liabilities
6,367
6,367
13,443
00
8
13,451
195,586
-139
195,447
BMW Group change in presentation of balance sheet at 31 December 2018
→ 67
in € million
As originally
reported
Impact of
accounting
policy changes
5,045
As amended
5,045
-31
-6
5,299
1,773
-33
1,806
thereof other liabilities
thereof deferred tax
5,767
-9
5,776
thereof other provisions
79,935
-48
79,983
Total non-current provisions and liabilities
55,862
5,632
5,632
thereof deferred tax
As originally
2,166
2,135
ASSETS
Total non-current assets
4
-259
57,559
thereof equity attributable to shareholders of BMW AG
57,829
-259
58,088
Total equity
EQUITY AND LIABILITIES
209,379
399
208,980
10,257
467
9,790
1,378
12
1,366
84,017
479
83,538
1,918
57,300
thereof revenue reserves
56,121
-259
69
-102
2,694
Present value of finance lease liabilities at 31 December 2018
Total lease liabilities at 1 January 2019
Lease liabilities for former operating leases at 1 January 2019
Gross lease liabilities for former operating leases at 1 January 2019
Discounting impact
thereof receivables from sales financing
thereof deferred tax
thereof other assets
Total current assets
5,293
thereof current tax
Total assets
125,442
-80
125,362
48,109
-20
48,089
1,590
48
1,638
thereof other assets
Total current provisions and liabilities
thereof other liabilities
706
10.62
70,909
10.84
Diluted earnings per share of preferred stock in €
10.60
-0.22
10.82
Diluted earnings per share of common stock in €
10.62
-0.22
10.84
Basic earnings per share of preferred stock in €
10.60
-0.22
10.82
Basic earnings per share of common stock in €
6,974
-143
7,117
Attributable to shareholders of BMW AG
7,064
131
-143
132
Statements
thereof change in other operating assets and liabilities
thereof change in provisions
thereof change in receivables from sales financing
thereof change in deferred taxes
thereof net profit
Cash inflow/outflow from operating activities
in € million
→ 70
BMW Group change in presentation of cash flow statement
for the period from 1 January to 31 December 2018
Total comprehensive income attributable to shareholders of BMW AG
Total comprehensive income
Net profit
in € million
Income Statement
→ Notes to the
Principles and
Policies
→ Accounting
Financial Statements
Notes to the Group
→ 69
BMW Group change in presentation of statement of comprehensive income
for the period from 1 January to 31 December 2018
Group
Financial
7,207
-0.22
-2,530
Revenues
As amended
policy changes
Impact of
accounting
As originally
reported
in € million
→ 68
BMW Group change in presentation of income statement
for the period from 1 January to 31 December 2018
209,379
399
208,980
Total equity and liabilities
15,826
709
15,117
6,075
-3
6,078
Net profit/loss
thereof other provisions
71,615
Cost of sales
Gross profit
thereof other liabilities
Profit/loss before financial result
Selling and administrative expenses
45
Income taxes
9,627
-188
9,815
8,933
-188
9,121
-9,568
-10
-2,575
18,378
-178
18,556
97,315
-78,937
-13
-78,924
-165
97,480
Profit/loss before tax
-9,558
3
Profit/loss after tax
-24
1,561
-383
-337 -1,805
1,947
5
1
535
654
Income taxes
23
5
Interest expense
62
84
-15
28
thereof from continuing operations
Total comprehensive income
1,561
Interest income
*Including dividends received in the amount of €643 million (2018: €384 million).
384
1,284
Group dividend income*
-15
-24
-1,805
-344
1,947
-382
1,933
-7
1
-250
-14
Other comprehensive income
-24
-337 -1,805
-383
1,311
-18
4,966
-29
Disposals 31.12.2018
31.12.2018
31.12.2017
4,556
1,414
5
1,075
5
195
5,636
5
1,609
956
5,014
9,976
8,409
5
380
380
Development costs
Goodwill
92
1,183
615
Value
adjustments¹
675
Reclassi-
fications
differences
3
8
5
444
820
9
115
6
938
28
28
1,286
12
123
11
1,410
1 Including €74 million recognised through the income statement.
² Prior year's figures adjusted due to the change in the presentation of vehicles coming out of leases, as well as initial direct costs.
3 Including assets under construction of €2,017 million.
Depreciation and amortisation
Carrying amount
Translation
1.1.2018
Current year
Other intangible assets
1,048
6,202
19,801
2,525
18,471
Land, titles to land, buildings, including
buildings on third party land
Plant and machinery
829 Other facilities, factory and office equipment
Advance payments made and
construction in progress
Property, plant and equipment
7,697
114
3,488
3,707
7,592
38,259
36,257
Leased products²
2,624
2,769
Investments accounted for using
the equity method
Investments in non-consolidated
189
2
191
253
249
subsidiaries
35,503
2,975
3,504
200
10,971
9,464
Intangible assets
29
348
33
5,310
6,420
6,122
27,838
154
438
2,886
28,111
10,078
8,995
1,970
17
270
175
2,082
908
2,3953
34,774
2,767
408
Other investments
Participations
Analysis of changes in Group tangible, intangible
and investment assets 2018
in € million
Acquisition and manufacturing cost
1.1.2018
Translation
differences
Additions
Reclassi-
fications
Disposals 31.12.2018
Development costs
Goodwill
Other intangible assets
Intangible assets
12,965
2,984
385
1,750
12
161
15,100
12
3,145
959
14,990
→ Notes to the
Balance Sheet
385
Notes to the Group
Financial Statements
144
-322
-219
88
204
253
subsidiaries
11
-11
501
499
458
671
-311
-230
589
703
739
 ྨ| | |
Participations
28
Non-current marketable securities
Other investments
143
Group
Financial
Statements
125
1,798
1,084
-1,551
6
2,395
Property, plant and equipment
53,245
314
4,868
3,123
55,304
Leased products²
43,634
735
18,580
17,098
45,851
Investments accounted for using
the equity method
2,769
547
692
2,624
Investments in non-consolidated
subsidiaries
1,409
18
2,525
construction in progress
17,173
Land, titles to land, buildings, including
buildings on third party land
11,088
75
277
372
82
11,730
Plant and machinery
36,833
Non-current marketable securities
201
1,119
2,852
38,189
Other facilities, factory and office equipment
2,799
20
294
60
183
2,990
Advance payments made and
2,888
1
73
458
1
469
30
6
thereof current financial liabilities
887
81
39
RECONCILIATION OF
AGGREGATED FINANCIAL
INFORMATION
Assets
Provisions and liabilities
9,337
14,629 13,284
7,358
1,598
1,765
2,759
245
158
1
1
653
1
40
6,094
Current provisions and liabilities
1
2
818
50
102
Equity
5,293
5,926
1,597
1,764
2,106
205
149
Non-current financial liabilities
87
71
112
Non-current provisions and liabilities
1,271
1,193
184
5
3
7,978
9
Net assets
5,292 5,926 1,597
YOUR NOW
DriveNow
2019
2018
2019
2018
2019
2018
2019
IONITY
2018
2019
2018
Revenues
Scheduled depreciation
21,910
651
17,766
636
424
14
150
Profit/loss before financial result
1,922
-1,349
THERE
BMW Brilliance
THE INCOME STATEMENT
DISCLOSURES RELATING TO
1,764
2,106
205
149
Group's interest in net assets
2,646
2,963
475
522
987
51
2,937
37
-960
-898
Carrying amount
1,686
2,065
475
522
987
51
37
in € million
Eliminations
480
2,937
110
in € million
within one year
31.12.2019
31.12.2018
9,804
8,980
between one and two years
6,489
between two and three years
3,278
between three and four years
1,073
between four and five years
225
between one and five years
25
9,863
37
20,894
18,880
later than five years
Minimum lease payments
Impairment losses amounting to €198 million (2018:
€235 million) were recognised on leased products in
2019 as a consequence of changes in residual value
expectations. Income from the reversal of impairment
losses amounted to €74 million (2018: €92 million).
The carrying amount of leased products was adjusted
due to changes in presentation of initial direct costs
(previously reported as other assets) and vehicles com-
ing out of leases (now reported as part of inventories)
(adjustment effect at 31 December 2018: decrease of
€313 million).
22
Leased products
Minimum lease payments of non-cancellable oper-
ating leases amounting to €20,894 million (2018:
€18,880 million) fall due as follows:
Property, plant and equipment
23
As in the previous year, there was no requirement to
recognise impairment losses or reversals of impair-
ment losses on intangible assets in 2019.
412
Participations
-1
596
1
28
29
Non-current marketable securities
74
671
739
690
Other investments
145
146
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
21
Intangible assets
Intangible assets mainly comprise capitalised devel-
opment costs on vehicle, module and architecture
projects as well as subsidies for tool costs, licences,
purchased development projects, software and pur-
chased customer lists.
Other intangible assets include a brand-name right
amounting to €43 million (2018: €41 million) which
is allocated to the Automotive segment and is not
subject to scheduled amortisation since its useful life
is deemed to be indefinite. The asset is subject to a
limited right of ownership. The €2 million increase
in the carrying amount is entirely due to currency
factors. Intangible assets also include goodwill of
€33 million (2018: €33 million) allocated to the Auto-
motive cash-generating unit (CGU) and goodwill of
€347 million (2018: €347 million) allocated to the
Financial Services CGU.
As in the previous year, no financing costs were recog-
nised as a cost component of intangible assets in 2019.
(including right-of-use assets arising from leases)
No impairment losses were recognised in 2019, as in
the previous year.
As in the previous year, no financing costs were
recognised as a cost component of property, plant
and equipment in 2019.
Right-of-use assets arising from leases of land and
buildings relate primarily to logistics and office
premises and, to a lesser extent, to selling and pro-
duction premises. In order to secure these premises
and, in the interests of flexibility, the property rental
agreements concerned often contain extension and
termination options.
DriveNow
IONITY
2018
2019
2018
2019
2018
THE BALANCE SHEET
Non-current assets
7,248
6,714
1,131
1,763
1,643
175
48
Current assets
7,381
6,570
467
2
1,116
70
2019
2018
2019
2018
24
Investments accounted for using the equity method
Investments accounted for using the equity method
comprise the joint venture BMW Brilliance Automotive
Ltd. (BMW Brilliance), the YOUR NOW companies,
the joint venture IONITY Holding GmbH & Co. KG
(IONITY) and the interest in the associated
company
THERE Holding B.V. (THERE).
BMW Brilliance produces BMW brand models for the
Chinese market and also has engine manufacturing
facilities, which supply the joint venture's two plants
with petrol engines.
The BMW Group intends to increase its stake in
the BMW Brilliance joint venture from 50% to 75%.
On 11 October 2018, the BMW Group signed an
agreement with its joint venture partner, a wholly
owned subsidiary of Brilliance China Automotive
Holdings Ltd. (CBA), to acquire an additional 25%
shareholding in BMW Brilliance. The two partners
agreed on a purchase price of an equivalent of €3.6 bil-
lion. The contractual term of the joint venture, which
would currently expire in 2028, is to be extended to
2040 as part of the agreement. The prerequisite for
the extension is the acquisition of the additional
shares as agreed. The agreement was approved at
the CBA shareholders' meeting on 18 January 2019
and remains subject to the approval of the relevant
authorities. The transaction is scheduled to be closed
in 2022. The closing will result in BMW Brilliance
being fully consolidated in the BMW Group Financial
Statements and is expected to result in the recognition
of a significant valuation gain in the financial year in
which the transaction closes.
With effect from 31 January 2019, the BMW Group
completed the merger of several mobility services
companies under the name YOUR NOW. Further
information is provided in → note 2 to the Group → see
Financial Statements.
Together with Daimler AG, Stuttgart (Daimler AG),
the Ford Motor Company and the Volkswagen Group,
the BMW Group operates the joint venture IONITY
Holding GmbH & Co. KG, whereby each of the par-
ties has an equal shareholding. IONITY's business
model envisages the construction and operation of
high-performance charging stations for battery electric
vehicles in Europe.
note 2
Together with Audi AG, Daimler AG and other com-
panies, the BMW Group holds shares in THERE.
HERE International B.V. (HERE) is an associated
company of THERE. HERE's digital maps are laying
the foundations for the next generation of mobility
and location-based services, providing the basis for
new assistance systems and, ultimately, fully auto-
mated driving.
Capital increases were made at the level of THERE
in January 2019, with BMW AG participating with an
amount of €69 million. Since then, BMW AG's stake
in THERE amounts to 29.7%.
In December 2019, it was announced that Mitsubishi
Corporation (MC) and Nippon Telegraph and Tele-
phone Corporation (NTT) will jointly acquire a 30%
stake in HERE. The transaction is subject to the
approval of the antitrust authorities and is expected
to be closed during the first half of 2020.
147
thereof cash and cash equivalents
148
Notes to the Group
Financial Statements
→ Notes to the
Financial information relating to equity accounted
investments is summarised in the following tables:
Balance Sheet
in € million
DISCLOSURES RELATING TO
BMW Brilliance
THERE
YOUR NOW
2019
Group
Financial
Statements
2,374
Items that can be reclassified to the income statement in the future
tax
397
1,013
115
14,023
buildings on third party land
Land, titles to land, buildings, including
17,851
1,915
2,075
182
385
15,391
1,733
2,582
11
99
15,449
thereof right-of-use assets
from leases
1
from leases
thereof right-of-use assets
40,061
2,187
1,253
2,581
17,173
224
Plant and machinery
3,107
45
-8
751
22
2,387
38,190
Other facilities, factory and office equipment
Intangible assets
11
Statements
Group
Financial
NOTES TO THE BALANCE SHEET
142
141
derivative financial instruments with a negative amount
of €56 million (2018: positive amount of €39 million)
and costs of hedging with a positive amount of €37 mil-
lion (2018: negative amount of €139 million).
Other comprehensive income relating to equity ac-
counted investments is reported in the Group
Statement of Changes in Equity within currency trans-
lation differences with a positive amount of €22 mil-
lion (2018: negative amount of €24 million), within
-604
457
-1,061
-694
558
-1,252
Other comprehensive income
192
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
1,798
Other intangible assets
385
Goodwill
2,134
14,990
Development costs
448
Disposals 31.12.2019
Additions
Acquisition and manufacturing cost
Translation
differences
1.1.2019
in € million
Analysis of changes in Group tangible,
intangible and investment assets 2019
20
Reclassi-
fications
192
3,061
75
86
4
938
292
293
139
2
444
Other investments
Non-current marketable securities
Participations
subsidiaries
Investments in non-consolidated
3,439
2,061
28
1,000
28
28
Disposals
Value
adjustments'
Reclassi-
fications
Current year
Translation
differences
1.1.2019
Carrying amount
2,876
Depreciation and amortisation
2 Carrying amounts at 1.1.2019 (from the first-time application of IFRS 16).
1 Including €71 million recognised through the income statement.
1,292
349
225
6
1,410
3 Including assets under construction of €1,555 million.
23
2,624
Investments accounted for using
104
2
1
33
1
71
from leases
thereof right-of-use assets
3,172
286
63
311
23
82
6
Before
tax
construction in progress
2,392
18
49,942
17,041
20,513
619
45,851
Leased products
60,673
the equity method
2,575
380
57,666
Property, plant and equipment
1,991
3
-1,713
1,297
5,202
544
544
-124
Notes to the Group
Financial Statements
Notes to the
Income Statement
→ Notes to the
Statement of
Comprehensive
Income
17
Fee expense for the Group auditor
The fee expense pursuant to § 314 (1) no. 9 HGB recog-
nised in the financial year 2019 for the Group auditor 7
in € million
and the PwC network of audit firms amounted to
€19 million (2018: €24 million, KPMG International)
and consists of the following:
PwC International
(2018: KPMG International)
2019
thereof: PwC GmbH
(2018: KPMG AG)
2018
2019
Statements
Group
Financial
↑ ↑
140
Employees
125,893
123,337
Apprentices and students gaining work
experience
7,389
Average number of employees
133,282
2018
8,228
131,565
171
19
885
1,389
The number of employees at the end of the reporting
period is disclosed in the Combined Management
Report.
Variable lease payments are based on distance driven.
The agreements have, in part, extension and purchase
options.
139
Income from variable lease payments for operating leases
Income from variable lease payments for finance leases
Financial income on the net investment in finance leases
Selling profit or loss on the sale of vehicles previously
leased to retail customers under finance leases
2018
Audit of financial statements
Tax advisory services
Other services mainly include consulting services
relating to production processes.
18
Government grants and government assistance
Income from asset-related and performance-related
grants, amounting to €41 million (2018: €29 million)
and €199 million (2018: €83 million) respectively, was
recognised in the income statement in 2019.
These amounts relate mainly to public sector grants
aimed at the promotion of regional structures as well
as to subsidies received for plant expansions.
NOTES TO THE STATEMENT
OF COMPREHENSIVE
INCOME
19
Disclosures relating to the statement of
comprehensive income
Other comprehensive income for the period after tax
comprises the following:
in € million
2019
2018
Remeasurement of the net defined benefit liability for pension plans
Deferred taxes
-1,254
935
Other attestation services include mainly project-
related audits, comfort letters and statutorily
prescribed, contractually agreed or voluntarily com-
missioned attestation work.
The audit of financial statements comprises mainly
the audit of the Group Financial Statements and the
separate financial statements of BMW AG and its
subsidiaries, and, in accordance with current require-
ments, all work related thereto, including the review
of the Interim Group Financial Statements.
Services provided during the financial year 2019 by
the Group auditor PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft, Frankfurt am Main,
Munich branch, on behalf of BMW AG and sub-
sidiaries under its control relate to the audit of the
financial statements, other attestation services, tax
advisory services and other services.
7
Other services
Fee expense
14
17
4
5
1
Other attestation services
1
19
24
3222
1
2
2
7
3
2019
2019
in € million
18
-30
30
-12
42
718
-217
935
-867
387
-1,254
Remeasurement of the net defined benefit liability for pension plans
Marketable securities (at fair value through other comprehensive income)
Derivative financial instruments
tax
After
Deferred
taxes
-12
-706
211
-495
33
-157
3
6
-3
Other comprehensive income from equity accounted investments
Currency translation foreign operations
-433
Earnings per share of preferred stock are computed
on the basis of the number of preferred stock shares
entitled to receive a dividend in each of the relevant
financial years. As in the previous year, diluted earn-
ings per share correspond to basic earnings per share.
187
91
-34
125
Costs of hedging
-945
436
-1,381
-620
Basic/diluted earnings per share from continuing
operations amounted to €7.40 per share of common
stock and €7.42 per share of preferred stock.
The previous year's figures have been adjusted due to
the change in accounting policy for volume-dependent
bonuses and for manufacturer lessors (see note 6). → see
note 6
1,133
10,249
1,387
Social insurance expenses
948
Personnel expenses
12,451
843
12,479
Pension and welfare expenses
Personnel expenses include €72 million (2018:
€45 million) of costs relating to workforce measures.
The total pension expense for defined contribution
plans of the BMW Group amounted to €148 million
(2018: €122 million). Employer contributions paid to
state pension insurance schemes totalled €667 mil-
lion (2018: €645 million).
→ see
notes 4, 6, 20,
22 and 35
Most of the expenses for leases for low-value assets
and short-term leases relate to low-value assets.
The BMW Group is party to leases at the end of the
reporting period which have not yet commenced.
These leases could give rise to future cash outflows
amounting to €42 million.
Total cash outflows for leases in 2019 amount to
€591 million.
Information on right-of-use assets and lease liabilities
and further explanatory comments are provided in
→ note 4 (Accounting policies, assumptions, judgments
and estimates), note 6 (Changes in accounting policy
for leases), note 20 (Analysis of changes in Group
tangible, intangible and investment assets in 2019),
note 22 (Property, plant and equipment (including
right-of-use assets arising from leases) and note 35
(Financial liabilities).
(b) As lessor
year was:
The average number of employees during the
31.12.2019
10,370
2018
16
Leases
(a) As lessee
In terms of accounting for leases as a lessee, the fol-
lowing amounts are included in the income statement
for the financial
year 2019:
in € million
Expenses for leases of low-value assets and
short-term leases
Expenses relating to variable lease payments
2019
Wages and salaries
-94
-3
-54
15
Personnel expenses
The income statement includes personnel expenses
as follows:
in € million
2019
not included in the measurement of lease liabilities
Interest expenses arising on the measurement of
lease liabilities
31.12.2019 31.12.2018
Advance payments made and
1,667
Before
tax
2018
2019
-604
-694
-1,322
Deferred
173
544
674
171
387
-217
Items not expected to be reclassified to the income statement in the future
192
After
taxes
Investments in non-consolidated
thereof right-of-use assets
from leases
908 Other facilities, factory and office equipment
thereof right-of-use assets
from leases
Advance payments made and
construction in progress
Property, plant and equipment
5,086
7,333
42,609
38,259
Leased products
240
240
3,199
2,624
Investments accounted for using
the equity method
-867
Plant and machinery
718
thereof gains/losses arising in the period under report
-1,381
-229
-333
-477
-1,048
125
-706
-620
-973
736
353
-3
-157
5,014
-611
-29
-17
-1
thereof reclassifications to the income statement
Derivative financial instruments
thereof gains/losses arising in the period under report
thereof reclassifications to the income statement
Costs of hedging
thereof gains/losses arising in the period under report
thereof reclassifications to the income statement
Other comprehensive income from equity accounted investments
Deferred taxes
Currency translation foreign operations
191
480
Deferred taxes on components of other comprehen-
sive income are as follows:
in € million
42
-30
59
Marketable securities (at fair value through other comprehensive income)
from leases
Other comprehensive income for the period after tax
Land, titles to land, buildings, including
buildings on third party land
6,122
10,971
Intangible assets
5,310
44
794
2
46
6,104
9,345
6,420
1
430
5
426
2,681
2,3872
1,899
28,111
Other intangible assets
906
5
1,183
4
148
6,202
1,815
1,733
4,948
thereof right-of-use assets
10,443
9,976
5
380
380
Development costs
Goodwill
166
1,169
615
158
11,729
6
10,884
10,078
6
2,082
14
322
216
275
2,147
76
1,025
31
31
73
712
1,9913
2,395
2,172
29,177
3,086
12
4,202
7,592
95
4,732
2,493
37,428
-6
23,245
19,801
35,503
1.91
31.12.2018
1.00
31.12.2019
31.12.2018
31.12.2019
31.12.2019
31.12.2018
-264
1.92
S2PA tables and S2PA light tables with weightings
Mortality Table 2018 G issued by Prof. K. Heubeck (with invalidity rates reduced by 70%)
17.2
16.0
19.0
19.2
20.2
21.3
2.25
2.15
1.62
1.38
3.66
2.42
2.69
Other
United Kingdom
21,247
in € million
999
999
-1,274
-1,274
-1,274
-416
-416
-416
-264
-
-73
73
-658
-658
-658
-632
Germany
Germany
57
Based on the measurement principles contained in
IAS 19, the following balance sheet carrying amounts
apply to the Group's pension plans:
United Kingdom
Germany
The following mortality tables are applied in countries,
in which the BMW Group has significant defined
benefit plans:
Weighted duration of all pension obligations in years
Pension level trend
Discount rate
2,310
-18,937
-264
14
14
6
8
57
689
United Kingdom
2
Total
2,313
thereof pension provision
2,702
1,823
371
125
262
382
3,335
2,330
thereof assets
-2
999
-5
3,314
-15
-21
-17
The most significant of the BMW Group's pension
plans are described below.
Germany
Both employer- and employee-funded benefit plans
exist in Germany. Benefits paid in conjunction with
these plans comprise old-age retirement pensions as
well as invalidity and surviving dependents' benefits.
The increase to current pension payments for inflation
is carried out in accordance with § 16 of the Company
Pensions Act (Betriebsrentengesetz).
The defined benefit plans have been closed to new
entrants since 2014. Defined contribution plans with
a minimum rate of return, comprising employer- and
employee-funded components, continue to exist. The
fact that the plan involves a minimum rate of return
means that the defined contribution entitlements are
classified in accordance with IAS 19 as defined benefit
plans. In the case of defined benefit plans involving
the payment of a pension, the amount of benefits to
be paid is determined by multiplying a fixed amount
by the number of years of service.
The assets of the German pension plans are invested
by BMW Trust e. V., Munich, in accordance with a
CTA. The representative bodies of this entity are
the Board of Directors and the Members' General
Meeting. BMW Trust e. V., Munich, currently has
seven members and three members of the Board of
Directors elected by the Members' General Meeting.
The Board of Directors is responsible for investments,
drawing up and deciding on investment guidelines as
well as monitoring compliance with those guidelines.
The members of the association can be employees,
employee representatives, senior executives and
members of the Board of Management of BMW AG.
An ordinary Members' General Meeting takes place
once every calendar year, and deals with a range
of matters, including receiving and approving the
association's annual report, ratifying the activities of
the Board of Directors and adopting changes to the
association's statutes.
United Kingdom
Defined benefit plans exist in the United Kingdom
which are closed for all plan participants. Vested
benefits remain in place. New benefits are covered
by contributions made to a defined contribution plan.
The defined benefit pension plans are administered
by BMW Pension Trustees Limited, Farnborough,
and BMW (UK) Trustees Limited, Farnborough,
both trustee companies which act independently
of the BMW Group. BMW (UK) Trustees Limited,
Farnborough, is represented by ten trustees and
BMW Pension Trustees Limited, Farnborough, by five
trustees. A minimum of one third of the trustees must
be elected by plan participants. The trustees represent
the interests of plan participants and decide on invest-
ment strategies. Funding contributions to the funds
are determined in agreement with the BMW Group.
155
156
Group
Financial
Statements
Notes to the Group
Financial Statements
-16
382
246
110
31.12.2019
31.12.2018
31.12.2019
31.12.2018
31.12.2019
31.12.2018
31.12.2019 31.12.2018
Present value of defined benefit
obligations
14,022
11,542
9,503
8,277
Fair value of plan assets
11,320
9,721
9,137
366
1,821
2,702
Carrying amounts at 31 December
3
3
Other
2
Effect of limiting net defined benefit
21,247
18,937
24,652
21,340
1,428
1,049
1,127
883
8,167
asset to asset ceiling
-10
Pensions and other benefits paid
-10
Group
Financial
Statements
154
153
The previous year's figures have been adjusted due to
the change in accounting policy for volume-dependent
bonuses and for manufacturer lessors (see → note 6).
Equity attributable to shareholders of BMW AG in-
creased during the financial year by 3.5% primarily
reflecting the increase in revenue reserves.
* Prior year's figures adjusted.
Notes to the Group
Financial Statements
160,897
Total capital
64.4%
66.3%
Proportion of total capital
103,597
116,740
176,064
→ Notes to the
Balance Sheet
32
Pension provisions
Gains (-) or losses (+) arising from changes in financial assumptions
Gains (-) or losses (+) arising from changes in demographic assumptions
-2,002
-2,002
-2,002
-3
-3
-3
-191
-191
-191
41
in %
The assumptions stated below, which depend on the
economic situation in the relevant country, are used
to measure the defined benefit obligation of each
pension plan. In Germany, the so-called "pension
entitlement trend" (Festbetragstrend) remained at
2.0%. The following weighted average values have
been used for Germany, the UK and other countries:
most of the defined benefit plans have been closed
to new entrants.
In the case of defined benefit plans, the BMW Group
is required to pay the benefits it has granted to
present and past employees. Defined benefit plans
may be covered by provisions or pension assets. In
Germany, pension entitlements are mostly covered
by assets transferred to BMW Trust e. V., Munich, in
conjunction with a Contractual Trust Arrangement
(CTA). Funded plans also exist in the UK, the USA,
Switzerland, Belgium and Japan. In the meantime, &
Total financial liabilities
38,825
46,093
Current financial liabilities
21,247
-18,937
2,310
Effect of limitation
of the net defined
benefit asset to the
asset ceiling
Net defined
benefit liability
3
2,313
473
473
473
485
-444
41
Total
3,201
Plan assets
Gains (-) or losses (+) on plan assets, excluding amounts included
in interest income
64,772
70,647
Non-current financial liabilities
→ Notes to the
Balance Sheet
The change in the net defined benefit liability for pension
plans can be derived as follows:
in € million
1 January 2019
EXPENSE/INCOME
Current service cost
Interest expense (+)/income (−)
Past service cost
Gains (-) or losses (+) arising from settlements
REMEASUREMENTS
Defined
benefit
obligation
3,201
3,201
-3
Plan assets
obligation
Defined
benefit
Effect of limitation
thereof assets
thereof pension provision
31 December 2018
Translation differences and other changes
Pensions and other benefits paid
Employee contributions
Transfers to fund
Gains (-) or losses (+) arising from changes in financial assumptions
Gains (-) or losses (+) arising from changes in demographic assumptions
Gains (-) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the
asset ceiling
Gains (-) or losses (+) on plan assets, excluding amounts included
in interest income
REMEASUREMENTS
Gains (-) or losses (+) arising from settlements
Total
Past service cost
of the net defined
benefit asset to the
asset ceiling
22,710
59
59
59
62
62
-413
475
508
508
508
3,236
Net defined
benefit liability
3
3,233
-19,477
35.6%
-10
Interest expense (+)/income (−)
EXPENSE/INCOME
78
-527
-527
thereof assets
thereof pension provision
31 December 2019
Translation differences and other changes
Employee contributions
Transfers to fund
-4
-4
-4
Gains (-) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the
asset ceiling
-3
-3
-78
Current service cost
-1,104
-1
1 January 2018
in € million
-527
-21
3,335
3,314
2
3,312
-21,340
24,652
18
18
-455
473
-1
1,103
33.7%
60
57,300
Finance leases are analysed as follows:
Statements
Group
Financial
150
1,032
482
Notes to the Group
Financial Statements
12
363
-61
15
2
-24
-54
175
30
in € million
Balance Sheet
due between two and three years
6,811
due between one and two years
6,811
6,991
due within one year
→ Notes to the
31.12.2018
in € million
Gross investment in finance leases
The carrying amounts of receivables relating to the
credit card business comprises the following:
Allowances for impairment and credit risk
31.12.2018
31.12.2019
31.12.2019
26
-1
1
investment funds
5,391
5,316
thereof non-current
Derivative instruments
1,620
Marketable securities and
1,977
1,325
11,614
847
9,749
Loans to third parties
54
20
thereof current
10,596
12,939
Other assets
4
-129
-105
-1
-20
-3
33
-17
-10
in € million
31.12.2019
31.12.2018
Sundry other assets
1,353
1,173
5,462
due between three and four years
3,775
Gross carrying amount
Receivables from companies in which
3,779
4,807
leased products
Return right assets for future
The carrying amount of the net investment in finance
leases remained largely unchanged over the reporting
period.
an investment is held
31.12.2018*
in € million
Other assets comprise:
Other assets
2,261
2,267
Unrealised interest income
31.12.2019
2,641
1,916
Other taxes
Receivables from subsidiaries
460
396
Prepaid expenses
293
413
Collateral assets
933
1,086
Expected reimbursement claims
Financial assets comprise:
Financial assets
26
1,747
1,935
28
* Prior year's figures adjusted.
23
20,054
30
22,315
23,600
24
32
due later than five years
15,480
27
due between one and five years
due between four and five years
244
-18
262
Net carrying amount
Allowance for impairment
529
Net investment in finance leases
due within one year
6,256
due later than five years
13,908
due between one and five years
433
due between four and five years
Income tax assets totalling €1,209 million (2018:
→ see €1,378 million, adjusted see → note 6) include claims
amounting to €186 million (2018: €222 million),
which are expected to be settled after more than one
year. Claims may be settled earlier than this depend-
ing on the timing of the underlying proceedings.
Income tax assets
note 6
3,421
due between three and four years
4,968
due between two and three years
6,225
due between one and two years
6,123
21,333
Credit card receivables
244
Other
Equity
Number of shares issued
Balance Sheet
Shares issued/in circulation at 1 January
Shares issued in conjunction with Employee Share Programme
Less: shares repurchased and re-issued
31
Shares issued/in circulation at 31 December
2019
Common stock
2018
2019
2018
56,126,904
Preferred stock
→ Notes to the
Financial Statements
Notes to the Group
Utilised
-7
-1
Exchange rate impact and other changes
Balance at 31 December
2
72
54
Out of the total amount of recognised for inventories
at 31 December 2019, inventories measured at net
realisable value amounted to €973 million (2018:
€680 million). Write-downs to net realisable value
in the financial year 2019 amounted to €126 million
(2018: €54 million), while reversals of write-downs
amounted to €22 million (2018: €22 million).
The expense recorded in conjunction with inven-
tories during the financial year 2019 amounted to
€62,633 million (2018: €58,079 million). At 31 Decem-
ber 2019, the carrying amounts of inventories expected
to be realised after more than twelve months amount
to €445 million (2018: €452 million).
From the financial year 2019 onward, certain advance
payments to suppliers for raw materials, supplies and
finished goods amounting to €536 million, which were
previously reported within other assets, have been
reclassified to inventories. The previous year's figures
have been adjusted accordingly (adjustment effect at
31 December 2018: increase of €609 million).
In the case of trade receivables, collateral is generally
held in the form of vehicle documents and bank guar-
antees so that the risk of bad debt loss is very
limited.
Expenses for impairment losses and income from the
reversal of impairment losses is not significant and
is therefore not reported separately in the income
statement.
152
Group
Financial
Statements
744,447
4,047
-26
55,605,404 601,995,196
521,524
24
Further information regarding the transition effects
recognised directly in equity on the initial application
of IFRS 16 is provided in → note 6.
Capital management disclosures
The BMW Group's objectives with regard to capital
management are to safeguard over the long-term the
Group's ability to continue as a going concern and to
provide an adequate return to shareholders.
The capital structure is managed in order to meet
needs arising from changes in economic conditions
and the risks of the underlying assets.
The BMW Group is not subject to any unified external
minimum equity capital requirements. Within the
Financial Services segment, however, there are a
number of individual entities which are subject to
equity capital requirements of relevant regulatory
banking authorities.
In order to manage its capital structure, the BMW Group
uses various instruments, including the amount of
dividends paid to shareholders and share buybacks.
Moreover, the BMW Group actively manages debt
capital, carrying out funding activities with a target
debt structure in mind. A key aspect in the selection
of financial instruments is the objective to achieve
matching maturities for the Group's financing require-
ments. In order to reduce non-systematic risk, the
BMW Group uses a variety of financial instruments
available on the world's capital markets to achieve
diversification.
Accumulated other equity comprises amounts recog-
nised directly in equity resulting from the translation
of the financial statements of foreign subsidiaries,
changes in the fair value of derivative financial instru-
ments and marketable securities, costs of hedging
recognised directly in equity as well the related
deferred taxes.
→ see
note 6
note 6
The capital structure at the end of the reporting period
was as follows:
in € million
31.12.2019 31.12.2018*
Equity attributable to shareholders
of BMW AG
59,324
→ see
Accumulated other equity
The proposed distribution was not recognised as a
liability in the Group Financial Statements.
Distribution of a dividend of €2.50 per share of
common stock (€1,505 million)
56,867,304
56,126,904
601,995,196
601,995,196
All Company stock is issued to bearer and each share
has a par value of €1.00. Preferred stock, to which no
voting rights are attached, bear an additional dividend
of €0.02 per share.
In 2019, a total of 744,447 shares of preferred stock
was sold to employees at a reduced price of €46.10 per
share in conjunction with the Company's Employee
Share Programme. These shares are entitled to receive
dividends for the first time with effect from the finan-
cial
year 2020.
Issued share capital increased by €0.7 million as a
result of the issue to employees of 740,400 new shares
of non-voting preferred stock. BMW AG is authorised
up to 15 May 2024 to issue 5 million shares of non-
voting preferred stock amounting to nominal €5.0 mil-
lion. At the end of the reporting period, 4.3 million
of these amounting to nominal €4.3 million remained
available for issue.
In addition, 4,047 previously issued shares of pre-
ferred stock were acquired and re-issued to employees
in conjunction with the Employee Share Programme.
Capital reserves
Capital reserves include premiums arising from the
issue of shares and totalled €2,161 million (2018:
€2,118 million). The change amounting to €43 million
related to the share capital increase in conjunction
with the issue of shares of preferred stock to employees.
Revenue reserves
Revenue reserves comprise the non-distributed earn-
ings of companies consolidated in the Group Financial
Statements. In addition, remeasurements of the net
defined benefit obligation for pension plans are also
presented in revenue reserves.
It is proposed that the unappropriated profit of
BMW AG for the financial year 2019 amounting to
€1,646 million be utilised as follows:
-
Distribution of a dividend of €2.52 per share of
preferred stock (€141 million)
601,995,196
Proportion of total capital
-7
21
151
29
Inventories
Inventories comprise the following:
in € million
in € million
Trade receivables comprise the following:
31.12.2019
Gross carrying amount
2,590
2,600
Allowances for impairment of stage 2-
simplified procedure
-26
31.12.2018
Trade receivables
30
In addition, the previous year's figures have been
adjusted due to the change in the presentation of
vehicles coming out of leases that were previously
reported within leased products (adjustment effect
at 31 December 2018: increase of €592 million).
260
128
Financial assets
7,325
7,685
thereof non-current
1,370
thereof current
5,955
1,010
6,675
In June 2019, the Financial Services segment sold a
credit card portfolio based in the USA and amounting
to €216 million for strategic reasons.
From the financial year 2019 onward, certain advance
payments to suppliers for raw materials, supplies and
finished goods amounting to €536 million, which were
previously reported within other assets (line item
Prepaid expenses) have now been reclassified to inven-
tories. The previous year's figures have been adjusted
accordingly (adjustment effect at 31 December 2018:
decrease of €609 million). Furthermore, the compar-
ative figures for the previous financial year have been
note 6
adjusted to reflect the change in accounting policy
for volume-dependent bonuses and for manufacturer
lessors (see note 6) as well as the change in the pre- → see
sentation of deferred initial direct costs for operating
and finance leases and receivables originated. These
items are now reported within leased products and
receivables from sales financing (adjustment effect at
31 December 2018: decrease of €939 million).
Collateral assets comprise mainly customary collat-
eral (banking deposits) in connection with the sale
of receivables.
-20
Reversed (-)
Allowances for impairment of stage 3
-34
in € million
Advance payments to suppliers
Inventories
632
636
15,891
14,248
609
* Prior year's figures adjusted.
2018
Balance at 1 January
54
2,313
Allocated (+)
30
2019
808
financial services business
Vehicles held for sale in the
Net carrying amount
2,518
2,546
31.12.2019
31.12.2018*
Impairment allowances on trade receivables in accor-
dance with IFRS 9 developed as follows:
Finished goods and goods for resale
11,491
10,548
Work in progress, unbilled contracts
1,286
1,208
Raw materials and supplies
1,674
1,247
-46
2,330
295
Since 1 July 2019, future entitlements relating to
former members of two defined benefit plans in the
USA are being accounted for via a defined contribu-
tion plan. Past service cost resulted mainly from the
complete closure of the defined benefit plans.
-192
decrease of 0.25%
0.7
156
0.8
200
increase of 0.25%
-3.7
-779
-4.4
-1,097
decrease of 1 year
3.6
770
4.7
1,155
increase of 1 year
-2.7
-567
-0.8
-147
-0.7
In the UK, the sensitivity analysis for the pension
level trend also takes account of restrictions due to
caps and floors.
365
192
12
450
1,019
3
-20
-4
-21
-3.3
-7
-21
51
-4
-23
-1
138
110
59
308
79
Total
-810
2.8
Discount rate
a non-linear pattern, estimates made on the basis
of the specified sensitivities are only possible with
this restriction. The calculation of sensitivities using
ranges other than those specified could result in a dis-
proportional change in the defined benefit obligation.
It is only possible to aggregate sensitivities to a limi-
ted extent. Since the change in obligation follows
The sensitivity analysis provided below shows the
extent to which changes in individual factors - inde-
pendently of each other - could influence the defined
benefit obligation at the end of the reporting period.
100.0
100.0
100.0
100.0
100.0
100.0
3.9
6.8
51.5
54.5
4.8
5.0
18.8
29.0
48.5
Pension level trend
Average life expectancy
Pension entitlement trend
Change in defined benefit obligation
597
3.7
905
increase of 0.25%
15.7
3,334
17.4
4,290
decrease of 0.75%
decrease of 0.25%
-12.5
-13.6
-3,352
increase of 0.75%
in %
in € million
in %
31.12.2018
in € million
31.12.2019
-2,652
Simplified
General
Stage 3
Stage 1
Stage 2
Stage 3
General
Simplified
Total
Impairment allowances at 1 January 2019
363
175
12
482
1,032
Reclassification to Stage 1
2
-13
-1
-12
Reclassification to Stage 2
-17
in € million
149
Impairment allowances on receivables from sales
financing in accordance with IFRS 9, which only arise
within the Financial Services segment, developed
as follows:
The figures for the previous financial year have been
restated for the change in accounting policy for
→ see manufacturer lessors (see → note 6), as well as for
the change in the presentation of initial direct costs
previously reported within other assets (adjustment
effect at December 31, 2018: increase of €700 mil-
lion) and of residual value risk provisions, previously
reported within other provisions (adjustment effect at
31 December 2018: decrease of €441 million).
25
Receivables from sales financing
Receivables from sales financing comprise the fol-
lowing:
in € million
Credit financing for retail customers
31.12.2019
31.12.2018*
and dealerships
71,104
107
66,959
21,333
20,054
Receivables from
sales financing
92,437
87,013
* Prior year's figures adjusted.
7
note 6
Finance lease receivables
-16
74
Reclassification to Stage 3
Impairment allowances at 31 December 2019
361
209
12
517
1,099
in € million
Impairment allowances at 1 January 2018
Reclassification to Stage 1
44
Reclassification to Stage 2
Derecognition and origination of receivables
Write-off of receivables
Changes in risk parameters
Other changes
Impairment allowances at 31 December 2018
Impairment allowances include €74 million (2018:
€113 million) on credit-impaired receivables relating
to finance leases.
The estimated fair value of vehicles held as collateral
for credit-impaired receivables at the end of the report-
ing period totalled €541 million (2018: €506 million).
The carrying amount of assets held as collateral and
reclaimed as a result of payment default amounted to
€39 million (2018: €42 million).
Stage 1
Stage 2
Reclassification to Stage 3
45.5
24
44
-6
-24
175
144
Derecognition and origination of receivables
17
-26
-15
-23
-24
Write-off of receivables
-17
-133
-152
-17
-40
31
1
-8
Other changes
-2
29.3
Changes in risk parameters
77.3
16,705
879
746
6,402
7,306
7,169
8,653
Total with quoted market price
124
15
15
109
Other
Absolute return funds
268
|g|
103
47
29
221
74
Money market funds
93
19
93
15
14,450
19
Debt instruments
1,009
325
394
Real estate
55
1
1
thereof non-investment grade
918
851
216
256
702
595
(funds without a rating)
thereof mixed funds
307
316
307
316
thereof investment grade
1,280
1,168
1
270
256
911
Real estate funds
2,786
3,002
584
1,565
2,031
thereof investment grade
Debt instruments
Equity instruments
2018
2019
2018
2019
2018
2019
2018
2019
Total
Other
United Kingdom
Germany
COMPONENTS OF PLAN ASSETS
in € million
157
Plan assets in Germany, the UK and other countries
comprised the following:
Depending on the cash flow profile and risk struc-
ture of the pension obligations involved, plan assets
relating to defined benefit plans are invested in a
diversified portfolio.
7
27.4
407
91
172
2,705
34
7
550
757
2,202
2,238
thereof non-investment grade
(funds without a rating)
thereof mixed funds
9,144
10,752
518
716
585
5,891
3,402
4,275
11,930
13,754
552
592
5,774
6,648
5,604
6,513
2,144
5,224
678
54
1
9,721
9,137
8,167
883
1,049
21,340
18,937
The expected change arising from benefit payments
out of plan assets - which does not have an income
statement impact - is predicted to exceed employer
contributions to plan assets in the coming year by
€65 million. Plan assets of the BMW Group include
own transferable financial instruments amounting to
€8 million (2018: €5 million).
The BMW Group is exposed to risks arising both from
defined benefit plans and defined contribution plans
with a minimum return guarantee. The discount rates
used to calculate pension obligations are subject to
market fluctuation and therefore influence the level of
the obligations. Furthermore, changes in other actuar-
ial parameters, such as expected rates of inflation, also
have an impact on pension obligations. In order to
reduce currency exposures, a substantial portion of
plan assets is either invested in the same currency as
the underlying plan or hedged by means of currency
derivatives. As part of the internal reporting proce-
dures and for internal management purposes, finan-
cial risks relating to the pension plans are reported
using a value-at-risk approach by reference to the
pension deficit. The investment strategy is also subject
to regular review together with external consultants,
with the aim of ensuring that investments are struc-
tured to match the timing of pension payments and
the expected development of pension obligations. In
this way, fluctuations in pension funding shortfalls
are reduced.
158
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
The defined benefit obligation relates to current
employees, pensioners and former employees with
vested benefits as follows:
in %
65.9
67.6
31.12.2018
31.12.2019
31.12.2018
31.12.2019
11,320
31.12.2018
Other
United Kingdom
Germany
Former employees with vested benefits
Defined benefit obligation
Pensioners
Current employees
31.12.2019
31 December
4,487
4,635
65
31
605
640
36
1,110
1,303
1,039
20
12
669
1
21
13
Cash and cash equivalents
Absolute return funds
1,339
710
170
137
1,765
1,831
2,552
2,667
Other
Total without quoted market price
1,033
67
104
212
219
537
816
64.3
632
5.8
26
101,976
161
162
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
Bonds comprise:
Issuer
Interest
Issue volume
in relevant currency
(ISO-Code)
Weighted average
maturity period
(in years)
Weighted average
nominal interest rate
(in %)
BMW Finance N.V.
variable
EUR 5,000 million
1.9
0.0
variable
SEK 1,500 million
4.0
0.7
variable
USD 700 million
-33
2.4
1,063
93,883
114
-9
Commercial paper
4,461
-2,021
40
40
8
53,346
17,335
3
14,359
13,196
105
2,480
Financial liabilities towards companies in which an
investment is held
739
-210
529
Other (excluding interest payable)
604
-31
38
15
626
Liabilities relating to financing activities
7,037
JPY 19,100 million
2.5
NOK 500 million
fixed
1.5
0.8
GBP 1,150 million
fixed
1.9
fixed
3.8
NOK 1,500 million
fixed
1.8
5.0
SEK 1,750 million
fixed
2.5
5.3
USD 2,050 million
fixed
2.3
4.8
HKD 2,166 million
fixed
3.8
2.3
CNY 11,500 million
fixed
0.4
AUD 290 million
variable
6.9
fixed
3.0
2.4
fixed
EUR 25,900 million
6.3
variable
BMW Canada Inc.
3.0
5.0
AUD 30 million
fixed
1.0
7.6
EUR 2,500 million
fixed
3.0
6.2
USD 13,655 million
fixed
2.0
2.7
USD 3,658 million
variable
BMW US Capital, LLC
4.0
1.0
RON 240 million
3.3
5.8
351
Other assets
Payables to other companies in which an investment is held
Payables to subsidiaries
Social security
Sundry
Other liabilities
* Prior year's figures adjusted.
31.12.2019
31.12.2018*
6,103
5,021
5,038
4,976
3,635
3,112
2,971
2,940
1,265
945
815
Other advanced payments received for orders
850
765
Other taxes
USD 2,587 million
22
1.7
BMW Finance N.V.
EUR 300 million
31
-0.4
BMW India Financial Services Private Ltd.
INR 1,100 million
297
6.8
36
Other liabilities
Other liabilities comprise the following items:
in Mio. €
Refund liabilities for future leased products
Contract liabilities
Deferred income
Bonuses and sales aides
Deposits received
BMW US Capital, LLC
585
519
38
Contingent liabilities and other financial
commitments
Contingent liabilities
The following contingent liabilities existed at the
balance sheet date:
in € million
Investment subsidies
Litigation
Guarantees
Other
Contingent liabilities
31.12.2019
31.12.2018
284
139
275
125
46
14
618
OTHER DISCLOSURES
297
Financial Statements
→ Other Disclosures
Statements
781
192
92
109
102
1,834
2,003
23,066
21,119
Contract liabilities relate to obligations for service and
repair work as well as telematics services and roadside
assistance agreed to be part of the sale of a vehicle
(in some cases multi-component arrangements).
An amount of €2,255 million (2018: €2,134 million)
was released from contract liabilities in the financial
year and recognised as revenues from contracts
with customers.
Deferred income includes down payments received
on leases with customers as well as deferred grants.
Grants comprise mainly public sector funds to
promote regional structures and which have been
invested in the production plants in Brazil, Mexico,
Leipzig and Berlin. The grants are partly subject to
holding periods for the assets concerned of up to five
years and/or minimum employment figures. Grant
income is recognised in the income statement over
the useful lives of the assets to which it relates.
The previous year's figures have been adjusted for the
change in accounting policy for manufacturer lessors
(see note 6).
→ see
note 6
37
Trade payables
As in the previous year, trade payables are due within
one year.
163
164
Group
Financial
Notes to the Group
1,087
(in %)
Weighted average
maturity period
(in days)
1,554
2,146
intangible assets
Purchase commitments for
3,486
3,128
CAD 200 million
2.0
2.0
fixed
CAD 2,400 million
3.4
2.2
Other
variable
GBP 940 million
1.4
1.0
variable
165
SEK 500 million
166
Statements
Trade receivables
Cash and cash equivalents
Other
Credit card receivables
Loans to third parties
Marketable securities and investment funds
Other derivative instruments
Fair value hedges
Cash flow hedges
Derivative instruments
Financial assets
Receivables from sales financing
Other investments
ASSETS
in € million
The carrying amounts of financial instruments are
assigned to IFRS 9 categories in the following table.
Financial instruments
39
Notes to the Group
Financial Statements
→ Other Disclosures
Group
Financial
Weighted average
nominal interest rate
3.0
31.12.2018
3.0
8.1
fixed
GBP 1,450 million
4.3
1.5
fixed
NOK 1,000 million
10.0
3.3
fixed
CHF 600 million
6.8
0.5
The following details apply to commercial
Issuer
paper:
Issue volume
in relevant currency
(ISO-Code)
INR 4,000 million
Purchase commitments for
property, plant and equipment
fixed
3.0
31.12.2019
in € million
In addition to liabilities, provisions and contingent
liabilities, the following commitments exist for the
BMW Group at the end of the reporting period:
Other financial obligations
Lease liabilities
BMW Group has been notified that the U.S. Securities
and Exchange Commission ("SEC") is conducting an
investigation related to vehicle sales practices and
reporting of delivery figures. The potential risks for
BMW Group related to the SEC's investigation cannot
be quantified at the present time. Further disclosures
pursuant to IAS 37.86 cannot be provided at present.
In September 2019, the Japan Fair Trade Commission
conducted a search at BMW Japan Corp. in connection
with its market practises in relation to distributors.
These investigations are ongoing. Possible risks for
the BMW Group can neither be foreseen in detail nor
quantified at present. Further disclosures pursuant to
IAS 37.86 cannot be provided at present.
Regulatory authorities have ordered the BMW Group
to recall various vehicle models in conjunction with
airbags supplied by the Takata group of companies.
Provision for the costs involved has been recognised
within warranty provisions. In addition to the risks
already covered by warranty provisions, it cannot be
ruled out that further BMW Group vehicles will be
affected by future recall actions. Further disclosures
pursuant to IAS 37.86 cannot be provided at present.
The European Commission is currently conducting
an investigation in connection with antitrust allega-
tions against five German car manufacturers. The
BMW Group has provided for the potential outcome
of the investigation in the form of a provision mea-
sured on the basis of the Statement of Objections, at
→ see the best possible estimate (see also → note 10). In con-
nection with these allegations, numerous class action
lawsuits have been brought in the USA and Canada
as well as several private lawsuits in South Korea.
The class action lawsuits in the USA were initially
dismissed on the basis of the lack of conclusiveness.
The applicants resubmitted their claims in mid-2019
in an amended form. A decision on the five manufac-
turers' renewed claims for the dismissal of the class
action lawsuits is still pending. Class action lawsuits
in Canada and private lawsuits in South Korea are
at an early stage. Further civil lawsuits based on the
allegations are possible. In addition, the Chinese State
Administration for Market Regulation (SAMR) opened
antitrust proceedings against BMW AG in March 2019.
These proceedings are still at an early stage. Possible
risks for the BMW Group can neither be foreseen in
detail nor quantified at present. Further disclosures
pursuant to IAS 37.86 cannot be provided at present.
note 10
The BMW Group determines its best estimate of
contingent liabilities on the basis of the information
available at the date of preparation of the Group
Financial Statements. This assessment may change
over time and is adjusted regularly on the basis of new
information and circumstances. A part of the risks is
covered by insurance.
Other contingent liabilities comprise mainly risks
relating to taxes and customs duties.
0.8
fixed
KRW 120,000 million
3.0
2.6
fixed
CNY 6,000 million
4.8
-141
110
12,658
19,549
Liabilities from customer deposits (banking)
11,216
3,414
27
14,657
Liabilities to banks
7,903
2,204
1,329
11,436
Lease liabilities
544
1,363
988
11,597
2,895
7,952
62,165
Balance Sheet
35
Financial liabilities
Financial liabilities of the BMW Group comprise the
following:
31.12.2019
in € million
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
Total
Bonds
14,077
35,801
12,287
Asset-backed financing transactions
Commercial paper
2,615
2,615
Maturity later
than five years
Total
Bonds
9,762
2,615
Commercial paper
14,657
Liabilities from customer deposits (banking)
11,436
Liabilities to banks
62,165
Bonds
Financial liabilities
LIABILITIES
31,682
Maturity between
one and five years
one year
in € million
Maturity within
Derivative instruments
Other
Financial liabilities
1,149
886
61
2,096
→ Notes to the
637
419
1,327
46,093
55,536
15,111
116,740
31.12.2018
271
2,045
Notes to the Group
Financial Statements
160
-104
5,550
1,617
Obligations for personnel and
social expenses
2,819
6
1,448
31.12.2019
3
-1,713
-67
2,496
1,495
Other obligations
-2,561
2,087
168
69
33
Other provisions
Other provisions changed during the year as follows:
in € million
1.1.2019*
Translation
differences
Additions
Reversal of
discounting
thereof due
Utilised
Reversed
31.12.2019 within one year
Statutory and non-statutory warranty
obligations, product guarantees
5,147
2,831
-7
10
10
13,209
7,421
* Prior year's figures adjusted.
Depending on when claims occur, it is possible that
the BMW Group may be called upon to fulfil the
warranty or guarantee obligations over the whole
period of the warranty or guarantee. Expected reim-
bursement claims at 31 December 2019 amounted to
€1,086 million (2018: €933 million) and are disclosed
within other assets (see → note 28).
Provisions for obligations for personnel and social
expenses comprise mainly performance-related remu-
neration components, early retirement part-time work-
ing arrangements and employee long-service awards.
The provisions for other obligations cover numerous
identifiable specific risks and uncertain obligations, in
particular for litigation and liability risks, including the
provision recognised for the ongoing EU Commission's
antitrust proceedings. Further information is provided
in note 10.
Other obligations for ongoing operational expenses
include in particular expected payments for bonuses
and other price deductions.
→ see
note 28
→ see
note 10
note 6
The figures for the previous financial year have been
restated for the change in accounting policy for
→ see manufacturer lessors (see → note 6), as well as for the
changes in the presentation of residual value risk pro-
visions for finance leases and vehicle financing, which
were previously reported in other provisions and
have now been reclassified to receivables from sales
financing (adjustment effect at 31 December 2018:
decrease of €441 million).
34
Income tax liabilities
Current income tax liabilities totalling €963 million
(2018: €1,158 million) include €89 million (2018:
€96 million) which are expected to be settled after
more than twelve months. Liabilities may be settled
earlier than this depending on the timing of the
underlying proceedings.
159
-907
-5,091
181
7,532
-440
-698
3,293
2,489
Other obligations for ongoing
operational expenses
1,348
Group
Financial
Statements
25
-377
-38
1,870
1,820
Other provisions
11,401
93
912
3,889
90,342
Total
-1,754
-43
44
-7
11,436
Lease liabilities
105
-440
6
3,224
2,895
Commercial paper
2,480
134
1
13,196
2,615
Liabilities to banks
96
31.12.2019
Bonds
53,346
7,342
618
859
62,165
Asset-backed financing transactions
17,335
1,869
345
19,549
Liabilities from customer deposits (banking)
14,359
202
14,657
Financial liabilities towards companies in which an
investment is held
529
31.12.2018
Bonds
44,880
7,784
707
-33
Asset-backed financing transactions
16,855
288
192
Liabilities from customer deposits (banking)
13,572
557
227
Liabilities to banks
Other changes
Changes in
fair values
Changes due to
exchange rate
factors
Changes due to
the acquisition
or disposal of
companies
-233
296
Other (excluding interest payable)
626
Liabilities relating to financing activities
101,976
202
7,322
Other changes
36
1,059
903
3,217
114,477
in € million
1.1.2018
Cash inflows/
outflows
864
fair values
Changes in
Changes due to
exchange rate
factors
326
242
21,812
461
70,625
IFRS 9 category
Not assigned to an
At fair value
through profit
or loss
At fair value
through other com-
prehensive income
114
915
646
Other
Derivative instruments
2,480
2,480
1,244
50
444
3,889
8,058
1,519
Remaining other assets
413
Collateral assets
2,641
Receivables from companies in which an investment is held
Commercial paper
308
462
2,518
11,574
260
14
40
1,058
Receivables from subsidiaries
679
105
49
557
434
1,101
Financial liabilities
38,825
51,851
12,921
103,597
Planned future cash outflows from variable lease
payments, which are not taken into account in the
measurement of lease liabilities, are expected to
amount to €56 million.
Similarly, potential future cash outflows amounting
to €1,393 million (undiscounted) have not been taken
into account in the measurement of lease liabilities
as it is not reasonably certain that the leases will be
renewed (or not terminated). These cash outflows
relate to periods of up to 59 years.
Liabilities related to financing activities can be recon-
ciled as follows:
in € million
1.1.2019
Cash inflows/
outflows
Changes due to
the acquisition
or disposal of
companies
1,675
32,592
10,992
53,346
9
Lease liabilities
13,196
1,225
3,293
8,678
Liabilities to banks
47
14,359
3,289
10,961
Liabilities from customer deposits (banking)
17,335
11,603
5,732
Asset-backed financing transactions
109
At amortised cost
2,341
19,549
Liabilities from customer deposits (banking)
Liabilities to banks
* Prior year's figures adjusted - see note 25.
31.12.2019
Fair value
Carrying amount
Fair value
31.12.2018
Carrying amount*
Asset-backed financing transactions
73,699
90,445
87,013
446
444
680
675
62,757
62,165
53,831
70,625
53,346
Bonds
in € million
9,669
697
556
422
Payables to subsidiaries
Payables to other companies in which an investment is held
92
781
Remaining other liabilities
Marketable securities and investment funds
5,665
118,129
1,675
* Prior year's figures adjusted - see note 25. The carrying amounts of cash flow hedges and fair value hedges are categorised as at fair value through profit or loss for the sake of clarity.
Receivables from sales financing are shown including finance and operating leases.
167
168
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Other Disclosures
The following table shows the fair values and carrying
amounts of financial assets and liabilities that are
measured at cost or amortised cost and whose carry-
ing amounts differ from their fair value. Due to their ¬
predominantly short-term nature, the fair value of
other financial assets and liabilities measured at amor-
tised cost corresponds to the carrying amount. For
this reason, these items are not disclosed separately.
Total
1,101
19,659
17,443
31.12.2019
Level hierarchy in accordance with IFRS 13
Level 1
Level 2
Level 3
4,582
365
106
355
462
Interest rate risks
14
74
267
5
1,155
Currency risks
723
Raw material market price risks
218
Asset-backed financing transactions
1,274
19,549
Derivative instruments (liabilities)
Raw material market price risks
17,335
14,739
14,657
14,374
14,359
12,071
11,436
13,277
13,196
Other risks
With effect from the financial year 2019, the fair
value and carrying amounts of receivables from
sales financing do not include receivables relating to
finance and operating leases. The fair value of these
receivables amounts to €22,741 million (carrying
amount: €21,812 million) at the balance sheet date.
are classified in the following table on the basis of
their measurement levels in accordance with IFRS 13.
Where the fair value was required for a financial
instrument for disclosure purposes, the discounted
cash flow method was used, taking account of the
BMW Group's own default risk. The fair values of
these items are allocated to Level 2 in accordance
with IFRS 13.
in € million
Marketable securities, investment funds and collateral assets
Other investments
Cash equivalents
Loans to third parties
Derivative instruments (assets)
Interest rate risks
Currency risks
At 31 December 2019, financial assets and liabilities
measured at fair value in accordance with IFRS 97
105
Receivables from sales financing
Trade payables
21,577
in € million
ASSETS
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Marketable securities and investment funds
Loans to third parties
Credit card receivables
Other
Cash and cash equivalents
At amortised cost
31.12.2018*
At fair value
through other com-
prehensive income
At fair value
through profit
1,020
127,391
Total
17,606
Derivative instruments
Other liabilities
Cash flow hedges
Fair value hedges
Other derivative instruments
Lease liabilities
Other
1,327
10,182
or loss
805
1,020
2,895
Other liabilities
Payables to subsidiaries
192
Payables to other companies in which an investment is held
519
Remaining other liabilities
4,749
271
87,013
Trade payables
840
3,671
4,264
LIABILITIES
Financial liabilities
Bonds
53,346
Liabilities to banks
13,196
Liabilities from customer deposits (banking)
104,665
14,359
2,480
Asset-backed financing transactions
17,335
Cash flow hedges
Fair value hedges
Other derivative instruments
Other
429
Lease liabilities
Commercial paper
Total
Derivative instruments
Remaining other assets
1,444
675
3,671
970
654
17
3
244
128
10,094
483
2,546
293
885
1,916
Receivables from companies in which an investment is held
Collateral assets
Receivables from subsidiaries
Other assets
Trade receivables
295
Total
628
1,772
1,014
16
704
38
Gross carrying amount of financial assets
with poor credit ratings
5,291
in € million
Marketable securities, investment funds and collateral assets
Other investments
Cash equivalents
Derivative instruments (assets)
89,539
199
Loans to third parties
Stage 3
416
421
Interest rate risks
121
753
79,805
Gross carrying amount of financial assets
with good credit ratings
Expected
credit loss
Total*
Simplified
General
Stage 2
31.12.2018
Stage 1
in € million
1,099
93,536
1,014
2,567
Currency risks
409
343
Other risks
Financial instruments recognised at fair value for
which no market price is available are allocated to
Level 3. Fair values are determined in accordance with
the following table:
in € million
Unquoted equity instruments
Convertible bonds
31.12.2019
Fair value
355
14
Options on unquoted equity instruments
5
Valuation method
Input Parameter
Market-based approach
Milestone analysis
(quantitative and qualitative factors)
Market-based approach
Milestone analysis
(quantitative and qualitative factors)
Financial ratios
Technical
company-specific ratios
Liquidity-specific ratios
80,979
Financial ratios
Technical
company-specific ratios
Liquidity-specific ratios
With effect from 30 June 2019, marketable securities
amounting to €187 million were transferred from
Level 1 to Level 2 in view of the fact that their fair value
is determined on the basis of observable market data. T
Raw material market price risks
Any transfers between fair value hierarchy levels are
made at the end of the relevant reporting period.
4
Derivative instruments (liabilities)
Interest rate risks
Currency risks
Raw material market price risks
31.12.2018
Level hierarchy in accordance with IFRS 13
Level 1
Level 2
Level 3
4,641
164
265
885
3
1,069
713
191
923
269
Cash outflows
4,393
Cash outflows
With gross settlement
DERIVATIVE FINANCIAL LIABILITIES
Other financial liabilities
Commercial paper
Trade payables
Liabilities from customer deposits (banking)
Liabilities to banks
Asset-backed financing transactions
Bonds
NON-DERIVATIVE FINANCIAL LIABILITIES
in € million
Total financial liabilities
Cash outflows
With net settlement
Cash inflows
Financial ratios
Cash inflows
With gross settlement
With net settlement
Total financial liabilities
11,277
12,446
1,378
2,317
8,751
20,345
12,090
8,255
65,049
12,595
37,477
14,977
Total
Maturity later
than five years
Maturity between
one and five years
Maturity within
one year
31.12.2019
Cash outflows
Gross carrying amount of financial assets
with medium credit ratings
DERIVATIVE FINANCIAL LIABILITIES
Commercial paper
990
510
2,422
84,385
Total
592
1,821
990
37
607
187
with poor credit ratings
Gross carrying amount of financial assets
189
5,507
52
1,062
88,307
Other financial liabilities
1,050
Further disclosures relating to credit risk - in particu-
lar with regard to the amounts of impairment losses
recognised - are provided in the explanatory notes
Trade payables
Liabilities from customer deposits (banking)
Liabilities to banks
Asset-backed financing transactions
Bonds
NON-DERIVATIVE FINANCIAL LIABILITIES
in € million
The following table shows the maturity structure of
expected contractual cash flows (undiscounted) for
financial liabilities:
Liquidity risk
→ Other Disclosures
Notes to the Group
Financial Statements
Group
Financial
Statements
174
173
26 and 30
notes 25,
to the relevant categories of receivables in → notes 25, → see
26 and 30.
* Prior year's figures adjusted.
Market-based approach
Milestone analysis
(quantitative and qualitative factors)
Unquoted equity
instruments
Exercise price
296
155
Net gains and losses of financial instruments measured
at fair value through profit or loss mainly include gains
and losses arising on the fair value measurement of
stand-alone derivatives, on marketable securities and
shares in investment funds, and on other investments.
Net gains and losses arising on financial assets mea-
sured at amortised cost mainly include exchange
rate gains and losses as well as expenses and income
relating to impairment losses. Net gains and losses
arising on financial liabilities measured at amortised
cost mainly include exchange rate gains and losses.
Interest income arising on financial assets measured
at amortised cost mainly relates to the interest income
earned on credit financing and reported within
revenues. Interest expense for financial liabilities
measured at amortised cost amounted to €1.9 billion
(2018: €1.8 billion).
Net gains and losses arising on financial instruments
measured at fair value through other comprehensive
income relate to marketable securities and shares
→ see in investment funds and are disclosed in → note 19.
Interest income arising on financial assets measured
at fair value through other comprehensive income
amounted to €49 million (2018: €58 million) and
interest expense to €41 million (2018: €47 million).
note 19
172
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Other Disclosures
Credit risk
The BMW Group is exposed to counterparty credit
risks if contractual partners, for example a retail cus-
tomer or a dealership, are unable or only partially able
to meet their contractual obligations. Information on
the management of credit risk for receivables from
financial services is provided in the Combined Man-
agement Report (see section Report on Outlook, Risks
and Opportunities).
Notwithstanding the existence of collateral accepted,
the carrying amount of financial assets (with the
exception of derivative financial instruments) gener-
ally represents the maximum credit risk. In addition,
the credit risk is increased by additional unutilised
loan commitments in the dealership financing
line of business. Total credit risk at the end of the
reporting period amounted to €31,943 million (2018:
€29,403 million).
In the case of all relationships underlying non-deriva-
tive financial instruments, in order to minimise the
credit risk and depending on the nature and amount
of exposure, collateral is required, credit information
and references obtained or historical data based on the
existing business relationship, in particular payment
behaviour, reviewed.
In the case of trade receivables, customers are regularly
assessed with regard to their credit risk. Depending
on contractual status, necessary measures, such as
dunning procedures, are initiated in good time.
The credit risk relating to cash deposits and derivative
financial instruments is minimised by the fact that the
Group only enters into such contracts with parties of
first-class credit standing.
Within the financial services business, items financed
for retail customers and dealerships (such as vehi-
cles, facilities and property) serve as first-ranking
collateral with a recoverable value. Security is also
put up by customers in the form of collateral asset
pledges, asset assignment and first-ranking mortgages,
supplemented where appropriate by warranties and
guarantees. Items previously held as collateral that
are subsequently acquired relate mainly to vehicles.
As a rule, these assets can be converted into cash
at short notice through the dealership organisation.
Creditworthiness testing is an important aspect of
the BMW Group's credit risk management. Every
borrower's creditworthiness is tested for all credit
financing and lease contracts entered into by the
BMW Group. In the case of retail customer financing,
creditworthiness is assessed using validated scoring
systems integrated into the acquisition process. In
the area of dealership financing, creditworthiness is
assessed by means of ongoing credit monitoring and
an internal rating system that takes account not only
of the material credit standing of the borrower, but
also of qualitative factors such as past reliability in
business relations.
203
The credit risk on trade receivables is assessed
mainly on the basis of information relating to over-
due amounts. The gross carrying amounts of these
receivables are allocated in accordance with IFRS 9
to overdue ranges used for management purposes
as follows:
160
-1,012
-833
-913
-913
787
1,263
1,064
762
Non-derivative financial assets and liabilities are only
offset if a legally enforceable right currently exists and
it is actually intended to offset the relevant amounts.
No financial assets and liabilities have been netted
in the BMW Group due to the fact that the necessary
requirements for netting have not been met.
7
Gains and losses on financial instruments
The following table shows the net gains and losses
arising on financial instruments in accordance with
IFRS 9:
in € million
Financial instruments measured at fair value through profit or loss
Financial assets measured at amortised cost
Financial liabilities measured at amortised cost
2019
2018
-150
-833
in € million
1-30 days overdue
Stage 1
31.12.2019
Stage 2
Stage 3
General
Simplified
Total
Expected
credit loss
Gross carrying amount of financial assets
with good credit ratings
85,399
696
378
86,473
272
Gross carrying amount of financial assets
with medium credit ratings
4,102
in € million
Not overdue
on default probabilities. The related gross carrying
amounts in accordance with IFRS 9 are allocated as
follows:
2,600
31.12.2019
31.12.2018
1,947
2,066
369
375
31-60 days overdue
89
34
61-90 days overdue
40
29
More than 90 days overdue
145
96
Total
2,590
Receivables from sales financing are allocated to inter-
nally defined rating categories based on credit risk.
The classification into creditworthiness levels is based
1,675
1,977
2,096
31 December 2018
Unquoted equity
instruments
Convertible bonds
Options on
unquoted equity
instruments
265
3
90
14
-38
-3
Financial Instru-
ments Level 3
272
104
-41
33
34
5
Gains (+)/losses (-) recognised in accumulated other equity
Gains (+)/losses (-) recognised in the income statement
Currency translation differences
5
Disposals
1 January 2018
169
170
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Other Disclosures
Financial instruments allocated to Level 3 relate
mainly to investments in a private equity fund. For
valuation purposes, the investment advisor provides
the external fund manager with relevant, invest-
ment-specific information on an ongoing basis (at
least quarterly). The latter subsequently assesses the
underlying individual companies in accordance with
the guidelines for international private equity and
venture capital valuations (IPEV).
As part of the process of analysing valuations, the
external fund manager reviews the investment-specific
milestones, including an analysis of key financial,
technical and liquidity-specific performance indica-
tors. Based on this analysis, it is considered whether
the price set at the most recent financing round is
acceptable as a reasonable market valuation, in par-
ticular for early-stage or growth-phase investments.
Key performance indicators used for the purpose
of milestone analysis are highly dependent on the
business model underlying the investment; typical
technical key performance indicators relate to licenses &
and patents held, the stage of technology development
such as evidence of feasibility and prototypes, market
entries, customer and user growth and appointments
to key management positions. Key financial perfor-
mance indicators used are revenues, EBITDA and the
corresponding growth rate and/or development of
specific contribution margins. Key liquidity-specific
performance indicators are cash on hand, cash burn
rates and prospects for future financing rounds.
A detailed listing and quantification of potential sen-
sitivities is not considered meaningful in view of the
valuation methodology applied. A change of +/-10%
in the relevant input parameter (price of the last
financing round) would normally also give rise to a
similar change of +/-10% in the valuation. Similarly,
a significant reduction in growth rates or margins
could result in impairment and therefore to a lower
valuation of an investment.
The balance sheet carrying amount of Level 3 financial
instruments developed as follows:
in € million
1 January 2019
Additions
Disposals
Gains (+)/losses (-) recognised in accumulated other equity
Gains (+)/losses (-) recognised in the income statement
Currency translation differences
31 December 2019
Gains and losses recognised in the income state-
ment in the financial year 2019 included unrealised
gains and losses totalling a net positive amount of
€32 million.
in € million
Additions
355
14
5
265
3
4
272
Offsetting of financial instruments
Derivative financial instruments of the BMW Group
are subject to legally enforceable master netting agree-
ments or similar contracts. However, receivables and
payables relating to derivative financial instruments
are not netted due to non-fulfilment of the stipulated
criteria. Offsetting would have the following impact
on the carrying amounts of derivatives:
171
in € million
Balance sheet amounts as reported
Gross amount of derivatives which can be offset in case of insolvency
Net amount after offsetting
31.12.2019
Reported on Reported on equity
assets side and liabilities side
31.12.2018
Reported on
assets side
Reported on equity
and liabilities side
1,620
10
10
47
45
374
3,505
Options on
unquoted equity
Financial Instru-
Convertible bonds
instruments
ments Level 3
111
Technical
company-specific ratios
Liquidity-specific ratios
2
3
-4
-2
2
115
106
-6
|| 2
103
27
9,848
10,182
745
1,022
5,279
5,173
1,784
1,815
1,797
1,833
Aluminium (EUR/t)
Lead (EUR/t)
Copper (EUR/t)
Palladium (EUR/oz)
Platinum (EUR/oz)
Disclosures on hedging measures
The following disclosures on hedging measures
include derivatives of fully consolidated companies
that have been designated as a hedging instrument.
The amounts shown in the table are stated before
deferred taxes and take account of additional effects
arising from the application of the modified closing
rate method.
31.12.2018
31.12.2019
Raw material price risks
Average
hedging rates
327
419
Cash flow at risk
916
125.29
945
177
The following tables show key information on hedged
items for each risk category as well as the balances
Interest rate risks
Fair Value Hedges
Raw material price risks
Currency risks
Cash Flow Hedges
in € million
Interest rate risks
Fair Value Hedges
Raw material price risks
Cash Flow Hedges
Currency risks
in € million
The following tables provides information on the nomi-
nal amounts, carrying amounts and fair value changes
of contracts designated as hedging instruments:
→ Other Disclosures
Notes to the Group
Financial Statements
Group
Financial
Statements
178
Information on average interest hedge rates is not
provided, since interest rate derivatives designated
as hedging instruments are used exclusively to hedge
items in fair value hedges. The hedge rates therefore
correspond in each case to current market interest rate
level. Most of the hedges used in this context relate
to variable yield curves relating to the euro, US dollar
and British pound currency areas.
7
124.92
1,328.59
1,526
Raw material price risks
Nominal amounts of
hedging intruments
12,027
24,295
4,619
Interest rate risks
9,097
17,159
Maturity later
than five years
and five years
Maturity
between one
Maturity within
one year
31.12.2018
in € million
31.12.2019 31.12.2018
in € million
The following table shows the potential negative impact
for the BMW Group resulting from fluctuations in
prices across all categories of raw materials, measured
on the basis of the cash-flow-at-risk approach. The
risk at each reporting date for the following financial
year was as follows:
2,109
1,288.91
32
35,501
EUR/KRW
EUR/JPY
0.79
0.87
EUR/GBP
1.17
1.16
EUR/USD
8.26
8.26
EUR/CNY
31.12.2018
31.12.2019
Average
hedging rates
Currency risks
The following table shows the average hedging rates of
hedging transactions used by the BMW Group.
Currency risks
12,059
23,304
The potential negative impact on earnings is calculated
at the reporting date for each raw materials category
for the following financial year on the basis of current
market prices and exposure with a confidence level of
95%. The risk mitigating effect of correlations between
the various categories of raw materials is taken into
account when the risks are aggregated.
in € million
Currency risks
Assets
Carrying Amounts
58,723
8,631
relationships
Continuing hedge
Change in value
of hedged items
Liabilities
Balances in accumulated other equity
31.12.2019
Assets
Carrying Amounts
of designated components within accumulated other
equity:
27
556
654
52,580
479
-250
-453
-23
31.12.2018
1,167
relationships
Terminated hedge
-33
49,846
8,930
-262
453
941
-119
relationships
Continuing hedge
Change in value
of hedged items
Liabilities
Balances in accumulated other equity
relationships
Terminated hedge
-759
Cash Flow Hedges
334
3,667
23,843
of designated
components
Change in fair value
Liabilities
Assets
Nominal amounts
Carrying Amounts
31.12.2019
Interest rate risks
Fair Value Hedges
Raw material price risks
Currency risks
Cash Flow Hedges
in € million
Interest rate risks
Fair Value Hedges
Raw material price risks
60
189
590
3,571
121
363
651
26,256
Change in fair value
of designated
components
Liabilities
Assets
Nominal amounts
Carrying Amounts
31.12.2018
758
271
1,244
59,999
250
215
266
-479
14,809
exposure is compared to all hedges that are in
place. The net cash flow surplus represents an uncov-
ered risk position. The cash-flow-at-risk approach
involves showing the impact of potential raw materials
market price fluctuations on operating cash flows
on the basis of probability distributions. Volatilities
and correlations serve as input factors to assess the
relevant probability distributions.
12,938
792
454
318
20
2,478
2,478
9,669
9,669
14,485
107
3,368
11,010
14,552
900
3,804
18,652
11,710
731
6,942
665
19,218
54,576
51,732
841
81
515
245
841
81
515
245
-29,674
-213
-10,974
-18,487
31,070
213
11,639
1,396
13,088
56,531
34,196
-17,727
-32,302
52,909
598
18,485
33,826
2,256
-26
758
1,524
4,394
1,686
1,958
750
2,618
2,618
10,182
-624
11,546
-50,653
338
10,789
Total
Maturity later
than five years
Maturity between
one and five years
one year
Maturity within
31.12.2018
132,834
15,683
58,443
58,708
735
735
23
23
22
338
374
374
This
119,396
an overall positive cash flow can arise due to the
various yield curves used. At 31 December 2019 credit
commitments available at short notice to dealerships
which had not been called upon at the end of the
reporting period amounted to €10,776 million (2018:
€9,010 million).
Maturity within
one year
in € million
as follows:
The nominal amounts of hedging instruments were
for
The starting point for analysing raw materials price
risk is to identify planned purchases of raw materials
or components containing raw materials, the so-called
"exposure". At each reporting date, the exposure
the following financial year amounted to:
The economic relationship between the hedged item
and the hedging instrument is based essentially on
the fact that they have the same basis and term. The
BMW Group designates only the commodity price
index-linked raw material surcharge as a hedged item.
Other price components contained in the contract are
not designated as being part of the hedge relationship
as no effective hedging instruments exist for these
components.
The BMW Group is exposed to market price risks on
raw materials. In order to hedge these risks, the Group
mainly used forward commodity contracts. As part of
the implementation of the risk management strategy,
the extent to which risk exposures should be hedged
is decided at regular intervals and the corresponding
hedging ratio defined.
1,123
1,094
31.12.2018
31.12.2019
Raw materials price risk
Value at risk
in € million
The following table shows for interest-rate-sensitive
exposures of the BMW Group the potential fair value
fluctuation compared with the expected value, mea-
sured on the basis of the value-at-risk approach:
The BMW Group applies a value-at-risk approach
throughout the Group for internal reporting purposes
and to manage interest rate risk. This approach is
based on a historical simulation in which the potential
future fair value losses of the interest rate portfo-
lios are compared across the Group with expected
amounts on the basis of a holding period of 250 days
and a confidence level of 99.98%. The risk mitigating
effect of correlations between the various portfolios
is taken into account when the risks are aggregated.
31.12.2019
The transition to the newly created and/or revised
benchmark interest rates is being managed and moni-
tored within the framework of a multidisciplinary
project, the
e scope of which is likely to cover changes to
systems, processes, risk and valuation models, as well
as dealing with the related impact at an accounting
and financial reporting level. The uncertainty arising
from interest rate benchmark reform is expected to
persist most likely until the end of 2021.
Maturity
between one
and five years
in € million
40,631
23,146
1,920
1,651
Raw material price risks
Nominal amounts of
hedging intruments
4,174
4,382
12,938
29,691
6,672
Interest rate risks
9,020
14,823
Currency risks
31.12.2018
31.12.2019
Raw material price exposures
Maturity later
than five years
The cash flows from non-derivative liabilities com-
prise principal repayments and the related interest.
The amounts disclosed for derivative instruments
comprise only cash flows relating to derivatives that
have a negative fair value at the balance sheet date.
In the case of derivatives with a negative fair value,
As a result of the ongoing reform and replacement
of specific benchmark interest rates, uncertainty
arises regarding the timing and exact nature of those
changes. Overall, a considerable number of contracts
within the BMW Group are directly affected by the
reform of benchmark interest rates. Hedging rela-
tionships within the BMW Group are based primarily
on USD LIBOR and GBP LIBOR reference interest
rates, whereby those rates are designated as the
hedged risk in fair value hedges. In the case of these
hedging relationships, uncertainty arises with respect
to the identifiability of the designated benchmark
interest rates.
Interest rate risk is managed through the use of in-
terest rate derivatives. As part of the implementation
of the risk management strategy, interest rate risks
are monitored and managed at regular intervals. The
interest rate contracts used for hedging purposes
comprise mainly swaps, which, if hedge accounting
is applied, are accounted for as fair value hedges. The
economic relationship between the hedged item and
the hedging instrument is based on the fact that the
main parameters of the hedged item and the related
hedging instrument, such as start date, term and
currency, are the same.
28,407
33,950
31.12.2018
31.12.2019
Currency exposure
in € million
The BMW Group measures currency risk using a cash-
flow-at-risk model. The analysis of currency risk is
based on forecast foreign currency transactions which
could result in exposures to surpluses of foreign cur-
rency cash inflows and cash outflows. At the end of
the reporting period, the overall currency exposure –
in each case for the following year and determined by
aggregating the individual currency exposures based
on their absolute amount - was as follows:
As part of the implementation of the risk management
strategy, the extent to which risk exposures should be
hedged is decided at regular intervals. The economic
relationship between the hedged item and the hedging
instrument is based essentially on the fact that they
are denominated in the same currency and have the
same maturities.
As an enterprise with worldwide operations, the
BMW Group conducts business in a variety of cur-
rencies, from which currency risks arise. In order to
hedge currency risks, the BMW Group holds, as at
31 December 2019, derivative financial instruments
mostly in the form of forward currency contracts and
currency swaps.
Currency risk
Currency, interest rate and raw materials market price
risks of the BMW Group are managed at a corporate
level.
Protection against such risks is provided in the first
instance though natural hedging which arises when
the values of non-derivative financial instruments
have matching maturities and amounts (netting).
Derivative financial instruments are used to reduce
the risk remaining after netting.
The principal market risks to which the BMW Group
is exposed are currency risk, interest rate risk and raw
materials market price risk.
Market risks
Further information is provided in the Combined
Management Report.
As a further reduction of risk, a syndicated credit line
totalling €8 billion (2018: €8 billion) from a consortium
of international banks is available to the BMW Group.
Intragroup cash flow fluctuations are balanced out by
the use of daily cash pooling arrangements.
Solvency is assured at all times by managing and
monitoring the liquidity situation on the basis of
a rolling cash flow forecast. The resulting funding
requirements are covered by a variety of instruments
placed on the world's financial markets, with the aim
to minimise risk by matching maturities with financ-
ing requirements and in alignment with a dynamic
target debt structure.
This exposure is compared to all hedges that are in
place. The net cash flow surplus represents an uncov-
ered risk position. The cash-flow-at-risk approach
involves showing the impact of potential exchange
rate fluctuations on operating cash flows on the basis
of probability distributions. Volatilities and correla-
tions serve as the main input factors to determine the
relevant probability distributions.
For selected fixed-interest assets, part of the interest
rate risk is hedged on a portfolio basis. In this case,
swaps are used as the hedging instrument. Hedge
relationships are terminated and redesignated on a
monthly basis at the end of each reporting period,
thereby taking account of the constantly changing
content of each portfolio.
The potential negative impact on earnings is calcu-
lated at the reporting date for each currency for the
following financial year on the basis of current market
prices and exposures with a confidence level of 95%.
The risk mitigating effect of correlations between the
various currencies is taken into account when the
risks are aggregated.
in € million
60,356
55,697
Fair values of interest rate portfolios
31.12.2018
31.12.2019
in € million
The fair value of the Group's interest rate portfolios
was as follows at the end of the reporting period:
Interest rate risks arise when funds are borrowed and
invested with differing fixed-rate periods or differing
terms. At the BMW Group, all items subject to, or
bearing, interest are exposed to interest rate risk and
can therefore affect both the assets and liabilities side
of the balance sheet.
Interest rate risk
Notes to the Group
Financial Statements
→ Other Disclosures
Group
Financial
Statements
176
175
431
487
31.12.2019 31.12.2018
Cash flow at risk
The following table shows the potential negative impact
for the BMW Group for the following year resulting
from unfavourable changes in exchange rates, mea-
sured on the basis of the cash-flow-at-risk approach.
Further information is provided in the "Report on
Outlook, Risks and Opportunities” section of the
Combined Management Report.
22
10,749
2018
2019
2018
DELTON Health AG (formerly DELTON AG)
2,065
3,536
23,386
20
34
DELTON Logistics S.à r.l.
1,473
21,596
14
1,871
Payables
at 31 December
2,235
6
SOLARWATT GmbH
453
358
1
8
4
ALTANA AG
2,529
2,322
462
UnternehmerTUM GmbH
104
58
DELTON Technology SE
EnviroChemie GmbH
2019
Receivables
at 31 December
at 31 December
2018
2019
2018
2019
2018
BMW Brilliance Automotive Ltd.
9,227
7,691
107
99
2,639
1,829
at 31 December
496
Business relationships of the BMW Group with other
associated companies and joint ventures as well as
with non-consolidated subsidiaries are small in scale.
Stefan Quandt, Germany, is a shareholder and Deputy
Chairman of the Supervisory Board of BMW AG.
He is also the sole shareholder and Chairman of
the Supervisory Boards of DELTON Health AG, Bad
Homburg v.d.H., and DELTON Technology SE,
Bad Homburg v.d.H., as well as the sole shareholder
of DELTON Logistics S.à r.l., Grevenmacher, which
via its subsidiaries, performed logistic-related services
for the BMW Group during the financial year 2019.
In addition, the Delton companies held by Stefan
Quandt acquired vehicles from the BMW Group by
way of leasing.
Stefan Quandt, Germany, is also the indirect major-
ity shareholder of SOLARWATT GmbH, Dresden.
Cooperation arrangements are in place between the
BMW Group and SOLARWATT GmbH, Dresden,
within the field of electric mobility. The focus of this
cooperation is on the provision of complete photo-
voltaic solutions for rooftop systems and carports
to BMW i customers. In 2019 SOLARWATT GmbH,
Dresden, acquired vehicles from the BMW Group
by way of leasing.
Susanne Klatten, Germany, is a shareholder and
member of the Supervisory Board of BMW AG and
also a shareholder and Deputy Chairwoman of the
Supervisory Board of ALTANA AG, Wesel. In 2019,
ALTANA AG, Wesel, acquired vehicles from the
BMW Group, mainly by way of leasing.
Susanne Klatten, Germany, is also the sole share-
holder and Chairwoman of the Supervisory Board
of UnternehmerTUM GmbH, Garching. In 2019,
the BMW Group bought in services from Unterne-
hmerTUM GmbH, Garching, mainly in the form of
consultancy and workshop services.
In addition, Susanne Klatten, Germany, and Stefan
Quandt, Germany, are indirectly sole shareholders of
Entrust Datacard Corp., Shakopee, Minnesota. Stefan
Quandt is also a member of the supervisory board of
this entity. In 2019, Entrust Datacard Corp., Shakopee,
Minnesota, acquired vehicles from the BMW Group
by way of leasing.
Seen from the perspective of BMW Group entities,
the volume of transactions with the above-mentioned
entities was as follows:
in € thousand
Supplies and services
performed
2019
Supplies and services
received
2018
2019
2018
772
28
2,651
107
401
1,527
The members of the Board of Management in office at
the end of the reporting period hold 36,921 shares of
BMW common stock based on holding requirements
arising from share-based remuneration for the finan-
cial years 2015 to 2018 (2018: 65,960).
The share-based remuneration component is measured
at its fair value at each balance sheet date between
grant and settlement date, and on the settlement date.
The amounts are recognised as personnel expense
on a straight-line basis over the vesting period and
reported in the balance sheet as a provision.
The cash-settlement obligation for the share-based
remuneration component is measured at its fair
value at the balance sheet date (based on the closing
price of BMW AG common stock in Xetra trading at
31 December 2019).
The total carrying amount of the provision for the
share-based remuneration component of current
and former Board of Management members and
senior heads of department at 31 December 2019
was €5,851,703 million (2018: €4,745,518 million).
The total expense recognised in 2019 for the share-
based remuneration component of current and
former Board of Management members and senior
heads of department was €1,979,477 million (2018:
€609,890 million).
The fair value of the programmes for Board of Manage-
ment members and senior heads of department at the
date of grant of the share-based remuneration com-
ponents was €1,374,798 (2018: €1,919,680 million),
based on a total of 19,983 shares (2018: 22,245 shares)
of BMW AG common stock or a corresponding cash-
based settlement measured at the relevant market
share price prevailing on the grant date.
Further details on the remuneration of the Manage-
ment Board are provided in the Compensation Report,
which is part of the Combined Management Report.
42
Declaration with respect to the Corporate
Governance Code
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft have
issued the prescribed Declaration of Compliance
pursuant to § 161 of the German Stock Corporation
Act. It is included in the Corporate Governance State-
ment, which is available on the BMW Group website
at www.bmwgroup.com/ir.
43
Compensation of members of the Board of
Management and Supervisory Board
The total compensation of the current members of
the Board of Management and the Supervisory Board
of BMW AG expensed for the financial year 2019 in
accordance with IFRS comprised the following:
in € million
of common stock of BMW AG. For financial years
from 2018 onwards, the investment component cor-
responds to 45% of the gross bonus. The investment
component is paid after the end of the Annual General
Meeting, at which the separate financial statements
of BMW AG for the relevant financial year are pre-
sented. The shares of common stock are purchased
immediately after the investment component has been
paid out. Shares of common stock purchased in this
way by Board members are required to be held for a
period of four years. At the end of the holding period,
Board members receive from BMW AG, for
every three
shares of common stock held, either one additional
share of common stock or the cash equivalent, to be
decided at BMW AG's discretion. In the event of death
or invalidity, special rules apply for early payment
of share-based remuneration components based on
the target amounts. Insofar the service contract is
prematurely terminated and the Company has an
extraordinary right of termination, or if the Board
member resigns without the Company's agreement,
entitlements to amounts as yet unpaid relating to
share-based remuneration are forfeited.
2019
The compensation arrangements applicable for
members of the Supervisory Board for the financial
year 2019 do not include any stock options, value
appreciation rights comparable to stock options or
any other stock-based compensation components.
Apart from vehicle sales, service loaners, vehicle lease
and financing contracts at customary conditions, no
advances or loans were granted to members of the
Board of Management and the Supervisory Board of
BMW AG or its subsidiaries, nor were any contingent
liabilities entered into on their behalf.
Further details about the remuneration of current
members of the Board of Management and the
Supervisory Board can be found in the Compensa-
tion Report, which is part of the Combined Manage-
ment Report.
Compensation to members of the
Board of Management
30.0
28.8
Fixed remuneration
8.1
8,601
Other Entities
Reconciliation to Group figures
Group
31.12.2019
31.12.2018
2018
-
Members of the Board receive a cash compensation
(investment component) for the specific purpose of
investment - after tax and deductions in shares
For financial years beginning after 1 January 2011,
BMW AG has added a share-based remuneration
component to the existing compensation system for
Board of Management members.
52
355
341
65
5
27
693
367
Entrust Datacard Corp.
153
103
10
2
Apart from vehicle sales, service loaners, leasing and
financing contracts at customary conditions, compa-
nies of the BMW Group concluded no further trans-
actions with members of the Board of Management
or Supervisory Board of BMW AG. This also applies
to close members of the families of those persons.
BMW Trust e. V., Munich, administers assets on a
trustee basis to secure obligations relating to pensions
in Germany and is therefore a related party of the
BMW Group in accordance with IAS 24. This entity
has no assets of its own. It had no income or expenses
during the period under report. BMW AG bears ex-
penses on an immaterial scale and performs services
for BMW Trust e. V., Munich.
For disclosures relating to the compensation of key
management personnel, please see → note 43 and the
Compensation Report.
41
The share-based remuneration programme for qualify-
ing senior heads of department, introduced with effect
for financial years beginning after 1 January 2012, is
closely based on the programme for Board of Manage-
ment members and is aimed at rewarding a long-term,
entrepreneurial approach to running the business on a
sustainable basis. Under the terms of the programme,
participants give a commitment to invest an amount
equivalent to 20% of their earnings-related bonus in
shares of BMW common stock and to hold the shares
so acquired for a minimum of four years. With effect
from 1 July 2019, the share-based compensation pro-
gramme was revised and the investment requirement
increased to 26% of the earnings-related bonus. In
return for the investment requirement, BMW AG pays
100% of the investment amount as a net subsidy. Once
the four-year holding period requirement has been
fulfilled, the participants receive – for each three
common stock shares held and at the Company's
option - one additional share of common stock or the
cash equivalent, to be decided at BMW AG's discretion.
Programme for senior heads of department and
members of the Board of Management
Notes to the Group
Financial Statements
→ Other Disclosures
Group
Financial
Statements
182
181
Payables
note 31
of issued shares). Participants in the programme
were entitled in 2019 to acquire packages of 10, 17 or
25 shares of preferred stock (2018: 7, 12 or 17) with
a discount in each case of €13.00 (2018: €20.00) per
share compared to the market price (average closing
price in Xetra trading in the period from 5 November
to 8 November 2019: €59.10). The programme was
open to employees who have been in an employment
relationship with BMW AG or by a wholly-owned
BMW AG subsidiary in Germany, provided that the
management of the subsidiary concerned has decid-
ed to participate in the programme. At the date of
the announcement of the programme, there was a
requirement for the employment relationship to have
existed without interruption for at least one year and
for it to continue until the transfer of the shares of
preferred stock. Shares of preferred stock acquired
in conjunction with the Employee Share Programme
are subject to a vesting period of four years, starting
from 1 January of the year in which the shares were
acquired. In the financial year under report, 744,447
(2018: 521,524) shares of preferred stock were acquired
by employees. This figure includes 740,400 (2018:
521,500) shares out of Authorised Capital 2019, with
the remainder bought back via the stock exchange.
Every year the Board of Management of BMW AG
decides whether the programme is to be continued.
In connection with the Employee Share Programme,
non-voting shares of preferred stock in BMW AG were
granted in 2019 to qualifying employees at favourable
conditions (see → note 31 for the number and price → see
→ see
note 43
Employee Share Programme
The BMW Group provides three share-based pro-
grammes: one for eligible employees, one for senior
heads of department and one for members of the
Board of Management.
Share-based remuneration
In the financial year 2019, the BMW Group recorded
a personnel expense of €10 million (2018: €10 million)
for the Employee Share Programme, corresponding
to the difference between the market price and the
reduced price of the shares of preferred stock pur-
chased by employees.
31.12.2019
Receivables
2018
income statement
-931
-614
-497
12
-19
-6
Currency risks
Interest rate risk
Raw material price risk
in € million
Designated
component
Costs
Costs
recognised in
of hedging
Designated
component
Costs
of hedging
Opening balance at 1 January 2019
940
Change in fair value during the reporting period
-480
-614
-622
-13
-262
12
13
250
-1
Reclassification to profit or loss
of hedging
for continuing hedge relationships
Hedge
ineffectiveness
Change in costs of
hedging in other
comprehensive
in € million
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
in € million
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
Designated components and costs of hedging within
accumulated other equity changed as follows:
2019
income
Change of
comprehensive
income
Change in costs of
hedging in other
comprehensive
income
Hedge
ineffectiveness
recognised in
income statement
-961
264
117
Change of
designated com-
ponents in other
comprehensive
income
2018
9
-1
designated com-
ponents in other
for terminated hedge relationships
-491
716
319
for terminated hedge relationships
-68
Hedge relationships give rise to the following effects:
7
Reclassification to acquisition costs for inventories
-51
-2
Closing balance at 31 December 2018
940
-614
-13
-262
12
-987
179
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Other Disclosures
The nominal amount of hedging instruments directly
affected by the reform of benchmark interest rates is ¬
€11,269 million (of which USD LIBOR €8,949 million,
GBP LIBOR €1,907 million).
40
Related party relationships
Transactions of Group entities with related parties
were carried out without exception in the normal
course of business with each of the parties concerned
and at market conditions.
in € million
Supplies and services
performed
2019
7
A significant proportion of the BMW Group's transac-
tions with related parties relates to the joint venture
BMW Brilliance Automotive Ltd.
Supplies and services
received
180
for continuing hedge relationships
Reclassification to profit or loss
14
9
23
-6,600
Reclassification to acquisition costs for inventories
Closing balance at 31 December 2019
-22
-497
5
8
1
-6
5
in € million
Currency risks
Interest rate risk
Designated
component
Costs
Costs
-453
-20
-966
120
Change in fair value during the reporting period
235
2019
6
Opening balance at 1 January 2018
of hedging
Costs
Raw material price risk
Designated
component
of hedging
of hedging
1,875
31.12.2018*
33
31.12.2018*
73,624
68,252
2,374
2,176
28,210
26,425
Inter-segment revenues
18,058
17,594
-6
-3
1,388
1,280
91,682
External revenues
85,846
2,173
29,598
27,705
Total revenues
Segment result
4,499
6,182
194
175
2,272
2,143
31.12.2019
Result from equity accounted investments
136
2,368
632
BY OPERATING SEGMENT
2018*
Explanatory notes to segment information
Information on reportable segments
For the purposes of presenting segment information,
the activities of the BMW Group are divided into
operating segments in accordance with IFRS 8. The
segmentation follows the internal management and
reporting system and takes account of the organ-
isational structure of the BMW Group based on
the various products and services of the reportable
segments.
The activities of the BMW Group are broken down
into the operating segments Automotive, Motorcycles,
Financial Services and Other Entities.
Within the Automotive segment the BMW Group devel-
ops, manufactures, assembles and sells automobiles
and off-road vehicles, under the brands BMW, MINI
and Rolls-Royce as well as spare parts, accessories
and mobility services. BMW and MINI brand products
are sold in Germany through branches of BMW AG
and by independent, authorised dealerships. Sales
outside Germany are handled primarily by subsidiary
companies and by independent import companies in
some markets. Rolls-Royce brand vehicles are sold in
the USA as well as in China, Korea, Italy, Russia and
Thailand via subsidiary companies and elsewhere by
independent, authorised dealerships.
Activities relating to the development, manufacture,
assembly and sale of motorcycles as well as spare
parts and accessories are reported in the Motorcycles
segment.
Automobile leasing, fleet business, multi-brand
business, retail and dealership financing, customer
deposit business and insurance activities are the main
activities allocated to the Financial Services segment.
Holding and Group financing companies are re-
ported in the Other Entities segment. This segment
also includes the operating companies BMW (UK)
Investments Ltd. and Bavaria Lloyd Reisebüro GmbH,
which are not allocated to one of the other segments.
Internal management and reporting
Segment information is prepared as a general rule
in conformity with the accounting policies adopted
for preparing and presenting the Group Financial
Statements. Exceptions to this general principle
include the treatment of inter-segment warranties,
the earnings impact of which is allocated to the
Automotive and Financial Services segments on
the basis used internally to manage the business. In
addition, intragroup repurchase agreements between
the Automotive and Financial Services segments
pursuant to IFRS 15, impairment allowances on
intragroup receivables and changes in the value of
consolidated other investments pursuant to IFRS 9
are also excluded. Intragroup leasing arrangements
are not reflected in the internal management and
reporting system on a IFRS 16 basis and therefore,
in accordance with IFRS 8, do not give rise to any
changes in the presentation of segment information.
Inter-segment receivables and payables, provisions,
income, expenses and profits are eliminated upon
consolidation. Inter-segment revenues are based on
market prices. Centralised functions are included in
the segments concerned. Expenses for centralised
administrative functions allocated to the Financial
Services segment are not settled in cash.
The role of “chief operating decision maker” with
respect to resource allocation and performance
assessment of the reportable segment is embodied
in the full Board of Management. For this purpose,
different measures of segment performance as well as
segment assets are taken into account in the operating
segments.
The Automotive and Motorcycles segments are
managed on the basis of return on capital employed
(ROCE). The relevant measure of segment results
used is therefore profit before financial result.
Capital employed is the corresponding measure of
segment assets used to determine how to allocate
resources and comprises all current and non-current
operational assets after deduction of liabilities used
operationally which are generally not subject to
interest (e.g. trade payables).
The success of the Financial Services segment is mea-
sured on the basis of return on equity (ROE). Profit
before tax therefore represents the relevant measure
of segment earnings. The measure of segment assets
in the Financial Services segment corresponds to net
assets, defined as total assets less total liabilities.
The success of the Other Entities segment is assessed
on the basis of profit or loss before tax. The corre-
sponding measure of segment assets used to manage
the Other Entities segment is total assets less asset-
side income tax items and intragroup investments.
185
SEGMENT INFORMATION
186
Statements
Notes to the Group
Financial Statements
→ Segment Information
Segment information by operating segment is as
follows:
in € million
Automotive
Motorcycles
Financial Services
2019
2018*
2019
2018
2019
Group
Financial
Capital expenditure on non-current assets
7,607
7,853
Group
2018*
2018*
2019
2
2
104,210
96,855
3
4
-19,443
-18,875
5
6
2019
-19,443
104,210
96,855
-96
-45
249
1,172
7,118
9,627
136
-7,003
-6,174
28,297
632
26,593
-6,356
-18,875
Reconciliation to Group figures
2018
2019
149
147
27,544
24,767
Depreciation and amortisation on non-current assets
5,853
4,982
110
97
11,142
10,122
in € million
Segment assets
Investments accounted for using the equity method
Automotive
Motorcycles
Financial Services
Other Entities
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6. In addition, figures for the prior year
have been adjusted due to changes in presentation of selected items, which are not material overall.
14,806
15,545
618
712
45
13,836
2,624
31.12.2018*
31.12.2019
31.12.2018
31.12.2019
31.12.2018
31.12.2019
16,193
3,199
SEGMENT INFORMATION
The accumulated amount of hedge-related fair value
adjustments is €8 million for assets (2018: €15 million)
and €1,012 million (2018: €243 million) for liabilities. 7
Notes to the Group
Financial Statements
9,627
7,118
288
-6
-7
795
-32
8,455
6,869
Reconciliation of segment result
Total for reportable segments
Financial result of Automotive segment
Financial result of Motorcycles segment
Elimination of inter-segment items
Group profit before tax from
continuing operations
2018*
2019
in € million
The total of the segment figures can be reconciled to
the corresponding Group figures as follows:
Reconciliation of capital expenditure
The information disclosed for capital expenditure and
depreciation and amortisation relates to non-current
property, plant and equipment, intangible assets and
leased products.
The result of the Financial Services segment was
negatively impacted by impairment losses totalling
€254 million (2018: €302 million) recognised on leased
products. Income from the reversal of impairment
losses on leased products amounted to €95 million
(2018: €118 million).
Write-downs on inventories to their net realisable
value amounting to €126 million (2018: €54 million)
were recognised by the Automotive segment in the
financial year 2019. The reversal of impairment losses
increased the segment result of the Automotive seg-
ment by €22 million (2018: €22 million).
Notes to the Group
Financial Statements
→ Segment Information
Group
Financial
Statements
188
187
Investments accounted for using the equity method
2,624
Segment assets
208,938
228,034
3,199
95,166
89,546
84,512
The Other Entities' segment result includes interest
and similar income amounting to €1,515 million (2018:
€1,178 million) and interest and similar expenses
amounting to €1,419 million (2018: €1,145 million).
on non-current assets
Total for reportable segments
35,300
not subject to interest
→ Segment Information
Liabilities of Motorcycles segment
45
47
Non-operating assets - Motorcycles
34,643
38,257
48,639
58,612
113,772
138,488
Reconciliation of segment assets
Total for reportable segments
Non-operating assets - Automotive
Liabilities of Automotive segment
not subject to interest
31.12.2018*
31.12.2019
in € million
8,601
32,767
Elimination of inter-segment items
-7,003
-6,174
Total Group capital expenditure
on non-current assets
106,038
28,297
Reconciliation of depreciation and
amortisation on non-current assets
Total for reportable segments
Elimination of inter-segment items
Total Group depreciation and
amortisation on non-current assets
17,105
15,201
-6,356
-6,600
10,749
26,593
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
383
Segment result
7.1
3.9
44
Compensation to members of the
Supervisory Board
5.6
5.6
Fixed compensation and attendance fees
2.0
2.0
Variable compensation
3.6
Statements
Total expense
45.6
41.7
thereof due within one year
Group
Financial
184
Result from equity accounted investments
183
financial year that could have a major impact on
the results of operations, financial position and net
assets of BMW AG and the BMW Group.
No other events have occurred since the end of the
termination of board activity
Current assessments and assumptions for the finan-
cial year 2020, to the extent already known to the
BMW Group, have been taken into account and
described in the outlook report. Apart from these
assessments, no further significant negative effects
are known or can be estimated at the present time.
However, further negative effects could arise in the
course of the year.
Events after the end of the reporting period
On 30 January 2020, the World Health Organisation
(WHO) declared an international health emergency
due to the outbreak of coronavirus. Since 11 March
the WHO has characterised the spread of the corona-
virus as a pandemic.
Pension obligations to current members of the Board
of Management are covered by provisions amounting
to €14.6 million (2018: €19.7 million), determined
in accordance with IAS 19. Pension obligations to
former members of the Board of Management and
their surviving dependants, also determined in
accordance with IAS 19, amounted to €113.1 million
(2018: €91.0 million).
The total remuneration of former members of the
Board of Management and their dependants amounted
to €16.0 million (2018: €9.2 million).
Since the financial year 2018, variable cash com-
pensation has been supplemented by a multi-year
and future-oriented Performance Cash Plan (PCP).
The PCP evaluation period comprises three years,
the grant year and the two subsequent years. The
PCP bonus is paid out after the end of the three-year
evaluation period.
30.7
28.6
The continuing spread of the coronavirus and
the impact on the business development of the
BMW Group is being continually monitored. Based
on current developments, the BMW Group expects
that the increasing spread of the coronavirus and the
necessary containment measures will have a nega-
tive impact on BMW Group vehicle deliveries in all
key sales markets. Risks also exist for upstream
and downstream processes, for example, through
possible bottlenecks due to supply shortages. For
the Financial Services segment, risk provisioning
expense is expected to increase.
Benefits in conjunction with the
3.6
2.9
External revenues
Inter-segment revenues
3.4
SEGMENT INFORMATION
BY OPERATING SEGMENT
688
613
Total liabilities -
Financial Services segment
140,955
131,415
Other Entities segment
6,859
Elimination of inter-segment items
-155,872
7,084
-127,273
Total Group assets
Non-operating assets -
208,938
Allocation to pension provisions
228,034
Total revenues
1.0
Share-based remuneration component
5.3
8.3
0.3
20.3
20.9
Variable remuneration
8.2
* Prior year's figures adjusted due to a change in accounting policy in connection with the
adoption of IFRS 16; see note 6. In addition, figures for the prior year have been adjusted
due to changes in presentation of selected items, which are not material overall.
thereof Performance Cash Plan
1
1
100
4
4
5
5
100
15
16
100
100
4
Jürgen Wechsler²
100
5
5
100
5
5
100
5
5
2 Supervisory Board Member until 16 May 2019
1 Supervisory Board Member since 16 May 2019
Werner Zierer
Dr. Thomas Wittig'
Dr. Vishal Sikka¹
4
To Our
Shareholders
Chairman of the Board of Management
Examination of financial statements, including the separate non-financial report and
the proposal for the appropriation of profits
Brigitte Rödig
Oliver Zipse
Management
of the Board of
→ Statement of the
Chairman
Shareholders
To Our
18
17
Norbert Reithofer
Chairman of the Supervisory Board
Yours
On behalf of the Supervisory Board
Munich, 17 March 2020
→ Report of the
The readiness of our employees to deliver outstanding performance alongside their passion and
enthusiasm for the enterprise and its products make us confident in the ability of the BMW Group
to successfully shape individual mobility as a technological pioneer moving forward.
Expression of appreciation by the Supervisory Board
Furthermore, in conjunction with the presentation of the Sustainable Value Report, the Audit
Committee and the Supervisory Board considered the separate non-financial report of BMW AG
(Company and Group) at 31 December 2019 drawn up by the Board of Management. The
Board of Management provided a detailed explanation of the reports at the meetings. Repre-
sentatives of the auditor presented the main findings of their audit and answered additional
questions put by the members of the Supervisory Board. PwC performed a “limited assurance"
review of these reports and issued an unqualified statement thereon. The Supervisory Board
acknowledged and approved the separate non-financial report (Company and Group) drawn
up by the Board of Management.
Due to the rapidly deteriorating situation caused by the proliferation of coronavirus, the Board
of Management resolved on 16 March 2020 to revise the forecast for the financial year 2020 and
to draw up the Company and Group Financial Statements anew, together with the Combined
Management Report. In a telephone conference of the Audit Committee held on the same day,
the Board of Management reported in detail on the adjustments made. Representatives of
the auditor reported on the supplementary audit performed and the findings identified and
confirmed that no objections had arisen in the course of this work. After thorough examination
and deliberation, the Audit Committee recommended that the Supervisory Board approve
the revised versions of the Company and Group Financial Statements for the financial year
2019. After concluding its own examination, the Supervisory Board determined that it had no
objections and accordingly approved the revised versions of the Company and Group Financial
Statements for the financial year 2019 on 17 March 2020. The Company Financial Statements
have therefore been adopted.
We also examined the proposal of the Board of Management to use the unappropriated profit
to pay a dividend of €2.50 per share of common stock and €2.52 per share of non-voting
preferred stock, in each case on shares entitled to receive a dividend. We consider the proposal
appropriate and have therefore given it our approval.
Based on a thorough examination conducted by the Audit Committee and the full Supervisory
Board, we concurred with the results of the external audit. In accordance with the conclusion
reached after the examination by the Audit Committee and the Supervisory Board, no objections
were raised. The Group and Company Financial Statements of Bayerische Motoren Werke
Aktiengesellschaft for the financial year 2019 drawn up by the Board of Management were
subsequently approved at our meeting held on 12 March 2020.
The representatives of the external auditor confirmed that the risk management system estab-
lished by the Board of Management is capable of identifying at an early stage any developments
that might threaten the Company's going-concern status. They confirmed that no material
weaknesses in the internal control system and risk management system with regard to the
financial reporting process were identified. Similarly, they did not identify in the course
of their audit work any facts that were inconsistent with the contents of the Declaration of
Compliance pursuant to § 161 of the German Stock Corporation Act (AktG) issued by the
Board of Management and the Supervisory Board.
At the respective meetings, the Board of Management provided the Audit Committee and the
Supervisory Board with detailed explanations of the financial reports presented. Representatives
of the external auditor were also present at both meetings. They reported on the main findings of
their audit, explained the key audit matters and answered additional questions put by members
of the Audit Committee and the Supervisory Board. The Audit Committee and the Supervisory
Board reviewed the key audit issues and the related audit procedures in great detail.
Supervisory Board.
At its meeting on 12 March 2020, the Audit Committee carefully examined and deliberated
on these documents before they were considered in detail at the plenary session of the
Immediately after authorising their issue, the Board of Management submitted the Company
and Group Financial Statements for the 2019 financial year, the Combined Management Report
(including the Statement of Corporate Governance) and the proposal for the appropriation of
profits to the Supervisory Board. The long-form audit reports of the auditor were also made
available to the Supervisory Board without delay.
At its meeting held on 27 February 2020, the Audit Committee initially considered in detail
the preliminary version of the Company and Group Financial Statements for the finan-
cial year 2019, the Combined Management Report (including the Statement of Corporate
Governance), the auditor's long-form reports and the Board of Management's proposal for
the appropriation of profits.
PwC audited the Company and Group Financial Statements of BMW AG for the financial year
2019 as well as the Combined Company and Group Management Report - as authorised for
issue by the Board of Management on 10 March 2020 - and issued an unqualified audit opinion,
signed by the auditor Petra Justenhoven as independent auditor (Wirtschaftsprüferin) and
by Andreas Fell as independent auditor (Wirtschaftsprüfer) and auditor responsible for the
performance of the engagement.
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft ("PwC") was appointed as
auditor for the first time for the financial year 2019. PwC conducted a review of the condensed
Interim Group Financial Statements and Interim Group Management Report for the six-month
period ended 30 June 2019 and presented the findings of its review to the Audit Committee.
No issues were identified that might indicate that the condensed Interim Group Financial
Statements and Interim Group Management Report had not been prepared in accordance
with the applicable provisions in all material respects.
We wish to express our appreciation to the members of the Board of Management and the
entire workforce of the BMW Group worldwide for their commitment and joint achievements
in the financial year 2019.
Dr. Dominique Mohabeer
Supervisory Board
100
To Our
Shareholders
14
13
The Mediation Committee, which is prescribed by law, did not need to convene during the
financial year 2019.
The Nomination Committee held one meeting during the financial year 2019, at which it addressed
the subject of succession planning for shareholder representatives on the Supervisory Board going
forward, taking into account the composition targets decided upon by the Supervisory Board.
A key aspect of the Personnel Committee's work during its five meetings held during 2019
involved preparing decisions in connection with the composition of the Board of Management.
The Personnel Committee held discussions on Board of Management compensation, not least
against the background of the implementation of ARUG II and revision of the German Corporate
Governance Code. In individual cases it also granted approval for Board of Management members
to assume mandates outside the Group.
→ Report of the
Furthermore, the main results of the audits conducted by Group Internal Audit, along with
details of further audit planning, were reported to the Audit Committee. The Audit Committee
also discussed risk management and the BMW Group's current risk profile as well as the internal
control system and the report on major legal disputes. The EMIR audit report ("European Market
Infrastructure Regulation”) pursuant to § 32 of the German Securities Trading Act (WPHG)
was also presented to the Audit Committee by an auditor, and the effectiveness of the system
in place at BMW AG to ensure compliance with regulatory requirements was confirmed.
The Audit Committee concurred with the decision of the Board of Management to raise the
Company's share capital in accordance with Article 4 (5) of the Articles of Incorporation
(Authorised Capital 2019) by €740,400 and to issue a corresponding number of new non-voting
bearer shares of preferred stock in conjunction with an Employee Share Programme.
At the following meeting of the Supervisory Board, the Chairman of the Audit Committee
reported on these matters in great detail. At the recommendation of the Audit Committee, the
Supervisory Board decided to obtain a second opinion from an independent antitrust law expert
in addition to the advice received from the law firm engaged by the Company. At a subsequent
meeting of the Audit Committee, the expert confirmed the Company's legal opinion and its
defence strategy.
The Audit Committee continued to deal intensively with the EU Commission's investigation
into the antitrust allegations in connection with the former working groups of several German
automobile manufacturers. Subsequent to receiving the EU Commission's Statement of Objec-
tions in April 2019, which resulted in the BMW Group recognising a significant provision for
a possible fine, the Audit Committee held a separate meeting on this topic. At that meeting,
the Audit Committee was provided with detailed information concerning allegations made
by the EU Commission and was fully briefed on the Company's viewpoint, which denies the
allegations and intends to contest them - with all the legal means at its disposal if necessary.
The Company's Chief Legal Counsel and a representative of the law firm engaged by the
Company explained the Company's legal position to the Committee.
In February 2019, the Board of Management informed the Audit Committee of the result of the
proceedings conducted by the Public Prosecutor's Office Munich regarding a faulty software
update. Based on its classification as a misdemeanour, a fine of €8.5 million was imposed,
which the Company accepted. The investigations undertaken by the Public Prosecutor did
not identify any evidence of test-stand-related defeat devices, fraud or any other deliberate
legal violations.
"Compliance 4.0".
During the year under report, the Audit Committee again dealt intensively with the topic
of compliance within the BMW Group. In his regular report, the Chairman of the Com-
pliance Committee provided a summary of ongoing compliance-related proceedings and
presented the improvements being made to the compliance system, which is now known as
The quarterly financial reports were discussed with the Board of Management prior to their
publication. Representatives of the external auditors were present when the Half-Year Financial
Report was discussed at the end of July 2019.
The Board of Management also reported in detail to the Audit Committee on the mutually
agreeable completion of proceedings initiated by the German Federal Cartel Office in 2016
regarding the purchase of long steel by the BMW Group. The proceedings were terminated
in November 2019 with the imposition of a fine of €28 million, which the Company did not
contest. The Board of Management stressed that the exchange of information in question had
no effect on the selling prices of BMW Group vehicles.
The Audit Committee discussed PwC's fee proposal for the audits of the Company and Group
Financial Statements 2019 and for the review of the Half-Year Financial Report, and deemed
it appropriate. Following the approval at the Annual General Meeting held in May 2019, the
Audit Committee appointed PwC for the relevant engagements and specified audit focus areas.
It also approved the scope of non-audit services to be provided by PwC and subsequently
received regular reports on the relevant matters.
Supervisory Board
The Supervisory Board made several decisions regarding the composition of the Board of
Management during the 2019 financial
year:
The attendance rate at the meetings of the Supervisory Board and its committees was 99.6%
overall. The following table shows attendance by individual member:
Disclosure of attendance at meetings by individual members
The composition of the Presiding Board and the committees of the Supervisory Board remained
unchanged during the financial year 2019. The Supervisory Board plans to make a mutually
agreed change to the position of chair of the Audit Committee directly following the 2020
Annual General Meeting. As in the past, the future chairperson also needs to meet the required
criteria as an independent financial expert. The composition of the Supervisory Board and its
committees is contained in the Corporate Governance Report and the Statement on Corporate
Governance, which is available on our website. You can also find the curricula vitae of the
Supervisory Board members on our website.
We therefore wish to express our gratitude to him in particular for his many years of loyal service
to the BMW Group. Within the framework of elections pursuant to the German Co-Determi-
nation Act, the employees elected Verena zu Dohna-Jaeger and Dr Thomas Wittig as members
of the Supervisory Board, the former as representative of IG Metall and the latter as executive
staff representative. The remaining employee representatives were re-elected. The Annual
General Meeting elected Dr Vishal Sikka, founder and CEO of Vianai Systems, Inc., as a new
member of the Supervisory Board. Susanne Klatten and Stefan Quandt, both entrepreneurs,
were re-elected as shareholder representatives.
Messrs Franz Haniel, Ralf Hattler and Jürgen Wechsler resigned from the Supervisory Board
with effect from the end of the Annual General Meeting 2019. We would like to thank all three of
them for their faithful, constructive cooperation during their respective periods of office on the
Supervisory Board. Mr Haniel was a member of the Supervisory Board for a period of 15 years.
Composition of the Supervisory Board, the Presiding Board and the Supervisory
Board's committees
Composition of the Board of Management
Peter Schwarzenbauer left the Board of Management on 31 October 2019 after reaching the
stipulated retirement age. We wish to thank him for his dedication, his excellent work and
the dynamic contribution he made to the field of digitalisation in particular. As part of the
realignment of Board member portfolios, Mr Pieter Nota has been given combined responsibility
for all BMW Group brands as head of "Customer, Brands, Sales" and the size of the Board
has been reduced overall.
With effect from 1 November 2019, Ilka Horstmeier was appointed member of the Board of
Management with responsibility for Human Resources and as Labour Relations Director.
Ms Horstmeier has worked for the BMW Group since 1995, most recently as Managing Director
of the Dingolfing plant.
The mandate of Milagros Caiña Carreiro-Andree was terminated by mutual agreement with
effect from 31 October 2019. We would like to thank Ms Caiña Carreiro-Andree for her
positive contribution to the further development of human resource policies throughout
the BMW Group.
With effect from 1 October 2019, Dr Milan Nedeljković was appointed member of the Board of
Management and assumed responsibility for Production. Dr Nedeljković joined the BMW Group
in 1993 and, after serving as Managing Director of the Leipzig and Munich production plants,
most recently worked as Senior Vice President for Corporate Quality.
On 16 August 2019, Dr Andreas Wendt was temporarily given Board responsibility for
Production in addition to his role as Board member responsible for the Purchasing and
Supplier Network.
The Supervisory Board appointed Oliver Zipse as Chairman of the Board of Management with
effect from 16 August 2019. Mr Zipse initially became a Board of Management member with
responsibility for Production in 2015 and has worked for the BMW Group since 1991. Apart
from his expertise in the field of production, he has also gained a wealth of experience in
various strategic management functions.
The mandate of the Chairman of the Board of Management, Harald Krüger, was terminated by
mutual agreement on 15 August 2019, after Mr Krüger had previously informed the Chairman
of the Supervisory Board that he was not available for a further term of office. We wish to
thank Mr Krüger for his outstanding work and the key momentum he provided with great
enthusiasm during his long tenure at the BMW Group as Chairman and Member of the Board
of Management as well as in his previous functions.
In 2019, we resolved to extend the mandate of one Board of Management member.
The meeting held in February 2019 focused primarily on preparing for the Supervisory Board
meeting at which the financial statements and on the planned change of the Group auditor
were examined. The committee recommended to the full Supervisory Board that Pricewa-
terhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC) be elected as Company and
Group auditor at the Annual General Meeting 2019. Prior to this, PwC issued a Declaration
of Independence, and the planned scope of non-audit services to be provided by PwC was
discussed. In connection with the audits of the financial statements for the financial year 2018,
which were performed for the last time by KPMG Wirtschaftsprüfungsgesellschaft mbH, the
Audit Committee considered the scope of non-audit services provided by KPMG entities to the
BMW Group in 2018. There were no indications of conflicts of interest, grounds for exclusion
or lack of independence on the part of the auditor.
The Audit Committee held five meetings and two telephone conference calls during the
financial year 2019.
The Presiding Board convened four times during the year under report. Its focus was on
preparing the detailed agenda of full Supervisory Board meetings, unless a committee was
responsible for doing so. Working closely with the Board of Management and senior heads of
department, we made suggestions for topics to be reported on at Supervisory Board meetings.
Furthermore, the Presiding Board devoted time to following the latest developments regarding
corporate governance.
Supervisory Board
→ Report of the
To Our
Shareholders
10
9
I personally held a number of individual discussions with investor representatives on Super-
visory Board-related matters, especially in light of the planned changes to the German Cor-
porate Governance Code. The main topics discussed were the compensation of the Board of
Management, the independence of Supervisory Board members and the planned change in
the compensation system for the Supervisory Board.
In its regular reports on the BMW Group's current situation, the Board of Management report-
ed to the Supervisory Board on new models and model revisions in the Automotive and
Motorcycles segments, delivery volumes (in particular of electrified models) and the competitive
situation, as well as the development of new and total business volume in the Financial Services
segment. Any variances from budget were also brought to the Supervisory Board's attention.
The Board of Management's status reports also covered changes in the workforce size as well
as economic developments in key markets.
The Audit Committee and the full Supervisory Board also deliberated at great length on the
challenges posed by trade conflicts as well as the various Brexit scenarios.
The Supervisory Board continuously monitored the running of the business in a thorough
manner and advised the Board of Management on matters relating to the management and
further development of the BMW Group. In five meetings of the full Supervisory Board
(including one two-day meeting), we deliberated in detail with the Board of Management on
the performance of the BMW Group. The Board of Management also kept the Supervisory
Board well informed on matters of particular significance between meetings. Furthermore, the
Chairman of the Supervisory Board was in frequent direct contact with the Chairman of the
Board of Management, as was the Chairman of the Audit Committee with the Chief Financial
Officer regarding current topics.
In 2019, we made major decisions regarding the leadership of the BMW Group, with
Mr Oliver Zipse designated as new Chairman of the Board of Management and two new
members appointed to the Board.
Focus of the Supervisory Board's activities during the past financial year
The Supervisory Board performed the duties incumbent upon it with the utmost diligence.
With its product portfolio firmly on the right track, the BMW Group is well positioned to meet
the challenges posed by technological change.
The BMW Group faced numerous challenges in 2019. Despite retaining its leading position in
the premium segment in terms of delivery volumes, it did not generate the level of earnings
we aspire to. In our capacity as Supervisory Board, we stand firmly behind the Board of Man-
agement's objective of increasing profitability again in the coming years and continuing in the
long and highly successful tradition of the BMW Group despite the difficult global economic
conditions. Customer focus is always our highest priority. At the same time, the BMW Group
is committed to assuming a pioneering role in the field of sustainability. The importance we
attach to this topic is most evident in the rapid expansion of our range of electrified vehicles
driven by the BMW Group's new model offensive this year.
Dear Shareholders,
The work of the Supervisory Board focused in particular on the strategic development of the
BMW Group against the backdrop of digitalisation and electrification, including the core topic
of automated driving. Key cooperations, such as the joint venture with Daimler in the field of
mobility services, were subject to intensive scrutiny.
The Board of Management also informed us about important current topics such as the opening
of the BMW plant in Mexico, the Battery Cell Competence Centre in Munich and the new
#NEXTGen technology and future fair held at the BMW Welt site in Munich. The Board of
Management also reported on the state of negotiations with FC Bayern and the BMW Group's
participation at the IAA in Frankfurt. Moreover, the Board of Management kept the Supervisory
Board well informed on matters of product quality, the joint venture with Great Wall Motor
and the cooperation with Northvolt in the field of battery cell production.
The Supervisory Board also deliberated at length on important issues arising in the Board of
Management's various areas of responsibility. For instance, the Board of Management
presented the core elements of the Group's Finance function, including a description of its
financing strategy. We also considered the strategy and risk profile of the Financial Services
segment. In addition to strategy realignment within the sales organisation, a further topic
of focus was the contribution of the Purchasing and Supplier Network to the profitability
and future viability of the BMW Group. The Board of Management reported in detail on the
current status of and overall strategy regarding the BMW brand.
We paid particular attention to the implementation of Strategy NUMBER ONE > NEXT.
The Board of Management elaborated on the current status, highlighting changes in the market
environment attributable to trade conflicts, regulatory issues - especially fleet CO2 emis-
sions - as well as corporate social responsibility considerations. Together with the Board of
Management, we discussed in detail the decisions reached and measures taken to implement
the strategy over the past 12 months. The Board of Management reported in detail on its
strategies adopted for brands and design, for products as well as for customer experience
and services, focusing in particular on the expansion of the Group's electrified product
portfolio and the luxury segment. The strategic fields of technology and digitalisation were
also the subject of intensive debate, specifically focusing on the core topics of electric mobility
and automated driving.
Description of Presiding Board and committee work
The Supervisory Board has established a Presiding Board and four committees, whose work
during the financial year 2019 was reported on by their respective chairpersons at the subsequent
meetings of the full Supervisory Board. You can read more about the tasks, the composition
and the working methods of the Presiding Board and the various committees of the Supervisory
Board in the Statement on Corporate Governance on our website.
Supervisory Board
→ Report of the
To Our
Shareholders
12
11
We reviewed the efficiency of our work on the Supervisory Board and prepared for the related
deliberations within the full Supervisory Board based on a questionnaire and detailed individual
discussions between the Chairman and all members. Overall, the work of the Supervisory
Board was deemed efficient and given a positive assessment. Valuable feedback and suggestions
relating to the work of the Supervisory Board were welcomed and will be taken up in the
new financial year.
No conflicts of interest pertaining to members of the Supervisory Board arose during the year
under report. Significant transactions with Supervisory Board members and other related
parties as defined by IAS 24, including their close relatives and intermediary entities, were
examined on a quarterly basis.
We also reviewed current targets for the composition of the Supervisory Board and the com-
petency profile set out for its members. We concluded that the composition of the Supervisory
Board at 31 December 2019 was in line with the targets stipulated in the diversity concept, the
competency profile and other composition targets. In view of the major strategic importance
of automated driving, we have decided to expand our competency profile to include the fields
of digitalisation and artificial intelligence. The composition targets for the financial year 2020
were further developed in line with the recommendations contained in the draft version of the
new German Corporate Governance Code. An overview of the members of the Supervisory
Board, describing their specific fields of expertise, is available in the Statement on Corporate
Governance on our website.
We also deliberated intensively on corporate governance within the BMW Group and the
application of the recommendations contained in the German Corporate Governance Code.
In December, the Board of Management and the Supervisory Board issued their Declaration of
Compliance with the German Corporate Governance Code. We intend to fully comply with all
recommendations made in the Code in the version dated 7 February 2017, which was valid at
the date of the Declaration. The wording of the Declaration of Compliance is available in the
Statement on Corporate Governance on our website.
We also addressed the compensation of the Supervisory Board, which has remained unchanged
since 2013, and spoke in favour of changing to a purely fixed compensation model. A corresponding
proposal will be submitted for shareholder approval at the Annual General Meeting 2020.
For the financial year 2019, the Supervisory Board examined the structure and level of compen-
sation paid to the members of the Board of Management. In this context, we took into account
trends in Group business performance, executive manager compensation and the remuneration
of BMW Group employees in Germany. Based on comparative studies conducted by an external
compensation consultant, we concluded that the compensation of the members of the Board
of Management is commensurate. Detailed information on the compensation of the Board of
Management is contained in the Compensation Report.
With regard to Board of Management compensation, the Supervisory Board spent a significant
amount of time addressing issues related to the Act on the Implementation of the Second Share-
holder Rights Directive (ARUG II) and the new version of the German Corporate Governance
Code as well as assessing any resulting need for change at the BMW Group. We intend to revise
the compensation system for the Board of Management during the financial year 2020 and
will put forward the revised system for shareholder approval at the Annual General Meeting
to be held in the financial year 2021.
The Board of Management also reported on the current status of diversity concepts for
the Group.
In the third quarter, the Supervisory Board conferred extensively on the BMW Group's fore-
casts for the period from 2020 to 2025. In this context, the Board of Management outlined
the currently volatile nature of external business conditions, highlighting in particular risks
arising from trade policies and weaker economic forecasts for certain markets. The potential
impact of a range of risk scenarios on forecasts was also discussed at length. After a thorough
examination, the Supervisory Board approved the BMW Group's long-term corporate forecast.
Based on this long-term assessment, the Board of Management presented the annual budget
for the financial year 2020, which the Supervisory Board likewise deliberated upon at length.
Supervisory Board Member
Simone Menne
4
100
Verena zu Dohna-Jaeger¹
100
5
5
5
5
95
21
100
21
21
22
100
4
21
100
22
22222
Dr. Kurt Bock
Christiane Benner
Dr. Karl-Ludwig Kley
Stefan Schmid
Stefan Quandt
Attendance in %
Attendance
Meetings
Manfred Schoch
Dr.-Ing. Norbert Reithofer
21
100
100
1
6
6
100
Franz Haniel²
5
5
Susanne Klatten
100
5
5
100
Willibald Löw
5
5
Horst Lischka
80
Prof. Dr. Renate Köcher
100
5
Prof. Dr. Reinhard Hüttl
100
5
5
Dr.-Ing. Heinrich Hiesinger
100
1
1
Ralf Hattler²
4
1
13,428
Germany
2018*
2019
13,556
39,237
90
China
20,564
18,959
199
2018*
USA
34,856
Non-current assets
100
External revenues
BMW SLP, S.A. de C.V., Villa de Reyes
Rest of Europe
1,141
9,111
BMW International Holding B.V., Rijswijk 10
100
2019
3,941
100
The reconciliation of segment figures to the corre-
sponding total Group figures shows the elimination
of inter-segment items. Revenues with other segments
result mainly from the sale of vehicles, for which the
Financial Services segment has concluded a financing
or lease contract. Eliminations of inter-segment items
in the reconciliation to the Group profit before tax,
capital expenditure and depreciation and amortisation
mainly result from the sale of vehicles in the Automo-
tive segment, which are subsequently accounted for
as leased vehicles in the Financial Services segment. 7
In the reconciliation of segment assets to Group assets,
eliminations relate mainly to intragroup financing
balances.
In the information by region, external sales are based
on the location of the customer. The information dis-
closed for non-current assets relates to property, plant
and equipment, intangible assets and leased products.
Eliminations disclosed for non-current assets relate
to leased products.
Information by region
in € million
21,702
Rest of Asia
Rest of the Americas
Other regions
in € million
Equity
BMW Holding B.V., The Hague
Europe 12
FOREIGN²
LARGUS Grundstücks-Verwaltungsgesellschaft mbH, Munich
Bürohaus Petuelring GmbH, Munich
BMW Vermögensverwaltungs GmbH, Munich
BMW M GmbH Gesellschaft für individuelle Automobile, Munich 3, 5, 6
Profit/loss
in € million
BAVARIA-LLOYD Reisebüro GmbH, Munich
Bavaria Wirtschaftsagentur GmbH, Munich 3, 5, 6
BMW Anlagen Verwaltungs GmbH, Munich 3,6
BMW Fahrzeugtechnik GmbH, Eisenach 3, 5, 6
BMW Vertriebszentren Verwaltungs GmbH, Munich
BMW Hams Hall Motoren GmbH, Munich 4, 5, 6
Alphabet International GmbH, Munich 4, 5, 6
Alphabet Fuhrparkmanagement GmbH, Munich4
BMW High Power Charging Beteiligungs GmbH, Munich 4,6
Parkhaus Oberwiesenfeld GmbH, Munich
Rolls-Royce Motor Cars GmbH, Munich 4, 5, 6
Capital invest-
ment in %
4,594
-6
51
100
100
100
100
100
100
100
100
100
100
100
153
100
1
327
100
1,988
100
3,558
100
BMW Verwaltungs GmbH, Munich 3,6
100
BMW Finanz Verwaltungs GmbH, Munich
BMW INTEC Beteiligungs GmbH, Munich 3,6
453
2,641
2,445
3,406
3,834
3,591
3,904
1,565
1,756
388
10,975
15,284
17,373
31,154
32,805
21,297
22,470
15,979
19,720
Eliminations
11,344
-7,739
-7,855
Group
BMW Beteiligungs GmbH & Co. KG, Munich6
DOMESTIC¹, 12
Companies
→ 71
Affiliated companies (subsidiaries) of BMW AG at 31 December 2019
for equity and earnings and for investments are not
made if they are of "minor significance" for the results
of operations, financial position and net assets of
BMW AG pursuant to § 286 (3) sentence 1 no. 1 HGB
and § 313 (3) sentence 4 HGB. It is also shown in the
list which subsidiaries apply the exemptions available
in § 264 (3) and § 264 b HGB with regard to the publica-
tion of annual financial statements and the drawing up
of a management report and/or notes to the financial
statements (footnotes 5 and 6). The Group Financial
Statements of BMW AG serve as exempting consoli-
dated financial statements for these companies.
7
The List of investments of BMW AG pursuant to
§ 285 and § 313 HGB is presented below. Disclosures
List of investments at 31 December 2019
46
100
→ List of Investments
at 31 December 2019
Notes to the Group
Financial Statements
Group
Financial
Statements
190
189
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6. In addition, figures for the prior year have
been adjusted due to changes in presentation of selected items, which are not material overall.
69,031
77,583
96,855
104,210
BMW Bank GmbH, Munich³
LIST OF INVESTMENTS AT
31 DECEMBER 2019
100
Group
Financial
Statements
100
219
1,085
BMW Financial Services (GB) Ltd., Farnborough
100
55
1,125
BMW España Finance S. L., Madrid
100
7
1,246
BMW International Investment B.V., The Hague
100
589
1,431
BMW (UK) Holdings Ltd., Farnborough
100
BMW (Schweiz) AG, Dielsdorf
GSB Sonderabfall-Entsorgung Bayern GmbH, Baar-Ebenhausen
BMW Motoren GmbH, Steyr
BMW Finance S.N.C., Guyancourt
→ List of Investments
at 31 December 2019
Munich, 16 March 2020
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
Oliver Zipse
Klaus Fröhlich
Ilka Horstmeier
Dr. Milan Nedeljković
Pieter Nota
Dr. Nicolas Peter
Dr.-Ing. Andreas Wendt
968
100
95
1,020
BMW Italia S.p.A., San Donato Milanese
BMW (UK) Manufacturing Ltd., Farnborough
Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern
DOMESTIC
Companies
2,106
25
-24
205
Capital invest-
ment in %
in € million
Profit/loss
in € million
Equity
Critical TW S.A., Porto
BMW AVTOTOR Holding B.V., Amsterdam
BMW Albatha Leasing LLC, Dubai
BMW Albatha Finance PSC, Dubai
Bavarian & Co Co. Ltd., Incheon
FOREIGN7
PDB - Partnership for Dummy Technology and Biomechanics GbR, Gaimersheim
The Retail Performance Company GmbH, Munich
-1,805
50
5,293
1,947
→ 74
BMW AG's participations at 31 December 2019
51
50
25
40
40
20
Notes to the Group
Financial Statements
20
50
50
50
218
29.7
-383
1,597
50
50
Digital Energy Solutions GmbH & Co. KG, Munich
Statements
100
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Asia Pacific Capital Pte Ltd., Singapore
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Tokio Corp., Tokyo
2015-2 ABL, Tokyo 13
2016-1 ABL, Tokyo 13
2016-2 ABL, Tokyo 13
2017-1 ABL, Tokyo 13
2017-2 ABL, Tokyo 13
2017-3 ABL, Tokyo 13
2018-1 ABL, Tokyo 13
2018-2 ABL, Tokyo 13
g| g| g| g| ༠༐ ༠༐ ༠༐ ༠༐ ༠༐ ༠༐
100
100
100
0
BMW India Private Ltd., Gurgaon
0
100
100
1
100
BMW Manufacturing (Thailand) Co. Ltd., Rayong
107
45
100
BMW Malaysia Sdn Bhd, Kuala Lumpur
BMW China Services Ltd., Beijing
51
100
BMW Asia Technology Centre Sdn Bhd, Kuala Lumpur
100
PT BMW Indonesia, Jakarta
BMW Holding Malaysia Sdn Bhd, Kuala Lumpur
BMW Asia Pte. Ltd., Singapore
100
100
100
194
2018-3 ABL, Tokyo 13
2019-1 ABL, Tokyo 13
Group
Financial
Statements
BMW Canada Inc., Richmond Hill, Ontario
586
174
100
BMW of North America LLC, Wilmington, Delaware
493
632
100
BMW do Brasil Ltda., Araquari
179
9
100
BMW US Capital LLC, Wilmington, Delaware
140
-97
100
BMW Financeira S.A. Credito, Financiamento e Investimento, São Paulo
100
968
692
BMW Financial Services NA LLC, Wilmington, Delaware
Notes to the Group
Financial Statements
→ List of Investments
at 31 December 2019
2019-2 ABL, Tokyo 13
The Americas
BMW (US) Holding Corp., Wilmington, Delaware
BMW Manufacturing Co. LLC, Wilmington, Delaware
BMW Bank of North America Inc., Salt Lake City, Utah
4,012
529
Group
Financial
2,281
100
1,480
160
100
Financial Services Vehicle Trust, Wilmington, Delaware
889
-670
100
452
Encory GmbH, Unterschleißheim
DOMESTIC7
Not equity accounted or proportionately consolidated entities
BMW Hungary Korlátolt Felelősségű Társaság, Vecsés
BMW Group Benefit Trust Ltd., Farnborough
BMW Financial Services Czech Republic s.r.o., Prague
BMW Drivers Club Ltd., Farnborough
BMW Car Club Ltd., Farnborough
BMW (UK) Pensions Services Ltd., Hams Hall
BMW (GB) Ltd., Farnborough
Alphabet Insurance Services Polska Sp. z o.o., Warsaw
Europe
FOREIGN7
BMW i Ventures GmbH, Munich
BMW Car IT GmbH, Munich4
Automag GmbH, Munich
Alphabet Fleetservices GmbH, Munich4
DOMESTIC7
Capital invest-
ment in %
Profit/loss
in € million
BMW i Ventures B.V., The Hague
0
BMW Manufacturing Hungary Kft., Vecsés
100
John Cooper Garages Ltd., Farnborough
Cezwei PL GmbH, Salzburg
Cezwei HU GmbH, Salzburg
BMW Russland Automotive 000, Kaliningrad
BMW Motorsport Ltd., Farnborough
BMW Mobility Development Center s.r.o., Prague
100
100
100
100
100
100
100
100
100
100
100
BMW Manufacturing Russland 000, Kaliningrad
0
100
100
BMW AG's non-consolidated companies at 31 December 2019
Bavarian Sky Australia Trust A, Mulgrave 13
BMW Australia Trust 2011-2, Mulgrave 13
BMW Melbourne Pty. Ltd., Melbourne
BMW Sydney Pty. Ltd., Sydney
BMW New Zealand Ltd., Auckland
BMW Financial Services New Zealand Ltd., Auckland
BMW Australia Ltd., Melbourne
BMW Australia Finance Ltd., Mulgrave
Oceania
Bavarian Sky China 2019-3, Beijing 13
Bavarian Sky China 2018-1, Beijing 13
Bavarian Sky China 2018-2, Beijing 13
Bavarian Sky China 2019-1, Beijing 13
Bavarian Sky China 2019-2, Beijing 13
2019-3 ABL, Tokyo 13
791
3,106
BMW Österreich Holding GmbH, Steyr
100
→ 72
Companies
400
29
100
100
100
100
0
0
0
0
John Cooper Works Ltd., Farnborough
0
0
0
0
in € million
Equity
22
12
169
0
000 BMW Leasing, Moscow
U.T.E. Alphabet España-Bujarkay, Sevilla
100
100
100
70
100
100
100
100
100
100
100
51
100
100
THEPSATRI Co. Ltd., Bangkok
Herald Hezhong (Peking) Automotive Trading Co. Ltd., Beijing
BMW Technology Office Israel Ltd., Tel Aviv
BMW Philippines Corp., Manila
100
195
196
Group
Financial
Spotlight Automotive Ltd., Zhangjiagang 8, 11
FOREIGN
Joint operations – proportionately consolidated entities
THERE Holding B.V., Amsterdam³
FOREIGN
Associated companies - equity accounted
BMW Brilliance Automotive Ltd., Shenyang
FOREIGN
BMW Mobility Services Ltd., Sichuan Tianfu New Area (Chengdu Section)
Blitz 18-353 GmbH, Munich 8, 11, 14
DOMESTIC
Joint ventures - equity accounted
Companies
→ 73
BMW AG's associated companies, joint ventures
and joint operations at 31 December 2019
→ List of Investments
at 31 December 2019
Notes to the Group
Financial Statements
Statements
IONITY Holding GmbH & Co. KG, Munich
112
BMW Middle East Retail Competency Centre DWC-LLC, Dubai
BMW India Leasing Private Ltd., Gurgaon
BMW Technology Corp., Wilmington, Delaware
Designworks/USA Inc., Newbury Park, California
MINI Business Innovation LLC, Wilmington, Delaware
Mini Urban X Accelerator SPV LLC, Wilmington, Delaware
Toluca Planta de Automoviles S.A. de C.V., Mexico City
BMW Operations Corp., Wilmington, Delaware
BMW Leasing de Argentina S.A., Buenos Aires
BMW Experience Centre Inc., Richmond Hill, Ontario
BMW i Ventures Inc., Wilmington, Delaware
BMW i Ventures LLC, Wilmington, Delaware
217-07 Northern Boulevard Corp., Wilmington, Delaware
The Americas
90
100
100
100
100
100
100
100
100
100
100
Africa
BMW Automobile Distributors (Pty) Ltd., Midrand
BPF Midrand Property Holdings (Pty) Ltd., Midrand
Multisource Properties (Pty) Ltd., Midrand
100
100
BMW India Foundation, Gurgaon
BMW Hong Kong Services Ltd., Hong Kong
BMW Financial Services Hong Kong Ltd., Hong Kong
BMW Financial Services Singapore Pte Ltd., Singapore
BMW Finance (United Arab Emirates) Ltd., Dubai
BMW China Investment Ltd., Beijing
Asia
100
100
BMW Insurance Services Korea Co. Ltd., Seoul
100
100
100
100
100
100
100
100
100
100
BMW India Financial Services Private Ltd., Gurgaon
100
18
BMW Finanzdienstleistungen (Schweiz) AG, Dielsdorf
Bavaria Reinsurance Malta Ltd., Floriana
BMW Malta Ltd., Floriana
BMW Financial Services Belgium S.A./N.V., Bornem
BMW Belgium Luxembourg S.A./N.V., Bornem
BMW Northern Europe AB, Stockholm
BMW Financial Services B.V., Rijswijk 10
BMW Norge AS, Fornebu
Alphabet Italia Fleet Management S.p.A., Rome
Alphabet España Fleet Management S.A.U., Madrid
100
100
100
100
100
100
100
BMW Bank 000, Moscow
100
Swindon Pressings Ltd., Farnborough
10
11
Alphabet Nederland B.V., Breda 10
BMW Vertriebs GmbH, Salzburg
129
29
121
Alphabet Belgium Long Term Rental NV, Aartselaar
100
52221222
100
100
100
100
100
100
30
100
100
100
100
100
BMW Italia Retail S.r.I., Rome
BMW Automotive (Ireland) Ltd., Dublin
Alphabet France S.A.S., Saint-Quentin-en-Yvelines
BMW Danmark A/S, Copenhagen
BMW Czech Republic s.r.o., Prague
BMW Madrid S.L., Madrid
BMW Slovenská republika s.r.o., Bratislava
Alphabet UK Ltd., Glasgow
BMW Slovenia distribucija motornih vozil d.o.o., Ljubljana¹¹
BMW Bulgaria EOOD, Sofia 11
100
100
100
100
100
100
100
BMW Romania S.R.L., Bucharest 11
BMW Renting (Portugal) Lda., Porto Salvo
Park Lane Ltd., Farnborough
BMW Amsterdam B.V., Amsterdam
100
100
100
BMW Austria GmbH, Salzburg
BMW Services Ltd., Farnborough
100
100
Alphabet France Fleet Management S.N.C., Saint-Quentin-en-Yvelines
138
Alphabet Austria Fuhrparkmanagement GmbH, Salzburg
Alphabet Fuhrparkmanagement (Schweiz) AG, Dielsdorf
BMW Portugal Lda., Porto Salvo
BMW Financial Services (Ireland) DAC, Dublin
BMW Financial Services Denmark A/S, Copenhagen
BMW Hellas Trade of Cars A.E., Kifissia
BMW Nederland B.V., Rijswijk
Oy BMW Suomi AB, Helsinki
BMW Distribution S.A.S., Vélizy-Villacoublay
BMW Retail Nederland B.V., The Hague
BMW Austria Bank GmbH, Salzburg
165
BMW Financial Services Scandinavia AB, Sollentuna
3 Profit and Loss Transfer Agreement with BMW AG.
2 The amounts shown for the foreign subsidiaries correspond to the annual financial statements drawn up in accordance with uniform IFRS rules. Equity and earnings not denominated in euro are translated
into euro using the closing exchange rate at the balance sheet date.
1 The amounts shown for the German subsidiaries correspond to the annual financial statements drawn up in accordance with German accounting requirements (HGB).
SGL Composites LLC, Dover, Delaware
FOREIGN7
Capital invest-
ment in %
in € million
in € million
Profit/loss
Equity
SGL Carbon SE, Wiesbaden
Racer Benchmark Group GmbH, Landsberg am Lech
Joblinge gemeinnützige AG München, Munich
Joblinge gemeinnützige AG Leipzig, Leipzig
Joblinge gemeinnützige AG Berlin, Berlin
IVM Industrie-Verband Motorrad GmbH & Co. Dienstleistungs KG, Essen
Hubject GmbH, Berlin
4 Profit and Loss Transfer Agreement with a subsidiary of BMW AG.
5 Exemption from drawing up a management report applied in accordance with § 264 (3) and § 264 b HGB.
6 Exemption from publication of financial statements applied in accordance with § 264 (3) and § 264 b HGB.
7 These entities are neither consolidated nor accounted for using the equity method due to their overall immateriality for the Group Financial Statements.
18,3
49,0
197
9,1
6,2
16,7
9,8
20,4
193
15,6
4,6
14 Other: Blitz 18-353 GmbH, Munich, has been operating under the name YOUR NOW GmbH since 3 January 2020. Sutum ROM GmbH was merged with BMW Romania S.R.L., Bucharest, effective
14 January 2020.
13 Control on basis of economic dependence.
12 Deconsolidation in the financial year 2019: DriveNow GmbH & Co. KG, Munich, Drive Now Verwaltungs GmbH, Munich, Drive Now Austria GmbH, Vienna, DriveNow UK Ltd., London, DriveNow Sverige AB,
Sollentuna, DriveNow Belgium S.p.r.l., Brussels, Drive Now Italy S.r.I., Milan, BMW Coordination Center V.o.F., Bornem, BMW Services Belgium N.V., Bornem, BMW Roma S.r.l., Rome (merger),
APD Industries plc, Birmingham, BMW Den Haag B.V., The Hague
11 First-time consolidation.
1º Exemption pursuant to Article 2:403 of the Civil Code of the Netherlands (Burgerlijk Wetboek).
⁹ Including power to appoint representative bodies.
8 The amounts shown for entities accounted for using the equity method and for proportionately consolidated entities correspond to the annual financial statements drawn up in accordance with uniform
IFRS rules. Equity not denominated in euro is translated into euro using the closing exchange rate at the balance sheet date, earnings are translated using the average rate.
3,1
100
100
97
58
100
Rolls-Royce Motor Cars Ltd., Farnborough
233
91
100
BMW Iberica S.A., Madrid
228
34
100
BMW France S.A.S., Montigny-le-Bretonneux
225
35
BMW Finance N.V., The Hague
211
BMW Austria Leasing GmbH, Salzburg
176
277
ALPHABET (GB) Ltd., Farnborough
100
20
100
495
44
100
380
43
100
191
578
BMW (UK) Ltd., Farnborough
90
100
BMW Russland Trading OOO, Moscow
291
189
100
BMW i Ventures SCS SICAV-RAIF, Senningerberg
288
373
100
BMW Financial Services Polska Sp. z o.o., Warsaw
100
100
100
100
100
OO
0
0
0|0|
0
0
0
0
0
0
0
BMW (South Africa) (Pty) Ltd., Pretoria
861
100
109
100
BMW Canada Auto Trust 2019-1, Richmond Hill, Ontario 13
BMW Manufacturing Indústria de Motos da Amazônia Ltda., Manaus
SB Acquisitions LLC, Wilmington, Delaware
BMW Auto Leasing LLC, Wilmington, Delaware
BMW FS Securities LLC, Wilmington, Delaware
100
100
100
100
100
BMW FS Funding Corp., Wilmington, Delaware
BMW Facility Partners LLC, Wilmington, Delaware
100
BMW Manufacturing LP, Woodcliff Lake, New Jersey
BMW FS Receivables Corp., Wilmington, Delaware
BMW Receivables 1 Inc., Richmond Hill, Ontario
BMW Receivables Ltd. Partnership, Richmond Hill, Ontario
BMW Receivables 2 Inc., Richmond Hill, Ontario
BMW Extended Service Corp., Wilmington, Delaware
BMW Vehicle Lease Trust 2017-2, Wilmington, Delaware 13
BMW Vehicle Lease Trust 2018-1, Wilmington, Delaware¹³
BMW Vehicle Lease Trust 2019-1, Wilmington, Delaware 13
BMW Vehicle Owner Trust 2016-A, Wilmington, Delaware 13
BMW Vehicle Owner Trust 2018-A, Wilmington, Delaware 13
BMW Vehicle Owner Trust 2019-A, Wilmington, Delaware 13
BMW Floorplan Master Owner Trust Series 2018-1, Wilmington, Delaware 13
BMW Canada 2018-A, Richmond Hill, Ontario 13
BMW Canada Auto Trust 2017-1, Richmond Hill, Ontario 13
BMW Canada Auto Trust 2018-1, Richmond Hill, Ontario¹³
193
100
BMW Financial Services (South Africa) (Pty) Ltd., Midrand
SuperDrive Investments (RF) Ltd., Cape Town 13
167
232
64
100
Herald International Financial Leasing Co. Ltd., Tianjin
228
29
58
BMW (Thailand) Co. Ltd., Bangkok
205
83
100
BMW Korea Co. Ltd., Seoul
196
32
100
BMW Leasing (Thailand) Co. Ltd., Bangkok
174
BMW Japan Corp., Tokyo
100
456
502
11
100
0
Africa
Asia
BMW Automotive Finance (China) Co. Ltd., Beijing
BMW Financial Services Korea Co. Ltd., Seoul
100
BMW Acquisitions Ltda., São Paulo
321
568
49
100
BMW Japan Finance Corp., Tokyo
541
65
100
BMW China Automotive Trading Ltd., Beijing
58
100
2,441
BMW Leasing do Brasil S.A., São Paulo
BiV Carry ISCS, Senningerberg
BMW (UK) Capital plc, Farnborough
100
100
100
100
100
100
100
100
100
100
Alphabet Luxembourg S.A., Leudelange
Riley Motors Ltd., Farnborough
BMW Central Pension Trustees Ltd., Farnborough
Triumph Motor Company Ltd., Farnborough
BLMC Ltd., Farnborough
BMW (UK) Investments Ltd., Farnborough
Société Nouvelle WATT Automobiles S.A.R.L., Saint-Quentin-en-Yvelines
Alphabet Polska Fleet Management Sp. z o.o., Warsaw
at 31 December 2019
100
100
100
100
100
100
100
100
Sutum ROM GmbH, Salzburg 11, 14
100
100
100
100
100
100
192
198
→ List of Investments
100
13
Notes to the Group
Financial Statements
Bavarian Sky S.A., Compartment A, Luxembourg 13
0
0
BMW de Mexico S.A. de C.V., Mexico City
100
BMW of Manhattan Inc., Wilmington, Delaware
100
BMW de Argentina S.A., Buenos Aires
Rolls-Royce Motor Cars NA LLC, Wilmington, Delaware
0
BMW Leasing de Mexico S.A. de C.V., Mexico City
BMW Consolidation Services Co. LLC, Wilmington, Delaware
100
100
100
100
100
Bavarian Sky S.A., Compartment German Auto Loans 6, Luxembourg 13
Bavarian Sky S.A., Compartment German Auto Loans 7, Luxembourg¹
Bavarian Sky S.A., Compartment German Auto Loans 8, Luxembourg 13
Bavarian Sky S.A., Compartment German Auto Loans 9, Luxembourg 13
Bavarian Sky S.A., Compartment German Auto Leases 5, Luxembourg 13
100
BMW Insurance Agency Inc., Wilmington, Delaware
0
BMW Financial Services de Mexico S.A. de C.V. SOFOM, Mexico City
0
Bavarian Sky Europe S.A. Compartment A, Luxembourg 13
0
Bavarian Sky FTC, Compartment French Auto Leases 3, Paris 13
Bavarian Sky UK 1 plc, London 13
Bavarian Sky UK 2 plc, London 13
Bavarian Sky UK A Ltd., London 13
Bavarian Sky UK C Ltd., London 13
100
Bavarian Sky UK B Ltd., London 13
Bavarian Sky S.A., Compartment B, Luxembourg 13
0
0
0
0
0
0
0
0
PERSONNEL COMMITTEE
Norbert Reithofer¹, Manfred Schoch, Stefan Quandt, Stefan Schmid,
Karl-Ludwig Kley
― activities based on terms of procedure
preparation of Supervisory Board meetings to the extent that the subject matter to be
discussed does not fall within the remit of a committee
and their composition
Overview of Supervisory Board committees
PRESIDING BOARD
preparation of decisions relating to the appointment and revocation of appointment of
members of the Board of Management, the compensation and the regular review of the
Board of Management's compensation system
Principal duties, basis for activities
-
Members
-
members, including acceptance of non-BMW Group supervisory mandates as well as the
approval of transactions requiring Supervisory Board approval by dint of law (e.g. loans
to Board of Management or Supervisory Board members)
― established in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of procedure
Norbert Reithofer¹, Manfred Schoch, Stefan Quandt, Stefan Schmid,
Karl-Ludwig Kley
AUDIT COMMITTEE
supervision of the financial reporting process, the effectiveness of the internal control
system, the risk management system, as well as the performance of Supervisory
Board duties in connection with audits pursuant to § 32 of the German Securities Trading
Act (WPHG)
― supervision of external audit, in particular auditor independence and additional work
performed by external auditor
preparation of proposals for election of external auditor at Annual General Meeting,
engagement (recommendation) of external auditor, determination of additional areas of
audit emphasis and fee agreements with external auditor
- preparation of Supervisory Board's resolution on Company and
― discussion of interim reports with Board of Management prior to publication
Membership of equivalent national or foreign boards of business enterprises.
Group Financial Statements
― conclusion, amendment and revocation of employment contracts (in conjunction with
the resolutions taken by the Supervisory Board regarding the compensation of the Board
of Management) and other contracts with members of the Board of Management
― decisions relating to the approval of ancillary activities of Board of Management
Membership of other statutory supervisory boards.
Supervisory Board
committees and
their composition
³ Employee representatives (members of senior management).
Membership of equivalent national or foreign boards of business enterprises.
― preparation of the Supervisory Board's audit of the non-financial reporting, preparation of
the selection of the auditor for non-financial reporting and engagement of the auditor
supervision of internal audit system and compliance as well as the audit and supervision of
any needs for action related to possible violations of duties by members of the Board of
Management in preparation of a resolution in the Supervisory Board
205
206
Corporate
Governance
→ Members of the
Supervisory Board
→ Overview of
Jürgen Wechsler² (b.1955)
Member since 2011 until 16 May 2019
Former Regional Head of IG Metall Bavaria
Mandates
Schaeffler AG, Deputy Chairman
Siemens Healthcare GmbH*, Deputy Chairman
(until 18 March 2019)
Dr. Thomas Wittig³ (b.1960)
Member since 16 May 2019,
elected until the AGM 2024
Senior Vice President Financial Services
Mandates
BMW Bank GmbH*, Chairman
BMW Automotive Finance (China) Co., Ltd.*,
Chairman
Werner Zierer¹ (b.1959)
Member since 2001, elected until the AGM 2024
Chairman of the Works Council, Regensburg
1 Employee representatives (Company employees).
2 Employee representatives (union representatives).
◆ Not listed on the stock exchange.
― decision on approval for utilisation of Authorised Capital 2019
Compliance Instruments
of the BMW Group
― established in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of procedure
Annual
Report
Board of Management BMW AG
Annual
Report
BMW Group Compliance Committee
BMW Group Compliance Committee ←
Office
Compliance Controls
Compliance Reporting
Compliance Case
Management
Compliance Processes
and IT Systems
BMW Group Compliance
Network
Annual
Compliance
Reporting Run
Compliance Strategy
Legal Compliance
Monitoring and Trends
Compliance
Risks and
Preventive Excellence
Compliance Academy and Culture
Compliance Codes and
Internal Regulations
Compliance Communications
The decisions taken by the BMW Group Compliance
Committee are drafted in concept and implemented
operationally by the BMW Group Compliance Com-
mittee Office. The BMW Group Compliance Commit-
tee Office has more than 20 employees and is allocated
in organisational terms to the Chairman of the Board
of Management. For operational implementation of
compliance topics, it is supported by a Group-wide
compliance network of around 240 BMW Group
Compliance Responsibles (heads of the local units)
and over 70 local Compliance Officers (heads of the
local compliance functions). The specific compliance
activities required for financial services business are
coordinated by a separate compliance department
within the Financial Services segment.
Membership of other statutory supervisory boards.
Supervisory Board BMW AG
- amendments to Articles of Incorporation only affecting wording
The BMW Group Compliance Committee reports
regularly and on a case-by-case basis to the Board of
Management and the Audit Committee of the Super-
visory Board on all compliance-related issues, includ-
ing the progress made in refining the BMW Group
Compliance Management System, details of inves-
tigations performed, known infringements of the
law, sanctions imposed and corrective/preventative
measures implemented. This also ensures the Board of
Management and Supervisory Board are immediately
notified of any cases of particular significance. On
the basis of this information, the Board of Manage-
ment keeps track of and analyses compliance-related
developments and trends and initiates the measures
needed to improve the Compliance Management
System. In 2019 the system was further enhanced, par-
ticularly with a focus on the characteristics of the roles
and responsibilities in the Group-wide Compliance
Management as well as the monitoring of compliance
training and additional preventative activities.
Responsible and lawful conduct is fundamental to
the success of the BMW Group. Compliance is an
integral part of our corporate culture and the reason
why customers, shareholders, business partners and
the general public place their trust in us. The Board of
Management and the employees of the BMW Group
are obliged to act responsibly and in compliance with
applicable laws and regulations. The BMW Group also
expects its business partners to conduct themselves
in the same manner.
Karl-Ludwig Kley 1, 2, Norbert Reithofer, Manfred Schoch, Stefan Quandt,
Stefan Schmid
NOMINATION COMMITTEE
-identification of suitable candidates as shareholder representatives on the Supervisory
Board to be put forward for inclusion in the Supervisory Board's proposals for election at
the Annual General Meeting
established in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of procedure
MEDIATION COMMITTEE
proposal to Supervisory Board if resolution for appointment of Board of Management
member has not been carried by the necessary two-thirds majority of Supervisory Board
members' votes
established as required by law
Norbert Reithofer¹, Susanne Klatten, Karl-Ludwig Kley, Stefan Quandt
(In line with the recommendations of the German Corporate Governance
Code, the Nomination Committee comprises only shareholder
representatives.)
Norbert Reithofer, Manfred Schoch, Stefan Quandt, Stefan Schmid
(In accordance with statutory requirements, the Mediation Committee
comprises the Chairman and Deputy Chairman of the Supervisory Board
and one member each selected by shareholder representatives and
employee representatives.)
1 Chair.
² (Independent) financial expert within the meaning of §§ 100 (5) and 107 (4) AktG, no. 5.3.2 GCGC.
It is planned to bring about a change in the position
of Chair of the Audit Committee directly following
the 2020 Annual General Meeting. In line with the
requirements profile, the intention is for an indepen-
dent financial expert to continue to hold this position
in the future.
207
208
Corporate
Governance
Compliance and
Human Rights in
the BMW Group
COMPLIANCE AND
HUMAN RIGHTS IN
THE BMW GROUP
BMW Group Compliance Management System
→ 75
The BMW Group Compliance Management System
is designed to ensure that the BMW Group, its repre-
sentative bodies, its managers and staff act in a lawful
manner. Particular emphasis is placed on measures
to ensure compliance with antitrust legislation and
avoid the risk of corruption or money laundering.
Activities to avoid non-compliance with the law
are managed and monitored by the BMW Group
Compliance Committee. These activities include
legal monitoring, internal compliance regulations,
communications and training activities, complaint
and case management, compliance reporting and
compliance controls, as well as following through
with sanctions in cases of non-compliance.
◆ Not listed on the stock exchange.
Deutsche Post AG (since 15 May 2019)
2 Employee representatives (union representatives).
Mandates
Chairman (until 15 August 2019)
Harald Krüger (b.1965)
Rolls-Royce Motor Cars Limited*, Chairman
(since 1 April 2019)
Mandates
Customer, Brands, Sales (since 1 April 2019)
Sales and Brand BMW, Aftersales BMW Group
(until 31 March 2019)
Pieter Nota (b.1964)
(until 7 October 2019)
BMW Motoren GmbH, Chairman
(until 31 October 2019)
BMW (South Africa) (Pty) Ltd.*, Chairman
Mandates
Chairman (since 16 August 2019)
Production (until 15 August 2019)
Oliver Zipse (b.1964)
-
Chairman since 4 December)
BMW Motoren GmbH*, Chairman
BMW (South Africa) (Pty) Ltd.*, Chairman
(since 1 November 2019)
Mandates
Dr. Milan Nedeljković (b.1969)
Production (since 1 October 2019)
BOARD OF MANAGEMENT
MEMBERS OF THE
Further information on corporate management and
governance, including the declaration of compliance
according to § 161 of the German Stock Corporation
Act, can be found in the Corporate Governance State-
ment (sections 289 f and 315 of the German Commer-
cial Code (HGB)) at → www.bmwgroup.com/compliancedeclaration
(Corporate Governance).
Corporate Governance Statement
Once a year, the Board of Management and the Super-
visory Board of BMW AG issue a Declaration of Compli-
ance pursuant to § 161 of the German Stock Corporation
Act (AktG) with regard to the recommendations of the
"Government Commission on the German Corporate
Governance Code", as officially published and valid
at the date of the Declaration. BMW AG's current and
previous Declarations of Compliance are available
online at → www.bmwgroup.com/compliancedeclaration (Corporate
Governance). In the Declaration of Compliance issued
in December 2019, the Board of Management and
the Supervisory Board declared that all recommen-
dations of the German Corporate Governance Code
(version dated 7 February 2017) will be complied with
going forward.
Declaration of Compliance
Shareholders may exercise their voting rights at the
Annual General Meeting either in person, via a proxy
or via a representative designated by BMW AG. Voting
rights may also be exercised by postal vote.
Moreover, the system for the compensation of mem-
bers of the Board of Management is presented to the
Annual General Meeting for approval in the case of
significant changes, but at least every four years.
The shareholders of BMW AG exercise their rights at
the Annual General Meeting. The Annual General
Meeting decides in particular on the utilisation of
unappropriated profit, the ratification of the acts of
the members of the Board of Management and of the
Supervisory Board, the appointment of the external
auditor, changes to the Articles of Incorporation and
specified capital measures and elects the shareholders'
representatives to the Supervisory Board.
Shareholders and Annual General Meeting
(Member since 7 October 2019,
Deutsche Telekom AG
Milagros Caiña Carreiro-Andree (b.1962)
Human Resources, Labour Relations Director
(until 31 October 2019)
Mandates
MEMBERS OF THE
→Members of the
Supervisory Board
Corporate
Governance
204
203
Dr. Andreas Liepe
General Counsel:
Membership of equivalent national or foreign boards of business enterprises.
Membership of other statutory supervisory boards.
Not listed on the stock exchange.
(16 August 2019 until 30 September 2019)
Dr.-Ing. Andreas Wendt (b.1958)
Purchasing and Supplier Network
Production
Human Resources, Labour Relations Director
(since 1 November 2019)
Ilka Horstmeier (b.1969)
Rolls-Royce Motor Cars Limited*, Chairman
(until 31 March 2019)
Scout24 AG
Mandates
-
LOGISTRIAL Real Estate AG⭑
(23 September 2019 until 17 December 2019)
Klaus Fröhlich (b.1960)
Development
Mandates
Further information on the composition and work
procedures of the Supervisory Board and its com-
mittees is available at → www.bmwgroup.com/scg (Corporate
Governance).
E.ON SE
Finance
Mandates
BMW Brilliance Automotive Ltd.*,
Deputy Chairman
Peter Schwarzenbauer (b.1959)
Transformation Electromobility
(1 April 2019 until 31 October 2019)
MINI, Rolls-Royce, BMW Motorrad,
Customer Engagement and Digital Business
Innovation BMW Group (until 31 March 2019)
Dr. Nicolas Peter (b.1962)
BMW AG ensures that the Supervisory Board and
its committees are appropriately equipped to carry
out their duties. This includes providing a central
Supervisory Board office to support the chairpersons
in their coordination work.
Composition of the Presiding Board and the various
committees is based on legal requirements, the Arti-
cles of Incorporation, rules of procedure and corporate
governance principles, while taking into particular
account the expertise of Board members.
→Members of the
Board of
Management
→Page 246 Responsibility Statement by the Company's
Legal Representatives
→ Page 242 Glossary - Explanation of Key Figures
(Part of the Combined Management Report)
→Page 211 Compensation Report
Overview of Supervisory Board committees and their composition
Compliance and Human Rights in the BMW Group
→ Page 208
→ Page 207
Members of the Supervisory Board
→ Page 204
Members of the Board of Management
→ Page 203
→Page 202
Corporate Governance Statement
→Page 202 Declaration of Compliance
→ Page 202 Shareholders and Annual General Meeting
Report
Compensation
3 Employee representatives (members of senior management).
CORPORATE
GOVERNANCE
→Page 200 Corporate Governance
→ Page 200
(Part of the Combined Management Report)
Information on the Company's Governing Constitution
Board of Management
→Page 247 Independent Auditor's Report
→Page 201
Supervisory Board
4
Corporate
Governance
Company's Govern-
ing Constitution
Board of
Management
Supervisory Board
Compliance
→Page 201
SUPERVISORY BOARD
200
Information on the
→ Corporate Govern-
ance Statement
→ Declaration of
Compliance
→ Supervisory Board
Shareholders and
Annual General
Meeting
202
201
Taking into account the specific circumstances of the
BMW Group and the number of Board members, the
Supervisory Board has set up a Presiding Board and
four committees: the Personnel Committee, the Audit
Committee, the Nomination Committee and the Medi-
ation Committee. These serve to raise the efficiency
of the Supervisory Board's work and facilitate the
handling of complex issues.
The Supervisory Board has stated specific targets for
its composition, agreed to a diversity concept and
determined a competency profile. Members of the
Supervisory Board are responsible for undertaking
any training required for the performance of their
duties. The Company provides them with appropriate
assistance therein.
The Supervisory Board regularly assesses the efficiency
of its activities. To this end, shared discussion is con-
ducted within the Supervisory Board and individual
meetings held with the Chairman, prepared on the
basis of a questionnaire sent in advance, which is
drawn up by the Supervisory Board.
Members of the Supervisory Board are obliged to
inform the full Supervisory Board of any conflicts
of interest, in particular those resulting from a
consultant or executive function with clients, sup-
pliers, lenders or other business partners, so that
the Supervisory Board can report to the shareholders
at the Annual General Meeting on its treatment of
the issue. Significant and non-temporary conflicts of
interest of a Supervisory Board member result in the
termination of mandate.
Members of the Supervisory Board of BMW AG are
obliged to act in the best interests of the enterprise as a
whole. They may not pursue personal interests in their
decisions or take advantage of business opportunities
intended to benefit the BMW Group.
BMW AG's Supervisory Board is composed of ten
shareholder representatives (elected by the Annual
General Meeting) and ten employee representatives
(elected in accordance with the Co-Determination
Act). The ten Supervisory Board members represent-
ing employees comprise seven Company employees,
including one executive staff representative, and three
members elected following nomination by unions. The
Supervisory Board has the task of advising and super-
vising the Board of Management in its management of
BMW AG. It is involved in all decisions of fundamental
importance for BMW AG. The Supervisory Board
appoints the members of the Board of Management
and decides upon the level of compensation they
receive. The Supervisory Board can revoke appoint-
ments for important reasons.
Supervisory Board
Further information on the composition and work
procedures of the Board of Management and its com-
mittees is available at www.bmwgroup.com/scg (Corporate
Governance).
Terms of procedure approved by the Board of Man-
agement contain a plan for the allocation of areas of
responsibility among the individual Board members.
Deliberations are held and decisions taken by the
Board of Management as a collegiate body at full Board
meetings, at Product and Customer full Board meetings
(since 1 November 2019) and at Sustainability Board
meetings (combined with full Board meetings with
effect from 1 November 2019). The Board of Manage-
ment also deliberates and makes decisions at meetings
of its Customer committee (since 1 November 2019) and
its Senior Executives and Operations committees. The
overall framework for developing business strategies,
the use of resources, the implementation of strategies
and matters of particular importance to BMW AG are
decided upon at full Board of Management meetings.
Members of the Board of Management are required
to act in the enterprise's best interests and may not
pursue personal interests in their decisions or take
advantage of business opportunities intended for the
benefit of the BMW Group. Individual members of
the Board of Management of BMW AG are required
to disclose
any conflicts of interest to the Supervisory
Board without delay and inform the other members
of the Board of Management accordingly.
In accordance with § 7 of the Articles of Incorporation,
the Board of Management of BMW AG comprises two
or more persons; other than that the number of mem-
bers of the Board of Management is determined by the
Supervisory Board. At 31 December 2019, the Board
of Management comprised seven members. The Board
of Management decides on the principal guidelines
for managing the enterprise, determines and agrees
upon the strategic orientation with the Supervisory
Board, and ensures its implementation. The Board of
Management is also responsible for ensuring that all
provisions of law and internal regulations are com-
plied with. Further details on compliance within the
BMW Group are available in the section “Corporate
Governance, Compliance and Human Rights in the
BMW Group" of the Annual Report. The Board of
Management is also responsible for ensuring that
appropriate risk management and risk controlling
systems are in place throughout the Group.
Company's
Governing
Constitution
Board of
Management
→ Supervisory Board
Corporate
Governance
CORPORATE
GOVERNANCE
The Board of Management and Supervisory Board
report below on corporate governance at BMW AG in
accordance with Section 3.10 of the German Corpo-
rate Governance Code (DCGK) in the version dated
7 February 2017 and principle 22 DCGK in the version
dated 16 December 2019.
Information on the Company's
Governing Constitution
The designation BMW Group comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and
its Group entities. BMW AG is a stock corporation
(Aktiengesellschaft) within the meaning of the
German Stock Corporation Act (Aktiengesetz) and
has its registered office in Munich, Germany. It has
three representative bodies: the Annual General
Meeting, the Supervisory Board and the Board of
Management. The duties and powers of those bodies
derive from the Stock Corporation Act and the Arti-
cles of Incorporation of BMW AG. Shareholders, as
the owners of the business, exercise their rights at
the Annual General Meeting. The Board of Manage-
ment is responsible for managing the enterprise and
is monitored and advised by the Supervisory Board.
The Supervisory Board appoints the members of the
Board of Management and can, for an important rea-
son, revoke an appointment at any time. The Board
of Management informs the Supervisory Board and
reports to it regularly, promptly and comprehen-
sively, in line with the principles of conscientious
and faithful accountability and in accordance with
the law and the reporting duties determined by
the Supervisory Board. The Board of Management
requires the approval of the Supervisory Board for
certain major business proceedings. The Supervisory
Board is not, however, authorised to undertake man-
agement measures itself.
The close interaction between Board of Management
and Supervisory Board in the interests of the enter-
prise as described above is also known as a "two-tier
board structure".
Board of Management
The Board of Management manages the enterprise
under its own responsibility, acting in the best inter-
ests of the BMW Group with the aim of achieving sus-
tainable growth in value. The interests of shareholders,
employees and other stakeholders are also taken into
account in the pursuit of this aim.
Good corporate governance - acting in accordance
with the principles of responsible management
aimed at increasing enterprise value on a sustainable
basis - is an essential requirement for the BMW Group
embracing all areas of the business. Corporate culture
within the BMW Group is founded on transparent
reporting and internal communication, corporate
governance in the interest of all stakeholders, trustful
cooperation both of the Board of Management and the
Supervisory Board as well as among employees, and
compliance with applicable law.
Dr. jur. Karl-Ludwig Kley (b.1951)
Member since 2008, elected until the AGM 2021
Deputy Chairman of the Supervisory Board
Chairman of the Supervisory Board of E.ON SE
and of the Deutsche Lufthansa Aktiengesellschaft
Corporate
Governance
Franz Haniel (b.1955)
1 Employee representatives (Company employees).
2 Employee representatives (union representatives).
³ Employee representatives (members of senior management).
◆ Not listed on the stock exchange.
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
Member since 2004 until 16 May 2019
Entrepreneur
Mandates
-
Franz Haniel & Cie. GmbH*, Chairman
DELTON Technology SE*
Heraeus Holding GmbH*
TBG AG*
Ralf Hattler³ (b.1968)
Member since 2017 until 16 May 2019
Head of Purchasing Indirect Goods and Services,
Raw Material, Production Partner
Deputy Chairman of the Supervisory Board
Chairman of the Works Council, Dingolfing
Member since 2007, elected until the AGM 2024
Stefan Schmid¹ (b.1965)
ABB AG
Stefan Quandt (b.1966)
Member since 1997, elected until the AGM 2024
Deputy Chairman of the Supervisory Board
Entrepreneur
Mandates
-
DELTON Health AG*, Chairman
DELTON Technology SE*, Chairman
Dr.-Ing. Heinrich Hiesinger (b.1960)
Frankfurter Allgemeine Zeitung GmbH*
AQTON SE*, Chairman
Entrust Datacard Corp.*
Verena zu Dohna-Jaeger² (b.1975)
Member since 16 May 2019,
elected until the AGM 2024
Department head with the Executive Board of
IG Metall
Mandates
(since 24 June 2019)
Aktiengesellschaft in Munich
Member since 2017, elected until the AGM 2022
Former Chairman of the Board of Management
of thyssenkrupp AG
Horst Lischka² (b.1963)
- Deutsche Post AG
Springer Nature AG & Co. KGaA
Johnson Controls International plc
Russell Reynolds Associates Inc.*
(since 19 January 2019)
Dr. Dominique Mohabeer¹ (b.1963)
Member since 2012, elected until the AGM 2024
Member of the Works Council, Munich
Prof. Dr. rer. pol. Renate Köcher (b.1952)
Member since 2008, elected until the AGM 2022
Director of Institut für Demoskopie
Allensbach Gesellschaft zum Studium der
öffentlichen Meinung mbH
Mandates
Infineon Technologies AG
Nestlé Deutschland AG⭑
Robert Bosch GmbH⭑
Brigitte Rödig¹ (b.1963)
Member since 2013, elected until the AGM 2024
Member of the Works Council, Dingolfing
Dr. Vishal Sikka (b.1967)
Member since 16 May 2019,
elected until the AGM 2024
CEO & Founder, Vianai Systems, Inc.
Mandates
Oracle Corporation (since 6 December 2019)
Mandates
Member since 2015, elected until the AGM 2021
Member of supervisory boards
Simone Menne (b.1960)
Member since 1999, elected until the AGM 2024
Chairman of the Works Council, Landshut
Member since 2009, elected until the AGM 2024
General Representative of IG Metall Munich
Mandates
KraussMaffei Group GmbH*
MAN Truck & Bus SE*
(since 19 March 2019, former MAN Truck & Bus AG)
Städtisches Klinikum München GmbH⭑
Prof. Dr. rer. nat. Dr. h.c. Reinhard Hüttl (b.1957)
Member since 2008, elected until the AGM 2023
Chairman of the Executive Board
Mandates
of Helmholtz-Zentrum Potsdam
Susanne Klatten (b.1962)
Member since 1997, elected until the AGM 2024
Entrepreneur
Mandates
SGL Carbon SE, Chairwoman
ALTANA AG*, Deputy Chairwoman
UnternehmerTUM GmbH*, Chairwoman
Willibald Löw¹ (b.1956)
Deutsches GeoForschungsZentrum - GFZ
University Professor
Münchener Rückversicherungs-Gesellschaft
1 Employee representatives (Company employees).
FUCHS PETROLUB SE, Chairman
(since 7 May 2019)
Fresenius Management SE*
Mandates
-
E.ON SE, Chairman
Deutsche Lufthansa Aktiengesellschaft, Chairman
Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer (b.1956)
Member since 2015, elected until the
Annual General Meeting (AGM) 2020
Chairman of the Supervisory Board
Former Chairman of the Board of
Management of BMW AG
Siemens Aktiengesellschaft
Henkel AG & Co. KGaA (Shareholders' Committee)
Manfred Schoch¹ (b.1955)
Member since 1988, elected until the AGM 2024
Mandates
and General Works Council
-
Deputy Chairman of the Supervisory Board
Chairman of the European
Mandates
Member since 2018, elected until the AGM 2023
Former Chairman of the Board of
Management of BASF SE
Dr. rer. pol. Kurt Bock (b.1958)
Continental AG, Deputy Chairwoman
-
Member since 2014, elected until the AGM 2024
Second Chairwoman of IG Metall
Christiane Benner² (b.1968)
Industrial Engineer
Mandates
→ 80
Capped at 180%
of target amount
Performance Cash Plan
Since the financial year 2018, variable cash com-
pensation includes a multi-year and future-oriented
Performance Cash Plan (PCP). The PCP is calculated
at the end of a three-year evaluation period by mul-
tiplying a predefined target amount by a factor that
is based on multi-year target achievement (the PCP
factor). The PCP target amount (100%) amounts to
€0.85 million p.a. for a Board member in the first
period of office, €0.95 million p.a. from the second
period of office or the fourth year of mandate and
€1.6 million p.a. for the Chairman of the Board of
Management. The maximum amount that can be paid
to a Board member is capped at 180% of the PCP
target amount p.a.
The PCP evaluation period comprises three years,
the grant year and the two subsequent years. PCP
entitlements are paid in cash. The bonus is paid out
after the end of the Annual General Meeting, at which
the separate financial statements of BMW AG for the
third
year
of the evaluation period are presented.
In order to determine the PCP factor, a multi-year
earnings factor is multiplied by a multi-year perfor-
mance factor. The PCP factor is capped at a maximum
value of 1.8.
7
In order to determine the multi-year earnings factor,
an earnings factor is calculated for each year of the
three-year evaluation period and an average is then
calculated for the evaluation period. As for the earn-
ings-related component of the bonus, the earnings
factor for each individual year within the evaluation
period is determined on the basis of Group net profit
and post-tax return on sales for the relevant year.
The maximum earnings factor is 1.8. The underlying
measurement values are determined in advance for
a period of three financial years and may not be
changed retrospectively.
In addition to the multi-year earnings factor, the
Supervisory Board also determines a multi-year per-
formance factor after the end of the evaluation period.
To this end, the Supervisory Board takes account of
in particular the business development during the
evaluation period, the forecast trend in the business
development, the Board member's individual contri-
bution to profitability and the status of compliance
within the Board member's area of responsibility.
The multi-year performance factor can be between
0.9 and 1.1.
Performance Cash Plan overview
TARGET AMOUNT
Average earnings factor
X
CASH PAYMENT
Cash payment at end of evaluation period
- Capped at 180% of target amount
PCP factor overview
→ 81
MULTI-YEAR EARNINGS FACTOR
MULTI-YEAR PERFORMANCE FACTOR
X
Cash payment
Measurement based on
PCP FACTOR
TOTAL
Value between 0 and 1.8
Contribution to sustainable and long-term
business development over a period of
at least three financial years
9.0
11.0
Upper limit
Group net profit after tax (in € billion)
The performance-related component is calculated using
a performance factor which the Supervisory Board sets
for each member of the Board of Management and
which is multiplied by 70% of the target bonus amount.
The Supervisory Board sets the performance factor on
the basis of a detailed evaluation of the contribution
made by Board members to sustainable and long-term
business development over a period of at least three
financial years. The evaluation by the Supervisory
Board is based on predefined criteria that take into
account the Group's long-term success, the interests
of shareholders and stakeholders as well as social
responsibility.
The criteria include in particular innovation (economic
and ecological, for example in the reduction of car-
bon dioxide emissions), the Group's market position
compared to its competitors, customer focus, ability
to adapt, leadership, corporate culture, promotion
of compliance and integrity, contribution to the
Group's attractiveness as an employer, progress in
implementing the diversity concept, and activities that
foster corporate social responsibility. The Supervisory
Board also draws comparisons with competitors. The
individual performance factor lies between zero and
a maximum 1.8.
213
214
Corporate
Governance
Bonus overview
→ 79
→ Compensation
Report
EARNINGS COMPONENT BONUS
Earnings factor
x 0.3 of target amount
Based on Group net profit and
Basis for earnings factor:
Group net profit
Group post-tax return on sales
PERFORMANCE COMPONENT
Performance factor
x 0.7 of target amount
Value between 0 and 1.8
Basis for performance factor:
-
• Qualitative, mainly non-financial parameters
multi-year performance factor:
Formula: 30% target amount x earnings factor
Maximum amount of earnings-related bonus p.a.:
BASE SALARY
Component
components
Overview of compensation system and compensation
→ Compensation
Report
·Value between 0 and 1.8
Corporate
Governance
216
215
A one-year post-contractual non-competition clause
has been agreed with Board members under spec-
ified circumstances. During that one-year period,
the former Board member is entitled to receive
monthly compensation equivalent to 60% of his or
her previous base remuneration, reduced by any
amount of other income exceeding 40% of the base
remuneration. The Company may unilaterally waive
the requirement to comply with the post-contractual
non-competition clause.
In the event of death or invalidity, special rules apply
for early payment of performance cash plans and
share-based remuneration components based on
the target amounts. Insofar as the service contract
is prematurely terminated and the Company has an
extraordinary right of termination, or if the Board
member resigns without the Company's agreement,
entitlements to amounts as yet unpaid relating to per-
formance cash plans and share-based remuneration
are forfeited.
Parameter/measurement base
Other
At the end of the Annual General Meeting at which
the separate financial statements of BMW AG for the
relevant financial year are presented, members of the
Board of Management receive a cash compensation
(investment component) for the specific purpose of
investment - after tax and deductions - in shares of
common stock of BMW AG. The investment compo-
nent corresponds to 45% of the gross bonus. The
shares of common stock are purchased immediately
after the investment component has been paid out.
As a general rule, the acquired shares are required
to be held by Board members for four years. This
period also applies if a Board member leaves the
Board of Management.
Share-based remuneration
Members of the Board of Management who were
Board members on 1 January 2018 receive advance
payments out of the Performance Cash Plan 2018 and
the Performance Cash Plan 2019 in the years 2019 and
2020. At the end of each relevant evaluation period,
the advance payment is set off or repaid, depending
on the amount then determined. The advance pay-
ment for each relevant year is €0.5 million for a Board
member in the first period of office and €0.6 million
from the second period of office or the fourth year of
mandate. For the Chairman of the Board of Manage-
ment the amount is €0.9 million p.a.
PCP FACTOR
Value between 0.9 and 1.1
6.9 7.2
Forecast trend in business development
-Individual contribution to profitability
area of responsibility
Status of compliance in each Board member's
Trend in business development
At the end of the holding period, Board members
receive from the Company for every three shares of
common stock held, either one additional share of
common stock or the cash equivalent, to be decided
at the Company's discretion (matching component).
Upper limits have been defined for both the invest-
ment component and the matching component
(see Overview of compensation system and compen-
sation components).
Member of the Board of Management:
€0.80 million p.a. (first period of office)
€0.95 million p.a. (from second period of office or fourth year of mandate)
Earnings factor may not exceed 1.8
― The earnings factor is 1.0 in the event of a Group net profit of €5.3 billion and a post-tax
return on sales of 5.6%
Allocation table fixed in advance for a period of three financial years
share of the shareholders of BMW AG) and Group post-tax return on sales
Earnings factor is derived from Group net profit (from the financial year 2022: earnings
€0.54 million (Chairman of the Board of Management)
€0.30 million (from second period of office or fourth year of mandate)
€0.255 million (first period of office)
Base amount p.a. (30% target amount per bonus):
Capped at 180% of target amount, see section Remuneration caps
Payment at the end of the Annual General Meeting at which the separate
financial statements of BMW AG are presented
€1.0 million (from second period of office or fourth year of mandate)
€1.8 million (Chairman of the Board of Management)
€0.85 million (first period of office)
-
-
-
Target amount p.a. (at 100% target achievement):
(at 100% target achievement corresponds to 70% of target amount)
b) Performance-related bonus
(at 100% target achievement corresponds to 30% of target amount)
a) Earnings-related bonus
(sum of earnings-related bonus and performance-related bonus)
Bonus
VARIABLE REMUNERATION
€1.80 million p.a.
Chairman of the Board of Management:
Group post-tax return on sales
The BMW Group is committed to respecting interna-
tionally recognised human rights and gears its due dil-
igence process towards the UN Guiding Principles on
Business and Human Rights, focusing on topics and
areas of activity where it can leverage its influence as
a commercial enterprise. The BMW Group stated its
position clearly back in 2005, with the Joint Decla-
ration on Human Rights and Working Conditions at
the BMW Group, which was updated in 2010. In 2018,
for further clarification, the BMW Group published
its Code on Human Rights and Working Conditions,
which strengthens the Company's commitment to
human rights and outlines how it promotes human
rights and implements the core labour standards
of the ILO.
Cash Plan
approx. 24
1.520²
the
Any member of staff with questions or concerns
relating to compliance is expected to discuss these
matters with their managers and with the relevant
departments within the BMW Group: in particular,
with the BMW Group Compliance Committee Office,
Legal Affairs and Corporate Audit. The BMW Group
Compliance Contact also serves as a further point of
contact and provides non-employees with a system for
reporting concerns relating to compliance. Commu-
nication with the BMW Group Compliance Contact
may remain anonymous, if preferred. BMW Group
employees worldwide also have the opportunity to
submit information about possible breaches of the law
within the Company anonymously and confidentially
in several languages via the BMW Group SpeakUP
Line. All compliance-related queries and concerns
are documented and followed up by the BMW Group
Compliance Committee Office using an electronic
Case Management System. If necessary, Corporate
Audit, Corporate Security, the legal departments or
the Works Council may be called upon to assist in
process.
than 35,000 managers and employees worldwide have
so far completed antitrust compliance training and
currently hold a valid certificate. Additional classroom
training and multi-day coaching sessions are also held
for all key compliance topics in local markets. The main
emphasis here is on training in antitrust law.
Existing employee training activities were restructured
and refined with the creation of the BMW Group
Compliance Academy in 2019. As well as impart-
ing knowledge, its online and classroom training
options with Company-specific case studies play
an important role in reinforcing compliance in the
corporate culture. The online training modules must
be repeated by the required target groups every two
years and include a final test. Successful completion
of the test is confirmed by a certificate. More than
48,500 managers and staff worldwide have so far
received training in the basic principles of compli-
ance and hold a valid training certificate. Successful
completion of the training programme is mandatory
for all BMW Group managers. The Company makes
sure that newly recruited managers and promoted
staff undergo compliance training. In this way, the
BMW Group achieves almost full training coverage for
its managers in compliance matters. Online training
in antitrust compliance is mandatory for managers
and staff exposed to antitrust risks as a result of their
functions or on specific occasions. A total of more
Various internal media and communications materi-
als are used to raise employee awareness across all
compliance issues, including newsletters, employee
newspapers and the compliance homepage in the
BMW Group intranet, where employees can find all
compliance-related information and training materi-
als. A Group-wide Compliance Day was organised for
the first time in 2019 to boost employee awareness of
the importance of creating a culture of transparency
and trust.
Compliance measures are determined and prioritised
on the basis of a regular Group-wide compliance risk
assessment that relies on data-based risk indicators
and transaction validation, among other methods.
The various elements of the BMW Group Compliance
Management System are shown in the diagram on the
previous page and are applicable to all BMW Group
organisational units worldwide. The BMW Group
Legal Compliance Code, which forms the core of the
Group's Compliance Management System, is supple-
mented by an internal set of rules. The BMW Group
Policy "Antitrust Compliance", which establishes
binding rules of conduct for all employees across the
BMW Group to prevent unlawful restriction of compe-
tition, deserves particular mention. The BMW Group
Policy "Corruption Prevention" and the BMW Group
Instruction "Corporate Hospitality and Gifts" deal with
lawful handling of gifts and benefits and define appro-
priate assessment criteria and approval procedures.
4,925,000
1,800,000
1,710,000
810,000
Various IT systems support BMW Group employees
with the assessment, approval and documentation
of compliance-relevant matters. For example, all
exchange activities with competitors must be docu-
mented and approved in a special compliance IT system.
The same applies to verifying legal admissibility and
documenting benefits, especially in connection with
corporate hospitality. The BMW Group also uses an
IT-based Business Relations Compliance programme
to ensure the reliability of its business relations. Rel-
evant business partners are checked and evaluated
for potential compliance risks. Appropriate measures
are implemented to manage compliance risks based
on the results of the evaluation. A further IT system
is used to verify customer integrity as required under
anti-money-laundering regulations.
405,000
3,240,000
2,880,000
1,458,000
729,000
9,850,000
*Including base salary, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the individual components.
Retirement benefits
With effect from 1 January 2010, the provision of
retirement benefits for members of the Board of
Management was changed to a defined contribution
system with a guaranteed minimum return. Retire-
ment benefits remain unchanged as part of the new
compensation system applicable for financial years
from 2018 onwards, as they are appropriate and in
line with customary market practice.
If a mandate is terminated, the defined contribution
system provides, in the case of death or invalidity, for
amounts accumulated on individual pension accounts
to be paid out as a one-off amount or in instalments.
For entitlements arising before 2016, there is an
option to receive payment as a lifelong pension or in
a combined form. Former Board members are entitled
to receive the retirement benefit at the earliest upon
reaching the age of 60, or in the case of entitlements
awarded for the first time after 1 January 2012, upon
reaching the age of 62.
The amount of the benefits to be paid is determined
on the basis of the amount accrued in each Board
member's individual pension savings account. The
amount on this account results from annual contri-
butions paid in, plus interest earned depending on
the type of investment.
If a member of the Board of Management with a vested
entitlement dies prior to the commencement of bene-
fit payments, a surviving spouse or registered partner,
or otherwise surviving children - in the latter case
depending on their age and education - are entitled
to receive benefits as surviving dependants.
5,500,000
€0.459 million (first period of office)
Through the Group-wide reporting system, compli-
ance responsibles across all organisational units of
the BMW Group report, on both a regular and ad hoc
basis, on the compliance status of their respective
units, on any identified legal risks and incidences of
non-compliance, as well as on sanctions and correc-
tive/preventative measures implemented.
210
Compliance is also an important factor in safeguarding
the future of the BMW Group workforce. With this
in mind, the Board of Management and the national
and international employee representative bodies of
the BMW Group have agreed on a binding set of joint
principles for lawful conduct. Employee representa-
tives are regularly involved in the process of refining
compliance management within the BMW Group.
COMPENSATION REPORT
(PART OF THE COMBINED
MANAGEMENT REPORT)
The following section describes the principles govern-
ing the compensation of the Board of Management
for financial years since 2018. A description of the
stipulations set out in the Company's statutes relat-
ing to the compensation of the Supervisory Board is
also provided. In addition to explaining the system of
compensation, details of components of compensation
are also provided with figures. Furthermore, the com-
pensation of each member of the Board of Management
and the Supervisory Board for the financial year 2019
is disclosed by individual member and analysed with
its component parts.
1. Board of Management compensation
Responsibilities
The full Supervisory Board is responsible for determin-
ing and regularly reviewing the system and structure
of the Board of Management's compensation as well
as for determining the compensation of individual
Board members. The Supervisory Board's Personnel
Committee is responsible for the preparatory work
relating to those tasks.
The Supervisory Board reviews the appropriateness
of the compensation system annually. In preparation,
the Personnel Committee also consults remuneration
studies. In order to check that the compensation
system is in line with peers, the Supervisory Board
especially compares compensation paid by other
DAX companies. For a vertical view, it compares Board
compensation with the salaries of executive managers
and with the average salaries of employees of BMW AG
based in Germany, also with regard to salary devel-
opment over time. During the consultative process,
consideration is also given to the recommendations
of an independent external remuneration expert as
well as to input from investors and analysts.
The Supervisory Board presents the compensation
system to the Annual General Meeting for shareholder
approval whenever significant changes are proposed,
but at least once every four years. The currently valid
compensation system was approved by the Annual
General Meeting in 2018.
Principles of compensation
The compensation system for the Board of Management
at BMW AG is designed to encourage a management
approach focused on the sustainable development of
the BMW Group. A further principle of the compensa-
tion system at the BMW Group is that of consistency.
This means that compensation systems for the Board
of Management, executive management and employ-
ees of BMW AG are composed of similar elements.
The Supervisory Board performs an annual review to
ensure that all Board of Management compensation
components are appropriate, both individually and in
total, and do not encourage the Board of Management
to take inappropriate risks for the BMW Group. At
the same time, the compensation model used for the
Board of Management needs to be attractive for highly
qualified executives in a competitive environment.
The compensation of members of the Board of Man-
agement is determined by the full Supervisory Board
on the basis of performance criteria and after taking
into account any remuneration received from Group
companies. The principal performance criteria are the
tasks and exercise of mandate of the Board member,
the economic situation as well as the performance and
future prospects of the BMW Group. The Supervisory
Board sets ambitious and relevant parameters as the
basis for variable compensation. It also ensures that
variable components based on multi-year criteria take
account of both positive and negative developments
and that the overall incentive is on the long term. As
a general rule, targets and comparative parameters
may not be changed retrospectively.
209
211
Corporate
Governance
→ Compensation
Report
Compensation system, compensation components
Board of Management compensation comprises fixed
and variable cash elements as well as a share-based
component. Retirement and surviving dependants'
benefit entitlements are also in place. The compensa-
tion components are described in more detail below.
Overview of compensation system: depiction of
allocation to cash benefits (target compensation)
and pension contribution¹
→ 76
in %
Managers, in particular, bear a high degree of respon-
sibility and must set a good example with regard to
preventing infringements. Managers throughout the
BMW Group acknowledge this principle by signing
a written declaration, in which they also undertake
to make staff working for them aware of legal risks.
Managers must, at regular intervals and on their
own initiative, verify compliance with the law. It
is important to signal to employees that they take
compliance risks seriously and that disclosing rele-
vant information is extremely valuable. In dealings
with their staff, managers remain open to discussion
and listen to differing opinions. Any indication of
non-compliance with the law must be rigorously and
judiciously investigated.
Compliance with and implementation of compli-
ance rules and processes are audited regularly by
Corporate Audit and subjected to control checks
by the BMW Group Compliance Committee Office.
Corporate Audit carries out on-site audits as part of
its regular activities. The BMW Group Compliance
Committee also engages Corporate Audit to perform
compliance-specific checks and, if necessary, brings
in Corporate Security to investigate suspected cases.
A BMW Group Compliance Spot Check, a sample test
specifically designed to identify potential corruption
risks, and two antitrust compliance validations (to
identify and audit possible antitrust risks) were
carried out in addition in 2019.
→ Compensation
Report
Compliance and
Human Rights in
the BMW Group
Corporate
Governance
212
In the case of death or invalidity, a minimum benefit
is payable based on the number of contributions
possible up to the age of 60 (subject to maximum of
ten contributions).
Pension contribution
approx. 8
Base salary
approx. 27
In order to calculate the earnings-related component,
an earnings factor is determined on the basis of the
target parameters and multiplied by 30% of the target
bonus amount. The level of the earnings-related com-
ponent depends on the degree to which the targets
set by the Supervisory Board for Group net profit
(from the financial year 2022: earnings share of the
shareholders of BMW AG) and Group post-tax return
on sales are achieved. The degree of achievement
is expressed in an earnings factor. The underlying
measurement values are determined in advance for a
period of three financial years and may not be changed
retrospectively. The earnings factor is capped at a
maximum of 1.8. The bonus is paid out after the end
of the Annual General Meeting, at which the sepa-
rate financial statements of BMW AG for the relevant
financial year are presented.
An earnings factor of 1.000 would give rise to a profit-
related component of €0.255 million for a Board
member in the first period of office, €0.3 million
from the second period of office or the fourth year
of mandate and €0.54 million for the Chairman of
the Board of Management. For instance, in the event
of a Group net profit of €5.3 billion and a post-tax
return on sales of 5.6%, the earnings factor is 1.000.
Similarly, a Group net profit of €6.9 billion and a post-
tax return on sales of 7.3% gives rise to an earnings
factor of 1.500 and a Group net profit of €9.0 billion
and a post-tax return on sales of 8.0% to one of 1.637. ¬
A minimum earnings factor of 0.135 arises in the
event of a Group net profit of €3 billion and a post-
tax return on sales of 3%. If the Group net profit
were below €3 billion or the post-tax return on sales
below 3%, the earnings factor would be zero. In this
case, a profit-related component would not be paid.
The maximum earnings factor of 1.800 is reached in
the event of a Group net profit of €11 billion and
a post-tax return on sales of 9%. In exceptional
circumstances, for instance major acquisitions or
disposals, the Supervisory Board may adjust the
earnings factor.
Earnings components: allocation table for calculating earnings factor¹
→ 78
Group post-tax return on sales in %
9.0 Upper limit
043
8.0
7.4
7.3
In the case of 100% target achievement, the bonus
comprises an earnings-related component of 30%
and a performance-related component of 70%. The
target bonus (100%) is €0.85 million p.a. for a Board
member during the first period of office, €1.0 million
p.a. from the second period of office or the fourth year
of mandate and €1.8 million p.a. for the Chairman of
the Board of Management. For all Board members, the
upper limit of the bonus is set at 180% of the relevant
target bonus.
5.6
0.135
3.0 Lower limit
1 Simplified depiction.
2 Earnings factor 2018.
3 Earnings factor 2019.
0.7983
1.000
3.0
Lower limit
5.0 5.3
1.800
1.637
4.8
Bonus
Payment of a discretionary additional bonus is not
provided for. An upper limit has been set for each
component of variable remuneration (see Overview of
compensation system and compensation components).
share-based remuneration
Share-based
remuneration
approx. 14
Performance
It is essential for compliance at the BMW Group that
employees are aware of and comply with applicable
legal regulations. The BMW Group does not tolerate
violations of the law by its employees. Culpable
violations of the law result in employment-contract
sanctions and may involve personal liability conse-
quences for the employee involved.
Earn-
ings-based
component of
the bonus
approx. 8
Performance component
of the bonus approx. 19
1 Simplified depiction of target amounts for the variable cash remuneration of the Chairman
of the Board of Management and pension contribution. Excludes other remuneration.
Based on the assumption that the share price remains unchanged for the calculation of the
matching component.
Overview of compensation system: depiction of
variable remuneration (target compensation)²
→ 77
in %
Share-based remuneration
approx. 22
Performance
Cash Plan
approx. 37
Earnings-based
component
of the bonus
approx. 12
Performance
component
of the bonus
approx. 29
² Simplified depiction of target amounts for the variable cash remuneration of the Chairman
of the Board of Management. Excludes basic salary, other remuneration and pension
contribution. Based on the assumption that the share price remains unchanged for the
calculation of the matching component.
Fixed remuneration
Fixed remuneration consists of a base salary, which is
paid monthly, and fringe benefits (other remuneration
elements such as the use of Company cars, insurance
premiums and contributions towards security sys-
tems). With effect from the financial year 2018, the
base salary is €0.8 million p.a. for a Board member
during the first period of office, €0.95 million p.a. for
a Board member from the second period of office or
the fourth year of mandate and €1.8 million p.a. for
the Chairman of the Board of Management.
Variable remuneration
The variable remuneration of the Board of Manage-
ment comprises three components:
bonus
Performance Cash Plan and
1.500
€0.54 million (from second period of office or fourth year of mandate)
217
Formula: 70% target amount x performance factor
Share acquisition immediately after payment of earmarked cash remuneration
Payment at the end of the Annual General Meeting at which the separate financial
statements of BMW AG for the relevant financial year are presented
Maximum remuneration, see section Remuneration caps
€0.81 million (Chairman of the Board of Management)
€0.45 million (from second period of office or fourth year of mandate)
€0.3825 million (first period of office)
Cash remuneration p.a. at 100% target achievement of the bonus:
Earmarked cash remuneration amounting to 45% of the gross bonus
Requirement for Board of Management members to hold the acquired shares of common
stock for four years
Requirement for Board of Management members to invest an amount of 45% of the
gross bonus after tax and contributions in BMW AG common stock
Multi-year performance factor can be between 0.9 and 1.1
Criteria include in particular the trend in business development during the evaluation
period, the forecast trend in business development, individual contribution to profitability
and the status of compliance within the Board member's area of responsibility
Determined by Supervisory Board at end of evaluation period
Average for evaluation period calculated
Earnings factor for each year may not exceed 1.8
and Group post-tax return on sale
Earnings factor for each year of three-year evaluation period derived from Group net profit
b) Share-based remuneration component
(matching component)
Target amount p.a. (at 100% target achievement):
| | || |
-
-
€0.85 million (first period of office)
Once the four-year holding period requirement is fulfilled, Board of Management mem-
bers receive for each three common stock shares held either - at the Company's option -
one further share of common stock or the equivalent amount in cash
€0.95 million (from second period of office or fourth year of mandate)
€1.6 million (Chairman of the Board of Management)
Capped at 180% of target amount, see section Remuneration caps
Formula: PCP factor x target amount
PCP factor: multi-year earnings factor x multi-year performance factor
PCP factor may not exceed 1.8
Payment at the end of the Annual General Meeting at which the separate financial state-
ments of BMW AG for the third year of the evaluation period are presented
Three-year evaluation period
a) Cash remuneration component
(investment component)
― Maximum remuneration, see section Remuneration caps
Contractual agreement, main points: non-cash benefits from use of Company car, insurance
premiums, contributions towards security systems
The annual contribution paid by the Company is
€350,000 for a Board member and €500,000 for the
Chairman of the Board of Management. The guaran-
teed minimum rate of return p.a. corresponds to the
maximum interest rate used to calculate insurance
reserves for life insurance policies (guaranteed interest
on life insurance policies). When granting pension
entitlements, the Supervisory Board considers the
targeted level of pension provision in each case as well
as the resulting expense for the BMW Group.
344,500
688,500
1,530,000
1,530,000
Total*
of matching
component
Monetary value
Share-based compensation programme
Cash compen-
sation for share
acquisition
Performance
Cash Plan
Bonus
Chairman of the Board of Management
in the second period of office or from fourth year of mandate
Member of the Board of Management
in the first period of office
Member of the Board of Management
218
Corporate
Governance
→ Compensation
Report
Overview of compensation system and compensation
components onwards
RETIREMENT AND SURVIVING DEPENDANTS' BENEFITS
OTHER REMUNERATION
€0.972 million (Chairman of the Board of Management)
Principal features
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
Pension contributions p. a.:
Member of the Board of Management: €350,000
Chairman of the Board of Management: €500,000
REMUNERATION CAPS (MAXIMUM REMUNERATION)
in € p.a.
Defined contribution system with guaranteed minimum rate of return
Share-based remuneration programme
Model
Performance factor may not exceed 1.8
- Maximum amount of performance-related bonus p.a.:
€2.268 million (Chairman of the Board of Management)
Criteria for the performance factor include: innovation (economic and ecological, for
example in the reduction of carbon dioxide emissions), the Group's market position
compared to its competitors, customer focus, ability to adapt, leadership, corporate
culture, promotion of compliance and integrity, contribution to the Group's attractiveness
as an employer, progress in implementing the diversity concept, and activities that
foster corporate social responsibility
·Primarily qualitative, non-financial criteria, expressed in terms of a performance factor
aimed at measuring the Board member's contribution to the sustainable and long-term
development and the future viability of the Company over a period of at least three finan-
cial years
€0.70 million (from second period of office or fourth year of mandate)
€1.26 million (Chairman of the Board of Management)
€0.595 million (first period of office)
Component
Parameter/measurement base
VARIABLE REMUNERATION
Performance Cash Plan
a) Multi-year earnings factor
b) Multi-year performance factor
€1.26 million (from second period of office or fourth year of mandate)
Base amount p.a. (70% target amount per bonus):
€1.071 million (first period of office)
FY 2019 (Min) FY 2019 (Max)
FY 2018
FY 2019
950,000
71,822
1,021,822
950,000
71,822
1,021,822
950,000
71,822
1,021,822
950,000
64,033
1,014,033
950,000
950,000
FY 2019
² Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
Grants
2,966
(matching component) 2014 for holding obligation 2015-2019
Share-based remuneration component
485,730
810,000
0
in €
BASE SALARY
Fixed compensation
Fringe benefits (other compensation)
Total
ONE-YEAR VARIABLE REMUNERATION
Earnings-based component of the bonus¹
Payout
FY 2018
71,822
1,021,822
64,033
1,014,033
300,000
0
178,500
119,000
840,000
Performance Cash Plan
PCP 2018-2020²
PCP 2019-20212
950,000
600,000
950,000
0 1,710,000
600,000
Share-based remuneration programme
Cash remuneration component
(investment component) 2018 for holding obligation 2019-20231
450,000
583,200
Cash remuneration component
(investment component) 2019 for holding obligation 2020-20241
450,000
0
Share-based remuneration component
99,167
Performance component of the bonus 2018 (three-year plan term)1
540,000
300,000
239,400
456,000
MULTI-YEAR VARIABLE REMUNERATION
Performance component of the bonus
Performance component of the bonus 2018 (three-year plan term)¹
700,000
840,000
Performance component of the bonus 2019 (three-year plan term)1
700,000
0 1,260,000
162,708
162,708
29,375
162,708
42,500
0
76,500
33,915
Performance component of the bonus 2019 (three-year plan term)1
(matching component) 2015 for holding obligation 2016-2020
Share-based remuneration component
(matching component) 2016 for holding obligation 2017-2021
(investment component) 2019 for holding obligation 2020-20241
Cash remuneration component
(investment component) 2018 for holding obligation 2019-20231
Cash remuneration component
Share-based remuneration programme
0
255,000
0
141,667
PCP 2019-20212
PCP 2018-20202
Performance Cash Plan
→ Compensation
Report
Ilka Horstmeier
Human Resources, Industrial Relations Director
Member of the Board of Management
63,750
0
114,750
68,812
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
3,543,245 3,846,352
5,500,000 3,862,192
1,375,149
3,854,304
4
Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
since 1 November 2019
227
Corporate
Governance
Other
57,417
0
12,013
(matching component) 2019 for holding obligation 2020-2024
Share-based remuneration component
228
in €
BASE SALARY
Fixed compensation
1,021,822 5,746,822 3,509,073
353,327 353,327 353,119
3,500,977
353,327
Total compensation
Pension expense³
Total
Other
405,000
3,189,918 3,493,233
353,327 353,119
0
(matching component) 2019 for holding obligation 2020-2024
³ Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
95,040
(matching component) 2018 for holding obligation 2019-2023
Share-based remuneration component
(matching component) 2017 for holding obligation 2018-2022
Share-based remuneration component
79,155
Share-based remuneration component
162,708
29,375
Fringe benefits (other compensation)
Total
ONE-YEAR VARIABLE REMUNERATION
Earnings-based component of the bonus¹
MULTI-YEAR VARIABLE REMUNERATION
Performance component of the bonus
Grants
Payout
29,375
FY 2018
FY 2018
FY 2019
133,333
133,333
133,333
133,333
29,375
FY 2019 FY 2019 (Min) FY 2019 (Max)
Total
Pension expense³
1,346
Compensation
Total
Total
Number
Monetary value
2,036,351
(1,785,240)
1,725
(1,045)
103,037
3,460,227
(90,288)
(2,800,522)
1,855,626
Total
93,870
3,159,674
(3,382,560)
(1,981)
(171,158)
(5,376,110)
1,304,275
compensation component
(matching component)⁹
1,016
Share-based
Performance
496,271
8,155,411
8,697,280
3,913,778
(7,801,613)
(421,209)
(8,222,822)
(10,350,938)
(4,657,922)
1 Member of the Board of Management since 13 May 2015, Chairman of the Board of Management since 16 August 2019.
2 Member and Chairman of the Board of Management until 15 August 2019.
3 Member of the Board of Management until 31 October 2019.
4 Member of the Board of Management since 1 November 2019.
5 Member of the Board of Management since 1 October 2019.
6 Member of the Board of Management until 31 October 2019.
7 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office with effect from the end of the financial year 2018.
8 PCP is paid out after the end of the relevant three-year evaluation period.
⁹ Provisional amount/cash value calculated at grant date (date on which the entitlement became binding in law in accordance with German Accounting Standard 17 (DRS 17).
The final number of matching shares is determined in each case when the requirement to invest in BMW AG common stock has been fulfilled. See note 41 to the Group Financial Statements
for a description of the accounting treatment of the share-based compensation component.
Performance
Cash Plan
2018-20208
Variable cash compensation
Cash Plan
2019-20218
7,659,140
70,856
(1,879,200)
(-)
1,330,361
1,036
72,251
2,223,394
(-)
(1,597,320)
(1,004)
(86,746)
(2,574,435)
1,330,361
965
67,299
2,227,648
(1,597,320)
(935)
(80,784)
(2,516,716)
1,304,275
1,016
70,856
(-)
2,227,405
(-)
18,026
(1,181)
(102,038)
(3,006,202)
1,565,130
1,135
79,155
2,666,107
(1,879,200)
(1,100)
(95,040)
(2,988,273)
221,727
173
12,013
396,448
(-)
(-)
(-)
(-)
332,591
280
555,722
2,204,145
Total'
(275,400)
1,021,822
1,079,400
485,730
(950,000)
(64,033)
(1,014,033)
(1,296,000)
(583,200)
Ilka Horstmeier4
133,333
29,375
162,708
152,915
68,812
(-)
(-)
(-)
(-)
(-)
Milan Nedeljković5
200,000
71,822
5,105
950,000
(583,200)
Harald Krüger²
1,122,581
87,597
1,210,178
1,279,742
575,884
(1,800,000)
(22,392)
(1,822,392)
(2,332,800)
(1,049,760)
Milagros Caiña Carreiro-Andree³
791,667
60,607
852,274
899,500
404,775
(950,000)
(74,964)
(1,024,964)
(1,296,000)
Klaus Fröhlich
(123,930)
205,105
103,218
(495,720)
Peter Schwarzenbauer
791,667
37,347
829,014
899,500
404,775
(950,000)
(51,777)
(1,001,777)
(1,296,000)
(583,200)
Andreas Wendt
800,000
102,701
902,701
917,490
412,871
(200,000)
(13,029)
(213,029)
(1,101,600)
229,373
(838,612)
(800,000)
(-)
(-)
(-)
(-)
(-)
Pieter Nota
800,000
20,782
820,782
917,490
412,871
(800,000)
(90,369)
(890,369) (1,101,600)
(495,720)
Nicolas Peter
800,000
29,988
829,988
917,490
412,871
(38,612)
(1,879,200)
(1,181)
(102,038)
ONE-YEAR VARIABLE REMUNERATION
Earnings-based component of the bonus¹
MULTI-YEAR VARIABLE REMUNERATION
Performance component of the bonus
Payout
FY 2018
Grants
FY 2019
FY 2019 (Min)
FY 2019 (Max)
FY 2018
FY 2019
1,122,581
87,597
1,210,178
1,122,581
87,597
1,210,178
1,122,581
87,597
1,210,178
1,800,000
22,392
1,822,392
1,122,581
87,597
1,210,178
1,800,000
22,392
1,822,392
336,774
Total
336,774
Fringe benefits (other compensation)
BASE SALARY
526,935
Other
Total
Pension expense³
Total compensation
4,505,060
406,452
1,320,839 7,393,904 3,309,449
406,452 406,452 353,289
4,070,090 3,276,900
406,452 353,289
4,911,512
1,727,291
7,137,0974 3,662,738
4,476,542 3,630,189
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
2 Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
³ Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
Harald Krüger
Chairman of the Board of Management
13 May 2015 until 15 August 2019
Member of the Board of Management
since 1 December 2008 until 13 May 2015
in €
Fixed compensation
0
606,194
336,774
909,290
575,884
Share-based remuneration component
(matching component) 2013 for holding obligation 2014-2018
88,157
Share-based remuneration component
(matching component) 2014 for holding obligation 2015-2019
57,105
Share-based remuneration component
(matching component) 2015 for holding obligation 2016-2020
Share-based remuneration component
(matching component) 2016 for holding obligation 2017-2021
Share-based remuneration component
(matching component) 2017 for holding obligation 2018-2022
Share-based remuneration component
(matching component) 2018 for holding obligation 2019-2023
171,158
Share-based remuneration component
(matching component) 2019 for holding obligation 2020-2024
93,870
91,011
558,203
540,000
558,203
Cash remuneration component
820,000
Performance component of the bonus 2018 (three-year plan term)¹
1,260,000
1,512,000
Performance component of the bonus 2019 (three-year plan term)1
903,677
903,677 1,414,452
942,968
Performance Cash Plan
PCP 2018-20202
PCP 2019-20212
1,600,000
900,000
997,849
0 1,796,129
561,290
Share-based remuneration programme
Cash remuneration component
(investment component) 2018 for holding obligation 2019-20231
810,000
1,049,760
(investment component) 2019 for holding obligation 2020-20241
103,037
Share-based remuneration component
(matching component) 2019 for holding obligation 2020-2024
90,288
Corporate
Governance
→ Compensation
Report
In addition to the disclosures required by German
commercial law and the accounting principles required
to be applied, the following tables show the amounts
awarded and payments made to individual members
Oliver Zipse
Chairman of the Board of Management
since 16 August 2019
Member of the Board of Management
since 13 May 2015
of the Board of Management in accordance with the
requirements of the German Corporate Governance
Code in the version dated 7 February 2017.
in €
BASE SALARY
Fixed compensation
Fringe benefits (other compensation)
Total
ONE-YEAR VARIABLE REMUNERATION
Earnings-based component of the bonus¹
MULTI-YEAR VARIABLE REMUNERATION
Grants
Payout
FY 2019
FY 2019 (Min)
FY 2019 (Max)
224
FY 2018
223
Andreas Wendt
(2,983,015)
1,330,361
1,036
72,251
2,305,313
(399,330)
(277)
12,611,058
(15,008,860)
9,728
(9,087)
(21,645)
659,614
(782,828)
(634,004)
21,426,083
(24,014,510)
Oliver Zipse¹
Harald Krüger²
Milagros Caiña Carreiro-Andree³
Klaus Fröhlich
Ilka Horstmeier4
Milan Nedeljković5
Pieter Nota
Nicolas Peter
Peter Schwarzenbauer
Total7
FY 2019
FY 2018
1,269,892
50,947
566,666
2,150,323
712,900
Share-based remuneration programme
Cash remuneration component
(investment component) 2018 for holding obligation 2019-20231
427,500
554,040
Cash remuneration component
(investment component) 2019 for holding obligation 2020-20241
585,484
0 1,053,871
631,971
Share-based remuneration component
(matching component) 2015 for holding obligation 2016-2020
Share-based remuneration component
(matching component) 2016 for holding obligation 2017-2021
Share-based remuneration component
(matching component) 2017 for holding obligation 2018-2022
Share-based remuneration component
(matching component) 2018 for holding obligation 2019-2023
916,667
1,194,624
PCP 2019-20212
PCP 2018-2020²
1,320,839
1,269,892
50,947
1,320,839
1,269,892
50,947
1,320,839
900,000
24,994
924,994
1,269,892
900,000
50,947
1,320,839
24,994
924,994
390,323
0
(554,040)
702,581
311,477
433,200
Performance component of the bonus
Performance component of the bonus 2018 (three-year plan term)1
Performance component of the bonus 2019 (three-year plan term)1
665,000
798,000
910,753
0 1,639,355
1,092,903
Performance Cash Plan
285,000
454,645
(1,231,200)
(24,994)
Human Resources, Industrial Relations Director
Member of the Board of Management
1 July 2012 until 31 October 2019
in €
BASE SALARY
Fixed compensation
Fringe benefits (other compensation)
Total
ONE-YEAR VARIABLE REMUNERATION
Earnings-based component of the bonus¹
MULTI-YEAR VARIABLE REMUNERATION
Performance component of the bonus
Payout
FY 2018
Grants
FY 2019 FY 2019 (Min)
FY 2019 (Max)
FY 2018
FY 2019
791,667
791,667
60,607
60,607
Milagros Caiña Carreiro-Andree
852,274
Report
Corporate
Governance
Share-based remuneration component
(matching component) 2015 for holding obligation 2016-2020
Share-based remuneration component
52,520
(matching component) 2014 for holding obligation 2015-2019
Share-based remuneration component
81,130
(matching component) 2013 for holding obligation 2014-2018
Share-based remuneration component
404,775
Pension expense³
Total compensation
4,100,551 3,099,843 6,390,888 6,203,550 3,684,199 6,192,309
316,758 316,758 316,758 504,831 316,758 504,831
4,417,309
3,416,601
6,143,0114 6,708,381
4,000,957 6,697,140
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
2 Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
* Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
225
226
→ Compensation
(matching component) 2016 for holding obligation 2017-2021
852,274
950,000
74,964
1,024,964
Share-based remuneration programme
Cash remuneration component
(investment component) 2018 for holding obligation 2019-20231
450,000
583,200
Cash remuneration component
(investment component) 2019 for holding obligation 2020-20241
375,000
315,000
675,000
³ Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
"Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
² Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
442,768
820,8334
221,041
384,435
58,333
844,875
58,333
162,708
58,333
58,333
521,805
580,138
Total compensation
500,000
791,667
60,607
852,274
0 1,425,000
791,667
791,667
950,000
60,607
852,274
74,964
1,024,964
250,000
0
450,000
300,000
199,500
456,000
Performance component of the bonus 2018 (three-year plan term)1
700,000
840,000
Performance component of the bonus 2019 (three-year plan term)1
700,000
700,000 1,050,000
700,000
Performance Cash Plan
PCP 2018-20202
PCP 2019-20212
950,000
600,000
(924,994)
Share-based remuneration component
Other
I
21.4
Total compensation
3.3
0.8
3.3
The following table shows the compensation of the
members of the Board of Management in accordance
with commercial law and the accounting principles
required to be applied.
Share-based compensation component*
62.5
15.0
58.9
12.6
34.2
8.2
37.8
8.1
Variable cash compensation
Fixed compensation
Proportion in %
Amount
Proportion in %
Amount
in € million
2018
100.0
2019
24.0
* Matching component; provisional number/cash value calculated at grant date (date on which the entitlement became binding in accordance with German Accounting Standard 17 (DRS 17)).
The final number of matching shares is determined in each case when the requirement to invest in BMW AG common stock has been fulfilled.
221
222
Corporate
Governance
→ Compensation
Report
Compensation of the individual members
of the Board of Management for the
financial year 2019 (2018)
Fixed compensation
Variable cash compensation
in € or
number of matching shares
Base salary
Other
compensation
Total
Bonus
Share-based
compensation
component (invest-
ment component)
Oliver Zipse¹
1,269,892
50,947
1,320,839
1,404,380
631,971
(900,000)
100.0
penetration of technologies relating to electrification,
including the opening of the new battery cell com-
petence centre. Also considered were the continuous
progress made in reducing the fleet's CO2 emissions
as well as the planning decisions taken – such as
the development of the product portfolio – to ensure
compliance with emission thresholds. The develop-
ment of the market position was another focus area
of the evaluation. Here, the Supervisory Board took
into account in particular the BMW Group's achieve-
ments in confirming its position as the world's lead-
ing premium automobile manufacturer for the 16th
consecutive year and setting a new delivery volume
record for the ninth consecutive year. Furthermore,
the Supervisory Board also considered the Board
of Management's decision to successively integrate
electrified models into the production system. The
focus on flexible plant structures is a prerequisite for
the further expansion of electrification. As part of the
evaluation of other performance criteria, the Supervi-
sory Board also assessed in particular the Company's
ability to adapt to change, measured for example in
terms of developments in the area of cooperation
arrangements and strategic investments. In the area
of Corporate Social Responsibility, consideration
was given to the BMW Group's activities to promote
children and young people through educational
programmes and road safety education as well as to
the BMW Group's excellent performance in various
sustainability indices over a number of years. The
BMW Group's attractiveness as an employer was eval-
uated by reference to various studies over a period of
several years, in which the BMW Group was ranked
among the top employers.
0.7
In determining the performance factor, the Super-
visory Board uses various criteria to evaluate the
contribution of Board members to the sustainable
and long-term development and future viability of
the Company. In this context, the Supervisory Board
considers developments over recent years as well as
the impact of planning decisions going forward.
Klaus Fröhlich
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
² Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
3,004,515 3,939,518
4,583,3334 3,881,226
2,217,815
1,922,369 4,789,774 3,527,002 2,709,069 3,585,294
295,446 295,446 354,224 295,446 354,224
3,039,797
295,446
3,335,243
A central topic of focus was innovation performance,
particularly in the area of electrification. The Super-
visory Board took into account continuous growth in
the number of electrified vehicles delivered in recent
years as well as the measures taken to accelerate the
Total compensation
Total
Other
337,500
55,095
70,856
(matching component) 2019 for holding obligation 2020-2024
Share-based remuneration component
I
102,038
(matching component) 2018 for holding obligation 2019-2023
Share-based remuneration component
Pension expense³
Development
(matching component) 2017 for holding obligation 2018-2022
220
Income earned on an employed or a self-employed
basis up to the age of 63 may be offset against instal-
ment payments. In addition, certain circumstances
have been specified, in the event of which the Com-
pany no longer has any obligation to pay benefits.
Transitional payments are not provided.
In the event of the death of a Board member during
the service contract term, the base remuneration
for the month of death and a maximum of three
further calendar months are paid to entitled surviving
dependants.
Members of the Board of Management who retire
immediately after their service on the Board, or
who are deemed to be in an equivalent position, are
entitled to acquire vehicles and other BMW Group
products and services at conditions that also apply to
BMW pensioners and to lease BMW Group vehicles in
accordance with the guidelines applicable to senior
heads of departments. Retired Chairmen of the Board
of Management are entitled to use a BMW Group
vehicle as a company car on a similar basis to senior
heads of departments, and depending on availability
and against payment, use BMW chauffeur services.
Termination benefits on premature termination of
Board activities, benefits paid by third parties
In agreement with the Supervisory Board, Mr Krüger
resigned from the Board of Management at the end of
15 August 2019 and was released from his duties for
the remaining term of his service contract, which ends
on 30 April 2020. The proportionate amount of base
and other remuneration relating to the period after
his departure from the Board and to the financial year
2019 amounted to €0.7 million. The proportionate
amount of base remuneration relating to the finan-
cial year 2020 amounts to €0.6 million. The expected
amount of variable cash remuneration (bonus, cash
component of share-based remuneration, PCP) for
the remaining term of the contract from the date
of departure from the Board of Management totals
€3.5 million, where necessary taking into account
forecast figures. This includes the bonus for the period
from 16 August to 31 December 2019 amounting to
€0.8 million as well as the proportionate amount of
the cash component of remuneration (investment
component) for this period amounting to €0.3 million.
The cash value of the cash component of share-based
remuneration (matching component) for the period
from 16 August 2019 to 31 December 2019 amounts
to €0.06 million. The expected cash value of the match-
ing component for the relevant proportionate period in
the financial year 2020 amounts to €0.05 million. The
Company will pay a pension contribution of €0.2 mil-
lion for the period from the date of departure from the
Board of Management up to 31 December 2019 and a
corresponding proportionate amount of €0.2 million
for the financial year 2020. Compensation for the
agreed one-year post-contractual non-competition
clause amounts to €1.1 million. A provision has been
recognised for remuneration relating to the period
after 31 December 2019.
Ms Caiña Carreiro-Andree left the Board of Manage-
ment at the end of 31 October 2019 and was released
from her duties for the remaining period of her ser-
vice contract (until 30 June 2020). The proportionate
amount of base and other remuneration relating to
the period after her departure from the Board and
to the financial year 2019 amounts to €0.2 million.
Fixed remuneration relating to the financial year 2020
amounts to €0.5 million.
since 9 December 2014
Member of the Board of Management
219
Corporate
Governance
Contributions falling due under the defined contri-
bution model are paid into an external fund in con-
junction with a trust model that is also used to fund
pension obligations to employees.
→ Compensation
Report
Mr Schwarzenbauer left the Board of Management at
the end of 31 October 2019. Under the terms of his
service contract, a one-year post-contractual non-com-
petition clause applies. The proportionate amount of
compensation relating to the financial year 2019 is
€0.1 million. The corresponding figure for the remain-
ing period from 1 January 2020 to 31 October 2020 is
€0.5 million, for which a provision has been recognised.
In line with the recommendation of the German
Corporate Governance Code dated 7 February 2017,
Board of Management service contracts provide for
severance pay to be paid to the Board member in
the event of premature termination by the Company
without important reason, the amount of which is
limited to a maximum of two years' compensation
(severance payment cap). If the remaining term of the
contract is less than two years, the severance payment
is reduced proportionately. For these purposes, annual
compensation comprises base remuneration, the target
bonus amount and the target PCP amount for the last
full financial year before termination.
No commitments or agreements exist for payment of
compensation in the event of early termination of a
Board member's mandate due to a change of control or
a takeover offer. No members of the Board of Manage-
ment received any payments or relevant commitment
from third parties in 2019 on account of their activities
as members of the Board of Management.
Remuneration caps
The Supervisory Board has stipulated upper limits
for all variable remuneration components and for the
remuneration of members of the Board of Manage-
ment in total. The upper limits are shown in the table
Overview of compensation system and compensation
components.
The overall upper limits (caps) have not changed in
conjunction with the revised compensation system
for financial years from 2018 onwards and are lower
than the sum of the maximum amounts of the various
individual components.
Revision of Board of Management compensation for
financial years
from 2021 onwards
Regulations governing management board compen-
sation and the reporting thereof were again reformed
by lawmakers through the implementation of the EU's
Second Shareholder Rights Directive (ARUG II). More-
over, the Government Commission on the German
Corporate Governance Code revised the recommenda-
tions and suggestions relating to management board
compensation in its revised version of the German
Corporate Governance Code dated 16 December 2019.
The Supervisory Board has examined the new regula-
tions and intends to revise the compensation system
for the Board of Management of BMW AG during the
financial year 2020. The revised compensation system
will be submitted for approval by the shareholders at
the Annual General Meeting held during the finan-
cial year 2021. The Supervisory Board will also take
account of input from investors when revising the
compensation system.
Total compensation of the Board of Management for
the financial year 2019 (2018)
The total compensation of the current members of the
Board of Management of BMW AG for the financial
year 2019 amounted to €21.4 million (2018: €24.0 mil-
lion), of which €8.1 million (2018: €8.2 million) relates
to fixed components including other remuneration.
Variable components amounted to €12.6 million (2018:
€15.0 million) and the share-based remuneration com-
ponent to €0.7 million (2018: €0.8 million).
The BMW Group achieved a net profit of €5,022 mil-
lion (2018: €7,207 million) and a post-tax return on
sales of 4.8% (2018: 7.4%). According to the defined
allocation table, these results yield an earnings factor
of 0.798 (2018: 1.520) for the earnings component
relevant for the bonus of members of the Board of
Management in office during the financial year 2019.
The Supervisory Board set a performance factor of
1.20 (2018: 1.20) for the performance component of
Board members for the financial
year 2019.
The expected amount of variable cash remuneration
(bonus, cash component of share-based remuneration,
PCP) for the remaining term of the contract from the
date of departure from the Board of Management totals
€1.9 million, where necessary taking into account
forecast figures. This includes a bonus for the period
from 1 November to 31 December 2019 amounting to
€0.2 million and the proportionate amount of the cash
component of remuneration (investment component)
for this period amounting to €0.1 million. The cash
value of the cash remuneration component of the
share-based remuneration programme (matching
component) for the period from 1 November 2019
to 31 December 2019 amounts to €0.01 million. The
expected cash value of the matching component for
the relevant proportionate period in the financial year
2020 amounts to €0.05 million. The proportionate
amount of pension contribution for the 2019 and
2020 financial years is €0.1 million and €0.2 million
respectively. Compensation for the agreed one-year
non-competition clause amounts to €0.6 million.
A provision has been recognised for remuneration
relating to the period after 31 December 2019.
Fringe benefits (other compensation)
Fixed compensation
700,000
in €
Total
BASE SALARY
Payout
FY 2018
Grants
Performance component of the bonus 2018 (three-year plan term)1
Performance component of the bonus
MULTI-YEAR VARIABLE REMUNERATION
456,000
199,500
300,000
450,000
0
Performance component of the bonus 2019 (three-year plan term)1
250,000
Earnings-based component of the bonus¹
ONE-YEAR VARIABLE REMUNERATION
1,001,777
51,777
37,347
829,014
950,000
950,000
51,777
1,001,777
791,667
37,347
829,014
829,014
829,014
37,347
37,347
791,667
791,667
FY 2019
FY 2018
FY 2019 FY 2019 (Min) FY 2019 (Max)
840,000
791,667
80,784
Member of the Board of Management
0
67,299
(matching component) 2019 for holding obligation 2020-2024
Share-based remuneration component
583,333
(matching component) 2018 for holding obligation 2019-2023
Share-based remuneration component
344,500
(matching component) 2017 for holding obligation 2018-2022
412,871
688,500
0
382,500
(investment component) 2019 for holding obligation 2020-20241
Cash remuneration component
495,720
Share-based remuneration component
Other
Total
Pension expense³
Transformation Electromobility
Peter Schwarzenbauer
→ Compensation
Report
Corporate
Governance
232
231
³ Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
"Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
2 Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
3,013,676 3,289,051
4,925,000 3,355,015
1,183,315
3,333,114
3,001,896 2,660,349 2,935,932
353,119 353,327 353,119
829,988 4,922,988
353,327 353,327
2,979,787
353,327
Total compensation
since 1 April 2013 until 31 October 2019
0 1,050,000
I
Performance Cash Plan
800,000
FY 2018
FY 2019
FY 2018
FY 2019 (Min) FY 2019 (Max)
FY 2019
Payout
Grants
Performance component of the bonus
MULTI-YEAR VARIABLE REMUNERATION
102,701
Earnings-based component of the bonus¹
Total
Fringe benefits (other compensation)
Fixed compensation
BASE SALARY
in €
since 1 October 2018
Member of the Board of Management
Purchasing and Supplier Network
Andreas Wendt
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
ONE-YEAR VARIABLE REMUNERATION
902,701
800,000 800,000
102,701 102,701
902,701 902,701
200,000 800,000
13,029 102,701
213,029 902,701
Share-based remuneration programme
0
1,530,000
0
850,000
212,500
PCP 2019-20212
PCP 2018-2020²
Performance Cash Plan
714,000
1,071,000
595,000
Performance component of the bonus 2019 (three-year plan term)1
178,500
148,750
Performance component of the bonus 2018 (three-year plan term)¹
96,900
203,490
63,750
0
255,000
13,029
213,029
200,000
³ Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
700,000
2 Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
2,977,476 3,894,875
Share-based remuneration component
60,779
(matching component) 2013 for holding obligation 2014-2018
Share-based remuneration component
404,775
675,000
0
375,000
(investment component) 2019 for holding obligation 2020-20241
Cash remuneration component
(matching component) 2014 for holding obligation 2015-2019
583,200
(investment component) 2018 for holding obligation 2019-20231
Cash remuneration component
Share-based remuneration programme
500,000
0 1,425,000
791,667
600,000
950,000
PCP 2019-20212
PCP 2018-20202
450,000
52,520
Share-based remuneration component
(matching component) 2015 for holding obligation 2016-2020
4,583,3334 3,856,934
1,120,681
3,503,815 2,685,809 3,541,756
353,119 291,667 353,119
829,014 4,766,514
291,667 291,667
2,899,870
291,667
3,191,537
Total compensation
Pension expense³
Total
Other
337,500
102,038
70,856
(matching component) 2019 for holding obligation 2020-2024
Share-based remuneration component
(matching component) 2018 for holding obligation 2019-2023
Share-based remuneration component
I
I
(matching component) 2017 for holding obligation 2018-2022
Share-based remuneration component
(matching component) 2016 for holding obligation 2017-2021
Share-based remuneration component
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
0
1 Service cost differs due to the different valuation bases used to measure pension obligations for HGB purposes (expected settlement amount)
and for IFRS purposes (present value of the defined benefit obligation).
382,500
* Member of the Board of Management until 31 October 2019.
5 Member of the Board of Management since 1 November 2019.
6 Member of the Board of Management since 1 October 2019.
7 Member of the Board of Management until 31 October 2019.
* Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2018.
Pension entitlements
in €
Service cost in
accordance with
IFRS for the
Service cost in
accordance with
HGB for the
financial year 20191 financial year 20191
Defined benefit
obligation IFRS¹
Defined benefit
obligation HGB¹
Oliver Zipse²
406,452
406,452
3,054,273
(5,753,776)
(5,753,913)
(509,486)
(504,831)
7,259,148
7,259,148
3 Member and Chairman of the Board of Management until 15 August 2019.
319,966
Harald Krüger³
(2,298,405)
(2,298,444)
(356,550)
(353,289)
3,054,125
316,758
Milagros Caiña Carreiro-Andree4
Provisional number or provisional monetary value calculated on the basis of the closing price of BMW common stock in the Xetra trading system on 30 December 2019 (€73.14) (fair value at reporting date).
2 Member of the Board of Management since 13 May 2015, Chairman of the Board of Management since 16 August 2019.
(274,927)
359,649
(46,218)
(268,257)
104,384
356,008
(-19,097)
(254,591)
668
668
(-)
(-)
1,516
(-)
1,516
76,736
100,397
(23,661)
(23,661)
2,456,758
957,504
(1,632)
(1,632)
36,304
34,672
(1,786,110)
(354,125)
441,254
139,649
(80,987)
(51,812)
231,415
150,428
(32,264)
143,912
295,446
3,463,676
362,125
760,562
760,306
(350,000)
(350,000)
(350,276)
(350,041)
353,327
355,573
2,656,550
2,656,550
(353,119)
(356,382)
(2,004,567)
(2,004,567)
291,667
291,667
(1,886,766)
2,414,082
355,573
(132,500) (1,886,766)
2,890,450 27,962,636 27,960,893
(19,703,788) (19,703,287)
(2,775,150)
(2,754,201)
(132,500)
2,876,116
359,979
2,414,082
(2,188,159)
(2,188,161)
(356,382)
(353,119)
2,682,925
2,682,925
353,327
297,688
(-)
Total8
3,463,676
(354,224)
(357,468)
(2,561,031)
(2,560,943)
Klaus Fröhlich
353,327
355,573
3,256,267
3,256,267
(353,119)
(356,382)
(2,660,630)
(2,660,630)
Ilka Horstmeier5
58,333
58,333
Andreas Wendt
Peter Schwarzenbauer?
Nicolas Peter
Pieter Nota
1,421,152
1,421,605
(-)
87,500
Milan Nedeljković
(-)
(-)
(-)
992,662
993,548
87,500
(458,341)
(30,821)
571,504
21,645
Share-based remuneration component
(matching component) 2019 for holding obligation 2020-2024
72,251
0
344,500
Other
Total
Pension expense³
Total compensation
3,057,452
353,327
902,701 4,995,701
353,327 353,327
755,299 2,233,062
132,500 353,327
612,359
132,500
3,410,779
1,256,028
4,925,0004
Members of the Board of Management hold a total of
92,519 shares of BMW common stock (2018: 65,690)
which are subject to holding requirements relating
to the financial years 2015 – 2018 (cash remuneration
components 2015-2018). The cash remuneration
component for the financial year 2019 will be paid
after the Annual General Meeting 2020. The purchase
of shares of BMW common stock takes place imme-
diately thereafter.
At the end of each relevant evaluation period, the
advance payments are set off or repaid, depending
on the amount then determined. In the financial year
2019, an expense of €8.3 million (2018: €5.3 million)
was recognised for the PCP in accordance with IAS 19.
In the financial year 2019, advance payments totalling
€4.27 million were made to the members of the
Board of Management, who belonged to the Board at
1 January 2018, for the PCP 2018-2020. This figure
includes advance payments to Mr Krüger, Ms Caiña
Carreiro-Andree and Mr Schwarzenbauer totalling
€2.10 million.
For financial years from 2018 onwards, a new variable
compensation component was introduced in the form
of the Performance Cash Plan. The PCP is paid out after
the end of the relevant three-year evaluation period. In
the case of the PCP for the financial year 2019, the eval-
uation period covers the financial years 2019 to 2021.
The target amount for the PCP 2019-2021 is €1.195 mil-
lion for Mr Zipse, €0.95 million for Mr Fröhlich,
€0.142 million for Ms Horstmeier, €0.213 million for
Mr Nedeljković and €0.85 million each for Mr Nota,
Dr Peter and Dr Wendt. The proportionate amount of
the target amount is €0.998 million for Mr Krüger and
€0.792 million each for Ms Caiña Carreiro-Andree and
Mr Schwarzenbauer. Due to the fact that the criteria for
the evaluation period 2019 to 2021 have not yet been
fully met, this component is not included in variable
compensation for the financial
year 2019.
→ Compensation
Report
Corporate
Governance
(matching component) 2018 for holding obligation 2019-2023
234
* Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
2 Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
744,859
2,586,389
887,799
233
Shares of BMW common stock held by individual
members of the Board of Management subject to
holding requirements in connection with share-based
remuneration for the financial years 2015-2018¹
Share-based remuneration component
688,500
In order to perform his duties, the Chairman of the
Supervisory Board has the use of an office, with
administrative support, as well as access to the BMW
car service.
The Company also reimburses to each member of the
Supervisory Board reasonable expenses and any value-
added tax arising on the member's remuneration. The
amounts disclosed below are net amounts.
In addition, each member of the Supervisory Board
receives an attendance fee of €2,000 for each full
meeting of the Supervisory Board (Plenum) which
the member has attended, payable at the end of the
financial year. Attendance at more than one meeting
on the same day is not remunerated separately.
amount.
Accordingly, the Articles of Incorporation of BMW AG
stipulate that the Chairman of the Supervisory Board
shall receive three times the amount and each Deputy
Chairman shall receive twice the amount of the
remuneration of a Supervisory Board member. Each
chairman of the Supervisory Board's committees
receives twice the amount and each member of a
committee receives one-and-a-half times the amount
of the remuneration of a Supervisory Board mem-
ber, provided the relevant committee convened for
meetings on at least three days during the financial
year. If a member of the Supervisory Board exercises
more than one of the functions referred to above,
the compensation is measured only on the basis of
the function that is remunerated with the highest
The German Corporate Governance Code (version
dated 7 February 2017) also recommends in sec-
tion 5.4.6 paragraph 1 sentence 2 that the exercising
of chair and deputy chair positions in the Supervisory
Board as well as the chair and membership of commit-
tees should also be considered in the compensation.
With fixed compensation elements and an earnings-
related compensation component oriented toward
sustainable growth, the compensation structure in
place for BMW AG's Supervisory Board complies with
the recommendation on supervisory board compensa-
tion contained in section 5.4.6 paragraph 2 sentence 2
of the German Corporate Governance Code (version
dated 7 February 2017).
In accordance with the Articles of Incorporation, each
member of BMW AG's Supervisory Board receives, in
addition to the reimbursement of reasonable expenses,
a fixed amount of €70,000 (payable at the end of the
year) as well as earnings-related compensation of €170
for each full €0.01 by which the average amount of
(undiluted) earnings per share (EPS) of common stock
reported in the Group Financial Statements for the
remuneration year and the two preceding financial
years exceeds a minimum amount of €2.00, payable
after the Annual General Meeting held in the fol-
lowing year. An upper limit corresponding to twice
the amount of the fixed compensation is in place for
the earnings-related compensation. The limit for a
member of the Supervisory Board with no additional
compensation-relevant function is set at €140,000.
The fixed and earnings-related components in combi-
nation are intended to ensure that the compensation
of Supervisory Board members is appropriate in
relation to the tasks of Supervisory Board members
and the Company's financial condition and also
takes account of the Company's performance over
several years.
Compensation principles, compensation components
The Supervisory Board of BMW AG receives a fixed
compensation component as well as an earnings-
related compensation component, which is oriented
toward sustainable growth. The earnings-related
component is based on average earnings per share
of common stock for the remuneration year and the
two preceding financial years.
The compensation of the Supervisory Board is specified
either by a resolution of the shareholders at the Annual
General Meeting or in the Articles of Incorporation.
The compensation provisions valid for the financial
year under report were resolved by shareholders at
the Annual General Meeting on 14 May 2013 and
are set out in Article 15 of BMW AG's Articles of
Incorporation, which are available at → www.bmwgroup.com
within the section "Company" (menu items "Company
Portrait” and “Corporate Governance") as well as in
"BMW Group Download Centre".
Responsibilities, provisions of Articles of
Incorporation
2. Supervisory Board compensation
→ Compensation
Report
Corporate
Governance
238
237
0
382,500
(investment component) 2019 for holding obligation 2020-20241
Cash remuneration component
123,930
95,625
412,871
(investment component) 2018 for holding obligation 2019-20231
3 Member and Chairman of the Board of Management until 15 August 2019.
4 Member of the Board of Management until 31 October 2019.
5 Member of the Board of Management since 1 November 2019.
6 Member of the Board of Management since 1 October 2019.
7 Member of the Board of Management until 31 October 2019.
8 Prior year's figures comprise only members of the Board of Management at 31 December 2018.
Cash remuneration component
in €
Oliver Zipse²
Harald Krüger³
totalling €10.3 million, as reported above, in con-
nection with the departure of Mr Krüger, Ms Caiña
Carreiro-Andree and Mr Schwarzenbauer from the
Board of Management. Some of these amounts have
not yet been paid.
Pension obligations to former members of the Board
of Management and their surviving dependants are
fully covered by pension provisions amounting to
€113.1 million (2018: €91.0 million), recognised in
accordance with IAS 19.
235
236
Corporate
Governance
→ Compensation
Report
Share-based component of the individual members
of the Board of Management for the
financial year 2019 (2018)¹
in €
Oliver Zipse²
Harald Krüger³
Milagros Caiña Carreiro-Andree4
Klaus Fröhlich
Ilka Horstmeier5
Milan Nedeljković
170,267
(222,771)
(29,002)
358,043
135,272
HGB and IFRS1
Total benefits paid to former members of the Board of
Management and their surviving dependants for the
financial year 2019 amounted to €16.0 million (2018:
€9.2 million). This total figure of former members
of the Board of Management also includes amounts
Provision at
31.12.2019 in
accordance with
Expense in 2019
Total8
Andreas Wendt
Peter Schwarzenbauer
Nicolas Peter
Pieter Nota
in accordance with
HGB and IFRS
In addition, an expense of €2.9 million (2018: €3.4 mil-
lion) was recognised in the financial year 2019 for
current members of the Board of Management for
the period after the end of their service relationship.
This relates to the expense for allocations to pension
provisions in accordance with IAS 19.
(65,690)
7 Member of the Board of Management until 31 October 2019.
(19,528)
24,788
(7,821)
11,938
Total¹
Total
15,608
Andreas Wendt
Nicolas Peter
Pieter Nota
Milan Nedeljković6
Ilka Horstmeier5
Klaus Fröhlich
Milagros Caiña Carreiro-Andree4
Peter Schwarzenbauer?
² Member of the Board of Management since 13 May 2015, Chairman of the Board of Management since 16 August 2019.
(13,294)
(9,106)
Member of the Board of Management since 1 October 2019.
5 Member of the Board of Management since 1 November 2019.
* Member of the Board of Management until 31 October 2019.
3 Member and Chairman of the Board of Management until 15 August 2019.
2 Member of the Board of Management since 13 May 2015, Chairman of the Board of Management since 16 August 2019.
1 Only takes into account shares of BMW common stock acquired with the cash remuneration component relating to the Board of Management's
share-based remuneration programme and for which the four-year holding requirement has not yet expired.
13,305
92,519
(12,888)
15,202
(3,053)
6,736
(-)
3,954
988
(investment component) 2018 for holding obligation 2019-20231
459,000
Share-based remuneration programme
Member of the Board of Management
since 1 April 2018
Customer, Brands, Sales
Pieter Nota
→ Compensation
Report
Corporate
Governance
230
229
³ Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
² Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
625,196
in €
1,231,2504
831,256
537,696
87,500
205,105 1,228,355
87,500 87,500
87,500
743,756
Total compensation
Pension expense³
Total
Other
86,125
0
292,605
BASE SALARY
Fixed compensation
Fringe benefits (other compensation)
Total
890,396
90,396
20,782
90,396
20,782
820,782
820,782
820,782
20,782
20,782
800,000
800,000
800,000
800,000
800,000
800,000
FY 2018
FY 2019
FY 2018
FY 2019 FY 2019 (Min) FY 2019 (Max)
Payout
Grants
Performance component of the bonus
MULTI-YEAR VARIABLE REMUNERATION
Earnings-based component of the bonus¹
ONE-YEAR VARIABLE REMUNERATION
18,026
820,782
(matching component) 2019 for holding obligation 2020-2024
103,218
5,105
200,000
FY 2019
FY 2018
FY 2019 (Max)
FY 2019 (Min)
FY 2019
Grants
FY 2018
Payout
Performance component of the bonus
205,105
MULTI-YEAR VARIABLE REMUNERATION
ONE-YEAR VARIABLE REMUNERATION
Total
Fringe benefits (other compensation)
Fixed compensation
BASE SALARY
in €
since 1 October 2019
Member of the Board of Management
Production
Milan Nedeljković
Cash remuneration component
Earnings-based component of the bonus¹
200,000
5,105
205,105
200,000
200,000
172,125
0
95,625
(investment component) 2019 for holding obligation 2020-20241
Cash remuneration component
(investment component) 2018 for holding obligation 2019-20231
Cash remuneration component
Share-based remuneration programme
382,500
0
PCP 2019-20212
PCP 2018-2020²
Performance Cash Plan
178,500
267,750
0
148,750
Performance component of the bonus 2019 (three-year plan term)1
Performance component of the bonus 2018 (three-year plan term)¹
50,873
114,750
0
63,750
5,105
205,105
5,105
205,105
Share-based remuneration component
890,396
212,500
0
38,612
838,612
29,988
829,988
829,988
829,988
29,988
29,988
800,000
800,000
800,000
800,000
800,000
29,988
800,000
FY 2018
FY 2019 (Max)
FY 2019 (Min)
FY 2019
Grants
FY 2018
Payout
Total
Fringe benefits (other compensation)
Fixed compensation
BASE SALARY
FY 2019
38,612
829,988
838,612
500,000
255,000
0 1,530,000
850,000
500,000
850,000
PCP 2019-20212
PCP 2018-2020²
Performance Cash Plan
714,000
0 1,071,000
595,000
Performance component of the bonus 2019 (three-year plan term)1
714,000
595,000
Performance component of the bonus 2018 (three-year plan term)¹
Performance component of the bonus
MULTI-YEAR VARIABLE REMUNERATION
387,600
203,490
255,000
459,000
0
Earnings-based component of the bonus¹
ONE-YEAR VARIABLE REMUNERATION
in €
since 1 January 2017
255,000
Finance
Cash remuneration component
495,720
382,500
(investment component) 2018 for holding obligation 2019-20231
Cash remuneration component
Share-based remuneration programme
500,000
0 1,530,000
850,000
500,000
850,000
PCP 2019-20212
Performance Cash Plan
714,000
0 1,071,000
595,000
Performance component of the bonus 2019 (three-year plan term)1
714,000
595,000
Performance component of the bonus 2018 (three-year plan term)1
387,600
203,490
Member of the Board of Management
255,000
459,000
(investment component) 2019 for holding obligation 2020-20241
382,500
PCP 2018-20202
688,500
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
0
² Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
3,011,122 3,337,716
4,925,000 3,409,642
1,180,761
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
2,987,716
350,000
3,059,642 2,651,143
350,000 359,979
Nicolas Peter
820,782 4,913,782
359,979 359,979
2,975,533
359,979
3,335,512
412,871
Pension expense³
Total
Other
344,500
72,251
(matching component) 2019 for holding obligation 2020-2024
Share-based remuneration component
86,746
(matching component) 2018 for holding obligation 2019-2023
Share-based remuneration component
Total compensation
243
244
Profit/loss before financial result as a percentage of
→ Glossary-
Explanation
Equity capital as a percentage of the balance sheet
total.
Corporate
Governance
of Key Figures
EBIT plus financial result.
The effective tax rate is calculated by dividing the
income tax expense by the Group profit before tax.
Effective tax rate
EBT
revenues.
EBIT margin
Equity ratio
Fair value
Cash and cash equivalents as well as marketable secu-
rities and investment funds.
Fair value hedge
Group profit/loss before tax as a percentage of Group
EBIT
Abbreviation for "Earnings Before Interest and Taxes",
equivalent in the BMW Group income statement to
"Profit/loss before financial result". This is comprised
of revenues less cost of sales, selling and administra-
tive expenses and the net amount of other operating
income and expenses.
revenues.
Pre-tax return on sales
Group net profit as a percentage of Group revenues.
Post-tax return on sales
The amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing
parties in an arm's length transaction.
Liquidity
Gross profit margin
Goodwill corresponds to the consideration paid to
acquire an entity, less the fair value of the separate
assets acquired and liabilities assumed. The buyer
is willing to pay the additional amount in return for
future expected earnings.
Goodwill
Free cash flow is derived from cash flows from oper-
ating and investing activities. The cash flows from
investing activities from the purchase and sale of
marketable securities and investment funds is not
included. Cash flows from the purchase and sale of
shares and the dividend payout from investments
accounted for using the equity method are included
in the cash flows from investing activities.
Free cash flow
A hedge against exposures to fluctuations in the fair
value of a balance sheet item.
Gross profit as a percentage of Group revenues.
Basic earnings per share are calculated for common
and preferred stock by dividing the net profit after
minority interests, as attributable to each category of
stock, by the average number of shares in circulation.
Earnings per share of preferred stock are computed
on the basis of the number of preferred stock shares
entitled to receive a dividend in each of the relevant
financial years.
Asset-backed financing transactions
A new or used vehicle will be recorded as a deliv-
ery once handed over to the end user (which also
includes leaseholders under lease contracts with
BMW Financial Services). In the US and Canada, end
users also include (1) dealers when they designate a
vehicle as a service loaner or demonstrator vehicle
and (2) dealers and other third parties when they
purchase a company vehicle at auction and dealers
when they purchase company vehicles directly from
BMW Group. Deliveries may be made by BMW AG,
one of its international subsidiaries, a BMW Group
retail outlet, or independent third party dealers. The
vast majority of deliveries – and hence the reporting
to BMW Group of deliveries – is made by independent
third party dealers. Retail vehicle deliveries during
a given reporting period do not correlate directly to
the revenue that BMW Group recognises in respect
of such reporting period.
The sum of the balance sheet line items “Leased prod-
ucts” and “Receivables from sales financing" (current
and non-current), as reported in the balance sheet for
the Financial Services segment.
Business volume in balance sheet terms
A securitised debt instrument in which the issuer
certifies its obligation to repay the nominal amount
at the end of a fixed term and to pay a fixed or variable
rate of interest.
Bond
A form of corporate financing involving the sale of
receivables to a financing company.
A hedge against exposures to the variability in fore-
casted cash flows, particularly in connection with
exchange rate fluctuations.
CO₂ fleet emissions
Cash flow hedge
-
of Key Figures
→ Glossary-
Explanation
Corporate
Governance
Research and development expenditure
The sum of research and non-capitalised development
cost and capitalised development cost (not including
the associated scheduled amortisation).
242
GLOSSARY EXPLANATION
OF KEY FIGURES
Earnings per share (EPS)
The calculation of average CO2 fleet emissions of a
manufacturer is reported through the weighted aver-
age of CO2 emissions by all vehicles newly registered
in the reporting period. The calculation is based on
the volume of new registrations of the manufacturer
in the EU in the calendar year as well as the individual
vehicle-specific CO2 emissions, which have been cal-
culated based on the WLTP test cycle and adapted to
the New European Driving Cycle (NEDC). Additional
effects from the recognition of eco-innovations are not
taken into consideration in the disclosure of fleet emis-
sions for 2019. For the 2020 forecast, the disclosure
relates purely to a reduction of the CO₂ fleet emissions
and not the CO2 fleet limit, which the BMW Group
needs to achieve. This means that the recognition of
super credits, phase-in and eco-innovations is not part
Capital expenditure ratio
Deliveries
Financial swap agreements, under which creditors of
securities (usually bonds) pay premiums to the seller
of the CDS to hedge against the risk that the issuer of
the bond will default. As with credit default insurance
agreements, the party receiving the premiums gives
a commitment to compensate the bond creditor in
the event of default.
Credit default swap (CDS)
Similar to "value at risk" (see definition below).
Cash flow at risk
The
process of combining separate financial state-
ments of Group entities into Group Financial State-
ments, depicting the financial position, net assets
and results of operations of the Group as a single
economic entity.
of the forecast.
Consolidation
Commercial paper
Liquid funds generated (cash inflows) or used (cash
outflows) during a reporting period.
Cash flow
Capitalised development costs as a percentage of
research and development expenditure.
Capitalisation rate
Investments in property, plant and equipment and
other intangible assets (excluding capitalised devel-
opment costs) as a percentage of Group revenues.
Short-term debt instruments with a term of less than
one year which are usually issued at a discount to
their face value.
Research and development expenditure ratio
Research and development expenditure as a percent-
age of Group revenues.
Measurement of provision for risks relating to
an EU antitrust proceeding
The engineering, IT and process expertise required for
the (pre-)development of hardware and software for
all BMW Group products and services is combined at
the Group's international research and development
locations.
Measurement of leased products
-
-
In our view, the matters of most significance in our
audit were as follows:
Key audit matters are those matters that, in our
professional judgment, were of most significance in
our audit of the consolidated financial statements
for the financial year from January 1 to December 31,
2019. These matters were addressed in the context
of our audit of the consolidated financial state-
ments as a whole, and in forming our audit opinion
thereon; we do not provide a separate audit opinion
on these matters.
Key Audit Matters in the Audit of the Consolidated
Financial Statements
Valuation of receivables from sales financing
Auditor's Report
Corporate
Governance
248
247
We conducted our audit of the consolidated financial
statements and of the group management report
in accordance with § 317 HGB and the EU Audit
Regulation (No. 537/2014, referred to subsequently
as "EU Audit Regulation") in compliance with Ger-
man Generally Accepted Standards for Financial
Statement Audits promulgated by the Institut der
Wirtschaftsprüfer [Institute of Public Auditors in
Germany] (IDW). Our responsibilities under those
requirements and principles are further described
in the “Auditor's Responsibilities for the Audit of
the Consolidated Financial Statements and of the
Group Management Report" section of our auditor's
report. We are independent of the group entities
in accordance with the requirements of European
law and German commercial and professional law,
and we have fulfilled our other German professional
responsibilities in accordance with these require-
ments. In addition, in accordance with Article 10 (2)
point (f) of the EU Audit Regulation, we declare that
we have not provided non-audit services prohibited
under Article 5 (1) of the EU Audit Regulation. We
believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our
audit opinions on the consolidated financial state-
ments and on the group management report.
Basis for the Audit Opinions
the accompanying consolidated financial state-
ments comply, in all material respects, with
the IFRS as adopted by the EU, and the addi-
tional requirements of German commercial
law pursuant to § [Article] 315e Abs. [paragraph] 1
HGB [Handelsgesetzbuch: German Commer-
cial Code] and, in compliance with these require-
ments, give a true and fair view of the assets,
liabilities, and financial position of the Group as
at December 31, 2019, and of its financial per-
formance for the financial year from January 1
to December 31, 2019, and
→ Independent
In our opinion, on the basis of the knowledge obtained
in the audit,
Valuation of provisions for statutory and non-
statutory warranty obligations and product
guarantees
Our presentation of these key audit matters has been
structured in each case as follows:
241
81,032
The Company's disclosures on the applied "Accounting
policies, assumptions, judgments and estimations" are
contained in the notes to the consolidated financial
statements under note 4 and on leased products are
contained under note 23.
Based on our audit procedures, we were able to
satisfy ourselves that the methods and processes for
determining the expected residual values of leased
products underlying the valuation are appropriate
and the assumptions and parameters included in the
forecast model for the residual value are appropriate
as a whole.
As part of our audit we obtained an understanding of
the development of operating leases, the underlying
residual value risks as well as the business processes
for the identification, management, monitoring and
measurement of residual value risks, among other
things by inquiries and inspection of documents
related to the internal calculation methods. Further-
more we evaluated the appropriateness and effec-
tiveness of the internal control system, particularly
regarding the determination of expected residual
values. This included the evaluation of the propriety
of the relevant IT systems as well as the implemented
interfaces therein by our IT specialists. In addition,
we evaluated the appropriateness of the forecasting
methods, the model assumptions as well as the
parameters used for the measurement of the residual
values based on the validations carried out by the
BMW Group. For this purpose, we inquired with the
BMW Group's experts responsible for the management
and monitoring of residual value risks and inspected
the internal analysis on residual value developments
and residual value forecasts as well as the validation
results. We examined the mathematically correctness
of the forecast values using the key calculation steps.
Against this background and due to the resulting
significant uncertainties with regard to estimates
in the context of measuring the residual values of
the leased products, this matter was of particular
significance in the context of our audit.
Measurement and recognition of YOUR NOW
equity investments
available data on historical empirical values, current
market data and market estimates as well as forecasts
by external market research institutes. The estimation
of future residual values is subject to judgment due to
the large number of assumptions to be made by the
executive directors and the amount of data included
in the determination.
Measurement of leased products
Hereinafter we present the key audit matters:
Reference to further information
Audit approach and findings
Matter and issue
-
The BMW Group leases vehicles to end customers
under operating leases (leased products). At the
balance sheet date, the figure reported under the
"leased products" line item for operating leases was
EUR 42,609 million (approximately 18.7% of total
assets). Leased products are measured at cost, which is
depreciated on a straight-line basis over the lease term
to the expected residual value (recoverable amount). A
key estimated value for subsequent measurement of
leased products is the expected residual value at the
end of the lease term. The BMW Group uses internally
Research and development locations
We have audited the consolidated financial statements
of Bayerische Motoren Werke Aktiengesellschaft,
Munich, and its subsidiaries (the Group), which com-
prise the consolidated balance sheet as at Decem-
ber 31, 2019, the consolidated income statement,
consolidated statement of comprehensive income,
consolidated statement of changes in equity and
consolidated statement of cash flows for the financial
year from January 1 to December 31, 2019, and notes
to the consolidated financial statements, including a
summary of significant accounting policies.
Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we
declare that our audit has not led to any reservations
relating to the legal compliance of the consolidated
financial statements and of the group manage-
ment report.
Corporate
Governance
246
245
The BMW Group's workforce comprises the employees
of BMW AG and those of all companies in which it
holds a majority interest, irrespective of the treat-
ment of those companies for consolidation purposes.
Employees with dormant employment contracts,
employees in the non-work phases of pre-retirement
part-time working arrangements and low-income
earners are not included.
Workforce size
Comprises in-house vocational training provided by
the BMW Group in 11 countries as well as the further
training of BMW Group employees and temporary
staff working for consolidated companies worldwide.
→ Responsibility
Statement by the
Company's Legal
Representatives
Vocational and further training
Value at risk
-
RoE in the Financial Services segment is calculated
as segment profit before taxes, divided by the aver-
age amount of equity capital - at the end of the last
five quarters attributable to the Financial Services
segment.
Return on equity (ROE)
ROCE in the Automotive and Motorcycles segments
is measured on the basis of relevant segment profit
before financial result and the average amount of
capital employed - at the end of the last five quar-
ters in the segment concerned. Capital employed
corresponds to the sum of all current and non-current
operational assets, less liabilities that generally do not
incur interest.
Return on capital employed (RoCE)
A measure of the potential maximum loss in value of
an item during a set time period, based on a specified
probability.
Audit Opinions
→ Independent
Auditor's Report
Statement pursuant to § 117 No. 1 of the
Securities Trading Act (WpHG) in conjunction
with § 297 (2) sentence 4 and § 315 (1) sentence
5 of the German Commercial Code (HGB)
"To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position and profit of the
Group, and the Group Management Report includes
a fair review of the development and performance of
the business and the position of the Group, together
with a description of the principal opportunities and
risks associated with the expected development of
the Group."
the accompanying group management report as
a whole provides an appropriate view of the
Group's position. In all material respects, this
group management report is consistent with
the consolidated financial statements, complies
with German legal requirements and appro-
priately presents the opportunities and risks of
future development. Our audit opinion on
the group management report does not cover
the content of those parts of the group man-
agement report listed in the "Other Information"
section of our auditor's report.
Report on the Audit of the Consoli-
dated Financial Statements and of
the Group Management Report
To Bayerische Motoren Werke
Aktiengesellschaft, Munich
INDEPENDENT
AUDITOR'S REPORT
Dr.-Ing. Andreas Wendt
Dr. Nicolas Peter
RESPONSIBILITY
STATEMENT BY THE
COMPANY'S LEGAL
REPRESENTATIVES
Pieter Nota
Ilka Horstmeier
Klaus Fröhlich
Oliver Zipse
The Board of Management
Bayerische Motoren Werke
Aktiengesellschaft
Munich, 16 March 2020
Dr. Milan Nedeljković
With the exception of purchase, rental, leasing and
financing contracts for vehicles on customary terms
and conditions and the advance payments relating to
the PCP 2018-2020 described above, neither BMW AG
nor any of its subsidiaries granted loans or advances to
members of the Board of Management or the Super-
visory Board during the financial year 2019, nor were
any contingent liabilities entered into on their behalf.
Variable
compensation
A detailed description of the proposal will be included
in the invitation to the Annual General Meeting 2020.
(8,000)
(140,000)
(218,000)
Renate Köcher
70,000
10,000
140,000
220,000
(70,000)
(10,000)
(140,000)
(220,000)
Horst Lischka¹
70,000
10,000
140,000
220,000
Simone Menne
(220,000)
(140,000)
(10,000)
(70,000)
220,000
(70,000)
140,000
70,000
Willibald Löw¹
(220,000)
(140,000)
(10,000)
(70,000)
10,000
220,000
140,000
10,000
8,000
70,000
Reinhard Hüttl4
(220,000)
(140,000)
(10,000)
122,0004
(70,000)
140,000
10,000
70,000
Heinrich Hiesinger
(220,000)
(140,000)
220,000
70,000
200,000
(10,000)
70,000
Susanne Klatten
Total
Attendance fee
compensation
Fixed
(70,000)
in €
4 Due to the requirements of his employer, Prof. Dr. Hüttl has waived his Supervisory Board compensation until further notice, to the extent that such compensation exceeds the amount of €200,000
(excluding value added tax) p.a.
3 Member of the Supervisory Board until 16 May 2019.
² Member of the Supervisory Board since 16 May 2019.
1 These employee representatives have - in line with the guidelines of the Deutscher Gewerkschaftsbund - requested that their remuneration be paid into the Hans Böckler-Stiftung.
(200,000)
(120,000)
Compensation of the individual members of the
Supervisory Board for the financial year 2019 (2018)
10,000
140,000
220,000
220,000
140,000
10,000
70,000
Werner Zierer¹
(-)
(70,000)
(-)
87,688
8,000
43,844
(218,000)
(140,000)
(8,000)
139,532
(70,000)
(10,000)
(220,000)
The Supervisory Board and Board of Management
propose to submit a proposal to the Annual General
Meeting 2020 to change Supervisory Board compensa-
tion for financial years beginning after 1 January 2020
to an exclusively fixed compensation. The proposal of
an exclusively fixed compensation model also corre-
sponds to the new suggestion for supervisory board
remuneration put forward by the Government Com-
mission on the German Corporate Governance Code
in the Code version dated 16 December 2019, section
G.18. The proposed model is intended to strengthen
the independent advisory and control function of the
Supervisory Board. At the same time, the proposal will
also help to simplify the compensation system.
Revision of Supervisory Board compensation for
financial years from 2020 onwards
4 Disclosures for the previous year include amounts relating to a member of the Supervisory Board who left office during the financial year 2018.
3 Member of the Supervisory Board until 16 May 2019.
1 These employee representatives have - in line with the guidelines of the Deutscher Gewerkschaftsbund - requested that their remuneration be paid into the Hans Böckler-Stiftung.
2 Member of the Supervisory Board since 16 May 2019.
(5,628,565)
(140,000)
(3,620,377)
(1,820,188)
5,639,692
3,623,128
196,000
1,820,564
Total4
(188,000)
3. Other
81,032
2,000
Brigitte Rödig¹
(220,000)
(140,000)
(10,000)
(70,000)
220,000
70,000
140,000
70,000
Dominique Mohabeer¹
(218,000)
(140,000)
(8,000)
(70,000)
10,000
52,688
10,000
220,000
26,344
Thomas Wittig²
Jürgen Wechsler¹,3
(-)
(-)
139,532
140,000
87,688
43,844
Vishal Sikka²
(220,000)
(140,000)
(10,000)
(70,000)
8,000
(10,000)
(70,000)
280,000
Attendance fee
Variable
compensation
Total
Norbert Reithofer (Chairman)
210,000
10,000
420,000
640,000
(210,000)
(10,000)
(420,000)
(640,000)
Manfred Schoch (Deputy Chairman)¹
compensation
140,000
280,000
430,000
(140,000)
(10,000)
(280,000)
(430,000)
Stefan Quandt (Deputy Chairman)
140,000
10,000
In accordance with Article 15 of the Articles of Incor-
poration, the compensation of the Supervisory Board
for activities during the financial year 2019 totalled
€5.6 million (2018: €5.6 million). This includes fixed 7
430,000
(140,000)
(10,000)
10,000
Fixed
in €
Compensation of the individual members of the
Supervisory Board for the financial year 2019 (2018)
in € million
Fixed compensation
Variable compensation
Total compensation
Supervisory Board members did not receive
any
ther compensation or benefits from the BMW Group
for advisory or agency services personally rendered.
fur-
2019
2018
Amount
Proportion in %
Amount
Proportion in %
2.0
35.7
2.0
35.7
3.6
64.3
3.6
64.3
5.6
100.0
5.6
100.0
240
Corporate
Governance
→ Compensation
Report
(280,000)
(430,000)
Stefan Schmid (Deputy Chairman)¹
140,000
220,000
(43,656)
239
(87,312)
(138,968)
Verena zu Dohna-Jaeger¹, 2
43,844
8,000
87,688
139,532
(-)
(-)
Franz Haniel³
26,344
2,000
(70,000)
(8,000)
52,688
(140,000)
81,032
(218,000)
Ralf Hattler³
26,344
2,000
52,688
Total compensation of the Supervisory Board for the
financial year 2019
140,000
10,000
(8,000)
Kurt Bock
10,000
280,000
430,000
(140,000)
(8,000)
(280,000)
(428,000)
Karl-Ludwig Kley (Deputy Chairman)
70,000
8,000
280,000
428,000
140,000
(10,000)
(218,000)
(140,000)
(8,000)
(70,000)
220,000
(140,000)
10,000
70,000
Christiane Benner¹
(430,000)
(280,000)
140,000
remuneration of €2.0 million (2018: €2.0 million)
and variable remuneration of €3.6 million (2018:
€3.6 million). The earnings-related remuneration for
the financial year 2019 was capped at the maximum
amount stipulated in the Articles of Incorporation.
68,821
60,477
19.7
21.2
20.1
20.2
21.1
18.1
3,190,353
76,848
76,059
80,401
92,175
Business volume (based on balance sheet carrying amounts)
66,233
75,245
80,974
Valuation of receivables from sales financing
The BMW Group offers end customers, dealerships
and importers various financing models for vehicles.
In this context, current and non-current receivables
from sales financing totaling EUR 92,437 million are
reported in the consolidated statement of financial
position as at the balance sheet date (approximately
EUR 40.4% of total assets). Impairment losses amount-
ing to EUR 1,099 million were recognized on these
receivables as at the balance sheet date. In order to
determine the amount of the necessary valuation
allowances to be recognized with respect to receiv-
ables from sales financing, the BMW Group, among
others, evaluates the creditworthiness of the dealers,
importers and end customers, as well as any loss ratios,
and risk provisioning parameters are derived based on
historical default probabilities and loss ratios.
9,593
9,118
7,978
8,275
7,776
7,432
5,404
3,481
3,003
3,809
8,370
3,166
122,244
97,136
116,324
92,337
110,351
105,876
100,306
95,453
4,471
89,869
7,671
6,122
49,113
46,100
65,591
59,078
51,134
48,395
7,688
47,213
172,174
154,803
138,377
131,835
123,429
110,164
40,134
52,834
89,161
83,141
Equity
Equity ratio
Non-current provisions and liabilities
Current provisions and liabilities
Balance sheet total
CASH FLOW STATEMENT
Cash and cash equivalents at balance sheet date
Free cash flow Automotive segment
Capital expenditure ratio (capital expenditure/revenues)
PERSONNEL
Personnel cost per employee
DIVIDEND
Dividend total
Dividend per share of common stock/preferred stock
257
258
This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.
Workforce at year-end4
84,887
Capital expenditure (excluding capitalised development costs)
Net profit for the year
2,102
3.20/3.22
1,904
2.90/2.92
1,707
2.60/2.62
1,640
2.50/2.52
1,508
2.30/2.32
852
BALANCE SHEET
Non-current assets
Current assets
1.30/1.32
Revenues
Gross profit margin
Earnings before financial result
Earnings before tax
Return on sales (earnings before tax/revenues)
Income taxes
Effective tax rate
INCOME STATEMENT
The determination of the valuation allowances by the
executive directors is subject to a significant degree
of judgment due to several value-influencing factors
such as the estimation of creditworthiness, the deter-
mination of probabilities of default and loss ratios and
was therefore of particular significance in the context
of our audit.
51,643
63,819
2,476
1,610
30.7
33.2
32.5
34.5
2,692
33.5
6,396
5,817
5,329
5,111
4,907
3,243
33.1
110,343
2,564
2,828
8,018
5,111
9,224
8,707
7,893
7,803
2,890
7,383
10.0
10.8
10.4
10.2
10.7
8.0
4,853
58,288
97,959
81,305
4.0
3.8
42,764
37,437
35,600
30,606
5.4
27,103
24.8
24.2
25.7
23.2
22.0
21.7
23,930
86,193
6.5
4.2
74,425
67,013
61,831
56,844
52,184
50,530
5.7
49,004
3,826
4,601
4,967
4,151
2,720
2,312
43,151
As part of our audit we obtained a comprehensive
understanding of the development of receivables from
sales financing, the associated default-related risks
as well as the business processes for the identifica-
tion, management, monitoring and measurement of
default risks, among other things by inquiries and
inspection of documents on the internal calculation
methods. Furthermore we evaluated the appropriate-
ness and effectiveness of the internal control system
regarding the determination of the impairment loss
to recognize. In this context, we also evaluated the
relevant IT systems and internal processes. The eval-
uation included an assessment by our IT specialists
of the appropriateness of the systems concerned and
associated interfaces to ensure the completeness of
data as well as the audit of automated controls for
data processing. As part of our audit we assessed in
particular the appropriateness of the risk classification
procedures as well as the risk provisioning parameters
used. For this purpose, we analyzed in particular the
validations of parameters that are regularly conducted
by the Company. To assess the default risk, we also
used targeted sampling of individual cases to examine
whether the attributes for assignment to the respective
risk categories were suitably available and the impair-
ment losses had been calculated using the parameters
defined for these risk categories.
In our view, the assumptions and parameters used in
the measurement of receivables from sales financing
were appropriate overall.
The Company's disclosures on the applied "Accounting
policies, assumptions, judgments and estimations" are
contained in the notes to the consolidated financial
statements under note 4 and on "receivables from
sales financing" are contained under note 25.
%
3,731
4,688
5,029
5,650
€ million
5.4
66,864
84,736
90,630
€ million
121,671
121,964
124,202
96,390
137,404
5.2
4.0
69,634
79,698
85,502
€ million
25.1
27.7
4.8
27.7
%
47,363
54,107
57,829
59,907
€ million
26.3
73,183
€ million
Current provisions and liabilities
30.1
%
Effective tax rate
2,755
2,000
2,530
26.3
2,140
Income taxes
10.3
10.9
9.9
6.8
%
€ million
Balance sheet total
18.7
Net profit for the year
Non-current provisions and liabilities
Equity ratio
Equity
Capital expenditure ratio (capital expenditure/revenues)
Capital expenditure (excluding capitalised development costs)
Current assets
28.5
Non-current assets
6,910
84,347
8,675
7,064
5,022
€ million
BALANCE SHEET
Return on sales (earnings before tax/revenues)
€ million
71,411
2,117,965 1,963,798 1,845,186
123,495 115,215 106,358
2,257,851
136,963
2010
2011
2012
2013
1,668,982 1,461,166
104,286
98,047
2014
4 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time working arrangements and low wage earners.
5 Proposal by management.
3 Excluding Husqvarna, deliveries up to 2013: 59,776 units; production up to 2013: 59,426 units.
² Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjustments is a review of sales data in prior periods for the BMW Group's
most important markets (China, USA, Germany, UK, Italy and Japan). The retrospective adjustment enables better comparability. Additional information can be found
in the section "Comparison of Forecasts for 2019 with Actual Results in 2019".
111,191
2,300
3.50/3.52
2,630
4.00/4.02
2015
2,303
3.50/3.52
2,279,503
151,004
1,861,826
113,811
3,592,093
3,846,364
4,130,002
4,359,572
4,718,970
FINANCIAL SERVICES
2,165,566 2,006,366
133,615 110,127
Motorcycles³
PRODUCTION VOLUME
Motorcycles³
Automobiles2
DELIVERIES
1,481,253
99,236
1,738,160
110,360
Automobiles
82,625
2.505/2.525
Dividend per share of common stock/preferred stock
7,880
9,039
10,979
12,036
€ million
Cash and cash equivalents at balance sheet date
Free cash flow Automotive segment
CASH FLOW STATEMENT
195,506
208,938
228,034
€ million
67,989
71,765
188,535
€
€ million
2,713
1,646
€ million
Dividend total
DIVIDEND
124,729
99,575
129,932
100,760
2,567
134,682
101,178
€
Personnel cost per employee
Workforce at year-end
PERSONNEL
5,792
4,459
133,778
98,901
Contract portfolio
9,665
9,627
- Conclude on the appropriateness of the execu-
tive directors' use of the going concern basis of
accounting and, based on the audit evidence
obtained, whether a material uncertainty exists
related to events or conditions that may cast
significant doubt on the Group's ability to con-
tinue as a going concern. If we conclude that
a material uncertainty exists, we are required to
draw attention in the auditor's report to the
related disclosures in the consolidated financial
statements and in the group management report
or, if such disclosures are inadequate, to mod-
ify our respective audit opinions. Our conclusions
are based on the audit evidence obtained up
to the date of our auditor's report. However, fu-
ture events or conditions may cause the Group
to cease to be able to continue as a going concern.
― Evaluate the appropriateness of accounting poli-
cies used by the executive directors and the
reasonableness of estimates made by the execu-
tive directors and related disclosures.
Obtain an understanding of internal control rele-
vant to the audit of the consolidated financial
statements and of arrangements and measures
(systems) relevant to the audit of the group man-
agement report in order to design audit proce-
dures that are appropriate in the circumstances,
but not for the purpose of expressing an audit
opinion on the effectiveness of these systems.
• Identify and assess the risks of material misstate-
ment of the consolidated financial statements
and of the group management report, whether
due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropri-
ate to provide a basis for our audit opinions. The
risk of not detecting a material misstatement
resulting from fraud is higher than for one result-
ing from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresenta-
tions, or the override of internal controls.
We exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accor-
dance with $317 HGB and the EU Audit Regulation
and in compliance with German Generally Accepted
Standards for Financial Statement Audits promulgated
by the Institut der Wirtschaftsprüfer (IDW) will always
detect a material misstatement. Misstatements can
arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of
users taken on the basis of these consolidated financial
statements and this group management report.
-
Our objectives are to obtain reasonable assurance
about whether the consolidated financial statements
as a whole are free from material misstatement,
whether due to fraud or error, and whether the group
management report as a whole provides an appropri-
ate view of the Group's position and, in all material
respects, is consistent with the consolidated financial
statements and the knowledge obtained in the audit,
complies with the German legal requirements and
appropriately presents the opportunities and risks
of future development, as well as to issue an audi-
tor's report that includes our audit opinions on the
consolidated financial statements and on the group
management report.
The supervisory board is responsible for overseeing
the Group's financial reporting process for the prepa-
ration of the consolidated financial statements and of
the group management report.
Furthermore, the executive directors are responsible
for the preparation of the group management report
that, as a whole, provides an appropriate view of
the Group's position and is, in all material respects,
consistent with the consolidated financial statements,
complies with German legal requirements, and appro-
priately presents the opportunities and risks of future
development. In addition, the executive directors
are responsible for such arrangements and measures
(systems) as they have considered necessary to enable
the preparation of a group management report that
is in accordance with the applicable German legal
requirements, and to be able to provide sufficient
appropriate evidence for the assertions in the group
management report.
In preparing the consolidated financial statements,
the executive directors are responsible for assessing
the Group's ability to continue as a going concern.
They also have the responsibility for disclosing, as
applicable, matters related to going concern. In
addition, they are responsible for financial report-
ing based on the going concern basis of accounting
unless there is an intention to liquidate the Group or
to cease operations, or there is no realistic alternative
but to do so.
Responsibilities of the Executive Directors and the
Supervisory Board for the Consolidated Financial
Statements and the Group Management Report
The executive directors are responsible for the prepa-
ration of the consolidated financial statements that
comply, in all material respects, with IFRS as adopted
by the EU and the additional requirements of German
commercial law pursuant to § 315 e Abs. 1 HGB and
that the consolidated financial statements, in com-
pliance with these requirements, give a true and fair
view of the assets, liabilities, financial position, and
financial performance of the Group. In addition the
executive directors are responsible for such internal
control as they have determined necessary to enable
the preparation of consolidated financial statements
that are free from material misstatement, whether
due to fraud or error.
→ Independent
Auditor's Report
Corporate
Governance
Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements and of the
Group Management Report
252
Evaluate the overall presentation, structure and
content of the consolidated financial statements,
including the disclosures, and whether the con-
solidated financial statements present the un-
derlying transactions and events in a manner that
the consolidated financial statements give a
true and fair view of the assets, liabilities, finan-
cial position and financial performance of the
Group in compliance with IFRS as adopted by
the EU and the additional requirements of
German commercial law pursuant to § 315 e
Abs. 1 HGB.
― Evaluate the consistency of the group manage-
ment report with the consolidated financial
statements, its conformity with German law, and
the view of the Group's position it provides.
We declare that the audit opinions expressed in this
auditor's report are consistent with the additional
report to the audit committee pursuant to Article 11
of the EU Audit Regulation (long-form audit report).
We were elected as group auditor by the annual gen-
eral meeting on May 16, 2019. We were engaged by
the supervisory board on May 17, 2019. We have been
the group auditor of the Bayerische Motoren Werke
Aktiengesellschaft, Munich, without interruption
since the financial
year 2019.
Further Information pursuant to Article 10 of the
EU Audit Regulation
German Public Auditor Responsible
for the Engagement
Other Legal and Regulatory
Requirements
Auditor's Report
Obtain sufficient appropriate audit evidence
regarding the financial information of the enti-
ties or business activities within the Group to
express audit opinions on the consolidated finan-
cial statements and on the group management
report. We are responsible for the direction, su-
pervision and performance of the group audit.
We remain solely responsible for our audit
opinions.
→ Independent
254
253
From the matters communicated with those charged
with governance, we determine those matters that
were of most significance in the audit of the consoli-
dated financial statements of the current period and
are therefore the key audit matters. We describe these
matters in our auditor's report unless law or regulation
precludes public disclosure about the matter.
We also provide those charged with governance with
a statement that we have complied with the relevant
independence requirements, and communicate with
them all relationships and other matters that may
reasonably be thought to bear on our independence,
and where applicable, the related safeguards.
We communicate with those charged with governance
regarding, among other matters, the planned scope
and timing of the audit and significant audit findings,
including any significant deficiencies in internal con-
trol that we identify during our audit.
Perform audit procedures on the prospective in-
formation presented by the executive directors
in the group management report. On the basis
of sufficient appropriate audit evidence we eval-
uate, in particular, the significant assumptions
used by the executive directors as a basis for
the prospective information, and evaluate the
proper derivation of the prospective informa-
tion from these assumptions. We do not express
a separate audit opinion on the prospective
information and on the assumptions used as a
basis. There is a substantial unavoidable risk
that future events will differ materially from the
prospective information.
Corporate
Governance
The German Public Auditor responsible for the
engagement is Andreas Fell.
251
is materially inconsistent with the consolidated
financial statements, with the group manage-
ment report or our knowledge obtained in the
audit, or
The determination of the reversal of impairment
losses, the purchase price allocation as well as the
impairment loss is based on the exercise of judg-
ment by the executive directors, which is subject
to significant estimation uncertainties. Against this
background, this matter was of particular significance
during our audit.
and a reversal of impairment losses amounting to
EUR 97 million was recognized. YOUR NOW gen-
erated negative operating earnings amounting to
EUR 662 million in the past financial year, which were
recognized in the consolidated financial statements.
Furthermore, there was a triggering event at the level
of the BMW Group and a EUR 240 million impair-
ment loss was recognized. The Company has defined
a triggering event to be in particular a significant
deviation from target figures.
In the BMW Group's consolidated financial state-
ments as at December 31, 2019, the line item “Invest-
ments accounted for using the equity method" the
YOUR NOW equity investments with a carrying
amount of EUR 987 million (approximately 0.4%
of total assets) is reported. The BMW Group and a
competitor have bundled mobility services within
YOUR NOW. As a result of the combination with
the competitor, the BMW Group contributed its
investment in DriveNow GmbH & Co. KG, Munich,
Parkmobile Group Holding B.V., Amsterdam, Digital
Charging Solutions GmbH, Berlin and Reach Now
LLC, Seattle. In the course of the transaction, disposal
proceeds amounting to EUR 232 million were realized
Measurement and recognition of YOUR NOW
equity investments
The Company's disclosures on the applied "Accounting
policies, assumptions, judgments and estimations" are
contained in the notes to the consolidated financial
statements under note 4 and on "Other provisions"
are contained under note 33.
In our view, the method for the valuation of provisions
for statutory and non-statutory warranty obligations
as well as product guarantees is overall appropriate.
Taking into consideration the information available,
we believe that, overall, the measurement parameters
and assumptions used by the executive directors
are appropriate.
As part of our audit, we examined and evaluated the
methodological procedure adopted for the purposes
of calculating the fair value for the determination of
the reversal of impairment losses, among other things.
We compared the future cash inflows used in the cal-
culation against the underlying budget and assessed
their appropriateness. Moreover, we examined the
methodological procedure used in the purchase price
allocation. In connection with the impairment loss,
we assessed whether a triggering event had occurred.
We examined the impairment test conducted by the
BMW Group based on the occurrence of a triggering
event and assessed its methodical correctness. After
comparing the future cash inflows used against the
budget adopted by the shareholders, we examined
in particular the derivation of the discount rate used.
In order to assess the appropriateness of the valuation
method used for the determination of the provisions
for statutory and non-statutory warranty obligations
as well as product guarantees including the assump-
tions and parameters, we primarily obtained an
understanding of the process for determining the
assumptions and parameters through discussions with
the responsible employees of the BMW Group. We
also evaluated the appropriateness as well as effective-
ness of controls for determining the assumptions and
parameters. With the involvement of our IT specialists,
we checked the IT systems used regarding their com-
pliance. We compared the expenses for claims and
technical actions with actual costs incurred in order to
draw conclusions on the forecast accuracy. Based on a
targeted sample of vehicle models, the mathematically
correctness of the valuation model used across the
Group was examined. We examined and evaluated the
assumptions used by the BMW Group concerning the
extent to which the past values were representative of
the expected susceptibility of damage, the expected
value of damage per vehicle (comprising parts and
labor input) as well as the expected assertion of claims
from statutory and non-statutory warranties.
→ Independent
Corporate
Governance
250
249
The determination of provisions is associated with
unavoidable estimation uncertainties and is subject
to a high risk of change, depending on factors such
as notification of detected defects as well as claims
made by vehicle owners. Against this background,
this matter was of particular significance during
our audit.
Valuation of provisions for statutory and non-statu-
tory warranty obligations and product guarantees
Provisions for statutory and non-statutory war-
ranty obligations as well as product guarantees are
included in the consolidated financial statements of
BMW Group as a material amount in other provi-
sions. The provisions amounted to EUR 5,550 million
(approximately 2.4% of total assets) as at December
31, 2019. BMW Group is responsible for the legally
required warranty and product guarantees in the
respective sales market. In order to estimate the
liabilities arising from statutory and non-statutory
warranty obligations and product guarantees for
vehicles sold, information on the type and volume
of damages arising and on remedial measures is
recorded and analyzed at vehicle model level. The
expected amount of obligations is extrapolated from
costs of the past and recognized as a provision in
the corresponding amount, if the criteria of IAS 37
have been met. For specific or anticipated individual
circumstances, for example recalls, additional provi-
sions are recognized provided they have not already
been taken into account.
Auditor's Report
otherwise appears to be materially misstated.
The valuation parameters and assumptions used by the
executive directors are overall in line with our expec-
tations and are also within the ranges considered by
us to be acceptable.
Measurement of provision for risks relating to an
EU antitrust proceeding
In connection with our audit, our responsibility is
to read the other information and, in so doing, to
consider whether the other information
Our audit opinions on the consolidated financial
statements and on the group management report
do not cover the other information, and consequently
we do not express an audit opinion or any other form
of assurance conclusion thereon.
The other information comprises further the remaining
parts of the annual report – excluding cross-references
to external information - with the exception of the
audited consolidated financial statements, the audited
group management report and our auditor's report.
the separate non-financial report pursuant to
§ 289 b Abs. 3 HGB and § 315 b Abs. 3 HGB
the corporate governance report pursuant to
No. 3.10 of the German Corporate Governance
Code
the statement on corporate governance pur-
suant to § 289f HGB and § 315 d HGB included
in section "Statement on Corporate Gover-
nance (§ 289 f HGB)" of the group management
report
The Company's disclosures on the applied "Account-
ing policies, assumptions, judgments and estimations"
are contained in the notes to the consolidated finan-
cial statements under note 2 and on the YOUR NOW
equity investments are contained under note 24.
-
Other Information
The Company's disclosures on the applied "Accounting
policies, assumptions, judgments and estimations" are
contained in the notes to the consolidated financial
statements under note 4 and on "Other operating
expenses" are contained under note 10.
In our view, the estimates made by the executive
directors regarding the recognition and measurement
of the provision for the risks from the EU antitrust
proceeding described above and the associated risk
provision in the consolidated financial statements are
sufficiently documented and substantiated.
With the knowledge that estimated values result in an
increased risk of accounting misstatements and that
the executive directors' recognition and measurement
decisions have a direct effect on consolidated result,
we evaluated the appropriateness of the carrying
amounts, with the involvement of an internal PwC
antitrust law expert. Furthermore, we also held reg-
ular meetings with the Company's legal department
in order to receive information regarding updates
on current developments and the reasons for the
corresponding estimates. The development of the
aforementioned risks arising from the EU antitrust
proceeding, including the executive directors' esti-
mates concerning the potential proceeding outcomes,
was provided to us by the Company in writing. In
addition, we obtained and evaluated an external legal
confirmation as at the balance sheet date.
In our view, this matter was of particular significance
for our audit due to the significant uncertainties con-
cerning the outcome of the EU antitrust proceeding
and the potential effects on BMW AG's assets, liabil-
ities, financial position and financial performance.
In April 2019, the BMW Group was notified by the
European Commission of complaints in a pending
antitrust proceeding. The European Commission
accuses various manufacturers of colluding to restrict
competition in the field of innovation. In this con-
nection, a EUR 1.4 billion provision for litigation and
risk provisioning was recognized in the consolidated
financial statements under the balance sheet item
"Other provisions". The risk assessment to be made
on developments in the EU antitrust proceeding and
the estimation of whether or not a provision must
be recognized to cover the risks, and if so, in what
amount the current obligation must be measured, is
subject to a high degree of uncertainties and charac-
terized by the estimates and assumptions made by
the executive directors.
The executive directors are responsible for the other
information. The other information comprises the
following non-audited parts of the group management
report:
10,675
Munich, 11 March 2020/limited to the amendment
referred to in the Information on the Supplementary
Audit: 16 March 2020
Petra Justenhoven
Wirtschaftsprüferin
104,210
€ million
Revenues
INCOME STATEMENT
123,394
5,114,906
96,855
5,380,785
124,719
5,973,682
142,834
€ million
Business volume (based on balance sheet carrying amounts)
contracts
Contract portfolio
FINANCIAL SERVICES
5,235,207
133,147
2,359,756
145,555
98,282
Gross profit margin
7,118
€ million
Earnings before tax
9,386
9,899
8,933
94,163
7,411
Earnings before financial result
19.9
20.3
19.0
17.3
%
€ million
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
2,541,534 2,505,741
162,687 185,682
units
units
Information
Other
256
Comparison
Ten-year
Other
Information
→ BMW Group
5
OTHER
INFORMATION
We issue this auditor's report on the amended con-
solidated financial statements and amended group
management report on the basis of our statutory audit
completed on March 11, 2020 and our supplementary
audit completed on March 16, 2020, which concerned
the amendments to disclosures in the notes to the con-
solidated financial statements and the group manage-
ment report due to the updated reporting on expected
developments and on risks and opportunities taking
into account new information on the effects of the
spread of coronavirus. Please refer to the presentation
of the amendments by the executive directors in the
sections entitled "Basis of preparation" and "Report on
post-balance sheet date events" in the amended notes
to the consolidated financial statements, and in the
sections entitled “Organization and business model",
"Report on economic position”, “Report on expected
developments” and “Report on risks and opportunities”
in the amended group management report.
Information on the
Supplementary Audit
[German Public Auditor]
Andreas Fell
Wirtschaftsprüfer
[German Public Auditor]
→ Page 256 BMW Group Ten-year Comparison
2,564,025
187,116
Ten-year
BMW GROUP
2,468,658 2,352,440
164,153 145,032
2,538,367 2,483,292
175,162 165,566
units
units
2016
2017
20181
Comparison
2019
Automobiles
PRODUCTION VOLUME
Motorcycles³
Automobiles²
DELIVERIES
TEN-YEAR COMPARISON
Motorcycles³
1 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
73,542
PUBLISHED BY
Bayerische Motoren Werke
Aktiengesellschaft
80788 Munich
Germany
Telephone +49 89 382-0
ATHON ULTRA
#BlackBadge
General Information
and Group Profile
On 10 March 2020, the Financial Statements of
BMW AG were drawn up by the Board of Manage-
ment and the Board of Management granted approval
for publication of the Group Financial Statements.
Based on current developments regarding the spread
of the coronavirus, the Board of Management on
16 March 2020 adjusted the original outlook for the
BMW Group, the assumptions regarding the devel-
opment of the global economy and the economic
risks and opportunities for the financial year 2020
in the Combined Management Report, as well as
the statement regarding the Events after the end of
the reporting period. On the same day, the Board of
Management again drew up the Financial Statements
of BMW AG and once again gave approval for the
publication of the Group Financial Statements.
This Combined Management Report incorporates the
management reports of Bayerische Motoren Werke
Aktiengesellschaft (BMW AG) and the BMW Group.
→ www.bmwgroup.com/company
ORGANISATION AND
BUSINESS MODEL
Production running at full swing
Substantial upfront expenditure for
future-oriented projects
AND GROUP
PROFILE
3.50
Business Model
→ Organisation and
General information on the BMW Group is provided
below. There have been no significant changes to the
Group's structure compared to the previous year.
3.20
2.522
Combined
Management
Report
GENERAL
INFORMATION
Based in Munich, Germany, Bayerische Motoren Werke
Aktiengesellschaft (BMW AG) is the parent Company
of the BMW Group, which is the most successful maker
of automobiles and motorcycles in the premium seg-
ment worldwide. With BMW, MINI and Rolls-Royce,
the BMW Group owns three of the best-known pre-
mium brands in the automotive industry. In addition
to a strong market position in the premium segment
of the global motorcycles sector, the BMW Group is
also well-positioned in the financial services business.
The BMW Group comprises BMW AG itself and all
subsidiaries over which BMW AG has either direct
or indirect control. BMW AG is also responsible
for managing the Group, which is sub-divided into
the Automotive, Motorcycles and Financial Services
operating segments. The Other Entities segment
primarily comprises holding companies and Group
financing companies.
The BMW Group's underlying principle in all aspects
of corporate strategy is its customer-oriented approach.
In its ongoing efforts to develop its products, brands
and services, the BMW Group is currently focusing
on new technologies such as alternative drivetrains,
digitalisation, connectivity and autonomous driving.
27
Fax
E-mail
Telephone +49 89 382-2 53 87
7.47
3.22
3.52
4.02
3.52
The MINI brand promises outstanding driving pleasure
in the premium small car segment and, apart from its
highly efficient combustion-engine-driven models,
also offers plug-in hybrid and all-electric drivetrains.
Rolls-Royce is the ultimate marque in the ultra-luxury
segment, boasting a tradition that stretches back over
more than 100 years. Rolls-Royce Motor Cars spe-
cialises in bespoke customer specifications and offers
the very highest level of both quality and service.
The BMW brand caters to a wide variety of customer
requirements. Its portfolio encompasses a broad range
of models, starting with the premium compact class
and extending - via the premium mid-class - through
to the ultra-luxury class. Alongside all-electric mod-
els such as the BMW i3, it also offers its customers
state-of-the-art plug-in hybrids and a whole array
of vehicles driven by highly efficient combustion
engines. Together with its extremely popular X-model
family and high-performance BMW M range, the
BMW Group meets the varying needs and wishes of
its customers worldwide.
Automotive segment
In order to provide a better insight into the Group as a
whole, this report also contains separate presentations
of the operating segments Automotive, Motorcycles
and Financial Services.
Presentation of segments
General Information
The BMW Group operates on a global scale and
employed a workforce of 133,778 people worldwide
at the end of the year. In 2019, the BMW Group
strengthened its position as one of the world's most
attractive employers. Its leading role in terms of
sustainability contributes to employee loyalty within
the BMW Group and is one of the reasons for the low
staff attrition rate.
27
The BMW Group sets itself clear targets in terms of sus-
tainable, individual mobility, resource-efficient value
creation, the continued development of its workforce
potential and its own social commitment. Sustain-
ability is therefore an integral part of the Group's
business model and plays a vital role in ensuring its
viability going forward.
Management
Report
→ Page 64
Outlook, Risks and
Opportunities
The Motorcycles business is also clearly focused on
the premium segment. The model range currently
comprises motorcycles for the Sport, Tour, Roadster,
Heritage and Adventure segments as well as scooter
models for the Urban Mobility segment. BMW Motor-
rad also offers a broad range of equipment options to
enhance rider safety and comfort. The Motorcycles
business sales network is organised similarly to that
of the automobiles business. Currently, BMW motor-
cycles are sold by more than 1,200 dealerships and
importers in over 90 countries.
Financial Services segment
The BMW Group is a leading provider of financial
services in the automobile sector. These services are
offered in almost 60 countries worldwide via com-
panies and cooperation arrangements in place with
local financial service providers and importers. The
segment's main business comprises credit financ-
ing and the leasing of BMW Group brand cars and
motorcycles to retail customers. Customers can also
choose from an attractive array of insurance and
banking products. Operating under the brand name
Alphabet and working together with Alphabet coop-
eration partners, the BMW Group's international
multi-brand fleet business provides financing and
comprehensive management services for corporate
car fleets in 20 countries. The segment also supports
the BMW Group's dealership organisation by financ-
ing dealership vehicle inventories.
28
Combined
Management
Report
General Information
and Group Profile
Motorcycles segment
Organisation and
Business Model
Research and Development
→ www.bmwgroup.com/innovation
A major factor in the enduring success of the
BMW Group is its consistent focus on the future. Inno-
vation is an integral part of its corporate philosophy.
Shaping individual mobility and finding innovative
solutions today for the needs of tomorrow is a key
driving force. Research and development (R&D) are
therefore of major importance for the BMW Group
in ensuring its long-term commercial success as a
premium manufacturer.
In its development of new technologies, the BMW Group
focuses on the topics of emissions-reducing drivetrain
systems, digitalisation and autonomous driving with
the aim of creating completely new experiences and
future ways of travelling. A key prerequisite for success
both now and in the future is the ability to anticipate
customer needs and wishes in all fields of technol-
ogy and implement developments in a way that adds
value for the customer. However, as a premium manu-
facturer, the BMW Group is driven by the aspiration
to exceed customer expectations in every respect.
With this approach, the BMW Group strives to find
outstanding solutions for the overall (mobility) needs
of its customers.
The BMW Group addresses the key trends shaping
tomorrow's individual mobility via the central topics
of Design, Autonomous, Connectivity, Electrified and
Services.
1. Design
→ Research and
Development
The global sales network of the BMW Group's automo-
bile business currently comprises around 3,500 BMW,
1,600 MINI and 150 Rolls-Royce dealerships. Within
Germany, sales are conducted through branches of
the BMW Group and independent authorised dealer-
ships. Sales outside Germany are handled primarily
by subsidiary companies and by independent import
companies in some markets.
Combined
26
→Page 53
+49 89 382-1 46 61
ir@bmwgroup.com
Comparison of Forecasts for 2019 with Actual Results in 2019
Review of Operations
→ Page 64
Automotive Segment
→ Page 71
Motorcycles Segment
→ Page 73
Financial Services Segment
→ Page 76 Comments on Financial Statements of BMW AG
→ Page 82 Report on Outlook, Risks and Opportunities
Page 82 Outlook
→Page 88 Risks and Opportunities
→ Page 101 Internal Control System Relevant for Accounting
and Financial Reporting Processes
→ Page 102 Disclosures Relevant for Takeovers and Explanatory Comments
and Group Profile
Economic Position
The BMW Group on the Internet
Further information about the BMW Group is
available online at → www.bmwgroup.com.
Investor Relations information is available directly
→Financial Calendar
Shareholders
To Our
24
24
5 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
65.11
↑↑
72.08
87.875
90.92
8.23
8.81
6.78
4.12
3.90
82.30
Contacts
FINANCIAL CALENDAR
CONTACTS
19 March 2020
Analyst and Investor Conference
6 May 2020
Quarterly Statement to 31 March 2020
14 May 2020
Annual General Meeting
5 August 2020
Quarterly Report to 30 June 2020
4 November 2020
Quarterly Statement to 30 September 2020
Business and Finance Press
Telephone +49 89 382-2 45 44
Fax
E-mail
+49 89 382-2 41 18
+49 89 382-2 44 18
presse@bmwgroup.com
Investor Relations
2020
9.72
10.47
13.09
10.625
Quarterly Report to 30 June 2021
3 August 2021
Annual General Meeting
12 May 2021
Quarterly Statement to 31 March 2021
7 May 2021
Analyst and Investor Conference
18 March 2021
Annual Accounts Press Conference
17 March 2021
Annual Report 2020
17 March 2021
2021
→ www.rolls-roycemotorcars.com and → www.bmw-motorrad.com.
is available at www.bmw.com, www.mini.com,
Information about the various BMW Group brands
at www.bmwgroup.com/ir.
3 November 2021
The BMW Group sees design as the characteristic
combination of aesthetics and technology. Out-
standing design involves focusing keenly on peo-
ple and their needs. Ground-breaking design
underlines the inimitable character of each new
vehicle, thereby strengthening all of the Group's
brands.
Quarterly Statement to 30 September 2021
→Page 26 General Information and Group Profile
7.49
9.70
10.45
13.07
10.605
2
→Page 52 Overall Assessment by Management
→Page 48 General and Sector-specific Environment
→Page 48 Report on Economic Position
→Page 44 Management System
→ Page 43 Cooperation Agreements and Partnerships
→Page 41 Sustainability
Page 39 Workforce
→Page 38 Purchasing and Supplier Network
→Page 31 Production Network
→Page 28 Research and Development
→Page 26 Organisation and Business Model
COMBINED MANAGEMENT
REPORT
2. Autonomous
The ability to use services from the BMW Group
nearly everywhere at all times is the prerequi-
site for a digital services offering that is solely fo-
cused on the customers and their individual
needs. This includes, for example, personalised
and context-based information in the vehicle.
For customers of the BMW Group it is very easy
to keep the vehicle digitally up-to-date and to
tailor the vehicle to customers' individual wishes
over the entire life cycle. With the Remote Soft-
ware Update, the vehicle can always be updated
with the latest software, functions are continu-
ously expanded and digital services can be booked
at any time. In this way, the security and quality
of the vehicle is continually improved. BMW drivers
can therefore keep their vehicles up to date as they
are accustomed to from the smartphone world.
In July 2019, the BMW Group and Daimler AG
signed an agreement on long-term strategic coop-
eration in the field of automated driving. The
two companies intend to jointly develop the next
generation of technology for driver assistance
systems and automated driving on motorways as
well as automated parking features. The cooper-
ation is open for further OEM and technology
partners and the results of this collaboration
will also be offered to other OEMs for licensing.
BMW AG STOCK
AND CAPITAL
MARKETS
IN 2019
in 2019
Capital Markets
→BMWAG Stock and
Shareholders
To Our
22
22
Chairman of the Board of Management
Oliver Zipse
V.fium
Yours
you to accompany the BMW Group on our continued path towards the future.
I invite
We are systematically further developing our highly complex and digitally connected vehicles
in the interests of our customers and society. We have the capability, the ambition and the
determination to be a pioneer in the age of new mobility - and, at the same time, to remain
an attractive and safe investment for you, our shareholders.
Top ratings unchanged
Dividend payout ratio increases
→ www.bmwgroup.com/ir
Ratings remain at top level
Dividend and payout ratio
negative
stable
Outlook
A-1
P-1
Current financial liabilities
We firmly believe that the far-reaching technological transformation will strengthen our business
model.
A+
Non-current financial liabilities
Standard &
Poor's
Moody's
Company rating
These rating assessments are underpinned by the
BMW Group's dependable financial profile and excel-
lent creditworthiness. Consequently, the Company not
only has good access to international capital markets,
but also benefits from attractive refinancing conditions.
Moody's has given BMW AG a long-term rating of A1
(stable outlook) since January 2017. The short-term
rating is P-1. The overall positive assessment reflects
the launch of attractive products in conjunction with
the current model offensive, the excellent positioning
of the BMW Group with respect to the challenges
faced by the automobile industry and its consistently
strong operating performance and robust financial and
capital structure. The rating agency Standard & Poor's
has given BMW AG a long-term rating of A+ (negative
outlook) and a short-term rating of A-1.
The BMW Group continues to be the best-rated auto-
mobile manufacturer in Europe.
A1
Dear Shareholders,
Optimism secures success - and success secures the future.
The latest developments regarding the coronavirus pose major challenges for us all – including
the BMW Group. In close cooperation with our business partners, we are working on targeted
measures to avoid supply bottlenecks where possible. As a Company, we have initiated measures
worldwide to protect the health and safety of our employees, in consultation with our works
council representatives. At the same time I have been witnessing a remarkable solidarity:
employees are supporting each other. That is what sets your Company apart - taking on
responsibility as a key member of society.
Shareholders
To Our
20
19
This forms the basis of our business model and our confidence. Demand for premium mobility
worldwide is expected to grow until 2030. Our goal is to gain or regain market share – but not
at any price. Rising sales must also generate the necessary earnings.
People still want to be mobile.
Our corporate spirit is rooted in the values of responsibility, appreciation, transparency, trust
and openness. In the Board of Management, we have geared the BMW Group's strategy towards
the relevant areas of future activity and adjusted core elements: what does the BMW Group
stand for? What drives us? What are we working towards? And how can we achieve our goals?
It is imperative that we focus on business, environmental and social challenges equally.
Everything today is interconnected. There are no simple solutions to long-term success.
→ Statement of the
Chairman
Our business environment is shaped by uncertain developments, which we need to respond
to quickly and appropriately, but it is also shaped by stable trends. That is why enhancing
our strategy is an ongoing task.
This was confirmed by our most recent employee survey. - even at a time when the role of the
automotive industry is the subject of intense debate. The BMW Group is considered one of the
world's most attractive employers and is the number one automobile manufacturer in various
renowned rankings. Our associates value that you, our shareholders, support the Company's
long-term course. This gives us the backing and internal stability we need to continue to chart
our own course and differentiate ourselves from the competition.
Our team is proud to work for the BMW Group.
I would also like to thank our high-performing retail organisation, as well as the suppliers we
work with as partners. The dedication and ideas of our more than 133,000 associates worldwide
drive the Company forwards.
In 2019 we reached a new record level of vehicles delivered to customers for the ninth con-
secutive year. Personally, and on behalf of my Board of Management team, I would like to
thank our more than two-and-a-half million BMW, MINI and Rolls-Royce customers - and
over 175,000 BMW Motorrad customers.
Our customers are the key to our success.
At the BMW Group, the customer always takes centre stage. That is what makes your Company
strong. But we also know that success doesn't happen by itself - and certainly not in times of
technological transformation. We seek to offer our customers the best products and services
so they can be mobile in a way that suits their personal needs. Together, we are leading "sheer
driving pleasure” into a sustainable future – as intended by the Paris Climate Agreement. To
achieve this, we are systematically directing our focus towards new technologies and connectivity.
Because we want your Company to emerge as a winner of this transformation.
Dear Shareholders,
The BMW Group strategy is dynamic.
In view of the Group's good earnings performance,
the Board of Management and the Supervisory Board
will propose to the Annual General Meeting that
BMW AG's unappropriated profit of €1,646 million 7
of the Board of
Management
The financial year 2019 was impacted by a variety of headwinds. As previously announced, our
Group earnings before tax were significantly lower than the previous year.
-
Reliability even in difficult times.
Climate protection achieves the biggest impact through implementation, not announcements.
Our understanding of responsibility has always encompassed the entire value chain. Last year
alone, we reduced CO2 emissions from production by 25 percent from the previous year. The
“footprint” of every new plug-in hybrid is certified: from raw material procurement, through the
supply chain, production and use phase, all the way to recycling. E-mobility requires cobalt and
lithium. Starting this year, we will be sourcing both raw materials ourselves and making them
available to our suppliers. This creates transparency. You will find more details on this in our
Sustainable Value Report 2019. We will no longer be printing our Annual Report, which will
now be exclusively available on our website as part of our expanded digital offering.
Offering effective solutions. Creating a real impact. Ensuring sustainability.
That's what we stand for.
We plan to meet the EU's new CO2 standards.
We geared up for sustainable mobility early. This year alone, we plan to lower the CO2 emissions
of our European new vehicle fleet by another 20 percent. This would allow us to meet the
European Union's new CO2 targets for 2020 and 2021. To achieve this, we are forging ahead
with our electric offensive and, at the same time, continuing to make our conventional engines
more efficient. Too little attention is paid to these efforts and their effects - even though they
have a rapid and noticeable impact.
21
24
We aim to improve our profitability.
The iX3, 14 and iNEXT use our entirely newly developed fifth-generation electric drivetrain. The
electric motor is designed in such a way that no rare earths are needed. Long-term contracts
will secure our supply of battery cells.
The BMW Group figure was nearly double that. We will continue in this direction: the goal is
for a quarter of our European new vehicle fleet to be electrified in 2021; a third in 2025 and
half in 2030. The next fully-electric models are already in the starting blocks: the MINI SE and
BMW iX3 this year, followed by the BMW i4 and iNEXT from 2021.
More than one million electrified vehicles by the end of 2021.
Our experience with e-mobility is delivering results. By the end of 2019, the BMW Group had
more than 500,000 electrified vehicles on roads across the world. This, in itself, is already a
significant contribution to climate protection. In Germany, BMW clearly leads the market for
electrified vehicles, with a share of 21 percent. In 2019, the average share of battery-electric
vehicles and plug-in hybrids in the European Union was three percent.
Customers choose the vehicle segment that best suits their living environment - we provide
the right drivetrain to go with it. The popular BMW X3 is a good example of this. Starting this
year, four different drivetrain variants will be offered: efficient diesel and petrol, plug-in hybrid
and pure electric. Mobility needs will continue to vary around the world and from region to
region - in some cases, significantly. Our plants have the flexibility to produce all types of
drivetrains. In this way, we are able to inspire our customers and win them over to sustainable
drivetrains. Our online Annual Report features customers from the Netherlands, South Africa
and Japan and shows how they use different drivetrains in their everyday lives.
We offer our customers the Power of Choice.
Nearly all model series have been updated over the past two years. They will be joined this
year by new models like the BMW 2 Series Gran Coupé, highly profitable BMW M models,
new plug-in hybrids and electric models. Our portfolio is younger, more attractive and more
technologically diverse than ever before. This allows us to meet every customer's needs and
desires – no matter where they are in the world. As a result we are challenging the competition
in every segment.
The biggest model offensive in our history continues.
The EBIT margin in the Automotive Segment was within our adjusted target range of 4.5 to 6.5 per-
cent. The Board of Management and the Supervisory Board will propose a dividend of €2.50 per
share of common stock and €2.52 per share of preferred stock to the Annual General Meeting.
We are working intensively to bring the EBIT margin in the Automotive Segment back within
our target range of 8 to 10 percent. This is the standard we hold ourselves to - and what you
expect as shareholders. We will realise over 12 billion euros in efficiency potential through our
Performance > NEXT programme by the end of 2022 – for example, through current measures
aimed at digitalising our processes. We will continue to make significant investments in our
future. In 2019 alone, we invested 6.4 billion euros in research and development.
We provide maximum vertical integration for e-mobility.
Since 2018, the BMW Group has been pooling its
expertise with the aim of developing state-of-
the-art driver assistance systems in its own devel-
opment centre. The goal is to create an open
platform for highly and fully automated driving
that will serve as an industry standard going
forward. Today, the latest generation of driver as-
sistance systems already supports customers in
a variety of driving situations. However, “safety
first" always has the foremost priority in all
development work performed.
(2018: €2,303 million) be used to pay a dividend of
€2.50 per share of common stock (2018: €3.50) and
a dividend of €2.52 for each share of preferred stock
(2018: €3.52). The payout ratio for 2019 therefore
stands at 32.8% (2018: 32.0%).
2019
56.53
67.29
60.70
47.54
92.19
74.15
78.89
82.50
67.85
77.41
72.70
74.64
62.10
55.05
Low
58.96
KEY DATA PER SHARE IN €
Dividend
Common stock
3. Connectivity
The demands and needs of customers for mod-
ern, digital mobility are the top priority for the
BMW Group. One of the most important effects
of digitalisation in the automotive industry is
that the vehicle itself has become focal point of
the digital customer experience. The BMW Group
prepared itself at an early stage in this area.
With BMW Connected and the growing digital
offerings, the Company is prepared for the ex-
pectations and wishes of its customers. In this
regard, the focus is not just on the develop-
ment and integration of new technologies and
services for the vehicle, but on customers and
their contemporary demands. Digital services,
which customers are used to, should be avail-
able seamlessly and without restrictions even out-
side of the vehicle.
Annual Accounts Press Conference
4.00
3.50
2.502
23
High
23
³ Weighted average number of shares for the year.
2 Proposed by management.
1 Xetra closing prices.
Free cash flow Automotive segment
Equity
Earnings per share of preferred stock4
Earnings per share of common stock³
Preferred stock
4 Stock weighted according to dividend entitlements.
Year-end closing price
Stock exchange price in €¹
54,809
73.14
Low
High
Year-end closing price
Stock exchange price in €¹
601,995
601,995
70.70
601,995
601,995
Number of shares in 1,000
COMMON STOCK
2015
2016
2017
2018
601,995
BMW AG stock
→ 09
86.83
97.63
55,114
55,605
56,127
56,867
Number of shares in 1,000
PREFERRED STOCK
75.68
88.75
65.10
69.86
58.70
122.60
92.25
90.83
96.26
77.75
77.71
18 March 2020
Born (VDL Nedcar)³
2,564,025
Germany
Thailand
United Kingdom
Steyr
Spartanburg
San Luis Potosí
Rosslyn
South Africa
Regensburg
Oxford
Motorcycles
Lightweight construction components, electric drivetrain systems and special engines
BMW 1 Series, BMW 2 Series, BMW i, BMW M
Germany
Germany
Brazil
Germany
United Kingdom
Germany
Toolmaking, outer body parts for Rolls-Royce, aluminium tanks for BMW Motorrad
Petrol engines for BMW, BMW i, MINI
Core engine parts
Rayong
Mexico
BMW 3 Series, BMW 4 Series, BMW M
Petrol and diesel engines, high-performance engines for M models
333
Pressed parts and bodywork components
Distribution centre for parts and components
Cockpit assembly
Processing of carbon fibre components
Rolls-Royce Phantom, Ghost, Wraith, Dawn, Cullinan*
High-performance engines for M models
BMW X3, BMW X4, BMW X5, BMW X6, BMW X7, BMW M
Petrol and diesel engines for BMW and MINI
Core engine parts
*Fuel consumption and CO₂ emissions information are available on page 70.
United Kingdom
Rolls-Royce Manufacturing Plant Goodwood
Germany
United Kingdom
Wackersdorf
Swindon
BMW 3 Series
BMW X3
BMW 1 Series, BMW 2 Series, BMW 3 Series, BMW 4 Series
BMW X1, BMW X2, BMW M
BMW 3 Series, BMW 5 Series, BMW 7 Series
BMW X1, BMW X3, BMW X5, BMW X6
Motorcycles
MINI, MINI Clubman
Core engine parts
BMW 3 Series, BMW 4 Series, BMW 5 Series, BMW 6 Series,
BMW 7 Series, BMW 8 Series, BMW M
Chassis and drivetrain components
Components for electric mobility
Rolls-Royce bodywork, pressed parts
BMW 3 Series, BMW X1, BMW X3, BMW X4, BMW X5
BMW motorcycles, Maxi-Scooters, car brake discs
BMW 3 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series
BMW X1, BMW X3, BMW X4, BMW X5, BMW X7, MINI Countryman
Germany
India
Its ability to produce electric powertrain systems,
batteries and prototypes for battery cells in-house
gives the BMW Group a competitive edge that enables
it to secure valuable knowledge of new technologies,
gain important system expertise and leverage cost
advantages.
The BMW Group plants in Germany play a leading
role in integrating e-mobility throughout the Group's
production network. The technologies used to produce
electric powertrain components and high-voltage
batteries are developed at the Group's prototype con-
struction centre in Munich. As a competence centre
for electric powertrain systems, the Dingolfing site
acts as lead production plant, and the e-motors for
the BMW Group's electrified vehicles are manufac-
tured there. The corresponding battery modules and
high-voltage batteries are produced at the Group's
three battery factories in Dingolfing (Germany),
Spartanburg (USA) and Shenyang (China). In Thailand,
the BMW Group works closely with a partner that
manufactures batteries for electrified vehicles pro-
duced locally.
The BMW Group is integrating the production of
fully and partially electrified vehicles in its existing
production system, enabling it to ensure the long-
term capacity utilisation of the production network,
while at the same time being able to respond swiftly
and flexibly to customer requirements. In 2019, the
Group produced electrified models at 11 different
locations worldwide.
existing production system
Production of electrified automobiles in the
→ Production Network
General Information
and Group Profile
Organisation and
Business Model
Combined
Management
Report
32
32
31
3 Contract production.
2 Joint Venture BMW Brilliance Automotive Ltd., Shenyang.
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 536,509 units, 2018: 491,872 units).
100.0
0.9
2,541,534
The BMW Group combines its wealth of experience
and broad knowledge of battery cell technologies in
its own new competence centre, which was opened
in Munich in 2019.
Group
Expansion of the international production network
In its efforts to remain successful going forward,
the BMW Group continues to invest in expanding
existing and establishing new production capacities,
thereby increasing its manufacturing capability and
enhancing the flexibility of its production network.
The BMW Group endeavours to achieve an even dis-
tribution of production and deliveries in the various
regions of the world.
The BMW Brilliance Automotive Ltd, Shenyang (BBA)
joint venture in China is currently building a new facil-
ity on the premises of the Tiexi plant and carrying out
major extensions to its automobile plant in Dadong.
Brazil
Germany
Products
Country
Munich
Manaus
Leipzig
Landshut
Hams Hall
Eisenach
Dingolfing
Chennai
Berlin
BMW GROUP PLANTS
Araquari
Locations
A further eight production sites are operated either
by partners or contract manufacturers. The same
standards of quality, safety and sustainability apply
at all locations within the BMW Group's production
network worldwide.
The production network comprises 31 locations in
15 countries, 20 of which are BMW Group plants.
Three of these locations belong to the BMW Brilliance
Automotive joint venture in Shenyang, China. ¬
International production network
In 2019, the BMW Group opened a new plant in
San Luis Potosí (Mexico). The new facility, which
has the capacity to manufacture up to 175,000 units
per year, produces the BMW 3 Series Sedan, thus sig-
nificantly boosting production flexibility within the
network. The BMW 3 Series Sedan is also produced
in Germany and China.
USA
Austria
note 8
-20.7
-10.1
43.3
-0.9
29
29
With digital services such as on-street parking or
digital charging services, which are available to
book over the BMW ConnectedDrive Store, it has
been possible since 2014 to constantly customise
the vehicle toward individual preferences. The next
step for more flexibility involves offering addi-
tional vehicle functions after purchase, such as a
high-beam assistant or driver assistant system,
Active Cruise Control (ACC). The expanded, cus-
tomer-oriented and digital offerings of the
BMW Group make it possible to update the vehi-
cle for many years with the newest functions.
Therefore, customers do not need to decide about
specific optional equipment at purchase, but
they can regularly customise their vehicle based
on individual needs.
Together with automated driving, the systematic
expansion of connectivity on the path towards a
digital and emissions-free future is one of the cen-
tral areas of action, with which the BMW Group
is shaping the transformation of the mobility in-
dustry in line with its corporate strategy.
4. Electrified
During the 2019 reporting period, the BMW Group
reached a further milestone with the delivery
of its 500,000th electrified automobile. With 11
electrified models in its range (as of 2019), the
BMW Group is among the world's leading providers
of electric mobility. Since 2016, the Company
has been the market leader for electrified vehicles
in Germany and also occupies a top position
not only in Europe, but worldwide.
Its many years of experience have given the
BMW Group a broad and sound base of knowl-
edge in the field of electric mobility. On this
basis, the Company develops the drivetrain tech-
nology such as the motor, the power electronics
and also the battery, including the battery cell it-
self, guaranteeing the typical driving charac-
teristics for its electrified vehicles that customers
associate with the brand.
In 2020, the BMW X3 will be the first BMW Group
model to be available in four different drive-
train versions: with an efficient diesel or petrol
engine, as a plug-in hybrid, and with an all-electric
powertrain system in the form of the BMW iX3*.
The BMW iX3 is the first model to benefit from a
new generation of highly efficient BMW electric
drivetrains, which enables a new balance between
range and battery size.
* Fuel
consumption
and CO₂ emis-
sions informa-
tion are available
on page 70.
Due to its role as a technology carrier and its en-
during sales success, the BMW i3 is also being
developed to the next level. Launched at the end of
2019, the MINI Cooper SE* is a further all-electric
vehicle that complements the BMW Group's range
of electrified models. Over 90,000 registered
prospective customers (as of 2019) reflect the avid
interest of consumers in this first all-electric
MINI model. Rolls-Royce Motor Cars is also work-
ing hard on developing an electric vehicle. In line
with the expectations of its customers, the brand
will immediately focus on manufacturing all-
electric models.
1 Prior year's figures adjusted due to a change in accounting policy in connection with the
adoption of IFRS 16; see note 6 to the Group Financial Statements. In addition, figures for
the prior year have been adjusted due to changes in presentation of selected items, which
are not material overall.
2 Research and development expenditure as a percentage of Group revenues.
3 Capitalised development costs as a percentage of research and development expenditure.
Further information on research and development
→ see expenditure is provided in → note 8 to the Group
Financial Statements.
Spartanburg
Proportion of
production in %
Change in %
2018
2019
in units
The Group set a new production volume record in the
year under report, totalling 2,564,025¹ BMW, MINI
and Rolls-Royce brand vehicles (2018: 2,541,5341
units; +0.9%). The figure comprised 2,205,841¹ BMW
(2018: 2,168,496¹ units; +1.7%), 352,729 MINI (2018:
368,685 units; -4.3%) and 5,455 Rolls-Royce (2018:
4,353 units; +25.3%) brand vehicles.
The BMW Group's range of models includes highly
efficient combustion engines as well as state-of-
the-art plug-in hybrids and all-electric drivetrains.
This broad array of options enables the Group to
meet the varying requirements and wishes of its
customers in different regions of the world while
at the same time making an effective contribution
to cutting CO2 emissions. Regardless of the type
of drivetrain the customer chooses, all current and
future models, each with their own specific
characteristics, will feature the driving pleasure
typical of the brand.
High capacity utilisation throughout the entire
production network
→ 11
Vehicle production of the BMW Group by plant
Sustainability in production and along the value chain
has played a fundamental role for the BMW Group
Its production network leverages innovative technolo-
gies from the fields of digitalisation and Industry 4.0,
including applications from the worlds of virtual reality,
artificial intelligence and 3D printing. Standardised
processes and structures ensure consistent premium
quality throughout the production system. At the
same time, the BMW Group offers its customers a high
degree of individualisation.
The BMW Group's production system is characterised
by its high flexibility and efficiency, enabling it to
respond rapidly to changing market situations and fluc-
tuating regional demand. The BMW Group's production
expertise also makes a contribution to its profitability.
Production Network
34
for many years. The Company has been continually
reducing the use of resources such as energy and water
and produces less waste and CO2 emissions. In 2019
the production of a vehicle required on average
only half the resources and CO2 as in 2006. From
2020 onwards all plants operated directly by the
BMW Group globally as well as those of the joint
venture BMW Brilliance Automotive in China will
obtain energy exclusively from renewable sources.
5. Services
The BMW Group aims to be one of the leading
providers of premium mobility services going
forward. In order to do so, it is essential to have a
clear understanding of the needs of customers
worldwide. This knowledge is the basis for offer-
ing customers an attractive, comprehensive range
of services in this field, too. These include easy-
to-use, digitally supported mobility services
that also feature bring-and-collect services or help
customers find open parking spaces in urban
environments. In order to reinforce this strategic
field, the BMW Group founded the joint venture
YOUR NOW together with Daimler AG during the
period under report. Further information is pro-
vided in the section Cooperation Agreements
and Partnerships.
30
5,952
5,320
-1,667
-1,414
New expenditure for capitalised
development costs
2,134
2,984
Research and development expenses
Amortisation
Research and development expenditure
6,890
Change in
2019
2018¹
%pts¹
Research and development
expenditure ratio²
Capitalisation rate³
6,419
411,620
2018
in € million
Combined
Management
Report
General Information
and Group Profile
Organisation and
Business Model
→ Research and
Development
→ Production Network
Battery cell competence centre opened
The BMW Group has combined its wealth of experi-
ence in the field of e-mobility with its wide-ranging
knowledge of battery cells to form a new competence
centre in Munich. It is tasked with continuing to
develop battery cell technology and master the
processes required for cell production. Based on
current technology, the aim is to significantly increase
the energy density of battery cells and thus also the
range for customers.
The further development of battery cell technology
is a key success factor in the BMW Group's electric
offensive strategy, enabling it to have a direct impact
on both the performance and the cost of the battery.
This holistic approach ensures that the BMW Group
is always at the cutting edge of technology while
simultaneously covering the entire value chain,
including research and development, assembly and
design of battery cells. Swift decision-making and
comprehensive collaboration are making it possible
to develop battery cells in a complete, transparent
and sustainable manner. Moreover, it is crucial to
take recycling into account from the very beginning.
2019
Sustainability is also a key factor for the expansion of
electric mobility. For the BMW Group, responsible raw
material extraction and processing starts at the very
beginning of the value chain. Supply chains for the
upcoming fifth generation of high-voltage electrical
storage systems have also been restructured, including
the plan to purchase cobalt and lithium for battery
cells directly with effect from 2020. The strategy will
provide complete transparency regarding the origin
of these two essential raw materials for manufactur-
ing batteries. Further information is available in the
Sustainable Value Report at → www.bmwgroup.com/svr.
BMW i Hydrogen NEXT presented
The BMW Group assumes that various alternative
drivetrain systems will coexist in future years, as the
mobility requirements of customers worldwide cannot
be met by one solution alone. Hydrogen-powered vehi-
cles could become an important alternative to, as well
as a supplement for, battery-electric powered vehicles.
This diversity in the field of electrified drivetrain tech-
nologies, which also includes plug-in hybrids alongside
highly efficient combustion engines, underlines the
BMW Group's commitment to offering its customers
tailor-made solutions that satisfy their own individual
mobility needs. In 2019, the BMW Group presented a
further milestone in this strategy at the IAA with its fuel
cell-powered development vehicle BMWi Hydrogen
NEXT. This innovative vehicle provides an initial
preview of a small series of hydrogen fuel cell electric
drivetrains based on the current BMW X5.
The BMW Group has already demonstrated the
practical viability of the technology. Since 2013, the
BMW Group and the Toyota Motor Corporation have
been collaborating on the joint development of a
powertrain system based on hydrogen fuel cell tech-
nology. Since summer 2015, BMW Group researchers
have been testing a small fleet of BMW 5 Series GT
hydrogen fuel cell prototypes with a jointly developed
powertrain system.
Global research and innovation network expanded
At 31 December 2019, more than 15,700 people in
12 countries were working in the BMW Group's global
research and innovation network. The following tables
summarise the key financial figures for research and
development:
BMW Group performance indicators relating
to research and development expenses
→ 10
With the opening of the competence centre, the
BMW Group is not only setting the future strategic
course in technological terms, it is also securing jobs
and key qualifications in the long term.
356,749
15.4
16.1
308
25,538
0.2
25.3
4,353
5,455
Graz (Magna Steyr)³
1.0
Dadong (BBA)²
San Luis Potosí
Goodwood
0.3
5.9
7,752
8,208
0.3
Tiexi (BBA)²
-18.1
250,241
-16.6
42,660
33,816
Partner plants
2.0
-18.9
64,431
52,231
299,939
6.8
211,660
174,097
11.2
49.2
191,888
286,268
9.8
-17.7
1.3
10,956
0.9
-20.0
319,592
255,804
11.1
-13.4
328,862
284,907
10.0
Araquari
Rayong
Rosslyn
Munich
Oxford
Leipzig
Regensburg
Dingolfing
Chennai
8,976
230,284
-5.7
51.8
15,612
23,700
2.7
38.3
50,224
69,463
244,248
8.6
157,799
221,077
8.7
-5.2
234,501
222,340
9.0
40.1
Combined
Management
Report
Petrol engines, production of core engine parts
Organisation and
Business Model
Spain
Portugal
Italy
Slovenia¹
Malta
Sweden
Finland¹
Denmark
Czech
Republic
Poland
Switzerland
Austria
Hungary¹
Romania¹
Bulgaria¹
Greece
■ Production in Europe
BMW Group plant Berlin
BMW Group plant Dingolfing
BMW Group plant Eisenach
BMW Group plant Landshut
BMW Group plant Leipzig
Slovakia¹
BMW Group plant Munich
France
☐
BMW do Brasil, Araquari,
Brazil
BMW Group Technology Office Tel Aviv,
Tel Aviv, Israel
BMW Group R&D Center Seoul,
Seoul, South Korea
1 Sales locations only.
Russia
India
China
South Korea
Japan
Hong Kong
Belgium
Thailand
Singapore¹
Indonesia¹
Australia
BMW Group locations in Europe
→ 13
Norway
Germany
The Netherlands
UK
Ireland
Malaysia
BMW Group IT DevOps Hub,
Rosslyn, South Africa
BMW Group plant Regensburg
BMW Group plant Steyr, Austria
Ensuring access to resources in a volatile
environment
The international orientation of the Purchasing and
Supplier Network provides the BMW Group with good
access to global procurement markets. It is responsible
for the worldwide procurement and quality assurance
of production materials, raw materials, capital goods
and services as well as the manufacturing of vehicle
components produced in-house. External suppliers
are selected systematically on the basis of competitive-
ness according to the criteria of operating excellence,
quality, innovation, flexibility, cost and sustainability.
Sustainability and resource efficiency
along the value chain
The BMW Group attaches great importance to compli-
ance with environmental and social standards as well
as to the efficient use of resources along the entire
value chain.
For these reasons, sustainability criteria based on
the BMW Group Sustainability Standard are firmly
embedded in its purchasing processes. These criteria
also play an essential role in the selection and assess-
ment of suppliers and apply across the entire supply
chain. Sustainability management therefore creates
greater transparency for both the BMW Group and
its suppliers.
The BMW Group is also involved in initiatives aimed at
standardising sustainability requirements and estab-
lishing verification mechanisms for supply chains in
connection with critical raw materials.
Further information is available in the Sustainable
Value Report 2019 online at www.bmwgroup.com/svr.
Connecting procurement markets
The BMW Group remains committed to its strategy
of maintaining a regional balance with regard to
sales volume, production and purchasing volumes,
thereby making an important contribution to natural
hedging against currency fluctuations. In particular,
the proportion of purchase volumes attributable to the
Americas region grew in 2019, mainly due to the sig-
nificant increase in vehicle production in Spartanburg,
USA, and the start-up of the vehicle plant in San Luis
Potosí, Mexico. Growth in the region will continue in
future with the ramping up of production in Mexico.
Regional mix of BMW Group
purchase volumes 2019
Purchasing and Supplier Network
→ 14
Asia/Australia 6.5
Rest of Western
Europe 16.8
2.3 Other
33.4
Germany
19.0
North America
22.0 Eastern Europe
Example: cobalt
Since cobalt is a key component for producing
electrified vehicles, the BMW Group is working to
achieve the greatest possible level of transparency in
the supply chain. The Group is in continuous contact
with battery cell manufacturers and demands disclo-
sure of the origin of this critical raw material. The
BMW Group has also made its information on the
subject of cobalt, such as the smelters and countries
of origin, publicly available and updates it regularly.
The next step will be to restructure the supply chains
used to acquire cobalt. From 2020 onwards, the Group
plans to purchase cobalt for fifth-generation battery
cells directly from mines in Morocco and Australia
and make it available to its supply chain partners. The
strategy increases transparency regarding the origin
of the raw material.
General Information
and Group Profile
in %, basis: production material
BMW Group plant Wackersdorf
→ Workforce
Organisation and
Business Model
BMW Group plant Hams Hall, UK
BMW Group plant Oxford, UK
BMW Group plant Swindon, UK
Rolls-Royce Manufacturing Plant,
Goodwood, UK
Partner plants
in Europe
Partner plant, Born,
the Netherlands
Partner plant, Graz,
Austria
Partner plant,
Kaliningrad, Russia
▲ Research and development
network in Europe
BMW Group Research and Innovation
Centre (FIZ), Munich, Germany
BMW Group Autonomous Driving
Campus, Unterschleißheim, Germany
BMW Group Designworks, Munich,
Germany
BMW Car IT, Munich, Germany
BMW Group Lightweight
Construction and Technology Center,
Landshut, Germany
→ Purchasing and
Supplier Network
BMW Group Diesel Competence
Centre, Steyr, Austria
Porto, Portugal
BMW France, S. A. S.,
Montigny, France
Rolls-Royce Motor Cars Ltd.,
Goodwood, UK
Sales subsidiaries
and Financial Services
locations
37
32
88
38
Combined
Management
Report
General Information
and Group Profile
Critical TechWorks S.A.,
BMW Technology, Chicago, USA
BMW Group IT Technology Office,
Greenville, USA
7.1
BMW Group Engineering Japan,
Tokyo, Japan
7
Moreover, various MINI models and the BMW X1 were
assembled at VDL Nedcar in Born (the Netherlands).
BMW motorcycles were also manufactured by the
TVS Motor Company in Hosur (India) and the Loncin
Motor Company in Chongqing (China).
Locations
Country
CONTRACT PRODUCTION
The Netherlands
Born
China
Chongqing
Austria
Graz
Hosur
India
Motorcycle production up sharply
The BMW Group also awards contracts to external
partners for the production of specific types of
vehicle as well as motorcycles. During the period
under report, Magna Steyr Fahrzeugtechnik pro-
duced the BMW 5 Series Sedan and the BMW Z4 in
Graz (Austria).
In 2019, a total of 187,116 motorcycles rolled off produc-
tion lines at five different locations worldwide (2018:
162,687 units; +15.0%). The significant increase was
primarily due to the fact that the production of BMW
scooters at the Chinese partner Loncin Motor Co., Ltd
in Chongqing now covers the full product range. In
September 2019, BMW Motorrad celebrated 50 years
of motorcycle production at the Berlin plant together
with over 10,000 visitors.
MINI Convertible, MINI Countryman
BMW X1
Motorcycles
BMW 5 Series
BMW Z4
Motorcycles
35
35
36
Combined
Management
Report
General Information
and Group Profile
→ Organisation and
Business Model
Products
BMW 5 Series, BMW 7 Series
BMW X1, BMW X3, BMW X4, BMW X5, BMW X6, BMW X7
BMW 3 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series
BMW X1, BMW X3, BMW X4, BMW X5
MINI Countryman
BMW X1, BMW X3, BMW X4, BMW X5, BMW X6, BMW X7
BMW 5 Series, BMW 7 Series
BMW Group Engineering USA,
Woodcliff Lake, USA
→ Production Network
The plants in Shenyang (China) are operated by the
BMW Brilliance Automotive (BBA) joint venture. The
Shenyang production location comprises the Dadong &
Locations
JOINT VENTURE BMW BRILLIANCE
AUTOMOTIVE HOLDINGS LTD.
Dadong (Shenyang)
Tiexi (Shenyang)
Country
China
China
China
and Tiexi automobile plants. Tiexi also has an engine
plant with an adjacent foundry and battery factory.
Products
BMW 5 Series
BMW X3
BMW 1 Series, BMW 2 Series, BMW 3 Series
BMW X1, BMW X2
6.2
33.2
The BMW Group's four automobile partner plants in
Jakarta (Indonesia), Cairo (Egypt), Kaliningrad (Russia)
and Kulim (Malaysia) primarily serve their respective
regional markets.
MINI Countryman
BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X5
Products
Malaysia
Kulim
Russia
BMW Group locations worldwide
Kaliningrad
Cairo
Indonesia
Country
Jakarta
PARTNER PLANTS
Locations
Egypt
→ 12
Tiexi (Shenyang)
☐
BMW Group Technology Office,
Shanghai, China
United Arab
Mexico
USA
Canada
Headquarters
Emirates
locations
7 Countries with
12
Production and
assembly plants
31
Financial Services
locations worldwide
BMW Group Engineering China,
Beijing, China
research and development
7 Sales subsidiaries and
Brazil
South Africa
BMW Group ConnectedDrive Lab
China, Shanghai, China, and
BMW Group Designworks Studio
Shanghai, China
BMW Group Engineering and
Emission Test Center,
Oxnard, USA
BMW Group Technology Office USA,
Mountain View, USA
▲ Research and development
network outside Europe
BMW Group Designworks, Newbury
Park, USA
Partner plants
outside Europe
Partner plant, Chongqing, China
Partner plant, Hosur, India
Partner plant, Jakarta, Indonesia
Partner plant, Cairo, Egypt
Partner plant, Kulim, Malaysia
Argentina¹
BMW Group plant Spartanburg, USA
BMW Brilliance Automotive, China
(joint venture-3 plants)
BMW Group plant Chennai, India
■BMW Group plant Araquari, Brazil
Production
outside Europe
New Zealand
43
BMW Group plant Manaus, Brazil
BMW Group plant Rayong, Thailand
BMW Group plant Rosslyn, South Africa
BMW Group plant San Luis Potosí,
Mexico
119
114
Other
8,860
Group
At 31 December 2019, the BMW Group employed a
workforce of 133,778 people worldwide. The number
of employees was thus at a similar level to the end of
the previous year (2018: 134,682 employees; −0.7%).
During 2019, natural fluctuation was used to lever-
age competencies to focus even more keenly on the
major topics of the future. Specialists and IT experts
were hired in future-oriented fields such as artificial
intelligence and autonomous driving, electric mobility,
smart production and logistics as well as data analysis,
software architecture, agile software development and
innovative drivetrain systems. The global production
network was also further expanded.
BMW Group apprentices at 31 December
→ 16
4,964
4,700
5,000
4,613
4,750
4,801
2,500
2015
2016
2017
2018
-0.7
2019
→ 15
31.12.2019
31.12.2018
Change in %
Automotive
121,208
121,994
-0.6
Motorcycles
3,658
3,709
-1.4
Financial Services
8,798
BMW Group employees
133,778
2019
Realignment of vocational training
Diversity is a key factor in ensuring the BMW Group's
continued competitiveness. The aim is to ensure
equal opportunities for all employees and at the
same time utilise and promote the diversity of the
Group's workforce. In this context, emphasis is placed
on the three aspects of gender, cultural background
and age/experience. In 2019, the BMW Group again
implemented a broad array of measures in its efforts
to promote diversity. Further information on this topic
is also provided in the Sustainable Value Report 2019.
→ www.bmwgroup.com/svr
The percentage of women in the BMW Group work-
force as a whole was 19.8% (BMW AG: 16.3%), surpass-
ing the internal target range of between 15 and 17%.
The number of women in management functions rose
to 17.5% across the BMW Group (BMW AG: 15.8%).
During the
year under report, female representation
in the BMW Group's trainee and student development
programmes stood at approximately 39% and 28%
respectively.
At the same time, the workforce is becoming increas-
ingly international. Employees from over 120 countries
work together successfully for BMW AG. Moreover, a
balanced age structure in the workforce encourages
an exchange of ideas and knowledge between gen-
erations and plays a key role in reducing the loss of
know-how when valuable employees retire.
Proportion of female employees in manage-
ment functions at BMW AG/BMW Group*
→ 18
18
17.2
16.0
15.3
17.5
15.8
15.1
BMW Group 14.3
BMWAG 12.5
13.3
in %
3.39
3.5
Diversity as a competitive factor
134,682
7.0
→ 17
-4.2
-0.7
Workforce at previous year's level
Started in 2018, the realignment of vocational training
continued to make good progress with the implemen-
tation of various strategic action packages, aimed in
particular at bringing about the digital transformation
of vocational training based on three pillars: modern
and mobile equipment, new digital collaboration and
learning platforms, and a broadly based system of
talent development specifically tailored to apprentices.
In addition to the basic range of skills still needed,
emphasis is also being placed on promoting the acqui-
sition of new technical and interdisciplinary expertise
across 30 vocations and 17 dual courses of study. The
latter were expanded to include the bachelor-degree
programmes Industry 4.0 Computer Science, Artificial
Intelligence and Production and Automation. The
total number of apprentices and participants in the
BMW Group's development programmes for young
talent remained at a high level during the year under
report at 4,801 (2018: 4,964; -3.3%).
High level of investment in employee qualification
Spending on employee training and development
totalled €370 million and therefore remained at a
similar level to the previous year (2018: €373 mil-
lion; -0.8%). The BMW Group consistently promotes
the principle of lifelong learning. The availability of
innovative, requirements-based learning opportuni-
ties enables employees to play an active role in shaping
the future of the BMW Group. During 2019, the range
of training courses on offer for key strategic areas such
as electric mobility, robotics and data analytics was
therefore expanded, new learning formats introduced
in conjunction with the digitalisation initiative, and
a greater emphasis placed on improving manager
skill sets, in particular those relevant for leadership
in the digital age.
39
10
40
↑↑
Combined
Management
Report
General Information
and Group Profile
Organisation and
Business Model
Workforce
Sustainability
BMW Group remains a highly attractive employer
Again in 2019, the BMW Group was ranked among
the world's most attractive employers. In the latest
"World's Most Attractive Employers" ranking pub-
lished by the agency Universum, the BMW Group
was once again named the most attractive automotive
company in the world.
In 2019, BMW Group China was also selected by busi-
ness students participating in the locally conducted
Universum student survey as the most attractive
employer in the automotive industry. The renowned
Zhaopin "Most Attractive Employer Award" named
the BMW Group the most attractive employer overall.
The BMW Group also came out on top again in
Trendence's "Young Professional Barometer Germany”.
It also received the "Most Attractive Employer of the
Last 20 Years" award for the most number one rank-
ings over this period. Moreover, the Group matched its
previous year's performance in the Universum study
"Young Professionals Germany", finishing first, second
and third in the categories Business, Engineering and
IT respectively. Based on the overall results of studies
across all sectors, the BMW Group continued to be
one of the world's highest-ranked companies in 2019.
Employee attrition rate at BMW AG*
as a percentage of workforce
→ www.bmwgroup.com/en/responsibility/employees
Return on equity in %
RoE Financial
Services
Report on
Economic Position
→ General and Sector-
specific Environment
REPORT
ON ECONOMIC
POSITION
Automobile markets down
Report
on previous year
Financial Services segment posts
record results
GENERAL AND
SECTOR-SPECIFIC
ENVIRONMENT
General economic environment
The global economy was impacted by a variety of
adverse factors during 2019, and the resulting 2.9%
growth rate was the slowest recorded for
The
years.
economic slowdown was broadly based. Amongst
the G7 countries, Japan was the only one to record
an increase in economic output. The BRIC countries
were also unable to escape the consequences of the
slowdown, resulting in lower growth rates across
the board.
The 1.2% growth rate recorded in the eurozone was
also down on the previous year. Although major
economies in the region continued to expand, the
pace of growth in Germany (+0.6%), France (+1.3%),
Italy (+0.2%) and Spain (+ 2.0%) was significantly low-
er year-on-year, whereby exports, private consumption
and a slight increase in public-sector spending con-
tributed to the positive growth rates. Despite lower
industrial production output, the unemployment rate
continued to fall and is now at its lowest level since
2008. Against a backdrop of weaker economic per-
formance and easing inflationary pressures, towards
the end of the year the European Central Bank (ECB)
decided to resume its securities purchase programme
and reduce its deposit rate further.
Economic performance in the United Kingdom (UK)
was dominated by ongoing uncertainty regarding the
terms of Brexit and hence the UK's future relationship
with the European Union (EU). Despite a further slight
drop in the unemployment rate, private consumer
sentiment failed to improve noticeably. Public-sector
spending was increased substantially with a view to
counteracting the slowing pace of the UK economy.
Nevertheless, economic growth dropped for the fifth
consecutive year to stand at 1.4%.
BMW Group automobile deliveries
nonetheless at new high level
2.70 2.64 2.78
Management
48
2018
Cost of capital (equity + debt capital)
2019
7,812
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
2018
7,279
Combined
-443
Capital employed comprises the average amount of
Group equity employed during the year as a whole,
the financial liabilities of the Automotive and Motor-
cycles segments, and pension provisions. The earn-
ings amount corresponds to Group profit before tax,
adjusted for interest expense incurred in conjunction
with the pension provision and on the financial lia-
bilities of the Automotive and Motorcycles segments
(earnings before interest expense and taxes). The cost
of capital is the minimum rate of return expected by
capital providers in return for the capital employed.
Since capital employed comprises an equity capital
(e.g. share capital) and a debt capital element (e.g.
bonds), the overall cost of capital rate is determined
on the basis of the weighted average rates for equity
and debt capital, measured using standard market
procedures. The pre-tax average weighted cost of capi-
tal for the BMW Group in 2019 was 12%, unchanged
from the previous year.
Value-based project management
Operational business in the Automotive and Motor-
cycles segments is largely shaped by its life-cycle-
dependent project character. Projects have a substantial
influence on future business performance. Project
decisions are therefore a crucial component of financial
management in the BMW Group.
Project decisions are based on calculations derived
from expected cash flows of the individual project.
Calculations are made for the full term of a project,
incorporating future years in which the project is
expected to generate cash flows. Project decisions
are taken on the basis of net present value and the
internal rate of return calculated for the project.
The net present value of a project indicates the extent
to which a project will be able to generate a positive
contribution to earnings over and above the cost of
capital. A project with a positive net present value
enhances value added and therefore results in an
increase in enterprise value. The internal rate of return
of the project corresponds to the average return on
capital employed in the project. It is equivalent to the
multi-year average RoCE for an individual project. It is
therefore consistent with one of the most important
of the key performance indicators.
For all project decisions, the project criteria and
long-term periodic results impact are measured and
incorporated in the long-term Group forecast. This
approach enables an analysis of the impact of project
decisions on periodic earnings and rates of return for
each year during the term of the project. The overall
result is a cohesive management model.
47
2,619
Value added Group
9,898
7,369
2018
2019
2018*
15,146
2019
Average equity capital in € million
2,143
14,522
2,272
2019
Profit before tax in € million
Financial Services
→ 22
Return on equity
Average equity capital
=
2018*
15.0
14.8
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
2018
2019
Earnings amount
BMW Group
in € million
→ 23
Value added Group*
earnings amount
(cost of capital rate ×
capital employed)
-
=
= earnings amount
cost of capital
Value added
Group
7
The information provided by these two key perfor-
mance indicators is further complemented by pre-tax
return on sales and value added. Value added, as a
highly aggregated performance indicator, also provides
an insight into capital efficiency and the (opportunity)
cost of capital required to generate Group profit. A
positive value added means that a company is gener-
ating more value than the cost of capital.
Group profit before tax provides a comprehensive
measure of the Group's overall performance after
consolidation effects and a transparent basis for com-
paring performance, particularly over time. The size of
the Group's workforce is monitored as an additional
key non-financial performance indicator.
Strategic management and quantification of finan-
cial implications for long-term corporate planning
are performed primarily at Group level. The key
performance indicators are Group profit before tax
and the size of the Group's workforce at the year-end.
Strategic management at Group level
Workforce
2.08
ROCE
Motorcycles
2016
Return on capital
(ROCE or RoE)
Value added
→ 19
BMW Group - value drivers
The BMW Group's internal management system is
based on a multilayered structure. Operating manage-
ment occurs primarily at segment level. In order to
manage long-term corporate performance and assess
strategic issues, additional performance indicators are
taken into account within the management system at
Group level. In this context, the value added serves
as one of several indicators for the contribution made
to enterprise value during the financial year. This
approach is made operational at both Group and
segment level through key financial and non-finan-
cial performance indicators (value drivers). The link
between value added and the relevant value drivers
is shown in a simplified form below.
7
the
×
The business management system applied by the
BMW Group follows a value-based approach that
focuses on profitability, consistent growth, value
enhancement for capital providers and job security.
Capital is considered to be employed profitably when
the amount of profit generated sustainably exceeds
the cost of equity and debt capital. In this way,
desired degree of corporate autonomy is also secured
in the long term.
→ Management System
General Information
and Group Profile
Management
Report
Combined
44
43
33
MANAGEMENT SYSTEM
Since the acquisition of the HERE mapping service
by BMW AG, Daimler AG and AUDI AG in 2015, the
partners have been working on high-precision digi-
tal maps that can be linked to real-time vehicle data.
These digital maps are key for the next generation
of mobility and location-based services, including
providing the basis for new assistance systems. As
an independent platform, HERE has ensured at all
stages that it remains accessible to other partners in
the automotive sector and beyond. In December 2019,
HERE announced the intention of Mitsubishi Corpo-
ration (MC) and Nippon Telegraph and Telephone
Corporation of Japan (NTT) to jointly acquire a 30%
ownership stake in the business. Subject to regulatory
approvals, the transaction is expected to be closed
during the first half of 2020.
Return on sales
Profit
ROCE Automotive
Profit before
financial result
The most comprehensive key performance indica-
tor used for the Automotive segment is RoCE. This
indicator provides information on the profitability of
capital employed and the operational business. ROCE
is measured on the basis of segment profit before
financial result and the average capital employed in
the segment. The strategic target for the Automotive
segment's RoCE is 26%.
Automotive segment
segments and return on equity (ROE) for the Financial
Services segment. These indicators combine a wide
range of relevant economic information, such as
profitability (return on sales) and capital efficiency
(capital turnover) to provide a measurement of segment
performance and the development of enterprise value.
→ 20
Return on capital employed
Capital turnover
Operating performance at segment level is managed at
an aggregated level on the basis of returns on capital.
Depending on the business model, the segments are
measured on the basis of return on total capital or return
on equity. Specifically, return on capital employed
(ROCE) is used for the Automotive and Motorcycles
Due to the high level of aggregation, it is impractical
to manage the business on the basis of value added.
This key indicator therefore only serves for reporting
purposes. Relevant value drivers having a significant
impact on business performance and therefore on
enterprise value are defined for each controlling
level. The financial and non-financial value drivers
are reflected in the key performance indicators used
to manage the business. In the case of project-re-
lated decisions, the system follows a project-oriented
management logic that is based on value added and
profitability performance indicators, thereby provid-
ing a fundamental basis for decision-making.
45
45
Revenues
Expenses
Average weighted
cost of capital rate
Capital employed
Management of operating performance
at segment level
HERE
Alongside the planned increase in the stake in BBA,
the BMW Group is expanding its presence in China
on a significant scale, thereby underlining its com-
mitment to the region.
The BMW Group has signed an agreement with the
Chinese manufacturer Great Wall Motor Company
Limited to produce MINI electric vehicles via a 50:50
joint venture based in China. In addition to MINI elec-
tric vehicles, the Spotlight Automotive Limited joint
venture (Spotlight) will also produce electric vehicles
for Great Wall Motor. Apart from production, the
joint venture model includes the joint development
of battery-electric vehicles. Spotlight was founded on
27 December 2019 following approval by the Chinese
authorities.
In 1959, Herbert Quandt secured the independence of
BMW AG, thus laying the foundation for the successful
development of the BMW Group. In recognition of his
entrepreneurial achievements, in 1970 BMW AG estab-
lished the "BMW Stiftung Herbert Quandt", which
has meanwhile been renamed the "BMW Foundation
Herbert Quandt" with expanded endowment capital.
Further information on the topics of sustainability
and human resources within the BMW Group is avail-
able in the Sustainable Value Report 2019, which is
published online at www.bmwgroup.com/svr.
Stakeholder dialogues and materiality analysis as
basis for sustainability management
The BMW Group is in continual dialogue with its
numerous stakeholders, both in Germany and abroad.
Stakeholder feedback provides the BMW Group with
a clear picture of how current trends are changing
the business environment and provides key input for
the strategic decision-making process. In 2019, a total
of four dialogue events (BMW Group Dialogues) on
corporate responsibility and sustainability were held
in Tel Aviv, San Luis Potosí, Seoul and Munich. The
events addressed various topics, including product
and production responsibility, responsibility for
resources, and responsibility for future mobility.
In the course of regular materiality analysis, social
challenges are continually monitored and analysed
in order to gauge their significance from the point
of view of both external and internal stakeholders.
Top rankings in sustainability ratings
The BMW Group again achieved outstanding results
in prestigious sustainability ratings in 2019, thereby
confirming the Company's view of its leading posi-
tion as a sustainable enterprise. In the Dow Jones
Sustainability Indices (DJSI) rating, the BMW Group
is the only German automobile manufacturer to have
been included once again in the two indices "Europe"
and "World" and the only company in the sector to
have been continuously represented since the indices
were established. In the CDP rating (formerly the
Carbon Disclosure Project), the Group achieved the
category Leadership with a rating of A- in the year
under report. Furthermore, the Group was again
listed in the British FTSE4Good Index in 2019. The
BMW Group is also listed in the MSCI, Sustainalytics
and ISS-oekom rankings, holding a leading position
in each within the industry.
impact-oriented investments, the BMW Foundation
Herbert Quandt supports the sustainability targets of
the United Nations' Agenda 2030 → www.bmw-foundation.org.
Cooperation Agreements and
Partnerships
BMW Brilliance Automotive
The BMW Group intends to increase its stake in
BMW Brilliance Automotive (BBA) from 50 to 75%.
An agreement to this effect was signed in 2018 with
the BMW Group's venture partner, Brilliance China
Automotive Holdings Ltd. (CBA). The contractual term
of the joint venture, which was due to expire in 2028,
is to be extended up to 2040. Following approval by the
Annual General Meeting of CBA on 18 January 2019,
the closing of the agreement continues to be subject
to regulatory approvals.
YOUR NOW
On 28 March 2018, the BMW Group signed an agree-
ment with Daimler AG regarding the merger of certain
business units that provide mobility services. Follow-
ing approval by the relevant antitrust authorities, the
transaction was closed on 31 January 2019. The two
companies are now pressing ahead as planned to
realise their joint vision of fully electric and autono-
mous on-demand mobility. The new range of mobility
services will be easy to access, intuitive to use, and cater
to customers' needs. The cooperation comprises the
joint ventures REACH NOW (on-demand mobility and
multimodal services), CHARGE NOW (battery charg-
ing), FREE NOW (ride-hailing), PARK NOW (parking)
and SHARE NOW (car-sharing). The YOUR NOW
companies were contributed into a holding company
with effect from 31 December 2019. Based on this, the
BMW Group and the Daimler Group each have an
equal share in the holding company.
Under the YOUR NOW umbrella, BMW and Daimler
offer innovative solutions for cities and municipalities
seeking to make mobility more efficient and sustain-
able. Further information is provided in → note 2 to
the Group Financial Statements.
→ see
note 2
In order to ensure the success of the business in the
long term, the BMW Group enters into specific coop-
eration agreements and partnerships with companies
in the automotive industry as well as technology lead-
ers in other sectors. Against a background of rapid
technological change, the aim of collaborating with
external partners is to combine expertise in order to
bring innovations to market within the shortest time
possible.
*Efficiency indicator calculated from Scope 1 and Scope 2 CO₂ emissions (market-based
method in accordance with GHG Protocol Scope 2 Guidance) of vehicle production, exclud-
ing motorcycles (adjusted for CHP losses), divided by the total amount of produced vehi-
cles, including from the joint venture BMW Brilliance Automotive Ltd., Shenyang (China),
but excluding vehicles from contract production at Magna Steyr and Nedcar.
The BMW Foundation Herbert Quandt is an inde-
pendent corporate foundation whose activities
contribute to the BMW Group's social responsibility
and mission goals. The foundation endeavours to
inspire leaders worldwide to assume and continually
develop their social responsibility and political com-
mitment. Leaders are also encouraged to work for a
peaceful, just and sustainable future. With its Respon-
sible Leadership programmes, a global network and
BMW Foundation Herbert Quandt
Spotlight
With effect from September 2018, all vehicles in the
EU were required to be approved in accordance with
the new WLTP testing cycle. However, the calculation
of CO2 fleet emissions by the EU Commission will
not be converted to WLTP until 2021. Therefore, for
reporting purposes up to and including 2020, WLTP
fleet emissions must be translated back to the previ-
ously applicable values calculated in accordance with
the outgoing New European Driving Cycle (NEDC).
Due to the changed test conditions used for WLTP
purposes, emission values are higher when translated
back to an NEDC basis (NEDC-correlated).
41
42
个个
Combined
Management
Report
General Information
and Group Profile
Organisation and
Business Model
Sustainability
→ Cooperation
Agreements and
Partnerships
Production
In its efforts to reduce CO2 emissions generated by
production and thus contribute to climate protection,
the BMW Group uses energy-efficient equipment pow-
ered by renewable energy. In 2019, 87% (2018: 79%) of
the BMW Group's electricity worldwide was generated
from renewable sources or were compensated through
appropriate certificates of origin. As from 2020, all the
Group's locations worldwide are scheduled to obtain
their electricity exclusively from renewable sources.
In 2019, at 2.04 MWh per vehicle* produced, the
BMW Group further reduced the amount of energy
consumed in the production process compared with
the previous year (2018: 2.12 MWh; -3.8%).
Through the use of measures to boost energy efficiency
and the purchase and in-house generation of electricity
from renewable sources at BMW Group manufactur-
ing sites, production-related CO2 emissions fell by
25.0% to 0.30 tonnes per vehicle* produced in the
year under report compared with the previous year
(2018: 0.40 tonnes).
Social engagement
Social engagement is also an integral part of the
BMW Group's corporate identity. For many years now,
the BMW Group has firmly supported intercultural
exchange. In partnership with the UN Alliance of Civi-
lizations, the BMW Group presents the Intercultural
Innovation Award for projects the Company views as
exemplary in this field. Since 2011, each year it has
presented the "BMW Group Award for Social Com-
mitment” to employees who have made an exceptional
contribution through their outstanding volunteer work.
The Group addresses current social challenges,
primarily in areas where its expertise enables it to
make the greatest impact. The main focus here is on
problem-solving approaches that are internationally
applicable and have a tangible long-term impact by
helping people to help themselves. With this aim in
mind, the BMW Group works together with the BMW
Foundation Herbert Quandt.
=
Average capital
employed
Automotive
Average
with the "Comprehensive" option of the standards
of the Global Reporting Initiative (GRI). This is the
highest level of transparency set out in the GRI stan-
dards, in which all relevant information and indicators
of the aspects identified as material are reported on.
The Sustainable Value Report is drawn up subject to
a limited assurance engagement in accordance with
ISAE 3000 (International Standard on Assurance
Engagements 3000 (Revised): "Assurance Engagements
other than Audits or Reviews of Historical Financial
Information").
Based on the requirements of the German CSR Direc-
tive Implementation Act, since the financial year 2017
BMW AG has been required to publish a non-financial
declaration at both Company and Group level. The
declaration is published jointly for BMW AG and the
BMW Group as a separate combined non-financial
report within the Sustainable Value Report.
The separate combined non-financial report is avail-
able online within the Sustainable Value Report 2019
at → www.bmwgroup.com/svr.
CO₂ fleet emissions
The development of sustainable products and services
is an integral part of the BMW Group's business model.
The early use of Efficient Dynamics technologies (since
2007) across the entire fleet and the electrification of
vehicles, which continued to make good progress in
2019, have enabled CO2 emissions to be continuously
reduced. Together, these two cornerstones are essen-
tial for future compliance with statutory CO2 and fuel
consumption limits going forward.
The BMW Group has reduced the CO2 emissions of its
newly sold vehicles in Europe by approximately 40%
between 1995 and 2019. In Europe*, average CO2 emis-
sions were 127 g CO2/km (2018: 128 g CO2/km; -0.8%)
in the year under report. Based on this figure, the
BMW Group's new vehicle fleet* in Europe in 2019
had an average fuel consumption of 5.0 litres of diesel
per 100 km or 6.0 litres of petrol per 100 km.
Profit before tax
EU-28
of return on equity. RoE is defined as segment profit
before tax, divided by the average amount of equity
capital in the Financial Services segment. The target
is a long-term return on capital of at least 14%.
Financial Services segment
The principal value drivers are the number of motor-
cycle deliveries and the operating return on sales
(EBIT margin: segment-related profit/loss before
financial result as a percentage of segment revenues)
as the performance indicator for segment profitability.
28.4
29.4
616
660
175
As is common practice in the banking sector, the
Financial Services segment is managed on the basis 7
The Sustainable Value Report is published together
with the Annual Report and drawn up in accordance
Further information on sustainability within the
BMW Group is provided in the Sustainable Value Report
2019, which is published online at www.bmwgroup.com/svr.
Responsibility towards employees and society
in general
2017
2018
2019
* Number of employees on unlimited employment contracts leaving the Company.
2015
2016
2017
2018
2019
*Since 2017 including maternity leave.
Sustainability
→ www.bmwgroup.com/responsibility
The BMW Group sees itself as a pioneer of sustain-
ability, not only within the automotive industry, but
across other sectors, too. Long-term thinking and
responsible action have long been the cornerstones of
the BMW Group's distinct identity and its economic
success. As early as 1973, the BMW Group was the
first company in the automotive sector to appoint an
environment officer. Since 2001, the BMW Group has
been committed to the United Nations Environment
Programme, the UN Global Compact and the Cleaner
Production Declaration. Through its sustainability
policy, the BMW Group is supporting the implemen-
tation of the UN's Sustainable Development Goals
(SDG), which were adopted in September 2015, and
is committed to complying with the Paris Climate
Convention.
The principles and importance of managing the
business on a sustainable basis are emphasised in
the BMW Group's corporate strategy, which includes
a clear commitment to preserving resources. The
BMW Group remains fully committed to ecological
and social sustainability along the entire value chain
as well as to comprehensive product responsibility.
Apart from the reduction of CO2 emissions, key
components of the Group's sustainability strategy
include industrial environmental protection, circular
economy, sustainability in the supply chain, employee
orientation and social commitment.
In order to safeguard its viability going forward, the
BMW Group's business model is rigorously based
on the principle of sustainability. The Group works
continually on technical innovations that contribute
to solving global challenges such as climate change
and urbanisation. In this endeavour, the BMW Group
concentrates on three main topics:
The development of products and services for
sustainable individual mobility
The efficient use of resources along the entire
value chain
194
2015
2018
2018
Capital employed corresponds to the sum of all cur-
rent and non-current operational assets, less liabilities
that generally do not incur interest (e.g. trade payables
and other provisions).
49.8
29.0
12,420
15,513
6,182
4,499
Due to its key importance for the Group as a whole,
the Automotive segment is managed on the basis
of additional performance indicators which have a
significant impact on RoCE and hence on segment
performance. These value drivers are the number of
vehicle deliveries and the operating return on sales
(EBIT margin: segment-related profit/loss before
financial result as a percentage of segment revenues)
2018
2018
2019
2018
2019
Return on capital employed in %
capital employed in € million
Profit before financial result in € million
2019
as the key performance indicator for segment prof-
itability. The management system also takes into
account average CO2 emissions for the fleet, which,
through their influence on ongoing development
costs and due to regulatory requirements, can have a
significant long-term impact on Group performance.
Fleet emissions correspond to average CO2 emissions
of new cars sold in the EU-28 countries.
By managing the business on the basis of key value
drivers, it is possible to gain a better understanding
of the causes of changes in the RoCE and to define
suitable measures to influence it.
46
Return on capital employed in %
Average
capital employed in € million
2019
2018
2019
Profit before financial result in € million
Average capital
employed
7
Profit before
financial result
Motorcycles
→ 21
Return on capital employed
As with the Automotive segment, the Motorcycles
segment is managed on the basis of RoCE. Capital
employed is determined on the same basis as in the
Automotive segment. The strategic RoCE target for
the Motorcycles segment is 26%.
Motorcycles segment
→Management System
General Information
and Group Profile
Report
Combined
Management
2019
Cost of capital
14.0
China
%
8.2 (+0.1%pts)
29.4 (+1.0%pts)
90
%
slight increase
%
15.0 (+0.2%pts)
in line with last
year's level
In an ad hoc announcement dated 5 April 2019,
the BMW Group reported that the EU Commission
had informed it of a "Statement of Objections" in
conjunction with ongoing antitrust proceedings. The
EU Commission is investigating whether German
automobile manufacturers cooperated in techni-
cal working groups to restrict competition in the
solid increase
development and rollout of emissions-reduction
technologies. The Statement of Objections leads the
BMW Group to conclude that it is probable ("more
likely than not") that the EU Commission will issue
a significant fine. If necessary, the BMW Group will
contest the EU Commission's allegations with all the
legal means at its disposal.
54
Combined
Management
Report
Report on
Economic Position
→ Comparison of
Forecasts for 2019
with Actual Results
in 2019
Irrespective thereof, the fact that a fine is "more
likely than not" triggers a requirement to recognise
a provision in accordance with International Financial
Reporting Standards. Based on information currently
available and in accordance with International Finan-
cial Reporting Standards, a provision of approximately
€1.4 billion was recognised in the first quarter of 2019
to take account of financial impacts that cannot yet
be definitively assessed. Group and Automotive seg-
ment earnings for the first quarter as well as for the
full financial year were impacted accordingly. The
BMW Group has examined the objections and gained
access to the documents in the EU Commission's
investigation file. In December 2019, the BMW Group
submitted a detailed response to the EU Commission,
which the latter will now examine before determining
the next steps in the proceedings. Consequently, it
is not yet possible to assess the ultimate financial
impact definitively.
Detailed information on the key performance indica-
tors for the Group is presented as part of the following
review of the BMW Group's results of operations,
financial position and net assets. The development
of the key performance indicators for the Automo-
tive, Motorcycles and Financial Services segments is
described in the relevant sections on each segment.
53
In December 2019, BMW Group was informed by
the U.S. Securities and Exchange Commission
(the SEC) that the SEC had commenced an inquiry
into BMW Group's vehicle sales* practices and
reporting. On January 22, 2020, the SEC formally
opened an investigation into potential violations of
U.S. securities laws by BMW Group relating to dis-
closures regarding BMW Group's unit sales of new
vehicles. BMW Group is reviewing the matter and
cooperating with the SEC's investigation. Information
on contingent liabilities is provided in → note 38 to
the Group Financial Statements.
175,162 (+5.8%)
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 538,612 units).
2 EU-28.
7,118 (-26.1%)
significant decrease
133,778 (-0.7%)
in line with last
year's level
slight increase
slight decrease
units
g CO2/km
2,538,367 (+2.2%)
slight increase
127 (-0.8%)
in line with last
units
year's level
Q1: between 4.5 and 6.5
%
4.9 (-2.3%pts)
%
29.0 (-20.8%pts)
significant decrease
solid increase
between 8 and 10
solid increase
in line with last year's level
between 6 and 8
significant decrease
The preparation of BMW Group's retail vehicle deliv-
ery data involves estimates and judgments and is
subject to other uncertainties, including:
The vast majority of deliveries of vehicles are
carried out by independent dealerships or other
third parties, and BMW Group is reliant on
such third parties to correctly report relevant
data to BMW Group.
*see Glossary
for the definition
of deliveries
Profit before financial result
104,210
96,855
7.6
-86,147
-78,477
-9.8
18,063
18,378
Other operating income and expenses
-1.7
-9,568
2.1
-1,285
123
7,411
8,933
-17.0
Financial result
Profit before tax
-9,367
Selling and administrative expenses
Gross profit
Cost of sales
→ see
note 38
-
In addition, the definition of deliveries includes
any vehicles delivered in the United States or
Canada if:
the relevant dealers designate such vehicles as
service loaner vehicles or demonstrator vehi-
cles (BMW Group provides financial incentives
in this regard to such dealers); or
such vehicles are company vehicles purchased
by dealers or other third parties at auctions
or by dealers directly from BMW Group,
each of which may not correlate to a sale to a
consumer or other end user in the relevant
reporting period.
See Glossary - Explanation of Key Figures - Deliveries
for the definition of deliveries.
Retail vehicle deliveries during a given reporting
period do not correlate directly to the revenue that
BMW Group recognises in respect of such report-
ing period.
In connection with reviewing its sales practices
and related reporting practices, BMW Group also
reviewed prior period retail vehicle delivery data and
separately determined that certain vehicle deliveries
were not reported in the correct periods. BMW Group
has revised the data on those vehicle deliveries that
had not been reported in the correct periods as
further described below, and is making, and will
continue to make in the future, certain adjustments
to its policies and procedures in order to improve the
reliability and validity of its retail vehicle delivery
data, in particular with respect to the timing of the
recognition of deliveries.
Specifically, the retail vehicle delivery data presented
in this annual report (years 2015 through 2019) have
been revised by adjusting the data for BMW Group's
six most significant markets to reflect the above. In
the years 2015 through 2019, these six markets (China,
USA, Germany, UK, Italy and Japan) represented on
average 68.3% of BMW Group's total vehicle deliv-
eries. For each of the years 2015 through 2019, these
revisions amounted to less than 1% of BMW Group's
total retail vehicle deliveries. The retail vehicle deliv-
ery data for BMW Group's other markets have not
been adjusted, as BMW Group believes the impact
to be immaterial.
While BMW Group believes the retail vehicle delivery
data presented in this annual report to be materially
correct in accordance with BMW Group's definition
of deliveries, challenges and further revisions of such
data cannot be ruled out.
Results of operations of the BMW Group
The BMW Group recorded a solid year-on-year
increase in revenues for the financial year 2019.
Alongside product mix effects, higher revenues from
leasing and the sale of products previously leased to
customers also had a positive influence in the year
under report. Moreover, revenues were positively
impacted by currency factors, mainly relating to the 7
BMW Group condensed income statement
→ 31
exchange rates of the US dollar, Chinese renminbi,
Japanese yen and Thai baht. In the previous year,
revenues were also negatively impacted by the high
level of competition due to the reaction of competitors
to the early implementation of WLTP regulations as
well as by the unfavourable effect of trade conflicts
on selling prices.
in € million
2019
2018*
Change in %
Revenues
in 2019
Actual outcome
€ million
in line with last year's level
Russian Rouble
100
Chinese Renminbi
British Pound
150
100
150
Index: December 2014=100
The Chinese renminbi stabilised year-on-year with an
average exchange rate of 7.73 renminbi to the euro
over the year. The Japanese yen also appreciated in
value with an average exchange rate of 122 yen to the
euro during the year under report.
US Dollar
The development of the British pound's exchange
rate over the year reflected the uncertainty of capital
markets regarding their expectations of an orderly
Brexit. As a consequence, the value of the British
currency dropped to 0.93 pounds to the euro at one
stage, compared to a high of 0.83, ultimately resulting
in an average rate of 0.88 pounds to the euro in 2019,
nearly unchanged from the previous year.
Currency markets
and China.
Although the drop in consumer demand due to the
value added tax hike was slightly greater than expect-
ed, this effect was more than offset by the even more
pronounced growth in consumer demand that had
occurred prior to the hike. Government spending was
increased on a significantly greater scale than one
year earlier, thereby boosting the domestic economy.
By contrast, exports fell year-on-year in 2019 as a
consequence of the trade disputes between the USA
→ 24
Exchange rates compared to the euro
In Japan, GDP grew by 0.7%, mainly attributable to a
moderate year-on-year increase in private consumption. 7
Growth in China came in at 6.1% in 2019, slightly
down on the previous year. Private consumer spending
decreased year-on-year. The trade conflict with the USA
caused import prices to increase, thereby triggering a
rise in the inflation rate, the effect of which was felt
most noticeably by private households. Similarly, there
was no improvement in the willingness of companies
to invest, with volumes even lower than one year
earlier. During 2019, however, numerous protective
tariffs imposed by the USA on Chinese products
exacerbated the factors slowing down the Chinese
economy, causing the government to undertake fiscal
and monetary measures to prevent the economy from
cooling too quickly.
Gross domestic product (GDP) in the USA was up by
2.3% in 2019, marking the country's tenth successive
year of economic growth. Once again, domestic demand
provided the momentum for growth. In addition to
higher spending by private households, public-sector
spending also rose significantly. Consumer sentiment
within private households was underpinned by a his-
torically low unemployment rate and rising wages. By
contrast, the level of investment by companies and
private households fell noticeably. Moreover, exports
stagnated and industrial production contracted on a
massive scale. Weak economic growth combined with
a moderate inflation rate of 1.8% were the decisive
factors behind the US Reserve's decision to cut interest
rates sharply during the period under report.
→ 34
The US dollar/euro exchange rate fluctuated between
1.09 and 1.15 US dollars to the euro during 2019, fin-
ishing at an average rate of 1.12 US dollars to the euro
for the year.
Japanese Yen
50
50
in %
50
100
Price per barrel of Brent Crude
→ 25
Oil price trend
→ General and Sector-
specific Environment
Economic Position
Report on
Report
Management
Combined
50
49
Source: Reuters.
2020
2019
2018
2017
2016
2015
BMW Group performance indicators relating to research and development expenses
-293
2017
2019
Key figures presented in the report have been rounded
in accordance with standard commercial practice. In
certain cases, this may mean that values do not add up
exactly to the stated total and that percentages cannot
be derived exactly from the values shown.
BMW Group comparison of 2019 forecasts with actual outcomes 2019
→ 30
GROUP
Profit before tax
Workforce at year-end
AUTOMOTIVE SEGMENT
Deliveries to customers¹
Fleet emissions²
The following table shows the development of key per-
formance indicators for the BMW Group as a whole as
well as for the Automotive, Motorcycles and Financial
Services segments in the financial year 2019 compared
to the forecasts made in the Annual Report 2018. ¬
EBIT margin
MOTORCYCLES SEGMENT
Deliveries to customers
EBIT margin
Return on capital employed
FINANCIAL SERVICES SEGMENT
Return on equity
Forecast for 2019
in 2018 Annual Report
Forecast revision
during the year
significant decrease
Return on capital employed
COMPARISON OF
FORECASTS FOR 2019
WITH ACTUAL RESULTS
IN 2019
52
52
2020
Source: Working Group for the Iron and Metal Processing Industry.
51
Combined
Management
Report
Report on
Economic Position
→ General and Sector-
specific Environment
↑ ↑ ↑
→ Overall Assessment
by Management
Comparison of
Forecasts for 2019
with Actual Results
in 2019
International interest rate environment
The trade dispute between the USA and China,
increasing trade barriers and growing uncertainty as a
result of geopolitical risks all had a negative impact on
the global economy in 2019. The major central banks
responded to these developments with expansionary
monetary policies.
In September, the European Central Bank decided to
cut the deposit rate by 0.10% to -0.50% and resume
its bond purchase programme. Since November 2019,
it has been buying securities at a monthly rate of
€20 billion; an end to the purchase programme has
not been set.
With the outcome of the UK's EU exit negotiations
being uncertain, the Bank of England (BOE) followed
a “wait-and-see” approach and left the key interest
rate unchanged at 0.75% in 2019.
During the period under report, the US Federal
Reserve (Fed) cut interest rates for the first time since
the financial crisis. After three reductions of 0.25%
in each case, at 31 December 2019 the benchmark
interest rate was within a range of 1.50 to 1.75%. After
its meeting in October, the Fed signalled that it would
not reduce interest rates further in the near future.
In August, the Bank of China (PBOC) announced a
reform of its lending rate mechanism, replacing the
traditional benchmark interest rate with the market-
oriented Loan Prime Rate (LPR). On introduction of
the new system, the LPR stood at 4.25 %, 0.10% lower
than the former traditional benchmark rate. During
the remainder of the year, the PBOC reduced the LPR
to 4.15% in two steps.
Moderate economic growth, the increase of the value
added tax and an inflation rate that continues to
be significantly under the 2% target prompted the
Japanese central bank to maintain its highly expansive
monetary policies.
OVERALL ASSESSMENT
BY MANAGEMENT
Overall assessment of business performance
Despite challenging conditions and volatility on inter-
national markets, the BMW Group can look back on
an overall satisfactory business performance in 2019.
Despite some downward trends in figures in the past
financial
year,
the BMW Group's results of operations,
financial position and net assets are all indicative
of its solid financial condition. Overall, in view of
the various economic challenges arising during the
year, business developed in line with management's
revised expectations, taking into account the provision
recognised in connection with the EU Commission's
antitrust proceedings. This assessment also takes
into account events after the end of the reporting
period. The impact expected from the spread of the
coronavirus has been taken into account in the out-
look for 2020.
2018
694
7,118
9,627
23,623
Cost of sales relating to financial services business
9.3
44,558
48,690
Manufacturing costs
Change in %
2018*
2019
22,042
100.0
2.7
2.3
20.2
22.7
30.9
30.6
46.2
44.4
2018*
100.0
7.2
thereof interest expense relating to financial services business
2,288
2,996
3,675
Other cost of sales
49.4
1,717
2,566
Warranty expenses
-11.0
1,844
1,641
Service contracts, telematics and roadside assistance
17.9
1,414
1,667
thereof amortisation of capitalised development costs
11.9
5,320
5,952
Research and development expenses
12.4
2,035
2019
thereof Italy
in € million
BMW Group cost of sales
7.3
7,064
-28.9
Earnings per share of common stock in €
Earnings per share of preferred stock in €
7.47
10.60
-29.5
7.49
-2.5
10.62
in %
2019
2018*
Change in %pts
Pre-tax return on sales
Post-tax return on sales
Gross profit margin
6.8
9.9
-29.5
17.3
19.0
-1.7
Group
Other regions
Americas
Asia
Europe
in %
→ 32
BMW Group revenues by region
Group revenues by region were as follows:
Economic Position
→ Report on
Combined
Management
Report
56
99
55
55
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
3.8
26.3
30.1
Effective tax rate
→ 33
Research and development expenditure ratio
Capitalisation rate
5.5
14.5
Europe
Change in %
+1.1
thereof Germany
+4.9
thereof France
+1.6
thereof Italy
+0.1
→ 28
thereof Spain
thereof UK
+4.0
USA
-1.2
-3.9
-0.8
-2.0
Change in %pts
Japan
-4.6
International automobile markets
A downward trend was observable on most automo-
bile markets in 2019. Accordingly, registration figures
for
passenger cars and light commercial vehicles fell
worldwide by 2.0% to a total of 83.5 million vehicles.
International automobile markets
-26.1
Income taxes
Profit from continuing operations
Profit/loss from discontinued operations
Net profit
-2,140
-2,530
15.4
4,978
7,097
-29.9
44
-33
5,022
Increasing uncertainty regarding the global economy
also put pressure on commodity markets in 2019.
After substantial rises for steel in the previous year,
prices consolidated at a lower level in 2019.
Against this backdrop, prices for precious and non-fer-
rous metals rose only slightly. Palladium and rhodium,
which are mainly used in catalytic converters, were
the exception to the general trend and became signifi-
cantly more expensive during the reporting period.
Prices for lithium and cobalt, which are used as raw
materials in batteries, were well down in 2019 com-
pared with the high levels of the recent past. Increased
supply capacity and significantly lower-than-expected
demand for these materials meant that prices remained
at a lower level than in previous years.
Despite some risks, oil markets were relatively calm
in 2019. The drone attack on oil production facilities
in Saudi Arabia caused prices to rise significantly in
the short term, but had little impact on price levels
in the medium term. Whereas prices in the region of
53 US dollars per barrel were still seen on the market
at the beginning of the year, the price of Brent crude
oil rose to a peak of 75 US dollars due to prevailing
concerns. Overall, the average price per barrel fell
sharply from 72 US dollars to 64 US dollars year-on-
year. WTI, the benchmark for crude oil in the USA,
followed a similar trend, with an average price of
around 57 US dollars per barrel for the year as a whole.
Steel price trend
→ 27
Index: January 2015=100
150
100
Total
thereof Spain
International motorcycle markets
International motorcycle markets
in € million
currency effects, higher raw material prices (espe-
cially for palladium and rhodium) as well as higher
warranty expenses all had a negative impact on
cost of sales.
Group cost of sales increased compared to the pre-
vious year. Higher manufacturing costs due to stricter
regulatory requirements (especially in connection
with the reduction of fleet emissions), negative
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
9.8
78,477
86,147
Cost of sales
22.7
Research and development expenses
Amortisation
2016
50
Total
3.1
13.2
thereof Brazil
-4.8
thereof USA
-3.3
America
2015
New expenditure for capitalised development costs
Total research and development expenditure
2019
2018
→ 29
Europe
thereof Germany
year-on-year.
Change in %
8.2
7.5
thereof France
12.0
2018*
2019
related mainly to investments in new model series such
as the X5, the BMW 3 Series and the BMW 8 Series,
while in 2019 they related mainly to amounts invested
in autonomous driving, the BMW 1 Series and a new
generation of electrified vehicles. Furthermore, the
higher level of costs capitalised in the previous years
referred to above also resulted in increased amortisa-
tion on capitalised development costs in 2019.
In addition to the higher level of cost of sales incurred
for the Financial Services business, there was a year-
on-year increase in the area of research and develop-
ment, where expenses rose to €5,952 million (2018:
€5,320 million), mainly in relation to the electrification
of vehicles (including the iNEXT), ongoing develop-
ment work on autonomous driving and digitalisation.
In the previous year, capitalised development costs
6,890
6,419
2,984
2,134
-1,414
-1,667
5,320
5,952
Motorcycle markets in the 250 cc plus class generally
performed well during 2019. The number of new reg-
istrations worldwide increased by 3.1%
-3.1
6.2
-0.9
2015
Palladium
100
50
300
200
Lithium carbonate
Gold
Cobalt
100
Platinum
0
2016
2017
2018
2019
2020
Energy and raw materials prices
-67
Source: Reuters.
-44
100
300
7.1
Source: Reuters.
Price in US dollars
Price in euros
2015
2016
2017
2018
2019
2020
Metals price trend
→ 26
Index: December 2014=100
The amount of cash inflow from the Group's financing
activities resulted mainly from the higher volume of
asset-backed securities financing, while the repay-
ment of loans had an offsetting effect.
Total cash outflow from the Group's investing activ-
ities was slightly down on the previous year. Lower
cash outflows for investments in property, plant
and equipment and intangible assets (€875 million
decrease) contrasted with higher net cash outflows for
investments in financial assets (€761 million increase),
the latter relating primarily to the acquisition of the
YOUR NOW companies (cash outflow of €890 million).
The higher dividend received from BMW Brilliance
Automotive Ltd., Shenyang (€259 million increase),
also had a positive impact.
The decrease in cash inflow from the Group's operat-
ing activities was attributable in particular to higher
tax payments, mainly relating to the tax reform in the
USA. The decrease was exacerbated by the increase
in working capital over the twelve-month period,
primarily reflecting the slight increase in inventories
held by the Automotive, Motorcycles and Financial
Services segments.
-883
1,940
1,057
Change in cash and cash equivalents
200
-111
4.8
494
In the year under report, the workforce size, based
on a total of 133,778 employees, remained at a simi-
lar level year-on-year and was therefore in line with
expectations (2018: 134,682 employees; -0.7%).
The income tax expense for the year amounted to
€2,140 million (2018: €2,530 million). The effective
tax rate increased to 30.1% (2018: 26.3%), mainly due
to the non-deductibility of the expense recorded for
the provision relating to EU Commission anti-trust
proceedings as well as the non-deductibility of impair-
ment losses relating to the YOUR NOW Group, recog-
nised in other financial result. Tax income received for
prior years - mainly due to the successful conclusion
of intergovernmental tax treaties covering the topic
of transfer pricing – had an offsetting effect.
As forecast most recently in the Quarterly Statement
to 30 September 2019, Group profit before tax for
the full financial year was significantly down on the
previous year and, at €7,118 million (2018: €9,627 mil-
lion), was therefore in line with revised expectations.
At a net negative amount of €109 million, other finan-
cial result was significantly down on the previous year
(2018: net positive amount of €51 million). The one-
off revaluation gain of €329 million arising from the
pooling of mobility services with the Daimler Group
was partially offset by impairment losses totalling
€240 million. In the previous year, other financial
result also included a revaluation gain of €209 million
arising on the takeover of DriveNow. Other financial
result was also adversely affected by revaluation losses
recognised on interest rate hedges in connection with
the refinancing of the Financial Services business.
In addition, the higher interest expense arising in
connection with the recognition of lease liabilities in
accordance with IFRS 16 as well as the higher amount
of interest unwound on non-current provisions for
statutory and non-statutory warranty obligations had
a negative impact on the net interest result.
→ see
note 2
→ see
note 10
33.2
43.3
-10.1
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
52
57
Depreciation and amortisation on property, plant
and equipment and intangible assets recorded in cost
of sales and in selling and administrative expenses
totalled €6,017 million (2018: €5,113 million).
Selling and administrative expenses amounted to
€9,367 million and were therefore slightly down on
the previous year (2018: €9,568 million), helped by a
decrease in personnel costs that was partially attrib-
utable to amendments to pension plans in the USA.
The net amount of other operating income and ex-
penses decreased significantly from a positive amount
of €123 million to negative €1,285 million, mainly due
to the recognition of a provision of approximately
€1.4 billion in connection with the EU Commission
antitrust proceedings. Further information is provided
in → note 10 to the Group Financial Statements.
As a result, profit before financial result (EBIT) de-
creased by €1,522 million to €7,411 million (2018:
€8,933 million).
The financial result deteriorated significantly year-on-
year by €987 million to a net expense of €293 million.
The main negative factor here was a €496 million drop
in the result from equity accounted investments,
whereby a €179 million increase in the Group's share
of earnings of BMW Brilliance Automotive Ltd. was
more than offset by the negative at-equity result of
€662 million attributable to the YOUR NOW compa-
nies. In addition to operating losses, the YOUR NOW
at-equity result also included write-downs recorded
at separate entity level amounting to €277 million
arising in conjunction with the reorientation of the
YOUR NOW Group. Further information is provided
in → note 2 to the Group Financial Statements.
The net interest result deteriorated by €331 million,
mainly due to the reversal of provisions recorded in
2018 following the conclusion of mutual
agreement
procedures relating to taxes and customs.
Combined
Management
Report
→ Report on
58
Financial position of the BMW Group
4,296
4,790
Cash inflow (+)/outflow (-) from financing activities
79
-7,363
-7,284
Cash inflow (+)/outflow (-) from investing activities
-1,389
5,051
Economic Position
Cash inflow (+)/outflow (-) from operating activities
3,662
Change
2018
2019
in € million
→ 35
BMW Group cash flows
Cash flows from operating activities are determined
indirectly, starting with Group and segment net profit.
By contrast, cash flows from investing and financing
activities are based on actual payments and receipts.
The consolidated cash flow statements for the Group
and the Automotive and Financial Services segments
show the sources and applications of cash flows for the
financial years 2019 and 2018, classified according to
operating, investing and financing activities. Cash and
cash equivalents in the cash flow statements corre-
spond to the amounts disclosed in the balance sheet.
Effects of exchange rate and changes in composition of Group
→ Review of Operations
Automobile deliveries at record level
REVIEW OF OPERATIONS
Automotive Segment
→ Automotive Segment
as a percentage of deliveries
The BMW Group delivered a total of 2,538,367¹ BMW, 'Including the
MINI and Rolls-Royce brand automobiles in 2019,
thereby setting a new record for the total number of
deliveries to customers (2018: 2,483,292¹² units; +2.2%).
Japan 2.4
Italy 2.9
Other 29.2
3 EU-28
Economic Position
→ 43
BMW Group - key automobile markets 2019
On the American continent, business conditions
were characterised by growing competition within a
declining market. With 472,904 units delivered, the
BMW Group nevertheless exceeded the previous year's
figure (2018: 457,095² units; +3.5%). Sales figures
for the Group's three brands in the USA were solidly
up year-on-year, with 375,751 units delivered (2018:
355,3732 units; +5.7%). The BMW Group also ended
2019 as the leading premium automobile manufacturer
in the USA.
The BMW Group's performance in Europe was held
down by a number of factors, in particular due to the
Automotive Ltd., prevalence of political uncertainty in a number of
countries. At 1,083,669 units, deliveries of the Group's
three brands decreased marginally year-on-year (2018:
1,097,117² units; -1.2%). Contrary to this broader
trend, business in Germany developed positively,
with a total of 330,507 units delivered, 6.4% up on
the previous year (2018: 310,576² units). In the UK,
volumes fell slightly year-on-year to 233,780 units (2018:
236,752² units; -1.3%), not least due to uncertainty
regarding Brexit.
Deliveries of BMW Group automobiles in Asia rose
by a solid 6.8% in 2019. In total, 930,085¹ BMW, MINI
and Rolls-Royce brand vehicles (2018: 871,181¹² units)
were delivered to customers in this region. Figures for
China developed very positively, rising to 724,7331
units (2018: 635,813¹² units; +14.0%).
Deliveries up in Asia and in the Americas,
slightly down in Europe
455,581 units).
Shenyang
(2019:
538,612 units,
2018:
CO2 emissions from fleet vehicles delivered in
Europe in 2019 amounted to 127 g CO2/km (2018:
128 g CO2/km; -0.8%) and were therefore at the
previous year's level. The original forecast predicted
a slight decrease. The lower proportion of diesel-
powered vehicles delivered in 2019 meant that no
further reduction in fleet CO2 emissions was achieved
compared to the previous year.
Fleet carbon dioxide (CO2) emissions³
at previous year's level
The ongoing electrification of the product range is
also having a significant impact. As targeted, the
BMW Group finished the year with half a million
electrified vehicles on roads across the globe. The
broad range of electrified vehicles on offer is ideally
suited to meeting customer needs and constitutes an
important aspect of the BMW Group's contribution
to effective climate protection.
As foreseen in the outlook for the financial year 2019,
Automotive segment deliveries increased slightly and
were therefore in line with expectations.
Volumes also developed well for each of the Group's
brands. The BMW brand achieved a new high to date,
with 2,185,793¹ units (2018: 2,114,963¹² units; +3.3%)
delivered to customers. MINI remained slightly below
the previous year's figure, with 347,474 units delivered
worldwide (2018: 364,1352 units; -4.6%). Rolls-Royce
Motor Cars exceeded the 5,000-unit threshold for
the first time, with 5,100 vehicles handed over to
customers (2018: 4,194² units; +21.6%). This signifi-
cant increase also represents a new record for the
ultra-luxury marque.
joint venture
BMW Brilliance
Report on
7.2
64
2019
-26.1
9,627
7,118
-24.8
383
288
2018¹
-45
6.0
2,143
2,272
10.7
169
187
-36.0
-96
Change in %pts
14.9
16.2
63
63
² The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year figures.
1 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
0.1
8.1
8.2
EBIT margin
-0.7
20.0
19.3
Gross profit margin
Motorcycles
-2.3
UK 9.2
4.9
-1.3
Combined
Management
Report
28.6 China
Total²
13.0 Germany
61.9
57.9
51.7
2,538.4
465.8
508.8
595.0
635.8
67.8
724.7
739.4
847.5
871.2
930.1
413.8
359.5
358.8
685.5
65.3
2,483.3
2,468.7
Review of Operations
Economic Position
Report on
Report
Management
Combined
66
99
65
69
The BMW X family again benefited from strong
demand in 2019. Worldwide deliveries of X family
vehicles rose to 963,994 units, a significant 22.3%
year-on-year increase (2018: 788,063¹ units). A signif-
icant contribution to this growth was made by the
highly successful BMW X3 model, deliveries of which
rose by more than one-half to 316,883 units (2018:
200,151¹ units; +58.3%) due to the full availability
of the model produced in China. Deliveries of the
BMW X2 (91,812 units; 2018: 66,792¹ units; +37.5%)
and the X4 (61,598 units; 2018: 46,894¹ units; +31.4%)
increased by around one-third. At 165,537 units, deliv-
eries of the BMW X5 once again exceeded the previous
year's very high level (2018: 155,134¹ units; +6.7%).
The positive resonance identified around the market
launch of the new X7, which has been available since
March 2019, was also reflected in its subsequent sales
performance (2019: 39,924 units; 2018: 15 units).
At 359,211 units, sales of the BMW 3 Series were slightly
down on the previous year (2018: 364,347¹ units; -1.4%),
partially influenced by model changes to the Sedan
in March and the Touring in September. Moreover,
the new extended-wheelbase version has only been
available in China since June 2019. The launch of
the new models helped boost deliveries, particularly
during the final quarter, resulting in double-digit
volume growth. Between October and Decem-
ber 2019, the BMW Group delivered 106,155 units
of the BMW 3 Series worldwide, 20.6% more than
in the previous year (2018: 87,9871 units). Worldwide
deliveries of the BMW 5 Series fell to 353,268 units
(2018: 381,749¹ units; -7.5%). The new BMW Z4,
which has been available since March 2019, enjoyed
strong demand during the period under report (2019:
15,827 units). Sales figures for the new BMW 8 Series
also developed very encouragingly and had totalled
12,219 units (2018: 923 units) by the end of the report-
ing period.
BMW brand deliveries rose by 3.3% to 2,185,793 units
in 2019, reaching a new record level for the ninth year
in succession (2018: 2,114,963¹ units). The models of
the BMW X family, the BMW i3, the new BMW Z4 and
the new BMW 8 Series all made positive contributions
to the overall growth. Moreover, the X1 and X5 (both
from the BMW X family) as well as the BMW Z4 were
all global market leaders in their own segments. The
BMW i3 continues to perform well as a highly success-
ful model for mobility in metropolitan areas.
BMW² brand achieves new volume record
1 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjustments is a review of sales data in prior periods for the BMW Group's most important markets (China, USA, Germany,
UK, Italy and Japan). The retrospective adjustment enables better comparability. Additional information can be found in the section "Comparison of Forecasts for 2019 with Actual Results in 2019".
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 538,612 units, 2018: 455,581 units, 2017: 385,705 units, 2016: 311,473 units, 2015: 281,357 units).
2,257.9
2,352.4
355.4
14.7 USA
375.8
453.4
2018
2019
6,977
Other markets
104,210
thereof China²
Asia²
2017
thereof USA
thereof UK
thereof Germany
Europe
in 1,000 units
→ 44
BMW Group deliveries of vehicles by region and market¹
² Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjust-
ments is a review of sales data in prior periods for the BMW Group's most important markets
(China, USA, Germany, UK, Italy and Japan). The retrospective adjustment enables better com-
parability. Additional information can be found in the section “Comparison of Forecasts for
2019 with Actual Results in 2019".
Americas
2016
2015
1,083.7
456.1
457.1
472.9
232.3
252.4
242.4
236.8
233.8
287.4
298.5
296.5
310.6
330.5
1,003.1
1,091.9
1,103.2
1,097.1
503.9
4,467
2,173
2018¹
BMW 8 Series
12,219
923
0.6
BMW Z4
15,827
2.3
85
BMW X1
20181
266,124
283,709
-6.2
12.2
0.7
-10.1
56,208
50,552
74,238
108,376
-31.5
3.4
BMW 5 Series
353,268
381,749
-7.5
16.2
BMW 6 Series
25,181
26,244
-4.1
1.2
BMW 7 Series
BMW X2
91,812
66,792
37.5
-37.5
1.0
BMW X7
39,924
15
1.8
BMW i
42,249
37,347
13.1
1.9
BMW total
2,185,793
2,114,963
3.3
35,368
BMW 4 Series
22,116
7.6
4.2
BMW X3
316,883
200,151
58.3
14.5
BMW X4
61,598
46,894
31.4
2.8
BMW X5
165,537
155,134
6.7
BMW X6
16.4
-1.4
364,347
2,368
5.2
6.8
85,846
91,682
Currency adjusted
change² in %
Change in %
2018¹
2019
EBIT margin
Gross profit margin
Automotive
in %
→ 42
BMW Group margins by segment
9.0
Group
8.1
27,705
2019
6.1
7.6
96,855
104,210
0.1
-3.0
-18,875
-19,443
-18.0
-16.7
6
5
4.6
6.8
29,598
Change in %
Eliminations
Financial Services
2018
Change in %
2019 in %
BMW 1 Series
173,870
198,548
-12.4
8.0
BMW 2 Series
115,184
153,073
-24.8
5.3
BMW 3 Series
359,211
2019
Other Entities
Proportion of
BMW sales volume
in units
Motorcycles
Automotive
in € million
BMW Group profit/loss before tax by segment
Group
Eliminations
Other Entities
Financial Services
Motorcycles
Automotive
in € million
→ 40
BMW Group revenues by segment
Results of operations by segment
-0.5% Minority interest
→ Automotive Segment
→ 41
99.0
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 538,612 units, 2018: 455,581 units).
35.5
-1.4
27.7
26.3
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
Change in %pts
31.12.2018*
31.12.2019
Financial Services segment
Automotive segment
Group
in %
41.0
→ 37
Group equity rose slightly by €2,078 million to
€59,907 million, increased primarily by the profit
of €4,915 million attributable to shareholders of
BMW AG and decreased by the dividend payment
of €2,303 million. The reduction in the equity ratio
reflected the fact that - due to the effects described
above the balance sheet total rose at a faster rate
than equity. The adoption of IFRS 16 therefore only
had a limited impact on the equity ratio.
7
Receivables from sales financing increased solidly
over the twelve-month period, mainly due to larger
credit financing volumes in the UK and China. A
total of 1,320,656 new credit financing contracts with
retail customers were signed during the financial
year 2019. Compared to the end of the previous
financial year, the contract portfolio with dealers
and retail customers under management grew by
4.5% to 4,064,561 contracts.
Inventories also increased significantly compared to
the previous year due to the build-up of inventories
of higher-value vehicles such as the BMW X5 and
X7 models. Higher inventories of raw materials and
supplies also contributed to the rise, partly reflecting
the higher purchase price of some precious metals,
especially palladium.
Leased products went up significantly year-on-year
on the back of leasing portfolio growth in various
countries, including Germany and the USA.
The sharp rise in property, plant and equipment com-
pared to one year earlier was mainly attributable to
the recognition of right-of-use assets in accordance
with IFRS 16, as a result of which property, plant
and equipment increased by €2.8 billion. In addition,
substantial amounts were invested to develop the
product portfolio.
The balance sheet total of the BMW Group was signifi-
cantly higher than at the end of the previous financial
year. Currency impacts from the British pound, the
US dollar, the Canadian dollar and the Thai baht
contributed to this increase.
1 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
² The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year figures.
100.0
7.6
9.1
208,938
BMW Group equity ratio
228,034
-5.5
10.1
Other expenses
Cost of materials²
Total output
Other income
Financial income
Revenues
WORK PERFORMED
→ 38
BMW Group value added statement
Economic Position
→ Report on
Management
Report
9.9
Combined
62
19
61
Net valued added by the BMW Group remained at a
high level in the financial year 2019.
The value added statement shows the value of work
performed by the BMW Group during the financial
year, less the value of work bought in. Deprecia-
tion and amortisation, cost of materials, and other
expenses are treated as bought-in costs in the value
added calculation. The allocation statement applies
value added to each of the participants involved in
the value added process. The bulk of the net value
added benefits employees. The remaining proportion
in the Group is retained to finance future operations.
The gross value added amount treats depreciation as
a component of value added which, in the allocation
statement, would be treated as internal financing.
Value added statement
note 10
Overall, the results of operations, financial position
and net assets position of the BMW Group remained
stable during the year under report.
Financial liabilities were significantly higher than at
the end of the previous financial year, mainly as a
result of new bonds issued. This also includes the 144A
bond in the USA and the first Panda bond placed on
the Chinese capital market.
Other provisions increased markedly year-on-year
due to the provision recognised in conjunction with
ongoing EU Commission antitrust proceedings. Fur-
ther information is provided in → note 10 to the Group → see
Financial Statements.
Pension provisions increased significantly compared
to the end of the financial year 2018, with lower
discount rates in Germany and the UK in particular
contributing to the rise.
-0.2
62
2019
Total equity and liabilities
0.0
5.7
15.0
15.9
11,401
13,209
Other provisions
1.5
42.4
43.1
2,330
3,335
Pension provisions
Deferred and current tax
26.3
3.6
57,829
59,907
Equity
EQUITY AND LIABILITIES
100.0
7.6
9.1
208,938
228,034
0.0
5.3
1.4
0.0
1,595
-45.6
62
Liabilities in conjunction with assets held for sale
10.1
7.5
9.2
21,119
23,066
Other liabilities
4.5
4.5
5.3
2019
2,931
Currency-adjusted
ASSETS
9,669
10,182
Trade payables
51.2
11.5
12.7
103,597
116,740
Financial liabilities
0.7
-47.5
Group
11
2019
2018¹
66.4
10.4
Bought-in costs
Gross value added
32,938
31.3
33,143
33.6
-0.6
Depreciation and amortisation of total tangible,
intangible and investment assets
10,749
65,474
10.2
8.7
25.0
Net value added
22,189
21.1
24,542
24.9
-9.6
ALLOCATION
Employees
Providers of finance
Government/public sector
8,601
Shareholders
68.7
20.9
96,855
98.2
7.6
-22
0.0
988
1.0
1,031
1.0
774
0.8
33.2
72,281
105,219
98,617
100.0
6.7
57,358
54.5
53,132
53.9
8.0
14,923
14.2
12,342
12.5
100.0
2018¹
Group
Net value added
22,189
100.0
24,542
100.0
-9.6
1 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
² Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
BMW Group value added 2019
→ 39
in %
Depreciation and amortisation 10.2
14.2 Other expenses
18.9
Cost of materials 54.5
21.1 Net value added
56.1% Employees
11.1 % Providers of finance
10.1% Government/public sector
7.4% Shareholders
14.7% Group
in %
in %
in € million
in %
in € million
Change
C
Minority interest
0.4
0.5
12,451
56.1
12,479
50.8
-0.2
2,466
11.1
2,266
9.2
8.8
2,250
10.1
90
2,733
-17.7
1,646
7.4
2,303
9.4
-28.5
3,269
14.7
4,671
19.0
-30.0
107
11.2
100.0
0.0
9.1
Economic Position
Review of Operations
→ Automotive Segment
Report on
Report
Management
Combined
98
68
2 Fuel consumption and CO2 emissions information are available on page 70.
1 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the
adjustments is a review of sales data in prior periods for the BMW Group's most important
markets (China, USA, Germany, UK, Italy and Japan). The retrospective adjustment en-
ables better comparability. Additional information can be found in the section "Comparison
of Forecasts for 2019 with Actual Results in 2019".
Rolls-Royce total
Cullinan²
21.6
Deliveries of electrified automobiles up on
4,194
544
2,508
-27.0
1,816
1,326
-34.0
1,003
662
-27.3
831
604
Phantom²
5,100
Change in %
previous year
Worldwide deliveries of electrified BMW and MINI
brand vehicles in 2019 totalled 146,160 units (2018:
142,385¹ units; +2.7%). The number of BMW plug-in
hybrid vehicles delivered was influenced by the
3 Series and X5 model changes as well as by the
launch of the X3 in autumn 2019. The total of 86,947
BMW hybrid drive vehicles delivered to customers
during the period under report was down on the
very high figure achieved one year earlier (2018:
91,759¹ units; -5.2%). The new models helped gener-
ate a positive trend in the fourth quarter of 2019, as
sales of hybrid-drive BMW vehicles during the final
three months of the year increased significantly by
16.1% to 33,250 units (2018: 28,649¹ units). Over the
twelve-month period, the BMW i3 recorded a 14.1%
increase in worldwide deliveries to 39,501 units (2018:
34,623¹ units). The electrified MINI Countryman² also
benefited from strong demand, with 16,964 units
delivered to customers during the period under report
(2018: 13,279¹ units; +27.8%).
Segment revenues at record level, earnings
negatively impacted by provision
Deliveries of BMW vehicles by model variant 1,2
The BMW Vision iNEXT was showcased in 2019 with
the aim of providing a preview of tomorrow's mobil-
ity. The vehicle embodies the fusion of electric and
autonomous driving as well as next-level connectivity.
During the current financial year, BMW will launch three
further models featuring hybrid technology, namely
the BMW X1, the X2 and the BMW 3 Series Touring.
Two additional all-electric models will be added with the
MINI Cooper SE and the BMW iX3. The BMW Group is
consciously focusing on battery electric vehicles (BEV)
and plug-in hybrid technologies (PHEV). Flexible
platforms are being used to cover varying regional
customer requirements, enabling buyers to select
the drivetrain system best suited to their mobility
requirements.
Greater choice of electrified vehicles²
2 Fuel consumption and CO₂ emissions information are available on page 70.
1 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the
adjustments is a review of sales data in prior periods for the BMW Group's most important
markets (China, USA, Germany, UK, Italy and Japan). The retrospective adjustment en-
ables better comparability. Additional information can be found in the section "Comparison
of Forecasts for 2019 with Actual Results in 2019".
2.7
142,385
27.8
13,279
16,964
146,160
At the end of the year under report, the BMW Group's
vehicle portfolio included 11 all-electric or electri-
fied models in various segments. These models are
sold on more than 70 markets around the world,
underlining the BMW Group's leading position world-
wide in terms of combined deliveries of all-electric
and plug-in hybrid vehicles as well as being market
leader in Germany.
-5.2
86,947
13.1
37,347
42,249
2018 Change in %
2019
Total
MINI Electric
BMW e
BMWi
in units
Deliveries of electrified models¹
→ 48
91,759
The Automotive segment recorded a solid year-on-
year increase in revenues. Alongside positive currency
effects, the main influencing factor was the product
mix effect generated by increased deliveries of the
X7 and the BMW 8 Series, which were launched in
2019, the X4, the X5, and the Rolls-Royce Cullinan,
all of which were available for the full twelve-month
period in 2019. Growth in after-sales business due to
the increased size of the global vehicle fleet also had a
positive impact on revenues. In the previous year, rev-
enues were also negatively impacted by the high level
of competition caused by the reaction of competitors
to the early implementation of WLTP regulations as
well as the tougher market situation triggered by trade
conflicts. The rejuvenation of the product portfolio
has also helped the segment to achieve higher prices.
2018
Wraith/Dawn
2019 in %
Change in %
2018
2019
Proportion of
MINI sales volume
MINI total
MINI Countryman
MINI Clubman
MINI Convertible
MINI Hatch (3- and 5-door)
in units
The revised model of the MINI Clubman was also
launched during the year under report. The MINI
Convertible remains the world's best-selling vehicle of
its kind. The John Cooper Works brand also continues
to enjoy strong demand.
67
mark again (98,845 units; 2018: 99,594¹ units; -0.8%).
However, partly due to the decisive contribution made
by the popular plug-in hybrid model, it nevertheless
remained a cornerstone for the MINI brand. The
MINI Hatch (3- and 5-door) achieved a volume of
177,560 units (2018: 184,008¹ units; -3.5%).
Deliveries of MINI vehicles by model variant¹
At 347,474 units, MINI brand deliveries worldwide were
slightly down year-on-year (2018: 364,135¹ units; -4.6%).
The MINI Countryman nearly reached the 100,000 unit
In 2019, due to external factors, the MINI brand was
not quite able to match the high level of deliveries
achieved one year earlier. In particular, Brexit-driven
uncertainty and intense competition in the small and
compact car segment played a significant role. Never-
theless, thanks to its underlying strength in numerous
markets, the MINI brand managed to grow its overall
share in the highly competitive premium segment.
MINI down on previous year
The addition of the new X3 M and X4 M as well as the
first two M8 models significantly extends the range
of vehicles offered by the BMW Group subsidiary. All
new models are now immediately available at market
launch as competition models with more powerful
engines. In addition to the X models (X3 M, X4 M,
X5 M and X6 M), the BMW M2 CS and - within the
luxury class - the M8 Coupé, M8 Convertible and
M8 Gran Coupé all made their débuts during the year
under report. 2019 thus saw the launch of the largest
number of BMW M models to date.
With 136,173 units delivered during the twelve-month
sions informa- period, BMW M GmbH achieved the best result to date in
its almost 50-year history (2018: 103,580² units; +31.5%),
ensuring it a leading market position among the pro-
viders in its competitive field.
BMW M achieves record result³
tion are available
on page 70.
3 Fuel
consumption
and CO₂ emis-
A total of 12 new BMW models, including four
M models, were launched during 2019. Two model
revisions were also brought to market during the same
period. March saw the launch of the seventh-gener-
ation BMW 3 Series Sedan, the new BMW 8 Series
Convertible, the BMW Z4 Roadster and the BMW X7.
In the same month, the BMW 7 Series became
available across the dealer organisation following an
extensive model revision. In summer, the extended-
wheelbase version of the 3 Series Sedan went on sale
in China. In autumn, BMW launched successor models
for the 3 Series Touring and the 1 Series. The new
BMW 8 Series Gran Coupé also became available in
autumn 2019.
BMW model range significantly expanded
² Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjustments is a review of sales data in prior periods for the BMW Group's most important markets (China, USA, Germany,
UK, Italy and Japan). The retrospective adjustment enables better comparability. Additional information can be found in the section "Comparison of Forecasts for 2019 with Actual Results in 2019".
→ 46
2019
62
184,008
Ghost
in units
→ 47
Deliveries of Rolls-Royce vehicles
by model variant¹
The product range also includes Black Badge variants
of the Dawn, Ghost, Wraith and Cullinan models.
In addition to bespoke equipment options, the
Black Badge vehicles also offer more powerful engine
performance.
One of the key factors for the success of Rolls-Royce
Motor Cars is its bespoke range. At Rolls-Royce, the
term bespoke refers to equipment configurations
with which the vehicles are highly individualised
in accordance with customer requirements. The
result is the creation of unique vehicles that secure
Rolls-Royce Motor Cars an outstanding position in
the luxury segment.
In 2019, Rolls-Royce Motor Cars surpassed the 5,000
threshold for the first time in over 100
years of cor-
porate history, also setting a new record with 5,100
deliveries worldwide (2018: 4,194¹ units; +21.6%).
The new Rolls-Royce Cullinan², which has been
available to customers since the end of 2018, made a
major contribution to this performance (2,508 units;
2018: 544¹ units).
Rolls-Royce looks back on successful year
100.0
-4.6
364,135
347,474
177,560
28.4
99,594
98,845
11.7
-14.9
47,795
40,685
8.7
-7.2
32,738
30,384
51.2
-3.5
-0.8
461
Change in %
Proportion of
Segment cost of sales increased moderately compared
to the previous year. This was mainly due to higher
manufacturing costs driven by stricter regulatory
requirements (especially in relation to the reduction of
fleet emissions), negative currency effects and higher
raw material prices (particularly for palladium and
rhodium). The increase in research and development
expenses described above also had a negative impact.
Warranty expenses increased mainly as a result of
allocations to provisions in light of local changes to
legislation as well as additional allocations to provi-
sions in individual markets.
3.2
-5.0
-4.7
7,685
7,325
Financial assets
40.5
4.0
6.2
87,013
92,437
Deferred and current tax
Receivables from sales financing
-7.0
-4.9
739
703
Other investments
1.4
22.0
21.9
2,624
3,199
Investments accounted for using the equity method
18.7
0.3
9.9
3,403
12.8
9.6
10,979
12,036
Total assets
Assets held for sale
Cash and cash equivalents
1.1
-1.8
−1.1
2,546
2,518
7.0
3,016
10.2
14,248
15,891
5.7
20.7
22.1
10,596
12,939
Trade receivables
Inventories
Other assets
1.5
9.8
11.5
change² in %
11.4
42,609
in € billion
Programme
The following table provides an overview of amounts
utilised at 31 December 2019 in connection with the
BMW Group's money and capital market
A total of 13 public ABS transactions were executed in
2019, including five in China, two each in Japan, the
USA and Germany, and one each in Canada and South
Africa with a total volume equivalent to €7.7 billion.
Further funds were also raised via new and prolonged
ABS conduit transactions in Japan, UK, Germany and
Australia with a total volume equivalent to €5.6 bil-
lion. Other transactions remain in place in Germany,
Switzerland and South Africa, amongst others.
In 2019, the BMW Group issued three euro bench-
mark bonds on the European capital market with a
total issue volume of €6.8 billion, as well as bonds
on the US capital market with a total issue volume
of USD 5.0 billion. Bonds were also issued in British
pounds, Canadian dollars, Swiss francs and Norwe-
gian krone for a total amount of €2.0 billion. Private
placements totalling €4.4 billion were also issued,
including, for the first time, so-called "Panda bonds"
for an amount of 9.5 billion Chinese renminbi.
notes 31, 35
and 39
→ see
On account of its good ratings and the high level
of acceptance it enjoys on capital markets, the
BMW Group was again able to refinance operations at
favourable conditions on debt capital markets during
the financial year 2019. In addition to bonds, loan
notes and private placements, the Group also issued
commercial paper. As in previous years, all issues were
in high demand, not only from private investors but
also from institutional investors in particular. In addi-
tion, retail customer and dealership financing receiv-
ables as well as rights and obligations from leasing
contracts are securitised in the form of asset-backed
securities (ABS) financing arrangements. Specific
banking instruments, such as customer deposits held
by the Group's own banks in Germany and the USA,
are also deployed for financing purposes. In addition,
loans are also taken from international banks.
Financing measures undertaken at corporate level
ensure access to liquidity for the Group's operating
subsidiaries at standard market conditions and con-
sistent credit terms. Funds are acquired in line with
a target liability structure, comprising a balanced
mix of financing instruments. The use of longer-term
instruments to fund the Group's Financial Services
business and the maintenance of a sufficiently high
liquidity reserve serves to avoid the liquidity risk in
the portfolio. This conservative financial approach
also helps the Group's rating. Further information
is provided in the section Liquidity risks within the
"Report on Outlook, Risks and Opportunities".
3. Focus on value through the optimisation of
financing costs
2. Autonomy through the diversification of refi-
nancing instruments and investors
1. The ability to act through permanent access
to strategically important capital markets
Euro Medium Term Notes
The overall objective of Group financing is to ensure
the solvency of the BMW Group at all times, focusing
on three areas:
Refinancing
59
59
Property, plant and equipment
5.1
6.8
6.9
10,971
11,729
Intangible assets
total in %
2019
balance sheet
A broad range of instruments on international money
and capital markets is used to refinance Group oper-
ations worldwide. The funds raised are used almost
exclusively to finance the BMW Group's Financial
Services business.
38,259
Australian Medium Term Notes
Commercial Paper
Programme
framework
Leased products
10.2
16.5
17.4
19,801
23,245
in € million
→ 36
Economic Position
BMW Group condensed balance sheet at 31 December
Net assets of the BMW Group
→ Report on
programmes:
Management
Report
60
60
Further information with respect to financial liabilities
is provided in → notes 31, 35 and 39 to the Group
Financial Statements.
The BMW Group also has access to a syndicated credit
line, which was newly agreed upon in July 2017. The
syndicated credit line of €8 billion has a term up to
July 2024 and is being made available by a consortium
of 44 international banks. The credit line was not
being utilised at 31 December 2019.
At 31 December 2019, liquidity remained at a solid
level of €17.4 billion.
2.6
13.4
1.6
40.4
50.0
* Measured at exchange rates at the relevant transaction dates.
Amount
utilised*
Combined
→ 45
1,295
Deliveries up in nearly all markets
90
21,331
20,646
685
-3,754
-1,158
-2,596
17,577
19,488
7,694
-1,911
CO2 emissions
in l/100 km
(combined)
in g/km
(combined)
Electric power
consumption
in kWh/100 km
(combined)
0
1.9
0
<201
43
Fuel consumption
7,784
149
4,321
MINI Cooper SE
BMW
BMW X3 M
BMW X4 M
BMW X5 M
BMW X6 M Competition
BMW M8 Competition Coupé
BMW M8 Competition Convertible
BMW M8 Competition Gran Coupé
BMW M2 CS
ROLLS-ROYCE
Cullinan
Provisionary data based on WLTP.
² Provisionary data.
2019
2018
Change
9,077
8,631
446
4,470
2.1-1.9
47-43
2.1-1.7
48-39
238-219
14.5
330-328
Motorcycles Segment
Other taxes
Profit after income tax
Income taxes
Financial result
Result on investments
-1,158
-2,526
Other operating expenses*
2,184
Other operating income*
-5,859
-5,528
Research and development expenses
-2,803
-2,776
Administrative expenses
-4,078
10.4-9.6
MINI Cooper SE Countryman ALL4
244
246
13.8
14.2-13.72
19.4-15.72
2.5-2.0
56-46
22.3-17.82
2.1-1.9
47-43
13.9-13.5
0
0
16.8-14.8
10.5
239
10.6-10.5
240-239
13
296
12.7
289
10.6
242
10.8
10.7
BMW 330e xDrive Touring
BMW 330e Touring
BMW X2 xDrive25e
2,801
2,107
-19
-22
Unappropriated profit available for distribution
Transfer to revenue reserves
2,820
2,129
-872
-767
-1,452
39
2,344
1,858
Net profit
The net amount of other operating income and expenses
deteriorated from a positive amount of €134 million
to negative €1,359 million year-on-year, mainly due
to the provision recognised for the EU Commission's
antitrust proceedings referred to above. Further infor-
mation is provided in → note 10 to the Group Financial see
Statements.
The EBIT margin came in at 4.9% (2018: 7.2%; -2.3 per-
centage points). As forecast in the Quarterly Statement
to 30 September 2019 the EBIT margin was within the
target range of 4.5 to 6.5% and therefore in line with
revised expectations. In the Annual Report 2018, the
segment EBIT margin was forecast to be within the
target range of 6 to 8%.
The Automotive segment's financial result finished
at a net negative amount of €32 million, significantly
down on the previous year (2018: net positive amount
€795 million). The deterioration mainly reflected the
negative impact of the result from equity-accounted
investments on the one hand and other financial result
note 10
on the other (the latter excluding the revaluation
losses recognised on interest rate hedges), in both
cases described above in the analysis of the Group's
results of operations. Profit before tax for the year was
significantly lower than one year earlier.
The Automotive segment's RoCE in 2019 fell signifi-
cantly to 29.0% (2018: 49.8%; -20.8 percentage points),
mainly due to the lower EBIT. Other factors with a
negative impact on ROCE were the increase in capital
employed due to the first-time recognition of right-of-
use assets in accordance with IFRS 16 and the higher
level of capital expenditure, particularly in conjunction
with the development of the product portfolio.
-461
The long-term target RoCE of at least 26% for the Auto-
motive segment was slightly exceeded. As forecast in
the outlook for the financial year 2019, ROCE decreased
significantly and was therefore in line with expectations.
-498
2,303
Solid increase in motorcycle deliveries
Subject to the shareholders' approval of the appro-
priation of results at the Annual General Meeting,
the unappropriated profit available for distribution
amounts to €1,646 million (2018: €2,303 million).
As a percentage of Group net profit, the dividend
corresponds to a payout ratio of 32.8% (2018: 32.0%).
After deducting the expense for taxes, the Company
reports a net profit of €2,107 million, compared to
€2,801 million in the previous year.
The expense for income taxes relates primarily to
current tax for the financial 2019.
year
Income from profit transfer agreements with Group
companies, reported in the line item Result on invest-
ments, decreased year-on-year. By contrast, financial
result improved by €1,491 million, mainly due to
higher income from designated plan assets offset
against pension obligations. The lower impairment
loss of €30 million (2018: €119 million) recognised on
the investment in SGL Carbon SE, Wiesbaden, also
had the effect of keeping down the deterioration in
earnings for the year.
Other operating expenses totalling €2,526 million
(2018: €1,158 million) were impacted mainly by the
recognition of the provision recognised in connection
with ongoing EU Commission antitrust proceedings.
Other operating income fell to €1,295 million (2018:
€2,184 million), whereby the change was mainly
attributable to a positive prior-year effect resulting
from the change in method for measuring provisions
for statutory and non-statutory warranties and prod-
uct guarantees.
Research and development expenses related mainly to
new vehicle models (including the new 1 Series, the
2 Series Gran Coupé and the X6), expenditure on the
development of reference architectures, powertrain
systems and automated driving, as well as higher
expenditure on vehicle electrification. Compared to
the previous year, research and development expenses
decreased by 5.6%.
Financial Statements
of BMW AG
→ Comments on
Economic Position
Report on
Report
Management
Combined
78
77
Selling and administrative expenses were slightly
lower than in the previous year.
Cost of sales increased by 9.9% to €70,178 million,
mostly due to the higher number of deliveries and
the rise in cost of materials. Gross profit decreased
by €1 million to €14,513 million.
Revenues increased by €6,336 million year-on-year,
primarily reflecting growth in the volume of deliveries
to customers. In geographical terms, the increase re-
lated mainly to China and the USA. Revenues totalled
€84,691 million (2018: €78,355 million), of which
Group internal revenues accounted for €57,412 million
(2018: €58,707 million) or 67.8% (2018: 74.9%).
* Separate presentation of other operating income and expenses from the financial year 2019. Prior year's figures will be presented analogously.
1,646
-3,979
Free cash flow for the Automotive segment was as
follows:
in € million
Review of Operations
→ Automotive Segment
→ Motorcycles
Segment
In the Automotive segment, net financial assets com-
prised the following:
Net financial assets Automotive segment
→ 50
in € million
Cash and cash equivalents
Marketable securities and investment funds
Intragroup net financial assets
Financial assets
Less: external financial liabilities*
Net financial assets Automotive segment
*Excluding derivative financial instruments.
The increase in external financial liabilities was main-
ly attributable to the recognition of lease liabilities
according to IFRS 16 amounting to €2.8 billion. Fur-
ther information is provided in → note 6 to the Group → see
Financial Statements.
note 6
BMW Group fuel consumption and CO2 emissions information
→ 51
Model
BMW GROUP ELECTRIFIED MODELS
BMW iX3
BMW X1 xDrive25e
Economic Position
Free cash flow Automotive segment
→ 49
Report on
70
Cash inflow (+)/outflow (-) from operating activities
Cash inflow (+)/outflow (-) from investing activities
Adjustment for net investment in marketable securities and investment funds
Free cash flow Automotive segment
The change in working capital included in the cash
inflow from operating activities resulted mainly from
the higher level of inventories and was offset by a
decrease in trade payables. Following the adoption
of IFRS 16, lease payments are included in cash flows
from financing activities, giving rise to a positive
effect of €470 million. The increase in cash outflow
from investing activities mainly reflected the changes
described in the Group Cash Flow Statement with
respect to investments in property, plant and equip-
ment and intangible assets, financial assets and divi-
dends received. The liquidation of a Group company
in the previous financial year also had a negative effect.
2019
2018
Change
9,690
9,352
338
-7,165
-6,769
-396
42
130
-88
2,567
2,713
-146
69
69
Combined
Management
Report
As anticipated in the outlook for the financial year
2019, the Motorcycles segment achieved a solid
increase in deliveries and was therefore in line with
expectations.
Selling expenses
14,513
3 With effect from the beginning of the fourth quarter of 2019, the EU Bank comprises
BMW Bank GmbH and its branches in Italy, Spain and Portugal. The former subsidiary in
France was transferred for organisational purposes to the Europe/Middle East/Africa
region in conjunction with strategic realignments.
2 The calculation only includes automobile markets in which the Financial Services segment
is represented by a consolidated entity.
In addition, figures for the prior year have been adjusted due to changes in presentation of
selected items, which are not material overall.
1 Prior year's figures adjusted due to a change in accounting policy in connection with the
adoption of IFRS 16; see note 6 to the Group Financial Statements.
2019
2018
2017
2016
2015
73
4,719
5,381
5,708
5,974
3,000
6,000
in 1,000 units
→ 54
Contract portfolio of
Financial Services segment
The total portfolio of financing and leasing contracts
with retail customers again developed positively in
2019, growing 4.8% year-on-year. In total, 5,486,319
contracts were in place with retail customers at
31 December 2019 (2018: 5,235,207 contracts). The
China region continued to record the fastest growth
rate of all regions, significantly enlarging its contract
portfolio by 19.8% compared to one year earlier. The
Europe/Middle East/Africa region (+5.6%) and the
EU Bank³ (+4.0%) grew year-on-year, while the total
contract portfolio in the Americas region (+0.7%) hov-
ered around the previous year's level. The Asia/Pacific
region saw a slight decrease in the volume of its con-
tract portfolio (-2.5%).
5,115
74
Combined
Management
30
20.7
Leasing 22.0
21.2
22.4
22.3
46.7
46.1
50.1
49.9
52.2
60
→ 55
BMW Group new vehicles financed or
leased by Financial Services segment¹²
Segment
→Financial Services
Review of Operations
in %
Economic Position
Report on
Report
The proportion of new BMW Group vehicles either
leased or financed by the Financial Services segment
in the financial year 2019 amounted to 52.2%², 2.1 per-
centage points up on the previous year (2018: 50.1%),
mainly due to growth in China and the USA.
The total volume of new credit financing and leasing
contracts concluded with retail customers amounted
to €61,353 million, representing a solid year-on-year
increase (2018: €55,817 million; +9.9%). Adjusted for
currency factors, the increase was 7.9%.
In the pre-owned financing and leasing business for
BMW and MINI brand vehicles, 398,144 new contracts
were signed during the twelve-month period (2018:
396,610 contracts; +0.4%).
More than two million new contracts concluded
Thanks to its strong performance, the Financial Ser-
vices segment surpassed the threshold of two million
new customer contracts in a single year for the first
time. In total, 2,003,782 credit financing and leasing
contracts were concluded with retail customers dur-
ing the period under report, a solid 5.0% year-on-
year increase (2018: 1,908,640 contracts). The biggest
growth markets were China and the USA. While the
number of new contracts grew slightly by 3.4% in
the credit financing line of business, the correspond-
ing increase for leasing business was 8.2%. Overall,
leasing accounted for 34.1% and credit financing for
65.9% of new business.
→ 53
BMW Group - key motorcycle markets 2019
BMW Motorrad introduced four new and two revised
models during the period under report. In Febru-
ary 2019, it launched three new models - the F 850 GS
Adventure (Adventure segment) and the C 400 X and
the C 400 GT (Urban Mobility segment). These were
followed by the revised R 1250 R (Roadster segment) in
April and the new S 1000 RR (Sport segment) in July.
The revised version of the R 1250 RS (Sport segment)
has been available to customers since September.
Model range further rejuvenated
71
2019
2018
2017
2016
2015
137.0
145.0
164.2 165.6
175.2
90
180
in 1,000 units
→ 52
BMW Group deliveries of motorcycles
Numerous other new models and concept studies
were also presented during the year under report.
The Concept R18 was unveiled at the Concorso
d'Eleganza Villa d'Este - a new interpretation of
BMW Motorrad classics. The special limited edition
of the R nine T/5 model was presented during the
BMW Motorrad Days event. At the International
Motorcycle Fair in Milan (EICMA), customers had
the opportunity to familiarise themselves with the
new models F 900 R (Roadster segment), F 900 XR
and S 1000 XR (Adventure segment) and the Concept
Study R18/2, a modern interpretation of a dynamic,
high-performance cruiser.
The number of motorcycles sold in Europe rose by
7.0% to 104,994 units (2018: 98,144 units). Deliveries
in Germany increased by 10.4% to 26,292 units (2018:
23,824 units). Growth rates in Italy (15,580 units,
2018: 14,110 units; +10.4%) and Spain (12,607 units,
2018: 11,124 units; +13.3%) were also up on a dou-
ble-digit scale year-on-year. In France, motorcycle
deliveries grew slightly by 4.1% to 17,300 units
(2018: 16,615 units). The only year-on-year decline
occurred in the USA, where - within a declining
market - BMW Motorrad saw deliveries fall slightly to
13,379 units (2018: 13,842 units; -3.3%). A particularly
sharp rise of 36.7% was recorded for Brazil, where,
for the first time, more than 10,000 BMW motor-
cycles were sold in a single year (10,064 units; 2018:
7,361 units).
as a percentage of sales volume
Slight growth in fleet business
15.0 Germany
Other 45.7
In balance sheet terms, business volume grew by 7.3%
to stand at €142,834 million (2018¹: €133,147 mil-
lion). The contract portfolio under management at
31 December 2019 comprised 5,973,682 contracts,
therefore growing slightly by 4.7% year-on-year (2018:
5,708,032 contracts).
The Financial Services segment performed strongly
in 2019 within a challenging, volatile environment.
Segment profit before tax rose by 6.0% to a record
level of €2,272 million (2018¹: €2,143 million).
Successful financial year for the
Financial Services segment
Financial Services Segment
The return on capital employed (ROCE) for the Motor-
cycles segment in 2019 increased slightly to 29.4%
(2018: 28.4%; +1.0 percentage points), mainly due to
the higher level of EBIT. In the most recent outlook
provided in the Quarterly Statement to 30 Septem-
ber 2019, a solid increase was still being forecast.
The deviation in this case was due to the higher
amount of capital employed. The long-term target
ROCE of 26% for the Motorcycles segment continued
to be surpassed.
Profit before tax for the twelve-month period was
significantly higher than one year earlier.
The segment EBIT margin edged up to 8.2% (2018:
8.1%; +0.1 percentage points) and therefore within the
range of 8 to 10% forecast in the Annual Report 2018.
The Motorcycles segment also recorded solid year-on-
year revenue growth. In addition to the higher number
of units delivered, product mix and currency effects
also had a positive impact on the performance in 2019.
Strong segment performance
→Financial Services
Segment
Review of Operations
→ Motorcycles
Segment
Economic Position
Report on
Management
Report
Combined
72
22
Brazil 5.7
7.2 Spain
7.6 USA
8.9 Italy
9.9 France
The BMW Group is one of Europe's foremost leasing
and full-service providers. Under the brand name
Alphabet, the Financial Services segment's fleet
management business offers leasing and financing
arrangements as well as specific services to commer-
cial customers. The number of fleet contracts rose by
2.5% during the financial year 2019. Included in the
total contract portfolio with retail customers referred
to above, the segment was thus managing a portfolio
of 717,353 fleet contracts at the end of the reporting
period (2018: 700,080 contracts).
Financing 24.1
27.5
Economic Position
Report on
Management
Report
Combined
Profit before tax recorded for the Other Entities
segment and eliminations fell by €146 million. The
significant drop was due in particular to revaluation
losses (included in other financial result) arising
on interest rate and currency hedges in connection
with the refinancing of the Financial Services busi-
ness. In addition, a sharp rise in the number of new
operating lease contracts had a negative impact due
to the elimination of margins relating to the leased
products concerned.
Other Entities Segment/Eliminations
2019
2018
2017
2016
2015
0
0.25 0.26
0.32
0.34
0.37
0.25
0.5
in %
→ 58
Development of credit loss ratio
→ Comments on
Further information on the risk situation is provided
in the section Risks and Opportunities.
Financial Statements
of BMW AG
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
based in Munich, Germany, is the parent Company of
the BMW Group. The comments on the BMW Group
and Automotive segment provided in earlier sections
apply to BMW AG, unless presented differently in the
following section. The Financial Statements of BMW AG
are drawn up in accordance with the provisions of the
German Commercial Code (HGB) and the relevant
supplementary provisions contained in the German
Stock Corporation Act (AktG).
Gross profit
-63,841
-70,178
78,355
84,691
Cost of sales
Revenues
2018
2019
in € million
→ 59
BMW AG Income Statement
Results of operations
76
66
At 31 December 2019, BMW AG employed a workforce
of 88,303 people (31 December 2018: 89,842 people).
BMW AG develops, manufactures and sells auto-
mobiles and motorcycles as well as spare parts
and accessories manufactured in-house, by foreign
subsidiaries and by external suppliers, and performs
services related to these products. Sales activities are
carried out primarily through branches, subsidiaries,
independent dealerships and importers. In the
financial year 2019, BMW AG increased automobile
deliveries by 35,898 units to 2,555,795 units. This
figure includes 534,638 units relating to series sets
supplied to the joint venture BMW Brilliance Auto-
motive Ltd., Shenyang, an increase of 44,056 units
over the previous year.
Business environment and review of operations
The general and sector-specific environment of BMW AG
is essentially the same as that of the BMW Group and
is described in the Report on Economic Position sec-
tion of the Combined Management Report.
Differences in accounting treatments based on HGB
(used for the Company Financial Statements) and
IFRS (used for the Group Financial Statements) are
mainly to be found in connection with the capitali-
sation of intangible assets, the creation of valuation
units, the recognition and measurement of financial
instruments and provisions as well as the recognition
of deferred tax assets. Differences also arise in the
presentation of assets and liabilities and of items in
the income statement.
The key financial performance indicator for BMW AG
is the dividend payout ratio (unappropriated profit of
BMW AG in accordance with HGB in relation to the net
profit for the year of BMW Group in accordance with
IFRS). The key non-financial performance indicators
are essentially identical and concurrent with those of
the BMW Group. These are described in detail in the
Report on Economic Position section of the Combined
Management Report.
On 10 March 2020, the Financial Statements of BMW AG
were drawn up by the Board of Management. Based on
current developments regarding the spread of corona-
virus, the Board of Management on 16 March 2020
adjusted the original outlook for the BMW Group, the
assumptions regarding the development of the global
economy and the economic risks and opportunities for
the financial year 2020 in the Combined Management
Report, as well as the statement regarding the Events
after the end of the reporting period. On the same day,
the Financial Statements of BMW AG were drawn up
anew by the Board of Management.
COMMENTS ON FINANCIAL
STATEMENTS OF BMW AG
14,514
The risk profile of the segment's credit financing port-
folio also remained stable at a low level. The credit
loss ratio on the total credit portfolio amounted to
0.26% at 31 December 2019 and was therefore nearly
unchanged compared to one year earlier (2018: 0.25%).
This figure comprises a credit loss ratio for leasing
business of 0.15% (2018: 0.14%) and a credit loss ratio
for financing business with retail customers of 0.41%
(2018: 0.38%).
Risk profile
Dealership financing slightly up on previous year
The total volume of dealership financing continued
growing during the financial year 2019 to stand at
€21,227 million at the end of the reporting period
(2018: €20,438 million; +3.9%).
3 With effect from the beginning of the fourth quarter of 2019, the EU Bank comprises
BMW Bank GmbH and its branches in Italy, Spain and Portugal. The former subsidiary in
France was transferred for organisational purposes to the Europe/Middle East/Africa
region in conjunction with strategic realignments.
25.7 America
Middle East/
Africa
35.5 Europe/
EU Bank3 18.5
China 12.2
Asia/Pacific 8.1
in % per region
Contract portfolio retail customer financing
of Financial Services segment 2019
→ 56
2 Delivery figures have been adjusted retrospectively going back to 2015, as described in
the section "Comparison of forecasts for 2019 with actual outcomes in 2019".
1 Until 2015 excluding Rolls-Royce.
2019
2018
2017
2016
2015
0
29.9
28.9
26.0
Financial Services segment posts record earnings
The Financial Services segment achieved a solid
increase in revenues during the period under report
on the back of portfolio growth, higher revenues from
the sale of returned leasing vehicles, and favourable
currency factors.
Despite ongoing political and economic uncertainties,
such as Brexit and trade disputes, the risk profile
across the Financial Services segment's total portfolio
remained stable at a low level.
Cost of sales relating to Financial Services business
increased by €1,849 million (2018: €24,089 million).
Consistent with the development of revenues, the
main factors for the increase were expenses associated
with the sale of returned leasing vehicles as well as
risk provisioning expenses driven by portfolio growth.
As predicted in the Annual Report 2018, the 15.0%
return on equity generated by the Financial Services
segment in 2019 was at a similar level to the previ-
ous year (2018: 14.8%; +0.2 percentage points) and
exceeded the RoE target of at least 14%.
The decrease in cash outflow from the Financial Ser-
vices segment's operating activities was mainly due
to the higher profit before tax and the lower increase
in receivables from sales financing compared to the
previous year. Cash inflow from financing activities
was mainly driven by the increase in asset-backed
securities financing and the repayment of loans.
75
15
-49
133
84
-1,493
6,793
5,300
-1
1,445
-6,790
130
-5,345
129
Change
2018
2019
Cash inflow (+)/outflow (-) from operating activities
Cash inflow (+)/outflow (-) from investing activities
Cash inflow (+)/outflow (-) from financing activities
Net
in € million
→ 57
Net cash flows for the Financial Services segment
Net cash inflows and outflows for the Financial Ser-
vices segment were as follows:
Profit before tax in the Financial Services segment rose
by 6.0%, representing a solid year-on-year increase.
With the delivery of 175,162 units in 2019, the Motor-
cycles segment exceeded the previous year's figure by
5.8%, marking a new record for the ninth consecutive
year (2018: 165,566 units).
Investments
Workforce at year-end
3,497
55,819
3,168
45,535
Capital expenditure on intangible assets and prop-
erty, plant and equipment in the year under report
totalled €3,233 million (2018: €2,975 million), up by
8.7% compared to the previous year. Depreciation
and amortisation amounted to €2,573 million (2018:
€2,470 million).
The carrying amount of investments rose to €3,762 mil-
lion (2018: €3,559 million), mainly due to additions to
investments in subsidiaries amounting to €257 million.
The impairment loss recognised on the investment in
SGL Carbon SE, Wiesbaden, amounting to €30 million
(2018: €119 million) had an offsetting effect.
Combined
Management
Report
79
Report on
→ Comments on
Financial Statements
of BMW AG
Inventories increased to €5,994 million (2018:
€4,811 million), mainly due to the build-up of raw
materials, supplies and goods for resale and the
first-time inclusion in inventories of prepayments
on orders.
Receivables from subsidiaries, most of which relate
to intragroup financing receivables, increased to
€16,698 million (2018: €8,570 million), primarily due
to the change in the exercise of the option to offset
receivables from and payables to subsidiaries with
effect from the financial
year 2019.
The decrease in other receivables and other assets
to €3,513 million (2018: €3,595 million) was mainly
attributable to lower receivables from companies with
which an investment relationship exists. The increase
in tax receivables had an offsetting effect.
As a result of the lower unappropriated profit com-
pared with the dividend paid for the previous financial
year, equity decreased by €162 million to €15,079 mil-
lion. The equity ratio fell from 33.5% to 27.0%, mainly
due to the higher balance sheet total.
In order to secure pension obligations, cash funds to-
talling €497 million were transferred to BMW Trust e. V.,
Munich, in conjunction with a Contractual Trust
Arrangement (CTA), to be invested in plan assets.
Plan assets are offset against the related guaranteed
obligations. The resulting surplus of assets over liabil-
ities is reported in the BMW AG balance sheet on the
line item Surplus of pension and similar plan assets
over liabilities.
Economic Position
19
19,060
28,226
28
205
214
8,784
7,824
8,989
8,038
511
545
5,751
5,560
21,777
12,670
187
285
Provisions for pensions went down from €214 million
to €205 million, after offsetting pension plan assets
against pension obligations.
28
Other provisions increased year-on-year, mainly due
to the provision recognised in connection with
EU Commission antitrust proceedings.
Liabilities to subsidiaries amounting to €21,777 mil-
lion (2018: €12,670 million) comprised mainly
financial liabilities. In addition to higher intragroup
financing liabilities, the increase was primarily due
to the change in the exercise of the option to offset
receivables from and payables to subsidiaries with
effect from the financial year 2019.
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Outlook
REPORT ON OUT-
LOOK, RISKS AND
OPPORTUNITIES
81
Economic development significantly
slowed by spread of coronavirus
BMW Group outlook for 2020 signifi-
cantly impacted by coronavirus
OUTLOOK
The report on outlook, risks and opportunities describes
the expected development of the BMW Group in 2020,
including the significant risks and opportunities, from
a Group management perspective. In line with the
Group's internal management system, the outlook
covers a period of one year. Risks and opportunities
are managed on the basis of a two-year assessment.
The report on risks and opportunities therefore
addresses a period of two years.
The report on outlook, risks and opportunities con-
tains forward-looking statements that are based on
the BMW Group's expectations and assessments and
which can be influenced by unforeseeable events. As
a result, actual outcomes can deviate either positively
or negatively from the expectations described below -
for example on account of political and economic
developments. Further information is provided in
the section Risks and Opportunities.
Its continuous forecasting process ensures the
BMW Group's ability to exploit opportunities quickly
and systematically as they arise and react in a similar
way to unexpected risks. The principal risks and
opportunities are described in detail in the section
Risks and Opportunities. The matters discussed
therein are relevant for all of the BMW Group's key
performance indicators and could result in variances
between the outlook and actual outcomes.
82
Automobile markets in decline
as consequence worldwide
PricewaterhouseCoopers GmbH Wirtschaftsprüfungs-
gesellschaft, Frankfurt am Main, Munich branch, has
issued an unqualified audit opinion on the financial
statements of BMW AG, of which the balance sheet
and the income statement are presented here. The
BMW AG financial statements for the financial year
2019 will be submitted to the operator of the electronic
version of the German Federal Gazette and can be
obtained via the Company Register website. These
financial statements are available on the homepage
of the BMW Group under → www.bmwgroup.com/ir.
of BMW AG.
No other events have occurred since the end of the
financial year that could have a major impact on the
results of operations, financial position and net assets
Deferred income increased by €329 million to
€3,497 million and included mainly amounts for
services still to be performed relating to service and
maintenance contracts.
Liquidity within the BMW Group is ensured by means
of a liquidity concept applied uniformly across the
Group. This involves concentrating a significant part
of the Group's liquidity at the level of BMW AG. An
important instrument in this context is the cash pool
based at BMW AG. The liquidity position reported
by BMW AG therefore reflects the global activities of
BMW AG and other Group companies.
Cash and cash equivalents increased by €215 million
to €6,757 million, mainly as a result of net positive
cash inflows from operating activities. Investments
in long-lived assets and the payment of the dividend
for the previous financial year had an offsetting effect.
60
80
Risks and opportunities
BMW AG's performance is essentially dependent on
the same set of risks and opportunities that affect the
BMW Group and which are described in detail in the
Report on Outlook, Risks and Opportunities section
of the Combined Management Report. As a general
rule, BMW AG participates in the risks entered into
by Group companies in proportion to the respective
shareholding percentage. At the same time, the result
in investments has a significant impact on the earn-
ings of BMW AG.
BMW AG is integrated in the Group-wide risk man-
agement system and internal control system of the
BMW Group. Further information is provided in the
section Internal Control System Relevant for Account-
ing and Financial Reporting Processes within the
Combined Management Report.
Outlook
For the financial year 2020, BMW AG forecasts a divi-
dend payout ratio (unappropriated profit of BMW AG
in accordance with HGB in relation to the BMW Group
net profit for the year in accordance with IFRS) within
a range of between 30 and 40% (2019: 32.8%).
Due to its significance in the Group and its close ties
with Group companies, expectations for BMW AG
with respect to its non-financial performance indica-
tors correspond largely to the BMW Group's outlook.
This is described in detail in the Report on Outlook,
Risks and Opportunities section of the Combined
Management Report.
Events after the end of the reporting period
The continuing spread of the coronavirus and the
impact on the business development of BMW AG is
being continually monitored. Based on current devel-
opments, BMW AG expects that the increasing spread
of the coronavirus and the necessary containment
measures will have a negative impact on BMW AG
vehicle deliveries in all key sales markets. Risks
also exist for upstream and downstream processes,
for example, through possible bottlenecks due to
supply shortages.
Current assessments and assumptions for the financial
year 2020, to the extent already known to BMW AG,
have been taken into account and described in the
outlook report. Apart from these assessments, no
further significant negative effects are known or can
be estimated at the present time. However, further
negative effects could arise in the course of the
year.
Liabilities to banks decreased by €34 million, mainly
as a result of the repayment of project-related loans.
15,241
15,079
2,303
4,811
Trade receivables
Receivables from subsidiaries
Other receivables and other assets
Marketable securities
Cash and cash equivalents
5,994
964
16,698
8,570
3,513
3,595
4,109
4,080
947
Inventories
15,787
16,640
Financial and net assets position
BMW AG Balance Sheet at 31 December
→ 60
in € million
2019
2018
ASSETS
Intangible assets
405
252
Property, plant and equipment
12,473
11,976
3,762
3,559
Tangible, intangible and investment assets
6,757
6,542
Current assets
38,035
Provisions
Liabilities to banks
Trade payables
Liabilities to subsidiaries
Other liabilities
Liabilities
Deferred income
Total equity and liabilities
659
658
2,210
2,177
10,564
10,103
1,646
Other provisions
62
Pension provisions
Equity
28,545
Prepaid expenses
58
535
Surplus of pension and similar plan assets over liabilities
1,086
668
Total assets
55,819
45,535
EQUITY AND LIABILITIES
Subscribed capital
Capital reserves
Revenue reserves
Unappropriated profit available for distribution
Registered profit-sharing certificates
Assumptions used in the outlook
On 30 January 2020, the World Health Organisation
(WHO) declared an international health emergency
due to the outbreak of coronavirus. Since 11 March
the WHO has characterised the spread of the corona-
virus as a pandemic.
The high degree of uncertainty surrounding the global
spread and resulting consequences of coronavirus
makes it difficult to provide an accurate forecast of
the BMW Group's business performance for the finan-
cial year 2020. Based on the latest developments, the
BMW Group expects the spread of coronavirus and
the required containment measures to have a negative
impact on delivery volumes in all major markets over
the year 2020 as a whole. This assessment is based on
the assumption that deliveries across all markets will
return to normal after a few weeks. Any potential
longer-term effects on deliveries due to the spread of
coronavirus and the associated volatility on financial
markets cannot be assessed at present and are there-
fore not included in the outlook.
g CO2/km
127
significant decrease
The following outlook relates to a forecast period of one
year and is based on the composition of the BMW Group
during that time. The outlook takes account of all
information available at the time of reporting and
any which could have an effect on the overall perfor-
mance of the Group. The expectations contained in
the outlook are based on the BMW Group's forecasts
for 2020 and reflect its most recent status. The basis
for the preparation of and the principal assumptions
used in the forecasts - which consider the consensual
opinions of leading organisations, such as economic
research institutes and banks - are set out below. The
BMW Group's outlook is drawn up on the basis of
these assumptions.
4.9
%
significant decrease
29.0
units
175,162
%
8.2
slight decrease
between 6 and 8
%
between 2 and 4
significant decrease
2,538,367
units
in line with last
year's level
Deliveries to customers
EBIT margin
Return on capital employed
FINANCIAL SERVICES SEGMENT
Return on equity
1 Based on adjusted figures.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 538,612 units).
3 EU-28.
2019
reported
2019
adjusted
2020
Outlook¹
€ million
7,118
significant decrease
133,778
126,016
29.4
slight decrease
%
15.0
Practicability
Compliance
Committee
Reporting/
Monitoring
Completeness
Identification
Group-wide
risk management
Internal Control System
Analysis and
Measurement
Measures
Controlling
Risk
Management
Steering
Committee
Supervisory
Board
Board of
Management
Group
Audit
Effectiveness
MOTORCYCLES SEGMENT
The risk management system is organised formally as
a decentralised, Company-wide network and is steered
by a centralised risk management function. Every
BMW Group division is represented within the risk
management organisation by Network Representatives.
Risk management system
slight decrease
87
88
88
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
RISKS AND
OPPORTUNITIES
As a worldwide-leading provider of premium cars,
motorcycles and mobility services, as well as related
financial services, the BMW Group is exposed to
numerous uncertainties and change. Making full
use of the opportunities arising out of change is a
fundamental basis of the Group's corporate success.
In order to achieve growth, profitability, efficiency
and continued sustainable activities going forward,
the BMW Group must consciously assume risks.
Management of opportunities and risks is essential
for the Group to react appropriately to changes in
political, economic, technical or legal conditions.
Opportunities and risks which are likely to materialise
are taken into account in the Outlook Report. The
following sections focus on potential future devel-
opments or events, which could result in a positive
(opportunity) or a negative (risk) deviation from the
BMW Group's outlook. The earnings impact of risks
and opportunities is assessed separately without
offsetting. Opportunities and risks are assessed with
respect to a medium-term period of two years.
Risk management in the BMW Group
→ 62
7
As part of the risk management process, all individual
and cumulative risks that represent a threat to the suc-
cess of the business are monitored and managed. Any
risks capable of posing a threat to the going-concern
status of the BMW Group are strictly avoided. Where
no specific reference is made, opportunities and risks
relate to the Automotive segment. The scope of entities
consolidated in the Report on Risks and Opportuni-
ties corresponds to the scope of consolidated entities
included in the BMW Group Financial Statements.
The objective of the risk management system, and the
main function of risk reporting, is to identify, mea-
sure and, where possible, actively manage internal or
external risks that could threaten the attainment of the
Group's corporate targets. According to Group-wide
rules, every employee and manager has a duty to report
risks through the relevant reporting channels. The key
elements of a good risk culture are rooted in the core
values of the BMW Group, its risk management manual
and in the principles of its risk management strategy.
Return on capital employed
%
Fleet emissions³
Currencies of particular importance for the interna-
tional operations of the BMW Group are the Chinese
renminbi, the British pound, the Japanese yen and
the US dollar. All of these major currencies are again
expected to be subject to a high degree of fluctuation
in 2020.
The US dollar could benefit from its function as a
"safe haven" in 2020 due to the spread of coronavirus.
Overall, therefore, the US dollar is more likely to move
sideways against the euro.
In the case of the Chinese renminbi, the close eco-
nomic links between the USA and China suggest that
the currencies of these two countries will develop
relatively synchronously. The renminbi is likely to
depreciate marginally against the euro in 2020.
The value of the British pound is currently being
largely determined by the progress of the Brexit
negotiations. Accordingly, the most likely scenario
is a volatile sideways movement of the pound against
the euro.
The Japanese central bank's highly expansionary
monetary policy is unlikely to change in 2020. The
euro/yen exchange rate is therefore likely to follow a
sideways trend.
The currencies of numerous emerging economies
could come under further downward pressure against
the US dollar and the euro, particularly in countries
such as Russia, Brazil and India.
Currency markets
International automobile markets
International motorcycle markets
Prior to the outbreak of coronavirus, the BMW Group
had predicted that the global motorcycle markets in
the 250 cc plus class would grow slightly in 2020. For
instance, the upward trend seen on major European
markets such as France and Spain was expected to con-
tinue. In Germany and Italy, the markets were forecast
to remain stable. By contrast, the USA was predicted to
see a further slight decline in motorcycle registrations
in 2020, whereas Brazil was expected to see a slight
increase. However, due to the spread of coronavirus,
global motorcycle markets in the 250 cc plus class are
now expected to decline slightly year-on-year.
International interest rate environment
Protectionism and the ongoing trade dispute between
the USA and China are casting a shadow over global
growth prospects for 2020. The new coronavirus,
which is spreading worldwide, poses an additional
risk for the global economy. Various central banks
and governments have already taken action to coun-
teract the economic impact of the virus with a raft of
monetary policy measures.
In view of the developments regarding coronavirus,
the US Federal Reserve lowered its benchmark interest
rates by 0.5 percentage points on 3 March 2020 and by
1 percentage point on 15 March 2020. In connection
with the latest developments, further reductions
appear to be likely over the course of the year.
Further central banks are expected to take measures
to mitigate the negative impact on the global economy
and to ensure liquidity on the markets.
According to the original forecasts, new registrations
worldwide were expected to decrease slightly in 2020
(83.1 million units; -0.5%). However, due to the
worldwide spread of coronavirus, new registrations
are now expected to drop significantly.
→ Outlook
Opportunities
Risks and
In the UK, in addition to the consequences of corona-
virus, uncertainties relating to EU exit negotiations on
a trade agreement are having the effect of impairing
the reliability of forecasts drawn up by businesses.
Irrespective of these matters, the BMW Group is
working on the basis that an agreement between the
EU and UK will be finalised by 31 December 2020.
Furthermore, the BMW Group anticipates that trade
tensions between the USA and China will continue
to be a source of uncertainty, but that the current
tariffs will not see a further increase. The Group also
assumes that trade between the EU and the USA will
not be subject to additional tariffs.
From the beginning of the financial year 2020, the key
performance indicator for the workforce size will be
based solely on the number of core and temporary
employees. This change is in line with the reorgan-
isation of internal management, which focuses on
these employee groups. Employee groups such as
apprentices, students gaining work experience and
doctoral candidates primarily serve to secure the next
generation of employees and promote the training of
young people, and are therefore excluded from an
internal management perspective. For this reason,
they will no longer be included in the key performance
indicator for the workforce size.
Economic outlook
The global economy will be significantly impacted by
the knock-on consequences of coronavirus. Despite
the fact that wide-ranging monetary and fiscal policy
measures have already been initiated in many coun-
tries, global growth is likely to be significantly lower
than in the previous year. Although the provisional
agreement in the trade dispute between the USA and
China as well as the reduced level of concern regarding
a potentially disorderly withdrawal of the UK from the
EU gave rise to some optimism at the beginning of the
year, the positive impact in these two areas is likely to
be far outweighed by the knock-on consequences of
coronavirus. At present, it is not possible to provide an
exact assessment of the situation. Further information
on political and global economic risks is also provided
in the section Risks and Opportunities.
GDP in the eurozone is likely to grow significantly
more sluggishly in 2020 than the predicted rate of 1.0%.
The growth rate in Germany is likely to be even slower.
Similarly, prospects for the economies of other member
states in the eurozone are also on the gloomy side.
France and Spain will grow only marginally at most,
while Italy, the first country in Europe to be affected
by coronavirus, is likely to go in recession.
In the UK, apart from the impact of coronavirus, eco-
nomic performance in 2020 will also depend on the
progress of negotiations with the EU regarding a free
trade agreement. Overall, GDP growth in 2020 is likely
to be significantly below the most recently predicted
level of 1.0%.
In the USA, growth is expected to continue slowing
down in 2020. The spread of coronavirus and the
resulting containment measures are likely to reduce
economic momentum to a level considerably lower than
the most recently predicted 1.7%, despite developments
on the labour and property markets remaining positive.
The US Federal Reserve has already responded to the
spread of coronavirus with interest rate cuts and will
likely adopt further measures to support the economy.
Even without the impact of coronavirus, the ongoing
normalisation of the Chinese economy would have
caused the country's growth rate to continue falling in
2020. However, the extent of the slowdown will now be
much greater and certainly be below the most recently
predicted rate of 5.6%.
Rather than growing slightly, the Japanese economy
is likely to contract due to coronavirus, particularly
in view of the fact that the value added tax hike in
October 2019 is bound to exert downward pressure
on private consumption for some time to come. As an
export-oriented country, Japan is likely to be hit harder
by a decline in world trade than China, for example.
83
83
EBIT margin
Combined
Management
Report
Report on Outlook,
Apart from the consequences of the spread of corona-
virus and other global developments, the progress of
negotiations on a trade agreement between the EU
and the UK are likely to have a considerable impact on
the UK economy. The Bank of England is also expected
to adopt measures to counter the negative economic
impact of coronavirus and to stabilise the economy.
95
84
The economic consequences of the coronavirus and
the trade war with the USA are likely to continue
having an adverse impact on the Chinese economy in
2020. A mixture of reforms as well as monetary and
fiscal policy measures is intended to counteract any
sharp slowdown in economic growth.
Outlook for the BMW Group
Overall assessment by Group management
Within a volatile environment, now overshadowed
by the global spread of coronavirus, business is ex-
pected to develop negatively during the financial year
2020. While numerous new automobile and motor-
cycle models as well as individual mobility-related
services will generate additional momentum, the
various factors described above are likely to have a
major offsetting impact. Research and development
expenses will remain at a high level in connection
with future-oriented projects. In light of the impact
of the global spread of coronavirus, profit before tax
during the period covered by the outlook is likely to
decrease significantly.
For the same reason, Automotive segment deliv-
eries to customers are likely to be well down on
the previous year. At the same time, fleet carbon
dioxide emissions are forecast to drop considerably.
Influenced by the negative factors described above,
the Automotive segment's EBIT margin in 2020 is
expected to lie within a target range of 2 and 4%. The
latest prediction is that the RoCE in this segment is
likely to be significantly lower than one year earlier.
The RoE in the Financial Services segment is expected
to decrease slightly, mainly due to the higher risk
provisioning expense.
The Motorcycles segment is now expected to record a
slight decrease of deliveries to customers, down on the
previous forecast of a solid increase. The EBIT margin
is expected to lie within a target range of 6 and 8%,
while the ROCE is likely to be slightly under the pre-
vious year's level.
_
The targets are to be achieved with a workforce size
which based on the new method of calculation
described above - will be at a similar level to the
previous year (workforce size at the end of 2019
based on the new definition: 126,016 employees;
workforce size based on the previous definition:
133,778 employees).
-
The prevailing high level of uncertainty – particularly
in connection with the further spread of corona-
virus, economic and political developments such as
the negotiations between the EU and the UK on a
trade agreement by 31 December 2020, as well as
international trade and customs policies - may cause
economic developments in many regions to deviate
markedly from expected trends and outcomes. Any
such deviations could have a significant impact on
the business performance of the BMW Group.
Furthermore, the actual business performance of the
BMW Group may also differ from current expectations
as a result of the risks and opportunities described
below in the Report on Risks and Opportunities.
→ 61
GROUP
Profit before tax
AUTOMOTIVE SEGMENT
Deliveries to customers²
85
→ Outlook
Opportunities
BMW Group key performance indicators
Report on Outlook,
Despite the government's economic measures against
the negative effects of the tax increase, the economy
in Japan is likely to be impacted negatively by the
coronavirus. It is expected that the Japanese central
bank will continue its extremely low interest rate poli-
cies, in order to reach the target of 2% price stability.
Risks and
Expected consequences for the BMW Group
Future developments on international automobile
markets also have a direct impact on the BMW Group.
Challenges in the competitive environment will have a
significant effect on sales volumes in some countries.
Due to its global business model, the BMW Group is
well placed at all times to capitalise on any opportu-
nities that present themselves, even at short notice.
Coordination between the Group's sales and produc-
tion networks also enables it to balance out the impact
of unforeseeable developments in the various regions.
Investments in markets important for the future also
form a basis for further growth, while simultaneously
strengthening the global presence of the BMW Group.
In view of the increasingly unpredictable consequences
of economic and political conditions around the
world, actual economic growth in some regions may
deviate from expected trends and outcomes. Areas
affected in this context include trade and customs
policies, security and potential additional international
trade conflicts.
Prior to the outbreak of coronavirus, the BMW Group's
original forecast for the Automotive segment envis-
aged a slight increase in deliveries to customers and
an EBIT margin of between 6 and 8%. Group profit
before tax was expected to increase significantly.
The spread of coronavirus has slowed down the
growth of the BMW Group's deliveries in China. In
light of the sharp increase in corona infections in other
regions of the world, currently particularly in Europe
and North America, the BMW Group now expects
worldwide deliveries to customers to be significantly
down on the previous year.
Due to the lower volume of deliveries in China com-
pared to the original forecast, the necessary contain-
ment measures and a similar trend already emerging
in other regions of the world, including Europe and
North America, earnings of the Automotive segment
are likely to be negatively impacted, particularly in
the first half of the year. The negative effect on the
EBIT margin of the Automotive segment over the full
twelve-month period is currently expected to be in
the region of four percentage points. Based on the
latest forecast, the EBIT margin for the Automotive
segment is therefore expected to be within the range
of 2 and 4%.
Direct effects of coronavirus on the BMW Group
Taking into account the effects described above, Group
profit before tax is expected to be significantly lower
than in 2019.
Furthermore, risks also exist for upstream processes,
including possible bottlenecks due to supply shortages.
The BMW Group continues to observe developments
closely and is ready to take all necessary measures.
Combined
Management
Report
98
In the Financial Services segment, the number of new
contracts is expected to decrease and the risk provi-
sioning expense to increase. As a result, the return on
equity is forecast to drop slightly year-on-year.
86
-26.6
8.9
9.2
7.2
2.7
-44.9
77.7
5,222
74.3
4.9
7,118
2018*
10,675
9,665
Change in %
2020
2019
2017
2016
10
49.8
K =
9,627
29.0
21.2
-56.2
RoCE in %
REPORT 2020
* The 2018 figures were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 (see Annual Report 2019, Note 6 to the Group Financial Statements).
-25.3
11.2
15.0
14.8
18.1
RoE in %
FINANCIAL SERVICES SEGMENT
12.7
-49.0
29.4
28.4
34.0
33.0
-45.1
4.5
8.2
8.1
9.1
9.0
15.0
EBIT margin in %
BMW GROUP
RoCE in %
359
363
364
TCFD-Index
NFE-Index
BMW Group Fuel Consumption
and CO2 Emissions Information
365
BMW Group
Ten-year Comparison
367
Financial Calendar
368
Contacts
BMW Group
Report 2020
About This Report
K = T
|◄
INFORMATION
Reporting Concept
357
Further GRI Information
Fundamental Aspects of Corporate
Governance (Part of the Combined
Management Report)
291
Remuneration Report (Part of the
Combined Management Report)
326
Glossary and Explanation
of Key Figures
4
330
Company's Legal Representatives
331
Independent Auditor's Report
340
Independent Practitioner's Report
343
OTHER
344
Responsibility Statement by the
282
ABOUT THIS REPORT
This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.
Similar to annual reports in previous years, the
new BMW Group Report combines the management
reports of Bayerische Motoren Werke Aktiengesellschaft
(BMW AG) and the BMW Group in a Combined Manage-
ment Report.
In accordance with § 289 b and § 315 b of the Ger-
man Commercial Code (HGB), BMW AG is required to
issue a non-financial statement (NFS) at both Company
and Group level. This statement is published jointly for
BMW AG and the BMW Group as a non-financial report
within the Combined Management Report. In order to
identify this content more easily, an NFS index is includ-
ed as an appendix that summarises the references for the
reader. As in previous years, the NFS has been reviewed.
Contents that have been subjected to a limited assurance
standard are marked with graphic symbols .... All
other parts of the Management Report and the Group
Financial Statements have been audited to a reasonable
assurance standard, unchanged from the previous year.
Further information is provided in the ✓ Independent Auditor's
Report and the ✓ Independent Practitioner's Report.
This report also contains information on the attain-
ment of targets relating to the now completed sustaina-
bility strategy for the period from 2012 to 2020.
The BMW Group has published sustainable value
reports since 2001, initially every two years and annually
since 2012. Prior to this period, the Group had a long
tradition of publishing environmental reports, in which
it reported transparently on the impact of its operations
on the environment, including mitigating measures.
Since 2005, the BMW Group has applied Global
Reporting Initiative (GRI) standards to report on sustain-
ability matters. Since 2008, it has voluntarily complied
with the highest GRI application level ("comprehensive
option"). Additional GRI-relevant information is provid-
ed in the chapter ✓ Further GRI Information and in the GRI
Content Index. This information was also subjected to a
limited assurance review.
In 2015, the General Assembly of the United Nations
(UN) announced 17 Sustainable Development Goals
(SDGs). The SDGs are at the core of the 2030 Agenda, a
global action plan aiming to ensure that economic pro-
gress is environmentally friendly and socially equitable.
The BMW Group has identified the SDGs to which it
can make a direct and thus the greatest possible con-
tribution with its own sustainability goals. Reference is
made to these SDGs at the beginning of the Combined
Management Report.
BMW Group
Report 2020
About This Report
The report is structured to ensure that essential con-
tent is easily accessible, even at a glance. With this point
in mind, the key information is presented in summarised
form at the beginning of each section of the Management
Report and subsequently discussed in detail. In addition,
information provided in graphical form has been high-
lighted to enable key facts to be identified more easily.
Connection to Figures in the Group Financial
Statements
For each topic, an assessment was carried out to identify figures
reported in the financial statements that enable a better under-
standing of the NFS, and which therefore require to be explained.
Where necessary, these figures have been disclosed and ex-
plained in the relevant chapters.
CURRENT AND FUTURE REPORTING
K = 6
In light of the announcement that the major stand-
ards institutions (GRI, SASB, CDSB, CDP/TCFD and
IIRC) intend to collaborate, alongside regulatory devel-
opments relating to non-financial reporting (including
the revision of the Non-Financial Reporting Directive),
the reporting environment is likely to continue gaining
momentum. At the same time, the BMW Group sees the
development of business strategy as an ongoing task, in
order to remain flexible within an increasingly dynamic
environment. Both aspects will play a key role in future
reporting. For this reason, the BMW Group plans to
review its non-financial performance indicators in 2021.
The figures for fuel consumption, CO2 emissions and power con-
sumption are calculated based on the measurement methods
stipulated in the current version of Regulation (EU) 715/2007.
This information is based on a vehicle with basic equipment in
Germany; ranges take into account differences in wheel and
tyre size selected as well as optional equipment and can change
based on configuration. Fuel Consumption and CO2 Emissions
Information are available in chapter Other Information.
The figures have been calculated based on the new WLTP test cy-
cle and adapted to NEDC for comparison purposes. In these vehi-
cles, different figures than those published here may apply for the
assessment of taxes and other vehicle-related duties which are
(also) based on CO2 emissions.
For further details of the official fuel consumption figures and
official specific CO2 emissions of new cars, please refer to the
"Manual on fuel consumption, CO2 emissions and power con-
sumption of new cars", available at www.dat.de/co2/.
On 9 March 2021, the Financial Statements of
BMW AG were authorised for issue by the Board of Man-
agement and the Group Financial Statements approved
for publication.
CONTENT AND STRUCTURE
This approach not only underlines the BMW Group's
determination to spearhead the transformation towards
sustainability, but also its desire to shape the
process and
report on it in a transparent manner. This report com-
bines the Sustainability Report and the Annual Report
in a single Integrated Report, based on the framework
of the International Integrated Reporting Council (IIRC).
It replaces the two previously separate publications and
will be published each year on the date of the Annual
Conference. The BMW Group is keen to demonstrate
to shareholders, customers, employees and, last but not
least, the general public how economic, ecological and
social issues can complement one another. In fact, they
are often mutually dependent and the pursuit of sus-
tainability is the driving force of the Group. The report
also includes descriptions of corporate strategy, future
development and internal management processes and
how the BMW Group, as part of society, creates value in
economic, ecological and social terms. Join the conver-
sation with the BMW Group Dialogue.
The logical consequence, starting with this report, is
to inform stakeholders about the BMW Group's business
performance in a single integrated report. The objective
is to provide a clear insight into the BMW Group as a
whole with the aim of making its activities transparent,
accountable and measurable. At the same time, the in-
tention is to make it as easy as possible for readers to
familiarise themselves with the contents of the report.
For this reason, key information is deliberately repeated
at various points in the document, providing a general
overview for readers focusing on specific chapters and
sections who do not intend to read the entire report.
SYMBOLS AND OTHER INFORMATION
OBJECTIVE
This report represents a new approach to reporting
for the BMW Group. For the reporting year 2020, the
BMW Group has combined its Annual Report and its
Sustainability Report (formerly the Sustainable Value
Report) in a single document. It is therefore important
for us to begin by briefly explaining the structure and
rationale behind the new approach so that you, as a
stakeholder in the company, can make the best possible
use of the report. Above all, this means being able to
find and categorise the information you are looking
for both quickly and reliably. Integrated reporting is a
dynamic process for the BMW Group that works in both
directions. For this reason, we are not only seeking a
dialogue based on assertions underpinned by content,
we are equally convinced that it enables us to report in
the most effective way.
...The contents of these sections were subjected to
a separate limited assurance engagement by the
independent auditor. All other audited sections
of the report underwent a reasonable assurance
audit engagement by the independent auditor.
The following symbols help the reader to navigate
through the report:
K<
☑
Return to previous page
(PART OF THE COM-
BINED MANAGEMENT
REPORT)
Go to table of contents
Cross reference
As a premium manufacturer, the BMW Group aspires
to lead the way in terms of sustainability. It is therefore
taking responsibility and placing this topic at the core
of its corporate strategy moving forward. This change
has involved taking a major step, as the BMW Group is
including sustainability as a prime factor in its corporate
decision-making processes. This integrated approach
obviates the need to pursue a separate sustainability
strategy. Sustainability principles - such as the prudent
use of resources - are increasingly playing a key role in
shaping the BMW Group's corporate strategy and serving
as key parameters for an integrated and multidimension-
al approach.
As it embraces this process, the BMW Group is build-
ing on a solid foundation, given that it has repeatedly
set itself ambitious sustainability targets and assumed a
pioneering role in this area over decades. For example,
the BMW Group was the first company in the automotive
sector to appoint an environmental protection officer
back in 1973. Under the umbrella of Efficient Dynamics,
the BMW Group proceeded to innovate in the field of
electrified drivetrains, while at the same time developing
highly efficient combustion engines, and has systematical-
ly continued to take this dual approach ever since. With
a trial fleet of around 600 fully electric MINI E vehicles
made available to customers, the BMW Group demon-
strated as long ago as 2009 that electric mobility can be a
source of great driving pleasure as well as being suitable
for everyday use. The all-electric BMW i3 followed in 2013,
effectively setting the benchmark for sustainable mobility
going forward. In 2020, the Group also achieved its car-
bon emissions targets for the new vehicle fleet, thanks
to the growing size of its fleet of electrified vehicles.
BMW Group
Report 2020
About This Report
|
K = 5
The BMW Group has long considered it both its obliga-
tion and its mission to take a pioneering role within the
automotive industry.
Continued on next page
GOVERNANCE
CORPORATE
3
Products and Services
87
Production, Purchasing and
Supplier Network
About This Report
105
Employees and Society
(Part of the Combined
122
Report on Economic Position
Management Report)
159
Report on Outlook, Risks and
Opportunities
7
TO OUR
179
69
General Information and Group Profile
36
REPORT
MOTORCYCLES SEGMENT
OUR RESPONSIBILITY.
OUR FUTURE.
Report on the BMW Group's economic
performance and its ecological and social
contributions.
LINK TO THE ONLINE REPORT
BMW
GROUP
B
MW
MINI
STAKEHOLDERS
ROLLS-ROYCE
BMW Group
Contents
Report 2020
CONTENTS
35
55
COMBINED
MANAGEMENT
MOTOR CARS LTD
8
BMW Group in Figures
13
Income Statement for Group
186
and Segments
187
Statement of Comprehensive
Income for Group
188
Balance Sheet for Group
STATEMENTS
and Segments
Cash Flow Statement for Group
192
194
and Segments
Statement of Changes in Equity
for Group
Notes to the Group Financial
Statements
K<<
190
BMW Group
FINANCIAL
Contents
Report of the Supervisory Board
23
Statement of the Chairman
29
33
of the Board of Management
Dialogue with Stakeholders
BMW Stock and Capital Markets
GROUP
in 2020
Internal Control System Relevant for
Accounting and Financial Reporting
Processes
Disclosures Relevant for Takeovers
and Explanatory Comments
K<<
| N
BMW Group
Report 2020
4
185
180
Report 2020
281
TO OUR
2020
Change in %
352
349
373
370
279
-24.6
1,986,167
359,758
4,037
2,349,962
2,089,854
371,729
3,438
2,465,021
2,117,854
364,101
4,194
2,486,149
2,184,939
347,465
5,100
2,537,504
2,028,841
292,582
-7.1
-15.8
3,756
2,325,179
-8.4
2019
2018
2017
2016
Spending on employee training and development (in million €)1
AUTOMOTIVE SEGMENT
Deliveries by brand²
BMW3
MINI
Rolls-Royce
Total³
Production by brand
2,002,997
352,580
4,179
2,359,756
BMW4
Rolls-Royce
Total4
Energy consumption per vehicle produced (in MWh)5
MOTORCYCLES SEGMENT
Production volume
BMW
FINANCIAL SERVICES SEGMENT
K = 9
MINI
2,123,947
378,486
3,308
2,505,741
2,168,496
368,685
4,353
2,541,534
2,205,841
352,729
5,455
2,564,025
1,828,604
1,908,640
2,003,782
1,845,271
-7.9
1 Training for BMW Group employees and temporary staff at consolidated companies worldwide. Data collated on basis on direct inputs of participants and, to a smaller extent, by extrapolation. Data also includes e-learning formats.
2 Retail vehicle delivery data presented for 2020 is not directly comparable to such data presented for previous years. For further information on retail vehicle delivery data, please see ✓ Comparison of Forecast with Actual Outcomes.
3 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 311,473 units, 2017: 385,705 units, 2018: 455,581 units, 2019: 538,612 units, 2020: 602,247 units).
4 Production figures including the Joint Venture BMW Brilliance Automotive Ltd., Shenyang (2016: 305,726 units, 2017: 396,749 units, 2018: 491,872 units, 2019: 536,509 units, 2020: 602,935 units).
5 Efficiency ratio calculated on basis of electricity, heat, natural gas and heating oil consumption of vehicle production (excluding motorcycles), adjusted for CHP losses, divided by total number of vehicles produced, excluding contract manufacturing by Magna Steyr and Nedcar,
plus energy consumption of engine plants and electric motors as well as battery production divided by engine production in Hams Hall, Steyr, Munich and BMW Brilliance Automotive Ltd. in Shenyang.
1,811,157
BMW Group
Report 2020
BMW Group in Figures
KEY FINANCIAL PERFORMANCE INDICATORS
GROUP
Profit/loss before tax in € million
AUTOMOTIVE SEGMENT
To Our Stakeholders
EBIT margin in %
To Our Stakeholders
GROUP
New contracts with retail customer
168,104
1,980,740
-10.2
271,121
-23.1
3,776
-30.8
2,255,637
-12.0
-10.2
2.21
2.12
2.04
2.12
3.9
145,555
185,682
162,687
187,116
2.17
FURTHER NON-FINANCIAL PERFORMANCE FIGURES
-26.4
2016
K = T
8
2017
2018
2019
2020
Change in %
Workforce at year-end¹
|
Share of women in management positions in the BMW Group²
129,932
16.0
134,682
17.2
120,726
-4.2
17.8
3.5
AUTOMOTIVE SEGMENT
Deliveries 3,4
124,729
15.3
Share of electrified vehicles in deliveries
GROUP
BMW GROUP
IN FIGURES
STAKEHOLDERS
8
BMW Group in Figures
BMW Group in Figures
13
Report of the Supervisory Board
23
Statement of the Chairman of the
KEY NON-FINANCIAL PERFORMANCE INDICATORS
Board of Management
Dialogue with Stakeholders
33
BMW Stock and Capital Markets in 2020
K = 7
BMW Group
Report 2020
To Our Stakeholders
BMW Group in Figures
29
CO2 emissions EU New Vehicle Fleet (in g CO2/km)5
126,016
17.2
2,349,962
0.30
0.23
-23.3
MOTORCYCLES SEGMENT
Deliveries
145,032
CO2 emissions per vehicle produced (in tons)6
165,566
175,162
169,272
-3.4
1 Since the reporting year 2020, a new definition for workforce size has been applied (see Glossary). To enable better comparability, the value for 2019 was adjusted accordingly (2019 before adjustment: 133,778 employees).
For the timeframe including and prior to 2018, the share of the employees that are no longer reflected in reporting is about 7.5-8%.
2 The new definition of the term "employee" (see footnote 1) also has an impact on the proportion of women in management positions. For comparative purposes, the 2019 figure has been adjusted accordingly (2019 before adjustment: 17.5%).
3 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 311,473 units, 2017: 385,705 units, 2018: 455,581 units, 2019: 538,612 units, 2020: 602,247 units).
4 Retail vehicle delivery data presented for 2020 is not directly comparable to such data presented for previous years. For further information on retail vehicle delivery data, please see Comparison of Forecast with Actual Outcomes.
5 EU including Norway and Iceland; since 2018 value according to WLTP (Worldwide Harmonised Light Vehicles Test Procedure), retroactively calulated as NEDC (New European Driving Cycle).
6 Efficiency indicator calculated on the basis of Scope 1 and Scope 2 emissions (i.e. a market-based method according to GHG Protocol Scope 2 Guidance that excludes climate-impacting gases other than carbon dioxide) from vehicle production
(excluding motorcycles), adjusted for CHP losses, divided by the total number of vehicles produced, including the joint venture BMW Brilliance Automotive Ltd., Shenyang, but excluding contract manufacturing by Magna Steyr and Nedcar.
7 Figure (internal calculation) takes into account flexibilities as defined in regulatory requirements: phase-in with 5 g/km, supercredits BEV/PHEV with 7.5 g/km and eco-innovations with 2.4 g/km.
BMW Group
To Our Stakeholders
Report 2020
0.40
0.41
164,153
-22.0
2,465,021
0.54
2,537,504
2,325,179
-8.4
2.6
4.2
5.7
2,486,149
8.3
5.8
127
128
997
124
43.1
128
United Kingdom
* See Fuel Consumption and CO2 Emissions Information.
Austria
Rolls-Royce Manufacturing Plant Goodwood
Germany
United Kingdom
Wackersdorf
Swindon
USA
Regensburg
South Africa
Germany
Steyr
Spartanburg
San Luis Potosí
Rosslyn
BMW 1 Series, BMW 2 Series, BMW 4 Series
BMW X1, BMW X2, BMW M
BMW X3
Mexico
BMW 3 Series
The pandemic-related interruption of production at
most BMW Group plants had a significant impact on
energy consumption per vehicle. When the produc-
tion facilities were restarted, the same base load³ and
simultaneously lower production volumes resulted in
an overall increase in energy consumption per unit.
Although the BMW Group's energy consumption fell
to 5,714,610 MWh (2019: 5,974,625 MWh) in absolute
terms during the pandemic ✓ Energy Consumption in Detail,
energy efficiency was negatively impacted by lower unit
volumes and not least also by hygiene measures such
as the requirement to increase the frequency of venti-
lation. The BMW Group's specific energy consumption
for vehicle production in 2020 therefore rose by 3.9%
to 2.12 MWh per vehicle produced compared to 2019.
GRI 302-1, 302-3, 302-4
High-voltage batteries
The BMW Group's four automotive partner plants in
Jakarta (Indonesia), Cairo (Egypt), Kaliningrad (Russia)
and Kulim (Malaysia) primarily serve their respective
regional markets and produce BMW and MINI brand
models.
China
MINI, MINI Clubman, MINI Cooper SE*
BMW 2 Series, BMW 3 Series, BMW 5 Series, BMW 7 Series
BMW X1, BMW X3, BMW X5, BMW X7
Motorcycles
China
China
Country
* See Fuel Consumption and CO2 Emissions Information.
Tiexi (Shenyang)
BMW X3, BMW X4, BMW X5, BMW X6, BMW X7, BMW M,
Tiexi (Shenyang)
BMW BRILLIANCE AUTOMOTIVE HOLDINGS LTD.
JOINT VENTURE
Locations
Production, Purchasing and Supplier Network
Combined Management Report
BMW Group
Report 2020
High-performance engines for M models
Pressed parts and bodywork components
Distribution centre for parts and components
Cockpit assembly
Processing of carbon fibre components
Rolls-Royce Phantom, Ghost, Wraith, Dawn, Cullinan*
Petrol and diesel engines
Core engine parts
Dadong (Shenyang)
BMW Group
Report 2020
year on year.
Production, Purchasing and Supplier Network
GRI 305-4, 305-5
1 Efficiency indicator calculated from Scope 1 and Scope 2 CO2 emissions (market-based method according
to GHG Protocol Scope 2 Guidance. Other climate-impacting gases than CO2 not included) from vehicle
production, without motorcycles, minus CHP losses divided by the total number of vehicles produced, incl.
BMW Brilliance Automotive Ltd. joint venture, Shenyang/CN, not including the vehicles from the Magna
Steyr and Nedcar contract production plants.
2 The figures for 2016 to 2018 were examined by the external auditor on the basis of a limited assurance
engagement.
BMW Group
Report 2020
Combined Management Report
Production, Purchasing and Supplier Network
K = 96
The absolute volume of carbon emissions fell by
13% to around 66 million tonnes during the year under
report. The main drivers were the reduction in fleet carbon
emissions worldwide and the lower production volume due
to the coronavirus pandemic. ✓ GRI 302-2, 305-1, 305-2, 305-3,
2020
305-4, 305-5
(CONDENSED VERSION) 1
in t CO2/CO2e
2020
2019
MINIMISING RESOURCE CONSUMPTION AND OTHER
EMISSONS
The BMW Group wants to lead the way by keeping
resource consumption in its production processes to an
absolute minimum. Apart from carbon emissions, further
decisive factors are energy and water consumption, the
amount of waste sent for disposal and the use of solvents.
In recent years, the BMW Group has made a great deal
of progress in terms of resource consumption. Between
2006 and 2020, the BMW Group reduced its average re-
source consumption and emissions generated per vehicle
by 56.7%, an improvement of 6.5%
The BMW Group also awards contracts to external
partners for the production of specific types of vehicle
as well as motorcycles. During the period under report,
Magna Steyr Fahrzeugtechnik produced the BMW 5 Se-
ries Sedan and the BMW Z4 in Graz (Austria). VDL
Nedcar manufactured the MINI Convertible and MINI
Countryman models as well as the BMW X1 at its produc-
tion plant in Born (the Netherlands). In addition, BMW
motorcycles are produced at the TVS Motor Company in
Hosur (India) as well as at the Loncin Motor Company
in Chongqing (China).
F
LL BMW GROUP CO2 FOOTPRINT
Combined Management Report
2018 2019
2016
RESOURCE CONSUMPTION
AND RESOURCE EFFICIENCY
KK = 95
CARBON FOOTPRINT IN PRODUCTION REDUCED AGAIN
The reduction of carbon emissions and the respon-
sible use of resources are important cornerstones of the
BMW Group's strategy. Its own plants and locations
have a direct influence on both carbon emissions levels
and resource consumption. The BMW Group has been
committed to resource-efficient production at its plants
for many years. This includes checking and monitoring
the consumption of resources across the BMW Group's
production network. The principle of continuous im-
provement applies throughout the BMW Group. It in-
vests in efficient technologies and also continually seeks
to optimise its existing processes and procedures. This
principle has been highly successful, as the Group clearly
surpassed its target of reducing resource consumption
per vehicle produced by an average of 45 % by 2020 com-
pared to 2006, achieving an overall reduction of 56.7%.
Apart from continuously reducing energy consumption
in general, the BMW Group is now focusing on convert-
ing its electricity supply to renewable energy sources.
Any remaining production-related emissions that cannot
yet be avoided will be offset from 2021 onwards.
L-78%
CO2 emissions per vehicle
since 2006
NEW PRODUCTION TARGETS UP TO 2030
The biggest lever for reducing the BMW Group's
Scope 1 and Scope 2 emissions is at its production
locations, which account for around 90% of these emis-
sions. The BMW Group has had considerable success
in this area and repeatedly set new standards in terms
of sustainable production methods. Between 2006 and
2020, carbon emissions per vehicle produced fell by
around 78% by continually improving energy efficiency,
generating renewable electricity in-house and entering
into direct supply contracts for green power (including
guarantees of origin). Nevertheless, the BMW Group
has already set itself the next target: compared to 2019,
these emissions levels are to be reduced by a further
80%
per vehicle by 2030. As from 2021, the Group will
make the remaining carbon emissions from Scope 1 and
Scope 2 completely carbon-neutral by using voluntary
offset certificates.
2017
Carbon emissions per vehicle produced fell by
around 23% to 0.23 t compared with the previous year.
The reduction is a result of completely switching the
BMW Group's production network to green electricity
generated from renewable sources. The BMW Group also
managed to reduce the absolute level of carbon emissions
generated by the production network to 486,630 t (2019:
697,025 t). GRI 305-4
in t
1.0
0.5
0.54
0.41
0.40
0.30
0.23
CO2 EMISSIONS PER VEHICLE PRODUCED 1,2
Products
33,816
BMW X3
8,208
8,400
-30.6%
8,976
6,228
8.7%
23,700
25,752
2.3%
-26.9%
50,760
-35.0%
221,077
143,758
-20.8%
222,340
175,984
-12.7%
69,463
3,776
5,455
-30.8%
TOTAL EMISSIONS2
2,255,637
-22.4%
26,256
-31.6%
52,231
35,747
-27.8%
174,097
125,666
1.9%
286,268
291,798
24.3%
250,241
311,137
119.6%
25,538
56,081
230,284
BMW 5 Series
200,968
255,804
Araquari
Chennai
Rayong
Rosslyn
Munich
Oxford
Spartanburg
Dingolfing
Regensburg
Leipzig
in units
1 Includes vehicles produced by the BMW Brilliance Automotive Ltd.,
The coronavirus pandemic caused demand on in-
ternational automotive markets to fall, in some cases
substantially, especially in the first six months of the
year. Production volumes were adjusted accordingly and,
at 2,255,6371 BMW, MINI and Rolls-Royce brand auto-
mobiles, were below the level recorded one year earlier
(2019: 2,564,025¹ units; -12.0%). The figure comprised
1,980,740¹ BMW (2019: 2,205,841¹ units; -10.2%), 271,121
MINI (2019: 352,729 units; - 23.1%) and 3,776 Rolls-Royce
brand vehicles (2019: 5,455 units; - 30.8%).
HIGH PRODUCTION VOLUME DESPITE PANDEMIC
Production, Purchasing and Supplier Network
Combined Management Report
BMW Group
Report 2020
K = 93
BMW X1, BMW X2
Petrol engines, high-voltage batteries, battery components,
production of core engine parts
BMW 1 Series, BMW 2 Series, BMW 3 Series
BMW iX3*
VEHICLE PRODUCTION OF THE BMW GROUP BY PLANT
Shenyang joint venture (2020: 602,935 units; 2019: 536,509 units).
2 Joint Venture BMW Brilliance Automotive Ltd., Shenyang.
3 Contract production.
199,991
-18.6%
284,907
231,970
-12.2%
411,620
361,365
Change in %
2019
2020
K = 94
Total
Partner plants
Graz (Magna Steyr)³
Born (VDL Nedcar)³
Dadong (BBA)²
Tiexi (BBA)²
San Luis Potosí
Goodwood
-21.8%
65,828,005
K = 91
Scope 2
The Purchasing and Supplier Network has been op-
erating on a global basis for many years and adheres to
the principle of procuring parts and components locally.
The BMW Group has efficient teams on the ground in all
of its key purchasing markets. Direct contact with these
local markets has proved particularly effective during the
coronavirus pandemic. Despite the high level of pressure
on the supply chain, the BMW Group again managed to
ensure a seamless supply of parts to its globally located
production plants throughout the 2020 reporting year.
The supply chain has thus demonstrated its stability and
flexibility, despite the exceptional conditions witnessed
in the 2020 pandemic year. Its many years of sustainable
activity in the purchasing and supplier network have also
helped to build this resilience.
Overall, the Purchasing and Supplier Network is
responsible for the global procurement and quality as-
surance of production materials, raw materials, capital
goods and services as well as the in-house manufacturing
of vehicle components. External suppliers are rigorously
selected on the basis of competitiveness in terms of op-
erational excellence, quality, innovation, flexibility, cost
and sustainability.
LL REGIONAL DISTRIBUTION OF BMW GROUP
PURCHASE VOLUMES*
in € billion
Asia/Australia 7.2%
Rest of Western
Europe 14.3%
North America 18.1%
3.5% Other
The Purchasing and Supplier Network therefore
makes a significant contribution to the Group's focus
on the strategic markets of tomorrow, such as e-mobility
and connectivity, and takes steps to ensure correspond-
ing production volumes in the supply chain. With the
growing demand for electrified vehicles, the need for the
respective components and parts in production is also in-
creasing. For battery cells in particular, the BMW Group
is taking a variety of measures to accommodate this
growth. For example, it will purchase the battery cells
for its entire fifth generation from four different sup-
pliers, thus making itself less dependent on individual
manufacturers. Flexibility in terms of volume is both a
premise and a decisive criterion for selecting battery cell
suppliers.
40.0% Germany
16.9% Eastern Europe
* Direct and indirect purchasing; excluding Joint Venture BMW Brilliance Automotive Ltd., Shenyang.
GRI 102-9
60%
Thailand
Rayong
United Kingdom
Oxford
BMW 3 Series, BMW 4 Series, BMW M
Petrol and diesel engines, high-performance engines for M models
Core engine parts
Total
€55.5 billion
Motorcycles
The BMW Group has laid the foundations for a stable
and sustainable supply chain by organising its purchasing
processes, managing international supply relationships
with its partners and producing its own components.
K = 100
CLEAR PROCESSES, ROLES AND RESPONSIBILITIES
Independent processes have been established
throughout the company for planning and implementing
energy-related measures, which assign clear roles and
responsibilities to the central strategy departments, the
regional controlling offices and the plants at local level.
The BMW Group also maintains a close dialogue with its
energy suppliers in local markets, monitors regulatory
developments and calls in external support as needed
in order to respond to any changes in the percentage of
renewable electricity supplied and the size of its carbon
footprint.
100%
Green electricity from
renewable sources
RENEWABLE ENERGY GENERATED IN-HOUSE
50
The BMW Group is reducing the size of its carbon
footprint by generating its own electricity from renewable
sources. It is utilising suitable technologies and develop-
ing solutions, depending on the location and the on-site
conditions. The various options range from solar energy,
for example in Mexico, to biogas in South Africa and
wind power in Leipzig. As the BMW Group's in-house
production cannot fully cover its energy requirements, it
2016 2017 2018
PURCHASING AND
SUPPLIER NETWORK
2019
1 Electricity from in-house renewable generation plants, direct supply contracts for green electricity and
certified proofs of origin.
2 See Fuel Consumption and CO2 Emissions Information.
3 Calculated based on volumes of green electricity purchased (including via certificates of origin). Relates to
all BMW Group production locations including the BMW Brilliance Automotive Ltd., Shenyang, joint venture
as well as motorcycle production and non-production areas.
4 The figures for 2016 to 2018 were examined by the external auditor on the basis of a limited assurance
engagement.
BMW Group
Report 2020
Combined Management Report
Production, Purchasing and Supplier Network
2020
Germany
Germany
Brazil
Germany
Munich
Manaus
Production, Purchasing and Supplier Network
Combined Management Report
BMW Group
Report 2020
The Group's Dingolfing plant has assumed a lead-
ing role as a competence centre for e-drive systems in
the production of electric drivetrain components. It
produces battery modules, high-voltage batteries and
fifth-generation electric motors for the BMW Group's
electrified vehicles. E-motors are also manufactured
at the Landshut plant. Production facilities for battery
components and high-voltage batteries are also being
established at the Group's Leipzig and Regensburg sites.
Currently, high-voltage batteries are manufactured at
three BMW Group plants, i.e. Dingolfing (Germany),
Spartanburg (USA) and Shenyang (China). In Thailand,
the BMW Group collaborates closely with a partner
that manufactures high-voltage batteries for electrified
vehicles that are produced locally. By 2024, the produc-
tion of internal combustion engines in Europe will be
concentrated at BMW Group locations in Steyr (Austria)
and Hams Hall (UK).
Electrification is also becoming increasingly impor-
tant in terms of drivetrain production. In the year under
report, the BMW Group announced the construction of
a pilot plant for the near-series production of battery cell
prototypes. The aim is to further optimise the produc-
tion of battery cells in terms of quality, performance and
costs. The Battery Cell Competence Centre in Munich
already covers the entire value chain in terms of battery
cell technology - from research and development to the
structure and design of the battery cell as well as its
manufacturability.
The BMW Group continues to accelerate towards
electric mobility and is bolstering its international
production network for the increased manufacturing of
electrified vehicles. By the end of 2022, every production
plant in Germany should have the capacity to produce at
least one fully electric vehicle model. The BMW Group's
production system is capable of manufacturing both con-
ventional internal combustion and electrically powered
vehicles on a single line, enabling it to respond flexibly
to changing customer requirements for various drivetrain
systems. In 2020, the Group simultaneously manufac-
tured electrified models at 13 locations in its global pro-
duction network. By the middle of the current decade
it will be deploying a new cluster architecture geared to
fully electric drivetrains. Initially, the technology will be
launched at the future Debrecen plant in Hungary and
then transferred to the global production network in a
step-by-step process.
SYSTEMATIC TRANSFORMATION TOWARDS ELECTRIC
MOBILITY
every production plant in Germany
will be manufacturing at least one
fully electric model
PRODUCTION SITES IN KEY MARKETS
2022
The BMW Group's production system is efficient and
flexible. It provides customers with a large number of
customisation options when choosing their own vehicle.
Moreover, during the reporting period the BMW Group's
global production system once again demonstrated its
ability to respond to highly volatile market developments,
even under the demanding conditions of the 2020 pan-
demic year.
PRODUCTION NETWORK
2,564,025
Production, Purchasing and Supplier Network
Combined Management Report
Report 2020
BMW Group
of value added
attributable to suppliers
The production network leverages innovative technol-
ogies from the fields of digitalisation and Industry 4.0,
including applications from the worlds of virtual reality,
artificial intelligence, smart logistics and 3D printing.
Locations
Country
The BMW Group's production network comprises
31 locations in 15 countries. The Group aims to strike a
balance between production and deliveries in the various
regions of the world. 20 of the 31 sites are BMW Group
plants. Three sites belong to the BMW Brilliance Au-
tomotive joint venture in Shenyang (China), which is
currently being further enlarged. Eight production sites
are operated by partners or contract manufacturers. The
same standards of quality, safety and sustainability ap-
ply at all locations within the BMW Group's production
network worldwide.
Toolmaking, vehicle components, aluminium tanks for BMW Motorrad
Petrol engines, core engine parts
Vehicle and engine components, e-motors and special-purpose motors
BMW 1 Series, BMW 2 Series, BMW i, BMW M
e-motors, high-voltage batteries, battery components
Rolls-Royce bodywork, pressed parts
Chassis and drivetrain components,
BMW 3 Series, BMW X1, BMW X3, BMW X4, BMW X5
BMW motorcycles, car brake discs
BMW 2 Series, BMW 3 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series
BMW X1, BMW X3, BMW X4, BMW X5, BMW X7, MINI Countryman
BMW 3 Series, BMW 4 Series, BMW 5 Series, BMW 6 Series,
BMW 7 Series, BMW 8 Series, BMW M
Products
K = 92
Germany
United Kingdom
Germany
India
Germany
Brazil
Leipzig
Hams Hall
Landshut
Eisenach
Dingolfing
Chennai
Berlin
Araquari
BMW GROUP PLANTS
63
Scope 1
79
87
GRI 302-3, 305-4
2 The emissions listed account for approximately 90% of the BMW Group's total Scope 1 to Scope 3 emissions.
Scope 1 and Scope 2 emissions exclude climate-impacting gases other than carbon dioxide.
3 The base load is the amount of power permanently required (e.g. standby consumption), regardless of how
many vehicles are produced. The base load includes energy required for emergency and basic lighting, min-
imum ventilation or heating and air conditioning in standby mode.
BMW Group
Combined Management Report
Report 2020
Production, Purchasing and Supplier Network
K = 97
-67.7%
ENERGY CONSUMPTION PER VEHICLE PRODUCED 1,2
3.0
GRI 302-3, 302-4
2.21
2.17
2.12
2.04
2.12
2016 2017 2018 2019 2020
in MWh
At 2.25 m³ per vehicle produced, specific water
consumption dropped by 3% compared to the previous
year. Water Consumption per Vehicle Produced
Solvent emissions
-82.4%
Scope 3
642,885
84,257
65,100,863
75,987,119
642,259
302,574
75,042,286
LL-56.7 %
Resource consumption and emissions
from vehicle production since 2006
LL IMPROVEMENT IN RESOURCE CONSUMPTION AND
EMISSIONS FROM VEHICLE PRODUCTION SINCE 2006
per vehicle produced
Average of the values
1 The detailed version of the BMW Group carbon footprint can be found in the section on BMW Group CO2
Footprint.
Energy consumption
-38.0%
CO2 emissions
-78.1%
Water consumption
-31.0%
Process wastewater
-42.7%
Waste for disposal
-56.7%
The BMW Group continuously tries to further reduce
energy and water consumption. It sees opportunities to
save energy in particular by improving base load man-
agement, for example by reducing standby consumption
during shift breaks. In order to reduce water consump-
tion, the BMW Group's plants are further improving their
circulation systems by means of wastewater treatment.
Optimisation measures are, however, offset by the high-
er consumption required to cool the newly installed
combined heat and power plants. The BMW Group has
investigated the use of water sources other than drinking
water in a number of its plants in future. It focused on
locations in dry climatic regions, such as the plant in San
Luis Potosí (Mexico).
During the year under report, the volume of waste
for disposal per vehicle produced decreased by 18.6% to
3.33 kg compared to 2019. The main reason for differ-
ences in the volume of waste for disposal is changes in
the structure of the existing waste disposal companies
at the BMW Group's various locations. For example, in
2020 the Shenyang plant in China began using house-
hold-type commercial waste to generate energy, a strategy
also introduced at the Rosslyn plant in South Africa.
Waste for Disposal per Vehicle Produced
In close cooperation with freight carriers, infrastructure oper-
ators and commercial vehicle manufacturers, the BMW Group
is developing ecologically sustainable logistics concepts. The
Green Logistics strategy pursues the logistical aim of achiev-
ing climate-neutral transportation, thereby contributing to the
Group's target of reducing carbon emissions in the supply chain
by 20% per vehicle by 2030 (base year 2019).
The carbon footprint and the use of carbon-efficient energy and
modes of transport is a decisive criterion for the BMW Group
when selecting freight carriers. Currently, more than half of the
vehicles the Group produces are transported from manufactur-
ing plants by rail. When supplying vehicles to the Chinese mar-
ket, the BMW Group is further reducing its carbon footprint by
using the railway lines along the Silk Road more intensively. In or-
der to reduce carbon emissions, some of the spare parts sent to
China by airfreight are being increasingly dispatched by rail. For
other overseas markets, the option to switch to intermodal air-sea
transport has been tested.
The BMW Group is increasingly working on the further devel-
opment and piloting as well as the use of innovative technolo-
gies and already deploys battery- and gas-driven trucks to sup-
ply production facilities. In 2020, the BMW Group used the sea
route from Belgium to Spain for vehicle production purposes. The
use of biofuel from waste cooking oil led to a reduction in carbon
emissions of 1,100 t.
BMW Group
Report 2020
Combined Management Report
Production, Purchasing and Supplier Network
K =
Logistics: freight carriers and carbon emissions
99
All BMW Group locations worldwide as well as
the BMW Brilliance Automotive (BBA) joint venture
purchase 100% green electricity, i.e. energy generated
from renewable sources¹. With the aim of cutting the
carbon emissions it generates in production processes
by an additional 80% per vehicle by 2030 (base year
2019) in a further step, the BMW Group systematically
continues to invest in optimising the energy efficiency
of its global production network. The strategy includes
the use of process heat in paint shops and data analysis
to reduce the power consumption of its machinery to
a minimum. Moreover, the BMW Group is further ex-
panding its own renewable power generation capacities
at its various locations and increasing its energy storage
capability. Leveraging these and other measures, the
Group is making steady progress towards its long-term
goal of becoming a leader in the use of renewable energy
in production and value creation.
-
buys in electricity from renewable sources – preferably
locally. At the same time, in future the BMW Group
intends to cover an increasing percentage of its elec‐
tricity requirements through so-called power purchase
agreements (PPAs), i.e. direct purchases from defined
renewable energy generation facilities.
The Group is also working on solutions for storing
renewable energy. For example, the storage farm at the
BMW Group plant in Leipzig is equipped with high-volt-
age batteries from the BMW i32. The storage farm is in-
tegrated in the public power grid and provides control
energy, which means the BMW Group is additionally
helping to keep the public electricity grids stable.
SHARE OF GREEN ELECTRICITY PURCHASED FROM
THIRD PARTIES 3,4
in %
100
100
RENEWABLE ENERGY
Through its own venture capital fund BMW i Ven-
tures, the BMW Group has invested in key technologies
that can make a decisive contribution towards achieving
its long-term vision of carbon neutrality. In 2020, for ex-
ample, BMW i Ventures invested in PureCycle, the first
company in the world that can recycle polypropylene
(an essential vehicle component) into a colourless and
odourless native state. The BMW Group also invested
in Prometheus Fuels, which has developed a technology
that enables carbon-neutral synthetic fuels to be pro-
duced using green energy.
In its efforts to minimise waste, the BMW Group has
developed recycling and reprocessing concepts that are
adapted to the waste flows in its various plants, to region-
al legal requirements and to existing local waste disposal
structures. Moreover, the Group intends to increase its
level of expertise in the development and production of
battery cells Electric Mobility and create greater transpar-
ency regarding the whereabouts and recycling of end-of-
life vehicles and their resources. ✓ Input/Output Assessment
By 2030, the BMW Group intends to further increase
the percentage of recycled secondary raw materials in
its vehicles while systematically developing the recy-
cling process at the same time. During the year under
report, around 25% of the steel and up to 20% of the
thermoplastics the Group used for vehicle manufacturing
were derived from secondary sources. Up to 50% of the
aluminium the BMW Group uses to make its aluminium
castings comes from secondary sources. ✓ Average Distribu-
tion of Materials in BMW Group Vehicles GRI 301-2
The BMW Group reduced its emissions of volatile
organic compounds (VOC³) per vehicle produced by
4.7% to 0.81 kg in the 2020 reporting period. This year-
on-year improvement is attributable to process optimi-
sations such as restricting the quantity of material used
for cleaning work, the use of solvent-free cleaning agents,
and the equipping of several new paint shops with ex-
tended thermal oxidisation facilities for base and clear
coats, such as at the Munich, Dingolfing and Shenyang
plants. Solvent Emissions per Vehicle Produced GRI 305-7
MONITORING RESOURCE CONSUMPTION
The monitoring of resource consumption is an in-
tegral part of the Group's environmental management
strategy in the global production network and is man-
aged by the Steering Committee of the BMW Group's
international environmental protection network. Each
facility, building and space at each location is allocated to
an internal operator. Within this area, the operator is not
only responsible for the facilities and technical systems as
well as the smooth running of processes and procedures,
but also for their environmental impact. 4
An environmental management system in accord-
ance with ISO 14001 has been implemented at all 31
BMW Group production plants. With the exception
of the Manaus plant in Brazil (planned for 2021), all
Group sites are certified according to this standard.
The five competence centres - emissions, water, waste,
qualification and environmental management system -
coordinate the BMW Group's environmental protec-
tion measures worldwide. Accordingly, any ecological
improvements that have proven to be effective at one
location are implemented at other locations to the extent
possible. Ongoing further training and the exchange of
information between employees are aimed at ensuring
the transfer of knowledge.
L-38%
Energy consumption per vehicle
produced since 2006
1 Efficiency indicator calculated from electricity, heat, natural gas and heating oil consumption from vehicle
production (without motorcycles) minus CHP losses, divided by the total number of vehicles produced, ex-
cluding vehicles from the Magna Steyr and Nedcar contract production plants, plus energy consumption of the
engine plants and electric engines as well as battery production, divided by engine production in Hams Hall,
Steyr, Munich and BMW Brilliance Automotive Ltd. in Shenyang.
2 The figures for 2016 to 2018 were examined by the external auditor on the basis of a limited assurance
engagement.
3 VOC emissions (volatile organic compounds) are generated in particular during the painting process and
can be reduced by deploying innovative painting technologies.
4 Each operator is required to describe the environmental impacts in the aspect register in accordance with
the environmental management system and identify measures for improvement (e.g. long-term targets).
BMW Group
Report 2020
Combined Management Report
Production, Purchasing and Supplier Network
K = 98
CIRCULAR ECONOMY MAXIMISES RESOURCE EFFICIENCY
AND CONTRIBUTES TO CLIMATE PROTECTION
The responsible use of resources plays a key role
in the BMW Group's business model. For example, if
electric mobility is not only to be produced using pri-
mary materials in the long term, the underlying flows
of resources need to undergo a sustainable transforma-
tion. The BMW Group intends to create high-quality
secondary raw materials by promoting a greater degree
of transparency in the recycling chain and tracking the
actual further use of raw materials within the cycle. The
Group wants to provide effective impetus for a circular
economy that is viable in the long term by emphasising
the importance of recycling valuable resources. At the
same time, this strategy can significantly contribute to
cutting carbon emissions (Scope 3 upstream), as the use
of secondary raw materials can significantly reduce the
size of the Group's carbon footprint in its procurement
and production processes - even down to as little as
one-sixth, depending on the material. For this reason,
the BMW Group has defined the circular economy as
a strategic focus for the coming years. This includes its
own internal initiatives as well as increasing its external
commitment in dialogue with major stakeholders.
The economical use of resources is already a key re-
quirement in the design process and at the product devel-
opment stage and guarantees that BMW Group products
are designed to ensure that as much raw material as
possible remains within the circular economy. In 2020,
a total of 99.1% of the waste generated in production
processes was either recycled or recovered. To the extent
viable, i.e. depending on the waste disposal market and
distances to the supplier, the cycles of materials are phys-
ically closed so that the resulting recyclates can be reused.
End-of-life vehicles are therefore not considered as waste
to be disposed of, but as a source of secondary raw ma-
terials. For this reason, the BMW Group promotes the
return of end-of-life vehicles, components and materials
to the raw materials cycle. Together with its sales organi-
sations in each country, the Group has already organised
the taking back of end-of-life vehicles in 30 countries and
offers environmentally friendly recycling services at more
than 2,800 take-back centres. All vehicles brought onto
the market since 2008 comply with global requirements
for the recycling of end-of-life vehicles, components and
materials. Already today, vehicles are required to be 95%
recyclable. GRI 301-3
81
-12.0%
With the aim of stepping up its efforts to ensure
due diligence in the field of sustainability, since 2018
the BMW Group has been involved in developing the
Automotive Sustainability Assessment (ASA) in the
German Association of the Automotive Industry (VDA).
Based on these guidelines, the performance of essential
due diligence procedures can now be audited in a stand-
ardised manner, even at the premises of medium-sized
suppliers to the automotive industry. The BMW Group
already applies the Responsible Business Alliance
(RBA) audit programme for major suppliers from the
electronics industry. It also carries out qualification,
standardisation and empowerment measures and holds
informational events, particularly in the case of supply
chains exposed to a higher degree of risk. The aim is to
further develop and actively bring about transformation
at suppliers with regard to sustainability issues. In its
efforts to achieve this aim, the BMW Group leverages
both individual and standardised elements of the Drive
Sustainability Initiative and the Responsible Business
Alliance to integrate sustainability in business processes
such as procurement. ☺
The technological heart of the BMW Group beats in its Research
and Innovation Centre (FIZ). With the FIZ Future programme, the
BMW Group is combining its knowledge, expertise and creativity
at its location in Munich (Germany) in order to research and devel-
op the individual mobility of the future, characterised by electrifica-
tion, digitalisation and connectivity.
A detailed presentation of sustainability-related
activities undertaken in the supplier network and a
description of the OECD Due Diligence Guidance is
available on the BMW Group website.
In 2020, responsibility for sustainability in the supply
chain and also energy was combined in a separate depart-
ment within Purchasing. It comprehensively manages the
integration of sustainability factors in the BMW Group's
procurement activities. At the same time, it works togeth-
er closely with the Strategy department and continually
adapts operational purchasing requirements.
414-2
The BMW Group has agreed corrective measures with
64% (2019: 62%) of the suppliers at which sustainability
shortfalls were identified in the course of the reporting
year. The suppliers are required to remedy these defi-
cits prior to the start of production. The main areas to
be acted upon in particular were hazardous materials
management, waste management, working conditions
and occupational health and safety. GRI 308-1, 308-2, 414-1,
In 2020, the sustainability questionnaire for sup-
pliers, which was initiated by the BMW Group in 2012
and jointly compiled by the automotive manufacturers,
was comprehensively revised. The BMW Group's Supply
Chain Response Team processes any information regard-
ing potential breaches of its sustainability standards in
the supplier network. Furthermore, the BMW Group's
Human Rights Contact Supply Chain serves as the cen-
tral point of contact and can be reached anonymously by
telephone or email to report any potential violations of
social or environmental standards by suppliers.
Via the due diligence process, the BMW Group
checks whether and how sustainability standards are be-
ing implemented by its suppliers. Suppliers contractually
undertake to comply with a range of requirements in line
with their environmental (ISO 14001, EMAS) and occu-
pational health and safety management systems (OHSAS
18001, ISO 45001) and to demand and maintain compli-
ance with these agreements from their subcontractors.
K = 104
Production, Purchasing and Supplier Network
Report 2020
Combined Management Report
BMW Group
Two-thirds of the world's lithium reserves are located in Latin
America. To date, however, the impact of lithium mining in the re-
gion has not been sufficiently scientifically studied. The gap will
now be closed by the study commissioned by the BMW Group.
BASF SE is also partially financing the study.
Lithium is the lightest metal on earth and is mainly used to pro-
duce batteries, ceramics, glass and aluminium. It is therefore
also an essential material for producing lithium-ion batteries and
plays a key role in vehicle electrification.
Furthermore, the Group has commissioned a study on sustaina-
ble lithium mining under the auspices of two renowned American
universities in order to scientifically investigate water consump-
tion in the extraction of lithium. The purpose of the study, which
will be jointly conducted by the University of Alaska-Anchorage
and the University of Massachusetts-Amherst, is to investigate
the impact of lithium mining on local water supplies in Latin
America.
The BMW Group currently sources lithium for its fifth genera-
tion of high-voltage batteries exclusively from Australia, where
the material is extracted by means of a so-called hard rock min-
ing process.
Electric mobility can only be sustainable if the
raw materials it requires are also obtained as
sustainably as possible. Take lithium for
example:
We can only succeed in achieving our sustainabil-
ity goals by interacting with suppliers on the basis of
mutual cooperation. Ultimately, climate protection and
compliance with environmental and social standards
are a challenge for the whole of society. As with quality,
sustainability is all about accomplishing ambitious goals
in close collaboration with the supplier network.
The BMW Group follows the principle of
empowerment before disengagement.
The mining of cobalt entails risks, particularly when it comes to
upholding human rights. The BMW Group is committed to en-
suring that the mining and processing of cobalt are carried out
in accordance with sustainability standards and international-
ly applicable labour laws. For this reason, the Group purchases
the cobalt needed to produce its fifth generation of battery cells
directly from the mines themselves and makes it available to the
battery cell suppliers. Around one-fifth of the BMW Group's co-
balt requirement is purchased from mines in Morocco and the re-
maining four-fifths in Australia.
At the same time, the Group is engaged in a pilot project in
the Democratic Republic of Congo in keeping with the princi-
ple of "empowerment before disengagement". In 2018, the
BMW Group joined forces with other partners to initiate the
cross-sector initiative "Cobalt for Development" with the aim of
improving the working and living conditions of workers engaged
in small-scale cobalt mining operations in the Congo. As part of
the project, around 40 members of 12 mining cooperatives were
trained as trainers on occupational and environmental risks who
pass on the content to more than 1,500 miners in the form of
training courses. These programmes are underpinned by activi-
ties in local communities by which the residents benefit from im-
proved access to education and alternative income opportunities.
The project is being implemented by the Gesellschaft für interna-
tionale Zusammenarbeit (GIZ) GmbH.
The aim of the project is to further develop and professionalise
artisanal mining in the Congo to meet the BMW Group's strict
sustainability requirements and could be an option for sourcing
cobalt in the long term.
since 2011.
The opening of the FIZ Nord project building was a major milestone
in the year under report. At the new FIZ Nord, the BMW Group is
pooling the innovative strength and key competences it will need
to take on the challenges of the future. For the first time, all its ve-
hicle drivetrain developers are working under one roof - on both
state-of-the-art, highly efficient petrol engines and the latest gen-
eration of electric drivetrains. The key aim here is to promote in-
tensive collaboration and thus also the transfer of knowledge be-
tween the various technologies. With this strategy, the BMW Group
has taken an important step towards developing the competences
and networking of the people who work there as well as bolstering
its innovative strength.
of female managers
at BMW AG has
The number
DELIVERED
Employees and Society
BMW Group
Report 2020
levels of the company.
COMPREHENSIVE MEASURES AND COOPERATION IN A
SPIRIT OF PARTNERSHIP ENSURE COMPLIANCE WITH
SUSTAINABILITY STANDARDS.
advancement of women at all
STRENGTH. That is why it has
THE BMW GROUP
SEES DIVERSITY as a
PROMISED
EMPLOYEES
AND SOCIETY
KK=105
Employees and Society
BMW Group
Report 2020
More information on this project is available here.
set targets for the long-term
At its own plants, the BMW Group is gradually es-
tablishing closed recycling loops between the plants and
the raw materials manufacturers, such as at the Landshut
components plant. In late 2019, the foundry in Landshut
was certified by the Aluminium Stewardship Initiative
(ASI) for its sustainable use of aluminium. Around half
of the aluminium used at the BMW Group's Landshut
plant comes from a closed recycling loop. The Group is
consciously reducing the use of carbon-intensive primary
aluminium via this method.
With the aim of protecting stocks of critical raw ma-
terials, by 2030 the BMW Group plans to significantly
increase the percentage of recycled raw materials, i.e.
secondary raw materials, that it uses and to reuse these
materials in line with circular economy principles. The
growth of e-mobility is causing the topic of circular
economy to become increasingly important, as a variety
of critical raw materials are required to produce battery
cells. The use of secondary raw materials significantly
reduces the carbon footprint compared to primary ma-
terials: by a factor of 4 to 6 for aluminium and by a factor
of 2 to 5 for steel and thermoplastics.
In addition to compliance with environmental
and social standards and respect for human rights, the
responsible use of nature's finite resources also plays a
major role.
in the supply chain by 2030
CO2 emissions per vehicles
-20%
at least
Just as the BMW Group continuously implements
optimisation and efficiency measures in its own pro-
duction environment, it is also actively committed to
promoting decarbonisation measures within its supplier
network. By participating in the CDP supply chain pro-
gramme, the Group motivates its suppliers to operate
sustainably and, for example, utilise renewable energy
in their production activities. The core of the programme
consists of annual reporting that takes a multitude of
climate-related aspects into account, including specific
measures to reduce carbon emissions or increase the
centage of renewable energy deployed. The BMW Group
strongly encourages its suppliers to set targets in line
with the Paris Climate Agreement and thereby contrib-
ute to limiting global warming. The Group's success is
reflected in the steadily growing number of suppliers
participating: 63 suppliers (2019: 40) reported at least
one 2-degree-compliant target system, and 59 (2019: 54)
plan to publish one within the next two years.
One of the biggest levers for promoting decarboni-
sation in the supply chain is the use of green electricity.
For this reason, the BMW Group has agreed with the
suppliers of the current fifth generation of battery cells
to use only green electricity from renewable sources for
production purposes.
By the year 2030, the BMW Group intends to have
over seven million electrified vehicles on the road. This
means that the average carbon emissions generated by
the BMW Group's supplier network (scope 3 upstream
according to SBTI) will increase by more than one-third
per vehicle by 2030 if no countermeasures are taken.
Apart from the growing percentage of electrified models
in the BMW Group's product range, the reasons are, for
example, the energy-intensive production of battery cells,
the greater use of aluminium and increased localisation
in China, where the proportion of green electricity in
the energy mix is still relatively low. Nevertheless, the
BMW Group has set itself the goal of not only halting this
trend, but even reversing it and reducing carbon emis-
sions
per vehicle in the supply chain¹ by at least 20%²
(base year 2019) by 2030. With this aim in mind, among
other measures, since 2020 it has established the carbon
footprint as a criterion for awarding contracts within the
supply chain.
The BMW Group is continuously expanding its sus-
tainability activities across the supplier network. The fo-
cus is essentially on three key issues: 1. Decarbonisation,
2. Compliance with environmental and social standards,
particularly human rights, and 3. The protection of nat-
ural resources.
per-
For many raw materials, the requirement to ensure
that environmental standards and human rights have not
been violated poses a particular challenge, for instance
in the case of lithium and cobalt, both of which are key
raw materials for manufacturing battery cells.
MOTIVATING PARTNERS TO OPERATE SUSTAINABLY
NEW TARGETS FOR DECARBONISATION IN THE
SUPPLIER NETWORK
SUSTAINABILITY INTEGRAL TO PURCHASING AND
SUPPLIER NETWORK
K = 101
Production, Purchasing and Supplier Network
Report 2020
Combined Management Report
BMW Group
The BMW Group places great emphasis on cor-
porate due diligence. The Group already addressed this
issue in 2008, defining and setting out comprehensive
environmental and social standards for the awarding of
contracts for the BMW i3. Since 2010, the BMW Group
has required its partners and suppliers for BMW i models
to comply with human rights and extended environ-
mental and social standards, including environmental
protection management systems. Since 2014, these speci-
fications have been mandatory for suppliers of all vehicle
models. In 2019, this requirement was supplemented to
include occupational health and safety management
systems wherever necessary.
K = 106
1 Including transport logistics.
BMW Group
RESPONSIBLE USE OF NATURAL RESOURCES
K = 103
Production, Purchasing and Supplier Network
Report 2020
Combined Management Report
BMW Group
In 2012, in its materials strategy the BMW Group
identified particularly critical raw materials and other
materials from a sustainability perspective and initiat-
ed the cross-industry study ✓ Material Change Report (2018)
on this basis. The Group continuously analyses the
raw materials prioritised in the report as well as other
materials essential for production with regard to their
impact on the environment and society along the entire
supply chain. By sourcing raw materials such as cobalt
and lithium directly, the BMW Group can establish trace-
ability and transparency with regard to environmental
and social standards, which is critical for conducting due
diligence in raw materials supply chains.
During the year under report, the BMW Group
included key sustainability issues such as biodiversity,
deforestation and animal welfare in its ✓ Supplier Sustain-
ability Policy, which forms the basis for the Group's terms
and conditions of purchase. Accordingly, BMW Group
suppliers and all purchases are subject to the Group's
comprehensive sustainability requirements.
² Value rounded for simplification purposes. The target percentage validated in conjunction with SBTI is 22%.
KEY ELEMENTS FOR SUSTAINABLE MATERIALS
PURCHASING
It is a major challenge to ensure compliance with
human rights as well as environmental, health and safe-
ty standards in the extraction of raw materials. For this
reason, BMW Group Purchasing goes beyond the mere
contractual agreement of sustainability standards to a
deeper point in the supply chain in order to conclude
respective direct agreements at particularly critical points
in the supplier network and ensures compliance with
them by conducting audits.
RESPECT FOR ENVIRONMENTAL AND SOCIAL
STANDARDS AND HUMAN RIGHTS
The BMW Group has integrated the assessments of
the CDP Supply Chain Programme in its key purchasing
processes. The results are used in discussions with sup-
pliers, in strategic management meetings and in overall
supplier strategies to point out potential for improvement.
On average, suppliers that have been reporting within the
CDP Supply Chain Programme for at least three years
have improved. The BMW Group sees this fact as proof
that the programme has become well established at the
companies participating for longer periods and that it
yields the intended results. In 2020, the Group also asked
more than 1,000 additional suppliers who, as small and
medium-sized companies, did not meet the criteria to be
invited to the CDP Supply Chain Programme to complete
a carbon-related questionnaire. The activity further cov-
ered approximately another 11% (and therefore a total of
90%) of the Group's production-related purchasing vol-
ume. The results of the survey provided the BMW Group
with additional insights that enabled it to further establish
the carbon footprint assessment in the supply chain as an
award criterion in decision-making processes. This was
already the case in 18 out of 31 tenders with the largest
carbon footprint. ✓ GRI 308-1, 308-2, 414-1, 414-2
In 2020, a total of 218 suppliers to the BMW Group
(2019: 199) reported via the CDP Supply Chain pro-
gramme, accounting for approximately 79% of the
BMW Group's production-related purchasing volume
(2019: 78%). The participating suppliers reported carbon
reduction totalling some 22 million tonnes of emissions
(2019: 32 million tonnes), which are proportionately
attributable to the materials and goods supplied to the
BMW Group. Due to the coronavirus pandemic and the re-
sulting decrease in production volumes, carbon emissions
were generally lower in 2020. Accordingly, the reduction
in reported carbon emissions was also lower. ✓ GRI 308-1,
308-2, 414-1, 414-2
K = 102
Production, Purchasing and Supplier Network
Report 2020
Combined Management Report
The BMW Group is also involved in various initia-
tives to standardise management approaches towards
implementing human rights due diligence and applying
them throughout the entire supplier network. In Ger-
many, for example, these include the industry dialogue
on respect for human rights along the global supply
and value chains of the German automotive industry,
in which the BMW Group is actively involved. It is also
active internationally and involved in initiatives to stand-
ardise the mining of raw materials. By certifying mines
in accordance with the standards of the Initiative for
Responsible Mining Assurance (IRMA) or the Aluminium Stewardship
Initiative (ASI), the BMW Group is promoting compliance
with environmental and social standards right from the
raw material extraction stage with the aim of making a
significant contribution to improving compliance with
human rights throughout international supply chains.
BMW Group
Report 2020
more than DOUBLED
-
K
Employees and Society
Report 2020
Combined Management Report
BMW Group
Due to the coronavirus pandemic, face-to-face training
was only conducted to a limited extent during the period
under report. However, the increased use of e-learning
formats ensured that qualification courses were held, for
the most part, despite the situation. ✓ GRI 404-1
* Further training of employees and temp workers of the BMW Group in the consolidated companies world-
wide. Data retrieved by direct representation of the number of participants as well as a small share by quali-
fied extrapolation. The data also include e-learning courses.
GRI 404-1
2020
2019
2018
2016 2017
2.0
33
2.5
3.3
Employees and Society
3.4
三 110
INVESTMENT IN TRAINING AND FURTHER EDUCATION1
in € million
400
Future orientation and innovative capability
with FIZ Future
Excellent leadership is a vital prerequisite for deliv-
ering outstanding performance in a competitive envi-
ronment. The BMW Group's managers play a key role
in implementing its new corporate strategy. In order to
develop this expertise, the BMW Group promotes per-
sonalities who have the right attitude and individual,
context-related behaviour, joint team leadership skills
and a high degree of connectedness within the company.
Apart from careers in management, the BMW Group also
offers the Expert Career². It empowers its managers to
develop excellent leadership qualities based on a uniform
understanding of leadership. ✓ GRI 404-2
DEVELOPMENT AND FURTHER TRAINING FOR
MANAGERS
As one of the pioneers in this field, the BMW Group
is also shaping the transformation to electric mobility and
digitalisation. For example, it already commissioned its
Autonomous Driving Campus in Unterschleißheim near
Munich back in 2018 and its Battery Cell Competence
Centre in Munich in 2019. By 2026, the Group intends
to invest some €400 million in a new vehicle assembly
line on the site of the current internal combustion
engine production facility at its main plant in Munich.
The transformation of production sites and long-term job
security thus go hand in hand. Employees are trained
and qualified in order to take on new responsibilities
in other areas. For example, the BMW Group is further
expanding its e-drivetrain production competence centre
in Dingolfing. It has also established production facili-
ties for battery modules and high-voltage batteries at its
Leipzig and Regensburg plants, which are scheduled to
begin production in 2021. Since 2009, the BMW Group
has provided more than 52,000 people, not only its own
employees, but also those of suppliers, with further
training in the field of electric mobility. GRI 404-2
INVESTMENT AND TRAINING BOLSTER JOB SECURITY
Spending on employee training
and development
€279 million
1 Training and further education encompasses BMW Group vocational training in 11 countries and further
education for employees and temp workers of the BMW Group in the consolidated companies worldwide.
2 Unlike the conventional management career with its focus on disciplinary leadership, the Expert Career pro-
gramme focuses on technical-, project- or company-related topics that do not entail line responsibility for
others. This Expert Career option enables the BMW Group to offer employees an additional career path.
3.8
Strategic human resources planning helps manage
the need for systematically developing and/or restructur-
ing competences, ensuring that vacancies are filled and
employees are qualified in good time.
2016 2017 2018 2019 2020
279
200
300
349
352
370
373
Expenditure on training and further education to-
talled €279 million (2019: €370 million). The year-on-year
decrease was due to the coronavirus pandemic, whereby
much of the training initially planned as face-to-face
events had to be transferred to virtual formats, the cost
of which was significantly lower.
5.0
3.4
Lifelong learning is an integral part of everyday work-
ing life at the BMW Group. It aims to ensure the efficien-
cy and employability of its workforce and thus its own
long-term competitiveness by offering a needs-oriented
and innovative range of training courses, particularly in
forward-looking fields of expertise such as digitalisation
and electrification. ✓ GRI 404-2
WHAT DOES DIVERSITY
In 2020, BMW Group employees spent an average of
2.0 days on further training (2019: 3.3).
INNOVATIVE and MORE
COMPETITIVE.
We need DIVERSITY:
It makes us MORE
Sabine Distler and Gabriele von Stetten are
jointly responsible for diversity strategy at the
BMW Group.
Employees and Society
BMW Group
Report 2020
"Working at the BMW Group means
taking responsibility far beyond our own
premises for our society, the environ-
ment and all our stakeholders. It is our
associates who are creating more sustain-
able, connected and safer mobility. This is
our contribution to a better future. This is
what drives us forward every day."
MEAN TO THE BMW GROUP?
-
Human Resources,
of Management of BMW AG,
Ilka Horstmeier
Member of the Board
K = 107
O
Member of the Board of Management
of BMW AG, Finance
Dr. Nicolas Peter
"Commitment to a sustainable future
is no longer just an option. It is an obli-
gation. This is valid for the BMW Group
and every other company. BMW has been
a leader in sustainability for years and
we are now setting ourselves even more
ambitious goals for the coming decade.
We are putting sustainability at the very
centre of the company, measuring our
success and making this even more trans-
parent through the BMW Group Report."
Labour Relations Director
The BMW Group firmly believes
that diversity enhances our performance
capabilities. Diverse teams are more
innovative - because everyone brings a
different perspective. Our customers are
diverse, too. If we want to understand
them, win them over and engage them,
we also need this kind of diversity among
our employees.
K = 108
THE BMW GROUP ALSO
SETS ITSELF TARGETS
FOR EXAMPLE, FOR THE
PERCENTAGE OF WOMEN
IN MANAGEMENT.
HOW CAN THESE GOALS
BE ACHIEVED?
BROAD RANGE OF TRAINING AND FURTHER EDUCATION
OPPORTUNITIES
Social, economic and technological developments
require companies to continually adapt to new situations
and qualify their employees to meet the challenges of the
future. The BMW Group therefore invests continuously
in measures aimed at establishing, broadening or adapt-
ing the necessary competencies, and offers its workforce
numerous options for training and further education.
Promoting and developing the potential of its work-
force and being an attractive employer are important
aspects of sustainability for the BMW Group. And, as
one of the most important stakeholder groups, it is log-
ical to consistently involve employees in the dialogue
when changing the Group's strategic course. In a series
of international stakeholder dialogues with employees
from various regions in 2020, the BMW Group discussed
its perception as a sustainable company as well as the
main focus of its strategy. ✓ Dialogue with Stakeholders
EMPLOYEE DEVELOPMENT AND EMPLOYER
ATTRACTIVENESS - KEY ASPECTS OF SUSTAINABILITY
The success of the BMW Group is based on the
personal commitment and technical expertise of its
employees. As an attractive employer offering highly
interesting future-oriented jobs, the BMW Group is look-
ing to recruit new employees, deploy them in the best
way possible and specifically promote their potential
with the aim of ensuring their long-term employability.
The success of this approach is reflected not only in the
results of employee satisfaction surveys, but also in the
awards the BMW Group has received as an attractive
employer.
-
Number of days
AVERAGE DAYS OF FURTHER TRAINING*
QUALIFICATION, DEVELOPING AND RESTRUCTURING
COMPETENCIES
K = 109
Employees and Society
Report 2020
Combined Management Report
BMW Group
Further information is available at:
report.bmwgroup.com
We have expanded our diversity
strategy to include physical and mental
ability, sexual orientation and identity, in
addition to the previous dimensions of
gender, cultural background, age and ex-
perience. For certain factors, quantitative
targets make sense; for others, we need
qualitative goals. It's about creating the
best-possible working environment in an
open and respectful corporate culture.
WHAT ABOUT OTHER
DIVERSITY FACTORS?
We identify female talents at the com-
pany and develop them selectively. At the
same time, we continue to bring qualified
women into the company. We already
make sure we have a high percentage of
women in our talent development pro-
grammes.
LONG-TERM EMPLOYEE
DEVELOPMENT AND EMPLOYER
ATTRACTIVENESS
Education
2 In the form of donations and payments in kind.
L
16.2
Expenditure on
Corporate Citizenship
€33.6 m
Community 26.7%
|<< = 120
Total
2016
2017 2018 2019 2020
69,092 or 99.7% of people employed at BMW Group
plants work at a location certified in accordance with
an international occupational health and safety manage-
ment system³. GRI 403-1, 403-8 □
2.0
2016
2017 2018
2019
OLD
2019 2020
NEW
GRI 403-10
£3.2
Accidents
per one million hours worked
1 BMW AG; Number of hours of absence due to paid sick leave divided by the contractually agreed target
number of working hours; up to 2019, absence due to unpaid sick leave was also taken into account.
Figures up to 2018 are not comparable.
2 Number of occupational accidents with at least one day of absence from work per one million hours worked.
3 OHSAS 18001/ISO 45001 (Occupational Health and Safety Assessment Series) or OHRIS (Occupational
Health and Risk Management System).
3.2
3.5
3.5
3.6
The Group continuously strives to improve this figure
by means of its health management measures.
LL SICKNESS RATE 1
in %
7.0
4.9
5.0
4.6
BMW Group
Report 2020
4.6
Occupational safety is one of the BMW Group's fore-
most preventive measures for protecting and maintaining
the health of its workforce. The strategy is based on a
comprehensive management system that not only meets
legal requirements applicable at the Group's various lo-
cations, but frequently goes beyond them. Accordingly,
the BMW Group is committed to ensuring and certifying
the highest level of occupational safety at all its locations.
The right to occupational health and safety is also a key
feature enshrined in the BMW Group's Code on Human
Rights and Working Conditions. In the Code, the com-
pany undertakes to consistently comply with currently
applicable occupational health and safety legislation
worldwide and also to set its own additional standards
for improving occupational safety. LZ GRI 403-1
Fortunately, in 2020 the accident frequency rate
across the workforce as a whole dropped further to
3.2 accidents per 1 million hours worked (2019: 3.5).
However, one fatal accident occurred at the Group's
Dingolfing plant during the year under report. By 2015,
the BMW Group had already achieved the target it set
itself in 2011 of halving the accident frequency rate to 4.5
accidents per 1 million hours worked by 2020. Since then,
the BMW Group has endeavoured to continue reducing
this rate. GRI 403-9
LL ACCIDENT FREQUENCY RATE 2
8.0
4.0
GRI 403-9
4.0
OCCUPATIONAL SAFETY AT ALL GROUP LOCATIONS
One of the parameters the BMW Group uses to quan-
tify the success of its health management measures is
the sickness rate. At 3.4%, the sickness rate at BMW AG
was lower than in the previous year (2019: 5.0% or 3.7%
according to the new definition). ✓ GRI 403-10
Combined Management Report
K = 115
The BMW Group places great emphasis on an unprej-
udiced, appreciative and inclusive working environment
for all its employees. To underline its conviction, in 2020
the BMW Group continued expanding the diversity
concept with the existing dimensions of gender, cultural
background, age and experience to include sexual orien-
tation and identity as well as disability.
The BMW Group promotes a culture that sees strength
in diversity and difference as a valued asset. It seeks to
raise awareness of diversity issues among its employees
and managers by means of training, presentations and
dialogue formats and also promotes diversity and equal
opportunity via its recruiting and personnel development
measures. During the year under report, the BMW Group
again organised an international Diversity Week with the
aim of raising awareness of every dimension of diversity
within the company and exerting a positive influence
on its corporate culture. However, the programme was
conducted exclusively online due to the coronavirus pan-
demic. The Diversity Week and the simultaneously run
global diversity awareness campaign were transmitted in
a variety of digital formats and reached an approximate
total of 92,000 BMW Group employees online.
The equal treatment of all employees is a funda-
mental principle firmly enshrined in Group policy. The
BMW Group Code of Conduct and the BMW Group Code
of Human Rights and Working Conditions rigorously ad-
dress discrimination of all kinds. Employees are asked
to contact their managers, the relevant specialised units,
the personnel department or the Works Council if they
have
any pertinent concerns. The BMW Group SpeakUP
Line is a telephone service available in over 30 languages
that gives employees worldwide the opportunity to report
possible violations both anonymously and confidentially.
Diversity-promoting concepts have also been
developed for selecting the future composition of the
Board of Management and the Supervisory Board. The
BMW Group provides information on the respective
diversity criteria and how to implement them in its
Corporate Governance Statement.
BMW Group
Combined Management Report
Report 2020
Employees and Society
K = 117
PERCENTAGE OF FEMALE EMPLOYEES
The BMW Group is committed to the sustained ad-
vancement of women and has therefore set targets for
the percentage of women employed at all levels of the
company. This target framework was valid up to and
including 2020.
The percentage of women in management positions¹
within the BMW Group has been rising steadily for: many
years. Globally, the proportion of female managers in the
BMW Group stood at 17.8% at the end of 2020 (2019: new
definition; 17.2%). At BMW AG, the number of women in
management positions has more than doubled between
2011 and the present day. Expressed as a percentage, the
proportion of female managers at BMW AG was 16.2%
(2019: new definition; 15.5%) at the end of 2020.
The percentage of women employed in the
BMW Group's total workforce reached 19.5% during
the period under report (2019: new definition; 19.3%),
exceeding the internally agreed target range of 15% to
17%. At 15.9%, the proportion of women working for
BMW AG was within the target range of 15% to 17%
(2019: new definition; 15.7%).
The proportion of women in young talent training
programmes such as the Global Leader Development
Programme increased to around 42% (2019: 39%) dur-
ing the period under report. In the student promotion
programmes such as Fastlane and SpeedUp, the figure
was around 33% (2019: 28%). GRI 405-1
PERCENTAGE OF WOMEN IN MANAGEMENT POSITIONS
AND IN THE TOTAL WORKFORCE OF THE BMW GROUP 2
PROMOTING DIVERSITY AT ALL LEVELS
The BMW Group sees diversity as a strength and
this factor in its workforce is one of the keys to its cor-
porate success. The BMW Group believes that diversity
fosters innovation and therefore also boosts competitive-
ness. A deeper understanding of the needs of customers
around the world is just one example. In recent years,
the BMW Group's diversity concept has continued to
broaden the eclectic nature of its workforce in terms of
gender, cultural background, age and experience. For
this reason,
the Board of Management not only approved
the Group's existing diversity concept, but broadened it
during the year under report.
EMPLOYEE DIVERSITY
|<< = 116
External companies and their employees also need
to be able to work safely at BMW Group locations. For
this reason, cooperation with contractual partners is
regulated in a separate contractor declaration, enabling
potential hazards to be identified and appropriate protec-
tive measures taken on this basis. On large construction
sites, all employees of external companies are given
safety briefings by BMW Group experts. On smaller
construction sites, however, this duty is performed by
the contractors themselves. The company department
responsible for placing the order monitors compliance
with the occupational health and safety regulations, sup-
ported by the relevant occupational health and safety
unit as required.
In order to improve occupational safety at the up-
stream stages of the value chain, too, the BMW Group
requires its suppliers to comply with internationally
recognised occupational health and safety requirements¹
via its Purchasing Conditions. ✓ GRI 403-7
MANAGEMENT, TRAINING AND QUALITY ASSURANCE
All topics relating to health and occupational safety
within the BMW Group are combined in the Work En-
vironment, Health, Group Safety and Group Data Pro-
tection unit and allocated to the Board of Management's
Human Resources area of responsibility. Moreover, the
managers in the various specialist departments are
responsible for all related in-house processes. Health
management and occupational safety, i.e. occupational
health professionals, occupational medical staff, safety
specialists and safety officers support and advise the
respective internal departments. GRI 403-1
The BMW Group continually assesses and improves
occupational health and safety at all its locations based
on recognised management systems such as ISO 45001,
OHSAS 18001 or OHRIS², via occupational health and
safety committees and by way of in-house risk assessments.
Health and safety committees that include both employer
and employee representatives work actively at nearly all
BMW Group locations, making continuous improvements
to occupational health and safety standards. ✓ GRI 403-4
In order to identify work-related risks in both pro-
duction facilities and offices, the BMW Group conducts
wide-ranging risk and stress analyses. For example,
during the year under report, the internal analysis of
an industrial accident uncovered a risk in the produc-
tion of high-voltage batteries. A technical solution was
then found to automate this stage of production. The
employees concerned were then trained and instructed
and their protective equipment was adapted accordingly.
A specific risk assessment was also carried out pertaining
to the coronavirus pandemic. Employees are encouraged
to contact their managers at any time if hazards or risks
are identified. Employees can also approach their des-
ignated work representative at any time, or report risks
and hazards anonymously via the Compliance hotline.
GRI 403-2
Employees and Society
On the basis of management systems, the BMW Group
regularly evaluates all the methods and instruments used
within the company. The results are then used to improve
internal standards. As part of its co-determination process,
the BMW Group involves the Works Council as well as
representatives of the severely disabled and personnel
management as required.
To ensure occupational health and safety standards
at all its locations, the BMW Group provides its staff
with regular training. The BMW Group Academy is
solely responsible for all training measures relating to
environmental protection and occupational health and
safety. It prepares its various seminars in cooperation
with the relevant departments for occupational safety,
ergonomics, environmental protection and health man-
agement. However, the occupational safety, ergonomics
and environmental protection departments or the health
services can also develop and offer their own measures
if required to do so at short notice. The BMW Group is
also adapting these programmes in line with the current
pandemic situation and increasingly switching to virtual
solutions. ✓ GRI 403-5
1 In accordance with OHSAS 18001/ISO 45001 and management systems derived from ILO (International
Labour Organization) or UNGC (United Nations Global Compact).
² OHSAS 18001/ISO 45001 (Occupational Health and Safety Assessment Series) or OHRIS (Occupational
Health and Risk Management System).
BMW Group
Report 2020
Combined Management Report
Employees and Society
The Group ensures the quality of its processes by
conducting internal audits on an annual basis. Tests at
the BMW Group's various locations are performed by
external certification organisations and the specialists re-
sponsible for implementation are given regular training.
Due to the challenges posed by the coronavirus pandem-
ic, in order to comply with safety and hygiene regulations,
audits were conducted partly on-site and partly virtually
in the year under report. ✓ GRI 403-2, 403-4, 403-9, 403-10
In line with the general demographic change,
the increasingly high average age of the workforce
presents further challenges in terms of healthcare.
The BMW Group's Health Initiative also closely ad-
dresses the concerns of employees looking to remain
as healthy and productive as possible at an advanced
age. GRI 403-3, 403-6
E
114
4,000
2016
2017 2018
2019
2020
THE BMW GOUP REMAINS AN ATTRACTIVE EMPLOYER
Highly regarded industry ratings once again ranked
the BMW Group as one of the world's most attractive em-
ployers in 2020. The BMW Group is therefore the world's
top-ranked automotive manufacturer in the current rank-
ing of the World's Most Attractive Employers 2020 as
rated by the well-known study provider Universum. In
the study - which counts as one of the leading studies
in the field of employer attractiveness worldwide – the
BMW Group ranked fourth among engineering and
IT students worldwide, after Google, Microsoft and
Apple. When conducting the study, Universum surveyed
235,000 students from the 12 economically largest na-
tions worldwide. This recognition is a major success for
the BMW Group. In the Trendence Young Professionals
Barometer for Germany, the BMW Group again achieved
top spot in 2020.
As an attractive employer, the BMW Group offers fu-
ture-oriented jobs and the right conditions for employees
to grow personally and contribute towards shaping the
future. Outstanding performance is a daily motivation
to develop individual potential and make the company
successful together.
1 International trainee programme for university graduates and young professionals across all disciplines.
2 Includes SpeedUp (an undergraduate programme) and Fastlane (a master's programme).
Universum
study
Top-ranked automotive
manufacturer - World's Most Attractive
Employers 2020
BMW Group
Report 2020
4,613
4,672
4,750
4,801
57.0% Science/
BMW Group
Combined Management Report
Report 2020
Employees and Society
|<< = 111
PROMOTING YOUNG TALENT
Combined Management Report
Vocational training at the BMW Group makes an
important contribution to meeting the constant demand
for
young talent within the company, thus underlining
the attractiveness of the Group as an employer. At the
same time, the Group has the ambition to develop per-
sonalities through vocational training and enable young
people to participate in society. With this point in mind,
the BMW Group invests in vocational training and thus
in the skilled workers of tomorrow. Despite the chal-
lenges posed by the pandemic, the BMW Group again
recruited 1,200 trainees in Germany alone during the
year under report. This social responsibility still includes
the promise that BMW AG will offer its trainees perma-
nent positions after completing their vocational training
at its various plants and at the company headquarters.
Trainees are preparing for their future occupations
in 30 skilled trades and 17 dual courses of study at 19
training locations around the world. The training oppor-
tunities on offer are geared towards the Group's future
fields of activity. Graduate trainees thus play a key role in
developing expertise within the BMW Group. GRI 404-2
The BMW Group attracts further young talents by
offering academic programmes for junior staff and
supports them in their professional and personal de-
velopment through mentoring, networking and a wide
range of qualification opportunities in practical and
international assignments. Despite the coronavirus pan-
demic, the BMW Group managed to implement all of its
programmes. Face-to-face events were partially replaced
by digital formats and the international assignments that
form part of the Global Leader Development Programme¹
were largely conducted at BMW AG level, despite the un-
favourable conditions. The total number of apprentices
and trainees participating in development programmes
for junior staff within the BMW Group remained at the
high level of 4,672 in the year under report (2019: 4,801;
-2.7%).
APPRENTICES AND PARTICIPANTS IN YOUNG TALENT
PROGRAMMES 2
Number
5,000
4,500
4,964
For several years now, the BMW Group has been
additionally investing in digitalised training, which has
been even more widely used since the outbreak of the
coronavirus pandemic. Innovative learning platforms and
formats as well as digitalised learning content ensured
that numerous training locations were able to continue
offering training with virtually no gaps, even when the
vocational schools were closed.
Employees and Society
K = 112
In our efforts to ensure that the BMW Group re-
mains an attractive employer, we also offer above-average
salaries for the respective labour markets. To verify this
fact, we conduct remuneration studies each year on a
worldwide basis. The total salary package consists of
monthly remuneration and a variable component. We
also offer a wide range of additional benefits, such as a
company pension. ✓ GRI 401-2
BMW Group
Report 2020
Combined Management Report
Employees and Society
HEALTH AND PERFORMANCE
HEALTH MANAGEMENT WITH A HOLISTIC APPROACH
KK=113
The BMW Group places great emphasis on main-
taining and promoting the health and the performance of
its employees. It therefore encourages personal respon-
sibility and designs its work environments with the idea
of maintaining the health of its people in the long term.
In line with this strategy, employees at all BMW Group
locations have a comprehensive health management sys-
tem available to them. The Group's very high standards
of occupational safety also serve as a preventive measure.
Since 2011, the BMW Group has combined a set
of coordinated measures to promote the health and
performance of its workforce within its health initiative
programme. A range of campaigns inform the workforce
on subjects such as addiction prevention or ways of
maintaining good mental health. Regular campaign days,
dialogue events and training courses address current
health topics such as nutrition, exercise and fitness, can-
cer prevention or mental resilience and raise awareness
of these issues accordingly. Due to the unprecedented
circumstances caused by the pandemic, many of these
events took place virtually. ✓ GRI 403-6
Strategic personnel planning serves as a tool for iden-
tifying the need to readjust personnel and competence
structures at an early stage. The BMW Group uses this
information as the basis for making targeted improve-
ments in the areas of training and further education,
personnel development, marketing, recruiting and young
talent programmes.
Measures to address the coronavirus pandemic
Specially trained teams were sent out to the Group's various lo-
cations and plants, advising managers and employees on how
best to implement the protection and hygiene measures. The ex-
perts from the hygiene teams were also available to answer ques-
tions at any time. Moreover, a Group-wide information campaign
helped inform employees on how best to contribute to curbing
the rate of infection. Regular safety and hygiene inspections en-
sure that the measures are being implemented effectively and on
a sustained basis during the pandemic.
The BMW Group ensured the health and safety of its entire work-
force at its various locations throughout the year under report,
despite the exceptional challenge posed by the coronavirus pan-
demic. The new SARS-CoV-2 occupational health and safety reg-
ulations were implemented at BMW AG and a works agreement
was concluded to that effect. A comprehensive manual based on
this agreement is ensuring the implementation of infection con-
trol measures worldwide.
BMW Group
Report 2020
Combined Management Report
Employees and Society
K =
In terms of health protection for the BMW Group's workforce, the
exceptional challenges posed by the coronavirus pandemic had to
be addressed during the year under report. The primary aim was to
ensure the Group's ability to perform while at the same time pro-
tecting the health of its staff. For these reasons, the BMW Group
set up a crisis management team without delay to draw up and
implement effective protection and hygiene concepts. Staff and
managers were promptly provided with information and recom-
mendations for action, not only to protect themselves, but others
too. The crisis management team kept a watchful eye on inter-
national developments, as the infection spread extremely quick-
ly during the year under report. The BMW Group responded ef-
fectively in a challenging situation that had to be reassessed on
a daily basis at times.
in %
* BMW AG; number of employees on unlimited employment contracts leaving the Company.
2016
Depending on their stage of life or living circum-
stances, employees have different needs when it comes
to organising their work and their working hours. For
this reason and to help employees find a good work-life
balance, the BMW Group offers a great deal of individual
personal scope in the form of working time arrangements
such as flexible working hours, remote working, addi-
tional holidays in return for a corresponding reduction in
salary, sabbaticals or temporary and permanent part-time
solutions. These factors form the basis for individually
adjusting contractually agreed working hours. The BMW
Group is also investing in so-called new working environ-
ments with the aim of offering employees contemporary
and attractive spaces in which to collaborate.
Every two years, the BMW Group conducts a com-
pany-wide employee survey. The survey conducted in
autumn 2019 again showed a slight improvement in the
High Performance Index (HPO-I) compared to 2017. The
HPO-I is integrated as a parameter in the BMW Group's
management system and measures the performance of
the organisation as a whole. The results of the 2019 em-
ployee survey were evaluated, analysed and internal
measures derived accordingly. Among other aspects, at-
tractiveness as an employer and overall satisfaction were
rated with 85% and 82% approval respectively. Despite
overall positive approval ratings with regard to employer
attractiveness, a declining trend is discernible, which
shows that topics such as climate change, sustainability
and electric mobility are becoming increasingly impor-
tant for the workforce and thus also for the survey results.
The BMW Group is responding to this development with
its new strategy, focusing on sustainability and numerous
internal initiatives, including stakeholder dialogues with
employees on the topic of sustainability. The Group is
also implementing the new strategic guidelines in its
various corporate divisions. Its assessment regarding
processes has also developed highly positively, albeit still
at a low level. In order to encourage this positive trend,
activities aimed at improving interdisciplinary coopera-
tion have been stepped up. The results of the follow-up
process were reported to the Board of Management in
July 2020. The next employee survey is currently being
prepared and will be conducted in autumn 2021.
MANAGING EMPLOYMENT AND WORKFORCE PLANNING
As of 31 December 2020, the BMW Group employed
a total of 120,726 people worldwide. From the 2020 re-
porting period onwards, the figure denoting the size of
the workforce only includes core and temporary employ-
ees. The number of employees is slightly below that of
the previous year (2019: number of employees based on
new definition: 126,016; -4.2%). Z GRI 102-7, 102-8
The widespread restrictions on public life and the
economy caused by the coronavirus pandemic also
had a negative impact on the automotive industry in
2020. The BMW Group responded by taking a number
of personnel measures. Initially, it made use of flexible
arrangements such as reducing excess hours on time
and holiday accounts, followed by the introduction of
short-time working hours. In dialogue with the Works
Council, the Group also agreed on a balanced package
of personnel measures that reconciled the future viability
of the organisation with the interests of the workforce.
Firstly, the number of employees was reduced through
natural fluctuation, and secondly by reaching voluntary
agreements such as early retirement part-time working
arrangements or direct early retirement.
2017 2018 2019 2020
Appropriate provisions were recognised and the ex-
pected cost included in personnel expenses. For details
see note 15 to the Group Financial Statements.
as a percentage of workforce
3.39
3.5
2.70
2.64
2.78
5.51
EMPLOYEE ATTRITION RATE*
Entire
The BMW Group greatly emphasises the importance
of all of its employees having access to the company's in-
house health services. In Germany, the focus is mainly on
providing acute treatment for employees and temporary
workers during working hours. In certain countries, how-
ever, the Group's health service also takes on primary
care tasks, such as in Thailand, India or Mexico. The
BMW Group's company doctors also advise employees
on individual preventive measures if requested to do so
and help them adapt their work environment to ensure
that their health and performance are maintained in the
long term. GRI 403-2, 403-3
18.7
Diversity also means living a corporate culture in
which employees of all sexual orientations and identities
are treated with equal appreciation and respect. With
this point in mind, the BMW Group is committed, for
example, to raising awareness among employees and
managers for the concerns of lesbians, gays, bisexuals
and transgender people, as well as to various cam-
paigns as part of the LGBT+ movement's PRIDE Month.
It is supported in this respect by its internal network
BMW Group PRIDE. Confirmation of this commitment
can be seen, among other things, in the Group's top 5
ranking in the DAX 30 LGBT+ Diversity Index 2020.
Disability
Employees with disabilities need to be offered an
inclusive and accessible working environment that
enables them to fully develop their performance. That
is the BMW Group's mission. It begins with providing
training opportunities for severely disabled young people
and continues by designing workplaces that meet their
needs. As part of an internal communication campaign,
under
during the year
report the BMW Group encour-
aged greater openness and assuredness in interaction
with disabled employees.
In the coming years, the BMW Group intends to
analyse its activities in all five dimensions of the ex-
tended diversity concept and add new measures and
programmes as the need arises. The Human Resources
Policy and Strategy department and the operational
Human Resources department, together with the disci-
plinary managers, are responsible for all the measures
provided for in this concept.
BMW Group
Report 2020
Combined Management Report
Employees and Society
CORPORATE CITIZENSHIP
BUILDING BRIDGES BETWEEN CULTURES
VOLUNTARY COMMITMENT OF EMPLOYEES
KK = 119
Corporate citizenship is an integral part of the
BMW Group's corporate identity. The company's com-
mitment to corporate citizenship focuses in particular on
long-term and international projects in which it can pro-
vide targeted support with its own core competences. At
all the Group's international locations, this commitment
aims at attaining better living conditions, intercultural
understanding and good education.
Support provided during the coronavirus
pandemic
لك
Sexual orientation and identity
GRI 405-1
3 All employees without clock control.
53.3
32.6
indirect³
8.3
63.8
27.9
9.4
The coronavirus pandemic posed major challenges for socie-
ty and companies worldwide in the year under report. In order to
help handle this exceptional situation, the BMW Group has orient-
ed its measures internationally and focused on its areas of core
competence. For example, the BMW Group made vehicles avail-
able to social and healthcare facilities. It also donated protective
equipment to health authorities and medical facilities.
59.3
16.1
63.0
20.9
male
female
1 Up to 2019: number of employees on unlimited employment contracts. From 2020, reporting based on new
employee definition Glossary.
2 Clock-controlled and production employees.
31.3
14.1
The BMW Group aims to play a leading role in inter-
cultural understanding. As a corporation with a multi-
national workforce and locations on five continents, the
BMW Group has a keen interest in encouraging tolerance
and understanding between various nations, cultures
and religions. Together with the United Nations Alliance
of Civilisations (UNAOC), since 2011 the Group has
regularly presented the ✓ Intercultural Innovation Award. The
Award is designed to promote innovative projects that
seek solutions to intercultural tensions and conflicts.
The BMW Group is increasingly involving its em-
ployees in its social commitment efforts. Since 2011,
the company has presented the BMW Group Awards for
Social Commitment to its employees. The award goes
to staff members who have made a special contribution
through their voluntary work. In 2020, five employees
were honoured for their charitable social commitment,
two of them even received special awards from the Dop-
pelfeld Foundation. The BMW Group Awards for Social
Commitment are each endowed with € 5,000, which go
directly to the respective aid projects. This year's award
winners come from India (Ooruni Foundation), Germany
(Gesellschaft für Kinderkrebsforschung e. V. and Hilfe für
Kinder in Kenya) and South Africa (Gauteng Community
Organization and Golden Youth Club). In addition to the
award winners, each of the other five finalists received
prize money of € 2,500.
0.1% Politics
87,8374
Commercial Activities
Community Investment
€50,000
33,436
37,242
33,229 33,631
Donations/
payments in kind
2016
2017
2018 2019 2020
3 The activities of the BMW Group in the area of corporate citizenship are divided into three main areas:
monetary donations and payments in kind; community investment, which refers to investment in project
initiatives and partnerships conceived in-house as well as corporate volunteering by BMW Group
employees; and our commercial activities, which encompass sponsorship and so-called cause-related
marketing.
4 The relatively high amount in 2016 is due to a one-off donation to increase the capital of the
BMW Foundation in the BMW centenary year 2016 from €50 million to €100 million.
20 workforce
Management 15.3
positions
Society/
Environment/Sustainability 2.4%
Culture 8.6%
Sports 5.2%
in € million
LL DONATIONS WORLDWIDE2
The organisation Waves For Water is another project
with employee involvement that the BMW Group has
been successfully working together with for five years.
As part of this initiative, employees near the Group's
locations in Mexico, India, Thailand and Indonesia help
provide families with water filters to facilitate their access
to clean drinking water. In the year under report, the
project was unfortunately interrupted by the coronavirus
pandemic, but will be continued as soon as circumstanc-
es permit.
BMW Group
Report 2020
Combined Management Report
Employees and Society
EDUCATION CREATES BETTER PROSPECTS FOR LIFE
LL PEOPLE REACHED BY THE BMW GROUP'S
CORPORATE CITIZENSHIP ACTIVITIES 1
LL TOTAL EXPENDITURE ON CORPORATE CITIZENSHIP
BY TYPE OF ACTIVITY 3
At its various locations, the BMW Group develops
educational projects that facilitate young people's first
steps into the labour market and offer them better pros-
pects for life. With its programmes from primary school
level through to higher education, the BMW Group is
making a lasting contribution towards more equal op-
portunity. The BMW Group bases its funding approach
on the specific needs and requirements at its various
locations. During the year under report, the BMW Group
again supported a range of educational projects in the
USA, Thailand, India, Brazil, Mexico, China, Korea,
South Africa and Germany. However, due to the coro-
navirus pandemic, it was unable to offer its support to
the same extent as before.¹ The workshops were there-
fore conducted with a smaller number of participants
and online whenever possible. The BMW Group used
any funds that could not be deployed for educational
measures due to the coronavirus restrictions to mitigate
the immediate consequences of the pandemic. ✓ Support
provided during the coronavirus pandemic
Originally, the BMW Group had set itself the goal of
reaching around one million people with the award-win-
ning projects by 2020, but it surpassed that figure at an
early stage. Since 2017, the Group has therefore been
pursuing the new aim of supporting six million people
with the award winners' projects by 2025. By the end
of 2020, the award-winning projects had already helped
some five million people.* The BMW Group therefore
believes it is well on the way to exceeding the target it
has set itself.
For further information and additional projects, see
the website BMW Group's Corporate Citizenship.
People reached by
Intercultural Innovation Award-
winning projects since 2011
Target 2025:
6 million
in € thousand
By the end of 2020:
approx. 5 million
100,000
1 Due to the coronavirus pandemic, the number of people who took part in educational projects was not
recorded in 2020.
The BMW Group's investment in corporate citizenship
totalled €33.6 million in 2020 (2019: €33.2 million).
direct²
* The number of people supported is provided by the award winners at the end of each year. It is calculated
based on combined data from media and sources. The figure reported relates only to the people who benefit
directly from the projects concerned.
59.9
OLD
2019
2017 2018
2016
Percentage of women
in the BMW Group
19.5%
In order to ensure gender pay parity, BMW AG has
established a process that compares the monthly pay of
men and women based on the categories of full-time,
part-time and pay grade. In 2020, there were no signif-
icant differences in the total remuneration packages
offered to women and men at BMW AG. GRI 405-2
as in management positions to between 20% and 22%.
BMW AG is aiming for a proportion of 17% to 19% of
women in the total workforce and 19% to 21% in man-
agement positions. To achieve this target, BMW AG care-
fully analysed the effectiveness of its existing measures
and programmes during the year under report, focused
on specifically optimising them to suit requirements
and derived new measures. These include, for exam-
ple, new formats for the targeted promotion of young
female managers and the option of filling management
positions with two people at the same time in a form of
joint leadership. In addition, the BMW Group ensures a
high proportion of women in its young talent promotion
programmes and is committed to a seamless return to
working life after parental leave.
By 2025, the BMW Group aims to increase the pro-
portion of women in the workforce in general as well
15.5 15.716.2 15.9
15.1
16.5 15.8 16.3.
16.1
14.0
15.8
2019 2020
NEW
Management
positions 13.3
20 workforce
in %
PERCENTAGE OF WOMEN IN MANAGEMENT POSITIONS
AT BMW AG2
NEW
OLD
2016 2017 2018 2019 2019 2020
10
16.0
19.5
17.8
19.3
17.2
19.8
17.5
19.9
17.2
19.3
29.7
10
1 The proportion of women in management functions includes management levels I to IV. Management
levels are defined in terms of their functional level and follow a comprehensive job evaluation system
based on Mercer.
Entire
BMW Group
years old
11.7
59.2
29.1
2019 total
59.1
30-50
years old
29.8
11.6
59.2
29.2
2 The new definition of the term "employee" is provided in the Glossary. The difference between old and
new definitions in previous years is similar to the difference between 2019 new and old.
2020 total
10.4
2019 total new¹
years old
11.1
>50
Employees and Society
< 30
Report 2020
|<< = 118
DIVERSITY IN ALL DIMENSIONS
Cultural background
Employees from over 110 countries work together at
the BMW Group. The ability to work together in inter-
national teams in a spirit of trust and respect is key to
the Group's success. A broad range of opportunities for
personnel development, qualification and further training
promotes intercultural understanding. For example, the
Global Leader Development Programme for newly recruit-
ed employees is deliberately geared towards international
participants. In 2020, new employees from eight countries
took part in the programme (2019: 11 countries). With its
“Courage to be more open” campaign, the BMW Group is
also actively fighting against racism, for an unprejudiced
working environment and mutual respect.
Age and experience
Combined Management Report
The BMW Group sees demographic change as both
a challenge and an opportunity, as it offers people the
chance to combine (life) experience and fresh ideas in a
productive way. Since 2019, as part of the Senior Expert
Programme, retired employees have been passing on their
knowledge and experience to their younger colleagues.
Within the Reverse Mentoring Programme organised
by the BMW Group, older employees benefit from the
new knowledge of the younger generation. Managers are
qualified to recognise and leverage the opportunities and
challenges that mixed-age teams offer. ✓ GRI 404-2
L BMW AG EMPLOYEES BY AGE GROUP, DIVIDED INTO
FUNCTIONS AND GENDER1
in %
2018 total
thereof USA
INTERNATIONAL INTEREST RATE ENVIRONMENT IN 2020
The coronavirus pandemic and its severe impact on
the economy in 2020 also prompted central banks around
the world to adopt drastic countermeasures. The aim of
their monetary policies was to mitigate the effects of the
downturn, for example by making it easier for smaller
companies to access cheap credit.
In the first half of the year, the European Central
Bank (ECB) decided to increase the existing bond pur-
chase programme to €120 billion per month and launch
an additional emergency bond purchase programme
(Pandemic Emergency Purchase Programme – PEPP)
with a total volume of €1,850 trillion.
-17.7
thereof Brazil
0.1
-0.9
Total
-9.1
America
-13.7
thereof Spain
thereof Italy
-4.6
-1.1
As a direct response to the economic impact of the
coronavirus pandemic, the Bank of England (BOE) cut
its benchmark interest rate in two steps from 0.75% to
0.1% during the first quarter and increased its bond-buy-
ing programme to a total volume of 895 billion British
pounds.
thereof France
thereof Germany
15.0
-3.5
In the USA, in two emergency meetings held during
the first quarter, the Fed lowered its target range for the
benchmark interest rate from between 1.50 and 1.75%
to between 0.00 and 0.25%. It also announced further
measures, including a commitment to make unlimited
bond purchases.
Actual
OVERALL ASSESSMENT
BY MANAGEMENT OF THE
FINANCIAL YEAR
AUTOMOTIVE SEGMENT
Deliveries to customers1
Workforce at year-end
Change in %
Emissions new vehicle fleet²
Profit before tax
GROUP
Detailed information on the Group's key perfor-
mance indicators is provided in conjunction with the
analysis of the Group's results of operations, financial
position and net assets below. Changes in key perfor-
mance indicators for the Automotive, Motorcycles and
Financial Services segments are explained in the separate
sections for each segment.
The following table shows the development of key
performance indicators for the BMW Group as a whole
as well as for the Automotive, Motorcycles and Financial
Services segments in the financial year 2020 compared
to the forecasts made in the Annual Report 2019. In light
of the rapid escalation of the coronavirus crisis during
the first quarter 2020, the BMW Group partially revised
its outlook for the year. The changes are shown below.
outcome in 2020
After suffering an economic slump at the beginning
of the year, but then avoiding a second wave of infec-
tions, China recovered earlier and faster than other major
economies. Instead of introducing massive stimulus pro-
grammes, China increasingly relied on other instruments,
such as lowering the reserve requirement ratio to 12.5%
and the loan prime rate to 3.85%.
K = 127
in 2019 Annual Report
Forecast for 2020
BMW GROUP COMPARISON OF 2020
FORECASTS WITH ACTUAL OUTCOMES 2020
COMPARISON OF FORECASTS
WITH ACTUAL OUTCOMES
Report on Economic Position
Combined Management Report
BMW Group
Report 2020
Despite declining key performance indicators in
2020, the BMW Group's results of operations, financial
position and net assets are indicative of its solid finan-
cial condition. Overall, business developed in line with
management's revised expectations. This assessment also
takes into account events after the end of the reporting
period. The outlook for 2021 factors in the expected
impact of the coronavirus pandemic.
The BMW Group coped well with the major chal-
lenges that arose during the pandemic year 2020 and, in
view of the pronounced level of volatility on international
markets, can look back on a business performance over
the last 12 months that can be regarded as satisfactory
overall.
Forecast revision
during the year
Europe
-25.5
International motorcycle markets in the 250 cc plus
class were down slightly overall (-0.9%) in 2020 due to
the pandemic. Markets in Europe were also negatively
impacted by the developments and contracted by 1.1%.
In Spain, the decline was significantly higher at 13.7%.
Registration figures were also down in Italy (-9.1%) and
France (-4.6%). By contrast, Germany saw a significant
increase, with new registrations up by 15.0%. The US
market was at a similar level to the previous year (+0.1%).
Brazil, on the other hand, recorded a significant drop
(-17.7%).
Price in euros
-27.7
thereof Italy
Price in US dollars
-19.1
-24.3
thereof France
US dollars before recovering to stand at 51 US dollars by
the end of the year. For a short time in April, WTI crude
was quoted at a negative market price of 37 US dollars,
ultimately finishing the year at a positive market price
of 48 US dollars.
AUTOMOBILE MARKETS
thereof Spain
Automobile markets slumped worldwide in 2020 due
to the impact of the coronavirus pandemic. In total, reg-
istration figures for passenger cars and light commercial
vehicles fell sharply by 13.3% to a total of 72.4 million
units during the year under report.
Price per barrel of Brent Crude
100
50
Source: Reuters.
INTERNATIONAL AUTOMOBILE MARKETS
Change in %
thereof Germany
EBIT margin
Europe
OIL PRICE TREND
-32.3
thereof United Kingdom (UK)
-29.4
INTERNATIONAL MOTORCYCLE MARKETS
|<< = 126
Report on Economic Position
Combined Management Report
Report 2020
BMW Group
-13.3
Total
2021
2020
2019
2018
2017
2016
-11.4
Japan
-5.0
China
-14.5
Oil prices reacted sharply to the coronavirus pan-
demic and the related collapse in demand. The market
price of WTI crude even turned negative for a short
time. Although the price recovered somewhat by the
end of 2020, it remains slightly lower than one year
earlier. The price of Brent crude sank to a low of 19
USA
INTERNATIONAL MOTORCYCLE MARKETS
Return on capital employed
Change in %
EBIT margin
Revenues
2019
K = 130
2020
in € million
BMW GROUP CONDENSED INCOME STATEMENT
RESULTS OF OPERATIONS OF THE BMW GROUP
Report on Economic Position
Combined Management Report
Cost of sales
BMW Group
Report 2020
Retail vehicle deliveries during a given reporting
period do not correlate directly to the revenue that
BMW Group recognizes in respect of such reporting
period.
BMW Group believes the retail vehicle delivery data
presented in this report are materially correct in accord-
ance with BMW Group's current definition and related
policies and procedures of retail vehicle deliveries.
Retail vehicle delivery data for periods prior to 2020
include an immaterial number of pre-series vehicles
that were never intended to be sold to end users
(such as vehicles for use by government agencies in
connection with safety evaluations (e.g., crash tests)
or for other tests).
The definition of deliveries includes vehicles deliv-
ered in the United States and Canada if the relevant
dealers designate such vehicles as service loaner
vehicles or demonstrator vehicles.
The vast majority of deliveries of vehicles are carried
out by independent dealerships or other third parties,
and BMW Group is reliant on such third parties to
correctly report relevant data to BMW Group.
The preparation of BMW Group's retail vehicle deliv-
ery data involves a variety of estimates and judgments,
some of which are complex and all of which are inher-
ently subjective, and is subject to other uncertainties,
including:
Combined Management Report
Report on Economic Position
BMW Group
Report 2020
* See Glossary for the definition of deliveries.
KK 129
98,990
104,210
-85,408
-9,367
6.1
Other operating income and expenses
43
-1,285
Profit before financial result
4,830
7,411
-34.8
Financial result
392
|<< = 125
-293
-8,795
Selling and administrative expenses
-24.8
18,063
13,582
Gross profit
-5.0
0.9
-86,147
The retail vehicle delivery data for automobiles for
BMW Group's other markets have not been adjusted
for any period prior to 2020, nor have any retail vehi-
cle delivery data for motorcycles been adjusted for any
period prior to 2020. BMW Group believes the impact
on BMW Group's retail vehicle delivery data presented
in this report of such data not having been adjusted to
reflect the Revised Reporting Process to be immaterial.
MOTORCYCLES SEGMENT
Deliveries to customers
When presenting total retail vehicle delivery data
for automobiles other than model-by-model data, data
relating to the years 2016 through 2019 for BMW Group's
16 most significant markets were adjusted to reflect the
Revised Reporting Process. In the years 2016 through
2019, these 16 markets represented on average approxi-
mately 87% of BMW Group's total retail deliveries of au-
tomobiles. For each of the years 2016 through 2019, these
revisions amounted to less than 1% of BMW Group's
total retail deliveries of automobiles.
In connection with the above, BMW Group reviewed
prior period retail vehicle delivery data for automo-
biles and determined that certain vehicle deliveries of
automobiles were not reported in the correct periods.
BMW Group has corrected its reported delivery data, as
further described below, to report deliveries in the period
in which they occurred and has made, and will continue
to make in the future, certain adjustments to its poli-
cies and procedures (together, the “Revised Reporting
Process") in order to further improve the reliability and
validity of its retail vehicle delivery data, in particular
with respect to the timing of the recognition of retail
vehicle deliveries.
12.7 (-16.3%-pts.)
%
2.7 (-2.2%-pts.)
%
99 (-22.0%)
significant decrease
2,325,179 (-8.4%)
moderate decrease
slight decrease
120,726 (-4.2%)
5,222 (-26.6%)
significant decrease
significant decrease
Q1: between 0 and 3
units
between 2 and 4
significant decrease
significant decrease
significant decrease
Q1: slight decrease
in line with last year's level
€ million
significant decrease
Return on capital employed
g CO2/km
slight decrease Q1: significant decrease
Q3: moderate decrease
units
169,272 (-3.4%)
In December 2019, BMW Group was informed by
the SEC that the SEC had commenced an inquiry into
BMW Group's vehicle sales and sales reporting practic-
es. On January 22, 2020, the SEC formally opened an
investigation into potential violations of U.S. securities
laws by BMW Group relating to disclosures regarding
BMW Group's unit sales of new vehicles. On Septem-
ber 24, 2020, BMW AG and two of its U.S. subsidiaries
settled the matter with the SEC and, without admitting
or denying the allegations, consented to the entry of an
order (the "SEC Order") finding violations of Sections
17(a)(2) and 17(a)(3) of the U.S. Securities Act and agreed
to pay a penalty of U.S.$18 million. The SEC Order
alleged, among other things, that the disclosures that
BMW Group had provided to investors in its U.S. bond
offerings conducted under Rule 144A in the period from
2016 to 2019 had contained material misstatements and
omissions regarding BMW Group's U.S. retail vehicle
deliveries.
RETAIL VEHICLE DELIVERY DATA*
KK = 128
Report on Economic Position
Report 2020
Combined Management Report
BMW Group
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2020: 602,247 units).
2 EU including Norway and Iceland.
slight decrease
11.2 (-3.8%-pts.)
%
Q1: moderate decrease
slight decrease
FINANCIAL SERVICES SEGMENT
Return on equity
significant decrease
15.0 (-14.4%-pts.)
%
4.5 (-3.7%-pts.)
%
between 6 and 8 Q1: between 3 and 5
slight decrease Q1: significant decrease
slight decrease
BMW Group has applied the Revised Reporting
Process to all markets with effect from the year 2020.
While BMW Group revised retail vehicle delivery data for
certain of its most significant markets for the years 2016
through 2019 presented in this report, such data were
not revised for BMW Group's other markets. As a result,
retail vehicle delivery data presented in this report for
the
years 2016 through 2019 is not directly comparable
to such data presented for the year 2020. Specifically, the
retail vehicle delivery data for automobiles presented in
this report have been revised as follows:
Combined Management Report
Report on Economic Position
Profit/loss from discontinued operations
Source: Working Group for the Iron and Metal Processing Industry.
MANAGING CORPORATE CITIZENSHIP IN A TARGETED
AND EFFECTIVE MANNER
Employees and Society
Report 2020
Combined Management Report
BMW Group
Report 2020
Profit/loss before tax
5,222
7,118
-26.6
Income taxes
-1,365
-2,140
36.2
Profit from continuing operations
3,857
K = 121
4,978
To ensure transparency regarding all the measures
taken in this area, the Group-wide guidelines on spon-
soring, donations and memberships have been binding
since 2011. Apart from transparency, it is also essential
to carefully document all the measures in order to ensure
that legal requirements are complied with.
Inspiring, connecting, investing - the BMW Foundation Herbert Quandt
GENERAL AND SECTOR-
SPECIFIC ENVIRONMENT
ECONOMIC POSITION
REPORT ON
K = 122
Report on Economic Position
Combined Management Report
Report 2020
BMW Group
* The BMW Foundation Herbert Quandt is a corporate foundation of BMW AG. The Foundation implements
its programme with the income earned on endowment assets or received in the form of regular financial
contributions from the benefactor. In accordance with the Articles of Incorporation, the independent Foun-
dation is advised by the Board of Trustees (Kuratorium), on which the Chairman of the Supervisory Board
and one member of the Board of Management of BMW AG are represented.
In response to the challenges posed by the coronavirus pandemic, the
BMW Foundation Herbert Quandt supported the German government's
#WirvsVirus hackathon both financially and via its RESPOND network
during the year under report. This world's largest hackathon aims to de-
velop creative solutions to combat the impact of the pandemic.
Further information about the BMW Foundation Herbert Quandt is
available here: www.bmw-foundation.org/en/
In order to actively support the ongoing transformation to a sustainable
society and a sustainable economic system, the Foundation launched
the RESPOND Accelerator programme in 2020. For the first group,
ten start-ups were selected that aim to successfully develop their sus-
tainable business models. RESPOND aims to demonstrate that social
responsibility and successful entrepreneurship are not contradicto-
ry concepts. As part of the five-month programme, which got off to a
successful start despite the adverse conditions caused by the pandem-
ic, the start-ups received support from mentors and investors from the
Foundation's network.
currently has 1,854 members in 109 countries, also maintained its col-
laboration via online meetings.
The digital transformation expedited by the coronavirus pandemic also
impacted the Foundation's programmes in 2020. For example, the Re-
sponsible Leaders Table format events on the topic of Europe featuring
selected leaders from the worlds of politics, business and civil socie-
ty were held virtually. The Foundation also conducted the Responsible
Leaders forums that had already been planned for Turkey and India on-
line. The RISE-City programme was carried out in Amsterdam, Madrid,
Athens and Singapore - either physically or on a hybrid basis - depend-
ing on the local situation. The Responsible Leaders Network, which
Through its Responsible Leadership programmes, the global Respon-
sible Leaders Network and its impact-oriented investments (the Eber-
hard von Kuenheim Fund), the BMW Foundation Herbert Quandt has
promoted the UN Sustainable Development Goals since their adoption
in 2015.
The BMW Foundation Herbert Quandt* is an independent corporate
foundation whose activities contribute towards the BMW Group's cor-
porate citizenship and mission. The Foundation's mission is to inspire
executives worldwide to take social responsibility and work as respon-
sible leaders for a peaceful, just and sustainable future. Moreover, the
Foundation invests in initiatives and organisations that develop solu-
tions to social, environmental and political crises.
The BMW Group will continue to be socially active
on a global basis and focus its commitment on the UN
Sustainable Development Goals going forward. The joint
initiatives of the BMW Group and its partners, particular-
ly the BMW Foundation Herbert Quandt, therefore focus
on the topics in which they can have the greatest impact
and benefit society to the greatest extent.
-22.5
44
Net profit
2020
2019
Change in %-pts.
5.3
6.8
-1.5
3.9
4.8
-0.9
13.7
17.3
-3.6
26.1
30.1
-4.0
4 Income tax expense as a percentage of Group profit before tax.
3 Gross profit as a percentage of Group revenues.
2 Group net profit as a percentage of Group revenues.
1 Group profit before tax as a percentage of Group revenues.
3,857
5,022
-23.2
Earnings per share of common stock in €
5.73
7.47
-23.3
In 2020, the coronavirus crisis caused the global
economy to slump on a scale not seen since the Great
Depression of the 1930s. The International Monetary
Fund (IMF) estimates the contraction in global gross
domestic product (GDP) at 3.5%. All G7 countries saw a
significant drop in economic output. The BRIC countries
also suffered sharp declines – with the notable exception
of China.
Earnings per share of preferred stock in €
7.49
-23.2
in %
Pre-tax return on sales¹
Post-tax return on sales²
Gross profit margin³
Effective tax rate4
5.75
-
BMW Group
GDP in the United Kingdom (UK) slumped by 10.7%
in 2020. The performance was influenced not only by
the consequences of the coronavirus pandemic, but also
by the ongoing uncertainty surrounding the terms of
the Brexit trade deal, which would ultimately govern the
UK's future relations with the European Union (EU).
g
300
400
500
Index: December 2015=100
DEVELOPMENT OF METALS PRICES
Looking at raw materials for batteries, the price of
cobalt remained largely stable compared to the previous
year. By contrast, the price of lithium fell slightly, reflect-
ing lower demand due to the coronavirus pandemic on
the one hand and oversupply on the other.
Prices for precious and non-ferrous metals also
followed a similar trend. One exception, however, was
rhodium, which is mainly used in catalytic converters. In
this case, prices continued to rise significantly through-
out the 12-month period. By the end of the year the price
of this precious metal had almost tripled compared to
one year earlier.
The impact of the coronavirus pandemic was also felt
on practically all commodities markets in 2020. After
falling noticeably in mid-year, steel and aluminium prices
rose again sharply towards the end of the year.
ENERGY AND RAW MATERIALS PRICES
Report on Economic Position
Report 2020
Combined Management Report
BMW Group
Europe's economy was hit harder than any other
major region. In the eurozone, the economy contracted
sharply by 7.6% year-on-year. Significant losses were
recorded in Germany (-5.0%), France (-8.3%), Italy
(-9.0%) and Spain (-11.0%), the eurozone's largest
economies. With many areas of the economy complete-
ly paralysed at times due to lockdowns lasting several
weeks, both production and consumption slumped
dramatically. Unemployment rates rose in all countries,
despite the increases being at least partially held down
by short-time work programmes. Governments across
the region implemented extensive economic stimulus
packages to support their countries' economies. The
assistance programmes caused government spending
to rise sharply in 2020, resulting in higher debt ratios in
the respective countries.
The Japanese yen fluctuated between 114 and 127
to the euro, resulting in an average exchange rate for the
year of 122 yen to the euro.
yen
Source: Reuters.
2021
2020
2019
200
2018
€100
Source: Reuters.
2020 2021
2019
2018
2016 2017
50
|<< = 124
100
150
200
Index: January 2016=100
STEEL PRICE TREND
2021
2020
2019
2018
2017
2016
Lithium carbonate
Platinum
Gold
Cobalt
Palladium
00
2017
The currencies of major emerging markets also lost in
value in 2020 as a consequence of the coronavirus crisis.
The Indian rupee and the Russian rouble fell by around
5% and 14% respectively against the euro on average,
while the Brazilian real depreciated by as much as 33%
against the euro.
100
Although China was the only economy to expand in
2020, its growth rate of 2.3% was significantly down on
the previous year. Consumer demand collapsed almost
completely during the spring lockdown. However, strong
pent-up demand set in from early summer and lasted
through to the end of the year, thereby helping the econ-
omy to recover.
Export-reliant Japan also suffered a considerable de-
cline in economic output (-5.3%) due to the coronavirus
pandemic during the period under report. The main
factors here were lower private consumption, particularly
in the spring, and the drop in exports.
BMW Group
Combined Management Report
Report 2020
50
Japanese yen
US dollar
Chinese renminbi
Russian rouble
British pound
= 123
K
Report on Economic Position
150
Index: December 2015=100
The same applies to the Chinese renminbi, which
averaged 7.87 renminbi to the euro over the year as a
whole.
The value of the British pound was affected by
both the coronavirus pandemic and the uncertainties
surrounding a free trade agreement with the EU. For a
while, the British currency fell to 0.93 pounds to the euro
before finishing the year at 0.83 pounds to the euro. The
average exchange rate of 0.89 pounds to the euro for the
year was slightly lower than one year earlier.
The US dollar/euro exchange rate became far more
volatile in 2020 due to the coronavirus crisis. It fluctuated
between 1.07 and 1.22 to the euro, and resulted in an
average rate for the year of 1.14 US dollars to the euro.
In the USA, GDP fell by 3.5% during the under
report. Due to the lockdowns and in the absence of
short-time work programmes, the unemployment rate
rose significantly. Consumer sentiment and exports
both slumped during various parts of the year. Both
corporate investment and industrial production suffered
a significant decline. In light of the ensuing economic
situation, the US Federal Reserve (FED) further lowered
its benchmark interest rates in 2020.
year
CURRENCY MARKETS
2016
EXCHANGE RATES COMPARED TO THE EURO
11.9
14.7
3,269
13.0
2,522
Group
-23.9
7.4
1,646
6.4
-4.4
31,435
31.3
32,938
31.3
-4.6
Depreciation and amortisation of total tangible,
intangible and investment assets
11,976
Gross value added
10,749
19.3
1,253
19,459
Net value added
11.4
10.2
21.1
-12.3
ALLOCATION
Employees
12,244
63.0
12,451
56.1
-1.7
Providers of finance
-22.9
2,129
10.9
2,466
11.1
-13.7
Government/public sector
1,229
6.3
2,250
10.1
-45.4
Shareholders
22,189
Minority interest
6.4% Shareholders
0.4
Combined Management Report
Report on Economic Position
RESULTS OF OPERATIONS BY SEGMENT
BMW GROUP REVENUES BY SEGMENT
in € million
Currency adjusted
2020
2019
Change in %
change* in %
80,853
91,682
-11.8
-10.5%
2,284
2,368
-3.5
-1.1%
30,044
29,598
1.5
2.9%
3
BMW Group
Report 2020
|<< = 139
0.4% Minority interest
13.0% Group
107
0.5
-23.4
Net value added
19,459
100.0
22,189
100.0
-12.3
* Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
BMW Group
Report 2020
82
Combined Management Report
BMW GROUP VALUE ADDED 2020
in %
Depreciation and amortisation 11.9
16.7 Other expenses
Cost of materials 52.1
C
19.3 Net
value added
63.0% Employees
10.9% Providers of finance
6.3% Government/public sector
68.7
Report on Economic Position
72,281
92,437
69,121
Cash inflow (+)/outflow (-) from operating activities
Cash inflow (+)/outflow (-) from investing activities
Cash inflow (+)/outflow (-) from financing activities
Effects of exchange rate and changes in composition of Group
Change in cash and cash equivalents
13,251
3,662
9,589
-3,636
-7,284
3,648
-8,254
4,790
-13,044
140
-111
251
1,501
1,057
444
⚫ Since the reporting year 2020, a new definition for workforce size has been applied (see Glossary).
To enable better comparability, the value for 2019 was adjusted accordingly (2019 before adjustment:
133,778 employees).
BMW Group
Report 2020
Combined Management Report
Report on Economic Position
K = 134
Change
Despite lower earnings, the increase in net cash in-
flows from operating activities can be explained primarily
by the pandemic-related drop in new business recorded
by the Financial Services segment. The swift measures
taken at production level to adjust to the coronavirus
situation also resulted in lower levels of inventories at
dealerships and simultaneously to a reduction in receiv‐
ables from sales financing, primarily in the form of lower
credit financing for dealerships. Advance tax payments
also dropped year-on-year due to the lower earnings.
The reduction in inventories had a positive impact on
the change in working capital, whereas the decrease in
trade payables, caused mainly by earlier plant closures
and stringent cost management, had an offsetting effect.
2019
Cash flows from operating activities are determined
indirectly, starting with Group/segment profit before
tax. By contrast, cash flows from investing and financing
activities are based on actual payments and receipts.
Change in %-pts.
6.3
6.2
36.6
33.2
0.1
3.4
THERE Holding B.V. on the sale of shares in the card
service provider HERE International B.V. to Mitsubishi
Corporation (MC) and Nippon Telegraph and Telephone
Corporation (NTT) 5 during the first half of 2020. In the
previous year, the financial result also included higher
impairment losses recognised in connection with the
strategic realignment of the YOUR NOW Group.
1 See
Fuel Consumption and CO2 Emissions Information.
2 Research and development expenditure as a percentage of Group revenues.
3 Capitalised development costs as a percentage of research and development expenditure.
4 Further information is provided in note 10 to the Group Financial Statements.
5 Further information is provided in note 24 to the Group Financial Statements.
BMW Group
Report 2020
Combined Management Report
Report on Economic Position
K = 133
As forecast most recently in the quarterly state-
ment to 30 September 2020, Group profit before tax
of €5,222 million was significantly lower than one year
earlier (2019: €7,118 million) and therefore in line with
the revised outlook.
Income tax expense for the year decreased to
€1,365 million (2019: €2,140 million), mainly due to the
pandemic-related drop in earnings. The effective tax rate
fell to 26.1% (2019: 30.1%). In the previous financial year,
the effective tax rate was raised due to the non-deducti-
bility of items for tax purposes, namely the recognition
of the provision relating to the EU Commission's anti-
trust proceedings and impairment losses relating to the
YOUR NOW Group, the latter of which was reported
within other financial result.
The size of the workforce decreased slightly to
120,726 employees year-on-year and was therefore in line
with expectations (2019: 126,016*; -4.2% employees).
FINANCIAL POSITION OF THE BMW GROUP
The consolidated cash flow statements for the Group
and the Automotive and Financial Services segments
show the sources and applications of cash flows for the
financial years 2020 and 2019, classified according to
operating, investing and financing activities. Cash and
BMW GROUP CASH FLOWS
in € million
cash equivalents in the cash flow statements correspond
to the amounts disclosed in the balance sheet.
2020
The year-on-year change in cash flows from investing
activities was positively influenced by the level of net out-
flows disbursed in 2019 for investment assets, primarily
for the acquisition of the YOUR NOW companies. In addi-
tion, the higher level of investments in property, plant and
equipment and intangible assets in 2019 – particularly
for the market launch of new vehicle models such as the
BMW 1 Series, the BMW 3 Series and the X5 - resulted in
a year-on-year decrease in cash outflows. Proceeds from
the sale of marketable securities also had a positive impact
on the net cash outflow from investing activities.
The net cash outflow from financing activities was
mainly attributable to lower financing requirements in
the Financial Services segment and the related reduction
in bond issues, the reduced volume of asset-backed fi-
nancing and the repayment of liabilities to banks.
REFINANCING
13.0
0.6
K = 135
BMW Group
Report 2020
Combined Management Report
Report on Economic Position
NET ASSETS OF THE BMW GROUP
BMW GROUP CONDENSED BALANCE SHEET AT 31 DECEMBER
|<< = 136
Adjusted for currency effects, the BMW Group's
balance sheet total was slightly lower than at 31 Decem-
ber 2019. Including currency effects from the US dollar
and pound sterling, amongst others, the balance sheet
total decreased moderately.1
Property, plant and equipment (adjusted for currency
effects) were slightly down on the previous year, mainly
due to the lower amount of capital expenditure in 2020.
In the previous year, investments at the BMW plants in
Spartanburg, USA and San Luis Potosí, Mexico had the
effect of increasing property, plant and equipment.
in € million
ASSETS
Intangible assets
Group
2020
2019
Change in %
Currency-adjusted
change² in %
Proportion of
balance sheet total
1.6
35.3
50.0
utilised*
A broad range of instruments on international money
and capital markets is used to refinance worldwide op-
erations. The funds raised are used almost exclusively to
refinance the BMW Group's Financial Services business.
The overall objective of Group financing is to ensure the
solvency of the BMW Group at all times, focusing on
three areas:
1. The ability to act through permanent access to stra-
tegically important capital markets
2. Autonomy through the diversification of refinancing
instruments and investors
3. Focus on value through the optimisation of financing
costs
Financing measures undertaken at corporate level
ensure access to liquidity for the Group's operating sub-
sidiaries at standard market conditions and consistent
credit terms. Funds are acquired in line with a target
liability structure, comprising a balanced mix of financ-
ing instruments. The use of longer-term instruments to
refinance the Group's Financial Services business and
the maintenance of a sufficiently high liquidity reserve
serves to rule out any imminent liquidity risk for the
portfolio. This conservative financial approach also has
a favourable effect on the Group's rating. Further infor-
mation is provided in the section “Liquidity risks” within
the "Report on Outlook, Risks and Opportunities".
Focused capital market management, good rat-
ings and the high level of acceptance enjoyed by the
BMW Group on those markets enabled it to refinance
itself on the world's debt capital markets at favourable
conditions during the period under report, despite the
temporary impact of the coronavirus pandemic on those
markets. In addition to bonds, loan notes and private
placements, the Group also issued commercial paper. As
in previous years, the issues were all in high demand,
not only from institutional investors, but also from
private investors for selected transactions. In addition,
retail customer and dealership financing receivables as
well as rights and obligations from leasing contracts are
securitised in the form of asset-backed securities (ABS)
financing arrangements. Specific banking instruments,
such as the customer deposits used by the Group's own
banks in Germany and the USA, are also deployed for
financing purposes. In addition, loans are also taken from
international banks.
BMW Group
Report 2020
Combined Management Report
Report on Economic Position
In 2020, the BMW Group issued one euro benchmark
bond on the European capital market with a total issue
volume of €2.3 billion as well as one bond on the US
capital market with a total issue volume of 4.0 billion
US dollars. In addition, one bond was issued for a total
amount of 0.4 billion British pounds. Private placements
totalling €3.6 billion were also issued, including so-called
"Panda Bonds" for an amount of 6.0 billion Chinese
renminbi. A total of nine public ABS transactions were
executed in 2020, including three transactions in China,
two in Germany and one each in Japan, the USA, Canada
and the UK, with a total financing volume equivalent
of €5.8 billion. In addition, further financing equivalent
to €10.7 billion was realised or secured in the UK, Ger-
many, the USA, Switzerland and Australia via new and
prolonged ABS conduit transactions. Other transactions
remain in place in Germany, China, the UK, the USA,
Canada, Japan and South Africa, amongst others.
2019
The following table provides an overview of amounts
utilised at 31 December 2020 in connection with the
BMW Group's money and capital market programmes:
The BMW Group also has access to a syndicated
credit line, which was renegotiated in July 2017. The
syndicated credit line of €8 billion has a term ending in
July 2024 and is being made available by a consortium
of 44 international banks.
The credit line was not being utilised at 31 Decem-
ber 2020. Further information with respect to financial
liabilities is provided in ✓ notes 31, 35 and 39 to the Group
Financial Statements.
Programme
in € billion
Euro Medium Term Notes
Australian Medium Term Notes
Commercial Paper
* Measured at exchange rates at the relevant transaction dates.
Programme
framework
Amount
Liquidity-related measures were put in place during
the first half of the year to enable the Group to respond
flexibly to ongoing uncertainties caused by the coronavi-
rus pandemic and to manage operations at short notice
in the event of possible renewed containment measures.
Reflecting the improved situation on capital markets in
the second half of the year, the BMW Group was able to
reduce the amount of liquidity on hand to €17.8 billion
at 31 December 2020, similar to the previous year's level.
in % 2020
2020
Profit before financial result dropped sharply to
€4,830 million (2019: €7,411 million), reflecting the
various negative impacts on gross profit described above.
22.7
2.2
100.0
2020
2019
2.3
100.0
Change in %
Factors working in the opposite direction included
product mix effects due to the less pronounced drop in
the sale of high-revenue models, higher selling prices on
the back of a rejuvenated product range, and a portfo-
lio-related upturn in leasing revenues. Positive develop-
ments on pre-owned vehicle markets were reflected in
higher revenues generated from the sale of returned lease
vehicles, particularly in the third and fourth quarters.
Due to the drop in new leasing business in the first half
of the year as well as the expected decline in new leasing
business in light of lower inventory levels at dealerships,
the amount of revenues eliminated on consolidation
decreased year-on-year.*
Group cost of sales amounted to €85,408 million,
similar to the previous year's level (2019: €86,147 mil-
lion; -0.9%). Higher risk-provisioning expenses, mainly
arising in connection with the measurement of credit
and residual value risks, were partially offset by reduced
manufacturing costs due to lower production volumes.
Manufacturing costs
46,878
48,776
-3.9
Cost of sales relating to financial services business
27,114
25,828
thereof interest expense relating to financial services business
1,960
2,288
Research and development expenses
5,689
21.4
5,952
30.6
44.4
5
Other regions
Americas
Asia
Europe
in %
BMW GROUP REVENUES BY REGION
Group revenues by region were as follows:
Report on Economic Position
Report 2020
Combined Management Report
BMW Group
Group
BMW GROUP COST OF SALES
in € million
2020
K = 131
2019
Due to coronavirus-related dealership closures,
Group revenues for the financial year under report
were moderately down on the previous year (2020:
€98,990 million; 2019: €104,210 million; - 5.0%).
Negative currency effects caused by the unfavourable
development of the US dollar, the Russian rouble and
the Chinese renminbi also had a downward impact on
revenues.
44.3
32.1
5.0
-14.3
-4.4
thereof amortisation of capitalised development costs
1,710
Research and development expenses
Amortisation
New expenditure for capitalised development costs
Total research and development expenditure
K = 132
2020
2019
5,689
5,952
-1,710
-1,667
2,300
2,134
6,279
6,419
Furthermore, the eliminations described above had
an equal and opposite impact on revenues, resulting in
a year-on-year decrease in the amount of cost of sales
eliminated on consolidation.
Research and development expenses were slightly
lower than in the previous year. Higher expenses were
incurred in 2019 including those relating to the BMW iX¹
for instance. By contrast, the amount capitalised for future
vehicle model start-ups increased in the financial year un-
der report. The higher level of capitalised development
costs mainly related to new models, the electrification of
the vehicle fleet and automated driving.
Depreciation and amortisation on property, plant
and equipment and intangible assets recorded in cost of
sales and in selling and administrative expenses totalled
€6,143 million (2019: €6,017 million).
Selling and administrative expenses decreased year-
on-year, influenced in particular by lower personnel
expenses (due to a year-on-year decline in the number
of employees) and a decrease in expenses for marketing
and communication (including the impact of new model
launch events transmitted via digital formats). Stringent
fixed cost management also contributed to the reduction
in selling and administrative expenses.
BMW GROUP PERFORMANCE INDICATORS RELATING TO RESEARCH AND DEVELOPMENT EXPENSES
in %
Research and development expenditure ratio²
Capitalisation rate³
The net amount of other operating income and ex-
penses improved significantly, whereby the year-on-year
change was attributable to the expense recognised in the
first half of the previous financial year for the provision
relating to ongoing antitrust proceedings.4
in € million
BMW GROUP RESEARCH AND DEVELOPMENT EXPENDITURE
enues.
Cost of sales relating to Financial Services business
went up as a result of the costs associated with the sale
of returned lease vehicles, mirroring the impact on rev-
1,667
2.6
Service contracts, telematics and roadside assistance
1,411
1,641
-14.0
Warranty expenses
Other cost of sales
Cost of sales
2,971
The financial result improved significantly year-on-
year. The figure reported for 2020 benefited in particular
from an increase to €1,212 million (2019: €918 million)
of at-equity earnings generated by the Chinese joint ven-
ture BMW Brilliance Automotive Ltd., Shenyang, as
well as from the gain of €105 million recorded by
2,566
1,345
1,384
-2.8
85,408
86,147
-0.9
* Further information is provided in ✓ note 5 to the Group Financial Statements.
BMW Group
Report 2020
Combined Management Report
Report on Economic Position
In addition, warranty expenses were negatively
impacted in 2020 by the recognition of provisions in
connection with the exhaust gas recirculation cooler and
vehicle recalls (such as for contaminated battery cells in
plug-in hybrid vehicles).
15.8
12,342
11,729
5.2
Receivables from sales financing (adjusted for cur-
rency effects) went down slightly compared to 31 De-
cember 2019, primarily due to the decrease in dealership
financing, mainly in the USA, Germany, the UK and
France. A total of 1,238,286 new credit financing con-
tracts were concluded with retail customers during the
financial year 2020. The number of contracts in place
with dealerships and retail customers decreased by 0.6%
to 4,040,231 contracts.
Group equity rose slightly by €1,613 million to
€61,520 million, driven primarily by the profit of
€3,775 million attributable to shareholders of BMW AG.
The dividend payment for the financial year 2019
amounted to €1,646 million, reducing equity accordingly.
Other provisions increased year-on-year due to addi-
tions to risk provisions in connection with the exhaust
gas recirculation cooler and various recalls, such as for
contaminated battery cells in plug-in hybrids.
Financial liabilities decreased moderately over the
twelve-month period, with repayments of maturing
bonds exceeding new issues.
Despite the volatility caused by the outbreak of the
coronavirus pandemic, the results of operations, finan-
cial position and net assets of the BMW Group remained
stable throughout the financial year, thanks to a raft of
measures that were immediately implemented, including
focused working capital management, strict investment
and fixed cost management and targeted liquidity man-
agement.
BMW GROUP EQUITY RATIO*
in %
Group
Automotive segment
Financial Services segment
* Equity capital as a percentage of the balance sheet total, respectively.
31.12.2020
31.12.2019
Change in %-pts.
28.4
26.3
2.1
37.0
35.5
1.5
10.5
Leased products (adjusted for currency effects) were
slightly up on the previous year due to portfolio growth,
mainly in Germany, Italy and Switzerland.
9.9
Combined Management Report
Report on Economic Position
100.0
-5.9
49.1
Trade payables
8,644
10,182
-15.1
-13.3
4.0
Other liabilities
21,187
23,066
-8.1
-4.2
9.8
1 Further information is provided in ✓ note 5 to the Group Financial Statements.
2 The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to
the prior year figures.
Total equity and liabilities
216,658
228,034
-5.0
-1.6
BMW Group
Report 2020
0.6
K = 137
BMW Group
-22
916
0.9
1,031
1.0
-11.2
100,556
100.0
105,219
100.0
-4.4
52,355
52.1
57,358
54.5
-8.7
16,766
16.7
14,923
14.2
12.4
0.6
650
-5.0
104,210
Combined Management Report
Report 2020
Report on Economic Position
VALUE ADDED STATEMENT
BMW GROUP VALUE ADDED STATEMENT
The value added statement shows the value of work
performed by the BMW Group during the financial
year, less the value of work bought in. Depreciation and
amortisation, cost of materials, and other expenses are
treated as bought-in costs in the value added calculation.
The allocation statement applies value added to each of
the participants involved in the value added process.
The bulk of the net value added benefits the employees.
The remaining proportion in the Group is retained to
finance future operations. The gross value added amount
treats depreciation and amortisation as a component of
value added which, in the allocation statement, would be
treated as internal financing.
Net valued added by the BMW Group remained at a
high level in the financial year 2020.
WORK PERFORMED
Revenues
Financial income
Other income
Total output
-8.9
Cost of materials*
Other expenses
Bought-in costs
2020
2020
2019
in € million
in %
in € million
2019
in %
Change
in %
98,990
98.4
|<< = 138
116,740
106,376
Financial liabilities
Receivables from sales financing
84,277
-8.8
-4.7
38.9
Financial assets
7,752
7,325
5.8
7.2
3.6
Deferred and current tax
3,065
3,403
-9.9
-7.1
1.4
Other assets
10,326
12,939
-20.2
0.3
11.8
4.6
703
5.6
5.7
Property, plant and equipment
21,850
23,245
-6.0
-3.5
10.1
Leased products
41,995
-17.9
42,609
2.6
19.4
Investments accounted for using the equity method
3,585
3,199
12.1
12.0
1.7
Other investments
735
-1.4
68.8
4.8
14,896
2.7
7.1
28.4
Pension provisions
3,693
3,335
10.7
11.7
1.7
Other provisions
13,982
13,209
5.9
8.9
6.5
Deferred and current tax
1,256
1,595
-21.3
-18.9
0.6
59,907
61,520
Equity
EQUITY AND LIABILITIES
15,891
-6.3
-3.1
6.9
Trade receivables
2,298
2,518
-8.7
-6.7
1.1
Inventories
Cash and cash equivalents
12,036
12.5
14.9
6.2
Total assets
216,658
228,034
-5.0
-1.6
100.0
13,537
-40.0
99.0
-14,194
2019
Change in %
2,722
4,467
-39.1
100
187
-46.5
1,725
2,272
-24.1
-235
-96
910
288
5,222
7,118
-26.6
|<< = 140
2020
Group
0.0%
Other Entities
Eliminations
-19,443
27.0
98,990
104,210
-5.0
-3.5%
Automotive
Motorcycles
-26.5%
Other Entities
Eliminations
Group
* The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year figures.
BMW GROUP PROFIT / LOSS BEFORE TAX BY SEGMENT
in € million
Automotive
Motorcycles
Financial Services
Financial Services
MINI sales volume
2020 in %
157,040
177,553
-11.6
53.7
32,958
30,383
-18.1
8.5
40,683
-19.0
Change in %
24,875
2019
DELIVERIES OF MINI VEHICLES BY MODEL VARIANT 2
Proportion of
MINI total
MINI Countryman
MINI Clubman
MINI Convertible
MINI Hatch (3- and 5-door)
in units
11.3
Rolls-Royce total
-26.4
5,100
3,756
-12.3
2020
77,709
Combined Management Report
-21.4
Free cash flow for the Automotive segment was as
follows:
Report on Economic Position
Report 2020
Combined Management Report
BMW Group
|<< = 146
* Further information is provided in note 10 to the Group Financial Statements.
As forecast for the financial year 2020, ROCE declined
significantly and was well below the long-term strategic
target valid through 2020 of at least 26% for the auto-
motive segment.
-
The Automotive segment's RoCE for 2020 was signif-
icantly lower at 12.7% (2019: 29.0%; -16.3 percentage
points). The decline was mainly attributable to the lower
EBIT. The higher volume of capital expenditure in pre-
vious years – including amounts invested to expand the
product portfolio – also contributed to this development.
Profit before tax for the year amounted to €2,722 mil-
lion and was therefore significantly lower than one year
earlier (2019: €4,467 million; -39.1 %).
The segment EBIT margin (profit before financial
result as a percentage of revenues) came in at 2.7% (2019:
4.9%; -2.2 percentage points). As forecast in the quar-
terly statement to 30 September 2020, the EBIT margin
was within the target range of between 0 and 3% and
therefore in line with the revised outlook. In the 2019
Annual Report, a segment EBIT margin within a target
range of between 2 and 4% was forecast.
The net amount of other operating income and ex-
penses improved by €1,361 million, largely due to the
provision recognised in relation with the EU Commis-
sion's ongoing antitrust proceedings in the previous
financial year.*
Expenses recognised for workforce measures were
largely offset by lower expenses for performance-related
remuneration components.
year-on-year.
In addition, lower capitalised overhead costs due to
the reduction of inventories accounted for at Group level
as well as higher expenses for depreciation and amorti-
sation had the effect of increasing segment cost of sales
Segment cost of sales decreased moderately to
€71,456 million compared to the previous year (2019:
€78,062 million; -8.5%). The volume-related decline
in cost of sales was offset by expenses for various pro-
visions, including those recognised in connection with
the exhaust gas recirculation cooler and recalls (such as
contaminated battery cells in plug-in hybrid vehicles).
Automotive segment revenues amounted to
€80,853 million (2019: €91,682 million; -11.8%, cur-
rency-adjusted: -10.5%) and were therefore significantly
lower than one year earlier. Lower sales volumes due to
the coronavirus pandemic and negative currency effects
were partially offset by overall favourable product mix
effects brought about by the less pronounced drop in the
sale of high-revenue models. Improved selling prices also
helped to cushion the impact of the drop in revenues.
AUTOMOTIVE SEGMENT PERFORMANCE
Report on Economic Position
2,508
Report 2020
2 Retail vehicle delivery data presented for 2020 is not directly comparable to such data presented for previous
years. For further information on retail vehicle delivery data, please see ✓ Comparison of Forecast with
Actual Outcomes.
1 See Fuel Consumption and CO2 Emissions Information.
100.0
-15.8
347,465
292,582
26.5
98,846
2,199
360
1,326
BMW i (i3 and 18)
2.4
22.1
39,882
48,693
BMW X7
1.9
72.3
22,116
38,100
BMW X6
8.3
1.9
165,498
168,674
BMW X5
2.7
-10.3
61,569
55,237
BMW X4
14.4
-7.7
316,883
292,328
BMW X3
3.7
-19.1
91,765
28,162
42,249
-33.3
1.4
873
Wraith/Dawn
Cullinan
-51.1
662
324
-40.4
604
FREE CASH FLOW AUTOMOTIVE SEGMENT
Phantom
Ghost
Change in %
2019
2020
in units
BY MODEL VARIANT 1,2
-34.2
DELIVERIES OF ROLLS-ROYCE VEHICLES
Due to the global impact of the coronavirus pan-
demic, Rolls-Royce deliveries fell to 3,756 units (2019:
5,1002 units; -26.4%). Nevertheless, the leading marque
in the ultra-luxury segment continued to expand its mod-
el range, including the launch of the new Rolls-Royce
Ghost in September 2020.
ROLLS-ROYCE: FIGURES DOWN IN CHALLENGING
ENVIRONMENT AFTER PREVIOUS YEAR'S RECORD
PERFORMANCE1
At the same time, the importance of electric mobil-
ity for the MINI brand is steadily growing. In addition
to the MINI Countryman plug-in hybrid variant, the
fully electric MINI Cooper SE has been available since
March 2020. The latter generated a great deal of market
interest, with 17,580 units delivered to customers by the
end of the reporting year. The revised model of the MINI
Countryman became available in September. Deliveries
of John Cooper Works high-performance models went up
by 21.2% to 20,628 units (2019: 17,025 units²). The MINI
John Cooper Works GP made its market début in March.
In a highly challenging environment, MINI deliveries
worldwide fell to 292,582 units (2019: 347,4652 units), a
drop of 15.8%.
MINI FIGURES DOWN ON PREVIOUS YEAR 1
K<< = 145
Report on Economic Position
Combined Management Report
BMW Group
Report 2020
100
-7.1
2,184,939
2,028,841
BMW total
Rolls-Royce Motor Cars' Bespoke programme allows
customers to select their own personalised configura-
tions with maximum flexibility. The marque also offers
the Dawn, Ghost, Wraith and Cullinan models in Black
Badge variants. Black Badge vehicles can be customised
to include special features as well as higher engine per-
formance.
in € million
-1,512
2019
The segment EBIT margin (profit before financial
result as a percentage of revenues) came in at 4.5% (2019:
8.2%; -3.7 percentage points) and thus within the most
recently forecast target range of between 3 and 5%.
Motorcycles segment revenues were slightly down
year-on-year. The main reasons for this development were
the pandemic-related drop in sales and unfavourable
currency effects, which were partially offset by positive
product mix effects.
Revised models of the G 310 GS, the G 310 R and the
R 1250 RT were also presented in October and November.
Numerous series models scheduled for launch in 2021
were also presented online, including the M 1000 RR -
BMW Motorrad's first-ever M model - in September. This
was followed in October by the launch of the R18 Classic
and in November by the launch of the S 1000 R. With
the R18 Classic, BMW Motorrad is expanding its product
range in the cruiser segment with the addition of a model
that is also ideally suited for touring.
In November 2020, products such as the Definition
CE04 - an electrically powered scooter featuring innova-
tive connectivity solutions for urban mobility – were pre-
sented online using a virtual format on the BMW Group's
innovation platform #NEXTGen.
-
In light of the pandemic-related restrictions,
BMW Motorrad increasingly turned to virtual formats
to showcase its new models over the course of 2020.
MOTORCYCLES SEGMENT PERFORMANCE
BMW MOTORRAD OFFERS A GLIMPSE INTO THE FUTURE
Combined Management Report
Report on Economic Position
BMW Group
Report 2020
China 7.0
6.5 Spain
Brazil 6.3
7.2 USA
8.2 Italy
10.4 France
16.3 Germany
Other 38.1
as a percentage of sales volume
BMW GROUP - KEY MOTORCYCLE MARKETS 2020
2020
2017 2018 2019
2016
90
In February, BMW Motorrad completed its mid-range
offering with the market launches of the F 900 R (Roadster
segment) and the F 900 XR (Adventure segment). The Ad-
venture Sport model S 1000 XR followed in March. In the
Heritage segment, the R18 - a cruiser with the largest box-
er engine ever built by BMW Motorrad – has been avail-
able since September. The model revisions of the highly
successful Enduro models R 1250 GS and R1250 GSA as
well as that of the R nine T family followed in October. In
addition, various special editions were introduced to mark
the 40th anniversary of the GS series.
Four new models and several model revisions were
launched in 2020.
MARKET LAUNCHES IN 2020: MODEL RANGE
REJUVENATED
The spread of the coronavirus caused international
motorcycle markets to develop unevenly in 2020. Over-
all, however, the number of motorcycles delivered by
BMW Motorrad worldwide fell only slightly by 2.8% to
102,026 units (2019: 104,994 units). Germany, however,
managed to buck the general trend with deliveries up
by 4.7% to 27,516 units (2019: 26,292 units). Motorcy-
cle deliveries in France also edged up, rising by 1.4%
to 17,539 units (2019: 17,300 units). By contrast, figures
for Italy (13,918 units; 2019: 15,580 units; -10.7%) and
Spain (11,030 units; 2019: 12,607 units; -12.5%) - both
of which were particularly hard hit by the pandemic –
dropped sharply year-on-year.
Profit before tax for the year was significantly lower
than one year earlier.
DELIVERIES BY MARKET
The ROCE for the Motorcycles segment in 2020 was
15.0%, significantly down on the previous year's level
(2019: 29.4%; -14.4 percentage points), mainly due to
the lower level of EBIT.
<< = 149
2 EU Bank comprises BMW Bank GmbH with its branches in Italy, Spain and Portugal.
a consolidated entity.
1 The calculation only includes automobile markets in which the Financial Services segment is represented by
2019 2020
2017 2018
2016
5,381
5,115
5,974 5,982
5,708
3,000
6,000
in 1,000 units
CONTRACT PORTFOLIO OF
FINANCIAL SERVICES SEGMENT
The total portfolio of credit financing and leasing con-
tracts in place with retail customers edged up year-on-
year, rising by 1.9% to stand at 5,591,799 contracts at the
end of the reporting period (2019: 5,486,319 contracts).
China remained the region with the highest growth rate,
this time coming in with a moderate year-on-year rise of
8.7%. Figures for the Europe/Middle East/Africa region
(+2.6%) and the EU Bank² region (+2.2%) were also up
on the previous year. By contrast, the contract portfolios
in the Americas and Asia/Pacific regions fell slightly by
1.1% and 1.9% respectively.
The share of new BMW Group vehicles leased or fi-
nanced by the Financial Services segment stood at 49.8%¹
in 2020, 2.4 percentage points down on the previous year
(2019: 52.2%), mainly attributable to increased compe-
tition in China.
The total volume of new credit financing and leasing
contracts concluded with retail customers during the
twelve-month period amounted to €57,200 million, mod-
erately lower than one year earlier (2019: €61,353 mil-
lion; -6.8%).
By contrast, customer demand for pre-owned vehicles
picked up in a number of key sales markets including
the USA. Overall, a total of 405,713 credit financing
and leasing contracts relating to pre-owned BMW and
MINI brand vehicles were signed in 2020, a year-on-year
improvement of 1.9% (2019: 398,144 contracts).
New credit financing contracts also dropped mod-
erately by 6.2%, while new leasing contracts saw a
more pronounced decrease of 11.1%. Overall, leasing
accounted for 32.9% and credit financing for 67.1% of
new business.
A total of 1,845,271 new credit financing and leasing
contracts was signed with retail customers during 2020,
a moderate decrease of 7.9% on the previous year (2019:
2,003,782 contracts).
NEW BUSINESS WITH RETAIL CUSTOMERS MODERATELY
DOWN ON PREVIOUS YEAR
In a difficult environment dominated by the global
impact of the coronavirus pandemic, business devel-
oped significantly less favourably for the Financial
Services segment in 2020 compared to one year earlier,
a fact reflected in a 24.1% drop in profit before tax to
€1,725 million (2019: €2,272 million). As reported in
previous quarters, this development was primarily
due to the recognition of risk provisioning expenses
for credit and residual value risks, thereby reducing
reported earnings over the course of the twelve-month
period. Due to the impact of the coronavirus pandemic,
the segment's total business volume in balance sheet
terms decreased moderately by 6.8% to €133,093 million
(2019: €142,834 million). The contract portfolio under
management at 31 December 2020 comprised 5,981,928
contracts and was therefore at a similar level to one year
earlier (2019: 5,973,682 contracts; +0.1%).
FINANCIAL SERVICES BUSINESS HELD DOWN BY
CORONAVIRUS PANDEMIC
FINANCIAL SERVICES SEGMENT
|<<= 150
Report on Economic Position
Report 2020
Combined Management Report
BMW Group
The performance was in line with the outlook com-
municated in the quarterly statement to 30 Septem-
ber 2020, but well short of the Motorcycles segment's
ROCE target valid through 2020 of 26%.
Motorcycles segment deliveries dropped slightly to
169,272 units (2019: 175,162 units; -3.4%) due to the
global pandemic. Favourable market developments in
the fourth quarter, however, caused the total number of
motorcycles delivered over the twelve-month period to
exceed the revised outlook announced in the quarterly
statement to 30 September 2020.
|<< = 148
145.0
Intragroup net financing
Marketable securities and investment funds
Cash and cash equivalents
Change
31.12.2019
31.12.2020
in € million
NET FINANCIAL ASSETS AUTOMOTIVE SEGMENT
In the Automotive segment, net financial assets
comprised the following:
828
2,567
3,395
Free cash flow Automotive segment
-892
42
-850
Adjustment for net investment in marketable securities and investment funds
3,232
-7,165
-3,933
Cash inflow (+)/outflow (-) from investing activities
74,229
9,690
8,178
Cash inflow (+)/outflow (-) from operating activities
-
The main factor influencing the decrease in the
net cash inflow from operating activities was the pan-
demic-related year-on-year deterioration in operational
pre-tax earnings. The change in working capital was posi-
tively impacted by the reduction in inventories, while the
lower level of trade payables – mainly due to an earlier
closure of plants – had an offsetting effect compared
to the prior year. The decrease in the net cash outflow
from investing activities was mainly attributable to the
changes described in the Group Cash Flow Statement.
Change
K = 147
Financial assets
9,522
9,077
445
180
169.3
164.2 165.6
175.2
in 1,000 units
BMW GROUP DELIVERIES OF MOTORCYCLES
Sales in China grew strongly, with motorcycle deliver-
ies climbing by 33.7% to 11,788 units (2019: 8,818 units).
Brazil saw a solid increase of 6.4% to 10,707 units (2019:
10,064 units), also bucking the market trend. By contrast,
deliveries in the USA fell moderately to 12,135 units
(2019: 13,379 units; -9.3%).
MOTORCYCLE DELIVERIES DOWN DURING
PANDEMIC YEAR
MOTORCYCLES SEGMENT
Combined Management Report
Report on Economic Position
Report 2020
BMW Group
* Excluding derivative financial instruments.
885
2020
17,577
Net financial assets Automotive segment
939
-3,754
-2,815
Less: external financial liabilities*
-54
21,331
21,277
212
7,784
7,996
-711
4,470
3,759
18,462
BMW X2
At €560 million, the Automotive segment's financial
result was significantly up on the previous year (2019:
negative €32 million), mainly reflecting the improved
result from at-equity accounted investments described
in the section on Group earnings above.
-13.6
Japan 2.7
Other 28.6
as a percentage of sales volume
BMW GROUP – KEY AUTOMOBILE MARKETS 2020
A total of 307,876 units were delivered to customers
in the USA (2019: 375,726³ units; -18.1%). Despite a
challenging environment due to the coronavirus pan-
demic, the final quarter here finished strongly on the
back of rising demand.
Sales of the BMW Group's three brands on the Amer-
ican continent totalled 379,714 units (2019: 472,8793
units; -19.7%).
Figures for the UK deteriorated significantly, with
deliveries falling to 163,174 units (2019: 233,7713
units; -30.2%), not least due to uncertainty over reaching
a trade deal with the EU and the course of the pandemic.
Measures taken by the BMW Group to reduce fleet-
wide carbon emissions are having a marked effect. The
increased share of electrified vehicles delivered and the
rigorous use of Efficient Dynamics technologies have
enabled the BMW Group to achieve the stipulated fleet
CO2 limit for 2020, based on regulatory requirements.
Fleet carbon emissions of vehicles delivered in Europe at
the end of the reporting period were 99 g CO2/km (2019:
127 g CO2/km; - 22.0%).
FLEET CO2 TARGETS MORE THAN ACHIEVED 1 -
EMISSIONS WITHIN THE LEGAL LIMIT
<< = 143
Report on Economic Position
Italy 2.7
UK 7.0
Combined Management Report
4 See Fuel Consumption and CO2 Emissions Information.
3 Retail vehicle delivery data presented for 2020 is not directly comparable to such data presented for previous
years. For further information on retail vehicle delivery data, please see ✓ Comparison of Forecast with
Actual Outcomes.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2020: 602,247 units, 2019:
538,612 units).
Glossary for the definition of deliveries.
1 See
The launch of the fully electric MINI 4 and the pres-
entation of the BMW iX34 during 2020 will be followed
in 2021 by the first deliveries of the two fully electric
models, the BMW iX4 and the BMW i4.
The growing number of electrified models offered
by BMW and MINI brands was again reflected in the
sharply rising delivery figures recorded in 2020. Over
the twelve-month period, the BMW Group sold a total
of 192,662 electrified BMWs and MINIs worldwide,
around one-third (31.8%) up on the previous year
(2019: 146,1583 units). Accordingly, electric mobility has
become a significant growth driver for business. In the
meantime, the BMW Group has expanded its portfolio
of electrified vehicles to 14 models, which are available
in a total of 95 countries worldwide. Based on its existing
plans, the BMW Group will have 25 electrified models
on the road by 2023.
PROPORTION OF ELECTRIFIED VEHICLES UP
SIGNIFICANTLY
Due to the impact of the coronavirus crisis in the first
half of 2020, deliveries were originally expected to drop
significantly over the year as a whole. In the end, however,
the decrease was relatively moderate at 8.4%, largely on
the back of a distinct recovery, particularly in the final
quarter.
In 2020, the BMW Group delivered a total of
2,325,1792 BMW, MINI and Rolls-Royce brand automo-
biles to customers (2019: 2,537,5042,3 units; -8.4%), once
again leading the premium segment worldwide.
The worldwide restrictions placed on public and pri-
vate life due to the coronavirus pandemic also affected
the BMW Group and its dealership organisation. Against
this backdrop, deliveries¹ were extremely volatile in
2020. After a promising start to the year, sales figures
slumped in the spring, before recovering from the third
quarter onwards. During the final months of the
year, the
BMW Group returned to its successful course.
BMW Group
Report 2020
31.8
33.5 China
12.3 Germany
233.8
163.2
298.5
296.5
310.6
330.5
285.0
1,089.8
1,101.9
1,097.4
1,081.6
13.2 USA
913.6
2017
2018
2019
2020
thereof Germany
thereof UK
Europe
in 1,000 units
By contrast, sales performance in Europe was af-
fected more severely by the coronavirus crisis. In an
unprecedented year marked by restrictions strongly
affecting retail business, the BMW Group delivered a
total of 913,642 units across the region (2019: 1,081,6493;
-15.5%). The number of vehicles delivered in Germany
fell by 13.8% to 285,019 units (2019: 330,507³ units).
BMW Group sales in Asia grew solidly in 2020,
with deliveries to customers rising by 6.0% to a total
of 986,4642 BMW, MINI and Rolls-Royce brand vehicles
(2019: 930,7672,3 units). In China in particular, the
BMW Group surpassed the previous year's figure by
7.4%, with 778,4122 units delivered to customers (2019:
724,7112,3 units).
BMW GROUP DELIVERIES OF VEHICLES BY REGION AND MARKET 3
DELIVERIES UP IN ASIA AND DOWN IN EUROPE AND
AMERICA
2016
236.8
146,158
12.7
-2.2
4.9
2.7
-3.3
14.9
11.6
in %-pts.
2019
2020
Change
2 Profit/loss before financial result as a percentage of segment revenues.
15.0
1 Gross profit as a percentage of segment revenues.
Gross profit margin¹
Motorcycles
EBIT margin²
Gross profit margin¹
Automotive
in %
BMW GROUP MARGINS BY SEGMENT
Report on Economic Position
Combined Management Report
BMW Group
Report 2020
11.3
EBIT margin²
192,662
19.3
4.5
39,519
44,541
BMW Group BEV
Total
at
38.9
106,639
148,121
BMW Group PHEV
Change in %
2019
2020
-4.3
in units
A strong second six-month period also contribut-
ed significantly to the brands making up for a major
part of the coronavirus-related decline in the first half
of the
year. Over the full year, the BMW brand deliv-
ered 2,028,8412 units to customers worldwide, 7.1%
below the record figure set one year earlier (2019:
2,184,9392,3 units). MINI was also down year-on-year
292,582 units (2019: 347,465³ units; -15.8%). Following
the previous year's record high, Rolls-Royce Motor Cars
delivered a total of 3,756 of its ultra-luxury brand vehi-
cles to customers in 2020 (2019: 5,100³ units; - 26.4%).
BMW GROUP ASSERTS ITS POSITION AS LEADING
PREMIUM MANUFACTURER
AUTOMOTIVE SEGMENT
REVIEW OF OPERATIONS
K = 142
Combined Management Report
Report on Economic Position
Report 2020
BMW Group
K = 141
-3.7
8.2
DELIVERIES OF ELECTRIFIED MODELS 3
242.4
BMW Group
Americas
-47.6
74,236
38,879
BMW 4 Series
18.8
6.3
358,643
381,416
BMW 3 Series
5.2
-8.9
1.9
115,095
BMW 2 Series
8.1
-5.6
173,870
164,056
BMW 1 Series
2020 in %
Change in %
2019
2020
in units
104,859
3 Retail vehicle delivery data presented for 2020 is not directly comparable to such data presented for previous
years. For further information on retail vehicle delivery data, please see ✓ Comparison of Forecast with
Actual Outcomes.
BMW 5 Series
353,249
252.4
266,124
230,041
0.7
-5.3
15,819
14,982
BMW Z4
BMW X1
1.0
69.4
12,219
302,564
20,703
2.3
-9.0
50,552
46,025
BMW 7 Series
1.0
25,170
19,893
BMW 6 Series
14.9
-14.3
BMW 8 Series
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2020: 602,247 units,
2019: 538,612 units).
-21.0
1 See
45.4
508.8
595.0
635.8
724.7
778.4
thereof China²
738.2
847.7
871.8
930.8
52.2
986.5
359.5
355.4
375.7
307.9
thereof USA
453.7
456.1
457.1
472.9
Fuel Consumption and CO2 Emissions Information.
379.7
Asia²
59.9
358.8
68.3
The BMW brand introduced a variety of innovative
new products over the course of 2020, starting with the
BMW X3 plug-in hybrid variant in January, followed
by the BMW X1 plug-in hybrid and the BMW 2 Series
Gran Coupé in March. The second half of the year saw
the launch of model revisions of the BMW 5 Series and
the BMW 6 Series Gran Turismo as well as the plug-in
hybrid variants of the BMW 3 Series Touring and the
BMW X2. The new BMW 4 Series Coupé was launched
in October. The fully electric BMW iX3 celebrated its
market début in China in November, with other markets
to follow in early 2021. Additional hybrid variants of the
BMW 5 Series were also added to the product range.
NEW BMW BRAND PRODUCTS1
59.3
BMW sales volume
Proportion of
M models. In addition to these two models, BMW M also
presented the new BMW M8 Gran Coupé and the M2 CS
during the year under report. The new BMW M3 and
the BMW M4 Coupé, which both celebrated their world
premières in 2020, will be launched as further important
models in 2021.
DELIVERIES OF BMW VEHICLES BY MODEL VARIANT 1,2,3
MOST SUCCESSFUL YEAR TO DATE FOR BMW M1
The BMW brand finished the year with a total of
2,028,841 units delivered to customers worldwide (2019:
2,184,9392,3 units; -7.1%), whereby the BMW 8 Series
and the BMW X7 contributed in particular to the im-
proved model mix. In addition, the 8 Series, the X6 and
the X7 proved highly popular, each posting double-digit
percentage increases. The highly successful BMW 3 Series
model also recorded solid growth during the twelve-
month period. Deliveries of the BMW 4 Series declined
due to model life cycle factors.
BMW BRAND 1.2 BENEFITS FROM STRONG LUXURY
SEGMENT
三 144
K
BMW M GmbH finished the most successful year in
its history with a 5.9% rise in deliveries to 144,231 units
(2019: 136,165³ units; +5.9%), boosted by good contribu-
tions from the new high-performance BMW X5 M and X6
Combined Management Report
Report on Economic Position
2,537.5
2,465.0
2,350.0
2,486.1
Other markets
Total²
1 EU including Norway and Iceland.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2020: 602,247 units,
2019: 538,612 units, 2018: 455,581 units, 2017: 385,705 units, 2016: 311,473 units).
3 Retail vehicle delivery data presented for 2020 is not directly comparable to such data presented for previous
years. For further information on retail vehicle delivery data, please see ✓ Comparison of Forecast with
Actual Outcomes.
BMW Group
Report 2020
2,325.2
6,757
6,822
39,472
4,109
3,336
3,513
964
16,698
18,939
778
-22
5,994
38,035
Trade receivables
3,849
Prepaid expenses
BMW Group
Report 2020
58
2019
5,748
K = 157
2020
in € million
Report on Economic Position
Combined Management Report
Cash and cash equivalents
Current assets
Other receivables and other assets
Marketable securities
55,819
57,640
Total assets
1,086
1,261
Surplus of pension and similar plan assets over liabilities
73
Inventories
BMW Group
Report 2020
16,834
Other operating expenses decreased to €1,250 mil-
lion (2019: €2,526 million), mainly due to the prior-year
recognition of a provision relating to EU Commission
antitrust proceedings.
Other operating income decreased to €1,237 million
(2019: €1,295 million), whereby the main reasons for the
change were lower income from the reversal of other pro-
visions, offset by higher gains on financial transactions.
|<<= 156
Combined Management Report
Report on Economic Position
* See Fuel Consumption and CO2 Emissions Information.
1,646
1,253
Unappropriated profit available for distribution
-461
-449
Transfer to revenue reserves
2,107
1,702
Net profit
Capital expenditure on intangible assets and proper-
ty, plant and equipment in the year under report totalled
€2,790 million (2019: €3,233 million), down by 13.7%
compared to the previous year. Depreciation and amorti-
sation amounted to €2,646 million (2019: €2,573 million).
Income from profit transfer agreements with Group
companies, reported in the line item Result on invest-
ments, increased year-on-year. By contrast, financial
result deteriorated by €319 million, mainly due to lower
income from designated plan assets offset against pen-
sion obligations.
The expense for income taxes related primarily to
withholding taxes incurred during the financial year
2020.
After deducting the expense for taxes, the Compa-
ny reports a net profit of €1,702 million, compared to
€2,107 million in the previous year.
Subject to the shareholders' approval of the appro-
priation of results at the Annual General Meeting, the
unappropriated profit available for distribution amounts
to €1,253 million (2019: €1,646 million). As a percentage
of Group net profit, the dividend corresponds to a payout
ratio of 32.5% (2019: 32.8%).
Tangible, intangible and investment assets
3,762
3,826
12,473
12,520
405
488
16,640
2019
Receivables from subsidiaries
Property, plant and equipment
Investments
Intangible assets
ASSETS
in € million
BMW AG BALANCE SHEET AT 31 DECEMBER
FINANCIAL AND NET ASSETS POSITION
2020
Investments increased to €3,826 million (2019:
€3,762 million) mainly due to a contribution of €88 mil-
lion made to the capital reserves of BMW Bank GmbH,
57,640
EQUITY AND LIABILITIES
Combined Management Report
Report on Economic Position
BMW Group
Report 2020
55,819
-18
Total equity and liabilities
3,615
Deferred income
28,226
28,511
187
221
21,777
23,404
5,751
511
|<= 158
101
4,785
In order to secure pension obligations, cash funds
totalling €531 million were transferred to BMW Trust
e. V., Munich, in conjunction with a Contractual Trust
Arrangement (CTA), to be invested in plan assets. Plan
assets are offset against the related guaranteed obliga-
tions. The resulting surplus of assets over liabilities is
reported in the BMW AG balance sheet on the line item
Surplus of pension and similar plan assets over liabilities.
Other provisions increased year-on-year, mainly due
to additions to provisions for statutory and non-statutory
warranty and product guarantees obligations in connec-
tion with the exhaust gas recirculation cooler on the one
hand and for selling activities on the other.
BMW Group
Report 2020
PricewaterhouseCoopers GmbH Wirtschaftsprü-
fungsgesellschaft, Frankfurt am Main, Munich branch,
has issued an unqualified audit opinion on the financial
statements of BMW AG, of which the balance sheet and
the income statement are presented here. The BMW AG
financial statements for the financial year 2020 will
be submitted to the operator of the electronic version
of the German Federal Gazette and can be obtained
via the Company Register website. These financial
statements are available on the BMW Group's website
at www.bmwgroup.com/ir.
Due to its significance in the Group and its close
ties with Group companies, expectations for BMW AG
with respect to its non-financial performance indicators
correspond largely to the BMW Group's outlook. This
is described in detail in the Report on Outlook, Risks
and Opportunities section of the Combined Management
Report. The outlook for 2021 takes account of the expect-
ed impact of the coronavirus pandemic.
For the financial year 2021, BMW AG expects a divi-
dend payout ratio (unappropriated profit of BMW AG in
accordance with HGB in relation to net profit for the year
of the BMW Group in accordance with IFRS) within a
range of between 30% and 40% (2020: 32.5%).
OUTLOOK
BMW AG is integrated in the Group-wide risk
management system and internal control system of the
BMW Group. Further information is provided in the
section Internal Control System Relevant for Accounting
and Financial Reporting Processes within the Combined
Management Report.
BMW AG's performance is essentially dependent on
the same set of risks and opportunities that affect the
BMW Group and which are described in detail in the
Report on Outlook, Risks and Opportunities section of
the Combined Management Report. As a general rule,
BMW AG participates in the risks entered into by Group
companies in proportion to the respective shareholding
percentage. At the same time, the result on investments
has a significant impact on the earnings of BMW AG.
RISKS AND OPPORTUNITIES
Cash and cash equivalents increased by €65 million
to €6,822 million, mainly due to surpluses from operating
activities and cash inflows from marketable securities
held as current assets. Cash outflows from financing ac-
tivities and investments in long-lived assets particularly
had an offsetting effect.
therefore reflects the global activities of BMW AG and
other Group companies.
Liquidity within the BMW Group is ensured by
means of a liquidity concept applied uniformly across
the Group. This involves concentrating a significant part
of the Group's liquidity at the level of BMW AG. An im-
portant instrument in this context is the cash pool based
at BMW AG. The liquidity position reported by BMW AG
contracts.
Deferred income increased by €118 million to
€3,615 million and included mainly amounts for services
still to be performed relating to service and maintenance
Liabilities to subsidiaries increased to €23,404 mil-
lion (2019: €21,777 million), mainly in connection with
intragroup refinancing.
Liabilities to banks decreased by €410 million as a
result of the repayment of project-related loans.
Provisions for pensions increased from €205 million
to €229 million, after offsetting of pension plan assets
against pension obligations.
8,989
10,322
10,093
15,079
15,165
Equity
1,646
1,253
Unappropriated profit available for distribution
10,564
11,013
Revenue reserves
2,210
2,239
Capital reserves
659
660
Subscribed capital
Registered profit-sharing certificates
27
28
Pension provisions
Liabilities
Other liabilities
Liabilities to subsidiaries
Trade payables
Liabilities to banks
Provisions
Other provisions
Munich.
205
Equity rose by €86 million to €15,165 million due
to the transfer to other revenue reserves and the issue
of shares of preferred stock in conjunction with the
BMW AG's Employee Share Programme. These increas-
es were offset by the lower balance of unappropriated
profit available for distribution compared to the paid-out
dividend for the previous financial year. The equity ratio
changed from 27.0% to 26.3%.
BMW Group
Report 2020
The increase in other receivables and other assets to
€3,849 million (2019: €3,513 million) was mainly attrib-
utable to higher receivables from companies with which
an investment relationship exists. The decrease in tax
receivables had an offsetting effect.
Receivables from subsidiaries rose to €18,939 million
(2019: €16,698 million), mainly reflecting the higher level
of intragroup trade receivables.
Inventories decreased to €5,748 million (2019:
€5,994 million), mainly due to the lower level of finished
goods held.
3,497
8,784
229
2,129
The key financial performance indicator for BMW AG
is the dividend payout ratio (unappropriated profit of
BMW AG in accordance with HGB in relation to net
profit for the year of the BMW Group in accordance
with IFRS). The key non-financial performance indicators
are essentially identical and concurrent with those of
the BMW Group. These are described in detail in the
Report on Economic Position section of the Combined
Management Report.
-767
Change
2019
2020
in € million
THE FINANCIAL SERVICES SEGMENT
NET CASH FLOWS FOR
As described above, the net cash inflow from operat-
ing activities recorded by the Financial Services segment
for the financial year 2020 resulted primarily from the
fact that lower vehicle inventories at dealerships had
the effect of reducing receivables from sales financing,
mainly in the area of dealership financing. The net cash
outflow from financing activities mainly reflected the
repayment of loans and the decrease in asset-backed
securities financing.
Net cash inflows and outflows for the Financial Ser-
vices segment were as follows:
The improved risk profile in the fourth quarter, main-
ly due to better remarketing outcomes and lower risk
provisions for credit losses, contributed greatly to the
RoE for the full year 2020 being above the forecast value
("moderate decline") communicated in the quarterly
statement to 30 September 2020.
K = 151
BMW GROUP NEW VEHICLES FINANCED OR
LEASED BY FINANCIAL SERVICES SEGMENT¹
FLEET BUSINESS DOWN SLIGHTLY ON PREVIOUS YEAR
in %
in % per region
Asia/Pacific 7.8
Cash inflow (+)/outflow (-) from operating activities
60
Cash inflow (+)/outflow (-) from investing activities
424
Report on Economic Position
Report 2020
Combined Management Report
BMW Group
594
84
-7,808
295
8,107
5,300
-5,345
129
678
Net
-2,508
Cash inflow (+)/outflow (-) from financing activities
2,762
|<<= 153
52.2
50.1
to commercial customers.
At 31 December 2020, the segment was managing
a portfolio of 704,977 fleet contracts (2019: 717,353
contracts), down slightly by 1.7% over the twelve-month
period.
2 With effect from the beginning of the fourth quarter of 2019, the EU Bank comprises BMW Bank GmbH and
its branches in Italy, Spain and Portugal. The former subsidiary in France was transferred for organisational
purposes to the Europe/Middle East/Africa region in conjunction with strategic realignments.
DEALERSHIP FINANCING SIGNIFICANTLY LOWER
The total volume of dealership financing was sig-
nificantly lower compared to one year earlier, falling
by 23.5% to €16,241 million at the end of the reporting
period (2019: €21,227 million).
BMW Group
Report 2020
Combined Management Report
Report on Economic Position
K = 152
FINANCIAL SERVICES SEGMENT PERFORMANCE
Revenues generated by the Financial Services seg-
ment rose slightly to €30,044 million (2019: €29,598 mil-
lion; 1.5%; currency-adjusted: +2.9%) due to portfolio
growth mainly in Germany, Italy and Switzerland as well
as due to higher revenues from the sale of returned lease
vehicles.
Cost of sales relating to Financial Services business
went up by €1,020 million (2019: €25,938 million; +3.9%).
Apart from depreciation on leased vehicles and costs
associated with the sale of returned lease vehicles, the
increase was driven primarily by additional risk provi-
sions related to expected residual value and credit losses.
Segment profit before tax amounted to €1,725 mil-
lion (2019: €2,272 million; - 24.1%), significantly down
on the previous year.
Return on equity (RoE) finished at 11.2%, slightly
below the level achieved one year earlier (2019: 15.0%;
-3.8 percentage points). The decline was primarily attrib-
utable to the pandemic-related increase in risk provisions
for residual value risks and, to an even greater extent, for
credit risks, in both cases causing earnings to deteriorate.
Combined Management Report
Under the brand name Alphabet, the Financial Ser-
vices segment's fleet management business offers leasing
and financing arrangements as well as specific services
49.9
24.9 Americas
1 Values adjusted retrospectively due to the restatement of delivery figures. See Glossary for the definition
of deliveries.
49.8
46.7
China 13.0
Leasing 22.4
30
207212223214
EU Bank² 18.6
Financing 27.5
28.9
29.9
26.0
28.4
2016
2017 2018 2019
2020
35.7 Europe/
Middle East/Africa
CHANGE IN RISK PROFILE
In 2020, the risk profile across the Financial Services
segment's total portfolio was shaped primarily by the
volatility arising due to the coronavirus pandemic and
the resulting additional risk provisioning measures rec-
ognised in connection with expected credit and residual
value risks, mainly provisions and allowances to cover
future credit and/or residual value losses.
The initial and continuous testing of customer cred-
itworthiness is an important aspect of the BMW Group's
credit risk management. As explained in previous quar-
ters, for accounting purposes the Financial Services
segment has raised credit loss allowances over the course
of 2020 in order to reflect the potential longer-term
economic impact of the coronavirus pandemic on retail
and dealership business. The amounts recognised were
based on reasonable and appropriate market-specific
information and estimates available at the end of the
reporting period.
-2,776
-2,747
Administrative expenses
-3,979
-4,030
Selling expenses
14,513
11,314
Gross profit
-70,178
84,691
75,040
-63,726
Cost of sales
Revenues
Research and development expenses related mainly
to new vehicle models (including the iX3* as well as
the new 4 Series Coupé and Convertible), expenses for
the development of reference architectures, drivetrain
systems, digital products and automated driving as well
as increased expenses in connection with electrification.
R&D expenses decreased by 2.4% year-on-year, in line
with activities relating to new model start-ups.
Research and development expenses
Overall, selling and general administrative expenses
were at a similar level to the previous year.
-5,394
Other operating income
-214
39
-280
1,858
3,084
Other taxes
Profit after income tax
Income taxes
Financial result
Result on investments
-2,526
-1,250
Other operating expenses
1,295
1,237
-5,528
Cost of sales went down by 9.2% to €63,726 million,
mostly due to the lower number of deliveries. Expenses
incurred in connection with the exhaust gas recirculation
cooler, however, along with a number of other items,
had a negative impact in the financial year under report.
Gross profit fell by €3,199 million to €11,314 million.
Revenues fell by €9,651 million year-on-year, primar-
ily reflecting the lower volume of deliveries to customers
caused by the coronavirus pandemic. In geographical
terms, the scale of decline was most pronounced in
the Rest of Europe and USA regions. Revenues totalled
€75,040 million (2019: €84,691 million), of which Group
internal revenues accounted for €49,348 million (2019:
€57,412 million) or 65.8% (2019: 67.8%).
2019
BMW Group
The combined profit before tax in the Other Entities
segment and eliminations saw a significant improvement
of €483 million. This was attributable to reversal effects
from the leased products portfolios, lower eliminations
due to the decline in new leasing business and the
lower expected new leasing business resulting from the
reduced levels of inventories at dealerships.
OTHER ENTITIES SEGMENT/ELIMINATIONS
2016 2017 2018 2019 2020
0.21
0.25 0.26
0.32
0.34
0.5
in %
DEVELOPMENT OF CREDIT LOSS RATIO
Further information on the segment's risk profile is
provided in the section on risks and opportunities and
in note 38 to the Group Financial Statements.
In line with customary business practice, the Finan-
cial Services segment makes provision to take account
of significant business risks on an ongoing and compre-
hensive basis. Based on current assessments, however,
the segment has recognised appropriate levels of provi-
sions/allowances to cover residual value and credit risks.
In the premium segment for pre-owned vehicles,
remarketing selling prices for vehicles coming out of
leases developed positively overall in 2020. Whereas
restrictions on sales and the lower supply of new ve-
hicles had a negative impact on demand for new and
pre-owned vehicles during the first lockdown, the market
saw an upward trend during the second half of the year.
Despite this moderate recovery, economic development
remains exposed to an increased level of uncertainty due
to the pandemic. This point is particularly relevant for
the development of prices for pre-owned premium seg-
ment vehicles in the short and medium term. Under the
prevailing circumstances, the BMW Group sees prices as
likely to fluctuate significantly in subsequent quarters, as
in 2020, due to a number of factors, including possible
changes in demand patterns or the renewal of temporary
restrictions that could have an impact on the remarketing
process. Accordingly, in 2020 market-specific risk provi-
sioning expenses were recognised relating to the vehicle
portfolio subject to residual value risks.
The credit loss ratio on the total credit portfolio
amounted to 0.21% at 31 December 2020, and was there-
fore slightly lower than one year earlier (2019: 0.26%).
More specifically, the loss ratio stood at 0.16% (2019:
0.15%) for leasing business and 0.31 % (2019: 0.41 %) for
credit financing business with retail customers. The over-
all improvement in the loss ratio was also attributable to
government measures (such as payment moratoriums
or restrictions in the receivables management process)
implemented in many countries around the world.
Report 2020
Combined Management Report
Report on Economic Position
|<<= 154
<= 155
2020
in € million
BMW AG INCOME STATEMENT
RESULTS OF OPERATIONS
Report on Economic Position
Combined Management Report
1,720
Report 2020
At 31 December 2020, BMW AG employed a work-
force of 84,668 people (31 December 2019: 86,700 people,
adjusted). With effect from the financial year 2020, the
key performance indicator for the size of the workforce
comprises only core and temporary employees. The
change in presentation is in line with the change in the
internal management system, which now focuses on
these employee groups.
BMW AG develops, manufactures and sells automo-
biles and motorcycles as well as spare parts and accesso-
ries manufactured in-house, by foreign subsidiaries and
by external suppliers, and performs services related to
these products. Sales activities are carried out primarily
through branches, subsidiaries, independent dealerships
and importers. Mainly due to the impact of the coronavi-
rus pandemic, automobile deliveries fell by 305,852 units
to 2,249,943 units in the financial year 2020. This figure
includes 598,853 units relating to series sets supplied to
the joint venture BMW Brilliance Automotive Ltd., She-
nyang, an increase of 64,215 units over the previous year.
The general and sector-specific environment
of BMW AG is essentially the same as that of the
BMW Group and is described in the Report on Economic
Position section of the Combined Management Report.
BUSINESS ENVIRONMENT AND REVIEW OF OPERATIONS
Differences in accounting treatments based on HGB
(used for the Company Financial Statements) and IFRS
(used for the Group Financial Statements) are mainly
to be found in connection with the capitalisation of
intangible assets, the creation of valuation units, the
recognition and measurement of financial instruments
and provisions as well as the recognition of deferred tax
assets. Differences also arise in the presentation of assets
and liabilities and of items in the income statement.
Bayerische Motoren Werke Aktiengesellschaft
(BMW AG), based in Munich, Germany, is the parent
company of the BMW Group. The comments on the
BMW Group and Automotive segment provided in earlier
sections apply to BMW AG, unless presented differently
in the following section. The Financial Statements of
BMW AG are drawn up in accordance with the provisions
of the German Commercial Code (HGB) and the relevant
supplementary provisions contained in the German
Stock Corporation Act (AktG).
COMMENTS ON FINANCIAL
STATEMENTS OF BMW AG
BMW Group
CONTRACT PORTFOLIO RETAIL CUSTOMER FINANCING
OF FINANCIAL SERVICES SEGMENT 2020
Combined Management Report
Report on Economic Position
Reserve will continue its expansionary monetary policies
in 2021. The USA's central bank may also be willing to
allow inflation to run at a rate higher than 2% in future,
even over an extended period of time, thereby possibly
leading to further depreciation of the US dollar against
the euro.
In 2021, the value of the British pound will be large-
ly determined by the consequences of the agreement
reached between the UK government and the EU. In view
of the prevailing uncertainties, the exchange rate of the
relatively weak pound is expected to move sideways over
the course of 2021.
Looking at the Chinese renminbi, the close economic
ties between the USA and China suggest that the cur-
rencies of these two countries will develop more or less
synchronously. The renminbi is expected to depreciate
slightly against the euro in 2021.
It seems reasonable to assume that the US Federal
Report on Outlook, Risks and Opportunities
|<= 159
REPORT ON
OUTLOOK, RISKS
AND OPPORTUNITIES
OUTLOOK
The BMW Group's report on outlook, risks and
opportunities presents the expected development in
2021, including the main risks and opportunities from
the perspective of the Group's management. In line with
the Group's internal management system, the outlook
covers a period of one year. Risks and opportunities
are managed on the basis of a two-year assessment. The
✓ Report on Risks and Opportunities therefore addresses a period
of two years.
The continuous forecasting process within the
BMW Group ensures that it is always ready to take ad-
vantage of opportunities as they arise, but also to react
appropriately to unexpected risks. The principal risks
and opportunities are described in detail in the Report
on Risks and Opportunities. The matters discussed
therein are relevant for all of the BMW Group's key
performance indicators and could result in variances
between the outlook and actual outcomes.
From the 2020 reporting year onwards, the outlook
report will include the following key performance in-
dicators in addition to existing ones: the proportion of
women in management positions in the BMW Group, the
proportion of electrified vehicles to total deliveries and
carbon emissions per vehicle produced. ✓ Strategy, Goals
and Management System. This is in line with the integrated
approach used by BMW Group to manage its business
systematically on the basis of financial and sustainability
targets.
According to the latest assessment of the Internation-
al Monetary Fund (IMF), the global economy is projected
to grow by 5.5% in 2021. Many countries are expected
to continue implementing a comprehensive range of
monetary and fiscal policy measures in 2021, in a bid to
boost economies battered by the coronavirus pandemic.
Moreover, post-lockdown catch-up effects could generate
additional momentum. Ultimately, however, the actual
growth rate will depend heavily on the success of the vac-
cination campaigns now underway. Potential new waves
of the virus and its mutations pose an additional risk.
Further information on political and global economic
risks is also provided in the ✓ Report on Risks and Opportunities.
The central bank in Japan is unlikely to change its
highly expansionary monetary policy in 2021. For this
reason, the euro/yen exchange rate is also expected to
remain more or less stable.
The eurozone economy is projected to grow by
around 4.3% in 2021. The rate for Germany, however,
is likely to be somewhat lower (+3.6%). The economic
outlook for the other eurozone member states is very
positive in some cases, with countries such as France
(+ 5.6%), Italy (+4.6%) and Spain (+5.7%) expected to
post strong GDP growth over the forecast period.
economy
The US economy is also projected to grow consider-
ably by 4.8% in 2021. The US Federal Reserve is likely
to continue pursuing its low-interest-rate policies. At
the same time, the stimulus packages announced by US
President Biden are expected to provide a boost to the
economy.
The Japanese economy, which has also been severely
affected by the pandemic, is projected to grow by 2.8%
in 2021.
China was the only economy to expand slightly in
2020. With a projected rate of 8.4%, the Chinese econo-
my is set to continue its growth course in 2021.
CURRENCY MARKETS
Currencies of particular importance for the interna-
tional operations of the BMW Group are the US dollar,
the British pound, the Chinese renminbi and the Japa-
nese yen. All of these major currencies are expected to
be subject to a high degree of fluctuation in 2021.
BMW Group
Report 2020
Combined Management Report
Report on Outlook, Risks and Opportunities
K = 160
The performance of the UK economy in 2021 will not
only depend on the impact of the coronavirus pandemic,
but also on that of the Trade and Cooperation Agreement
reached with the EU. The latest projection for the UK
is a growth rate of 4.6%.
The currencies of numerous emerging markets could
come under pressure against the US dollar and the euro
due to the ongoing coronavirus pandemic. This applies
in particular to countries such as Russia, Brazil and India.
ECONOMIC OUTLOOK
The pandemic will continue to have a perceptible
impact on international automobile markets in 2021.
Although new registrations are expected to rise to around
78 million units (+7.7%), overall sales are likely to remain
significantly lower than before the coronavirus crisis.
INTERNATIONAL AUTOMOBILE MARKETS
+6.0
+7.7
+7.6
+9.8
+3.2
+4.3
+9.0
+9.1
-0.6
+4.2
in registrations %
Change
INTERNATIONAL MOTORCYCLE MARKETS
The BMW Group expects worldwide motorcycle mar-
kets in the 250 cc plus class to grow slightly overall in
2021. After contracting in 2020, demand in Spain is likely
to see a solid recovery. Market volumes are expected to
be slightly higher in Italy and slightly lower in Germany
and France. A slight contraction is also forecast for the
US market. Brazil is expected to bounce back with a solid
recovery. The market in China is set to grow sharply again
in 2021. As in the past year, motorcycle market demand
will continue to be influenced by the course of the pan-
demic and its impact on the global economy in 2021.
The Japanese market is also expected to show a sig-
nificant upward trend in 2021 (around 4.7 million units;
+6.0%).
China
USA
thereof Italy
thereof Spain
thereof UK
thereof France
thereof Germany
Europe
INTERNATIONAL AUTOMOBILE MARKETS
Japan
Total
According to current estimates, passenger car regis-
trations in China are likely to rise sharply year-on-year
(22.0 million units; + 7.6%).
The negative trend in the USA is also expected to
come to an end, at least for the time being. Based on
current forecasts, the US market is set to grow in 2021
and reach a total of 16.0 million units (+ 9.8%).
Europe's automobile markets are forecast to see sig-
nificant growth (12.4 million units; + 4.2%), albeit still
below pre-crisis levels. The latest forecast for Germany
indicates that new registrations may even decline slight-
ly (2.9 million units; -0.6%). By contrast, considerable
growth is predicted for France (1.8 million units; +9.1%),
Italy (1.5 million units; +9.0%) and Spain (approximately
0.9 million units; +4.3%). Likewise, new registrations
in the UK are forecast to rise in 2021 (1.7 million units;
+3.2%).
High
Insignificant
Insignificant
Insignificant
Stable
Stable
Information, data protection and IT
Purchasing
Sales network
Insignificant
Increased
High
Stable
Stable
Stable
Stable
Low
Financial risks and opportunities
Legal risks
Raw materials
Liquidity
Other financial risks
Pension obligations
High
Medium
Medium
Increased
Stable
Increased
Significant
Significant
Stable
Stable
Medium
Foreign currencies
Stable
K = 167
Production and technology
High
Medium
RISKS AND OPPORTUNITIES
The following table provides an overview of signif-
icant risks and opportunities and indicates their level
of importance for the BMW Group. Overall, no risks
capable of threatening the continued existence of the
RISKS AND OPPORTUNITIES
BMW Group were identified either at the balance sheet
date or at the date on which the Group Financial State-
ments were drawn up. Due to the particular features of
the business model applied for the Financial Services
segment, risks and opportunities relating to it are pre-
sented separately on Risk Management System in the Financial
Services Segment
Risks
Classification of
risk amount
Change compared
to prior year
Classification
Opportunities
Change compared to
prior year
High
High
Significant
Increased
Macroeconomic risks and opportunities
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
High
Stable
Market developments
High
Stable
Insignificant
Insignificant
Stable
Stable
Risks and opportunities relating to operations
Stable
Stable
Stable
三 169
Stable
Risks relating to production processes and fields of
technology can lead to unplanned production interrup-
tions or additional costs due to vehicle recalls. If
any
such risks were to materialise, they could have a high
earnings impact over the two-year assessment period.
The corresponding risk amounts are classified as high.
Potential causes of production downtimes include
fires, infrastructural damage, machine and tooling break-
downs, IT malfunctions, temporary disruptions in utility
supply or transportation and logistical disruptions, or
the outbreak of a pandemic. All production units have a
variety of measures in place to deal with potential pro-
duction interruptions and downtimes, some of which are
already integrated in the planning process and can be
implemented operationally with a high degree of flexibil-
ity. These measures have an effect on both the amount of
damage and the probability of the risks occurring.
Technical fire protection, rapid response by on-site
fire brigades and appropriate employee training are the
key strategies for preventing and reducing any potential
damage from fires. Furthermore, policies are in place
with insurance companies of high credit standing to
cover the risk of fire-related events that lead to significant
production interruptions at the Group's or at suppliers'
premises.
The BMW Group's successful business continuity
management concept helps minimise downtimes in the
event of a production stoppage and make up for lost
production volumes as quickly as possible.
Flexible working time models and working time
accounts designed to manage employee deployment,
coupled with the ability to build individual vehicle mod-
els or engine types with a high degree of flexibility at
other BMW Group plants as required, make a significant
contribution to ensuring that fluctuations in demand can
be met.
Detect-analyse-respond measures have been rolled
out to counter the threat of targeted cyberattacks, re-
flecting the fact that such attacks could cause damage
to production facilities, resulting in long downtimes and
substantial losses.
Vehicles may be damaged or destroyed by natural
hazards or other risks during transport from production
plants to the sales regions. Due to the growing number
of major claims, deductible amounts included in trans-
port insurance policies have risen significantly. In fact,
as more and more insurance companies withdraw from
this market segment, there is a risk that it could become
economically unviable to take out insurance, as a result
of which the BMW Group would be required to bear the
losses itself.
BMW Group
Report 2020
Combined Management Report
Report on Outlook, Risks and Opportunities
K = 170
The BMW Group recognises appropriate provisions
for statutory and non-statutory warranty obligations. It
cannot be ruled out, however, that additional costs arise
in conjunction with vehicle recalls that are either not
covered or not fully covered by provisions. Despite thor-
ough quality assurance processes, such risks can always
arise if the materials and/or processing procedures used
prove insufficient, in some cases years after a product is
launched. Further information on risks in conjunction
with provisions for statutory and non-statutory warranty
obligations is provided in ✓ note 33 to the Group Financial
Statements.
of
The BMW Group sees opportunities relating to
production processes and fields of technology primarily
in the competitive edge gained by mastering new and
complex technologies. Innovations in the technologies
deployed and in IT in general are driving the pace
digitalisation in production processes. Given the long
lead times involved in developing new products and
processes, additional opportunities are not expected to
have a significant earnings impact for the BMW Group
during the outlook period.
Risks and opportunities relating to purchasing
Purchasing risks relate primarily to supply risks
caused by the failure of a supplier to deliver as well as
to threats to BMW Group-relevant know-how within
the supplier network. Production problems at supplier
level could lead to consequences caused by increased
expenditure for the BMW Group due to production inter-
ruptions and a corresponding reduction in vehicle sales.
The BMW Group deploys an extensive set of checks and
proactive management measures to tackle the challenges
currently facing the automotive supply industry. If pur-
chasing risks were to materialise, they could have a high
earnings impact over the two-year assessment period.
The risk amount attached to purchasing risks is classified
as high.
Close cooperation between carmakers and suppliers
in the development and production of vehicles and the
provision of services generates economic benefits, but
also raises levels of dependency. Potential reasons for
the failure of individual suppliers to deliver include, in
particular, IT-related risks, non-compliance with sus-
tainability or quality standards and the occurrence of
natural hazards and fires. Insufficient financial capacity
on the part of individual suppliers could also jeopardise
supplies to production plants. In this context, additional
countermeasures have been put in place in the wake of
the coronavirus pandemic.
Moreover, any major deterioration of a particular
country's national security situation is incorporated in
the risk measurement process as a potential reason for
the failure of a value and/or supply chain. Any risks
potentially arising for individual suppliers and/or entire
supply chains in conjunction with the need to adapt to
the consequences of climate change are continually as-
sessed on the basis of in-house expert knowledge, taking
scientific findings into due account.
The growing complexity of the supplier network, par-
ticularly in the case of sub-suppliers whose operations
can only be indirectly monitored by the BMW Group, is
a further potential cause of downtimes at supplier loca-
tions. For instance, there is a risk that strong demand
on international semiconductor markets gives rise to
bottlenecks in the supply of electronic components for
production. The increased threat of cyberattacks along
the entire value chain also affects supply security as
well as the ability to protect know-how relevant to the
BMW Group. To ensure a uniform level of IT security for
all those involved along the value and supply chain, the
BMW Group impresses on suppliers the importance of
obtaining appropriate IT security certification.
By monitoring and developing global supplier mar-
kets, the BMW Group continuously strives to become
more competitive by working together with the world's
best product and service providers. As part of its supplier
preselection process, the BMW Group checks for com-
pliance with the sustainability standards established for
its supplier network. This includes due consideration of
and compliance with internationally recognised human
rights and applicable labour and social standards.
The level of carbon emissions generated by prospec-
tive suppliers is taken into account as an independent
criterion when processing tenders and awarding new
contracts. This approach ensures that first-tier suppliers
regard the issue of carbon emissions - alongside other
factors - as relevant for their business and, in turn, set
targets for other supply chain levels in which they are
involved. The aim is to reduce carbon emissions across
all relevant supply chains on the basis of constructive
cooperation with suppliers. It is important to point out,
however, that the BMW Group depends on receiving
accurate information from suppliers in this regard.
Furthermore, fire risks at series suppliers are eval-
uated by means of questionnaires and selective on-site
inspections. Suppliers are required to implement the
necessary measures on a continuous basis. Following
evaluation, the results are fed back into the process for
awarding contracts for new projects.
Risks and opportunities relating to production and
technologies
RISKS AND OPPORTUNITIES RELATING TO OPERATIONS
expected, additional opportunities are likely to arise for
the BMW Group. Compared to the assumptions made
in the outlook, the BMW Group does not expect these
opportunities to have a significant earnings impact over
the two-year assessment period.
Local product usage restrictions in specific sectors
could have a limiting impact on the BMW Group's sales
in individual markets. In some urban areas, for instance,
local measures have been, or are being, introduced,
including entry restrictions, congestion charges or, in
some situations, highly restrictive registration rules.
These could influence local demand for the BMW Group
vehicles affected and hence have a negative impact on
sales, margins and, possibly, the residual values of these
vehicles. Among other measures, the BMW Group is ad-
dressing this risk by broadening its range of electrified
vehicles and mobility services.
MACROECONOMIC RISKS AND OPPORTUNITIES
Economic conditions have an impact on business
performance and hence the level of earnings generated
by the BMW Group. Unforeseen disruptions in global
economic relations can have highly unpredictable effects.
Macroeconomic risks due to sales volume fluctuations
could have a high earnings impact over the two-year
assessment period. The risk amounts attached to macro-
economic risks are classified as high.
Currently, the greatest risk for the global economy
is the further spread and the consequences of the coro-
navirus pandemic. Considerable uncertainty remains
regarding the dynamics of the coronavirus pandemic
going forward, despite the current decline in infection
figures. The situation is highly dependent on the pro-
gress and success of the vaccination campaigns currently
underway. It is not currently possible to predict with any
degree of certainty the point in time from which a high
vaccination rate could significantly mitigate the course of
the pandemic. As a result, restrictions to public life and
regional lockdowns are likely to be a continued source
of uncertainty for consumers and weigh heavily on the
sales situation across all markets. The BMW Group is
monitoring the situation on a continuous basis and tak-
ing appropriate measures as required.
BMW Group
Report 2020
Combined Management Report
Report on Outlook, Risks and Opportunities
K = 168
However, risks that existed prior to the outbreak of the
pandemic still remain, despite being partially displaced
in the public perception. The trade conflict between the
USA and China is likely to be an enduring topic, despite
the inauguration of the new US president. However, the
focus could well shift from pure tariff increases to import
and export restrictions on certain technologies. The po-
tential introduction of further trade restrictions on both
sides could have a significantly adverse impact on the
BMW Group's business operations due to less favourable
conditions for importing vehicles.
In the wake of ongoing climate change, natural
disasters could occur more frequently and impact the
BMW Group in a variety of ways. For instance, economic
activity in the affected regions could be negatively influ-
enced. For consumers, this would mean a loss of income
and the threat of unemployment and have a negative
effect on sales. In the context of its "Adaptation to Climate
Change" project, the BMW Group is preparing for numer-
ous possible scenarios and has taken the step of systemat-
ically integrating the reporting of opportunities and risks
associated with climate change within this report.
Other risks to the economy include political instability
in Belarus, the conflict between Armenia and Azerbaijan,
political unrest in the USA, the impact of the change in
Hong Kong's status, and uncertainty regarding the sus-
tainability of debt levels in some European countries.
If the coronavirus is overcome with the help of ef-
fective vaccines over the course of 2021, opportunities
could arise for the BMW Group in terms of revenues
and earnings. Significantly higher GDP growth in our
strongest sales regions, positive signals in Europe and
the USA on the back of new economic stimulus packages,
and a de-escalation of the trade conflict between the USA
and its economic partners could result in significantly
stronger sales volume growth, reduced competitive
pressures and improved pricing. Against this backdrop,
macroeconomic opportunities capable of generating a
sustainably positive impact on earnings are currently
classified by the BMW Group as significant.
Significant
Significant
STRATEGIC AND SECTOR-SPECIFIC RISKS AND OPPOR-
TUNITIES; CHANGES IN LEGISLATION AND REGULATORY
REQUIREMENTS
At present, the BMW Group sees a continuous trend
towards increasingly stringent vehicle emissions regula-
tions, particularly for conventional drivetrain systems.
The BMW Group is addressing this risk primarily by sys-
tematically electrifying its entire portfolio of brands and
models: based on its existing plans, the BMW Group will
already have 25 electrified models on the road by 2023.
At the same time, the Group is pressing ahead with the
continued development of highly efficient combustion
engines in order to further reduce fuel consumption
and emissions.
Additional risks could result from the tightening of
existing import and export regulations, which could,
in turn, lead primarily to additional expenses, but also
complicate the import and export of vehicles and parts.
Changes in trade policies could also have a positive
impact on the BMW Group's earnings in the short to
medium term. Any reduction in tariff barriers, import
restrictions or direct excise duties could result in lower
manufacturing costs or enable products and services to
be offered to customers at more attractive prices. Further
opportunities to improve the BMW Group's earnings
performance due to changes in legislation and regulatory
requirements compared to the outlook are classified as
insignificant.
Market developments
Apart from economic factors and sector-specific
political conditions, increasingly fierce competition
among
established manufacturers and the emergence of
new market competitors could also have effects that are
difficult to predict. Unforeseen consumer preferences
and changes in brand perceptions can also give rise
to both opportunities and risks. If market risks were
to materialise, they could have a high earnings impact
over the two-year assessment period. The risk amount
is classified as high.
BMW Group
Report 2020
Combined Management Report
Report on Outlook, Risks and Opportunities
K
Report on Outlook, Risks and Opportunities
A potential further intensification in terms of com-
petition could put pressure on sales volumes, selling
prices and margins. For instance, the BMW Group could
be confronted with supply and demand distortions in
the transition from conventionally powered vehicles
to alternative drivetrain concepts, despite complying
with legal requirements. Customer behaviour can also
alter due to changes in attitudes, values, environmental
factors and fuel or energy prices. The flexibility of the
BMW Group's sales and production processes makes
it possible to mitigate risks and take any opportunities
arising in corresponding market and product segments.
The short-term introduction of more stringent legis-
lation and regulations, particularly with regard to emis-
sions, safety and consumer protection as well as regional,
vehicle-related purchase and usage taxes, represents a
significant risk for the automobile industry. Country-
and sector-specific trade barriers can also be subject to
change at short notice. Any sudden tightening of regula-
tions in these areas could necessitate significantly higher
investments and ongoing expenses or exert influence on
customer behaviour. If the risk of market disruption due
to unforeseeable short-term changes in legislation and
regulations were to materialise, this could have a highly
negative earnings impact over the two-year assessment
period and beyond. The resulting risk amounts are there-
fore classified as high.
Combined Management Report
Moreover, the BMW Group continuously monitors
its sales markets with the aim of increasing added value
for customers and making the most of opportunities in
terms of sales volume growth and pricing. The further
development of the product and mobility portfolio as
well as expansion in growth regions offer the greatest
medium to long-term growth opportunities for the
BMW Group. This depends above all on the Group's
ability to develop innovative products and services and
bring them to market. If the negative impact of the cur-
rent competitive situation is reduced more quickly than
Once identified, opportunities are acted upon in
the relevant operational areas on a decentralised basis.
The importance of opportunities for the BMW Group is
classified on a qualitative basis in the categories "signif-
icant" and "insignificant”. Probable measures aimed at
increasing profitability are already incorporated in the
outlook.
120,726
5,222
2020
adjusted
reported
2020
€ million
FINANCIAL SERVICES SEGMENT
Return on equity
Return on capital employed 5
MOTORCYCLES SEGMENT
Deliveries to customers
EBIT margin
Return on capital employed5
AUTOMOTIVE SEGMENT
Deliveries to customers²
Share of women in management positions
in the BMW Group
Workforce at year-end
Profit before tax
GROUP
BMW GROUP KEY PERFORMANCE INDICATORS
Ongoing uncertainty, particularly regarding the fur-
ther course of the coronavirus pandemic, macroeconomic
and political developments as well as international trade
and customs policies, could cause economic conditions in
many regions to differ quite considerably from expected
trends and developments. All these factors could have
significant effects on the overall business performance of
the BMW Group. Furthermore, the Group's actual busi-
ness performance may also differ from current expecta-
tions as a result of the risks and opportunities discussed
below in the Report on Risks and Opportunities.
%
17.8
units
2,324,809
1 Based on adjusted outlook; see ✓ Glossary for the definition of terminology/ranges used in forecasting.
15.0
%
4.5
%
169,272
units
12.7
The targets described above are to be met with a
slightly lower number of employees.
%
%
0.318
0.23
tons
996
g/km
8.3
%
2.7
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2020: 602,247 units).
The proportion of women in management positions
in the BMW Group is expected to increase slightly.
The RoE in the Financial Services segment is expect-
ed to finish within a range of 12 to 15%. The switch to
a forecast corridor for RoE allows for a narrower and
therefore more precise outlook.
to purchasing
The BMW Group continues to observe these develop-
ments and is ready to implement all necessary measures
quickly and effectively.
ASSUMPTIONS USED IN THE OUTLOOK
The report on outlook, risks and opportunities con-
tains forward-looking statements. These are based on the
BMW Group's expectations and assessments and may be
influenced by unforeseeable events. As a result, actual
outcomes can deviate either positively or negatively from
the expectations described below, among other things
due to changes in the political and economic environ-
ment as well as the further course of the coronavirus
pandemic. Report on Risks and Opportunities.
BMW Group
Report 2020
Combined Management Report
Report on Outlook, Risks and Opportunities
K = 162
The following outlook relates to a forecast period
of one year and is based on the composition of the
BMW Group during that time. The outlook takes account
of all information available at the time of reporting and
which could have an effect on the overall performance of
the Group. The expectations contained in the outlook are
based on the BMW Group's forecast for 2021 and reflect
its most recent status. The basis for the preparation of
and the principal assumptions used in the forecasts -
which consider the consensual opinions of leading
organisations, such as economic research institutes and
banks - are set out below. The BMW Group's outlook
takes account of these assumptions.
The coronavirus pandemic will continue to have an
impact on business performance in 2021 and hence on
the results of operations, financial position and net assets
of BMW AG and the BMW Group. Due to the continuing
uncertainty surrounding the course and potential conse-
quences of the pandemic going forward, it is difficult to
make an accurate forecast of the BMW Group's business
performance in 2021. For the forecast year 2021, the
BMW Group is working on the basis that the original
widespread prevalence of the infection that was the
dominant feature of 2020 will be replaced by recurrent,
regional hotspots. The outlook has been therefore been
drawn up on the assumption that, outside of hot spots,
the overall incidence of infection can be controlled
worldwide. The successive launch of vaccination cam-
paigns and improved vaccine supply should also have
an increasingly positive effect in 2021.
Uncertainties remain, however, as mutated strains
of the virus emerge and spread, raising questions about
the efficacy of currently available vaccines in combat-
ting mutations. It is not possible to assess the extent to
which such risks could impact the global economy, the
financial markets and therefore the BMW Group and,
for this reason, they have not been taken into account
in the outlook.
With demand on international semiconductor mar-
kets currently at a high level, the supply situation for
electronic chips has become increasingly tense, which
could result in supply bottlenecks affecting the availabili-
ty of semiconductor components required for production.
The BMW Group is monitoring the situation closely.
Should the situation deteriorate further and significant
supply bottlenecks occur, it cannot be ruled out that this
will have an adverse impact on the outlook.
The BMW Group expects that the tensions between
the USA and China will persist after the change in the
US administration and remain a source of uncertainty.
However, based on up-to-date assessments, customs
tariffs are not expected to rise.
Current estimates and assumptions for the finan-
cial year 2021, to the extent already known to the
BMW Group, have been taken into account and described
in the outlook report. Beyond these assessments, no fur-
ther significant opportunities and risks are known or can
be estimated at the present time. However, it cannot be
ruled out that the assumptions underlying estimates may
need to be changed over the course of the year.
OUTLOOK FOR THE BMW GROUP
OVERALL ASSESSMENT BY GROUP MANAGEMENT
Despite the volatile situation brought about by the
global spread of coronavirus, the BMW Group expects
business to develop positively and the risk situation to
remain stable in the financial year 2021. New automobile
and motorcycle models as well as individual mobili-
ty-related services are expected to generate momentum.
Group profit before tax is therefore expected to rise
significantly during the outlook period.
The Automotive segment is expected to record a solid
year-on-year increase in the number of BMW, MINI and
Rolls-Royce brand vehicles delivered to customers. At the
same time, the BMW Group is targeting a further signif-
icant reduction in carbon emissions in the new vehicle
fleet¹, calculated using the revised base². In addition to
improvements achieved through developments in highly
efficient combustion engines, the expected reduction also
reflects the significant increase in the forecast proportion
of electrified vehicles sold. According to the planning,
carbon emissions per vehicle produced are likely to fall
moderately. The Automotive segment's EBIT margin is set
to recover in 2021, most likely finishing within a range of
6 to 8% and thus causing the segment RoCE to improve
significantly.
Furthermore, risks continue to exist for upstream
processes, including possible bottlenecks due to sup-
ply shortages arising in regions that could become the
focus of a pandemic. Due to the high demand on inter-
national semiconductor markets, there is currently an
additional risk of bottlenecks in the supply of electronic
components to production. ✓ Risks and opportunities relating
An unpredictable political environment may cause
actual economic growth in some regions to deviate from
expected trends and developments. Areas affected in this
context include trade and customs policies, security and
potential additional international trade conflicts.
Future developments on international automobile
markets also have a direct impact on the BMW Group.
Challenges in the competitive environment as well as
the course of the coronavirus pandemic are likely to
have a significant impact on sales volumes. Due to its
global business model, the BMW Group is well placed
to capitalise on opportunities that present themselves,
even at short notice. Coordination between the Group's
sales and production networks also enables it to even
out the impact of unforeseeable developments in various
regions. Moreover, investments in key future-oriented
markets form a sound basis for further growth, while
simultaneously strengthening the global presence of the
BMW Group.
CONSEQUENCES FOR THE BMW GROUP
|<< = 163
Report on Outlook, Risks and Opportunities
Combined Management Report
BMW Group
Report 2020
2 Efficiency indicator calculated on the basis of Scope 1 and Scope 2 emissions (i.e. a market-based method
according to GHG protocol Scope 2 guidance that excludes climate-changing gases other than carbon dioxide)
of vehicle production excluding motorcycles, adjusted for CHP losses and divided by the total number of
vehicles produced, including the joint venture BMW Brilliance Automotive Ltd., Shenyang, but excluding
vehicles produced by the contract manufacturers Magna Steyr and Nedcar.
1 EU including Norway and Iceland; since 2018 figure based on WLTP (Worldwide Harmonised Light Vehicles
Test Procedure) and converted back to the New European Driving Cycle (NEDC).
BMW Group
Report 2020
The Motorcycles segment is expected to record a solid
increase in deliveries to customers. The EBIT margin is
predicted to lie within the target range of 8 to 10%, en-
abling the segment to record a significantly higher level
of ROCE than one year earlier.
Combined Management Report
K = 161
INTERNATIONAL INTEREST RATE ENVIRONMENT
Trade relations between the USA and China should
improve under the new US administration, whilst still
remaining strained. Low inflation rates give central
banks sufficient headroom to continue their expansion-
ary monetary policies. However, the rise in inflation
rates since the beginning of the year, especially in the
eurozone, indicates that consumer prices are also likely
to increase again in the course of 2021.
Within the eurozone, the course of the pandemic and
delays in the vaccine rollout suggest that the pathway
back to normality could take some time yet. Any further
lockdowns during the first half of the year could damp-
en economic growth and hold down inflation figures,
potentially leaving the ECB with little flexibility to raise
interest rates in 2021.
The UK's economy is not expected to improve signif-
icantly during the first quarter. Following the initial suc-
cess of the vaccination programme, the UK government
is now looking to ease the lockdown on a cautious step-
by-step basis. It remains to be seen, however, to what
extent the virus mutation circulating there could cause
the situation to deteriorate again. In light of the fiscal
and monetary policy measures taken by the government
and the Bank of England, the economy is not expected to
see an upturn before the summer. It is therefore safe to
assume that the Bank of England will keep interest rates
stable for the time being.
In the USA, the House of Representatives has ap-
proved President Biden's 1.9 trillion dollar stimulus pack-
age aimed at countering the impact of the pandemic on
the economy. Despite inflation being expected to rise in
2021, the Federal Reserve seems determined to continue
its current programme of quantitative easing and leave
the benchmark interest rate unchanged.
BMW Group
Report 2020
The Chinese central bank is expected to maintain an
unchanged course. Despite strained trade relations with
the USA, economic growth in China is likely to gather
additional pace in 2021.
Report on Outlook, Risks and Opportunities
%
Share of electrified vehicles in deliveries
CO2-Emissions EU New Vehicle Fleet3
CO2 emissions per vehicle produced4
EBIT margin
11.2
Report on Outlook, Risks and Opportunities
Report 2020
Combined Management Report
BMW Group
The risk management process applies across the
entire Group and comprises the early identification,
analysis and assessment of risks, the coordinated use of
appropriate management tools and the monitoring and
evaluation of the measures taken.
risk management network. These measures are essential
ways of preparing those involved in the process to comply
with any new or additional requirements.
According to Group-wide guidelines, every employee
and manager has a duty to report risks via the relevant
reporting channels. The key elements of an effective risk
culture are embedded in the BMW Group's core values,
in its risk management guidelines and in the risk strategy.
New information and new requirements are continuous-
ly fed into the BMW Group's risk management system,
thereby ensuring its ongoing development. Training
programmes and informational events are regularly con-
ducted across the BMW Group, particularly within the
Risks are classified both according to their potential
impact on earnings (worst-case scenario) and according
to the risk amount (average earnings impact, taking into
account the probability of occurrence). The impact of
risks is measured and reported net of any mitigation
measures that are already taking effect (net basis). Risks
are measured over a two-year assessment period.
|<< = 166
The BMW Group utilises standardised methods to
assess risks. All significant risks are measured using
value-at-risk models and assessed on the basis of uni-
form loss distribution metrics, thereby enabling better
comparability of risks for both internal and external
reporting purposes. The overall effect of risks on the
results of operations, financial and net assets position
is referred to in the following sections uniformly as
"earnings impact".
3 EU including Norway and Iceland; since 2018 value converted WLTP (Worldwide Harmonised Light Vehicles Test Procedure) basis.
Group
Audit
Risk Manage-
ment Steering
Committee
Controlling
Internal Control System
Measures
-ŏ
Analysis and
Measurement
Board of
Management
Group-wide
risk management
The potential earnings impact in the worst-case sce-
nario is classified as follows:
Low
Medium
High
The continuous monitoring of key business processes
and strict cost controls are also essential for ensuring
high levels of profitability and return on capital employed.
A dynamic market environment also gives rise to op-
portunities. Identifying these opportunities is an integral
part of the BMW Group's strategic planning process. The
Group's range of products and services is continually
reviewed on the basis of these analyses, resulting, for
example, in new product projects being presented to
the Board of Management for consideration. In order to
compete successfully in the long term and at the same
time effectively help play an active role in achieving the
goal of climate neutrality - as called for by politicians
and desired by society in general – the Group's vehicle
platforms are designed to operate flexibly with various
types of drivetrain, enabling it to respond more swiftly
to changing customer needs.
OPPORTUNITIES MANAGEMENT
activities, business relationships and products and/or
services provided by the BMW Group that are highly
likely to have a seriously adverse impact. No significant
non-financial risks were identified during the year
under
report.
In accordance with § 289 c of the German Commer-
cial Code (HGB) risks that could have an impact on the
non-financial aspects referred to in the Act are reviewed
as part of the reporting process. Significant risks in this
context are defined as those stemming from business
When analysing sustainability-related opportunities
and risks, the physical risks associated with climate
change (e.g. disruption of supply chains due to natural
hazards) and transition risks (such as meeting emissions
requirements) are also assessed.
Alongside comprehensive risk management, sus-
tainability constitutes a core strategic principle of the
BMW Group. Risks resulting from sustainability issues
are generally identified via the Group-wide risk man-
agement network.
MANAGING NON-FINANCIAL RISKS AS REPORTED
IN THE NFS
Class
Group-wide effects and trends can be identified by
aggregating all significant risks at Group level using
value-at-risk models. For this
the potential
purpose,
earnings impact of the risks (confidence level: 99%) is
aggregated, taking correlation effects into account. In or-
der to assess the risk-bearing capacity of the BMW Group,
the aggregated amount of risks is compared with the risk
cover amount (equity recognised for accounting purpos-
es). A limit system for various risks helps monitor the
risk-bearing capacity.
The earnings impact of risks and opportunities is
presented separately without offsetting. If no specific
reference is made, opportunities and risks relate to
the Automotive segment. The scope of entities covered
in the report on risks and opportunities corresponds
to the scope of consolidated entities included in the
BMW Group Financial Statements.
> €0-50 million
> €50-400 million
> € 400 million
Risk amount
Low
Medium
High
Class
The following criteria apply for the purpose of clas-
sifying the risk amount:
> €0-500 million
> €500-2,000 million
> €2,000 million
Potential earnings impact
in a worst-case scenario
MONITORING RISK-BEARING CAPACITY
Identification
Supervisory
Board
RISK MEASUREMENT
BMW Group
Report 2020
Other functions such as ✓ Compliance and Human Rights and
the Internal Control System serve as key interfaces to the risk
management system. In its capacity as an independent
control body, Corporate Audit reviews the risk manage-
ment system established by the Board of Management
on an annual basis.
Risk management is organised as a decentralised,
Group-wide network and steered by a centralised risk
management function. Every BMW Group division is rep-
resented by Network Representatives. This formal struc-
ture reinforces the network's visibility and underlines the
importance of risk management within the BMW Group.
The responsibilities and duties of the centralised risk
management function and the Network Representatives
are clearly documented and understood. Significant risks
reported from within the network are firstly presented
for review to the Risk Management Steering Committee,
which is chaired by Group Controlling. After review,
any significant risks identified are reported to both the
Board of Management and the Supervisory Board's Audit
Committee.
In addition to the risks described below, unforeseen
events could have a negative impact on business opera-
tions and hence on the BMW Group's results of opera-
tions, financial position and net assets as well as on its
reputation.
Management does not see any threat to the
BMW Group's status as a going concern. Similar to one
year earlier, the current set of risks to the BMW Group
are considered manageable. If these risks - or opportu-
nities – were to materialise, they could have an impact
on underlying key performance indicators, thus causing
deviations from the outlook. The BMW Group's finan-
cial resources are stable, with liquidity requirements
currently covered by existing liquidity and available
financing instruments.
The assessment of the overall risk situation is based
on a consolidated view of all significant individual risks.
The overall risk situation for the BMW Group has wors-
ened moderately compared to one year earlier, reflecting -
in the worst-case scenario - a significant deterioration
in the global economic situation due to the coronavirus
pandemic. The BMW Group has already adjusted its sales
and production planning to take account of expected
macroeconomic developments and incorporated their
impact in the outlook. Should the effect of the pandemic
prove less severe in 2021 and if the economy recovers
more quickly than expected, opportunities for both rev-
enues and earnings could arise.
All opportunities and risks expected to materialise
have already been addressed in the Outlook Report. The
following sections focus on potential future developments
or events that could result in a positive (opportunity)
or a negative deviation (risk) from the outlook for the
BMW Group.
The management of opportunities and risks is essen-
tial in order to respond in an appropriate manner to any
changes that occur in political, economic, technical or le-
gal conditions. The BMW Group has put a comprehensive
risk management system in place to effectively with risks
as they arise. The aim of the risk management system
is to identify, assess and actively manage any risks that
could threaten the attainment of the Group's corporate
targets. As part of that process, individual and cumulative
risks capable of posing a threat to the profitability of the
business are monitored and managed.
As a globally leading provider of premium automo-
biles, motorcycles, mobility services and financial
services, the BMW Group is exposed to an array of un-
certainties and changes. To ensure growth, profitability,
efficiency and continued sustainability going forward, the
BMW Group needs to take well calculated risks and make
full use of any opportunities that present themselves.
|<< = 164
ORGANISATION OF RISK MANAGEMENT
OVERALL ASSESSMENT OF THE RISK
AND OPPORTUNITIES SITUATION
RISKS AND OPPORTUNITIES
Report on Outlook, Risks and Opportunities
Combined Management Report
Combined Management Report
8 From 2021, CO2 emissions according to Scope 1 and 2 include not only production emissions but also emissions at locations not allocated to production, e.g. research centres, distribution centres, office buildings.
7 The CO2 fleet emissions figure of 99 g/km for the year 2020, as measured internally, is based on NEDC and takes due account of permitted offsetting factors (phase-in, super-credits and eco-innovations). The CO2 fleet emissions
forecast for 2021 is based on WLTP in accordance with legal requirements and includes fewer offsetting factors due to the fact that phase-in is no longer permitted for 2021 and the BMW Group fully utilised the maximum amount
of super-credits in 2020. For better comparability of the CO2 fleet emissions forecast for 2021 and the fleet value for 2020, the 2020 figure has been converted internally from an NEDC basis (including offsetting factors) to a WLTP
basis (excluding offsetting factors). The figure derived for 2020 serves only to enable reconciliation with the 2021 figure: it is not official and does not correspond to legislation that was in place in 2020.
6 Value (internal calculation) takes account of flexibilities as defined in regulatory requirements: phase-in with 5 g/km, supercredits BEV/PHEV with 7.5 g/km and eco-innovations with 2.4 g/km.
4 Efficiency indicator calculated from Scope 1 and Scope 2 CO2 emissions (market-based method according to GHG Protocol Scope 2 Guidance. Other climate-impacting gases than CO2 not included) from vehicle production, without
motorcycles, minus CHP losses divided by the total number of vehicles produced, incl. BMW Brilliance Automotive Ltd. joint venture, Shenyang, not including the vehicles from the Magna Steyr and Nedcar contract production plants.
5 Unlike the other key performance indicators, the ROCE forecast for the Automotive and Motorcycles segments is based on the change in percentage points.
K = 165
Solid increase
between 8 and 10
Significant increase
between 6 and 8
Significant increase
Moderate decrease
Solid increase
Significant increase
Significant decrease
1357
Slight increase
Slight decrease
Significant increase
2021
Outlook¹
BMW Group
Report 2020
Report on Outlook, Risks and Opportunities
between 12 and 15
Completeness
RISK MANAGEMENT IN THE BMW GROUP
Effectiveness
Practicability
Compliance
Committee
Reporting/
Monitoring
BMW Group
Future pension obligations are financed largely via
external pension funds or trust constructs that are le-
gally separate from BMW. Externally managed funds are
invested on capital markets in a broadly diversified port-
folio with a view to enabling future pension payments to
be disbursed out of pension assets. These arrangements
greatly reduce the need to fund pension payments out
of ongoing operations.
Risks and opportunities relating to pension obligations
Currency risks and opportunities
If other financial risks were to materialise, they could
have a medium earnings impact over the two-year as-
sessment period. The risk amount associated with other
financial risks is classified as medium. Revaluations
of investments could give rise to opportunities with a
significant earnings impact.
The BMW Group holds equity investments of varying
amounts in numerous entities, which could result in risk
from depreciation and amortisation.
The BMW Group works together with banks to en-
sure that the available liquidity is optimally invested and
to hedge against financial market risks (particularly cur-
rency, commodity and interest rate risks) using derivative
financial instruments. Counterparty risk describes the
risk that the BMW Group will not receive the payments
due to it in connection with the investment and hedging
transactions referred to above. An enhanced value-at-risk
model is employed to measure counterparty risk, taking
into account the creditworthiness (rating) of the banks
and the business volumes involved. Risk is managed
using a limit system, which includes daily monitoring of
the extent to which limits are being utilised.
Other financial risks worth mentioning include coun-
terparty risks as well as those arising in connection with
investments in other entities.
Other financial risks
Further information on risks in conjunction with fi-
nancial instruments is provided in ✓ note 39 to the Group
Financial Statements.
The liquidity position is monitored continuously and
managed through the Group-wide planning of financial
requirements and funding. The diversified refinancing
strategy employed reduces dependency on financial
instruments and markets. Moreover, the BMW Group's
solid financial and earnings position results in high credit
ratings from internationally recognised rating agencies.
At present, opportunities relating to liquidity are not
expected to have any significant earnings impact.
Solvency is assured at all times throughout the
BMW Group by adhering to liquidity ratios and using a
broadly diversified range of refinancing sources. Regular
measurement and monitoring ensure that cash inflows
and outflows for the various maturities and currencies
offset one another. This approach is an integral part of
the BMW Group's liquidity concept.
Report 2020
Based on the experience gained during the global
financial crisis, a liquidity concept has been drawn up,
which is rigorously adhered to and continuously devel-
oped. The concept has been recently updated to take
account of the implications of the coronavirus pandemic.
The use of the “matched funding principle" to finance
the Financial Services segment's operations ensures
that liquidity risks are generally avoided. Furthermore,
scenarios have been calculated to present and analyse
the potential impact of the coronavirus pandemic on the
matched funding principle.
Combined Management Report
K = 174
In an antitrust investigation, the EU Commission al-
leges that five German car manufacturers colluded with
the aim of restricting competition for innovation with
regard to certain exhaust treatment systems for diesel-
and petrol-driven passenger vehicles. The current investi-
gation is solely concerned with possible infringements of
competition law. The EU Commission is not alleging that
the BMW Group conducted a deliberate and unlawful ma-
nipulation of the emissions control system. The Statement
of Objections leads the BMW Group to believe that it is
probable ("more likely than not") that the Commission
will issue a significant fine. A provision of approximately
€1.4 billion was recognised in 2019 in accordance with
International Financial Reporting Standards for negative
financial impacts that cannot yet be definitively assessed.
In December 2019 the BMW Group submitted a detailed
reply to the Statement of Objections. The EU Commis-
sion is currently examining the reply and, on that basis,
will determine the next procedural steps. Therefore, the
financial impact cannot yet be definitively assessed.
Report on Outlook, Risks and Opportunities
Combined Management Report
BMW Group
Report 2020
Like all entities with international operations, the
BMW Group is confronted with legal disputes, alleged
claims (particularly relating to warranties and product
liability or intellectual property rights infringements)
and proceedings initiated by government agencies. Any
of these could, amongst other consequences, have an
adverse impact on the Group's reputation. Such pro-
ceedings are typical for the sector, may result as a con-
sequence of realigning product or purchasing strategies
to changed market conditions or are antitrust-related.
Particularly in the US market, class action lawsuits and
product liability risks can have substantial financial con-
sequences and cause damage to the Group's reputation.
More rigorous application or interpretation of existing
regulations or the introduction of new regulations could
result in a greater number of recalls.
and export regulations – give rise to a greater risk of
non-compliance with applicable law. A Compliance Man-
agement System is in place across the BMW Group to
ensure that its representative bodies, executives and staff
members worldwide consistently act in a lawful manner.
In 2020, the system was further developed, primarily by
establishing additional compliance functions in various
centralised departments within BMW AG, stepping up
face-to-face training on antitrust compliance and via a
Group-wide "Tone from the Top" communication initi-
ative that reflects the compliance management culture
within the BMW Group. ✓ Corporate Governance
-
The growing globalisation of the BMW Group's
operations as well as of business interdependencies
in general, combined with the variety and complexity
of legal provisions - increasingly including import
The BMW Group is exposed to various legal risks,
not least due to the global nature of its operations. Legal
risks
may result from non-compliance with laws or other
legal requirements or from legal disputes with business
partners or other market participants. If legal risks were
to materialise, they could have a high earnings impact
over the two-year assessment period. The risk amounts
attached to significant identified legal risks are classified
as medium. However, it cannot be ruled out that new
legal risks, as yet unforeseen, materialise that could have
a high earnings impact for the BMW Group.
LEGAL RISKS
Further information on risks in conjunction with
pension provisions is provided in ✓ note 32 to the Group
Financial Statements.
Remeasurements on the liability and asset sides are
recognised net of deferred taxes through other compre-
hensive income and hence directly in equity (within
revenue reserves).
pension assets offers the opportunity to further reduce
pension plan deficits by generating positive returns and
thereby impact the BMW Group's financial position to a
significant degree. The risks and opportunities described
above are continuously monitored and managed.
Despite the high level of external funding, risks re-
lating to pension obligations could have a high earnings
impact over the two-year assessment period. The risk
amounts attached to pension obligations are classified as
high. The strategic portfolio allocation of pension assets
therefore comprises two key components. One part is al-
located with a view to hedging against value fluctuations,
applying the "liability-driven investment approach",
whereby capital market instruments are employed on
a targeted basis to hedge against financial risks arising
from the measurement of pension obligations. A second
part is allocated with a view to generating income. Within
a favourable capital market environment, this part of the
The fluctuation of pension assets reflects the vola-
tility of individual asset classes on capital markets. The
broadly diversified portfolio comprises investments in
interest-bearing securities, equities, real estate and other
asset classes.
Pension obligations are primarily measured using a
discount rate based on market yields from high-quality
corporate bonds. These yields are subject to market
fluctuations and therefore influence the level of pension
obligations. Changes in other parameters, such as rising
inflation rates and longer life expectancy, also impact
the amount as well as the duration of future pension
payments. Regulatory requirements or changes may also
affect the amount of pension obligations.
Risks arise from fluctuations in pension obligations
on the one hand and the related pension assets on the
other. Opportunities arise if the value of pension assets
on capital markets develops favourably or if pension
obligations decrease at a more pronounced rate than
the related assets.
Report on Outlook, Risks and Opportunities
The major part of the Financial Services segment's
credit financing and leasing business is refinanced on
capital markets. Liquidity risks can arise in the form
of rising refinancing costs or from restricted access to
funds as a consequence of the general market situation. If
liquidity risks were to materialise, they would be likely to
have a medium earnings impact over the two-year assess-
ment period. The risk amount associated with liquidity
risks, including the risk of the BMW Group's rating being
downgraded, is classified as medium. The
year-on-year
change in the assessment of the risk amount reflects
the sharp short-term rise in refinancing costs on capital
markets at the beginning of the coronavirus pandemic.
Combined Management Report
K = 173
Information security, data protection and IT
The advance of digitalisation throughout all areas of
the business world places considerable demands on the
confidentiality, integrity and availability of electronical-
ly processed data and the associated use of information
technology (IT). Alongside higher threat levels in this
area, regulatory requirements worldwide relating to
the use of personal data are becoming increasingly
stringent, for example due to the California Consumer
Privacy Act. If risks relating to information security,
data protection and IT were to materialise, they could
have a high earnings impact over the two-year assess-
ment period. Despite extensive security measures and
constant efforts to ensure compliance with applicable
data protection legislation, the risk amount in this area
is classified as high.
In addition to cyberattacks and direct physical inter-
vention, there is a risk that either a lack of knowledge
or misconduct on the part of employees could also pose
a danger to the confidentiality, integrity and availability
of information, data and systems. The main direct con-
sequences could range from negative effects on revenues
due to the misuse of information through to disruption
in the production of components or vehicles. A further
indirect consequence could be reputational damage.
The BMW Group places great emphasis on protecting
the confidentiality, integrity and availability of informa-
tion from unauthorised access or misuse, whether relat-
ing to business, employees or customers. Data security
is an integral part of all Group business processes and
practised in accordance with the ISO/IEC 27001 inter-
national standard. In conjunction with risk management
requirements, risks relating to information security, data
protection and IT are systematically documented, allocat-
ed appropriate measures by the departments concerned
and continuously monitored with regard to threat level
and risk mitigation. Regular analyses and controls as
well as rigorous security management policies ensure
an appropriate level of security.
BMW Group
Report 2020
New developments in the field of digital communica-
tion and connectivity provide new opportunities for the
BMW Group's brands to take advantage of additional
sales channels in their efforts to bring new products to
market. Based on vehicle-driven telematics data, custom-
ers can elect to use a specific service and actively consent
to the relevant data being transferred. The service provid-
ers contracted to perform the work receive the necessary
data via the BMW Group's secure back end system. The
information forms the basis for customised, data-driven,
innovative service options. Additional opportunities
could arise if new sales channels contribute to greater
brand reach to customer groups than currently envisaged
in the outlook. Compared to the assumptions made in
the outlook, the BMW Group does not expect these
opportunities to have a significant earnings impact over
the two-year assessment period.
Combined Management Report
K = 172
However, despite continuous testing and preventive
security measures, it is impossible to eliminate risks com-
pletely in this area. All Group employees are required to
treat information such as confidential business, customer
and employee data with care, use information systems se-
curely and handle risks in a transparent manner. Group-
wide requirements are documented in a comprehensive
set of principles, guidelines and instructions, such as, for
example, the Privacy Corporate Rules for handling per-
sonal data. Regular communication, awareness-raising
and training measures form the basis for a high level of
security and risk awareness. With regard to cooperations
and business partnerships, the BMW Group protects its
intellectual property as well as its customer and employee
data by issuing clearly defined instructions on informa-
tion security, data protection and the use of information
technology. Trade secrets and sensitive personal data
are subject to particularly stringent security measures.
Technical data protection incorporates industry-wide
standards and good practices. Responsibility for informa-
tion security and data protection for each Group entity
lies with either the Board of Management or the relevant
management team.
With the advance of digitalisation, the BMW Group
is continually improving the customer experience in its
existing lines of business. At the same time, new busi-
ness segments are emerging, which have only become
feasible due to innovation in the field of information
technology. The development and provision of digital ser-
vices for customers, increased vehicle connectivity and
automated driving solutions are opening up new oppor-
tunities. Via BMW ConnectedDrive and BMW CarData,
the
range of services and apps on offer to customers is
constantly being expanded and updated. Compared to
the assumptions made in the outlook, the BMW Group
does not expect these opportunities to have a significant
earnings impact over the two-year assessment period.
FINANCIAL RISKS AND RISKS RELATING TO THE
USE OF FINANCIAL INSTRUMENTS
Report on Outlook, Risks and Opportunities
and importers. In addition, a pilot project to promote
direct sales was launched in South Africa in 2020. Any
threat to the continued activities of parts of the sales
network, for example due to the impending insolvency
of a dealership, would entail risks for the BMW Group.
The occurrence of sales and marketing risks would have
only a low earnings impact over the two-year assessment
period. The risk amount is classified as low.
In order to sell its products and services, the
BMW Group operates a global sales network mainly com-
prising independent dealerships, branches, subsidiaries
Risks and opportunities relating to the sales network
Report on Outlook, Risks and Opportunities
As an internationally operating enterprise, the
BMW Group conducts business in a variety of currencies,
thus giving rise to currency risks and opportunities. A
substantial portion of Group revenues, purchasing and
funding occur outside the eurozone, particularly in China
and the USA. Regularly updated cash-flow-at-risk models
and scenario analyses are used to measure currency risks
and opportunities. If currency risks were to materialise,
they could be associated with a high earnings impact over
the two-year assessment period. The risk amount relating
to currency risks is classified as high. The risk assessment
is therefore slightly less favourable than one year earlier,
due to the increased volatility of individual currencies
in the wake of the coronavirus pandemic. Significant
opportunities can arise if currency developments are
favourable for the BMW Group.
BMW Group
Report 2020
Changes in prices are monitored via a well-defined
management process, the primary objective of which is
to increase planning reliability for the BMW Group. Price
fluctuations for precious metals (platinum, palladium,
rhodium), nonferrous metals (aluminium, copper), raw
materials for batteries (lead, nickel, cobalt) and, to some
extent, for steel and its basic ingredients (iron ore, coking
coal) as well as energy (gas, electricity) are hedged using
financial derivatives and supply contracts with fixed
pricing arrangements.
If such risks were to materialise, they could have a
medium earnings impact over the two-year assessment
period. The risk amount is classified as medium. Signif-
icant opportunities could arise if raw materials prices
develop favourably for the BMW Group.
Risks and opportunities relating to raw materials prices
As a large-scale manufacturing company, the
BMW Group is exposed to purchase price risks, par-
ticularly in relation to the raw materials used in vehicle
production. The analysis of raw materials price risks is
based on planned purchases of raw materials and com-
ponents containing those products. Cash-flow-at-risk
models and scenario analyses are used to measure risks
and opportunities relating to raw materials prices.
to medium term and for operational purposes by means
of hedging on financial markets. The principal objective
is to increase planning reliability for the BMW Group.
Hedging transactions are entered into only with finan-
cial partners of good credit standing. Opportunities are
also secured through the use of options during specific
market phases.
Combined Management Report
Operational currency management is based on the re-
sults of currency risk analyses. The BMW Group manages
currency risks at both strategic (medium to longterm)
and operational level (short to mediumterm). Medium- to
long-term measures include increasing production and
purchase volumes in foreign currency regions, i.e. nat-
ural hedging. Currency risks are managed in the short
For several years, lawsuits have been filed against
BMW Bank GmbH (BMW Bank) in which consumers
claim the withdrawal of their loan and leasing contracts
on the basis of allegedly incorrect and insufficient
pre-contractual information. The focus is on loan con-
tracts. Since 2017, BMW Bank has won the vast majority
of these lawsuits. In November 2019, the Federal Court
of Justice (BGH) adopted a decision of principle in favour
of BMW Bank, confirming the accuracy of consumer-rel-
evant information in loan contracts. In addition, in Octo-
ber 2020 the BGH decided in a case in which BMW Bank
Report on Outlook, Risks and Opportunities
K = 171
The risks associated with the supply of raw materials
are mitigated either by reducing the use of raw materials
or substituting them with alternative products.
Within the Purchasing and Supplier Network, oppor-
tunities arise above all in the area of global sourcing and
the associated efficiency improvements. Making optimal
use of any innovations developed by suppliers is a key
prerequisite for developing future-oriented mobility prod-
ucts and services. Similarly, favourable location-related
cost factors, in particular those arising due to the close
proximity of supplier structures to new and existing
BMW Group production plants as well as the introduc-
tion of innovative production technologies, could lead to
lower cost of materials for the BMW Group.
One of the BMW Group's aims is to have battery cells
manufactured in Europe. Key prerequisites for achieving
this aim, however, are primarily further advances in the
development of battery cell technology and the mastery
of cell production processes. Contracts have been con-
cluded with various suppliers as part of the Group's elec-
trification strategy. A further source of opportunities is
seen in the possible integration of previously unidentified
supplier-driven innovations in the Group's product range.
The BMW Group offers innovative suppliers numerous
options for creating specific contractual arrangements
that promote companies developing innovative solutions.
Compared to the assumptions made in the outlook, the
BMW Group does not expect such additional oppor-
tunities to have a significant earnings impact over the
two-year assessment period.
Liquidity risks
was not involved that consumers are generally obliged to
pay a compensation after a successful withdrawal. Since
the beginning of 2020, several references for a prelim-
inary ruling on the scope of information obligations
have been filed with the European Court of Justice (ECJ).
On the basis of these requests, there is a risk that BMW
Bank's prospects of success in the withdrawal lawsuits
could deteriorate in the event of negative future ECJ case
law. The possible financial impact cannot be definitively
assessed at this stage.
K = 179
K = 175
Organisational measures incorporating the principles
of the risk-oriented segregation of duties
Controls integrated in processes and IT systems
Group-wide mandatory accounting guidelines
-
Internationally recognised standards for internal
control systems were taken into account when designing
the various components of the BMW Group's internal
control system. The system comprises:
The internal control system relevant for accounting
and financial reporting processes has the task of en-
suring that accounting and financial reporting of the
BMW Group is both accurate and reliable. Within the
framework of the "Three Lines of Defence" model used
to manage risk across the Group, the internal control
system represents a key component of the second line
of defence, serving as a link between the operating units,
the corporate audit function and the external auditors.
FOR ACCOUNTING AND
FINANCIAL REPORT-
ING PROCESSES
SYSTEM* RELEVANT
INTERNAL CONTROL
Internal Control System Relevant for Accounting and Financial Reporting Processes
Process-independent monitoring measures
Combined Management Report
If operational risks were to materialise, they would be
likely to have a low earnings impact over the two-year as-
sessment period. The risk amount is classified as medium.
At present, no significant opportunities for the earnings
situation are seen with regard to operational risks.
In the Financial Services segment, operational risks
are defined as the risk of losses arising as a consequence
of the unsuitability or failure of internal procedures
(process risks), people (personnel-related risks), systems
(infrastructure- and IT-related risks) and external events
(external risks). The recording and measurement of risk
scenarios, loss events and countermeasures in the op-
erational risk management system provide the basis for
the systematic analysis and management of potential or
materialised operational risks. Annual self-assessments
are also carried out. This risk category also includes
sustainability risks that correspond to the definition of
operational risks, such as external events or natural and
man-made disasters.
Operational risks relating to the
Financial Services segment
Interest rate risks in the Financial Services segment
relate to potential losses caused by changes in market
interest rates. These can arise when fixed interest rate
periods do not match for assets and liabilities recognised
in the balance sheet. If interest rate risks were to mate-
rialise, they could have a medium earnings impact over
the two-year assessment period. The risk amount is clas-
sified as medium. Favourable interest rate developments
compared to the outlook represent opportunities that
the BMW Group classifies as significant. Interest rate
risks in the Financial Services business are managed by
ensuring that fixed interest rate periods match to a large
extent and through the use of interest-rate derivatives. If
the relevant recognition criteria are fulfilled, derivatives
used by the BMW Group are accounted for as hedging
relationships. Further information on risks in conjunc-
tion with financial instruments is provided in ✓ note 39 to
the Group Financial Statements.
Interest rate risks and opportunities relating to the
Financial Services segment
Based on current expectations of a rising level of re-
sidual value losses in subsequent years, the level of risk
provisioning has been raised in the form of additional
provisions and in line with applicable financial reporting
standards. Accordingly, risk costs for residual value risks
in the Financial Services segment are significantly higher
than one year
earlier.
Each vehicle's estimated residual value is calculated
on the basis of historical external and internal data. This
estimation provides the expected market value of the ve-
hicle at the end of the contractual period. Developments
on pre-owned car markets are an important factor for the
BMW Group. In 2020, the number of electrified vehicles
also continued to increase. Changes in the value of these
vehicles are largely determined by a set of known influ-
encing factors. Prices on pre-owned car markets in the
premium segment fluctuated within the usual range and
were even favourably influenced in some cases by coro-
navirus-related catch-up effects. As part of the manage-
ment of residual value risks, the net present value of risk
costs is also calculated at the contract commencement
date. Market developments are monitored throughout
the contractual period and the risk assessment updated
accordingly. Residual value risk management essentially
follows the same established process, regardless of the
drivetrain variant.
K = 178
Report on Outlook, Risks and Opportunities
Combined Management Report
BMW Group
Report 2020
The system and the methodologies applied are sub-
ject to continuous improvement, with system effective-
ness assessed regularly on the basis of centralised and
decentralised process analyses, analyses of data within
the various financial systems and audit procedures. The
principal features of the internal control system, as far
as they relate to individual entity and Group accounting
and financial reporting processes, are described below.
Guidelines for recognising, measuring and allocating
items to accounts are available to all Group employees
via the intranet. New accounting standards are assessed
for their impact on the BMW Group's accounting and
financial reporting. Accounting guidelines and processes
are reviewed continuously and revised at least once a
year, or more frequently if required.
Preventive and detective controls are integrated in
Group accounting and financial reporting processes.
Preventive controls serve to prevent errors and omis-
sions, whereas detective controls serve to detect and
correct errors. To the extent possible, they are designed
to comply with the principle of the segregation of duties.
Key IT systems that are relevant for accounting and fi-
nancial reporting incorporate controls designed, among
other things, to prevent business transactions from being
recorded incorrectly as well as to ensure the timely rec-
ognition and measurement of all business transactions
in accordance with applicable requirements. Controls are
also in place to test the appropriateness of consolidation
procedures.
Report 2020
Combined Management Report
Report 2020
Disclosures Relevant for Takeovers and Explanatory Comments
K = 180
DISCLOSURES
RELEVANT FOR
TAKEOVERS*AND
EXPLANATORY
COMMENTS
COMPOSITION OF SUBSCRIBED CAPITAL
Responsibilities for ensuring the effectiveness of
the internal control system in Group accounting and
financial reporting processes are clearly defined and
allocated to the relevant line and process managers.
These managers report annually on their assessment
of the effectiveness of the internal control system for
accounting and financial reporting purposes. The assess-
ment also includes the results of internal and external
audits as well as of data analysis that is conducted on a
continual basis. In this context, the Group's various units
confirm the effectiveness of the internal control system
for accounting and financial reporting. The results of
the assessment are gathered and documented with the
aid of appropriate tools. Any weaknesses in the control
system are eliminated, taking into account their potential
impact on accounting and financial reporting processes.
The Board of Management and the Audit Committee
are briefed annually on the effectiveness of the internal
control system for accounting and financial reporting.
The Board of Management and, where appropriate, the
Supervisory Board, are informed without delay if there
are any significant changes in the effectiveness of the
internal control system.
The rights and obligations of shareholders derive from
the German Stock Corporation Act (AktG) in conjunction
with the Company's Articles of Incorporation, the full
text of which is available at ✓ www.bmwgroup.com. The right
of shareholders to have their shares evidenced is ex-
cluded in accordance with the Articles of Incorporation.
The voting power attached to each share corresponds to
its par value. Each €1 of par value of share capital repre-
sented in a vote entitles the holder to one vote (Article 18
no. 1 of the Articles of Incorporation).
The Company's shares of preferred stock are shares
as defined in § 139 ff. AktG, which carry a cumulative
preferential right in terms of the allocation of profit and
for which voting rights are excluded. These shares confer
voting rights only in exceptional cases stipulated by law,
in particular when the preference amount has either not
been paid or has not been fully paid within one year and
the arrears are not paid in the subsequent year alongside
the full preference amount due for that year. With the
exception of voting rights, holders of shares of preferred
stock are entitled to the same rights as holders of shares of
common stock. Article 24 of the Articles of Incorporation
confers preferential treatment to the non-voting shares
of preferred stock with regard to the appropriation of
the Company's unappropriated profit. Accordingly, the
unappropriated profit is required to be appropriated in
the following order:
a Subsequent payment of any arrears on dividends on
non-voting shares of preferred stock in the order of
accruement
b Payment of an additional dividend of €0.02 per €1
par value on non-voting preferred shares
c Uniform payment of any other dividends on shares
of common and preferred stock, provided the share-
holders do not resolve otherwise at the Annual
General Meeting
RESTRICTIONS AFFECTING VOTING RIGHTS OR THE
TRANSFER OF SHARES
In addition to shares of common stock, the Company
has also issued non-voting shares of preferred stock. Fur-
ther information is provided in the section “Composition
of subscribed capital".
When the Company issues non-voting shares of
preferred stock to employees in conjunction with its
Employee Share Programme, these shares are generally
subject to a Company-imposed blocking period of four
years, calculated from the beginning of the calendar year
in which the shares were issued.
Contractual holding period arrangements also
apply to shares of common stock acquired by Board of
Management members and certain senior department
heads in conjunction with the share-based remuneration
programmes (Remuneration Report of the Corporate
Governance section; ✓ note 41 to the Group Financial
Statements).
* Disclosures pursuant to § 289a and § 315a HGB.
In conjunction with the ongoing development of
IT systems relevant for accounting and financial report-
ing processes at both individual entity and Group level,
controls are adapted to take account of new requirements
and opportunities arising as a result of advances in infor-
mation technology. Moreover, the BMW Group uses data
analysis tools to identify and subsequently eliminate any
weaknesses in the control system.
BMW Group
Report 2020
The BMW Group recognises appropriate levels of pro-
vision for lawsuits. In addition, a part of these risks is in-
sured to an economically reasonable extent. Further risks
from legal proceedings are reported as other contingent
liabilities. It cannot be ruled out, however, that damages
arise that are either not covered or not fully covered by
insurance policies or provisions or reported as contingent
liabilities. In accordance with IAS 37 (Provisions, Con-
tingent Liabilities and Contingent Assets), the required
information is not provided if the BMW Group concludes
that its disclosure could seriously prejudice the outcome
of the relevant legal proceedings. Further information on
contingent liabilities is provided in ✓ note 38 to the Group
Financial Statements.
Risks and opportunities arise in conjunction with
leasing contracts if the market value of a leased vehicle
at the end of the contractual term of a lease differs from
the residual value estimated at the commencement date
of the lease. A residual value risk exists if the expected
market value of the vehicle at the end of the contractual
term is lower than its estimated residual value at the date
the contract is entered into. If unexpected residual value
risks were to materialise, they could have a high earnings
impact from the Group's perspective over the two-year
assessment period. A high earnings impact would then
arise for the affected Financial Services and Automotive
segments. The risk amount is classified as high for the
Group as a whole. Opportunities can arise out of a pos-
itive deviation between the actual market value and the
original residual value forecast. The BMW Group classi-
fies potential residual value opportunities as significant.
Due to the coronavirus pandemic, moratoria were
granted to customers and dealers, particularly during
the first six months of the year, taking into account the
prevailing legal requirements. The simultaneous im-
provement in the economic situation in most markets in
the second half of the year meant that the low percentage
of actual loan defaults was kept stable.
Classification
Change compared
to prior year
Classification of
risk amount
Risks
The following overview provides a general summary
of the main risks and opportunities in the Financial
Services segment:
The growing challenges posed by climate change
and the resulting impact on the financial system are
taken into account in the Financial Services segment by
adequately addressing sustainability risks. As an inte-
gral part of the BMW Group's value chain, the Financial
Services segment is highly aware of the importance of
managing sustainability risks and is therefore fully inte-
grated in the BMW Group's comprehensive sustainable
corporate strategy.
within the Group, developments that affect the
BMW Group's industrial business in the first step (e.g.
diesel driving bans, adjustments to carbon emissions
targets, the growing proportion of e-vehicles, etc.) are
also relevant for the Financial Services segment in the
second step. This environment has always been part
of the underlying framework of the Financial Services
segment's business model.
Operational risks
Interest rate changes
Residual value
Opportunities
Risks and opportunities relating to the provision of financial services
Credit risk
The Financial Services segment not only helps its
customers to satisfy their mobility needs by offering
credit financing and leasing products, it also promotes
the BMW Group's industrial business from a sales point
of view. The far-reaching consequences of the debate
on sustainability and sustainability risks affect both the
non-financial economy (and therefore the BMW Group)
and the financial economy (and therefore the Financial
Services segment). Due to the close interrelationships
into account.
Sustainability has developed into a megatrend of
our time and is increasingly becoming the focus of
political and social debate. Both the effects of climate
change and the changes brought about by the fight
against climate change are also likely to be reflected
across the world's financial system. Due to the potential
macroeconomic consequences, the related sustainability
risks are seen as a threat to the stability of financial
markets. In the context of bank supervision at national
and international level, it is therefore essential that the
banks concerned take sustainability risks adequately
All risks - in the sense of unexpected losses - must
be covered at all times. Based on the entity's risk ap-
petite, this is achieved by ensuring specified levels of
risk-covering assets (asset cushions) in the form of equity
capital. Unexpected losses are measured using various
value-at-risk models, which are validated at regular in-
tervals. Risks are also aggregated after taking account of
correlation effects. In addition to assessing the Group's
ability to bear risk, stress scenarios are also examined.
The segment's risk-bearing capacity is also regularly
monitored by means of an integrated limit system for
the various risk categories.
In the Financial Services segment, the risk manage-
ment process also takes financial regulatory require-
ments such as Basel III into account. Internal methods
for identifying, measuring, managing and monitoring
risks within the Financial Services segment comply with
national and international standards. Risk management
within the Financial Services business is built on the
prevailing risk culture, the defined risk strategy, the
internal capital adequacy assessment process framework
and a set of rules comprising principles and guidelines.
In organisational terms, the risk management process
is ensured by means of a clear division between front-
and back-office activities and a comprehensive internal
control system. The main tool used to manage risk
within the Financial Services segment is to ensure the
segment's risk-bearing capacity.
RISK MANAGEMENT SYSTEM IN THE
FINANCIAL SERVICES SEGMENT
K = 176
Report on Outlook, Risks and Opportunities
Combined Management Report
BMW Group
Report 2020
RISKS AND OPPORTUNITIES
Change compared
to prior year
Medium
Stable
Initial and continuous creditworthiness testing is an
important aspect of the BMW Group's credit risk man-
agement system. For this reason, every borrower's cred-
itworthiness is tested for all credit financing and leasing
contracts entered into by the BMW Group. Opportunities
may arise if the managed portfolio performs better over
time than estimated when the credits were granted. The
intensive management of purchasing processes and col-
lateral assessment as well as favourable macroeconomic
developments could accentuate these opportunities. In
the case of retail customer financing, creditworthiness
is assessed using validated scoring systems integrated in
the purchasing process. In the area of dealership financ-
ing, creditworthiness is assessed by means of ongoing
credit monitoring and an internal rating system that
takes account not only of the material credit standing of
the borrower, but also of qualitative factors such as past
reliability in business relationships. Changes in the cred-
itworthiness of customers arising during the credit term
are covered by risk provisioning procedures. The credit
risk of individual customers is quantified on a monthly
basis and, depending on the outcome, taken into account
within the risk provisioning system. Macroeconomic
developments are currently subject to a higher degree
of volatility. If developments are more favourable than
assumed in the outlook, credit losses may be reduced,
leading to a positive earnings impact.
In light of the uncertainties surrounding the future
course of the coronavirus pandemic, additional credit
loss provisions were recognised during the financial year
2020 for expected credit losses, in order to reflect the
possible negative impact of the coronavirus pandemic on
retail customer and dealership business for accounting
purposes.
Credit and counterparty default risk arises within
the Financial Services segment if a contractual partner
(e.g. a customer or dealership) becomes either unable or
only partially able to fulfil its contractual obligations, so
that lower income is generated or losses are incurred. If
unexpected credit and counterparty default risks were to
materialise, they could have a medium earnings impact
over the two-year assessment period. The risk amount is
classified as medium. The BMW Group classifies poten-
tial opportunities in this area as insignificant.
Credit and counterparty risks and opportunities relating
to the Financial Services segment
During the financial year 2020, the aggregate risk
cushion for risks in the Financial Services segment was
sufficient at all times, thereby ensuring the segment's
risk-bearing capacity.
The main categories of risk relevant for the Finan-
cial Services segment are credit and counterparty risk,
residual value risk, interest rate risk, operational risk
and liquidity risk. The evaluation of liquidity risk for the
Financial Services segment is included in the liquidity
risk category for the Group as a whole.
Risks and opportunities relating to the Financial Services
segment
K = 177
Report on Outlook, Risks and Opportunities
Combined Management Report
BMW Group
Report 2020
Stable
Medium
Stable
Significant
Stable
Medium
Stable
Significant
Stable
High
Stable
Insignificant
Residual value risks and opportunities relating to the
Financial Services segment
BMW Group
The subscribed capital (share capital) of BMW AG
amounted to €659,684,500 at 31 December 2020 (2019:
€658,862,500) and, in accordance with Article 4 no. 1
of the Articles of Incorporation is sub-divided into
601,995,196 shares of common stock (91.26%) (2019:
601,995,196; 91.37%) and 57,689,304 shares of non-vot-
ing preferred stock (8.74%) (2019: 56,867,304; 8.63%),
each with a par value of €1. The Company's shares are
issued to bearer.
* Disclosures pursuant to sections 289 and 315 HGB.
BMW Group
36
Report 2020
Group Financial Statements
BMW Group
147,617 156,500 105,233 112,897 -148,919 -155,872
1,447
1,502
111,225 113,062
216,658 228,034
Total equity and liabilities
40,552 -83,071 -91,132
Cash Flow Statement for Group and Segments
701
797
23,171 -83,023 -91,119
42,169 50,829 21,797
183
319
16,092 17,966 34,830 34,902
71,963 82,625 50,589 53,311
Current provisions and liabilities
Other liabilities
68,819 79,193 34,829
CASH FLOW STATEMENT FOR GROUP
in € million
2,272
1,725
4,467
2,722
Trade receivables
7,118
5,222
Other interest and similar income/expenses²
Interest received²
Income taxes paid
Profit/loss before tax¹
2019
2020
Financial Services
(unaudited supplementary information)
K = 190
2019
2020
2019
2020
Automotive
(unaudited supplementary information)
Group
AND SEGMENTS
-13
-48
17,239
12
963
747
34
Receivables from sales financing
Financial assets
Current tax
Other assets
Cash and cash equivalents
Current assets
Total assets
222222
29
14,896
15,891
13,391
14,404
687
679
818
808
30
537
-1,605
704
184
9
943
892
413
378
8,814
7,365
10,182
8,644
37
Trade payables
12,959
26,938
25,178
1,929
897
38,986 46,093
35
Financial liabilities
75
18
192
-3,389
-382
-1,984
429
-1,526
-11
1
43
191
14
160
-193
-43
-1,255
422
-1,560
370
Cash inflow/outflow from operating activities
Change in other operating assets and liabilities
Change in provisions
Change in trade payables
Change in trade receivables
Change in inventories
-222
-1,454
-76
381
-18
>
is presented in ✓ note 35.
The reconciliation of liabilities from financing activities
-5,345
2,762
9,690
8,178
3,662
13,251
118
-1,432
683
-26
1,096
754
-59
129
1,745
1,122
1,512
1,115
-34
-831
-841
-1,117
Other non-cash income and expense items
54
46
5,853
5,974
6,017
6,139
Depreciation and amortisation of tangible and intangible assets
3
1
61
152
51
104
3
91
283
91
163
-345
-1,513
99
-200
94
-262
-996
Changes in working capital
-3,589
4,184
-3,560
4,192
Change in receivables from sales financing
-3,600
-311
-3,825
2,298
-1,016
3
4
Gain/loss on disposal of tangible and intangible assets and marketable securities
-136
-920
-136
-920
Result from equity accounted investments
23
6
Change in leased products
Current tax
55
2,228
32
3,693
3,335
3,197
2,820
109
96
49
47
338
372
Other provisions
33
6,488
5,788
6,268
5,605
74
81
146
102
Pension provisions
Deferred tax
-17,784
21,972
31
59,550
57,667
Accumulated other equity
31
-1,518
-1,163
Equity attributable to shareholders of BMW AG
31
60,891
59,324
Minority interest
629
583
Equity
61,520
59,907
41,117 40,174
15,555
15,545
21,389
-16,541
Revenue reserves
13
632
19,577
705
746
63,243
42,506 39,639
61,762
47,588
1,011
49,015
34
49,865
-3,078
-15
-3,749
-68
102 -46,214 -43,139
50,373 -49,307 -46,956
Other provisions
33
7,494
7,421
6,960
6,962
100
105
388
299
46
19,519
509
85,502
Non-current provisions and liabilities
697
543
2,812
3,804
78
Financial liabilities
35
67,390
70,647
2,087
2,680
17,730
18,170
Other liabilities
36
5,095
5,100
7,270
7,929
522
569
83,175
2,161
2,199
31
1,000
64
84
200
125
28
9,110
11,614
33,747
33,492
2
1
5,952
5,106
13,537
12,036
9,522
9,077
5
11
2,863
342
81,807 90,630 63,133
1,209
27
219
186
100
103
1
25
36,252
41,407
36,252
41,407
26
5,108
5,955
4,152
4,772
612
1,009
392
187
-48
-13
606
216,658 228,034 111,225 113,062
64,973
913
information)
information)
Note
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
EQUITY AND LIABILITIES
Subscribed capital
31
660
659
Capital reserves
information)
information)
information)
Group
877
46,661
52,625
2,075 1,147
50,592 54,364
64,692 -83,216 -91,677
873
65,878 -83,264 -91,690
1,502
1,447
147,617
156,500 105,233
112,897 -148,919 -155,872
1,979
BMW Group
Report 2020
Balance Sheet for Group and Segments
in € million
|<= 189
Automotive
(unaudited supplementary
Motorcycles
(unaudited supplementary
Financial Services
(unaudited supplementary
Other Entities
(unaudited supplementary
Eliminations
(unaudited supplementary
Group Financial Statements
2,518
6,847 -10,934
-65,655 -64,182
-232
-87
Profit/loss from continuing operations
3,857
4,978
2,009
3,113
74
131
1,269
1,600
-173
-67
678
29
201
44
44
Net profit/loss
3,857
5,022
2,009
3,157
74
131
1,269
1,600
-173
-67
678
Profit/loss from discontinued operations
201
62
-456
-32
-3
-7
-57
4
-40
-271
-125
102
-89
Profit/loss before tax
5,222
7,118
2,722 4,467
-672
100
1,725
2,272
-235
-96
910
288
Income taxes
13
-1,365
-2,140
-713
-1,354
-26
-56
187
Attributable to minority interest
82
107
7.49
BMW Group
Report 2020
Group Financial Statements
Statement of Comprehensive Income for Group
STATEMENT OF COMPREHENSIVE INCOME
FOR GROUP
in € million
Net profit/loss
Remeasurement of the net liability for defined benefit pension plans
Deferred taxes
Items not expected to be reclassified to the income statement in the future
Marketable securities (at fair value through other comprehensive income)
Derivative financial instruments
Costs of hedging
Other comprehensive income from equity accounted investments
5.75
Deferred taxes
Items that can be reclassified to the income statement in the future
Other comprehensive income for the period after tax
Total comprehensive income
Total comprehensive income attributable to minority interests
Total comprehensive income attributable to shareholders of BMW AG
K = 187
Note
2020
2019
3,857
5,022
32
-354
-1,254
Currency translation foreign operations
14
Diluted earnings per share of preferred stock in €
7.47
17
30
67
77
-2
Attributable to shareholders of BMW AG
31
3,775
4,915
1,992
3,127
74
131
1,202
1,523
-171
-67
5.73
14
Diluted earnings per share of common stock in €
Dilutive effects
7.49
5.75
560
14
7.47
5.73
14
Basic earnings per share of common stock in €
201
678
Basic earnings per share of preferred stock in €
139
-293
Financial result
3,086
3,660
3
5
753
321
-7,762
-240
-264
-1,326
-1,341
-26
-24
34
457
24
10
916
1,031
931
976
2
2
34
73
125
173
-176
-193
Other operating expenses
Other operating income
10
343
9,397
-7,237
2,368
2,284
91,682
98,990 104,210 80,853
-86,147 -71,456 -78,062
-85,408
13,582 18,063
-8,795 -9,367
9
Selling and administrative expenses
Gross profit
8
Cost of sales
7
Revenues
2019
2020
13,620
2019
2019
2020
2019
2020
2019
3
5
-14,194 -19,443
-1,941
-1,911
-26,958
-25,938
14,947
19,764
2020
-873
-2,316
-929
1
3
4
1,169
1,515
-1,292
-1,761
Interest and similar expenses
11
-458
-499
-613
-737
-8
420
-4
-1,232
-1,419
1,394
1,672
Other financial result
12
-186
-109
17
149
5
-37
-208
-221
-7
236
179
116
-2,335
-2
-1
-73
-80
-66
-125
197
225
Profit/loss before financial result
4,830
7,411
2,162
4,499
103
194
1,721
11
Interest and similar income
51,079
136
920
136
392
920
Result from equity accounted investments
377
808
29
36
2,312
24
387
-215
-867
Disclosures Relevant for Takeovers and Explanatory Comments
Combined Management Report
BMW Group
Report 2020
Framework agreements are in place with financial
institutions and banks (ISDA Master Agreements)
with respect to trading activities with derivative
financial instruments. These agreements include
an extraordinary right of termination that triggers
actions in the event that the creditworthiness of the
party involved is materially weaker following a direct
or indirect acquisition of beneficially owned equity
capital which confers the power to elect a majority of
the Supervisory Board of a contractual party or any
other ownership interest that enables the acquirer
to exercise control over a contractual party or which
constitutes a merger or a transfer of net assets.
-
BMW AG acts as guarantor for all obligations arising
from the joint venture agreement relating to BMW
Brilliance Automotive Ltd. in China. This agreement
grants an extraordinary right of termination to ei-
ther joint venture partner in the event of a change
in control at one of the parties or if more than 25%
of the shares of the other party are acquired by a
third party either directly or indirectly - or if the
other party is merged with another legal entity.
Termination of the joint venture agreement may
lead to the dissolution of the joint venture with an
optional purchase right for BMW (or for the partner)
to acquire the shares of the other partner or to the
liquidation of the joint venture company.
A cooperation agreement concluded with Peugeot
SA relating to small (1- to 1.6-litre) petrol engines
entitles each of the cooperation partners to give ex-
traordinary notification of termination in the event
of a competitor acquiring control over the other
contractual party and if any concerns of the other
contractual party regarding the impact of the change
of control on the cooperation arrangements are not
resolved during the subsequent discussion process.
An agreement concluded with an international con-
sortium of banks relating to a syndicated credit line,
which was not being utilised at the balance sheet
date, entitles the lending banks to give extraordinary
notice to terminate the credit line, such that all out-
standing amounts, including interest, would fall due
with immediate effect if one or more parties jointly
acquire direct or indirect control of BMW AG. The
term "control" is defined as the acquisition of more
than 50% of the share capital of BMW AG, the right
to receive more than 50% of the dividend or the right
to direct the affairs of the Company or appoint the
majority of members of the Supervisory Board.
BMW AG is party to the following major agreements,
which contain provisions that would apply in the event
of a change in control or the acquisition of control as a
result of a takeover bid:
SIGNIFICANT AGREEMENTS OF THE COMPANY TAKING
EFFECT IN THE EVENT OF A CHANGE IN CONTROL
FOLLOWING A TAKEOVER BID
In accordance with Article 4 no. 5 of the Articles of
Incorporation, the Board of Management is authorised,
with the approval of the Supervisory Board, to increase
by means of cash contributions BMW AG's share capital
during the period up to and including 15 May 2024 by up
to €3,437,600 for the purposes of an Employee Share Pro-
gramme by issuing new non-voting shares of preferred
stock, which carry the same rights as existing non-voting
preferred stock (Authorised Capital 2019). The subscrip-
tion rights of existing shareholders are excluded. No
conditional capital was in place at the reporting date.
The Board of Management is authorised to buy back
shares and sell repurchased shares in situations specified
in § 71 AktG, for example to avert serious and imminent
damage to the Company and/or to offer shares to per-
sons employed or previously employed by BMW AG or
one of its affiliated companies.
AUTHORISATIONS OF THE BOARD OF MANAGEMENT,
IN PARTICULAR WITH RESPECT TO THE ISSUING OR
BUYING BACK OF SHARES
K = 182
KK = 183
Disclosures Relevant for Takeovers and Explanatory Comments
BMW Group
Report 2020
5 Controlled entities, of which 3% or more are attributed: Susanne Klatten Beteiligungs GmbH.
4 Controlled entities, of which 3% or more are attributed: AQTON GmbH & Co. KG für Automobilwerte.
3 Controlled entities, of which 3% or more are attributed: AQTON Verwaltung GmbH, AQTON GmbH & Co. KG
für Automobilwerte.
1 Based on voluntary notifications provided by the listed shareholders as at 31 December 2020.
2 Controlled entities, of which 3% or more are attributed: AQTON SE, AQTON Verwaltung GmbH, AQTON
GmbH & Co. KG für Automobilwerte.
There are no shares with special rights that confer
control rights.
Amendments to the Articles of Incorporation must
comply with § 179 ff. AktG. Amendments must be de-
cided upon by the shareholders at the Annual General
Meeting (§ 119 (1) no. 6, § 179 (1) AktG). The Supervi-
sory Board is authorised to approve amendments to the
Articles of Incorporation that only affect its wording
(Article 14 no. 3 of the Articles of Incorporation). Reso-
lutions are passed at the Annual General Meeting by a
simple majority of shares cast unless otherwise explicitly
required by binding provisions of law or, if a majority of
share capital is required, by a simple majority of shares
represented in the vote (Article 20 no. 1 of the Articles
of Incorporation).
The appointment or removal of members of the Board
of Management is based on the rules contained in § 84 f.
AktG in conjunction with § 31 of the German Co-Deter-
mination Act (MitbestG).
Like all other shareholders, employees exercise their
control rights pertaining to shares they have acquired in
conjunction with the Employee Share Programme and/or
the share-based remuneration programme directly on
the basis of relevant legal provisions and the Company's
Articles of Incorporation.
CONTROL OF VOTING RIGHTS WHEN EMPLOYEES
PARTICIPATE IN CAPITAL AND DO NOT DIRECTLY
EXERCISE THEIR CONTROL RIGHTS
20.75
0.2
20.7
16.6
16.63
16.64
Combined Management Report
9.0
Financing agreements in place with the European
Investment Bank (EIB) entitle the EIB to demand
early repayment of its loans in the event of an im-
minent or actual change in control of BMW AG, if
the EIB has reason to assume - after the change in
control has taken place or 30 days after it has made
a request to discuss the situation - that the change in
control could have a significantly adverse impact, or
if the borrower refuses to hold any such discussions.
A change in control of BMW AG arises if one or more
individuals take over or lose control of BMW AG,
with control being defined in the above-mentioned
financing agreements as (i) holding or having control
over more than 50% of the voting rights, (ii) the right
to appoint the majority of the members of the Board
of Management or Supervisory Board, (iii) the right
to receive more than 50% of dividends payable or
(iv) any other comparable controlling influence over
BMW AG.
attributed pursuant to § 30 WPHG - holds more
than 50% of the voting rights or shares in the other
principal, or (iii) the other principal has concluded
a control agreement as dependent company. The
outcome of such a bidding procedure is that the joint
venture will go to the principal making the highest bid.
194
192
Cash Flow Statement for Group and Segments
190
Balance Sheet for Group and Segments
188
Statement of Comprehensive Income for Group
187
Income Statement for Group and Segments
186
GROUP FINANCIAL
STATEMENTS
Group Financial Statements
BMW Group
Report 2020
三 184
BMW AG and Daimler AG have entered into a joint
venture agreement relating to mobility services in the
areas of car sharing, ride hailing, parking, charging
and multimodality, which entitles both Daimler AG
and BMW AG (hereafter referred to as "principals")
to initiate a bidding procedure in the event that (i)
the other principal receives notice in accordance
with § 33 of the German Securities Trading Act
(WPHG) that including shares attributed pursuant
to § 34 WPHG - a shareholding of more than 50%
has been attained or, in accordance with § 20 AktG
of the German Stock Corporation Act (AktG) that a
shareholding of more than 50% has been attained or
(ii) a shareholder or a third party – including shares
K
COMPENSATION AGREEMENTS WITH MEMBERS OF THE
BOARD OF MANAGEMENT OR WITH EMPLOYEES IN THE
EVENT OF A TAKEOVER BID
BMW AG has entered into an agreement with Great
Wall Motor Company Limited to establish the joint
venture Spotlight Automotive Ltd. in China. The
agreement grants an extraordinary right of termi-
nation to either joint venture partner in the event
that - either directly or indirectly – more than 25% of
the shares of the other party are acquired by a third
party or if the other party is merged with another
legal entity. The termination of the joint venture
agreement may result in the sale of the shares to the
other joint venture partner or in the liquidation of
the joint venture entity.
-
Until 19 June 2020, BMW AG was party to a collab-
oration agreement with Mercedes-Benz AG for the
development of technologies for second-generation
automated driving (from 2024), which could be
terminated by either party in the event that a third
party – either directly or indirectly - acquires at least
30% of the voting rights in one of the contractual par-
ties (§ 29 (2) and § 30 of the German Securities Acqui-
sition and Takeover Act (WpÜG)). This collaboration
was terminated with immediate effect in accordance
with an agreement dated 18/19 June 2020.
-
-
Disclosures Relevant for Takeovers and Explanatory Comments
Combined Management Report
BMW Group
Report 2020
The development collaboration agreement between
BMW AG, FCA US LLC and FCA Italy S.p.A. relating
to the development of technologies used in conjunc-
tion with automated vehicles may be terminated by
any of the contractual parties if certain competitors
in the technology sector acquire and subsequently
hold at least 30% of the voting shares of one of the
other contractual parties.
The development collaboration agreement between
BMW AG, Intel Corporation and Mobileye Vision
Technologies Ltd., relating to the development of
technologies used in automated vehicles, may be
terminated by any of the contractual parties if a
competitor of one of the parties acquires and sub-
sequently holds at least 30% of the voting shares of
one of the contractual parties.
the HERE Group or certain potential competitors of
the HERE Group from the technology sector acquire
at least 25% of BMW AG. If none of the other share-
holders acquire these shares, the other shareholders
are entitled to resolve that There Holding B.V. be
dissolved.
BMW AG is party to the shareholder agreement re-
lating to There Holding B.V., which is the majority
shareholder of the HERE Group. In accordance with
the shareholder agreement, each contractual party is
required to offer its directly or indirectly held shares
in There Holding B. V. for sale to the other sharehold-
ers in the event of a change in control. A change in
control of BMW AG arises if a person takes over or
loses control of BMW AG, with control defined as (i)
holding or having control over more than 50% of the
voting rights, (ii) the possibility to control more than
50% of voting rights exercisable at Annual General
Meetings on all or nearly all matters, or (iii) the right
to determine the majority of members of the Board
of Management or the Supervisory Board. Further-
more, a change in control occurs if competitors of
Several supply and development contracts between
BMW AG and various industrial customers, all relat-
ing to the sale of components for drivetrain systems,
grant an extraordinary right of termination to the
relevant industrial customer in specified cases of a
change in control at BMW AG (for example BMW AG
merges with a third party or is taken over by a third
party; an automobile manufacturer acquires more
than 50% of the voting rights or share capital of
BMW AG).
The BMW Group has not concluded any compen-
sation agreements with members of the Board of Man-
agement or with employees for situations involving a
takeover offer.
25.62
0.2
Direct share of
voting rights
3,451
550
512
131
84
-1,418 -1,853
Other assets
Non-current assets
Inventories
28
1,216
1,325
2,861
2,203
3,196
33
2,929
3,351
41,860
38,919
-46,467 -43,184
134,851
137,404
48,092 48,089
589
570
100,956
105,908
50,869
47,019
36
2,194
2,459
13
Indirect share of
voting rights
SHARES WITH SPECIAL RIGHTS THAT CONFER
CONTROL RIGHTS
The voting percentages disclosed above may have
changed subsequent to the stated date if these changes
were not required to be reported to the Company. As the
Company's shares are issued to bearer, the Company is
generally aware of changes in shareholdings only if such
changes are subject to mandatory notification rules.
Susanne Klatten Beteiligungs GmbH, Bad Homburg v. d. Höhe, Germany
AQTON GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany
Susanne Klatten, Germany
AQTON Verwaltung GmbH, Bad Homburg v. d. Höhe, Germany
AQTON SE, Bad Homburg v. d. Höhe, Germany
Stefan Quandt, Germany
in %
STATUTORY REGULATIONS AND PROVISIONS CONTAINED
IN THE ARTICLES OF INCORPORATION GOVERNING THE
APPOINTMENT AND REMOVAL OF MEMBERS OF THE
BOARD OF MANAGEMENT AND CHANGES TO THE ARTI-
CLES OF INCORPORATION
K = 181
Based on information available to the Company, the
following direct or indirect holdings exceeding 10% of
the voting rights at the end of the reporting period were
held at the stated reporting date:¹
DIRECT OR INDIRECT INVESTMENTS IN CAPITAL
EXCEEDING 10% OF VOTING RIGHTS
Disclosures Relevant for Takeovers and Explanatory Comments
Report 2020
Combined Management Report
BMW Group
Deferred tax
-68
-15
1,168
1,939
139
194
161
559
1,370
2,644
26
Financial assets
-11,289
-49
131
208
217
Statement of Changes in Equity for Group
Financial Services
(unaudited supplementary
information)
Other Entities
(unaudited supplementary
information)
Eliminations
(unaudited supplementary
information)
Note
2020
2019
2020
2019
2020
2019
Motorcycles
(unaudited supplementary
information)
2020
2020
2019
2020
2019
ASSETS
Intangible assets
21
12,342
11,729
11,809 11,212
155
127
Property, plant and equipment
Leased products
2019
Automotive
(unaudited supplementary
information)
Group
K = 188
7
42
991
-706
201
125
106
-3
-444
171
-1,283
544
-422
173
19
-637
-694
in € million
AND SEGMENTS
BALANCE SHEET FOR GROUP
Balance Sheet for Group and Segments
Report 2020
Group Financial Statements
Investments accounted for using the equity method
BMW Group
3,138
31
107
82
4,328
3,220
4,221
30,044
222
21,850
information)
information)
(unaudited supplementary
Eliminations
Other Entities
Financial Services
(unaudited supplementary
Motorcycles
(unaudited supplementary
information)
Automotive
(unaudited supplementary
information)
Group
|<< = 186
in € million
FOR GROUP AND SEGMENTS
INCOME STATEMENT
Income Statement for Group and Segments
(unaudited supplementary
information)
Report 2020
BMW Group
KK = 185
4
List of investments at 31 December 2020
269
Segment Information
264
Other Disclosures
242
Notes to the Balance Sheet
219
Notes to the Statement of Comprehensive Income
Notes to the Income Statement
Notes to the Group Financial Statements
Accounting Principles and Policies
Group Financial Statements
Note
2020
2019
23,245 21,371 22,749
401
407
377
78
389
89
23
41,995
42,609
48,759
50,348
-6,764
-7,739
24
3,585
3,199
3,585
2020
6,938
1
20
48,082
51,030
48,025
22
25
5,144
4,711
703
735
Other investments
3,199
Receivables from sales financing
29,598
Furthermore, the Board of Management provided us with information on a number
of important current topics, including the opening of the Competence Centre for electric
drivetrain production in Dingolfing and BMW Brilliance Automotive's second battery
centre in China as well as the new communication concept for the futuristic technology
showcase #NEXT Gen 2020, which was held virtually for the first time. The reports also
addressed the topics of product quality and the progress of the HERE joint venture.
Prof. Renate Köcher left the Supervisory Board with effect from the end of the
Annual General Meeting 2020. We would like to thank Prof. Köcher for her many
years of constructive work and faithful cooperation while serving on the Supervisory
Board. The Annual General Meeting elected Anke Schäferkordt as a new member of
the Supervisory Board. Ms Schäferkordt has a wealth of knowledge and experience in
the field of communication and media, and, in her capacity as an independent financial
expert, ideally complements the Supervisory Board's overall composition. The Annual
General Meeting re-elected me as a member of the Supervisory Board and I was again
elected Chairman at the subsequent meeting of the Supervisory Board.
-46.9
2,184
2,194
2,172
2,312
1,721
-25.6
-17
103
14
29
36
24.1
-663
-404
431
377
808
-27
9,665
194
207
-17,306
-18,875
-19,443
-14,194
27.0
9,386
9,899
8,933
175
7,411
-34.8
7,695
7,888
6,182
4,499
2,162
-51.9
187
4,830
-20,017
10,675
7,118
-45
-96
-235
-772
-534
383
288
910
80
-2,755
-2,530
-2,140
-1,365
36.2
6,910
8,675
7,097
6,910
-2,000
9,627
170
1,725
5,222
-26.6
7,916
8,717
6,977
4,467
2,722
-39.1
-24.1
185
169
187
100
-46.5
2,166
2,207
2,143
2,272
205
8,675
-40.0
5
Automotive
Motorcycles
Financial Services²
Other Entities
Eliminations²
Group income taxes²
Profit/loss from continuing operations²
Profit/loss from discontinued operations
Group profit/loss before tax (EBT)²
Group net profit/loss²
K = 11
2016
2017
2018
2019
2020
Change in %
5,823
Earnings per share² in €
7,112
Eliminations²
Financial Services²
BMW Group
To Our Stakeholders
Report 2020
BMW Group in Figures
FURTHER FINANCIAL PERFORMANCE FIGURES
in € million
Total capital expenditure¹
Depreciation and amortisation
Other Entities
Free cash flow Automotive segment
Automotive
Motorcycles
Financial Services²
Other Entities
Eliminations2
Group profit/loss before financial result (EBIT)²
Automotive
Motorcycles
Group revenues²
3
8,013
6,222
91,682
80,853
-11.8
2,069
2,272
2,173
2,368
2,284
85,846
-3.5
27,567
27,705
29,598
30,044
1.5
6
7
6
25,681
7,784
85,742
-5.0
-20.1
4,806
4,822
5,113
6,017
6,143
2.1
5,792
86,424
4,459
2,567
3,395
32.3
94,163
98,282
96,855
104,210
98,990
2,713
In view of the considerable length of time he has been a member of the Supervi-
sory Board and mindful of the Supervisory Board's efforts to appoint an independent
chairperson to the Audit Committee as defined in the German Corporate Governance
Code, Dr Karl-Ludwig Kley resigned his membership and chairmanship of the Audit
Committee with effect from the end of the 2020 Annual General Meeting. We wish to
thank Dr Kley for his many years of knowledgeable and committed leadership of the
Audit Committee and are delighted that he will continue to contribute his expertise as
a member of the Supervisory Board. Dr Kurt Bock was subsequently elected as member
and Chairman of the Audit Committee. Dr Bock has been a member of the Supervisory
Board since 2018 and, as a former long-serving Chief Financial Officer and Chairman of
the Board of Executive Directors of BASF SE, has a great deal of expertise in the fields
of accounting, financial reporting and auditing. An overview of the composition of the
Supervisory Board and its committees is provided both ✓ in this report and in the separate
Statement on Corporate Governance, which is available on our website together with
the curricula vitae of Supervisory Board members.
-33
7,064
3,857
K = 16
In the third quarter, the Supervisory Board devoted a great deal of time to exam-
ining the BMW Group's revised forecast for the period from 2021 to 2026. The Board
of Management outlined the fundamental changes made to mitigate the impact of
the coronavirus pandemic compared with the forecast presented one year earlier as
well as the ambitious long-term targets in the forecast. It also pointed out the higher
degree of volatility and uncertainty in terms of external framework conditions, whilst
reiterating the aim of achieving continuous overall growth, particularly in the field of
electric mobility. After thorough examination, the Supervisory Board approved the
BMW Group's long-term corporate plan.
At the final meeting held in 2020, the Board of Management presented the annual
budget for corporate development in the financial year 2021 and discussed it in exhaus-
tive detail with the Supervisory Board.
With the advance of digitalisation, data protection and cybersecurity are becoming
increasingly important issues. For this reason, we requested a report on the current
status from the Board of Management.
We also discussed the topic of diversity at considerable length. The Board of Man-
agement reported on the current status of the diversity concepts developed by the
Group and the target achievement at various levels as well as future targets. As its
target for the proportion of women on the Board of Management from 1 January 2021 to
31 December 2025, the Supervisory Board has stipulated that the Board of Management
should continue to include at least one female member.
The Supervisory Board's agenda also included a number of internal issues during
the
year under report. For example, the Supervisory Board updated its rules of pro-
cedure and published them online in accordance with the recommendation of the
revised German Corporate Governance Code. At the Supervisory Board meeting held
in March, we also discussed the results of our annual efficiency self-assessment in
detail. The Supervisory Board has also benefited from advances in digitalisation, a key
element of our corporate strategy, by setting up a digital boardroom to improve the flow
of information. Due to coronavirus-related restrictions, beginning in the spring, the
meetings themselves were held as face-to-face events with digital participation offered
to enable all members to attend.
The main focus of
SUPERVISORY BOARD
WORK was on the continued
development of corporate
strategy, particularly the
expansion of electric mobility.
Report of the Supervisory Board
BMW Group
Report 2020
Report of the Supervisory Board
We also discussed corporate governance standards at the BMW Group. Based
on a self-assessment, we concluded that the composition of the Supervisory Board
at 31 December 2020 was in line with the targets stipulated in the diversity concept,
the competency profile and other composition targets. We updated the competency
profile and broadened the definition of the various areas of expertise. An overview
showing each individual Supervisory Board member's areas of expertise is provided in
the Statement of Corporate Governance on our website.
In December, the Board of Management and the Supervisory Board issued their
Declaration of Compliance with the German Corporate Governance Code. We will
comply with the recommendations of the Code as amended on 16 December 2019
without exception. The wording of the Declaration of Compliance can be found in the
Statement of Corporate Governance on our website.
The Supervisory Board took part in a variety of further training measures in 2020.
In July, for instance, we visited the BMW Autonomous Driving Campus in Unter-
schleißheim near Munich and discussed the topic of automated driving at great length
through several presentations. The presentation held by an external expert on artificial
intelligence gave us additional food for thought on the importance of software for
the future of the automotive industry, which we then explored in greater depth in a
subsequent discussion. In September, the Supervisory Board attended a workshop on
drivetrain technology at the BMW and MINI Driving Academy in Maisach near Munich,
including a driving session.
No conflicts of interest arose on the part of members of the Supervisory Board
during the year under report. Significant transactions involving Supervisory Board
members and/or other related parties as defined by IAS 24, including close relatives
and intermediary entities, were subject to review on a quarterly basis.
We reviewed the efficiency of our work in the Supervisory Board by completing
a revised and expanded questionnaire as well as holding supplementary discussions
with the Chairman. Overall, there is a high degree of satisfaction with the work of
the Supervisory Board. Cooperation, both within the Supervisory Board itself and
with the Board of Management, was unanimously assessed as being constructive and
trusting. However, we intend to discuss suggestions for improving individual aspects
of cooperation in the new financial year.
of the BMW Group's broader
strategy, encompassing
all relevant aspects, from the
supply chain to production
To Our Stakeholders
and the product life cycle.
To Our Stakeholders
The change to the system of Board of Management remuneration was also the focus
of one-on-one discussions between myself and investor representatives concerning
Supervisory-Board-related issues, including the question of the independence of Su-
pervisory Board members.
The Supervisory Board performed the duties incumbent upon it with the utmost
diligence in 2020, rigorously monitoring the management of the BMW Group in a
conscientious manner. It also advised the Board of Management on matters relating
to the leadership and strategic evolution of the company. In five meetings of the full
Supervisory Board – all lasting significantly longer than usual due to the circumstances
and including one two-day meeting – together with the Board of Management we
deliberated in great detail on the operating performance of the BMW Group. The
Board of Management also kept the Supervisory Board informed of any matters of
significance outside the framework of formal meetings as the need arose. In addition,
the Chairmen of the Supervisory Board and the Board of Management engaged in
direct dialogue on current issues, as did the Chairman of the Audit Committee and the
Board of Management member responsible for Finance. Conference calls were also held
between the Members of the Board of Management, the Board of Management member
responsible for Finance, the Chairman of the Supervisory Board and the Chairman of
the Audit Committee as a supplementary measure.
The Board of Management's regular reports on the Group's current performance
were dominated by pandemic-related matters during the year under report. In view
of the rapid spread of coronavirus in the spring, additional meetings of the Audit
The SUPERVISORY BOARD
is convinced that the
BMW Group will continue to
expand its position in the
premium segment through its
enduring commitment to
sustainability in economic,
social and ecological terms.
BMW Group
Report 2020
To Our Stakeholders
BMW Group
Report 2020
Report of the Supervisory Board
Committee and the Presiding Board were scheduled to facilitate the monitoring of
production, sales and liquidity developments in a prompt manner. The Board of Man-
agement kept us constantly informed regarding the impact of the pandemic on the
BMW Group's business performance, providing up-to-date status reports on sales, pro-
duction, liquidity and the Financial Services segment. Information on vehicle deliveries
to customers was separately analysed by market and model, focusing particularly on the
electrified variants. The reports also dealt with the competitive situation in general and
the development of new business and transaction volume as well as the risk situation in
the Financial Services segment. The Board of Management pointed out deviations from
the original forecast and presented measures to mitigate the impact of the pandemic. It
also outlined potential developments based on a range of possible scenarios. The size
of the workforce and the attainment of the decarbonisation targets set out by the EU
Commission were also a subject of discussion.
The Supervisory Board deliberated in depth on the BMW Group's evolving corporate
strategy, which is now clearly focused on the progressive transformation of its drivetrain
technology towards electric mobility. The Board of Management outlined to us the
renewed production network strategy, which is based on converting the Munich plant
to assemble the new vehicle architecture and the planned cluster architecture at the
BMW Group plant in Hungary. As a core component of the BMW Group's overarching
corporate strategy, we also took an in-depth look at the sustainability aspect, which is
embedded at every stage along the supply chain, the production process and the entire
life cycle of our products.
The Supervisory Board also deliberated at length on important issues arising within
the Board of Management's various key areas of responsibility. Purchasing, for instance,
reported on the status of the supply chain and the purchasing strategy regarding raw
materials for electric mobility. The Board of Management member responsible for Fi-
nance gave a talk on the Group's financing system, focusing in particular on liquidity
management and financial market risk management. When reporting on the Financial
Services segment, the main focus was on strategy as well as business performance and
the risk situation. We also analysed the BMW Group's strategic cooperations in great
detail, particularly the further course of the "Your Now" joint venture strategy and the
market situation in China.
In light of the coronavirus pandemic and the accompanying restrictions on events
involving large numbers of people, in early April we agreed that the 2020 Annual
General Meeting should be held as a virtual event without the physical presence of
shareholders.
An important topic for the Supervisory Board in 2020 was the revision of the Board
of Management's remuneration system for the financial years 2021 and beyond, in line
with the new version of the German Corporate Governance Code. After the Personnel
Committee had completed the initial groundwork, in the third quarter we intensively
discussed proposals for a new remuneration concept with the help of an independent
remuneration consultant. On this basis, in December we worked through the details
of the revised remuneration system, focusing in particular on setting targets for the
variable remuneration components. The Supervisory Board finally passed a resolution
approving the new remuneration system, including a standardised service agreement,
new target remuneration levels and total remuneration caps.
The Supervisory Board reviewed the structure and level of Board of Management re-
muneration for the financial year 2020, whilst also taking into account the BMW Group's
business performance in 2020. The salaries of senior executives and employees within
Germany as a whole were also taken into account. After analysing comparative studies
provided by an external remuneration consultant, we concluded that the remuneration
of Board of Management members is appropriate. Detailed information on the remu-
neration of the Board of Management is provided in the Remuneration Report.
K = 15
-
BMW Group
Report 2020
Report of the Supervisory Board
Our agenda also included considering an audit report relating to the European
Market Infrastructure Regulation (EMIR). In this context, the independent auditor
confirmed the effectiveness of the system currently applied by BMW AG to ensure
compliance with the regulatory requirements.
The Audit Committee concurred with the decision of the Board of Management
to raise the Company's share capital in accordance with Article 4 (5) of the Articles of
Incorporation (Authorised Capital 2019) by €822,000 and issue a corresponding number
of new non-voting bearer shares of preferred stock in conjunction with the Employee
Share Programme.
The SUPERVISORY BOARD
and the BOARD OF
MANAGEMENT will comply
with the recommendations
of the German Corporate
Governance Code without
exception.
BMW Group
Report 2020
To Our Stakeholders
The Audit Committee was regularly provided with detailed information regarding
major legal disputes and proceedings. These included, in particular, an investigation
initiated in December 2019 by the US Securities and Exchange Commission (SEC) into
possible violations of US securities laws in relation to the reporting of vehicle delivery
figures in the USA. The case was concluded in September 2020 with a settlement of
18 million US dollars.
Report of the Supervisory Board
The Personnel Committee focused primarily on the topic of Board of Management
remuneration. In its five meetings during the year under report, the Personnel Commit-
tee reviewed the appropriateness of the Board of Management's remuneration for the
financial year 2019, duly taking the impact of the coronavirus pandemic into account.
During the second half of the year, the Committee focused on revising the remuneration
system for Board of Management members. The Personnel Committee also performed
the groundwork for the full Supervisory Board to appoint a Board of Management
member responsible for Development and granted approval for members of the Board
of Management to assume mandates outside the Group in exceptional cases.
The Nomination Committee convened twice during the financial year 2020. Taking
into account the German Corporate Governance Code (DGCC) and the composition
requirements adopted by the Supervisory Board, the Nomination Committee addressed
the issue of potential replacements for shareholder representatives on the Supervisory
Board in the coming years.
The Mediation Committee, which is prescribed by law, did not need to convene
during the financial year 2020.
Composition of the Board of Management
With effect from 1 July 2020, Klaus Fröhlich retired from his position as Board of
Management member responsible for Development. We would like to thank Mr Fröhlich
for his many years of successful and effective work for BMW AG and particularly wish
to express our appreciation for the momentum he generated over a 30-year period in
advancing the BMW Group's role as a pioneer of new technologies.
The Supervisory Board appointed Frank Weber to the Board of Management as his
successor with effect from 1 July 2020. Mr Weber joined the BMW Group in 2011 as
Head of Total Vehicle Development and was most recently responsible for the Rolls-
Royce product line as well as the BMW luxury class. In light of the various management
positions he has previously held in development, Mr Weber is excellently qualified to
assume responsibility for Development at the BMW Group and we certainly wish him
all the best in his new role.
The Supervisory Board extended the mandate of one Board of Management member
during the year under report.
Composition of the Supervisory Board, the Presiding Board and the Supervisory Board's
committees
K = 20
To Our Stakeholders
In addition, the main findings of internal audits conducted by Corporate Audit as
well as details of advance audit planning were reported to the Audit Committee. We
discussed the effectiveness of the BMW Group's current risk profile and risk manage-
ment system on several occasions, including ongoing measures to improve the internal
control system on a continuous basis.
K = 19
K = 18
Description of Presiding Board activities and committee work
The Supervisory Board has established a Presiding Board and four committees. The
chairpersons of these two bodies reported in detail on the work of their committees
at each subsequent Supervisory Board meeting. You can read more about the duties,
the composition and the working methods of the Presiding Board and various other
Supervisory Board committees in the Statement of Corporate Governance on our website.
Due to the exceptional challenges of the past financial year caused by the corona-
virus pandemic, the Presiding Board and the Audit Committee intensified their work
in order to fulfil their duties in a suitable manner. Additional meetings were held to
provide the Presiding Board with prompt information on the current status of sales and
production and the Audit Committee with information on liquidity and the Financial
Services business.
The Presiding Board held six meetings and one conference call during the financial
year 2020. Together with the Board of Management and senior heads of department, we
prepared the detailed agenda of full Supervisory Board meetings (unless a committee
was responsible for doing so) and made suggestions for topics to be reported on at
Supervisory Board meetings.
The Audit Committee held seven meetings and three conference calls during the
year
under report.
The meetings held in February and March 2020 focused primarily on preparing
the Supervisory Board meeting at which the financial statements for the financial year
2019 were to be discussed and examined. After obtaining the auditor's Declaration of
Independence, the Audit Committee recommended to the full Supervisory Board that
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft ("PwC") be proposed
for election as auditor at the 2020 Annual General Meeting. There were no indications
of conflicts of interest, grounds for exclusion or lack of independence on the part of
the auditor.
The Audit Committee discussed PwC's fee proposal for audits of the year-end Com-
pany and Group Financial Statements 2020 and the review of the Half-Year Financial
Report and deemed it appropriate. Following approval by the Annual General Meeting
held in May 2020, the Audit Committee appointed PwC for the relevant engagements
and specified audit focus areas. It also approved the scope of non-audit services to be
on an expert legal opinion and oral explanations, the Supervisory Board decided not
to assert any claims for damages against current or former members of the Board of
Management of BMW AG in connection with the fine imposed by the German Federal
Cartel Office on 21 November 2019.
provided by PwC and subsequently received regular reports on the relevant matters.
The quality of the audit was a subject of discussion at the Supervisory Board meetings
held in February and June. The Board concluded that the audit was of good quality.
At our meetings we also discussed preparations for the new Integrated Group Report
and the procedural changes required with regard to reporting and the external audit.
We decided that the non-financial (Group) statement should again be reviewed by PwC
in the form of a "limited assurance" engagement.
We also discussed the quarterly statement with the Board of Management prior
to their publication. Representatives of the external auditors were present when the
Half-Year Financial Report was discussed at the beginning of August 2020.
The Audit Committee again dealt intensively with the topic of compliance within the
BMW Group during the year under report. In his regular report, the Chairman of the
Compliance Committee provided a summary of ongoing compliance-related proceedings
and presented a raft of measures aimed at promoting the continuous improvement of
the compliance system. The Head of Corporate Quality also reported on the subject of
technical compliance. The relevant head of department also presented the Supervisory
Board a description of tax and customs compliance management.
Furthermore, the Audit Committee regularly discussed the status of the EU Com-
mission's investigation into the antitrust allegations connected with the former working
groups of several German automobile manufacturers and was provided with updates
from the Board of Management regarding the potential further course of proceedings.
In relation to proceedings initiated by the German Federal Cartel Office and ter-
minated in 2019 with a fine of €28 million regarding the purchase of long steel by the
BMW Group, the Supervisory Board addressed the question of whether it had a duty
to act on this matter. The Supervisory Board sought counsel from external lawyers in
order to obtain legal certainty. On the recommendation of the Audit Committee and
after carefully considering the advantages and disadvantages for the BMW Group, based
BMW Group
Report 2020
To Our Stakeholders
Report of the Supervisory Board
The Board of Management presented us with the Sustainable Value Report as well
as the separate combined non-financial report of BMW AG and the BMW Group for
the financial year 2019. Moreover, the representatives of PwC presented the findings
of their review, which had been performed as a “limited assurance" engagement.
4,978
44
Focus of Supervisory Board activities during the past financial year
DEAR SHAREHOLDERS,
BMW GROUP DELIVERIES OF AUTOMOBILES 1,2
BMW GROUP REVENUES
in 1,000 units
in € billion
2,600
2,350.0
2,465.0 2,486.1 2,537.5
104.2
BMW Group in Figures
2,325.2
98.3
94.2
96.9
99.0
€1,300
2016
2017 2018 2019
2020
110
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 311,473 units,
2017: 385,705 units, 2018: 455,581 units, 2019: 538,612 units, 2020: 602,247 units).
To Our Stakeholders
3 Group profit before tax as a percentage of Group revenues.
-22.5
10.45/10.47
13.07/13.09
10.60/10.62
5,022
7.47/7.49
3,857
-23.2
5.73/5.75
BMW Group
Report 2020
-23.3/-23.2
10.9
9.9
6.8
5.3
-22.1
Pre-tax return on sales 2,3 in %
1 Expenditure for capitalised development costs, other intangible assets and property, plant and equipment.
2 The 2018 figures were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 (see Annual Report 2019, Note 6 to the Group Financial Statements).
10.3
We look back on 2020 as an exceptionally challenging year, dominated as it was by
the impact of the coronavirus pandemic. The year unfolded very differently from the way
we had anticipated at the end of 2019. Nevertheless, despite the challenging conditions,
the BMW Group remained focused on its targets and pressed ahead with its future-ori-
ented projects. Thanks to resolute crisis management and rigorous digital teamwork at
all levels, the BMW Group achieved a respectable result for the year, with deliveries to
customers in the fourth quarter at their highest level to date. This excellent collective
performance gives us confidence as we go into 2021. Sustainable, digitalised mobility,
combined with an outstanding overall customer experience, are the key supporting
pillars of the BMW Group's corporate strategy. As a pioneer of new technologies and
champion of sustainability in economic, social and ecological terms, the BMW Group
will continue on its transformational journey to becoming a tech company, thereby
strengthening its position in the premium segment in the process.
2 Retail vehicle delivery data presented for 2020 is not directly comparable to such data presented for previous
years. For further information on retail vehicle delivery data, please see ✓ Comparison of Forecast with
Actual Outcomes.
BEFORE FINANCIAL RESULT (EBIT)
3 The 2018 figures were adjusted due to the change in accounting policy in conjunction with the adoption of
IFRS 16 (see Annual Report 2019, Note 6 to the Group Financial Statements).
2016 2017 20183 2019 2020
K = 12
BMW Group
Report 2020
To Our Stakeholders
Report of the Supervisory Board
REPORT OF THE
SUPERVISORY BOARD
2018 2019 2020
The excellent collective
gives the SUPERVISORY
BOARD confidence as we go
into 2021.
Norbert Reithofer
Chairman of the Supervisory Board
|<< = 13
BMW Group
To Our Stakeholders
Report 2020
Report of the Supervisory Board
performance of the BMW Group
BMW GROUP PROFIT/LOSS
2017
5,500
in € million
55
2016
2017 2018 2019 2020
BMW GROUP PROFIT/LOSS
BEFORE TAX
in € million
10,675
11,000
2016
9,665
7,118
5,222
9,899
9,386
8,933
7,411
4,830
5,500
9,627
11,000
Sustainability is at the heart
1 At the beginning of the financial year 2020, the starting point for determining cash flow was changed to profit/loss before tax; the previous year's figures have been adjusted accordingly.
10.2
2019
2020
Financial Services
Motorcycles
Automotive
in %
Amounts are discounted on the basis of a market-re-
lated cost of capital rate. Impairment tests are performed
for accounting and financial reporting purposes for the
Automotive and Motorcycles cash-generating units using
a risk-adjusted pre-tax cost of capital (WACC). In the
case of the Financial Services cash-generating unit, a
pre-tax cost of equity capital is used, as is customary in
the sector. The following discount factors were applied:
K = 199
Notes to the Group Financial Statements
Group Financial Statements
BMW Group
Report 2020
The BMW Group determines the value in use on the
basis of a present value computation. Cash flows used
for this calculation are derived from long-term forecasts
approved by management. These long-term forecasts are
based on detailed forecasts drawn up at an operational
level, covering a planning period of six years. For the
purposes of calculating cash flows beyond the planning
period, a perpetual annuity return is assumed which
does not take growth into account. Forecasting assump-
tions are continually adjusted to current information and
regularly compared with external sources. The assump-
tions used take account in particular of expectations of
the profitability of the product portfolio, future market
share development, macroeconomic developments (such
as currency, interest rate and raw materials prices) as well
as the legal environment and past experience.
As part of the process of assessing recoverability, it
is generally necessary to apply estimations and assump-
tions in particular regarding future cash inflows and
outflows and the length of the forecast period – which
could differ from actual amounts. Actual amounts may
differ from the assumptions and estimations used if
business conditions develop differently to expectations.
If the reason for a previously recognised impairment
loss no longer exists, the impairment loss is reversed up
to the level of the recoverable amount, but no higher
than the amortised acquisition or manufacturing cost.
Impairment losses on goodwill are not reversed.
For the purpose of the impairment test, the carrying
amount of an asset (or a cash-generating unit) is com-
pared with the recoverable amount. The first step of the
impairment test is to determine the value in use. If the
value in use is lower than the carrying amount, the next
step is to determine the fair value less costs to sell and
compare the amount so determined with the asset's car-
rying amount. If the fair value is lower than the carrying
amount, an impairment loss is recognised, reducing the
carrying amount to the higher of the asset's value in use
or fair value less costs to sell.
If there is any indication of impairment of intangible
assets, or if an annual impairment test is required (i.e.
intangible assets with an indefinite useful life, intangible
assets during the development phase and goodwill), an
impairment test is performed. Each individual asset is
tested separately unless the cash flows generated by
the asset are not sufficiently independent from the
cash flows generated by other assets or other groups of
assets. In these cases, impairment is tested at the level
of a cash-generating unit, which is the norm for the
BMW Group.
Intangible assets also include emission allowances and
similar rights arising from programmes aimed at reducing
carbon or other climate-damaging emissions (for example
in conjunction with the EU Emissions Trading System
or vehicle-related emissions regulations in the USA or
China). These allowances and rights are carried at cost
and, in the event that they are allocated free of charge,
recorded at a value of zero. Amounts are derecognised
at the date of the return, sale or expiry of the allowances
or rights. In parallel to the recognition of these allow-
ances and rights as assets, provisions are recognised in
accordance with IAS 37 corresponding to the amount
of obligations expected to arise in conjunction with the
related emission regulations. Provisions are measured
on the basis of the expected value of the allowances or
rights that are to be returned.
Goodwill arises on first-time consolidation of an
acquired business when the cost of acquisition exceeds
the Group's share of the net fair value of the assets, li-
abilities and contingent liabilities identified during the
acquisition.
Development costs are capitalised if all of the criteria
specified by IAS 38 are met. They are measured on the
basis of direct costs and directly attributable overhead
costs. Project-related capitalised development costs are
amortised on a straight-line basis following the start of
production over the estimated product life (usually seven
to twelve years).
K = 198
Notes to the Group Financial Statements
Group Financial Statements
10.9
BMW Group
Report 2020
10.2
13.2
IFRS 16 requires that lease payments are discounted
as a general rule using the interest rate implicit in the
lease. However, since the interest rate in leases entered
into by the BMW Group cannot readily be determined,
amounts are discounted on the basis of the incremental
borrowing rate, comprising the risk-free interest rate
in the relevant currency for matching maturities plus
a premium for the credit risk. Specific risks attached to
an asset are generally not taken into account, given that
collateral received in the context of alternative financing
arrangements is not relevant within the BMW Group.
The lease payments to be taken into account to meas-
ure the right-of-use asset and the lease liability comprise
fixed payments, variable lease payments that depend on
an index or an interest rate as well as amounts expected
to be payable under residual value guarantees. If it is
reasonably certain that a purchase or lease extension
option will be exercised, the relevant payments are also
included. Payments for periods for which the lessee
has an option to terminate a lease unilaterally are only
included in the lease payments if it is reasonably certain
that the termination option will not be exercised. For the
purposes of assessing options, the BMW Group takes
account of all facts and circumstances that create an eco-
nomic incentive to exercise or not to exercise the option.
三 200
K
Notes to the Group Financial Statements
Group Financial Statements
Report 2020
BMW Group
The lease liability is measured on initial recognition
at the present value of the future lease payments. Sub-
sequent to initial recognition, the carrying amount of
the lease liability is increased to reflect interest on the
lease liability and reduced, without income statement
impact, by the lease payments made. Lease liabilities
are reported within financial liabilities, while interest
expense is reported as part of net interest result. In the
cash flow statement, both the repayment portion and
the interest portion of lease payments are shown as cash
outflows from financing activities.
right-of-use asset is calculated as the sum of the present
value of the future lease payments, any lease payments
made at or before the commencement date, any initial
direct costs incurred by the lessee and the estimated
costs of dismantling, removing or restoring the leased
asset. Lease incentives granted by the lessor are deduct-
ed. Right-of-use assets are depreciated on a straight-line
basis over the shorter of the useful life of the leased asset
and the expected lease term. If ownership of the leased
asset is automatically transferred at the end of the lease
term or the exercise of a purchase option is reflected in
the lease payments, the right-of-use asset is amortised
on a straight-line basis over the expected useful life of
the leased asset. Right-of-use assets are reported in the
balance sheet within the relevant line items for property,
plant and equipment. The amortisation expense on right-
of-use assets is reported in the income statement in cost
of sales as well as in selling and administrative expenses.
In the case of leased items of property, plant and
equipment, a right-of-use asset and a liability for the out-
standing lease payments are recognised with effect from
the date on which the leased asset becomes available
for use by the BMW Group. The acquisition cost for the
For machinery used in multiple-shift operations,
depreciation rates are increased to account for the addi-
tional utilisation. If there is any indication of impairment
of property, plant and equipment, an impairment test is
performed as described above for intangible assets.
8 to 50
3 to 21
2 to 25
Other equipment, factory and office equipment
Factory and office buildings, residential buildings, fixed
installations in buildings and outside facilities
Plant and machinery
in years
The following useful lives are applied throughout the
BMW Group:
-
statement.
manufacturing process as well as an appropriate pro-
portion of production-related overheads. This includes
production-related depreciation and amortisation as well
as an appropriate proportion of administrative and social
costs. Financing costs are not included in acquisition or
manufacturing cost unless they are directly attributable
to the asset. The carrying amount of items of depreciable
property, plant and equipment is written down according
to scheduled usage-based depreciation – as a general rule
on a straight-line basis - over the useful lives of the assets.
Depreciation is recorded as an expense in the income
All items of property, plant and equipment are measured
at acquisition or manufacturing cost less accumulated
depreciation and accumulated impairment losses. The
cost of internally constructed plant and equipment
comprises all costs which are directly attributable to the
The risk-adjusted discount rate, calculated using a
CAPM model, also takes into account specific peer-group
information relating to beta-factors, capital structure data
and borrowing costs. In conjunction with the impairment
tests for cash-generating units, sensitivity analyses are
performed for the main assumptions in order to rule
out that possible changes to the assumptions used to
determine the recoverable amount would result in the
requirement to recognise an impairment loss. Even in the
case of a 10% deterioration in the individual measure-
ment assumptions, the need to recognise an impairment
loss did not arise.
11.5
10.9
Intangible assets are measured at acquisition or man-
ufacturing cost. Intangible assets with finite useful lives
are amortised on a straight-line basis over their useful
lives of between three and 20 years. Impairment losses
are recognised where necessary. Intangible assets with
indefinite useful lives are tested annually for impairment.
Internally generated intangible assets mainly comprise
development costs for vehicle, module and architecture
projects.
Earnings per share are calculated as follows: Basic
earnings per share are calculated for common and pre-
ferred stock by dividing the net profit for the year
after
minority interests and attributable to each category of
stock, by the average number of outstanding shares. Net
profit for the year is accordingly allocated to the different
categories of stock. The portion of the net profit that
is not being distributed is allocated to each category of
stock based on the number of outstanding shares. Profits
available for distribution are determined directly on the
basis of the dividend proposals or resolutions for com-
mon and preferred stock. Diluted earnings per share are
calculated and separately disclosed in accordance with
IAS 33.
Public sector grants are not recognised until there is
reasonable assurance that the conditions attaching to
them have been complied with and the grants will be
received. The resulting income is recognised in cost of
sales over the periods in which the costs occur that they
are intended to compensate.
17.97
7.73
7.87
7.82
8.00
0.88
0.89
0.85
0.90
1.12
1.14
1.12
1.23
2019
Average rate
2020
31.12.2019
31.12.2020
Closing rate
Argentina has fulfilled the definition of a hyper-
inflationary economy since 1 July 2018. Since that
date, IAS 29 (Financial Reporting in Hyperinflationary
Economies) has therefore been applied for the BMW
subsidiary in Argentina. The price indices published
by the Federación Argentina de Consejos Profesionales
de Ciencias Económicas (FACPCE) are used to adjust
non-monetary assets and liabilities and items in the
income statement. The resulting effects are not material
for the BMW Group.
Russian Rouble
South African Rand
Chinese Renminbi
15.72
18.77
90.54
69.60
Revenues also include interest income from financial
services. Interest income arising on finance leases as well
as on retail customer and dealership financing is recog-
nised using the effective interest method and reported
as interest income on credit financing within revenues.
Revenues from leases of own-manufactured vehicles
are recognised at Group level in accordance with the re-
quirements for manufacturer or dealer leases. In the case
of operating leases, revenues from lease payments are
recognised on a straight-line basis over the lease term. In
the case of finance leases, revenues are recognised at the
lease commencement date at the amount of the fair value
of the leased asset and reduced by any unguaranteed
residual value of vehicles that are expected to be returned
to the Group at the end of the lease term. Similarly, cost
of sales is reduced for unguaranteed residual values. In
addition, initial direct costs are recognised as cost of sales
at the lease commencement date.
Revenues from the sale of products, for which re-
purchase arrangements are in place, are not recognised
immediately in full. Instead, revenues are either rec-
ognised proportionately or the difference between the
sales and repurchase price recognised in instalments over
the term of the contract depending on the nature of the
agreement. In the case of vehicles sold to a dealership
that are expected to be repurchased in a subsequent
period as part of leasing operations, revenues are not
recognised at Group level at the time of the sale of the
vehicle. Instead, assets and liabilities relating to the right
of return vehicles are recognised.
Revenues from customer contracts include in particu-
lar revenues from the sale of products (primarily new
and pre-owned vehicles and related products) as well
as revenues from services. Revenue is recognised when
control is transferred to the dealership or retail customer.
In the case of sales of products, this is usually at the
point in time when the risks and rewards of ownership
are transferred. Revenues are stated net of settlement
discount, bonuses and rebates as well as interest and
residual value subsidies. The consideration arising from
these sales usually falls due for payment immediately or
within 30 days. In exceptional cases, a longer payment
may also be agreed. In the case of services, control is
transferred over time. Consideration for the rendering
of services to customers usually falls due for payment
at the beginning of a contract and is therefore deferred
as a contract liability. The deferred amount is released
over the service period and recognised as revenue in
the income statement. As a rule, amounts are released
on the basis of the expected expense trend, as this best
reflects the performance of the service. If the sale of
products includes a determinable amount for services
(multiple-component contracts), the related revenues
are deferred and recognised as income in the same way.
Variable consideration components, such as bonuses,
are measured at the expected value, and in the case of
multi-component contracts, allocated to all performance
obligations unless directly attributable to the sale of a
vehicle.
05 ACCOUNTING POLICIES, ASSUMPTIONS,
JUDGEMENTS AND ESTIMATIONS
K = 197
Notes to the Group Financial Statements
Report 2020
Group Financial Statements
BMW Group
Other financial reporting standards issued by the
IASB and not yet applied are not expected to have
any significant impact on the BMW Group Financial
Statements.
Determining which items are to be counted as lease
payments including the issue of the lease term under-
lying those payments - and which discount rate to apply
involves using estimates and assumptions that may differ
from actual outcomes.
cial
Replacing a previous benchmark rate results in a
change in the basis for determining the contractual cash
flows relating to financial assets and financial liabilities.
For simplification purposes, it is permitted to account for
the change by updating the effective interest rate without
any immediate impact on profit or loss. This practical
expedient is also available for finance leases, in that
the requirements contained in IFRS 9 for modifications
are deemed to apply. A similar practical expedient is
available for lease liabilities accounted for in accordance
with IFRS 16. In this case, any modification required by
the benchmark reform results only in the lease liability
being remeasured when the alternative interest rate is
used to discount the modified lease payments.
In accordance with the amendments, hedge account-
ing is not required to be discontinued solely because of
the reform. Instead, the hedge relationships are deemed
to remain in place even if the existing benchmark interest
rate is replaced by an alternative interest rate, provided
that the underlying documentation has been appropri-
ately updated.
In August 2020, the IASB published the Amendment
Standard Interest Rate Benchmark Reform (IBOR) -
Phase 2. The amendments contain a number of reliefs to
mitigate the impact on the accounting treatment of hedge
relationships, financial instruments and lease liabilities
resulting from the reform of interest rate benchmarks.
Financial reporting standards issued by
the IASB, but not yet applied
b
ments.
Financial reporting standards applied for
the first time in the financial
year 2020
Standards or amendments to standards applied
for the first time in the financial year do not have any
significant impact on the BMW Group Financial State-
a
04 FINANCIAL REPORTING RULES
16.17
72.43
82.71
The amendments are mandatory for financial years
beginning on or after 1 January 2021. The BMW Group
intends to apply the proposed practical expedients
for transactions affected by the benchmark reform. The
amendments have not been adopted early for the finan-
year 2020.
As lessee, the BMW Group makes use of the applica-
tion exemptions available for short-term leases and leases
of low-value assets.
The BMW Group has not applied the exemptions
available to lessees to account for COVID-19-related rent
concessions (amendment to IFRS 16 dated 28 May 2020).
Group products recognised by BMW Group entities
as leased products under operating leases are measured
at manufacturing cost and all other leased products at
acquisition cost, in each case including initial direct costs.
All leased products are depreciated over the period of
the lease using the straight-line method down to their
expected residual value. Where the recoverable amount
of a lease exceeds the asset's carrying amount, changes
in residual value expectations are recognised by adjusting
scheduled depreciation prospectively over the remain-
ing term of the lease. If the recoverable amount is lower
than the asset's carrying amount, an impairment loss is
recognised for the shortfall. A test is carried out at each
balance sheet date to determine whether an impairment
loss recognised in prior years no longer exists or has de-
creased. In such cases, the carrying amount of the asset
is increased to the recoverable amount, at a maximum
up to the amount of the asset's amortised cost.
130
-22
110
6
Effect of changes in composition of Group on cash and cash equivalents
-40
-83
43
28
Change in cash and cash equivalents
1,501
1,057
445
446
788
90
Cash and cash equivalents as at 1 January
12,036
10,979
9,077
8,631
2,075
1,985
-28
Effect of exchange rate on cash and cash equivalents
5,300
132,408
-133,089
491
-1,671
-2,366
-1,671
-2,366
-901
877
-2,438
5,491
-275
164,478
-171,532
718
-199
-447
Cash and cash equivalents as at 31 December
-197
173
-143,500
-982
-605
305
-8,254
4,790
-3,973
-2,085
-18
153,823
-156,657
2,782
-2,508
-1
150,517
British Pound
13,537
9,522
reserves
reserves
Translation
differences
Marketable
Securities
financial
instruments
Costs
of hedging
Equity
attributable to
shareholders
of BMW AG
Minority
interest
Total
31
659
2,161
57,667
-760
Depending on the business model and the structure
of contractual cash flows, financial assets are classified
as measured at amortised cost, at fair value through
comprehensive income or at fair value through profit
or loss. The category "measured at fair value through
comprehensive income" at the BMW Group comprises
With the exception of lease receivables, financial assets
are measured on initial recognition at their fair value.
Financial assets include in particular other investments,
receivables from sales financing, marketable securities
and investment funds, derivative financial assets, trade
receivables and cash and cash equivalents. As a gen-
eral rule, initial recognition takes place as soon as the
BMW Group becomes a party to a contract; in the case
of standard purchases or sales of non-derivative financial
assets, initial recognition takes place at the settlement
date.
Investments accounted for using the equity method are
measured provided no impairment has been recog-
nised - at cost of investment adjusted for the Group's
share of earnings and changes in equity capital. If there
any indication that an investment is impaired, an im-
pairment test is performed on the basis of a discounted
cash flow method. An indicator exists, for example, in
the event of a serious shortfall compared to budget, the
loss of an active market or if funds are required to avoid
insolvency.
-
is
market data as well as on forecasts of external institu-
tions. Furthermore, assumptions are regularly validated
by comparison with external data.
29
15
Assumptions and estimations are required regarding
future residual values, since these represent a significant
part of future cash inflows. Relevant factors to be consid-
ered include the trend in market prices and demand on
the pre-owned automobile market. The assumptions are
based on internally available historical data and current
capital
Note
Revenue
Capital
9,077
2,863
2,075
2 With the exception of interest for lease liabilities, interest relating to financial services business is classified as revenues/cost of sales.
3 Includes dividends received from investment assets amounting to €1,020 million (2019: €643 million).
BMW Group
Group Financial Statements
Report 2020
Statement of Changes in Equity for Group
STATEMENT OF CHANGES
IN EQUITY FOR GROUP
12,036
in € million
Net profit
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2020
Dividend payments
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2020
Accumulated other equity
K = 192
Derivative
Subscribed
1 January 2020
33
US-Dollar
The exchange rates of currencies which have a
material impact on the Group Financial Statements were
as follows:
−1
-1,326
55,862
-32
2,118
658
31
1 January 2019 (as originally reported)
Total
Minority
interest
attributable to
shareholders
of BMW AG
of hedging
Costs
financial
instruments
Marketable
Securities
Translation
differences
Revenue
reserves
reserves
capital
Note
in € million
Capital
Subscribed
Derivative
558
K = 193
-569
529
57,797
529
57,268
-569
558
Т
-1,326
55,830
2,118
658
31
31 December 2019
Premium arising on capital increase relating to preferred stock
Other changes
Subscribed share capital increase out of Authorised Capital
Dividend payments
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2019
Net profit
due to accounting policy change)
1 January 2019 (as adjusted
Effects of accounting policy change*
-32
-32
57,829
57,300
Equity
Accumulated other equity
Statement of Changes in Equity for Group
3,220
82
3,138
188
781
5
-1,396
3,560
-637
-637
188
781
5
-1,396
-215
3,857
82
3,775
3,775
59,907
583
59,324
-447
-1,646
-1,646
-25
-1,671
Group Financial Statements
BMW Group
Report 2020
61,520
629
60,891
-264
868
34
-2,156
59,550
2,199
4,915
660
25
-11
36
-5
72
-31
38
38
38
1
1
31
4,915
107
5,022
185
21
15
15
14
14
207
186
21
Total
Foreign
Germany
31 December 2020
31 December 2019
Included for the
first time in 2020
No longer included
in 2020
Included at
Included at
In relation to fully consolidated companies, the fol-
lowing changes took place in the Group reporting entity
in the financial year 2020:
The BMW Group Financial Statements include
BMW AG and all material subsidiaries over which
BMW AG either directly or indirectly - exercises con-
trol. This also includes 57 structured entities, consisting
of asset-backed financing arrangements and special
purpose funds.
-
02 GROUP REPORTING ENTITY AND
CONSOLIDATION PRINCIPLES
presentation in the notes relating to relevant balance
sheet and income statement items. Prior year figures
have been adjusted accordingly.
The presentation of selected items was changed in
the financial year 2020, whereby the changes were not
material overall. Attention is drawn to the changes in
Approval for the publication of the Group Financial
Statements was granted by the Board of Management
on 9 March 2021 and by the Supervisory Board on
11 March 2021.
In order to provide a better insight into the results
of operations, financial position and net assets of the
BMW Group, and going beyond the requirements of
IFRS 8 (Operating Segments), the Group Financial
Statements also include an income statement and a
balance sheet for the Automotive, Motorcycles, Finan-
cial Services and Other Entities segments. The Group
Cash Flow Statement is supplemented by a statement
of cash flows for the Automotive and Financial Services
segments. Inter-segment transactions relate primarily
to internal sales of products, the provision of funds for
Group companies and the related interest. A description
of the nature of the business and the major operating
activities of the BMW Group's segments is provided in
note 45 ("Explanatory notes to segment information").
206
BMW Group
Report 2020
Group Financial Statements
|<< = 196
Notes to the Group Financial Statements
Report 2020
Group Financial Statements
BMW Group
In the single entity accounts of BMW AG and its sub-
sidiaries, foreign currency receivables and payables are
measured on initial recognition using the exchange rate
prevailing at the date of first-time recognition. Advance
payments to suppliers or from customers in a foreign
currency that result in the addition of non-monetary
assets or liabilities are recorded at the exchange rate
prevailing at the date of payment. At the end of the
reporting period, foreign currency receivables and pay-
ables are measured using the closing exchange rate. The
resulting unrealised gains and losses, as well as realised
gains and losses arising on settlement, are recognised
in the income statement, in line with the underlying
substance of the transaction. Non-monetary balance
sheet items denominated in foreign currencies are rolled
forward on the basis of historical exchange rates.
The financial statements of consolidated companies
which are presented in a foreign currency are trans-
lated using the modified closing rate method. Under
this method, assets and liabilities are translated at the
closing exchange rate, whilst income and expenses are
translated at the average exchange rate. Differences
arising on foreign currency translation are presented in
"Accumulated other equity".
03 FOREIGN CURRENCY TRANSLATION
AND MEASUREMENT
The other changes to the Group reporting entity do
not have a material impact on the results of operations,
financial position and net assets of the Group.
Associated companies and joint ventures are account-
ed for using the equity method, with measurement on
initial recognition based on acquisition cost.
In the case of a joint venture, the parties which have
joint control only have rights to the net assets of the
arrangement.
The income statement for the BMW Group and
segments is presented using the cost of sales method.
In June 2020, a joint decision was taken to temporar-
ily put on hold the cooperation with the Daimler Group
for the development of highly automated driving systems,
which is accounted for as a joint operation. This has no
impact on the financial statements.
The BMW Group is party to a cooperation with
Toyota Motor Corporation, Toyota City, which has
developed a sports car.
The two largest joint operations that are accounted
for by the BMW Group and which are described below
are of minor significance for the Group Financial State-
ments as a whole:
Financial Statements on the basis of the BMW Group
entity's rights and obligations (proportionate consolida-
tion).
In the case of a joint operation, the parties that have
joint control of the arrangement have rights to the assets
and obligations for the liabilities, relating to the arrange-
ment. Assets, liabilities, revenues and expenses of a joint
operation are recognised proportionately in the Group
Joint operations and joint ventures are forms of
joint arrangements. Such an arrangement exists when
a BMW Group entity jointly carries out activities with a
third party on the basis of a contractual agreement.
An entity is classified as an associated company if
BMW AG - either directly or indirectly - has the ability to
exercise significant influence over the entity's operating
and financial policies. As a general rule, the Group is
assumed to have significant influence if it holds 20% or
more of the entity's voting power.
An entity is deemed to be controlled if BMW AG - ei-
ther directly or indirectly – has power over it, is exposed
or has rights to variable returns from it and has the
ability to influence those returns.
When assessing whether an investment gives rise
to a controlled entity, an associated company, a joint
operation or a joint venture, the BMW Group considers
contractual arrangements and other circumstances, as
well as the structure and legal form of the entity. Dis-
cretionary decisions may also be required. If indications
exist of a change in the judgement of (joint) control, the
BMW Group undertakes a new assessment.
All consolidated subsidiaries have the same year-end
as BMW AG with the exception of BMW India Private Ltd.
and BMW India Financial Services Private Ltd., whose
year-ends are 31 March in accordance with local legal
requirements.
|<< = 195
Notes to the Group Financial Statements
In 2019, the BMW Group and the Chinese auto-
mobile manufacturer Great Wall Motor Company
Limited (Great Wall) established the jointly operated
company, Spotlight Automotive Limited (Spotlight)
for the future joint development and manufacture
of electric vehicles in China. The BMW Group and
Great Wall each hold 50% of the joint operation's
equity. In addition to electric MINI vehicles, Spot-
light will also develop and produce electric vehicles
for Great Wall.
1 Euro =
Key figures presented in the report have been round-
ed in accordance with standard commercial practise. In
certain cases, this may mean that values do not add up
exactly to the stated total and that percentages cannot
be derived from the values shown.
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMW Group Financial
Statements or Group Financial Statements) at 31 Decem-
ber 2020 were drawn up in accordance with International
Financial Reporting Standards (IFRS), as endorsed by the
European Union (EU), and the supplementary require-
ments of § 315e (1) of the German Commercial Code
(HGB). The Group Financial Statements and Combined
Management Report will be submitted electronically to
the operator of the Federal Gazette and are accessible
via the website of the Company Register. Bayerische
Motoren Werke Aktiengesellschaft (BMW AG), which
has its seat in Germany, Munich, Petuelring 130, is
registered in the Commercial Register of the District
Court of Munich under the number HRB 42243.
BMW AG manufactures automobiles and motorcycles
in the premium segment.
2,161
659
1
1
-2,366
-63
-2,303
-2,303
4,328
107
4,221
128
-551
30
566
4,048
-694
-694
128
-551
30
566
-867
43
92
57,667
-760
01 BASIS OF PREPARATION
Accounting Principles
and Policies
GROUP FINANCIAL
STATEMENTS
NOTES TO THE
K = 194
Notes to the Group Financial Statements
Group Financial Statements
BMW Group
Report 2020
* The 2018 figures were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 (see Annual Report 2019, Note 6 to the Group Financial Statements).
59,907
583
The Group currency is the euro. All amounts are
disclosed in millions of euros (€ million) unless stated
otherwise.
59,324
15
29
104
10
94
-6
8
I
43
43
29
-447
28
180
28
-19
53
50
45
50
8
2
Proceeds from the disposal of intangible assets and property, plant and equipment
34
32
34
31
1
Expenditure for investment assets
-176
-14
-6,734
-5,990
-6,902
33
BMW Group
Report 2020
Group Financial Statements
Cash Flow Statement for Group and Segments
in € million
K = 191
Group
-1,598
Automotive
(unaudited supplementary information)
2020
2019
2020
2019
2020
2019
-6,150
Financial Services
(unaudited supplementary information)
-199
Total investment in intangible assets and property, plant and equipment
Proceeds from subsidies for intangible assets and property, plant and equipment
Proceeds from the disposal of investment assets and other business units³
Cash inflow/outflow from investing activities
Payments into equity
Payment of dividends for the previous year
Intragroup financing and equity transactions
Interest paid²
Proceeds from issue of non-current financial liabilities
Change in other financial liabilities
Cash inflow/outflow from financing activities
-3,636
-7,284
-3,933
-7,165
424
-1,557
129
356
521
Repayment of non-current financial liabilities
1,679
1,087
1,328
465
1,327
1,087
57
Investments in marketable securities and investment funds
-775
-925
-507
822
-91
-268
Proceeds from the sale of marketable securities and investment funds
2,200
-829
2,300
401
New expenditure for capitalised
Other operating income
916
2,134
282
development costs
Total research and
Sundry operating income
5,952
-1,710
Amortisation
41
30
Gains on the disposal of assets
5,689
164
Exchange losses
Research and development expenses
8
-1,667
-286
-266
6,279
43
Other operating income and expenses
Income from the reversal of impairment
losses and write-downs
Selling and administrative expenses relate mainly to
expenses for marketing and communication, personnel
and IT.
-2,316
-873
Other operating expenses
-210
Sundry operating expenses
point in time.
development expenditure
-20
Loss on the disposal of assets
09 SELLING AND ADMINISTRATIVE EXPENSES
-173
-47
write-downs
Expense for impairment losses and
-181
-1,732
-157
Expense for additions to provisions
6,419
-117
2019
Expenses for service contracts, tele-
matics and roadside assistance
Warranty expenditure
433
86,147
85,408
1,384
1,345
2,566
2,971
1,641
1,411
-1,285
5,952
Other cost of sales
5,689
1,960
to financial services business
Research and development expenses
thereof: interest expense relating
25,828
27,114
Cost of sales relating to financial
services business
48,776
46,878
Manufacturing costs
2019*
2,288
2020
Cost of sales
Cost of sales is reduced by public-sector subsidies
in the form of reduced taxes on assets and reduced con-
sumption-based taxes amounting to €105 million (2019:
€105 million). Other cost of sales included expenses that
were able to be allocated to manufacturing costs or cost
of sales relating to financial services business. Prior year
figures have been adjusted accordingly.
114
Income from the reversal of provisions
148
326
Exchange gains
In the previous year, an expense of approximately
€1.4 billion was also recognised in connection with the
ongoing anti-trust proceedings carried out by the Euro-
pean Commission (see also note 10 to the BMW Group
Financial Statements for the financial year 2019). In
December 2019, the BMW Group submitted a detailed
response to the European Commission regarding the
latter's Statement of Objections. A decision by the Eu-
ropean Commission is pending. There was no impact
on the income statement in the financial 2020. The
year
financial impact cannot be definitively assessed at this
The expense for additions to provisions includes liti-
gation and other legal risks. Income from the reversal of
provisions includes income arising on the reassessment
of risks from legal disputes.
Impairment losses recognised on receivables from
contracts with customers amounted to €47 million (2019:
€48 million).
1,031
2019
* Prior year's figures adjusted.
2020
Other operating income and expenses comprise the
following items:
10 OTHER OPERATING INCOME AND EXPENSES
in € million
Research and development expenditure was as follows:
statement.
Impairment losses recognised in the income state-
ment 2020 in connection with receivables from sales
financing amounted to €646 million (2019: €219 million).
In view of the fact that the impairment losses are of
minor importance compared to total Group cost of sales,
they have not been disclosed separately in the income
K = 209
Notes to the Group Financial Statements
Group Financial Statements
BMW Group
Report 2020
in € million
in € million
9
2019
Other interest and similar expenses
-189
-234
financial instruments
-1,439
-450
differences
Income (+) and expenses (-) from
-41
-34
-225
benefit liability for pension plans
Net interest expense on the net defined
-1,176
-658
deferred tax income (-)
80
48
Result on investments
-226
-199
on other long-term provisions
thereof relating to temporary
Deferred tax expense (+)/
-232
Sundry other financial result
The tax expense resulting from the change in the
valuation allowance on deferred tax assets relating to
tax losses available for carryforward and temporary
differences amounted to €10 million (2019: €7 million).
The tax expense was reduced by €4 million (2019:
€30 million) as a result of utilising tax loss carryforwards,
for which deferred assets had not previously been: recog-
nised and in conjunction with previously unrecognised
tax credits and temporary differences.
Sundry other financial result comprises mainly in-
come and expenses arising on the measurement of stand-
alone derivatives and fair value hedge relationships, as
well as income and expenses from the measurement and
sale of marketable securities and shares in investment
funds.
-320
-342
Net interest result
2,140
1,365
263
-208
thereof relating to tax loss
carryforwards and tax credits
Income taxes
-186
Other financial result
-499
-458
Interest and similar expenses
-4
-1
thereof subsidiaries:
-189
-234
-109
-307
-87
subsidiaries and participations
2019
2020
in € million
2019
2020
12 OTHER FINANCIAL RESULT
in € million
11 NET INTEREST RESULT
Notes to the Group Financial Statements
Group Financial Statements
13 INCOME TAXES
BMW Group
Report 2020
9,367
8,795
expenses
Total selling and administrative
3,711
3,495
Administrative expenses
5,656
5,300
Selling expenses
Income from the reversal of and expenses for the
recognition of impairment allowances and write-downs
relate mainly to impairment allowances on receivables.
K = 210
Taxes on income of the BMW Group comprise the
following:
Other interest and similar income
Expense relating to interest impact
3,316
2,023
Current tax expense
Expenses from investments in
179
116
Interest and similar income
13
12
thereof from subsidiaries:
2019
2020
in € million
2020
8
thereof from subsidiaries:
387
135
subsidiaries and participations
Income from investments in
179
116
2020
in € million
NOTES TO THE INCOME
STATEMENT
08 COST OF SALES
Report 2020
BMW Group
Provisions for pensions are measured using the
projected unit credit method. Under this method, not
only obligations relating to known vested benefits at
the reporting date are recognised, but also the effect of
future expected increases in pensions and salaries. The
calculation is based on independent actuarial valuations
which take into account the relevant biometric factors.
Financial liabilities, with the exception of lease lia-
bilities, are measured on first-time recognition at their
fair value. For these purposes, transaction costs are
taken into account except in the case of financial lia-
bilities allocated to the category "measured at fair value
through profit or loss”. Subsequent to initial recognition,
liabilities are - with the exception of derivative financial
instruments - measured at amortised cost using the ef-
fective interest method.
Cash and cash equivalents comprise mainly cash on
hand and cash at bank with an original term of up to
three months. With the exception of money market
funds, cash and cash equivalents are measured at am-
ortised cost.
of administrative and social costs. Financing costs are
not included in the acquisition or manufacturing cost
of inventories.
Work in progress and finished goods, as well as ve-
hicles held for sale in the financial services business, are
stated at the lower of manufacturing cost and net realisa-
ble value. Manufacturing cost comprises all costs which
are directly attributable to the manufacturing process as
well as an appropriate proportion of production-related
overheads. This includes production-related deprecia-
tion and amortisation and an appropriate proportion
Cost of sales comprises:
As a general rule, each income tax treatment is con-
sidered independently when accounting for uncertainties
in income taxes. If it is not considered probable that an
income tax treatment will be accepted by the local tax
authorities, the BMW Group uses the most likely amount
of the tax treatment when determining taxable profit
and the tax base.
Current income taxes are calculated within the
BMW Group on the basis of tax legislation applicable
in the relevant countries. To the extent that judgement
was necessary to determine the treatment and amount
of tax items presented in the financial statements, there
is in principle a possibility that local tax authorities may
take a different position.
foreseeable future. This is particularly the case if it is
intended that profits will not be distributed, but rather
will be used to maintain the substance and expand the
volume of business of the entities concerned.
Deferred tax liabilities on taxable temporary differ-
ences arising from investments in subsidiaries, branches
and associated companies as well as interests in joint
arrangements are not recognised if the Group is able
to control the timing of the reversal and it is probable
that the temporary difference will not reverse in the
The recoverability of deferred tax assets is assessed at
each balance sheet date on the basis of planned taxable
income in future financial years. If with a probability
of more than 50 percent future tax benefits will not be
realised, either in part or in total, a valuation allowance
is recognised on the deferred tax assets. The calculation
of deferred tax assets requires assumptions to be made
with regard to the level of future taxable income and the
timing of recovery of deferred tax assets. These assump-
tions take account of forecast operating results and the
impact on earnings of the reversal of taxable temporary
differences. Since future business developments cannot
be predicted with certainty and to some extent cannot
be influenced by the BMW Group, the measurement of
deferred tax assets is subject to uncertainty.
Deferred income taxes are recognised for all tempo-
rary differences between the tax and accounting bases
of assets and liabilities, including differences arising on
consolidation procedures, as well as on unused tax losses
and unused tax credits, to the extent that they can be
utilised. Deferred tax assets and liabilities are measured
at the tax rates that are expected to apply for the period
when the asset is realised or the liability settled, based
on tax rates and tax laws that have been enacted or sub-
stantively enacted at the balance sheet date.
K = 203
Group Financial Statements
Notes to the Group Financial Statements
K = 204
In the case of funded plans, the pension obligation
is offset against plan assets measured at their fair value.
If the plan assets exceed the pension obligation, the
surplus is tested for recoverability. In the event that the
BMW Group has a right of reimbursement or a right to
reduce future contributions, it reports an asset (within
Other financial assets), measured on the basis of the
present value of the future economic benefits attached
to the plan assets. For funded plans, in cases where the
obligation exceeds plan assets, a liability is recognised
under pension provisions.
K = 205
Notes to the Group Financial Statements
Group Financial Statements
Report 2020
BMW Group
Related party disclosures comprise information on as-
sociated companies, joint ventures and non-consolidated
subsidiaries as well as individuals which have the ability
to exercise a controlling or significant influence over the
financial and operating policies of the BMW Group. This
includes all persons in key positions of the Company, as
well as close members of their families or intermediary
entities. In the case of the BMW Group, this also ap-
plies to members of the Board of Management and the
Supervisory Board. Details relating to these individuals
and entities are provided in ✓ note 40 and in the list of
investments disclosed in ✓ note 46.
If the recognition criteria relevant for provisions are
not fulfilled and the outflow of resources on fulfilment
is not unlikely, the potential obligation is disclosed as a
contingent liability.
Notes to the Group Financial Statements
The recognition and measurements of provisions for
litigation and liability risks necessitates making assump-
tions in order to determine the probability of liability, the
amount of claim and the duration of the legal dispute.
The assumptions made, especially the assumption about
the outcome of legal proceedings, are subject to a high
degree of uncertainty. The appropriateness of assump-
tions is regularly reviewed, based on assessments under-
taken both by management and external experts, such
as lawyers. If new developments arise in the future that
result in a different assessment, provisions are adjusted
accordingly.
Provisions for statutory and non-statutory warranties
are recognised at the point in time when control over
the goods is transferred to the dealership or retail cus-
tomer or when it is decided to introduce new warranty
measures. With respect to the level of the provision, esti-
mations are made in particular based on past experience
of damage claims and processes. Future potential repair
costs and price increases per product and market are
also taken into account. Provisions for warranties for all
The measurement of provisions for statutory and
non-statutory warranty obligations (statutory, contrac-
tual and voluntary) involves estimations. In addition
to manufacturer warranties prescribed by law, the
BMW Group offers various further standard (assurance-
type) warranties depending on the product and sales
market. No provisions are recognised for additionally
offered service packages that are treated as separate
performance obligations.
Other provisions are recognised when the BMW Group
has a present legal or factual obligation towards a third
party arising from past events, the settlement of which
is probable, and when the amount of the obligation can
be reliably estimated. Provisions with a remaining period
of more than one year are measured at their net present
value.
Remeasurement of the net liability can result from
changes in the present value of the defined benefit ob-
ligation, the fair value of the plan assets or the asset
ceiling. Remeasurement can result, amongst others, from
changes in financial and demographic parameters, as
well as changes following the portfolio development.
Remeasurements are recognised immediately through
other comprehensive income and ultimately in equity
(within revenue reserves).
Past service cost arises where a BMW Group company
introduces a defined benefit plan or changes the benefits
payable under an existing plan. This cost is recognised
immediately in the income statement. Similarly, gains
and losses arising on the settlement of a defined benefit
plan are recognised immediately in the income statement.
Net interest expense on the net defined benefit lia-
bility or net interest income on the net defined benefit
assets are presented within the financial result. All other
costs relating to allocations to pension provisions are
allocated to costs by function in the income statement.
The calculation of the amount of the provision re-
quires assumptions to be made with regard to discount
rates, salary trends, employee fluctuation and the life
expectancy of employees. Discount rates are determined
by reference to market yields at the end of the reporting
period on high quality fixed-interest corporate bonds.
The salary trend relates to the expected future rate of
salary increase which is estimated annually based on in-
flation and the career development of employees within
the Group.
companies of the BMW Group are adjusted regularly to
take account of new information, with the impact of any
changes recognised in the income statement. Further
information is provided in ✓ note 33. Similar estimates
are also made in conjunction with the measurement of
expected reimbursement claims.
Share-based remuneration programmes which are
expected to be settled in shares are measured at their
fair value at grant date. The related expense is recognised
as personnel expense in the income statement over the
vesting period and offset against capital reserves. Share-
based remuneration programmes expected to be settled
in cash are revalued to their fair value at each balance
sheet date between the grant date and the settlement
date and on the settlement date itself. The expense is
recognised as personnel expense in the income statement
over the vesting period and presented in the balance
sheet as a provision.
Group Financial Statements
Ineffectiveness arising on cash flow hedges is rec-
ognised directly in cost of sales, whereas the impact of
terminated hedging relationships is recognised in other
operating income and expenses.
The BMW Group derecognises financial assets when
it has no reasonable expectation of recovery. This may
be the case, for instance, if the debtor is deemed not
to have sufficient assets or other sources of income to
service the debt.
not been credit-impaired at the time they were acquired
or originated, an impairment allowance is recognised at
an amount equal to lifetime expected credit losses (stage
3). This is the case regardless of whether the general or
simplified approach is applied. In the case of stage 3 as-
sets, interest income is calculated on the asset's carrying
amount less any impairment loss.
As a general rule, the BMW Group assumes that a
receivable is in default if it is more than 90 days overdue
or if there are objective indications of insolvency, such as
the opening of insolvency proceedings. Credit-impaired
assets are identified as such on the basis of this definition
of default. In the case of credit-impaired assets which had
The BMW Group applies the simplified approach de-
scribed in IFRS 9 to operating lease and trade receivables,
whereby the amount of the loss allowance is measured
subsequent to the initial recognition of the receivable
on the basis of lifetime expected credit losses (stage 2
simplified approach). For the purposes of allocating at
item to stage 2, it is irrelevant whether the credit risk of
the assets concerned has increased significantly since
initial recognition.
-
With the exception of receivables from operating
leases and trade receivables, the BMW Group applies
the general approach described in IFRS 9 to deter-
mine impairment of financial assets. Under the general
approach, loss allowances are measured on initial recog-
nition on the basis of the expected 12-month credit loss
(stage 1). If the credit loss risk at the end of the reporting
period has increased significantly since initial recog-
nition, the impairment allowance is measured on the
basis of lifetime expected credit losses (stage 2 - general
approach). The measurement of the change in default risk
is based on a comparison of the default risk at the date of
initial recognition and at the end of the reporting period.
The default risk at the end of each reporting period is
determined on the basis of credit checks, current key
performance indicators and any overdue payments.
Receivables from sales financing are measured at
amortised cost using the effective interest rate method.
Operating lease receivables due for payment at the end
of the reporting period and included in this balance sheet
line item are also measured on this basis, and the related
vehicles reported as leased products. Receivables from
sales financing also include finance lease receivables
which are measured at the amount of the net investment
in the lease.
Items reported under other investments within the
scope of IFRS 9 are measured at fair value through profit
or loss. Investments in subsidiaries, joint arrangements
and associated companies that are not material to the
BMW Group are also included in other investments.
The market values of financial instruments measured
at fair value are determined on the basis of market infor-
mation available at the balance sheet date, such as quoted
prices or using appropriate measurement methods, in
particular the discounted cash flow method.
mainly marketable securities and investment funds used
for liquidity management purposes. Selected marketable
securities and investment funds, money market funds
within cash and cash equivalents as well as convertible
bonds are recognised at fair value through profit or loss,
as their contractual cash flows do not solely represent
payments of principal and interest. The BMW Group
does not make use of the option to measure equity
instruments at fair value through other comprehensive
income or debt instruments at fair value through profit
or loss.
三 201
K
Notes to the Group Financial Statements
Group Financial Statements
BMW Group
Report 2020
Loss allowances relating to the balance sheet item
"Receivables from sales financing" are determined pri-
marily on the basis of past experience with credit losses,
current data on overdue receivables, rating classes and
scoring information. Forward-looking information (for
instance forecasts of key performance indicators) is also
taken into account if, based on past experience, such
indicators show a substantive correlation to actual credit
losses.
BMW Group
Report 2020
In the case of raw materials hedges that are account-
ed for as cash flow hedges, the hedging instruments are
designated in full as part of the hedging relationship. As
an exception to this general rule, the interest component
of raw materials derivative instruments redesignated in
conjunction with the first-time application of IFRS 9
was not designated as part of the hedging relationship.
Changes in the fair value of this component are recorded
as costs of hedging on a separate line within accumulated
other equity. Amounts recorded in accumulated other
equity are included in the carrying amount of inventories
on initial recognition.
The time values of option transactions and the in-
terest component – including the currency basis - of
forward currency contracts are not designated as part of
the hedging relationship in the case of currency hedges
accounted for as cash flow hedges. Changes in the fair
value of such components are recorded as costs of hedg-
ing on a separate line within accumulated other equity.
Amounts recorded in accumulated other equity from
currency hedges are reclassified to cost of sales when
the related hedged item is recognised in profit or loss.
Fair value hedge ineffectiveness is generally recog-
nised in other financial result.
and redesignated on a monthly basis at the end of each
reporting period, thereby taking account of the constant-
ly changing content of each portfolio.
In addition, for selected fixed-interest assets, a
portion of the interest rate risk is hedged on a portfolio
basis in accordance with IAS 39. The designated hedged
items (underlying transactions) are reported in the
balance sheet as receivables from sales financing and
financial liabilities. In this case, swaps are used as the
hedging instrument. Hedge relationships are terminated
Fair value hedges are mainly used to hedge interest
rate risks relating to financial liabilities. The currency
basis is not designated as part of the hedging relationship
in the case of cross currency interest rate hedges account-
ed for as fair value hedges. Accordingly, changes in the
market value of such components are recorded as costs
of hedging within accumulated other equity. Amounts
accumulated in equity are reclassified to other financial
result within the income statement over the term of the
hedging relationship.
Where hedge accounting is applied, changes in fair
value of derivative financial instruments are presented
as part of other financial result in the income statement
or within other comprehensive income as a component
of accumulated other equity, depending on whether the
hedging relationship is classified as a fair value hedge or
a cash flow hedge.
BMW Group
Report 2020
The BMW Group applies the option to recognise the
credit risks arising from the fair values of a group of
derivative financial assets and liabilities on the basis of
their total net amount. Portfolio-based valuation adjust-
ments (credit valuation adjustments and debit valuation
adjustments) to the individual derivative financial assets
and financial liabilities are allocated using the relative
fair value approach (net method).
Derivative financial instruments are used within the
BMW Group for hedging purposes in order to reduce
currency, interest rate, fair value and market price risks.
Derivative financial instruments are recognised as of the
trade date, measured at their fair value. Depending on
their market value at measurement date, these financial
instruments are reported in the balance sheet as financial
assets or financial liabilities.
ments.
Expected credit losses are only presented separately
if they are material for the BMW Group Financial State-
Loss allowances on trade receivables are determined
primarily on the basis of information relating to overdue
amounts. Input factors available on the market, such as
ratings and probabilities of default, are used to calcu-
late valuation allowance for cash and cash equivalents,
financial receivables, receivables from subsidiaries and
receivables from companies in which an investment is
held. In the case of marketable securities and investment
funds, the BMW Group usually applies the option not to
allocate financial assets with a low default risk to differ-
ent stages. Accordingly, assets with an investment grade
rating are always allocated to stage 1.
K = 202
Notes to the Group Financial Statements
Group Financial Statements
Fair values are determined on the basis of valuation
models. Observable market price, tenor and currency
basis spreads are taken into account in the measurement
of derivative financial instruments. Furthermore, the
Group's own credit risk and that of counterparties is
taken into account on the basis of credit default swap
values for market contracts with matching terms.
The share-based remuneration programme for
Board of Management members and senior heads of
department entitles BMW AG to elect whether to settle
its commitments in cash or with shares of BMW AG
common stock. Based on the decision to settle in cash,
the share-based remuneration programmes for Board of
Management members and senior heads of department
are accounted for as cash-settled, share-based remuner-
ation programmes. Further information on share-based
remuneration programmes is provided in ✓ note 41.
Inventories of raw materials, supplies and goods for
resale are stated at the lower of average acquisition cost
and net realisable value.
GENERAL SITUATION
2,820
2,195
104,210
Revenues recognised from contracts with customers
in accordance with IFRS 15 totalled €83,814 million
(2019: €89,610 million).
An analysis of revenues by segment is shown in the
explanatory comments on segment information provided
in note 45. Revenues from the sale of products and re-
lated goods are generated primarily in the Automotive
segment and, to a lesser extent, in the Motorcycles
segment. Revenues from the sale of products previously
leased to customers, income from lease instalments and
interest income on loan financing are allocated to the
Financial Services segment. Other income relates mainly
to the Automotive segment and the Financial Services
segment.
The major part of revenues expected to arise from the
Group's order book at the end of the reporting period
relates to the sale of vehicles. Revenues resulting from
those sales will be recognised in the next financial year.
The services included in vehicle sale contracts that will
be recognised as revenues in subsequent years represent
only an insignificant portion of expected revenues. Ac-
cordingly, use has been made of the practical expedient
contained in IFRS 15, permitting an entity not to disclose
information on a quantitative basis due to the short-term
nature of items and the lack of informational value of
such disclosures.
Interest income on loan financing and finance
leases includes interest calculated on the basis of the
effective interest method totalling €3,424 million (2019:
€3,687 million). This interest income is not reported
separately in the income statement as it is not significant
compared to total Group revenues.
67,548
Sales of products and related goods
2019
2020
Revenues by activity comprise the following:
07 REVENUES
K = 208
Notes to the Group Financial Statements
Report 2020
Group Financial Statements
98,990
Revenues
06 IMPACT OF THE CORONAVIRUS PANDEMIC
ON THE FINANCIAL STATEMENTS
2,335
73,433
Sales of products previously
leased to customers
11,345
11,020
Income from lease instalments
11,322
BMW Group
10,746
and finance leases
3,677
3,996
Revenues from service contracts,
telematics and roadside assistance
2,763
Other income
Interest income on loan financing
Overall, the additional impairment losses described
above were offset by a volume-related decrease in receiv-
ables. The lower level of impairment allowances com-
pared to 31 December 2019 therefore arose as a result of
the lower level of receivables overall. A summary of the
relevant values is provided in ✓ note 30.
in € million
The effects of a higher risk on receivables within
stage 2 were calculated using a scenario model as the
basis for recognising additional credit risk allowances
for trade receivables. The standard model used by the
BMW Group to determine expected credit losses is
unable at present - to appropriately take account of
the impact of the coronavirus pandemic. An increasing
overdue status of these receivables is seen as a risk. A
simulated reclassification of receivables to a higher over-
due band was run, taking account of macroeconomic
influencing factors, the development of the gross domes-
tic product (GDP), of the countries concerned. An addi-
tional allowance for expected credit losses was calculated
and recorded on the basis of this simulation. Further
information on the calculation of valuation allowances
in accordance with IFRS 9 is provided in ✓ note 5.
For the purposes of measuring and accounting for re-
sidual value risks, discretionary adjustments were made
to the expected market values of vehicles in order to take
account of the effects of the pandemic that are not con-
sidered in the existing measurement models (post-model
adjustments). The adjustments were determined using a
market-specific approach, thereby taking account of the
varying effects and measures arising in each market as
well as the structure of the valuation models.
Residual value risk
For the purposes of accounting for currency and
commodity hedges, coronavirus-related effects on sales
and production were taken into account as unscheduled
exposure updates. If the hedged item was no longer
expected to occur, the hedge relationships were de-
designated. The corresponding amounts were then re-
classified immediately from other comprehensive income
to profit and loss (other operating income and expenses).
De-designation of hedge relationships
From the BMW Group's perspective, the spread of
coronavirus also provided an indication of impairment
relating to investments accounted for using the equity
method. The exception to this general consideration was
the BMW Brilliance Automotive joint venture in China,
given the rapid economic recovery registered in that
region. Further information is provided in ✓ note 24.
The increasing global spread of the coronavirus and
the related low market capitalisation of BMW AG gave
rise to an indication that tangible and intangible assets
of the BMW Group could be impaired. As a result, im-
pairment tests were performed for the Automotive, Mo-
torcycles and Financial Services cash-generating units.
In this context, values in use were determined on the
basis of updated long-term forecasts that already reflect
adjustments to expectations made in light of coronavi-
rus. Against this backdrop, it was decided not to include
probability-weighted scenarios. A detailed description of
the methodology applied to perform impairment tests is
provided in note 5.
Impairment tests
ACCOUNTING POLICIES
pertaining to the scale and duration of the pandemic's ef-
fects took account of current market value developments.
If the regression models used were highly affected by
market values realised in recent months, the outcomes
were adjusted for exceptionally positive results in the
second half of the year for instance, in the UK and the
Netherlands. In the case of the Belgian and German mar-
kets, for instance, procedures included the derivation
of a number of macroeconomic scenarios to calculate
the potential impact on pre-owned vehicle valuations.
Probabilities were weighted where necessary, taking into
account external indicators (e.g. consumer confidence
indices) and internal indicators (e.g. inventory trends).
In some cases, including for the French market, macro-
economic parameters based on current risk estimates
were adjusted.
K = 206
Group Financial Statements
Report 2020
BMW Group
Significant effects on the Group Financial Statements
are described below.
In light of the developments described above, Group
net profit was significantly lower than in the previous
year.
The year-on-year decrease in selling and adminis-
trative expenses mainly reflected the reduction in com-
munication, marketing and travel expenses arising as
a result of the containment measures implemented in
connection with the coronavirus pandemic. Short-time
work allowances received have been netted in the income
statement against the corresponding expenses.
Due to lower new leasing business as well as lower
expected new leasing business, the amount of revenues
eliminated on consolidation fell compared to the previ-
ous year.
Whereas the main negative factors in the first quarter
were the drop in demand in China and the closure of
dealerships in a few other markets, business in the sec-
ond quarter was adversely impacted by the global spread
of the pandemic affecting other key sales markets of the
BMW Group. Although customer demand increased in
many markets during the second half of the year, the
repercussions of the coronavirus pandemic on business
in the first half of the year continued to be felt. This is
reflected in particular in the decline in revenues, main-
ly due to the lower number of vehicle sales and lower
revenues from spare parts. The decline in vehicle sales
was also reflected in cost of sales, whereby fixed costs
fell on a less pronounced scale by comparison to the
reduction in capacity utilisation levels. Group earnings
were also negatively impacted by higher risk provisioning
expenses relating in particular to the reassessment of
residual value and credit risks.
The BMW Group's earnings for the financial year
2020 have been negatively impacted by the course of the
coronavirus pandemic and the related measures put in
place to contain the virus.
Notes to the Group Financial Statements
Discretionary model adjustments are regularly re-
viewed in order to ensure that allowances for residual
value losses are continuously updated on the basis of
expected market values. In light of the volatile market
environment and the current high level of uncertainty
surrounding the future course of the coronavirus pan-
demic, only limited conclusions can be drawn from the
recent improvement in market values observed on pre-
owned automobile markets. A summary of the relevant
values is provided in note 23.
In the case of the US market, past experience
relevant for market value changes arising during the
financial crisis was taken into account in the calculation
of post-model adjustments. In the case of the UK and
Canadian markets, the procedures applied also included
projections drawn up by external providers on the impact
of the coronavirus pandemic. In all cases, assumptions
Report 2020
II. Trade receivables
Furthermore, additional scenarios were considered
for the economic development of individual markets
(for example, the UK), for which an increased level of
uncertainty exists. In addition, in light of current risk
assessments, macroeconomic parameters were adjusted
to take account of specific circumstances in some markets
(for instance, South Africa and Malaysia). A summary of
the values is provided in ✓ note 25.
downgrades based on adjusted expectations of future
business performance. In this context, increased default
probabilities were assigned to dealerships that could be
exposed to deteriorating business conditions as a result
of the coronavirus pandemic. However, this reassessment
did not result in amounts being reclassified from stage
1 to stage 2 or stage 3. Instead, additional impairment
allowances were recognised to take account of the higher
anticipated risk of default.
In the case of dealership business, creditworthiness
expectations of individual dealerships were assessed
on the basis of market-specific scenarios, including
In the case of retail customer business, portfolios
were measured taking into account market-specific
qualitative factors with the aim of identifying particu-
larly affected portfolio segments (such as the tourism
sector). This assessment was based on local expertise
and took into account various scenarios, including the
number of payment deferral applications, government
measures and additional qualitative portfolio data. For
the identified portfolio segments affected, amounts were
reclassified from stage 1 (impairment allowance based on
the 12-month expected credit losses) to stage 2 (impair-
ment allowance based on lifetime expected credit losses),
resulting in the recognition of additional risk allowances.
Credit risk parameters were otherwise left unchanged.
In connection with the coronavirus pandemic, al-
lowances for expected credit losses were increased to
take account of the negative impact on retail customer
and dealership business, to the extent not covered by
the BMW Group's standard loss provisioning models
(post-model adjustments).
BMW Group
Credit risk
K = 207
Notes to the Group Financial Statements
I. Receivables from sales financing
Group Financial Statements
BMW Group
Net profit attributable to the shareholders of BMW AG
The income statement includes personnel expenses
as follows:
|<<= 214
15 PERSONNEL EXPENSES
2019
2020
14 EARNINGS PER SHARE
Report 2020
€
1.92*
2.52
€ million
Personnel expenses include €602 million (2019:
€72 million) of costs relating to workforce measures.
The total pension expense for defined contribution
plans of the BMW Group amounted to €150 million
(2019: €148 million). Employer contributions paid to
state pension insurance schemes totalled €634 million
(2019: €667 million).
Earnings per share of preferred stock are computed
on the basis of the number of preferred stock shares enti-
tled to receive a dividend in each of the relevant financial
years. As in the previous year, diluted earnings per share
correspond to basic earnings per share.
Group Financial Statements
3,775.0
56,122,857
in € million
56,867,180
Social insurance expenses
911
948
Personnel expenses
12,244
12,451
€
5.73
7.47
€
5.75
7.49
44
€
1.90*
2.50
number
1,133
1,252
Pension and welfare expenses
2020
2019
Profit attributable to common stock
Profit attributable to preferred stock
Average number of common stock shares in circulation
Average number of preferred stock shares in circulation
Basic/diluted earnings per share of common stock
Basic/diluted earnings per share of preferred stock
Dividend per share of common stock
Dividend per share of preferred stock
* Proposal by management.
4,914.5
€ million
3,448.1
326.9
4,494.4
420.1
Wages and salaries
10,081
10,370
number
601,995,196
601,995,196
€ million
Notes to the Group Financial Statements
Actual tax expense
The average number of employees during the year
2020
2019
Income from variable lease payments for
operating leases
148
171
Income from variable lease payments
for finance leases
17
19
19
Financial income on the net investment
in finance leases
890
885
Selling profit on the sale of vehicles
previously leased to retail customers
under finance leases
1,167
1,384
Most of the expenses for leases for low-value assets
and short-term leases relate to low-value assets.
The BMW Group is party to leases at the end of the
reporting period which have not yet commenced. These
leases could give rise to future cash outflows amounting
to €225 million (2019: €42 million).
* Prior year's figures adjusted.
Variable lease payments are based on distance driven.
The agreements have, in part, extension and purchase
options.
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
17 FEE EXPENSE FOR THE GROUP AUDITOR
The fee expense pursuant to § 314 (1) no. 9 HGB
recognised in the financial year 2020 for the Group
auditor and the PwC network of audit firms amounted
to €18 million (2019: €19 million) and consists of the
following:
in € million
Notes to the Group Financial Statements
in € million
-54
-55
Interest expense arising on the
measurement of lease liabilities
16 LEASES
was:
2020
2019*
a
As lessee
Average number of employees
122,874
123,868
thereof at proportionately-consolidated
entities
* Prior year's figures adjusted.
139
The previous year's figure was adjusted in view of the
change in the internal management system (see Annual
Report 2019, Group Management Report). The number
of employees at the end of the reporting period is dis-
closed in the Combined Management Report.
K = 215
In terms of accounting for leases as a lessee, the
following amounts are included in the income statement:
2020
2019
Total cash outflows for leases in 2020 amounted to
€653 million (2019: €591 million).
Information on right-of-use assets, lease liabilities as
well as further explanatory comments are provided in
note 5 (Accounting policies, assumptions, judgments
and estimates), ✓ note 20 (Analysis of changes in Group
tangible, intangible and investment assets in 2020),
note 22 (Property, plant and equipment (including
right-of-use assets arising from leases)) and ✓ note 35
(Financial liabilities).
Expenses for leases of low-value assets
and short-term leases
-91
-94
Expenses relating to variable lease
payments not included in the
measurement of lease liabilities
-13
-3
b
As lessor
in € million
Group Financial Statements
2019
K = 213
53
673
282
324
3,203
6
3
1
1,013
1,125
3,966
476
306
348
329
6,655
6,239
33
42
3,717
3,544
852
3,721
3,883
1,766
16,284
15,823
49
13,848
3,354
17
Effective tax rate
26.1%
30.1%
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
KK 212
The allocation of deferred tax assets and liabilities to
balance sheet line items at 31 December is shown in the
following table:
in € million
Intangible assets
Property, plant and equipment
Leased products
Other investments
Sundry other assets
Tax loss carryforwards
Capital Losses
Provisions
2020
Deferred tax assets
2019
2020
Deferred tax liabilities
Audit of financial statements
3,186
780
4,085
22
3,454
17
647
1,539
13,755
Valuation allowances on tax loss carryforwards
-138
2020
2019*
1,562
-122
658
1,176
-305
558
thereof relating to fair value gains and losses on financial instruments
and marketable securities recognised directly in equity
-443
170
thereof relating to the remeasurements of net liabilities for defined benefit pension plans
161
376
thereof from currency translation
-23
12
Exchange rate impact and other changes
35
-50
Deferred taxes at 31 December (assets (+)/liabilities (-))
1,950
1,562
* Sign convention changed compared to previous year's Group Financial Statements.
Taxable temporary differences relating to investments
in subsidiaries, associated companies and joint ventures
amount to €22,174 million (2019: €21,215 million). No
deferred taxes are recognised on these taxable temporary
differences because the BMW Group is able to determine
the timing of the reversal of the temporary differences
and it is probable that the temporary differences will not
reverse in the foreseeable future, in particular in view of
the fact that there is no intention to distribute the profits,
but rather to use them to maintain their substance and
reinvest in the companies concerned. No computation
was made of the potential impact of income taxes on
the grounds of proportionality. Deferred tax liabilities
on expected dividends amount to €76 million (2019:
€64 million) and relate primarily to dividends from for-
eign subsidiaries and joint ventures.
The tax returns of BMW Group entities are checked
regularly by German and foreign tax authorities. Taking
account of numerous factors - including interpretations,
commentaries and legal decisions relating to the various
tax jurisdictions as well as past experience - adequate
provision has been made, to the extent identifiable and
probable, for potential future tax obligations.
Change in deferred taxes recognised directly in equity
Deferred tax expense (-)/income (+) recognised through income statement
Deferred taxes at 1 January (assets (+)/ liabilities (-))
in € million
-177
Valuation allowances on capital losses
-329
Netting
-13,339
-13,123
2,459
1,950
2,194
1,562
-13,339
509
-13,123
632
Liabilities
BMW Group
Report 2020
Eliminations
Net
Tax loss carryforwards relating to Germany and
foreign operations amounted to €1,568 million (2019:
€954 million). This includes one tax-loss carryforward
amounting to €406 million (2019: €519 million), on
which a valuation allowance of €138 million (2019:
€177 million) was recognised on the related deferred
tax asset. The increase in tax losses available for carry-
forward was mainly attributable to the decline in earn-
ings as a consequence of the coronavirus pandemic.
For entities with tax losses available for carryforward,
a net surplus of deferred tax assets over deferred tax
liabilities is reported amounting to €392 million (2019:
€292 million). The basis for the recognition of deferred
taxes is the BMW Group business model or manage-
ment's assessment that there is material evidence that
the entities will generate future taxable profit, against
which deductible temporary differences can be offset. In
this context, it is also expected that the loss recorded
by BMW AG tax group for income tax purposes for the
financial year 2020 can be utilised in full in the coming
years, taking into account the minimum taxation rules
in Germany. Furthermore, it is assumed that tax start-up
losses relating to the San Luis Potosí plant in Mexico,
opened in 2019, can be utilised by offset against planned
future profits.
Loss carryforwards amounting to €1,129 million
(2019: €553 million) can be used indefinitely, while
€439 million (2019: €401 million) expire after more than
3 years.
Capital losses available for carryforward in the Unit-
ed Kingdom which do not relate to ongoing operations
decreased to €1,832 million (2019: €1,938 million) due
to currency factors. As in previous years, deferred tax
assets recognised on these tax losses - amounting to
€348 million at the end of the reporting period (2019:
€329 million) - were fully written down since they can
only be utilised against future capital gains.
Deferred tax assets and deferred tax liabilities are
netted for each relevant tax entity if they relate to the
same tax authorities.
BMW Group
Group Financial Statements
Report 2020
Notes to the Group Financial Statements
Deferred taxes recognised directly in equity amount-
ed to €1,710 million (2019: €2,015 million).
Deferred taxes
Other attestation services
1,500
Other services
Additions
fications
Disposals 31.12.2019
1.1.2019
Translation
differences Current year
Reclassi-
1.1.2019 differences
Depreciation and amortisation
Carrying amount
fications adjustments¹ Disposals 31.12.2019 31.12.2019 31.12.2018
Development costs
14,990
2,134
Goodwill
Value
385
in € million
Translation
7
-57
10
529
735
703
Reclassi-
1 Including €57 million recognised through the income statement.
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
ANALYSIS OF CHANGES IN GROUP TANGIBLE,
INTANGIBLE AND INVESTMENT ASSETS 2019
K = 220
Acquisition and manufacturing cost
2 Including assets under construction of €1,297 million.
1,733 15,391
385
5,014
1,667
166
1,899
5
1,169
380
380
906
615
1,733 4,948 10,443 9,976
6,122 11,729
Land, titles to land, buildings, including
buildings on third party land
14,023
115
1,013
397
10,971
1,815
4
6,202
5
Other intangible assets
1,798
11
448
182 2,075
1,183
4
148
Intangible assets
17,173
11
2,582
1,915
17,851
589
99
1,264
156
-1,294
-2
1,619
1,6192 1,991
2,067
60,991 37,428 -705
4,250
-1,264 3,651
-2
21,850 23,245
Leased products
49,942 -1,930 17,820
15,712
50,120 7,333 -300 5,833
4,741
1,830 39,141
8,125 41,995 42,609
60,673
-19
333
བ་
206
2,211
927
1,025
941
-1
16
51
70
73
Advance payments made and construction in progress
Property, plant and equipment
1,991
37
Investments accounted for using the equity method
3,439
-
84
97
963
501
10
-57
-24
10
519
499
Non-current marketable securities
Other investments
1,292
-35
444
1,000
Participations
204
1,440
1,054
3,825
240
240 3,585 3,199
Investments in non-consolidated subsidiaries
292
-11
72
52
301
88
-3
85
216
149
-59
15,449 5,310
794
2,624
-
2,876
2,061
3,439
240
Investments accounted for using the equity method
240
Investments in non-consolidated subsidiaries
444
2
139
293
292
3,199 2,624
191
42,609 38,259
5,086
380 5,202
2,575 60,673
35,503
216
4,202
2,493
7,333
37,428 23,245 19,801
45,851
619 20,513
17,041
49,942 7,592
95
4,732
Leased products
-322
-219
88
6
225
349
1,292
671
-311
1,410
-230
703
739
Other investments
1 Including €71 million recognised through the income statement.
2 Carrying amounts at 1.1.2019 (from the first-time application of IFRS 16).
3 Including assets under construction of €1,555 million.
589
28
28
28
204
253
Participations
938
4
86
28
1,000
480
11
-11
501
499
458
Non-current marketable securities
57,666
44
1,9913 2,395
3
2,581
1,253
2,187
40,061
28,111
158
224
3,086
2,172
29,177
10,884
10,078
thereof right-of-use assets from leases
1
O
75
38,190
6,420
2,681 2,3872
2
46
6,104 9,345
thereof right-of-use assets from leases
2,387
22
Plant and machinery
751
45
3,107
1
430
5
426
-8
6
82
6
71
1
33
1
2
104
thereof right-of-use assets from leases
31
73
712
Advance payments made and construction in progress
Property, plant and equipment
2,392
18 1,297
-1,713
31
908
1,025
2,147
6
76
12
Other facilities, factory and office equipment
3,061
23
23
311
63
286
3,172
2,082
14
322
275
1,991
Tax advisory services
2,147
31
3,138
Group Financial Statements
Report 2020
Notes to the Group Financial Statements
Deferred taxes on components of other comprehensive
income are as follows:
in € million
2020
BMW Group
2019
Deferred taxes
After tax
Before tax
Deferred taxes
After tax
Remeasurement of the net liability for defined benefit
pension plans
Before tax
-354
-694
Other comprehensive income for the period after tax
thereof reclassifications to the income statement
638
736
Other comprehensive income from equity accounted investments
Deferred taxes
106
-3
-637
-444
Currency translation foreign operations
-1,283
544
Items that can be reclassified to the income statement in the future
-422
173
171
139
-215
-1,254
-59
142
125
-34
91
Other comprehensive income from equity accounted
201
investments
-55
51
-3
6
3
Currency translation foreign operations
106
Costs of hedging
-495
211
387
-867
Marketable securities
(at fair value through other comprehensive income)
7
-2
5
42
-12
30
Derivative financial instruments
991
-328
663
-706
-611
-1,283
-437
125
1
3
3
18
19
2
7
1
Services provided during the financial year 2020
by the Group auditor PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft, Frankfurt am Main,
Munich branch, on behalf of BMW AG and subsidiaries
under its control relate to the audit of the financial
statements, other attestation services, tax advisory
services and other services.
Other attestation services include mainly project-
related audits, comfort letters and statutorily prescribed,
contractually agreed or voluntarily commissioned attes-
tation work.
Tax advisory services include primarily services
related to transfer pricing and tax compliance.
Other services mainly include consulting services
relating to production processes.
BMW Group
Report 2020
Group Financial Statements
The audit of financial statements comprises mainly
the audit of the Group Financial Statements and the
separate financial statements of BMW AG and its sub-
sidiaries, and all work related thereto, including the
review of the Interim Group Financial Statements.
Notes to the Group Financial Statements
1
4
Fee expense
2020
PwC International
2019
2020
18 GOVERNMENT GRANTS
4
AND GOVERNMENT ASSISTANCE
2019
Income from asset-related and performance-related
grants, amounting to €67 million (2019: €41 million)
and €210 million (2019: €199 million) respectively, was
recognised in the income statement in 2020.
These amounts relate mainly to public sector grants
aimed at the promotion of regional structures as well as
to subsidies received for plant expansions.
thereof: PwC GmbH
14
14
K = 216
NOTES TO THE STATEMENT
OF COMPREHENSIVE INCOME
19 DISCLOSURES RELATING TO THE STATEMENT
OF COMPREHENSIVE INCOME
thereof reclassifications to the income statement
Derivative financial instruments
thereof gains/losses arising in the period under report
-13
-17
991
59
-706
-229
thereof reclassifications to the income statement
-645
-477
Costs of hedging
201
1,636
20
thereof gains/losses arising in the period under report
42
Other comprehensive income for the period after tax
comprises the following:
in € million
|<< = 217
2020
2019
Remeasurement of the net liability for defined benefit pension plans
Deferred taxes
-354
-1,254
139
387
Items not expected to be reclassified to the income statement in the future
-215
-867
Marketable securities (at fair value through other comprehensive income)
7
thereof gains/losses arising in the period under report
121
-1,283
544
3,107
-72
280
12
219
3,108
thereof right-of-use assets from leases
426
452
51
73
796
2,312
2,681
-14
Plant and machinery
9,244 9,345
124
2
1,232
6,769 12,342 11,729
Land, titles to land, buildings, including
buildings on third party land
15,449
6,691
-380
538
293
15,935
6,104
-135
846
621
40,061
-765
1,841
10,060
40
10,884
76
Other facilities, factory and office equipment
3,172
-100
18
248
44
thereof right-of-use assets from leases
104
-4
41
226
20
44
2
15
-1
710
1,548
thereof right-of-use assets from leases
82
-1
8
31
40,299
58
29,177
-511
3,071
2
2,140
30,239
6
1,893
544
-16
19,111
1.1.2020
Translation
differences
Additions
Reclassi-
fications
Translation
Reclassi-
in € million
Depreciation and amortisation
Carrying amount
Disposals 31.12.2020
1.1.2020
differences Current year
fications adjustments¹ Disposals 31.12.2020 31.12.2020 31.12.2019
Development costs
Value
15,391
Acquisition and manufacturing cost
20 ANALYSIS OF CHANGES IN GROUP TANGIBLE,
INTANGIBLE AND INVESTMENT ASSETS 2020
Other comprehensive income
-332
-305
-637
-1,252
558
KK = 219
-694
KK = 218
BMW Group
Group Financial Statements
Report 2020
Notes to the Group Financial Statements
NOTES TO THE BALANCE SHEET
Other comprehensive income relating to equity
accounted investments is reported in the Group State-
ment of Changes in Equity within currency translation
differences with a negative amount of €113 million (2019:
positive amount of €22 million), within derivative finan-
cial instruments with a positive amount of €118 million
(2019: negative amount of €56 million) and within costs
of hedging with a positive amount of €46 million (2019:
positive amount of €37 million).
2,300
715
16,976
1,751
1,169
-16
183
2
543
545
795
906
Intangible assets
17,851
-53 2,571
2
1,260
956
2
271
-52
4,948
1,710
689 5,969
11,007
10,443
Goodwill
385
-1
384
5
5
379
380
Other intangible assets
2,075
6,122
1,365
-348
ed on the basis of the relevant country-specific tax rates.
2020 between 9.0%
These ranged in the financial year
and 40.0% (2019: between 9.0% and 40.0%).
-397
2,192
1,608
30.8%
7,118
5,222
30.8%
Other variances include various reconciling items.
Tax expense for prior years resulted primarily from
adjustments to income tax receivables and provisions for
prior years, among other things due to transfer pricing
issues in conjunction with unconcluded and ongoing
transfer pricing proceedings.
2019
taxes.
The tax increases as a result of non-deductible ex-
penses mainly relate to non-recoverable withholding
2020
Profit before tax
in € million
-373
The difference between the expected tax expense
based on the underlying tax rate for Germany and actual
tax expense is explained in the following reconciliation:
Variances due to different tax rates
15.0
Corporate tax rate
Expected tax expense
2019
2020
in %
Tax rate applicable in Germany
三 211
K
Notes to the Group Financial Statements
Group Financial Statements
BMW Group
Report 2020
Equity accounted
Deferred taxes are determined on the basis of tax
rates which are currently applicable or expected to apply
in the relevant national jurisdictions when the amounts
are recovered. After taking account of an average muni-
cipal trade tax multiplier rate (Hebesatz) of 428,0 (2019:
428,0), the underlying income tax rate for Germany was
as follows:
Solidarity surcharge
15.0
5.5
Deferred taxes for non-German entities are calculat-
5.5
-100
-15
Other variances
-17
17
-162
61
for prior years
Tax expense (+)/benefits (-)
30.8
30.8
German income tax rate
5
Effects from tax rate changes
15.0
Tax increases (+)/tax reductions (-) due to:
Corporate tax rate including solidarity
-210
Tax-exempt income
-97
surcharge
15.8
-314
15.8
Non-deductible expenses
398
909
Municipal trade tax rate
15.0
29 INVENTORIES
Notes to the Group Financial Statements
28 OTHER ASSETS
Other assets comprise:
BMW Group
Report 2020
in € million
Group Financial Statements
Inventories comprise the following:
31.12.2020
31.12.2019
in € million
30 TRADE RECEIVABLES
Trade receivables comprise the following:
31.12.2019
in € million
Income tax assets totalling €606 million (2019:
€1,209 million) include claims amounting to €43 million
(2019: €186 million), which are expected to be settled
after more than one year. Claims may be settled earlier
than this depending on the timing of the underlying
proceedings. The decrease in income tax assets was
mainly attributable to tax reimbursements.
K = 227
31.12.2020
* Prior year's figures adjusted.
30
20,693
31.12.2020
503
433
due later than five years
45
27 INCOME TAX ASSETS
Net investment in finance leases
without loss allowances
20,948
21,537
Unrealised interest income
1,806
1,790
Loss allowances
255
204
Net investment in finance leases
21,333
31.12.2019
818
Finished goods and goods for resale
2,641
Allowances for impairment of stage 3
-23
-46
Vehicles held for sale in the
Other taxes
1,581
1,935
financial services business
due between four and five years
808
Net carrying amount
2,298
2,518
Expected reimbursement claims
1,046
1,086
2,048
Return right assets for future
in which an investment is held
1,660
10,542
11,491
Gross carrying amount
2,345
2,590
leased products
3,041
4,807
Work in progress, unbilled contracts
1,373
1,286
Allowances for impairment of stage 2 -
Receivables from companies
simplified procedure
-24
-26
Raw materials and supplies
1,674
3,421
1,620
due between three and four years
Finance leases are analysed as follows:
in € million
due within one year
26 FINANCIAL ASSETS
31.12.2020
31.12.2019*
Financial assets comprise:
6,970
6,918
due between one and two years
due between two and three years
6,293
6,761
in € million
31.12.2020
31.12.2019
5,190
5,412
The estimated fair value of vehicles held as collateral
for credit-impaired receivables at the end of the reporting
period totalled €517 million (2019: €541 million). The
carrying amount of assets held as collateral and taken
back as a result of payment default amounted to €33 mil-
lion (2019: €39 million).
Marketable securities and
Impairment allowances include €95 million (2019:
€74 million) on credit-impaired receivables relating to
finance leases.
Notes to the Group Financial Statements
31
1
-8
Other changes
44
-24
24
44
Impairment allowances at 31 December 2019
361
209
12
12
517
1,099
BMW Group
Report 2020
Group Financial Statements
KK 226
due between three and four years
3,695
3,725
6,426
6,384
Financial assets
7,752
7,325
due between one and two years
5,809
6,263
thereof non-current
2,644
1,370
due between two and three years
4,770
5,006
thereof current
5,108
5,955
due within one year
260
199
Other
investment funds
4,226
5,391
due between four and five years
558
479
Derivative instruments
3,256
3,395
Advance payments to suppliers
48
32
Loans to third parties
71
54
Gross investment in finance leases
22,754
23,327
due later than five years
503
accordance with IFRS 9 developed as follows:
Receivables from subsidiaries
36.4%
33.7%
Non-current financial liabilities
67,390
70,647
Current financial liabilities
38,986
46,093
Total financial liabilities
106,376
116,740
Proportion of total capital
Total capital
63.6%
66.3%
167,267
176,064
Equity attributable to shareholders of BMW AG
increased during the financial year by 2.6%, primarily
reflecting the increase in revenue reserves.
Proportion of total capital
BMW Group
Report 2020
59,324
Equity attributable to shareholders
of BMW AG
Revenue reserves
Revenue reserves comprise the non-distributed earn-
ings of companies consolidated in the Group Financial
Statements. In addition, remeasurements of the net
defined benefit obligation for pension plans are also
presented in revenue reserves.
It is proposed that the unappropriated profit of
BMW AG for the financial year 2020 amounting to
€1,253 million be utilised as follows:
Distribution of a dividend of €1.92 per share of
preferred stock (€109 million)
Distribution of a dividend of €1.90 per share of
common stock (€1,144 million)
The proposed distribution was not recognised as a
liability in the Group Financial Statements.
Accumulated other equity
Accumulated other equity comprises amounts recog-
nised directly in equity resulting from the translation of
the financial statements of foreign subsidiaries, changes
in the fair value of derivative financial instruments and
marketable securities, costs of hedging recognised direct-
ly in equity as well the related deferred taxes.
Capital management disclosures
The BMW Group's objectives with regard to capital
management are to safeguard over the long-term the
Group's ability to continue as a going concern and to
provide an adequate return to shareholders.
The capital structure is managed in order to meet
needs arising from changes in economic conditions and
the risks of the underlying assets.
The BMW Group is not subject to any unified exter-
nal minimum equity capital requirements. Within the
Financial Services segment, however, there are a number
of individual entities which are subject to equity capital
requirements of relevant regulatory banking authorities.
In order to manage its capital structure, the
BMW Group uses various instruments, including the
amount of dividends paid to shareholders and share
buybacks. Moreover, the BMW Group actively manages
debt capital, carrying out funding activities with a target
debt structure in mind. A key aspect in the selection of
financial instruments is the objective to achieve matching
maturities for the Group's financing requirements. In
order to reduce non-systematic risk, the BMW Group
uses a variety of financial instruments available on the
world's capital markets to achieve diversification.
The capital structure at the end of the reporting
period was as follows:
in € million
31.12.2020
31.12.2019
60,891
Group Financial Statements
Notes to the Group Financial Statements
32 PENSION PROVISIONS
1.33
1.38
2.19
2.15
Weighted duration of all pension obligations in years
21.6
21.3
19.8
19.2
15.9
16.0
The following mortality tables are applied in coun-
tries, in which the BMW Group has significant defined
benefit plans:
Germany
United Kingdom
Mortality Table 2018 G issued by Prof. K. Heubeck (with invalidity rates reduced by 70%)
S2PA tables and S3PA light tables
K = 230
Pension level trend
2.42
1.88
1.92
In the case of defined benefit plans, the BMW Group
is required to pay the benefits it has granted to pres-
ent and past employees. Defined benefit plans may be
covered by provisions or pension assets. In Germany,
pension obligations of the BMW Group are mostly cov-
ered by assets transferred to BMW Trust e. V., Munich, in
conjunction with a Contractual Trust Arrangement (CTA)
(funded plan). Funded plans also exist in the UK, the
USA, Switzerland, Belgium and Japan. In the meantime,
most of the defined benefit plans have been closed to
new entrants.
The assumptions stated below, which depend on the
economic situation in the relevant country, are used to
measure the defined benefit obligation of each pension
plan. In Germany, the so-called “pension entitlement
trend" (Festbetragstrend) remained at 2.0%. The follow-
ing weighted average values have been used for Germany,
the UK and other countries:
in %
Germany
United Kingdom
Other
Capital reserves include premiums arising from
the issue of shares and totalled €2,199 million (2019:
€2,161 million). The change amounting to €38 million
related to the share capital increase in conjunction with
the issue of shares of preferred stock to employees.
31.12.2020
31.12.2020
31.12.2019
31.12.2020
31.12.2019
Discount rate
0.55
1.00
1.19
31.12.2019
Capital reserves
K = 229
Notes to the Group Financial Statements
Collateral assets comprise mainly customary collater-
al (banking deposits) arising on the sale of asset-backed
financing instruments.
Out of the total amount recognised for inventories at
31 December 2020, inventories measured at net realisa-
ble value amounted to €899 million (2019: €973 million).
Write-downs to net realisable value in the financial year
2020 amounted to €59 million (2019: €126 million), while
reversals of write-downs amounted to €2 million (2019:
€22 million).
The expense recorded in conjunction with inventories
during the financial year 2020 amounted to €48,128 million
(2019: €53,524 million). The previous year's figures were
adjusted due to a change in the computational logic. The
adjusted amount disclosed no longer relates only to prod-
ucts sold, but also includes the impact of inter-segment
eliminations. Excluding inter-segment eliminations,
the prior-year figure amounted to €62,633 million. At
31 December 2020, the carrying amounts of inventories
expected to be realised after more than twelve months
amount to €359 million (2019: €445 million).
BMW Group
Group Financial Statements
Report 2020
Notes to the Group Financial Statements
Impairment allowances on trade receivables in
-40
in € million
31 EQUITY
2020
2019
Number of shares issued
Preferred stock
KK 228
Common stock
1,325
11,614
9,110
thereof current
1,216
546
308
Inventories
14,896
15,891
Collateral assets
454
413
Balance at 1 January
Prepaid expenses
396
Sundry other assets
1,246
1,353
Other assets
10,326
12,939
thereof non-current
364
632
72
2020
Shares issued/in circulation at 31 December
57,689,304
56,126,904
744,447
4,047
56,867,304
601,995,196
601,995,196
601,995,196
601,995,196
In the case of trade receivables, collateral is generally
held in the form of vehicle documents and bank guar-
antees so that the risk of bad debt loss is very limited.
Expenses for impairment losses and income from
the reversal of impairment losses is not significant
and is therefore not reported separately in the income
statement.
All Company stock is issued to bearer and each share
has a par value of €1.00. Preferred stock, to which no
voting rights are attached, bear an additional dividend
of €0.02 per share.
In 2020, a total of 822.124 shares of preferred stock
was sold to employees at a reduced price of €36.55
per share in conjunction with an Employee Share
Programme. These shares are entitled to receive
dividends for the first time with effect from the finan-
cial year 2021.
Issued share capital increased by €0.8 million as a
result of the issue to employees of 822.000 new shares
of non-voting preferred stock. BMW AG is authorised up
to 15 May 2024 to issue 5 million shares of non-voting
preferred stock amounting to nominal €5.0 million. At
the end of the reporting period, 3.4 million of these
amounting to nominal €3.4 million remained available
for issue.
In addition, 124 previously issued shares of preferred
stock were acquired and re-issued to employees.
BMW Group
Group Financial Statements
Report 2020
72
47
822,124
124
Less: shares repurchased and re-issued
2019
2020
2019
Allocated (+)
16
30
Reversed (-)
-36
54
-7
56,867,304
Utilised
-1
-7
Shares issued in conjunction with Employee Share Programme
Exchange rate impact and other changes
Balance at 31 December
4
2
Shares issued/in circulation at 1 January
Changes in risk parameters
-26
-133
-48
-24
-37
-1,805
-701
-383
206
1,947
2,560
169
-24
-1,805
-749
-383
206
1,947
2,560
-5
-8
-28
-37
6
-14
1
in € million
Impairment allowances on receivables from sales
financing in accordance with IFRS 9, which only arise
within the Financial Services segment, developed as
follows:
Receivables from sales financing comprise the
following:
25 RECEIVABLES FROM SALES FINANCING
Notes to the Group Financial Statements
Report 2020
Group Financial Statements
BMW Group
1,284
10
379
-37
-1,788
-830
-382
216
1,933
2,729
17
-81
-24
654
822
1
|<<=224
2020
20191
YOUR NOW
2020
2019
2020
2019
THERE
IONITY
BMW Brilliance
2 Including dividends received in the amount of €1,020 million (2019: €643 million).
1 Prior year's figures adjusted.
Group dividend income²
Total comprehensive income
Other comprehensive income
thereof from discontinued operations
thereof from continuing operations
Profit/loss after tax
Income taxes
2020
20191
23,913
707
21,910
651
1
23
3
5
5
84
80
-29
-43
-1,349
-693
10
19
150
127
1
8
424
234
2,374
3,174
31.12.2020
Interest expense
31.12.2019
K = 225
Stage 3
Stage 2
Stage 1
in € million
1,639
643
39
474
483
General
Impairment allowances at 31 December 2020
24
27
75
69
Other changes
176
49
1
66
195
60
Simplified
Impairment allowances at 1 January 2019
144
175
-24
-6
Reclassification to Stage 3
74
-16
107
-17
Total
Reclassification to Stage 2
-1
-13
2
Reclassification to Stage 1
1,032
482
12
175
363
-12
Changes in risk parameters
-106
-90
-9
-4
-6
1
Reclassification to Stage 1
71,104
63,584
1,099
517
Finance lease receivables
12
361
Impairment allowances at 1 January 2020
Credit financing for retail customers
and dealerships*
Total
Simplified
General
Stage 3
Stage 2
Stage 1
209
20,693
21,333
Reclassification to Stage 2
-14
-1
Write-off of receivables
1
-33
21
12
Derecognition and origination of receivables
* Figure contains Operating leases.
160
195
-30
-4
Reclassification to Stage 3
92,437
84,277
Receivables from sales financing
123
-15
153
-15
in € million
Interest income
Profit/loss before financial result
Scheduled depreciation
in € million
Financial information relating to equity accounted
investments is summarised in the following tables (from
a 100% perspective):
Notes to the Group Financial Statements
Report 2020
Group Financial Statements
BMW Group
The spread of the coronavirus also gave rise to an in-
dication of possible impairment from the BMW Group's
perspective. The impairment test was based on HERE'S
current business plan, which already incorporates
its lowered expectations in the wake of the coronavirus
pandemic. The value in use was determined on the basis
of a present value computation derived from the revised
business plan. A pre-tax discount rate of 18.5% was
applied. Following the impairment test, an impairment
loss of €27 million was recognised in the BMW Group
Financial Statements and included in the result on in-
vestments within other financial result.
In December 2019, it was announced that Mitsubishi
Corporation (MC) and Nippon Telegraph and Telephone
Corporation (NTT) would jointly acquire a 30% stake
in HERE. This acquisition was completed in May 2020
following the receipt of approval from the antitrust au-
thorities. The sale of the shares gave rise to a positive im-
pact of €105 million which is reported within the result
from equity accounted investments. In addition, share
capital reductions were carried out at the level of THERE
in June and September 2020, resulting in €197 million
being returned to the BMW Group.
Together with AUDI AG, Daimler AG and other com-
panies, the BMW Group holds shares in THERE. HERE
International B.V. (HERE) is an associated company of
THERE. HERE's digital maps are laying the foundations
for the next generation of mobility and location-based
services, providing the basis for new assistance systems
and, ultimately, fully automated driving.
2020
THERE
-
IONITY
With effect from 31 January 2019, the BMW Group
completed the merger of several mobility services
companies under the name YOUR NOW. The at-equity
loss reported for YOUR NOW Holding GmbH for 2020
amounted to €349 million (2019: loss of €662 million).
This loss includes impairment losses amounting to
€113 million (2019: loss of €277 million), recorded at the
level of YOUR NOW Holding GmbH. The impairment
losses arose in light of the fact that - with respect to its
impact on the BMW Group's investments accounted for
using the equity method – the spread of the coronavirus
gave rise to an indication of possible impairment, both
at the level of the BMW Group and at the level of YOUR
NOW Holding GmbH. The test only resulted in the need
to recognise an impairment loss at the level of YOUR
NOW Holding GmbH. In the previous year, impairment
losses amounting to €240 million were also recognised
in the BMW Group Financial Statements on the carrying
amount of individual YOUR NOW companies. These
impairment losses were reported in the result on invest-
ments within other financial result.
YOUR NOW
The BMW Group intends to increase its stake in
the BMW Brilliance joint venture from 50% to 75%. On
11 October 2018, the BMW Group signed an agreement
with its joint venture partner, a wholly owned subsidiary
of Brilliance China Automotive Holdings Ltd. (CBA), to
acquire an additional 25% shareholding in BMW Bril-
liance. The two partners agreed on a purchase price
of an equivalent of €3.6 billion. The contractual term
of the joint venture, which would currently expire in
2028, is to be extended to 2040 as part of the agreement.
The prerequisite for the extension is the acquisition of
the additional shares as agreed. The agreement was
approved at the CBA shareholders' meeting on 18 Jan-
uary 2019 and remains subject to the approval of the
relevant authorities. The transaction is scheduled to
close in 2022. The closing will result in BMW Brilliance
being fully consolidated in the BMW Group Financial
Statements and is expected to result in the recognition of
a significant valuation gain in the financial year in which
the transaction closes.
BMW Brilliance produces BMW brand models mainly
for the Chinese market and also has engine manufactur-
ing facilities, which supply the joint venture's two plants
with petrol engines.
BMW Brilliance Automotive Ltd.
Investments accounted for using the equity method
comprise the joint venture BMW Brilliance Automotive Ltd.
(BMW Brilliance), Shenyang, the joint venture YOUR
NOW Holding GmbH, Munich, the joint venture IONITY
Holding GmbH & Co. KG (IONITY), Munich, and the
interest in the associated company THERE Holding B. V.
(THERE), Rijswijk.
24 INVESTMENTS ACCOUNTED FOR USING
THE EQUITY METHOD
Together with Daimler AG, Stuttgart (Daimler AG),
the Ford Motor Company, the Volkswagen Group, Kia
Motors Corporation and Hyundai Motor Corporation,
the BMW Group operates the joint venture IONITY
Holding GmbH & Co. KG, whereby each of the parties
has an equal shareholding. The entry of Kia Motors
Corporation and Hyundai Motor Corporation was com-
pleted in October 2020. Since then, the BMW Group
has held a 20% stake in IONITY. IONITY's business
model envisages the construction and operation of
high-performance charging stations for battery electric
vehicles in Europe.
K = 222
BMW Brilliance
2019
Current assets
175
244
1,610
945
1,131
1,190
7,248
7,292
THERE
Non-current assets
20191
IONITY
KK 223
2020
20191
YOUR NOW
2020
2019
2020
DISCLOSURES RELATING TO THE BALANCE SHEET
Notes to the Group Financial Statements
Group Financial Statements
BMW Group
Report 2020
Right-of-use assets arising from leases of land and
buildings relate primarily to logistics and office prem-
ises and, to a lesser extent, to selling and production
premises. In order to secure these premises and, in the
interests of flexibility, the property rental agreements
concerned often contain extension and termination
options.
As in the previous year, no financing costs were
recognised as a cost component of property, plant and
equipment in 2020.
No impairment losses were recognised in 2020, as in
the previous year.
As in the previous year, no financing costs were
recognised as a cost component of intangible assets
in 2020.
As in the previous year, there was no requirement to
recognise impairment losses or reversals of impairment
losses on intangible assets in 2020.
Other intangible assets include a brand-name right
amounting to €40 million (2019: €43 million) which is
allocated to the Automotive segment and is not subject
to scheduled amortisation since its useful life is deemed
to be indefinite. The asset is subject to a limited right
of ownership. The €3 million decrease in the carrying
amount is entirely due to currency factors. Intangible as-
sets also include goodwill of €33 million (2019: €33 mil-
lion) allocated to the Automotive cash-generating unit
(CGU) and goodwill of €346 million (2019: €347 million)
allocated to the Financial Services CGU.
Intangible assets mainly comprise capitalised
development costs on vehicle, module and architecture
projects as well as subsidies for tool costs, licences,
purchased development projects, emission allowances,
software and purchased customer lists.
K = 221
23 LEASED PRODUCTS
Minimum lease payments of non-cancellable ope-
rating leases amounting to €20,872 million (2019:
€20,894 million) fall due as follows:
22 PROPERTY, PLANT AND EQUIPMENT (INCLUDING
RIGHT-OF-USE ASSETS ARISING FROM LEASES)
Notes to the Group Financial Statements
Group Financial Statements
BMW Group
Report 2020
1
-15
-23
Write-off of receivables
-2
-17
21 INTANGIBLE ASSETS
in € million
31.12.2020
31.12.2019
Impairment losses amounting to €312 million (2019:
€198 million) were recognised on leased products in
2020 as a consequence of changes in residual value
expectations. Income from the reversal of impairment
losses amounted to €110 million (2019: €74 million).
20,894
20,872
Minimum lease payments
25
35
later than five years
225
275
1,073
1,534
between three and four years
between four and five years
3,278
3,416
between two and three years
6,489
6,327
between one and two years
9,804
9,285
within one year
thereof cash and cash equivalents
9,859
7,381
24
2 Including shareholder impairment.
1 Prior year's figures adjusted.
Carrying amount
Eliminations
Group's interest in net assets
205
244
2,073
1,226
3,694
1,597
5,293
7,388
Net assets
40
55
653
486
1
9,336
1,214
2,646
3352
475
Revenues
DISCLOSURES RELATING TO THE INCOME STATEMENT
in € million
Notes to the Group Financial Statements
Group Financial Statements
BMW Group
Report 2020
51
554
49
987
591
475
3352
1,686
2,610
-960
-1,084
51
49
987
591
9,763
-152
Provisions and liabilities
299
2,073
1,226
1,597
1,214
5,293
7,388
Equity
50
17
244
818
1
24
2,937
5,137
70
55
1,116
767
467
341
205
Non-current financial liabilities, provisions and liabilities
1,546
2,726
1,712
1,598
1,214
14,629
17,151
Assets
RECONCILIATION OF AGGREGATED FINANCIAL INFORMATION
30
42
469
373
1
7,978
8,217
Current financial liabilities, provisions and liabilities
10
13
184
113
1,358
245
17
Derecognition and origination of receivables
-524
Liabilities from customer deposits (banking)
12,735
3,709
22
16,466
11,216
3,414
27
14,657
Liabilities to banks
4,578
19,549
3,159
9,037
7,903
2,204
1,329
11,436
Lease liabilities
Derivative instruments
492
1,181
838
2,511
1,300
11,597
7,952
18,819
31.12.2020
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
Total
Maturity within
one year
KK 238
31.12.2019
Maturity between
one and five years
Maturity later
than five years
Total
Bonds
12,642
32,001
12,022
56,665
14,077
35,801
12,287
62,165
Asset-backed financing transactions
6,863
11,956
544
in € million
1,363
2,895
15,111
116,740
Planned future cash outflows from variable lease
payments, which are not taken into account in the
measurement of lease liabilities, are expected to amount
to €57 million (2019: €56 million).
Similarly, potential future cash outflows amounting
to €1,252 million (2019: €1,393 million) (undiscounted)
have not been taken into account in the measurement
of lease liabilities as it is not reasonably certain that the
leases will be renewed (or not terminated). These cash
outflows relate to periods of up to 74 years (2019: up to
59 years).
BMW Group
Group Financial Statements
Report 2020
Notes to the Group Financial Statements
Liabilities related to financing activities can be rec-
onciled as follows:
in € million
as of
1.1.2020
55,536
Cash inflows/
outflows
the acquisition or
disposal of companies
Changes due to
exchange rate factors
KK 239
Changes
in fair values
Other changes
31.12.2020
Bonds
Asset-backed financing transactions
62,165
-4,306
Changes due to
46,093
106,376
14,619
593
517
38
1,148
1,149
886
61
2,096
Commercial paper
Other
Financial liabilities
550
550
2,615
2,615
533
248
399
1,180
637
271
419
1,327
38,986
52,771
988
-1,972
Financial liabilities of the BMW Group comprise the
following:
Notes to the Group Financial Statements
0.8
200
0.8
Pension entitlement trend
decrease of 0.25%
-210
-0.8
-192
-0.8
In the UK, the sensitivity analysis for the pension
level trend also takes account of restrictions due to caps
and floors.
K=236
218
BMW Group
Report 2020
Notes to the Group Financial Statements
33 OTHER PROVISIONS
Other provisions changed during the year as follows:
in € million
K =237
as of
1.1.2020*
Translation
differences
Additions
Reversal of
discounting
thereof due
Utilised
Group Financial Statements
increase of 0.25%
-4.4
-1,097
decrease of 0.75%
4,585
17.2
4,290
17.4
increase of 0.25%
766
2.9
905
3.7
Pension level trend
decrease of 0.25%
-721
-2.7
-810
-3.3
increase of 1 year
1,078
4.1
1,155
4.7
Average life expectancy
decrease of 1 year
-1,081
-4.1
Reversed
35 FINANCIAL LIABILITIES
31.12.2020
Statutory and non-statutory warranty obligations, product guarantees
1,288
-1,399
-171
1,516
1,486
Other provisions
* Prior year's figures adjusted.
13,209
-433
7,232
186
-94
-5,549
13,982
7,494
Depending on when claims occur, it is possible that
the BMW Group may be called upon to fulfil the warranty
or guarantee obligations over the whole period of the
warranty or guarantee. Warranty provisions include
amounts recognised in connection with the exhaust
recirculation cooler. Expected reimbursement claims at
31 December 2020 amounted to €1,046 million (2019:
€1,086 million) and are disclosed within other assets (see
✓ note 28).
gas
Provisions for obligations for personnel and social
expenses comprise mainly obligations relating to per-
formance-related remuneration components, workforce
measures as well as pre-retirement part-time working
arrangements and long-service awards.
The provisions for other obligations cover numerous
identifiable specific risks and uncertain obligations, in
particular for litigation and liability risks, including the
provision recognised in the previous year for the ongoing
EU Commission's antitrust proceedings. Further infor-
mation is provided in ✓ note 10.
Other obligations for ongoing operational expenses
include in particular expected payments for bonuses and
other price deductions.
34 INCOME TAX LIABILITIES
Current income tax liabilities totalling €747 million
(2019: €963 million) include €40 million (2019: €89 mil-
lion) which are expected to be settled after more
than twelve months. Liabilities may be settled earlier
than this depending on the timing of the underlying
proceedings.
BMW Group
Report 2020
Group Financial Statements
-663
1,892
Other obligations for ongoing operational expenses
2,794
5,550
-277
3,178
158
-2,354
-124
6,131
1,731
Obligations for personnel and social expenses
2,496
-19
1,405
19
-1,288
-31
2,582
1,483
Other obligations
3,271
-43
1,361
9
-508
-337
3,753
within one year
766
12
56,665
CNY 13,500 million
2.3
3.6
fixed
HKD 2,352 million
5.8
2.6
fixed
USD 2,050 million
5.3
2.5
fixed
fixed
3.8
1.9
fixed
GBP 850 million
6.0
1.3
fixed
AUD 273 million
10.0
3.2
BMW US Capital, LLC
NOK 1,500 million
0.8
6.5
EUR 23,800 million
Weighted average
maturity period
(in years)
Weighted average
nominal interest rate
(in %)
variable
EUR 3,350 million
2.1
0.0
BMW Finance N.V.
variable
NOK 1,730 million
3.0
1.9
variable
SEK 1,500 million
4.0
0.5
variable
USD 500 million
3.0
1.0
fixed
JPY 24,500 million
5.3
0.5
fixed
variable
K = 240
USD 2,158 million
0.7
fixed
CHF 600 million
6.8
0.5
Other
fixed
CNY 6,000 million
3.0
4.8
fixed
CAD 1,600 million
3.3
3.2
Issuer
The following details apply to commercial paper:
BMW Finance N.V.
Issue volume
in relevant currency
(ISO-Code)
Weighted average
maturity period
(in days)
Weighted average
nominal interest rate
(in %)
EUR 550 million
71
-0.2
2.4
10.0
NOK 1,000 million
fixed
fixed
USD 16,255 million
6.4
3.2
fixed
EUR 2,500 million
7.6
0.9
fixed
AUD 30 million
5.0
3.0
BMW International Investment B.V.
variable
SEK 500 million
3.0
0.7
variable
GBP 250 million
2.2
0.1
fixed
GBP 1,800 million
4.1
1.3
3.5
in relevant currency
(ISO-Code)
Issue volume
Interest
-48
740
Other (excluding interest payable)
864
-78
-34
752
Liabilities relating to financing activities
114,477
-6,336
-3,573
492
787
105,540
in € million
as of
1.1.2019
Cash inflows/
outflows
Changes due to
the acquisition or
disposal of companies
Changes due to
Changes
exchange rate factors
in fair values
185
296
Financial liabilities towards companies in which an investment is held
550
19,549
-82
-648
18,819
Liabilities from customer deposits (banking)
14,657
2,329
-520
16,466
Liabilities to banks
11,436
-2,172
-248
21
9,037
Lease liabilities
2,895
-494
-63
173
2,511
Commercial paper
2,615
-2,025
-40
Other changes
31.12.2019
Bonds
Asset-backed financing transactions
134
1
2,615
Financial liabilities towards companies in which an investment is held
529
-233
296
Other (excluding interest payable)
626
202
36
864
Liabilities relating to financing activities
101,976
7,322
1,059
903
3,217
114,477
BMW Group
Report 2020
Issuer
Group Financial Statements
Notes to the Group Financial Statements
Bonds comprise:
2,480
Discount rate
Commercial paper
3,224
53,346
7,342
618
859
62,165
17,335
1,869
345
19,549
Liabilities from customer deposits (banking)
14,359
202
96
14,657
Liabilities to banks
13,196
-1,754
-43
44
-7
11,436
Lease liabilities
105
-440
6
2,895
84
-13.6
-13.2
26,587
-22,910
3,677
3,680
3,693
-13
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
in € million
Defined
-36
benefit obligation
Total
K = 233
Effect of limitation
of the net defined
benefit asset to the
asset ceiling
Net defined
benefit liability
1 January 2019
EXPENSE/INCOME
Current service cost
21,247
-18,937
Plan assets
-36
582
-618
15,535
Present value of defined benefit obligations
31.12.2019
31.12.2020
31.12.2019
31.12.2020
31.12.2019
31.12.2020
31.12.2019
31.12.2020
Total
Other
United Kingdom
Germany
K = 231
in € million
Based on the measurement principles contained in
IAS 19, the following balance sheet carrying amounts
apply to the Group's pension plans:
Notes to the Group Financial Statements
Report 2020
Group Financial Statements
BMW Group
-645
639
-6
-6
2,310
14,022
3
Interest expense (+)/income (−)
-4
-1
Gains (-) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the asset ceiling
Transfers to fund
Employee contributions
Pensions and other benefits paid
Translation differences and other changes
31 December 2019
thereof pension provisions
thereof assets
-3
-527
-527
78
-78
-1,104
1,103
-1
-1
473
24,652
-455
18
18
-527
-4
-4
-3
Past service cost
473
473
473
485
-444
41
41
-191
-191
-191
-3
-3
-3
Gains (-) or losses (+) arising from settlements
REMEASUREMENTS
Gains (-) or losses (+) on plan assets, excluding amounts included in interest income
-2,002
-2,002
Gains (-) or losses (+) arising from changes in financial assumptions
3,201
3,201
-2,002
3,201
Gains (-) or losses (+) arising from changes in demographic assumptions
-3
2,313
-21,340
9,944
1,108
-21,340
24,652
Total
Plan assets
benefit obligation
Defined
thereof assets
thereof pension provisions
31 December 2020
Translation differences and other changes
Pensions and other benefits paid
3,312
Employee contributions
Changes in the limitation of the net defined benefit asset to the asset ceiling
Gains (-) or losses (+) arising from experience adjustments
Gains (-) or losses (+) arising from changes in demographic assumptions
Gains (-) or losses (+) arising from changes in financial assumptions
Gains (-) or losses (+) on plan assets, excluding amounts included in interest income
REMEASUREMENTS
Gains (-) or losses (+) arising from settlements
Past service cost
Interest expense (+)/income (-)
Current service cost
EXPENSE/INCOME
Transfers to fund
488
488
337
-524
-524
1
-144
-144
-144
-239
-239
2,726
2,726
2,726
-239
-1,880
-1,880
-1,880
34
-54
488
3,314
2
Net defined
benefit liability
Effect of limitation
of the net defined
benefit asset to the
asset ceiling
KK 232
-54
-54
34
-303
1 January 2020
9,503
in € million
Notes to the Group Financial Statements
246
241
366
355
2,702
3,084
Carrying amounts at 31 December
2
3
2
3
3,680
Effect of limiting net defined benefit asset to asset ceiling
22,910
883
870
9,137
9,589
11,320
12,451
Fair value of plan assets
24,652
26,587
1,127
21,340
3,314
thereof pension provisions
thereof assets
Report 2020
-84
BMW Group
The defined benefit pension plans are administered
by BMW Pension Trustees Limited, Farnborough, and
BMW (UK) Trustees Limited, Farnborough, both trustee
companies which act independently of the BMW Group.
BMW (UK) Trustees Limited, Farnborough, is represent-
ed by ten trustees and BMW Pension Trustees Limited,
Farnborough, by five trustees. A minimum of one third
of the trustees must be elected by plan participants. The
trustees represent the interests of plan participants and
decide on investment strategies. Funding contributions
to the funds are determined in agreement with the
BMW Group.
Defined benefit plans exist in the United Kingdom
which are closed for all plan participants. Vested benefits
remain in place. New benefits are covered by contribu-
tions made to a defined contribution plan.
United Kingdom
The assets of the German pension plans are invested
by BMW Trust e. V., Munich, in accordance with a CTA.
The representative bodies of this entity are the Board
of Directors and the Members' General Meeting. BMW
Trust e. V., Munich, currently has seven members and
three members of the Board of Directors elected by the
Members' General Meeting. The Board of Directors is
responsible for investments, drawing up and deciding on
investment guidelines as well as monitoring compliance
with those guidelines. The members of the association can
be employees, employee representatives, senior executives
and members of the Board of Management of BMW AG.
An ordinary Members' General Meeting takes place once
every calendar year, and deals with a range of matters, in-
cluding receiving and approving the association's annual
report, ratifying the activities of the Board of Directors
and adopting changes to the association's statutes.
by multiplying a fixed amount by the number of years
of service.
The defined benefit plans have been closed to new
entrants since 2014. Defined contribution plans with a
minimum rate of return, comprising employer- and em-
ployee-funded components, continue to exist. The fact
that the plan involves a minimum rate of return means
that the defined contribution entitlements are classified
in accordance with IAS 19 as defined benefit plans. In the
case of defined benefit plans involving the payment of a
pension, the amount of benefits to be paid is determined
Both employer- and employee-funded benefit plans
exist in Germany. Benefits paid in conjunction with these
plans comprise old-age retirement pensions as well as in-
validity and surviving dependants' benefits. The level of
ongoing pension payments is adjusted in accordance with
§16 of the Company Pensions Act (Betriebsrentengesetz).
Germany
The most significant of the BMW Group's pension
plans are described below.
-21
-13
-16
-13
-5
3,335
3,693
262
254
371
355
2,702
3,084
The change in the net liability for defined benefit pension
plans can be derived as follows:
3,312
2
3,314
104
1,177
1,033
Total without quoted market price
2,831
2,667
2,216
1,831
137
137
5,184
113
4,635
12,451
11,320
9,589
9,137
870
883
22,910
21,340
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
31 December
219
244
710
thereof non-investment grade
Real estate
428
394
656
716
1,084
1,110
Cash and cash equivalents
159
20
1
159
21
Absolute return funds
645
632
643
640
23
31
1,311
1,303
Other
820
In the financial year 2021, disbursements out of
the plan assets are expected to exceed the employer's
contributions to plan assets by €85 million. Plan assets
of the BMW Group include own transferable financial
instruments amounting to €1 million (2019: €8 million).
1
The BMW Group is exposed to risks arising both from
defined benefit plans and defined contribution plans with
a minimum return guarantee. The discount rates used to
calculate pension obligations are subject to market fluctu-
ation and therefore influence the level of the obligations.
Furthermore, changes in other actuarial parameters, such
as expected rates of inflation, also have an impact on pen-
sion obligations. In order to reduce currency exposures, a
substantial portion of plan assets is either invested in the
The defined benefit obligation relates to current em-
ployees, pensioners and former employees with vested
benefits as follows:
Defined benefit obligation
100.0
100.0
100.0
100.0
100.0
100.0
<=235
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
6.8
The sensitivity analysis provided below shows the
extent to which changes in individual factors - inde-
pendently of each other could influence the defined
benefit obligation at the end of the reporting period.
It is only possible to aggregate sensitivities to a
limited extent. Since the change in obligation follows a
non-linear pattern, estimates made on the basis of the
specified sensitivities are only possible with this restric-
tion. The calculation of sensitivities using ranges other
than those specified could result in a disproportional
change in the defined benefit obligation.
in € million
31.12.2020
Change in defined benefit obligation
in %
in € million
31.12.2019
in %
increase of 0.75%
-3,514
-
7.2
54.5
57.8
in %
Germany
United Kingdom
Other
31.12.2020
31.12.2019
31.12.2020
31.12.2019
31.12.2020
31.12.2019
Current employees
66.2
67.6
62.9
64.3
Pensioners
27.4
27.4
42.2
45.5
29.9
29.0
Former employees with vested benefits
6.4
5.0
same currency as the underlying plan or hedged by means
of currency derivatives. As part of the internal report-
ing procedures and for internal management purposes,
financial risks relating to the pension plans are reported
using a value-at-risk approach by reference to the pension
deficit. The investment strategy is also subject to regular
review together with external consultants, with the aim
of ensuring that investments are structured to match the
timing of pension payments and the expected develop-
ment of pension obligations. In this way, fluctuations in
pension funding shortfalls are reduced.
1
1
851
584
74
91
2,588
2,705
Debt instruments
7,326
6,513
6,940
6,648
632
348
592
13,754
thereof investment grade
5,041
4,275
6,316
5,891
625
585
11,982
10,752
-
14,898
2,031
2,166
Equity instruments
3,335
-21
In 2020, employment contract termination agree-
ments were agreed with employees, resulting in the de-
parture of the persons concerned and to vested pension
benefits. Past service cost resulted mainly from differing
assumptions used to calculate statutory pension entitle-
ments on the one hand and for the ongoing accounting
for active employees on the other.
Past service cost in the previous year resulted mainly
from the complete closure of two defined benefit plans
in the USA.
Depending on the cash flow profile and risk structure
of the pension obligations involved, plan assets relating
to defined benefit plans are invested in a diversified
portfolio.
BMW Group
Group Financial Statements
Report 2020
Notes to the Group Financial Statements
Plan assets in Germany, the UK and other countries
comprised the following:
in € million
2020
Germany
2019
2020
United Kingdom
Other
KK = 234
Total
2019
2020
2019
2020
2019
COMPONENTS OF PLAN ASSETS
thereof mixed funds (funds without a rating)
thereof non-investment grade
2,285
2,238
7,373
7,306
733
746
17,726
16,705
Debt instruments
779
911
673
256
1
1,453
1,168
thereof investment grade
324
316
324
316
thereof mixed funds (funds without a rating)
455
595
673
256
1,128
8,653
-3,352
9,620
124
624
757
7
7
2,916
3,002
19
19
19
19
Real estate funds
85
74
2
29
87
103
Money market funds
Absolute return funds
Other
128
109
6
15
134
Total with quoted market price
Group Financial Statements
31
Notes to the Group Financial Statements
2,641
Collateral assets
454
413
Remaining other assets
1,504
5,774
1,519
8,058
Total
82,939
3,245
2,693
30,048
2,048
90,342
2,045
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
in € million
LIABILITIES
Financial liabilities
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset-backed financing transactions
Derivative instruments
Cash flow hedges
3,889
Fair value hedges
Receivables from companies in which an investment is held
546
3,889
1,058
40
14
260
915
11,574
462
2,518
Cash flow hedges
851
Fair value hedges
1,992
Other derivative instruments
308
413
115
3,245
866
Loans to third parties
49
22
Other
Cash and cash equivalents
Trade receivables
199
12,622
2,298
Other assets
Receivables from subsidiaries
Marketable securities and investment funds
444
Other derivative instruments
Other
Payables to subsidiaries
180
192
Payables to other companies in which an investment is held
814
519
Remaining other liabilities*
5,250
14,943
4,917
17,438
Total
117,605
788
2,895
17,814
1,020
21,409
* Prior year's figures adjusted.
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
Disclosures relating to financial instruments measured at
amortised cost
The following table shows the fair values and carry-
ing amounts of financial assets and liabilities that are
measured at amortised cost and whose carrying amounts
differ from their fair value.
The fair values are generally determined using the
discounted cash flow method, taking into account the
relevant risk of default. For the purposes of fair value
measurement using the discounted cash flow method,
expected future cash flows are discounted on the basis
of up-to-date interest curves observable on the market.
The fair values of receivables from sales financing
are measured using the discounted cash flow method,
taking into account customer-specific credit risk. In view
of the fact that these allowances are calculated in part on
the basis of internal information, receivables from sales
financing are allocated to Level 3 in the level hierarchy in
accordance with IFRS 13. The fair values of the financial
assets shown in the table relate to financial institutions
and are also measured using the discounted cash flow
method, taking into account the risk of default. Given
that these financial institutions all have excellent credit
ratings, the risk of default is low and can be observed on
the market. The fair values of these items are therefore
allocated to Level 2.
In the case of financial liabilities, own credit risk is
also taken into account based on credit default swaps
available on the market, so that the fair values of these
items are also allocated to Level 2.
For all other financial instruments not listed here
that are measured at amortised cost, the carrying amount
corresponds to the fair value. For this reason, they are
not presented separately.
31.12.2020
127,559
Lease liabilities
1,020
805
Trade payables
Other liabilities
31.12.2020
At fair value
through other
At amortised cost comprehensive income
At fair value
through profit or loss
Not assigned
to an IFRS 9 category
At fair value
through other
At amortised cost comprehensive income
56,665
9,037
16,466
550
18,819
1,180
271
8,644
11,436
14,657
2,615
19,549
112
248
788
2,511
1,327
10,182
At fair value
through profit or loss
KKK = 244
31.12.2019
Not assigned
to an IFRS 9 category
62,165
50
1,244
326
814
519
Payables to subsidiaries
Other advance payments received for orders
180
192
139
160
Social security
133
109
Sundry
Other liabilities
* Prior year's figures adjusted.
Payables to other companies in which an investment is held
1,550
21,187
23,066
Contract liabilities relate to obligations for service
and repair work as well as telematics services and
roadside assistance agreed to be part of the sale of a
vehicle (in some cases multi-component arrangements).
An amount of €2,604 million (2019: €2,255 million) was
released from contract liabilities in the financial
year and
recognised as revenues from contracts with customers.
Deferred income includes down payments received
on leases with customers as well as deferred grants.
Grants comprise mainly public sector funds to promote
regional structures and which have been invested in the
production plants in Brazil, China, Germany, Mexico,
Austria and South Africa amongst others. The grants
are partly subject to holding periods for the assets con-
cerned of up to five years and/or minimum employment
figures or minimum production figures. Grant income is
recognised in the income statement over the useful lives
of the assets to which it relates.
37 TRADE PAYABLES
K = 241
As in the previous year, trade payables are due within
one year.
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
K = 242
OTHER DISCLOSURES
38 CONTINGENT LIABILITIES AND OTHER FINANCIAL
COMMITMENTS
2,091
Contingent liabilities
983
Deposits received
89
2,590
2,345
145
60
40
23
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
36 OTHER LIABILITIES
Other liabilities comprise the following items:
in € million
31.12.2020
1,019
31.12.2019*
5,485
5,038
Refund liabilities for future leased products
Deferred income
Bonuses and sales aides
3,926
6,103
3,546
3,635
2,911
2,971
Other taxes
1,484
1,265
Contract liabilities
The following contingent liabilities existed at the
balance sheet date:
in € million
Investment subsidies
Group Financial Statements
39 FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments are
assigned to IFRS 9 categories in the following table.
in € million
ASSETS
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
31.12.2020
At fair value
through other
At fair value
Not assigned
BMW Group
Report 2020
At amortised cost comprehensive income
to an IFRS 9 category
At fair value
through other
At amortised cost comprehensive income
63,104
477
258
21,173
70,625
At fair value
through profit or loss
KK = 243
31.12.2019
Not assigned
to an IFRS 9 category
461
242
21,812
through profit or loss
2,146
2,787
Purchase commitments for
intangible assets
Litigation
Guarantees
Other
Contingent liabilities
31.12.2020
31.12.2019
77
105
284
139
43
46
1,067
618
1,292
1,087
Other contingent liabilities comprise mainly risks
relating to taxes and customs duties.
The BMW Group determines its best estimate of con-
tingent liabilities on the basis of the information available
at the date of preparation of the Group Financial State-
ments. This assessment may change over time and is
adjusted regularly on the basis of new information and
circumstances. A part of the risks is covered by insurance.
3,128
3,264
Purchase commitments for property,
plant and equipment
31.12.2019
31.12.2020
in € million
31.12.2019
In addition to liabilities, provisions and contingent
liabilities, the following commitments exist for the
BMW Group at the end of the reporting period:
On January 22, 2020, the U.S. Securities and Exchange
Commission (SEC) had opened an investigation into po-
tential violations of U.S. securities laws by BMW Group
relating to disclosures regarding BMW Group's unit sales
of new vehicles. This matter was settled on September
24, 2020 with the SEC, without admitting or denying the
allegations, and BMW Group consented to the entry of
an Order finding violations of the U.S. Securities Act
and agreed to pay a penalty of $18 million. Certain
BMW Group entities and their officers are defendants
in private securities litigation following the SEC Order.
Possible risks for the BMW Group cannot be quantified
at present. Further disclosures pursuant to IAS 37.86
cannot be provided at present.
and determination of a violation of the law, provided that
an agreement with BMW Japan on future-oriented meas-
ures can be reached. The discussions in that regard are
still ongoing. Any remaining risks for the BMW Group
can currently not be ruled out and foreseen in detail,
either in terms of their outcome or the amounts involved.
Further disclosures pursuant to IAS 37.86 cannot be
provided at present.
In September 2019, the Japan Fair Trade Commission
conducted a search of BMW Japan Corp. in connection
with its market practices in relation to dealerships. In
mid-December 2020, the authority signalled its principle
willingness to end the investigation without sanctions
Regulatory authorities have ordered the BMW Group
to recall various vehicle models in conjunction with air-
bags supplied by the Takata group of companies. Provi-
sion for the costs involved has been recognised within
warranty provisions. In addition to the risks already cov-
ered by warranty provisions, it cannot be ruled out that
further BMW Group vehicles will be affected by future
recall actions. Further disclosures pursuant to IAS 37.86
cannot be provided at present.
the investigation in the form of a provision measured
on the basis of the Statement of Objections, at the best
possible estimate (see also note 10 to the Group Financial
Statements for the financial year 2019). In relation to
these allegations, numerous class action lawsuits have
been brought in the USA and Canada as well as several
private lawsuits in South Korea. The class action law-
suits in the USA were dismissed in the first instance
in October 2020. The plaintiffs have appealed this
decision. Class action lawsuits in Canada and private
lawsuits in South Korea are still at an early stage. Further
civil lawsuits based on the allegations are possible going
forward. In addition, the Chinese State Administration
for Market Regulation opened antitrust proceedings
against BMW AG in March 2019, followed by the Korea
Fair Trade Commission in May 2020 and the Turkish
Competition Authority in July 2020. Possible risks for
the BMW Group cannot be currently foreseen, either in
terms of their outcome or the amounts involved. Further
disclosures pursuant to IAS 37.86 cannot be provided
at present.
The European Commission is currently conducting
an investigation in connection with antitrust allega-
tions against five German car manufacturers. The
BMW Group has provided for the potential outcome of
Other financial commitments
in € million
31,682
Carrying amount
-2
-31
397
22
3
-5
417
Unquoted equity
instruments
Convertible
bonds
Options on
unquoted equity
instruments
Derivative
instruments
Financial
Instruments
Level 3
265
3
-29
90
-38
-3
4
272
104
-41
33
34
5
5
355
14
5
374
14
BMW Group
Report 2020
85
-7
Disposals
Gains (+)/losses (-) recognised in accumulated other equity
Gains (+)/losses (-) recognised in the income statement
Currency translation differences
31 December 2020
in € million
1 January 2019
Additions
Disposals
Gains (+)/losses (-) recognised in accumulated other equity
Gains (+)/losses (-) recognised in the income statement
Currency translation differences
31 December 2019
Gains and losses recognised in the income statement
are reported within the line item “Other financial result".
Gains and losses recognised in the income statement
in the 2020 financial year included an unrealised net
positive amount of €84 million (2019: €32 million).
KK = 248
Options on
Unquoted equity
instruments
Convertible
bonds
85
unquoted equity
Derivative
instruments
Financial
Instruments
Level 3
355
14
5
73
17
-87
-7
374
90
2
-94
-7
instruments
Group Financial Statements
Notes to the Group Financial Statements
Offsetting of financial instruments
Financial instruments measured at fair value through profit or loss
310
-1,012
Financial assets measured at amortised cost
-1,050
160
Financial liabilities measured at amortised cost
-350
296
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
KK 250
7
Credit risk
Notwithstanding the existence of collateral accept-
ed, the carrying amount of financial assets (with the
exception of derivative financial instruments) generally
represents the maximum credit risk. In addition, the
credit risk is increased by additional unutilised loan com-
mitments in the dealership financing line of business.
Total dealership financing credit risk at the end of the
reporting period therefore amounted to €30,682 million
(2019: €31,943 million).
In the case of all relationships underlying non-
derivative financial instruments, in order to minimise
the credit risk and depending on the nature and amount
of exposure, collateral is required, credit information
and references obtained or historical data based on the
existing business relationship, in particular payment
behaviour, reviewed.
In the case of trade receivables, customers are regu-
larly assessed with regard to their credit risk. Depend-
ing on contractual status, necessary measures, such as
dunning procedures, are initiated in good time.
The credit risk relating to cash deposits and deriva-
tive financial instruments is minimised by the fact that
the Group only enters into such contracts with parties
of first-class credit standing.
Within the financial services business, items fi-
nanced for retail customers and dealerships (such as
vehicles, facilities and property) serve as first-ranking
collateral with a recoverable value. Security is also put
up by customers in the form of collateral asset pledges,
asset assignment and first-ranking mortgages, supple-
mented where appropriate by warranties and guarantees.
Items previously held as collateral that are subsequently
acquired relate mainly to vehicles. As a rule, these as-
sets can be converted into cash at short notice through
the dealership organisation. Creditworthiness testing
is an important aspect of the BMW Group's credit risk
management. Every borrower's creditworthiness is test-
ed for all credit financing and lease contracts entered
into by the BMW Group. In the case of retail customer
financing, creditworthiness is assessed using validated
scoring systems integrated in the acquisition process.
In the area of dealership financing, creditworthiness is
assessed by means of ongoing credit monitoring and
an internal rating system that takes account not only of
the material credit standing of the borrower, but also of
qualitative factors, such as past reliability in business
relations.
The credit risk on trade receivables is assessed mainly
on the basis of information relating to overdue amounts.
The gross carrying amounts of these receivables are allo-
cated in accordance with IFRS 9 to overdue ranges used
for management purposes as follows:
in € million
31.12.2020
31.12.2019
Not overdue
1-30 days overdue
31-60 days overdue
61-90 days overdue
More than 90 days overdue
Total
2,002
1,947
229
369
The BMW Group is exposed to counterparty credit
risks if contractual partners, for example a retail cus-
tomer or a dealership, are unable or only partially able
to meet their contractual obligations. Information on the
management of credit risk for receivables from finan-
cial services is provided in the Combined Management
Report (see section ✓ Report on Outlook, Risks and Opportunities).
Financial instruments measured at fair value through other comprehensive income
Total interest income arising on financial assets
measured at amortised cost relates mainly to the interest
income earned on credit financing and reported within
revenues. Total interest expense arising on financial
liabilities measured at amortised cost amounted to
€1.8 billion (2019: €1.9 billion).
Net gains and losses arising on financial assets meas-
ured at amortised cost comprise mainly exchange rate
gains/losses and impairment losses/reversals. Net gains
and losses arising on financial liabilities measured at am-
ortised cost comprise mainly exchange rate gains/losses
as well as fair value gains/losses on hedged items in
designated hedging relationships that are recognised in
the income statement.
Derivative financial instruments of the BMW Group
are subject to legally enforceable master netting agree-
ments or similar contracts. However, receivables and
payables relating to derivative financial instruments
are not netted due to non-fulfilment of the stipulated
criteria. Offsetting would have the following impact on
the carrying amounts of derivatives:
in € million
31.12.2020
Reported on
assets side
Reported on equity
and liabilities side
Reported on
assets side
Balance sheet amounts as reported
3,256
1,148
1,620
Gross amount of derivatives which can be offset in case of insolvency
Net amount after offsetting
Fair value
-790
-833
2,466
358
Net gains and losses arising on financial instruments
measured at fair value through profit and loss mainly
include results from the fair value measurement of stand-
alone derivatives, marketable securities and shares in
investment funds, as well as other financial assets.
Net gains and losses arising on financial instruments
measured at fair value through other comprehensive
income mainly relate to changes in the fair value of
marketable securities. Further details are provided in
the disclosures relating to the statement of comprehen-
sive income (✓ note 19). Total interest income arising on
financial assets measured at fair value through other
comprehensive income amounted to €37 million (2019:
€49 million) and total interest expense to €30 million
(2019: €41 million).
42
2019
2020
Reported on equity
and liabilities side
1 January 2020
Additions
31.12.2019
in € million
The following table shows the net gains and losses
arising on financial instruments in accordance with IFRS 9:
Gains and losses on financial instruments
Non-derivative financial assets and liabilities are only
offset if a legally enforceable right currently exists and it
is actually intended to offset the relevant amounts. No
financial assets and liabilities have been netted in the
BMW Group due to the fact that the necessary require-
ments for netting have not been met.
2,096
-833
1,263
787
KK = 249
in € million
-790
For selected derivatives, a complete set of data rele-
vant for valuation purposes is not available due to their
limited market maturity. In order to model forward curves,
data is collated and updated on the basis of regular bank
and trader inquiries. The valuation methodology applied
is in line with the general valuation principles for deriv-
atives used within the treasury management system of
the BMW Group. Changes in fair values resulting from
shifts in forward curves within a range of +/- 10% are not
material for the BMW Group.
11,436
K = 245
BMW Group
Group Financial Statements
Report 2020
Notes to the Group Financial Statements
Disclosures relating to financial instruments measured at
fair value
The carrying amounts of financial instruments
measured at fair value are allocated to the measurement
levels pursuant to IFRS 13 as described below.
in € million
Marketable securities, investment funds and
collateral assets
Other investments
Cash equivalents
Loans to third parties
12,071
Derivative instruments (assets)
Currency risks
Raw material market price risks
Other risks
Derivative instruments (liabilities)
Interest rate risks
Currency risks
Raw material market price risks
31.12.2020
Level hierarchy in accordance with IFRS 13
Level 1
Level 2
31.12.2019
Level hierarchy in accordance with IFRS 13
Level 3
Interest rate risks
9,037
9,209
14,657
The balance sheet carrying amount of Level 3 finan-
cial instruments developed as follows:
Fair value
Carrying amount
Receivables from sales financing - credit financing
65,326
63,104
73,699
Receivables from sales financing – finance and operating leases
23,116
21,173
22,741
70,625
21,812
Financial assets - Marketable securities and investment funds
Financial liabilities
116
115
446
444
14,739
16,466
16,599
19,549
18,819
18,818
Level 1
62,165
56,665
58,136
Liabilities to banks
Liabilities from customer deposits (banking)
Asset-backed financing transactions
Bonds
62,757
Level 2
19,659
3,608
K = 247
Financial instruments measured at fair value using
input factors not based on observable market prices are
allocated to Level 3. The fair values of these financial
instruments are shown in the following table:
in € million
31.12.2020
Fair value
31.12.2019
Fair value
355
Unquoted equity instruments
397
Convertible bonds
22
14
Options on unquoted equity instruments
3
5
Notes to the Group Financial Statements
5
-
-
Financial instruments allocated to Level 3 relate
mainly to investments in a private-equity fund. The
valuation of unquoted equity instruments is determined
primarily using the market-based approach. In particular,
the financing rounds that take place within the private
equity sector usually on a regular basis at intervals of
approximately 12 to 24 months – represent a significant
input factor for these purposes. In addition, the invest-
ment advisor provides the external fund manager with
relevant, investment-specific information on an ongoing
basis (at least quarterly). The latter subsequently assesses
the underlying individual companies in accordance with
the guidelines for International Private Equity and Ven-
ture Capital Valuations (IPEV).
As part of the process of analysing valuations, the
external fund manager reviews the investment-specific
milestones, including an analysis of financial, technical
and liquidity-specific performance indicators. Based on
this analysis, it is considered whether the price of the
most recent financing round is acceptable as a reasonable
market valuation, in particular for early-stage or growth-
phase investments. Key performance indicators used for
the
purpose of milestone analysis are highly dependent
on the business model underlying the investment; typical
technical key performance indicators relate to licenses
and patents held, the stage of technology development
such as evidence of feasibility and prototypes, market en-
tries, customer and user growth and appointments to key
management positions. Key financial performance indi-
cators used are revenues, EBITDA and the corresponding
growth rate and/or development of specific contribution
margins. Key liquidity-specific performance indicators
are cash on hand, cash burn rates and prospects for
future financing rounds.
Since the pricing of equity investments derived from
financing rounds is considered to be the key input factor
for the valuation, adjustments in valuation give rise to a
similar change in the equity instrument that is required
to be recorded with income statement effect.
In addition, the valuation of selected equity instru-
ments is based on the income approach. This involves
discounting cash flows on the basis of current business
cases using the weighted average cost of capital to
determine the fair value of the financial instrument.
Changes in fair values determined in connection with
adjustments to significant input factors are not material
for the BMW Group.
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
The convertible bonds that have been classified to
Level 3 are primarily used as instruments in advance of
future financing rounds relating to private equity invest-
ments. Valuations are therefore performed in accordance
with the International Private Equity and Venture Capital
Valuation (IPEV) guidelines.
Level 3
The exercise price for share options in such compa-
nies is generally low, verging towards zero. Consequently,
financing rounds have a direct impact on the market
value of the options. In this respect, they are valued in a
similar way to unquoted equity instruments, as described
above.
Derivative instruments
Group Financial Statements
Mandatory conversions are usually structured in such
a way that the number of shares to be received depends
on the future share price. Due to the generally short ma-
turities, the instruments are subject to only insignificant
fluctuations in value. Irrespective of this fact, impairment
tests are performed at regular intervals.
As a general rule, any transfers between fair-value hi-
erarchy levels are made at the end of the relevant interim
or year-end reporting period.
BMW Group
Report 2020
4,582
365
80
397
106
355
915
503
-
22
22
14
2,344
335
462
919
In the previous financial year, marketable securi-
ties amounting to €187 million were transferred as at
30 June 2019 from Level 1 to Level 2, reflecting the fact
that their fair value was determined on the basis of ob-
servable market data.
573
Level 2 to Level 1 as at 31 December 2020, due to the
fact that corresponding market or stock exchange prices
are available.
In the financial year 2020, the availability of market or
stock exchange prices was re-assessed as at 31 December.
As a result, an amount of €275 million relating to mar-
ketable securities, investment funds and collateral assets
was reclassified from Level 1 to Level 2, in view of the fact
that the fair values of the marketable securities concerned
are derived on the basis of comparable instruments in the
form of a theoretical price. Furthermore, money market
funds amounting to €915 million were reclassified from
K
723
218
三 246
5
267
1,274
74
6
171
52
1,155
2020
2019
1,950
Payables at 31 December
三 260
K
BMW Brilliance Automotive Ltd.
2020
2020
2019
Receivables at 31 December
2020
2019
Supplies and services performed
For the most part, this involves the sale of vehicle
components to BMW Brilliance Automotive Ltd. for
further processing. BMW Group entities also perform
services on behalf of BMW Brilliance Automotive Ltd.
Supplies and services received
2019
2,065
2,363
20
462
273
2,529
2,425
8
287
453
in € million
1
6
1,871
1,574
14
5
21,596
19,068
1,473
1,235
6
A significant proportion of the BMW Group's trans-
actions with related parties relates to the joint venture
BMW Brilliance Automotive Ltd.
Susanne Klatten, Germany, is also the sole share-
holder and Chairwoman of the Supervisory Board
of UnternehmerTUM GmbH, Garching. In 2020, the
BMW Group bought in services from Unternehmer-
TUM GmbH, Garching, mainly in the form of consul-
tancy and workshop services.
EnviroChemie GmbH
K=259
Notes to the Group Financial Statements
Group Financial Statements
BMW Group
Report 2020
<= 258
The nominal amount of hedging instruments directly
affected by the reform of benchmark interest rates is
€14,469 million (of which USD LIBOR €11,581 million
and GBP LIBOR €2,500 million).
5
1
-497
-22
Closing balance at 31 December 2019
-6
8
Reclassification to acquisition costs for inventories
5
243
23
40 RELATED PARTY RELATIONSHIPS
The following individuals and entities are related
parties in accordance with IAS 24:
Stefan Quandt and Susanne Klatten, as well as
companies controlled by them,
The Board of Management and the Supervisory Board
of the BMW Group,
UnternehmerTUM GmbH
ALTANA AG
SOLARWATT GmbH
DELTON Technology SE
DELTON Logistics S.à r.l.
DELTON Health AG (formerly DELTON AG)
in € thousand
Seen from the perspective of BMW Group entities,
the volume of transactions with the above-mentioned
entities was as follows:
Entrust Corp.
Notes to the Group Financial Statements
Group Financial Statements
BMW Group
In addition, Susanne Klatten, Germany, and Stefan
Quandt, Germany, are indirectly sole shareholders of
Entrust Corp., Shakopee, Minnesota. Stefan Quandt is
also a member of the supervisory board of this entity.
In 2020, Entrust Corp., Shakopee, Minnesota, acquired
vehicles from the BMW Group by way of leasing.
Susanne Klatten, Germany, is a shareholder and
member of the Supervisory Board of BMW AG and also a
shareholder and Deputy Chairwoman of the Supervisory
Board of ALTANA AG, Wesel. In 2020, ALTANA AG,
Wesel, acquired vehicles from the BMW Group, mainly
by way of leasing.
Stefan Quandt, Germany, is also the indirect majority
shareholder of SOLARWATT GmbH, Dresden. Cooper-
ation arrangements are in place between BMW Group
and SOLARWATT GmbH, Dresden, within the field of
electric mobility. The focus of this cooperation is on the
provision of complete photovoltaic solutions for roof-
top systems and carports to BMW i customers. In 2020
SOLARWATT GmbH, Dresden, acquired vehicles from
the BMW Group by way of leasing.
Stefan Quandt, Germany, is a shareholder and
Deputy Chairman of the Supervisory Board of BMW AG.
He is also the sole shareholder and Chairman of the
Supervisory Boards of DELTON Health AG, Bad
Homburg v.d.H., and DELTON Technology SE, Bad
Homburg v.d.H., as well as the sole shareholder of
DELTON Logistics S.à r.l., Grevenmacher, which via its
subsidiaries, performed logistic-related services for the
BMW Group during the financial year 2020. In addition,
the DELTON companies held by Stefan Quandt acquired
vehicles from the BMW Group by way of leasing.
Transactions of the Group companies with related
parties were carried out, without exception, in the nor-
mal course of business of each of the parties concerned
and conducted at market conditions, i.e. conditions that
are also granted to other third-party manufacturers.
During the
year under report, members of the Board
of Management and the Supervisory Board concluded
vehicle purchase contracts and related service contracts
as well as vehicle rental, vehicle leasing and vehicle fi-
nancing contracts with BMW Group entities on market
conditions.
Associated companies, joint ventures, non-consoli-
dated subsidiaries, BMW Trust e. V. and BMW Foun-
dation Herbert Quandt
Report 2020
355
1,334.86
124.20
65
in € million
31.12.2020
Carrying Amounts
<= 256
31.12.2019
Carrying Amounts
Nominal
amounts
Assets
Liabilities
Change in
fair value of
designated
components
Nominal
amounts
Assets
Liabilities
Change in
fair value of
designated
components
Cash Flow Hedges
Average hedging rates
Currency risks
A cash-flow-at-risk approach to risk management
involves making use of portfolio effects. No USD-denomi-
nated hedging transactions were in hedging relationships
at the balance sheet date.
16,469
The following table provides information on the nom-
inal amounts, carrying amounts and fair value changes
of contracts designated as hedging instruments:
0.87
1,328.59
124.92
Group Financial Statements
9
Notes to the Group Financial Statements
The following table shows the most significant aver-
age hedging rates of hedging transactions used by the
BMW Group:
Currency risks
EUR/CNY
EUR/USD
EUR/GBP
EUR/KRW
EUR/JPY
Average hedging rates
31.12.2020
31.12.2019
8.05
Raw material price risks
1.16
0.87
Information on average interest hedge rates is not
provided, since interest rate derivatives designated as
hedging instruments are used exclusively to hedge items
in fair value hedges. The hedge rates therefore corre-
spond in each case to current market interest rate levels.
Most of the hedges used in this context relate to variable
yield curves relating to the euro, US dollar and British
pound currency areas.
277
54
1,169 23,843
2020
Supplies and services performed
Supplies and services received
10
9
154
134
107
28
11
693
510
27
2,651
1,310
104
37
2019
2020
Receivables at 31 December
2019
60
590
-479
Raw material price risks
31.12.2020
496
804
2,639
80
2,045
155
9,227
9,701
2019
2020
2019
Payables at 31 December
2020
107
716
In the following table, the potential volumes of fair
for terminated hedge relationships
31.12.2019
=257
K << = 257
Carrying Amounts
Balances in accumulated other equity
31.12.2020
Carrying Amounts
Interest rate risks
Fair Value Hedges
Raw material price risks
Currency risks
Cash Flow Hedges
in € million
Hedge relationships give rise to the following effects:
The accumulated amount of hedge-related fair value
adjustments is €10 million (2019: €8 million) for assets
and €1,680 million (2019: €1,012 million) for liabilities.
Interest rate risks
Fair Value Hedges
Balances in accumulated other equity
Raw material price risks
Assets
Change in value
of hedged items
198
554
Change in costs of
hedging in other
comprehensive income
Change of designated
components in other
comprehensive income
-720
58,714
8,483
532
510
-1,169
-467
Terminated
hedge
relationships
Continuing
hedge
relationships
of hedged items
Liabilities
Assets
Change in value
Terminated
hedge
relationships
Continuing
hedge
relationships
Liabilities
Currency risks
Cash Flow Hedges
in € million
248
1,992
59,774
Interest rate risks
1,833
1,573
Aluminium (EUR/t)
Fair Value Hedges
250
215
266
3,571
466
58
574
3,241
BMW Group
Report 2020
723
59,999
1,244
271
The following table shows key information on hedged
items for each risk category as well as the balances of
designated components within accumulated other equity:
Notes to the Group Financial Statements
Report 2020
Group Financial Statements
BMW Group
916
701
Platinum (EUR/oz)
509
1,022
Palladium (EUR/oz)
12,307
11,188
Nickel (EUR/t)
5,173
4,568
Copper (EUR/t)
758
1,350
-491
-5
-250
in € million
510
72
-29
-299
532
Closing balance at 31 December 2020
Reclassification to acquisition costs for inventories
84
-104
for terminated hedge relationships
557
-512
for continuing hedge relationships
1
466
5
Opening balance at 1 January 2019
-443
Change in fair value during the reporting period
Interest rate risk
for continuing hedge relationships
Reclassification to profit or loss
-1
250
13
-622
-480
12
-262
-13
-614
940
Costs of hedging
Costs of hedging Designated component
Costs of hedging
Designated component
Raw material price risk
Currency risks
1,170
5
1
-7
264
117
-961
recognised in
income statement
Hedge ineffectiveness
2019
Change in costs of
hedging in other
comprehensive income
3
2
Change of designated
components in other
comprehensive income
Hedge ineffectiveness
recognised in
income statement
2020
-759
58,723
8,631
-23
1
9
-1
BMW Group
Group Financial Statements
4
-497
-22
Costs of hedging
Costs of hedging Designated component
Costs of hedging
Designated component
Raw material price risk
479
Interest rate risk
Reclassification to profit or loss
Change in fair value during the reporting period
Opening balance at 1 January 2020
in € million
accumulated other equity changed as follows:
Designated components and costs of hedging within
Notes to the Group Financial Statements
Report 2020
Currency risks
12,938
8.26
23,146
374
552
28
144
380
735
338
23
374
552
28
144
380
-50,653
338
-624
23
49,264
Notes to the Group Financial Statements
Group Financial Statements
BMW Group
Report 2020
cash flow forecast. The resulting funding requirements
are covered by a variety of instruments placed on the
world's financial markets, with the aim to minimise risk
by matching maturities with financing requirements and
in alignment with a dynamic target debt structure.
Solvency is assured at all times by managing and
monitoring the liquidity situation on the basis of a rolling
At 31 December 2020 credit commitments available at
short notice to dealerships which had not been called
upon at the end of the reporting period amounted to
€14,367 million (2019: €10,776 million).
735
The cash flows relating to non-derivative liabilities
comprise principal repayments and the related interest.
The amounts disclosed for derivative instruments com-
prise only cash flows relating to derivatives that have a
negative fair value at the balance sheet date. In the case of
derivatives with a negative fair value, an overall positive
cash flow can arise due to the various yield curves used.
15,683
58,443
58,708
118,629
14,767
54,598
132,834
K253
-17,727
-20,391
432
Total financial liabilities
Cash outflows
With net settlement
Cash inflows
Cash outflows
248
With gross settlement
1,007
384
435
188
765
357
DERIVATIVE FINANCIAL LIABILITIES
-32,302
14
1,524
-617
-5,296
-14,478
52,909
598
18,485
694
33,826
631
5,544
14,910
2,256
-26
758
21,085
As a further reduction of risk, a syndicated credit line
totalling €8 billion (2019: €8 billion) from a consortium
of international banks is available to the BMW Group.
Intra-group cash flow fluctuations are balanced out by
the use of daily cash pooling arrangements.
Further information is provided in the Combined
Management Report.
Market risks
Value at risk
in € million
value fluctuations measured on the basis of the val-
ue-at-risk approach - are compared with the expected
value for the interest-rate-sensitive exposures of the
BMW Group:
The BMW Group applies a value-at-risk approach
throughout the Group for internal reporting purposes
and to manage interest rate risk. This approach is based
on a historical simulation in which the potential future
fair value losses of the interest rate portfolios are com-
pared across the Group with expected amounts on the
basis of a holding period of 250 days and a confidence
level of 99.98%. The risk mitigating effect of correlations
between the various portfolios is taken into account
when the risks are aggregated.
The transition to the newly created or revised bench-
mark rates is being managed and monitored as part of
a multidisciplinary project. The conversion project will
involve making changes to systems, processes, risk and
valuation models, as well as dealing with the associated
accounting implications. The uncertainty arising from
the benchmark interest rate reform is likely to continue
to exist up to the end of 2021.
In view of the plans to reform and replace certain
benchmark interest rates, the timing and exact nature
of these changes is currently subject to uncertainty.
Across the BMW Group, a considerable number of con-
tracts are directly affected by the benchmark interest
rates reform. Hedging relationships entered into by the
BMW Group are mainly based on USD LIBOR and GBP
LIBOR benchmark interest rates, which are designated
as hedged risks in fair value hedging relationships. The
hedging relationships affected are subject to uncertain-
ty with respect to the identifiability of the designated
benchmark interest rates.
Raw materials price risk
are used as the hedging instrument. Hedge relationships
are terminated and redesignated on a monthly basis at
the end of each reporting period, thereby taking account
of the constantly changing content of each portfolio.
In view of the fact that own credit risk is excluded
from the hedging relationship, ineffectiveness is expected
to be low.
Interest rate risk is managed through the use of
interest rate derivatives. As part of the implementa-
tion of the risk management strategy, interest rate
risks are monitored and managed at regular intervals.
The interest rate contracts used for hedging purposes
comprise mainly swaps, which, if hedge accounting is
applied, are accounted for as fair value hedges. The
economic relationship between the hedged item and the
hedging instrument is based on the fact that the main
parameters of the hedged item and the related hedging
instrument, for example start date, term and currency,
are the same. Items are hedged on the basis of a con-
stant ratio of one to one between hedging instrument
and risk exposure.
55,697
58,545
Fair values of interest rate portfolios
31.12.2019
For selected fixed-interest assets, part of the interest
rate risk is hedged on a portfolio basis. In this case, swaps
31.12.2020
31.12.2020
1,160
The following disclosures on hedging measures in-
clude derivatives of fully consolidated companies that are
designated as a hedging instrument. The amounts shown
in the table are stated before deferred taxes and take
account of additional effects arising from the application
of the modified closing rate method.
Disclosures on hedging measures
The following table shows the potential negative
impact for the BMW Group resulting from fluctuations
in prices across all categories of raw materials, measured
on the basis of the cash-flow-at-risk approach. The risk
at each reporting date for the following financial year
was as follows:
The potential negative impact on earnings is calculat-
ed at the reporting date for each raw materials category
for the following financial year on the basis of current
market prices and exposure with a confidence level of
95%. The risk mitigating effect of correlations between
the various categories of raw materials is taken into
account when the risks are aggregated.
The starting point for analysing raw materials price
risk is to identify planned purchases of raw materials
or components containing raw materials, the so-called
"exposure". At each reporting date, the exposure for the
following financial year amounted to:
The economic relationship between the hedged item
and the hedging instrument is based essentially on the
fact that they have the same basis and term. The BMW
Group designates only the commodity price index-linked
raw material surcharge as a hedged item. Other price
components contained in the contract are not designated
as being part of the hedge relationship as no effective
hedging instruments exist for these components.
31.12.2019
<= 255
Group Financial Statements
Report 2020
BMW Group
Causes of hedge ineffectiveness are seen potentially
only for counterparty credit risk. However, in view of
the processes that have been established for credit risk
management, ineffectiveness is not expected to arise.
The BMW Group is exposed to market price risks on
raw materials. In order to hedge these risks, the Group
mainly uses forward commodity contracts. As part of
the implementation of the risk management strategy,
the extent to which risk exposures should be hedged
is decided at regular intervals and the corresponding
hedging ratio defined. Items are hedged on the basis of a
constant ratio of one to one between hedging instrument
and risk exposure.
1,094
Notes to the Group Financial Statements
in € million
The fair value of the Group's interest rate portfolios
was as follows at the end of the reporting period:
Interest rate risks arise when funds are borrowed
and invested with differing fixed-rate periods or differ-
ing terms. At the BMW Group, all items subject to, or
bearing, interest are exposed to interest rate risk and
can therefore affect both the assets and liabilities side
of the balance sheet.
31.12.2019
31.12.2020
Currency exposure
in € million
The BMW Group measures currency risk using a
cash-flow-at-risk model. The analysis of currency risk is
based on forecast foreign currency transactions which
could result in exposures to surpluses of foreign currency
cash inflows and cash outflows. At the end of the report-
ing period, the overall currency exposure - in each case
for the following year and determined by aggregating the
individual currency exposures based on their absolute
amount was as follows:
Causes of hedge ineffectiveness are seen potentially
only for counterparty credit risk. However, in view of
the processes that have been established for credit risk
management, ineffectiveness is not expected to arise.
33,975
As part of the implementation of the risk manage-
ment strategy, the extent to which risk
exposures should
be hedged is decided at regular intervals. The economic
relationship between the hedged item and the hedging
instrument is based essentially on the fact that they are
denominated in the same currency and have the same
maturities. Items are hedged on the basis of a constant
ratio of one to one between hedging instrument and risk
exposure.
Currency risk
Further information is provided in the "Report
on outlook, risks and opportunities" section of the
Combined Management Report.
rate level.
Currency, interest rate and raw materials market
price risks of the BMW Group are managed at a corpo-
Protection against such risks is provided in the first
instance though natural hedging which arises when
the values of non-derivative financial instruments have
matching maturities and amounts (netting). Derivative
financial instruments are used to reduce the risk remain-
ing after netting.
The principal market risks to which the BMW Group
is exposed are currency risk, interest rate risk and raw
materials market price risk.
As an enterprise with worldwide operations, the
BMW Group conducts business in a variety of curren-
cies, from which currency risks arise. In order to hedge
currency risks, the BMW Group holds, as at 31 Decem-
ber 2020, derivative financial instruments mostly in the
form of forward currency contracts and currency swaps.
33,950
Currency exposures include short positions amount-
ing to €5,222 million (2019: €2,789 million).
This exposure is compared to all hedges that are in
place. The net cash flow surplus represents an uncovered
risk position. The cash-flow-at-risk approach involves
Interest rate risk
|<<= 254
Notes to the Group Financial Statements
Group Financial Statements
Report 2020
BMW Group
487
531
31.12.2019
31.12.2020
Cash flow at risk
in € million
The following table shows the potential negative im-
pact for the BMW Group for the following year resulting
from unfavourable changes in exchange rates, measured
on the basis of the cash-flow-at-risk approach.
The potential negative impact on earnings is calcu-
lated at the reporting date for each currency for the
following financial year on the basis of current market
prices and exposures with a confidence level of 95%.
The risk mitigating effect of correlations between the
various currencies is taken into account when the risks
are aggregated.
showing the impact of potential exchange rate fluctua-
tions on operating cash flows on the basis of probability
distributions. Volatilities and correlations serve as the
main input factors to determine the relevant probability
distributions.
288
120
Other financial liabilities
2,618
802
2,091
1,019
17
937
118
38
199
22
1,167
4,102
431
5,469
38
5,291
1,653
704
1,014
1,099
93,536
1,014
416
2,567
89,539
16
1,639
1,019
422
4,223
80,252
628
1,772
85,916
3,778
272
86,473
Stage 2
Stage 1
31.12.2020
Stage 3
Stage 2
Stage 1
Stage 3
Further disclosures relating to credit risk
in par-
ticular with regard to the amounts of impairment losses
recognised – are provided in the explanatory notes to the
relevant categories of receivables in ✓ note 25 and 30.
Gross carrying amount of financial assets with good credit ratings
Gross carrying amount of financial assets with medium credit ratings
Gross carrying amount of financial assets with poor credit ratings
Total
in € million
Receivables from sales financing are allocated to
internally defined rating categories based on credit risk.
The classification into creditworthiness levels is based on
default probabilities. The related gross carrying amounts
in accordance with IFRS 9 are allocated as follows:
Notes to the Group Financial Statements
Group Financial Statements
BMW Group
Report 2020
-
K = 251
31.12.2019
General
378
696
85,399
406
78,356
367
1,633
76,356
Expected
credit loss
Total
Simplified
General
Expected
credit loss
Total
Simplified
BMW Group
The nominal amounts of hedging instruments were
as follows:
Report 2020
Notes to the Group Financial Statements
14,809
27
3,505
11,277
16,611
22
Trade payables
3,781
Liabilities from customer deposits (banking)
12,446
1,378
2,317
8,751
10,000
12,808
1,388
8,644
10,182
2,618
550
550
Commercial paper
3,387
1,302
8,644
1,523
2,767
1,028
1,227
512
Lease liabilities
10,182
562
3,317
5,295
Liabilities to banks
Maturity between
31.12.2019
三 252
K
Maturity within
one year
Total
one and five years
Maturity later
than five years
Maturity within
one year
31.12.2020
NON-DERIVATIVE FINANCIAL LIABILITIES
in € million
The following table shows the maturity structure
of expected contractual cash flows (undiscounted) for
financial liabilities:
Liquidity risk
Maturity between
one and five years
Maturity later
than five years
Total
Bonds
20,345
12,090
8,255
19,436
12,369
7,067
Asset-backed financing transactions
65,049
12,595
37,477
14,977
58,610
11,930
33,224
13,456
Group Financial Statements
40,631
31.12.2019
in € million
12,373
28,213
8,082
Interest rate risks
31.12.2020
4,530
11,939
Currency risks
This exposure is compared to all hedges that are in
place. The net cash flow surplus represents an uncovered
risk position. The cash-flow-at-risk approach involves
showing the impact of potential raw materials market
price fluctuations on operating cash flows on the basis
of probability distributions. Volatilities and correlations
serve as input factors to assess the relevant probability
distributions.
310
Cash flow at risk
4,204
31.12.2019
31.12.2020
Raw material price exposures
in € million
Maturity later
than five years
31.12.2020
Maturity within Maturity between
one year
one and five years
in € million
4,382
419
31.12.2019
1,449
1,920
1,651
Raw material price risks
Nominal amounts of
hedging instruments
12,938
29,691
Raw material price risks
Interest rate risks
9,020
14,823
Currency risks
than five years
6,672
31.12.2019
one and five years
Maturity within Maturity between
one year
in € million
12,373
34,535
21,470
Nominal amounts of
hedging instruments
1,792
Maturity later
KK = 268
BMW Group
Group Financial Statements
Report 2020
Notes to the Group Financial Statements
LIST OF INVESTMENTS AT
31 DECEMBER 2020
DOMESTIC¹
46 LIST OF INVESTMENTS AT 31 DECEMBER 2020
The List of investments of BMW AG pursuant to § 285
and § 313 HGB is presented below. Disclosures for equity
and earnings and for investments are not made if they
are of "minor significance" for the results of operations,
financial position and net assets of BMW AG pursuant
to § 286 (3) sentence 1 no. 1 HGB and § 313 (3) sen-
tence 4 HGB. It is also shown in the list which subsidiar-
ies apply the exemptions available in § 264 (3) and § 264 b
HGB with regard to the publication of annual financial
statements and the drawing up of a management report
and/or notes to the financial statements (footnotes 5 and
6). The Group Financial Statements of BMW AG serve as
exempting consolidated financial statements for these
companies.
Companies
BMW Beteiligungs GmbH & Co. KG, Munich
BMW INTEC Beteiligungs GmbH, Munich 3,6
BMW Bank GmbH, Munich³
77,583
BMW Finanz Verwaltungs GmbH, Munich
BMW Verwaltungs GmbH, Munich³,6
AFFILIATED COMPANIES (SUBSIDIARIES) OF BMW AG
AT 31 DECEMBER 2020
76,187
Total for reportable segments
Elimination of inter-segment items
Total Group depreciation and
98,990
Group
-7,739
-6,764
Eliminations
453
619
2,445
2,130
Other regions
3,834
3,192
3,904
Parkhaus Oberwiesenfeld GmbH, Munich
104,210
BMW High Power Charging Beteiligungs GmbH, Munich 4,6
Alphabet Fuhrparkmanagement GmbH, Munich4
Alphabet International GmbH, Munich 4,5,6
BMW Hams Hall Motoren GmbH, Munich 4,5,6
BMW Vertriebszentren Verwaltungs GmbH, Munich
BMW Fahrzeugtechnik GmbH, Eisenach 3,5,6
BMW Anlagen Verwaltungs GmbH, Munich 3,6
Bavaria Wirtschaftsagentur GmbH, Munich 3,5,6
Rolls-Royce Motor Cars GmbH, Munich 4,5,6
BAVARIA-LLOYD Reisebüro GmbH, Munich
100
BMW Vermögensverwaltungs GmbH, Munich
100
100
100
100
100
100
100
3,379
100
153
100
210
100
2,075
100
3,558
100
797
6,897
Capital invest-
ment in %
in € million
Profit/loss
in € million
Equity
K = 269
Europe 10
FOREIGN²
LARGUS Grundstücks-Verwaltungsgesellschaft mbH, Munich
Bürohaus Petuelring GmbH, Munich
BMW M GmbH Gesellschaft für individuelle Automobile, Munich 3,5,6
Rest of the Americas
13,638
1,599
The reconciliation of segment figures to the corre-
sponding total Group figures shows the elimination of
inter-segment items. Revenues with other segments
result mainly from the sale of vehicles, for which the
Financial Services segment has concluded a financing
or lease contract. Eliminations of inter-segment items in
the reconciliation to the Group profit before tax, capital
expenditure and depreciation and amortisation mainly
result from the sale of vehicles in the Automotive seg-
ment, which are subsequently accounted for as leased
Notes to the Group Financial Statements
Group Financial Statements
Report 2020
BMW Group
10,749
11,976
amortisation on non-current assets
-6,356
-6,175
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
In total, the following amounts of goods and services
were supplied to or received from other joint ventures
and associated companies:
in € million
Other joint ventures and associated companies
Supplies and services received
Supplies and services performed
2020
2019
2020
Receivables at 31 December
2019
2020
K = 261
Payables at 31 December
2019
2020
products in the Financial Services segment. In the recon-
ciliation of segment assets to Group assets, eliminations
relate mainly to intragroup financing balances.
1,756
In the information by region, external sales are based
on the location of the customer. The information dis-
closed for non-current assets relates to property, plant
and equipment, intangible assets and leased products.
Eliminations disclosed for non-current assets relate to
leased products.
in € million
11,344
10,433
Rest of Asia
17,373
17,630
32,805
30,258
Rest of Europe
22,470
19,487
19,720
17,837
USA
199
170
20,564
21,315
China
39,237
40,254
13,428
100
Germany
2019
Non-current assets
2020
2019
External revenues
2020
Information by region
100
Group Financial Statements
100
11
148
BMW Austria Bank GmbH, Salzburg
100
-5
156
BMW Italia S.p.A., San Donato Milanese
100
134
189
BMW Russland Trading 000, Moscow
100
17
193
BMW Austria Leasing GmbH, Salzburg
100
1
195
BMW Iberica S.A., Madrid
100
54
202
Rolls-Royce Motor Cars Ltd., Farnborough
100
2
216
BMW France S.A., Montigny-le-Bretonneux
100
46
100
223
Alphabet Nederland B.V., Breda
13
100
100
100
100
100
100
100
100
100
Alphabet Italia Fleet Management S.p.A., Rome
BMW Norge AS, Fornebu
BMW Financial Services B.V., The Hague
BMW Northern Europe AB, Stockholm
BMW Belgium Luxembourg S.A./N.V., Bornem
BMW Financial Services Belgium S.A./N.V., Bornem
BMW Malta Ltd., Floriana
Bavaria Reinsurance Malta Ltd., Floriana
BMW Bank 000, Moscow
100
Alphabet Belgium Long Term Rental NV, Aartselaar
100
BMW Vertriebs GmbH, Salzburg
100
BMW Financial Services Scandinavia AB, Sollentuna
100
13
100
BMW Finanzdienstleistungen (Schweiz) AG, Dielsdorf
100
122
51
BMW (UK) Ltd., Farnborough
16
BMW Financial Services (GB) Ltd., Farnborough
100
65
1,190
BMW España Finance S. L., Madrid
K = 270
Notes to the Group Financial Statements
2019
Report 2020
BMW Group
100
-1
1,706
BMW International Investment B.V., The Hague
100
761
3,041
BMW Österreich Holding GmbH, Steyr
100
1,165
9,477
BMW International Holding B.V., The Hague
100
2,634
21,742
BMW Holding B.V., The Hague
100
100
100
1,157
100
242
BMW (UK) Holdings Ltd., Farnborough
225
BMW Finance N.V., The Hague
100
63
272
ALPHABET (GB) Ltd., Farnborough
100
54
340
BMW i Ventures SCS SICAV-RAIF, Senningerberg
100
51
496
BMW (UK) Manufacturing Ltd., Farnborough
100
35
530
BMW Finance S.N.C., Guyancourt
100
143
927
BMW Motoren GmbH, Steyr
100
20
1,050
BMW (Schweiz) AG, Dielsdorf
100
417
1,111
100
18,151
32
64
in € million
10,749
11,976
-6,356
28,297
24,042
-7,003
-6,291
-6,175
12,054 11,142
110
119
5,853
5,978
Depreciation and amortisation on non-current assets
24,146 27,544
Reconciliation
149
Automotive
Financial Services
31.12.2019
31.12.2020
31.12.2019
31.12.2020
31.12.2019
31.12.2020
31.12.2019
31.12.2020
31.12.2019
31.12.2020
31.12.2019
31.12.2020
Group
to Group figures
Other Entities
Motorcycles
146
7,607
6,041
98,990
-14,194 -19,443
5 -14,194 -19,443
3
29,598
30,044
2,368
2,284
80,853 91,682
3
2
1,388
1,454
-6
-9
18,058
104,210
Segment result
2,162
4,499
Capital expenditure on non-current assets
136
920
136
920
Result from equity accounted investments
7,118
Segment assets
5,222
1,467
-96
-235
2,272
1,725
194
103
249
15,779
Investments accounted for using the equity method
3,585
140,955
132,062
Total liabilities - Financial Services
segment
7,118
5,222
688
782
subject to interest
288
910
Liabilities of Motorcycles segment not
-7
-3
47
39
Reconciliation of capital expenditure on
Non-operating assets - Other Entities
segment
7,007
6,859
Reconciliation of depreciation and
amortisation on non-current assets
28,297
24,042
-7,003
-6,291
Elimination of inter-segment items
Total Group capital expenditure on
non-current assets
228,034
Non-operating assets - Motorcycles
216,658
35,300
30,333
Total for reportable segments
-155,872
-148,919
Elimination of inter-segment items
non-current assets
Total Group assets
12,747
-32
Financial result of Automotive segment
Financial result of Motorcycles segment
Elimination of inter-segment items
Group profit before tax from
continuing operations
The Other Entities' segment result includes interest
and similar income amounting to €1,169 million (2019:
€1,515 million) and interest and similar expenses
amounting to €1,232 million (2019: €1,419 million).
The result of the Financial Services segment was neg-
atively impacted by impairment losses totalling €362 mil-
lion (2019: €254 million) recognised on leased products.
Income from the reversal of impairment losses on leased
products amounted to €126 million (2019: €95 million).
Write-downs on inventories to their net realisable
value amounting to €59 million (2019: €126 million)
were recognised by the Automotive segment in the fi-
nancial year 2020. The reversal of impairment losses had
a positive impact of €2 million (2019: €22 million) on the
segment result of the Automotive segment.
K = 267
Notes to the Group Financial Statements
Group Financial Statements
BMW Group
Report 2020
89,546 216,658 228,034
3,585 3,199
86,417
106,038
15,545 98,226
15,555
712
681
16,193
3,199
The information disclosed for capital expenditure
and depreciation and amortisation relates to non-cur-
rent property, plant and equipment, intangible assets
and leased products.
The total of the segment figures can be reconciled to
the corresponding Group figures as follows:
in € million
in € million
38,257
35,769
Liabilities of Automotive segment not
subject to interest
6,869
3,755
Reconciliation of segment result
Total for reportable segments
58,612
560
59,677
138,488
130,241
Reconciliation of segment assets
Total for reportable segments
2019
2020
31.12.2019
31.12.2020
Non-operating assets - Automotive
98,990 104,210
2
1
10.9
Variable remuneration
8.1
7.3
Fixed remuneration
30.0
18.8
Board of Management
Compensation to members of the
2019
2020
in € million
The total compensation of the current members
of the Board of Management and the Supervisory Board
of BMW AG expensed for the financial year 2020 in
accordance with IFRS comprised the following:
43 COMPENSATION OF MEMBERS OF THE BOARD
OF MANAGEMENT AND SUPERVISORY BOARD
K = 263
20.9
thereof Performance Cash Plan
1.3
8.3
attendance fees
Fixed compensation and
5.6
5.6
of the Supervisory Board
Compensation to members
7.1
Notes to the Group Financial Statements
0.6
Benefits in conjunction with the
2.9
2.6
Allocation to pension provisions
1.0
0.6
Share-based remuneration component
termination of board activity
5.6
Group Financial Statements
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft have
issued the prescribed Declaration of Compliance pursu-
ant to § 161 of the German Stock Corporation Act. It is
included in the Corporate Governance Statement, which
is on the BMW Group website at www.bmwgroup.com/ezu.
In the financial year 2020, the BMW Group recorded
a personnel expense of €9 million (2019: €10 million) for
the Employee Share Programme, corresponding to the
difference between the market price and the reduced
price of the shares of preferred stock purchased by em-
ployees.
of the announcement of the programme, there was a
requirement for the employment relationship to have
existed without interruption for at least one year and for
it to continue until the transfer of the shares of preferred
stock. Shares of preferred stock acquired in conjunction
with the Employee Share Programme are subject to a
vesting period of four years, starting from 1 January
of the year in which the shares were acquired. In the
financial year under report, 822,124 (2019: 744,447)
shares of preferred stock were acquired by employees.
This figure includes 822,000 (2019: 740,400) shares out
of Authorised Capital 2019, with the remainder bought
back via the stock exchange. Every year the Board of
Management of BMW AG decides whether the scheme
is to be continued.
In connection with the Employee Share Programme,
non-voting shares of preferred stock in BMW AG were
granted in 2020 to qualifying employees at favourable
conditions (see ✓ note 31 for the number and price of is-
sued shares). Participants in the programme were entitled
in 2020 to acquire packages of 8, 18 or 28 shares of pre-
ferred stock (2019: 10, 17 or 25) with a discount in each
case of €11.50 (2019: €13.00) per share compared to the
market price (average closing price in Xetra trading in the
period from 3 November to 6 November 2020: €48.05).
The programme was open to employees who have been
in an employment relationship with BMW AG or by a
wholly-owned BMW AG subsidiary in Germany, provided
that the management of the subsidiary concerned has
decided to participate in the programme. At the date
Employee Share Programme
The BMW Group provides three share-based pro-
grammes: one for eligible employees, one for senior
heads of department and one for members of the Board
of Management.
41 SHARE-BASED REMUNERATION
For disclosures relating to key management person-
nel, please see ✓ note 43 and the Remuneration Report.
The BMW Foundation Herbert Quandt, Munich, is
an independent corporate foundation and due to the
BMW Group's significant influence, qualifies as a related
party according to IAS 24. BMW Group made donations
to the BMW Foundation Herbert Quandt during the
financial year 2020 totaling €6.3 million (2019: €6.4 mil-
lion). No other significant transactions took place.
BMW Trust e. V., Munich, administers assets on a
trustee basis to secure obligations relating to pensions
in Germany and is therefore a related party of the
BMW Group in accordance with IAS 24. This entity has
no assets of its own. It had no income or expenses during
the period under report. BMW AG bears expenses on an
immaterial scale and performs services for BMW Trust
e. V., Munich.
Business relationships with non-consolidated com-
panies are small in scale.
9
9
1
8
78
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
42 DECLARATION WITH RESPECT TO THE
CORPORATE GOVERNANCE CODE
Further details on the remuneration of the Manage-
ment Board are provided in the Remuneration Report,
which is part of the Combined Management Report.
The fair value of the programmes for Board of Man-
agement members and senior heads of department at
the date of grant of the share-based remuneration com-
ponents was €987,759 (2019: €1,374,798), based on a
total of 13,444 shares (2019: 19,983 shares) of BMW AG
common stock or a corresponding cash-based settlement
measured at the relevant market share price prevailing
on the grant date.
The total expense recognised in 2020 for the share-
based remuneration component of current and former
Board of Management members and senior heads of
department was €1,820,265 (2019: €1,979,477).
The total carrying amount of the provision for the
share-based remuneration component of current and for-
mer Board of Management members and senior heads of
department at 31 December 2020 was €6,383,766 (2019:
€5,851,703).
The cash-settlement obligation for the share-based
remuneration component is measured at its fair value
at the balance sheet date (based on the closing price of
BMW AG common stock in Xetra trading at 31 Decem-
ber 2020).
The share-based remuneration component is meas-
ured at its fair value at each balance sheet date between
grant and settlement date, and on the settlement date.
The amounts are recognised as personnel expense on a
straight-line basis over the vesting period and reported
in the balance sheet as a provision.
BMW Group
Report 2020
The members of the Board of Management in office
at the end of the reporting period hold 44,037 shares
of BMW common stock based on holding requirements
arising from share-based remuneration for the financial
years 2016 to 2019 (2019: 36,921).
Members of the Board of Management receive a
cash compensation (investment component) for the
specific purpose of investment - after tax and contribu-
in shares of common stock of BMW AG. For the
financial years 2018 to 2020, the investment component
corresponds to 45% of the gross bonus. The investment
component is paid after the end of the Annual General
Meeting, at which the separate financial statements of
BMW AG for the relevant financial year are presented.
-
tions
For financial years beginning after 1 January 2011,
BMW AG has added a share-based remuneration com-
ponent to the existing compensation system for Board
of Management members.
The share-based remuneration programme for quali-
fying department heads, introduced with effect for finan-
cial years beginning after 1 January 2012, is closely based
on the programme for Board of Management members
and is aimed at rewarding a long-term, entrepreneurial
approach to running the business on a sustainable basis.
Under the terms of the programme, participants give a
commitment to invest an amount equivalent to 20% of
their performance-based bonus in BMW common stock
and to hold the shares so acquired for a minimum of
four years. With effect from 1 July 2019, the share-based
compensation programme was revised and the invest-
ment requirement increased to 26% of the earnings-re-
lated bonus. In return for the investment requirement,
BMW AG pays 100% of the investment amount as a net
subsidy. Once the four-year holding period requirement
has been fulfilled, the participants receive - for each
three common stock shares held and at the Company's
option - one additional share of common stock or the
cash equivalent, to be decided at BMW AG's discretion.
Programme for senior heads of department and members
of the Board of Management
K = 262
The shares of common stock are purchased immediate-
ly after the investment component has been paid out.
Shares of common stock purchased in this way by
Board members are required to be held for a period of
four years. Under the compensation system valid up to
the financial year 2020, Board members receive from
BMW AG, for every three shares of common stock held,
either one additional share of common stock or the cash
equivalent, to be decided at BMW AG's discretion. In
the event of death or invalidity, special rules apply for
early payment of share-based remuneration components
based on the target amounts. Insofar the service contract
is prematurely terminated and the Company has an ex-
traordinary right of termination, or if the Board member
resigns without the Company's agreement, entitlements
to amounts as yet unpaid relating to share-based remu-
neration are forfeited.
28
2.0
Total expense
Financial Services
2020
2019
2020
2019
Motorcycles
Automotive
2020
SEGMENT INFORMATION BY OPERATING SEGMENT
in € million
follows:
Segment information by operating segment is as
Notes to the Group Financial Statements
Report 2020
Group Financial Statements
2019
2020
Other Entities
2019
28,210
28,590
2,374
2,293
73,624
68,106
Total revenues
BMW Group
Inter-segment revenues
2019
2020
2019
Group
Reconciliation
to Group figures
K = 266
2020
17,105
Variable compensation
The success of the Other Entities segment is assessed
on the basis of profit or loss before tax. The correspond-
ing measure of segment assets used to manage the Other
Entities segment is total assets less asset-side income tax
items and intragroup investments.
The Automotive and Motorcycles segments are man-
aged on the basis of return on capital employed (ROCE).
The relevant measure of segment results used is therefore
profit before financial result. Capital employed is the cor-
responding measure of segment assets used to determine
how to allocate resources and comprises all current and
non-current operational assets after deduction of liabil-
ities used operationally which are generally not subject
to interest (e.g. trade payables).
No other events have occurred since the end of the
financial year which could have a major impact on the
results of operations, financial position and net assets of
BMW AG and the BMW Group.
Current estimates and assumptions for the finan-
cial year 2021, to the extent already known to the
BMW Group, have been taken into account and described
in the Report on Outlook. Apart from these assessments,
no further significant negative effects are known or can
be estimated at the present time. However, further neg-
ative effects could arise in the course of the
year.
The further course of the pandemic and implications
for the BMW Group's business performance is being
continually monitored.
The coronavirus pandemic will continue to influence
the course of business for the BMW Group in 2021. The
situation remains volatile and could have an impact on
the results of operations, financial position and net assets
of BMW AG and the BMW Group.
44 EVENTS AFTER THE END OF THE
REPORTING PERIOD
Further details about the remuneration of current
members of the Board of Management and the Super-
visory Board can be found in the Remuneration Report,
which is part of the Combined Management Report.
The compensation arrangements applicable for
members of the Supervisory Board for the financial year
2020 do not include any stock options, value appreciation
rights comparable to stock options or any other stock-
based compensation components. Apart from an advance
amount paid out of the Performance Cash Plan 2019 –
2021 to individual members of the Board of Management,
no loans or advances were granted to members of the
Board of Management and the Supervisory Board by
BMW AG or its subsidiaries in the financial year 2020,
nor were any contingent liabilities entered into in their
favour. During the year under report, members of the
Board of Management and the Supervisory Board con-
cluded vehicle purchase contracts and related service
contracts as well as vehicle rental, vehicle leasing and
vehicle financing contracts with BMW Group entities on
market conditions.
Pension obligations to current members of the Board
of Management are covered by provisions amounting
to €14.7 million (2019: €14.6 million), determined in
accordance with IAS 19. Pension obligations to former
members of the Board of Management and their surviving
dependants, also determined in accordance with IAS 19,
amounted to €118.8 million (2019: €113.1 million).
subsequent years. The PCP is paid out after the end of
the three-year assessment period. The total remunera-
tion of former members of the Board of Management
and their dependants amounted to €13.1 million (2019:
€16.0 million).
Since the financial year 2018 and up to and including
the financial year 2020, variable cash compensation has
been supplemented by a multi-year and future-orient-
ed Performance Cash Plan (PCP). The PCP evaluation
period comprises three years, the grant year and the two
28.6
23.1
thereof due within one year
3.6
45.6
27.6
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
|<< = 264
The role of "chief operating decision maker" with re-
spect to resource allocation and performance assessment
of the reportable segment is embodied in the full Board
of Management. For this purpose, different measures of
segment performance as well as segment assets are taken
into account in the operating segments.
Segment information is prepared as a general rule in
conformity with the accounting policies adopted for pre-
paring and presenting the Group Financial Statements.
Exceptions to this general principle include the treat-
ment of inter-segment warranties, the earnings impact
of which is allocated to the Automotive and Financial
Services segments on the basis used internally to manage
the business. In addition, intragroup repurchase agree-
ments between the Automotive and Financial Services
segments pursuant to IFRS 15, impairment allowances
on intragroup receivables and changes in the value of
consolidated other investments pursuant to IFRS 9 are
also excluded. Intragroup leasing arrangements are not
reflected in the internal management and reporting
system on an IFRS 16 basis and therefore, in accord-
ance with IFRS 8, do not give rise to any changes in the
presentation of segment information. Inter-segment re-
ceivables and payables, provisions, income, expenses and
profits are eliminated upon consolidation. Inter-segment
revenues are based on market prices. Centralised func-
tions are included in the segments concerned. Expenses
for centralised administrative functions allocated to the
Financial Services segment are not settled in cash.
Internal management and reporting
<= 265
Notes to the Group Financial Statements
Group Financial Statements
BMW Group
Report 2020
The success of the Financial Services segment is
measured on the basis of return on equity (RoE). Profit
before tax therefore represents the relevant measure of
segment earnings. The measure of segment assets in the
Financial Services segment corresponds to net assets,
defined as total assets less total liabilities.
Holding and Group financing companies are report-
ed in the Other Entities segment. This segment also
includes the operating companies BMW (UK) Invest-
ments Ltd. and Bavaria Lloyd Reisebüro GmbH, which
are not allocated to one of the other segments.
Activities relating to the development, manufacture,
assembly and sale of motorcycles as well as spare parts
and accessories are reported in the Motorcycles segment.
Within the Automotive segment, the BMW Group
develops, manufactures, assembles and sells automobiles
and off-road vehicles, under the brands BMW, MINI
and Rolls-Royce as well as spare parts, accessories and
mobility services. BMW and MINI brand products are
sold in Germany through branches of BMW AG and
by independent, authorised dealerships. Sales outside
Germany are handled mainly by subsidiary companies
and by independent import companies in some markets.
Rolls-Royce brand vehicles are sold in selected markets
via subsidiary companies and elsewhere by independent,
authorised dealers.
The activities of the BMW Group are broken down
into the operating segments Automotive, Motorcycles,
Financial Services and Other Entities.
For the purposes of presenting segment information,
the activities of the BMW Group are divided into oper-
ating segments in accordance with IFRS 8. The segmen-
tation follows the internal management and reporting
system and takes account of the organisational structure
of the BMW Group based on the various products and
services of the reportable segments.
Information on reportable segments
45 EXPLANATORY NOTES TO SEGMENT INFORMATION
SEGMENT INFORMATION
Automobile leasing, fleet business, multi-brand busi-
ness, retail and dealership financing, customer deposit
business and insurance activities are the main activities
allocated to the Financial Services segment.
External revenues
000 BMW Leasing, Moscow
Report 2020
100
100
100
100
100
100
Capital invest-
ment in %
100
100
100
100
100
100
100
100
100
in € million
in € million
BMW Financial Services Slovakia s.r.o., Bratislava
BMW Financial Services Czech Republic s.r.o., Prague
BMW Group Benefit Trust Ltd., Farnborough
BMW i Ventures B.V., Den Haag
BMW Manufacturing Hungary Kft., Vecsés
BMW Manufacturing Russland OOO, Kaliningrad
Profit/loss
BMW Mobility Development Center s.r.o., Prague
BMW Russland Automotive 000, Kaliningrad
Cezwei PL GmbH, Salzburg
John Cooper Garages Ltd., Farnborough
John Cooper Works Ltd., Farnborough
U.T.E. Alphabet España-Bujarkay, Seville
K = 276
Equity
BMW Motorsport Ltd., Farnborough
100
100
100
Asia
BMW Finance (United Arab Emirates) Ltd., Dubai
BMW Financial Services Hong Kong Ltd., Hong Kong
BMW Financial Services Singapore Pte Ltd., Singapore
BMW Hong Kong Services Ltd., Hong Kong
BMW India Foundation, Gurgaon
BMW India Leasing Private Ltd., Gurgaon
BMW Insurance Services Korea Co. Ltd., Seoul
BMW Automobile Distributors (Pty) Ltd., Midrand
BPF Midrand Property Holdings (Pty) Ltd., Midrand
Multisource Properties (Pty) Ltd., Midrand
BMW Middle East Retail Competency Centre DWC-LLC, Dubai
100
100
100
100
100
100
K = 277
Africa
BMW Leasing de Argentina S.A., Buenos Aires
BMW Operations Corp., Wilmington, Delaware
BMW Technology Corp., Wilmington, Delaware
Designworks/USA Inc., Newbury Park, California
MINI Business Innovation LLC, Wilmington, Delaware
Urban X Accelerator SPV LLC, Wilmington, Delaware
BMW Shared Services LLC, Wilmington, Delaware
BMW Mobility Services LLC, Wilmington, Delaware
Toluca Planta de Automoviles S.A. de C.V., Mexico City
BMW i Ventures LLC, Wilmington, Delaware
100
100
100
100
100
100
90
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
The Americas
217-07 Northern Boulevard Corporation, Wilmington, Delaware
BMW Experience Centre Inc., Richmond Hill, Ontario
BMW i Ventures Inc., Wilmington, Delaware
BMW Poland sp. z o.o., Warsaw
100
BMW Drivers Club Ltd., Farnborough
BMW (UK) Pensions Services Ltd., Hams Hall
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Bavarian Sky China Leasing 2020-1, Tianjin 11
Notes to the Group Financial Statements
2017-3 ABL, Tokyo 11
2018-1 ABL, Tokyo 11
2018-2 ABL, Tokyo 11
2018-3 ABL, Tokyo 11
2019-1 ABL, Tokyo 11
2019-2 ABL, Tokyo 11
2019-3 ABL, Tokyo 11
2020-1 ABL, Tokyo 11
K = 275
Bavarian Sky China 2018-2, Beijing 11
Bavarian Sky China 2019-2, Beijing 11
Bavarian Sky China 2019-3, Beijing 11
Bavarian Sky China 2020-1, Beijing 11
Bavarian Sky China 2020-2, Beijing 11
Bavarian Sky China Leasing 2019-1, Tianjin 11
Bavarian Sky China Leasing 2019-2, Tianjin 11
Bavarian Sky China 2019-1, Beijing 11
Oceania
BMW Australia Finance Ltd., Mulgrave
323
Notes to the Group Financial Statements
BMW AG'S NON-CONSOLIDATED COMPANIES
AT 31 DECEMBER 2020
Companies
DOMESTIC7
Alphabet Fleetservices GmbH, Munich4
Group Financial Statements
Automag GmbH, Munich
BMW i Ventures GmbH, Munich
IDEALworks GmbH, Munich
FOREIGN7
Europe
Alphabet Insurance Services Polska Sp. z o.o., Warsaw
BMW (GB) Ltd., Farnborough
BMW Car IT GmbH, Munich4
BMW Group
Report 2020
0
0
21
100
BMW Australia Ltd., Melbourne
115
22
100
BMW Financial Services New Zealand Ltd., Auckland
100
BMW New Zealand Ltd., Auckland
100
BMW Sydney Pty. Ltd., Sydney
100
BMW Melbourne Pty. Ltd., Melbourne
BMW Australia Trust 2011-2, Mulgrave11
Bavarian Sky Australia Trust A, Mulgrave11
100
OO
BMW Car Club Ltd., Farnborough
Group Financial Statements
100
100
IVM Industrie-Verband Motorrad GmbH & Co. Dienstleistungs KG, Essen
Joblinge gemeinnützige AG Berlin, Berlin
Joblinge gemeinnützige AG Leipzig, Leipzig
Joblinge gemeinnützige AG München, Munich
Racer Benchmark Group GmbH, Landsberg am Lech
SGL Carbon SE, Wiesbaden
Hubject GmbH, Berlin
Mobimeo GmbH, Berlin
Northvolt AB, Stockholm
1 The amounts shown for the German subsidiaries correspond to the annual financial statements drawn up in accordance with German accounting requirements (HGB).
Equity
in € million
Profit/loss
in € million
Capital invest-
ment in %
FOREIGN7
2 The amounts shown for the foreign subsidiaries correspond to the annual financial statements drawn up in accordance with uniform IFRS rules. Equity and earnings not denominated in euro are translated into euro using the
closing exchange rate at the balance sheet date.
GSB Sonderabfall-Entsorgung Bayern GmbH, Baar-Ebenhausen
DOMESTIC7
50
50
20
20
40
40
Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern
50
BMW Group
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
BMW AG'S PARTICIPATIONS AT 31 DECEMBER 2020
K = 279
Companies
50
3 Profit and Loss Transfer Agreement with BMW AG.
4 Profit and Loss Transfer Agreement with a subsidiary of BMW AG.
5 Exemption from drawing up a management report applied in accordance with § 264 (3) and § 264 b HGB.
Group Financial Statements
Notes to the Group Financial Statements
Munich, 9 March 2021
Bayerische Motoren Werke
Aktiengesellschaft
THE BOARD OF MANAGEMENT
BMW Group
Report 2020
OLIVER ZIPSE
DR. MILAN NEDELJKOVIĆ
PIETER NOTA
DR. NICOLAS PETER
FRANK WEBER
DR.-ING. ANDREAS WENDT
K = 280
ILKA HORSTMEIER
4
10
18
6 Exemption from publication of financial statements applied in accordance with § 264 (3) and § 264 b HGB.
7 These entities are neither consolidated nor accounted for using the equity method due to their overall immateriality for the Group Financial Statements.
8 The amounts shown for entities accounted for using the equity method and for proportionately consolidated entities correspond to the annual financial statements drawn up in accordance with uniform IFRS rules. Equity not
denominated in euro is translated into euro using the closing exchange rate at the balance sheet date, earnings are translated using the average rate.
9 First-time consolidation.
1º Deconsolidation in the financial year 2020: Sutum ROM GmbH (merger), Société Nouvelle WATT Automobiles S.A.R.L. (merger), Alphabet France SAS (merger), Alphabet (UK) Ltd. (liquidation),
BMW Retail Nederland B. V. (liquidation), BMW Amsterdam B.V. (sale).
11 Control on basis of economic dependence.
5
3
16
20
10
17
60
9
50
100
217
206
100
100
70
100
100
100
THEPSATRI Co. Ltd., Bangkok
BMW Group
Group Financial Statements
Notes to the Group Financial Statements
BMW AG'S ASSOCIATED COMPANIES, JOINT VENTURES
AND JOINT OPERATIONS AT 31 DECEMBER 2020
Companies
Joint ventures - equity accounted
Report 2020
DOMESTIC
Herald Hezhong (Beijing) Automotive Trading Co. Ltd., Beijing
BMW Philippines Corp., Manila
100
100
100
100
100
100
BMW Technology Office Israel Ltd., Tel Aviv
100
100
100
100
100
100
BMW Mobility Services Ltd., Sichuan Tianfu New Area (Chengdu Section)
51
YOUR NOW Holding GmbH, Munich
IONITY Holding GmbH & Co. KG, Munich³
FOREIGN
Equity
in € million
Profit/loss
in € million
Capital invest-
ment in %
1,226
244
K = 278
-749
-37
20
7,388
2,560
50
50
1,214
50
Critical TW S.A., Porto
BMW AVTOTOR Holding B.V., Amsterdam
BMW Albatha Leasing LLC, Dubai
BMW Brilliance Automotive Ltd., Shenyang
Associated companies - equity accounted
FOREIGN
THERE Holding B.V., Amsterdam³
Joint operations - proportionately consolidated entities
FOREIGN
Spotlight Automotive Ltd., Zhangjiagang³
Not equity accounted or proportionately consolidated entities
DOMESTIC7
Encory GmbH, Unterschleißheim
The Retail Performance Company GmbH, Munich
PDB - Partnership for Dummy Technology and Biomechanics GbR, Gaimersheim
FOREIGN7
Bavarian & Co Co. Ltd., Incheon
BMW Albatha Finance PSC, Dubai
30
Report 2020
BMW Group
>
BMW Central Pension Trustees Ltd., Farnborough
Triumph Motor Company Ltd., Farnborough
Riley Motors Ltd., Farnborough
= 272
K<
Notes to the Group Financial Statements
Group Financial Statements
Report 2020
BMW Group
100
100
100
100
100
100
100
100
100
100
BLMC Ltd., Farnborough
100
Bavarian Sky S.A., Compartment German Auto Loans 7, Luxembourg 11
Bavarian Sky S.A., Compartment German Auto Loans 8, Luxembourg 11
Bavarian Sky S.A., Compartment German Auto Loans 9, Luxembourg 11
Bavarian Sky S.A., Compartment German Auto Loans 10, Luxembourg 11
Bavarian Sky S.A., Compartment German Auto Leases 5, Luxembourg 11
Bavarian Sky S.A., Compartment A, Luxembourg 11
Bavarian Sky UK 2 plc, London 11
0
Bavarian Sky UK D Ltd., London 11
Bavarian Sky UK C Ltd., London 11
Bavarian Sky UK B Ltd., London 11
Bavarian Sky UK A Ltd., London 11
Bavarian Sky UK 3 plc, London 11
0
0
0
0
0
0
0
0
0
100
100
100
100
Bavarian Sky S.A., Compartment B, Luxembourg 11
Bavarian Sky Europe S.A. Compartment A, Luxembourg 11
0
100
100
Alphabet Polska Fleet Management Sp. z o.o., Warsaw
BMW Bulgaria EOOD, Sofia
BMW Slovenia distribucija motornih vozil d.o.o., Ljubljana
BMW Slovenská republika s.r.o., Bratislava
BMW Madrid S. L., Madrid
BMW Czech Republic s.r.o., Prague
BMW Danmark A/S, Copenhagen
BMW Automotive (Ireland) Ltd., Dublin
BMW Italia Retail S.r.I., Rome
BMW Romania S.R.L., Bucharest
BMW Hungary Kft., Vecsés⁹
BMW Renting (Portugal) Lda., Porto Salvo
Park Lane Ltd., Farnborough
BMW Distribution S.A.S., Vélizy-Villacoublay
Oy BMW Suomi AB, Helsinki
BMW Nederland B.V., The Hague
BMW Financial Services Denmark A/S, Copenhagen
BMW Financial Services (Ireland) DAC, Dublin
BMW Portugal Lda., Porto Salvo
BMW (UK) Investments Ltd., Farnborough
100
BiV Carry ISCS, Senningerberg
Alphabet Luxembourg S.A., Leudelange
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
K = 271
BMW (UK) Capital plc, Farnborough
0
0
0
100
100
100
100
100
BMW FS Securities LLC, Wilmington, Delaware
BMW Auto Leasing LLC, Wilmington, Delaware
SB Acquisitions LLC, Wilmington, Delaware
BMW Manufacturing Indústria de Motos da Amazônia Ltda., Manaus
BMW Acquisitions Ltda., São Paulo
BMW Leasing do Brasil S.A., São Paulo
BMW Consolidation Services Co. LLC, Wilmington, Delaware
BMW de Argentina S.A., Buenos Aires
BMW Insurance Agency Inc., Wilmington, Delaware
BMW Leasing de Mexico S.A. de C.V., Mexico City
BMW Financial Services de Mexico S.A. de C.V. SOFOM, Mexico City
Rolls-Royce Motor Cars NA LLC, Wilmington, Delaware
BMW of Manhattan Inc., Wilmington, Delaware
K = 273
100
Notes to the Group Financial Statements
100
100
BMW FS Funding Corporation, Wilmington, Delaware
0
0
0
0
0
100
BMW Group
100
100
100
100
100
100
100
100
100
100
100
100
Group Financial Statements
Report 2020
BMW Group
769
BMW of North America LLC, Wilmington, Delaware
100
738
1,127
BMW Financial Services NA LLC, Wilmington, Delaware
100
80
1,304
BMW Bank of North America Inc., Salt Lake City, Utah
100
208
2,150
BMW Manufacturing Co. LLC, Wilmington, Delaware
100
164
2,873
BMW (US) Holding Corp., Wilmington, Delaware
The Americas
309
100
BMW Canada Inc., Richmond Hill, Ontario
550
100
BMW de Mexico S.A. de C.V., Mexico City
100
BMW Financeira S.A. Credito, Financiamento e Investimento, São Paulo
100
BMW US Capital LLC, Wilmington, Delaware
100
59
109
Alphabet Fuhrparkmanagement (Schweiz) AG, Dielsdorf
BMW SLP, S.A. de C.V., Villa de Reyes
-6
125
BMW do Brasil Ltda., Araquari
100
-521
293
Financial Services Vehicle Trust, Wilmington, Delaware
100
89
100
Alphabet Austria Fuhrparkmanagement GmbH, Salzburg
BMW Hellas Trade of Cars A.E., Kifissia
BMW Services Ltd., Farnborough
610
55
100
BMW Japan Finance Corp., Tokyo
583
62
100
BMW China Automotive Trading Ltd., Beijing
522
477
100
Herald International Financial Leasing Co. Ltd., Tianjin
259
36
58
BMW Korea Co. Ltd., Seoul
207
14
100
BMW Financial Services Korea Co. Ltd., Seoul
BMW Leasing (Thailand) Co. Ltd., Bangkok
58
2,664
0
>
Alphabet France Fleet Management S.N.C., Saint-Quentin-en-Yvelines
Report 2020
Group Financial Statements
Notes to the Group Financial Statements
|<<
三 274
Africa
BMW (South Africa) (Pty) Ltd., Pretoria
BMW Financial Services (South Africa) (Pty) Ltd., Midrand
SuperDrive Investments (RF) Ltd., Cape Town 11
839
154
81
100
7
100
0
Asia
BMW Automotive Finance (China) Co. Ltd., Beijing
280
184
10
100
BMW Asia Pte. Ltd., Singapore
100
BMW India Private Ltd., Gurgaon
100
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Asia Pacific Capital Pte Ltd., Singapore
100
100
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Tokio Corp., Tokyo
2016-2 ABL, Tokyo 11
2017-1 ABL, Tokyo 11
2017-2 ABL, Tokyo 11
100
100
0
0
OO
0
100
100
100
100
BMW Manufacturing (Thailand) Co. Ltd., Rayong
140
84
100
BMW Japan Corp., Tokyo
108
-35
100
BMW (Thailand) Co. Ltd., Bangkok
0
100
BMW Malaysia Sdn Bhd, Kuala Lumpur
100
51
BMW China Services Ltd., Beijing
100
BMW China Investment Ltd., Beijing⁹
BMW Asia Technology Centre Sdn Bhd, Kuala Lumpur
PT BMW Indonesia, Jakarta
BMW Holding Malaysia Sdn Bhd, Kuala Lumpur
BMW India Financial Services Private Ltd., Gurgaon
0
BMW Group
0
Alphabet España Fleet Management S.A.U., Madrid
Swindon Pressings Ltd., Farnborough
BMW Financial Services Polska Sp. z o.o., Warsaw
BMW Austria GmbH, Salzburg
Notes to the Group Financial Statements
0
BMW Facility Partners LLC, Wilmington, Delaware
BMW Manufacturing LP, Woodcliff Lake, New Jersey
BMW FS Receivables Corporation, Wilmington, Delaware
BMW Receivables 1 Inc., Richmond Hill, Ontario
BMW Receivables Ltd. Partnership, Richmond Hill, Ontario
BMW Receivables 2 Inc., Richmond Hill, Ontario
BMW Extended Service Corporation, Wilmington, Delaware
BMW Vehicle Lease Trust 2018-1, Wilmington, Delaware 11
BMW Vehicle Lease Trust 2019-1, Wilmington, Delaware11
BMW Vehicle Owner Trust 2018-A, Wilmington, Delaware 11
BMW Vehicle Owner Trust 2019-A, Wilmington, Delaware 11
BMW Vehicle Owner Trust 2020-A, Wilmington, Delaware 11
Group Financial Statements
BMW Canada 2018-A, Richmond Hill, Ontario 11
BMW Canada Auto Trust 2018-1, Richmond Hill, Ontario¹1
BMW Canada Auto Trust 2019-1, Richmond Hill, Ontario 11
BMW Canada Auto Trust 2020-1, Richmond Hill, Ontario 11
0
BMW Floorplan Master Owner Trust Series 2018-1, Wilmington, Delaware¹¹
BMW 2020-A Lease Conduit, Wilmington, Delaware 11
Overview of Supervisory Board Committees
Remuneration Report
(Part of the Combined Management Report)
Glossary and Explanation of Key Figures
Responsibility Statement by the Company's
Legal Representatives
Independent Auditor's Report
331
and their Composition
Independent Practitioner's Report
330
K = 281
BMW Group
Report 2020
Corporate Governance
Fundamental Aspects of Corporate Governance System
K = 282
FUNDAMENTAL
ASPECTS OF CORPO-
RATE GOVERNANCE
(PART OF THE COM-
BINED MANAGEMENT
REPORT)
Good corporate governance - acting in accordance
with the principles of responsible management aimed at
increasing enterprise value on a sustainable basis - is an
essential requirement for the BMW Group, embracing
all areas of the business. Corporate culture within the
BMW Group is founded on transparent reporting and
corporate communication, corporate governance in the
interest of stakeholders, trustful cooperation both of
the Board of Management and the Supervisory Board
as well as among employees, and compliance with
plicable law.
340
326
285
289
CORPORATE
GOVERNANCE
282
282
282
Fundamental Aspects of Corporate Governance
(Part of the Combined Management Report)
Information on the Company's Governing Constitution
Board of Management
283
Supervisory Board
284
Corporate Governance
Shareholders and Annual General Meeting
284
Declaration of Compliance
284
Corporate Governance Statement
ap-
Members of the Board of Management
286
Members of the Supervisory Board
291
The Board of Management and the Supervisory
Board report below on the main features of corporate
governance. The Corporate Governance Report pursu-
ant to Principle 22 of the German Corporate Govern-
ance Code (DCGK), as amended on 16 December 2019,
is part of the Corporate Governance Statement. which
can be accessed at ✓ www.bmwgroup.com/ezu (Corporate
Governance).
BOARD OF MANAGEMENT
The designation BMW Group comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and its
Group entities. BMW AG is a stock corporation (Aktien-
gesellschaft) within the meaning of the German Stock
Corporation Act (Aktiengesetz) and has its registered
office in Munich, Germany. It has three representative
bodies, namely the Annual General Meeting, the Supervi-
sory Board and the Board of Management. The duties and
authorities of those bodies derive from the Stock Corpo-
ration Act and the Articles of Incorporation of BMW AG.
Shareholders, as the owners of the business, exercise their
rights at the Annual General Meeting. The Board of Man-
agement is fully responsible for managing the enterprise
and is monitored and advised by the Supervisory Board.
The Supervisory Board appoints the members of the Board
of Management and can, for an important reason, revoke
an appointment at any time. The Board of Management
informs the Supervisory Board and reports to it regularly,
promptly and comprehensively, in line with the principles
of conscientious and faithful accountability and in accord-
ance with the law and the reporting duties determined
by the Supervisory Board. The Board of Management
requires the approval of the Supervisory Board for certain
major proceedings. The Supervisory Board is not, however,
authorised to undertake management measures itself.
SHAREHOLDERS AND
ANNUAL GENERAL MEETING
KKK = 284
DECLARATION OF COMPLIANCE CORPORATE GOVERNANCE
STATEMENT
The shareholders of BMW AG exercise their rights at
the Annual General Meeting. The Annual General Meet-
ing decides in particular on the utilisation of unappropri-
ated profit, the ratification of the acts of the members of
the Board of Management and of the Supervisory Board,
the appointment of the external auditor, changes to the
Articles of Incorporation and specified capital measures
and elects the shareholders' representatives to the Su-
pervisory Board.
Moreover, the systems for the remuneration of Board
of Management members and Supervisory Board mem-
bers are presented to the Annual General Meeting for
approval in the case of significant changes, but at least
every four years. This is scheduled to take place at the
Annual General Meeting in 2021.
² (Independent) financial expert within the meaning of §§ 100 (5) and 107 (4) AktG, C.10, D.4 DCGK.
Shareholders may exercise their voting rights at the
Annual General Meeting either in person, by proxy or via
a representative designated by BMW AG. Voting rights
may also be exercised via postal vote.
Fundamental Aspects of Corporate Governance System
Due to the Covid-19 pandemic, the 2020 Annual
Meeting was held for the first time as a virtual meeting,
i.e., without the physical presence of shareholders and
proxies, except for the Company representatives bound
by instructions issued by shareholders. In this case, the
Company enabled shareholders to exercise their voting
rights by issuing instructions to Company representatives
or by postal vote (in both cases in paper form and online).
Further information on corporate management and
governance, including the declaration of compliance
pursuant to § 161 of the German Stock Corporation Act,
can be found in the Corporate Governance Statement
(§ 289 f and § 315 HGB) at www.bmwgroup.com/ezu (Corpo-
rate Governance).
BMW Group
Report 2020
Corporate Governance
Fundamental Aspects of Corporate Governance System
MEMBERS OF THE
BOARD OF MANAGEMENT
OLIVER ZIPSE (b.1964)
Chairman
Once a year, the Board of Management and the Su-
pervisory Board of BMW AG issue an annual Declaration
of Compliance pursuant to § 161 of the German Stock
Corporation Act (AktG) with regard to recommenda-
tions of the Government Commission on the German
Corporate Governance Code as officially published and
valid at the date of the declaration. BMW AG's current
and previous Declarations of Compliance are available
online at www.bmwgroup.com/compliancedeclaration (Corpo-
rate Governance). In the Declaration of Compliance
issued in December 2020, the Board of Management
and the Supervisory Board declared that all recommen-
dations of the German Corporate Governance Code
(version dated 16 December 2019) will be complied
with going forward.
Corporate Governance
BMW Group
Report 2020
Further information on the composition and working
procedures of the Supervisory Board and its committees
is provided in the Corporate Governance Statement at
www.bmwgroup.com/ezu (Corporate Governance).
The close interaction between Board of Management
and Supervisory Board in the interests of the enterprise
as described above is also known as a "two-tier board
structure".
The Board of Management manages the enterprise
under its own responsibility, acting in the best interests
of the BMW Group with the aim of achieving sustainable
growth in value. The interests of shareholders, employees
and other stakeholders are also taken into account in the
pursuit of this aim.
In accordance with § 7 of the Articles of Association,
the Board of Management of BMW AG comprises two
or more persons; other than that, the number of mem-
bers of the Board of Management is determined by the
Supervisory Board. At 31 December 2020, the Board
of Management comprised seven members. The Board
of Management decides on the principal guidelines for
managing the enterprise, determines and agrees upon
the strategic orientation with the Supervisory Board, and
ensures its implementation. The Board of Management
is responsible for ensuring that all provisions of law and
internal regulations are complied with. Further details
on compliance within the BMW Group are available
in the section ✓ Compliance and Human Rights. The Board of
Management is also responsible for ensuring that appro-
priate risk management and risk controlling systems are
in place throughout the Group.
BMW Group
Report 2020
Corporate Governance
Fundamental Aspects of Corporate Governance System
K = 283
Members of the Board of Management are required to
act in the enterprise's best interests and may not pursue
personal interests in their decisions or take advantage
of business opportunities intended for the benefit of
the BMW Group. Individual members of the Board of
Management of BMW AG are required to disclose any
conflicts of interest to the Supervisory Board without
delay and inform the other members of the Board of
Management accordingly.
Deliberations are held and decisions taken by the
Board of Management as a collegiate body at full Board
meetings as well as at Product and Customer full Board
meetings. The Board of Management also deliberates and
makes decisions at meetings of its three committees -
Customer, Operations and Senior Executives. The overall
framework for developing business strategies, the use of
resources, the implementation of strategies and matters
of particular importance to BMW AG are decided upon
at Board of Management meetings.
The Board of Management Board has issued terms of
procedure for itself. The allocation of areas of responsi-
bility and business segments among the members of the
Board of Management is set out in the Board's Schedule
of Responsibilities.
Further information on the composition and working
methods of the Management Board and its committees
is provided in the Corporate Governance Statement at
www.bmwgroup.com/ezu (Corporate Governance).
SUPERVISORY BOARD
BMW AG's Supervisory Board is composed of ten
shareholder representatives (elected by the Annual
General Meeting) and ten employee representatives
(elected in accordance with the Co-Determination Act).
The ten Supervisory Board members representing em-
ployees comprise seven Company employees, including
one executive staff representative, and three members
elected following nomination by unions. The Supervi-
sory Board has the task of advising and supervising the
Board of Management in its management of BMW AG. It
is involved in all decisions of fundamental importance for
BMW AG. The Supervisory Board appoints the members
of the Board of Management and decides upon the level
of remuneration they receive. The Supervisory Board can
revoke appointments for important reasons.
Members of the Supervisory Board of BMW AG are
obliged to act in the best interest of the enterprise as a
whole. They may not pursue personal interests in their
decisions or take advantage of business opportunities
intended for the benefit of the BMW Group.
Members of the Supervisory Board are obliged to
inform the full Supervisory Board of any conflicts of
interest so that the latter can report to the shareholders
at the Annual General Meeting on its treatment of the
issue. Conflicts of interest requiring to be disclosed in-
clude, in particular, conflicts of interest that may arise
as a result of a consultant or board function with clients,
suppliers, lenders or other business partners. Significant
and non-temporary conflicts of interest of a Supervisory
Board member result in the termination of mandate.
The Supervisory Board regularly assesses the effi-
ciency of its activities. To this end, shared discussion is
conducted within the Supervisory Board and, at regular
intervals, in personal discussions with the Chairman,
prepared on the basis of a questionnaire sent in advance,
which is drawn up by the Supervisory Board.
The Supervisory Board has stated specific targets for
its composition, agreed to a diversity concept and deter-
mined a competency profile. Members of the Supervisory
Board are responsible for undertaking any training re-
quired for the performance of their duties. The Company
provides them with appropriate assistance therein.
Taking into account the specific circumstances of the
BMW Group and the number of Board members, the
Supervisory Board has set up a Presiding Board and four
committees, namely the Personnel Committee, the Audit
Committee, the Nomination Committee and the Media-
tion Committee. These serve to raise the efficiency of the
Supervisory Board's work and facilitate the handling of
complex issues.
Composition of the Presiding Board and the various
committees is based on legal requirements, the Articles
of Incorporation, rules of procedure and corporate gov-
ernance principles, while taking into particular account
the expertise of the members concerned.
BMW AG ensures that the Supervisory Board and
its committees are appropriately equipped to carry out
their duties. This includes providing a central Supervi-
sory Board office to support the chairpersons in their
coordination work.
INFORMATION ON THE
COMPANY'S GOVERNING
CONSTITUTION
BMW Group
Report 2020
-
K = 287
― FUCHS PETROLUB SE, Chairman
— Fresenius Management SE* (until 30 June 2020)
- Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München (until 29 April 2020)
VERENA ZU DOHNA-JAEGER2 (b.1975)
Member since 2019, elected until the AGM 2024
Department head for Industrial Relations and
Co-determination Policy with the Executive Board of
IG Metall/(In-house) counsel
Mandates
-
- ABB AG
1 Employee representatives (Company employees).
2 Employee representatives (union representatives).
3 Employee representatives (members of senior management).
Not listed on the stock exchange.
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
― BASF SE, Chairman
BMW Group
Report 2020
Fundamental Aspects of Corporate Governance System
BMW Bank GmbH*, Chairman
DR.-ING. HEINRICH HIESINGER (b.1960)
Member since 2017, elected until the AGM 2022
Member of supervisory boards
Mandates
-
Deutsche Post AG
― Fresenius Management SE* (since 1 July 2020)
- ZF Friedrichshafen AG* (since 1 January 2021)
PROF. DR. RER. POL. RENATE KÖCHER (b.1952)
Member until 14 May 2020
Director of Institut für Demoskopie
Allensbach Gesellschaft zum Studium der
öffentlichen Meinung mbH
Corporate Governance
Mandates
Chairman of the Supervisory Board of BASF SE
(since 18 June 2020)
Member since 2018, elected until the AGM 2023
Former Chairman of the Board of Management
of BMW AG
Mandates
Siemens Aktiengesellschaft
- Henkel Management AG (since 22 June 2020)
- Henkel AG & Co. KGaA (Shareholders' Committee)
MANFRED SCHOCH¹ (b.1955)
Member since 1988, elected until the AGM 2024
Deputy Chairman of the Supervisory Board
Chairman of the European and General Works Council
Industrial Engineer
STEFAN QUANDT (b.1966)
Member since 1997, elected until the AGM 2024
Deputy Chairman of the Supervisory Board
Entrepreneur
Mandates
― DELTON Health AG*, Chairman
― DELTON Technology SE*, Chairman
― Frankfurter Allgemeine Zeitung GmbH*
- AQTON SE*, Chairman
Entrust Corp.
STEFAN SCHMID¹ (b.1965)
Member since 2007, elected until the AGM 2024
Deputy Chairman of the Supervisory Board
Chairman of the Works Council, Dingolfing
DR. JUR. KARL-LUDWIG KLEY (b.1951)
Member since 2008, elected until the AGM 2021
Deputy Chairman of the Supervisory Board
Chairman of the Supervisory Board of E.ON SE
and Deutsche Lufthansa Aktiengesellschaft
Mandates
― E.ON SE, Chairman
― Deutsche Lufthansa Aktiengesellschaft, Chairman
CHRISTIANE BENNER2 (b.1968)
Member since 2014, elected until the AGM 2024
Second Chairwoman of IG Metall
Mandates
-
- Continental AG, Deputy Chairwoman
DR. RER. POL. KURT BOCK (b.1958)
Mandates
-
-
-
Member since 2013, elected until the AGM 2024
Member of the Works Council, Dingolfing
1 Employee representatives (Company employees).
2 Employee representatives (union representatives).
3 Employee representatives (members of senior management).
Not listed on the stock exchange.
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
BMW Group
Corporate Governance
Report 2020
Fundamental Aspects of Corporate Governance System
ANKE SCHÄFERKORDT (b.1962)
Member since 14 May 2020, elected until the AGM 2025
Member of supervisory boards
Mandates
- BASF SE
- Serviceplan Group Management SE*
- Wayfair Inc.
WERNER ZIERER1 (b.1959)
Member since 2001, elected until the AGM 2024
Chairman of the Works Council, Regensburg
DR. VISHAL SIKKA (b.1967)
Member since 2019, elected until the AGM 2024
CEO & Founder, Vianai Systems, Inc.
Mandates
Oracle Corporation
DR. THOMAS WITTIG³ (b.1960)
Member since 2019, elected until the AGM 2024
BRIGITTE RÖDIG1 (b.1963)
Chairman of the Supervisory Board
DR. DOMINIQUE MOHABEER¹ (b.1963)
Member since 2012, elected until the AGM 2024
Member of the Works Council, Munich
WILLIBALD LÖW¹ (b.1956)
Infineon Technologies AG (until 20 February 2020)
Nestlé Deutschland AG*
Robert Bosch GmbH⭑
SIMONE MENNE (b.1960)
Member since 2015, elected until the AGM 2021
Member of supervisory boards
Mandates
- Deutsche Post AG
- Henkel AG & Co. KGaA (since 17 June 2020)
- Springer Nature AG & Co. KGaA⭑
(until 3 March 2020)
― Johnson Controls International plc
- Russell Reynolds Associates Inc.*
PROF. DR. RER. NAT. DR. H. C.
REINHARD HÜTTL (b.1957)
Member since 2008, elected until the AGM 2023
Scientific Director and Managing Director of EUREF
Energy Innovation GmbH
University Professor
SUSANNE KLATTEN (b.1962)
Member since 1997, elected until the AGM 2024
Entrepreneur
Mandates
- SGL Carbon SE, Chairwoman
― ALTANA AG*, Deputy Chairwoman
UnternehmerTUM GmbH*, Chairwoman
-
HORST LISCHKA² (b.1963)
Member since 2009, elected until the AGM 2021
Secretary with the Executive Board of IG Metall
Mandates
― KraussMaffei Group GmbH♦
― MAN Truck & Bus SE*
― München Klinik gGmbH (until 15 May 2020)
Member since 1999, elected until the AGM 2024
Chairman of the Works Council, Landshut
DR.-ING. DR.-ING. E. H. NORBERT REITHOFER (b.1956)
Member since 2015, elected until the Annual General
Meeting (AGM) 2025
MEMBERS OF THE
SUPERVISORY BOARD
K = 286
discussion of interim reports with Board of Management prior to publication
supervision of external audit, in particular auditor independence and additional work performed by external auditor
preparation of proposals for election of external auditor at Annual General Meeting, engagement (recommendation)
of external auditor, determination of additional areas of audit emphasis and fee agreements with external auditor
preparation of Supervisory Board's resolution on Company and Group Financial Statements
German Securities Trading Act (WpHG)
supervision of the financial reporting process, the effectiveness of the internal control system, the risk management Kurt Bock 1,2, Norbert Reithofer, Manfred Schoch, Stefan Quandt, Stefan Schmid
system, as well as the performance of Supervisory Board duties in connection with audits pursuant to § 32 of the
Norbert Reithofer 1, Manfred Schoch, Stefan Quandt, Stefan Schmid, Karl-Ludwig Kley
-
-
AUDIT COMMITTEE
established in accordance with the recommendation contained in the German Corporate Governance Code, activi-
ties based on terms of procedure
decisions relating to the approval of ancillary activities of Board of Management members, including acceptance
of non-BMW Group supervisory mandates as well as the approval of transactions requiring Supervisory Board
approval by dint of law (e.g. loans to Board of Management or Supervisory Board members)
conclusion, amendment and revocation of employment contracts (in conjunction with the resolutions taken by the
Supervisory Board regarding the remuneration of the Board of Management) and other contracts with members of
the Board of Management
preparation of decisions relating to the appointment and revocation of appointment of members of the Board of
Management, the remuneration and the regular review of the Board of Management's remuneration system
PERSONNEL COMMITTEE
activities based on terms of procedure
preparation of Supervisory Board meetings to the extent that the subject matter to be discussed does not fall within Norbert Reithofer¹, Manfred Schoch, Stefan Quandt, Stefan Schmid, Karl-Ludwig Kley
the remit of a committee
Members
PRESIDING BOARD
Senior Vice President Financial Services
Principal duties, basis for activities
supervision of internal audit system and compliance as well as the audit and supervision of any needs for action
related to possible violations of duties by members of the Board of Management in preparation of a resolution in
the Supervisory Board
amendments to Articles of Incorporation only affecting wording
1 Chair.
(In accordance with statutory requirements, the Mediation Committee comprises the Chairman and Deputy Chairman of
the Supervisory Board and one member each selected by shareholder representatives and employee representatives.)
proposal to Supervisory Board if resolution for appointment of Board of Management member has not been carried Norbert Reithofer, Manfred Schoch, Stefan Quandt, Stefan Schmid
by the necessary two-thirds majority of Supervisory Board members' votes
established as required by law
(In line with the recommendations of the German Corporate Governance Code, the Nomination Committee comprises
only shareholder representatives.)
Norbert Reithofer', Susanne Klatten, Karl-Ludwig Kley, Stefan Quandt
Members
MEDIATION COMMITTEE
established in accordance with the recommendation contained in the German Corporate Governance Code, activi-
ties based on terms of procedure
identification of suitable candidates as shareholder representatives on the Supervisory Board to be put forward for
inclusion in the Supervisory Board's proposals for election at the Annual General Meeting
NOMINATION COMMITTEE
Principal duties, basis for activities
K = 290
Fundamental Aspects of Corporate Governance System
Corporate Governance
BMW Group
Report 2020
>
established in accordance with the recommendation contained in the German Corporate Governance Code, activi-
ties based on terms of procedure
decision on approval for utilisation of Authorised Capital 2019
K = 289
preparation of the Supervisory Board's audit of the non-financial reporting, preparation of the selection of the audi-
tor for non-financial reporting and engagement of the auditor
OVERVIEW OF SUPERVISORY
Finance
Mandates
BMW Brilliance Automotive Ltd.*,
Deputy Chairmann
DR. MILAN NEDELJKOVIĆ (b.1969)
Production
Mandates
- BMW (South Africa) (Pty) Ltd.*, Chairman
BMW Motoren GmbH*, Chairman
FRANK WEBER (b.1966)
Development (since 1 July 2020)
DR. NICOLAS PETER (b.1962)
◆ Not listed on the stock exchange.
DR.-ING. ANDREAS WENDT (b.1958)
Purchasing and Supplier Network
General Counsel:
DR. ANDREAS LIEPE
K = 285
BMW Group
Report 2020
Corporate Governance
Fundamental Aspects of Corporate Governance System
BOARD COMMITTEES AND
THEIR COMPOSITION
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards
of business enterprises.
Human Resources, Labour Relations Director
Mandates
- Rolls-Royce Motor Cars Limited*, Chairman
ILKA HORSTMEIER (b.1969)
Corporate Governance
Report 2020
BMW Group
K = 288
Membership of equivalent national or foreign boards of business enterprises.
Membership of other statutory supervisory boards.
Not listed on the stock exchange.
3 Employee representatives (members of senior management).
Fundamental Aspects of Corporate Governance System
1 Employee representatives (Company employees).
BMW Automotive Finance (China) Co., Ltd.*,
Chairman
KLAUS FRÖHLICH (b.1960)
Development (until 30 June 2020)
Mandates
― E.ON SE
PIETER NOTA (b.1964)
Customer, Brands, Sales
2 Employee representatives (union representatives).
Mandates
K |<< = 23
Chairman of the Board of Management
Oliver Zipse
BMW models iX and ¡4.
ALL-ELECTRIC
OFFENSIVE with the NEW
our TECHNOLOGY
STATEMENT OF THE
CHAIRMAN OF THE
This
BOARD OF MANAGEMENT
Statement of the Chairman of the Board of Management
To Our Stakeholders
Report 2020
BMW Group
Chairman of the Supervisory Board
BMW Group
Report 2020
year we are launching
To Our Stakeholders
the BMW Group stands for.
DEAR SHAREHOLDERS,
Accepting things as they are and making the best of them.
Despite the coronavirus pandemic, we delivered about a third more electrified BMW
and MINI vehicles to customers than the previous year. Our plug-in hybrids were highly
sought-after, as were our new fully electric models, the BMW iX3* and MINI Cooper SE*.
Because we started our preparations early, we were able to significantly overfulfil our
assigned CO2 limit by about 5 g/km. This was never in any doubt for us. Our EU fleet
emissions are currently at 99 g/km and we will also meet the 2021 requirements.
EU CO2 limits for 2020 significantly overfulfilled.
Our vehicles have given many people a sense of security during the pandemic. In
fact, cars were more popular than ever. Our customers bought over 2.3 million BMW,
MINI and Rolls-Royce vehicles – a decrease of only 8.4 percent from our record-breaking
2019. Nonetheless, the BMW Group was able to increase its global market share in
2020. Additionally, BMW Motorrad posted the second-best sales figures in its history
and BMW M GmbH had its most successful year ever.
Global market share increased during the pandemic.
The rapid spread of SARS-CoV-2 around the globe struck while the BMW Group
was in the midst of its multidimensional transformation. In hindsight, one thing is clear:
in a difficult environment with unforeseeable developments, your company proved just
how robust, flexible, adaptable and innovative it is. Our greatest strength was taking a
realistic view of things, relying more than ever before on the flexibility of our people.
Thanks to this, we were able to meet our adjusted targets, which we announced early in
the pandemic. At the same time, the Board of Management made far-reaching decisions
and significantly stepped up the pace of transformation at the BMW Group.
Robust and flexible, adaptable and innovative - your company during
the Covid-19 pandemic.
Statement of the Chairman of the Board of Management
To Our Stakeholders
BMW Group
Report 2020
-
TECHNOLOGY – that is what
ENVIRONMENTAL
PROGRESS through
We are documenting our impact on the road to climate neutrality. With the transition
to integrated reporting, we are documenting how we are managing the BMW Group
systematically and in an integrated manner according to financial and sustainability
targets. For you, dear shareholders, as well as for other stakeholders in this company,
we want to verifiably show our progress. With this move, we are not just leading the
way among our key competitors. The BMW Group has followed a broad stakeholder
approach for years. We aim to set an example and are therefore comprehensively and
systematically reducing our environmental footprint. Our aim is to achieve full trans-
parency. We will naturally only be releasing the new Report online.
First integrated BMW Group Report.
Such profound upheavals like the sustainable mobility that we are combining step
by step with the principles of a circular economy require cooperation on a much larger
scale. The BMW Group is involved as a partner and visionary through cross-industry
technology alliances and platforms. We firmly believe that technological innovation,
in combination with responsible action, contributes to progress for companies and
the economy, as well as benefiting the environment. We all share the same goal of a
climate-neutral society.
Climate change demands responses. Rethinking our mobility as a task for society
as a whole is one way of responding – with considerable impact and an important sig-
nalling effect. The BMW Group is a global, digitalised high-tech company for premium
mobility. With this idea of ourselves, we are driving and shaping the transformation of
our industry. To do so, we are relying on technological innovation in all relevant fields -
sustainable drivetrains, autonomous driving and intelligent integration of hardware and
software, as well as for the digitalised automotive production of the future, up to and
including blockchain technology and artificial intelligence.
Statement of the Chairman of the Board of Management
During lockdown, we had to shut down production across our global network for
the first time in BMW history. Shortly afterwards, we ramped up again - in a phased, yet
extremely timely manner. This enabled us to respond to different rates of development
in the markets quite precisely.
Many customers are eagerly awaiting the new fully electric BMW iX* and i4 models.
Both vehicles have a strong emotional appeal straight from the heart of the BMW brand. In
the iX we have perfectly integrated hardware and software in the form of shy tech. Just as
our customers would expect from us: in a simple, intuitive and precise manner. We want
to excite people with innovations and at the same time inspire them. The new BMW iDrive
transforms the iX*, just like every future BMW model, into a digital powerhouse.
Phase III of our transformation - what will define a BMW in the
Achieving consistent, sustainable development will also give us a competitive edge.
In 2012, we set ourselves ten sustainability goals up to 2020. Today, we are able to say:
mission accomplished. Let me give you three examples:
1. We halved the CO2 emissions of our European new vehicle fleet between 1995 and
2020.
* See Fuel Consumption and CO2 Emissions Information.
2. Our plants worldwide exclusively source green electricity. As of 2021, they will even
produce completely CO2-neutral on balance.
3. The percentage of women in management functions at the BMW Group is above
our target range.
BMW Group
Report 2020
To Our Stakeholders
Statement of the Chairman of the Board of Management
Sustainability is the common thread.
<< = 27
-
We now find ourselves on the next stage of the journey – pursuing a verifiable
and consistent path towards climate neutrality by 2050. In July 2020, we adopted our
integrated sustainability strategy, with concrete science-based targets for the first stage
up to 2030. How are we different from other companies? The answer to that is simple:
we are substantially reducing our carbon footprint along the entire value chain. The
aim is for life cycle CO2 emissions per vehicle to be lowered by at least a third. This will
be achieved through innovation, not offsets. In this way, we can drastically reduce the
carbon footprint compared to 2019 per vehicle by 2030:
-
In production by 80 percent.
In the supply chain by at least 20 percent.
Without countermeasures, growth in e-mobility would, in fact, increase supply chain
CO2 emissions by a third. Instead, we are reversing this trend and lowering emissions.
Our aim is to create the most sustainable supply chain in our industry. We have already
agreed with our suppliers that they will only use green power to produce battery cells.
This measure alone adds up to about ten million tonnes less CO2 over the next ten years.
Climate-neutral business model spanning the entire value chain by 2050.
We are already looking ahead into the future and intend to close the material cycle
further - for instance, by increasing the percentage of secondary material in our vehicles.
This lowers CO2 emissions significantly compared to using primary material. We will be
sharing how we plan to drive towards a circular economy at the IAA MOBILITY 2021.
Our clear claim
We don't just do sustainability at BMW: We are making BMW sustainable.
is that the GREENEST
ELECTRIC VEHICLE comes
FROM BMW. We are
We aim to deliver at least seven million electrified vehicles to customers by 2030. To
coincide with the next surge in e-mobility, we will be launching our new cluster archi-
tecture, which is uncompromisingly centred on fully electric drivetrains, in the middle
of the decade, starting at our new plant in Hungary. We believe the next dimension of
digital connectivity is closely tied to this: in the vehicle, in production and throughout
our company processes.
Listen to what CEO
OLIVER ZIPSE has
BMW iX and i4 will revolutionise the market in 2021.
We are also stepping up electric mobility to keep pace with growing demand. Our
roadmap is ambitious: Your company aims to have delivered more than a million ve-
hicles with battery-electric or plug-in hybrid drive trains to customers by the end of
this year. We will have 25 electrified models on the roads by 2023 - targeting our large
high-volume models, in particular. By 2025, electrified vehicles will comprise at least a
quarter of our sales volume. We also see potential in fuel cells and are supporting the
creation of hydrogen infrastructure in Germany. A small series of the BMW i Hydrogen
NEXT is planned from 2022.
Electrifying the BMW Group.
We are currently leveraging the full potential of global differences in demand with
our wide range of products and drivetrains. The popular BMW X3 will be joined by
the high-volume BMW 5 Series, X1 and 7 Series models, each with a choice of four
drivetrain technologies. Our plants are capable of building different drivetrains on the
same production line. By the end of 2022, each of our German vehicle plants will be
producing at least one fully electric vehicle. This is what flexibility looks like at BMW!
We are enabling our team by developing expertise and reallocating competences. We
plan to take everyone along with us. This year alone, we will be training 75,000 partici-
pants in future areas of activity and new fields of expertise like robotics, data analytics,
agile software development, AI, autonomous driving and, of course, e-mobility.
Phase II of our transformation - strategic focus on electrification, digitalisation and
developing expertise.
-
At major tipping points, BMW has often ushered in change with bold decisions.
During the global economic and financial crisis of 2008/2009, your company paved the
way for electric mobility. The ultra-sustainable BMW i3* was ahead of its time – and is
still performing well in the marketplace to this day.
Phase I of our transformation - the e-mobility pioneer.
Personally, and on behalf of the Board of Management team, I would like to thank
all our customers for placing their trust in us. I would also explicitly like to thank our
retail organisation and suppliers and extend an especially warm thank you to all our
associates. 2020 was an extremely challenging year, full of emotion, hope and setbacks,
but the BMW team spirit prevailed. The Company and employee representatives found
solutions together - just as Herbert Quandt would have wanted.
year 2030?
Thank you to all our customers; praise for our 120,726 associates.
Our associates implemented the new requirements with commitment and discipline -
and continue to do so. Every single vehicle launch went ahead as planned. Our supply
chain stayed up and running at all times and mastered the stress test of the coronavirus
year. We kept in touch with our customers – personally and digitally. Thanks to our
new Mobile Sales Office, we are also offering contactless consultation and sales in more
than 60 markets.
K = 26
Statement of the Chairman of the Board of Management
To Our Stakeholders
BMW Group
Report 2020
K = 25
* See Fuel Consumption and CO2 Emissions Information.
the financial year 2020. ☑
to report about
-
reducing CO2 emissions
per
vehicle over the entire
BMW Group Dialogues are among the main formats for
interacting with stakeholders and have been held regu-
larly since 2011. Above all, they provide an opportunity
to sound out current and impending corporate strategic
decisions compared with stakeholder expectations. Major
topics covered in recent years have included electric mo-
bility, the Group's energy strategy, corporate citizenship,
urban mobility, and environmental and social standards
in the supply chain.
Generally, BMW Group Dialogues are held annually
in the BMW Group's key sales regions of North America,
Europe and Asia. Stakeholder feedback is documented
and incorporated in the Group's strategic considerations
alongside other key factors.
PARTICIPATION IN PUBLIC POLICY DEVELOPMENT AND
WORK IN ASSOCIATIONS
The BMW Group maintains an active, open and
transparent dialogue with policy makers, union repre-
sentatives, associations and non-governmental organi-
sations (NGOs). The aim is to play a constructive and
transparent role in helping shape the general political
framework regarding the company's business activities.
In this context, the BMW Group offers its expertise to
promote fair competition for all those involved and find
viable solutions.
The BMW Group has political offices in a number of
major cities, including Berlin, Brussels, Washington DC
and Beijing, giving it a worldwide presence for express-
ing its opinions on environmental, financial and social
policy issues. The BMW Group always adopts a clear
position, which it communicates in a transparent manner
to external parties, regardless of the target audience it
is addressing.
Apart from its own activities in terms of public pol-
icy development, the BMW Group is also a member of
numerous associations in various countries. Membership
is voluntary in the majority of cases, although there are
some situations in which it is necessary to join associa-
tions in order to comply with legal requirements.
The BMW Group puts forward its own standpoints
with a view to helping shape association policies. How-
ever, this does not mean that the Group's opinions
always fully coincide with those of the associations. If
there are any major differences, the Group considers the
best options available for best dealing with the situation.
BMW Group Cooperation Policy for Trade, Industry & Car Manufacturer
Associations
BMW Group
Report 2020
To Our Stakeholders
BMW GROUP DIALOGUES
Dialogue with Stakeholders
At the beginning of 2021, the BMW Group assumed
the presidency of the European Automobile Manufactur-
ers' Association (ACEA). The Association collaborates
with a wide range of institutional, non-governmental
research and civil society organisations as well as with a
number of industry associations. The year 2021 is seen
as a crucial point for the automotive industry within the
European Union in terms of transitioning to sustainable
mobility. The current focus of the ACEA agenda is there-
fore on topics such as climate protection, emissions, con-
nected and automated driving, sustainability, research
and innovation, economy and safety.
In the interest of transparency, the BMW Group al-
ways discloses the most important association member-
ships on its website BMW Group Memberships. Furthermore,
all topics that are discussed at EU level are publicly
available in the EU Transparency Register.
FINANCIAL MARKET PRESENCE WITH SUSTAINABILITY
CREDENTIALS
Regular in-depth dialogue with capital market partici-
pants has always been a high priority for the BMW Group.
Within a short space of time, sustainability has become a
key driver for the financial market. Investors and analysts
are increasingly considering environmental, social and
governance (ESG) aspects in their investment recommen-
dations and decision-making processes.
For many years now, its top rankings in prestigious
capital market sustainability indexes have borne out the
BMW Group's leading role among automobile manu-
facturers. In 2020, for instance, the BMW Group was
ranked first in the automotive category of the Dow Jones
Sustainability Indices World and Europe. The Group also
attaches particular importance to remaining in direct
contact with investors and analysts. These dialogues are
currently focused on the BMW Group's sustainability
strategy, the related progress updates and the ambi-
tious targets the Group has set itself to reduce carbon
emissions across the entire value chain. These topics are
discussed in face-to-face meetings and conversations as
well as at (sometimes virtual) roadshows and conferences
held at key international financial centres.
Against the backdrop of the Paris Climate Agreement,
policymakers in Europe are also increasingly adopting a
holistic approach to dealing with climate protection and
sustainability issues. For example, the EU Action Plan
for Sustainable Finance aims to redirect capital flows
towards sustainable economic activities. Financial risks
arising from factors such as climate change, resource
scarcity and environmental degradation are set to be
given greater prominence, and new approaches are
being developed to manage these risks. There are also
calls to promote greater transparency and long-termism
regarding financial and economic activity.
In June 2020, as a key aspect of the EU Action Plan,
the EU Parliament adopted a regulation to introduce a
uniform classification system (taxonomy) for environ-
mentally sustainable economic activities within the EU,
with a view to achieving a sustainable allocation of cap-
ital. The Taxonomy Regulation also extends the relevant
reporting requirements to companies covered by the EU
CSR Directive. From the 2021 reporting year onwards,
companies affected are required to disclose information
on revenues, capital expenditure and operating expenses
relating to economic activities that qualify as environ-
mentally sustainable, based on the stipulated taxonomy.
The BMW Group attaches great importance to the EU
Taxonomy Directive and is currently preparing for the
new requirements in a Group-wide project.
KK = 30
The basis for the BMW Group's engagement with
stakeholders is set out in its ✓ Stakeholder Engagement Policy.
The document defines dialogue objectives, sets out the
criteria for identifying and prioritising stakeholders, and
specifies suitable dialogue formats as well as forms of
communication.
In its interaction with stakeholders, the BMW Group
uses its own dialogue formats as well as participating
constructively in public debates. For example, the Group
has been represented at UN climate conferences for many
years.
The aim at all times is to achieve a better understand-
ing of the positions of stakeholders and in turn provide
them with greater insight into the BMW Group's activi-
ties. In pursuing this aim, the BMW Group does not shy
away from critical topics and debates, but endeavours to
find solutions via a constructive dialogue with stakehold-
ers in the best interests of all concerned.
value chain. This is what sets
the BMW Group apart.
BMW Group
Report 2020
To Our Stakeholders
Statement of the Chairman of the Board of Management
Dear Shareholders,
The coronavirus pandemic has shown very clearly how important cars are to people.
Demand should continue to increase overall. We aim to get sales back towards their
pre-pandemic levels by the end of the year. We always take a long-term perspective.
All our decisions are geared towards adding value, profitability and growth in close
combination with sustainability, climate protection and secure jobs. On this basis, your
company will remain a safe and attractive investment, focused on added value creation.
Our entrepreneurial independence is a valuable commodity for us. From this posi-
tion, we can create a new mobility for our customers. We will be investing more than
€30 billion in research and development - and the future of your company - by 2025.
That alone shows how fully confident we are.
Join us in embarking on this promising decade!
Yours
OLIVER ZIPSE
Chairman of the Board of Management
K = 28
BMW Group
Report 2020
To Our Stakeholders
Dialogue with Stakeholders
K = 29
DIALOGUE WITH
STAKEHOLDERS
STAKEHOLDER ENGAGEMENT
The BMW Group is an enterprise that operates on
a global scale within a complex environment subject to
crucial interdependencies. Business activities have an
external impact and can affect the interests of many
individual stakeholders as well as various categories of
stakeholders. Conversely, developments occurring across
society as a whole can influence the Group's business
activities, both directly and indirectly. Against this back-
drop, the BMW Group maintains a regular dialogue with
its stakeholders in all key markets on a variety of topics.
NORBERT REITHOFER
During the use phase by more than 40 percent.
Yours
Munich, March 2021
100
Dr. Kurt Bock
10
10
100
Christiane Benner
5
5
100
Verena zu Dohna-Jaeger
5
5
100
Dr.-Ing. Heinrich Hiesinger
5
5
100
Prof. Dr. Reinhard Hüttl
5
5
100
Susanne Klatten
7
7
100
Prof. Dr. Renate Köcher1
1
24
1
24
100
On behalf of the Supervisory Board
Concurrently, numerous benchmarks for investing
in liquid assets have been replaced by ESG-optimised
indices. Regarding the non-liquid portion of pension
assets, a fixed amount has been reserved for upcoming
investments that are intended to have a measurable,
positive impact on the environment or society in gen-
eral that are not based on yield considerations alone
(impact investments). In addition to climate protection,
the investments made to date are largely based on the
Sustainable Development Goals (SDGs) set out by the
UN such as health, well-being, affordable clean energy,
and sustainable consumption and production.
BMW Group
Report 2020
To Our Stakeholders
Report of the Supervisory Board
K = 21
Disclosure of attendance at meetings by individual members
The attendance rate at the meetings of the Supervisory Board, its committees and the
Presiding Board was over 99%. The table below shows attendance by individual member:
Supervisory Board Member
Dr.-Ing. Norbert Reithofer
Manfred Schoch
Attendance
Attendance in %
100
Meetings
29
29
27
27
100
Stefan Quandt
29
29
100
Stefan Schmid
27
27
Dr. Karl-Ludwig Kley
100
Sustainability is also an important factor for the
BMW Group when it comes to investing pension fund
assets. At the end of 2019, the Group took a pivotal
decision to apply sustainability criteria to investments
held by its German pension fund. The current focus is
on measuring the carbon footprint of significant parts of
these assets on the one hand and the risks attached to
their future performance on the other.
5
Dr. Vishal Sikka
Dr. Thomas Wittig
Werner Zierer
1 Supervisory Board Member until 14 May 2020.
2 Supervisory Board Member since 14 May 2020.
LO
LQ
Examination of financial statements and the profit distribution proposal
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft ("PwC") was ap-
pointed as external auditor for the financial year 2020. PwC conducted a review of the
condensed Interim Group Financial Statements and the Interim Group Management
Report for the six-month period ended 30 June 2020 and presented its findings to the
Audit Committee. No issues were identified that might indicate that the condensed
Interim Group Financial Statements and Interim Group Management Report had not
been prepared in accordance with the applicable provisions in all material respects.
-
PwC, for the second time, audited the Company and Group Financial Statements
for the financial year 2020 as well as the Combined Management Report, including
the Statement on Corporate Governance for the financial year 2020 – in each case
authorised for issue by the Board of Management on 9 March 2021 and issued an
unqualified audit opinion, signed for the second year in succession by the auditor
Petra Justenhoven as independent auditor (Wirtschaftsprüferin) and by Andreas Fell as
independent auditor (Wirtschaftsprüfer) and auditor responsible for the performance
of the engagement.
At its meeting held on 26 February 2021, the Audit Committee initially considered
in detail the preliminary version of the Company and Group Financial Statements,
the Combined Management Report (including the Combined Non-financial (Group)
Statement), the Statement of Corporate Governance, the draft versions of the auditor's
reports and the Board of Management's proposal for the appropriation of profit.
Immediately after authorising their issue, the Board of Management submitted the
Company and Group Financial Statements for the financial year 2020 and the Combined
Management Report (including the Combined Non-financial (Group) Statement), the
Statement of Corporate Governance and the proposal for the appropriation of profit to
the Supervisory Board. The auditor's long-form audit reports were also made available
to the Supervisory Board in a prompt manner.
At its meeting on 10 March 2021, the Audit Committee diligently examined and
deliberated on these documents before they were considered in detail at the plenary
session of the Supervisory Board on 11 March 2021.
BMW Group
Report 2020
To Our Stakeholders
K = 22
At the two respective meetings, the Board of Management provided the Audit Com-
mittee and the Supervisory Board with detailed explanations of the financial reports
presented. The representatives of the external auditor present at the meetings reported
on the main findings of their audit and answered additional questions put by members
of the Audit Committee and the Supervisory Board. The focus of these meetings was
on key audit matters as well as the related audit procedures, which were discussed at
length by the Audit Committee and the Supervisory Board.
The representatives of the external auditor confirmed that the risk management
system established by the Board of Management is capable of identifying at an early
stage any developments that might threaten the Company's going concern status. They
also confirmed that no material weaknesses in the internal control system and risk
management system were identified with regard to the financial reporting process. Sim-
ilarly, in the course of their audit work they did not identify any facts inconsistent with
the contents of the Declaration of Compliance pursuant to § 161 of the German Stock
Corporation Act (AktG) issued by the Board of Management and the Supervisory Board.
Based on a thorough examination conducted by the Audit Committee and the full
Supervisory Board, we concurred with the results of the external audit. In accordance
with the conclusion reached by the Audit Committee and the Supervisory Board after
the examination, no objections were raised. The Group and Company Financial State-
ments of Bayerische Motoren Werke Aktiengesellschaft for the financial year 2020
drawn by the Board of Management were subsequently approved at our meeting held
on 11 March 2021. The Company Financial Statements for the year ended 31 Decem-
ber 2020 have therefore been adopted.
We also examined the proposal of the Board of Management to use the unappropri-
ated profit to pay a dividend of €1.90 per share of common stock and €1.92 per share
of non-voting preferred stock, in each case on shares entitled to receive a dividend. We
considered the proposal appropriate and therefore gave it our approval.
The Audit Committee and the Supervisory Board also considered at length the
combined Non-financial (Group) Statement for the year ended 31 December 2020,
which was drawn up by the Board of Management for the first time as part of the
Integrated Group Report. The Board of Management provided an in-depth explana-
tion of the statement during the relevant meetings. Representatives of the external
auditor presented key findings of their audit and answered additional questions posed
by the members of the Supervisory Board. The “limited assurance" audit performed
by PwC received an unqualified opinion, which was duly signed by Andreas Fell as
independent auditor (Wirtschaftsprüfer) and by Nicolette Behncke as independent
auditor (Wirtschaftsprüferin). The Supervisory Board acknowledged and approved the
combined Non-financial (Group) Statement drawn up by the Board of Management.
Expression of appreciation by the Supervisory Board
Horst Lischka
We are confident that the Board of Management and the employees of the
BMW Group, with their courage and willingness to adapt, will ensure your company
a leading position in the field of sustainable and digitalised mobility going forward.
We would like to express our special thanks to the members of the Board of Man-
agement and the entire workforce of the BMW Group worldwide for their remarkable
achievements in the financial year 2020. Their outstanding degree of motivation, adapt-
ability and strong team spirit made this result possible, despite the extremely difficult
conditions.
100
5
Report of the Supervisory Board
100
5
5
100
Willibald Löw
5
5
100
5
5
100
Dr. Dominique Mohabeer
5
5
Simone Menne
Brigitte Rödig
5
100
5
80
4
100
4
5
4
Anke Schäferkordt²
100
5
5
Group net profit
―
Earnings factor
Value between 0 and 1.8
Basis for earnings factor:
x 0.3 of target amount
Group post-tax return on sales
Value between 0 and 1.8
+
PERFORMANCE COMPONENT
Performance factor
x 0.7 of target amount
Basis for performance factor:
EARNINGS COMPONENT BONUS
Contribution to sustainable and long-term
business development over a period of
at least three financial years
Performance Cash Plan
BONUS OVERVIEW
5.0 5.3
Remuneration Report
- Qualitative, mainly non-financial parameters
1.000
3.0
Lower limit
3.9
6.9 7.2
9.0
11.0
Upper Limit
K
= 294
factor would be zero. In this case, an earnings-related
component would not be paid. The maximum earnings
factor of 1.800 is reached in the event of a Group net
profit of €11 billion and a post-tax return on sales of
9%. In exceptional circumstances, for instance major
acquisitions or disposals, the Supervisory Board may
adjust the earnings factor.
the interests of shareholders and stakeholders as well as
social responsibility.
The criteria include in particular innovation (econom-
ic and ecological, for example in the reduction of carbon
emissions), the Group's market position compared to its
competitors, customer focus, ability to adapt, leadership,
corporate culture, promotion of compliance and integrity,
contribution to the Group's attractiveness as an employ-
er, progress in implementing the diversity concept, and
activities that foster corporate social responsibility. The
Supervisory Board also draws comparisons with com-
petitors. The individual performance factor lies between
zero and a maximum 1.8.
Group net profit after tax (in € billion)
1 Simplified depiction 2 Earnings factor 2018 3 Earnings factor 2019 4 Earnings factor 2020
BMW Group
Report 2020
Corporate Governance
The performance-related component for the financial
year 2020 bonus is calculated using a performance factor
which the Supervisory Board has set for each member
of the Board of Management and which is multiplied by
70% of the target bonus amount. The Supervisory Board
sets the performance factor on the basis of a detailed
evaluation of the contribution made by Board members
to sustainable and long-term business development over
a period of at least three financial years. The evaluation
by the Supervisory Board is based on predefined criteria
that take into account the Group's long-term success,
Up to and including the grant year 2020, variable cash
remuneration includes a multi-year and future-oriented
Performance Cash Plan (PCP). The PCP is calculated at
the end of a three-year evaluation period by multiplying
a predefined target amount by a factor that is based on
multi-year target achievement (the PCP factor). The PCP
target amount (100%) amounts to €0.85 million p.a. for a
Board member in the first period of office, €0.95 million
p.a. from the second period of office or the fourth year
of mandate and €1.6 million p.a. for the Chairman of
the Board of Management. The maximum amount that
can be paid to a Board member is capped at 180% of the
PCP target amount p.a.
member's area of responsibility
TOTAL
×
Measurement based on
multi-year performance factor:
Value between 0 and 1.8
Share-based remuneration
- Trend in business development
Status of compliance in each Board
1.500
- Individual contribution to profitability
Forecast trend in business development
Value between 0.9 and 1.1
At the end of the Annual General Meeting at which
the separate financial statements of BMW AG for the
relevant financial year are presented, members of the
Board of Management receive for financial years up to
and including the financial year 2020 a cash remuner-
ation (investment component) for the specific purpose
of investment - after tax and deductions - in shares of
common stock of BMW AG. The investment component
corresponds to 45% of the gross bonus. The shares of
common stock are purchased immediately after the
investment component has been paid out. As a gener-
al rule, the acquired shares are required to be held by
Board members for four years. This period also applies
if a Board member leaves the Board of Management,
including in the case of retirement.
At the end of the holding period, Board members
receive from the Company, for every three shares of com-
mon stock held, either one additional share of common
stock or the cash equivalent, to be decided at the Compa-
ny's discretion (matching component). Upper limits have
been defined for both the investment component and
the matching component (see Overview of remuneration
system and remuneration components).
Other
In the event of death or invalidity, special rules apply
for early payment of performance cash plans and share-
based remuneration components based on the target
amounts. Insofar as the service contract is prematurely
terminated and the Company has an extraordinary right
of termination, or if the Board member resigns without
the Company's agreement, entitlements to amounts as
yet unpaid relating to performance cash plans and share-
based remuneration are forfeited.
A one-year post-contractual non-competition clause
has been agreed with the Board members under speci-
fied circumstances against payment of a remuneration
amount. Service agreements taking effect after 1 Janu-
ary 2021 provide for the payment of a monthly amount
corresponding to the respective monthly base salary dur-
ing the period of the post-contractual non-competition
clause. In accordance with the recommendation of the
German Corporate Governance Code dated 16 Decem-
ber 2019, any severance payment is offset against the
non-competition clause remuneration amount. The same
applies to other income, unless it relates to remuneration
for supervisory board mandates approved during the
term of office. The Company may unilaterally waive
the requirement to comply with the post-contractual
non-competition clause.
PCP FACTOR
MULTI-YEAR PERFORMANCE FACTOR
MULTI-YEAR EARNINGS FACTOR
Average earnings factor
Based on Group net profit and
Group post-tax return on sales
CASH PAYMENT
Cash payment at end of evaluation period
Capped at 180% of target amount
Cash payment
Capped at 180%
of target amount
In order to determine the PCP factor, a multi-year
profit factor is multiplied by a multi-year performance
factor. The PCP factor is capped at a maximum value
of 1.8.
In order to determine the multi-year earnings factor,
an earnings factor is calculated for each year of the three-
year evaluation period and an average is then calculated
for the evaluation period. As for the earnings-related
component of the bonus, the earnings factor for each indi-
vidual year within the evaluation period is determined on
the basis of Group net profit and post-tax return on sales
for the relevant year. The maximum earnings factor is
1.8. The underlying measurement values are determined
in advance for a period of three financial years and may
not be changed retrospectively.
In addition to the multi-year earnings factor, the Su-
pervisory Board also determines a multi-year performance
factor after the end of the evaluation period. To this end,
the Supervisory Board takes account in particular of the
business development during the evaluation period, the
forecast trend in the business development, the Board
member's individual contribution to profitability and the
status of compliance within the Board member's area of
responsibility. The multi-year performance factor can be
between 0.9 and 1.1.
Members of the Board of Management who were
Board members on 1 January 2018 received and will
receive an advance payment out of the 2018-2020 Per-
formance Cash Plan in 2019 and from the 2019-2021
Performance Cash Plan in 2020. At the end of each rele-
vant assessment period, the advance payment is set off or
repaid, depending on the amount then determined. The
advance payment for each relevant year is €0.5 million for
a Board member in the first period of office and €0.6 mil-
lion from the second period of office or the fourth year
of
mandate. For the Chairman of the Board of Management
the amount is €0.9 million p.a.
The PCP evaluation period comprises three years, the
grant year and the two subsequent years. PCP entitle-
ments are paid in cash. The bonus is paid out after the
end of the Annual General Meeting, at which the separate
financial statements of BMW AG for the third
year of the
evaluation period are presented.
BMW Group
Report 2020
Remuneration Report
K = 295
PERFORMANCE CASH PLAN OVERVIEW
TARGET AMOUNT
PCP FACTOR OVERVIEW
PCP FACTOR
×
Corporate Governance
1.520²
Variable remuneration
1.800
Board of Management remuneration comprises fixed
and variable cash elements as well as a share-based com-
ponent. Retirement and surviving dependants' benefit
entitlements are also in place. The remuneration com-
ponents are described in more detail below.
OVERVIEW OF REMUNERATION SYSTEM FOR FINANCIAL
YEARS 2018-2020: DEPICTION OF VARIABLE REMU-
NERATION (TARGET REMUNERATION) 2
in %
OVERVIEW OF REMUNERATION SYSTEM FOR FINANCIAL
YEARS 2018-2020: DEPICTION OF ALLOCATION TO
CASH BENEFITS (TARGET REMUNERATION) AND PEN-
SION CONTRIBUTION1
approx. 22
Share-based remuneration
in %
approx. 8
Pension contribution
approx. 27
Base salary
approx. 14
Share-based
remuneration
approx. 24
Performance Cash Plan
Remuneration system, remuneration components
K
= 292
Remuneration Report
Corporate Governance
BMW Group
Report 2020
Corporate Governance
Remuneration Report
K = 291
REMUNERATION
REPORT (PART OF THE
COMBINED MANAGE-
MENT REPORT)
The following section describes the principles gov-
erning the remuneration of the Board of Management
and the stipulations set out in the statutes relating to the
remuneration of the Supervisory Board. In addition to
explaining the system of remuneration for the financial
years 2018 to 2020, details of components of remuner-
ation are also provided with figures. Furthermore, the
remuneration of each member of the Board of Manage-
ment and the Supervisory Board for the financial year
2020 is disclosed by individual member and analysed
with its component parts.
approx. 8
Earnings-based
The Supervisory Board has resolved a new remuner-
ation system for the Board of Management for financial
year from 2021 onwards. In accordance with the statu-
tory requirements, the new remuneration system will
be submitted to the 2021 Annual General Meeting for
resolution.
The determination and regular review of the system
and structure of Board of Management remuneration is
a task of the full Supervisory Board, as is the determi-
nation of the individual level of remuneration of Board
of Management members. The Supervisory Board's
Personnel Committee assumes a preparatory function
in determining and reviewing the system and level of
Board of Management remuneration.
The Supervisory Board reviews the remuneration
system annually for appropriateness in terms of structure,
target and maximum remuneration as well as and actual
remuneration. In preparation, the Personnel Committee
also consults remuneration studies. In order to check
that the remuneration system is in line with peers,
the
Supervisory Board compares remuneration paid by oth-
er DAX companies in horizontal terms. For a vertical
view, it compares Board remuneration with the salaries
of executive managers and with the average salaries of
employees of BMW AG based in Germany, also with re-
gard to the development over time. Recommendations
made by an independent external remuneration expert
and suggestions made by investors and analysts are also
considered in the consultative process.
The Supervisory Board is required to submit the re-
muneration system to the Annual General Meeting for
approval in the event of significant changes, but at least
every four years. The remuneration system valid for the
2020 financial year was approved by the Annual General
Meeting in 2018.
Principles of remuneration
The remuneration system for the Board of Manage-
ment at BMW AG is designed to encourage a manage-
ment approach focused on the sustainable and long-term
development of the BMW Group. One further principle
applied when designing remuneration systems at BMW is
that of consistency at different levels. This means that re-
muneration systems for the Board of Management, senior
management and employees of BMW AG are composed
of similar elements. The Supervisory Board performs an
annual review to ensure that all Board of Management re-
muneration components are appropriate, individually and
in total, and do not encourage the Board of Management
to take inappropriate risks for the BMW Group. At the
same time, the remuneration model used for the Board
of Management needs to be attractive for highly qualified
executives in a competitive environment.
The remuneration of members of the Board of Man-
agement is determined by the full Supervisory Board
on the basis of performance criteria and after taking
into account any remuneration received from Group
companies. The principal performance criteria are the
tasks and exercise of mandate of the Board member,
the economic situation as well as the performance and
future prospects of the BMW Group. The Supervisory
Board sets ambitious and relevant parameters as the basis
for variable remuneration. It also ensures that variable
components based on multi-year criteria take account of
both positive and negative developments and that the
overall incentive is on the long term. As a general rule,
targets and comparative parameters may not be changed
retrospectively.
BMW Group
Report 2020
1. Board of Management remuneration
Responsibilities
component
of the bonus
approx. 19 Performance
component of the bonus
1 Simplified depiction of target amounts for the variable cash remuneration of the Chairman of the Board of
Management and pension contribution. Excludes other remuneration. Based on the assumption that the
share price remains unchanged for the calculation of the matching component.
In order to calculate the earnings-related component,
an earnings factor is determined on the basis of the target
parameters and multiplied by 30% of the target bonus
amount. The level of the earnings-related component
depends on the degree to which the targets set by the Su-
pervisory Board for Group net profit and Group post-tax
return on sales are achieved. The degree of achievement
is expressed in an earnings factor. The underlying meas-
urement values for the bonus payable for the financial
year 2020 were determined three financial years ago (i.e.
back in 2017) and may not be changed retrospectively.
The earnings factor is capped at a maximum value of 1.8.
The bonus is paid out after the end of the Annual General
Meeting, at which the separate financial statements of
BMW AG for the relevant financial year are presented.
For the financial year 2020, an earnings factor of
1.000 would give rise to an earnings-related component
of €0.255 million for a Board member in the first period
of office, €0.3 million from the second period of office
or the fourth year of mandate and €0.54 million for the
Chairman of the Board of Management. For instance,
in the event of a Group net profit of €5.3 billion and a
post-tax return on sales of 5.6%, the earnings factor is
1.000. Similarly, a Group net profit of €6.9 billion and a
post-tax return on sales of 7.3% gives rise to an earnings
factor of 1.500 and a Group net profit of €9.0 billion
and a post-tax return on sales of 8.0% to one of 1.637. A
minimum earnings factor of 0.135 arises in the event of
a Group net profit of €3 billion and a post-tax return on
sales of 3%. If the Group net profit were below €3 billion
or the post-tax return on sales below 3%, the earnings
EARNINGS COMPONENTS: ALLOCATION TABLE FOR CALCULATING EARNINGS FACTOR¹
Group post-tax return on sales in %
9.0 Upper limit
8.0
K = 293
7.4
5.6
4.8
3.9
3.0 Lower Limit
0.7983
0.4444
0.135
7.3
1.637
Remuneration Report
BMW Group
Report 2020
approx. 37
approx. 12
Earnings-based
component
of the bonus
approx. 29
Performance
component
of the bonus
2 Simplified depiction of target amounts for the variable cash remuneration of the Chairman of the Board of Man-
agement. Excludes basic salary, other remuneration and pension contribution. Based on the assumption that
the share price remains unchanged for the calculation of the matching component.
Fixed remuneration
Corporate Governance
Fixed remuneration consists of a base salary, which
is paid monthly, and fringe benefits (other remuneration
elements such as the use of Company cars, insurance pre-
miums and contributions towards security systems). The
basic remuneration of Board of Management members
for the financial year 2020 is €0.8 million for a Board
p.a.
member during the first period of office, €0.95 million p.a.
for a Board member with effect from the second period of
office or the fourth year of mandate and €1.8 million p.a.
for the Chairman of the Board of Management.
The variable remuneration of the Board of Manage-
ment comprises three components:
Bonus
Performance Cash Plan
Share-based remuneration
Payment of a discretionary additional bonus is not pro-
vided for. An upper limit has been set for each component
of variable remuneration (see Overview of remuneration
system and remuneration components).
Bonus
Assuming 100% target achievement, the bonus for the
2020 financial 1 year comprises an earnings-related compo-
nent of 30% and performance-related component of 70%.
The target bonus (100%) is €0.85 million p.a. for a Board
member during the first period of office, €1.0 million
p.a. from the second period of office or the fourth year
of mandate and €1.8 million p.a. for the Chairman of
the Board of Management. For all Board members, the
upper limit of the bonus is set at 180% of the relevant
target bonus.
BMW Group
Report 2020
Corporate Governance
Performance Cash Plan
Overview for Financial Years 2018-2020 of remuneration system and remuneration components
Overview for Financial Years 2018-2020 of remuneration system and remuneration components onwards
RETIREMENT BENEFITS
Model
Principal features
Defined contribution system with guaranteed minimum Pension based on amounts credited to individual savings accounts for contributions paid and interest
rate of return
earned, various forms of disbursement
REMUNERATION CAPS
(MAXIMUM REMUNERATION)
in € p.a.
K = 299
Pension contributions p. a.:
Bonus
Performance
Cash Plan
Member of the Board of Management
in the first period of office
1,530,000
1,530,000
Member of the Board of Management in the second
period of office or from fourth year of mandate
Chairman of the Board of Management
Member of the Board of Management: €350,000
Chairman of the Board of Management: € 500,000
1,800,000
Remuneration Report
BMW Group
Report 2020
b) Share-based remuneration component
(matching component)
Parameter/measurement base
Requirement for Board of Management members to invest an amount of 45% of the gross bonus after tax and
contributions in BMW AG common stock
Requirement for Board of Management members to hold the acquired shares of common stock for four years
Earmarked cash remuneration amounting to 45 % of the gross bonus
Cash remuneration p.a. at 100% target achievement of the bonus:
€0.3825 million (first period of office)
€0.45 million (from second period of office or fourth year of mandate)
Corporate Governance
€0.81 million (Chairman of the Board of Management)
Payment at the end of the Annual General Meeting at which the separate financial statements of BMW AG for the
relevant financial year are presented
Share acquisition immediately after payment of earmarked cash remuneration
Once the four-year holding period requirement is fulfilled, Board of Management members receive for each three
common stock shares held either - at the Company's option - one further share of common stock or the equivalent
amount in cash
Maximum remuneration, see section Remuneration caps
OTHER REMUNERATION
Contractual agreement, main points: non-cash benefits from use of Company car, use of corporate cars or the
BMW chauffeur service, insurance premiums, contributions towards security systems
Maximum remuneration, see section Remuneration caps
a) Cash remuneration component
(investment component)
3,240,000
Share-based remuneration programme
The annual contribution paid by the Company for the
financial year 2020 is €350,000 for a Board member and
€500,000 for the Chairman of the Board of Management.
The guaranteed minimum rate of return p.a. corresponds
to the maximum interest rate used to calculate insurance
reserves for life insurance policies (guaranteed interest on
life insurance policies). When granting pension entitle-
ments, the Supervisory Board considers the targeted level
of pension provision in each case as well as the resulting
expense for the BMW Group.
Contributions falling due under the defined contribu-
tion model are paid into an external fund in conjunction
with a trust model that is also used to fund pension obli-
gations to employees.
BMW Group
Report 2020
Corporate Governance
Remuneration Report
K = 300
In the case of death or invalidity, a minimum benefit
is payable based on the number of contributions possible
up to the age of 60 (subject to maximum of ten contribu-
tions).
In the event of the death of a Board member during
the service contract term, the base remuneration for the
month of death and a maximum of three further calendar
months are paid to entitled surviving dependants.
Termination benefits on premature termination of Board
activities, benefits paid by third parties
Klaus Fröhlich left the Board of Management on
30 June 2020. In accordance with the provisions of his
service contract, a one-year post-contractual non-com-
petition clause applies. The proportionate amount
of remuneration relating to the financial year 2020 is
€0.3 million. The corresponding figure for the remaining
period from 1 January 2021 to 30 June 2021 is €0.3 mil-
lion, for which a provision has been recognised.
In line with the recommendation of the German Cor-
porate Governance Code dated 16 December 2019, Board
of Management service contracts provide for severance
pay to be paid to the Board member in the event of pre-
mature termination by the Company without important
reason, the amount of which is limited to a maximum
of two years' remuneration (severance payment cap).
If the remaining term of the contract is less than two
years, the severance payment is reduced proportionately.
For these purposes, annual remuneration is based on
the sum of base remuneration and the target amount
of variable remuneration components for the last full
financial year before termination. If the relevant target
amount for variable remuneration was not reached, the
amounts granted are used instead.
No commitments or agreements exist for payment
of remuneration in the event of early termination of a
Board member's mandate due to a change of control or
a takeover offer. No members of the Board of Manage-
ment received any payments or relevant commitment
from third parties in 2020 on account of their activities
as members of the Board of Management.
Remuneration Report
Remuneration caps
The Supervisory Board has stipulated upper limits
for all variable remuneration components and for the
remuneration of Board of Management members in total.
The total upper limit amounts are lower than the sum
of the maximum amounts applicable for the individual
components. The upper limits are shown in the table
Overview of remuneration system and remuneration
components for the financial years 2018-2020.
Members of the Board of Management who retire
immediately after their service on the Board, or who are
deemed to be in an equivalent position, are entitled to
acquire vehicles and other BMW Group products and
services at conditions that also apply to BMW pensioners
and to lease BMW Group vehicles in accordance with
the guidelines applicable to senior heads of departments.
Retired Chairmen of the Board of Management are en-
titled to use a BMW Group vehicle as a company car
on a similar basis to senior heads of departments, and
depending on availability and against payment, use BMW
chauffeur services.
1,710,000
2,880,000
If a member of the Board of Management with a
vested entitlement dies prior to the commencement of
benefit payments, a surviving spouse or registered part-
ner, or otherwise surviving children - in the latter case
depending on their age and education - are entitled to
receive benefits as surviving dependants.
The amount of the benefits to be paid is determined
on the basis of the amount accrued in each Board mem-
ber's individual pension savings account. The amount on
Cash remuneration
for share acquisition
Monetary value of
matching component
Total*
688,500
344,500
4,925,000
810,000
this account results from annual contributions paid in,
plus interest earned depending on the type of investment.
405,000
729,000
5,500,000
9,850,000
* Including base salary, other fixed remuneration elements and pension contribution. For the purposes of the overall cap, German accounting rules (HGB) require the relevant grant year to be taken in the calculation for the PCP;
in the case of the matching component, the actual amount deemed to have been received is required to be added retrospectively to the total remuneration of the grant year concerned. The overall cap in absolute terms is lower
than the sum of the maximum amounts for the individual components.
Retirement benefits
With effect from 1 January 2010, the provision of
retirement benefits for members of the Board of Man-
agement was changed to a defined contribution system
with a guaranteed minimum return.
If a mandate is terminated, the defined contribution
system provides, in the case of death or invalidity, for
amounts accumulated on individual pension accounts to
be paid out as a one-off amount or in instalments. For
entitlements arising before 2016, there is an option to
receive payment as a lifelong pension or in a combined
form. Former Board members are entitled to receive the
retirement benefit at the earliest upon reaching the age
of 60, or in the case of entitlements awarded for the first
time after 1 January 2012, upon reaching the age of 62.
1,458,000
Share-based remuneration programme
Income earned on an employed or a self-employed
basis
up to the age of 63 may be offset against instalment
payments. In addition, certain circumstances have been
specified, in the event of which the Company no longer
has any obligation to pay benefits. Transitional payments
are not provided.
K = 298
Base amount p.a. (30% target amount per bonus):
€0.255 million (first period of office)
€0.30 million (from second period of office or fourth year of mandate)
€0.54 million (Chairman of the Board of Management)
Earnings factor is derived from Group net profit and Group post-tax return on sales
- Allocation table fixed in advance for a period of three financial years
The earnings factor is 1.0 in the event of a Group net profit of € 5.3 billion and a post-tax return on sales of 5.6%
Formula: 30% target amount x earnings factor
- Earnings factor may not exceed 1.8
€0.459 million (first period of office)
€ 0.54 million (from second period of office or fourth year of mandate)
€0.972 million (Chairman of the Board of Management)
BMW Group
Report 2020
Corporate Governance
Remuneration Report
Maximum amount of earnings-related bonus p.a.:
Payment at the end of the Annual General Meeting at which the separate financial statements of BMW AG
are presented
Capped at 180% of target amount, see section Remuneration caps
- € 1.8 million (Chairman of the Board of Management)
Parameter/measurement base
Component
Component
Member of the Board of Management:
€0.80 million p.a. (first period of office)
€ 0.95 million p.a. (from second period of office or fourth year of mandate)
BASE SALARY
- €1.80 million p.a.
K = 296
VARIABLE REMUNERATION
Bonus
(sum of earnings-related bonus and performance-related bonus)
a) Earnings-related bonus
(at 100% target achievement corresponds to 30% of target amount)
Target amount p.a. (at 100% target achievement):
€ 0.85 million (first period of office)
€ 1.0 million (from second period of office or fourth year of mandate)
K = 297
Component
Chairman of the Board of Management:
(at 100% target achievement corresponds to 70% of target amount)
Three-year evaluation period
Capped at 180% of target amount, see section Remuneration caps
- Formula: PCP factor x target amount
- PCP factor: multi-year earnings factor x multi-year performance factor
- PCP factor may not exceed 1.8
Payment at the end of the Annual General Meeting at which the separate financial statements of BMW AG for the
third year of the evaluation period are presented
Earnings factor for each year of three-year evaluation period derived from Group net profit and Group post-tax
return on sale
- € 1.6 million (Chairman of the Board of Management)
Earnings factor for each year may not exceed 1.8
- Determined by Supervisory Board at end of evaluation period
Criteria include in particular the trend in business development during the evaluation period, the forecast trend
in business development, individual contribution to profitability and the status of compliance within the Board
member's area of responsibility
>
Remuneration Report
b) Performance-related bonus
Corporate Governance
Average for evaluation period calculated
- €0.95 million (from second period of office or fourth year of mandate)
Multi-year performance factor can be between 0.9 and 1.1
-
Performance Cash Plan
a) Multi-year earnings factor
€0.85 million (first period of office)
b) Multi-year performance factor
Parameter/measurement base
Formula: 70% target amount x performance factor
Base amount p.a. (70% target amount per bonus):
€0.595 million (first period of office)
BMW Group
Report 2020
€ 0.70 million (from second period of office or fourth year of mandate)
€1.26 million (Chairman of the Board of Management)
Primarily qualitative, non-financial criteria, expressed in terms of a performance factor aimed at measuring the Board
member's contribution to the sustainable and long-term development and the future viability of the Company over a
period of at least three financial years
Criteria for the performance factor include: innovation (economic and ecological, for example in the reduction of carbon
dioxide emissions), the Group's market position compared to its competitors, customer focus, ability to adapt, leader-
ship, corporate culture, promotion of compliance and integrity, contribution to the Group's attractiveness as an employ-
er, progress in implementing the diversity concept, and activities that foster corporate social responsibility, reputation
- Performance factor may not exceed 1.8
Maximum amount of performance-related bonus p.a.:
€ 1.071 million (first period of office)
Target amount p.a. (at 100% target achievement):
€2.268 million (Chairman of the Board of Management)
€1.26 million (from second period of office or fourth year of mandate)
ap-
In addition to the disclosures required by HGB and
plicable accounting standards, the following tables - -based
on the model tables contained in the German Corporate
Governance Code (GCCC) dated 7 February 2017 – show
figures for amounts awarded as well as amounts paid to
the individual members of the Board of Management.
(2,305,313)
20,801,828
1 Breakdown of remuneration for the financial year 2020 (2019) in the table Remuneration of the individual members of the Board of Management for the financial year 2020 (2019).
2 Amounts include an advance payment made in 2019 in line with contractually agreed arrangements.
6 Member of the Board of Management since 1 July 2020.
4 PCP 2020-2022 will not be reported until the end of the three-year assessment period.
5 Member of the Board of Management until 30 June 2020. In accordance with the requirements of the HGB, only the proportionate amount of the PCP 2018-2020 corresponding to the
length of service of the Board member is reported.
7 Disclosures for the previous year include amounts relating to members of the Board of Management who left office during the financial year 2019.
(21,426,083)
BMW Group
Report 2020
3 PCP 2019-2021 will not be reported until the end of the three-year assessment period.
1,038,119
(-)
2,271,154
(-)
(-)
Corporate Governance
2,106,496
1 Total remuneration in accordance with HGB.
(-)
2,121,095
(-)
(2,227,648)
(555,722)
(-)
(-)
(2,223,394)
3,186,273
(-)
(-)
(396,448)
2 Total remuneration in accordance with HGB and the requirements of German Accounting Standard No. 17
for the financial year 2020 include the PCP 2018-2020, amounting to approximately €3.3 million. Total
remuneration for the financial year 2020 excluding the PCP 2018-2020 amounted to approximately
€17.5 million.
2,820,380
FJ 2020
OLIVER ZIPSE
1,800,000
66,256 66,256
1,866,256 1,866,256 1,866,256 1,320,839 1,866,256 1,320,839
ONE-YEAR VARIABLE REMUNERATION
Earnings-based component of the bonus¹
540,000
0 972,000 390,323 239,760 311,477
MULTI-YEAR VARIABLE REMUNERATION
1,269,892
50,947
Performance component of the bonus
910,753
1,092,903
1,260,000
0 2,268,000
1,449,000
PCP 2018-20202
Performance component of the bonus 2019 (three-year plan term)1
Performance component of the bonus 2020 (three-year plan term)1
Performance Cash Plan
1,800,000
66,256
1,269,892
50,947
1,800,000 1,800,000
66,256
Chairman of the Board of Management
since 16 August 2019
Member of the Board of Management
since 13 May 2015
in €
BASE SALARY
Fixed remuneration
Fringe benefits (other remuneration)
Total
Grants
K = 306
Payout
FJ 2020
FJ 2020 (Min)
FJ 2020 (Max)
FJ 2019
FJ 2019
Remuneration Report
(-)
Andreas Wendt
2020
(-)
Pieter Nota
2,037,530
782,850
(2,223,394)
(-)
(555,722)
Nicolas Peter
782,850
(2,227,648)
(-)
Frank Weber6
1,038,119
(-)
2,403,423
2,121,095
Milan Nedeljković
(-)
Performance
277,584
Cash Plan
2018-2020²
4,438,831
844,250
(3,460,227)
(-)
Klaus Fröhlich5
1,246,105
729,125
(2,666,107)
Ilka Horstmeier
2,106,496
(396,448)
(-)
(-)
(-)
(-)
195,713
5,283,081
25
(3,460,227)
1,975,230
(2,666,107)
24.0
37.6
21.4
3.3
17.5
2016
2017
2018
2019
20.82
40.3
50
(-)
(2,305,313)
Gesamt?
17,467,040
(21,426,083)
3,334,788
(-)
K = 305
Variable cash remuneration
Total remuneration in
accordance with HGB
and the requirements
of German Accounting
Standard No. 17
DEVELOPMENT OF BOARD OF MANAGEMENT REMU-
NERATION FOR THE FINANCIAL YEARS 2016 TO 2020
IN ACCORDANCE WITH HGB1
in € million
Performance
Cash Plan
2019-20213
(-)
Performance
Cash Plan
2020-20224
2,075,441
PCP 2019-20213
PCP 2018-20202
712,900
211,095
Share-based remuneration component
(matching component) 2014 for holding obligation 2015-2019
2,966
Share-based remuneration component
(matching component) 2015 for holding obligation 2016-2020
0 405,000
|
1 The bonus components and cash remuneration component reported in accordance with the GCCC for the
financial years 2020 and 2019 will be, or were, paid in 2021 and 2020 respectively.
2 An advance payment was made out of PCP 2018-2020. This was reported as an amount deemed received
(Zufluss) for the financial year 2018 and paid out in 2019. The amount paid out of PCP 2018-2020 is allo-
cated proportionately over the assessment period on the basis of period of time in office and as a former
member of the Board of Management.
3 The advance payment out of PCP 2019-2021, which is reported deemed received (Zufluss) for the
financial year 2019, was paid out in 2020.
4 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group;
this amount was not paid out in the financial year.
5 Agreed maximum amount. The overall cap in absolute terms is lower than the sum of the maximum amounts
for the individual components.
Share-based remuneration component
52,723
(matching component) 2016 for holding obligation 2017-2021
225,000
Cash remuneration component
0 630,000
402,500
PCP 2019-20213
PCP 2020-2022
129,125
950,000
(investment component) 2020 for holding obligation 2021-20251
600,000
0 855,000
Share-based remuneration programme
Cash remuneration component
(investment component) 2019 for holding obligation 2020-20241
450,000
485,730
475,000
Share-based remuneration component
(matching component) 2017 for holding obligation 2018-2022
Share-based remuneration component
I
Remuneration Report
in €
ILKA HORSTMEIER
Human Resources, Industrial Relations Director
Member of the Board of Management
since 1 November 2019
BASE SALARY
Fixed remuneration
Corporate Governance
Fringe benefits (other remuneration)
Total
K = 308
Payout
FJ 2020
FJ 2020 (Min) FJ 2020 (Max)
FJ 2019
Sub-total as shown in
the table Remuneration
of the individual mem-
bers of the Board of
Management for the fi-
nancial year 2020 (2019)¹
Grants
Report 2020
BMW Group
706,546 2,750,0005 3,854,304 1,568,589 3,543,245
|
(matching component) 2018 for holding obligation 2019-2023
Share-based remuneration component
(matching component) 2019 for holding obligation 2020-2024
Share-based remuneration component
79,155
(matching component) 2020 for holding obligation 2020-2024
34,364
0 202,500
Other
Total
Pension expense4
Total remuneration
1,765,910
175,000
531,546 2,894,046 3,500,977 1,393,589 3,189,918
175,000 175,000 353,327 175,000 353,327
1,940,910
350,000
1,194,624
840,000
Performance component of the bonus 2019 (three-year plan term)1
Performance component of the bonus 2020 (three-year plan term)1
Performance Cash Plan
(matching component) 2017 for holding obligation 2018-2022
|
Share-based remuneration component
(matching component) 2018 for holding obligation 2019-2023
Share-based remuneration component
(matching component) 2019 for holding obligation 2020-2024
Share-based remuneration component
Share-based remuneration component
103,037
123,873
0 729,000
1 The bonus components and cash remuneration component reported in accordance with the GCCC for the
financial years 2020 and 2019 will be, or were, paid out in 2021 and 2020 respectively.
2 An advance payment was made out of PCP 2018-2020. This was reported as an amount deemed received
(Zufluss) for the financial year 2018 and paid out in 2019.
Other
3 The advance payment out of PCP 2019-2021, which is reported deemed received (Zufluss) for the
financial year 2019, was paid out in 2020.
(matching component) 2020 for holding obligation 2020-2025
Total
|
Share-based remuneration component
PCP 2020-2022
1,600,000
0 2,880,000
Share-based remuneration programme
Cash remuneration component
(investment component) 2019 for holding obligation 2020-20241
Cash remuneration component
(matching component) 2016 for holding obligation 2017-2021
585,484
(investment component) 2020 for holding obligation 2021-20251
Share-based remuneration component
810,000
0 1,458,000
759,942
(matching component) 2015 for holding obligation 2016-2020
33,423
631,971
4 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group;
this amount was not paid out in the financial year.
5 Agreed maximum amount. The overall cap in absolute terms is lower than the sum of the maximum amounts
for the individual components.
FJ 2020
FJ 2020 (Min) FJ 2020 (Max)
FJ 2019
FJ 2020
FJ 2019
475,000 475,000 475,000 950,000
56,546 56,546 56,546 71,822
531,546 531,546 531,546 1,021,822
Payout
475,000 950,000
56,546 71,822
531,546 1,021,822
Earnings-based component of the bonus¹
150,000
0 270,000 300,000
66,600 239,400
MULTI-YEAR VARIABLE REMUNERATION
Performance component of the bonus
ONE-YEAR VARIABLE REMUNERATION
Grants
K = 307
Fringe benefits (other remuneration)
Total
Pension expense4
Total remuneration
6,200,129 1,866,256 10,173,256 4,505,060 4,625,965 4,070,090
502,626 502,626 502,626 406,452 502,626 406,452
6,702,755 2,368,882 9,850,0005 4,911,512 5,128,591 4,476,542
BMW Group
Report 2020
Corporate Governance
Remuneration Report
KLAUS FRÖHLICH
Development
Member of the Board of Management
since 9 December 2014
until 30 June 2020
in €
BASE SALARY
Fixed remuneration
700,000
Oliver Zipse
(1,725)
requirements of German Accounting Standard No. 17
1,688,760
759,942
(1,404,380)
(631,971)
Klaus Fröhlich²
475,000
1,866,256
(1,320,839)
56,546
469,100
211,095
2,448,702
(2,036,351)
680,195
1,669
463
123,873
(103,037)
34,364
531,546
4,438,831
(3,460,227)
(50,947)
66,256
Share-based
remuneration
component
in € or
number of matching shares
Oliver Zipse
(1,269,892)
Base salary
Total
Bonus (investment component)
Total
Number
Monetary value
1,800,000
Other remuneration
1,246,105
(950,000)
(71,822)
(162,708)
(152,915)
(68,812)
(221,727)
(173)
(12,013)
(29,375)
(396,448)
800,000
101,973
901,973
797,470
358,862
1,156,332
Milan Nedeljković
(133,333)
2,106,496
62,790
(1,021,822)
(1,079,400)
(485,730)
(1,565,130)
(1,135)
(79,155)
(2,666,107)
Ilka Horstmeier
800,000
87,374
887,374
797,470
358,862
1,156,332
846
(matching component)5
846
Variable cash remuneration
K = 303
PHEV 106,639
BEV 39,519
192,662
148,121
44,541
2019
+31.8%
2020
Units/Year
200,000
€150,000
€100,000
€50,000
LL-2016
DELIVERIES OF ELECTRIFIED VEHICLES
2017
146,158
: 230,000
BMW Group
Report 2020
Corporate Governance
Remuneration Report
K = 301
Total remuneration of the Board of Management for the
financial year 2020 (2019)
The total remuneration of the current members of the
Board of Management of BMW AG for the financial
year
2020 amounted to €17.5 million (2019: €21.4 million), of
which €7.3 million (2019: €8.1 million) relates to fixed
components (including other remuneration). Variable
components amounted to €9.7 million (2019: €12.6 mil-
lion) and the share-based remuneration component to
€0.5 million (2019: €0.7 million).
115,000
For the financial year 2020, the BMW Group achieved
a net profit of €3,857 million (2019: €5,022 million) and a
post-tax return on sales of 3.9% (2019: 4.8%). According
to the defined allocation table, these results yield an
earnings factor of 0.444 (2019: 0.798) for the earnings
component relevant for the bonus for the financial
2020.
In determining the performance factor, the Su-
pervisory Board uses agreed-upon criteria to evaluate
the contribution of Board members to the sustainable
and long-term development and future viability of the
BMW Group.
The Supervisory Board's decision-making process is
based on a detailed, documented analysis of performance
based on all agreed-upon criteria, as well as in-depth dis-
cussions at Personnel Committee and full Supervisory
Board level.
In particular, the members of the Board of Manage-
ment jointly exceeded the targets for the following criteria
deemed particularly relevant by the Supervisory Board:
Market position compared to competitors: Despite the
restrictions due to the pandemic, the BMW Group re-
mained the world's leading manufacturer of premium
automobiles for the 17th year in succession. Sales of
electrified vehicles saw a sharp rise compared to the
previous year.
DELIVERIES OF ELECTRIFIED VEHICLES
Units/Year
year
2018
2019
2020
Adaptability: Prudent management limited the im-
pact of the pandemic on the Group, particularly in
terms of keeping global supply chains running.
On the basis of these criteria, the Supervisory Board's
first calculated and then set a performance factor of 1.15
for all members of the Board of Management for the
financial
year 2020 (2019: 1.20).
The performance cash plan (PCP) included in the
remuneration system for the financial years 2018 to 2020
serves as a long-term incentive. The PCP is paid out in
cash after the end of the relevant three-year assessment
period.
In the case of the 2020 grant year, the PCP assess-
ment period covers the financial years 2020 to 2022. The
target amount for the PCP 2020-2022 is €1.6 million
for Mr Zipse, €0.85 million each for Ms Horstmeier, Mr
Nedeljković, Mr Nota and Dr Wendt, €0.95 million for
Dr Peter and €0.425 million for Mr Weber. The target
amount for Mr Fröhlich is €0.475 million. Due to the fact
that the criteria established for the PCP 2020-2022 have
not yet been fully met, this component is not included in
variable remuneration for the financial
year
2020.
In the 2020 financial year, in line with contractually
agreed arrangements, advances were paid out of the PCP
2019-2021 to the Board members in office at 31 Decem-
ber 2020 (Mr Zipse, Mr Nota and Dr Peter) with a total
amount of €1.7 million, and an advance of €0.6 million
paid to Mr Fröhlich.
At the end of assessment period, the advance pay-
ments will be set off or refunded, depending on the
actual entitlement arising. The expense of the PCP for
the financial year 2020 recognised in accordance with
IAS 19 amounted to €1.3 million (2019: €8.3 million).
Reputation: Capital market rating agencies once again
ranked the BMW Group as the best European automo-
bile manufacturer. The BMW Group again performed
excellently in sustainability indices such as the Dow
Jones Sustainability Index, taking first place in the
"Automobiles" segment as the most sustainable man-
ufacturer. It is also in the top CDP grouping (Climate
A List).
Remuneration awarded for the financial year 2020
(2019) is presented in the table below on an individual-
ised basis.
Report 2020
Corporate Governance
Remuneration Report
Remuneration of the individual members of the
Board of Management for the financial year 2020 (2019)1
Fixed remuneration
BMW Group
Customer orientation and innovative solutions: New
software was installed in approximately 624,000 vehi-
cles via remote upgrades, without the need for a visit
to a service partner. The proportion of new vehicles
sold with the new software has risen sharply over the
past few years, and a further increase in the number
of such vehicles is foreseeable as a result of product
decisions already taken.
Customer orientation: As in previous years, the
BMW Group won several industry awards for concept
studies on various vehicles and plants, assessed on
the basis of the concept of quality.
2 Taking into account the offset of certain flexibilities that are defined in the regulatory requirements (phase-in
with 5 g/km, supercredits BEV/PHEV with 7.5 g/km and eco-innovations with 2.4 g/km). This is a preliminary
internal calculation with a potential variation of ±0.5 g CO2/km, as official registration figures from the authori-
ties are not available from all EU states. Officially published values by the EU Commission are not expected to
be available until November 2021.
BMW Group
Report 2020
Corporate Governance
Remuneration Report
K = 302
1,2
Ecological benefits from innovation: At 99 g/km¹.2
the figure for the BMW Group's fleet carbon emis-
sions was 5 g/km below the EU legal limit, as in
previous years. Further progress is likely to be made
in the foreseeable future on the back of measures
already adopted.
FLEET EMISSIONS IN THE EU1
in CO2 g/km
130
110
2018
2019
20202
1 Based on the New European Driving Cycle (NEDC) test procedure. With effect from September 2018, all vehicles
in the EU are required to be approved in accordance with the new WLTP testing cycle. However, the EU Commis-
sion will not start using WLTP to calculate fleet CO2 emissions until 2021. For this reason, WLTP fleet emissions
must be retroactively calculated as NEDC values for the purposes of reporting up to and including 2020.
Share-based remuneration component
in €
62,790
(200,000)
(2,305,313)
17,467,040
(21,426,083)
1 Contains disclosures in accordance with HGB and the requirements of German Accounting Standard No. 17.
2 Member of the Board of Management until 30 June 2020.
3 Member of the Board of Management from 1 July 2020.
4 Disclosures for the previous year include amounts relating to members of the Board of Management who left office during the financial year 2019.
5 Preliminary number or preliminary monetary value calculated in accordance with German Financial Reporting Standard 17 (DRS 17).
(72,251)
509,559
(659,614)
The final number of matching shares is determined in each case when the requirement to invest in BMW AG common stock has been fulfilled.
BMW Group
Report 2020
Corporate Governance
Remuneration Report
Remuneration in accordance with HGB and the require-
ments of German Accounting Standard No. 17
The PCP 2018-2020 was awarded for the perfor-
mance of Board of Management members in the financial
year 2018. The three-year assessment period for this re-
muneration component, which was subject to specified
forfeiture provisions, expired on 31 December 2020. The
earnings factors determined for each year of the assess-
ment period (financial year 2018: 1.520; financial year
2019: 0.798, financial year 2020: 0.444), give rise to a mul-
ti-year earnings factor of 0.921. The Supervisory Board
set the multi-year performance factor at 1.0 for members
of the Board of Management in office in financial
year
2018, so that the PCP factor for the PCP 2018-2020 is
0.921. For the purposes of determining the multi-year
performance factor, the Supervisory Board took account
in particular of business development during the assess-
ment period, the outlook for business development going
forward, the Board member's individual contribution to
profitability and the status of compliance within the
Board member's area of responsibility. When consider-
ing actual and forecasted business development for the
See note 41 to the Group Financial Statements for a description of the accounting treatment of the share-based remuneration component.
relevant periods, the Supervisory Board paid particular
attention to the development of certain key performance
figures such as the number of deliveries, the EBIT margin
and the return on capital employed. For the financial
year 2020, the Supervisory Board took account of the
impact of the coronavirus pandemic of these figures. It
was not necessary to change the assessments relating to
individual contributions to profitability or the status of
compliance within Board members' area of responsibility.
(9,728)
(1,036)
(917,490)
Total4
6,825,000
439,700
7,264,700
(7,659,140)
7,001
(496,271)
6,684,675
(8,697,280)
(412,871)
3,008,106
(3,913,778) (12,611,058)
1,156,332
(1,330,361)
9,692,781
846
62,790
2,075,441
(8,155,411)
In accordance with the requirements of HGB and
German Accounting Standard No. 17, PCP-related re-
muneration is required to be included in the total remu-
neration figure for the financial year in which the plan's
conditions are fulfilled. The amount arising for the PCB
2018-2020 is therefore required to be included in the
financial year 2020. The following tables show the remu-
neration of the members of the Board of Management in
accordance with the requirements of HGB and applicable
accounting standards for the financial year 2020 (2019)
and in the financial year 2020 (2019) respectively.
in € million
Fixed remuneration
0.7
3.3
20.8
100.00
21.4
100.0
2.5
1 Variable cash payments for the financial year 2020 also include a payment out of the PCP 2018-2020 for the 2018 grant year amounting to €3.3 million. PCP 2018-2020 accounts for 16.0% of total remuneration in
accordance with HGB and the requirements of German Accounting Standard No. 17.
K = 304
BMW Group
Corporate Governance
Report 2020
Remuneration Report
Remuneration in accordance with HGB and the
2 Matching component; provisional number/provisional monetary value calculated in accordance with DRS 17. The final number of matching shares is determined in each case when the requirement to invest in BMW AG
common stock has been fulfilled.
0.5
58.9
12.6
Variable cash remuneration1
Share-based remuneration component²
Total remuneration
2020
2019
Amount
Proportion in %
Amount
Proportion in %
7.3
34.9
8.1
37.8
13.0
62.6
(902,701)
2,121,095
(102,701)
(-)
(800,000)
(20,782)
(820,782)
(917,490)
(412,871)
(1,330,361)
2,037,530
(1,036)
(2,223,394)
Nicolas Peter
950,000
24,231
974,231
938,200
(72,251)
422,190
62,790
1,156,332
(5,105)
(205,105)
(229,373)
(103,218)
(332,591)
(280)
846
(18,026)
Pieter Nota
800,000
18,408
818,408
797,470
358,862
(555,722)
1,360,390
927
68,802
1,038,119
(-)
(-)
(-)
(-)
Andreas Wendt
31,360
800,000
856,319
797,470
(-)
358,862
(-)
(-)
(-)
56,319
558
578,166
179,431
2,403,423
(800,000)
(29,988)
(829,988)
(917,490)
(412,871)
(1,330,361)
(965)
(67,299)
(2,227,648)
Frank Weber³
400,000
28,593
428,593
398,735
(800,000)
Sub-total
FJ 2019
Payout
Fixed remuneration
BASE SALARY
in €
3 Agreed maximum amount. The overall cap in absolute terms is lower than the sum of the maximum amounts
for the individual components.
this amount was not paid out in the financial year.
2 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group;
1 The bonus components and cash remuneration component reported in accordance with the GCCC for the
financial years 2020 and 2019 will be, or were, paid out in 2021 and 2020 respectively.
Member of the Board of Management
since 1 October 2019
Production
Fringe benefits (other remuneration)
Total
MILAN NEDELJKOVIĆ
Corporate Governance
Report 2020
BMW Group
Total remuneration
3 Agreed maximum amount. The overall cap in absolute terms is lower than the sum of the maximum amounts
for the individual components.
this amount was not paid out in the financial year.
2 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group;
1 The bonus components and cash remuneration component reported in accordance with the GCCC for the
financial years 2020 and 2019 will be, or were, paid out in 2021 and 2020 respectively.
442,768
Remuneration Report
K = 309
Grants
Payout
PCP 2020-2022
PCP 2019-2021
PCP 2018-2020
148,750 684,250 178,500
0 1,071,000
595,000
Performance component of the bonus 2019 (three-year plan term)1
Performance component of the bonus 2020 (three-year plan term)1
Performance Cash Plan
Performance component of the bonus
MULTI-YEAR VARIABLE REMUNERATION
63,750 113,220 50,873
0 459,000
255,000
Earnings-based component of the bonus¹
ONE-YEAR VARIABLE REMUNERATION
200,000 800,000 200,000
5,105 101,973 5,105
901,973 901,973 205,105 901,973 205,105
800,000 800,000 800,000
101,973 101,973 101,973
901,973
FJ 2019
FJ 2020
FJ 2019
FJ 2020 (Min) FJ 2020 (Max)
FJ 2020
3,385,097 1,239,807 4,925,000³ 580,138 2,396,139
384,435
58,333
521,805 2,043,706
58,333 352,433
887,374 4,980,374
352,433 352,433 352,433
PCP 2018-2020
684,250
0 1,071,000
595,000
119,000
99,167
Performance component of the bonus 2019 (three-year plan term)1
Performance component of the bonus 2020 (three-year plan term)1
Performance Cash Plan
Performance component of the bonus
MULTI-YEAR VARIABLE REMUNERATION
33,915
42,500 113,220
0 459,000
255,000
Earnings-based component of the bonus¹
ONE-YEAR VARIABLE REMUNERATION
800,000 800,000 800,000
87,374 87,374 87,374 29,375
887,374 887,374 887,374 162,708 887,374
162,708
29,375
87,374
800,000
133,333
PCP 2019-2021
212,500
PCP 2020-2022
850,000
3,032,664
Pension expense²
Total
Other
0 344,500
62,790
(matching component) 2020 for holding obligation 2020-2025
12,013
(matching component) 2019 for holding obligation 2020-2024
Share-based remuneration component
Share-based remuneration component
358,862
0 688,500
382,500
(investment component) 2020 for holding obligation 2021-20251
Cash remuneration component
68,812
63,750
(investment component) 2019 for holding obligation 2020-20241
Cash remuneration component
Share-based remuneration programme
0 1,530,000
141,667
850,000
133,333
Share-based remuneration programme
Cash remuneration component
412,871
382,500
(investment component) 2019 for holding obligation 2020-20241
Cash remuneration component
Share-based remuneration programme
0 1,530,000
850,000
500,000
850,000
282,850
PCP 2020-2022
PCP 2019-20213
PCP 2018-20202
684,250
0 1,071,000
595,000
714,000
595,000
Performance component of the bonus 2019 (three-year plan term)1
Performance component of the bonus 2020 (three-year plan term)1
Performance Cash Plan
Performance component of the bonus
(investment component) 2020 for holding obligation 2021-20251
MULTI-YEAR VARIABLE REMUNERATION
382,500
358,862
0 1,530,000
FJ 2020
2,963,698
Total remuneration
Pension expense4
5 Agreed maximum amount. The overall cap in absolute terms is lower than the sum of the maximum amounts
for the individual components.
this amount was not paid out in the financial year.
4 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group;
Total
3 The advance payment out of PCP 2019-2021, which is reported deemed received (Zufluss) for the
financial year 2019, was paid out in 2020.
Other
2 An advance payment was made out of PCP 2018-2020. This was reported as an amount deemed received
(Zufluss) for the financial year 2018 and paid out in 2019.
1 The bonus components and cash remuneration component reported in accordance with the GCCC for the
financial years 2020 and 2019 will be, or were, paid out in 2021 and 2020 respectively.
0 344,500
62,790
(matching component) 2020 for holding obligation 2020-2025
72,251
(matching component) 2019 for holding obligation 2020-2024
Share-based remuneration component
Share-based remuneration component
(matching component) 2018 for holding obligation 2019-2023
Share-based remuneration component
0 688,500
0 459,000 255,000 113,220 203,490
818,408 4,911,408 2,975,533 2,257,590 2,651,143
354,680 354,680 354,680 359,979 354,680 359,979
3,318,378 1,173,088 4,925,0005 3,335,512 2,612,270 3,011,122
Earnings-based component of the bonus¹
743,756 2,058,305
87,500 352,121
3,047,263 901,973 4,994,973
352,121 352,121 352,121
Total remuneration
Pension expense²
Total
Other
0 344,500
62,790
255,000
18,026
(matching component) 2019 for holding obligation 2020-2024
Share-based remuneration component
Share-based remuneration component
358,862
0 688,500
382,500
(investment component) 2020 for holding obligation 2021-20251
Cash remuneration component
103,218
95,625
Cash remuneration component
(investment component) 2019 for holding obligation 2020-20241
537,696
87,500
3,339,384 1,254,094 4,925,000³ 831,256 2,410,426
(matching component) 2020 for holding obligation 2020-2025
BMW Group
ONE-YEAR VARIABLE REMUNERATION
625,196
800,000
18,408
818,408
FJ 2019
FJ 2020
FJ 2019
FJ 2020 (Min) FJ 2020 (Max)
FJ 2020
Grants
三 310
800,000 800,000 800,000 800,000 800,000
18,408 18,408 20,782 18,408 20,782
818,408 818,408 820,782 818,408 820,782
Fringe benefits (other remuneration)
Total
K
Report 2020
Remuneration Report
PIETER NOTA
Corporate Governance
Member of the Board of Management
since 1 January 2018
in €
BASE SALARY
Fixed remuneration
Customer, Brands, Sales
28,258
(358,043)
Ilka Horstmeier
(356,008)
(104,384)
401,743
98,458
Klaus Fröhlich²
(135,272)
in accordance with
HGB and IFRS
73,882
Oliver Zipse
31.12.2020 in
accordance with
HGB and IFRS¹
Provision at
Expense in 2020
in €
Share-based remuneration component (matching
component) for individual members of the Board of
Management for the financial year 2020 (2019)¹
Remuneration Report
Corporate Governance
398,503
28,925
135,147
(668)
(34,672)
98,843
Andreas Wendt
398,503
6,773
Frank Weber³
(231,415)
(150,428)
295,180
63,765
Nicolas Peter
(100,397)
(76,736)
269,346
168,949
Pieter Nota
(1,516)
(1,516)
34,078
32,561
Milan Nedeljković
(668)
BMW Group
Report 2020
<< = 314
3 Member of the Board of Management from 1 July 2020.
Milan Nedeljković
Ilka Horstmeier
Klaus Fröhlich²
Oliver Zipse
Shares of stock
Shares of BMW common stock held by individual
members of the Board of Management subject to holding
requirements in connection with share-based
remuneration for the financial years 2016-20191
The members of the Board of Management hold a to-
tal of 59,341 shares of BMW common stock (2019: 92,519)
which they are required to hold in accordance with the
terms of the share-based remuneration programme for
the financial years 2016-2019. The cash component
of the share-based remuneration programme for the
financial year 2020 will be paid out after the end of the
Annual General Meeting 2021, triggering the requirement
to purchase additional shares of BMW common stock.
Share ownership
Remuneration Report
Pieter Nota
Corporate Governance
BMW Group
3,353,355 1,208,065 4,925,000³ 3,410,779 2,560,110 2,586,389
Gesamtvergütung
3,001,609 856,319 4,949,319 3,057,452 2,208,364 2,233,062
351,746 351,746 351,746 353,327 351,746 353,327
Pension expense²
Total
Other
(36,304)
0 344,500
Report 2020
Nicolas Peter
Frank Weber³
Andreas Wendt
2 Member of the Board of Management until 30 June 2020.
(92,519)4
1 Includes only shares of BMW common stock acquired using the cash remuneration component of the share-based remuneration programme for members of the Board of Management,
for which the four-year holding period has not yet expired.
59,341
(988)
5,684
(-)
(6,736)
11,110
(3,954)
8,650
(-)
1,174
(-)
782
(13,305)
15,304
(11,938)
16,637
Total¹
Total
4 Disclosures for the previous year include shares held by members of the Board of Management who left office during the financial year 2019.
Total4
1,391,331
1,961,425
351,746
Nicolas Peter
(760,306)
(760,562)
(362,125)
(359,979)
1,156,993
1,157,145
357,593
354,711
354,680
(1,421,605)
(87,500)
(87,500)
1,829,906
1,830,168
355,076
352,121
Milan Nedeljković
(992,662)
(1,421,152)
3,134,163
3,134,163
(353,327)
62,790
2,634,327
2,615,352
Total4
2,863,441
(2,414,082)
2,863,441
(2,414,082)
(355,573)
(353,327)
354,711
351,746
(-)
(-)
(-)
(-)
655,172
655,460
175,000
175,000
(2,656,550)
(2,656,550)
(355,573)
(993,548)
571,489
(58,333)
1,391,936
Andreas Wendt
Frank Weber³
Pieter Nota
Ilka Horstmeier
Klaus Fröhlich²
Oliver Zipse
in €
Pension entitlements
Pension obligations to former members of the Board
of Management and their surviving dependants are fully
covered by pension provisions amounting to €118.8 mil-
lion (2019: €113.1 million), computed in accordance
with IAS 19.
K
Total benefits paid to former members of the Board
of Management and their surviving dependants for the
financial year 2020 amounted to €13.1 million (2019:
€16.0 million). The total remuneration of former mem-
bers of the Board of Management also includes the
amounts described above amounting to €0.6 million
arising in connection with the departure of Mr. Fröhlich.
Some of these amounts have not yet been paid out.
Remuneration Report
Corporate Governance
BMW Group
Report 2020
KK = 315
4 Disclosures for the previous year include amounts relating to members of the Board of Management who left office during the financial year 2019.
3 Member of the Board of Management from 1 July 2020.
1 Value at the end of the reporting period calculated on the basis of the closing price of BMW common stock in Xetra trading on 30 December 2020 (€72.23).
2 Member of the Board of Management until 30 June 2020.
(2,456,758)
(957,504)
In addition, an expense of €2.6 million (2019:
€2.9 million) was recognised in the financial year 2020
for current members of the Board of Management for the
period after the end of their service relationship. This re-
lates to the expense for allocations to pension provisions
in accordance with IAS 19.
三 316
Service cost in
accordance with
IFRS for the
financial year 2020¹
Service cost in
accordance with
HGB for the
financial year 2020¹
355,375
352,433
(3,256,267)
(3,256,267)
(355,573)
(353,327)
3,556,660
3,556,660
175,000
175,000
(3,054,125)
(3,054,273)
(406,452)
(406,452)
3,700,982
3,701,016
506,861
502,626
Defined benefit
obligation HGB¹
obligation IFRS¹
Defined benefit
(58,333)
(matching component) 2020 for holding obligation 2020-2025
FJ 2020
(matching component) 2019 for holding obligation 2020-2024
Share-based remuneration component
4 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group;
3,443,033
Total
3 The advance payment out of PCP 2019-2021, which is reported deemed received (Zufluss) for the
financial year 2019, was paid out in 2020.
Other
2 An advance payment was made out of PCP 2018-2020. This was reported as an amount deemed received
(Zufluss) for the financial year 2018 and paid out in 2019.
1 The bonus components and cash remuneration component reported in accordance with the GCCC for the
financial years 2020 and 2019 will be, or were, paid out in 2021 and 2020 respectively.
0 405,000
68,802
this amount was not paid out in the financial year.
(matching component) 2020 for holding obligation 2020-2025
(matching component) 2019 for holding obligation 2020-2024
Share-based remuneration component
Share-based remuneration component
(matching component) 2018 for holding obligation 2019-2023
Share-based remuneration component
(matching component) 2017 for holding obligation 2018-2022
Share-based remuneration component
422,190
0 810,000
450,000
67,299
(investment component) 2020 for holding obligation 2021-20251
5 Agreed maximum amount. The overall cap in absolute terms is lower than the sum of the maximum amounts
for the individual components.
Total remuneration
FJ 2020
Payout
Grants
KK = 312
ONE-YEAR VARIABLE REMUNERATION
Fringe benefits (other remuneration)
Total
Fixed remuneration
BASE SALARY
in €
Pension expense4
3 Agreed maximum amount. The overall cap in absolute terms is lower than the sum of the maximum amounts
for the individual components.
1 The bonus components and cash remuneration component reported in accordance with the GCCC for the
financial 2020 will be paid out in 2021.
Member of the Board of Management
since 1 July 2020
Development
FRANK WEBER
Remuneration Report
Corporate Governance
Report 2020
BMW Group
974,231 5,699,231 2,979,787 2,617,471 2,660,349
351,746 351,746 351,746 353,327 351,746 353,327
3,794,779 1,325,977 5,500,0005 3,333,114 2,969,217 3,013,676
2 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group;
this amount was not paid out in the financial year.
Cash remuneration component
412,871
382,500
FJ 2019
FJ 2020
FJ 2019
FJ 2020 (Min) FJ 2020 (Max)
FJ 2020
Payout
Grants
= 311
K
950,000
24,231
974,231
Fringe benefits (other remuneration)
Total
BASE SALARY
in €
Member of the Board of Management
since 1 January 2017
Finance
NICOLAS PETER
Remuneration Report
Corporate Governance
Report 2020
BMW Group
Fixed remuneration
950,000 950,000 800,000 950,000 800,000
24,231 24,231 29,988 24,231 29,988
974,231 974,231 829,988 974,231 829,988
ONE-YEAR VARIABLE REMUNERATION
Earnings-based component of the bonus¹
(investment component) 2019 for holding obligation 2020-20241
Cash remuneration component
Share-based remuneration programme
0 1,710,000
950,000
500,000
850,000
282,850
PCP 2020-2022
PCP 2019-20213
PCP 2018-20202
805,000
0 1,260,000
700,000
714,000
595,000
Performance component of the bonus 2019 (three-year plan term)1
Performance component of the bonus 2020 (three-year plan term)1
Performance Cash Plan
Performance component of the bonus
MULTI-YEAR VARIABLE REMUNERATION
0 540,000 255,000 133,200 203,490
300,000
FJ 2020 (Min) FJ 2020 (Max)
FJ 2019
18,289,989
FJ 2019
Performance component of the bonus
MULTI-YEAR VARIABLE REMUNERATION
0 459,000 255,000 113,220 203,490
255,000
Earnings-based component of the bonus¹
ONE-YEAR VARIABLE REMUNERATION
800,000 800,000 800,000 800,000 800,000 800,000
56,319 56,319 56,319 102,701 56,319 102,701
856,319 856,319 856,319 902,701 856,319 902,701
FJ 2019
FJ 2020
Performance component of the bonus 2019 (three-year plan term)1
Performance component of the bonus 2020 (three-year plan term)1
Performance Cash Plan
FJ 2019
FJ 2020
Payout
Grants
KK = 313
Fringe benefits (other remuneration)
Total
Fixed remuneration
BASE SALARY
in €
3 Agreed maximum amount. The overall cap in absolute terms is lower than the sum of the maximum amounts
for the individual components.
FJ 2020 (Min) FJ 2020 (Max)
595,000
714,000
595,000
Share-based remuneration component
(matching component) 2018 for holding obligation 2019-2023
Share-based remuneration component
358,862
0 688,500
382,500
(investment component) 2020 for holding obligation 2021-20251
Cash remuneration component
412,871
382,500
(investment component) 2019 for holding obligation 2020-20241
Cash remuneration component
Share-based remuneration programme
0 1,530,000
850,000
195,713
PCP 2020-2022
PCP 2019-2021
PCP 2018-2020
684,250
0 1,071,000
this amount was not paid out in the financial year.
72,251
2 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group;
Purchasing and Supplier Network
Member of the Board of Management
since 1 October 2018
Aktienbasiertes Vergütungsprogramm
765,000
0
425,000
PCP 2020-2022
PCP 2019-2021
PCP 2018-2020
342,125
535,500
Cash remuneration component
0
Performance component of the bonus 2019 (three-year plan term)
Performance component of the bonus 2020 (three-year plan term)1
Performance Cash Plan
Performance component of the bonus
MULTI-YEAR VARIABLE REMUNERATION
56,610
0 229,500
127,500
Earnings-based component of the bonus¹
400,000
28,593
428,593
400,000 400,000 400,000
28,593 28,593 28,593
428,593 428,593 428,593
297,500
(investment component) 2019 for holding obligation 2020-2024
Cash remuneration component
(investment component) 2020 for holding obligation 2021-20251
Share-based remuneration component
ANDREAS WENDT
Remuneration Report
Corporate Governance
Report 2020
BMW Group
1,181,759
603,593 2,462,500³
1,006,759
175,000
428,593 2,474,968
175,000 175,000
175,000
1,676,203
1,501,203
Total remuneration
Pension expense²
Total
Other
0 172,125
31,360
(matching component) 2020 for holding obligation 2021-2025
179,431
0 344,250
191,250
1 The bonus components and cash remuneration component reported in accordance with the GCCC for the
financial years 2020 and 2019 will be, or were, paid out in 2021 and 2020 respectively.
18,288,648
850,000
(2,890,450)
Maximum amount of performance component p.a.:
€ 0.855 million (first period of office)
€ 1.035 million (from second period of office or fourth year of mandate)
€ 1.890 million (Chairman of the Board of Management)
Performance Cash Plan
Not applicable
- Performance factor may not exceed 1.8
^
Corporate Governance
Remuneration Report
K = 320
Component
Share-based remuneration programme with holding requirements
a) Personal cash investment amount
BMW Group
Report 2020
aa) RoCE component
Measurement parameters and target values are determined before the start of the financial year
- Criteria for the cross-divisional targets with ESG criteria include in particular: innovation performance
(environmental, e.g. reduction of carbon emissions), development of the BMW Group's reputation based on ESG
aspects (e.g. corporate culture, promotion of integrity and compliance), adaptability, attractiveness as an employ-
er, leadership performance
(at 100% target achievement corresponds to 50% of target amount)
Parameters/measurement base, applicable amounts
Assessment period one year
Base amount p.a. (50% of target bonus amount):
€0.475 million (first period of office)
€0.575 million (from second period of office or fourth year of mandate)
Criteria for the other cross-divisional targets include in particular: market position compared to competitors, inno-
vation performance (economic), development of the BMW Group's reputation based on non-ESG-related aspects
(e.g. perception on capital markets, brand strength), customer orientation
€ 1.050 million (Chairman of the Board of Management)
Primarily qualitative, non-financial criteria, expressed in terms of a performance factor, aimed at measuring the
Board member's contribution to sustainable and long-term performance and corporate orientation
Additional trend analysis over at least three financial years to assess the impact of past decisions and actions in the
grant year as well as the impact of decisions and actions in the grant year on future financial years
Composition of the performance factor within target structure
10% individual targets
50% cross-divisional targets with ESG criteria
40% other cross-divisional targets
-Formula: 50% of target amount x performance factor
b) Performance component
(at 100% target achievement corresponds to 50% of target amount)
(at 100% target achievement corresponds to 50% of target amounts)
€1.175 million (Chairman of the Board of Management)
Formula: 50% of target amount x ROCE factor
ROCE factor is derived from the RoCE achieved in the Automotive segment for the grant year
Minimum, target and maximum values for ROCE are defined before the start of the financial year
ROCE factor may not exceed 1.8
Strategic focus target component p.a. (50% of target amount for personal cash investment amount):
€0.55 million (first period of office)
€0.64 million (from second period of office or fourth year of mandate)
€0.64 million (from second period of office or fourth year of mandate)
€1.175 million (Chairman of the Board of Management)
- Weighting of the strategic focus targets is decided upon before the start of the financial year
Formula in the case of two strategic focus targets with equal weighting p.a.: 25% of target amount for personal
cash investment amount x factor for strategic focus target 1 +25% of target amount for personal cash investment
amount x factor for strategic focus target 2
Minimum, target and maximum values for each focus target are defined before the start of the financial year
Factor for each strategic focus target may not exceed 1.8
Not applicable
(2,876,116)
At least two strategic focus targets of a non-financial nature derived from strategic plan and business forecast
bb) Strategic focus target component
Target amount of RoCE component p.a. (50% of target amount for personal cash investment amount):
€0.55 million (first period of office)
(strategic focus target component)
b) Share-based remuneration component
(matching component)
Parameters/measurement base, applicable amounts
-
-
Requirement for Board of Management members to invest an earmarked cash amount
Payment after the Annual General Meeting at which the Company Financial Statements are presented for the
relevant financial year
(personal cash investment amount), net of tax and deductions, in shares of BMW common stock
Requirement for Board of Management members to hold the acquired shares of BMW common stock for
at least four years (share ownership)
Target amount p.a. (at 100% target achievement):
€1.10 million (first period of office)
- € 1.28 million (from second period of office or fourth year of mandate)
€2.35 million (Chairman of the Board of Management)
50% of target amount depends on ROCE achieved in the Automotive segment (ROCE component)
50% of the target amount depends on the achievement of predefined strategic focus targets
Assessment period of five years in total (one year for determining the personal cash investment amount,
four years holding requirement)
Component
Capped at 180% of target amount
K
The Performance Cash Plan will no longer apply in
the future, resulting in a simplification of the remu-
neration system.
In future, most of the variable remuneration of the
Board of Management will be determined using
a share-based approach, in compliance with the
recommendation of the GCCC in the version dated
16 December 2019. In order to simplify the remu-
neration system, the matching component that was
previously paid out in cash or shares at the end of
the four-year holding period no longer applies. As in
the past, the company awards a so-called "personal
cash investment amount", which is required to be
used - after tax and deductions - to acquire shares
of BMW common stock. Compared to the previous
arrangements, the personal cash investment amount
will have a significantly higher weighting within the
target structure, given that it replaces the PCP as a
long-term incentive. Within the target structure, one
half of the personal cash investment amount will be
linked to the attainment of an ROCE target for the
Automotive segment and one half to the attainment
of strategic focus targets set by the Supervisory Board
in accordance with corporate planning.
The members of the Board of Management are re-
quired to hold the BMW common stock acquired with
the personal cash investment amount on a long-term
basis, i.e. at least for a period of four years.
In the new remuneration system, the payment of var-
iable remuneration components is subject to special
malus and clawback clauses.
BMW Group
Report 2020
Under the new remuneration system, variable,
earnings-related remuneration will be oriented even
more closely towards the company's sustainable de-
velopment. Non-financial targets, particularly in the
areas of the environment (e.g. reduction of carbon
emissions), social issues and governance are taken
into account appropriately.
Corporate Governance
Outlook: Remuneration elements, parameters, target remuneration levels and caps for financial years from financial year 2021 onwards
Component
BASE SALARY
Parameters/measurement base, applicable amounts
Member of the Board of Management:
€0.90 million p.a. (first period of office)
Remuneration Report
€ 1.05 million p.a. (from second period of office or fourth year of mandate)
The new remuneration system for members of the
Board of Management is designed to be simple,
clear and easy to understand. It complies with the
requirements of the German Stock Corporation Act
(AktG) and the recommendations and suggestions of
the GCCC for executive board remuneration.
Key features of the new remuneration system include
in particular:
(27,962,636)
三 319
(27,960,893)
1 Service cost differs due to the different valuation bases used to measure the present value of defined benefit pension obligations for IFRS purposes and the expected settlement amount for HGB purposes.
2 Member of the Board of Management until 30 June 2020.
3 Member of the Board of Management since 1 July 2020.
-
4 Disclosures for the previous year include amounts relating to members of the Board of Management who left office during the financial year 2019.
Report 2020
Remuneration Report
K = 317
Revision of Board of Management remuneration for
financial years from 2021 onwards
During the financial year 2020, the Supervisory Board
considered in detail the new requirements for Board of
Management remuneration resulting from the Act Im-
plementing the Second EU Shareholder Rights Directive
(ARUG II) as well as the recommendations and sugges-
tions contained in the German Corporate Governance
Code (GCCC) dated December 16, 2019. At its meeting
in December 2020, the Supervisory Board, acting on the
recommendation of the Personnel Committee, resolved
to revise the existing system of Board of Management
remuneration for financial years from 2021 onwards.
In its deliberations, the Supervisory Board also took
into account the recommendations of an independent
remuneration expert as well as suggestions from investor
representatives and analysts. In agreement with the mem-
bers of the Board of Management in office at that time,
the relevant service contracts were amended with effect
from 1 January 2021, in order to implement changes to
the remuneration system for financial years from 2021
onwards for all Board members at the same time.
The Supervisory Board will submit the new system
for Board of Management remuneration to the 2021
Annual General Meeting for approval. The new remu-
neration system will be explained in detail in the notice
document inviting shareholders to the Annual General
Meeting.
BMW Group
Chairman of the Board of Management:
Corporate Governance
Monthly payment on time-apportioned basis
Formula: 50% of target amount x performance factor
Earnings factor is derived from an allocation table based on the parameters profit attributable to shareholders of
BMW AG and Group post-tax return on sales in grant year
- Allocation table is determined in advance
The earnings factor is 1.0 in case of a profit attributable to shareholders of BMW AG amounting to € 5.3 billion
and a post-tax return on sales of 5.6%
The earnings factor is 1.5 in case of a profit attributable to shareholders of BMW AG amounting to € 6.9 billion
and a post-tax return on sales of 7.3%
The earnings factor is 0 in case of a profit attributable to shareholders of BMW AG below € 3.0 billion or a post-
tax return on sales of below 3.0%
€ 1.050 million (Chairman of the Board of Management)
Earnings factor may not exceed 1.8
€ 0.855 million (first period of office)
€ 1.890 million (Chairman of the Board of Management)
>
BMW Group
Report 2020
- €1.95 million p.a.
Corporate Governance
Maximum amount of earnings component p.a.:
€0.575 million (from second period of office or fourth year of mandate)
€ 1.035 million (from second period of office or fourth year of mandate)
€0.475 million (first period of office)
|<< = 318
VARIABLE REMUNERATION
Bonus
(sum of earnings component and performance component)
a) Earnings component
(at 100% target achievement corresponds to 50% of target amount)
Target amount p.a. (at 100% target achievement):
Remuneration Report
€ 1.15 million (from second period of office or fourth year of mandate)
€ 0.95 million (first period of office)
€2.1 million (Chairman of the Board of Management)
Capped at 180% of target amount
Payment after the Annual General Meeting at which the Company Financial Statements are presented for the
relevant financial year
Assessment period one year
Base amount p.a. (50% of target bonus amount):
RETURN ON CAPITAL EMPLOYED (ROCE)
GROSS PROFIT MARGIN
>+10.0%-pts.
>-10.0%-pts.
[-0.9%-pts./+0.9%-pts.]
[+1.0%-pts./+4.9%-pts.]
[-1.0%-pts./-4.9 %-pts.]
[+5.0%-pts./+9.9%-pts.]
[-5.0%-pts./-9.9%-pts.]
Solid increase
Moderate decrease
Unlike the other key performance indicators, the
ROCE forecast for the Automotive and Motorcycles seg-
ments is based on the change in percentage points:
At previous year's level
Slight increase
Slight decrease
Goodwill corresponds to the consideration paid to
acquire an entity, less the fair value of the separate assets
acquired and liabilities assumed. The buyer is willing to
pay the additional amount in return for future expected
earnings.
action.
Significant increase
Significant decrease
Gross profit as a percentage of Group revenues.
Report 2020
Corporate Governance
Glossary and Explanation of Key Figures
POST-TAX RETURN ON SALES
RESEARCH AND DEVELOPMENT LOCATIONS
RESEARCH AND DEVELOPMENT EXPENDITURE
KK = 329
Group net profit as a percentage of Group revenues.
PRE-TAX RETURN ON SALES
The engineering, IT and process expertise required
for the (pre-)development of hardware and software for
all BMW Group products and services is combined at
the Group's international research and development
locations.
Group profit/loss before tax as a percentage of
Group revenues.
The amount at the measurement date for which an
asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm's length trans-
BMW Group
TRAINING AND FURTHER EDUCATION
10,000
GOODWILL
(-)
The sum of research and non-capitalised development
cost and capitalised development cost (not including the
associated scheduled amortisation).
(-)
134,344
8,000
126,344
Anke Schäferkordt6
(220,000)
(140,000)
(10,000)
(70,000)
FAIR VALUE
210,000
Brigitte Rödig¹
(220,000)
(140,000)
(10,000)
(70,000)
210,000
[-5.0%/-9.9%]
>+10.0%
>-10.0%
Equity capital as a percentage of the balance sheet
total.
200,000
ROCE in the Automotive and Motorcycles segments
is measured on the basis of relevant segment profit be-
fore financial result and the average amount of capital
employed at the end of the last five quarters - in the
segment concerned. Capital employed corresponds to
the sum of all current and non-current operational assets,
less liabilities that generally do not incur interest.
(140,000)
Expenditure for training comprises all costs incurred
in the year under report for vocational training within
the BMW Group in a total of seven countries, including
personnel costs for trainers and apprentices as well as
other costs and investments related to vocational training.
200,000
Dominique Mohabeer¹
(220,000)
(10,000)
(70,000)
210,000
(220,000)
210,000
(220,000)
210,000
10,000
200,000
Simone Menne
(140,000)
(10,000)
(70,000)
10,000
200,000
Willibald Löw¹
(140,000)
(10,000)
(70,000)
10,000
200,000
Horst Lischka¹
With exception of the advance payments relating to
the PCP 2019-2021 described above, neither BMW AG
nor any of its subsidiaries granted loans or advances to
members of the Board of Management or the Supervisory
Board during the financial year 2020, nor were any con-
tingent liabilities entered into in their favour. During the
year under report, members of the Board of Management
and the Supervisory Board concluded vehicle purchase,
service, rental, leasing and financing contracts for vehi-
cles on customary market terms and conditions.
Vishal Sikka
10,000
[-1.0%/-4.9%]
DR.-ING. ANDREAS WENDT
FRANK WEBER
The number of apprentices undergoing training with-
in the BMW Group includes those employed at domestic
and international plants in a total of seven countries as
well as those working in corporate functions, at Group
plants in Germany and international sales companies as
well as in the Financial Services segment.
Expenditure for further education includes all costs
incurred by the BMW Group's consolidated companies
in connection with ongoing and advanced training. This
includes preparation and implementation costs, oppor-
tunity costs and investments made in order to provide
such training. Costs also include notional depreciation,
measured on the basis of asset inventory lists.
RESEARCH AND DEVELOPMENT EXPENDITURE RATIO
RETURN ON EQUITY (ROE)
Research and development expenditure as a percent-
age of Group revenues.
RoE in the Financial Services segment is calculated
as segment profit before taxes, divided by the average
amount of equity capital - at the end of the last five
quarters – attributable to the Financial Services segment.
VALUE AT RISK
A measure of the potential maximum loss in value
of an item during a set time period, based on a specified
probability.
BMW Group
Report 2020
Corporate Governance
Responsibility Statement by the Company's Legal Representatives
-
RESPONSIBILITY
STATEMENT BY THE
STATEMENT PURSUANT TO § 117 NO.1 OF THE
SECURITIES TRADING ACT (WPHG) IN CONJUNCTION
WITH § 297 (2) SENTENCE 4 AND § 315 (1) SENTENCE 5
OF THE GERMAN COMMERCIAL CODE (HGB)
"To the best of our knowledge, and in accordance
with the applicable reporting principles, the Group Fi-
nancial Statements give a true and fair view of the assets,
liabilities, financial position and results of operations of
the Group, and the Group Management Report includes
a fair review of the development and performance of
business and position of the Group, together with a
description of the principal opportunities and risks
associated with the expected development of the Group."
Munich, 9 March 2021
Bayerische Motoren Werke
Aktiengesellschaft
THE BOARD OF MANAGEMENT
OLIVER ZIPSE
ILKA HORSTMEIER
K = 330
DR. MILAN NEDELJKOVIĆ
PIETER NOTA
DR. NICOLAS PETER
COMPANY'S LEGAL
REPRESENTATIVES
200,000
Short-term debt instruments with a term of less than
one year which are usually issued at a discount to their
face value.
208,000
CREDIT DEFAULT SWAP (CDS)
EFFECTIVE TAX RATE
EBIT plus financial result.
EBT
revenues.
Profit/loss before financial result as a percentage of
EBIT MARGIN
EARNINGS PER SHARE (EPS)
Services and – in the US and Canada – dealers when they
designate a vehicle as a service loaner or demonstrator
vehicle. In the case of used vehicles, end users may in-
clude dealers and other third parties when they purchase
a vehicle at auction or directly from BMW Group. Vehi-
cles designated for the end user and suffering total loss in
transit will also be recorded as deliveries. Deliveries may
be made by BMW AG, one of its international subsidiar-
ies, a BMW Group retail outlet, or independent dealers.
The vast majority of deliveries - and hence the reporting
to BMW Group of deliveries – is made by independent
dealers.
The process of combining separate financial state-
ments of Group entities into Group Financial Statements,
depicting the financial position, net assets and results
of operations of the Group as a single economic entity.
CONSOLIDATION
Financial swap agreements, under which creditors
of securities (usually bonds) pay premiums to the seller
of the CDS to hedge against the risk that the issuer of
the bond will default. As with credit default insurance
agreements, the party receiving the premiums gives a
commitment to compensate the bond creditor in the
event of default.
3. Other
K = 327
Glossary and Explanation of Key Figures
Corporate Governance
Report 2020
BMW Group
A hedge against exposures to the variability in
forecasted cash flows, particularly in connection with
exchange rate fluctuations.
CASH FLOW HEDGE
The sum of the balance sheet line items “Leased prod-
ucts" and "Receivables from sales financing" (current and
non-current), as reported in the balance sheet for the
Financial Services segment.
In accordance with legal requirements, the forecast
of fleet carbon emissions for 2021 is based on WLTP
and includes lower offsetting factors, as phase-in is no
longer permitted for 2021 and the BMW Group fully
utilised the maximum amount of supercredits in 2020.
For better comparability of the fleet carbon emissions
forecast for 2021 and the actual figure for the fleet in
2020, the latter has been converted internally from NEDC
(including offsetting factors) to a WLTP basis (excluding
offsetting factors). The figure derived for 2020 serves
only to reconcile it with the 2021 figure; it is not official
in nature and does not correspond to legislation that was
in place in 2020.
The
average carbon emissions of a manufacturer's
fleet are calculated on the basis of the weighted average
of carbon emissions across all vehicles newly registered
during the reporting period. New registrations for these
purposes comprise all newly registered vehicles of a given
manufacturer in the EU, including Norway and Iceland,
during the calendar year, plus any individual vehicle-spe-
cific carbon emissions determined in accordance with the
WLTP type test procedure and converted back to the New
European Driving Cycle (NEDC). The BMW Group's fleet
carbon emissions figure for 2020, as measured internally,
includes legally permitted offsetting factors (i.e. phase-in,
supercredits and eco-innovations).
CARBON EMISSIONS OF THE NEW VEHICLE FLEET
COMMERCIAL PAPER
Similar to "value at risk” (see definition below).
Basic earnings per share are calculated for common
and preferred stock by dividing the net profit after mi-
nority interests, as attributable to each category of stock,
by the average number of shares in circulation. Earnings
per share of preferred stock are computed on the basis of
the number of preferred stock shares entitled to receive
a dividend in each of the relevant financial years.
The effective tax rate is calculated by dividing the
income tax expense by the Group profit before tax.
[+1.0%/+4.9%]
[-0.9%/+0.9%]
Significant increase
Significant decrease
Slight decrease
Solid increase
Moderate decrease
The BMW Group uses the following terminology and
ranges when forecasting key performance indicators:
At previous year's level
Slight increase
OUTLOOK
Cash and cash equivalents as well as marketable
securities and investment funds.
Free cash flow is derived from cash flows from
operating and investing activities. The cash flows from
investing activities from the purchase and sale of mar-
ketable securities and investment funds is not included.
Cash flows from the purchase and sale of shares and the
dividend payout from investments accounted for using
the equity method are included in the cash flows from
investing activities.
FREE CASH FLOW
A hedge against exposures to fluctuations in the fair
value of a balance sheet item.
EQUITY RATIO
EBIT
The number of employees includes BMW AG and all
companies in which it holds a majority interest, irrespec-
tive of whether they are consolidated in the Group Finan-
cial Statements. The figure does not include employees
in dormant employment relationships, those in the non-
work phase of partial retirement working arrangements
and low-wage earners. With effect from the financial
year 2020, the definition also includes employees with
permanent and fixed-term contracts. Up to 2019, it also
included temporary staff, postgraduate students, interns,
apprentices, those on extended sick leave and sabbaticals.
LIQUIDITY
FAIR VALUE HEDGE
EMPLOYEES
Glossary and Explanation of Key Figures
Corporate Governance
BMW Group
Report 2020
The BMW Group uses the terms Battery Electric Ve-
hicle (BEV) to denote fully electric vehicles and Plug-in
Hybrid Vehicle (PHEV) to denote vehicles that can be
charged and also driven on a fully electric basis.
Abbreviation for “Earnings Before Interest and Taxes",
equivalent in the BMW Group income statement to
"Profit/loss before financial result". This is comprised
of revenues less cost of sales, selling and administrative
expenses and the net amount of other operating income
and expenses.
A new or used vehicle will be recorded as a delivery
once handed over to the end user. End users also include
leaseholders under lease contracts with BMW Financial
DELIVERIES
ELECTRIFIED VEHICLES
K = 328
8,000
CASH FLOW AT RISK
CASH FLOW
5,565,016
198,000
5,367,016
Total7
(220,000)
(140,000)
(10,000)
(70,000)
210,000
10,000
200,000
(1,820,564)
Werner Zierer¹
(87,688)
(8,000)
(43,844)
210,000
10,000
200,000
Thomas Wittig
(139,532)
(87,688)
(8,000)
(43,844)
(139,532)
Liquid funds generated (cash inflows) or used (cash
outflows) during a reporting period.
(196,000)
(5,639,692)
Capitalised development costs as a percentage of
research and development expenditure.
CAPITALISATION RATE
Investments in property, plant and equipment and
other intangible assets (excluding capitalised develop-
ment costs) as a percentage of Group revenues.
CAPITAL EXPENDITURE RATIO
BUSINESS VOLUME IN BALANCE SHEET TERMS
A securitised debt instrument in which the issuer
certifies its obligation to repay the nominal amount at
the end of a fixed term and to pay a fixed or variable
rate of interest.
BOND
A form of corporate financing involving the sale of
receivables to a financing company.
ASSET-BACKED FINANCING TRANSACTIONS
EXPLANATION OF
KEY FIGURES
GLOSSARY AND
(3,623,128)
K = 326
Report 2020
Corporate Governance
BMW Group
8 Earnings-related remuneration for the financial year 2019 was capped at the maximum amount.
7 Figures for the previous year include the remuneration of members of the Supervisory Board who left office during the financial year 2019.
6 Member of the Supervisory Board since 14 May 2020.
5 Member of the Supervisory Board until 14 May 2020.
4 Due to the requirements of his employer, Prof. Dr. Hüttl has waived his Supervisory Board remuneration until further notice, to the extent that this would exceed the amount of €200,000 p.a.
3 Chairman of the Audit Committee since 14 May 2020.
2 Chairman of the Audit Committee until 14 May 2020.
1 In line with the guidelines of the Deutscher Gewerkschaftsbund, these employee representatives have requested that their remuneration be paid into the Hans Böckler-Stiftung.
Glossary and Explanation of Key Figures
Total
[+5.0%/+9.9%]
Variable
remuneration8
Norbert Reithofer (Chairman)
600,000
10,000
610,000
(210,000)
(10,000)
(420,000)
(640,000)
Manfred Schoch (Deputy Chairman)1
400,000
10,000
410,000
(140,000)
(10,000)
(280,000)
(430,000)
Stefan Quandt (Deputy Chairman)
400,000
10,000
410,000
(140,000)
(10,000)
(280,000)
Total
Variable
remuneration8
Attendance fee
remuneration
2020
2019
Amount
Proportion in %
Amount
Proportion in %
5.6
100.0
2.0
35.7
3.6
(430,000)
64.3
100.0
5.6
100.0
KK 323
BMW Group
Corporate Governance
Report 2020
Remuneration Report
Remuneration of the individual members of the
Supervisory Board for the financial year 2020 (2019)
in €
Fixed
5.6
Stefan Schmid (Deputy Chairman)¹
400,000
10,000
(220,000)
Verena zu Dohna-Jaeger¹
200,000
10,000
210,000
(43,844)
(8,000)
(87,688)
(139,532)
Heinrich Hiesinger
200,000
(140,000)
10,000
210,000
(70,000)
(10,000)
(140,000)
(220,000)
Reinhard Hüttl4
190,000
10,000
200,000
(70,000)
(8,000)
K = 325
ther remuneration or benefits from the BMW Group for
advisory or agency services personally rendered.
(10,000)
210,000
410,000
(140,000)
(10,000)
(280,000)
(430,000)
Karl-Ludwig Kley (Deputy Chairman)²
418,548
10,000
428,548
(140,000)
(8,000)
(70,000)
(280,000)
Kurt Bock (Chairman of the Audit Committee)³
357,930
10,000
367,930
(70,000)
(10,000)
(140,000)
(220,000)
Christiane Benner¹
200,000
10,000
(428,000)
(122,000)
Supervisory Board members did not receive any fur-
Fixed remuneration
Variable remuneration
Remuneration Report
Component
RULES FOR WITHHOLDING AND CLAWING BACK REMUNERATION
a) Malus
a) Clawback
Parameters/measurement base, applicable amounts
K = 321
Agreement to withhold variable remuneration in the event of specified serious compliance violations or (withholding
amounts provisionally) in the event of reasonable suspicions of such
· Amounts may also be withheld in principle after a member has left the Board
Applies from financial year 2021 onwards
Agreement entitling the BMW Group to reclaim variable remuneration already paid out in the event of specified seri-
ous incidences of non-compliance, incorrect calculation bases for remuneration or incorrect financial statements
- Amounts may also be clawed back in principle after a member has left the Board
Applies from financial year 2021 onwards
OTHER FIXED REMUNERATION (FRINGE BENEFITS)
Corporate Governance
Contractual agreement, main points: non-cash benefits from the use of company cars and the BMW chauffeur service,
insurance premiums, contributions towards security systems, employee discounts
The Supervisory Board may award payments to compensate for loss of salary from a previous employment relationship
and to cover relocation costs in the case of new entrants. These payments are to be included for the purposes of deter-
mining the maximum remuneration
RETIREMENT BENEFITS
Model
Defined contribution system with a guaranteed minimum return
Principal features
Benefits based on amounts credited to individual savings accounts for contributions paid and interest earned, various
forms of disbursement
Pension contribution p.a.:
Member of the Board of Management: € 400,000
Chairman of the Board of Management: € 700,000
CAPS
p.a. in €
REIIMBURSEMENT OF LOSSES AND EXPENSES
Member of the Board of Management in the first period of office
Susanne Klatten
200,000
Attendance fee
remuneration
Fixed
in €
Remuneration of the individual members of the
Supervisory Board for the financial year 2020 (2019)
Remuneration Report
Report 2020
Corporate Governance
BMW Group
<< = 324
(220,000)
BMW Group
Report 2020
(140,000)
(70,000)
76,194
2,000
74,194
Renate Köcher5
(220,000)
(140,000)
(10,000)
(70,000)
210,000
10,000
(10,000)
Member of the Board of Management from second period of office or fourth year of mandate
Chairman of the Board of Management
* Maximum remuneration as defined in section 87a (1) sentence 2 no. 1 AktG. The overall cap is lower than the sum of the maximum amounts for the individual components.
Bonus
Amount in € p.a.³
1.00
200,000
3.00
600,000
2.00
400,000
2.25
450,000
2.00
400,000
Factor
2.00
1.50
300,000
1 If a Supervisory Board member performs several additional remuneration-relevant functions, their remuneration remuneration is measured only on the basis of the function that is remunerated with the highest amount.
2 Provided the relevant committee convened for meetings on at least three days during the financial year.
3 Plus attendance fee of €2,000 per plenary session.
BMW Group
Report 2020
Corporate Governance
Remuneration Report
Remuneration of the Supervisory Board for the financial
year 2020 (total)
In accordance with Article 15 of the Articles of Incor-
poration, the remuneration of the Supervisory Board for
activities during the financial year 2020 totalled €5.6 mil-
lion (2019: €5.6 million).
in € million
400,000
In order to be able to perform his duties, the Chair-
man of the Supervisory Board is provided with secretar-
iat and chauffeur services.
Furthermore, the Company reimburses each member
of the Supervisory Board for their reasonable expenses.
In addition, each member of the Supervisory Board
receives an attendance fee of €2,000 for each full meeting
of the Supervisory Board (Plenum) which the member
has attended, payable at the end of the financial year.
Attendance at more than one meeting on the same day
is not remunerated separately.
Share-based remuneration
(personal investment cash amount)
Maximum remuneration*
1,710,000
2,070,000
1,980,000
2,304,000
3,780,000
4,230,000
4,925,000
5,500,000
9,850,000
BMW Group
Total remuneration
Report 2020
Remuneration Report
K = 322
2. Supervisory Board remuneration
Provisions of Articles of Incorporation, procedures
The remuneration regulation valid for the financial
year under report was resolved by shareholders at the
Annual General Meeting on 14 May 2020 and is set out
in Article 15 of BMW AG's Articles of Incorporation.
With effect from the financial year 2020, members of the
Supervisory Board are remunerated exclusively on the
basis of a fixed remuneration structure. In accordance
with the Act Implementing the Second EU Shareholder
Rights Directive (ARUG II), a resolution on the remu-
neration of the members of the Supervisory Board is
required to be adopted by the Annual General Meeting
of a listed stock corporation at least every four years.
A
proposal will be submitted to the Annual General Meet-
ing on 12 May 2021 to confirm the existing remuneration
arrangements.
Remuneration principles, remuneration components
The exclusively fixed remuneration structure for Su-
pervisory Board remuneration is intended to strengthen
the independent exercise of its control and advisory
functions and complies with Suggestion G.18 of the
German Corporate Governance Code (GCCC) dated
16 December 2019. In accordance with the Articles of
Incorporation, each member of the Supervisory Board
of BMW AG who does not perform any additional re-
muneration-relevant functions receives - in addition
to reimbursement of reasonable expenses
- a fixed
remuneration of €200,000, payable after the end of the
financial year.
The latest version of the GCCC dated 16 Decem-
ber 2019 recommends that the exercising of chair and
deputy chair positions in the Supervisory Board as well
the chair and membership of committees should also be
considered when determining the level of remuneration
(Recommendation G.17) due to the higher time con-
sumption. Accordingly, the Articles of Incorporation of
BMW AG stipulate that the Chairman of the Supervisory
Board shall receive three times the amount and each Dep-
uty Chairman twice the amount of remuneration paid to
a Supervisory Board member, excluding amounts relat-
ing to additional remuneration-relevant functions. The
chair of the Audit Committee receives two-and-a-quarter
times the amount, the chair of other Supervisory Board
committees twice the amount and each member of a
committee one-and-a-half times the amount of the remu-
neration paid to a Supervisory Board member, provided
the relevant committee convened on at least three days
during the financial year. If a member of the Supervisory
Board exercises more than one of the functions referred
to above, their remuneration is measured only on the
basis of the function receiving the highest amount.
Overview of remuneration¹
Member of the Supervisory Board
Chairman of the Supervisory Board
Deputy Chairman of the Supervisory Board
Chairman of the Audit Committee²
Chairman of another committee²
Member of the Audit Committee²
Member of another committee²
In the event of changes in the composition of the Super-
visory Board during the year or in the performance of
additional remuneration-relevant functions, remunera-
tion is determined on a proportionate basis.
Corporate Governance
(200,000)
Corporate Governance
K = 340
We have complied with the German professional pro-
visions regarding independence as well as other ethical
requirements.
3 The Company's disclosures on the applied “Account-
ing policies, assumptions, judgments and estima-
tions" are contained in the notes to the consolidated
financial statements under note 5 and on "Other
provisions" are contained under note 33.
available, we believe that, overall, the measurement
parameters and assumptions used by the executive
directors are appropriate.
In our view, the method for the valuation of provi-
sions for statutory and non-statutory warranty obli-
gations as well as product guarantees is overall ap-
propriate. Taking into consideration the information
2 In order to assess the appropriateness of the val-
uation method used for the determination of the
provisions for statutory and non-statutory warranty
obligations as well as product guarantees including
the assumptions and parameters, we primarily ob-
tained an understanding of the process for deter-
mining the assumptions and parameters through
discussions with the responsible employees of the
BMW Group. We also evaluated the appropriateness
as well as effectiveness of controls for determining
the assumptions and parameters. With the involve-
ment of our IT specialists, we checked the IT systems
used regarding their compliance. We compared the
expenses for claims and technical actions with ac-
tual costs incurred in order to draw conclusions on
the forecast accuracy. Based on a targeted sample
of vehicle models, the mathematically correctness
of the valuation model used across the Group was
examined. We examined and evaluated the assump-
tions used by the BMW Group concerning the extent
to which the past values were representative of the
expected susceptibility of damage, the expected value
of damage per vehicle (comprising parts and labor
input) as well as the expected assertion of claims
from statutory and non-statutory warranties.
The determination of provisions is associated with
unavoidable estimation uncertainties and is subject
to a high risk of change, depending on factors such
as notification of detected defects as well as claims
made by vehicle owners. Against this background, this
matter was of particular significance during our audit.
KK = 334
Independent Auditor's Report
Corporate Governance
Report 2020
4 Measurement of YOUR NOW equity investment
BMW Group
1
3 Valuation of provisions for statutory and non-statuto-
ry warranty obligations and product guarantees
The Company's disclosures on the applied “Account-
ing policies, assumptions, judgments and estima-
tions"
are contained in the notes to the consolidated
financial statements under note 5 and on "receivables
from sales financing" are contained under note 25.
3
In our view, the assumptions and parameters used in
the measurement of receivables from sales financing
were appropriate overall.
As part of our audit we obtained a comprehensive
understanding of the development of receivables
from sales financing, the associated default-related
risks as well as the business processes for the identi-
fication, management, monitoring and measurement
of default risks, among other things by inquiries
and inspection of documents on the internal cal-
culation methods. Furthermore, we evaluated the
appropriateness and effectiveness of the internal
control system regarding the determination of the
impairment loss to recognize. In this context, we also
evaluated the relevant IT systems and internal pro-
cesses. The evaluation included an assessment by our
IT specialists of the appropriateness of the systems
concerned and associated interfaces to ensure the
completeness of data as well as the audit of auto-
mated controls for data processing. As part of our
audit we assessed in particular the appropriateness
of the risk classification procedures as well as the risk
provisioning parameters used. For this purpose, we
analyzed in particular the validations of parameters
that are regularly conducted by the Company. To as-
sess the default risk, we also used targeted sampling
of individual cases to examine whether the attributes
for assignment to the respective risk categories were
suitably available and the impairment losses had
been calculated using the parameters defined for
these risk categories.
2
The determination of the valuation allowances by the
executive directors is subject to a significant degree
of judgment due to several value-influencing factors
such as the estimation of creditworthiness, the de-
termination of probabilities of default and loss ratios
and was therefore of particular significance in the
context of our audit.
1 The BMW Group offers end customers, dealerships
and importers various financing models for vehicles.
In this context, current and non-current receivables
from sales financing totaling EUR 84,277 million are
reported in the consolidated statement of financial
position as at the balance sheet date (approximately
EUR 38.9% of total assets). Impairment losses
amounting to EUR 1,639 million were recognized
on these receivables as at the balance sheet date.
In order to determine the amount of the necessary
valuation allowances to be recognized with respect
to receivables from sales financing, the BMW Group,
among others, evaluates the creditworthiness of the
dealers, importers and end customers, as well as
any loss ratios, and risk provisioning parameters are
derived based on historical default probabilities and
loss ratios.
Provisions for statutory and non-statutory warranty
obligations as well as product guarantees are in-
cluded in the consolidated financial statements of
BMW Group as a material amount in other provi-
sions. The obligations amounted to EUR 6,131 mil-
lion (approximately 2.8% of total assets) as at De-
cember 31, 2020. BMW Group is responsible for the
legally required warranty and product guarantees in
the respective sales market. In order to estimate the
liabilities arising from statutory and non-statutory
warranty obligations and product guarantees for
vehicles sold, information on the type and volume
of damages arising and on remedial measures is
recorded and analyzed at vehicle model level. The
expected amount of obligations is extrapolated from
costs of the past and recognized as a provision in
the corresponding amount, if the criteria of IAS 37
have been met. For specific or anticipated individual
circumstances, for example recalls, additional provi-
sions are recognized provided they have not already
been taken into account.
1
In the BMW Group's consolidated financial state-
ments as at December 31, 2020, the YOUR NOW
equity investment is reported under the balance
sheet item "Investments accounted for using the
equity method" with a carrying amount of EUR
591 million (approximately 0.3% of total assets). The
BMW Group and a competitor have bundled mobility
services within YOUR NOW. In the financial year
2020 YOUR NOW generated negative operating
earnings amounting to EUR 349 million, which were
recognized in the consolidated financial statements.
Furthermore, there was a triggering event at the level
of the BMW Group. The Company has identified as a
triggering event in particular a significant deviation
from target figures and the impacts of the coronavi-
rus crisis regarding the YOUR NOW equity invest-
ment. As a result of the impairment test performed,
no further write-downs were necessary as at balance
sheet date.
The measurement of the YOUR NOW equity invest-
ment, including the performance of the impairment
test, depends to a significant degree on the estimates
made by the executive directors and their exercise of
judgment, which are subject to significant estimation
The executive directors are responsible for the other
information. The other information comprises the follow-
ing non-audited parts of the group management report:
Other Information
3 The Company's disclosures on the applied “Account-
ing policies, assumptions, judgments and estima-
tions" are contained in the notes to the consolidated
financial statements under note 5 and on "Other
operating expenses" are contained under note 10.
In our view, the estimates made by the executive di-
rectors regarding the recognition and measurement
of the provision for the risks from the EU antitrust
proceeding described above and the associated risk
provision in the consolidated financial statements
are sufficiently documented and substantiated.
development of the aforementioned risks arising
from the EU antitrust proceeding, including the
executive directors' estimates concerning the poten-
tial proceeding outcomes, was provided to us by the
Company in writing. In addition, we obtained and
evaluated an external legal confirmation as at the
balance sheet date.
With the knowledge that estimated values result in an
increased risk of accounting misstatements and that
the executive directors' recognition and measure-
ment decisions have a direct effect on consolidated
result, we evaluated the retention of the carrying
amounts, with the involvement of an internal PwC
antitrust law expert. Furthermore, we also held reg-
ular meetings with the Company's legal department
in order to receive updates on current developments
and the reasons for the corresponding estimates. The
In our view, this matter was of particular significance
for our audit due to the significant uncertainties con-
cerning the outcome of the EU antitrust proceeding
and the potential effects on BMW AG's assets, liabil-
ities, financial position and financial performance.
In April 2019, the BMW Group was notified by the
European Commission of complaints in a pending
antitrust proceeding. The European Commission
accuses various manufacturers of colluding to re-
strict competition in the field of innovation. In this
connection, as in the previous year, a EUR 1.4 billion
provision for litigation and risk provisioning was rec-
ognized at the balance sheet date in the consolidated
financial statements under the balance sheet item
"Other provisions". The risk assessment to be made
on developments in the EU antitrust proceeding and
the estimation of whether or not a provision must
be recognized to cover the risks, and if so, in what
amount the current obligation must be measured, is
subject to a high degree of uncertainties and charac-
terized by the estimates and assumptions made by
the executive directors.
2
1
5 Measurement of provision for risks relating to an
EU antitrust proceeding
三
KKK 335
Independent Auditor's Report
Corporate Governance
BMW Group
Report 2020
3 The Company's disclosures on the applied "Account-
ing policies, assumptions, judgments and estimations"
are contained in the notes to the consolidated finan-
cial statements under note 5 and on the YOUR NOW
equity investment are contained under note 24.
The valuation parameters and assumptions used by
the executive directors are overall in line with our ex-
pectations and are also within the ranges considered
by us to be acceptable.
As part of our audit, we examined and evaluated the
methodological procedure adopted for the purposes
of measuring the YOUR NOW equity investment as
well as for performing the impairment test, among
other things. We also assessed the appropriateness
of the valuation parameters and assumptions on
which the measurement was based. We examined
the impairment test conducted by the BMW Group
based on the occurrence of a triggering event. After
comparing the future cash inflows used in the calcu-
lation against the underlying budget, we assessed the
appropriateness of the calculation, in particular by
reconciling it with general and sectorspecific market
expectations. Moreover, we evaluated the estimates
made by the executive directors with respect to the
impacts of the coronavirus crisis on the YOUR NOW
equity investment and examined its consideration
in the calculation of future cash inflows. We also as-
sessed the parameters used to determine the discount
rate applied and examined the measurement model.
uncertainties. Against this background, this matter
was of particular significance during our audit.
2
2 Valuation of receivables from sales financing
--
3 The Company's disclosures on the applied “Account-
ing policies, assumptions, judgments and estimations"
are contained in the notes to the consolidated finan-
cial statements under note 5 and on leased products
are contained under note 23.
Independent Auditor's Report
K = 332
Independent Auditor's Report
Report 2020
Corporate Governance
BMW Group
We conducted our audit of the consolidated financial
statements and of the group management report in ac-
cordance with § 317 HGB and the EU Audit Regulation
(No. 537/2014, referred to subsequently as “EU Audit
Regulation") in compliance with German Generally Ac-
cepted Standards for Financial Statement Audits prom-
ulgated by the Institut der Wirtschaftsprüfer [Institute of
Public Auditors in Germany] (IDW). Our responsibilities
under those requirements and principles are further de-
scribed in the "Auditor's Responsibilities for the Audit of
the Consolidated Financial Statements and of the Group
Management Report" section of our auditor's report. We
are independent of the group entities in accordance with
the requirements of European law and German com-
mercial and professional law, and we have fulfilled our
other German professional responsibilities in accordance
with these requirements. In addition, in accordance with
Article 10 (2) point (f) of the EU Audit Regulation, we
declare that we have not provided non-audit services
prohibited under Article 5 (1) of the EU Audit Regulation.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinions on the consolidated financial statements and on
the group management report.
Basis for the Audit Opinions
Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we
declare that our audit has not led to any reservations
relating to the legal compliance of the consolidated fi-
nancial statements and of the group management report.
financial statements, complies with German legal
requirements and appropriately presents the oppor-
tunities and risks of future development. Our audit
opinion on the group management report does not
cover the content of those parts of the group manage-
ment report listed in the "Other Information" section
of our auditor's report.
Key Audit Matters in the Audit of the Consolidated
Financial Statements
the accompanying group management report as a
whole provides an appropriate view of the Group's
position. In all material respects, this group man-
agement report is consistent with the consolidated
In our opinion, on the basis of the knowledge obtained
in the audit,
We have audited the consolidated financial state-
ments of Bayerische Motoren Werke Aktiengesellschaft,
Munich, and its subsidiaries (the Group), which comprise
the BMW Group Income Statement for Group, Statement
of Comprehensive Income for Group, BMW Group Balance
Sheet at 31 December 2020, BMW Group Cash Flow State-
ment for BMW Group and BMW Group Statement of Chang-
es in Equity for the financial year from January 1 to Decem-
ber 31, 2020, and Notes to the Group Financial Statements,
including a summary of significant accounting policies. In
addition, we have audited the group management report
of Bayerische Motoren Werke Aktiengesellschaft, which
is combined with the Company's management report, for
the financial year from January 1 to December 31, 2020.
In accordance with the German legal requirements, we
have not audited the content of those parts of the group
management report listed in the "Other Information"
section of our auditor's report.
Audit Opinions
REPORT ON THE AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS AND OF THE GROUP
MANAGEMENT REPORT
TO BAYERISCHE MOTOREN WERKE
AKTIENGESELLSCHAFT, MUNICH
AUDITOR'S REPORT
INDEPENDENT
The following copy of the auditor's report also includes a "Report
on the audit of the electronic renderings of the financial state-
ments and the management report prepared for disclosure pur-
poses in accordance with § 317 Abs. 3b HGB" ("Separate report
on ESEF conformity"). The subject matter (ESEF documents)
to which the Separate report on ESEF conformity relates is not
attached. The audited ESEF documents can be inspected in or
retrieved from the Federal Gazette.
BMW Group
Report 2020
the accompanying consolidated financial statements
comply, in all material respects, with the IFRSS as
adopted by the EU, and the additional requirements
of German commercial law pursuant to § [Article]
315e Abs. [paragraph] 1 HGB [Handelsgesetzbuch:
German Commercial Code] and, in compliance
with these requirements, give a true and fair view
of the assets, liabilities, and financial position of the
Group as at December 31, 2020, and of its financial
performance for the financial year from January 1 to
December 31, 2020, and
Key audit matters are those matters that, in our
professional judgment, were of most significance in our
audit of the consolidated financial statements for the fi-
nancial year from January 1 to December 31, 2020. These
matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in
forming our audit opinion thereon; we do not provide a
separate audit opinion on these matters.
In our view, the matters of most significance in our
audit were as follows:
~ ~ -
Corporate Governance
BMW Group
Report 2020
Based on our audit procedures, we were able to
satisfy ourselves that the methods and processes for
determining the expected residual values of leased
products underlying the valuation are appropriate
and the assumptions and parameters included in the
forecast model for the residual value are appropriate
as a whole.
As part of our audit we obtained an understanding of
the development of operating leases, the underlying
residual value risks as well as the business processes
for the identification, management, monitoring and
measurement of residual value risks, among other
things by inquiries and inspection of documents
related to the internal calculation methods. Fur-
thermore, we evaluated the appropriateness and
effectiveness of the internal control system, par-
ticularly regarding the determination of expected
residual values. This included the evaluation of the
propriety of the relevant IT systems as well as the
implemented interfaces therein by our IT specialists.
In addition, we evaluated the appropriateness of the
forecasting methods, the model assumptions as well
as the parameters used for the measurement of the
residual values based on the validations carried out
by the BMW Group. For this purpose, we inquired
with the BMW Group's experts responsible for the
management and monitoring of residual value risks
and inspected the internal analysis on residual value
developments and residual value forecasts as well as
the validation results. We examined the mathemati-
cally correctness of the forecast values using the key
calculation steps.
2
Against this background and due to the resulting
significant uncertainties with regard to estimates in
the context of measuring the residual values of the
leased products, this matter was of particular signif-
icance in the context of our audit.
The BMW Group leases vehicles to end customers
under operating leases (leased products). At the bal-
ance sheet date, the figure reported under the “leased
products" line item for operating leases was EUR
41,995 million (approximately 19.4% of total assets).
Leased products are measured at cost, which is de-
preciated on a straight-line basis over the lease term
to the expected residual value (recoverable amount).
A key estimated value for subsequent measurement
of leased products is the expected residual value at
the end of the lease term. The BMW Group uses in-
ternally available data on historical empirical values,
current market data and market estimates as well
as forecasts by external market research institutes.
The estimation of future residual values is subject to
judgment due to the large number of assumptions to
be made by the executive directors and the amount
of data included in the determination.
1
1 Measurement of leased products
Hereinafter we present the key audit matters:
Reference to further information
Audit approach and findings
3
2
1 Matter and issue
Our presentation of these key audit matters has been
structured in each case as follows:
5 Measurement of provision for risks relating to
an EU antitrust proceeding
4 Measurement of YOUR NOW equity investment
3 Valuation of provisions for statutory and
non-statutory warranty obligations and product
guarantees
2 Valuation of receivables from sales financing
Measurement of leased products
KK 333
Our audit firm applies the national legal require-
ments and professional standards – in particular the
Professional Code for German Public Auditors and Ger-
man Chartered Auditors (“Berufssatzung für Wirtschafts-
prüfer und vereidigte Buchprüfer“: “BS WP/vBP") as well
as the Standard on Quality Control 1 published by the
Institut der Wirtschaftsprüfer (Institute of Public Audi-
tors in Germany; IDW): Requirements to quality control
for audit firms (IDW Qualitätssicherungsstandard 1: An-
forderungen an die Qualitätssicherung in der Wirtschaft-
sprüferpraxis – IDW QS 1) - and accordingly maintains a
comprehensive system of quality control including doc-
umented policies and procedures regarding compliance
with ethical requirements, professional standards and
applicable legal and regulatory requirements.
the statement on corporate governance pursuant to
§ 289 f HGB and § 315 d HGB included in section
"Corporate Governance" of the group management
report
the disclosures marked with "L..." of the non-finan-
cial statement pursuant to § 289b Abs. 1 HGB and §315d
Abs. 1 HGB
Evaluate whether the ESEF documents enables a
XHTML reproduction with content equivalent to the
audited consolidated financial statements and to the
audited group management report.
Evaluate the technical validity of the ESEF documents,
i.e., whether the electronic file containing the ESEF
documents meets the requirements of the Delegated
Regulation (EU) 2019/815 in the version applicable
as at the balance sheet date on the technical specifi-
cation for this electronic file.
Obtain an understanding of internal control relevant
to the assurance engagement on the ESEF documents
in order to design assurance procedures that are
appropriate in the circumstances, but not for the
purpose of expressing an assurance conclusion on
the effectiveness of these controls.
K = 339
-
Independent Practitioners Report
Corporate Governance
Report 2020
BMW Group
Evaluate whether the tagging of the ESEF documents
with Inline XBRL technology (iXBRL) enables an
appropriate and complete machine-readable XBRL
copy of the XHTML reproduction.
Identify and assess the risks of material non-com-
pliance with the requirements of § 328 Abs. 1 HGB,
whether due to fraud or error, design and perform
assurance procedures responsive to those risks, and
obtain assurance evidence that is sufficient and
appropriate to provide a basis for our assurance
conclusion.
Group Auditor's Responsibilities for the Assurance
Engagement on the ESEF Documents
The supervisory board is responsible for overseeing
the preparation of the ESEF documents as part of the
financial reporting process.
The executive directors of the Company are also
responsible for the submission of the ESEF documents
together with the auditor's report and the attached
audited consolidated financial statements and audited
group management report as well as other documents
to be published to the operator of the German Federal
Gazette [Bundesanzeiger].
considered necessary to enable the preparation of ESEF
documents that are free from material non-compliance
with the requirements of § 328 Abs. 1 HGB for the elec‐
tronic reporting format, whether due to fraud or error.
In addition, the executive directors of the Company
are responsible for such internal control as they have
The executive directors of the Company are re-
sponsible for the preparation of the ESEF documents
including the electronic reproduction of the consolidated
financial statements and the group management report
in accordance with § 328 Abs. 1 Satz 4 Nr. 1 HGB and
for the tagging of the consolidated financial statements
in accordance with § 328 Abs. 1 Satz 4 Nr. 2 HGB.
Responsibilities of the Executive Directors and the
Supervisory Board for the ESEF Documents
We conducted our assurance engagement on the
reproduction of the consolidated financial statements
and the group management report contained in the
above-mentioned attached electronic file in accordance
with § 317 Abs. 3b HGB and the Exposure Draft of IDW
Assurance Standard: Assurance in Accordance with § 317
Abs. 3b HGB on the Electronic Reproduction of Financial
Statements and Management Reports Prepared for Publi-
cation Purposes (ED IDW ASS 410) and the International
Standard on Assurance Engagements 3000 (Revised).
Accordingly, our responsibilities are further described
below in the “Group Auditor's Responsibilities for the
Assurance Engagement on the ESEF Documents" section.
Our audit firm has applied the IDW Standard on Quality
Management: Requirements for Quality Management in
the Audit Firm (IDW QS 1).
Basis for the Reasonable Assurance Conclusion
Our objective is to obtain reasonable assurance about
whether the ESEF documents are free from material
non-compliance with the requirements of § 328 Abs.
1 HGB, whether due to fraud or error. We exercise pro-
fessional judgment and maintain professional skepticism
throughout the assurance engagement. We also:
FURTHER INFORMATION PURSUANT TO ARTICLE 10 OF
THE EU AUDIT REGULATION
We were elected as group auditor by the annual
general meeting on May 14, 2020. We were engaged by
the supervisory board on June 17, 2020. We have been
the
group auditor of the Bayerische Motoren Werke Ak-
tiengesellschaft, Munich, without interruption since the
financial year 2019.
We declare that the audit opinions expressed in this
auditor's report are consistent with the additional report
to the audit committee pursuant to Article 11 of the EU
Audit Regulation (long-form audit report).
Independence and Quality Control of the Audit Firm
This responsibility of Company's executive directors
includes the selection and application of appropriate
methods of non-financial reporting and sustainability
reporting as well as making assumptions and estimates
related to individual non-financial disclosures and
sustainability disclosures which are reasonable in the
circumstances. Furthermore, the executive directors are
responsible for such internal control as they have consid-
ered necessary to enable the preparation of an Integrated
Group Report that is free from material misstatement
whether due to fraud or error.
The executive directors of the Company are respon-
sible for the preparation of the combined non-financial
statement in accordance with §§ 315 c in conjunction
with 289c to 289e HGB and the Sustainability Disclo-
sures in accordance with the principles stated in the Sus-
tainability Reporting Standards of the Global Reporting
Initiative (hereinafter the "GRI-Criteria").
Responsibilities of the Executive Directors
We have performed a limited assurance engagement
on the disclosures in the „BMW Group Report 2020" for
the period from 1 January to 31 December 2020 (herein-
after the “Integrated Group Report") of BMW AG, Mu-
nich, (hereinafter the "Company") denoted with "L ... J”
of the combined non-financial statement pursuant to §§
(Articles) 289b (paragraph) Abs. 1 and 315b Abs. 1 HGB
("Handelsgesetzbuch”: “German Commercial Code"),
which is integrated into the combined management
report (hereinafter the "Disclosures on Non-financial
Reporting") contained in the Integrated Group Report,
as well as the sustainability disclosures contained in the
sections "Dialog with Stakeholders” and “Further GRI
Information" of the Integrated Group Report (hereinafter
referred to as "Sustainability Disclosures”). Our engage-
ment in this context relates solely to the disclosures
denoted with the symbol "L..." and the disclosures
in the sections "Dialog with Stakeholders” and “Further
GRI Information".
To BMW AG, Munich
1 PricewaterhouseCoopers GmbH has performed a limited assurance engagement on the German version
of the,,BMW Group Report 2020" and issued an independent practitioner's report in German language,
which is authoritative. The following text is a translation of the independent practitioner's report.
INDEPENDENT PRACTITIONER'S REPORT ON A
LIMITED ASSURANCE ENGAGEMENT ON DISCLOSURES
ON NON-FINANCIAL REPORTING AND SUSTAINABILITY
DISCLOSURES¹
REPORT
INDEPENDENT
PRACTITIONER'S
Independent Practitioners Report
Corporate Governance
Report 2020
BMW Group
ANDREAS FELL
Wirtschaftsprüfer
[German public auditor]
Wirtschaftsprüferin
[German public auditor]
PETRA JUSTENHOVEN
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
Munich, 10 March 2021
The German Public Auditor responsible for the
engagement is Andreas Fell.
GERMAN PUBLIC AUDITOR RESPONSIBLE FOR
THE ENGAGEMENT
on the accompanying consolidated financial statements
and the accompanying group management report for the
financial year from 1 January to 31 December 2020 con-
tained in the "Report on the Audit of the Consolidated
Financial Statements and on the Group Management
Report" above.
the subsections "Information on the Company's
Governing Constitution”, “Board of Management”,
"Supervisory Board", "Shareholders and Annual
General Meeting” and “Declaration of Compliance"
listed in the "Corporate Governance" section of the
group management report
In our opinion, the reproduction of the consolidated
financial statements and the group management report
contained in the above-mentioned attached electronic
file and prepared for publication purposes complies
in all material respects with the requirements of § 328
Abs. 1 HGB for the electronic reporting format. We do
not express any opinion on the information contained
in this reproduction nor on any other information con-
tained in the above-mentioned electronic file beyond this
reasonable assurance conclusion and our audit opinion
Reasonable Assurance Conclusion
Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance
with $317 HGB and the EU Audit Regulation and in com-
pliance with German Generally Accepted Standards for
Financial Statement Audits promulgated by the Institut
der Wirtschaftsprüfer (IDW) will always detect a mate-
rial misstatement. Misstatements can arise from fraud
or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the
basis of these consolidated financial statements and this
group management report.
Our objectives are to obtain reasonable assurance
about whether the consolidated financial statements as a
whole are free from material misstatement, whether due
to fraud or error, and whether the group management
report as a whole provides an appropriate view of the
Group's position and, in all material respects, is con-
sistent with the consolidated financial statements and
the knowledge obtained in the audit, complies with the
German legal requirements and appropriately presents
the opportunities and risks of future development, as
well as to issue an auditor's report that includes our audit
opinions on the consolidated financial statements and on
the
group management report.
Auditor's Responsibilities for the Audit of the Consoli-
dated Financial Statements and of the Group Manage-
ment Report
The supervisory board is responsible for overseeing
the Group's financial reporting process for the prepara-
tion of the consolidated financial statements and of the
group management report.
Furthermore, the executive directors are responsible
for the preparation of the group management report that,
as a whole, provides an appropriate view of the Group's
position and is, in all material respects, consistent with
the consolidated financial statements, complies with
German legal requirements, and appropriately presents
the opportunities and risks of future development. In
addition, the executive directors are responsible for such
arrangements and measures (systems) as they have con-
sidered necessary to enable the preparation of a group
management report that is in accordance with the ap-
plicable German legal requirements, and to be able to
provide sufficient appropriate evidence for the assertions
in the group management report.
In preparing the consolidated financial statements,
the executive directors are responsible for assessing the
Group's ability to continue as a going concern. They
also have the responsibility for disclosing, as applicable,
matters related to going concern. In addition, they are
responsible for financial reporting based on the going
concern basis of accounting unless there is an intention
to liquidate the Group or to cease operations, or there is
no realistic alternative but to do so.
The executive directors are responsible for the
preparation of the consolidated financial statements that
comply, in all material respects, with IFRSS as adopted
by the EU and the additional requirements of German
commercial law pursuant to § 315 e Abs. 1 HGB and that
the consolidated financial statements, in compliance
with these requirements, give a true and fair view of the
assets, liabilities, financial position, and financial perfor-
mance of the Group. In addition the executive directors
are responsible for such internal control as they have
determined necessary to enable the preparation of con-
solidated financial statements that are free from material
misstatement, whether due to fraud or error.
Responsibilities of the Executive Directors and the
Supervisory Board for the Consolidated Financial
Statements and the Group Management Report
otherwise appears to be materially misstated.
We exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
is materially inconsistent with the consolidated finan-
cial statements, with the group management report
or our knowledge obtained in the audit, or
In connection with our audit, our responsibility is to
read the other information and, in so doing, to consider
whether the other information
KKK = 336
Independent Auditor's Report
Corporate Governance
Report 2020
BMW Group
Our audit opinions on the consolidated financial
statements and on the group management report do not
cover the other information, and consequently we do not
express an audit opinion or any other form of assurance
conclusion thereon.
The other information comprises further the remain-
ing parts of the annual report – excluding cross-referenc-
es to external information with the exception of the
audited consolidated financial statements, the audited
group management report and our auditor's report.
-
—
Identify and assess the risks of material misstatement
of the consolidated financial statements and of the
group management report, whether due to fraud or
error, design and perform audit procedures respon-
sive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our
audit opinions. The risk of not detecting a material
misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collu-
sion, forgery, intentional omissions, misrepresenta-
tions, or the override of internal controls.
Obtain an understanding of internal control relevant
to the audit of the consolidated financial statements
and of arrangements and measures (systems) relevant
to the audit of the group management report in order
to design audit procedures that are appropriate in the
circumstances, but not for the purpose of express-
ing an audit opinion on the effectiveness of these
systems.
BMW Group
Assurance Report in Accordance with § 317 Abs. 3b HGB
on the Electronic Reproduction of the Consolidated
Financial Statements and the Group Management Report
Prepared for Publication Purposes
OTHER LEGAL AND REGULATORY REQUIREMENTS
KKK = 338
Independent Auditor's Report
Report 2020
Corporate Governance
BMW Group
From the matters communicated with those charged
with governance, we determine those matters that were
of most significance in the audit of the consolidated
financial statements of the current period and are there-
fore the key audit matters. We describe these matters in
our auditor's report unless law or regulation precludes
public disclosure about the matter.
We also provide those charged with governance with
a statement that we have complied with the relevant in-
dependence requirements, and communicate with them
all relationships and other matters that may reasonably
be thought to bear on our independence, and where
applicable, the related safeguards.
We communicate with those charged with govern-
ance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings,
including any significant deficiencies in internal control
that we identify during our audit.
Perform audit procedures on the prospective infor-
mation presented by the executive directors in the
group management report. On the basis of sufficient
appropriate audit evidence we evaluate, in particular,
the significant assumptions used by the executive
directors as a basis for the prospective information,
and evaluate the proper derivation of the prospec-
tive information from these assumptions. We do not
express a separate audit opinion on the prospective
information and on the assumptions used as a basis.
There is a substantial unavoidable risk that future
events will differ materially from the prospective
information.
Evaluate the consistency of the group management
report with the consolidated financial statements, its
conformity with German law, and the view of the
Group's position it provides.
Obtain sufficient appropriate audit evidence re-
garding the financial information of the entities
or business activities within the Group to express
audit opinions on the consolidated financial state-
ments and on the group management report. We
are responsible for the direction, supervision and
performance of the group audit. We remain solely
responsible for our audit opinions.
Evaluate the overall presentation, structure and
content of the consolidated financial statements,
including the disclosures, and whether the consol-
idated financial statements present the underlying
transactions and events in a manner that the con-
solidated financial statements give a true and fair
view of the assets, liabilities, financial position and
financial performance of the Group in compliance
with IFRSS as adopted by the EU and the additional
requirements of German commercial law pursuant
to § 315 e Abs. 1 HGB.
Conclude on the appropriateness of the executive di-
rectors' use of the going concern basis of accounting
and, based on the audit evidence obtained, whether
a material uncertainty exists related to events or
conditions that may cast significant doubt on the
Group's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are
required to draw attention in the auditor's report to
the related disclosures in the consolidated financial
statements and in the group management report
or, if such disclosures are inadequate, to modify
our respective audit opinions. Our conclusions are
based on the audit evidence obtained up to the date
of our auditor's report. However, future events or
conditions may cause the Group to cease to be able
to continue as a going concern.
Evaluate the appropriateness of accounting policies
used by the executive directors and the reasonable-
ness of estimates made by the executive directors and
related dislosures.
-
K = 337
Independent Auditor's Report
Corporate Governance
Report 2020
We have performed an assurance engagement in ac-
cordance with § 317 Abs. 3b HGB to obtain reasonable
assurance about whether the reproduction of the consol-
idated financial statements and the group management
report (hereinafter the "ESEF documents") contained in
the attached electronic file BMW_AG_KA+KLB_ESEF-
2020-12-31.zip and prepared for publication purposes
complies in all material respects with the requirements
of § 328 Abs. 1 HGB for the electronic reporting format
("ESEF format"). In accordance with German legal re-
quirements, this assurance engagement only extends
to the conversion of the information contained in the
consolidated financial statements and the group man-
agement report into the ESEF format and therefore
relates neither to the information contained within this
reproduction nor to any other information contained in
the above-mentioned electronic file.
K = 331
Independent Auditor's Report
0.0
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
Munich, 10 March 2021
The report is not intended for any third parties to
base any (financial) decision thereon. Our responsibil-
ity lies only with the Company. We do not assume any
responsibility towards third parties.
We issue this report on the basis of the engagement
agreed with the Company. The assurance engagement
has been performed for purposes of the Company and
the report is solely intended to inform the Company
about the results of the limited assurance engagement.
Intended Use of the Assurance Report
the Sustainability Disclosures in the sections “Dialog
with Stakeholders" and "Further GRI Information"
of the Company's Integrated Group Report for the
period from 1 January to 31 December 2020 have not
been prepared, in all material aspects, in accordance
with the relevant GRI-Criteria.
the Disclosures on Non-financial Reporting denoted
with the symbol "L ..." of the Company's combined
non-financial statement pursuant to §§ 289 b Abs. 1
and 315b Abs. 1 HGB for the period from 1 January
to 31 December 2020, which is integrated into the
combined management report contained in the In-
tegrated Group Report, have not been prepared, in
all material aspects, in accordance with the require-
ments of §§ 315 c in conjunction with 289c to 289e
HGB relevant to these disclosures, or
Based on the assurance procedures performed and
assurance evidence obtained, nothing has come to our
attention that causes us to believe that
Assurance Conclusion
Independent Practitioners Report
Corporate Governance
Report 2020
BMW Group
Evaluation of the presentation of the disclosures
Inquiries of the employees responsible for the in-
formation on fleet emissions and fuel consumption
contained in the Integrated Group Report and recon-
ciliation of individual data on fleet emissions and fuel
consumption with the technical vehicle data
Analytical evaluation of selected disclosures in the
Integrated Group Report
- Testing of processes for the collection, control, anal-
ysis and aggregation of selected data from various
Group sites on a sample basis
ANDREAS FELL
Wirtschaftsprüfer
[German public auditor]
Identification of the likely risks of material misstate-
ment of the Integrated Group Report
NICOLETTE BEHNCKE
K
363
TCFD-Index
359
Reporting Concept
357
Employees and Society
352
Production, Purchasing and Supplier Network
Further GRI Information
344
344
INFORMATION
OTHER
Other Information
Report 2020
BMW Group
= 342
Wirtschaftsprüferin
[German public auditor]
Inquiries of personnel involved in the preparation of
the Integrated Group Report regarding the prepara-
tion
process, the internal control system relating to
this process and selected disclosures in the Integrat-
ed Group Report
Obtaining an understanding of the structure of the
sustainability organization and of the stakeholder
engagement
Within the scope of our assurance engagement, we
performed amongst others the following assurance pro-
cedures and further activities:
2018
2019
2020
3 AOX absorbable organic halides in water.
1 Efficiency indicator = process wastewater from vehicle production divided by the total number of vehicles
produced, incl. BMW Brilliance Automotive Ltd. joint venture in Shenyang, not including vehicles from the
Magna Steyr and Nedcar contract production plants. BMW Motorrad is not included either.
BMW Group
Report 2020
Other Information
Further GRI Information
WASTE 1
in t
Total waste
Hazardous waste for recovery
Hazardous waste for disposal
Non-hazardous waste for recovery
Non-hazardous waste for disposal
Materials for recycling³
Metals for recycling (scrap)
2017
2016
2 COD chemical oxygen demand.
|||||
In a limited assurance engagement the assurance pro-
cedures are less in extent than for a reasonable assurance
engagement, and therefore a substantially lower level of
assurance is obtained. The assurance procedures selected
depend on the practitioner's judgment.
the Sustainability Disclosures in the sections “Dialog
with Stakeholders" and "Further GRI Information"
of the Company's Integrated Group Report for the
period from 1 January to 31 December 2020 have not
been prepared, in all material aspects, in accordance
with the relevant GRI-Criteria.
the Disclosures on Non-financial Reporting denoted
with the symbol "..." of the Company's com-
bined non-financial statement pursuant to §§ 289b
Abs. 1 and 315b Abs. 1 HGB for the period from
1 January to 31 December 2020, which is integrated
into the combined management report contained in
the Integrated Group Report, have not been prepared,
in all material aspects, in accordance with the re-
quirements of §§ 315 c in conjunction with 289c to
289e HGB relevant to these disclosures, or
We conducted our assurance engagement in accord-
ance with the International Standard on Assurance
Engagements (ISAE) 3000 (Revised): Assurance Engage-
ments other than Audits or Reviews of Historical Finan-
cial Information, issued by the IAASB. This Standard
requires that we plan and perform the assurance en-
gagement to allow us to conclude with limited assurance
that nothing has come to our attention that causes us to
believe that
Within the scope of our engagement we did not
perform an audit on external sources of information
or expert opinions, referred to in the Integrated Group
Report.
Our responsibility is to express a limited assurance
conclusion on the Disclosures on Non-financial Report-
ing denoted with the symbol "L..." of the combined
non-financial statement and the Sustainability Disclo-
sures in the sections "Dialog with Stakeholders" and
"Further GRI Information" of the Integrated Group
Report based on the assurance engagement we have
performed.
Practitioner's Responsibility
= 341
NFE-Index
K
Corporate Governance
Report 2020
BMW Group
64
0.0
63
54
1 The key performance indicator "Process wastewater" is measured after wastewater treatment in BMW Group plants (incl. the BMW Brilliance Automotive Ltd. joint venture in Shenyang) has taken place. BMW Motorrad is not in-
cluded. Together with the wastewater from sanitary facilities at the plants, this is the figure for total wastewater. Due to factors such as evaporation, water input does not correspond to total wastewater.
Independent Practitioners Report
364
BMW Group Fuel Consumption and
CO2 Emissions Information
365
84,257
302,574
84,257
302,574
538,622
538,622
510,911
510,911
868,089
Electricity/heat purchased by BMW Group locations 4,7
868,089
SCOPE 2: INDIRECT GREENHOUSE GAS EMISSIONS
Total emissions
1,7936
6,098
6,182
6,562
5,117
Emissions of company-owned planes
72,554
SCOPE 3: INDIRECT GREENHOUSE GAS EMISSIONS
Total emissions
Emissions of logistics
Emissions of business trips⁹
10 The figures from 2020 onwards are not directly comparable with previous years due to the improved data basis. In some cases, figures are extrapolated based on surveys conducted at major national and international
BMW Group locations.
9 Includes air travel, train travel and rental cars.
8 The volume of carbon emissions in 2020 is not directly comparable with the figures reported for previous years, as the scope of analysis has been expanded to include local data from suppliers involved in supplying specified
production plants as well as data from service providers involved in distributing vehicles to dealerships in specified markets and spare parts deliveries.
7 Market-based emissions according to GHG Protocol Scope 2 guidance. VDA factors (updated in June 2019) used since the reporting year 2020. Scope 2 emissions calculated using the location-based method (total bought-in
electricity and heat calculated using VDA factors): 1,250,572 t CO2.
6 Decrease is due to the pandemic-related reduction in travel activities.
4 Emissions from BMW Group-owned production sites including BMW Motorrad Berlin as well as administration, development and central distribution centres. VDA factors (updated in June 2019) used since the reporting year 2020.
5 Includes refuelling of service and function-related vehicles in Germany and at individual international locations (USA, Sweden, France). Private refuelling is not recorded.
3 Figure not directly comparable to previous years' figures. Calculated using EU fleet emissions according to NEDC correlated. Using NEDC correlated values in 2017 would result in a value of 52,933,132 t of CO2. This is
equivalent to a reduction of absolute emissions by 0.3% in 2018.
1 The emissions listed account for approximately 90% of the BMW Group's total Scope 1 to Scope 3 emissions. Scope 1 and Scope 2 emissions exclude climate-changing gases other than carbon dioxide.
2 Due to new input data from an external service provider, the figures for 2017 were adjusted.
85,667
25,2176
65,100,863
71,714,7412 73,093,0773 75,042,286
1,497,075² 1,563,919 1,570,397
169,233 159,039 129,646
140,187 136,608 146,298 166,586
16,786,192 17,221,109 18,505,921 16,234,959
51,887,708 52,759,5673 53,421,006 46,200,385
1,234,346
1,269,018 1,150,857
1,252,835
69,388,735
1,427,399
142,250
139,797
15,391,154
51,079,073
1,185,148
Emissions of disposal 11
Emissions of utilisation phase 12
Emissions of upstream chain11
Emissions of employees' commuter traffic 10
1,322,8598
Waste for disposal
88,272
85,008
2016
in t CO2/CO2e
<< = 344
BMW GROUP CO2 FOOTPRINT
PRODUCTION, PURCHASING
AND SUPPLIER NETWORK
GRI INFORMATION
FURTHER
Further GRI Information
Report 2020
Other Information
BMW Group
K = 343
Contacts
368
Financial Calendar
367
BMW Group Ten-year Comparison
2017
2018
2019
2020
Emissions of company vehicles5
568,538
550,494
487,249
529,728
472,021
Emissions of BMW Group locations4
642,885
88,782
642,259
625,072
562,146
Total emissions
SCOPE 1: DIRECT GREENHOUSE GAS EMISSIONS
65,828,005
72,850,7242 74,213,402³ 75,987,119
70,818,970
Total emissions¹
581,703
KKK = 349
WASTE FOR DISPOSAL PER VEHICLE PRODUCED1
2016
January 20181
ISO 14001
January 20181
ISO 14001/EMAS
ISO 14001/EMAS
National Standard²/ISO 14001
ISO 14001/EMAS
ISO 14001
January 20181
January 20181
Certification planned in 2021
January 20181
January 20181
ISO 14001
January 20181
ISO 14001/EMAS
January 20181
ISO 14001
ISO 14001
January 20181
ISO 14001/EMAS
January 20181
Manaus/BR
Munich/DE
Oxford/UK
Rayong/TH
Regensburg/DE
Rosslyn/ZA
San Luis Potosí/MX
Spartanburg/US
January 20181
Steyr/AT
Date of most recent ISO 14001 certification
ISO 14001
January 20181
ISO 14001/EMAS
January 20181
ISO 14001
January 20181
ISO 14001/EMAS
Environmental management system
Leipzig/DE
ISO 14001
ISO 14001
December 2018
BMW Brilliance Automotive, Shenyang/CN (joint venture)³
CONTRACT PRODUCTION
Loncin Motor Co., Chongqing/CN
Magna Steyr Fahrzeugtechnik, Graz/AT
TVS Motor Company, Hosur/IN
VDL Nedcar, Born/NL
1 Three-year validity period extended by a further six months due to the coronavirus pandemic..
2 Compliance with legal requirements.
3 The joint venture comprises three locations.
ISO 14001
August 2018
ISO 14001/EMAS
ISO 14001
ISO 14001
July 2018
January 2020
October 2020
K = 350
ISO 14001
BMW BRILLIANCE AUTOMOTIVE HOLDINGS LTD. JOINT VENTURE
August 2020
December 2018
May 2019
November 2018
January 20181
ISO 14001/EMAS
January 20181
ISO 14001
January 20181
ISO 14001/EMAS
January 20181
Swindon/UK
March 2019
Wackersdorf/DE
Jakarta/ID
ISO 14001
Cairo/EG
ISO 14001
Kaliningrad/RU
ISO 14001
Kulim/MY
ISO 14001
ASSEMBLY PLANTS
11 Emissions from the upstream value chain and from disposal are calculated from the life cycle assessments in accordance with ISO 14040/44 of representative vehicles of the product lines using the LCA tool GaBi from the com-
pany Thinkstep (including the climate-changing gases CO2, CH4, N2O, SF6, NF3). Corresponding to the CO2e emissions, the life cycle assessments show the energy consumption (lower calorific value): around 75,640,609 MWh
in the upstream chain and around 502,243 MWh at disposal companies.
Landshut/DE
Eisenach/DE
Goodwood/UK
739,799
742,652
726,590
724,025
4.27
3.86
4.09
3.51
3.33
3,732
4,039
5,189
4,855
3,2862
754,486
776,179
779,911
723,632
3,8822
4,894
4,717
2017
2018
2019
2020
in kg
762,924
785,209
789,817
771,162
780,911
10
30,855
36,379
37,259
44,572
44,267
4,219
4,992
775,459
Hams Hall/UK
768,292
571,685
2017
2018
2019
2020
1 Efficiency indicator = VOC emissions from vehicle production divided by the total number of vehicles
produced, without motorcycles, incl. BMW Brilliance Automotive Ltd. joint venture Shenyang, not including
the vehicles from the Magna Steyr and Nedcar contract production plants.
1 Efficiency indicator waste for disposal from vehicle production divided by the total number of vehicles
produced, incl. BMW Brilliance Automotive Ltd. joint venture, Shenyang, not including vehicles from the
Magna Steyr and Nedcar contract production plants. BMW Motorrad is not included either.
BMW Group
Other Information
Report 2020
Further GRI Information
ENVIRONMENTAL MANAGEMENT SYSTEMS AT PRODUCTION LOCATIONS
Production plant
BMW GROUP PLANTS
Araquari/BR
Berlin/DE
Chennai/IN
Dingolfing/DE
2016
1.0
0.81
0.85
560,164
503,928
453,106
7,951
9,031
9,906
9,749
7,168
569,841
2016 2017
2019 2020
1 These figures refer to the production sites of the BMW Group incl. the BMW Brilliance Automotive Ltd. joint venture in Shenyang. BMW Motorrad is not included.
2 Decrease mainly due to changes in the structure of the existing recovery and recycling firms at the individual locations. For further explanations, see ✓✓ Resource Consumption and Resource Efficiency.
3 Includes both recycling and thermal utilisation.
SOLVENT EMISSIONS PER VEHICLE PRODUCED 1
in kg
2.0
1.14
1.03
0.93
2018
12 The fleet emissions are extrapolated from the average fleet emissions of the main sales markets of the BMW Group. The calculation was based on an average mileage of 150,000 km.
GRI 302-2, 305-1, 305-2, 305-3
of which CHP losses
Other Information
KK = 348
WATER CONSUMPTION PER VEHICLE PRODUCED1
2016
2017
2018
2019
2020
in m³
Water consumption
of which drinking water in %
of which groundwater in %
of which surface water in %
of which rainwater in %
5,017,816
87.1
5,073,220
5,425,073
5,417,428
in m³
4,722,310²
WATER CONSUMPTION1
Other Information
670
GRI 301-1
CO4
t
393
SO24
t
11
41
Particulates, dust4
1 Incl. BMW Brilliance Automotive Ltd., Shenyang, not including contract production.
2 The number of vehicles produced in 2020 decreased to around 2.25 million units (2019: around 2.56 mil-
lion units). Based on an average weight of BMW Group vehicles of around 1.6 t, the total weight of input
materials is around 3.6 million t. To calculate the individual material flows, the total weight is multiplied by
the average distribution of the materials in BMW Group vehicles.
3 The figure includes only automobile production (i.e. excluding motorcycles).
4 BMW Group measurements/capture as well as calculations based on energy consumption (primarily
heating oil and gas) with the aid of the VDA emission factors.
GRI 301-1, 302-1, 305-1, 305-7
K = 347
BMW Group
Report 2020
Further GRI Information
3.0
88.0
90.4
0.45
73.0
0.47
2,390,485
2,542,318
402
461
406
742
Total heavy metals and heavy metal compounds in kg
2,417,246
0.8
3,378,877
988,392
3,578,497
1,036,179
3,432,982
1,015,736
3,633,306
914,016
2,719,290
2,368,554
of which wastewater from sanitary facilities
0.42
0.44
313
0.40
87.4
86.3
12.5
11.7
9.6
12.6
13.6
0.5
t
0.3
AOX³ in kg
1,491,848
1,960,211
1,902,577
2,273,678
2,085,398
COD² in kg
0.4
131
NOX4
1 Calculation based on aggregated mean values of vehicles of the BMW 1, 2, 3, 4, 5, 6, 7, X1, X2, X3, X4, X5
and X6 series, MINI and MINI Countryman as well as the i3 and i8 BMW i models and the PHEV versions of
BMW 3, 5, 7, X1 and X5 series and MINI Countryman.
1,697
6.3
2.6
7.7
3.8
Air
0.5
11.1
0.72
12.93
0.9
16.3
0.6
12.2
0.5
10.6
1 Figures refer to BMW and MINI (i.e. without Rolls-Royce) including BMW Brilliance Automotive Ltd., Shenyang, excluding contract manufacturing. CO2 emissions calculated in accordance with DIN EN 16258 and TREMOD 5.2 (air cargo belly/freighter). Scope: Inbound volumes (supply of materials to plants and spare parts delivery)
for BMW and MINI vehicle plants worldwide as well as for the delivery of spare parts to central parts distribution. Outbound volumes (distribution of vehicles and spare parts) to distribution centres in markets worldwide and for certain markets to the trade, including contract manufacturing.
2 The volume of carbon emissions in 2020 is not directly comparable with the figures reported for previous years, as the scope of analysis has been expanded to include local data from suppliers involved in supplying specified production plants as well as from service providers involved in distributing vehicles to dealerships in specified markets
and spare parts deliveries.
3 Due to new input data from an external service provider, the 2017 values were adjusted.
2.3
6.5
2.5
6.32
BMW Group
47.8
74.7
52.0
Road
14.9
30.8
17.2
4 Decrease mainly due to lower production volumes.
31.73
31.1
20.1
37.5
17.1
33.6
Rail
6.9
3.1
17.6
3,312,562
944,008
GRI 305-3
Other Information
of which recyclable
t
768,292
(e.g. aluminium) 18.1
of which waste for disposal
t
7,168
Elastomers
(e.g. tyres and seals) 3.8
Total wastewater³
m³
3,378,877
CO2 emissions
t
566,804
Volatile org. compounds (VOC)³
t
52.9 Steel and iron
Non-ferrous metals
Textiles 1.1
775,459
Further GRI Information
INPUT/OUTPUT ASSESSMENT
OF BMW GROUP PRODUCTION 1,2
AVERAGE DISTRIBUTION OF MATERIALS IN BMW GROUP
VEHICLES 1
Water³
Energy
in %
M.O.N.
(modif. organ.
Naturwerkst.) 0.4
BMW Group
Report 2020
m³ 4,722,310
4,946,865
Thermoplastic
resins 12.0
Others 9.8
1.9 Duromers
OUTPUT
Total waste³
t
MWh
of which process wastewater
INPUT
in m³
84,166
108,536
220
192,911
164,957
205,320
224,819
237,446
Wood pellets
of which CHP losses
Biogas (landfill gas)
NON-FOSSIL FUELS
3,660
3,093,543
498,299
3,005,902
412,451
2,669,457
294,724
258,380
245,899
101
86,787
68,560
220
220
|<< = 346
LOGISTICS: CARRIERS AND CO2 EMISSIONS1
Further GRI Information
Report 2020
Other Information
BMW Group
K<< = 345
3 Figures since 2018 not directly comparable to previous years' figures, mainly due to a more refined distinction between production and non-manufacturing areas (e.g. administration, development, central distribution centres).
4 The decrease was mainly due to the pandemic-related interruption of production at most BMW Group plants. For further explanations, see ✓ Resource Consumption and Resource Efficiency.
GRI 302-1
2,624,557
1 Energy consumption at BMW Group-owned production sites including BMW Motorrad Berlin (Germany) as well as administration, development and central distribution centres.
2 Upper calorific value for fossil fuels.
1,703
1,091
381
394
Solar (photovoltaics)
RENEWABLES
65,065
56
68
2,316
2016
2,575,089
2,205
369,426
of which non-manufacturing areas
85,559
of which motorcycle production
of which vehicle production
Total energy consumption
TOTAL ENERGY CONSUMPTION
2020
2019
2018
2017
2016
in MWh
ENERGY CONSUMPTION IN DETAIL 1,2
Further GRI Information
Total wastewater
Report 2020
5,783,841 5,852,666 5,788,965 5,974,625
5,328,856 5,362,618 5,169,266 5,226,227
95,493
89,300 120,583
394,555 530,3993 627,815
5,714,610
4,946,865
114,072
653,673
TOTAL ENERGY CONSUMPTION IN DETAIL
2,888
4,450
3,698
Heating oil
FOSSIL FUELS
1,113
1,123
1,072
Natural gas
266,112
2,439,675 2,154,8994
2,513,308
395,609
2,588,409
408,735
1,095
1,084
381,340
Community heating
2,584,570
Electricity (external source)
358,992
2017
Community cooling in Mwh
2019
0.0
0.0
0.0
1.5
0.0
50.3
75.0
52.93
75.8
55.0
77.7
Sea
g CO₂
tkm
g CO₂
tkm
g CO₂
0.0
0.1
1 These figures refer to the production sites of the BMW Group incl. the BMW Brilliance Automotive Ltd. joint venture in Shenyang. BMW Motorrad is not included.
2 Decrease mainly due to lower production volumes and reduced cooling requirements at BMW Group locations worldwide.
WASTEWATER1
2020
2019
2018
2018
2017
2016
PROCESS WASTEWATER PER VEHICLE PRODUCED 1
1 Efficiency indicator = water consumption from vehicle production divided by the total number of vehicles
produced, incl. BMW Brilliance Ltd. joint venture in Shenyang, not including vehicles from the Magna Steyr
and Nedcar contract production plants. BMW Motorrad is not included either.
tkm
2020
2017 2018
2016
1.0
2.25
2.25
2.32
2.39
in m³
2019
g CO₂
2.22
g CO2
26,489
25,777
25,881
25,006
Transport volume in million tkm
OUTBOUND (DISTRIBUTION OF VEHICLES AND SPARE PARTS)
13,6234
472,290
577,077
23,6224
14,491
589,730
506,604
CO2 emissions int
15,202
2020
Transport volume in million tkm
tkm
INBOUND (MATERIAL PROVISION OF THE PLANTS AND SPARE
PARTS DELIVERY)
14,5453
537,928³
CO2 emissions int
15,634
959,147
tkm
PERCENTAGE SHARE OF CARRIERS IN TOTAL (INBOUND AND OUT-
BOUND) IN TERMS OF TRANSPORT VOLUME AND CO2 EMISSIONS
37,2454
1,322,8592
920,795
42,123
1,563,919
40,268
1,497,0753
40,4263
1,570,397
40,208
CO2 emissions int
Transport volume in million tkm
1,427,399
TOTAL (INBOUND AND OUTBOUND)
850,569
993,320
974,189
2016
4 Of whom 35.3% are tariff-bound production employees of the BMW Group.
3 Of whom 35.7% are tariff-bound production employees of the BMW Group.
2 Of whom 35.4% are tariff-bound production employees of the BMW Group.
NEW
5 Of whom 36.7% are tariff-bound production employees of the BMW Group.
OLD
2019 2019 2020
2018
2017
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition,
see Glossary). For the period 2018 and earlier, the percentage of employees no longer covered
by the new definition is between 7.5% and 8.0%.
6 Of whom 38.2% are tariff-bound production employees of the BMW Group.
BMW Group
Report 2020
GRI 102-7
Other Information
Further GRI Information
SHARE OF EMPLOYEES PER COUNTRY WITH PRODUC-
TION LOCATION(S)
SHARE OF EMPLOYEES REPRESENTED BY A TRADE
UNION OR FALLING UNDER COLLECTIVE AGREEMENTS
India 591
Number of employees
of which fixed-term
China 2,110
of which fixed-term
809
Thailand 566
of which fixed-term 45
7 Of whom 37.9% are tariff-bound production employees of the BMW Group.
GRI 102-8
103
3 Permanent and fixed-term employees.
8,645
8,860
20
8,798
8,684
8,473
100
115
117
119
114
110
4,270
4 Corresponds to the new definition of an employee with effect from 2020, therefore no change in the figure.
4,685
3,803
3,489
2,892
Employees
in Germany
4,753
5,553
6,299
6,318
6,3184
6,433
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition, see ✓ Glossary). For the period 2018 and earlier, the percentage of employees no longer covered by the new definition is
between 7.5% and 8.0%.
2 Within BMW AG (which employs around two-thirds of the entire workforce of BMW Group), 0.8% of employees are on fixed-term contracts. Approximately 27% of employees are on fixed-term contract are women.
Under the current system, this data is only collated for BMW AG.
4,638
South Africa 2,878
100
Austria 3,618
2,911 Mexico
Austria¹
100
100
100
100
of which fixed-term 1
South Africa
58
53
62
59
63
7,301 Other countries
of which fixed-term 370
USA (no collective agreements exist)
Mexico¹
0
0
0
0
0
100
100
1 Excluding executives and contractors.
GRI 102-41
8,394
81,367 Germany
100
100
100
100
of which fixed-term 67
USA 11,924
of which fixed-term 0
UK 6,594
of which fixed-term 105
in %
K = 353
2016
2017
2018
2019
2020
866 Brazil
of which fixed-term
652
of which fixed-term 24
UK
100
100
100
100
100
85
86
85
85
84
China (plant)
100
Germany1
3,474
Number of notifications of potential violations of our sustainability principles received
through our supply chain reporting channels
3,658
313
Number of supplier locations not awarded contracts because they fail to meet the BMW Group's
sustainability or other requirements¹
193
153
108
Number of existing supplier relationships that had to be terminated prematurely due to
serious sustainability violations
0
0
0
9
2
3
of which number of notifications that were clarified during the reporting year
9
2
2
1 Basis: Industry-specific sustainability questionnaire.
2 Includes on-site visits and remote audits.
GRI 308-1, 308-2, 414-1, 414-2
BMW GROUP SUPPLIERS PARTICIPATING IN THE CDP SUPPLY CHAIN PROGRAMME
2018
2019
2020
Number of reporting suppliers
Number of suppliers newly admitted to the programme the year under report
190
199
105
218
89
1,317
of which fixed-term 799
BMW Group
Other Information
Report 2020
Further GRI Information
SUSTAINABILITY ASSESSMENT OF RELEVANT SUPPLIER LOCATIONS
2018
2019
2020
Number of supplier locations assessed¹
4,168
3,921
3,220
Proportion of audited suppliers of production-related material with a contract volume greater
than € 2 million¹
97%
95%
98%
Proportion of audited suppliers of non-production-related material with a contract volume
greater than € 10 million¹
80%
72%
56%
Number of identified sustainability deficits at potential and existing supplier locations
from an ESG perspective¹
2,320
2,131
1,902
Number of agreed corrective measures aimed at addressing those sustainability deficits¹
Number of audits and assessments conducted by or on behalf of the BMW Group²
1,123
1,225
20
24
25
new 2019
2020
EMPLOYEES IN GERMANY AND ABROAD 1
Number of employees in thousands
|<< = 352
K
三
124.72
129.93
134.74
133.85
126.06 120.77
124,729
129,932
134,682
133,778
126,016
120,726
200
112,869
117,664
121,994
121,208
113,719
108,676
3,351
3,506
3,709
old 2019
2018
2017
2016
Proportion of reporting suppliers in the BMW Group's production-relevant purchasing volume
75%
78%
79%
Average score of participating suppliers evaluated
с
с
C
Proportion of suppliers with a score of B or higher
30%
34%
35%1
1 The target of at least 60% of BMW Group suppliers participating in the CDP Supply Chain Programme achieving a score of at least B by 2020 was not achieved. The target period was therefore extended to 2025.
3,503
三
BMW Group
Other Information
Report 2020
Further GRI Information
EMPLOYEES AND SOCIETY
EMPLOYEES AT END OF YEAR1
BMW Group
Automotive
Motorcycles
Financial Services
Other
Share of employees with fixed-term contracts²
Employees in part-time employment³
|<<=351
ALTERNATIVE WAYS OF WORKING AT BMW AG1
3.5
followed by the USA with 9.9% and the UK with 5.5%.
National standard²
OHRIS
OHRIS
ISO 45001
ISO 45001
OHSAS 18001
ISO 45001
OHRIS
ISO 45001
OHSAS 18001
Most recent year of certification
Management system
Kulim/MY
Kaliningrad/RU
Cairo/EG
Jakarta/ID
ASSEMBLY PLANTS
Wackersdorf/DE
Swindon/UK
Steyr/AT
Spartanburg/US
San Luis Potosí/MX
Rosslyn/ZA
Regensburg/DE
Rayong/TH
OHRIS
ISO 45001
OHSAS 18001
OHRIS
BMW Brilliance Automotive Ltd., Shenyang/CN (joint venture)³
BMW BRILLIANCE AUTOMOTIVE HOLDINGS LTD. JOINT VENTURE
May 20171
October 2020
Implemented
December 2018
August 2018
October 2020
April 2019
April 2019
June 2020
OHSAS 18001
National standard²
OHSAS 18001
Oxford/UK
OHSAS 18001
ISO 45001
ISO 45001
ISO 45001
ISO 45001
ISO 45001
November 2020
January 2019
August 2018
December 2020
March 2019
Implemented
March 2018
October 2018
August 2020
November 2020
May 2018
September 2018
December 2019
December 20171
November 2020
OHRIS
Munich/DE
Manaus/BR
Landshut/DE
Leipzig/DE
1 The share of employees with severe disabilities is based on the statutory requirements in accordance with
the German Social Code (SGB IX). In addition, the BMW Group awarded contracts amounting to around
€25 million (2019: €35.5 million) to workshops for the severely disabled in Germany in 2020, of which
around €7 million (2019: €8.5 million) can be written off in accordance with the compensatory levy act.
The significant year-on-year decline in orders placed with workshops for the severely disabled was mainly
due to coronavirus-related restrictions imposed on workshops, which also results in a reduction of the off-
settable portion of the disabled persons levy.
GRI 405-1
3 Start of production 06/2019.
1 "Local" refers to managers with local contracts. People deployed to work at the location who do not have a local employment contract are not included. These are reflected in the difference to 100 in each case.
2 Including employees of the joint venture BMW Brilliance Automotive Ltd., Shenyang, which is not consolidated in the BMW Group.
62.9
48.4
Mexico³
57.1
56.8
56.8
65.6
MAIN ACCIDENT FACTORS 1
Thailand
2019
2018
2017
2016
78.8
73.7
76.7
76.5
65.8
China²
4.0
2020
CONTRACT PRODUCTION
in %
Transport 9.3
Goodwood/UK
Hams Hall/UK
Eisenach/DE
Dingolfing/DE
Chennai/IN
Berlin/DE
Araquari/BR
BMW GROUP PLANTS
Production plant
OCCUPATIONAL HEALTH AND SAFETY MANAGEMENT SYSTEMS AT PRODUCTION LOCATIONS
Further GRI Information
Report 2020
Other 8.3
Other Information
GRI 403-9
1 The accident severity rate in the reporting year was 53.4 lost days (due to occupational accidents)
per 1 million hours worked (2019: 78.3).
12.7 Handling parts
26.4 Walking
3.9 Driving
7.2 Processing
Assembly/dismantling 17.4
activities 9.6
Secondary
Testing 3.6
Cleaning 1.6
BMW Group
84,9
Loncin Motor Co., Chongqing/CN
TVS Motor Company, Hosur/IN
TCFD Key elements
TCFD-Index
Other Information
BMW Group
Report 2020
A: C2.1, C2.3, C2.3a, C2.4, C2.4a
CDP questionnaire 2020:
✓ Risks and Opportunities
Products and Services
Production, Purchasing and
Supplier Network
✓ Strategy, Goals and Management
System
CDP questionnaire 2020:
B: C1.2, C1.2a
✓ Corporate Governance
CDP questionnaire 2020:
A: C1.1b
✓ Strategy, Goals and Management
System
BMW Group Report 2020:
Reference to chapters in the BMW Group Report
2020 and the CDP questionnaire for 2020
In the context of its "Adaptation to Climate Change" strategy project, the BMW Group is preparing for a broad range of possible consequences and plans to systematically
integrate reporting on the opportunities and risks associated with climate change in its Group Report.
As a globally leading provider of premium automobiles, motorcycles, mobility services and financial services, the BMW Group is exposed to an array of uncertainties and
changes. In order to ensure growth, profitability, efficiency and continued sustainability going forward, the BMW Group needs to take well calculated risks and make full use
of any opportunities that present themselves.
A. Climate-related risks and opportunities
Sustainability is the basic pattern that shapes the BMW Group's strategy. From beginning to end, activities and plans should comprehensively be examined with regard to
their economic, ecological and social impacts and the corresponding decisions taken based on an integrated approach. The BMW Group is firmly convinced that the fight
against climate change and the responsible use of resources will determine the future of our society - and thus also that of the BMW Group. Particularly as a premium
manufacturer, the BMW Group aspires to lead the way in promoting sustainability. In addition to the Group's activities to reduce greenhouse gas emissions (mitigation),
addressing the consequences of climate change (adaptation) is also being dealt with and assessed within the framework of the "Adaptation to Climate Change" strategy
project.
B. The role of management in assessing and managing climate-related risks and opportunities
The highest level of direct responsibility for climate change issues is the Board of Management, which determines the Group's strategic course with regard to sustain-
ability issues, including addressing climate change. Every proposal considered by the Board of Management must be assessed from a sustainability perspective.
The new substance targets for 2030 developed and adopted in 2020 that focus on decarbonisation have been incorporated into the BMW Group's target controlling
system and will be taken into account in the compensation of the Board of Management and top management going forward.
A. Responsibility of the Board of Management for climate-related risks and opportunities
STRATEGY
GOVERNANCE
STRATEGY
Key elements of summarised disclosures/Key messages
Significant opportunities
-
2020 and the CDP questionnaire for 2020
Reference to chapters in the BMW Group Report
K = 360
More stringent regulatory requirements for issuers could make the BMW Group less attractive as a sustainable investment.
The rising price required to be paid for CO2 emissions in energy-intensive supply chains could result in higher purchasing prices.
- The risk of bottlenecks in the availability of raw materials, particularly those required to manufacture battery cells could increase. Moreover, if commodity price risks
materialise, they could have an impact on earnings.
There could a greater risk of interruptions in the supply chain or the inability of individual suppliers to deliver, particularly due to breaches of sustainability or quality
standards and the danger of natural disasters.
The scale of acute and chronic physical risks (e.g. floods, storms, droughts) to BMW-relevant assets (e.g. properties, suppliers, logistics) could rise.
The short-term introduction of more stringent legislation and regulations in the BMW Group's main markets (EU, USA, China), particularly regarding carbon emissions
regulations, could have an effect on the Group's range of products and services.
As climate change progresses, natural disasters are likely to occur on an increasing scale and impact the BMW Group in a variety of ways, with a negative influence on
economic growth in the affected regions, among other factors. Any ensuing drop in consumer purchasing power due to a loss of income and the threat of unemploy-
ment would, in turn, have a negative earnings impact for the BMW Group.
-
Key elements of summarised disclosures/Key messages
| |
The BMW Group is adapting to the expected consequences of climate change by conducting an assessment and deriving measures required to mitigate the physical
risks for BMW-relevant assets (e.g. properties, suppliers, logistics).
By generating its own electricity from renewable sources, the BMW Group is reducing not only its carbon footprint, but also its dependence on external sources.
- The BMW Group is boosting efficiency and cutting costs by switching to lower-carbon processes and technologies in its own production facilities.
The BMW Group has already contractually agreed with its cell manufacturers that only green electricity will be used to produce the fifth generation of battery cells.
From the BMW Group's point of view, establishing the carbon footprint as an award criterion in the supply chain is a key competitive advantage in efficiently reducing
carbon emissions in upstream processes.
Contracts have been concluded with various battery cell suppliers in order to safeguard the Group's electrification strategy. Volume flexibility has been written into the
contracts to ensure additional latitude in the supply of battery cells.
The BMW Group is convinced that the ability to produce electric drivetrains, batteries and prototypes for battery cells in-house gives it a decisive competitive edge that
enables it to safeguard its know-how in new technologies, gain crucial system expertise and leverage cost advantages.
(The BMW Group is convinced that the ability to produce electric drivetrains, batteries and prototypes for battery cells in-house creates a decisive competitive advan-
tage that enables it...)
The BMW Group's production system is capable of manufacturing both conventional internal combustion and electrically powered vehicles on a single line, enabling it
to respond flexibly to changing customer requirements for various drivetrain systems.
The BMW Group intends to press ahead with the systematic electrification of all its brands and model series. By 2023, it plans to have 25 electrified vehicles on the road.
Achieving this aim will provide the Group with an attractive portfolio to respond to the growing customer demand for battery-electric and plug-in hybrid vehicles.
Smart, scalable vehicle architectures that can be equipped with all available types of drivetrain systems are intended to give the Group the flexibility to successfully
implement the shift towards climate neutrality that is both called for politically and aspired to socially.
-
-
Significant risks
TCFD Key elements
K = 359
TCFD-INDEX
SUSTAINABILITY DISCLOSURES
Combined Non-Financial Statement (NFS) at Group
and Company level in accordance with § 289 b and § 315b
HGB
German Commercial Code (HGB); German Ac-
counting Standards (DRS); Guidelines on Alternative
Performance Measures of the European Securities and
Markets Authority (ESMA)
MANAGEMENT REPORT
The BMW Group Report 2020 is based on the follow-
ing reporting and accounting standards:
REPORTING
CONCEPT
K = 357
Reporting Concept
Other Information
Report 2020
BMW Group
The NFS contained in the Combined Management
Report, the chapter "Dialogue with Stakeholders", the
supplementary sustainability-related disclosures in
the chapter Additional GRI Information and the GRI
Content Index have been prepared in accordance with
the standards of the Global Reporting Initiative (GRI)
(comprehensive option).
K = 356
January 2021
August 2018
January 2020
Implemented
ISO 45001
OHSAS 18001
ISO 45001
December 2020
ISO 45001
GRI 403-8
3 The joint venture comprises three locations.
2 Compliance with legal requirements.
1 Three-year validity period extended until March 2021 due to coronavirus pandemic.
VDL Nedcar, Born/NL
National standard²
Magna Steyr Fahrzeugtechnik, Graz/AT
UN GLOBAL COMPACT - REPORT ON PROGRESS
GROUP FINANCIAL STATEMENTS OF BMW AG
TCFD-Index
Other Information
BMW Group
Report 2020
K = 358
The report contains various forward-looking state-
ments about future developments which are based on
the current status of the BMW Group's assumptions
and forecasts. They are therefore subject to a variety of
predictable and unpredictable risks, uncertainties and
other factors, so that the actual outcome, including the
BMW Group's net assets, financial position and results of
operations, its development or performance could differ
considerably. The BMW Group makes no commitment
to update such forward-looking statements or to adapt
them to future events or developments.
FORWARD-LOOKING STATEMENTS
102-55
The report is published annually in German and
English on the BMW Group website. The ✓ GRI Content
Index is also available on the website as a separate PDF
document. The reporting period covers the financial
year from 1 January to 31 December 2020. The state-
ments made in the report relate to the BMW Group
reporting entity. Any deviations from this are marked
accordingly. Nothing significant has changed in the
reporting period with regard to the organisation of the
BMW Group. The global supplier network is subject to
continuous change. The 2021 report will be published
in spring 2022. GRI 102-10, 102-45, 102-50, 102-51, 102-52,
Those parts of the Combined Management Report,
which relate primarily to the NFS pursuant to §§ 289 b
and 315b HGB as well as the chapter “Dialogue with
Stakeholders" and the section "Additional GRI Informa-
tion" were subjected to a limited assurance engagement
and are marked with the symbol .... In addition, in-
dividual parts of the NFS were subjected to a reasonable
assurance engagement. The external audit supports the
Supervisory Board of BMW AG in the fulfilment of its
auditing duties.
PwC has audited the Group Financial Statements and
the Combined Management Report for the year ended
31 December 2020 and issued an unqualified audit opin-
ion thereon.
The entire report of BMW AG, comprising the Com-
bined Management Report, the Group Financial State-
ments, the disclosures on corporate governance and the
additional GRI information, has been subject to an annu-
al independent audit by PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft ("PwC” or “Auditor”).
The external audit serves to underpin the reliability and
trustworthiness of the information for the public.
In 2001, the BMW Group committed to implement-
ing the principles of the United Nations Global Compact
and provides information in this report on the progress
made towards achieving that aim. References to the
Global Compact principles have been integrated in the
✓ GRI Content Index.
PUBLICATION AND SCOPE
Reporting Concept
Report 2020
Other Information
BMW Group
The order of topics covered is aligned with the long-
term sustainability goals of the BMW Group and does
not represent any particular weighting of the topics. In
accordance with the statutory materiality requirements,
information has been in each case with a view to pro-
viding an understanding of the BMW Group's business
performance, results of operations and financial position,
while also showing the impact of business activities on
the non-financial aspects specified in the legislation.
The main topics addressed in the NFS to ensure com-
pliance with § 289 c and § 315 c HGB were determined
partly on the basis of the results of the materiality anal-
ysis updated in 2018 and in line the requirements of
the Global Reporting Initiative (GRI) and partly on the
basis of the BMW Group's own long-term sustainability
goals. For these purposes, consideration was given to the
BMW Group's own business operations, products and
services on the one hand and its business relationships
(e.g. along the supply chain) on the other. Topics of par-
ticular relevance are presented in the combined, separate
non-financial statement.
MAIN TOPICS ADDRESSED IN THE NFS
appendix to this report provides a compact overview of
the key statements in the four TCFD core elements and
their location in the BMW Group Report and the CDP
questionnaire.
The BMW Group follows the recommendations
of the Task Force on Climate-related Financial Disclo-
sures (TCFD) with a view to providing information on
climate-related risks and opportunities as transparently
as possible within the framework of corporate financial
reporting. The BMW Group reports on these issues both
in its own integrated report as well as through its CDP
scoring disclosures. The ✓ 2020 CDP questionnaire is availa-
ble on the BMW Group website. The ✓ TCFD Index in the
The Group Financial Statements of Bayerische
Motoren Werke Aktiengesellschaft for the year ended
31 December 2020 have been prepared in accordance
with International Financial Reporting Standards (IFRS),
as endorsed by the European Union (EU), and the
supplementary requirements of § 315e of the German
Commercial Code (HGB).
TCFD DISCLOSURES
EXTERNAL AUDIT
78.2
77.6
76.1
BMW Group
4 Statistical population not including apprentices, interns, thesis students working at the company and doctoral candidates.
GRI 102-8, 401-3
3 Only workers in administrative positions who engaged in teleworking.
2 Of which 3,608 were female (65%). For systemic reasons, this number is only calculated for BMW AG.
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition, see Glossary). For the period 2018 and earlier, the percentage of employees no longer covered by
the new definition is between 7.5% and 8.0%.
4,158
5.2
4.9
4.6
4.1
3.9
in % of total number of employees
4,082
4,096
3,675
3,389
3,028
Parental leave
0.8
0.9
0.9
0.7
0.6
0.7
Other Information
Report 2020
Further GRI Information
AVERAGE TRAINING HOURS AT THE BMW AG ACADEMY,
TOTAL NUMBER OF EMPLOYEES LEAVING BMW AG,
GRI 404-1
7.1
10.6
11.9
Tariff
21.1
14.1
17.7
(master craftsmen)
"Meister"
in % of total number of employees
14.1
22.7
Non-tariff employees
in %
2020
2019
2018
Employee category
WITH PRODUCTION SITE(S) 1
SHARE OF WOMEN IN THE WORKFORCE BY COUNTRY
K = 354
BY EMPLOYEE CATEGORY
16.7
653
764
764
34,339
31,754
28,088
Teleworking positions³
5,568
7.0
6.6
6.4
5,440
5,630
5,000
5.6
5.2
36,066
5.0
4,294
2020
new 2019
old 2019
2018
2017
2016
in % of total number of employees
Part-time workers²
Number of employees
GRI 102-8
4,572
BY REASON FOR LEAVING 1
36,208
in % of total number of employees
648
567
598
Sabbaticals
6.0
6.6
6.2
6.1
5.3
5.1
in % of total number of employees 4
43,309
4,747
5,500
5,508
4,690
3,998
Number of employees who use "Vollzeit Select"
87.2
70.8
69.4
66.1
63.3
59.4
5,474
Number
2016
2017
88.3
87.7
89.4
USA
89.8
87.5
86.9
86.3
87.5
UK
8.0
87.4
99.7
99.5
99.4
99.3
Germany
in %
2020
2019
2018
2017
2016
AT BMW AG1
99.7
SHARE OF EMPLOYEES WITH SEVERE DISABILITIES
89.1
6.3
67.6
Brazil
68.4
82.1
74.4
70.0
66.7
India
85.9
82.7
82.8
6.4
83.0
South Africa
6.0
78.7
82.3
85.6
82.8
84.8
Austria
6.6
6.5
6.4
85.4
A good two-thirds the BMW Group workforce are employed in Germany,
K = 355
SHARE OF LOCAL EMPLOYEES IN MANAGEMENT
POSITIONS AT MAJOR COMPANY LOCATIONS1
Dismissed by employer
2,6012
1,029
873
809
809
(termination or suspension of employment contract by employee)
Voluntarily left company
1,884
1,700
1,314
59
1,207
Part-time retirement, retirement, death
0
4,535
2,794
2,247
2,077
2,067
Total
2020
2019
2018
1,199
in %
59
60
Further GRI Information
Report 2020
Other Information
BMW Group
GRI 405-1
1 For the purposes of calculating the total number of employees in the BMW Group, the term "employee" has
been redefined with effect from the reporting year 2020 (for definition, see ✓ Glossary).
50
25
35.7 Other countries
30.0 Mexico
19.4 Brazil
61
50.3 China
8.0 India
22.1 South Africa
15.8 Austria
24.9 USA
16.6 UK
16.4 Germany
2 Increase mainly due to a set of personnel measures. For further explanations, see ✓ Long-term Employee Development and Employer Attractiveness.
GRI 401-1
1 Figures refer to employees with permanent contracts.
50
65
60
32.0 Thailand
57.8
All Board of Management members bear responsibility for climate change-related issues and ensure that the Group's strategy with regard to sustainability and climate
change is implemented as a systematic driver in all Board areas of responsibility. One focus of the Group's strategy in the 2020 reporting year was the topic of addressing
climate-related risks and opportunities. The impacts of this topic were assessed, internal structures for decision-making and controlling were established with the partici-
pation of top management, and project organisations were set up in the relevant Board areas of responsibility.
www.bmw-motorrad.com
96,390
84,347
80,974
75,245
INCOME STATEMENT
Revenues
€ million
98,990
104,210
96,855
98,282
94,163
92,175
80,401
111,191
76,059
68,821
Gross profit margin
%
13.7
17.3
19.0
20.3
19.9
19.7
21.2
20.1
20.2
21.1
Earnings before financial result
76,848
€ million
123,394
133,147
Automobiles2
units
Motorcycles³
units
2,325,179 2,537,504 2,486,149
169,272 175,162 165,566
2,465,021
164,153
2,349,962
145,032
2,259,733
136,963
2,117,965 1,963,798 1,845,186 1,668,982
123,495 115,215 106,358 104,286
PRODUCTION VOLUME
Automobiles
Motorcycles³
units 2,255,637 2,564,025 2,541,534
units 168,104 187,116 162,687
2,505,741
185,682
124,719
2,359,756 2,279,503
145,555 151,004
FINANCIAL SERVICES
Contract portfolio
contracts
5,981,928 5,973,682
5,708,032
5,380,785
5,114,906
4,718,970
4,359,572 4,130,002 3,846,364 3,592,093
Business volume
(based on balance sheet carrying amounts)
€ million
133,093
142,834
2,165,566 2,006,366 1,861,826 1,738,160
133,615 110,127 113,811 110,360
4,830
7,411
8,933
Risk management is organised as a decentralised, Group-wide network and controlled via a centralised risk management function. Every BMW Group divisional area of
responsibility is represented by Network Representatives. Any significant risks reported from within the network, including sustainability- and climate-related risks, are
presented for review to the Risk Management Steering Committee, which is chaired by Group Controlling. After review, any risks regarded as significant are reported to the
Board of Management and the Supervisory Board's Audit Committee. In addition, topics that represent opportunities or risks for the BMW Group's business in the long
term are identified by means of an environmental radar that continuously monitors external changes.
Apart from reducing greenhouse gas emissions (mitigation), the topic of adaptation (adjustment to the consequences of climate change) was also addressed in line with
Group strategy. As part of the strategy project set up for this purpose, key links in the BMW Group's value chain were singled out (e.g. properties, suppliers, logistics,
products) for which the consequences of climate change are likely to be particularly relevant and for which adaptation measures will need to be taken in order to mitigate
medium-term climatic changes.
Various annual time slices as well as climate scenarios are used to determine the risks. Based on the IPCC (Intergovernmental Panel on Climate Change), three scenarios
were defined in order to present and assess climate change-related risks. A low-emission scenario takes a < 2°C pathway into account. Accordingly, all countries world-
wide agree to combat climate change and implement rigorous climate protection policies. On the one hand, this scenario means greater transition-related risks for the
BMW Group, for example due to stricter carbon emissions regulations in its main markets, but on the other hand it limits physical risks. The second climate scenario cho-
sen by the BMW Group outlines a "medium" emissions scenario in which moderate emissions levels are assumed. Limited climate protection will lead to a medium level of
transitional and physical risk. Another scenario portrays how the world will look if little or nothing is undertaken to protect the climate. This scenario would mean the high-
est level of emissions and therefore the highest level of physical risk.
B. Group processes for managing climate-related risks
The efficient management of opportunities and risks is key to responding appropriately to changes that occur in political, economic, technical or legal conditions. The
BMW Group has put a comprehensive risk management system in place to manage these risks in a structured manner as they arise. The aim of the risk management sys-
tem is to identify, assess and actively manage any risks that could threaten the attainment of the Group's corporate targets. Within that process, any individual and cumula-
tive risks that pose a threat to the BMW Group's success are monitored and managed. As part of its "Adaptation to Climate Change" project, the BMW Group is discussing
the integration of sustainability and, above all, climate-related risks in Group-wide risk management processes.
Risks are classified both according to their potential impact on earnings (worst-case scenario) and according to the risk amount (average earnings impact, taking into
account the probability of occurrence).
As part of the existing natural hazard assessment process for properties and suppliers, current climate change-related hazards are also taken into account and assessed
accordingly. The consideration of future medium-term physical risks is being investigated within the context of a current strategy project.
C. Integrating processes for identifying, assessing and managing climate-related risks within the Group's general risk management system
Alongside comprehensive risk management, sustainability constitutes a core strategic principle of the BMW Group. Risks resulting from sustainability aspects that could
have an impact on the BMW Group are generally identified via the Group-wide risk management network.
When analysing sustainability-related opportunities and risks, the physical risks associated with climate change (e.g. disruption of supply chains due to natural hazards)
and transition-related risks (such as the ability to meet emissions requirements) are also assessed.
Reference to chapters in the BMW Group Report
2020 and the CDP questionnaire for 2020
CDP questionnaire 2020:
B: C2.3, C2.3a, C2.4a, C3.1, C3.1b,
C3.1d as well as examples of strategic
decisions
A. Group processes for identifying and assessing climate-related risks
C: C3.1a, C3.1d well as assessment of
strategy resilience
✓ Risks and Opportunities
CDP questionnaire 2020:
A: C2.2, C2.2a
B: C2.2a
C: C2.2
BMW Group
Report 2020
Other Information
TCFD-Index
K = 362
TCFD Key elements
Key elements of summarised disclosures/Key messages
KEY SUSTAINABILITY A. Key sustainability indicators the Group uses to assess climate-related risks and opportunities
INDICATORS AND
TARGETS
The BMW Group Report provides an overview of key sustainability indicators that the BMW Group uses to measure, monitor and manage its sustainability targets. The key sus-
tainability indicators here are carbon emissions per vehicle produced and carbon emissions (g CO2/km) generated by the new vehicle fleet (EU including Norway and Iceland).
B. Disclosure of Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions
The BMW Group discloses its Scope 1, Scope 2 and Scope 3 emissions within the framework of its carbon footprint reporting process.
C. Targets according to which the Group addresses climate-related opportunities and risks
The BMW Group has set itself the following carbon reduction targets per vehicle produced throughout their life cycle for 2030 (base year 2019): -20% supply chain;
-80% production; - 40% use phase.
BMW Group Report 2020:
The BMW Group conducts stress tests using qualitative and quantitative sensitivity analyses. Product planning, sales volumes and R&D investments all take the goals of
the Paris Climate Agreement into account.
C. Resilience of the BMW Group's strategy
The necessity to contain climate change has a major impact on both short- and long-term decision-making at the BMW Group. In the year under report, the BMW Group
assessed its carbon emissions over the entire life cycle of its vehicles, using the internationally recognised method devised by the Science Based Targets Initiative (SBTI).
Decarbonisation targets for the supply chain, production and use phase of its vehicles were developed for the period up to 2030, approved by the Board of Management
and registered with the SBTI. From the BMW Group's perspective, these science-based decarbonisation targets are intended to provide a clearly defined pathway to sus-
tainable growth.
9,899
9,386
9,593
9,118
7,978
8,275
8,018
Earnings before tax
€ million
5,222
7,118
9,627
10,675
9,665
9,224
8,707
7,893
B. The impact of climate-related risks and opportunities on the Group's business activities and its strategic and financial corporate planning
Key elements of summarised disclosures/Key messages
MANAGEMENTT
RISK
TCFD Key elements
STRATEGY
|<< = 361
2011
TCFD-Index
BMW Group
Report 2020
5.3
%
Return on sales (earnings before tax/revenues)
7,383
7,803
Other Information
Reference to chapters in the BMW Group Report
2012
2014
2.2-1.9
49-43
15.8-14.7
Rolls-Royce Dawn
16.3-16.1
372-367
BMW M4 Competition
10.2
234
Rolls-Royce Cullinan
15.0
341
BMW M4
10.8
BMW 330e xDrive Touring
248
16.0-15.9
365-363
BMW 530e Sedan
1.9-1.7
43-39
14.9-13.8
Rolls-Royce Ghost incl. EWB
15.0
343
K = 368
BMW 530e xDrive Sedan
2.1-2.0
49-46
16.5-15.9
Rolls-Royce Wraith
Rolls-Royce Dawn Black Badge
330-328
Rolls-Royce Phantom incl. EWB
Electricity power
consumption
in kWh/100 km
(combined/weighted
combined) max/min
BMW
BMW 330e Sedan
BMW 330e xDrive Sedan
MINI
1.8-1.5
41-35
2.0-1.7
45-40
14.8-13.9
15.9-15.2
MINI Cooper SE
16.8-14.8
14.5-14.4
BMW M3 Competition
BMW M3
10.8
234
248
MINI Cooper SE Countryman ALL4
MINI John Cooper Works GP
1.7
40
14-13.1
7.4-6.0
169-137
ROLLS-ROYCE
BMW 330e Touring
1.9-1.7
44-38
15.6-14.5
10.2
16.3
371
BMW 545e xDrive Sedan
2.1-1.6
BMW X5 M and X5 M Competition
13.0-12.8
47-37
296-291
25.2-23.5
BMW X6 M and X6 M Competition
13.1
301
BMW iX3
17.8-17.5
BMW i3 120 Ah
13.1
BMW i3s 120 Ah
BMW iX*
BMW X5 xDrive45e
* Figures are provisional and based on forecasts based on WLTP testcycle.
BMW Group
Other Information
Report 2020
BMW Group Ten-year Comparison
BMW GROUP TEN-YEAR
COMPARISON
DELIVERIES
K = 365
2020
2019
2018¹
2017
2016
2015
<21*
16.9-16.3
54-48
2.4-2.1
2.3-2.2
53-49
16.3-15.8
BMW 530e Touring
2.0-1.8
46-42
16.1-15.4
Rolls-Royce Cullinan Black Badge
Rolls-Royce Wraith Black Badge
15.1
343
16.1
367
BMW 530e xDrive Touring
2.4-2.2
54-50
16.7-16.1
Rolls-Royce Ghost Black Badge
BMW X3 xDrive30e
13.7
43
1.9
BMW X2 xDrive25e
13.8
2013
43
BMW X1 xDrive25e
260
11.3
BMW M8
370
16.2
1.9
2020 and the CDP questionnaire for 2020
BMW Group Report 2020:
Products and Services
Production, Purchasing and
Supplier Network
✓ Carbon footprint of the BMW Group
CDP questionnaire 2020:
47,363
42,764
37,437
35,600
30,606
27,103
%
28.4
26.3
27.7
27.7
25.1
24.8
24.2
4.0
25.7
22.0
€ million
83,175
85,502
79,698
69,634
73,183
63,819
58,288
51,643
52,834
49,113
€ million
71,963
23.2
82,625
5.4
5.7
90,630
84,736
73,542
66,864
61,831
56,844
52,184
50,530
49,004
€ million
3,922
5,650
5,029
4,688
6.5
3,731
4,601
4,967
4,151
2,720
%
€ million
4.0
61,520
5.4
5.2
59,907
57,829
4.8
54,107
4.0
4.2
3,826
71,411
71,765
67,989
5,792
5,404
3,481
3,003
3,809
3,166
PERSONNEL
Workforce at year-end4
Personnel cost per employee4
€
120,726
99,647
126,016
98,901
134,682
101,178
129,932
4,459
124,729
100,760
99,575
97,136
116,324
92,337
110,351
89,869
105,876
100,306
89,161
84,887
DIVIDEND
Dividend total
€ million
1,2535
1,646
122,244
2,713
2,567
3,395
65,591
59,078
51,134
48,395
47,213
€ million
216,658
228,034
208,938
195,506
188,535
172,174
154,803
138,377
131,835
123,429
CASH FLOW STATEMENT
€ million
Free cash flow Automotive segment
7,776
8,370
7,671
7,688
81,807
6,122
9,039
10,979
12,036
13,537
€ million
Cash and cash equivalents at balance sheet date
7,880
€ million
74,425
81,305
Other Information
Report 2020
BMW Group Fuel Consumption and CO2 Emissions Information
KK<< = 364
BMW GROUP FUEL CONSUMPTION AND CO2 EMISSIONS INFORMATION
As of February 2021
Model
Figures according to NEDC
Electricity power
consumption
Fuel consumption
in 1/100 km
(combined/weighted
CO2 emissions
in g/km
(combined/weighted
combined) max/min
BMW Group
combined) max/min
Model
Fuel consumption
in 1/100 km
(combined/weighted
combined) max/min
Figures according to NEDC
6.8
9.9
10.9
10.3
10.0
10.8
10.4
10.2
10.7
Income taxes
€ million
in kWh/100 km
(combined/weighted
combined) max/min
K = 363
✓ Compliance and Human Rights
✓ Compliance and Human Rights
Purchasing and Supplier Network
A: C4.2, C9.1
B: C6.1, C6.3, C6.5
C: C4.1, C4.1a, C4.1b, C4.2
BMW Group
Report 2020
Other Information
NFE-Index
NFE-INDEX
Mandatory disclosure pursuant to section 289 c-e HGB
Business model
Integration of top management
Risks
Connection to figures in financial statements
Environmental matters
Employee matters
Social matters
Respect for human rights
Combatting corruption and bribery
✓ Corporate Citizenship
Design and Product Safety
✓ Employee Diversity
Health and Performance
Long-term Employee Development and Employer Attractiveness
Production, Purchasing and Supplier Network
1,365
Products and Services
✓ Compliance and Human Rights
About this Report
✓ Report on Risks and Opportunities
✓ Strategy, Goals and Management System
✓ Organisation and Business Model
Chapter in BMW Group Report 2020
Long-term Employee Development and Employer Attractiveness
combined) max/min
2,140
2,000
Current assets
Capital expenditure
(excluding capitalised development costs)
Capital expenditure ratio
(capital expenditure/revenues)
Equity
Equity ratio
Non-current provisions and liabilities
Current provisions and liabilities
Balance sheet total
K = 366
2020
2019
2018¹
Non-current assets
2017
2015
2014
2013
2012
2011
€ million
134,851
137,404
124,202
121,964
121,671
110,343
97,959
86,193
2016
BALANCE SHEET
BMW Group Ten-year Comparison
Other Information
2,755
2,828
2,890
2,564
2,692
2,476
Effective tax rate
%
26.1
30.1
26.3
18.7
28.5
30.7
33.2
32.5
34.5
BMW Group
Report 2020
4,907
5,111
5,329
5,817
6,396
2,530
6,910
7,064
5,022
3,857
€ million
Net profit for the year
33.5
8,675
CO2 emissions
in g/km
(combined/weighted
14.6-14.0
2,303
2021
2022
17 March 2021
BMW Group Annual Conference.
Media Day
18 March 2021
BMW Group Annual Conference.
Analyst and Investor Day
FINANCIAL CALENDAR
7 May 2021
12 May 2021
Annual General Meeting
3 August 2021
Half-Year Report to 30 June 2021
3 November 2021
Quarterly Statement to 30 September 2021
16 March 2022
BMW Group Report 2021
Quarterly Statement to 31 March 2021
16 March 2022
Report 2020
BMW Group
2,630
2,300
Dividend per share of common stock/preferred stock
€
1.905/1.925
2.50/2.52
3.50/3.52
4.00/4.02
Other Information
3.50/3.52
1,904
2.90/2.92
1,707
2.60/2.62
1,640
2.50/2.52
1,508
2.30/2.32
1 The 2018 figures were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 (see Annual Report 2019, note 6 to the Group Financial Statements).
In addition, prior year figures were adjusted due to changes in the presentation of selected items that are of minor importance overall.
2 Retail vehicle delivery data presented for 2020 is not directly comparable to such data presented for previous years. For further information on retail vehicle delivery data, please see ✓ Comparison of Forecast with Actual Outcomes.
3 Excluding Husqvarna, deliveries up to 2013: 59,776 units; production up to 2013: 59,426 units.
4 Since the reporting year 2020, a new definition for workforce size has been applied (see Glossary). To enable better comparability, the value for 2019 was adjusted accordingly (2019 before adjustment: 133,778 employees).
For the timeframe including and prior to 2018, the share of the employees that are no longer reflected in reporting is about 7.5-8%.
5 Proposal by management.
2,102
3.20/3.22
BMW Group Annual Conference.
Media Day
Financial Calendar
BMW Group Annual Conference.
E-mail
presse@bmwgroup.com
INVESTOR RELATIONS
Telephone +49 89 382-2 53 87
Further information about the BMW Group is
available online at:
www.bmwgroup.com
www.bmwgroup.com/ir
Information about the various BMW Group brands
is available at:
+49 89 382-2 44 18
www.bmw.com
Telephone +49 89 382-0
Fax
+49 89 382-1 46 61
E-mail
ir@bmwgroup.com
www.mini.com
www.rolls-roycemotorcars.com
17 March 2022
Bayerische Motoren Werke
Aktiengesellschaft
80788 Munich
Germany
Fax
Investor Relations information is available directly at:
5 May 2022
Analyst and Investor Day
+49 89 382-2 41 18
Quarterly Statement to 31 March 2022
11 May 2022
Annual General Meeting
3 August 2022
3 November 2022
Quarterly Statement to 30 September 2022
K = 367
Half-Year Report to 30 June 2022
Other Information
Telephone +49 89 382-2 45 44
BMW Group
THE BMW GROUP ON THE INTERNET
BUSINESS AND FINANCE PRESS
PUBLISHED BY
Contacts
Report 2020
CONTACTS
The starting point for the BMW Group's corporate
strategy is to act in a consistent manner on a custom-
er-oriented and sustainable basis. Products, brands
and services are currently being developed with a clear
focus on innovative technologies such as low-emissions
drivetrains, digitalisation, connectivity and autonomous
driving.
BMW GROUP LOCATIONS WORLDWIDE
General Information and Group Profile
Combined Management Report
BMW Group
Report 2020
The BMW Group comprises BMW AG itself and all
subsidiaries over which BMW AG has either direct or in-
direct control. BMW AG is also responsible for managing
the Group, which is sub-divided into the Automotive,
Motorcycles and Financial Services operating segments.
The Other Entities segment primarily comprises holding
companies and Group financing companies.
Operating on a global scale, the BMW Group employed
a workforce of 120,726 people at the end of the year
under report. In 2020, the BMW Group consolidated its
position as one of the world's most attractive employers.
Its leading role in terms of sustainability also contributes
to employee loyalty within the BMW Group.
The BMW Group is one of the most successful manu-
facturers of automobiles and motorcycles in the premium
segment worldwide. With BMW, MINI and Rolls-Royce,
the BMW Group owns three of the best-known premium
brands in the automotive industry. It also holds a strong
market position in the premium segment of the motorcy-
cle business. The Group sets itself clear goals in terms of
sustainable, individual mobility, resource-efficient value
creation, the continued development of its workforce
potential and its contribution to society. Sustainability
is an integral part of the Group's business model and
plays a vital role in ensuring its viability going forward.
General information on the BMW Group is provid-
ed below. There have been no significant changes in
the Group's structure compared to the previous year.
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
based in Munich, Germany, is the parent company of the
BMW Group.
Combined Management Report
As societal values as well as demographic and tech-
nological conditions change, new demands on mobility
solutions are constantly emerging. The ambition to fulfil
those wishes and needs is the force that drives us for-
ward. We are taking steps to ensure a viable future for
our business by developing innovatively, sustainably and
independently.
WE ARE MOVING FORWARD IN OUR OWN
INDEPENDENT WAY.
Digitalisation provides us with an excellent oppor-
tunity to take a fundamentally new approach to devel-
oping products for the benefit of our customers. We
not only react to customer wishes, but also anticipate
them through a good understanding of their preferences.
Moreover, digitalisation enables us to redesign processes
throughout the entire organisation.
Mobility patterns worldwide, and hence the entire
automotive industry, are currently undergoing profound
change. We see this transformation as an opportunity to
set new industry standards and innovate in the fields of
electrification, connectivity and automated driving.
THE TRANSFORMATION OF MOBILITY AND THE
ADVANCE OF DIGITALISATION ARE OPPORTUNITIES.
K = 37
General Information and Group Profile
Headquarters
ORGANISATION AND
BUSINESS MODEL
Canada
and development locations
Mexico
BMW Group
Report 2020
Countries with research
13
Production and
assembly plants
31
☑
Hong Kong
Japan
South Korea
China
Sales subsidiaries and
Financial Services
locations worldwide
42
✰ India
Russia
KK = 38
Argentina*
Brazil
Arab Emirates
United
USA
The growth of the BMW Group not only provides a
reasonable return for investors, but also attractive salaries
for its employees. We also make a positive contribution
to society in general at the locations where we operate,
firstly by paying the amounts due to public authorities
(such as customs duties and taxes) and secondly in the
form of social, cultural and corporate citizenship activi-
ties. Corporate Citizenship.
Dialogue within the context of press trips, press releases, information events
on new products, test drives, trade fairs
OUR ACTIONS AS A COMPANY HAVE A POSITIVE IMPACT
ON THE ECONOMY AND SOCIETY.
AND PRODUCTION
RESPONSIBLE
CONSUMPTION
11 AND COMMUNITIES
SUSTAINABLE CITIES
10 INEQUALITIES
REDUCED
GENDER
QUALITY
EDUCATION
CLIMATE
AFFORDABLE AND
CLEAN ENERGY
W
AND WELL-BEING
GOOD HEALTH
Corporate Citizenship
119
Employee Diversity
116
Thailand
EQUALITY
13 CLIMATE
со
K = 35
Global challenges such as growing urbanisation and
the finite nature of natural resources have inspired and
motivated us to develop a range of innovative products
and services. Climate change is one of the greatest chal-
lenges of our time and we are fully committed to the
Paris Climate Agreement in order to mitigate its effects.
As the BMW Group, we are making our contribution
by focusing on developing and improving technologies
and services that can effectively help bring about a via-
ble reduction in the global carbon emissions caused by
individual mobility. With this strategy we can create a
clear competitive advantage by offering our customers
emotional, trendsetting mobility solutions that are also
made with sustainable principles in mind.
ment.
The BMW Group's stance is unwavering: ecological
and social sustainability, responsibility for our products
and a clear commitment to conserving resources are at
the heart of our corporate strategy. We think and manage
our corporate affairs in a holistic manner. For instance,
we do not limit our understanding of environmental sus-
tainability to the emissions generated by our vehicles, but
rather take the entire value chain into account - whether
along the supply chain, in our production processes, dur-
ing the use phase or at the end-of-life recycling stage.
We have firmly embedded the principle of sustainability
in every aspect of our business. Our primary aim is to
balance the interests of economy, ecology and society and
thereby contribute to ecological and societal improve-
Long-term thinking and responsible action are an
integral part of the BMW Group's corporate identity
and continue to form the basis for our economic success.
We strive constantly to meet the high expectations our
customers have in our products. Our business model is
intrinsically linked with the principle of sustainability
and we see the two factors as an integral unit. We aspire
to be not only the most successful, but also the most
sustainable premium provider of individual mobility and
always focus on the needs of our customers.
LONG-TERM THINKING FORMS THE BASIS FOR OUR
ECONOMIC SUCCESS.
CORE VALUES AND
GUIDING PRINCIPLES
INFORMATION AND
GROUP PROFILE
GENERAL
K = 36
General Information and Group Profile
Combined Management Report
Report 2020
BMW Group
FOR THE GOALS
PARTNERSHIPS
M
AND INFRASTRUCTURE
INDUSTRY, INNOVATION
DECENT WORK AND
ECONOMIC GROWTH
We are a company operating on a global scale. As
such, we acknowledge our responsibility to contribute
to economic prosperity in the countries where we are
located. For this reason, we not only aspire to achieve
sustained profitable growth for the Group, but also to
make a specific contribution towards economic devel-
opment and improvement in the quality of life at the
locations where we operate.
Malaysia
Romania*
Sales subsidiaries and
Financial Services
BMW Group Diesel Competence Centre, Steyr, Austria
Critical TechWorks S.A., Porto, Portugal
BMW Group Lightweight Construction and
Technology Center, Landshut, Germany
BMW Group Designworks, Munich, Germany
BMW Group Autonomous Driving Campus,
Unterschleißheim, Germany
BMW Car IT, Munich, Germany
▲ Research and development network in Europe
BMW Group Research and Innovation Centre (FIZ),
Munich, Germany
Greece
Bulgaria*
BMW France, S. A. S., Montigny, France
Partner plant, Born, the Netherlands
Partner plant, Graz, Austria
Partner plant, Kaliningrad, Russia
BMW Group plant Swindon, UK
Rolls-Royce Manufacturing Plant, Goodwood, UK
BMW Group plant Oxford, UK
BMW Group plant Regensburg
BMW Group plant Wackersdorf
BMW Group plant Steyr, Austria
BMW Group plant Hams Hall, UK
BMW Group plant Leipzig
BMW Group plant Munich
BMW Group plant Landshut
BMW Group plant Eisenach
BMW Group plant Dingolfing
BMW Group plant Berlin
□ Partner plants in Europe
■ Production in Europe
Rolls-Royce Motor Cars Ltd., Goodwood, UK
Report 2020
Dialogue with sales organisations and coordinating units of importers
* See Fuel Consumption and CO2 Emissions Information.
Financing dealership vehicle fleets serves to support
the dealership organisation and rounds off the segment's
range of services. ✓ Products and Services
Operating under the brand name Alphabet, the
BMW Group's international multi-brand fleet business
provides financing and comprehensive management ser-
vices for corporate car fleets in more than 20 countries.
These services also include helping customers to manage
their fleets on a sustainable and climate-friendly basis.
attractive array of insurance and banking products.
The BMW Group is a leading provider of financial
services in the automotive sector. It offers these services
in around 60 countries worldwide via companies and
cooperation arrangements with local financial services
providers and importers. The Financial Services seg-
ment's main business is credit financing and the leasing
of BMW Group brand automobiles and motorcycles to
retail customers. Customers can also choose from an
FINANCIAL SERVICES SEGMENT
The Motorcycles business is also clearly focused
on the premium segment. The model range currently
comprises motorcycles in the Sport, Tour, Roadster,
Heritage, Adventure and Urban Mobility categories.
BMW Motorrad also offers a broad range of equipment
options to enhance rider safety and comfort. The Mo-
torcycles business sales network is organised similarly
to that of the automobiles business. Currently, BMW
motorcycles are sold by more than 1,200 dealerships and
importers in over 90 countries.
BMW Group
MOTORCYCLES SEGMENT
The MINI brand promises driving pleasure in the
premium small car segment and, apart from models pow-
ered by efficient combustion engines, also offers plug-
in hybrid and fully electric variants. Rolls-Royce is the
ultimate marque in the ultra-luxury segment, boasting a
tradition that stretches back over more than 100
years.
Rolls-Royce Motor Cars specialises in bespoke customer
specifications and offers the very highest level of quality
and service.
The BMW brand caters to a wide variety of customer
requirements. Its model portfolio comprises an extensive
range of automobiles, including the premium compact
class, the premium mid-size luxury class and the ul-
tra-luxury class. Apart from fully electric models such
as the BMW iX3*, which was launched in 2020, it also
includes state-of-the-art plug-in hybrids and conventional
models powered by highly efficient combustion engines.
Together with the highly successful models of the BMW
X family and the high-performance BMW M brand, the
BMW Group meets the diverse expectations and needs
of its customers worldwide.
AUTOMOTIVE SEGMENT
In order to provide a better insight into the Group as
a whole, this report also contains separate presentations
of the Automotive, Motorcycles and Financial Services
operating segments.
PRESENTATION OF SEGMENTS
K = 40
General Information and Group Profile
Combined Management Report
The global sales network of the BMW Group's automo-
bile business currently comprises more than 3,500 BMW,
over 1,600 MINI and some 140 Rolls-Royce dealerships.
Portugal*
Spain
K = 39
BMW Group Technology Office Tel Aviv, Tel Aviv, Israel
BMW Group R&D Center Seoul, Seoul, South Korea
BMW Group Engineering China, Beijing, China
BMW Group Engineering Japan, Tokyo, Japan
BMW Group Engineering USA, Woodcliff Lake, USA
BMW Group IT Technology Office, Greenville, USA
BMW Group IT Technology Office, Singapore
BMW Group IT DevOps Hub, Rosslyn, South Africa
BMW do Brasil, Araquari, Brazil
BMW Group Technology Office, Shanghai, China
BMW Group Connected Drive Lab China, Shanghai,
China, and BMW Group Designworks Studio
Shanghai, China
BMW Group Engineering and Emission Test Center,
Oxnard, USA
BMW Group Designworks, Newbury Park, USA
BMW Group Technology Office USA, Mountain View,
USA
▲ Research and development
network outside Europe
□ Partner plants outside Europe
Partner plant, Chongqing, China
Partner plant, Hosur, India
Partner plant, Jakarta, Indonesia
Partner plant, Cairo, Egypt
Partner plant, Kulim, Malaysia
BMW Group
Report 2020
BMW Group plant Spartanburg, USA
BMW Brilliance Automotive, China
(joint venture 3 plants)
BMW Group plant Rayong, Thailand
BMW Group plant Rosslyn, South Africa
BMW Group plant Manaus, Brazil
Production outside Europe
■BMW Group plant Araquari, Brazil
BMW Group plant Chennai, India
New Zealand
South Africa
Australia
*Sales locations only.
Indonesia*
BMW Group plant San Luis Potosí, Mexico
Combined Management Report
General Information and Group Profile
BMW GROUP LOCATIONS IN EUROPE
Health and Performance
Hungary*
Slovakia
Austria
Poland
Czech
Republic
Denmark
Finland*
Sweden
Slovenia*
Italy
Switzerland
France
Belgium/Luxembourg
Ireland
UK
The Netherlands
Germany
Norway
Singapore
113
*Sales locations only.
Long-term Employee Development and
601,995
2016
2017
2018
2019
2020
K = 34
Low
COMMON STOCK
Number of shares in 1,000
The Board of Management and the Supervisory
Board will propose to the Annual General Meeting that
the unappropriated profit of BMW AG amounting to
€1,253 million (2019: €1,646 million) be used to pay a
dividend of €1.90 per share of common stock (2019:
€2.50) and a dividend of €1.92 for each share of preferred
stock (2019: €2.52). The payout ratio for 2020 therefore
stands at 32.5% (2019: 32.8%).
BMW AG STOCK
DIVIDEND BELOW PREVIOUS YEAR'S LEVEL - PAYOUT
RATIO REMAINS STABLE
BMW Stock and Capital Markets in 2020
To Our Stakeholders
BMW Group
Report 2020
The BMW Group again achieved top rankings in
prestigious sustainability ratings in 2020, underlining
its strong position in this area. In 2020, for instance, the
BMW Group was named sector leader in the Automobiles
category of the Dow Jones Sustainability Indices World
and Europe. It is also in the top grouping (Climate A
List) of the CDP ratings list (formerly Carbon Disclosure
Project) for the transparency of its carbon emissions
reporting. Furthermore, the Group was again listed in
the British FTSE4Good Index in 2020, is also listed by
MSCI, Sustainalytics and ISS-Oekom and holds a leading
position in its sector in each case.
TOP RANKINGS IN SUSTAINABILITY RATINGS
A-1
negative
negative
P-1
A
A2
Moody's Standard & Poor's
Non-current financial liabilities
Current financial liabilities
Outlook
Company rating
With its above-average ratings overall, the
BMW Group continues to enjoy good access to interna-
tional capital markets and is also benefiting from highly
attractive refinancing conditions.
The BMW Group is already benefiting from its
rigorous working capital and capital expenditure man-
agement. The Automotive segment's free cash flow, for
instance, exceeded market expectations not only in the
fourth quarter 2020, but also for the financial year as a
whole, with the EBIT margin again nearing the strategic
target range of between 8 and 10%.
At the same time, however, the short-term ratings for
BMW AG were confirmed by both Moody's (P-1) and S&P
(A-1) and therefore remain at a high level.
The negative outlook for the long-term ratings reflects
the general uncertainty regarding future developments
and the potentially adverse impact of the coronavirus
pandemic. In light of the prevailing circumstances, the
agencies see a potentially negative impact on automobile
sales, profitability and free cash flow across the automo-
tive sector.
601,995
Both agencies cite the negative trend in profitability
and free cash flow as the reason for the downgrade by
one rating level. Furthermore, the transformation of the
automotive industry and a deterioration of the market
environment in general are seen as major challenges.
601,995
601,995
55.05
55.20
Year-end closing price
Stock exchange price in €1
55,114
55,605
56,127
56,867
57,689
Number of shares in 1,000
PREFERRED STOCK
65.10
77.71
69.86
58.70
37.66
92.25
90.83
96.26
77.75
76.68
88.75
86.83
70.70
73.14
72.23
High
Year-end closing price
Stock exchange price in €1
601,995
62.10
In this context, Moody's lowered its long-term rating
for BMW AG from A1 to A2 in March 2020 and at the
same time set the outlook to "under review for further
downgrade", before changing it to negative two months
later in May. Also in March, the rating agency Standard
& Poor's (S&P) lowered its credit rating from A+ to A,
while leaving the outlook at negative.
Employer Attractiveness
The Group's new corporate strategy objectives
Environmental and social standards in the supply
chain
Carbon emissions in the supply chain
Support for electric mobility and the comprehensive
expansion of charging infrastructure
Political control over emissions limits without dis-
criminating against individual drivetrain technolo-
gies and vehicle concepts
Continued development of the regulatory framework
for automated driving and digital networks
Support for new efficiency-enhancing technologies
Realistic relationship between emissions targets and
emission measurement methods
Consistency between supply-side and demand-side
decarbonisation policies
Ensuring a sufficient supply of critical raw materials
Trade policy and free trade agreements
K = 31
BMW Group
To Our Stakeholders
Report 2020
Dialogue with Stakeholders
THE NEXT STEPS:
STAKEHOLDER GROUPS AND FORMS OF DIALOGUE
K = 32
The BMW Group intends to continue interacting with
its stakeholders throughout 2021. Apart from consider-
ing ways to develop and expand its own existing formats,
it will also continue to participate constructively in public
formats during the coming year.
Further plans include broadening the scope of in-
ternal dialogues with employees from 2021 onwards,
building on the success of this format at the BMW Group
Dialogues in 2020. The aim is to make employees aware
of the expectations of external stakeholders on the one
hand, while at the same time enabling employees to
participate in ongoing discussions and developments
on the other.
The BMW Group will also continue to engage in con-
structive dialogue with investors and analysts focused on
Socially Responsible Investments (SRI). In addition to the
daily discussions held on this subject, the BMW Group's
participation in SRI roadshows and conferences in global
financial centres is again scheduled for 2021.
The extent to which the coronavirus situation will
continue to impact direct interaction with stakeholders
in 2021 remains to be seen. However, the BMW Group
has fared well with its digital formats so far and has
developed a range of options for maintaining dialogue
with stakeholders via alternative concepts and formats.
BMW Group
in dialogue
GRI 102-40, 102-43
Dialogue, conferences and technology workshops with investors and analysts
Dialogue in the context of industry initiatives, joint events, training courses,
presentations, supplier risk assessments
Participation of company experts in committees and working groups, memberships
of initiatives and associations
Available to answer questions from policymakers and provide information to political
decision makers on relevant topics from the company's perspective
Visiting universities and colleges, talks, discussions, dialogue events
with students
—
The severe impact of the coronavirus pandemic in
2020 and the accompanying repercussions for the global
economy resulted in a reassessment of ratings in some in-
dustries, including the automotive sector. For some time
now, the rating agencies have highlighted the major chal-
lenges currently facing the entire automotive industry in
general. In light of developments in 2020, the agencies
took the opportunity to reassess the credit ratings of their
entire portfolio of automobile manufacturers. The more
rigorous assessment resulted in a significant number of
negative outlooks and downgrades being announced in
the course of recent months.
Key topics raised by the BMW Group with stakeholders
included:
Lobbying in associations
RATINGS REMAIN AT HIGH LEVEL
BMW STOCK AND
CAPITAL MARKETS
IN 2020
K = 33
BMW Stock and Capital Markets in 2020
To Our Stakeholders
Report 2020
BMW Group
Employees
Customers
Mass media
Business partners
Local stakeholders
Civil society and NGOs
Research
Political
decision makers
and associations
Suppliers
Networks
Capital market
Surveys (including a corporate reputation study), social media, trade fairs, mass media
Dialogue with employees and managers, employee surveys, idea management,
internal media
Face-to-face meetings/dialogue, responding to enquiries
Discussions with local residents, plant tours, press engagements
BMW Group
To Our Stakeholders
Report 2020
Dialogue with Stakeholders
KEY TOPICS IN 2020
The BMW Group's interaction with stakeholders in-
cludes topics brought to its attention by stakeholders as
well as those in which it proactively engages in dialogue.
Key issues raised by BMW Group stakeholders in
2020 included:
-
Climate protection, particularly carbon emissions
Human rights in the supply chain, particularly re-
garding the procurement of raw materials for electric
mobility applications
Illegal deforestation
Sustainable finance
74.64
The BMW Group continues to be the best-rated
automobile manufacturer in Europe.
High
17.45
6.78
58
Compliance and Human Rights
142
Review of Operations
62
142
Innovation and Customer Orientation
Automotive Segment
148
Motorcycles Segment
69
93.26
Products and Services
Financial Services Segment
73
Design and Product Safety
153
Other Entities Segment/Eliminations
76
Carbon Emissions and Pollutants
154
Comments on Financial Statements of BMW AG
80
Electric Mobility
84
Mobility Patterns
150
90.92
82.95
72.08
72.70
Comparison of Forecasts with Actual Outcomes
of the Financial Year
Overall Assessment by Management
How the BMW Group creates value
56
127
Strategy, Goals and Management System
41
126
Organisation and Business Model
37
General and Sector-specific Environment
122
Core Values and Guiding Principles
36
Report on Economic Position
122
General Information and Group Profile
36
MANAGEMENT REPORT
COMBINED
Combined Management Report
BMW Group
Report 2020
5 The 2018 figures were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 (see Annual Report 2019, Note 6 to the Group Financial Statements).
4 Stock weighted according to dividend entitlements.
3 Weighted average number of shares for the year.
2 Proposed by management.
1 Xetra closing prices.
159
Report on Outlook,
88.265
87
Free cash flow Automotive segment
Equity
1.902
2.50
3.50
4.00
3.50
Earnings per share of preferred stock4
1.922
4.02
3.52
5.73
7.47
10.605
13.07
3.52
Earnings per share of common stock³
Preferred stock
Common stock
57.60
Risks and Opportunities
109
67.85
85.50
78.89
74.15
Low
32.50
47.54
60.70
67.29
56.53
KEY DATA PER SHARE IN €
Dividend
Disclosures Relevant for Takeovers
and Explanatory Comments
10.45
2.50
Production Network
Internal Control System Relevant for
Accounting and Financial Reporting
Processes
4.12
Employees and Society
105
180
Purchasing and Supplier Network
100
Renewable Energy
99
Resource Consumption and Resource Efficiency
179
95
91
Risks and Opportunities
164
Supplier Network
Outlook
Production, Purchasing and
159
3.90
10.47
5.15
10.625
7.49
5.75
13.09
As a pioneer of electric mobility, the BMW Group is
in the process of significantly expanding its range. By
the end of 2021, it aims to have over one million ve-
hicles powered by either all-electric or plug-in hybrid
drivetrains on the road. BMW Group customers will
then be able to choose from a range of five fully electric
series-produced models.
BMW Group
The BMW Group intends to have 25 electrified mod-
els on the road by 2023. The plan is based on flexible
vehicle architectures and production systems that enable
a model to be manufactured as an all-electric version, as
a plug-in hybrid or powered by a conventional internal
combustion engine. This approach gives the BMW Group
the flexibility to take account of changes in market de-
mand as well as differences in regulatory requirements
and infrastructure in the various markets in which it
operates. The BMW Group forecasts that demand for
its electrified vehicles is set to double by 2021 compared
to 2019. According to the BMW Group's forecasts, by
2021 the sale of electrified vehicles is expected to double
compared to 2019 figures. By 2025, the proportion of
electrified cars in total Group deliveries is expected to
rise to at least 25%. However, Group decarbonisation
targets are far more ambitious. By 2030, it aims to reduce
carbon emissions per kilometre driven during a given
vehicle's use phase by more than 40% compared to 2019
(Scope 3 downstream). ✓ Carbon Emissions and Pollutants The
target is within the range defined by the SBTI's calcu-
lations to limit global warming to between 1.5 and 1.75
degrees Celsius.
* Value rounded for simplification purposes. The target percentage validated in conjunction with SBTI is 22%.
In its reporting procedures, the BMW Group also takes the rec-
ommendations of the Task Force on Climate-related Financial
Disclosures (TCFD) into account in order to report transparent-
ly on climate risks and opportunities for operational and finan-
cial reporting purposes. Firstly, it reports on this topic in detail in
its BMW Group Report and secondly in the CDP questionnaire,
which has incorporated the TCFD recommendations since 2018.
The BMW Group's 2020 CDP questionnaire is available on the
BMW Group Website. The TCFD Index TCFD-Index in the ap-
pendix provides a compact overview of the key statements con-
tained in the four TCFD core elements as well as their location in
the BMW Group Report and the CDP questionnaire.
Task Force on Climate-related Financial
Disclosures (TCFD)
Moreover, the BMW Group is currently in the process
of creating the organisational conditions that enable it
to reliably record and document the size of the carbon
footprint generated via its supply chain. This, in turn, is
the key prerequisite for taking subsequent measures to
reduce and effectively manage it, fully in line with the
BMW Group's declared strategy of continuous improve-
ment. Purchasing and Supplier Network
As a concrete example of the measures taken, the
Group has already entered into contractual agreements
with its cell manufacturers that only green electricity will
be used to produce the fifth generation of battery cells, a
move that should lead to a total saving of around ten mil-
lion tonnes of carbon dioxide over the next ten years.
The Group not only aims to halt the rise in the level
of carbon generated by the supply chain that would be
expected without taking countermeasures (Scope 3 up-
stream), it also intends to reduce emissions per vehicle
by at least 20%* by 2030 (base year 2019). In its efforts to
achieve this aim, among other measures the BMW Group
is establishing the carbon footprint of the supply chain
as a decision-making criterion when awarding contracts.
With this end in mind, the Group took the step of initiat-
ing a dialogue with its most important suppliers in terms
of their carbon footprint during the period under report.
The BMW Group is playing an exemplary role in working
with well-documented and measurable carbon emission
targets for its supply chain.
CARBON EMISSIONS IN PRODUCTION AND AT BUSINESS
LOCATIONS BY 80%
-
age
CO2 IN THE SUPPLY CHAIN: TREND REVERSAL AND
SIGNIFICANT REDUCTION
K = 48
General Information and Group Profile
Combined Management Report
BMW Group
Report 2020
* Electricity generated from in-house renewable power plants, direct supply contracts for green electricity
and certified guarantees of origin.
Alongside the purchase of electricity, 100% of which
has been obtained from green, renewable sources* since
2020, Renewable Energy the BMW Group will continue to
systematically invest in optimising its energy efficiency
and also intends to exploit the opportunities offered by
digitalisation in the process. Even today, the Group's
production processes are already highly efficient - for
example, by reducing the volume of rejects in car body
construction to a minimum and by planning the ongo-
ing maintenance of its machinery on a predictive basis.
The BMW Group will also examine the potential for the
broader deployment of renewable energy at its various
locations worldwide. The use of green hydrogen to gen-
erate power can also play a key role.
The BMW Group has a direct influence on the carbon
emissions generated at its own plants and locations and
has therefore been a leader in terms of resource efficiency
in this field for many years. Its underlying aspiration
is even more ambitious than the international pursuing
efforts of limiting global warming to 1.5 degrees Celsius.
Despite having already reduced the level of carbon
emissions per vehicle produced by more than 70%
since 2006, the BMW Group intends to additionally
reduce carbon emissions per vehicle produced, which
are generated directly by its own combustion process-
es (Scope 1) and indirectly by external energy sources
(Scope 2), by a further 80% by 2030 (base year 2019).
Accordingly, by 2030 carbon emissions are expected to
have dropped by over 90% compared with 2006 levels.
Resource Consumption and Resource Efficiency
By 2030, the carbon emissions generated by
BMW Group vehicles are to be reduced by more than
40% per kilometre driven. The BMW Group has been
working successfully for many years to reduce the level
of carbon emissions of its new vehicle fleet worldwide.
As well as complying with its legal obligations, the Group
has always remained true to its voluntary commitments.
The early deployment of Efficient Dynamics technologies
since 2007 and the ongoing electrification of its vehicle
fleet form the dual basis for continued compliance with
statutory carbon emissions and fuel consumption limits
going forward.
In view of the increasing number of electric vehicles
on roads worldwide, far greater attention will also have
to be paid to upstream value creation when it comes to
reducing carbon emissions going forward – particularly
in light of the energy-intensive production of high-volt-
batteries. Due to the greater proportion of electrified
vehicles, carbon emissions generated per vehicle in the
BMW Group's supply chain are set to rise by more than
one-third by 2030 if no countermeasures are taken. At
the same time, as the volume of carbon emissions gener-
ated during the use phase decreases, the total percentage
of emissions caused by the supply chain and attributable
to the Group will increase. This situation requires the
BMW Group to set its own strategic targets.
CARBON TARGETS FOR THE VEHICLE'S USE PHASE
100%
General Information and Group Profile
ELECTRICITY PURCHASED FOR
THE BMW GROUP'S PLANTS
WORLDWIDE SINCE 2020 FROM
RENEWABLE ENERGY SOURCES
17.8%
PROPORTION OF WOMEN
IN MANAGEMENT POSITIONS
IN THE BMW GROUP
|
PRODUCTS AND
SERVICES
PRODUCTION, PURCHASING
AND SUPPLIER NETWORK
-53%
TARGETS ACHIEVED
2020
Strategic targets 2020
EMPLOYEES AND
SOCIETY
A
General Information and Group Profile
Combined Management Report
BMW Group
Report 2020
Report 2020
CO2 EMISSIONS IN THE
EUROPEAN NEW VEHICLE
FLEET IN THE PERIOD FROM
1995 TO 2020
K = 46
This is a simplified depiction. Detailed explanations of KPIs and its corresponding
assurance level are provided in the relevant chapters of the report.
BMW Group
Report 2020
Combined Management Report
K = 47
Combined Management Report
PROPORTION OF WOMEN
K = 49
↑22%
IN MANAGEMENT POSITIONS
IN THE BMW GROUP
* EU including Norway and Iceland.
繩
D'
2030
80%
REDUCTION OF CO2 EMISSIONS
PER VEHICLE IN PRODUCTION
MINIMUM PROPORTION OF ELEC-
TRIFIED AUTOMOBILES TO TOTAL
DELIVERIES
(BASE YEAR 2019)
REDUCTION OF CO2 EMISSIONS
IN VEHICLE USE PHASE
PER KILOMETRE DRIVEN
(BASE YEAR 2019)
↓≥20 %
REDUCTION OF CO2 EMISSIONS
IN THE SUPPLY CHAIN
(BASE YEAR 2019)
K = 50
This is a simplified depiction. Detailed explanations of KPIs and its corresponding
assurance level are provided in the relevant chapters of the report.
↓ >40%
↑≥25%
2025
RETURN ON CAPITAL EMPLOYED
AUTOMOTIVE SEGMENT
RESPONSIBLE USE OF RESOURCES - ENTERING THE
CIRCULAR ECONOMY
Not only decarbonisation but also the responsible
use of resources plays a key part in the BMW Group's
strategy. In practical terms, this means primarily avoiding
waste or reducing it to an absolute minimum. However,
as resources are scarce and many raw materials are only
available in limited quantities, the reuse of materials
and raw materials in the form of secondary materials is
becoming increasingly key for manufacturing processes
going forward.
For example, the growing popularity of electric mo-
bility worldwide cannot be covered by primary materials
alone in the long term. Furthermore, there is a strong
synergy between the conservation of primary natural
resources and carbon dioxide emissions. Therefore,
from a sustainability perspective, the underlying flows
of resources require some rethinking. The BMW Group
aims to obtain high-quality secondary materials through
promoting a greater degree of transparency in the re-
cycling chain and simultaneously tracing the reuse of
(secondary) raw materials within the cycle.
The Group has the clear objective of promoting the cir-
cular economy principle by using raw materials even more
efficiently in order to protect nature's finite resources.
Even today, vehicles are already required to be 95%
recyclable. However, the proportion of secondary raw
materials used to manufacture new vehicles is still com-
paratively low. In view of this key point, the BMW Group
plans to considerably increase this proportion in its
vehicles by 2030 - and is already exploring some very
far-reaching scenarios. The use of secondary materials
again significantly reduces carbon emissions in compari-
son to primary materials - by as much as 80% in the case
of aluminium, for example. Keeping the extraction of raw
materials to a minimum is an ideal way of protecting ex-
isting resources. In the case of critical raw materials, for
example, any political conflicts in the producing coun-
tries could also give rise to risks for the BMW Group's
procurement activities, which can be mitigated through
the use of secondary products.
Particularly in view of the high-voltage batteries
needed to power electrified vehicles, which can entail
the use of critical raw materials, the circular economy
has a decisive role to play. In close collaboration with the
German recycling specialist Duesenfeld, the BMW Group
has developed a process that can achieve a recycling rate
up to 96% - including the graphite and electrolytes
these devices contain. The BMW Group already offers all
customers who own a vehicle equipped with a high-volt-
age battery to take the devices back free of charge. The
offer also applies to regions where it is not legally obliged
to do so.
of
In order to monitor and verify flows of goods on a
global basis, the BMW Group is also using digital tools
in pilot processes, including blockchain technology. The
PartChain project, for example, enables the Group to
collect supply chain data using a method that is both
verifiable and tamper-proof at all times. In the long term,
this technology could enable critical raw materials in par-
ticular to be fully traceable from the mine to the smelter.
Resource Consumption and Resource Efficiency
SECURING LONG-TERM SUCCESS
In order to create value for the BMW Group, the
environment and society in general, sustainability is
integrated throughout the entire value chain and all
its underlying processes. And the evidence of how this
Group strategy is being implemented underlines its tan-
gible impact. It sets out clear guidelines and points the
way forward in terms of how the BMW Group intends to
shape the individual premium mobility of tomorrow. The
BMW Group will move forward in its own independent
way and continue the long-term process of developing
on a sustainable and profitable basis.
The BMW Group's strategic goals up to the years 2025
and 2030 respectively are summarised in the presenta-
tion below:
BMW Group
Report 2020
Combined Management Report
General Information and Group Profile
10%
EBT MARGIN
GROUP
↑ 8-10%
EBIT MARGIN
AUTOMOTIVE SEGMENT
Strategic targets
≥ 40%
General Information and Group Profile
In future, the key non-financial performance indica-
tors will be supplemented to include CO2 emissions gen-
erated in the supply chain. The corresponding strategic
focus is firmly established in every area of the company.
Report 2020
2. CO2 emissions of the new vehicle fleet*
Report 2020
General Information and Group Profile
K = 42
DIRECTION-WHAT IS THE BMW GROUP'S
DRIVING FORCE?
Its aspiration to manufacture products that will in-
spire its customers - both today and in the future. That is
the force that drives the BMW Group. At the same time,
the Group strives to achieve a high level of profitability
in order to safeguard its corporate independence and
distinctively shape the mobility trends of the future. The
integration of ecological and social aspects throughout
its entire value chain ensures the continued viability of
the BMW Group going forward.
The Group is built on a firm foundation of strong
brands and emotional products. In the face of increasing-
ly fierce competition, the BMW Group continues to hone
its brand profiles and express them, among
other ways,
in a unique, characteristic automotive design language.
Design arouses emotions and emotion drives desire. At
the BMW Group, outstanding design always follows
function. The kidney-shaped grille of the new BMW iX,
for example, takes on a new role as a smart surface that
not only conceals new technologies, but has the ability
to self-heal due to the use of innovative materials, so that
slight scratches disappear by themselves. ✓ Innovation and
Customer Orientation
The products must deliver what their design prom-
ises, i.e. sportiness, quality and emotionality, a fact
that applies equally to all drivetrain technologies. The
BMW Group is a leading supplier of electrified vehicles,
the foundation for which was laid at an early stage by
project i with the all-electric BMW i3 in 2013. Mean-
while, the Group is in the middle of its second phase:
In order to keep pace with growing market demand, it
is expanding its offering of electric drivetrains across all
segments. With its flexible platforms and the fifth gen-
eration of in-house developed fully electric drivetrains,
the BMW Group can offer its customers worldwide a
broad and mature range of products. For example, the
all-electric MINI Cooper SE* and the BMW iX3* were
both launched in the course of 2020 and will be followed
by the BMW i4 and the BMW iX* in 2021.
Combined Management Report
In future, models such as the high-volume BMW 5 Se-
ries and the X1 as well as the BMW 7 Series will be available
with four different types of drivetrain - all-electric, plug-in
hybrid, petrol and diesel. Moreover, the BMW Group is
preparing for the third phase of its transformation with a
new vehicle architecture starting in the mid-2020s. Over
the next ten years, the Group intends to have more than
seven million of its electrified vehicles on roads world-
wide - at least two-thirds of them all-electric models.
As part of its Performance Programme, the BMW
Group is also working to continuously raise its level of
efficiency in order to compensate for the high upfront
expenditures required for the technologies that will shape
the world of tomorrow. Profitability and free cash flow
have a high priority within the BMW Group's corporate
management system. All the measures and initiatives it
takes are therefore aimed at continually developing its
strong economic base.
* See Fuel Consumption and CO2 Emissions Information.
BMW Group
Report 2020
Combined Management Report
General Information and Group Profile
K = 43
Moreover, to express the importance of its ability to
perform in economic terms, the BMW Group has set it-
self ambitious financial targets in the course of realigning
its strategy. In future, the key performance indicators
(KPIs) already used in the annual outlook, namely
1. Profit before financial result as a percentage of Auto-
motive segment revenues (EBIT margin Automotive
segment) and
With this aim in mind, the BMW Group is system-
atically expanding its product range and progressively
enhancing both its technologies and its vehicle archi-
tectures, the latest of which are entirely centred on fully
electric drivetrain systems. At the same time, the Group
is taking another major step in terms of digitalised con-
nectivity, not only within the vehicle itself, but also in
its corporate processes.
2. Return on capital employed for the Automotive seg-
ment (ROCE Automotive segment)
BMW Group
The BMW Group stands for first-class individual
mobility and sustained responsibility. These factors pro-
vide transparency and reliability for shareholders and
investors as well as for partners in the supply chain and
the production and sales system, but also for all other
stakeholders, political decision makers, the media and
the general public.
BMW Group
3. Proportion of electrified vehicles in total deliveries
Combined Management Report
General Information and Group Profile
K = 41
STRATEGY, GOALS AND
MANAGEMENT SYSTEM
STRATEGIC ORIENTATION OF THE BMW GROUP
Individual mobility, as the BMW Group understands
it, is inextricably linked with conserving the world's nat-
ural resources. The BMW Group bases its contribution
to the sustainable development of our planet on scien-
tifically derived criteria. With this principle in mind, it
combines ecological and social aspects with securing its
long-term future in all its activities. The BMW Group
views the combination of driving pleasure and respon-
sibility for acting sustainably as a clear factor for dif-
ferentiation. The outcome is that customers experience
outstanding innovative products made by a company
focused on sustainability.
The BMW Group considers itself as a pioneer and
sets standards for the individual mobility of tomorrow. It
combines joy and responsibility without compromise and,
together with its partners, leads the industry in terms
of environmental, social and integrity standards. The
BMW Group is committed to complying with the Paris
Climate Agreement – with a verifiable track record of
continuous improvement. It is promoting the principles
of circular economy, both in its corporate philosophy and
in close collaboration with its partners - from the supply
chain to production, the use phase and the recycling of
its products.
However, that is merely the starting point for the
BMW Group, which intends to integrate sustainability
more strongly than ever in its corporate strategy. The
strategy establishes the necessary conditions to fulfill
both customer expectations and regulatory requirements
regarding emissions in the Group's various markets by
offering a wide range of products. Its clear ambition is to
ensure that all areas of the company think, manage and
demonstrably act in a true spirit of sustainability.
the basic pattern that shapes the BMW Group's strategy.
From beginning to end, activities and plans should com-
prehensively be examined with regard to their economic,
ecological and social impacts and the corresponding
decisions taken based on an integrated approach. With
effect from the financial year 2020, the Group is there-
fore integrating its reporting. A Group Report of this
nature covers a variety of key aspects and endeavours
to highlight correlations in a transparent manner. The
BMW Group is therefore consciously subjecting all of its
activities to a comprehensive external audit, including
its activities in the area of sustainability.
THE STRATEGY ARROW - POINTING THE WAY
TO THE FUTURE
The BMW Group's strategy comprises four key ele-
ments, which are summarised in a strategy arrow that
points towards the future.
Position
Strategic
approach
Collaboration
Direction
POSITION - WHAT DOES THE BMW GROUP
STAND FOR?
This way
of thinking has resulted in the BMW Group
reaching the logical strategic decision to move away from
pursuing a separate sustainability strategy and present-
ing a separate sustainable value report. Sustainability is
will also be integrated as KPIs at the strategic level. The
aim is for the Automotive segment's EBIT margin to rise
steadily again to between 8% and 10% and for the ROCE
to reach a level of at least 40% in the future.
Report 2020
3. Group profit before tax as a percentage of Group
revenues (BMW Group EBT margin).
BMW Group
Report 2020
Combined Management Report
General Information and Group Profile
K = 45
The new target framework represents a systematic
continuation of the ten strategic sustainability goals
already announced in 2012, which have been rigorously
pursued in the period from 2012 to 2020. These sustain-
ability goals were divided into three main fields of action:
1. Products and services
The increasing electrification of the BMW Group's
fleet and the systematic further development of
combustion engines made it possible to remain
within the fleet CO2 limit set by the EU in the 2020
reporting period, taking all regulatory requirements
and regulations into account. As a result, the
Group also achieved the target it set itself in 2012
of halving the carbon emissions generated by its
European new vehicle fleet in the period from 1995
to 2020. Carbon Emissions and Pollutants →
2. Production and value creation
Carbon emissions are to be reduced by at least
one-third per vehicle over the entire life cycle, from the
supply chain to production to the end-of-life phase. The
BMW Group expects environmental and social stand-
ards to be upheld by all participants in the supply chain,
including those delivering critical raw materials. The
BMW Group aims to ensure the most sustainable supply
chain in the industry.
Since 2020, the BMW Group has obtained all of its
production-related, externally generated electricity
from renewable sources, in line with the target set
by the Group. Renewable Energy
Women accounted for 19.5% of the BMW Group's to-
tal workforce during the year under report (BMW AG:
15.9%) and therefore above the target range of 15%
to 17% set for 2020. At 17.8%, the proportion of
women in management positions at BMW Group
(BMW AG: 16.2%) was also within the target range
at the end of 2020. The high proportion of women
in junior management programmes also forms the
basis for a further increase in the number of women
in management positions over time. ✓ Employee Diversity
NEW AND AMBITIOUS TARGET FRAMEWORK BY 2030
The BMW Group is firmly convinced that the fight
against climate change and the responsible use of re-
sources will determine the future of our society - and
thus also that of the BMW Group. Particularly as a
premium manufacturer, the BMW Group aspires to lead
the way in promoting sustainability and is therefore also
taking responsibility with regard to this key topic.
This also means facing up to the challenges of the
future, but also making effective use of opportunities as
they arise. With this in mind, the BMW Group focuses on
the performance and diversity of its workforce, whereby
the proportion of women in management positions at
BMW Group is seen as a key performance indicator for
the future.
Moreover, the BMW Group is rigorously going one
step further by setting itself new and ambitious sustain-
ability targets for 2030. They are an inherent aspect of
strategic management and include the upstream supply
chain, the Group's own manufacturing operations as well
as the customers' use phase.
The corresponding key non-financial performance
indicators are:
1. CO2 emissions per
The two segment-related profitability indicators will
be supplemented by the KPI
3. Employees and society
the technological and economic route remains uncertain,
the BMW Group sets its targets one decade at a time.
In 2020, for example, the Group set itself specific goals
for the year 2030 based on scientific information. New
science-based targets have emerged from the initiative of
the same name (SBTI). These targets are fully in line with
the requirements of the Paris Climate Agreement and put
the BMW Group on the path towards climate neutrality.
vehicle produced
Dialogue with Stakeholders. It is also in the top CDP grouping
for its transparent disclosure of carbon emissions. The
principle of continuous improvement has always been a
key aspect of the BMW Group's strategy.
The Group has therefore given a commitment to
achieve climate neutrality across the entire value chain
by no later than 2050. In view of the long-term nature
of its targets and the fact that, from today's perspective,
With regard to free cash flow, the BMW Group focus-
es particularly on capital expenditure and the systematic
management of working capital.
Even faster digitalised processes and lean struc-
tures are key prerequisites for consistently leveraging
efficiencies. During the coronavirus pandemic year
2020, for example, advances in digitalisation enabled
the BMW Group to maintain direct contact with its cus-
tomers, despite lockdowns worldwide. Digitalisation is
helping to shorten the process of developing new vehicle
models by up to one-third. When the BMW Group transi-
tions to the more advanced smart vehicle architectures in
2021, the conventional drivetrain variants will be largely
phased out to make way for electrified drivetrains such
as mild hybrid, plug-in hybrid and fully electric systems.
These results will already begin to take effect from 2022.
Moreover, as one of its efficiency initiatives, the
Group regularly assesses how complexity can be rea-
sonably reduced. Complexity arises due to increasingly
strict and globally heterogeneous regulatory require-
ments. The Group-wide Performance Programme also
includes making the most of synergies and efficiencies
in indirect purchasing as well as in terms of materials
and production costs. And it goes without saying that
the BMW Group is selectively bolstering its performance
with attractive new models - especially in segments gen-
erating the highest returns.
STRATEGIC APPROACH - WHERE IS THE
BMW GROUP HEADING?
The BMW Group places the strategic emphasis on its
customers and their varying requirements worldwide. In
the BMW Group, trendsetting technologies, emotional
products and individualised customer service merge to
create a unique overall experience for customers.
Its strategy is therefore of a dynamic nature. On the
one hand, the Group's market environment is charac-
terised by stable trends. This includes people's need for
individual mobility, which the BMW Group is convinced
will remain strong and grow further in the years to come.
On the other hand, however, it needs to be able to re-
spond to uncertain developments both flexibly and with
a sense of proportion. These developments can be of a
(geo) political nature, but also come in the form of fully
unexpected events such as the coronavirus pandemic.
In 2020, the Board of Management realigned the core
elements of the BMW Group's strategy and focused them
on the key technology areas that are expected to shape
the future.
Innovative technologies are the key to the future
of mobility going forward. By 2025, the BMW Group
intends to invest more than €30 billion in research
and development to reinforce its role as a leader of
innovation. The Group's plans are also an expression
of confidence in terms of the way it sees business de-
veloping going forward. Its ability to integrate a broad
variety of technologies in an overall system is of crucial
importance. Companies that succeed in mastering and
combining both hardware and software in equal measure
are those which will shape the future of the automobile
in the long term.
BMW Group
With this strategy, the BMW Group intends to gen-
erate a Group EBT margin in excess of 10%. In terms of
KPIs, the equivalent to Group EBT margin for corporate
management purposes is Group profit before tax (EBT).
Management System and ✓ Outlook
General Information and Group Profile
|<< = 44
HOW DOES THE BMW GROUP
ENSURE COOPERATION?
To achieve its strategic goals, the entire team of some
121,000 employees worldwide needs to work in a spirit
of cooperation to implement the strategy, based on the
principles of responsibility, appreciation, transparency,
trust and openness. The BMW Group therefore works
hand in glove with both internal and external partners
with the twin aims of achieving maximum effectiveness
and joint success.
The Group needs to tackle the entrepreneurial,
ecological and social challenges in equal measure to
accomplish these aims. Decisions need to be analysed
with regard to their interactions and consequences in the
overall context. Success is not something to be simply
taken for granted, but has to be worked for every day
anew. Everyone needs to work hard for "their" company
and deliver maximum performance in order to reach the
common goal. Success in corporate terms is always the
joint success of all BMW Group employees together with
their partners. For this reason, it is also a key aspiration
of the BMW Group to be an attractive employer.
SUSTAINABILITY PLACED AT CORE
OF CORPORATE STRATEGY
Combined Management Report
Sustainability is intrinsic to the BMW Group's stra-
tegic orientation. At the end of July 2020, the Board of
Management of BMW AG announced the first details of
this strategy and presented targets to which the enter‐
prise will remain committed for the period up to 2030.
In this endeavour, the BMW Group is building on a solid
foundation. In recent years and decades, it has also re-
peatedly set standards in sustainability that are acknowl-
edged by external, independent bodies. In 2020, for
example, the BMW Group took back industry leadership
in the automotive sector in the Dow Jones Sustainability
Indices World and Europe. The BMW Group therefore
occupies the top spot among automotive manufacturers
13.4
12.0
12.0
2019
2020
Financial Services
Automobile
Motorcycles
2019
In order to determine the internal rate of return,
risk-adjusted cost of capital rates are based on the average
of actual rates in recent years. In light of the long-term
nature of product and investment decisions, the follow-
ing internal rates of return are used in conjunction with
segment management:
-443
Value added Group
Capital employed comprises the average amount
of Group equity and pension provisions as well as the
financial liabilities of the Automotive and Motorcycles
segments employed at the end of the last five quarters in
each case. The earnings amount corresponds to Group
profit before tax, adjusted for interest expense incurred
in conjunction with the pension provision and the fi-
nancial liabilities of the Automotive and Motorcycles
segments (profit before interest expense and taxes). The
cost of capital is the minimum rate of return expected
by capital providers in return for the capital employed.
Since capital employed comprises an equity capital (e.g.
share capital) and a debt capital element (e.g. bonds),
the overall cost of capital rate is determined on the basis
of the weighted average rates for equity and debt capital,
measured using standard market procedures. The pre-tax
average weighted cost of capital for the BMW Group in
2020 was 12%, unchanged from the previous year.
earnings amount -
(cost of capital rate × capital
employed)
=
cost of capital
12.0
12.0
13.4
in %
=
Financial Services
Operational business in the Automotive and Motor-
cycles segments is largely shaped by the life-cycle-de-
pendent character of investment projects, which have
a substantial influence on future business performance.
Project-related decisions are therefore a crucial element
of financial management in the BMW Group.
Value added Group
29.4
The main value drivers include the number of de-
liveries and the operating return on sales (EBIT margin:
segment profit before financial result as a percentage of
segment revenues) as the key performance indicator for
segment profitability.
K = 53
BMW Group
Combined Management Report
Report 2020
General Information and Group Profile
VALUE-BASED MANAGEMENT FOR PROJECT DECISIONS
FINANCIAL SERVICES SEGMENT
RETURN ON EQUITY
RoE
15.0
Combined Management Report
BMW Group
Report 2020
For all project decisions, the project criteria and long-
term periodic results impact are measured and incorpo-
rated in the long-term Group planning. This approach
enables an analysis of the impact of project decisions on
periodic earnings and rates of return for each year during
the term of the project. The overall result is a cohesive
management model.
The net present value indicates the extent to which
the project will be able to generate future net cash in-
flows over and above the cost of capital. A project with
a positive net present value enhances future value added
and therefore results in an increase in enterprise value.
The internal rate of return of the project shows the aver-
age return on the capital employed in the project. In this
respect, there are conceptual links between the internal
rate of return and the multi-year average RoCE.
Project decisions are based on calculations derived
from the expected cash flows of each individual project.
Calculations are made for the full term of a project, in-
corporating future years in which the project is expected
to generate cash flows. Project decisions are taken on the
basis of net present value and the internal rate of return
calculated for the project.
As commonly practised in the banking sector, the
Financial Services segment is managed on the basis of
return on equity (ROE). RoE is defined as segment profit
before tax, divided by the average amount of equity
capital in the Financial Services segment. The target is a
return on equity of at least 14%.
earnings amount -
The information provided by these non-financial
performance indicators is complemented by the two
financial key performance indicators of pre-tax return
on sales and value added. Value added, as a highly ag-
gregated performance indicator, also provides an insight
into capital efficiency and the (opportunity) cost of cap-
ital required to generate Group profit. A positive added
value means that a return on investment above the cost
of capital has been achieved.
7,812
11.2
15,146
15,343
2,272
1,725
2020
2019
2020
Average equity capital in € million
Profit before tax in € million
2019
2020
2019
Return on equity in %
Average equity capital
Financial Services
Profit before tax
15.0
-2,597
STRATEGIC MANAGEMENT AT GROUP LEVEL
K = 54
8,061
7,369
5,464
2020
2020
2019
2019
2020
Cost of capital (equity + debt capital)
Earnings amount
BMW Group
in € million
VALUE ADDED GROUP
K = 55
General Information and Group Profile
Combined Management Report
BMW Group
Report 2020
Strategic management and the quantification of
financial implications based on long-term corporate
planning are performed primarily at Group level. Key
performance indicators in this context include Group
profit before tax and the size of the workforce at the
year
end. Group profit before taxes provides a comprehensive
measure of the Group's overall corporate performance
after consolidation effects and a transparent basis for
comparing performance over time.
660
Report 2020
194
Cost of capital
×
Average weighted
cost of capital rate
Expenses
Revenues
BMW Group
Report 2020
Combined Management Report
General Information and Group Profile
K = 52
Due to the very high level of aggregation, it is im-
practical to manage the business on the basis of value
added. This key indicator is, however, used for reporting
purposes. In addition, relevant value drivers having a sig-
nificant impact on business performance and therefore
on enterprise value are defined for each controlling level.
The financial and non-financial value drivers are reflected
in the key performance indicators used to manage the
business. In the case of project-related decisions, the
target system follows a project-oriented management
logic that is based on net present values and profitability
performance indicators, thereby providing a fundamental
basis for decision-making.
AUTOMOTIVE SEGMENT
The most comprehensive key performance indicator
used for the Automotive segment is RoCE. This indica-
tor provides information on the profitability of capital
employed and the operational business. Value driver
analyses can be used to interpret the causes of a change
in ROCE and derive suitable measures to influence its
development. RoCE is measured on the basis of segment
RETURN ON CAPITAL EMPLOYED
profit before financial result and the average capital
employed in the segment. The strategic target for the
Automotive segment's RoCE is 40%.
Profit before
financial result
ROCE Automotive
Capital employed
Average
capital employed
Capital turnover
Value added
General Information and Group Profile
BMW Group
Combined Management Report
General Information and Group Profile
K = 51
Managing sustainability
The BMW Group's long-term strategic course is determined by
the full Board of Management, which is therefore also responsi-
ble for implementing the Group's sustainability goals. In 2019,
the separate format of the Board of Management's Sustaina-
bility Board was fully incorporated into the regular meetings of
the Board of Management, enabling sustainability issues to be
even more systematically integrated within the BMW Group's
decision-making processes. Since then, sustainability has been
treated like every other topic and discussed at Board of Manage-
ment meetings as the need arises. Moreover, all requests for de-
cisions referred to the Board of Management are required to be
assessed beforehand in terms of their sustainability. A Strategy
and Structure Circle, comprising the top management of the vari-
ous company divisions, prepares the drafts of decisions to be tak-
en for the Board of Management after also taking sustainability
issues into account.
The BMW Group's corporate governance principles are set out in
detail in its Corporate Governance Statement. ☑GRI 102-18,
102-19, 102-20, 102-26, 102-27, 102-31, 102-33
The Group's targets for sustainability are applied at business unit
level and overall area of responsibility level. As a consequence,
the individual targets set for managers include sustainability as-
pects and criteria that have an impact on performance-based
compensation. GRI 102-19, 102-28
The Supervisory Board decides on the amounts awarded to mem-
bers of the Board of Management ✓ Remuneration Report, basing
its decisions on the sustainable development of the BMW Group
as a whole. Bonuses are partially based on personal performance
and assessed primarily according to qualitative criteria. These in-
clude ecological innovations (e.g. carbon emission reductions),
leadership accomplishments and the ability to manage change
processes. Additional criteria include enhancing the company's
attractiveness as an employer, progress in implementing the di-
versity concept and activities that encourage corporate citizen-
ship within the BMW Group. GRI 102-27, 102-28, 102-35
MANAGEMENT SYSTEM
The BMW Group's business management system fol-
lows a value-based approach that focuses on profitability,
consistent growth, value enhancement for capital pro-
viders, sustainability, climate protection and job security.
Capital is considered to be employed profitably when the
amount of profit generated sustainably exceeds the cost
of equity and debt capital. This strategy also secures the
desired degree of corporate autonomy in the long term.
BMW GROUP-VALUE DRIVERS
The BMW Group's internal management system is
based on a multilayered structure. Operating perfor-
mance is managed primarily at segment level. In order
to manage long-term corporate performance and assess
strategic issues, additional key performance figures are
taken into account within the management system at
Group level. In this context, the value added serves as
one of several indicators for the contribution made to
enterprise value during the financial year. This approach
is made operational at both Group and segment level
through key financial and non-financial performance
indicators (value drivers). The link between value added
and the relevant value drivers is presented in a simplified
form below.
Profit
Return on sales
Return on capital
(ROCE or RoE)
687
MANAGEMENT OF OPERATING PERFORMANCE
AT SEGMENT LEVEL
Average capital employed in € million
General Information and Group Profile
MOTORCYCLES SEGMENT
As with the Automotive segment, the Motorcycles
segment is managed on the basis of RoCE. Capital em-
ployed is determined on the same basis as in the Auto-
motive segment. The strategic RoCE target for the Motor-
cycles segment is 40% as in the Automotive segment.
ROCE Motorcycles
RETURN ON CAPITAL EMPLOYED
Profit before
financial result
Average
capital employed
Profit before financial result in € million
Average capital employed in € million
Return on capital employed in %
2020
2019
2020
2019
2020
2019
103
Report 2020
Profit before financial result in € million
Combined Management Report
Furthermore, the segment manages its compliance
with fleet CO2 targets in regulated markets. This also
includes the proportion of total deliveries accounted for
by electrified vehicles. Since compliance with regulatory
requirements has a significant impact on the company's
success, business decisions relating to vehicle projects
also take fleet CO2 requirements into consideration.
In order to take account of the increasing relevance of
carbon emissions over the life cycle of a vehicle, in 2020
a control logic was agreed upon to measure this factor
during the manufacturing phase (supplier network, logis-
tics, production).
Return on capital employed in %
2020
2019
2020
2019
2020
2019
Operating performance at segment level is managed
at an aggregated level on the basis of returns on cap-
ital. Depending on the business model, the segments
are measured on the basis of return on total capital or
return on equity. Specifically, return on capital employed
(ROCE) is used for the Automotive and Motorcycles
segments and return on equity (ROE) for the Financial
Services segment. These indicators combine a wide range
of relevant economic information, such as profitability
(return on sales) and capital efficiency (capital turnover)
to measure segment performance and the development
of enterprise value.
Automotive
2,162
4,499
17,026
15,513
12.7
29.0
Capital employed corresponds to the sum of all cur-
rent and non-current operational assets, less liabilities
that generally do not incur interest (e.g. trade payables
and other provisions).
Due to its key importance for the Group as a whole,
the Automotive segment is managed on the basis of
additional key performance indicators that have a
significant impact on RoCE and hence on segment
performance. These value drivers are the number of
vehicle deliveries and the operating return on sales
(EBIT margin: segment profit before financial result as a
percentage of segment revenues) as the key performance
indicator for segment profitability.
BMW Group
KK = 56
Produced capital
Within the BMW Group, value creation is a com-
prehensive process involving a broad range of positive
factors, some of which interact in complex ways. These
factors may be of a financial or a non-financial nature
and relate to both tangible and intangible values that are
geared towards creating additional value using a mini-
mum of resources. These input factors form the basis that
drives the BMW Group's overall performance.
Combined Management Report
General Information and Group Profile
KK = 58
COMPLIANCE AND
HUMAN RIGHTS
Responsible and lawful conduct is fundamental to the
success of the BMW Group. Compliance is an integral
part of our corporate culture and the reason why share-
holders, customers, business partners and the general
public place their trust in us. The Board of Management
and the employees of the BMW Group are obliged to act
responsibly and in compliance with applicable laws and
regulations. The BMW Group also expects its business
partners to conduct themselves in the same manner
throughout the entire value chain. As an active corpo-
rate member of the German Institute for Compliance
(DICO), the BMW Group provides practical support for
compliance management in Germany and contributes to
its further development.
COMPLIANCE AS A CORPORATE FUNCTION
The BMW Group Compliance Management System is
designed to ensure that the BMW Group, its representa-
tive bodies, its managers and staff act in a lawful manner
at all company locations. Particular emphasis is placed on
measures to ensure compliance with antitrust legislation
and avoid the risk of corruption or money laundering, as
well as promoting respect for human rights. Activities
to avoid non-compliance with the law are managed and
monitored by the BMW Group Compliance Committee.
These activities include legal monitoring, internal compli-
ance regulations, communications and training activities,
complaint and case management, compliance reporting
and compliance controls, as well as following through
with sanctions in cases of non-compliance.
BMW Group
Report 2020
REGULAR COMPLIANCE REPORTING TO BOARD OF
MANAGEMENT AND SUPERVISORY BOARD
-
Board of Management decision of 15 December 2020
establishing a BMW Group Chief Compliance Officer,
effective 1 January 2021, to further strengthen com-
pliance management at the BMW Group.
Creation of six new compliance functions within
the Board divisions of BMW AG, with a multi-day
onboarding programme for the new Compliance
Officers.
Stepping up antitrust compliance measures.
A company-wide tone-from-the-top communications
initiative highlighting the compliance management
culture at the BMW Group. ✓ GRI 102-33
BMW GROUP COMPLIANCE MANAGEMENT SYSTEM
Supervisory Board BMW AG←
Board of Management BMW AG
BMW Group Compliance Committee
BMW Group Compliance Committee ←
The BMW Group Compliance Committee reviews the
effectiveness and efficiency of the Compliance Manage-
ment System on an ongoing basis. It reports regularly
and on a case-by-case basis to the Board of Management
and the Audit Committee of the Supervisory Board on all
compliance-related issues, including the progress made
in refining the BMW Group Compliance Management
System, details of investigations performed, known
infringements of the law, sanctions imposed and correc-
tive/preventative measures implemented. This also en-
sures the Board of Management and Supervisory Board
are immediately notified of any cases of particular sig-
nificance. On the basis of this information, the Board of
Management keeps track of and analyses developments
and trends in the field of compliance and initiates the
measures needed to improve the Compliance Manage-
ment System. The following were among the measures
implemented in 2020:
Compliance Controls
Compliance
Reporting
CO2 emissions EU new
car fleet since 1995
(in %)
-53
(in %)
Relationship capital
60
Proportion of
value creation
from suppliers
(in %)
35
Proportion of
suppliers in the
CDP Supply Chain
programme with
an assessment of
at least B (in %)
Motorcycles
2.33
Development
Deliveries to
customers
Natural capital
-56.7
Improvement
in resource
consumption and
emissions from
vehicle production
(in %, average)
192,662
Deliveries of
electrified vehicles
(in million units)
Compliance Case
Management
Compliance Processes
and IT Systems
Compliance Academy
and Culture
The various elements of the BMW Group Compli-
ance Management System are shown in the diagram on
the previous page ✓ BMW Group Compliance Management System
and are applicable to all BMW Group organisational
units worldwide. The BMW Group Legal Compliance
Code and BMW Group Code on Human Rights, which
form the core of the Group's Compliance Management
System, are supplemented by an internal set of rules.
The BMW Group Policy "Compliance" sets out binding
strategic requirements for BMW Group compliance
management, its premises and basic principles, as well
as for implementation in the business departments.
The BMW Group Policy “Antitrust Compliance", which
establishes binding rules of conduct for all employees
across the BMW Group to prevent unlawful restriction
of competition, was supplemented by several additional
manuals in 2020 and deserves particular mention. The
rules set out in the BMW Group Policy "Corruption Pre-
vention" and the BMW Group Instruction “Corporate
Hospitality and Gifts" deal with lawful handling of gifts
and benefits and define appropriate assessment criteria
and approval procedures. The BMW Group Instruc-
tion "Anti-money-Laundering" defines company-wide
standards for anti-money-laundering for trade in goods
and the financial services sector.
Compliance measures are determined and prioritised
on the basis of a regular group-wide compliance risk
assessment that relies on data-based risk indicators and
transaction validation, among other methods.
Various internal media and communications ma-
terials are used to raise awareness among staff across
all compliance issues, including newsletters, employee
newspapers and the compliance homepage in the
BMW Group intranet, where employees can find all
compliance-related information and training materials.
A compliance tone-from-the-top initiative called "Walk-
the-Talk" was organised for the first time in 2020 to boost
employee awareness of the importance of creating a cul-
ture of transparency and trust. Senior managers gave
keynote speeches on a wide range of compliance issues
at forums and employee meetings.
The training opportunities offered by the BMW Group
Compliance Academy are refined on an ongoing basis for
specific target groups. As well as imparting knowledge,
online and classroom training options with company-spe-
cific case studies play an important role in reinforcing
compliance in the corporate culture. The online training
modules must be repeated by the required target groups
every two years and include a final test. Successful com-
pletion of the test is confirmed by a certificate. These
courses are also offered on an optional basis to all other
employees.
BMW Group
Report 2020
Combined Management Report
General Information and Group Profile
COMPLIANCE MANAGEMENT SYSTEM AIMED AT ENSUR-
ING LAWFUL CONDUCT THROUGHOUT THE GROUP
KK = 60
-
Any member of staff with questions or concerns
relating to compliance is expected to discuss these
matters with their managers and with the relevant de-
partments within the BMW Group: in particular, with
the BMW Group Compliance Committee Office, Legal
Affairs and Corporate Audit. The BMW Group Compli-
ance Contact also serves as a further point of contact
and provides non-employees with a system for reporting
concerns relating to compliance. Communication with
the BMW Group Compliance Contact may remain anon-
ymous, if preferred. BMW Group employees worldwide
also have the opportunity to submit information about
possible breaches of the law within the company anon-
ymously and confidentially in several languages via the
BMW Group SpeakUP Line. The BMW Group assures
those providing information that no attempt will be made
to determine their identity should they choose to remain
anonymous. Unauthorised use is naturally excluded
from this. All compliance-related queries and concerns
are documented and followed up by the BMW Group
Compliance Committee Office using an electronic Case
Management System. If necessary, Corporate Audit,
Corporate Security, the legal departments or the Works
Council may be called upon to assist in the process and
address any issues.
Various IT systems support BMW Group employees
with the assessment, approval and documentation of
compliance-relevant matters. For example, all exchange
activities with competitors must be documented and
approved in a special compliance IT system. The same
applies to verifying legal admissibility and documenting
benefits, especially in connection with corporate hospi-
tality. The BMW Group also uses an IT-based Business
Relations Compliance programme to ensure the reliabil-
ity of its business relations. Relevant business partners
are checked and evaluated for potential compliance
risks. Appropriate measures are implemented to manage
compliance risks based on the results of the evaluation.
A further IT system is used to verify customer integrity
as required under anti-money-laundering regulations. IT
solutions for automated reporting of compliance training
activities and documentation of all compliance activities
conducted by the business units were also under devel-
opment during the reporting year.
Through the Group-wide reporting system, compli-
ance responsibles across all organisational units of the
BMW Group report, on both an ongoing and adhoc basis,
on the compliance status of their respective units, on any
identified legal risks and incidences of non-compliance,
as well as on sanctions and corrective/preventative meas-
ures implemented.
Compliance with and implementation of compliance
rules and processes are audited regularly by Corporate
Audit and subjected to control checks by the BMW Group
Compliance Committee Office. Corporate Audit carries
out on-site audits as part of its regular activities. The
BMW Group Compliance Committee also engages Cor-
porate Audit to perform compliance-specific checks and,
if necessary, brings in Corporate Security to investigate
suspected cases. Two BMW Group Compliance Spot
Checks, sample tests specifically designed to identify
potential corruption risks, and an antitrust compliance
validation (to identify and audit possible antitrust risks)
were carried out in addition in 2020. The organisational
units for audit are selected on the basis of a Group-wide
compliance risk assessment. ✓ GRI 205-1
In an antitrust investigation, the EU Commission
alleges that five German car manufacturers colluded with
the aim of restricting competition for innovation with
regard to certain exhaust treatment systems installed in
diesel and petrol-driven passenger vehicles. The current
investigation is solely concerned with possible infringe-
ments of competition law. For further details, please see
the section on Legal Risks within the Report on risks
and opportunities and ✓ note 10 to the Group Financial
Statements.
HOW THE BMW GROUP
CREATES VALUE
More than 42,800 managers and staff worldwide have
so far received training in the basic principles of com-
pliance, including the content of the Legal Compliance
Code and the topic of corruption prevention, and hold
a valid training certificate. Successful completion of the
training programme is mandatory for all BMW Group
managers. The company makes sure that newly recruited
managers and promoted staff receive compliance train-
ing. Online training in antitrust compliance is mandatory
for
managers and staff exposed to the associated risks as
a result of their functions or on specific occasions. A total
of more than 38,300 managers and employees worldwide
have so far completed antitrust compliance training and
currently hold a valid certificate. Classroom and virtual
training, as well as multi-day coaching sessions, are also
held in local markets for all key compliance topics. One
main emphasis here is on department-specific antitrust
training an area that was significantly expanded in
2020. GRI 205-2
functions). The specific compliance activities required for
financial services business are coordinated by a separate
compliance department within the Financial Services
segment. The BMW Group compliance organisation
remained fully operational in 2020, despite the unique
demands of the coronavirus situation.
The financial services business entails specific risks arising from
the nature of its products and processes. The focus here is on an-
ti-money-laundering measures, compliance with financial sanc-
tions, information privacy and data protection, fraud prevention,
and legislative and regulatory monitoring, as well as consum-
er protection. To address the risks in these areas, a "compliance
coordination" function was created within the Financial Services
segment as a delegated function of the BMW Group Compliance
Committee Office. Based on an annual trend analysis, it identifies
new or modified regulatory requirements in the financial services
sector and defines the necessary measures. Implementation by
BMW Group financial services companies worldwide is tracked on
a quarterly basis. Compliance is incorporated into the target man-
agement process for the Financial Services segment. Integration
of specific targets into strategic management underlines the im-
portance of this topic and helps monitor implementation. A man-
agement system is also used to identify risks of non-compliance
with internal and external regulations in the early stages.
Compliance management in the Financial
Services segment
Office
BMW Group Compliance
Network
Compliance Instruments
of the BMW Group
Annual Report
Annual Report
Annual
Compliance
Reporting Run
Compliance Strategy
Legal Compliance
Monitoring and Trends
Compliance Risks and
Preventive Excellence
Compliance Codes and
Internal Regulations
Compliance Communications
BMW Group
Report 2020
Combined Management Report
General Information and Group Profile
K = 59
COMPANY-WIDE COMPLIANCE NETWORK
The decisions taken by the BMW Group Compliance
Committee are drafted in concept and implemented
operationally by the BMW Group Compliance Commit-
tee Office. The BMW Group Compliance Committee
Office has more than 20 employees and forms part of
the organisation that reports to the Chairman of the
Board of Management. For operational implementation
of compliance topics, it is supported by a Group-wide
compliance network of around 240 BMW Group Com-
pliance Responsibles (heads of local units) and over 80
local Compliance Officers (heads of local compliance
R&D ratio
6.3
II
First-year benefits
4. Relationship capital
3. Intellectual capital
1. Financial capital
According to the input-output model of the IIRC
framework, the factors on both the input and the output
side are divided into six different types of capital, which
can be distinguished as follows:
from implemented
employee ideas
(CRE8) (€ million)
(€ million)
279
120,726
5. Produced capital
Human capital
end of year
expenditure (€ million)
Intellectual capital
1,561
Employee ideas
implemented in
conjunction with
CRE8 Ideas
Management
6,279
Workforce at Training and education
R&D expenditure
(€ million)
6. Natural capital
The BMW Group's solid economic base is inextricably
linked with its human and intellectual capital. These
two precious assets constitute the greatest factor in the
enduring success of the Group as a whole and play a
key role in tackling the challenges of the future. They
combine the knowledge, skills, abilities, strengths and
talents of the BMW Group's workforce and are among
the most important value factors for the Group.
Equity capital
(€ million)
Total assets
216,658 61,520
Financial capital
K = 57
General Information and Group Profile
Report 2020
The BMW Group's financial capital is defined in
terms of equity capital and total assets, the latter cor-
responding to the balance sheet total. An appropriately
high equity ratio (i.e. equity as a percentage of total
assets) makes a significant contribution to safeguarding
the corporate independence of the BMW Group and
forms a solid basis for high earnings and therefore stable
dividends for the shareholders.
Combined Management Report
ner. Value Added Statement
All in all, these various aspects form the basis of the
BMW Group's enduring success. Even minor changes in
individual factors can directly influence the overall result.
This holistic BMW Group approach is intended to ensure
that all available resources are used in a responsible man-
Natural capital describes all the renewable and
non-renewable resources deployed in the manufactur-
ing process. The BMW Group is an efficiency-oriented
company, and for that reason both the enterprise as
a whole and its individual employees have always de-
ployed natural resources sparingly as a matter of course.
The consistently positive development of these capital
indicators in recent years underscores this common
corporate identity, a fact additionally confirmed by the
assessments of independent rating agencies ✓ BMW Stock
and Capital Markets in 2020.
The backbone of the BMW Group's produced capital
is formed by the 31 plants in its global production net-
work, across which it manufactured a total of 2.26 million
premium vehicles during the 2020 reporting period. Thir-
teen of these plants (over 40%) are already producing
electrified vehicles alongside conventional models.
and Supplier Network
stable relationships, which have developed over a long
period of time in many cases, have created a capital of
inestimable value, a fact amply demonstrated not least
in the 2020 pandemic year. Even under the challeng-
ing conditions of the global lockdown in 2020, the
BMW Group's supply chains remained firm; a feat only
possible when the partners share common standards and
values and can truly depend on one another. ✓ Purchasing
For the BMW Group, innovation means rigorously
taking the next step. In this context, it also collaborates
closely with its partners in the supplier network. The
In its international R&D network, the BMW Group
offers its innovation-minded employees excellent condi-
tions that enable them to create the solutions that will
shape tomorrow's world. The high degree of motivation
to innovate and the willingness to perform, both of
which are firmly anchored throughout the entire work-
force, are equally expressed in the lively participation
in Group-wide ideas management as well as in the
outstanding level of employee satisfaction. A key pillar
of the BMW Group's personnel development strategy is
to develop this success factor in a targeted manner. In
addition to its many other levers, the Group attaches
great importance to the personal advancement of each
individual, which also includes providing opportunities
for further training.
BMW Group
Relationship capital
2. Human capital
Proportion of
production-relevant
Natural capital
100
Proportion of
electricity from
renewable energy
sources (in %)
BMW
GROUP
This diagram shows an illustrative overview of key performance indicators (KPIs) disclosed
in the report. Detailed explanations of KPIs and its corresponding assurance level are provided
in the relevant chapters of the report.
Further information is available at: ✓ report.bmwgroup.com
Output
Financial capital
1,253
Dividend total
(proposal to the
Annual General
Meeting) (€million)
Human capital
12,244
Wages/salaries/
social insurance
contributions
(€ million)
4,830
Profit before
financial result (EBIT)
(€ million)
82
79
Intellectual capital
18.2
vehicles
Energy consumption
per produced vehicle
(in MWh)
Employee
satisfaction
(in %)
(€ million)
purchasing volume within
the CDP supply chain
programme (in %)
55.5
Purchase volume
How the BMW Group creates value
Produced capital
thereof 13
31
Number of
plants
plants
producing
electrified
2.12
Input
Intelligent Personal Assistant: the BMW Group has revamped the look
of the BMW Intelligent Personal Assistant and made it more emotion-
al. The Assistant is able to distinguish between the driver's and the pas-
senger's speech, learns and even leans towards the respective conver-
sation partner.
BMW Operating System 7: new features in version 07/20
Digital key: in collaboration with Apple, the BMW Group is the first car
manufacturer to offer its customers the option of using their iPhone as
a fully fledged digital car key. It unlocks the vehicle at the door handle
and the engine can be started when it is placed in the smartphone com-
partment. Access rights can be shared with other people and config-
ured in the process and there is a specially designed mode for inexpe-
rienced drivers.
The Munich Research and Innovation Centre (FIZ)
is the main hub of the Group's international network of
14 research and development locations. The first phase
INNOVATION CULTURE IN THE MAKING: A NEW
CENTRALISED HUB OF THE BMW GROUP'S GLOBAL
RESEARCH AND DEVELOPMENT NETWORK COMES
INTO BEING.
The BMW Group operates an international network
of research and development locations to ensure that
ideas can swiftly and directly become innovations for
customers in the form of ideas to offer. The network
provides the ideal environment for experts to work cre-
atively in internationally connected teams to promote
knowledge transfer and even faster, integrated, flexible
collaboration for effectively developing the major trends
of the future. This combined network of research and
development expertise is continuously being expanded
and strengthened in a competence-oriented manner.
In a state-of-the-art innovation process, the
BMW Group also uses its ability to change perspectives
when required. In this respect, it is the first automotive
manufacturer to collaborate with Epic Games, a com-
puter games developer. The BMW Group has modified
gaming technologies and adapted them for use in vehi-
cle development as well as in production planning and
customer presentation at the retail level. In the field of
vehicle development, new components and systems can
therefore be tested intensively at a very early stage so
that they can later be used by the customer simply and
intuitively to the greatest extent possible. Technologies
originating from the computer games industry such as
mixed reality and game engines are key elements that
are making an important contribution in this respect.
Internationally staffed teams of developers work simul-
taneously and interactively with one another before
hardware prototypes are additionally made available. In
a mixed reality environment, technical solutions can be
analysed at an early stage on a virtual ride before the
first samples are made physically available, effectively
cutting testing costs and, last but not least, minimising
development times.
K = 65
Navigation/BMW Maps: the cloud-based system has a great many ad-
vantages. The route calculation feature combines real-time informa-
tion with forecast models and therefore acts more dynamically and
swiftly than ever. Additional context-based information such as rat-
ings, business opening hours and pictures of interesting places pro-
vide BMW Group customers with excellent support. Entering a des-
tination has now been made far more convenient due to the free text
function, which uses a single search line and adds suggestions for rel-
evant search terms.
General Information and Group Profile
Combined Management Report
BMW Group
Report 2020
Via the BMW Group's international development net-
work, the varying regional needs and requirements of its
customers worldwide are being incorporated into design,
research and development. Group locations worldwide
are in direct dialogue with their various regions. The
BMW Group conducts an average of 70 customer studies
per year in the area of display and operating concepts
alone. The Group also researches dialogue formats and
upcoming trends.
CUSTOMER-CENTRIC DEVELOPMENT
Apple Car Play allows navigation information from Apple Maps to be
displayed on both the head-up display and the info display. Google
Android Auto is also integrated: customers can use functions on their
BMW Group
Report 2020
smartphones wirelessly within the vehicle and access their apps via
touch control without having to directly operate their smartphone. Navi-
gation instructions provided by Google Maps are shown on both the info
display and the head-up display.
Since the end of 2020, over 400 data-driven and
AI applications have been helping the BMW Group pro-
cess and interpret big data throughout all relevant areas
of the company. Artificial intelligence is also deployed
when it comes to developing an algorithm that enables
safe and predictive automated driving features, helping
to analyse the approximately 250 million kilometres of
"experience" gained to date (as of October 2020). Even
now, BMW Group customers are already experiencing
the capabilities of AI technologies as they drive. Since the
end of 2018, an Intelligent Personal Assistant has been
offering them support upon request. Since the second
half of 2020, more than 70% of BMW vehicles have been
equipped with the BMW Intelligent Personal Assistant
as standard. For example, commands given in natural
speech enable drivers to comfortably operate numerous
vehicle functions without having to take their hands off
the steering wheel.
BMW eDrive zones: plug-in hybrids can use geofencing to detect when
they are entering an environmentally restricted zone or a city centre.
They then automatically switch to electric mode after previously ensur-
ing that the vehicle's battery is fully charged, enabling them to drive lo-
cally emissions-free and almost silently where it has the greatest impact.
Charging management: electrified models are provided with addition-
al information and services via the Connected Charging feature. Pub-
lic charging stations and their availability are displayed and addition-
al information is also shown, for example on providers, opening hours
or suggestions for places of interest and cafes or restaurants nearby.
Finding a parking space: customers can be assisted via various services
when searching for a parking space. The on-street parking information,
for example, calculates where a parking space is most likely to be free.
BMW Group
Report 2020
Combined Management Report
General Information and Group Profile
INNOVATION IN PRODUCTION
INSPIRATION AND COOPERATION
K = 66
ALWAYS UP TO DATE VIA RADIO INTERFACE
The remote software upgrade function keeps BMW
vehicles continuously up to date. The software updates
can be conveniently downloaded to the vehicle whether
at home or on the road and contain improvements or
even fully new vehicle features. In autumn 2020, the
BMW Group rolled out the most extensive remote soft-
ware upgrade in its history. The free-of-charge improve-
ments and new attractive features were made available
over-the-air to more than 750,000 BMW Operating
System 7 (version 07/20) vehicles worldwide.
Moreover, Remote Software Upgrade allows drivers
to purchase and activate additional optional features. For
example, the Highbeam Assist or Active Cruise Control
with the Stop&Go function can also be subsequently in-
stalled quickly and easily over the air, even on vehicles
that have already been delivered to customers. Customers
can therefore benefit from the latest technological devel-
opments and have the opportunity to test functions that
were not yet needed at the time of purchase for a certain
period of time with the option to purchase them.
Apps have been offering customers an effortless
connection between their smartphones and the vehicle
since 2013. A new generation of the My BMW app has
been available on 30 European markets as well as in
China and Korea since December 2020. My BMW is the
new universal interface to the vehicle and, depending on
how it is equipped, also enables selected features to be
activated remotely, such as vehicle localisation.
of construction completed in the course of enlarging the
Munich FIZ went into operation in autumn 2020. On
the FIZ campus, the focus is on transformation and the
future-related topics of electrification, digitalisation and
connectivity. With over 90 petabytes of storage capacity,
100 test benches, 200 laboratories and the directly adja-
cent prototype construction facility, the FIZ has grown
to become one of the largest research and development
centres in Europe.
ARTIFICIAL INTELLIGENCE – THE BASIS FOR AUTOMATED
DRIVING AND INTERACTION WITH THE VEHICLE
BMW Group
Report 2020
given a new function as a smart surface where camera
technology, radar and other sensor-based features are
located behind a transparent exterior. Through the use
of innovative materials, the surface of the grille also has
a self-healing effect that makes light scratches disappear
by themselves. Moreover, as the first 5G-capable model
to be made by a premium manufacturer, the BMW iX will
also be the BMW Group's technology flagship in terms
of digitalisation going forward. In addition, gigabit Eth-
ernet technology is being used for the first time in this
innovative vehicle, enabling extremely large volumes of
data from sensors and antennas, for example, to be trans-
mitted through the vehicle within fractions of a second
and then processed in the centralised high-performance
computers of the vehicle's on-board system. Moreover,
some of this data is also transmitted to the cloud, an-
alysed and returned to the vehicle fleet, depending on
the situation, creating new services for customers. For
instance, information on danger spots detected by these
vehicles, such as black ice, will be made available to the
entire fleet, as well as tips on where a free parking space
is most likely to be found upon arrival. When using all
these digital technology innovations, the BMW Group
places great emphasis on ensuring that drivers and pas-
sengers can perceive and operate new features intuitively,
effortlessly and without distraction – regardless of how
technically complex they may be. These functions are
known as shy tech, i.e. technology that only becomes
visible when needed.
Combined Management Report
The dynamics of the markets in which the
BMW Group operates are largely determined by customer
expectations and therefore by demand. The BMW Group
therefore focuses on the wishes and needs of its cus-
tomers. Market expectations have a direct impact on the
range of vehicles on offer. How big does the vehicle need
to be? Which drivetrain variant fits your own lifestyle?
For this reason, the BMW Group offers a broad range
of drivetrain systems and aims to offer corresponding
electrified models for all of its brands and for every
series. Ultimately, a business model is successful and
sustainable in the long term by offering tailor-made
solutions and assuring customers who are confident in
their purchasing decisions. Since 2020, the BMW X3 has
been the benchmark in this regard. It is now available in
all four drivetrain variants: as an iX3* with an all-electric
drivetrain, as a plug-in hybrid or as a model powered by
a highly efficient diesel or petrol engine.
In production scenarios, innovations can act in two
different ways: they serve the purpose of conserving re-
sources and thus further boosting efficiency ✓ Production,
Purchasing and Supplier Network, but they can also help to
implement new product ideas and design options. Dig-
italisation is thus also paving the way for completely
new applications that enable owners to customise their
vehicles, such as by adding individual equipment features
for the MINI. Furthermore, the BMW Group opened
the Additive Manufacturing Campus in summer 2020.
Production, research and even further training on the
subject of additive manufacturing (i.e. 3D printing) are
combined under one roof at the location. The Campus
is also capable of manufacturing components for series
production vehicles.
FOCUS ON DRIVETRAIN TECHNOLOGIES
The BMW Group's culture of innovation is most
deeply rooted in its global research and development
network. However, innovation is a lot more than that
for the BMW Group: throughout the entire company it
is both the basis and the driving force behind the quest
to replace the good with the better. Innovative solutions
benefit society in a number of ways: economically, eco-
logically and socially.
A constant striving for innovation, for something new
and better, is a concept deeply anchored in the corpo-
rate culture of the BMW Group - in the thinking of its
employees, in its processes and also in the identity of its
brands. The benchmark and the goal of the BMW Group's
activities is to identify the wishes of customers worldwide
in advance, in order to actively help shape trends and
thereby drive transformation - a strategy discerniable in
production vehicles such as the BMW iX*. In its develop-
ment work, the BMW Group focuses on two key areas.
Firstly, innovative digital solutions that make people's
everyday lives easier and at the same time protect the
environment, and secondly, as a premium provider in its
industry, the Group sees it as an obligation to offer cus-
tomers a diverse range of customised, efficient drivetrain
technologies ranging from all-electric drive systems, to
plug-in hybrids and highly efficient internal combustion
engines. This also includes hydrogen fuel cell technology,
which the Group believes could become an additional
option in the long term.
INNOVATION AND CUSTOMER
ORIENTATION
In order to meet increasing requirements in the area
of human rights, the BMW Group discusses various
legislative proposals at German and European level
through associations and initiatives and participates in
the Automotive Industry Dialogue as part of the Ger-
man government's National Action Plan on Business
and Human Rights. The German Federal Ministry of
Labour and Social Affairs featured a practical example
from the BMW Group on its ✓ CSR website. As part of its
leadership of the ✓ CSR/Human Rights Working Group of the
German Institute for Compliance (DICO), various as-
pects of human rights management in companies were
discussed among members and presented at the ✓ DICO
Forum in October 2020.
Specific human rights risks arise in the supply
chain due to the collaborative, cross-border and conti-
nent-spanning nature of value creation processes in the
automotive industry. For this reason, the BMW Group
has integrated respect for human rights into its Supplier
Sustainability Policy and follows an appropriate risk manage-
ment process. In addition to the company's international
purchasing terms and conditions, BMW Group dealer
and importer contracts also contain a clause on com-
pliance and human rights. Human rights obligations
are also considered in choosing sites and in important
investment decisions. ✓ GRI 412-3
K = 62
General Information and Group Profile
General Information and Group Profile
K = 63
* See Fuel Consumption and CO2 Emissions Information.
THE FIFTH GENERATION OF ELECTRIC DRIVETRAINS:
A MAJOR LEAP IN TERMS OF PRODUCTION AND
SUSTAINABILITY
CAN THE HYDROGEN FUEL CELL SERVE AS A BUILDING
BLOCK GOING FORWARD?
Customer-oriented innovations frequently begin
with basic research. Built up over many years, the
BMW Group's expertise makes sustainable solutions
possible. The new, in-house-developed electric motor
does not contain any rare earth elements. The latest
generation of batteries requires two-thirds less cobalt
than its predecessors. The BMW Group also considers
the factor of sustainability when sourcing the cobalt it
uses. The metal is acquired transparently via a certified
process and supplied to the battery cell producers for
further processing. Details are available in the chapter
Purchasing and Supplier Network Purchasing and Supplier
Network. The BMW Group has contractually agreed with
the battery cell suppliers for the fifth generation of its
eDrive electric drivetrain that only green electricity from
renewable sources will be used in their production pro-
cesses, which should reduce carbon emissions by some
ten million tonnes over the next ten years. In this fifth
generation of the BMW Group's electric drivetrain, the
electric motor, transmission and power electronics are
also installed within a compact space. The outstanding
efficiency of the drivetrain components and the high
energy density of the high-voltage battery enable ranges
that conventional electric vehicles can only achieve with
significantly larger and correspondingly heavier batteries
and therefore lower efficiency. This electric drivetrain
was deployed for the first time in the BMW iX3*, which
was launched in 2020. From 2021 onwards, further
all-electric models such as the BMW iX* or the BMW i4
will be powered by this state-of-the-art technology.
* See Fuel Consumption and CO2 Emissions Information.
-
Whether electric motors, high-voltage batteries,
charging equipment or power electronics since 2011
the BMW Group has gained extensive experience with
all the components used in eDrive technology and
places its emphasis on in-house developments. By the
end of 2022, all German vehicle plants will produce at
least one fully electric vehicle. The production system is
capable of manufacturing vehicles either with internal
combustion engines or electric drivetrains on a single
line and can therefore also respond flexibly in terms of
the type of drivetrain required by the customer. This
level of flexibility in production allows the BMW Group
to meet customer expectations in an ideal way. At the
BMW Group's Battery Research Centre, work on battery
cells is currently focusing on features that provide a high
degree of customer value, including energy density, peak
power, longevity, charging properties, costs, behaviour
at various temperatures and, last but not least, safety.
At the same time, the BMW Group is building a pilot
plant for lithium-ion battery cells near Munich, making
the BMW Group the first automotive manufacturer to
singlehandedly cover the entire process chain of electric
driving and master it in technological terms.
The BMW Group is also investing in the enhanced
development of hydrogen fuel cell technology. The
BMW i Hydrogen NEXT, which is based on the X5, al-
ready awakened a great deal of interest among visitors
at the IAA 2019. In the long term, hydrogen technology
could become a further component in the BMW Group's
drivetrain range. If the supply of renewably produced
hydrogen can be ensured, this technology will provide an
attractive option for combining emissions-free mobility
with long-distance capability and short refuelling times.
The BMW Group is convinced that different forms of
drivetrain will continue to exist side by side in the future,
as customer expectations cannot be met with a single
solution on an international basis. Beginning in 2022,
the BMW Group will present a low-volume series of the
BMW i Hydrogen NEXT featuring the second generation
of its hydrogen fuel cell drive system. To make this aim a
reality, the BMW Group has been collaborating success-
fully with Toyota Motor Corporation since 2013. The new
drivetrain technology will be combined with the fifth
generation of the eDrive, which will then generate its en-
ergy from a fuel cell instead of a high-voltage battery. The
BMW Group has also developed this technology in-house
as an overall system. However, the appropriate political
and infrastructural framework conditions first need to be
created if green hydrogen is to become widely available
in sufficient quantities and at competitive prices. Hy-
drogen can also play a key role in powering heavy-duty
and commercial vehicles with the aim of making logistics
carbon-neutral going forward. The BMW Group's Leipzig
and Spartanburg plants have already been using trans-
port vehicles powered by renewably produced hydrogen
for a number of years.
* See Fuel Consumption and CO2 Emissions Information.
Combined Management Report
General Information and Group Profile
|<< = 64
THE BMW iX*: ELECTRIC FROM THE GROUND UP
In November 2020, the BMW Group gave the public
its first preview of the BMW iX, the first of which are
scheduled for delivery to customers in the course of
2021. Right from the start, the BMW iX was designed
exclusively to provide electric mobility that is suitable for
everyday use. The vehicle is powered by the fifth genera-
tion of BMW eDrive technology, which the BMW Group
has developed in-house and consists of twin electric
motors, power electronics, charging technology and a
high-voltage battery produced without the use of rare
earths. Fully electric and featuring four-wheel drive
technology, it will enable ranges of over 600 km in the
WLTP cycle. Equipped with innovative charging technol-
ogy and a highly efficient drivetrain, the BMW iX can be
charged to enable a range of over 120 km in a mere ten
minutes. Thanks to the development of new technologies,
the kidney-shaped grille of the BMW iX has now been
KW 8136E
THE BMW GROUP COVERS THE ENTIRE PROCESS CHAIN
FOR ELECTRIC DRIVETRAINS
NDEED
in %
1
-1,667
-1,710
7.8
2,134
2,300
-4.4
5,952
5,689
2.6
Change in %
2020
and capitalised development cost (not including the associated scheduled amortisation).
3 Research and development expenditure comprises the sum of research and non-capitalised development cost
² Capitalised development costs as a percentage of research and development expenditure.
1 Research and development expenditure as a percentage of Group revenues.
Research and development expenditure³
Amortisation
New expenditure for capitalised development costs
2019
6,279
6,419
-2.2
70
|
K =
M:XC 722E
X3
accomplished.
MINUS 53%.
Mission
DELIVERED
Products and Services
1995 and 2020.
our European new vehicle
fleet BY HALF between
We aim to reduce the
CO2 EMISSIONS of
PROMISED
KK = 69
AND SERVICES
PRODUCTS
Products and Services
BMW Group
Report 2020
K = 68
Research and development expenses
ARTOUGH
in € million
3.4
As strong, independent companies, the BMW Group and TMC have been
collaborating successfully in various fields since 2011, including fuel cell
technology. The BMW Group was primarily responsible for developing a
joint sports car platform, and series production of these brand-specific
vehicles has been ongoing since the end of 2018.
Toyota Motor Corporation (TMC)
Since BMW AG, Daimler AG and AUDI AG acquired the HERE mapping
service in 2015, the partners have been working on high-precision dig-
italised maps that can be linked to real-time vehicle data. Digitalised
maps create the basis for the next generation of location-related servic-
es, thereby marking the next key step in the evolution of individual mobili-
ty. They also form the basis for developing new assistance systems. As an
independent platform, HERE has always remained accessible for the au-
tomotive industry as well as other partners. In 2020, Mitsubishi Corpo-
ration (MC) and Nippon Telegraph and Telephone Corporation of Japan
(NTT) jointly acquired 30% of the business. As a result, the location data
and technology platform now has nine direct and indirect shareholders:
Audi, Bosch, the BMW Group, Continental, Intel, MC, Mercedes-Benz,
NTT and Pioneer.
HERE
Together with the intention to increase its shareholding in BBA, the
BMW Group is significantly expanding its presence in China and under-
lining its commitment on that market.
The aim of Spotlight Automotive Limited (Spotlight), a joint venture be-
tween the BMW Group and the Chinese manufacturer Great Wall Motors,
is to produce all-electric MINIs for the BMW Group as well as electric vehi-
cles for Great Wall Motors. The joint venture also includes the joint devel-
opment of battery-powered electric vehicles. Spotlight was established
on 27 December 2019, following approval from the Chinese authorities
and the first stage of construction has already begun.
Spotlight
The BMW Group intends to increase its shareholding in BBA from 50%
to 75%. The BMW Group already signed an agreement to that effect with
its partner Brilliance China Automotive Holdings Ltd. (CBA) in 2018. Fol-
lowing approval by the Annual General Meeting of CBA, completion of the
agreement remains subject to regulatory approvals.
IONITY
BMW Brilliance Automotive Ltd. is a 50:50 joint venture between the
BMW Group and Brilliance China Automotive Holdings Ltd., which was
founded in 2003. BMW Brilliance Automotive Ltd. produces BMW brand
models in one engine plant and two automobile plants in Shenyang, Chi-
na. Production of the BMW iX3* began there in 2020.
To maintain its successful course in the long term, the BMW Group en-
ters into targeted cooperations and partnerships not only with companies
from the automotive industry, but also with technology leaders from other
sectors. The aim of interacting with external partners is to combine exper-
tise against the backdrop of rapid technological change and make innova-
tions available to customers within the shortest time possible.
Cooperations and partnerships
K = 67
General Information and Group Profile
Combined Management Report
BMW Group
Report 2020
Cooperations and partnerships For the BMW Group, main-
taining its innovation network also includes intensive
dialogue with selected colleges and universities. Every
year, thousands of students come to the BMW Group to
complete an internship or write a scientific thesis. Many
Group employees also work as lecturers at universities
and higher education institutions. The BMW Group
maintains close partnerships with six universities and
research institutions to conduct joint research projects
that combine knowledge transfer with the training of
highly qualified junior staff.
The best ideas often come into being when different
partners work together. Regional BMW Group Technolo-
gy
Offices are searching for promising young companies
worldwide in fields of innovation such as sensor tech-
nology, artificial intelligence, battery technology, smart
materials, natural user interfaces and smart logistics.
Cooperations in which the strengths of the BMW Group
complement those of established partners also help to
enhance the innovative strength of the BMW Group.
BMW Brilliance Automotive (BBA)
The BMW Group is a founding partner of the IONITY joint venture, the aim
of which is to establish a comprehensive, high-performance, high-power
charging (HPC) network for electric vehicles. The joint venture represents
a vital step towards ensuring that electric mobility also becomes a viable
means of transport over long distances, thus establishing it on the mar-
ket. All IONITY charging points are publicly accessible, brand-independ-
ent and designed in accordance with the European Combined Charging
System (CCS) standard. The founding partners (the BMW Group, Daim-
ler AG, the Ford Motor Company as well as the Volkswagen Group with
Audi and Porsche) all participated in equal measure. In 2019, the Hyundai
Motor Group with its Hyundai and Kia brands was accepted as an addition-
al shareholder. The joint venture is, however, also open to further partners.
YOUR NOW
Under the name YOUR NOW, the BMW Group and Daimler AG are offering
innovative, customer-friendly solutions for business partners, cities and
municipalities looking to make their mobility more efficient and sustain-
able. The cooperation includes the joint ventures FREE NOW (ride-shar-
ing services) with REACH NOW (on-demand mobility and multimodality),
PARK NOW (parking) with CHARGE NOW (charging) and SHARE NOW
(car sharing). Further information is available in the chapter Mobility
Patterns.
33.2
36.6
0.1
6.2
6.3
Research and development expenditure ratio¹
0.0
5.7
5.7
Research and development expenses as a percentage of revenues
Change in %-pts.
2019
2020
Combined Management Report
BMW GROUP PERFORMANCE INDICATORS RELATING
TO RESEARCH AND DEVELOPMENT EXPENSES
General Information and Group Profile
Combined Management Report
BMW Group
Report 2020
* See Fuel Consumption and CO2 Emissions Information.
Capitalisation rate²
BMW Group
Report 2020
BMW Group
Report 2020
With the signing of the UN Global Compact by the
Board of Management of BMW AG in 2001 and the "Joint
Declaration on Human Rights and Working Conditions
in the BMW Group", which was adopted in 2005 and up-
dated in 2010, the BMW Group has committed to abide
by internationally recognised human rights and, specif-
ically, the ILO core labour standards. The BMW Group
Code on Human Rights and Working Conditions, which
was published in 2018 to provide further clarification,
was ratified by the Board of Management and employee
representatives. This affirms the BMW Group's com-
mitment to human rights and outlines how it promotes
respect for human rights and, specifically, how it imple-
ments the ILO Core Labour Standards in its business
operations worldwide. The Code was also part of the
compliance communications initiative "Walk-the-Talk".
The BMW Group conducts specific training on the sub-
ject of human rights: for instance, training Purchasing
staff to be aware of human rights issues. ✓ GRI 412-2
In its annual compliance reporting, all organisational
units of the BMW Group are also asked for a local risk
assessment of potential for human rights abuses. Their
responses form the basis for developing further measures
for the department to minimise the risks. ✓ GRI 412-1 ➡
BMW Group
Report 2020
General Information and Group Profile
|<< = 61
MANAGERS HAVE UNIQUE RESPONSIBILITY AS
COMPLIANCE ROLE MODELS
Managers, in particular, bear a high degree of re-
sponsibility and must set a good example with regard
to preventing infringements. Managers throughout the
BMW Group acknowledge this principle by signing a
written declaration, in which they also undertake to
make staff working for them aware of legal risks. Manag-
ers must, at regular intervals and on their own initiative,
verify compliance with the law. It is important to signal to
employees that they take compliance risks seriously and
that disclosing relevant information is extremely valuable.
Managers should remain open to discussion and consider
differing opinions. Any indication of non-compliance
with the law must be rigorously investigated.
Combined Management Report
It is essential for compliance at the BMW Group that
employees are aware of and comply with applicable legal
regulations. The BMW Group does not tolerate violations
of the law. Culpable violations of the law result in em-
ployment-contract sanctions and may involve personal
liability consequences for the employee involved.
COOPERATION BETWEEN COMPLIANCE AND EMPLOYEE
REPRESENTATIVES
Compliance is also an important factor in safeguard-
ing the future of the BMW Group workforce. With this
in mind, the Board of Management and the national
and international employee representative bodies of the
BMW Group have agreed on a binding set of joint prin-
ciples for lawful conduct. Employee representatives are
regularly involved in the process of refining compliance
management within the BMW Group.
WORLDWIDE IMPLEMENTATION OF LABOUR
STANDARDS AND RESPECT FOR HUMAN RIGHTS
LBMW Group models for ensuring compliance with
environmental and social standards throughout its value
chain are based on various internationally recognised
guidelines. This especially applies to the ✓ Guidelines for Multi-
national Companies issued by the Organisation for Economic Cooperation
and Development (OECD), the ✓ UN Guiding Principles on Business and
Human Rights, the content of the ICC Business Charter for Sustain-
able Development and the United Nations Environment Programme's
(UNEP) Declaration on Cleaner Production. The BMW Group con-
centrates on topics and action areas where it can exert its
influence as a commercial enterprise. ✓ GRI 102-12, 102-16
SANCTIONS MANAGEMENT
2019
2002 2003 2004
Year
2011
2012
2013 2014 2015
2016 2017
2018
40
Development of CO2 emissions of BMW Group new vehicle fleet in
the EU (on the basis of the NEDC test cycle; provisional value for
2018). Source: the International Council on Clean Transportation
(ICCT), 1995-2009; European Environment Agency (EEA),
2010-2019.
1 Flexibilities as defined in regulatory requirements: phase-in with 5 g/km, supercredits BEV/PHEV with
7.5 g/km and eco-innovations with 2.4 g/km.
2 Since 2018, all vehicles in the EU must be licensed according to the new WLTP test cycle. However,
the EU Commission will not start using WLTP to calculate fleet CO2 emissions until 2021. As a result,
WLTP fleet emissions must be retroactively calculated as NEDC values for the purposes of reporting
until and in 2020.
3 This is a preliminary internal calculation with a potential tolerance of +/-0.5 g CO2/km, as official registra-
tion figures have not been provided by all EU states. The EU Commission is not expected to publish official
figures until November 2021.
- Development of CO2 emissions of BMW Group new vehicle fleet in
the EU from 1995 to 2017 (on the basis of the NEDC test cycle).
2001
- Development of CO2 emissions of BMW Group new vehicle fleet
in the EU from 2017 to 2020 (on the basis of the WLTP test cycle,
retroactively calculated as an NEDC value for the purposes of
comparability).2
BMW Group
Report 2020
2020
2000
to base year
1995)
1997 1998
- 40%
drop in carbon emissions
generated by the new car fleet
in the use phase by 2030
BMW Group
Report 2020
Combined Management Report
Products and Services
KK = 77
Taking all regulatory requirements¹ into account, the
average carbon emissions generated by the BMW Group's
new car fleet within the EU (including Norway and
Iceland) according to the NEDC2 in the year under report
amounted to 99 g CO2/km³. The BMW Group therefore
reduced its fleet carbon emissions by 28 g CO2/km com-
pared to the previous year (2019: 127 g CO2/km), approx-
imately 5 g CO2/km below the limit of 104 g CO2/km
applicable to the BMW Group. Between 1995 and 2020,
the Group's carbon emissions were reduced by around
53%. This success was achieved through the consistent
electrification of the vehicle fleet and the continuous
improvement in the efficiency of combustion engines.
GRI 302-5, 305-5
Worldwide, the BMW Group reduced its fleet
average carbon emissions by 5% compared to the
previous year to 133 g CO2/km² in 2020 (simplified in-
ternal BMW Group calculation for its core markets EU,
USA, China, Japan and Korea) (2019: 140 g CO2/km).
GRI 305-3, 305-5
LL DEVELOPMENT OF CO2 EMISSIONS OF BMW GROUP NEW VEHICLE FLEET IN THE EUROPEAN UNION
Base year 1995 = 210 g CO2/km
230
← g CO2/km ->
(compared
Combined Management Report
-53%
90
1995 1996
1999
Products and Services
The BMW Group continues to work intensively
on reducing fuel consumption and carbon emissions
in its conventionally powered vehicles. Since 2007,
the BMW Group has been implementing its Efficient
Dynamics package of technological measures through-
out the fleet, comprising various coordinated measures
to reduce fuel consumption. In this context, the Group
continued to optimise the efficiency of its combustion
engines throughout the year under report by deploying
recuperation systems and continuous emissions reduc-
tion measures. Recuperation systems utilise the energy
recovered from the braking process to supply the vehi-
cle's electrical system and generate additional power for
the drivetrain. For this reason they are often referred to
as mild hybrid vehicles. ✓ Electrified Vehicles
In the USA, the average fleet emissions¹ for the
model year (MY) 2020 amounted to 156 g CO2/km
for passenger cars (MY 2019: 157 g CO2/km) and
186 g CO2/km for light trucks (MY 2019: 188 g CO2/km).
Fleet-weighted CO2 emissions in the USA averaged
167 g CO2/km (MY 2019: 167 g CO2/km - BMW internal
calculation).
In order to meet market-specific fleet requirements
and its own even more ambitious decarbonisation tar-
gets, the BMW Group is taking an holistic approach to
reducing emissions throughout the entire life cycle of its
vehicles. This approach is particularly relevant, as - de-
spite the expansion of electric mobility having an overall
positive impact on carbon emissions in the use phase –
emissions levels in the supply chain are increasing due to
the use of more carbon-intensive components, especially
those installed in high-voltage battery systems. For this
reason, right from the product development stage of new
vehicle projects, the BMW Group has defined specific
targets for reducing carbon emissions across the entire
life cycle. The strategy applies equally to the vehicle de-
velopment, the supply chain, production, the use phase,
and finally recycling at the end-of-life phase.
BMW Group
Report 2020
Combined Management Report
Products and Services
ELECTRIC MOBILITY
K = 80
AMBITIOUS TARGETS FOR EXPANDING ELECTRIC
MOBILITY
PRODUCT OFFERING EXPANDED AND SALES VOLUME
INCREASED
Electric mobility is one of the key topics of the
future when it comes to making road travel sustainable
and a more pleasant experience. In recent years, the
BMW Group has significantly expanded its range of
electrified vehicles and related services. It therefore sees
itself as one of the leading providers of premium electric
mobility, measured on the basis of its cumulative sales
volume figures between 2013 and 2020 and in light of
the holistic approach it is taking.
The BMW Group's electrified vehicles combine the
advantages of sustainable mobility with dynamic drive-
train behaviour. Fully electric battery-powered models
(BEVs) generate zero local emissions and can significantly
reduce traffic noise levels in towns and cities.
The BMW Group is pursuing the goal of substantially
further decarbonising its vehicles and thereby achieving
a worldwide reduction in carbon emissions in the use
phase (Scope 3 downstream in accordance with SBTI
Carbon Emissions and Pollutants and Paris Climate Agreement
targets. A key part of its product strategy is therefore to
systematically continue electrifying its model
range. The
BMW Group has set itself ambitious targets: by 2025, the
proportion of electrified vehicles in its total deliveries is
to rise to at least 25%. By 2030, the BMW Group plans to
have delivered at least seven million electrified vehicles¹.
To ensure that it achieves its sales volume targets
for electric and plug-in hybrid vehicles, the BMW Group
plans to more than double its sales of electrified vehi-
cles by the end of 2021 compared with 2019 figures
(2019: 146,1582 units). Based on its existing plans, the
BMW Group will have 25 electrified models on the road
by 2023.
The BMW Group is consciously focusing on battery
electric vehicles (BEV) and plug-in hybrid technology
(PHEV), enabling customers to select the form of drive-
train that best suits their respective mobility needs. In
order to serve regionally varying customer requirements,
the BMW Group assembles a variety of drivetrain tech-
nologies on the same production line.
During the year under report, the BMW Group
launched further models with hybrid drivetrains: the
BMW X1 xDrive25e³, X2 xDrive25e³, X3 xDrive 30e³,
330e Touring³, 330e xDrive Sedan³, 330e xDrive Tour-
ing³, 530e Sedan³, 530e Touring³, 530e xDrive Sedan³,
530e xDrive Touring³ and 545e xDrive Sedan³. These
were joined by two additional all-electric models, the
MINI Cooper SE³ and the BMW iX33, which has been
available in Europe since the end of January 2021. The
BMW iX33 is already equipped with the technology of the
fifth, and thus latest, generation of BMW Group battery
cells.
1 See
Glossary.
2 Retail vehicle delivery data presented for 2020 is not directly comparable to such data presented for previous
years. For further information on retail vehicle delivery data, please see ✓ Comparison of Forecast with
Actual Outcomes.
3 See Fuel Consumption and CO2 Emissions Information.
The BMW Group supports the development of har-
monised national regulations, also on an international
basis to the extent possible. Comparable regulations in
major markets create reliable, predictable framework
conditions that make a key contribution to combating
climate change and improving air quality. In view of
its commitment to complying with the climate goals
enshrined in the Paris Agreement, during the year
under report the BMW Group entered into a voluntary
agreement with the US State of California to reduce fleet
emissions over and above national requirements. The
KK = 78
The BMW Group has the clear ambition to meet statu-
tory carbon emissions requirements. Within the EU, the
Group succeeded in improving on fleet carbon targets
during the year under report. With respect to fleet car-
bon limits in other regulated markets, the BMW Group is
also explicitly aiming to comply with the limits and keep
its emissions as far below them as possible, which it again
succeeded in doing in the under report.
year
With this approach of taking the entire vehicle life
cycle into account, the BMW Group intends to realise its
ambition of achieving substantial improvement from one
vehicle generation to the next. The Group implements its
targets and assesses its progress during the development
process based on a carbon footprint in accordance with
the ISO 14040/44 standard. ✓ Electric Mobility
In China, average carbon emissions² rose slightly to
151 g CO2/km (2019: 144 g CO2/km). This is due to lower
sales of electrified models in China, while overall sales
are increasing. ✓ GRI 302-5, 305-5
The BMW Group sees wide-ranging opportunities
to further reduce fuel consumption and pollutant emis-
sions in the electrification of power trains. This point
is particularly relevant against the backdrop of global
decarbonisation targets, for example in the EU, China or
the USA (particularly California), and the sustainability
targets the BMW Group has set itself for 2030. For this
reason, the BMW Group again expanded its range of
electrified vehicles during the 2020 reporting year. By
2030, the Group plans to have delivered at least seven mil-
lion electrified vehicles to its customers. ✓ Electric Mobility
CONVENTIONAL DRIVETRAINS MORE EFFICIENT AND
WITH LOWER EMISSIONS
more than
Since the early 1990s, the BMW Group has managed
to significantly reduce the pollutant emissions generated
by its vehicles by deploying new technologies and mak-
ing improvements to existing ones. In Europe alone, it
has reduced the relevant exhaust emissions of the new
vehicle fleets for diesel passenger cars in accordance with
the threshold values of the standards Euro 1 to Euro 6
from 1992 to 2019 by well over 90% compared to the level
recorded prior to the introduction of the Euro emissions
standards. GRI 305-7 The introduction of new models
with even lower-emissions drivetrain technologies has
made a significant contribution to this result. In the
year under report, the BMW Group also converted all
its remaining models to the Euro 6d emissions standard.
The BMW Group expects modern, highly efficient
diesel engines to continue playing an important role. As
part of its Efficient Dynamics approach, the BMW Group
will therefore continue to work on reducing the consump-
tion of conventional drivetrain systems and boosting
their efficiency in the foreseeable future. It intends to
continue along this route, taking innovative approaches
to the combustion engine, aerodynamics and lightweight
design. The use of 48-volt technology is another key
component in the BMW Group's efforts to reduce its
carbon emissions.
Artificial intelligence (AI) can also contribute to cut-
ting carbon emissions and vehicle fuel consumption. The
BMW Group is conducting research into how AI could
make energy management in vehicles adaptive, enabling
energy consumption to be modified to suit the needs of
the driver and further improve energy efficiency.
Nitrogen oxide levels are a crucial factor for the air
quality in towns and cities. With this point in mind, since
mid-2018 the BMW Group has installed a highly effective
combination of an NOx storage catalytic converter (NSC)
and an SCR system (SCR: selective catalytic reduction)
with urea injection technology (AdBlue) in all BMW
diesel models as well as in the larger MINI diesels. As
part of its continuous further development strategy, the
BMW Group has additionally improved the efficiency of
its exhaust gas after-treatment technology by utilising
an oxidation catalytic converter in conjunction with two
SCR catalytic converters. In 2020, this new technique
was launched and rolled out across the Group's product
portfolio together with the revised generation of its diesel
engines.
7 million
electrified vehicles delivered
by 2030
1 Basis: USC (United States Combined).
2 Basis: NEDC (New European Driving Cycle).
BMW Group
Report 2020
Combined Management Report
Products and Services
K = 79
With the aim of spreading these innovations
for improving air quality as swiftly as possible, the
BMW Group offered a scrappage bonus in Germany in
2020. The move was intended to rejuvenate the passenger
car fleet and thus contribute quickly and effectively to
reducing nitrogen oxide emissions. In 2019 and 2020,
there were already first signs of a noticeable reduction
in NOx pollution in German cities, partially due to the
progressive renewal of the fleets of all automotive man-
ufacturers. ✓ GRI 416-2
SUCCESSFUL REDUCTION SURPASSES LEGAL
REQUIREMENTS
matters agreed therein are valid for every state in the
USA – one of the BMW Group's largest sales markets.
The commitments made enhance the Group's long-term
planning security in the face of political change and are
in line with increasingly stringent legislation worldwide
designed to reduce vehicle emissions. In view of the
growing popularity of electric mobility, for example,
the BMW Group sees the rapid expansion and technical
harmonisation of charging infrastructure as an urgent
requirement. In the USA and Europe in particular, the
slow pace of infrastructural expansion is still holding
back the spread of electric mobility.
MANAGEMENT OVER THE ENTIRE LIFE CYCLE
The development of sustainable products and servic-
es has long been an integral part of the BMW Group's
business model. The early fleet-wide use of Efficient Dy-
namics technologies (since 2007) and the electrification
of vehicles (since 2013) are continuously reducing carbon
emissions in the long term. These twin factors form the
basis for complying with and even undercutting legally
prescribed carbon emissions and fuel consumption limits.
-
Whereas Scope 1 emissions are generated within a company
through the combustion of fossil fuels, Scope 2 refers to the indi-
rect emissions caused by the consumption of electricity and heat
from externally generated sources of energy. Scope 3 emissions
are generated in the upstream and downstream stages of the val-
ue chain, both in the supply chain (upstream) and in the subse-
quent use of products and services (downstream).
K = 72
WHY ARE THE CO2 EMISSIONS
OF THE NEW VEHICLE FLEET
IN EUROPE THE BENCHMARK?
The EU requirements are among the
strictest and most ambitious worldwide.
Think of it this way: Once you've met Eu-
ropean requirements, it's a lot easier to
fulfil those in other markets and regions.
Aside from that, Europe is also our biggest
sales region.
HOW DID THE BMW GROUP
MEET THE TARGETS FOR
2020?
We made the right decisions - impor-
tant decisions - early on: We offer elec-
trified vehicles in every segment - while
continuing to make our conventional drive
trains more efficient. We ultimately over-
fulfilled the targets for 2020. And that's a
good thing, because we're not interested
in the goals themselves it's about con-
tributing to environmental responsibility.
-
CAN YOU GIVE US A GLIMPSE
OF THE FUTURE?
We are right on track for the targets
for 2021, but the goals for 2030 are a
whole other dimension. I know that our
product portfolio puts us in a very good
position. But the conditions also have to
be right and that means significantly
expanding charging infrastructure.
Further information is available at:
report.bmwgroup.com
BMW Group
Report 2020
Combined Management Report
Products and Services
K = 73
DESIGN AND PRODUCT SAFETY
BMW Group vehicles combine emotional and func-
tional design with the highest of safety standards. Active
and passive safety systems ensure greater safety on the
road - not only for BMW Group customers, but for all
other road users, too. When manufacturing its products,
the BMW Group avoids the use of any substances that are
hazardous to health. It also informs its customers about
all the various safety aspects of its products and enables
them to recognise and handle dangerous situations by
providing driver safety training. The BMW Group en-
sures transparency, informational self-determination and
data security when using its customers' data.
FUTURE-ORIENTED DESIGN
The BMW Group is synonymous with future-oriented,
emotional vehicle design that unites aesthetics with state-
of-the-art technology. It strives to create experiences
for its customers through the design of its vehicles. A
successful design makes vehicles coveted products that
cater to the individual needs of customers the world over.
The BMW, MINI, Rolls-Royce and BMW Motorrad brands
each have their own independent design language. De-
signs created by the BMW Group should not only meet
the high design standards of a globally leading premium
automotive manufacturer, but make technical innova-
tions functional and intuitive to use at the same time.
is responsible for CO2
strategy during the
product use phase.
In order to make future mobility trends perceptible
at the earliest stage of design, the BMW Group devel-
ops various types of prototypes. Concept vehicles, such
as the BMW Concept i4, which was first presented in
March 2020, are specifically used to communicate in
advance how future series-produced vehicles will look.
Vision vehicles such as the MINI Vision Urbanaut, which
was unveiled at the BMW Group #NEXTGen event in No-
vember 2020, provide the public with a glimpse of how
the Group's future mobility concepts could be designed.
Christian Miedaner
early on.
BMW Group
Report 2020
Products and Services
Pieter Nota
Member of the
Board of Management
of BMW AG, Customer,
Brands, Sales
"Our ambition: to provide the best
premium customer experience in the
industry.
Premium is also defined in terms of
sustainability.
That's why we support our customers
in making not only the best, but also the
most responsible vehicle choice - includ-
ing a seamlessly integrated, convenient
charging concept for our electric vehicles."
"At the BMW Group, we are creating
the digital, emission-free and dynamic
driving of the future.
As a tech company, we master 'sheer
driving pleasure', today and tomorrow.
We are the only ones to combine
dynamic performance and quality with
safety and security for customers and
data."
Frank Weber
Member of the Board of Management
of BMW AG, Development
K = 71
BMW Group
Report 2020
Products and Services
We made the
RIGHT DECISIONS
BURN LL
FLEET CARBON EMISSIONS FURTHER REDUCED
The globally operating company Designworks is also
a subsidiary of the BMW Group and an inspiring studio
that works to create thought-provoking design ideas for
both the BMW Group and external customers. In its
three studios in Los Angeles, Munich and Shanghai, it
creates ambitious visions of the future that are meant to
shape and improve our world.
The BMW Group not only strives to create an emo-
tional connection between products and its customers via
its design, it also designs and builds its vehicles to meet
the highest safety standards, as it considers the safety of
its vehicles an essential part of its product responsibility.
All BMW Group vehicles are subject to stringent
safety tests during development and production, some of
which are even stricter than those prescribed by law. The
BMW Group's quality management does not end at the
factory gate, but also extends to vehicles that customers
are already using. If any deviations from the Group's
strict quality standards are observed in their markets, it
systematically follows up on these indications. If neces-
sary, the Group informs the relevant authorities without
delay and initiates any measures that may be required.
The BMW Group take voluntary technical action even
if there is no immediate danger. Any vehicles potentially
affected are checked, and if a fault is detected the cor-
responding components are replaced. If there is a safety
risk of any kind, the BMW Group implements technical
measures in collaboration with the relevant authorities.
For this reason, the Group has established appropriate
committees, processes and organisations that are man-
aged by the Product Support, Technical Actions and
Warranty Costs department. ✓ GRI 416-1
CONTINUOUS FURTHER DEVELOPMENT OF SAFETY
SYSTEMS
By systematically developing and improving its safety
systems, the BMW Group is helping to reduce the risk of
accidents and injuries for all road users. An important in-
dicator of this risk is the European New Car Assessment
Programme (Euro NCAP), a scheme for assessing the
safety of vehicles in the event of a crash. The results of
the most recently assessed vehicles (four top Euro NCAP
ratings for the BMW 1 Series, BMW 2 Series Gran Coupé,
BMW 3 Series and BMW Z4) once again demonstrate the
BMW Group's premium standards in terms of vehicle
safety.
In the years to come, the BMW Group will continue
working to additionally enhance the safety of its vehicles.
Apart from constantly optimising the passive safety of
each individual vehicle, the Group is also focusing on
improving road safety standards by means of connected
and automated driving. This applies, for example, to the
BMW iX*, which was unveiled during the year under
report and will go into series production in 2021. With
its even more efficient sensor technology, the vehicle will
be equipped with new and improved automated driving
and parking functions and set new standards for the
BMW Group.
* See Fuel Consumption and CO2 Emissions Information.
BMW Group
Report 2020
Combined Management Report
Products and Services
K = 76
CARBON EMISSIONS
AND POLLUTANTS
NEW TARGETS FOR DECARBONISATION BY 2030
The fight against climate change is crucial for the
future of our society and thus also for that of the
BMW Group. For this reason, it is placing sustaina-
bility in the centre of its corporate strategy. In future,
the BMW Group intends to be even more systematic in
examining not only the economic, but also the ecological
and social impact of its corporate decisions. The Group
has therefore also committed to the requirements of the
Paris Climate Agreement that are relevant to it and set
itself the target of establishing a climate-neutral business
model across its entire value chain by the
year 2050.
In 2020, the BMW Group undercut the EU's manu-
facturer-specific fleet carbon emissions limit of 104 g/km
by achieving a figure of 99 g/km according to internal
calculations. At the same time, it also accomplished
the goal it set itself in 2012 of halving the carbon emis-
sions generated by its European new vehicle fleet by 2020
compared with 1995. – Furthermore, the BMW Group
will continue to work successfully on constantly reducing
its carbon emissions going forward. The BMW Group
aims to provide its customers with the best offers world-
wide, also in terms of sustainability. For this reason, the
BMW Group's drivetrain technology is based on two
factors highly efficient combustion engines and electric
mobility.
≥ 25 %
The BMW Group is committed to achieving long-
term carbon neutrality by 2050. Guided by this principle,
it is taking extensive measures to substantially reduce
the carbon and other pollutant emissions generated by
its vehicles, as it has done in the past. In the year under
report, the BMW Group therefore set itself specific new
targets derived from the Science Based Targets Initia-
tive (SBTI) in order to further cut its carbon emissions
below the level already achieved and is taking a holistic
approach to accomplishing this aim. In this context, the
Group intends to achieve a mitigation corridor across all
the activities for which it is responsible that corresponds
to the defined target set out in the 2015 Paris Climate
Agreement, i.e. to limit global warming to between 1.5
and 1.75 degrees Celsius. Within the value chain, this
includes all three scopes defined under the umbrella of
the Science Based Targets Initiative (SBTI). By 2030, the
BMW Group therefore intends to reduce the average car-
bon emissions generated by its new car fleet in the use
phase by 40% compared to 2019 (Scope 3 downstream).
Furthermore, the BMW Group is scrutinising its entire
value chain and striving to significantly reduce carbon
emissions from the supply chain (Scope 3 upstream),
its production processes (Scope 1 and 2) and the entire
use phase. These targets have been notified to the SBTI
and validated.
Recording carbon emissions
from Scope 1 to Scope 3
The carbon emissions generated by a given company are record-
ed in various categories. The Greenhouse Gas Protocol, a part-
nership between the World Resources Institute (WRI) and the
World Business Council for Sustainable Development (WBCSD),
distinguishes between Scope 1, Scope 2 and Scope 3 emissions,
based on their various sources.
ENSURING SAFETY WITH QUALITY MANAGEMENT
USING SAFETY TECHNOLOGY TO MINIMISE RISKS
Furthermore, the Group works closely with the
relevant data protection supervisory authorities to
clarify fundamental data protection issues that relate
to the increasing connectedness of its vehicles with the
environment. For example, as a member of the German
Association of the Automotive Industry (VDA) and
the European Association of the Automotive Industry
(ACEA), the BMW Group supports the principles on data
protection they have drawn up. These principles focus
on transparency, the informational self-determination of
customers and the technical protection of data in their
vehicles.
K = 75
By including a raft of active and passive safety
measures, the BMW Group is able to reduce the risk of
accidents and injuries not only for vehicle occupants, but
for other road users, too. Above all, these safety measures
include optimised chassis tuning, highly effective braking
systems, stable passenger compartments and airbags, but
also digital driver assistance systems such as active cruise
control, collision warning, lane guidance and emergency
braking assistants.
BMW Group
Combined Management Report
Report 2020
Products and Services
REDUCING POLLUTANTS
COMPREHENSIVE INFORMATION ON SAFETY ASPECTS
DATA PROTECTION IS A KEY TASK
K = 74
Right from the design stage of its vehicles, the
BMW Group consciously avoids the use of problematic
materials and substances and takes active steps to keep
emissions within the passenger compartment to a mini-
mum. With this design strategy, the BMW Group seeks to
ensure that legal requirements regarding product safety,
human health protection and the environment are com-
plied with worldwide for each phase of the product life
cycle, including development, use, recycling and disposal.
In addition, all BMW, MINI and Rolls-Royce brand vehi-
cles are equipped with passenger compartment air filters
as standard, which filter out pollutants and particles such
as dust or pollen from the outside air.
In 2020, the BMW Group installed passenger com-
partment filters featuring nanofibre filter technology
for the first time, which keep certain microbial particles
and allergens as well as ultra-fine particulate matter from
entering the vehicle's passenger compartment. Also in
2020, nanofibre filters were installed for the first time
in a Rolls-Royce as standard. From 2021, however, the
innovative technology will gradually become available for
numerous other BMW Group vehicle models.
The BMW Group provides customers with compre-
hensive information on the correct use of its products
and services. Information on health and safety as well
as the proper use of its vehicles is provided in printed
form in the integrated owner's manual and is also avail-
able electronically via a smartphone app or online. The
information is supplemented by notes and additional
background information on services, accessories and
vehicle components.
DRIVER TRAINING TO PROMOTE GREATER ROAD
SAFETY
The BMW Group offers training for BMW and MINI
brand automobiles as well as BMW motorcycles in over
30 countries. In the BMW and MINI Driving Experience,
it raises awareness of potentially dangerous situations
and thus also contributes to road safety in general. De-
spite global restrictions due to the coronavirus pandemic,
the Driving Experience trained over 70,000 participants
worldwide at various international locations in 2020.
The BMW Group views data protection as one of the
most important tasks of digitalisation. It takes data pro-
tection into account at an early stage in the development
of its functions and services in order to ensure transpar-
ency,
informational self-determination and data security
for its customers. In order to maintain this high level
of data protection in the long term, the BMW Group's
products and services are always developed according to
security-by-design principles and continuously tested for
security aspects (cybersecurity) throughout their entire
life cycle.
The BMW Group's product responsibility also
includes the secure transfer of vehicle data to third
parties. For this reason, BMW Group vehicles are not
directly connected to the Internet, but communicate
directly and exclusively with the BMW ConnectedDrive
back-end service via a secure connection in a virtual
private network. This precaution minimises the risk of
unauthorised third parties gaining access to the vehicle
or the driver's personal data. The point of access to the
Internet is controlled via a gateway. The BMW Group
considers the provision of vehicle data via a secured back
end (extended vehicle approach in accordance with ISO
20078) the best solution for ensuring data security and
thus a high level of data protection.
BMW Group
Report 2020
Combined Management Report
Products and Services
In May 2017, the BMW Group introduced BMW
and MINI CarData for the secure transmission of data to
third parties. CarData is already available to BMW and
MINI customers across all European markets. Custom-
ers can adjust their privacy settings to suit their own
personal needs, either within their vehicles or on the
ConnectedDrive portal, thereby retaining their right to
informational self-determination. They can decide at any
time which data to share with service providers (such
as workshops, insurance companies and fleet manag-
ers) in order to receive customised service offers. The
BMW Group has also been offering this service in the
USA since April 2020.
proportion of electrified vehicles in
total deliveries by 2025
RANGE OF ELECTRIFIED VEHICLES FURTHER EXPANDED
EXPANDING THE CHARGING INFRASTRUCTURE AND
ENABLING FASTER CHARGING
FURTHER DEVELOPING AUTOMATED DRIVING
The BMW Group and its subsidiaries are working
continuously on intelligently interconnecting vehicles,
infrastructure and mobility services. The aim here is to
make better use of the limited parking space available
and reduce traffic congestion. The BMW Group is fully
committed to complying with statutory limits for air
quality, noise levels and carbon emissions as well as to
restoring the quality of life for the residents of urban are-
as. For these reasons, the BMW Group intends to further
intensify its dialogue with towns and cities and make an
active contribution to the discussion on more sustainable
mobility options as well as tailored traffic management
measures. The Group also intends to transfer the results
achieved in individual cities to other areas and adapt
them on an international basis.
customers in around 1,200 cities to pay more quickly and
easily for parking spaces on a contactless basis. However,
PARK NOW's business performance was also impacted
by the coronavirus pandemic in 2020.
The CHARGE NOW vehicle charging service cur-
rently provides access to around 246,000 public charging
points operated by various providers in 32 countries. In
addition to its CHARGE NOW services, the BMW Group
is working with partners in other markets to provide cus-
tomers with broad access to charging points. The PARK
NOW digital parking service enabled around 45 million
Further information is available at:
report.bmwgroup.com
The BMW Group has expanded its car-sharing
service offering (SHARE NOW) to include a long-term
rental of up to 30 days. It also continued to develop
FREE NOW into a multimodal mobility platform by
adding e-bikes and e-scooters. In 2020, FREE NOW had
46 million registered customers and offers ride services
in 17 countries and 153 cities. In the year under report,
around 2.9 million customers used the SHARE NOW
car-sharing services, which are available in 16 cities and
eight countries. The car-sharing fleet currently compris-
es around 9,500 vehicles, almost one-quarter of which
are electrically powered. In 2020, the number of trips
decreased due to the coronavirus pandemic.
Via its subsidiaries, the BMW Group promotes
innovative service offerings in the fields of car sharing,
driving services, parking and vehicle charging as well as
multimodal transport. In 2019, the BMW Group there-
fore merged its own mobility services in a joint venture
with those of Daimler Mobility Services GmbH to create
the YOUR NOW service. The common goal of the two
companies is to expand the use of on-demand mobility
and offer new solutions for cities and municipalities
looking to make road use more efficient and sustaina-
ble. In this context, the market development and the
political-regulatory framework conditions in the cities are
continuously being examined and the range of services
further developed in collaboration with strategic partners.
KK = 85
Products and Services
Combined Management Report
Automated functions and digitally connected vehicles
can help reduce traffic congestion, minimise the risk of
accidents and cut emissions levels. These technologies are
therefore making a direct contribution to improving the
quality of life in cities, and electric mobility in particular
is becoming more and more popular at the same time.
BMW Group
Report 2020
At the same time, the BMW Group has reached
agreements with the cities of Munich and Hamburg,
where it has carried out the first pilot projects for making
city centres more pleasant to live in. Specific examples of
the development of new, sustainable mobility options in-
clude the City2Share research project, which focuses on
measures to reduce traffic in project districts in Munich
and Hamburg, and the “umparken Schwabing-West” pro-
ject, in which the BMW Group is working to transform
public space and enable it to be used more appropriately
by offering mobility packages for local residents.
The BMW Group is currently working together with
three German cities to improve the traffic situation
and explore new mobility solutions. The New Mobility
Berlin project aims to improve the quality of life within
the city. For this reason, the BMW Group is develop-
ing tailor-made multimodal solutions, i.e. approaches
that incorporate the entire range of transport modes.
In selected districts of the city, via its subsidiaries, the
BMW Group offers shared fleets of rental cars and
e-scooters as an alternative to privately used vehicles.
The strategy is intended to encourage better use of the
road space occupied by rarely used private vehicles for
other purposes going forward.
MAKING URBAN MOBILITY SUSTAINABLE WITH
SERVICES
areas.
Moreover, the Group continues to work together with
its subsidiaries and in dialogue with the respective cities
to find solutions to the increasing density of road traffic
and the corresponding rise in noise levels, air pollution
and land use. The BMW Group is also meeting these
challenges by developing connected vehicles. In view of
the growing trend towards vehicle electrification, the
Group is therefore making a significant contribution in
particular to providing eco-friendlier modes of transport
as well as promoting the better use of space in urban
The BMW Group wants to make mobility more sus-
tainable and more convenient to use. In recent years,
numerous urban mobility offers have been developed
and introduced in cooperation with selected towns and
cities. The BMW Group therefore sees its 2020 target
of providing sustainable support for changing mobility
behaviour by offering integrated mobility services in
selected metropolitan regions as having been met.
MOBILITY PATTERNS
To advocate for improved conditions, the BMW Group
is involved, for example, in the National Platform for the
Future of Mobility (NPM), in the European initiative EIT
Urban Mobility and within the framework of the World
Economic Forum. Furthermore, the BMW Group is in
dialogue with think tanks such as Agora Verkehrswende
and is a member of the International Consultative Com-
mittee of China EV 100 as well as at VELOZ, a non-profit
organisation dedicated to promoting electric mobility in
the US state of California.
In the BMW Group's view, there is still a need for
political support for electric mobility in many countries
and cities. In the EU, for example, market research points
to the close correlation between the density of charging
infrastructure and the sale of electrified vehicles. This
correlation applies not only at member state level, but
also in a regional comparison. The BMW Group is
therefore seeking dialogue with policymakers to call for
measures to be taken to improve consistency on both
the supply and the demand sides. In concrete terms,
the aim is to improve framework conditions with the
aim of stimulating demand for electrified vehicles not
only nationally, but also at local level. The focus here is
on increasing the number of public charging points and
offering usage incentives in everyday life, such as park-
ing spaces reserved for electric vehicles or discounts on
parking fees. In Germany, for example, only a few cities
have so far taken advantage of the funding opportunities
offered by the Electric Mobility Act.
IMPROVING POLITICAL CONDITIONS
The BMW Group is also involved in various urban
platforms via which municipalities exchange information
and collaborate on projects, including the ✓ Urban Mobility
Platform in Germany and the international ✓ EIT Urban
Mobility Platform of the European Institute of Innovation and
Technology.
K<< = 84
The latest BMW models are equipped with
state-of-the-art driver assistance systems. In 2021, the
BMW Group is taking automated driving a decisive step
Employee mobility
Production, Purchasing and Supplier Network
Report 2020
BMW Group
with Stakeholders
The BMW Group has combined the topics of sustain-
ability and mobility in its corporate strategy. It analyses
the opportunities and challenges arising from changes
in mobility demand that result from new types of mo-
bility on offer or regulatory framework conditions. The
BMW Group then develops premises for its contribution
to sustainable mobility on this basis. In corporate depart-
ments for both strategy and communication, the Group
has established dedicated teams in a global network and
provided them with funding to jointly define sustainabil-
ity goals and monitor the extent to which they are being
achieved. The BMW Group views developments in its
main markets in a differentiated manner and engages in
collaborative research projects in order to understand the
changes, impacts and needs of urban mobility behaviour
worldwide at an early stage. The Group is also in regular
dialogue with its international stakeholders. One of the
aims of these established events is to gain a better un-
derstanding of people's mobility needs worldwide and
develop new products and services accordingly. ✓ Dialogue
IDENTIFYING POTENTIAL FOR SUSTAINABLE MOBILITY
AT AN EARLY STAGE
independently which of their vehicle data are transmitted
to other market participants for a specific purpose. The
BMW Group has also been offering this service in the
USA since June 2020. Design and Product Safety
With BMW CarData, the BMW Group introduced
a secure, data-protection-compliant and transparent
service for the non-discriminatory sharing of vehicle
data, initially in Germany in 2017 and since 2018 across
Europe. BMW CarData provides BMW Group customers
with complete data sovereignty. Customers can decide
In order to protect its digital systems from tampering,
the BMW Group systematically searches for possible
weak points with a view to closing any potential gaps in
good time before approving the respective component.
The Group continuously translates any new insights into
binding standards. Clear standards regarding data and
information protection also apply to any collaborations
and partner relationships.
The protection of data and information within the
BMW Group is based on the relevant laws and standards,
particularly in accordance with the EU General Data Pro-
tection Regulation and the ISO/IEC 27001 international
security standard. The personal data of customers is
only collected, processed or utilised to the extent legally
permitted and with the consent of the person in ques-
tion. Any complaints can be reported to the Customer
Interaction Centre, the Data Protection Officer or via the
SpeakUP Line and will be dealt with promptly.
further with the development of the BMW iX*. It will be
the first BMW Group vehicle to offer both automated
driving and parking functions via a new modular tech-
nology system. The BMW Group sees considerable
po-
tential in automated driving and will continue to develop
this field intensively over the next few years.
PREVENTIVELY PROTECTING CUSTOMER DATA
Since 2018, BMW assistance systems have been
utilising artificial intelligence to anticipate typically dan-
gerous situations such as the swerving of other vehicles
in order to react in good time. The BMW Group can
further improve the performance of artificial intelligence
in this field by analysing anonymised data taken from
real-life activities. Therefore, as a founding member of
the European Gaia-X project, it is committed to devel-
oping standards for organising data and cloud-based
measures with the aim of making traffic management
more efficient.
The safety of its automated systems is a top priority
for the BMW Group. For that reason, in 2019 it partnered
with 11 leading companies in the field of automated
driving to produce a Safety First for Automated Driving
(SaFAD) white paper that highlights the importance
of safety by design in the development of an industry
standard for automated driving. The BMW Group sees
this white paper as an important step towards defining
industry-wide standards from the testing stage to the
approval of highly and fully automated driving functions.
The BMW Group is also leveraging vehicle con-
nectivity with its new eDrive Zones technology, which
automatically switches plug-in hybrids to fully electric
driving mode when entering an environmental zone.
The innovation makes it easier for customers to drive
emissions-free to the greatest extent possible. The Group
has already introduced this function in over 80 European
cities.
K
= 86
Products and Services
Combined Management Report
BMW Group
Report 2020
* See Fuel Consumption and CO2 Emissions Information.
The BMW Group provides incentives for its employees to use
public transport, including benefits such as a discounted month-
ly ticket within the Munich city area. Around 14,000 employees
have chosen this option. The Group also operates a long-estab-
lished shuttle bus service between its locations. It also provides
its staff with rental bicycles and scooters for commuting. Last but
not least, as a good example, with its BMW LeaseRad offer, the
Group is actively supporting the growing number of employees
who choose to ride to work by bicycle and also encourages travel-
ling by bicycle and scooter in general.
As the largest single employer in the Munich metropolitan region,
the BMW Group has a special role to play in its hometown location
and the surrounding urban areas by actively helping to reduce en-
vironmental pollution. The Group is planning to have one of the
largest company charging networks in place by mid-2021, there-
by helping to increase the popularity of electric mobility and re-
duce carbon dioxide as well as other pollutant emissions.
Czech Republic, which is scheduled for completion in
2022. Complex everyday automated driving conditions
can then be tested at the new facility in a realistic but
controlled environment.
PRODUCTION,
PURCHASING AND
SUPPLIER NETWORK
Products and Services
Combined Management Report
L PHEVs and highly efficient internal combustion
engines are therefore a more likely choice in this envi-
ronment. For these reasons, the BMW X3* is the first
model series to be available in two variants, firstly with
a combustion engine and secondly as a plug-in hybrid
version, thanks to the BMW Group's scalable, modular
construction system. The BMW iX3* is also available with
its all-electric drivetrain.
K = 82
Products and Services
Combined Management Report
Report 2020
BMW Group
Around half of the 25 models will be offered as
all-electric versions. The BMW Group also intends to
offer its high-volume models as purely battery-powered
versions. From today's perspective, the European Union's
target of attaining climate neutrality by 2050, the interim
targets discussed in the context of the Green Deal and
the similarly ambitious climate policy targets of other
countries can only be achieved with a variety of parallel
technologies if customers are to continue being offered
a range of mobility options that meet their specific and
differing needs going forward. Even today, from a global
viewpoint there are driving profiles that cannot yet
be covered by an all-electric vehicle due to physical or
technical restrictions or insufficient access to a viable
charging infrastructure.
The BMW Group invests on an ongoing basis in the
planning and development of new vehicle models. The
figure of 25 electrified models previous targeted to be on
the roads by 2025 has now been brought forward to 2023.
FURTHER INVESTMENTS IN ELECTRIFICATION
As a matter of principle, the BMW Group takes a
differentiated view to increasing the electric range and
does not necessarily consider it expedient to aim for
a maximum range for all electrified vehicles, and is
rather of the opinion that it makes more sense to offer
customers tailor-made solutions by producing a fleet of
vehicles with varying ranges. Resource use and resource
efficiency - advantages that also benefit the customer.
Quite apart from battery-powered electric drivetrain
systems, the BMW Group also continues to see the poten-
tial of fuel cells, a technology embedded in the hydrogen
strategy of various countries. The Group is planning to
produce a small series of the BMW i Hydrogen NEXT
from 2022. Moreover, as an associated partner of H2
Mobility Deutschland GmbH, the BMW Group is in-
terested in establishing the infrastructure required for
hydrogen-powered vehicles.
To further increase the range of its electrified vehicles,
the BMW Group is improving both the energy density
and the efficiency of its battery cells. For example, the
high-voltage battery in the BMW iX3¹ has a 20% higher
energy density and the power density of the electric
motor has also been increased by 30%.
RANGE INCREASED TO MEET CUSTOMER NEEDS
3 The range has already been determined in accordance with the new WLTP test cycle (Worldwide harmo-
nized Light vehicles Test Procedure) and recalculated to NEDC (New European Driving Cycle) for compara-
bility. The actual range depends on various factors, including personal driving style, route characteristics,
the outside temperature, heating, air conditioning, preheating and precooling. Provisional figure.
2 Retail vehicle delivery data presented for 2020 is not directly comparable to such data presented for previous
years. For further information on retail vehicle delivery data, please see ✓ Comparison of Forecast with
Actual Outcomes.
1 See Fuel Consumption and CO2 Emissions Information.
In 2020, the BMW Group delivered 192,662 electri-
fied vehicles (2019: 146,158 units²). Further information
is available in the “Automotive segment" section of the
Business Report.
In November 2020, the Group presented the
BMW iX¹, featuring new electric drivetrain technology,
substantially enhanced connectivity and innovative in-
terior design. The BMW iX¹ also features a range of over
600 km (WLTP) and shorter charging times. The vehicle
can be charged for a range of over 120 km in roughly
ten minutes.
K = 81
Products and Services
Combined Management Report
BMW Group
Report 2020
To enable customers to cover as much of their daily
driving as possible emissions-free, the BMW Group is sys-
tematically increasing the electric range of its plug-in hy-
brids (PHEV) and battery-powered electric vehicles (BEV)
by introducing new technologies. Hence, for PHEVs, the
Group has increased the range of the BMW X5 PHEV¹
from 31 km (2015: NEDC data) to 80 km³, the BMW
530e PHEV¹ from 45 km (2017: NEDC data) to 60 km³
and the BMW 330e PHEV¹ from 40 km (2016: NEDC
data) to 60 km³. In the BEV segment, the range of the
BMW i3 BEV¹ increased from 300 km (2016: NEDC data)
to 359 km³.
Report 2020
ACHIEVING SUSTAINABILITY OVER THE ENTIRE
LIFE CYCLE
With its project i, the BMW Group was among the
first manufacturers to pursue the aim of reducing carbon
BMW Group
* See Fuel Consumption and CO2 Emissions Information.
During the year under report, the BMW Group
continued to pursue and expand its approaches to the
holistic ecological optimisation of electric mobility both
at home and on the road. In addition to BMW Charging
and MINI Charging, the Group already offers electricity
from renewable sources as well as attractive solar power
packages for homes in both Germany and Austria. As
part of its strategic investment in the IONITY joint ven-
ture, the BMW Group is preparing to broaden its range
of services to enter other markets as well as the field of
public charging.
GREEN ELECTRICITY FOR E-MOBILITY
The BMW Group intends to offer electric mobility to
both private customers and companies operating entire
fleets and is additionally expanding the BMW Charging
product and service portfolio for trendsetting charging
solutions at home, on the road and at the workplace.
Charging infrastructure for both private and commercial
purposes is a key prerequisite for the further expansion
of electric mobility. The BMW Group welcomes the sup-
port provided by government premiums, as charging
options both at home and at the workplace make a key
contribution to the overall infrastructure from the point
of view of customers.
At European level, in close collaboration with the
IONITY joint venture, the BMW Group is in the process
of building a high-performance fast-charging network com-
prising some 400 charging stations along major transport
routes by 2021. Fast-charging stations make charging up to
seven times faster than standard 50 kW stations. Originally
planned for completion by 2020, due to the coronavirus
pandemic and the lack of approvals, the BMW Group and
its partners were compelled to postpone the construction of
certain stations until 2021. To date, 325 of the 400 planned
IONITY fast-charging stations have been installed and a
further 44 are currently under construction. At powerful
and increasingly widespread DC fast-charging points
with outputs of at least 150 kW, the BMW iX3* can be
charged to achieve a range of over 100 km (WLTP) in
around ten minutes.
A comprehensive charging infrastructure is a prereq‐
uisite for the rapid, widespread deployment of electric
mobility. In order to promote this project, between 2015
and 2020 the BMW Group committed itself to improving
the charging infrastructure in a total of over 50 projects
and has initiated the installation of some 15,000 opera-
tional charging points. The BMW Group plans to install a
total of 4,100 charging points at BMW Group properties
in Germany by the end of 2021. Half of these charging
points will be made accessible for public use. Together
with other car manufacturers, charging station providers,
charging service providers and energy suppliers, the
BMW Group is working on simplifying not only access
to charging stations, but also the charging process itself.
The competence centre replicates the entire value chain of bat-
tery cell technology, from research and development to the struc-
ture and the design of the battery cell to the production of the first
prototypes. It takes the complete life cycle of a battery cell into ac-
count, from purchasing the raw materials to recycling. Particularly
in view of the high-voltage batteries needed to power electrified ve-
hicles, which can entail the use of critical raw materials, the circu-
lar economy has a decisive role to play. ✓ Production, Purchasing
and Supplier Network →
In 2019, the BMW Group began pooling its wealth of experi-
ence and comprehensive knowledge of battery cell technology
in a new competence centre based in Munich. With this strategy,
the Group is pursuing the twin aims of further improving its bat-
tery cell technology and fully penetrating production processes.
Based on the battery technology currently in use, the BMW Group
intends to substantially increase the potential range of its electri-
fied vehicles by 2030 by continuing to develop its battery cells,
modules and systems. Looking to the future, the focus will be
even more on cutting battery system costs in order to make elec-
tric mobility more profitable.
Competence centre for battery cells
The BMW Group considers both decarbonisation
targets and market-specific fleet requirements right from
the product development stage. In doing so, it defines
specific targets that ensure well-balanced optimisation
over the entire life cycle.
The BMW Group aims to ensure that electric and
electrified vehicles make an effective contribution to
climate protection not only in the use phase, but also in
their overall footprint, including the supply chain. As
an example, the environmental report of the BMW iX3*
indicates that the greenhouse gas potential values of an
all-electric vehicle are around 30% lower than those of
a conventional reference vehicle with a diesel drivetrain
when the calculation is based on standard consumption
and the European electricity mix. Furthermore, when
the electricity used for charging is generated from re-
newable energy sources, the emissions values are around
60% lower.
Products and Services
Combined Management Report
BMW Group
Report 2020
* See Fuel Consumption and CO2 Emissions Information.
The BMW Group manages the implementation of its
targets and assesses progress in vehicle development via
its Life Cycle Assessment in accordance with the ISO
14040/44 standard. The Group utilises these assessments
to record the environmental impacts occurring over the
life cycle of a vehicle right from the development stage
and make comparisons with predecessor models. Howev-
er, the BMW Group's approach goes one step further: it
breaks down the targets by product and then implements
the appropriate measures. These include, for example,
the use of green electricity for energy-intensive processes
in the supply chain or in production as well as the use of
recycled materials such as aluminium or plastics instead
of deploying primary resources.
Other approaches to handling resources in a respon-
sible, sustainable manner include the reuse of batteries,
such as in stationary storage systems with the aim of
improving the use of renewable energy and promoting
recycling. In collaboration with the recycling specialist
Duesenfeld, for example, the BMW Group has developed
the prototype of a process that enables 96% of the mate-
rial from battery cells to be recovered for recycling. Fur-
thermore, the option exists for all customers whose ve-
hicle contains a high-voltage battery for the BMW Group
to take the battery back free of charge. This also applies
to regions where there is no legal obligation to do so.
generation of battery cells. In a joint technology consor-
tium with battery manufacturer Northvolt, the Group
also plans to configure the value chain for battery cells
in Europe with sustainability as its top priority.
The BMW Group has entered into a contractual agree-
ment with its battery cell manufacturers to ensure that
they only use green electricity when producing the fifth
The use of renewable energy in production process-
es - for example in the manufacture of energy-intensive
materials such as carbon fibre reinforced plastic - or the
choice of green electricity in the use phase - also help
reduce the carbon footprint of the BMW Group's vehicles.
Further information on how efficiently and therefore eco-
nomically and sparingly the BMW Group uses resources
in its production processes is provided in the section
✓ Resource Consumption and Resource Efficiency.
and other pollutant emissions as well as the use of critical
materials over the entire life cycle of its vehicles right
from the very beginning. With the fifth generation of
BMW eDrive, the Group reached an important milestone
during the year under report. A special feature of the
electric motor, which is being installed in the BMW iX3*
for the first time (eDrive Gen5), has been designed so
that it no longer requires the use of rare earth elements.
For the fifth generation of its high-voltage storage system,
the BMW Group obtains any critical raw materials it re-
quires from sources outside the known conflict regions.
Cobalt that is bought in directly by BMW Group and
made available to suppliers is sourced from Morocco and
Australia. The lithium used is also from Australia, where
it is extracted by means of the so-called hard rock mining
process. In addition, the BMW Group has successfully
reduced the amount of cobalt required per kWh by two-
thirds through the further chemical development of its
battery cells. Purchasing and Supplier Network
K = 83
PROMISED
In order to incorporate highly mature new technolo-
gies in series production and further raise its level of ex-
pertise in the field of automated driving, the BMW Group
is building a new development and testing ground in the
per vehicle produced.
"A company is much more than just
the sum of its individual employees. It is
about sharing the same goals, working
together as partners and taking responsi-
bility beyond one's own area. This applies
to us at the BMW Group, as well as in
cooperation with our suppliers."
BMW Group
Report 2020
Production, Purchasing and Supplier Network
K = 90
We know where
TECHNOLOGY can still
leverage POTENTIAL.
we can reach the high goals
we set ourselves.
MR WITSCHNIG, ENVIRON-
MENTAL PROTECTION IN
PRODUCTION. WHAT DOES
THAT MEAN EXACTLY?
THE GOAL IS TO REDUCE
CO2 EMISSIONS IN PRO-
DUCTION BY ANOTHER 80%
BY 2030. HOW WILL YOU
DO THAT?
Our goal is clean production. That
means minimising our environmental
impact in a targeted manner - with regard
to water, waste, energy, solvents, etc. We
have achieved a great deal in recent years -
for instance, reducing the amount of
waste by 80%. And all BMW Group plants
worldwide have obtained their electricity
from renewable energies since 2020.
We have already achieved a great deal
when it comes to energy efficiency and
sourcing green power. And we know where
technology can still leverage potential. Our
next big topic will be gas consumption.
Jury Witschnig is responsible
for environmental protection in
production. Patricia Perez Szmak
heads the project dedicated to
sustainability in the supply chain.
SUPPLY CHAIN CO2 EMIS-
SIONS ARE ALSO MEANT TO
BE REDUCED BY 2030.
MS PEREZ SZMAK, WHY BY
ONLY 20%?
Without corrective measures, ex-
panding electromobility would increase
CO2 emissions in the supplier network
by at least a third. We don't just want to
stop this increase; we want to reverse it.
So, actually, a reduction of at least 20% is
a very ambitious goal.
We aim to reduce
CO2 EMISSIONS
Purchasing and Supplier Network
Dr.-Ing. Andreas Wendt
Member of the Board of Management
of BMW AG,
That's why I'm OPTIMISTIC
Board of Management
K = 87
of BMW AG, Production
BMW Group
Report 2020
Production, Purchasing and Supplier Network
K = 88
DELIVERED
for all BMW Group plants
has been sourced from
100% RENEWABLE
ENERGIES.
BMW Group
Report 2020
Since 2020, the electricity
Renewable energies will play a big
part in this. A second topic is the reuse
of materials in other words, a circular
economy. The best part is: Our suppliers
are fully on board with this.
Production, Purchasing and Supplier Network
K
|<< = 89
"Our expertise in integrating new
technologies and products into our
production system is unique worldwide.
Through innovation and digitalisation, we
are setting new benchmarks in terms of
efficiency and sustainability. This leads
into a new era of automotive production:
The next level of our BMW Group pro-
duction system will be lean, green and
digital."
Dr. Milan Nedeljković
Member of the
85,742
98,282
"From 2021, this indicator will include the carbon emissions of all other BMW Group locations in addition to the carbon emissions generated by production. The figures for 2019 (base year) and 2020 have been adjusted accordingly for comparison purposes (2019 before adjustment: 0.30 tons, 2020 before adjustment: 0.23 tons).
12 Figures from 2017 and 2018 are audited with limited assurance.
111,239
98,990
104,210
96,855
12.4
87.2
6,143
3,395
2,567
2,713
4,459
5.7
6,495
10 Efficiency ratio calculated on the basis of Scope 1 and Scope 2 CO₂ emissions (i.e. a market-based method according to GHG Protocol Scope 2 guidance; mainly the use of the VDA emissions factors as well as isolated use of local emissions factors; but excluding climate-changing gases other than carbon dioxide) from vehicle pro-
duction (BMW Group manufacturing sites incl. joint venture BMW Brilliance Automotive Ltd. and motorcycles, excluding contract manufacturers), as well as BMW Group non-manufacturing sites (e.g. research centre, sales centre, offices) divided by the number of vehicles (excluding motorcycles) produced (BMW Group manufacturing
sites incl. joint venture BMW Brilliance Automotive Ltd., excluding contract manufacturers).
6,017
5,113
6,354
9 Flexibilities as defined in the regulatory requirements for 2021 are as follows: eco-innovation with 1.7 g CO2/km (WLTP).
164,153
7 This is a preliminary internal calculation with a potential variation of +/- 0.5 g CO2/km, as official registration figures from the authorities are not available from all EU states. The EU Commission is not expected to publish official figures until November the following year.
34.0
28.4
29.4
15.0
35.9
4,822
165,566
175,162
169,272
194,261
14.8
18.1
14.8
15.0
11.2
22.6
1 The 2018 figures were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 ( Annual Report 2019, Note 6 to the Group Financial Statements).
2 The term "employee" has been redefined with effect from the reporting year 2020 (for definition, see Glossary and explanation of key figures). The figure for 2019 was restated accordingly for comparison purposes (2019 before adjustment: 133,778 employees). For the period 2018 and earlier, the percentage of employees no
longer covered by the new definition is between 7.5 and 8.0 %.
3 The new definition of the term "employee" (see footnote 1) also has an impact on disclosures relating to the percentage of female employees. The 2019 figure was adjusted accordingly for comparison purposes (2019 before adjustment: 17.5 %).
4 Deliveries including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 385,705 units, 2018: 455,581 units, 2019: 538,612 units, 2020: 602,247 units, 2021: 651,236 units).
5 Retail vehicle delivery data for 2020 and 2021 are not directly comparable to the data presented for previous years. See Retail vehicle delivery data in the section Comparison of Forecasts with Actual Outcomes for further information.
6 EU-27 countries including Norway and Iceland; with effect from 2021, values are calculated on a converted basis in line with WLTP (Worldwide Harmonised Light Vehicles Test Procedure). Values from 2017 to 2020 according to New European Driving Cycle (NEDC).
8 To improve year-on-year comparability, the 2020 NEDC figures were converted to WLTP after adjusting for permissible flexibilities - specifically from 99 g CO₂ / km according to NEDC (including 5 g CO2/km phase-in, 7.5 g CO2/km supercredits and 2.4 g CO2/km eco-innovations) to 135 g CO2/km according to WLTP
(excluding flexibilities). In 2020, a phase-in regulation was accepted, as was the recognition of supercredits. As of 2021, these two simplifications no longer apply for the BMW Group.
20.8
Automotive
6,222
Total capital expenditure¹
Change in %
2021
2020
2019
2018
2017
in € million
FURTHER FINANCIAL PERFORMANCE FIGURES
Depreciation and amortisation
BMW Group in Figures
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
10
84.4
← = Q
Free cash flow Automotive segment
Group revenues²
Automotive
7,784
8,013
7,112
Profit/loss from continuing operations²
Group income taxes²
Eliminations²
Other Entities
Financial Services²
Motorcycles
Automotive
Group profit/loss before tax (EBT)²
Eliminations²
Other Entities
Financial Services²
Motorcycles
Group profit/loss before financial result (EBIT)²
Eliminations²
Other Entities
10
Financial Services²
Motorcycles
7,518
8.3
RoE in %
8.2
RoCE in %
EBIT margin in %
MOTORCYCLES SEGMENT
CO₂ emissions per vehicle produced (in tons) 10, 11, 12
CO2 emissions EU new vehicle fleet (in g/km) 6,7
Share of electrified vehicles in deliveries (in %)
Deliveries 4,5
RoCE in %
EBIT margin in %
Deliveries
AUTOMOTIVE SEGMENT
Workforce at year-end²
Profit/loss before tax in € million
GROUP
KEY PERFORMANCE INDICATORS
BMW GROUP IN FIGURES
BMW Group in Figures
← = Q
Other Information
Remuneration Report
Share of women in management positions in the BMW Group³
Corporate Governance
59.9
29.0
2017
2018¹
2019
2020
2021
Change in %
10,675
129,932
16.0
9,627
7,118
12.7
134,682
17.2
5,222
120,726
17.8
16,060
118,909
18.8
- 1.5
5.6
9.2
77.7
7.2
4.9
2.7
10.3
49.8
126,016
17.2
Group Financial Statements
Combined Management Report
To Our Stakeholders
8.4
4.2
5.7
5.8
8.3
13.0
56.6
128.0
127.5
2,521,514
127.0
0.40
0.40
99.1 (135.0)8
0.35
115.99
- 14.1
0.33
- 5.7
9.1
8.1
0.41
2,325,179
2,537,504
2,486,149
BMW Group Report 2021
9
STAKEHOLDERS
TO OUR
BMW Group and Capital Markets
31
Dialogue with Stakeholders
28
The Board of Management
27
Statement of the Chairman of the Board of Management
21
Report of the Supervisory Board
12
BMW Group in Figures
9
← = Q
85,846
FINANCIAL SERVICES SEGMENT
Other Information
2,465,021
4.5
91,682
BMW Group Report 2021
95,476
5
About this Report (Part of the Combined Management Report)
34
Overview of the BMW Group
38
BMW Group Integrated Strategy
3 GROUP FINANCIAL STATEMENTS
149 Income Statement for Group and Segments
150 Statement of Comprehensive Income for Group
51
Products and Mobility Solutions
151
Balance Sheet for Group and Segments at 31 December 2021
1
TO OUR STAKEHOLDERS
67
Production, Purchasing and Supplier Network
9
BMW Group in Figures
COMBINED MANAGEMENT REPORT
2
CONTENTS
Contents
indication of the scope of the audit can be found in the respective chapters of the report.
Return on capital employed
Automotive segment
≥ 18%
Reduction of CO2 emissions in the
use phase of the vehicle
> 50%
Reduction of CO₂ emissions in the
supply chain
> 20%
TO THE CHAPTER
80
BMW Group Integrated Strategy
4
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
->
The diagram provides a simplified overview of the key performance indicators (KPIs) disclosed in the report. Detailed explanations of the KPIs as well as an
Employees and Society
Report of the Supervisory Board
271 Remuneration Report
5
6 OTHER INFORMATION
321 Further GRI Information
332 SASB-Index
337 TCFD-Index
341 NFS-Index
342 Consumption and Carbon Disclosures
344 BMW Group Ten-year Comparison
346 Glossary and Explanation of Key Figures
351 Financial Calendar
352 Contacts
6
5
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
REMUNERATION REPORT
5
267 Independent Practitioner's Report
259 Independent Auditor's Report
91
Financial Performance
155 Statement of Changes in Equity for Group
157 Notes to the Group Financial Statements
21
Statement of the Chairman of the Board of Management
27
The Board of Management
28
12
Dialogue with Stakeholders
BMW Group and Capital Markets
121 EU Taxonomy
124 Outlook, Risk and Opportunity Management
143 Internal Control System
144 Disclosures Relevant for Takeovers and Explanatory Comments
4
CORPORATE GOVERNANCE
248 Fundamental Aspects of Corporate Governance
(Part of the Combined Management Report)
258 Responsibility Statement by the Company's Legal
Representatives
31
Other Information
80%
> 50%
← = Q
BMW GROUP REPORT 2021
In 2021, the BMW Group demonstrated how profitability and transformation can go hand in glove, des-
pite tough market conditions. Electric mobility is gathering pace, with delivery figures on a steep up-
ward trajectory. At the same time, the BMW Group is working on digital solutions that make life more
convenient for customers and provide access to a broad range of services. The BMW Group's vision of
a circular economy is gradually taking shape, the ultimate goal being fully sustainable mobility.
Further information is provided in the following report.
KEY PERFORMANCE INDICATORS
PROFIT / LOSS BEFORE TAX
in € million
EBIT MARGIN AUTOMOTIVE SEGMENT
in %
EBIT MARGIN MOTORCYCLES SEGMENT in %
ROE FINANCIAL SERVICES SEGMENT
in %
16,060
Significant increase compared to
prior year
10.3
8.3
22.6
↑
Significant increase to prior year
Significant increase to prior year
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Remuneration Report
BMW
GROUP
M
THE FUTURE IS
ELECTRIC,
DIGITAL AND
CIRCULAR
W
MINI
Significant increase to prior year
ROLLS-ROYCE
BMW GROUP REPORT 2021
On the way to an electric and digitalised mobility
in a sustainable and circular economy. Report
on the BMW Group's economic performance and
its ecological and social contributions.
7 Link to the Online-Report
2
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
MOTOR CARS LTD
Reduction of CO2 emissions per
vehicle produced
GROUP EMPLOYEES
DELIVERIES AUTOMOTIVE SEGMENT
Corporate Governance
Remuneration Report
Other Information
← = Q
STRATEGIC TARGETS OF THE BMW GROUP
FINANCIAL TARGETS
EBT margin Group
EBIT margin Automotive segment
> 10%
TARGET ACHIEVEMENT BY 2025
8-10%
Share of electrified cars in total
deliveries
Share of women in management
positions
>30%
TARGET ACHIEVEMENT BY 2030
22%
↑
Share of fully electrified cars in
total deliveries
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
in units
DELIVERIES MOTORCYCLES SEGMENT
in units
SHARE OF ELECTRIFIED
VEHICLES IN DELIVERIES
in %
118,909
Slight decrease to prior year
2,521,514
194,261
end of year
Solid increase to prior year
Significant increase to prior year
↑
The diagram provides a simplified overview. Detailed explanations of the KPIs as well as an indication of the scope of the audit can be found in the respective
chapters of the report.
13.0
Significant increase to prior year
TO THE CHAPTER
BMW Group in figures
->
3
71
← = Q
About This Report
ABOUT THIS REPORT
205
11,805
2,722
4,467
6,977
8,717
16,060
5,222
7,118
9,627
10,675
-390
808
377
431
- 404
-8
36
29
169
187
100
228
- 3,597
-1,365
- 2,140
-2,530
- 2,000
8,675
-257
910
288
383
-27
-534
-235
-96
-45
80
3,753
1,725
2,272
2,143
2,207
531
Profit/loss from discontinued operations
14
1,721
66.7
5
3
5
6
7
9.4
32,867
30,044
29,598
27,705
27,567
20.3
2,748
2,284
2,368
2,173
2,272
18.1
- 17,306
- 18,875
- 19,443
- 14,194
2,312
2,172
2,194
227
103
194
175
207
9,870
3,701
2,162
6,182
7,888
13,400
4,830
7,411
8,933
9,899
39.9
-19,857
4,499
7,097
-33
Group net profit/loss²
8,675
The Combined Management Report is based on the follow-
ing legal frameworks:
German Commercial Code (HGB) (among other relevant
legislation)
Combined Non-Financial Statement (NFS) at Group
and Company level in accordance with § 289 b and
§ 315 b HGB. 7 NFS-Index
German Accounting Standards (GASS) underpinning
HGB requirements
German Stock Corporation Act (AktG)
Taxonomy Regulation (Regulation (EU) 2020/852 of the
European Council and of the European Parliament on the
Establishment of a Framework to Facilitate Sustainable
Investment, and amending Regulation (EU) 2019/2088)
The Combined Management Report is also based on:
Guidelines on Alternative Performance Measures issued
by the European Securities and Markets Authority (ESMA)
German Corporate Governance Code
Furthermore, the following reporting standards and trans-
parency requirements have, for the most part, been integrat-
ed in the Combined Management Report:
-
Global Reporting Initiative (GRI) ( GRI-Index), option
"comprehensive"
Sustainability Accounting Standards Board (SASB)
(7 SASB-Index)
Task Force on Climate-related Financial Disclosures
(TCFD) (TCFD-Index)
UN Global Compact Progress Report: see references in
GRI Content Index (GRI-Index)
Group Financial Statements
The Group Financial Statements of Bayerische Motoren
Werke Aktiengesellschaft for the year ended 31 December
2021 have been prepared in accordance with International
Financial Reporting Standards (IFRS) as endorsed by the
European Union (EU) and the supplementary requirements
of § 315 e HGB.
ADDITIONAL INFORMATION
ON THE REPORT
Publication and scope
The BMW Group Report is published annually to coincide
with the BMW Group Annual Conference most recently
held on 17 March 2021 - and is subsequently available in
both German and English on the BMW Group website. The
7 GRI Content Index is also available on the website as a sepa-
rate document. The reporting period covers the financial
year from 1 January to 31 December 2021. The statements
made in the report relate to the BMW Group reporting entity.
Any deviations are marked accordingly. Nothing significant
has changed in the reporting period with regard to the or-
ganisational structure of the BMW Group. The BMW Group
Report 2022 will be published on 15 March 2023.
7 GRI 102-45, 102-48, GRI-Index 102-52
Combined Management Report
The BMW Group Report 2021 is based on the following re-
porting and accounting standards:
FRAMEWORKS APPLIED
SASB-Index
(PART OF THE COMBINED MANAGEMENT REPORT)
REPORTING CONCEPT
Integrated reporting and corporate strategy
In the BMW Group's view, a key prerequisite for a company's
profitability is that its activities are compatible with external
economic, ecological and social interests. Conversely, profit-
ability is the prerequisite for a company's ability to develop
sustainable and innovative technologies, ensure job security,
and cooperate with all its business partners along a value
chain that is striving to become increasingly sustainable.
For this reason, since the financial year 2020, the BMW Group
has kept stakeholders informed of its business performance
by reporting on an integrated basis. With the Integrated
Group Report 2021, we aim to provide a clear and compre-
hensive insight into the BMW Group and explain our activities
in a transparent, comprehensible and measurable manner.
We are well aware that integrated reporting is among the
subjects of an ongoing discussion currently taking place be-
tween stakeholders, regulators and reporting entities. The
status achieved to date is therefore still subject to constant
review and continuous improvement.
The BMW Group is keen to demonstrate to its shareholders
how economic, ecological and social issues complement
one another and are often mutually dependent, and which
general external conditions influence the company and de-
fine our potential to boost sustainability. For these reasons,
we explain the BMW Group's corporate strategy as well as the
latest developments and the way in which the business is
managed on the basis of key financial and non-financial tar-
gets. KPI Dashboard
On 8 March 2022, the Financial Statements of BMW AG
were authorised for issue by the Board of Management and
the Group Financial Statements approved for publication.
The BMW Group Report combines the management reports
of Bayerische Motoren Werke Aktiengesellschaft (BMW AG)
and the BMW Group in a Combined Management Report.
6
BMW Group Report 2021
External audit
To Our Stakeholders
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
About This Report
Changes in reporting and outlook for reporting
requirements
In light of recent and prospective changes in non-financial
disclosure requirements, including the revision of the Non-Fi-
nancial Reporting Directive at EU level (Corporate Sustain-
ability Reporting Directive), the related development of EU
reporting standards and the establishment of the Inter-
national Sustainability Standards Board (ISSB) under the
umbrella of the IFRS Foundation, the pace of change within the
reporting environment will continue to gather momentum
and increase the extent to which non-financial and financial
disclosures need to be presented on an integrated basis.
The BMW Group is preparing itself for these new trends by
developing its internal control system to ensure that non-fi-
nancial performance indicators are monitored to the same
degree as financial performance indicators. In the year under
report, we also complied with the disclosure requirements of
the (EU Taxonomy] Regulation and expanded our reporting in
line with the requirements of the Sustainability Accounting
Standards Board.
7 GRI 102-48, 102-49
Combined Management Report
The entire report of BMW AG, comprising the Combined
Management Report, the Group Financial Statements, the
disclosures on corporate governance and the additional GRI
information, has been subject to an annual independent au-
dit by PricewaterhouseCoopers GmbH Wirtschaftsprüfungs-
gesellschaft ("PwC" or "Auditor"). The external audit serves
to underpin the reliability and trustworthiness of the infor-
mation contained therein for external users. The external au-
dit supports the Supervisory Board of BMW AG in fulfilling its
auditing duties. Any links and/or disclosures that refer to
additional information outside the BMW Group Report and
the GRI Content Index are not part of the audit. The Remuner-
ation Report 2021 was prepared in accordance with the require-
ments of § 162 of the German Stock Corporation Act (AktG)
and its content audited by PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft.
7
BMW Group Report 2021
About This Report
Combined Management Report
Group Financial Statements
14.4
5.3
6.8
9.9
10.9
12,463
18.77/18.79
3,857
5.73/5.75
To Our Stakeholders
12,463
4,978
44
5,022
7.47/7.49
10.60/10.62
13.07/13.09
3 Group profit/loss before tax as a percentage of Group revenues.
² The figures for 2018 were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 ( Annual Report 2019, Note 6 to the Group Financial Statements).
1 Expenditure for capitalised development costs, other intangible assets and property, plant and equipment.
Pre-tax return on sales 2,3 in %
Earnings in € per share of common stock / preferred stock²
7,064
3,857
80,853
BMW Group Report 2021
Summarised disclosures of fuel consumption, carbon emis-
sions and electricity consumption are provided in the section
Consumption and carbon emissions data.
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
PwC has audited the Group Financial Statements and the
Combined Management Report for the year ended 31 De-
cember 2021 and issued an unqualified audit opinion there-
upon. Further information is provided in the Independent Audi-
tor's Report and the Independent Practitioner's Report on
Non-financial Disclosures.
The contents of the NFS, in accordance with § 289 b and
315 b HGB, were subjected to an audit to obtain limited
assurance and is denoted with the symbol [...]]. The chapter
7 Dialogue with stakeholders and the additional information pro-
vided in the section Additional GRI Information were also sub-
jected to a limited assurance engagement. Certain individual
parts of the NFS as well as the remainder of the Combined
Management Report were subjected to a reasonable assur-
ance engagement. Information provided in the SASB-Index is
subjected to a limited assurance review on a voluntary basis.
The TCFD-Index refers to the corresponding chapter, in which
the respective test levels are denoted.
8
Material topics addressed in the NFS
was given to the BMW Group's own business operations,
products and services on the one hand and its business re-
lationships (for example in the supply chain) on the other. In
accordance with statutory materiality requirements, infor-
mation has been aggregated in each case with a view to pro-
viding an understanding of the BMW Group's course of busi-
ness, results of operations and financial position, while also
showing the impact of its activities on the non-financial as-
pects specified in the legislation. A stakeholder survey con-
ducted during the period under report with selected repre-
sentatives from capital markets and academia confirmed our
selection of material topics.
7 GRI 102-46, 102-49
Connection to figures in the Group Financial Statements
For each topic, an assessment was carried out to identify
figures reported in the financial statements that enable a
better understanding of the NFS, and which therefore need
to be disclosed and explained.
Forward-looking statements
The BMW Group Report 2021 contains various forward-look-
ing statements concerning future developments that are
based on the current status of the BMW Group's assumptions
and forecasts. These statements are therefore subject to a va-
riety of predictable and unpredictable risks, uncertainties and
other factors, which means that the actual outcome, including
that of the BMW Group's net assets, financial position and re-
sults of operations, its development or performance, could
differ considerably to those statements.
Editorial comments
The key figures presented in this report have been rounded
in accordance with standard commercial practise. In certain
cases, this may mean that figures do not add up exactly to
the stated total and that percentages cannot be derived from
the figures shown.
The BMW Group Report uses also the simplified term "car-
bon" or the abbreviation CO₂ instead of CO₂e. Since not only
carbon dioxide, but also other gases such as methane (CH4)
and nitrous oxide (N₂O) contribute to climate warming to a
varying extent, the impact is converted into so-called CO₂
equivalents (CO₂e).
The material topics addressed in the NFS to ensure compli-
ance with § 289 c and § 315 c HGB were determined partly
on the basis of the results of the materiality analysis updated
in 2018, in line with the requirements of the Global Reporting
Initiative (GRI), and partly on the basis of the BMW Group's
own long-term targets. For these purposes, consideration
153 Cash Flow Statement for Group and Segments
Corporate Governance
0
thereof China
+31
Asia
+32
+ 15
+19
+ 11
+22
+44
thereof Brazil
Americas
thereof Spain
thereof Italy
thereof France
+10
- 12
+7
Change compared to
previous year in %
thereof USA
Total
+14
OVERALL ASSESSMENT
during the year
in 2020 Group Report
Forecast revision
Forecast for 2021
BMW GROUP: COMPARISON OF THE FORECASTS FOR 2021 WITH ACTUAL OUTCOMES IN 2021
The BMW Group's results of operations, financial position
and net assets are indicative of its solid financial condition.
Business developed in line with management expectations.
This assessment also takes into account events after the
end of the reporting period.
Financial Performance
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
96
Despite the global challenges driven by semiconductor com-
ponent supply shortages and the impact of the coronavirus
pandemic, the BMW Group can be satisfied with the course
of business in the financial year 2021.
FINANCIAL YEAR
BY MANAGEMENT OF THE
thereof Germany
Europe
+1
-3
International automobile markets
International automobile markets recovered slightly overall
in 2021, despite the continuing supply bottlenecks reported
in many markets. Registration figures for passenger cars and
light commercial vehicles worldwide edged up by 1% to 73.4
million units.
Financial Performance
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
95
Source: Reuters
Price in euros
- Price in US dollars
2022
2021
2020
2019
2018
INTERNATIONAL AUTOMOBILE MARKETS
Actual
Europe
thereof France
+3
+3 INTERNATIONAL MOTORCYCLE MARKETS
Total
Japan
China
USA
COOPER
Registration figures on international motorcycle markets
developed as follows in the year under report:
The trend on international motorcycle markets in the 250 CC
plus class was predominantly positive in 2021. Worldwide,
motorcycle registrations were 14% up on one year earlier,
when pandemic-related factors had caused the markets to
contract. Markets in Europe also showed an upward trend,
with registrations up by 7% year-on-year. Among the major
motorcycle markets, positive contributions to the region's re-
covery came from Italy (+22%), Spain (+11%) and France
(+10%). By contrast, registration figures in Germany fell
sharply (-12%). Registrations in the USA rose by 15% year-
on-year. The Brazilian market also performed extremely well,
with registrations up by 32% after a decline one year earlier.
China recorded the biggest increase with growth of 44%.
International motorcycle markets
+1
+1
+6
+1
-10
Change compared to
previous year in %
-2
thereof United Kingdom (UK)
thereof Spain
thereof Italy
thereof Germany
outcome in 2021
COMPARISON OF FORE-
CASTS WITH ACTUAL
OUTCOMES
The following table shows the development of key per-
formance indicators for the BMW Group as a whole as well as
for the Automotive, Motorcycles and Financial Services seg-
ments in the financial year 2021 compared to the forecasts
made in the BMW Group Report 2020. Favourable selling
price trends for new and pre-owned vehicles as well as the
partial reversal of the provision for the EU antitrust proceed-
ings resulted in the EBIT margin forecast for the Automotive
segment being adjusted during the year. Due to lower risk
provisioning expense recognised for expected residual value
and credit risks, higher profits on the resale of lease returns
and the reversal of credit risk allowances, the BMW Group
also adjusted its forecast for the return on equity (ROE) range.
The changes are shown below.
BMW Group Report 2021
97
6 Unlike the other key performance indicators, the RoCE forecast for the Automotive and Motorcycles segments is based on the change in percentage points. Glossary
5 Due to the expansion of the reporting scope during the year under report, the comparative figure (in 2020 before the adjustment: 0.31 tonnes) was revised to 0.35 tonnes.
"For better comparability of the previous year's values with the current year under report, the 2020 NEDC figures were converted to WLTP, making adjustments for applicable flexibilities specifically from
99 g CO2/km according to NEDC (including 5 g CO2/km phase-in, 7.5 g CO2/km supercredits and 2.4 g CO2/km eco-innovations) to 135 g CO2/km according to WLTP (excluding flexibilities). In 2020, a phase-in
scheme and the awarding of supercredits were possible. In 2021, these two exemptions were no longer available for the BMW Group.
1 Including automobiles from the joint venture BMW Brilliance Automotive Ltd. Shenyang (2021: 651,236 units).
2 EU-27 countries including Norway and Iceland; with effect from 2021, values are calculated on a converted basis in line with WLTP (Worldwide Harmonised Light Vehicles Test Procedure).
3 Efficiency indicator calculated on the basis of Scope 1 and Scope 2 emissions (i. e. a market-based method according to GHG Protocol Scope 2 guidance; mainly use of VDA emission factors as well as occasional use of local emis-
sions factors). This excludes climate-changing gases (other than carbon dioxide) that are emitted in conjunction with vehicle production (BMW Group plants incl. BMW Brilliance Automotive Ltd. joint venture and Motorrad, excluding
partner plant and contract manufacturing) as well as other BMW Group locations not assigned to manufacturing (e.g. research centres, sales centres, office buildings) divided by the number of vehicles generated in automobile
production (BMW Group plants including the BMW Brilliance Automotive Ltd. joint venture and partner plants, excluding contract manufacturing).
22.6 (+11.4%-points)
%
Q2: between 17 and 20
Q3: between 20 and 23
between 12 and 15
between 8 and 10
significant increase
35.9 (+20.9 %-points)
significant increase
%
8.3 (+3.8 %-points)
%
significant increase
194,261 (+14.8%]
units
Q2: significant increase
To Our Stakeholders
solid increase
Combined Management Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
98
* See Glossary for the definition of deliveries.
Retail vehicle deliveries during a given reporting period do
not correlate directly to the revenue that BMW Group recog-
nizes in respect of such reporting period.
Retail vehicle delivery data for periods prior to 2020 in-
clude an immaterial number of pre-series vehicles that
were never intended to be sold to end users (such as ve-
hicles for use by government agencies in connection with
safety evaluations (e.g., crash tests) or for other tests).
The definition of deliveries includes vehicles delivered in
the United States and Canada if the relevant dealers des-
ignate such vehicles as service loaner vehicles or demon-
strator vehicles.
The vast majority of deliveries of vehicles are carried out
by independent dealerships or other third parties, and
BMW Group is reliant on such third parties to correctly re-
port relevant data to BMW Group.
The preparation of BMW Group's retail vehicle delivery data
involves a variety of estimates and judgments, some of
which are complex and all of which are inherently subjective,
and is subject to other uncertainties. In addition, as
BMW Group continues to enhance its policies and proce-
dures regarding retail vehicle delivery data, it may not always
be practicable for BMW Group to adjust prior-period data
(and any such adjustments would be of a de minimis nature
without any material impact on the comparability of periods).
Examples of the foregoing include:
The retail vehicle delivery data for automobiles for
BMW Group's other markets have not been adjusted for any
period prior to 2020, nor have any retail vehicle delivery data
for motorcycles been adjusted for any period prior to 2020.
BMW Group believes the impact on BMW Group's retail ve-
hicle delivery data presented in this report of such data not
having been adjusted to reflect the Revised Reporting Pro-
cess to be immaterial.
When presenting total retail vehicle delivery data for auto-
mobiles other than model-by-model data, data relating to
the years 2016 through 2019 for BMW Group's 16 most sig-
nificant markets were adjusted to reflect the Revised Report-
ing Process. In the years 2016 through 2019, these 16 mar-
kets represented on average approximately 87% of
BMW Group's total retail deliveries of automobiles. For each
of the years 2016 through 2019, these revisions amounted to
less than 1% of BMW Group's total retail deliveries of
automobiles.
In 2020, BMW Group reviewed and revised its policies and
procedures for the reporting of retail vehicle delivery data for
automobiles in order to further improve the reliability and
validity of its retail vehicle delivery data, in particular with re-
spect to the timing of the recognition of retail vehicle deliver-
ies (the Revised Reporting Process). BMW Group has ap-
plied the Revised Reporting Process to all markets with
effect from the year 2020. While BMW Group revised retail
vehicle delivery data for certain of its most significant mar-
kets for the years 2016 through 2019 presented in this report,
such data were not revised for BMW Group's other markets.
As a result, retail vehicle delivery data presented in this re-
port for the years 2016 through 2019 is not directly compar-
able to such data presented for the years 2020 and 2021.
Specifically, the retail vehicle delivery data for automobiles
presented in this report have been revised as follows:
Retail vehicle delivery data*
Financial Performance
← = Q
Other Information
Remuneration Report
Group Financial Statements
2017
significant increase
%
Return on capital employed (RoCE) 6
EBIT margin
moderate decrease
CO2 emissions per vehicle produced³
significant decrease
Emissions new vehicle fleet²
significant increase
Share of electrified vehicles in deliveries
solid increase
slight increase
slight decrease
significant increase
Deliveries to customers'
AUTOMOTIVE SEGMENT
Share of women in management
positions in the BMW Group
Workforce at year-end
Profit before tax
GROUP
Detailed information on the BMW Group's key performance
indicators is provided below in conjunction with the analysis
of the Group's results of operations, financial position and
net assets. Changes in the key performance indicators used
for the Automotive, Motorcycles and Financial Services
segments are explained in the respective sections on the
segments.
MOTORCYCLES SEGMENT
Deliveries to customers
59.9 (+47.2 %-points)
EBIT margin
between 6 and 8
10.3 (+7.6 %-points)
%
13.0 (+ 56.6%)
significant increase
115.9 (-14.1 %)4
significant decrease
solid increase
2,521,514 (+8.4%)
in tons
in g/km
%
units
solid increase
18.8 (+ 5.6%)
%
slight decrease
118,909 (-1.5%)
significant increase
16,060 (+207.5 %)
€ million
significant increase
Q2: between 7 and 9
Q3: between 9.5 and 10.5
Return on capital employed (ROCE]6
FINANCIAL SERVICES SEGMENT
Return on equity (ROE)
Corporate Governance
10
30
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
Financial Performance
92
M
ECONOMIC GROWTH
DECENT WORK AND
After contracting significantly in 2020, Japan's economy re-
covered slightly during the first half of 2021. Despite exten-
sive stimulus packages, however, the second half of the year
saw a drop in economic output, with the year-on-year growth
rate finishing at 1.8%.
China's economic growth rate rose to 8.1% in 2021, well up
on the previous year, boosted in particular by a renewed
sharp rise in exports. However, the pace of growth slowed
somewhat towards the end of the year due to weaker con-
sumer demand.
The US economy grew by 5.7% year-on-year. The US labour
market also staged a recovery in 2021. Although the USA's
employment figures have not yet returned to pre-crisis levels,
some sectors are already seeing labour shortages.
Despite its exit from the European Union (EU) and the im-
pact of supply bottlenecks, the economy of the United King-
dom (UK), which had experienced a particularly severe
slump in the previous year, recovered in 2021, with GDP up
by 7.0%.
The coronavirus crisis hit countries in the eurozone harder
than in other major regions. For this very reason, however,
the subsequent recovery in the worst affected European
countries was more pronounced. Overall, the economies of
the eurozone countries grew by 5.1% year-on-year. At 2.7%,
Germany's economy recorded a lower growth rate than other
European countries, mainly reflecting the impact of supply
shortfalls, particularly for semiconductor components. By
contrast, the economies of France (+6.7%), Italy (+6.3%)
and Spain (+5.0%) all grew strongly, influenced in particular
by good progress made on the vaccination front, the easing
of pandemic restrictions and the catch-up effects driven by
pent-up demand.
92
Currency markets and international interest rate
environment
Supply chain bottlenecks, capacity constraints and higher
energy prices caused inflation to rise in the world's major
economies in 2021. Towards the end of the year, a number of
central banks announced their intention to modify their pre-
vious highly expansionary monetary policies.
EXCHANGE RATES COMPARED TO THE EURO
70
60
80
As in the previous year, the currencies of major emerging
markets weakened again in 2021 due to the impact of the
coronavirus pandemic. While the average value of the Indian
rupee fell by around 3% against the euro, the Russian rou-
ble depreciated by 5% and the Brazilian real by as much as
8% on average against the euro.
The average exchange rate of the Japanese yen was 130 to
the euro during the year under report.
In China, the rapid recovery of the domestic economy and
the sharp growth in exports in 2021 led to a continuous ap-
preciation of the Chinese renminbi. On average over the year,
the Chinese currency traded at 7.63 renminbi to the euro.
Bucking the international trend, the Chinese central bank
lowered the reserve requirement ratio for most banks by 50
basis points at the end of 2021, thereby easing its monetary
policy in order to shore up the economy.
Post-Brexit, the British pound remains fairly close to the
lower value it fell to after the 2016 referendum. However, at
an average rate of 0.86 pounds to the euro, the British cur-
rency was slightly stronger than in previous years. In re-
sponse to the high inflation rate, the Bank of England (BoE)
raised the official bank rate by 15 basis points to 25 basis
points in December 2021.
The bandwidth of fluctuation in the US dollar/euro exchange
rate was slightly narrower in 2021 than in the previous year.
The US currency fluctuated between 1.23 and 1.12 US dollars
to the euro and weakened somewhat compared to the previ-
ous year with an average rate of 1.18 US dollars to the euro in
2021. Both the European Central Bank (ECB) and the US
Federal Reserve (Fed) left their benchmark interest rates
unchanged. Towards the end of the year, however, they
announced that bond purchases would be curtailed.
90
06
100
00
110
120
30
130
140
150
Index: December 2016 = 100
Following the pandemic-related slump in 2020, the global
economy experienced an upswing in the year under report.
According to the provisional calculations of the International
Monetary Fund (IMF), global gross domestic product (GDP)
grew by 5.9% year-on-year in 2021. All three major regions -
Europe, the USA and China - saw an economic recovery.
GENERAL AND
SECTOR-SPECIFIC
ENVIRONMENT
FINANCIAL PERFORMANCE
7 Direct link to section
98
Outcomes
Comparison of Forecasts with Actual
96
Overall Assessment by Management of the
Financial Year
95
General and Sector-Specific Environment
FINANCIAL PERFORMANCE
91
Financial Performance
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
91
Earnings Performance of the BMW Group
60
101
103
(up 117.6% on the previous year)
Profit before tax: Financial Services segment
€3,753 million
7 Direct link to section
Profit before financial result: Automotive segment
(up 356.5 % on the previous year)
€ 9,870 million
Group profit before tax (up 207.5 % on the previous year)
Direct link to section
16,060 million
AT A GLANCE
Financial Statements of BMW AG
Comments on the
117
Course of Business
109
Value Added Statement
107
Net Assets Position of the BMW Group
105
Refinancing
Financial Position of the BMW Group
50
50
2017
Source: Working Group for the Iron and Metal Processing Industry.
2022
2021
2020
2019
2018
2017
50
100
50
150
200
Index: January 2016 = 100
STEEL PRICE TREND
Cobalt
― Palladium
Silver
-Lithium hydroxide ---Lithium carbonate
2022
94
2021
BMW Group Report 2021
Combined Management Report
40
50
60
60
70
10
80
90
90
100
Price per barrel of Brent Crude
OIL PRICE TREND
Whereas in the previous year, oil markets had seen negative
prices for a brief period in the wake of the coronavirus pan-
demic, crude oil prices rose massively in 2021. WTI-grade oil
was temporarily quoted at over 84 US dollars per barrel and
Brent crude at over 86 US dollars per barrel, both reaching
their highest level in seven years. Prices fell again slightly
towards the end of 2021, but were still well above prior-year
levels.
Financial Performance
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
To Our Stakeholders
20
2020
2018
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
93
Source: Reuters
2022
Source: Reuters
Chinese renminbi
- British pound
Japanese yen
Russian rouble --- US dollar
2021
2020
2019
2018
← = Q
2019
Financial Performance
The year 2021 was marked by a pronounced shortage of raw
materials, with demand outstripping supply for nearly all
commodities. Average prices for steel and aluminium rough-
ly doubled year-on-year, but fell again slightly towards the
end of the 12-month period.
2017
0
45
90
90
135
135
180
225
270
315
360
405
450
Index: December 2016 = 100
DEVELOPMENT OF METALS PRICES
Prices of raw materials for batteries, however, rose signifi-
cantly, mainly due to the growing demand for electric ve-
hicles. Quoted prices for cobalt, for example, were up almost
twofold compared to the low for the year recorded one year
earlier. Similarly, the average price of lithium almost doubled
year-on-year.
rhodium and palladium. Lower demand from the automotive
industry also had a dampening effect on prices.
Prices for precious and non-ferrous metals also followed a
similar trend. After rising sharply through to mid-2021, prices
fell again during the second half of the year, particularly for
Energy and raw materials prices
Remuneration Report
0.33 (-5.7%) 5
moderate decrease
← = Q
Other cost of sales
Cost of sales
2,192
2,971
-26.2
1,401
1,345
4.2
89,253
85,408
4.5
Antitrust investigation concluded
In the Half-Year Report to 30 June 2021, information was
provided on the conclusion of the EU Commission's antitrust
proceedings in connection with allegations of colluding to
restrict competition for innovation with regard to certain ex-
haust treatment systems. In accordance with the updated
Statement of Objections received on 20 May 2021, the EU
Commission dropped most of the original charges. Remeas-
urement of the provision originally recognised in the financial
year 2019 gave rise to a positive impact on earnings of
around one billion euros in the second quarter 2021. The pro-
ceedings were concluded by settlement on 8 July 2021 and
resulted in a fine of approximately € 373 million, which was
paid in July 2021. Further information, in particular relating to
further antitrust proceedings and civil lawsuits, is provided in
note 38 to the Group Financial Statements 2021.
Increase in Group net profit in 2021
Group revenues were significantly higher in the financial year
2021, reflecting the impact of coronavirus-related dealership
closures in the previous 12-month period (2021: € 111,239 mil-
lion; 2020: € 98,990 million; + 12.4%). Sales volume was
also higher in 2021, whereby the increase was held down by
production shortfalls due to supply bottlenecks for semicon-
ductor components. However, this unfavourable impact was
more than offset by improved pricing, due to both the grow-
ing desire for individual mobility on the one hand and the
reduced worldwide availability of products triggered by those
same semiconductor component shortages on the other. In
addition, revenues were also boosted by favourable product
mix effects due to increased sales of high-revenue models.
The semiconductor scarcity was also reflected in higher sell-
ing prices on pre-owned vehicle markets, which in turn gave
rise to higher revenues from the sale of lease returns.
Group cost of sales rose to € 89,253 million (2020: € 85,408 mil-
lion; +4.5%), mainly due to sales volume growth.
Other factors influencing the increase were volume-related
cost of sales for lease returns, rising raw materials and energy
prices, and the higher proportion of electrified vehicles sold.
Furthermore, reversals of and lower additions to credit risk al-
lowances as well as the remarketing result arising on the sale
of lease returns had a positive impact on cost of sales.
In the previous year, warranty expenses were impacted by
the recognition of provisions in connection with the exhaust
gas recirculation cooler and other warranty-related items.
The reduced workforce size and changeover effects resulting
from the modernisation of the pension plan model in Germa-
ny amounting to € 562 million had a positive impact on cost
of sales and selling and administrative expenses, while higher
expenses for performance-related remuneration components
had an offsetting effect. Depreciation and amortisation on
property, plant and equipment and intangible assets recorded
in cost of sales and in selling and administrative expenses to-
talled € 6,495 million (2020: € 6,143 million).
Further information is provided in note 32 to the Group Financial Statements.
Warranty expenses
12.8
1,411
1,591
Manufacturing costs
2021
2020
51,361
46,878
Change in %
9.6
Cost of sales relating to financial services business
26,409
27,114
-2.6
↑
thereof interest expense relating to financial services business
1,960
- 16.2
Research and development expenses
6,299
5,689
10.7
thereof amortisation of capitalised development costs
Service contracts, telematics and roadside assistance
1,935
1,710
13.2
1,643
in € million
= Q
BMW Group Report 2021
6,299
5,689
rise to fair value measurement losses on interest rate hedges.
Other financial result was additionally impacted by positive
valuation effects, primarily arising on investments held by
the BMW i Ventures fund and on the investment in SGL
Carbon shares.
The increased at-equity result from the Chinese joint venture
BMW Brilliance Automotive Ltd., Shenyang, amounting to
€ 1,727 million (2020: € 1,212 million) was another key driver
of the improved financial result.
As forecast most recently in the Quarterly Statement to
30 September 2021, Group profit before tax of € 16,060 mil-
lion was significantly higher than one year earlier (2020:
€ 5,222 million) and therefore in line with expectations.
Income tax expense for the year increased to € 3,597 million
(2020: € 1,365 million), mainly due to the significant year-
on-year improvement in Group profit before tax. The effec-
tive tax rate for the 12-month period was 22.4% (2020:
26.1%), reflecting the partial reversal in 2021 of the risk pro-
vision in connection with the antitrust proceedings of the EU
Commission as well as the impact of fair value measurement
gains within other financial result.
The size of the workforce decreased slightly to 118,909 em-
ployees year-on-year and was therefore in line with expect-
ations (2020: 120,726 employees; -1.5%).
BMW GROUP PERFORMANCE INDICATORS RELATING TO RESEARCH AND DEVELOPMENT EXPENSES
in %
Research and development expenditure ratio¹
Capitalisation rate²
1 Research and development expenditure as a percentage of Group revenues.
² Capitalised development costs as a percentage of research and development expenditure.
2021
2020
6.2
6.3
Change in
%-pts.
-0.1
36.5
36.6
-0.1
Other Information
1,710
1,935
-2,300
-2,506
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Performance
A substantial part of research and development expenditure
in 2021 related to new vehicle models (including the all-elec-
tric BMW iX and BMW i4 models and the new BMW 2 Series
Active Tourer) as well as the development of digital products,
automated driving and new architectures. The year-on-year
rise in research and development expenses clearly reflects
the increase in vehicle and module production start-up activ-
ities as the BMW Group continues its electric offensive.
The net amount of other operating income and expenses im-
proved significantly, primarily due to the income arising on
the partial reversal of the provision relating to the antitrust
proceedings of the EU Commission, which was recorded in
the second quarter 2021.
100
BMW GROUP RESEARCH AND DEVELOPMENT EXPENSES
New expenditure for capitalised development costs
Amortisation
Research and development expenses
As a result of the various factors described above, profit
before financial result jumped to € 13,400 million (2020:
€ 4,830 million).
The financial result improved significantly to a net positive
amount of € 2,660 million (2020: net positive amount of
€ 392 million), influenced in particular by improvements in
the line items "Other financial result” and “Result from equity
accounted investments".
Other financial result benefited in 2021 from the continued
favourable fair value development of interest rate hedges re-
sulting from the rise in yield curves in the USA, whereas in
the previous year the downward trend in interest rates gave
2021
2020
6,870
6,279
Research and development expenditure
Financial Performance
in € million
Remuneration Report
Asia
32.5
32.1
Selling and administrative expenses
-9,233
- 8,795
- 5.0
Americas
22.8
21.4
Other operating income and expenses
647
43
Other regions
2.3
2.2
Profit before financial result
13,400
4,830
Group
100.0
61.9
100.0
13,582
44.3
Financial Performance
Other Information
EARNINGS PERFORMANCE OF THE BMW GROUP
BMW GROUP CONDENSED INCOME STATEMENT
Group revenues by region were as follows:
in € million
Revenues
Cost of sales
Gross profit
2021
111,239
2020
98,990
Change in %
12.4
BMW GROUP REVENUES BY REGION
in %
2021
2020
-89,253
- 85,408
- 4.5
42.4
21,986
Financial result
Europe
26.1
Pre-tax return on sales¹
14.4
5.3
9.1
Post-tax return on sales²
11.2
3.9
7.3
Effective tax rate4
22.4
6.1
- 3.7
² Group net profit as a percentage of Group revenues.
3 Gross profit as a percentage of Group revenues.
"Income taxes as a percentage of Group revenues.
BMW GROUP COST OF SALES
99
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Profit/loss before tax
Group Financial Statements
1 Group profit before tax as a percentage of Group revenues.
13.7
Corporate Governance
Gross profit margin³
2,660
19.8
392
16,060
5,222
-3,597
- 1,365
Income taxes
12,463
3,857
Earnings per share of common stock in €
18.77
Net profit
5.73
Earnings per share of preferred stock in €
18.79
5.75
Change in
in %
2021
2020
%-points
0.5
89.4
1,256
2,379
Deferred and current tax
6.1
13,982
-0.2
Other provisions
13,954
-66.2
- 66.5
-2.5
86.0
26.5
103,463
106,376
-2.7
-6.0
45.1
Trade payables
10,932
8,644
24.4
4.8
3,693
21,187
Other liabilities
22,420
Financial liabilities
To Our Stakeholders
A broad range of instruments on international money and
capital markets is used to refinance worldwide operations.
Funds raised are used almost exclusively to refinance the
BMW Group's Financial Services business. The overall ob-
jective of Group financing is to ensure the solvency of the
BMW Group at all times, focusing on three areas:
Cash inflow (+)/ outflow (-) from financing activities
BMW Group Report 2021
104
5.8
In 2021, the BMW Group issued bonds totalling approxi-
mately € 6.9 billion. The BMW Group refinanced itself by
means of 144A transactions with a total volume of 4.5 billion
US dollar on the US capital market and by means so-called
Panda bonds with a volume of 9.5 billion Chinese renminbi
on the Chinese capital market. Activities on international
capital markets were rounded off by one euro benchmark
Focused capital market management, good ratings and the
high level of acceptance enjoyed by the BMW Group on
those markets enabled it to refinance itself on the world's
debt capital markets at favourable conditions during the
period under report. In addition to bonds, the BMW Group
also issued commercial paper in 2021. As in previous years,
all issues were in high demand, not only from institutional
investors, but also from private investors in selected transac-
tions. Moreover, retail customer and dealership financing
receivables as well as rights and obligations from leasing
contracts are securitised in the form of asset-backed secur-
ities (ABS) financing arrangements. Specific banking instru-
ments, such as the customer deposits used by the Group's
own banks in Germany and the USA, are also deployed for
financing purposes. In addition, loans are taken from inter-
national banks.
Financing measures undertaken at corporate level ensure
access to liquidity for the Group's operating subsidiaries at
standard market conditions and consistent credit terms.
Funds are acquired in line with a target liability structure,
comprising a balanced mix of financing instruments. The use
of longer-term instruments to refinance the Group's Finan-
cial Services business and the maintenance of a sufficiently
high liquidity reserve serves to rule out any imminent liqui-
dity risk for the portfolio. This conservative financial ap-
proach also has a favourable effect on the Group's rating.
Further information is provided in the section "Liquidity
risks" within the chapter 7 Outlook, Risk and Opportunity Management.
3. Focus on value through the optimisation of financing
costs
2. Autonomy through the diversification of refinancing in-
struments and investors
1. The ability to act through permanent access to stra-
tegically important capital markets
REFINANCING
The main factor driving up net cash inflow from operating
activities was the increase in segment profit before tax. Fur-
thermore, a reduction in dealership inventories and the as-
sociated reduction in receivables from sales financing, pri-
marily dealership financing, had a positive effect, while the
increase in retail customer financing had an offsetting im-
pact. The decrease in inventories as a consequence of strong
demand for lease returns also had a positive impact. The
change in the net cash inflow from investing activities was
attributable to the combined effect of higher outflows for in-
vestments in and lower inflows from sales of marketable
securities.
- 206
- 180
788
608
110
-96
-121
- 2,508
-2,629
- 350
424
74
497
2,762
3,259
Change
2020
2021
Effects of exchange rate and changes in composition of segment
Change in cash and cash equivalents
1,247
1.3
Group Financial Statements
Total equity and liabilities
37.0
4.5
Financial Services segment
11.3
10.5
0.8
1 Equity capital as a percentage of the balance sheet total, respectively.
2 Further information is provided in note 32 to the Group Financial Statements.
107
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Performance
VALUE ADDED STATEMENT
The value added statement shows the value of work per-
formed by the BMW Group during the financial year, less the
value of work bought in. Depreciation and amortisation, cost
of materials, and other expenses are treated as bought-in
costs in the value added calculation. The allocation state-
ment applies value added to each of the participants in-
volved in the value added process. The bulk of the net value
added benefits the employees. The remaining proportion in
the Group is retained to finance future operations. The gross
value added amount treats depreciation and amortisation as
a component of value added which, in the allocation state-
ment, would be treated as internal financing.
Net value added by the BMW Group rose sharply in 2021 due
to the year-on-year improvement in earnings.
BMW GROUP VALUE ADDED STATEMENT
WORK PERFORMED
Revenues
Financial income
Other income
Total output
Cost of materials *
Combined Management Report
2021
41.5
4.3
28.4
32.7
229,527
216,658
5.9
2.6
100.0
1 The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior-year figures.
2 Further information is provided in note 4 to the Group Financial Statements.
106
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
9.8
Other Information
Financial Performance
with retail customers during the financial year 2021. The
number of contracts in place with dealerships and retail cus-
tomers fell by 2.6% to 3,929,583 contracts.
The earnings-related higher cash holdings of Group com-
panies contributed to the increase in cash and cash
equivalents.
Group equity rose to € 75,132 million, driven primarily by the
profit of € 12,382 million attributable to shareholders of
BMW AG and reduced by the dividend payout of € 1,253 million.
Adjusted for currency effects, pension obligations decreased
significantly to € 1,247 million, mainly due to actuarial gains
and the positive effects arising from the modernisation of the
pension model in Germany².
Financial liabilities decreased over the 12-month period due
to the repayment of bonds (adjusted for currency effects).
Despite the volatile situation with respect to the further
course of the coronavirus pandemic and the limited avail-
ability of semiconductor components, the BMW Group's re-
sults of operations, financial position and net assets all im-
proved during the financial year 2021.
BMW GROUP EQUITY RATIO1
in %
Group
Automotive segment
31.12.2021
31. 12. 2020
Change in
%-points
← = Q
Group Financial Statements
Trade receivables
Remuneration Report
4.0
6.9
14,896
15,928
Inventories
4.4
-3.0
-0.8
10,326
10,243
Other assets
1.6
16.6
21.7
3,065
3,731
Deferred and current tax
3.3
-4.6
-3.1
7,752
7,515
Financial assets
38.1
- 1.0
3.7
84,277
87,417
Receivables from sales financing
6.9
0.5
2,261
- 1.6
in € million
Pension provisions
32.7
18.3
22.1
61,520
75,132
Equity
EQUITY AND LIABILITIES
Receivables from sales financing (adjusted for currency ef-
fects] went down slightly compared to 31 December 2020,
primarily due to the decrease in dealership financing, mainly
in the USA, Germany, the UK and France. The currency-ad-
justed decrease in dealership financing receivables was par-
tially offset by rising retail customer financing. Overall, how-
ever, receivables from sales financing grew slightly. A total of
1,334,853 new credit financing contracts were concluded
Investments accounted for using the equity method (adjust-
ed for currency effects) increased significantly over the
12-month period under report, mainly driven by the rise in the
BMW Group's at-equity valuation of the Chinese joint ven-
ture BMW Brilliance Automotive Ltd., Shenyang, in light of
that entity's higher earnings and the fact that it did not pay
out a dividend during the financial year 2021.
Based on constant currencies, leased products were slightly
highly than one year earlier. Although the contract portfolio
under management was at a similar level compared to the
previous year, leased products in the balance sheet grew as
a consequence of volume growth as well as the higher aver-
age financing volume per vehicle, the latter brought about by
an improved product mix.
Adjusted for currency effects, property, plant and equipment
and intangible assets all went up year-on-year, driven by higher
capital expenditure, particularly in connection with the electrifi-
cation of the vehicle fleet as well as new model revisions.
Adjusted for currency effects, the BMW Group's balance
sheet total was slightly higher than at 31 December 2020.
Including currency effects from the US dollar, the British
pound and the Chinese Renminbi, amongst others, the bal-
ance sheet total grew solidly compared to the previous year².
1.0
Proportion of
balance sheet
total in % 2021
7.0
100.0
2.6
5.9
216,658
229,527
Total assets
16.2
18.3
13,537
16,009
Cash and cash equivalents
1.0
- 4.5
2,298
61.9
68.8
735
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
105
The BMW Group continued to deploy robust liquidity-related
measures throughout 2021 to ensure its ability to act flexibly
and independently at all times. Thanks to the combination of
financing measures taken and the high free cash flow gener-
ated during the year, liquidity on hand totalled € 20.2 billion
at 31 December 2021 and was therefore significantly higher
than the previous year's corresponding figure of € 17.8 bil-
lion.
* Measured at the exchange rate on the trade date of the respective transaction.
1.4
13.0
Commercial Paper
1.6
Australian Medium Term Notes
30.7
50.0
Euro Medium Term Notes
Amount utilised*
Programme volume
in € billion
Programmes
The credit line was not being utilised at 31 December 2021.
Further information with respect to financial liabilities is
provided in notes 31, 35 and 39 to the Group Financial
Statements.
The BMW Group also has access to a syndicated credit line,
which was renegotiated in July 2017. The syndicated credit
line of € 8 billion has a term ending in July 2024 and is being
made available by a consortium of 44 international banks.
The following table provides an overview of amounts utilised
at 31 December 2021 in connection with the BMW Group's
money and capital market programmes:
bond amounting to € 1.5 billion and a bond denominated in
Canadian dollars with a total value of 0.5 billion Canadian
dollar. ABS transactions with a total financing volume equiv-
alent to € 15.1 billion were executed in 2021, including both
new and rolled-over ABS transactions. During the year under
report, the BMW Group was party to ABS transactions in the
following markets: Australia, Canada, China, France, Germa-
ny, Japan, South Africa, South Korea, Switzerland, the USA
and the UK.
Financial Performance
← = Q
Other Information
← = Q
Financial Performance
NET ASSETS POSITION OF THE BMW GROUP
BMW GROUP CONDENSED BALANCE SHEET AT 31 DECEMBER
1,241
Other investments
2.2
42.6
42.6
3,585
5,112
Investments accounted for using the equity
method
5.7
9.8
19.5
2.9
6.4
41,995
44,700
Leased products
Corporate Governance
0.7
21,850
22,390
Property, plant and equipment
4.9
5.2
12,342
12,980
Intangible assets
ASSETS
Currency-adjusted
change in %1
Change in %
2020
2021
in € million
2.5
2021
in %
The BMW brand set a new record in 2021, delivering a total
of 2,213,7901 units (2020: 2,028,8411 units; +9.1%). The core
brand's growth was mainly attributable to its youthful, at-
tractive range of models. The BMW X family in particular re-
mained extremely popular. The BMW X3 and BMW X4 model
revisions launched in 2021 made a significant contribution to
the brand's strong overall sales performance. The figure in-
cluded 37,938 units of the new BMW iX33, which means ap-
proximately every tenth BMW X3 vehicle delivered worldwide
was all-electric.
2020
ix
4
110
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Performance
Sales volume situation in main markets:
new record set in China
Deliveries of BMW, MINI and Rolls-Royce brand vehicles in
Asia rose solidly to a new high of 1,067,9141 units (2020:
986,464 units; +8.3%). The sales figure for China grew by
8.9%, also resulting in a new record level of 847,9351 units
(2020: 778,412¹ units).
Europe saw a slight increase in the number of deliveries to
949,124 units (2020: 913,642 units; +3.9%). In Germany,
however, the impact of the coronavirus pandemic became
even more pronounced at the beginning of 2021, a fact re-
flected in weak sales figures during the early stages of the
year. Over the year as a whole, a total of 266,818 units were
delivered, well down on the previous year (2020: 285,019
units; -6.4%).
In the UK, sales of all three brands totalled 164,344 units
(2020: 163,174 units; +0.7%), marginally up on the previous
year's figure. France and Italy, however, both recorded
double-digit growth rates. Sales in France, for example, rose
to 76,845 units (2020: 69,880 units; +10.0%), while in Italy
the BMW Group delivered a total of 70,224 units (2020:
62,538 units; +12.3%).
Sales also recovered well in the Americas region during the
year under report, with delivery numbers rising to 451,747
units (2020:379,714 units; +19.0%). A total of 368,032 units
were delivered in the USA (2020: 307,876 units; +19.5%).
-
LARGEST AUTOMOBILE
BMW GROUP
MARKETS 2021
as a percentage of sales volume
Other
25.8
Italy
China
33.6
2.8
France
3.0
Korea
USA
47 Consumption and carbon emissions.
3.1
3 Includes the joint venture BMW Brilliance Automotive Ltd., Shenyang.
(2021: 651,236 units; 2020: 602,247 units).
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Performance
DELIVERIES OF ELECTRIFIED MODELS
2021
2020
Change in %
BMW Group PHEV
BMW Group BEV
Total
224,460
148,121
51.5
103,854
44,541
133.2
328,314
192,662
70.4
COURSE OF BUSINESS
Automotive segment
BMW Group retains leadership in premium segment
Despite global challenges such as semiconductor component
supply issues and the impact of the coronavirus pandemic,
the BMW Group can be satisfied with the positive course of
business in the financial year 2021. Driven by brisk demand
and an attractive product range, automobile deliveries grew
by a solid 8.4% to a total of 2,521,514¹ BMW, MINI and Rolls-
Royce brand vehicles (2020: 2,325,1791 units), enabling the
BMW Group to extend its lead in the premium segment.
Deliveries² of BMW brand vehicles grew by 9.1% to 2,213,7901
units (2020: 2,028,8411 units). MINI also recorded an in-
crease, with deliveries rising to 302,138 units (2020: 292,582
units; +3.3%). Rolls-Royce Motor Cars delivered a total of
5,586 units (2020: 3,756 units; +48.7%), the highest figure
recorded for the luxury marque to date.
Deliveries of electrified vehicles at record level
Electric mobility continues to gain in significance for the en-
tire sector and is a key driver of sales volume growth for the
BMW Group. The trend is reflected in the sharp rise in the
sale of electrified models offered by the BMW and MINI
brands.
With a total of 328,3143 units, deliveries jumped sharply by
70.4% in the year under report (2020: 192,662³ units). De-
mand was particularly strong for the Group's all-electric
models and delivery figures more than doubled year-on-year
to 103,8543 units (2020: 44,5413 units; +133.2%). Their
share of total delveries was 4.1% (2020: 1.9%) in the year
under report. Two additional all-electric models, the BMW iX4
and the BMW i44, went on sale towards the end of 2021, both
of which have been highly acclaimed in the trade press. By
the end of the period under report, the BMW Group had a
total of 14 electrified models on the roads. In 2022, the prod-
uct range will be expanded to include the all-electric BMW i7
luxury sedan and the BMW iX1. The increased share of deliv-
eries accounted for by electrified vehicles and the rigorous
use of Efficient Dynamics technologies enabled further pro-
gress to be made in decarbonising fleet emissions. Further
information is provided in the chapter 7 Carbon emissions and pol-
lutants.
in units
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
² See 7 Glossary for definition of deliveries.
14.6
UK
6.5
724.7
778.4
847.9
thereof China¹
847.7
871.8
930.8
986.5
1,067.9
Asia¹
358.8
355.4
375.7
307.9
368.0
thereof USA
456.1
457.1
472.9
379.7
451.7
242.4
236.8
233.8
163.2
164.3
1,101.9
296.5
310.6
330.5
635.8
595.0
Other markets
52.8
Germany
10.6
BMW GROUP DELIVERIES OF VEHICLES BY REGION AND MARKET 2
in 1,000 units
2021
2020
2019
2018
2017
BMW brand sets new record
Europe
thereof Germany
thereof UK
Americas
949.1
Combined Management Report
913.6
1,097.4
37 Consumption and carbon emissions.
2 Retail vehicle delivery data presented for 2020 and 2021 is not directly comparable to such data presented for previous years. For further information on retail vehicle delivery data, please see Comparison of
Forecasts with Actual Outcomes.
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 538,612 units; 2018: 455,581 units; 2017: 385,705 units).
2,465.0
2,486.1
2,537.5
2,325.2
2,521.5
Total1
59.3
59.9
52.2
45.4
1,081.6
2020
in € million
To Our Stakeholders
109
63.7
69,121
68.8
6.7
Gross value added
42,073
36.3
31,435
31.3
33.8
Depreciation and amortisation of total tangible,
intangible and investment assets
11,758
10.1
11,976
11.9
- 1.8
Net value added
30,315
26.2
19,459
19.3
55.8
ALLOCATION
Employees
12,286
40.5
12,244
63.0
73,772
0.3
- 18.9
16,766
in %
Change in %
111,239
96.0
98,990
98.4
12.4
2,904
2.5
650
0.6
1,702
1.5
916
0.9
85.8
115,845
100.0
100,556
100.0
15.2
60,173
51.9
52,355
52.1
14.9
Other expenses
Bought-in costs
13,599
11.8
16.7
Providers of finance
1,808
6.0
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Performance
BMW GROUP VALUE ADDED 2021
in %
Other expenses
11.8 %
Depreciation and
amortisation
10.1%
Cost of materials
51.9 %
Net
value added
26.2%
Employees
40.5 %
Government/public
sector
12.4 %
Group
28.2%
Providers of finance
6.0%
Shareholders
12.6 %
Minority interest
0.3%
BMW Group Report 2021
Cash inflow (+)/ outflow (-) from investing activities
108
* Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
2,129
10.9
- 15.1
Government / public sector
3,758
12.4
1,229
6.3
Shareholders
3,827
12.6
1,253
6.4
Group
BMW Group Report 2021
8,555
2,522
13.0
Minority interest
81
0.3
82
0.4
- 1.2
Net value added
30,315
100.0
19,459
100.0
55.8
28.2
Cash inflow (+)/outflow (-) from operating activities
266.8
CASH FLOWS FINANCIAL SERVICES SEGMENT
-6,735
- 8,254
1,519
Effects of exchange rate and changes in composition of Group
-307
140
-447
Change in cash and cash equivalents
2,472
1,501
971
102
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Performance
Free cash flow for the Automotive segment was as follows:
FREE CASH FLOW AUTOMOTIVE SEGMENT
in € million
Cash inflow (+)/outflow (-) from operating activities
Cash inflow (+)/ outflow (-) from financing activities
Cash inflow (+)/ outflow (-) from investing activities
- 2,753
-6,389
in € million
285.0
101
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Financial Performance
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
FINANCIAL POSITION OF
THE BMW GROUP
The consolidated cash flow statements for the Group and
the Automotive and Financial Services segments show the
sources and applications of cash flows for the financial years
2021 and 2020, classified according to operating, investing
and financing activities. Cash and cash equivalents in the
cash flow statements correspond to the amounts disclosed
in the balance sheet.
Cash flows from operating activities are determined indirect-
ly, starting with Group/segment profit before tax. By con-
trast, cash flows from investing and financing activities are
based on actual payments and receipts.
The main factors driving the higher net cash inflow from op-
erating activities were the Group's improved profit before tax
on the one hand and the overall change in working capital on
the other. Within working capital, the rise in trade payables
due to higher production volumes had a favourable effect,
while the increase in inventories in the Automotive segment
- partially compensated by a decrease in inventories in the
Financial Services segment - had an offsetting effect. Within
receivables from sales financing, amounts due from retail
customers went up on the back of higher business volumes.
On the other hand, receivables from dealership financing fell
in light of brisk demand and short standing times for ve-
hicles, and therefore had an offsetting effect. The decrease
in provisions mainly reflected the partial reversal in 2021 of
the risk provision in connection with the antitrust proceed-
ings of the EU Commission.
Substantial investments in property, plant and equipment
and intangible assets, in particular for the launch of new ve-
hicle models, resulted in a higher net cash outflow from in-
vesting activities. In the previous year, proceeds from the
sale of marketable securities and the receipt of a dividend
from BMW Brilliance Automotive Ltd., Shenyang, also had a
positive effect on the net cash flow from investing activities.
The change in the net cash outflow from financing activities
mainly reflected the higher level of financial liabilities pay-
able to BMW Group companies in which an investment is
held as well as the lower dividend paid out for the 2020 pan-
demic year.
BMW GROUP CASH FLOWS
in € million
Cash inflow (+)/ outflow (-) from operating activities
Cash inflow (+)/outflow (-) from investing activities
2021
2020
15,903
13,251
2,652
-3,636
Adjustment for net investment in marketable securities and investment funds
Free cash flow Automotive segment
Change
2020
1,115
Financial assets
24,887
21,277
3,610
Less: external financial liabilities*
-2,525
-2,815
290
Net financial assets Automotive segment
22,362
18,462
*Excluding derivative financial instruments.
103
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
2021
Cash and cash equivalents held by the Financial Services
segment changed as follows:
Financial Performance
7,996
9,111
3,900
8
-6,208
Intragroup net financing
- 3,933
Change
4,405
-2,275
-21
6,354
- 850
8,178
3,395
2,959
The Automotive segment generated free cash flow amount-
ing to € 6,354 million in 2021. The main factor influencing the
increase in the net cash inflow from operating activities was
the year-on-year improvement in profit before tax. Within
working capital, the positive impact of higher trade payables
was partially offset by the increase in inventories resulting
from production adjustments caused by semiconductor sup-
ply bottlenecks. The increase in the net cash outflow from
investing activities was mainly attributable to the changes
described in the Group Cash Flow Statement.
In the Automotive segment, net financial assets comprised
the following:
829
12,583
3,767
NET FINANCIAL ASSETS AUTOMOTIVE SEGMENT
Marketable securities and investment funds
2,487
9,522
3,759
Cash and cash equivalents
Change
31.12.2020
31.12.2021
in € million
12,009
12,096
Property, plant and equipment
12,740
12,520
Revenue reserves
2,239
Tangible, intangible and investment assets
Investments
5,067
3,826
3,827
1,253
18,511
11,013
Unappropriated profit available for distribution
2021
Capital reserves
488
704
660
662
Subscribed capital
EQUITY AND LIABILITIES
2020
in € million
2020
2021
Intangible assets
16,834
ASSETS
2,342
Equity
Prepaid expenses
15,165
9,995
10,093
Marketable securities
Cash and cash equivalents
Current assets
3,077
Other provisions
3,336
10,417
10,322
8,824
6,822
Liabilities to banks
in € million
Provisions
3,849
4,071
229
Inventories
7,287
5,748
Trade receivables
758
778
Registered profit-sharing certificates
26
27
Receivables from subsidiaries
Other receivables and other assets
21,019
18,939
Pension provisions
422
18,927
Financial Performance
- 3,858
Other Information
Research and development expenses
- 6,451
Other operating income
2,199
- 1,460
- 1,250
-3,243
2,991
- 280
- 1,068
4,927
-214
1,720
-17
4,910
-18
-426
1,702
Administrative expenses
Selling expenses
Results of operations
BMW AG INCOME STATEMENT
in € million
Revenues
Cost of sales
Gross profit
1
2020
- 63,726
11,314
-4,030
-2,747
-5,394
2021
88,526
-72,283
16,243
75,040
- 1,083
3,827
-449
1,253
The financial result deteriorated by € 146 million, mainly due
to lower income from designated plan assets offset against
pension obligations.
The expense for income taxes related primarily to current tax
for the financial year 2021.
After deducting the expense for taxes, the Company reports
a net profit of € 4,910 million, compared to € 1,702 million in
the previous year.
Subject to the shareholders' approval of the appropriation of
results at the Annual General Meeting, the unappropriated
profit available for distribution amounts to € 3,827 million
(2020: € 1,253 million). As a percentage of Group net profit,
the dividend corresponds to a payout ratio of 30.7% (2020:
32.5%), which is therefore within the forecasted target range
of 30% to 40%.
119
119
Income from profit transfer agreements with Group com-
panies, reported in the line item Result on investments, was
similar to one year earlier.
Financial and net assets position
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
BMW AG BALANCE SHEET AT 31 DECEMBER
Other operating expenses increased slightly to € 1,460 mil-
lion (2020: € 1,250 million) and, as in the previous year, com-
prised mainly expenses from financing transactions and ad-
ditions to other provisions.
Other operating income increased to € 2,199 million (2020:
€ 1,237 million), primarily due to income arising on the partial
reversal of the provision relating to EU Commission antitrust
proceedings.
chitectures. Research and development expenses rose by
19.6% year-on-year, reflecting the increase in vehicle and
module production start-up activities as the BMW Group
continues its electric offensive.
Other operating expenses
Result on investments
Financial result
Income taxes
Profit after income tax
Other taxes
Net profit
Transfer to revenue reserves
Unappropriated profit available for distribution
Revenues increased by € 13,486 million in 2021, primarily re-
flecting year-on-year sales volume growth. In geographical
terms, the greater part of the increase was generated
in the USA, China and Rest of Europe. Revenues totalled
€ 88,526 million (2020: € 75,040 million), of which Group
internal revenues accounted for € 60,373 million (2020:
€ 49,348 million) or 68.2% (2020: 65.8%).
Cost of sales went up by 13.4% to € 72,283 million, mostly
due to sales volume growth.
Gross profit rose by € 4,929 million to € 16,243 million.
3,084
Overall, selling expenses decreased slightly and general ad-
ministrative expenses increased significantly.
A large proportion of the research and development ex-
penses incurred in 2021 are related to new vehicle models
(including the all-electric BMW iX and BMW 14 models and
the new BMW 2 Series Active Tourer) as well as to the devel-
opment of digital products, automated driving and new ar-
← = Q
101
14,778
Other Information
To Our Stakeholders
BMW Group Report 2021
1=1
111
23,404
Surplus of pension and similar plan assets over liabilities
Total assets
Combined Management Report
1,086
Other liabilities
462
221
64,705
57,640
Liabilities
1,261
31,456
Group Financial Statements
Remuneration Report
To mark its 50th anniversary in 2022, the BMW M brand will
continue its market offensive with the addition of new
all-electric models, starting with the BMW iX M601, which
celebrated its world première on the North American market
at the beginning of 2022. Together with the BMW 14 M501,
the BMW Group is also focusing on electric mobility in the
high-performance class.
12.0
Share of BMW
Change in % deliveries 2021 in %
= Q
↑
2020
Corporate Governance
2021
DELIVERIES OF BMW VEHICLES BY MODEL VARIANT 1,2
New milestone in BMW M success story
The BMW Group marked a new milestone in the success
story of its BMW M brand in 2021, delivering a total of
163,541 units of its high-performance models (2020:
144,231 units), 13.4% up on the previous year. The new
BMW M31 and BMW M41 as well as the BMW X5 M1 and
BMW X6 M¹ Sports Activity Vehicles all contributed signifi-
cantly to the sales growth recorded in 2021.
The BMW brand brought a variety of new vehicles to market in
2021. For example, at the beginning of the year, the all-electric
BMW iX31 was launched in Europe, followed in March 2021 by
the BMW 320e¹ and BMW 520e¹. These two new entry-level
models with plug-in hybrid drive systems are part of the BMW
3 Series and BMW 5 Series respectively. The BMW X3 and
BMW X4 model revisions were launched during the summer.
The second generation of the BMW 4 Series Gran Coupé
celebrated its market début in the autumn. The all-new BMW
iX and BMW i4 models were added to the all-electric vehicle
product range in November 2021. The BMW 2 Series Coupé
was launched on the North American market towards the
end of the year under report, with other markets following in
early 2022.
Numerous new BMW brand products
Financial Performance
Other Information
in units
BMW 1 Series / BMW 2 Series
28,511
Total equity and liabilities
Equity increased by € 3,762 million to € 18,927 million due to
the higher level of unappropriated profit reported, which
was, in turn, attributable to the combined effect of the previ-
ous year's lower dividend payout and the higher transfer to
other revenue reserves as well as the issue of shares of pre-
ferred stock in conjunction with the Employee Share Pro-
gramme in 2021. The equity ratio changed from 26.3% to
29.3%.
In order to secure pension obligations, cash funds totalling
€ 1,081 million were transferred to BMW Trust e. V., Munich,
in conjunction with a Contractual Trust Arrangement (CTA),
to be invested in plan assets. Plan assets are offset against
the related guaranteed obligations. The resulting surplus of
assets over liabilities is reported in the BMW AG balance
sheet on the line item Surplus of pension and similar plan
assets over liabilities.
Provisions for pensions increased from € 229 million to
€ 422 million, after offsetting of pension plan assets against
pension obligations.
Other provisions decreased slightly from € 10,093 million to
€ 9,995 million due to the utilisation and partial reversal of
the provision relating to EU Commission antitrust proceed-
ings. This was mainly offset by additions to personnel-relat-
ed provisions and provisions for statutory and non-statutory
warranty and product guarantee obligations.
Liabilities to subsidiaries increased to € 24,462 million
(2020: € 23,404 million), mainly in connection with intra-
group refinancing.
Deferred income increased by € 264 million to € 3,879 mil-
lion and included primarily amounts for services still to be
performed relating to service and maintenance contracts.
The increase in other receivables and other assets to
€ 4,071 million (2020: € 3,849 million) was mainly attributa-
ble to higher tax receivables. The decrease in financial mar-
ket receivables had an offsetting effect.
Liquidity within the BMW Group is ensured by means of a li-
quidity concept applied uniformly across the Group. This in-
volves concentrating a significant part of the Group's liquid-
ity at the level of BMW AG. An important instrument in this
context is the cash pool based at BMW AG. The liquidity pos-
ition reported by BMW AG therefore reflects the global activ-
ities of BMW AG and other Group companies.
Risks and opportunities
BMW AG's performance is essentially dependent on the
same set of risks and opportunities that affect the
BMW Group and which are described in detail in the 7 Outlook,
Risk and Opportunity Management chapter of the Combined Man-
agement Report. As a general rule, BMW AG participates in
the risks entered into by Group companies in proportion to
the respective shareholding percentage. At the same time,
the result on investments has a significant impact on the
earnings of BMW AG.
BMW AG is integrated in the Group-wide risk management
system and internal control system of the BMW Group. Fur-
ther information is provided in the Internal Control System chap-
ter of the Combined Management Report.
Outlook
For the financial year 2022, BMW AG expects an unchanged
dividend payout ratio (unappropriated profit of BMW AG in
accordance with HGB in relation to the Group net profit at-
tributable to shareholders of BMW AG in accordance with
IFRS) within a range of between 30% and 40%. Up to the
financial year 2021, the payout ratio was defined as the un-
appropriated profit of BMW AG in accordance with HGB in
relation to the Group net profit in accordance with IFRS
(2021: 30.7%).
Cash and cash equivalents increased by € 2,002 million to
€ 8,824 million, mainly due to surpluses from operating ac-
tivities. Cash outflows for investments in fixed assets had an
offsetting effect.
Deferred income
Financial Performance
Other Information
3,879
64,705
3,615
57,640
Capital expenditure on intangible assets and property, plant
and equipment in the year under report totalled € 3,304 mil-
lion (2020: € 2,790 million), up by 18.4% compared to the
previous year. Depreciation and amortisation amounted to
€ 2,846 million (2020: € 2,646 million).
Investment assets increased to € 5,067 million (2020:
€ 3,826 million) mainly due to a non-cash contribution re-
corded in capital reserves in the amount of € 957 million at
the level of BMW INTEC Beteiligungs GmbH, Munich.
Inventories rose to € 7,287 million (2020: € 5,748 million),
primarily due to higher levels of bought-in goods for resale,
work in progress and finished goods.
← = Q
Receivables from subsidiaries increased to € 21,019 million
(2020: € 18,939 million), mainly reflecting the higher level of
intragroup trade receivables.
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
120
265,964
268,915
-1.1
17 Consumption and carbon emissions data
100.0
9.1
2,028,841
2,213,790
1.4
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2021: 651,236 units, 2020: 602,247 units).
10.7
31,179
BMW total
BMW i (iX, i3 and 18)
2.5
12.9
48,693
28,162
54,957
1
112
39,472
Trade payables
6,531
4,785
72
73
12
Liabilities to subsidiaries
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
24,462
BMW X7
10.9
16.3
- 6.1
66,728
62,628
BMW 7 Series / BMW 8 Series
14.7
1.2
2.8
322,457
BMW 5 Series / BMW 6 Series
22.2
16.8
420,295
490,969
BMW 3 Series / BMW 4 Series
326,212
BMW Z4
Financial Performance
14,982
206,774
240,504
BMW X5/X6
18.7
19.3
347,565
414,671
BMW X3/X4
14.1
2.5
304,270
311,928
BMW X1/X2
0.7
- 1.4
45,036
← = Q
Share of MINI
deliveries 2021 in %
Remuneration Report
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
115
Other Information
Financial Performance
Results of operations of the Motorcycles segment
The Motorcycles segment EBIT margin (profit before finan-
cial result as a percentage of revenues) came in at 8.3%
(2020: 4.5%; +3.8 percentage points) and thus within the
forecast target range of between 8 and 10%.
Profit before tax for the year was significantly higher at
€ 228 million (2020: € 100 million), mostly driven by favour-
able product mix effects and year-on-year sales volume
growth, the latter also partially reflecting the adverse impact
of coronavirus-related dealership closures in the previous
year.
The ROCE for the Motorcycles segment in 2021 was 35.9%
and therefore significantly higher than one year earlier (2020:
15.0%; +20.9 percentage points), mainly due to the im-
proved EBIT performance, and was therefore in line with the
revised outlook communicated in the quarterly statement to
30 September 2021.
Financial Services segment
Record segment profit before tax
← = Q
The financial year 2021 was a successful one for the Finan-
cial Services segment, with profit before tax up by 117.6% to
€ 3,753 million (2020: € 1,725 million). In the previous year,
additional risk provisioning expenses for credit and residual
value risks had had a negative impact on earnings. The year
under report, however, was influenced by the exceptionally
positive trend on pre-owned vehicle markets, particularly in
the USA and the UK. The upturn on the pre-owned market
caused the remarketing values of lease returns to increase
sharply. Alongside this favourable development, segment
earnings also benefited from the unchanged low level of al-
lowances that needed to be recognised for credit risks. The
credit loss ratio on the total credit portfolio fell to a historical-
ly low level of 0.18% at 31 December 2021 (2020: 0.21%),
comprising 0.11% (2020: 0.16%) for leasing business and
0.28% (2020: 0.31%) for credit financing business with re-
tail customers. Further information on risks and opportun-
15
New products unveiled: systematically embracing electrification
The BMW Group unveiled the BMW Motorrad Vision Amby at
the IAA Mobility in 2021. This completely new concept motor-
cycle has been designed as an electrified vehicle that com-
bines the typical elements of a bicycle and a motorcycle. To-
gether with the all-electric CE 02 concept vehicle, which was
presented to the public online in September, these models
provide a revealing glimpse of how the future of urban mobil-
ity could look.
France
10.2
Other
Italy
40.2
8.3
BMW Motorrad systematically continued to pursue its elec-
tric mobility strategy throughout the year under report, in-
cluding the unveiling of the CE 04 Electric Scooter (Urban
Mobility segment) in July 2021. The launch of this new prod-
uct is scheduled for the first half of 2022.
Brazil
5.7
Spain
6.5
8.3
China
7.4
USA
Germany
13.4
ities in the Financial Services segment is provided in the
chapter Risk and opportunity management.
New business with retail customers moderately up on previous
year
2 EU Bank comprises BMW Bank GmbH with its branches in Italy, Spain and
Portugal.
116
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
1 The calculation only includes automobile markets in which the Financial Services
segment is represented by a consolidated entity.
Corporate Governance
Other Information
← = Q
Financial Performance
BMW GROUP NEW VEHICLES FINANCED OR
LEASED BY FINANCIAL SERVICES SEGMENT1
in %
52.2
Remuneration Report
In balance sheet terms, business volume grew slightly by 4.8%
to stand at € 139,530 million at the end of the reporting period
(2020: € 133,093 million).
2021
2019
A total of 1,956,514 new credit financing and leasing contracts
were signed with retail customers during 2021 (2020:
1,845,271 contracts; +6.0%). The improved performance in
2021 reflected growth in both new credit financing business
(+7.8%) and new leasing business (+2.4%). The biggest in-
creases were registered in China and the USA. Overall, leas-
ing accounted for 31.8% and credit financing for 68.2% of
new business.
Business with pre-owned vehicles also developed positively,
with the number of new contracts signed up by 1.4%. In
total, 411,520 new credit financing and leasing contracts for
pre-owned BMW and MINI brand vehicles were signed dur-
ing the year under report (2020: 405,713 contracts).
The total volume of new credit financing and leasing con-
tracts concluded with retail customers during the 12-month
period amounted to € 63,414 million, significantly up on the
previous year (2020: € 57,200 million; +10.9%).
The share of new BMW Group vehicles either leased or fi-
nanced by the Financial Services segment stood at 50.5%¹
(2020: 49.8%; +0.7 percentage points).
At 31 December 2021, the contract portfolio with retail cus-
tomers comprised 5,577,011 contracts and was therefore at a
similar level to one year earlier (2020: 5,591,799 contracts;
-0.3%). In regional terms, China grew at the fastest rate,
registering a 9.0% year-on-year increase. The Asia/Pacific
region finished at a similar level to the previous year (+0.3%).
By contrast, the Americas (-2.2%), the EU Bank² (-1.7%)
and the Europe/Middle East/Africa regions (-1.7%) all reg-
istered slight contract portfolio decreases.
CONTRACT PORTFOLIO OF FINANCIAL
SERVICES SEGMENT WITH RETAIL CUSTOMERS
2020
in 1,000 units
5,486 5,592
5,577
4,926
|
2017
2018
5,235
as a percentage of sales volume
LARGEST MOTORCYCLE
BMW GROUP
MARKETS 2021
2021
2020
Change
in %-points
17.6
11.6
6.0
In line with expectations, the Automotive segment's RoCE
for 2021 rose sharply to 59.9% (2020: 12.7%; +47.2 percent-
age points), mainly due to the considerable year-on-year rise
in EBIT on the one hand and the lower volume of capital em-
ployed on the other, the latter attributable primarily to lower
average inventories during the financial year under report.
10.3
7.6
17.8
15.0
2.8
EBIT margin²
8.3
2.7
4.5
Profit before tax for the year amounted to € 11,805 million
and was therefore significantly higher than one year earlier
(2020: € 2,722 million).
MOTORCYCLES
← = Q
Financial Performance
Results of operations of the Automotive segment
Automotive segment revenues amounted to € 95,476 mil-
lion (2020: € 80,853 million; +18.1%, currency-adjusted:
+18.3%) and were therefore significantly higher than one
year earlier.
Sales volume was also higher in 2021, whereby the increase
was held down by production shortfalls due to supply bottle-
necks for semiconductor components. However, this un-
favourable impact was more than offset by improved pricing
due to both the growing desire for individual mobility on the
one hand and the reduced worldwide availability of products
triggered by those same semiconductor component short-
ages on the other. Other factors with a positive impact on
segment revenues were the increased volume of high-re-
venue vehicles sold, the exceptionally strong performance of
pre-owned vehicle markets and hence better residual values
and growth in spare parts and accessories business.
Segment cost of sales rose significantly to € 78,637 million
(2020: € 71,456 million; +10.0%), whereby the year-on-year
increase was primarily attributable to sales volume growth.
Further negative factors included rises in raw materials and
energy prices, higher expenses due to the increasing propor-
tion of electrified vehicles, larger allocations to provisions for
performance-related remuneration components and higher
research and development expenses. In the previous year,
warranty expenses were impacted by the recognition of pro-
visions in connection with the exhaust gas recirculation cool-
er and other warranty-related items.
As described in the section above on the results of opera-
tions for the BMW Group as a whole, the changeover effects
arising from the modernisation of the pension model in Ger-
many had a total positive impact of € 542 million on Auto-
motive segment cost of sales and selling and administrative
expenses, while higher expenses for performance-related
remuneration components had an offsetting effect.
Gross profit margin¹
The net amount of other operating income and expenses im-
proved significantly, largely due to the partial reversal of the
provision for EU antitrust proceedings in the second quarter
2021, as described above.
At € 1,935 million, the Automotive segment's financial result
was significantly up on the previous year (2020: € 560 mil-
lion). As described above, the main driving factors in this re-
spect were the improved result from the at-equity accounted
Chinese joint venture BMW Brilliance Automotive Ltd., Shen-
yang, positive valuation effects recognised in other financial
result arising on investments held by the BMW i Ventures
fund and on the investment in SGL Carbon shares.
BMW GROUP MARGINS BY SEGMENT
in %
AUTOMOTIVE
Gross profit margin¹
EBIT margin²
The Automotive segment EBIT margin (profit before finan-
cial result as a percentage of revenues) came in at 10.3%
(2020: 2.7%; +7.6 percentage points). As forecast in the
quarterly statement to 30 September 2021, the EBIT margin
was within the target range of between 9.5 and 10.5% and
therefore in line with revised expectations. In the 2020 An-
nual Report, a segment EBIT margin within a target range of
between 6 and 8% was forecast.
3.8
1 Gross profit as a percentage of segment revenues.
2 Profit before financial result as percentage of segment revenues.
BMW GROUP DELIVERIES OF MOTORCYCLES
in 1,000 units
175.2
164.2
165.6
169.3
194.3
(Roadster segment), the G 310 GS (Adventure segment) and
the R 1250 RT (Tour segment). The S 1000 R was also added
to the model range in the Roadster segment in May. Last but
not least, in September, BMW Motorrad launched the R 18 B
and the R 18 Transcontinental models in the Heritage seg-
ment – two further derivatives of the 1,800 cc boxer family.
|||||
2017
2018
2019
2020
2021
-
0
The BMW Group brought five new motorcycle models and
three model revisions onto the market in 2021. The first of
these was the M 1000 RR the first M model from BMW
Motorrad to be powered by a high-performance in-line
four-cylinder engine - which was launched in February 2021
in the Sports segment. The same month saw the launch of
the R 18 Classic in the Heritage segment, based on the
high-capacity 1,800 cc R18 boxer engine. The launch was
followed in March 2021 by the model revisions of the G 310 R
-
New models launched in the year under report
114
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Performance
Motorcycles segment
BMW Motorrad reports best sales performance to date
The Motorcycles segment had the most successful year in its
history with a total of 194,261 units delivered during the year
under report (2020: 169,272 units), 14.8% up on the previ-
ous year. Despite the ongoing impact of semiconductor
shortages and pandemic-related issues, the revised outlook
for the full year, as communicated in the quarterly statement
to 30 September 2021, was achieved within a generally fa-
vourable market environment.
Sales volume growth in nearly all markets
In Europe, sales volume grew solidly by 8.9% to 111,126 units
in 2021 (2020: 102,026 units). Excellent sales performances
were recorded for France with 19,887 units (2020: 17,539
units; +13.4%), Italy with 16,034 units (2020: 13,918 units;
+15.2%) and Spain with 12,616 units (2020: 11,030 units;
+14.4%). Within a generally contracting market, deliveries in
Germany fell moderately to 25,972 units (2020: 27,516 units;
-5.6%).
Figures for the USA were also significantly higher than in
the previous year, with deliveries rising at a double-digit
rate to 16,030 units (2020: 12,135 units; +32.1%). The pic-
ture was similar in China, where deliveries climbed by 21.4%
to 14,309 units (2020: 11,788 units). Brazil also saw a slight
increase, with deliveries rising to 11,150 units (2020: 10,707
units; +4.1%).
50.1
Other Information
49.8
46.7
|
3,756
5,586
Rolls-Royce total
10.1
2,199
2,422
48.7
Cullinan
873
828
Wraith/Dawn
324
1,909
18.6
-5.2
360
2021
Change in %
77,709
82,363
10.0
-7.8
32,958
30,385
2020
8.3
24,875
25,120
54.4
4.6
157,040
164,270
1.0
6.0
427
Phantom
LNC 3136
Financial Performance
← = Q
Business environment and review of operations
The general and sector-specific environment of BMW AG is
essentially the same as that of the BMW Group and is de-
scribed in the ▾ Financial Performance section of the Combined
Management Report.
BMW AG develops, manufactures and sells automobiles and
motorcycles as well as spare parts and accessories manu-
factured in-house, by foreign subsidiaries and by external
suppliers, and performs services related to these products.
Sales activities are conducted primarily through branches,
subsidiaries, independent dealerships and importers. Bene-
fiting mainly from the diminishing impact of the coronavirus
pandemic, automobile deliveries increased by 187,648 units
to 2,437,591 units in the financial year 2021. This figure in-
cludes 674,995 units relating to series sets supplied to the
joint venture BMW Brilliance Automotive Ltd., Shenyang, an
increase of 76,142 units over the previous year.
At 31 December 2021, BMW AG employed a workforce of
83,308 people (31 December 2020: 84,668 people).
UCC 991
Despite the global challenges driven by semiconductor sup-
ply shortages and the impact of the coronavirus pandemic,
BMW AG can be satisfied with the course of business in the
financial year 2021.
118
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
The BMW Group's results of operations, financial position
and net assets of the financial year 2021 are indicative of its
solid financial condition. Business developed in line with
management expectations. This assessment also takes into
account events after the end of the reporting period.
Ghost
Sales growth for MINI
Revised models of the MINI 3-door, MINI 5-door and MINI
Convertible were also launched during the year under report.
Demand for the John Cooper Works Performance models re-
mained high.
Change in %
2020
2021
in units
DELIVERIES OF ROLLS-ROYCE VEHICLES BY MODEL
VARIANT *
MINI total
MINI also recorded higher sales volumes, with a total of
302,138 units delivered worldwide (2020: 292,582; +3.3%).
A key factor driving the growth was the number of electrified
vehicles sold. The all-electric MINI Cooper SE* was the
best-selling model in the MINI family, with sales almost
doubling to 34,851 units year-on-year (2020: 17,580 units;
+98.2%). Together with the MINI Countryman Plug-in Hy-
brid, it accounted for 18% of the brand's total deliveries
worldwide in 2021.
MINI Countryman
MINI Convertible
MINI Hatch (3- and 5-door)
in units
DELIVERIES OF MINI VEHICLES BY MODEL VARIANT
Rolls-Royce Motor Cars can also look back on a highly suc-
cessful year, in which a record number of 5,586 ultra-luxury
vehicles were delivered to customers (2020: 3,756 units;
+48.7%). High demand for the marque worldwide was driv-
en in particular by the popularity of the Ghost* and the Cull-
inan*. The Black Badge variants, with their exclusive fea-
tures and more powerful engines, also remained extremely
sought-after.
New record for Rolls-Royce
MINI Clubman
27.3
302,138
292,582
in % per region
Asia/Pacific
7.8
China
14.2
EU Bank²
CONTRACT PORTFOLIO RETAIL CUSTOMER FINAN-
CING OF FINANCIAL SERVICES SEGMENT 2021
18.3
Middle East/Africa
35.2
Americas
24.5
Due to adjustments in delivery figures, numbers have been adjusted retroactively,
7 Glossary.
2 With effect from the fourth quarter 2019, the EU Bank comprises BMW Bank
GmbH and its branches in Italy, Spain and Portugal. The former subsidiary in
France was transferred for organisational purposes to the Europe / Middle East/
Africa region in conjunction with strategic realignments.
Under the brand name Alphabet, the Financial Services seg-
ment's fleet management business primarily offers leasing
and financing arrangements as well as specialist services to
commercial customers. At 31 December 2021, the contract
portfolio stood at 696,393 contracts (2020: 704,977 con-
tracts; -1.2%).
Dealership financing significantly lower
Europe/
The dealership financing line of business was impacted by a
significant reduction in vehicle inventories held by dealer-
ships at the end of the year, mainly due to constraints on
new vehicle production caused by semiconductor shortages
on the one hand and the high demand for new and pre-
owned vehicles on the other. As a result, the volume of deal-
ership financing decreased significantly by 19.0% to € 13,149
million at 31 December 2021 (2020: € 16,241 million).
2021
2019
22.3
21.2
21.4
20.8
LEASING 20.7
FINANCING
2020
28.9
28.4
29.7
26.0
0
2017
2018
29.9
Results of operations of the Financial Services segment
Financial Services segment revenues increased to
€ 32,867 million (2020: € 30,044 million; +9.4%), driven in
particular by the higher level of revenues generated with
end-of-contract business on the back of ongoing favourable
conditions on pre-owned vehicle markets. Segment cost of
sales went up by € 791 million (2020: € 26,958 million;
+2.9%), mainly due to increased costs associated with the
sale of returned lease vehicles.
At the same time, the remarketing values of those vehicles
also surged, with a corresponding positive impact on earn-
ings. Moreover, segment earnings benefited from the un-
changed low level of allowances required to be recognised
for credit risks. This contrasts with the situation one year ear-
lier, when earnings were impacted by additional risk provi-
sioning expenses for credit and residual value risks in light of
the coronavirus pandemic.
The Financial Services segment's profit before tax rose sig-
nificantly to € 3,753 million (2020: € 1,725 million).
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
based in Munich, Germany, is the parent company of the
BMW Group. The comments on the BMW Group and the Au-
tomotive segment provided in earlier sections apply to
BMW AG, unless presented differently in the following sec-
tion. The Financial Statements of BMW AG are drawn up in
accordance with the provisions of the German Commercial
Code (HGB) and the relevant supplementary provisions con-
tained in the German Stock Corporation Act (AktG).
The key financial performance indicator for BMW AG is the
dividend payout ratio (unappropriated profit of BMW AG in
accordance with HGB in relation to net profit for the year of
the BMW Group in accordance with IFRS). The key non-fi-
nancial performance indicators are essentially identical and
concurrent with those of the BMW Group. These are de-
scribed in detail in the Financial Performance section of the
Combined Management Report.
Differences in accounting treatments based on HGB (used
for the Company Financial Statements) and IFRS (used for
the Group Financial Statements) are mainly to be found in
connection with the capitalisation of intangible assets, the
creation of valuation units, the recognition and measure-
ment of financial instruments and provisions as well as the
recognition of deferred tax assets. Differences also arise in
the presentation of assets and liabilities and of items in the
income statement.
Other Information
Remuneration Report
Corporate Governance
FINANCIAL STATEMENTS
OF BMW AG
Group Financial Statements
To Our Stakeholders
BMW Group Report 2021
113
⚫ 7 Consumption and carbon emissions
100.0
3.3
Combined Management Report
COMMENTS ON THE
Financial Performance
← = Q
Return on equity (ROE) finished at 22.6%, significantly high-
er than the level recorded one year earlier (2020: 11.2%;
+11.4 percentage points). The main reason for the increase
was the improved risk profile throughout the year
in par-
ticular thanks to better remarketing outcomes and lower ex-
penses for credit risk allowances.
-
The RoE in 2021 was therefore in line with the revised fore-
cast of between 20 and 23%. Originally, an RoE within a
range of 12 to 15% was predicted for 2021 in the BMW Group
Report 2020.
Other Entities segment/Eliminations
The Other Entities segment recorded a profit before tax of
€ 531 million in the financial year under report (2020: loss
before tax of € 235 million). The turnaround was primarily
attributable to the improvement in other financial result,
which benefited from the recognition of fair value measure-
ment gains on interest rate hedges entered into with match-
ing maturities in conjunction with the refinancing of Financial
Services business in a period of rising rather than falling in-
terest rates.
Eliminations gave rise to a loss before tax of € 257 million
(2020: profit before tax of € 910 million). The deterioration
here reflected the higher volume of leasing-business-related
eliminations required, primarily due to the year-on-year in-
crease in new leasing business, both in terms of sales vol-
ume and contract values.
17
117
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
50.5
In addition, a number of series production models were pre-
sented to the public during the year under report, including the
C 400 GT and C 400 X Scooter models in March and the
K1600 GT, K1600 GTL and K1600 B Tourer models in October.
1,237
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesell-
schaft, Frankfurt am Main, Munich branch, has issued an
unqualified audit opinion on the financial statements of
BMW AG, of which the balance sheet and the income state-
ment are presented here. The BMW AG financial statements
for the financial year 2021 will be submitted to the operator of
the electronic version of the German Federal Gazette and
can be obtained via the Company Register website. These
financial statements are available on the BMW Group's web-
site at www.bmwgroup.com/ir.
Due to its significance in the Group and its close ties with
Group companies, expectations for BMW AG with respect to
its non-financial performance indicators correspond largely
to the BMW Group's outlook. This is described in detail in the
7 Outlook, Risk and Opportunity Management section of the Combined
Management Report.
BMW Group Report 2021
BMW GROUP KEY PERFORMANCE INDICATORS
Outlook, Risk and Opportunity Management
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
GROUP
To our Stakeholders
128
The BMW Group's actual business performance may also
deviate from current expectations due to the risks and op-
portunities discussed below in the section on Risk and Oppor-
tunity Management.
Without taking the full consolidation of BMW Brilliance into
account, the targets described above would have been
achieved with only a slight rise in the overall number of em-
ployees. However, the increase in the stake in BMW Bril-
liance and the full consolidation of that entity will cause the
number of employees to rise significantly.
The share of women in management functions within the
BMW Group is expected to rise slightly, irrespective of the
Group's increased stake in BMW Brilliance.
tax is set to increase significantly over the forecast period,
mainly reflecting BMW Brilliance's additional contribution to
the Automotive segment's operating profit as well as the
remeasurement of the at-equity investment previously re-
corded, with a positive effect of approximately € 7 to € 8 bil-
lion to be recognised within the financial result. These ef-
fects would more than compensate for the elimination of the
previous at-equity result of BMW Brilliance in the financial
result and the negative impact of consolidated adjustments
arising on full consolidation. Even taking into account the
negative impact of production schedule adjustments and in-
terruptions triggered by the war in Ukraine, Group profit is
expected to increase significantly.
Excluding the impact of the full consolidation of BMW Bril-
liance, Group profit before tax would have decreased signifi-
cantly. Without the impact of the war in Ukraine, sales vol-
umes would have been expected to develop positively over
the forecast period. However, this volume growth would not
have been sufficient to compensate for the previous year's
effects, such as the partial reversal of the provision relating
to the concluded antitrust proceedings, the remeasurement
gains arising on the modernisation of the pension plan, and
the highly favourable risk situation within the credit and leas-
ing lines of business. Nonetheless, including the impact of
the full consolidation of BMW Brilliance, Group profit before
The RoE in the Financial Services segment is predicted to
finish within a range of between 14 and 17%. Compared with
the financial year 2021, it has been assumed that the highly
favourable results from remarketing lease returns, combined
with an easing of the supply situation for semiconductors
during the second half of the year, will return to a normal lev-
el. The full consolidation of BMW Brilliance will not impact
the Financial Services segment, as the companies held
jointly with BMW Brilliance that are attributable to this seg-
ment have already been reported on a fully consolidated ba-
sis due to the segment's majority shareholdings in the enti-
ties concerned. Likewise, no significant impact is currently
expected from the war in Ukraine.
Motorcycles segment deliveries are forecast to increase
slightly. The EBIT margin is predicted to finish within a range
of between 8 and 10% and, based on the revised methodol-
ogy, the segment ROCE within a range of 19 and 24%. Key
performance indicators for the Motorcycles segment will only
be marginally affected by the full consolidation of BMW Bril-
liance and are not currently expected to be substantially im-
pacted by the war in Ukraine.
BMW Group Report 2021
Profit before tax
Workforce at year-end
Share of women in management positions
tons
CO₂ emissions per vehicle produced³
EBIT margin
115.9
g/km
CO₂ emissions EU New Vehicle Fleet²
13.0
%
Share of electrified vehicles in deliveries
2,521,514
units
Deliveries to customers'
18.8
%
16,060
118,909
€ million
2021
adjusted
2021
reported
AUTOMOTIVE SEGMENT
in the BMW Group
ments and interruptions triggered by the war in Ukraine, a
ROCE in a range between 14 and 19% is now considered
more likely.
← = Q
Other Information
Remuneration Report
The dual impact of an economic upturn and supply bottle-
necks caused raw materials prices to rise sharply in 2021.
The BMW Group expects the overall situation on raw mate-
rials and energy markets to remain tense in the foreseeable
future and has already taken the initial impact of the pre-
vailing situation into account in its outlook for the financial
year 2022.
However, international demand for semiconductors is still
predicted to remain high, causing the supply situation to re-
main tight. As in the financial year 2021, the risk of supply
bottlenecks affecting the availability of the semiconductor
components required for production persists and the situa-
tion is not expected to ease before the second half of 2022.
The coronavirus pandemic is no longer currently expected to
have a significant impact on the results of operations, finan-
cial and net assets position of BMW AG and the Group as a
whole.
-
The outlook takes account of all information available at the
time of reporting and which could have an impact on the
overall course of business of the Group. The expectations
contained in the outlook are based on the BMW Group's
forecast for 2022 and reflect its most recent status. The ba-
sis for the preparation of and the principal assumptions used
in the forecasts – which consider the consensual opinions of
leading organisations, such as economic research institutes
and banks are set out below. The BMW Group's outlook
takes account of these assumptions.
Outlook, Risk and Opportunity Management
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To our Stakeholders
BMW Group Report 2021
126
* See note [3] to the Group Financial Statements
The following outlook covers a forecast period of one year
and is based on the composition of the BMW Group during
that time. For this reason, the outlook also includes the im-
pact of fully consolidating BMW Brilliance Automotive Ltd.,
Shenyang, (BMW Brilliance). On 11 February 2022, the
BMW Group increased its shareholding in the BMW Bril-
liance joint venture from 50% to 75%*. The full consolida-
tion of BMW Brilliance with effect from that date has a signif-
icant impact on some of the BMW Group's key performance
indicators.
Both the Outlook and the Risk and Opportunity Manage-
ment sections of this report contain forward-looking state-
ments based on the BMW Group's expectations and assess-
ments and may be influenced by unforeseeable events. As a
result, actual outcomes can deviate either positively or neg-
atively from the expectations described below, due to chang-
es in the political and economic environment as well as other
factors. Risk and Opportunity Management
Assumptions used in the outlook
Moreover, the war in Ukraine is having a substantial effect on
that country's automotive supply industry, with supply restric-
tions resulting in production schedule adjustments and/or
interruptions at a number of BMW Group plants.
0.33
The outlook does not factor in the following:
An escalation of the conflict outside Ukraine
Corporate Governance
Group Financial Statements
Combined Management Report
Outlook, Risk and Opportunity Management
To our Stakeholders
BMW Group Report 2021
127
2 Carbon emissions per vehicle produced already take BMW Brilliance into account.
1 Delivery figures already include vehicles produced by BMW Brilliance.
Based on the newly adopted methodology, RoCE for the Au-
tomotive segment would have been forecast at between 19
and 24%, reflecting the lower level of earnings otherwise
expected without the increase in the stake in BMW Brilliance
and the impact of the war in Ukraine. However, the addition-
al net assets identified in conjunction with the increased
stake in BMW Brilliance plus fair value adjustments arising
on the purchase price allocation have the twin effect of in-
creasing capital employed. In combination with elimination
effects on earnings in 2022, the targeted range for ROCE
would therefore have been between 15 and 20%. However,
in light of the adverse impact of production schedule adjust-
Although, as described above, the BMW Group had been set
to forecast sales volume growth, the EBIT margin had never-
theless been expected to be lower year-on-year due to the
absence of various positive effects that had benefited the fi-
nancial year 2021, such as the partial reversal of the provi-
sion relating to the concluded antitrust proceedings, the
remeasurement gains arising on the modernisation of the
pension plan, and the highly favourable risk situation in the
leasing line of business. The full consolidation of BMW Bril-
liance would have increased segment revenues and EBIT
sharply, but due to consolidation effects, no significant im-
pact on the EBIT margin in the Automotive segment was ex-
pected for the financial year 2022 and the figure would have
been likely to remain between 8 and 10%. However, in light
of the probable adverse impact of production schedule ad-
justments and interruptions triggered by the war in Ukraine,
an EBIT margin of between 7 and 9% is now thought to be
more realistic.
Excluding the impact of the full consolidation of BMW Bril-
liance and the war in Ukraine, the Automotive segment EBIT
margin had been expected to finish within a target range of
between 8 and 10%.
Without the impact of the war in Ukraine, carbon emissions
per vehicle produced would have been predicted to decline
moderately². However, in light of the likely adverse impact of
production schedule adjustments and interruptions trig-
gered by the war in Ukraine, the scale of reduction is now
only expected to be slight.
The BMW Group expects to achieve its target of slightly cut-
ting the carbon emissions generated by its EU new vehicle
fleet, driven in particular by the significantly growing share of
electrified automobiles in total deliveries.
Prior to the outbreak of war in Ukraine, the BMW Group was
set to forecast slight year-on-year growth in deliveries of
BMW, MINI and Rolls-Royce brand vehicles for the Automo-
tive segment. However, due to the production schedule ad-
justments and interruptions described above that have been
triggered by the war in Ukraine, it now predicts deliveries to
remain at previous year's level.
- key performance
-
Outlook for the BMW Group
indicators
Regardless of these uncertainties, however, the situation re-
mains highly volatile, making it very difficult to accurately
forecast outcomes for the financial year 2022. Other possible
longer-term effects of the war in Ukraine cannot be estimat-
ed at the present time and are therefore not taken into ac-
count in the outlook.
Additional major price hikes for energy and raw materi-
als, including rises triggered by the war in Ukraine and/or
the related sanctions
A significant tightening of sanctions against Russia or a
change in the interpretation of existing sanctions
Expected consequences for the BMW Group
Future developments on international automobile markets
have a direct impact on the BMW Group. The challenging
market environment, the supply situation for vehicle compo-
nents, the coronavirus pandemic and further developments
in the Ukraine conflict are currently the factors most likely to
have a significant impact on business performance. Flexible
coordination between the Group's sales and production net-
works will also help cushion the impact of unforeseeable de-
velopments in individual regions. Risk and Opportunity Management
%
Return on capital employed (ROCE)"
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
Outlook, Risk and Opportunity Management
To our Stakeholders
BMW Group Report 2021
130
← = Q
BMW
The Management and the Supervisory Board do not see any
threat to the BMW Group's status as a going concern. Simi-
lar to one year earlier, the current set of risks to the
BMW Group are considered to be manageable. If these risks
- or opportunities - were to materialise, they could have an
impact on underlying key performance indicators, thus caus-
ing deviations from the outlook. Regardless of the full con-
solidation of BMW Brilliance, the BMW Group's financial re-
sources are stable and liquidity requirements are currently
covered by existing liquidity as well as the various financing
instruments available.
Overall Risk and Opportunity Situation
The assessment of the overall risk situation is based on a
consolidated view of all significant individual risks to which
the BMW Group is exposed. The BMW Group's overall expo-
sure to risk, including the impact of integrating BMW Bril-
liance, has increased moderately compared with the previ-
ous year. A prolonged military conflict between Russia and
Ukraine and a worsening of the coronavirus pandemic could
I have a further negative impact on the global economy and
hold down sales volume. At the same time, considerable un-
certainties remain in the form of potential bottlenecks along
the entire supply chain, particularly for semiconductors.
However, if the effect of these issues were to prove less se-
vere in 2022 than currently expected, opportunities could
arise that could benefit both revenues and earnings.
With effect from 11 February 2022, the BMW Brilliance Auto-
motive Ltd. (BMW Brilliance) joint venture is fully consolidat-
ed in the Group Financial Statements. If the full consolida-
tion of BMW Brilliance from that date is expected to result in
a different classification of individual risk categories, such
changes are indicated separately in this Risk Report.
Medium to long-term risks in connection with the climate
change are described in the section Climate-related opportunities
and risks.
As a general rule, the time horizon considered covers the
current and the following financial year. Potential short-term
effects of climate change are taken into account.
All opportunities and risks that are expected to materialise
have already been addressed in the Outlook Report. The fol-
lowing sections focus on potential future developments or
events that could result in a positive (opportunity) or a nega-
tive (risk) deviation from the outlook for the BMW Group.
The aim of the risk management system is to identify, as-
sess and proactively manage any risks that could threaten
the attainment of the Group's corporate targets. As part of
that process, any individual or cumulative risks capable of
posing a threat to the profitability of the business are both
monitored and managed.
31-9 457 423-16° X MT 5.00 H2 MIC
In addition to the risks described below, unforeseen events
could have a negative impact on business operations and
hence on the BMW Group's results of operations, financial
position and net assets as well as on its reputation.
Organisation of Risk Management
Risk management is organised as a decentralised, Group-
wide network and steered by a centralised risk management
function. The various BMW Group divisions are represented
by Network Representatives. The responsibilities and tasks
of the centralised risk management function and the Net-
work Representatives are clearly documented and accepted.
Risks pertaining to BMW Brilliance are incorporated in this
Risk Report on the basis of the assessment made by the
centralised risk management function. In future, BMW Bril-
liance will also be integrated in the risk management net-
work. Significant risks reported from within the network are
firstly presented for review to the Risk Management Steering
Committee, which is chaired by Group Controlling. After they
have been reviewed, any significant risks are reported to
both the Board of Management and the Supervisory Board's
Audit Committee.
Internal Control System
Measures
Board of
Management
Completeness
Supervisory
Board
Risk Manage-
ment Steering
Committee
Controlling
Reporting/
Monitoring
Group
Compliance
Council
Practicability
Effectiveness
Analysis and
Measurement
Identifi-
cation
Group-wide risk management
RISK MANAGEMENT IN THE BMW GROUP
The risk management process is applicable across the entire
Group and comprises the early identification, analysis and
measurement of risks, the coordinated use of appropriate
risk management tools and the monitoring and assessment
of the measures taken.
ment Guidelines as well as in the Group's overall risk strat-
egy. New information and requirements are continuously in-
corporated in the BMW Group's risk management system,
thereby ensuring its ongoing development. Training pro-
grammes and informational events are regularly conducted
throughout the BMW Group, particularly within the risk man-
agement network.
According to Group-wide guidelines, every employee and
manager has a duty to report risks via the relevant reporting
channels. The key elements of an appropriate risk culture are
embedded in the BMW Group's core values, the BMW Group
Risk Management Policy and the BMW Group Risk Manage-
Other functions such as Compliance and Human Rights and
the Internal Control System serve as key interfaces to the risk
management system. In its capacity as an independent con-
trol body, Corporate Audit reviews the risk management sys-
tem established by the Board of Management on an annual
basis.
The management of risks and opportunities is essential in
order to respond appropriately to any changes that occur in
political, economic, ecological, social, technological or legal
conditions. The BMW Group has put a comprehensive risk
management system in place to effectively manage these
risks as they arise.
The BMW Group's business is exposed to a variety of uncer-
tainties and changes. Against this backdrop, it consciously
takes well-calculated risks and makes full use of any oppor-
tunities that present themselves.
RISK AND OPPORTUNITY
MANAGEMENT
Outlook, Risk and Opportunity Management
units
between 7 and 9
between 14 and 19
Slight decrease
Slight decrease
Significant increase
in line with last
year's level
Slight increase
Significant increase
Significant increase
2022
Outlook
Return of Equity (RoE)
FINANCIAL SERVICES SEGMENT
Return on capital employed (ROCE)4
EBIT margin
Deliveries to customers
MOTORCYCLES SEGMENT
24.0
59.9
%
194,261
10.3
Slight increase
8.3
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To our Stakeholders
BMW Group Report 2021
129
4 New method of calculation applied with effect from 2022. Performance Management
1 Deliveries including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2021: 651,236 units).
² EU-27 countries including Norway and Iceland; with effect from 2021, values are calculated on a converted basis in line with WLTP (Worldwide Harmonised Light Vehicles Test Procedure).
3 Efficiency ratio calculated on the basis of Scope 1 and Scope 2 CO₂ emissions (i.e. a market-based method according to GHG Protocol Scope 2 guidance; but excluding climate-changing gases other than carbon
dioxide from vehicle production (BMW Group manufacturing sites incl. joint venture BMW Brilliance Automotive Ltd. and motorcycles, but excluding contract manufacturers), as well as BMW Group non-manufac-
turing sites, (e.g. Research centre, Sales centre, offices) divided by the number of vehicles (excluding motorcycles) produced (BMW Group manufacturing sites incl. joint venture BMW Brilliance Automotive Ltd.,
excluding contract manufacturers).
between 14 and 17
22.6
%
between 19 and 24
21.9
35.9
%
between 8 and 10
%
121
The impact of the war in Ukraine, the limited availability of
vehicle components, the further course of the coronavirus
pandemic, and macroeconomic factors will continue to influ-
ence the performance of motorcycles markets in 2022.
+4
to other environmental
not cause significant harm
Economic activity does
+
environmental objectives
substantial contribution
to at least one of the
screening criteria:
Fulfillment of technical
objectives
+
Act on environmental
objectives 1 and 2
described in the Delegated
Economic activities are
By 2025 the share of electrified automobiles in total Group
deliveries is expected to rise to at least 30%. Over the next
decade, we expect that some ten million of our all-electric
vehicles will be on the roads. Therefore, by 2030, at least
every second automobile delivered by the BMW Group will
be an all-electric model. ]]
The taxonomy-aligned proportions that will need to be re-
ported in the coming years will initially be significantly lower
than these values. They will subsequently increase due to
the growing share of zero-emissions vehicles, the develop-
ment and production methods used, and potentially contri-
butions made to other environmental objectives as yet to be
defined. Due to the high level of investment in the trans-
formation of our business activities, for example in the elec-
trification of our vehicles and research into alternative drive
systems, these economic activities have the potential to be-
come taxonomy-aligned over time. Overall, we anticipate
that the proportion of taxonomy-aligned economic activities
will steadily rise as a result of the increasing electrification of
our product portfolio.
Accordingly, for 2021, 82.9% of revenues, 99.7% of capital
expenditure, and 100.0% of operational expenditure are
taxonomy-eligible.
Financial Services segment, are not described as economic
activities in the Delegated Regulation and are therefore not
taxonomy-eligible.
Reporting from 2022 onwards
Taxonomy eligibility
Ensuring the minimum
safeguard criteria
+
Non-eligible activities
Eligible activities
REVENUES
[ MANDATORY EU TAXONOMY DISCLOSURES
EU Taxonomy
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
123
* It should be noted that the relevant Delegated Regulation describes the economic
activity "Manufacture of low-carbon technologies for transport" differently for
Environmental Objective 1 (Climate change mitigation) and Environmental Objec-
tive 2 (Climate change adaptation). For the purposes of consistent reporting on the
taxonomy-eligibility of vehicle production, the BMW Group follows the description
given for Environmental Objective 1, given that taxonomy-eligible vehicle produc-
tion as listed for Environmental Objective 2 is a subset of taxonomy-eligible vehicle
production for Environmental Objective 1.
taxonomy-
aligned
Economic
activity is
]]
for occupational and
human rights
Reporting in 2021
[EXPLANATORY COMMENTS ON REPORTING PROCEDURES
Only the sale of parts and components, such as aftersales
business excluding the provision of repair services and the
supply of production components to BMW Brilliance Auto-
motive Ltd. (BBA) as well as other third parties, and non-au-
tomotive banking and insurance services performed by the
Based on the descriptions of the two economic activities list-
ed for Environmental Objective 1 (Climate change mitiga-
tion), a large part of the BMW Group's business model falls
within the scope of the EU taxonomy*.
significantly harmed, and minimum protection criteria for oc-
cupational safety and human rights must also be met.
Substantial contribution depends on the extent to which the
economic activity in question fulfils so-called technical
screening criteria. No other environmental objective may be
6) The protection and restoration of biodiversity and
ecosystems
4) The transition to a circular economy
5) Pollution prevention and control
3) The sustainable use and protection of water and
marine resources
2) Climate change adaptation
1) Climate change mitigation
Essentially, an economic activity can only be classified as
sustainable if it makes a substantial contribution to one of
the following six environmental objectives:
The EU taxonomy is a classification system that defines
economic activities as environmentally sustainable based on
predetermined criteria. Environmental sustainability is as-
certained in three steps.
[Within the framework of the EU Green Deal and the Action
Plan "Financing Sustainable Growth", the EU taxonomy is a
cornerstone of the EU's aspiration to become climate-neu-
tral by 2050. Its key objectives are to create transparency for
capital market participants and to channel capital flows to-
wards sustainable economic activities.
EU TAXONOMY
EU Taxonomy
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
The EU Taxonomy Regulation was published in July 2020.
The Delegated Act on the first two environmental objectives,
climate change mitigation and climate change adaptation,
and the delegated regulation on reporting requirements
(Article 8 of the EU Taxonomy Regulation) came into force at
the end of December 2021*. In addition, the EU Commission
published an initial FAQ document in December 2021 and a
second FAQ document in early February 2022 to explain ap-
plication issues relevant for the first year of reporting. On the
basis of the phased introduction of the EU taxonomy in the
Delegated Acts, in 2021 companies such as the BMW Group
are required to report the taxonomy-eligible proportion of
revenues, capital expenditures and operational expenditures
for the first two environmental objectives. From the reporting
years 2022 and 2023 onwards, the reporting requirements
are to be successively expanded to include the taxono-
my-aligned proportion of revenues, capital and operational
expenditures and to all environmental objectives.
CAPITAL EXPENDITURE
Our understanding of sustainability
across its entire value chain by 2050, we welcome initiatives
that serve this objective. For this reason, we have set our-
selves specific targets and report systematically each year
on the actual levels achieved.
7 Overview of the BMW Group
Economic activity 6.5 Transport by motorbikes, passen-
ger cars and light commercial vehicles including the pur-
chase, financing, renting, leasing and operation of pas-
senger cars and motorcycles.
7 Overview of the BMW Group
Economic activity 3.3 Manufacture of low carbon technol-
ogies for transport including the production of passenger
vehicles and motorcycles.
An economic activity is taxonomy-eligible if it is described in
the Delegated Acts relating to the six environmental objec-
tives, regardless of whether that economic activity meets all
of the technical screening criteria stipulated in those Dele-
gated Acts. The BMW Group's business activities can cur-
rently be allocated to two economic activities that are de-
scribed in the Delegated Act relating to the first two
environmental objectives:
[Explanatory comments on reporting procedures
For the reporting year 2021, the currently applicable simplifi-
cation rules only require reporting on taxonomy eligibility in
relation to the environmental objections of climate change
mitigation and climate change adaptation. Taxonomy eligi-
bility is an indicator of the environmental sustainability po-
tential of an economic activity based on the selective re-
quirements of the EU taxonomy. It does not, however, say
anything about the actual sustainability of a company's eco-
nomic activities at the present point in time. Our aspiration is
to successively make all of the BMW Group's economic ac-
tivities more sustainable.
= Q
↑
EU Taxonomy
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
122
⚫ Commission Delegated Regulation (EU) 2021/2139 dated 4 June 2021 and
Commission Delegated Regulation (EU) 2021/2178 dated 6 July 2021.
In the coming years, the significant growth in electric mobility
will mean that - depending on the energy mix - the majority of
carbon emissions will be generated in particular within the up-
stream value chain rather than in the use phase. Without the
anticipated set of measures, emissions generated within the
BMW Group supply chain would already exceed direct carbon
emissions in the use phase prior to 2030. Strategy/Supplier net-
work/Carbon emissions Accordingly, the BMW Group is taking a ho-
listic approach to achieving its sustainability-related targets
and is committed to considering carbon emissions over the
entire life cycle of the vehicles it produces. Carbon Emissions and
Pollutants Currently, however, for the purpose of assessing car-
bon emissions, the EU taxonomy focuses exclusively on reduc-
ing emissions in the use phase that are attributable to locally
emissions-free drive systems, an approach which also ignores
the emissions indirectly attributable to the supply of energy.
Moreover, the taxonomy only reflects the impact of decarbon-
isation measures in production to the extent that they serve to
manufacture taxonomy-aligned products. However, increasing
the energy efficiency of paint shop processes also reduces
carbon emissions when a conventionally powered vehicle is
painted. 1]
The BMW Group supports the overarching aim of the EU
Taxonomy Regulation to promote the private financing of
sustainable economic activities in order to make Europe the
world's first climate-neutral continent by 2050. As a com-
pany aspiring to establish a climate-neutral business model
Group Audit
Eligible activities
Total (in € million)
Europe's automobile markets are expected to grow moder-
ately in 2022 (12.5 million units; +6%).
Supply bottlenecks are likely to continue having a dampen-
ing impact on automobile markets in 2022. The war in
Ukraine will significantly exacerbate the current supply bot-
tlenecks. The forecasts are generally based on the assump-
tion that the supply bottlenecks will be overcome in the sec-
ond half of 2022. Registration figures worldwide are expected
to grow at a slightly faster rate than in the previous year (ap-
proximately 77 million units; +4%). However, due to the
marked weakness of recent years, absolute registration fig-
ures remain well below normal levels.
International automobile markets
The Russian rouble has depreciated significantly, especially
since the beginning of the military conflict with Ukraine. The
currencies of emerging market countries such as Brazil and
India are likely to remain under pressure against the US dol-
lar and the euro in 2022, mainly due to the ongoing impact of
the coronavirus pandemic.
After appreciating against the euro in 2021, the Chinese ren-
minbi is expected to lose in value slightly in the course of
2022, due to the Chinese central bank's recent decision to
ease monetary policy with a view to ensuring that the greater
demand for financing can be met.
The central bank in Japan is unlikely to change its highly ex-
pansionary monetary policy in 2022. The yen is therefore
likely to depreciate slightly against the euro.
Combined Management Report
Outlook, Risk and Opportunity Management
← = Q
The trend is similar in the USA, with the market expected to
grow by 6% to 15.9 million units in 2022. However, this is still
below the pre-coronavirus crisis level.
Other Information
Corporate Governance
Group Financial Statements
To our Stakeholders
BMW Group Report 2021
125
Following the gain in value of the British pound against the
euro in 2021 and the tighter monetary policy predicted in the
UK over the 12-month period, combined with moderate inter-
est rate hikes, a further slight appreciation of the currency is
expected in 2022.
Whereas the ECB is likely to keep persevering with its expan-
sionary monetary policy in 2022, the US Federal Reserve
has announced its intention to tighten its policy in light of
high inflation and the USA's strong economic recovery and
to raise interest rates during the first half of 2022. Compared
with the previous year, the US dollar is therefore likely to ap-
preciate against the euro.
Currencies of particular importance for the international op-
erations of the BMW Group are the Chinese renminbi, the
British pound, the US dollar and the Japanese yen.
Remuneration Report
In China, on the other hand, the automobile market as a
whole is expected to remain flat, reflecting the slowdown in
economic momentum. After the slight recovery in 2021, pas-
senger vehicle registrations are therefore expected to be in
the region of 21.2 million units in 2022, just 1% up on the
previous year.
The Japanese automobile market is currently predicted to
expand slightly in 2022 (4.4 million units; +2%).
+2
+1
+6
+12
+6
+4
+4
+6
in Registrations %
+6
Change
International motorcycle markets
Total
Japan
China
USA
thereof Germany
thereof France
thereof Italy
thereof Spain
thereof UK
Europe
INTERNATIONAL AUTOMOBILE MARKETS
Registration figures on international automobile markets are
expected to develop as follows in 2022:
Currency markets and international interest rate
environment
After a slight recovery in the year under report, the pace of
growth in Japan is projected to increase moderately in 2022
(+2.3%).
After strong growth in the previous year, momentum in China
is expected to drop slightly in 2022. A growth rate of 5.1% is
therefore projected for the 12-month period.
economy.
Regulation (EC) No. 1126/2008. Revenues relating to the
sale of parts and components (e.g. after-sales business ex-
cluding the provision of repair services) and the supply of
production components to BBA and third parties, insurance
premiums, and interest income on deposit-taking and credit
business were not included, as these economic activities are
not classified as taxonomy-eligible.
]]
0.0
0
Proportion (in %)
100.0
4,478
Total (in € million)
Further information on revenues is provided in note 7 to the
Group Financial Statements. Revenues are calculated in ac-
cordance with Article 2(5) of Directive 2013/34/EU. Re-
venues comprise revenue and income items recognised in
accordance with IAS 1.82(a), as amended by Commission
The proportion of total revenues, capital expenditure and op-
erational expenditure relating to eligible and non-eligible ac-
tivities are shown in each case as an aggregate percentage
for the BMW Group. Only taxonomy-eligible revenues, cap-
ital expenditure, and operational expenditure as listed for
Environmental Objective 1 ("Climate change mitigation") are
disclosed, given that taxonomy-eligible revenues, capital ex-
penditure and operational expenditure for Environmental
Objective 2 ("Climate change adaptation") are a subset of
the values for Environmental Objective 1 ("Climate change
mitigation"). This approach avoids double counting of rev-
enues, capital expenditure and operational expenditure
when determining the KPI in the numerator across multiple
economic activities.
[Technical information
Non-eligible activities
Eligible activities
OPERATIONAL EXPENDITURE
Proportion (in %)
99.7
0.3
67
25,917
Total (in € million)
Proportion (in %)
82.9
17.1
92,262
18,977
In the case of the disclosures for capital expenditure, ref-
erence is made to 7 note 21 and 7 note 22 to the Group Finan-
cial Statements. Capital expenditure is calculated in accord-
ance with IAS 16.73 (e) (i) and (iii) (Property, Plant and
Equipment), IAS 38.118 (e) (i) (Intangible Assets) and IFRS
16.53 (h) (Leases). In accordance with the definition of cap-
ital expenditure provided in Annex I of the Delegated Regu-
lation (EU) 2021/2178, the KPI figure used for taxonomy
purposes comprises additions to intangible assets, in par-
ticular capitalised development costs, additions to property,
plant and equipment as well as right-of-use assets in ac-
cordance with IFRS 16, and leased-out products. Capital
expenditure relating to the sale of parts to external third
Non-eligible activities
parties or the delivery of parts to cooperation partners (in-
cluding BBA) are not taken into account.
124
A growth rate of 3.2% is projected for the USA in 2022,
which is still positive, although not as strong as in the previ-
ous year. The stimulus and infrastructure packages adopted
by the US Administration are likely to provide support for the
The UK economy is projected to grow by 3.5% in 2022 de-
spite labour shortages and continued supply bottlenecks.
In the Eurozone, GDP growth is projected to be around 3.0 %
in 2022. At 2.1%, the growth rate in Germany is expected to
be slightly lower than one year earlier and similar figures are
predicted for France (+2.8%), Italy (+3.1%) and Spain
(+4.6%).
According to IMF projections in January, the global economy
will continue to grow in 2022, less strongly than in the previ-
ous year, and reach a level of around 4.0%. Risks definitely
persist, however, first and foremost due to the further course
of the war in Ukraine, the estimated impact of which has
been taken into account in the current economic forecasts
only rudimentarily. High inflation is likely to lead to interest
rate increases in some countries and weaken demand to
some extent. New virus variants, pandemic-related restric-
tions or prolonged supply bottlenecks could slow the pace of
economic growth. Further information on political and global
economic risks is also available in the section Risk and Oppor-
tunity Management.
Economic outlook
It is not yet possible to accurately assess the full impact of
the war in Ukraine, as the situation remains highly volatile,
making it extremely difficult to forecast macroeconomic de-
velopments and the likely performance of international auto-
mobile markets in the financial year 2022 Forecast assumptions.
Both the Outlook and the Risk and Opportunity Management
sections of this report present the expected development in
2022, including the main risks and opportunities from the
perspective of the BMW Group's management. In line with
the Group's performance management, the outlook covers a
period of one year. Risks and opportunities are managed
on the basis of a two-year assessment period. Disclosures
relating to risk and opportunity management therefore ad-
dress a period of two years.
OUTLOOK
RISK AND OPPORTUNITY MANAGEMENT
OUTLOOK,
Outlook, Risk and Opportunity Management
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To our Stakeholders
BMW Group Report 2021
Operational expenditure comprises only non-capitalised
development costs, maintenance and refurbishment costs
for buildings, repairs to property, plant and equipment, rele-
vant IT costs in the Financial Services segment, non-capital-
ised expenses relating to short-term lease contracts with
expenditure for low value assets, and contracts with purely
variable remuneration. The KPI figure calculated for taxono-
my-purposes is not used by the BMW Group for financial re-
porting purposes. ]]
The BMW Group expects, subject to the further development
in Ukraine, the world's motorcycle markets in the 250 cc plus
class to remain stable in 2022, with volumes generally re-
maining at the previous year's level.
The continuous forecasting process applied within the
BMW Group ensures that it is constantly ready to take ad-
vantage of opportunities as they arise, but also to react ap-
propriately to any unexpected risks. The principal risks and
opportunities are described in detail in the Risk and Oppor-
tunity Management section. Actual outcomes may deviate
from the outlook due to unexpected events.
At present, the BMW Group is seeing a continuous trend to-
wards increasingly stringent vehicle emissions regulations,
particularly for conventional drive systems, with the aim of
improving air quality, above all in conurbations. A legislative
proposal for the new Euro 7 emissions standard is being dis-
cussed within the European Union. As the technical require-
ments and the implementation timetable for the new stand-
ard are still subject to consultation, a certain element of risk
is involved. A discussion about fuel consumption and carbon
A further risk is seen in the very high rate of inflation current-
ly being observed in many regions. If inflation were to remain
high over an extended period, rising prices would curb de-
mand. The expected interest rate hikes by central banks will
also have a dampening effect on business.
Macroeconomic opportunities that could have a sustained
positive impact on the BMW Group's results of operation are
classified as insignificant.
Strategic and Sector-Specific Risks and Opportunities
Changes in legislation and regulatory requirements
The introduction of more stringent legislation and regula-
tions, particularly regarding emissions, safety and consumer
protection as well as regional vehicle-related purchase and
usage taxes, poses a significant risk for the automobile in-
dustry. Country- and sector-specific trade barriers can also
be subject to change at short notice. Any sudden tightening
of regulations in these areas could necessitate significantly
higher investments and ongoing expenses or exert influence
on customer behaviour. The risk amount attached to the oc-
currence of the risk of disruption in product availability due to
unforeseeable short-term changes in legislation and regula-
tions is classified as high.
emissions could affect the Company's reputation.
Additional risks could result from the tightening of existing
import and export regulations, which could, in turn, lead pri-
marily to additional expenses, but also complicate the im-
port and export of vehicles and parts.
Changes in trade policies could also have a positive impact
on the BMW Group's earnings in the short to medium term.
Any reduction in tariff barriers, import restrictions or direct
excise duties could result in lower manufacturing costs or
enable products and services to be offered to customers at
more attractive prices. Additional opportunities potentially
arising from changes in legislation and regulations are clas-
sified as insignificant.
Market developments
Increasingly fierce competition among established manufac-
turers and the emergence of new competitors can have re-
percussions that are difficult to predict. Unforeseen con-
sumer preferences and changes in brand perceptions could
also give rise to both opportunities and risks. The risk amount
attached to the occurrence of market risks over the two-year
assessment period is classified as medium.
Any toughening of market competition could ramp up pres-
sure on sales volume and selling prices. For instance, the
BMW Group could be confronted with short-term supply and
demand distortions in the transition from conventionally
powered vehicles to alternative drive concepts. Customer
behaviour can also change, such as in the event of changing
social values and norms or as a consequence of governmen-
tal policies relating to vehicle usage.
Sales markets are continuously monitored in order to opti-
mally meet customer requirements and, at the same time,
capitalise on opportunities in terms of sales growth and pri-
cing. Opportunities arising over the assessment period are
classified as insignificant.
134
BMW Group Report 2021
To our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Outlook, Risk and Opportunity Management
ing from simple tariff increases to further import and export
restrictions on specific technologies. This could also lead to
less favourable import and export conditions for the
BMW Group.
Risks and Opportunities Relating to Operations
Risks and opportunities relating to production and technologies
Risks relating to production processes and fields of technol-
ogy can lead to unplanned production interruptions or add-
itional costs due to vehicle recall actions. The risk amount
attached to the occurrence of such risks over the two-year
assessment period is classified as medium.
The conflict between the USA and China is also set to re-
main a major topic of discussion. The focus is currently shift-
Global supply shortfalls - particularly for semiconductors
continue to dampen the prospects of economic growth.
These bottlenecks could persist throughout the whole of
2022, with the resulting shortage of (upstream) products
causing the hitherto strong recovery of the global economy
to lose pace.
Medium
Medium
Increased
Stable
Stable
Decreased
Stable
Significant
Stable
Insignificant
Significant
Decreased
Stable
1 The classified risk amount does not change as a result of the full consolidation of BMW Brilliance.
2 As shown in the section "Risk measurement", the risk amount ranges used for risk classification purposes have been updated. The change shown here relates to the classification of prior-year risks using the
updated risk amount ranges.
133
BMW Group Report 2021
To our Stakeholders
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Combined Management Report
Outlook, Risk and Opportunity Management
Macroeconomic Risks and Opportunities
Economic conditions have an impact on business perform-
ance and hence on the level of earnings generated by the
BMW Group. Unforeseen disruptions in global economic re-
lations can have highly unpredictable effects. The risk
amount over the two-year assessment period is classified as
medium.
The invasion of Ukraine by Russian troops has, among other
factors, triggered supply restrictions affecting components
from Ukraine which have already led to production schedule
adjustments and interruptions at a number of BMW Group
plants. If the military conflict continues for a prolonged peri-
od, it will also have a perceptible impact on sales.
There is a risk of a further escalation of the conflict and
therefore of the sanctions imposed by Western countries on
Russia as well as possible retaliatory measures by Russia.
Any additional sanctions relating to the capital market and
the import and export of goods and raw materials will have
distinct consequences that are also likely to have a negative
impact on economies outside Russia.
Mutation could result in the emergence of a highly conta-
gious coronavirus variant that could, in tum, cause severe
disease. In this case, strict containment measures could
slow down the economic recovery. The BMW Group is moni-
toring the situation on a continuous basis and taking appro-
priate measures as required.
Medium
Potential causes of production downtimes include fires, nat-
ural hazards and infrastructural damage as well as machine
and tooling breakdowns. Equally significantly, however, pro-
duction could also be impaired by bottlenecks in the supply
of production materials or components, utility or media sup-
ply failures or disruptions to transportation, logistics or IT
systems, all of which could be caused by cyberattacks,
among other factors.
Technical fire protection, transparency with regard to poten-
tial natural hazards relevant for site selection and ongoing
operations, underpinned by other appropriate (e.g. struc-
tural) measures, a rapid response by on-site fire services
and employee training are the key strategies for preventing
or reducing any potential damage from fires and/or natural
hazards. Furthermore, policies are in place with insurance
companies of high credit standing to mitigate the impact of
any property damage caused by fire and/or natural events
that lead to significant business interruptions at either the
Group's or suppliers' premises.
tures to new and existing BMW Group production plants as
well as the introduction of innovative production technol-
ogies, could lead to lower cost of materials for the
BMW Group.
Opportunities arising over the assessment period are classi-
fied as insignificant.
Risks and opportunities relating to the sales network
In order to sell its products and services, the BMW Group op-
erates a global sales network - mainly comprising inde-
pendent dealerships, branches, subsidiaries and importers.
Any threat to the continued activities of parts of the sales
network, for example due to the impending insolvency of
large-scale dealerships, would entail risks for the
BMW Group. The risk amount attached to sales and market-
ing risks over the two-year assessment period is classified
as low.
As in other areas, the BMW Group is shaping the future of its
sales organisation with a clear focus on placing the custom-
er experience at the centre of its activities. Our declared aim
is to deliver the best premium brand and customer experi-
ence in the industry. A key building block in this endeavour is
the digitalisation of the customer journey. In conjunction with
the dealership organisation, new opportunities are arising in
this context, which the BMW Group, however, classifies as
insignificant.
Information security, data protection and IT
Digitalisation and automation across all areas of the busi-
ness and all BMW Group products offer excellent opportu-
nities that are helping move the organisation forward on its
strategic path towards sustainability. At the same time, re-
quirements regarding the confidentiality, integrity and avail-
ability of information are becoming increasingly strict, with a
corresponding impact on the related use of information tech-
nology (IT). The level of threat has continuously risen in re-
cent years and the impact of the military conflict between
Russia and Ukraine could lead to a further increase in the
number of cyberattacks. Moreover, legal and regulatory re-
quirements are becoming ever stricter worldwide. Examples
include the Second Act to Increase the Security of Informa-
tion Technology Systems (German IT Security Act 2.0) and
new data protection laws in China.
In view of the higher incidence of observed attacks on
BMW Group applications and systems, the risk amount
despite extensive security measures - is classified as high.
In addition to threats in the form of cyberattacks and phys-
ical interventions, information and data can also be compro-
mised by a lack of risk awareness and inappropriate behav-
iour. The main direct consequences would be negative
effects on revenues, disruption in the production of compo-
nents and vehicles, or reputational damage.
The BMW Group places great emphasis on protecting busi-
ness information, for instance against unauthorised access
and/or misuse. Data security is an integral part of all Group
business processes and practised in accordance with the
ISO/IEC 27001 international standard. In conjunction with
risk management requirements, risks relating to information
security, data protection and IT are systematically docu-
mented, allocated appropriate measures by the departments
concerned and continuously monitored with regard to threat
level and risk mitigation. Regular analyses and controls as
well as tight security management policies ensure an appro-
priate level of security.
However, despite continuous testing and preventive security
measures, it is impossible to completely eliminate risks in
this area. All authorised persons are required to treat infor-
mation such as confidential business, customer and em-
ployee data with great care, use information systems
securely and handle risks in a transparent manner. Uniform
requirements that apply throughout the Group are
136
BMW Group Report 2021
To our Stakeholders
Corporate Governance
Remuneration Report
Other Information
← = Q
Combined Management Report
Outlook, Risk and Opportunity Management
documented in a comprehensive set of rules and guidelines.
A consistently applied policy of updating such rules and reg-
ulations to current situations, coupled with regular commu-
nication, awareness-raising and training measures, form the
basis for a high level of security and risk awareness in
general.
With regard to cooperations and business partnerships, the
BMW Group protects its intellectual property as well as its
customer and employee data by issuing clearly defined in-
structions on information security and data protection. Trade
secrets and sensitive personal data are subject to particular-
ly stringent security measures.
Within the Purchasing and Supplier Network, opportunities
arise primarily in the context of global sourcing and associ-
ated efficiency improvements. Making optimal use of any
innovations developed by suppliers is a key prerequisite for
developing future-oriented mobility products and services.
Similarly, favourable location-related cost factors, particular-
ly those arising due to the close proximity of supplier struc-
All production units have a variety of measures in place to
deal with potential production interruptions and downtimes,
some of which are already integrated in the planning process
and also applied at operational level with a high degree of
flexibility. These measures have an effect on both the amount
of damage and the probability of the risks occurring.
The risks associated with the supply of raw materials are
mitigated either by reducing the use of the raw materials in
question or substituting them with alternative products.
The increased threat of cyberattacks along the entire value
chain also affects supply security as well as the ability to
protect know-how relevant to the BMW Group. In order to
ensure a uniform level of IT security for all those involved
along the value and supply chain, the BMW Group impresses
on suppliers the importance of obtaining appropriate IT se-
curity certification.
Appropriate measures have been put in place to counter the
threat of targeted cyberattacks, reflecting the fact that any
such attacks could cause damage to production facilities
and possibly result in long downtimes and substantial
losses.
Vehicles could be damaged or destroyed by natural hazards
or other threats during transport from the Group's production
plants to its various sales regions. Premiums and deductibles
for transport insurance policies currently remain at a persis-
tently high level. Any further increase could make it econom-
ically unviable to take out insurance, as a result of which the
BMW Group would be required to bear the losses itself.
The BMW Group recognises appropriate provisions for stat-
utory and non-statutory warranty obligations. It cannot be
ruled out, however, that additional costs could arise in con-
junction with vehicle recalls that are either not covered or not
fully covered by provisions. Despitely, deploying thorough
quality assurance processes, such risks can always arise if
the materials and/or processing procedures used prove in-
sufficient, in some cases years after a product has been
launched. A high number of recalls could also have a nega-
tive impact on the BMW Group's reputation. Further infor-
mation on risks in conjunction with provisions for statutory
and non-statutory warranty obligations is provided in
note 33 to the Group Financial Statements.
The development and testing of new technologies inherently
give rise to a certain level of risk. An accident - for example
involving a vehicle in automated driving mode could have
a negative impact on the Company's reputation, regardless
of cause. Avoiding these risks is a top priority for the
BMW Group.
The BMW Group sees opportunities relating to production
processes and fields of technology primarily in the competi-
tive edge gained from mastering new and complex technol-
ogies. Given the long lead times involved in developing new
products and processes, additional opportunities are not
expected to have a significant earnings impact on the
BMW Group during the assessment period.
Risks and opportunities relating to purchasing
Purchasing risks relate primarily to supply risks caused by
the failure of a supplier as well as to threats to BMW Group-rel-
evant know-how within the supplier network. Production
problems at supplier level could lead to consequences
caused by increased expenditure for the BMW Group due to
production interruptions and a corresponding reduction in
vehicle sales. The BMW Group deploys an extensive set of
checks and proactive management measures to tackle the
challenges currently facing the automotive supply industry.
The risk amount attached to purchasing risks over the two-
year assessment period is classified as high.
Potential reasons for the failure of individual suppliers to de-
liver include IT-related risks, non-compliance with sustain-
ability or quality standards, the lack of availability of raw ma-
terials and other input materials, and the occurrence of
natural hazards and/or fires. Insufficient financial capacity
on the part of individual suppliers can also jeopardise sup-
plies to production plants. In this context, the BMW Group
ensures financial support for suppliers that are of critical im-
portance for maintaining production. Moreover, any major
deterioration of a particular country's security situation is
incorporated in the risk measurement process as a potential
reason for the failure of a value or supply chain.
Among other challenges, the military conflict between Rus-
sia and Ukraine is causing disruptions in the supply of com-
ponents produced in Ukraine. Any further escalation could
potentially affect both direct suppliers and upstream
sub-suppliers from neighbouring countries, thereby aggra-
vating the supply situation still further and curtailing the
availability of raw materials from Russia.
The growing complexity of the supplier network, particularly
in the case of sub-suppliers whose operations can only be
indirectly monitored by the BMW Group, is a further potential
cause of downtimes at supplier locations. Due to the high
level of demand on international semiconductor markets, the
135
BMW Group Report 2021
To our Stakeholders
Combined Management Report
Outlook, Risk and Opportunity Management
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
BMW Group has already experienced temporary bottlenecks
in the supply of electronic components.
The ongoing tight supply situation along the entire supply
chain particularly due to bottlenecks affecting the supply of
semiconductors could continue to result in adjustments to
the production schedule. Reporting on such eventualities
could also have a negative impact on the Company's reputa-
tion. The BMW Group is monitoring the situation very closely,
assessing developments on a continual basis and ensuring
that supply chains and production plants are working to-
gether as closely as possible.
When selecting its suppliers, the BMW Group not only takes
into account external requirements, such as those contained
in the German Supply Chain Due Diligence Act (Lieferketten-
sorgfaltspflichtengesetz), but also ensures that the sustain-
ability standards set internally by the Group are met.
The loss or theft of sensitive business information could also
have a negative impact on the Company's reputation.
Low
Stable
> € 1,000 million
The impact of risks and opportunities is presented separate-
ly without offsetting. If no specific reference is made, oppor-
tunities and risks relate to the Automotive segment. The
scope of entities consolidated for risk reporting purposes
corresponds to the scope of consolidated entities included in
the BMW Group Financial Statements.
Monitoring Risk-Bearing Capacity
Group-wide effects and trends can be identified by aggre-
gating all significant risks at Group level using value-at-risk
models. For this purpose, the potential earnings impact of
the risks (confidence level: 99%) is aggregated, taking cor-
relation effects into account. In order to assess the risk-bear-
ing capacity of the BMW Group, the aggregated amount of
risks is compared with the risk cover amount (i. e. the equity
capital of the BMW Group recognised for accounting pur-
poses). A limit system for various risks helps monitor the
risk-bearing capacity.
Managing Reputational Risks
Quite apart from the financial consequences, risks can also
have an impact on the BMW Group's reputation. For these
purposes, the BMW Group assesses all risks with regard to
their impact on its reputation using a scoring model. More-
over, other overarching topics are monitored by means of
regular media analysis. Any significant reputational reper-
cussions are described in the following sections.
Managing Non-Financial Risks as Reported in the NFS
Alongside the maintenance of a comprehensive system of
risk management, sustainability constitutes a core strategic
principle of the BMW Group. Risks resulting from sustain-
ability issues are generally identified via the Group-wide risk
management network.
In accordance with § 289c of the German Commercial Code
(HGB) risks that could have an impact on the non-financial
aspects referred to in the relevant legislation are reviewed as
part of the reporting process. Significant risks in this context
are defined as those stemming from business activities,
business relationships and products and services provided
by the BMW Group that are highly likely to have a seriously
adverse impact. No significant non-financial risks were iden-
tified during the year under report.
132
BMW Group Report 2021
To our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Outlook, Risk and Opportunity Management
Opportunity Management
A dynamic market environment also gives rise to opportun-
ities. Identifying these opportunities is an integral part of the
BMW Group's strategic planning process. The Group's range
of products and services is continually reviewed on the basis
of these analyses.
The continuous monitoring of key business processes and
strict cost controls are also essential factors for ensuring
high levels of profitability and return on capital employed.
> € 400 million
The importance of opportunities for the BMW Group is clas-
sified on a qualitative basis in the categories "significant"
and "insignificant". Probable measures aimed at increasing
profitability are already incorporated in the outlook.
High
> € 50-400 million
131
BMW Group Report 2021
To our Stakeholders
Combined Management Report
Outlook, Risk and Opportunity Management
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Risk Measurement
The BMW Group utilises standardised methods to assess
risks. All significant risks are measured using value-at-risk
models and assessed on the basis of uniform loss distribu-
tion metrics, thereby enabling better comparability of risks
for both internal and external reporting purposes. The overall
impact of the risks on the results of operations, financial and
net assets position is referred to in the following sections
uniformly as "earnings impact”.
Risks are measured net of any risk mitigation measures that
are already taking effect (net basis).
Risks are classified according to the risk amount (average
earnings impact, taking into account the probability of occur-
rence). The earnings impact may be significantly higher if the
risk actually materialises (worst-case scenario).
In light of the continued growth of the business and the as-
sociated risks, the value limits used in the Annual Report
since 2013 have been revised.
The following ranges apply for the purpose of classifying the
risk amount:
New risk amount range
€0 200 million
Class
Low
Previous risk amount range
€0 50 million
Medium
> € 200 1,000 million
High
Risks and Opportunities
Due to the particular features of the business model applied
for Financial Services business, risks and opportunities re-
lating to that segment are presented separately in the sec-
tion Risk management system in the Financial Services
segment.
Stable
High
Stable
Insignificant
Stable
Low
Stable
Insignificant
Stable
Information security, data protection and IT
Financial risks and opportunities
High
Increased
Insignificant
Stable
Foreign currencies
Raw materials
Liquidity
Other financial risks
Pension obligations
Legal risks
Low
Decreased
Significant
Insignificant
The following table provides an overview of significant risks
and opportunities for the years 2022 and 2023 and indicates
their level of importance for the BMW Group. Overall, no risks
capable of threatening the continued existence of the
BMW Group were identified either at the balance sheet date
or at the date on which the Group Financial Statements were
drawn up.
Stable
Stable
Due to the medium- to long-term horizon involved, risks as-
sociated with climate change are presented in the section
7 Climate-related opportunities and risks.
Macroeconomic risks and opportunities
Strategic and sector-specific risks and opportunities
Changes in legislation and regulatory requirements
Market developments
Risks and opportunities relating to operations
Production and technology
Purchasing
Sales network
Risks
Classification
of the risk amount¹
Change compared
to prior year 2
Classification
Medium
Stable
Insignificant
Opportunities
Change compared
to prior year
Decreased
High
Medium
Stable
Decreased
Insignificant
Stable
Insignificant
Medium
Financial Risks and Risks relating to the use of Financial
Instruments
Group Financial Statements
As an internationally operating enterprise, the BMW Group
conducts business in a variety of currencies, thus giving rise
to currency risks and opportunities. A substantial portion of
Group revenues, production, other purchases and funding
occur outside the eurozone, particularly in China and the
USA. Regularly updated cash-flow-at-risk models and scen-
ario analyses are used to measure currency risks and oppor-
tunities. The risk amount associated with currency risks is
classified as low. The risk situation is more favourable than
in the previous year, as exchange rates have developed posi-
tively compared with those assumed in earlier forecasts.
Stable
Significant
Stable
Insignificant
Stable
Stable
High
Medium
Classification
Change compared
to prior year 2
of the risk amount¹
Risks
to prior year
Change compared
Opportunities
Classification
Initial and continuous creditworthiness testing is an import-
ant aspect of the BMW Group's credit risk management sys-
tem. For this reason, every borrower's creditworthiness is
tested for all credit financing and leasing contracts entered
into by the BMW Group. Opportunities may arise if the man-
aged portfolio performs better over time than estimated
when the credits were granted. Changes in the creditworthi-
ness of customers arising during the credit term are covered
by risk provisioning procedures. The credit risk of individual
customers is quantified on a monthly basis and, depending
on the outcome, taken into account within the risk provision-
ing system. Macroeconomic developments are currently
subject to a higher degree of volatility. If developments are
more favourable than assumed in the outlook, credit losses
may be lower than expected, leading to a positive earnings
impact.
In the financial year 2021, the Financial Services segment
benefited among other things from a favourable risk situ-
ation and the resulting lower level of impairment allowances
required. Credit losses were at an historically low level.
Operational risks
Interest rate changes
Residual value
Credit risk
Credit and counterparty default risk arises within the Finan-
cial Services segment if a contractual partner (e.g. a cus-
tomer or dealership) becomes either unable or only partially
able to fulfil its contractual obligations, so that less income is
generated or losses are incurred. Among other consequenc-
es, the military conflict between Russia and Ukraine could
also result in credit losses. The risk amount attached to the
occurrence of unexpected credit or counterparty default risks
over the two-year assessment period is classified as medi-
um. The BMW Group classifies potential opportunities in this
area as insignificant.
Credit and counterparty risks and opportunities relating to the
Financial Services segment
Risks and opportunities relating to the Financial Services segment
The main categories of risk relevant for financial services
business are credit and counterparty risk, residual value risk,
interest rate risk, operational risk and liquidity risk. The
evaluation of liquidity risk for the Financial Services segment
is included in the liquidity risk category for the Group as a
whole.
The following overview provides a summary of the main risks
and opportunities in the Financial Services segment:
Due to the close interrelationships within the Group, devel-
opments that affect the BMW Group's industrial business in
the first step are also relevant for the Financial Services seg-
ment in the second step. In addition, banking supervisory
agencies around the world require sustainability risks to be
adequately addressed. Sustainability risks, such as natural
events or a change in carbon pricing, affect existing risk cat-
egories and can also have an impact in the short term.
All risks - in the sense of unexpected losses – must be cov-
ered at all times. Based on the segment's risk appetite, this
is achieved by ensuring specified levels of risk-covering as-
sets (asset cushions) in the form of equity capital. Unexpect-
ed losses are measured using various value-at-risk models,
which are validated at regular intervals. Risks are aggregat-
ed after taking account of correlation effects. In addition to
assessing the Group's ability to bear risk, stress scenarios
are also examined. The segment's risk-bearing capacity is
regularly controlled by means of an integrated limit system
for the various risk categories.
Low
Stable
Significant
Stable
Organisation and processes for managing climate-related risks
Within the BMW Group, the Board of Management is directly
responsible for all matters relating to climate change includ-
ing dealing with the consequences of climate change. Ac-
Transitory risks, on the other hand, arise from the transition
to a low-carbon economy. This category of risks includes for
example new and additional legal requirements relating to
climate protection. We also see the changes resulting from
the transition to a low-carbon future as an opportunity. In-
novative products and services enable us to develop new
fields of business, help decarbonise the mobility sector and
thus boost our competitiveness at the same time.
When considering climate-related risks, the BMW Group dis-
tinguishes between physical and transitory risks. Physical
risks refer to the actual impact of climate change. Physical
risks attributable to fundamental changes in climatic condi-
tions, such as rising temperatures or changing precipitation
patterns, are referred to as chronic and generally have a
longer-term effect. We therefore monitor these risks over a
period of up to 30 years. However, extreme weather events
such as storms, floods and heatwaves are already becoming
more frequent.
[[ Numerous developments of relevance for the BMW Group
are either directly or indirectly linked to climate-related is-
sues. The BMW Group is taking action to mitigate the impact
of climate change and to adapt to changing climatic condi-
tions. It is therefore imperative to identify climate-related
risks and opportunities and to take appropriate account of
them in determining the strategic direction to be followed,
managing the business and organising a Group-wide risk
management system. Since 2019, the BMW Group has been
acting on the recommendations of the Task Force on Cli-
mate-related Financial Disclosures (TCFD) and is continu-
ously developing its reporting on the management of cli-
mate-related risks and opportunities.
Climate-Related Opportunities and Risks
Due to closer interconnection with other risk categories, such
as outsourcing risks or information security risks, the level of
the risk amount has been raised slightly from low to medium
compared to the previous year. The classification of the risk
amount has changed to medium as the pertinent threshold
of €200 million was exceeded for the first time.
Operational risks relating to the Financial Services segment
In the Financial Services segment, operational risks are de-
fined as the risk of losses arising due to the unsuitability or
failure of internal procedures (process risks), people (per-
sonnel-related risks), systems (infrastructure and IT risks)
and external events (external risks). The recording and
measurement of risk scenarios, loss events and counter-
measures in the operational risk management system pro-
vide the basis for the systematic analysis and management
of potential or materialised operational risks. Annual self-as-
sessments are also carried out.
Interest rate risks in the Financial Services segment relate to
potential losses caused by changes in market interest rates.
These can arise when fixed interest rate periods do not
match for assets and liabilities recognised in the balance
sheet. The risk amount attached to interest rate risks is clas-
sified as low. Favourable interest rate developments com-
pared to the outlook represent opportunities that the
BMW Group classifies as significant. Interest rate risks in the
Financial Services business are managed by ensuring that
fixed interest rate periods match to a large extent and
through the use of interest-rate derivatives. If the relevant
recognition criteria are fulfilled, derivatives used by the
BMW Group are accounted for as hedging relationships. Fur-
ther information on risks in conjunction with financial instru-
ments is provided in 7 note 39 to the Group Financial
Statements.
Interest rate risks and opportunities relating to the Financial
Services segment
The exceptional upturn in the pre-owned vehicle market,
particularly in the USA and the UK, combined with high lev-
els of revenue generated on lease returns sold, had a cor-
respondingly positive effect on the residual value situation
across the Financial Services segment during the financial
year 2021. This development was reflected in the lower level
of residual value risk provisioning required.
Market developments are observed throughout the contrac-
tual period and the risk assessment updated accordingly.
Residual value risk management essentially follows the
same established process, regardless of the drive system
variant.
Each vehicle's estimated residual value is calculated at the
beginning of the contract on the basis of historical external
and internal data. Developments on pre-owned car markets
are an important factor for the BMW Group. The BMW Group
has developed and implemented specialised methods and
processes that enable the sustainability aspects of residual
value risks to be appropriately assessed and managed.
Risks and opportunities arise in conjunction with leasing
contracts if the market value of a leased vehicle at the end of
the contractual term of a lease differs from the residual value
estimated at the commencement date of the lease. A re-
sidual value risk exists if the expected market value of the
vehicle at the end of the contractual term is lower than its
estimated residual value at the date the contract was entered
into. The risk amount attached to the occurrence of unex-
pected residual value risks over the two-year assessment
period is classified as high. Opportunities can arise out of a
positive deviation between the actual market value and the
original residual value forecast. The BMW Group classifies
potential residual value opportunities as significant.
Risk management within the Financial Services business is
built on the prevailing risk culture, the defined risk strategy,
the internal capital adequacy assessment process frame-
work and a set of rules comprising principles and guidelines.
The main tool used to manage risk within the Financial Ser-
vices segment is to ensure its risk-bearing capacity.
Residual value risks and opportunities relating to the Financial
Services segment
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To our Stakeholders
BMW Group Report 2021
140
2 As shown in the section "Risk measurement", the risk amount ranges used for risk classification purposes have been revised. The change shown here relates to the classification of prior-year risks using the
revised risk amount ranges.
1 The classified risk amount does not change as a result of the full consolidation of BMW Brilliance.
Increased
Medium
Currency risks and opportunities
Risk Management System in fhe Financial Services
Segment
Outlook, Risk and Opportunity Management
← = Q
Risks can arise from fluctuations in pension obligations on
the one hand and the related pension assets on the other.
Opportunities can arise if the value of pension assets on
capital markets develops favourably or if pension obligations
decrease at a more pronounced rate than the related assets.
Pension obligations are primarily measured using a discount
rate based on market yields from high-quality corporate
bonds. These yields are subject to market fluctuations and
Risks and opportunities relating to pension obligations
Future pension obligations are financed largely via external
pension funds or trust constructs that are legally separate
from the BMW Group. Externally managed funds are invest-
ed on capital markets in a broadly diversified portfolio with a
view to enabling future pension payments to be disbursed
out of pension assets. These arrangements greatly reduce
the need to fund pension payments out of ongoing
operations.
The risk amount associated with other financial risks is clas-
sified as medium. Generally speaking revaluations of invest-
ments could give rise to opportunities with a significant
earnings impact.
The BMW Group holds equity investments of varying
amounts in numerous entities, which could give rise to risks
requiring the recognition of impairment losses.
struments and to protect payments made in advance. Coun-
terparty risk denotes the risk that the BMW Group will not
receive, or not receive in full, the payments due to it in con-
nection with the investment and hedging transactions re-
ferred to above. An enhanced value-at-risk model is em-
ployed to measure counterparty risk, taking into account the
creditworthiness (rating) of the banks and the business vol-
umes involved. Risk is managed using a limit system, which
includes daily monitoring of the extent to which limits are
being utilised at the level of the individual counterparties.
The BMW Group works together with banks to ensure that
the available liquidity is optimally invested in order to hedge
against financial market risks (particularly currency, com-
modity and interest rate risks) using derivative financial in-
Other financial risks worth mentioning include counterparty
risks as well as those arising in connection with investments
in other entities.
Other financial risks
The liquidity position is monitored continuously and man-
aged through the Group-wide planning of financial require-
ments and funding. At present, opportunities relating to li-
quidity are not expected to have any significant earnings
impact. Further information on risks in conjunction with fi-
nancial instruments is provided in 7 note 39 to the Group Fi-
nancial Statements.
Solvency is assured at all times throughout the BMW Group
by adhering to liquidity ratios and using a broadly diversified
range of refinancing sources. Regular measurement and
monitoring ensure that cash inflows and outflows for the
various maturities and currencies offset one another. This
approach is an integral part of the BMW Group's liquidity
concept.
Based on the experience gained during the global financial
crisis, a liquidity concept has been drawn up, which is rigor-
ously adhered to and continuously developed. In the Finan-
cial Services segment, the use of the "matched funding prin-
ciple" ensures that liquidity risks are generally avoided.
The major part of the Financial Services segment's credit fi-
nancing and leasing business is refinanced on capital mar-
kets. Liquidity risks can arise in the form of rising refinancing
costs or from restricted access to funds due to the general
market situation. The risk amount associated with liquidity
risks is classified as low.
Liquidity risks
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
Outlook, Risk and Opportunity Management
BMW Group Report 2021
137
Due to high demand, the prices of many raw materials have
been, and continue to be, subject to a high degree of fluctu-
ations on commodity markets. Accordingly, the risk amount
associated with raw materials prices is classified as high.
Significant opportunities could arise if raw materials prices,
contrary to current expectations, develop favourably for the
BMW Group.
The analysis of raw materials price risks is based on planned
purchases of raw materials and components containing
those products. Cash-flow-at-risk models and scenario
analyses are deployed to measure risks and opportunities
relating to raw materials prices. Price fluctuations for pre-
cious metals (platinum, palladium, rhodium), non-ferrous
metals (aluminium, copper), raw materials for batteries
(lead, nickel, cobalt) and, to some extent, for steel and its
basic ingredients (iron ore, coking coal) as well as energy
(gas, electricity) are hedged using financial derivatives and
supply contracts with fixed pricing arrangements.
Risks and opportunities relating to raw materials prices
As a manufacturing company, the BMW Group is exposed to
purchase price risks, particularly in relation to the raw mate-
rials used in vehicle production. Changes in prices are moni-
tored via a well-defined management process, the primary
objective of which is to improve planning reliability for the
BMW Group as a whole.
foreign currency regions, i. e. natural hedging. Currency risks
are managed in the short to medium term and for operation-
al purposes by means of hedging on financial markets. The
principal objective is to increase planning reliability for the
BMW Group. Hedging transactions are entered into only with
financial partners of good credit standing. Depending on ex-
change rate developments, significant opportunities may
arise.
Operational currency management is based on the results of
currency risk analyses. The BMW Group manages currency
risks at both strategic (medium to long term) and operational
level (short to medium term). Medium- to long-term meas-
ures include increasing production and purchase volumes in
Alleged or actual non-compliance with the law could also
have a negative impact on the BMW Group's reputation.
therefore influence the level of pension obligations. Changes
in other parameters, such as rising inflation rates and longer
life expectancy, also impact the amount as well as the dura-
tion of future pension payments. Regulatory requirements or
changes may also affect the amount of pension obligations.
The fluctuation of pension assets reflects the volatility of in-
dividual asset classes on capital markets. The broadly diver-
sified portfolio comprises investments in interest-bearing
securities, equities, real estate and other asset classes.
To our Stakeholders
The risk amount attached to pension obligations is classified
as medium.
Other Information
The risk relating to pension obligations was substantially re-
duced by the restructuring of pension commitments in Ger-
many in 2021. Under the new arrangements, employees
were given the option to switch to the Company's defined
contribution pension plan. While the latter entails the risk as-
sociated with guaranteeing a minimum rate of return, the
overall risk is lower than that arising in connection with the
defined benefit pension plan.
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
Outlook, Risk and Opportunity Management
BMW Group Report 2021
139
The BMW Group recognises appropriate levels of provision
for lawsuits and risks. In addition, a part of these risks is
insured to an economically reasonable extent. Neverthe-
less, it cannot be ruled out that damages may occur in ex-
cess of the insured amounts. In accordance with Interna-
tional Financial Reporting Standards (IFRS), the required
information is not provided if the BMW Group concludes
that disclosure of the information could seriously prejudice
the outcome of the relevant legal proceedings. Further in-
formation on contingent liabilities is provided in 7 note 38 to
the Group Financial Statements.
The BMW Group is subject to tax and customs audits in
every country in which it operates, potentially resulting in
back taxes, retrospective customs duties, interest, penal-
ties and similar payments. Payments of this nature may,
for instance, result from the full or the partial non-recogni-
tion of intercompany transfer prices in the countries con-
cerned. Further substantive legal risks may also arise as a
result of changes in tax or customs legislation or due to the
way that legislation is interpreted by tax and customs au-
thorities or courts. In many cases, such changes can also
have a retrospective impact on calendar years that were
not yet subject to definitive audits. In order to minimise
procedural tax and customs risks, the BMW Group recently
set up a comprehensive Tax and Customs Control Frame-
work that is already being applied in Germany and will be
rolled out successively in other countries.
goods-related restrictions, international trading may also
involve personal, country-specific and end-use-related re-
strictions. In particular, non-compliance with applicable
EU and US export control regulations could result in signif-
icant legal consequences for the BMW Group. In light of its
strong presence in the USA and China, any intensification
of the trade dispute between the two countries could be a
potential source of additional risk exposure.
International movements of goods require compliance with
extensive export control regulations. In addition to
For several years, lawsuits have been filed against BMW
Bank GmbH (BMW Bank) in which consumers claim the
withdrawal of their loan and leasing contracts on the basis
of allegedly incorrect and insufficient pre-contractual infor-
mation. The focus is on loan contracts. Since 2017, BMW
Bank has won the vast majority of these lawsuits. In No-
vember 2019, the Federal Court of Justice (BGH) adopted a
decision of principle in favour of BMW Bank, confirming the
accuracy of consumer-relevant information in loan con-
tracts. In addition, in October 2020 the BGH decided in a
case in which BMW Bank was not involved that consumers
are generally obliged to pay a compensation after a suc-
cessful withdrawal. Since the beginning of 2020, several
references for a preliminary ruling on the scope of informa-
tion obligations have been filed with the European Court of
Justice (ECJ). On September 9, 2021, the ECJ decided on
the requests for preliminary ruling concerning the require-
ments on the terms and conditions in consumer credit
agreements in particular with regard to default interest and
prepayment penalty. Based on this ruling the BGH re-
quests the ECJ for another preliminary ruling whether the
concept of abuse of rights in connection with consumer
credit agreements is still applicable under certain circum-
stances. Although this is technically not a final decision,
the BGH mentioned in the reasoning part of its decision
that it does not consider BMW Bank's terms and conditions
in consumer credit agreements to completely fulfill the re-
quirements as set by the ECJ ruling. Therefore, there is a
legal risk that borrowers might withdraw consumer credit
agreements of BMW Bank with reference to the proceeding
submitted to the ECJ and the ECJ decision as of September
9, 2021. However, the right to compensation of BMW Bank
due to the car use period of the borrower is still applicable.
The possible financial impact cannot be definitively as-
sessed at this stage.
To our Stakeholders
The growing globalisation of the BMW Group's operations
as well as of business interdependencies in general, com-
bined with the variety and complexity of legal provisions -
increasingly including import and export regulations - give
rise to a greater risk of non-compliance with applicable
legislation. A Compliance Management System is in place
across the BMW Group to ensure that its representative
bodies, executives and staff members worldwide consist-
ently act in a lawful manner. Further information on com-
pliance within the BMW Group as well as on the Compli-
ance Management System is provided in the chapter
7 Compliance and human rights.
Like all entities with international operations, the
BMW Group is confronted with legal disputes and alleged
claims relating in particular to warranty and product liabil-
ity, infringements of protected rights and proceedings initi-
ated by government agencies. Any of these could, amongst
other consequences, have an adverse impact on the
Group's reputation. Proceedings of this nature are essen-
tially typical for the sector, may result as a consequence of
realigning product or purchasing strategies to changed
market conditions, or are antitrust-related. Particularly in
the US market, class action lawsuits and product liability
risks can have substantial financial consequences and
cause damage to the BMW Group's reputation. More rigor-
ous application, interpretation of, or changes to, existing
regulations could result in a greater number of recalls.
BMW Group Report 2021
To our Stakeholders
Combined Management Report
Outlook, Risk and Opportunity Management
Remeasurements on the liabilities and assets sides are rec-
ognised net of deferred taxes through other comprehensive
income and hence directly in equity of the BMW Group (with-
in revenue reserves). Further information on risks in conjunc-
tion with pension provisions is provided in 7 note 32 to the
Group Financial Statements.
Corporate Governance
Group Financial Statements
Remuneration Report
Other Information
← = Q
Legal Risks
Due to the global nature of its operations, the BMW Group
is exposed to various legal risks. Legal risks may result
from non-compliance with laws or other legal require-
ments, or from legal disputes with business partners or
other market participants. If legal risks were to materialise,
they could have a high earnings impact over the two-year
assessment period. The risk amounts attached to signifi-
cant identified legal risks are classified as medium.
138
10
-176
2
15
125
34
34
36
Other operating expenses
10
931
1,614
916
1,702
Other operating income
34
- 1,055
37
-26
-41
3
-873
Selling and administrative expenses
-929
Financial Services (unaudited
supplementary information)
- 1,326
Motorcycles (unaudited
Group supplementary information) supplementary information)
Other Entities (unaudited
Eliminations (unaudited
supplementary information) supplementary information)
in € million
Revenues
Cost of sales
Gross profit
Note
2021
2020
2021
2020
2021
2020
-73
- 68
-2
-1
- 1,003
-1,385
2,284
-264
- 1,941
32,867
2,748
-2,259
80,853
- 71,456
- 78,637
- 85,408
- 89,253
8
95,476
-27,749
98,990
7
2020
2021
2020
2021
2020
2021
Automotive (unaudited
53
111,239
30,044
-26,958
5
3
-7,237
-7,580
- 8,795
-9,233
9
753
-465
3
5
3,086
5,118
343
489
9,397
16,839
13,582
21,986
14,947
19,392
- 14,194
-19,857
- 240
FOR GROUP AND SEGMENTS
5
for Group and Segments
-50
106
163
-423
1,228
- 1,283
1,382
- 401
19
2,401
201
- 616
3,241
81
82
31
14,783
3,159
479
- 186
1,170
12
14,864
Attributable to minority interest
72
14
Deferred taxes *
Currency translation foreign operations
Items that can be reclassified to the income statement in the future
Other comprehensive income for the period after tax
Total comprehensive income
Total comprehensive income attributable to minority interests
Total comprehensive income attributable to shareholders of BMW AG
* Prior year's figure adjusted.
Note
2021
991
2020
3,857
32
1,243
-354
-224
139
1,019
-215
-45
7
12,463
Net profit / loss
Income taxes
Profit/loss before tax
I
920
1,520
920
1,520
24
Result from equity accounted investments
808
-390
36
Interest and similar income
- 8
3,701
103
227
2,162
9,870
4,830
13,400
Profit/loss before financial result
197
23
1,721
11
135
116
Financial result
Other financial result
1,394
1,122
-1,232
-974
-4
-3
- 3
-613
-310
-458
-165
11
Interest and similar expenses
- 1,292
-989
1,169
875
3
2
236
246
Other comprehensive income from equity accounted investments
141
Costs of hedging
Items not expected to be reclassified to the income statement in the future
Marketable securities (at fair value through other comprehensive income)
13
-3,597
-1,365
-2,645
-713
-51
-26
- 838
-456
-119
910
62
-232
12,463
3,857
9,160
2,009
177
74
2,915
1,269
412
56
- 173
-257
531
638
- 208
2,660
392
1,935
560
1
-3
52
4
-235
539
133
102
16,060
5,222
11,805
2,722
228
100
3,753
1,725
-271
-201
678
81
5.75
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
14
18.77
5.73
14
18.79
5.75
150
BMW Group Report 2021
18.79
To Our Stakeholders
Group Financial Statements Corporate Governance
Statement of Comprehensive
Income for Group
Remuneration Report
Other Information
← = Q
STATEMENT OF COMPREHENSIVE INCOME
FOR GROUP
in € million
Net profit/loss
Remeasurement of the net liability for defined benefit pension plans
Deferred taxes
Combined Management Report
14
5.73
17
82
10
17
71
67
-2
Attributable to shareholders of the BMW AG
INCOME STATEMENT
12,382
3,775
9,150
1,992
177
74
2,844
1,202
412
- 171
- 201
678
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
14
18.77
Derivative financial instruments
141
31
To our Stakeholders
146
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Disclosures Relevant for Takeovers
and Explanatory Comments
Amendments to the Articles of Incorporation must comply
with §§ 179 et seqq. AktG. Amendments must be decided
upon by the shareholders at the Annual General Meeting
(§ 119 (1) no. 6, § 179 (1) AktG). The Supervisory Board is au-
thorised to approve amendments to the Articles of Incorpor-
ation that only affect its wording (Article 14 no. 3 of the Ar-
ticles of Incorporation). Resolutions are passed at the
Annual General Meeting by a simple majority of votes cast
unless otherwise explicitly required by binding provisions of
law or, if a majority of share capital is required, by a simple
majority of share capital represented in the vote (Article 20
no. 1 of the Articles of Incorporation).
Authorisations of the Board of Management, in particu-
lar with respect to the issuing or buying back of shares
The Board of Management is authorised to buy back shares
and sell repurchased shares in situations specified in § 71
AktG, for example to avert serious and imminent damage to
the Company and/or to offer shares to persons either cur-
rently or previously employed by BMW AG or one of its affili-
ated companies.
Significant agreements of the Company taking effect in
the event of a change in control following a takeover bid
BMW AG is party to the following major agreements, which
contain provisions that would apply in the event of a change
in control or the acquisition of control as a result of a take-
over bid:
An agreement concluded with an international consor-
tium of banks relating to a syndicated credit line, which
was not being utilised at the balance sheet date, entitles
the lending banks to give extraordinary notice to termin-
ate the credit line, such that all outstanding amounts, in-
cluding interest, would fall due with immediate effect if
one or more parties jointly acquire direct or indirect con-
trol of BMW AG. The term "control" is defined as the ac-
quisition of more than 50% of the share capital of
BMW AG, the right to receive more than 50% of the divi-
dend, or the right to direct the affairs of the Company or
appoint the majority of members of the Supervisory
Board.
A cooperation agreement concluded with Peugeot SA re-
lating to small (1- to 1.6-litre) petrol engines entitles each
of the cooperation partners to give extraordinary notifica-
tion of termination in the event of a competitor acquiring
control over the other contractual party and if any con-
cerns of the other contractual party regarding the impact
of the change of control on the cooperation arrange-
ments are not resolved during the subsequent discussion
process.
BMW AG acts as guarantor for all obligations arising from
the joint venture agreement relating to BMW Brilliance
Automotive Ltd. in China. This agreement grants an ex-
traordinary right of termination to either joint venture
partner in the event of a change in control at either one of
the parties, or if more than 25% of the shares of the oth-
er party are acquired by a third party - either directly or
indirectly or if the other party is merged with another
legal entity. Termination of the joint venture agreement
may lead to the dissolution of the joint venture, with an
optional purchase right for BMW (or the partner) to ac-
quire the shares of the other partner or to the liquidation
of the joint venture company.
Framework agreements are in place with financial insti-
tutions and banks (ISDA Master Agreements) with re-
spect to trading activities with derivative financial instru-
ments. These agreements include an extraordinary right
of termination that triggers actions in the event that the
creditworthiness of the party involved is materially weak-
er following a direct or indirect acquisition of beneficially
owned equity capital which confers the power to elect a
majority of the Supervisory Board of a contractual party
or any other ownership interest that enables the acquirer
to exercise control over a contractual party or which con-
stitutes a merger or a transfer of net assets.
BMW AG and Mercedes-Benz Group AG have entered
into a Joint Venture Agreement relating to mobility ser-
vices, which includes the areas of car sharing, ride hailing
and charging, and entitles both Mercedes-Benz Group
AG and BMW AG (hereafter referred to as "principals") to
initiate a bidding procedure in the event that (i) the other
principal receives notice in accordance with § 33 of the
German Securities Trading Act (WpHG) that - including
shares attributed pursuant to § 34 WpHG - a sharehold-
ing of more than 50% has been attained or, in accord-
ance with § 20 AktG of the German Stock Corporation Act
(AktG) that a shareholding of more than 50% has been
attained or (ii) a shareholder or a third party - including
shares attributed pursuant to § 30 WPHG - holds more
than 50% of the voting rights or shares in the other prin-
cipal, or (iii) the other principal has concluded a control
agreement as a dependent company. The outcome of
such a bidding procedure is that the joint venture will go
to the principal making the highest bid.
Several supply and development contracts between
BMW AG and various industrial customers, all relating to
the sale of components for drivetrain systems, grant an
extraordinary right of termination to the relevant indus-
trial customer in specified cases of a change in control at
BMW AG (for example BMW AG merges with a third party
or is taken over by a third party; an automobile manufac-
turer acquires more than 50% of the voting rights or
share capital of BMW AG).
147
In accordance with Article 4 no. 5 of the Articles of Incorpor-
ation, the Board of Management is authorised, with the ap-
proval of the Supervisory Board, to increase by means of
cash contributions BMW AG's share capital during the period
up to and including 15 May 2024 by up to € 1,722,600 for the
purposes of an Employee Share Programme by issuing new
non-voting shares of preferred stock, which carry the same
rights as existing non-voting shares of preferred stock (Au-
thorised Capital 2019). The subscription rights of existing
shareholders are excluded. No conditional capital was in
place at the reporting date.
BMW Group Report 2021
The appointment or removal of members of the Board of
Management is based on the rules contained in §§ 84 et
seq. AktG in conjunction with § 31 of the German Co-Deter-
mination Act (MitbestG).
Control of voting rights when employees participate in
capital and do not directly exercise their control rights
Like all other shareholders, employees exercise their control
rights pertaining to shares they have acquired in conjunction
with the Employee Share Programme and/or the share-
based remuneration programme directly on the basis of rele-
vant legal provisions and the Company's Articles of
Incorporation.
Stefan Quandt, Germany
AQTON SE, Bad Homburg v. d. Höhe, Germany
AQTON Verwaltung GmbH, Bad Homburg v. d. Höhe, Germany
AQTON GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany
Susanne Klatten, Germany
Susanne Klatten Beteiligungs GmbH, Bad Homburg v. d. Höhe, Germany
The voting percentages disclosed above may have changed
subsequent to the stated date if these changes were not re-
quired to be reported to the Company. As the Company's
shares are issued to bearer, the Company is generally only
aware of changes in shareholdings if such changes are sub-
ject to mandatory notification rules.
1 Based on voluntary notifications provided by the listed shareholders as at 31 December 2021.
² Controlled entities, of which 3% or more are attributed: AQTON SE, AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
3 Controlled entities, of which 3% or more are attributed: AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
Statutory regulations and provisions contained in the
Articles of Incorporation governing the appointment and
removal of members of the Board of Management and
changes to the Articles of Incorporation
4 Controlled entities, of which 3% or more are attributed: AQTON GmbH & Co. KG für Automobilwerte.
Indirect share of
voting rights
25.62
16.63
Direct share of
voting rights
0.2
9.0
16.64
16.6
0.2
20.75
20.7
Shares with special rights that confer control rights
There are no shares with special rights that confer control
rights.
5 Controlled entities, of which 3% or more are attributed: Susanne Klatten Beteiligungs GmbH.
To Our Stakeholders
Combined Management Report
Group Financial Statements
169 Notes to the Income Statement
176 Notes to the Statement of Comprehensive Income
178 Notes to the Balance Sheet
201 Other Disclosures
228 Segment Information
231 List of investments at 31 December 2021
Remuneration Report
Other Information
←三〇
GROUP -
157 Accounting Principles and Policies
3
149
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Income Statement
Corporate Governance
Remuneration Report
Other Information
← = Q
BMW Group Report 2021
FINANCIAL
STATEMENTS
157 Notes to the Group Financial Statements
155 Statement of Changes in Equity for Group
153 Cash Flow Statement for Group and Segments
Corporate Governance
Remuneration Report
Other Information
← = Q
Disclosures Relevant for Takeovers
and Explanatory Comments
BMW AG is party to the shareholder agreement relating
to There Holding B. V., which is the majority shareholder
of the HERE Group. In accordance with the shareholder
agreement, each contractual party is required to offer its
directly or indirectly held shares in There Holding B. V. for
sale to the other shareholders in the event of a change in
control. A change in control of BMW AG arises if a person
takes over or loses control of BMW AG, with control de-
fined as (i) holding or having control over more than 50%
of the voting rights, (ii) the possibility to control more than
50% of voting rights exercisable at Annual General
Meetings on all or nearly all matters, or (iii) the right to
determine the majority of members of the Board of Man-
agement or the Supervisory Board. Furthermore, a
change in control occurs if competitors of the HERE
Group, or certain potential competitors of the HERE
Group from the technology sector, acquire at least 25%
of BMW AG. If none of the other shareholders acquire
these shares, the other shareholders are entitled to re-
solve that There Holding B. V. be dissolved.
The development collaboration agreement between
BMW AG, Intel Corporation and Mobileye Vision Technol-
ogies Ltd., relating to the development of technologies
used in automated vehicles, may be terminated by any of
the contractual parties if a competitor of one of the par-
ties acquires and subsequently holds at least 30% of the
voting shares of one of the contractual parties.
The development collaboration agreement between
BMW AG, FCA US LLC and FCA Italy S.p.A. relating to
the development of technologies used in conjunction
with automated vehicles, may be terminated by any of
the contractual parties if certain competitors in the tech-
nology sector acquire and subsequently hold at least
30% of the voting shares of one of the other contractual
parties.
BMW AG has entered into an agreement with Great Wall
Motor Company Limited to establish the joint venture
Spotlight Automotive Ltd. in China. The agreement
grants an extraordinary right of termination to either joint
venture partner in the event that - either directly or indi-
rectly more than 25% of the shares of the other party
are acquired by a third party or the other party is merged
with another legal entity. The termination of the joint ven-
ture agreement may result in the sale of the shares to the
other joint venture partner or in the liquidation of the joint
venture entity.
-
Compensation agreements with members of the Board
of Management or with employees in the event of a
takeover bid
The BMW Group has not concluded any compensation
agreements with members of the Board of Management or
with employees for situations involving a takeover offer.
148
BMW Group Report 2021
To Our Stakeholders
-66
Combined Management Report
Group Financial Statements
Corporate Governance
149 Income Statement for Group and Segments
150 Statement of Comprehensive Income for Group
151
Balance Sheet for Group and Segments at 31 December 2021
in %
Based on the information available to the Company, the fol-
lowing direct or indirect holdings exceeding 10% of the vot-
ing rights at the end of the reporting period were held at the
stated reporting date:¹
-6
= Q
Combined Management Report
Outlook, Risk and Opportunity Management
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Stricter requirements for carbon emitters due to regula-
tory tightening could affect the reputation of the
BMW Group and make it less attractive as a sustainable
investment.
The transformation to a lower-emissions economy is fun-
damentally changing certain industries. Due to the po-
tential macroeconomic consequences, the related sus-
tainability risks are seen as a threat to the stability of
financial markets. They could also have a negative im-
pact on job security as well as the financial position of
selected industries and their employees.
Climate-related opportunities
With its flexible vehicle architectures and production sys-
tems,
the BMW Group strives to take account of fluctuat-
ing customer demand as well as regulatory and infra-
structural differences in its markets in a swift and
adaptable manner. Production network
To our Stakeholders
The BMW Group sees the growing demand for electrified
vehicles as a major opportunity. We are leveraging this
opportunity by continuously expanding our range of elec-
trified products, while at the same time pressing ahead
with the in-house development and production of electric
drive systems, batteries and battery cell prototypes. This
approach enables us to secure key know-how in new
technologies at an early stage, gain crucial systems ex-
pertise and exploit cost advantages, which could also
provide a decisive competitive edge. 7 Production network
-
The BMW Group can exert its influence across its global
supplier network to cut carbon emissions and work to-
wards implementing decarbonisation measures. For in-
stance, it has already entered into a contractual agree-
ment with its cell manufacturers that only green
electricity will be used to produce the fifth generation of
battery cells. Supplier network and purchases and Decarbo-
nisation
By switching to lower-carbon processes and technol-
ogies at its own production plants, the BMW Group is not
only boosting efficiency, but also cutting its costs. For ex-
ample, generating its own electricity from renewable en-
ergy sources reduces the carbon footprint and minimises
dependence on external electricity sources as well as its
exposure to price fluctuations on the energy market.
7 Renewable energy
In the best interest of a circular economy, the BMW Group
intends to gradually increase its use of secondary mater-
ials and hence reduce carbon emissions at the same
time. With this strategy, we are not only contributing to-
wards achieving our decarbonisation target in the supply
chain, but also reducing our dependence on primary ma-
terials in terms of their availability and cost. 7 Circular econ-
omy and resource efficiency
By reporting comprehensively and transparently in a
manner that meets potential legal requirements at an
early stage, we are better able to ensure our access to
capital markets and obtain attractive financing condi-
tions on a long-term basis. 7 BMW Group and Capital Markets
By rigorously aligning its corporate strategy to meet specific
sustainability targets, the BMW Group takes appropriate ac-
count of risks and opportunities in all its investments, in-
novations and corporate decisions. ]]
143
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Internal Control System
The BMW Group's strategic planning assumptions will
endeavour to anticipate the consequences of rising car-
bon prices in the form of taxes and levies as well as po-
tential shortfalls in emissions credits under emissions
trading schemes, taking into account the assumptions
applied in its own decision-making process and its coop-
eration with suppliers. Circular economy, resource efficiency and
renewable efficiency
BMW Group Report 2021
142
* Representative Concentration Pathways.
Direct or indirect investments in capital exceeding 10%
of voting rights
Combined Management Report
Outlook, Risk and Opportunity Management
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
cordingly, the individual members of the Board of Manage-
ment are each charged with the task of ensuring that their
portfolios are strategically aligned with the stated objectives.
Moreover, each proposal presented to the Board of Manage-
ment is required to be assessed from a sustainability per-
spective and thus also with regard to climate-related as-
pects. Internal management within strategy
As part of the environmental analysis as part of the strategy
process, the BMW Group analyses and takes account of
transitory risks from a regulatory perspective on a continu-
ous basis. During the financial year under report, the
BMW Group successfully completed its "Adaptation to Cli-
mate Change" project with the involvement of top manage-
ment. The physical climate risks were analysed and as-
sessed using an external assessment tool.
Scenario analyses for identifying climate-related opportunities
and risks
The BMW Group focuses on both mitigating and adapting to
the consequences of climate change.
In the Adaptation to Climate Change project, we identified
and assessed physical risks comprehensively for the first
time on the basis of two different time horizons (2030 and
2050) as well as various climate change scenarios. Three
warming pathways developed by the Intergovernmental
Panel on Climate Change (IPCC) were applied and, in ac-
cordance with the TCFD recommendation, the impact of
physical risks on the various stages of the value chain (in-
cluding real estate, logistics and suppliers) was examined.
The so-called RCP* scenarios range from a low-emissions
scenario in line with the 2°C target (RCP 2.6), a medium
scenario with global warming of 2.4-2.7°C by the year 2100
(RCP 4.5) through to a 5°C scenario (RCP 8.5). On the one
hand, the RCP 2.6 scenario entails high transitory risks for
the BMW Group due to stricter regulatory requirements gov-
erning carbon emissions. On the other hand, fewer physical
risks would be likely to arise given the more ambitious cli-
mate protection measures. In the RCP 8.5 scenario, how-
ever, the physical risks dominate due to insufficient climate
protection measures. Based on the BMW Group's assess-
ment, the RCP 4.5 scenario is currently seen as the most
likely and roughly corresponds to the contributions currently
committed to by each country at national level.
Physical climate risks
Climate change is likely to cause natural disasters to oc-
cur more frequently at our locations, for example heavy
rains and heat waves, with the risk of damage to both
inventories and products. To avoid production stoppages,
we have already taken preventive measures at our pro-
duction sites and other premises, such as the installation
of sluice gates at the plant in Chennai, India.
Physical climate risks could have a negative impact on
economic growth in the regions affected, with noticeable
unfavourable macroeconomic consequences, including a
loss of income and the threat of unemployment for con-
sumers. These factors, in turn, could reduce purchasing
power in certain regions and have a negative impact on
the BMW Group's sales volumes and operating result.
Transitory climate risks
A significant tightening of laws and regulations in the
BMW Group's main markets (the EU, the USA and China),
particularly in terms of carbon emissions regulations
which may also result from possible legal proceedings or
court decisions and regional vehicle purchase and usage
taxes, could have an impact on the BMW Group's range
of products and services and result in higher costs
and/or lower sales volumes. Changes in legislation and regula-
tory requirements ]]
[Any serious failure to comply with sustainability or qual-
ity standards could cause disruptions in the supply chain
or the inability of individual suppliers to deliver.
The aim is to reduce carbon emissions across all relevant
supply chains on the basis of constructive cooperation
with suppliers. It is important to point out, however, that
the BMW Group depends on receiving accurate informa-
tion from suppliers in this regard.
However, if the carbon price were to rise to unexpected
levels without sufficient time to plan accordingly, produc-
tion costs will be driven up, with a correspondingly nega-
tive impact on the BMW Group's sales volumes and prof-
itability. Furthermore, setting a price for carbon emissions
could result in reduced purchasing power and thus hold
down economic growth in the regions concerned.
The global spread of electric mobility may give rise to
bottlenecks in the availability of raw materials, particular-
ly those needed to manufacture battery cells. As a result,
higher raw materials prices could also have an impact on
the BMW Group's earnings situation.
Group Financial Statements
Corporate Governance
Extreme weather events at suppliers' locations world-
wide can impact component deliveries and consequently
supplies to production plants. Under these circum-
stances, key transport routes could be blocked - with im-
plications for both the supply of components and the dis-
tribution of new vehicles.
Other Information
The subscribed capital (share capital) of BMW AG amoun-
ted to € 661,399,500 at 31 December 2021 (2020:
€ 659,684,500) and, in accordance with Article 4 no. 1 of the
Articles of Incorporation is sub-divided into 601,995,196
shares of common stock (91.02 %) (2020: 601,995,196;
91.26%) and 59,404,304 shares of non-voting preferred
stock (8.98 %) (2020: 57,689,304; 8.74%), each with a par
value of € 1. The Company's shares are issued to bearer.
The rights and duties of shareholders derive from the Ger-
man Stock Corporation Act (AktG) in conjunction with the
Company's Articles of Incorporation, the full text of which is
available at ≈ www.bmwgroup.com. The right of shareholders to
have their shares evidenced is excluded in accordance with
the Articles of Incorporation. The voting power attached to
each share corresponds to its par value. Each €1 of par value
of share capital represented in a vote entitles the holder to
one vote (Article 18 no. 1 of the Articles of Incorporation).
The Company's shares of preferred stock are shares as de-
fined in §§ 139 et seqq. AktG, which carry a cumulative pref-
erential right in terms of the allocation of profit and for which
voting rights are excluded. These shares confer voting rights
only in exceptional cases stipulated by law, in particular if the
preference amount has either not been paid or not been paid
in full within one year and the arrears are not paid in the sub-
sequent year alongside the full preference amount due for
that year. With the exception of voting rights, holders of
shares of preferred stock are entitled to the same rights as
holders of shares of common stock. In addition, Article 24 of
the Articles of Incorporation confers preferential treatment to
the non-voting shares of preferred stock with regard to the
appropriation of the Company's unappropriated profit. Ac-
cordingly, the unappropriated profit is required to be appro-
priated in the following order:
(a) Subsequent payment of any arrears on dividends on
non-voting shares of preferred stock in the order of
accruement
(b) Payment of an advance dividend of € 0.02 per € 1 par
value on non-voting shares of preferred stock
(c) Uniform payment of any other dividends on shares of
common and preferred stock, provided the shareholders
do not resolve otherwise at the Annual General Meeting
Restrictions affecting voting rights or the transfer of
shares
In addition to shares of common stock, the Company has
also issued non-voting shares of preferred stock. Further in-
formation can be found in the section "Composition of sub-
scribed capital".
When the Company issues non-voting shares of preferred
stock to employees in conjunction with its Employee Share
Programme, these shares are generally subject to a Com-
pany-imposed blocking period of four years, calculated from
the beginning of the calendar year in which the shares were
issued.
Composition of subscribed capital
Contractual holding period arrangements also apply to
shares of common stock acquired by Board of Management
members and certain senior department heads in conjunc-
tion with share-based remuneration programmes. Remuner-
ation Report
145
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
Remuneration Report
↑
Disclosures Relevant for Takeovers
and Explanatory Comments
* Disclosures pursuant to § 289 a, § 315 a HGB.
DISCLOSURES RELEVANT FOR TAKEOVERS*
AND EXPLANATORY COMMENTS
BMW Group Report 2021
← = Q
The Internal Control System* (ICS) is part of the BMW Group's
overall system of internal governance, and is based on a set
of measures and control activities that are integrated in pro-
cesses and organisational structures with a view to ensuring
the accuracy of external financial and non-financial report-
ing. The requirements for the design and structure of ICS
procedures incorporated in accounting and financial report-
ing processes as well as those used to generate selected
non-financial information included in the BMW Group Report
are defined on a Group-wide basis.
INTERNAL CONTROL SYSTEM
Disclosures Relevant for Takeovers
and Explanatory Comments
← = Q
The ICS for financial reporting has the task of ensuring that
the BMW Group's accounting and financial reporting pro-
cesses are both accurate and reliable. The ICS for non-finan-
cial reporting focuses primarily on the further development
of the processes used to gather data as the basis for
reporting non-financial performance indicators within the
BMW Group Report.
The BMW Group's ICS is based on the "Three Lines of De-
fence" model, including a clear definition of how the various
functions are required to interact with one another to man-
age risks. As an essential component of the second line of
defence, the ICS serves as a link between the operating units
(first line), internal audit (third line) and the external auditor.
Internationally acknowledged standards for internal control
systems were taken into account when designing the various
elements of the ICS deployed by the BMW Group. The sys-
tem comprises:
Group-wide mandatory accounting guidelines
Controls integrated in processes and IT systems
Organisational measures incorporating the principles of
the risk-oriented segregation of duties
Process-independent monitoring measures
Basically, the aim of any internal control system is to prevent,
or reduce the probability of, potential risks from occurring.
Both the system itself and the methods applied are subject
to continuous improvement, with system effectiveness as-
sessed regularly on the basis of centralised and decentral-
ised process analyses, data analyses within the various fi-
nancial systems, and audit-related procedures.
The principal features of the BMW Group's ICS are described
below.
Guidelines for recognising, measuring and allocating items
to accounts, along with the definitions of non-financial per-
formance indicators are available to all employees via the
BMW Group's intranet system. New financial reporting
standards are assessed at an early stage for their impact on
the BMW Group's accounting and financial reporting sys-
tems. Pertinent requirements are reviewed continuously and
revised at least once a year, or more frequently if required.
Preventive controls serve to identify and eliminate weak-
nesses and omissions in processes. Detective controls on
the other hand are deployed to detect and correct any errors
in the results of those processes and are generally based on
the principle of the segregation of duties. All key relevant IT
systems incorporate controls that are designed, among other
* Disclosures pursuant to § 289 and § 315 HGB.
Whenever changes are made to IT systems relating to ac-
counting and financial reporting processes, the aforemen-
tioned controls are adapted to take account of new require-
ments and/or any opportunities that have arisen due to
technical advances in information technology. Moreover, the
BMW Group deploys data analysis tools to identify and
subsequently eliminate weaknesses in its processes and/or
control systems.
Responsibilities for ensuring the effectiveness of ICS proce-
dures for accounting and financial reporting processes as
well as the further development of the reporting of non-fi-
nancial performance indicators are clearly defined in a role-
based model and allocated to the relevant line and process
managers. Once a year, the managers responsible report on
their assessment of the ICS in place for accounting and fi-
nancial reporting processes, based on the results of both
internal and external audits as well as continual monitoring.
The results of the assessment are gathered and document-
ed in a centralised IT system. Any weaknesses found in the
ICS are eliminated, taking into account their potential im-
pact. Both the Board of Management and the Audit Commit-
tee are informed about the effectiveness of the ICS on an
annual basis. The Board of Management and, where appro-
priate, the Supervisory Board, are promptly informed in the
event of any significant changes to the ICS.
144
Other Information
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Remuneration Report
things, to prevent business transactions from being recorded
incorrectly, ensure the complete recognition and accurate of
business transactions in accordance with the applicable re-
quirements, and provide the basis for checking the accuracy
of consolidation procedures.
Group Financial Statements
Corporate Governance
2,644
577
559
I
159
1,939
997
-18
- 15
Deferred tax
1,715
2,202
13
161
26
-11,740
- 10,934
-57
735
2,459
6,061
4,711
21
20
6,899
6,938
25
51,712
48,025
I
51,808
48,082
-96
Financial assets
3,418
100,956
618
589
107,713
46,818
131
41,860
50,869
- 1,873
-1,418
-42,316
-46,467
-63,360
- 65,655
Inventories
29
15,928
14,896
1,241
635
3,196
48,092
134,851
550
39
Other assets
28
1,302
1,216
2,057
2,861
30
33
2,649
2,929
38,882
Non-current assets
143,354
51,548
Receivables from sales financing
2020
3,585
information)
information)
Note
2021
14,868
2021
information)
2020
2020
2021
2020
2021
2020
2021
2021
Eliminations
(unaudited supplementary (unaudited supplementary (unaudited supplementary (unaudited supplementary (unaudited supplementary
information)
information)
Other Entities
Financial Services
151
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Balance Sheet for Group and Segments
at 31 December 2021
Corporate Governance
Remuneration Report
Other Information
← = Q
BALANCE SHEET FOR GROUP
AND SEGMENTS AT 31 DECEMBER 2021
in € million
Group
Automotive
Motorcycles
2020
ASSETS
Intangible assets
Property, plant and equipment
67
78
23
44,700
41,995
52,017
48,759
-7,317
-6,764
Investments accounted for using the equity method
24
24
5,112
3,585
5,112
401
Other investments
438
21,885
Leased products
22
21
12,980
12,342
12,438
11,809
167
155
374
377
1
22
22,390
21,850
21,371
13,391
16,009
687
Motorcycles
Financial Services
Other Entities
Eliminations
(unaudited supplementary (unaudited supplementary (unaudited supplementary (unaudited supplementary (unaudited supplementary
information)
information)
information)
information)
Automotive
in € million
2021
2020
2021
2020
2021
2020
Note
Group
AND SEGMENTS AT 31 DECEMBER 2021
BALANCE SHEET FOR GROUP
392
200
52,625
1,147
54,364
105,233
-187
-48
-88,668
-83,216
- 88,855 - 83,264
-152,215 - 148,919
152
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Balance Sheet for Group and Segments
at 31 December 2021
Corporate Governance
Remuneration Report
Other Information
← = Q
2021
105,593
2020
2020
Equity attributable to shareholders of BMW AG
31
74,366
60,891
Minority interest
766
- 1,518
629
75,132
61,520
50,296
41,117
17,324
15,555
Equity
-325
31
Accumulated other equity
2021
2020
EQUITY AND LIABILITIES
Subscribed capital
31
661
660
Capital reserves
31
2,325
2,199
Revenue reserves
31
71,705
59,550
2021
147,617
153,437
1,502
26
5,800
5,108
4,925
4,152
542
Financial assets
612
Current tax
27
1,529
606
300
342
520
36,252
35,705
36,252
404
818
Trade receivables
30
2,261
2,298
2,076
1,979
91
219
94
100
Receivables from sales financing
25
35,705
Other assets
28
8,941
9,110
Current assets
86,173
81,807
69,770
63,133
759
913
45,724
46,661
520
58,775
Total assets
229,527 216,658
121,318
111,225
1,394
2,863
656
3,471
9
35,592
33,747
3
N│I
83
64
1,146
2
5,425
5,952
56,589
Cash and cash equivalents
13,537
12,009
9,522
5
information)
1.14
-24
661
2,325
71,705
- 438
2
362
-251
74,366
766
75,132
156
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Statement of Changes
in Equity for Group
Corporate Governance
Remuneration Report
Other Information
← = Q
31
- 102
80
-182
Change in trade receivables
Change in inventories
Changes in working capital
Change in receivables from sales financing
Change in leased products
13
14,783
81
14,864
STATEMENT OF CHANGES
-1,253
-1,277
1
1
1
126
126
126
7
- 189
-1,253
Change in trade payables
IN EQUITY FOR GROUP
1 January 2020
Standard/Interpretation
Subscribed share capital increase out of
a Financial reporting standards applied for the first time in the
financial year 2021:
05 Financial reporting rules
Argentina has fulfilled the definition of a hyperinflationary
economy since 1 July 2018. Since that date, IAS 29 (Financial
Reporting in Hyperinflationary Economies) has therefore
been applied for the BMW subsidiary in Argentina. The price
indices published by the Federación Argentina de Consejos
Profesionales de Ciencias Económicas (FACPCE) are used
to adjust non-monetary assets and liabilities and items in
the income statement. The resulting effects are not material
for the BMW Group.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
160
1,345.42
1,353.58
1,329.79
1,351.64
82.71
Amendments to IFRS 9, IAS 39,
IFRS 7, IFRS 4 and IFRS 16
Interest Rate Benchmark
Reform Phase 2
-
In August 2020, the IASB published the Amendment Stand-
ard Interest Rate Benchmark Reform (IBOR) – Phase 2. The
amendments contain a number of reliefs to mitigate the
impact on the accounting treatment of hedge relationships,
financial instruments and lease liabilities resulting from the
reform of interest rate benchmarks.
Net profit
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2020
Dividend payments
Revenues from customer contracts include in particular rev-
enues from the sale of products (primarily new and pre-
owned vehicles and related products) as well as revenues
from services. Revenue is recognised when control is trans-
ferred to the dealership or retail customer. In the case of
sales of products, this is usually at the point in time when the
risks and rewards of ownership are transferred. Revenues
are stated net of settlement discount, bonuses and rebates
as well as interest and residual value subsidies. The consid-
eration arising from these sales usually falls due for payment
immediately or within 30 days. In exceptional cases, a longer
payment may also be agreed. In the case of services, control
is transferred over time. Consideration for the rendering of
services to customers usually falls due for payment at the
beginning of a contract and is therefore deferred as a con-
tract liability. The deferred amount is released over the ser-
vice period and recognised as revenue in the income state-
ment. As a rule, amounts are released on the basis of the
expected expense trend, as this best reflects the perfor-
mance of the service. If the sale of products includes a deter-
minable amount for services (multiple-component con-
tracts), the related revenues are deferred and recognised as
income in the same way. Variable consideration compo-
nents, such as bonuses, are measured at the expected
value, and in the case of multi-component contracts, allo-
cated to all performance obligations unless directly attribut-
able to the sale of a vehicle.
06 Accounting policies, assumptions, judgements and
estimations
Similarly, other financial reporting standards issued by the
IASB and not yet applied are not expected to have any sig-
nificant impact on the BMW Group Financial Statements.
Based on current assessments, the application of the new
rules is not expected to have a material impact on the Group
Financial Statements of the BMW Group. Early adoption of
IFRS 17 is not planned.
In May 2017, the IASB published IFRS 17 Insurance Con-
tracts. The Standard replaces IFRS 4 and contains new rules
relating to recognition, measurement, presentation and dis-
closure requirements for insurance contracts. The new rules
are mandatory for financial years beginning on or after 1 Jan-
uary 2023. In a Group-wide project, the BMW Group is cur-
rently examining the impact of adopting IFRS 17 for existing
agreements and, where applicable, the impact on financial
reporting.
in € million
b Financial reporting pronouncements issued by the IASB, but
not yet applied
01.01.2021
27.08.2020
Date of issue by IASB Mandatory application IASB Mandatory application EU
ments.
The adoption of other financial reporting Standards or
Revised Standards in the financial year 2021 did not have
any significant impact on the BMW Group Financial State-
Further explanatory comments on the impact of the interest
rate benchmark reform are provided in 7 note 39.
interest rate benchmark reform do not therefore have any
direct impact on profit or loss.
The adoption of the rules contained in the amended Stand-
ard means that the existing hedging relationships can be
continued and the contractual changes arising due to the
The BMW Group is impacted by the reform of interest rate
benchmarks primarily in the area of financial liabilities and
related interest rate hedges. For a significant proportion of
these instruments, the previous benchmark interest rate was
replaced by an alternative interest rate in 2021.
01.01.2021
Change in provisions
Automotive
Financial Services
-16
160
119
-43
438
422
- 1,032
370
-563
-76
433
-841
762
- 996
1,355
4,184
926
4,192
965
191
6
1
1,799
3,259
8,178
12,583
13,251
- 1,432
1,047
-26
- 1,425
754
-311
129
1,122
- 1,440
1,115
- 1,256
-34
-11
-1,454
1,810
- 1,526
87
- 1,602
- 1,016
-1,282
220
163
130
- 1,513
- 1,423
-382
- 1,805
- 1,605
-3,217
283
1,725
2,722
11,805
2020
2021
2020
2021
2020
5,222
2021
16,060
Group (unaudited supplementary information) (unaudited supplementary information)
3,753
87.18
2
78
- 920
- 1,520
- 920
- 1,520
6
94
-470
99
-713
3
46
5,974
6,341
6,139
6,495
1
1
152
115
104
35
90.54
85.23
7.87
59,550
2,199
660
31
4
-11
15
-4
50
- 31
38
38
38
1
1
1
- 1,671
- 25
- 1,646
- 2,156
34
868
-264
In order to provide a better insight into the results of opera-
tions, financial position and net assets of the BMW Group,
and going beyond the requirements of IFRS 8 (Operating
Segments), the Group Financial Statements also include an
income statement and a balance sheet for the Automotive,
Motorcycles, Financial Services and Other Entities seg-
ments. The Group Cash Flow Statement is supplemented by
a statement of cash flows for the Automotive and Financial
Services segments. Inter-segment transactions relate pri-
marily to internal sales of products, the provision of funds for
Group companies and the related interest. A description of
the nature of the business and the major operating activities
of the BMW Group's segments is provided in note 45
("Explanatory notes to segment information").
The income statement for the BMW Group and segments is
presented using the cost of sales method.
Key figures presented in the report have been rounded in
accordance with standard commercial practise. In certain
cases, this may mean that values do not add up exactly to
the stated total and that percentages cannot be derived from
the values shown.
The Group currency is the euro. All amounts are disclosed in
millions of euros (£ million) unless stated otherwise.
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMW Group Financial
Statements or Group Financial Statements) at 31 December
2021 were drawn up in accordance with International Finan-
cial Reporting Standards (IFRS), as endorsed by the Euro-
pean Union (EU), and the supplementary requirements of
§ 315 e (1) of the German Commercial Code (HGB). The
Group Financial Statements and Combined Management
Report will be submitted electronically to the operator of the
Federal Gazette and are accessible via the website of the
Company Register. Bayerische Motoren Werke Aktienge-
sellschaft (BMW AG), which has its seat in Germany, Munich,
Petuelring 130, is registered in the Commercial Register of
the District Court of Munich under the number HRB 42243.
BMW AG manufactures automobiles and motorcycles in the
premium segment.
01 Basis of preparation
ACCOUNTING PRINCIPLES AND POLICIES
NOTES TO THE GROUP FINANCIAL STATEMENTS
← = Q
- 1,646
Other Information
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
157
61,520
629
60,891
Remuneration Report
3,241
82
3,159
2,161
659
31
Total
Minority
interest
Equity
attributable to
shareholders
of BMW AG
Costs of
hedging
Derivative
financial
instruments
Marketable
securities
57,667
Translation
differences
reserves
Capital
Subscribed
capital
Note
Accumulated other equity
* Prior year's figures adjusted.
31 December 2020
Other changes *
preferred stock
Revenue
reserves
Approval for the publication of the Group Financial State-
ments was granted by the Board of Management on 8 March
2022.
- 760
15
187
803
5
- 1,396
3,560
-616
-616
187
803
29
5
-215
3,857
82
3,775
3,775
59,907
583
59,324
-447
- 1,396
2,762
02 Group reporting entity and consolidation principles
The BMW Group Financial Statements include BMW AG and
all material subsidiaries over which BMW AG - either directly
or indirectly exercises control. This also includes 59 struc-
tured entities, consisting of asset-backed financing arrange-
ments and special purpose funds.
In relation to fully consolidated companies, the following
changes took place in the Group reporting entity in the finan-
cial year 2021:
1 Euro =
In the single entity accounts of BMW AG and its subsidiaries,
foreign currency receivables and payables are measured on
initial recognition using the exchange rate prevailing at the
date of first-time recognition. Advance payments to suppli-
ers or from customers in a foreign currency that result in the
addition of non-monetary assets or liabilities are recorded at
04 Foreign currency translation and measurement
The financial statements of consolidated companies which
are presented in a foreign currency are translated using the
modified closing rate method. Under this method, assets
and liabilities are translated at the closing exchange rate,
whilst income and expenses are translated at the average
exchange rate. Differences arising on foreign currency trans-
lation are presented in "Accumulated other equity".
Following the business combination, minority interests in the
equity capital of BMW Automotive Finance (China) Co. Ltd.
and in Herald International Financial Leasing Co., Ltd. will
change to 10.5% in each case. As the two entities are
already included in the Group Financial Statements as sub-
sidiaries, the change will be recognised through Group equity
without any impact on profit or loss.
The fair values of the assets acquired and liabilities assumed
at the acquisition date are currently in the process of being
measured. The balance sheet values at 31 December 2021
are included in 7 note 24. The remeasurement of acquired
assets and liabilities will give rise primarily to the recognition
of reacquired rights and dealership relationships as intangi-
ble assets. Other fair value adjustments will also be recog-
nised, mainly for property, plant and equipment and invento-
ries. Due to the proximity of the acquisition date and the date
on which these financial statements were authorised for
issue, further information is not yet available for disclosure
and will be provided in the BMW Group's next quarterly
statement. Adjustments to the fair value may also arise over
the course of the financial year 2022 as the fair value meas-
urement process is finalised.
which has been provisionally calculated at € 11 to 12 billion.
The expected remeasurement gain of € 7 to 8 billion will be
recognised in the financial year 2022 on the line item "Result
on investments" within the financial result.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
159
In this context, the Group's 50% shareholding in BMW Bril-
liance at the acquisition date will be measured at fair value,
As the BMW Group already held 50% of the shares in BMW
Brilliance prior to the acquisition, the transaction constitutes
a business combination achieved in stages (step acquisi-
tion).
Cash and cash equivalents acquired totalled approximately
€ 8.7 billion.
The consideration paid for the additional 25% stake totals
€ 3.7 billion, including hedging effects, and has been settled
entirely in cash.
US Dollar
British Pound
Chinese Renminbi
Russian Rouble
7.63
8.00
7.22
0.89
0.86
0.90
0.84
1.14
1.18
Since the acquisition took place prior to the date on which
the financial statements were approved for publication, this
report contains disclosures relating to the business combi-
nation, even though BMW Brilliance will not be fully consoli-
dated until the financial year 2022.
1.23
2020
2021
31.12.2020
31.12.2021
Average rate
Closing rate
The exchange rates of currencies which have a material
impact on the Group Financial Statements were as follows:
the exchange rate prevailing at the date of payment. At the
end of the reporting period, foreign currency receivables and
payables are measured using the closing exchange rate. The
resulting unrealised gains and losses, as well as realised
gains and losses arising on settlement, are recognised in the
income statement, in line with the underlying substance of
the transaction. Non-monetary balance sheet items denom-
inated in foreign currencies are rolled forward on the basis of
historical exchange rates.
Korean Won
25,264
The strategic objective of the acquisition is to further
strengthen the BMW Group's long-term collaboration with a
partner in China, to expand production capacities at the
existing locations in Shenyang and to systematically increase
the local production of further models including New Energy
Vehicles.
BMW Brilliance manufactures BMW brand models primarily
for the Chinese market at its two vehicle production plants as
well as petrol engines and high-voltage batteries at a sepa-
rate facility.
a result of which it now has control over BMW Brilliance.
BMW Brilliance will therefore be fully consolidated as a sub-
sidiary in the BMW Group Financial Statements with effect
from 11 February 2022. The contractual term of the joint ven-
ture, which previously ran until 2028, has been extended to
2040.
All consolidated subsidiaries have the same year-end as
BMW AG with the exception of BMW India Private Ltd. and
BMW India Financial Services Private Ltd., whose year-ends
are 31 March in accordance with local legal requirements.
Interim financial statements are prepared as at 31 December
for the two companies with divergent reporting dates.
205
185
20
31 December 2021
Included at
17
16
1
When assessing whether an investment gives rise to a con-
trolled entity, an associated company, a joint operation or a
joint venture, the BMW Group considers contractual arrange-
ments and other circumstances, as well as the structure and
legal form of the entity. Discretionary decisions may also be
required. If indications exist of a change in the judgement of
16
Included for the first time in 2021
No longer included in 2021
206
185
21
Total
Foreign
Germany
31 December 2020
Included at
16
-
158
To Our Stakeholders
The previous joint venture requirement came to an end with
effect from 1 January 2022. The amended joint venture
agreement came into force and the formal transfer of shares
was completed on 11 February 2022, following the issuance
of an amended "business license". Since that date, the
BMW Group has held a 75% majority of the voting rights, as
On 11 February 2022, via the Group company BMW Holding
B. V., the BMW Group increased its shareholding in the joint
venture BMW Brilliance Automotive Ltd. (BMW Brilliance)
from 50% to 75% with the acquisition of a further 25% of
BMW Brilliance's shares. On 11 October 2018, the BMW Group
signed an agreement with its joint venture partner, a wholly
owned subsidiary of Brilliance China Automotive Holdings
Ltd. (CBA), to acquire these shares. The agreement was
approved at the CBA shareholders' meeting on 18 January
2019.
03 Increased shareholding in BMW Brilliance
Automotive Ltd.
The other changes to the Group reporting entity do not have
a material impact on the results of operations, financial posi-
tion and net assets of the Group.
On 30. September 2021, the BMW Group signed an agree-
ment with the Huachen Group to acquire all of the shares of
Brilliance Automobile Manufacturing Co, Ltd., a Huachen
Group subsidiary. The acquisition includes land usage rights
as well as buildings and production facilities of a Huachen
Group vehicle plant at the Shenyang site. The transaction is
expected to be completed in the first half of 2022 after all the
necessary regulatory approvals have been obtained.
Associated companies and joint ventures are accounted for
using the equity method, with measurement on initial recog-
nition based on acquisition cost.
In the case of a joint venture, the parties which have joint
control only have rights to the net assets of the arrangement.
The BMW Group's largest joint operation is Spotlight Auto-
motive Limited (Spotlight), which has been operated jointly
with the Chinese automobile manufacturer Great Wall Motor
Company Limited (Great Wall) since 2019, jointly developing
and manufacturing electric vehicles in China. The BMW Group
and Great Wall each hold 50% of the joint operation's equity.
In addition to electric MINI vehicles, Spotlight will in future
also develop and produce electric vehicles for Great Wall.
In the case of a joint operation, the parties that have joint
control of the arrangement have rights to the assets, and
obligations for the liabilities, relating to the arrangement.
Assets, liabilities, revenues and expenses of a joint opera-
tion are recognised proportionately in the Group Financial
Statements on the basis of the BMW Group entity's rights
and obligations (proportionate consolidation). The impact of
joint operations on the Group Financial Statements are of
minor significance.
BMW Group Report 2021
Joint operations and joint ventures are forms of joint arrange-
ments. Such an arrangement exists when a BMW Group
entity jointly carries out activities with a third party on the
basis of a contractual agreement.
-
An entity is deemed to be controlled if BMW AG - either
directly or indirectly has power over it, is exposed or has
rights to variable returns from it and has the ability to influ-
ence those returns.
(joint) control, the BMW Group undertakes a new assess-
ment.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
An entity is classified as an associated company if BMW AG
either directly or indirectly – has the ability to exercise sig-
nificant influence over the entity's operating and financial
policies. As a general rule, the Group is assumed to have
significant influence if it holds 20% or more of the entity's
voting power.
Premium arising on capital increase relating to
Change in other operating assets and liabilities
- 1,192
6,739
5,095
5,676
36
Other liabilities
41,202
17,730
18,909
2
2,087
2,247
67,390
62,342
35
Financial liabilities
88
2,812
3,426
697
7,270
524
522
40,003
33
Other provisions
- 49,307
- 46,214
-15
- 3,078
-3,571
-18
-42,065
-45,654
78
47,588
1,011
49,015
41,873
1,515
63,243
705
667
19,519
18,518
83,175
77,929
Non-current provisions and liabilities
475
42,506
62,525
6,748
509
13
Pension provisions
Payment of dividends for the previous year
Intragroup financing and equity transactions
Interest paid¹
Proceeds from issue of non-current financial liabilities
Repayment of non-current financial liabilities
Change in other financial liabilities
Cash inflow/outflow from financing activities
Effect of exchange rate on cash and cash equivalents
2021
- 6,619
2020
- 6,150
2021
-6,439
2020
- 5,990
2021
-12
2020
-14
32
1,247
3,693
1,073
Deferred tax
146
152
74
110
6,268
6,944
6,488
7,206
1,458
33
- 16,541
-17,752
21,389
338
108
49
35
109
31
3,197
Other provisions
7,494
6,175
6,960
21,797
34,829
105,233
22,943
38,456
105,593
147,617
153,437
1,502
1,394
111,225
121,318
216,658
229,527
Total equity and liabilities
-48
-187
12,959
9
10
892
42,169
68,819
73,588
797
727
-88,622
- 83,023
- 88,809
- 83,071
Other non-cash income and expense items
Depreciation and amortisation of tangible and intangible assets
Other interest and similar income/expenses¹
Interest received¹
Income taxes paid
Profit/loss before tax
in € million
FOR GROUP AND SEGMENTS
CASH FLOW STATEMENT
50,589
← = Q
Remuneration Report
Corporate Governance
Group Financial Statements
Cash Flow Statement for Group
and Segments
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
153
.148,919
-152,215
Other Information
52,504
71,963
76,466
38,986
41,121
35
Financial liabilities
18
81
192
140
537
1,462
700
921
34
Current tax
46
4
388
460
100
109
747
54
897
25,178
Current provisions and liabilities
47,666
319
240
34,830
34,517
16,092
16,744
36
24,428
Other liabilities
378
378
7,365
9,650
8,644
10,932
37
Trade payables
15,418
894
53
43
45
Authorised Capital
Premium arising on capital increase relating to
preferred stock
Other changes
31 December 2021
Accumulated other equity
Note
Subscribed
capital
Capital
reserves
Revenue
reserves
31
660
2,199
59,550
Translation
differences
-2,156
Marketable
securities
Derivative
financial
instruments
Costs of
hedging
Subscribed share capital increase out of
Dividend payments
Comprehensive income at 31 December 2021
Other comprehensive income for the period after tax
12,009
9,522
3,471
2,863
1 With the exception of interest for lease liabilities, interest relating to financial services business is classified as revenues/cost of sales.
2 Includes dividends received from investment assets amounting to € - million (2020: € 1.020 million).
The reconciliation of liabilities from financing activities is presented in 7 Note [35].
155
BMW Group Report 2021
To Our Stakeholders
Equity
attributable to
shareholders
of BMW AG
Combined Management Report
Corporate Governance
Remuneration Report
Other Information
← = Q
STATEMENT OF CHANGES
IN EQUITY FOR GROUP
in € million
1 January 2021
Net profit
Group Financial Statements
Statement of Changes
in Equity for Group
Minority
interest
Total
Investments in marketable securities and investment funds
Proceeds from the disposal of investment assets and other business units²
Proceeds from subsidies for intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investment assets
Total investment in intangible assets and property, plant and equipment
in € million
Group (unaudited supplementary information) (unaudited supplementary information)
Financial Services
Automotive
FOR GROUP AND SEGMENTS
Proceeds from the sale of marketable securities and investment funds
CASH FLOW STATEMENT
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Cash Flow Statement for Group
and Segments
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
154
15,903
← = Q
13,537
Cash inflow/outflow from investing activities
-317
34
868
-264
60,891
629
61,520
12,382
12,382
81
Payments into equity
12,463
1,718
-32
-317
13
2,401
2,401
13,401
1,718
-32
1,019
Cash inflow/outflow from operating activities
16,009
2,075
37
1,679
Result from equity accounted investments
260
521
- 6,389
-3,636
- 6,208
-3,933
74
424
103
28
103
28
- 1,277
- 1,671
- 1,277
- 1,671
2,200
302
- 91
- 185
11
8
40
34
39
34
1
-158
- 176
- 1,545
- 132
-1
263
1,328
260
1,327
-271
-925
-16
- 829
- 199
-901
-2,511
-2,438
- 143
130
-96
110
Effect of changes in composition of Group on cash and cash equivalents
- 40
43
Change in cash and cash equivalents
Cash and cash equivalents as at 1 January
180
2,472
2,487
445
608
788
13,537
12,036
9,522
9,077
2,863
1,501
Cash and cash equivalents as at 31 December
-307
-2,629
-217
224,916
-275
164,478
-367
-447
-27
218,348
- 18
153,823
-232,089
- 171,532
-2,508
-659
-219,488
-156,657
1,829
-6,735
718
1,049
2,782
- 8,254
-3,745
-3,973
-982
Authorised Capital
BMW Group Report 2021
5,689
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
compared to total Group cost of sales, they have not been
disclosed separately in the income statement.
Research and development expenses are as follows:
10 Other operating income and expenses
Other operating income and expenses comprise the follow-
ing items:
in € million
2021
2020
in € million
2021
2020
Exchange gains
232
326
Research and development expenditure
6,870
BMW Group Report 2021
170
Impairment losses recognised in the income statement 2021
in connection with receivables from sales financing
amounted to € 103 million (2020: € 646 million). In view of
the fact that the impairment losses are of minor importance
Cost of sales is reduced by public-sector subsidies in the
form of reduced taxes on assets and reduced consump-
tion-based taxes amounting to € 118 million (2020:
€ 105 million).
Other Information
Remuneration Report
Group Financial Statements Corporate Governance
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
26,409
27,114
thereof: interest expense relating
to financial services business
Research and development expenses
1,643
6,279
1,960
5,689
Expenses for service contracts,
telematics and roadside assistance
Warranty expenditure
Other cost of sales
Cost of sales
1,591
1,411
2,192
2,971
1,401
1,345
89,253
85,408
6,299
Income from the reversal of provisions
1,162
114
Expense for additions to provisions
-474
- 157
Expense for impairment losses and
write-downs
-7
in € million
2021
2020
Loss on the disposal of assets
-98
- 286
Selling expenses
5,300
Sundry operating expenses
-272
Administrative expenses
3,909
3,495
Other operating expenses
-1,055
-47
- 117
- 266
- 873
Total selling and administrative
5,324
← = Q
-204
916
New expenditure for capitalised develop-
ment costs
-2,506
-2,300
Income from the reversal of impairment
losses and write-downs
10
164
Amortisation
1,935
1,710
Exchange losses
Gains on the disposal of assets
30
Research and development expenses
6,299
Sundry operating income
285
282
09 Selling and administrative expenses
Selling and administrative expenses relate mainly to expenses
for marketing and communication, personnel and IT.
Other operating income
1,702
13
Revenues from the sale of products, for which repurchase
arrangements are in place, are not recognised immediately
in full. Instead, revenues are either recognised proportion-
ately or the difference between the sales and repurchase
price is recognised in instalments over the term of the con-
tract depending on the nature of the agreement. In the case
of vehicles sold to a dealership that are expected to be repur-
chased in a subsequent period as part of leasing operations,
revenues are not recognised at Group level at the time of the
sale of the vehicle. Instead, assets and liabilities relating to
the right of return vehicles are recognised.
Revenues from leases of own-manufactured vehicles are
recognised at Group level in accordance with the require-
ments for manufacturer or dealer leases. In the case of oper-
ating leases, revenues from lease payments are recognised
on a straight-line basis over the lease term.
Finance leases, on the other hand, are accounted for as a
sale. At the lease commencement date, revenues are recog-
nised at the amount of the fair value of the leased asset and
reduced by any unguaranteed residual value of vehicles that
are expected to be returned to the Group at the end of the
lease term. In addition, initial direct costs are recognised as
cost of sales at the lease commencement date.
164
Where the recoverable amount of a lease exceeds the
asset's carrying amount, changes in residual value expecta-
tions are recognised by adjusting scheduled depreciation
prospectively over the remaining term of the lease. If the
recoverable amount is lower than the asset's carrying
amount, an impairment loss is recognised for the shortfall. A
test is carried out at each balance sheet date to determine
whether an impairment loss recognised in prior years no
longer exists or has decreased. In such cases, the carrying
amount of the asset is increased to the recoverable amount,
at a maximum up to the amount of the asset's amortised
cost.
Group products recognised by BMW Group entities as
leased products under operating leases are measured at
manufacturing cost and all other leased products at acquisi-
tion cost, in each case including initial direct costs. All leased
products are depreciated over the period of the lease using
the straight-line method down to their expected residual
value.
The BMW Group has not applied the exemptions available to
lessees to account for COVID-19-related rent concessions
(amendments to IFRS 16 dated 28 May 2020 and 31 March
2021).
As lessee, the BMW Group makes use of the application
exemptions available for short-term leases and leases of
low-value assets.
-
Determining which items are to be counted as lease pay-
ments including the issue of the lease term underlying
those payments and which discount rate to apply involves
using estimates and assumptions that may differ from actual
outcomes.
-
into account, given that collateral received in the context of
alternative financing arrangements is not relevant within the
BMW Group.
IFRS 16 requires that lease payments are discounted as a
general rule using the interest rate implicit in the lease. How-
ever, since the interest rate in leases entered into by the
BMW Group cannot readily be determined, amounts are dis-
counted on the basis of the incremental borrowing rate,
comprising the risk-free interest rate in the relevant currency
for matching maturities plus a premium for the credit risk.
Specific risks attached to an asset are generally not taken
BMW Group Report 2021
The lease payments to be taken into account to measure the
right-of-use asset and the lease liability comprise fixed pay-
ments, variable lease payments that depend on an index or
an interest rate as well as amounts expected to be payable
under residual value guarantees. If it is reasonably certain
that a purchase or lease extension option will be exercised,
the relevant payments are also included. Payments for peri-
ods for which the lessee has an option to terminate a lease
unilaterally are only included in the lease payments if it is
reasonably certain that the termination option will not be
exercised. For the purposes of assessing options, the
BMW Group takes account of all facts and circumstances
that create an economic incentive to exercise or not to exer-
cise the option.
ance sheet within the relevant line items for property, plant
and equipment. The depreciation expense on right-of-use
assets is reported in the income statement in cost of sales
as well as in selling and administrative expenses.
In the case of leased items of property, plant and equip-
ment, a right-of-use asset and a liability for the outstanding
lease payments are recognised with effect from the date on
which the leased asset becomes available for use by the
BMW Group. The cost of the right-of-use asset is the sum of
the amount at which lease liability is initially measured, any
lease payments made at or before the lease commence-
ment date, any initial direct costs incurred by the lessee and
the estimated costs of dismantling, removing or restoring the
leased asset. Lease incentives granted by the lessor are
deducted. Right-of-use assets are depreciated on a straight-
line basis over the shorter of the useful life of the leased
asset and the expected lease term. If ownership of the
leased asset is automatically transferred at the end of the
lease term or the exercise of a purchase option is reflected in
the lease payments, the right-of-use asset is depreciated on
a straight-line basis over the expected useful life of the
leased asset. Right-of-use assets are reported in the bal-
The useful life of the plant and equipment is reviewed regu-
larly and extended or shortened as necessary, based on the
assumptions used for long-term corporate planning pur-
poses and product-related decisions, as described above.
For machinery used in multiple-shift operations, deprecia-
tion rates are increased to account for the additional utilisa-
tion. If there is any indication of impairment of property, plant
and equipment, an impairment test is performed as
described above for intangible assets.
3 to 21
2 to 25
8 to 50
Other facilities, factory and office equipment
Plant and machinery
Factory and office buildings, residential buildings, fixed
installations in buildings and outside facilities
in years
The following useful lives are applied throughout the
BMW Group:
The lease liability is measured on initial recognition at the
present value of the future lease payments. Subsequent to
initial recognition, the carrying amount of the lease liability is
increased to reflect interest on the lease liability and reduced,
without income statement impact, by the lease payments
made. Lease liabilities are reported within financial liabili-
ties, while interest expense is reported as part of net interest
result. In the cash flow statement, both the repayment por-
tion and the interest portion of lease payments are shown as
cash outflows from financing activities.
← = Q
To Our Stakeholders
Group Financial Statements Corporate Governance
Notes to the Group
Financial Statements
BMW Group Report 2021
165
As a general rule, the BMW Group assumes that a receivable
is in default if it is more than 90 days overdue or if there are
objective indications of insolvency, such as the opening of
insolvency proceedings. Credit-impaired assets are identi-
fied as such on the basis of this definition of default. In the
case of credit-impaired assets which had not been credit-im-
paired at the time they were acquired or originated, an
impairment allowance is recognised at an amount equal to
lifetime expected credit losses (stage 3). This is the case
-
The BMW Group applies the simplified approach described
in IFRS 9 to operating lease and trade receivables, whereby
the amount of the loss allowance is measured subsequent to
the initial recognition of the receivable on the basis of life-
time expected credit losses (stage 2 – simplified approach).
For the purposes of allocating at item to stage 2, it is irrele-
vant whether the credit risk of the assets concerned has
increased significantly since initial recognition.
To Our Stakeholders
general approach). The measurement of the change in
default risk is based on a comparison of the default risk at
the date of initial recognition and at the end of the reporting
period. The default risk at the end of each reporting period is
determined on the basis of credit checks, current key perfor-
mance indicators and any overdue payments.
With the exception of receivables from operating leases and
trade receivables, the BMW Group applies the general
approach described in IFRS 9 to determine impairment of
financial assets. Under the general approach, loss allow-
ances are measured on initial recognition on the basis of the
expected 12-month credit loss (stage 1). If the credit loss risk
at the end of the reporting period has increased significantly
since initial recognition, the impairment allowance is meas-
ured on the basis of lifetime expected credit losses (stage 2
investment in the lease. This balance sheet line item also
includes operating lease receivables due at the end of the
reporting period, while the related vehicles are reported as
leased products.
Receivables from sales financing also include finance lease
receivables which are measured at the amount of the net
Combined Management Report
Receivables from sales financing are measured as a gen-
eral rule at amortised cost using the effective interest rate
method.
The market values of financial instruments measured at fair
value are determined on the basis of market information
available at the balance sheet date, such as quoted prices or
using appropriate measurement methods, in particular the
discounted cash flow method.
The BMW Group does not make use of the option to meas-
ure equity instruments at fair value through other compre-
hensive income or debt instruments at fair value through
profit or loss.
Depending on the business model and the structure of con-
tractual cash flows, financial assets are classified as meas-
ured at amortised cost, at fair value through comprehensive
income or at fair value through profit or loss. The category
"measured at fair value through comprehensive income" at
the BMW Group comprises mainly marketable securities and
investment funds used for liquidity management purposes.
Selected marketable securities and investment funds, money
market funds within cash and cash equivalents as well as
convertible bonds are recognised at fair value through profit
or loss, as their contractual cash flows do not solely repre-
sent payments of principal and interest.
non-derivative financial assets, initial recognition takes
place at the settlement date.
With the exception of lease receivables, financial assets are
measured on initial recognition at their fair value. Financial
assets include in particular other investments, receivables
from sales financing, marketable securities and investment
funds, derivative financial assets, trade receivables and cash
and cash equivalents. As a general rule, initial recognition
takes place as soon as the BMW Group becomes a party to
a contract; in the case of standard purchases or sales of
Investments accounted for using the equity method are
measured provided no impairment has been recognised -
at cost of investment adjusted for the Group's share of earn-
ings and changes in equity capital. If there is any indication
that an investment is impaired, an impairment test is per-
formed on the basis of the discounted cash flow method. An
indicator exists, for example, in the event of a serious short-
fall compared to budget, the loss of an active market or if
funds are required to avoid insolvency.
Assumptions and estimations are required regarding future
residual values, since these represent a significant part of
future cash inflows. Relevant factors to be considered include
the trend in market prices and demand on the pre-owned
automobile market. The expected change in the drive-sys-
tem mix going forward, which is subject to continuous anal-
ysis, is also taken into account. The BMW Group has devel-
oped and implemented methods and processes that enable
the sustainability aspects of residual value risks, particularly
climate-related factors, to be appropriately assessed and
managed. Potential regulatory changes are also taken into
account. For example, upward or downward adjustments
can be made to residual values on the basis of a range of
scenario analyses. The assumptions are based on internally
available historical data and current market data as well as
on forecasts of external institutions. Furthermore, assump-
tions are regularly validated by comparison with external
data. Certain types of contracts require a high degree of
judgement when deciding whether they give rise to operat-
ing leases or finance receivables.
← = Q
Other Information
Remuneration Report
Items reported under other investments within the scope of
IFRS 9 are measured at fair value through profit or loss.
Investments in subsidiaries, joint arrangements and associ-
ated companies that are not material to the BMW Group are
also included in other investments.
647
Other Information
Corporate Governance
of the recoverable amount, but no higher than the amortised
acquisition or manufacturing cost. Impairment losses on
goodwill are not reversed.
Financial Statements
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
-
162
For the purpose of the impairment test, the carrying amount
of an asset (or a cash-generating unit) is compared with the
recoverable amount. The first step of the impairment test is
to determine the value in use. If the value in use is lower than
the carrying amount, the next step is to determine the fair
value less costs to sell and compare the amount so deter-
mined with the asset's carrying amount. If the fair value is
lower than the carrying amount, an impairment loss is rec-
ognised, reducing the carrying amount to the higher of the
asset's value in use or fair value less costs to sell.
If there is any indication of impairment of intangible assets,
or if an annual impairment test is required (i. e. intangible
assets with an indefinite useful life, intangible assets during
the development phase and goodwill), an impairment test is
performed. Each individual asset is tested separately unless
the cash flows generated by the asset are not sufficiently
independent from the cash flows generated by other assets
or other groups of assets. In these cases, impairment is
tested at the level of a cash-generating unit, which is the
norm for the BMW Group.
carbon or other climate-damaging emissions (for example
in conjunction with the EU Emissions Trading System or
vehicle-related emissions regulations in the USA or China).
These allowances and rights are carried at cost and, in the
event that they are allocated free of charge, recorded at a
value of zero. Amounts are derecognised at the date of the
return, sale or expiry of the allowances or rights. In parallel to
the recognition of these allowances and rights as assets,
provisions are recognised in accordance with IAS 37 corre-
sponding to the amount of obligations expected to arise in
conjunction with the related emission regulations. Provisions
are measured on the basis of the expected value of the
allowances or rights that are to be returned.
Intangible assets also include emission allowances and
similar rights arising from programmes aimed at reducing
Goodwill arises when the cost of acquiring a business
exceeds the Group's share of the net fair value of the assets,
liabilities and contingent liabilities identified during the
acquisition.
Development costs are capitalised if all of the criteria spec-
ified by IAS 38 are met. They are measured on the basis of
direct costs and directly attributable overhead costs. Pro-
ject-related capitalised development costs are amortised on
a straight-line basis following the start of production over the
estimated product life (usually five to twelve years).
Intangible assets are measured on initial recognition at
acquisition or manufacturing cost. Subsequently, intangible
assets with finite useful lives are amortised on a straight-line
basis over their useful lives of between three and 20 years.
Impairment losses are recognised where necessary. Intangi-
ble assets with indefinite useful lives are tested annually for
impairment. Internally generated intangible assets mainly
comprise development costs for vehicle, module and archi-
tecture projects.
Earnings per share are calculated as follows: Basic earn-
ings per share are calculated for common and preferred
stock by dividing the net profit for the year after minority
interests and attributable to each category of stock, by the
average number of outstanding shares. Net profit for the
year is accordingly allocated to the different categories of
stock. The portion of the net profit that is not being distrib-
uted is allocated to each category of stock based on the
number of outstanding shares. Profits available for distribu-
tion are determined directly on the basis of the dividend pro-
posals or resolutions for common and preferred stock.
Diluted earnings per share are calculated and separately
disclosed in accordance with IAS 33.
Public sector grants are not recognised until there is rea-
sonable assurance that the conditions attaching to them
have been complied with and the grants will be received. The
resulting income is recognised in cost of sales over the peri-
ods in which the costs occur that they are intended to com-
pensate.
Revenues also include interest income from financial ser-
vices. Interest income arising on finance leases as well as on
retail customer and dealership financing is recognised using
the effective interest method and reported as interest income
on credit financing within revenues.
If the reason for a previously recognised impairment loss no
longer exists, the impairment loss is reversed up to the level
Remuneration Report
As part of the process of assessing recoverability, it is gener-
ally necessary to apply estimations and assumptions in
particular regarding future cash inflows and outflows and the
length of the forecast period - which could differ from actual
amounts. Actual amounts may differ from the assumptions
and estimations used if business conditions develop differ-
ently to expectations.
Amounts are discounted on the basis of a market-related
cost of capital rate. Impairment tests are performed for
accounting and financial reporting purposes for the Automo-
tive and Motorcycles cash-generating units using a risk-ad-
justed pre-tax cost of capital (WACC). In the case of the
Financial Services cash-generating unit, a pre-tax cost of
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
163
-
The cost of internally constructed plant and equipment com-
prises all costs which are directly attributable to the manu-
facturing process as well as an appropriate proportion of
production-related overheads. This includes production-re-
lated depreciation and amortisation as well as an appropri-
ate proportion of administrative and social costs. Financing
costs are not included in acquisition or manufacturing cost
unless they are directly attributable to the asset. The carry-
ing amount of items of depreciable property, plant and
equipment is written down according to scheduled usage-
based depreciation as a general rule on a straight-line
basis over the useful lives of the assets. Depreciation is
recorded as an expense in the income statement.
All items of property, plant and equipment are measured at
acquisition or manufacturing cost less accumulated depreci-
ation and accumulated impairment losses.
The risk-adjusted discount rate, calculated using a CAPM
model, also takes into account specific peer-group informa-
tion relating to beta-factors, capital structure data and bor-
rowing costs. In conjunction with the impairment tests for
cash-generating units, sensitivity analyses are performed for
the main assumptions in order to rule out that possible
changes to the assumptions used to determine the recover-
able amount would result in the requirement to recognise an
impairment loss. Even in the case of a 10% deterioration in
the individual measurement assumptions, the need to rec-
ognise an impairment loss did not arise.
13.2
The BMW Group determines the value in use on the basis of
a present value computation. Cash flows used for this calcu-
lation are derived from long-term forecasts approved by
management. These long-term forecasts are based on
detailed forecasts drawn up at an operational level, covering
a planning period of six years. For the purposes of calculat-
ing cash flows beyond the planning period, a perpetual
annuity return is assumed which does not take growth into
account. Forecasting assumptions are continually adjusted
to current information and regularly compared with external
sources. The assumptions used take account in particular of
expectations of the profitability of the product portfolio,
future market share development, macroeconomic develop-
ments (such as currency, interest rate and raw materials
prices) as well as the legal environment and past experi-
ence. Assumptions also take into account the impact of cli-
mate change and the influence of other sustainability factors
on business performance and the product portfolio, for
example as a result of changes in demand patterns, regula-
tory requirements or changes in production conditions.
13.0
10.1
10.2
10.1
2020
2021
Financial Services
Motorcycles
Automotive
in %
equity capital is used, as is customary in the sector. The fol-
lowing discount factors were applied:
10.2
43
Other operating income and expenses
9,233
Corporate Governance
expenses
Other Information
← = Q
The share-based remuneration programme for Board of
Management members and senior heads of department
entitles BMW AG to elect whether to settle its commitments
in cash or with shares of BMW AG common stock. Based on
the decision to settle in cash, the share-based remuneration
programmes for Board of Management members and senior
heads of department are accounted for as cash-settled,
share-based remuneration programmes. Further informa-
tion on share-based remuneration programmes is provided
in 7 note 41.
169
BMW Group Report 2021
Group Financial Statements
Notes to the Group
Financial Statements
To Our Stakeholders
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Other Information
← = Q
NOTES TO THE INCOME STATEMENT
Financial Statements
Combined Management Report
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
In the financial year 2021, as part of a modernisation of the
pension plan model in Germany, the previous pension enti-
tlement trend (Festbetragstrend) was converted - with the
exception of one remaining component – into a career trend.
Net interest expense on the net defined benefit liability or
net interest income on the net defined benefit assets are
presented separately within the financial result.
All other costs relating to allocations to pension provisions
are allocated to costs by function in the income statement.
Past service cost arises where a BMW Group company intro-
duces a defined benefit plan or changes the benefits paya-
ble under an existing plan. This cost is recognised immedi-
ately in the income statement.
Similarly, gains and losses arising on the settlement of a
defined benefit plan are recognised immediately in the
income statement.
Remeasurement of the net liability can result from changes
in the present value of the defined benefit obligation, the fair
value of the plan assets or the asset ceiling. Remeasure-
ment can result, amongst others, from changes in financial
and demographic parameters, as well as changes following
the portfolio development. Remeasurements are recognised
immediately through other comprehensive income and ulti-
mately in equity (within revenue reserves).
Other provisions are recognised when the BMW Group has
a present legal or factual obligation towards a third party
arising from past events, the settlement of which is proba-
ble, and when the amount of the obligation can be reliably
estimated. Provisions with a remaining period of more than
one year are measured at their net present value.
The measurement of provisions for statutory and non-stat-
utory warranty obligations (statutory, contractual and
voluntary) involves estimations. In addition to manufacturer
warranties prescribed by law, the BMW Group offers various
further standard (assurance-type) warranties depending on
the product and sales market. No provisions are recognised
for additionally offered service packages that are treated as
separate performance obligations.
Provisions for statutory and non-statutory warranties are
recognised at the point in time when control over the goods
is transferred to the dealership or retail customer or when it
is decided to introduce new warranty measures. With respect
to the level of the provision, estimations are made in particu-
lar based on past experience of damage claims and pro-
cesses. Future potential repair costs and price increases per
product and market are also taken into account. Provisions
for warranties for all companies of the BMW Group are
adjusted regularly to take account of new information, with
the impact of any changes recognised in the income state-
ment. Further information is provided in 7 note 33. Similar esti-
mates are also made in conjunction with the measurement
of expected reimbursement claims.
The recognition and measurements of provisions for litiga-
tion and liability risks necessitates making assumptions in
order to determine the probability of liability, the amount of
claim and the duration of the legal dispute. The assumptions
made, especially the assumption about the outcome of legal
proceedings, are subject to a high degree of uncertainty. The
appropriateness of assumptions is regularly reviewed, based
on assessments undertaken both by management and
external experts, such as lawyers. If new developments arise
in the future that result in a different assessment, provisions
are adjusted accordingly.
If the recognition criteria relevant for provisions are not ful-
filled and the outflow of resources on fulfilment is not unlikely,
the potential obligation is disclosed as a contingent liability.
Related party disclosures comprise information on associ-
ated companies, joint ventures and non-consolidated sub-
sidiaries as well as individuals which have the ability to exer-
cise a controlling or significant influence over the financial
and operating policies of the BMW Group. This includes all
persons in key positions of the Company, as well as close
members of their families or intermediary entities.
In the case of the BMW Group, this also applies to members
of the Board of Management and the Supervisory Board.
Details relating to these individuals and entities are pro-
vided in note 40 and in the list of investments disclosed in
7 note 46.
Share-based remuneration programmes which are
expected to be settled in shares are measured at their fair
value at grant date. The related expense is recognised as
personnel expense in the income statement over the vesting
period and offset against capital reserves.
Share-based remuneration programmes expected to be set-
tled in cash are revalued to their fair value at each balance
sheet date between the grant date and the settlement date
and on the settlement date itself. The expense is recognised
as personnel expense in the income statement over the
vesting period and presented in the balance sheet as a pro-
vision.
168
07 Revenues
The calculation of the amount of the provision requires
assumptions to be made with regard to discount rates, pen-
sion trends, employee fluctuation and the life expectancy of
employees, among other things. Discount rates are deter-
mined by reference to market yields at the end of the report-
ing period on high quality fixed-interest corporate bonds.
Revenues by activity comprise the following:
2021
Revenues recognised from contracts with customers in
accordance with IFRS 15 totalled € 95,795 million (2020:
€ 83,814 million).
An analysis of revenues by segment is shown in the explan-
atory comments on segment information provided in 7 note 45.
Revenues from the sale of products and related goods are
generated primarily in the Automotive segment and, to a
lesser extent, in the Motorcycles segment. Revenues from
the sales of products previously leased to customers, income
from lease instalments and interest income on loan financ-
ing and finance leases are allocated to the Financial Ser-
vices segment.
Sundry other income relates mainly to the Automotive seg-
ment and the Financial Services segment.
The major part of revenues expected to arise from the
Group's order book at the end of the reporting period relates
to the sale of vehicles. Revenues resulting from those sales
will be recognised in the next financial year.
The services included in vehicle sale contracts that will be
recognised as revenues in subsequent years represent only
an insignificant portion of expected revenues. Accordingly,
use has been made of the practical expedient contained in
IFRS 15, permitting an entity not to disclose information on a
quantitative basis due to the short-term nature of items and
the lack of informational value of such disclosures.
2,763
2,335
98,990
Interest income on loan financing and finance leases
includes interest calculated on the basis of the effective
interest method totalling € 3,379 million (2020: € 3,424 mil-
lion). This interest income is not reported separately in the
income statement as it is not significant compared to total
Group revenues.
in € million
2021
2020
Manufacturing costs
51,361
46,878
Cost of sales relating to financial
services business
08 Cost of sales
Cost of sales comprises:
111,239
Revenues
2,424
Sales of products and related goods
77,042
2020
67,548
Sales of products previously leased
to customers
13,780
Income from lease instalments
11,526
11,345
11,322
Interest income on loan financing
and finance leases
3,701
3,677
Revenues from service contracts,
telematics and roadside assistance
2,766
Other income
in € million
← = Q
Remuneration Report
Remuneration Report
-
Fair value hedge ineffectiveness is generally recognised in
other financial result.
In addition, for selected fixed-interest assets, a portion of the
interest rate risk is hedged on a portfolio basis in accordance
with IAS 39. The designated hedged items (underlying
transactions) are reported in the balance sheet as receiva-
bles from sales financing or financial liabilities. Interest rate
risks are hedged on the basis of the present value of net
cash flows relating to fixed-income assets (on the asset
side) less cash flows relating to variable-rate financing (on
the liabilities side). The net cash flow determined in this way
is hedged by purchasing corresponding interest rate swaps
that have the effect of reducing the interest rate risk. Hedge
relationships are terminated and redesignated on a monthly
basis at the end of each reporting period, thereby taking
account of the constantly changing content of each portfolio.
accumulated other equity. Amounts accumulated in equity
are reclassified to other financial result within the income
statement over the term of the hedging relationship.
Fair value hedges are mainly used to hedge interest rate
risks relating to financial liabilities. The currency basis is not
designated as part of the hedging relationship in the case of
cross currency interest rate hedges accounted for as fair
value hedges. Accordingly, changes in the market value of
such components are recorded as costs of hedging within
Where hedge accounting is applied, changes in fair value of
derivative financial instruments are presented as part of
other financial result in the income statement or within other
comprehensive income as a component of accumulated
other equity, depending on whether the hedging relationship
is classified as a fair value hedge or a cash flow hedge.
The BMW Group applies the option to recognise the credit
risks arising from the fair values of a group of derivative
financial assets and liabilities on the basis of their total net
amount. Portfolio-based valuation adjustments (credit valu-
ation adjustments and debit valuation adjustments) to the
individual derivative financial assets and financial liabilities
are allocated using the relative fair value approach (net
method).
Fair values are determined on the basis of valuation models.
Observable market price, tenor and currency basis spreads
are taken into account in the measurement of derivative
financial instruments. Furthermore, the Group's own credit
risk and that of counterparties is taken into account on the
basis of credit default swap values for market contracts with
matching terms.
Derivative financial instruments are used within the
BMW Group for hedging purposes in order to reduce cur-
rency, interest rate, fair value and market price risks. Deriva-
tive financial instruments are recognised as of the trade
date, measured at their fair value. Depending on their market
value at measurement date, these financial instruments are
reported in the balance sheet as financial assets or financial
liabilities.
Input factors available on the market, such as ratings and
probabilities of default, are used to calculate valuation allow-
ances for cash and cash equivalents, financial receivables,
receivables from subsidiaries and receivables from compa-
nies in which an investment is held. In the case of marketa-
ble securities and investment funds, the BMW Group usually
applies the option not to allocate financial assets with a low
default risk to different stages. Accordingly, assets with an
investment grade rating are always allocated to stage 1.
Loss allowances on trade receivables are determined pri-
marily on the basis of information relating to overdue
amounts. Furthermore, both positive and negative economic
scenarios are used alongside the latest forecasts of key per-
formance indicators when determining the level of valuation
allowances. These scenarios are based on local analyses
and take into account, for example, anticipated political and
economic developments as well as sustainability risks in the
markets concerned.
Forward-looking information (for instance forecasts of key
performance indicators) is also taken into account if, based
on past experience, such indicators show a substantive cor-
relation to actual credit losses.
Loss allowances relating to the balance sheet item "Receiv-
ables from sales financing" are determined primarily on the
basis of past experience with credit losses, current data on
overdue receivables, rating classes and scoring information.
The BMW Group derecognises financial assets when it has
no reasonable expectation of recovery. This may be the case,
for instance, if the debtor is deemed not to have sufficient
assets or other sources of income to service the debt.
regardless of whether the general or simplified approach is
applied. In the case of stage 3 assets, interest income is cal-
culated on the asset's carrying amount less any impairment
loss.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
Other Information
In the opinion of the EU Commission, the carmakers con-
cerned within the framework of what was actually legiti-
mate technical cooperation in the development of SCR tech-
nology (SCR: selective catalytic reduction) created an
undue degree of transparency with regard to the sizes of
their AdBlue tanks, the range that can be achieved with a full
tank and the assumed average AdBlue consumption,
thereby violating EU competition law. The amount of the pro-
vision exceeding the fine was reversed with income state-
ment effect in the year under report. The fine was paid in July
2021, thereby concluding the EU Commission's proceedings.
-
In 2019, a provision of approximately € 1.4 billion was recog-
nised in connection with EU Commission anti-trust proceed-
ings which resulted in an increase in other operating
expenses in the financial year 2019 (see also note 10 to the
BMW Group Financial Statements for the financial year
2019). In this antitrust investigation, the EU Commission had
alleged that five German car manufacturers colluded with
the aim of restricting competition for innovation with regards
to certain exhaust treatment systems for petrol- and die-
sel-driven passenger vehicles. The investigation was solely
concerned with possible infringements of competition law.
There were no allegations that the BMW Group conducted a
deliberate and unlawful manipulation of the emissions con-
trol system. On the basis of BMW AG's detailed submissions,
the EU Commission dropped most of its charges. The pro-
ceedings were settled on 8 July 2021, and a fine amounting
to approximately € 373 million was issued.
The expense for additions to provisions includes litigation
and other legal risks. Income from the reversal of provisions
includes income arising on the reassessment of risks from
legal disputes.
Impairment losses recognised on receivables from contracts
with customers amounted to € 7 million (2020: € 47 million).
Income from the reversal of and expenses for the recognition
of impairment allowances and write-downs relate mainly to
impairment allowances on receivables.
8,795
-
The time values of option transactions and the interest com-
ponent including the currency basis of forward currency
contracts are not designated as part of the hedging relation-
ship in the case of currency hedges accounted for as cash
flow hedges. Changes in the fair value of such components
are recorded as costs of hedging on a separate line within
accumulated other equity. Amounts recorded in accumulated
other equity from currency hedges are reclassified to cost of
sales when the related hedged item is recognised in profit or
loss.
161
166
In the case of raw materials hedges that are accounted for as
cash flow hedges, the hedging instruments are designated in
full as part of the hedging relationship. As an exception to this
general rule, the interest component of raw materials deriva-
tive instruments redesignated in conjunction with the first-
time application IFRS 9 was not designated as part of the
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
167
In the event that the BMW Group has a right of reimburse-
ment or a right to reduce future contributions, it reports an
asset (within Other financial assets), measured on the basis
of the present value of the future economic benefits attached
to the plan assets. For funded plans, in cases where the obli-
gation exceeds plan assets, a liability is recognised under
pension provisions.
Provisions for pensions are measured using the projected
unit credit method. Under this method, not only obligations
relating to known vested benefits at the reporting date are
recognised, but also the effect of future expected increases
in pensions and salaries. The calculation is based on inde-
pendent actuarial valuations which take into account the rel-
evant biometric factors.
Financial liabilities, with the exception of lease liabilities,
are measured on first-time recognition at their fair value. For
these purposes, transaction costs are taken into account
except in the case of financial liabilities allocated to the cat-
egory "measured at fair value through profit or loss". Subse-
quent to initial recognition, liabilities are - with the exception
of derivative financial instruments - measured at amortised
cost using the effective interest method.
Cash and cash equivalents comprise mainly cash on hand
and cash at bank with an original term of up to three months.
With the exception of money market funds, cash and cash
equivalents are measured at amortised cost.
Inventories also include vehicles held for sale in the financial
services business, measured at their amortised cost or lower
net realisable value.
Work in progress and finished goods are stated at the lower
of manufacturing cost and net realisable value. Manufactur-
ing cost comprises all costs which are directly attributable to
the manufacturing process as well as an appropriate propor-
tion of production-related overheads. This includes produc-
tion-related depreciation and amortisation and an appropri-
ate proportion of administrative and social costs. Financing
costs are not included in the acquisition or manufacturing
cost of inventories.
Inventories of raw materials, supplies and goods for resale
are stated at the lower of average acquisition cost and net
realisable value.
As a general rule, each income tax treatment is considered
independently when accounting for uncertainties in income
taxes. If it is not considered probable that an income tax
treatment will be accepted by the local tax authorities, the
BMW Group uses the most likely amount of the tax treatment
when determining taxable profit and the tax base.
In the case of funded plans, the pension obligation is offset
against plan assets measured at their fair value. If the plan
assets exceed the pension obligation, the surplus is tested
for recoverability.
Deferred tax liabilities on taxable temporary differences aris-
ing from investments in subsidiaries, branches and associ-
ated companies as well as interests in joint arrangements are
not recognised if the Group is able to control the timing of the
reversal and it is probable that the temporary difference will
not reverse in the foreseeable future. This is particularly the
case if it is intended that profits will not be distributed, but
rather will be used to maintain the substance and expand the
volume of business of the entities concerned.
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements Corporate Governance
Notes to the Group
Financial Statements
Remuneration Report
Other Information
Current income taxes are calculated within the BMW Group
on the basis of tax legislation applicable in the relevant coun-
tries. To the extent that judgement was necessary to deter-
mine the treatment and amount of tax items presented in the
financial statements, there is in principle a possibility that
local tax authorities may take a different position.
hedging relationship. Changes in the fair value of this compo-
nent are recorded as costs of hedging on a separate line
within accumulated other equity. Amounts recorded in accu-
mulated other equity are included in the carrying amount of
inventories on initial recognition.
← = Q
The recoverability of deferred tax assets is assessed at each
balance sheet date on the basis of planned taxable income in
future financial years. If with a probability of more than 50 per-
cent future tax benefits will not be realised, either in part or in
total, a valuation allowance is recognised on the deferred tax
assets. The calculation of deferred tax assets requires assump-
tions to be made with regard to the level of future taxable
income and the timing of recovery of deferred tax assets.
Deferred income taxes are recognised for all temporary differ-
ences between the tax and accounting bases of assets and
liabilities, including differences arising on consolidation proce-
dures, as well as on unused tax losses and unused tax credits,
when it is probable that they can be utilised. Deferred tax assets
and liabilities are measured at the tax rates that are expected to
apply to the period when the asset is realised or the liability
settled, based on tax rates and tax laws that have been enacted
or substantively enacted at the balance sheet date.
Ineffectiveness arising on cash flow hedges is recognised
directly in cost of sales, whereas the impact of prematurely ter-
minated hedging relationships is recognised in other operating
income and expenses.
These assumptions take account of forecast operating results,
future legislative changes in connection with climate change
and the impact on earnings of the reversal of taxable tempo-
rary differences. Since future business developments cannot
be predicted with certainty and to some extent cannot be
influenced by the BMW Group, the measurement of deferred
tax assets is subject to uncertainty.
19,287
195
2,506
16,976
Translation
1.1.2021 differences
5,969
379
1.1.2021 differences Additions
in € million
Carrying amount
Depreciation, amortisation and impairment losses
Acquisition and manufacturing cost
Reclassifi-
Translation
20 Analysis of changes in Group tangible, intangible and investment assets 2021
cations Disposals 31.12.2021
Development costs
Current Reclassifi- Value ad-
year cations justments¹
1,935
Costs of hedging *
72
-22
1,751
190
Disposals 31.12.2021 31.12.2021 31.12.2020
7,714 11,573 11,007
Goodwill
384
1
385
NOTES TO THE BALANCE SHEET
5
5
380
Other intangible assets
← = Q
- 61
Remuneration Report
50
Other comprehensive income
- 1,283
- 1,283
1,228
1,228
51
-55
106
135
-50
Other comprehensive income from equity accounted investments
Currency translation foreign operations
141
- 60
Other Information
201
* Prior year's figures adjusted.
2,462
2,401
-332
- 284
-616
Other comprehensive income relating to equity accounted
investments is reported in the Group Statement of Changes
in Equity within currency translation differences with a posi-
tive amount of € 490 million (2020: negative amount of
€ 113 million), within derivative financial instruments with a
negative amount of € 368 million (2020: positive amount of
€ 118 million) and within costs of hedging with a negative
amount of € 37 million (2020: positive amount of € 46 mil-
lion).
Gains or losses realised on derivative financial instruments
which have been reclassified to acquisition costs for invento-
ries are not recognised through other comprehensive income
after tax.
178
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
685
85
82
991
177
* Prior year's figure adjusted.
-616
2,401
Other comprehensive income for the period after tax
-401
1,382
Items that can be reclassified to the income statement in the future
-1,283
1,228
Currency translation foreign operations
-423
163
106
BMW Group Report 2021
-50
638
359
-437
-287
201
72
-645
-11
1,636
25
991
14
-13
-7
Other comprehensive income from equity accounted investments
Deferred taxes*
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
51
37
14
45
5
-2
7
-32
13
-45
Marketable securities (at fair value through other comprehensive income)
Derivative financial instruments *
-215
After tax
Deferred taxes
139
- 354
1,019
-224
Corporate Governance
Remuneration Report
Other Information
← = Q
Deferred taxes on components of other comprehensive
income are as follows:
2021
- 306
2020
Remeasurement of the net liability for defined benefit pension plans
Before tax
Deferred taxes
After tax
Before tax
1,243
in € million
289
125
112
2
183
-16
1,169
1,751
545
2
271
543
-52
Other intangible assets
380
379
5
5
384
- 1
385
2,075
Goodwill
795
906
- 380
15,449
buildings on third party land
Land, titles to land, buildings, including
11,729
12,342
6,769
1,232
956
2
-16
6,122
19,111
2
2,571
-53
17,851
Intangible assets
1,893
621
5,969 11,007 10,443
1,710
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
179
2 Including assets under construction of € 1,354 million.
1 Including € 434 million recognised through the income statement
735
1,241
Group Financial Statements
Notes to the Group
Financial Statements
119
-434
-15
529
1,360
65
55
122
39
-39
689
Corporate Governance
Other Information
4,948
Disposals 31.12.2020 31.12.2020 31.12.2019
cations justments¹
Reclassifi- Value ad-
Current
year
Translation
1.1.2020 differences
cations Disposals 31.12.2020
715 16,976
2,300
Remuneration Report
15,391
1.1.2020 differences Additions
in € million
Carrying amount
Depreciation, amortisation and impairment losses
Acquisition and manufacturing cost
Reclassifi-
Translation
Analysis of changes in Group tangible, intangible and investment assets 2020
← = Q
Development costs
1,264
538
15,935
104
-4
41
20
121
31
- 1
34
thereof right-of-use assets from leases
37
2,211
927
1,025
16
51
70
73
thereof reclassifications to the income statement
206
Advance payments made and construction
in progress
333
2,147
1
8
31
58
6
1
15
2
-59
18
76
Other facilities, factory and office
equipment
3,172
- 100
248
44
226
3,138
40
293
1,991
941
5
452
-14
426
3,108
219
12
280
73
-72
thereof right-of-use assets from leases
9,345
9,244
6,691
124
846
- 135
6,104
3,107
- 19
796
2,681
- 1,294
1,619
thereof right-of-use assets from leases
10,884
10,060
30,239
1,500
2
2,312
3,071
29,177
40,299
1,548
710
1,841
-765
40,061
Plant and machinery
-511
2
Other investments
519
2,311
2
3,180
468
30,239
41,739
2,350
864
31,574
2,292
40,299
Plant and machinery
2,312
2,229
1,134
115
433
20
634
796
10,165
thereof right-of-use assets from leases
25
4
121
thereof right-of-use assets from leases
71
235
67
3,138
10,060
Other facilities, factory and office
equipment
131
14
19
15
18
145
38
58
40
73
3,363
416
2,137
12
6,769
21,647
307
2
2,795
46
251
19,111
956
1,027
948
61
202
12
795
1,975
Intangible assets
220
8,667
12,342
59
3,108
thereof right-of-use assets from leases
9,244
9,434
7,452
206
843
12,980
124
16,886
344
221
789
285
15,935
buildings on third party land
Land, titles to land, buildings, including
6,691
Non-current marketable securities
262
2,211
subsidiaries
Investments in non-consolidated
3,585
5,112
240
240
5,352
209
Participations
1,736
equity method
Investments accounted for using the
44,700 41,995
9,147
4,542
5,263
301
8,125
3,825
53,847
301
47
988
32
-39
-434
-17
444
1,020
46
11
75
963
216
253
87
2
85
340
19
28
3,251
16,463
1,725
1,619
Advance payments made and construction
in progress
70
62
69
20
36
2
23
51
19
927
907
2,344
249
2
335
45
131
18,465
1,407
5
50,120
Leased products
22,390 21,850
41,370
2,766
4,358
637
39,141
-1,160
63,760
-2
4,723
1,009
60,991
Property, plant and equipment
1,619
1,8842
1,884
2,961
thereof gains/losses arising in the period under report
due to:
thereof reclassifications to the income statement
Tax loss carryforwards
Non-deductible expenses
314
398
Capital Losses
Equity accounted
-370
-210
Provisions
Tax expense (+) / benefits (-) for prior
years
-54
- 97
61
Effects from tax rate changes
25
17
Eliminations
Other variances
-71
-15
Actual tax expense
3,597
1,365
Valuation allowances on tax loss carryforwards
Effective tax rate
Liabilities
-597
Tax-exempt income
Sundry other assets
Other Information
← = Q
Financial Statements
The difference between the expected tax expense based on
the underlying tax rate for Germany and actual tax expense
is explained in the following reconciliation:
The allocation of deferred tax assets and liabilities to bal-
ance sheet line items at 31 December is shown in the fol-
lowing table:
in € million
2021
2020
Profit before tax
16,060
5,222
in € million
Tax rate applicable in Germany
30.8%
30.8%
Intangible assets
Expected tax expense
4,946
1,608
Property, plant and equipment
Variances due to different tax rates
-596
-397
Leased products
Tax increases (+)/ tax reductions (-)
Other investments
1,6192
22.4%
Remuneration Report
26.1 %
Netting
476
490
348
6,070
6,655
29
33
4,303
3,717
601
852
3,936
1,061
3,721
1,766
17,129
16,284
15,755
13,848
- 140
- 138
-490
- 348
- 14,297
- 13,339
- 14,297
1,826
3,966
4,646
1,013
Deferred taxes
Net
The tax reductions due to tax-exempt income related pri-
Imarily to the partial release of the provision for the EU anti-
trust proceedings as well as to the tax-exempt impact of the
mark-to-market valuation of participations.
Tax benefits for prior years resulted primarily from adjust-
ments to income tax receivables and provisions for prior
years, among other things due to transfer pricing issues in
connection with unconcluded and ongoing transfer pricing
proceedings.
Deferred tax assets
Deferred tax liabilities
2021
2020
2021
2020
4
17
3,494
3,354
74
49
665
673
300
282
4,493
3,203
5
6
1
1
886
Valuation allowances on capital losses
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
-214
- 225
thereof subsidiaries:
-1
Interest and similar expenses
-165
- 458
in € million
2021
2020
Net interest result
-30
Other interest and similar expenses
- 342
Sundry other financial result benefited in 2021 from the favour-
able fair value development of interest rate hedges resulting
from the rise in yield curves in the USA, whereas in the previ-
ous year, the downward trend in interest rates gave rise to fair
value measurement losses on interest rate hedges.
13 Income taxes
Taxes on income of the BMW group comprise the following:
The tax expense was reduced by € 28 million (2020: € 4 mil-
lion) as a result of utilising tax loss carryforwards, for which
deferred assets had not previously been recognised and in
conjunction with previously unrecognised tax credits and
temporary differences.
The tax expense resulting from the change in the valuation
allowance on deferred tax assets relating to tax losses avail-
able for carryforward and temporary differences amounted
to € 3 million (2020: € 10 million).
Deferred taxes are determined on the basis of tax rates
which are currently applicable or expected to apply in the rel-
evant national jurisdictions when the amounts are recov-
ered. After taking account of an average municipal trade tax
multiplier rate (Hebesatz) of 428.0 (2020: 428.0), the under-
lying income tax rate for Germany was as follows:
Current tax expense
2,512
2,023
Deferred tax expense (+)/ deferred tax
income (-)
in %
2021
Sundry other financial result comprises mainly income and
expenses arising on the measurement of stand-alone deriv-
atives and fair value hedge relationships, as well as income
and expenses from the measurement and sale of marketa-
ble securities and shares in investment funds.
-34
-22
benefit liability for pension plans
171
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
11
Net interest result
in € million
2021
2020
Other interest and similar income
135
116
thereof from subsidiaries:
12
8
Interest and similar income
135
116
Net interest impact on other long-term
provisions
71
- 199
Net interest expense on the net defined
2020
1,085
- 658
12 Other financial result
thereof from subsidiaries:
14
12
German income tax rate
30.8
30.8
Expenses from investments in
subsidiaries and participations
-28
- 87
Result on investments
584
48
Income (+) and expenses (-) from finan-
cial instruments
586
-234
Sundry other financial result
586
-234
Deferred taxes for non-German entities are calculated on the
basis of the relevant country-specific tax rates. These ranged
in the financial year 2021 between 9.0% and 40.0% (2020:
between 9.0% and 40.0%).
Other financial result
1,170
- 186
172
BMW Group Report 2021
To Our Stakeholders
15.0
- 13,339
15.0
1,365
Corporate tax rate
15.0
15.0
thereof relating to temporary
differences
1,668
- 450
Solidarity surcharge
5.5
5.5
in € million
2021
2020
thereof relating to tax loss carryfor-
Corporate tax rate including solidarity
Income from investments in subsidiaries
wards and tax credits
-583
- 208
surcharge
15.8
15.8
and participations
612
135
Income taxes
3,597
Municipal trade tax rate
2,202
2,459
1,458
109
148
Income from variable lease payments for
finance leases
13
17
Financial income on the net investment in
finance leases
964
890
Selling profit on the sale of vehicles
previously leased to retail customers under
finance leases
1,557
1,167
Income from variable lease payments for
operating leases
Variable lease payments are based on distance driven. The
agreements have, in part, extension and purchase options.
The fee expense pursuant to § 314 (1) no. 9 HGB recognised
in the financial year 2021 for the Group auditor and the PwC
network of audit firms amounted to € 19 million (2020:
€ 18 million) and consists of the following:
Services provided during the financial year 2021 by the Group
auditor PricewaterhouseCoopers GmbH Wirtschaftsprü-
fungsgesellschaft, Frankfurt am Main, Munich branch, on
behalf of BMW AG and subsidiaries under its control relate to
the audit of the financial statements, other attestation ser-
vices, tax advisory services and other services.
The audit of financial statements comprises mainly the audit
of the Group Financial Statements and the separate finan-
cial statements of BMW AG and its subsidiaries, and all work
related thereto, including the review of the Interim Group
Financial Statements.
Other attestation services include mainly project-related
audits, comfort letters and statutorily prescribed, contractu-
ally agreed or voluntarily commissioned attestation work.
Tax advisory services include primarily services related to
transfer pricing and tax compliance.
Other services mainly include consulting services relating to
production processes.
18 Government grants and government assistance
Income from asset-related and performance-related grants,
amounting to € 94 million (2020: € 67 million) and € 152 mil-
lion (2020: € 210 million) respectively, was recognised in the
income statement in 2021.
These amounts relate mainly to public sector grants aimed
at the promotion of regional structures as well as to subsi-
dies received for plant expansions.
in € million
Audit of financial statements
Other attestation services
Tax advisory services
17 Fee expense for the Group auditor
2020
2021
in € million
911
2021
2020
Personnel expenses
12,286
12,244
Average number of employees
118,626
122,874
thereof at proportionately-
consolidated entities
304
139
Most of the expenses for leases of low-value assets and
short-term leases relate to low-value assets.
The BMW Group is party to leases at the end of the reporting
period which have not yet commenced. These leases could
give rise to future cash outflows amounting to € 530 million
(2020: € 225 million).
Total cash outflows for leases in 2021 amounted to
€ 600 million (2020: € 653 million).
Information on right-of-use assets, lease liabilities as well as
further explanatory comments are provided in 7 note 6
(Accounting policies, assumptions, judgements and estima-
tions), note 20 (Analysis of changes in Group tangible, intan-
gible and investment assets 2021), note 22 (Property, plant
and equipment (including right-of-use assets arising from
leasing) and note 35 (Financial liabilities).
175
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
As lessor
Other services
Fee expense
PwC International
thereof: PwC GmbH
Other Information
← = Q
NOTES TO THE STATEMENT
OF COMPREHENSIVE INCOME
19 Disclosures relating to the statement of comprehen-
sive income
Other comprehensive income for the period after tax com-
prises the following:
in € million
2021
2020
Remeasurement of the net liability for defined benefit pension plans
1,243
- 354
Deferred taxes
-224
139
Items not expected to be reclassified to the income statement in the future
1,019
- 215
Marketable securities (at fair value through other comprehensive income)
-45
7
thereof gains/losses arising in the period under report
-38
20
thereof reclassifications to the income statement
Derivative financial instruments
thereof gains/losses arising in the period under report
Remuneration Report
968
Corporate Governance
Combined Management Report
2021
2020
2021
2020
16
14
5
4
2
1
2
0
0
0
0
0
1
3
1
0
19
18
8
4
176
BMW Group Report 2021
To Our Stakeholders
Group Financial Statements
Notes to the Group
Financial Statements
Costs of hedging
Social insurance expenses
720
658
23
- 305
247
-443
-250
161
26
-23
-144
744
35
1,950
- 1,085
The tax returns of BMW Group entities are checked regularly
by German and foreign tax authorities. Taking account of
numerous factors - including interpretations, commentaries
and legal decisions relating to the various tax jurisdictions as
well as past experience – adequate provision has been
made, to the extent identifiable and probable, for potential
future tax obligations.
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
14 Earnings per share
Net profit attributable to the shareholders of BMW AG
Profit attributable to common stock
Profit attributable to preferred stock
174
1,562
1,950
2020
509
744
1,950
173
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Tax loss carryforwards relating to Germany and foreign
operations amounted to € 4,138 million (2020: € 1,568 mil-
lion). This includes one tax-loss carryforward amounting to
€ 413 million (2020: € 406 million), on which a valuation
allowance of € 140 million (2020: € 138 million) was recog-
nised on the related deferred tax asset.
For entities with tax losses available for carryforward, a net
surplus of deferred tax assets over deferred tax liabilities is
reported amounting to € 2,487 million (2020: € 392 million).
The basis for the recognition of deferred taxes is the
BMW Group business model or management's assessment
that there is material evidence that the entities will generate
future taxable profit, against which deductible temporary dif-
ferences can be offset. The increase in tax loss carryfor-
wards was mainly attributable to the exercise of a tax option
by the BMW Group's US companies. Furthermore, it is
assumed that tax start-up losses relating to the San Luis
Potosí plant in Mexico, opened in 2019, can be utilised by
offset against planned future profits.
Loss carryforwards amounting to € 3,834 million (2020:
€ 1,129 million) can be used indefinitely, while € 304 million
(2020: € 439 million) expire after more than 3 years.
Capital losses available for carryforward in the United King-
dom which do not relate to ongoing operations increased to
€ 1,959 million (2020: € 1,832 million) due to currency fac-
tors. As in previous years, deferred tax assets recognised on
these tax losses - which increased to € 490 million due to a
tax rate change in the UK (2020: € 348 million) - were fully
written down since they can only be utilised against future
capital gains.
Deferred tax assets and deferred tax liabilities are netted for
each relevant tax entity if they relate to the same tax author-
ities.
Deferred taxes recognised directly in equity amounted to
€ 1,733 million (2020: € 1,710 million).
in € million
Deferred taxes at 1 January (assets (+)/ liabilities (-))
Deferred tax expense (-)/ income (+) recognised through income statement
Change in deferred taxes recognised directly in equity
thereof relating to fair value gains and losses on financial instruments and marketable securities recognised
directly in equity
thereof relating to the remeasurements of net liabilities for defined benefit pension plans
thereof from currency translation
Exchange rate impact and other changes
Deferred taxes at 31 December (assets (+)/ liabilities (-))
Taxable temporary differences relating to investments in
subsidiaries, associated companies and joint ventures
amount to € 25,526 million (2020: € 22,174 million). No
deferred taxes are recognised on these taxable temporary
differences because the BMW Group is able to determine the
timing of the reversal of the temporary differences and it is
probable that the temporary differences will not reverse in
the foreseeable future, in particular in view of the fact that
there is no intention to distribute the profits, but rather to use
them to maintain their substance and reinvest in the compa-
nies concerned. No computation was made of the potential
impact of income taxes on the grounds of proportionality.
Deferred tax liabilities on expected dividends amount to
€ 79 million (2020: € 76 million) and relate primarily to divi-
dends from foreign subsidiaries and joint ventures.
2021
Average number of common stock shares in circulation
Average number of preferred stock shares in circulation
Basic / diluted earnings per share of common stock
Basic / diluted earnings per share of preferred stock
Dividend per share of common stock
Dividend per share of preferred stock
Е
18.79
5.75
of lease liabilities
- 14
-13
Е
5.80*
1.90
Interest expense arising on the
Е
5.82*
1.92
measurement of lease liabilities
-48
-55
Earnings per share of preferred stock are computed on the
basis of the number of preferred stock shares entitled to
receive a dividend in each of the relevant financial years. As
in the previous year, diluted earnings per share correspond
to basic earnings per share.
15 Personnel expenses
The income statement includes personnel expenses as fol-
lows:
in € million
Wages and salaries
Personnel expenses include € 223 million (2020: 602 mil-
lion) of costs relating to workforce measures.
The decrease in pension and welfare expenses was mainly
attributable to positive changeover effects resulting from the
modernisation of the pension plan model in Germany
amounting to € 562 million. The total pension expense for
defined contribution plans of the BMW Group amounted to
€ 160 million (2020: € 150 million). Employer contributions
paid to state pension insurance schemes totalled € 654 mil-
lion (2020: € 634 million).
The average number of employees during the year was:
2021
10,598
Pension and welfare expenses
payments not included in the measurement
2020
10,081
1,252
Expenses relating to variable lease
18.77
* Proposal by the Board of Management
16 Leases
2021
€ million
12,382.2
2020
3,775.0
As lessee
In terms of accounting for leases as a lessee, the following
amounts are included in the income statement:
€ million
11,298.4
3,448.1
€ million
1,083.8
326.9
in € million
2021
2020
number
601,995,196
601,995,196
number
57,686,234
56,867,180
Expenses for leases of low-value assets
and short-term leases
-74
- 91
€
5.73
1,991
1,260
60,673
No impairment losses were recognised in 2021, as in the
previous year.
22 Property, plant and equipment (including right-of-
use assets arising from leasing)
As in the previous year, no financing costs were recognised
as a cost component of intangible assets in 2021.
As in the previous year, there was no requirement to recog-
nise impairment losses or reversals of impairment losses on
intangible assets in 2021.
Other intangible assets include a brand-name right amount-
ing to € 43 million (2020: € 40 million) which is allocated to
the Automotive segment and is not subject to scheduled
amortisation since its useful life is deemed to be indefinite.
The asset is subject to a limited right of ownership. Intangi-
ble assets also include goodwill of € 33 million (2020:
€ 33 million) allocated to the Automotive cash-generating
unit (CGU) and goodwill of € 347 million (2020: € 346 mil-
lion) allocated to the Financial Services CGU. The changes in
these items compared to the previous year are exclusively
currency-related.
Intangible assets mainly comprise capitalised development
costs on vehicle, module and architecture projects as well as
subsidies for tool costs, licences, purchased development
projects, emission allowances, software and purchased cus-
tomer lists.
21 Intangible assets
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
180
2 Including assets under construction of € 1,297 million.
1 Including € 57 million recognised through the income statement
703
735
529
10
- 57
7
589
1,264
149
As in the previous year, no financing costs were recognised
as a cost component of property, plant and equipment in
2021.
Right-of-use assets arising from leases of land and buildings
relate primarily to logistics and office premises and, to a
lesser extent, to selling and production premises. In order to
secure these premises and, in the interests of flexibility, the
property rental agreements concerned often contain exten-
sion and termination options.
23 Leased products
Property, plant and equipment
In collaboration with Mercedes-Benz Group AG, the Ford
Motor Company, the Volkswagen Group, Kia Motors Corpo-
ration and Hyundai Motor Corporation, the BMW Group
operates the joint venture IONITY, whereby each of the par-
ties has an equal shareholding. IONITY's business model
envisages the construction and operation of high-perfor-
mance charging stations for battery-powered vehicles in
Europe. On 1 November 2021, IONITY Holding GmbH & Co.
KG signed a contract with GRP III HPC Lux S.à.r.l. (Black-
rock) for the provision of financing amounting to € 500 mil-
lion to expand the charging network. The existing share-
holders are also investing an additional € 200 million in the
business. The transaction is due to be completed in the first
half of 2022.
IONITY
BMW Brilliance produces BMW brand models primarily for
the Chinese market at its two vehicle production plants as
BMW Brilliance
24 Investments accounted for using the equity method
Investments accounted for using the equity method com-
prise the joint venture BMW Brilliance Automotive Ltd. (BMW
Brilliance), Shenyang, the joint venture YOUR NOW Holding
GmbH, Munich, the joint venture IONITY Holding GmbH &
Co. KG (IONITY), Munich, and interests in the associated
company THERE Holding B.V. (THERE), Rijswijk, and the
associated company Solid Power Inc., Wilmington, Delaware.
Impairment losses amounting to € 338 million (2020:
€ 312 million) were recognised on leased products in 2021 as
a consequence of changes in residual value expectations.
Income from the reversal of impairment losses amounted to
€ 111 million (2020: € 110 million).
20,872
35
35
275
302
1,534
156
1,702
3,812
7,052
between one and two years
between two and three years
between three and four years
between four and five years
later than five years
Minimum lease payments
10,123
31.12.2021
The at-equity loss reported for YOUR NOW for 2021
amounted to € 171 million (2020: loss of € 349 million). On
29 March 2021 YOUR NOW Holding GmbH signed an agree-
ment with the bp Group for the latter to acquire a 33.3%
stake in Digital Charging Solutions GmbH (DCS) (Charge-
Now). The transaction was completed on 1 October 2021. In
addition, on 8 March 2021, YOUR NOW Holding GmbH
signed an agreement to sell PARK NOW Group to EasyPark
Group. Following receipt of regulatory approval, the transac-
tion was completed on 27 May 2021. The impact of the two
transactions is not material.
YOUR NOW
31.12.2020
The BMW Group acquired a further 25% of the shares in the
BMW Brilliance joint venture on 11 February 2022. The trans-
action is described in detail in note 3.
well as petrol engines and high-voltage batteries at a sepa-
rate facility.
within one year
in € million
Minimum lease payments of non-cancellable operating
leases amounting to € 23,026 million (2020: € 20,872 mil-
lion) fall due as follows:
9,285
6,327
3,416
-35
23,026
Other investments
Investments in non-consolidated
3,439
equity method
Investments accounted for using the
41,995 42,609
8,125
4,741
5,833
- 300
7,333
50,120
15,712
17,820
- 1,930
49,942
Leased products
21,850 23,245
39,141
1,830
-2
4,250
- 705
60,991
2,067
-2
3,651
1,292
subsidiaries
Participations
37,428
1,054
Non-current marketable securities
1,440
3,199
3,585
240
499
519
444
10
.57
10
501
963
97
84
- 1,264
1,000
3,825
-24
292
72
52
301
-11
240
-3
85
216
204
88
72
47
2020
2021
At 31 December 2021, the carrying amounts of inventories
expected to be realised after more than twelve months
amount to € 405 million (2020: € 359 million).
Impairment allowances on trade receivables in accordance
with IFRS 9 developed as follows:
8
The expense recorded in conjunction with inventories during
the financial year 2021 amounted € 54,484 million (2020:
€ 48,128 million).
At 31 December 2021 work in progress included unfinished
vehicles still held in inventories due to production programme
changes necessitated by semiconductor component short-
ages.
Balance at 1 January
Allocated
in € million
-4
-20
- 36
Utilised
-1
Exchange rate impact and other changes
Balance at 31 December
1
-4
32
47
Reversed
In the case of trade receivables, collateral is generally held in
the form of vehicle documents and bank guarantees so that
the risk of bad debt loss is very limited. Expenses for impair-
ment losses and income from the reversal of impairment
losses is not significant for the BMW Group and is therefore
not reported separately in the income statement.
16
Out of the total amount recognised for inventories at
31 December 2021, inventories measured at net realisable
value amounted to € 1,457 million (2020: € 899 million).
Write-downs to net realisable value in the financial year 2021
amounted to € 41 million (2020: € 59 million), while rever-
sals of write-downs amounted to € 5 million (2020: € 2 mil-
lion).
2,298
15,928
Gross carrying amount
2,293
187
2,345
Work in progress, unbilled contracts
3,175
1,373
Allowances for impairment of stage 2 -
simplified approach
-18
-24
Raw materials and supplies
14,896
2,277
-14
-23
Vehicles held for sale in the financial
services business
404
818
Net carrying amount
2,261
Advance payments to suppliers
Inventories
389
503
1,660
Allowances for impairment of stage 3
57,689,304 601,995,196 601,995,196
Combined Management Report
Revenue reserves
Revenue reserves comprise the non-distributed earnings of
companies consolidated in the Group Financial Statements.
In addition, remeasurements of the net defined benefit obli-
gation for pension plans are also presented in revenue
reserves.
It is proposed that the unappropriated profit of BMW AG for
the financial year 2021 amounting to € 3,827 million be uti-
lised as follows:
―
Distribution of a dividend of € 5.82 per share of preferred
stock (€ 336 million)
Distribution of a dividend of € 5.80 per share of common
stock (€ 3,491 million)
The proposed distribution was not recognised as a liability in
the Group Financial Statements.
Accumulated other equity
Accumulated other equity comprises amounts recognised
directly in equity resulting from the translation of the finan-
cial statements of foreign subsidiaries, changes in the fair
value of derivative financial instruments and marketable
securities, costs of hedging recognised directly in equity as
well the related deferred taxes.
Capital management disclosures
The BMW Group's objectives with regard to capital manage-
ment are to safeguard over the long-term the Group's ability
to continue as a going concern and to provide an adequate
return to shareholders.
Capital reserves include premiums arising from the issue of
shares and totalled € 2,325 million (2020: € 2,199 million).
The change amounting to € 126 million related to the share
capital increase in conjunction with the issue of shares of
preferred stock to employees.
The capital structure is managed in order to meet needs
arising from changes in economic conditions and the risks of
the underlying assets.
In order to manage its capital structure, the BMW Group
uses various instruments, including the amount of dividends
paid to shareholders and share buybacks. Moreover, the
BMW Group actively manages debt capital, carrying out
funding activities with a target debt structure in mind. A key
aspect in the selection of financial instruments is the objec-
tive to achieve matching maturities for the Group's financing
requirements. In order to reduce non-systematic risk, the
BMW Group uses a variety of financial instruments available
on the world's capital markets to achieve diversification.
188
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
10,542
← = Q
The BMW Group is not subject to any unified external mini-
mum equity capital requirements. Within the Financial Ser-
vices segment, however, there are a number of individual
entities which are subject to equity capital requirements of
relevant regulatory banking authorities.
601,995,196
2020
Common stock
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Statements
31 Equity
Number of shares issued
Shares issued in circulation at 1 January
Shares issued in conjunction with Employee Share Programme
Less: shares repurchased and re-issued
Shares issued / in circulation at 31 December
All Company stock is issued to bearer and each share has a
par value of € 1.00. Preferred stock, to which no voting rights
are attached, bear an additional dividend of € 0.02 per
share.
In 2021, a total of 1,718,070 shares of preferred stock was
sold to employees at a reduced price of € 60.78 per share in
conjunction with an Employee Share Programme. These
shares are entitled to receive dividends for the first time with
effect from the financial year 2022.
Issued share capital increased by € 1.7 million as a result of
the issue to employees of 1,715,000 new shares of non-vot-
ing preferred stock. BMW AG is authorised up to 15 May 2024
to issue 5 million shares of non-voting preferred stock
amounting to nominal € 5.0 million. At the end of the report-
ing period, 1.7 million of these amounting to nominal
€ 1.7 million remained available for issue.
In addition, 3.070 previously issued shares of preferred stock
were acquired and re-issued to employees.
Preferred stock
2020
2021
56,867,304 601,995,196
2021
57,689,304
1,718,070
3,070
59,404,304
822,124
124
Capital reserves
To Our Stakeholders
9,683
454
31.12.2020
48
Gross investment in finance leases
24,413
22,754
thereof non-current
1,715
Receivables from subsidiaries
694
546
2,644
due within one year
44
6,625
thereof current
5,800
5,108
Collateral assets
397
364
Prepaid expenses
295
The capital structure at the end of the reporting period was
as follows:
due between one and two years
6,001
6,426
due later than five years
1,046
1,112
due between two and three years
5,590
5,190
Loans to third parties
58
71
Receivables from companies in which an
investment is held
2,190
2,048
due between three and four years
4,435
3,695
Other
216
199
Other taxes
1,950
1,581
due between four and five years
669
558
Financial assets
7,515
7,752
Expected reimbursement claims
5,809
Finished goods and goods for resale
Sundry other assets
1,246
8,941
9,110
Net investment in finance leases
22,159
20,693
186
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Corporate Governance
1,216
Remuneration Report
← = Q
29 Inventories
Inventories comprise the following:
Financial Statements
30 Trade receivables
Trade receivables comprise the following:
in € million
31.12.2021
31.12.2020
in € million
31.12.2021
Other Information
1,302
10,326
10,243
due between two and three years
5,158
4,770
due between three and four years
4,080
3,395
due between four and five years
604
503
due later than five years
42
45
Net investment in finance leases without
loss allowances
22,510
Unrealised interest income
1,903
Loss allowances
351
20,948
1,806
255
27 Income tax assets
Income tax assets totalling € 1,529 million (2020: € 606 mil-
lion) include claims amounting to € 19 million (2020:
€ 43 million), which are expected to be settled after more
than one year. Claims may be settled earlier than this
depending on the timing of the underlying proceedings. The
increase in income tax assets was mainly attributable to the
exercise of a tax option by the BMW Group's US companies.
thereof non-current
thereof current
Collateral assets comprise mainly customary collateral
(banking deposits) arising on the sale of asset-backed
financing instruments.
Other assets
1,200
in € million
-82
31.12.2021 31.12.2020
Defined benefit plans exist in the United Kingdom which are
closed for all plan participants. Vested benefits remain in
place. New benefits are covered by contributions made to a
defined contribution plan.
United Kingdom
Board of Directors and adopting changes to the associa-
tion's statutes.
The assets of the German pension plans are invested by
BMW Trust e. V., Munich, in accordance with a CTA. The rep-
resentative bodies of this entity are the Board of Directors
and the Members' General Meeting. BMW Trust e. V., Munich,
currently has seven members and three members of the
Board of Directors elected by the Members' General Meet-
ing. The Board of Directors is responsible for investments,
drawing up and deciding on investment guidelines as well as
monitoring compliance with those guidelines. The members
of the association can be employees, employee representa-
tives, senior executives and members of the Board of Man-
agement of BMW AG. An ordinary Members' General Meet-
ing takes place once every calendar year, and deals with a
range of matters, including receiving and approving the
association's annual report, ratifying the activities of the
In the case of defined benefit plans involving the payment of
a pension, the amount of benefits to be paid is determined
by multiplying a fixed amount by the number of years of ser-
vice.
The defined benefit plans have been closed to new entrants
since 2014. Defined contribution plans with a minimum rate
of return, comprising employer- and employee-funded com-
ponents, continue to exist. The fact that the plan involves a
minimum rate of return means that the defined contribution
entitlements are classified in accordance with IAS 19 as
defined benefit plans. In the financial year 2021, employees
in the defined benefit plan were given the option to switch to
the defined contribution plan.
Both employer- and employee-funded benefit plans exist in
Germany. Benefits paid in conjunction with these plans
comprise old-age retirement pensions as well as invalidity
and surviving dependants' benefits. The level of ongoing
pension payments is adjusted in accordance with §16 of the
Company Pensions Act (Betriebsrentengesetz).
Germany
The most significant of the BMW Group's pension plans are
described below.
- 13
- 82
The defined benefit pension plans are administered by BMW
Pension Trustees Limited, Farnborough, and BMW (UK)
Trustees Limited, Farnborough, both trustee companies
which act independently of the BMW Group. BMW (UK) Trus-
tees Limited, Farnborough, is represented by ten trustees
and BMW Pension Trustees Limited, Farnborough, by five
trustees. A minimum of one third of the trustees must be
elected by plan participants. The trustees represent the
interests of plan participants and decide on investment
strategies. Funding contributions to the funds are deter-
mined in agreement with the BMW Group.
-13
-46
-7
3,693
1,247
254
194
355
106
3,084
947
thereof pension provisions
thereof assets
-29
190
BMW Group Report 2021
To Our Stakeholders
411
411
Past service cost
Interest expense (+)/income (-)
3,680
3
Net defined
benefit liability
Effect of limitation
of the net defined
benefit asset to the
asset ceiling
Total
3,677
-22,910
26,587
Plan assets
benefit obligation
Defined
Current service cost
EXPENSE / INCOME
1 January 2021
in € million
The change in the net defined benefit liability for pension
plans can be derived as follows:
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
3,680
257
1,165
165
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
Present value of defined benefit obligations
in € million
Total
Other
31.12.2020
United Kingdom
the following balance sheet carrying amounts apply to the
Group's pension plans:
Based on the measurement principles contained in IAS 19,
Financial Statements
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
Germany
15,045
15,535
8,844
355
60
3,084
940
Carrying amounts
3
1,187
3
3
1,184
Effect of limiting net defined benefit asset to asset ceiling
22,910
25,011
870
938
9,589
9,968
12,451
14,105
Fair value of plan assets
26,587
24,989
1,108
1,100
9,944
241
Equity attributable to shareholders of
BMW AG
- 235
-527
Total financial liabilities
103,463
106,376
Pension level trend
2.10
1.33
2.36
2.19
Proportion of total capital
58.2%
63.6%
1.88
Weighted duration of all pension obligations in years
21.6
17.8
19.8
15.4
15.9
Total capital
177,829
167,267
Mortality Table 2018 G issued by Prof. K. Heubeck (with invalidity rates reduced by 70%)
S3PA Tables and CMI_2020 model with improvement factor of 1.25%
Equity attributable to shareholders of BMW AG increased
during the financial year by 22.1%, primarily reflecting the
increase in revenue reserves.
32 Pension provisions
17.5
2.27
1.19
1.83
The assumptions stated below, which depend on the eco-
nomic situation in the relevant country, are used to measure
the defined benefit obligation of each pension plan. The fol-
lowing weighted average values have been used for Ger-
many, the UK and other countries:
74,366
60,891
Germany
United Kingdom
Other
Proportion of total capital
41.8%
36.4%
Non-current financial liabilities
62,342
67,390
in %
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
Current financial liabilities
41,121
38,986
Discount rate
1.04
0.55
In the case of defined benefit plans, the BMW Group is
required to pay the benefits it has granted to present and
past employees. Defined benefit plans may be covered by
provisions or pension assets. In Germany, pension obliga-
tions of the BMW Group are mostly covered by assets trans-
ferred to BMW Trust e. V., Munich, in conjunction with a Con-
tractual Trust Arrangement (CTA) (funded plan). Funded
plans also exist in the UK, the USA, Switzerland, Belgium
and Japan. In the meantime, most of the defined benefit
plans have been closed to new entrants.
22
The following mortality tables are applied in countries, in
which the BMW Group has significant defined benefit plans:
United Kingdom
Transfers to fund
1,157
1,157
Changes in the limitation of the net defined benefit asset to the asset ceiling
97
-616
-1,341
-652
-1,341
-616
97
97
Gains (-) or losses (+) arising from experience adjustments
- 1,082
-616
-1,341
Gains (-) or losses (+) arising from changes in financial assumptions
-652
-652
Gains (-) or losses (+) on plan assets, excluding amounts included in interest income
REMEASUREMENTS
Gains (-) or losses (+) arising from settlements
-527
22
411
-527
Gains (-) or losses (+) arising from changes in demographic assumptions
- 1,082
- 1,082
Employee contributions
In addition, the career trend component, which is plan-de-
pendent and lies within a range of 0.25% to 0.50%, is now
part of the measurement of pension obligations in Germany
(2020: pension entitlement trend of 2.0%).
189
3,256
1,247
1,165
1,187
-22
-25,011
24,989
21
27
-6
-717
711
- 5
5
675
- 680
-90
90
thereof assets
thereof pension provisions
31 December 2021
Translation differences and other changes
Pensions and other benefits paid
Germany
2,998
BMW Group Report 2021
Total comprehensive income
4,305
2,610
298
335
424
591
42
49
183
BMW Group Report 2021
- 1,084
To Our Stakeholders
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
in € million
DISCLOSURES RELATING TO THE INCOME STATEMENT
Revenues
Scheduled depreciation
Profit/loss before financial result
Combined Management Report
- 1,283
49
42
87
297
486
127
55
Net assets
Group's interest in net assets
Eliminations
Carrying amount
11,176
7,388
1,090
1,214
897
1,226
209
244
5,588
3,694
298
335
424
591
Interest income
Interest expense
Income taxes
Profit/loss after tax
2020
2021
2020
28,001
23,913
248
234
30
8
729
707
263
127
26
19
4,457
3,174
-1
-1
- 309
- 693
-39
-43
2021
9,763
2020
2020
thereof from continuing operations
thereof from discontinued operations
Other comprehensive income
Group dividend income
25 Receivables from sales financing
Receivables from sales financing comprise the following:
in € million
31.12.2021 31.12.2020
Credit financing for retail customers and
dealerships*
65,258
63,584
Finance lease receivables
22,159
20,693
Receivables from sales financing
87,417
84,277
* Figure includes operating leases
BMW Brilliance
THERE
YOUR NOW
IONITY
2021
2021
12,836
Provisions and liabilities
299
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial information relating to equity accounted invest-
ments is summarised in the following tables (from a 100%
perspective):
BMW Brilliance
THERE
YOUR NOW
IONITY
in € million
DISCLOSURES RELATING TO THE BALANCE SHEET
Non-current assets
Current assets
thereof cash and cash equivalents
Equity
31.12.2021
31.12.2020 31.12.2021
31.12.2020
31.12.2021
31.12.2020 31.12.2021
31.12.2020
8,950
7,292
Group Financial Statements
Notes to the Group
Financial Statements
1,175
Combined Management Report
BMW Group Report 2021
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
181
Remuneration Report
Other Information
← = Q
THERE
Together with AUDI AG, Mercedes-Benz Group AG and other
companies, the BMW Group holds shares in THERE. HERE
International B.V. (HERE) is an associated company of
THERE. HERE's digital maps are laying the foundations for
the next generation of mobility and location-based services,
providing the basis for new assistance systems and, ulti-
mately, fully automated driving.
Solid Power
In May 2021, the BMW Group, together with the Ford Motor
Company and Volta Energy Technologies, participated in an
investment round relating to Solid Power, an industry-lead-
ing producer of solid-state batteries for electric vehicles. In
this context, some existing joint development partnerships
with Solid Power have also been expanded with a view to
securing the supply of solid-state batteries for future gener-
ations of electric vehicles. The investment meets the criteria
of an associated company and is accounted for using the
equity method.
in € million
Disclosures relating to the Income Statement
Profit/loss after tax
thereof from continuing operations
thereof from discontinued operations
Other comprehensive income
Total comprehensive income
2021
2020
-26
-26
-26
182
To Our Stakeholders
185
1,190
945
2,027
1,546
87
84
113
16
13
Current financial liabilities, provisions and liabilities
10,809
8,217
213
373
111
42
RECONCILIATION OF AGGREGATED FINANCIAL INFORMATION
Assets
24,012
17,151
1,177
1,214
1,194
1,712
336
Non-current financial liabilities, provisions and liabilities
666
244
1,226
287
244
15,062
9,859
2
24
528
767
49
55
8,493
5,137
2
24
444
341
19
17
11,176
7,388
1,090
1,214
897
209
80
9
4
361
Impairment allowances at 1 January 2020
Total
Simplified
General
in € million
Stage 3
Stage 2
Stage 1
567
209
35
447
Impairment allowances at 31 December 2021
3
-4
31
-65
Other changes
-31
-46
10
550
12
517
1,099
Write-off of receivables
1
-33
1
21
12
Derecognition and origination of receivables
160
195
-1
-30
-4
Reclassification to Stage 3
123
-15
153
- 15
Reclassification to Stage 2
-9
- 4
-6
1
Reclassification to Stage 1
Changes in risk parameters
- 143
-131
-11
483
Impairment allowances at 1 January 2021
Simplified
General
in € million
Stage 3
Stage 2
Stage 1
The estimated fair value of vehicles held as collateral for
credit-impaired receivables at the end of the reporting period
totalled € 569 million (2020: € 517 million). The carrying
amount of assets held as collateral and taken back as a
result of payment default amounted to € 21 million (2020:
€ 33 million).
Impairment allowances include € 102 million (2020:
€ 95 million) on credit-impaired receivables relating to
finance leases.
In connection with the coronavirus pandemic, allowances for
expected credit losses were increased in 2020 to take
account of the negative impact on retail customer and deal-
ership business, to the extent not covered by the
BMW Group's standard loss provisioning models (post-
model adjustments) and their level reviewed on a regular
basis. Although the level of expected credit losses decreased
significantly during 2021, a large proportion of the additional
allowance recorded one year earlier was retained due to
ongoing uncertainty about the further course of the pan-
demic.
1,599
-67
-35
Total
in accordance with IFRS 9, which only arise within the Finan-
cial Services segment, developed as follows:
Impairment allowances on receivables from sales financing
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
474
-1
39
1,639
-1
Write-off of receivables
-9
-55
11
34
Derecognition and origination of receivables
129
170
-1
-37
-3
Reclassification to Stage 3
119
-25
159
-15
Reclassification to Stage 2
-34
-7
-31
4
Reclassification to Stage 1
643
Group Financial Statements
Notes to the Group
Financial Statements
-14
-90
-37
-
199
-48
174
169
-17
10
-81
3,770
2,729
- 125
216
- 337
- 830
-35
-37
379
184
BMW Group Report 2021
Derivative instruments
3,041
2,405
-35
products
-701
206
38
5
2
3
2
1
1,150
822
8
6
-6
- 8
3,596
2,560
-108
206
-337
- 749
-35
-37
3,596
2,560
- 108
-536
6,293
6,528
due between one and two years
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
185
1,639
643
39
474
483
Impairment allowances at 31 December 2020
195
24
27
75
69
Other changes
176
49
1
66
60
Changes in risk parameters
- 106
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Other Information
Return right assets for future leased
4,226
4,243
Marketable securities and investment funds
6,970
7,147
due within one year
31.12.2020
31.12.2021
in € million
-1
31.12.2020
in € million
31.12.2020
31.12.2021
in € million
Other assets comprise:
28 Other assets
Financial assets comprise:
26 Financial assets
Financial Statements
Finance leases are analysed as follows:
← = Q
31.12.2021
Corporate Governance
2019
2020
BMW Group Report 2021
The Board of Management and the Supervisory Board also visited the BMW and
MINI Driving Academy in Maisach together, in order to take an in-depth look at how
the Group's product portfolio can be best aligned to meet differing customer needs.
The members of the Supervisory Board were given the opportunity to test-drive the
full range of vehicle types, comprising all-electric, plug-in hybrid and conventionally
powered vehicles as well as the BMW iX5 Hydrogen, which is powered by hydrogen
fuel cell technology. A particular highlight was the unveiling of the new BMW 7 Series,
the only model in its segment to offer customers a choice between an internal com-
bustion engine and an all-electric drive system in the form of the BMW i7. Apart from
BMW, MINI and Rolls-Royce brand vehicles and a joint venture product, we also took
test drives in various competitor vehicles. Design presentations covering the BMW,
MINI, Rolls-Royce and BMW Motorrad brands as well as the BMW i Vision Circular
allowed us to take a fascinating look into the future.
New members of the Supervisory Board were given the opportunity to participate in
an onboarding programme comprising several modules, during which senior execu-
tives provided useful insights into key business areas and planning processes used
at the BMW Group as well as on key topics currently relevant for Supervisory Board
work.
16
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
The members of the Supervisory Board jointly attended various training events in
2021. In July, for instance, we took the opportunity to familiarise ourselves thoroughly
with battery cell technology. After an introductory presentation by the Board of Man-
agement covering various related topics, we visited the BMW Group Battery Cell Com-
petence Centre in Munich, where we had the opportunity to listen to an internationally
renowned researcher giving a talk on lithium-ion batteries, followed by a discussion of
the future of battery cell technology. In the newly constructed part of the Research and
Innovation Centre in Munich, we were given a guided tour to gain an insight into the
various new working environments. Partly with the Wirecard case in mind, coopera-
tion between supervisory boards, audit committees and auditors was the subject of a
workshop conducted by representatives of the BMW Group's auditors PwC.
← = Q
Throughout the entire year, personal conversations with members of the Supervisory
Board enabled me to gather feedback concerning the work of the Supervisory Board.
At the end of 2021, we also assessed the effectiveness of our work at both Supervis-
ory Board and committee level by means of a questionnaire and concluded that there
was a high level of satisfaction with the work of the Supervisory Board. The feedback
we received on the organisation of our meetings as well as the topics covered in
meetings, training sessions and onboarding events was unanimously favourable. The
constructive and trusting cooperation prevailing both within the Supervisory Board
itself and in its work with the Board of Management was also commended. Proposals
put forward for improving individual aspects of Supervisory Board work and dealing
with certain topics in greater depth will be followed up in the coming financial year.
The Supervisory Board is careful to avoid potential conflicts of interest in its delib-
erations and decisions. Therefore, as a precautionary measure, I did not take part in
the Supervisory Board's deliberations and resolution and the preparation of the Audit
Committee's recommendation to the Supervisory Board on whether claims should be
asserted against former members of the Board of Management in connection with
the EU Commission's antitrust proceedings against German automakers. I left the
room whenever these matters came up for discussion. No other potential conflicts of
interest were identified or reported.
Description of Presiding Board activities and committee work
The Supervisory Board has established a Presiding Board and four committees. In
our capacity as chairmen, the Chairman of the Audit Committee, Dr. Bock, and myself
reported in detail on the work of the Presiding Committee and the committees at each
of the subsequent Supervisory Board meetings. You can read more about the duties,
the composition and the working methods of the Presiding Board and various other
Supervisory Board committees in the Statement of Corporate Governance on the
BMW website.
The Presiding Board held four meetings during the financial year 2021. Together
with the Board of Management and senior heads of department, we prepared the
detailed agenda of Supervisory Board meetings (unless a committee was responsible
for doing so) and made suggestions for topics to be reported on at Supervisory Board
meetings.
The Audit Committee held five meetings and three conference calls during the year
under report.
The meetings held in February and March 2021 focused on preparing the Superviso-
ry Board meeting at which the financial statements for the financial year 2020 were
discussed and examined. After obtaining the auditor's Declaration of Independence,
the Audit Committee recommended to the Supervisory Board that Pricewaterhouse-
Coopers GmbH Wirtschaftsprüfungsgesellschaft ("PwC") be proposed for election as
auditor at the 2021 Annual General Meeting. There were no indications of conflicts of
interest, grounds for exclusion or lack of independence on the part of the auditor.
After thorough deliberation, the Audit Committee concluded that PwC's fee proposal
for the audit of the Company and Group Financial Statements and the integrated
BMW Group Report 2021 as well as for the review of the Half-Year Report 2021 was
appropriate in light of the growing scope of tasks and issued the corresponding
contracts to PwC following their election at the Annual General Meeting in May 2021.
The Audit Committee also specified supplementary audit focus areas and approved
the scope of non-audit services to be provided by PwC and subsequently received
regular reports on the relevant matters. The Audit Committee discussed the quality of
the audit in detail on several occasions at its meetings. In particular, it requested the
relevant department to report on the Group's perception of the audits of the financial
statements for the financial year 2020 as well as on the results of the survey con-
ducted within the Group in this context. Based on this report, the auditor's description
of the quality assurance measures undertaken and the Audit Committee's own expe-
rience with the auditor, the audit was found to be of good quality.
The Board of Management presented the combined Non-financial Statement of
BMW AG and the BMW Group for the financial year 2020 to us. Subsequently, the
representatives of PwC reported to us orally on the results of their "limited assur-
ance" audit. We have engaged PwC again to conduct a "limited assurance" audit of
the Non-financial (Group) Statement for the financial year 2021, to the extent that
it relates to parts of the management report that are not subject to a “reasonable
assurance" audit. Going beyond the formal review required by law, the Audit Commit-
tee also engaged PwC to perform additional review procedures on the content of the
Remuneration Report for the financial year 2021.
17
Report of the Supervisory Board
In December, the Board of Management and the Supervisory Board issued their Dec-
laration of Compliance with the German Corporate Governance Code. We will comply
with the recommendations of the Code as amended on 16 December 2019, again
without exception.
We reviewed our contribution to ensuring good corporate governance within the
BMW Group and implemented changes concerning individual aspects. For example,
in order to ensure compliance with the Act on Strengthening Financial Market Integ-
rity, a number of changes were made to the Supervisory Board's rules of procedure,
a copy of which is published on the BMW website. Based on a self-assessment, we
concluded that the composition of the Supervisory Board at 31 December 2021 was
in line with the targets stipulated in the diversity concept, the competency profile and
other composition targets. An overview showing each individual Supervisory Board
member's areas of expertise is provided in the Statement of Corporate Governance
on the BMW Group website.
In December, the Board of Management presented the budget for the financial year
2022, including HR planning. After detailed deliberations with the Board of Manage-
ment on this subject, the Supervisory Board also gave its approval to this document.
← = Q
Report of the Supervisory Board
We also spent considerable time deliberating on the antitrust proceedings instigated
by the EU Commission in connection with the former working groups of several Ger-
man automobile manufacturers. In this context, we consulted with external attorneys
and an antitrust advisor engaged directly by the Supervisory Board. We were kept
well informed about the latest status of the proceedings at all times. In May 2021, af-
ter the EU Commission significantly scaled down its charges in terms of content and
timing, the BMW Group was able to reverse approximately € 1 billion of the € 1.4 bil-
lion provision recognised in 2019. After the proceedings were concluded in July 2021
with the payment of a fine amounting to around € 373 million, the Supervisory Board
carefully considered the question of potential personal responsibility on the part
of former Board of Management members and any duty of the Supervisory Board
to act. The Supervisory Board also obtained advice on this issue from an attorney,
whose written findings were also explained to us personally at the relevant meeting.
Based on this report and taking into account the supplementary explanations pro-
vided by the antitrust advisor, also regarding the legal particularities of the antitrust
proceedings, the Supervisory Board decided - after thorough discussion and on the
recommendation of the Audit Committee – not to assert any claims against former
members of the Board of Management of BMW AG in this context.
11
The Board of Management familiarised us with the NEUE KLASSE, which will herald
the third phase of the BMW Group's transformation to electric mobility from 2025
onwards and set new standards in terms of digitalisation, electrification and sus-
tainability in vehicles. We took a detailed look at the key features of the New Cluster
Vehicle Architecture (NCVA), which is specifically geared towards all-electric vehicles.
Furthermore, the Board of Management elucidated potential applications of artificial
intelligence (AI) in production planning processes. The Financial Services segment
was also included in our deliberations, particularly in light of positive developments in
terms of its risk profile and the pre-owned vehicle market. Key topics relating to the
Group's corporate finance system were also discussed. Regarding sales markets we
focused in particular on Asia as a whole.
The Board of Management reported on the current status of the diversity concepts
developed by the Group and the extent to which targets have been achieved regard-
ing the proportion of women employed at various levels.
We also addressed the topic of compliance within the BMW Group in depth, including
the current status and ongoing developments. The Chief Compliance Officer pre-
sented the annual report on compliance, including compliance targets and a number
of other selected topics, focusing in particular on measures and processes aimed at
improving the Group's compliance management system on a continuous basis.
In light of the coronavirus pandemic and the accompanying restrictions on events
involving large numbers of people, in March 2021 we agreed on a plan to hold the
Annual General Meeting 2021 on a virtual basis. For the same reason, in December
2021, we approved the plan to hold the Annual General Meeting 2022 again in a
virtual format.
Strategic cooperations were again a key topic at Supervisory Board meetings in 2021,
including in particular the positioning of the BMW Group in the vital Chinese market
going forward and the future structure of the BMW Brilliance Automotive joint ven-
ture. We also deliberated on the intended acquisition of shares in Brilliance Automo-
tive Manufacturing. The Board of Management updated us regularly on the strategic
positioning and status at the various YOUR NOW companies.
The new remuneration system resolved by the Supervisory Board for the members
of the Board of Management during the previous financial year came into effect on
1 January 2021 and was approved by shareholders at the Annual General Meeting
2021 with a majority of 91.6% of valid votes. The Supervisory Board reviewed both
the targeted and the expected level of Board of Management remuneration for the
financial year 2021 in light of the BMW Group's business performance and also the
multi-year remuneration trend of its senior executives and employees in Germany.
Based on a comparative study conducted by an external remuneration consultant
and subsequent oral advice, we concluded that the remuneration of Board of Man-
agement members is appropriate. In December 2021, following thorough preparation
by the Personnel Committee, we adopted the variable remuneration component tar-
gets applicable to Board of Management members for the financial year 2022, taking
into account the budget for the financial year 2022, the long-term business plan and
15
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Report of the Supervisory Board
the corporate strategy. Detailed information on Board of Management remuneration
is provided in the Remuneration Report.
The new remuneration system, which gives the Supervisory Board greater influence
on corporate strategy implementation was also the focus of one-on-one discussions
with investor representatives ahead of the Annual General Meeting 2021. Other
topics discussed on these occasions included corporate-governance-related issues,
such as succession planning for future appointments to the Supervisory Board.
The Supervisory Board exhaustively examined the long-term business plan for the
period up to 2027, the framework for which and the ambitious long-term targets con-
tained therein were presented by the Board of Management. Despite the prevailing
volatile and uncertain conditions, the Board of Management reaffirmed the key target
of achieving continuous growth, with a clear focus on the Group's planned sales of
all-electric models. The long-term business plan also included financial planning
and various potential scenarios, each involving their own opportunities and risks.
Following this thorough examination, the Supervisory Board approved the long-term
business plan for the BMW Group.
BMW Group Report 2021
Other Information
To Our Stakeholders
Group Financial Statements
The Supervisory Board extended the mandates of four Board of Management mem-
bers during the year under report.
Composition of the Supervisory Board, the Presiding Board and the Supervisory
Board's committees
The shareholder representatives Dr. Karl-Ludwig Kley, Prof. Reinhard Hüttl and
Simone Menne left the Supervisory Board with effect from the end of the Annual
General Meeting 2021. We would like to thank them for their constructive input and
faithful cooperation during their periods of office, which stretched over many years in
some cases. Our special thanks go to Dr. Kley: as a member of the Presiding Board
and various committees, but especially as Chairman of the Audit Committee, he drew
on his many years of broad business experience to make valuable contributions and
provided invaluable impetus for the BMW Group in corporate discussions.
The Annual General Meeting elected Dr. Marc Bitzer, Rachel Empey and Prof. Dr. Dr.
h.c. Christoph M. Schmidt as new members. Ms. Empey and Dr. Bitzer both have
extensive experience and expertise in capital markets and customer requirements.
Ms. Empey also has specialised knowledge in financial services and IT, Dr. Bitzer in
the fields of technologies and supply chains. Prof. Schmidt has extensive expertise in
the areas of science, sustainability and resources. With their broad range of exper-
tise, the three newly elected members complement the composition of the Supervi-
sory Board in an excellent manner.
The employee representatives Horst Lischka, Willibald Löw, Brigitte Rödig and
Verena zu Dohna left the Supervisory Board at their own request during the financial
year 2021. We wish to thank them for their constructive work and faithful cooperation
during their periods of office, in some cases stretching over many years. Our spe-
cial thanks go to Mr. Löw, who has been loyally connected with the BMW Group for
decades as an employee, Chairman of the Works Council at the Landshut site, and
member of the Supervisory Board. By court order, and to replace members of the Su-
pervisory Board for their respective remaining terms of office, Johann Horn, District
Manager of IG Metall Bavaria, was appointed in May 2021, Jens Köhler, Chairman
of the Works Council at the Leipzig site, in August 2021, Bernhard Ebner, Chairman
of the Works Council at the Landshut site, in October 2021 and Sibylle Wankel, First
Authorized Representative of IG Metall Munich, in January 2022.
Dr. Kurt Bock, member of the Supervisory Board since 2018 and Chairman of the
Audit Committee since 2020, was elected to succeed Dr. Kley as a member of the
Presiding Committee and the Personnel and Nomination Committees. An overview of
the composition of the Supervisory Board and its committees is provided both in this
report (Corporate Governance) and in the separate Statement on Corporate Governance,
which is available on the BMW Group website together with the curricula vitae of
Supervisory Board members.
Disclosure of attendance at meetings by individual members
The attendance rate at Supervisory Board meetings was around 99%, and 100% for
the meetings and conference calls held by the various committees and the Presid-
ing Board. The meetings were all held on a face-to-face basis. In individual cases,
however, members participated virtually due to the coronavirus pandemic. The table
below shows attendance by individual members:
Examination of financial statements and the profit distribution proposal
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft ("PwC") was ap-
pointed as external auditor for the financial year 2021. PwC conducted a review of the
condensed interim Group Financial Statements and the Interim Group Management
Report for the six-month period ended 30 June 2021 and presented its findings to
both the Audit Committee and the Supervisory Board in separate executive sessions.
No issues were identified that might indicate that the condensed Interim Group Fi-
nancial Statements and Interim Group Management Report had not been prepared in
accordance with the applicable provisions in all material respects.
The Supervisory Board appointed Dr.-Ing. Joachim Post as his successor with effect
from 1 January 2022. Dr. Post has worked for the BMW Group since 2002, most
recently as head of the "Product Line Midsize Class BMW" unit. He was previously
the manager responsible for the BMW Group's vehicle strategy and, as the head of
various BMW model lines, was responsible for promoting the electrification of the
vehicle fleet.
PwC audited the Company and Group Financial Statements for the financial year
2021 authorised for issue by the Board of Management on 8 March 2022 and is-
sued an unqualified audit opinion, signed for the third consecutive financial year by
Petra Justenhoven as independent auditor (Wirtschaftsprüferin) and Andreas Fell
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Report of the Supervisory Board
Member of the Supervisory Board
19
Report of the Supervisory Board
← = Q
Other Information
Corporate Governance
Remuneration Report
Other Information
← = Q
Report of the Supervisory Board
The Quarterly Statements were presented by the Board of Management and dis-
cussed with the Audit Committee prior to their publication. Representatives of the
external auditors were present when the Half-Year Financial Report was discussed
at the beginning of August 2021. In conjunction with the implementation of the
requirements of the Act on Strengthening Financial Market Integrity, an executive
session was also held with the external auditor without the members of the Board of
Management being present.
The Audit Committee again dealt extensively with the topic of compliance within
the BMW Group during the year under report. The Chief Compliance Officer of the
BMW Group presented the annual report on compliance, including compliance targets
and a number of other selected topics, focusing in particular on measures and pro-
cesses aimed at improving the Group's compliance management system on a contin-
uous basis. The Head of Corporate Quality also reported on the subject of technical
compliance. We also received a report on the status of tax and customs compliance
management from the relevant head of department.
The Audit Committee was kept informed of major legal disputes and proceedings.
During the first two quarters of 2021, the Committee spent considerable time dealing
with the antitrust proceedings instigated by the EU Commission in connection with
the former working groups of several German automobile manufacturers, carefully
monitoring the progress of proceedings based on various inputs, including direct
reports drawn up by a lawyer appointed to represent the BMW Group. After the pro-
ceedings were concluded, with the assistance of the consultant attorney and based
on his detailed report, the Audit Committee drew up a recommendation to the Super-
visory Board on the question of whether to assert claims against former members of
the Board of Management.
The Audit Committee also received reports on the further development of the internal
control system and the main findings of the internal audits performed by Corporate
Audit, as well as details of advance audit planning. The BMW Group's risk profile and
risk management system were discussed on a number of occasions.
In its report on the audit of over-the-counter derivatives entered into by BMW AG
during the financial year 2020, the external auditor confirmed to the Audit Committee
the effectiveness of the system in place at BMW AG in complying with the regulatory
requirements of the European Market Infrastructure Regulation.
The Audit Committee concurred with the decision of the Board of Management to
raise the Company's share capital in accordance with Article 4 (5) of the Articles of
Incorporation (Authorised Capital 2019) by € 1,715,000 and issue a corresponding
number of new non-voting bearer shares of preferred stock in conjunction with the
Employee Share Programme.
At its four meetings, the Personnel Committee focused primarily on succession
planning for the Board of Management, preparing personnel-related decisions and
dealing with Board of Management remuneration issues. The Committee reviewed
the appropriateness of Board of Management remuneration for the financial years
2020 and 2021 and considered all relevant developments during that period, includ-
ing the impact of the coronavirus pandemic, when determining the corporate earn-
ings and performance factors applicable for Board of Management remuneration in
2020 and 2021. In addition, the Committee deliberated on targets for the financial
year 2022. The Personnel Committee also prepared reappointments, performed the
groundwork for the Supervisory Board to appoint a Board of Management member
responsible for the Purchasing and Supplier Network, and granted approval for one
member of the Board of Management to assume a mandate outside the Group. A
resolution to approve loans granted by and transactions concluded by BMW Bank
GmbH with members of the representative bodies of BMW AG was renewed, and
updated contracts of Board of Management members were prepared.
The Nomination Committee convened twice during the financial year 2021. Taking
into account the German Corporate Governance Code (GCGC) and the composition
requirements adopted by the Supervisory Board, the Nomination Committee ad-
dressed the issue of the composition of the Supervisory Board regarding shareholder
representatives.
The Mediation Committee, which is prescribed by law, did not need to convene
during the financial year 2021.
Composition of the Board of Management
Dr.-Ing. Andreas Wendt, Board of Management member for the Purchasing and
Supplier Network, retired on 31 December 2021. We would like to thank Dr. Wendt for
his many years of loyal and dedicated work for BMW AG, most recently for guiding the
BMW Group successfully through the ongoing semiconductor shortage.
18
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Combined Management Report
Remuneration Report
Corporate Governance
Group Financial Statements
2,505,741
368,685
4,353
2,541,534
2,205,841
352,729
5,455
2,564,025
1,980,740
271,121
3,776
2,255,637
2,166,644
9.4
288,713
6.5
5,912
56.6
Total 4
2,461,269
Energy consumption per vehicle produced (in MWh] 5,6
2.17
2.12
2.04
2.12
2.10
- 0.9
MOTORCYCLES SEGMENT
Production volume
BMW
9.1
378,486
3,308
Rolls-Royce
MINI
2021
Change in %
349
373
370
279
389
39.4
2,089,854
371,729
3,438
2,465,021
2,117,854
364,101
4,194
2,486,149
2,184,939
347,465
5,100
2,537,504
2,028,841
292,582
3,756
2,325,179
2,213,790
9.1
302,138
3.3
5,586
48.7
2,521,514
8.4
2,123,947
2,168,496
185,682
162,687
187,116
168,104
Chairman of the
Supervisory Board
13
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Report of the Supervisory Board
Focus of Supervisory Board activities during the past financial year
The Supervisory Board performed the duties incumbent upon it with the utmost dili-
gence in the financial year 2021.
Based on in-depth reports presented by the Board of Management, we continuously
and diligently monitored the quality of management in the BMW Group and advised
the Board of Management on matters relating to the strategic development and
leadership of the BMW Group. We focused in particular on the technological trans-
formation of the BMW Group's drive system technology. At each of its five meetings
(including two two-day meetings), the Supervisory Board held detailed discussions
with the Board of Management on the BMW Group's current position. The Board of
Management also kept the Supervisory Board informed of any matters of significance
outside the framework of formal meetings whenever necessary. I also discussed key
current matters personally with the Chairman of the Board of Management between
meetings on an ongoing basis, as did the Chairman of the Audit Committee with the
Board of Management member responsible for Finance.
Within the Supervisory Board and its committees, dialogues were always conduct-
ed in an open and constructive spirit, both internally and together with members of
the Board of Management. Members of the Supervisory Board and its committees
had adequate opportunity to prepare in advance for the topics to be discussed at
meetings with the aid of well-documented information provided to them. Moreover,
shareholder representatives and employee representatives generally prepared for
meetings in separate preliminary discussions.
In its regular reports on the BMW Group's position, the Board of Management kept
us well informed regarding current developments and performance, including an
in-depth presentation of current sales trends based on figures analysed by market,
model and drive system for both the BMW Group and its competitors, with a sharp fo-
cus on electrified models and developments on the Chinese market. The reports also
contained regular updates on the performance and risk profile of the Financial Ser-
vices segment as well as the development of key performance indicators and liquidity
for the BMW Group as a whole, highlighting deviations from the original forecast and
presenting a range of scenarios for future potential developments. Updates on the
current status of semiconductor supply issues were also provided at every meeting.
The monitoring of corporate strategy remained high on the Supervisory Board's
agenda. The Board of Management provided a comprehensive account of its
strategy with a particular focus on sustainability, including detailed key objectives,
regionally differentiated approaches and specific strategies for each of the Group's
divisions. It also briefed us on the state of progress in terms of electrification, digital-
isation, sustainability and circularity and explained the customer-centric, future-ori-
ented strategy adopted for the BMW brand. Against the backdrop of stricter carbon
emissions regulations across all major markets, the Board of Management provided
us with details of the BMW Group's ambitious decarbonisation targets up to the
year 2030. The latest aspects of vehicle digitalisation, ranging from digital operating
systems and driver assistance technologies to personalised digital experiences, were
also thoroughly explained to us in a presentation, which also focused on differing
customer expectations in various markets as well as the importance of digital fea-
tures as a key purchasing criterion, particularly in the strategically important market
of China. We also held a detailed discussion on the technological challenges posed
for vehicle, environment and drivers when developing automated driving beyond Lev-
el 3. A Supervisory Board member with in-depth expertise in this field provided us
with additional insight into the future of automated driving as well as the importance
of agile software integration in BMW Group vehicles. At each meeting, the Board of
Management reported on its strategy-related work as well as on the current status of
implementation.
It also kept us well informed about current topics of significance, including the
establishing of QUATAC, a consortium promoting the use of quantum computing in
industrial settings, the successful presentation of the BMW Group at the IAA Mobility
in Munich, the highly encouraging results of the employee survey, the BMW Group's
participation in the start-up company Solid Power, which specialises in solid-state
battery cells, and the expansion of the IONITY network for premium charging sta-
tions using 100% green power.
On the basis of a thorough examination, we considered the impact of changes in
legislation and regulations on the BMW Group, in particular the Act on Corporate
Due Diligence in Supply Chains, the Act on Strengthening Financial Market Integrity
(FISG) and the new European exhaust emissions standard (Euro 7).
14
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Norbert Reithofer
Meetings
The year 2021 was a particularly challenging one for the BMW Group, with semicon-
ductor supply issues and the ongoing coronavirus pandemic making the business
environment more volatile and calling for even greater flexibility from company and
workforce alike. However, the prudent leadership of the Board of Management and
the tremendous hard work of our employees helped make 2021 a highly successful
financial year for the BMW Group. With a new record of over 2.5 million BMW brand
vehicles delivered, we are now the leading manufacturer in the premium segment
worldwide. With great resolve, the Board of Management continued to develop the
key strategies that will shape the future of the BMW Group and create the ideal
conditions for an attractive product portfolio precisely tailored to meet the needs
of our customers as we move forward. The fact that we are on the right track with
our strategy was amply borne out by the enthusiastic media response to the BMW i
Vision Circular at the IAA Mobility in Munich and the presentation of the BMW iX and
BMW 14 models. Even in these uncertain times we therefore look to 2022 with confi-
dence and will remain firmly focused on our mission of moving people with products
that evoke emotions.
REPORT OF THE
SUPERVISORY BOARD
187,500
11.5
FINANCIAL SERVICES SEGMENT
New contracts with retail customer
1,828,604
1,908,640
2,003,782
1,845,271
1,956,514
6.0
1 Training for BMW Group employees and temporary staff at consolidated companies worldwide. Data are collated on the basis of direct inputs of participants and, to a small extent, by extrapolation. Data also include e-learning formats.
² Delivery figures presented for 2020 and 2021 are not directly comparable to those of previous years. See sales figures for deliveries in the section Comparison of Forecasts with Actual Outcomes for further information.
3 Deliveries including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 385,705 units, 2018: 455,581 units, 2019: 538,612 units, 2020: 602,247 units, 2021: 651,236 units).
"Production volume including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 396,749 units, 2018: 491,872 units, 2019: 536,509 units, 2020: 602,935 units, 2021: 700,777 units).
5 Efficiency ratio calculated on the basis of energy consumption, adjusted for CHP losses, of vehicle production (BMW Group manufacturing sites incl. joint venture BMW Brilliance Automotive Ltd., excluding motorcycles and contract manufacturers) divided by the total number of vehicles produced (BMW Group
manufacturing sites incl. joint venture BMW Brilliance Automotive Ltd., excluding motorcycles and contract manufacturing).
6 Figures from 2017 and 2018 are audited with limited assurance.
12
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Report of the Supervisory Board
DEAR SHAREHOLDERS,
Attendance
The Supervisory Board also deliberated at length on key issues arising within the
Board of Management's various key areas of responsibility. We were given an insight
into working methods and working environments at the BMW Group currently being
developed in conjunction with the "Connected Works" project.
Dr.-Ing. Norbert Reithofer
3
75
Anke Schäferkordt
5
5
100
Prof. Dr. Christoph Schmidt²
4
4
100
Dr. Vishal Sikka
4
5
100
Dr. Thomas Wittig
5
5
100
5
5
100
Werner Zierer
1 Member of the Supervisory Board until 12 May 2021.
2 Member of the Supervisory Board since 12 May 2021.
5
Brigitte Rödig
100
5
1
1
100
Susanne Klatten
7
7
100
Jens Köhler5
2
2
100
Horst Lischka¹
1
1
100
Willibald Löw4
3
3
100
Simone Menne¹
1
1
100
Dr. Dominique Mohabeer
5
3 Member of the Supervisory Board since 14 May 2021.
Prof. Dr. Reinhard Hüttl¹
4 Member of the Supervisory Board until 16 July 2021.
6 Member of the Supervisory Board until 1 October 2021.
ла
Norbert Reithofer
Chairman of the Supervisory Board
2018
2017
BMW4
Production by brand
Total 3
Rolls-Royce
MINI
BMW3
Yours
Deliveries by brand²
Spending on employee training and development (in million €)1
GROUP
OTHER NON-FINANCIAL PERFORMANCE FIGURES
BMW Group in Figures
← = Q
Other Information
Remuneration Report
Attendance in %
Group Financial Statements
Combined Management Report
To Our Stakeholders
AUTOMOTIVE SEGMENT
On behalf of the Supervisory Board
Munich, March 2022
We are confident that the Board of Management and the Group's entire workforce,
with their courage and confidence, will write the next chapter of the BMW Group's
unique success story in 2022.
7 Member of the Supervisory Board since 8 October 2021.
8 Member of the Supervisory Board until 31 December 2021.
(Wirtschaftsprüfer) as independent auditor responsible for the performance of the
engagement.
At its meeting held on 24 February 2022, the Audit Committee initially considered in
detail the preliminary version of the Company and Group Financial Statements, the
Combined Management Report (including the Combined Non-financial (Group) State-
ment), the Statement of Corporate Governance, the draft versions of the auditor's
reports and the Board of Management's proposal for the appropriation of profit.
Immediately after authorising their issue, the Board of Management submitted the
Company and Group Financial Statements for the financial year 2021 and the Com-
bined Management Report (including the Combined Non-financial (Group) State-
ment), the Statement of Corporate Governance and the proposal for the appropri-
ation of profit to the Supervisory Board. The auditor's long-form audit reports were
also made available to the Supervisory Board in a prompt manner.
At its meeting on 9 March 2022, the Audit Committee diligently examined and de-
liberated on these documents before they were considered in detail at the plenary
session of the Supervisory Board on 10 March 2022.
At the two respective meetings, the Board of Management provided the Audit Com-
mittee and the Supervisory Board with detailed explanations of the financial reports
presented. The representatives of the external auditor present at the meetings
reported on the main findings of their audit and answered additional questions put
by members of the Audit Committee and the Supervisory Board. The focus of these
meetings was on key audit matters as well as the related audit procedures, which
were discussed at length by the Audit Committee and the Supervisory Board.
The representatives of the external auditor confirmed that the risk management
system established by the Board of Management is capable of identifying at an early
stage any developments that might threaten the Company's going-concern status.
They also confirmed that that no material weaknesses in the internal control system
and risk management system were identified with regard to the financial reporting
process. Similarly, in the course of their audit work they did not identify any facts
inconsistent with the contents of the Declaration of Compliance pursuant to § 161 of
the German Stock Corporation Act (AktG) issued by the Board of Management and
the Supervisory Board.
20
20
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Report of the Supervisory Board
Based on a thorough examination conducted by the Audit Committee and the Super-
visory Board, we concurred with the results of the external audit. In accordance with
the final result of this examination, no objections were raised. The Group and Com-
pany Financial Statements of Bayerische Motoren Werke Aktiengesellschaft for the
financial year 2021 drawn by the Board of Management were subsequently approved
at our meeting held on 10 March 2022. The Company Financial Statements for the
year ended 31 December 2021 have therefore been adopted.
We also examined the proposal of the Board of Management to use the unappro-
priated profit to pay a dividend of € 5.80 per share of common stock and € 5.82 per
share of non-voting preferred stock, in each case on shares entitled to receive a divi-
dend. We consider the proposal appropriate and have therefore given it our approval.
For the financial year 2021, the Supervisory Board and the Board of Management
have prepared the Remuneration Report for the first time in accordance with §162
AktG (ARUG II / Act Implementing the Second EU Shareholder Rights Directive). At
the request of the Audit Committee, PwC reviewed the content of the Remuneration
Report, reported to both the Audit Committee and the Supervisory Board on the
results of the review, and confirmed that the Remuneration Report complies in all
material respects with the financial reporting provisions contained in §162 AktG.
The Audit Committee and the Supervisory Board also considered at length the com-
bined Non-financial (Group) Statement for the year ended 31 December 2021, which
was drawn up by the Board of Management as part of the integrated BMW Group
Report. Following an in-depth explanation of the statement by the Board of Man-
agement, representatives of the external auditor presented key findings of their audit
and answered additional questions posed by the members of the Supervisory Board.
Based on the "limited assurance" audit performed by PwC on those parts of the
Management Report that were not subject to a reasonable assurance engagement,
PWC issued an unqualified opinion, signed for the sixth time by Andreas Fell and for
the second time by Nicolette Behncke. The Supervisory Board acknowledged and
approved the combined Non-financial (Group) Statement drawn up by the Board of
Management.
Expression of appreciation by the Supervisory Board
We would like to express our thanks and appreciation to the members of the Board
of Management and all employees of the BMW Group worldwide for their outstand-
ing performance in the financial year 2021. With their unbending commitment, even
under adverse conditions, and a fine collective performance, they have taken the
BMW Group to the top of the global premium segment over the past 12-month period
and additionally enhanced the Group's profile as a guarantor of first-class individual
and sustainable mobility.
5 Member of the Supervisory Board since 3 August 2021.
100
Corporate Governance
3
23
23
100
20
100
Christiane Benner
5
5
100
Dr. Marc Bitzer²
4
100
4
Verena zu Dohna³
5
5
100
Bernhard Ebner
1
1
100
Rachel Empey²
4
4
100
Manfred Schoch
Dr.-Ing. Heinrich Hiesinger
21
21
21
100
Dr. Karl-Ludwig Kley¹
4
4
Stefan Schmid
100
20
5
5
100
Johann Horn³
3
Dr. Kurt Bock
100
21
100
Stefan Quandt
23
23
1,421
352
13,982
- 1,800
- 5,621
-86
7,127
-214
- 1,108
1,111
56
1,603
* Prior year's figures adjusted.
Other provisions
Other obligations for ongoing operational expenses
1,448
1,333
-994
-1,334
in € million
Other provisions changed during the year as follows:
33 Other provisions
Financial Statements
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
196
1.1.2021*
-62
Career trend
63
increase of 0.10 %
- 0.8
-210
-3
decrease of 0.25 %
Pension entitlement trend
0.8
218
3
increase of 0.25 %
- 4.1
decrease of 0.10 %
2,589
Translation
differences
Reversal of
discounting
13,954
-9
1,219
41
3,666
Other obligations
2,196
3,317
-40
- 1,299
-23
2,083
14
Additions
2,582
1,798
6,600
-212
within one year
31.12.2021
Reversed
Utilised
-2,220
-54
2,714
241
6,131
Statutory and voluntary warranty obligations, product guarantees
thereof due
Obligations for personnel and social expenses
6,748
31.12.2020
Statutory and voluntary warranty obligations, product guarantees
in € million
31.12.2020
31.12.2021
Financial Statements
Financial liabilities of the BMW Group comprise the follow-
ing:
35 Financial liabilities
Notes to the Group
← = Q
Other Information
Remuneration Report
Bonds
Corporate Governance
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
197
34 Income tax liabilities
Current income tax liabilities totalling € 921 million (2020:
€ 747 million) include € 44 million (2020: € 40 million) which
are expected to be settled after more than twelve months.
Liabilities may be settled earlier than this depending on the
timing of the underlying proceedings.
Other obligations for ongoing operational expenses include
in particular expected payments for bonuses and other price
deductions.
The provisions for other obligations cover numerous specific
risks and uncertain obligations, in particular for litigation and
liability risks. Further information on the reversal of the pro-
vision relating to EU Commission antitrust proceedings is
provided in note 10.
pre-retirement part-time working arrangements and
long-service awards.
Provisions for obligations for personnel and social expenses
comprise mainly obligations relating to performance-related
remuneration components, workforce measures as well as
Depending on when claims occur, it is possible that the
BMW Group may be called upon to fulfil the warranty or
guarantee obligations over the whole period of the warranty
or guarantee. Warranty provisions include amounts recog-
nised in connection with the exhaust gas recirculation cooler.
Expected reimbursement claims at 31 December 2021
amounted to € 1,112 million (2020: € 1,046 million) and are
disclosed within other assets (see note 28].
Group Financial Statements
7,494
Asset-backed financing transactions
Maturity between
one and five years
37
2
194
87
Absolute return funds
Other
223
128
I
4
Maturity within
one year
51,498
28,675
12,406
Total
than five years
Maturity later
Maturity between
one and five years
Maturity within
one year
Total
than five years
Maturity later
10,417
in € million
13,982
- 5.549
2.496
1,731
6,131
- 124
- 2.354
158
3.178
-277
5.550
within one year
- 19
- 1,081
Utilised
thereof due
Reversal of
discounting
Additions
Translation
differences
1.1.2020
Other provisions
Other obligations for ongoing operational expenses
Other obligations
Obligations for personnel and social expenses
Reversed
-663
1.405
- 1.288
186
7.232
-433
13.209
1,486
1,516
- 171
- 1.399
1.288
-94
19
1.892
3,753
-337
- 508
9
1.361
-43
3.271
1,483
2,582
-31
2,794
-3.6
-3,514
decrease of 1 year
9,620
10,840
Total with quoted market price
134
1
56
159
Absolute return funds
709
645
742
643
10
23
1,461
1,311
Other
1,207
820
7,580
7,373
806
733
646
455
472
thereof mixed funds (funds without a rating)
324
328
324
328
thereof investment grade
214
1,453
1
5
673
646
779
800
Debt instruments
17,726
19,226
1,451
673
244
113
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
The BMW Group is exposed to risks arising both from
defined benefit plans and defined contribution plans with a
minimum return guarantee. The discount rates used to cal-
culate pension obligations are subject to market fluctuations
and therefore influence the level of the obligations. Further-
more, changes in other actuarial parameters, such as
expected rates of inflation, also have an impact on pension
obligations. In order to reduce currency exposures, a sub-
stantial portion of plan assets is either invested in the same
currency as the underlying plan or hedged by means of cur-
rency derivatives. As part of the internal reporting proce-
dures and for internal management purposes, financial risks
relating to the pension plans are reported using a value-at-
risk approach by reference to the pension deficit. The invest-
ment strategy is also subject to regular review together with
external consultants, with the aim of ensuring that invest-
ments are structured to match the timing of pension pay-
ments and the expected development of pension obliga-
tions. In this way, fluctuations in pension funding shortfalls
are reduced.
The defined benefit obligation relates to current employees,
pensioners and former employees with vested benefits as
follows:
Germany
United Kingdom
Other
in %
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
Current employees
6
To Our Stakeholders
BMW Group Report 2021
194
In the financial year 2021, disbursements out of the
plan assets are expected to exceed the employer's contribu-
tions to plan assets by € 225 million. Plan assets of the
BMW Group include own transferable financial instruments
amounting to € 2 million (2020: € 1 million).
1,537
1,177
Total without quoted market price
3,265
2,831
2,388
2,216
132
137
116
5,785
Total plan assets
14,105
12,451
9,968
9,589
938
870
25,011
22,910
5,184
-910
1,118
thereof non-investment grade
in € million
in %
-10.6
-2,650
increase of 0.75 %
decrease of 0.75 %
Discount rate
in € million
31.12.2020
31.12.2021
Change in defined benefit obligation
In the UK, the sensitivity analysis for the pension level trend
also takes account of restrictions due to caps and floors.
It is only possible to aggregate sensitivities to a limited
extent. Since the change in obligation follows a non-linear
pattern, estimates made on the basis of the specified sensi-
tivities are only possible with this restriction. The calculation
of sensitivities using ranges other than those specified could
result in a disproportional change in the defined benefit obli-
gation.
-
The sensitivity analysis provided below shows the extent to
which changes in individual factors – independently of each
other could influence the defined benefit obligation at the
end of the reporting period.
-
Financial Statements
← = Q
Other Information
Remuneration Report
Corporate Governance
in %
85
-13.2
3,311
Average life expectancy
4.1
1,078
3.6
896
increase of 1 year
- 2.7
- 721
-2.3
Group Financial Statements
Notes to the Group
- 586
Pension level trend
2.9
766
2.4
610
increase of 0.25 %
17.2
4,585
13.2
decrease of 0.25 %
1,128
Combined Management Report
BMW Group Report 2021
62.9
59.9
-
66.2
62.0
159
55
Cash and cash equivalents
1,084
1,280
656
786
428
494
Real estate
1
5
1
5
Pensioners
30.6
27.4
50.4
195
= Q
↑
100.0
100.0
100.0
100.0
100.0
100.0
To Our Stakeholders
Defined benefit obligation
7.9
57.8
49.6
6.4
7.4
Former employees with vested benefits
29.9
32.2
42.2
7.2
157
- 6,021
19
1,148
1,374
1,374
550
550
736
75
342
1,153
533
248
399
1,180
Financial liabilities
41,121
49,626
12,716
103,463
38,986
52,771
14,619
106,376
Planned future cash outflows from variable lease payments,
which are not taken into account in the measurement of
lease liabilities, are expected to amount to € 48 million
(2020: € 57 million).
Similarly, potential future cash outflows amounting to
€ 1,262 million (2020: € 1,252 million) (undiscounted) have
not been taken into account in the measurement of lease
liabilities as it is not reasonably certain that the leases will be
renewed (or not terminated). These cash outflows relate to
periods of up to 62 years (2020: up to 74 years). The decrease
in the period under report was due to a contractual adjust-
ment.
198
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
38
517
593
1,875
20
16,702
12,735
3,709
22
16,466
Liabilities to banks
4,918
3,186
975
9,079
4,578
3,159
1,300
Corporate Governance
9,037
475
1,131
814
2,420
492
1,181
838
2,511
Derivative instruments
Commercial paper
Other
1,146
581
148
Lease liabilities
3,507
Remuneration Report
← = Q
9,079
Lease liabilities
2,511
-464
42
331
2,420
Commercial paper
550
781
43
1,374
Financial liabilities towards companies in which an investment is held
740
1,295
153
2,188
Other (excluding interest payable)
752
Liabilities relating to financing activities
105,540
- 18
- 5,344
-10
724
3,672
- 846
325
103,347
Changes due to
-59
458
-357
9,037
Liabilities related to financing activities can be reconciled as
follows:
Changes due to
the acquisition or
Cash inflows /
disposal
Changes due to
Changes
in € million
Bonds
Asset-backed financing transactions
1.1.2021
outflows
of companies exchange rate factors
56,665
Other Information
1,647
Other changes
31.12.2021
-6
51,498
18,819
-331
874
19,362
Liabilities from customer deposits (banking)
16,466
-229
465
16,702
Liabilities to banks
in fair values
-787
13,175
Liabilities from customer deposits (banking)
18,819
Total
3,312
488
488
337
- 303
34
-54
- 54
Effect of limitation
of the net defined
benefit asset to the
asset ceiling
Net defined
benefit liability
2
3,314
488
34
- 54
-1,880
- 1,880
-1,880
2,726
2,726
2,726
- 239
- 144
- 239
- 239
-144
-144
1
1
-524
-21,340
24,652
Plan assets
benefit obligation
191
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
in € million
1 January 2020
EXPENSE / INCOME
Current service cost
Interest expense (+)/income (-)
Past service cost
Gains (-) or losses (+) arising from settlements
REMEASUREMENTS
Gains (-) or losses (+) on plan assets, excluding amounts included in interest income
Gains (-) or losses (+) arising from changes in financial assumptions
-524
Gains (-) or losses (+) arising from changes in demographic assumptions
Changes in the limitation of the net defined benefit asset to the asset ceiling
Transfers to fund
Employee contributions
Pensions and other benefits paid
Translation differences and other changes
31 December 2020
thereof pension provisions
thereof assets
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Defined
Gains (-) or losses (+) arising from experience adjustments
- 524
84
- 84
Other Information
← = Q
Depending on the cash flow profile and risk structure of the
pension obligations involved, plan assets relating to defined
benefit plans are invested in a diversified portfolio.
Plan assets in Germany, the UK and other countries com-
prised the following:
Germany
Financial Statements
United Kingdom
Other
Total
in € million
Equity instruments
31.12.2021 31.12.2020 31.12.2021 31.12.2020 31.12.2021 31.12.2020 31.12.2021 31.12.2020
2,875
2,166
Remuneration Report
342
85
74
3,302
Debt instruments
7,742
12,642
32,001
12,022
56,665
6,891
12,471
19,362
6,863
11,956
348
the acquisition or
Corporate Governance
Combined Management Report
-645
639
-6
-6
- 618
26,587
582
-36
-36
-22,910
3,677
3
3,680
3,693
-13
Group Financial Statements
Notes to the Group
192
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
In conjunction with a measure aimed at modernising the
pension model in Germany, employees were given the choice
of remaining in the previous defined benefit plan or switch-
ing to the defined contribution plan. The fixed amounts to
which employees were previously entitled in the defined
benefit plan remain unchanged going forward and therefore
this is one factor which results in a plan amendment in
accordance with IAS 19. The previous pension entitlement
trend (Festbetragstrend) was converted – with the exception
of one remaining component - into a career trend. Further-
more, an employee switching to the defined contribution
plan received an entitlement deemed to be equivalent in
legal terms to their previous rights.
This gave rise to an overall positive impact of € 562 million
on past service cost, which was recognised in the income
statement, primarily in the form of reductions to cost of sales
as well as to selling and administrative expenses.
Actuarial gains arising in the financial year 2021 resulted in a
surplus of plan assets over liabilities for one of the pension
plans in the United Kingdom. However, because there is no
right of reimbursement or right to reduce future contributions
to the fund, the amount of plan assets recognised has been
limited to the amount of the obligations.
In the previous financial year, employment contract termina-
tion agreements were agreed with employees, resulting in
the persons concerned leaving the BMW Group with vested
pension benefits. Past service cost resulted mainly from dif-
fering assumptions used to calculate statutory pension enti-
tlements on the one hand and for the ongoing accounting for
active employees on the other.
193
BMW Group Report 2021
To Our Stakeholders
BMW Group Report 2021
in € million
Bonds
Asset-backed financing transactions
3.3
fixed
CHF 600 million
6.8
0.5
Other
fixed
JPY 10,000 million
3.0
0.2
fixed
CAD 800 million
3.3
1.4
200
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
36 Other liabilities
Other liabilities comprise the following items:
in € million
Contract liabilities
Deferred income
Bonuses and sales aides
10.0
NOK 1,000 million
fixed
1.4
2.3
fixed
GBP 600 million
6.0
0.9
fixed
AUD 273 million
10.0
3.2
BMW US Capital, LLC
variable
USD 2,138 million
3.4
0.4
31.12.2021
fixed
6.7
3.0
fixed
EUR 1,500 million
8.7
0.8
BMW International Investment B. V.
variable
GBP 200 million
2.0
0.0
fixed
GBP 1,550 million
4.1
USD 15,400 million
31.12.2020
5,955
5,485
As in the previous year, trade payables are due within one
year.
7,326
7,081
6,940
660
632
2,588
15,483 14,898
thereof investment grade
5,302
5,041
6,377
6,316
653
625
37 Trade payables
12,332
thereof mixed funds (funds without a rating)
thereof non-investment grade
2,440
2,285
704
624
7
7
3,151
2,916
Real estate funds
20
19
20
11,982
4.0
Grants comprise mainly public sector funds to promote
regional structures and which have been invested in the pro-
duction plants in Brazil, China, Germany, Mexico, Austria
and South Africa amongst others. The grants are partly sub-
ject to holding periods for the assets concerned of up to five
years and/or minimum employment figures or minimum
production figures. Grant income is recognised in the income
statement over the useful lives of the assets to which it
relates.
Contract liabilities relate to obligations for service and repair
work as well as telematics services and roadside assistance
agreed to be part of the sale of a vehicle (in some cases mul-
ti-component arrangements). An amount of € 3,035 million
(2020: € 2,604 million) was released from contract liabilities
in the financial year and recognised as revenues from con-
tracts with customers.
3,820
3,546
3,123
2,911
Refund liabilities for future leased products
3,108
3,926
Payables to other companies in which an investment is held
2,367
814
Other taxes
1,143
1,484
Deposits received
Deferred income includes down payments received on
leases with customers as well as deferred grants.
895
Payables to subsidiaries
Other advance payments received for orders
Social security
Sundry
Other liabilities
180
180
160
139
123
133
1,546
22,420
1,550
21,187
1,019
Money market funds
NOK 750 million
2.5
173
2,511
Commercial paper
2,615
-2,025
-40
550
Financial liabilities towards companies in which an investment is held
296
492
-48
740
Other (excluding interest payable)
864
-78
-34
752
Liabilities relating to financing activities
114,477
- 6,336
- 3,573
787
185
105,540
199
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
-63
- 494
2,895
Lease liabilities
1. 1. 2020
Cash inflows/
outflows
disposal
Changes due to
Changes
of companies exchange rate factors
in fair values
Other changes
31.12.2020
62,165
- 4,306
- 1,972
766
12
Corporate Governance
56,665
-82
-648
18,819
Liabilities from customer deposits (banking)
14,657
2,329
- 520
16,466
Liabilities to banks
11,436
-2,172
- 248
21
9,037
19,549
Remuneration Report
Other Information
← = Q
EUR 300 million
26
-0.6
variable
SEK 1,500 million
4.0
0.5
variable
USD 500 million
3.0
0.9
fixed
EUR 22,900 million
6.9
BMW Finance N. V.
0.8
CNY 17,000 million
2.6
3.4
fixed
JPY 13,400 million
5.6
0.6
fixed
HKD 1,759 million
6.1
2.7
fixed
USD 1,750 million
5.6
fixed
fixed
2.3
NOK 1,730 million
Bonds comprise:
Financial Statements
The following details apply to commercial paper:
Issue volume
Weighted average
Weighted average
Issue volume
Issuer
Interest
in relevant currency
(ISO Code)
maturity period
(in years)
nominal interest rate
in relevant
Weighted
average
3.0
Weighted
average
Issuer
currency
(ISO Code)
maturity period nominal interest
(in days)
rate (in %)
BMW Finance N. V.
variable
EUR 2,000 million
2.2
0.0
BMW US Capital, LLC USD 1,220 million
16
0.1
variable
(in %)
227
Remuneration Report
205
2,511
788
248
112
Not allocated to an
IFRS 9 category
At fair value
through profit or loss
At fair value through
other comprehensive
income
15,572
31.12.2020
116,976
4,621
15,017
18,693
619
117,503
Total
4,856
* Prior year's figures adjusted.
Remaining other liabilities *
788
204
in € million
For all other financial instruments not listed here that are
measured at amortised cost, the carrying amount corre-
sponds to the fair value. For this reason, they are not pre-
sented separately.
In the case of financial liabilities, own credit risk is taken into
account based on credit default swaps available on the mar-
ket, so that the fair values of these items are also allocated
to Level 2.
IFRS 13. The fair values of the financial assets shown in the
table exist with financial institutions and are also measured
using the discounted cash flow method, taking into account
the risk of default. Given that these financial institutions all
have excellent credit ratings, the risk of default is low and
can be observed on the market. The fair values of these
items are therefore allocated to Level 2.
The fair values of receivables from sales financing are meas-
ured using the discounted cash flow method, taking into
account customer-specific credit risk. In view of the fact that
these allowances are calculated in part on the basis of inter-
nal information, receivables from sales financing are allo-
cated to Level 3 in the level hierarchy in accordance with
The fair values are generally determined using the dis-
counted cash flow method, taking into account the relevant
risk of default. For the purposes of fair value measurement
using the discounted cash flow method, expected future
cash flows are discounted on the basis of up-to-date interest
curves observable on the market.
The following table shows the fair values and carrying
amounts of financial assets and liabilities that are measured
at amortised cost and whose carrying amounts differ from
their fair value.
18,443
Disclosures relating to financial instruments measured at
amortised cost
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
← = Q
Receivables from sales financing credit financing
814
investment is held
Fair value hedges
Cash flow hedges
Derivative instruments
19,362
Asset-backed financing transactions
1,374
Commercial paper
Other derivative instruments
16,702
9,079
Liabilities to banks
51,498
Bonds
At amortised cost
Not allocated to an
IFRS 9 category
At fair value
through profit or loss
Liabilities from customer deposits (banking)
2,367
1,006
9,037
Payables to other companies in which an
180
180
Payables to subsidiaries
Other liabilities
1,180
8,644
2,420
56,665
619
1,153
10,932
Trade payables
Other
Lease liabilities
18,819
550
16,466
250
-
Receivables from sales financing - finance and operating leases
Financial assets - Marketable securities and investment funds
Level hierarchy in accordance with IFRS 13
In the previous year, an amount of € 275 million relating to
marketable securities, investment funds and collateral was
reclassified from Level 1 to Level 2, in view of the fact that the
fair values of the marketable securities concerned were
derived on the basis of comparable instruments in the form
of a theoretical price. Furthermore, money market funds
amounting to € 915 million were reclassified from Level 2 to
Level 1 due to the fact that corresponding market or stock
exchange prices became available.
At 31 December 2021, equity instruments amounting to
€ 49 million were reclassified from Level 3 to Level 1, due to
the fact that quoted market prices became available for the
instruments concerned for the first time.
As a general rule, any transfers between fair-value hierarchy
levels are made at the end of the relevant reporting period.
397
31.12.2020
31.12.2021
Level hierarchy in accordance with IFRS 13
The carrying amounts of financial instruments measured at
fair value are allocated to the measurement levels pursuant
to IFRS 13 as described below:
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
Disclosures relating to financial instruments measured at fair
value
BMW Group Report 2021
in € million
Level 2
915
26
Cash equivalents
80
724
223
Other investments
Level 1
503
548
3,675
Marketable securities, investment funds and collateral
assets
Level 3
Level 2
Level 1
Level 3
3,608
9,037
9,209
9,079
63,104
65,326
64,795
67,158
Carrying
amount
Fair value
amount
24,675
Fair value
31.12.2020
31.12.2021
Liabilities to banks
Liabilities from customer deposits (banking)
Asset-backed financing transactions
Bonds
Financial liabilities
Carrying
22,622
23,116
21,173
9,177
16,466
16,599
16,702
16,732
18,819
18,818
19,362
19,602
56,665
58,136
51,498
53,022
115
116
20
20
income
At amortised cost
At fair value through
other comprehensive
31.12.2021
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
202
2,787
Other Information
2,190
3,350
31.12.2020
31.12.2021
Purchase commitments for
intangible assets
Purchase commitments for property,
plant and equipment
in € million
In addition to liabilities, provisions and contingent liabilities,
the following commitments exist for the BMW Group at the
end of the reporting period:
3,264
Other financial commitments
← = Q
The carrying amounts of financial instruments are assigned
At amortised cost
Not allocated to an
IFRS 9 category
At fair value
through profit or loss
At fair value through
other comprehensive
income
At amortised cost
31.12.2021
Financial Statements
39 Financial instruments
Fair value hedges
Derivative instruments
Financial assets
Receivables from sales financing
Other investments
ASSETS
in € million
to IFRS 9 categories in the following table:
Cash flow hedges
On 22 January 2020, the U.S. Securities and Exchange Com-
mission (SEC) opened an investigation into possible viola-
tions of U.S. securities laws by the BMW Group relating to
disclosures regarding the BMW Group's unit sales of new
vehicles. This matter was settled with the SEC, without admit-
ting or denying the allegations, and the BMW Group con-
sented to the entry of an Order finding violations of the U.S.
Securities Act and agreed to pay a penalty of US $18 million.
Certain BMW Group entities and their officers are defendants
in private securities litigation following the SEC Order. Possi-
ble risks for the BMW Group cannot be quantified at present.
Further disclosures pursuant to IAS 37.86 cannot be provided
at present.
future recall actions going forward. Further disclosures pur-
suant to IAS 37.86 cannot be provided at the present time.
Regulatory authorities have ordered the BMW Group to recall
various vehicle models in conjunction with airbags supplied
by the Takata group of companies. Provision for the costs
involved has been recognised within warranty provisions. In
addition to the risks already covered by warranty provisions,
further BMW Group vehicles may possibly be affected by
Guarantees
Litigation
Investment subsidies
in € million
The following contingent liabilities existed at the balance
sheet date:
Contingent liabilities
commitments
Other
38 Contingent liabilities and other financial
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
OTHER DISCLOSURES
Contingent liabilities
31.12.2021
31.12.2020
With respect to the Korean investigation, BMW AG recog-
nised a provision during the financial year. The Turkish anti-
trust authority issued its decision in January 2022, abstain-
ing from issuing a fine. Possible risks for the BMW Group in
connection with the antitrust proceedings in China cannot be
currently foreseen, either in terms of their outcome nor the
amounts involved. Further disclosures pursuant to IAS 37.86
cannot be provided at present.
In addition, the Chinese State Administration for Market
Regulation opened antitrust proceedings against BMW AG
in March 2019, followed by the Korea Fair Trade Commission
in May 2020 and the Turkish Competition Authority in July
2020.
The class action lawsuits in Canada and the private lawsuits
in South Korea remain at an early stage. Further civil law-
suits based on the allegations are possible going forward.
been brought in the USA and Canada as well as several pri-
vate lawsuits in South Korea. In the USA, the customer class
actions were withdrawn and the dealer class action was dis-
missed.
The EU Commission's antitrust proceedings (see note 10 for
additional information) was settled on 8 July 2021. In relation
to these allegations, numerous class action lawsuits have
The BMW Group determines its best estimate of contingent
liabilities based on the information available at the date of
preparing the Group Financial Statements. This assessment
may change over time and is adjusted regularly on the basis
of new information and circumstances. A part of the risks is
covered by insurance.
Other contingent liabilities mainly comprise risks relating to
taxes and customs duties.
1,292
1,466
1,067
1,202
43
77
105
131
77
56
At fair value through
other comprehensive
income
Loans to third parties
At fair value
through profit or loss
947
88,036
Total
5,774
1,504
5,517
1,547
Remaining other assets
3,238
454
Collateral assets
2,048
2,190
investment is held
Receivables from companies in which an
546
2,298
295
915
2,371
82,939
Financial Statements
Financial liabilities
LIABILITIES
in € million
← = Q
Other Information
Remuneration Report
31,041
Corporate Governance
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
203
30,048
2,693
3,245
Group Financial Statements
Notes to the Group
12,622
199
22
Cash and cash equivalents
Other
23
35
Loans to third parties
985
3,238
Trade receivables
20
390
Other derivative instruments
1,012
1,596
63,104
22,622
294
Marketable securities and investment funds
216
15,983
26
49
866
3,245
115
413
1,992
851
21,173
258
477
Not allocated to an
IFRS 9 category
31.12.2020
694
Receivables from subsidiaries
Other assets
2,261
46
64,795
BMW Group Report 2021
Derivative instruments (assets)
223
The BMW Group is exposed to counterparty credit risks if
contractual partners, for example a retail customer or a deal-
ership, are unable or only partially able to meet their contrac-
tual obligations. Information on the management of credit
risk for receivables from financial services is provided in the
Combined Management Report (see section Outlook, Risk
and Opportunity Management).
Credit risk
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
209
-350
818
Financial liabilities measured at amortised cost
- 1,050
Notwithstanding the existence of collateral accepted, the
carrying amount of financial assets (with the exception of
derivative financial instruments) generally represents the
maximum credit risk. In addition, the credit risk is increased
by additional unutilised loan commitments in the dealership
financing line of business. Total dealership financing credit
risk at the end of the reporting period therefore amounted to
€ 31,508 million (2020: € 30,682 million).
In the case of all relationships underlying non-derivative
financial instruments, in order to minimise the credit risk and
depending on the nature and amount of exposure, collateral
is required, credit information and references obtained or
historical data based on the existing business relationship,
in particular payment behaviour, reviewed.
In the case of trade receivables, customers are regularly
assessed with regard to their credit risk. Depending on con-
tractual status, necessary measures, such as dunning pro-
cedures, are initiated in good time.
The credit risk relating to cash deposits and derivative finan-
cial instruments is minimised by the fact that the Group only
enters into such contracts with parties of first-class credit
standing.
23
14
31
12
229
120
2,002
803
2,113
31.12.2021
More than 90 days overdue
Total
1-30 days overdue
31-60 days overdue
61-90 days overdue
Not overdue
in € million
The credit risk on trade receivables is assessed mainly on
the basis of information relating to overdue amounts. The
gross carrying amounts of these receivables are allocated in
accordance with IFRS 9 to overdue ranges used for manage-
ment purposes as follows:
Within the financial services business, items financed for
retail customers and dealerships (such as vehicles, facilities
and property) serve as first-ranking collateral with a recover-
able value. Security is also put up by customers in the form
of collateral asset pledges, asset assignment and first-rank-
ing mortgages, supplemented where appropriate by warran-
ties and guarantees. Items previously held as collateral that
are subsequently acquired relate mainly to vehicles. As a
rule, these assets can be converted into cash at short notice
through the dealership organisation. Creditworthiness test-
ing is an important aspect of the BMW Group's credit risk
management. Every borrower's creditworthiness is tested
for all credit financing and lease contracts entered into by the
BMW Group. In the case of retail customer financing, credit-
worthiness is assessed using validated scoring systems
integrated in the purchasing process. In the area of dealer-
ship financing, creditworthiness is assessed by means of
ongoing credit monitoring and an internal rating system that
takes account not only of the material credit standing of the
borrower, but also of qualitative factors, such as past reliabil-
ity in business relations.
31.12.2020
Financial assets measured at amortised cost
310
-35
1,148
3,256
1,875
2,998
Reported on
assets side
assets side liabilities side
Reported on
equity and
-1,118
1,880
Reported on
The following table shows the net gains and losses arising
on financial instruments in accordance with IFRS 9:
Gains and losses on financial instruments
Non-derivative financial assets and liabilities are only offset
if a legally enforceable right currently exists and it is actually
intended to offset the relevant amounts. No financial assets
and liabilities have been netted in the BMW Group due to the
fact that the necessary requirements for netting have not
been met.
Gross amount of derivatives which can be offset in case of insolvency
Net amount after offsetting
Balance sheet amounts as reported
in € million
23
31.12.2021
34
-1,118
- 790
2,466
Financial instruments measured at fair value through profit or loss
7
-45
Financial instruments measured at fair value through other comprehensive income
2020
2021
in € million
757
Total interest income arising on financial assets measured at
amortised cost relates mainly to the interest income earned
on credit financing and reported within revenues. Total inter-
est expenses arising on financial instruments measured at
amortised cost amounted to € 1.6 billion (2020: € 1.8 billion).
Net gains and losses arising on financial assets measured at
amortised cost comprise mainly exchange rate gains / losses
and impairment losses/reversals.
Net gains and losses arising on financial instruments meas-
ured at fair value through profit and loss mainly include
results from the fair value measurement of stand-alone
derivatives, marketable securities and shares in investment
funds, as well as other financial assets.
Net gains and losses arising on financial instruments meas-
ured at fair value through other comprehensive income
mainly relate to changes in the fair value of marketable secu-
rities. Further details are provided in the disclosures relating
to the statement of comprehensive income ( note 19). Total
interest income arising on financial assets measured at fair
value through other comprehensive income amounted to
€ 31 million (2020: € 37 million) and total interest expense to
€ 18 million (2020: € 30 million).
358
Reported on
equity and
liabilities side
31.12.2020
- 790
Net gains and losses arising on financial liabilities measured
at amortised cost comprise mainly exchange rate gains/
losses as well as fair value gains/losses on hedged items in
designated hedging relationships that are recognised in the
income statement.
60
2,293
2,345
1,054
13
769
71
431
5,469
38
1,907
1,653
517
6,025
44
2,671
3,310
406
78,356
3,778
367
705
937
1,639
85,916
1,019
422
4,223
80,252
1,599
118
89,016
431
4,511
83,020
802
2,091
1,019
17
1,054
Offsetting of financial instruments
1,633
377
31.12.2021
Financial Statements
Further disclosures relating to credit risk - in particular with
regard to the amounts of impairment losses recognised -
are provided in the explanatory notes to the relevant catego-
ries of receivables in notes 25 and 730.
Gross carrying amount of financial assets with good credit ratings
Gross carrying amount of financial assets with medium credit ratings
Gross carrying amount of financial assets with poor credit ratings
Total
in € million
The classification into creditworthiness levels is based on
default probabilities. The related gross carrying amounts in
accordance with IFRS 9 are allocated as follows:
Receivables from sales financing are allocated to internally
defined rating categories based on credit risk.
31.12.2020
← = Q
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
210
Other Information
76,356
Stage 1
Stage 3
81,084
374
1,071
79,639
Expected
credit loss
Total
Simplified
Stage 2
General
Total
Simplified
General
Expected
Stage 3
Stage 2
Stage 1
credit loss
Financial Statements
Derivative financial instruments of the BMW Group are sub-
ject to legally enforceable master netting agreements or
similar contracts. However, receivables and payables relat-
ing to derivative financial instruments are not netted due to
non-fulfilment of the stipulated criteria. Offsetting would
have the following impact on the carrying amounts of deriv-
atives:
Other Information
The exercise price for share options in such companies is
generally low, verging towards zero. Consequently, financing
rounds have a direct impact on the fair value of the options.
In this respect, the valuation of options and assessment of
their impact on sensitivity is similar to the approach taken to
unquoted equity instruments, as described above.
Mandatory conversions are usually structured in such a way
that the number of shares to be received depends on the
future share price. Due to the generally short maturities, the
instruments are subject to only insignificant fluctuations in
value. Irrespective of this fact, impairment tests are per-
formed at regular intervals.
The convertible bonds that have been classified to Level 3
are primarily used as instruments in advance of future
financing rounds relating to private equity investments. Val-
uations are therefore performed in accordance with the IPEV
guidelines.
In addition, equity instruments that are held outside the pri-
vate equity fund are measured using the income approach.
This involves discounting cash flows on the basis of current
business cases using the weighted average cost of capital to
determine the fair value of the financial instrument. Changes
in fair values determined in connection with adjustments to
significant input factors are not material for the BMW Group.
ment.
Since the pricing from the financing rounds is considered to
be the decisive input factor for the valuation, increases or
decreases in valuation give rise to a similar change in the
equity instrument that is recognised in the income state-
As part of the process of analysing valuations, the external
fund manager reviews the investment-specific milestones,
including an analysis of financial, technical and liquidity-spe-
cific performance indicators. Based on this analysis, it is
considered whether the price of the most recent financing
round is acceptable as a reasonable market valuation, in
particular for early-stage or growth-phase investments. Key
performance indicators used for the purpose of milestone
analysis are highly dependent on the business model under-
lying the investment. Typical technical key performance indi-
cators relate to licenses and patents held, the stage of tech-
nology development such as evidence of feasibility and
prototypes, market entries, customer and user growth and
appointments to key management positions. Key financial
performance indicators used are revenues, EBITDA and the
corresponding growth rate and/or development of specific
contribution margins. Key liquidity-specific performance
indicators are cash on hand, cash burn rates and prospects
for future financing rounds.
For selected derivatives, a complete set of data relevant for
valuation purposes is not available due to their limited mar-
ket maturity. In order to model forward curves, data are col-
lated and updated on the basis of regular bank and trader
inquiries. The valuation methodology applied is in line with
the general valuation principles for derivatives used within
the treasury management system of the BMW Group.
Changes in fair values resulting from shifts in forward curves
within a range of +/-10% are not material for the
BMW Group.
-
3
-5
67
Options on unquoted equity instruments
Derivative instruments
22
23
Convertible bonds
397
Financial instruments allocated to Level 3 relate mainly to
investments in a private-equity fund. The valuation of
unlisted equity instruments is determined primarily using the
market-based approach. In particular, the financing rounds
that take place within the private equity sector - usually on a
regular basis at intervals of approximately 12 to 24 months
represent a significant input factor for these purposes. In
addition, the investment advisor provides the external fund
manager with relevant, investment-specific information on
an ongoing basis (at least quarterly). The latter subsequently
assesses the underlying individual companies in accordance
with the guidelines for International Private Equity and Ven-
ture Capital Valuations (IPEV).
724
207
To Our Stakeholders
31 December 2021
← = Q
Currency translation differences
Gains (+)/losses (-) recognised in the income
statement
Gains (+)/losses (-) recognised in accumulated
other equity
Disposals
Additions
BMW Group Report 2021
1 January 2021
The balance sheet carrying amount of Level 3 financial
instruments developed as follows:
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
in € million
Unquoted equity
instruments
Unquoted equity instruments
31.12.2021
Fair value
Raw material market price risks
1,045
Currency risks
729
40
67
1,092
101
I
1,373
Interest rate risks
Derivative instruments (liabilities)
Other risks
Raw material market price risks
Currency risks
Interest rate risks
466
31.12.2020
Fair value
2,344
573
in € million
Financial instruments measured at fair value using input fac-
tors not based on observable market prices are allocated to
Level 3. The fair values of these financial instruments are
shown in the following table:
← = Q
Other Information
Remuneration Report
Group Financial Statements Corporate Governance
Notes to the Group
Financial Statements
Combined Management Report
335
To Our Stakeholders
206
6
52
171
919
3
1
BMW Group Report 2021
Options on
unquoted equity
Level transfer
Convertible bonds
22
Gains (+)/losses (-) recognised in the income
statement
-7
-7
Gains (+)/losses (-) recognised in accumulated
other equity
-94
2
-2
Currency translation differences
-7
Disposals
90
17
73
Additions
374
397
- 87
14
31 December 2020
85
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
208
85
Gains and losses recognised in the income statement are
reported within the line item "Other financial result". Gains
and losses recognised in the income statement in the finan-
cial year 2021 included an unrealised net positive amount of
€ 352 million (2020: € 84 million).
- 5
3
22
397
- 31
-2
- 29
417
355
5
Financial
instruments
Level 3
1 January 2020
Financial
instruments
23
724
-49
52
32
417
488
-220
24
76
-5
3
Derivative
instruments
instruments
-30
100
Level 3
-254
Derivative
instruments
instruments
Convertible bonds
instruments
in € million
-4
Unquoted equity
Options on
unquoted equity
67
-49
34
491
1
75
75
814
201
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
211
2020
9
Remuneration Report
Hedge relationships give rise to following effects:
in € million
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
← = Q
Designated components and costs of hedging within accu-
Financial Statements
Change of designated
components in other
comprehensive income
-806
547
Change in costs of
hedging in other
comprehensive income
55
2021
mulated other equity changed as follows:
Hedge ineffectiveness
recognised in income
statement
Other Information
Corporate Governance
- 820
1,057
10,611
56,985
1,141
-1,169
-467
532
Remuneration Report
510
58,714
-720
217
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
8,483
Change of designated
components in other
comprehensive income
17
3
Designated
component Costs of hedging
510
Designated
-22
component Costs of hedging Costs of hedging
-497
Designated
component Costs of hedging
-4
1
-2
5
-795
-307
20
820
1,170
-443
5
Change in fair value during the reporting period
- 299
532
component Costs of hedging Costs of hedging
2020
Change in costs of
hedging in other
comprehensive income
Hedge ineffectiveness
recognised in income
statement
554
509
198
- 5
2
3
2021
2020
Currency risks Interest rate risk
Raw material price risk
Currency risks Interest rate risk
Raw material price risk
Designated
in € million
Opening balance at 1 January
-274
466
795
Continuing
hedge
relationships
Raw material price risks
Fair Value Hedges
Interest rate risks
The following table shows key information on hedged items
for each risk category as well as the balances of designated
components within accumulated other equity:
in € million
Cash Flow Hedges
Currency risks
Currency risks
Raw material price risks
Interest rate risks
The accumulated amount of hedge-related fair value adjust-
ments is a negative amount of € 9 million (2020: positive
amount of € 10 million) for assets and a positive amount of
€ 577 million (2020: positive amount of € 1,680 million) for
liabilities.
Carrying amounts
31.12.2021
Carrying amounts
Nominal
amounts
Assets
Fair Value Hedges
Liabilities
Cash Flow Hedges
The following table provides information on the nominal
amounts, carrying amounts and fair value changes of con-
tracts designated as hedging instruments:
11,188
1,822
1,350
676
701
Information on average interest hedge rates is not provided,
since interest rate derivatives designated as hedging instru-
ments are used exclusively to hedge items in fair value
hedges. The hedge rates therefore correspond in each case
to current market interest rate level. Most of the hedges used
216
in € million
BMW Group Report 2021
Combined Management Report
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Statements
To Our Stakeholders
Change in
fair value of
designated
components
Nominal
amounts
Assets
59,774
1,992
248
723
31.12.2021
31.12.2020
Carrying amounts
-1,138
Balances in accumulated
other equity
Balances in accumulated
other equity
Assets
Change in
value of
Liabilities hedged items
Continuing
hedge
relationships
Terminated
hedge
relationships
Assets
Change in
value of
Liabilities hedged items
Carrying amounts
250
1,012
57,920
Liabilities
31.12.2020
Change in
fair value of
designated
components
33,666
437
905
5,111
1,159
101
-795
820
16,469
3,241
277
54
1,169
574
58
466
Terminated
hedge
relationships
14,475
1
for continuing hedge relationships
A significant proportion of the BMW Group's transactions
with related parties relates to the joint venture BMW Bril-
liance Automotive Ltd.
in € million
BMW Brilliance Automotive Ltd.
For the most part, this involves the sale of vehicle compo-
nents to BMW Brilliance Automotive Ltd. for further process-
ing. BMW Brilliance Automotive Ltd. also provides services
and vehicles to BMW Group entities.
Supplies and services performed
Supplies and services received
Receivables at 31 December
510
Payables at 31 December
2020
2021
2020
2021
2020
2021
2020
2021
11,500
9,701
337
49
49
65
1,369
5
3,362
1,574
287
ALTANA AG
80
2,572
251
UnternehmerTUM GmbH
37
809
273
1,310
315
243
2,425
1,030
155
Corporate Governance
2021
27
2020
2021
32
70
Receivables at 31 December
Supplies and services received
2020
64
5
Payables at 31 December
2020
2021
8
15
2021
Supplies and services performed
For disclosures relating to key management personnel,
please see note 43 and the Remuneration Report.
The BMW Foundation Herbert Quandt, Munich, is an inde-
pendent corporate foundation and due to the BMW Group's
significant influence, qualifies as a related party according to
IAS 24. The BMW Group made donations to the BMW Foun-
dation Herbert Quandt during the financial year 2021 total-
ling € 5.9 million (2020: € 6.4 million). No other significant
transactions arose.
2,045
2,345
804
220
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
In total, the following amounts of goods and services were
supplied to or received from other joint ventures and associ-
ated companies:
in € million
Other joint ventures and associated companies
Business relationships with non-consolidated companies
are small in scale.
BMW Trust e. V., Munich, administers assets on a trustee
basis to secure obligations relating to pensions in Germany
and is therefore a related party of the BMW Group in accord-
ance with IAS 24. This entity has no assets of its own. It had
no income or expenses during the period under report.
BMW AG bears expenses on an immaterial scale and per-
forms services for BMW Trust e. V., Munich.
2,363
Reclassification to profit or loss
8,827
19,068
1,057
532
- 299
- 2
510
The nominal amount of hedging instruments that continue
to be directly affected by the reform of the benchmark inter-
est rates and USD LIBOR totals € 7,257 million.
218
15
BMW Group Report 2021
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
40 Related party relationships
To Our Stakeholders
The following individuals and entities are related parties in
accordance with IAS 24:
-244
Closing balance at 31 December
-4
355
-3
-512
557
3
for terminated hedge relationships
-274
-7
- 104
84
-29
Reclassification to acquisition costs for inventories
-273
72
6
7
Stefan Quandt and Susanne Klatten, as well as compa-
nies controlled by them
The Board of Management and the Supervisory Board of
the BMW Group
Associated companies, joint ventures, non-consolidated
subsidiaries, BMW Trust e. V. and BMW Foundation Her-
bert Quandt
2021
2020
2021
2020
2021
2020
2021
in € thousand
2020
1,821
1,950
1
DELTON Logistics S.à r.l.
1,090
1,235
19,450
DELTON Health AG (formerly DELTON AG)
Payables at 31 December
Receivables at 31 December
Supplies and services received
Transactions of Group entities with related parties were car-
ried out, without exception, in the normal course of business
of each of the parties concerned and conducted at market
conditions, i. e. conditions that are also granted to other
third-party manufacturers.
During the year under report, members of the Board of Man-
agement and the Supervisory Board concluded vehicle pur-
chase contracts and related service contracts as well as
vehicle rental, vehicle leasing and vehicle financing contracts
with BMW Group entities at market conditions.
Stefan Quandt, Germany, is a shareholder and Deputy Chair-
man of the Supervisory Board of BMW AG. He is also the
sole shareholder and Chairman of the Supervisory Boards of
DELTON Health AG, Bad Homburg v.d.H., and DELTON
Technology SE, Bad Homburg v.d.H., as well as the sole
shareholder of DELTON Logistics S.à.r.I., Grevenmacher,
which via its subsidiaries, performed logistic-related ser-
vices for the BMW Group during the financial year 2021. In
addition, the DELTON companies held by Stefan Quandt
acquired vehicles from the BMW Group by way of leasing.
Stefan Quandt, Germany, is also the indirect majority share-
holder of SOLARWATT GmbH, Dresden. Cooperation
arrangements are in place between BMW Group and
SOLARWATT GmbH, Dresden, within the field of electric
mobility. The focus of this collaboration is on the provision of
complete photovoltaic solutions for rooftop systems and car-
ports to BMW i customers. In addition, SOLARWATT GmbH
purchases battery cells and related components for home
battery storage applications as part of a supply project. In
addition to the deliveries of goods described above, SOLAR-
WATT GmbH, Dresden, also purchased vehicles from the
BMW Group by way of leasing during the financial year 2021.
Susanne Klatten, Germany, is a shareholder and member of
the Supervisory Board of BMW AG and also a shareholder
and Deputy Chairwoman of the Supervisory Board of
ALTANA AG, Wesel. In 2021, ALTANA AG, Wesel, acquired
vehicles from the BMW Group, mainly by way of leasing.
Susanne Klatten, Germany, is also the sole shareholder and
Chairwoman of the Supervisory Board of UnternehmerTUM
GmbH, Garching. In 2021, the BMW Group bought in services
from UnternehmerTUM GmbH, Garching, mainly in the form
of consultancy and workshop services.
219
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Seen from the perspective of BMW Group entities, the vol-
ume of transactions with the above-mentioned entities was
as follows:
Supplies and services performed
SOLARWATT GmbH
4,568
2,158
1,573
631
21,085
-27,866
-14,180
- 157
-42,203
- 14,478
5,544
-5,296
-20,391
219
216
88
523
380
144
- 617
28
14,910
166
With gross settlement
1,434
937
9
2,380
432
248
44,583
14
Cash outflows
Cash inflows
With net settlement
Cash outflows
Total financial liabilities
29,300
15,117
694
552
219
216
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
The resulting funding requirements are covered by a variety
of instruments placed on the world's financial markets, with
the aim to minimise risk by matching maturities with financ-
ing requirements and in alignment with a dynamic target
debt structure.
As a further reduction of risk, a syndicated credit line totalling
€ 8 billion (2020: € 8 billion) from a consortium of interna-
tional banks is available to the BMW Group. Intra-group
cash flow fluctuations are balanced out by the use of daily
cash pooling arrangements.
Combined Management Report
Further information is provided in the Combined Manage-
ment Report.
The principal market risks to which the BMW Group is
exposed are currency risk, interest rate risk and raw materi-
als market price risk.
Protection against such risks is provided in the first instance
though natural hedging which arises when the values of
non-derivative financial instruments have matching maturi-
ties and amounts (netting). Derivative financial instruments
are used to reduce the risk remaining after netting.
Currency, interest rate and raw materials market price risks
of the BMW Group are managed at a corporate level.
Further information is provided in the "Outlook, Risk and
Opportunity Management" section of the Combined Man-
agement Report.
Currency risk
As an enterprise with worldwide operations, the BMW Group
conducts business in a variety of currencies, from which cur-
rency risks arise. In order to hedge currency risks, the
BMW Group holds, as at 31 December 2021, derivative finan-
cial instruments mostly in the form of forward currency con-
tracts and currency swaps.
Market risks
To Our Stakeholders
BMW Group Report 2021
212
88
523
380
144
28
552
53,334
52,053
13,256
118,643
49,264
54,598
14,767
118,629
The cash flows from non-derivative liabilities comprise prin-
cipal repayments and the related interest. The amounts dis-
closed for derivative instruments comprise only cash flows
relating to derivatives that have a negative fair value at the
balance sheet date. In the case of derivatives with a negative
fair value, an overall positive cash flow can arise due to the
various yield curves used. At 31 December 2021 credit com-
mitments available at short notice to dealerships which had
not been called upon at the end of the reporting period
amounted to € 18,334 million (2020: € 14,367 million).
Solvency is assured at all times by managing and monitoring
the liquidity situation on the basis of a rolling cash flow fore-
cast.
DERIVATIVE FINANCIAL LIABILITIES
As part of the implementation of the risk management strat-
egy, the extent to which risk exposures should be hedged is
decided at regular intervals.
765
288
30,071
10,821
54,158
13,456
33,224
11,930
58,610
13,266
Asset-backed financing transactions
12,622
19,586
7,067
12,369
19,436
Liabilities to banks
5,130
6,964
3,350
NON-DERIVATIVE FINANCIAL LIABILITIES
Maturity later
than five years
Other Information
5,389
← = Q
Notes to the Group
Liquidity risk
The following table shows the maturity structure of expected
contractual cash flows (undiscounted) for financial liabilities:
in € million
Total
Financial Statements
31.12.2020
Maturity within Maturity between
one year one and five years
Maturity later
than five years
Maturity within
Total
Maturity between
one year one and five years
31.12.2021
1,027
9,507
5,295
2,640
512
1,227
1,028
2,767
Commercial paper
1,374
990
1,374
550
Other financial liabilities
321
116
301
738
120
550
1,167
483
Lease liabilities
3,317
1,388
10,000
Liabilities from customer deposits (banking)
13,211
3,574
20
16,805
12,808
3,781
22
16,611
Trade payables
10,932
10,932
8,644
8,644
357
The economic relationship between the hedged item and
the hedging instrument is based essentially on the fact that
they are denominated in the same currency and have the
same maturities. Items are hedged on the basis of a con-
stant ratio of one to one between hedging instrument and
risk exposure.
Bonds
The BMW Group measures currency risk using a cash-flow-
at-risk model. The analysis of currency risk is based on fore-
cast foreign currency transactions which could result in
exposures to surpluses of foreign currency cash inflows and
cash outflows. At the end of the reporting period, the overall
currency exposure – in each case for the following year and
determined by aggregating the individual currency expo-
sures based on their absolute amount - was as follows:
Maturity
later than
five years
Currency risks
21,670
11,996
Interest rate risks
9,474
25,145
Maturity Maturity
within between one
one year and five years
11,251
2,669
2,442
Nominal amounts of
hedging instruments
33,813
39,583
11,251
Raw material price risks
31.12.2021
in € million
EUR/JPY
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
31.12.2021
Disclosures on hedging measures
The nominal amounts of hedging instruments were as
follows:
The following table shows the most significant average
hedging rates of hedging transactions used by the
BMW Group:
Currency risks
EUR/CNY
EUR/USD
EUR/GBP
EUR/KRW
The following disclosures on hedging measures include
derivatives of fully consolidated companies that are desig-
nated as a hedging instrument. The amounts shown in the
table are stated before deferred taxes and take account of
additional effects arising from the application of the modified
closing rate method.
BMW Group Report 2021
31.12.2020
8.05
Palladium (EUR/oz)
Platinum (EUR/oz)
Interest rate risks
8,082
28,213
12,373
1,449
1,792
4,530
Nominal amounts of
21,470
34,535
12,373
31.12.2021
1,730
Causes of hedge ineffectiveness are seen potentially only for
counterparty credit risk. However, in view of the processes
that have been established for credit risk management, inef-
fectiveness is not expected to arise.
31.12.2020
hedging instruments
7.99
11,939
Nickel (EUR/t)
1.23
0.87
1,341.73
0.87
1,334.86
124.20
A cash-flow-at-risk approach to risk management involves
making use of portfolio effects. No JPY-denominated hedg-
ing transactions were in hedging relationships at the end of
the year under report (2020: no USD-denominated hedging
transactions).
in this context relate to variable yield curves relating to the
euro, US dollar and British pound currency areas.
Raw material price risks
Currency risks
Aluminium (EUR/t)
Copper (EUR/t)
Maturity
within
Maturity
between one
in € million
one year and five years
Maturity
later than
five years
31.12.2020
215
Raw material price risks
597
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Interest rate risk
Interest rate risks arise when funds are borrowed and
invested with differing fixed-rate periods or differing terms.
At the BMW Group, all items subject to, or bearing, interest
are exposed to interest rate risk and can therefore affect
both the assets and liabilities side of the balance sheet.
Combined Management Report
The fair value of the Group's interest rate portfolios was as
follows at the end of the reporting period:
Fair values of interest rate portfolios
31.12.2021
31.12.2020
63,835
58,545
Interest rate risk is managed through the use of interest rate
derivatives. As part of the implementation of the risk man-
agement strategy, interest rate risks are monitored and
managed at regular intervals. The interest rate contracts
used for hedging purposes comprise mainly swaps, which, if
hedge accounting is applied, are accounted for as fair value
hedges. The economic relationship between the hedged
item and the hedging instrument is based on the fact that
the main parameters of the hedged item and the related
hedging instrument, for example start date, term and cur-
rency, are the same. Items are hedged on the basis of a con-
stant ratio of one to one between hedging instrument and
risk exposure.
In view of the fact that own credit risk is excluded from the
hedging relationship, ineffectiveness is expected to be low.
in € million
For selected fixed-interest assets, part of the interest rate
risk is hedged on a portfolio basis.
To Our Stakeholders
213
Currency exposure
310
Currency exposures include short positions amounting to
€ 2,715 million (2020: € 5,222 million). In addition, a cur-
rency risk exposure existed at the reporting date on the pur-
chase price payable arising in connection with the increase
in the BMW Group's stake in the BMW Brilliance joint ven-
ture for a euro-equivalent amount of € 3,857 million. The
transaction was completed in February 2022. Further infor-
mation is provided in a note 3 Increased shareholding in BMW
Brilliance Automotive Ltd.
in € million
This exposure is compared to all hedges that are in place.
The net cash flow surplus represents an uncovered risk posi-
tion. The cash-flow-at-risk approach involves showing the
impact of potential exchange rate fluctuations on operating
cash flows on the basis of probability distributions. Volatili-
ties and correlations serve as the main input factors to deter-
mine the relevant probability distributions.
The potential negative impact on earnings is calculated at
the reporting date for each currency for the following finan-
cial year on the basis of current market prices and exposures
with a confidence level of 95%. The risk mitigating effect of
correlations between the various currencies is taken into
account when the risks are aggregated.
The following table shows the potential negative impact for
the BMW Group for the following year resulting from unfa-
vourable changes in exchange rates, measured on the basis
of the cash-flow-at-risk approach.
BMW Group Report 2021
31.12.2021
33,975
in € million
Cash flow at risk
31.12.2021
31.12.2020
564
531
38,134
In this case, swaps are used as the hedging instrument.
Hedge relationships are terminated and redesignated on a
monthly basis at the end of each reporting period, thereby
taking account of the constantly changing content of each
portfolio.
31.12.2020
The transition to the newly created or revised benchmark
interest rates is being managed, monitored and assessed
with regard to risk management implications as part of a
multidisciplinary project. The tasks of the conversion project
includes the continual monitoring of regulatory develop-
ments, the initiation of necessary changes to systems, pro-
cesses, risk and measurement models as well as the clarifi-
cation of the associated accounting and financial reporting
implications. The uncertainty triggered by the benchmark
interest rate reform, in the meantime relating primarily to the
USD and CAD, is expected to be eliminated during the finan-
cial
year 2022.
The BMW Group is exposed to market price risks on raw
materials. In order to hedge these risks, the Group mainly
uses forward commodity contracts. As part of the implemen-
tation of the risk management strategy, the extent to which
risk exposures should be hedged is decided at regular inter-
vals and the corresponding hedging ratio defined. Items are
hedged on the basis of a constant ratio of one to one
between hedging instrument and risk exposure.
Causes of hedge ineffectiveness are seen potentially only for
counterparty credit risk. However, in view of the processes
that have been established for credit risk management, inef-
fectiveness is not expected to arise.
The economic relationship between the hedged item and
the hedging instrument is based essentially on the fact that
they have the same basis and term. The BMW Group desig-
nates only the commodity price index-linked raw material
surcharge, which is specified in the purchase contracts of
vehicle components, as a hedged item. The proportion of the
hedged risk component as a percentage of the total fair
value depends on the specific types of vehicle component
involved. Other price components contained in the contract
are not designated as being part of the hedge relationship
as no effective hedging instruments exist for these compo-
nents.
The starting point for analysing raw materials price risk is to
identify planned purchases of raw materials or components
containing raw materials, the so-called "exposure". At each
reporting date, the exposure for the following financial year
amounted to:
in € million
Raw material price exposures
The following table shows the potential negative impact for
the BMW Group resulting from fluctuations in prices across
all categories of raw materials, measured on the basis of the
cash-flow-at-risk approach. The risk at each reporting date
for the following financial year was as follows:
31.12.2021
31.12.2020
31.12.2021 31.12.2020
in € million
The potential negative impact on earnings is calculated at
the reporting date for each raw materials category for the
following financial year on the basis of current market prices
and exposure with a confidence level of 95%. The risk miti-
gating effect of correlations between the various categories
of raw materials is taken into account when the risks are
aggregated.
4,204
Cash flow at risk
This exposure is compared to all hedges that are in place.
The net cash flow surplus represents an uncovered risk posi-
tion.
In light of the reform and replacement of certain benchmark
interest rates, some of the BMW Group's hedging relation-
ships have been redesignated to take account of alternative
benchmark interest rates.
The cash-flow-at-risk approach involves showing the impact
of potential raw materials market price fluctuations on oper-
ating cash flows on the basis of probability distributions. Vol-
atilities and correlations serve as input factors to assess the
relevant probability distributions.
Raw materials price risk
← = Q
6,872
Other Information
that have been transferred with effect from 31 December
2021 to an alternative benchmark interest rate in accordance
with the IBOR Fallbacks Protocol totals € 6,890 million
(mainly GBP LIBOR € 4,229 million and JPY LIBOR
€ 2,279 million).
The BMW Group applies a value-at-risk approach through-
out the Group for internal reporting purposes and to manage
interest rate risk. This approach is based on a historical sim-
ulation in which the potential future fair value losses of the
interest rate portfolios are compared across the Group with
expected amounts on the basis of a holding period of 250
days and a confidence level of 99.98 %. The risk mitigating
effect of correlations between the various portfolios is taken
into account when the risks are aggregated.
In the following table the potential volumes of fair value fluc-
tuations measured on the basis of the value-at-risk
approach are compared with the expected value for the
interest-rate-sensitive exposures of the BMW Group:
in € million
Value at risk
31.12.2021 31.12.2020
1,237
1,160
In the case of USD LIBOR and CAD CDOR, uncertainty
remains as to the exact timing and nature of the changes.
The notional amount of financial derivatives not yet con-
verted to an alternative interest rate at 31 December 2021 is
€ 12,522 million (USD LIBOR € 12,522 million). The nominal
amount of non-derivative financial liabilities not yet con-
verted to an alternative interest rate is € 700 million (thereof
USD LIBOR € 387 million and CAD CDOR € 313 million).
214
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
The BMW Group's fair value hedges affected by the reform
are mainly based on the benchmark interest rates relating to
the British pound (GBP), the US dollar (USD) and the Japan
yen (JPY). Fair value hedges for which GBP LIBOR and JPY
LIBOR were previously designated as the hedged risk were
converted during the financial year 2021, with GBP LIBOR
replaced by the SONIA benchmark interest rate and JPY
LIBOR replaced by the TONA benchmark interest rate. The
BMW Group continues to see the economic link and has
therefore continued to account the pertinent items as fair
value hedges. The notional amount of financial derivatives
To Our Stakeholders
BMW Group Report 2021
Combined Management Report
-Relevant period is the vesting year
To Our Stakeholders
― Primarily qualitative, non-financial criteria, expressed in terms of a performance factor aimed at measuring the Board member's contribution to sustainable and long-term performance
and corporate orientation
- Formula: 50% of target amount x performance factor
― € 1.050 million (Chairman of the Board of Management)
― € 0.575 million (from second period of office or fourth year of mandate)
- € 0.475 million (first period of office)
- Earnings factor may not exceed 1.8
― € 1.890 million (Chairman of the Board of Management)
― € 1.035 million (from second period of office or fourth year of mandate)
- € 0.855 million (first period of office)
- Maximum amount of earnings component p.a.:
― Additional trend analysis over at least three financial years
― Base amount p. a. (50% of target bonus amount):
- Assessment period one year
― Measurement parameters and target values are determined before the start of the financial year
- 50% cross-divisional targets with ESG criteria
-40% other cross-divisional targets
-10% individual targets
― Criteria for the cross-divisional targets with ESG criteria include in particular: innovation performance (environmental, e. g. reduction of carbon emissions), development of the
BMW Group's reputation based on ESG aspects (e. g. corporate culture, promotion of integrity and compliance), adaptability, attractiveness as an employer, leadership performance
- Criteria for the other cross-divisional targets include in particular: market position compared to competitors, innovation performance (economic), development of the BMW Group's
reputation based on non-ESG-related aspects (e. g. perception on capital markets, brand strength), customer orientation
BMW Group Report 2021
- Performance factor may not exceed 1.8
- Maximum amount of performance component p. a.:
- € 0.855 million (first period of office)
― € 1.035 million (from second period of office or fourth year of mandate)
― € 1.890 million (Chairman of the Board of Management)
― Earnings component of bonus rewards attainment of financial targets and is beneficial for earnings-related aspects of business strategy
― Performance component of bonus motivates the pursuit of non-financial strategic targets and is therefore beneficial for the long-term development of the BMW Group
226
- Composition of performance factor:
― The earnings factor is 1.5 in case of a profit attributable to shareholders of BMW AG amounting to € 6.9 billion and a Group post-tax return on sales of 7.3%
―The earnings factor is 0 in case of a profit attributable to shareholders of BMW AG below € 3.0 billion or a Group post-tax return on sales of below 3.0%
VARIABLE REMUNERATION COMPONENTS
(SHORT-TERM BENEFITS)
-Profit attributable to shareholders of BMW AG and Group post-tax return on sales in grant year
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
Other Information
225
― Capped at 180% of target amount
— € 2.10 million (Chairman of the Board of Management)
Combined Management Report
- € 1.15 million (from second period of office or fourth year of mandate)
- € 0.95 million (first period of office)
— Target amount p. a. (at 100 % target achievement):
― Payment after the Annual General Meeting at which the Company Financial Statements are presented for the relevant financial year
― The earnings factor is 1.0 in case of a profit attributable to shareholders of BMW AG amounting to € 5.3 billion and a Group post-tax return on sales of 5.6%
↑
COMPONENT
― Earnings factor is derived from a predefined allocation based on the parameters
- Formula: 50% of target amount x performance factor
― € 1.050 million (Chairman of the Board of Management)
― € 0.575 million (from second period of office or fourth year of mandate)
- € 0.475 million (first period of office)
― Base amount p. a. (50% of target bonus amount):
= Q
Assessment period one year
Remuneration linked to corporate strategy
(at 100% target achievement corresponds to
50% of target amount)
Performance component
(at 100 % target achievement corresponds to
50% of target amount)
Earnings component
Bonus
Parameters/measurement base, applicable amounts
Group Financial Statements
Notes to the Group
Financial Statements
― € 1.175 million (Chairman of the Board of Management)
Remuneration Report
BMW Group Report 2021
227
-Commitment to purchase shares of BMW AG common stock and four-years holding requirement is beneficial for the long-term development of the BMW Group
―The remaining 50% of the personal investment cash amount is beneficial for the attainment of strategic focus targets and therefore contributes to the BMW Group's operational suc-
cess in strategically important areas
― personal investment cash amount is 50 % dependent on key performance indicator RoCE and is therefore directly linked to a key measure of corporate strategy and reflects BMW AG's
aspiration to generate a significant premium on the cost of capital
― € 2.115 million (Chairman of the Board of Management)
To Our Stakeholders
― € 1.152 million (from second period of office or fourth year of mandate)
- Maximum amount of strategic focus target component p. a.:
- Factor for each strategic focus target may not exceed 1.8
― Minimum, target and maximum values are defined before the start of the financial year
25% of target amount for personal investment cash amount x factor for strategic focus target 1 + 25% of target amount for personal investment cash amount x factor for strategic
focus target 2
- Formula in event of two strategic focus targets with equal weighting p. a.:
- Weighting of the strategic focus targets is decided before the start of the financial year
- € 0.990 million (first period of office)
- At least two strategic focus targets derived from the strategic plan
Combined Management Report
Corporate Governance
Current estimates and assumptions for the financial year
2022, to the extent already known, have been taken into
account and described in the outlook. However, the outlook
does not factor in a significant tightening of sanctions
against Russia and/or an escalation of the conflict outside
Ukraine. Similarly, additional major price hikes for energy
and raw materials, including rises triggered by the war in
Ukraine and/or the related sanctions, have not been taken
into account.
The war in Ukraine had no impact on the Consolidated
Financial Statements for the year ended 31 December 2021.
Any potential effects on the BMW Group's business perfor-
mance are being monitored on an ongoing basis. Due to the
current situation, local production in Russia as well as the
export of automobiles and motorcycles to the Russian mar-
ket have been discontinued for the foreseeable future. The
war in Ukraine is having a substantial negative effect on the
country's automotive suppliers. The resulting supply restric-
tions have led to production schedule adjustments and
interruptions at a number of BMW Group plants, which in
turn is likely to have a negative impact on automobile sales
figures. For this reason, the corresponding key performance
indicators reported by the Automotive segment are now
forecast to be down on the previous year. The war in Ukraine
is not currently expected to have a significant impact on the
business performance of the Motorcycles and Financial Ser-
vices segments.
(sum of earnings component and performance
component)
44 Events after the end of the reporting period
On 11 February 2022, the BMW Group acquired a further 25%
of the shares in the previous joint venture BMW Brilliance
Automotive Ltd. Further information is provided in 7 note 3
Increased shareholding in BMW Brilliance Automotive Ltd.
― Agreement entitling the BMW Group to reclaim variable remuneration already paid out in the event of specified incidences of non-compliance, incorrect calculation bases or incorrect
financial statements
― Amounts may also be clawed back in principle after a member has left the Board
Agreement to withhold variable remuneration in the event of specified serious compliance violations or (withholding amounts provisionally) in the event of reasonable suspicions of such
― Amounts may also be withheld in principle after a member has left the Board
Group Financial Statements
Notes to the Group
Financial Statements
Parameters/measurement base, applicable amounts
Malus
MALUS AND CLAWBACK RULES
COMPONENT
← = Q
Other Information
Remuneration Report
Clawback
Corporate Governance
― € 0.64 million (from second period of office or fourth year of mandate)
― Target amount strategic focus target component p. a. (50% of target amount of personal investment cash amount):
- Target amount p. a. (at 100 % target achievement):
― Assessment period of five years in total (one year for determining the personal investment cash amount, four years holding requirement)
Requirement for Board of Management members to invest an earmarked cash amount (personal investment cash amount), net of tax and deductions, in shares of BMW common stock
- Requirement for Board of Management members to hold the acquired shares of BMW common stock for at least four years (share ownership)
Parameters/measurement base, applicable amounts
Remuneration linked to corporate strategy
Strategic focus target component (at 100 %
target achievement corresponds to 50% of
target amount)
- € 1.10 million (first period of office)
RoCE component (at 100 % target achievement
corresponds to 50% of target amount)
Personal investment cash amount
SHARE-BASED REMUNERATION
(SHORT-TERM BENEFITS)
COMPONENT
= Q
↑
Other Information
Basis of computation
- € 0.55 million (first period of office)
― € 1.28 million (from second period of office or fourth year of mandate)
-50% of target amount depends on ROCE achieved in the Automotive segment (ROCE component)
― € 2.115 million (Chairman of the Board of Management)
· € 1.152 million (from second period of office or fourth year of mandate)
- € 0.990 million (first period of office)
- Maximum amount of RoCE component p. a.:
― ROCE factor may not exceed 1.8
Minimum, target and maximum values for ROCE are defined before the start of the financial year
― € 2.35 million (Chairman of the Board of Management)
- ROCE factor is derived from the ROCE achieved in the Automotive segment for the grant year
― € 1.175 million (Chairman of the Board of Management)
― € 0.264 million (from second period of office or fourth year of mandate)
- € 0.55 million (first period of office)
- Target amount RoCE component p. a. (50% of target amount of the personal investment cash amount):
― Payment after the Annual General Meeting at which the Company Financial Statements are presented for the relevant financial year
- 50% of the target amount depends on the achievement of predefined strategic focus targets (strategic focus target component)
- Capped at 180 % of target amount
― Formula: 50% of target amount x RoCE factor
Bonus
Share-based remuneration component
Chairman of the Board of Management: € 700,000
The total remuneration of the current members of the Board
of Management and the Supervisory Board of BMW AG
expensed for the financial year 2021 in accordance with IFRS
comprised the following:
43 Remuneration of members of the Board of
Management and Supervisory Board
← = Q
Other Information
Remuneration Report
Corporate Governance
in € million
Group Financial Statements
Notes to the Group
Financial Statements
To Our Stakeholders
BMW Group Report 2021
223
The Board of Management and the Supervisory Board of
Bayerische Motoren Werke Aktiengesellschaft have issued
the prescribed Declaration of Compliance pursuant to § 161
of the German Stock Corporation Act. It is included in the
Corporate Governance Statement, which is on BMW Group
website at www.bmwgroup.com/entsprechenserklaerung.
42 Declaration with respect to the
Corporate Governance Code
The previous year's value includes the fair value of the pro-
grammes at grant date as well as the shares granted to
members of the Board of Management.
Combined Management Report
The fair value of the programmes for senior heads of depart-
ment at the date of grant of the share-based remuneration
components was € 1,317,984 (2020: € 987,759), based on a
total of 18,341 shares (2020: 13,444 shares) of BMW AG
common stock or a corresponding cash-based settlement
measured at the relevant market share price prevailing on
the grant date.
2021
Compensation to members of the
Compensation to members of the
0.6
0.5
0.6
1.1
tion of board activity
2020
Benefits in conjunction with the termina-
8.5
Other long-term benefits
16.9
35.3
Short-term benefits
Board of Management
3.9
Supervisory Board
The total expense recognised in 2021 for the share-based
remuneration component of current and former Board of
Management members and senior heads of department
was € 2,743,398 (2020: € 1,820,265).
The cash-settlement obligation for the share-based remu-
neration component is measured at its fair value at the bal-
ance sheet date (based on the closing price of BMW AG
common stock in Xetra trading at 31 December 2021).
In the financial year 2021, the BMW Group recorded a per-
sonnel expense of € 23 million (2020: € 9 million) for the
Employee Share Programme, corresponding to the differ-
ence between the market price and the reduced price of the
shares of preferred stock purchased by employees.
In the financial year under report, 1,718,070 (2020: 822,124)
shares of preferred stock were acquired by employees. This
figure includes 1,715,000 (2020: 822,000) shares out of
Authorised Capital 2019, with the remainder bought back via
the stock exchange. Every year the Board of Management of
BMW AG decides whether the scheme is to be continued.
In connection with the Employee Share Programme Share
Programme, non-voting shares of preferred stock in BMW AG
were granted in 2021 to qualifying employees at favourable
conditions (see note 31 Equity for the number and price of
issued shares). Participants in the programme were entitled
in 2021 to acquire packages of 10, 20, 30, 40 or 90 shares of
preferred stock (2020: 8, 18 or 28) with a discount in each
case of € 13.50 (2020: € 11.50) per share compared to the
market price (average closing price in Xetra trading in the
period from 28 October to 3 November 2021: € 74.28). The
programme was open to employees who have been in an
employment relationship with BMW AG or a wholly-owned
BMW AG subsidiary in Germany, provided that the manage-
ment of the subsidiary concerned has decided to participate
in the programme. At the date of the announcement of the
programme, there was a requirement for the employment
relationship to have existed without interruption for at least
one year and for it to continue until the transfer of the shares
of preferred stock. Shares of preferred stock acquired in con-
junction with the Employee Share Programme are subject to
a vesting period of four years, starting from 1 January of the
year in which the shares were acquired.
Employee Share Programme
The BMW Group provides three share-based programmes:
one for eligible employees, one for senior heads of depart-
ment and one for members of the Board of Management.
41 Share-based remuneration
Programme for senior heads of department and members of the
Board of Management
← = Q
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
Apart from this, no other events have occurred since the end
of the financial year which could have a major impact on the
results of operations, financial position and net assets of
BMW AG and the BMW Group.
To Our Stakeholders
Other Information
The total carrying amount of the provision for the share-
based remuneration component of current and former Board
of Management members and senior heads of department
at 31 December 2021 was € 8,347,245 (2020: € 6,383,766).
The share-based remuneration programme in place in 2021
for qualifying departmental heads is aimed at rewarding a
long-term, entrepreneurial approach to running the business
on a sustainable basis. Under the terms of the programme,
participants give a commitment to invest an amount equiva-
lent to 26% of their performance-based bonus in BMW com-
mon stock and to hold the shares so acquired for a minimum
of four years. In return for the investment requirement,
BMW AG pays 100% of the investment amount as a net
subsidy. Once the four-year holding period requirement has
been fulfilled, the participants receive - for each three com-
mon stock shares held and at the Company's option - one
additional share of common stock or the cash equivalent, to
be decided at BMW AG's discretion.
ponent is determined on the basis of at least two strategic
focus targets that are required to be defined before the start
of the financial year. Minimum, target and maximum values
are defined and factors stipulated for the Automotive seg-
ment's RoCE as well as for each strategic focus target. After
the end of the financial year, the relevant factors are deter-
mined on the basis of target achievement.
The remuneration system for Board of Management mem-
bers no longer provides for a matching component for finan-
cial years from 2021 onwards.
The share-based remuneration component is measured at
its fair value at each balance sheet date between grant and
settlement date, and on the settlement date. The amounts
are recognised as personnel expense on a straight-line basis
over the vesting period and reported in the balance sheet as
a provision.
← = Q
Other Information
Remuneration Report
Corporate Governance
With effect from the financial year 2021, the members of the
Board of Management receive an earmarked cash amount
(personal investment cash amount), net of taxes and deduc-
tions to be invested in BMW AG common stock. The personal
investment cash amount is paid after the end of the Annual
General Meeting, at which the separate financial statements
of BMW AG for the relevant financial year are presented. The
shares of common stock are purchased immediately after
the personal investment cash amount has been paid out,
and, with effect from the date of purchase, are subject to a
holding period of four years. The target amount for the per-
sonal investment cash amount comprises a ROCE compo-
nent (50%) and a strategic focus targets component (50%).
The RoCE component is determined on the basis of a RoCE
factor that depends on the RoCE achieved in the Automotive
segment in the grant year. The strategic focus targets com-
Group Financial Statements
Notes to the Group
Financial Statements
To Our Stakeholders
BMW Group Report 2021
222
The members of the Board of Management in office at the
end of the reporting period hold 58,560 shares of BMW
common stock based on holding requirements arising from
share-based remuneration for the financial years 2017 to
2020 (2020: 44,037).
In the event of death or invalidity, special rules apply for early
payment of share-based remuneration components based
on the target amounts. Insofar the service contract is prema-
turely terminated and the Company has an extraordinary
right of termination, or if the Board member resigns without
the Company's agreement, entitlements to amounts as yet
unpaid relating to share-based remuneration are forfeited.
Up to and including 2020, the members of the Board of
Management received an earmarked cash amount (invest-
ment component) amounting to 45% of the gross amount of
the bonus, which, net of taxes and deductions, was required
to be invested in BMW common stock, also subject to a four-
year holding period, after which the member of the Board of
Management received, at BMW AG's discretion, one addi-
tional share of common stock for every three shares held or,
alternatively, the equivalent value in cash (matching compo-
nent).
Combined Management Report
Base remuneration has the effect of discouraging unduly high levels of risk being taken to achieve short-term targets, thus contributing to the long-term development of the Company
- Fixed remuneration components are a prerequisite for competitive levels of remuneration to attract and retain Board of Management members with the right qualifications
Current compensation
5.5
Base remuneration
(SHORT-TERM BENEFITS)
FIXED REMUNERATION COMPONENTS
REMUNERATION BOARD OF MANAGEMENT AND SUPERVISORY BOARD
COMPONENT
and the Supervisory Board is structured as follows:
The remuneration of members of the Board of Management
Parameters/measurement base, applicable amounts
Financial Statements
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
To Our Stakeholders
← = Q
BMW Group Report 2021
Fringe benefits
Retirement benefits
(other long-term benefits)
Member of the Board of Management: € 400,000
Pension contribution p. a.:
Benefits based on amounts credited to individual savings accounts for contributions paid and interest earned, various forms of disbursement
The Supervisory Board may award payments to compensate for loss of salary from a previous employment relationship and to cover relocation costs in the case of new entrants.
Defined contribution system with a guaranteed minimum return
Contractual agreement, main points: non-cash benefits from the use of company cars and the BMW chauffeur service, insurance premiums, contributions towards security systems, em-
ployee discounts
― Monthly payment on time-apportioned basis
Compensation payments
- € 1.95 million p. a.
― € 1.05 million p. a. (from second period of office or fourth year of mandate)
― € 0.90 million p. a. (first period of office)
Member of the Board of Management:
Bonus
VARIABLE REMUNERATION COMPONENTS
(SHORT-TERM BENEFITS)
Remuneration linked to corporate strategy
Chairman of the Board of Management:
Total expense
224
* If a Supervisory Board member performs several additional remuneration-relevant functions, their re-
muneration is measured only on the basis of the function that is remunerated with the highest amount.
Factor Amount in € p. a.
REMUNERATION SUPERVISORY BOARD*
Supervisory Board members who perform remuneration-rel-
evant functions, such as the Chairman or Deputy Chairman
of the Supervisory Board, as well as chairs and members of
committees (provided the committee has met on at least
three days of the financial year) receive higher remuneration
due to the additional requirements.
In accordance with the Articles of Incorporation, each mem-
ber of the Supervisory Board of BMW AG who does not per-
form any additional remuneration-relevant functions receives
a fixed remuneration of € 200,000 p. a. plus an attendance
fee of € 2,000 per plenary meeting in addition to the reim-
bursement of reasonable expenses.
The remuneration arrangements applicable for members of
the Supervisory Board do not include any stock options,
value appreciation rights comparable to stock options or any
other share-based remuneration components.
Pension obligations to former members of the Board of Man-
agement and their surviving dependants, also determined in
accordance with IAS 19, amounted to € 114.3 million (2020:
€ 118.8 million).
Member of the Supervisory Board
Pension obligations to current members of the Board of
Management are covered by provisions amounting to
€ 18.9 million (2020: € 14.7 million), determined in accord-
ance with IAS 19.
The expense recognised for the current members of the
Board of Management for the share-based remuneration
arrangements in place up to and including 2020 amounted
to € 0.5 million (2020: € 0.6 million). At 31 December 2021,
the provision for the share-based remuneration component
amounted to € 1.6 million (2020: € 1.6 million).
No further shares were granted to active current members of
the Board of Management during the financial year under
report (2020: 7,001 shares). In the previous year, the fair
value of the shares granted amounted to € 0.5 million.
For the financial years 2018 up to and including the financial
year 2020, variable cash remuneration was supplemented
by a multi-year and future-oriented Performance Cash Plan
(PCP). The PCP assessment period comprises three years,
the grant year and the two subsequent years. The PCP is
paid out after the end of the three-year assessment period.
27.6
50.9
5.6
The total remuneration of former members of the Board of
Management and their dependants amounted to € 14.2 mil-
lion (2020: € 13.1 million).
No loans or advances were granted to members of the Board
of Management and the Supervisory Board by BMW AG or
its subsidiaries in the financial year 2021, nor were any con-
tingent liabilities entered into in their favour. During the year
under report, members of the Board of Management and the
Supervisory Board concluded vehicle leasing contracts and
related service contracts (service and repair) with BMW Group
entities at market conditions.
1.00
Chairman of the Supervisory Board
Deputy Chairman of the Supervisory Board
Chairman of another committee
Member of the Audit Committee
Member of another committee
300,000
1.50
400,000
2.00
400,000
200,000
2.00
2.25
Chairman of the Audit Committee
400,000
2.00
600,000
3.00
450,000
228
← = Q
To Our Stakeholders
130,241
59,677
Financial result of Motorcycles segment
1
- 3
Liabilities of Automotive segment
not subject to interest
36,910
35,769
Elimination of inter-segment items
-257
910
Non-operating assets - Motorcycles
40
39
Group profit before tax
16,060
5,222
30,333
32,434
Total for reportable segments
132,062
136,113
Information by
66,942
Total liabilities - Financial Services
segment
Reconciliation of capital expenditure on
Non-current assets
External revenues
782
735
Liabilities of Motorcycles segment not
subject to interest
non-current assets
Non-operating assets - Automotive
560
1,935
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
To Our Stakeholders
The Other Entities' segment result includes interest and sim-
ilar income amounting to € 875 million (2020: € 1,169 mil-
lion) and interest and similar expenses amounting to
€ 974 million (2020: € 1,232 million).
BMW Group Report 2021
31.12.2020 31.12.2021 31.12.2020 31.12.2021 31.12.2020
86,417 229,527 216,658
5,112
3,585
Group
to Group figures
96,201
98,226
97,917
230
Non-operating assets - Other Entities
segment
The information disclosed for capital expenditure and depre-
ciation and amortisation relates to non-current property,
plant and equipment, intangible assets and leased products.
Financial Statements
Financial result of Automotive segment
133,326
Reconciliation of segment assets
Total for reportable segments
3,755
14,381
Total for reportable segments
The total of the segment figures can be reconciled to the cor-
responding Group figures as follows:
Reconciliation of segment result
in € million
2020
2021
in € million
In the information by region, external revenues are based on
the location of the customer. The information disclosed for
non-current assets relates to property, plant and equipment,
intangible assets and leased products. Eliminations dis-
closed for non-current assets relate to leased products.
The reconciliation of segment figures to the corresponding
total Group figures shows the inter-segment items. Reve-
nues with other segments result mainly from the sale of
vehicles, for which the Financial Services segment has con-
cluded a financing or lease contract. Eliminations of
inter-segment items in the reconciliation to the Group profit
before tax, capital expenditure and depreciation and amorti-
sation mainly result from the sale of vehicles in the Automo-
tive segment, which are subsequently accounted for as
leased products in the Financial Services segment. In the
reconciliation of segment assets to Group assets, elimina-
tions relate mainly to intragroup financing balances.
31.12.2021 31.12.2020
region in E million
Germany
2021
2020
328
2,130
2,562
Other regions
18,151
17,027
354
Total for reportable segments
3,222
3,379
3,821
Rest of the Americas
tion on non-current assets
1,821
3,192
2,315
Elimination of inter-segment items
- 6,175
BMW Group Report 2021
* Prior year's figures adjusted
76,187
80,070
98,990
111,239
-5,269
Group
11,758
on non-current assets
Total Group depreciation and amortisation
- 6,764
-7,317
Eliminations
11,976
31. 12. 2020 31.12.2021
15,555
10,433
Rest of Asia
2020*
40,254
213
2021
41,202
308
21,315
25,333
China
7,007
- 148,919
Total Group capital expenditure on
-152,215
- 6,291
-6,451
Elimination of inter-segment items
7,676
13,638
14,206
Elimination of inter-segment items
10,875
USA
17,837
Reconciliation of depreciation and amortisa-
17,630
19,134
30,258
32,920
Rest of Europe
21,522
216,658
Total Group assets
24,042
25,983
non-current assets
19,487
20,878
229,527
BMW Group Report 2021
17,324
619
2020
2021
2020
2021
2020
2021
2021
2020
External revenues
in € million
Group
Reconciliation
to Group figures
Other Entities
Financial Services
2021
Motorcycles
2020
2020
-13
12,747
18,303
Inter-segment revenues
98,990
111,239
2021
1
28,590
31,304
2,293
2,761
68,106
77,173
1
- 9
Automotive
Write-downs on inventories to their net realisable value
amounting to € 41 million (2020: € 59 million) were recog-
nised by the Automotive segment in the financial year 2021.
The reversal of impairment losses had a positive impact of
€ 5 million (2020: € 2 million) on the segment result of the
Automotive segment.
Holding and Group financing companies are reported in the
Other Entities segment. This segment also includes the
operating companies BMW (UK) Investments Ltd. and
Bavaria Lloyd Reisebüro GmbH, which are not allocated to
one of the other segments.
Automobile leasing, retail and dealership financing, mul-
ti-brand fleet business, customer deposit business and
insurance activities are the main activities allocated to the
Financial Services segment.
Activities relating to the development, manufacture, assem-
bly and sale of motorcycles as well as spare parts and acces-
sories are reported in the Motorcycles segment.
Within the Automotive segment, the BMW Group develops,
manufactures, assembles and sells automobiles powered
with all-electric drive systems, plug-in hybrid systems and
highly efficient combustion engines, as well as spare parts,
accessories and mobility services under the BMW, MINI and
Rolls-Royce brands. BMW and MINI brand products are sold
in Germany through branches of BMW AG and by independ-
ent, authorised dealers. Sales outside Germany are handled
mainly by subsidiary companies and by independent import
companies in some markets. Rolls-Royce brand vehicles are
sold in selected markets via subsidiary companies and else-
where by independent, authorised dealers.
The activities of the BMW Group are broken down into the
operating segments Automotive, Motorcycles, Financial Ser-
vices and Other Entities.
For the purposes of presenting segment information, the
activities of the BMW Group are divided into operating seg-
ments in accordance with IFRS 8. The segmentation follows
the internal management and reporting system and takes
account of the organisational structure of the BMW Group
based on the various products and services of the reportable
segments.
Internal management and reporting
45 Explanatory notes to segment information
Information on reportable segments
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
SEGMENT INFORMATION
The result of the Financial Services segment was negatively
impacted by impairment losses totalling € 390 million (2020:
€ 362 million) recognised on leased products. Income from
the reversal of impairment losses on leased products
amounted to € 134 million (2020: € 126 million).
Segment information is prepared as a general rule in con-
formity with the accounting policies adopted for preparing
and presenting the Group Financial Statements. Exceptions
to this general principle include the treatment of inter-seg-
ment warranties, the earnings impact of which is allocated to
the Automotive and Financial Services segments on the
basis used internally to manage the business. In addition,
intragroup repurchase agreements between the Automotive
and Financial Services segments pursuant to IFRS 15,
impairment allowances on intragroup receivables and
changes in the value of consolidated other investments pur-
suant to IFRS 9 are also excluded. Intragroup leasing
arrangements are not reflected in the internal management
and reporting system on an IFRS 16 basis and therefore, in
The role of "chief operating decision maker" with respect to
resource allocation and performance assessment of the
reportable segment is embodied in the full Board of Man-
agement. For this purpose, different measures of segment
performance as well as segment assets are taken into
account in the operating segments.
Segment information by operating segment is as follows:
The success of the Other Entities segment is assessed on
the basis of profit or loss before tax. The corresponding
measure of segment assets used to manage the Other Enti-
ties segment is total assets less asset-side income tax items
and intragroup investments.
The success of the Financial Services segment is measured
on the basis of return on equity (RoE). Profit before tax there-
fore represents the relevant measure of segment earnings.
The measure of segment assets in the Financial Services
segment corresponds to net assets, defined as total assets
less total liabilities.
← = Q
Other Information
Remuneration Report
accordance with IFRS 8, do not give rise to any changes in
the presentation of segment information. Inter-segment
receivables and payables, provisions, income, expenses and
profits are eliminated upon consolidation. Inter-segment
revenues are based on market prices. Centralised cost com-
ponents are included in the respective segments, without
resulting in cash settlement.
Corporate Governance
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
229
With effect from the reporting year 2022, a simplified defini-
tion of capital employed will be applied to make the RoCE
calculation more comprehensible and transparent for users.
Further information is provided in the section "Managing
operational performance at segment level" within the Com-
bined Management Report.
The Automotive and Motorcycles segments are managed on
the basis of return on capital employed (ROCE). The relevant
measure of segment results used is therefore profit before
financial result. Capital employed is the corresponding meas-
ure of segment assets used to determine how to allocate
resources and comprises all current and non-current opera-
tional assets after deduction of liabilities used operationally
which are generally not subject to interest (e. g. trade payables).
Group Financial Statements
Notes to the Group
Financial Statements
681
1,563
4
- 6,291
-6,451
-5,269
12,054
10,567
119
119
25,983
5,978
Depreciation and amortisation on non-current assets
24,146
24,936
146
169
6,041
6,341
7,329
24,042
11,758
15,779
3,585
17,466
5,112
31. 12. 2020 31.12.2021
31. 12. 2020 31.12.2021
31.12.2021
Other Entities
-6,175
Financial Services
Automotive
Reconciliation
Investments accounted for using the equity method
Segment assets
in € million
11,976
Motorcycles
1,454
Capital expenditure on non-current assets
1,520
-14,194 111,239
- 19,857
3
5
30,044
32,867
98,990
2,284
80,853
95,476
Total revenues
- 14,194
- 19,857
2
2,748
920
Segment result
1,679
920
1,520
Result from equity accounted investments
5,222
16,060
1,467
9,870
221
531
1,725
3,753
103
227
2,162
- 235
231
BMW Group Report 2021
BMW of Manhattan Inc., Wilmington, Delaware
0
0
0
0
0
Africa
BMW Financial Services (South Africa) (Pty) Ltd., Midrand
BMW (South Africa) (Pty) Ltd., Pretoria
Profit / loss in € million Capital investment in %
104
100
100
SuperDrive Investments (RF) Ltd., Cape Town¹¹
0
Asia
BMW Automotive Finance (China) Co. Ltd., Beijing
2,561
13
306
Equity in € million
↑
0
0
| |
0
0
0
237
= Q
BMW Group Report 2021
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
Companies
BMW Canada Auto Trust 2021-1, Richmond Hill, Ontario 11
BMW Vehicle Lease Trust 2021-2, Wilmington, Delaware11
BMW Vehicle Lease Trust 2021-1, Wilmington, Delaware 11
BMW Vehicle Owner Trust 2019-A, Wilmington, Delaware¹¹
BMW Vehicle Owner Trust 2020-A, Wilmington, Delaware¹¹
To Our Stakeholders
100
58
559
100
100
BMW Manufacturing (Thailand) Co. Ltd., Rayong
116
94
100
BMW (Thailand) Co. Ltd., Bangkok
128
100
100
BMW Asia Pte. Ltd., Singapore
BMW Receivables 1 Inc., Richmond Hill, Ontario
I
100
BMW Asia Technology Centre Sdn Bhd, Kuala Lumpur
100
BMW Asia Pacific Capital Pte Ltd., Singapore
BMW China Investment Ltd., Beijing⁹
BMW Japan Corp., Tokyo
51
559
100
BMW Japan Finance Corp., Tokyo
527
66
100
BMW Financial Services Korea Co. Ltd., Seoul
58
279
100
BMW Korea Co. Ltd., Seoul
269
119
100
Herald International Financial Leasing Co. Ltd., Tianjin
210
71
100
100
100
BMW Consolidation Services Co. LLC, Wilmington, Delaware
BMW de Argentina S. A., Buenos Aires
BMW de Mexico S. A. de C. V., Mexico City
I
100
100
100
BMW Auto Leasing LLC, Wilmington, Delaware
100
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Other Information
236
← = Q
100
100
1,473
202
100
BMW of North America LLC, Wilmington, Delaware
948
549
100
BMW Acquisitions Ltda., São Paulo
BMW Manufacturing Indústria de Motos da Amazônia Ltda., Manaus
405
100
BMW Canada Inc., Richmond Hill, Ontario
663
324
100
BMW (US) Holding Corp., Wilmington, Delaware
698
Financial Statements
Companies
BMW do Brasil Ltda., Araquari
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Profit / loss in € million Capital investment in %
Equity in € million
BMW Canada Auto Trust 2019-1, Richmond Hill, Ontario 11
BMW Canada Auto Trust 2020-1, Richmond Hill, Ontario¹
BMW Extended Service Corporation, Wilmington, Delaware
BMW Facility Partners LLC, Wilmington, Delaware
BMW Financeira S. A. Credito, Financiamento e Investimento, São Paulo
BMW Financial Services de Mexico S. A. de C. V. SOFOM, Mexico City
BMW Financial Services NA LLC, Wilmington, Delaware
BMW FS Funding Corporation, Wilmington, Delaware
BMW FS Receivables Corporation, Wilmington, Delaware
BMW FS Securities LLC, Wilmington, Delaware
BMW Insurance Agency Inc., Wilmington, Delaware
BMW Leasing do Brasil S. A., São Paulo
BMW Receivables 2 Inc., Richmond Hill, Ontario
BMW Receivables Ltd. Partnership, Richmond Hill, Ontario
BMW SLP, S. A. de C. V., Villa de Reyes
BMW US Capital LLC, Wilmington, Delaware
Rolls-Royce Motor Cars NA LLC, Wilmington, Delaware
SB Acquisitions LLC, Wilmington, Delaware
BMW 2020- A Lease Conduit, Wilmington, Delaware 11
BMW 2021- A Lease Conduit, Wilmington, Delaware 11
BMW Canada 2018-A, Richmond Hill, Ontario 11
BMW China Automotive Trading Ltd., Beijing
BMW China Services Ltd., Beijing
100
100
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Other Information
← = Q
BMW Group Report 2021
Financial Statements
Companies
DOMESTIC'
Alphabet Fleetservices GmbH, Munich 4
Automag GmbH, Munich
BMW Car IT GmbH, Munich'
BMW i Ventures GmbH, Munich
IDEALworks GmbH, Munich
BMW AG'S NON-CONSOLIDATED COMPANIES AT 31 DECEMBER 2021
FOREIGN7
240
0
BMW Financial Services New Zealand Ltd., Auckland
BMW Melbourne Pty. Ltd., Melbourne
BMW New Zealand Ltd., Auckland
BMW Sydney Pty. Ltd., Sydney
Bavarian Sky Australia Trust A, Mulgrave 11
BMW Australia Trust 2011-2, Mulgrave 11
Equity in € million
0
Profit / loss in € million Capital investment in %
0
100
100
100
100
100
100
0
Equity in € million
Profit / loss in € million Capital investment in %
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
BMW Manufacturing LP, Woodcliff Lake, New Jersey
100
100
100
000 BMW Leasing, Moscow
100
100
100
100
Europe
Alphabet Insurance Services Polska Sp. z o. o., Warsaw
BMW (GB) Ltd., Farnborough
BMW (UK) Pensions Services Ltd., Hams Hall
BMW Car Club Ltd., Farnborough
BMW China Capital B. V., The Hague
BMW Drivers Club Ltd., Farnborough
BMW Financial Services Czech Republic s. r.o., Prague
BMW Financial Services Slovakia s. r.o., Bratislava
BMW Group Benefit Trust Ltd., Farnborough
BMW Manufacturing Hungary Kft., Debrecen
BMW Manufacturing Russland 000, Kaliningrad
BMW Mobility Development Center s. r.o., Prague
BMW Motorsport Ltd., Farnborough
BMW Poland sp. z o. o., Warsaw
BMW Russland Automotive 000, Kaliningrad
John Cooper Garages Ltd., Farnborough
John Cooper Works Ltd., Farnborough
BMW Australia Ltd., Melbourne
100
BMW Australia Finance Ltd., Mulgrave
Bavarian Sky Korea 2021-1, Seoul 11
2017-3 ABL, Tokyo 11
2018-1 ABL, Tokyo 11
2018-2 ABL, Tokyo 11
2018-3 ABL, Tokyo 11
2019-1 ABL, Tokyo 11
2019-2 ABL, Tokyo 11
2019-3 ABL, Tokyo 11
BMW Malaysia Sdn Bhd, Kuala Lumpur
2020-1 ABL, Tokyo 11
2021-2 ABL, Tokyo 11
Bavarian Sky China 2019-2, Beijing 11
Bavarian Sky China 2019-3, Beijing 11
Bavarian Sky China 2020-1, Beijing 11
Bavarian Sky China 2020-2, Beijing
Bavarian Sky China 2021-1, Beijing
11
Bavarian Sky China 2021-2, Beijing 11
Bavarian Sky China 2021-3, Beijing 11
2021-1 ABL, Tokyo 11
Bavarian Sky China Leasing 2020-1, Tianjin 11
PT BMW Indonesia, Jakarta
BMW Leasing (Thailand) Co. Ltd., Bangkok
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur
100
238
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
BMW Tokyo Corp., Tokyo
Corporate Governance
Other Information
← = Q
Financial Statements
Companies
BMW Holding Malaysia Sdn Bhd, Kuala Lumpur
BMW India Financial Services Private Ltd., Gurgaon
BMW India Private Ltd., Gurgaon
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur
Remuneration Report
Equity in € million
Profit / loss in € million Capital investment in %
100
0
0
0
0
239
BMW Group Report 2021
To Our Stakeholders
0
Combined Management Report
Corporate Governance
Remuneration Report
Other Information
← = Q
Companies
Bavarian Sky China Leasing 2021-1, Tianjin
11
Group Financial Statements
Notes to the Group
Financial Statements
0
0
0
100
100
100
100
100
100
51
0
0
0
0
0
0
0
0
0
0
Oceania
389
Financial Services Vehicle Trust, Wilmington, Delaware
BMW Manufacturing Co. LLC, Wilmington, Delaware
BMW Bank of North America Inc., Salt Lake City, Utah
515
387
100
Alphabet España Fleet Management S. A.U., Madrid
417
19
100
BMW i Ventures SCS SICAV-RAIF, Senningerberg
BMW (UK) Holdings Ltd., Farnborough
779
100
BMW Russland Trading 000, Moscow
315
313
100
BMW Finance N. V., The Hague
316
BMW Finance S. N.C., Guyancourt
100
806
3,286
1,167
100
BMW Financial Services (GB) Ltd., Farnborough
1,116
488
100
5
BMW Motoren GmbH, Steyr
192
100
BMW (Schweiz) AG, Dielsdorf
879
8
100
BMW Hellas Trade of Cars A. E., Kifissia
937
BMW Austria Bank GmbH, Salzburg
BMW (UK) Ltd., Farnborough
ALPHABET (GB) Ltd., Farnborough
19
100
Alphabet Austria Fuhrparkmanagement GmbH, Salzburg
Alphabet Belgium Long Term Rental NV, Aartselaar
Alphabet France Fleet Management S. A.S., Saint-Quentin-en-Yvelines
Alphabet Fuhrparkmanagement (Schweiz) AG, Dielsdorf
Alphabet Italia S. p.A., Trento
118
100
I
100
100
100
233
BMW Group Report 2021
To Our Stakeholders
2,042
100
92
132
251
97
100
251
46
100
203
8
100
198
82
100
181
189
100
Rolls-Royce Motor Cars Ltd., Farnborough
BMW Finanzdienstleistungen (Schweiz) AG, Dielsdorf
BMW Österreich Holding GmbH, Steyr
Combined Management Report
100
4,055
BMW Vermögensverwaltungs GmbH, Munich
Bürohaus Petuelring GmbH, Munich
LARGUS Grundstücks-Verwaltungsgesellschaft mbH, Munich
Rolls-Royce Motor Cars GmbH, Munich 4,5,6
BAVARIA-LLOYD Reisebüro GmbH, Munich
Equity in € million
Profit / loss in € million Capital investment in %
BMW M GmbH Gesellschaft für individuelle Automobile, Munich 3,5,6
8,390
100
4,515
100
2,075
251
100
213
1,494
3
BMW High Power Charging Beteiligungs GmbH, Munich 4,6
BMW Finanz Verwaltungs GmbH, Munich
BMW Anlagen Verwaltungs GmbH, Munich 3,6
BMW Vertriebszentren Verwaltungs GmbH, Munich
Parkhaus Oberwiesenfeld GmbH, Munich
Alphabet Fuhrparkmanagement GmbH, Munich 4
Alphabet International GmbH, Munich 4,5,6
Bavaria Wirtschaftsagentur GmbH, Munich 3,5,6
BMW Fahrzeugtechnik GmbH, Eisenach 3,5,6
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Other Information
← = Q
BMW Hams Hall Motoren GmbH, Munich 4,5,6
Financial Statements
AT 31 DECEMBER 2021
AFFILIATED COMPANIES (SUBSIDIARIES) OF BMW AG AT 31 DECEMBER 2021
Companies
46 List of investments at 31 December 2021
The List of Investments of BMW AG pursuant to § 285 and
§ 313 HGB is presented below. Disclosures for equity and
earnings and for investments are not made if they are of "mi-
nor significance" for the results of operations, financial posi-
tion and net assets of BMW AG pursuant to § 286 (3) sen-
tence 1 no. 1 HGB and § 313 (3) sentence 4 HGB. It is also
shown in the list which subsidiaries apply the exemptions
available in § 264 (3) and § 264 b HGB with regard to the
publication of annual financial statements and the drawing
up of a management report and/or notes to the financial
statements (footnotes 5 and 6). The Group Financial State-
ments of BMW AG serve as exempting consolidated finan-
cial statements for these companies.
DOMESTIC 1, 10
BMW Beteiligungs GmbH & Co. KG, Munich 6
BMW INTEC Beteiligungs GmbH, Munich 3,6
BMW Bank GmbH,
Munich 3
LIST OF INVESTMENTS
100
179
100
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Companies
To Our Stakeholders
FOREIGN²
Equity in € million
Profit / loss in € million Capital investment in %
BMW Holding B. V., The Hague
17,535
2,049
100
BMW International Holding B. V., The Hague
Europe
BMW Group Report 2021
232
51
173
4
100
106
27
100
100
100
100
100
100
100
100
100
100
100
100
2,185
Group Financial Statements
Notes to the Group
100
Remuneration Report
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
BMW Renting (Portugal) Lda., Porto Salvo
BMW Romeania S. R.L., Bucharest
BMW Services Ltd., Farnborough
BMW Slovenia distribucija motornih vozil d. o.o., Ljubljana
BMW Slovenská republika s. r.o., Bratislava
BMW Vertriebs GmbH, Salzburg
Oy BMW Suomi AB, Helsinki
100
Corporate Governance
Swindon Pressings Ltd., Farnborough
The British Motor Corporation Ltd., Birmingham
Triumph Motor Company Ltd., Farnborough
Bavarian Sky Europe S. A. Compartment A, Luxembourg 11
Equity in € million
Profit / loss in € million Capital investment in %
100
Riley Motors Ltd., Farnborough
100
100
100
Bavarian Sky UK 4 plc, London 11
0
0
0
0
0
0
Bavarian Sky S. A., Compartment German Auto Leases 5, Luxembourg 11
Bavarian Sky S. A., Compartment German Auto Leases 6, Luxembourg
Bavarian Sky S. A., Compartment German Auto Loans 10, Luxembourg 11
Bavarian Sky S. A., Compartment German Auto Loans 9, Luxembourg 11
Bavarian Sky UK 3 plc, London 11
Bavarian Sky UK A Ltd., London 11
Bavarian Sky UK C Ltd., London 11
Bavarian Sky UK D Ltd., London"
0
0
0
0
The Americas 10
Bavarian Sky UK B Ltd., London 11
11
0
Bavarian Sky S. A., Compartment B, Luxembourg 11
0
235
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
↑
= Q
Companies
Equity in € million
Profit / loss in € million Capital investment in %
Bavarian Sky FTC, Compartment French Auto Leases 4, Paris 11
Bavarian Sky S. A., Compartment A, Luxembourg 11
0
0
BMW Portugal Lda., Porto Salvo
BMW Northern Europe AB, Stockholm
Park Lane Ltd., Farnborough
BMW Nederland B. V., The Hague
BMW Central Medical Trustees Ltd., Farnborough
BMW Czech Republic s. r.o., Prague
BMW Danmark A/S, Copenhagen
BMW Distribution S. A.S., Vélizy-Villacoublay
BMW España Finance S. L., Madrid
BMW Financial Services (Ireland) DAC, Dublin
BMW Financial Services B. V., The Hague
BMW Bulgaria EOOD, Sofia
BMW Financial Services Belgium S. A./ N. V., Bornem
BMW Financial Services Denmark A/S, Copenhagen
BMW Financial Services Polska Sp. z o. o., Warsaw
Profit / loss in € million Capital investment in %
100
100
100
100
100
100
BMW Norge AS, Fornebu
100
BMW Belgium Luxembourg S. A./ N. V., Bornem
BMW Automotive (Ireland) Ltd., Dublin
Other Information
← = Q
Financial Statements
Companies
Alphabet Luxembourg S. A., Leudelange
Alphabet Nederland B. V., Breda
Alphabet Polska Fleet Management Sp. z o. o., Warsaw
BMW Bank 000, Moscow
Bavaria Reinsurance Malta Ltd., Floriana
BiV Carry II SCS, Senningerberg⁹
BLMC Ltd., Farnborough
BMW (UK) Capital plc, Farnborough
BMW (UK) Investments Ltd., Farnborough
BMW (UK) Manufacturing Ltd., Farnborough
BMW Austria GmbH, Salzburg
BMW Austria Leasing GmbH, Salzburg
BiV Carry ISCS, Senningerberg
100
Equity in € million
100
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Statements
Companies
Combined Management Report
100
BMW Hungary Kft., Vecsés ⁹
BMW Iberica S. A., Madrid
BMW International Investment B. V., The Hague
BMW Italia Retail S. r.I., Rome
BMW Italia S. p.A., San Donato Milanese
BMW Madrid S. L., Madrid
BMW Malta Ltd., Floriana
BMW France S. A., Montigny-le-Bretonneux
To Our Stakeholders
BMW Financial Services Scandinavia AB, Sollentuna
234
BMW Group Report 2021
100
100
100
☐
100
100
100
100
100
100
100
100
100
100
100
100
100
The Americas
217-07 Northern Boulevard Corporation, Wilmington, Delaware
BMW Experience Centre Inc., Richmond Hill, Ontario
100
BMW Mobility Services LLC, Wilmington, Delaware
BMW Operations Corp., Wilmington, Delaware
BMW Shared Services LLC, Wilmington, Delaware
BMW Technology Corp., Wilmington, Delaware
Designworks/USA Inc., Newbury Park, California
MINI Business Innovation LLC, Wilmington, Delaware
Toluca Planta de Automoviles S. A. de C. V., Mexico City
Urban X Accelerator SPV LLC, Wilmington, Delaware
100
Profit / loss in € million Capital investment in %
BMW i Ventures Inc., Wilmington, Delaware
BMW i Ventures LLC, Wilmington, Delaware
Equity in € million
BMW Group Report 2021
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
241
Companies
100
100
100
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
247
Frank Weber
Dr.-Ing. Joachim Post
Group Financial Statements
Dr. Nicolas Peter
Dr.-Ing. Milan Nedeljković
Ilka Horstmeier
Oliver Zipse
Aktiengesellschaft
Bayerische Motoren Werke
Munich, 8 March 2022
Pieter Nota
← = Q
Corporate Governance
Other Information
Representatives
258 Responsibility Statement by the Company's Legal
256 Overview of Supervisory Board Committees and their
Composition
255 Outgoing Members of the Supervisory Board
252 Current Members of the Supervisory Board
251 Outgoing Members of the Board of Management
Remuneration Report
251 Current Members of the Board of Management
250 Shareholders and Annual General Meeting
249 Supervisory Board
248 Board of Management
248 Information on the Company's Governing Constitution
248 Fundamental Aspects of Corporate Governance
(Part of the Combined Management Report)
← = Q
250 Declaration of Compliance
259 Independent Auditor's Report
Other Information
Corporate Governance
9 First-time consolidation.
The amounts shown for entities accounted for using the equity method and for proportionately consolidated entities correspond to the annual financial statements drawn up in accordance with uniform IFRS rules.
Equity not denominated in euro is translated into euro using the closing exchange rate at the balance sheet date, earnings are translated using the average rate.
7 These entities are neither consolidated nor accounted for using the equity method due to their overall immateriality for the Group Financial Statements.
6 Exemption from publication of financial statements applied in accordance with § 264 (3) and § 264b HBG.
5 Exemption from drawing up a management report applied in accordance with § 264 (3) and § 264b HBG.
4 Profit and Loss Transfer Agreement with a subsidiary of BMW AG.
10 Deconsolidation in the financial year 2021: BMW Verwaltungs GmbH (merger), BMW Leasing de Mexico S. A. de C. V. (merger).
3 Profit and Loss Transfer Agreement with BMW AG.
1 The amounts shown for the German affiliated companies correspond to the annual financial statements drawn up in accordance with German accounting rules (HGB).
Equity in € million Profit / loss in € million Capital investment in %
= Q
↑
Northvolt AB, Stockholm
FOREIGN
2 The amounts shown for the foreign affiliated companies correspond to the annual IFRS statements drawn up in accordance with uniform IFRS rules. Equity and earnings not denominated in euro are translated in
euro using the closing exchange rate at the balance sheet date.
Remuneration Report
11 Control on basis of economic dependence.
3
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
246
3
5
18
10
6
17
10
22
16
9
267 Independent Practitioner's Report
CORPORATE
GOVERNANCE
250
7 GRI-Index: 102-23
More information about the composition of the Supervisory
Board, and how it operates and its individual committees, is
provided in the Statement on Corporate Governance at
7 www.bmwgroup.com/statement on corporate governance.
BMW AG ensures that the Supervisory Board and its com-
mittees are appropriately equipped to carry out their duties.
This includes providing a central Supervisory Board office to
support the chairpersons in their coordination work.
The composition of the Presiding Board and the committees
is based on legal requirements, the Articles of Incorporation,
the rules of procedure and corporate governance principles,
particularly taking into account the professional expertise of
their members.
Taking into account the specific circumstances of the
BMW Group and the number of Board members, the Super-
visory Board has set up a Presiding Board and four commit-
tees, namely the Personnel Committee, the Audit Commit-
tee, the Nomination Committee and the Mediation
Committee. These serve to raise the effectiveness of the Su-
pervisory Board's work and facilitate the handling of com-
plex issues.
BMW Group Report 2021
The Supervisory Board has stated specific targets for its
composition, agreed to a diversity concept and determined a
competency profile. Members of the Supervisory Board are
responsible for undertaking any training required for the per-
formance of their duties, appropriately assisted by the
Company.
The Supervisory Board regularly assesses the effectiveness
of its activities and the activities carried out by its commit-
tees by means of a questionnaire as well as discussions with
The members of the Supervisory Board are required to re-
port any conflicts of interest immediately to the Chairman of
the Supervisory Board. The Supervisory Board reports on
the handling of such conflicts of interest to the Annual Gen-
eral Meeting. Conflicts of interest requiring to be disclosed
include, in particular, conflicts of interest that may result from
a directorship function or advisory role with clients, suppli-
ers, lenders or other business partners. If a Supervisory
Board member has significant and non-temporary conflicts
of interest, this will lead to the termination of the mandate.
Members of the Supervisory Board of BMW AG are obliged
to act in the best interest of the enterprise as a whole. They
may not pursue personal interests in their decisions or take
advantage of business opportunities intended for the benefit
of the Company.
reasons.
BMW AG's Supervisory Board is composed of ten share-
holder representatives (elected by the Annual General Meet-
ing) and ten employee representatives (elected in accord-
ance with the Co-Determination Act). The ten Supervisory
Board members representing employees comprise seven
Company employees, including one executive staff repre-
sentative, and three members elected following nomination
by unions. The Supervisory Board is charged with the task of
advising and supervising the Board of Management in its
management of BMW AG. It is involved in decisions of fun-
damental importance for BMW AG. The Supervisory Board
appoints the members of the Board of Management and
decides upon the level of remuneration they receive. The
Supervisory Board can revoke appointments for important
SUPERVISORY BOARD
the Chairman. The findings and conclusions resulting from
this self-assessment process are subsequently discussed in
plenary.
Governance).
To Our Stakeholders
Group Financial Statements
Further information on corporate management and govern-
ance, including the Declaration of Compliance pursuant to
§161 of the German Stock Corporation Act, can be found in
the Statement on Corporate Governance (§ 289f and § 315d
HGB) at www.bmwgroup.com/statement on corporate governance.
DECLARATION OF
COMPLIANCE
The Board of Management and the Supervisory Board of
BMW AG issue an annual Declaration of Compliance pursu-
ant to §161 of the German Stock Corporation Act (AktG) with
regard to recommendations of the Government Commission
on the German Corporate Governance Code as officially pub-
lished and valid at the date of the declaration. The current
and previous Declarations of Compliance of BMW AG are
available online at www.bmwgroup.com/compliance declaration. In
the Declaration of Compliance issued in December 2021, the
Board of Management and the Supervisory Board declared
that BMW Group would continue to comply with all recom-
mendations of the German Corporate Governance Code
(version dated 16 December 2019) going forward.
structions to Company representatives or by postal vote
(both in writing and online).
Due to the Covid-19 pandemic, the 2021 Annual General
Meeting was held as a virtual meeting, i. e. without share-
holders and proxies being physically present with the excep-
tion of the Company representatives bound by instructions
issued by shareholders. The Company enabled shareholders
in this situation to exercise their voting rights by issuing in-
Shareholders may exercise their voting rights at the Annual
General Meeting either in person, by proxy, or via a repre-
sentative designated by BMW AG. Voting rights may also be
exercised via postal vote.
Combined Management Report
Moreover, the remuneration systems for members of the
Board of Management and the Supervisory Board are pre-
sented to the Annual General Meeting for approval whenever
they undergo significant changes, but at least every four
years. They were last presented at the 2021 Annual General
Meeting. From the 2022 Annual General Meeting onwards,
the Annual General Meeting will also vote on whether to ap-
prove the Remuneration Report.
ANNUAL GENERAL
MEETING
SHAREHOLDERS AND
← = Q
Other Information
Remuneration Report
Corporate Governance
Fundamental Aspects of
Corporate Governance
The shareholders of BMW AG exercise their rights at the An-
nual General Meeting. The Annual General Meeting decides
in particular on the utilisation of unappropriated profit, the
ratification of the activities of the members of the Board of
Management and of the Supervisory Board, the appoint-
ment of the external auditor, changes to the Articles of Incor-
poration and certain capital-related measures, as well as
electing the shareholders' representatives to the Supervis-
ory Board.
More information about the composition of the Board of
Management, and how it operates and its individual commit-
tees is provided in the Statement on Corporate Governance
at www.bmwgroup.com/statement on corporate governance (Corporate
The Board of Management has issued terms of procedure for
itself. The allocation of areas of responsibility and business
segments among the members of the Board of Management
is set out in the Board's Schedule of Responsibilities.
Deliberations are held and decisions taken by the Board of
Management as a collegiate body at full. Board meetings as
well as at "Product and Customer Board Meetings". The
Board of Management also deliberates and makes decisions
at meetings of its three committees "Customer", "Oper-
ations" and "Senior Executives". The overall framework for
developing business strategies, the use of resources, the im-
plementation of strategies and matters of particular impor-
tance to BMW AG are decided upon at Board of Management
meetings.
Governance).
The Board of Management and the Supervisory Board re-
port below on the main features of corporate governance.
A detailed report on corporate governance can be found in
the Statement on Corporate Governance, available at
www.bmwgroup.com/statement on corporate governance (Corporate
Good corporate governance acting in accordance with
the principles of responsible management aimed at cre-
ation of value on a sustainable basis - is an essential re-
quirement for the BMW Group, embracing all areas of the
business. Transparent reporting and corporate communi-
cation, corporate governance that is aligned with the inter-
ests of all stakeholders, cooperation based on trust be-
tween the Board of Management, Supervisory Board and
employees, and compliance with applicable law are essen-
tial cornerstones of the corporate culture within the
BMW Group.
-
FUNDAMENTAL ASPECTS OF CORPORATE GOVERNANCE
(PART OF THE COMBINED MANAGEMENT REPORT)
← = Q
INFORMATION ON THE
Other Information
Corporate Governance
Fundamental Aspects of
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
248
Remuneration Report
COMPANY'S GOVERNING
CONSTITUTION
The designation BMW Group comprises Bayerische Motor-
en Werke Aktiengesellschaft (BMW AG) and its Group en-
tities. BMW AG is a stock corporation (Aktiengesellschaft)
within the meaning of the German Stock Corporation Act
(Aktiengesetz) and has its registered office in Munich, Ger-
many. It has three representative bodies, namely the Annual
General Meeting, the Supervisory Board and the Board of
Management. The duties and authorities of those bodies de-
rive from the Stock Corporation Act and the Articles of Incor-
poration of BMW AG. Shareholders, as the owners of the
business, exercise their rights at the Annual General Meet-
ing. The Board of Management is fully responsible for man-
aging the enterprise and is monitored and advised by the
Supervisory Board. The Supervisory Board appoints the
members of the Board of Management and can, at any time,
revoke an appointment for good cause. The Board of Man-
agement informs the Supervisory Board and reports to it
regularly, promptly and comprehensively, in line with the
principles of conscientious and faithful accountability and in
accordance with the law and the reporting duties determined
by the Supervisory Board. The Board of Management re-
quires the approval of the Supervisory Board for certain
major proceedings. The Supervisory Board is not, however,
authorised to undertake management measures itself.
Members of the Board of Management are required to act in
the enterprise's best interests and may not pursue personal
interests in their decisions or take advantage of business op-
portunities intended for the benefit of the Company. Individual
members of the Board of Management of BMW AG are re-
quired to disclose any conflicts of interest to the Supervisory
Board without delay, and to inform the other members of the
Board of Management accordingly.
all provisions of law and internal regulations are complied
with. You can find more details about compliance at
BMW Group in the section Compliance and human rights at
BMW Group. The Board of Management is responsible for
ensuring that appropriate risk management, risk controlling
and compliance management systems are in place through-
out the Company.
← = Q
Other Information
Remuneration Report
Corporate Governance
Fundamental Aspects of
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
249
In accordance with §7 of the Articles of Association, the
Board of Management of BMW AG comprises two or more
persons; other than that, the number of members of the
Board of Management is determined by the Supervisory
Board. At 31 December 2021, the Board of Management
comprised seven members. The Board of Management de-
cides on the principal guidelines for managing the enter-
prise, determines and agrees upon the strategic orientation
with the Supervisory Board, and ensures its implementation.
The Board of Management is responsible for ensuring that
The Board of Management manages the enterprise under its
own responsibility, acting in the best interests of the enter-
prise with the aim of achieving sustainable creation of value.
The interests of shareholders, employees and other stake-
holders are also taken into account in the pursuit of this aim.
7 GRI 102-43
BOARD OF MANAGEMENT
The close interaction between the Board of Management
and the Supervisory Board in the interests of the enterprise
as described above is also known as a "two-tier board
structure".
SGL Carbon SE, Wiesbaden
Racer Benchmark Group GmbH, Landsberg am Lech
Mobimeo GmbH, Berlin
Joblinge gemeinnützige AG Munich, Munich
70
100
100
Profit / loss in € million Capital investment in %
Equity in € million
BMW Financial Services Hong Kong Ltd., Hong Kong
51
BMW Philippines Corp., Manila
Herald Hezhong (Beijing) Automotive Trading Co. Ltd., Beijing
Financial Statements
Companies
← = Q
Other Information
Remuneration Report
THEPSATRI Co. Ltd., Bangkok
Corporate Governance
243
To Our Stakeholders
Equity in € million Profit / loss in € million Capital investment in %
IONITY Holding GmbH & Co. KG, Munich 8
YOUR NOW Holding GmbH, Munich 8
DOMESTIC
Joint ventures - equity accounted
Companies
BMW Group Report 2021
BMW AG'S ASSOCIATED COMPANIES, JOINT VENTURES AND JOINT OPERATIONS AT 31 DECEMBER 2021
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
Financial Statements
Group Financial Statements
Notes to the Group
Combined Management Report
To Our Stakeholders
BMW Insurance Services Korea Co. Ltd., Seoul
BMW India Leasing Private Ltd., Gurgaon
BMW India Foundation, Gurgaon
BMW Hong Kong Services Ltd., Hong Kong
BMW Finance (United Arab Emirates) Ltd., Dubai
BMW Financial Services Singapore Pte Ltd., Singapore
Asia
BMW Middle East Retail Competency Centre DWC-LLC, Dubai
BMW Automobile Distributors (Pty) Ltd., Midrand
BPF Midrand Property Holdings (Pty) Ltd., Midrand
Multisource Properties (Pty) Ltd., Midrand
100
100
100
100
100
100
Africa
BMW Mobility Services Ltd., Sichuan Tianfu New Area (Chengdu Section)
BMW Parts Manufacturing (Thailand) Co., Ltd., Rayong Province
BMW Technology Office Israel Ltd., Tel Aviv
BMW Group Report 2021
242
100
100
100
100
100
100
100
100
100
100
100
100
100
897
100
-337
209
50
50
40
Equity in € million Profit loss in € million Capital investment in %
Critical TechWorks S. A., Porto
BMW AVTOTOR Holding B. V., Amsterdam
50
BMW ArcherMind Information Technology Co. Ltd., Nanjing
Companies
Financial Statements
← = Q
Other Information
Remuneration Report
Corporate Governance
BMW Albatha Leasing LLC, Dubai
Group Financial Statements
Notes to the Group
245
To Our Stakeholders
Joblinge gemeinnützige AG Leipzig, Leipzig
Joblinge gemeinnützige AG Berlin, Berlin
IVM Industrie-Verband Motorrad GmbH & Co. Dienstleistungs KG, Essen
Hubject GmbH, Berlin
GSB Sonderabfall-Entsorgung Bayern GmbH, Baar-Ebenhausen
Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern
BMW Group Report 2021
DOMESTIC
BMW AG'S PARTICIPATIONS AT 31 DECEMBER 2021
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
Companies
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
Spotlight Automotive Ltd., Zhangjiagang 8
FOREIGN
Joint operations - proportionately consolidated entities
Solid Power, Inc., Wilmington, Delaware
THERE Holding B. V., Amsterdam 8
FOREIGN
Not equity accounted or proportionately consolidated entities
Associated companies - equity accounted
3,596
11,176
BMW Brilliance Automotive Ltd., Shenyang 8
FOREIGN
20
-35
50
DOMESTIC
Encory GmbH, Unterschleißheim
The Retail Performance Company GmbH, Munich
244
40
20
20
50
50
50
7
30
- 108
1,090
BMW Albatha Finance PSC, Dubai
Bavarian & Co Co. Ltd., Incheon
FOREIGN
PDB - Partnership for Dummy Technology and Biomechanics GbR, Gaimersheim
50
The Board of Management
― Established in accordance with recommendation in the German Corporate Governance Code, activities based on
rules of procedure
- Amendments to Articles of Incorporation only affecting wording
― Concluding, amending and revoking employment contracts (in conjunction with the resolutions taken by the Supervisory Board
regarding the remuneration of the Board of Management) and other contracts with members of the Board of Management
― Preparing decisions relating to the appointment (and revocation of appointment) of members of the Board of Management,
remuneration, and the regular review of the Board of Management's remuneration system
PERSONNEL COMMITTEE
- Activities based on rules of procedure
– Preparing Supervisory Board meetings where the subject matter to be discussed does not fall within the remit of a committee
PRESIDING BOARD
Principal duties, basis for activities
OVERVIEW OF SUPERVISORY BOARD COMMITTEES AND THEIR COMPOSITION
― Taking decisions relating to the approval of ancillary activities of Board of Management members, including the assumption of
non-BMW Group supervisory board mandates, as well as the approval of transactions requiring Supervisory Board approval by
law (e. g. loans to Board of Management or Supervisory Board members)
← = Q
Remuneration Report
Corporate Governance
Fundamental Aspects of
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
256
Memberships of comparable boards of business enterprises in Germany and abroad.
Other Information
- Activities based on rules of procedure
Members
Norbert Reithofer¹, Manfred Schoch, Stefan Quandt, Stefan Schmid, Karl-Ludwig Kley (until 12 May
2021), Kurt Bock (since 12 May 2021)
3 Reference to further information
Hereinafter we present the key audit matters:
1 Measurement of leased products
The BMW Group leases vehicles to end customers under
operating leases (leased products). At the balance sheet
date, the figure reported under the "leased products" line
item for operating leases was EUR 44,700 million (ap-
proximately 19.5% of total assets). Leased products are
measured at cost, which is depreciated on a straight-line
basis over the lease term to the expected residual value
(recoverable amount). A key estimated value for subse-
quent measurement of leased products is the expected
residual value at the end of the lease term. The
BMW Group uses internally available data on historical
empirical values, current market data and market esti-
mates as well as forecasts by external market research
institutes. The estimation of future residual values is
subject to judgment due to the large number of assump-
tions to be made by the executive directors and the
amount of data included in the determination.
Against this background and due to the resulting signifi-
cant uncertainties with regard to estimates in the context
of measuring the residual values of the leased products,
this matter was of particular significance in the context of
our audit.
2 As part of our audit we obtained an understanding of the
development of operating leases, the underlying residu-
al value risks as well as the business processes for the
identification, management, monitoring and measure-
ment of residual value risks, among other things by in-
quiries and inspection of documents related to the inter-
nal calculation methods. Furthermore, we evaluated the
appropriateness and effectiveness of the internal control
system, particularly regarding the determination of ex-
pected residual values. This included the evaluation of
the propriety of the relevant IT systems as well as the
implemented interfaces therein by our IT-specialists. In
addition, we evaluated the appropriateness of the fore-
casting methods, the model assumptions as well as the
parameters used for the measurement of the residual
values based on the validations carried out by the
BMW Group. For this purpose, we inquired with the
BMW Group's experts responsible for the management
and monitoring of residual value risks and inspected the
internal analysis on residual value developments and re-
sidual value forecasts as well as the validation results.
We examined the mathematically correctness of the
forecast values using the key calculation steps.
Based on our audit procedures, we were able to satisfy
ourselves that the methods and processes for determin-
ing the expected residual values of leased products un-
derlying the valuation are appropriate and the assump-
tions and parameters included in the forecast model for
the residual value are appropriate as a whole.
3 The Company's disclosures on the applied "Accounting
policies, assumptions, judgments and estimations" are
contained in the notes to the consolidated financial
statements under note 6 and on leased products are
contained under note 23.
-― Making decisions on approval for utilisation of the Authorised Capital 2019 and determinations concerning the form of share
certificates and dividend coupons
― Supervising compliance as well as analysing and supervising any needs for action related to possible violations of duties by members
of the Board of Management in preparation of a resolution at the Supervisory Board
- Supervising the effectiveness of the internal control system, the risk management system and the internal audit system as well as
the performance of Supervisory Board duties in connection with audits pursuant to § 32 of the German Securities Trading Act (WpHG)
- Preparing the Supervisory Board's audit of the non-financial reporting, preparing the selection of the auditor for non-financial
reporting, and engaging the auditor
― Engaging and signing the fee agreement with the external auditor as well as determining areas of audit emphasis
- Preparing the proposal for the election of the external auditor at the Annual General Meeting,
- Supervising the external audit, in particular selecting the auditor and ensuring the independence and quality of the external
audit and any additional work performed by the external auditor
- Preparing the Supervisory Board's resolution on Company and Group Financial Statements and discussing interim reports and
notifications with the Board of Management prior to publication
― Auditing the accounts and supervising the financial reporting process
AUDIT COMMITTEE
Norbert Reithofer 1, Manfred Schoch, Stefan Quandt, Stefan Schmid, Karl-Ludwig Kley (until 12 May
2021), Kurt Bock (since 12 May 2021)
-Memberships of other statutory supervisory boards.
"Group mandate.
Not listed on the stock exchange.
3 Executive employee of the enterprise.
Former Secretary to the Executive Board of IG Metall
Member from 2009 to 12 May 2021
HORST LISCHKA² (b. 1963)
Scientific Director and Managing Partner of EUREF Energy
Innovation GmbH
PROF. DR. DR. H. C. REINHARD HÜTTL (b. 1957)
Member from 2008 to 12 May 2021
Deutsche Lufthansa Aktiengesellschaft, Chairman
E.ON SE, Chairman
Mandates
Chairman of the Supervisory Boards of E.ON SE and
Deutsche Lufthansa Aktiengesellschaft
Deputy Chairman of the Supervisory Board (until 12 May
2021)
DR. JUR. KARL-LUDWIG KLEY (b. 1951)
Member from 2008 to 12 May 2021
OF THE SUPERVISORY
BOARD
OUTGOING MEMBERS
← = Q
Other Information
Remuneration Report
Group Financial Statements
Combined Management Report
To Our Stakeholders
Mandates
2 Audit approach and findings
-
Deputy Chairman (until 10 May 2021)
2 Union representative.
1 Employees of the enterprise.
Member of the Works Council, Landshut (Chairman until 13
July 2021)
Member from 1999 to 16 July 2021
WILLIBALD LÖW¹ (b. 1956)
ABB AG
Mandates
Head of Industrial Relations Regulations and
Co-determination Policy at the Executive Board of
IG Metall (In-house) Counsel
Member from 2019 to 31 December 2021
VERENA ZU DOHNA² (b. 1975)
Member from 2013 to 1 October 2021
Member of the Works Council, Dingolfing
BRIGITTE RÖDIG¹ (b. 1963)
Johnson Controls International plc
Russell Reynolds Associates Inc.*
Deutsche Post AG
Henkel AG & Co. KGaA
Mandates
-
Member from 2015 to 12 May 2021
Member of supervisory boards
SIMONE MENNE (b. 1960)
MAN Truck & Bus SE*
KraussMaffei Group GmbH *,
1 Matter and issue
Our presentation of these key audit matters has been struc-
tured in each case as follows:
4 Presentation of the acquisition of BMW Brilliance
Automotive Ltd., Shenyang, China, after the
balance sheet date in the notes
- Established as required by law
Norbert Reithofer, Manfred Schoch, Stefan Quandt, Stefan Schmid
(In accordance with statutory requirements, the Mediation Committee comprises the Chairman and Dep-
uty Chairman of the Supervisory Board and one member each selected by shareholder representatives
and employee representatives.)
⚫ Chair.
258
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Responsibility Statement by the
Company's Legal Representatives
Remuneration Report
Other Information
← = Q
RESPONSIBILITY STATEMENT BY THE
COMPANY'S LEGAL REPRESENTATIVES
Statement pursuant to § 117 No.1 of the 1, AktG Trading Act
(WpHG) in conjunction with § 297 (2) sentence 4 and § 315
(1) sentence 5 of the German Commercial Code (HGB)
"To the best of our knowledge, and in accordance with the
applicable reporting principles, the Group Financial State-
ments give a true and fair view of the assets, liabilities, finan-
cial position and results of operations of the Group, and the
Group Management Report includes a fair review of the
development and performance of the business and position
of the Group, together with a description of the principal
opportunities and risks associated with the expected devel-
opment of the Group."
Munich, 8 March 2022
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
― Submitting a proposal to the Supervisory Board if a resolution to appoint a member of the Board of Management has not been
carried by the necessary two-thirds majority of Supervisory Board members' votes
Oliver Zipse
MEDIATION COMMITTEE
Norbert Reithofer*, Kurt Bock (since 12 May 2021), Susanne Klatten, Karl-Ludwig Kley (until 12 May
2021), Stefan Quandt
Kurt Bock 1,2, Norbert Reithofer 3³, Manfred Schoch, Stefan Quandt, Stefan Schmid
1 Chair.
2 Special knowledge and experience according to recommendation D.4 of the DCGK
and expertise in accounting and auditing within the meaning of § 100 (5) AktG.
3 Expertise in auditing within the meaning of § 100 (5) AktG.
257
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Fundamental Aspects of
Corporate Governance
Remuneration Report
Other Information
← = Q
Principal duties, basis for activities
NOMINATION COMMITTEE
- Identifying suitable candidates as shareholder representatives on the Supervisory Board to be put forward for inclusion in the
Supervisory Board's proposals for election at the Annual General Meeting
― Established in accordance with recommendation in the German Corporate Governance Code, activities based on terms of proce-
dure
Members
(In line with the recommendation of the German Corporate Governance Code, the Nomination Committee
comprises only shareholder representatives.)
BMW Group Report 2021
Ilka Horstmeier
Pieter Nota
Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we declare
that our audit has not led to any reservations relating to the
legal compliance of the consolidated financial statements
and of the group management report.
Basis for the Audit Opinions
We conducted our audit of the consolidated financial state-
ments and of the group management report in accordance
with § 317 HGB and the EU Audit Regulation (No. 537/2014,
referred to subsequently as “EU Audit Regulation”) in compli-
ance with German Generally Accepted Standards for Finan-
cial Statement Audits promulgated by the Institut der
Wirtschaftsprüfer [Institute of Public Auditors in Germany]
(IDW). Our responsibilities under those requirements and
principles are further described in the "Auditor's Responsibil-
ities for the Audit of the Consolidated Financial Statements
260
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Independent Auditor's Report
Remuneration Report
Other Information
← = Q
and of the Group Management Report" section of our audi-
tor's report. We are independent of the group entities in ac-
cordance with the requirements of European law and Ger-
man commercial and professional law, and we have fulfilled
our other German professional responsibilities in accordance
with these requirements. In addition, in accordance with Arti-
cle 10 (2) point (f) of the EU Audit Regulation, we declare that
we have not provided non-audit services prohibited under
Article 5 (1) of the EU Audit Regulation. We believe that the
audit evidence we have obtained is sufficient and appropriate
to provide a basis for our audit opinions on the consolidated
financial statements and on the group management report.
Key Audit Matters in the Audit of the Consolidated Fi-
nancial Statements
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the con-
solidated financial statements for the financial year from Jan-
uary 1 to December 31, 2021. These matters were addressed
in the context of our audit of the consolidated financial state-
ments as a whole, and in forming our audit opinion thereon;
we do not provide a separate audit opinion on these matters.
In our view, the matters of most significance in our audit were
as follows:
1 Measurement of leased products
2 Valuation of receivables from sales financing
3 Valuation of provisions for statutory and
non-statutory warranty obligations and product
guarantees
the accompanying group management report as a whole
provides an appropriate view of the Group's position. In
all material respects, this group management report is
consistent with the consolidated financial statements,
complies with German legal requirements and appropri-
ately presents the opportunities and risks of future devel-
opment. Our audit opinion on the group management
report does not cover the content of those parts of the
group management report listed in the "Other Informa-
tion" section of our auditor's report.
Dr.-Ing. Milan Nedeljković
financial performance for the financial year from Janu-
ary 1 to December 31, 2021, and
In our opinion, on the basis of the knowledge obtained in the
audit,
Dr. Nicolas Peter
Dr.-Ing. Joachim Post
Frank Weber
259
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
INDEPENDENT AUDITOR'S REPORT
Independent Auditor's Report
Remuneration Report
Other Information
← = Q
To Bayerische Motoren Werke
Aktiengesellschaft, Munich
Report on the Audit of the
Consolidated Financial Statements and
of the Group Management Report
Audit Opinions
We have audited the consolidated financial statements of
Bayerische Motoren Werke Aktiengesellschaft, Munich, and
its subsidiaries (the Group), which comprise the Balance
Sheet for Group at 31 December 2021, and the Income State-
ment for Group, Statement of Comprehensive Income for
Group, Cash Flow Statement for Group and Statement of
changes in Equity for Group for the financial year from 1 Jan-
uary to 31 December 2021, and Notes to the Group Financial
Statements, including a summary of significant accounting
policies. In addition, we have audited the combined man-
agement report of Bayerische Motoren Werke Aktienge-
sellschaft, which is combined with the Company's manage-
ment report, for the financial year from 1 January to 31
December 2021. In accordance with the German legal re-
quirements, we have not audited the content of those parts
of the group management report listed in the "Other Infor-
mation" section of our auditor's report.
the accompanying consolidated financial statements
comply, in all material respects, with the IFRSS as adopt-
ed by the EU, and the additional requirements of German
commercial law pursuant to § [Article] 315e Abs. [para-
graph] 1 HGB [Handelsgesetzbuch: German Commercial
Code] and, in compliance with these requirements, give a
true and fair view of the assets, liabilities, and financial
position of the Group as at December 31, 2021, and of its
255
Corporate Governance
Fundamental Aspects of
Corporate Governance
Other Information
Entrust Corp.*.**
-
SOLARWATT GmbH ***
DELTON Health AG ***, Chairman
DELTON Technology SE***, Chairman
Frankfurter Allgemeine Zeitung GmbH*
AQTON SE***, Chairman
Mandates
Chairman of the European and General Works Council
Industrial Engineer
Deputy Chairman of the Supervisory Board
Member since 1988, elected until the AGM 2024
MANFRED SCHOCH (b. 1955)
** Note: Mr Quandt is the sole shareholder of DELTON Health AG, DELTON Technology SE and AQTON
SE. Mr Quandt holds majority interests in Entrust Corp. and SOLARWATT GmbH.
Henkel AG & Co. KGaA (Shareholders' Committee)
Siemens Aktiengesellschaft
Mandates
Chairman of the Supervisory Board of BASF SE
Deputy Chairman of the Supervisory Board
(since 12 May 2021)
Member since 2018, elected until the AGM 2023
DR. RER. POL. KURT BOCK (b. 1958)
Member since 1997, elected until the AGM 2024
Deputy Chairman of the Supervisory Board
Entrepreneur
STEFAN QUANDT (b. 1966)
Former Chairman of the Board of Management of BMW AG
Henkel Management AG*
DR.-ING. DR.-ING. E. H. NORBERT REITHOFER (b. 1956)
Member since 2015, elected until the AGM 2025
Chairman of the Supervisory Board
Mandates
CHRISTIANE BENNER² (b. 1968)
253
Simex Trading AG*
Whirlpool Corp. **, Chairman
Mandates
Member since 12 May 2021, elected until the AGM 2025
Chairman and Chief Executive Officer of Whirlpool
Corporation
DR. MARC BITZER (b. 1965)
Deputy Chairman of the Supervisory Board
Chairman of the Works Council, Dingolfing
Member since 2007, elected until the AGM 2024
STEFAN SCHMID1 (b. 1965)
FUCHS PETROLUB SE, Chairman (until 3 May 2022)
Continental AG, Deputy Chairwoman
- Memberships of comparable boards of business enterprises in Germany and abroad.
- Memberships of other statutory supervisory boards.
"Group mandate.
Not listed on the stock exchange.
3 Executive employee of the enterprise.
2 Union representative.
1 Employees of the enterprise.
Deputy Chair of IG Metall
Member since 2014, elected until the AGM 2024
Mandates
CURRENT MEMBERS OF
THE SUPERVISORY BOARD
← = Q
Other Information
DR.-ING. JOACHIM POST (b. 1971)
DR.-ING. MILAN NEDELJKOVIĆ (b. 1969)
Production
Chairman (until 10 February 2022 Deputy Chairman)
BMW Brilliance Automotive Ltd. ****,
―
Mandates
DR. NICOLAS PETER (b. 1962)
Finance
Human Resources, Labour Relations Director
ILKA HORSTMEIER (b. 1969)
Purchasing and Supplier Network (since 1 January 2022)
OLIVER ZIPSE (b. 1964)
Chairman
CURRENT MEMBERS
← = Q
Other Information
Remuneration Report
Corporate Governance
Fundamental Aspects of
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
OF THE BOARD OF
MANAGEMENT
Mandates
BMW (South Africa) (Pty) Ltd. ****, Chairman
BMW Motoren GmbH ***, Chairman
FRANK WEBER (b. 1966)
Development
Remuneration Report
Corporate Governance
Fundamental Aspects of
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
252
DR. ANDREAS LIEPE
General Counsel:
DR.-ING. ANDREAS WENDT (b. 1958)
Purchasing and Supplier Network
(until 31 December 2021)
MANAGEMENT
OF THE BOARD OF
OUTGOING MEMBERS
-Memberships of comparable boards of business enterprises in Germany and abroad.
- Memberships of other statutory supervisory boards.
**Group mandate.
Not listed on the stock exchange.
Rolls-Royce Motor Cars Limited ****, Chairman
Mandates
Customer, Brands, Sales
PIETER NOTA (b. 1964)
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
SIBYLLE WANKEL² (b. 1964)
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
254
-Memberships of comparable boards of business enterprises in Germany and abroad.
- Memberships of other statutory supervisory boards.
"Group mandate.
Member since 4 January 2022, appointed until the
Not listed on the stock exchange.
2 Union representative.
1 Employees of the enterprise.
Oracle Corporation
Mandates
DR. DOMINIQUE MOHABEER¹ (b. 1963)
Member since 2012, elected until the AGM 2024
Member of the Works Council, Munich
Member since 2019, elected until the AGM 2024
CEO & Founder, Vianai Systems, Inc.
DR. VISHAL SIKKA (b. 1967)
Chairman of the Works Council, Leipzig
Member since 3 August 2021, appointed until the
AGM 2024
3 Executive employee of the enterprise.
JENS KÖHLER¹ (b. 1964)
AGM 2024
Mandates
Remuneration Report
Corporate Governance
Fundamental Aspects of
Corporate Governance
-Memberships of comparable boards of business enterprises in Germany and abroad.
- Memberships of other statutory supervisory boards.
"Group mandate.
Not listed on the stock exchange.
3 Executive employee of the enterprise.
2 Union representative.
1 Employees of the enterprise.
1. Authorised Representative and Head of IG Metall's
Munich Office
31 October 2021)
Member since 2001, elected until the AGM 2024
WERNER ZIERER¹ (b. 1959)
BMW Automotive Finance (China) Co. Ltd.***,
Chairman
BMW Bank GmbH ****, Chairman
Mandates
Senior Vice President Financial Services
Member since 2019, elected until the AGM 2024
DR. THOMAS WITTIG³ (b. 1960)
KraussMaffei Group GmbH*, Deputy Chairwoman (since
31 May 2021)
Member of the Works Council, Regensburg (Chairman until
← = Q
(Chairman since 1 January 2022)
Fresenius Management SE*
BASF SE (until 29 April 2022)
Mandates
Member since 2020, elected until the AGM 2025
Member of supervisory boards
ZF Friedrichshafen AG*
EDAG Engineering GmbH* (until 28 May 2021)
Siemens Healthcare GmbH*
Mandates
Member since 14 May 2021, appointed until the AGM 2024
Head of Bavaria Region, IG Metall
JOHANN HORN² (b. 1958)
Chairman of the Works Council, Landshut
Member since 8 October 2021, appointed until the AGM
2024
BERNHARD EBNER¹ (b. 1978)
← = Q
Other Information
Remuneration Report
Corporate Governance
Fundamental Aspects of
Corporate Governance
Serviceplan Group Management SE*
Wayfair Inc.
RACHEL EMPEY (b. 1976)
ANKE SCHÄFERKORDT (b. 1962)
SUSANNE KLATTEN (b. 1962)
Deutsche Post AG
Mandates
Thyssen Vermögensverwaltung GmbH*
Member since 12 May 2021, elected until the AGM 2025
Member of the Board of Management of Fresenius Man-
agement SE (finance division)
Basalt-Actien-Gesellschaft*
Mandates
PROF. DR. DR. H. C. CHRISTOPH M. SCHMIDT (b. 1962)
Member since 12 May 2021, elected until the AGM 2025
President of the RWI - Leibniz Institute for Economic
Research, University Professor
UnternehmerTUM GmbH*, Chairwoman
251
ALTANA AG ****, Deputy Chairwoman
-
Mandates
Member since 2017, elected until the AGM 2022
Chairman of the Supervisory Board of ZF
Friedrichshafen AG
DR.-ING. HEINRICH HIESINGER (b. 1960)
Member since 1997, elected until the AGM 2024
Entrepreneur
Mandates
Fresenius Kabi AG***, Deputy Chairwoman
Fresenius Medical Care Management AG****
SGL Carbon SE, Chairwoman
SprinD GmbH*
Remuneration Report
Other considerations
Other Information
318 VI.
318 V.
Outlook for the 2022 financial year
319 VII. Auditor's Report
REMUNERATION
REPORT
← = Q
5
Comparison of change in remuneration and earnings
pursuant to § 162 (1) Sentence 2 No. 2 of the German
Stock Corporation Act (AktG)
Remuneration of the members of the Supervisory Board
(sgd. Petra Justenhoven)
Wirtschaftsprüferin
(German Public Auditor)
(sgd. Andreas Fell)
Wirtschaftsprüfer
(German Public Auditor)
267
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Remuneration Report
Other Information
← = Q
Corporate Governance
Independent Practitioner's Report
INDEPENDENT PRACTITIONER'S REPORT
Independent Practitioner's Report on a Limited As-
surance Engagement on Disclosures on Non-financial
Reporting and Sustainability Discloures¹
To BMW AG, Munich
We have performed a limited assurance engagement on the
disclosures in the "BMW Group Report 2021" of BMW AG,
Munich, (hereinafter the "Company") for the period from 1
January to 31 December 2021 (hereinafter the “Integrated
Group Report") denoted with "[... ]]" of the Combined
Non-financial Statement, which is integrated into the com-
bined management report (hereinafter the "Disclosures on
Non-financial Reporting") contained in the Integrated Group
Report, as well as the sustainability disclosures contained in
the sections "Dialog with stakeholders" and "Further GRI
information" of the Integrated Group Report (hereinafter
referred to as "Sustainability Disclosures"). Our engagement
in this context relates solely to the disclosures denoted with
the symbol "[...]" and the disclosures in the sections "Dia-
log with stakeholders" and "Further GRI information".
"
Not subject to our assurance engagement are the external
sources of documentation or expert opinions mentioned in
the Integrated Group Report.
Responsibility of the Executive Directors
The executive directors of the Company are responsible for
the preparation of the Combined Non-financial Statement in
accordance with §§ (Articles) 315c in conjunction with 289c
to 289e HGB ("Handelsgesetzbuch": "German Commercial
Code") and Article 8 of REGULATION (EU) 2020/852 OF
THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of
18. June 2020 on establishing a framework to facilitate sus-
tainable investment and amending Regulation (EU)
2019/2088 (hereinafter the "EU Taxonomy Regulation") and
the Delegated Acts adopted thereunder, as well as for mak-
ing their own interpretation of the wording and terms con-
tained in the EU Taxonomy Regulation and the Delegated
Acts adopted thereunder, as set out in section "EU-Taxon-
omy" of the Combined Non-financial Statement and the
Sustainability Disclosures in accordance with the principles
stated in the Sustainability Reporting Standards of the
Global Reporting Initiative (hereinafter the "GRI-Criteria”).
This responsibility includes the selection and application of
appropriate methods of non-financial reporting and sustain-
ability reporting as well as making assumptions and esti-
mates related to individual non-financial disclosures and
sustainability disclosures of the Group that are reasonable in
the circumstances. Furthermore, the executive directors are
responsible for such internal control as the executive direc-
tors consider necessary to enable the preparation of an Inte-
grated Group Report that is free from material misstatement
whether due to fraud or error.
The EU Taxonomy Regulation and the Delegated Acts issued
thereunder contain wording and terms that are still subject
to considerable interpretation uncertainties and for which
clarifications have not yet been published in every case.
Therefore, the executive directors have disclosed their inter-
pretation of the EU Taxonomy Regulation and the Delegated
Acts adopted thereunder in section "EU-Taxonomy" of the
Combined Non-financial Statement. They are responsible for
the defensibility of this interpretation. Due to the immanent
risk that indeterminate legal terms may be interpreted differ-
ently, the legal conformity of the interpretation is subject to
uncertainties.
1 PricewaterhouseCoopers GmbH has performed a limited assurance engagement on
the German version of the,,BMW Group Report 2021" and issued an independent
practitioner's report in German language, which is authoritative. The following text
is a translation of the independent practitioner's report
268
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
Munich, March 9, 2022
The German Public Auditor responsible for the engagement
is Andreas Fell.
GERMAN PUBLIC AUDITOR RESPONSIBLE FOR THE
ENGAGEMENT
ments of § 328 Abs. 1 HGB for the electronic reporting for-
mat, whether due to fraud or error.
The supervisory board is responsible for overseeing the pro-
cess for preparing the ESEF documents as part of the finan-
cial reporting process.
Group Auditor's Responsibilities for the Assurance Work
on the ESEF Documents
Our objective is to obtain reasonable assurance about
whether the ESEF documents are free from material
non-compliance with the requirements of § 328 Abs. 1 HGB,
whether due to fraud or error. We exercise professional judg-
ment and maintain professional skepticism throughout the
assurance work. We also:
Identify and assess the risks of material non-compliance
with the requirements of § 328 Abs. 1 HGB, whether due
to fraud or error, design and perform assurance proce-
dures responsive to those risks, and obtain assurance
evidence that is sufficient and appropriate to provide a
basis for our assurance opinion.
Obtain an understanding of internal control relevant to
the assurance work on the ESEF documents in order to
design assurance procedures that are appropriate in the
circumstances, but not for the purpose of expressing an
assurance opinion on the effectiveness of these controls.
Evaluate the technical validity of the ESEF documents,
i.e., whether the electronic file containing the ESEF doc-
uments meets the requirements of the Delegated Regu-
lation (EU) 2019/815 in the version in force at the date of
the consolidated financial statements on the technical
specification for this electronic file.
Evaluate whether the ESEF documents provide an
XHTML rendering with content equivalent to the audited
consolidated financial statements and to the audited
group management report.
Evaluate whether the tagging of the ESEF documents
with Inline XBRL technology (iXBRL) in accordance with
the requirements of Articles 4 and 6 of the Delegated
Regulation (EU) 2019/815, in the version in force at the
date of the consolidated financial statements, enables
an appropriate and complete machine-readable XBRL
copy of the XHTML rendering.
Further Information pursuant to Article 10 of the EU
Audit Regulation
We were elected as group auditor by the annual general
meeting on May 12, 2021. We were engaged by the supervi-
sory board on June 24, 2021. We have been the group auditor
of Bayerische Motoren Werke Aktiengesellschaft, Munich,
without interruption since the financial year 2019.
BMW Group Report 2021
We declare that the audit opinions expressed in this audi-
tor's report are consistent with the additional report to the
audit committee pursuant to Article 11 of the EU Audit Regu-
lation (long-form audit report).
Our auditor's report must always be read together with the
audited consolidated financial statements and the audited
group management report as well as the assured ESEF
documents. The consolidated financial statements and the
group management report converted to the ESEF format -
including the versions to be published in the Federal Ga-
zette are merely electronic renderings of the audited con-
solidated financial statements and the audited group
management report and do not take their place. In particu-
lar, the "Report on the Assurance on the Electronic Render-
ing of the Consolidated Financial Statements and the Group
266
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Independent Auditor's Report
Management Report Prepared for Publication Purposes in
Accordance with § 317 Abs. 3a HGB" and our assurance
opinion contained therein are to be used solely together
with the assured ESEF documents made available in elec-
tronic form.
REFERENCE TO AN OTHER MATTER - USE OF THE
AUDITOR'S REPORT
Combined Management Report
Group Financial Statements
Corporate Governance
Independent Practitioner's Report
← = Q
Assurance Opinion
Based on the assurance procedures performed and evi-
dence obtained, nothing has come to our attention that
causes us to believe that
the Disclosures on Non-financial Reporting denoted with
the symbol "[[ ... ]]" of the Company's Combined Non-fi-
nancial Statement for the period from 1 January to 31
December 2021, which is integrated into the combined
management report contained in the Integrated Group
Report, have not been prepared, in all material aspects,
in accordance with the requirements of §§ 315c in con-
junction with 289c to 289e HGB relevant to these disclo-
sures and the EU Taxonomy Regulation and the Dele-
gated Acts issued thereunder as well as the interpretation
by the executive directors disclosed in section "EU-Tax-
onomy" of the Non-financial Statement, or
the Sustainability Disclosures in the sections "Dialog
with stakeholders" and "Further GRI information" of the
Company's Integrated Group Report for the period from 1
January to 31 December 2021 have not been prepared, in
all material aspects, in accordance with the relevant
GRI-Criteria.
We do not express an assurance opinion on the external
sources of documentation or expert opinions mentioned in
the Disclosures on Non-financial Reporting denoted with the
symbol "[[ ]]" of the Company's Combined Non-financial
Statement.
Restriction of Use
We draw attention to the fact that the assurance engage-
ment was conducted for the Company's purposes and that
the report is intended solely to inform the Company about
the result of the assurance engagement. Consequently, it
may not be suitable for any other purpose than the afore-
mentioned. Accordingly, the report is not intended to be used
by third parties for making (financial) decisions based on it.
Our responsibility is to the Company. We do not accept any
responsibility to third parties. Our assurance opinion is not
modified in this respect.
Munich, 9 March 2022
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
Andreas Fell
Wirtschaftsprüfer
Other Information
Nicolette Behncke
[German public auditor] [German public auditor]
270
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
271 I.
Review of the past financial year from a remuneration
perspective
272 II.
Remuneration of the members of the Board of
Management
310 III.
Wirtschaftsprüferin
In addition, the executive directors of the Company are re-
sponsible for such internal control as they have considered
necessary to enable the preparation of ESEF documents
that are free from material non-compliance with the require-
Remuneration Report
Group Financial Statements
Remuneration Report
Other Information
← = Q
Independence and Quality Control of the Audit Firm
We have complied with the German professional provisions
regarding independence as well as other ethical require-
ments.
Our audit firm applies the national legal requirements and
professional standards in particular the Professional Code
for German Public Auditors and German Chartered Auditors
("Berufssatzung für Wirtschaftsprüfer und vereidigte Buch-
prüfer": "BS WP/vBP") as well as the Standard on Quality
Control 1 published by the Institut der Wirtschaftsprüfer
(Institute of Public Auditors in Germany; IDW): Requirements
to quality control for audit firms (IDW Qualitätssicherungs-
standard 1: Anforderungen an die Qualitätssicherung in der
Wirtschaftsprüferpraxis - IDW QS 1) - and accordingly main-
tains a comprehensive system of quality control including
documented policies and procedures regarding compliance
with ethical requirements, professional standards and appli-
cable legal and regulatory requirements.
Responsibility of the Assurance Practitioner
Our responsibility is to express a conclusion with limited
assurance on the Disclosures on Non-financial Reporting
denoted with the symbol "[[ ... ]]" of the Combined Non-fi-
nancial Statement and the Sustainability Disclosures in the
sections "Dialog with stakeholders" and "Further GRI infor-
mation" of the Integrated Group Report based on the assur-
ance engagement we have performed.
We conducted our assurance engagement in accordance
with International Standard on Assurance Engagements
(ISAE) 3000 (Revised): Assurance Engagements other than
Audits or Reviews of Historical Financial Information, issued
by the IAASB. This Standard requires that we plan and per-
form the assurance engagement to obtain limited assurance
about whether any matters have come to our attention that
cause us to believe that
the Disclosures on Non-financial Reporting denoted with
the symbol "[[ ... ]]" of the Company's Combined Non-fi-
nancial Statement, contained in the Integrated Group
Report, other than the external sources of documentation
or expert opinions mentioned in the disclosures denoted
with the symbol "[[ ... ]]" in the Combined Non-financial
Statement, are not prepared, in all material respects, in
accordance with §§ 315c in conjunction with 289c to
289e HGB and the EU Taxonomy Regulation and the
Delegated Acts issued thereunder as well as the inter-
pretation by the executive directors disclosed in section
"EU-Taxonomy" of the Combined Non-financial State-
ment, or
the Sustainability Disclosures in the sections "Dialog
with stakeholders" and "Further GRI information" of the
Company's Integrated Group Report have not been pre-
pared, in all material aspects, in accordance with the rel-
evant GRI-Criteria.
In a limited assurance engagement the procedures per-
formed are less extensive than in a reasonable assurance
engagement, and accordingly a substantially lower level of
assurance is obtained. The selection of the assurance proce-
dures is subject to the professional judgement of the assur-
ance practitioner.
Corporate Governance
Independent Practitioner's Report
In the course of our assurance engagement, we have,
amongst other things, performed the following assurance
procedures and other activities:
- Inquiries of personnel involved in the preparation of the
Integrated Group Report regarding the preparation pro-
cess, the internal control system relating to this process
and selected disclosures in the Integrated Group Report
Identification of the likely risks of material misstatement
of the Integrated Group Report
Testing of processes for the collection, control, analysis
and aggregation of selected data from various Group
sites on a sample basis
Analytical evaluation of selected disclosures in the Inte-
grated Group Report
Evaluation of the process to identify taxonomy-eligible
economic activities and the corresponding disclosures in
the Combined Non-financial Statement
Inquiries on the relevance of climate-risks
Evaluation of the presentation of the disclosures
In determining the disclosures in accordance with Article 8 of
the EU Taxonomy Regulation, the executive directors are
required to interpret undefined legal terms. Due to the imma-
nent risk that undefined legal terms may be interpreted dif-
ferently, the legal conformity of their interpretation and,
accordingly, our assurance engagement thereon are subject
to uncertainties.
269
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Obtaining an understanding of the structure of the sus-
tainability organization and of the stakeholder engage-
ment
The executive directors of the Company are responsible for
the preparation of the ESEF documents including the elec-
tronic renderings of the consolidated financial statements
and the group management report in accordance with § 328
Abs. 1 Satz 4 Nr. [number] 1 HGB and for the tagging of the
consolidated financial statements in accordance with § 328
Abs. 1 Satz 4 Nr. 2 HGB.
To Our Stakeholders
We conducted our assurance work on the rendering of the
consolidated financial statements and the group manage-
ment report contained in the electronic file identified above
in accordance with § 317 Abs. 3a HGB and the IDW Assur-
ance Standard: Assurance Work on the Electronic Render-
ing of Financial Statements and Management Reports,
Prepared for Publication Purposes in Accordance with
§ 317 Abs. 3a HGB (IDW ASS 410 (10.2021)) and the Inter-
national Standard on Assurance Engagements 3000 (Re-
vised). Our responsibility in accordance therewith is further
described in the "Group Auditor's Responsibilities for the
Assurance Work on the ESEF Documents" section. Our au-
dit firm applies the IDW Standard on Quality Management
1: Requirements for Quality Management in the Audit Firm
(IDW QS 1).
(comprising parts and labor input) as well as the expect-
ed assertion of claims from statutory and non-statutory
warranties.
In our view, the method for the valuation of provisions for
statutory and non-statutory warranty obligations as well
as product guarantees is overall appropriate. Taking into
consideration the information available, we believe that,
overall, the measurement parameters and assumptions
used by the executive directors are appropriate.
3 The Company's disclosures on the applied "Accounting
policies, assumptions, judgments and estimations" are
contained in the notes to the consolidated financial
statements under note 6 and on "Other provisions" are
contained under note 33.
4 Presentation of the acquisition of BMW Brilliance
Automotive Ltd., Shenyang, China, after the balance
sheet date in the notes
The BMW Group held so far 50% of shares in BMW Bril-
liance Automotive Ltd., Shenyang, China. On October 11,
2018, a purchase agreement was concluded for the ac-
quisition of a further 25% of the shares in BMW Brilliance
Automotive Ltd. Shenyang, China. The acquisition was
subject to the removal of the joint venture obligation for
automotive production in China, which occurred in Jan-
uary 2022. The closing of the transaction was on Feb-
ruary 11, 2022. The acquisition date therefore falls with-
in the preparation phase of the consolidated financial
statements for financial year 2021. The previously held
shares will be measured at fair value as at the acquisi-
tion date, which will result in an appreciation effect
amounting to EUR 7.0 billion to EUR 8.0 billion in the
financial year 2022. Due to the gain of control after the
balance sheet date but prior to the approval of the pub-
lication of the consolidated financial statements for
financial year 2021, disclosures in the notes to the
financial statements are already required for the busi-
ness combination (a as is the case for acquisitions
during the reporting period) in accordance with IFRS 3
and IAS 10.
Due to the estimates made by the executive directors in
determining the appreciation effect on the previously
held shares and the associated uncertainties as well as
the significance of this matter for an assessment of the
future net assets and liabilities, financial position and fi-
nancial performance of the Group, this matter was of par-
ticular significance during our audit.
2 As part of our audit of the presentation of the acquisition
of BMW Brilliance Automotive Ltd. Shenyang, China, we
first inspected the contractual agreements and, based
on this, evaluated the acquisition date, with the involve-
ment of our specialists in international accounting. Fur-
thermore, we examined the determination of the appre-
ciation effect. In view of the special features of
determining the fair values in the context of the prelimi-
nary purchase price allocation, our valuation specialists
assisted us in the process. Together, we examined the
appreciation effect and, by using checklists, evaluated
the completeness and accuracy of the disclosures in the
notes to the consolidated financial statements required
under IFRS 3 and IAS 10.
Overall, we were able to satisfy ourselves that, taking into
consideration the information available, the acquisition is
properly presented in the notes to the consolidated fi-
nancial statements and that the estimates and assump-
tions made by the executive directors are appropriate
overall for the presentation of the acquisition.
3 The Company's disclosures relating to the acquisition
are contained in the notes to the consolidated financial
statements under note 3 "Increase of share in BMW Bril-
liance Automotive Ltd.".
Other Information
The executive directors are responsible for the other infor-
mation. The other information comprises the following
non-audited parts of the group management report:
← = Q
the "Corporate Governance" section of the group man-
agement report
The other information comprises further
the statement on corporate governance pursuant to
§ 289f HGB and § 315d HGB
the remuneration report pursuant to § 162 AktG [Aktien-
gesetz: German Stock Corporation Act], for which the
supervisory board is also responsible
=
-
all remaining parts of the annual report excluding
cross-references to external information with the excep-
tion of the audited consolidated financial statements, the
audited group management report and our auditor's report
Our audit opinions on the consolidated financial statements
and on the group management report do not cover the other
information, and consequently we do not express an audit
opinion or any other form of assurance conclusion thereon.
263
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
the disclosures marked with "[[ ... ]]" of the non-financial
statement pursuant to § 289b Abs. 1 HGB and § 315b
Abs. 1 HGB
Corporate Governance
Independent Auditor's Report
Other Information
Corporate Governance
Independent Auditor's Report
Responsibilities of the Executive Directors and the Su-
pervisory Board for the ESEF Documents
261
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Independent Auditor's Report
Remuneration Report
Other Information
← = Q
2 Valuation of receivables from sales financing
1 The BMW Group offers end customers, dealerships and
importers various financing models for vehicles. In this
context, current and non-current receivables from sales
financing totaling EUR 87,417 million are reported in the
consolidated statement of financial position as at the
balance sheet date (approximately 38.1% of total as-
sets). Impairment losses amounting to EUR 1,599 mil-
lion were recognized on these receivables as at the bal-
ance sheet date. In order to determine the amount of the
necessary valuation allowances to be recognized with
respect to receivables from sales financing, the
BMW Group, among others, evaluates the creditworthi-
ness of the dealers, importers and end customers, as
well as any loss ratios, and risk provisioning parameters
are derived based on historical default probabilities and
loss ratios.
Remuneration Report
The determination of the valuation allowances by the
executive directors is subject to a significant degree of
judgment due to several value-influencing factors such
as the estimation of creditworthiness, the determina-
tion of probabilities of default and loss ratios and was
therefore of particular significance in the context of our
audit.
sessment by our IT-specialists of the appropriateness
of the systems concerned and associated interfaces to
ensure the completeness of data as well as the audit of
automated controls for data processing. As part of our
audit we assessed in particular the appropriateness of
the risk classification procedures as well as the risk
provisioning parameters used. For this purpose, we
analyzed in particular the validations of parameters
that are regularly conducted by the Company. To as-
sess the default risk, we also used targeted sampling of
individual cases to examine whether the attributes for
assignment to the respective risk categories were suit-
ably available and the impairment losses had been cal-
culated using the parameters defined for these risk cat-
egories.
In our view, the assumptions and parameters used in the
measurement of receivables from sales financing were
appropriate overall.
3 The Company's disclosures on the applied "Accounting
policies, assumptions, judgments and estimations" are
contained in the notes to the consolidated financial
statements under note 6 and on "receivables from sales
financing" are contained under note 25.
3 Valuation of provisions for statutory and non-statu-
tory warranty obligations and product guarantees
Provisions for statutory and non-statutory warranty ob-
ligations as well as product guarantees are included in
the consolidated financial statements of BMW Group as
a material amount in other provisions. The obligations
amounted to EUR 6,600 million (approximately 2.9% of
total assets) as at December 31, 2021. BMW Group is re-
sponsible for the legally required warranty and product
guarantees in the respective sales market. In order to
estimate the liabilities arising from statutory and
non-statutory warranty obligations and product guar-
antees for vehicles sold, information on the type and
volume of damages arising and on remedial measures
is recorded and analyzed at vehicle model level. The ex-
pected amount of obligations is extrapolated from costs
of the past and recognized as a provision in the corre-
sponding amount, if the criteria of IAS 37 have been
met. For specific or anticipated individual circumstanc-
es, for example recalls, additional provisions are recog-
nized provided they have not already been taken into
account.
The determination of provisions is associated with una-
voidable estimation uncertainties and is subject to a high
risk of change, depending on factors such as notification
of detected defects as well as claims made by vehicle
owners. Against this background, this matter was of par-
ticular significance during our audit.
In order to assess the appropriateness of the valuation
method used for the determination of the provisions for
statutory and non-statutory warranty obligations as well
as product guarantees including the assumptions and
parameters, we primarily obtained an understanding of
the process for determining the assumptions and pa-
rameters through discussions with the responsible em-
ployees of the BMW Group. We also evaluated the ap-
propriateness as well as effectiveness of controls for
determining the assumptions and parameters. With the
involvement of our IT specialists, we checked the IT sys-
tems used regarding their compliance. We compared the
expenses for claims and technical actions with actual
costs incurred in order to draw conclusions on the fore-
cast accuracy. Based on a targeted sample of vehicle
models, the mathematically correctness of the valuation
model used across the Group was examined. We exam-
ined and evaluated the assumptions used by the
BMW Group concerning the extent to which the past val-
ues were representative of the expected susceptibility of
damage, the expected value of damage per vehicle
262
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
2 As part of our audit we obtained a comprehensive un-
derstanding of the development of receivables from
sales financing, the associated default-related risks as
well as the business processes for the identification,
management, monitoring and measurement of default
risks, among other things by inquiries and inspection of
documents on the internal calculation methods. Fur-
thermore, we evaluated the appropriateness and effec-
tiveness of the internal control system regarding the
determination of the impairment loss to recognize. In
this context, we also evaluated the relevant IT systems
and internal processes. The evaluation included an as-
Remuneration Report
314 IV.
Basis for the Assurance Opinion
Evaluate the overall presentation, structure and content
of the consolidated financial statements, including the
disclosures, and whether the consolidated financial
statements present the underlying transactions and
events in a manner that the consolidated financial state-
ments give a true and fair view of the assets, liabilities,
financial position and financial performance of the Group
in compliance with IFRSS as adopted by the EU and the
additional requirements of German commercial law pur-
suant to § 315e Abs. 1 HGB.
Obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business activ-
ities within the Group to express audit opinions on the
consolidated financial statements and on the group
management report. We are responsible for the direction,
supervision and performance of the group audit. We re-
main solely responsible for our audit opinions.
Evaluate the consistency of the group management re-
port with the consolidated financial statements, its con-
formity with German law, and the view of the Group's
position it provides.
Perform audit procedures on the prospective information
presented by the executive directors in the group man-
agement report. On the basis of sufficient appropriate
audit evidence we evaluate, in particular, the significant
assumptions used by the executive directors as a basis
for the prospective information and evaluate the proper
derivation of the prospective information from these as-
sumptions. We do not express a separate audit opinion
OTHER LEGAL AND
on the prospective information and on the assumptions REGULATORY
used as a basis. There is a substantial unavoidable risk
that future events will differ materially from the prospec-
tive information.
We communicate with those charged with governance re-
garding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any sig-
nificant deficiencies in internal control that we identify during
our audit.
We also provide those charged with governance with a
statement that we have complied with the relevant inde-
pendence requirements, and communicate with them all re-
lationships and other matters that may reasonably be
thought to bear on our independence, and where applicable,
the related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the consolidated financial state-
ments of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report
unless law or regulation precludes public disclosure about
the matter.
Other Information
the auditor's report to the related disclosures in the con-
solidated financial statements and in the group manage-
ment report or, if such disclosures are inadequate, to
modify our respective audit opinions. Our conclusions are
based on the audit evidence obtained up to the date of
our auditor's report. However, future events or conditions
may cause the Group to cease to be able to continue as
a going concern.
Report on the Assurance on the Electronic Rendering of
the Consolidated Financial Statements and the Group
Management Report Prepared for Publication Purposes
in Accordance with § 317 Abs. 3a HGB
We have performed assurance work in accordance with
§ 317 Abs. 3a HGB to obtain reasonable assurance as to
whether the rendering of the consolidated financial state-
ments and the group management report (hereinafter the
"ESEF documents") contained in the electronic file BMW_
AG_KA+KLB_ESEF-2021-12-31.zip and prepared for publi-
cation purposes complies in all material respects with the
requirements of § 328 Abs. 1 HGB for the electronic report-
ing format ("ESEF format"). In accordance with German
legal requirements, this assurance work extends only to
the conversion of the information contained in the consoli-
dated financial statements and the group management re-
port into the ESEF format and therefore relates neither to
the information contained within these renderings nor to
any other information contained in the electronic file identi-
fied above.
In our opinion, the rendering of the consolidated financial
statements and the group management report contained in
the electronic file identified above and prepared for publica-
tion purposes complies in all material respects with the re-
quirements of § 328 Abs. 1 HGB for the electronic reporting
format. Beyond this assurance opinion and our audit opin-
ion on the accompanying consolidated financial statements
and the accompanying group management report for the
financial year from January 1 to December 31, 2021 con-
265
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Independent Auditor's Report
Remuneration Report
Other Information
← = Q
tained in the "Report on the Audit of the Consolidated
Financial Statements and on the Group Management Re-
port" above, we do not express any assurance opinion on
the information contained within these renderings or on the
other information contained in the electronic file identified
above.
Assurance Opinion
← = Q
REQUIREMENTS
Remuneration Report
Other Information
← = Q
In connection with our audit, our responsibility is to read the
other information mentioned above and, in so doing, to con-
sider whether the other information
—
is materially inconsistent with the consolidated financial
statements, with the group management report disclo-
sures audited in terms of content or with our knowledge
obtained in the audit, or
otherwise appears to be materially misstated.
Responsibilities of the Executive Directors and the Su-
pervisory Board for the Consolidated Financial State-
ments and the Group Management Report
The executive directors are responsible for the preparation of
the consolidated financial statements that comply, in all ma-
terial respects,
with IFRSS as adopted by the EU and the ad-
ditional requirements of German commercial law pursuant to
§ 315e Abs. 1 HGB and that the consolidated financial state-
ments, in compliance with these requirements, give a true
and fair view of the assets, liabilities, financial position, and
financial performance of the Group. In addition the executive
directors are responsible for such internal control as they
have determined necessary to enable the preparation of
consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Furthermore, the executive directors are responsible for the
preparation of the group management report that, as a
whole, provides an appropriate view of the Group's position
and is, in all material respects, consistent with the consoli-
dated financial statements, complies with German legal re-
quirements, and appropriately presents the opportunities
and risks of future development. In addition, the executive
directors are responsible for such arrangements and meas-
ures (systems) as they have considered necessary to enable
the preparation of a group management report that is in ac-
cordance with the applicable German legal requirements,
and to be able to provide sufficient appropriate evidence for
the assertions in the group management report.
The supervisory board is responsible for overseeing the
Group's financial reporting process for the preparation of the
consolidated financial statements and of the group manage-
ment report.
Auditor's Responsibilities for the Audit of the Consoli-
dated Financial Statements and of the Group Manage-
ment Report
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or
error, and whether the group management report as a whole
provides an appropriate view of the Group's position and, in
all material respects, is consistent with the consolidated fi-
nancial statements and the knowledge obtained in the audit,
complies with the German legal requirements and appropri-
ately presents the opportunities and risks of future develop-
ment, as well as to issue an auditor's report that includes our
audit opinions on the consolidated financial statements and
on the group management report.
In preparing the consolidated financial statements, the exec-
utive directors are responsible for assessing the Group's
ability to continue as a going concern. They also have the
responsibility for disclosing, as applicable, matters related to
going concern. In addition, they are responsible for financial
reporting based on the going concern basis of accounting
unless there is an intention to liquidate the Group or to cease
operations, or there is no realistic alternative but to do so.
sidered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated
financial statements and this group management report.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with
§ 317 HGB and the EU Audit Regulation and in compliance
with German Generally Accepted Standards for Financial
Statement Audits promulgated by the Institut der Wirtschaft-
sprüfer (IDW) will always detect a material misstatement.
Misstatements can arise from fraud or error and are con-
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
264
Corporate Governance
Independent Auditor's Report
Evaluate the appropriateness of accounting policies used
by the executive directors and the reasonableness of es-
timates made by the executive directors and related dis-
closures.
Obtain an understanding of internal control relevant to
the audit of the consolidated financial statements and of
arrangements and measures (systems) relevant to the
audit of the group management report in order to design
audit procedures that are appropriate in the circumstanc-
es, but not for the purpose of expressing an audit opinion
on the effectiveness of these systems.
Identify and assess the risks of material misstatement of
the consolidated financial statements and of the group
management report, whether due to fraud or error, design
and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropri-
ate to provide a basis for our audit opinions. The risk of
not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls.
We exercise professional judgment and maintain profession-
al skepticism throughout the audit. We also:
Conclude on the appropriateness of the executive direc-
tors' use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a materi-
al uncertainty exists related to events or conditions that
may cast significant doubt on the Group's ability to con-
tinue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in
FY 20211
since 1 January 2018
Customer, Brands, Sales
PIETER NOTA
since 1 October 2019
TARGET REMUNERATION FOR THE FINANCIAL YEAR 2021 (2020)
← = Q
Other Information
Remuneration Report
FY 20202
MILAN NEDELJKOVIĆ
Production
FY 20211
1,050,000
in %
in €
in %
in €
in %
in €
FY 2020²
in %
Fixed remuneration (basic remuneration)
900,000
27
800,000
24
in €
Corporate Governance
1,175,000
Combined Management Report
27
17
(-)
(-)
550,000
16
(-)
(-)
4,450,000
63
4,333,873
65
2,050,000
60
7,119,355
100
6,700,129
100
3,397,633
100
2,145,290
3,382,664
63
100
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
279
BMW Group Report 2021
To Our Stakeholders
Group Financial Statements
800,000
BONUS
Fixed
remuneration
CC
(-)
255,000
8
(-)
255,000
8
(-)
595,000
(-)
(-)
595,000
Performance component of bonus 2020
18
475,000
14
(-)
(-)
575,000
15
(-)
(-)
Performance component of bonus 2021
475,000
14
(-)
Earnings component of bonus 2021
24
(-)
35
Fringe benefits (other remuneration)
43,237
1
101,973
3
18,525
0.5
18,408
1
Contribution to the company pension scheme
400,000
12
Earnings component of bonus 2020
350,000
400,000
10
350,000
11
Total
1,343,237
40
1,251,973
37
1,468,525
38
1,168,408
10
16
3 Provisional monetary value calculated as of 2 January 2021 in accordance with German Accounting Standard 17, as amended. The final number of matching shares and/or the final cash
value will only be determined when the investment obligation is fulfilled in shares of common stock of the company.
(-)
7
400,000
12
350,000
10
Total
2,669,355
37
2,366,256
35
1,347,633
40
500,000
1,237,374
BONUS
Earnings component of bonus 2020
Performance component of bonus 2020
Earnings component of bonus 2021
(-)
(-)
540,000
8
(-)
(-)
1,260,000
19
(-)
CC
37
255,000
10
Contribution to the company pension scheme
(-)
in €
in %
in €
in %
in €
FY 20211
in %
Fixed
remuneration
Fixed remuneration (basic remuneration)
Fringe benefits (other remuneration)
1,950,000
27
1,800,000
700,000
27
26
in €
800,000
FY 20202
in %
24
19,355
0.3
66,256
1
47,633
1
87,374
3
900,000
550,000
8
595,000
Target total remuneration
1 Remuneration system as of financial year 2021.
2 Remuneration system applicable until financial year 2020.
(-)
1,600,000
24
Τ
850,000
25
(-)
(-)
810,000
Total
12
(-)
382,500
11
(-)
123,873
2
(-)
62,790
2
1,175,000
17
(-)
(-)
(-)
Strategic focus target component
Personal cash investment amount 20214
18
1,050,000
15
(-)
(-)
475,000
14
(-)
(-)
Performance component of bonus 2021
1,050,000
15
RoCE component
(-)
475,000
14
CC
PERFORMANCE CASH PLAN
Variable
PCP 2020-2022
remuneration
SHARE-BASED PAYMENT
Cash remuneration component
(investment component) 2020 for holding obligation 2021-2025
Share-based remuneration component
(matching component) 2020 for holding obligation 2021-20253
(-)
575,000
350,000
PERFORMANCE CASH PLAN
15
(-)
(-)
475,000
14
(-)
(-)
Performance component of bonus 2021
575,000
15
(-)
(-)
475,000
14
(-)
(-)
PERFORMANCE CASH PLAN
Variable
PCP 2020-2022
remuneration
SHARE-BASED PAYMENT
Cash remuneration component
(investment component) 2020 for holding obligation 2021-2025
(-)
Share-based remuneration component
575,000
Earnings component of bonus 2021
18
297,500
175,000
10
Total
1,472,746
38
1,324,231
35
1,397,833
41
603,593
36
BONUS
(matching component) 2020 for holding obligation 2021-20253
Earnings component of bonus 2020
(-)
300,000
8
(-)
Performance component of bonus 2020
(-)
700,000
18
(-)
C C
127,500
8
(-)
Personal cash investment amount 20214
RoCE component
Strategic focus target component
640,000
16
(-)
(-)
550,000
16
(-)
(-)
2,430,000
62
2,468,802
65
(-)
2,050,000
1,072,610
64
3,902,746
100
3,793,033
100
3,447,833
100
1,676,203
100
3 Provisional monetary value calculated as of 2 January 2021 in accordance with German Accounting Standard 17, as amended. The final number of matching shares and/or the final cash
value will only be determined when the investment obligation is fulfilled in shares of common stock of the company.
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
59
12
16
(-)
Total
Target total remuneration
1 Remuneration system as of financial year 2021.
2 Remuneration system applicable until financial year 2020.
(-)
950,000
25
に
450,000
12
(-)
(-)
550,000
68,802
I
I
425,000
25
191,250
11
(-)
31,360
2
640,000
16
(-)
2
400,000
9
FY 20202
62,790
2
(-)
62,790
2
550,000
16
(-)
(-)
640,000
16
550,000
(-)
16
(-)
640,000
16
(-)
(-)
2,050,000
60
2,145,290
63
2,430,000
3,393,237
100
(-)
3,397,263
12
(-)
Variable
PCP 2020-2022
(-)
850,000
25
Τ
850,000
26
remuneration
SHARE-BASED PAYMENT
Cash remuneration component
(investment component) 2020 for holding obligation 2021-2025
382,500
Share-based remuneration component
Personal cash investment amount 20214
RoCE component
Strategic focus target component
Total
Target total remuneration
1 Remuneration system as of financial year 2021.
2 Remuneration system applicable until financial year 2020.
(-)
(-)
382,500
11
(-)
(matching component) 2020 for holding obligation 2021-20253
15
100
100
in €
in %
in €
in %
Fixed remuneration (basic remuneration)
1,050,000
27
950,000
25
900,000
26
400,000
in %
24
Fringe benefits (other remuneration)
22,746
1
24,231
1
97,833
3
28,593
2
Contribution to the company pension scheme
400,000
10
Fixed
remuneration
3,898,525
in €
in €
68
62
2,145,290
65
3,313,698
100
3 Provisional monetary value calculated as of 2 January 2021 in accordance with German Accounting Standard 17, as amended. The final number of matching shares and/or the final cash
value will only be determined when the investment obligation is fulfilled in shares of common stock of the company.
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
280
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
in %
Group Financial Statements
Remuneration Report
Other Information
← = Q
TARGET REMUNERATION FOR THE FINANCIAL YEAR 2021 (2020)
NICOLAS PETER
Finance
since 1 January 2017
FRANK WEBER
Development
since 1 July 2020
FY 20211
FY 2020²
FY 20211
FY 2020²
Corporate Governance
FY 20211
18
Human Resources, Labour Relations Director
- € 1.95 million p.a.
- Monthly payment on a pro rata basis
Contractual agreement, main points: non-cash benefits from the use of company cars and the BMW chauffeur service, insurance premiums, contributions towards security systems, employee discounts
The Supervisory Board may award payments to compensate for loss of salary from a previous employment relationship and to cover relocation costs in the case of new entrants.
Defined contribution system with a guaranteed minimum return
Benefits based on amounts credited to individual savings accounts for contributions paid and interest earned, various forms of disbursement
Pension contribution p. a.:
Member of the Board of Management: € 400,000
Chairman of the Board of Management: € 700,000
― Base remuneration has the effect of discouraging unduly high levels of risk being to achieve short-term targets, thus contributing to the long-term development of the Company
- Fixed remuneration components are a prerequisite for competitive levels of remuneration to attract and retain Board of Management members with the right qualifications
Bonus
Bonus
(sum of earnings component and performance
component)
Earnings component
(at 100% target achievement corresponds to
50% of target amount)
- Target amount p. a. (at 100% target achievement):
- € 0.95 million (first period of office)
Chairman of the Board of Management:
― € 1.05 million p.a. (from second period of office or fourth year of mandate)
€ 0.90 million p.a. (first period of office)
Member of the Board of Management:
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
2.
― € 1.15 million (from second period of office or fourth year of mandate)
Overview of remuneration system from the financial year 2021 onwards
FIXED REMUNERATION COMPONENTS
Base remuneration
Fringe benefits
Compensation payments
Retirement benefits
Remuneration linked to corporate strategy
VARIABLE REMUNERATION COMPONENTS
Parameters/measurement base, applicable amounts
The table below shows an overview of the remuneration system applicable from the financial year 2021 onwards.
COMPONENT
- € 2.10 million (Chairman of the Board of Management)
― Capped at 180% of target amount
― Payment after the Annual General Meeting at which the Company Financial Statements are presented for the relevant financial year
Corporate Governance
Remuneration Report
Other Information
← = Q
COMPONENT
VARIABLE REMUNERATION COMPONENTS
Bonus
Group Financial Statements
Performance component
Remuneration linked to corporate strategy
Share-based remuneration
Personal investment cash amount
Basis of computation
Parameters/measurement base, applicable amounts
Assessment period one year
- Base amount p. a. (50% of target bonus amount):
- € 0.475 million (first period of office)
(at 100% target achievement corresponds to
50% of target amount)
To Our Stakeholders
Combined Management Report
BMW Group Report 2021
- Assessment period one year
― Base amount p. a. (50% of target bonus amount):
- € 0.475 million (first period of office)
€ 0.575 million (from second period of office or fourth year of mandate)
― € 1.050 million (Chairman of the Board of Management)
- Formula: 50% of target amount x performance factor
― Earnings factor is derived from a predefined allocation based on the parameters
To Our Stakeholders
― Profit attributable to shareholders of BMW AG and Group post-tax return on sales in grant year
— The earnings factor is 1.5 in case of a profit attributable to shareholders of BMW AG amounting to € 6.9 billion and a Group post-tax return on sales of 7.3%
― The earnings factor is 0 in case of a profit attributable to shareholders of BMW AG below € 3.0 billion or a Group post-tax return on sales of below 3.0%
-Earnings factor may not exceed 1.8
- Maximum amount of earnings component p. a.:
- € 0.855 million (first period of office)
― € 1.035 million (from second period of office or fourth year of mandate)
- € 1.890 million (Chairman of the Board of Management)
>
275
―The earnings factor is 1.0 in case of a profit attributable to shareholders of BMW AG amounting to € 5.3 billion and a Group post-tax return on sales of 5.6%
BMW Group Report 2021
274
The amount of the variable share-based remuneration
also depends on the fulfilment of financial and non-fi-
nancial objectives derived from the business strategy,
since 50% of the target cash amount earmarked for
share purchases is linked to a financial key indicator
(ROCE in the Automotive segment), and 50% is linked to
strategic focus targets. The obligation to use the net
amount to purchase shares of common stock in the com-
pany and to hold these shares for at least four years also
motivates the members of the Board of Management to
strive to ensure the long-term positive development of
the company, as this in turn promotes sustainable posi-
tive developments in the price of BMW shares.
310 III. Remuneration of the members of the
Supervisory Board
310 1. Articles of Incorporation and procedure
310 2. Principles and elements of remuneration
310 3. Remuneration granted and owed to
members of the Supervisory Board pursuant
to § 162 of the German Stock Corporation
Act (AktG)
314 IV. Comparison of change in remuneration
and earnings pursuant to § 162 (1)
Sentence 2 No. 2 of the German Stock
Corporation Act (AktG)
318 V. Other considerations
318 VI. Outlook for the 2022 financial year
319 VII. Auditor's Report
REMUNERATION REPORT
306 10. Remuneration granted and owed to
former members of the Board of Manage-
ment pursuant to § 162 of the German Stock
Corporation Act (AktG)
The Board of Management and the Supervisory Board have
prepared this Remuneration Report in accordance with the
requirements of § 162 of the German Stock Corporation Act
(AktG). As a result of the implementation of the second EU
Shareholder Rights Directive via §162 AktG, the reporting
standard applicable to Bayerische Motoren Werke Aktienge-
sellschaft (BMW AG) has changed as of the reporting year
2021. The report shows and explains the remuneration
granted and owed to the individual current and former mem-
bers of the Board of Management and the Supervisory
Board of BMW AG in the financial year 2021.1
The auditing firm PricewaterhouseCoopers GmbH has
audited the remuneration report beyond the requirements of
§162 (3) Sentences 1 and 2 AktG.
I.
Review of the past financial year from a remunera-
tion perspective
The Supervisory Board adopted the current remuneration
system for the members of the Board of Management with
effect from 1 January 2021. The Annual General Meeting
approved it on 12 May 2021 with a majority of 91.60% of the
valid votes cast.
Despite the challenges posed by supply shortages and the
ongoing coronavirus pandemic, 2021 was a very successful
financial year for the BMW Group, with solid sales growth for
its BMW, MINI and Rolls-Royce brands. The BMW brand set
a new sales record and took over the top position in the
global premium segment. In 2021, the BMW Group also con-
sistently pushed ahead with the expansion of its range of
electrified models, increasing the share of electrified vehicles
sold by the BMW and MINI brands by more than 70 per cent
compared to 2020. The launch of the BMW iX and the BMW
14 also marked the entry of two products at the forefront of
innovation to the market.
Under the leadership of the Board of Management, the
BMW Group's management continued to steer the company
in a prudent fashion through the volatile and challenging
environment that characterised last year. For example, the
production, sales and purchasing networks successfully
managed the challenges associated with the coronavirus
pandemic and supply bottlenecks, demonstrating genuine
flexibility in the process. As a result, the impact of Covid-19
was limited over the past financial year.
In order to facilitate understanding, the basic features of the
remuneration systems applicable to the members of the
Board of Management and the members of the Supervisory
Board, as applied in the 2021 financial year, are also set out
below. In view of the fact that individual members of the Board
of Management also received remuneration components from
earlier remuneration systems during the 2021 financial year
(specifically the remuneration systems for the 2016 financial
year and for 2019 financial year) elements of these systems
are also explained to the extent necessary for comprehension.
1 Due to rounding, it is possible that individual figures in this report may not add up
exactly to the totals provided, and that the percentages presented here may not be
an exact reflection of the absolute values to which they relate.
295 9. Remuneration granted and owed to mem-
bers of the Board of Management pursuant
to § 162 of the German Stock Corporation
Act (AktG)
295 7. Malus and clawback provisions
since 1 November 2019
271
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
295 8. Regulations in the event of death, inva-
lidity and post-contractual non-competition
clause
Remuneration Report
← = Q
REMUNERATION REPORT
271 I. Review of the past financial year from a
remuneration perspective
272 II. Remuneration of the members of the
Board of Management
272 1. Principles of the remuneration system
and the contribution of remuneration to
the promotion of the company's business
strategy and its long-term development
274 2. Overview of remuneration system from
the financial year 2021 onwards
277 3. Determination and review of the remuner-
ation system and individual remuneration
284 4. Remuneration for the 2021 financial year
294 5. Shareholding rules
294 6. Retirement benefits
Other Information
― € 0.575 million (from second period of office or fourth year of mandate)
BMW Group Report 2021
Combined Management Report
The remuneration system takes into account both the
performance of the entire Board of Management and the
achievement of individual targets.
The remuneration system observes the principle of con-
sistency between the remuneration systems in the com-
pany: The remuneration systems for the Board of Man-
agement, executives and employees of BMW AG are all
designed in a similar way.
273
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
The remuneration system ensures that both positive and
negative developments are appropriately reflected in the
remuneration ("pay for performance").
Corporate Governance
Other Information
← = Q
The total remuneration is in line with market practice
both in terms of amount and structure, and takes into
account the size, complexity and economic situation of
the company.
The BMW Group aims to be the most successful and sus-
tainable premium provider of individual mobility. The busi-
ness strategy focuses on the customer and the provision of
sustainable individual mobility in the premium segment, tak-
ing into account high profitability, in order to secure the com-
pany's independence in the future. The remuneration sys-
tem contributes to the implementation of the business
strategy and the sustainable and long-term development of
the company. It also takes into account the concerns of the
company's important stakeholders (in particular, sharehold-
ers, customers, and employees). The incentive effects of the
various remuneration components have a complementary
effect.
The fixed basic remuneration counteracts the temptation
to take disproportionately high risks in order to achieve
short-term goals, and thus contributes to the long-term
development of the company.
The variable bonus is divided into two parts, which influ-
ence behaviour in different ways. The earnings-related
component of the bonus rewards recipients for achieving
the company's financial targets in the vesting year, and
promotes the earnings-related parts of the business
strategy. In contrast, the performance component of the
bonus is based on non-financial performance criteria,
which are also derived from the business strategy. In this
respect, the performance component of the bonus also
offers particular incentives to encourage individuals con-
sistently to pursue the goals of the business strategy for
the long-term development of the company. These goals
do not have to be directly reflected in the key financial
indicators for a given vesting year.
Remuneration Report
To Our Stakeholders
The total remuneration of the members of the Board of
Management is commensurate with their tasks and per-
formance as well as the company's situation.
The remuneration structure is geared towards the sus-
tainable and long-term development of the company.
Therefore, variable remuneration components are pre-
dominantly granted on the basis of a multi-year assess-
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
At the same time, the Board of Management of the
BMW Group worked very constructively and intensively on
the core strategic course for the future, in order to create the
conditions for an attractive and future-oriented product port-
folio, and to achieve a significant improvement in profitabil-
ity. The strategic decisions taken in this regard focused in
particular on strategic issues related to electrification.
In December 2020, the Supervisory Board set ambitious tar-
gets linked to the variable remuneration of the members of
the Board of Management for the 2021 financial year. Of the
total variable target remuneration available, approximately
38% is linked to environmental, social or governance (ESG)
targets. It set targets for fleet carbon emissions in the EU
and sales targets for electrified vehicles in the 2021 financial
year as strategic focus targets for long-term variable remu-
neration (share-based remuneration). In doing so, it attached
particular significance to the strategic importance of acceler-
ating market penetration for electrified vehicles and sustain-
ability targets in determining remuneration.
ment.
Thanks to its strong overall performance, the Board of Man-
agement exceeded both the financial and non-financial tar-
gets for short-term variable remuneration (bonuses) 7 "Bonus
for the 2021 financial year". The financial target regarding long-
term variable remuneration (share-based remuneration)
was also exceeded with regard to the return on capital
employed (ROCE) in the Automotive segment. The Board of
Management achieved (or nearly achieved) the ambitious
non-financial strategic focus targets for long-term variable
remuneration. At 115.9 g/km, fleet carbon emissions came
in under the EU legal limit of 125.8 g/km "Share-based remuner-
ation for the 2021 financial year".
The composition of the Board of Management did not
change during the year. For Dr. Wendt, the target remunera-
tion applicable to Members of the Board of Management
from the second mandate period onwards was applied at
the beginning of his second mandate period, from 1 October
2021 onwards.
The remuneration system for the members of the Supervi-
sory Board is set out in Article 15 of the Articles of Incorpora-
tion. It was confirmed by the Annual General Meeting on 12
May 2021 with a majority of 99.40% of the valid votes cast,
and implemented for the 2021 financial year in accordance
with the provisions of the Articles of Incorporation.
In the 2021 financial year, there were several changes to the
composition of the Supervisory Board, meaning that the
Supervisory Board remuneration for individual Supervisory
Board members had to be calculated pro rata temporis. With
effect from the end of the 2021 Annual General Meeting, Dr.
Kley resigned from the Supervisory Board and the Personnel
Committee, which, among other things, is responsible for
preparing decisions in connection with Board of Manage-
ment remuneration. The Supervisory Board elected Dr. Bock
as his successor on the Personnel Committee, with effect
from 12 May 2021.
II. Remuneration of the members of the Board of
Management
1.
Principles of the remuneration system and the contribution
of remuneration to the promotion of the company's business
strategy and its long-term development
The remuneration system in place since the 2021 financial
year is easy to understand and clearly structured. It complies
with the provisions of the German Stock Corporation Act
(AktG) and the recommendations and suggestions of the
German Corporate Governance Code. The Supervisory
Board has applied the following principles in designing the
remuneration system for the Board of Management:
If necessary, and in the interest of the long-term success of
BMW AG, the Supervisory Board may temporarily deviate
from the remuneration system - as provided for in § 87a (2)
Sentence 2 AktG. In accordance with G.11 of the German Cor-
porate Governance Code dated 16 December 2019, the
Supervisory Board has also reserved the right to make
adjustments if extraordinary developments occur, such as
significant acquisitions and disposals, or changes in
accounting standards or tax regulations that have a signifi-
cant impact. After due examination, the Supervisory Board
did not make use of these options for the 2021 financial year.
- € 1.050 million (Chairman of the Board of Management)
272
― Primarily qualitative, non-financial criteria, expressed in terms of a performance factor aimed at measuring the Board members contribution to sustainable and long-term performance
and corporate orientation
― Minimum, target and maximum values are defined before the start of the financial year
― Factor for each strategic focus target may not exceed 1.8
Maximum amount of strategic focus target component p. a.:
- € 0.990 million (first period of office)
― € 1.152 million (from second period of office or fourth year of mandate)
― € 2.115 million (Chairman of the Board of Management)
― personal investment cash amount is 50% dependent on key performance indicator RoCE and is therefore directly linked to a key measure of corporate strategy and reflects BMW AG's
aspiration to generate a significant premium on the cost of capital
―The remaining 50% of the personal investment cash amount is beneficial for the attainment of strategic focus targets and therefore contributes to the BMW Group's operational suc-
cess in strategically important areas
― Commitment to purchase shares of BMW AG common stock and four-years holding requirement is beneficial for the long-term development of the BMW Group
Malus and clawback rules
Malus
Clawback
- Agreement to withhold variable remuneration in the event of specified serious compliance violations or (withholding amounts provisionally) in the event of reasonable suspicions of such
― Amounts may also be withheld in principle after a member has left the Board
― Agreement entitling the BMW Group to reclaim variable remuneration already paid out in the event of specified incidences of serious non-compliance, incorrect calculation bases or
incorrect financial statements
― Amounts may also be clawed back in principle after a member has left the Board
277
BMW Group Report 2021
25% of target amount for personal investment cash amount x factor for strategic focus target 1 + 25% of target amount for personal investment cash amount x factor for strategic
focus target 2
- Formula in event of two strategic focus targets with equal weighting p. a.:
― Weighting of the strategic focus targets is decided before the start of the financial year
- At least two strategic focus targets derived from the strategic plan
- Target amount RoCE component p. a. (50% of target amount of the personal investment cash amount):
- € 0.55 million (first period of office)
― € 0.264 million (from second period of office or fourth year of mandate)
― € 1.175 million (Chairman of the Board of Management)
- Formula: 50% of target amount x ROCE factor
― ROCE factor is derived from the RoCE achieved in the Automotive segment for the vesting year
― Minimum, target and maximum values for ROCE are defined before the start of the financial year
To Our Stakeholders
- ROCE factor may not exceed 1.8
- € 0.990 million (first period of office)
― € 1.152 million (from second period of office or fourth year of mandate)
― € 2.115 million (Chairman of the Board of Management)
— Target amount strategic focus target component p. a. (50% of target amount of personal investment cash amount):
- € 0.55 million (first period of office)
€ 0.64 million (from second period of office or fourth year of mandate)
― € 1.175 million (Chairman of the Board of Management)
- Maximum amount of RoCE component p. a.:
Combined Management Report
Group Financial Statements
Corporate Governance
Bonus
27-30%
Excluding a possible payment to new members of the Board of Management to compensate for salary
losses from a previous employment relationship and/or to cover relocation costs.
278
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Variable
remuneration
58-66%
Corporate Governance
Other Information
← = Q
TARGET REMUNERATION FOR THE FINANCIAL YEAR 2021 (2020)
OLIVER ZIPSE
Chairman of the Board of Management since 16 August 2019
Member of the Board of Management since 13 May 2015
ILKA HORSTMEIER
- Formula: 50% of target amount x performance factor
Remuneration Report
Parameters/measurement base, applicable amounts
Share-based
payment
31-36%
Basic
Remuneration Report
Other Information
← = Q
3.
Determination and review of the remuneration system and
individual remuneration
Determining the system and structure of Board of Manage-
ment remuneration, and reviewing it regularly, is a task of the
full Supervisory Board, as is determining the individual level
of remuneration of members of the Board of Management.
The Personnel Committee of the Supervisory Board assumes
a preparatory function in the determination and review of the
remuneration system as a whole, and of the individual remu-
neration paid to members of the Board of Management.
The Supervisory Board reviews the remuneration system
annually to ensure it is appropriate in terms of structure, tar-
get and maximum remuneration, as well as actual remuner-
ation. The Supervisory Board also takes remuneration stud-
ies into account when assessing the market conformity of
the target and maximum remuneration, as well as when
assessing actual remuneration in horizontal terms. Due to
the size and structure of the BMW Group, DAX companies
are used as a comparison group and the remuneration data
from this group is compared with the remuneration paid to
members of the Board of Management at BMW AG. Verti-
cally, the Supervisory Board compares the remuneration of
members of the Board of Management with the remunera-
tion of senior executives and with the average remuneration
of employees employed by BMW AG in Germany in areas
inside and outside the scope of collective bargaining agree-
ments, including in terms of how they have changed over a
period of several years. Recommendations from independ-
ent external remuneration experts, as well as suggestions
from investor and analyst circles, may also be included in the
deliberations. For the 2021 financial year, the review has
shown that the target and maximum remuneration as well as
actual remuneration are appropriate.
remuneration
25-30%
In accordance with the remuneration system, the Supervi-
sory Board acting on the proposal of the Personnel Com-
mittee sets specific target remuneration for each individual
member of the Board of Management for the upcoming
financial year, as well as the performance criteria associated
with the variable remuneration components provided for in
the remuneration system.
a) Target remuneration for the 2021 financial year
The following tables show the individual target remuneration
of the members of the Board of Management and the rela-
tive share of the respective remuneration component in the
total target remuneration.
OVERVIEW OF TOTAL TARGET
REMUNERATION FOR MEMBERS OF THE
BOARD OF MANAGEMENT
in %
Fringe benefits
1-4%
Contributions to
retirement
benefit plans
7-12%
The total target remuneration is composed of the fixed remu-
neration and the variable remuneration. Within the variable
remuneration, the proportion of share-based remuneration
as long-term variable remuneration exceeds the share of the
bonus as short-term variable remuneration. The share of the
individual remuneration components is within the ranges
specified by the remuneration system.
Remuneration linked to corporate strategy
-
RoCE component (at 100% target achievement
corresponds to 50% of target amount)
― Assessment period of five years in total (one year for determining the personal cash investment amount, four years holding requirement)
- Requirement for Board of Management members to invest an earmarked cash amount (personal cash investment amount), net of tax and deductions, in shares of BMW common stock
― Requirement for Board of Management members to hold the acquired shares of common stock for at least four years (share ownership guideline)
- Performance component of bonus motivates the pursuit of non-financial strategic targets and is therefore beneficial for the long-term development of the BMW Group
― € 1.890 million (Chairman of the Board of Management)
― € 1.035 million (from second period of office or fourth year of mandate)
- € 0.855 million (first period of office)
- Maximum amount of performance component p. a.:
― Performance factor may not exceed 1.8
― Measurement parameters and target values are determined before the start of the financial year
― Criteria for the other cross-divisional targets include in particular: market position compared to competitors, innovation performance (economic), development of the BMW Group's
reputation based on non-ESG-related aspects (e.g. perception on capital markets, brand strength), customer orientation
― Criteria for the cross-divisional targets with ESG criteria include in particular: innovation performance (environmental, e.g. reduction of carbon emissions), development of the BMW
Group's reputation based on ESG aspects (e.g. corporate culture, promotion of integrity and compliance), adaptability, attractiveness as an employer, leadership performance
-10% individual targets
-40% other cross-divisional targets
- 50% cross-divisional targets with ESG criteria
- Composition of performance factor:1
- Relevant period is the vesting year
- Additional trend analysis over at least three financial years
— Target amount p. a. (at 100% target achievement):
- € 1.10 million (first period of office)
― Earnings component of bonus rewards attainment of financial targets and is beneficial for earnings-related aspects of business strategy
― € 2.35 million (Chairman of the Board of Management)
VARIABLE REMUNERATION COMPONENTS
Share-based remuneration
COMPONENT
← = Q
Other Information
― € 1.28 million (from second period of office or fourth year of mandate)
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
Remuneration Report
276
- 50% of target amount depends on ROCE achieved in the Automotive segment (ROCE component)
- 50% of the target amount depends on the achievement of predefined strategic focus targets (strategic focus target component)
BMW Group Report 2021
- Capped at 180% of target amount
Strategic focus target component (at 100%
target achievement corresponds to 50% of
target amount]
― Payment after the Annual General Meeting at which the Company Financial Statements are presented for the relevant vesting year
1 See below for the set targets for the 2021 financial year (Variable remuneration for the 2021 financial year).
>
5.6
9.0
OVERVIEW OF EARNINGS COMPONENT OF THE BONUS FOR THE FINANCIAL YEAR 2021
3.0
Member of the Board of Management
Oliver Zipse
Ilka Horstmeier
Milan Nedeljković
of bonus in €
Proportionate target bonus
11.2
1,890,000
855,000
855,000
1,035,000
1,035,000
855,000
900,000
amount in €
Group post-tax return on sales in %
Nicolas Peter
Pieter Nota
500,000
Andreas Wendt
475,000
Earnings component
Frank Weber
1.800
575,000
475,000
475,000
1,050,000
Earnings factor
575,000
1,800
The performance component of the bonus rewards the
achievement of certain non-financial targets. Before the
beginning of the financial year, the Supervisory Board sets
these targets in the form of various non-financial perfor-
mance criteria and associated metrics. The performance cri-
teria are derived primarily from the corporate strategy, long-
term corporate planning and the business development
planning done for the following year. The targets are divided
into individual targets for the individual members of the Board
of Management (departmental targets) and collective targets
for the entire Board of Management (interdepartmental tar-
gets). The Supervisory Board has discretion in weighting the
performance criteria. Approximately 10% of the target
amount for the performance bonus is intended to be allo-
12.4
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
286
maximum value
11.0
Profit attributable to
shareholders in € billion
1.800²
2 Earnings factor 2021
1 Simplified depiction
target value
← = Q
180%
Targets set and extent of achievement - earnings component of
the bonus for the 2021 financial year
Performance component of the bonus
11.0
5.3
3.0
Profit attributable to shareholders of BMW AG in € billion
Earnings
factor
Actual achievement
value
in %
value
Maximum
Target
value
value
Performance criteria
Minimum
Target
TARGETS SET AND ACHIEVED EARNINGS COMPONENT OF BONUS FOR THE FINANCIAL YEAR 2021
cated to the departmental targets. Departmental targets can
be department-specific targets or contributions to shared tar-
gets measured individually for each department. The remain-
der of the target amount for the performance bonus (amount-
ing to approximately 90%) should be associated with
interdepartmental, non-financial targets. In this regard,
around 50% of the target amount should be connected to the
achievement of non-financial targets relating to environmen-
tal, social and governance (i.e., ESG targets).
The targets set and the extent to which they have been
achieved, as well as the specific amounts associated with
the earnings component of the bonus for the 2021 financial
year, are shown in the following tables. In the financial year
2021, BMW AG's share of profit attributable to shareholders
was € 12.4 billion, and the Group post-tax return on sales
was 11.2%. Both key indicators exceeded the maximum val-
ues defined for the assessment of the earnings component,
so the earnings factor has been capped at the maximum
value of 1.800 (corresponding to a target achievement of
180%, the highest possible percentage).
Targets set and extent of achievement - performance component
of the bonus for the financial year 2021
non-financial
In order to determine the extent to which targets were
achieved in 2021, the Supervisory Board assessed the
departmental targets, on the one hand, and the interdepart-
mental targets, on the other hand, within a target achieve-
ment corridor with a partial performance factor between 0
(corresponding to a target being 0% achieved) and 1.80
(corresponding to a target being 180% achieved, the high-
est possible percentage). The performance factor for the
bonus was determined from the two partial performance
factors, with a weighting of 10% for the departmental tar-
gets and 90% for the interdepartmental targets. With regard
to the interdepartmental targets, 50% of the weighting is for
non-financial environmental, social and governance (ESG)
targets, and 40% is for other non-financial targets.
Specific departmental targets
Pieter Nota
Milan Nedeljković
Ilka Horstmeier
Staff restructuring and qualification
Promote employer attractiveness
Continue to develop the Compliance Management System
Present and promote new products
Positioning with regard to proposed legislation
Coordination of the work of the Board of Management
Achievement of departmental diversity targets
Preventive activities in ensuring compliance
Leadership performance in the department
Contribution to meeting growth and profitability targets
Development of reputation (e.g. awareness in the capital market, brand strength)
Customer orientation (product, customer service quality)
Innovation performance (economic)
minimum value
Expand market position
← = Q
OVERVIEW OF DEPARTMENTAL TARGETS FOR THE PERFORMANCE COMPONENT OF THE BONUS FOR FINANCIAL YEAR 2021
Interdepartmental ESG targets
Interdepartmental other
non-financial targets
Entire Board of Management¹
Joint departmental targets
Nicolas Peter
Other Information
Oliver Zipse
Target set
Innovation performance (environmental)
Develop the Company's reputation e.g. (corporate culture, promoting integrity and ensuring compliance)
Transformability (investment in training and further education, sustainability)
Employer attractiveness
Leadership performance (employee satisfaction)
All members of the Board
of Management²
The targets set by the Supervisory Board for the 2021 vesting
year as part of the performance component of the bonus, the
weighting of the relevant criteria and the individual target
achievement are summarised in the tables below.
Frank Weber
Implement the diversity strategy
In order to determine the extent to which targets were
achieved, the Supervisory Board assessed the leadership
performance of the individual members of the Board of Man-
agement and the overall performance of the Board of Man-
agement as a whole. With regard to the departmental tar-
gets, the Supervisory Board assessed the individual
performance of each member of the Board of Management.
287
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
With regard to the interdepartmental targets, the Supervi-
sory Board deliberately considered the Board of Manage-
ment as a team and assessed the performance of all the
members of the Board of Management as a whole. The
Supervisory Board's decision-making process is based on a
detailed, documented analysis of performance as measured
against all the agreed criteria, as well as in-depth discus-
sions at Personnel Committee and full Supervisory Board
level. As a basis for its assessment, the Supervisory Board
was guided, in particular, by the quantitative and qualitative
metrics defined in the corporate planning that had been
done before the beginning of the financial year. These met-
rics include, for example, key indicators such as vehicle
sales, segment shares and the share of sales for electrified
vehicles, as well as other metrics for assessing sustainability
performance, R&D rate, the quality of the customer experi-
ence compared to the competition, investments in training
and further education, targets for diversity in the workforce
and the results of employee surveys. The results of compar-
ative studies and calculations were also used to assess indi-
vidual metrics. In addition to a review of performance in
2021, the Supervisory Board carried out a trend review cov-
ering several financial years. In doing so, it assessed the
effects of decisions, measures and the overall course set in
previous financial years on the financial year 2021 and, by
way of a forecast, also estimated the significance of the per-
formance in 2021 for the future development of the company.
OVERVIEW OF TARGETS OF THE PERFORMANCE
COMPONENT OF THE BONUS FOR THE FINANCIAL
YEAR 2021
10%
Departmental
targets¹
40%
Other
interdepartmental
targets²
Promote the strategic development of real estate management
Ensure the production network is managed effectively
Deliver dynamic alignment of the production structure in line with strategic factors
Achieve quality targets in production
Remuneration Report
Corporate Governance
Andreas Wendt
Group Financial Statements
To Our Stakeholders
BMW Group Report 2021
288
Interdepartmental
ESG targets²
50%
1 Individual assessment for each member of the Board of Management.
2 Collective assessment of the Board of Management as a team.
Combined Management Report
5.3
997,833
minimum value
To Our Stakeholders
BMW Group Report 2021
Reduce carbon emissions in production
997,803
401,099
1,398,902
1 Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
2 The pension contribution and any service cost in excess of this contribution represent the cost to the Company. This amount is not paid out to the relevant member of the Board of Management.
3 Maximum remuneration within the meaning of § 87 a (1) Sentence 2 no. 1 German Stock Corporation Act (AktG). This total upper limit is lower than the sum of the maximum amounts from the individual components.
Any special payments to compensate for loss of salary from a previous employment relationship and/or to cover relocation costs for new appointments are also covered by the maximum remuneration.
284
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
The maximum limits for each individual element of the varia-
ble remuneration in the 2021 vesting year and the stipulated
maximum remuneration limits were complied with in all
cases Remuneration granted and owed.
The remuneration granted and owed pursuant to § 162 Ger-
man Stock Corporation Act (AktG) for financial year 2021
7 Remuneration granted and owed includes a payout from the Per-
formance Cash Plan 2019-2021 for members of the Board of
Management who were in office back in the 2019 financial
year. This variable component of the remuneration system
applicable for the financial years 2018 to 2020 falls under
the overall caps set by the Supervisory Board for the vesting
year 2019. A final assessment of compliance with the overall
caps set for the 2019 vesting year will only be possible when
the matching component of the share-based remuneration
for the 2019 vesting year is paid out after the expiry of the
four-year shareholding period in the 2024 financial year.
The remuneration granted and owed for the 2021 financial
year pursuant to § 162 AktG Remuneration granted and owed also
includes the payment of the matching component of the
share-based remuneration for the 2016 vesting year to the
members of the Board of Management who were in office in
that financial year. This payment was made in May 2021,
after the expiry of the four-year shareholding period. This
Fringe benefits (other
remuneration) Total fixed remuneration
19,355
1,969,355
947,633
943,237
Andreas Wendt
Frank Weber
Nicolas Peter
Pieter Nota
Combined Management Report
Milan Nedeljković
Oliver Zipse
OVERVIEW OF FIXED REMUNERATION FOR THE 2021 FINANCIAL YEAR (IN €)
a) Fixed remuneration for the 2021 financial year
Each member of the Board of Management receives a fixed
basic remuneration, which is paid monthly on a pro rata
basis. The fixed basic remuneration ensures a minimum
income appropriate to the tasks and responsibilities of a
member of the Board of Management. It counteracts the
temptation to take disproportionately high risks in order to
achieve short-term goals, and thus contributes to the com-
pany's long-term development.
Remuneration for the 2021 financial year
Following a proposal by the Personnel Committee, the
Supervisory Board determined in December 2020 the target
remuneration for the members of the Board of Management
for the 2021 financial year, as well as the performance crite-
ria for the variable remuneration components provided for in
the remuneration system. In March 2022, at the suggestion
of the Personnel Committee, the Supervisory Board set or
confirmed the amount of the variable remuneration compo-
nents due to the members of the Board of Management for
the 2021 financial year after reviewing and assessing the
extent to which the targets had been achieved.
4.
component is subject to the overall cap set for the vesting
year 2016, which was complied with for the members of the
Board of Management in office at that time.
Ilka Horstmeier
Base salary
Group Financial Statements
Remuneration Report
900,000
0
1,152,000
0
990,000
0
1,030,500
0
1,152,000
0
990,000
0
1,030,500
0
4,374,000
0
3,690,000
Other Information
4,925,000
1,473,845
5,500,000
402,075
401,099
Corporate Governance
401,099
4,687,833
1,072,746
5,446,746
0
3,861,000
0
997,833
1,950,000
900,000
47,633
payment
Strategic
focus target
component²
PERFORMANCE COMPONENT
50% OF TARGET AMOUNT
EARNINGS FACTOR
50% OF TARGET AMOUNT
PERFORMANCE FACTOR
BONUS
(MAX. 180% OF
TARGET AMOUNT)
x
-
Earnings factor is derived from an allocation matrix based on
the parameters "profit attributable to shareholders of BMW AG"
and "Group post-tax return on sales" in the vesting year.
- Earnings factor may not exceed 1.8.
- Performance factor consists of
-50% cross-divisional targets with ESG criteria,
-40% other cross-divisional targets,
-10% individual departmental targets.
- Performance factor may not exceed 1.8.
(1) Bonus for the 2021 financial year
Overview
The bonus consists of an earnings component and a perfor-
mance component. If 100% of the target is achieved, the
share of the bonus attached to each component is 50% of
the individual target amount of the bonus. The bonus amount
is capped at 180% of the individual target amount. The
bonus is paid following the Annual General Meeting at which
the annual financial statements for the vesting year are pre-
sented.
3.0
0.135
1.000
5.6
target value
maximum value
9.0
Share-based
on sales in %
EARNINGS COMPONENT OF THE BONUS: ALLOCATION MATRIX¹
a target achievement of 180%, the highest possible per-
centage). For intermediate values, the earnings factor is
derived from the matrix.
the earnings factor is 1.000 (corresponding to a target
achievement of 100 %). As of the achievement of both max-
imum values, the earnings factor is 1.800 (corresponding to
For both indicators, the Supervisory Board defines a mini-
mum value, a target value and a maximum value before the
start of the vesting year. If one of the minimum values is not
reached, the earnings factor is zero (corresponding to a tar-
get achievement of 0%). If both target values are reached,
The earnings component of the bonus rewards the perfor-
mance of the business in the vesting year, as measured by
the financial indicators "Profit attributable to shareholders of
BMW AG" and "Group post-tax return on sales". For this pur-
pose, the Supervisory Board adopts an allocation matrix
before the start of the vesting year, from which an earnings
factor is derived based on the values achieved.
Earnings component of the bonus
Group post-tax return
EARNINGS COMPONENT
Share-based
payment
RoCE component²
² Each represents approx. 26-27% of variable target remuneration.
The amount of the basic remuneration depends on the indi-
vidual's respective function on the Board of Management
and the duration of their tenure on the Board of Manage-
ment or their appointment period, as applicable.
997,803
60,303
937,500
97,833
900,000
The fringe benefits include, in particular, insurance benefits,
non-cash benefits from vehicle use and use of telephones
and computers, health care, employee discounts and subsi-
dies for safety equipment. In addition, the Supervisory Board
can approve payments to newly appointed members of the
Board of Management in order to compensate them for loss
of salary from a previous employment relationship and/or to
cover relocation costs. No such approvals were issued in the
2021 financial year.
1,072,746
1,050,000
1,068,525
18,525
1,050,000
43,237
900,000
22,746
3.0
b) Variable remuneration for the 2021 financial year
The variable remuneration for the 2021 financial year con-
sists of the bonus and the share-based remuneration. The
bonus consists of the earnings and performance compo-
nents, and the share-based remuneration (personal cash
investment amount) consists of the RoCE component and
the strategic focus targets component. The performance cri-
teria for the variable remuneration paid to members of the
Board of Management are based on the Group's key strate-
gic financial and non-financial targets and performance indi-
cators, and sustainably promote the Group's development.
When determining specific target values, the Supervisory
Board takes into account, in particular, long-term corporate
planning and business development planning for the follow-
ing year. These plans are prepared by the Board of Manage-
ment and submitted to the Supervisory Board for approval.
For details of the strategic relevance of the individual remu-
neration components, see also above Overview of remuneration
system.
BMW Group Report 2021
1 Each represents approx. 23-24% of variable target remuneration.
Earnings
component¹
Bonus
Performance
component¹
Bonus
OVERVIEW OF THE COMPOSITION OF THE BONUS
285
OVERVIEW OF VARIABLE TARGET REMUNERATION
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
← = Q
Plan sales and prices, realise potential in our sales markets
Prepare and successfully deliver launches of new products
107.0%
Expand the internal control system (ICS) with regard to sales management and reporting
Ensure reliable communication with capital markets
Fixed
Fixed remuneration (basic remuneration)
in €
MAXIMUM AND MINIMUM REMUNERATION FOR THE FINANCIAL YEAR 2021
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
283
1 Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
2 The pension contribution and any service cost in excess of this contribution represent the cost to the Company. This amount is not paid out to the relevant member of the Board of Management.
3 Maximum remuneration within the meaning of § 87 a (1) Sentence 2 no. 1 German Stock Corporation Act (AktG). This total upper limit is lower than the sum of the maximum amounts from the individual components.
Any special payments to compensate for loss of salary from a previous employment relationship and/or to cover relocation costs for new appointments are also covered by the maximum remuneration.
402,852
1,471,377
1,068,525
5,442,525
402,852
5,500,000
943,237
401,466
1,344,703
4,925,000
1,349,398
4,925,000
2,671,629
401,466
Fringe benefits
remuneration
Total
BONUS
Min
Max
Min
Max
Min
Max
31 December 2021
from 1 October 2018 to
ANDREAS WENDT
Purchasing and Supplier Network
Member of the Board of Management
FRANK WEBER
Development
Member of the Board of Management
since 1 July 2020
Member of the Board of Management
since 1 January 2017
401,765
Finance
Maximum remuneration ³ / Minimum remuneration
Pension expense²
Total fixed and variable remuneration
Total
Strategic focus target component
RoCE component
remuneration (PERSONAL CASH INVESTMENT AMOUNT) 1
SHARE-BASED REMUNERATION
Variable
Performance component of bonus
Earnings component of bonus
NICOLAS PETER
401,765
702,274
702,274
9,850,000
0
990,000
0
990,000
0
2,115,000
RoCE component
(PERSONAL CASH INVESTMENT AMOUNT) 1
remuneration
SHARE-BASED REMUNERATION
Variable
1,152,000
1,035,000
855,000
0
855,000
0
1,890,000
Performance component of bonus
0
1,035,000
0
855,000
0
0
1,050,000
0
2,115,000
Maximum remuneration ³ / Minimum remuneration
Pension expense²
4,633,237
947,633
4,637,633
1,969,355
9,979,355
Total fixed and variable remuneration
0
4,374,000
0
Strategic focus target component
3,690,000
3,690,000
0
8,010,000
Total
0
1,152,000
0
990,000
0
990,000
0
0
1,050,000
900,000
900,000
Overall target achievement
(Cap: 180% of the target
amount)
4,858,803
401,099
5,068,750
Personal cash investment
amount
values determined for the individual strategic focus targets
using this calculation are added together. If two strategic
focus targets are set, each strategic focus target accounts
for 25% of the individual target amount, unless the Supervi-
sory Board decides on a different weighting. If more than
two strategic focus targets are set, the Supervisory Board
determines the weighting of each target.
FY
Target amount
OVERVIEW OF SHARE-BASED REMUNERATION
strategic focus target, and assigns a factor to each of these
values. If the minimum value is not reached, the factor for
that target is 0. If the target value is reached, the factor for
that target is 1.00. As of the achievement of the maximum
value, the factor for that target is 1.80. The strategic focus
targets component of the personal cash investment amount
is determined in a two-step process. In the first step, the fac-
tor for the vesting year achieved for the relevant strategic
focus target is multiplied by the share of the individual target
amount attributable to this target. In the second step, the
The Supervisory Board sets at least two strategic focus tar-
gets before the start of the vesting year. It derives these tar-
gets from the corporate strategy and corporate planning. It
then sets a minimum, target and maximum value for each
Strategic focus targets component of the personal cash invest-
ment amount
Weighting
RoCE component of the personal cash investment amount
Before the beginning of the relevant vesting year, the Super-
visory Board sets minimum, target and maximum values for
the ROCE in the Automotive segment in the vesting year on
the basis of corporate planning, and assigns a RoCE factor
to each of these values. If the minimum value is not reached,
the RoCE factor is 0. If the target value is reached, the RoCE
factor is 1.00. As of the achievement of the maximum value,
the ROCE factor is 1.80. The RoCE component of the per-
sonal investment cash amount is determined by multiplying
the ROCE factor for the vesting year by 50% of the individual
target amount.
RoCE component + strategic focus targets component
Personal cash investment amount =
The personal cash investment amount is paid out after the
Annual General Meeting at which the annual financial state-
ments for the vesting year are presented. The size of this
amount depends on the target amount, the RoCE achieved
in the Automotive segment and the degree to which certain
strategic focus targets were achieved in the vesting year. The
personal cash investment amount is limited to a maximum
of 180% of the target amount and is calculated as follows:
Personal cash investment amount
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
Target amount for the personal cash investment amount
The target amounts for the individual members of the Board
of Management for the 2021 financial year are presented in
the table "Overview of share-based remuneration for the
2021 financial year", below.
BMW Group Report 2021
Target
ROCE
1 Simplified depiction. Payment, acquisition of shares and the start of the four-year holding period occur following the Annual General Meeting at which the annual financial statements for the
vesting year are presented.
Freely available
shares
Performance period: 4 years
n+5
n+4
n+3
n+2
FY
FY
FY
FY
50%
при
هلر
Total performance period: 5 years
payment amount)
Acquisition of shares¹
(amounting to 100 % of the
n+1
FY
Taxes
Performance period: 1 year
Payment amount
Strategic Focus
targets
50%
Share performance over 4 years
855,000
290
cash investment amounts (less taxes and duties) in BMW
shares of common stock, and to hold these shares for a
period of at least four years (Share Ownership Guideline).
The obligation to purchase BMW shares of common stock
and the multi-year holding period strengthens the entrepre-
neurial long-term orientation of the Board of Management.
Implementing the corporate strategy sustainably by taking
appropriate decisions also creates lasting value for the
shareholders, and thus regularly provides the basis for posi-
Interdepartmental targets - ESG
Interdepartmental targets - Other
Departmental targets
0
855,000
0
1,035,000
0
900,000
0
855,000
0
1,035,000
50%
997,803
997,833
997,833
1,072,746
60,303
60,303
97,833
97,833
22,746
22,746
1,072,746
937,500
937,500
997,803
tive long-term capital market performance. Due to the sub-
stantial investment and the fixed holding period associated
with these shares, members of the Board of Management
participate in the long-term positive (and negative) develop-
ment of the company, as reflected in the share price, even
after their departure.
107.0%
102.5 %
(2) Share-based remuneration for the 2021 financial year
As part of the share-based remuneration as a variable long-
term component of remuneration, the members of the Board
of Management receive a cash payment earmarked for
investment in BMW shares of common stock (the "personal
cash investment amount"). This amount depends on the
achievement of certain financial and non-financial targets in
the past financial year (vesting year). The members of the
Board of Management are obliged to invest their personal
115.6%
10%
530,000
500,000
1.06
102.5 %
40%
107.0%
50%
115.6%
40 %
10%
475,000
1.06
102.5 %
40%
107.0%
50%
116.3%
10%
609,500
575,000
1.06
503,500
Expand the digital marketing and sales concepts
0
Earnings component of bonus
TARGET REMUNERATION FOR THE FINANCIAL YEAR 2021 (2020)
← = Q
Interdepartmental targets - ESG
Interdepartmental targets - Other
Departmental targets
Interdepartmental targets - ESG
Interdepartmental targets - Other
Departmental targets
Andreas Wendt
Frank Weber
Nicolas Peter
113.1%
10%
609,500
575,000
1.06
102.5 %
40 %
107.0%
50%
Interdepartmental targets - ESG
Interdepartmental targets - Other
Departmental targets
Pieter Nota
113.1%
10%
503,500
475,000
1.06
ANDREAS WENDT
Purchasing and Supplier Network
from 1 October 2018 until 31 December 2021
FY 20211
1,206,319
39
1,397,803
Total
10
350,000
11
400,000
Contribution to the company pension scheme
2
56,319
102.5 %
2
24
800,000
26
937,500
Fixed remuneration (basic remuneration)
Fringe benefits (other remuneration)
Fixed
remuneration
in %
in €
in %
in €
FY 2020²
60,303
40 %
50%
Interdepartmental targets - ESG
Interdepartmental targets - Other
Departmental targets
OVERVIEW OF TARGET ACHIEVEMENT FOR THE PERFORMANCE COMPONENT OF THE BONUS FOR FINANCIAL YEAR 2021
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
289
10%
Oliver Zipse
40%
Weighting
1 Collective assessment of the Board of Management as a team. 2 Individual assessment for each member of the Board of Management.
Establish a CO₂ management system in the supply chain
Meet quality requirements and cost targets in the supplier network
Maintain an efficient and flexible supplier network during the Covid-19 pandemic
Ensure production flexibility for vehicle components
Continue to develop automated driving and hydrogen technology
Develop new vehicle architecture
Ensure planned new products are handed over to production on time
Develop attractive and exciting vehicle models
Prepare the first Integrated Annual Report and further develop the ICS for non-financial key indicators
Manage financial risk and secure Group financing during and after the Covid-19 pandemic
Coordinate the delivery of Performance NEXT financial targets
50%
36
Targets
Weighting
50%
Milan Nedeljković
113.8%
10%
503,500
475,000
1.06
102.5 %
40 %
107.0%
50%
Interdepartmental targets - ESG
Interdepartmental targets - Other
Departmental targets
Interdepartmental targets - ESG
Interdepartmental targets - Other
Departmental targets
Ilka Horstmeier
10%
1,113,000
1,050,000
1.06
102.5 %
40 %
107.0%
Performance component
of bonus in €
Proportionate target
bonus amount in €
Performance factor
Average target
achievement
118.1%
BONUS
Earnings component of bonus 2020
(-)
Total
remuneration
Fixed remuneration (basic remuneration]
Fringe benefits
Fixed
in €
OLIVER ZIPSE
Chairman of the Board of Management
since 16 August 2019
Member of the Board of Management
since 13 May 2015
MAXIMUM AND MINIMUM REMUNERATION FOR THE FINANCIAL YEAR 2021
In addition to the maximum limits for the individual compo-
nents of overall remuneration, the Supervisory Board also set
minimum thresholds that had to be exceeded in order for a tar-
get to be achieved. If these minimum thresholds are not
reached, the relevant component of the variable remuneration
is not paid.
The total fixed maximum remuneration is less than the sum of
the maximum amounts for the individual components.
to cover relocation costs for new appointments are also cov-
ered by the maximum remuneration.
The maximum remuneration of the Members of the Board of
Management for the vesting year 2021, as determined in
accordance with § 87a (1) Sentence 2 No. 1 AktG includes, as
fixed components, the basic remuneration for 2021, other fixed
remuneration for 2021, the pension contribution, and any ser-
vice cost in excess of that contribution for 2021. The maximum
remuneration includes the bonus for the vesting year 2021 and
the share-based remuneration as variable components for the
vesting year 2021. Any special payments to compensate for
loss of salary from a previous employment relationship and/or
BONUS
The Supervisory Board has set upper limits on the remunera-
tion of Members of the Board of Management for the 2021
financial year (vesting year) in two ways: It has set maximum
limits in terms of the amount paid for all variable remuneration
components and, additionally, for the total remuneration of the
Board of Management members in each case. Both compo-
nents of the bonus and both components of the share-based
remuneration (the personal cash investment amount) are lim-
ited to a maximum of 180% of the respective target amount.
b)
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
282
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
Maximum and minimum remuneration for the financial year
2021
3 Provisional monetary value calculated as of 2 January 2021 in accordance with German Accounting Standard 17, as amended. The final number of matching shares and/or the final cash
value will only be determined when the investment obligation is fulfilled in shares of common stock of the company.
ILKA HORSTMEIER
Human Resources,
Labour Relations Director
Member of the Board of Management
since 1 November 2019
PIETER NOTA
Customer, Brands, Sales
Member of the Board of Management
1,050,000
18,525
1,068,525
1,050,000
18,525
1,068,525
900,000
43,237
943,237
900,000
43,237
943,237
947,633
947,633
1,969,355
1,969,355
47,633
47,633
19,355
MILAN NEDELJKOVIĆ
Production
Board of the Board of Management
since 1 October 2019
19,355
Min.
Max.
Min
Max
Min
Max
900,000
1,950,000
1,950,000
Min
Max
since 1 January 2018
900,000
1,890,000
100
100
(investment component) 2020 for holding obligation 2021-2025
Cash remuneration component
SHARE-BASED PAYMENT
remuneration
25
850,000
(-)
PCP 2020-2022
Variable
PERFORMANCE CASH PLAN
(-)
(-)
14
Performance component of bonus 2021
(-)
14
500,000
18
595,000
(-)
(-)
Performance component of bonus 2020
Earnings component of bonus 2021
8
255,000
500,000
3,351,609
(-)
11
3,542,803
64
2,145,290
61
2,145,000
(-)
(-)
16
572,500
(-)
16
382,500
572,500
1 Remuneration system as of financial year 2021.
Target total remuneration
Total
Strategic focus target component
RoCE component
Personal cash investment amount 20214
2
62,790
(-)
(matching component) 2020 for holding obligation 2021-20253
Share-based remuneration component
2 Remuneration system applicable until financial year 2020.
402,075
1,399,908
281
Over-the-air updates: BMW has the largest fleet.
Member of the Board of Management,
Human Resources, Labour Relations Director
Member of the Board of Management,
Customer, Brands, Sales
THE BOARD OF MANAGEMENT
28
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Dialogue with Stakeholders
DIALOGUE WITH STAKEHOLDERS
Stakeholder engagement
The BMW Group operates on a global scale in a highly inter-
connected world. Its business activities have a major impact
on the environment in which it operates and can have both a
direct and an indirect bearing on the interests of a wide var-
iety of stakeholders. Conversely, societal trends and devel-
opments can influence many aspects of the Group's busi-
ness activities. Against this backdrop, the BMW Group
maintains a continuous dialogue with its stakeholders world-
wide.
Consistency between supply-side and demand-side de-
carbonisation policies
Realistic relationship between emissions targets and
emissions measurement methods
· Support for new efficiency-enhancing technologies
Continued development of the regulatory framework for
automated driving and digital networks
Emissions limits without excluding individual drive tech-
nologies and vehicle concepts
Responsible leadership
Member of the Board of Management,
Finance
Sustainable financing and the EU taxonomy
Social responsibility for employees
Circularity and circular design, the use of secondary ma-
terials, particularly in relation to battery recycling
The Paris Climate Agreement and climate neutrality of
the BMW Group by 2050
The BMW Group's interaction with stakeholders includes top-
ics brought to its attention by stakeholders as well as those in
which it proactively engages in dialogue. This combination
gives rise to a comprehensive range of interlinked topics:
7 GRI 102-44
Material topics in 2021
Our commitment to stakeholder engagement is set out in the
7 BMW Group Stakeholder Engagement Policy, which outlines both the
dialogue objectives and the criteria for identifying and priori-
tising stakeholders. A variety of suitable dialogue formats
and forms of communication are described in internal guide-
lines. Key topics and formats are summarised below
7 GRI 102-42, 102-43, 102-46.
Environmental and social standards and respect for human
rights in the supply chain, particularly regarding the pro-
curement of raw materials for electric mobility applications
Ensuring a sufficient supply of critical raw materials
BMW Group Xchange
Nicolas Peter
Chairman of the Board of Management
Together, we will continue to make a difference in the future, as a global Impact
Company that creates values and generates added value. We hope you will continue
to support us on our BMW way.
Yours
V.fiume
Oliver Zipse
Chairman of the Board of Management
"We see transform-
ation as an oppor-
tunity. As a global
Impact Company,
we will continue to
make a difference in
the future."
27
27
BMW Group Report 2021
To Our Stakeholders
BMW
GROUP
The Board of Management
Milan Nedeljković
Member of the Board of Management,
Production
Combined Management Report
Member of the Board of Management,
Purchasing and Supplier Network
Joachim Post
Oliver Zipse
Member of the Board of Management,
Development
Frank Weber
MOTOR CARS LTD
Ilka Horstmeier
ROLLS-ROYCE
M
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
MINI
I would like to say a sincere thank you for the financial year 2021: to you, our share-
holders, all our customers, our retail organisation and suppliers - and, above all, to
our 118,909 associates. The feedback we received in our Employee Survey clear-
ly reflected back to us that the team stands behind the Company. Our associates
believe BMW has found the right balance between stability and disruption. We see
transformation as an opportunity.
The BMW Group Xchange encompasses all the well-estab-
lished forms of events organised by the Group, such as the
BMW Group Dialogues, the rad°hub and the FUTURE
FORUM, providing the appropriate platforms to encourage
an intensive dialogue with a variety of target groups.
BMW Group Dialogues are usually held in the BMW Group's
key sales regions of North America, Europe and Asia on an
annual basis. The results of these stakeholder dialogues are
documented and incorporated in the Group's strategic
considerations GRI-Index: 102-21.
Outlook
The BMW Group will continue to interact closely with its
stakeholders in 2022.
The continual dialogue with investors and financial analysts
on sustainability-related topics will be continued. Apart from
direct dialogue, the BMW Group's participation in (virtual)
SRI/ESG roadshows and conferences is again planned.
Moreover, plans are in place for the coming year to expand
the scope of recording the carbon emissions associated with
our investments, with the primary aim of reliably assessing
and transparently documenting the compatibility of our in-
vestments with the climate goals enshrined in the Paris
Agreement. To the extent possible, our aim is to take account
of non-liquid investments in the Group's reporting on sus-
tainability, or at least for all such investments to be reviewed
from a sustainability perspective.
The BMW Group will continue developing its own dialogue
options on an ongoing basis. We also intend to broaden the
scope of internal dialogue with employees in 2022 (Employ-
ees and society). In addition, we plan to participate in a variety
of public discussion formats going forward.
BMW
Group
in
dialogue
7 GRI 102-40, 102-43
Surveys (including a corporate reputation study), social media, trade fairs, mass media
Customers
Dialogue with employees and managers, employee surveys, idea management,
internal media
Dialogue, conferences and technology workshops with investors and analysts
Dialogue in the context of industry initiatives, joint events, training courses,
presentations, supplier risk assessments
Dialogue with sales organisations and coordinating units of importers
Participation of Company experts in committees and working groups, memberships
of initiatives and associations
Civil society and NGOs
Local stakeholders
Media
Academia
Political
decision makers
and associations
STAKEHOLDER GROUPS AND FORMS OF DIALOGUE
Networks
Employees
Capital market
Face-to-face meetings / dialogue, responding to enquiries
Discussions with local residents, plant tours, press engagements
Dialogue within the context of press trips, press releases, information events
on new products, test drives, trade fairs
Visiting universities and colleges, talks, discussions, dialogue events with students
Available to answer questions from policymakers and provide information to political
decision makers on relevant topics from the company's perspective
Suppliers
Business partners
7 BMW Group Dialogues are one of the main formats for interact-
ing with stakeholders and have been held regularly since
2011. Major topics covered in recent years have included
electric mobility, corporate citizenship, urban mobility, envir-
onmental and social standards within the supply chain, and
circularity, i. e. the transformation from a linear to a circular
economy with increasingly closed material cycles Resource
efficiency, circular economy and renewable energy.
Dialogue with Stakeholders
Other Information
29
29
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Dialogue with Stakeholders
Participation in public policy development and work in
associations
The BMW Group maintains an active, open and transparent
dialogue with representatives of politics, trade unions, asso-
ciations and non-governmental organisations (NGOs). The
aim is to play a constructive and transparent role in helping
shape the general political framework regarding the Group's
business activities.
Apart from its own activities in the area of public policy de-
velopment, the BMW Group is a member of numerous asso-
ciations in various countries. Membership is voluntary in the
majority of cases, although there are some situations in
which it is necessary to join associations in order to comply
with legal requirements.
7 BMW Group Lobbying Policy
At the beginning of 2021, the BMW Group assumed the
presidency of ACEA, the Association of European Automo-
bile Manufacturers (Association des Constructeurs Eu-
ropéens d'Automobiles). In December 2021, it was confirmed
that the BMW Group will continue to chair the association for
a further year (2022).
In the interest of transparency, the BMW Group always dis-
closes the most important association memberships on its
website BMW Group List of Memberships.
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
← = Q
30
In addition, standard benchmarks for measuring the invest-
ment performance of liquid assets were revised again in
2021 with the aid of ESG-oriented indices.
We currently record carbon emissions associated with all our
equity investments and a significant proportion of our
fixed-income assets. The relevant emissions data are includ-
ed in the TCFD Report relating to our UK pension plan, which
is required to be prepared annually in line with legislation that
came into force in 2021 for larger-scale UK pension schemes.
Since 2019, sustainability criteria have also been a major
factor for the BMW Group's pension fund investment strate-
gy. The current focus is on measuring the carbon footprint of
significant parts of these assets on the one hand and the
risks attached to their future performance on the other. The
BMW Group aims to achieve carbon neutrality with respect
to its pension plan assets by 2050 at the latest.
Against the background of the Paris Climate Agreement, pol-
icymakers in Europe are also increasingly addressing the is-
sues of climate protection and sustainability. For example,
the EU Action Plan for Sustainable Finance aims to direct
capital flows towards sustainable economic activities. A key
element of the EU Action Plan is the introduction of a stand-
ardised system to classify what is sustainable and what is
not.EU Taxonomy
cesses.
Financial market presence with sustainability credentials
Regular, in-depth communication with the capital market
has always been given a high priority within the BMW Group.
In the meantime, sustainability has become a decisive cri-
terion on financial markets. Furthermore, investors and fi-
nancial analysts alike are increasingly considering environ-
mental, social and governance (ESG) aspects in their
investment recommendations and decision-making pro-
The volume of non-liquid pension plan assets invested in our
various impact funds continues to grow according to sched-
ule. The investments made to date in this area relate not
only to climate protection, but also to other Sustainable De-
velopment Goals (SDGs) set by the UN. In 2021, the focus of
investment was on making cities more sustainable and ad-
dressing the consequences of climate change.
Many people benefit from our success: you, our shareholders, our global team and
society. This year, we will be hiring new staff, both worldwide and at our home base
in Germany - something a company only does when it is full of confidence.
Pieter Nota
Your Company is financially and economically stronger than ever. This allows us to
operate independently and invest in our own future. This is certainly something we
can continue to build on.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
24
Your Company operates at the intersection of conflicting forces, where conditions are
not only demanding, but also highly complex. The situation is becoming more and
more differentiated from one region of the world to another, with a highly dynamic
rate of change. In this context, it is more important than ever to anticipate require-
ments in the early stages, plan for various scenarios and manage risks effectively.
-
Staying flexible and pivoting quickly.
success.
The BMW brand is back on top of the global premium segment - and we intend
to keep it that way. BMW and Rolls-Royce achieved new all-time highs, as well as
BMW Motorrad. Global market share is also an important currency in our industry. As
a premium manufacturer, we increased our share of the global market to 3.4% during
the coronavirus pandemic – and with a further increase in profitability. Sales in key
individual markets and regions – China, Europe and the US grew significantly in
some cases. Our Financial Services Segment also made a major contribution to our
In February 2022, the BMW Group increased its share in the joint venture BMW
Brilliance Automotive Ltd. (BBA) to a 75% majority stake. With full consolidation of
BBA in the BMW Group Financial Statements, we are taking your Company into the
next dimension as a global company. The Chinese market is a driving force for digital
trends. This move will bring us even closer to customers there and enable us to keep
our finger on the pulse.
Looking forward confidently even in uncertain times. This characterises your Com-
pany. Our products are in high demand: More than 2.52 million customers took
delivery of a BMW Group vehicle in 2021 - 8.4% more than the previous year. This
number includes almost 330,000 electrified vehicles – an increase of 70 %.
Confident even in uncertain times.
← = Q
Statement of the Chairman of
the Board of Management
This is a complex task, and we will continue to learn. Our second Integrated Report
for the financial year 2021 reflects this learning process. The "Integrated Strategy of
the BMW Group" section provides a qualified insight into how strategy and our man-
agement of the Company are intertwined.
Holistic sustainability based on concrete targets.
We have announced clearly defined targets for 2030 that show how we will continue
to lower CO₂ emissions. As our shareholders, you know that your Company always
takes a holistic approach. We are therefore substantially reducing our environmen-
tal footprint in a measurable way throughout the entire value chain - during the use
phase, in production and in the upstream supply chain. Here, we are adopting a ten-
year perspective because this is a manageable time frame, in which we can take
responsibility for measures ourselves. We do not believe in empty promises. We are
able to report at any given time on how we are performing in all three sustainability
scopes.
_
Statement of the Chairman of
the Board of Management
We are the first German automotive manufacturer to join the "Business Ambition for
1.5° C" campaign launched by the Science-Based Targets initiative (SBTI).
This means our road to climate neutrality follows a scientifically validated and trans-
parent path.
Building credibility by keeping promises.
-
We deliver on our promises - and can back them up. In 2021, your Company once
again met the European Union's CO₂ targets – even clearly outperforming the legal
requirements by approximately 10 g/km. You can rest assured that we will also meet
our CO, requirements for 2030.
In production, well-designed individual steps ultimately contribute to overall sustain-
ability as well: as promised, production at all our locations has been carbon neutral
on balance since 2021. Our electric motors no longer require rare earths. We use
only green power to produce batteries for our electrified vehicles - as do our battery
cell suppliers. Our batteries are also almost fully recyclable. All of this is relevant for
ramping up electromobility. After all, this year, every one of our plants in Germany will
already be producing electric vehicles.
Change makes us resilient.
We never stand still – because we are constantly refining our business model. This
strengthens our resilience, building on a solid foundation created by profitability and
sustainable action. We believe the two go hand in hand and are mutually dependent.
Since most of our CO₂ emissions today are produced during the use phase, we have
raised the bar in this area: By 2030, we will reduce CO2 emissions by more than 50%
from 2019 levels. Our targets apply worldwide, including the extra 10% from the
SBTi framework added to fuel consumption figures and including CO₂ emissions from
fuel production and electricity generation. This will in turn also reduce our life cycle
carbon footprint – from the ore mine to kilometres driven on the road – by more than
40%.
"We have mastered
both competence
development from
the ground up and
how to transform
existing plants
Statement of the Chairman of
the Board of Management
NEUE KLASSE for a new age.
The NEUE KLASSE is our exclusively fully electric product range, which will usher
in Phase III of our transformation towards emissions-free mobility. It will be built on
our New Cluster Architecture (NCAR), with the three core forward-looking elements:
“electric”, “digital” and “circular”. This will be the next milestone in BMW history for
future products, technologies and new ways of working. The NEUE KLASSE makes a
significant contribution to sustainability, by relying on the concept of circularity.
Your Company is leveraging the opportunities and potential of global auto-
motive markets.
Our intelligent vehicle architectures enable us to offer different drivetrain variants
efficiently. This benefits customers and the climate alike. We serve markets according
to their individual circumstances and pace of change. In the mid-term, this will also
include hydrogen fuel cell technology - because hydrogen makes it possible to store
sustainably produced energy and release it just as quickly as conventional fuels.
New BMW 7 Series: the only luxury sedan to offer drivetrain variety.
All of us at BMW are looking forward to the market launch of the new BMW 7 Series
this year: progressive, digital and innovative, it is also the only luxury sedan to offer
customers a choice of drivetrain variants. By the way, the most powerful variant - the
BMW i7 - is fully electric. In April, we will present it in New York, Munich and Beijing,
representing the major regions of the world.
← = Q
_
Our new BMW iX and BMW i4 models are already winning over customers with their
innovations and an electric range of up to 600 kilometres. With the BMW iX, we are
also the first premium manufacturer to introduce the 5G mobile telecommunications
standard in a production vehicle that is available worldwide. Both models are among
the eight fully electric vehicle models we will have on the roads this year; by 2023,
there will be a dozen.
We already aim to at least double our sales of battery-electric vehicles this year com-
pared to 2021.
By 2025
the end of Phase II of our transformation - we aim to increase the total
share of our electrified vehicles, that means battery-electric and plug-in hybrids,
to more than 30%. By 2030 - the end of Phase III - more than 50% of our global
deliveries to customers should be fully electric. We are gearing up the Company and
our supply chains for this exponential growth in electromobility.
MINI and Rolls-Royce will be exclusively all-electric from the early 2030s onwards,
while all BMW Motorrad's urban models will be released with e-drives only from
2030. BMW M GmbH has also unveiled its first fully electric model, the BMW iX M60.
Merging the digital and the physical experience.
E-mobility shifts into sport mode.
Other Information
Other Information
Corporate Governance
into cutting-edge
locations for
electromobility."
Dealing with the effects of the coronavirus pandemic demanded a lot of us in 2021.
In typical BMW tradition, and in the spirit of Herbert Quandt, the Company and its
employee representatives once again found flexible solutions. The vaccination cam-
paign we launched together is a good example of this. For our locations in Germany,
we have made the BMW pension scheme even more attractive and increased the
level of benefits. At the plant in Leipzig, work hours have been brought into line with
our Bavarian locations. This shows our sense of community at BMW in difficult times.
We also responded extremely flexibly to semiconductor supply bottlenecks. This is a
stress test we have withstood together. All business units are working hand in hand
to minimise the impact and adjust production to the situation. Our stable and trust-
based relationships with suppliers have proved especially valuable in this respect. We
can expect, and are preparing for, the global supply situation for vehicle components
to remain difficult in 2022.
Transformation takes place not just on greenfield sites or around the confe-
rence table - but on the ground at our plants.
We are expanding our production network globally and in a targeted manner. For
instance in China: in Shenyang, we will be opening a new plant in Tiexi this year and
expanding the plant in Dadong.
Remuneration Report
We have mastered both competence development from the ground up and how to
transform existing plants into cutting-edge locations for electromobility. Examples of
this are our two "bookends": our oldest plant, Munich, and our future plant in Hungary.
In 2022, as a sort of counterpart to our main plant in Munich, we will also be laying
the foundation stone for our newest plant in Hungary. The first vehicles for the NEUE
KLASSE will come off the production line in Debrecen in 2025.
25
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Our main plant in Munich will be 100 years old this year. To mark the centenary, we
are smoothly transitioning to 100% electric during ongoing production. With its new
vehicle assembly, the plant will be capable of producing only fully electric models
from 2026 onwards in line with demand. In parallel, we are also working on emis-
sions-free transport logistics. That is what transformation looks like on the ground.
Remuneration Report
-
Group Financial Statements
BMW Group: The Impact Company.
OF MANAGEMENT
STATEMENT OF THE
CHAIRMAN OF THE BOARD
the Board of Management
Statement of the Chairman of
←三〇
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
21
Your Company has around 10,000 IT and software specialists working on research
and development for vehicle digitalisation at ten locations in Europe, Asia and the
Americas. We are collaborating in the regions with major tech players, who are also
our competitors.
Corporate Governance
Focused on the customer and their mobility experience.
Dear Shareholders,
the Board of Management
Statement of the Chairman of
← = Q
Other Information
Remuneration Report
We make a difference.
Corporate Governance
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
26
26
By 2025, a quarter of our sales will probably be conducted online. That is why our
Sales and Marketing is seamlessly integrating all customer touchpoints, online and
offline. We are implementing future-oriented sales structures in conjunction with our
retailers. That is our culture at BMW.
Group Financial Statements
Oliver Zipse
At the CES tech show in Las Vegas in January 2022, our BMW iX Flow, featuring E
Ink, received rave reviews from the media and on social media. This unique technol-
ogy allows the exterior to change colour.
Board of Management
The BMW Group exists because we move body, heart and mind.
That is our internal compass. It guides us - even now, through the many changes we
must navigate as a BMW Group team - with focus and self-assurance. Transform-
ation is part of our DNA - and we all aspire to lead the way. We presented our most
recent example of this last year at the IAA Mobility in Munich: the BMW i Vision Cir-
cular, a car that moves body, heart and mind. With this extraordinary Vision Vehicle,
BMW has clearly defined the next big future topic of "circularity" for itself. Imagine
what we could achieve if we begin thinking consequently about circularity at both
business and macroeconomic levels - and across industries.
Your Company presents its second Integrated Report.
We lead the way in the German automotive industry with our integrated reporting of
the Company's financial and non-financial performance.
This is a new step for us - consistent and irreversible. Integrated reporting is a pro-
cess that involves and challenges the whole Company. It requires integrated thinking:
what is the impact of a decision as a whole – from both a business and an
environmental perspective, in the short term, mid-term and in the long term?
"BMW has clearly
defined the next big
We want to make a difference. To create the values our customers ask for. To gener-
ate meaningful added value. That is part of our responsibility - because our society
depends on people's mobility and benefits from it.
future topic of
circularity for
23
23
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Chairman of the
itself with the BMW i
Vision Circular."
Your Company has held its own in the marketplace for over 100 years. Yet, far more
important than that is staying resolutely focused on the future – with the support and
backing of a motivated team, shareholders and stakeholders. All of you want to know
why the BMW Group should continue to exist 100 years from now.
The modern car is not only one of the most complex items we use as consumers; it is
also becoming a true digital device. It should therefore come as no surprise that digi-
tal business models will account for a growing share of value creation. This applies, in
particular, to the Chinese market, with its many young, technophile customers.
That is what enables it to stay the course, to rely on its own strengths, to withstand
the headwinds and to constantly reinvent itself. This applies in particular, and in its
own unique way, to the current transformation.
-
22
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Corporate Governance
Remuneration Report
Group Financial Statements
← = Q
Statement of the Chairman of
the Board of Management
DEAR SHAREHOLDERS,
LADIES AND GENTLEMEN:
A company needs to know what it stands for.
Other Information
Group Financial Statements
← = Q
Other Information
Remuneration Report
Thus, in addition to the fixed remuneration components, the
following variable remuneration components are reported as
remuneration granted for the 2021 financial year within the
meaning of $162 of the German Stock Corporation Act
(AktG):
Corporate Governance
Combined Management Report
Total1
BMW Group Report 2021
296
accrual of entitlement (e.g. the expiry of assessment peri-
ods or the non-occurrence of forfeiture conditions) have
occurred.
1 Disclosures for the previous year include amounts relating to members of the Board of Management
who left office during the financial year 2020.
Bonus for the 2021 financial year (to be paid out in 2022)
(18,289,989)
(2,615,352)
To Our Stakeholders
Share-based remuneration (personal cash investment
amount) for the 2021 financial year (to be paid out in
2022)
293
Share-based remuneration component (matching com-
ponent) for the vesting year 2016, due to the expiry of the
four-year holding period in the financial year 2021(paid
out in 2021)
18,883,016
150%
100%
0%
Actual value 2021
224,460
180,000
minimum value
241,000
target value
Performance Cash Plan 2019-2021, due to the expiry of
the three-year assessment period in the 2021 financial
year (payments for the vesting year 2019 to be paid out in
2022)
400,000
→ Target achievement: 86%
PHEV sales in units
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
maximum value
50%
Target achievement
(351,746)
275,000
250,250
137,500
141,625
137,500
118,250
1,500,125
Milan Nedeljković
550,000
990,000
275,000
250,250
137,500
141,625
137,500
3,204,813
252,625
293,750
302,563
Strategic
focus targets
focus target
BEV in €
in €
(PHEV)
PHEV in €
118,250
investment
amount
in €
1,175,000
Ilka Horstmeier
550,000
2,115,000
990,000
587,500
534,625
293,750
Oliver Zipse
1,500,125
Pieter Nota
640,000
1,745,600
Frank Weber
550,000
990,000
275,000
250,250
137,500
137,600
141,625
118,250
1,500,125
Andreas Wendt
572,500
1,030,500
286,250
260,488
137,500
Personal cash
160,000
160,000
1.80
1,152,000
320,000 0.91
291,200
160,000
1.03
164,800
164,800
160,000
137,600
1,745,600
Nicolas Peter
640,000
1,152,000
320,000
291,200
0.86
143,125
Component
Proportionate
target amount
1.03
103 %
103,854
170,000
101,000
75,000
12.50%
0.91
91%
115.9
100
114
125
25%
1.80
12.50%
180,000
241,000
400,000
291
RoCE factor
in €
of Management
target amount
Member of the Board
Proportionate
180%
Total
Component Strategic focus target (BEV)
Component - Strategic focus target (CO2)
RoCE component
OVERVIEW OF SHARE-BASED REMUNERATION FOR THE 2021 FINANCIAL YEAR
0.86
86%
224,460
Component Strategic focus target (PHEV)
59.90
45.00
16.00
Other Information
Remuneration Report
RoCE -
component
in €
Proportionate
target amount
in €
Factor -
Strategic
Component
Strategic
focus targets
← = Q
focus target
Factor -
Strategic
Component
Strategic
(CO2)
CO₂ in €
in €
focus targets
(BEV)
focus target
Proportionate
target amount
Factor -
Strategic
The following tables provide an overview of the targets set
and extent of achievement of share-based remuneration for
the 2021 financial year.
Minimum
10.00
50%
segment (in %)
Reduction of fleet
CO2 emissions (in g/km)
Sales of all-electric vehicles
(BEV) in units
Sales of plug-in hybrid
vehicles (PHEV) in units
Strategic focus targets
Component-
RoCE component
RoCE in the Automotive
TARGETS SET AND TARGET ACHIEVEMENT OF SHARE-BASED REMUNERATION FOR FY 2021
Factor
Actual
Value
value
Maximum
Target
value
value
Weighting
Performance criteria
Target
achievement
147,419
143,125
123,088
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
benefits correspond to allocations to pension provisions in
accordance with IAS 19.
7. Malus and clawback provisions
The remuneration system applied since 2021 provides for the
possibility of withholding variable remuneration (malus) and
reclaiming variable remuneration already paid out (claw-
back) under certain conditions. The rules allow the Supervi-
sory Board to withhold or reclaim variable remuneration in
the event of certain serious compliance-related violations
(compliance malus and/or compliance clawback). These
provisions can also be applied where variable remuneration
components linked to the achievement of certain targets
have been paid out on the basis of incorrect calculation
bases or incorrect financial statements. Remuneration can
also be withheld or reclaimed after an individual's departure
from the Board of Management.
The Supervisory Board has not identified any reason to with-
hold or reclaim variable remuneration components in the
2021 financial year.
8. Regulations in the event of death, invalidity and post-con-
tractual non-competition clause
In the event of death or invalidity, special regulations apply
regarding the early maturity of Performance Cash Plans and
share-based remuneration components (matching compo-
nents) based on target amounts. Where the contract of
employment is terminated prematurely and the company
has an extraordinary right of termination, or if the Board
member resigns without the company's agreement, entitle-
ments to amounts as yet unpaid relating to performance
cash plans and share-based remuneration (matching com-
ponents) are forfeited. The other variable remuneration com-
ponents (bonus, personal cash investment amount) are set-
tled on the basis of the target amounts.
A one-year post-contractual non-competition clause has
been agreed with the Board members under specified
circumstances against payment of a remuneration
amount. Contracts of employment provide for the pay-
ment of a monthly waiting allowance in the amount of
the applicable monthly basic remuneration for the dura-
tion of the post-contractual non-competition clause. In
accordance with the recommendation of the German
Corporate Governance Code dated 16 December 2019,
any severance payment is offset against the non-com-
petition clause remuneration amount. The same applies
to other income from third parties, except remuneration
for Supervisory Board appointments approved during the
term of office. The company may unilaterally waive the
requirement to comply with the post-contractual
non-competition clause.
BMW Group Report 2021
295
For members of the Board of Management in office in the
financial year 2021, expenses for post-employment benefits
of € 3.1 million (2020: € 2.6 million) were incurred. These
be in an equivalent position, are entitled to acquire vehicles
and other BMW Group products and services at conditions
that also apply to BMW pensioners and to lease BMW Group
vehicles in accordance with the guidelines applicable to sen-
ior heads of departments. Retired Chairmen of the Board of
Management also have the option of using the BMW car ser-
vice, subject to availability and at a charge.
2,771
58,560
(23,616)
(22,418)
(1,997)
(59,341)³
The retirement benefits system provides for annual contribu-
tions by the company with a guaranteed minimum interest
rate equal to the maximum interest rate specified in the
German actuarial reserve regulation (Deckungsrückstel-
lungsverordnung). Commitments to pay annual contribu-
tions to the company pension scheme are linked to the term
of appointment as a member of the Board of Management.
Pension entitlements become vested when the employment
relationship has existed for one year. If a mandate is termi-
nated, the defined contribution system provides, in the case
of death or invalidity, for amounts accumulated on individual
pension accounts to be paid out as a one-off amount or in
instalments.
Dr. Wendt left the Board of Management on 31 December
2021. For the period from 1 January 2022 to 31 December
2022, the waiting allowance contractually owed to him
amounts to approximately € 1.1 million. A provision was
made for this.
As regards pension commitments, retired members of the
Board of Management are entitled to retirement benefits at
the age of 62 at the earliest. The amount of the benefits to
be paid is determined on the basis of the amount accrued in
each Board member's individual pension savings account.
This figure is in turn based on the annual contributions and
an annual interest rate depending on the form of investment.
The payment is made as a lump sum or in annual instal-
ments at the discretion of the member of the Board of Man-
agement. For entitlements arising before 2016, there is an
option to receive payment as a lifelong pension or in a com-
bined form. In the event of the death of a member of the
Board of Management entitled to benefits before the occur-
Nicolas Peter
Frank Weber
Andreas Wendt
Total
1 Includes only shares of BMW common stock acquired using the cash remuneration component of the share-based remuneration programme for members of the Board of Management, for which the four-year holding
period has not yet expired.
2 Payment of the 2020 cash remuneration component (investment component) in May 2021 with subsequent acquisition of reported BMW shares of common stock, for which the four-year holding period until 2025 applies.
3 Disclosures for the previous year on the share portfolio as at 31 December include shares held by a member of the Board of Management who left office during the financial year 2020.
rence of the insured event, a surviving spouse or registered
partner is entitled to a survivor's benefit; otherwise, surviv-
ing children are entitled to a survivor's benefit depending on
their age and level of education. In the event of death or
invalidity, a minimum benefit in the amount of the potential
annual pension contributions that could have been made up
to the age of 60 is approved. This benefit cannot exceed ten
years of contributions.
Members of the Board of Management who retire immedi-
ately after their service on the Board, or who are deemed to
Pieter Nota
9.
Remuneration granted and owed to members of the Board of
Management pursuant to § 162 of the German Stock Corpora-
tion Act (AktG)
The following tables ("Presentation of remuneration granted and
owed") show the fixed and variable remuneration granted and
owed to the members of the Board of Management in the
reporting year in accordance with § 162 AktG.
1,632,365
(354,680)
(1,157,145)
Nicolas Peter
401,099
3,731,163
(351,746)
402,852
(3,134,163)
402,075
1,100,507
(175,000)
(655,460)
Andreas Wendt
401,099
3,379,883
Frank Weber
17,294
Pieter Nota
(352,121)
The tables include all amounts received by the individual
members of the Board of Management in the reporting
period (“remuneration granted”) and all remuneration legally
due but not yet received ("remuneration owed").
In addition to actual amounts received, "remuneration
granted" in the reporting year is also assumed if the activity
on which the remuneration component is based has been
fully performed by the member of the Board of Management
as of the balance sheet date, and if all conditions for the
PENSION ENTITLEMENTS
in €
Oliver Zipse
Ilka Horstmeier
Cash value of entitle-
ments to pension benefits
in accordance with IFRS
as at 31 December 2021
4,644,382
(3,701,016)
(1,830,168)
702,274
401,765
1,953,670
(352,433)
(1,391,936)
Milan Nedeljković
401,466
2,441,046
(502,626)
44,037
(5,684)
(-)
End of the holding
Share portfolio as at
1 January 2021
Additions in the
financial year²
period in the Share portfolio as at
financial year
31 December 2021
16,637
4,508
2,771
Ilka Horstmeier
18,374
(6,696)
(1,997)
(16,637)
782
2,285
3,067
(-)
(11,938)
(782)
Oliver Zipse
The share-based remuneration (investment component) for
the vesting year 2020 was paid out in 2021, immediately
after which the BMW shares of common stock were acquired.
1,561,494
294
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
SHARES OF BMW COMMON STOCK HELD BY INDIVIDUAL MEMBERS OF THE BOARD OF MANAGEMENT SUBJECT
TO HOLDING REQUIREMENTS IN CONNECTION WITH SHARE-BASED REMUNERATION FOR THE FINANCIAL YEARS
2017-20201
Remuneration Report
← = Q
6.
Retirement benefits
Milan Nedeljković
5.
Shareholding rules
The members of the Board of Management in office as at 31
December 2021 hold a total of 58,560 BMW shares of com-
mon stock which they are required to hold in accordance with
the terms of the share-based remuneration programmes for
the financial years 2017-2020.
Other Information
(2,863,441)
(-)
1,174
(4,374)
(-)
(11,110)
0
1,142
1,142
(-)
(6,736)
(-)
(-)
5,684
2,285
(-)
7,969
(988)
(4,696)
(-)
(782)
13,614
2,504
2,285
(-)
3,459
(-)
(1,174)
(-)
(1,174)
(-)
8,650
(-)
10,935
(3,954)
(4,696)
(-)
(8,650)
11,110
2,285
3,112,630
Service cost in
accordance with
IFRS for the
financial year 2021
year.
684,250
(-)
(-)
(-)
6
(-)
113,220
(-)
(-)
4
43
887,374
24
947,633
(-)
(-)
1
(-)
47,633
39
(-)
FY 2020
as a % of total
remuneration
in €³
Earlier vesting years
Vesting year 2020
in €²
800,000
23
900,000
as a % of total
remuneration
Earlier vesting years
in €3
87,374
Vesting year 2021
in € 1
33
(-)
(-)
(-)
(-)
(-)
Share-based remuneration component (matching component) 2015 for holding
obligation 2016-2020
18
(-)
358,862
(-)
(-)
(-)
4
143,650
855,000
(-)
(-)
(-)
(-)
(-)
(-)
(-)
(-)
13
(-)
503,500
(-)
(-)
22
(-)
Т
FY 2021
SHARE-BASED PAYMENT
2 Remuneration system applicable until financial year 2020.
1 Remuneration system from financial year 2021.
100
5,338,865
502,626
5,841,491
100
8,752,558
702,274
9,454,832
Total amount received incl. service cost?
Service cost
Remuneration according to § 162 German Stock Corporation Act (AktG)
81 or 19
1,023,907
4,314,958
93 or 7
3 Remuneration for prior vesting years if, as of the balance sheet date, the activity underlying the remuneration component has been fully performed, and all conditions for the entitlement are met.
575,390
Remuneration for vesting year 2021 or earlier vesting years
65
3,472,609
77
6,783,203
Total variable remuneration
(-)
46 or 19
1,023,907
2,448,702
71 or 7
575,390
6,207,813
Total variable remuneration Vesting year 2021 or earlier vesting years
8,177,168
remuneration Cash remuneration component (investment component) 2020 for holding
obligation 2021-2025
4 The number of shares purchased in 2017 with the 2016 cash remuneration component (investment component) amounted to 2,771 (purchased on 12 May 2017 at a price of €87.50). The 2016 matching component was paid out in cash in May 2021. The number of mathematical matching shares for calculating
the equivalent value in cash amounts to 923 (holding period expired on 11 May 2021). Reference price for calculating the equivalent value of the matching shares: € 83.36.
6 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group; this amount is not paid out.
Variable
PCP 2019-2021
PCP 2018-2020
PERFORMANCE CASH PLAN
Performance component of bonus 2021
Earnings component of bonus 2021
Performance component of bonus 2020
Earnings component of bonus 2020
Fringe benefits (other remuneration)
Total
BONUS
Fixed remuneration
Fixed
remuneration
Member of the Board of Management since 1 November 2019
Human Resources, Labour Relations Director
5 Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
ILKA HORSTMEIER
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
300
^
9 An advance payment in the amount of € 566,666 was paid out from the PCP 2018-2020 in 2019.
8 An advance payment in the amount of € 712,900 was paid out from the PCP 2019-2021 in 2020.
7 Corresponds to the previous disclosure of amounts received in accordance with the model tables in the version of the German Corporate Governance Code dated 7 February 2017. For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the
vesting year are to be taken into account. The defined maximum remuneration for the vesting year 2021 is € 9,850,000; the remuneration for the vesting year 2021 including service cost is € 8,879,442, which is below the maximum remuneration.
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021 (2020)
Share-based remuneration component (matching component) 2016 for holding
obligation 2017-2021
(-)
(-)
target value
45
maximum value
ROCE in the Automotive segment in %
→ Target achievement: 180 %
Target achievement
100%
50%
0%
100
maximum value
Actual value 2021
115.9
114
target value
125
minimum value
minimum value
CO₂g/km
1 According to the WLTP test procedure. With effect from September 2018, all vehicles in the EU must be approved in accordance with the new WLTP
testing cycle. However, the European Commission did not switch the calculation of fleet carbon emissions to WLTP until 2021. Therefore, up to and
including 2020, a recalculation of the WLTP fleet emissions to NEDC values was necessary for reporting purposes.
Target achievement
292
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
With regard to reducing fleet carbon emissions according to
WLTP, the Supervisory Board set the following values in CO₂
g/km under WLTP for fleet consumption in Europe as thresh-
old values relevant to remuneration for the vesting year 2021:
Minimum value: 125 CO₂ g/km, Target value: 114 CO₂ g/km,
Maximum value: 100 CO₂ g/km. The actual value for the 2021
financial year was 115.9 CO₂ g/km, so the target was 91%
achieved. The CO2 fleet value achieved (after setting an ambi-
tious original target), thus is below the legal limit of 125.8 CO₂
g/km by 9.9 CO₂ g/km in 2021.
For sales of all-electric vehicles (BEV), the Supervisory
Board set the following reference values in units for the vest-
ing year 2021: Minimum value: 75,000 units, Target value:
→ Target achievement: 91 %
101,000 units, Maximum value: 170,000 units. The actual
value for the 2021 financial year was 103,854 units, so the
target was 103% achieved.
16
150%
Thus, the remuneration granted and owed includes all remu-
neration components earned through the activities of the
members of the Board of Management in the 2021 financial
year. In addition, it includes remuneration components
already earned as a result of activity in previous financial
years, but for which the respective member of the Board of
Management's payment entitlement only arose due to the
occurrence of conditions or at the end of the 2021 financial
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Targets set and extent of achievement for the ROCE component
for the 2021 financial year
ROCE in the Automotive segment for the financial year 2021
is defined as segment profit before financial result, divided
by the average capital employed in the segment. The Super-
visory Board has determined the following values for the
vesting year 2021: Minimum value: 10%, Target value: 16%,
Maximum value: 45%. The RoCE achieved for the 2021
financial year was 59.9%, meaning that the maximum value
set for the purposes of assessing the value of the RoCE com-
ponent was exceeded and the RoCE factor for the calculation
of the personal cash investment amount is 1.80 (its maxi-
mum value). The target was set by the Supervisory Board in
December 2020 on the basis of long-term corporate plan-
ning. RoCE for the Automotive segment increased signifi-
cantly in the 2021 financial year, to 59.9% (2020:
12.7%/+47.2 percentage points). This was driven in large
part by increasing EBIT compared to the previous year. A
reduction in capital employed, and specifically the reduction
in average inventory during the financial year, was another
contributing factor. This was due, in particular, to the rapid
recovery of operational business from the consequences of
the coronavirus pandemic and the positive price effects for
new and pre-owned vehicles caused by the shortage of sup-
ply due to the tense supply situation for semiconductors.
Targets set and extent of achievement for the strategic focus
targets component for the 2021 financial year
10
In December 2020, the Supervisory Board set the following
strategic focus targets for the vesting year 2021, in accord-
ance with the remuneration system:
Reduce CO2 fleet emissions in the EU according to WLTP;
weighting in relation to personal cash investment
amount: 25%.
Sales of all-electric vehicles (Battery Electric Vehicles,
BEV); weighting in relation to personal cash investment
amount: 12.5%.
Sales of plug-in hybrid vehicles (PHEV); weighting in
relation to personal cash investment amount: 12.5%.
TARGETS SET AND EXTENT OF ACHIEVEMENT ROCE
200%
180%
150%
100%
50%
0%
TARGETS SET AND EXTENT OF ACHIEVEMENT REDUCTION OF FLEET CARBON
EMISSIONS (EU)¹
200%
Actual value 2021
59.9
180%
―
For sales of plug-in hybrid vehicles (PHEV), the Supervisory
Board set the following reference values in units for the 2021
vesting year: Minimum value: 180,000 units, Target value:
241,000 units, Maximum value: 400,000 units. The actual
value for the 2021 financial year was 224,460 units, so the
target was 86% achieved.
The personal investment cash amount for the vesting year
2021 will be paid out after the Annual General Meeting 2022,
at which the Financial Statements of BMW AG for the finan-
cial year 2021 will be presented.
TARGETS SET AND EXTENT OF ACHIEVEMENT BEV SALES
3,806,258
Remuneration for vesting year 2021 or earlier vesting years
57
1,156,332
76
3,002,275
Total variable remuneration
57
(-)
1,156,332
72 or 4
(-)
(-)
143,650
(-)
2,858,625
Total variable remuneration Vesting year 2021 or earlier vesting years
510,125
Strategic focus target component
(-)
(-)
(-)
25
990,000
RoCE component
Personal cash investment amount 20214
I
(-)
(-)
143,650
96 or 4
2,043,706
(-)
200%
180%
150%
100%
Actual value 2021
103,854
50%
0%
75,000
minimum value
101,000
target value
170,000
maximum value
BEV sales in units
→ Target achievement: 103 %
Target achievement
TARGETS SET AND EXTENT OF ACHIEVEMENT PHEV SALES
200%
180%
2 Remuneration system applicable until financial year 2020.
1 Remuneration system from financial year 2021.
6 Corresponds to the previous disclosure of amounts received in accordance with the model tables in the version of the German Corporate Governance Code dated 7 February 2017. For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the
vesting year are to be taken into account. The defined maximum remuneration for the vesting year 2021 is € 4,925,000; the remuneration for the vesting year 2021 including service cost is € 4,208,023, which is below the maximum remuneration.
5 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group; this amount was not paid out in the financial year.
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
3 Remuneration for prior vesting years if, as of the balance sheet date, the activity underlying the remuneration component has been fully performed, and all conditions for the entitlement are met.
>
100
2,043,706
352,433
2,396,139
100
3,949,908
401,765
4,351,673
Total amount received incl. service cost 6
Service cost 5
Remuneration according to § 162 German Stock Corporation Act (AktG)
100
(-)
12
13
Strategic focus target component
7.3
8.0
(Upper limit)
9.0
on sales in %
Group post-tax return
EARNINGS COMPONENTS: ALLOCATION TABLE FOR CALCULATING EARNINGS FACTOR FOR 2019-20211
Presentation of remuneration granted and owed
The following tables show the remuneration granted and
owed to the members of the Board of Management.
d)
acquired shares of common stock expired on 11 May 2021.
The company settled the matching component in cash, and
paid out the equivalent value of the matching shares.
The investment component for the 2016 financial year was
paid out immediately after the 2017 Annual General Meeting
on 11 May 2017, and the shares of common stock were
acquired on 12 May 2017. Therefore, the holding period for the
Under the share-based remuneration programme for the
financial year 2016, the members of the Board of Manage-
ment were each required to invest an amount equal to 20%
of the total bonuses they received from the company as
additional cash remuneration for the financial year 2016,
which were paid exclusive of taxes and social security contri-
butions (the investment component) in shares of the compa-
ny's common stock. In principle, the members of the Board
of Management must hold these shares of common stock for
at least four years. Under a matching plan, the member of
the Board of Management receives from the company - at
the company's discretion - either an additional share of
common stock or the equivalent in cash (share-based remu-
neration component/matching component) for every three
shares of common stock held after the four-year holding
period.
Share-based remuneration components have been included
in the remuneration of members of the BMW AG Board of
Management since 2011. In the financial year 2021, the
matching component of the share-based remuneration of
the vesting year 2016 was paid out.
5.6
Share-based remuneration component (matching compo-
nent) 2016
margin for the Automotive segment and ROCE for the Auto-
motive segment, as well as the return on equity for the
Financial Services segment. For the financial years 2020
and 2021, the Supervisory Board has taken into account the
impact of the coronavirus pandemic and the semiconductor
crisis on these key indicators. It was not necessary to change
the assessments relating to individual contributions to profit-
ability or the status of compliance within Board members'
areas of responsibility.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
298
1 The PCP factor for Mr Krüger is 1.081. This differs from the PCP factor mentioned above, since a value of
1.0 was agreed for the earnings factor of the 2019 financial year.
Forecast trend in business development
Value between 0.9 and 1.1
Individual contribution to profitability
c)
Status of compliance in each Board member's
area of responsibility
4.8
0.4443
Target amount
1,194,624
Total amount PCP
Remuneration
(payment amount
PCP 2019-2021)
1,211,349
11.0
(Upper limit)
9.0
1 The advance payment was paid out in 2020.
Andreas Wendt
Frank Weber
Pieter Nota
Ilka Horstmeier
Milan Nedeljković
Nicolas Peter
in €
Oliver Zipse
PERFORMANCE CASH PLAN 2019-2021
0.7982
1Simplified depiction 2Earnings factor 2019 3 Earnings factor 2020 "Earnings factor 2021
6.9
1.000
1.500
1.637
1.8004
5.0 5.3
3.9
3.0
(Lower limit)
(Lower limit)
ཥཊྛོ
3.0
0.135
3.9
Group net profit after tax
(in € billion)
PCP factor
Trend in business development
=
b) Performance Cash Plan 2019-2021
a) Variable remuneration for the 2021 financial year
The variable remuneration for the 2021 financial year and the
extent to which targets were achieved are set out above in
7 Variable remuneration for the 2021 financial year.
2 Payment of 2016 cash remuneration component (investment component) in 2017, immediately following the acquisition of BMW shares of common stock subject to holding requirements for 2017-2021.
2026
2022
1 Simplified depiction.
Basic remuneration and fringe benefits
Contribution to company pension scheme -
11 May 2021
2020
2019
2018
2017
2016
The remuneration system applicable for the financial years
2018-2020 provided for the Performance Cash Plan (PCP)
as a long-term variable cash remuneration component.
Bonus 2021
Four-year holding period for
acquired BMW shares
Present value of own investment 2021
Payment after AGM 2022,
Acquisition of BMW shares
Payment after AGM 2022
Disbursement matching component 2016
(assessment period 2019-2021)
Performance Cash Plan 2019-2021
Four-year holding period for acquired BMW shares
▼ 2
Share-based remuneration 2016
OVERVIEW OF REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021 WITH PAYOUT PROFILE 1
1,089,813
In addition to the amount of remuneration, the relative share
of the relevant remuneration component in the total remu-
neration granted and owed is also shown. For the sake of
clarity, the service cost for the company pension scheme is
also shown, although this service cost is not classified as
remuneration within the meaning of § 162 AktG.
Disbursement after AGM 2022
-
For the purposes of calculating the Performance Cash Plan,
a fixed target amount is multiplied by a multi-year target
achievement factor (PCP factor) after the end of a three-year
assessment period. The target amount for a member of the
PCP entitlements are paid in cash. The bonus is paid out
after the end of the Annual General Meeting, at which the
separate financial statements of BMW AG for the third year of
the evaluation period (consisting of the vesting year and the
following two years) are presented.
PCP FACTOR
MULTI-YEAR PERFORMANCE FACTOR
Measurement based on
multi-year performance factor:
_
- Cash payment at end of evaluation period
CASH PAYMENT
In determining the multi-year performance factor for the
members of the Board of Management in office for the 2019
financial year, the Supervisory Board assessed, in particular,
the trend in the development of the business over the assess-
ment period, the forecast trend in the development of the
business, the individual contribution made by each Board
member to earnings, and the status of compliance in the
individual Board member's area of responsibility. In assess-
ing the development of the business over the assessment
period and the forecast trend, the Supervisory Board
assessed, in particular, the development of certain key indi-
cators - such as the change in the number of deliveries, EBIT
mance factor for all members of the Board of Management
holding office for the 2019 financial year is 1.0, resulting in a
PCP factor of 1.014 for the 2019-2021 Performance Cash
Plan¹.
PCP FACTOR
-
MULTI-YEAR EARNINGS FACTOR
Average earnings factor
Based on Group net profit and
Group post-tax return on sales
Value between 0 and 1.8
PCP FACTOR OVERVIEW
TARGET AMOUNT
PERFORMANCE CASH PLAN OVERVIEW
Board of Management's Performance Cash Plan (100%) in
the first appointment period is € 0.85 million p.a.; from the
second appointment period or the fourth year of mandate
onwards it is € 0.95 million p. a. For the Chairman of the
Board of Management, the target amount is € 1.6 million
p. a. For all members of the Board of Management, the max-
imum payout amount is limited to 180% of the target amount
of the Performance Cash Plan p. a.
In the 2021 financial year, a consolidated net profit of € 12.5
billion and a consolidated return on sales after tax of 11.2%
were achieved. For both indicators, the defined maximum
values were thus exceeded, meaning that the earnings factor
was capped at the maximum value of 1.800 (corresponding
to a target being 180% achieved, the maximum possible
percentage). Based on the earnings factors for the individual
years of the assessment period (financial year 2019: 0.798,
financial year 2020: 0.444, financial year 2021: 1.800), the
multi-year performance factor is 1.014. The multi-year perfor-
The members of the Board of Management in office as at
1 January 2018 received an advance payment from the Per-
formance Cash Plan 2019-2021 in 2020. The advance pay-
ment amounted to € 0.5 million for a Board of Management
member in their first appointment period, and € 0.6 million
from the second appointment period or the fourth year of
appointment. For the Chairman of the Board of Manage-
ment, the advance payment was € 0.9 million. At the end of
the assessment period, the advance payments will be set off
or refunded, depending on the actual entitlement arising.
In addition to the multi-year earnings factor, the Supervisory
Board also sets a multi-year performance factor after the end
of the evaluation period. To this end, the Supervisory Board
takes account in particular of the development of the busi-
ness during the evaluation period, the forecast trend in the
development of the business, the Board member's individual
contribution to profitability and the status of compliance
within the Board member's area of responsibility. The mul-
ti-year performance factor can be between 0.9 and 1.1.
In order to determine the multi-year earnings factor, an earn-
ings factor is calculated for each year of the three-year eval-
uation period and an average is then calculated for the eval-
uation period. The earnings factor for the individual year of
the assessment period is determined on the basis of the
Group's consolidated net profit and the consolidated return
on sales after tax for the assessment year concerned, and
can amount to a maximum of 1.800. The underlying meas-
urement values are determined in advance for a period of
three financial years, and may not be changed retrospec-
tively.
In order to determine the PCP factor, a multi-year profit factor
is multiplied by a multi-year performance factor. The maxi-
mum amount that can be paid to a Board member is capped
at 180% of the PCP target amount p. a.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
297
The Performance Cash Plan 2019-2021 was approved for
the performance of the Members of the Board of Manage-
ment in the 2019 financial year. As at the balance sheet date
of the reporting year, the three-year assessment period of
this remuneration component, which was subject to certain
forfeiture provisions, had expired.
2019-2021
- Capped at 180 % of target amount
Advance payment¹
712,900
(-)
13
1,113,000
(-)
22
(-)
1,890,000
27
(-)
1,449,000
(-)
(-)
(-)
(-)
4
239,760
(-)
(-)
35
1,866,256
23
1,969,355
1
(-)
66,256
34
(-)
1,800,000
(-)
22
0.2
277,584⁹
498,4498
24
2,115,000
1.014
RoCE component
Personal cash investment amount 20215
1
76,941
Share-based remuneration component (matching component) 2016 for holding
obligation 2017-20214
1
33,423
(-)
(-)
(-)
5
(-)
14
(-)
759,942
(-)
(-)
(-)
Cash remuneration component (investment component) 2020 for holding
obligation 2021-2025
remuneration
Variable
13
712,9008
(-)
6
Share-based remuneration component (matching component) 2015 for holding
obligation 2016-2020
(-)
(-)
(-)
861,900
(-)
1.014
850,000
(-)
(-)
(-)
(-)
361,900
500,000
861,900
498,449
850,000
861,900
361,900
861,900
1.014
850,000
215,475
(-)
215,475
1.014
212,500
143,650
143,650
19,355
1.014
141,667
500,000
299
1.014
To Our Stakeholders
FY 2020
as a % of total
remuneration
in €3
BMW Group Report 2021
Earlier vesting years
Vesting year 2020
in €2
FY 2021
as a % of total
remuneration
in €3
in €1
Earlier vesting years
1,950,000
SHARE-BASED PAYMENT
PCP 2019-2021
PCP 2018-2020
PERFORMANCE CASH PLAN
Performance component of bonus 2021
Vesting year 2021
Fringe benefits (other remuneration)
Total
BONUS
Combined Management Report
Fixed remuneration
Fixed
remuneration
Member of the Board of Management since 13 May 2015
Chairman of the Board of Management since 16 August 2019
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021 (2020)
OLIVER ZIPSE
← = Q
Other Information
Group Financial Statements
Remuneration Report
Corporate Governance
Earnings component of bonus 2020
Performance component of bonus 2020
Earnings component of bonus 2021
2,143,240
3,752,000
69
Total variable remuneration
78
Remuneration for vesting year 2021 or earlier vesting years
2,334,621
Service cost 5
361,900
93 or 8
782,850
Remuneration according to § 162 German Stock Corporation Act (AktG)
75 or 25
4,462,846
(-)
44 or 25
Strategic focus target component
(-)
RoCE component
1,152,000
(-)
Personal cash investment amount 20214
24
593,600
(-)
12
Total variable remuneration Vesting year 2021 or earlier vesting years
3,390,100
361,900
70 or 8
(-)
(-)
1,360,390
(-)
(-)
782,850
Total amount received incl. service cost 6
Fringe benefits (other remuneration)
Total
100
← = Q
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021 (2020)
FRANK WEBER
Development, Member of the Board of Management since 1 July 2020
Fixed remuneration
Fixed
remuneration
Other Information
BONUS
Performance component of bonus 2020
Earnings component of bonus 2021
PCP 2018-2020
Performance component of bonus 2021
(-)
PERFORMANCE CASH PLAN
Earnings component of bonus 2020
Remuneration Report
Corporate Governance
Group Financial Statements
3,117,471
351,746
3,469,217
100
1 Remuneration system from financial year 2021.
2 Remuneration system applicable until financial year 2020.
>
3 Remuneration for prior vesting years if, as of the balance sheet date, the activity underlying the remuneration component has been fully performed, and all conditions for the entitlement are met.
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
5 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group; this amount was not paid out in the financial year.
6 Corresponds to the previous disclosure of amounts received in accordance with the model tables in the version of the German Corporate Governance Code dated 7 February 2017. For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the
vesting year are to be taken into account. The defined maximum remuneration for the vesting year 2021 is € 5,500,000; the remuneration for the vesting year 2021 including service cost is € 4,863,945, which is below the maximum remuneration.
7 An advance payment in the amount of € 500,000 was paid out from the PCP 2019-2021 in 2020.
8 An advance payment in the amount of € 500,000 was paid out from the PCP 2018-2020 in 2019.
304
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
4,824,746
401,099
5,225,845
(-)
FY 2021
as a % of total
remuneration
Share-based remuneration component (matching component) 2016 for holding
obligation 2017-2021
30
22,746
(-)
0.5
24,231
(-)
(-)
1
22
974,231
31
(-)
(-)
(-)
1,072,746
133,200
FY 2020
as a % of total
remuneration
Earlier vesting years
Earnings component of bonus 2021
PCP 2019-2021
Performance component of bonus 2020
Performance component of bonus 2021
PERFORMANCE CASH PLAN
PCP 2018-2020
in €3
PCP 2019-2021
Vesting year 2021
in €¹
1,050,000
Earlier vesting years
in €³
(-)
22
Vesting year 2020
in €2
950,000
SHARE-BASED PAYMENT
(-)
4
(-)
9
16
Variable
remuneration
Cash remuneration component (investment component) 2020 for holding
obligation 2021-2025
(-)
282,8508
500,0007
(-)
(-)
14
Share-based remuneration component (matching component) 2015 for holding
obligation 2016-2020
(-)
(-)
(-)
422,190
(-)
8
361,900
(-)
(-)
805,000
(-)
26
1,035,000
21
(-)
(-)
609,500
13
(-)
(-)
(-)
(-)
(-)
SHARE-BASED PAYMENT
ANDREAS WENDT
Vesting year 2021
Remuneration for vesting year 2021 or earlier vesting years
3,856,458
(-)
100
1,006,759
(-)
57
100
3,856,458
100
Service cost 5
Total amount received incl. service cost 6
402,075
4,258,533
1,006,759
175,000
1,181,759
Remuneration according to § 162 German Stock Corporation Act (AktG)
100
578,166
2,858,625
(-)
(-)
13
(-)
(-)
(-)
74
Total variable remuneration Vesting year 2021 or earlier vesting years
(-)
74
578,166
(-)
57
Total variable remuneration
2,858,625
1 Remuneration system from financial year 2021.
2 Remuneration system applicable until financial year 2020.
>
BONUS
Earnings component of bonus 2020
Performance component of bonus 2020
Earnings component of bonus 2021
Performance component of bonus 2021
FY 2021
Fringe benefits (other remuneration)
Total
Vesting year 2021
in €1
in €3
as a % of total
remuneration
Vesting year 2020
Earnings component of bonus 2020
Earlier vesting years
Earlier vesting years
Fixed remuneration
Fixed
remuneration
Member of the Board of Management from 1 October 2018 until 31 December 2021
3 Remuneration for prior vesting years if, as of the balance sheet date, the activity underlying the remuneration component has been fully performed, and all conditions for the entitlement are met.
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
5 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group; this amount was not paid out in the financial year.
6 Corresponds to the previous disclosure of amounts received in accordance with the model tables in the version of the German Corporate Governance Code dated 7 February 2017. For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the
vesting year are to be taken into account. The defined maximum remuneration for the vesting year 2021 is € 4,925,000; the remuneration for the vesting year 2021 including service cost is € 4,258,533, which is below the maximum remuneration.
305
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021 (2020)
Purchasing and Supplier Network
(-)
FY 2021
235
510,125
997,833
26
428,593
43
(-)
(-)
3
(-)
(-)
6
(-)
(-)
(-)
342,125
56,610
(-)
(-)
3
Earlier vesting years
in €¹
900,000
in €³
as a % of total
remuneration
(-)
23
28,593
Vesting year 2020
in €²
400,000
in €3
FY 2020
as a % of total
remuneration
(-)
40
97,833
(-)
Earlier vesting years
34
855,000
22
(-)
(-)
Share-based remuneration component (matching component) 2016 for holding
obligation 2017-2021
(-)
(-)
(-)
(-)
Т
Personal cash investment amount 20214
RoCE component
990,000
(-)
26
Strategic focus target component
Τ
Share-based remuneration component (matching component) 2015 for holding
obligation 2016-2020
18
(-)
(-)
(-)
503,500
13
(-)
(-)
(-)
(-)
(-)
Variable
remuneration
Cash remuneration component (investment component) 2020 for holding
obligation 2021-2025
(-)
I
179,431
(-)
BONUS
(-)
remuneration
Personal cash investment amount 20214
RoCE component
990,000
25
(-)
(-)
Τ
(-)
510,125
Total variable remuneration Vesting year 2021 or earlier vesting years
2,858,625
(-)
215,475
13
(-)
Strategic focus target component
(-)
(-)
(-)
Cash remuneration component (investment component) 2020 for holding
obligation 2021-2025
(-)
(-)
(-)
358,862
(-)
(-)
17
(-)
(-)
(-)
(-)
(-)
Share-based remuneration component (matching component) 2016 for holding
obligation 2017-2021
Share-based remuneration component (matching component) 2015 for holding
obligation 2016-2020
(-)
71 or 5
1,156,332
2,058,305
352,121
2,396,139
100
>
3 Remuneration for prior vesting years if, as of the balance sheet date, the activity underlying the remuneration component has been fully performed, and all conditions for the entitlement are met.
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
5 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group; this amount was not paid out in the financial year.
100
6 Corresponds to the previous disclosure of amounts received in accordance with the model tables in the version of the German Corporate Governance Code dated 7 February 2017. For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the
vesting year are to be taken into account. The defined maximum remuneration for the vesting year 2021 is € 4,925,000; the remuneration for the vesting year 2021 including service cost is € 4,208,023, which is below the maximum remuneration.
² Remuneration system applicable until financial year 2020.
302
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
1 Remuneration system from financial year 2021.
4,017,337
401,466
4,418,803
Total amount received incl. service cost 6
Service cost 5
(-)
56
Total variable remuneration
3,074,100
77
1,156,332
56
Remuneration for vesting year 2021 or earlier vesting years
3,801,862
215,475
95 or 5
2,058,305
(-)
100
Remuneration according to § 162 German Stock Corporation Act (AktG)
remuneration
Corporate Governance
Variable
(-)
Performance component of bonus 2020
Earnings component of bonus 2021
Performance component of bonus 2021
PERFORMANCE CASH PLAN
PCP 2018-2020
PCP 2019-2021
Earnings component of bonus 2020
SHARE-BASED PAYMENT
Earlier vesting years
in €¹
900,000
in €³
FY 2021
as a % of total
remuneration
(-)
22
Vesting year 2021
Vesting year 2020
in €²
800,000
BONUS
remuneration
937,500
301
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Fringe benefits (other remuneration)
Total
Corporate Governance
Other Information
← = Q
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021 (2020)
MILAN NEDELJKOVIĆ
Produktion, Member of the Board of Management since 1 October 2019
Fixed remuneration
Fixed
Remuneration Report
Earlier vesting years
in €3
FY 2020
as a % of total
remuneration
(-)
684,250
(-)
855,000
21
(-)
(-)
33
(-)
13
(-)
(-)
(-)
215,475
5
503,500
(-)
6
(-)
39
43,237
(-)
1
101,973
(-)
5
943,237
23
901,973
44
(-)
(-)
(-)
113,220
(-)
Fringe benefits (other remuneration)
Total
Remuneration Report
← = Q
593,600
Total variable remuneration Vesting year 2021 or earlier vesting years
3,390,100
(-)
361,900
12
70 or 8
Strategic focus target component
(-)
1,156,332
782,850
(-)
42 or 28
Total variable remuneration
3,752,000
78
1,939,182
(-)
70
(-)
(-)
(-)
13
Share-based remuneration component (matching component) 2015 for holding
obligation 2016-2020
(-)
(-)
(-)
(-)
Share-based remuneration component (matching component) 2016 for holding
obligation 2017-2021
(-)
(-)
Personal cash investment amount 20214
RoCE component
1,152,000
24
(-)
Remuneration for vesting year 2021 or earlier vesting years
4,458,625
361,900
8 An advance payment in the amount of € 500,000 was paid out from the PCP 2018-2020 in 2019.
303
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
7 An advance payment in the amount of € 500,000 was paid out from the PCP 2019-2021 in 2020.
Corporate Governance
Other Information
← = Q
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021 (2020)
NICOLAS PETER
Finance, Member of the Board of Management since 1 January 2017
Fixed remuneration
Fixed
Remuneration Report
6 Corresponds to the previous disclosure of amounts received in accordance with the model tables in the version of the German Corporate Governance Code dated 7 February 2017. For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the
vesting year are to be taken into account. The defined maximum remuneration for the vesting year 2021 is € 5,500,000; the remuneration for the vesting year 2021 including service cost is € 4,861,477, which is below the maximum remuneration.
5 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group; this amount was not paid out in the financial year.
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
92 or 8
1,974,740
782,850
72 or 28
Remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost 5
Total amount received incl. service cost 6
4,820,525
402,852
5,223,377
100
2,757,590
354,680
3,112,270
100
1 Remuneration system from financial year 2021.
² Remuneration system applicable until financial year 2020.
>
3 Remuneration for prior vesting years if, as of the balance sheet date, the activity underlying the remuneration component has been fully performed, and all conditions for the entitlement are met.
358,862
Other Information
(-)
Cash remuneration component (investment component) 2020 for holding
obligation 2021-2025
FY 2021
as a % of total
remuneration
Vesting year 2020
in €2
Earlier vesting years
in €3
FY 2020
as a % of total
remuneration
(-)
in €³
22
(-)
29
18,525
(-)
0.4
18,408
800,000
(-)
in €¹
1,050,000
Vesting year 2021
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021 (2020)
PIETER NOTA
Customer, Brands, Sales, Member of the Board of Management since 1 January 2018
Fixed remuneration
Fixed
remuneration
Fringe benefits (other remuneration)
Total
BONUS
Earlier vesting years
Earnings component of bonus 2020
Earnings component of bonus 2021
Performance component of bonus 2021
PERFORMANCE CASH PLAN
PCP 2018-2020
PCP 2019-2021
SHARE-BASED PAYMENT
Performance component of bonus 2020
1
1,068,525
22
13
(-)
(-)
(-)
282,8508
10
609,500
(-)
8
(-)
500,0007
18
Variable
remuneration
361,900
(-)
(-)
21
818,408
30
(-)
(-)
(-)
113,220
(-)
4
(-)
(-)
(-)
684,250
(-)
25
1,035,000
(-)
(-)
(-)
in €2
800,000
829,6002
61
(-)
(-)
Variable
Share-based remuneration component (matching component)
(-)
Total
Waiting allowance
Waiting allow- Pensions
ance/Pensions (Partial) capital payments
Total
Total remuneration for financial years 2021 or earlier vesting years
Total remuneration according to § 162 German Stock Corporation Act (AktG)
remuneration 2016 for holding obligation 2017-2021
(-)
Performance Cash Plan 2019-2021
40,156
Earlier vesting
as a % of total
in €
years in €¹
remuneration
Fixed Fringe benefits (other remuneration)
11
remuneration Total
2
40,156
(-)
11
27,241
2
27,241
153,966³
11
(-)
(-)
(-)
360,000
26
323,691
89
(-)
387,241
1,370,807
100
363,847
363,847
(-)
100
Fixed Fringe benefits (other remuneration)
983,566
(-)
(-)
89
(-)
983,566
72
(-)
360,000
(-)
26
(-)
(-)
(-)
(-)
(-)
(-)
(-)
323,691
(-)
Financial year 2021
remuneration Total
as a % of total
remuneration
in €
Total remuneration for financial years 2021 or earlier vesting years
Total remuneration according to § 162 German Stock Corporation Act (AktG)
1 Remuneration for prior vesting years is due if, as of the balance sheet date, the activity underlying the
remuneration component has been fully performed, and all conditions for the entitlement are met.
2 The number of shares purchased in 2017 with the 2016 cash remuneration component (investment
component) amounted to 2,603 (purchased on 12 May 2017 at a price of € 87.50). The 2016 matching
component was paid out in cash in May 2021. The number of mathematical matching shares for calcu-
lating the equivalent value in cash amounts to 867 (holding period expired on 11 May 2021). Reference
price for calculating the equivalent value of the matching shares: € 83.36).
3 The number of shares purchased in 2017 with the 2016 cash remuneration component (investment
component) amounted to 3,470 (purchased on 12 May 2017 at a price of € 87.50). The 2016 matching
component was paid out in cash in May 2021. The number of mathematical matching shares for calcu-
lating the equivalent value in cash amounts to 1,156 (holding period expired on 11 May 2021). Reference
price for calculating the equivalent value of the matching shares: € 83.36).
"The target amount of the 2019-2021 Performance Cash Plan is € 950,000. An advance payment of
€ 600,000 was made from the PCP 2019-2021 in 2020.
5 The number of shares purchased in 2017 with the 2016 cash remuneration component (investment
component) amounted to 2,771 (purchased on 12 May 2017 at a price of € 87.50). The 2016 matching
component was paid out in cash in May 2021. The number of mathematical matching shares for the
purposes of calculating the equivalent value in cash amounts to 923 (holding period expired on 11 May
2021). Reference price for calculating the equivalent value of the matching shares: € 83.36).
Total
Earlier vesting
20,629
years in €¹
(-)
20,629
363,3004
as a % of total
remuneration
3
in €
3
ance/Pensions (Partial) capital payments
Waiting allow-
100
300,062
396,427
96,364
100
KLAUS FRÖHLICH
Member of the Board of Management until 30 June 2020
Financial year 2021
Pensions
Fixed Fringe benefits (other remuneration)
Variable
Performance Cash Plan 2019-2021
Share-based remuneration component (matching component)
remuneration 2016 for holding obligation 2017-2021
Total
Waiting allowance
remuneration Total
49
(-)
76,9415
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
308
Other Information
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021
HARALD KRÜGER
Chairman of the Board of Management until 15 August 2019
Financial year 2021
NORBERT REITHOFER
Chairman of the Board of Management until 13 May 2015
Chairman of the Supervisory Board since 13 May 2015
Earlier vesting
← = Q
>
100
745,870
10
440,241
59
285,000
(-)
38
(-)
(-)
(-)
(-)
(-)
285,000
38
305,629
440,241
years in €¹
379,861
Performance Cash Plan 2019-2021
Share-based remuneration component (matching component)
1 Remuneration for prior vesting years is due if, as of the balance sheet date, the activity underlying the
remuneration component has been fully performed, and all conditions for the entitlement are met.
2 The target amount of the PCP 2019-2021 is € 791,667. An advance payment of € 500,000 was made
from the PCP 2019-2021 in 2020.
3 The number of shares acquired in 2017 with the cash remuneration component (investment component)
2016 amounted to 3,346. The 2016 matching component was paid out in cash in May 2021. The number
of mathematical matching shares for the calculating the equivalent value in cash amounts to 1,115 (hold-
ing period expired on 11 May 2021). Reference price for calculating the equivalent value of the matching
shares: € 83.36).
310
BMW Group Report 2021
To Our Stakeholders
100
Combined Management Report
Corporate Governance
Remuneration Report
Other Information
← = Q
III. Remuneration of the members of the Supervisory Board
1. Articles of Incorporation and procedure
Group Financial Statements
The regulation governing remuneration for the Supervisory
Board applicable to the reporting year was adopted by the
Annual General Meeting on 14 May 2020. It is set out in Arti-
cle 15 of the Articles of Incorporation, and specifies both the
remuneration system to be used and the precise framework
for calculating the remuneration due to the members of the
Supervisory Board. The regulation was confirmed by the
Annual General Meeting on 12 May 2021 with a majority of
99.40% of the valid votes cast.
3,297,170
395,696
3
395,696
12
(-)
(-)
(-)
Total remuneration according to § 162 German Stock Corporation Act (AktG)
(-)
(-)
87
2,882,022
87
Total remuneration for financial years 2021 or earlier vesting years
2,901,473
2,882,022
2.
Principles and elements of remuneration
With effect from the 2020 financial year, remuneration for
members of the Supervisory Board has been structured as
purely fixed remuneration, and complies with Suggestion
G.18 of the German Corporate Governance Code as amended
on 16 December 2019. This strengthens the independence of
the Supervisory Board in advising and monitoring the Board
of Management. The structure and amount of the fixed
remuneration ensure that highly qualified individuals can
continue to be proposed to the Annual General Meeting for
membership of the Supervisory Board. This strengthens its
advisory and supervisory function, which contributes to the
company's sustainable and long-term development.
2.00
400,000
2.25
450,000
Chairman of another committee 2
Member of the Audit Committee 2
Member of another committee 2
2.00
600,000
400,000
400,000
1.50
300,000
Chairman of the Audit
Committee 22
1 If a Supervisory Board member performs several additional remuneration-relevant functions, their
remuneration remuneration is measured only on the basis of the function that is remunerated with the
highest amount.
2 Provided the relevant committee convened for meetings on at least three days during the financial year.
3 Plus attendance fee of €2,000 per plenary session.
2.00
3.00
Chairman of the Supervisory Board
200,000
In accordance with the Articles of Incorporation, each mem-
ber of the Supervisory Board of BMW AG who does not exer-
cise any additional function relevant to remuneration
receives in addition to the reimbursement of reasonable
expenses – fixed remuneration of € 200,000 p.a.
The latest version of the GCCC, dated 16 December 2019,
recommends that exercising the functions of the chair and
deputy chair of Supervisory Board should also be considered
when determining the level of remuneration, along with any
committees an individual chairs or sits on (Suggestion G.17).
This is to take account of the extra time commitment associ-
ated with these positions. In view of the particular demands
placed on the members and, in particular, on the Chairman
of the Audit Committee and the increased scope of the Audit
Committee's tasks, a higher level of remuneration is pro-
vided for work on this committee than for work on other com-
mittees. Accordingly, the Articles of Incorporation of BMW
AG stipulate that the Chairman of the Supervisory Board
shall receive three times the amount and each Deputy Chair-
man twice the amount of remuneration paid to a Supervisory
Board member, excluding amounts relating to additional
remuneration-relevant functions. The Chair of the Audit
Committee receives two-and-a-quarter times the amount,
the Chair of other Supervisory Board committees twice the
amount, each member of the Audit Committee twice the
amount, and each member of another committee one-and-
a-half times the amount of the remuneration paid to a Super-
visory Board member, provided the relevant committee con-
vened on at least three days during the financial year. If a
member of the Supervisory Board exercises more than one
of the functions referred to above, their remuneration is
measured only on the basis of the function receiving the
highest amount.
In the event of changes in the composition of the Supervi-
sory Board during the year, or if additional remuneration-rel-
evant functions are performed, remuneration is determined
on a proportionate basis.
In addition, each member of the Supervisory Board receives
an attendance fee of € 2,000 per meeting for each meeting
of the Supervisory Board (plenary) in which he or she partic-
ipates. This also applies to participation by telephone or
video link. If they attend more than one meeting on the same
day, the meetings are not remunerated separately.
In accordance with the provisions of the Articles of Incorpo-
ration, the remuneration and the attendance fee are only
paid after the end of the respective financial year. Further-
more, the company reimburses each member of the Super-
visory Board for their reasonable expenses. In order to be
able to perform his duties, the Chairman of the Supervisory
Board is provided with secretariat and chauffeur services.
3.
Remuneration granted and owed to members of the Super-
visory Board pursuant to § 162 of the German Stock
Corporation Act (AktG)
The following table shows the remuneration granted and
owed to the members of the Supervisory Board in the 2021
financial year pursuant to § 162 (1) Sentence 1 AktG. The
activities on which the remuneration for the 2021 financial
year is based were performed fully as at the balance sheet
date). Therefore, the remuneration for the Supervisory Board
activity is classified as granted for the 2021 financial year,
even if the payment of the Supervisory Board remuneration
(including the attendance fee) was only made after the end
of the 2021 financial year, in accordance with Article 15 of the
Articles of Incorporation.
Supervisory Board members did not receive any further
remuneration or benefits from the BMW Group for advisory
or agency services personally rendered.
OVERVIEW OF REMUNERATION 1
Deputy Chairman of the
Supervisory Board
Factor Amount in € p. a. ³
Member of the Supervisory Board
1.00
92,9463
Variable
(-)
ance/Pensions (Partial) capital payments
96,3644
31
96,364
31
(-)
(-)
(-)
(-)
62
(-)
191,038
(-)
62
212,638
96,364
191,038
309,002
7
7
years in €1
remuneration 2016 for holding obligation 2017-2021
Total
Waiting allowance
Waiting allow- Pensions
ance/Pensions (Partial) capital payments
Total
19
Total remuneration for financial years 2021 or earlier vesting years
IAN ROBERTSON
Member of the Board of Management until 31 December 2017
Financial year 2021
in €
21,600
21,600
Earlier vesting
Total remuneration according to § 162 German Stock Corporation Act (AktG)
100
1 Remuneration for prior vesting years is due if, as of the balance sheet date, the activity underlying the
remuneration component has been fully performed, and all conditions for the entitlement are met.
2 The target amount of the 2019-2021 Performance Cash Plan is € 1,600,000. The PCP factor is 1.081.
This differs from the PCP factor mentioned above, since a value of 1.0 was agreed for the earnings
factor of the 2019 financial year. An advance payment of € 900,000 was made from the PCP 2019-
2021 in 2020.
19,451
Performance Cash Plan 2019-2021
(-)
302,750²
as a % of total
remuneration
1
years in €¹
(-)
1
Variable
Share-based remuneration component (matching component)
Total
remuneration 2016 for holding obligation 2017-2021
Waiting allowance
Waiting allow- Pensions
9
19,451
remuneration Total
Fixed Fringe benefits (other remuneration)
3 The number of shares purchased in 2017 with the 2016 cash remuneration component (investment
component) amounted to 5,542 (purchased on 12 May 2017 at a price of € 87.50). The 2016 matching
component was paid out in cash in May 2021. The number of mathematical matching shares for the
purposes of calculating the equivalent value in cash amounts to 1,847 (holding period expired on 11 May
2021). Reference price for calculating the equivalent value of the matching shares: € 83.36).
"The number of shares purchased in 2017 with the 2016 cash remuneration component (investment
component) amounted to 3,470 (purchased on 12 May 2017 at a price of € 87.50). The 2016 matching
component was paid out in cash in May 2021. The number of mathematical matching shares for calcu-
lating the equivalent value in cash amounts to 1,156 (holding period expired on 11 May 2021). Reference
price for calculating the equivalent value of the matching shares: € 83.36).
309
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021
PETER SCHWARZENBAUER
Member of the Board of Management until 31 October 2019
Financial year 2021
Earlier vesting
in €
Total
72,273
as a % of total
remuneration
(-)
69
Remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost 5
Total amount received incl. service cost 6
4,851,197
401,099
5,252,296
100
2,208,364
351,746
2,560,110
91 or 9
100
2 Remuneration system applicable until financial year 2020.
3 Remuneration for prior vesting years if, as of the balance sheet date, the activity underlying the remuneration component has been fully performed, and all conditions for the entitlement are met.
4 Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
5 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group; this amount was not paid out in the financial year.
6 Corresponds to the previous disclosure of amounts received in accordance with the model tables in the version of the German Corporate Governance Code dated 7 February 2017. For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the
vesting year are to be taken into account. The defined maximum remuneration for the vesting year 2021 is € 5,068,750; the remuneration for the vesting year 2021 including service cost is € 4,390,396, which is below the maximum remuneration.
306
1 Remuneration system from financial year 2021.
BMW Group Report 2021
195,713
82 or 18
861,900
62 or 18
(-)
1,156,332
(-)
195,713
(-)
52 or 9
2,012,651
Total variable remuneration
79
1,352,045
61
Remuneration for vesting year 2021 or earlier vesting years
3,989,297
861,900
3,853,394
To Our Stakeholders
Combined Management Report
Group Financial Statements
(-)
(-)
(-)
Variable
Share-based remuneration component (matching component)
remuneration 2016 for holding obligation 2017-2021
(-)
Performance Cash Plan 2019-2021
(-)
Total
(-)
(-)
(-)
(-)
(-)
(-)
12
12
30,128
30,128
Corporate Governance
Remuneration Report
Other Information
← = Q
10. Remuneration granted and owed to former members of the
Board of Management pursuant to § 162 of the German Stock
Corporation Act (AktG)
The following tables show the fixed and variable remunera-
tion granted and owed to former members of the Board of
Management who have definitively terminated their service
within the last 10 financial years, in accordance with § 162
AktG.
For individual former members of the Board of Management,
the remuneration granted and owed also includes the Per-
formance Cash Plan 2019-2021 and/or the share-based
remuneration component (matching component) 2016. In
this regard, please refer to the statements on remuneration
granted and owed for the active members of the Board of
Management.
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021
FRANK-PETER ARNDT
Member of the Board of Management until 31 March 2013
Financial year 2021
Earlier vesting
in €
years in €1
as a % of total
remuneration
Fixed
Fringe benefits (other remuneration)
remuneration Total
2,991,494
Total variable remuneration Vesting year 2021 or earlier vesting years
11
530,994
5
(-)
(-)
684,250
(-)
31
(-)
900,000
19
(-)
(-)
530,000
11
(-)
(-)
113,220
(-)
(-)
in €3
307,588
FY 2020
as a % of total
remuneration
(-)
36
60,303
(-)
1
56,319
(-)
3
997,803
21
856,319
39
(-)
216,814
(-)
9
Share-based remuneration component (matching component) 2015 for holding
obligation 2016-2020
(-)
(-)
(-)
(-)
(-)
16
(-)
Personal cash investment amount 20214
RoCE component
1,030,500
21
(-)
Strategic focus target component
Share-based remuneration component (matching component) 2016 for holding
obligation 2017-2021
(-)
358,862
(-)
(-)
861,900
18
(-)
(-)
(-)
PERFORMANCE CASH PLAN
PCP 2018-2020
PCP 2019-2021
SHARE-BASED PAYMENT
Variable
remuneration Cash remuneration component (investment component) 2020 for holding
obligation 2021-2025
(-)
(-)
195,713
(-)
(-)
(-)
remuneration Total
27,604
7
27,335
7
Performance Cash Plan 2019-2021
7
(-)
(-)
(-)
(-)
(-)
Variable
Share-based remuneration component (matching component)
(-)
Total
27,335
27,604
Member of the Board of Management until 30 September 2016
Financial year 2021
Earlier vesting
in €
years in €1
as a % of total
remuneration
Financial year 2021
7
FRIEDRICH EICHINER
Earlier vesting
in €
years in €¹
as a % of total
remuneration
Fixed
Fringe benefits (other remuneration)
Member of the Board of Management until 31 December 2016
remuneration 2016 for holding obligation 2017-2021
Waiting allowance
ance/Pensions (Partial) capital payments
279,984
(-)
74
272,727
(-)
69
(-)
(-)
279,984
(-)
(-)
(-)
88
272,727
74
(-)
(-)
(-)
(-)
Total
Total remuneration for financial years 2021 or earlier vesting years
Total remuneration according to § 162 German Stock Corporation Act (AktG)
(-)
72,2732
19
(-)
96,3643
24
72,273
19
96,364
24
(-)
(-)
KLAUS DRAEGER
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021
Waiting allow- Pensions
Other Information
Fixed Fringe benefits (other remuneration)
remuneration Total
32,950
32,950
Performance Cash Plan 2019-2021
(-)
363,300²
Earlier vesting
as a % of total
remuneration
4
47
Variable
Share-based remuneration component (matching component)
remuneration 2016 for holding obligation 2017-2021
(-)
4
Member of the Board of Management until 31 October 2019
Financial year 2021
MILAGROS CAIÑA CARREIRO-ANDREE
in €
(-)
(-)
216,814
← = Q
88
246,942
(-)
246,942
100
Waiting allowance
Waiting allow- Pensions
ance/Pensions
(Partial) capital payments
Total
Total remuneration for financial years 2021 or earlier vesting years
Total remuneration according to § 162 German Stock Corporation Act (AktG)
^
96,3643
12
years in €¹
3 The number of shares purchased in 2017 with the 2016 cash remuneration component (investment
component) amounted to 3,470 (purchased on 12 May 2017 at a price of € 87.50). The 2016 matching
component was paid out in cash in May 2021. The number of mathematical matching shares for calcu-
lating the equivalent value in cash amounts to 1,156 (holding period expired on 11 May 2021). Reference
price for calculating the equivalent value of the matching shares: € 83.36).
(-)
(-)
285,000
37
Corporate Governance
459,664
777,615
100
307
BMW Group Report 2021
To Our Stakeholders
1 Remuneration for prior vesting years is due if, as of the balance sheet date, the activity underlying the
remuneration component has been fully performed, and all conditions for the entitlement are met.
2 The target amount of the 2019-2021 Performance Cash Plan is € 950,000. An advance payment of
€ 600,000 was made from the PCP 2019-2021 in 2020.
Combined Management Report
Group Financial Statements
Remuneration Report
(-)
(-)
317,950
Waiting allow-
Total
Total remuneration according to § 162 German Stock Corporation Act (AktG)
ance/Pensions (Partial) capital payments
Total
Waiting allowance
(-)
Total remuneration for financial years 2021 or earlier vesting years
459,664
59
285,000
(-)
37
(-)
Pensions
220,000
since May 1997
210,000
Jens Köhler¹
(-)
(-)
Susanne Klatten
218,000
(-)
220,000
1 %
(-)
210,000
132,344
(-)
0%
-5%
- 1%
(-)
140,355
(-)
(-)
(-) 135,419
since August 2021
(-)
(-)
Heinrich Hiesinger
since May 2017
220,000
57%
220,000
0%
210,000
-5%
210,000
0%
Johann Horn¹
since May 2021
(-)
(-)
(-)
(-)
(-)
210,000
56%
Christoph Schmidt
since May 2021
(-)
(-)
134,344
(-)
(-)
Vishal Sikka
since May 2019
(-)
(-)
(-)
(-)
135,419
(-)
(-)
(-)
(-)
86,258
(-)
Dominique Mohabeer¹
since June 2012
220,000
220,000
0%
220,000
0%
210,000
-5%
210,000
0%
Anke Schäferkordt
since May 2020
(-)
(-)
(-)
430,000
(-)
430,000
428,000
0%
430,000
0%
410,000
- 5%
410,000
0%
Kurt Bock2
since May 2018, Deputy Chairman and Chairman of the Audit
Committee
138,968
(-)
220,000
58%
367,930
67 %
since 2007, Deputy Chairman
460,000
Stefan Schmid¹
410,000
430,000
139,532
430,000
0%
430,000
0%
410,000
-5%
410,000
0%
since 1997, Deputy Chairman
430,000
0%
430,000
0%
410,000
-5%
0%
(-)
25%
Christiane Benner¹
(-)
(-)
(-)
(-)
139,532
(-)
210,000
51%
210,000
0%
(-)
(-)
(-)
(-)
(-)
48,237
(-)
135,419
Rachel Empey
(-)
(-)
Marc Bitzer
Verena zu Dohna
Bernhard Ebner¹
since May 2021
since May 2019
since October 2021
since May 2021
since 2014
216,000
218,000
1 %
220,000
1 %
210,000
-5%
210,000
0%
(-)
(-)
(-)
(-)
(-)
(-)
Andreas Fell
Wirtschaftsprüfer
49 %
Dr.-Ing. Dr.-Ing. E.h.
Norbert Reithofer
Chairman of the
Supervisory Board
For the Board of
Management
Oliver Zipse
Chairman of the Board
of Management
319
BMW Group Report 2021
To Our Stakeholders
For the Supervisory Board
Combined Management Report
Corporate Governance
Remuneration Report
Other Information
← = Q
VII. Auditor's Report
To Bayerische Motoren Werke Aktiengesellschaft Munich
Remuneration Report pursuant to § 162 AktG for the Finan-
cial Year from January 1 to December 31, 2021
Group Financial Statements
Bayerische Motoren Werke Aktiengesellschaft
There are no plans to change the remuneration system for
members of the Supervisory Board for the 2022 financial
year,
sum of intangible assets, property, plant and equipment and
net working capital. This simplified definition aims to make
this indicator more transparent and easier to understand. In
addition, the capital employed items taken into account
reflect the focus of operational segment management. The
new definition leads to an increase in capital employed com-
pared to the previous definition. The strategic target value for
the ROCE in the Automotive segment according to the new
definition will therefore be 18 % from the financial year 2022
onwards (previous year: 40 %). In terms of content, this
amounts to an even more ambitious objective compared to
the previous measurement of return on capital.
2 Dr. Bock was elected Chairman of the Audit Committee after the 2020 Annual General Meeting.
3 Chairman of the Audit Committee until 2020 Annual General Meeting.
318
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
V. Other considerations
BMW AG did not grant any loans to members of the Board of
Management or the Supervisory Board in the financial year
2021, nor did it enter into any contingent liabilities in their
favour. In the year under review, members of the Board of
Management and the Supervisory Board concluded con-
tracts with BMW Group companies for vehicle leasing and
vehicle services (maintenance and repair work) at arm's
length conditions.
The company maintains a financial loss liability insurance
policy for company directors. The insurance provides cover
for legal liability claims and protects the private assets of
members of BMW AG's corporate entities if a claim is made
against them for financial loss in the course of exercising
their function as a corporate entity. A deductible is provided
for members of the Board of Management that complies
with the requirements of the German Stock Corporation Act
(AktG).
VI. Outlook for the 2022 financial year
In principle, the current remuneration system for members of
the Board of Management will apply unchanged for the 2022
financial year.
Under this system, 50 % of the share-based remuneration
as a long-term component of the variable remuneration
depends on the RoCE achieved in the Automotive segment
in the relevant vesting year. For the financial year 2021, the
RoCE is defined as the segment profit before financial result,
divided by the average capital employed in the segment. The
definition of this key indicator has been adjusted for the
financial year 2022. Previously, "capital employed" com-
prised the sum of all current and non-current operating
assets, adjusted for deductible capital. The deductible capi-
tal corresponded to the capital shares that were available to
the operational business, largely without interest. This
included, for example, trade payables and other provisions.
In future, the definition of capital employed will include the
Auditor's Report
To Bayerische Motoren Werke Aktiengesellschaft, Munich
We have audited the remuneration report of Bayerische
Motoren Werke Aktiengesellschaft, Munich, for the financial
year from January 1 to December 31, 2021 including the related
disclosures, which was prepared to comply with § [Arti-
cle] 162 AktG [Aktiengesetz: German Stock Corporation Act].
Responsibilities of the Executive Directors and the Supervisory
Group Financial Statements
Corporate Governance
321 Further GRI Information
332 SASB-Index
337 TCFD-Index
341 NFS-Index
342 Consumption and Carbon Disclosures
344 BMW Group Ten-year Comparison
346 Glossary and Explanation of Key Figures
351 Financial Calendar
352 Contacts
Remuneration Report
Other Information
← = Q
OTHER
INFORMATION
6
since 1988, Deputy Chairman
Combined Management Report
1 In line with the guidelines of the Deutscher Gewerkschaftsbund, these employee representatives have requested that their remuneration be paid into the Hans Bockler-Stiftung.
To Our Stakeholders
320
Board
The executive directors and the supervisory board of Bayer-
ische Motoren Werke Aktiengesellschaft are responsible for
the preparation of the remuneration report, including the
related disclosures, that complies with the requirements of
§ 162 AktG. The executive directors and the supervisory
board are also responsible for such internal control as they
determine is necessary to enable the preparation of a remu-
neration report, including the related disclosures, that is free
from material misstatement, whether due to fraud or error.
Auditor's Responsibilities
Our responsibility is to express an opinion on this remunera-
tion report, including the related disclosures, based on our
audit. We conducted our audit in accordance with German
generally accepted standards for the audit of financial state-
ments promulgated by the Institut der Wirtschaftsprüfer (Insti-
tute of Public Auditors in Germany) (IDW). Those standards
require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about
whether the remuneration report, including the related disclo-
sures, is free from material misstatement.
An audit involves performing procedures to obtain audit evi-
dence about the amounts including the related disclosures
stated in the remuneration report. The procedures selected
depend on the auditor's judgment. This includes the assess-
ment of the risks of material misstatement of the remunera-
tion report including the related disclosures, whether due to
fraud or error.
In making those risk assessments, the auditor considers
internal control relevant to the preparation of the remunera-
tion report including the related disclosures. The objective of
this is to plan and perform audit procedures that are appro-
priate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the company's
internal control. An audit also includes evaluating the appro-
priateness of accounting policies used and the reasonable-
ness of accounting estimates made by the executive direc-
tors and the supervisory board, as well as evaluating the
overall presentation of remuneration report including the
related disclosures.
We believe that the audit evidence we have obtained is suffi-
cient and appropriate to provide a basis for our audit opinion.
Audit Opinion
In our opinion, based on the findings of our audit, the remu-
neration report for the financial year from January 1 to
December 31, 2021, including the related disclosures, com-
plies in all material respects with the accounting provisions
of § 162 AktG.
Reference to an Other Matter - Formal Audit of the Remuneration
Report according to § 162 AktG
The audit of the content of the remuneration report described
in this auditor's report includes the formal audit of the remu-
neration report required by § 162 Abs. [paragraph] 3 AktG,
including the issuance of a report on this audit. As we
express an unqualified audit opinion on the content of the
remuneration report, this audit opinion includes that the
information required by § 162 Abs. 1 and 2 AktG has been
disclosed in all material respects in the remuneration report.
Restriction on use
We issue this auditor's report on the basis of the engage-
ment agreed with Bayerische Motoren Werke Aktienge-
sellschaft. The audit has been performed only for purposes
of the company and the auditor's report is solely intended to
inform the company as to the results of the audit. Our
responsibility for the audit and for our auditor's report is only
towards the company in accordance with this engagement.
The auditor's report is not intended for any third parties to
base any (financial) decisions thereon. We do not assume
any responsibility, duty of care or liability towards third par-
ties; no third parties are included in the scope of protection of
the underlying engagement. Section 334 BGB [Bürgerliches
Gesetzbuch: German Civil Code], according to which objec-
tions arising from a contract may also be raised against third
parties, is not waived.
Munich, March 9, 2022
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
Petra Justenhoven
Wirtschaftsprüferin
BMW Group Report 2021
-25%
156,538
- 5%
from May 2008 to May 2021, Deputy Chairman
430,000
430,000
0%
428,000
0%
428,548
0%
148,237
- 65%
Reinhard Hüttl
from May 2009 to May 2021
189,780
200,000
5%
200,000
0%
Karl-Ludwig Kley³
200,000
FORMER MEMBERS OF THE SUPERVISORY BOARD IN €
0%
210,000
1%
Thomas Wittig
since May 2019
(-)
139,532
(-)
210,000
Werner Zierer¹
since November 2001
220,000
220,000
0%
220,000
0%
210,000
51% 210,000
-5% 210,000
0%
208,000
0%
- 62%
- 45%
Simone Menne
Brigitte Rödig¹
from May 2015 to May 2021
from July 2013 to October 2021
218,000
218,000
0%
220,000
220,000
0%
220,000
220,000
1 %
0%
210,000
210,000
-5%
75,118
- 64%
114,602
75,118
- 5%
0%
Horst Lischka¹
from May 2009 to May 2021
220,000
220,000
0%
220,000
0%
210,000
-5%
75,118
- 64%
Willibald Löw¹
from May 1999 to July 2021
220,000
220,000
0%
220,000
210,000
Stefan Quandt
(-)
0%
210,000
5
10,000
95
200,000
Dominique Mohabeer¹
(-)
(-)
(-)
(-)
(-)
(-)
100
86,258
5
4,000
95
100
(200,000)
(95)
(10,000)
127,419
Christoph Schmidt 4
(100)
(134,344)
[6])
(8,000)
(94)
(126,344)
82,258
100
5
10,000
95
200,000
Anke Schäferkordt
(100)
(210,000)
(5)
210,000
94
Jens Köhler 1,3
(210,000)
126,344
Johann Horn 1,2
as a % of total
remuneration
in €
as a % of total
remuneration
in €
as a % of total
remuneration
in €
total remuneration
attendance fee
fixed remuneration
MEMBERS OF THE SUPERVISORY BOARD IN OFFICE AS OF DECEMBER 31, 2021
COMPENSATION PAID AND OWED TO SUPERVISORY BOARD MEMBERS ACCORDING
TO § 162 OF THE GERMAN STOCK CORPORATION ACT (AKTG) IN FISCAL YEAR 2021 (2020)
← = Q
Other Information
Remuneration Report
Corporate Governance
95
6,000
5
132,344
(5)
(10,000)
(95)
(200,000)
100
210,000
5
10,000
(100)
95
Susanne Klatten
(-)
(-)
(-)
(-)
(-)
(-)
100
200,000
Group Financial Statements
8,000
135,419
2 Member of the Supervisory Board since 14 May 2021.
1 These employee representatives have declared that they will transfer their remuneration to the Hans Böckler Foundation in accordance with the guidelines of the German Federation of Trade Unions.
(100)
(4,020,274)
(3)
(136,000)
(97)
(3,884,274)
100
4,863,096
4
176,000
96
4,687,096
Total acting members of the Supervisory Board
(100)
(210,000)
3 Member of the Supervisory Board since 3 August 2021.
4 Member of the Supervisory Board since 12 May 2021.
313
BMW Group Report 2021
fixed remuneration
Total current and former members of the Supervisory Board
Total former members of the Supervisory Board
Brigitte Rödig 1,4
Simone Menne²
Willibald Löw 1,3
Horst Lischka 1,2
Reinhard Hüttl2
(5)
Karl-Ludwig Kley (Deputy Chairman)²
COMPENSATION PAID AND OWED TO SUPERVISORY BOARD MEMBERS ACCORDING
TO § 162 OF THE GERMAN STOCK CORPORATION ACT (AKTG) IN FISCAL YEAR 2021 (2020)
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
FORMER MEMBERS OF THE SUPERVISORY BOARD
6
(10,000)
(200,000)
(4)
(8,000)
(96)
(200,000)
100
210,000
5
10,000
95
200,000
Vishal Sikka
(-)
(-)
(-)
(-)
(-)
100
(208,000)
(100)
Thomas Wittig
200,000
100
210,000
5
10,000
95
200,000
Werner Zierer¹
(100)
(95)
(210,000)
(10,000)
(95)
(200,000)
100
210,000
5
10,000
95
(5)
attendance fee
Combined Management Report
BMW Group Report 2021
Stefan Schmid (Deputy Chairman)¹
(100)
(410,000)
(2)
(10,000)
(98)
(400,000)
100
410,000
2
10,000
98
400,000
Stefan Quandt (Deputy Chairman)
(100)
(410,000)
(2)
400,000
98
10,000
2
(10,000)
(97)
(357,930)
100
460,000
2
10,000
98
(10,000)
450,000
(100)
(410,000)
(2)
(10,000)
(98)
(400,000)
100
410,000
Kurt Bock (Deputy Chairman, Chairman of the Audit Committee)
(3)
(98)
100
in €
as a % of total
remuneration
in €
total remuneration
attendance fee
fixed remuneration
MEMBERS OF THE SUPERVISORY BOARD IN OFFICE AS OF DECEMBER 31, 2021
COMPENSATION PAID AND OWED TO SUPERVISORY BOARD MEMBERS ACCORDING
TO § 162 OF THE GERMAN STOCK CORPORATION ACT (AKTG) IN FISCAL YEAR 2021 (2020)
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
311
as a % of total
remuneration
in €
as a % of total
remuneration
Norbert Reithofer (Chairman)
410,000
2
10,000
98
400,000
Manfred Schoch (Deputy Chairman)¹
(100)
(610,000)
(400,000)
(2)
(98)
(600,000)
100
610,000
2
10,000
98
600,000
(10,000)
To Our Stakeholders
(367,930)
Christiane Benner¹
(-)
(-)
(-)
100
135,419
6
8,000
94
127,419
Rachel Empey²
(-)
(-)
(-)
(-)
(-)
(-)
100
(-)
(-)
(-)
Heinrich Hiesinger
312
4 Member of the Supervisory Board until 31 December 2021.
>
3 Member of the Supervisory Board since 8 October 2021.
2 Member of the Supervisory Board since 12 May 2021.
1 These employee representatives have declared that they will transfer their remuneration to the Hans Böckler Foundation in accordance with the guidelines of the German Federation of Trade Unions.
(100)
(210,000)
48,237
(5)
(95)
(200,000)
100
210,000
5
10,000
95
200,000
(10,000)
(100)
4
96
6
8,000
94
127,419
Marc Bitzer²
(100)
(210,000)
(5)
(10,000)
(95)
(200,000)
100
210,000
5
10,000
95
200,000
135,419
100
(-)
(-)
46,237
Bernhard Ebner 1,3
(100)
(210,000)
(5)
(10,000)
(95)
(200,000)
2,000
100
5
10,000
95
200,000
Verena zu Dohna 1,4
(-)
(-)
(-)
210,000
total remuneration
Manfred Schoch¹
14%
2017
2018 Change in %
2019 Change in %
2020 Change in %
2021
Change in %
Net income of BMW AG according to the German Commercial Code (HGB) (in € million)
Profit attributable to shareholders of BMW AG (in € million)
COMPARISON OF CHANGES IN EARNINGS AND REMUNERATION FOR EMPLOYEES, THE BOARD OF MANAGEMENT AND THE SUPERVISORY BOARD
3,197
8,589
- 12 %
2,107
-25%
1,702
- 19%
7,117
- 17%
Group post-tax return on sales (in %)
2,801
8.8
← = Q
Remuneration Report
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
IV. Comparison of change in remuneration and earnings
pursuant to § 162 (1) Sentence 2 No. 2 of the German
Stock Corporation Act (AktG)
Other Information
Pursuant to § 162 (1) Sentence 2 No. 2 AktG, the following
table shows the change in earnings, the annual change in
the remuneration of the members of the Board of Manage-
ment and the Supervisory Board, and the annual change in
the average remuneration of the employees on a full-time
equivalent basis over the last five financial years.
The change in earnings is presented on the basis of BMW
AG's net profit for the year in accordance with the German
Commercial Code (HGB). In addition, the changes in the key
indicators "earnings attributable to shareholders of BMW
AG" and "Group post-tax return on sales" are reported, as
these key indicators are relevant to the calculation of the var-
iable remuneration of the members of the Board of Manage-
ment (earnings component of the bonus).
The presentation of average employee remuneration is
based on the average remuneration of all employees of
BMW AG on a full-time equivalent basis. In the 2021 financial
year, this was 78,144 people. As of 31 December 2021, BMW
Group employed 118,909 people worldwide. The compo-
nents of the average employee remuneration presented are
generally in line with the remuneration granted and owed to
the members of the Board of Management and the Supervi-
sory Board according to § 162 (1) Sentence 1 AktG.
315
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
For the members of the Board of Management and the
Supervisory Board, the remuneration granted and owed in
the relevant financial year is presented within the meaning of
§ 162 (1) Sentence 1 AktG. The remuneration granted and
owed to former members of the Board of Management
includes any variable remuneration from previous vesting
years and any remuneration from any contracts of employ-
ment that remained valid beyond the end of their mandate,
as well as retirement benefit plans (pension payments, pay-
ments from the capital account), other remuneration and any
waiting allowances paid.
BMW Group Report 2021
7.3
4,915
4.8
III. REMUNERATION OF THE BOARD OF MANAGEMENT IN €¹
Oliver Zipse²
since May 2015,
Chairman since 16 August 2019
Ilka Horstmeier
since November 2019
Milan Nedeljkovic
since October 2019
(428,548)
Pieter Nota3
Nicolas Peter³
since January 2017
Frank Weber
Andreas Wendt
since July 2020
from October 2018 until December 2021
4,115,640
2,710,234
- 34%
since January 2018
- 17%
99,169
86,715
- 31 %
3,775
- 23%
4,978
12,382
192 %
228%
- 34%
3.9
- 19%
-3%
11.2
I. CHANGES IN EARNINGS
II. AVERAGE REMUNERATION OF EMPLOYEES IN €
Employees of BMW AG
90,771
93,522
3%
89,353
- 4%
187 %
314
^
"Member of the Supervisory Board until 1 October 2021.
(100)
108,602
95
6,000
5
114,602
100
(200,000)
(210,000)
(95)
(5)
(210,000)
(100)
73,118
97
2,000
3
75,118
(10,000)
100
(5)
(95)
97
2,000
3
75,118
100
(190,000)
(95)
(10,000)
(10,000)
(5)
(100)
73,118
97
2,000
3
75,118
100
(200,000)
(200,000)
(200,000)
(95)
(10,000)
(60,000)
(4)
(1,468,548)
(100)
5,311,827
(5,292,822)
96
196,000
4
(96)
5,507,827
(96)
(196,000)
(4)
(5,488,822)
(100)
1 These employee representatives have declared that they will transfer their remuneration to the Hans Böckler Foundation in accordance with the guidelines of the German Federation of Trade Unions.
2 Member of the Supervisory Board until 14 May 2021.
3 Member of the Supervisory Board until 16 July 2021.
100
(1,408,548)
100
644,731
(5)
(210,000)
(100)
150,538
96
6,000
4
156,538
100
(200,000)
(95)
(10,000)
(5)
(210,000)
(100)
624,731
97
20,000
3
(-)
73,118
(-)
45%
until October 2019
- 39%
- 83%
-2%
10%
- 54%
309,002
7%
3,297,170
149 %
1 The reported remuneration for the years 2017-2020 has been recalculated in accordance with the requirements of § 162 German Stock Corporation Act (AktG).
2 For the financial years 2019 and 2020, the calculation of remuneration also took into account the advances in the amount of € 600,000 each from the Performance Cash Plan 2018-2020 and 2019-2021, which were paid out in 2019 and 2020, respectively.
3 Ms Caiña Carreiro-Andree's contract of employment ran until 30 June 2020.
"For the financial years 2019 and 2020, the calculation of remuneration also took into account the advances in the amount of € 900,000 each from the Performance Cash Plan 2018-2020 and 2019-2021, which were paid out in 2019 and 2020, respectively.
5 Mr Krüger's contract of employment ran until 30 April 2020.
6 For the financial years 2019 and 2020, the calculation of remuneration also included the advances paid in the amounts of € 600,000 and € 500,000 from the Performance Cash Plan 2018-2020 and 2019-2021, which were paid out in 2019 and 2020, respectively..
317
BMW Group Report 2021
To Our Stakeholders
Peter Schwarzenbauer6
Combined Management Report
- 69%
1 %
-30%
10%
- 23%
745,870
- 69%
until August 2019
-36%
10%
- 34%
3,923,856
384,435
- 1%
-10%
- 21%
1,370,807
363,847
- 64%
until December 2017
Group Financial Statements
Corporate Governance
Remuneration Report
(2)
(10,000)
(98)
(418,548)
100
148,237
1
2,000
99
as a % of total
remuneration
in €
as a % of total
remuneration
in €
as a % of total
remuneration
in €
146,237
610,000
-5%
610,000
0%
Other Information
← = Q
COMPARISON OF CHANGES IN EARNINGS AND REMUNERATION FOR EMPLOYEES, THE BOARD OF MANAGEMENT AND THE SUPERVISORY BOARD
IV. REMUNERATION OF THE SUPERVISORY BOARD IN €
2017
2018 Change in %
2019 Change in %
2%
-32%
2020 Change in %
Change in %
Norbert Reithofer
since 2015, Chairman
640,000
640,000
0%
640,000
2021
396,427
until May 2015, Chairman of the Supervisory Board since May 2015
- 8%
64%
3,949,908
93%
4,017,337
95%
62%
75%
55%
- 1%
3,856,458
4,851,197
283 %
120%
1 The reported remuneration for the years 2017-2020 has been recalculated in accordance with the requirements of § 162 German Stock Corporation Act (AktG).
2 For the financial years 2019 and 2020, the calculation of remuneration also included the advances paid in the amounts of € 566,667 and € 712,000 from the Performance Cash Plans 2018-2020 and 2019-2021, which were paid out in 2019 and 2020, respectively.
3 For the financial years 2019 and 2020, the calculation of remuneration also included the advances in the amount of € 500,000 each from the Performance Cash Plans 2018-2020 and 2019-2021, which were paid out in 2019 and 2020, respectively.
>
8,752,558
316
36%
432 %
283 %
(-) 2,233,062
(-)
(-)
(-)
537,696
(-)
(-)
2,487,689
(-)
4,182,138
2,435,932
(-)
(-)
612,359
- 42%
(-)
2,651,143
2,660,349
7%
5,338,865
2,043,706
2,058,305
2,757,590
9% 3,117,471
(-) 1,006,759
265 % 2,208,364
BMW Group Report 2021
4% 4,820,525
17% 4,824,746
(-)
Combined Management Report
- 28%
0%
4%
246,942
1 %
- 39%
8%
-25%
777,615
To Our Stakeholders
- 1%
- 8%
2%
379,861
- 73%
until June 2020
until October 2019
until September 2016
until December 2016
- 68%
lan Robertson
until March 2013
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
COMPARISON OF CHANGES IN EARNINGS AND REMUNERATION FOR EMPLOYEES, THE BOARD OF MANAGEMENT AND THE SUPERVISORY BOARD
Change in 2019 on
2018 in %
Change in 2018 on
2017 in %
(100)
2021
Change in 2021 on
2020 in %
FORMER MEMBERS OF THE BOARD OF MANAGEMENT IN €1
Frank-Peter Arndt
Milagros Caiña
Carreiro-Andree 2,3
Klaus Draeger
Friedrich Eichiner
Klaus Fröhlich²
Harald Krüger 4,5
Change in 2020 on
2019 in %
Norbert Reithofer
7,168
6,650
1 Waste generated by automobile production (BMW Group plants, including the BMW Brilliance Automotive Ltd. joint venture, excluding partner plants and contract manufacturing).
2 Includes both recycling and thermal utilisation.
1.03
in kg
9,749
0.93
0.85
SOLVENT EMISSIONS PER VEHICLE PRODUCED 1
9,906
← = Q
PRODUCTION, PURCHASING AND SUPPLIER NETWORK
FURTHER GRI INFORMATION
Further GRI Information
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
To Our Stakeholders
BMW Group Report 2021
321
9,031
Combined Management Report
in t CO₂/CO₂e
Waste for disposal
Further GRI Information
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
WASTE 1
To Our Stakeholders
326
= Q
↑
1 Water consumed by automobile production (BMW Group plants, including the BMW Brilliance Automotive Ltd. joint venture, excluding partner plants and contract manufacturing).
0.3
0.0
14.6
BMW Group Report 2021
WASTE FOR DISPOSAL PER VEHICLE
PRODUCED¹
in t
Total waste
822,848
768,292
771,162
779,911
776,179
Materials for recycling 2
829,498
775,459
780,911
789,817
785,209
in kg
2021
2020
2019
2018
2017
0.81
BMW GROUP CO₂ FOOTPRINT¹
0.70
2017
4.8
6.0
6.6
6.1
5.3
in % of total number of employees"
of which fixed-term 12
3,736
4,747
South Africa 2,894
5,474
4,690
Number of employees who use "Vollzeit Select"
of which fixed-term 39
India 562
84.3
87.2
70.8
66.1
63.3
in % of total number of employees
5,508
Sabbaticals
567
648
5.4
5.2
4.9
4.1
3.9
4,211
4,158
4,082
3,675
3,389
in % of total number of employees
Parental leave
0.6
0.8
0.9
0.7
0.6
in % of total number of employees
464
653
764
41,180
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition, see Glossary).
43,309
34,339
ALTERNATIVE WAYS OF WORKING AT BMW AG1
1 Excluding executives and contractors. 7 GRI 102-41
100
100
100
Mexico¹
0
0
0
SHARE OF EMPLOYEES PER COUNTRY WITH
PRODUCTION LOCATION(S)
70
59
20
0
USA (no collective agreements exist)
62
53
South Africa
100
100
63
Number of employees
China 2,059
Number of employees
31,754
Teleworking position³
Thailand 561
7.7
7.0
6.6
5.6
5.2
in % of total number of employees
of which fixed-term 756
5,951
5,568
5,440
5,000
4,572
2021
2020
2019
2018
2017
Part-time workers²
36,208
For the period 2018 and earlier, the percentage of employees no longer covered by the new definition is between 7.5% and 8.0 %.
² Of which 3,716 were female (62%). For systemic reasons, this number is only calculated for BMW AG.
3 Only workers in administrative positions who engaged in teleworking.
1,700
1,314
1,207
Part-time retirement, retirement, death
3,720
4,535
2,794
2,247
2,077
1,884
Total
-22 South Africa
15 Austria (incl. sales region Eastern Europe)
- 25 USA
-17 UK
-17 Germany
2021
2020
2019
2018
33 Thailand
1,938
Voluntarily left company
- 20 Brazil
Total emission²
2017
2018
= Q
52 China
2 Increase mainly due to a set of personnel measures.
37 Other countries
1 Figures refer to employees with permanent contracts.
33
50
65
60
61
Dismissed by employer
- 31 Mexico
1,749²
2,6012
1,029
873
809
(termination or suspension of employment contract by employee)
2017
Number
-7 India
TOTAL NUMBER OF EMPLOYEES LEAVING BMW AG, BY REASON FOR LEAVING¹
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
330
of which fixed-term 727
79,647 Germany
of which fixed-term 299
of which fixed-term 0
6,696 Other countries
of which fixed-term 2
3,033 Mexico
1 Including the Eastern Europe sales region.
of which fixed-term 100
UK 6,475
of which fixed-term 0
USA 12,171
of which fixed-term 142
Austria¹ 3,934
of which fixed-term 426
877 Brazil
4 Statistical population not including apprentices, interns, thesis students working at the company and doctoral candidates.
Remuneration Report
100
Other Information
ACADEMY, BY EMPLOYEE CATEGORY
in %
SHARE OF WOMEN IN THE WORKFORCE BY
COUNTRY WITH PRODUCTION SITE(S)
↑
Further GRI Information
10.8
7.1
10.6
Tariff
27
21.1
14.1
(master craftsmen)
"Meister"
30.7
14.1
16.7
Non-tariff employees
2021
2020
2019
Employee category
AVERAGE TRAINING HOURS AT THE BMW AG
100
100
Austria¹
328
co co
8
8
2
2
9
3
2
BMW Group Report 2021
9
0
0
0
2 Includes on-site visits and remote audits.
1 Basis: Industry-specific sustainability questionnaire.
of which number of notifications that were clarified during the reporting year
Number of notifications of potential violations of our sustainability principles received
through our supply chain reporting channels
Number of existing supplier relationships that had to be terminated prematurely due to
serious sustainability violations
81
0
To Our Stakeholders
Combined Management Report
Group Financial Statements
126,016
134,682
129,932
Employees with fixed-term contract²
Other
Financial Services
Motorcycles
Automotive
BMW Group
2021
2020
2019
2018
2017
EMPLOYEES AT END OF YEAR'
EMPLOYEES AND SOCIETY
Further GRI Information
← = Q
Other Information
Remuneration Report
Corporate Governance
108
153
193
196
BMW Group Report 2021
327
← = Q
Further GRI Information
1 Efficiency indicator calculated from the waste generated in automobile production (BMW Group plants,
including the BMW Brilliance Automotive Ltd. joint venture, excluding partner plants and contract ma-
nufacturing) divided by the number of vehicles produced (BMW Group plants, including the BMW Brilli-
ance Automotive Ltd. joint venture and partner plants, excluding contract manufacturing).
2021
2020
2019
2018
2017
0
2.90
3.33
4.09
|
3.86
4.27
Efficiency indicator calculated from the solvent emissions (VOC) generated in automobile production
(BMW Group plants, including the BMW Brilliance Automotive Ltd. joint venture, excluding partner
plants and contract manufacturing) divided by the number of automobiles produced (BMW Group
plants, including the BMW Brilliance Automotive Ltd. joint venture and partner plants, excluding
contract manufacturing).
2021
2020
2019
2018
To Our Stakeholders
120,726
Combined Management Report
Corporate Governance
313
105
89
Number of audits and assessments conducted by or on behalf of the BMW Group²
Number of supplier locations not awarded contracts because they fail to meet the
BMW Group's sustainability or other requirements¹
61 %
64 %
62 %
48 %
Number of identified sustainability deficits at potential and existing supplier locations
from an ESG perspective
98%
98 %
95 %
97%
Proportion of audited suppliers of production-related material with a contract volume
greater than € 2 million¹
2021
2020
2019
2018
SUSTAINABILITY ASSESSMENT OF RELEVANT SUPPLIER LOCATIONS
Other Information
Remuneration Report
Group Financial Statements
0
118,909
121,994
Further GRI Information
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
13.6
329
5 Of whom 37.9 % are tariff-bound production employees of the BMW Group
4 Of whom 38.2 % are tariff-bound production employees of the BMW Group
3 Of whom 35.3% are tariff-bound production employees of the BMW Group
² Of whom 35.7% are tariff-bound production employees of the BMW Group
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition,
see Glossary). For the period 2018 and earlier, the percentage of employees no longer covered by the
new definition is between 7.5 und 8.0 %.
2021
2020
2019
2018
6 Of whom 38.0 % are tariff-bound production employees of the BMW Group
in %
2017
2018
100
100
100
100
100
China (plant)
83
84
85
85
86
UK
100
100
100
100
100
Germany¹
2021
2020
2019
2017
0
30
in Germany
3,489
4,638
4,685
97
103
110
119
117
8,466
8,473
8,684
8,860
8,645
3,418
3,474
3,503
3,709
3,506
106,928
108,676
113,719
2,892
117,664
2,503
5,553
Employees
60
90
90
abroad
Employees
20
120
118.96
120.75
126.04
134.73
129.92
150
Number of employees in thousands
EMPLOYEES IN GERMANY AND ABROAD¹
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition, see Glossary).
For the period 2018 and earlier, the percentage of employees no longer covered by the new definition is between 7.5% and 8.0%
2 Around 30,5% of these are women employed at BMW AG. For system-related reasons, this data is only collected for BMW AG.
3 Permanent and fixed-term employees.
6,846
6,433
6,318
6,299
Employees in part-time employment³
SHARE OF EMPLOYEES REPRESENTED BY A TRADE UNION OR FALLING UNDER COLLECTIVE AGREEMENTS
2.32
7.7
5,852,666
5,788,965
5,974,625
6,348,009
5,714,610
6,040,824
6,476,955
TOTAL ENERGY CONSUMPTION BY SEGMENT
Vehicle production
5,362,618
5,169,266
Motorcycle production
95,493
89,300
Non-manufacturing areas
394,555
530,3993
5,226,227
120,583
627,825
5,226,227
120,583
1,001,199
2021
4,946,865
114,072
653,673
2020
2019
6 Includes air travel, train travel and rental cars.
7 The figures from 2020 onwards are not directly comparable with previous years due to the improved data basis. In some cases, figures have been extrapolated based on surveys conducted at major national and international BMW Group locations.
8 Based on life cycle assessments in accordance with ISO 14040/44 of representative vehicles of the product lines using the LCA tool GaBi provided by the company Thinkstep (including the climate-impacting gases CO₂, CH 4, N₂O, SF 6, NF 3). Corresponding to the CO₂e emissions, the life cycle assessments show the energy consump-
tion (lower calorific value): around 86,095,113 MWh in the category "Bought-in goods and services" and around 600,049 MWh in the category "Waste disposal".
9 Use-phase emissions are based on global average fleet emissions. For definition, see glossary carbon emissions of new vehicle fleet worldwide, including upstream emissions. The calculation is based on an average mileage of 200,000 km.
323
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Further GRI Information
ENERGY CONSUMPTION 1,2,3
in MWh
TOTAL ENERGY CONSUMPTION
Total energy consumption
2017
2018
2019 old
2020 old
5 Scope expanded to include the Greer packaging plant (South Carolina, USA) to supply production and distribute Rolls-Royce vehicles. The figures for 2021 are therefore not directly comparable with previous years.
4,946,865
114,072
979,887
1,072
1,123
33,688
1,113
33,322
31,882
2,888
2,205
7,760
3,660
9,368
8,908
2,624,557
2,669,457
3,005,902
3,117,505
3,093,542
3,206,948
3,517,068
258,380
294,724
1,095
4,450
5,329,550
Wood pellets
Biogas (landfill gas)
125,450
1,021,955
TOTAL ENERGY CONSUMPTION BY SOURCE
Electricity
2,588,409
2,513,308
2,439,675
Community heating
408,735
395,609
358,992
2,653,855
367,040
2,154,8994
2,320,314
2,453,215
266,112
274,484
284,763
Community cooling
Heating oil
Natural gas
of which CHP losses
of which CHP losses
" Includes both upstream and downstream transportation. Use and modelling of emissions factors primarily in accordance with DIN EN 16258 as well as figures from CleanCargo and JEC5; in some cases, extrapolations have been used for individual months.
3 Emissions from company cars (Scope 1) are also included on a pro-rata basis under employee commuting and use phase (both Scope 3). A system-related delimitation is not currently possible.
2 Includes all refuelling of function-relabel vehicles within Germany and at major international locations (e.g. test sites in the USA, Sweden and France). All refuellings of company vehicles in Germany and, since November 2021, throughout Europe are also included. The latter include both business and private trips, except refuel-
ling paid for privately by employees.
Electricity/heat purchased by BMW Group locations 3,4,5,6
510,911
510,911
538,622
538,622
302,574
302,574
354,095
354,095
84,257
84,257
130,090
130,090
134,849
134,849
1 Due to the broader definition of Scope 1 and Scope 2 emissions generated by BMW Group locations in the year under report and adjustments to the methodology for calculating use-phase emissions, the years 2019 (base year) and 2020 have been adjusted for comparison purposes. For these reasons, a direct comparison with
2017 and 2018 figures is not possible.
2 The emissions listed account for approximately 90% of the BMW Group's total Scope 1 to Scope 3 emissions.
3 Carbon emissions (disregarding climate-impacting gases apart from carbon dioxide) generated by vehicle production (BMW Group plants including the BMW Brilliance Automotive Ltd. joint venture and motorcycle production, but excluding partner plants and contract manufacturing) and by other BMW Group locations not directly
related to production (e.g. research centres, sales centres, office buildings).
4 From 2021, this indicator also includes the carbon emissions generated by other BMW Group locations as well as those relating to production. For comparison purposes, the figures for 2019 (base year) and 2020 have been adjusted accordingly. The figures for 2017 and 2018 are therefore not directly comparable.
5 Calculation of Scope 1 and Scope 2 emissions, using the operational control approach in accordance with the GHG Protocol. Leased office space without the direct influence of the BMW Group on energy supply is therefore not included.
6 Scope 2 emissions calculated using the market-based method in accordance with the GHG Protocol Scope 2 guidance; mainly the use of VDA emissions factors and in some cases the use of local emissions factors; alternative calculation using the location-based method: 1,404,348 t CO₂.
7 Includes all refuelling of function-relabel vehicles within Germany and at major international locations (e.g. test sites in the USA, Sweden and France). All refuellings of company vehicles in Germany and, since November 2021, throughout Europe are also included. The latter include both business and private trips, except refuel-
ling paid for privately by employees.
8 Emissions from company cars (Scope 1) are also included on a pro-rata basis under employee commuting and use phase (both Scope 3). A system-related delimitation is not currently possible.
9 Biomethane certificates amounting to 164,000 MWh are taken into account in this indicator. This share has reduced carbon emissions by 30,024 metric tonnes.
>>>
^
322
BMW Group Report 2021
Total emission
To Our Stakeholders
Scope 2: INDIRECT GREENHOUSE GAS EMISSION
1,793
529,728
487,249
550,494
586,638
568,538
678,967
604,620
699,713
631,3049
company vehicles 7,8
company-owned planes
88,782
88,272
85,667
85,667
72,554
72,554
66,442
6,562
6,182
6,098
6,098
1,793
1,967
Combined Management Report
Group Financial Statements
Corporate Governance
117,682,832
1,322,859
25,217
166,586
121,705,368
Upstream chain 8
16,786,192
17,221,109
Utilisation phase ³,9
Disposal 8
51,887,708
1,234,346
52,759,567
1,252,835
18,505,921
53,421,006
1,269,018
18,505,921
16,234,959
16,234,959
110,899,066
1,269,018
46,200,385
98,782,354
1,878,9105
29,765
139,999
18,534,765
99,805,490
1,150,857
1,150,857
1,316,438
1 Due to the broader definition of Scope 1 and Scope 2 emissions generated by BMW Group locations in the year under report and adjustments to the methodology for calculating use-phase emissions, the years 2019 (base year) and 2020 have been adjusted for comparison purposes. For these reasons, a direct comparison with
2017 and 2018 figures is not possible.
166,586
146,298
65,100,863
1,322,859
25,2172
129,646
Remuneration Report
Other Information
BMW GROUP CO₂ FOOTPRINT¹
Further GRI Information
← = Q
2017
2018
2019 old
2019
2020 old
412,451
2020
SCOPE 3: INDIRECT GREENHOUSE GAS EMISSIONS
Total emissions
Logistics4
Business trips 6
Employees' commuter traffic 3,7
71,714,741
1,497,075
169,233
140,187
73,093,077
1,563,919
159,039
136,608
75,042,286
1,570,397
129,646
146,298
132,520,346
1,570,397
2021
BMW Group locations 3,4,5
425,796
498,299
4,722,310
2020
87.4
5,417,428
2019
90.4
88.0
5,425,073
5,073,220
2017
2018
of which rainwater in %
of which surface water in %
of which groundwater in %
of which drinking water in %
Water consumption
in m³
WATER CONSUMPTION1
1 Efficiency indicator calculated from the amount of water consumed by automobile production (BMW
Group plants, including the BMW Brilliance Automotive Ltd. joint venture, excluding partner plants and
contract manufacturing) divided by the number of automobiles produced (BMW Group plants, including
the BMW Brilliance Automotive Ltd. joint venture and partner plants, excluding contract manufacturing).
2 At approximately 2.46 million vehicles, the number produced (BMW Group plants, including the BMW
Brilliance Automotive Ltd. joint venture, partner plants and contract production) increased in the year
under report compared with the previous year (2020: approximately 2.26 million). Based on an average
weight of BMW Group vehicles of approximately 1.8 tonnes, the total weight of input materials is
around 4.3 million tonnes. To calculate the individual material flows, the total weight is multiplied by
the average distribution of the materials in BMW Group vehicles.
1 Calculation based on unit-adjusted averages for the BMW 1 Series, 2 Series, 3 Series, 4 Series,
5 Series, 6 Series, 7 Series, 8 Series, X1, X2, X3, X4, X5, X6, X7, Rolls-Royce, MINI, MINI Countryman
and the BEV vehicles iX, iX3, 14, 13, MINI E as well as the PHEV variants.
1111
2021
2021
85.1
52.0
77.2
51.1
Road in %
Rail in %
17.2
31.7
17.6
31.1
20.1
37.5
17.1
33.6
14.2
27.2
6.3
2.5
6.5
2.3
6.3
12.6
4,924,477
74.7
2020
2018
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
325
1 Use and modelling of emissions factors primarily in accordance with DIN EN 16258 as well as figures from CleanCargo and JEC5; in some cases, extrapolations have been used for individual months.
2 Figures relate to automobile production (BMW Group including the BMW Brilliance Automotive Ltd. joint venture and partner plants, excluding Rolls-Royce and contract manufacturing) and spare parts deliveries to parts distribution centres.
3 Figures relate to automobile production (BMW Group including the BMW Brilliance Automotive Ltd. joint venture, contract production and parts for partner plants) and spare parts deliveries to distribution centres in markets worldwide as well as to dealerships in certain markets.
" Scope expanded to include the Greer packaging plant (South Carolina, USA) to supply production and distribute Rolls-Royce vehicles. The figures for 2021 are therefore not directly comparable with previous years.
5 The CO₂e emission values for 2020 are not directly comparable with those of previous years, as the analysis has been expanded to include the local data of suppliers, who are in the production supply for certain plants and in the vehicle transportation to dealers in certain markets as well as the additional volume of part deliveries.
17.9
1.0
10.6
0.5
12.2
0.6
16.3
0.9
12.9
0.7
Air in %
3.8
Further GRI Information
2019
AVERAGE DISTRIBUTION OF MATERIALS IN
in %
2017
1.0
2.15
2.25
2.22
2.6
2.39
in m³
PROCESS WASTEWATER PER VEHICLE
PRODUCED¹
50.3 Steel and iron
-1.9 Duromers
Others 10.0
(e.g. tyres and seals) 3.7
Elastomers
(e.g. aluminium) 20.0
Non-ferrous metals
Textiles 1.2
resins 12.6
Thermoplastic
Naturwerkst.) 0.3
M.O.N. (modif. organ.
BMW GROUP VEHICLES 1,2
47.8
73.0
50.3
1,703
1,703
2,316
2,316
2,344
1 Energy consumption generated by vehicle production (BMW Group plants including the BMW Brilliance Automotive Ltd. joint venture and motorcycle, excluding partner plants and contract manufacturing)
and by other BMW Group locations not directly related to production (e.g. research centres, sales centres, office buildings).
² Due to an extention in the reporting scope in the year under report, figures from 2019 and 2020 have been adjusted to enable better comparison. Figures for 2017 and 2018 are therefore not directly comparable.
3 Upper calorific value.
4 The decrease was mainly due to the pandemic-related interruption of production at most BMW Group plants.
324
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Further GRI Information
TRANSPORT LOGISTICS: CARRIERS AND CO2 EMISSIONS 1
2017
2018
1,091
2019
381
1,211
508,318
224,819
205,320
164,957
164,957
192,911
192,911
177,564
84,166
86,787
68,560
68,560
65,065
65,065
67,038
220
220
68
1,501
56
1,161
Solar (photovoltaics)
2020
2021
INBOUND² (MATERIAL PROVISION OF THE PLANTS AND
40,268
1,563,919
42,123
1,570,397
37,245
1,322,8595
51,741
1,878,9104
PERCENTAGE SHARE OF CARRIERS IN TOTAL (INBOUND AND OUT-
BOUND) IN TERMS OF TRANSPORT VOLUME AND CO2 EMISSION
tkm
g CO₂e
tkm
9 Соге
tkm
g CO₂e
tkm
g CO₂e
tkm
g CO₂e
Sea in %
75.8
52.9
75.0
1,497,075
40,426
CO₂e emissions in t
Transport volume in million tkm
SPARE PARTS DELIVERY)
Transport volume in million tkm
CO₂e emissions in t
14,545
14,491
537,928
589,730
15,634
577,077
13,623
472,290
23,244
820,226
498,299
OUTBOUND³ (DISTRIBUTION OF VEHICLES AND SPARE PARTS)
25,881
25,777
26,489
CO₂e emissions in t
959,147
974,189
993,320
23,622
850,569
28,497
1,058,685
TOTAL (INBOUND AND OUTBOUND)
Transport volume in million tkm
7.6
3.8
625,072
642,885
678,403
642,259
581,703
Total emission
SCOPE 1: DIRECT GREENHOUSE GAS EMISSION
118,491,889
122,539,929
2020
2020 old
65,828,005
133,552,843
2019
2019 old
75,987,119
74,213,402
72,850,724
2021
Remuneration Report
Group Financial Statements
Corporate Governance
Other Information
Remuneration Report
TCFD-INDEX
[c
Governance
Combined Management Report
← = Q
To Our Stakeholders
SASB-Index
337
TCFD-Index
The BMW Group not only wants to make vehicle more
recyclable, it is also looking to reduce the use of primary
raw materials in the automotive value chain and increase
the proportion of secondary raw materials. Circularity
as a strategic priority.
All BMW Group vehicles sold since 2008 meet the
currently applicable worldwide requirements for the
recycling of end-of-life vehicles, components and mate-
rials. Vehicles are already currently required to be 95%
recyclable (based on vehicle weight). Together with its
national sales organisations, the BMW Group has already
introduced take-back systems for end-of-life vehicles
in 30 countries and offers eco-friendly vehicle recycling
at more than 2,800 take-back points. From product
development to recycling.
At the Recycling and Dismantling Centre in Munich,
8,543 vehicles (including motorcycles) were taken back
and recycled during the reporting year. This is equivalent
to a total vehicle scrap weight of 12,799 t. In relation to
the entire vehicle, at least 85% of materials are recycled
and, including thermal utilisation, at least 95% as
stipulated by legal requirements (European End-of-Life
Vehicles Directive ELV 2000/53/EC).
Total amount of waste: 829,498 t.; 93.4 % of this was
recycled and 5.8 % thermally utilised.
Response Comment
A. Responsibility of the Board of
Management for climate-related risks
and opportunities
TR-AU-440b.3
Percentage (%) by sales-
weighted metric tons (t)
BMW Group Report 2021
B. The role of management in assessing
and managing climate-related risks and
opportunities
Outlook, Risk and Opportunity Management
Outlook, Risk and Opportunity Management
To Our Stakeholders
BMW Group Report 2021
338
TCFD-Index
>
]]
C 1.2, C 1.2a
C1.1a, C 1.1b
CDP questionnaire 2021
7 Performance Indicators
7 Strategy Process
BMW Group Integrated Strategy
7 Climate-Related Opportunities and Risks
7 Organisation of Risk Management
Quantitative
7 Corporate Governance
- Performance Management
7 Performance Indicators
BMW Group Integrated Strategy
Strategy Process
7 Climate-Related Opportunities and Risks
7 Organisation of Risk Management
BMW Group Report 2021
Average recyclability of vehicles sold
Category
TR-AU-440b.1
risks associated with the use of critical
materials
TR-AU-440a.1
n/a
Discussion and Analysis
Description of the management of
Material Sourcing
Discussion of strategy for managing fleet Discussion and Analysis n/a
fuel economy, and emissions risks and
opportunities
TR-AU-410a.3
Code
Unit of Measure
Category
Accounting Metric
Fuel Economy & Use-phase Emissions
[C
Topic
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
SASB-Index
↑
= Q
Response Comment
Code
Unit of Measure
Metric tons (t),
percentage (%)
Metric tons (t),
percentage (%)
Quantitative
Weight of end-of-life material recovered,
percentage recycled
Quantitative
Total amount of waste from manufactur-
ing, percentage recycled
Combined Management Report
Accounting Metric
Materials Efficiency & Recycling
Topic
TR-AU-440b.2
← = Q
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
336
Other Information
The BMW Group also has a set of rigorous measures in
place to reduce pollutant emissions generated by its ve-
hicles, such as nitrogen oxides (NOx), carbon monoxide
(CO) and particulate matter (PM) (pollutant emissions).
In order to meet the respective due diligence require-
ments in terms of environmental and social standards,
we rely on systematic risk analyses as well as preven-
tion, empowerment and remediation measures. Moreover,
the BMW Group enshrines its obligatory sustainability
standards in all its supply contracts. Sourcing the raw
materials required to produce battery cells, such as
lithium and cobalt, is generally a highly challenging task.
In order to establish traceability and transparency across
the supply chain for both of these raw materials and to
minimise the identified risks, the BMW Group sources
them directly from the producers and makes them avail-
able to its own suppliers in order to produce the current
generation of battery cells. Detailed information on the
approach taken by the BMW Group is provided in the
section Taking ecological and social responsibility.
Close cooperation with our suppliers in a spirit of part-
nership was one of the factors that enabled us, for ex-
ample, to cushion the effects of the global semiconductor
shortage to a large extent. In order to secure long-term
supplies in this area, the BMW Group concluded a direct
agreement with semiconductor suppliers for the first
time at the end of 2021. The agreement enables the
BMW Group to secure the supply of several million semi-
conductors per year. Global network and local procurement
In line with its corporate strategy, the BMW Group is
pursuing a clear course of decarbonisation. Against a
backdrop of increasing electrification, it is particularly
important to consider carbon emissions over the entire
life cycle of a vehicle. In this context, the BMW Group
has set itself decarbonisation targets by 2030 (base
year 2019) during the use phase, in the upstream supply
chain and in production. These targets were notified
to the SBTI and validated (Decarbonisation targets across
the value chain). The BMW Group is also taking measures
to mitigate and adapt to climate change. It is there-
fore imperative to identify climate-related risks and
opportunities and to take appropriate account of them
in determining the strategic direction to be followed,
managing the business and organising a Group-wide
risk management system. For further information, see
7 Climate-related opportunities and risks.
Other Information
Group Financial Statements
C. Resilience of the BMW Group's
strategy
Remuneration Report
BMW Group Report 2021
Key Sustainability Indicators and Targets
(C
TCFD-Index
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
340
>
]]
C2.2
C 2.2, C2.2a
C2.2, C2.2a, C 2.1
CDP questionnaire 2021
7 Climate-Related Opportunities and Risks
Outlook, Risk and Opportunity Management
7 Organisation of Risk Management
A. Key sustainability indicators the Group
uses to assess climate-related risks and
opportunities
7 Environmental Analysis and Megatrends
Strategy Process
B. Disclosure of Scope 1, Scope 2 and
Scope 3 greenhouse gas (GHG) emissions
BMW Group Integrated Strategy
]]
C4.1, C4.1b, C4.2
C6.1, C6.3, C6.5
CDP questionnaire 2021
C4.2
7 Circular Economy, Resource Efficiency and Renewable Energy
Production, Purchasing and Supplier Network
7 Carbon Emissions and Pollutants
Products and Mobility Solutions
7 Performance Indicators
Strategy Process
BMW Group Integrated Strategy
Other GRI Information (Table BMW Group CO₂ Footprint)
― Circular Economy, Resource Efficiency and Renewable Energy
Production, Purchasing and Supplier Network
7 Carbon Emissions and Pollutants
Products and Mobility Solutions
7 Performance Indicators
BMW Group Integrated Strategy
Other GRI Information (Table BMW Group CO₂ Footprint)
7 Performance Indicators
7 Dashboard
C. Targets according to which the Group
addresses climate-related opportunities
and risks
7 Environmental Analysis and Megatrends
Outlook, Risk and Opportunity Management
7 Organisation of Risk Management
7 Climate-Related Opportunities and Risks
BMW Group Integrated Strategy
BMW Group Integrated Strategy
7 Climate-Related Opportunities and Risks
* Reducing Carbon Emissions in the Supply Chain
7 Carbon Emissions at BMW Group Locations
Production, Purchasing and Supplier Network
- Electric Mobility
7 Carbon Emissions and Pollutants
Products and Mobility Solutions
7 Strategy Process
7 Climate change and CO₂ reduction
7 Environmental Analysis and Megatrends
BMW Group Integrated Strategy
Outlook, Risk and Opportunity Management
― Climate-Related Opportunities and Risks
7 Environmental Analysis and Megatrends
Strategy Process
Outlook, Risk and Opportunity Management
7 Climate-Related Opportunities and Risks
BMW Group Integrated Strategy
BMW Group Report 2021
335
B. The impact of climate-related risks and
opportunities on the Group's business
activities and its strategic and financial
corporate planning
A. Climate-related risks and
opportunities
Strategy
[C
← = Q
Other Information
Outlook, Risk and Opportunity Management
7 Climate-Related Opportunities and Risks
BMW Group Integrated Strategy
Strategy Process
CDP questionnaire 2021
Outlook, Risk and Opportunity Management
7 Organisation of Risk Management
BMW Group Report 2021
C. Integrating processes for identifying,
assessing and managing climate-related
risks within the Group's general risk
management system
B. Group processes for managing
climate-related risks
A. Group processes for identifying and
assessing climate-related risks
Risk Management
[C
← = Q
Other Information
Remuneration Report
Corporate Governance
Corporate Governance
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
339
TCFD-Index
>
]]
C 3.1, C3.1a
C2.3, C2.3a, C 2.4, C2.4a, C3.1, C3.3
C2.1, C2.3, C2.3a, C2.4, C2.4a, C 2.2a
Group Financial Statements
^
]]>>>
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
]]
Germany
UK
99.4
99.5
99.7
99.7
99.8
86.3
86.9
87.5
89.8
89.5
Other 7.6
Transport 8.3
Cleaning 1.9
3.1 Driving
USA
Austria
South Africa
87.7
88.3
87.4
89.1
88.3
2021
2020
2019
2018
TR-AU-000.A
Number
Code
Unit of Measure
Category
Quantitative
Number of vehicles manufactured
Accounting Metric
Activity Metric
[C
Topic
SASB-INDEX
331
82.8
BMW Group Report 2021
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Further GRI Information
SHARE OF LOCAL EMPLOYEES IN MANAGEMENT POSITIONS AT MAJOR COMPANY LOCATIONS 1
MAIN ACCIDENT FACTORS¹
in %
2017
To Our Stakeholders
Number of vehicles sold
85.6
78.7
78.8
82.2
Thailand
56.8
56.8
57.1
57.8
60.0
1 The accident severity rate in the reporting year was 66.1 lost days (due to occupational accidents)
per 1 million hours worked (2020: 53.4).
Mexico 3
48.4
62.9
67.8
1 "Local" refers to managers with local contracts. People deployed to work at the location who do not have a local employment contract are not included.
These are reflected in the difference to 100 in each case.
2 Including employees of the joint venture BMW Brilliance Automotive Ltd., Shenyang, which is not consolidated in the BMW Group.
3 Start of production 06/2019.
SASB-Index
332
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
73.7
76.7
76.5
China2
79.1
Secondary
Testing 2.8
activities 12.8
← = Q
83.0
82.8
82.7
85.9
85.4
Assembly/
dismantling 16.3
82.3
India
74.4
82.1
68.4
78.4
16.6 Handling
parts
Brazil
76.1
77.6
78.2
84.9
85.1
70.0
Quantitative
6.7 Processing
TR-AU-000.B
Topic
[C
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
334
]]
At the BMW Group's international plants, strike action
resulted in operational disruptions at the Rosslyn site in
South Africa. Strikes were held on 13 days, spread over
four time-blocks, with the focus primarily on pay rise de-
mands. Lost production was compensated by additional
shifts. The number of employees involved in the strike
action was not recorded by the BMW Group.
At BMW AG, strike action was taken in 2021 at the Leip-
zig plant. In this case, a series of five 24-hour strikes
was called by IG Metall as part of its campaign to secure
a so-called “equalization allowance" to compensate the
difference in contractual weekly working hours between
the collective bargaining areas in eastern and western
Germany. Due to the fact that the strikes took place
during the semiconductor supply crisis, the impact the
BMW Group cannot be quantified directly. Following
the conclusion of a collective bargaining framework
agreement on the harmonisation of working hours, the
BMW Group entered into corresponding discussions with
the Works Council.
Strike action is usually taken to reinforce pay rise
demands.
* Excluding senior management and contractors.
reporting on this accounting metric.
on the aforementioned countries for the purposes of
Based on the availability of data, the BMW Group focuses
Mexico: 100 %
USA: no collective agreements in place
South Africa: 70%
Austria²: 100 %
China (Plant): 100%
Accounting Metric
Category
Unit of Measure
Code
(3) Plug-in hybrid electric vehicles (PHEV): 224,460*
(1) Emission free vehicles (BEV): 103,854*
(2) The BMW Group portfolio includes BEVs (1) and
PHEVS (2). Based on BMW Group definitions, 48V
vehicles are not classified as hybrid vehicles see
7 Electrified vehicles.
"Average volume-weighted fleet emissions including regulatory credit
factors of 8.83 g CO₂/ km (off cycle technologies, NEV multiplier, phase-in)
according to WLTC (Worldwide Harmonized Test Cycle) under China-specific
test road conditions.
3 Flexibilities defined in the regulatory requirements for 2021: eco-innovations
at 1.7 g CO2/km (WLTP).
2 This is a preliminary internal calculation with a potential variation of +/-
0.5 g CO2/km, as official registration figures have not been provided by the
authorities of all EU states. Official values published by the EU Commission
are not expected to be made available until the following year.
1The figures are determined using a new calculation method, which was
applied retroactively back to the year 2019 (2019 before adjustment:
140 g/km; 2020 before adjustment: 133 g/km). For definition, see
7 Glossary: Carbon emissions of the new vehicle fleet worldwide, including
upstream emissions.
The BMW Group focuses on the core markets of Europe,
China, and the USA, which account for more than 80 %
of BMW Group sales. Further information is provided the
sections Decarbonisation during the use phase meets legal re-
quirements and Fleet emissions in the USA, China and worldwide.
USA (USC): 140.9 g CO2/km (volume-weighted fleet car-
bon emissions, based on passenger cars and light trucks)
CN (WLTC): 163.0 g CO2/km²
EU (WLTP): 115.9 g CO2/km²,3
197.9 g CO2/km¹
Global carbon emissions of the new vehicle fleet,
including emissions generated by upstream supply chain
(normalised based on WLTP):
UK: 83%
Response Comment
↑
SASB-Index
TR-AU-410a.2
Number
Quantitative
Number of (1) zero-emission vehicles
(ZEV), (2) hybrid vehicles and (3) plug-in
hybrid vehicles sold
TR-AU-410a.1
Mpg, L/km, gCO₂/km,
km/L
Quantitative
Number
Fuel Economy & Use-phase Emissions
= Q
Germany: 100 %
Sales-weighted average passenger fleet
fuel economy, by region
Response Comment
333
^
]]
*The survey period runs from November of the previous year through to November of
the reporting year, as to allow for a processing time after the receipt of complaints.
100 %* of the security-related complaints were
reviewed.
In its report on NCAP programmes, the BMW Group
focuses on markets in the EU (including the UK), China,
the USA and South Korea. Further information on new
car assessment programmes is provided in the section on
effective safety systems.
In reporting year 2021, safety and compliance-relat-
ed technical recall actions took place for 1,920,977
vehicles. These were voluntary and were carried out in
coordination with relevant authorities. The main tech-
nical recall actions related to the exhaust gas recircula-
tion cooler and Takata airbags. For further information
regarding quality management see 7 Product safety as
part of quality management.
-66% Korean New Car Assessment Programme (KNCAP)
- 87% China New Car Assessment Programme (C-NCAP)
― 60 % - U. S. National Highway Traffic Safety Admin-
istration's (NHTSA) New Car Assessment Programme
(NCAP)
- 100% - European New Car Assessment Programme
(Euro NCAP)
*Deliveries including joint venture BMW Brilliance Automotive Ltd., Shenyang
(2017: 385,705 automobiles, 2018: 455,581 automobiles, 2019: 538,612
automobiles, 2020: 602,247 automobiles, 2021: 651,236 automobiles).
BMW Group Report 2021
194,261 (Motorcycles)
2,461,269* (Automobiles)
187,500 (Motorcycles)
Response Comment
TR-AU-250a.2
Number,
Percentage (%)
Quantitative
Number of safety-related defect
complaints, percentage investigated
TR-AU-250a.1
Percentage (%)
Quantitative
Percentage of vehicle models rated by
NCAP programmes with an overall 5-star
safety rating, by region
Product Safety
* Production including the joint venture BMW Brilliance Automotive Ltd., Shen-
yang (2017: 396,749 automobiles, 2018: 491,872 automobiles, 2019: 536,509
automobiles, 2020: 602,935 automobiles, 2021: 700,777 automobiles).
2,521,514* (Automobiles)
To Our Stakeholders
- 23.9 Walking
Group Financial Statements
Combined Management Report
Accounting Metric
Product Safety
Category
Quantitative
Unit of Measure
Code
Number
TR-AU-250a.3
Labour Practices
Percentage of active workforce covered
under collective bargaining agreements
Quantitative
Percentage (%)
Number of vehicles recalled
(1) Number of work stoppages and
(2) total days idle
TR-AU-310a.1
Remuneration Report
Corporate Governance
← = Q
[C
Other Information
SASB-Index
TR-AU-310a.2
Number, Days idle
Quantitative
Topic
Social matters
Business model
Employee matters
Environmental matters
Connection to figures in financial statements
Risks
Integration of top management
Mandatory disclosure pursuant to section 289 c - e HGB
Group Financial Statements
← = Q
Other Information
Remuneration Report
Corporate Governance
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
341
Respect for human rights
NFS-INDEX
Combatting corruption and bribery
Operational expenditures that are taxonomy eligible
EU Taxonomy Regulation*
How does the BMW Group ensure cooperation?
7 Performance indicators
7 Employees and Society
7 Employer Attractiveness and Employee Development
7 Health and Performance
7 Diversity
7 BMW Group Integrated Strategy
-
7 Environmental Analysis and Megatrends
7 Purchasing and Supplier Network
7 Corporate Citizenship
7 Compliance and Human Rights
7 Purchasing and Supplier Network
7 Compliance and Human Rights
7 EU Taxonomy
NFS-Index
7 Product Safety and Data Protection
Mandatory disclosure requirement according to Art. 8 of the
7 BMW Group Integrated Strategy
7 Products and Mobility Solutions
Revenues that are taxonomy eligible
Capital expenditures that are taxonomy eligible
BMW Group Report 2021
7 Business Model and Segments
7 BMW Group Integrated Strategy
7 BMW Group Integrated Strategy
7 Strategy Process
Production, Purchasing and Supplier Network
7 Performance Indicators
7 Environmental Analysis and Megatrends
Risk and Opportunity Management
About this Report
7 Compliance and Human Rights
7 Employer Attractiveness and Employee Development
7 BMW Group Integrated Strategy
7 Performance Indicators
7 Managing sustainability
7 Environmental Analysis and Megatrends
Research and development expenditure ratio
Research and development expenditure as a percentage of
Group revenues.
30.7
42,764
37,437
35,600
30,606
Equity ratio
Non-current provisions and liabilities
%
32.7
28.4
26.3
27.7
27.7
25.1
24.8
24.2
25.7
23.2
€ million
77,929
83,175
85,502
47,363
54,107
57,829
59,907
4,688
3,731
3,826
4,601
4,967
4,151
Capital expenditure ratio (capital expenditure / revenues)
%
4.5
4.0
79,698
5.4
4.8
4.0
4.2
5.7
6.5
5.4
Equity
€ million
75,132
61,520
5.2
69,634
73,183
63,819
131,835
CASH FLOW STATEMENT
Cash and cash equivalents at balance sheet date
€ million
16,009
13,537
Free cash flow Automotive segment
€ million
6,354
3,395
138,377
12,036
2,567
9,039
7,880
6,122
7,688
7,671
8,370
2,713
4,459
5,792
5,404
10,979
5,029
154,803
188,535
58,288
51,643
52,834
Current provisions and liabilities
€ million
76,466
71,963
82,625
71,411
71,765
172,174
67,989
59,078
51,134
48,395
Balance sheet total
€ million
229,527
216,658
228,034
208,938
195,506
65,591
3,481
5,650
5,012
2,564
2,692
Effective tax rate
%
22.4
26.1
30.1
26.3
18.7
28.5
Research and development locations
33.2
32.5
34.5
Net profit for the year
€ million
12,463
3,857
5,022
7,064
8,675
2,890
2,828
2,755
2,000
9,224
8,707
7,893
7,803
Return on sales (earnings before tax revenues)
%
14.4
5.3
6.8
9.9
6,910
10.9
10.0
10.8
10.4
10.2
Income taxes
€ million
3,597
1,365
2,140
2,530
10.3
6,396
5,817
5,329
BALANCE SHEET
Non-current assets
Current assets
€ million
€ million
143,354
86,173
134,851
81,807
90,630
137,404 124,202
84,736
121,964
73,542
2012
121,671
97,959
86,193
81,305
66,864
61,831
56,844
52,184
50,530
Capital expenditure (excluding capitalised development costs)
€ million
110,343
3,922
The engineering, IT and process expertise required for the
(pre-)development of hardware and software for all
BMW Group products and services is combined at the
Group's international research and development locations.
2015
5,111
1 The 2018 figures were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 (see Annual Report 2019, note 6 to the Group Financial Statements).
In addition, prior year figures were adjusted due to changes in the presentation of selected items that are of minor importance overall.
² Retail vehicle delivery data presented for 2020 and 2021 is not directly comparable to such data presented for previous years. For further information on retail vehicle delivery data, please see Comparison of Forecasts with Actual Outcomes.
3 Excluding Husqvarna, deliveries up to 2013: 59,776 units; production up to 2013: 59,426 units.
"Since the reporting year 2020, a new definition for workforce size has been applied ( Glossary). To enable better comparability, the value for 2019 was adjusted accordingly (2019 before adjustment: 133,778 employees).
For the timeframe including and prior to 2018, the share of the employees that are no longer reflected in reporting is about 7.5-8 %.
5 Proposal by management.
345
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
2014
Group Financial Statements
Remuneration Report
Other Information
← = Q
BMW Group Ten-year Comparison
2021
2020
2019
20181
2017
2016
Corporate Governance
9,665
3,003
PERSONNEL
Employees
The number of employees includes BMW AG and all compa-
nies in which it holds a majority interest, irrespective of
whether they are consolidated in the Group Financial State-
ments. The figure does not include employees in dormant
employment relationships, those in the non-work phase of
partial retirement working arrangements and low-wage
earners. With effect from the financial year 2020, the defini-
tion also includes employees with permanent and fixed-term
contracts. Up to 2019, it also included temporary staff, post-
graduate students, interns, apprentices, those on extended
sick leave and sabbaticals.
Employees in the non-work phase of partial retirement
working arrangements
The number of people with temporary or permanent employ-
ment contracts who have opted for retirement via partial re-
tirement working arrangements and who are in the non-ac-
tive phase of this model (i. e. the second part, following the
active phase in this model).
Equity ratio
Equity capital as a percentage of the balance sheet total.
Expenditure on training and further education
Expenditure on training comprises all costs incurred in the
reporting year for vocational training within the consolidated
and non-consolidated, wholly owned subsidiaries of the
BMW Group, including personnel costs for trainers and ap-
prentices as well as other costs and investments related to
vocational training. The volume of expenditure for further ed-
ucation is calculated for all consolidated and non-consoli-
dated wholly owned subsidiaries of the BMW Group. This
includes preparation and implementation costs, opportunity
costs and investments made in order to provide such further
education. These costs also include notional depreciation,
measured on the basis of inventory lists.
F
Fair value
The amount at the measurement date for which an asset
could be exchanged, or a liability settled, between knowl-
edgeable, willing parties in an arm's length transaction.
Fair value hedge
A hedge against exposures to fluctuations in the fair value of
a balance sheet item.
Free cash flow
Free cash flow is derived from cash flows from operating and
investing activities. The cash flows from investing activities
from the purchase and sale of marketable securities and in-
vestment funds is not included. Cash flows from the pur-
chase and sale of shares and the dividend payout from in-
vestments accounted for using the equity method are
included in the cash flows from investing activities.
G
Goodwill
Goodwill corresponds to the consideration paid to acquire an
entity, less the fair value of the separate assets acquired and
liabilities assumed. The buyer is willing to pay the additional
amount in return for future expected earnings.
Gross profit margin
Gross profit as a percentage of Group revenues.
I
Interns
← = Q
Glossary and Explanation of Key Figures
Other Information
Remuneration Report
E
Earnings per share (EPS)
Basic earnings per share are calculated for common and
preferred stock by dividing the net profit after minority inter-
ests, as attributable to each category of stock, by the aver-
age number of shares in circulation. Earnings per share of
preferred stock are computed on the basis of the number of
preferred stock shares entitled to receive a dividend in each
of the relevant financial years.
EBIT
Abbreviation for "Earnings Before Interest and Taxes", equiv-
alent in the BMW Group income statement to "Profit / loss
before financial result". This is comprised of revenues less
cost of sales, selling and administrative expenses and the
net amount of other operating income and expenses.
EBIT margin
Profit loss before financial result as a percentage of reve-
nues.
EBT
EBIT plus financial result.
The number of people obtaining voluntary or mandatory
work experience at a BMW Group company (includes all of
the consolidated and non-consolidated companies in which
the BMW Group holds more than 50% of the shares) while
studying for a degree.
Effective tax rate
Electrified vehicles
The BMW Group uses the terms Battery Electric Vehicle
(BEV) to denote fully electric vehicles and Plug-in Hybrid Ve-
hicle (PHEV) to denote vehicles that can be charged and
also driven on a fully electric basis.
Consolidation
The process of combining separate financial statements of
Group entities into Group Financial Statements, depicting
348
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
The effective tax rate is calculated by dividing the income tax
expense by the Group profit before tax.
L
Liquidity
Cash and cash equivalents as well as marketable securities
and investment funds.
Slight decrease
Solid increase
Moderate decrease
Significant increase
Significant decrease
[-0.9% +0.9%]
[+1.0% / +4.9%]
[-1.0% / -4.9%]
[+5.0% / +9.9%]
[-5.0% / 9.9%]
>10.0%
>=-10.0%
Unlike the other key performance indicators, the RoCE fore-
cast for the Automotive and Motorcycles segments is based
on the change in percentage points:
P
At previous year's level
Slight increase
Slight decrease
Solid increase
Moderate decrease
Significant increase
Significant decrease
Part time, full time
[-0.9%-pts. / +0.9%-pts.]
[+1.0%-pts. / +4.9%-pts.]
[-1.0%-pts. / -4.9 %-pts.]
[+5.0%-pts. / +9.9 %-pts.]
[-5.0%-pts. - 9.9 %-pts.]
>= 10.0%-pts.
>= 10.0 %-pts.
The number of employees (see definition of "Employees”),
distinguishing between employees who have contractually
stipulated weekly working hours as prescribed by law, in a
collective wage agreement or by the company in question
(full time) and employees with a contractually stipulated re-
duction in their number of weekly working hours, which are
thus less than the respective number of full-time working
hours (part time).
At previous year's level
Slight increase
Payout ratio
People on extended sick leave
The number of people with active employment contracts
who are absent from work on grounds of illness for an ex-
tended period of time (as defined in the country in question
- in Germany, this means an absence of more than 42 calen-
dar days with a given illness).
Post-tax return on sales
Group net profit as a percentage of Group revenues.
Pre-tax return on sales
Group profit loss before tax as a percentage of Group reve-
nues.
R
Research and development expenditure
The sum of research and non-capitalised development cost
and capitalised development cost (not including the associ-
ated scheduled amortisation).
Ratio of unappropriated profit of BMW AG in accordance with
HGB to net profit for the year of the BMW Group in accord-
ance with IFRS.
A new or used vehicle will be recorded as a delivery once
handed over to the end user. End users also include lease-
holders under lease contracts with BMW Financial Services
and in the US and Canada - dealers when they designate
a vehicle as a service loaner or demonstrator vehicle. In the
case of used vehicles, end users may include dealers and
other third parties when they purchase a vehicle at auction or
directly from the BMW Group. Vehicles designated for the
end user and suffering total loss in transit will also be record-
ed as deliveries. Deliveries may be made by BMW AG, one of
its international subsidiaries, a BMW Group retail outlet, or
independent dealers. The vast majority of deliveries - and
hence the reporting to BMW Group of deliveries - are made
by independent dealers. In the US and Canada, the period
start and end dates for the reporting of deliveries may imma-
terially deviate from the beginning and, respectively, end of
calendar years or calendar quarters and instead follow in-
dustry-standard reporting calendars.
The BMW Group uses the following terminology and ranges
when forecasting key performance indicators:
This entails compensating for carbon emissions which can-
not be avoided by reducing emissions elsewhere (avoid-
ance) or else by absorbing them by means of so-called car-
bon sinks (carbon removals). In its activities, the BMW Group
stresses the avoidance of carbon emissions over compensa-
tion. Unavoidable carbon emissions are neutralised in ac-
counting terms by means of offsetting. Offsetting involves
purchasing certificates on the voluntary carbon market and
thus goes beyond the carbon offsetting approach which is
implemented via the European Union Emissions Trading
System (ETS). Criteria such as additionality, permanence,
additional social benefits (e.g. will the avoidance of open
fires in enclosed spaces provide health benefits), certifica-
tion, transparency and the avoidance of double counting
contribute to the quality of the certificates used and thus to
the effectiveness of offsetting.
M
Management positions
Management positions are positions at functional levels I to
IV below the Board of Management level.
Maternity protection, parental leave
The number of people with active employment contracts
who are absent from work, as permitted by law, before and
after the birth of a child (maternity protection) or due to par-
enthood, as provided for by law in the country in question
(parental leave).
N
Number of training participants
The number of employees of the BMW Group (includes all
consolidated and non-consolidated companies in which the
BMW Group is the sole shareholder) participating in further
349
BMW Group Report 2021
Outlook
To Our Stakeholders
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
Glossary and Explanation of Key Figures
← = Q
education worldwide. This data is collected by directly regis-
tering participants and, to a lesser extent, via qualified ex-
trapolation. It comprises the overall number of participants
on training and qualification courses, including e-learning
courses.
0
Offsetting
Combined Management Report
3,809
Deliveries
Financial swap agreements, under which creditors of securi-
ties (usually bonds) pay premiums to the seller of the CDS to
hedge against the risk that the issuer of the bond will default.
As with credit default insurance agreements, the party re-
ceiving the premiums gives a commitment to compensate
the bond creditor in the event of default.
2,102
1,904
1.90/1.92
2.50/2.52
3.50/3.52
4.00/4.02
3.50/3.52
3.20/3.22
2.90/2.92
1,707
2.60/2.62
1,640
2.50/2.52
1 The 2018 figures were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 (see Annual Report 2019, note 6 to the Group Financial Statements).
In addition, prior year figures were adjusted due to changes in the presentation of selected items that are of minor importance overall.
2 Retail vehicle delivery data presented for 2020 and 2021 is not directly comparable to such data presented for previous years. For further information on retail vehicle delivery data, please see Comparison of Forecasts with Actual Outcomes.
3 Excluding Husqvarna, deliveries up to 2013: 59,776 units; production up to 2013: 59,426 units.
"Since the reporting year 2020, a new definition for workforce size has been applied ( Glossary). To enable better comparability, the value for 2019 was adjusted accordingly (2019 before adjustment: 133,778 employees).
For the timeframe including and prior to 2018, the share of the employees that are no longer reflected in reporting is about 7.5-8 %.
5 Proposal by management.
346
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
2,300
2,630
2,303
1,646
Workforce at year-end 4
Personnel cost per employee 4
DIVIDEND
€
118,909
103,569
120,726
99,647
126,016
98,901
134,682
101,178
129,932
100,760
124,729
99,575
Group Financial Statements
122,244
97,136
110,351
105,876
89,869
89,161
Dividend total
€ million
Dividend per share of common stock / preferred stock
€
3,8275
5.80/5.825
1,253
116,324
92,337
Corporate Governance
Remuneration Report
Other Information
347
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
Glossary and Explanation of Key Figures
← = Q
This indicator documents the progress made by the
BMW Group in its strategic objective of reducing carbon
emissions during the utilisation phase including upstream
emissions (drivetrain energy supply) by an average rate of
more than 50% per kilometre driven by 2030 (base year
2019). For the purpose of this calculation, the volume-weight-
ed average fleet carbon emissions are calculated for the core
markets EU (27 EU countries incl. Norway and Iceland; plus
UK) (driving cycle: Worldwide Harmonized Light Vehicles
Test Procedure; basis: production volume), USA (driving cy-
cle: United States Combined; basis: production volume) and
China (driving cycle: Worldwide Harmonized Test Cycle, sub-
ject to China-specific framework conditions for testing; ba-
sis: import volumes/local production volumes; incl. joint
venture BMW Brilliance Automotive Ltd.) before deduction of
legally permitted offsetting factors (e.g. supercredits and
eco-innovations) and then standardised according to the
WLTP (European) driving cycle. These core markets account
for more than 80% of the BMW Group's sales. The calculat-
ed figures are increased by 10% to account for possible dis-
crepancies between cycle values and real emissions, as re-
quired by the Science Based Targets Initiative. This indicator
also includes the upstream emissions for the respective en-
ergy sources (fossil fuels and electricity used for charging), in
line with the well-to-wheel approach. This covers the entire
causal chain behind vehicle motion, i. e. from the generation
and supply of power to its conversion into drivetrain energy.
This approach also includes the environmental impacts as-
sociated with the supply of energy. For example, to calculate
the volume of emissions resulting from upstream electricity
(drivetrain energy supply), the BMW Group uses the energy
report published by the International Energy Agency (IEA) as
a basis in order to assess the emissions associated with the
electricity mix in its core markets.
Liquid funds generated (cash inflows) or used (cash out-
flows) during a reporting period.
Cash flow at risk
Similar to "value at risk” (see definition below).
Cash flow hedge
Hedges against exposures to the variability in forecasted
cash flows, particularly in connection with exchange rate
fluctuations.
Commercial paper
Short-term debt instruments with a term of less than one
year which are usually issued at a discount to their face val-
ue.
the financial position, net assets and results of operations of
the Group as a single economic entity.
Credit default swap (CDS)
Cash flow
D
Carbon emissions of the new vehicle fleet worldwide,
including upstream emissions
Carbon emissions of the new vehicle fleet in the EU
The average carbon emissions of a manufacturer's fleet are
calculated on the basis of the weighted average of carbon
emissions across all vehicles newly registered during the re-
← = Q
Glossary and Explanation of Key Figures
GLOSSARY AND
EXPLANATION OF KEY FIGURES
A
Apprentices
The number of people on multi-year vocational training
courses at a BMW Group company (includes all of the con-
solidated and non-consolidated companies in which the
BMW Group holds more than 50% of the shares), with these
training courses consisting of practical and theory sections.
Asset-backed financing transactions
A form of corporate financing involving the sale of receiva-
bles to a financing company.
B
porting period. New registrations for these purposes com-
prise all newly registered vehicles of a given manufacturer in
the EU, including Norway and Iceland, during the calendar
year, plus any individual vehicle-specific carbon emissions
determined in accordance with the WLTP type test proce-
dure. The BMW Group's fleet carbon emissions figure for
2021, as measured internally, includes legally permitted off-
setting of eco-innovations.
BMW Group employees
tended sick leave or on sabbatical were also included in this
definition.
Bond
A securitised debt instrument in which the issuer certifies its
obligation to repay the nominal amount at the end of a fixed
term and to pay a fixed or variable rate of interest.
Business volume in balance sheet terms
The sum of the balance sheet line items "Leased products"
and "Receivables from sales financing" (current and non-cur-
rent), as reported in the balance sheet for the Financial Ser-
vices segment.
C
Capital expenditure ratio
Investments in property, plant and equipment and other in-
tangible assets (excluding capitalised development costs)
as a percentage of Group revenues.
Capitalisation rate
Capitalised development costs as a percentage of research
and development expenditure.
Since 2020, all people with active temporary or permanent
employment contracts (as of 31 December in the year in
question) with the BMW Group (includes all of the consoli-
dated and non-consolidated companies in which the
BMW Group holds more than 50% of the shares) have been
considered employees of the BMW Group. This excludes ap-
prentices, interns, temporary staff (working students), tem-
porary employees, dormant/inactive employment contracts
due to maternity leave, sabbaticals, parental leave, long-
term illness (as defined in the country in question), those in
inactive early retirement phase, and employees accompany-
ing their partner abroad. Up to 2019, temporary staff, post-
graduate students, interns, apprentices, and people on ex-
10,675
2013
7,118
41-35
14.8-13.9
1.9 1.4
43-31
18.6-16.5
51-60
2.0-1.7
45-40
15.9-15.2
BMW 330e Touring
1.9-1.4
42-31
18.3-16.2
52-61
1.9 1.7
44-38
15.6-14.5
BMW 330e xDrive Touring
2.1-1.6
48-35
19.3 17.3
1.8 1.5
52-60
18.4-16.5
41-30
1.8-1.5
41-35
14.8 - 14.2
BMW 320e Touring
1.9-1.4
44-32
18.6 -16.7
50-59
1.9 1.7
44-38
48-57
15.3 14.3
2.2-1.5
49-35
19.5-17.3
46-57
2.1 1.9
49-43
16.4-16.0
BMW 330e
BMW 330e xDrive
1.8 1.3
BMW 320e xDrive Touring
2.2 1.9
49-43
15.8-14.7
As of February 2022
Model
Electric range
(combined weighted
combined)
Fuel consumption
in l/100km
(combined weighted
combined) max/min
CO₂ emissions
in g/km
(combined/weighted
combined) max/min
Figures according to NEDC
Electricity power
consumption
in kWh/100 km
(combined weighted
combined) max/min
Fuel consumption
in l/100km
(combined weighted
combined) max/min
CO₂ emissions
in g/km
(combined/weighted
combined) max/min
Consumption and Carbon Disclosures
Electricity power
consumption
Figures according to WLTP
BMW
BMW i4 M50
BMW i4 eDrive40
22.5 18.0
19.1 16.1
416-521
493-590
BMW 520e
1.8 1.3
41-30
in kWh/100 km
(combined/weighted
combined) max/min
52-61
← = Q
Remuneration Report
BMW M3
10.2 10.0
231-227
10.8
248
BMW X3 xDrive30e
2.6-2.0
59-45
20.5-18.9
42-50
Other Information
BMW iX3
453-461
BMW M4
10.1 9.9
230-226
343
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
9,627
18.2-16.3
18.1 -16.1
1.8 1.3
ROCE in the Automotive and Motorcycles segments is meas-
ured on the basis of relevant segment profit before financial
result and the average amount of capital employed
at the
end of the last five quarters in the segment concerned.
Capital employed corresponds to the sum of all current and
non-current operational assets, less liabilities that generally
do not incur interest.
-
Return on capital employed (ROCE)
← = Q
Glossary and Explanation of Key Figures
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
350
* Regulation (EU) 2020/852 of the European Parliament and of the Council of 18
June 2020 on the establishment of a framework to facilitate sustainable invest-
ment, and amending Regulation (EU) 2019/2088 (Text with EEA relevance).
342
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Return on equity (ROE)
-
RoE in the Financial Services segment is calculated as seg-
ment profit before taxes, divided by the average amount of
-
Contractually stipulated weekly hours of work.
Working hours/working times
W
A measure of the potential maximum loss in value of an item
during a set time period, based on a specified probability.
Value at risk
V
Expenditure for further education includes all costs incurred
by the BMW Group's consolidated companies in connection
with ongoing and advanced training. This includes prepara-
tion and implementation costs, opportunity costs and in-
vestments made in order to provide such training. Costs also
include notional depreciation, measured on the basis of as-
set inventory lists.
The number of apprentices undergoing training within the
BMW Group includes those employed at domestic and inter-
national plants in a total of seven countries as well as those
working in corporate functions, at Group plants in Germany
and international sales companies as well as in the Financial
Services segment.
Expenditure for training comprises all costs incurred in the
year under report for vocational training within the
BMW Group in a total of seven countries, including personnel
costs for trainers and apprentices as well as other costs and
investments related to vocational training.
Training and further education
Other Information
The number of people employed on an hourly basis as tem-
porary staff at a BMW Group company (includes all of the
consolidated and non-consolidated companies in which the
BMW Group holds more than 50% of the shares) while stud-
ying for a degree.
The number of people employed by the BMW Group (in-
cludes all of the consolidated and non-consolidated compa-
nies in which the BMW Group holds more than 50% of the
shares) whom the BMW Group has actively hired from a
temporary employment agency as temporary employees.
Temporary employee
T
Scope 1 emissions are generated within a company through
the combustion of fossil fuels, Scope 2 refers to the indirect
emissions caused by the consumption of electricity and heat
from externally generated sources of energy. Scope 3 emis-
sions are generated in the upstream and downstream stag-
es of the value chain, both in the supply chain (upstream]
and in the subsequent use of products and services (down-
stream).
The carbon emissions generated by a company are recorded
in various categories. The Greenhouse Gas Protocol, a part-
nership between the World Resources Institute (WRI) and
the World Business Council for Sustainable Development
(WBCSD), distinguishes between Scope 1, Scope 2 and
Scope 3 emissions, based on their various sources. Whereas
Scope 1 to Scope 3 carbon emissions
The number of people with active employment contracts
who are absent from work for at least one month and for not
more than six months due to an employee-funded leave of
absence ("sabbatical").
Sabbatical
S
equity capital at the end of the last five quarters - attribut-
able to the Financial Services segment.
Temporary staff/working students
← = Q
Consumption and Carbon Disclosures
CONSUMPTION AND
CARBON DISCLOSURES
48-43
1.7-1.5
39-35
15.0-14.4
69-80
1.8-1.8
41-41
14.3 13.8
13.5-13.5
1.4 1.1
2.1-1.9
30-22
up to 90
BMW X2 xDrive25e
BMW 320e (automatic transmission)
1.8-1.7
42-38
15.2 -14.9
51-53
1.9
43
13.7
20.0 17.9
41-30
47-52
44-39
FIGURES FOR FUEL CONSUMPTION, CO2-EMISSIONS AND POWER CONSUMPTION
The figures for fuel consumption, CO₂ emissions and power consumption
are calculated based on the measurement methods stipulated in the cur-
rent version of Regulation (EU) 715/2007. This information is based on a
vehicle with basic equipment in Germany; ranges take into account differ-
ences in wheel and tyre size selected as well as optional equipment and can
change based on configuration. The figures have been calculated based on
the new WLTP test cycle and adapted to NEDC for comparison purposes.
For vehicles that were newly type approved on or after January 1, 2021,
official figures are only based on WLTP. In the vehicles, different figures
than those published here may apply for the assessment of taxes and
other vehicle-related duties which are also based on CO2 emissions. For
further details of the official fuel consumption figures and official spe-
cific CO2 emissions of new cars, please refer to the "Manual on fuel con-
sumption, CO₂ emissions and power consumption of new cars", available
at www.dat.de/co2
As of February 2022
Fuel consumption
in l/100km
(combined weighted
combined) max/min
CO2 emissions
in g/km
(combined/weighted
combined) max/min
Electricity power
consumption
in kWh/100 km
(combined/weighted
combined) max/min
Figures according to WLTP
15.7-15.0
Electric range
(combined weighted
combined)
CO2 emissions
in g/km
(combined weighted
combined) max/min
Figures according to NEDC
Electricity power
consumption
in kWh/100 km
(combined/weighted
combined) max/min
Model
BMW
BMW X1 xDrive25e
BMW 225xe Active Tourer (model year 2021)
BMW 230e xDrive Active Tourer (preliminary figures)
2.1 1.7
Fuel consumption
in l/100km
(combined weighted
combined) max/min
53-61
18.9 18.5
1.9 1.5
BMW Group Ten-year Comparison
BMW GROUP TEN-YEAR COMPARISON
DELIVERIES
Automobiles 2
Motorcycles 3
PRODUCTION VOLUME
Automobiles
Motorcycles 3
FINANCIAL SERVICES
Contract portfolio
BMW 520e Touring
INCOME STATEMENT
2021
2020
2019
20181
2017
2016
2015
2014
2013
← = Q
Other Information
Remuneration Report
Corporate Governance
16.3 -15.8
369-357
Rolls-Royce Dawn
16.9-16.2
381-367
* Figures are preliminary and rely on an outlook based on the WLTP type test procedure.
16.9-14.9
6.5-6.2
2.1-1.9
149-142
48-44
14.8 14.1
2012
15.8
15.2
348
16.0-15.9
365-363
16.3-16.1
372 - 367
344
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
359
units
units
2,521,514 2,325,179 2,537,504
194,261 169,272 175,162
2,486,149 2,465,021
165,566 164,153
19.0
20.3
19.9
19.7
21.2
20.1
20.2
€ million
13,400
4,830
17.3
7,411
9,899
9,386
9,593
9,118
7,978
8,275
Earnings before tax
€ million
16,060
5,222
8,933
Rolls-Royce Wraith
13.7
%
2,349,962 2,259,733 2,117,965 1,963,798 1,845,186
145,032 136,963 123,495 115,215 106,358
units 2,461,269 2,255,637 2,564,025 2,541,534
units 187,500 168,104 187,116 162,687
2,505,741 2,359,756 2,279,503 2,165,566 2,006,366
185,682 145,555 151,004 133,615 110,127
1,861,826
113,811
€ million
contracts 5,859,890 5,981,928
139,530 133,093
5,973,682 5,708,032
142,834 133,147
5,380,785 5,114,906 4,718,970 4,359,572 4,130,002 3,846,364
124,719 123,394 111,191 96,390 84,347 80,974
Revenues
€ million
19.8
111,239
104,210
96,855
98,282
94,163
92,175
80,401
76,059
76,848
Gross profit margin
Earnings before financial result
98,990
377-368
Business volume (based on balance sheet carrying amounts)
Rolls-Royce Cullinan
44-35
18.6-17.1
51-57
2.0 1.8
46-42
16.1-15.4
BMW 545e xDrive
2.2-1.6
51-37
19.2-17.2
1.9 1.5
47-57
53-49
16.3-15.8
BMW X5M
BMW X5 xDrive45e
13.6-13.3
1.7 1.2
307-303
13.3
303
BMW X6M
2.3-2.2
13.4 13.1
BMW 530e Touring
49-46
43-35
18.4-17.0
51-57
1.9-1.7
2.0-1.8
43-39
15.1-14.5
46-42
15.6-15.0
BMW 530e
1.8 1.3
16.5-15.9
41 - 30
53-61
1.9 -1.7
43-39
14.9-13.8
BMW 530e xDrive
2.2-1.6
49-35
19.4-17.4
47-55
2.1 2.0
16.5 16.1
39-27
305-299
18.3-16.2
77-88
BMW 745Le
2.2 1.8
50-42
19.1 - 18.1
47-54
2.2-2.2
51-49
17.1 -16.5
MINI
MINI Cooper SE
16.9-16.6
17.8-17.5
17.6 -15.2
7.5-6.9
170-158
MINI Cooper SE Countryman ALL4
2.1 1.7
15.9 14.8
ROLLS-ROYCE
Rolls-Royce Black Badge Ghost
15.8
359
27.7 24.3
MINI Cooper S Countryman ALL4
51-47
59-56
47-39
45-52
2.1-1.6
2.6-2.5
13.1
47-37
301
BMW iX xDrive40
BMW iX xDrive50
BMW iX M60
22.5 19.3
372-425
23.0 19.8
24.5-21.9
25.2-23.5
BMW 745e
550 - 631
502-561
20.1 18.8
2.5 2.1
2.2 -2.1
BMW 745Le xDrive
18.9 17.9
49-41
2.1 1.8
48-55
57-47
+49 89 382-2 44 18
Fax
BUSINESS AND FINANCE PRESS
+49 89 382-2 41 18
Further information about the BMW Group is available
online at:
THE BMW GROUP ON THE INTERNET
Telephone +49 89 382-2 45 44
Other Information
Contacts
← = Q
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
7 www.bmwgroup.com
To Our Stakeholders
CONTACTS
E-mail
Fax
Investor Relations information is available directly at:
BMW Group Report 2021
7 www.bmw-motorrad.com
7www.rolls-roycemotorcars.com
www.mini.com
7 www.bmw.com
ir@bmwgroup.com
E-mail
presse@bmwgroup.com
+49 89 382-1 46 61
Telephone +49 89 382-2 53 87
INVESTOR RELATIONS
Telephone +49 89 382-0
80788 Munich
Germany
Bayerische Motoren Werke
Aktiengesellschaft
PUBLISHED BY
7www.bmwgroup.com/ir
Information about the various BMW Group brands is
available at:
352
17 March 2022
3 November 2023
5 May 2022
BMW Group Annual Conference. Analyst and Investor Day
BMW Group Annual Conference. Media Day
16 March 2022
2022
FINANCIAL CALENDAR
Financial Calendar
Quarterly Statement to 31 March 2022
← = Q
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
351
Other Information
Quarterly Statement to 30 September 2023
11 May 2022
3 August 2022
Half-Year Report to 30 June 2023
3 August 2023
Annual General Meeting
11 May 2023
Quarterly Statement to 31 March 2023
4 May 2023
BMW Group Annual Conference. Analyst and Investor Day
Annual General Meeting
16 March 2023
15 March 2023
BMW Group Report 2022
15 March 2023
2023
Quarterly Statement to 30 September 2022
3 November 2022
Half-Year Report to 30 June 2022
BMW Group Annual Conference. Media Day
WWW.BMWGROUP.COM
31
59,404
103 Refinancing
105 Net Assets Position of the BMW Group
107 Value Added Statement
109 Course of Business
117 Comments on the Financial Statements of BMW AG
121 EU Taxonomy
124 Outlook, Risk and Opportunity Management
124 Outlook
129 Risk and Opportunity Management
143 Internal Control System
Purchasing and Supplier Network
144 Disclosures Relevant for Takeovers and Explanatory Comments
MANAGEMENT
REPORT
34
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Overview of the BMW Group
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
COMBINED
74
Circular Economy, Resource Efficiency and Renewable Energy
70
96
Comparison of Forecasts with Actual Outcomes
48
Compliance and Human Rights
98
Earnings Performance of the BMW Group
51
Products and Mobility Solutions
101 Financial Position of the BMW Group
51
Innovation and Customer Orientation
56
Carbon Emissions and Pollutants
59
Electric Mobility
62
Mobility Concepts and Services
65
Product Safety and Data Protection
67
Production, Purchasing and Supplier Network
67
Production Network
← = Q
Performance Management
OVERVIEW OF THE BMW GROUP
The BMW Group successfully manufactures automobiles
and motorcycles for the premium and luxury segments on a
global basis. With BMW, MINI and Rolls-Royce, the
BMW Group owns three of the best-known brands in the au-
tomotive industry worldwide. It also occupies a strong mar-
ket position in the premium motorcycles segment. At 31 De-
cember 2021, the BMW Group employed a workforce of
118,909 people worldwide.
Financial Services segment
The BMW Group is a leading provider of financial services in
the automotive sector. It offers these services in more than
50 countries worldwide via companies and cooperation ar-
rangements with local financial service providers and im-
porters. The Financial Services segment's main line of busi-
ness comprises credit financing and the leasing of
BMW Group brand automobiles and motorcycles to retail
customers. Customers can also select from an attractive ar-
ray of insurance and banking products.
Operating under the brand name Alphabet, the BMW Group's
international multi-brand fleet business provides financing
and comprehensive management services for corporate car
fleets in more than 20 countries.2 These services also in-
clude assisting customers to manage their fleets on a sus-
tainable and climate-friendly basis.
Financing dealership vehicle fleets serves to support the
dealership organisation and rounds off the segment's range
of services. Financial Services segment
LOCATIONS
Global overview
The BMW Group operates on a worldwide basis. The
BMW Group's largest automobile and motorcycle markets
are located in Europe, particularly in Germany and the
United Kingdom (UK) as well as in China and the USA.
17 Consumption and carbon emissions data
2 Including cooperation partners
As in all other areas, the BMW Group focuses rigorously on
the premium segment with its Motorcycles segment and its
model range of motorcycles and scooters in the Sport, Tour,
Roadster, Heritage, Adventure and Urban Mobility catego-
ries. BMW Motorrad also offers a broad range of equipment
options to enhance riding safety and comfort as well as per-
sonalised configurations. The Motorcycles segment's sales
network is organised similarly to that of the Automotive seg-
ment. Currently, BMW motorcycles are sold by more than
1,200 dealerships and importers in over 90 countries world-
wide. Motorcycles segment
36
To Our Stakeholders
Combined Management Report
Overview of the BMW Group
Group Financial Statements
Corporate Governance
Direction is the second strategic element, after position. The
BMW Group offers exciting products for current and future
generations and secures its independence as a company by
maintaining a high level of profitability. The BMW Group is
shaping the future of sustainable mobility with its passion
and strong capacity for innovation. Thanks to its exciting
products, the Company is able to achieve maximum custom-
er satisfaction and brand strength, and thus grow its market
share.
What drives the BMW Group?
-
Direction
Sustainability is built into individual market strategies
across our global sales organisation. Centralised measures
are combined with local activities in the markets to imple-
ment a holistic programme. Best practices in the fields of
environmental protection, social sustainability, corporate
citizenship and governance are also shared within an es-
tablished international sustainability network.
solutions.
BMW Group - Report 2021
Motorcycles segment
Its comprehensive range of products enables the BMW Group
to meet the diverse expectations and needs of its customers
worldwide. The global sales network of the BMW Group's
automobile business currently comprises more than 3,500
BMW, 1,600 MINI and over 150 Rolls-Royce dealerships.
7 Automotive segment
Royce Motor Cars specialises in providing bespoke customer
specifications and offers the utmost in terms of quality and
service.
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
based in Munich, Germany, is the parent company of the
BMW Group, which comprises BMW AG itself and all sub-
sidiaries over which BMW AG has either direct or indirect
control. List of Investments. BMW AG is also responsible for
managing performance throughout the Group, which is
sub-divided into the Automotive, Motorcycles and Financial Services
operating segments Presentation of segments. The Group's Other
Entities segment primarily comprises holding companies
and Group financing companies. The structure of the
BMW Group changed significantly at the beginning of the
financial year 2022 due to the BMW Group's majority ac-
quisition of the joint venture BMW Brilliance Automotive
Ltd. (BBA). Further information on the consolidation of
BMW Brilliance Automotive is provided in the 7 Notes to the
Group Financial Statements.
BUSINESS MODEL
AND SEGMENTS
Business model
The BMW Group develops, manufactures and sells innova-
tive premium automobiles and motorcycles on a worldwide
basis. It also offers a broad range of financial and mobility
services. The Group is structured into operating segments,
namely the Automotive, the Motorcycles and the Financial
Services segments.
Automotive segment
The BMW Group manufactures BMW, MINI and Rolls-Royce
brand vehicles. The BMW brand caters to a broad variety of
customer requirements. Its wide-ranging model portfolio
1 The change took place outside of the financial period under report.
27 Consumption and carbon emissions data
M.ST 9056
M.NW 5143
35
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Overview of the BMW Group
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
covers several automobile classes, ranging from the pre-
mium compact class, the premium mid-size class and
through to the ultra-luxury class. Alongside its state-of-the-
art plug-in hybrids and vehicles powered by highly efficient
combustion engines, the BMW brand also includes all-elec-
tric models manufactured under the BMW i sub-brand, such
as the BMW iX and the BMW i4 launched in 2021, as well as
modern plug-in hybrid models and high-performance vehi-
cles belonging to the BMW M sub-brand.
The MINI brand promises driving pleasure in the premium
compact segment and, alongside models powered by effi-
cient combustion engines, it also offers plug-in hybrid and
all-electric models. The all-electric MINI Cooper SE¹ was the
best-selling model in the MINI family in the year under
report.
With a tradition stretching back well over a century, Rolls-
Royce is the ultimate marque in the ultra-luxury class. Rolls-
ORGANISATIONAL
STRUCTURE
44
Overall Assessment by Management of the Financial Year
95
2.50
3.50
4.00
Preferred stock
5.822
1.92
2.50
3.52
4.02
Earnings per share of common stock³
1.90
18.77
7.47
10.605
13.07
Earnings per share of preferred stock"
18.79
5.75
7.49
10.625
13.09
Free cash flow Automotive segment
5.73
5.802
Common stock
Dividend
56,867
56,127
55,605
Stock exchange price in €1
Year-end closing price
73.30
55.20
55.05
62.10
74.64
High
82.00
57.60
67.85
85.50
78.89
Low
51.60
32.50
47.54
60.70
67.29
KEY DATA PER SHARE IN €
9.61
5.15
3.90
4.12
80 Employer Attractiveness and Employee Development
34
Business Model and Segments
83
Health and Performance
35
Locations
86
Diversity
38
BMW Group Integrated Strategy
89
Corporate Citizenship
38
Environmental Analysis and Megatrends
91
Financial Performance
39
Strategy Process
91
General and Sector-Specific Environment
43
Performance Indicators
Organisational Structure
developed. Plug-in hybrid (PHEV) concepts also provide a
good alternative in these circumstances. Products and mobility
34
80
6.78
Equity
113.60
93.26
90.92
88.265
82.95
1 Xetra closing prices.
2 Proposed by management.
3 Weighted average number of shares for the year.
4 Stock weighted according to dividend entitlements.
5 The 2018 figures were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 (see Annual Report 2019, Note 6 to the Group Financial Statements).
33
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
34
Overview of the BMW Group
Employees and Society
Direction
Collaboration
Strategic
approach
2 Norway
17 Poland
9 Belgium/Luxembourg
16 Czech Republic
8 Ireland
1 Germany
Financial Services
• Sales subsidiaries and
LOCATIONS IN EUROPE
← = Q
3 Denmark
Other Information
Corporate Governance
Group Financial Statements
Combined Management Report
Overview of the BMW Group
To Our Stakeholders
BMW Group - Report 2021
37
BMW Group Technology Office Tel Aviv, Tel Aviv, Israel
BMW Group R&D Center Seoul, Seoul, South Korea
BMW Group Engineering Japan, Tokyo, Japan
BMW Group Engineering USA, Woodcliff Lake, USA
BMW Group IT Technology Office, Greenville, USA
BMW Group IT Technology Office, Singapore
BMW Group IT DevOps Hub, Rosslyn, South Africa
BMW do Brasil, Araquari, Brazil
BMW Group Engineering China, Beijing, China
BMW Group Technology Office, Shanghai, China
Remuneration Report
10 France
11 Switzerland
4 Sweden
BMW Group plant Leipzig
BMW Group plant Landshut
BMW Group plant Eisenach
23
☐
20
23 Greece
22 Bulgaria *
21 Romania *
20 Hungary*
19 Slovakia
18 Austria
■ Production in Europe
BMW Group plant Berlin
BMW Group plant Dingolfing
10
15
Sales locations only.
15 Portugal
7 UK
14 Spain
6 The Netherlands
13 Slovenia *
5 Finland
12 Italy
18
and BMW Group Designworks Studio Shanghai, China
BMW Group ConnectedDrive Lab China, Shanghai, China,
BMW Group Technology Office USA, Mountain View, USA
BMW Group Engineering and Emission Test Center, Oxnard, USA
☐
19 New Zealand
18 Australia
17 Indonesia *
13 Japan
12 South Korea
11 China
10 India
9 Russia
16 Singapore
15 Malaysia
14 Thailand
7 Argentina *
8 South Africa
5 United Arab Emirates
6 Brazil
4 Mexico
3 USA
2 Canada
1 Headquarters
Financial Services
• Sales subsidiaries and
LOCATIONS WORLDWIDE
← = Q
☐
BMW Group plant Munich
BMW Group plant Regensburg
BMW Group plant Wackersdorf
BMW Group plant Steyr, Austria
BMW Group plant Hams Hall, UK
BMW Group plant Oxford, UK
10
Sales subsidiaries and Financial
Services locations worldwide
BMW Group Designworks, Newbury Park, USA
▲ Research and development network outside Europe
Partner plant, Kulim, Malaysia
Partner plant, Cairo, Egypt
Partner plant, Jakarta, Indonesia
Partner plant, Hosur, India
Partner plant, Chongqing, China
Partner plants outside Europe
☑
BMW Brilliance Automotive, China (joint venture - 3 plants)
BMW Group plant Spartanburg, USA
BMW Group plant San Luis Potosí, Mexico
BMW Group plant Rosslyn, South Africa
BMW Group plant Araquari, Brazil
BMW Group plant Chennai, India
BMW Group plant Manaus, Brazil
BMW Group plant Rayong, Thailand
■ Production outside Europe
☐
0.15
*Sales locations
and development locations
Countries with research
13
Production and assembly plants
31
41
57,689
BMW Group plant Swindon, UK
Partner plants in Europe
STRATEGY PROCESS
M&BX 524E
Concrete requirements and regulations for autonomous driv-
ing are likely to be in place in individual countries and re-
gions by 2025. The aim of all regulators is assumably to au-
thorise autonomous driving systems in the medium term
7 Products and mobility solutions.
Alongside digitalisation, development of automated/autono-
mous driving remains a key expectation for the future of mo-
bility. Due to the importance of this topic for the automotive
industry and the complexity of the technologies and exper-
tise involved, extensive funding is being channelled into de-
velopment in this area worldwide.
Automated/autonomous driving
In addition to the new possibilities digitalisation can offer
customers, further potential lies in networking mobile value
creation. To create a virtual platform and meet future chal-
lenges, the BMW Group founded the Catena-X Automotive
Network, together with other manufacturers, system suppli-
ers and technology partners Production, purchasing and supplier
network.
In addition to the topics already referred to, the combination
of digitalisation and connectivity is another important mega-
trend for the BMW Group. The modern vehicle is already one
of the most complex and software-intensive items owned by
consumers. Vehicles are increasingly viewed as digital ob-
jects, with corresponding functions expected. Customers de-
mand products that are seamlessly and perfectly integrated
into their familiar living environment. It is therefore safe to
assume that digital business models will generate a growing
percentage of added value in the future. China, in particular,
is setting new standards for digitalisation. Customer desires
are increasingly influenced by the world of consumer elec-
tronics and are an important factor in purchasing decisions
7 Innovation and customer orientation.
Digitalisation and connectivity
In the transport sector, a swift transition to electromobility is
an important prerequisite on the road to climate neutrality.
By 2030, the BMW Group will be capable of offering a com-
plete array of electric vehicles in terms of both product diver-
sity and range. Growing demand is additionally strength-
ened by the benefits of lower running costs and framework
conditions such as government subsidies Electromobility.
Electromobility and drive technologies
The BMW Group regards the strategy process as a continu-
ous task. The assumptions underpinning our strategies are
regularly reviewed, based on the findings from our analysis of
environmental and external factors. The Board of Manage-
ment sets the strategic direction for this process, regularly
addressing strategic issues for the BMW Group and assess-
ing the impact of external factors. The BMW Group's corpo-
rate strategy is the starting point for business departments to
systematically align their own strategy with the Company's
strategic goals and define the concrete measures that must
be implemented in order to achieve them. This process takes
place via a planning and management system with a built-in
feedback loop.
The US government has also proposed more ambitious cli-
mate-protection goals that aim to halve greenhouse gas
emissions by 2030 from 2005 levels. China is relying on fleet
limits and a growing percentage of zero-emissions vehicles.
We see the consequences of climate change as a major
challenge for the future. As governments around the world
work to translate the goals of the Paris Climate Agreement
into national laws, investors are increasingly evaluating
companies and their business models according to ESG cri-
teria BMW Group and capital market.
Climate change and CO₂ reduction
Around the world, the conditions for individual mobility in
cities and their surrounding suburban areas are developing
very differently in some cases and depend above all on the
location of these conurbations, their population density
and the focus of emissions policy in the respective urban
regions. Mobility concepts and services.
especially in urban areas, but will mainly be used as a sup-
plementary option 7 Mobility concepts and services.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
BMW Group Integrated Strategy
The European Union (EU) sees itself as a global leader in
achieving these climate goals. Within the EU, the Sustain-
able Finance Framework aims to classify a company's busi-
ness activities according to sustainability criteria.
* 7 Consumption and carbon emissions data.
40
40
Position
To leverage the potential for lowering CO₂ emissions during
the use phase, in particular, the BMW Group is actively
working on numerous projects and initiatives to improve the
framework conditions for electromobility. However, while
the ambitious goals of the Paris Climate Agreement are de-
signed to tackle climate change in the transport sector, they
I can only be achieved through a combination of all modern
drive technologies in addition to electromobility that are
closely aligned with customer needs and different mobility
requirements around the world. Modern combustion-en-
gine technology continues to make a meaningful contribu-
tion to the effective reduction of CO2 emissions worldwide.
For this reason, the BMW Group offers those customers
who choose not to buy an electrified vehicle - because of
their mobility needs or because the prerequisites are not
met vehicles with modern, efficient internal combustion
engines that rely on technology that is continuously further
Performance indicators.
Control parameters such as life cycle CO₂ emissions and sec-
ondary raw material quotas are already important perfor-
mance indicators during the development phase of our vehi-
cle projects
3. In the supply chain, a reduction of more than 20 %
Measurable science-based targets, initially up until 2030,
have been firmly established across the Company, laying the
foundation for the reduction of our CO2 emissions. We have
joined the Science-Based Targets Initiative (SBTI) for this
purpose. This will enable us to guarantee transparency and
comparability in the validation and measurement of our tar-
gets and, at the same time, ensure they are in line with the
latest scientific findings CO₂ and emissions.
2. In production, a reduction of 80 % for every vehicle
produced
1. In the use phase of the vehicle, an average reduction
of more than 50 % for every kilometre driven
―
The BMW Group is committed to first-class individual mobil-
ity and contributes to sustainable development. It aims to
find the right balance between business, the environment
and society. The BMW Group combines driving pleasure and
responsibility without compromise and, together with its
partners, leads the industry in environmental, social and in-
tegrity standards. The Company is committed to the Paris
Climate Agreement and providing a verifiable track record of
continuous improvement. To achieve this and reduce the im-
pact on the environment as a whole, the BMW Group is pro-
moting as well the reduction of CO2 emissions throughout
the whole product life cycle as the principles of the circular
economy from the supply chain, to production, the use
phase and the recycling of its products. For this reason,
BMW has also laid out ambitious targets to reduce CO2 emis-
sions by 2030 (reference year 2019), understood as follows:
What does the BMW Group stand for?
Position -
The BMW Group strategy comprises four elements: position, di-
rection, strategic approach and collaboration. These formulate
the various aspects of our aspirations and are combined in a
"strategy arrow" that serves as a symbol for our forward-looking
approach. This strategic framework provides a fixed point of ref-
erence for all decisions of Company-wide significance.
The BMW Group's corporate strategy, referred to as the
"BMW Group strategy", forms the core of our integrated ap-
proach. It defines the framework for decision-making and lays
the foundation for the Company to maintain a consistent focus
on profitability, growth and sustainability, even in an increas-
ingly dynamic environment.
Corporate strategy
The strategy is integrated into annual longer-range corpor-
ate planning, with implementation monitored by a target
system that is comprised of aspects finance, customers, pro-
cesses, learning and development. Performance indicators.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
BMW Group Integrated Strategy
To Our Stakeholders
BMW Group Report 2021
To Our Stakeholders
BMW Group Report 2021
39
Individual mobility appears likely to remain a fundamental
human need for the foreseeable future, although vehicle
ownership depends to a large extent on income, household
size and location (urban/suburban). Mobility services, so-
called on-demand mobility (ODM), will remain relevant,
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
BMW Group Integrated Strategy
To Our Stakeholders
BMW Group Report 2021
38
CIRCULAR
Rolls-Royce Motor Cars Ltd., Goodwood, UK
BMW France, S. A. S., Montigny, France
Critical TechWorks S.A., Porto, Portugal
BMW Group Diesel Competence Centre, Steyr, Austria
Technology Center, Landshut, Germany
BMW Group Lightweight Construction and
BMW Group Designworks, Munich, Germany
BMW Group Autonomous Driving Campus,
Unterschleißheim, Germany
BMW Car IT, Munich, Germany
BMW Group Research and Innovation Centre (FIZ),
Munich, Germany
▲ Research and development network in Europe
Partner plant, Kaliningrad, Russia
Partner plant, Graz, Austria
Partner plant, Born, the Netherlands
← = Q
Rolls-Royce Manufacturing Plant, Goodwood, UK
38
Strategy Process
Mobility patterns
The most important megatrends with long-term implications
for the BMW Group's business model are currently climate
change and the reduction of carbon dioxide (CO2) emissions,
electromobility, digitalisation and connectivity - including
automated and autonomous driving, as well as mobility pat-
terns within society. GRI 102-46
A company's success depends to a large extent on its ability
to recognise changes in its environment early on, plan for
different scenarios, effectively manage risks and take advan-
tage of opportunities that may arise from such changes
(Risks and opportunities.) To this end, we continuously monitor
the business environment in our key regions, using available
data to analyse in detail the trends and developments that
could affect our business in the future. Regular Dialogue with
stakeholders within the framework of the BMW Group Xchange
formats rounds out the picture from the analysis of external
and environmental factors.
AND MEGATRENDS
ENVIRONMENTAL ANALYSIS
of the automotive industry and essentially comprises the in-
tegrated and continuous strategy process, the target system
and Corporate management.
The BMW Group strategy is developed from an analysis of
the global megatrends that are crucial to the transformation
7 Compliance and Human rights.
The BMW Group's integrated strategy is based on funda-
mental elements, like the integrity of our actions.
We constantly refine our corporate strategy and align our
strategic targets with these external factors and their dy-
namic rate of change as important input parameters.
Diverging social expectations in the face of climate change
Megatrends such as electrification and connectivity
A capital market focused on profitability and growth
Sustainability
Global competition
The BMW Group operates at the intersection of challenging,
increasingly complex and differentiated conditions around
the world. This includes:
BMW GROUP INTEGRATED STRATEGY
Environmental Analysis and Megatrends
BMW GROUP INTEGRATED STRATEGY
ELECTRIC
Compliance and Human Rights
48
44 Performance Management
Performance Indicators
43
39
Other Information
Remuneration Report
PREFERRED STOCK
Standard
Moody's
and Poor's
A2
A
Short-term debt
P-1
A-1
Outlook
stable
stable
The BMW Group has maintained a good ranking in presti-
gious sustainability ratings in 2021. For instance, the
BMW Group is represented in the MSCI ESG, Sustainalytics
and ISS ESG indexes and is well positioned in its sector in all
three. Due to its transparent reporting of carbon emissions,
the BMW Group is again in the top grouping (A List) of the
CDP rating list.
32
32
BMW Group Report 2021
Company rating
Long-term debt
With its above-average ratings, the BMW Group enjoys good
access to international capital markets and is thus able to
benefit from highly attractive refinancing conditions.
tations that the BMW Group will continue performing well, SUSTAINABILITY RATINGS
GOOD PLACEMENT IN
Number of shares in 1,000
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
To Our Stakeholders
Other Information
BMW Group and Capital Markets
BMW GROUP AND CAPITAL MARKETS
RATINGS REMAIN AT
HIGH LEVEL
The BMW Group continues to enjoy the best ratings on the
capital market of Europe's automobile manufacturers.
The persisting impact of the coronavirus pandemic and the
challenges posed by the ongoing transformation of the auto-
motive industry caused rating agencies to reassess their rat-
ings for the automotive sector in 2020, resulting in the ratings
and outlooks of numerous companies being downgraded.
However, in light of the generally improved situation, upward
adjustments were made over the course of 2021.
In this context, Moody's raised its outlook for BMW AG from
"negative" to "stable" on 26 March 2021. At the same time,
the long-term rating of A2 and the short-term rating of P-1
were both confirmed. On 5 August 2021, Standard & Poor's
(S&P) adjusted its outlook for BMW AG from "negative" to
"stable" and confirmed its long-term and short-term ratings
of A and A-1 respectively.
In addition to the general recovery in the automotive indus-
try, the upgraded outlook reflects the rating agencies' expec-
← = Q
Combined Management Report
despite the challenging economic environment. Moreover,
both agencies explicitly highlight the fact that BMW AG con-
tinues to implement its policy of decarbonisation, thereby
enabling it to undercut the targets set by the EU for 2020.
Corporate Governance
High
88.49
72.23
73.14
70.70
86.83
76.68
601,995
77.75
90.83
68.34
37.66
58.70
69.86
Group Financial Statements
77.71
96.26
601,995
95.89
601,995
Remuneration Report
Other Information
← = Q
BMW Group and Capital Markets
DIVIDEND TO RISE
SIGNIFICANTLY
BMW AG STOCK
COMMON STOCK
Low
The Board of Management and the Supervisory Board will
propose to the Annual General Meeting that the unappropri-
ated profit of BMW AG amounting to € 3,827 million (2020:
€ 1,253 million) be used to pay a dividend of € 5.80 per
share of common stock (2020: € 1.90) and a dividend of
€ 5.82 per share of preferred stock (2020: € 1.92). The pay-
out ratio for 2021 therefore stands at 30.7% (2020: 32.5%).
2020
2019
2018
2017
Number of shares in 1,000
Stock exchange price in €1
Year-end closing price
601,995
601,995
2021
Compliance is the managerial responsibility of the Board of
Management of BMW AG and is primarily executed by creat-
ing an appropriate regulatory and supervisory framework, as
well as through regular and ad hoc compliance reporting, ac-
companied by clear and unambiguous compliance commu-
nications. This approach is based on the core belief that
compliance with applicable laws and related internal regula-
tions is the personal responsibility of each individual em-
ployee. As role models, BMW Group managers are also
tasked with anchoring compliance culture in their respective
area of responsibility and ensuring compliance requirements
and processes are implemented accordingly. 7 GRI-Index 102-16
Further development of the CMS
During the reporting period, the Board of Management of
BMW AG significantly refined the compliance organisation
and created a new Chief Compliance Officer role, which took
effect on 1 January 2021 and which serves as head of the
Group Compliance. In addition to being responsible for the
Compliance Management System (CMS), the Chief Compli-
ance Officer manages the Group Compliance division and
briefs the Board of Management and Supervisory Board of
BMW AG on development and implementation of the CMS at
regular intervals. Furthermore, compliance has been an-
chored by the Board of Management in the Company's en-
hanced understanding of leadership.
Compliance Management System (CMS)
The BMW Group's Company-wide CMS is based on the Pre-
vent, Detect, Respond Model, which defines specific preven-
tion, monitoring, control and response measures, on the ba-
sis of clearly assigned roles and responsibilities.
The CMS is tailored to the Company's specific risk situation.
It addresses all relevant compliance topics, including fraud
prevention, export control, anti-money laundering, antitrust
compliance, corruption prevention and human rights as well
as data privacy and technical compliance. These last two topics are
the responsibility of the respective specialist departments.
An effective and efficient compliance organisation is funda-
mental to reducing sanction and liability risks, as well as
risks arising from other (non-) financial disadvantages, such
as reputational risks.
During the reporting period, the organisation and content of
the CMS were refined according to defined strategic focus
topics. The objective is to further strengthen the culture of
compliance and integrity at the Company, with the declared
aim of avoiding Company-related violations of the law.
rights
THREE-STAGE APPROACH TO COMPLIANCE
MANAGEMENT SYSTEM AND COMPLIANCE TOPICS
RESPOND
Data
protection
Human
Technical
PREVENT
Compliance as a corporate function
Further development of the CMS is also taking place against
the backdrop of external factors, such as global legal devel-
opments and the evolution of compliance at other compa-
nies. To this end, the BMW Group is involved in various asso-
ciations and interest groups and has been an active
corporate member of the German Institute for Compliance
(DICO) for many years, at the Board level and through its
leadership of the working group "Human Rights/CSR".
Compliance means much more to the BMW Group than just
complying with applicable laws and Company rules: it is part
of our identity and our living culture of integrity and creates a
binding framework for all our business activities worldwide.
As such, compliance lays the foundation for the long-term
success of the Company, builds trust in our products and
brands, and shapes the public image of the BMW Group.
5,464
← = Q
compliance
2021
16,289
8,938
8,061
7,351
2020
-2,597
Value-based management for project decisions
Operational business in the Automotive and Motorcycles
segments is largely shaped by the life-cycle-dependent
character of investment projects that have a substantial in-
fluence on future performance. Project-related decisions are
therefore a crucial element of financial management in the
BMW Group. Project decisions are based on calculations de-
rived from the expected cash flows of each individual project.
Calculations are made for the complete term of a project, in-
corporating future years in which the project is expected to
generate cash flows. Project decisions are taken on the ba-
sis of net present value and the internal rate of return calcu-
lated for the project. The net present value indicates the ex-
tent to which the project will be able to generate future net
cash inflows over and above the cost of capital. A project
with a positive net present value enhances future value add-
ed and therefore results in an increase in enterprise value.
The project's internal rate of return measures the average
return on the capital employed in the project. For all project
decisions, the project criteria and long-term impact on peri-
odic results are measured and incorporated in the long-term
Group plan. This approach enables an analysis of the impact
of project decisions on periodic earnings and rates of return
for each year during the term of the project.
COMPLIANCE AND
HUMAN RIGHTS
Board of Management remuneration
Performance criteria for the short- and long-term variable
remuneration of the Board of Management are also based
on the main strategic financial and non-financial targets
and key performance indicators and contribute towards the
BMW Group's long-term development. Non-financial key
performance indicators used in this context include the
number of vehicles delivered, the share of women in man-
agement functions, carbon emissions and sales of electri-
fied vehicles. Financial key performance indicators that
have an impact on variable remuneration include the return
on capital employed for the Automotive segment as well as
other key financial performance indicators monitored at
Group level. Remuneration Report
48
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
BMW Group Integrated Strategy
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
46
Corruption
The BMW Group protects information providers in two ways.
If they prefer, individuals may provide information without
disclosing their identity. Policy also stipulates that no one
providing information should face retaliatory action. All com-
pliance-related queries and concerns are documented and
processed using an electronic Case Management System. If
necessary, Corporate Audit, Corporate Security, the legal de-
partments or the Works Council may be called upon to assist
in processing the case. GRI-Index: 102-34
Fraud
In response to the rapid pace of transformation in the auto-
motive industry, activities in the field of technical compliance
were also significantly expanded during the period under
report.
Company-wide compliance network
Business departments at the BMW Group are responsible
for lawful conduct during the performance of their assigned
tasks. This means they are also responsible for identifying
and evaluating any compliance risks that arise in the course
of their daily business. Monitoring and reducing these risks
also falls under their scope of duties. More than 230 man-
agers group-wide perform these tasks. These Compliance
Officers form part of the Compliance Organisation.
Specialist departments are supported in their work by the
central Group Compliance function, as well as a Group-wide
network of business unit and division compliance functions,
supplemented by around 80 local Compliance Officers
(heads of local compliance functions) at BMW AG's inter-
national subsidiaries. Local Compliance Officers are tasked
with implementing the CMS and compliance programmes for
relevant topics within their area of responsibility. Business
unit and division compliance functions also perform the task
of identifying and implementing specific compliance meas-
ures in their area of activity.
Expanded training activities
The BMW Group continuously refines the Group Compliance
training opportunities for specific target groups. For exam-
ple, during the year under review, we redesigned our Group-
wide mandatory Compliance Essentials online training to
create a user-oriented approach with focused content and a
high level of interactivity. This training formed part of the
mandatory training programme and included human rights
topics in the year under report. > GRI-Index: 412-2
In addition to imparting knowledge, online and classroom
training options, including practical case studies, play an im-
portant part in strengthening the compliance culture and un-
derstanding of compliant behaviour at the Company. Online
training must be completed every two years by relevant tar-
get groups. The training modules include exercises and test
questions relating to the BMW Group Legal Compliance
Code and corruption prevention, as well as other topics. So
far, more than 69,000 employees worldwide have com-
pleted the Compliance Essentials training, and over 36,000
employees completed online antitrust compliance training.
Department-specific training modules supplement the ex-
tensive options - for instance, in the areas of antitrust law or
human rights. GRI-Index: 205-1
Increasingly strict national legislation to protect personal
data, and the higher risks associated with this, shaped com-
pliance measures regarding data privacy.
Digitalisation supports compliance
avoid compliance risks on the basis of this evaluation.
Reporting system for detecting possible non-compliance with the
law and compliance controls
Any employee with questions or concerns relating to compli-
ance can discuss these matters with their managers and
with the relevant departments within the BMW Group: spe-
cifically, with Group Compliance, Legal Affairs and Corporate
Audit. The BMW Group Compliance Contact serves as a fur-
ther point of contact and provides non-employees with a
process for reporting compliance concerns. Our employees
worldwide can also submit information relating to possible
infringements of the law at the Company in several lan-
guages via the BMW Group SpeakUP Line. In 2021, an
ombudsperson for suppliers was dedicated. Verification of
effectiveness
2020
CMS monitoring/controls
Observance and implementation of compliance regulations
and processes are subject to regular audits. The BMW Group
CMS provides differentiated monitoring levels for this pur-
pose. Compliance Officers are those primarily responsible
for performing direct checks in their area of responsibility.
Further measures integrated into business processes to help
reduce risk generally form part of the ▾ Internal Control System.
The central Group Compliance function refined its audit ap-
proach in 2021, with the aim of increasing audit frequency by
introducing risk-based compliance audits without cause.
These compliance audits are currently focused on antitrust
50
50
BMW Group employees have used IT-based systems for
swift and efficient documentation, assessment and approval
of compliance-relevant matters for years. Examples include
IT-supported processes to monitor money laundering, sanc-
tion lists and exchange activities with competitors as well as
to conduct background checks on the reliability of business
partners and verify, approve and document the legal admis-
sibility of benefits in kind. Measures are implemented to
prevention
Note 10 to the Group Financial Statements GRI-Index: 205-3
the context of export controls from heightened trade rela-
tions between the US and China and in connection with
efforts to prevent money laundering, due in part to the in-
crease in legislative initiatives to tighten multinational
anti-money-laundering requirements.
prevention
Antitrust
compliance
Export
control
Anti-money-
laundering
DETECT
A further priority was developing and implementing more ex-
tensive preventive measures in response to the antitrust
proceedings brought by the European Commission and con-
cluded in July 2021, concerning restriction of competition in
innovation in certain emissions control systems1.
The Supply Chain Due Diligence Law will take effect on
1 January 2023 in Germany; the adjustments it requires for
the human rights compliance programme have been a key
focus for Group Compliance during the reporting period. It
should be noted that the Board of Management decided in
December 2021 to appoint a Human Rights Officer and
assign this role to the head of Group Compliance. Concen-
trating relevant expertise in this new function will also
contribute to the strategic alignment of the Company in the
social dimension of sustainability. Other priorities arose in
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
BMW Group Integrated Strategy
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
49
2021
11.2
2021
227
2020
103
2021
2020
632
687
2021
35.9
2020
2021
15.0
Profit before tax
in € million
Average equity capital
in € million
Return on equity
in %
2021
2020
2021
RETURN ON EQUITY (FINANCIAL SERVICES SEGMENT)
2020
Motorcycles
Return on capital employed
Other Information
← = Q
Motorcycles segment
The Motorcycles segment is largely managed according to
the same logic applied to the Automotive segment. The prin-
cipal key performance indicator is the return on capital em-
ployed (ROCE). The new definition of capital employed
adopted by the Automotive segment will also be applied by
the Motorcycles segment, beginning with the 2022 reporting
period. As in the Automotive segment, the new strategic
ROCE target set for the Motorcycles segment is 18%.
ROCE Motorcycles
Profit before
financial result
Average capital employed
The main value drivers include the number of deliveries as
well as the operating return on sales (corresponding to the
EBIT margin: segment profit/loss before financial result as a
percentage of segment revenues) as the key performance
indicator for segment profitability.
in %
Financial Services segment
Profit before tax
RoE
Financial Services
Average equity capital
RETURN ON CAPITAL EMPLOYED (MOTORCYCLES SEGMENT)
Profit before financial result
in € million
Average capital employed
in € million
The performance of the Financial Services segment is meas-
ured on the basis of the return on equity (ROE), a key perfor-
mance indicator commonly used in the banking sector. With-
in the BMW Group, RoE is defined as segment profit/loss
before tax, divided by the average amount of equity capital
in the Financial Services segment. The target is a return on
equity of at least 14%.
2021
2020
Financial Services
Automotive
=
(cost of capital rate x
capital employed)
Motorcycles
Financial Services
VALUE ADDED GROUP
in € million
BMW Group
in %
Earnings amount Cost of capital (equity + debt capital)
2020
12.0
12.0
12.0
12.0
13.4
13.4
Value added Group
2021
earnings amount -
cost of capital
earnings amount -
=
Value added
Group
3,753
1,725
16,586
15,343
22.6
BMW Group Report 2021
47
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
BMW Group Integrated Strategy
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Strategic management at Group level
Strategic management and the measurement of its financial
impact are coordinated primarily at Group level in conjunc-
tion with the long-term corporate plan. One of the key perfor-
mance indicators used in this context is Group profit/loss
before tax, which provides a comprehensive measure of the
Group's overall corporate performance after consolidation
effects and enables a transparent comparison over time.
Other key performance indicators at Group level are the size
of the workforce at the year-end and the share of women in
management functions. By 2025, the BMW Group aims to
increase the share of women in management functions to
22%.
The information provided by these key performance indica-
tors at Group level is complemented by the two financial per-
formance indicators of pre-tax return on sales and value
added. Value added, as a highly aggregated performance
indicator, also provides an insight into capital efficiency and
the (opportunity) cost of capital required to generate Group
profit. A positive value added means that a return on invest-
ment above the cost of capital has been achieved.
Capital employed comprises the amount of Group equity and
pension provisions as well as the financial liabilities of the
Automotive and Motorcycles segments employed on aver-
age at the end of each of the last five quarters. The earnings
amount corresponds to Group profit/loss before tax, adjust-
ed for interest expense incurred in conjunction with the pen-
sion provision and on the financial liabilities of the Automo-
tive and Motorcycles segments (profit/loss before interest
expense and tax). The cost of capital is the minimum rate of
return expected by capital providers in return for the capital
employed. Since capital employed comprises an equity cap-
ital (e.g. share capital) and a debt capital element (e.g.
bonds), the overall cost of capital is determined on the basis
of the weighted average rates for equity and debt capital,
measured using standard market procedures. The pre-tax
average weighted cost of capital for the BMW Group in 2021
was 12%, unchanged from the previous year.
In order to determine the internal rate of return, risk-adjusted
cost of capital rates are based on the average of actual rates
in recent years. In light of the long-term nature of product
and investment decisions, the following internal rates of re-
turn are used in conjunction with segment management:
2020
To Our Stakeholders
Return on capital employed
Group Financial Statements
Automotive segment
Number of employees at the end of the year
Share of women in management positions
Group profit before tax (Group EBT)
Group
The following summarises the strategic targets and key per-
formance indicators defined in DRS 20, which also form the
basis for Performance Management. GRI-Index: 102-19
Once approved by the Board of Management and Super-
visory Board, the target figures in the strategic target system
form the planning basis for the current reporting year and the
target agreements for BMW Group managers. Remuneration
report GRI-Index: 102-35. Companies subject to the provisions of
German Accounting Standard No. 20 (DRS 20) must define
the Company's most effective performance indicators for
corporate management during the external reporting period
(key performance indicators).
Long-range corporate planning for the Company as a whole
and its segments is geared towards the structure of the
BMW Group target system. In this way, the targets set out in
the planning are regularly compared with the BMW Group's
strategic goals. Department strategies are also aligned with
the corporate strategy.
Once strategic targets have been derived from the findings
of the environmental analysis and the ongoing strategy process
within the Company, the BMW Group target system trans-
lates the strategy into a clear system for measuring perfor-
mance. The target system is therefore a key instrument for
anchoring strategy throughout the Company. For corporate
management purposes, the strategic targets are backed by
effective performance indicators.
Profit before financial result as a percentage of segment
revenues (EBIT margin)
PERFORMANCE
INDICATORS
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
BMW Group Integrated Strategy
To Our Stakeholders
BMW Group Report 2021
43
← = Q
* Consumption and carbon emissions data
Return on capital employed (ROCE) in %
Deliveries (in units)
Corporate Governance
PERFORMANCE
MANAGEMENT
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
BMW Group Integrated Strategy
To Our Stakeholders
Share of electrified cars in total deliveries (in %)
CO2 emissions EU new vehicle fleet (in g CO2/km)
CO₂ emissions per vehicle produced (in tons)
BMW Group Report 2021
44
M.VE 291E
* 7 Consumption and carbon emissions data
Financial Services segment
Return on equity (ROE) in %
Return on capital employed (ROCE) in %
Deliveries (in units)
Profit before financial result as a percentage of segment
revenues (EBIT margin)
-
Motorcycles segment
44
The BMW Group's performance management system fol-
lows a value-based approach that focuses on profitability,
consistent growth, value enhancement for capital providers,
sustainability, climate protection and job security. Capital is
considered to be employed profitably when the amount of
profit generated on a sustained basis exceeds the cost of
equity and debt capital. This strategy also secures the de-
sired degree of corporate autonomy in the long term.
We are constantly expanding our collaborations to secure
access to new technologies and increase value creation
setting cooperation goals and defining strategic fields of co-
operation with our partners based on the strategic frame-
work.
To anchor strategy within the Company, it is critical to keep em-
ployees and managers informed, to strengthen their creativity
and to encourage them to actively participate in the implementa-
tion and achievement of goals. The results of the Employee Sur-
We recognised the importance of electromobility early on
and began our transformation in this direction accordingly. In
the initial phase, the BMW Group introduced electrification
into standard production with the launch of the fully electric
BMW i3 in 2013. In 2014, the BMW Group launched the BMW
18, with ground breaking technology and a futuristic design.
The launch of the My BMW app in July 2020 has given BMW
a direct channel to its customers and provided them with a
direct link not only to their BMW dealership, but also to the
BMW brand as a whole. Customers can use the app to make
service appointments, request information on the condition
of their vehicle, or receive the latest news on BMW brand
products and services. The topic of battery charging has also
been fully integrated in this digital ecosystem. The My BMW
app can also be used to plan trips and display suitable
charging points along the route. The same applies, of course,
to the MINI brand with the MINI app.
The BMW Group is making customer experience the focus of
all its marketing and sales activities. The aim is to offer the
industry's best premium customer experience and to seam-
lessly integrate all customer touchpoints, online and offline.
The BMW Group is focused on its customers worldwide and
on meeting their different requirements. It does so by un-
derstanding the needs of its current and future customers
and exceeding their expectations. It combines ground
breaking technologies, emotional products and individual
customer care to create a unique overall experience. Creat-
ing the best customer experience, both physically and digi-
tally, as well as personalised, reliable communication, is of
primary importance to us.
Where is the BMW Group heading?
Strategic approach -
As part of our focus on efficiency, we regularly assess ways
to utilise synergies and efficiencies across the Company in
an effort to reduce the complexity that arises from increas-
ingly strict and heterogeneous regulatory requirements.
Faster, digitalised processes within lean structures are fun-
damental to systematically leveraging efficiencies. In vehicle
development, for instance, we see considerable potential for
reducing process time through digitalisation. In addition to
this, distinguishing the BMW Group from its competitors, we
are also taking advantage of the expanded possibilities of
digitalisation for customer contact, with integrated product
and service offerings, functional upgrades and customer
support. The BMW Group is also bolstering its portfolio with
attractive new models especially in highly profitable
segments.
To underline the importance of the BMW Group's economic
performance capabilities, our ambitious financial targets are
tied to the following strategic key performance indicators:
EBIT margin in the Automotive segment (between 8 and
10%), RoCE in the Automotive segment (at least 18%) and
Group EBT margin (more than 10%) Performance indicators.
The current, second phase of the transformation began in
2020 with our all-electric model offensive, led by the MINI
Cooper SE* and the BMW iX3*, and followed in late 2021
with the BMW i4 and BMW iX. Since 2013, the BMW Group
has delivered a total of more than 1 million electrified vehi-
cles to customers. From 2022 onwards, alongside the BMW
X3/iX3, additional models will be available with a choice of
fully electric or plug-in hybrid drivetrain, or with a state-of-
the-art internal combustion engine - for example, in the next
generation of luxury BMW 7 Series and BMW 5 Series se-
dans and the BMW X1. Going forward, the BMW Group will
continue to meet specific customer needs in individual mar-
kets and segments with a broad range of state-of-the-art
drive systems. Innovations and customer orientation.
The focus on profitability is a very important aspect of the
BMW Group's corporate management system. All measures
and initiatives are aimed at further developing the BMW
Group's strong economic base, so it can continue to operate
independently and invest in the future.
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
BMW Group Integrated Strategy
To Our Stakeholders
BMW Group Report 2021
41
← = Q
vey confirm high internal acceptance of the BMW Group's strat-
egy and sustainability activities, as well as employees' willingness
to play their part Employees and Society. BMW Group employees
not only work closely together within the Company, but also with
external partners. The stable relationships that have grown over
time in our partner networks are based on the same values as
those at the BMW Group. This has been especially evident during
the pandemic years of 2020 and 2021. Even when confronted
with the challenges of global lockdowns and the shortage of
semiconductor components, our supply chains have held up well
and our retail network showed its strength. This is the only way
we can maximise our effectiveness and, together, lead the Com-
pany to success.
By 2023, in the middle of the second phase, we will already
have at least one fully electric model on the roads in virtually
all key model series from the compact segment to the
ultra-luxury class. In this context, we are investing additional
funds and plan to increase electrified vehicles' share total
deliveries to over 30% by 2025. The trend towards electro-
mobility will also continue to progress dynamically beyond
the year 2025. By 2030, the BMW Group plans to increase
the share of fully electric automobiles in its total deliveries to
more than 50%. Performance indicators.
7 Consumption and carbon emissions data
Our ambitious strategic objectives can only be achieved if all
employees work together. Diversity is an important compo-
nent of our competitiveness Employees and society. The diver-
sity metric defines the share of women in management po-
sitions as a key performance indicator and a strategic target
variable. The aim is to increase the share of women in man-
agement positions at the BMW Group to 22% by 2025 7 Per-
formance indicators.
How does the BMW Group
ensure cooperation?
In the Financial Services Segment, the strategic approach is
geared towards making the product range available to all
customer groups across all channels Financial Services segment.
BMW Motorrad is continuing to evolve in the direction of
electromobility. The "Vision Amby" Vision Vehicle and the
fully-electric Concept CE 02 provide a glimpse of the future of
urban mobility. In the urban mobility segment, the CE 04
electric scooter is a trailblazer for BMW Motorrad's electro-
mobility strategy 7 Motorcycles segment.
BMW M is also currently working on various forms of electri-
fication and already launched a performance car with a fully
electrified drive train, the BMW i4 M50*, in 2021. At the same
time, MINI's transition to an all-electric brand underlines its
urban identity. Rolls-Royce, the world's leading luxury brand,
will also focus on electromobility in the future Automotive
segment.
The third phase of the transformation will begin in 2025 with
our global fully electric product line-up, the Neue Klasse.
Production of vehicles for the Neue Klasse will get underway
at the newly constructed BMW Group Plant Debrecen and
then expanded to BMW Group Plant Munich from 2026 on-
wards. The Neue Klasse sets the standard for digitalisation,
electrification and sustainability. It will be characterised by a
New Cluster Architecture (NCAR) geared exclusively towards
battery electric vehicles (BEVs), a completely redefined tech
stack autonomous driving and a newly developed high-per-
formance electric drivetrain generation. The Neue Klasse
also makes a significant contribution to sustainability, by re-
lying on the concept of circularity Circular design.
The BMW iX is the first BMW Group vehicle to offer automated
driving and parking functions from a new technology kit that
will enable continuous improvement and expansion of driver
assistance functions and highly automated driving in the mid-
term (Level 3). These functions will continue to be rolled out
and used in the next-generation BMW 7 Series and BMW 5
Series, for instance. Moreover, with the launch of the BMW iX,
the BMW Group became the first premium manufacturer to in-
clude the 5G mobile communications standard in a series pro-
duction vehicle on a worldwide basis. In terms of mobility, this
means comprehensive expansion of data-based services in
the fields of entertainment and infotainment, automated and
assisted driving and, above all, road safety.
In addition to delivering product substance, we also offer our
customers a 360° approach to electrification, by creating an
appropriate charging ecosystem - because charging is a
trailblazer for electromobility. As well as offering charging
options at home and at work, we also provide public charg-
ing through BMW Charging and MINI Charging Mobility con-
cepts and services.
To make this transformation possible, the BMW Group is
pushing ahead, both by restructuring existing plants and by
further developing employee competences (Employees and
Society). The restructuring of BMW Group Plant Munich pro-
vides a clear example of how the BMW Group can success-
fully and smoothly transform a full plant, including produc-
tion of internal combustion engines, to 100% electromobility
during ongoing production by 2026. Production, Purchasing and
Supplier network.
← = Q
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
BMW Group Integrated Strategy
To Our Stakeholders
BMW Group Report 2021
42
42
Other Information
Combined Management Report
BMW Group Integrated Strategy
The BMW Group's performance management system is
based on a multi layered structure. Operational performance
-
12.7
59.9
17,026
16,486
2,162
9,870
2020
2021
46
2020
2020
2021
in %
Average capital employed
in € million
Profit before financial result
in € million
Automotive
RETURN ON CAPITAL EMPLOYED (AUTOMOTIVE SEGMENT)
Furthermore, the Automotive segment manages its compli-
ance with fleet carbon emissions requirements in regulated
markets. In this context, it also reports on the share of elec-
trified vehicles in total deliveries performance indicators. As
compliance with regulatory requirements is a significant fac-
tor in the BMW Group's success, business decisions relating
to vehicle projects also take targets for fleet carbon emis-
sions into account. Managing sustainability
2021
mance. These value drivers are the number of vehicle deliv-
eries and the operating return on sales (EBIT margin: seg-
ment profit before financial result as a percentage of segment
revenues) as the key performance indicator for segment
profitability.
46
To Our Stakeholders
Corporate Governance
Remuneration Report
Other Information
← = Q
law. So-called Compliance Spot Checks were also carried
out in 2021, with a focus on possible corruption risks. Cor-
porate Audit also conducts audits focused on compliance
requirements.
All control checks are geared towards reducing compliance
risks for the BMW Group. Any infringements are immediately
remedied, with an emphasis on minimising the risk of repeat
offenses and strengthening the understanding of compli-
ance within the Company. Where incidences of non-compli-
ance can be traced to an individual, such persons will be
appropriately sanctioned, in accordance with the processes
defined for this purpose.
Regular compliance reporting to the Board of Management and
Supervisory Board
The Board of Management and Supervisory Board of
BMW AG, the Audit Committee and other executive commit-
tees are informed on a regular basis and, if necessary, im-
mediately by the Chief Compliance Officer. In 2021, the con-
tent reported to committees was focused and the frequency
of reports increased – for example, at least twice a year for
the Board of Management.
BMW Group Report 2021
-
Internationally recognised guidelines for environmental and
social compliance set the benchmark for the BMW Group's
entire value chain. This applies, in particular, to the Guide-
lines for Multinational Companies issued by the Organisa-
tion for Economic Cooperation and Development (OECD),
the UN Guiding Principles on Business and Human Rights,
the Ten Principles of the UN Global Compact, the content of
the ICC Business Charter for Sustainable Development, and
the United Nations Environment Programme's (UNEP) Dec-
laration on Cleaner Production. The BMW Group concen-
trates on topics and action areas where it can exert its influ-
ence as a company. With the participation of employee
representatives, these (supra) national requirements were
incorporated into internal company rules and principles
through the Joint Declaration on Human Rights and Working Conditions in
the BMW Group of 2005 (updated in 2010), clarified in the
7 BMW Group Code on Human Rights and Working Conditions of 2018 and
integrated with the human rights compliance programme.
The automotive industry is heavily involved in global supply
chains. In a collaborative global value creation process such
as this, there is a risk that human rights may not be respect-
ed throughout the supply chain. Respect for human rights
has been incorporated into the BMW Group Supplier Sustainability
Policy. To fulfil our environmental and social responsibility, we imple-
ment a multistage due diligence process in our Purchasing
and Supplier Network division.
In addition to the Company's international purchasing terms
and conditions, BMW Group dealer and importer contracts
include requirements relating to compliance and human
rights. Human rights issues also play an important role in
the Company's choice of locations and major investment
decisions. 1] GRI-Index: 412-3
Compliance management in the Financial Services
segment
The financial services business entails specific risks, due to
the nature of its products and processes. The focus of com-
pliance management is therefore anti-money-laundering,
compliance with financial sanctions, information and privacy
protection, fraud prevention, legislative and regulatory moni-
toring, consumer protection and implementing the require-
ments of the Financial Supervisory Authorities. To manage
risk in these areas, the Financial Services segment has
established its own Compliance and Governance depart-
ment, which works closely with the central Group Compli-
ance function as a decentralised unit. Based on an annual
trend analysis it identifies the possible need for adjustments
and defines resulting measures. Implementation by the
BMW Group's financial services companies worldwide is
continuously reviewed and reported to the management of
the Financial Services segment on a quarterly basis.
In the BMW Group's Financial Services segment, compli-
ance is incorporated into the target management process.
Integration of specific targets into strategic steering under-
lines the importance of this topic and helps to monitor the
implementation. A management system also supports the
process of identifying risks arising from non-compliance with
internal and external regulations at an early stage.
Group Financial Statements
Combined Management Report
BMW Group Integrated Strategy
[Global implementation of labour standards and human
rights
BMW GROUP
CIVILIZATIONS
EQUALITY
An integrated approach to target management ensures that
the BMW Group's vehicle projects make a positive contribu-
tion towards achieving the sustainability targets that have
been set. By 2030, the BMW Group intends to drastically
broaden the scope of recycling, while further increasing the
proportion of secondary raw materials used to manufacture
its automobiles. With this point in mind, the BMW Group es-
tablished the so-called "Secondary First" approach during
the year under report. Non-financial performance indicators
such as carbon emissions and secondary raw materials quo-
tas are therefore key performance indicators for all new vehi-
cle projects. The overall result is a cohesive management
model across all aspects of the business. 7 GRI-Index: 102-19
As part of the procedures for managing sustainability on an
integrated basis at corporate level, a Group target system
has been created, which has been implemented for each of
the Board members' areas of responsibility. The BMW Group
has set itself the target of decarbonising its vehicle fleet by
an average of 40% overall over the entire life cycle by 2030,
based on the reference year 2019. In this context, specific
targets have been set for the vehicle's use phase, production
and the supply chain (7 Position) including emissions reduc-
tion targets across the entire value chain (carbon emissions and
pollutants). Additionally, specific carbon targets have been set
for each vehicle project.
with the full Board. All topics submitted to the Board of Man-
agement for decision-making must also be evaluated from
the point of view of sustainability, thereby ensuring that sus-
tainability issues are systematically integrated in deci-
sion-making processes.
Revenues
Expenses
cost of capital rate
Average weighted
Cost of capital
45
Capital employed
Return on capital
(ROCE or RoE)
Value added
Return on sales
Profit
The BMW Group's long-term corporate strategies are deter-
mined by the Board of Management. Responsibility for im-
plementing the Group's sustainability goals therefore lies
Managing sustainability
is managed primarily at segment level. In order to manage
long-term corporate performance and assess strategic is-
sues, additional key performance figures are taken into ac-
count within the management system at Group level. In this
context, the value added serves as one of several indicators
to measure the contribution made to enterprise value during
the financial year. This aspiration to add value is measured
at both Group and segment level by means of the key finan-
cial and non-financial performance indicators (value drivers).
The link between value added and the relevant value drivers
is presented in a simplified form below.
VALUE DRIVERS
Capital turnover
UN ALLIANCE OF
BMW Group Report 2021
Combined Management Report
BMW Group Integrated Strategy
GENDER
DUNAOC
Due to the special significance of ROCE for the BMW Group,
the Automotive segment is also managed on the basis of a
number of additional key performance indicators that have a
significant impact on RoCE and hence on segment perfor-
Average capital employed
Profit before
financial result
ROCE Automotive
The new strategic target for RoCE is 18% (target under the
previous definition: 40%). In substance, the new target is
even more ambitious than that previously used to measure
the return on capital employed. Value is enhanced for
BMW AG shareholders when the RoCE exceeds the cost of
capital.
employed than previously reported. We also expect the
amount of capital employed to increase in light of the acqui-
sition of further shares in BMW Brilliance Automotive Ltd.
and the resulting full consolidation of that entity in the finan-
cial year 2022, whereby the increase will arise primarily due
to the capitalisation of reacquired rights in conjunction with
the purchase price allocation. The RoCE will be impacted
temporarily by the higher capital base as well as the related
amortisation expense expected to be recorded.
To Our Stakeholders
With effect from the reporting year 2022, a simplified defi-
nition of capital employed will be applied to make the calcu-
lation of RoCE more comprehensible and transparent. More-
over, the capital employed figures reflect the focus of the
operating segment management. In future, capital employed
will be calculated as the sum of intangible assets, property,
plant and equipment and net working capital, the latter com-
prising inventories and trade receivables less trade pay-
ables. The new definition results in a higher level of capital
The most comprehensive key performance indicator used for
the Automotive segment is RoCE, which is measured on the
basis of segment profit/loss before financial result and the
average capital employed in the segment. It provides infor-
mation on the profitability of capital employed and business
operations. Value driver analyses are used to interpret the
causes of a change in RoCE and derive suitable measures to
influence its development.
Automotive segment
Managing operational performance at segment level
At segment level, operational performance is managed us-
ing an aggregated approach based on returns on capital.
Depending on the business model, the segments are meas-
ured on the basis of return on total capital or return on equity.
Return on capital employed (ROCE) is used for the Automo-
tive and Motorcycles segments and return on equity (ROE)
for the Financial Services segment. These indicators com-
bine a wide range of relevant economic information, such as
profitability (return on sales) and capital efficiency (capital
turnover) to measure segment performance and the devel-
opment of enterprise value.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Up to and including the reporting year 2021, capital em-
ployed has been defined as the sum of all current and
non-current operational assets less liabilities that were
available to the operational business and generally did not
incur interest (e.g. trade payables and other provisions).
Remuneration Report
We view digital technologies as an excellent opportunity to
further improve our existing processes, come up with new
solutions, and engage seamlessly with our customers. For
example, in many markets vehicles can be demonstrated live
on a screen shared with a customer or configured online to-
gether with a member of our sales team. A complete online
sales process has already been successfully implemented in
some of our markets, with others to follow in the foreseeable
future.
Moreover, the BMW Group and Solid Power, Inc. have ex-
tended the development agreement that has been in place
since 2016; the BMW Group intends to purchase solid-state
battery cells from Solid Power, Inc. for use in a prototype
within the first half of the current decade.
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
With the even more ambitious target of reducing carbon
emissions during the use phase by more than 50%, the
overall view over the complete life cycle¹ of a vehicle by 2030
results in an average carbon emissions reduction of at least
40%. By 2050, we intend to achieve net zero in terms of our
carbon emissions across the entire value chain. As of the
year under report, we made the remaining carbon emissions
generated at our own plants and locations completely car-
bon-neutral through the use of voluntary offsetting certifi-
cates. Compensation of site-related carbon emissions
[ THE BMW GROUP'S CARBON FOOTPRINT
(ABRIDGED VERSION)³
in t CO₂ / CO₂e
TOTAL EMISSIONS
Scope 1
Scope 2
Scope 32
For definition, Glossary: Carbon emissions Scope 1 to Scope 3
To Our Stakeholders
2021
2020
118,491,889
678,967
130,090
117,682,832
For a detailed version, see 7 Carbon footprint of the BMW Group in "Further GRI information" ]]
M.VE 2918
[ Following the overall drop in carbon emissions one year
earlier due to the coronavirus pandemic, the figure rose
again by around 3% to approximately 123 million tonnes in
the year under report, mainly driven by renewed growth in
production volume. Nonetheless, carbon emissions are 8%
down overall compared to the base year 2019, mainly due to
lower average fleet emissions worldwide. 1]
Decarbonisation during the use phase meets legal
requirements
The carbon emissions generated during the use phase are
the subject of numerous regulatory requirements and also a
key parameter in our life cycle assessment. With the early
serial introduction of electrified vehicles since 2013 and the
fleet-wide use of innovative Efficient Dynamics technologies since
2007, we have continuously and permanently reduced both
vehicle fuel consumption and emissions. These two param-
eters form the basis for us for again meeting mandatory car-
bon emissions and fuel consumption requirements in the
year under report. SASB-Index
EU carbon emissions targets achieved
As from 2021, average fleet CO₂ emissions in the EU4 must
be reported according to the new WLTP5 type test cycle. In
the year under report they totalled 115.9 g CO2/km, taking
regulatory requirements into account. We have thus signifi-
cantly reduced fleet carbon emissions compared with the
previous year (2020: 135 g CO₂/km 6,7). We were significantly
below the limit of 125.8 g CO2/km applicable for the
BMW Group by 9.9 g CO2/km. The reduction is therefore in
line with the trend seen in previous decades, driven by the
increasing electrification of our vehicle fleet and continuous
improvements in the efficiency of our internal combustion
engines. On this basis, we continue to work unabated to fur-
ther reduce greenhouse gas emissions going forward.
7 GRI-Index: 305-5
JOINING THE INITIATIVE BUSINESS AMBITION
FOR 1.5°C
In line with the targets set at the Paris Climate Agreement, the
BMW Group wants to make its contribution to limiting global
warming. We are demonstrating this commitment with our me-
dium- and long-term plans for decarbonisation. To emphasise
our intention, during the year under report we became the first
German automotive manufacturer to join the Business Ambi-
tion for 1.5°C initiative of the SBTi. The campaign brings together
companies that have set themselves the target of net zero emis-
sions in line with the SBTI and are thus following a long-term
1.5 degree pathway. By joining the initiative, the BMW Group is
also part of the international Race to Zero campaign organised
by the United Nations. With this move, we also want to motivate
other companies to take ambitious steps to protect the climate.
1 Excluding carbon emissions relating to disposal.
2 Scope 3 in this case includes emissions from logistics, business travel, employee
commuting, upstream supply chain, use phase and waste disposal.
3 Due to the broader extent of reporting on Scope 1 and Scope 2 emissions at BMW
Group locations and the changed method for calculating Scope 3 downstream
emissions in the use phase, the previous year's figures have been adjusted to
enable better comparison.
122,539,929
699,713
134,849
121,705,368
BMW Group Report 2021
57
57
Under the brand name YOUR NOW, the BMW Group and
Daimler Mobility AG offer innovative, customer-friendly solu-
tions for business partners, cities, towns and municipalities
that are looking to make their mobility more efficient and
sustainable. The cooperation includes the joint ventures
FREE NOW (ride-sharing and multimodality), REACH NOW
(on-demand mobility and multimodality), SHARE NOW
(car sharing) and CHARGE NOW (charging). In 2021, the en-
ergy company bp also joined to become the third partner in
Digital Charging Solutions GmbH (DCS), which operates the
CHARGE NOW brand. Innovative mobility services on offer
In 2021, the BMW Group, together with the Ford Motor Com-
pany, Volta Energy Technologies and other investors, invest-
ed in Solid Power, Inc., one of the industry's leading develop-
ers of solid-state battery cells with high energy density that
can also be used to power electric vehicles. This investment
and the subsequent IPO provided Solid Power, Inc. with the
financial resources to secure its research and development
activities for the years to come.
We are also driving hydrogen fuel cell technology forward at
a higher level. For example, we are involved in worldwide or-
ganisations and associations, such as the 7 Hydrogen Council.
As an associated partner of H2 Mobility Deutschland GmbH, the
BMW Group supports the establishing of infrastructure re-
quired for hydrogen-powered vehicles. In this context, the
BMW Group welcomes the call in the EU's Fit for 55 legisla-
tive package to establish a basic infrastructure of 700-bar
hydrogen refuelling stations.
Information on the overall scope of the BMW Group's re-
search and development activities is provided in the section.
7 Earnings performance
56
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
CARBON EMISSIONS AND
POLLUTANTS
[ Mitigating the impact of climate change is one of the great-
est challenges of our time and requires a massive effort, not
only on the part of society as a whole, but also from policy-
makers and the business community. The BMW Group is
also involved in these endeavours. By 2050, we intend to
achieve the target of net zero in terms of our emissions
across the entire value chain. With this aim in mind, in 2020
the BMW Group set itself ambitious, science-based targets
for the year 2030, which have been validated by the Science
Based Targets initiative (SBTI). We intend to achieve these
targets by further reducing the carbon footprint and pollutant
emissions of our vehicles, as we have done in the past.
Decarbonising across the entire life cycle
The BMW Group is pursuing a clear strategy of decarbonisa-
tion across the entire life cycle of its vehicles and has defined
specific targets in order to do so. With this holistic approach,
we are moving forward on a path in line with the climate pro-
tection targets designed to limit global warming enshrined in
the Paris Climate Agreement.
5 Categories included under Scope 3 downstream: Use phase Carbon footprint.
6 For comparison purposes, the figures for 2019 (base year) and 2020 have been
adjusted accordingly.
"Based on the well-to-wheel method, which in addition to the tank-to-wheel
approach also takes into account the generation and supply of fuel and thus the
entire impact chain relating to the driving of vehicles.
3 Categories included under Scope 3 upstream according to the Greenhouse Gas
Protocol: 1. Bought-in goods and services and 4. Transport and distribution.
Carbon footprint
2 Figure rounded for simplification purposes. The target validated in conjunction with
the SBTi is 22%.
1 Scope 3 emissions generated by the upstream value chain, logistics services and
well-to-tank emissions are stated in carbon equivalents. When measuring Scope 1
and Scope 2 emissions and the further Scope 3 emissions, climate-impacting
gases apart from carbon dioxide have been ignored.
Carbon reduction during the use phase (Scope 3 down-
stream) by an average of at least 50% per kilometre
driven. Thus we again significantly raised the original tar-
get of more than 40% that we had set ourselves. The
main reason for this is the dynamic growth in demand for
our electrified vehicles. Electric mobility, 7 Automotive segment
The adjusted target of 50% has been submitted and
successfully validated by SBTi in february 2022.
" EU-27 countries including Norway and Iceland.
An average of at least 20 %² carbon reduction in the sup-
ply chain (Scope 3 upstream³) per vehicle produced. This
data also provides us with a scientifically tested and con-
firmed target for reducing carbon emissions in the supply
chain. Reducing carbon emissions in the supply chain
We have set ourselves the following decarbonisation targets¹
to be achieved by 2030 (base year 2019). These targets were
notified to the SBTI and validated in 2020.
Measurable, science-based targets that initially extend to
2030 form the basis for our decarbonisation strategy and for
this reason we have joined the SBTi. The use of sci-
ence-based targets makes the measurability of our targets
transparent and at the same time ensures that they are in
line with the latest scientific findings. ]]
Decarbonisation targets across the value chain
encompass the supply chain, production and the subse-
quent use of the vehicle by the customer. Our system for
7 measuring performance enables us to ensure that these tar-
gets are implemented both rigorously and consistently
throughout the entire Group. The strategy allows us to
take our decarbonisation targets into account right from
the product development stage as well as market-related
requirements for our vehicle fleet at the same time. We
manage the implementation of our targets and the as-
sessment of progress during the development process
with the help of a carbon footprint based on ISO stand-
ards 14040 and 14044.
The BMW Group intends to leverage its holistic manage-
ment system to substantially improve its carbon footprint
from one vehicle generation to the next across the entire
life cycle. In view of the increasing electrification, it is par-
ticularly important to be aware that although the trend
reduces carbon emissions during the use phase. It in-
creases them at the same time in the supply chain. The
reason for this lies primarily in the carbon-intensive com-
ponents needed to power electric mobility, such as
high-voltage batteries in particular. With this point in
mind, the BMW Group defines specific decarbonisation
targets for all its vehicles right from the outset. The targets
Holistic management system
An average of 80% carbon reduction at our own produc-
tion sites and locations (Scope 1 and 2) per vehicle pro-
duced. Decarbonisation at BMW Group locations From 2021,
carbon emissions in accordance with Scope 1 and 2 include
not only production-specific emissions, but also those
generated at locations not directly related to production.6
The BMW Group is a founding partner of the IONITY joint
venture, the aim of which is to establish a high-performance,
high-power charging network for electric vehicles right
across Europe. The joint venture represents a vital step to-
wards ensuring that electric mobility also becomes a con-
venient means of transport for long-distance travel, thus es-
tablishing it firmly on the market. The founding partners, i. e.
the BMW Group, Daimler AG, the Ford Motor Company and
the Volkswagen Group together with Audi and Porsche, all
participated in equal measure. In 2019, the Hyundai Motor
Group with its Hyundai and Kia brands joined as an addi-
tional partner. In the year under report, the existing partners
signed the inclusion of Blackrock as a further investor (clos-
ing after approval through anti-trust authorities). The move
will enable IONITY to further invest in consolidating and ex-
panding the fast charging network. Expanding charging infra-
structure and enabling faster charging
5 WLTP stands for the new Worldwide harmonized Light vehicles Test Procedure.
Since 2021, the EU Commission has used this procedure as the basis for calculating
fleet carbon emissions.
7 To improve comparability of the previous year's figures with those of the current
year under report, the 2020 NEDC figures have been converted to WLTP after ad-
justment for the applicable flexibilities - specifically, from 99 g CO2/km according
to NEDC (incl. 5 g CO2/km phase-in, 7.5 g CO2/km supercredits and 2.4 g CO₂/km
eco-innovations) to 135 g CO2/km according to WLTP (excluding flexibilities). In
2020, a phase-in regulation was accepted, as was the recognition of supercredits.
As of 2021, these two simplifications no longer apply for the BMW Group.
87 Consumption and carbon emissions data
7 GRI-Index: 305-7
ELECTRIC MOBILITY
[Electric mobility is one of the key topics shaping the future
of the BMW Group in terms of sustainable mobility. The in-
creasing number of electrified models and continuously
growing sales volume figures place the BMW Group firmly
among the leading providers of premium electric mobility
worldwide. We see electrification from a holistic point of view
and consider it essential to promote electric mobility by put-
ting in place the necessary charging infrastructure as well as
customer-friendly charging solutions. Accordingly, we are
continuously expanding our range of products and providing
a comprehensive range of charging products and services.
Driving electric mobility forward
Our electrified vehicles are making an essential contribution
to driving down fleet emissions and thus to meeting our am-
bitious strategic decarbonisation targets right across the value
chain. For this reason, we are systematically continuing to
electrify our model range as a vital ingredient of our product
strategy.
Drive system diversity
The BMW Group has always focused its business on the
needs of its customers, and our product portfolio amply re-
flects this enduring ambition. Leveraging the benefits of
scalable, modular design and the Group's flexible production
systems, customers can now choose between fully electric ve-
hicles, plug-in hybrids and efficient conventionally powered
models. A prime example of the freedom of choice our cus-
tomers enjoy is the BMW X3, which is the first model series
to be available as a plug-in hybrid*, a combustion engine
version (both diesel and petrol), and as a BMW iX3* with an
all-electric drive system.
By the year 2030, at least half
of the BMW Group's vehicle
deliveries worldwide are set to
be fully electric models.
By offering parallel drive technologies, we are creating a
smooth transition to the future of electric mobility, while sim-
ultaneously making the best possible use of our existing re-
sources. At the same time, we are systematically continuing
to electrify our product range, driven by the dual forces of
growing customer demand and regulatory requirements. ]]
By 2025, the proportion of electrified automobiles in total
Group deliveries is projected to rise to at least 30%. By the
year 2030, at least half of the BMW Group's vehicle deliver-
ies worldwide are set to be fully electric models. Moreover,
we intend to put some ten million fully electric vehicles on
the road during the next ten years. [t By the early 2030s, the
BMW Group plans to offer only all-electric vehicles to its
MINI and Rolls-Royce customers. The fact that we are sys-
tematically electrifying both brands has to do with their typ-
ical user profiles, as MINIs are predominantly used for urban
driving, while Rolls-Royce cars are mainly used for shorter
distances. 1]
7 Consumption and carbon emissions data.
60
60
BMW Group Report 2021
Nitrogen oxide levels are a crucial factor determining the
quality of air in towns and cities. With this point in mind,
since mid-2018 the BMW Group has been using a highly ef-
fective combination of a NOx storage catalytic converter
(NSC) and a selective catalytic reduction (SCR) system with
urea injection (AdBlue) in all diesel-powered BMW vehicles
as well as in the larger MINI diesel models. The efficiency of
exhaust gas after-treatment has been additionally boosted
by the use of an improved oxidation catalytic converter com-
bined with a two-stage SCR system. The new technology
has been available since 2020 with the revised generation of
six-cylinder diesel engines and is due to be rolled out across
the entire product range during the coming years. There
have already been noticeable reductions in NOx pollution
levels in German cities over the past few years, partially driv-
en by the ongoing renewal of the vehicle fleets of all automo-
tive manufacturers. ]]
To Our Stakeholders
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
[Broader offering
The BMW Group's range of electrified products consists of
purely battery electric vehicles (BEV¹) and plug-in hybrid
models (PHEV²).
Apart from the established all-electric BMW i3, MINI Cooper
SE6 and BMW iX36 models already available, two key inno-
vation drivers were added during the year under report - the
BMW X6 and the BMW i46. Over the next two years, the
all-electric versions of the BMW 7 Series, the BMW X1, the
high-volume 5 Series and the MINI Countryman are set to
follow, as will the all-electric Rolls-Royce Spectre. From
2025, we will be rigorously taking the core BMW brand into
a new all-electric dimension with the 7 Neue Klasse.
During the year under report, the BMW Group also added
further engine variants to its PHEV model range with the
BMW 320e6 and the BMW 520e6. Including these innov-
ations, we are currently offering 17 plug-in hybrid basic mod-
els in a total of 83 markets worldwide. With innovations
such as the BMW eDrive Zone, extensive charging options and
increased ranges, we are enabling drivers of plug-in hybrids
to travel electrically as often and over as long a distance as
possible. The BMW 2 Series Active Tourer compact plug-in
hybrid model will be launched in 2022 and capable of trav-
elling up to 80 kilometres (WLTP4) purely on its own battery
power. 1]
In 2021, the BMW Group delivered a total of 328,314 all-elec-
tric and plug-in hybrid vehicles (2020: 192,6625] to custom-
ers, around 104,000 of them with all-electric drive systems,
thus surpassing our self-imposed target of more than doub-
ling our sales of electrified vehicles compared with the 2019
figure (146,158 units). Therefore, at the end of 2021, more
than one million BMW Group vehicles with fully electric or
plug-in hybrid drive systems were on the road worldwide
(Automotive segment). In the year under report, the percentage
share of electrified vehicles to total BMW Group deliveries
reached 13.0%.
[[Increasing range to suit customer needs
The BMW Group assesses the increase in electric vehicle
ranges from various points of view. We are not aiming to pro-
vide the technically greatest possible range across all vehicle
segments as a matter of pure principle. It is far more important
to adapt the range to suit the intended use of each individual
vehicle. At the same time, we also need to consider the eco-
logical impact, as a longer range means larger and therefore
heavier high-voltage batteries. This relationship has a direct
effect on resource consumption, the environmental footprint
of the respective supply chain, and vehicle weight, which in
turn has a significant influence on the overall consumption of
a given vehicle.
For these reasons, the MINI Cooper SE6 is designed for ur-
ban driving and has a range of more than 200 kilometres
(WLTP4), in line with customer requirements. The new BMW
iX and i4 models are designed for covering long distances of
around 600 kilometres (WLTP4) on just one charge. In view
of the customer and usage profiles of both vehicles, we con-
sider these ranges to be optimal. Fully electric vehicles will
be capable of achieving ranges of more than 600 kilometres
(WLTP4), depending on vehicle size and type, as the use of
electric mobility continues to become more widespread.
Combined Management Report
Products and Mobility Solutions
Since the early 1990s, the BMW Group has significantly re-
duced the level of regulated pollutant emissions generated
by its vehicles, such as nitrogen oxides (NOx), carbon mon-
oxide (CO) and particulate matter (PM), by deploying new
technologies and continually improving existing ones. Be-
tween 1992 and 2021, in Europe alone we reduced the rele-
vant exhaust emissions of our new fleet of diesel cars in line
with Euro 1 to Euro 6d exhaust standards by more than 90%
compared to the level recorded prior to their introduction.
Measures aimed at minimising air pollution have made a
significant contribution to these achievements. All
BMW Group vehicles offered for sale during the year under
report meet the current Euro 6d emissions standard in the
European Union as well as similar regulations in Switzer-
land, Norway, the United Kingdom and Iceland.
[Pollutant emissions
← = Q
8
58
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Fleet emissions in the USA, China and worldwide
In the USA, average fleet emissions¹ for model year (MY]
2021 were calculated at 134.0 g CO2/km for passenger cars
(MY 2020: 155.7 g CO2/km) and 150.1 g CO2/km for light
trucks (MY 2020: 185.6 g CO2/km). Volume-weighted fleet
carbon emissions in the USA averaged 140.9 g CO2/km (MY
2020: 166.8 g CO2/km) (BMW internal calculation). In the
2021 reporting year, legally permissible imputation factors¹
were included for the first time. For this reason, direct com-
parability with the previous year is not possible. In China, av-
erage fleet carbon emissions² were 163.0 g CO2/km accord-
ing to the new WLTC test cycle introduced in the year under
report (2020: 151.1 g CO2/km NEDC). Due to the change
of cycle, a direct comparison with the previous year is not
possible.
The BMW Group's global carbon fleet emissions³ averaged
197.9 g CO2/km³ in the year under report (2020: 212.4g
CO2/km). The figure represents a reduction of 9.4% com-
pared with the 2019 baseline. When calculating these emis-
sions, the BMW Group takes into account the average fleet
carbon emissions in the EU, the USA and China and stand-
ardises them according to WLTP. Accounting for more than
80% of BMW Group deliveries overall, these three core mar-
kets and regions are a reliable basis for calculating fleet car-
bon emissions worldwide. In line with the SBTI, we add 10%
to the figures calculated to cover any possible differences
between the figures according to WLTP and actual emis-
sions. The figure also includes the upstream supply chain
emissions generated by energy sources (fossil fuels and
electricity) in accordance with the well-to-wheel approach.4
7 GRI-Index: 305-5
[Legal framework
The BMW Group has the clear ambition not only to comply
with statutory carbon emissions limits worldwide, but also
to significantly undercut them wherever possible. At the
same time, we support the development of harmonised reg-
ulations both nationally and internationally. Comparable
regulations in major markets create reliable, predictable
framework conditions that make a key contribution to com-
batting climate change and improving air quality. We ad-
dress the opportunities and risks associated with increas-
ingly strict carbon emissions regulations as part of our
7 climate-related risks. TCFD-Index
The BMW Group supports the proposal published by the EU
Commission in the year under report for implementing the
EU's 2030 climate protection target. The associated goals of
Fit for 55 largely coincide with those of the BMW Group.
Moreover, we are closely monitoring regulatory develop-
ments in the USA. In 2020, the BMW Group entered into a
voluntary agreement with the US state of California to reduce
its fleet emissions. The bilateral agreement is applicable for
all new BMW Group vehicle registrations in every state of the
USA. In 2021, the US government announced plans to intro-
duce tougher fleet fuel consumption targets at national level.
The BMW Group also intends to comply with these future
requirements. The US federal requirements regarding Green-
house Gas Emissions (GHG) generated by vehicle fleets and
the Corporate Average Fuel Economy (CAFE) regulations are
applicable in this case.
Designing conventional drive systems for greater
efficiency and lower emissions
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
Products and Mobility Solutions
To Our Stakeholders
6 This is a preliminary internal calculation with a potential variation of
+/- 0.5 g CO2/km, as official registration figures have not been provided by the
authorities of all EU states. The EU Commission is not expected to publish official
figures until November 2022.
BMW Group Report 2021
4 The well-to-wheel method takes into account the entire impact chain relating to
the movement of vehicles. The method covers everything from the generation and
provision of fuel to its conversion into energy and thus also takes into account the
environmental impact of producing the required fuel. For example, the BMW Group
takes the IEA Energy Report as the basis for calculating emissions in the upstream
value chain (Provision of electrical energy).
2 Average volume-weighted fleet emissions including regulatory credit factors of
8.83 g CO2/km (off-cycle technologies, NEV multiplier, phase-in) according to
WLTC (Worldwide Harmonized Test Cycle under China-specific test road conditions).
3 The figures are determined using a new calculation method, which was applied
retroactively to the year 2019 (2019 prior to adjustment: 140 g/km; 2020 prior to
adjustment: 133 g/km). For the defintion see Glossary Carbon emissions of the
new vehicle fleet worldwide incl. upstream emissions.
1 Average volume-weighted fleet emissions including regulatory credit factors (EV
multipliers, credits advanced technologies) of 21.6 g CO2/km according to USC
(United States Combined).
The BMW Group has been implementing its Efficient Dy-
namics package of technological measures across its entire
fleet since 2007. The package comprises a range of coordi-
nated measures designed to reduce fuel consumption. We
will continue to pursue this strategy with innovative ap-
proaches to the use of internal combustion engines, aerody-
namics and lightweight construction. The broader use of 48-
volt technology is a key component in this regard. 48-volt
recuperation systems gather the energy recovered during
braking to supply the vehicle's electrical system and gener-
ate additional power, which reduces fuel consumption and
therefore carbon emissions. In the EU, apart from our
all-electric and plug-in hybrid models, we are also offering a
wide range of new models featuring a 48-volt recuperation
system. As from 2022, our modular motors will be fitted with
the second, even more efficient generation of 48-volt tech-
nology. The continued further development of energy man-
agement technologies in our vehicles, supplemented by oth-
er measures such as switching to highly efficient tyres,
should ensure even greater efficiency and optimise fuel con-
sumption. 1]
Technological improvements
The BMW Group expects state-of-the-art, highly efficient
combustion engines to continue playing a vital role. As part
of our Efficient Dynamics approach, we will therefore con-
tinue to work on further reducing the fuel consumption of
conventional drive systems in the coming years, thereby in-
creasing their efficiency. 7 SASB-Index
59
Hydrogen
Since the BMW Group, Daimler and Audi acquired the HERE
mapping service in 2015, the three partners have been work-
ing on developing high-precision digital maps that can be
linked to real-time vehicle data. The maps form the basis for
the next generation of location-related services, thereby
marking another key step in the evolution of individual mobil-
ity as well as building a solid foundation for developing new
assistance systems. HERE remains accessible as an inde-
pendent platform for the automotive industry as well as for
other partners. During the year under report, the location
data and technology platform had nine direct and indirect
shareholders, i. e. Audi, Bosch, the BMW Group, Continental,
Intel, Mitsubishi, Daimler, Nippon Telegraph and Telephone,
and Pioneer.
BMW Brilliance Automotive Ltd. (BBA) is a joint venture
founded in 2003 and owned equally by the BMW Group and
Brilliance China Automotive Holdings Ltd. (CBA). BMW Bril-
liance Automotive manufactures BMW brand models at an
engine plant and two automobile plants in Shenyang, China
(Liaoning Province). In February 2022, the BMW Group ac-
quired a further 25% of the shares in the BMW Brilliance
joint venture. Further information on the consolidation of
BMW Brilliance Automotive is available in the Notes to the
Group Notes to the Financial Statement.
CUSTOMER ORIENTATION
[[An innovation only differs from a mere idea or an invention
when successfully applied to create new products, services
or processes. In this particular sense, innovation within the
BMW Group is inextricably linked with the concept of cus-
tomer orientation. During the year under report, innovations
again led to processes being optimised, products improved,
and new technologies introduced that make everyday life
easier for our customers. We see the future as electric, digital
and circular.
Circular design - a topic shaping the future
The BMW Group and its brands are well-known for their
emotive, forward-thinking design. In the course of the re-
porting year we also focused on another key facet of our
work: circular design. At the IAA Mobility in September 2021,
design geared to promoting sustainability and driven by the
circular economy concept 7 Circularity as a Strategic priority found its
expression in the BMW i Vision Circular. The design of this vision
vehicle has been optimised for closed material loops and
shows what a vehicle can look like that is not only made of
100% recycled materials, but is, in fact, itself fully recyclable.
Efficient urban mobility is another strategic focus reflected in
the vision and concept vehicles that the BMW Group pre-
sented in 2021. The Group also demonstrated its ability to
develop innovative solutions with design studies such as the
7 BMW Motorrad Vision AMBY and the BMW i Vision AMBY two-wheel-
ers. Powered by smart speed and drive system controls, they
can be used both on the road and on cycle paths. The 7 MINI
Vision Urbanaut shows a facet of the automobile that goes far
beyond its core purpose as a means of mobility and can be
used in a highly flexible manner. 1]
7 SASB-Index
[100 %
recycled and recyclable. This design study points
to what is conceivable as we move forward. ]]
3 GOOD HEALTH
AND WELL-BEING
W
QINDUSTRY INNOVATION
CLIMATE
ANDINFRASTRUCTURE
INNOVATION AND
ACTION
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
[Digitalisation - an opportunity for innovation and
customer orientation
Furthermore, digitalisation is a vital key to keeping our ve-
hicles "fresh" throughout their entire life cycle. Since the
launch of Operating System 7 in 2018, remote software up-
grades have become a reality for BMW automobiles.
Remote software upgrades also provide BMW owners with
the option to tap into new digital business models such as
"functions on demand". Customers can either purchase
additional functions or simply order them for a specific
amount of time. The response to these offers has already
been highly positive. 7 Online Report
In autumn 2021, with the launch of the new, all-electric BMW
iX, the BMW Group simultaneously introduced its new BMW
Operating System 8 as well as a new display and control
system. The principal design focus was on clarity and
straightforward, intuitive usability. The large BMW curved
display enables drivers to customise the content of their dis-
play via a touchscreen. Buttons and switches have been re-
duced to a necessary minimum.
Digitalisation also enables innovations, simplifications and
advances outside the vehicle. The My BMW app and the
MINI app for smartphones have been available since 2020.
They provide a connection from wherever the user is located
to the vehicle - or to the service partner if required. Both
apps were equipped with additional new features during the
52
7 Range of reliable charging services ]]
charging points available to customers in Europe
with the BMW and MINI Charging Cards.
"> 250,000
"Range calculated on the basis of the new WLTP test cycle (Worldwide Harmonized
Light Vehicles Test Procedure). The actual range achievable depends on a variety
of factors, including personal driving style, route characteristics, the outside tem-
perature, heating, air conditioning, preheating and precooling. Provisional figure
5 Vehicle delivery figures presented for the year 2020 are not directly comparable
with those of previous years. See sales figures for deliveries in the section "Com-
parison of Forecasts with Actual Outcomes" for further information.
67 Consumption and carbon emissions data.
3 All performance and body variants are counted as basic models. Specifically, these
are the following: BMW 225xe*, BMW 320e*, BMW 320e Touring*, BMW 330e*,
BMW 330e Touring*, BMW 520e*, BMW 530e*, BMW 530e Touring*, BMW 545e*,
BMW 545e Touring*, BMW X1 xDrive25e*, BMW X1 xDrive25Le* (China only), BMW
X2 xDrive 25e*, BMW X3 xDrive30e*, BMW X5 xDrive 45e*, BMW 745e/Le/Le
xDrive* and MINI Cooper SE Countryman ALL4*.
1 Battery electric vehicle.
2 Plug-in hybrid electric vehicle.
An expanded, customer-friendly charging infrastructure will
pave the way for the rapid and widespread use of electric
mobility. For this reason, the BMW Group is committed to
creating standardised framework conditions and services
that enable easy charging. 1]
Expanding charging infrastructure and enabling faster
charging
51
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
PRODUCTS AND MOBILITY SOLUTIONS
51
Innovation and Customer Orientation
electrified vehicles delivered by the BMW Group
in 2021 more than twice as many as in 2019.
7 Broader offering
328,314
decrease in carbon emissions on average per
vehicle over its entire life cycle compared with
2019 that is our target by 2030.
Decarbonisation targets
> 40%
AT A GLANCE
PRODUCTS AND MOBILITY SOLUTIONS
period under report. For example, the My BMW app now also
includes a digital tyre diagnosis feature that uses artificial
intelligence to assess the condition of the vehicle's tyres.
The MINI app now enables users to access a broader range
of services, including booking appointments and paying for
services contactlessly. In an optionally available service
video, they can find out about the vehicle check or opt for a
variety of services. Innovative digital solutions are also de-
ployed in other areas of the BMW Group, such as in
production or development scenarios. When it comes to
maintaining production systems, we are switching to what is
known as a predictive maintenance strategy. With the help of
sensors, cloud-based data analysis and artificial intelli-
gence, the system assesses when a particular piece of
equipment needs to be serviced in order to prevent unneces-
sary production downtime. The technology allows mainten-
ance to be planned and components to be replaced before
they actually break down.
Product Safety and Data Protection
Mobility Concepts and Services
62
Electric Mobility
59
Carbon Emissions and Pollutants
56
65
Spotlight Automotive Limited (Spotlight), a joint venture be-
tween the BMW Group and the Chinese manufacturer Great
Wall Motors, will produce all-electric MINIs as well as electric
vehicles for Great Wall Motors. Established in December
2019, the joint venture also includes the collaborative devel-
opment of battery electric vehicles. The construction of a
production plant in Zhangjiagang (Jiangsu Province) is
meanwhile in the advanced stages. With this collaboration,
the BMW Group is stepping up its commitment in China and
significantly increasing its production capacities.
REMOTE SOFTWARE UPGRADES
MPZ 1869
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
[The BMW iX5 Hydrogen is powered by fuel cells that stem
from the Group's development cooperation with the Toyota
Motor Corporation. However, the fuel cell stack and the over-
all drive system are being developed in-house by the
BMW Group. The collaborative project, which began in 2013,
aims to optimise the everyday suitability of fuel cell technol-
ogy and its use in each company's own production vehicles.
In order to build up an efficient hydrogen-based economy
and promote the production of green Hydrogen, the
BMW Group supports initiatives right across Europe.
Inspiration and cooperation
Good ideas often come into being when different partners
decide to work together. Accordingly, we focus on cooper-
ations in which the strengths of the BMW Group comple-
ment those of established partners and innovation drivers
such as start-ups. Using this approach, we are constantly
developing the innovative strength of the BMW Group.
Regional BMW Group Technology Offices are in search of
promising business partners worldwide in fields of innova-
tion such as sensor technology, artificial intelligence, bat-
tery technology, smart materials, natural user interfaces
and smart logistics. To maintain this network, the
BMW Group also holds an intensive dialogue with selected
colleges and universities. For example, numerous Group
employees also lecture at universities and higher education
institutions and a great many students come to the
BMW Group each year to complete an internship or write a
scientific thesis, enabling us to ensure the transfer of
knowledge between theory and practice and help train
highly qualified junior staff. 1]
QUANTUM COMPUTING
The BMW Group clearly sees quantum computing as a groundbreak-
ing technology of the future that has considerable potential for use in
a broad range of applications, such as for researching materials, in
the field of battery cell chemistry, or to power the future of automated
driving with quantum machine learning. However, it is still a long way
from achieving technological maturity and that's why it is particularly
important for us to provide the best possible support for cutting-edge
research and its transfer to industrial applications.
The BMW Group is one of ten German companies that formed the
Quantum Technology and Application Consortium (QUTAC) in June
2021. The aim of the consortium is to continue developing the existing
fundamentals of quantum computing to create truly usable industrial
applications.
Worldwide culture of innovation
Combined Management Report
Products and Mobility Solutions
The Munich Research and Innovation Centre (FIZ) is the
main hub of the BMW Group's international network of re-
search and development locations. After the initial construc-
tion phase, the extension was first occupied in autumn 2020,
the new driving simulation centre was also put into oper-
ation during the year under report. In five of a total of 14 sim-
ulators and usability labs, LED walls are deployed to create
a virtual environment for development purposes, to enable
more realistic representations than previous projection
systems.
In June 2021, the BMW Group and the Technical University of Munich
(TUM) jointly announced the establishment of the endowed chair for
Quantum Algorithms and Applications. The move was followed in
November 2021 by an agreement with RWTH Aachen University also
aimed at supporting research into quantum computing. Both of these
collaborations are intended to build a bridge between basic research
and industrial application.
In July 2021, the BMW Group launched the BMW Group Quantum Com-
puting Challenge crowd innovation initiative in collaboration with
Amazon Web Services Inc. Researchers, start-ups and companies
alike are called upon to develop innovative quantum algorithms that
serve as solutions to one of four industrial challenges that were an-
nounced. The winners will be invited to implement the selected pilot
projects together with the BMW Group as their customer.
focuses on life in the city, and the BMW Startup Garage, which
represents the third and final pillar. In May, the BMW Group
opened a so-called "incubation site" in Shanghai in cooper-
ation with Alibaba Cloud. This joint innovation base aims to
help Chinese tech start-ups scale their innovations.
Cooperations and partnerships
In order to maintain its long-term success, the BMW Group
enters into targeted cooperations and partnerships, not only
with companies from the automotive industry, but with tech-
nology leaders from other sectors as well. The aim of co-
operating with external partners is to pool our common ex-
pertise and implement innovations as swiftly as possible.
Some of the BMW Group's major collaborations and invest-
ments are listed below:
55
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
The global dialogue with start-ups is another important
means for us to bring new impulses into the Company. The
dialogue is based on three key pillars: BMW i Ventures through
which we invest in technology start-ups, the Accelerator
URBAN-X start-up, which was initiated by the MINI brand and
To Our Stakeholders
BMW Group Report 2021
54
Liptond
Drive technologies of the future
The BMW Group also focuses on the needs and wishes of its
customers worldwide when developing its drive technolo-
gies. For this reason, we are constantly enhancing our exist-
ing drive technologies in the interests of efficiency, decar-
bonisation and resource conservation. At the same time, of
course, the BMW Group is researching new drive technolo-
gies with the aim of preparing them for series production. 1]
REMOTE SOFTWARE UPGR
Some 30 BMW models are currently upgradeable, which means
that suitable vehicles can receive the latest software upgrades
"over the air". These remote software upgrades provide BMW
vehicles with improvements as well as new digital products and
services and keep the software up to date.
The BMW Group has already offered automated remote soft-
ware upgrades to more than four million of its vehicles, and cus-
tomers have successfully installed them more than 2.3 million
times. Read more in our online special. Online Report
53
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
[Electric-powered future with the Neue Klasse
The BMW Group sees the transformation to all-electric, con-
nected, sustainable mobility as an opportunity and has de-
veloped a clear road map that consists of three phases. In
the first phase, the Group began pioneering e-mobility as
early as 2007 with project i, enhancing the technology and
then developing electrified vehicles for series production. In
the second phase, which is currently underway, we are intro-
ducing electrification to the product portfolio with a new
model initiative Broader offering based on smart vehicle archi-
tectures and our highly flexible 7 production network, which is
capable of manufacturing the full range of vehicles from
all-electric to combustion engine drive systems on the same
production line. By the peak of the second transformation
phase at the end of 2025, the share of electrified cars in the
BMW Group's total deliveries is scheduled to rise to at least
30%.
From 2025, the third phase will begin with the Neue Klasse,
which will be characterised by three key aspects: a com-
pletely redefined IT and software architecture, a new genera-
tion of electric drive systems and batteries, and a new level of
sustainability across the entire vehicle life cycle. Contributing
factors include:
the all-electric drive system
** Consumption and carbon emissions data
MHEV 5057 E
Hydrogen fuel cell technology has the potential to become a
sustainable alternative to battery electric drive systems. The
technology really comes into its own when comprehensive
electric charging infrastructure is not available and there are
also a broad number of applications for this technology on
long-distance journeys or in larger classes of vehicle. De-
pending on market requirements and other general condi-
tions, the BMW Group intends to offer a production vehicle of
this type in the second half of the decade. ]]
tween the carbon-free drive system, the chassis technology
and the electronic systems under realistic conditions. The
BMW iX5 Hydrogen uses hydrogen as a fuel and converts it
into electricity via a fuel cell, making the BMW iX5 Hydrogen
a fully electrically powered vehicle. A pilot series of this mod-
el will be produced at the end of 2022 in order to gain further
practical experience in a broadly based field trial.
HYDROGEN
CONCEPT PROTECTION VRS
XDrive
HYDROGEN
Hydrogen fuel cell technology
[[Additionally bolstering battery expertise
Powerful, sustainable energy storage systems and the de-
velopment of new, innovative battery cells are key elements
for powering future generations of all-electric vehicles. For
the Neue Klasse, we are working on significantly increasing
the energy density of the cells, while at the same time cutting
material and production costs. Battery recyclability is an-
other key consideration that will impact the development of
all our future generations of battery cells. Moreover, the
BMW Group is already conducting intensive research into
solid-state battery technology, which shows great promise
for the future.
This high technological standard will be integrated in a com-
plete vehicle architecture exclusively geared towards electric
drive systems. 1]
closed-loop systems for essential production materials
the increasing use of secondary materials
the use of carbon-free energy in ever larger parts of the
supply chain
During the year under report we began testing the BMW iX5
Hydrogen with its hydrogen fuel cell drive in everyday driving
scenarios in Europe. The aim is to test the interaction be-
Our customer-oriented technological diversity approach also
includes the further development of fuel cell technology, for
which we see considerable potential, depending on the seg-
ment. We see electric drive systems that use hydrogen as an
energy storage system as a complementary addition to bat-
tery electric mobility and as an opportunity to reduce carbon
emissions at an even faster rate. In this context, we present-
ed the BMW X5 Hydrogen at the IAA Mobility 2021.
Since 2019, we have been
building up relevant knowledge
in this field at the Battery Cell
Competence Centre in Munich.
The efficient use of resources needs to be considered right
from the outset, not only during the design process, but also
later at the product development stage, and is therefore an
essential requirement. The BMW Group aims to design its
vehicles so that as many material cycles as possible are
closed. We summarise this principle under the concept of
circular design. With the BMW i Vision Circular, we have
shown that we are taking a critical look at the trend towards
increasingly complex composites of materials and analys-
ing new approaches to using compounds of (mono)mater-
ials (Innovations). ]]
From product development to recycling
We are working hard to further integrate the principle of cir-
cularity in all our processes. However, the availability of
high-quality secondary raw materials is currently limited and
in some cases insufficient to meet demand. Depending on
material requirements, adequate amounts of secondary ma-
terial are not yet available for every application. As part of its
efforts to meet these challenges, the BMW Group is working
together with its partners to form closed material loops in the
automotive industry. In collaboration with BASF and the
ALBA Group, we are currently testing improved methods of
recycling automotive plastics as part of a pilot project.
7 Online-Report
The responsible and efficient use of resources is of great im-
portance to the BMW Group, which takes a targeted ap-
proach to the circular economy concept based on the four
principles Re:think, Re:duce, Re:use and Re:cycle.
Circularity as a strategic priority
[[ Circularity is one of our key strategic priorities. The in-
creased use of secondary raw materials is a cornerstone of
the BMW Group's long-term decarbonisation strategy. We
also see the circular economy concept as an important factor
in our efforts to significantly mitigate the social and environ-
mental impacts of mining and processing primary raw ma-
terials. The use of secondary materials also has economic
benefits, as it conserves primary raw materials. Circularity
calls for a holistic strategic approach, beginning at the product
design stage and encouraging the increased use of second-
ary raw materials in our supply chain as well as the recycling
of BMW Group vehicles at the end of their life cycle. At the
same time, in our own production cycles we are systematically
pursuing the strategy of conserving resources, improving
energy efficiency and continuously cutting emissions.
CIRCULAR ECONOMY,
RESOURCE EFFICIENCY
AND RENEWABLE ENERGY
AND SERVICES
Pollutants management
SASB-Index
The BMW Group endeavours to meet legal requirements re-
garding the use and handling of pollutants at every stage of
the value chain. Right from the design stage, the BMW Group
is careful to exclude any substances of concern from its ve-
hicles to the greatest extent possible. In doing so, we use the
7 Global Automotive Declarable Substance List (GADSL) as a guide. At
[ All BMW Group vehicles are
subject to stringent quality,
safety and legal compliance
tests, right from the develop-
ment stage through to
production. 1]
the same time, we are working to reduce emissions in the
vehicle interior to an absolute minimum. All BMW, MINI and
Rolls-Royce vehicles are equipped with passenger compart-
ment air filters as standard, reliably filtering out pollutants
and particles such as dust or pollen from the outside air. In
2020, the BMW Group fitted passenger compartment air fil-
ters with nanofibre filter technology, which keeps certain micro-
bial particles and allergens from entering the vehicle's interior.
Since 2021, we have been gradually introducing this technol-
ogy in a range of other BMW Group models.
Customer awareness and empowerment
The BMW Group provides its customers with extensive infor-
mation on the correct use of its products and services. Infor-
mation on safety, the proper use of its vehicles, and health
protection is available in the integrated operating instruc-
tions in printed form, online, or via an app. The information is
supplemented by notes and background tips on services,
accessories and the vehicle's various components. ]]
66
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
[With its BMW and MINI Driving Experience, the BMW Group offers
product experiences and safety training with BMW, MINI and
BMW Motorrad brand vehicles in 25 countries. The Driving
Experience teaches participants safe vehicle handling and
prepares them for any dangerous situations that may occur
on the road. In 2021, more than 100,000 customers world-
wide took part in these training courses.
Data protection - an essential task
The BMW Group views data protection as one of the most
important tasks in these times of increasing digitalisation.
For this reason, the strictest data protection requirements
are taken into account at an early stage when developing
features and services. Via an individually configurable data
protection menu, we provide our customers with transpar-
ency, informational self-determination and ultimately data
sovereignty.
We work continuously on improving vehicle safety. The
7 European New Car Assessment Programme (Euro NCAP), a vehicle
crash safety assessment scheme, confirms the effective-
ness of the safety measures installed in our vehicles. In the
2021 Euro-NCAP-Rating, the BMW iX received the highest
rating, just like numerous models did in past years, such as
the BMW 4 Series Coupé and BMW 4 Series Convertible,
thus demonstrating the Group's premium-level standards in
terms of vehicle safety.
State-of-the-art safety systems play a major role in reducing
the risk of accidents and injuries (active safety) and largely
mitigate the consequences of a possible accident (passive
safety). Safety begins with key factors such as optimal chas-
sis tuning, highly effective braking systems and stable pas-
senger compartments, but also includes airbags as standard
and digital driver assistance systems such as active cruise
control, collision warning, lane guidance and emergency
braking assistants. They also promote greater safety for all
road users. The connectivity and automation of vehicles also
provides a growing number of opportunities to improve safe-
ty. The BMW iX sets new standards in this regard, thanks in
part to its advanced front collision warning system with brak-
ing intervention, which comes as standard.
Effective safety systems
These actions were all of a voluntary nature and carried out
in coordination with the respective authorities. The main
technical actions related to exhaust gas recirculation issues
and Takata-airbags. GRI-Index: 416-1, 7 SASB-Index
With the all-electric BMW iX, which was launched in 2021, we
are also offering state-of-the-art driver assistance systems.
The BMW iX is the first BMW Group vehicle to feature auto-
mated driving and parking functions from a new modular tech-
nology toolkit that will be deployed across the entire product
portfolio from next year.
With its BMW eDrive Zone technology, the BMW Group is
demonstrating how vehicle connectivity can help make urban
mobility more sustainable. Plug-in hybrids equipped with the
appropriate module can automatically switch to all-electric
driving when entering a defined zone, making it easier for cus-
tomers to drive emissions-free as often as possible, provided
their vehicles are charged with green electricity. BMW eDrive
Zone technology is already available in over 138 towns and
cities across Europe.
Safety of automated and smart systems
The BMW Group gives the safety of its automated systems
the highest priority. For that reason, we support the develop-
ment of an industry-wide ISO standard for highly and fully
automated driving functions. In 2019, the BMW Group, to-
gether with 11 leading companies in the field of automated
driving, published the white paper Safety First for Automated
Driving, which was translated into an ISO Technical Report in
2020. The work is currently being continued in a worldwide
ISO working group and scheduled to be published as an ISO
Technical Specification in 2023 with the aim of defining uni-
form technical standards for safe automated driving.
Artificial intelligence (AI) has been used in BMW driver
assistance systems since 2018. It helps to detect dangerous
situations, such as other vehicles swerving into traffic, at an
early stage so that the driver can react accordingly. The Al's
learning is controlled and safeguarded throughout the pro-
cess. Here, too, the Group is working to achieve the inter-
national harmonisation of Al standards and helped initiate the
development of the new ISO Safety and Artificial Intelligence
standard in 2021. In this context, as a founding member of the
European GAIA-X project, we are committed to establishing a
protected, high-performance data infrastructure as the basis for
safe, efficient traffic management. ]]
$138
European towns and cities are compatible with
BMW eDrive Zone technology. ]]
* Munich test site, pilot test of automated driving in urban traffic.
65
Customer data protection
BMW Group Report 2021
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
PRODUCT SAFETY AND
DATA PROTECTION
Product safety as part of quality management
The BMW Group operates a comprehensive system of qual-
ity management, as we want to ensure that our products are
of high quality, safe and compliant with the law. All
BMW Group vehicles are therefore subject to stringent test-
ing from the development stage right through to production.
However, our quality management system goes further and
also includes the use of our vehicles after they have been
delivered to our customers; if any deviations from the quality
standard are observed, they are rigorously followed up. The
BMW Group also informs the relevant authorities without
delay if required to do so by market-specific regulations. This
is especially true for safety-related aspects. If a safety risk is
detected, the BMW Group implements any technical meas-
ures required in close coordination with the responsible au-
thorities. Corresponding committees, processes and organ-
isations are in place for this purpose, which are controlled by
the Product Support, Technical Actions and Warranty Costs
department. In the reporting year 2021, safety- and compli-
ance-related technical actions affected 1,920,977 vehicles.
To Our Stakeholders
At the BMW Group, data and information protection is based
on the relevant laws and standards, particularly the EU Gen-
eral Data Protection Regulation and the ISO/IEC 27001 in-
ternational security standard. The personal data of custom-
ers are only collected, processed or used to the extent
legally permitted and with the consent of the data subject.
However, should customers have any queries or complaints
regarding the protection of their personal data, they are wel-
come to contact the Customer Interaction Centre or the data
protection officer in their respective markets.
[In 2021, more than 100,000
customers worldwide took part
in BMW and MINI Driving
Experience training courses. 1]
At the same time, we continuously strive to maintain our
high level of data protection and regularly check all applica-
tions that process customer data to ensure that they comply
with all current and appropriate IT security measures. In the
course of this process, we specifically search for any possible
weak points and eliminate them with teams of IT specialists.
We implement any new insights into mandatory corporate
standards as the need arises.
74
Purchasing and Supplier Network
AT A GLANCE
80%
decrease in carbon emissions on average per
vehicle produced compared with 2019 - that is
our target by 2030.
* Carbon emissions at BMW Group locations
"Up to 30%
share of secondary raw materials in our vehicles -
and that figure is set to increase.
7 Preference for secondary raw materials ]]
Circular Economy, Resource Efficiency and
Renewable Energy
"Catena-X
DECENT WORK AND
QINDUSTRY INNOVATION
ANDINFRASTRUCTURE
ECONOMIC GROWTH
M
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
QO
is a network-based system for exchanging
information and data that creates greater
transparency in the supply chain.
* Highlight box ]]
Since 2021, the Munich-based research project TEMPUS*, in
which the BMW Group is participating, has been following up
questions relating to technical feasibility. The project also aims
to assess the acceptance of automated traffic systems among
the general public.
70
Production Network
The BMW Group collaborates closely with the relevant data
protection supervisory authorities particularly regarding
fundamental data protection issues, such as those relating
to the increasing connectivity of our vehicles.
Securely connected
The BMW Group's responsibility for its products includes the
secure transfer of vehicle data to third parties. For this rea-
son, BMW Group vehicles are not directly connected to the
Internet, but communicate directly and exclusively with the
BMW Connected Drive back end via a highly secure connec-
tion in a virtual private network. This strategy enables us to
minimise the risk of unauthorised third parties gaining ac-
cess to either the vehicle or the driver's personal data. The
point of access to the Internet is controlled via a gateway. We
see this Extended Vehicle Approach in accordance with ISO
20078 as the best solution to ensure an outstanding level of
data security and protection and to meet statutory cyber-
security requirements (e. g. UN R155).
The secure transmission of data to third parties was imple-
mented with the introduction of BMW CarData in Germany
and Europe (2017) and in the USA (2020). CarData provides
BMW and MINI customers with complete transparency and
sovereignty over any data transferred to authorised third par-
ties, allowing them to decide independently at any time which
data they release to service providers such as workshops, in-
surance companies or fleet managers in order to receive indi-
vidual service offers. 1]
NAVIGATION
NAVIGATION IS
NOW SET TO
ISLA TAPAS
CALENDAR LOCATIONS
DINNER WITH
FRIENDS AT 7PM
[ BMW CarData provides BMW
and MINI customers with
transparency and sovereignty
over any data transferred to
authorised third parties. 1]
67
67
To Our Stakeholders
Combined Management Report
Group Financial Statements
Production, Purchasing and Supplier Network
Corporate Governance
Remuneration Report
Other Information
← = Q
PRODUCTION, PURCHASING AND
SUPPLIER NETWORK
BMW Group Report 2021
PRODUCTION, PURCHASING AND
[ Digital connectivity and automation
Automated features and digitally connected vehicles can
help reduce emissions, the risk of accidents and traffic con-
gestion. Since 2017, the Group has been pooling the devel-
opment of assistance and automation functions at the Au-
tonomous Driving Campus, located just north of Munich. It
also operates research facilities in both China and the USA,
the BMW Group's two largest markets in terms of traffic-re-
lated as well as traffic law specifics, the very beginning. In
order to develop new technologies to maturity for series pro-
duction and expand our testing capacities, we are currently
building a new test site in the Czech Republic.
Other Information
1 Disclosure in CO₂ equivalents.
2 The entire value chain was taken into account and standard consumption levels as
well as the European electricity mix were used as a basis.
37 Consumption and carbon emissions data.
62
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
MOBILITY CONCEPTS
[The BMW Group aims to make mobility more sustainable
and cities more pleasant places to live in. With these aims in
mind, we are cooperating with cities around the world and
are involved in overarching platforms for mobility, thus mak-
ing our contribution to reducing both traffic density and the
associated negative impacts. Via BMW Group subsidiaries,
we also offer a range of innovative urban mobility services,
which include car sharing, driving and charging services, and
a digital, multimodal platform that allows users to conveni-
ently order, combine and use various modes of transport via
their smartphones. To make these services more sustain-
able, the YOUR NOW companies FREE NOW and SHARE
NOW are gradually electrifying their fleets of vehicles. In
addition, the BMW Group is driving forward the connectivity
and automation of its vehicles as key elements towards en-
suring eco-friendly, safe and free-flowing traffic in cities.
Shaping the future of mobility
The BMW Group is currently working together with the three
German cities of Munich, Berlin and Hamburg, and at inter-
national level with Rotterdam, Los Angeles and Beijing, on
cooperative research and implementation projects.
In Munich, for example, the BMW Group is currently working
with partners from the local business community to develop
a new model of collaboration between policymakers, stake-
holders and the private sector, building on 25 years of in-
volvement in the so-called Inzell-Initiative. The focus is on
creating strategic measures for developing sustainable
transportation in the region.
In the German capital, the BMW Group is involved in the
7 New Mobility Berlin project, which addresses people's chan-
ging mobility needs and the shortage of space in a growing
city. Against this backdrop, the project aims to make public
street space more flexible to use. The project is looking to
create shared spaces to provide mobility stations for car
sharing or rental bicycles, for example.
For this reason, the BMW Group sees it as particularly im-
portant to produce components such as the electric motor,
high-voltage storage systems, and battery cells in a more
sustainable manner. Reducing carbon emissions in the supply chain.
Other methods of mitigating the environmental impact in-
clude recycling and reusing the high-voltage storage units
installed in our BEV and PHEV models. The BMW Group al-
ready offers all customers that use its battery-powered vehi-
cles to take back their high-voltage batteries free of charge
at the end of their life cycle. ]]
The environmental impact of a battery vehicle is predomi-
nantly caused in the upstream value chain, where the pur-
chasing of raw materials to manufacture battery cells and
the carbon-intensive production of the batteries themselves
leave a significant footprint.
> Cooperations and partnerships ]]
[ At European level, in collaboration with the joint venture
7 IONITY, the BMW Group is further expanding a comprehen-
sive, high-performance, fast-charging network along major road
routes. Depending on the vehicle, charging is particularly fast
with capacities of up to 350 kW. All IONITY charging points are
publicly accessible, regardless of vehicle brand, and designed in
accordance with the European Combined Charging System (CCS)
standard. A ubiquitous high-power charging network is key to
achieving sufficient market penetration and ultimately the suc-
cess of electric mobility. All 6,600 IONITY charging points are
powered by 100% green electricity.
61
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
In the National Platform for the Future of Mobility, which was set up
by the previous federal government, the BMW Group chaired
the working group on digitalisation for the mobility sector.
The group developed measures to make mobility more cli-
mate-neutral, efficient, convenient and cost-effective for the
future.
[Range of reliable charging services
Customers can use their BMW and MINI charging cards to take
advantage of public charging services, providing them with
straightforward, transparent access to one of the world's larg-
est charging networks with over 250,000 charging points
across Europe, of which 48,000 are located in Germany alone,
and also include fast-charging stations with a capacity of over
150 kilowatts (kW). The IONITY European high-power charging
service can also be accessed via BMW Charging and MINI
Charging. In 2021, the BMW Group introduced a standardised
tariff structure for public charging in 22 European countries.
With the Connected Charging application, available both within
the vehicle and as a smartphone app, we also enable MINI and
BMW drivers to charge their vehicles in a predictive, convenient
and cost-efficient manner. The service provides drivers with
comprehensive information at any time, including the remain-
ing range of their vehicle and the availability of charging points.
Apart from the public charging services they offer, BMW
Charging and MINI Charging provide a standard charging
solution in the form of the Flexible Fast Charger and other
charging products designed for home use. BMW also offers
charging solutions for corporate customers in collaboration
with partners. The BMW Group itself operates one of the
largest company charging networks in Germany. Employee mobility
In addition to the BMW Charging and MINI Charging ser-
vices, we offer green electricity tariffs and attractive solar
power services for the home in certain countries, and plans
are being put in place to expand this offering to other markets.
Improving framework conditions
The BMW Group still sees a need for political action in order
to better promote electric mobility in many countries and
cities. EU market research data highlight the close correlation
between the density of charging infrastructure and the sale
of electrified vehicles - both at the level of member states
and in a comparison of various regions.
We support political initiatives in favour of sector coupling,
with the aim of forming smart connections between the mo-
bility and the energy sectors. The BMW Group is also con-
ducting its own targeted research and development work in
this area. For example, as part of a pilot project in California,
USA, customers can already use the 7 BMW Charge Forward
service to synchronise their charging behaviour with grid
capacity utilisation and the use of renewable forms of energy
(Collaboration with cities). The further expansion of this tech-
nology is planned.
Another project aimed at promoting sector coupling is so-
called Bidirectional Charging Management (BDL), which is funded by
Germany's Federal Ministry for Economic Affairs and Ener-
gy. BDL transforms electric vehicles into mobile energy stor-
age devices and thus into a part of the energy system in that
their batteries are not only able to store electricity, but also
simultaneously feed it into the operator's power grid in the
opposite direction.
Recording electric mobility over the entire life cycle
Electrified vehicles need to be as eco-friendly as possible,
not only during their use phase, but also in terms of their
overall footprint, including the supply chain. 7 Holistic manage-
ment system. In the BMW Group's case, for instance, this was
confirmed by the environmental report on the BMW iX3³:
Over its life cycle, the all-electric vehicle emits around 40%
fewer carbon emissions' than the BMW X3 30i reference
vehicle. If the battery is charged using renewable energy
only, carbon emissions are even around 67% lower.
IONITY EUROPEAN FAST-CHARGING NETWORK
With BMW Charging and MINI Charging, the BMW Group
offers a comprehensive range of charging solutions that
make electrified vehicles more convenient to use in a variety
of situations. These include charging products and services
that benefit customers on the road, at home and at work.
cooperation
In October 2021, the BMW Group extended its
with the City of Rotterdam, which has been ongoing since
2018, for a further six years. One successful example of this
collaboration is the BMW eDrive Zone technology, which was
launched in 2020. BMW eDrive Zone technology
The importance of cooperation between cities and energy
suppliers was meaningfully demonstrated in the 7 BMW
Charge Forward project in California. The project enabled us to
demonstrate that intelligently controlled charging coordinat-
ed to suit the availability of renewable energy is more envi-
ronmentally friendly, more energy-efficient and more cost-ef-
fective for the customer.
view camera.
Full range
radar
(300 m).
M&DI 270E
Surround
view cameras.
O
Ultrasonic
sensors.
Surround
Short range
radars.
Sensor-setup for parking
49
64
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
Remuneration Report
Sensor-setup for driving
← = Q
Front
camera (8 Mpi).
360,000
Range of innovative mobility services
Together with Daimler Mobility AG, the BMW Group offers
mobility services via the joint venture YOUR NOW, which was
established in 2019. The YOUR NOW range of services in-
cludes car sharing and the use of e-scooters, e-bikes and
e-kick scooters (multimodality) as well as driving and char-
ging services and provides customers with access to the
charging infrastructure as well as to alternative means of
transportation apart from their own cars. At the same time,
they are promoting the expansion of public charging points
with their increasingly electrified range of vehicles. All YOUR
NOW subsidiaries continued to consistently develop their
activities throughout 2021 against a backdrop of pandem-
ic-related restrictions.
As Europe's largest multimodal mobility platform, FREE
NOW combines various forms of mobility in one single app.
With this strategy, the service brings registered users in
European and Latin American cities to their destination
quickly and in line with their individual needs. Apart from taxi
cabs and private ride services, e-scooters and e-kick scooters,
SHARE NOW vehicles have also been bookable via the FREE
NOW app since mid-2021. At the same time, FREE NOW is
systematically promoting the electrification of the fleet it uses.
FREE NOW intends to grow its share of electrically powered
trips to 50% by 2025 and go all-electric by 2030.
SHARE NOW is one of the pioneers in the field of car sharing
and offers vehicles for on-demand rental. In 2021, the mobil-
ity brand launched its first connection between two metro-
politan areas with the route between Rotterdam and
Amsterdam. Furthermore, SHARE NOW systematically con-
tinued to electrify its vehicle fleet during the year under re-
port and more than a quarter of its vehicles are meanwhile
powered by electricity. ]]
63
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
public charging points in 30 countries. ]]
Remuneration Report
← = Q
[The joint venture also includes Digital Charging Solutions
(DCS) GmbH, one of the leading developers of digital char-
ging services for car manufacturers and fleet operators in
Europe. Under the CHARGE NOW brand, DCS offers com-
prehensive access to public charging points. As a so-called
white-label solution, business customers can offer their end
customers made-to-measure access to a network of more
than 360,000 public charging points from a variety of oper-
ators in 30 countries. The BMW Group utilises the DCS offer-
ing by giving its customers access to the public charging ser-
vices provided by BMW Charging and MINI Charging at competitive
tariff rates in both Europe and Japan. The addition of the
energy company bp as DCS's third partner will make a sig-
nificant contribution towards further expanding the available
charging network.
In 2021, the YOUR NOW holding company sold its digital
parking services, which were offered under the PARK NOW
brand, among others, to the Swedish company EasyPark. 1]
AUTOMATED AND AUTONOMOUS DRIVING
At the end of 2021, the all-electric BMW iX was the first BMW Group
vehicle to offer automated driving and parking features from a new
technology kit that will also be deployed in the upcoming BMW 7
Series. With the introduction of completely new software and state-
of-the-art sensor technology - including the use of an 8-megapixel
camera for the first time in the automotive sector - customers can
now choose from around 40 driver assistance features designed to
make their driving experience more pleasant, convenient and ulti-
mately safer.
Around 1,200 engineers are working on developing and testing new,
automated driver assistance functions to achieve these aims. Around
half of these employees are highly qualified software developers. Ar-
tificial intelligence (AI) is a key technology for enabling automated
and autonomous driving. A large number of Al-based applications
are currently in use and being tested under everyday conditions.
Automated driver assistance functions are being rigorously devel-
oped at more than 12 locations worldwide (including test sites) in
order to allow for local circumstances such as regulatory, road and
climatic conditions. Regionally differing customer requirements also
play a key role.
The recently opened Driving Simulation Centre in Munich is unique
worldwide. Visitors can virtually test driver assistance systems and
automated driving functions that realistically simulate the product
requirements of the future.
[[The DCS offering includes
Other Information
SUPPLIER NETWORK
[We aspire to deliver the highest standards of quality and
safety for all BMW Group vehicles. In all measures, the safety
of people is key. In its manufacturing processes, the
BMW Group avoids the use of any substances that pose a
health risk. The active and passive safety systems built into
our vehicles ensure greater safety on the road. In our driving
safety training courses, we instruct customers on all aspects
of safety and show them how to recognise and react appro-
priately to dangerous situations. Responsibility towards our
customers also includes the responsible handling of their
data. In this respect we focus on transparency, informational
self-determination, data sovereignty and data security.
Electrification, digitalisation, efficiency and sustainability
are the key factors shaping the future of the BMW Group's
production system and the main guiding principles in the
restructuring of its global production network. As production
of the all-electric BMW iX and BMW 14 models began in
2021, we rigorously attuned our vehicle assembly systems
to suit the requirements of electric mobility. At the same
time, we are benefiting from the high flexibility of our pro-
duction system. During the year under report, this agility en-
abled us to respond both swiftly and specifically to major
challenges such as the tense semiconductor supply situ-
ation and the ongoing coronavirus pandemic, despite which
we still managed to significantly increase production vol-
ume year-on-year.
186,883
175,984
6.2
151,154
143,758
5.1
61,580
50,760
21.3
24,624
25,752
- 4.4
8,472
6,228
36.0
10,104
8,400
20.3
5,912
-4.7
200,968
191,604
- 8.3
Munich
Rosslyn
Rayong
Chennai
Araquari
Goodwood
San Luis Potosí
Tiexi (BBA)²
Dadong (BBA)²
3,776
Born (VDL Nedcar)³
2020
433,810
361,365
Change in %
20.0
244,734
231,970
5.5
183,485
199,991
2021
56.6
69,149
56,081
PRODUCTION NETWORK
3 Contract manufacturing.
70
70
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Production, Purchasing and Supplier Network
Corporate Governance
venture (2021: 700,777 units; 2020: 602,935 units).
Remuneration Report
← = Q
Restructuring production for electric mobility
The BMW Group already manufactures automobiles with
all-electric or plug-in hybrid drive systems at 13 locations*
across its worldwide production network. All-electric mod-
els are already part of the production programme in Dingolf-
ing, Leipzig, Munich, Oxford and Shenyang, including the
BMW iX produced in Dingolfing and the BMW i4, which has
been manufactured at the Munich plant since the year
under report.
By the end of 2022, every production plant in Germany shall
have the capacity to manufacture at least one all-electric
model. From the middle of the decade, the 7 Neue Klasse will
also feature a cluster architecture consistently geared to pro-
ducing electric drive systems. The new architecture will be
deployed for the first time at the Group's new plant in Debre-
cen, Hungary, as well as at the Munich plant, and will be
gradually transferred to the BMW Group's global production
network in the coming years.
Component production for electrified vehicles
The Dingolfing plant now plays a leading role as a compe-
tence centre for electric drive systems, producing battery
modules, high-voltage batteries and fifth-generation electric
motors, which are also produced at the Landshut plant. The
BMW Group plants in Spartanburg (USA) and Shenyang
(China) also make high-voltage batteries. The Leipzig plant
began manufacturing battery modules and other battery
components during the year under report. The Regensburg
plant also began producing battery components during the
same period. In Thailand, the BMW Group collaborates with
a partner that makes high-voltage batteries for electrified ve-
hicles that are produced locally.
* BMW Group production sites, including contract manufacturing at Magna Steyr
Fahrzeugteile (Austria), VDL Nedcar (the Netherlands) and Inokom Kulim (Malaysia).
Developing expertise for battery cell production
The approval process for the planned pilot plant in Parsdorf
near Munich for near-series battery cell production came
closer to completion during the year under report. The
BMW Group intends to further optimise the production of
battery cells at the Parsdorf plant in terms of quality, perfor-
mance and costs. Since 2019, we have been pooling our
knowledge at the Battery Cell Competence Centre in Munich.
The entire value chain of battery cell technology is concen-
trated at the Centre, including research and development,
the composition and design of the battery cell and industrial
producibility.
Other Information
Oxford
1 Includes vehicles produced by the BMW Brilliance Automotive Ltd., Shenyang joint
2,255,637
23.3
335,311
311,137
7.8
365,466
291,798
25.2
105,214
125,666
9.1
- 16.3
54,547
35,747
52.6
Partner plants
29,220
26,256
11.3
Total
2,461,269
Graz (Magna Steyr)³
Leipzig
2 BMW Brilliance Automotive Ltd., Shenyang joint venture.
Spartanburg
Germany
India
BMW 3 Series, BMW X1, BMW X3, BMW X4, BMW X5
BMW motorcycles
BEV
Dingolfing
Germany
Leipzig
Manaus
Germany
The BMW Group's automotive partner plants in Jakarta (In-
donesia), Cairo (Egypt), Kaliningrad (Russia) and Kulim (Ma-
laysia) mainly produce BMW and MINI brand models for their
respective regional markets.
Munich
Electrification portfolio
Brazil
Germany
BEV, PHEV
BEV, PHEV
Oxford
Rayong
United Kingdom
Thailand
BMW 3 Series, BMW 4 Series, BMW i4, BMW M
MINI, MINI Clubman, MINI Cooper SE*
BEV, PHEV
BEV
BMW 2 Series, BMW 3 Series, BMW 5 Series, BMW 7
Series, BMW X1, BMW X3, BMW X5, BMW X7
BMW motorcycles
BMW 2 Series, BMW 3 Series, BMW 5 Series, BMW 6
Series, BMW 7 Series, BMW X1, BMW X3, BMW X4,
BMW X5, BMW X7, MINI Countryman
BMW 3 Series, BMW 4 Series, BMW 5 Series, BMW 6
Series, BMW 7 Series, BMW 8 Series, BMW M; BMW IX
BMW 1 Series, BMW 2 Series, BMW i3, BMW M
BMW motorcycles
PHEV
Production programme 2021
Berlin
Chennai
Dingolfing
Regensburg
The BMW Group production network
The BMW Group production network comprises 31 locations
in 15 countries. The same high standards of quality, safety
and sustainability apply at all Group locations* worldwide.
Our state-of-the-art production facilities enable us to manu-
facture all-electric, plug-in hybrids and conventionally pow-
ered automobiles all on one line. Electric mobility is playing
an increasingly key role in this regard. For example, at the
end of 2021, electrified vehicles already accounted for some
26% of the total number produced at the BMW Group plant in
Munich.
TRANSFORMING THE MAIN PLANT IN
MUNICH
The restructuring of its plant in Munich amply demonstrates
how the BMW Group is transforming itself going forward. Since
the launch of the all-electric BMW i4 in November 2021, the
BMW Group's main plant has been manufacturing vehicles with
all types of drive system on the same production line. From 2023,
at least half of all vehicles produced at the Munich plant will be
powered by an electrified drive system and the majority of these
will be all-electric models.
* BMW Group production sites, including contract manufacturing at Magna Steyr
Fahrzeugteile (Austria), VDL Nedcar (the Netherlands) and Inokom Kulim (Malaysia).
69
68
Country
Brazil
BMW Group Report 2021
Corporate Governance
Remuneration Report
Other Information
← = Q
Production sites in key markets
The BMW Group aims to strike a good balance between pro-
duction and deliveries in the various regions of the world
where it operates. While 20 of its 31 locations are BMW Group
plants, three belong to the BMW Brilliance Automotive Ltd.
joint venture in Shenyang (China), which is currently being
enlarged to create additional production capacity. Further in-
formation on the consolidation of BMW Brilliance Automo-
tive Ltd. is provided in the 7 Notes to the Group Financial Statements.
Eight production sites are operated by Group partners or
contract manufacturers.
BMW GROUP VEHICLE PLANTS
Location
Araquari
To Our Stakeholders
The BMW Group also awards contracts to external partners
(contract manufacturers) to produce its automobiles and
motorcycles in series. During the period under report, Magna
Steyr Fahrzeugtechnik produced both the BMW 5 Series Se-
dan and the BMW Z4 in Graz (Austria). VDL Nedcar in Born
(the Netherlands) manufactures the MINI Convertible, the
MINI Countryman and the BMW X1. BMW motorcycles are
also produced by the TVS Motor Company in Hosur (India)
and by Loncin Motor Company in Chongqing (China).
Combined Management Report Group Financial Statements
Production, Purchasing and Supplier Network
Rosslyn
Production programme 2021
Electrification
BMW 5 Series, BMW X3; BMW iX3*
BMW 1 Series, BMW 3 Series, BMW X1, BMW X2
BEV, PHEV
PHEV
69
BMW Group Report 2021
To Our Stakeholders
China
Combined Management Report
Production, Purchasing and Supplier Network
Corporate Governance
Remuneration Report
← = Q
The BMW Group's production network also includes engine
plants in Hams Hall (UK), Munich (Germany), Steyr (Austria)
and Shenyang (China), as well as component plants in Ei-
senach, Landshut and Wackersdorf (Germany) and Swindon
(UK). By 2024, the BMW Group intends to concentrate its
production in Europe of combustion engines at the Steyr and
Hams Hall plants.
Significant growth in production volume
The coronavirus pandemic had a lower impact on BMW Group
production volumes than one year earlier. However, the limit-
ed availability of semiconductor components led to adjust-
ments in the production programme. Despite these chal-
lenges, the BMW Group achieved significant year-on-year
growth during the reporting period with a production volume
of 2,461,2691 BMW, MINI and Rolls-Royce brand vehicles
(2020: 2,255,6371 units; +9.1%), comprising 2,166,6441
BMW (2020:1,980,740¹ units; +9.4%), 288,713 MINI (2020:
271,121 units; +6.5%) and a record number of 5,912 Rolls-
Royce (2020: 3,776 units; +56.6%) brand vehicles. In the
reporting year 2021, the number of electrified vehicles pro-
duced grew by 51% to 341,097 units (2020: 225,604 units).
With 187,500 units produced (2020: 168,104 units), BMW
Motorrad recorded growth of 11.5 % year-on-year.
BMW GROUP AUTOMOBILE PRODUCTION BY PLANT
Regensburg
in units
Group Financial Statements
China
Other Information
Tiexi (Shenyang)
Country
San Luis Potosí
Spartanburg
Germany
BMW 1 Series, BMW 2 Series, BMW X1, BMW X2
PHEV
Rolls-Royce Manufacturing Plant, Goodwood
BMW X3
Mexico
USA
BMW 2 Series, BMW 3 Series
PHEV
South Africa
BMW X3, BMW X4, BMW X5, BMW X6, BMW X7,
BMW M
PHEV
United Kingdom
Rolls-Royce Cullinan, Dawn, Ghost, Phantom, Wraith
BEV from 2023
** Additional information on consumption and carbon emissions data.
BMW BRILLIANCE AUTOMOTIVE JOINT VENTURE (VEHICLE PLANTS)
Location
Dadong (Shenyang)
1 Efficiency indicator calculated from the absolute energy consumption (adjusted for CHP
losses) of automobile production (BMW Group plants incl. BMW Brilliance Automotive Ltd.
joint venture, excluding partner plants and contract manufacturing) divided by the number
of units produced in automobile production (BMW Group plants incl. BMW Brilliance
Automotive Ltd. joint venture and partner plants, excluding contract manufacturing).
2 Figures for 2017 and 2018 figures were subjected to a limited assurance review.
3 As of 2021, this figure also includes energy consumption at further BMW Group loca-
tions as well as energy consumption in production. For comparison purposes, the figure
for 2020 has been adjusted accordingly (2020 prior to adjustment: 5,714,610 MWh).
"Including BMW Brilliance Automotive Ltd., Shenyang.
5 To the extent recordable in the carbon footpring; market-based-method according to
GHG-Protocol.
BMW Group Report 2021
cation process, projects are required to demonstrate, for exam-
ple, the permanence of the decarbonisation impact they achieve.
Another vital criterion is additionality, i. e. proof that the project
in question would not have come about without financing via
carbon offsetting certificates. Furthermore, for the post-Kyoto
phase of the carbon offsetting market, we emphasise the import-
ance of ensuring that there is no double counting of the emissions
saved alongside the nationally determined contributions of the
affected countries named in the Paris Climate Agreement. We
also ensure that the projects additionally generate a social ben-
efit. 7 GRI-Index: 305-51]
74
Corporate Governance
To Our Stakeholders
Remuneration Report
Combined Management Report
Production, Purchasing and Supplier Network
Group Financial Statements
[[ The carbon emissions generated within its own production
network are already below the 1.5°C path calculated for the
BMW Group. Since the year under report, the BMW Group has
been making the remaining carbon footprint generated by its
plants and other locations carbon-neutral on the energy bal-
ance sheet, including company cars and business trips, through
the use of voluntary offsetting certificates. Via this method, we
are demonstrably offsetting the associated carbon emissions by
supporting external projects. In collaboration with experienced
partners such as atmosfair and First Climate, we support climate
protection projects that meet strict criteria. As part of the certifi-
COMPENSATION OF SITE-RELATED CARBON EMISSIONS
2019
7 GRI-Index: 302-1, 302-3, 302-4
2.12
2.04
Other Information
2.17
2.12
|
2.10
|
Energy consumption in detail
0
2018
2020
2021
Renewable energy
The BMW Group is committed to the use of renewable ener-
gy at all its locations. Worldwide, all BMW Group production
sites and the vast majority of its other locations procure
their electricity from renewable self-generation plants, direct
supply contracts for green electricity, and electricity of certi-
fied origin. We also made additional use of biogas certifi-
cates in the year under report. Moreover, we are increasing
the amount of renewable energy generated at our own sites.
Additions made during the reporting year included large-
scale photovoltaic installations at our plant in Araquari, Bra-
zil, which generate some of the electricity required for pro-
duction at the site.
At present, however, the BMW Group is unable to entirely
cover its electricity requirements by producing its own re-
newable energy, and therefore purchases additional power
from renewable and predominantly local or regional sources.
We cover an increasing proportion of our electricity require-
ments through so-called Power Purchase Agreements
(PPAs), i. e. direct purchases from defined renewable energy
generation plants, such as the regional green electricity
bought in to manufacture the BMW iX and the BMW i4.
report, which also negatively impacted energy consumption
per vehicle at some of its plants. For this reason, absolute
consumption³ within the BMW Group increased to 6,476,955
MWh during the year under report (2020: 6,040,824 MWh).
However, at 2.10 MWh per vehicle produced, specific energy
consumption in the BMW Group's vehicle production fell by
0.9% in 2021 compared to 2020. This fact is attributable to
various energy efficiency measures as well as improved pro-
duction capacity utilisation.
2017
← = Q
75
The main reason for the drop in relative carbon emissions
per vehicle produced was improved energy efficiency on the
back of higher production volumes following the pandem-
ic-related restrictions. From mid-2021, however, supply
bottlenecks for semiconductor components and the necessary
adjustments to the production programme dampened the
positive trend. As a result, absolute carbon emissions³ at
BMW Group locations increased to 766,153 t of CO₂ (2020:
734,710 t of CO2) due to the overall increase in energy con-
sumption relating to higher production volumes. In the previ-
ous year, consumption and production volumes were signifi-
cantly lower due to pandemic-related restrictions. In the first
half of 2021, the cold weather in Germany also led to greater
energy requirements for heating and thus to an increase in
carbon emissions. GRI-Index: 305-1, 305-2, 305-3, 305-5
To Our Stakeholders
Combined Management Report
Group Financial Statements
Production, Purchasing and Supplier Network
Corporate Governance
Remuneration Report
Other Information
← = Q
[t The department Purchasing and Supplier Network is re-
sponsible for the worldwide procurement and quality assur-
ance of production materials, raw materials, capital goods
and services as well as the production of vehicle components
manufactured in-house. The BMW Group follows the princi-
ple of sourcing vehicle components as closely as possible to
its production sites. Efficient teams are in place in all major
purchasing markets in order to identify risks swiftly and re-
spond flexibly and at short notice to changing market situa-
tions. Close cooperation with our suppliers in a spirit of part-
nership was one of the factors that enabled us, for example,
to cushion the effects of the global semiconductor shortage
to a large extent. In order to secure long-term supplies in this
area, the BMW Group concluded a direct agreement with
semiconductor suppliers for the first time at the end of 2021.
The agreement enables the BMW Group to secure the supply
of several million semiconductors per year. Overall, however,
the supply situation for semiconductor components will again
remain tight in 2022.
Taking ecological and social responsibility
The BMW Group sees itself as a pioneer in terms of corpo-
rate due diligence in its supplier network. Back in 2008, we
defined a comprehensive draft of preventive measures, in-
cluding contractual obligations to comply with environmental
and social standards, and stipulated them for the first time
when selecting suppliers for the BMW i3. We have also de-
fined and implemented raw-material-specific sustainability
requirements for certain components.
In 2014, we extended our standards to include a multistage
due diligence process. Since then, the process has included
the procurement of production materials for vehicle models
as well as risk-based, non-production-related goods and
services. Every supplier who has a direct business relation-
ship with the BMW Group is obliged to sign these require-
ments for its manufacturing and delivery locations and pass
them on contractually to its respective sub-suppliers. Specific
requirements are set out in the BMW Group Supplier Sustainability
Policy, the order documents and the contract documents.
These requirements must be implemented prior to the start
of production or by the agreed target date.
Further GRI information GRI-Index: 308-1, 414-1 SASB-Index
in MWh
in € billion
Management system and mission statement
The BMW Group is committed to respecting internationally
recognised human rights and is guided, among other things,
by the UN Guiding Principles on Business and Human
Rights, the OECD Due Diligence Guidance for Responsible
Business, and the German government's National Action
Plan as well as the Supply Chain Due Diligence Act derived
from it Worldwide Implementation of Labour Standards and Human
Rights.
BMW Group Report 2021
Carbon emissions at BMW Group locations
Year-on-year, the carbon emissions per vehicle 12 generated
at BMW Group locations fell by 5.7% to 0.33 t of CO₂ (2020:
0.35 t of CO₂), i. e. a reduction of 17.5% compared with the
2019 base year.
[t Global network and local procurement
Global purchasing, the management of international suppli-
er relationships, in-house component production and the
efficient management of challenges within the supplier net-
work are key factors in ensuring stable supplies to our pro-
duction sites. At the same time, Purchasing ensures the fu-
ture viability of the BMW Group by rigorously aligning the
supplier network with strategic future topics such as digital-
isation and electric mobility, while securing the required pur-
chasing volume. 1]
PURCHASING AND
SUPPLIER NETWORK
Efficiency indicator calculated from the absolute energy consumption (adjusted
for CHP losses) of automobile production (BMW Group plants incl. BMW Brilliance
Automotive Ltd. joint venture, excluding partner plants and contract manufacturing)
divided by the number of vehicles produced in automobile production (BMW Group
plants incl. BMW Brilliance Automotive Ltd. joint venture and partner plants, exclud-
ing contract manufacturing).
2 As of 2021, this figure also includes the carbon emissions of all other BMW Group
locations in addition to those generated by production processes. For comparison
purposes, the figure for 2020 has been adjusted accordingly (2019 before adjust-
ment: 0.30 t; 2020 before adjustment: 0.23 t).
3 As of 2021, this figure also includes the carbon emissions of all other BMW Group
locations in addition to those generated by production processes. For comparison
purposes, the figure for 2020 has been adjusted accordingly (2020 before adjustment:
652,795).
"Figure rounded for simplification purposes. The target percentage validated in
conjunction with the SBTi is 22%.
CO2 EMISSIONS PER VEHICLE PRODUCED 1,2
in t
0.40
0.35
0.33
0
2019
2020
2021
[Carbon emissions relating to transport logistics
As part of the Green Transport Logistics project, the
BMW Group is aiming to make transport logistics cli-
mate-neutral, both within the production network and for ve-
hicle deliveries. The carbon footprint and the use of car-
bon-efficient energy and modes of transport play a significant
role in this regard. We are therefore making a major contribu-
tion to transforming the transport sector, pursuing a techno-
logically open, innovative approach across all modes of
transport. In order to ensure sufficient supplies between our
plants, however, we were compelled to increase the year-on-
year use of air freight during the reporting year due to issues
relating to the supply of semiconductors.
Since the beginning of 2021, in cooperation with transport
service providers, the BMW Group has been using low-car-
bon liquefied natural gas (LNG) on certain European trans-
port routes to cover its production requirements. Depending
on availability, we are gradually increasing the biogenic con-
tent of the LNG fuel we use. At the same time, we are in-
creasing the volume of products transported by rail: around
half of the vehicles produced leave our plants by rail.
The BMW Group's supplier network comprises over 32,000
direct supplier locations worldwide, with whom we maintain
direct supplier relationships. Our rigorous partner selection
process is based on the criteria of quality, innovation, flexi-
bility, cost and sustainability. To meet the respective due dili-
gence requirements in terms of environmental and social
standards, we rely on systematic risk analyses as well as
prevention, empowerment and remediation measures. We
also use standardised online assessments and audits that
are integrated in our business processes. Moreover, the
BMW Group enshrines its obligatory sustainability standards
in all its supply contracts. 1] We have set ourselves the goal of
reducing carbon emissions in the supply chain by at least
20% by 2030 (base year 2019), while simultaneously in-
creasing the use of secondary materials.
ENERGY CONSUMPTION PER VEHICLE PRODUCED 1,2
Other Information
BMW Group Report 2021
systems are also currently being tested in the painting pro-
cess and gradually introduced throughout the Group's pro-
duction network. Specific water consumption in production was
improved slightly to 2.15 m³ (2020: 2.25 m³) per vehicle pro-
duced during the year under report.
painting process and can be reduced through the use of new painting technologies.
3 VOC (volatile organic compounds) emissions are mostly generated during the
² Related to the total weight of the waste.
1 In accordance with the BMW Group's environmental management system, each
operator is required to describe the environmental impacts in the aspects register
and identify measures for improvement (e. g. long-term targets).
The BMW Group pursues the aim of continuously reducing
the amount of water used in its production processes. Ac-
cordingly, its production plants optimise their circulation sys-
tems, for example by treating wastewater and putting
water-saving processes in place. One example is the dry
separation system used in the paint shop. Other closed-loop
Water
A certified environmental management system in accord-
ance with ISO 14001 is implemented at every BMW Group
production site. A total of five competence centres, i. e. Emis-
sions, Water, Waste, Qualification and the Environmental
Management System, coordinate environmental protection
measures throughout the BMW Group worldwide. According-
ly, any ecological improvements that have proven to be effec-
tive at one location are implemented at other locations to the
extent possible. Continuous training and the exchange of ex-
periences among employees ensure the transfer of know-
ledge and the Group-wide application of the latest findings.
In the year under report, our environmental management
system again made a major contribution to ensuring that
there were no significant environmental incidents involving
the payment of fines throughout the production network.
[ Controlling resource consumption is an integral part of en-
vironmental management in the BMW Group's global pro-
duction network and managed by a dedicated steering com-
mittee for the international environmental protection network.
Each facility, area and building is assigned to an internal op-
erator, who is responsible not only for the technical systems
and the smooth running of processes and procedures, but
also for their environmental impacts'.
← = Q
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
Production, Purchasing and Supplier Network
To Our Stakeholders
Waste
BMW Group Report 2021
In its efforts to reduce the volume of waste it generates, the
BMW Group deploys coordinated recycling and treatment
concepts adapted to the waste streams in its various plants,
to regionally applicable regulations and to locally existing
waste disposal structures. In 2021, 99.2%² of the waste
generated by production processes was either recycled or
recovered. During the year under report, the volume of waste for
disposal per vehicle produced decreased to 2.90 kg, 12.9% lower
than the 2020 figure. We aim to maintain this high recycling
and recovery rate within the BMW Group as we increasingly
transition to electric mobility. We are therefore integrating
the newly generated waste streams in our recycling and
treatment systems. SASB-Index
The BMW Group reduced its emissions of volatile organic
compounds (VOC³) per vehicle produced by 13.6% to 0.70
kg during the period under report. The year-on-year improve-
ment was mainly due to the use of solvent-free cleaning
agents and the new thermal afterburners deployed in the
paint shops at the Group's plants in Shenyang (China) (* Sol-
vents per vehicle produced). Due to the progress made in the use
of solvent-free substances and the optimisation of our paint
shops, we expect to see a further reduction in emissions lev-
els going forward. GRI-Index: 305-71]
Asia/Australia
Remuneration Report
Corporate Governance
Group Financial Statements
Production, Purchasing and Supplier Network
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
73
The BMW Group invests systematically in the energy effi-
ciency of its global production network, enabling it to cut the
energy consumption of machines to a minimum, such as
those deployed to generate the required processing heat in
its paint shops. The limited availability of semiconductor
components compelled the BMW Group to make adjust-
ments to its production programme during the year under
It is vitally important to use energy in an efficient, responsible
manner in order to conserve resources. The BMW Group
has processes in place throughout the organisation to plan
and implement energy management measures with the aim
of continuously optimising its use. Clear roles are assigned
with corresponding responsibilities, targets and reporting
obligations to the central strategy departments, the regional
controlling bodies and the various production plants at local
level. ]]
Energy management and efficiency
The remaining emissions are largely due to the use of nat-
ural gas. Here we face the challenge of replacing natural gas
with non-fossil energy sources such as biogas, hydrogen or
renewable electricity. The "heat transition" required to do so
is made more complicated by the physical availability of al-
ternative energy sources, the technical retrofitting of plants,
and political framework conditions.
opportunities to further reduce these emissions lie. As in the
past, we are focusing on additional energy efficiency meas-
ures, the increasing generation of our own electricity from
renewable sources, the purchasing of green electricity from
supply contracts, and the use of certificates of origin.
An 80% average reduction of
carbon emissions per vehicle
produced by 2030.
Carbon emissions at BMW Group locations
Compared with the base year 2019, the BMW Group intends
to reduce the average amount of carbon emissions per ve-
hicle produced by a further 80% by 2030. [[ Production
accounts for biggest share of the 7 Scope 1 and Scope 2 emissions
generated by the BMW Group and this is where the greatest
Solvents
72
2 Based on the Gabi database.
1 Based on vehicle weight, calculated on the basis of actual supplier feedback,
studies and expert assessments.
The BMW Group not only wants to create the basic condi-
tions for recycling vehicles, it is also looking to reduce the
use of primary raw materials in the automotive value chain.
This means closing loops in the production chain, i.e. by re-
turning production remnants to the material supplier or re-
covering materials at the end of a product's life cycle. In
doing so, we take special care to avoid downcycling these
materials into inferior secondary materials. By 2030, the
BMW Group aims to take the recycling process to a new
level, while at the same time further increasing the proportion
of secondary materials it uses to manufacture its vehicles. To
Preference for secondary materials
In this context, the BMW Group regards end-of-life vehicles
as a source of secondary materials. We therefore promote
the recovery of end-of-life vehicles, components and mater-
ials in order to reintegrate them in the raw materials cycle.
Together with its national sales organisations, the
BMW Group has already introduced take-back systems for
end-of-life vehicles in 30 countries and offers eco-friendly
vehicle recycling at more than 2,800 take-back points. All
BMW Group vehicles sold since 2008 meet the currently ap-
plicable worldwide requirements for the recycling of end-of-
life vehicles, components and materials. Vehicles are already
currently required to be 95% recyclable (based on vehicle
weight). GRI-Index: 301-3 SASB-Index
7 Average distribution of materials in BMW Group vehicles
[At the end of a product's life cycle, it needs to be possible
to increasingly separate and recycle key groups of materials
at a high degree of purity so that they can be reused in the
automotive industry in so-called closed loops. The strategy
reduces the need for primary materials and thus the neces-
sity to source potentially critical raw materials.
Re:cycle our circular economy
principles.
-
Re:think, Re:duce, Re:use,
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Production, Purchasing and Supplier Network
Combined Management Report
To Our Stakeholders
achieve this aim, the BMW Group established the "Second-
ary First" approach during the year under report, which gen-
erally gives preference to the use of secondary materials
when stipulating specifications for products, materials and
suppliers. This principle can only be deviated from in justi-
fied exceptional cases.
Currently, an average of up to 30% of the components
used in vehicle manufacture across Europe originate from
recycled and reused materials. However, the percentage of
material recycled differs considerably, depending on the
group. While the recycled proportion of many plastics, for
example, is in the single-digit percentage range, secondary
cast aluminium is already used at a rate of over 50% in cer-
tain components.
The use of secondary raw materials also significantly re-
duces carbon emissions compared with primary materials –
for example around 80% of aluminium and up to 70% of
steel² are recycled. At the same time, this strategy reduces
the amount of natural resources and critical raw materials
that need to be extracted. The circularity principle also helps
to more effectively mitigate risks that can be associated with
the extraction of primary raw materials from market-
related or even political availability risks to those relating to
environmental and social standards.
-
Resource management at every location
The BMW Group wants to lead the way by keeping resource
consumption and carbon emissions in its production pro-
cesses to an absolute minimum. Apart from carbon emissions,
the other relevant variables are energy and water consump-
tion, waste for disposal, the use of solvents and the reduction
of solvent emissions (VOC). ]]
With this point in mind, through BMW i Ventures we have
been investing in the US start-up Lilac Solutions since 2021.
Lilac is pursuing the goal of extracting lithium from the brine
of saltwater deposits using ion exchangers, deploying a far
more eco-friendly method that conserves resources more
effectively than conventional processes. Since the year un-
der report, our investments through BMW i Ventures have
additionally focused on an innovative process developed by
the US start-up Boston Metal for producing steel without
generating carbon emissions. We have also entered into an
agreement with the Swedish start-up H2 Green Steel to pur-
chase hydrogen steel produced using green electricity.
13,9%
be
RE:CYCLE
1,4%
8,6%
71
WIEDERVER-
IM AKTUELLEN BMW 3ER
MATERIALVERTEILUNG
RECYCLING
WERTUNG
The BMW Group invests, partly through its own venture capital
fund, in key technologies that can make a decisive contribu-
tion to achieving carbon neutrality and conserving resources.
Investments in resource-friendly technologies
In general, any secondary raw materials used have to meet
the same strict requirements as primary materials in terms
of quality, safety and reliability. Therefore, the market avail-
ability of these high-quality materials needs to increase sig-
nificantly. In order to improve the structural framework condi-
tions required to achieve this aim, both cross-industry
approaches and political initiatives are necessary.
7 SASB-Index
54,2%
6.9%
REGIONAL DISTRIBUTION OF BMW GROUP
PURCHASE VOLUMES¹
North America
20.1%
One of the most effective ways of decarbonising the supply
chain is the use of green electricity. For this reason, in 2020,
we entered into contractual agreements with battery cell
manufacturers to use only energy generated from renewable
sources to produce the current generation of battery cells. In
2021, the BMW Group also introduced green electricity as a
mandatory criterion for awarding new contracts in its supply
chain and has already concluded green electricity agree-
ments in the awarding of 427 orders, particularly with up-
stream suppliers of energy-intensive products.
-
These measures have already enabled the Group to reach
agreements that cut carbon emissions² by well over 20 million
tonnes during the period from 2021 to 2030. For example, car-
bon emissions generated in the supply chain to produce bat-
tery cells for the BMW iX have been reduced by up to 1.5 t CO₂
per vehicle, simply by agreeing to use green electricity to man-
ufacture them. The implementation of the strategic target was
incorporated in the necessary areas across the Group in 2021
and will be measured and reported in future by using the key
parameter of carbon emissions per vehicle produced.
Carbon Disclosure Project (CDP) for supplier empowerment
Through its participation in the CDP Supply Chain Pro-
gramme, the BMW Group has been motivating its suppliers
to operate sustainably since 2014 and, for example, to use
renewable energy in their production processes. The core of
the programme is an annual report, which includes a variety
of climate-related aspects such as decarbonisation and in-
creasing the percentage of renewable energy used. The
BMW Group strongly encourages its suppliers to set targets
in line with the Paris Climate Agreement in their efforts to
help limit global warming. Together with the BMW Group's
specified target for decarbonising the supply chain, this led
to a further significant increase in supplier commitment.
For example, year-on-year, supplier participation in the CDP
We aim to reduce carbon
emissions in the supply chain by
at least 20% by 2030 (base
year 2019).
Supply Chain Programme increased from 218 to 250 sup-
pliers, which covers 80% (2020: 79%) of the BMW Group's
production-relevant purchasing volume. Some 34% of sup-
pliers (2020: 29%) had at least a 2-degree-compliant target
system in place and 38% (2020: 35%) of suppliers received
at least a B rating. As in previous years, in 2021 the average
CDP rating among the BMW Group's participating suppliers
was a score of C.
The BMW Group has integrated the assessments of the CDP
Supply Chain Programme in its key purchasing processes.
The results are used in supplier discussions, in strategic
management discussions and in the overall supplier strat-
egies to point out potential for improvement. They also form a
basis for determining the group of bidders in purchasing
strategies when awarding contracts. The BMW Group uses
the CDP's assessment to support and further encourage its
own suppliers to implement the Paris Climate Agreement.
Suppliers who have participated for some time generally at-
tain a significantly improved CDP rating.
7 GRI-Index: 308-1, 308-2, 414-21]
1 Average per vehicle produced; figure rounded for simplification purposes. The
target validated in conjunction with the SBTi is 22%.
27 Consumption and carbon emissions data.
80
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Employees and Society
framework, we bindingly agreed corresponding measures for
429 contracts awarded in the course of 2021.
Group Financial Statements
[I In 2021, the BMW Group introduced the use of FSC-certified
tyres on a first vehicle model - the BMW X5 xDrive45e plug-in
hybrid² FSC-certified tyres made of natural rubber, making
the BMW Group the first automotive manufacturer in the world
to equip its vehicles with tyres based on sustainable, certified
natural rubber and rayon - a wood-based material used to re-
inforce tyres. ]]
Reducing carbon emissions in the supply chain
With the growing demand for electrified vehicles, the need for
suitable components and parts in production is also increas-
ing and with it the volume of carbon emissions they gener-
ate. If no countermeasures are taken, the supply chain foot-
print of an all-electric vehicle could be nearly twice that of a
conventional combustion engine model, practically eroding
part of the benefit of electric driving during the use phase. ]]
The BMW Group is reversing this trend and also intends to
reduce the volume of carbon emissions generated in the sup-
ply chain by at least 20% per vehicle by 2030 compared to
the base year 2019. [ To achieve this aim, we have been es-
tablishing decarbonisation as well as other measures among
our suppliers as an award criterion since 2020. Within this
We also expect our direct suppliers to demand minimum
standards in their chain of upstream suppliers, which has
been done for all the 37 raw materials we analysed. The
BMW Group even goes one step further in this regard be-
cause, as a precautionary measure, we are committed to
not using minerals such as cobalt that are extracted from
the deep sea. Together with other companies, we have de-
clared this in a 7 moratorium. ]]
CONFLICT MINERAL TUNGSTEN:
CLOSING MATERIAL CYCLES
[[ The circular economy concept is a key method for ensuring the
responsible use of raw materials and resources. For example,
since the year under report, the BMW Group has been reducing
the amount of the primary raw tungsten it requires by introducing
a closed material cycle. To achieve this aim, we collect discarded
drill and screw inserts in our German and Austrian plants, recycle
them, and have new tools manufactured from the secondary
raw material obtained. Apart from reducing our consumption of
primary raw materials, the strategy also cuts carbon emissions.
7 SASB-Index ]]
* Since the end of 2021: Federal Ministry for Economic Affairs and Climate Protection (BMWK).
79
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Production, Purchasing and Supplier Network
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
[The BMW Group is actively involved in multi-stakeholder
initiatives such as the Initiative for Responsible Mining Assurance
(IRMA), the Aluminium Stewardship Initiative (ASI), the Global Plat-
form for Sustainable Natural Rubber (GPSNR) and the > Responsible
Mica Initiative (RMI) with the aim of establishing and further de-
veloping certification systems for suppliers. We therefore re-
quire certification in accordance with these standards for
prioritised raw materials in our supplier network. Online
-
TYRES MADE OF FSC-CERTIFIED NATURAL
RUBBER
[t Traceability of conflict minerals
back to the certified mine. ]]
Corporate Governance
Other Information
"€ 35 million
spent by the BMW Group in 2021 on social pro-
jects and other activities in conjunction with its
corporate citizenship responsibilities.
7 Direct link to section ]]
8 DECENT WORK AND
ECONOMIC GROWTH
M
EMPLOYER ATTRACTIVE-
NESS AND EMPLOYEE
DEVELOPMENT
[The personal commitment and technical expertise of our
employees are crucial to the success of the BMW Group.
With a broad range of interesting and future-oriented jobs at
attractive conditions, we offer our employees secure pros-
pects and the opportunity to develop personally as well as
help shape the BMW Group's future. The objectives of our
Human Resources (HR) strategy have been defined with a
view to attracting skilled employees, optimising their deploy-
ment and providing them with opportunities to develop their
potential, thereby ensuring that all their skills and expertise
are available to meet the future needs of the BMW Group.
The success of this approach is borne out by the results of
employee satisfaction surveys and the outstanding positions
consistently achieved in employer rankings. 1]
The BMW Group's attractiveness as an employer
At 31 December 2021, the BMW Group employed a total of
118,909 people worldwide*, slightly below the headcount at
the end of the previous year (2020: 120,726; -1.5%). Further
GRI information This reduction was achieved through a combi-
nation of natural employee fluctuation and voluntary agree-
ments in line with planned workforce restructuring meas-
ures. For this purpose, appropriate provisions were made
which were taken into account in personnel expenses. Notes
to the Group Financial Statements, no. 15. At the same time, we
stepped up our recruitment efforts in 2021 with a view to en-
suring the continued availability of all the required expertise
within the workforce to ensure the planned future growth of
the BMW Group. 7 GRI-Index: 102-8
Strategic personnel planning serves as a tool for identifying
the need to readjust personnel and competence structures
at an early stage. The BMW Group uses this information as
the basis for making targeted improvements in the fields of
vocational and further training, personnel development, HR
marketing, recruiting and training programmes for future tal-
ents. 7 GRI-Index: Employee development, vocational and further training
* With effect from the reporting year 2020, a new definition of the term "employee"
is applied (see the Glossary for the definition). For the periods 2018 and older,
the percentage of employees no longer reported was between 7.5% and 8.0 %.
Other Information
Direct link to section
Remuneration Report
of management positions at BMW Group held by
women at the end of 2021. By 2025, the share is
expected to rise to 22%.
Direct link to section
← = Q
EMPLOYEES AND SOCIETY
80
Employer Attractiveness and Employee
Development
83
Health and Performance
86
Diversity
89
Corporate Citizenship
EMPLOYEES AND SOCIETY
AT A GLANCE
€ 389 million
invested in vocational and further training of BMW
Group employees in 2021.
18.8%
Mitigating risks through industry initiatives and partnerships
Apart from eliminating, substituting or reducing the use of
risk-related primary raw materials, we rely on close cooper-
ation with our partners in the supplier network. Our aim is to
continue reducing the potential negative impacts of our busi-
ness activities in our raw materials supply chains.
The BMW Group also keeps a close eye on raw materials
that are classified as so-called "conflict minerals". These in-
clude ores whose mining and trade are frequently associ-
ated with violations of environmental and social standards.
By using standardised applications such as the Conflict Min-
erals Reporting Template (CMRT) of the Responsible Miner-
als Initiative (RMI), the BMW Group ensures the traceability
of the raw materials it uses, right from the direct supplier to
the certified smelter. SASB-Index
Further measures that serve to meet our due diligence require-
ments include reducing or eliminating the use of so-called
high-risk primary raw materials. For example, we have re-
duced the use of cobalt in the cathodes of our current gener-
ation of battery cells to less than 10%. Our latest generation of
electric motors is made without the need for any rare earths.
← = Q
[ Obligatory sustainability standards
apply to all BMW Group suppliers
and are incorporated in the supply
contracts. 1]
The respective demands placed on us and our suppliers are
integrated throughout the Group by means of the following
internal standards:
The BMW Group Code of Conduct on Human Rights and Working
Conditions explains how we promote human rights and
good working conditions and implement the core working
standards of the International Labour Organisation (ILO).
The BMW Group Supplier Sustainability Policy summarises the
BMW Group's principles governing the global supplier
network in accordance with internationally acknowl-
edged standards and guidelines. We regularly update the
risks we have identified in our supplier network.
Risk analyses on ecological and social responsibility
The BMW Group monitors and assesses human rights risks
and impacts in its supplier network, both in its existing busi-
ness relationships and whenever it enters a new market or
field of business. The BMW Group Due Diligence Programme
within the Purchasing and Supplier Network consists of vari-
ous coordinated procedures, measures and standardised
applications that are integrated in business processes such
as procurement.
The BMW Group has been using a risk filter to identify human
rights risks at the locations of direct and indirect suppliers*
since 2012. In a dynamic, location-specific risk analysis, it
draws on various country- and commodity-group-specific risk
databases and standardised risk maps, and includes all sup-
plier locations that have already been awarded orders as well
as all potential supplier locations. Since 2020, the risk filter
has also included risk databases and standardised risk maps
provided by the Responsible Business Alliance (RBA). This
view of risks is supplemented by commodity-group-specific
assessments provided by our internal purchasing experts.
Another component when assessing the potential negative
impacts of business activities is the Drive Sustainability
questionnaire, which is subject to continuous improvement.
In this context, both direct and indirect suppliers are required
to provide information on their sustainability performance
and the preventive and remedial measures they have imple-
mented. The information provided is checked for accuracy
and completeness by an independent third party. The infor-
mation is obtained from new suppliers as part of the contract
awarding process. Existing business relationships are audit-
ed and updated on a continual basis. Further GRI information. In
order to minimise the risks, we pay close attention to imple-
menting preventive measures. Further information is availa-
ble 7 online.
Our aim is to check compliance with our sustainability stand-
ards in the intermediate stages of the value chain on an ad
hoc basis. The audit is partially conducted via the supply
chain mapping of suppliers for whom an indirect risk has
been identified. Moreover, the BMW Group develops
raw-material-specific sustainability strategies and derives
so-called empowerment activities and pilot projects from
them to both ensure and improve compliance with environ-
mental and social standards.
7 GRI-Index: 308-1, 412-1, 412-3, 414-1
Preventive and remedial measures
In 2014, we agreed upon preventive measures with our direct
suppliers concerning working conditions, occupational
health and safety, human rights and the environment. The
extent of these measures is based on the size of the supplier
and the potential risks. Direct suppliers with more than 50
employees are required to implement preventive measures
such as guidelines regarding child labour, freedom of associ-
ation, and collective bargaining as well as occupational safe-
ty and environmental protection. We require suppliers with
more than 100 employees to communicate our sustainability
standards to their suppliers and have a control mechanism
in place in the form of externally audited and certified envi-
ronmental management systems. If a supplier employs more
than 500 people, we require, among other things, the publi-
cation of a sustainability report, a code of conduct, and ex-
ternally audited and certified occupational safety and envi-
ronmental protection management systems as additional
control mechanisms.
Other Information
During the year under report, the BMW Group identified sus-
tainability deficits at 61% of its suppliers (2020: 64%) and
agreed on corrective preventive measures. The measures
related to subcontractor management, reporting, control
mechanisms and mission statements. 1]
Remuneration Report
Combined Management Report Group Financial Statements
Production, Purchasing and Supplier Network
IMPLEMENTATION OF THE SUPPLY CHAIN DUE DILIGENCE ACT
Total
€ 64.1 billion
Other
1.3%
Germany
38.4%
Eastern Europe
18.3%
[[ In 2021, the German Bundestag passed the Supply Chain Due
Diligence Act, in which the BMW Group actively participated
through its involvement in the National Action Plan "Business
and Human Rights". We very much welcome the regulation that
has now been adopted and are also advocating for Europe-wide
directives that ensure fair competitive conditions.
Our sustainability programme has fulfilled key due diligence re-
quirements since 2014. For example, as a preventive measure, the
BMW Group requires its suppliers to draw up a guideline on work-
ing conditions and human rights. Since 2019, we only commission
suppliers with more than 500 employees if they have a certified
occupational health and safety management system in place in
accordance with ISO 45001. Our suppliers are also trained as part
of the certification process. Moreover, if we identify high-risk
suppliers, we conduct additional audits at the supplier's premises
with the help of our own assessors and external auditors. In the
year under report, we reviewed approximately 200 potential and
active supplier locations via this method². Auditing, however, was
hampered by pandemic-related travel restrictions and is thus be-
low the level of the previous year (2020:313). 1]
1 Direct and indirect procurement; without BMW Brilliance Automotive Ltd., Shenyang joint
venture.
2 The audits conducted worldwide were in accordance with the standards of the Responsible
Business Alliance (RBA) and the United States Environmental Protection Agency (EPA).
76
76
BMW Group Report 2021
To Our Stakeholders
Corporate Governance
* Direct suppliers are tier-1 suppliers of the BMW Group. Indirect suppliers operate
downstream in the value chain between tier-1 suppliers and raw materials suppliers.
77
BMW Group Report 2021
18
78
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Production, Purchasing and Supplier Network
[[Rigorous reduction and traceability of critical raw materials
Due to the complexity of multilayered, dynamic, globalised
value chains and customer-supplier relationships, it is a major
challenge to ensure sustainability standards right from the
raw materials extraction stage. We have a clear aspiration to
comply with environmental and human rights standards at
every level of our supply chains. Sourcing the raw materials
required to produce battery cells, such as lithium and cobalt, is
generally a highly challenging task. In order to establish trace-
ability and transparency across the supply chain for both of
these raw materials and to minimise the identified risks, the
BMW Group sources them directly from the producers, and
ALLIANCE FOR CROSS-COMPANY,
DECENTRALISED DATA EXCHANGE
[[ As part of the Catena-X Automotive Network initiative, the
BMW Group is working to establish an open, scalable, decentral-
ised network for the secure exchange of information and data
across companies in the automotive value chain. The network
is based on an industry consortium funded by the Federal Min-
istry for Economic Affairs and Energy (BMWK)* consisting of
national and international partners from the automotive value
chain. Continuously connected data chains will make it possible
to create completely digital images of automobiles and the core
processes of automotive value creation, so-called digital twins.
New business processes and services can be either made pos-
sible or collaboratively enhanced, based on these digital twins.
By using the European GAIA-X and International Data Spaces
Frameworks as the architectural basis for the Catena-X network,
the companies involved have already agreed on the essential in-
frastructural principles for project implementation.]]
makes them available to its own suppliers in order to produce
the current generation of battery cells. The strategy allows us
to fully document both the origin and the path of the lithium
and cobalt we use, while creating transparency regarding
mining methods at the same time.
In the automotive supply chain, which is particularly complex
by industry standards, traceability right back to the raw ma-
terial extraction stage can be significantly improved with
new digital tools. The BMW Group is committed to driving
improvements within the framework of initiatives such as the
Catena-X Automotive Network - and is working with partner
companies to standardise data and information flows in the
automotive value chain in order to comply with antitrust-re-
lated and legal requirements. Together with partners at Cat-
ena-X and the WBCSD, we are working on solutions to
measure actual carbon emissions data in the supply chain and make
it comparable, with the aim of effectively reducing carbon
emissions in our supply chain. 1]
7 Raw Material Outlook Platform. The platform currently contains
risk profiles for ten raw materials.
[[ Alongside the required prevention measures, the BMW Group
has been offering training courses aimed at buyers, internal
process partners and suppliers since 2012. To raise awareness
of social and environmental standards in the supply chain, we
explain interdependencies and clearly describe what we expect
of the companies we work together with. Moreover, together
with partner companies, in selected cases we are breaking new
ground with the aim of taking action at the very beginning of the
supply chain. Further GRI information GRI-Index: 412-21]
TRAINING FOR THE SUPPLY CHAIN
To Our Stakeholders
Combined Management Report
Production, Purchasing and Supplier Network
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Rest of Western
Europe
15%
[ We require suppliers with more than 100
employees to have externally audited and
certified environmental protection man-
agement systems in place. 1]
Checking effectiveness
In addition to the preventive measures mentioned above, the
BMW Group conducts audits of environmental and social
standards at supplier locations in high-risk regions or for
high-risk product groups. For this reason, we are members of
the Responsible Business Alliance (RBA) and the German
Association of the Automotive Industry (VDA). Together with
other automotive manufacturers and suppliers in the VDA,
we have developed the Responsible Supply Chain Initiative
(RSCI), an assessment programme newly established for this
purpose that we will implement as of 2022.
Since September 2021, we have supplemented our preven-
tion and remediation review methods with the standard-
ised use of RBA Voices, a grievance mechanism for em-
ployees of the companies we audit. RBA Voices will be
applied to all high-risk suppliers that are part of the RBA's
audit programme and do not yet have their own grievance
mechanism.
Any information received regarding potential breaches of
the BMW Group's sustainability standards in the supplier
network is processed by the internal Human Rights Contact
Supply Chain function, where tips can be submitted anony-
mously by telephone or email. In addition, suppliers and
their employees have the option of reporting potential hu-
man rights or environmental violations to our Compliance
Ombudsman for the supplier network. Whistle-blower systems
to uncover possible violations of the law and compliance controls. A human
rights officer was appointed for the first time during the year
under report. Compliance and human rights
Standardisation and cooperation
At the instigation of the BMW Group and with the support of
other automotive manufacturers in the Drive Sustainability
initiative, in 2017 an analysis of the 37 most important raw
materials was conducted at the European business network
CSR Europe. Since then, the resulting Material Change Report
has served as the basis for potential improvements and the
development of both BMW-Group-specific and common
solutions for the automotive and electronics industries. In
2021, further improvements were made to the report on the
[By signing a contract with the BMW Group, the supplier un-
dertakes to implement and apply the preventive measures
prior to the start of production or by an agreed target date.
The supplier undertakes to demand compliance with these
agreements from his subcontractors and to follow them up.
All BMW Group supplier contracts include resource efficiency
requirements and demand compliance with the principles of
the UN Global Compact and the International Labour Organ-
isation (ILO). For this reason, the BMW Group has set itself
the goal of ensuring compliance with these commitments.
7 GRI-Index: 308-2, 412-2, 414-2
← = Q
The health and performance of employees are key factors in
the success of the BMW Group. We are therefore committed
not only to maintaining the status quo, but also to conscious-
ly encouraging improvement. Despite the coronavirus pan-
demic and the challenges it has posed, we continued to
make good progress in terms of the various health manage-
ment and occupational safety measures in place throughout
the BMW Group. Overall, for example, the accident frequency
rate decreased.
59.9
The BMW Group takes an holistic approach to the subject of
diversity, focusing primarily on five key dimensions, namely
cultural background; age and experience; sexual orientation
and identity; physical and mental ability; and gender. The
two departments, HR Policy and Strategy and HR Oper-
ations, working together with the relevant disciplinary line
managers, are responsible for implementing the measures
decided upon. 1]
Promoting diversity
Many other employees are involved in internal networks that
have been set up, including a number of women's networks
at various locations and the BMW Group PRIDE group, which
campaigns across borders for the interests of the LGBT+*
community. Sexual Orientation and Identity The dialogue generat-
ed by the aforementioned internal networks creates further
momentum for the BMW Group's commitment to support
diversity.
Employee initiatives play a key role in ensuring that diversity
is actively practised. For example, two teams from the future
talents programme took part in the Germany-wide Diversity
Challenge of the Diversity Charter during the year under report.
One of the teams was awarded first place for developing a
diversity app.
Employee engagement
The BMW Group is committed to raising awareness for di-
versity throughout the organisation. In this context, for in-
stance, we organise an annual Diversity Week, which in 2021
involved 170 activities aimed at motivating employees world-
wide to address the issue of diversity. The international com-
munication campaign Driven by Diversity was also launched
at the same time. The aim of the internal campaign is to
make the diverse identities, ways of thinking and experi-
ences of our employees visible and to embed diversity even
deeper in the corporate culture of the BMW Group and in the
mindset of its employees.
Group-wide initiatives
Diversity-promoting concepts have also been developed in
relation to the composition of the Board of Management and
Supervisory Board. Information on the stipulated diversity
criteria and their implementation is provided in the Corporate
Governance Statement. GRI-Index: Diversity and equal opportunity
Using a variety of training events, presentations and dia-
logue formats, we endeavour to sensitize employees and
managers to the positive contribution that diversity can
make to the business. The BMW Group also promotes diver-
sity and equal opportunity in its recruiting and personnel de-
velopment strategies.
specialist departments, the HR department or the Works
Council if they have any pertinent concerns. The BMW Group
SpeakUP Line is a telephone service available in over 30
languages that gives employees worldwide the opportunity
to report possible violations both anonymously and confi-
dentially (Whistleblower Systems for Detecting Possible Legal Violations
and Compliance Controls). GRI-Index: 406-1
[ A diverse workforce brings with it different
perspectives, experiences and competen-
cies – making the BMW Group more
innovative and competitive. ]]
The BMW Group places great emphasis on an unprejudiced,
appreciative and inclusive working environment for all its
employees. Key principles such as protection against dis-
crimination, equal treatment of all employees and respect at
all times are firmly embedded in the BMW Legal Compliance Code
and the BMW Group Code of Human Rights and Working Conditions. All
employees can contact their line managers, the relevant
Embedding diversity
[ The BMW Group sees diversity as a strength. A diverse
workforce brings with it different perspectives, experiences
and competencies – and can therefore make us more in-
novative and competitive as a company. For this reason, we
encourage a working environment that actively incorporates
different perspectives. We embrace diversity in all its facets
on the basis of our diversity concept. Our guiding principle is
to create “a sense of community" in which people can work
together in a spirit characterised by appreciation, mutual un-
derstanding, openness and fairness.
-
DIVERSITY
← = Q
In order to improve occupational safety at the upstream
stages of the value chain, too, the BMW Group requires its
suppliers via the agreed purchasing terms and conditions
to comply with internationally recognised occupational
health and safety requirements.² GRI-Index: 403-71]
-
[12.8 accidents per million hours
worked. ]]
1 Number of occupational accidents with at least one day of absence from work per
one million hours worked.
2 Management systems in accordance with ISO 45001 and derived from the Interna-
tional Labour Organization (ILO) or UNGC (United Nations Global Compact).
*Abbreviation for all sexual orientations and forms of identity.
86
To Our Stakeholders
Combined Management Report
Employees and Society
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
BMW Group Report 2021
87
BMW Group Report 2021
To Our Stakeholders
29.7
2021 total
9.8
30.3
direct¹
13.3
59.9
53.6
indirect²
7.8
63.6
28.6
male
8.8
33.1
It is extremely important for the BMW Group that external
partners and their employees also find a safe work environ-
ment at our locations and take advantage of the available
safety measures. For this purpose, cooperation with con-
tractual parties is regulated in a separate contractor declar-
ation, enabling potential hazards to be identified and appro-
priate protective measures to be taken on this basis. On
large-scale construction sites of the BMW Group, all employ-
ees of partner companies are given safety briefings by
BMW Group experts. In the case of smaller contracts, the
contractor is responsible for performing this duty. The de-
partment responsible for placing the order monitors compli-
ance with the occupational health and safety regulations,
supported by the relevant occupational health and safety
unit as required.
10.4
59.2
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
2020 total
Employees and Society
[ BMW AG EMPLOYEES ACCORDING TO AGE GROUP,
DIVIDED INTO FUNCTIONS AND GENDER
in %
<30
years old
30-50
years old
2019 total
11.6
> 50
years old
29.2
59.2
Occupational safety along the value chain
An important prerequisite for ensuring that its occupational
safety and health procedures work well at all locations is the
provision of regular training to employees. Responsibility for
the training measures implemented in this field lies with the
Training Competence Centre, which comprises staff from the
occupational safety, ergonomics, environmental protection
and health management departments. The seminar curricu-
lum is drawn up in collaboration with safety specialists,
Company doctors and the BMW Group Academy. The spe-
cialised departments can also be called on to provide solu-
tions to help meet short-term needs.
Occupational safety and ergonomics at Group sites
Preventive measures such as safe and ergonomically fa-
vourable workplaces are well-established aspects of the
BMW Group's approach to health protection. The right to
health and safety in the workplace is also a key feature firm-
ly embedded in the BMW Group's Code on Human Rights and Working
Conditions, which includes a commitment to comply with cur-
rently applicable occupational health and safety legislation
worldwide. Furthermore, uniform standards applying to all
sites are constantly improved, and help to ensure that health
and safety requirements are consistent throughout the
Group.
]]
ment to ensure that their health and performance are main-
tained in the long term. GRI-Index: 403-3, 403-6
2021
2020
2019
2018
2017
2.0
سال
3.4
3.4
3.7
4.6
4.9
in %
[[ SICKNESS RATE¹
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
[ 99.72% of employees at BMW Group
plants work at a site covered by an
international occupational health and
safety management system certified to
either ISO 45001 or OHRIS level. 1]
← = Q
[Health management on a holistic basis
The BMW Group bundles all measures aimed at promoting
the health and performance of its workforce within its Health
Initiative programme. Current health-related topics such as
nutrition, exercise and fitness as well as behavioural ergo-
nomics, cancer prevention or mental resilience are ad-
dressed in action days, dialogue events and training courses,
with the aim of raising employee awareness for these impor-
tant issues.
Global approach
The BMW Group places great emphasis of ensuring that all
employees have access to its in-house health services. In
Germany, these services focus on providing acute care for
employees and temporary workers during working hours. In
certain countries, however, the Group's health service also
takes on primary care tasks, such as at the sites in Thailand,
India or Mexico. The BMW Group's Company doctors also
advise employees on individual preventive measures if re-
quested to do so, and help them adapt their work environ-
MEASURES ADOPTED IN LIGHT OF THE
CORONAVIRUS PANDEMIC
[[ The SARS-CoV-2 occupational health and safety regulations
applicable for Germany and the Works Agreement concluded in
2020 continued to apply in 2021. A Group-wide "Corona Manual",
which is updated regularly, provides guidelines for implementing
infection control measures. In addition to protection and hygiene
concepts, the emphasis of the prevention efforts made during
the year under report was on the vaccination of employees. The
BMW Group's health service teams carried out Covid-19 vacci-
nations at numerous international plant locations. In Germany
alone, the BMW Group carried out almost 50,000 vaccinations
in 2021. 1]
Employees and Society
Certified occupational health and safety management system
In addition to international cooperation arrangements, occu-
pational health and safety activities throughout BMW Group
are coordinated on a global basis in line with a corresponding
management system that is certified to ISO 45001 or OHRIS2
level at 28 out of 31 plants. This means that 70,459 (2020:
69,092) or 99.72% (2020: 99.7%) of permanent employees
and 14,772 or 98.98% of temporary employees³ at BMW Group
plants work at a site covered by an international occupational
health and safety management system. It is the stated aim of
the BMW Group to obtain certification to one of these inter-
national standards for all of its plants by 2025. The only plants
for which this remains to be done are the Manaus plant (Bra-
zil), the partner plant in Kaliningrad (Russia) and the contract
manufacturing facility in Born (the Netherlands). Employer and
employee representatives work together at nearly all locations
to bring about a continual improvement in health and safety
standards. GRI-Index: 403-1, 403-41]
1 BMW AG; number of hours of absence due to paid sick leave divided by the con-
tractually agreed number of working hours; up to 2018, absence due to unpaid was
also taken into account. Figures up to 2018 are not comparable.
2 Occupational Health and Risk Management System.
2017
2018
2019
2020
[ Accident frequency
2021
0
The measures implemented by the BMW Group are also
helping in accident prevention terms. The accident frequency
rate dropped further to 2.8 accidents per million hours
worked (2020: 3.2). There were no fatal accidents during the
year under report (2020: one) 7 Further GRI information. The
stated goal is to have occupational health and safety stand-
ards in place throughout the Group. The success of the
plants of our joint venture BMW Brilliance Automotive Ltd.,
Shenyang, China, in this respect with their very low acci-
dent frequency rate – is a good example. 7 GRI-Index: 403-9
-
The BMW Group conducts comprehensive risk and stress
analyses in order to identify potential work-related risks in
both production and office workplaces. Pilot work continues
on the so-called Digital Workplace Stress Management sys-
tem which is used to assess ergonomic aspects of work-
places on a fully automated basis. With this project, the
BMW Group is going beyond current legal requirements and
setting the benchmark for the automotive industry. The
range of risk assessments was expanded to include a mobile
workplace analysis in view of the increased scale of working
from home.
The BMW Group uses various management systems to as-
sess the methods and tools deployed across the Group. The
results of the assessments are subsequently used to en-
hance internal norms. As part of co-determination arrange-
ments, the Works Council and, if necessary, the representa-
tives of severely disabled employees and HR management
are involved.
The BMW Group ensures the quality of its processes by
means of annual internal audits. Audits and certifications of
sites are conducted by external service providers. All neces-
sary audits were again successfully performed in 2021, re-
sulting, for example, in the elimination of defects identified in
plant and equipment. 7 GRI-Index: 403-2
Regular training for employees
Recognising and avoiding risks
[The BMW Group requires its
suppliers to comply with
internationally recognised
occupational health and safety
requirements. 1]
|||||
3.2
3 Figures excluding temporary employees included in the management system.
85
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Employees and Society
Group Financial Statements
2.8
Corporate Governance
Other Information
← = Q
[[ACCIDENT FREQUENCY RATE¹
3.6
3.5
3.5
Remuneration Report
31.9
female
15.2
[[ As an enterprise with global operations and a highly diverse
workforce, we have a keen interest in encouraging tolerance
and understanding between various nations, cultures and reli-
gions. Together with the United Nations Alliance of Civilisations
(UNAOC), since 2011 we have regularly presented the Intercul-
tural Innovation Award. The Award is given in recognition of pro-
jects that seek constructive solutions to intercultural tensions
and conflict.
BUILDING BRIDGES BETWEEN CULTURES
[As a corporation with a multinational workforce and loca-
tions on six continents, we are very much a part of society.
For this reason, our ecological, economic and social respon-
sibility extends beyond our core business. The main focus of
our corporate citizen activities at our international locations
is to make a contribution towards achieving better living con-
ditions, educational opportunities and greater intercultural
understanding. Through a broad range of activities, we also
contribute towards the attainment of the UN's Sustainable
Development Goals.
CORPORATE CITIZENSHIP
Employees and Society
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
89
1 Regarding the term "management function" please see the Glossary.
2 The new definition of the term "employee" is provided in the Glossary.
[The BMW Group is also aware of the need to achieve a
high percentage of women in our future talents programmes.
The aim is to ensure that the share of women in the total
workforce and in management functions continues to rise in
the future. The share of women participating in the trainee
programme (Global Leader Development Programme) in-
creased to around 47% in 2021 (2020: 42%). By contrast,
the percentage in student proportion programmes (Fastlane,
Speed Up) fell slightly to around 32% (2020: 33%). 1]
Entire workforce
2019
2020
2021
Management positions
Entire workforce
by 2025, namely to 22% for the BMW Group and 20% for
BMW AG. By 2025, we aim to increase the share of women
in the BMW Group workforce as a whole to between 20 and
22% and to between 17 to 19% for the BMW AG.
The BMW Group's target is to reach a total of six million people
by 2025 with the award-winning projects. By the end of 2021,
the award-winning projects will already have benefited around
5.7 million people (2020: 5.1 million people).' The BMW Group
therefore considers it is well on the way to exceeding the target
it has set itself. ]]
The share of women in management functions¹ within the
BMW Group has been rising steadily for many years. Global-
ly, the share of female managers in the BMW Group stood at
18.8% at the end of 2021 (2020: 17.8%). At BMW AG, the
number of women in management functions has more than
doubled between 2011 and the present day. Expressed as a
percentage, the share of female managers at BMW AG was
17.5% at the end of the period under report (2020:16.2%).
2017
Management positions
2018
2019
2020
2021
The share of women in the BMW Group workforce as a whole
reached 19.7% (2020: 19.5%). At BMW AG, women ac-
counted for 16.0% of the total workforce (2020: 15.9%)
Further GRI Information.
Our aspiration
The BMW Group aspires to address concrete needs and
achieve a long-term impact by means of its corporate citi-
zenship activities. We therefore focus primarily on projects
where our expertise can be best leveraged to make a pur-
poseful contribution. In the event of a crisis, we also provide
fast and unbureaucratic assistance. During the year under
report, for instance, the BMW Group made € 1.5 million
available for rescue services in connection with the flood dis-
aster in Germany.²
The BMW Group's expenditure on corporate citizenship ac-
tivities in 2021 totalled € 34.6 million (2020: € 33.6 million).
These include social projects, communication activities,
sponsorship of cultural and sporting events, and donations
of various kinds.
1.4%
Culture
9.6%
Society /
Community
24.9%
2 The BMW Foundation Herbert Quandt is a corporate foundation of BMW AG. The
Foundation implements its programme with the income earned on endowment
assets or received in the form of regular financial contributions from the bene-
factor. In accordance with its statutes, the independent foundation is advised
by a board of trustees, on which the Chairman of the Supervisory Board and
one member each of the Supervisory Board and the Board of Management of
BMW AG are represented.
Sports
6.2%
Environment /
Sustainability
1 Designation until 2020: BMW Group Award for Social Commitment.
[The BMW Group Award honours
particularly dedicated social
we support young employees who
are making a valuable social or
ecological contribution with innova-
tive technologies. 1]
[With our accelerator programme,
[[The mission statement of the 7 One Young World network is to
meet global challenges together, while creating lasting, global
connections. This guiding principle brings together young people
from all over the world who are committed to social responsibility.
The BMW Group has been sending a delegation to the One Young
World Summit since 2016. In 2021, around 60 young employees
from the BMW Group took part in the event. ]]
CREATING A FORUM FOR YOUNG TALENT
ACROSS THE WORLD
Inspiring Responsible Leadership -
the BMW Foundation Herbert Quandt
The BMW Foundation Herbert Quandt2 is an independent corpor-
ate foundation and, as an important partner, contributes
with its activities to the social responsibility aspirations of
the BMW Group. At the same time, the Foundation encour-
ages leaders worldwide to take action as "Responsible
Leaders" and is committed to help shape a peaceful, just
and sustainable future. The Foundation strives to promote
the UN Sustainable Development Goals. These goals also
play a key role in the Foundation's grants, collaborations and
investments, with social and sustainability-related impacts
taken into account in every investment decision. Detailed in-
formation on this process is provided in the latest Impact In-
vesting Report. Significant activities during the year under re-
port included the 7 RESPOND Accelerator programme, the Equity,
Diversity, and Belonging Week and a Responsible Leaders Lab on
the topic of Reshaping Mobility to Serve Citizens' Needs. 1]
engagement on the part of our
employees. 1]
2018
in € million
2021
Improving prospects for life with educational projects
At its various locations, the BMW Group develops education-
al projects that facilitate young people's first steps into the
labour market and, in this way, offer them better prospects
for life. With its programmes from primary school level
through to higher education, the BMW Group is making a
[[TOTAL EXPENDITURE ON CORPORATE
CITIZENSHIP BY TYPE OF ACTIVITY3
in € thousand
Commercial Activities →
Community Investment →
Donations/
payments in kind →
37,242
[[DONATIONS WORLDWIDE
33,436
34,646
0
2017
2018
2019
2020
33,229 33,631
2017
0
19.7
18.8
Gender
In 2021, the BMW Group systematically implemented the
measures decided upon in 2020 aimed at promoting women
in the workforce. One focus was placed on future talents and
executive management training programmes. Increasing the
share of women at all levels. In the Inspired Lead leadership pro-
gramme, for example, gender diversity is taken into account
in both the selection of participants and the learning content.
The option of filling management functions in tandem (joint
leadership) was also well received by employees in the first
year after the programme was introduced. In 2021, our
measures relating to the promotion of women were evaluat-
ed externally on the basis of the Women's Career Index. This
assessment confirmed the effectiveness of the measures
taken and the progress we have made.
[t People from over 110 countries
work successfully together at
the BMW Group. 1]
|||||
4.0
The focus we place on sexual orientation and identity is a
clear reflection of diversity in action within the BMW Group.
An open-minded, unprejudiced and respectful working envi-
ronment is a prerequisite for LGBT+ employees to be able
to contribute their full potential. For this reason, the
BMW Group uses a range of informational events and dia-
logue formats to raise awareness of LGBT+ issues among
employees and managers. We are supported in the imple-
mentation of measures by the internal network BMW Group
PRIDE. We also send a clear signal to the outside world: in
2021, for instance, we joined the PROUT EMPLOYER net-
work of the Prout at Work Foundation and signed the UN Stand-
ards of Conduct for Business for Tackling Discrimination
against LGBTI people.
2017
2019
2020
2021
]]
1 Clock-controlled and production employees.
2 All employees without clock control.
2018
3 The share of employees with severe disabilities is based on the statutory require-
Sexual orientation and identity
6.6
|
63.4
21.4
]]
[Cultural background
People from over 110 countries work successfully together at
the BMW Group. Further GRI Information A broad range of op-
portunities for personnel development, qualification and fur-
ther training helps to promote intercultural understanding. For
example, the BMW Group deliberately gears the Global
Leader Development Programme towards international par-
ticipants. As in the previous year, new employees from eight
countries took part in the programme. Moreover, the
BMW Group uses various dialogue formats to ensure an un-
prejudiced working environment in a spirit of mutual respect.
Age and experience
6.5
The BMW Group sees demographic change as both a chal-
lenge and an opportunity. Since 2019, as part of the Senior
Expert Programme, retired employees have been passing on
their knowledge and experience to their younger colleagues.
Conversely, within the Reverse Mentoring Programme or-
ganised by the BMW Group, older employees benefit from
the new knowledge of the younger generation. We train our
managers to recognise and leverage the opportunities that
mixed-age teams offer. GRI-Index: 404-2
In line with its core values, the BMW Group is convinced of
the need to offer an inclusive and barrier-free working envi-
ronment for employees with physical or mental disabilities.
This begins with providing training opportunities for severe-
ly disabled young people and continues by designing work-
places that meet their needs. We have reaffirmed this as-
piration in 2021 by joining the international initiative The
Valuable 500. Furthermore, in the year under report BMW AG
awarded contracts amounting to around € 24.2 million
(2020: € 25 million) to workshops staffed by people with
severe restrictions.
[[SHARE OF EMPLOYEES WITH SEVERE
DISABILITIES AT BMW AG³
in %
6.5
6.3
6.4
Physical and mental abilities
BMW Group Report 2021
ments in accordance with the German Social Code (SGB IX).
88
POSITIONS AND IN THE TOTAL WORKFORCE OF THE
BMW GROUP²
in %
16.1
14.0
16.5
15.1
15.7
15.5
PERCENTAGE OF WOMEN IN MANAGEMENT
15.9
16.2
19.3
19.9
16.0
17.2
19.3
17.2
19.5
17.8
16.0
17.5
"The figure for 2021 comprises all orders completed and billed by 31 December
2021.
in %
BMW Group at 18.8 %.
88
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Employees and Society
Group Financial Statements
Corporate Governance
PERCENTAGE OF WOMEN IN MANAGEMENT
POSITIONS AND IN THE TOTAL WORKFORCE AT
BMW AG²
Remuneration Report
← = Q
BMW AG regularly compares the monthly salary levels and
variable remuneration of women and men employed by the
Company. The respective degree of employment and func-
tional level are also taken into account. The objective of the
audit is to ensure that the remuneration structures result in
fair pay. There were no significant differences in the overall
remuneration package between the genders within BMW AG
in the year under review. GRI-Index: 405-21]
Increasing the share of women
The BMW Group is working continuously to increase the
share of women in the workforce as a whole and in manage-
ment functions in particular. This remains a challenging task
in that it is still the case that more men go through the pro-
cess of vocational training, particularly in technical fields,
and are therefore in the majority on the labour market.
The BMW Group has set targets for the percentage share of
women at all levels of the Company. We have raised our tar-
gets for the percentage of women in management functions
Share of women in manage-
ment functions in the
Other Information
84
One of the parameters the BMW Group uses to quantify the
success of its health management measures is the sickness
rate. At 3.4%, the sickness rate at BMW AG was at the same
level to one year earlier (2020: 3.4%). The Group continu-
ously strives to improve this figure. 7 GRI-Index: 403-10
Centralised health and occupational safety management
Health and occupational safety activities within the
BMW Group are combined in the Work Environment, Health,
Group Safety and Group Data Protection unit and allocated
to the Board of Management's Human Resources and Social
Affairs area of responsibility. The managers in the various
specialist departments are responsible for all related pro-
cesses, supported and advised by the centralised health
management and occupational safety teams. ]]
Employer rankings and awards
Employees have varying needs when it comes to organising
their work and their working hours. For this reason, the
BMW Group offers a great deal of individual personal scope
in the form of working time arrangements, including flexible
working hours, remote working, additional holidays in return
for a corresponding reduction in salary, sabbaticals, and
temporary or permanent part-time solutions. Further GRI infor-
mation During the reporting year, under the title Connected-
Works, we continued to develop a process that was started
back in 2013 to implement a diverse range of options for em-
ployees to work within a spatially flexible, autonomous and
needs-oriented environment.]]
the latest ranking of the
World's Most Attractive
Employers 2021.
The BMW Group confirmed its
position as the most popular
automotive manufacturer in
As a key factor for the BMW Group's attractiveness as an
employer, we aim to ensure that, based on their overall re-
muneration package, our employees earn above average for
the respective labour markets. To confirm this, we conduct
remuneration studies each year on a worldwide basis. The
total salary package consists of a monthly remuneration
and a variable component dependent on the BMW Group's
overall performance. We also offer additional benefits such
as Company pension schemes and an attractive range of
mobility benefits, which can differ from country to country.
7 GRI-Index: 102-35, 102-38, 102-39, 401-2, SASB-Index
2021
[Attractive employment conditions
2020
2019
2018
2017
0
4.71
5.51
2.78
Highly regarded employer ratings once again ranked the
BMW Group as one of the world's most attractive employers.
In 2021, for instance, the BMW Group was again the world's
top-ranked automotive manufacturer in the current ranking of
the World's Most Attractive Employers 2021 as rated by Universum, a
well-known study provider. Among aspiring engineers, the
BMW Group ranked third worldwide, directly after Google and
Microsoft. For IT students, the BMW Group is the only auto-
motive company among the world's top 10 employers, mostly
in competition with prestigious technology enterprises. The
BMW Group again achieved the top spot in the Trendence
Professionals Barometer for Germany in 2021.
2.64
Results of the employee survey
[The survey conducted in autumn 2021 showed a signifi-
cant improvement in the HPO-I compared with two years
earlier. At the same time, the participation rate rose to a
record high, with some 100,000 employees or 79% of the
total workforce² taking part in the survey. Moreover, signifi-
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
Employees and Society
To Our Stakeholders
BMW Group Report 2021
82
3 E-roaming enables electric vehicles to be charged irrespective of the provider.
2 All BMW Group employees on fixed contracts at 1 August 2021.
1 BMW AG; departures of employees with permanent employment contracts.
At the same time, we encourage our employees to use alterna-
tive means of transport such as bicycles, including BMW Lease-
Rad arrangements. The Munich location is also served by a net-
work of Group-owned shuttle buses -30% of which are already
fully electric - that operate between the Group's various sites.
The BMW Group also subsidises the use of public transport with
the BMW JobTicket in Munich. ]]
[[The BMW Group offers its employees a variety of eco-friend-
ly mobility and commuting solutions. The creation of one of
Germany's largest corporate charging networks marks a spe-
cial milestone. The network of some 5,000 charging points at
numerous locations in Germany is available to charge not only
company and fleet vehicles, but employees' private electric ve-
hicles, too. More than 1,000 e-roaming³ charging points are also
available for use by the general public. All charging points are
powered entirely by renewable electricity sources.
EMPLOYEE MOBILITY
cant progress was evident in all areas surveyed. For in-
stance, the BMW Group's corporate strategy received a
very high level of approval from the workforce. Particularly
noteworthy was the fact that 84% of participants were
convinced by the strategy of integrating sustainability and
setting ambitious targets in this respect. They also sig-
nalled a high level of willingness and motivation to play an
active role in this process, with some 82% of respondents
concluding that they are optimistic about the future of the
BMW Group. 1]
The Group-wide survey of the workforce conducted every
two years enables employees to assess the organisation's
performance on a regular basis and from their own perspec-
tive. The assessment is performed with the aid of the High-
Performance Index (HPOI).
3.39
as a percentage of workforce
EMPLOYEE ATTRITION RATE1
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
90
90
3 The BMW Group's corporate citizenship activities are divided into three main
areas: donations (comprising cash and non-cash contributions), community in-
vestments (including expenditure on our own project initiatives and partnerships
as well as corporate volunteering) and commercial activities (covering activity
and event sponsoring undertaken to promote culture, sports and sustainability).
Commercial activities also include cause-related marketing.
"In the form of cash and non-cash contributions.
2 Of which approximately €900,000 was called upon in 2021.
1 The number of people supported by projects is provided by the award winners
at the end of each year. It is calculated based on combined data from media and
sources. The figure reported relates only to the people who benefit directly from
the projects concerned.
lasting contribution towards more equal opportunity. The
BMW Group bases its funding approach on the specific
needs and requirements at each location. During the year
under report, the BMW Group supported a range of educa-
tional projects for example in China, India, South Korea,
Russia and the USA. Further information is provided and ad-
ditional projects described on the website 7 BMW Group Cor-
porate Citizenship. ]]
Science /
Education
57.8%
Politics
0.1%
€ 16.6 million
Total
* Includes SpeedUp (an undergraduate programme) and Fastlane (a master's
programme).
Other Information
← = Q
Employees and Society
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
Employees and Society
To Our Stakeholders
← = Q
BMW Group Report 2021
We encourage young talented people within the BMW Group
to use their know-how to set up their own projects to help
solve the social and ecological challenges of our day. In the
"Innovation for Impact" accelerator programme, we support
young employees who are making a valuable contribution
with innovative technologies.
Promoting innovation
The BMW Group actively involves its employees in its social
engagement activities. Over the past ten years, particularly
dedicated charitable work has been recognised with the
BMW Group Award for Social Engagement. In 2021, the
BMW Group honoured four employees for their social en-
gagement, in one case even with a special prize sponsored
by the Doppelfeld Foundation. The BMW Group Awards for
social engagement are each endowed with € 10,000 and di-
rectly benefit the projects concerned.
Awards for social engagement
-
A great number of BMW Group employees around the world
are committed to social and environmental issues in a va-
riety of ways. This includes, above all, supporting education-
al projects and campaigns for the benefit of the communities
at the locations where we have operations. In order to make
it easier for employees to become involved in such activities,
the BMW Group launched a so-called Social Week in 2021,
comprising a lecture series as well as introductory events. In
addition, the creation of a Social Marketplace provides em-
ployees with a digital platform on which they are able to ob-
tain information about charitable projects and exchange
ideas with like-minded people. Environment-related initia-
tives such as collecting plastic waste, planting trees or
growing vegetables - are also a recurring feature of the pro-
jects pursued by our employees.
[Strengthening employee engagement
81
[ Despite the good progress, however, employees also
identified a number of potential areas for optimising busi-
ness processes. The results of the survey will form the ba-
sis for concrete measures that are scheduled for implemen-
tation by mid-2022. GRI-Index: 102-43
Remuneration Report
Our employees represent a crucial stakeholder group for the
BMW Group. As such, we actively involve them in our cor-
porate strategy development. The internal dialogues on the
topic of sustainability, first introduced in 2020, have become
one of the main platforms used to achieve this end. At the
two dialogue events held in 2021, we provided information
and findings on sustainability topics such as decarbonisa-
tion and the social dimension of sustainability. Dialogue with
the stakeholders
2021
Securing future talents
The BMW Group covers its recruiting requirements with the
help of future talents programmes, either with an academic
emphasis or through qualified vocational training. Trainees
are currently preparing for their future occupations within the
BMW Group in 30 skilled trades and 18 dual study pro-
grammes at 19 training locations around the world. The total
number of apprentices, dual study students and participants
in future talents programmes* remained at the high level of
4,517 in the year under report (2020: 4,672; -3.3%). In Ger-
many, some 1,200 young people began an apprenticeship or
a dual study programme in 2021 (2020: 1,200). A similar
number of apprenticeships and study places has been an-
nounced for the coming year. BMW AG continues to offer its
apprentices and dual study students permanent employ-
ment at the BMW Group's plants and headquarters after
they have completed their vocational training.
[Focus on future-oriented fields
Electrification, automation and connectivity as well as artifi-
cial intelligence (AI) are shaping and influencing apprentice-
ship and future talents training programmes offered by the
BMW Group. The relevant programme contents are therefore
updated annually to ensure that our expertise needs for the
future are adequately covered. In the year under report, for
instance, training for all vocational fields was expanded to
include fundamental aspects of cloud computing, 3D print-
ing and data analytics. At the same time, further vocational
profiles were added in 2021, such as IT specialist for data
and process analysis.
HEALTH AND
PERFORMANCE
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
Employees and Society
To Our Stakeholders
Employee involvement
83
2 Vocational and further training comprises the in-house training of all BMW Group
apprentices (Glossary [Apprentices]) as well as the further training of BMW
Group employees and temporary staff at consolidated companies worldwide.
2020
1 Further training of BMW Group employees in consolidated and non-consolidated
100% subsidiaries worldwide. Data are collated on the basis of direct inputs of
participants and, to a small extent, by extrapolation. Data also include e-learn-
ing formats.
2019
2017
← = Q
[Key role for managers in the transformation process
BMW Group managers have a key role to play in shaping the
ongoing transformation process. For this reason, the
BMW Group promotes personalities who have the right atti-
tude and willingness to perform, joint leadership skills and a
high degree of identification with the organisation. We en-
courage leadership skills by means of strategically aligned
management training programmes based on a uniform un-
derstanding of leadership. Apart from careers in manage-
ment, the BMW Group also offers the so-called "Expert
Career", which does not generally involve disciplinary re-
sponsibility for other employees. It focuses instead on tech-
nical, project-related or corporate topics as well as other
tasks driving the transformation process.
Recruiting and promoting new staff
Through its comprehensive range of apprenticeships, the
BMW Group creates a broad range of attractive employment
prospects for young people. Promoting future talents also
plays a key role in building up expertise within the Group. 1]
[The recruitment and promotion
of future talents is increasingly
focused on the future-oriented
topics of electrification,
automation and artificial
intelligence. 1]
APPRENTICES AND PARTICIPANTS IN YOUNG
TALENT PROGRAMMES¹
Number
4,964
4,801
4,750
4,672
4,517
iliii
4,000
2018
]]
BMW Group Report 2021
2020
2018
2017
0
23.1
Illi
16.0
26.0
26.6
27.1
Number of hours
[AVERAGE HOURS OF FURTHER TRAINING1
The scale of the training initiative is reflected in the signifi-
cant increase in the number of participants compared with
the previous year. Training measures undertaken across the
BMW Group in 2021 involved a total of 1.1 million participants
(2020: 770,000). Each member of the BMW Group work-
force received an average of 23.1 hours of training during the
year under report (2020: 16.0 hours). Further GRI Information. ]]
In total, the BMW Group invested € 388.6 million (2020:
€ 279.0 million) in training and further education in the fi-
nancial year 2021. The total expense for the years 2020 and
2021 therefore exceeds half a billion euros. GRI-Index: 404-2
In 2021, the BMW Group launched the largest training initia-
tive in its history, aimed at promoting and maintaining the
ability of its workforce to perform with the requisite expertise
and ensuring the Group's long-term competitiveness. Apart
from electric mobility and digitalisation, the BMW Group is
also focusing on a number of future-oriented fields, such as
electrics and electronics, data analytics, innovative produc-
tion technologies and new working methods.
Largest training initiative in the BMW Group's history
locations.
necessitated by electrification with substantial levels of in-
vestment at its various
The transformation of the automotive industry entails nu-
merous far-reaching changes. The BMW Group takes a for-
ward-looking approach to the related challenges for the
workforce structure, equally considering social, economic
and technological developments. Against this backdrop, we
strive continuously to ensure our employees have the neces-
sary skill sets, for both the present and the future. The
BMW Group is combining the transformation of expertise
Developing expertise for the future
The BMW Group's ideas management system as a further
opportunity for employee involvement encourages employ-
ees to contribute ideas on matters that do not fall within their
normal remit. Employee ideas that generate a positive finan-
cial effect for the BMW Group are rewarded with the pay-
ment of a bonus. In 2021, 4,810 ideas were submitted (2020:
5,980), more than a quarter of which were directly related to
sustainability - similar to one year earlier. A total of 1,318
ideas were implemented during the year under report (2020:
1,561), resulting in first-year benefits totalling € 30.4 million
(2020: €18.2 million). GRI-Index: 102-42
2019
2021
2020
INVESTMENT IN TRAINING AND FURTHER
EDUCATION²
2019
2018
2017
200
illil
279
349
370
2021
373
389
in € million
Other Information
← = Q
Responsibility Statement and Auditor's Report
Connection to figures in the Group Financial Statements
For each topic, an assessment was carried out to identify figures
reported in the Group financial statements that enable a better
understanding of the NFS, and which therefore need to be dis-
closed and explained.
Sustainable Development Goals
With its business operations, the BMW Group is in a position to
contribute directly to the achievement of Sustainable Develop-
ment Goals (SDGs), in particular SDG 3, 8, 9, 12 and 13. Infor-
mation about the importance of these goals for the BMW Group
is provided on our website.
Forward-looking statements
Remuneration Report
This report contains various forward-looking statements con-
cerning future developments that are based on the current status
of the BMW Group's assumptions and forecasts. These state-
ments are therefore subject to a variety of predictable and unpre-
dictable risks, uncertainties and other factors, which means that
the actual outcome, including that of the BMW Group's net as-
sets, financial position and results of operations, its development
or performance, could differ considerably from those statements.
5
Certain non-financial performance figures reported by the
BMW Group are based on a significant number of estimates and
valuations. Some are complex and subjective in nature, or sub-
ject to uncertainty for other reasons. The BMW Group is also con-
tinuously updating the policies and procedures used to calculate
its non-financial performance figures. It is not always practical to
apply new policies and procedures to prior reporting periods. Alt-
hough the methodology used to calculate indicators is in line with
standard practice, some indicators are not directly comparable
with the values reported by other companies.
5
3
Group Financial Statements
3.1
36,227
35,122
8
32,867
29,598
1.2
3,214
3,176
2,748
2,284
30,044
11
37.5
-19,443
The BMW Group is also required to ensure that third parties re-
port relevant data to the BMW Group correctly. These third par-
ties include independent dealerships - the overwhelming major-
ity of which report vehicle delivery figures to the BMW Group -
and suppliers, which provide the BMW Group with data on the
implementation of agreed measures designed to reduce carbon
emissions.
Statement on Corporate Governance
The Board of Management and the Supervisory Board of BMW
AG prepare a yearly combined Statement on Corporate Govern-
ance in accordance with § 289 f and § 315 d HGB to report on
corporate governance within the BMW Group. The Statement on
Corporate Governance is published on BMW AG's website at
7 www.bmwgroup.com/ezu. It also includes the Declaration of Com-
pliance pursuant to § 161 AktG.
Editorial comments
Key figures presented in the report have been rounded in accord-
ance with standard commercial practice. In individual cases, this
may mean that figures do not add up exactly to the stated total
and that percentages cannot be derived from the values shown.
Summarised disclosures of fuel consumption, carbon emissions
and electricity consumption are provided in the section
7 Consumption and Carbon Disclosures.
* See Glossary for a definition of deliveries.
8
4,830
7,411
- 15.9
- 16,231
- 19,298
- 19,857
- 14,194
Preparation of non-financial performance figures
To Our Stakeholders Combined Management Report
Publication and scope
7
-
Guidelines on Alternative Performance Measures issued by
the European Securities and Markets Authority (ESMA)
German Corporate Governance Code (GCGC)
Furthermore, the Combined Management Report makes refer-
ence to the following reporting standards and transparency
requirements:
The Combined Management Report is also based on:
← = Q
Other Information
Remuneration Report
BMW Group Report 2023 To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
About This Report
6
* Part of the Combined Management Report.
Taxonomy Regulation (Regulation (EU) 2020/852 of the
European Council and of the European Parliament on the
Establishment of a Framework to Facilitate Sustainable
Investment, and amending Regulation (EU) 2019/2088)
and its delegated acts ( EU Taxonomy)
German Stock Corporation Act (AktG)
German Accounting Standards (GAS 20) underpinning
HGB requirements
Combined Non-Financial Statement (NFS) at Group and
Company level in accordance with § 289 b and § 315 b
HGB (NFS Index)
Content of the Management Report in accordance with
§§ 289 and 315 HGB
German Commercial Code (HGB) (among other relevant
legislation)
-
The Combined Management Report is based on the following le-
gal frameworks:
Combined Management Report
The BMW Group Report is based on the following reporting and
accounting standards.
FRAMEWORKS APPLIED
Reporting Outlook for 2024
Non-financial disclosure requirements are continuing to evolve.
From the 2024 reporting year onwards, the BMW Group will be
subject to the transparency requirements of the Corporate Sus-
tainability Reporting Directive (CSRD) and the European Sustain-
ability Reporting Standards (ESRS). We are currently implement-
ing the new sustainability reporting standards and assessing
their impact on the structure and scope of the BMW Group's
reporting with a particular focus on the management report.
GRI Index: 2-4
GRI Standards 2021 of the Global Reporting Initiative (GRI)
(GRI Index)
BMW Group Report 2023
About This Report
SASB Standards according to the Sustainable Accounting
Standards Board ( SASB Index)
Group Financial Statements
The material topics covered in our non-financial reporting for the
reporting year are derived from the materiality analysis which the
BMW Group performed in 2022 in accordance with § 289 c and
§ 315 c HGB and validated for the 2023 reporting year. The top-
ics that were categorised as material remain those where the ac-
tions of the BMW Group may have a significant sustainability im-
pact on the environment and society (inside-out) and which may
be of high business relevance to the BMW Group (outside-in). As
a result, our focus is on alternative drive systems Electromobility,
decarbonisation along the value chain Carbon emissions, respon-
sible sourcing Purchasing and Supplier Network, resource manage-
ment in line with the principle of the circular economy Circular
Economy, Resource Efficiency and Renewable Energy as well as compli-
ance Compliance and Human Rights. Employee diversity and equal
opportunity Diversity, Equal Opportunity and Inclusion as well as an at-
tractive workplace Employer Attractiveness and Employee Development
are also given high priority within the BMW Group. Our reporting
under the GRI standards also covers topics which are considered
material from a double materiality perspective because they
have a significant environmental impact (inside-out) or are of
high business relevance to the BMW Group (outside-in). This
concept must be applied from 2024 onwards in accordance with
the Corporate Sustainability Reporting Directive. The topics cov-
ered in this context are responsible digitalisation ▾ Innovation,
Digitalisation and Customer Orientation, Product and Road Safety
7 Product Quality and Safety, Occupational Health and Safety Health
and Performance and Sustainable Governance Performance
Management.
Materiality analysis
assurance and are denoted with the symbol [[ ]]. The section
7 Dialogue with Stakeholders and the additional information provided
in the section Further GRI Information were also subjected to a lim-
ited assurance engagement. Information provided in the SASB
Index is also subjected to a limited assurance review on a volun-
tary basis. The TCFD Index indicates the sections in which the
depth of the audit is identified. Certain individual parts of the
7 NFS as well as the remainder of the Combined Management
Report were also subjected to a reasonable assurance engage-
ment.
The contents of the NFS, in accordance with § 289 b ff. and
§ 315 b ff. HGB, were subjected to an audit to obtain limited
PwC has audited the Group Financial Statements and the Com-
bined Management Report for the 2023 reporting year and is-
sued an unqualified audit opinion thereupon. Further information
is provided in the Independent Auditor's Report and the Independent
Practitioner's Report on Non-financial Disclosures.
The report, comprising the Combined Management Report, the
Group Financial Statements and the additional GRI information,
has been subject to an annual independent audit by Pricewater-
houseCoopers GmbH Wirtschaftsprüfungsgesellschaft ("PwC" or
"Auditor"). Unaudited sections are marked accordingly. The ex-
ternal audit serves to underpin the reliability and trustworthiness
of the information contained therein for the public. The external
audit supports the Supervisory Board of BMW AG in fulfilling its
auditing duties. Any links and disclosures that refer to infor-
mation outside the BMW Group Report and the GRI Index are
not part of the audit. The Remuneration Report 2023 was prepared
in accordance with the requirements of § 162 of the German
Stock Corporation Act (AktG) and its content audited by PwC.
External audit
7 GRI Index: 2-2, 2-3, 2-4
The BMW Group Report is published annually to coincide with
the BMW Group Annual Conference - most recently held on 15
March 2023 and is subsequently available in both German and
English on the BMW Group website. The GRI Index is also avail-
able on the website as a separate document. The reporting pe-
riod covers the financial year from 1 January to 31 December
2023. The statements made in the report generally relate to the
BMW Group reporting entity. Any deviations are marked accord-
ingly. The BMW Group Report 2024 will be published in March
2025.
2,368
ADDITIONAL INFORMATION
ON THE REPORT
The Group Financial Statements of Bayerische Motoren Werke
Aktiengesellschaft for the year ended 31 December 2023 have
been prepared in accordance with International Financial Re-
porting Standards (IFRS) as endorsed by the European Union
(EU) and the supplementary requirements of § 315 e HGB.
13,400
13,999
18,482
32.0
4,499
2,162
9,870
17.2
12,981
Recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD) (TCFD Index)
7.0
EBIT margin in %
123,602
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
BMW Group in Figures
9
BMW GROUP IN FIGURES
GROUP
To Our Stakeholders
2019
2020
2021
2022
2023
Change in %
Profit/loss before tax in € million
KEY PERFORMANCE INDICATORS
STAKEHOLDERS
TO OUR
01
6- Other Information
Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
BMW Group Report 2023
Other Information
← 三〇
9
BMW Group in Figures
12
Report of the Supervisory Board
20
Statement of the Chairman of the Board of Management
27
The Board of Management
29
Composition of the Board of Management and Supervisory Board
32
Dialogue with Stakeholders
35
BMW Group and Capital Markets
7,118
5,222
Employees at year-end¹
126,016
2.7
10.3
8.6
9.8
14.0
29.0
12.7
24.0
18.1
20.2
11.6
2,537,504
2,325,179
2,521,514
2,399,632
2,554,183
6.4
1.6
91,682
80,853
95,476
4.9
132,277
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition, see Glossary).
FINANCIAL SERVICES SEGMENT
120,726
16,060
118,909
Share of women in management positions in the BMW Group (in %)²
17.2
17.8
18.8
23,509
149,475
20.2
17,096
154,950
20.8
- 27.3
3.7
3.0
AUTOMOTIVE SEGMENT
RoCE in %3
Deliveries
Share of all-electric cars in deliveries (in %)
CO2 emissions of the EU new vehicle fleet (in g/km) 5,6,7
CO₂ emissions per vehicle produced (in tonnes)
MOTORCYCLES SEGMENT
EBIT margin in %
ROCE in %10
Deliveries
RoE in %
-
5 - REMUNERATION REPORT
4- Responsibility Statement and Auditor's Report
↓
> 20%
↓
LINK TO CHAPTER →
The BMW Group Strategy
4
BMW Group Report 2023
Contents
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
in the supply chain
Remuneration Report
← = Q
5
About This Report*
1 TO OUR STAKEHOLDERS
9
BMW Group in Figures
12
Report of the Supervisory Board
20
Other Information
22.1
Reduction in carbon emissions
80%
Automotive segment
8-10%
Return on capital employed
of Automotive segment
≥ 18%
This is a simplified presentation of the data. Detailed information on the performance figures
as well as the identification of the depth of the audit can be found in the respective chapters.
NON-FINANCIAL GOALS - TARGETS FOR THE PERIOD UP TO 2025
% Share of women
Å% |
in management positions
22%
↑
NON-FINANCIAL GOALS - TARGETS FOR THE PERIOD UP TO 2030
Share of all-electric
cars in deliveries
> 50%
Reduction in carbon emissions
during a vehicle's use phase
> 50%
Reduction in carbon emissions
per vehicle in production
↑
27
29
Statement of the Chairman of the Board of Management
The Board of Management
244 Responsibility Statement by the Company's Legal
Representatives
245 Independent Auditor's Report
252 Independent Practitioner's Report
38
Overview of the BMW Group
42
The BMW Group Strategy
52
Financial Performance
78
EU Taxonomy
90
Products
104 Production and Supplier Network
115 Employees and Society
123 Outlook
126 Appropriateness and Effectivness of the Internal
Control System and Risk Management System
127 Risks and Opportunities
142 Compliance and Human Rights
146 Internal Control System
147 Disclosures Relevant for Takeovers and Explanatory
Comments
2 COMBINED MANAGEMENT REPORT
EBIT margin in the
Part of the Combined Management Report.
330 Glossary and Explanation of Key Figures*
337 Financial Calender
Composition of the Board of Management and
Supervisory Board
32
Dialogue with Stakeholders
35
BMW Group and Capital Markets
3 - GROUP FINANCIAL STATEMENTS
152 Income Statement for Group and Segments
153 Statement of Comprehensive Income for Group
154 Balance Sheet for Group and Segments at 31 December 2023
156 Cash Flow Statement for Group and Segments
158 Statement of Changes in Equity for Group
160 Notes to the Group Financial Statements
4 - RESPONSIBILITY STATEMENT AND AUDITOR'S
REPORT
6 - OTHER INFORMATION
307 Further GRI Information
318 SASB Index
321 TCFD Index
325 NFS Index
326 Consumption and Carbon Disclosures
328 BMW Group Ten-year Comparison
338 Contacts
5 Remuneration Report
> 10%
FINANCIAL GOALS
256 Review of the 2023 Financial Year from a
Remuneration Perspective
8.1
9.8
in %
ROE IN THE FINANCIAL SERVICES
SEGMENT
in %
EBIT MARGIN IN THE MOTORCYCLES
SEGMENT
in %
EBIT MARGIN IN THE AUTOMOTIVE
SEGMENT
257 Outlook for the 2024 Financial Year
in € million
17,096
BEFORE TAX
GROUP PROFIT/LOSS
KEY PERFORMANCE INDICATORS
You can find more information on the BMW Group and reporting year 2023 in the following report.
The BMW Group can look back on a successful year 2023. The company is growing and also profitable. BMW is once again number one in the premium segment, with a highly attractive, innovative
range of products available to our customers across all brands, segments and drivetrain technologies. Vehicles with all-electric drivetrain systems are our biggest growth drivers. At the same time,
our Vision Vehicles demonstrate how we are setting up the NEUE KLASSE as our next innovative leap. Strong performance figures show that we are on track despite the numerous challenges in
our environment.
BMW GROUP REPORT 2023
← = a
Other Information
Significant decrease from previous year
258
Remuneration of the Members of the Board of Management
297 Remuneration of the Members of the Supervisory Board
300 Comparison of Change in Remuneration and Earnings
pursuant to § 162 (1) Sentence 2 No. 2 of the German Stock
Corporation Act (AktG)
304 Other Considerations
3- Group Financial Statements
2 Combined Management Report
1 To Our Stakeholders
The report is divided into the following sections:
On 12 March 2024, the Financial Statements of BMW AG were
authorised for issue by the Board of Management and the Group
Financial Statements approved for publication. The BMW Group
Report (hereinafter also "the Report") combines the manage-
ment reports of Bayerische Motoren Werke Aktiengesellschaft
(BMW AG) and the BMW Group in a Combined Management
Report.
The BMW Group regards its balance of economic, ecological and
social interests as the basis for its commercial success. This re-
port is intended to provide qualified insight into the BMW Group
and explain our activities in a transparent, comprehensible and
measurable manner. We are keen to demonstrate to our stake-
holders how economic, ecological and social issues complement
one another and are mutually dependent, and to identify the gen-
eral external conditions that influence the Company. For these
reasons, we explain the BMW Group's strategy as well as the latest
developments and the way in which the business is managed on
the basis of key financial and non-financial indicators and tar-
gets. Dashboard
Integrated reporting and corporate strategy
REPORTING CONCEPT
ABOUT THIS REPORT*
About This Report
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
5
CONTENTS
个
三
305 Auditor's Report
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023 To Our Stakeholders Combined Management Report
2
2,554,183
209,066
14.7
Slight increase over previous year
7
Slight increase over previous year
7
Slight increase over previous year
7
Significant increase over previous year
↑
This is a simplified presentation of the data. Detailed information on the performance figures
as well as the identification of the depth of the audit can be found in the respective chapters.
LINK TO CHAPTER →
The BMW Group Strategy
3
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = a
THE BMW GROUP'S STRATEGIC GOALS
154,950
Group EBT margin
in %
in units
NEXT ERA
Link to the online report
On the path to electric and digitalised mobility in a sustainable circular economy.
Report on the economic performance of the BMW Group and its environmental
and social contribution.
BMW GROUP REPORT 2023
DRIVING THE
Neue Klasse
MOTOR CARS LTD
ROLLS-ROYCE
MINI
W
M
BMW
GROUP
256 Remuneration Report
Within the corridor of 8 to 10%
Within the corridor of 8 to 10%
Within the corridor of 17 to 20%
GROUP WORKFORCE
at year-end
DELIVERIES IN THE AUTOMOTIVE
SEGMENT
in units
DELIVERIES IN THE MOTORCYCLES
SEGMENT
SHARE OF ALL-ELECTRIC
CARS IN DELIVERIES
194
10,635
227
- 11.2
175,162
169,272
194,261
202,895
209,066
3.0
15.0
11.2
22.6
17.9
17.2
22.1
- 3.9
8 To improve comparability, the 2020 NEDC figures were converted to WLTP after adjusting for permissible flexibilities - specifically from 99 g CO2/km according to NEDC (including 5 g CO2/km phase-in, 7.5 g CO2/km supercredits and 2.4 g CO2/km eco-innovations) to 135 g CO2/km according to WLTP
(excluding flexibilities). In 2020, a phase-in regulation was accepted, as was the recognition of supercredits, which ceased in 2021.
9 Efficiency ratio calculated on the basis of Scope 1 and Scope 2 carbon emissions (i.e. a market-based method according to GHG Protocol Scope 2 guidance; mainly based on the use of emissions factors for electricity, district heating and fuels of the VDA (each in the most current valid version: 12/2023) and
occasionally using local emissions factors; excluding climate-changing gases other than carbon dioxide from vehicle production (BMW Group manufacturing sites and Motorrad, but excluding partner plants and contract manufacturers), as well as BMW Group non-manufacturing sites (e.g. research centres,
sales centres, office buildings) divided by the number of vehicles produced (BMW Group manufacturing sites and partner plants, but excluding contract manufacturers).
10 The term "ROCE" has been redefined with effect from the reporting year 2022 (for definition, see Glossary). The 2021 figure was adjusted accordingly for comparison purposes (2021 before adjustment: 35.9%).
10
BMW Group Report 2023
To Our Stakeholders
BMW Group in Figures
Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
OTHER FINANCIAL PERFORMANCE FIGURES
in € million
2 The new definition of the term "employee" (see footnote 1) also has an impact on disclosures relating to the percentage of female employees.
3 The term "ROCE" has been redefined with effect from the reporting year 2022 (for definition, see Glossary). The 2021 figure was adjusted accordingly for comparison purposes (2021 before adjustment: 59.9%).
"Deliveries including BMW Brilliance Automotive Ltd., also for the period prior to full consolidation in the Group Financial Statements (2019: 538,612 units, 2020: 602,247 units, 2021: 651,236 units, 1 January to 10 February 2022: 96,133 units).
5 EU-27 countries including Norway and Iceland; with effect from 2021, values are calculated on a converted basis in line with WLTP (Worldwide Harmonised Light Vehicles Test Procedure), values for 2018 to 2020 were calculated based on the New European Driving Cycle (NEDC).
6 This is a preliminary internal calculation with a potential variation of +/- 0.5 g CO2/km, as official registration figures from the authorities are not available for all EU states. Figures officially published by the EU Commission are not expected to be available until November of the following year.
7 Including an allowance for eco-innovations (amounts of clearly minor significance).
Total capital expenditure¹
24.9
15.0
16.5
11.0
- 33.3
1.9
4.1
9.0
14.7
63.3
127.0
99.1 (135.0)8
115.9
105.0
21.9
102.1
0.40
0.35
0.33
0.32
0.28
- 12.5
8.2
4.5
8.3
8.1
8.1
29.4
- 2.8
14.4
Depreciation and amortisation
Group revenues
Change in %
7,784
6,222
7,518
10,610
11,440
7.8
6,017
6,143
6,495
8,566
8,974
2023
4.8
3,395
6,354
11,071
6,942
- 37.3
104,210
98,990
111,239
142,610
155,498
9.0
103
2,567
Free cash flow Automotive segment
2022
2020
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
Group profit/loss before financial result (EBIT)
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
Group profit/loss before tax (EBT)
2021
Automotive
Financial Services
Other Entities
Eliminations
Group income taxes
Profit/loss from continuing operations
Profit/loss from discontinued operations
Group net profit/loss
Earnings in € per share of common stock/preferred stock
Pre-tax return on sales² in %
1 Expenditure for capitalised development costs, other intangible assets and property, plant and equipment.
2 Group profit/loss before tax as a percentage of Group revenues.
2019
Motorcycles
5.3
↓
17.67/17.69
122
-257
910
288
- 100
995
1,334
531
-96
-7.6
2,962
257
3,205
3,753
-235
- 2,140
- 1,365
- 3,597
3,857
5.73/5.75
5,022
6.8
7.47/7.49
44
- 34.5
12,165
18,582
12,463
3,857
4,978
0.1
- 4,931
- 4,927
1,725
2,272
- 4.1
258
377
- 93.6
-13
- 203
8
36
29
- 3.4
3,055
3,163
3,701
1,721
2,312
0.8
259
808
12,463
- 390
2,200
269
228
100
187
- 33.2
12,642
18,918
11,805
2,722
4,467
- 27.3
17,096
23,509
16,060
5,222
147
18,582
7,118
- 34.5
12,165
- 35.3/-35.3
27.31/27.33
18.77/18.79
6 In the US market, manufacturers receive positive credits for undercutting regulatory GHG (Green-
house Gas) fleet limits. Failure to remain below the regulatory limits results in negative credits. At
the end of a model year, a positive GHG credit balance must be achieved in order to meet regula-
tory requirements. As GHG credits are valid for five years on the US market, a short-term failure to
meet fleet-wide limit targets in one year can be compensated by undercutting them in a previous
year. Moreover, it is possible to purchase credits from other manufacturers. In 2023, the BMW
Group drew on existing credits from previous years. However, it did not purchase any external
credits from other manufacturers. The requirements were therefore met without exception by us-
ing self-generated and existing credits.
3 Average carbon emissions fleet-wide within the EU (including Norway and Iceland) are required
to be reported in accordance with the new Worldwide Harmonised Light Vehicles Test Procedure
(WLTP) type test cycle as of 2021. Since 2021, this metric has been used by the EU Commission
as the basis for calculating carbon fleet emissions.
"This is a preliminary internal calculation with a potential variation of +/- 0.5 g CO2/km, as official
registration figures from the authorities are not available for all EU states. Figures officially pub-
lished by the EU Commission are not expected to be available until November of the following
year. Prior-year figures have not been retrospectively adjusted.
1 The other non-EU countries to which this statement applies are Albania, Andorra, Bosnia and
Herzegovina, Liechtenstein, Macau, North Macedonia, Montenegro and Turkey.
27 Consumption and Carbon Disclosures.
As of 2025, the Group will take its core BMW brand into a new,
consistently all-electric era with the NEUE KLASSE. By the early
2030s, the MINI and Rolls-Royce brands will have an exclusively
all-electric product portfolio. The strategy will help to achieve a
share of more than 50% of the BMW Group's global sales with
all-electric vehicles - depending on certain framework conditions
such as the development of a comprehensive charging infra-
structure by 2030. The BMW Group aims to have delivered more
than 10 million all-electric vehicles to customers by 2030.
With our growing range of all-electric models, we are serving a
rapidly increasing level of demand. Deliveries of all-electric cars
increased significantly again year on year to 375,716 units
(2022: 215,752 units/+74.1%). The share of all-electric vehi-
cles to total deliveries was 14.7%, also significantly higher than
in the previous year (2022: 9.0%/+63.3%). Since the 2023 fi-
nancial year, this key figure has replaced the proportion of elec-
trified vehicles, including PHEV vehicles, which was reported as
a key performance indicator up to 2022.
Demand for all-electric vehicles rising
We already provide our customers with an extensive range of all-
electric, battery-powered vehicles (BEV). In 2023, another high-
volume model, the all-electric BMW i52 business sedan, went on
sale. MINI presented the new all-electric MINI Cooper SE² to the
public during the year under report. The Rolls-Royce brand
launched its first all-electric model, the Rolls-Royce Spectre², in
2023. The BMW Group therefore has at least one all-electric
model in its range for all three premium brands and in all seg-
ments. At the end of the reporting period, a total of 20 all-electric
models in ten different series were available to order from the
BMW Group.
[[The BMW Group sees the electrification of its model range as a
key component of its product strategy to reduce fleet emissions
and thus achieve its ambitious strategic decarbonisation targets.]]
ELECTROMOBILITY
The level of nitrogen oxides is a crucial factor for air quality in
cities. For this reason, since mid-2018 the BMW Group has been
using a highly effective combination of nitrogen oxide storage
catalytic converters (NSCs) and selective catalytic reduction
(SCR) systems that include urea injection (AdBlue) in all BMW
vehicles as well as in the larger diesel-powered MINI models.
The efficiency of exhaust gas aftertreatment has been further in-
creased by the use of an improved oxidation catalyst in combi-
nation with a two-stage SCR system. The new technology has
been available since 2020 with the revised generation of six-cyl-
inder diesel engines and is currently being rolled out to other
models. There have already been signs of a reduction in NOx
pollution in German cities over the last few years. Apart from var-
ious measures taken to reduce pollutants, the ongoing renewal
of the vehicle fleets of all automobile manufacturers has also
contributed to the improvement. GRI Index: 305-71]
All type-approved BMW Group internal combustion engine vehi-
cles currently on sale in the EU comply with the latest Euro 6d or
Euro 6e emissions standards. The same applies to non-EU
countries as for example Switzerland, Norway, the UK and Ice-
land, where comparable regulations apply. At the same time, the
BMW Group is already preparing for the introduction of the up-
coming Euro 7 emissions standard, which is currently undergo-
ing the legislative process and will include for the first time limits
for brake particle emissions and tyre abrasion amongst other
things.
[[ Further reduction in pollutant emissions
← = Q
Other Information
5 For a definition, see
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
Products
To Our Stakeholders
Group Financial Statements Responsibility Statement and Auditor's Report
100
12 Takes into account an additional 10 % in line with SBTi to cover possible differences between
WLTP figures and real driving emissions. The upstream supply chain emissions generated by var-
ious energy sources (fossil fuels and electricity) according to the well-to-wheel approach are also
included. The assumed average mileage is 200,000 km (in accordance with VDA 900-100). For
definition and further information, see Glossary.
9 Average volume-weighted fleet-wide emissions, including regulatory allowable crediting factors
(off-cycle technologies, NEV multipliers, phase-in) in accordance with WLTC (Worldwide Harmo-
nised Test Cycle under China-specific test boundary conditions). Preliminary internal calculation.
10 On the Chinese market, manufacturers receive positive credits for undercutting regulatory CAFC
(Corporate Average Fuel Consumption) fleet limits. Failure to remain below the regulatory limits
results in negative credits. In addition, manufacturers receive positive credits for meeting or un-
dercutting the ZEV quota specifications (Zero Emissions Vehicle quota). At the end of a calendar
year, a positive CAFC/ZEV credit balance must be achieved in order to meet regulatory require-
ments. As CAFC/ZEV credits are valid for five years on the Chinese market, a short-term failure to
meet fleet limit targets in one year can be compensated by undercutting them in a previous year.
Moreover, it is possible to purchase credits from other manufacturers. In 2023, the BMW Group
drew on existing credits from previous years. However, it did not purchase any external credits
from other manufacturers. The requirements were therefore met without exception by using self-
generated and existing credits. A settlement between CAFC and ZEV remains in place.
11 For a definition, see Glossary.
8 Average volume-weighted fleet-wide emissions, including regulatory allowable crediting factors
(EV multipliers, credits for advanced technologies) in accordance with USC (United States Com-
bined). Preliminary internal calculation.
7 Converted from g/mi to g/km for comparison purposes.
Glossary.
Remuneration Report
To Our Stakeholders Combined Management Report
Products
Products
← = Q
CARBON EMISSIONS
[[The BMW Group is fully committed to the climate protection tar-
gets set out in the Paris Agreement. We are taking ambitious
steps to contribute to progressive decarbonisation, and have
therefore developed a carbon reduction strategy based on a ho-
listic approach.
For the BMW Group, holistic means decarbonising the emissions
generated by its vehicles over their entire life cycle. Although the
gradual electrification of the Group's fleet is contributing towards
decarbonisation during the use phase, emissions are also in-
creasing at the same time, particularly in the supply chain. The
main reason for this is the carbon-intensive production of com-
ponents such as high-voltage batteries. Reducing carbon emis-
sions within the supply chain is therefore one of our main selec-
tion criteria when awarding contracts to suppliers. With this strat-
egy, the BMW Group is making a vital contribution to decarbon-
ising the entire life cycle of its products, including energy-inten-
sive raw materials such as steel, light metals and plastics. The
approach also helps reduce carbon emissions across various
sectors. Carbon emissions in the supply chain
The BMW Group's decarbonisation targets are part of its inte-
grated corporate target system and validated by the Science
Based Targets initiative (SBTi). They are being implemented
under the responsibility of the Board of Management in the BMW
Group's various departments and thus throughout the organisa-
tion Performance Indicators and Performance Management. Specific de-
carbonisation targets are derived from the overarching objectives
for each vehicle project, with the aim of achieving substantial im-
provements from one vehicle generation to the next. The respon-
sibility for achieving these goals lies with specialist units in the
management areas of Development, Purchasing, Supplier Net-
work, Production and Logistics. Internal control and reporting
systems take into account the various stages in the value chain,
comprising the supply chain, development, production and the
use phase. Among other factors, our decarbonisation measures
are based on emissions specifications at material and compo-
nent level. Target management and the monitoring of target
achievement are performed at vehicle level and subsequently
aggregated for reporting at Group level.
We explain how the BMW Group manages the topic of sustaina-
bility across the organisation in the chapter 7 The BMW Group
Strategy. We also report on the management of climate-related
opportunities and risks in the chapters Outlook and 7 Risks and
Opportunities.
Reducing carbon emissions across the entire value chain
The BMW Group aims to achieve Net zero carbon emissions
across the entire value chain¹ by no later than 2050. This objec-
tive is based on decarbonisation targets up to 2030 that were
validated in 2021 by the SBTI and are in line with the climate
targets set out in the Paris Agreement to limit global warming.
Based on this commitment, we are part of the SBTI and the in-
ternational Race to Zero Campaign led by the United Nations.]]
We have set ourselves the following decarbonisation targets² to
be achieved by 2030 (base year 2019 for each scope):
Decarbonisation by an average of 80% per vehicle
produced at our own plants and sites (Scope 1 and 2)³.
These targets can be achieved, for example, by reducing our
energy requirements and simultaneously increasing the use
of renewable energy." Carbon emissions of BMW Group locations
Decarbonisation in the use phase of the vehicle (Scope 3
downstream) by an average of more than 50% per
kilometre driven. To accomplish this target, we are driving
the electrification of the entire product portfolio forward and
using new, efficiency-enhancing technologies. Efficient
Dynamics technologies
Decarbonisation by an average of more than 20% per
vehicle produced in the supply chain (Scope 3 upstream³).
Thus we also have a scientifically approved and confirmed
target for reducing carbon emissions in the supply chain.
The use of green electricity as a criterion when awarding
contracts to suppliers, a continuously increasing secondary
raw materials quota as well as innovations in the production
of primary raw materials contribute in particular to achieving
the target. Carbon emissions in the supply chain
1 In this context the entire value chain is to be understood as Scope 1 and 2 as well as the Scope 3
categories applicable to the BMW Group (categories 1, 4 and 11) in accordance with the Green-
house Gas Protocol.
2 Scope 3 emissions (upstream) in the supply chain and transport logistics, as well as well-to-tank
emissions from the supply of fuel in the use phase, take into account not only carbon dioxide but
also other climate-impacting greenhouse gases such as methane and are stated in carbon equiv-
alents (CO₂e). The measurement of Scope 1 and Scope 2 emissions, as well as the additional
Scope 3 emissions, does not include climate-impacting gases other than carbon dioxide.
7 Glossary.
3 In addition to production emissions, Scope 1 and 2 carbon emissions also include those gener-
ated at non-manufacturing sites.
"In-house generation, direct purchase or Energy Attributes Certificates (e.g. guarantees of origin).
5 Takes into account an additional 10% in line with SBTI to cover possible differences between
WLTP figures and real driving emissions. The upstream supply chain emissions generated by var-
ious energy sources (fossil fuels and electricity) according to the well-to-wheel approach are also
included. The assumed average mileage is 200,000 km (in accordance with VDA 900-100). For
definition and further information, see Glossary
6 Categories included under Scope 3 downstream according to the Greenhouse Gas Protocol: Cat-
egory 11: Use phase. Further GRI Information.
7 This figure has been rounded. The target validated under SBTI is 22%.
8 Categories included under Scope 3 upstream according to the Greenhouse Gas Protocol: Cate-
gory 1: Purchased goods and services; Category 4: Transportation and distribution. Further GRI
Information.
98
88
BMW Group Report 2023
To Our Stakeholders
Combined Management Report Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
2 Including an allowance for eco-innovations (with minor significance).
Other Information
1 EU-27 countries including Norway and Iceland.
The BMW Group's global fleet-wide carbon emissions¹¹ aver-
aged 185.4 g CO2/km¹² (2022: 193.7 g CO2/km) in the year un-
der report. These figures correspond to a decrease of 15.1%
compared to the base year 2019 (2019: 218.5 g CO2/km). As in
previous years, when calculating the emissions figure, the
BMW Group takes into account average fleet-wide carbon emis-
sions (including upstream emissions for fuel and electric charg-
ing) in the EU, the USA and China and standardises them in ac-
cordance with the WLTP. With a share of more than 80% of
BMW Group deliveries, these three core markets and regions
form a reliable basis for calculating global carbon fleet emissions.
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Products
To Our Stakeholders
BMW Group Report 2023
95
On 6 November 2023, the BMW Group signed an agreement
with Mercedes-Benz to establish a company based in China with
the objective of building charging infrastructure in that market.
The approval by the antitrust authorities has already been given.
The BMW Group holds a 50% stake in the recently founded
company. Reliable and comprehensive charging opportunities]]
On 19 October 2023, the BMW Group jointly founded a com-
pany together with General Motors, Honda, Hyundai, Kia, Mer-
cedes-Benz and Stellantis. The partners are working together
with the aim of establishing a public charging network in the USA
and Canada.
The BMW Group is continuously building on its various coopera-
tion arrangements aimed at expanding charging infrastructure in
general. In addition to the BMW Group, Mercedes-Benz, Ford,
Porsche, Volkswagen, Audi, Hyundai/Kia and BlackRock are all
involved in the long-established IONITY joint venture. The aim is
to set up an efficient, high-power charging network for electric
vehicles right across Europe.
Since the launch of the first BMW voice assistant (BMW Intelli-
gent Personal Assistant) in 2018, voice interaction has become
an increasingly important part of the BMW iDrive display and op-
erating concept. The next generation of the voice assistant will
be based on Amazon's Alexa technology, thus enabling an even
more natural dialogue between driver and vehicle.
In collaboration with Amazon Web Services (AWS), the
BMW Group is developing innovative cloud technologies for pro-
cessing vehicle data. The two companies are also working to-
gether to develop commercial standard cloud solutions for the
secure handling of vehicle data. The agreement is a continuation
of the partnership in the field of vehicle data that began back in
2015. As in all previous collaborations with AWS, the
BMW Group retains full and exclusive control over the data and
complies with the data protection regulations applicable in its re-
spective markets.
The HERE mapping service was acquired by BMW, Mercedes-
Benz and Audi in 2015. Continental, Intel, Mitsubishi, Nippon
Telegraph and Telephone, and Pioneer are also current share-
holders. The participation in HERE ensures long-term access to
scalable, high-resolution maps. The development of a central-
ised, more efficient geo-database, from which all HERE products
(including the currently used SD navigation map and HD maps)
can be fed and continuously updated, was completed in 2023.
Since 2022, the BMW Group and Qualcomm Technologies have
been working together to develop solutions for the next genera-
tion of automated driving. The three companies aim to develop
technologies ranging from New Car Assessment Program
(NCAP) solutions and advanced Level 2 driving assistance sys-
tems to the Level 3 functionalities of highly automated driving.
The joint development of software functions is based on BMW's
current software toolkit for automated driving. Within the terms
of the cooperation, ultimately some 1,300 specialists will work
together at various locations worldwide, including sites in Ger-
many, the USA, Sweden, China, Romania and the BMW Test
Centre in Sokolov in the Czech Republic.
To ensure its long-term success, the BMW Group enters into tar-
geted cooperations and partnerships with companies from vari-
ous industries Several of the Group's largest collaborations and
investments are listed below:
Remuneration Report
Worldwide cooperations and partnerships
When it opened in Silicon Valley in 1998, the BMW Group Tech-
nology Office USA was the Group's first research and develop-
ment facility to be established outside of Munich. Originally
The trend research conducted by the technology offices enables
the BMW Group to anticipate the technological developments of
tomorrow. The results are made publicly available in the Trend
Radar where scientific institutions, start-ups, but also potential
partners can make use of them.
Global dialogue with start-ups is an important means for the
BMW Group to gain impetus. This is based on three pillars, com-
prising BMW i Ventures (through which we invest in technology
start-ups), the start-up Platform URBAN-X (a MINI brand-initiated
start-up that focuses primarily on urban living) and the 7 BMW
Startup Garage. The latter serves as the BMW Group's venture cli-
ent unit and is tasked with searching for innovations that repre-
sent a significant benefit for products, services, systems and pro-
cesses. The aim of the programme is to evaluate and empower
start-ups to become suppliers and partners.
These offices are strategically positioned worldwide and focus
on key hotspots of technology and innovation. The potential of
new technologies is therefore being explored in pilot projects and
transferred to the Group's centralised teams. Whether manufac-
turing, developing smart city solutions or the mobility of the fu-
ture, these Technology Offices are driving forward innovations
that benefit the Group in all its lines of business.
Good ideas often emerge when different partners work together.
According to this principle, we focus on collaborations in which
the BMW Group complements its strengths with those of estab-
lished partners and innovation drivers such as start-ups, ena-
bling us to continue developing our innovative strengths. The
global network of BMW Group Technology Offices is also making
an essential contribution to maintaining the Group's leading role
in terms of innovation.
[[Inspiration and a culture of innovation
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
Products
To Our Stakeholders
based in Palo Alto, the BMW tech office moved to its current lo-
cation in Mountain View in 2011. Today, the Mountain View
team is part of a global network of BMW tech offices strategically
located in key technology hotspots around the world. They all
play a crucial role in the BMW Group's open approach to innova-
tion. Apart from the locations in Silicon Valley and Munich, the
worldwide network also includes Seoul, Shanghai, Tel Aviv and
Tokyo.
Other Information
← = Q
[[Mobility services offered by the BMW Group
Regulatory GHG-based fleet consumption targets were met in
the US market during the year under report. In the USA, fleet [[ Making conventional drivetrains more efficient and lowering
GHG emissions 7 averaged 116.5 g CO2/km for model year (MY)
2023 in the Passenger Cars category (MY 2022: 137.3 g
CO2/km) and 137.6 g CO2/km (MY 2022: 154.9 g CO2/km) in
the Light Trucks category. Volume-weighted fleet-wide carbon
emissions came to 126.5 g CO2/km on average in the USA (MY
2022: 145.9 g CO2/km). The significant year on year reduction
in fleet-wide carbon emissions in the US market was driven by
an upturn in all-electric vehicle sales in MY 2023. In China, aver-
age fleet carbon emissions were 146.4 g CO2/km in accord-
ance with the WLTC test cycle (2022: 150.6 g CO2/km WLTC).
Thus, we also met the regulatory CAFC fleet-wide consumption
requirements applicable during the year under report. 10
their emissions
The BMW Group pays close attention to carbon emissions legis-
lation in its various markets. Current developments in the year
under report included the adoption of fleet-wide carbon emis-
sions limits in the EU for the years 2030 and 2035 and the pub-
lication of draft legislation for GHG fleet-wide consumption tar-
gets in the USA for the period from 2027 to 2032. The statutory
framework for China's Zero Emission Vehicle (ZEV) mandate
was amended in the year under review. The amendment covers
the years 2024 to 2025 and increased the quota set for the
number of zero emissions vehicles. The BMW Group supports
the development of harmonised regulations - both nationally
and internationally. Comparable specifications in large markets
create reliable and predictable framework conditions and make
a vital contribution to combating climate change effectively. We
provide information on the BMW Group's most important climate
policy positions and activities in our Climate Commitment Report.
1 Not including carbon emissions generated through waste disposal.
2 In-house generation, direct purchase or Energy Attributes Certificates (e.g. guarantees of origin).
37 Consumption and Carbon Disclosures.
4 The methodology used to calculate carbon emissions changed in the 2023 reporting year for the
items "Purchased Goods and Services" and "Logistics - material supply of the plants and distri-
bution of vehicles". The prior-year figure has been retrospectively adjusted. Figure before change
in methodology: 117.4 million t CO2.
]]
99
99
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Products
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
As in previous years, statutory carbon emissions limits
during the use phase are met again
Carbon emissions generated in the use phase are not only an
important metric in our life cycle assessment, but also subject to
numerous regulatory requirements. Average fleet carbon emis-
sions within the EU¹, taking into account regulatory require-
ments² and in accordance with WLTP³, were 102.1 g CO2/km².
We have thus further reduced the carbon emissions generated
by our new vehicles within the EU5 fleet by 2.9 g year on year
(2022: 105.0 g CO2/km 4). In the year under report, we remained
significantly below the legal limit applicable to the BMW Group
(128.6 g CO2/km²) by 26.5 g CO2/km, thus continuing the trend
seen in recent decades, driven by the electrification of the vehicle
fleet and the fleet-wide use of innovative Efficient Dynamics
technologies.
6
In addition to its high quality and compliance with statutory reg-
ulations and standards, the BMW Group's comprehensive quality
management system also focuses on ensuring the safety of its
products. From the development stage to manufacturing, they
are therefore subject to rigorous testing procedures. Further-
more, any information received from customers regarding poten-
tial deviations from quality standards are systematically followed
up.
Quality management
We are also working continuously to further improve the safety of
our vehicles. In 2023, the new BMW 5 Series achieved top marks
in the European New Car Assessment Programme (Euro NCAP).
The new BMW i5* was also named "Safest car of the year" by
the Korean New Car Assessment Programme (KNCAP). Further
awards gained in 2023 included the "Top Safety Pick+" from the
Insurance Institute for Highway Safety (IIHS, USA) for the new
BMW 5 Series, the BMW X3 and the BMW X1, as well as a triple
"Good" rating in the China Insurance Automotive Safety Index (C-
IASI) for the BMW X1. GRI Index: 416-1 SASB Index
[[All BMW Group products and services are required to meet the
highest standards in terms of quality and safety, People's safety
has top priority, right from the product development stage. With
this point in mind, optimum chassis tuning, highly effective brak-
ing systems and stable passenger compartments are key fac-
tors. Moreover, BMW Group vehicles are equipped with state-of-
the-art safety systems that reduce the risk of accidents and inju-
ries (active safety systems such as collision warning or lane de-
parture warning systems) as well as mitigate the consequences
in the event of an accident (passive safety systems such as air-
bags or seat belts).
SAFETY
PRODUCT QUALITY AND
The BMW Group offers a range of additional mobility services in
the MyBMW app. It provides customers with access to exclusive
FREE NOW services and, in cooperation with SIXT, to rental cars
with exclusive specialised services. This BMW add-on mobility
offering is currently available to BMW and MINI customers in a
growing number of markets. For business customers and fleet
operators, among other services the BMW Group offers keyless
vehicle use for flexible fleet concepts or digital and efficient vehi-
cle management options. The BMW Group's range of services
also includes comprehensive charging solutions for the home,
the workplace and on the road. 7 Reliable and comprehensive charging
opportunities]]
As Europe's largest multimodal mobility platform, FREE NOW
combines the entire range of various forms of mobility in one app.
Apart from taxi cabs and private ride services, various types of e-
scooters as well as car-sharing vehicles can also be booked via
the FREE NOW app. By 2025, the share of electrically powered
trips is projected to increase to 50% and users are set to travel
fully electrically as of 2030.
Together with Mercedes-Benz, the BMW Group offers innovative
mobility services via the YOUR NOW joint venture. The range of
services provides customers with access to various modes of
transport other than their own vehicle.
Vehicles powered by modern, efficient internal combustion en-
gines continue to play a major role for our customers. This fact is
particularly true in regions where unrestricted access to charging
infrastructure is not yet available nationwide. For this reason, the
BMW Group will continue to work on improving the already high
efficiency of its conventional drivetrains going forward through
the use of innovative technologies as part of the Efficient Dynam-
ics technology package. A key component in this respect is the
broader use of 48-volt technology. 48-volt recuperation systems
use the energy recovered when braking to supply the vehicle's
electrical system and generate additional propulsion, thereby re-
ducing fuel consumption and carbon emissions. In Europe, in ad-
dition to our all-electric models and plug-in hybrids, we offer nu-
merous new model series that feature a 48-volt recuperation
system. Since 2022, our modular engines have been fitted with
the second, even more efficient generation of 48-volt technology.
The further development of energy management in BMW Group
vehicles, alongside other measures such as switching to highly
efficient tyres, is designed to ensure additional efficiency and op-
timised consumption figures.]]
Remuneration Report
BMW Group Report 2023
Combined Management Report
Products
To ensure the safety of automated systems, the BMW Group is
promoting the development of industry-wide ISO standards for
partially, highly and fully automated driving functions. The work
on classifying the standardisation of SAE³ Level 3 and Level 4
functions has resulted in an ISO technical report that is due to be
published as an ISO technical specification in 2024. Further-
more, in 2023 an ISO PAS standard was published that supports
the introduction of Level 2 systems with innovative driver inte-
gration. The documents define uniform technical standards for
safe assisted and automated driving.]]
Digital connectivity and automation
Automated functions and digitally connected vehicles can help
cut emissions, reduce the risk of accidents and ease traffic con-
gestion. That's why the BMW Group is consistently driving this
issue forward - with a sharp focus on customer convenience and
safety.
More than twenty years ago, with the founding of BMW Car IT
the BMW Group began developing its own software Since then,
the company has continued to expand its teams of developers to
form a global network. Beginning with the Ulm site in southern
Germany, its software expertise has been bolstered by the joint
ventures Critical TechWorks in Portugal and BA TechWorks in
China.
Software expertise at the BMW Group
The latest MINI vehicles in the "New MINI Family" also incorpo-
rate these technology modules and, with the MINI Operating
System 9, offer their customers an unmistakable digital user ex-
perience typical for the MINI brand. The iconic, round OLED dis-
play takes centre stage in this concept.
With the further development of the BMW iDrive in 2023 and the
"QuickSelect" fast access concept, an improved menu structure
based on devices from the consumer electronics sector is being
added to the system. With the right information in the right place,
the new BMW iDrive provides users with a concentrated, confi-
dent driving experience. The latest BMW iDrive generation is
based on the BMW Operating System 8.5 and BMW Operating
System 9.2
The latest generation of BMW Group vehicles offers customers a
maximum of interaction, infotainment and connectivity. State-of-
the-art on- and off-board technologies such as 5G connectivity
and cloud services make the latest BMW vehicles an integral part
of their users' digital ecosystems. The comprehensive connectiv-
ity enables a whole host of digital services and functions, from
smart and learning navigation to in-car gaming and video
streaming. The vehicle is thus becoming the "next living space"
for its users.
The vehicle as a digital experience
BMW ConnectedDrive upgrades also allow additional functions
to be either bought or simply booked for a specific period after
the vehicle has been initially purchased.
Digitalisation stands for innovation and customer focus
Digitalisation is a key element in keeping the vehicle constantly
up to date for customers long after they have taken delivery of
their new automobile. Since the launch of Operating System 7 in
2018, remote software upgrades' have been available for BMW
vehicles. Apart from these software upgrades, the BMW Group
also releases new functions and features on an ongoing basis.
At the end of 2023, over six million BMW vehicles worldwide
were already fully updatable. In other words, these vehicles can
be updated in every respect, including infotainment, the drive
system, driver assistance, convenience and safety. The BMW
Group can currently update over 30 derivatives of all its drive var-
iants remotely over the air.
The BMW VISION Neue Klasse represents the entire range of
technological innovations with which the BMW Group is under-
lining its future entrepreneurial viability. It stands for the dawn of
a new era of individual mobility: electric, digital and circular.
The BMW VISION Neue Klasse is also characterised by the in-
creased use of secondary raw materials, resource-friendly pro-
duction methods and an electric drive system featuring sixth-
generation BMW eDrive technology.
[[In the interior, the next generation of the BMW iDrive provides a
unique digital user experience: analogue controls are reduced to
a minimum in the BMW VISION Neue Klasse. The driver interacts
with the vehicle via the BMW Panoramic Vision, the central dis-
play unit and multifunctional buttons on the steering wheel. The
user experience is complemented by the tried-and-tested voice
control system via the BMW Intelligent Personal Assistant. The
next generation of the BMW iDrive thus offers a modern interpre-
tation of the brand's typical driver-oriented focus. Similar to the
BMW iDrive controller that was formerly on the centre console or
the BMW head-up display, the brand is setting new standards
with the BMW Panoramic Vision, which will be available for the
first time in the NEUE KLASSE. It projects information at a height
ideally aligned with the driver's line of sight and, for the first time,
across the entire width of the windscreen. This innovation will
complement the enhanced BMW head-up display in the NEUE
KLASSE series models.
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Products
BMW Group Report 2023 To Our Stakeholders
91
Remuneration Report
Other Information
← = Q
[[Virtualisation
For the BMW Group, the virtualisation of products, processes and
interaction spaces are a catalyst for digitalisation, reflecting the
fact that the combination of rapidly developing technologies such
as Web 3.0, artificial intelligence, X-reality (virtual reality, aug-
mented reality, mixed reality) and spatial computing generates
benefits across all areas of the value chain. Our holistic activities
comprise the following three pillars and underline the
BMW Group's commitment to innovation:
Corporate: The virtualisation of internal processes, methods
and products with real-time collaboration, regardless of
location
For example, as part of the iFactory, planners can use vir-
tual reality to virtually assess buildings, systems, logistics
and the assembly of new production areas and test pro-
cesses in 3D, long before construction is scheduled to
begin.
Commercial: Interaction with both new and existing tech-
savvy target groups in virtual spaces and virtual worlds.
Engagement on digital platforms enables experience-
oriented interaction with young target groups (Gen Z) within
their digital ecosystems with the aim of enhancing brand
image and developing long-term customer loyalty. In
dedicated virtual worlds such as the BMW Motorrad
MetaRide, innovative products can be experienced in a new
way and supported throughout the entire customer journey.
M.DI 351E
In-car experiences: Enhancing the quality of experience with
a focus on infotainment, productivity and gaming.
expli Point30
Paint30
double sin (angle) cos (angle)
BMW Group Report 2023
93
* Munich test site - pilot test of automated driving in urban traffic.
The BMW Group is conducting its own research and develop-
ment work with the aim of integrating electrified vehicles in the
power grid. The focus is on technologies such as smart charging,
a key component of the 7 BMW Charge Forward service, which en-
ables customers to synchronise their charging behaviour with the
current grid load and the use of renewable energy. The technol-
ogy has been available to all drivers of electrified vehicles in the
USA since November 2023. Another cross-sectoral project
known as Bidirectional Charging Management (BCM) was successfully
completed at the end of 2022. Over a period of three years,
BMW Group, together with grid operators and universities, tested
how electric vehicles can become mobile energy storage units
and thus part of the power grid system. The results of the project
underline the great potential of bidirectional charging and were
incorporated in an initial customer offering, Connected Home
Charging, in 2023. The project is a strategic cooperation with the
grid operator E.ON, which aims to establish a Europe-wide eco-
system for smart charging at home. The innovation enables cus-
tomers to connect their electrified BMW or MINI vehicle with their
smart home and the power grid. The service has been available
in an initial expansion stage in several European countries since
late 2023. In the coming years, it is to be expanded and ex-
tended to include additional scope with the ultimate aim of ena-
bling bidirectional charging as well.]]
the
Electrified vehicles as part of the power grid
New generation of battery cells
High-performance, innovative and sustainably produced battery
cells are the key to success for individual electric mobility. With its
NEUE KLASSE models, as of 2025 the BMW Group will be using
newly developed, round battery cells for the first time, which are
optimally coordinated to suit the new architecture. The sixth gen-
eration of our lithium-ion cells represents a giant technological
leap forward compared with the previous generation, effectively
increasing energy density by more than 20%, charging speed by
up to 30% and range by around 30%. The carbon emissions
generated by cell production will be reduced by up to 60%.
When developing drive system technologies, the BMW Group
considers the needs of its customers worldwide. For this reason
we are constantly developing existing drivetrain technologies in
the interests of efficiency, decarbonisation and resource conser-
vation. At the same time, we continue to research new drivetrain
technologies with the ultimate aim of developing them for series
production.
Drivetrain technologies of the future
Following recent approval by the Federal Motor Transport Au-
thority, the new BMW 7 Series will be equipped with Level 3 func-
tions for the first time. The option will be available as of March
2024, making the BMW Group one of the leading automobile
manufacturers in the field of highly automated driving.
Group Financial Statements Responsibility Statement and Auditor's Report
[[During the year under report, the BMW Group opened a new test
site, the Future Mobility Development Centre in Sokolov, Czech
Republic, where we are currently testing automated driving and
parking functions and even fully automated driving (Level 4) on
an area of 600 hectares. With the help of virtual simulations and
real-life testing, all driving situations are covered, whether in the
city, in the country, on the highway or when parking. We are thus
creating the basis for meeting our customers' high safety stand-
ards when it comes to automated driving. We also operate re-
search facilities in Munich, where we were involved in the
7 TEMPUS* research project in collaboration with the city authori-
ties. Between 2021 and 2023, we gathered practical experience
on a wide range of use cases relating to automated driving func-
tions and innovative mobility services in urban areas. The BMW
Group also has research facilities located in China and the USA,
enabling it to integrate its two largest markets with regard to
road- and traffic law-related issues right from the outset.
Take your hands off the steering wheel and temporarily turn your at-
tention away from the traffic situation – this is highly automated driving
at Level 3 and can be experienced in new BMW 7 Series models as of
March 2024. BMW Personal Pilot L3 is the name of the new function
that relieves customers of the task of driving in defined traffic situa-
tions and regulates speed, distance and lane guidance for them. The
innovative system enables drivers to engage in secondary activities
(such as writing messages or watching video streaming) on highways
with structurally separated lanes and at speeds of up to 60 km/h. ]]
In the new BMW 5 Series Sedan, customers can use the BMW Highway
Assistant and Active Lane Change feature for the first time. The BMW
Highway Assistant enables drivers to take their hands off the steering
wheel and place them in a comfortable position when driving for pro-
longed distances. The function is also supplemented by a new feature:
the Active Lane Change assistant with driver's gaze confirmation,
which enables the vehicle to change lanes automatically without the
driver having to touch the steering wheel. All the driver needs to do is
glance at the wing mirrors to confirm the lane change. The prerequi-
sites for this technology include high-precision sensors, a powerful
computing platform and connection to the BMW Cloud.
[[BMW Highway Assistant and Active Lane Change
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Products
To Our Stakeholders
BMW Group Report 2023
92
92
47 Consumption and Carbon Disclosures.
to autonomous driving in five stages.
3 SAE (Society of Automotive Engineers) levels categorise the degree of automation from manual
2 The use of OS 8.5 and OS 9 depends on the vehicle class and the production period.
1 The availability and contents of remote software upgrades depends on the country, model, equip-
ment and software version installed.
Y, 2) = tay, b
+z+d): Por (T d) con
2*p. xxxp. y y D.
double theta const
With the M Mixed Reality approach, for example, a team of
engineers at BMW M GmbH has developed an immersive
driving experience for the BMW M2 and M4, which is now
being made available to Driving Experience customers for
the first time. Wearing VR goggles, drivers can be immersed
in a virtual world while driving the real vehicle. In addition,
the BMW Group has made further inroads into the gaming
scene with the launch of Air Console, i.e. casual gaming in
numerous current BMW and MINI models.
The new BMW 5 Series sets new standards in terms of digital
connectivity and automation. Among other things, the vehicle
can be optionally equipped with a highway assistant, which per-
manently takes over distance control and steering tasks and, for
the first time, actively changes lanes when confirmed by the
driver's gaze.
In recent years, artificial intelligence (AI) has been increasingly
developed and performs ever more comprehensive tasks. GPTs
(Generative Pretrained Transformers) support and accelerate
operational processes, including creative tasks. The technology
holds considerable potential for the way we work, collaborate,
develop, share knowledge and interact with our customers and
how the future experience within our vehicles will be designed.
96
** Consumption and Carbon Disclosures.
To the extent possible, the BMW Group excludes the use of prob-
lematic substances right from the vehicle design stage and sets
out corresponding stipulations for its suppliers. Guidance is pro-
vided in the form of the Global Automotive Declarable Substance List
(GADSL). At the same time, we are working to reduce pollutant
emissions in the interior of our vehicles to an absolute minimum.
All BMW, MINI and Rolls-Royce brand vehicles are equipped as
standard with interior air filters that prevent exterior pollutants
and particles such as dust or pollen from entering the vehicle.
Since 2020, the BMW Group has been using air filters equipped
with nanofibre technology that are specially designed to prevent
certain microbial particles and allergens as well as ultra-fine par-
ticulate matter from entering the vehicle.]]
Pollutants management
If a safety risk or a compliance-related defect is found, the BMW
Group implements all the measures required to remedy the issue
following detailed discussions with the relevant authorities. In
2023, safety- and compliance-related technical campaigns af-
fected around 1.8 million vehicles (2022: 3.4 million vehicles). All
these actions were voluntary and carried out in coordination with
the authorities concerned. The BMW Group works according to
the principle of prevention. To avoid technical campaigns of this
type going forward, the BMW Group has also developed a com-
prehensive programme that has been in place since 2023.
Across the entire the life cycle of a vehicle, the above-mentioned
individual targets will result in an average carbon reduction of at
least 40% by 2030 compared to 2019. In order to achieve this
target, we are committed to promoting decarbonisation
measures such as the use of green electricity² in our own opera-
tions and those of our suppliers, without compensation
measures being taken into account. The combination of a signif-
icant increase in the sale of electrified vehicles, efficiency im-
provements in all drivetrain technologies and effective measures
to reduce carbon emissions in the supply chain are expected to
help achieve the targets that have been set.
[[We reviewed our carbon targets in 2023, as previously an-
nounced. The aim of this process was to set absolute targets for
reducing carbon emissions by 2030. The targets are expected to
be revalidated in the course of 2024. At the same time, we also
improved the quality of carbon-emissions-related data in our
supply chain (Scope 3 upstream) in 2023. In addition, greater
transparency was achieved with the first-time publication of a
Vehicle Footprint for the new BMW i5³, providing stakeholders
with useful information, including the greenhouse gas potential
of the vehicle over its entire life cycle. New level of transparency
achieved for vehicle data
Absolute carbon emissions rose by 3.0% to around 134.7 mil-
lion t CO2 during the year under report (2022: around 130.7 mil-
lion t CO₂), driven mainly by increased vehicle volumes and a rise
in emissions in the supply chain due to the increasing electrifica-
tion of the BMW Group's product portfolio. On the other hand,
electrification had a proportionate positive effect in the use
phase. Comprehensive information on the BMW Group's carbon
footprint is provided in the chapter Further GRI Information.]]
[[Carbon steering
BMW Group
Strategy
Consistency with the objectives of the
Paris Agreement
(Scope 1, 2, 3) and SBTi commitment
96
Monitoring & Reporting -
Governance
(Group reporting,
publications)
Target guidance and target control
through ongoing evaluation of
contribution to the measures
(avoidance of carbon emissions)
M
CO₂
Steering
Targets for product projects and
anchoring in the periodic targets
(t CO₂/vehicle) of the Purchasing,
Development and Production depart-
ments
to meet targets and implementation
in the technology clusters
for all scopes
97
BMW Group Report 2023
To Our Stakeholders
Artificial intelligence
N
BMW Group Report 2023
Development of measures
Combined Management Report
Products
The development of generative Al is still in its infancy and indus-
trialisation has only just begun. We are already using the first
tools based on this technology or investigating its potential for
specific applications, such as:
To Our Stakeholders
Image-generating Al for end-to-end support of our design
and vehicle construction processes
Large language models, such as those on which ChatGPT
is based, for voice applications within the vehicle
Text and image generation applications, as well as
knowledge management based on large language models
for exploration for all employees
Market and sales communication, e.g. generated
marketing texts
Knowledge management for customer interaction in call
centres
Knowledge management or comparison of offers in
purchasing
Testing and comparison of vehicle specifications
Coding support for IT and vehicle development
Shaping the future of mobility
The BMW Group is involved in numerous research and imple-
mentation projects for developing new mobility concepts. The
main focus is on pilot projects that improve the quality of life and
promote more sustainable urban mobility. In Munich, we are co-
initiators of the new Mobile Future Alliance Munich. Together with
policymakers, the Technical University of Munich and the Munich
Transport and Tariff Association, a strategy for sustainable mo-
bility in the greater Munich area is to be developed. Specifically,
it is about using street space more efficiently, creating open
spaces for liveable urban areas, establishing new mobility solu-
tions and promoting parking space management, among other
things.
In Rotterdam, we are working with the city authorities, Erasmus
University and other local partners on various pilot projects, in-
cluding the improved interconnectedness of different modes of
transport (intermodality), visionary urban vehicle concepts and
the more efficient use of charging infrastructure. The BMW Group
also held a stakeholder dialogue together with the City of Rotter-
dam in the reporting year. Over 100 participants from city admin-
istrations, the scientific community, industry and start-ups from
Europe, the USA and China discussed the urban mobility of the
future. The findings are now being incorporated into other pro-
jects.]]
94
94
BMW Group Report 2023
Application of generative Al in various processes at the
BMW Group, such as:
-
Remuneration Report
← = Q
[[Sensitising and empowering customers to drive safely
The BMW Group provides its customers with a broad range of
information regarding the proper use of its products and services.
Information on safety, the correct operation of vehicles, and
health protection is available in both printed and digital form. The
information is supplemented by detailed notes and background
information on the services, accessories and components per-
taining to each individual vehicle.
7 CarData provides BMW and MINI customers with transparency
and sovereignty over the transfer of data to authorised third par-
ties. With the introduction of the service in Germany and Europe
in 2017 and the USA in 2020, the BMW Group is fully imple-
menting the current requirements of the EU General Data Pro-
tection Regulation (EU GDPR) and the California Consumer Pri-
vacy Act (CCPA). The BMW Group deploys state-of-the-art tech-
nologies to prevent vehicle theft. The new BMW 5 Series and 7
Series also feature the latest ultrawide-band technology, which
further raises the level of vehicle safety.]]
With the BMW M Driving Experience, the BMW Group offers driver
and rider safety training for BMW, MINI and BMW Motorrad
brand vehicles in 25 countries. Participants learn how to handle
their vehicles in a safe manner and are sensitised to recognise
dangerous situations in road traffic. In 2023, more than 110,000
customers worldwide took part in these training courses.
Other Information
Right from the early stages of developing its functions and ser-
vices, the BMW Group sets out strict requirements for data pro-
tection due to the growing IT risks. Any personal data required in
the course of contact with our customers are only collected, pro-
cessed or used to the extent legally permitted and with the active
consent of the data subject.
Customer data protection
The BMW Group collaborates closely with the relevant data pro-
tection supervisory authorities particularly regarding funda-
mental data protection issues such as those arising from the in-
creasing connectivity of vehicles. 7 GRI Index: 3-3,418-1
Secure connectivity
Group Financial Statements Responsibility Statement and Auditor's Report
The BMW Group's responsibility for its products includes the se-
cure transmission of vehicle data to third parties. For example,
Group vehicles are not directly connected to the Internet, but
communicate directly and exclusively with the BMW Connect-
edDrive back-end facilities via a secure connection within a vir-
tual private network. The strategy enables the BMW Group to
minimise the risk of unauthorised third parties accessing either
the vehicle itself or any of its sensitive data. The access point to
the Internet is controlled via a gateway. We currently see this ex-
tended vehicle approach in accordance with ISO 20078 as the
best solution for offering an outstanding level of data security and
data protection and meeting the statutory cybersecurity require-
ments (e.g. UN R155).
In order to ensure the protection of customer data, despite the
challenge posed by the growing number of digitalised services,
we are constantly developing our data management systems
and respond promptly to any information received regarding
data protection risks. If customers have any queries regarding
the processing of their personal data, they can contact the Cus-
tomer Interaction Centre or the Data Protection Officer in their re-
spective market. With the aim of maintaining our high level of
data protection, we regularly check all applications that process
customer data to ensure full implementation of all current and
appropriate IT security measures. Teams of experts also search
specifically for any vulnerabilities in existing applications. We also
translate any new findings into binding, Group-wide standards.
With its flexible production network, the BMW Group is capable
of manufacturing vehicles with both all-electric and plug-in hybrid
drive systems as well as conventional combustion engines on
one single line, making it far easier to tailor the product range to
suit a wide variety of customer wishes and needs.
Remuneration Report
Combined Management Report
Production and Supplier Network
BMW Group Report 2023 To Our Stakeholders
105
The new Cell Manufacturing Competence Centre (CMCC) in Pars-
dorf near Munich plays a key role for the BMW Group. Using a
pilot production approach, the CMCC's experts can accurately
replicate the value-added processes involved in manufacturing
battery cells The BMW Group will take the findings of this pilot
scheme and apply them in close collaboration with its mass pro-
duction partners for battery cells at a later stage. The strategy
enables the BMW Group to set new standards regarding the
quality, performance, cost and ecological sustainability of battery
cells.
In line with the "local for local" principle, the BMW Group's high-
voltage battery assembly facilities worldwide are set up close to
the Group's vehicle plants with a view to increasing the resilience of
supply chains. Production facilities for the sixth generation of the
high-voltage battery are being established in Debrecen (Hun-
gary), Woodruff near Spartanburg (USA), San Luis Potosí (Mex-
ico) and Shenyang (China). The BMW Group is also planning to
produce sixth-generation high-voltage batteries in Germany at
the Irlbach-Straßkirchen site to supply German vehicle plants.
Integrated component production for electrified vehicles
The competence centre in Dingolfing plays a leading role in the
production of electrified drive systems, as battery modules, high-
voltage batteries and fifth-generation electric motors are all pro-
duced at the site. At the same time, we are preparing the BMW
Group's network to produce next-generation electrified drive sys-
tems. For this reason, the Steyr engine manufacturing plant in
Austria is to be expanded and the new drive systems will be pro-
duced there alongside diesel and petrol engines. Production is
scheduled to begin in the course of 2025.
The production system is based on the strategic vision of the
BMW iFACTORY, with a keen focus on sustainability, electrifica-
tion, digitalisation and profitability. The BMW iFACTORY utilises
innovative technologies that facilitate flexible, efficient production
with the aim of minimising the use of resources and promoting
digital solutions in the fields of data science, Al, virtual planning
and development.
Other Information
Group Financial Statements Responsibility Statement and Auditor's Report
104 Production Network
PRODUCTION AND SUPPLIER NETWORK
111 Purchasing and Supplier Network
107 Circular Economy, Resource Efficiency and
Renewable Energy
Combined Management Report
Production and Supplier Network
NETWORK
PRODUCTION AND SUPPLIER
← = Q
Other Information
Remuneration Report
← = Q
Group Financial Statements Responsibility Statement and Auditor's Report
PRODUCTION NETWORK
Electric mobility globally integrated
Oxford
From 2025, the NCAR will feature a vehicle architecture system-
atically geared to suit electric drive systems. The vehicle is due to
be manufactured initially at the new Debrecen plant in Hungary
as well as in Munich as of 2026. We aim to gradually transfer the
new vehicle architecture to the global production network in the
years that follow. We also plan to produce all-electric vehicles at
our plant in Spartanburg (USA), and at least six all-electric X
models are scheduled to be manufactured there by 2030.
BEV
BMW Group Report 2023 To Our Stakeholders
Rolls-Royce Cullinan', Dawn', Ghost¹, Phantom',
Wraith¹, Spectre¹
UK
BEV, PHEV
BEV
Electrification portfolio
BMW 4 Series, BMW 5 Series, BMW i5¹, BMW 6 Series,
BMW 7 Series, BMW i7¹, BMW 8 Series, BMW M, BMW
iX1
BMW 2 Series, BMW 3 Series, BMW 5 Series, BMW 6
Series, BMW 7 Series, BMW X1, BMW X3, BMW X5,
BMW X7, MINI Countryman
Germany
India
Electric mobility has been growing in importance for the BMW
Group for many years. With the start of production of the BMW
151 at the Dingolfing plant and the BMW iX21 at the Regensburg
plant, the BMW Group has continued to expand the production
of all-electric models at its German plants. Production has also
started in Zhangjiagang at the Spotlight plant, a joint venture
with Great Wall Motors. The site has been manufacturing the all-
electric MINI for the global market since November 2023. We are
therefore currently producing automobiles and motorcycles with
electrified drive systems at 15 7 BMW Group locations and at two
partner plants within our global production network. In 2023, all-
electric cars rolled off production lines in Dingolfing, Goodwood,
Munich, Regensburg, Oxford, Shenyang, at VDL Nedcar² in Born,
and in Zhangjiagang. Moreover, all-electric motorcycles were
manufactured both in Berlin and at our partner plant in Hosur
(India).
Rayong
Goodwood (Rolls-Royce Manufacturing)
Leipzig
Dingolfing
Chennai
Berlin
Araquari
BMW Series, BMW X1, BMW X3, BMW X4
BMW motorcycles
Germany
Production programme 2023
Country
Brazil
BMW Group vehicle plants
Location
Manaus
Munich
104
To Our Stakeholders
* Consumption and Carbon Disclosures.
Combined Management Report
Products
BMW Group Report 2023
102
2 Range calculated based on the new WLTP test cycle (Worldwide Harmonised Light Vehicles Test
Procedure). However, the actual range possible depends on a variety of factors, particularly varia-
bles such as personal driving style, route conditions, outside temperatures, heating, air condition-
ing and pre-heating. Preliminary figure.
17 Consumption and Carbon Disclosures.
With BMW and MINI Charging, we offer attractive electricity tariffs
and convenient charging solutions whether on the road, at
home or at work. Customers can use a large number of public
charging points via their BMW or MINI charging card and the My
BMW and/or MINI app. Digital Charging Solutions GmbH (DCS)
provides broad access to various charging networks throughout
Europe. DCS is one of Europe's leading providers of digital charg-
ing solutions and a joint venture between the BMW Group, Mer-
cedes-Benz and bp.]]
-
An expanded, customer-friendly charging infrastructure will pave
the way for the rapid and widespread use of electric mobility. With
the adoption of the Alternative Fuels Infrastructure Regulation
(AFIR) in 2023, the EU resolved to set up a basic network of both
electric charging stations and hydrogen filling stations by the end
of 2030. From the BMW Group's point of view, this is a first key
step towards providing a customer-friendly charging infrastruc-
ture. The BMW Group remains committed to achieving standard-
ised framework conditions and encourages offers that enable
customer-friendly charging on a broad basis. An expanded, cus-
tomer-friendly charging infrastructure will pave the way for the
rapid and widespread use of electric mobility.
Reliable, comprehensive charging opportunities
It is therefore particularly important to the BMW Group to include
environmental and social aspects in the production of compo-
nents such as electric motors, high-voltage storage systems and
battery cells. Carbon emissions in the supply chain, Social and ecological
responsibility. Other approaches to mitigating the environmental
impacts include increasing the use of recycling and reusing high-
voltage storage units from our BEV and PHEV models in an ap-
propriate manner. The BMW Group offers customers who pur-
chase its battery-powered vehicles the option to take back their
high-voltage batteries free of charge. The offer also applies to
markets where take-back is not mandatory by law.
The BMW Group's electrified vehicles are characterised by their
high efficiency and low consumption. However, the BMW Group
has greater aspirations: its vehicles need to be as eco-friendly
as possible, not only during their locally carbon-free use phase,
but also in terms of their overall footprint, including the supply
chain and production. Carbon Emissions Unlike conventional com-
bustion engine-powered vehicles, the environmental impact of
battery-powered automobiles lies predominantly in the up-
stream value chain. Where the use of natural raw materials to
manufacture battery cells and the carbon-intensive production of
batteries make a significant impact.
Group Financial Statements Responsibility Statement and Auditor's Report
Thinking holistically about electric mobility
The new all-electric MINI Cooper SE1, which is mainly designed
for urban use, has a customer-focused range of around 400 kil-
ometres (WLTP2). The new BMW i51 can achieve a range of up
to 582 km in the statutory WLTP test cycle, depending on factors
such as equipment and type of motor. With offers such as the
BMW eDrive Zone, attractive electricity tariffs for driving, charg-
ing equipment, the integration of charging in the vehicle app and
increased ranges, we are helping drivers of plug-in hybrids to
drive electrically as frequently and over as long a distance as
possible. For instance, the BMW X5 Plug-in-Hybrid from the
Designing electric vehicle ranges to match user behaviour
The BMW Group assesses the increase in the electric ranges of
its vehicles from various points of view. Our main approach is to
optimally adapt vehicle ranges to the respective purpose of use
and user behaviour. With this strategy we also take into account
the environmental impact, as greater range also means deploy-
ing larger and therefore heavier high-voltage batteries. This re-
lationship has an effect on resource consumption and the carbon
footprint of the supply chain as well as the vehicle's weight and
therefore its electricity consumption.
At the BMW Group, customer-oriented technological diversity
also includes the ongoing development of fuel cell technology.
Depending on the segment, we see hydrogen-powered electric
vehicles as a potentially key alternative to battery-powered elec-
tric mobility and thus as an opportunity to reduce carbon emis-
sions even more quickly. Hydrogen-powered pilot fleet operating
successfully
Our product portfolio serves the growing level of demand for
electrified models and at the same time takes into account the
varying framework conditions and customer needs in each indi-
vidual market. In addition to all-electric vehicles, our customers
can therefore choose from a wide range of plug-in hybrids and
vehicles powered by efficient combustion engines. Our flexible
production systems and scalable modular vehicle system reflect our
rigorous focus on customer needs. With the launch of the new
BMW i51, a further model series is now available with all three
types of drive system, which previously applied to the BMW X1,
BMW X3, BMW 3 Series and the BMW 7 Series.
[[Offering with consistently dedicated customer focus
← = Q
Remuneration Report Other Information
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Products
BMW Group Report 2023 To Our Stakeholders
101
Germany
Brazil
Germany
compact segment can cover up to 110 kilometres (WLTP²) solely
on battery power.
MCI 3790
Remuneration Report
← = Q
HAJDROGEN FUEL CELL
M DH1024E
The BMW Group is also committed to promoting hydrogen tech-
nology at a higher level, including involvement in global organi-
sations and associations such as the ▾ Hydrogen Council. As an as-
sociated partner of H2 Mobility Deutschland GmbH, the BMW Group
is also supporting the development of hydrogen infrastructure in
Germany.]]
Firstly, the findings from the pilot project are being incorporated
into the development of a potential series product. Secondly, we
are using them to promote initiatives for the construction of hy-
drogen filling stations worldwide. In this context, the Alternative
Fuel and Infrastructure Regulation (AFIR) will provide new impe-
tus at EU level. Among other things, it provides for the establish-
ment of a basic network of hydrogen filling stations along the
main European transport routes.
Hydrogen-powered pilot fleet operating successfully
Since the beginning of 2023, a pilot fleet of the hydrogen-pow-
ered BMW iX5 Hydrogen has been driven on roads worldwide.
The aim is to ascertain whether the product is ready for series
production and to obtain initial customer feedback. On the one
hand, we are focusing on countries where the hydrogen industry
is developing positively, for example with the establishment of a
filling station network. On the other hand, we are also active in
areas where the production of preferably green hydrogen and its
distribution and use in various applications are gaining in im-
portance. These areas currently include parts of Europe, Japan,
South Korea, China, the USA and the Middle East.
The BMW Group also promotes the use of renewable energy.
Since 2022, for each charging process conducted via BMW and
MINI Charging, the equivalent amount of energy consumed is fed
into the power grid as green electricity, which is certified via En-
ergy Attribute Certificates (EACs) as recognised proofs of origin.
Moreover, we are working continuously on integrating electric ve-
hicles with their high-voltage storage systems in the public power
grid. In 2023, we launched Connected Home Charging, the first
customer-oriented solution on the European market in collabo-
ration with E.ON. Electrified vehicles as part of the power grid
[[Solutions for simple, eco-friendly charging
Charging should be as easy as conventional refuelling and we
are working on digital solutions in particular to meet this demand.
Via the Connected Charging app, drivers not only receive up-to-
date charging information, they can also control the charging
process at the touch of a button. Customers can use the eRoute
function to plan charging stops on long journeys. In 2023, the
first BMW models, such as the BMW i7* and the BMW iX1*, were
equipped with a Plug&Charge function in which both authentica-
tion and billing are carried out automatically by connecting the
vehicle to the charging system. Using the so-called multi-con-
tract functionality, individual driving electricity tariff contracts
from various providers can also be stored digitally within the ve-
hicleto facilitate the use of charging stations from different oper-
ators.
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Other Information
Combined Management Report
Products
103
2 Primarily via direct purchase and Energy Attributes Certificates (e.g. certificates of origin).
37 Consumption and Carbon Disclosures.
1 Total number of charging points displayed on BMW front-ends (vehicle & app). The network can
be accessed by registered customers wherever a local partner is available.
3
HDC 4628E
With the publication of the Vehicle Footprint for the BMW 153, the
BMW Group is further enhancing transparency at product level. The innova-
tion provides customers and other interested parties with comprehensive in-
formation on the vehicle's key sustainability-related performance data.
These data include the four core CO₂e emissions indicators over the vehicle's
entire life cycle, including raw materials procurement, production, the supply
chain, recycling, energy consumption in the use phase, the secondary raw
material quota and key aspects of social sustainability in the supply chain.
The vehicle footprint includes a life cycle assessment performed in accord-
ance with DIN EN ISO 14040:2021 and DIN EN ISO 14044:2021 and au-
dited by TÜV Rheinland Energy. Going forward, the BMW Group will publish
analogous reports for vehicle start-ups based on a representative model per
drivetrain type. ]]
[[ New level of transparency achieved for vehicle data
BMW and MINI Charging provide the Flexible Fast Charger and
other charging products for use both on the move and at home.
We also offer charging solutions for corporate customers in co-
operation with our partners. The BMW Group itself operates one
of the largest company charging networks in Germany. ]]
With the new charging infrastructure under the terms of a coop-
eration with Mercedes-Benz in China, the BMW Group is meeting
its charging commitment in its three most important markets.
With this aim in mind, at least 1,000 charging stations with
around 7,000 charging points are to be installed by the end of
2026. The network will be open to drivers of all brands. The first
charging stations will go into operation as early as 2024 in
regions with a high density of electrified vehicles.
In the year under report, the BMW Group also announced the es-
tablishment of a charging network in the USA and Canada to-
gether with six other manufacturers. The aim is to install at least
30,000 charging points in cities, towns and along major
transport routes. The first charging stations are scheduled to
open in summer 2024.
[[BMW and MINI customers have access to over two million charg-
ing points worldwide¹ through the navigation system or the rele-
vant vehicle app. In Europe alone, we provide easy access to a
network with over 588,000 charging points through the public
BMW/MINI Charging service. These also include fast-charging
stations from IONITY, a company launched by the BMW Group,
with a charging capacity of up to 350 kilowatts (kW). IONITY cur-
rently operates 590 stations with more than 3,300 charging
points in a total of 24 countries, which are publicly accessible,
brand-independent and designed in accordance with the Euro-
pean Combined Charging System (CCS) charging standard. Fur-
thermore, they are all powered by 100% green electricity².
BMW Group Report 2023 To Our Stakeholders
BMW 1 Series, BMW 2 Series, MINI Countryman
BMW motorcycles
Regensburg
Rosslyn
UK
[[Resource management at all BMW Group locations
Within the BMW Group's global production network, resource ef-
ficiency and the control of resource consumption have been inte-
gral parts in the environmental management system for dec-
ades. Alongside 7 Carbon Emissions, the other key indicators for
managing resource efficiency and controlling resource consump-
tion within the BMW Group are energy consumption, potable water
consumption, the amount of waste generated and the use of VOC
solvents. The BMW Group intends to reduce its energy and pota-
ble water consumption, waste for disposal, and the amount of
solvents used per vehicle produced by 25% in each category by
2030 (base year: 2016).
A steering committee manages the international environmental
protection network within the BMW Group. Each individual facil-
ity, area and building is assigned to an internal operator, who,
within their area, is responsible for the technical systems, the
smooth running of processes and workflows and their environ-
mental impacts.
A certified environmental management system in accordance
with ISO 14001 has been implemented at all BMW Group pro-
duction sites. Moreover, all the Group's German plants are certi-
fied under the EMAS environmental management system. The
BMW Group coordinates its worldwide environmental protection
measures relating to imissions, water, waste, qualification stand-
ards, environmental management system in a total of five cen-
tralised competence centres. Environmental improvements that
have proven effective at one location are then implemented at
other locations to the extent possible. Regular further training
courses and the exchange of experiences within the workforce
ensure that relevant knowledge is effectively applied throughout
the organisation. During the year under report, our proactive en-
vironmental management system again made a major contribu-
tion to ensuring that there were no significant environmental in-
cidents involving the payment of fines throughout the global pro-
duction network.
Water
The BMW Group also aims to continuously reduce water con-
sumption at its production plants in order to prevent potential
water supply risks. With this point in mind, wastewater from the
paint shops and washing facilities at the assembly plants is re-
cycled. Moreover, slightly contaminated water (so-called "grey
water") is used as process water at the BMW Group's Dadong
vehicle plant (Shenyang, China). In regions where water is
scarce, the BMW Group ensures that it is used as sparingly as
possible. At the BMW manufacturing plant in Chennai, India, for
example, rainwater is collected during the monsoon season that
covers up to 100% of its water demand. vAt 1.78 m³ per vehicle
produced, specific potable water consumption²,³ in automobile pro-
duction was moderately below the previous year's level due to
the higher production volume (2022: 1.90 m³/-6.3%). 7 Water
consumption in detail
Waste
To minimise the total volume of waste generated, the
BMW Group utilises coordinated recycling and processing con-
cepts that are adapted to the specific waste streams at its vari-
ous plants, regionally applicable statutory regulations and local
waste management structures. In 2023, a total of 99.4% 4
(2022: 99.3%) of the waste generated by production was either
recycled or recovered. The amount of waste for disposal per vehicle
produced in the automobile production fell significantly by 22.6%
year on year to 2.12 kg (2022: 2.74 kg). The BMW Group in-
tends to maintain its high rates of recycling and recovery as it
gradually transitions to electric mobility. 7 GRI Index: 306-4, 306-5,
7 Waste generation in detail, 7 SASB Index
VOC solvent emissions
The VOC solvent emissions per vehicle produced 6,7 fell again signifi-
cantly by 14.8% to 0.52 kg (2022: 0.61 kg) during the year un-
der report. Due to the progress made in the use of solvent-free
substances and the constant optimisation of painting processes,
we expect to see a further slight decrease in emissions levels in
the coming year. GRI Index: 305-7
2021
2020
2019
| | ||
1.97
2.13
2.10
2.12
2.04
0
in MWh
Energy consumption per vehicle produced 4,5
At present, the BMW Group is unable to entirely cover its energy
needs by generating its own renewable energy and therefore
purchases from renewable sources, for example via power pur-
chase agreements (PPAs). The directly sourced green electricity
from defined generation plants is used, for example, to produce
the BMW iX3 and BMW i4³ models.
All BMW Group production sites worldwide and the majority of
other BMW Group locations use green electricity, which is either
generated in-house, procured directly or using Energy Attribute
Certificates (e.g. guarantees of origin).
Renewable energy
6,295,990 MWh; +1.3%). Energy consumption in detail, ▾ GRI Index:
302-1, 302-4
The BMW Group continuously invests in improving the energy ef-
ficiency of its worldwide production network. In this context, clear
roles in each case with corresponding responsibilities, targets
and reporting obligations - are assigned to central strategy de-
partments, regional management units and plants at local level.
After the persistent restrictions put in place due to the corona-
virus pandemic and the impact of the war in Ukraine, production
volumes increased again significantly in 2023. Due to the asso-
ciated improvement in plant capacity utilisation, specific energy
consumption in automobile production fell to 1.97 MWh per ve-
hicle produced (2022: 2.13 MWh; -7.5%) for the year under re-
port. At 6,380,652 MWh, the total amount of energy consumed
by the BMW Group during the period under report was higher
than the previous year due to production volume factors (2022:
← = Q
7 Contribution to climate protection outside the BMW Group's own value chain
Energy management and efficiency
Other Information
Group Financial Statements Responsibility Statement and Auditor's Report
2,382,305
11.7
17 Consumption and Carbon Disclosures.
2 Contract manufacturing.
107 BMW Group Report 2023
To Our Stakeholders Combined Management Report
Production and Supplier Network
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
CIRCULAR ECONOMY,
RESOURCE EFFICIENCY AND
RENEWABLE ENERGY
[[The significance of the circular economy concept continues to
grow against a backdrop of increasingly scarce resources, up-
ward price trends on raw materials markets, geopolitical tensions
and the need to meet sustainability targets. For these reasons,
the BMW Group is taking further steps to increase the proportion
of recycled materials in its products and thus reduce its depend-
ence on primary raw materials. The BMW Group is also continu-
ally enhancing its local supply chains in line with the "local for
local" principle. At all levels of in-house production, we remain
committed to consistently conserving resources, continuously
improving energy efficiency and further reducing carbon emis-
sions.
Closing material loops
The BMW Group pursues the strategic aim of reducing the pro-
portion of primary materials in its value chain. An important start-
ing point in this endeavour is to close cycles for certain materials
and components. With this objective in mind, the BMW Group re-
turns selected production residues to the supplier, enabling
those materials to be recovered and reused in a new production
process. At the BMW Group, the circular economy principle ("De-
sign for Circularity") is already being implemented as an opera-
tional concept in the design of the NEUE KLASSE by the corpo-
rate function "Total Vehicle Development" and systematically
applied in the development of new vehicle models.
The BMW Group already uses a certain extent, depending on the
vehicle, of recycled and reused materials to manufacture its ve-
hicles. In line with the "Secondary First" approach, we aim to in-
crease the use of secondary materials going forward, taking both
technical feasibility and market availability into account. Within
the framework of selected product, material and supplier require-
ments, we have therefore decided to give preference to second-
ary materials in our future vehicles. All secondary and primary
materials used bythe BMW Group must meet the same high
standards of quality, safety and reliability. GRI Index: 3-37 Average
distribution of materials in BMW Group vehicles
The BMW i Vision Circular vehicle is emblematic of our ambitions
and made entirely from recycled or renewable raw materials. The
NEUE KLASSE is also consistent with this vision in that the com-
ponents cobalt, lithium and nickel used to produce battery cells
will in future contain a certain percentage of secondary materials,
thus reducing the volume of primary materials needed and miti-
gating the associated negative environmental impacts. The
NEUE KLASSE will also contain a higher proportion of secondary
materials in other material groups such as steel and aluminium.
At the same time, we promote the recovery of end-of-life vehi-
cles, components and materials in order to retain them in various
material cycles as a source of secondary raw material. Together
with its national sales companies and importers, the BMW Group
has already organised the return of end-of-life vehicles in 32
countries and offers environmentally friendly recycling at more
than 2,800 points of return. GRI Index: 301-1, 301-3, 7 SASB Index
Compared to primary raw materials, the use of secondary mate-
rials also helps reduce carbon emissions - by up to 80% for al-
uminium and up to 70% for steel to name two examples. At the
same time, potential risks associated with the extraction of pri-
mary materials, such as high levels of energy consumption and
therefore carbon emissions, long transportation routes, environ-
mental damage and risks arising due to a lack of social standards
are being mitigated. As a result, the increased use of secondary
materials also promotes resilience throughout the value chain.
Purchasing and Supplier Network
[[ From scrap to raw material: the Car2Car funding
project
The Car2 Car project focuses on the recycling of aluminium, steel, glass,
copper and plastic. Together with representatives of the recycling in-
dustry, raw materials processors and the scientific community, the
BMW Group is leading a project to improve the quality of secondary
raw materials obtained from the recycling of end-of-life vehicles. Inno-
vative dismantling and automated sorting processes will enable reus-
able materials to be extracted to a far greater extent than previously.
As part of the funding project, the BMW Group is providing 433 end-
of-life vehicles. In order to cover a representative range, various mod-
els out of the Company's own inventories are being used – from MINI
to Rolls-Royce - with combustion engines, plug-in hybrid systems and
all-electric drives. ]]
Investments in resource-friendly technologies
Via the BMW i Ventures venture capital fund, the BMW Group in-
vests in fast-growing technology start-ups. One focus of the in-
vestment activity is on businesses that can make a strong con-
tribution to achieving carbon neutrality and conserving re-
sources. One example is the Swiss company Bcomp, which the
BMW Group has held a share in since 2022. Bcomp uses flax to
create structural components made from natural fibre compo-
sites as an alternative to plastic composites. By increasing our
stake in the US start-up Boston Metal in April 2023, we are scal-
ing up our investment in innovative processes for the manufac-
ture of carbon-reduced steel. In April 2023, BMW i Ventures also
acquired a stake in Cyclic Materials, a company developing a re-
cycling technology that extracts rare earths and base metals
from end-of-life products.
The BMW Group is also investing in research and innovation pro-
jects such as Circular Republic to implement closed material
cycles for certain product groups. The joint initiative of the organ-
isation "UnternehmerTUM" and the BMW Group focuses on the
transfer of knowledge between the world of science and compa-
nies to promote the circular economy.]]
108
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Production and Supplier Network
Remuneration Report
As a further contribution to protecting the climate, the
BMW Group finances various climate protection projects outside
its own value chain, equivalent to the amount of Scope 1 and
Scope 2 emissions remaining in 2023 as well as Scope 3 emis-
sions from the category "business travel".²
The remaining emissions are largely attributable to the use of
natural gas. In this respect, the BMW Group faces the challenge
of replacing natural gas with non-fossil energy sources such as
biogas, green hydrogen or green electricity. However, the transi-
tion to alternative energy sources depends largely on their avail-
ability, the technical retrofitting of the systems and the political
framework conditions.
The BMW Group intends to reduce carbon emissions per vehicle
produced (Scope 1 and Scope 2) by an average of 80% by 2030
compared to the base year 2019. Production accounts for the
majority of Scope 1 and Scope 2 emissions within the BMW Group.
As in the past, we remain committed to energy efficiency
measures, electricity generated in-house from renewable
sources, the purchase of green electricity from Power Purchase
Agreements and the use of Energy Attribute Certificates (e.g.
guarantees of origin).
2020
2019
0
0.28
0.32
0.33
0.35
0.40
in tonnes
Carbon emissions from the BMW Group locations per vehicle
produced¹
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Production and Supplier Network
To Our Stakeholders
BMW Group Report 2023
110
5 Value of the base year 2016 to the target reduction of -25% by 2030: 2.21 These figures have
been subjected to a limited assurance review.
4 Efficiency indicator calculated on the basis of total energy consumption (adjusted for CHP losses)
of automobile production (BMW Group plants, excluding partner plants and contract manufactur-
ing) divided by the number of vehicles produced in automobile production (BMW Group plants
and partner plants, excluding contract manufacturing).
Glossary.
37 Consumption and Carbon Disclosure.
2 For a definition of beyond value chain mitigation (contribution to climate protection outside the
BMW Group's own value chain), see the
'To the degree recordable within the carbon footprint; market-based method in accordance with
the GHG Protocol.
The BMW Group is pursuing the goal of reducing its dependence
on fossil energy sources. With this aim in mind, we are currently
in the process of investigating all our production sites to ascertain
whether natural gas can be fully dispensed with and replaced by
sources such as electricity, biogas, hydrogen or geothermal en-
ergy.
2023
2022
2021
2022
2023
Carbon emissions generated at BMW Group locations
By reducing energy consumption while simultaneously increas-
ing production volumes, carbon emissions generated per vehicle
produced at BMW Group locations fell by 12.5% to 0.28 t CO₂
(2022: 0.32 CO₂). The figure corresponds to a reduction of
30.0% compared to the base year 2019.
Energy use and carbon emissions
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
PHEV
To Our Stakeholders
BMW Group Report 2023
109
7 Efficiency indicator calculated from solvent emissions generated in automobile production
(BMW Group plants, excluding partner plants and contract manufacturing) divided by the number
of vehicles produced in automobile production (BMW Group plants and partner plants, excluding
contract manufacturing).
6 Solvent emissions (volatile organic compounds = VOC) are especially generated during the paint-
ing process and can be reduced by deploying new painting technologies.
5 Efficiency indicator calculated from the waste for disposal in automobile production (BMW Group
plants, excluding partner plants and contract manufacturing) divided by the number of vehicles
produced in automobile production (BMW Group plants and partner plants, excluding contract
manufacturing).
3 Potable water consumption refers to water purchased from external water suppliers. If a
BMW Group site does not purchase water from an external supplier, the primary source of supply
is counted as potable water. This method of measurement applies to the BMW Group plants in
San Luis Potosí (Mexico) and Araquari (Brazil) where groundwater is the main source of supply.
4 Waste for disposal in relation to the total weight of waste.
2,661,922
2 Efficiency indicator calculated from the potable water consumption measured for automobile pro-
duction (BMW Group plants, excluding partner plants and contract manufacturing) divided by the
number of vehicles produced in automobile production (BMW Group plants and partner plants,
excluding contract manufacturing).
biodiversity in countries where our renewable raw materials are
grown. In Indonesia, for instance, we therefore support local na-
ture conservation initiatives that are dedicated to preserving nat-
ural biodiversity via the "Living Rubber" project. We are also cur-
rently analysing biodiversity-related impacts as well as the op-
portunities and risks in order to develop corresponding targets
and the next steps moving forward. 7 GRI Index: 304-2]]
The BMW Group also takes biodiversity into account at its vari-
ous locations worldwide. It assesses biodiversity in the context of
its plants, using a biodiversity indicator as an example within the
framework of ecological verification procedures. Based on this
assessment, measures to improve these habitats are then pro-
posed accordingly. We are also committed to protecting
Biodiversity
1 Efficiency indicator calculated on the basis of Scope 1 and Scope 2 carbon emissions (market-
based method according to GHG Protocol Scope 2 guidance; mainly based on the use of emis-
sion factors for electricity, district heating and fuels of the VDA, each in the most current valid ver-
sion: 12/2023) and occasionally using local emissions factors; excluding climate-impacting gases
other than carbon dioxide from vehicle production (BMW Group plants including Motorcycle, but
excluding partner plants and contract manufacturing), as well as BMW Group non-manufacturing
sites (e.g. research centres, sales centres, offices) divided by the number of vehicles produced
(BMW Group plants and partner plants, but excluding contract manufacturing). Glossary.
2 Using the market-based method in accordance with the GHG Protocol Scope 2 guidance.
About half of the vehicles produced by the BMW Group leave its
plants by rail. In Germany, a significant volume of rail transport
relating to production and the sale of spare parts is already pow-
ered by green electricity.]]
Carbon emissions generated by transport logistics
[[With its Green Transport Logistics project, the BMW Group has
been pursuing the aim of continuing emissions-reduced trans-
portation within its global production and sales network since
2015. In addition to second-generation biofuels (e.g. HVO 100,
produced from residual and waste materials), battery-powered,
heavy-duty commercial vehicles have been increasingly de-
ployed for transporting goods at the Group's main plant in Mu-
nich since 2023. For the first time, the use of bio-LNG on public
roads was tested in Germany to supply production. Moreover,
the BMW Group has been involved in the "H2Haul" research pro-
ject since 2019 and the "HyCET" research project since 2022 in
order to gain early experience in the use of hydrogen trucks.
In collaboration with partners such as atmosfair and First Cli-
mate, we support climate protection projects operating in the vol-
untary market for the full extent of our Scope 1 and Scope 2 car-
bon footprint and our Scope 3 category "business travel" emis-
sions. These projects are certified by independent institutions in
line with international standards and have to meet a set of strict
criteria such as additionality, permanence and other factors. It is
also important to us that the projects in the global South gener-
ate social benefits in line with applicable sustainable develop-
ment goals (SDGs). These include, for example, initiatives that
enable people to earn an income or programmes that prevent
illness. GRI Index: 305-5
these initiatives without them counting towards the the
BMW Group's CO₂ reduction targets.
The BMW Group is committed to achieve a technically feasible,
substantial reduction in Scope 1 and Scope 2 emissions in order
to continue meeting this target for each financial year. Further-
more, the BMW Group also supports projects dedicated to de-
carbonisation outside its own value chain. We voluntarily back
The carbon emissions generated directly and indirectly by
BMW Group locations are already within the 1.5°C pathway cal-
culated for the enterprise as a whole. Reducing carbon emissions
across the entire value chain
Contribution to climate protection outside the BMW Group's own
value chain
7 Carbon footprint, 7 GRI Index: 305-1, 305-2, 305-3, 305-5
At 705,398 t CO2, total carbon emissions generated at
BMW Group locations were on a par with the previous year
(2022: 705,417 t CO₂). In a contrasting trend, the mild temper-
atures led to a reduction in the use of natural gas for heating pur-
poses.
1 In accordance with the environmental management system, each operator is required to describe
the environmental impacts in the aspects register and identify measures for improvement (e.g.
long-term targets).
11.8
Combined Management Report
Production and Supplier Network
20,808
China
MINI Cooper
17 Consumption and Carbon Disclosures.
2 Contract manufacturing.
Including Lydia extension since June 2022.
Electrification portfolio
BEV
106
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Production and Supplier Network
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Production sites in key markets
The BMW Group plants in Europe, South Africa, the USA and
Mexico manufacture for the global market. Production of the all-
electric MINI for the global market also began at the Spotlight
joint venture plant in China in November 2023. The BMW Bril-
liance plants in China mainly manufacture for the local market.
The BMW Group plants in Araquari (Brazil), Rayong (Thailand)
and Chennai (India) primarily serve their respective regional mar-
kets and produce BMW and MINI brand models. The same ap-
plies to the BMW Group's automotive partner plants in Jakarta
(Indonesia), Cairo (Egypt), Kulim (Malaysia) and Chu Lai (Vi-
etnam). The Group also awards contracts for the series produc-
tion of automobiles and motorcycles to external partners (con-
tract manufacturers). During the period under report, Magna
Steyr Fahrzeugtechnik produced both the BMW 5 Series Sedan
(up to May 2023) and the BMW Z41 in Graz (Austria). VDL Ned-
car2 in Born (the Netherlands) has continued to produce the MINI
Convertible and the MINI Countryman until the beginning of
2024.
The BMW Group manufactures BMW motorcycles, components
and scooters at its Berlin plant and also at international locations
in Ma-naus (Brazil) and Rayong (Thailand), where motorcycle
components are also produced. Components for motorcycles are
also produced in Rayong. BMW motorcycles and scooters are
also produced by the partner companies TVS Motor Company in
Hosur (India) and Loncin Motor Co., Ltd in Chongqing (China).
The BMW Group's production network also includes engine
plants in Hams Hall (UK), Steyr (Austria) and Shenyang (China),
as well as component plants at sites in Eisenach, Landshut and
Wackersdorf (all in Germany) and Swindon (UK). Engine produc-
tion in Munich (Germany) was discontinued in 2023. The pro-
duction network currently comprises a total of 32 plants in 15
countries.
Production volume record despite challenging environment
The BMW Group manufactured a total of 2,661,922 BMW, MINI
and Rolls-Royce brand vehicles in the year under report (2022:
2,382,305 units; +11.7%). BMW brand models accounted for
2,340,547 units (2022: 2,089,801 units; +12.0%), MINI for
315,196 units (2022: 286,265 units; +10.1%), and Rolls-
Royce Motor Cars for 6,179 units (2022: 6,239 units; -1.0%).
Production of electrified vehicles increased to a new
BMW Group automobile production by plant
in units
Dadong
Spartanburg
Tiexi
Dingolfing
Regensburg
Munich
Leipzig
Oxford
San Luis Potosí
Production programme 2023
Rosslyn
Country
Location
18,612
BEV, PHEV
BEV
Thailand
BMW 2 Series, BMW 3 Series, BMW 5 Series, BMW 7
Series, BMW X1, BMW X3, BMW X5, BMW X6, BMW X7
BMW motorcycles
PHEV
Germany
BMW 1 Series, BMW X1, BMW iX11, BMW X2, BMW iX21 BEV, PHEV
South Africa
BMW X3
San Luis Potosí
Mexico
BMW 2 Series, BMW 3 Series, BMW M
PHEV
Shenyang (Dadong)
China
BMW 5 Series, BMW X3, BMW iX31, BMW X5
BEV, PHEV
Shenyang (Tiexi)³
China
BMW 1 Series, BMW 3 Series, BMW X1, BMW iX11,
BMW X2, BMW i3 (extended-wheelbase version of BMW
3 Series),
BEV
Spartanburg
USA
BMW X3, BMW X4, BMW X5, BMW X6, BMW X7, BMW
XM1, BMW M
PHEV
Jointly controlled vehicle plants
Zhangjiagang (Spotlight)
Chennai
BMW 3 Series, BMW 4 Series, BMW ¡41, BMW M
MINI, MINI Clubman, MINI Cooper SE¹
Araquari
186,301
- 0.5
117,576
63,600
84.9
68,238
61,609
10.8
15,264
9,960
53.3
13,044
12,912
10,608
8,208
29.2
6,179
6,239
- 1.0
2,871
120,235
99,126
21.3
26,461
45,184
- 41.4
Rayong
185,400
23.9
1.0
188,199
Zhangjiagang (Spotlight)
Goodwood
151,949
Born (VDL Nedcar]
Graz (Magna Steyr)
Partner plants
Total
high level of 613,640 units (2022: 462,396 units; +32.7%) in
the 2023 reporting year, of which 415,692 were all-electric
(2022: 252,077 units; +64.9%). The number of motorcycles
produced by BMW Motorrad rose by 2.8% to 221,988 units
(2022: 215,932 units) over the 12-month period.
2023
Change
in %
420,586
395,021
6.5
410,793
2022
416,301
8.0
201,323
217,480
65.9
238,301
3.3
143,654
291,907
- 1.3
10.1
279,645
307,972
282,661
← = Q
If necessary, the BMW Group temporarily suspends a given busi-
ness relationship during efforts to mitigate the detected risk.
However, the business relationship will only be terminated if no
other effective means are available and we are unable to further
leverage our ability to exert influence. We endeavour to avoid this
latter situation by carefully selecting our suppliers and empower-
ing and working with them to improve their sustainability perfor-
mance. No existing supplier relationships needed to be termi-
nated due to serious sustainability violations during the year un-
der report. GRI Index: 2-24, 3-3, 308-1, 414-1
[[assessments had been redressed. In two cases, the closure as-
sessment carried out was not immediately able to confirm that
the agreed measures had been implemented. However, together
with the suppliers the BMW Group has now implemented these
measures, which will be reviewed by means of a new assess-
ment in 2024. GRI Index: 2-24, 308-2,414-2
Effectiveness and complaint mechanisms
Information on possible violations of the BMW Group's sustaina-
bility requirements in the supplier network can be submitted via
the BMW Group Human Rights Contact Supply Chain, among
other options. We also use the standardised RBA Voices com-
plaint mechanism as a complementary measure. Moreover,
whistle-blower systems are in place to detect and report possible
statutory violations. Our aim is to ensure that all substantiated
reports of environmental or human rights violations are rectified
by agreeing on remediation measures. Further information on
whistle-blower systems at the BMW Group can be found in the
chapter Compliance and Human Rights and on the website.
Carbon emissions in the supply chain
current upward trend will reverse by 2026 at the latest thanks to
the implementation of carbon-reducing measures.
In 2023, the number of contractual agreements with suppliers
that specified decarbonisation measures rose to 707 (2022:
468), Including those specifying the use of secondary raw mate-
rials, biomaterials and carbon-reduced steel. In our view, how-
ever, the use of green electricity has the greatest impact on de-
carbonising the supply chain². Accordingly, the BMW Group
specifies its use by direct suppliers (Tier 1) and for energy-inten-
sive processes in the upstream supply chain (n-Tier) as a crite-
rion for awarding new contracts to supply carbon-intensive com-
ponents and materials. During the year under report, we con-
cluded agreements of this kind for 676 contracts (2022: 343
contracts). In addition, since mid-2021 the BMW Group has con-
cluded numerous framework agreements with suppliers regard-
ing the use of green electricity.² In 2023, the BMW Group had 72
valid green electricity framework agreements in place with its
largest suppliers (2022: 46). During the year under report, we
developed an approach to review suppliers' concepts for the use
of green electricity even prior to series production.]]
2 In-house generation, direct purchase or Energy Attribute Certificates (e.g. guarantees of origin).
3 The procedure for determining the key figures is explained in the glossary. The methodology used
to calculate carbon emissions in the supply chain and related to logistics changed in the 2023 re-
porting year. Glossary.
Furthermore, we continue to engage an external service provider
to carry out annual reviews relating to decarbonisation measures
in series production. In the course of 2023, the BMW Group re-
viewed compliance with contractually agreed decarbonisation
measures in the supply chain at 72 suppliers (2022: 23). As a
result, the BMW Group reduced the volume of carbon emissions
generated in the supply chain by around 1.7 million t CO₂e during
the reporting period. In 2023, carbon emissions generated in the
supply chain and via logistics on behalf of the BMW Group world-
wide averaged 13.9 t CO₂e per vehicle produced (t CO₂e)³. As ex-
pected, the gradual electrification of the fleet leads to a rise in
emissions generated in the supply chain. We assume that the
1 The BMW Group includes measures that reduce carbon emissions, such as the use of green elec-
tricity, the use of secondary raw materials, new manufacturing processes for raw materials, and
product and material innovations such as biomaterials. Accordingly, compensation measures are
not included.
[[We continue to rely on the Carbon Disclosure Project (CDP) Sup-
ply Chain Programme to assess the performance of the supply
chain in terms of its decarbonisation. This helps suppliers to de-
fine their decarbonisation targets, integrate these into their busi-
ness processes and report on the actual reductions achieved.
Their efforts are linked to a rating from which we derive measures
for supplier development and empowerment. In 2023, 282 sup-
pliers took part in the rating (84% of the production-relevant pur-
chasing volume).]]
Other Information
The BMW Group aims to actively promote decarbonisation in its
own supply chain and reduce carbon emissions along the entire value
chain. For this reason, one of our sourcing criteria requires that
suppliers commit to undertaking decarbonisation measures. We
specifically enable our suppliers with online training via the
BMW Group Partner Academy and additionally provide face-to-
face formats for partner workshops at the BMW Group plant in
Landshut (Germany) as well as other locations. GRI Index: 3-3
Remuneration Report
The BMW Group's overarching approach to respecting human
rights and upholding social standards along the entire value
chain is provided in the chapter on 7 Compliance and Human Rights.
Group Financial Statements
The BMW Group is focusing mainly on component traceability
along multistage supply chains, cooperative root cause analysis
to combat any potential quality problems and the collection of
carbon-emissions-related data in the supply chains. In 2024, ef-
forts will be scaled up with suppliers with the aim of further im-
plementing and developing additional "use cases" as well as
scaling these for strategic relevant components through the in-
dustry network. Another key advancement is the provision of dig-
ital product passports, which contain product-specific data for
components such as batteries or even for entire vehicles. Based
on information from the n-tier supply chain via Catena-X, data
are available in particular regarding origin, material composition
and recycling.
115
Social and environmental responsibility
The BMW Group views responsible supply chain management
as an integral part of good corporate governance The develop-
ment of established processes was continued throughout the
year under report. The BMW Group's requirements and the ex-
pectations it places on its suppliers are set out in the 7 BMW Group
Supplier Code of Conduct and contractually enshrined as an integral
part of the BMW Group's Terms and Conditions of Purchase.
7 GRI Index: 2-23, 3-3, 407-1, 408-1
Due diligence in the supplier network
Our corporate responsibility for environmental and social stand-
ards in the supply chain is institutionalised as part of a multi-
stage due diligence process. We mainly use standardised control
procedures to carry out the due diligence obligations incorpo-
rated in our business processes. The BMW Group also cooper-
ates with initiatives and associations such as the Responsible
Business Alliance (RBA) and Drive Sustainability. In this context,
we follow the guidelines developed by the German Automotive
Industry Dialogue. We also remain committed to establishing an
industry-wide complaints mechanism, among other things.
Responsibility Statement and Auditor's Report
Risk analysis
Prevention and remediation
Prior to signing a contract with the BMW Group, if any risks are
identified in the course of the specific risk analysis, our suppliers
are required to implement or expand the necessary preventive or
remediation and control measures by an agreed target date. Our
suppliers are also required to request these from their subcon-
tractors based on their respective risks. The measures, which are
queried, validated and evaluated as part of the sourcing process
using the industry-wide questionnaire from Drive Sustainability,
serve to minimise potential risks or eliminate existing deficien-
cies. Further GRI information, ▾ Sustainability assessment of relevant
supplier locations This online assessment is performed for suppliers
of production-related goods and services with a contract volume
over a certain threshold. Different modules are used depending
on the size of the company being assessed. Implementation
must be successfully completed prior to the start of production.
For suppliers of non-production-related goods and services, this
procedure is also carried out depending on country- and product-
group-specific risks. The extent of the preventive measures is
based on the potential risks, the nature and scope of the busi-
ness activity and the size of the supplier. In addition, we offer
training courses on sustainability in the supply chain, some of
which are mandatory for internal purchasers. These trainings
also address process partners and suppliers on a voluntary ba-
sis.
The BMW Group has put additional control mechanisms in place
for suppliers in high-risk regions or high-risk product groups. Key
instruments in this respect are audits of environmental and social
standards at supplier locations using cross-industry assessment
programmes provided by the Responsible Business Alliance
(RBA) and the Responsible Supply Chain Initiative (RSCI) of the
VDA. The BMW Group reviewed a total of 95 potential and active
supplier locations using this method during the reporting year
(2022:49). The BMW Group has set itself the goal that all Tier 1
supplier sites that have been assessed meet the locally applica-
ble statutory requirements for sustainability as well as interna-
tional human rights standards (BMW Group minimum require-
ments). In 2023, 17 of the 19 closure assessments confirmed
that all cases of non-compliance with minimum requirements
(priority non-conformities) that were identified in initial ]]
114
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Production and Supplier Network
The BMW Group monitors and assesses the sustainability risks
in its supplier network in business relationships at both potential
and active supplier locations. In order to identify and assess ab-
stract environmental and human rights risks, various internal and
external data sources such as country- and product-group-spe-
cific indicators as well as media analyses at Group and location
level are drawn upon. The BMW Group uses standardised sus-
tainability surveys and commissions external on-site audits (as-
sessments) to conduct in-depth risk analyses for its Tier 1 sup-
pliers. Supply chain mapping forms the basis for analysing risks
at n-Tier suppliers. The BMW Group continuously endeavours to
increase transparency along the entire supply chain. 7 GRI Index:
2-24, 308-1,414-1
BMW Group Report 2023
Group Financial Statements
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Employees and Society
measures.
In 2023, the BMW Group accelerated the comprehensive devel-
opment of digital skills across the Company with the "Digital
Boost" training campaign. Further training measures in the re-
porting year also focused on the future-oriented fields of electrics
and electronics, data analytics, artificial intelligence, innovative
production technologies and new working methods.
The progress of our Company-wide qualification measures is
also reflected in the number of participants* which, at around 1.4
million, was significantly higher than the previous year (2022: 1
million). The number of training hours per employee also in-
creased in 2023 to an average of 23.7 hours (2022: 21.6).
▾ Further GRI information ]] Standing at a total of € 469 million, in-
vestments in training and further education for employees were
once again higher than the previous year (2022: € 416 million).
7 GRI Index: 404-1,404-2
* The number of participants takes into account the fact that there are employees who attended
several training events within the reporting year.
116
BMW Group Report 2023 To Our Stakeholders
Developing expertise for the future
[[The transformation shaping the automotive industry, particularly
with regard to electrification and digitalisation, is associated with
far-reaching changes. The BMW Group is adopting a forward-
looking approach to the associated challenges facing its employ-
ment structure, by systematically building up and transforming
expertise. As part of our integrative "Just Transition" approach,
we actively facilitate a socially responsible transformation of our
employees through comprehensive qualification and training
Combined Management Report
Employees and Society
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Spending on employee training and development¹
in € million
Catena-X is the pioneering initiative within the automotive indus-
try for digitalising the supply and value chains between automo-
bile manufacturers, suppliers, sub-suppliers and, in the future,
recycling companies. The digital platform enables partners
within value chains to tackle key challenges facing the industry,
such as enhancing resilience, meeting sustainability goals and
regulatory matters through digital collaboration. After two years
of development work, including a significant contribution from the
BMW Group as consortium leader, a beta test phase was suc-
cessfully conducted in 2023. Among other things, pilot projects
were carried out in conjunction with BMW component produc-
tion, providing valuable insights that will serve to promote inno-
vative data processing methods in a production environment.
Catena-X has been in the rollout phase since October 2023.
To Our Stakeholders
At 31 December 2023, the BMW Group employed a total work-
force of 154,950 people worldwide. This represents a slight in-
crease compared to the previous year (2022: 149,475/+3.7%).
Further GRI information We are, therefore, continuing to build up
employment, particularly in Development and IT, as well as in our
global production network. GRI Index: 2-7, 2-8
ATTRACTIVENESS AND
EMPLOYEE DEVELOPMENT
Remuneration Report
Other Information
← = Q
EMPLOYEES AND SOCIETY
115 Employer Attractiveness and Employee
Development
[[ Sustainable employment with appealing general conditions is a
cornerstone for individuals who decide to join the BMW Group.
We aim to provide a stable outlook, fostering personal growth
opportunities and empowering individuals to contribute to shap-
ing the Company's future. This forms the basis for the BMW
Group's long-term success when competing for talented profes-
sionals.]]
118 Health and Performance
122 Corporate Citizenship
BMW GROUP
GROUP
Unchen
EMPLOYEES AND SOCIETY
EMPLOYER
120 Diversity, Equal Opportunity and Inclusion
For the BMW Group, a digital flow of information throughout the
supply chain is an essential prerequisite for establishing more re-
silient and flexible supply chain management.
Responsibility Statement and Auditor's Report
← = Q
effects of these unexpected events through its flexible supply
network and thus largely ensure its ability to deliver vehicles.
To lessen the impact of the war in Ukraine on its European
plants, since 2022 extensive measures have been in place, and
therefore continues to source components from western Ukraine.
At the same time, our partners have established additional pro-
duction sites outside Ukraine. As a result of these various
measures the supply of wiring harnesses to our plants has
largely returned to normal. The situation is, however, being mon-
itored continually.
Expanding resilient supply chains
During the year under report, the BMW Group was generally able
to rely on the stability of its supply chains, despite the problems
caused by geopolitical crises and the availability of critical raw
materials. Price increases on global markets also tended to in-
tensify the tense purchasing situation. The BMW Group RiskHub
plays a key role in making our global supply chains more resilient.
For example, it helps to identify risks at an earlier stage through
the use of artificial intelligence (AI). We see the development of
the Catena-X digital ecosystem as the key to standardised data
transfers throughout our supplier network.
The BMW Group follows the principle of procuring vehicle com-
ponents close to its production sites, wherever possible. We are
therefore represented by local purchasing teams in all key mar-
kets in order to quickly identify local risks and opportunities and
respond flexibly to the respective market conditions. In the face
of geostrategic aspects, a resilient strategy for the Group's sup-
ply chains is also becoming increasingly important and the
BMW Group takes this fact increasingly into account when se-
lecting its partners.
Regional distribution of the BMW Group's purchased
volumes*
Natural disasters pose an additional risk. Extensive flooding in
Slovenia led to delivery difficulties during the year under report.
The prospect of climate change and the increasing number of
extreme weather events are likely to make planning more difficult
going forward. However, the BMW Group is able to mitigate the
in %
Other 3.3
Other Western
Europe 11.9
Total
96.1 Mrd. €
Germany 32.5
North America
15.5
China 17.4
*Direct and indirect purchasing.
The year 2023 was characterised by improved supply chain sta-
bility on the one hand, but also by rising material prices driven by
rampant worldwide inflation on the other. The latter resulted in
higher costs for the BMW Group, primarily for raw materials,
semiconductors, energy and transportation. The overall supply
situation also remained challenging in 2023. The supply situa-
tion for semiconductors in particular will remain challenging for
certain technologies in the current financial year. 7 Outlook, Risks
and Opportunities
Procuring high-quality components at competitive prices
Recognising innovative solutions at an early stage
Further digitalising processes within the supplier network
Integrating social and ecological standards within the
supplier network
370
111
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Production and Supplier Network
Group Financial Statements
Responsibility Statement and Auditor's Report
Supply security
Remuneration Report
← = Q
PURCHASING AND SUPPLIER
NETWORK
[[Supply chains and supplier network
The BMW Group's Purchasing and Supplier Network is respon-
sible for the global procurement and quality assurance of produc-
tion materials, raw materials, components, capital goods and
services as well as the in-house production of vehicle compo-
nents.
When it comes to purchasing and the supplier network, the main
focus areas are:
Ensuring security of supply to the production plants
Expanding resilient supply chains within a highly
challenging geopolitical environment
Other Information
[[Digitalisation in the supply chain
Risk management in purchasing
An interconnected risk management system is fundamental for
managing the supplier network. It takes preventative action when
nominating suppliers, while also reacting quickly in order to iden-
tify and analyse impending supply bottlenecks. The
BMW Group's RiskHub analyses information from external, pub-
lic-ly available data sources with regard to potential risks such as
natural disasters or financial risks. We also employ state-of-the-
art methods derived from the fields of Al and big data analytics.
For selected topics such as the reliable supply of semiconductor
components, we also take the locations of sub-suppliers into ac-
count when assessing overall risk.
Secondary raw materials will be increasingly deployed to cover
the BMW Group's cobalt, lithium and nickel requirements, to-
gether with purchased green electricity for the latest generation
of battery cells. Contracts and framework agreements have al-
ready been concluded with suppliers to this end. This will help
further reduce our carbon footprint from the new battery cell in
the supply chain compared to the previous generation. 7 Carbon
emissions in the supply chain
In-house production as a strategic competitive advantage
The BMW Group regularly examines its range of products in
terms of their profitability and strategic significance. The main fo-
cus is being directed at electric mobility, digitalisation and sus-
tainability. In these key areas of transformation, the BMW Group
is expanding its in-house expertise on a targeted and long-term
basis on matters relating to strategically important components.
At the same time, in-house production aims to improve both se-
curity of supply and the ability to innovate. The benefits of this
approach have already been seen, for example, with the control
unit of the high-voltage storage system and scopes of the electric
drive equipment. At the same time, we are looking to strengthen
our process competencies in technologies relevant for quality
management and enablement within the supplier network.
Quality assurance
Quality is a promise we make to our customers as well as a de-
cisive competitive advantage and an essential factor for the en-
during success of the BMW Group. The quality management sys-
tem is the basis for continuously improving the quality of our
products, processes and services. It consists of an intercon-
nected, comprehensive system that encompasses the entire
product development process, industrialisation and series pro-
duction with respect to both in-house production and the supplier
network. The various steps are supported based on need by our
teams of quality experts when necessary. The ultimate aim is to
ensure - both preventatively and systematically - that all quality
requirements are met at all times.
Innovations
Collaboration with technology partners and the establishment of
new networks enables us to implement innovations in our vehi-
cles within a very short time. In this context, we work closely with
the BMW Startup Garage and BMW i Ventures.
To strengthen this resilience even further, we plan to anchor the
upstream value chain for critical components in the respective re-
gions while accounting for geopolitical risks and economic effi-
ciency. Through this, the BMW Group also aims to improve its
resilience in the face of external events while reducing its de-
pendence on geopolitical factors and its exposure to related
risks.
The specialist teams cooperate in technology clusters to sharpen
the focus on innovation screening, which is implemented through
strategic supplier dialogue formats (Future Vision Deep Dive) and
other means. Findings from the supplier network are systemati-
cally processed within the technology clusters.]]
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Production and Supplier Network
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
113
Eastern Europe
19.4
As of 2025, the BMW Group plans to deploy a new generation of
battery cells. Against this backdrop, we have concluded contracts
with our partners that guarantee us annual production capacities
in Europe, China and the USA. We are strategically establishing
supply chains for battery cells close to our production sites,
thereby underpinning the "local for local" approach. During the
year under report, we entered into a new partnership in North
America to make the battery cell supply chain more resilient.
Moreover, the BMW Group has set itself the goal of generating a
positive impact for selected raw materials through our involve-
ment in local development projects. This currently applies to the
raw materials lithium, mica, cobalt and natural rubber.
In order to avoid cyber risks and deal effectively with an increas-
ing number of supplier-related incidents, the BMW Group contin-
ues to rely on supplier certification in accordance with the TISAX
automotive standard. When it comes to purchasing materials
both directly and indirectly, TISAX is an integral part of the pro-
curement process and an inherent component of contracts with
suppliers that meet the specific relevance criteria. The initiative
for joint IT security analyses and the regular exchange of infor-
mation via a B2B portal also enable us to make the supplier net-
work more resilient.]]
112
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Production and Supplier Network
Group Financial Statements
Remuneration Report
Purchasing battery cells
Other Information
[[An increasing number of training courses and informational
events are being organised both internally and externally to raise
awareness of the rapidly growing level of cyber risk.
Raw materials security and strategy
The volatile situation on energy and raw materials markets had
a major impact on purchasing over the course of 2023. The long-
term supply of critical raw materials required for electric mobility
remains a strategic challenge. Measures taken by the
BMW Group to increase supply security and promote the pro-
curement of raw materials from responsible sources include,
among other things, sourcing lithium and cobalt directly. Further-
more, the BMW Group analyses the development of raw materi-
als prices and hedges against price fluctuations - provided the
capital market offers the opportunity to do so. 7 Raw materials price
risks and opportunities
For the BMW Group, the responsible procurement of raw mate-
rials is the result of a holistic approach that takes economic, eco-
logical and social aspects equally into account. Our commitment
to upholding environmental and social standards as well as hu-
man rights throughout our raw materials supply chains is set out
in, among other places, the 7 BMW Group Supplier Code of Conduct in
which we oblige our Tier 1 suppliers to pass on our requirements
to their upstream sub-suppliers. There are also raw-materials-
specific statements such as the High Level Commitment for
sustainable natural rubber.
Annual risk analyses form the basis for implementing raw-mate-
rials-related preventive and remedial measures to reduce envi-
ronmental and human rights risks. Key levers in this respect are
to forgo, substitute or reduce the use of primary raw materials
that entail a high level of risk. The BMW Group's secondary raw
materials strategy is of vital significance in this context: > Circular
economy, resource efficiency and renewable energy. We also focus in par-
ticular on collaborating closely with our partners in the supplier
network as well as in multistakeholder initiatives and projects.
We use scientific findings to gain an even better understanding
of the extraction processes of raw materials and take them into
account accordingly when analysing the level of risk. 7 Lithium
Study
Among other things, the BMW Group focuses on the conflict min-
erals tin, tantalum, tungsten and gold (3TG) and uses standard-
ised tools of the Responsible Minerals Initiative (RMI) to trace raw
materials back to the smelter. We use existing certifications for
other raw materials. The BMW Group is also involved in develop-
ing certified standards for critical stages of the value chain, for
example as part of the Initiative for Responsible Mining Assur-
ance (IRMA), and is engaged in their implementation by suppli-
ers. Further details and raw materials profiles are available
7 online. SASB Index
← = Q
279
2021
389
0
2019
2020
2022
2023
]]
416
Occupational safety along the value chain
Cooperation with contractual partners on safety-related aspects
at the sites is regulated by way of a separate contractor declara-
tion. At major BMW Group construction sites, all employees of
partner companies receive safety briefings from BMW Group ex-
perts. In the case of smaller orders, the contractor is responsible
for the process of familiarisation. The commissioning specialist
department monitors compliance with the occupational health
and safety requirements, and is supported by the relevant spe-
cialist department for occupational safety and ergonomics.
Suppliers to the BMW Group are obligated to comply with inter-
nationally recognised occupational health and safety require-
ments via the Purchasing Terms and Conditions.5
7 GRI Index: 403-7]]
1 Occupational Health and Risk Management System.
2 The calculation takes into account apprentices, interns, temporary staff, doctoral students, long-
term sick-leave and people on sabbatical.
3 Previous year's value adjusted due to a correction in working hours.
4 Number of workplace accidents resulting in at least 1 lost day per million working hours.
5 Management systems in accordance with ISO 45001 and derived from the International Labour
Organization (ILO) or United Nations Global Compact (UNGC).
120
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Employees and Society
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
1.93
← = Q
2.0
3.2
119
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Employees and Society
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
[[Regular training for employees
BMW Group employees at all locations are trained in occupa-
tional health and safety as part of qualification programmes. The
necessary qualification requirements for occupational safety are
determined in coordination with the specialist department for oc-
cupational safety and ergonomics. The seminar curriculum is
drawn up in collaboration with safety specialists, Company doc-
tors and the BMW Group Academy.
Certified occupational health and safety management
system
The BMW Group follows the globally recognised ISO 45001
standard for occupational health and safety. Occupational health
and safety management systems are in place at all production
sites, and 29 of the 32 plants are certified in accordance with this
standard or OHRIS¹, which is based on ISO 45001. This means
that 99.80% (2022: 99.79%) of employees and 100% (2022:
99.98%) of temporary employees at BMW Group plants work at
a site covered by an international occupational health and safety
management system. The BMW Group plant in Manaus (Brazil,
certification planned for 2024), the contract manufacturing facil-
ities in Born (the Netherlands, production will end in 2024) and
the jointly managed Spotlight plant in Zhangjiagang (certification
planned for 2024) are not currently certified.
The BMW Group has set the goal of obtaining certification to one
of the aforementioned international standards for all of its plants
by 2025. Employer and employee representatives work together
at nearly all locations to bring about a continual improvement in
health and safety standards. GRI Index: 403-1, 403-4, 403-8
Recognising and avoiding risks
The BMW Group conducts comprehensive risk and stress ana-
lyses in order to identify potential work-related risks in both pro-
duction and office workplaces. With the Digital Workplace Stress
Management (DWSM) project - a fully automated ergonomics
assessment - the BMW Group continues to set standards in the
automotive industry. Over the last two years, ergonomics spe-
cialists from the BMW Group have been training employees in
the use of DWSM at all assembly locations in Germany. Prepa-
rations have also been made at the locations in Mexico, the UK,
the USA and South Africa for the implementation of DWSM.
The BMW Group regularly assesses all methods and instru-
ments used within the Company. The results of the assessments
are subsequently used to enhance internal norms. The Works
Council and, if necessary, the representatives of severely disa-
bled employees and HR management are involved.
The BMW Group ensures the quality of its processes by means
of annual internal audits. Audits and certifications of sites are
conducted by external service providers. All necessary audits
were again successfully performed in 2023. The results and re-
sulting measures are made available to all BMW Group locations.
7 GRI Index: 403-2, 403-7
Accident frequency at a low level
The BMW Group's preventive measures continue to have an im-
pact. In 2023, these also meant that the accident frequency rate
remained at a low level of 2.0 (2022: 1.93). There were no fatal
accidents during the reporting year (2022: no fatal accidents).
7 Further GRI Information, GRI -Index: 403-9
[[Accident frequency rate❝
3.5
2.8
DIVERSITY, EQUAL
OPPORTUNITY AND
INCLUSION
[[An appreciative, unprejudiced and inclusive working environment
for all employees is a fundamental prerequisite for successful
collaboration at the BMW Group. People from over 110 nations
bring different perspectives, experiences and competencies to
their daily work at the BMW Group, thereby strengthening the
Company's innovative power and competitive ability. Key princi-
ples such as protection against discrimination, equal treatment
of all employees and respect at all times are firmly embedded in
the BMW Group Code of Conduct and the BMW Group Code of Human
Rights and Working Conditions.
Equal opportunities at the BMW Group are also expressed in a
remuneration system that is designed to be independent of gen-
der, religious denomination, origin, age, disability, sexual orien-
tation or country-specific characteristics. In the reporting year,
BMW AG was the first German company to be certified as a Fair
Pay Leader by the Fair Pay Innovation Lab (FPI). The certifica-
tion is evidence that BMW AG's remuneration structures are ef-
fective in ensuring equal salaries between women and men. This
is supported by annual, science-based equal pay analyses, a
practice which the BMW Group also aims to expand to interna-
tional locations in the future. GRI Index: 405-2
direct¹
14.4
54.6
30.9
indirect²
9.5
63.2
27.3
male
10.4
59.2
30.4
15.6
64.0
20.3
The aim of diversity management is to anchor the importance of
diversity in thought and action. A key component is web-based
training against discrimination in the workplace. This training has
been mandatory for all employees in Germany since 2023. From
2024, all BMW Group employees will be offered anti-discrimina-
tion training. We have also introduced measures such as the
7 Senior Expert Programme and the Joint Leadership Programme,
which were used with increasing frequency in 2023. The BMW
Group also commissioned an external analysis of its existing
commitments, with a focus on the dimensions of sexual orienta-
tion and identity. This took place within the framework of our
membership with "PROUT AT WORK", a leading foundation and
consultancy in Germany focusing on LGBTIQ+3 issues in the
workplace, aimed at promoting equality for individuals within the
queer community. We will use this as the basis for specific
measures in the next step.
-
The established "Diversity Week" was expanded in 2023 to be-
come the international "Days of Diversity" for the first time.
Throughout the year, numerous activities such as lectures,
workshops and interactive events for employees - took place at
our locations worldwide, including special events on International
Women's Day and the International Days of Cultural Diversity
and Tolerance. In the reporting year, we also implemented
measures that were adopted in 2022 as part of the revised ver-
sion of BMW AG's general operating and inclusion agreement for
employees with disabilities. Examples of this include our require-
ments for barrier-free access in the areas of Manufacture and IT.
As in previous years, BMW AG in Germany awarded contracts
amounting to around € 42.7 million (2022: € 41.1 million) in
2023 to workshops staffed by people with disabilities.]]
1 Direct: Clock-controlled and production employees.
2 Indirect: All employees not engaged in clock-controlled work.
3 Abbreviation for all sexual orientations and forms of identity.
28.7
60.0
11.3
2023 in total
All employees can contact their managers, the relevant specialist
departments, the HR department, the Works council and the rep-
resentative body for employees with disabilities with concerns
relating to diversity, equal opportunities and inclusion. The BMW
Group SpeakUP Line is a telephone service available in over 30 lan-
guages that gives employees worldwide the opportunity to report
possible violations both anonymously and confidentially.
Compliance and Whistleblower Systems Controls Employees in Ger-
many also have access to the "Zero Tolerance" hotline, a free,
anonymous and professional advice centre for discrimination,
bullying and sexual harassment in the workplace.
7 GRI Index: 406-1
Promoting diversity
Our Company-wide concept for diversity, equal opportunities and
inclusion forms the basis of our holistic commitment. The HR de-
partment manages the content and implementation together
with Diversity Officers and disciplinary managers. The concept
contains aims and measures that focus on five key dimensions:
Gender
Age and experience
Physical and mental ability
Cultural background
Sexual orientation and identity
The BMW Group provides information about its commitment to
these categories on our website.
* Number of hours of absence due to paid sick leave divided by the contractually agreed number of
working hours.
[[BMW AG employees by age group
divided into functions and gender
<30
years
30-50
years
2021 in total
9.8
59.9
> 50
years
30.3
2022 in total
10.8
59.8
29.4
in %
2023
female
2021
2023
2022
2021
2020
2019
0
illi
3.73
4.00
4.71
5.51
3.39
in % of workforce size
Employee attrition rate BMW AG6
The BMW Group is one of the most attractive employers world-
wide. A positive perception of the Company, challenging and fu-
ture-oriented tasks, individual opportunities for personal devel-
opment, attractive remuneration and additional benefits, and a
modern working environment contribute to this.]]
[[Attractive employment conditions
2023
2022
2021
2020
2019
1 The key figure "Spending on employee training and development" includes the BMW Group's in-
vestments in vocational training, instruction and further education (for definition see Glossary),
limited to consolidated BMW Group subsidiaries.
5,007
2 Includes the programmes "Speed Up" (an undergraduate programme) and "Fastlane" (a master's
programme). These programmes vary by country, and are adapted to local market requirements
and university curricula.
4 The trainee programme was launched in April 2023 under its new name "AcceleratiON" (formerly
the Global Leader Development Programme, GLDP).
BMW Group Report 2023
2022
118
*All BMW Group employees on permanent contracts at 1 August 2023 were surveyed. In 2023,
this included the employees of BMW Brilliance Automotive Ltd. for the first time.
Also, in 2023, highly regarded employer ratings once again ranked the
BMW Group as one of the world's most attractive employers: the
BMW Group again achieved the top spot in the Trendence Profession-
als Barometer for Germany in 2023 for the 12th time in a row. In the
current ranking of the World's Most Attractive Employers 2023 of
the study provider Universum, the BMW Group moved up to third place
worldwide among prospective engineers, directly behind the technol-
ogy companies Google and Microsoft. The BMW Group is one of the top
15 employers globally among students in the fields of IT and business.
Excellent results in employer rankings
Employees also have a central opportunity to participate through
idea management, which allows employees to contribute ideas
outside of their area of responsibility. If the proposals have a pos-
itive impact on the BMW Group in terms of efficiency or sustain-
ability, they will be honoured accordingly. In 2023, numerous
employees submitted a total of 5,470 ideas (2022: 5,028). At
the same time, a total of 1,267 ideas (2022: 1,188) were imple-
mented, resulting in first-year benefits totalling € 52.0 million
(2022: € 20.5 million). More than a fifth of these had their pri-
mary impact in the area of sustainability. GRI Index: 2-29]]
The BMW Group measures the general mood in the workforce
and the performance of the organisation every two years as part
of a Company-wide employee survey*. This is measured using
the "High Performance Organisation Index" (HPO-I). In the sur-
vey in autumn 2023, the participation rate was higher than ever
before at 84%. At the same time, the HPO-I improved again
when compared to the last survey in 2021. 88% of the workforce
would recommend the BMW Group as an employer. 86% of em-
ployees were convinced by the strategy of integrating sustain-
ability and setting ambitious targets in this respect. They also
signalled a high level of willingness and motivation to play an ac-
tive role in this process, This contributes significantly to the fact
that approximately 85% of respondents are optimistic about the
future of the BMW Group. The topic of Compliance also scores
well among the workforce, with 88% approval. Despite progress
compared to the last survey, employees identified room for im-
provement in the optimisation of processes. The results of the
survey will form the basis for concrete measures that are sched-
uled for implementation by mid-2024.
The employees of the BMW Group are one of the most important
stakeholder groups for the Company, and are actively involved in
shaping the future direction of the Company. Dialogue with
Stakeholders
Involving employees
The BMW Group offers its employees an individual scope of free-
dom to organise their work and their working hours. The tools
used include flexible working times, remote work, additional
leave with corresponding reductions in pay, sabbaticals, and
temporary or permanent part-time solutions. Further GRI
information As part of our "ConnectedWorks" initiative, we ad-
vanced the methodological, technical and spatial foundations for
flexible and collaborative work in the reporting year.
[[In terms of total remuneration, we aim to ensure that our em-
ployees earn above average for the respective labour market. To
confirm this, we conduct remuneration studies each year on a
worldwide basis. The BMW Group also consistently applies the
principles of performance-related compensation. The total salary
package consists of a monthly remuneration and a variable com-
ponent dependent on the Company's overall performance. We
also offer additional benefits such as Company pension schemes
and an attractive range of mobility benefits, including subsidised
tickets for local public transport. For example, the BMW Group
subsidises the purchase of the "Deutschlandticket" for the ma-
jority of its scale-wage employees in Germany. Apprentices and
dual study students receive the ticket free of charge. 7 GRI Index:
2-21, 401-1, 401-2
← = Q
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
Employees and Society
BMW Group Report 2023 To Our Stakeholders
117
6 Departures of employees with permanent employment contracts.
5 Since 2022 including BMW Brilliance.
3 Including the BMW Group plant in Debrecen, Hungary, for the first time in 2023.
4,517
Other Information
4,672
The use of management systems and certifications (e.g. Occu-
pational Health and Safety Assessment Series, OHSAS 18001)
is aimed at continuously developing internal guidelines for occu-
pational safety and the ergonomic design of the workplace.
Responsibility for the topics of health and occupational safety is
enshrined in the Work Environment, Group Safety and Group
Data Protection division. 7 GRI Index: 403-1
Health management on a holistic basis
The BMW Group bundles all measures to maintain health and
performance in the "Health Initiative". In the reporting year, the
focus of health management was on psychological and mental
health. We discussed various mental health topics in expert pan-
els in the new "Health Talks" format. Our "Health and Leader-
ship" programme also focuses on managers' responsibility for
the mental health of our employees.
We use regular action days, dialogue events and training courses
to inform our employees and raise awareness of current health-
related topics such as nutrition, exercise and fitness, behavioural
ergonomics and cancer prevention.
To help promote a balanced diet, BMW AG runs company can-
teens in Germany. We focus on regional and sustainably pro-
duced food. The sustainability criteria used in supplier audits in-
clude sustainable water management during production, the use
of renewable energy and compliance with product-group-spe-
cific regulations. Since 2023, the "Sustainable Catering" guide-
lines have also been in place at most international locations,
aimed at further improving the environmental impact of BMW's
catering services.
-
It is important to the BMW Group that all employees have access
to the Company's own health services. In Germany, these ser-
vices focus on providing acute care to employees and temporary
employees during working times. At some locations
such as
South Africa, Thailand, India and Mexico - health management
also involves the provision of basic healthcare. The
BMW Group's occupational physicians advise employees on in-
dividual preventive measures on request. They also help to or-
ganise the respective working environment in such a way that
health and performance can be maintained over the long term.
The provision of occupational healthcare and medical advice
helps to prevent work-related health problems at an early stage
and avoid accidents at work. GRI Index: 3-3, 401-2, 403-3, 403-6
One of the ways in which the Company measures the success of
health management is by its sickness rate, which at 3.8% at
BMW AG was below the previous year (2022: 4.2%). The
sickness rate in Germany remained at a high level until the mid-
dle of 2023 and normalised over the course of the year.
Nevertheless, we aim to reduce this level, for example, with tar-
geted measures in accordance with our "Attendance Manage-
ment Works Agreement" (BAM) and the relevant health manage-
ment initiatives. BAM is a service provided by the BMW Group to
promote the health of employees and increase their attendance.
Health-preserving and health-promoting measures and offers
from the Company are also suggested to employees. The dis-
cussions are conducted by managers regularly or as needed.
7 GRI Index: 403-10]]
[[Sickness rate BMW AG*
in %
3.7
3.4
3.4
4.2
3.8
أنني
2.0
4,690
2020
measures.
The BMW Group also applies additional safety standards that go
beyond the legal obligations. The digital safety and ergonomic
risk analysis (SERA) records threats and sources of stress for
production workplaces and production-related areas worldwide.
The SERA takes into account the stricter US regulations and re-
quirements in addition to the German legal regulations. In pro-
duction, the use of laser scanners for presence monitoring in
small robot cells serves as another example of increased safety
2019
HEALTH AND PERFORMANCE
[[The health and performance of people employed by the
BMW Group enjoys top priority. The different activities at the op-
erating sites result in extensive requirements for occupational
health and safety. The Company is committed to complying with
applicable occupational health and safety laws worldwide. The
right to health and safety in the workplace is also enshrined in
the BMW Group's Code on Human Rights and Working Conditions.
4,000
Number
Apprentices and participants in future talent programmes
In addition to the wide range of vocational training options, the
BMW Group also offers programmes for top talents: participants
in the "ProMotion" doctoral programme go on to write their doc-
toral dissertations in cooperation with the BMW Group and thus
contribute valuable innovations to the Company. Our trainee pro-
gramme AcceleratiON4 aims to prepare future managers for the
tasks that await them in the future.
In 2023, a total of 1,200 young people started an apprenticeship
or dual study programme at BMW AG (2022: 1,200). The same
number of vocational training and study places were advertised
for the coming year. In the reporting year, the apprenticeships on
offer were expanded to include dual study programmes in Cyber
Security and Environmental Protection. BMW AG continues to of-
fer its apprentices and dual study students permanent employ-
ment at the BMW plants and headquarters after they have com-
pleted their vocational training. 7 GRI Index: 401-1
Specifically, we offer young people approximately 30 apprentice-
ships and 20 dual study programmes at 20 training locations
and 20 branches worldwide, in order to prepare them for their
future career at the BMW Group. The focus is on the future topics
of electrification, digitalisation, automation and sustainability.
The total number of apprentices, dual study students and partici-
pants in the young talent programmes² rose solidly to 5,007³
during the reporting year (2022: 4,690/+6.8%). In 2023, the
training cohort started at the new production site in Debrecen in
Hungary. The BMW Group has now established the successful
model of dual vocational training and instruction in nine countries
outside of Germany. We promote cross-location networking
through the MOVE exchange programme. Apprentices and dual
students are given the opportunity to gain practical experience
both in Germany and abroad.
The BMW Group offers a comprehensive programme with a va-
riety of entry opportunities to attract and promote young talent
and ensure the development of skills within the BMW Group. The
basis for this is the vocational training approach that has grown
over the years, the opportunities to pursue a dual study pro-
gramme and other student development programmes.]]
[[Recruiting and supporting new staff
2023
2022
4,801
2020
← = Q
2021
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Employees and Society
Other Information
469
2019
To Our Stakeholders
200
Economic outlook
to contribute as corporate citizens and play our part in address-
ing major future questions and challenges.]]
123
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Outlook
The International Monetary Fund anticipates global growth of
3.1% in 2024. Geopolitical conflicts and the effects of tighter
monetary policy in many countries will be the greatest burdens
on the global economy in 2024. Higher interest rates are affect-
ing consumer spending and investment, with a corresponding ef-
fect on the economy. Further information on political and global
economic risks is also available in the Risks and Opportunities sec-
tion.
Group Financial Statements Responsibility Statement and Auditor's Report
The BMW Group's expenditure within the strategic focus areas
in 2023 totalled € 44.2 million (2022: € 38.7 million). This in-
cludes donations for those affected by earthquakes in Turkey,
Syria and China, as well as fires in Hawaii and the floods in Italy.
Beyond financial support, the BMW Group also provides assis-
tance in the form of knowledge transfer, networking opportuni-
ties, projects to promote public infrastructure, and the engage-
ment of its own workforce. We also generate additional societal
impact through memberships in associations and institutions,
the provision of vehicles, including for vocational schools, and
participation in projects aimed at promoting more sustainable
mobility in cities. Shaping the future of mobility In doing so, we aim
Other Information
← = Q
OUTLOOK
The outlook and Risks and opportunities of the BMW Group pre-
sented in this report reflect the expected development in 2024
from the perspective of Group management. In line with the
Group's performance management, the outlook covers a period
of one year. Short-term risks and opportunities are managed on
the basis of a two-year assessment period. In addition, we report
on medium- and long-term risks and opportunities arising in con-
nection with climate change.
The continuous forecasting process applied within the
BMW Group ensures that it is constantly ready to take advantage
of opportunities as they arise, but also to react appropriately to
any unexpected risks. The principal Risks and Opportunities are de-
scribed in detail in the section of the same name and concern all
performance indicators. Actual outcomes may, however, deviate
from the outlook due to unexpected events.
Responsibility Statement and Auditor's Report
Remuneration Report
Valuing and supporting employee commitment
The BMW Group promotes and encourages employees to sup-
port social issues around the world in various ways through its
SOCIAL DRIVE initiative. The first pillar is the annual BMW Group
AWARD for social commitment, which has recognised the out-
standing commitment of individual employees for 12 years. Of
the ten finalists in 2023, four emerged as winners - one of whom
also won the special Doppelfeld Foundation prize. The prize
money of € 10,000 each will be used to fund the relevant charity
projects. The second pillar is the SOCIAL DRIVE IT platform,
which informs employees about specific support needs. The
platform launched in Germany in 2022 and is currently being
rolled out internationally. With our employees' help, we can also
provide more comprehensive support for existing projects, for ex-
ample through volunteer work and monetary donations. The
third pillar is the SOCIAL DRIVE DAYS, which are intended to
strengthen our employees' interest in social commitment.
The BMW Group supports numerous sports and cultural activi-
ties worldwide. For example, the "Opera for All" initiative pro-
vides free access to opera and classical music in Munich, Berlin,
Melbourne and London. In the context of our sports sponsor-
ships, we also contribute, for example, through the scholarship
programme of the Evans Scholars Foundation in conjunction with
the BMW Championships golf tournament.
Remuneration Report
Other Information
← = Q
CORPORATE CITIZENSHIP
[[As part of its social commitment, the BMW Group is committed
to environmental, economic and social issues outside its core
business. As such, we not only live up to our own aspirations but
also the expectations of society and our stakeholders worldwide.
The BMW Group aims to act in a targeted, long-term and effec-
tive manner. We also provide quick and unbureaucratic assis-
tance in the event of a crisis. We have defined four key topics that
are reflected in our projects on the basis of our core business and
skill sets:
Inclusion for equal opportunities
The BMW Group is a partner of the Intercultural Innovation Hub (IIH).
This platform has emerged from our long-standing partnership
with the UN Alliance of Civilizations and supports selected organ-
isations around the world that are engaged in concrete projects
promoting intercultural dialogue, peace and diversity, among
other initiatives. For this purpose, they receive support for over a
year in the form of expertise, networking opportunities and finan-
cial resources. The currently funded projects were honoured at an
event in Berlin in May 2023.
Forecasts for the eurozone as a whole indicate slight growth
(+0.6%). France (+0.7%), Italy (+0.5%) and Spain (+1.6%) are
expected to meet or outstrip the average for the eurozone. Ger-
many is expected to record at least a slight increase in economic
output in 2024 (+0.3%), although the continued modest growth
in the global economy is dampening the country's export econ-
omy.
We also contribute, for example, by supporting the 7 JOBLINGE
programme. The initiative helps people with a difficult start in life
to begin their professional lives.
Responsible Leadership for sustainable development
The BMW Group wants to support and bring together people
who are committed to societal needs. The annual One Young
World Summit represents an international networking oppor-
tunity. The BMW Group has been sending a delegation of young
managers to the global forum for sustainable development since
2016, including in 2023. Selected IIH organisations also had the
opportunity to take part in the international event.
To support young talent, the BMW Group awards full-time schol-
arships for the Global Online Master in Business Administration
(MBA) at the European School of Management and Technology (ESMT)
Berlin as part of the BMW Group Change Maker Fellowships. In addition,
the BMW Foundation Herbert Quandt expands our network with more
than 2,300 Responsible Leaders from over 100 countries on all
continents. As an important partner, the independent corporate
foundation contributes with its activities to the perception of so-
cial responsibility at the BMW Group.
Education for future generations
The BMW Group has been supporting educational projects at its
locations worldwide for many years. With BRIDGE. We are taking the
next step with Educating young people for tomorrow, today - a global and
long-term collaboration with UNICEF that started in 2023. The
collaboration aims to qualify young people in Brazil, China, India,
Mexico and South Africa for careers in the mathematical and
technical fields, while also collecting donations for the education
of children and adolescents in crisis areas within existing plat-
forms, and with the involvement of international subsidiaries and
stakeholders. The BMW Group is thereby making a long-term
contribution to UNICEF's goal of reaching more than ten million
children and adolescents through education. By undertaking this
commitment, we are simultaneously implementing our corporate
citizenship strategy at the local level, for example, through men-
toring and internship opportunities directly at our locations.
Culture and Sports for a united world
Corporate citizenship with impact
A slight uptick in economic output (+0.4%) is forecast for the UK,
where higher interest rates and continued higher inflation are
slowing growth.
International automobile markets
Growth is expected to reach 4.6% in China, where continued up-
heaval in the real estate sector and the resulting drop in con-
sumer confidence are dampening expectations.
Expected consequences for the BMW Group
Future developments on international automobile markets have
a direct impact on the BMW Group. A challenging competitive en-
vironment and macroeconomic and geopolitical developments
could all have a significant impact on business performance. The
close cooperation between our sales network and our production
network and our flexible vehicle architecture allow us to respond
to even unforeseeable developments effectively. 7 Risks and
Opportunities
Assumptions used in the outlook
The outlook contains forward-looking statements based on the
BMW Group's expectations and assessments and may be influ-
enced by unforeseeable events. As a result, actual outcomes can
deviate either positively or negatively from the expectations de-
scribed below due to changes in the political and economic envi-
ronment as well as other factors.
The following outlook covers a forecast period of one year and is
based on the composition of the BMW Group during that time.
The outlook takes account of all information available at the time
of reporting that could have an impact on the BMW Group's
performance.
The expectations contained in the outlook are based on the
BMW Group's forecast for 2024 and reflect its status at the time
of preparation of the Group Financial Statements. The basis for
the preparation of and the principal assumptions used in the
forecasts which consider the consensual opinions of leading
organisations, such as economic research institutes and banks -
are set out below. The BMW Group's outlook takes account of
these assumptions.
-
It is expected that a fall in inflation and stabilised interest rates in
many countries will allow for a slight increase in demand in 2024.
The number of vehicle deliveries is set to increase slightly against
this backdrop and in light of the full availability of new models
such as the BMW 7 Series and the BMW 5 Series, model
launches such as the BMW X2 and BMW X3, and the renewal of
the MINI product range. Pricing across the product portfolio is ex-
pected to remain at prior year's level.
The BMW Group anticipates an improved situation on the com-
modity markets in 2024 in light of the downward price trend for
precious metals and battery materials in the second half of 2023.
The continued rise in all-electric and electrified vehicle numbers
does, however, mean that expenditure will remain at a high level.
Higher costs for employees are expected in 2024, along with
higher costs from the supply chain, owing to high inflation in pre-
vious years.
In addition, the continued implementation of the electrification
and digitalisation strategy will lead to greater research and de-
velopment costs in 2024. Expenditure related to the NEUE
KLASSE, such as the further development of the sixth generation
of battery technology and manufacturing preparations in the pro-
duction network, will also impact the Group's earnings and result
in greater capital expenditure.
The situation in the Middle East became increasingly volatile at
the end of 2023. The conflict between Israel and Palestine is not
having a significant effect on the BMW Group's business at pre-
sent as the Group does not operate directly in that region. How-
ever, it must be assumed that the threat posed in the Red Sea by
the Houthi militia will cause some logistical challenges in 2024.
Our outlook does not account for any further escalation of the sit-
uation. The BMW Group is monitoring developments.
The war in Ukraine and its potential implications for the
BMW Group's course of business are also being closely moni-
tored. All applicable restrictions resulting from sanctions have
been factored into the outlook.
In view of the growing unpredictability of political developments,
actual macroeconomic and geopolitical developments in some
regions may deviate from expected trends and outcomes. Poten-
tial sources of political uncertainty include policies affecting trade
and customs tariffs, security developments and a possible wors-
ening of international trade conflicts.
Outlook for the BMW Group - key performance indicators
Deliveries of BMW, MINI and Rolls-Royce brand vehicles in the
Automotive segment are expected to rise slightly year-on-year
due to a slight increase in demand, full availability of new models
and model launches. In this context, the share of all-electric ve-
hicles relative to total deliveries is expected to increase signifi-
cantly compared to 2023.
Group Financial Statements
← = Q
The growth rate in the USA is expected to slow to 1.8% in 2024.
Higher interest rates are burdening companies and private
households in that country as well, while continually low unem-
ployment levels are supporting the economy.
Outlook
Remuneration Report
The Japanese economy is expected to see slower growth in
2024 than in the previous year (+0.8%).
Currency markets and international interest rate
environment
Currencies of particular importance for the international opera-
tions of the BMW Group are the Chinese renminbi, the British
pound, the US dollar, the Japanese yen and the South Korean
won.
It is expected that inflation in the US and in Europe will continue
to fall, and the BMW Group therefore does not expect any further
interest rate hikes from central banks. Accordingly, the US dollar
is expected to move sideways against the euro in 2024, with the
pound/euro exchange rate also expected to remain stable.
It is possible that Japan's highly expansionary monetary policy
may come to an end in 2024. If it does, the yen would appreciate
somewhat against the euro compared to its current very low
level.
Low inflation in China could lead to a more expansionary mone-
tary policy on the part of the central bank of China, potentially
resulting in a depreciation of the renminbi against the euro.
The currencies of emerging countries such as India and Brazil
may benefit from the monetary policies of the EU and USA sta-
bilising in 2024. No further devaluations against the euro and US
dollar are therefore expected at present.
The generally stable macroeconomic conditions should allow for
slight growth on international automobile markets in 2024
(+3.9%). Growth is expected to be spread across many mar-
kets, particularly the US and China. A higher global supply of new
vehicles is, however, expected to give rise to increasing price
competition, which will also have an effect on prices for pre-
owned vehicles.
International motorcycle markets
The BMW Group expects the world's motorcycle markets in the
500 cc plus class to remain in line with the previous year overall
in 2024. In Europe, market growth is also expected to be in line
with last year's level, with a slight decrease forecast in the USA.
Economic expectations will influence the motorcycle market in
China, while the motorcycle market in Brazil is expected to re-
main in a stable condition in 2024, as in the previous year.
124
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Other Information
Combined Management Report
Employees and Society
The BMW Group has set targets for the percentage share of
women at all levels of the Company. By 2025, we aim to increase
the share of women in the BMW Group workforce as a whole to
between 20 and 22% and to between 17 to 19% for BMW AG.
We aim to boost the share of women holding management posi-
tions in the BMW Group to 22% by 2025, and to 20% for
BMW AG.
BMW Group Report 2023
2022
2023
The share of women in the BMW Group workforce as a whole
reached 19.2% (2022: 18.6%). For BMW AG, the share was
17.1% (2022: 16.5%). The share of women in management
positions within the BMW Group has been rising steadily for
many years. Globally, the share of female managers in the
BMW Group stood at 20.8% at the end of the reporting year
(2022: 20.2%). In the last ten years, the number of women in
management positions in BMW AG has almost doubled. When
expressed as a percentage, the share of female managers at
BMW AG was 18.7% at the end of 2023 (2022: 18.2%).
7 Further GRI Information
[[The BMW Group is also aware of the need to achieve a high per-
centage of women in our future talents programmes. By doing
so, we aim to ensure that the share of women in the total work-
force and in management positions continues to rise in the fu-
ture. The proportion remained high in the trainee programme Ac-
celeratiON in 2023 at 41% (2022: 45%). The same applied to
the student support programmes (Fastlane, SpeedUp), with a
proportion of around 28% (2022: 31%). For our regular voca-
tional training and instructions, the share of women at BMW AG
in 2023 was 21.9%, and 22.1% in the BMW Group6.
Concepts to promote diversity, equal opportunity and inclusion
have also been developed by the BMW Group in relation to the
composition of the Board of Management and Supervisory
Board. Information on the stipulated diversity criteria and their
implementation is provided in the Corporate Governance Statement.
7 GRI Index: 3-3, 405-1]]
[[Our employees play a key role in ensuring that diversity, equal
opportunity and inclusion are actively practised. To this end,
many are involved and networked via internal networks. These
include family and women's networks at numerous locations,
and the BMW Group PRIDE association. This association advo-
cates for the interests of the LGBTIQ+ community across coun-
tries. The spirit of cooperation and dialogue with the internal net-
works provides the BMW Group with important impetus and sup-
port for the further development of its commitment.]]
Increasing the share of women
The BMW Group is working continuously to increase the share of
women in the workforce as a whole, and in management func-
tions, in particular. This remains a challenging task in that it is still
the case that more men go through the process of vocational
training, particularly in technical fields, and are, therefore, in the
majority on the labour market.
An EBIT margin of between 8 and 10% is forecast for the Auto-
motive segment in 2024. The RoCE for the Automotive segment
is also being affected by the increasing investment in electrifica-
tion and digitalisation, and expected to be between 15 and 20%.
Share of women in management positions and in the
total workforce (BMW AG)²
in %
18.2
18.7
17.5
15.515.7
2021
16.215.9
2020
4.0
121
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Employees and Society
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
[[Share of employees with severe disabilities at BMW AG¹
in %
6.6
6.5
6.5
6.2
6.0
2019
16.0
16.5
17.1
2021
2022
2023
in management functions
in the total workforce
in management functions
in the total workforce
1 The share of employees with severe disabilities is based on the statutory requirements in accord-
ance with the German Social Code (SGB IX).
2 For a definition of the term management positions, please refer to the Glossary.
3 For a definition of the term employee, please refer to the Glossary.
"The trainee programme was launched in April 2023 under its new name "AcceleratiON".
5 Up to and including the reporting year 2022, only the proportion of women in technical vocational
training and instruction (MINT areas) was reported.
6 Excluding sales companies.
122
2020
2019
2023
2022
Share of women in management positions and in the
total workforce (BMW Group)²
in %
19.3
19.5
17.2
17.8
18.819.7
To Our Stakeholders
20.2
18.6
19.2
0
0
2019
2020
2021
20.8
The BMW Group expects to achieve its target of slightly reducing
the carbon emissions generated by its EU new vehicle fleet by
further improving the overall fuel consumption of its products and
deploying an increasing number of vehicles with electric
drivetrain systems. It is therefore expected that we will continue
to remain significantly under the legal limits.
Workforce at year-end
125
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Risks are classified according to the risk amount (average earn-
ings impact, taking into account the probability of occurrence).
The earnings impact may be significantly higher if the risk actu-
ally materialises (worst-case scenario, confidence level: 99%).
The impact of risks and opportunities is presented separately
without offsetting against each other.
Group-wide effects and trends can be identified by aggregating
all material short-term risks at Group level. For this purpose, the
potential earnings impact of the risks is aggregated, taking cor-
relation effects into account. In order to assess the risk-bearing
capacity of the BMW Group, the aggregated amount of risks is
compared with the risk cover amount (the equity of the
BMW Group recognised for accounting purposes). A limit system
for various risks helps monitor the risk-bearing capacity.
Reputational risks
Quite apart from the financial consequences, risks can also have
an impact on the BMW Group's reputation. For these purposes,
the BMW Group assesses all material risks with regard to their
impact on its reputation using a scoring model. Moreover, other
overarching topics are monitored by means of regular media
analysis. Any material reputational repercussions are described
in the section Material Short-Term Risks and Opportunities.
Climate-related risks
Risks associated with climate change are presented in the sec-
tion Climate-Related Risks and Opportunities. Climate-related risks are
evaluated as physical and transitory risks in accordance with the
recommendations of the Task Force on Climate-related Finan-
cial Disclosures (TCFD). Transitory risks arise from the transition
to a low-carbon economy and are evaluated with the help of cli-
mate-related risk drivers and qualitative expert assessments.
Physical risks arise due to climate change and are evaluated us-
ing external data on potential natural hazards. Potential short-
term impacts of climate change are already included in the short-
term risks. All short-term risks are evaluated for their climate im-
pact. If a risk is categorised as climate-relevant, the climate-re-
lated portion of the risk is determined. The potential development
of climate-related risks is evaluated for two reporting periods
(medium-term until 2035 and long-term until 2050) and for
three global warming scenarios.
Non-financial risks as reported in the non-financial
statement (NFS)
Alongside the maintenance of a comprehensive system of risk
management, sustainability constitutes a core strategic principle
of the BMW Group. Risks resulting from sustainability issues are
generally identified via the Group-wide risk management
network.
In accordance with § 289c of the German Commercial Code
(HGB), risks that could have an impact on the non-financial as-
pects referred to in the relevant legislation are reviewed as part
of the reporting process. Material risks in this context are defined
as those stemming from business activities, business relation-
ships and products and services provided by the BMW Group
that are highly likely to have a seriously adverse impact. No ma-
terial non-financial risks were identified during the reporting year.
Opportunity management
Identifying opportunities is an integral part of the BMW Group's
strategic planning process. The Group's range of products and
services is continually reviewed on the basis of these analyses.
The continuous monitoring of key business processes and strict
cost controls are also essential factors for ensuring high levels of
profitability and returns on capital employed.
The importance of short-term opportunities for the BMW Group
is classified on a qualitative basis in the categories “material” and
"immaterial". Probable measures aimed at increasing profitabil-
ity are already incorporated in the outlook.
Climate-related opportunities are identified progressively as part
of the strategy development process and described in the section
* Climate-Related Risks and Opportunities.
130
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Risks and Opportunities
Combined Management Report
Risks and Opportunities
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders
129
According to our Group-wide guidelines, all employees and man-
agers have a duty to report risks through the designated report-
ing channels. The key elements of the risk management pro-
cesses and an appropriate risk culture are embedded in the
BMW Group's core values, the Group's extensive rules and reg-
ulations on risk management and in its overall risk strategy. Fur-
thermore, the BMW Group's risk management strategy is contin-
ually being refined in order to reflect new findings and require-
ments. Training programmes and informational events are reg-
ularly conducted throughout the BMW Group, particularly within
the risk management network.
The risk management process is applicable across the entire
Group and comprises the early identification, analysis and eval-
uation of risks, the use of appropriate risk management tools and
the monitoring and assessment of the measures taken. If no spe-
cific reference is made, risks and opportunities relate to the Au-
tomotive segment.
Risk Evaluation
Risk Management in the BMW Group
Internal
Control
System
Risk
Management
System
Reporting/
Monitoring
Appropriateness
Identification
Analysis
and
Evaluation
Measures
The BMW Group uses standardised, suitable methods for meas-
uring all short-term risks, reputational risks and medium to long-
term climate-related risks.
Compliance
Management
System
Effectiveness
Short-term risks
Risks relating to the current and subsequent financial year are
shown in the section Material Short-Term Risks and Opportunities.
These risks are evaluated using value-at-risk models and as-
sessed on the basis of uniform loss distribution metrics, thereby
enabling better comparability of risks for both internal and exter-
nal reporting purposes. Risks are evaluated net of any effective
risk mitigation measures (net basis).
Board of
Management
Steering
Committee
Performance
Management
Risk
Management
Supervisory
Board
Internal and external audit
BMW Group Report 2023
Remuneration Report
Other Information
← = Q
Immaterial
Low
Immaterial
Information security, data protection and IT
Financial risks and opportunities
High
Immaterial
Foreign currencies
Raw materials
Liquidity
Other financial risks
Pension obligations
Legal risks
High
Increased
Medium
Decreased
Material
Material
Low
Medium
Medium
Immaterial
Material
Medium
High
Immaterial
High
Immaterial
MATERIAL SHORT-TERM
RISKS AND OPPORTUNITIES
The overall risk situation for the BMW Group deteriorated mod-
erately year-on-year.
Consistently high inflation with high interest rates and lower real
incomes along with a corresponding widespread drop in demand
may have a negative impact on sales volumes and result in un-
favourable price and product mix effects. A prolonged war be-
tween Russia and Ukraine as well as further escalation of the
conflict in the Middle East could also significantly strain the global
economy. The present fragility of the Chinese economy poses an
extra risk to sales.
On balance, neither the Board of Management nor the Supervi-
sory Board see any threat to the BMW Group's status as a going
concern at the balance sheet date or at the date on which the
Group Financial Statements were drawn up. As in the previous
year, the current set of risks to the BMW Group are considered to
be manageable. All risks and opportunities that are expected to
materialise have already been addressed in the Outlook Report
as well as in the long-term corporate planning and are accord-
ingly not included in the risk and opportunity assessment below.
Liquidity requirements are currently covered by existing liquidity
as well as the various financing instruments available.
The following sections illustrate potential future developments or
events that could result in a negative (risk) or a positive (oppor-
tunity) deviation from the outlook for 2024 and 2025 and indi-
cate their significance to the BMW Group.
In addition, unforeseen events could affect business operations
and hence the BMW Group's results of operations, financial po-
sition and net assets as well as its reputation.
The following overview provides a summary of the material
short-term risks and opportunities:
Macroeconomic risks and opportunities
Strategic and sector-specific risks and opportunities
Changes in legislation and regulatory requirements
Market developments
Risks and opportunities relating to operations
Production and technology
Purchasing
← = Q
Sales network
of the risk level
High
High
High
Risks
Change compared
to prior year
Opportunities
Change compared
Classification
to prior year
Immaterial
Immaterial
Classification
A moderate reduction is expected in carbon emissions from
BMW Group plants per vehicle produced (Scope 1 and 2) due to
increased production volumes and BMW making greater use of
green energy.
Other Information
Group Financial Statements Responsibility Statement and Auditor's Report
17,096
154,950
Slight decrease
Slight increase
%
20.8
Slight increase
2,554,183
%
9.8
Between 8 and 10
%
20.2
Between 15 and 20
units
%
14.7
g/km
102.1
tons
0.28
Slight increase
Significant increase
Slight reduction
Moderate reduction
%
€ million
8.1
2024
Outlook
FINANCIAL SERVICES SEGMENT
Return on equity (ROE)
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Outlook
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
The stable demand situation can also be seen in the Motorcycles
segment, where deliveries are predicted to increase slightly
owing to the full availability of models, including the BMW R
1300 GS. The EBIT margin is expected to be between 8% and
10% and the segment RoCE between 21% and 26%.
The RoE in the Financial Services segment is predicted to finish
between 14% and 17%. As expected, the supply of and demand
for pre-owned vehicles is continuing to stabilise. It is therefore to
be expected that revenues from remarketing lease returns will fall
further as compared to 2023.
Group profit before tax will decrease slightly. As the BMW Group
continues to take a leading role among its competitors in the dig-
italisation and electrification of the vehicle fleet and intends to
strengthen this position, expenses associated with future pro-
jects will remain high in the Automotive segment in 2024. The
production network will also be expanded in 2024 in connection
with the NEUE KLASSE. The decrease in the financial services
business will also contribute to the fall in Group profit before tax.
The aforementioned targets are to be met with a slight growth in
the size of the workforce. Likewise, the share of women in man-
agement positions in the BMW Group is expected to increase
slightly.
The BMW Group's actual business performance may also devi-
ate from current expectations due to the risks and opportunities
discussed below in the Risks and Opportunities section.
BMW Group key performance indicators
GROUP
Profit before tax
Share of women in management positions in the BMW Group
AUTOMOTIVE SEGMENT
EBIT margin
Return on capital employed (ROCE)
Deliveries
Share of all-electric vehicles in deliveries
CO2 emissions EU new vehicle fleet 1,2
CO2 emissions BMW Group locations per vehicle produced³
MOTORCYCLES SEGMENT
EBIT margin
Return on capital employed (ROCE)
Deliveries
2023
Reported
%
22.1
Between 8 and 10
Between 21 and 26
127
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Risks and Opportunities
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
RISKS AND OPPORTUNITIES
127 Risk and Opportunity Management
130 Material Short-Term Risks and
Opportunities
137 Climate-Related Risks and Opportunities
141 Summary and Outlook
RISKS AND OPPORTUNITIES
RISK AND OPPORTUNITY
MANAGEMENT
The foundation of BMW Group's business success lies in effec-
tively managing risks and making use of any opportunities. This
is based on an effective risk and opportunity management strat-
egy, which puts us in a position to be able to react quickly and
flexibly to changes in political, economic, environmental, social,
technical or legal conditions. The general risk situation is regu-
larly evaluated as part of this.
The aim of our risk management system (RMS) is to identify,
measure and actively manage risks, both individual and cumula-
tive, that could pose a threat to the success of the business.
Risks and opportunities (including risks to reputation and cli-
mate-related risks) are considered for the current and subse-
quent financial year. Material Short-Term Risks and Opportunities In
addition, medium-term and long-term risks and opportunities
are also presented in connection with climate change. Climate-
Related Risks and Opportunities
Organisation of risk management
Risk management is organised as a decentralised, Group-wide
network and steered by a centralised risk management function.
The various BMW Group divisions are represented by Network
Representatives. We draw on the expertise of climate experts in
order to evaluate climate-related risks and opportunities. The re-
sponsibilities and tasks of the centralised risk management func-
tion, Network Representatives and climate experts are docu-
mented and accepted. All material risks are firstly presented for
review to the Risk Management Steering Committee, which is
chaired by Group Controlling. Any material risks are then re-
ported to both the Board of Management and the Supervisory
Board's Audit Committee.
Other functions such as Group Compliance and the Internal Con-
trol System (ICS) form key interfaces to the risk management
system. In its capacity as an independent control body, Corporate
Audit reviews the RMS established by the Board of Management
on an annual basis.
128
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Risks and Opportunities
* The information provided in this section is extraneous to management reports which are not cov-
ered by PwC's audit.
Taking this into account, the Board of Management is not aware
of any circumstances that give rise to doubts regarding the ap-
propriateness and effectiveness of the systems. In particular, no
material cases of non-compliance or systemic weakness were
identified that preclude such appropriateness and effectiveness.
The design and implementation of the internal control system
and the risk management system take into account the size,
structure and complexity of the BMW Group in particular. These
systems are intended to detect, manage and mitigate significant
risks. However, despite the comprehensive analysis of risks in
general, any control and risk management system has inherent
limitations. For this reason, the occurrence of risks cannot be
ruled out in all circumstances.
The ICS (in the narrower sense), the RMS and the CMS are au-
dited independently on a risk-oriented basis by Internal Audit as
part of the "Three Lines" model, with all systems interconnected
by overarching structural elements. Internal Audit's findings are
reported to the Board of Management and the Supervisory
Board on a regular basis.
units
209,066
Slight increase
%
17.2
Between 14 and 17
1 EU-27 countries including Norway and Iceland; with effect from 2021, values are calculated on a converted basis in line with WLTP (Worldwide Harmonised Light Vehicles Test Procedure).
2 Including an allowance for eco-innovations (amounts of minor significance).
3 Efficiency ratio calculated on the basis of Scope 1 and Scope 2 carbon emissions (i.e. a market-based method according to GHG Protocol Scope 2 guidance; mainly based on the use of emissions factors
for electricity, district heating and fuels of the VDA, each in the most current valid version: 12/2023) and occasionally using local emissions factors; excluding climate-changing gases other than carbon
dioxide from vehicle production (BMW Group manufacturing sites and Motorrad, but excluding partner plants and contract manufacturers), as well as BMW Group non-manufacturing sites (e.g. research
centres, sales centres, offices) divided by the number of vehicles produced (BMW Group manufacturing sites and partner plants, but excluding contract manufacturers).
126
BMW Group Report 2023
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Appropriateness and Effectiveness of the Internal Control System and Risk Management System
Remuneration Report
Remuneration Report
← = Q
APPROPRIATENESS AND EFFECTIVENESS
OF THE INTERNAL CONTROL SYSTEM AND
RISK MANAGEMENT SYSTEM*
The BMW Group complies with recommendation A.5 of the Ger-
man Corporate Governance Code and accordingly provided its
statement in accordance with § 161 of the Stock Corporation Act
www.bmwgroup.com/ezu in December 2023 on the following
basis:
The BMW Group has set up an internal control system and a risk
management system in accordance with the German Corporate
Governance Code.
The internal control system includes all the principles, instruc-
tions and measures introduced by the Board of Management to
ensure:
the effectiveness and efficiency of business operations
the propriety of accounting and financial reporting
compliance with the statutory regulations relevant to the
BMW Group
The BMW Group's internal control system comprises the follow-
ing: the internal control system for accounting and financial re-
porting, the internal control system for reporting selected non-
financial key figures Internal Control System (ICS in the narrower
sense), the Compliance Management System Compliance
Management System (CMS) and the Internal Audit Function (IAF).
The Risk Management System (RMS) comprises the entire set of
organisational rules and measures in place to identify, assess,
manage and communicate risks, including system monitoring.
7 Risk and Opportunity Management
Other Information
To Our Stakeholders
Due to the particular features of the business model, material
risks and opportunities relating to the Financial Services seg-
ment are presented separately in the section 7 Risk management
system in the Financial Services segment.
131
This may impact the credit rating and refinancing costs of the BMW Group.
A good ranking in the ESG ratings has a positive effect on the perception of a company on the capital market and has a favourable effect on investment decisions. Investment and
financing decisions by investors or lenders depend on a good ESG rating. Short-term and unforeseeable regulatory changes may reduce the appeal of a company on the capital market and
increase refinancing costs if it is not possible to react to the changes in the regulatory framework in time.
Any serious failure to comply with sustainability or quality standards and providing incorrect information accordingly, could cause disruptions in the supply chain or a shortfall of individual
suppliers to deliver.
Existing and new competitors are accelerating the production of electrified vehicles. If products and business models are perceived as being more attractive by customers,
this may have the corresponding impact on deliveries by the BMW Group.
Due to a global focus on sustainable products, energy prices and commodities costs are rising. This has a direct impact on manufacturing costs for the BMW Group and
may go on to affect deliveries. Furthermore, credit and residual value risks in the Financial Services segment may also be impacted.
they may jeopardise the availability and acceptance of planned or expected conditions for the customer.
Significant technological innovations may make product and production technologies, which are in use or in the pipeline today (from energy storage to recycling), as well as investments in
these innovations, obsolete or challenge their efficiency. In terms of infrastructure (such as new fuel options, charging technologies for electric vehicles),
standards and interfaces quickly enough.
Innovations in sustainable technologies are fostered, accelerating the prevalence of electromobility. For the BMW Group, this may have a negative impact on deliveries
and the residual value of existing products. In the areas of Production and Purchasing, remanence costs and impairment risks may result from changing processes and equipment.
The digital connectivity between companies and products to support decarbonisation is increasing in order to streamline processes and better manage emissions. Risks for the BMW Group
result from the time delay until such technologies can be used if, for example, some areas of the supply chain cannot provide the relevant
-
-
Transitory climate risks
Society
Politics, legal affairs and regulatory framework
Capital and financial market
The short-notice termination of government subsidies to promote low-carbon mobility may reduce the demand for electrified vehicles.
Uneven adjustments of prices for carbon emissions could have a negative impact on the macro- and microeconomic situation of a national economy, causing distortions in the credit risk, for
example.
Any short-notice tightening of legislation or regulations in the BMW Group's main markets (EU, US, China) may exceed the speed at which BMW Group and its suppliers can respond and pose
risks in terms of delivery volume, costs and residual values.
Production processes must quickly be changed to green energy sources and resource-friendly facilities. The BMW Group already consistently implements known requirements. However,
additional costs may result if additional requirements are announced at short notice.
[[Transitory climate risks
In the Paris Agreement global warming scenario, the potential
transitory risks are deemed the highest over the medium term as
a result of the fast-paced, sometimes unforeseeable develop-
ments. It cannot be ruled out that more decisive measures will
have to be taken globally in the next few years in order to achieve
the <+1.5°C target. For the BMW Group, this is reflected primar-
ily in the risk dimensions of "Politics, legal affairs and regulatory
framework", as well as "Market and competition". Regulatory re-
quirements introduced at short notice may enter into force, which
could have an impact on products, production and supply chains.
In the "Market and competition" risk dimension, risks may also
increase due to higher demand and the resulting higher prices for
select (scarce) raw materials on the one hand and due to rising
energy prices on the other.
[[The following graphic juxtaposes the risk dimensions of the tran-
sitory risks with the global warming scenarios. Potential impacts
are grouped into five different levels.
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Market and competition
Group Financial Statements
To Our Stakeholders
BMW Group Report 2023
139
Around the world, people's environmental awareness is increasing. Social discussions arising from a perceived worsening of the climate's health may lead to changes in mobility patterns
and/or customer preferences that may vary by region. This may require us to adapt the product portfolio, which may impact deliveries and residual values for vehicles.
in deliveries.
Fast rising and/or selectively discriminating regional vehicle-related purchase and usage taxes may lead to higher costs or a decrease
For suppliers, stricter requirements regarding circular economy, recycling and avoiding the use of resources may lead to higher costs in the short term.
Combined Management Report
Risks and Opportunities
Technology
[[RISK DIMENSION
BMW Group:
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
BMW Group Report 2023 To Our Stakeholders
Risks and Opportunities
137
Operational risks
To a limited degree, interest rate risks are deliberately accepted
in order to make use of the associated return potential. Risks
thereby result when there is a partial mismatch between fixed in-
terest rate periods, which means they are rated as low. The as-
sociated opportunities are classed as material.
Interest rate risks
Each lease contract is assigned a forecasted sales value for the
vehicle at the end of the lease term. Current market trends are
taken into consideration within the routine portfolio evaluation. In
addition, the portfolio composition (e.g. by drivetrain type) is an-
alysed on an ongoing basis. Relevant changes and their impacts
are incorporated into the portfolio evaluation. The residual value
calculation models, as well as the portfolio evaluation models,
are continually being refined.
They arise primarily when leased vehicles are sold after they are
returned at the end of the leasing period. A negative deviation
from the residual value forecast results in a residual value risk,
while a positive deviation represents a residual value oppor-
tunity.
Residual value risks and opportunities
Residual value risks are classified as high in terms of their risk
level, while residual value opportunities are deemed significant.
There may be positive effects in the ongoing assessment of the
portfolio's creditworthiness that lead to a reduction of the overall
risk and therefore constitute an opportunity. The BMW Group
continues to classify potential opportunities in this area as imma-
terial. In order to take account of the volatile economic environ-
ment, parameters within the credit awarding process were re-
viewed and adjusted to factor in or not accept declining credit
ratings.
Operational risks result from any form of ineffective or defective
internal processes, systems, external events or human error. The
aim is to systematically record and quantify all risks except for
those listed in the paragraphs above. Because the risks arise in
a wide range of areas of the Company, such as IT security or sup-
plier management, the close dovetailing of these areas is essen-
tial and ensures that there is adequate transparency regarding
the current risk situation of the entire division. All individual oper-
ational risks are recorded in a system and appropriate mititgation
measures are implemented. The risk amount is categorised as
medium.
Scenarios medium-term (2035)
CLIMATE-RELATED RISKS
AND OPPORTUNITIES
The BMW Group follows the recommendations of the TCFD by
continuously refining processes for reporting and the internal
steering of climate-related risks and opportunities.
The following table illustrates the transitory climate risks for the
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
Risks and Opportunities
[[Climate changes may have an impact on the BMW Group busi-
ness model. Consequently, the company analyses a range of cli-
mate scenarios, identifies and evaluates climate-related risks
and opportunities and takes the relevant measures. 7 GRI Index:
201-2
BMW Group Report 2023 To Our Stakeholders
Transitory climate risks arise from the transition to a low-emis-
sions economy across all sectors that is necessary in order to
mitigate climate change. These risks become particularly appar-
ent when conditions change more quickly and/or differently than
expected. The transitory climate risks were identified and evalu-
ated along five different risk dimensions.]]
Transitory climate risks
The BMW Group has committed to aligning its business activities
with the low-emissions scenario of the Paris Agreement and has
consistently based its long-term corporate planning on this.
7 Carbon Emissions
These climate scenarios range from a low-emissions scenario
with global warming of <+1.5 °C (Paris Agreement, SSP1-2.6),
a medium scenario with warming of an average of +2.5 °C (mid-
dle of the road, SSP2-4.5) to >+4 °C (fossil-fuelled development,
SSP5-8.5).
The BMW Group uses three scenarios to identify and evaluate
climate-related risks, which are based on the scenarios of the
Shared Socioeconomic Pathways (SSP) of the Intergovernmen-
tal Panel on Climate Change (IPCC).
Climate scenarios
During the 2023 reporting year, all material risks and opportuni-
ties for the BMW Group were analysed in terms of their sensitivity
regarding three different climate scenarios in accordance with
the TCFD. For the medium-term period until 2035, we distin-
guish between transitory and physical climate risks. For the long-
term period until 2050, the evaluation focuses on the physical
climate risks.
138
In the Financial Services segment, the risk of default is factored
into the interest rate when concluding an agreement. Further-
more, the credit portfolio is evaluated on an ongoing basis with
the aim of determining if any impairment allowances need to be
made for financial receivables. This evaluation is based on sta-
tistical methods and takes into account the following aspects,
among others: the creditworthiness of the customer, the cus-
tomer's payment history and the economic context in the cus-
tomer's region. The amount allocated to credit risks remains cat-
egorised as medium.
Short-term
Risk dimension
Society
Politics, legal affairs and regulatory framework
Capital and financial market
Market and competition
Technology
[[DIMENSION
The BMW Group also sees economic opportunities on the 1.5°C
trajectory arising from adjustments to products, production pro-
cesses and the value chain required to reach this goal. The op-
portunities identified are also distributed across the five dimen-
sions.]]
[[Climate-related opportunities
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
Risks and Opportunities
To Our Stakeholders
Transitory opportunities
-
By expanding the portfolio of electrified products and developing and producing our own electric drivetrains, batteries and battery cell prototypes, we will be able to safeguard know-how and
system expertise early on. This may result in competitive advantages.
By embracing the circular economy, the BMW Group is contributing towards achieving its decarbonisation target within the supply chain and reducing its dependence on primary materials,
also in terms of their availability, costs and ESG risks.
Thanks to its focus on sustainability, the BMW Group can make a valuable social contribution to the prevention of global warming.
Together with its suppliers, the BMW Group helps to reduce carbon emissions along the value chain and to work towards implementing decarbonisation measures. By taking action at an
early stage, the BMW Group will be prepared and also will benefit from a business perspective.
Subsidy programmes for alternative drivetrain technologies are helping to increase sales.
Implementing early-stage adjustments to the supply chain to address climate change enhances its long-term resilience, thereby ensuring business continuity.
- Eligibility to participate in global government initiatives and grants which facilitate the continued acceleration of climate change adaptation efforts (Scope 1 and 2), encompassing tax
reforms, green and digital stimulus packages as well as research and development incentives.
Significantly higher investments in charging infrastructure and in the generation and distribution of hydrogen may give the demand for low-emission vehicles a significant boost
and make it easier to replace the fossil source in production.
Improvements in the tax environment and incentives for customers, along with investment grants and easements for climate protection measures in production may
accelerate progress in terms of reducing carbon emissions.
BMW Group Report 2023
An above-average performance compared to industry benchmarks in terms of ESG indicators could lead to heightened appeal to investors.
Further diversification of the investor base by proactively managing the risks posed by climate change.
Leveraging BMW tools and other offers to manage carbon emission reduction efforts among Tier 1 suppliers has the potential to be a distinguishing feature for both investors and customers,
raising brand reputation in the process.
Differentiation through the consistent reduction of carbon emissions in the vehicle portfolio by means of the electrification and highly efficient combustion engines can further increase the
BMW Group's market share.
Due to the convincing sustainability performance of its offered products and the acceleration towards a circular economy, the BMW Group may experience advantages arising from higher
customer demand.
-
- With its flexible vehicle architectures and production systems, opportunities arise for the BMW Group in terms of its ability to respond quickly and flexibly to fluctuating customer demand
as well as regulatory and infrastructural differences in its markets.
Mitigation measures (Scope 1 and 2) can help to reduce energy consumption and operating costs.
An excellent ESG rating for the BMW Group could further enhance the Group's appeal to investors.
140
| high ]]
low
Society
and regulations
Politics, law
financial market
Capital and
competition
Market and
Risk profile
Physical climate risks also increase for the BMW Group particu-
larly in the long-term >+4 °C scenario. This leads to a higher risk
both for the BMW Group's production sites and also for suppliers'
sites. The risks regarding interruptions to production and distri-
bution as well as risks in the supply chain are shown in the con-
text of global warming scenarios over a medium-term (2035)
and long-term (2050) period:]]
In order to measure such risks, we draw on external data that
evaluate the development of acute and persistent natural phe-
nomena across the global warming scenarios and across time.
In addition to the transitory risks, the BMW Group also evaluates
physical risks. In doing so, the increasing frequency and intensity
of acute extreme weather events, such as heatwaves, storms
and floods, are taken into account, along with longer-term
changes such as in terms of temperature and rainfall.
Physical climate risks
Technology
Fossil
development
The middle
of the road
Paris
Agreement
For the BMW Group, this may result in damage to assets such as
buildings, vehicles or parts on the one hand, and on the other
hand, such events may lead to downtime at BMW Group sites or
at suppliers' sites.
"today"
low
Short-term
Risk profile
Supply chain
disruption
distribution
Production/
Fossil
development
of the road
high
The middle
Fossil
development
The middle
of the road
Paris
Agreement
Risk dimension
"today"
Scenarios long-term (2050)
Scenarios medium-term (2035)
Paris
Agreement
Credit risks and opportunities
[[ Physical climate risks
Opportunities
An increasing complexity within the supplier network, particularly
with sub-suppliers over which the BMW Group has only an indi-
rect influence, as well as a lack of solvency on the part of suppli-
ers, may influence the delivery of supplies to plants. A prevention
programme was put in place in order to identify relevant devel-
opments early on and define individual measures.
During the selection of suppliers a standardised assessment of
risk criteria is part of the sourcing process.
non-compliance with sustainability or quality standards. The risk
is categorised as high.
Potential reasons for the failure of suppliers to deliver include the
lack of availability of raw materials, energy and other input ma-
terials, the occurrence of natural hazards and/or fires, develop-
ments in the security situation of a country, IT-related risks and
The greatest risk relating to purchasing comes from supply
shortages due to supplier bottlenecks. Production problems at
the supplier level could lead to consequences caused by in-
creased expenditure for the BMW Group due to production inter-
ruptions and a corresponding reduction in vehicle sales. Supply
bottlenecks may also have a negative impact on the reputation
of the BMW Group if customer demand cannot be met as
expected.
Risks and opportunities relating to purchasing
The BMW Group sees opportunities relating to production pro-
cesses primarily in the competitive edge gained from mastering
new and complex technologies. Given the long lead times in-
volved in developing new products, additional opportunities are
not expected to have a significant earnings impact on the
BMW Group.
Product recalls can lead to additional costs. The BMW Group es-
tablishes appropriate provisions for statutory and non-statutory
warranty obligations. It cannot be ruled out, however, that addi-
tional costs could be incurred that are either not covered or not
fully covered by these provisions. Despite the deployment of
thorough quality assurance processes, such risks can always
arise if the materials and/or processing procedures used prove
insufficient - in some cases years after a product has been
launched. A high number of recalls could also have a negative
impact on the BMW Group's reputation. Further information on
risks in conjunction with provisions for statutory and non-statu-
tory warranty obligations is provided in 7 Note [34] to the Group
Financial Statements.
time and, in extreme cases, may lead to the non-admission of a
vehicle derivative, sub-market or even a complete market. This,
along with a delayed start of production for new models, could
lead to sales losses. Numerous control points have been imple-
mented as part of the homologation process in order to identify
and mitigate risks.
Potential short-term changes to the relevant legislation and reg-
ulations or changes in their national interpretation by the author-
ities may jeopardise our ability to receive type approvals in good
Risks resulting from property-related damage and damage due
to downtime, as well as transport damage to vehicles already
manufactured, are transferred to highly solvent insurance com-
panies. Due to the volatility of the international insurance mar-
kets, the BMW Group itself bears significant risks today. This so-
lution may become increasingly relevant if premiums and de-
ductibles continue to rise.
Potential natural hazards are already taken into account when
selecting a site and through the implementation of measures
during construction. The risk posed by natural hazards or fire is
reduced by the use of on-site fire services and employee training.
A variety of measures are also being taken to prevent and coun-
teract longer downtimes of manufacturing equipment due to tar-
geted cyberattacks.
All BMW Group plants have implemented measures for risk
avoidance and reduction. These include, for example, predictive
maintenance. The risk of production downtime due to parts sup-
ply is reduced via measures related to logistics, purchasing and
the use of the production network.
Risks and opportunities relating to production and technologies
Plant downtime is the main risk affecting production. Disruptions
to production can have various causes, including equipment and
tool shortages, supplier bottlenecks, scarcity or shortages of pro-
duction resources such as gas or electricity, as well as problems
with logistics. Furthermore, IT disruptions caused by cyber-
attacks, for example, are playing an increasingly significant role
in disruptions to the supply chain and production. Damage to the
factory infrastructure, caused by fire or natural events such as
hail, storms or heavy rainfall, can lead to production downtime.
The risk level for the occurrence of such risks is assessed as high.
Additional risks arise from the inflation-related price increases of
recent years and the resulting demands from suppliers, which
can have a negative impact on earnings. In addition to price risks,
the number of suppliers at risk of insolvency which the
BMW Group must support to maintain supplier operations is
increasing.
The rising threat of cyberattacks along the entire value chain af-
fects both the security of supply and the protection of expertise
relevant to the BMW Group. In order to optimise the level of in-
formation security throughout the entire value and supply chain,
the BMW Group requires its suppliers to provide proof of ade-
quate information security certification. Purchasing and Supplier
Network
Cost advantages gained by developing local supplier structures
near BMW plants in addition to innovative manufacturing tech-
nologies could lead to lower material expenses for the
BMW Group. Opportunities arising as a result are classified as
immaterial.
Risks and opportunities relating to the sales network
Information and data can also be compromised by a lack of risk
awareness and inappropriate behaviour. The main direct conse-
quences would be negative effects on Group revenues, disrup-
tion in production, or reputational damage. For this reason, the
BMW Group has launched an interactive programme to provide
regular training for every employee on the correct way to handle
dangerous emails.
In order to protect vehicle functions from manipulation, we have
introduced processes such as standardised safety assessments
and regular penetration tests. However, risks in this regard can
never be fully ruled out due to the high complexity and increasing
connectivity.
In view of the higher incidence of observed attacks, the risk
amount - despite extensive security measures - is still classified
as high.
Digitalisation and automation across all areas of the business
and its products offer a wide range of opportunities for the
BMW Group. Especially in the field of artificial intelligence, poten-
tial uses as well as risks are evaluated on a continuous basis. At
the same time, information technology (IT) requirements regard-
ing the confidentiality, integrity and availability of information are
becoming increasingly strict. The threat level has continued to
rise over recent years. Increasing geopolitical conflicts also con-
tribute to the rise in cyberattacks. Moreover, legal and regulatory
requirements are becoming ever stricter worldwide, which could
also necessitate higher investments in hardware and software.
Information security, data protection and IT
The BMW Group continuously strives to align its sales strategies
with future trends, prioritising the needs of both prospective and
current customers as the focal point of its operations. Opportuni-
ties arising as a result are classified as immaterial.
Overall, the risks arising from the sales network can be catego-
rised as low.
the same time, capitalise on opportunities in terms of sales
growth and pricing. Opportunities arising as a result are classified
as immaterial.
← = Q
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Risks and Opportunities
To Our Stakeholders
BMW Group Report 2023
133
In order to sell its products and services, the BMW Group oper-
ates a global sales network comprising subsidiaries, importers,
branches and independent dealerships. The insolvency of deal-
erships may have a negative impact on global vehicle sales and
the range of services available to our customers.
Other Information
Protecting information, for example from unauthorised access or
misuse, has the highest priority. In conjunction with risk manage-
ment requirements, risks relating to information security, data
← = Q
Remuneration Report
Macroeconomic risks and opportunities
> € 200-1,000 million
> € 1,000 million
Risk amount
€ 0-200 million
Medium
High
Low
Class
The following ranges apply for the purpose of classifying the risk
amount for material short-term risks:
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Risks and Opportunities
To Our Stakeholders
BMW Group Report 2023
Change
compared
to prior year
Economic conditions have an impact on business performance
and hence on the level of earnings generated by the BMW Group.
Unforeseen disruptions in global economic relations can have
highly unpredictable effects. The level of risk continues to be
classified as high.
With regard to the war in Ukraine, there is a risk of a further es-
calation of the conflict and therefore of further sanctions imposed
by Western countries on Russia as well as possible counter-
sanctions and/or retaliatory measures by Russia. Withdrawal of
US support for Ukraine could have major ramifications for the
course of the war.
Further escalation of the conflict in the Middle East could nega-
tively impact the price of oil, which in turn could lead to rising in-
flation rates.
In the trade war between the US and China, the focus is currently
shifting from simple tariff increases to further import and export
restrictions on specific technologies. This could also lead to less
favourable import and export conditions for the BMW Group.
With the recent anti-dumping and anti-subsidy probe launched
against China (the EU is examining, among other things, whether
subsidies for electric vehicles produced in China lead to distorted
competition), the EU is also considering imposing punitive tariffs
on the People's Republic, which in turn increases the risk of a
trade war between the two parties. An escalation of the conflict
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Risks and Opportunities
BMW Group Report 2023
132
The sales markets of the BMW Group are constantly monitored
in order to minimise risks, meet customer requirements and, at
The constant change in consumer preferences or an altered
brand perception pose both risks and opportunities. For instance,
the BMW Group could be confronted with short-term disruptions
in both supply and demand during the transition from conven-
tionally powered vehicles to alternative drive systems. The likeli-
hood of market risks occurring may be categorised as high.
Market developments
Other Information
Changes in trade policies could also have a positive impact on
the BMW Group's earnings in the short to medium term. Any re-
duction in tariff barriers, import restrictions or direct excise duties
could result in lower manufacturing costs or enable products and
services to be offered to customers at more attractive prices. Op-
portunities potentially arising from changes in legislation and
regulations are classified as immaterial.
The BMW Group is seeing increasingly stringent vehicle emis-
sions regulations for conventional drive systems. In December
2023, a political deal was reached in the EU on the Euro 7 reg-
ulation. Risks may arise from the details of the regulation still to
be finalised by the European Commission. In addition to pollutant
emissions, brake particle emissions, tyre abrasion and high-volt-
age battery durability (BEV, PHEV) are also being regulated for
the first time. Following the implementation of Euro 7, additional
targeted tightening measures are anticipated around 2030.
Country- and sector-specific trade barriers can also be subject to
change at short notice. Any tightening up of regulations could ne-
cessitate significantly increased investments and costs, influence
customer behaviour, and lead to interruptions in supply. The risk
is categorised as high.
Strategic and sector-specific risks and opportunities
Changes in legislation and regulatory requirements
The introduction of more stringent legislation and regulations,
particularly regarding emissions, safety and consumer protection
as well as regional vehicle-related purchase and usage taxes,
poses a significant risk for the automobile industry.
At the moment, macroeconomic opportunities that could influ-
ence the earnings situation of the BMW Group positively in the
long term are rather unlikely to materialise. If significantly more
positive economic development were to occur in a market due to
stronger fiscal or monetary policy measures, this could certainly
have a positive impact.
To mitigate the effects, sales markets are being monitored on an
ongoing basis, and individual measures are being defined by
standardised processes and committees.
Another risk is of recession in Europe and the United States. In
both regions, interest rates were raised considerably in order to
curb inflation. Inflation rates have significantly decreased by this
point and the majority of economies have continued to grow de-
spite the interest rate hikes - labour markets have shown partic-
ular resilience. However, monetary policy measures such as in-
terest rate hikes often take effect with some delay and could
therefore slow down the economy in 2024, posing a risk to sales.
The present fragility of the Chinese economy also represents a
risk to sales. If the situation in the real estate sector were to de-
teriorate further, the potential impacts on the economy would be
significantly felt.
could have negative consequences for trade between Europe
and China, resulting in both sales risks and risks in the supply
chain.
The legally required fleet-wide carbon emissions target in the EU
has been reduced to 0 g/km for 2035, thus requiring complete
electrification of the passenger car new vehicle fleet by 2035.
Moreover, the European Commission is working on a proposal to
determine if and how vehicles powered exclusively by e-fuels can
be recognised as zero-emission vehicles. In 2026, a review will
take place during which the necessary framework conditions to
achieve the zero emissions target in 2035 will be analysed. Risks
can arise from the availability of renewable energies, inadequate
private and public charging infrastructure as well as limited ac-
cess to resources for the construction of electric drives. A discus-
sion of consumption values and carbon emissions may have an
impact on the Company's reputation.
protection and IT are systematically documented, allocated ap-
propriate measures by the departments concerned and continu-
ously monitored with regard to threat level and risk mitigation.
Regular analyses and controls as well as tight security manage-
ment policies ensure an appropriate level of security.
To Our Stakeholders
Financial risks and risks relating to the use of financial
instruments
Combined Management Report
Risks and Opportunities
BMW Group Report 2023 To Our Stakeholders
136
Risk management in the Financial Services segment is based on
the requirements of the supervisory authorities, which are imple-
mented consistently worldwide. Climate-related risks are also
taken into account and analysed at regular intervals, thereby
considering a medium-term period in the future. > Climate-Related
Risks and Opportunities
Regular stress tests are carried out to support this model. These
are another indicator of potential risk management measures
and create a high degree of transparency with regard to extreme,
realistic events, particularly in volatile times.
The central goal of risk management in the Financial Services
segment is the continuous assurance of risk-bearing capacity.
Limits are assigned depending on the type of risk. Various value-
at-risk models are used for this purpose, which are validated at
regular intervals. The confidence level used in this model is con-
servative. Care is always taken to ensure that the coverage
amounts based on the equity of the Financial Services segment
are sufficient.
Risk management system in the Financial Services segment
Risk management in the Financial Services segment is based on
various pillars; namely, the prevailing risk culture, the risk strat-
egy and the defined risk appetite for the various types of risk. In
addition to this, there are a wide range of guidelines in place
worldwide that are implemented by the individual companies in
the Group.
Group Financial Statements Responsibility Statement and Auditor's Report
A Compliance Management System is in place across the
BMW Group to, among other things, encourage its representa-
tive bodies, executives and staff members worldwide to consist-
ently act in a lawful manner. Further information on this can be
found in the chapter 7 Compliance and Human Rights.
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
Risks and Opportunities
To Our Stakeholders
BMW Group Report 2023
← = Q
135
Remuneration Report
The following table provides an overview of the material short-
term risks and opportunities in the Financial Services segment:
Material
Material
However, despite continuous testing and preventive security
measures, it is impossible to completely eliminate risks in this
area. All authorised persons are required to treat information
such as confidential business, customer and employee data with
great care, use information systems securely and handle risks in
a transparent manner. Uniform requirements that apply through-
out the Group are documented in a comprehensive set of rules
and guidelines. A consistently applied policy of updating such
rules and regulations to the current situation, coupled with regu-
lar communication, awareness-raising and training measures,
form the basis for a high level of security and risk awareness in
general.
Immaterial
Classification
Change
compared
to prior year
Risks
Medium
← = Q
Low
Medium
of the risk level
Classification
Operational risks
Interest rate changes
Residual value
Credit risk
High
The BMW Group recognises appropriate levels of provision for
lawsuits and risks. In addition, a part of these risks is insured to
an economically reasonable extent. Nevertheless, it cannot be
ruled out that damages may occur in excess of the insured
amounts. In accordance with International Financial Reporting
Standards (IFRS), the required information is not provided if the
BMW Group concludes that disclosure of the information could
seriously prejudice the outcome of the relevant legal proceed-
ings. Further information on contingent liabilities is provided in
Note [39] to the Group Financial Statements.
Other Information
International movements of goods require compliance with ex-
tensive export control regulations. In addition to goods-related
restrictions, international trading may also involve personal,
country-specific and end-use-related restrictions. In particular,
non-compliance with applicable EU and US export control regu-
lations could result in significant legal consequences for the
BMW Group. In light of its strong presence in the USA and China,
any intensification of the trade dispute between the two countries
could be a potential source of additional risk exposure.
Combined Management Report
Risks and Opportunities
To Our Stakeholders
BMW Group Report 2023
134
The liquidity position is monitored continuously and managed
through the Group-wide planning of financial requirements and
funding. Further information on risks in conjunction with financial
instruments is provided in 7 Note [40] to the Group Financial State-
ments.
The liquidity concept, based on the experience gained during the
global financial crisis, is rigorously adhered to and continuously
developed. In the Financial Services segment, the use of the
"matched funding principle" ensures that liquidity risks are gen-
erally avoided.
The major part of the Financial Services segment's credit financ-
ing and leasing business is refinanced on capital markets. The
risk of restricted access to funds is deemed low.
Group Financial Statements Responsibility Statement and Auditor's Report
Liquidity risks
The analysis of raw materials price risks is based on planned pur-
chases of raw materials and components containing those prod-
ucts. A cash-flow-at-risk model is deployed to measure risks re-
lating to raw materials prices. Price fluctuations for raw materials
such as precious metals, non-ferrous metals, raw materials for
batteries and steel, and also energy, are hedged using financial
derivatives and supply contracts with fixed pricing arrangements.
Risks and opportunities relating to raw materials prices
As a manufacturing company, the BMW Group is subject to price
risks, particularly in relation to the raw materials used in vehicle
production.
Depending on exchange rate fluctuations, opportunities may
also arise, which means they can be considered material.
The BMW Group manages currency risks at both the strategic
(medium to long term) and operational level (short to medium
term). Over the medium and long term, it is possible to ramp up
production or purchase volumes in foreign currency regions (nat-
ural hedging). Currency risks are managed in the short to me-
dium term and for operational purposes by means of hedging on
financial markets, the primary objective of which is to improve
planning reliability for the BMW Group as a whole. Regularly up-
dated cash-flow-at-risk models are used to limit currency risks
and identify opportunities. The risk amount associated with cur-
rency risks is classified as high. The strengthening of the euro in
2023 has led to an increased level of risk compared to the pre-
vious year.
BMW Group companies are subject to governmental tax and
customs audits in each country where they operate, potentially
resulting in back taxes, retrospective customs duties, interest,
penalties and similar payments. Payments of this nature may, for
instance, result from the non-recognition of inter-company trans-
fer prices in the countries concerned. Further substantial legal
risks may emerge from contested interpretations of tax or cus-
toms legislation. The findings of the tax audit in the countries are
effective for the audit period and, if applicable, in subsequent
years. Risk management relating to tax and customs legislation
is enshrined in the BMW Group's RMS. In order to minimise ma-
terial procedural tax and customs risks, the BMW Group has set
up a comprehensive Tax Compliance Management System (Tax
CMS) that is already being applied in its major entities in Ger-
many, China and, since the end of 2023, Austria, and will be
rolled out successively in other major countries.
As an internationally operating enterprise, the BMW Group con-
ducts business in a variety of currencies, thus giving rise to cur-
rency risks and opportunities. A substantial portion of Group rev-
enues, production, other purchases and funding occur outside
the eurozone.
Currency risks and opportunities
The prices of many raw materials continue to be subject to un-
certainty on commodity markets. Accordingly, the risk amount
associated with raw materials prices is classified as medium, but
there are also material opportunities. This risk is lower than in the
previous year due to the decline in prices of raw materials.
Remuneration Report
Solvency is assured at all times throughout the BMW Group by
adhering to liquidity ratios and using a broadly diversified range
of refinancing sources.
arise if the value of pension assets on the capital markets devel-
ops favourably or if pension provisions decreased at a more pro-
nounced rate than the related assets.
Legal risks
Reevaluations on the liabilities and assets sides are recognised
net of deferred taxes through other comprehensive income and
hence directly in equity of the BMW Group (within revenue re-
serves). Further information on risks in conjunction with pension
provisions is provided in 7 Note [33] to the Group Financial State-
ments.
The fluctuation of pension assets reflects the volatility of various
asset classes on capital markets. Investments are broadly diver-
sified (interest-bearing securities, equities, real estate and other
asset classes).
Pension obligations are chiefly measured by projecting future
payouts, gauged with a current discount rate derived from mar-
ket yields from top-rated corporate bonds. This discount rate is
subject to market fluctuations and therefore influences the level
of pension obligations in terms of present value. Changes in
other parameters, such as inflation rates and life expectancy,
also impact the amount as well as the duration of future pension
payments. Regulatory requirements may also affect the amount
of pension obligations.
Like all entities with international operations, the BMW Group is
confronted with legal disputes, alleged claims relating in particu-
lar to warranty and product liability or intellectual property rights
infringements and proceedings initiated by government agen-
cies. Any of these could, amongst other consequences, have an
adverse impact on the Group's reputation. Such proceedings are
typical for the sector, may result as a consequence of realigning
product or purchasing strategies to changed market conditions,
or are antitrust related. Particularly in the US market, class action
lawsuits and product liability risks can have substantial financial
consequences and cause damage to the Group's reputation.
More rigorous application, interpretation of, or changes to, exist-
ing regulations could result in a greater number of recalls.
The risk associated with pension provisions based on IFRS val-
uations is categorised as medium. Material opportunities can
Risks and opportunities relating to pension obligations
Future pension obligations are financed largely via external pen-
sion funds or trust constructs that are legally separate from the
BMW Group. Externally managed funds are invested on capital
markets in a broadly diversified portfolio with a view to enabling
future pension payments to be disbursed out of pension assets.
These arrangements greatly reduce the need to fund pension
payments out of ongoing operations. Fluctuations in pension
provisions and the related pension assets give rise to risks that
may have varying effects due to the differences in accounting
standards between IFRS and HGB.
The potential financial impact of the matters covered under con-
tingent liabilities, including those related to legal and warranty
risks, cannot be conclusively assessed at this stage.
The risk associated with other financial risks is classified as me-
dium. Potential opportunities resulting from the revaluation of in-
vestments are evaluated as immaterial.
The BMW Group holds equity investments of varying amounts in
numerous entities. The recoverability of these investments is
monitored on an ongoing basis as part of a standardised pro-
cess. However, risks from impairment losses could still arise.
The BMW Group works together with banks to ensure that the
available liquidity is optimally invested in order to hedge against
financial market risks (particularly currency, commodity and in-
terest rate risks) using derivative financial instruments and to
protect payments made in advance. Counterparty risk denotes
the risk that the BMW Group will not receive, or not receive in full,
the payments due to it in connection with the investment and
hedging transactions referred to above. A value-at-risk model is
employed to measure counterparty risk, taking into account the
creditworthiness of the banks and the business volumes in-
volved. Risk is managed using a limit system, which includes
daily monitoring of the extent to which limits are being utilised at
the level of the individual counterparties.
The level of risk from legal risks is classified as medium.
Other financial risks worth mentioning include counterparty risks
as well as those arising in connection with investments in other
entities.
Other financial risks
← = Q
Other Information
Joint Declaration on Human Rights and Working Conditions:
Commitment to value-driven corporate governance,
formulated in collaboration with employee representatives
and the trade union.
Internationally recognised guidelines for the protection of human
rights set the benchmark for the BMW Group's entire value chain.
We regard them as specific demands placed on ourselves, our
supply chain and other business partners. They are closely inter-
linked with the Human rights compliance programme and the
7 BMW Group Code of Conduct and anchored in the following specific
Company-wide policies:
Regular compliance reporting to the Board of Management
and Supervisory Board
The BMW Group fulfils its social responsibility to protect human
rights. Our Group-wide approach, which is subject to continuous
improvement, is based on established due diligence processes
that encompass our own business operations, our supply chains
as well as other business partners. The individual steps include
a risk analysis, prevention, control and mitigation measures,
7 Complaint mechanisms, review of effectiveness and reporting.
The focus is on topics where the BMW Group has identified high
risks in terms of human rights and environmental aspects and
where it has a certain level of influence. We place particular em-
phasis on our global, extensive and highly complex supply chain.
We offer comprehensive details about the multistage due dili-
gence process for upholding human rights within the supplier
network in the section Purchasing and Supplier Network.
7 Declaration of Principles on Respect for Human Rights and Related
Environmental Standards: Approach and processes regarding
the implementation of the German Supply Chain Due
Diligence Act (LkSG).
7 BMW Group Supplier Code of Conduct: The BMW Group's
requirements and expectations for its global supplier
network in accordance with internationally recognised
sustainability standards and guidelines.
The BMW Group has established clear responsibilities across the
organization for implementing and monitoring due diligence ob-
ligations. Within the BMW Group, responsibility rests with the re-
spective departments and the management of the Group enti-
ties, while outside the BMW Group it lies with the relevant busi-
ness partners and suppliers. Central functions such as Group
Compliance and Sustainability in the Supply Chain oversee and
monitor compliance with due diligence obligations in the relevant
area. The BMW Group Human Rights Officer, who was ap-
pointed by the Board of Management of BMW AG at the end of
2021 as one of the requirements of the LKSG, also assumes a
support and monitoring function.
7 BMW Group Code on Human Rights and Working Conditions:
Guidance for employees, suppliers and authorised sales
partners regarding the BMW Group's efforts to safeguard
human rights and ensure fair working conditions.
[[ Respect for human rights
BMW Group Report 2023
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Compliance and Human Rights
To Our Stakeholders
As part of the annual review of the BMW Group CMS, its appro-
priateness and effectiveness are assessed on the basis of de-
fined criteria. In addition to the assessment of the Compliance
Responsibles, the measurement also takes into account the as-
sessment of compliance and other governance functions. Our
overall statement on the adequacy and effectiveness of the In-
ternal Control and Risk Management System, including the
CMS, can be found in the section 7 Appropriateness and Effectiveness
of the Internal Control System and Risk Management System.
145
In the reporting period, we focused on further developing the ex-
isting due diligence processes following the first-time application
of the LkSG. In addition to the policy statement published at the
end of 2022, this includes the further development of the risk
analysis for our own business operations. In 2023, we have also
updated the Human Rights Code and integrated the topic of hu-
man rights into the BMW Group Code of Conduct.
The Board of Management and Supervisory Board of BMW AG,
the Audit Committee (a committee of the Supervisory Board) and
the Company's other executive committees are briefed regularly
(at least twice a year), as well as on a case-by-case basis, by the
CCO.
← = Q
7 GRI Index: 2-23, 2-241]
AQTON Verwaltung GmbH, Bad Homburg v. d. Höhe, Germany
BMW Group Report 2023
2 Controlled entities, of which 3% or more are attributed: AQTON SE, AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
appropriately sanctioned, in accordance with the processes de-
fined for this purpose.
Based on voluntary notifications provided by the listed shareholders as at 31 December 2023.
3 Controlled entities, of which 3% or more are attributed: AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
Susanne Klatten Beteiligungs GmbH, Bad Homburg v. d. Höhe, Germany
AQTON GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany
Susanne Klatten, Germany
AQTON SE, Bad Homburg v. d. Höhe, Germany
Stefan Quandt, Germany
in %
Based on the information available to the Company, the follow-
ing direct or indirect shareholdings exceeded 10% of the voting
rights at the end of the reporting period:1
Direct or indirect investments in capital exceeding 10% of
voting rights
The ICS for financial reporting has the task of ensuring that sig-
nificant accounting and financial reporting processes deployed
within the BMW Group are both accurate and reliable. The ICS
for non-financial reporting focuses primarily on the further devel-
opment of the processes used to gather data as the basis for re-
porting the non-financial performance indicators disclosed in the
BMW Group Report.
The Internal Control System (ICS) is part of the BMW Group's
overall system of internal governance and based on a set of
monitoring measures and control activities that are integrated in
processes and organisational structures with a view to ensuring
the accuracy of external financial and non-financial reporting.
The requirements for the design and structure of ICS procedures
incorporated in accounting and financial reporting processes as
well as those used to generate selected non-financial infor-
mation included in the BMW Group Report are defined on a
Group-wide basis.
INTERNAL CONTROL SYSTEM
← = Q
Other Information
Remuneration Report
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Internal Control System
To Our Stakeholders
146
All control checks are geared towards reducing compliance risks.
Any infringements are immediately remedied, with an emphasis
on reducing the risk of repeat offences as far as possible. Where
infringements can be traced to an individual, that person will be
4
The CMS provides differentiated monitoring levels for reviewing
observance and implementation of compliance rules and pro-
cesses at regular intervals. In addition to the direct checks per-
formed by Compliance Responsibles as business managers,
risks are further reduced by additional measures integrated into
business processes, which generally form part of the Internal
Control System.
Compliance investigations
DETECT
In the Financial Services segment, compliance is incorporated
into the target management process. Integration of specific tar-
gets into strategic steering helps monitor implementation. A
management system also supports the process of identifying
risks arising from non-compliance with internal and external reg-
ulations at an early stage. 7 GRI Index: 3-3
The Financial Services segment has established its own dedi-
cated risk management unit, which works closely with the central
Group Compliance function as part of the CMS. On the basis of
an annual analysis, it identifies the possible need for adjustments
and defines appropriate measures. Group-wide implementation
by the BMW Group's financial services companies is continu-
ously reviewed and reported on to the management of the Fi-
nancial Services segment on a quarterly basis.
financial services business and the risks and regulations in-
volved. The specific focus of the programme – in addition to the
proper implementation of other compliance topics - is on legis-
lative and regulatory monitoring, consumer protection and the
implementation of financial services supervisory requirements.
PREV
Compliance monitoring
6
Compliance consulting
5
Compliance IT system
and processes
3
2
1
Compliance communication
and training
Legal Compliance Code and
compliance regulations
Compliance risk assessment
4 Controlled entities, of which 3% or more are attributed: AQTON GmbH & Co. KG für Automobilwerte.
The compliance programme Compliance for Regulated Financial
Services Units takes into account the particularities of the
8
Compliance investigations are carried out when the need arises
or ad hoc as part of the Detect function of central Group Compli-
ance. These include internal investigations in connection with of-
ficial investigations, which serve to clarify the facts internally.
Risk-based compliance audits aimed at identifying specific com-
pliance risks are focused on antitrust law. In 2023, export control
and anti-money-laundering efforts were incorporated as new
topics. Corporate Audit also monitors adherence to compliance
requirements by business managers, as well as selected ele-
ments of the CMS.
7
COMPLIANCE CULTURE
CMS monitoring and controls
The BMW Group protects information providers in two ways:
first, individuals may provide information without disclosing their
identity; second, no one providing information faces retaliatory
action. All queries and concerns relating to compliance are doc-
umented and processed using a Group-wide electronic case
management system. If necessary, Corporate Audit, Corporate
Security, the legal departments or the Works Council may be
brought in. GRI Index: 2-16
Reports regarding potential compliance violations can also be
submitted anonymously and confidentially in several languages
via the BMW Group SpeakUP Line notification system or via the
ombudsperson. Checking effectiveness
Compliance contact serves as a further point of contact for both
employees and external parties.
Compliance and notification systems
Employees with questions or concerns relating to compliance
can discuss these matters with their managers or relevant de-
partments and, specifically, with the Compliance functions. The
IT-based compliance systems are used for transparent and effi-
cient documentation, assessment and approval of compliance-
relevant matters Group-wide. This includes topics such as
money laundering and sanctions lists, exchange activities with
competitors, business partner due diligence and verifying the le-
gal admissibility of benefits in kind. The data collected in this way
forms the basis for the compliance risk assessment.
Digitalisation supports compliance
Compliance training opportunities are continuously refined for
specific target groups. The online training courses with case
studies and test questions, repeated every two years, strength-
ens the compliance culture and reinforces compliant behaviour.
More than 95,500 staff and managers worldwide have so far
completed the Compliance Essentials training and 51,500 have
received the Antitrust Compliance training. This offering is sup-
plemented by target-group-specific classroom training on anti-
trust compliance as well as online training courses on data pri-
vacy and product compliance. 7 GRI Index: 205-2
Compliance training
Specialist departments worldwide are supported in their work by
the central Group Compliance function, as well as the network of
business unit and division Compliance Officers (heads of relevant
compliance functions), supplemented by around 80 local Com-
pliance Officers (heads of local compliance functions) at
BMW AG's international subsidiaries. Every Compliance Officer
is tasked with implementing the CMS and compliance pro-
grammes for defined topics in their area of activity, as well as
identifying and realising division-specific compliance measures.
Relevant compliance risks are identified in the business depart-
ments on the basis of internal guidelines; an initial assessment
is then made and measures taken to mitigate them. Around 200
managers Group-wide perform these tasks for their area of re-
sponsibility as operational Compliance Responsibles.
Company-wide compliance network
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Compliance and Human Rights
BMW Group Report 2023 To Our Stakeholders
144
Notification system
5 Controlled entities, of which 3% or more are attributed: Susanne Klatten Beteiligungs GmbH.
Other Information
Indirect share
(b) payment of an advance dividend of € 0.02 per € 1 par
value on non-voting preferred shares, and
(c) uniform payment of any other dividends on ordinary and
preferred shares, provided the shareholders do not resolve
otherwise at the Annual General Meeting.
Restrictions affecting voting rights or the transfer of shares
In addition to ordinary shares, the Company has also issued non-
voting preferred shares. Further information can be found in the
section Composition of subscribed capital.
As of 31 December 2023, the Company owned a total of
5,161,255 ordinary and preferred treasury shares (2022:
16,760,957), from which the Company has no rights pursuant
to § 71 b AktG. The Company regularly provides information
about the current status of the share buyback on its website.
When the Company issues non-voting preferred shares or ordi-
nary shares to employees in conjunction with its Employee Share
Programme, these shares are generally subject to a Company-
imposed blocking period of four years in compliance with private
law, calculated from the beginning of the calendar year in which
the shares were issued.
Contractual holding period arrangements also apply to ordinary
shares acquired by Board of Management members and certain
senior vice presidents in conjunction with share-based remuner-
ation programmes. 7 Remuneration Report (on shareholding periods for
members of the Board of Managers)
* Information according to § 289a and § 315a HGB.
148
BMW Group Report 2023 To Our Stakeholders
Combined Management Report Group Financial Statements
Disclosures Relevant for Takeovers and Explanatory Comments
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
The BMW Group has not concluded any compensation agree-
ments with members of the Board of Management or with em-
ployees for situations involving a takeover offer.
bid
Compensation agreements with members of the Board of
Management or with employees in the event of a takeover
The software licence agreements concluded between
BMW AG and Google LLC for the use of "Projected Mode"
in BMW vehicles' head units grant both parties the right to
extraordinary termination in the event of a change of control
(not further defined in the agreement).
BMW AG has entered into an agreement with Great Wall
Motor Company Limited to establish the joint venture
Spotlight Automotive Ltd. in China. The underlying joint
venture agreement generally grants an extraordinary right
of termination to either joint venture partner in the event that
- either directly or indirectly - more than 25% of the shares
of the other party are acquired by a third party or the other
party is merged with another legal entity. The termination of
the joint venture agreement may result in the sale of the
shares to the other joint venture partner, or in the liquidation
of the joint venture entity.
(a) subsequent payment of any arrears on dividends on non-
voting preferred shares in the order of accruement,
The development collaboration agreement between
BMW AG, FCA US LLC and FCA Italy S.p.A., relating to the
development of technologies used in conjunction with
automated vehicles, may be terminated by any of the
contracting parties if certain competitors in the technology
sector acquire and subsequently hold at least 30% of the
voting shares of one of the other contractual parties.
The Company's non-voting preferred shares are shares as de-
fined in §§ 139 et seq. AktG, which carry a cumulative preferen-
tial right in terms of the allocation of profit and for which voting
rights are excluded. These shares confer voting rights only in ex-
ceptional cases stipulated by law, in particular if the preference
amount has either not been paid or not been paid in full within
one year and the arrears are not paid in the subsequent year
alongside the full preference amount due for that year. With the
exception of voting rights, holders of preferred shares are entitled
to the same rights as holders of ordinary shares. In addition, § 25
(3) of the Articles of Incorporation confers preferential treatment
to the non-voting preferred shares with regard to the appropri-
ation of the Company's unappropriated profit. Accordingly, the
unappropriated profit is required to be appropriated in the follow-
ing order:
€ 662,839,475) and, in accordance with § 5 of the Articles of
Incorporation, is subdivided into 579,795,667 ordinary shares
(90.78%) (2022: 601,995,196/90.82%), each with a par value
of € 1 and 58,920,408 (9.22%) (2022: 60,844,279/9.18%)
non-voting preferred shares, each with a par value of € 1. The
Company's shares are issued to the bearer.
compliant contracts for work and labour are even more firmly
rooted in the procurement of services and cooperation with ser-
vice providers.
Internationally acknowledged standards for internal control sys-
tems were taken into account when designing the various ele-
ments of the ICS deployed by the BMW Group (e.g. COSO
model²).
The principal features of the BMW Group's ICS are a role-based
approach embedded throughout the organisation, a clearly de-
fined control environment that is underpinned by a combination
of risk assessment procedures, control activities, information and
communication, and monitoring activities.
Both the system itself and the methods applied are subject to
continuous improvement, with its functionality being assessed
on a regular basis. Notwithstanding the measures taken, every
control system is subject to inherent limitations, given that it is
not possible to prevent all incorrect disclosures or detect them in
a timely manner.
Relevant BMW Group working instructions and guidelines for
recognising, measuring and allocating items to accounts as well
as definitions of non-financial performance indicators are avail-
able to all employees via the BMW Group's intranet system. New
reporting standards are assessed for their potential impact on
the BMW Group's reporting.
The principle of segregation of duties is taken into account for all
IT systems that are relevant for accounting and financial report-
ing. ICS requirements are also embedded in the ongoing devel-
opment of all IT systems used in these areas. Furthermore, the
BMW Group deploys data analysis tools to identify and subse-
quently eliminate any weaknesses detected in its processes
and/or control systems.
Responsibilities for ensuring the appropriateness and effective-
ness of ICS procedures for accounting and financial reporting
processes as well as those relating to non-financial performance
indicators are clearly defined in a role-based model and allocated
to the relevant line and process managers. They report annually
on their assessment of the ICS for accounting and financial re-
porting processes and the processes for non-financial perfor-
mance indicators. The assessment takes into account the results
of internal and external audits as well as the results of continuous
monitoring. The results of the assessment are gathered and doc-
umented in a centralised IT system. Both the Board of Manage-
ment and the Audit Committee are informed about the status of
the ICS on an annual basis. The Board of Management and,
where appropriate, the Supervisory Board, are promptly in-
formed in the event of any significant changes to the ICS.
1 Disclosures pursuant to § 289 and § 315 HGB.
2 Committee of Sponsoring Organizations of the Treadway Commission.
147
BMW Group Report 2023
To Our Stakeholders
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Disclosures Relevant for Takeovers and Explanatory Comments
Remuneration Report
← = Q
DISCLOSURES RELEVANT FOR TAKEOVERS*
AND EXPLANATORY COMMENTS
Composition of subscribed capital
As of 31 December 2023, the subscribed capital (share capital)
of BMW AG amounted to € 638,716,075 (2022:
The rights and duties of shareholders derive from the German
Stock Corporation Act (AktG) in conjunction with the Group's Ar-
ticles of Incorporation, the full text of which is available at
7 www.bmwgroup.com. The right of shareholders to have their
shares individually certified is excluded in accordance with the
Articles of Incorporation. The voting power attached to each
share corresponds to its par value. Each € 1 of par value of share
capital represented in a vote entitles the holder to one vote (§ 19
no. 1 of the Articles of Incorporation).
takes over or loses control of BMW AG, with control defined
as (i) holding or having control over more than 50% of the
voting rights, (ii) the possibility to control more than 50% of
voting rights exercisable at Annual General Meetings on all
or nearly all matters, or (iii) the right to determine the
majority of members of the Board of Management or the
Supervisory Board. Furthermore, a change in control occurs
if competitors of the HERE Group, or certain potential
competitors of the HERE Group from the technology sector,
acquire at least 25% of the share capital or voting rights of
BMW AG. If none of the other shareholders acquire these
shares, the other shareholders are entitled to resolve that
There Holding B.V. be dissolved.
← = Q
Other Information
To Our Stakeholders Combined Management Report Group Financial Statements
Disclosures Relevant for Takeovers and Explanatory Comments
BMW Group Report 2023
149
Amendments to the Articles of Incorporation must comply with
§§ 179 et seq. AktG. Amendments must be decided upon by the
shareholders at the Annual General Meeting (§ 119 (1) no. 6,
§ 179 (1) sentence 2 AktG). The Supervisory Board is authorised
to adopt amendments to the Articles of Incorporation that only
concern the wording (§ 179 (1) sentence 2 in conjunction with
§ 15 (3) of the Articles of Incorporation). Resolutions are passed
at the Annual General Meeting by a simple majority of shares
cast unless otherwise explicitly required by binding provisions of
law or, if a majority of share capital is required, by a simple ma-
jority of shares represented in the vote (§ 21 (1) of the Articles of
Incorporation).
The appointment or removal of members of the Board of Man-
agement is based on the rules contained in §§ 84 et seq. AktG
in conjunction with § 31 of the German Co-Determination Act
(MitbestG).
Statutory regulations and provisions contained in the
Articles of Incorporation governing the appointment and
removal of members of the Board of Management and
changes to the Articles of Incorporation
Control of voting rights when employees participate in
capital and do not directly exercise their control rights
Like all other shareholders, employees exercise their control
rights pertaining to any shares they have acquired in conjunction
with the Employee Share Programme and/or the share-based
remuneration programme directly on the basis of relevant legal
provisions and the Company's Articles of Incorporation.
Shares with special rights that confer control rights
There are no shares with special rights that confer control rights.
The percentages of the shareholdings with voting rights dis-
closed above may have changed subsequent to the stated date
if these changes were not required to be reported to the Com-
pany. As the Company's shares are issued to bearer, the Com-
pany is generally aware of changes in shareholdings only if such
changes are subject to mandatory notification requirements.
21.5
21.55
0.2
17.2
17.24
17.23
9.4
26.62
of voting rights
of voting rights
0.2
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Remuneration Report
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Disclosures Relevant for Takeovers and Explanatory Comments
To Our Stakeholders
BMW Group Report 2023
150
BMW AG is party to the shareholder agreement relating to
There Holding B.V., which is the majority shareholder of the
HERE Group. In accordance with the shareholder
agreement, each contracting party is required to offer its
directly or indirectly held shares in There Holding B.V. for
sale to the other shareholders in the event of a change of
control. A change of control of BMW AG arises if a person
Several supply and development contracts between
BMW AG and various industrial customers relating to the
sale of components for drivetrain systems, grant an
extraordinary right of termination to the relevant industrial
customer in specified cases of a change in control at
BMW AG (for example if BMW AG merges with a third party
or is taken over by a third party; an automobile manufacturer
acquires more than 50% of the voting rights or share capital
of BMW AG).
-
BMW AG and Mercedes-Benz Group AG have entered into
a joint venture agreement relating to mobility services, which
includes the areas of ride-hailing and vehicle charging, and
entitles both Mercedes-Benz Group AG and BMW AG
(hereafter referred to as "principals") to initiate a bidding
procedure in the event that (i) the other principal receives
notice in accordance with § 33 of the German Securities
Trading Act (WpHG) that including shares attributed
pursuant to § 34 WpHG - a shareholding of more than 50%
has been attained or, in accordance with § 20 of the
German Stock Corporation Act (AktG) that a shareholding of
more than 50% has been attained, or (ii) a shareholder or a
third party including shares attributed pursuant to § 30
WpHG - holds more than 50% of the voting rights or shares
in the other principal, or (iii) the other principal has concluded
a control agreement as a dependent company. The
outcome of such a bidding procedure is that the joint venture
will go to the principal making the highest bid.
Direct share
-
BMW AG has entered into framework agreements with
credit institutions for trading in derivative financial
instruments (ISDA Master Agreements). In the event of a
significant deterioration in creditworthiness, the contracting
parties are entitled to terminate the agreement with
immediate effect if the deterioration in creditworthiness
results from a direct or indirect acquisition of the majority of
the capital in a contracting party, which confers the right to
elect the majority of the Supervisory Board members (or a
-
BMW AG is the guarantor for all obligations under the
agreement regarding the joint venture BMW Brilliance
Automotive Ltd. in China. This agreement generally grants
an extraordinary right of termination to either joint venture
partner in the event of a change of control at either one of
the parties, or if more than 25% of the shares of the other
party are acquired by a third party either directly or
indirectly or if the other party is merged with another legal
entity. Termination of the joint venture agreement may lead
to the dissolution of the joint venture, with an optional
purchase right for BMW AG (or the partner) to acquire the
shares of the other partner or to the liquidation of the joint
venture company.
An agreement concluded with an international consortium
of banks relating to a syndicated credit line, which was not
being utilised at the balance sheet date, entitles the lending
banks to give extraordinary notice to terminate the credit
line, such that all outstanding amounts, including interest,
would fall due with immediate effect if one or more parties
jointly acquire direct or indirect control of BMW AG. The term
"control" is defined as the acquisition of more than 50% of
the share capital of BMW AG, the right to receive more than
50% of the dividend, or the right to direct the affairs of the
Company or appoint the majority of members of the
Supervisory Board.
Significant agreements of the Company which are subject to
a change of control provision following a takeover bid
BMW AG is party to the following major agreements, which con-
tain provisions that would apply in the event of a change of con-
trol or the acquisition of control as a result of a takeover bid:
According to § 5 (5) of the Articles of Incorporation, the Board of
Management is authorised, with the approval of the Supervisory
Board, to increase the share capital during the period up to and
including 15 May 2024 by up to € 282,625 for the purposes of
an Employee Share Programme by issuing new non-voting
shares of preferred stock, which carry the same rights as existing
non-voting shares of preferred stock (Authorised Capital 2019).
The subscription rights of existing shareholders are excluded. No
conditional capital was in place at the reporting date.
In accordance with the resolution taken at the Annual General
Meeting on 11 May 2022, the Board of Management is author-
ised until 10 May 2027 to acquire treasury shares (ordinary
and/or non-voting preferred shares) representing a total of up to
10% of the share capital in place at the date on which the reso-
lution was adopted or if lower - at the date on which the au-
thorisation is exercised.
The Board of Management is authorised to buy back shares and
sell repurchased shares in situations specified in § 71 AktG, for
example to avert serious and imminent damage to the Company
and/or to offer shares to persons either currently or previously
employed by BMW AG or one of its affiliated companies.
Authorisations of the Board of Management, in particular
with respect to the issuing or buying back of shares
comparable body) on a contracting party, from any other
transaction that enables control over a contracting party or
from a merger or transfer of assets. In the event of
extraordinary termination, all current transactions will be
settled.
RESPOND
The ICS is based on the "three lines" model, including a clear def-
inition of how the various functions are required to interact with
one another in order to manage risks. As a component of the
second line, the ICS serves as the link between the operating
units (first line) and Corporate Audit (third line).
9
Compliance lays the foundation for the long-term success of the
BMW Group. Compliance builds trust in our products and brands
and shapes our public image. Compliance means much more to
the BMW Group than simply complying with applicable laws and
BMW Group directives around the globe. It forms part of our iden-
tity, our understanding of leadership and our living culture of in-
tegrity. Compliance creates a binding framework for all our busi-
ness activities worldwide.
COMPLIANCE AND HUMAN RIGHTS
← = Q
Other Information
Remuneration Report
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Compliance and Human Rights
To Our Stakeholders
BMW Group Report 2023
142
Compliance as a corporate function
SUMMARY AND OUTLOOK
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
Risks and Opportunities
BMW Group Report 2023 To Our Stakeholders
141
In principle, the aim of every appropriate and effective ICS is to
prevent potential risks in external financial and non-financial re-
porting or reduce the likelihood of potential risks materialising.
10
← = Q
Compliance is the managerial responsibility of the Board of Man-
agement of BMW AG, executed by creating an appropriate regu-
latory and supervisory framework, as well as through regular and
ad hoc reporting, accompanied by clear communications. This
approach is based on the core belief that compliance with applic-
able laws and related internal regulations is the responsibility of
all employees. As role models, managers are tasked with an-
choring compliance culture in their area of responsibility and en-
suring compliance requirements and processes are imple-
mented accordingly. GRI Index: 2-23
[[The material short-term risks, reputational risks and climate-re-
lated risks may point towards potential challenges for the
BMW Group. The BMW Group actively considers the risks and
corresponding opportunities and takes them into account in de-
cision-making and planning processes. Drawing on internal and
external momentum, the risk management system is being con-
tinuously refined.]]
Compliance Management System (CMS)
Compliance
reporting
In addition to being responsible for the Company-wide Compli-
ance Management System, the Chief Compliance Officer also
manages the Group Compliance division and briefs the Board of
Management and Supervisory Board of BMW AG at regular
intervals.
including sanctions
compliance measures("remediation")
Risk-reducing
Three-Stage Approach of the Compliance Management System
As part of the CMS, the Group's HR department oversees the Ex-
ternal Workforce Compliance programme, which is designed to
safeguard the BMW Group from the repercussions of collabora-
tions with employees from external entities that are not compli-
ant with labour law. In the reporting period, External Workforce
Compliance was restructured to ensure that the requirements for
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
← = Q
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Compliance and Human Rights
143
The Quality Management department is responsible for Product
Compliance as part of the CMS with a focus on preventing in-
fringements of product-related laws and official regulations as
well as ensuring compliance with directly associated require-
ments for products within the BMW Group's Automotive and Mo-
torcycles segments. During the reporting year, there was a ex-
pansion of the Detect processes in particular, aimed at enhanc-
ing preventive activities. This expansion was accompanied by
the implementation of new training and communication formats.
One component of the CMS is the compliance programme Data
Privacy Protection, which is the responsibility of the department
Group Data Privacy Protection. This is based on the directive Pri-
vacy Corporate Rules and the so-called Binding Corporate Rules,
which contractually protect the transfer of employee data within
the BMW Group. Implementation of the programme is validated
through regular reporting by affiliated companies and independ-
ent audits carried out by Group Data Privacy Protection.
During the reporting period, a key area of focus was the updating
and further development of the compliance regulatory land-
scape. This included an update of the BMW Group Code of Conduct
as the central policy for the BMW Group's expectations of its em-
ployees in terms of compliance with applicable legal provisions
and internal regulations. An analysis of the BMW Group's activi-
ties to further improve antitrust compliance was also carried out.
Further priority areas emerged in the context of export control,
due to the war in Ukraine, and in anti-money-laundering efforts,
due to the increase in legislative initiatives as well as in anticipa-
tion of changes to the business model aiming to intensify direct
sales.
The CMS is reviewed on a regular basis and refined as needed.
This primarily involves evaluating strategic focus topics, legal
and regulatory requirements and trends, best practices as well
as industry standards, all of which are taken into account from a
risk perspective. The objective is to consistently improve the
CMS. The BMW Group is an active member of various associa-
tions and interest groups, including the German Institute for
Compliance e. V. (DICO), at Board level.
Further development of CMS
Group Financial Statements
The CMS is tailored to the BMW Group's risk situation and ad-
dresses all relevant compliance topics. Group-wide, these in-
clude anti corruption and fraud prevention, anti-money-launder-
ing, antitrust and human rights compliance, export control com-
pliance, data privacy protection and product compliance. In the
reporting year, the already established compliance programmes
External Workforce Compliance and Compliance for regulated Fi-
nancial Services Units were incorporated into the CMS. Respon-
sibility for Data Privacy Protection, Product Compliance, External
Workforce Compliance and Compliance for Regulated Financial
Services Units outside Group Compliance lies with independent
departments. GRI Index: 2-27, 205-1, 205-3, 206-1
The BMW Group's Company-wide Compliance Management
System (CMS) reinforces the culture of compliance and integrity
and helps reduce sanction and liability risks, as well as risks aris-
ing from other (non-) financial disadvantages, such as reputa-
tional risks. The CMS focuses on adequacy and effectiveness
and is based on the Prevent, Detect, Respond model, which de-
fines specific preventive, monitoring, control and response
measures. Clear assignment of roles and responsibilities is also
essential.
- 14
32
59
28
- 459
-649
-530
65
- 583
-86
102
- 117
-222
2,794
3,587
2
101
115
103
116
102
- 147
-219
1,957
Payments out of equity
1,890
Treasury shares acquired
Payments into equity
- 12
in € million
FOR GROUP AND SEGMENTS
CASH FLOW STATEMENT
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Cash Flow Statement for Group and Segments
1,220
Group Financial Statements
157
- 50
6
- 3,179
- 9,373
- 4,772
-9,548
111
28
991
BMW Group Report 2023 To Our Stakeholders Combined Management Report
.9
15
- 10,688
-70
-866
- 154
- 939
- 187
- 125
-179
156
- 3,835
- 115
- 4,135
- 130
- 31
- 310
-2,674
-523
- 2,715
1,870
- 3,649
1,888
-3,622
3,236
- 1,346
- 20
- 8,867
1,607
1,315
- 9,050
- 10,881
9,145
488
14,782
17,675
23,523
17,542
1,356
3,168
- 2,041
-447
- 1,970
1,735
47
53
854
1,471
816
1,616
Payment of dividends to shareholders of BMW AG
218
400
531
Net profit
13,109
in € million
Cash and cash equivalents as at 1 January
Change in cash and cash equivalents
Effect of changes in composition of Group on cash and cash equivalents
Effect of exchange rate on cash and cash equivalents
Cash inflow/outflow from financing activities
Change in other financial liabilities
Proceeds from issue of non-current financial liabilities
Repayment of non-current financial liabilities
Payment of dividends to non-controlling interests
Intragroup financing and equity transactions
Interest paid¹
- 2,998
- 2,961
Cash and cash equivalents as at 31 December
-7,139
-222
- 1,031
- 521
9
9
20,633
16,050
34
11,614
-22,430
-186
With the exception of interest for lease liabilities, interest relating to financial services business is classified as revenues/cost of sales.
2 Includes in the financial year 2022 the elimination of the non-cash revaluation effect of the investment in BMW Brilliance amounting to € 7,649 million.
Automotive
Group
2,076
- 1,455
- 1,485
- 1,455
- 1,485
- 3,827
- 5,430
- 3,827
- 5,430
- 1,278
-1,222
- 1,278
- 1,222
85
85
2022
2023
2022
2023
-20
2022
2023
-20
Financial Services
(unaudited supplementary information)
(unaudited supplementary information)
-26,102
-515
- 547
- 10,790
- 440
59
16,870
16,009
12,009
3,530
3,471
17,327
16,870
13,590
13,109
3,090
3,530
The reconciliation of liabilities from financing activities is presented in note [36] to the Group Financial Statements.
158
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Statement of Changes in Equity for Group
Remuneration Report
Other Information
← = Q
STATEMENT OF CHANGES
IN EQUITY FOR GROUP
1,100
1 January 2023
481
457
11,584
-12,165
3,281
- 1,235
247
- 51
1,396
- 1,313
-6,859
- 17,984
-7,346
- 10,592
-750
- 9,042
-705
104
- 502
99
-184
6
27
- 10
27
- 10
861
5,011
517
100
Other comprehensive income from equity accounted investments
Income taxes
Costs of hedging
Derivative financial instruments
Marketable securities (at fair value through other comprehensive income)
Items not expected to be reclassified to the income statement in the future
Income taxes
Remeasurement of the net liability for defined benefit pension plans
Net profit/loss
151
BMW Group Report 2023
To Our Stakeholders
Combined Management Report Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← EQ
152 Income Statement for Group and Segments
153 Statement of Comprehensive Income for Group
154 Balance Sheet for Group and Segments at 31 December 2023
156 Cash Flow Statement for Group and Segments
158 Statement of Changes in Equity for Group
160 Notes to the Group Financial Statements
160 Principles
Currency translation foreign operations
Items that can be reclassified to the income statement in the future
Other comprehensive income for the period after tax
Total comprehensive income
Total comprehensive income attributable to non-controlling interests
- 1,772
- 458
281
22
26
- 1,557
766
2,801
- 1,808
- 154
113
173 Notes to the Income Statement
745
-332
24
1,077
- 142
33
18,582
12,165
2022
2023
Note
Total comprehensive income attributable to shareholders of BMW AG
-118
180 Notes to the Statement of Comprehensive Income
182 Notes to the Balance Sheet
203 Other Disclosures
Cost of sales
Note
2023
2022
2023
2022
2023
2022
7
155,498
142,610
Revenues
132,277
3,214
3,176
8
- 125,809
- 118,042
- 109,920
- 104,324
-2,656
-2,628
2023
36,227
-31,548
2022
35,122
123,602
199
in € million
Eliminations
(unaudited supplementary
228 Segment Information
231 List of Investments at 31 December 2023
53
99%>
03
GROUP FINANCIAL
STATEMENTS
152 BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Income Statement for Group and Segments
Remuneration Report
information)
Other Information
INCOME STATEMENT
FOR GROUP AND SEGMENTS
O
Automotive
Motorcycles
Group
(unaudited supplementary
information]
(unaudited supplementary
information)
Financial Services
(unaudited supplementary
information)
Other Entities
(unaudited supplementary
information)
← = Q
2023
-2,394
19
443
14,697
1,351
1,197
Other investments
420
443
24
Investments accounted for using the equity method
-7,047
-7,297
49,867
50,415
42,820
43,118
23
Leased products
121
94
491
533
31,514
34,639
32,126
420
14,775
28
28
13
Deferred tax
1,191
643
481
256
1,522
588
3,073
1,387
26
35,266
Financial assets
- 140
50,482
50,657
50,368
50,517
25
Receivables from sales financing
-36,472
-36,612
23,020
23,084
-114
22
Property, plant and equipment
1
Automotive
(unaudited supplementary
information]
Group
= Q
↑
Intangible assets
ASSETS
in € million
AT 31 DECEMBER 2023
BALANCE SHEET FOR GROUP AND SEGMENTS
Other Information
Remuneration Report
Motorcycles
(unaudited supplementary
information)
Group Financial Statements Responsibility Statement and Auditor's Report
Balance Sheet for Group and Segments at 31 December 2023
To Our Stakeholders
BMW Group Report 2023
154
19,501
9,046
679
607
20,180
9,653
1,598
-2,512
Combined Management Report
853
Financial Services
(unaudited supplementary
information)
Eliminations
370
366
185
216
21,220
19,439
21,776
20,022
21
2022
2023
Other Entities
2022
2022
2023
2022
2023
2022
2023
2022
2023
Note
(unaudited supplementary
information)
(unaudited supplementary
information)
2023
2,431
2022
2022
3,205
- 100
995
1,334
122
Income taxes
13
- 4,931
- 4,927
-3,685
- 3,951
-75
-57
-861
-673
29
- 209
-339
-37
Net profit/loss
12,165
18,582
8,957
2,962
269
258
18,918
- 1,272
8,937
- 67
7,701
- 87
42
-1,118
1,194
-1,386
9,510
- 339
14,967
8,283
12
- 93
42
-87
1,198
-866
- 25
Profit/loss before tax
17,096
23,509
12,642
-1
183
212
2,101
17.67
27.31
Basic earnings per share of preferred stock in €
Dilutive effects
14
17.69
27.33
Diluted earnings per share of common stock in €
14
17.67
27.31
Diluted earnings per share of preferred stock in €
14
14
27.33
153
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Statement of Comprehensive Income for Group
Remuneration Report
Other Information
← = Q
STATEMENT OF COMPREHENSIVE INCOME
FOR GROUP
in € million
17.69
12
Basic earnings per share of common stock in €
995
2,532
-71
786
995
85
Attributable to non-controlling interests
875
641
857
601
17
85
40
Attributable to shareholders of the BMW AG
11,290
17,941
8,100
14,366
183
212
2,084
2,492
-72
786
1
2023
Financial result
1,846
- 1,559
- 1,543
-34
- 33
66
57
Other operating income
10
1,045
1,377
967
1,230
6
6
63
121
13
14
-4
6
Other operating expenses
10
- 1,227
- 296
-303
- 8,801
- 9,195
11
8
-16,231
- 19,298
- 30,437
18,315
19,347
Gross profit
29,689
24,568
22,357
- 1,330
19,278
548
4,679
4,685
11
8
2,084
49
Selling and administrative expenses
9
- 11,025
– 10,616
558
- 1,148
- 1,072
-2
422
1,389
739
7
5
5
6
3,403
1,543
- 4,103
- 1,871
701
Interest and similar expenses
-656
251
-1,502
- 57
8
7
- 11
- 6
-2,372
- 1,539
3,237
11
Other financial result
11
- 159
-1
- 128
- 100
-3
- 192
54
35
Profit/loss before financial result
18,482
13,999
12,981
Interest and similar income
10,635
257
3,055
3,163
- 13
- 203
2,200
147
Result from equity accounted investments
24
-159
- 100
259
- 999
1,758
3,340
Financial liabilities
215
215
123
141
886
1,045
1,224
1,401
35
Current tax
6
7
519
558
123
128
6,668
8,547
7,316
9,240
34
Other provisions
36
42,130
40,727
1,680
37,032
35,226
21,034
18,683
37
Other liabilities
11
4
852
1,071
494
- 46,105
566
13,906
14,120
15,547
38
Trade payables
-3
13,366
15,065
25,718
25,392
1,646
12,763
- 41,850
- 42,201
- 39,117
2
2
2,730
2,726
53,469
52,880
36
Financial liabilities
226
3,447
2,603
18,003
-
2,601
2,765
2,797
13
Deferred tax
156
158
83
80
8,206
7,559
2,786
226
16,343
Other liabilities
- 121
- 3,783
-2,633
- 100
315
34,515
1,185
36,092
33,037
59,620
57,629
815
897
20,795
21,253
32,249
71,217
Non-current provisions and liabilities
485
39,654
36,848
721
808
6,840
8,041
6,199
7,065
37
70,966
8,445
239
44,844
-698
- 4,229
- 3,472
- 4,512
- 5,049
3,205
2,962
18,918
12,642
2022
2023
2022
2023
2022
23,509
17,096
2023
(unaudited supplementary information)
(unaudited supplementary information)
Group
Financial Services
Automotive
Cash inflow/outflow from investing activities
Proceeds from the sale of marketable securities and investment funds
-487
683
453
1,417
159
100
159
8
-11
- 7,433
103
- 7,392
179
32
32
Investments in marketable securities and investment funds
8,433
8,566
8,974
2
5
-228
-350
-206
-515
6
3
718
8,826
Proceeds from the disposal of investment assets and other business units
Proceeds from subsidies for intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for acquisitions, net of cash acquired
Expenditure for investment assets
Total investment in intangible assets and property, plant and equipment
118,127
149,413
150,392
1,671
1,817
147,024
143,628
246,926
250,890
Total equity and liabilities
- 81,299
118,799
- 81,296
20,215
33,813
13,768
29,059
72,056
76,190
856
920
58,995
60,404
84,421
87,001
Current provisions and liabilities
-79,565
-79,572
49,028
- 163,074
156 BMW Group Report 2023 To Our Stakeholders Combined Management Report
Cash inflow/outflow from operating activities
Change in other operating assets and liabilities
Change in provisions
Change in trade payables
Change in trade receivables
Change in inventories
Changes in working capital
Change in receivables from sales financing
Change in leased products
Result from equity accounted investments
Other non-cash income and expense items²
- 169,981
Depreciation and amortisation of tangible and intangible assets
Interest received¹
Income taxes paid
Profit/loss before tax
in € million
FOR GROUP AND SEGMENTS
CASH FLOW STATEMENT
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Cash Flow Statement for Group and Segments
Group Financial Statements
Other interest and similar income/expenses¹
3,216
7,797
Other provisions
134
102
547
911
1,096
1,199
27
Current tax
-3
766
692
560
558
3,841
2,888
5,164
4,131
26
Financial assets
35,340
36,838
35,340
36,838
186
415
Other assets
28
68,310
92,204
94,972
Current assets
3,090
21
36
13,109
13,590
16,870
17,327
25
Cash and cash equivalents
- 78,727
54,857
57,638
5,020
3,753
4
7
31,576
24,925
9,602
7,596
- 81,855
Receivables from sales financing
1
114
701
767
75,403
75,318
154,722
155,918
Non-current assets
35,249
2,325
2,852
25
105,174
18
2,296
1,030
1,537
28
Other assets
- 121
- 100
-1,313
23
22
Other comprehensive income for the period after tax
506
2,612
71,621
104,191
38,315
62,550
184
143
102
3,869
3,875
4,127
4,162
30
Trade receivables
524
693
58,999
802
18,679
22,121
20,005
23,719
29
29
Inventories
- 88,123
- 84,340
-2,122
-42,247
- 38,878
905
34
1,050
45,218
I
I
I
87,125
89,596
31
Equity attributable to shareholders of BMW AG
I
- 1,278
- 500
31
Treasury shares
- 117
- 2,071
31
Accumulated other equity
85,425
89,072
31
Revenue reserves
2,432
2,456
31
I
I
Non-controlling interests
3,327
77
77
20
17
9
7
233
326
339
427
33
Capital reserves
Pension provisions
- 41,652
48,894
56,031
17,737
16,573
67,234
61,971
91,288
92,923
Equity
4,163
- 42,577
663
639
31
Group Financial Statements Responsibility Statement and Auditor's Report
Balance Sheet for Group and Segments at 31 December 2023
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
155
- 169,981
- 163,074
- 81,858
- 78,734
56,249
118,799
118,127
Remuneration Report
149,413
1,671
1,817
147,024
143,628
246,926
250,890
Total assets
59,128
210
611
3,530
45,222
150,392
970
Other Information
BALANCE SHEET FOR GROUP AND SEGMENTS
Subscribed capital
EQUITY AND LIABILITIES
2022
2023
2022
2023
2022
2023
2022
2023
2022
← = Q
2023
2023
Note
in € million
Eliminations
(unaudited supplementary
information)
(unaudited supplementary
information)
Other Entities
Financial Services
(unaudited supplementary
information)
Motorcycles
(unaudited supplementary
information]
Automotive
(unaudited supplementary
information]
Group
AT 31 DECEMBER 2023
2022
Comprehensive income at 31 December 2023
- 100
Treasury shares acquired
1,560
38
1,598
18,686
-146
- 109
1,973
-903
19,501
679
-903
20,180
-3,827
- 1,455
- 5,282
- 1,278
- 1,278
- 1,278
2
2
2
107
-3,827
1,973
- 109
- 146
Costs of
hedging
Treasury
shares
Equity
attributable to
shareholders
Non-
controlling
of BMW AG
interests
Total
31
661
2,325
71,705
17,941
- 438
2
362
- 251
74,366
766
75,132
17,941
641
18,582
745
107
107
- 1,139
-607
The income statement for the BMW Group and segments is pre-
sented using the cost of sales method.
In order to provide a better insight into the results of operations,
financial position and net assets of the BMW Group, and going
beyond the requirements of IFRS 8 (Operating Segments), the
Group Financial Statements also include an income statement
and a balance sheet for the Automotive, Motorcycles, Financial
Services and Other Entities segments. The Group Cash Flow
Statement is supplemented by a statement of cash flows for the
Automotive and Financial Services segments. Inter-segment
transactions relate primarily to internal sales of products, the pro-
vision of funds for Group companies and the related interest. A
description of the nature of the business and the major operating
activities of the BMW Group's segments is provided in 7 note 46
(Explanatory notes to segment information).
Approval for the publication of the Group Financial Statements
was granted by the Board of Management on 12 March 2024.
-
02 Group reporting entity and consolidation principles
The BMW Group Financial Statements include BMW AG and all
material subsidiaries over which BMW AG - either directly or in-
directly exercises control. This also includes 62 structured en-
tities, consisting of asset-backed financing arrangements and
special purpose funds. In some cases, contractual agreements
are in place with the asset-backed securities companies to offset
their losses in connection with residual value risks arising from
the receivables sold to them.
In relation to fully consolidated companies, the following changes
took place in the Group reporting entity in the financial year
2023:
Included at 31 December 2022
Included for the first time in 2023
No longer included in 2023
Included at 31 December 2023
Germany
Foreign
Total
20
184
204
18
18
15
15
20
187
207
All consolidated subsidiaries have the same year-end as BMW
AG with the exception of BMW India Private Ltd. and BMW India
Financial Services Private Ltd., whose year-ends are 31 March
in accordance with local legal requirements. Interim financial
statements are prepared as at 31 December for the two compa-
nies with divergent reporting dates.
When assessing whether an investment gives rise to a controlled
entity, an associated company, a joint operation or a joint ven-
ture, the BMW Group considers contractual arrangements and
other circumstances, as well as the structure and legal form of
the entity. Discretionary decisions may also be required. If indi-
cations exist of a change in the judgement of (joint) control, the
BMW Group undertakes a new assessment.
Dividend payments
Key figures presented in this report have been rounded in ac-
cordance with standard commercial practise. In certain cases,
this may mean that values do not add up exactly to the stated
total and that percentages cannot be derived from the values
shown.
financial
instruments
The Group Financial Statements have been drawn up in euros.
All amounts are disclosed in millions of euros (Є million) unless
stated otherwise.
01 Basis of preparation
- 1,746
4,173
2,427
31
663
2,432
85,425
- 584
- 107
1,728
- 1,278
87,125
4,163
91,288
160
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
NOTES TO THE GROUP FINANCIAL STATEMENTS
PRINCIPLES
The consolidated financial statements of Bayerische Motoren
Werke Aktiengesellschaft (BMW Group Financial Statements or
Group Financial Statements) at 31 December 2023 were drawn
up in accordance with International Financial Reporting Stand-
ards (IFRS), as endorsed by the European Union (EU), and the
supplementary requirements of § 315e (1) of the German Com-
mercial Code (HGB). Pursuant to § 325 HGB, the Group Finan-
cial Statements and the Group Management Report are required
to be submitted electronically to the operator of the German
Company Register and made accessible via that agency's web-
site. Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
which has its seat in Germany, Munich, Petuelring 130, is regis-
tered in the Commercial Register of the District Court of Munich
under the number HRB 42243. BMW AG manufactures automo-
biles and motorcycles in the premium segment.
Marketable
securities
- 1,154
Revenue
reserves
87,125
4,163
91,288
11,290
875
12,165
- 118
- 1,499
78
- 1,201
496
-2,244
-268
-2,512
11,172
- 1,499
78
- 1,201
496
9,046
607
9,653
- 5,430
- 1,278
-5,430
- 1,154
- 107
Translation
differences
Treasury share redemption
Reclassification resulting from share redemption
Other changes
31 December 2023
Accumulated other equity
Note
Subscribed
capital
Capital
reserves
Revenue
reserves
Translation
differences
Marketable
securities
Derivative
financial
instruments
Costs of
hedging
Treasury
shares
Equity
attributable to
shareholders
of BMW AG
Non-
controlling
interests
Total
31
663
85,425
11,290
-584
1,728
- 1,485
2,432
- 2,000
Other Information
← = Q
STATEMENT OF CHANGES
IN EQUITY FOR GROUP
in € million
1 January 2022
Net profit
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2022
Dividend payments
Treasury shares acquired
Authorised Capital
Premium arising on capital increase relating to
preferred stock
Other changes
31 December 2022
Accumulated other equity
Derivative
Note
Subscribed
capital
Capital
- 6,915
reserves
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Statement of Changes in Equity for Group
Subscribed share capital increase out of
BMW Group Report 2023
24
-1,222
2,000
To Our Stakeholders Combined Management Report
-1,222
-1,222
-95
172
42
31
639
2,456
77
- 2,083
159
92,923
119
89,072
3,327
89,596
-24
-658
699
-29
- 500
Other financial reporting standards and revised standards issued
by the IASB that have not yet been applied are not expected to
have any significant impact on the BMW Group Financial State-
ments.
c Accounting policy changes in the financial year 2023
In order to increase consistency between internal performance
management and external reporting, the following accounting
policies were changed in the financial year 2023.
Government grants related to assets were previously reported as
deferred income and recognised through profit or loss over the
accounting periods in which the costs occur that they are in-
tended to compensate. With effect from the financial year 2023,
government grants relating to assets are deducted from the car-
rying amount of the relevant assets and therefore now recog-
nised in profit or loss over the respective useful lives of the assets
in the form of reduced depreciation/amortisation. In this context,
the accounting treatment applied for investment tax credits was
also changed. Instead of being recognised immediately as a re-
duction of income tax expense, with effect from the financial year
2023 investment tax credits are also deducted from the carrying
amount of the related assets. The income statement impact is
therefore also spread over the respective useful lives of the as-
sets in the form of lower depreciation/amortisation expense. The
change in accounting policy has not been applied retrospectively
on the grounds of immateriality. Prior-year figures have therefore
not been adjusted.
Also with a view to increasing consistency with internal perfor-
mance management, with effect from the financial year 2023
advance payments to suppliers are reported within other assets.
At 31 December 2022, advance payments to suppliers amount-
ing to € 259 million were reported within inventories. Prior year
figures have not been adjusted on the grounds of immateriality.
Deferred income for government grants relating to assets at 31
December 2022 amounted to € 465 million or 0.19% of Group
total assets at that date. At 31 December 2023, the correspond-
ing amount was € 370 million.
To Our Stakeholders
The impact of the changes in accounting policy is not material for
the results of operations, financial position and net assets of the
BMW Group.
BMW Group Report 2023
Group Financial Statements
Notes to the Group Financial Statements
Combined Management Report
164
Date of issue by IASB
18.5.2017
amendments provide for a temporary exemption from recognis-
ing deferred taxes resulting from the implementation of the Pillar
Two rules. The exemption has accordingly been applied by the
BMW Group. The amendments also include disclosures in the
notes to explain the impact of the introduction of minimum taxa-
tion on affected entities. The introduction of the Pillar Two regu-
lations is not expected to have any significant impact on the
BMW Group Financial Statements.
In May 2023, the IASB published International Tax Reform - Pil-
lar Two Model Rules (Amendments to IAS 12) which sets out a
mandatory exemption to the accounting for deferred taxes in
conjunction with the global minimum taxation (Pillar Two). The
In May 2017 the IASB published IFRS 17 Insurance Contracts.
The Standard replaces IFRS 4 and contains new rules relating to
the recognition, measurement, presentation and disclosure re-
quirements for insurance contracts. In a Group-wide project, the
BMW Group examined the impact of adopting IFRS 17 for exist-
ing agreements. The BMW Group offers various products that
meet the definition of an insurance contract in accordance with
IFRS 17. However, for the majority of these products, either an
exemption applies (e.g. for warranty agreements) or the insur-
ance arrangements qualify as fixed-fee service contracts, which
can continue to be accounted for in accordance with IFRS 15 due
to the option available in IFRS 17. In some markets, however,
products are offered (e.g. comprehensive vehicle insurance) that
are required to be accounted for in accordance with IFRS 17.
These contracts can be accounted for using the premium alloca-
tion approach, which is essentially the same as the accounting
method already being applied for such contracts. In the financial
year 2023, insurance premiums for insurance contracts amount-
ing to € 89 million were recognised in other income within the
line item "Revenues". At 31 December 2023, insurance liabilities
for the remaining terms of these contracts amounted to € 289
million.
1.1.2023
1.1.2023
1.1.2023
1.1.2023
23.5.2023
Date of mandatory application EU
Date of mandatory application IASB
Insurance Contracts
International Tax Reform -
Pillar Two Model Rules
Amendments to IAS 12
IFRS 17
Standards and Revised Standards significant for the BMW Group
and applied for the first time in the financial year 2023:
Responsibility Statement and Auditor's Report
Standard/Interpretation
b Financial reporting pronouncements issued by the IASB, but not
yet applied
Remuneration Report
Public sector grants are not recognised until there is reasonable
assurance that the conditions attaching to them have been com-
plied with and the grants will be received. The resulting income
is recognised in cost of sales over the periods in which the costs
occur that they are intended to compensate. Information on the
accounting policy changes applied for the first time from the fi-
nancial year 2023 relating to government grants received for as-
sets as well as to investment tax credits is provided in ▾ note 5.
← = Q
In these cases, impairment is tested at the level of a cash-gener-
ating unit, which is the norm for the BMW Group.
a Financial reporting standards applied for the first time in the
financial year 2023
If there is any indication of impairment of intangible assets, or
if an annual impairment test is required (i.e. intangible assets
with an indefinite useful life, intangible assets during the devel-
opment phase and goodwill), an impairment test is performed.
Each individual asset is tested separately unless the cash flows
generated by the asset are not sufficiently independent from the
cash flows generated by other assets or other groups of assets.
Intangible assets also include emission allowances and similar
rights arising from programmes aimed at reducing carbon or
other climate-damaging emissions (for example in conjunction
with the EU Emissions Trading System or vehicle-related emis-
sions regulations in the USA or China). These allowances and
rights are carried at cost and, in the event that they are allocated
free of charge, recorded at a value of zero. Amounts are derec-
ognised when they are returned or, in exceptional cases, when
they are sold or expire. In parallel to the recognition of these al-
lowances and rights as assets, provisions are recognised in ac-
cordance with IAS 37 corresponding to the amount of obligations
expected to arise in conjunction with the related emissions regu-
lations. Provisions are measured on the basis of the expected
value of the allowances or rights that are to be returned.
Goodwill arises when the cost of acquiring a business exceeds
the Group's share of the net fair value of the assets, liabilities and
contingent liabilities identified during the acquisition.
Development costs are capitalised if all of the criteria specified
by IAS 38 are met. They are measured on the basis of direct
costs and directly attributable overhead costs. Project-related
capitalised development costs are amortised on a straight-line
basis following the start of production over the estimated product
life (usually five to 12 years).
Intangible assets are measured on initial recognition at acquisi-
tion or manufacturing cost. Subsequently, intangible assets with
finite useful lives are amortised on a straight-line basis over their
useful lives of between three and 20 years. Impairment losses
are recognised where necessary. Intangible assets with indefi-
nite useful lives are tested annually for impairment. Internally
generated intangible assets mainly comprise development costs
for vehicle, module and architecture projects.
Earnings per share are calculated as follows: basic earnings per
share are calculated for common and preferred stock by dividing
the net profit for the year (after non-controlling interests) that is
attributable to each category of stock, by the average number of
shares of each category in circulation. Net profit for the year is
accordingly allocated to the different categories of stock. The
portion of the net profit that is not being distributed is allocated
to each category of stock based on the number of outstanding
shares. Profits available for distribution are determined directly
on the basis of the dividend proposals or resolutions for common
and preferred stock. Diluted earnings per share are calculated
and separately disclosed in accordance with IAS 33.
← = Q
Notes to the Group Financial Statements
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Other Information
Combined Management Report
BMW Group Report 2023
165
Revenues also include interest income from financial services. In-
terest income arising on finance leases as well as on retail cus-
tomer and dealership financing is recognised using the effective
interest method and reported as interest income on credit financ-
ing within revenues.
Revenues from leases of own-manufactured vehicles are recog-
nised at Group level in accordance with the requirements for
manufacturer or dealer leases. In the case of operating leases,
revenues from lease payments are recognised on a straight-line
basis over the lease term. Finance leases, on the other hand, are
accounted for as a sale. At the lease commencement date, rev-
enues are recognised at the amount of the fair value of the leased
asset and reduced by any unguaranteed residual value of vehi-
cles that are expected to be returned to the Group at the end of
the lease term. In addition, initial direct costs are recognised as
cost of sales at the lease commencement date.
Revenues from the sale of products, for which repurchase ar-
rangements are in place, are not recognised immediately in full.
Instead, revenues are either recognised proportionately or the
difference between the sales and repurchase price is recognised
in instalments over the term of the contract depending on the na-
ture of the agreement. In the case of vehicles sold to a dealership
that are expected to be repurchased in a subsequent period as
part of leasing operations, revenues are not recognised at Group
level at the time of the sale of the vehicle. Instead, assets and
liabilities relating based on the right of return of these vehicles
are recognised.
expected value, and in the case of multi-component contracts,
allocated to all performance obligations unless directly attribut-
able to the sale of a vehicle.
Revenues from customer contracts include in particular reve-
nues from the sale of products (primarily new and pre-owned ve-
hicles and related products) as well as revenues from services.
Revenue is recognised when control is transferred to the dealer-
ship or retail customer. In the case of sales of products, this is
usually at the point in time when the risks and rewards of owner-
ship are transferred. Revenues are stated net of settlement dis-
count, bonuses and rebates as well as interest and residual value
subsidies. The consideration arising from these sales usually
falls due for payment immediately or within 30 days. In excep-
tional cases, a longer payment may also be agreed. In the case
of services, control is transferred over time. Consideration for the
rendering of services to customers usually falls due for payment
at the beginning of a contract and is therefore deferred as a con-
tract liability. The deferred amount is released over the service
period and recognised as revenue in the income statement. As a
rule, amounts are released on the basis of the expected expense
trend, as this best reflects the performance of the service. If the
sale of products includes a determinable amount for services
(multiple-component contracts), the related revenues are de-
ferred and recognised as income in the same way. Variable con-
sideration components, such as bonuses, are measured at the
More detailed information on how climate-related aspects are
taken into account for recognition and measurement purposes is
provided below, particularly in the comments on property, plant
and equipment, leased products and the performance of impair-
ment tests. This includes an indication of the extent to which cli-
mate-related aspects have been taken into account in the esti-
mations and assumptions for the recognition and measurement
of balance sheet items.
are highly relevant for the preparation of the Group Financial
Statements, particularly in the case of assumptions, judgements
and estimations relating to future developments that impact the
BMW Group and its environment, and are therefore included in
their assessment.
In line with the recommendations of the Taskforce for Climate-
related Financial Disclosures (TCFD), both physical and transi-
tion-related risks and opportunities are taken into account in the
Group's internal performance management system and in con-
junction with the preparation of the Group Financial Statements.
These aspects, referred to below as "climate-related aspects",
The targets set include a reduction in average carbon emissions
of 80% per vehicle produced in our own plants and locations
(Scope 1 and Scope 2), an average reduction of more than 50%
per kilometre driven in the use phase (Scope 3 downstream) and
an average reduction of more than 20% per vehicle in the supply
chain (Scope 3 upstream).
As a consequence of joining the Business Ambition for 1.5°C
campaign led by the Science Based Target initiative (SBTI), the
BMW Group pursues validated SBTi Near Term Targets for the
year 2030, which are incorporated in the Group's long-term cor-
porate plan.
The impact of climate change has been taken into account by
the Board of Management when preparing the Group Financial
Statements. As a matter of principle, the Group Financial State-
ments are prepared in accordance with the BMW Group's long-
term corporate plan, as approved by management, taking into
account issues relevant for climate change such as the transfor-
mation to electric mobility, regulatory requirements and changes
in production conditions. In this context, the BMW Group incurs
expenditure on research and development for electrified models,
invests in resource-saving production facilities for the manufac-
ture of electrified automobiles and, in particular, is gradually con-
verting its production processes from fossil fuels to green energy
by concluding long-term power purchase agreements for elec-
tricity and gas from renewable sources.
06 Accounting policies, assumptions, judgements and
estimations
To Our Stakeholders
05 Financial reporting rules
03 Other significant events
Russia-Ukraine war
Other Information
Chinese renminbi
US dollar
1 euro =
The exchange rates of currencies which have a material impact
on the Group Financial Statements were as follows:
The financial statements of consolidated companies which are
presented in a foreign currency are translated using the modified
closing rate method. Under this method, assets and liabilities are
translated at the closing exchange rate, while income and ex-
penses are translated at the average exchange rate. Differences
arising on foreign currency translation are presented in "Accu-
mulated other equity". In the single entity accounts of BMW AG
and its subsidiaries, foreign currency receivables and payables
are measured on initial recognition using the exchange rate pre-
vailing at the date of first-time recognition. Advance payments to
suppliers or from customers in a foreign currency that result in
the addition of non-monetary assets or liabilities are recorded at
the exchange rate prevailing at the date of payment. At the end
of the reporting period, foreign currency receivables and pay-
ables are measured using the closing exchange rate. The result-
ing unrealised gains and losses, as well as realised gains and
losses arising on settlement, are recognised in the income state-
ment, in line with the underlying substance of the transaction.
Non-monetary balance sheet line items denominated in foreign
currencies are rolled forward on the basis of historical exchange
rates.
04 Foreign currency translation and measurement
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
BMW Group Report 2023 To Our Stakeholders Combined Management Report
162
A closing rate of RUB 100.62 (2022: 77.12) to the euro was ap-
plied at 31 December 2023 to translate foreign currency items
denominated in Russian roubles. The BMW Group has been able
to execute transactions at this rate.
British pound
Japanese yen
The restrictions currently in place for payments continue to re-
strict the transfer of liquid funds from Russia. Developments in
this area are reviewed by the BMW Group on a regular basis. In
total, the Russian companies hold around 4% (2022: 5%) of the
BMW Group's cash and cash equivalents.
The other changes to the Group reporting entity do not have a
material impact on the results of operations, financial position
and net assets of the Group.
On 30 September 2021, the BMW Group signed an agreement
with the Huachen Group to acquire all of the shares of Brilliance
Automobile Manufacturing Co., Ltd., a Huachen Group subsidi-
ary. The transaction will not, however, be completed.
On 6 November 2023, the BMW Group signed an agreement
with the Mercedes-Benz Group AG to establish a company in
China with the aim of developing a charging infrastructure there.
Approval has been granted by the antitrust authorities. The BMW
Group will hold a 50% stake in the newly founded entity. It will
be included in the BMW Group Financial Statements as a joint
venture using the equity method.
On 19 July 2023, the BMW Group signed an agreement with the
companies of the Mercedes-Benz Group AG, the Stellantis
Group, the Honda Group, the Hyundai Motor Group and the Gen-
eral Motors Company Group to establish a company in Canada
with the aim of developing charging infrastructure in North Amer-
ica. Following approval by the relevant antitrust authorities, the
transaction was completed on 18 October 2023, with the BMW
Group holding a 16.67% stake. Although this is below 20%, the
newly founded entity is included in the BMW Group Financial
Statements as an associated company using the equity method,
reflecting the fact that the BMW Group is represented on the
management board and therefore has significant influence.
On 11 February 2022, via its subsidiary BMW Holding B.V., the
BMW Group increased its shareholding in the BMW Brilliance Au-
tomotive Ltd. (BMW Brilliance) joint venture from 50% to 75%
with the acquisition of a further 25% of BMW Brilliance's shares.
BMW Brilliance has been fully consolidated in the Group Finan-
cial Statements since that date. With regard to the figures re-
ported for the previous financial year, it should therefore be noted
that BMW Brilliance is only included for the relevant part of 2022
(i.e. from 11 February onwards). If BMW Brilliance had been fully
included in the Group Financial Statements with effect from 1
January 2022, Group revenues and profit after tax for the finan-
cial year 2022 would have amounted to € 145,521 million and
€ 18,842 million respectively. The remeasurement of the previ-
ously held shares resulted in a gain of € 7,649 million on first-
time consolidation, which was recognised in income from invest-
ments within the line item "Other financial result" in the previous
year. Detailed information is provided in 7 BMW Group Report 2022,
note [3] to the Group Financial Statements.
Associated companies and joint ventures are accounted for us-
ing the equity method, with measurement on initial recognition
based on acquisition cost.
In the case of a joint venture, the parties which have joint control
only have rights to the net assets of the arrangement.
The BMW Group's largest joint operation is Spotlight Automotive
Limited (Spotlight), which has been operated together with the
Chinese automobile manufacturer Great Wall Motor Company
Limited (Great Wall) since 2019, jointly developing and manu-
facturing electric vehicles for the MINI and Great Wall brands in
China. The BMW Group and Great Wall each hold 50% of the
joint operation's equity.
In the case of a joint operation, the parties that have joint control
of the arrangement have rights to the assets, and obligations for
the liabilities, relating to the arrangement. Assets, liabilities, rev-
enues and expenses of a joint operation are recognised propor-
tionately in the Group Financial Statements on the basis of the
BMW Group entity's rights and obligations (proportionate con-
solidation). The impact of joint operations on the Group Financial
Statements is of minor significance.
Joint operations and joint ventures are forms of joint arrange-
ments. Such an arrangement exists when a BMW Group entity
jointly carries out activities with a third party on the basis of a
contractual agreement.
An entity is classified as an associated company if BMW AG -
either directly or indirectly - has the ability to exercise significant
influence over the entity's operating and financial policies. As a
general rule, the Group is assumed to have significant influence
if it holds 20% or more of the entity's voting power.
-
An entity is deemed to be controlled if BMW AG either directly
or indirectly has power over it, is exposed or has rights to vari-
able returns from it and has the ability to influence those returns.
For the purpose of the impairment test, the carrying amount of
an asset (or a cash-generating unit) is compared with the recov-
erable amount. The first step of the impairment test is to deter-
mine the value in use. If the value in use is lower than the carrying
amount, the next step is to determine the fair value less costs to
sell and compare the amount so determined with the asset's car-
rying amount. If the fair value is lower than the carrying amount,
an impairment loss is recognised, reducing the carrying amount
to the higher of the asset's value in use or fair value less costs to
sell.
Major uncertainties remained at 31 December 2023 with re-
spect to the ongoing Russia-Ukraine war. The current sanctions
and the countermeasures taken significantly restrict economic
activities with Russia and also have an impact on the Russian
companies of the BMW Group.
← = Q
South Korean won
Closing rate
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
163
1,357.16
138.02
151.98
1,412.98
1,346.97
1,435.44
141.11
156.58
0.85
Argentina has fulfilled the definition of a hyperinflationary econ-
omy since 1 July 2018. Since that date, IAS 29 (Financial Re-
porting in Hyperinflationary Economies) has therefore been ap-
plied for the BMW subsidiary in Argentina. The price indices pub-
lished by the Federación Argentina de Consejos Profesionales de
Ciencias Económicas (FACPCE) are used to adjust non-mone-
tary asset, liability and income statement line items. The result-
ing effects are not material for the BMW Group.
0.87
0.87
7.08
7.66
7.36
7.86
1.05
1.08
1.07
1.11
2022
2023
31.12.2022
31.12.2023
Average rate
0.89
If the reason for a previously recognised impairment loss no
longer exists, the impairment loss is reversed up to the level of
the recoverable amount, but no higher than the amortised acqui-
sition or manufacturing cost. Impairment losses on goodwill are
not reversed. As part of the process of assessing recoverability,
it is generally necessary to apply estimations and assumptions -
in particular regarding future cash inflows and outflows and the
length of the forecast period which could differ from actual
amounts. Actual amounts may differ from the assumptions and
estimations used if business conditions develop differently to
expectations.
The lease payments to be taken into account to measure the
right-of-use asset and the lease liability comprise fixed pay-
ments, variable lease payments that depend on an index or an
interest rate as well as amounts expected to be payable under
residual value guarantees. If it is reasonably certain that a pur-
chase or lease extension option will be exercised, the relevant
payments are also included. Payments for periods for which the
lessee has an option to terminate a lease unilaterally are only in-
cluded in the lease payments if it is reasonably certain that the
termination option will not be exercised. For the purposes of as-
sessing options, the BMW Group takes account of all facts and
circumstances that create an economic incentive to exercise or
not to exercise the option.
The BMW Group determines the value in use of intangible assets
on the basis of a present value computation. The cash flows used
for this calculation are derived from the long-term corporate plan
approved by management, corresponding to a forecast period of
six years.
Where the recoverable amount of a lease exceeds the asset's
carrying amount, changes in residual value expectations are rec-
ognised by adjusting scheduled depreciation prospectively over
the remaining term of the lease. If the recoverable amount is
lower than the asset's carrying amount, an impairment loss is
recognised for the shortfall. A test is carried out at each balance
sheet date to determine whether an impairment loss recognised
in prior years no longer exists or has decreased. In such cases,
the carrying amount of the asset is increased to the recoverable
amount, at a maximum up to the amount of the asset's amor-
tised cost.
Assumptions and estimations are required regarding future re-
sidual values, since these represent a significant part of future
cash inflows. Relevant factors to be considered include the trend
in market prices and demand on the pre-owned automobile mar-
ket. The expected change in the drive-system mix going forward,
which is subject to regular analysis, is also taken into account.
The BMW Group has developed and implemented methods and
processes that enable sustainability aspects of residual value
risks, particularly climate-related aspects, to be appropriately as-
sessed and managed. A scenario-based approach is applied to
quantify the impact of the transition towards zero-emissions mo-
bility and factor in the technological progress of the products in-
volved, resulting potentially in the need to adjust the estimated
residual values of both internal combustion and electrified vehi-
cles. However, the transition to new drive systems will stretch
over a period of time. Under these circumstances, regulatory as-
pects, customer behaviour and the structure of the product range
all have to be taken into account. To varying degrees, the afore-
mentioned aspects will play a role in bringing about changes to
the existing product portfolio over the coming years. The nature
of these planned changes can already be anticipated today to
some extent, highlighting potential but calculable risks for future
operations. Disproportionate risks can only arise in the
168
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Notes to the Group Financial Statements
← = Q
event of unexpected regulatory changes that would also be to the
detriment of customers. In addition to these various considera-
tions, the vehicle portfolio subject to residual value risks is re-
measured on a quarterly basis, allowing new aspects to be incor-
porated in the valuation at an early stage. In this case, valuations
relevant for new business which are subject to the same turn of
events would also be adjusted. The forecasting models used by
the BMW Group are subject to regular review and can be supple-
mented where appropriate to include aspects relating to changes
in the market.
Using this approach, upward or downward adjustments can be
made to the forecast value on the basis of a range of scenario
analyses. The assumptions are based on internally available his-
torical data and current market data as well as on forecasts of
external institutions. Furthermore, assumptions are regularly val-
idated by comparison with external data. Certain types of con-
tracts require a high degree of judgement when deciding whether
they give rise to operating leases or receivables from sales
financing.
Investments accounted for using the equity method are
measured - provided no impairment has been recognised - at
cost of investment adjusted for the Group's share of earnings
and changes in equity capital. If there is any indication that an
investment is impaired, an impairment test is performed on the
basis of the discounted cash flow method. An indicator exists, for
example, in the event of a serious shortfall compared to budget,
the loss of an active market or if funds are required to avoid
insolvency.
With the exception of lease receivables financial assets are
measured on initial recognition at their fair value. Financial as-
sets include, in particular, other investments, receivables from
sales financing, finance-related receivables, trade receivables
and cash and cash equivalents. As a general rule, initial recogni-
tion takes place as soon as the BMW Group becomes a party to
a contract. In the case of so-called "regular way" purchases or
sales of non-derivative financial assets, initial recognition takes
place at the settlement date. Financial assets are derecognised
when contractual cash flows attached to them have expired or
are transferred and all significant risks and rewards have been
passed on to the acquirer.
Depending on the business model and the structure of contrac-
tual cash flows, financial assets are classified as measured at
amortised cost, at fair value through comprehensive income or at
fair value through profit or loss. The category "measured at fair
value through comprehensive income" at the BMW Group com-
prises mainly marketable securities and investment funds used
for liquidity management purposes. In the BMW Group, selected
marketable securities, shares in investment funds, money mar-
ket funds and convertible bonds are measured at fair value
through profit or loss, as their contractual cash flows do not solely
represent payments of principal and interest.
The BMW Group does not make use of the option to measure
equity instruments at fair value through other comprehensive in-
come or debt instruments at fair value through profit or loss.
The market values of financial instruments measured at fair
value are determined on the basis of market information avail-
able at the balance sheet date, such as quoted prices or using
appropriate measurement methods, in particular the discounted
cash flow method.
Items reported under other investments within the scope of
IFRS 9 are measured at fair value through profit or loss. Invest-
ments in subsidiaries, joint arrangements and associated com-
panies that are not material to the BMW Group are also included
in other investments.
Receivables from sales financing are measured as a general
rule at amortised cost using the effective interest rate method.
As part of its asset-backed securities (ABS) financing activities,
the BMW Group transfers some of its receivables from sales fi-
nancing - primarily retail customer and dealership financing re-
ceivables - to structured companies, which in turn securitise
them and place them on the capital market as collateralised
securities.
The transferred receivables are not derecognised and therefore
remain on the BMW Group's balance sheet. For this reason, re-
ceivables from sales financing fulfil the criteria of the "hold" busi-
ness model.
Receivables from sales financing also include finance lease re-
ceivables which are measured at the amount of the net invest-
ment in the lease. This balance sheet line item also includes op-
erating lease receivables at the end of the reporting period. The
related vehicles are reported within the line item "Leased
products".
With the exception of receivables from operating leases and
trade receivables, the BMW Group applies the general approach
described in IFRS 9 to determine impairment of financial assets.
Under the general approach, loss allowances are measured on
initial recognition on the basis of the expected 12-month credit
loss (stage 1). If the credit loss risk at the end of the reporting
period has increased significantly since initial recognition, the im-
pairment allowance is measured on the basis of lifetime ex-
pected credit losses (stage 2 - general approach). The measure-
ment of the change in default risk is based on a comparison of
the default risk at the date of initial recognition and at the end of
the reporting period. The default risk at the end of each reporting
period is determined on the basis of credit checks, current key
performance indicators and any overdue payments.
169
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Responsibility Statement and Auditor's Report
case including initial direct costs. All leased products are depre-
ciated over the period of the lease using the straight-line method
down to their expected residual value.
Group products recognised by BMW Group entities as leased
products under operating leases are measured at manufactur-
ing cost and all other leased products at acquisition cost, in each
As lessee, the BMW Group makes use of the application exemp-
tions available for short-term leases and leases of low-value
assets.
Determining which items are to be counted as lease payments -
including the issue of the lease term underlying those payments
- and which discount rate to apply involves using estimates and
assumptions that may differ from actual outcomes.
13.7
The risk-adjusted discount rate, calculated using a capital asset
pricing model (CAPM), also takes into account specific peer-
group information relating to beta-factors, capital structure data
and borrowing costs. No environmental, social and governance
(ESG)-related adjustments were made to the WACC.
In conjunction with the impairment tests for cash-generating
units, sensitivity analyses are performed for the main assump-
tions in order to rule out that possible changes to the assump-
tions used to determine the recoverable amount would result in
the requirement to recognise an impairment loss. Even in the
case of a 10% deterioration in the individual measurement as-
sumptions, an impairment loss would not arise. If the WACC were
to develop as in the previous year, the value in use calculated for
the Financial Services cash-generating unit would fall slightly be-
low its carrying amount in 2024. The BMW Group does not, how-
ever, expect the WACC to develop as in the previous year.
All items of property, plant and equipment are measured at ac-
quisition or manufacturing cost less accumulated depreciation
and accumulated impairment losses.
The cost of internally constructed plant and equipment com-
prises all costs which are directly attributable to the manufactur-
ing process as well as an appropriate proportion of production-
related overheads. This includes production-related depreciation
and amortisation as well as an appropriate proportion of admin-
istrative and social costs. Financing costs are not included in ac-
quisition or manufacturing cost unless they are directly attribut-
able to the asset. The carrying amount of items of depreciable
-
property, plant and equipment is written down according to
scheduled usage-based depreciation as a general rule on a
straight-line basis - over the useful lives of the assets. Depreci-
ation is recorded as an expense in the income statement.
The following useful lives are applied throughout the BMW
Group:
in years
Factory and office buildings, residential buildings, fixed
installations in buildings and outside facilities
8 to 50
Plant and machinery
Other facilities, factory and office equipment
3 to 30
2 to 25
Remuneration Report
The useful life of the plant and equipment is reviewed regularly
and extended or shortened as necessary. This review also takes
account of the impact of climate-related aspects on useful lives,
for example due to changes in demand patterns or regulatory re-
quirements. This assessment is based on the assumptions used
for long-term corporate planning purposes and product-related
decisions, as described above. Climate-related aspects have an
indirect impact on the utilisation of property, plant and equip-
ment. Adjustments to the useful lives of items of plant and ma-
chinery are avoided by a combination of flexible manufacturing
arrangements (independent of drivetrain type and capable of
handling all vehicle generations) and asset-preservation
measures. The useful lives of plant and machinery that are used
exclusively for internal combustion vehicle production are also
covered by the most up-to-date planning assumptions. For ma-
chinery used in multiple-shift operations, depreciation rates are
increased to account for the additional utilisation. If there is any
indication of impairment of property, plant and equipment, an im-
pairment test is performed as described above for intangible as-
sets.
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Notes to the Group Financial Statements
← = Q
A lease arises for IFRS 16 purposes either when an actual legal
rental/lease agreement for property, plant and equipment is
in place or when other contractual arrangements are in place that
are equivalent to a lease in substance. Depending on the specific
facts and circumstances of each individual case, power purchase
agreements and long-term supply contracts for battery cells may
also constitute a lease.
The BMW Group recognises a right-of-use asset and a liability
for the outstanding lease payments with effect from the date on
which the leased asset becomes available for use by the BMW
Group. The cost of the right-of-use asset is the sum of the
amount at which the lease liability is initially measured, any lease
payments made at or before the lease commencement date, any
initial direct costs incurred by the lessee and the estimated costs
of dismantling, removing or restoring the leased asset. Lease in-
centives granted by the lessor are deducted. Right-of-use assets
are depreciated on a straight-line basis over the shorter of the
useful life of the leased asset and the expected lease term. If
ownership of the leased asset is automatically transferred at the
end of the lease term or the exercise of a purchase option is re-
flected in the lease payments, the right-of-use asset is depreci-
ated on a straight-line basis over the expected useful life of the
leased asset. Right-of-use assets are reported in the balance
sheet within the relevant line items for property, plant and equip-
ment. The depreciation expense on right-of-use assets is re-
ported in the income statement in cost of sales as well as in sell-
ing and administrative expenses.
The lease liability is measured on initial recognition at the present
value of the future lease payments. Subsequent to initial recog-
nition, the carrying amount of the lease liability is increased to
reflect interest on the lease liability and reduced, without income
statement impact, by the lease payments made. Lease liabilities
are reported within financial liabilities, while interest expense is
reported as part of net interest result. In the cash flow statement,
both the repayment portion and the interest portion of lease pay-
ments are shown as cash outflows from financing activities.
-
IFRS 16 requires that lease payments are discounted as a gen-
eral rule using the interest rate implicit in the lease. However,
since the interest rate in leases entered into by the BMW Group
cannot readily be determined, amounts are discounted on the
basis of the incremental borrowing rate.
The incremental borrowing rate comprises the risk-free interest
rate in the relevant currency for matching maturities plus a pre-
mium for the credit risk. Specific risks attached to an asset are
generally not taken into account, given that collateral received in
the context of alternative financing arrangements is not relevant
within the BMW Group.
167
Other Information
Group Financial Statements
Notes to the Group Financial Statements
← = Q
Current income taxes are calculated within the BMW Group on
the basis of tax legislation applicable in the relevant countries. To
the extent that judgement was necessary to determine the treat-
ment and amount of tax items presented in the financial state-
ments, there is in principle a possibility that local tax authorities
may take a different position.
As a general rule, each income tax treatment is considered inde-
pendently when accounting for uncertainties in income taxes.
If it is not considered probable that an income tax treatment will
be accepted by the local tax authorities, the BMW Group uses the
most likely amount of the tax treatment when determining tax-
able profit and the tax base.
Inventories of raw materials, supplies and goods for resale are
generally stated at the lower of average acquisition cost and net
realisable value.
Work in progress and finished goods are stated at the lower of
manufacturing cost and net realisable value. Manufacturing cost
comprises all costs which are directly attributable to the manu-
facturing process as well as an appropriate proportion of produc-
tion-related overheads. This includes production-related depre-
ciation and amortisation and an appropriate proportion of ad-
ministrative and social costs. Financing costs are not included in
the acquisition or manufacturing cost of inventories.
Inventories also include vehicles held for sale in the financial ser-
vices business, measured at their amortised cost or lower net re-
alisable value.
Cash and cash equivalents comprise mainly cash on hand and
cash at bank with an original term of up to three months. With the
exception of money market funds, cash and cash equivalents are
measured at amortised cost.
13.7
15.4
15.6
12.4
13.7
2022
2023
Financial Services
Deferred tax liabilities on taxable temporary differences arising
from investments in subsidiaries, branches and associated com-
panies as well as interests in joint arrangements are not recog-
nised if the Group is able to control the timing of the reversal and
it is probable that the temporary difference will not reverse in the
foreseeable future. This is particularly the case if it is intended
that profits will not be distributed, but rather will be used to main-
tain the substance and expand the volume of business of the en-
tities concerned.
Motorcycles
Automotive excluding BMW Brilliance
in %
The following pre-tax discount factors were applied:
Amounts are discounted on the basis of a market-related cost of
capital rate. Impairment tests are performed for accounting and
financial reporting purposes and using a risk-adjusted pre-tax
cost of capital (WACC) for the Automotive (excluding BMW Bril-
liance), BMW Brilliance and Motorcycles cash-generating units.
In the case of the Financial Services cash-generating unit, a pre-
tax cost of equity capital is used, as is customary in the sector.
By analogous application of the procedures used for the other
cash-generating units, the value in use is also determined for the
BMW Brilliance cash-generating unit in view of the time period
since the acquisition date.
Assumptions also take into account the impact of climate-related
aspects and the influence of other sustainability factors on busi-
ness performance and the product portfolio, for example as a re-
sult of changes in demand patterns, regulatory requirements or
changes in production conditions. In line with the BMW Group's
strategy process and the ongoing transformation to electric mo-
bility, the detailed forecast takes account of key assumptions
such as the planned increase in the share of electrified automo-
biles to over 50% and the required level of expenditure on re-
search and development for vehicle models with battery-electric
drives. Other matters to be considered are the scale of future in-
vestments in resource-saving production facilities (including any
expected efficiency improvements), the cost of converting pro-
duction processes from fossil fuels to renewable energy sources
and, last but not least, the expected impact on the current leasing
portfolio.
For the purposes of calculating cash flows beyond the planning
period, a perpetual annuity return is assumed which does not
take growth into account. Forecasting assumptions are adjusted
to current information and regularly compared with external
sources. The assumptions used take account in particular of ex-
pectations of the profitability of the product portfolio, future mar-
ket share development, macroeconomic developments (such as
currency, interest rate and raw materials prices) as well as the
legal environment and past experience.
← = Q
Notes to the Group Financial Statements
Remuneration Report Other Information
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
166
BMW Brilliance
-
The recoverability of deferred tax assets is assessed at each bal-
ance sheet date on the basis of planned taxable income in future
financial years. If with a probability of more than 50% future tax
benefits will not be realised, either in part or in total, a valuation
allowance is recognised on the deferred tax assets. The calcula-
tion of deferred tax assets requires assumptions to be made with
regard to the level of future taxable income and the timing of re-
covery of deferred tax assets. These assumptions take account
of forecast operating results, announced legislative changes in
connection with climate change and the impact on earnings of
the reversal of taxable temporary differences. Since future busi-
ness developments cannot be predicted with certainty and to
some extent cannot be influenced by the BMW Group, the meas-
urement of deferred tax assets is subject to uncertainty.
as well as on unused tax losses and unused tax credits, when it
is probable that they can be utilised. As an exception to this, de-
ferred tax assets and liabilities resulting from the implementation
of the Pillar Two rules are not recognised. Further information is
provided in note 5.
The BMW Group applies the simplified approach described in
IFRS 9 to operating lease and trade receivables, whereby the
amount of the loss allowance is measured subsequent to the in-
itial recognition of the receivable on the basis of lifetime expected
credit losses (stage 2 – simplified approach). For the purposes of
allocating an item to stage 2, it is irrelevant whether the credit
risk of the assets concerned has increased significantly since in-
itial recognition.
As a general rule, the BMW Group assumes that a receivable is
in default if it is more than 90 days overdue or if there are objec-
tive indications of insolvency, such as the opening of insolvency
proceedings. Credit-impaired assets are identified as such on the
basis of this definition of default. In the case of credit-impaired
assets which had not been credit-impaired at the time they were
acquired or originated, an impairment allowance is recognised at
an amount equal to lifetime expected credit losses (stage 3). This
is the case regardless of whether the general or simplified ap-
proach is applied. In the case of stage 3 assets, interest income
is calculated on the asset's carrying amount less any impairment
loss.
In addition, post-model adjustments are recorded if the risk is not
fully covered by the standard models.
The BMW Group derecognises financial assets when it has no
reasonable expectation of recovery. This may be the case, for in-
stance, if the debtor is deemed not to have sufficient assets or
other sources of income to service the debt.
Loss allowances relating to the balance sheet line item “Receiv-
ables from sales financing" are determined primarily on the basis
of past experience with credit losses, current data on overdue re-
ceivables, rating classes and scoring information.
Forward-looking information (for instance forecasts of key per-
formance indicators) is also taken into account if, based on past
experience, such indicators show a substantive correlation to ac-
tual credit losses.
Loss allowances on trade receivables are determined primarily
on the basis of information relating to overdue amounts. Further-
more, both positive and negative economic scenarios are used
alongside the latest forecasts of key performance indicators
when determining the level of valuation allowances. These sce-
narios are based on local analyses and take into account, for ex-
ample, anticipated political and economic developments.
Input factors available on the market, such as ratings and prob-
abilities of default, are used to calculate valuation allowances for
cash and cash equivalents, financial assets, receivables from
subsidiaries and receivables from companies in which an invest-
ment is held. In the case of marketable securities and investment
funds, the BMW Group usually applies the option not to allocate
financial assets with a low default risk to different stages. Accord-
ingly, assets with an investment grade rating are always allo-
cated to stage 1.
Financial assets include in particular marketable securities and
shares in investment funds as well as derivative financial instru-
ments.
Derivative financial instruments are used within the BMW
Group for hedging purposes in order to reduce currency, interest
rate, fair value and market price risks. Derivative financial instru-
ments are recognised as of the trade date, measured at their fair
value. Depending on their market value at measurement date,
these financial instruments are reported in the balance sheet line
items "Financial assets" or "Financial liabilities".
Fair values are determined on the basis of valuation models. Ob-
servable market price, tenor and currency basis spreads are
taken into account in the measurement of derivative financial in-
struments. Furthermore, the Group's own credit risk and that of
counterparties is taken into account on the basis of credit default
swap values for market contracts with matching terms.
The BMW Group applies the option to recognise the credit risks
arising from the fair values of a group of derivative financial as-
sets and liabilities on the basis of their total net amount. Portfo-
lio-based valuation adjustments (credit valuation adjustments
and debit valuation adjustments) to the individual derivative fi-
nancial assets and financial liabilities are allocated using the rel-
ative fair value approach (net method).
Where hedge accounting is applied, changes in fair value of de-
rivative financial instruments are presented as part of other fi-
nancial result in the income statement or within other compre-
hensive income as a component of accumulated other equity,
depending on whether the hedging relationship is classified as a
fair value hedge or a cash flow hedge.
Fair value hedges are mainly used to hedge interest rate risks
relating to financial liabilities. The currency basis is not desig-
nated as part of the hedging relationship in the case of cross cur-
rency interest rate hedges accounted for as fair value hedges.
Accordingly, changes in the market value of such components
are recorded as costs of hedging within accumulated other eq-
uity. Amounts accumulated in equity are reclassified to other fi-
nancial result within the income statement over the term of the
hedging relationship.
Deferred tax assets and liabilities are measured at the tax rates
that are expected to apply to the period when the asset is real-
ised or the liability settled, based on tax rates and tax laws that
have been enacted or substantively enacted at the balance sheet
date.
In addition, for selected fixed-interest assets, a portion of the in-
terest rate risk is hedged on a portfolio basis in accordance with
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Notes to the Group Financial Statements
← = Q
IAS 39. The designated hedged items (underlying transactions)
are reported in the balance sheet as receivables from sales fi-
nancing or financial liabilities. Interest rate risks are hedged on
the basis of the present value of net cash flows relating to fixed
income assets (on the asset side) less cash flows relating to vari-
able-rate financing (on the liabilities side). The net cash flow de-
termined in this way is hedged by purchasing corresponding in-
terest rate swaps that have the effect of reducing the interest rate
risk. Hedge relationships are terminated and redesignated on a
monthly basis at the end of each reporting period, thereby taking
account of the constantly changing content of each portfolio.
Fair value hedge ineffectiveness is generally recognised in other
financial result.
-
The time values of option transactions and the interest compo-
nent - including the currency basis of forward currency con-
tracts are not designated as part of the hedging relationship in
the case of currency hedges accounted for as cash flow hedges.
Changes in the fair value of such components are recorded as
costs of hedging on a separate line within accumulated other
equity. Amounts recorded in accumulated other equity from cur-
rency hedges are reclassified to cost of sales when the related
hedged item is recognised in profit or loss.
In the case of raw materials hedges that are accounted for as
cash flow hedges, the hedging instruments are designated in full
as part of the hedging relationship. Amounts recorded in accu-
mulated other equity are included in the carrying amount of in-
ventories on initial recognition. Ineffectiveness arising on cash
flow hedges is recognised directly in cost of sales, whereas the
impact of prematurely terminated hedging relationships is recog-
nised in other operating income and expenses.
Deferred income taxes are recognised for all temporary differ-
ences between the tax and accounting bases of assets and lia-
bilities, including differences arising on consolidation procedures,
170
← = Q
12.4
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
Combined Management Report
BMW Group Report 2023 To Our Stakeholders
161
Other Information
15.2
finance leases
Interest income on credit financing and
106,678
15,040
11,872
11,664
Income from lease instalments
Sales of products and related goods
Sales of products previously leased to customers
118,769
5,279
2023
2022
in € million
14,262
4,129
3,394
roadside assistance
3,648
Other income
1,876
155,498
Revenues
1,497
142,610
Revenues recognised from contracts with customers in accord-
ance with IFRS 15 totalled € 138,190 million (2022:
€ 126,384 million), spread across the first, second and fifth cat-
egories of the above table and proportionately to other income.
An analysis of revenues by segment is shown in the explanatory
comments on segment information provided in ♬ note [46].
Revenues from the sale of products and related goods are gen-
erated primarily in the Automotive segment and, to a lesser ex-
tent, in the Motorcycles segment. Revenues from the sales of
products previously leased to customers, income from lease in-
stalments and interest income on credit financing and finance
leases are allocated to the Financial Services segment.
Other income relates mainly to the Automotive segment and the
Financial Services segment.
The major part of revenues expected to arise from the Group's
order book at the end of the reporting period relates to the sale
of vehicles. Revenues resulting from those sales will be recog-
nised in the next financial year.
The services included in vehicle sale contracts that will be recog-
nised as revenues in subsequent years represent only an insig-
nificant portion of expected revenues. Accordingly, use has been
made of the practical expedient contained in IFRS 15, permitting
an entity not to disclose information on a quantitative basis due
to the short-term nature of items and the lack of informational
value of such disclosures.
Interest income on credit financing and finance leases includes
interest calculated on the basis of the effective interest method
totalling € 4,081 million (2022: € 3,656 million). This interest
income is not reported separately in the income statement as it
is not significant compared to total Group revenues.
Revenues from service contracts, telematics and
Revenues by activity comprise the following:
← = Q
NOTES TO THE INCOME STATEMENT
Net interest expense on the net defined benefit liability or net in-
terest income on the net defined benefit assets are presented
separately within the financial result. All other costs relating to
allocations to pension provisions are allocated to costs by func-
tion in the income statement.
Past service cost arises where a BMW Group company intro-
duces a defined benefit plan or changes the benefits payable un-
der an existing plan. This cost is recognised immediately in the
income statement. Similarly, gains and losses arising on the set-
tlement of a defined benefit plan are recognised immediately in
the income statement.
Remeasurement of the net liability can result from changes in the
present value of the defined benefit obligation, the fair value of
the plan assets or the asset ceiling. Remeasurement can result,
amongst others, from changes in financial and demographic pa-
rameters, as well as changes following the portfolio develop-
ment. Remeasurements are recognised immediately through
other comprehensive income and ultimately in equity (within rev-
enue reserves).
Other provisions are recognised when the BMW Group has a
present legal or factual obligation towards a third party arising
from past events, the settlement of which is probable and when
the amount of the obligation can be reliably estimated. Provi-
sions with a remaining period of more than one year are meas-
ured at their net present value.
The measurement of provisions for statutory and non-
statutory warranty obligations (statutory, contractual and
voluntary) involves estimations. In addition to manufacturer
warranties prescribed by law, the BMW Group offers various fur-
ther standard (assurance type) warranties depending on the
product and sales market. No provisions are recognised for ad-
ditionally offered service packages that are treated as separate
performance obligations.
Provisions for statutory and non-statutory warranties are recog-
nised at the point in time when control over the goods is trans-
ferred to the dealership or retail customer or when it is decided
to introduce new warranty measures. With respect to the level of
the provision, estimations are made in particular based on past
experience of damage claims and processes. Future potential re-
pair costs and price increases per product and market are also
taken into account. Provisions for warranties for all companies of
the BMW Group are adjusted regularly to take account of new
information, with the impact of any changes recognised in the in-
come statement. Further information is provided in note 34. Sim-
ilar estimates are also made in conjunction with the measure-
ment of expected reimbursement claims.
The recognition and measurement of provisions for litigation
and liability risks necessitate making assumptions in order to
determine the probability of liability, the amount of claim and the
duration of the legal dispute. The assumptions made, especially
the assumption about the outcome of legal proceedings, are sub-
ject to a high degree of uncertainty. The appropriateness of as-
sumptions is regularly reviewed, based on assessments under-
taken both by management and external experts, such as law-
yers. If new developments arise in the future that result in a dif-
ferent assessment, provisions are adjusted accordingly.
If the recognition criteria relevant for provisions are not fulfilled
and the outflow of resources on fulfilment is not unlikely, the po-
tential obligation is disclosed as a contingent liability.
172
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Related party disclosures comprise information on associated
companies, joint ventures and non-consolidated subsidiaries as
well as individuals which have the ability to exercise a controlling
or significant influence over the financial and operating policies
of the BMW Group. This includes all persons in key positions of
the Company, as well as close members of their families or inter-
mediary entities.
In the case of the BMW Group, this also applies to members of
the Board of Management and the Supervisory Board. Details
relating to these individuals and entities are provided in 7 note [41]
and in the list of investments disclosed in 7 note [47].
Share-based remuneration programmes that provide for set-
tlement in shares or a cash payment with a direct obligation to
invest in shares of BMW AG common stock are measured at their
fair value at grant date. The related expense is recognised as
personnel expense in the income statement over the vesting pe-
riod and offset against capital reserves.
Share-based remuneration programmes expected to be settled
in cash are revalued to their fair value at each balance sheet date
between the grant date and the settlement date and on the set-
tlement date itself. The expense is recognised as personnel ex-
pense in the income statement over the vesting period and pre-
sented in the balance sheet as a provision.
The share-based remuneration programme for Board of Man-
agement members and senior heads of department entitles
BMW AG to elect whether to settle its commitments in cash or
with shares of BMW AG common stock. Based on the decision to
settle in cash, the share-based remuneration programmes for
Board of Management members and senior heads of depart-
ment are accounted for as cash-settled, share-based remunera-
tion programmes. Further information on share-based remuner-
ation programmes is provided in a note [42].
173
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
08 Cost of sales
Cost of sales comprises:
07 Revenues
in € million
Manufacturing costs
2022
in € million
2023
2022
Other operating income and expenses comprise the following
items:
Research and development expenditure
7,755
7,178
in € million
2023
2022
In the financial year 2022, expenses for impairment allowances
included the write-down of receivables from a non-consolidated
Russian subsidiary, which negatively impacted the Other Entities
segment. Detailed information is provided in the BMW Group
Report 2022, note [4] to the Group Financial Statements.
New expenditure for capitalised
development costs
-2,604
- 2,819
Exchange gains
429
458
11 Net interest result
Amortisation
2,387
2,265
Income from the reversal of provisions
240
521
Net interest result comprises the following:
Research and development expenses
7,538
6,624
10 Other operating income and expenses
Research and development expenses are as follows:
← = Q
Notes to the Group Financial Statements
The calculation of the amount of the provision requires assump-
tions to be made with regard to discount rates, pension trends,
employee fluctuation and the life expectancy of employees,
among other things. Discount rates are determined by reference
to market yields at the end of the reporting period on high-quality
fixed-interest corporate bonds.
82,549
76,760
Cost of sales relating to financial services
business
27,764
27,517
thereof: interest expense relating to
financial services business
3,554
2,114
Research and development expenses
7,538
6,624
Warranty expenditure
3,782
2023
3,209
2,780
2,775
1,396
1,157
125,809
118,042
Manufacturing costs are reduced by public-sector subsidies in
the form of reduced taxes on assets and reduced consumption-
based taxes amounting to € 107 million (2022: € 115 million).
Impairment losses recognised in the income statement 2023 in
connection with receivables from sales financing amounted to
€ 168 million (2022: € 649 million). In view of the fact that the
impairment losses are of minor importance compared to total
Group cost of sales, they have not been disclosed separately in
the income statement.
174
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Expenses for service contracts, telematics
and roadside assistance
Other cost of sales
Cost of sales
In the case of funded plans, the pension obligation is offset
against plan assets measured at their fair value. If the plan as-
sets exceed the pension obligation, the surplus is tested for re-
coverability. In the event that the BMW Group has a right of reim-
bursement or a right to reduce future contributions, it reports an
asset (within Other financial assets), measured on the basis of
the present value of the future economic benefits attached to the
plan assets. For funded plans, in cases where the obligation ex-
ceeds plan assets, a liability is recognised under pension provi-
sions.
Notes to the Group Financial Statements
Financial liabilities, with the exception of lease liabilities, are
measured on first-time recognition at their fair value. For these
purposes, transaction costs are taken into account except in the
case of financial liabilities allocated to the category "measured at
fair value through profit or loss". Subsequent to initial recognition,
liabilities are - with the exception of derivative financial instru-
ments - measured at amortised cost using the effective interest
method.
Notes to the Group Financial Statements
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
175
In the previous year, steepening yield curves had a positive im-
pact on the discount unwinding result.
Interest expense from unwinding the discounting of other non-
current provisions on the one hand and interest income from ad-
justing the discount rate on the other are netted and, as in previ-
ous years, reported as a net interest effect within interest
expense.
Expenses for impairment allowances recognised on receivables
from contracts with customers amounted to € 15 million
(2022: € 61million).
Income from the reversal of provisions includes income arising
on the reassessment of risks from legal disputes. The expense
for additions to provisions includes litigation and other legal risks.
Income from the reversal of and expenses for the recognition of
impairment allowances and write-downs relate mainly to impair-
ment allowances on receivables.
673
45
251
- 1
-4
-656
Interest and similar expenses
Net interest result
47
-182
Other operating income and expenses
thereof to subsidiaries
- 1,330
- 1,227
Other operating expenses
- 219
- 180
Other interest and similar expenses
- 231
← = Q
-345
12 Other financial result
Taxes on income of the BMW Group can be classified according
to their origin as follows:
Income (+) and expenses (-) from financial
instruments
850
18
thereof relating to tax loss carryforwards and
tax credits
7,770
-57
Result on investments
2022
5,069
- 142
- 992
-457
thereof relating to temporary differences
- 179
- 142
and participations
Expenses from investments in subsidiaries
-439
Deferred tax expense (+) / deferred tax income (-)
35
22
thereof from subsidiaries:
5,370
Current tax expense
7,949
85
2023
in € million
Income from investments in subsidiaries
and participations
2022
2023
in € million
13 Income taxes
Provisions for pensions are measured using the projected unit
credit method. Under this method, not only obligations relating to
known vested benefits at the reporting date are recognised, but
also the effect of future expected increases in pensions and sal-
aries. The calculation is based on independent actuarial valua-
tions which take into account the relevant biometric factors.
Sundry operating expenses
- 11
in € million
1,377
1,045
Other operating income
20
37
thereof from subsidiaries
274
316
Sundry operating income
422
691
Other interest and similar income
09 Selling and administrative expenses
45
58
Gains on the disposal of assets
2022
2023
in € million
79
2
171
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report Other Information
← = Q
2022
Selling and administrative expenses relate mainly to expenses
for marketing and communication, personnel and IT.
Exchange losses
-444
-9
Net interest expense on the net defined benefit
liability for pension plans
- 88
-67
Loss on the disposal of assets
481
-467
provisions
- 260
-15
Net interest impact on other long-term
Expense for impairment allowances and
write-downs
10,616
11,025
Total selling and administrative expenses
4,425
4,934
422
701
Interest and similar income
- 307
- 399
Expense for additions to provisions
6,191
6,091
Administrative expenses
Selling expenses
10
Net interest income on the net defined benefit
liability for pension plans
-401
2023
Deferred taxes are determined on the basis of tax rates which
are currently applicable or expected to apply in the relevant na-
tional jurisdictions when the amounts are recovered. After taking
account of an average municipal trade tax multiplier rate (Hebe-
satz) of 430% (2022: 430%), the underlying income tax rate for
Germany was as follows:
Income taxes
12,170
Motorcycles
2022
2023
Automotive
94
8,474
8,440
98
56
66
11,481
Interest expense arising on the measurement of
lease liabilities
12
Expenses relating to variable lease payments not
included in the measurement of lease liabilities
146,727
134,607
3,552
152,111
139,779
3,794
77
81
Expenses for leases of low-value assets and
short-term leases
2022
2023
in € million
17
Financial Services
1,377
1,385
b As lessor
Information on right-of-use assets, lease liabilities as well as fur-
ther explanatory comments are provided in 7 note [6], ^ note [20],
note [22] and note [36].
Cash outflows for leases in the financial year 2023 amounted to
€ 675 million (2022: € 681 million). In addition, cash outflows
for right-of-use assets paid in advance amounted to € 674 mil-
lion (2022: € 732 million).
commence.
The BMW Group is also party to long-term supply contracts for
battery cells that give rise to fixed and variable payment obliga-
tions. Based on the current interpretation, these arrangements
include a lease component in accordance with IFRS 16. The fixed
payment obligations arising in conjunction with such IFRS 16
compatible contracts amount to € 749 million and will fall due
with effect from the financial year 2026 after series deliveries
The BMW Group is party to leases at the end of the reporting
period which have not yet commenced. These leases are ex-
pected to give rise to future cash outflows amounting to
€ 480 million (2022: € 873 million).
= Q
↑
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Notes to the Group Financial Statements
Group Financial Statements
BMW Group Report 2023 To Our Stakeholders Combined Management Report
179
Most of the expenses for leases of low-value assets and short-
term leases relate to low-value assets.
Personnel expenses include € 44 million (2022: € 40 million) of
costs relating to workforce measures.
Of the average number of employees, 995 (2022: 953) are at-
tributable to one proportionately consolidated entity within the
Automotive segment.
13,932
14,721
1,066
1,174
Other
2022
in € million
2023
a As lessee
10,250.3
€ million
17,941.0
11,290.3
€ million
2022
2023
Personnel expenses
Social insurance expenses
Pension and welfare expenses
16,327.7
Wages and salaries
The income statement includes personnel expenses as follows:
15 Personnel expenses
In the case of preferred stock, the calculation of earnings per
share and the average number of shares in circulation only takes
account of shares of preferred stock that are entitled to receive a
dividend in each of the relevant financial years. As in the previous
year, diluted earnings per share correspond to basic earnings per
share.
* Proposal by the Board of Management.
Dividend per share of preferred stock
Dividend per share of common stock
Average number of common stock shares in circulation
Average number of preferred stock shares in circulation
Basic/diluted earnings per share of common stock
Basic/diluted earnings per share of preferred stock
Profit attributable to preferred stock
Profit attributable to common stock
Net profit attributable to the shareholders of BMW AG
in € million
€ million
1,040.0
1,613.3
Leases
16
Average number of employees
The average number of employees during the financial year was:
The total pension expense for defined contribution plans of the
BMW Group amounted to € 179 million (2022: € 175 million).
Employer contributions paid to state pension insurance schemes
totalled € 806 million (2022: € 750 million).
8.52
6.02*
€
8.50
6.00*
€
27.33
17.69
- 1,215
27.31
17.67
€
59,035,325
58,776,197
number
597,924,318
579,941,360
number
In terms of accounting for leases as a lessee, the following ex-
penses are included in the income statement:
14 Earnings per share
2023
Income from variable lease payments for
operating leases
113
745
-118
- 332
24
1,077
- 142
2022
2023
Other comprehensive income for the period after tax
-154
Items that can be reclassified to the income statement in the future
Other comprehensive income from equity accounted investments
Income taxes
thereof reclassifications to the income statement
thereof gains/losses arising in the period under report
Costs of hedging
thereof reclassifications to the income statement
thereof gains/losses arising in the period under report
Derivative financial instruments
thereof reclassifications to the income statement
thereof gains/losses arising in the period under report
Marketable securities (at fair value through other comprehensive income)
Currency translation foreign operations
33
-256
80
1,598
-2,512
853
-2,394
199
-1,772
- 458
281
22
26
742
868
-2,299
- 102
- 1,557
766
451
-1,301
2,350
-507
2,801
- 1,808
102
Items not expected to be reclassified to the income statement in the future
2022
Income taxes
in € million
2022
2023
thereof PwC GmbH
PwC International
Services provided during the financial year 2023 by the Group
auditor PricewaterhouseCoopers GmbH Wirtschaftsprüfungs-
gesellschaft, Frankfurt am Main, Munich branch, on behalf of
BMW AG and subsidiaries under its control relate to the audit of
financial statements and other attestation services. The audit of
financial statements comprises mainly the audit of the Group Fi-
nancial Statements and the separate financial statements of
BMW AG and subsidiaries, and all work related thereto, including
the review of the Interim Group Financial Statements. Other at-
testation services include mainly project-related audits, comfort
letters and statutorily prescribed, contractually agreed or volun-
tarily commissioned attestation work. No tax advisory or other
services were provided in the financial year 2023 or in the previ-
ous year.
Fee expense
Audit of financial statements
Other attestation services
Tax advisory services
Other services
in € million
The fee expense pursuant to § 314 (1) no. 9 HGB recognised in
the financial year 2023 for the Group auditor and the PwC net-
work of audit firms amounted to € 19 million (2022: € 20 mil-
lion) and consists of the following:
17 Fee expense for the Group auditor
2023
1,601
retail customers under finance leases
Selling profit on the sale of vehicles leased to
1,025
1,127
Financial income on the net investment in
finance leases
4
4
Income from variable lease payments for
finance leases
81
110
1,919
2022
18
17
Other comprehensive income for the period after tax comprises
the following:
19 Disclosures relating to the statement of comprehensive
income
NOTES TO THE STATEMENT OF COMPREHENSIVE INCOME
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
180
Variable lease payments are based on distance driven. The
agreements have, in part, extension and purchase options.
These amounts relate mainly to public sector grants aimed at the
promotion of regional structures as well as to subsidies received
for plant expansions and development.
18 Government grants and government assistance
Income from asset-related and performance-related grants,
amounting to € 98 million (2022: € 118 million) and € 215 mil-
lion (2022: € 172 million) respectively, was recognised in the in-
come statement in 2023.
6
6
20
19
2
1
1
5
5
Remeasurement of the net liability for defined benefit pension plans
Notes to the Group Financial Statements
Е
Other Information
Netting
Other variances included a net positive amount of € 304 million
(2022: net negative amount of € 54 million) attributable to de-
ferred tax effects relating to prior periods.
The tax increases due to non-deductible expenses were mainly
attributable to withholding tax expenses.
The tax reductions due to tax-exempt income reported for the
previous year related primarily to the non-tax-relevant gain rec-
ognised in conjunction with the remeasurement of the BMW
Group's previous at-equity interest in BMW Brilliance.
Valuation allowances on tax loss carryforwards and temporary differences
Valuation allowances on capital losses
21.0%
28.8%
Effective tax rate
4,927
4,931
Actual tax expense
18
266
Other variances
Deferred taxes
Eliminations
-7
Effects from tax rate changes
Liabilities
18
-284
Tax expense (+) / benefits (-) for prior years
Provisions
44
44
Capital losses
Equity accounted
802
632
Non-deductible expenses
31
Net
Deferred tax assets
Deferred tax liabilities
4,575
11
← = Q
4,636
5,012
464
461
212
182
3,495
3,334
1,281
1,478
5
3
3,686
2,895
2023
2022
2023
2022
18
15
Tax loss carryforwards
4,674
263
264
1,987
1,457
394
378
5,176
- 2,203
-217
Tax-exempt income
15.1
15.8
15.8
solidarity surcharge
Municipal trade tax rate
German income tax rate
Corporate tax rate including
5.5
5.5
Solidarity surcharge
15.0
15.0
Corporate tax rate
2022
2023
in %
Income from the reversal of impairment
Two calculation have been analysed for the BMW Group, taking
into account the statutory temporary simplification rules (for so-
called "transitional safe harbours"). Based on the results of the
analysis to date, the tax expense arising in the relevant jurisdic-
tions is estimated to be immaterial for the BMW Group. The BMW
Group is already applying the exemption relating to the recogni-
tion of deferred tax assets and liabilities in connection with Pillar
Two. Further information is provided in 7 note 5.
The BMW Group falls within the scope of the OECD Pillar Two
model rules aimed at ensuring a global minimum taxation rate of
15%. Under these rules, the BMW Group will be required pay a
top-up tax to the extent that the Pillar Two specific tax rate in
each jurisdiction where it operates falls below the minimum rate
of 15%. The Pillar Two model rules have been implemented in
Germany with effect for financial years beginning after 31 De-
cember 2023. The BMW Group is therefore not subject to a Pillar
Two tax expense for the financial year 2023. The impact of the
Pillar Two model rules from the financial year 2024 onwards is
currently being assessed. For this purpose, the jurisdictions that
could be affected by a top-up tax based on a preliminary Pillar
4,931
4,927
1,167
Sundry other financial result
- 1,215
1,167
15.1
Other financial result
8,937
In addition to the investment result, the other financial result in-
cludes income and expenses arising on the measurement of
stand-alone derivatives and fair value hedge relationships, as
well as income and expenses from the measurement and sale of
marketable securities and shares in investment funds.
The year-on-year decrease in the result on investments was due
in particular to the exceptionally high remeasurement gain rec-
ognised in the previous year on the BMW Group's previous at-
equity interest in BMW Brilliance in conjunction with that entity's
full consolidation in the financial year 2022. Further information
on this matter is provided in the BMW Group Report 2022, note [3] to
the Group Financial Statements.
The negative sundry other financial result was attributable in par-
ticular to the unfavourable fair value development of interest rate
hedges as a consequence of the decline in yield curves and port-
folio effects. The previous year's figure included the positive im-
pact of interest rate hikes in the financial year 2022.
The tax expense was reduced by € 33 million (2022: € 71 mil-
lion) as a result of utilising tax loss carryforwards, for which de-
ferred assets had not previously been recognised and in conjunc-
tion with previously unrecognised tax credits and temporary
differences.
The tax income resulting from the change in the valuation allow-
ance on deferred tax assets relating to tax losses available for
carryforward and temporary differences amounted to € 19 mil-
lion (2022: expense of € 103 million).
- 1,272
4,573
30.9
Deferred taxes for non-German entities are calculated on the ba-
sis of the relevant country-specific tax rates. These ranged in the
financial year 2023 between 9.0% and 40.0% (2022: between
9.0% and 40.0%).
Sundry other assets
Tax increases (+) / tax reductions (-) due to:
Other investments
-1,047
-786
Variances due to different tax rates
Leased products
Property, plant and equipment
7,264
5,283
Expected tax expense
Intangible assets
30.9%
30.9%
in € million
23,509
17,096
176
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
30.9
← = Q
The allocation of deferred tax assets and liabilities to balance
sheet line items at 31 December is shown in the following table:
in € million
Profit before tax
Tax rate applicable in Germany
2023
2022
The difference between the expected tax expense based on the
underlying tax rate for Germany and actual tax expense is ex-
plained in the following reconciliation:
1,027
19
4,162
Deferred tax assets and deferred tax liabilities are netted for
each relevant tax entity if they relate to the same tax authorities.
Capital losses available for carryforward in the UK which do not
relate to ongoing operations decreased due to changes in con-
solidated group companies and exchange rate factors and stood
at € 1,845 million (2022: € 1,856 million) at the end of the year
under report. As in previous years, deferred tax assets recog-
nised on these tax losses amounting to € 461 million (2022:
€ 464 million) were fully written down since they can only be uti-
lised against future capital gains.
A net surplus of deferred tax assets over deferred tax liabilities
amounting to € 95 million (2022: € 1,966 million) is reported for
entities that have suffered tax losses in the financial year 2023
or the preceding year. The basis for the recognition of deferred
taxes is the BMW Group business model or management's as-
sessment that there is material evidence that the entities will
generate future taxable profit, against which deductible tempo-
rary differences can be offset.
Tax loss carryforwards relating to Germany and foreign opera-
tions amounted to € 601 million (2022: € 711 million). This in-
cludes tax losses available for carryforward amounting to
€ 382 million (2022: € 416 million), on which a valuation allow-
ance of € 129 million (2022: € 141 million) was recognised on
the related deferred tax asset. Of these loss carryforwards,
€ 349 million (2022: € 382 million) can be used indefinitely,
while € 33 million (2022: € 34 million) expires after one to three
years.
Notes to the Group Financial Statements
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
177
1,007
The change in deferred taxes relating to amounts recognised
with income effect or without income effect is shown in the fol-
lowing reconciliation:
366
2,797
1,758
2,431
- 13,740
-13,471
- 13,740
- 13,471
-464
-461
-245
-185
16,505
800
16,207
2,765
in € million
Deferred taxes at 1 January (assets (+)/ liabilities (-))
Deferred tax expense (-)/ income (+) recognised through income statement
Change in deferred taxes recognised directly in equity
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
178
-
The tax returns of BMW Group entities are checked regularly by
German and foreign tax authorities. Taking account of numerous
factors including interpretations, commentaries and legal deci-
sions relating to the various tax jurisdictions as well as past ex-
perience adequate provision has been made, to the extent
identifiable and probable, for potential future tax obligations.
-
Deferred tax liabilities on expected dividends amounted to
€ 187 million (2022: € 199 million) and related primarily to divi-
dends from foreign subsidiaries.
- 1,007
- 1,312
-62
- 25
-366
-3
- 326
24
- 190
thereof relating to fair value gains and losses on financial instruments and marketable securities recognised directly in equity
thereof relating to the remeasurements of net liabilities for defined benefit pension plans
thereof from currency translation
Effects in connection with the first-time consolidation of BMW Brilliance
Exchange rate impact and other changes
Deferred taxes at 31 December (assets (+) / liabilities (-))
The effects in connection with the first-time consolidation of
BMW Brilliance in the previous year gave rise primarily to net de-
ferred tax liabilities relating to the remeasurement of the assets
acquired and liabilities assumed as part of the purchase price
allocation.
No deferred taxes are recognised on taxable temporary differ-
ences arising from investments in subsidiaries, associated com-
panies and joint ventures if the BMW Group is able determine the
timing of the reversal of the temporary differences and it is prob-
able that the temporary differences will not reverse in the fore-
seeable future, in particular in view of the fact that there is no in-
tention to distribute the profits, but rather to use them to maintain
substance and reinvest in the companies concerned. Temporary
differences of this kind, for which no deferred taxes were recog-
nised, amounted to € 36,081 million (2022: € 32,882 million).
No computation was made of the potential impact of income
taxes on the grounds of proportionality.
2023
16,548
2022
744
439
142
227
- 519
203
- 1,007
1,880
16,268
4,379
2,332
allowances and write-downs
85
760
942
Other
Loans to third parties
4,146
4,134
32
5,469
5,677
6,272
Marketable securities and investment funds
6,560
7,112
7,107
Derivative instruments
Financial assets
20
24,452
138
115
77
2
170
- 1
-15
-87
31.12.2023
6,385
6,232
thereof current
due within one year
due between one and two years
due between two and three years
due between three and four years
due between four and five years
thereof non-current
23,779
in € million
31.12.2022
31.12.2023
- 103
2,145
599
35
935
576
Impairment allowances at 31 December 2022
42
2
-3
96
-53
134
3
2
44
Derecognition and origination of receivables
Write-off of receivables
Changes in risk parameters
Other changes
188
To Our Stakeholders Combined Management Report
due later than five years
Gross investment in finance leases
due between one and two years
due between two and three years
due between three and four years
due between four and five years
due later than five years
due within one year
in € million
Finance leases are analysed as follows:
The estimated fair value of vehicles held as collateral for credit-
impaired receivables at the end of the reporting period totalled
€ 488 million (2022: € 455 million). The carrying amount of as-
sets held as collateral and taken back as a result of payment de-
fault amounted to € 19 million (2022: € 35 million).
Impairment allowances include € 95 million (2022: € 99 million)
on credit-impaired receivables relating to finance leases.
An additional risk allowance for expected credit losses was rec-
ognised to take account of the negative impact on retail customer
and dealership business, to the extent not covered by the stand-
ard loss provisioning models (post-model adjustments). The
level of the additional risk allowance is reviewed regularly and
has been reduced compared to the previous year, as the weaker
macroeconomic environment has already been partially taken
into account in the standard models. However, in view of the on-
going unfavourable macroeconomic prospects and geopolitical
uncertainties, the additional risk allowance remains in the mid-
three-digit million range.
Notes to the Group Financial Statements
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
BMW Group Report 2023
26 Financial assets
Financial assets comprise:
59
2,170
154
thereof right-of-use assets from
leases
1,229
1,271
2,248
430
1
15
395
-27
2,295
3,519
448
91
405
-4
1
49
156
- 1,967
4,050²
405
-81
3,412
construction in progress
Advance payments made and
2
91
89
67
42
47
- 1
63
43
-54
3,524
office equipment
30,738
46,425
2,773
1,520
3,221
-471
44,928
Plant and machinery
3,029
2,790
1,659
299
473
-27
1,512
-222
3,726
-14
2,732
Other facilities, factory and
838
1,273
444
303
141
1,717
1
3
701
-3
979
thereof right-of-use assets from
leases
14,190
14,929
31,496
43
5,818
5,8183
3,412
42
1,152
35
101
-16
1,102
Participations
291
234
89
-1
90
323
58
6
13
115
- 19
189
1 Thereof expense amounting to € 115 million recognised in profit or loss.
1,351
1,197
278
- 19
115
12
-6
132
93
107
-22
1,483
Other investments
1,060
963
1,475
4,449
381
Investments in non-consolidated
5,117
-323
41,180
10,073
77,719
52,948
18,338
18,927
-534
52,893
Leased products
3,760
8,674
518
- 1,019
73,306
Property, plant and equipment
3,521
42,453
35,266
32,126
420
443
240
240
683
145
168
subsidiaries
660
Investments accounted for using the
42,820
43,118
9,830
5,748
5,591
-86
equity method
2 Including advance payments for right-of-use assets amounting to € 79 million.
422
-114
- 1,772
- 1,772
- 82
- 104
22
26
26
- 1,115
442
- 1,557
546
-220
766
1,960
- 841
199
2,801
199
305
20 Analysis of changes in Group tangible, intangible and investment assets 2023
NOTES TO THE BALANCE SHEET
Notes to the Group Financial Statements
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
182
1,598
- 790
2,388
-2,512
- 2,817
- 1,272
536
- 1,808
In 2023, other comprehensive income from equity accounted in-
vestments was a positive amount of € 26 million and is reported
in the Group Statement of Changes in Equity within currency
translation differences. In the previous year, the amounts re-
ported for equity accounted investments comprised a negative
amount of € 395 million within currency translation differences
and positive amounts of € 220 million and € 93 million within
derivative financial instruments and costs of hedging respec-
tively.
Other comprehensive income
Other comprehensive income from equity accounted investments
Currency translation foreign operations
Costs of hedging
Marketable securities (at fair value through other comprehensive income)
Derivative financial instruments
Remeasurement of the net liability for defined benefit pension plans
in € million
Income taxes on components of other comprehensive income
are as follows:
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
BMW Group Report 2023 To Our Stakeholders Combined Management Report
181
The hedging effects of derivative financial instruments that are
subsequently recycled to the acquisition cost of inventories are
not included in other comprehensive income after tax.
2023
2022
Before tax
- 109
45
- 154
78
- 35
113
745
Acquisition and manufacturing cost
After tax
1,077
- 118
24
-142
Before tax
After tax
Income taxes
Income taxes
-332
Depreciation and amortisation
Carrying amount
Additions due
20,022
13,954
1,228
3,857
-104
11,429
33,976
1,386
2,766
-609
33,205
Intangible assets
8,087
6,191
3,270
21,776
Land, titles to land, buildings, including
buildings on third party land
21,442
4,541
thereof right-of-use assets from
leases
13,295
13,248
8,709
359
1
76
996
8,147
21,957
538
356
998
112
-413
-74
444
1,470
1,980
23,028
1,152
2,604
21,576
Development costs
1.1.2023 differences
Disposals 31.12.2023
cations
Translation
Reclassifi-
consolidated
companies Additions
1.1.2023 differences
in € million
Translation
to changes in
9,449
year
2,387
Current Reclassifi-
cations adjustments¹
Value
9,461
234
162
-534
10,067
Other intangible assets
1,562
- 104
1,487
-75
1,562
Goodwill
12,127
12,344
Disposals 31.12.2023 31.12.2023 31.12.2022
1,152
10,684
1,487
3 Including assets under construction amounting to € 4,565 million.
183
BMW Group Report 2023
4,127
Receivables from companies in which an
Advance payments to suppliers
11
259
thereof non-current
3
2
investment is held
48
50
Inventories
23,719
20,005
thereof current
4,162
4,159
Net carrying amount
693
- 16
Raw materials and supplies
3,722
3,424
Collateral assets
455
454
Allowances for impairment of stage 3
-52
-43
Vehicles held for sale in the
Deposits
98
114
financial services business
524
4,125
Other assets (financial instruments)
3,506
9,133
10,632
1,537
1,030
7,596
9,602
thereof non-current
thereof current
* Presentation adjusted compared to previous year.
Collateral assets comprise mainly customary collateral (banking
deposits) arising on the sale of asset-backed financing instru-
ments.
Out of the total amount recognised for inventories at 31 Decem-
ber 2023, inventories measured at net realisable value
amounted to € 1,346 million (2022: € 1,940 million). Write-
downs to net realisable value in the financial year 2023
amounted to € 189 million (2022: € 112 million), while rever-
sals of write-downs amounted to € 13 million (2022: € 11 mil-
lion).
The expense recorded in conjunction with inventories during the
financial year 2023 amounted to € 81,497 million (2022:
€ 76,014 million).
At 31 December 2023, the carrying amounts of inventories ex-
pected to be realised after more than 12 months amount to € 86
million (2022: € 98 million).
Impairment allowances on trade receivables in accordance with
IFRS 9 developed as follows:
In the case of trade receivables, collateral is generally held in the
form of vehicle documents and bank guarantees so that the risk
of bad debt loss is very limited.
Other assets
1,310
1,457
Sundry other assets*
5,971
Other taxes
1,987
1,846
Advance payments'
847
156
- 18
Expected reimbursement claims
872
Prepaid expenses
517
477
Other assets (non-financial instruments)
4,170
3,351
819
Allowances for impairment of stage 2 -
simplified approach
1,036
642
836
688
29
19
Income tax assets totalling € 1,199 million (2022: € 1,096 mil-
lion) include claims amounting to € 29 million (2022: € 26 mil-
lion), which are expected to be settled after more than one year.
Claims may be settled earlier than this depending on the timing
of the underlying proceedings.
Net investment in finance leases without
loss allowances
22,080
21,761
Unrealised interest income
2,372
2,018
Loss allowances
458
435
Net investment in finance leases
3,914
3,935
27 Income tax assets
5,061
3,438
2,926
4,386
18
34
404
379
21,622
5,518
1,387
3,073
4,131
5,164
5,857
5,694
5,191
8,237
Expenses for impairment losses and income from the reversal of
impairment losses are not significant for the BMW Group and are
therefore not reported separately in the income statement.
21,326
BMW Group Report 2023
Return right assets for future
leased products
2,263
4,317
Finished goods and goods for resale
Work in progress, unbilled contracts
16,103
12,563
Gross carrying amount
31.12.2023
31.12.2022
4,232
4,186
3,190
3,235
Receivables from subsidiaries
in € million
31.12.2022
31.12.2023
in € million
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
189
28 Other assets
29 Inventories
Inventories comprise the following:
30 Trade receivables
Trade receivables comprise the following:
in € million
31.12.2023
31.12.2022
Other assets comprise:
in € million
2023
2022
1,474
-31
948
10,067
443
254
8,349
-68
1,975
Other intangible assets
380
1,562
5
5
1,562
411
1,980
8,087
1,027
buildings on third party land
Land, titles to land, buildings, including
12,980
21,776
11,429
946
3,739
5
- 31
33,205
978
3,073
9,546
- 83
21,647
Intangible assets
8,667
16,886
1,197
385
in € million
business
Translation
Additions
arising on
Carrying amount
Depreciation and amortisation
Acquisition and manufacturing cost
Analysis of changes in Group tangible, intangible and investment assets 2022
Notes to the Group Financial Statements
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
1.1.2022 differences combinations
Additions
Reclassifi-
cations
Translation
Goodwill
11,573
12,127
9,449
530
2,265
7,714
- 15
Disposals 31.12.2022 31.12.2022 31.12.2021
Current
year
1.1.2022 differences
Disposals 31.12.2022
21,576
530
2,819
19,287
Development costs
Reclassifi-
Value
cations adjustments¹
31.12.2022
36
934
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = 9
31 Equity
Number of shares issued
Shares in circulation at 1 January
Shares issued in conjunction with Employee Share Programme
Less: shares repurchased and withdrawn from circulation
Shares in circulation at 31 December
Treasury shares
Number of shares issued at 31 December
BMW AG's issued share capital totalling € 638,716,075 com-
prises 579,795,667 shares of common stock, each with a par
value of € 1, and 58,920,408 shares of non-voting preferred
stock, each with a par value of € 1. The issued share capital and
the number of shares were reduced by € 24,123,400 in 2023
following the redemption of 22,199,529 shares of common
stock and 1,923,871 shares of preferred stock. These treasury
shares had been acquired in conjunction with the first share buy-
back programme 2022/2023. The amount of the share capital
reduction was reclassified to capital reserves.
All Company stock is issued to bearer. Preferred stock, to which
no voting rights are attached, bears an additional dividend of
€ 0.02 per share.
BMW AG is authorised to issue shares of non-voting preferred
stock amounting to nominal € 5.0 million prior to 15 May 2024.
At the end of the reporting period, 0.3 million shares of these
amounting to € 0.3 million remained available for issue.
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
190
Balance at 1 January
59
32
Allocated
17
34
Reversed
Capital reserves
-2
Utilised
-3
-2
Exchange rate impact and other changes
Balance at 31 December
-1
70
177
-5
2,830
Capital reserves include mainly premiums arising from the issue
of shares, and totalled € 2,456 million (2022: € 2,432 million).
Common stock
At the Annual General Meeting of BMW AG held on 11 May
2022, the shareholders authorised the Board of Management to
acquire treasury shares via the stock exchange, up to a maxi-
mum of 10% of the share capital in place at the date of the res-
olution and to redeem those shares without any further resolu-
tion by the Annual General Meeting. The buyback authorisation
remains valid until 10 May 2027.
In conjunction with this authorisation, on 30 June 2022 the
Board of Management of BMW AG resolved the first of a number
of share buyback programmes via the stock exchange. Under
this initial programme, BMW AG was authorised to acquire treas-
ury shares of common and preferred stock amounting to a max-
imum of € 1.85 billion and € 0.15 billion respectively. The share
buyback programme was launched in July 2022 and completed
on 30 June 2023.
On 3 May 2023, the Board of Management of BMW AG ap-
proved a second share buyback programme via the stock ex-
change. Under this programme, BMW AG is authorised to ac-
quire treasury shares of common and preferred stock amounting
to a maximum of € 1.65 billion and € 0.35 billion respectively.
The programme commenced immediately following completion
of the first buyback programme and will run until 31 December
2025 at the latest.
3,363
thereof right-of-use assets from
leases
9,434
13,295
8,147
339
1,000
34
7,452
21,442
412
1,168
Treasury shares
Accumulated other equity comprises amounts recognised di-
rectly in equity resulting from the translation of the financial
statements of foreign subsidiaries, changes in the fair value of
derivative financial instruments and marketable securities, costs
of hedging recognised directly in equity as well as the related de-
ferred taxes.
Accumulated other equity
The proposed distribution was not recognised as a liability in the
Group Financial Statements.
2023
2022
2023
2022
59,395,329
1,417,813
57,977,516
942,892
58,920,408
59,404,304
1,439,975
1,448,950
59,395,329
1,448,950
60,844,279
Preferred stock
586,683,189
11,105,885 15,312,007
575,577,304 586,683,189
4,218,363 15,312,007
579,795,667 601,995,196
Revenue reserves
Revenue reserves include the non-distributed earnings of com-
panies consolidated in the Group Financial Statements. In addi-
tion, remeasurements of the net defined benefit obligation for
pension plans are also presented in revenue reserves.
The Board of Management and the Supervisory Board propose
that the unappropriated profit of BMW AG for the financial year
2023 amounting to € 3,802,488,470.32 be utilised to pay a div-
idend of € 6.02 for each share of preferred stock entitled to re-
ceive a dividend, and a dividend of € 6.00 for each share of com-
mon stock entitled to receive a dividend, and that the remaining
amount be transferred to revenue reserves. Based on the num-
ber of shares at 31 December 2023 entitled to receive a divi-
dend, the proposed dividend represents a total payout of € 3.8
billion.
The proposal for the appropriation of unappropriated profit takes
into account 4,218,363 treasury shares of common stock and
942,892 treasury shares of preferred stock held directly or indi-
rectly by the Company at 31 December 2023. In accordance with
§ 71b of the German Stock Corporation Act, these shares are not
entitled to receive a dividend.
The number of shares entitled to receive a dividend may change
prior to the Annual General Meeting. In this case, based on an
unchanged distribution per share of common and preferred stock
entitled to receive a dividend, a correspondingly amended reso-
lution concerning the appropriation of profit will be submitted to
the Annual General Meeting.
601,995,196
-1
-24
-2
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
21 Intangible assets
Intangible assets mainly comprise capitalised development costs
on vehicle, module and architecture projects as well as rights re-
acquired in conjunction with a business acquisition. Also included
are subsidies for tool costs, licences, purchased development
projects, emissions allowances, software and purchased cus-
tomer bases.
Other intangible assets include brand-name rights amounting to
€ 96 million (2022: € 95 million) which are allocated to the Au-
tomotive segment and are not subject to scheduled amortisation
since their useful life is deemed to be indefinite. The brand-name
rights are, to an extent, subject to a limited right of ownership.
Intangible assets also include goodwill of € 33 million
(2022: € 33 million) allocated to the Automotive excluding BMW
Brilliance cash-generating unit (CGU) and goodwill of
€ 1,107 million (2022: € 1,182 million) allocated to the BMW
Brilliance CGU. Goodwill amounting to € 347 million
(2022: € 347 million) related to the Financial Services CGU.
As in the previous year, there was no requirement to recognise
impairment losses or reversals of impairment losses on intan-
gible assets in 2023.
As in the previous year, no financing costs were recognised as a
cost component of intangible assets in 2023.
In 2023, government grants totalling € 2 million (2022: €0 mil-
lion) were deducted from the acquisition cost of intangible assets
for the first time. These grants include public sector funds aimed
at promoting development.
22 Property, plant and equipment (including right-of-use
assets arising from leasing)
No impairment losses were recognised in 2023, as in the previ-
ous year.
As in the previous year, no financing costs were recognised as a
cost component of property, plant and equipment in 2023.
Responsibility Statement and Auditor's Report
Right-of-use assets arising from leases of land and buildings re-
late primarily to logistics and office premises and, to a lesser ex-
tent, to selling and production premises. In order to secure these
premises and, in the interests of flexibility, the property rental
agreements concerned often contain extension and termination
options.
The regular review of the useful lives of items of property, plant
and equipment subject to systematic depreciation takes into ac-
count the assumptions contained in the long-term corporate
plan, and hence the ongoing transformation towards electric mo-
bility as well as the associated short- and medium-term impact
on the product portfolio. The review of useful lives did not lead to
any material adjustments in the financial year 2023.
23 Leased products
Minimum lease payments of non-cancellable operating leases
fall due as follows:
in € million
within one year
31.12.2023
31.12.2022
9,601
9,606
between one and two years
6,872
6,522
between two and three years
3,875
In 2023, government grants totalling € 121 million (2022:
€0 million) were deducted from the acquisition cost of property,
plant and equipment for the first time. These amounts relate
mainly to public sector grants aimed at the promotion of regional
structures as well as to subsidies received for plant expansions.
3,465
Group Financial Statements
BMW Group Report 2023
27
-36
57
1,102
32
-21
23
- 8
42
1,060
988
Other investments
1,360
To Our Stakeholders Combined Management Report
36
60
1,483
119
- 18
23
- 8
132
1,351
1,241
1 Thereof expense amounting to € 23 million recognised in profit or loss.
2 Including advance payments for right-of-use assets amounting to € 160 million.
3 Including assets under construction amounting to € 2,502 million.
184
147
1,020
between three and four years
between four and five years
later than five years
Minimum lease payments
1,512
The at-equity loss reported by Solid Power for 2023 amounted
to € 12 million (2022: loss of € 19 million). In both financial
years, the carrying amount of the investment was written down
in the BMW Group Financial Statements.
in € million
DISCLOSURES RELATING TO
THE INCOME STATEMENT
Profit/loss after tax
2023
2022
-43
- 12
thereof from continuing operations
Total comprehensive income
-43
-12
-43
- 12
THERE
The BMW Group holds shares in Solid Power, an industry-lead-
ing manufacturer of solid-state batteries for electric vehicles.
Joint development partnerships are in place with Solid Power
with a view to securing the supply of solid-state batteries for fu-
ture generations of electric vehicles. The investment meets the
criteria of an associated company and is accounted for using the
equity method.
Together with AUDI AG, Mercedes-Benz Group AG and other
companies, the BMW Group holds shares in THERE. HERE In-
ternational B.V. (HERE) is an associated company of THERE.
HERE's digital maps are laying the foundations for the next gen-
eration of mobility and location-based services, providing the ba-
sis for new assistance systems and, ultimately, fully automated
driving.
186
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
Financial information relating to equity accounted investments is
summarised in the following tables (from a 100% perspective):
in € million
2023
YOUR NOW
The at-equity loss reported for THERE for 2023 amounted to
€ 77 million (2022: loss of € 40 million). The loss mainly arose
due to impairment losses recognised in relation to THERE's as-
sociated company HERE.
1,813
Solid Power
In 2023, the BMW Group, together with the Mercedes-Benz
Group AG, the Stellantis Group, the Honda Group, the Hyundai
Motor Group and the General Motors Company Group, founded
the company IONNA in Canada with the aim of developing a
charging network in North America. The BMW Group holds
16.67% of the associated company IONNA.
305
265
52
38
22,518
21,408
Impairment losses amounting to € 553 million
(2022:
€ 527 million) were recognised on leased products in 2023 as a
consequence of changes in residual value expectations. Income
from the reversal of impairment losses amounted to € 274 mil-
lion (2022: € 282 million).
In 2023, public sector grants totalling € 252 million
(2022: €0 million) were deducted from the acquisition cost of
leased products for the first time. These amounts relate mainly
to investment tax credits in the form of tax credits for electric ve-
hicles. It is expected that the investment tax credits can be uti-
lised. The actual utilisation of investment tax credits will, how-
ever, depend on the extent to which they can be offset against
income tax liabilities and is therefore subject to a degree of
uncertainty.
185
BMW Group Report 2023
To Our Stakeholders Combined Management Report
IONNA's earnings are not significant for the BMW Group Finan-
cial Statements 2023.
Group Financial Statements
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
24 Investments accounted for using the equity method
Investments accounted for using the equity method comprise an
interest in the joint venture YOUR NOW Holding GmbH (YOUR
NOW), Munich, as well as interests in the associated companies
IONITY Holding GmbH & Co. KG (IONITY), Munich, IONNA LLC
(IONNA), Torrance, Solid Power Inc. (Solid Power), Wilmington,
Delaware and THERE Holding B.V. (THERE), Rijswijk.
YOUR NOW
Together with Mercedes-Benz Group AG, the BMW Group offers
mobility services via the YOUR NOW joint venture.
The at-equity loss reported for YOUR NOW for the financial year
2023 amounted to € 82 million (2022: loss of € 357 million). In
the previous year, impairment losses were recognised in relation
to the YOUR NOW subsidiary FREE NOW.
IONITY
The BMW Group operates the entity IONITY in collaboration with
Mercedes-Benz Group AG, the Ford Motor Company, the
Volkswagen Group and the Hyundai Motor Group. IONITY'S
business model envisages the construction and operation of
high-performance charging stations for battery-powered vehi-
cles in Europe.
On 1 November 2021, a contract was signed with GRP III HPC
Lux S.à.r.l. (Blackrock) for the provision of financing amounting
to € 500 million for the further expansion of the charging net-
work. The existing shareholders are also investing an additional
€ 200 million. With effect from 28 April 2022, following comple-
tion of the transaction, Blackrock became IONITY's largest
shareholder. As a result, the former joint venture became an as-
sociated company of the BMW Group.
The at-equity profit reported for IONITY amounted to € 12 mil-
lion (2022: €5 million). This includes remeasurement effects
arising in conjunction with the transaction with Blackrock.
IONNA
Responsibility Statement and Auditor's Report
Participations
253
291
48
7
979
14
134
7
141
838
131
Other facilities, factory and
office equipment
3,251
40
787
164
155
479
3,524
2,344
28
370
447
2,295
1,229
907
thereof right-of-use assets from
leases
131
2
393
1
7
145
- 11
625
701
137
4,541
1,134
484
106
1,512
3,029
2,229
Plant and machinery
41,739
-1
268
3,563
1,407
4,542
44,928
31,574
213
3,457
I
4,506
30,738
14,190
10,165
thereof right-of-use assets from
leases
2,493
68
48
154
4,827
5,890
3,4123
1,884
5,292
5,146
41,180
32,126
10,073
22,390
42,820 44,700
Investments accounted for using the
equity method
5,352
402
5,094
182
660
240
420
5,112
Investments in non-consolidated
subsidiaries
340
9
35
3
381
87
3
90
240
9,147
52,893
18,077
69
1
41
I
48
63
91
62
Advance payments made and
construction in progress
1,884
29
1,585
Property, plant and equipment
63,760
373
7,072
2,6472
7,537
- 2,730
3
3,412
5,436
73,306
41,370
275
Leased products
53,847
1,096
16,027
IONITY
THERE
112
2023
31.12.2022
Stage 1
Stage 2
Stage 3
65,733
64,382
21,622
21,326
in € million
General
Simplified
Total
87,355
*Including operating leases.
85,708
576
935
35
599
2,145
Reclassification to Stage 1
5
-47
-1
-43
Reclassification to Stage 2
-23
-39
Impairment allowances at 1 January 2023
172
Receivables from sales financing
Credit financing for retail customers and
dealerships*
-53
- 339
-134
- 3
51
24*
2
- 9
-117
-776°
-54
53
- 337
Finance lease receivables
- 143
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
25 Receivables from sales financing
Receivables from sales financing comprise the following:
Impairment allowances on receivables from sales financing in
accordance with IFRS 9, which only arise within the Financial
Services segment, developed as follows:
↑
= Q
in € million
31.12.2023
187
Reclassification to Stage 3
-3
-52
For the purposes of ABS financing, only the senior tranches of
the issued securities are sold to external investors. Subordinated
tranches are retained by the BMW Group. Furthermore, the BMW
Group retains the exposure to interest rate risk in many transac-
tions for which it concludes corresponding interest rate deriva-
tives. The risk of delayed payments by debtors is reduced in the
majority of ABS financing agreements by cash reserves financed
by the BMW Group. Due to the risks remaining with the BMW
Group, the ABS financing arrangements did not result in the de-
recognition of the securitised financial assets.
The carrying amount of receivables from sales financing trans-
ferred, but not derecognised at 31 December 2023 stood at
€ 15,152 million (2022: € 14,487 million). The fair value of
those receivables
date
at that
€ 15,332 million
(2022: € 14,428 million).
was
The carrying amount of the corresponding liabilities from asset-
backed financing transactions at 31 December 2023 stood at
€ 12,089 million (2022: € 11,603 million). The fair value of
these liabilities at that date was € 12,148 million
(2022: € 11,635 million).
in € million
Reclassification to Stage 3
Stage 1
Stage 2
Stage 3
General
Simplified
Total
Impairment allowances at 1 January 2022
As part of its ABS financing activities, the BMW Group transfers
some of its receivables from sales financing – primarily retail cus-
tomer and dealership financing receivables - to structured com-
panies, which in turn securitise them and place them on the cap-
ital market as collateralised securities.
447
35
567
1,599
Reclassification to Stage 1
3
- 22
- 2
- 21
Reclassification to Stage 2
- 18
241
- 37
186
550
2,189
643
36
215
159
Derecognition and origination of receivables
54
26
2
-20
62
Write-off of receivables
-1
-24
1
-98
-124
Changes in risk parameters
Other changes
- 8
- 5
-1
-2
- 16
- 19
- 138
2
2022
- 11
-166
Impairment allowances at 31 December 2023
581
929
-54
- 797
234
- 134
Current assets
Non-current assets
DISCLOSURES RELATING TO THE BALANCE SHEET
2022
2023
2022
137
129
91
121
81
2
RECONCILIATION OF AGGREGATED FINANCIAL INFORMATION
thereof cash and cash equivalents
Assets
316
738
519
1,112
987
Provisions and liabilities
119
157
165
107
139
129
Net assets
196
Equity
Non-current financial liabilities, provisions and liabilities
Current financial liabilities, provisions and liabilities
41
36
- 168
26
28
858
973
412
573
159
77
1
3
113
96
144
77
1
3
162
164
218
128
986
1,109
357
574
98
68
77
159
124
412
130
80
11
598
46
32
- 131
-774
-27
- 51
-1
- 1
3
23
18
2
2
573
9
8
3
- 5
25
8
- 168
- 800
-54
- 53
- 339
357
271
2
Total comprehensive income
* Prior year figures restated.
973
858
Group's interest in net assets
38
87
62
299
255
Carrying amount
38
78
87
62
78
255
Other comprehensive income
299
thereof from discontinued operations
thereof from continuing operations
Income taxes
Interest expense
Profit/loss after tax
Profit/loss before financial result
Scheduled depreciation
Revenues
DISCLOSURES RELATING TO THE INCOME STATEMENT
Interest income
5
5
5
100
5
100
5
100
5
Jens Köhler
5
5
100
Gerhard Kurz
André Mandl
Anke Schäferkordt
Christoph M. Schmidt
Vishal Sikka
100
Sibylle Wankel
100
8
100
8
* Member of the Supervisory Board since 18 January 2023.
Susanne Klatten
5
1
4
1
80
5
5
5
5
5
100
5
5
100
Dominique Mohabeer
5
100
18
Other Information
To Our Stakeholders
In addition, key topics from the Board of Management's individual areas of
responsibility were on our agenda. Markets in the USA, Canada and Mexico as well as the
"fourth pillar" markets, in particular India, South Korea and Japan, were the subject of an in-
depth sales report. We discussed regional resilience and the growth strategy for these mar-
kets in great depth.
In the highly detailed risk report, we were brought up to date with the structure and working
methods of the risk management system. A key focus of the report was on geopolitical risks,
especially in the areas of purchasing/supply chains and sales markets as well as the
presentation of measures to mitigate risk. On the subject of information security with a focus
on IT security, we were informed about the organisation and functioning of the information
security management system and the structure of the IT security risk model, as well as the
measures derived from it and their effectiveness. The Board of Management also reported
on the business performance, sector-specific risk profile and current projects of the Finan-
cial Services segment. In addition, we received a report on key topics relating to the Group's
treasury system, such as funding, liquidity management, hedging strategies for price and
currency risks and the current state of share buyback programmes.
Chairman of the
Board of Management
Oliver Zipse
That is what the BMW Group stands for, like no other company. It is one of the reasons why
you, our shareholders, continue to stand by us.
At the BMW Group, we call it continuous progress.
We deliver what we say we are going to do – systematically, without making excuses, con-
sistently and reliably. Becoming a little bit better every day - that is what I expect from the
Company and from myself. That is how we move forward - bringing ambitious goals closer
and gradually turning them into reality. Society likes to talk about the transformation of mo-
bility and the automotive industry.
The Board of Management updated the members of the Supervisory Board biannually on
the current status of the level of attainment of defined financial KPIs and the KPIs for our
ESG targets, such as deliveries of all-electric automobiles, fleet carbon emissions, attrac-
tiveness as an employer, and diversity.
You know your Company: we always think ahead.
DEAR SHAREHOLDERS,
Strong today – strong tomorrow.
-
BOARD OF MANAGEMENT
STATEMENT OF THE
CHAIRMAN OF THE
← = Q
Remuneration Report
LADIES AND GENTLEMEN:
The Supervisory Board examined the Board of Management's remuneration in great de-
tail. It reviewed the target structure, maximum remuneration and expected remuneration for
the Board of Management for the financial year 2023, considering in particular the Group's
performance and the development of remuneration for senior executives and employees in
Germany over the past few years. Based on a comparative study conducted by an external
independent remuneration consultant and subsequent oral advice, we concluded that the
remuneration paid to Board of Management members for the financial year 2022 and the
target remuneration for 2023 were appropriate. Detailed information on the Board of Man-
agement's remuneration for the financial year 2023 is provided in the Remuneration Re-
port. In December 2023, following thorough preparation by the Personnel Committee, we
adopted the variable remuneration targets applicable to Board of Management members
for the financial year 2024, taking into account the budget for 2024, the long-term business
plan and the BMW Group's corporate strategy, including its ESG goals.
At each meeting, the Board of Management informed us about the current status of important
legal framework conditions and regulatory projects. These included in particular the EU's reg-
ulations regarding fleet carbon emissions in conjunction with the EU's "Fit for 55" package
and the Euro 7 emissions standards.
measures.
100
In December 2022, the Supervisory Board agreed to the plan to hold the Annual General
Meeting 2023 on a virtual basis in accordance with the regulations applicable at the time. In
March 2023, the detailed concept proposed by the Board of Management was approved.
With regard to the Annual General Meeting 2024, the Board of Management explained the
reasons for its decision in favour of the virtual format to the Supervisory Board.
Board. Further topics covered by the Board of Management's extensive report were market
strategies focusing particularly on China and Europe, the resilience of supply chains, and the
holistic, Group-wide performance programme. The report was rounded off with an analysis
of the competition and the outlook for the BMW Group's product portfolio.
At each meeting, the Board of Management updated us on current issues and projects re-
lated to strategy development work and implementation. The Board of Management also
reported on recent events such as the Group's successful appearance at the IAA Mobility in
Munich, the world premiere of the all-electric BMW iX2 and the BMW X5 Hydrogen at the
Japan Mobility Show, and the implementation of the major internal training programme
"Digital Boost".
The Supervisory Board also closely monitored developments relating to major strategic
collaborations. In 2023, the focus was once again on the Chinese market in particular, with
respect to both the BMW Brilliance Automotive joint venture and the cooperation with Great
Wall Motors for the local production of an all-electric MINI. We were also informed about the
status of the investments in YOUR NOW.
At Supervisory Board meetings we regularly addressed the topics of sustainability and
ESG. In a report on recent developments within the Group, the Board of Management in-
formed us about the cooperation with IONITY on rapid charging networks, the conversion of
BMW Group plants in Oxford and Swindon to enable the manufacturing of all-electric MINI
vehicles, and the successful outcome of the local referendum held in Irlbach-Straßkirchen on
the proposed construction of a new BMW Group plant to manufacture high-voltage batter-
ies, among other things. Furthermore, we were very pleased to note that the BMW Group
was presented with awards for activities relating to its sustainability strategy, conferred by a
management consultancy and the magazine "Automobilwoche", which voted the Group
number one in the automobile manufacturer category. Moreover, the Fair Pay Innovation
Lab awarded the BMW Group a gold medal in the category "Fair Pay Leader".
Within the framework of a presentation on the perception of the sustainability of the BMW
Group and its brands, we examined the objectives of the Group's corporate ESG strategy in
greater detail and looked at corporate communication regarding sustainability issues as well
as their media coverage. Regarding the energy transformation within the BMW Group as
well as decarbonisation at Group sites, we were informed in particular about the further im-
provement of energy management and the strategy involving the transition to renewable
energy sources at the BMW Group's existing production sites by 2030. We were also pro-
vided with reports on plans for new structures where no fossil fuels will be used (such as the
plant in Debrecen, where production is scheduled to begin in 2025).
14
BMW Group Report 2023
To Our Stakeholders
Combined Management Report Group Financial Statements
Report of the Supervisory Board
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
In the course of our work on corporate governance, we further developed and updated
parts of the Supervisory Board's skills matrix, which was introduced in 2022. Based on a
self-assessment, we concluded that the composition of the Supervisory Board at 31 De-
cember 2023 fully meets the targets stipulated in the diversity concept and the competency
profile.
In the Declaration of Compliance with the German Corporate Governance Code issued in
December 2023, the Board of Management and the Supervisory Board confirmed that they
have complied with the recommendations of the Code as amended on 28 April 2022 with-
out exception and will continue to fully comply with them in future.
We also dealt with the Group's compliance management system in great depth. In his an-
nual report, the Chief Compliance Officer presented changes to the structure and content of
the BMW Group's compliance management system and the revision of compliance regula-
tions. The report also addressed the implementation of the German Supply Chain Due Dili-
gence Act and the handling of individual cases. Moreover, at the Compliance Days in Mu-
nich, the Chief Compliance Officer relayed a message from the Chairman of the Board of
Management that set the "tone from the top", and addressed operational prevention
Responsibility Statement and Auditor's Report
BMW Group Report 2023
Combined Management Report Group Financial Statements
Statement of the Chairman of the Board of Management
BMW Group Report 2023
€ 6.00 for each share of common stock entitled to receive a dividend and € 6.02 for each
share of preferred stock entitled to receive a dividend and to transfer the remaining amount
to other revenue reserves. We consider the proposal appropriate and have therefore ap-
proved it.
Furthermore, in both the Audit Committee and the full Supervisory Board, we examined the
Board of Management's proposal to use the unappropriated profit to pay a dividend of
Based on a thorough examination conducted by the Audit Committee and the Supervisory
Board, we concurred with the results of the external audit. In accordance with the final result
of this examination, no objections were raised. At our meeting held on 14 March 2024, we
accordingly approved the Group and Company Financial Statements of BMW AG for the fi-
nancial year 2023. The Company Financial Statements for the year ended 31 December
2023 have therefore been adopted.
In the course of their audit work, they did not identify any facts inconsistent with the con-
tents of the Declaration of Compliance pursuant to § 161 of the German Stock Corporation
Act (AktG) jointly issued by the Board of Management and the Supervisory Board.
The representatives of the external auditors confirmed that the risk management system
established by the Board of Management is capable of identifying at an early stage any de-
velopments that might threaten the Company's going-concern status. They also confirmed
that no material weaknesses in the internal control system and risk management system
were identified with regard to the financial reporting process.
At the two respective meetings, the Board of Management provided a detailed explanation
of the reporting documents submitted to the Audit Committee and the Supervisory Board.
The representatives of the external auditor reported on the main findings of their audit and
answered questions put to them by members of the Audit Committee and the Supervisory
Board, partially without the presence of the members of the Board of Management. Both
the Audit Committee and the Supervisory Board gave meticulous consideration to the key
audit matters and the related audit procedures.
At its meeting held on 13 March 2024, the Audit Committee diligently examined and delib-
erated on these documents before they were considered in detail at the plenary session of
the Supervisory Board on 14 March 2024.
Based on the preparatory work of the Audit Committee, the Supervisory Board and the
Board of Management jointly prepared the Remuneration Report for the financial year 2023
in accordance with § 162 AktG. At the request of the Audit Committee, PwC reviewed the
contents of the Remuneration Report, reported to both the Audit Committee and the Super-
visory Board on the results of the review, and confirmed that the Remuneration Report com-
plies with the financial reporting provisions contained in § 162 AktG in all material respects.
The Audit Committee and the Supervisory Board also carefully examined the combined
Non-financial (Group) Statement for the year ended 31 December 2023. Following an in-
depth explanation of the statement by the Board of Management, representatives of PwC
presented the key findings of their audit and answered additional questions posed by the
members of the Supervisory Board. Based on the "limited assurance” audit performed by
PwC on those parts of the Management Report and certain sustainability disclosures in the
integrated BMW Group Report 2023 that were not subject to a reasonable assurance en-
gagement, PWC issued an unqualified opinion, signed for the second time by Michael Popp
(Wirtschaftsprüfer) and for the first time by Annette Fink.
Immediately after authorising their issue, the Board of Management submitted the Com-
pany and Group Financial Statements for the financial year 2023 and the Combined Man-
agement Report (including the Combined Non-financial (Group) Statement) to the Supervi-
sory Board. The auditor's long-form audit reports were also submitted to the Supervisory
Board in a prompt manner. In order to facilitate preparations, drafts of these documents had
already been made available to the Supervisory Board in advance.
The Company Financial Statements and the Group Financial Statements of BMW AG for the
financial year ended 31 December 2023, including the Combined Management Report, on
which PwC has issued unqualified audit opinions, were authorised by the Board of Manage-
ment on 12 March 2024. These audit opinions were signed for the fifth consecutive finan-
cial year by independent auditor Petra Justenhoven (Wirtschaftsprüferin) and, for the second
time, by Michael Popp (Wirtschaftsprüfer) as the auditor responsible for the performance of
the engagement.
PwC was appointed external auditor for the financial year 2023. PwC initially conducted a
review of the condensed Interim Group Financial Statements and the Interim Group Man-
agement Report for the first half of 2023 and presented its findings to the Audit Committee.
No issues were identified that might indicate that the condensed Interim Group Financial
Statements and Interim Group Management Report had not been prepared in accordance
with the applicable provisions in all material respects.
Review of financial statements and the profit distribution proposal
← = Q
Other Information
Remuneration Report
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Report of the Supervisory Board
At its meeting held on 29 February 2024, the Audit Committee initially gave in-depth con-
sideration to the preliminary version of the Company and Group Financial Statements and
the Combined Management Report (including the combined Non-financial (Group) State-
ment and the information on the EU taxonomy) as well as the draft version of the auditor's
long-form reports.
19
19
BMW Group Report 2023
20
20
Chairman of the Supervisory Board
Norbert Reithofer
Yours
M
On behalf of the Supervisory Board
Munich, March 2024
We are confident that the Board of Management and the BMW Group's workforce will con-
tinue to pursue the BMW Group's chosen path of sustainable and digitalised mobility in
2024, and we eagerly await the launch of the NEUE KLASSE in 2025.
With their great dedication and an outstanding collaborative effort during the past financial
year, the members of the Board of Management and the employees of the BMW Group
worldwide successfully defended the BMW brand's leading position in the global premium
segment and significantly expanded the share of electric mobility in Group sales. We there-
fore wish to express our deep thanks and appreciation to all of them.
Expression of appreciation by the Supervisory Board
The Supervisory Board acknowledged and approved the combined Non-financial (Group)
Statement drawn up by the Board of Management. Following a preparatory review con-
ducted by the Presiding Board as well as a further review at Supervisory Board level, the
Statement on Corporate Governance drawn up by the Board of Management was also ap-
proved by the Supervisory Board.
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Combined Management Report Group Financial Statements
Report of the Supervisory Board
To Our Stakeholders
To Our Stakeholders
5
In its role as a preparatory body, in the course of 2023 the Personnel Committee convened
four times to deliberate on the remuneration of, and succession planning for, the Board of
Management. The review of the appropriateness of the Board of Management's remunera-
tion for the financial years 2022 and 2023 and the determination of the factors for the
Board of Management's variable remuneration for those years were the subjects of thor-
ough preparation within the Personnel Committee. The determination of financial and ESG
targets for the Board of Management's remuneration for the financial year 2024 was also
discussed in great detail. In addition, the Personnel Committee prepared for the change of
remuneration consultant in the financial year 2023. The renewal of the anticipatory resolu-
tion on the approval of loans and transactions by BMW Bank GmbH was also on the
agenda.
Johann Horn
The head of Corporate Audit presented us with the key audit findings and plans for further
internal audits. The Chief Compliance Officer of the BMW Group reported on the structural
development of the compliance management system, the implementation of operational
measures and further planning. The report also addressed the implementation of the Ger-
man Supply Chain Due Diligence Act. In addition, we received a report on the BMW Group's
tax and customs control system from the responsible head of department.
In its report on the audit of over-the-counter derivatives entered into by BMW AG during the
financial year 2022, the external auditor confirmed to the Audit Committee the effectiveness
of the system in place at BMW AG in complying with the regulatory requirements of the Eu-
ropean Market Infrastructure Regulation.
The Audit Committee received regular reports on the state and development of significant
legal proceedings and internal investigations and, in individual cases, discussed product-
and emissions-related proceedings with external legal advisors brought in for that purpose.
The Nomination Committee held one meeting in the financial year 2023 in which it dis-
cussed the composition of shareholder representatives on the Supervisory Board. Taking
into account the composition requirements resolved by the Supervisory Board and the rec-
ommendations of the German Corporate Governance Code, the Nomination Committee is-
sued recommendations for the Supervisory Board's election proposals to the Annual Gen-
eral Meeting to be held in 2024.
The Mediation Committee, which is prescribed by law, did not need to convene during the
financial year under report.
17
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Report of the Supervisory Board
← = Q
Composition of the Board of Management
The Supervisory Board resolved to extend the term of office of one member and appointed
two new members to the Board of Management in the financial year 2023.
The Supervisory Board extended the mandate of Oliver Zipse, the Chairman of the Board of
Management.
Dr Nicolas Peter left the Board of Management on 11 May 2023 by mutual agreement as
part of a succession arrangement following three decades of successful work at the BMW
Group. As the Board of Management member responsible for Finance, he played a key role
in shaping the development of the BMW Group with his profound expertise, entrepreneurial
flair and vision. His work served to further cement the Group's excellent reputation, both on
the capital market and in the public eye. We are greatly indebted to Nicolas Peter for his out-
standing contribution.
On 12 May 2023, Walter Mertl was appointed as member of the Board of Management re-
sponsible for Finance. He joined the BMW Group in 1998 and was most recently responsi-
ble for corporate controlling. Mr Mertl has embodied the Group's commitment to sustainable
profitability during the transformation for many years.
On 31 October 2023, Pieter Nota left the Board of Management by mutual agreement, also
in line with the BMW Group's succession plans. After becoming the member of the Board of
Management responsible for Customer, Brands and Sales in 2018, Mr Nota was a key fig-
ure in driving forward the sale of all-electric models and the digitalisation of the customer
interface. He was also responsible for introducing a pioneering agency model for direct
sales in selected markets. We wish to thank Pieter Nota for his excellent work and valuable
inspiration.
On 1 November 2023, Jochen Goller was appointed as member of the Board of Manage-
ment responsible for Customer, Brands and Sales. Mr Goller has been at the BMW Group
since 1999 and has headed up activities in the China region since 2018. In Jochen Goller,
we have appointed an internationally experienced sales manager with particular expertise in
the Chinese market to the Board of Management.
Composition of the Supervisory Board, the Presiding Board and the Supervisory
Board's committees
There were no changes to the composition of the Supervisory Board during the past year on
the shareholder representative side. The Annual General Meeting elected Dr Kurt Bock to
the Supervisory Board for a further term of office of approximately four years. He was sub-
sequently appointed as Deputy Chairman of the Supervisory Board, member of the Presid-
ing Board and of the Personnel Committee as well as member and Chairman of the Audit
Committee.
With regard to the employee representatives, in January 2023 Dr Martin Kimmich was ap-
pointed to succeed the departing long-serving First Deputy Chairman of the Supervisory
Board, Manfred Schoch, for his remaining term of office. Dr Kimmich has been Chairman of
the Munich Works Council and the BMW AG Works Council since 2022.
Disclosure of attendance at meetings by individual members
The attendance rate at Supervisory Board meetings was 99%, and 100% for the meetings
held by the various committees and the Presiding Board. The meetings were held in person,
with individual members participating virtually only in justified exceptional cases. Three meet-
ings of the Audit Committee that dealt with the quarterly reports were held as hybrid meet-
ings, with individual members connected by either telephone or video call as planned. Indi-
vidual meeting attendance can be seen in the table below:
We also addressed the topic of climate-related risks. We regularly monitor the further devel-
opment of the internal control system for non-financial reporting with regard to the Group's
sustainability-related targets.
At its meeting in July 2023, the Audit Committee considered the effectiveness and appropri-
ateness of the BMW Group's internal control system (including the Corporate Audit func-
tion), the compliance management system and the risk management system. In the half-
yearly risk reports, we addressed the principal risks facing the BMW Group and their classifi-
cation. We focused particularly on geopolitical risks and the resulting risk scenarios, espe-
cially for supply chains and sales markets, as well as measures to mitigate these risks.
The Board of Management informed the Audit Committee regarding the implementation of
the first share buyback programme (which the Audit Committee had already approved in
2022), the redemption of the shares on 18 July 2023 and related reduction in share capital,
as well as the second share buyback programme resolved by the Board of Management in
May 2023.
The Quarterly Statements were presented to us for discussion by the Audit Committee prior
to their publication by the Board of Management. Representatives of the external auditors
were also present when the Half-Year Financial Report was discussed in early August
2023.
15
BMW Group Report 2023
To Our Stakeholders Combined Management Report Group Financial Statements
Report of the Supervisory Board
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
The BMW Group's long-term business plan was the subject of comprehensive examina-
tion by the Supervisory Board. In view of the ramp-up of electric mobility in an environment
that remains challenging and volatile, the focus was on safeguarding growth and returns.
The Board of Management informed us about plans for the various vehicle and corporate
segments and ambitious long-term targets, while confirming its key objectives for growth,
market shares and profitability. We were presented with key financial indicators for each
segment, in addition to opportunities and risks for the planning period. After thorough ex-
amination, the Supervisory Board approved the long-term business plan drawn up by the
Board of Management.
In December 2023, the Board of Management presented the budget for the financial year
2024. After exhaustive discussion with the Board of Management, we gave the budget our
approval.
I also met with investor representatives on a regular basis to discuss topics specific to the
Supervisory Board during the financial year 2023. We touched on corporate governance
issues such as succession planning for the Supervisory Board, the system for the Board of
Management's remuneration and the future format of the Annual General Meeting as well
as committee work and the Supervisory Board's handling of geopolitical risks.
With the BMW Group's support, Supervisory Board members attended advanced training
courses on various topics during 2023. At our July meeting held at the BMW Group's Leip-
zig plant, the subject of which was "BMW Group Production - Electrified. Digital. Sustaina-
ble", we discussed the topic of sustainability in production and energy generation at BMW
Group sites. In September, we took a first in-depth look at the Group's technology, architec-
ture and product strategy for the period as of 2025, and more closely at the strategic mod-
ules of the NEUE KLASSE. The members of the Supervisory Board then tested new BMW,
MINI and Rolls-Royce models at the BMW M Driving Academy in Maisach. This involved a
drive on the A8 motorway in the new BMW 5 Series sedan, where we tried out the level 2+
Highway Assistant. In addition, we were presented with BMW brand design vehicles, sup-
plemented by a preview of the NEUE KLASSE. A talk by a renowned Chinese economics
expert on the state of the Chinese economy in the wake of the coronavirus pandemic and on
opportunities for multinational corporations provided some interesting insights into the Chi-
nese market. The Supervisory Board held two hybrid meetings in October and November at
which the heads of the responsible internal departments and an external consultant pro-
vided us with a comprehensive update on non-financial reporting and the EU taxonomy, fo-
cusing on implementation by the BMW Group. We also delved more deeply into the complex
processes involved in implementing and reviewing the ambitious decarbonisation targets
within the supply chain as well as the main levers for decarbonisation in this area.
The onboarding programme for new Supervisory Board members was also continued in
2023. As part of the programme, new members are given an insight into the BMW Group's
key business areas and planning processes by representatives of internal specialist depart-
ments. The programme also includes an introduction to the ongoing work of the Supervisory
Board.
In late 2023, we reviewed the effectiveness of the work of the Supervisory Board and its
committees with the aid of a questionnaire, and discussed the findings in our subsequent
meeting. Cooperation both within the Supervisory Board and with the Board of Manage-
ment was unanimously perceived as constructive and trustworthy. In the current financial
year, we intend to act on proposals to explore certain topics in greater depth, such as bat-
tery technology and the circular economy concept.
Members of the
Supervisory Board
Norbert Reithofer
The Supervisory Board is careful to avoid any conflicts of interest in the course of its deliber-
ations and decision-making processes. No conflicts of interest occurred in the financial year
2023.
The Supervisory Board has established a Presiding Board and four committees. At each
subsequent Supervisory Board meeting, the Chairman of the Audit Committee, Dr Bock,
and myself reported in detail on the work of the Presiding Committee and the other commit-
tees. Further information on the duties, composition and working methods of the Presiding
Board as well as the various other committees is provided in the Statement of Corporate
Governance on the BMW Group website.
Unless a particular committee was responsible, the Presiding Board prepared the topics for
the plenary meetings at its four meetings in cooperation with the Board of Management and
senior heads of department. It also put forward proposals for reporting within the Supervi-
sory Board. The Presiding Board focused especially on the corporate strategy and its sus-
tainability-related aspects, in addition to longer-term corporate planning. The report on the
BMW Group's position was discussed in detail at every meeting of the Presiding Board.
The Audit Committee convened eight times in total.
In March 2023, the focus was on preparing for the Supervisory Board meeting at which the
financial statements for the financial year 2022 were discussed and examined. After verify-
ing the matter of independence, the Audit Committee recommended to the Supervisory
Board that PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft ("PwC") be
elected auditor at the Annual General Meeting 2023. There were no indications of conflicts
of interest, grounds for exclusion or lack of independence on the part of the auditor.
16
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Report of the Supervisory Board
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
The Audit Committee concluded that PwC's fee proposal for the audit of the Company and
Group Financial Statements and the BMW Group Report 2023, as well as for the review of
the Half-Year Report 2023, was appropriate in light of the scope of its tasks. The Commit-
tee therefore issued the corresponding contracts to PwC following its election at the Annual
General Meeting in May 2023.
The Audit Committee also specified supplementary audit focus areas. Moreover, it approved
the scope of the non-audit services to be performed, and received regular reports from PwC
regarding these services. At its meetings, the Audit Committee discussed the quality of the
audit in depth on several occasions. In particular, it received a report from the relevant de-
partment on the Group's experience with the audit of the financial statements for the finan-
cial year 2022 and on the results of the survey conducted within the Group for this purpose.
Based on this report, the auditor's description of the quality assurance measures under-
taken, and the Audit Committee's own experience with the auditor, the audit was found be
of good quality.
The Audit Committee also examined the combined Non-financial Statement of BMW AG
and the BMW Group for the financial year 2022, which was part of the BMW Group Report
2022. The Audit Committee had representatives from PwC explain the results of their audit.
We have again engaged PwC to conduct a "limited assurance" audit of the Non-financial
(Group) Statement for the financial year 2023, to the extent that it relates to parts of the
management report that are not subject to a "reasonable assurance" audit. Going beyond
the formal review required by law, the Audit Committee also engaged PwC to audit the con-
tents of the Remuneration Report for the financial year 2023.
Description of Presiding Board activities and committee work
Martin Kimmich*
Stefan Quandt
Stefan Schmid
Attendance
Attendance in %
18
5
18
100
100
Christiane Benner
5
5
100
Marc Bitzer
5
5
100
5
Bernhard Ebner
5
100
Rachel Empey
5
8
5
8
100
100
Heinrich Hiesinger
5
5
100
5
5
Kurt Bock
100
Meetings
Presiding
Board/
Presiding
Board/
Presiding
Board/
Plenum Committees
Plenum Committees
Plenum Committees
5
18
5
18
100
100
5
100
17
17
100
100
5
18
5
18
100
100
5
17
5
17
5
Corporate strategy, including sustainability, remained high on the Supervisory Board's
agenda. Following an analysis of the current situation in the automotive industry and the
ramifications of geopolitical developments, the Board of Management presented us with a
detailed strategy for implementing the automotive transformation. The strategy covered the
topics of electrification, digitalisation and sustainability, highlighting in particular the circular
economy concept as a key element of the Group's sustainable corporate approach. The
BMW Group's ambitious decarbonisation targets for2030 were also reaffirmed. With regard
to digitalisation, the Board of Management has placed the NEUE KLASSE at the centre of
its strategy, making it the benchmark for a holistic customer experience. The Board of Man-
agement also described the digitalisation of key business processes to the Supervisory
In conjunction with the report on HR-related strategies, we looked at the BMW Group's at-
tractiveness as an employer, employee performance and commitment, and workforce avail-
ability. The Board of Management also brought us up to date on the status of the Group's
diversity concepts and the extent to which targets have been achieved regarding the pro-
portion of women employed at various levels.
BMW Group Report 2023
1,956,514
1,845,271
2,003,782
2.8
215,932
187,500
168,104
187,116
-7.5
1.97
2.13
2.10
2.12
2.04
11.7
2,661,922
- 1.0
6,179
10.1
12.0
2,340,547
315,196
286,265
6,239
2,382,305
5,912
2,461,269
2,255,637
2,564,025
3,776
288,713
1,545,490
271,121
1,542,514
-0.2
In its reports on the BMW Group's position, the Board of Management kept us well in-
formed at each meeting regarding current developments and the Group's overall perfor-
mance. A regular topic of discussion at Supervisory Board meetings was the development
of current sales trends based on figures analysed by brand, segment and market region, for
both the BMW Group and its competitors. There was also a keen focus on electrified vehi-
cles and an overview of the Group's key financial indicators and liquidity situation.
We continuously and thoroughly monitored the governance of the BMW Group based on in-
depth reports received from the Board of Management and provided its members with pru-
dent advice on the management and strategic development of the Group. We focused in
particular on driving forward the Group's electrification strategy and expanding it to include
all segments and markets, as well as on implementing the corporate strategies adopted in
the fields of digitalisation and sustainability. At each of the five plenary sessions of the Su-
pervisory Board (including one two-day meeting), we held detailed discussions with the
Board of Management regarding the Group's position. The Board of Management also kept
the Supervisory Board well informed regarding any matters of significance outside the
framework of formal meetings. Furthermore, I discussed matters personally and on a regu-
lar basis with the Chairman of the Board of Management. In addition, the Chairman of the
Audit Committee maintained a direct line of contact with the Board of Management member
responsible for Finance as well as with the external auditor's representatives outside of
meetings. We regularly dealt with internal Supervisory Board issues and personnel-related
matters without the presence of the Board of Management. Our cooperation, both within
the Supervisory Board and its committees and with the Board of Management, was con-
ducted in a spirit of trust, respect and constructiveness. Detailed documents on the main
topics of each meeting were distributed to the members in advance. Moreover, the share-
holder and employee representatives regularly prepared for the meetings in separate pre-
liminary discussions.
The Supervisory Board again performed the duties incumbent upon it with the utmost dili-
gence throughout the financial year 2023.
Focus of Supervisory Board activities during the past financial year
← = Q
Remuneration Report Other Information
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Report of the Supervisory Board
To Our Stakeholders
13
Chairman of the Supervisory Board
Norbert Reithofer
2024 promises to be an exciting year for the BMW Group with a record number of product
launches. We firmly believe that, thanks to the enthusiasm and precision of our strong
workforce, we will master the challenges ahead and continue to set ourselves apart from
the competition with our wide range of products across all brands and drivetrain types.
The enthusiastic response to the presentation of the BMW VISION Neue Klasse at IAA
Mobility in Munich clearly demonstrates that the BMW Group is on the right path.
We also achieved a great deal in terms of sustainability in 2023, as our vehicle fleet once
again attained figures well within the EU's target limit for fleet carbon emissions.
We look back on 2023 as a successful financial year in which the BMW Group continued
to make decisive progress in ramping up electromobility. This is impressively demon-
strated by the fact that all-electric automobiles now make up nearly 15% of total sales.
The record high achieved in 2023 for total deliveries across all drivetrain types, and the
leading position of the BMW brand in the global premium segment further demonstrate
that the BMW Group's flexible drivetrain strategy is the right approach. Rigorous, far-
sighted decision-making have made this overall corporate success possible, ensureing
that the Group remains resilient, especially in volatile times.
DEAR SHAREHOLDERS,
REPORT OF THE
SUPERVISORY BOARD
Report of the Supervisory Board
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
12
12
1 Training for BMW Group employees and temporary staff at consolidated companies worldwide. Data is collated on the basis of direct input by participants and, to a small extent, by extrapolation. Data also includes e-learning formats.
2 Deliveries including BMW Brilliance Automotive Ltd. also for the period prior to full consolidation in the Group Financial Statements (2019: 538,612 units, 2020: 602,247 units, 2021: 651,236 units, 1 January to 10 February 2022: 96,133 units).
3 Production including BMW Brilliance Automotive Ltd. also for the period prior to full consolidation in the Group Financial Statements (2019: 536,509 units, 2020: 602,935 units, 2021: 700,777 units, 1 January to 10 February 2022: 58,507 units).
4 Efficiency indicator calculated from the absolute energy consumption (adjusted for CHP losses) of automobile production (BMW Group plants excluding partner plants and contract manufacturing) divided by the number of units produced (BMW Group plants and partner plants, excluding contract
manufacturing).
352,729
5,455
221,988
2,166,644
New contracts with retail customers
FINANCIAL SERVICES SEGMENT
BMW
Production
MOTORCYCLES SEGMENT
Energy consumption per vehicle produced (in MWh)"
Total³
Rolls-Royce
MINI
BMW³
Production by brand
Total²
Rolls-Royce
2019
MINI
Deliveries by brand
AUTOMOTIVE SEGMENT
Spending on employee training and development (in € million)¹
GROUP
OTHER NON-FINANCIAL PERFORMANCE FIGURES
← = Q
Other Information
2,089,801
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
To Our Stakeholders
BMW Group in Figures
BMW Group Report 2023
11
BMW²
2020
Remuneration Report
2022
2021
1,980,740
2,205,841
6.4
0.2
6,032
0.8
295,358
292,922
6,021
2,399,632
302,138
5,586
2,521,514
2,325,179
2,537,504
292,582
3,756
7.2
2,554,183
2,100,689
Change in %
2,252,793
370
279
389
416
2023
12.7
2,184,939
347,465
5,100
2,028,841
2,213,790
469
9,830
9,769
10,851
53
4,343
4,237
5,436
5,479
thereof investment grade
2,119
10,495
51
6,101
53
4,343
4,237
6,561
Debt instruments
2,770
37
41
2,068
thereof mixed funds
14
51
(funds without a rating)
27
1,082
2,729
9,630
Total with quoted market price
290
1
232
289
Other
Absolute return funds
50
78
15
35
51
28
78
28
27
1,082
Money market funds
51
Real estate funds
665
thereof non-investment grade
Equity instruments
arising on
31.12.2023
- 143
339
196
894
- 698
- 18,383
17,685
-52
52
336
-284
196
-6
- 703
-106
106
-367
-367
-367
-262
-262
462
462
8,401
697
31.12.2022
BMW Group Report 2023
Group Financial Statements
31.12.2022
31.12.2023
31.12.2022
31.12.2023
31.12.2022
31.12.2023
in € million
The BMW Group is exposed to risks arising both from defined
benefit plans and defined contribution plans with a minimum re-
turn guarantee. The discount rates used to calculate pension ob-
ligations are subject to market fluctuations and therefore influ-
ence the level of the obligations. Furthermore, changes in other
actuarial parameters, such as expected rates of inflation, also
have an impact on pension obligations. In order to reduce cur-
rency exposures, a substantial portion of plan assets is either in-
vested in the same currency as the underlying plan or hedged by
means of currency derivatives. As part of the internal reporting
procedures and for internal management purposes, financial
risks relating to the pension plans are reported using a value-at-
risk approach by reference to the pension deficit. The investment
strategy is also subject to regular review together with external
consultants, with the aim of ensuring that investments are struc-
tured to match the timing of pension payments and the expected
development of pension obligations. In this way, fluctuations in
pension provisions recognised in the balance sheet are reduced.
In the financial year 2024, disbursements out of plan assets are
expected to exceed the employer's contributions to plan assets
by € 298 million. Plan assets of the BMW Group include own
transferable financial instruments amounting to € 17 million
(2022: € 7 million).
32
1,155
To Our Stakeholders Combined Management Report
232
Total
Other
United Kingdom
Germany
Plan assets in Germany, the UK and other countries comprised
the following:
Depending on the cash flow profile and risk structure of the pen-
sion obligations involved, plan assets relating to defined benefit
plans are invested in a diversified portfolio.
Notes to the Group Financial Statements
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
665
4,288
1,791
149
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
197
18,383
19,347
741
740
6,134
6,079
11,508
12,528
Total plan assets
5,459
5,280
610
591
1,742
462
3,107
2,898
Total without quoted market price
Remuneration Report
2,388
Other Information
Notes to the Group Financial Statements
59.5
59.2
35.6
35.2
56.7
57.1
57.7
58.2
31.12.2022
31.12.2023
31.12.2022
31.12.2023
31.12.2022
31.12.2023
Defined benefit obligation
Former employees with vested benefits
Pensioners
Current employees
in %
Other
United Kingdom
Germany
The defined benefit obligation relates to current employees, pen-
sioners and former employees with vested benefits as follows:
← = Q
2,612
604
590
687
55
682
8
5
(funds without a rating)
thereof mixed funds
399
332
336
332
336
thereof investment grade
1,024
4
1
55
682
340
341
Debt instruments
12,924
14,067
131
63
thereof non-investment grade
4
1
347
435
1,437
1,587
Other
1,485
518
2
640
52
843
4,392
466
73
32
73
Cash and cash equivalents
1,053
700
622
455
431
Real estate
4
Absolute return funds
- 201
18,918
- 201
- 1,783
15,761
7,316
Other obligations*
Other provisions
* Presentation adjusted compared to previous year.
Depending on when claims occur, it is possible that the BMW
Group may be called upon to fulfil the warranty or guarantee ob-
ligations over the whole period of the warranty or guarantee.
Warranty provisions include amounts recognised in connection
with the exhaust gas recirculation cooler. Expected reimburse-
ment claims at 31 December 2023 amounted to € 819 million
(2022: € 872 million) and are disclosed within other assets (see
7 note [28]).
Provisions for obligations for personnel and social expenses
comprise mainly obligations relating to performance-related re-
muneration components, workforce measures as well as pre-
retirement part-time working arrangements and long-service
awards.
The provisions for other obligations cover numerous specific
risks and uncertain obligations, in particular for litigation and lia-
bility risks as well as risks relating to the order backlog.
35 Income tax liabilities
Current income tax
liabilities totalling € 1,401 million
(2022: € 1,224 million) include € 50 million (2022: € 58 mil-
lion) which are expected to be settled after more than 12 months.
Liabilities may be settled earlier than this depending on the tim-
ing of the underlying proceedings.
199
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
2,764
862
1,369
533
2,539
688
- 5,356
- 585
8,355
184
- 156
- 1,922
- 103
3,249
2,287
1,121
1
6
1,202
- 677
- 210
1,367
1,443
2,916
119
30
1,227
- 57
- 576
- 841
2,818
1,388
13,954
992
1,304
↑
484
7,255
39,808
7,754
21,471
10,583
Total
than five years
and five years
Maturity later
Maturity between one
Maturity within
one year
Total
than five years
Maturity later
Maturity between one
and five years
Maturity within
one year
Bonds
in € million
31.12.2022
31.12.2023
Financial liabilities of the BMW Group comprise the following:
36 Financial liabilities
← = Q
Other Information
11,020
22,306
7,758
41,084
669
2,399
4,187
5,824
684
1,272
3,868
Liabilities to banks
16,511
14
3,274
Lease liabilities
13,223
8
3,883
14,125
Liabilities from customer deposits (banking)
18,746
10,851
7,895
20,085
12,388
7,697
Asset-backed financing transactions
18,016
- 201
= Q
benefit obligation
17,685
Pensions and other benefits paid
Employee contributions
Transfers to fund
Changes in the limitation of the net defined benefit asset to the asset ceiling
Gains (-) or losses (+) arising from experience adjustments
Gains (-) or losses (+) arising from changes in demographic assumptions
Gains (-) or losses (+) arising from changes in financial assumptions
Gains (-) or losses (+) on plan assets, excluding amounts included in interest income
REMEASUREMENTS
Gains (-) or losses (+) arising from settlements
Past service cost
Interest expense (+)/income (-)
Current service cost
EXPENSE/INCOME
1 January 2022
in € million
Notes to the Group Financial Statements
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
Translation differences and other changes
31 December 2022
thereof pension provisions
thereof assets
Due to the fact that there is no right of reimbursement or right to
reduce future contributions to the fund, the amount of plan assets
reported for the UK pension plan has been limited to the amount
of the obligations.
6,417
-7,471
6,417
-7,471
- 7,471
6,417
34
34
34
10
21
- 11
- 349
BMW Group Report 2023
338
415
415
1,165
Net defined
benefit liability
Effect of limitation of the
net defined benefit asset
to the asset ceiling
1,187
-22
- 25,011
Total
Plan assets
benefit obligation
24,989
Defined
415
Defined
195
427
458
458
-317
- 317
27
27
27
-1
43
-44
-748
704
366
366
366
196
894
- 698
benefit liability
Net defined
Effect of limitation of the
net defined benefit asset
to the asset ceiling
Total
Plan assets
18,383
-174
329
-317
458
370
799
-429
- 19,347
35.6
17
-17
-106
89
-6
-6
-57
667
- 107
107
- 353
- 353
- 353
- 155
- 155
329
329
-174
-174
- 673
35.8
6.6
6.7
- 658
Translation
-11
68
16,511
Liabilities to banks
9,079
- 1,613
- 25
- 186
7,255
Lease liabilities
2,420
- 531
129
4
742
- 18
724
Other (excluding interest payable)
-2,082
44
- 150
16,702
2,188
1,712
77
261
1,374
Commercial paper
2,764
Financial liabilities towards companies in which an investment is held
- 30
Liabilities from customer deposits (banking)
-3
Other (excluding interest payable)
662
-131
Liabilities relating to financing activities
88,734
1,484
-38
493
- 1,709
1,194
354
90,057
Changes due to the
acquisition or disposal
business
combinations
in € million
Bonds
Asset-backed financing transactions
- 142
-471
19,362
41,084
3
31.12.2022
18,746
Other changes
1,011
- 8,107
Changes due to
exchange rate factors
of companies
Cash inflows/outflows
1.1.2022
51,498
Basis adjustments from
hedge accounting
- 3,321
Financial liabilities towards companies in which an investment is held
-14
Liabilities relating to financing activities
194
The defined benefit pension plans are administered by BMW
Pension Trustees Limited, Farnborough, and BMW (UK) Trustees
Limited, Farnborough, both trustee companies which act inde-
pendently of the BMW Group. BMW (UK) Trustees Limited, Farn-
borough, is represented by ten trustees and BMW Pension Trus-
tees Limited, Farnborough, by five trustees. A minimum of one
third of the trustees must be elected by plan participants. The
trustees represent the interests of plan participants and decide
on investment strategies. Funding contributions to the funds are
determined in agreement with the BMW Group.
Defined benefit plans exist in the UK which are closed for all plan
participants. Vested benefits remain in place. New benefits are
covered by contributions made to a defined contribution plan.
UK
The assets of the German pension plans are invested by BMW
Trust (a German association) in accordance with a CTA. The rep-
resentative bodies of the association are the Board of Directors
and the Members' General Meeting. BMW Trust currently has
seven members and three members of the Board of Directors
elected by the Members' General Meeting. The Board of Directors
is responsible for investments, drawing up and deciding on in-
vestment guidelines as well as monitoring compliance with those
guidelines. The members of the association can be employees,
employee representatives, senior executives and members of the
Board of Management of BMW AG. An ordinary Members' Gen-
eral Meeting takes place once every calendar year, and deals with
a range of matters, including receiving and approving the associ-
ation's annual report, ratifying the activities of the Board of Direc-
tors and adopting changes to the association's statutes.
plan with lifelong pension benefits remains in place which is now
closed to new entrants. The pension benefit is calculated by mul-
tiplying a fixed amount by the number of completed years of ser-
vice. Only employees who have not agreed to a one-time option
to switch to the defined contribution system will receive future in-
creases in entitlements under this plan.
Two employer-funded pension plans are in place that are based
on defined contributions for which the level of benefits depends
on developments on the capital markets. Benefits granted by the
two plans are funded by a combination of the payment of fixed
monthly contributions by the Company, a deferred remuneration
option for employees and a matching contribution by the Com-
pany. Further contributions are made on the basis of the BMW
Group's performance. A further plan is in place that is funded en-
tirely out of deferred remuneration. Due to the minimum interest
rate guaranteed by the BMW Group, these plans are all classified
as defined benefit plans in accordance with IAS 19. In addition to
the above plans, an employer-funded, defined benefit pension
Employer-funded as well as employee-funded benefit plans exist
in Germany. In addition to retirement benefits, pension benefits
also include disability and surviving dependents' benefits. The
level of ongoing pension payments is adjusted in accordance with
§ 16 of the Company Pensions Act (Betriebsrentengesetz).
Germany
The most significant of the BMW Group's pension plans are de-
scribed below.
- 143
- 57
- 1
4
- 45
-53
- 97
24
32
153
143
370
196
BMW Group Report 2023
193
77
77
157
144
427
339
118
662
To Our Stakeholders Combined Management Report
Responsibility Statement and Auditor's Report
103,347
- 11,287
129
1,349
- 3,532
-1,272
88,734
thereof assets
thereof pension provisions
31 December 2023
Translation differences and other changes
Pensions and other benefits paid
Employee contributions
Transfers to fund
Changes in the limitation of the net defined benefit asset to the asset ceiling
Gains (-) or losses (+) arising from experience adjustments
Gains (-) or losses (+) arising from changes in demographic assumptions
Remuneration Report
Other Information
Notes to the Group Financial Statements
The change in the net defined benefit liability for pension plans
can be derived as follows:
in € million
1 January 2023
Group Financial Statements
EXPENSE/INCOME
Interest expense (+)/income (-)
Past service cost
Gains (-) or losses (+) arising from settlements
REMEASUREMENTS
Gains (-) or losses (+) on plan assets, excluding amounts included in interest income
Gains (-) or losses (+) arising from changes in financial assumptions
Current service cost
21
3,292
1,634
391
4,243
- 235
thereof due
Reversal of
discounting
Additions
differences
Translation
Bonus and price reductions*
Statutory and voluntary warranty obligations, product guarantees
Obligations for personnel and social expenses
in € million
15,761
Other provisions
2,818
1,443
Other obligations
Derivative instruments
1,712
1,712
3,292
3,292
5,061
1,457
Utilised
-2,674
2,142
4,400
927
2,124
1,349
Other
Commercial paper
1,462
732
Reversed
within one year
Additions
9,240
17,037
- 1,005
- 6,428
476
8,568
-335
1,383
2,746
-533
- 932
38
1,399
-44
1,545
1,677
- 326
9,650
4,333
-12
1,782
47
31.12.2023
- 2,061
2,964
1,979
-44
1,144
-761
- 105
- 41
-54
108
1,046
-563
Basis adjustments from
hedge accounting
1,135
Other changes
31.12.2023
-23
39,808
18,746
1,796
-464
7
20,085
16,511
1,727
-247
10
15
18,016
1,712
Commercial paper
2,539
355
-64
-516
- 1,825
2,764
5,824
49
-279
- 1,201
7,255
Liabilities to banks
Lease liabilities
206
41,084
Changes due to the
acquisition or disposal
of companies
695
138
230
1,063
Financial liabilities
42,130
42,613
10,267
95,010
40,727
42,479
10,990
94,196
Planned future cash outflows from variable lease payments,
which are not taken into account in the measurement of lease
liabilities, are expected to amount to € 42 million
(2022: € 43 million).
Similarly, potential future cash outflows amounting to
€ 1,639 million (2022: € 1,608 million) (undiscounted) have not
been taken into account in the measurement of lease liabilities
as it is not reasonably certain that the leases will be renewed (or
not terminated). These cash outflows relate to periods of up to
90 years (2022: up to 61 years).
200
BMW Group Report 2023
Cash inflows/outflows
1.1.2023
Liabilities from customer deposits (banking)
Asset-backed financing transactions
Bonds
in € million
Changes due to
exchange rate factors
Liabilities related to financing activities can be reconciled as
follows:
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
Notes to the Group Financial Statements
1.1.2022
193
799
discounting
Utilised
Reversed
31.12.2022
within one year
6,600
872
141
3,820
-372
- 2,181
- 629
8,251
2,337
3,317
7
2,106
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
Additions
arising on
Additions
business
1.1.2023
combinations
Statutory and voluntary warranty obligations, product guarantees
Obligations for personnel and social expenses
8,251
3,249
Bonus and price reductions
in € million
Responsibility Statement and Auditor's Report
differences
Reversal of
DISCLOSURES RELATING TO THE
2022
2023
in € million
Financial information relating to BMW Brilliance is summarised
in the following table from a 100% perspective (2022: from
11 February 2022):
Total comprehensive income allocated to the other shareholders
of BMW Brilliance amounts to € 615 million (2022: € 580 mil-
lion). A dividend of € 1,447 million (2022: € 1,445 million) was
distributed to these shareholders during the financial year 2023.
At 31 December 2023, non-controlling interests in BMW Bril-
liance amounted to € 2,970 million (2022: € 3,709 million).
The 25% non-controlling interests of other shareholders in the
subsidiary BMW Brilliance represent a significant item in the
BMW Group's balance sheet.
32 Non-controlling interests
revenue reserves.
Equity attributable to shareholders of BMW AG increased during
the financial year by 2.8%, primarily reflecting the increase in
Equity attributable to shareholders of BMW AG
Proportion of total capital
Non-current financial liabilities
Current financial liabilities
in € million
The capital structure at the end of the reporting period was as
follows:
A key aspect in the selection of financial instruments is the ob-
jective to achieve matching maturities for the Group's financing
requirements. In order to reduce non-systematic risk, the BMW
Group uses a variety of financial instruments available on the
world's capital markets to achieve diversification.
In order to manage its capital structure, the BMW Group uses
various instruments, including the amount of dividends paid to
shareholders and share buybacks. Moreover, the BMW Group
actively manages debt capital, carrying out funding activities with
a target debt structure in mind.
The BMW Group is not subject to any unified external minimum
equity capital requirements. Within the Financial Services seg-
ment, however, there are a number of individual entities which
are subject to equity capital requirements of relevant regulatory
banking authorities.
The capital structure is managed in order to meet needs arising
from changes in economic conditions and the risks of the under-
lying assets.
191
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
thereof due
← = 9
Based on the authorisation granted by the Annual General Meet-
ing on 11 May 2022, the Board of Management of BMW AG re-
solved on 18 July 2023 (with effect as of 18 July 2023) to re-
deem the shares acquired by the Company as part of the first
share buyback programme (22,199,529 shares of common
stock and 1,923,871 shares of preferred stock each with a nom-
inal value of € 1) and to reduce the Company's share capital from
€ 663 million to € 639 million. This corresponds to around 3.6%
of share capital prior to the redemption of the shares and the re-
duction of issued share capital.
Up to 31 December 2023, a total of 4,218,363 shares of com-
mon stock had been bought back via the stock exchange at an
average price per share of € 98.38 and a total acquisition cost of
€ 415 million, corresponding to 0.64% of share capital. The
shares concerned are held by BMW AG as treasury shares at the
end of the reporting period.
Up to 31 December 2023, a total of 942,892 shares of preferred
stock had been bought back via the stock exchange at an aver-
age price per share of € 90.15 and a total acquisition cost of
€ 85 million, corresponding to 0.14% of share capital. The
shares concerned are held by BMW AG as treasury shares at the
end of the reporting period.
On 19 September 2023, the Board of Management resolved a
share buyback programme for shares of common stock for em-
ployees ("Share Buyback Programme Employee Shares 2023")
which was carried out during the period from 8 November to 27
November 2023. The acquisition of shares of common stock un-
der this programme serves the sole purpose of fulfilling the obli-
gations arising from the Employee Share Programme. Based on
the applications received from eligible employees, 1,290,000
shares of common stock were bought back and subsequently
sold to employees at a preferential price of € 71.47 per share.
These shares are entitled to receive dividends for the first time
with effect from the financial year 2023.
Capital management disclosures
The BMW Group's objectives with regard to capital management
are to safeguard over the long-term the Group's ability to con-
tinue as a going concern and to provide an adequate return to
shareholders.
The shares are being acquired with the purpose of either re-
deeming them at a later date and reducing share capital or using
them in conjunction with the Employee Share Programme.
INCOME STATEMENT
Revenues
Group Financial Statements
34 Other provisions
1,632
8.8
1,671
decrease of 0.75%
- 7.8
- 1,379
-7.5
- 1,418
increase of 0.75%
Discount rate
in %
in € million
in %
in € million
31.12.2022
31.12.2023
Change in defined benefit obligation
40.8
40.5
7.3
7.5
100.0
100.0
9.2
100.0
100.0
100.0
The sensitivity analysis provided below shows the extent to
which changes in individual factors - independently of each other
- could influence the defined benefit obligation at the end of the
reporting period.
It is only possible to aggregate sensitivities to a limited extent.
Since the change in obligation follows a non-linear pattern,
estimates made on the basis of the specified sensitivities are only
possible with this restriction. The calculation of sensitivities using
ranges other than those specified could result in a dispropor-
tional change in the defined benefit obligation.
In the UK, the sensitivity analysis for the pension level trend also
takes account of restrictions due to caps and floors.
100.0
Other provisions changed during the year as follows:
Pension level trend
325
198 BMW Group Report 2023 To Our Stakeholders Combined Management Report
-0.2
- 37
-0.2
-40
decrease of 0.10%
0.2
37
0.2
40
increase of 0.10%
Career trend
- 2.9
- 509
- 2.8
-533
decrease of 1 year
1.7
322
1.8
decrease of 0.25%
-319
- 1.7
increase of 0.25%
- 307
Average life expectancy
increase of 1 year
515
2.7
492
2.8
- 1.7
894
Profit after tax
DISCLOSURES RELATING TO THE
BALANCE SHEET
Effect of limiting net defined benefit asset to asset ceiling
Fair value of plan assets
Present value of defined benefit obligations
in € million
Based on the measurement principles contained in IAS 19, the
following balance sheet carrying amounts apply to the Group's
pension plans:
Notes to the Group Financial Statements
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
BMW Group Report 2023 To Our Stakeholders Combined Management Report
193
Mortality Table 2018 G issued by Prof. K. Heubeck (with invalidity rates reduced by 70%)
S3PA Tables and CMI_2020 model with improvement factor of 1.25%
United Kingdom
Germany
The following mortality tables are applied in countries in which
the BMW Group has significant defined benefit plans:
5.57
5.88
Pension level trend
2.24
2.53
2.17
Carrying amounts
2.26
13.8
14.2
13.1
13.7
12.8
12.8
Weighted duration of all pension obligations in years
4.73
thereof pension provisions
Germany
15
2
879
797
18,383
19,347
741
740
6,134
6,079
11,508
12,528
17,685
18,918
869
891
5,287
United Kindgom
Other
Total
31.12.2023
31.12.2022
31.12.2023
thereof assets
31.12.2022
31.12.2022
31.12.2023
31.12.2022
12,721
11,529
5,306
31.12.2023
Total comprehensive income
4.54
3.19
2,327
2,140
3,262
29,243
33,227
Total cash flows
181,321
184,606
Total capital
CASH FLOW STATEMENT
51.9%
51.5%
Proportion of total capital
DISCLOSURES RELATING TO THE
94,196
95,010
Total financial liabilities
31.12.2023
31.12.2022
Non-current assets
89,596
87,125
Current assets
2,193
48.5%
Non-current liabilities
52,880
53,469
Current liabilities
42,130
40,727
48.1%
3.67
16,352
11,044
Discount rate
31.12.2022
31.12.2023
31.12.2022
31.12.2023
31.12.2022
31.12.2023
in %
Other
United Kingdom
Germany
In addition, a career trend component, which is plan-dependent
and lies within a range of 0.25% to 0.50%, is taken into account
in the measurement of pension obligations in Germany (2022:
career trend of 0.25% to 0.50%).
The assumptions stated below, which depend on the economic
situation in the relevant country, are used to measure the defined
benefit obligation of each pension plan. The following weighted
average values have been used for Germany, the UK and other
countries:
In the case of defined benefit plans, the BMW Group is required
to pay the benefits it has granted to present and past employees.
Defined benefit plans may be covered by provisions or pension
assets. In Germany, pension obligations of the BMW Group are
almost entirely covered by assets transferred to BMW Trust e.V.,
Munich (BMW Trust), in conjunction with a Contractual Trust Ar-
rangement (CTA) (funded plan). In addition, funded plans also
exist in the UK as well as in the USA, Switzerland, Belgium and
Japan. In the meantime, all of the main defined benefit plans
have been closed for new entrants and replaced by defined con-
tribution plans.
33 Pension provisions
Notes to the Group Financial Statements
← = Q
12,344
3,601
4,059
9,773
9,756
-621
18,823
- 4,268
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
192
410
210
2
investment is held
Remaining other liabilities
Total
38
8,171
112,068
1,598
2,073
729
2,539
41,084
7,255
16,511
1,712
18,746
1,063
14,120
255
51
729
17,298
23,508
7,276
Payables to other companies in which an
241
Payables to subsidiaries
Other liabilities
At fair value through
other comprehensive
At amortised cost
income
Bonds
39,808
Liabilities to banks
5,824
Liabilities from customer deposits (banking)
18,016
Commercial paper
108,073
3,292
20,085
Derivative instruments
Cash Flow Hedges
Fair Value Hedges
Other derivative instruments
Lease liabilities
Other
Trade payables
1,046
15,547
Asset-backed financing transactions
31.12.2022
At fair value through
profit or loss
Not allocated to an
IFRS 9 category
Asset-backed financing transactions
Liabilities from customer deposits (banking)
Liabilities to banks
31.12.2023
31.12.2022
Fair value
Carrying
amount
Fair value
Carrying
amount
67,307
Bonds
65,092
63,808
23,539
22,263
22,600
21,900
40,919
39,808
42,173
41,084
19,951
65,237
Not allocated to an
IFRS 9 category
Receivables from sales financing - finance and operating leases
Financial liabilities
in € million
1,639
3,032
390
2,764
19,651
390
27,086
207
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Receivables from sales financing - credit financing
Group Financial Statements
Remuneration Report
Other Information
Notes to the Group Financial Statements
Disclosures relating to financial instruments measured at amortised
cost
The following table shows the fair values and carrying amounts
of financial assets and liabilities that are measured at amortised
cost and whose carrying amounts differ from their fair value.
The fair values are generally determined using the discounted
cash flow method, taking into account the relevant risk of default.
For the purposes of fair value measurement using the discounted
cash flow method, expected future cash flows are discounted on
the basis of up-to-date interest rate curves observable on the
market.
The fair values of receivables from sales financing are measured
using the discounted cash flow method, taking into account cus-
tomer-specific credit risk. In view of the fact that these allow-
ances are calculated in part on the basis of internal information,
receivables from sales financing are allocated to Level 3 in the
level hierarchy in accordance with IFRS 13.
In the case of financial liabilities, own credit risk is taken into ac-
count based on credit default swaps available on the market, so
that the fair values of these items are allocated to Level 2.
For all other financial instruments not listed here that are meas-
ured at amortised cost, the carrying amount corresponds to the
fair value. For this reason, they are not presented separately.
Responsibility Statement and Auditor's Report
20,085
At fair value through
profit or loss
At amortised cost
Not allocated to an
IFRS 9 category
At fair value through
other comprehensive
At amortised cost
income
At fair value through
profit or loss
65,092
911
286
22,263
63,808
31.12.2022
Not allocated to an
IFRS 9 category
1,003
348
21,900
1,525
444
2,046
427
957
At fair value through
profit or loss
income
At amortised cost
At fair value through
other comprehensive
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
40 Financial instruments
The carrying amounts of financial instruments are assigned to
IFRS 9 categories in the following table:
in € million
ASSETS
Other investments
Receivables from sales financing
1,913
Financial assets
Cash Flow Hedges
Fair Value Hedges
Other derivative instruments
Marketable securities and investment funds
Loans to third parties
Other
Cash and cash equivalents
Trade receivables
Other assets
31.12.2023
Derivative instruments
2,127
43
2,908
6,770
1,489
Total
88,036
2,127
3,184
31,345
88,086
2,908
3,464
1,218
7,603
32,467
BMW Group Report 2023
Group Financial Statements Responsibility Statement and Auditor's Report
Notes to the Group Financial Statements
Remuneration Report
Other Information
← = Q
in € million
LIABILITIES
Financial liabilities
31.12.2023
At fair value through
other comprehensive
206
income
Remaining other assets
455
530
17
1
26
8
347
57
236
143
16,055
4,162
454
1,272
10
4,127
Receivables from subsidiaries
642
1,036
Receivables from companies in which an
investment is held
48
50
Collateral assets
16,860
18,542
18,746
17,591
8
2
849
99
99
-54
4
1
-59
Gains (+)/losses (-) recognised in
accumulated other equity
Gains (+)/losses (-) recognised in
the income statement
-94
-2
57
- 39
Currency translation differences
-25
1
-26
839
Financial
instruments
Level 3
Derivative
instruments
instruments
In addition, equity instruments that are held outside the private
equity fund are measured using the income approach. This in-
volves discounting cash flows on the basis of current business
cases using the weighted average cost of capital to determine
the fair value of the financial instrument. Changes in fair values
determined in connection with adjustments to significant input
factors are not material for the BMW Group.
The convertible bonds that have been classified to Level 3 are
primarily used as instruments in advance of future financing
rounds relating to private equity investments. Valuations are
therefore performed in accordance with the IPEV guidelines.
Mandatory conversions are usually structured in such a way that
the number of shares to be received depends on the future share
price. Due to the generally short maturities, the instruments are
subject to only insignificant fluctuations in value. Irrespective of
this fact, impairment tests are performed at regular intervals.
The fair value of the options that the BMW Group holds in shares
of such investee companies is measured primarily on the basis
of a binomial model, taking into account the respective conditions
under which the options were granted. The comments provided
on the income-based approach used to measure equity instru-
ments held outside the private equity fund apply analogously for
the purposes of determining the relevant entity value that is
taken into account when measuring the fair value of the options.
The exercise price for share options arising in conjunction with
the private equity fund is generally low, verging towards zero.
Consequently, financing rounds have a direct impact on the fair
value of the options. In this respect, the valuation of options and
assessment of their impact on sensitivity is similar to the
approach taken to unquoted equity instruments, as described
above.
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Level transfer
Other Information
Notes to the Group Financial Statements
The balance sheet carrying amount of Level 3 financial instru-
ments developed as follows:
Unquoted equity
Options on
unquoted equity
in € million
1 January 2023
Additions
Disposals
instruments
Convertible bonds
← = Q
31 December 2023
765
1
accumulated other equity
7
7
Gains (+)/losses (-) recognised in
the income statement
14
2
2
14
Currency translation differences
Gains (+)/losses (-) recognised in
32
33
Level transfer
-71
-71
31 December 2022
839
8
2
849
Gains and losses recognised in the income statement are re-
ported within the line item "Other financial result" and included a
net negative amount of € 39 million (2022: net positive amount
of € 14 million) relating to unrealised items.
1
Since the pricing from the financing rounds is considered to be
the decisive input factor for the valuation, increases and de-
creases in valuation give rise to a similar change in the equity
instrument that is recognised in the income statement.
-23
75
58
824
Options on
Unquoted equity
in € million
1 January 2022
Additions
instruments
Convertible bonds
unquoted equity
instruments
- 5
Derivative
instruments
23
67
75
Disposals
- 6
- 12
Financial
instruments
Level 3
814
724
specific contribution margins. Key liquidity-specific performance
indicators are cash on hand, cash burn rates and prospects for
future financing rounds.
As part of the process of analysing valuations, the external fund
manager reviews the investment-specific milestones, including
an analysis of financial, technical and liquidity-specific perfor-
mance indicators, among others. Based on this analysis, it is
considered whether the price of the most recent financing round
is accept-able as a reasonable market valuation, in particular for
early-stage or growth-phase investments. Key performance in-
dicators used for the purpose of milestone analysis are depend-
ent on the business model underlying the investment. Typical
technical key performance indicators relate to licenses and pa-
tents held, the stage of technology development such as evi-
dence of feasibility and prototypes, market entries, customer and
user growth and appointments to key management positions.
Key financial performance indicators used are revenues, EBITDA
and the corresponding growth rate and/or development of
Financial instruments allocated to Level 3 relate mainly to invest-
ments in a private-equity fund. The valuation of unlisted equity
instruments is determined primarily using the market-based ap-
proach. In particular, the financing rounds that take place within
the private equity sector - usually on a regular basis at intervals
of approximately 12 to 24 months – represent a significant input
factor for these purposes. In addition, the investment advisor
provides the external fund manager with relevant, investment-
specific information on an ongoing basis (at least quarterly). The
latter subsequently assesses the underlying individual com-
panies in accordance with the guidelines for International Private
Equity and Venture Capital Valuations (IPEV).
Currency risks
Combined interest rate/currency risks*
Raw material market price risks
Other risks
Derivative instruments (liabilities)
Interest rate risks*
Currency risks
Combined interest rate/currency risks
Raw material market price risks
*Presentation adjusted compared to previous year.
Interest rate risks*
31.12.2023
Level hierarchy in accordance with IFRS 13
Level hierarchy in accordance with IFRS 13
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
1,864
306
31.12.2022
3,048
Derivative instruments (assets)
Cash equivalents
18,016
15,939
16,511
5,906
5,824
7,302
7,255
↑
= Q
208
Loans to third parties
BMW Group Report 2023
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
Disclosures relating to financial instruments measured at fair value
The carrying amounts of financial instruments measured at fair
value are allocated to the measurement levels pursuant to
IFRS 13 as follows:
in € million
Marketable securities and investment funds
Other investments
To Our Stakeholders Combined Management Report
Responsibility Statement and Auditor's Report
390
765
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Notes to the Group Financial Statements
← = 9
Financial instruments measured at fair value using input factors
not based on observable market prices are allocated to Level 3.
The fair values of these financial instruments are shown in the
following table:
209
in € million
Convertible bonds
Options on unquoted equity instruments
Fair value
31.12.2023
765
1
58
Fair value
31.12.2022
839
8
2
Unquoted equity instruments
146
519
1,174
164
839
1,272
10
1
8
As a general rule, any transfers between fair-value hierarchy lev-
els are made at the end of the relevant reporting period.
In the previous year, derivative instruments used to hedge raw
material price risks amounting to € 71 million were reclassified
from Level 3 to Level 2 as sufficient observable market data was
available for the first time for the instruments concerned.
794
1,684
381
1,278
472
437
324
1,495
58
2,319
318
373
1,390
2,987
768
Group Financial Statements
To Our Stakeholders Combined Management Report
To Our Stakeholders
CAD 700 million
fixed
BMW Canada Inc.
3.7
3.0
CNY 3,000 million
fixed
BMW China Capital B.V.
0.5
6.8
CHF 600 million
3.4
fixed
10.0
NOK 1,000 million
fixed
2.7
3.7
GBP 950 million
fixed
5.6
1.1
GBP 100 million
variable
3.3
3.5
Commercial paper comprises the following:
Issuer
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
202
= Q
↑
4.0
19
5.4
14
(in %)
nominal interest rate
Weighted average
Weighted average
maturity period
(in days)
EUR 1,303 million
USD 2,210 million
in relevant currency
(ISO Code)
Issue volume
BMW Finance N.V.
BMW US Capital, LLC
BMW International Investment B.V.
1.0
12.0
EUR 500 million
fixed
3.8
1.7
variable
(in %)
nominal interest rate
maturity period
(in years)
(ISO Code)
Interest
BMW Finance N.V.
Issuer
in relevant currency
Weighted average
Weighted average
Issue volume
Bonds comprise the following:
Notes to the Group Financial Statements
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
201
Combined Management Report
EUR 19,000 million
Notes to the Group Financial Statements
7.4
fixed
fixed
3.4
7.1
USD 14,795 million
fixed
5.4
2.9
USD 2,550 million
variable
BMW US Capital, LLC
3.2
10.0
AUD 273 million
fixed
2.6
7.5
USD 1,000 million
fixed
2.9
6.6
HKD 1,224 million
fixed
3.2
2.8
CNY 9,500 million
1.5
37 Other liabilities
EUR 1.000 million
in € million
In April 2023, the South Korean antitrust authority imposed a
fine of approximately 13 billion South Korean won (approxi-
mately € 9 million). BMW AG will no longer take action against
the authority's decision.
In addition, respective antitrust proceedings were opened
against BMW AG by the Chinese State Administration for Market
Regulation in March 2019 and the Korea Fair Trade Commission
in May 2020. Possible risks for the BMW Group in connection
with the antitrust proceedings in China cannot be currently fore-
seen, neither in terms of their outcome nor the amounts involved.
The EU Commission's antitrust proceedings were settled on 8
July 2021 (see note [10] to the BMW Group Financial State-
ments for the financial year 2021 included in the BMW Group
Report 2021).
The BMW Group determines its best estimate of contingent lia-
bilities on the basis of the information available at the date of
preparation of the Group Financial Statements. This assessment
may change over time and is adjusted regularly on the basis of
new information and circumstances. A part of the risks is covered
by insurance.
Other contingent liabilities mainly comprise risks relating to taxes
and customs duties.
1,112
1,358
1,969
1,801
89
22
94
In relation to these allegations, numerous class action lawsuits
have been brought in the USA and Canada in the second half of
2017, as well as several individual customers' lawsuits in South
Korea in June 2018. In the USA, the customer class actions were
withdrawn in August 2021 and the dealer class action was dis-
missed in the final instance in June 2022. In Canada, the class
action lawsuits have been discontinued without any payments
made by BMW. The individual customers' lawsuits in South Ko-
rea remain at an early stage. Further civil lawsuits based on the
allegations are possible going forward. Further disclosures pur-
suant to IAS 37.86 cannot be provided at present.
80
66
31.12.2022
31.12.2023
Contingent liabilities
Other
Guarantees
Litigation
Investment subsidies
in € million
The following contingent liabilities existed at the balance sheet
date:
39 Contingent liabilities and other financial commitments
Contingent liabilities
63
Beginning in 2014, regulatory authorities have ordered the BMW
Group to recall various vehicle models in conjunction with airbags
supplied by the Takata group of companies. Provision for the
costs involved has been recognised within warranty provisions.
In addition to the risks already covered by warranty provisions, it
cannot be ruled out that further vehicles of the BMW Group will
be affected by future recall actions. Further disclosures pursuant
to IAS 37.86 cannot be provided at present.
In May 2023, the National Highway Traffic Safety Administration
(NHTSA), an agency of the US federal government, requested a
recall of airbags in the USA that are equipped with airbag inflat-
ors produced by ARC Automotive. Further implications for the
BMW Group in other regions outside of North America as well as
implications from class action lawsuits, which have been brought
in this context against the BMW Group in the USA, cannot be
estimated at present. Further disclosures pursuant to IAS 37.86
cannot be provided at present.
BMW Group Report 2023
Other liabilities comprise the following items:
205
1,912
2,252
Purchase commitments for intangible assets
5,758
7,712
Purchase commitments for property, plant
and equipment
31.12.2022
31.12.2023
in € million
Other financial commitments
Furthermore, several BMW Group entities have been facing a
number of diesel emissions-related court claims in England and
Wales since November 2021 as well as in Scotland since March
2023. In November 2023, the High Court approved a group liti-
gation regarding the proceeding in England and Wales. In De-
cember 2023, the court ordered that at least three out of the 16
pending court proceedings against OEMS will proceed to trial
from October 2024 onwards. The proceedings against two other
OEMs have already been selected, and the selection of other
OEM proceedings is expected to follow in March 2024. In Scot-
land, the court also approved the combination of relevant claims
in group proceedings. It is estimated that any sued BMW Group
entities will have to file their statement of defence in April 2024.
Given that proceedings are still at an early stage, the probability,
amount or timing of any liability cannot be determined at present.
Further disclosures pursuant to IAS 37.86 cannot be provided at
present.
In addition, the KBA determined in February 2024 that two func-
tionalities of the emission control system of the BMW vehicle
model X3 with 2.0 litre diesel engine (EU5), built between Sep-
tember 2010 and March 2014 do not comply with legal require-
ments. The KBA views these functionalities as prohibited defeat
devices. The BMW Group has filed a timely objection against this
decision. Corrective measures are currently being coordinated
with the responsible type approval authorities. Furthermore, the
BMW Group is investigating whether and to what extent function-
alities of the emission control systems of this and other past die-
sel vehicle models comply with legal requirements and is in dia-
logue with the responsible authorities in this regard. Also, against
the background of the development in case law referred to
above, it is possible that further authorities and/or courts find
fault with functionalities of the emission control systems or deem
them as non-compliant with legal requirements. Given that the
investigations will take some time, it is not currently possible to
make any disclosures pursuant to IAS 37.86 with regard to pos-
sible measures to be taken, possible effects on administrative
and civil court proceedings and any financial risks that may be
related thereto.
In several recent judgements, the European Court of Justice has
ruled on emission control systems in diesel vehicles and has sig-
nificantly tightened requirements pertaining to the justification of
these systems. As a result of these new judgements by the Eu-
ropean Court of Justice, the interpretation of regulatory require-
ments for emission control systems is evolving. This is reflected,
amongst other things, by the fact that established administrative
practices of type approval authorities are being questioned from
numerous sides. This development leads to a reassessment of
civil proceedings pending in Germany due to the emissions per-
formance of BMW and MINI diesel vehicles. According to previ-
ously established case law of German national courts, damage
claims could only be asserted on the basis of intentional damage
inflicted in a manner offending common decency. In its most re-
cent judgements linked to proceedings against other manufac-
turers and taking into account the case law of the European Court
of Justice, the German Federal Court of Justice has ruled that a
manufacturer can also be held liable for negligent breach of EU
homologation standards and on the basis of a far-reaching re-
versal of the burden of proof to the detriment of the manufac-
turer. An increase in the effort and complexity of the defence in
individual cases, an increasing number of new court proceedings,
increased legal risks and increased financial expenditure are to
be expected. Further disclosures pursuant to IAS 37.86 cannot
be provided at present.
Following a request for legal assistance from the Korean author-
ities in 2020 in connection with leaks in exhaust gas recirculation
modules in BMW Group vehicles, the Munich public prosecutor's
office initiated an investigation and searched BMW Group offices
in Munich and Steyr in June 2022. Potential risks for the BMW
Group cannot be quantified at the present time. Further disclo-
sures pursuant to IAS 37.86 cannot be provided at present.
← = 9
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
BMW Group Report 2023 To Our Stakeholders Combined Management Report
204
In March 2022, the European Commission (EC) conducted in-
spections at the premises of automobile manufacturers and as-
sociations located in several member states. In parallel, the EC
sent out formal requests for information to several automobile
manufacturers, including BMW AG. The inspections and re-
quests for information concern possible collusion in relation to
the collection, treatment and recovery of end-of-life vehicles and
light commercial vehicles. The inspections were conducted in co-
ordination with the UK Competition and Markets Authority, which
has initiated formal proceedings in respect of the UK market. The
competition authorities allege that car manufacturers (i) coordi-
nated the remuneration to be paid to dismantlers for the provi-
sion of their services and (ii) agreed that issues related to end-
of-life vehicles should be dealt with in a non-competitive way.
Appropriate risk provisions were recognised in the second quar-
ter 2022 in connection with these investigations. At the current
stage of the investigations, further risks for the BMW Group in
connection with the proceedings of the two authorities cannot be
quantified at present. In December 2023, the South Korean anti-
trust authority conducted an inspection at the premises of sev-
eral car manufacturers, including BMW Korea. The investigation
by the South Korean antitrust authority has the same back-
ground as the investigations of the European Commission and
the UK Competition and Markets Authority. Due to the early stage
of this investigation, it is also not possible to provide further in-
formation in this regard. Further disclosures pursuant to IAS
37.86 cannot be provided at present.
OTHER DISCLOSURES
← = Q
In addition to liabilities, provisions and contingent liabilities, the
following commitments exist for the BMW Group at the end of the
reporting period:
Remuneration Report
1,079
255
241
51
38
5,777
2,963
4,809
5,447
31.12.2022
31.12.2023
1,047
Other liabilities
Other advance payments received for orders
Social security
Other taxes
Contract liabilities
Other liabilities (financial instruments)
Deposits received
Payables to subsidiaries
Payables to other companies in which an investment is held
Bonuses and sales aides
Other Information
Refund liabilities for future leased products
Other liabilities (non-financial instruments)
Sundry
9,768
Deferred income
7,998
Group Financial Statements
Notes to the Group Financial Statements
To Our Stakeholders Combined Management Report
11,939
Responsibility Statement and Auditor's Report
BMW Group Report 2023
203
Trade payables mainly have a remaining term of up to one year.
Grants comprise mainly public sector funds to promote regional
structures and which have been invested in the production plants
in Brazil, China, Germany, Mexico, Austria and South Africa
amongst others. The grants are partly subject to holding periods
for the assets concerned of up to five years and/or minimum em-
ployment figures or minimum production figures. Grants and
subsidies awarded before 31 December 2022 are released to
income over the useful life of the assets to which they relate.
Deferred income includes down payments received on leases
with customers as well as deferred grants.
Contract liabilities relate to obligations for service and repair work
as well as telematics services and roadside assistance agreed to
be part of the sale of a vehicle (in some cases multi-component
arrangements). An amount of € 4,239 million (2022:
€ 3,146 million) was released from contract liabilities in the fi-
nancial year and recognised as revenues from contracts with
customers.
27,233
25,748
2,241
38 Trade payables
13,053
2,643
1,613
1,412
130
3,359
237
237
13,337
7,651
120
3,633
17,309
1,465
Most of the hedges used in this context relate to variable yield
curves relating to the euro, US dollar and British pound currency
1,958
31.12.2022
Maturity
later than
five years
Information on average interest hedge rates is not provided,
since interest rate derivatives designated as hedging instru-
ments are used exclusively to hedge items in fair value hedges.
The hedge rates therefore correspond in each case to the current
market interest rate level.
in € million
Maturity
within
Maturity
between one
one year
and five years
Interest rate risks*
21,392
18,916
Currency risks
22,649
areas.
7,120
Nickel (EUR/t)
Palladium (EUR/oz)
2,313
19,169
8,626
Aluminium (EUR/t)
9,473
Combined interest/currency
risks
Copper (EUR/t)
908
961
791
7,398
Raw material price risks
5,329
Nominal amounts of
hedging instruments
34,130
43,787
9,417
31.12.2023
31.12.2022
2,270
3,519
19,350
Fair Value Hedges
Combined interest/currency
risks*
Carrying amounts
Carrying amounts
Change in fair value
of designated
Nominal amounts
Assets
Liabilities
components
Nominal amounts
Assets
Liabilities
↑
= Q
31.12.2022
Change in fair value
of designated
components
40,976
7,055
211
1,200
31.12.2023
Raw material price risks
Currency risks
Cash Flow Hedges
166
1,764
915
Raw material price risks
3,537
5,936
Nominal amounts of
hedging instruments
35,825
9,034
48,442
*Presentation adjusted compared to previous year.
218
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
The following table provides information on the nominal
amounts, carrying amounts and fair value changes of contracts
designated as hedging instruments:
in € million
9,949
Interest rate risks
The economic relationship between the hedged item and the
hedging instrument is based essentially on the fact that they
have the same basis and term. The BMW Group designates only
the commodity price index-linked raw materials surcharge, which
is specified in the purchase contracts of vehicle components, as
a hedged item. The proportion of the hedged risk component as
a percentage of the total fair value depends on the specific types
of vehicle component involved. Other price components con-
tained in the contract are not designated as being part of the
hedge relationship as no effective hedging instruments exist for
these components.
18,328
The transition to the newly created or revised benchmark interest
rates is being managed, monitored and assessed with regard to
risk management implications as part of a multidisciplinary pro-
ject. The tasks of the conversion project includes the continual
monitoring of regulatory developments, the initiation of neces-
sary changes to systems, processes, risk and measurement
models as well as the clarification of the associated accounting
and financial reporting implications. In the financial year 2023,
all contracts based on USD LIBOR were converted to alternative
benchmark interest rates (€ 412 million).
In the case of CAD CDOR and PLN WIBOR, uncertainty remains
as to the exact timing and nature of the changes. Non-derivative
financial instruments that have not been converted to an alterna-
tive interest rate at 31 December 2023 all relate to the CAD
CDOR, with a nominal liability amount of € 171 million
(2022: € 242 million). Derivative financial instruments that have
not been converted to an alternative interest rate at 31 Decem-
ber 2023 all relate to the PLN WIBOR, with a nominal amount of
€ 584 million (2022: € 100 million).
The BMW Group applies a value-at-risk approach throughout the
Group for internal reporting purposes and to manage interest
rate risk.
This approach is based on a historical simulation in which the
potential future fair value losses of the interest rate portfolios are
compared across the Group with expected amounts on the basis
of a holding period of 250 days and a confidence level of
99.98%. The risk mitigating effect of correlations between the
various portfolios is taken into account when the risks are aggre-
gated.
In the following table the potential volumes of fair value fluctu-
ations - measured on the basis of the value-at-risk approach –
are compared with the expected value for the interest-rate-sen-
sitive exposures of the BMW Group:
in € million
Value at risk
31.12.2023
1,967
31.12.2022
2,097
Raw materials price risk
The BMW Group is exposed to market price risks on raw mater-
ials. In order to hedge these risks, the Group mainly uses forward
commodity contracts. As part of the implementation of the risk
management strategy, the extent to which risk exposures should
be hedged is decided at regular intervals and the corresponding
hedging ratio defined. Items are hedged on the basis of a con-
stant ratio of one to one between hedging instrument and risk
exposure.
Causes of hedge ineffectiveness are seen potentially only for
counterparty credit risk. However, in view of the processes that
have been established for credit risk management, ineffective-
ness is not expected to arise.
The starting point for analysing raw materials price risk is to iden-
tify planned purchases of raw materials or components contain-
ing raw materials, the so-called "exposure". At each reporting
date, the exposure for the following financial year amounted to:
in € million
Raw material price exposures
31.12.2023
31.12.2022
← = Q
9,033
Notes to the Group Financial Statements
Remuneration Report
31.12.2023
31.12.2023
31.12.2022
493
530
Fair values of interest rate portfolios
31.12.2023
73,510
31.12.2022
73,954
Interest rate risk is managed through the use of interest rate de-
rivatives. As part of the implementation of the risk management
strategy, interest rate risks are monitored and managed at regu-
lar intervals. The interest rate contracts used for hedging pur-
poses comprise mainly swaps, which, if hedge accounting is ap-
plied, are accounted for as fair value hedges. The economic re-
lationship between the hedged item and the hedging instrument
is based on the fact that the main parameters of the hedged item
and the related hedging instrument (e.g. start date, term and cur-
rency) are the same. Items are hedged on the basis of a constant
ratio of one to one between hedging instrument and risk expo-
sure.
In view of the fact that own credit risk is excluded from the hedg-
ing relationship, ineffectiveness is expected to be low.
For selected fixed-interest assets, part of the interest rate risk is
hedged on a portfolio basis. In this case, swaps are used as the
hedging instrument. Hedge relationships are terminated and re-
designated on a monthly basis at the end of each reporting pe-
riod, thereby taking account of the constantly changing content
of each portfolio.
In light of the reform and replacement of certain benchmark in-
terest rates, some of the BMW Group's hedging relationships
have been redesignated to take account of alternative bench-
mark interest rates.
216
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Other Information
10,153
This exposure is compared to all hedges that are in place. The
net cash flow surplus represents an uncovered risk position. The
cash-flow-at-risk approach involves showing the impact of po-
tential raw materials market price fluctuations on operating cash
flows on the basis of probability distributions. Volatilities and
correlations serve as input factors to assess the relevant proba-
bility distributions.
EUR/KRW
31.12.2023
31.12.2023
31.12.2022
7.40
7.54
0.87
0.87
1,405.05
1,354.27
The following table shows the average hedging rates of the fi-
nancial instruments used by the BMW Group to hedge significant
raw materials risk exposures:
Maturity
within
Maturity
between one
in € million
one year
and five years
Maturity
later than
five years
Currency risks
22,648
EUR/GBP
EUR/CNY
Currency risks
The following table shows the average hedging rates of the fi-
nancial instruments used by the BMW Group to hedge significant
currency risk exposures:
The potential negative impact on earnings is calculated at the re-
porting date for each raw materials category for the following fi-
nancial year on the basis of current market prices and exposure
with a confidence level of 95%. The risk mitigating effect of cor-
relations between the various categories of raw materials is
taken into account when the risks are aggregated.
The following table shows the potential negative impact for the
BMW Group resulting from fluctuations in prices across all cate-
gories of raw materials, measured on the basis of the cash-flow-
at-risk approach. The risk at each reporting date for the following
financial year was as follows:
in € million
Cash flow at risk
31.12.2023
31.12.2022
1,045
1,115
217
Raw material price risks
BMW Group Report 2023
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
Disclosures on hedging measures
The following disclosures on hedging measures include deriva-
tives of fully consolidated companies that are designated as a
hedging instrument. The amounts shown are stated before de-
ferred taxes and take account of additional effects arising from
the application of the modified closing rate method.
The nominal amounts of hedging instruments were as follows:
To Our Stakeholders Combined Management Report
31.12.2022
662
Carrying amounts
1
- 2,161
1,832
- 2,281
- 18
517
Change in fair value during the reporting period
Reclassification to profit or loss
for continuing hedge relationships
for terminated hedge relationships
- 1,153
733
-150
135
44,041
578
739
2
- 110
- 103
3
1,654
15
Designated
component
Costs of
hedging
Costs of
hedging
Costs of
hedging
Designated
component
Costs of
hedging
Designated
component
Costs of
hedging
Costs of
hedging
Costs of
hedging
Designated
component
Costs of
hedging
2,026
- 1,783
-3
-274
- 244
1,057
-17
Reclassification to acquisition costs for inventories
291
2,660
Combined interest rate/currency risks²
2,870
309
49,899
1,414
1,956
288
49,236
Interest rate risks²
1,832¹
5171
1,119
520
552
1,494
9,473
-2,161
1,387
325
8,848
Cash flow at risk
156
117
78
2,845
Closing balance at 31 December
2,377
- 1,018
- 1,206
- 895
2,026
- 1,783
-3
662
Raw material price risk
* Presentation adjusted compared to previous year.
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
BMW Group Report 2023 To Our Stakeholders Combined Management Report
219
2 Presentation adjusted compared to previous year.
Prior year figures adjusted due to corrected currency translation.
-3,431
-254
162
118
Remuneration Report
Balances in accumulated
Combined
interest/
currency risk'
Interest rate
risk*
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks²
Combined interest rate/currency risks²
1 Prior year figures adjusted due to corrected currency translation.
2 Presentation adjusted compared to previous year.
The accumulated amount of hedge-related fair value adjust-
ments is a negative amount of € 11 million (2022: negative
amount of € 283 million) for assets and a negative amount of
€ 1,551 million (2022: positive amount of € 2,880 million) for li-
abilities.
- 1,8321
-5171
2,026
662
10,979
43,970
3,433
2,647
257
220
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Cash Flow Hedges
Responsibility Statement and Auditor's Report
in € million
2,605
other equity
Carrying amounts
Balances in accumulated
other equity
Assets
Liabilities
Change in
value of
hedged items
Continuing
hedge
relationships
Terminated
hedge
relationships
Assets
Liabilities
Change in
value of
hedged items
Continuing
hedge
relationships
Terminated
hedge
relationships
-1,654
2,161
2,377
-1,206
13,443
41,854
- 1,401
-75
Remuneration Report
Other Information
← = Q
Hedge ineffectiveness
recognised in
income statement
13
1
3
2023
2,300
- 395
- 1,539
2
- 18
3
2022
Combined
Currency risks
Interest rate
risk
Other Information
Raw material price risk
Currency risks
Change in costs of
hedging in other
comprehensive income
Change of designated
components in other
comprehensive income
Hedge ineffectiveness
recognised in
income statement
2022
Notes to the Group Financial Statements
Hedge relationships give rise to the following effects:
in € million
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks*
Combined interest/currency risks*
1,654
*Presentation adjusted compared to previous year.
lated other equity changed as follows:
in € million
Opening balance at 1 January
Change of designated
components in other
comprehensive income
351
- 1,868
Change in costs of
hedging in other
comprehensive income
765
2023
Designated components and costs of hedging within accumu-
in € million
interest/
currency risk
The potential negative impact on earnings is calculated at the re-
porting date for each currency for the following financial year on
the basis of current market prices and exposures with a confi-
dence level of 95%. The risk mitigating effect of correlations be-
tween the various currencies is taken into account when the risks
are aggregated.
Expected
credit loss
Stage 1
Stage 2
Stage 3
General
Simplified
31.12.2022
Total
Total
Expected
credit loss
credit ratings
71,882
1,901
509
74,292
388
71,418
975
financial assets with good
446
31.12.2023
General
65
4,232
4,186
213
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Simplified
Remuneration Report
← = Q
Notes to the Group Financial Statements
Receivables from sales financing are allocated to internally de-
fined rating categories based on credit risk. The classification into
creditworthiness levels is based on default probabilities. The re-
lated gross carrying amounts in accordance with IFRS 9 are al-
located as follows:
in € million
Gross carrying amount of
Stage 1
Stage 2
Stage 3
Other Information
72,839
370
Gross carrying amount of
financial assets with medium
credit ratings
21
968
2,459
934
80,444
7,472
560
1,068
1,152
89,544
80,528
5,853
The following table shows the potential negative impact for the
BMW Group for the following year resulting from unfavourable
changes in exchange rates, measured on the basis of the cash-
flow-at-risk approach.
The following table shows key information on hedged items for
each risk category as well as the balances of designated compo-
nents within accumulated other equity:
968
87,853
2,145
Further disclosures relating to credit risk - in particular with re-
gard to the amounts of impairment losses recognised - are pro-
vided in the explanatory notes to the relevant categories of re-
ceivables in notes [25] and [30].
2,189
318
1,004
2,938
8,311
3,971
32
22
12,314
797
8,792
3,726
37
40
12,555
841
Gross carrying amount of
financial assets with poor
credit ratings
Total
251
1,600
19
1,068
104
214
More than 90 days overdue
Total
29
- 1,638
-1,638
-2,118
5,061
-2,118
-1
-95
-228
- 188
Gross amount of derivatives which can be offset in case of insolvency
Cash collateral
1,287
2,040
2,755
Net amount after offsetting
Non-derivative financial assets and liabilities are only offset if a
legally enforceable right currently exists and it is actually in-
tended to offset the relevant amounts. No financial assets and
liabilities have been netted in the BMW Group due to the fact that
the necessary requirements for netting have not been met.
Gains and losses on financial instruments
The following table shows the net gains and losses arising on
financial instruments in accordance with IFRS 9:
in € million
2023
2,667
2022
4,386
Liabilities
211
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
4,400
← = Q
Derivative financial instruments of the BMW Group are subject to
legally enforceable master netting agreements or similar con-
tracts. However, receivables and payables relating to derivative
financial instruments are not netted due to non-fulfilment of the
stipulated criteria. Offsetting would have the following impact on
the carrying amounts of derivatives:
31.12.2023
31.12.2022
in € million
Balance sheet amount as reported
Assets
2,926
Liabilities
Assets
Offsetting of financial instruments
Financial instruments measured at fair value through other comprehensive income
113
- 154
Notwithstanding the existence of collateral accepted, the carry-
ing amount of financial assets (with the exception of derivative
financial instruments) generally represents the maximum credit
risk. In addition, the credit risk is increased by additional unu-
tilised loan commitments in the dealership financing line of busi-
ness. Total dealership financing credit risk at the end of the re-
porting period therefore amounted to € 32,149 million (2022:
€ 31,163 million).
In the case of all relationships underlying non-derivative financial
instruments, in order to minimise the credit risk and depending
on the nature and amount of exposure, collateral is required,
credit information and references obtained or historical data
based on the existing business relationship, in particular pay-
ment behaviour, reviewed.
In the case of trade receivables, customers are regularly as-
sessed with regard to their credit risk. Depending on contractual
status, necessary measures, such as dunning procedures, are
initiated in good time.
The credit risk relating to cash deposits and derivative financial
instruments is minimised by the fact that the Group only enters
into such contracts with parties of first-class credit standing.
Within the financial services business, items financed for retail
customers and dealerships (such as vehicles, facilities and prop-
erty) serve as first-ranking collateral with a recoverable value.
Security is also put up by customers in the form of collateral asset
pledges, asset assignment and first-ranking mortgages, supple-
mented where appropriate by warranties and guarantees. Items
previously held as collateral that are subsequently acquired re-
late mainly to vehicles. As a rule, these assets can be converted
into cash at short notice through the dealership organisation.
Creditworthiness testing is an important aspect of the BMW
Group's credit risk management. Every borrower's creditworthi-
ness is tested for all credit financing and lease contracts entered
into by the BMW Group. In the case of retail customer financing,
creditworthiness is assessed using validated scoring systems in-
tegrated in the purchasing process.
In the area of dealership financing, creditworthiness is assessed
by means of ongoing credit monitoring and an internal rating sys-
tem that takes account not only of the material credit standing of
the borrower, but also of qualitative factors, such as past reliabil-
ity in business relations.
The credit risk on trade receivables is assessed mainly on the
basis of information relating to overdue amounts. The gross car-
rying amounts of these receivables are allocated in accordance
with IFRS 9 to overdue ranges used for management purposes
as follows:
The BMW Group is exposed to counterparty credit risks if con-
tractual partners, for example a retail customer or a dealership,
are unable or only partially able to meet their contractual obliga-
tions. Information on the management of credit risk for receiv-
ables from sales financing is provided in the Combined Manage-
ment Report. ( Outlook and Risks and Opportunities)
in € million
31.12.2022
Not overdue
1-30 days overdue
31-60 days overdue
61-90 days overdue
3,718
3,871
339
208
42
31
31.12.2023
Credit risk
Total interest income arising on financial assets measured at
amortised cost relates mainly to the interest income earned on
credit financing and reported within revenues. Total interest ex-
penses arising on financial instruments measured at amortised
cost amounted to € 2.5 billion (2022: € 1.7 billion).
Financial instruments measured at amortised cost are some-
times subject to carrying amount adjustments that are recog-
nised through profit or loss as part of the application of hedge
accounting. These carrying amount changes are largely neutral-
ised by the offsetting changes in fair value arising on hedging
transactions and for this reason are not reported in the figures for
net gains and losses.
Financial instruments measured at fair value through profit or loss
-161
1,438
Financial assets measured at amortised cost
Financial liabilities measured at amortised cost
-482
-652
-67
209
212
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Responsibility Statement and Auditor's Report
Remuneration Report Other Information
Group Financial Statements
Notes to the Group Financial Statements
← = Q
Net gains and losses arising on financial instruments measured
at fair value through other comprehensive income relate to
changes in the fair value of marketable securities. Further details
are provided in note [19]. Total interest income arising on finan-
cial assets measured at fair value through other comprehensive
income amounted to € 82 million (2022: € 37 million) and total
interest expense to € 18 million (2022: € 10 million).
Net gains and losses arising on financial instruments measured
at fair value through profit and loss mainly include results from
the fair value measurement of stand-alone derivatives, market-
able securities and shares in investment funds, as well as other
financial assets.
Net gains and losses arising on financial assets measured at
amortised cost include mainly exchange rate gains/losses and
impairment losses/reversals.
Net gains and losses arising on financial liabilities measured at
amortised cost comprise mainly exchange rate gains/losses.
11
BMW Group Report 2023
504
Group Financial Statements
- 12,807
- 732
- 32,926
- 1,614
- 2,398
-249
- 4,261
1,201
- 19,387
1,993
3,572
- 1,614
- 2,398
- 249
- 4,261
1,201
1,993
378
378
3,572
-32,862
- 13,172
202
688
-951
-522
4
To Our Stakeholders Combined Management Report
18,145
12,650
- 594
598
1,150
20,537
280
-413
1,017
13,087
319
33,943
- 19,096
31,393
54,680
40,590
10,819
Further information is provided in the 7 Outlook and ▾ Risks and
Opportunities sections of the Combined Management Report.
Currency risk
As an enterprise with worldwide operations, the BMW Group
conducts business in a variety of currencies, from which currency
risks arise. In order to hedge currency risks, the BMW Group
holds, as at 31 December 2023, derivative financial instruments
mostly in the form of forward currency contracts and currency
swaps.
As part of the implementation of the risk management strategy,
the extent to which risk exposures should be hedged is decided
at regular intervals. The economic relationship between the
hedged item and the hedging instrument is based essentially on
the fact that they are denominated in the same currency and
have the same maturities. Items are hedged on the basis of a
constant ratio of one to one between hedging instrument and risk
exposure.
Causes of hedge ineffectiveness are seen potentially only for
counterparty credit risk. However, in view of the processes that
have been established for credit risk management, ineffective-
ness is not expected to arise.
The BMW Group measures currency risk using a cash-flow-at-
risk model. The analysis of currency risk is based on forecast
foreign currency transactions which could result in exposures to
surpluses of foreign currency cash inflows and cash outflows. At
the end of the reporting period, the overall currency exposure -
in each case for the following year and determined by aggregat-
ing the individual currency exposures based on their absolute
amount was as follows:
in € million
Currency exposure
Currency, interest rate and raw materials market price risks of the
BMW Group are managed at a corporate level.
Interest rate risk
The fair value of the Group's interest rate portfolios was as fol-
lows at the end of the reporting period:
31.12.2023
31.12.2022
39,157
43,179
in € million
Currency exposures include short positions amounting to
€ 2,136 million (2022: € 3,604 million).
The currency exposure is compared to all hedges that are in
place. The net cash flow surplus represents an uncovered risk
position. The cash-flow-at-risk approach involves showing the
impact of potential exchange rate fluctuations on operating cash
flows on the basis of probability distributions. Volatilities and cor-
relations serve as the main input factors to determine the rele-
vant probability distributions.
Interest rate risks arise when funds are borrowed and invested
with differing fixed-rate periods or differing terms. At the BMW
Group, all items subject to, or bearing, interest are exposed to
interest rate risk and can therefore affect both the assets and li-
abilities side of the balance sheet.
Protection against such risks is provided in the first instance
though natural hedging which arises when the values of non-de-
rivative financial instruments have matching maturities and
amounts (netting). Derivative financial instruments are used to
reduce the risk remaining after netting.
The principal market risks to which the BMW Group is exposed
are currency risk, interest rate risk and raw materials market price
risk.
Market risks
106,089
56,732
46,065
11,546
114,343
The cash flows from non-derivative financial liabilities comprise
principal repayments and the related interest. The amounts dis-
closed for derivative financial liabilities comprise only cash flows
relating to derivatives that have a negative fair value at the bal-
ance sheet date. It should be noted that, due to the various yield
curves used, a net positive cash flow may arise from inflows/out-
flows relating to derivative instruments with negative fair values.
At 31 December 2023, credit commitments available at short
notice to dealerships which had not been called upon at the end
of the reporting period amounted to € 13,218 million (2022:
€ 16,044 million).
Solvency is assured at all times by managing and monitoring the
liquidity situation on the basis of a rolling cash flow forecast.
The resulting funding requirements are covered by a variety of
instruments placed on the world's financial markets, with the aim
to minimise risk by matching maturities with financing require-
ments and in alignment with a dynamic target debt structure.
As a further reduction of risk, a syndicated credit line totalling
€ 8 billion (2022: € 8 billion) from a consortium of international
banks is available to the BMW Group. Intra-group cash flow fluc-
tuations are balanced out by the use of daily cash pooling ar-
rangements. Further information is provided in the Combined
Management Report.
215
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
181
305
- 1,469
174
Total financial liabilities
31.12.2023
31.12.2022
Maturity within
Maturity between
one year
one and five years
Maturity later
than five years
Cash inflows / outflows
Total
Maturity between
one and five years
Maturity later
than five years
511
11,308
23,450
9,150
43,908
11,951
Maturity within
one year
With net settlement
Cash inflows
Cash outflows
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
Liquidity risk
The following table shows the maturity structure of expected
contractual cash flows (undiscounted) for financial liabilities:
in € million
NON-DERIVATIVE FINANCIAL LIABILITIES
Bonds
Asset-backed financing transactions
Liabilities to banks
Liabilities from customer deposits (banking)
Trade payables
Lease liabilities
Commercial paper
Other financial liabilities
DERIVATIVE FINANCIAL LIABILITIES
With gross settlement
24,710
9,496
Total
8,161
15,547
14,080
40
14,120
497
46,157
882
2,839
35
533
1,094
3,087
3,298
3,298
1,714
1,714
191
146
1,460
15,512
1,460
14
12,996
16,636
8,057
11,470
19,527
3,998
1,386
850
6,234
21,157
2,594
4,456
3,337
13,285
18,325
← = Q
4,037
14,280
7,825
775
8
18,701
-4,136
Total for reportable segments
Elimination of inter-segment items
Total Group depreciation and
amortisation on non-current assets
amortisation on non-current assets
Reconciliation of depreciation and
26,637
30,367
2,903
Total Group capital expenditure on
3,255
12,805
Rest of Asia
- 5,038
-5,952
non-current assets
15,689
― € 2.115 million (Chairman of the Board of Management)
19,350
The Board of Management and the Supervisory Board of
Bayerische Motoren Werke Aktiengesellschaft have issued the
prescribed Declaration of Compliance with the recommendations
of the "Government Commission on the German Corporate Gov-
ernance Code" required by § 161 of the German Stock Corpora-
tion Act (AktG). The declaration has been made permanently
available on the Company's website www.bmwgroup.com/ezu.
44 Remuneration for members of the Board of Manage-
ment and the Supervisory Board
The expenses recorded in accordance with IFRS in financial year
2023 for remuneration for the active members of the Board of
Management and Supervisory Board are broken down as
follows:
in € million
Remuneration for the members of the
Board of Management
Short-term benefits
43 Declaration with respect to the Corporate Governance
Code
2023
32.9
Other long-term benefits
3.2
33.8
3.1
Benefits resulting from termination of the Board
mandate
2022
25% of target amount for personal cash investment amount x factor for strategic focus target 1 + 25% of target amount for personal cash investment amount x factor for strategic focus target 2
― Minimum, target and maximum values are defined before the start of the financial year
The total expense arising from the share-based remuneration
component for eligible active and former Board of Management
members and senior department heads was € 1,598,368 in fi-
nancial year 2023 (2022: € 638,715).
The cash settlement of the share-based remuneration compo-
nent is measured at fair value on the balance sheet date (closing
price of BMW AG common stock in Xetra trading on 31 Decem-
ber 2023).
Participants receive one additional share of common stock or the
equivalent value in cash for every three shares of common stock
held once the four-year holding requirement has been fulfilled, at
the Company's discretion.
The Board of Management members in office on the balance
sheet date hold 112,969 shares of BMW common stock with a
holding obligation arising from share-based remuneration for fi-
nancial years 2019 to 2022 (2022: 118,604).
224
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
The total carrying amount of the provision for the share-based
remuneration component for eligible active and former Board of
Management members and senior department heads was
€ 5,982,815 on 31 December 2023 (2022: € 6,971,951).
Responsibility Statement and Auditor's Report
Other Information
Notes to the Group Financial Statements
← = Q
The expenses and the corresponding allowance against revenue
reserves for the personal cash investment amount of the eligible
active Board of Management members and senior department
heads amount to € 21,776,062 (2022: € 20,175,614).
The share-based remuneration component is revalued at its fair
value at each balance sheet date between the grant date and the
settlement date and on the settlement date itself. The expense
for such programmes is recognised in the income statement (as
personnel expense) on a straight-line basis over the vesting pe-
riod of the options and in the balance sheet as a provision.
The remuneration system does not provide for any further
matching components for the members of the Board of Manage-
ment from financial year 2021 or for the senior department
heads from financial year 2022.
Remuneration Report
5.4
Share-based remuneration
0.2
200,000
3.00
600,000
2.00
400,000
2.25
1.00
450,000
400,000
2.00
400,000
1.50
300,000
*If a Supervisory Board member performs more than one of the functions referred to above, their
remuneration is measured only on the basis of the function that is remunerated with the highest
amount.
2.00
Member of the Supervisory Board
Chairman of the Supervisory Board
Deputy Chairman of the Supervisory Board
Chairman of the Audit Committee
Chairman of another committee
Member of the Audit Committee
Member of another committee
Factor Amount in € p.a.
Overview of the remuneration of the Supervisory Board*
0.1
Remuneration for the members of the Supervisory Board
Short-term benefits
5.8
5.5
47.5
42.5
Total expense
The costs for the active members of the Board of Management
arising from share-based remuneration, which was in force until
2020 inclusive, amounted to € 0.2 million (2022: € 0.1 million).
The provision for the share-based remuneration component
amounts to € 0.9 million (2022: € 1.2 million).
Total remuneration of former members of the Board of Manage-
ment and their dependants amounted to € 11.9 million
(2022: € 9.7 million). This remuneration also includes the con-
tributions accrued in connection with the departures of Dr Peter
and Mr Nota. Some of these amounts have not yet been paid out.
There are provisions for pension obligations to active members
of the Board of Management in accordance with IAS 19 totalling
€ 16.5 million (2022: € 16.6 million).
A provision has been established for pension obligations to for-
mer members of the Board of Management and their depend-
ants in accordance with IAS 19 totalling € 101.6 million
(2022: € 93.5 million).
The remuneration system for members of the Supervisory Board
does not include any stock options, value appreciation rights
comparable to stock options or any other share-based remuner-
ation components.
In accordance with the Articles of Incorporation, each member of
the Supervisory Board of BMW AG who does not exercise any
additional function relevant to remuneration receives fixed remu-
neration of € 200,000 p.a. in addition to the reimbursement of
his or her reasonable expenses, plus an attendance fee of
€ 2,000 for every plenary meeting that the member has
attended.
Members of the Supervisory Board who perform a function rele-
vant to remuneration such as the Chairman or Deputy Chairman
of the Supervisory Board or the chairmen or members of com-
mittees, provided these committees meet on at least three days
in the financial year, receive higher remuneration because of
these additional requirements.
in € million
Up to and including financial year 2021, eligible senior depart-
ment heads committed to invest 26% of their earnings-related
bonus in shares of BMW AG common stock and to hold the ac-
quired shares for four years. For the investment obligation, BMW
AG granted an amount corresponding to the entire investment
amount as a net subsidy.
In the event of death or invalidity, special rules apply for early
payment of share-based remuneration components (matching
components) based on the target amounts, and the holding pe-
riod is also dropped for shares of common stock that were ac-
quired with share-based remuneration components. Where the
service contract is terminated prematurely and the Company has
an extraordinary right of termination, or if the Board member re-
signs without the Company's agreement, entitlements to
amounts as yet unpaid relating to share-based remuneration
(matching components) are forfeited; a personal cash invest-
ment amount will be settled based on the target amount.
gross amount of the bonus that, net of tax and deductions, had
to be invested in shares of the Company's common stock (up to
and including financial year 2017, the investment component
amounted to 20% of the total bonus after tax, which the Board
of Management members received plus tax and social security
as additional cash remuneration). This amount was also subject
to a four-year holding period and on expiry thereof the Board of
Management members received one additional share of the
Company's common stock or the equivalent value in cash
(matching component) for every three shares of common stock
held, at BMW AG's discretion.
For financial years up to and including financial year 2020,
Board of Management members received an earmarked cash
amount (investment component) corresponding to 45% of the
2,900
2,740
1,066
794
361
361
11
118
3,387
3,215
71
29
Supplies and services performed
Supplies and services received
108
349
3,083
33
2,058
2,058
16
15
753
768
9,698
19,667
29
7
986
1,004
21,452
16,282
60
Receivables at 31 December
BMW Group companies did not grant any loans to members of
the Board of Management or the Supervisory Board in the 2023
financial year, nor did they enter into any contingent liabilities in
their favour. In the year under review, members of the Board of
Management and the Supervisory Board concluded contracts
with BMW Group companies for the purchase of vehicles, other
services (maintenance and repair work) and cash deposits at
arm's length conditions.
2023
4
Remuneration Report
Other Information
Notes to the Group Financial Statements
← = Q
42 Share-based remuneration
The BMW Group has three share-based programmes: one for
eligible employees, one for eligible senior department heads and
one for members of the Board of Management.
Responsibility Statement and Auditor's Report
Employee Share Programme
The shares of common stock acquired in the scope of the Em-
ployee Share Programme are subject to a vesting period of four
years calculated from 1 January of the year in which the shares
of common stock were acquired. These shares of common stock
are entitled to receive dividends for the first time with effect from
the financial year 2023.
A total of 1,290,000 shares of common stock were transferred
to employees in the reporting year (2022: 1,439,975 shares of
preferred stock). The 1,290,000 shares of common stock were
acquired in the scope of the Employee Share Programme. The
1,439,975 shares of preferred stock in the previous year
stemmed from Authorised Capital 2019. BMW AG's Board of
Management decides each year whether to continue the
programme.
As at 31 December 2023, the BMW Group recorded personnel
expenses resulting from the Employee Share Programme relat-
ing to the difference between the market price and the dis-
counted price for the shares of common and preferred stock, re-
spectively, purchased by employees totalling € 28 million (2022:
€ 23 million).
Senior department head and Board of Management programme
Both the share-based remuneration programme for members of
the Board of Management that was in force in the reporting year
and the share-based remuneration programme for eligible sen-
ior department heads serve to reward long-term entrepreneurial
conduct with sustainable business management in mind.
Board of Management members and eligible senior department
heads receive an earmarked cash amount (personal cash invest-
ment amount) that is, net of tax and deductions, to be invested
in shares of BMW AG common stock. This amount depends on
the achievement of certain financial and non-financial targets in
the past financial year (vesting year).
Payment of the personal cash investment amount is made after
the Annual General Meeting at which the Financial Statements
are presented for the relevant financial year. The shares of com-
mon stock are purchased immediately after the personal cash in-
vestment amount has been paid out and are subject to a holding
period of four years from the date of purchase. The RoCE com-
ponent and the strategic focus target component each make up
half of the target amount for the personal cash investment
amount. For the RoCE component, a RoCE factor is determined
based on the RoCE achieved in the Automotive segment for the
grant year. For the strategic focus target component, a minimum
of two strategic focus targets are defined prior to the start of the
financial year. Minimum, target and maximum values are defined
and factors are assigned for the RoCE in the Automotive seg-
ment and for each strategic focus target. The relevant factors are
determined after the end of the financial year based on the extent
to which targets were achieved.
Within the scope of the Employee Share Programme in the finan-
cial year 2023, eligible BMW Group employees were granted
shares of BMW AG common stock on preferential terms (for in-
formation on the number and price of the shares of common
stock issued see note [31]). At their discretion, participants in the
programme were able to purchase packages of 10, 20, 30, 40
or 50 shares of common stock (2022: 10, 20, 35, 50 or 65
shares of preferred stock) with a discount of € 20.00 (2022:
€ 16.00) on each share as compared to the market price (aver-
age closing price in Xetra trading in the period 1 to 6 November
2023: € 91.47). Employees who are currently employed by
BMW AG or a wholly owned subsidiary of BMW AG based in Ger-
many were able to partake in the programme, insofar as the sub-
sidiary's management had decided to participate. Employees
were required to have been in their positions for at least one year
without interruption at the time the programme was announced
and had to remain in their positions until the shares of common
stock were transferred.
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
4
2023
86
2022
63
2023
Payables at 31 December
2022
2023
17
2022
17
BMW Brilliance has been fully consolidated as a subsidiary of the
BMW Group since 11 February 2022 (see note 2). Goods and
services performed (mainly vehicle components for further pro-
cessing) for BMW Brilliance up to the date of first-time consoli-
dation in 2022 totalled € 1,330 million. Supplies and services
received in the same period amounted to € 106 million and com-
prised mainly vehicles and services.
Business relationships with non-consolidated companies are
small in scale.
BMW Trust e.V., Munich, administers assets on a trustee basis
to secure obligations relating to pensions in Germany and is
therefore a related party of the BMW Group in accordance with
IAS 24. This entity has no assets of its own. It had no income or
expenses during the period under report. BMW AG bears ex-
penses on an immaterial scale and performs services for BMW
Trust e.V.,
Munich.
The BMW Foundation Herbert Quandt, Munich, is an independ-
ent corporate foundation and, due to the BMW Group's signifi-
cant influence, qualifies as a related party according to IAS 24.
The BMW Group made donations to the BMW Foundation Her-
bert Quandt during the financial year 2023 totalling € 6.0 million
(2022: € 5.9 million) for ongoing foundation work and other ser-
vices. No other transactions arose.
223
2022
225
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Personal cash investment amount
Calculation
― Requirement for Board of Management members to invest an earmarked cash amount (personal cash investment amount), net of tax and deductions, in shares of BMW common stock immediately after
disbursement
― Payment as part of the next payroll run after the Annual General Meeting at which the Financial Statements are presented for the relevant vesting year
― Requirement for Board of Management members to hold the acquired shares of common stock for at least four years; this requirement remains in effect for individuals who step down from the Board of
Management (share ownership guideline)
― Assessment period of five years in total (one year for determining the personal cash investment amount, four years holding requirement)
Share-based remuneration
- Target amount p. a. (at 100% target achievement):
― € 1.28 million (from second period of office or fourth year of mandate = second remuneration level)
― € 2.35 million (Chairman of the Board of Management)
- 50% of target amount depends on ROCE achieved in the Automotive segment (ROCE component)
-50% of the target amount depends on the achievement of predefined strategic focus targets (strategic focus target component)
- Capped at 180% of target amount
- Payment after the Annual General Meeting at which the Financial Statements are presented for the relevant vesting year
― € 1.10 million (first period of office = first remuneration level)
Strategic relevance
- Performance component of bonus motivates the pursuit of non-financial strategic targets and is therefore beneficial for the long-term development of the BMW Group
― Earnings component of bonus rewards attainment of financial targets and is beneficial for earnings-related aspects of business strategy
― Primarily qualitative, non-financial criteria, expressed in terms of a performance factor, aimed at measuring the Board member's contribution to sustainable and long-term performance and corporate
orientation
- Relevant period is the vesting year
- Additional trend analysis over at least three financial years
- Composition of performance factor:
-50% cross-divisional targets with ESG criteria
-40% other cross-divisional targets
-10% individual targets
― Criteria for cross-divisional targets with ESG criteria include in particular: Innovation performance (environmental, e. g. reduction of carbon emissions), development of the BMW Group's reputation based on
ESG aspects (e.g. corporate culture, promotion of integrity and compliance), adaptability, attractiveness as an employer, leadership performance
- Criteria for the other cross-divisional targets include in particular: Market position compared to competitors, innovation performance (economic), development of the BMW Group's reputation based on
non-ESG-related aspects (e. g. perception on capital markets, brand strength), customer orientation
― Measurement parameters and target values are determined before the start of the financial year
- Performance factor may not exceed 1.8
- Maximum amount of performance component p. a.:
― € 0.855 million (first period of office = first remuneration level)
- € 1.035 million (from second period of office or fourth year of mandate = second remuneration level)
- € 1.890 million (Chairman of the Board of Management)
227
-Formula: 50% of target amount x performance factor
BMW Group Report 2023
Group Financial Statements
― € 1.175 million (Chairman of the Board of Management)
- Formula: 50% of target amount x RoCE factor
― ROCE factor is derived from the ROCE achieved in the Automotive segment for the vesting year
― Minimum, target and maximum values for ROCE are defined before the start of the financial year
― ROCE factor may not exceed 1.8
- Maximum amount of ROCE component p. a.:
― € 0.64 million (from second period of office or fourth year of mandate = second remuneration level)
― € 0.990 million (first period of office = first remuneration level)
- € 2.115 million (Chairman of the Board of Management)
- Target amount of strategic focus target component p. a. (50% of target amount for personal cash investment amount):
― € 0.55 million (first period of office = first remuneration level)
― € 0.64 million (from second period of office or fourth year of mandate = second remuneration level)
- € 1.175 million (Chairman of the Board of Management)
- At least two strategic focus targets derived from the strategic plan
― € 1.152 million (from second period of office or fourth year of mandate = second remuneration level)
― € 0.55 million (first period of office = first remuneration level)
- Target amount of ROCE component p. a. (50% of target amount for personal cash investment amount):
Parameters/measurement base, applicable amounts
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
COMPONENT
Share-based remuneration (continued)
RoCE component
(at 100% target achievement corresponds
to
50% of target amount)
Strategic focus target component
(at 100% target achievement corresponds
to
50% of target amount)
Strategic relevance
To Our Stakeholders Combined Management Report
2022
- € 1.050 million (Chairman of the Board of Management)
- € 0.475 million (first period of office = first remuneration level)
Chairman of the Board of Management:
-€ 1.95 million p. a.
Base salary is paid monthly on a pro rata basis
Contractual agreement, main points: non-cash benefits from the use of company cars and the BMW chauffeur service, insurance premiums, contributions towards security systems, employee discounts
The Supervisory Board may award payments to compensate for loss of salary from a previous employment relationship and to cover relocation costs in the case of new entrants
Defined contribution system with a guaranteed minimum return
Benefits based on amounts credited to individual savings accounts for contributions paid and interest earned, various forms of disbursement
― € 1.05 million p. a. (from second period of office or fourth year of mandate = second remuneration level)
Pension contribution p. a.:
Chairman of the Board of Management: € 700,000
- The base salary counteracts the temptation to take disproportionately high risks in order to achieve short-term goals, and thus contributes to the long-term development of the Company
- Fixed remuneration components are required for remuneration to be competitive in order to attract and retain qualified members of the Board of Management
Bonus
(sum of earnings component and
performance component)
Earnings component
Member of the Board of Management: € 400,000
― € 0.90 million p. a. (first period of office = first remuneration level)
Member of the Board of Management:
Bonus
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
The remuneration of members of the Board of Management and the Supervisory Board is structured as follows:
COMPONENT
FIXED REMUNERATION COMPONENTS
Parameters/measurement base, applicable amounts
Base salary
Fringe benefits
Compensation payments
Retirement benefits
Strategic relevance
VARIABLE REMUNERATION
COMPONENTS
(at 100% target achievement corresponds
to
- € 0.575 million (from second period of office or fourth year of mandate = second remuneration level)
50% of target amount)
- € 0.95 million (first period of office = first remuneration level)
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
COMPONENT
Group Financial Statements
Bonus (continued)
(at 100% target achievement corresponds
to
50% of target amount)
Parameters/measurement base, applicable amounts
Assessment period one year
- Base amount p. a. (50% of target bonus amount):
Performance component
To Our Stakeholders Combined Management Report
BMW Group Report 2023
226
― € 1.15 million (from second period of office or fourth year of mandate = second remuneration level)
- € 2.10 million (Chairman of the Board of Management)
- Capped at 180% of target amount
― Payment as part of the next payroll run after the Annual General Meeting at which the Financial Statements are presented for the relevant vesting year
-Assessment period one year
- Base amount p. a. (50% of target bonus amount):
― € 0.475 million (first period of office = first remuneration level)
― € 0.575 million (from second period of office or fourth year of mandate = second remuneration level)
― € 1.050 million (Chairman of the Board of Management)
- Formula: 50% of target amount x performance factor
― Earnings factor is derived from an allocation matrix determined in advance based on the parameters "profit attributable to shareholders of BMW AG" and "Group post-tax return on sales" in the vesting year
―The earnings factor is 1.0 in case of a profit attributable to shareholders of BMW AG amounting to € 5.3 billion and a post-tax return on sales of 5.6%
―The earnings factor is 1.5 in case of a profit attributable to shareholders of BMW AG amounting to € 6.9 billion and a post-tax return on sales of 7.3%
―The earnings factor is 0 in case of a profit attributable to shareholders of BMW AG below € 3.0 billion or a post-tax return on sales of below 3.0%
-Earnings factor may not exceed 1.8
- Maximum amount of earnings component p. a.:
― € 0.855 million (first period of office = first remuneration level)
- € 1.035 million (from second period of office or fourth year of mandate = second remuneration level)
― € 1.890 million (Chairman of the Board of Management)
- Target amount p. a. (at 100% target achievement):
Elimination of inter-segment items
2023
2023
1,190
62,519
420
443
31.12.2022
31.12.2023
66,168
31.12.2022 31.12.2023
1,127
Investments accounted for using the equity method
in € million
Group
to Group figures
Reconciliation
Other Entities
Financial Services
Segment assets
Motorcycles
31.12.2023 31.12.2022
16,573
31.12.2023
95,145
230
The information disclosed for capital expenditure and deprecia-
tion and amortisation relates to non-current property, plant and
equipment, intangible assets and leased products.
The Other Entities segment result includes interest and similar
income amounting to € 3,403 million (2022: € 1,543 million)
and interest and similar expenses amounting to € 2,372 million
(2022: € 1,539 million).
The result of the Financial Services segment was negatively im-
pacted by impairment losses totalling € 616 million
(2022: € 578 million) recognised on leased products. Income
from the reversal of impairment losses on leased products
amounted to € 289 million (2022: € 300 million).
Write-downs on inventories to their net realisable value amount-
ing to € 189 million (2022: € 112 million) were recognised by
the Automotive segment in the financial year 2023. The reversal
of impairment losses had a positive impact of € 13 million
(2022: € 11 million) on the segment result of the Automotive
segment.
420
17,737
246,926
31.12.2023
250,890
443
69,816
71,814
31.12.2022
31.12.2023
31.12.2022
95,727
31.12.2022
Automotive
14,456
14,565
- 100
- 159
23,509
17,096
8,417
994
-159
995
3,205
2,962
257
259
10,635
12,981
- 100
- 100
11,239
10,354
- 4,094
26,637
30,367
-5,038
-5,952
-4,136
10,016
9,759
101
116
8,433
8,826
21,150
24,896
171
184
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Elimination of inter-segment items
Total Group assets
on non-current assets
Reconciliation of capital expenditure
22,982
2022
2023
- 163,074
2022
Information by
region in € million
Germany
Non-operating assets - Other
Entities
23,509
17,096
Group profit before tax
122
2023
250,890
23,072
- 169,981
246,926
China
22,158
36,032
39,848
Rest of Europe
31,675
36,319
Total for reportable segments
18,919
19,106
28,751
31,845
USA
16,087
43,175
18,829 15,413 44,012
40,833 41,881 13,961
1,334
142,610
131,676
Total liabilities - Financial Services
Total for reportable segments
2022
2023
Reconciliation of segment result
in € million
Reconciliation of segment assets
Financial and other assets - Automotive
Trade payables - Automotive
31.12.2022
in € million
The total of the segment figures can be reconciled to the corre-
sponding Group figures as follows:
← = Q
Notes to the Group Financial Statements
Other Information
Remuneration Report
31.12.2023
179,076
63,554
13,906
177,110
71,742
12,763
12
1
494
566
Non-current assets
External revenues
50
61
Financial and other assets - Motorcycles
Trade payables - Motorcylces
Financial result of Motorcycles segment
Elimination of inter-segment items
8,283
15,092
16,102
- 339
Total for reportable segments
Financial result of Automotive segment
In the information by region, external sales are based on the lo-
cation of the customer. The information disclosed for non-current
assets relates to property, plant and equipment, intangible as-
sets and leased products. Eliminations disclosed for non-current
assets relate to leased products.
133,819
155,498
- 19,298
- 16,231
-50% of the personal cash investment amount within the target structure depends on the ROCE and is therefore directly linked to a key target for the corporate strategy and reflects BMW AG's aspiration to
generate a significant premium on the cost of capital
14,565
― € 1.152 million (from second period of office or fourth year of mandate = second remuneration level)
- € 0.990 million (first period of office = first remuneration level)
- Maximum amount of strategic focus target component p. a.:
-Factor for each strategic focus target may not exceed 1.8
―The remaining 50% of the personal cash investment amount encourages achievement of strategic focus targets and therefore contributes to business performance in key strategic areas
-Commitment to purchase shares of the Company's common stock and the four-year holding period provide additional motivation to support the Company's long-term development
221 BMW Group Report 2023
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
41 Related party relationships
To Our Stakeholders Combined Management Report
Malus and clawback rules
Malus
Clawback
- Agreement to withhold variable remuneration in the event of specified serious compliance violations or (withholding amounts provisionally) in the event of reasonable suspicions of such
― Amounts may also be withheld in principle after a member has left the Board
Within the Automotive segment, the BMW Group develops, man-
ufactures, assembles and sells automobiles powered with all-
electric drive systems, plug-in hybrid systems and highly efficient
combustion engines, as well as spare parts, accessories and mo-
bility services under the BMW, MINI and Rolls-Royce brands.
BMW and MINI brand products are sold in Germany through
branches of BMW AG and by independent, authorised dealer-
ships. Sales outside Germany are handled mainly by subsidiary
companies and by independent import companies in some mar-
kets. Rolls-Royce brand vehicles are sold in selected markets via
subsidiary companies and elsewhere by independent, authorised
dealerships.
The activities of the BMW Group are broken down into the oper-
ating segments Automotive, Motorcycles, Financial Services and
Other Entities.
For the purposes of presenting segment information, the activi-
ties of the BMW Group are divided into operating segments in ac-
cordance with IFRS 8. The segmentation follows the internal
management and reporting system and takes account of the or-
ganisational structure of the BMW Group based on the various
products and services of the reportable segments.
46 Explanatory notes to segment information
Information on reportable segments
SEGMENT INFORMATION
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
To Our Stakeholders Combined Management Report
228 BMW Group Report 2023
No events have occurred after the balance sheet date with a par-
ticular significance for the results of operations, financial position
or net assets of the BMW Group.
45 Events after the end of the reporting period
- Agreement entitling the BMW Group to reclaim variable remuneration already paid out in the event of specified serious incidences of non-compliance, incorrect calculation bases or incorrect financial statements
― Amounts may also be clawed back in principle after a member has left the Board
The following individuals and entities are related parties in ac-
cordance with IAS 24:
Activities relating to the development, manufacture, assembly
and sale of motorcycles as well as spare parts and accessories
are reported in the Motorcycles segment.
Stefan Quandt and Susanne Klatten as well as companies
controlled by them
Associated companies, joint ventures, non-consolidated
subsidiaries, BMW Trust and BMW Foundation Herbert
Quandt
SOLARWATT GmbH
ALTANA AG
UnternehmerTUM GmbH
In total, the following amounts of goods and services were sup-
plied to or received from other joint ventures and associated
companies:
in € million
Other joint ventures and associated companies
DELTON Logistics S.à r.l.
Supplies and services performed
Receivables at 31 December
Payables at 31 December
2023
2022
2023
2022
Supplies and services received
DELTON Health AG
in € thousand
Seen from the perspective of BMW Group entities, the volume of
significant transactions with the above-mentioned entities was
as follows:
Transactions of Group companies with related parties were
carried out, without exception, in the normal course of business
of each of the parties concerned and conducted at market condi-
tions, i.e. conditions that are also granted to other third-party
manufacturers.
No loans were granted by entities of the BMW Group to members
of the Board of Management and the Supervisory Board in the
financial year 2023, nor were any contingent liabilities entered
into on their behalf. During the year under report, members of the
Board of Management and the Supervisory Board concluded
contracts with BMW Group entities on customary market terms
and conditions for the purchase of vehicles, other services (in-
cluding maintenance and repair work) and the investment of
cash deposits in the low single-digit million range relating to the
Board of Management.
Stefan Quandt, Germany, is a shareholder and Deputy Chairman
of the Supervisory Board of BMW AG. He is also the sole share-
holder and Chairman of the Supervisory Boards of DELTON
Health AG, Bad Homburg v.d.H., and DELTON Technology SE,
Bad Homburg v.d.H., as well as the sole shareholder of DELTON
Logistics S.à r.l. Grevenmacher.
During the financial year 2023, DELTON Logistics S.à r.l. – via
its subsidiaries - performed logistic-related services for the BMW
Group. In addition, the DELTON companies held by Stefan
Quandt acquired vehicles from the BMW Group by way of
leasing.
Stefan Quandt, Germany, is also the indirect majority share-
holder of SOLARWATT GmbH, Dresden. Cooperation arrange-
ments are in place between BMW Group and SOLARWATT
GmbH, Dresden, within the field of electric mobility. The focus of
this collaboration is on the provision of complete photovoltaic so-
lutions for rooftop systems and carports to BMW i customers. In
addition, SOLARWATT GmbH purchases battery cells and re-
lated components for home battery storage applications as part
of a supply project. In addition to the deliveries of goods de-
scribed above, SOLARWATT GmbH, Dresden, also purchased
vehicles from the BMW Group by way of leasing during the finan-
cial year 2023.
Susanne Klatten, Germany, is a shareholder and member of the
Supervisory Board of BMW AG and also a shareholder and Dep-
uty Chairwoman of the Supervisory Board of ALTANA AG, Wesel.
In 2023, ALTANA AG, Wesel, acquired vehicles from the BMW
Group, mainly by way of leasing.
Susanne Klatten, Germany, is also the sole shareholder and
Chairwoman of the Supervisory Board of UnternehmerTUM
GmbH, Garching. In 2023, the BMW Group bought in services
from UnternehmerTUM GmbH, Garching, mainly in the form of
consultancy and workshop services.
222
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
The Board of Management and the Supervisory Board of
the BMW Group
2022
Automobile and motorcycle leasing, retail and dealership financ-
ing, multi-brand fleet business, customer deposit business and
insurance activities are the main activities allocated to the Finan-
cial Services segment.
Internal management and reporting
155,498
1
1
33,581
33,976
3,194
142,610
3,255
118,266
2022
2023
2022
2023
2022
105,834
14,011
17,768
-41
8
11
35,122
36,227
3,176
3,214
123,602
132,277
- 19,298
- 16,231
7
10
1,541
2,251
- 18
2023
Holding and Group financing companies are reported in the Other
Entities segment. This segment also includes the operating com-
pany Bavaria Lloyd Reisebüro GmbH, which is not allocated to
one of the other segments.
2022
2022
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
Notes to the Group Financial Statements
BMW Group Report 2023
The success of the Other Entities segment is assessed on the
basis of profit or loss before tax. The corresponding measure of
segment assets used to manage the Other Entities segment is
total assets less asset-side income tax items and intragroup
investments.
The success of the Financial Services segment is measured on
the basis of return on equity (RoE). Profit before tax therefore rep-
resents the relevant measure of segment earnings. The measure
of segment assets in the Financial Services segment corresponds
to net assets, defined as total assets less total liabilities.
Further information is provided in the section "Managing oper-
ational performance at segment level" within the Combined Man-
agement Report.
The Automotive and Motorcycles segments are managed on the
basis of return on capital employed (ROCE). The relevant meas-
ure of segment results used is therefore profit before financial re-
sult. Capital employed is the corresponding measure of segment
assets used to determine how to allocate resources. Capital em-
ployed is calculated as the sum of intangible assets, property,
plant and equipment and net working capital, the latter compris-
ing inventories as well as trade receivables less trade payables.
The role of "chief operating decision maker" with respect to re-
source allocation and performance assessment of the reportable
segment is embodied in the full Board of Management. For this
purpose, different measures of segment performance as well as
segment assets are taken into account in the operating
segments.
Segment information is prepared as a general rule in conformity
with the accounting policies adopted for preparing and presenting
the Group Financial Statements. Exceptions to this general prin-
ciple include the treatment of inter-segment warranties, the earn-
ings impact of which is allocated to the respective segments on
the basis used internally to manage the business. In addition, in-
tragroup repurchase agreements between the Automotive and
Financial Services segments pursuant to IFRS 15, impairment al-
lowances on intragroup receivables and changes in the value of
consolidated other investments pursuant to IFRS 9 are also ex-
cluded. Intragroup leasing arrangements are not reflected in the
internal management and reporting system on an IFRS 16 basis
and therefore, in accordance with IFRS 8, do not give rise to any
changes in the presentation of segment information. Inter-seg-
ment receivables and payables, provisions, income, expenses
and profits are eliminated upon consolidation. Inter-segment rev-
enues are based on market prices. Centralised cost components
are included in the respective segments, without resulting in cash
flows.
229
Segment information by operating segment is as follows:
in € million
External revenues
2023
2022
2023
Group
Reconciliation
to Group figures
Other Entities
Financial Services
Motorcycles
Automotive
Depreciation and amortisation on non-current assets
Capital expenditure on non-current assets
Result from equity accounted investments
Segment result
Total revenues
Inter-segment revenues
2023
14,456
- Formula in the event of two strategic focus targets with equal weighting p.a.:
The reconciliation of segment figures to the corresponding total
Group figures shows the inter-segment items. Revenues with
other segments result mainly from the sale of vehicles, for which
the Financial Services segment has concluded a financing or
lease contract. Eliminations of inter-segment items in the recon-
ciliation to the Group profit before tax, capital expenditure and
depreciation and amortisation mainly result from the sale of ve-
hicles in the Automotive segment, which are subsequently ac-
counted for as leased vehicles in the Financial Services segment.
In the reconciliation of segment assets to Group assets, elimina-
tions relate mainly to intragroup financing balances.
18,550
- 4,094
96,722
98,406
155,498 142,610
- 7,047
-7,297
332
285
- Weighting of the strategic focus targets is decided before the start of the financial year
3,068
3,003
2,926
4,941
5,386
Rest of the Americas
Other regions
Group
2,787
Eliminations
100
100
100
100
100
100
100
Capital investment in %
309
Profit/loss in € million
Equity in € million
403
← = Q
BMW Receivables Ltd. Partnership, Richmond Hill, Ontario
Rolls-Royce Motor Cars NA, LLC, Wilmington, Delaware
SB Acquisitions, LLC, Wilmington, Delaware
BMW 2021-A Lease Conduit, Wilmington, Delaware¹¹
BMW 2022-A Lease Conduit, Wilmington, Delaware¹¹
BMW 2023-A Lease Conduit, Wilmington, Delaware¹¹
BMW Canada Auto Trust 2021-1, Richmond Hill, Ontario¹¹
BMW Canada Auto Trust 2022-1, Richmond Hill, Ontario¹¹
BMW Canada Auto Trust 2023-1, Richmond Hill, Ontario 11
BMW Vehicle Lease Trust 2021-2, Wilmington, Delaware¹¹
100
107
- 245
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
BMW Receivables 2 Inc., Richmond Hill, Ontario
BMW Receivables 1 Inc., Richmond Hill, Ontario
BMW Financeira S.A. Credito, Financiamento e Investimento, São Paulo
BMW Financial Services de Mexico S.A. de C.V. SOFOM, Mexico City
BMW Manufacturing LP, Woodcliff Lake, New Jersey
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
Notes to the Group Financial Statements
235
197
551
BMW do Brasil Ltda., Araquari
100
558
665
100
Companies
BMW SLP, S.A. de C.V., Villa de Reyes
BMW US Capital, LLC, Wilmington, Delaware
BMW Manufacturing Indústria de Motos da Amazônia Ltda., Manaus
BMW Leasing do Brasil, S.A., São Paulo
BMW Insurance Agency, Inc., Wilmington, Delaware
BMW FS Securities LLC, Wilmington, Delaware
BMW FS Receivables Corporation, Wilmington, Delaware
BMW FS Funding Corporation, Wilmington, Delaware
BMW Floorplan Master Owner Trust, Wilmington, Delaware
0
BMW Facility Partners LLC, Wilmington, Delaware
BMW Extended Service Corporation, Wilmington, Delaware
BMW de Mexico, S.A. de C.V., Mexico City
BMW de Argentina S.A., Buenos Aires
BMW Consolidation Services Co., LLC, Wilmington, Delaware
BMW Auto Leasing LLC, Wilmington, Delaware
BMW Acquisitions Ltda., São Paulo
BMW of Manhattan, Inc., Wilmington, Delaware
0
Responsibility Statement and Auditor's Report
0
100
9
748
BMW Financial Services Korea Co., Ltd., Seoul
100
376
BMW Japan Finance Corp., Tokyo
1,019
100
241
2,596
BMW Automotive Finance (China) Co. Ltd., Beijing
75
4,148
BMW China Investment Ltd., Beijing
424
52
100
21
213
BMW Leasing (Thailand) Co., Ltd., Bangkok
100
114
273
BMW Korea Co., Ltd., Seoul
100
35
345
Herald International Financial Leasing Co., Ltd., Tianjin
100
101
390
BMW Japan Corp., Tokyo
7,882
0
BMW Brilliance Automotive Ltd., Shenyang
0
← = Q
BMW Vehicle Lease Trust 2022-1, Wilmington, Delaware¹¹
BMW Vehicle Lease Trust 2023-1, Wilmington, Delaware11
BMW Vehicle Lease Trust 2023-2, Wilmington, Delaware11
BMW Vehicle Owner Trust 2020-A, Wilmington, Delaware¹¹
BMW Vehicle Owner Trust 2022-A, Wilmington, Delaware¹¹
BMW Vehicle Owner Trust 2023-A, Wilmington, Delaware¹¹
BMWCA 2023-A SMBC, Richmond Hill, Ontario¹¹
Africa
Companies
Notes to the Group Financial Statements
Other Information
Remuneration Report
Equity in € million
BMW Financial Services NA, LLC, Wilmington, Delaware
To Our Stakeholders Combined Management Report
BMW Group Report 2023
236
0
0
0
Group Financial Statements
Profit/loss in € million
Capital investment in %
0
SuperDrive Investments (RF) Ltd., Cape Town¹¹
100
14
172
BMW Financial Services (South Africa) (Pty) Ltd., Midrand
100
71
670
BMW (South Africa) (Pty) Ltd., Pretoria
0
0
0
0
0
0
Asia
100
207
760
100
100
100
100
100
100
100
100
100
100
4
102
100
82
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
110
100
100
Capital investment in %
BMW Automotive (Ireland) Ltd., Dublin
BMW Austria GmbH, Salzburg
BMW (UK) Capital plc, Farnborough
BiV Carry II SCS, Senningerberg
BiV Carry ISCS, Senningerberg
Alphabet Polska Fleet Management Sp. z o.o., Warsaw
BMW Bulgaria EOOD, Sofia
Alphabet Luxembourg S.A., Leudelange
Alphabet Fuhrparkmanagement (Schweiz) AG, Dielsdorf
Alphabet España Fleet Management S.A.U., Madrid
000 BMW Bank, Moscow
BMW Belgium Luxembourg S.A./N.V., Bornem
Bavaria Reinsurance Malta Ltd., Floriana
Companies
Alphabet Italia S.p.A., Trento
BMW Central Medical Trustees Ltd., Farnborough
BMW China Capital B.V., The Hague
BMW Czech Republic s.r.o., Prague
Profit/loss in € million
Equity in € million
110
← = Q
BMW Renting (Portugal) Lda., Porto Salvo
BMW Portugal Lda., Porto Salvo
BMW Northern Europe AB, Stockholm
BMW Norge AS, Fornebu
BMW Nederland B.V., The Hague
BMW Italia Retail S.r.l., Rome
BMW Hungary Kft., Vecsés
BMW Financial Services Belgium S.A./N.V., Bornem
BMW Financial Services Denmark A/S, Copenhagen
BMW Financial Services Polska Sp. z o.o., Warsaw
BMW Hellas Trade of Cars A.E., Athens
BMW Financial Services (Ireland) DAC, Dublin
BMW España Finance S.L., Madrid
BMW Distribution S.A.S., Vélizy-Villacoublay
BMW Danmark A/S, Copenhagen
2
162
234
To Our Stakeholders Combined Management Report
Bavarian Sky UK D Ltd., London¹¹
The Americas
0
0
Bavarian Sky UK C Ltd., London¹¹
0
Bavarian Sky UK B Ltd., London¹¹
BMW (US) Holding Corp., Wilmington, Delaware
BMW Manufacturing Co., LLC, Wilmington, Delaware
BMW of North America, LLC, Wilmington, Delaware
0
0
Bavarian Sky UK 5 plc, London¹¹
0
0
0
0
Bavarian Sky UK A Ltd., London¹¹
2,643
1,877
100
BMW Canada Inc., Richmond Hill, Ontario
100
- 105
832
Financial Services Vehicle Trust, Wilmington, Delaware
100
100
1,534
BMW Bank of North America Inc., Salt Lake City, Utah
100
1,228
2,232
100
583
2,415
11
BMW Group Report 2023
0
0
Triumph Motor Company Ltd., Farnborough
Swindon Pressings Ltd., Farnborough
Riley Motors Ltd., Farnborough
Park Lane Ltd., Farnborough
Oy BMW Suomi AB, Helsinki
BMW Slovenská republika s.r.o., Bratislava
Bavarian Sky Europe S.A., Compartment Swiss Auto Lease A, Luxembourg11
BMW Slovenia, distribucija motornih vozil, d.o.o., Ljubljana
Companies
Notes to the Group Financial Statements
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
BMW Romania S.R.L., Bucharest
Bavarian Sky S.A. Luxembourg¹¹
Bavarian Sky S.A., Compartment A, Luxembourg¹¹
← = Q
Bavarian Sky S.A., Compartment German Auto Leases 6, Luxembourg 11
Bavarian Sky S.A., Compartment German Auto Leases 7, Luxembourg¹¹
Bavarian Sky S.A., Compartment German Auto Leases 8, Luxembourg¹¹
Bavarian Sky S.A., Compartment German Auto Loans 10, Luxembourg¹
Bavarian Sky S.A., Compartment German Auto Loans 11, Luxembourg 11
Bavarian Sky S.A., Compartment German Auto Loans 12, Luxembourg¹
Bavarian Sky UK 4 plc, London¹¹
0
0
0
100
100
100
100
100
100
100
100
Capital investment in %
Profit/loss in € million
Equity in € million
0
BMW China Automotive Trading Ltd., Beijing
BMW China Services Ltd., Beijing
316
Ling Yue Digital Information Technology Co., Ltd., Beijing
Herald Hezhong (Beijing) Automotive Trading Co., Ltd., Beijing
BMW Technology Office Israel Ltd., Tel Aviv
BMW Parts Manufacturing (Thailand) Co., Ltd., Rayong Province
BMW Middle East Retail Competency Centre DWC-LLC, Dubai
BMW Insurance Services Korea Co. Ltd., Seoul
BMW Philippines Corp., Manila
BMW Insurance Broker (Thailand) Co., Ltd., Bangkok
BMW India Foundation, Gurgaon
BMW Hong Kong Services Ltd., Hong Kong
BMW Financial Services Singapore Pte Ltd., Singapore
BMW Finance (United Arab Emirates) FZE, Dubai
BMW (China) Insurance Brokers Co. Ltd., Beijing
BMW Automobile Distributors (Pty) Ltd., Midrand
BPF Midrand Property Holdings (Pty) Ltd., Midrand
Asia
BMW India Leasing Private Ltd., Gurgaon
Africa
BMW Financial Services Hong Kong Ltd., Hong Kong
Equity in € million
100
100
100
100
100
100
BMW ArcherMind Information Technology Co., Ltd., Nanjing
100
100
100
100
100
Capital investment in %
Profit/loss in € million
100
Urban X Accelerator SPV, LLC, Wilmington, Delaware
MINI Canada Inc., Richmond Hill, Ontario
MINI Business Innovation, LLC, Wilmington, Delaware
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
BMW Shared Services, LLC, Wilmington, Delaware
BMW Technology Corp., Wilmington, Delaware
Designworks/USA, Inc., Newbury Park, California
BMW Operations Corp., Wilmington, Delaware
BMW Mobility Services, LLC, Wilmington, Delaware
Companies
← = Q
Notes to the Group Financial Statements
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
239
100
100
100
100
100
100
15
- 54
573
50
- 168
77
973
BMW AVTOTOR Holding B.V., Amsterdam
PDB - Partnership for Dummy Technology and Biomechanics GbR, Gaimersheim
IDEALworks GmbH, Munich
The Retail Performance Company GmbH, Munich
Encory GmbH, Unterschleissheim
DOMESTIC7
Not equity accounted or proportionately consolidated entities
FOREIGN7
- 339
31
17
20
40
40
50
50
Bavarian & Co Co., Ltd., Incheon
BMW Albatha Leasing, LLC, Dubai
BMW Albatha Finance PSC, Dubai
Critical TechWorks S.A., Porto
20
49
50
50
50
6
Spotlight Automotive Ltd., Zhangjiagang
100
FOREIGN
Solid Power, Inc., Wilmington, Delaware
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
240
50
51
Responsibility Statement and Auditor's Report
70
100
100
100
100
100
100
100
Remuneration Report
Other Information
← = Q
IONNA LLC, Torrance
THERE Holding B.V., Rijswijk
FOREIGN
IONITY Holding GmbH & Co. KG, Munich³
DOMESTIC
Associated companies - equity accounted
YOUR NOW Holding GmbH, Munich³
DOMESTIC
Joint ventures - equity accounted
Capital investment in %
Profit/loss in € million
Equity in € million
Companies
BMW AG's associated companies, joint ventures and joint operations at 31 December 2023
Notes to the Group Financial Statements
Joint operations - proportionately consolidated entities
100
100
100
0
0
51
100
100
100
0
Capital investment in %
Equity in € million
= Q
↑
2022-1 ABL, Tokyo¹¹
2021-2 ABL, Tokyo¹¹
2021-1 ABL, Tokyo¹¹
Profit/loss in € million
0
0
0
0
Bavarian Sky Korea 2023-A, Seoul¹¹
Bavarian Sky Korea 2023-2, Seoul¹¹
Bavarian Sky Korea 2023-1, Seoul¹¹
Bavarian Sky Korea 2022-A, Seoul¹¹
Bavarian Sky Korea 2022-1, Seoul¹¹
Bavarian Sky China Leasing 2022-1, Tianjin¹¹
Bavarian Sky China Leasing 2023-1, Tianjin¹¹
0
0
Bavarian Sky China 2023-1, Beijing¹¹
Bavarian Sky China 2022-2, Beijing¹¹
Bavarian Sky China 2022-1, Beijing¹¹
Bavarian Sky China 2021-3, Beijing
2023-2 ABL, Tokyo¹¹
2023-1 ABL, Tokyo¹¹
2020-1 ABL, Tokyo 11
0
2019-3 ABL, Tokyo¹¹
BMW Malaysia Sdn Bhd, Kuala Lumpur
100
100
100
8
105
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur
100
BMW Holding Malaysia Sdn Bhd, Kuala Lumpur
BMW India Private Ltd., Gurgaon
BMW Asia Technology Centre Sdn Bhd, Kuala Lumpur
BMW Asia Pte. Ltd., Singapore
BMW Asia Pacific Capital Pte Ltd., Singapore
BMW (Thailand) Co., Ltd., Bangkok
BMW India Financial Services Private Ltd., Gurgaon
100
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur
100
100
100
PT BMW Indonesia, Jakarta
BMW Tokyo Corp., Tokyo
BMW Manufacturing (Thailand) Co., Ltd., Rayong
Companies
Notes to the Group Financial Statements
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
237
100
100
100
2019-2 ABL, Tokyo¹¹
126
0
0
BMW Car Club Ltd., Farnborough
BMW (UK) Pensions Services Ltd., Hams Hall
BMW (UK) Investments Ltd., Bracknell 10
BMW (GB) Ltd., Farnborough
BLMC Ltd., Bracknell 10
Alphabet Insurance Services Polska Sp. z o.o., Warsaw
BMW Drivers Club Ltd., Farnborough
Europe
BMW i Ventures GmbH, Munich
BMW Car IT GmbH, Munich'
Automag GmbH, Munich
BMW Fleet GmbH, Munich'
DOMESTIC7
Companies
FOREIGN7
BMW Financial Services Czech Republic s.r.o., Prague
BMW Financial Services Slovakia s.r.o., Bratislava
BMW Group Benefit Trust Ltd., Farnborough
BMW Mobility Development Center s.r.o., Prague
BMW Motorsport Ltd., Farnborough
BMW Poland sp. z o.o., Warsaw
100
100
Capital investment in %
Profit/loss in € million
Equity in € million
BMW i Ventures, LLC, Wilmington, Delaware
BMW i Ventures, Inc., Wilmington, Delaware
BMW Experience Centre Inc., Richmond Hill, Ontario
217-07 Northern Boulevard Corporation, Wilmington, Delaware
The Americas
000 BMW Leasing, Moscow
John Cooper Works Ltd., Farnborough
John Cooper Garages Ltd., Farnborough
BMW Services Ltd., Bracknell¹º
BMW Russland Automotive 000, Kaliningrad
BMW AG's non-consolidated companies at 31 December 2023
0
Notes to the Group Financial Statements
Other Information
64
161
BMW Australia Ltd., Melbourne
100
2
182
100
BMW Australia Finance Ltd., Mulgrave
0
0
0
0
0
0
Oceania
BMW Financial Services New Zealand Ltd., Auckland
100
BMW Melbourne Pty. Ltd., Melbourne
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
238
0
0
100
BMW Australia Trust 2011-2, Mulgrave¹¹
Bavarian Sky Australia Trust A, Mulgrave¹¹
BMW Sydney Pty. Ltd., Sydney
100
BMW New Zealand Ltd., Auckland
100
← = Q
Alphabet Belgium Long Term Rental NV, Aartselaar
Other Information
41
51
100
100
100
100
100
100
100
100
100
100
100
100
12
129
100
179
100
14
200
100
232
113
BMW Group Report 2023
Group Financial Statements
668
11,458
100
6,990
29,648
BMW España Finance S.L., Madrid
BMW (Schweiz) AG, Dielsdorf
BMW Österreich Holding GmbH, Steyr
BMW International Holding B.V., Rijswijk
BMW Holding B.V., The Hague
Europe
FOREIGN 2,10
Capital investment in %
Profit/loss in € million
Equity in € million
← = Q
Companies
Notes to the Group Financial Statements
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
100
32
100
LIST OF INVESTMENTS AT 31 DECEMBER 2023
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
231
Notes to the Group Financial Statements
BMW Financial Services Scandinavia AB, Sollentuna
112
GG
100
42
100
233
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
47 List of investments at 31 December 2023
250
The List of Investments of BMW AG pursuant to § 285 and
§ 313 HGB is presented below. Disclosures for equity and earn-
ings and for investments are not made if they are of "minor sig-
nificance" for the results of operations, financial position and net
assets of BMW AG pursuant to § 286 (3) sentence 1 no. 1 HGB
and § 313 (3) sentence 4 HGB. It is also shown in the list which
subsidiaries apply the exemptions available in § 264 (3) and
§ 264 b HGB with regard to the publication of annual financial
statements and the drawing up of a management report and/or
notes to the financial statements (footnotes 5 and 6). The Group
Financial Statements of BMW AG serve as exempting consoli-
dated financial statements for these companies.
Equity in € million
2,075
100
1
6,139
100
11,559
BAVARIA-LLOYD Reisebüro GmbH, Munich
Rolls-Royce Motor Cars GmbH, Munich4,5,6
LARGUS Grundstücks-Verwaltungsgesellschaft mbH, Munich
Bürohaus Petuelring GmbH, Munich
BMW Vermögensverwaltungs GmbH, Munich
BMW M GmbH Gesellschaft für individuelle Automobile, Munich 3,5,6
BMW High Power Charging Beteiligungs GmbH, Munich4,6
BMW Hams Hall Motoren GmbH, Munich 4,5,6
BMW Vertriebszentren Verwaltungs GmbH, Munich
BMW Anlagen Verwaltungs GmbH, Munich³, 6
Parkhaus Oberwiesenfeld GmbH, Munich
Alphabet Fuhrparkmanagement GmbH, Munich
Alphabet International GmbH, Munich4,5,6
Bavaria Wirtschaftsagentur GmbH, Munich 3, 5, 6
BMW Fahrzeugtechnik GmbH, Eisenach 3,5,6
BMW Finanz Verwaltungs GmbH, Munich
BMW INTEC Beteiligungs GmbH, Munich 3,6
BMW Beteiligungs GmbH & Co. KG, Munich
BMW Bank GmbH, Munich³
DOMESTIC¹
Companies
Capital investment in %
Profit/loss in € million
Affiliated companies (subsidiaries) of BMW AG at 31 December 2023
4,149
Remuneration Report
100
198
Alphabet France Fleet Management S.A.S., Saint-Quentin-en-Yvelines
100
81
203
BMW Italia S.p.A., San Donato Milanese
100
- 95
207
BMW International Investment B.V., The Hague
100
- 13
227
BMW Russland Trading 000, Moscow
100
46
239
100
112
241
100
68
2
100
194
BMW Finanzdienstleistungen (Schweiz) AG, Dielsdorf
BMW Vertriebs GmbH, Salzburg
159
14
100
134
51
100
BMW Malta Ltd., Floriana
124
8
100
411
100
- 28
167
BMW Manufacturing Hungary Kft., Debrecen⁹
100
10
189
BMW Austria Bank GmbH, Salzburg
100
BMW Financial Services Nederland B.V., Breda
265
60
88
100
-59
643
BMW i Ventures SCS SICAV-RAIF, Senningerberg
100
90
957
BMW Motoren GmbH, Steyr
100
117
1,054
100
1,489
105
100
1,468
45
100
BMW (UK) Holdings Ltd., Farnborough
1,459
BMW Financial Services (GB) Ltd., Farnborough
BMW Finance S.N.C., Guyancourt
599
100
100
289
100
148
296
100
- 370
316
BMW Iberica S.A., Madrid
Rolls-Royce Motor Cars Ltd., Farnborough
BMW Austria Leasing GmbH, Salzburg
43
635
144
BMW (UK) Manufacturing Ltd., Farnborough
581
104
100
BMW (UK) Ltd., Farnborough
383
BMW France S.A., Montigny-le-Bretonneux
100
ALPHABET (GB) Ltd., Farnborough
BMW Finance N.V., The Hague
1/ Provisions for statutory and non-statutory warranty obliga-
tions as well as product guarantees are included in the consoli-
dated financial statements of BMW Group as a material amount
in other provisions. The obligations amounted to EUR 9,650
million (approximately 3.8% of total assets) as at 31 December
2023. The BMW Group is responsible for the legally required
warranty and product guarantees in the respective sales market.
In order to estimate the liabilities arising from statutory and non-
statutory warranty obligations as well as product guarantees for
vehicles sold, information on the type and volume of damages
arising and on remedial measures is recorded and analyzed at
3/ Valuation of provisions for statutory and non-statutory
warranty obligations as well as product guarantees
Group Financial Statements
In our view, the assumptions and parameters used in the meas-
urement of receivables from sales financing were appropriate
overall.
Responsibility Statement and Auditor's Report
Independent Auditor's Report
3/ The Company's disclosures on the applied "Accounting poli-
cies, assumptions, judgments and estimations" are contained in
the notes to the consolidated financial statements under note 6
and on "receivables from sales financing" are contained under
note 25.
vehicle model level. The expected amount of obligations is ex-
trapolated from costs of the past and recognized as a provision
in the corresponding amount, if the criteria of IAS 37 have been
met. For specific or anticipated individual circumstances, for ex-
ample recalls for vehicles sold, additional provisions are recog-
nized provided they have not already been taken into account.
2/ In order to assess the appropriateness of the valuation
method used for the determination of the provisions for statu-
tory and non-statutory warranty obligations as well as product
guarantees including the assumptions and parameters, we pri-
marily obtained an understanding of the process for determining
the assumptions and parameters through discussions with the
responsible employees of the BMW Group. We also evaluated
the appropriateness as well as effectiveness of controls for de-
termining the assumptions and parameters. With the involve-
ment of our IT specialists, we checked the IT systems used re-
garding their compliance. We compared the expenses for claims
and technical actions with actual costs incurred in order to draw
conclusions on the forecast accuracy. Based on a targeted sam-
ple of vehicle models, the mathematical correctness of the valu-
ation model used across the Group was examined. We exam-
ined and evaluated the assumptions used by the BMW Group
concerning the extent to which the past values were representa-
tive of the expected susceptibility of damage, the expected value
of damage per vehicle (comprising parts and labor input) as well
as the expected assertion of claims from statutory and non-stat-
utory warranties.
parameters and assumptions used by the executive directors
are appropriate.
3/ The Company's disclosures on the applied "Accounting poli-
cies, assumptions, judgments and estimations" are contained in
the notes to the consolidated financial statements under note 6
and on "Other provisions" are contained under note 34.
Other Information
The executive directors are responsible for the other infor-
mation. The other information comprises the following non-au-
dited parts of the group management report:
report
the disclosures marked with [[ ]] of the non-financial
statement to comply with §§ 289b to 289e HGB and with
§§ 315b to 315c HGB
The other information comprises further
the statement on corporate governance pursuant to § 289f
HGB and § 315d HGB
the remuneration report pursuant to 162 AktG [Aktien-
gesetz: German Stock Corporation Act], for which the
supervisory board is also responsible
all remaining parts of the annual report - excluding cross-
references to external information - with the exception of
the audited consolidated financial statements, the audited
group management report and our auditor's report
Our audit opinions on the consolidated financial statements and
on the group management report do not cover the other infor-
mation, and consequently we do not express an audit opinion or
any other form of assurance conclusion thereon.
248
BMW Group Report 2023 To Our Stakeholders Combined Management Report
The determination of provisions is associated with unavoidable
estimation uncertainties and is subject to a high risk of change,
depending on factors such as notification of detected defects as
well as claims made by vehicle owners. Against this background,
this matter was of particular significance during our audit.
the section "APPROPRIATENESS AND EFFECTIVENESS
OF THE INTERNAL CONTROL SYSTEM AND RISK
MANAGEMENT SYSTEM" of the group management
Against this background and due to the resulting significant un-
certainties with regard to estimates in the context of measuring
the residual values of the leased products, this matter was of
particular significance in the context of our audit.
← = Q
Remuneration Report
Key Audit Matters in the Audit of the Consolidated
Financial Statements
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consoli-
dated financial statements for the financial year from 1 January
to 31 December 2023. These matters were addressed in the
context of our audit of the consolidated financial statements as
a whole, and in forming our audit opinion thereon; we do not
provide a separate audit opinion on these matters.
In our view, the matters of most significance in our audit were as
follows:
1/ Measurement of leased products
2/ Valuation of receivables from sales financing
3/ Valuation of provisions for statutory and non-statutory
warranty obligations as well as product guarantees
Our presentation of these key audit matters has been structured
in each case as follows:
1/ Matter and issue
2/ Audit approach and findings
3/ Reference to further information
Hereinafter we present the key audit matters:
1/ Measurement of leased products
1/ The BMW Group leases vehicles to end customers under op-
erating leases (leased products). At the balance sheet date, the
figure reported under the "leased products" line item for operat-
ing leases was EUR 43,118 million (approximately 17.2% of
total assets). Leased products are measured at cost, which is
depreciated on a straight-line basis over the lease term to the
expected residual value (recoverable amount). A key estimated
value for subsequent measurement of leased products is the
expected residual value at the end of the lease term. For the re-
sidual value forecasts the BMW Group uses internally available
data on historical empirical values, current market data and
market estimates as well as forecasts by external market re-
search institutes. The residual value estimates also contain reg-
ulatory changes in the individual markets and expectations re-
garding customer behavior, among others including climate pol-
icy considerations. The estimation of future residual values is
subject to judgment due to the large number of assumptions to
be made by the executive directors and the amount of data in-
cluded in the determination.
2/ As part of our audit we obtained an understanding of the de-
velopment of operating leases, the underlying residual value
risks as well as the business processes for the identification,
management, monitoring and measurement of residual value
risks, among other things by inquiries and inspection of docu-
ments related to the internal calculation methods. Furthermore,
we evaluated the appropriateness and effectiveness of the in-
ternal control system, particularly regarding the determination of
expected residual values. This included the evaluation of the
propriety of the relevant IT systems as well as the implemented
interfaces therein by our IT-specialists. In addition, we evaluated
the appropriateness of the forecasting methods, the model as-
sumptions as well as the parameters used for the measurement
of the residual values based on the validations carried out by the
BMW Group. For this purpose, we inquired with the BMW
Group's experts responsible for the management and monitor-
ing of residual value risks and inspected the internal analysis on
residual value developments and residual value forecasts as
well as the validation results. We examined the mathematical
correctness of the forecast values using the key calculation
steps.
Based on our audit procedures, we were able to satisfy our-
selves that the methods and processes for determining the ex-
pected residual values of leased products underlying the
valuation are appropriate and the assumptions and parameters
included in the forecast model for the residual value are appro-
priate as a whole.
3/ The Company's disclosures on the applied "Accounting poli-
cies, assumptions, judgments and estimations" are contained in
the notes to the consolidated financial statements under note 6
and on leased products are contained under note 23.
2/ Valuation of receivables from sales financing
1/ The BMW Group offers end customers, dealerships and im-
porters various financing models for vehicles. In this context,
current and non-current receivables from sales financing total-
ing EUR 87,355 million are reported in the consolidated state-
ment of financial position as at the balance sheet date (approx-
imately 34.8% of total assets). Impairment losses amounting to
EUR 2,189 million were recognized on these receivables as at
the balance sheet date. In order to determine the amount of the
necessary valuation allowances to be recognized with respect
to receivables from sales financing, the BMW Group, among
others, evaluates the creditworthiness of the dealers, importers
and end customers, as well as any loss ratios, and risk provi-
sioning parameters are derived based on historical default prob-
abilities and loss ratios.
The determination of the valuation allowances by the executive
directors is subject to a significant degree of judgment due to
several value-influencing factors such as the estimation of cre-
ditworthiness, the determination of probabilities of default and
loss ratios and was therefore of particular significance in the
context of our audit.
2/ As part of our audit we obtained a comprehensive under-
standing of the development of receivables from sales financing,
the associated default-related risks as well as the business pro-
cesses for the identification, management, monitoring and
measurement of default risks, among other things by inquiries
and inspection of documents on the internal calculation meth-
ods. Furthermore, we evaluated the appropriateness and effec-
tiveness of the internal control system regarding the determina-
tion of the impairment loss to be recognized. In this context, we
247
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Independent Auditor's Report
Remuneration Report
Other Information
also evaluated the relevant IT systems and internal processes.
The evaluation included an assessment by our IT-specialists of
the appropriateness of the systems concerned and associated
interfaces to ensure the completeness of data as well as the au-
dit of automated controls for data processing. As part of our au-
dit we assessed in particular the appropriateness of the risk
classification procedures as well as the risk provisioning param-
eters used. For this purpose, we analyzed in particular the vali-
dations of parameters that are regularly conducted by the Com-
pany. To assess the default risk, we also used targeted sam-
pling of individual cases to examine whether the attributes for
assignment to the respective risk categories were suitably avail-
able and the impairment losses had been calculated using the
parameters defined for these risk categories.
Other Information
OTHER LEGAL AND
REGULATORY
REQUIREMENTS
In connection with our audit, our responsibility is to read the
other information mentioned above and, in so doing, to consider
whether the other information
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Independent Auditor's Report
Remuneration Report
Other Information
← = Q
provide a basis for our audit opinions on the consolidated finan-
cial statements and on the group management report.
Report on the Assurance on the Electronic Rendering of the
Consolidated Financial Statements and the Group Management
Report Prepared for Publication Purposes in Accordance with §
317 Abs. 3a HGB
Assurance Opinion
We have performed assurance work in accordance with § 317
Abs. 3a HGB to obtain reasonable assurance as to whether the
rendering of the consolidated financial statements and the
group management report (hereinafter the "ESEF documents")
contained in the electronic file BMW_AG_KA+KLB_ESEF-
2023-12-31.zip and prepared for publication purposes com-
plies in all material respects with the requirements of § 328 Abs.
1 HGB for the electronic reporting format ("ESEF format"). In ac-
cordance with German legal requirements, this assurance work
extends only to the conversion of the information contained in
the consolidated financial statements and the group manage-
ment report into the ESEF format and therefore relates neither
to the information contained within these renderings nor to any
other information contained in the electronic file identified
above.
In our opinion, the rendering of the consolidated financial state-
ments and the group management report contained in the elec-
tronic file identified above and prepared for publication purposes
complies in all material respects with the requirements of § 328
Abs. 1 HGB for the electronic reporting format. Beyond this as-
surance opinion and our audit opinion on the accompanying
consolidated financial statements and the accompanying group
management report for the financial year from 1 January to 31
December 2023 contained in the "Report on the Audit of the
Consolidated Financial Statements and on the Group Manage-
ment Report" above, we do not express any assurance opinion
on the information contained within these renderings or on the
other information contained in the electronic file identified
above.
Basis for the Assurance Opinion
We conducted our assurance work on the rendering of the con-
solidated financial statements and the group management re-
port contained in the electronic file identified above in accord-
ance with § 317 Abs. 3a HGB and the IDW Assurance Standard:
Assurance Work on the Electronic Rendering of Financial State-
ments and Management Reports, Prepared for Publication Pur-
poses in Accordance with § 317 Abs. 3a HGB (IDW ASS 410
(06.2022]) and the International Standard on Assurance En-
gagements 3000 (Revised). Our responsibility in accordance
therewith is further described in the "Group Auditor's Responsi-
bilities for the Assurance Work on the ESEF Documents" sec-
tion. Our audit firm applies the IDW Standard on Quality Man-
agement: Requirements for Quality Management in the Audit
Firm (IDW QMS 1 (09.2022)).
Responsibilities of the Executive Directors and the Supervisory
Board for the ESEF Documents
The executive directors of the Company are responsible for the
preparation of the ESEF documents including the electronic ren-
dering of the consolidated financial statements and the group
management report in accordance with § 328 Abs. 1 Satz 4 Nr.
[number] 1 HGB and for the tagging of the consolidated finan-
cial statements in accordance with § 328 Abs. 1 Satz 4 Nr. 2
HGB.
In addition, the executive directors of the Company are respon-
sible for such internal control as they have considered necessary
to enable the preparation of ESEF documents that are free from
material non-compliance with the requirements of § 328 Abs. 1
HGB for the electronic reporting format, whether due to fraud or
error.
The supervisory board is responsible for overseeing the process
for preparing the ESEF documents as part of the financial re-
porting process.
Group Auditor's Responsibilities for the Assurance Work on the
ESEF Documents
Our objective is to obtain reasonable assurance about whether
the ESEF documents are free from material non-compliance
with the requirements of § 328 Abs. 1 HGB, whether due to
fraud or error. We exercise professional judgment and maintain
professional skepticism throughout the assurance work. We
also:
Identify and assess the risks of material non-compliance
with the requirements of § 328 Abs. 1 HGB, whether due
to fraud or error, design and perform assurance procedures
responsive to those risks, and obtain assurance evidence
that is sufficient and appropriate to provide a basis for our
assurance opinion.
Obtain an understanding of internal control relevant to the
assurance work on the ESEF documents in order to design
assurance procedures that are appropriate in the
circumstances, but not for the purpose of expressing an
assurance opinion on the effectiveness of these controls.
Evaluate the technical validity of the ESEF documents, i.e.,
whether the electronic file containing the ESEF documents
meets the requirements of the Delegated Regulation (EU)
2019/815 in the version in force at the date of the
consolidated financial statements on the technical
specification for this electronic file.
Evaluate whether the ESEF documents provide an XHTML
rendering with content equivalent to the audited
consolidated financial statements and to the audited group
management report.
Evaluate whether the tagging of the ESEF documents with
Inline XBRL technology (iXBRL) in accordance with the
requirements of Articles 4 and 6 of the Delegated
Regulation (EU) 2019/815, in the version in force at the
date of the consolidated financial statements, enables an
appropriate and complete machine-readable XBRL copy of
the XHTML rendering.
250
From the matters communicated with those charged with gov-
ernance, we determine those matters that were of most signifi-
cance in the audit of the consolidated financial statements of the
current period and are therefore the key audit matters. We de-
scribe these matters in our auditor's report unless law or regu-
lation precludes public disclosure about the matter.
We also provide those charged with governance with a state-
ment that we have complied with the relevant independence re-
quirements, and communicate with them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
We communicate with those charged with governance regard-
ing, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant de-
ficiencies in internal control that we identify during our audit.
is materially inconsistent with the consolidated financial
statements, with the group management report disclosures
audited in terms of content or with our knowledge obtained
in the audit, or
otherwise appears to be materially misstated.
Responsibilities of the Executive Directors and the
Supervisory Board for the Consolidated Financial
Statements and the Group Management Report
The executive directors are responsible for the preparation of
the consolidated financial statements that comply, in all material
respects, with IFRSS as adopted by the EU and the additional
requirements of German commercial law pursuant to § 315e
Abs. 1 HGB and that the consolidated financial statements, in
compliance with these requirements, give a true and fair view of
the assets, liabilities, financial position, and financial perfor-
mance of the Group. In addition the executive directors are re-
sponsible for such internal control as they have determined nec-
essary to enable the preparation of consolidated financial state-
ments that are free from material misstatement, whether due to
fraud (i.e., fraudulent financial reporting and misappropriation of
assets) or error.
In preparing the consolidated financial statements, the execu-
tive directors are responsible for assessing the Group's ability to
continue as a going concern. They also have the responsibility
for disclosing, as applicable, matters related to going concern. In
addition, they are responsible for financial reporting based on
the going concern basis of accounting unless there is an inten-
tion to liquidate the Group or to cease operations, or there is no
realistic alternative but to do so.
Furthermore, the executive directors are responsible for the
preparation of the group management report that, as a whole,
provides an appropriate view of the Group's position and is, in
all material respects, consistent with the consolidated financial
statements, complies with German legal requirements, and
appropriately presents the opportunities and risks of future de-
velopment. In addition, the executive directors are responsible
for such arrangements and measures (systems) as they have
considered necessary to enable the preparation of a group man-
agement report that is in accordance with the applicable Ger-
man legal requirements, and to be able to provide sufficient ap-
propriate evidence for the assertions in the group management
report.
The supervisory board is responsible for overseeing the Group's
financial reporting process for the preparation of the consoli-
dated financial statements and of the group management re-
port.
Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements and of the Group Management Report
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error,
and whether the group management report as a whole provides
an appropriate view of the Group's position and, in all material
respects, is consistent with the consolidated financial state-
ments and the knowledge obtained in the audit, complies with
the German legal requirements and appropriately presents the
opportunities and risks of future development, as well as to issue
an auditor's report that includes our audit opinions on the con-
solidated financial statements and on the group management
report.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with § 317
HGB and the EU Audit Regulation and in compliance with Ger-
man Generally Accepted Standards for Financial Statement Au-
dits promulgated by the Institut der Wirtschaftsprüfer (IDW) will
always detect a material misstatement. Misstatements can
arise from fraud or error and are considered material if, individ-
ually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of
these consolidated financial statements and this group man-
agement report.
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of
the consolidated financial statements and of the group
management report, whether due to fraud or error, design
and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate
to provide a basis for our audit opinions. The risk of not
detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls.
Obtain an understanding of internal control relevant to the
audit of the consolidated financial statements and of
arrangements and measures (systems) relevant to the
audit of the group management report in order to design
audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an audit opinion on
the effectiveness of these systems.
← = Q
Evaluate the appropriateness of accounting policies used
by the executive directors and the reasonableness of
estimates made by the executive directors and related
disclosures.
249
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Independent Auditor's Report
Remuneration Report
Other Information
← = Q
-
Evaluate the overall presentation, structure and content of
the consolidated financial statements, including the
disclosures, and whether the consolidated financial
statements present the underlying transactions and events
in a manner that the consolidated financial statements give
a true and fair view of the assets, liabilities, financial
position and financial performance of the Group in
compliance with IFRSS as adopted by the EU and the
additional requirements of German commercial law
pursuant to § 315e Abs. 1 HGB.
Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express audit opinions on the
consolidated financial statements and on the group
management report. We are responsible for the direction,
supervision and performance of the group audit. We remain
solely responsible for our audit opinions.
Evaluate the consistency of the group management report
with the consolidated financial statements, its conformity
with German law, and the view of the Group's position it
provides.
Perform audit procedures on the prospective information
presented by the executive directors in the group
management report. On the basis of sufficient appropriate
audit evidence we evaluate, in particular, the significant
assumptions used by the executive directors as a basis for
the prospective information and evaluate the proper
derivation of the prospective information from these
assumptions. We do not express a separate audit opinion
on the prospective information and on the assumptions
used as a basis. There is a substantial unavoidable risk that
future events will differ materially from the prospective
information.
Conclude on the appropriateness of the executive directors'
use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast
significant doubt on the Group's ability to continue as a
going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in the auditor's
report to the related disclosures in the consolidated
financial statements and in the group management report
or, if such disclosures are inadequate, to modify our
respective audit opinions. Our conclusions are based on the
audit evidence obtained up to the date of our auditor's
report. However, future events or conditions may cause the
Group to cease to be able to continue as a going concern.
← = Q
In our view, the method for the valuation of provisions for statu-
tory and non-statutory warranty obligations as well as product
guarantees is overall appropriate. Taking into consideration the
information available, we believe that, overall, the measurement
Remuneration Report
8 The amounts shown for entities accounted for using the equity method and for proportionately consolidated entities correspond to the annual financial statements drawn up in accordance with uniform
IFRS rules. Equity not denominated in euros is translated into euros using the closing exchange rate at the balance sheet date, earnings are translated using the average rate.
9 First-time consolidation.
10 Deconsolidation in financial year 2023: Alphabet Austria Fuhrparkmanagement GmbH, Salzburg (merger), BMW Services Ltd, Bracknell (in liquidation), BMW (UK) Investments Ltd, Bracknell (in
liquidation), BLMC Ltd, Bracknell (in liquidation).
11 Control on basis of economic dependence.
28
18
16
16
10
8
6
5
3
7 These entities are neither consolidated nor accounted for using the equity method due to their overall immateriality for the Group Financial Statements.
3
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
Munich, 12 March 2024
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
Oliver Zipse
242
6 Exemption from publishing financial statements applied in accordance with § 264 (3) and § 264b HBG.
5 Exemption from drawing up a management report applied in accordance with § 264 (3) and § 264b HBG.
4 Profit and Loss Transfer Agreement with a subsidiary of BMW AG.
Other Information
241
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
BMW AG's participations at 31 December 2023
Companies
DOMESTIC7
IVM Industrie-Verband Motorrad GmbH & Co. Dienstleistungs KG, Essen
SGL Carbon SE, Wiesbaden
Hubject GmbH, Berlin
Joblinge gemeinnützige AG Leipzig, Leipzig
Joblinge gemeinnützige AG Berlin, Berlin
Racer Benchmark Group GmbH, Landsberg am Lech
Joblinge gemeinnützige AG München, Munich
Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern
GSB Sonderabfall-Entsorgung Bayern GmbH, Baar-Ebenhausen
FOREIGN7
Northvolt AB, Stockholm
Profit/loss in € million
Capital investment in %
1 The amounts shown for German affiliated companies correspond to the annual financial statements drawn up in accordance with German accounting rules (HGB).
2 The amounts shown for foreign affiliated companies correspond to the annual financial statements drawn up in accordance with uniform IFRS rules. Equity and earnings not denominated in euros are
translated into euros using the closing exchange rate at the balance sheet date.
3 Profit and Loss Transfer Agreement with BMW AG.
Jochen Goller
Ilka Horstmeier
Equity in € million
Dr-Ing Milan Nedeljković
Dr-Ing Milan Nedeljković
Dr-Ing Joachim Post
Frank Weber
245
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Independent Auditor's Report
Remuneration Report
Other Information
← = Q
INDEPENDENT AUDITOR'S REPORT
To Bayerische Motoren Werke Aktiengesellschaft, Munich
Report on the audit of the consolidated financial
statements and of the group management report
Audit Opinions
In our opinion, on the basis of the knowledge obtained in the
audit,
the accompanying consolidated financial statements
comply, in all material respects, with the IFRSs as adopted
by the EU, and the additional requirements of German
commercial law pursuant to § [Article] 315e Abs.
[paragraph] 1 HGB [Handelsgesetzbuch: German
Commercial Code] and, in compliance with these
requirements, give a true and fair view of the assets,
liabilities, and financial position of the Group as at 31
December 2023, and of its financial performance for the
financial year from 1 January to 31 December 2023, and
the accompanying group management report as a whole
provides an appropriate view of the Group's position. In all
material respects, this group management report is
consistent with the consolidated financial statements,
complies with German legal requirements and
appropriately presents the opportunities and risks of future
development. Our audit opinion on the group management
report does not cover the content of those parts of the
group management report listed in the "Other Information"
section of our auditor's report.
Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we declare
that our audit has not led to any reservations relating to the legal
compliance of the consolidated financial statements and of the
group management report.
Basis for the Audit Opinions
We conducted our audit of the consolidated financial statements
and of the group management report in accordance with § 317
HGB and the EU Audit Regulation (No. 537/2014, referred to
subsequently as "EU Audit Regulation") in compliance with Ger-
man Generally Accepted Standards for Financial Statement Au-
dits promulgated by the Institut der Wirtschaftsprüfer [Institute
of Public Auditors in Germany] (IDW). Our responsibilities under
those requirements and principles are further described in the
"Auditor's Responsibilities for the Audit of the Consolidated Fi-
nancial Statements and of the Group Management Report" sec-
tion of our auditor's report. We are independent of the group en-
tities in accordance with the requirements of European law and
German commercial and professional law, and we have fulfilled
our other German professional responsibilities in accordance
with these requirements. In addition, in accordance with Article
10 (2) point (f) of the EU Audit Regulation, we declare that we
have not provided non-audit services prohibited under Arti-
cle 5 (1) of the EU Audit Regulation. We believe that the audit
evidence we have obtained is sufficient and appropriate to
246
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Group Financial Statements
Walter Mertl
Responsibility Statement and Auditor's Report
Independent Auditor's Report
Walter Mertl
Ilka Horstmeier
We have audited the group financial statements of Bayerische
Motoren Werke Aktiengesellschaft, Munich, and its subsidiaries
(the Group), which comprise the balance sheet for the group at
31 December 2023, and the income statement for the group,
the statement of comprehensive income for the group, the state-
ment of changes in equity for the group and the cash flow state-
ment for the group for the financial year from 1 January to
31 December 2023, and notes to the group financial state-
ments, including material accounting policy information. In addi-
tion, we have audited the group management report of Bayer-
ische Motoren Werke Aktiengesellschaft, which is combined with
the Company's management report, for the financial year from
1 January to 31 December 2023. In accordance with the Ger-
man legal requirements, we have not audited the content of
those parts of the group management report listed in the "Other
Information" section of our auditor's report.
Oliver Zipse
Frank Weber
243
Jochen Goller
BMW Group Report 2023 To Our Stakeholders Combined Management Report Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
←三〇
245 Independent Auditor's Report
252 Independent Practitioner's Report
04
RESPONSIBILITY STATEMENT
AND AUDITOR'S REPORT
244
244 Responsibility Statement by the Company's Legal Representatives
Group Financial Statements
The Board of Management
Bayerische Motoren Werke
Aktiengesellschaft
Munich, 12 March 2024
BMW Group Report 2023 To Our Stakeholders Combined Management Report
"To the best of our knowledge, and in accordance with the appli-
cable reporting principles, the Group Financial Statements give a
true and fair view of the assets, liabilities, financial position and
results of operations of the Group, and the Group Management
Report includes a fair review of the development and perfor-
mance of the business and position of the Group, together with a
description of the principal opportunities and risks associated
with the expected development of the Group."
Statement pursuant to § 117 No.1 of the German Securities
Trading Act (WPHG) in conjunction with § 297 (2) sentence 4
and § 315 (1) sentence 5 of the German Commercial Code
(HGB)
LEGAL REPRESENTATIVES
Dr-Ing Joachim Post
RESPONSIBILITY STATEMENT BY THE COMPANY'S
← = Q
Other Information
Responsibility Statement and Auditor's Report Remuneration Report
Responsibility Statement by the Company's Legal Representatives
← = Q
The amount of the variable share-based remuneration also
depends on the fulfilment of financial and non-financial
objectives derived from the business strategy, since 50% of
the target personal cash investment amount earmarked for
share purchases is linked to a financial key indicator (ROCE
in the Automotive segment), and 50% is linked to strategic
The variable bonus is divided into two parts, which influence
behaviour in different ways. The earnings-related
component of the bonus rewards recipients for achieving
the Company's financial targets in the vesting year, and
promotes the earnings-related parts of the business
strategy. In contrast, the performance component of the
bonus is based on non-financial performance criteria, which
are also derived from the business strategy. In this respect,
the performance component of the bonus also offers
particular incentives to encourage individuals to pursue the
goals of the business strategy consistently for the long-term
development of the Company. These goals do not have to
be directly reflected in the key financial indicators for a given
vesting year.
The fixed basic remuneration counteracts the temptation to
take disproportionately high risks in order to achieve short-
term goals, and thus contributes to the long-term
development of the Company. It ensures a minimum income
appropriate to the tasks and responsibilities of a member of
the Board of Management.
The BMW Group aims to be the most successful and sustainable
premium provider of individual mobility. The business strategy
focuses on the customer and the provision of sustainable individ-
ual mobility in the premium segment, taking into account high
profitability, in order to secure the Company's independence in
the future. The remuneration system contributes to the imple-
mentation of the business strategy and the sustainable and long-
term development of the Company. It also takes into account the
concerns of the Company's important stakeholders (in particular,
shareholders, customers and employees). The incentive effects
of the various remuneration components have a complementary
effect.
The total remuneration is in line with market practice both in
terms of amount and structure, and takes into account the
size, complexity and economic situation of the Company.
The remuneration system observes the principle of
consistency between the remuneration systems in the
Company: the remuneration systems for the Board of
Management, executives and employees of BMW AG are all
designed in a similar way.
1.
The remuneration system ensures that both positive and
negative developments are appropriately reflected in the
remuneration ("pay for performance").
focus targets. The obligation to use the total net amount to
purchase shares of common stock in the Company and to
hold these shares for at least four years is a share ownership
guideline that strengthens the entrepreneurial long-term
orientation of the Board of Management. Implementing the
corporate strategy sustainably by taking appropriate
decisions also creates lasting value for the shareholders,
and thus regularly provides the basis for positive long-term
capital market performance. Due to the substantial
investment and the fixed holding period associated with
these shares, members of the Board of Management
participate in the long-term positive (and negative)
development of the Company, as reflected in the share price
and dividend trends.
III. REMUNERATION OF THE MEMBERS
The total remuneration of the members of the Board of
Management is commensurate with their tasks and
performance as well as the Company's situation.
The remuneration structure is geared towards the
sustainable and long-term development of the Company.
Therefore, variable remuneration components are pre-
dominantly granted on the basis of a multi-year
assessment.
Principles of the remuneration system and the contribution of
remuneration to the promotion of the Company's business
strategy and its long-term development
OF THE BOARD OF MANAGEMENT
III. Remuneration of the Members of the Board of Management
The remuneration system takes into account both the
performance of the entire Board of Management and the
achievement of individual targets.
The remuneration system which has been in place since the
2021 financial year complies with the provisions of the German
Stock Corporation Act (AktG) and the recommendations and
suggestions of the GCGC. The Supervisory Board has applied the
following principles in designing the remuneration system for the
Board of Management:
FIXED REMUNERATION COMPONENTS
BMW Group Report 2023
Strategic relevance
VARIABLE REMUNERATION COMPONENTS
Member of the Board of Management:
Other Information
Retirement benefits
Compensation payments
Fringe benefits
Base salary
259
Parameters/measurement base, applicable amounts
Overview of the remuneration system
2.
III. Remuneration of the Members of the board of Management
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
The table below shows an overview of the current remuneration system.
COMPONENT
Remuneration Report
VI. Other Considerations
BMW Group Report 2023 To Our Stakeholders Combined Management Report
BMW Group Report 2023
257
² Due to rounding, it is possible that individual figures in this report may not add up exactly to the
totals provided, and that the percentages presented here may not be an exact reflection of the
absolute values to which they relate.
1 For reasons of simplicity, this report partially uses the masculine form in reference to persons. It is
intended to represent all genders.
VII. Auditor's Report
305
304
The 2023 financial year was very successful for the BMW Group.
A total of 2,554,183 vehicles were delivered - a new record for
the BMW Group. The BMW brand defended its leading position
in the global premium segment by selling just under 2.3 million
delivered vehicles. The Rolls-Royce brand also achieved record
sales. BMW Motorrad achieved the strongest sales in the Com-
pany's history in the year of its 100th anniversary.
REVIEW OF THE 2023 FINANCIAL YEAR
FROM A REMUNERATION PERSPECTIVE
I.
schaft, Frankfurt am Main, Munich branch, has audited the Re-
muneration Report beyond the requirements of § 162 (3) Sen-
tences 1 and 2 AktG. The Auditor's Report is attached to this
report.
Wirtschaftsprüfungsgesell-
GmbH
PricewaterhouseCoopers
― € 0.90 million p. a. (first period of office = first remuneration level)
The Board of Management and the Supervisory Board have pre-
pared this Remuneration Report in accordance with the require-
ments of § 162 of the German Stock Corporation Act (AktG). The
report shows and explains the remuneration granted and owed
to the individual current and former members of the Board of
Management and the Supervisory Board of Bayerische Motoren
Werke Aktiengesellschaft (BMW AG) in the financial year 2023.1.2
In order to facilitate understanding, the basic features of the re-
muneration system applicable to the members of the Board of
Management and the Supervisory Board, as applied in the 2023
financial year, are also set out below. In view of the fact that indi-
vidual members of the Board of Management also received re-
muneration components from the remuneration system in effect
in the 2018 financial year during the 2023 financial year, ele-
ments of these systems are also explained to the extent neces-
sary for comprehension.
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Group Financial Statements
Remuneration Report Other Information
258
There are no plans to change the remuneration system for mem-
bers of the Supervisory Board for the 2024 financial year.
The remuneration system and the target remuneration for the
remuneration levels of the members of the Board of Manage-
ment, as described in this report for the 2023 financial year, will
continue to apply unchanged in the 2024 financial year. In De-
cember 2023, the Supervisory Board set the targets for variable
remuneration for the 2024 financial year on the basis of a pro-
posal by the Personnel Committee. A resolution was passed to
raise the required level of performance for the earnings compo-
nent of the bonus for the Board of Management, which remains
limited to 180% of the target remuneration.
2024 FINANCIAL YEAR
OUTLOOK FOR THE
II.
Incorporation. In the 2023 financial year, Dr Martin Kimmich was
appointed by the court to replace Mr Manfred Schoch as a mem-
ber of the Supervisory Board on 18 January 2023. Mr Schoch left
the Supervisory Board on 31 December 2022. On 23 January
2023, Dr Kimmich was appointed as the first deputy chair by the
Supervisory Board and as a member of the Personnel and Audit
Committee. As the first deputy chair, he is also a member of the
Presiding Board and the legally required Mediation Committee.
Apart from this, the composition of the Personnel Committee,
which is responsible for the preparation of remuneration deci-
sions in accordance with the Supervisory Board's rules of proce-
dure, did not change in the 2023 financial year. The Supervisory
Board awarded a contract to new external remuneration consult-
ants in the 2023 financial year. The Remuneration Report for the
2022 financial year was confirmed by the Annual General Meet-
ing on 11 May 2023 with a majority of 94.14% of the valid votes
cast. In view of the high level of approval, there was no reason to
rethink the implementation of the current remuneration system
or the manner of reporting. Changes were made to make certain
issues clearer.
The remuneration system for the members of the Supervisory
Board is set out in Article 16 of the Articles of Incorporation and
provides only for fixed remuneration. It was confirmed by the An-
nual General Meeting on 12 May 2021 with a majority of
99.40% of the valid votes cast, and implemented for the 2023
financial year in accordance with the provisions of the Articles of
The composition of the Board of Management changed during
the 2023 financial year. Mr Pieter Nota left the Board of Man-
agement on 31 October 2023 by mutual agreement as part of a
succession arrangement. Dr Nicolas Peter left the Board of Man-
agement on 11 May 2023. This was also by mutual agreement
as part of a succession arrangement. ▾ Premature termination of
activities and post-contractual non-competition clause Mr Walter Mertl was
appointed as the member of the Board of Management respon-
sible for Finance on 12 May 2023. Mr Jochen Goller was ap-
pointed as the member of the Board of Management responsible
for Customer, Brands, Sales on 1 November 2023. From the
start date of his second period of office on 1 July 2023, Mr Frank
Weber was eligible to receive the target remuneration in the sec-
ond remuneration level, which is available to members of the
Board of Management from their second period of office.
If necessary, and in the interest of the long-term success of
BMW AG, the Supervisory Board may temporarily deviate from
the remuneration system - as provided for in § 87a (2) Sentence
2 AktG. In accordance with G.11 of the German Corporate Gov-
ernance Code dated 28 April 2022 ("GCGC"), the Supervisory
Board has also reserved the right to make adjustments if extraor-
dinary developments occur, such as significant acquisitions and
disposals, or changes in accounting standards or tax regulations
that have a significant impact. After due examination, it did not
make use of these options for the 2023 financial year.
makes up part of the long-term variable remuneration (share-
based remuneration) component was also exceeded. In terms of
the non-financial strategic focus targets for the long-term vari-
able remuneration, the ambitious targets related to the reduction
of fleet carbon emissions in the EU were exceeded, while the
BMW Group's sales targets for all-electric vehicles were not quite
met in full. Share-based remuneration for the financial year 2023
Thanks to its strong overall performance, the Board of Manage-
ment exceeded both the financial and a large part of the non-
financial targets for short-term variable remuneration (bonuses)
for the 2023 financial year. 7 Bonus for the 2023 financial year The fi-
nancial target tied to ROCE in the Automotive segment which
In December 2022, the Supervisory Board set ambitious targets
linked to the variable remuneration of the members of the Board
of Management for the 2023 financial year. Of the total variable
target remuneration available, around 39% was linked to envi-
ronmental, social or governance (ESG) targets. The Supervisory
Board has set ambitious targets to reduce fleet carbon emissions
in the EU and to increase all-electric vehicle sales. These serve
as strategic focus targets that correspond to 50% of the long-
term variable remuneration (share-based remuneration). The
Supervisory Board has thus once again incorporated the strate-
gic importance of accelerating the electrification of the vehicle
fleet into the remuneration for the members of the Board of Man-
agement. The Supervisory Board placed particular emphasis on
environmental sustainability targets, which make up 50% of the
long-term variable remuneration.
The current remuneration system for the members of the Board
of Management came into effect on 1 January 2021. The Annual
General Meeting approved it on 12 May 2021 with a majority of
91.60% of the valid votes cast. The Supervisory Board did not
resolve any changes to the remuneration system or the target
remuneration in the remuneration levels set out for the members
of the Board of Management in the 2023 financial year.
The BMW Group generated a strong profit in the 2023 financial
year. Group net profit amounted to € 12.2 billion, with € 11.3 bil-
lion attributable to BMW AG shareholders, while the Group return
on sales after tax amounted to 7.8%. Under the leadership of the
Board of Management, the Company continued to drive the
BMW Group's transformation to electromobility forward in the re-
porting year. The BMW Group increased its sales of all-electric
ve-hicles at a significantly greater pace than the market as a
whole and has an all-electric offering in every major segment.
The proportion of total sales attributable to all-electric vehicles
went up to around 15%.
← = Q
II. Outlook for the 2024 Financial Year
Responsibility Statement and Auditor's Report
― € 1.05 million p. a. (from second period of office or fourth year of mandate = second remuneration level)
― € 0.855 million (first period of office = first remuneration level)
- € 1.95 million p. a.
- Performance factor may not exceed 1.8
― Measurement parameters and target values are determined before the start of the financial year
- Criteria for the other cross-divisional targets include in particular: Market position compared to competitors, innovation performance (economic), development of the BMW Group's reputation based on
non-ESG-related aspects (e. g. perception on capital markets, brand strength), customer orientation
- Criteria for cross-divisional targets with ESG criteria include in particular: Innovation performance (environmental, e. g. reduction of carbon emissions), development of the BMW Group's reputation based on
ESG aspects (e. g. corporate culture, promotion of integrity and compliance), adaptability, attractiveness as an employer, leadership performance
-10% individual targets
-40% other cross-divisional targets
-50% cross-divisional targets with ESG criteria
― Composition of performance factor:*
- Additional trend analysis over at least three financial years
- Relevant period is the vesting year
- Primarily qualitative, non-financial criteria, expressed in terms of a performance factor, aimed at measuring the Board member's contribution to sustainable and long-term performance and corporate
orientation
-Formula: 50% of target amount x performance factor
― € 1.050 million (Chairman of the Board of Management)
― € 0.575 million (from second period of office or fourth year of mandate = second remuneration level)
- € 0.475 million (first period of office = first remuneration level)
- Base amount p. a. (50% of target bonus amount):
Assessment period one year
- Maximum amount of performance component p. a.:
Parameters/measurement base, applicable amounts
― € 1.035 million (from second period of office or fourth year of mandate = second remuneration level)
-Earnings component of bonus rewards attainment of financial targets and is beneficial for earnings-related aspects of business strategy
REMUNERATION REPORT
* See below for the targets set for the 2023 financial year Variable remuneration for the 2023 financial year.
- Payment after the Annual General Meeting at which the Financial Statements are presented for the relevant vesting year
-50% of the target amount depends on the achievement of predefined strategic focus targets (strategic focus target component)
― Capped at 180% of target amount
-50% of target amount depends on ROCE achieved in the Automotive segment (RoCE component)
― € 2.35 million (Chairman of the Board of Management)
― € 1.28 million (from second period of office or fourth year of mandate = second remuneration level)
― € 1.10 million (first period of office = first remuneration level)
- Target amount p. a. (at 100% target achievement):
― Assessment period of five years in total (one year for determining the personal cash investment amount, four years holding requirement)
- Requirement for Board of Management members to hold the acquired shares of common stock for at least four years; this requirement remains in effect for individuals who step down from the Board of
Management (share ownership guideline)
- Payment as part of the next payroll run after the Annual General Meeting at which the Financial Statements are presented for the relevant vesting year
― Requirement for Board of Management members to invest an earmarked cash amount (personal cash investment amount), net of tax and deductions, in shares of BMW common stock immediately after
disbursement
Calculation
Share-based remuneration
Personal cash investment amount
Strategic relevance
-Performance component of bonus motivates the pursuit of non-financial strategic targets and is therefore beneficial for the long-term development of the BMW Group
― € 1.890 million (Chairman of the Board of Management)
(at 100% target achievement corresponds to
50% of target amount)
Performance component
Bonus (continued)
― € 1.15 million (from second period of office or fourth year of mandate = second remuneration level)
― € 0.95 million (first period of office = first remuneration level)
- Target amount p. a. (at 100% target achievement):
(at 100% target achievement corresponds to
50% of target amount]
Earnings component
performance component)
(sum of earnings component and
Bonus
Bonus
- Fixed remuneration components are required for remuneration to be competitive in order to attract and retain qualified members of the Board of Management
The base salary counteracts the temptation to take disproportionately high risks in order to achieve short-term goals, and thus contributes to the long-term development of the Company
Chairman of the Board of Management: € 700,000
Member of the Board of Management: € 400,000
Pension contribution p. a.:
Benefits based on amounts credited to individual savings accounts for contributions paid and interest earned, various forms of disbursement
Contractual agreement, main points: non-cash benefits from the use of company cars and the BMW chauffeur service, insurance premiums, contributions towards security systems, employee discounts
The Supervisory Board may award payments to compensate for loss of salary from a previous employment relationship and to cover relocation costs in the case of new entrants
Defined contribution system with a guaranteed minimum return
Base salary is paid monthly on a pro rata basis
― € 2.10 million (Chairman of the Board of Management)
― Capped at 180% of target amount
- Payment as part of the next payroll run after the Annual General Meeting at which the Financial Statements are presented for the relevant vesting year
Assessment period one year
- Base amount p. a. (50% of target bonus amount):
COMPONENT
III. Remuneration of the Members of the board of Management
← = Q
Other Information
Remuneration Report
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
260
Chairman of the Board of Management:
- € 1.890 million (Chairman of the Board of Management)
- € 0.855 million (first period of office = first remuneration level)
- Maximum amount of earnings component p. a.:
-The earnings factor is 1.5 in case of a profit attributable to shareholders of BMW AG amounting to € 6.9 billion and a post-tax return on sales of 7.3%
―The earnings factor is 0 in case of a profit attributable to shareholders of BMW AG below € 3.0 billion or a post-tax return on sales of below 3.0%
― Earnings factor may not exceed 1.8
― Earnings factor is derived from an allocation matrix determined in advance based on the parameters "profit attributable to shareholders of BMW AG" and "Group post-tax return on sales" in the vesting year
―The earnings factor is 1.0 in case of a profit attributable to shareholders of BMW AG amounting to € 5.3 billion and a post-tax return on sales of 5.6%
- Formula: 50% of target amount x performance factor
― € 1.050 million (Chairman of the Board of Management)
- € 0.575 million (from second period of office or fourth year of mandate = second remuneration level)
― € 0.475 million (first period of office = first remuneration level)
- € 1.035 million (from second period of office or fourth year of mandate = second remuneration level)
Stock Corporation Act (AktG)
← = Q
Remuneration granted and owed to members of the
Supervisory Board pursuant to § 162 of the German Stock
Corporation Act (AktG)
Identification of the likely risks of material misstatement of
the Integrated Group Report
Inquiries of the executive directors and relevant employees
involved in the preparation of the Integrated Group Report
regarding the preparation process, the internal control
system relat-ing to this process and selected disclosures in
the Integrated Group Report
-
engagement
Obtaining an understanding of the structure of the
sustainability organization and of the stakeholder
In the course of our assurance engagement, we have, amongst
other things, performed the follow-ing assurance procedures and
other activities:
In a limited assurance engagement the procedures performed
are less extensive than in a reason-able assurance engagement,
and accordingly a substantially lower level of assurance is ob-
tained. The selection of the assurance procedures is subject to
the professional judgement of the assur-ance practitioner.
the Sustainability Disclosures in the sections "Dialog with
stakeholders", "Further GRI in-formation" and "SASB-
Index" of the Company's Integrated Group Report have not
been prepared, in all material aspects, in accordance with
the relevant GRI-Criteria.
the Disclosures on Non-financial Reporting denoted with the
symbol [[ ]] of the Com-pany's Combined Non-financial
Statement, which is integrated into the combined man-
agement report contained in the Integrated Group Report,
other than the external sources of documentation or expert
opinions mentioned in the Disclosures on Non-financial Re-
porting denoted with the symbol [[ ]] of the Combined
Non-financial Statement, have not been prepared, in all
material respects, in accordance with §§ 315c in
conjunction with 289c to 289e HGB and the EU Taxonomy
Regulation and the Delegated Acts issued thereunder as
well as the interpretation by the executive directors
disclosed in section "EU-Taxonomy" of the Combined Non-
financial Statement, or
We conducted our assurance engagement in accordance with In-
ternational Standard on Assur-ance Engagements (ISAE) 3000
(Revised): Assurance Engagements other than Audits or Re-
views of Historical Financial Information, issued by the IAASB.
This Standard requires that we plan and perform the assurance
engagement to obtain limited assurance about whether any
matters have come to our attention that cause us to believe that
Our responsibility is to express a conclusion with limited assur-
ance on the Disclosures on Non-financial Reporting denoted with
the symbol [[ ]] of the Combined Non-financial Statement and
the Sustainability Disclosures in the sections "Dialog with stake-
holders", "Further GRI infor-mation" and "SASB-Index" of the In-
tegrated Group Report based on our assurance engagement.
Responsibility of the Assurance Practitioner
Our audit firm applies the national legal requirements and pro-
fessional standards – in particular the Professional Code for Ger-
man Public Auditors and German Chartered Auditors
("Berufssatzung für Wirtschaftsprüfer und vereidigte Buch-
prüfer": "BS WP/vBP") as well as the Standard on Quality Man-
agement 1 published by the Institut der Wirtschaftsprüfer (Insti-
tute of Public Auditors in Germany; IDW): Requirements to quality
management for audit firms (IDW Qualitätsmanagementstand-
ard 1: Anforderungen an das Qualitätsmanagement in der
Wirtschaftsprüferpraxis - IDW QMS 1 (09.2022)), which requires
the audit firm to design, imple-ment and operate a system of
quality management that complies with the applicable legal re-
quirements and professional standards.
Audit Firm's Independence and Quality Management
We have complied with the German professional provisions re-
garding independence as well as other ethical requirements.
← = Q
Other Information
Remuneration Report
Testing of
processes for the collection, control, analysis and
aggregation of selected data from various Group sites on a
sample basis
Responsibility Statement and Auditor's Report
Independent Practitioner's Report
Analytical evaluation of selected disclosures in the
Integrated Group Report
Evaluation of the presentation of the disclosures
Inquiries on the relevance of climate-risks
We draw attention to the fact that the assurance engagement
was conducted for the Company's purposes and that the report
is intended solely to inform the Company about the result of the
assurance engagement. Consequently, it may not be suitable for
any other purpose than the aforementioned. Accordingly, the re-
port is not intended to be used by third parties for making (finan-
cial) decisions based on it. Our responsibility is to the Company.
We do not accept any re-sponsibility to third parties. Our assur-
ance opinion is not modified in this respect.
Restriction of Use
We do not express an assurance opinion on the external sources
of documentation or expert opinions mentioned in the Disclo-
sures on Non-financial Reporting denoted with the symbol [[ ]]
of the Company's Combined Non-financial Statement.
the Sustainability Disclosures in the sections "Dialog with
stakeholders", "Further GRI in-formation" and "SASB-
Index" of the Company's Integrated Group Report for the
period from 1 January to 31 December 2023 have not been
prepared, in all material aspects, in accordance with the
relevant GRI-Criteria.
the Disclosures on Non-financial Reporting denoted with the
symbol [[ ]] of the Com-pany's Combined Non-financial
Statement for the period from 1 January to 31 December
2023, which is integrated into the combined management
report contained in the Inte-grated Group Report, have not
been prepared, in all material aspects, in accordance with
§§ 315c in conjunction with 289c to 289e HGB relevant to
these disclosures and the EU Taxonomy Regulation and the
Delegated Acts issued thereunder as well as the interpreta-
tion by the executive directors disclosed in section "EU-
Taxonomy" of the Non-financial Statement, or
Based on the assurance procedures performed and evidence
obtained, nothing has come to our attention that causes us to
believe that
Assurance Opinion
← = Q
Other Information
V. Comparison of Change in Remuneration and Earnings
pursuant to § 162 (1) Sentence 2 No. 2 of the German
Responsibility Statement and Auditor's Report
Independent Practitioner's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
254
In determining the disclosures in accordance with Article 8 of the
EU Taxonomy Regulation, the executive directors are required to
interpret undefined legal terms. Due to the immanent risk that
undefined legal terms may be interpreted differently, the legal
conformity of their interpretation and, accordingly, our assurance
engagement thereon are subject to uncertainties.
Evaluation of CO₂ compensation certificates exclusively with
regard to their existence, but not with regard to their impact.
Evaluation of the process to identify taxonomy-eligible and
taxonomy-aligned economic activi-ties and the
corresponding disclosures in the Combined Non-financial
Statement
Munich, 13 March 2024
Group Financial Statements
253
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
Munich, 13 March 2024
The German Public Auditor responsible for the engagement is
Michael Popp.
RESPONSIBLE FOR THE ENGAGEMENT
GERMAN PUBLIC AUDITOR
Our auditor's report must always be read together with the au-
dited consolidated financial statements and the audited group
management report as well as the assured ESEF documents.
The consolidated financial statements and the group manage-
ment report converted to the ESEF format - including the ver-
sions to be filed in the company register - are merely electronic
renderings of the audited consolidated financial statements and
the audited group management report and do not take their
place. In particular, the "Report on the Assurance on the Elec-
tronic Rendering of the Consolidated Financial Statements and
the Group Management Report Prepared for Publication Pur-
poses in Accordance with § 317 Abs. 3a HGB" and our assur-
ance opinion contained therein are to be used solely together
with the assured ESEF documents made available in electronic
form.
REFERENCE TO AN OTHER MATTER -
USE OF THE AUDITOR'S REPORT
We declare that the audit opinions expressed in this auditor's
report are consistent with the additional report to the audit com-
mittee pursuant to Article 11 of the EU Audit Regulation (long-
form audit report).
We were elected as group auditor by the annual general meeting
on 11 May 2023. We were engaged by the supervisory board
on 4 July 2023. We have been the group auditor of Bayerische
Motoren Werke Aktiengesellschaft, Munich, without interruption
since the financial year 2019.
Further Information pursuant to Article 10 of the EU Audit
Regulation
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Independent Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
251
Petra Justenhoven
Wirtschaftsprüferin
(German Public Auditor)
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Michael Popp
Wirtschaftsprüfer
(German Public Auditor)
BMW Group Report 2023
1 PricewaterhouseCoopers GmbH has performed a limited assurance engagement on the German version of the,,BMW Group Report 2023" and issued an independent practitioner's report in German language,
which is authoritative. The following text is a translation of the independent practitioner's report.
The EU Taxonomy Regulation and the Delegated Acts issued
thereunder contain wording and terms that are still subject to
considerable interpretation uncertainties and for which clarifica-
tions have not yet been published in every case. Therefore, the
executive directors have disclosed their interpretation of the EU
Taxonomy Regulation and the Delegated Acts adopted thereun-
der in section "EU-Taxonomy" of the Combined Non-financial
Statement. They are responsible for the defensibility of this inter-
pretation. Due to the immanent risk that indeterminate legal
terms may be interpreted differently, the legal conformity of the
interpretation is subject to uncertainties.
and making assumptions and estimates about individual non-fi-
nancial and sustainability disclosures of the Group that are rea-
sonable in the circumstances. Furthermore, the executive direc-
tors are responsible for such internal control as the executive di-
rectors consider necessary to enable the preparation of an Inte-
grated Group Report that is free from material misstatement
whether due to fraud or error.
This responsibility includes the selection and application of ap-
propriate non-financial and sus-tainability reporting methods
The executive directors of the Company are responsible for the
preparation of the Combined Non-financial Statement in accord-
ance with §§ (Articles) 315c in conjunction with 289c to 289e
HGB ("Handelsgesetzbuch": "German Commercial Code") and
Article 8 of REGULATION (EU) 2020/852 OF THE EUROPEAN
PARLIAMENT AND OF THE COUNCIL of 18. June 2020 on es-
tablishing a framework to facilitate sustainable investment and
amending Regulation (EU) 2019/2088 (here-inafter the "EU
Taxonomy Regulation") and the Delegated Acts adopted there-
under, as well as for making their own interpretation of the word-
ing and terms contained in the EU Taxonomy Regula-tion and
the Delegated Acts adopted thereunder, as set out in section
,,EU-Taxonomy" of the Combined Non-financial Statement and
the Integrated Group Report in accordance with the prin-ciples
stated in the Sustainability Reporting Standards of the Global
Reporting Initiative (hereinaf-ter the "GRI-Criteria") and for the
selection of the disclosures in the Combined Non-financial State-
ment and the Sustainability Disclosures.
Responsibility of the Executive Directors
Not subject to our assurance engagement are the external
sources of documentation or expert opinions mentioned in the
Integrated Group Report.
To Bayerische Motoren Werke Aktiengesellschaft, Munich
We have performed a limited assurance engagement on the dis-
closures in the "BMW Group Re-port 2023" of Bayerische Mo-
toren Werke Aktiengesellschaft, Munich, (hereinafter the
"Compa-ny") for the period from 1 January to 31 December
2023 (hereinafter the "Integrated Group Re-port") denoted with
[[ ]] of the Combined Non-financial Statement, which is inte-
grated into the combined management report (hereinafter the
"Disclosures on Non-financial Reporting") con-tained in the Inte-
grated Group Report, as well as the sustainability disclosures
contained in the sections "Dialog with stakeholders","Further
GRI information" and "SASB-Index" of the Integrat-ed Group Re-
port (hereinafter referred to as "Sustainability Disclosures"). Our
engagement in this context relates solely to the disclosures de-
noted with the symbol [[ ]] and the disclosures in the sections
"Dialog with stakeholders", "Further GRI information" and
"SASB-Index".
Independent Practitioner's Report on a Limited Assurance En-
gagement on Disclosures on Non-financial Reporting and Sus-
tainability Disclosures
Independent Practitioner's Report on a Limited Assurance
Engagement on Disclosures on Non-financial Reporting and
Sustainability Discloures¹
INDEPENDENT PRACTITIONER'S REPORT
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Independent Practitioner's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
252
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
Remuneration Report
(German Public Auditor)
279
279
6. Retirement benefits
279
Share ownership guideline
5.
278
Michael Popp
Wirtschaftsprüfer
4.
268
3. Determination and review of the remuneration system and
individual remuneration
262
2. Overview of the remuneration system
259
business strategy and its long-term development
1. Principles of the remuneration system and the contribution
of remuneration to the promotion of the Company's
ment
8.
III. Remuneration of the Members of the Board of Manage-
7. Malus and clawback provisions
9.
2. Principles and elements of remuneration
300
3.
297
297
Articles of incorporation and procedure
1.
297
Board
IV. Remuneration of the Members of the Supervisory
11. Maximum remuneration and remuneration vested in the
2023 financial year (vesting year)
10. Remuneration granted and owed to former members of
the Board of Management pursuant to § 162 of the
German Stock Corporation Act (AktG)
Remuneration granted and owed to members of the Board
of Management pursuant to § 162 of the German Stock
Corporation Act (AktG)
Premature termination of activities and post-contractual
non-competition clause
297
294
291
280
Outlook for the 2024 Financial Year
Remuneration for the 2023 financial year
Review of the 2023 Financial Year from a
Act (AktG)
300 V. Comparison of Change in Remuneration and Earnings Pursuant
to § 162 (1) Sentence 2 No. 2 of the German Stock Corporation
297 IV. Remuneration of the Members of the Supervisory Board
258 III. Remuneration of the Members of the Board of Management
257 II. Outlook for the 2024 Financial Year
Perspective
256 I. Review of the 2023 Financial Year from a Remuneration
256 Remuneration Report
← = Q
Remuneration Perspective
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
255
Annette Fink
304 VI. Other Considerations
305 VII. Auditor's Report
Other Information
REMUNERATION
05
258
258
II.
I.
256
REMUNERATION REPORT
← = Q
257
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
256
I. Review of the 2023 Financial Year from a Remuneration Perspective
REPORT
(at 100% target achievement corresponds to
50% of target amount)
Strategic relevance
Parameters/measurement base, applicable amounts
- Target amount of ROCE component p. a. (50% of target amount for personal cash investment amount):
- Formula: 50% of target amount x RoCE factor
― € 0.64 million (from second period of office or fourth year of mandate = second remuneration level)
― € 1.175 million (Chairman of the Board of Management)
- ROCE factor is derived from the RoCE achieved in the Automotive segment for the vesting year
Strategic focus target component
― € 0.55 million (first period of office = first remuneration level)
(at 100% target achievement corresponds to
50% of target amount)
To Our Stakeholders
Share-based remuneration (continued)
COMPONENT
III. Remuneration of the Members of the board of Management
← = Q
Other Information
Remuneration Report
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
261
- Minimum, target and maximum values for ROCE are defined before the start of the financial year
RoCE component
3 Member of the Board of Management until 31 October 2023, service contract comes to an end on 31 July 2024. See Premature termination of activities and post-contractual non-competition clause.
"Member of the Board of Management until 11 May 2023, service contract ended 31 May 2023. See Premature termination of activities and post-contractual non-competition clause.
5 Second remuneration level since 1 July 2023.
- ROCE factor may not exceed 1.8
― € 0.990 million (first period of office = first remuneration level)
1,639,756
100
3,910,825
100
3,372,692
100
3,452,259
100
1 Service contract comes to an end on 31 May 2023. See Premature termination of activities and post-contractual non-competition clause.
2 For more information about fringe benefits for the 2022 and 2023 financial years, refer to Remuneration granted and owed to members of the Board of Management pursuant to § 162 of the German Stock Corporation Act (AktG).
3 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
Total target remuneration
267
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Target remuneration for the 2023 (2022) financial year
FRANK WEBER
Development
since 1 July 2020¹
Fixed
remuneration
Remuneration Report
Other Information
BMW Group Report 2023
59
2,050,000
61
16
640,000
16
550,000
16
550,000
16
266,667
16
640,000
16
550,000
16
550,000
16
Total variable remuneration
1,012,500
62
2,430,000
62
2,050,000
III. Remuneration of the Members of the Board of Management
FY 2023
FY 2022
in €
525,000
14
475,000
14
Performance component
525,000
14
475,000
14
Variable
SHARE-BASED REMUNERATION
remuneration
Personal cash investment amount³
RoCE component
Strategic focus target component
Total variable remuneration
595,000
16
550,000
16
595,000
Earnings component
266,667
BONUS
1,334,077
in %
in €
in %
Fixed remuneration (base salary)
975,000
27
900,000
27
Fringe benefits (other remuneration]²
29,392
1
34,077
1
Contribution to the company pension scheme
400,000
11
400,000
12
Total fixed remuneration
1,404,392
39
39
Strategic focus target component
RoCE component
Personal cash investment amount³
since 1 January 2022
← = Q
FY 2023
FY 2022
in €
in %
in €
in %
in €
FY 2023
in %
FY 2022
in €
in %
Fixed remuneration (base salary)
437,500
27
1,050,000
27
900,000
27
900,000
Purchasing and Supplier Network
26
JOACHIM POST
Other Information
62
3,907,524
100
3,502,324
100
3,932,049
100
3,899,673
100
1 Second remuneration level since 1 October 2022.
2 Service contract comes to an end on 31 July 2024. See
Premature termination of activities and post-contractual non-competition clause.
3 For more information about fringe benefits for the 2022 and 2023 financial years, refer to Remuneration granted and owed to members of the Board of Management pursuant to § 162 of the German Stock Corporation Act (AktG).
"Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
266
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Target remuneration for the 2023 (2022) financial year
NICOLAS PETER
Finance
1 January 2017 to 11 May 20231
Remuneration Report
III. Remuneration of the Members of the Board of Management
16
Fixed
remuneration
23,089
BONUS
Earnings component
239,583
15
575,000
15
475,000
14
475,000
14
Performance component
239,583
15
575,000
15
475,000
14
475,000
14
Variable
remuneration
SHARE-BASED REMUNERATION
41
Fringe benefits (other remuneration]²
1,402,259
1,322,692
1
30,825
1
22,692
1
102,259
3
Contribution to the company pension scheme
166,667
10
400,000
10
400,000
12
400,000
12
Total fixed remuneration
627,256
38
1,480,825
38
39
550,000
16
2,240,000
3,644,392
2 Earnings factor 2023.
0.135
3.0
Minimum value
3.0
Minimum value
5.3
Target value
Profit attributable to
shareholders of BMW AG in € billion
11.0
Maximum value
270
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
← = Q
Targets set and extent of achievement - earnings component of the
bonus for the 2023 financial year
The targets set and the extent to which they have been achieved,
as well as the specific amounts associated with the earnings
component of the bonus for the 2023 financial year, are shown
in the following tables. In the 2023 financial year, BMW AG's
share of profit attributable to shareholders was € 11.3 billion,
and the Group post-tax return on sales was 7.8%. Based on the
allocation matrix approved by the Supervisory Board, this pro-
vides an earnings factor of 1.680, which corresponds to a target
achievement level of 168%.
1 Simplified depiction.
Performance component of the bonus
1.000
1.800
BONUS
X
+
X
=
Earnings factor is derived from an allocation matrix based on the
parameters "Profit attributable to shareholders of BMW AG" and
"Group post-tax return on sales" in the vesting year
Earnings factor may not exceed 1.8
Earnings component of the bonus: allocation matrix¹
T
Group return on sales
after tax in %
9.0
Maximum value
7.8
5.6
Target value
- Performance factor is derived from
-50% cross-divisional targets with ESG criteria
40% other cross-divisional targets
-10% individual departmental targets
- Performance factor may not exceed 1.8
Capped at 180%
of target amount
1.680²
PERFORMANCE FACTOR
The performance component of the bonus rewards the achieve-
ment of certain non-financial targets. Before the beginning of the
financial year, the Supervisory Board sets these targets in the
form of various non-financial performance criteria and associ-
ated metrics. The performance criteria are derived primarily from
the corporate strategy, long-term corporate planning and the
business development planning done for the following year. The
targets are divided into individual targets for the individual mem-
bers of the Board of Management (departmental targets) and
collective targets for the entire Board of Management (interde-
partmental targets). The Supervisory Board has discretion in
weighting the performance criteria. Approximately 10% of the
target amount for the performance bonus is intended to be allo-
cated to the departmental targets. Departmental targets can be
department-specific targets or contributions to shared targets
measured individually for each department. The remainder of the
target amount for the performance bonus (amounting to approx-
imately 90%) should be associated with interdepartmental, non-
financial targets. In this regard, around 50% of the target amount
should be connected to the achievement of non-financial targets
relating to environmental, social and governance (ESG targets).
Minimum value
79,167
575,000
301,178
575,000
1.680
575,000
239,583
475,000
525,000
Earnings component
Earnings factor
of the bonus in €
1,764,000
133,000
966,000
505,978
966,000
966,000
402,500
798,000
882,000
1,050,000
Targets set and extent of achievement – earnings component of the bonus for the 2023 financial year
amount in €
1 Member of the Board of Management since 1 November 2023.
2 Member of the Board of Management since 12 May 2023.
3.0
Target value
5.3
Maximum value
11.0
3.0
5.6
9.0
Actual value
11.3
7.8
Extent to which
target achieved
Earnings
factor
168%
1.680
Performance criteria
Profit attributable to shareholders of BMW AG in € billion
Group return on sales after tax in %
Overview of earnings component of the bonus for the 2023 financial year
Member of the Board of Management
Oliver Zipse
Jochen Goller¹
Ilka Horstmeier
Walter Mertl²
Milan Nedeljković
Pieter Nota³
Nicolas Peter
Joachim Post
Frank Weber5
Proportionate target bonus
2,430,000
50% OF TARGET AMOUNT
PERFORMANCE COMPONENT
a) Fixed remuneration for the 2023 financial year
Each member of the Board of Management receives a fixed base
salary, which is paid monthly on a pro rata basis. The amount of
the base salary depends on the individual's respective function
on the Board of Management and the duration of their tenure on
the Board of Management or their appointment period/remuner-
ation level, as applicable.
The fringe benefits include, in particular, non-cash benefits from
vehicle use and employee discounts and subsidies for safety
equipment. In addition, the Supervisory Board can approve pay-
ments to newly appointed members of the Board of Management
in order to compensate them for loss of salary from a previous
employment relationship and/or to cover relocation costs. A com-
mitment to cover relocation costs was issued in the 2023 finan-
cial year.
in €
Overview of fixed remuneration for the 2023 financial year
Base salary
Oliver Zipse
Jochen Goller¹
1,950,000
150,000
1,050,000
Fringe benefits
(other remuneration)
26,113
3,331
66,981
570,652
111,981
Total fixed
remuneration
1,976,113
153,331
1,116,981
682,633
Milan Nedeljković
1,050,000
27,524
1,077,524
Pieter Nota³
1,050,000
In December 2022, the Supervisory Board determined the target
remuneration for the members of the Board of Management for
the 2023 financial year as well as the performance criteria for the
variable remuneration components provided for in the remuner-
ation system. In March 2024, the Supervisory Board set or con-
firmed the amount of the variable remuneration components due
to the members of the Board of Management for the 2023 finan-
cial year after reviewing and assessing the extent to which the
targets had been achieved.
52,049
Remuneration for the 2023 financial year
← = Q
61
2,050,000
61
100
3,384,077
100
Total target remuneration
1 Second remuneration level since 1 July 2023.
2 For more information about fringe benefits for the 2022 and 2023 financial years, refer to Remuneration granted and owed to members of the Board of Management pursuant to § 162 of the German Stock
Corporation Act (AktG).
3 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
↑
= Q
268
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
4.
EARNINGS FACTOR
Nicolas Peter
Joachim Post
focus target
component
Approx. 26-27%
(of which ESG
targets: 100%)
*Incorporating the collective departmental targets for the performance component of the bonus.
269
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
← = Q
(1) Bonus for the 2023 financial year
Overview
The bonus consists of an earnings component and a perfor-
mance component. If 100% of the target is achieved for both the
performance and the earnings component, the share of the
bonus attached to each component is 50% of the individual tar-
get amount of the bonus. The bonus amount is capped at 180%
of the individual target amount. The bonus for the financial year
will be paid as part of the next payroll run after the Annual Gen-
eral Meeting 2024.
Earnings component of the bonus
The earnings component of the bonus rewards the performance
of the business in the 2023 vesting year, as measured by the
financial indicators "Profit attributable to shareholders of
BMW AG" and "Group post-tax return on sales". For this pur-
pose, the Supervisory Board adopted an allocation matrix, from
which an earnings factor is derived based on the values
achieved.
A minimum value, a target value and a maximum value were de-
fined for both key figures before the start of the 2023 vesting
year. If one of the minimum values is not reached, the earnings
factor is zero (corresponding to a target achievement of 0%). If
both target values are reached, the earnings factor is 1.000 (cor-
responding to a target achievement of 100%). If both maximum
values are exceeded, the earnings factor is 1.800 (correspond-
ing to a target achievement of 180%, the highest possible per-
centage). For intermediate values, the earnings factor is derived
from the allocation matrix.
Overview of the composition of the bonus
EARNINGS COMPONENT
50% OF TARGET AMOUNT
Share-based
remuneration
Strategic
437,500
Variable target remuneration
with ESG targets
Approx. 39% in total*
(of which ESG targets:
900,000
22,692
1,102,049
460,589
922,692
Bonus
Earnings component
Frank Weber5
975,000
29,392
1,004,392
Approx. 23-24%
Ilka Horstmeier
Walter Mertl²
1 Member of the Board of Management since 1 November 2023.
2 Member of the Board of Management since 12 May 2023.
3 Member of the Board of Management until 31 October 2023, service contract comes to an end on
31 July 2024. See Premature termination of activities and post-contractual non-competition
clause.
4 Member of the Board of Management until 11 May 2023, service contract ended 31 May 2023.
See Premature termination of activities and post-contractual non-competition clause.
5 Second remuneration level since 1 July 2023.
b) Variable remuneration for the 2023 financial year
The variable remuneration for the 2023 financial year consists of
the bonus and the share-based remuneration. When determining
specific target values, the Supervisory Board takes into account,
in particular, long-term corporate planning and business devel-
opment planning for the following year as submitted to the Su-
pervisory Board for approval. For the strategic relevance of the
individual remuneration components, see also above 7 Overview of
the remuneration system.
Overview of variable target remuneration 2023
Share-based
remuneration
RoCE component
Approx. 26-27%
Bonus Performance
component
Approx. 23-24%
50%)
62
2,430,000
61
14
(-)
(-)
Performance component
Variable
remuneration
SHARE-BASED REMUNERATION
Personal cash investment amount²
RoCE component
1,175,000
16
1,175,000
17
91,667
16
(-)
Strategic focus target component
1,175,000
16
1,175,000
17
91,667
79,167
16
15
15
12
(-)
(-)
Total fixed remuneration
2,676,113
38
2,667,249
37
219,998
39
(-)
BONUS
Earnings component
1,050,000
15
1,050,000
15
79,167
14
(-)
1,050,000
1,050,000
66,667
Total variable remuneration
62
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
WALTER MERTL
Finance
since 12 May 2023
← = Q
FY 2023
FY 2022
FY 2023
in €
in %
in €
in %
in €
in %
in €
FY 2022
in %
Fixed remuneration (base salary)
1,050,000
Human Resources and Real Estate, Labour Director
since 1 November 20191
4,450,000
ILKA HORSTMEIER
Target remuneration for the 2023 (2022) financial year
4,450,000
63
341,668
61
Total target remuneration
7,126,113
100
7,117,249
100
561,666
100
CCC
(-)
(-)
(-)
1 For more information about fringe benefits for the 2022 and 2023 financial years, refer to Remuneration granted and owed to members of the Board of Management pursuant to § 162 of the German Stock Corporation Act (AktG).
2 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
IIII
264
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Fixed
remuneration
27
10
10
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
← = Q
3.
Determination and review of the remuneration system and
individual remuneration
Determining the system and structure of Board of Management
remuneration, and reviewing it regularly, is a task of the full Su-
pervisory Board, as is determining the individual level of remu-
neration of members of the Board of Management. The Person-
nel Committee of the Supervisory Board assumes a preparatory
function.
The Supervisory Board reviews the remuneration system annu-
ally to ensure it is appropriate in terms of structure, target and
maximum remuneration, as well as actual remuneration. The Su-
pervisory Board also takes remuneration studies into account
when assessing the market conformity of the target and maxi-
mum remuneration, as well as when assessing actual remuner-
ation in horizontal terms. Due to the size and structure of the
BMW Group, DAX companies are used as a comparison group
while taking revenues, employee headcounts and market capi-
talisation into consideration. This ensures that the main compet-
itors of BMW AG and other global companies are factored in. Ver-
tically, the Supervisory Board compares the remuneration of
members of the Board of Management with the remuneration of
senior executives and with the average remuneration of employ-
ees employed by BMW AG in Germany in areas inside and out-
side the scope of collective bargaining agreements, including in
terms of how they have changed over a period of several years.
Recommendations from independent external remuneration ex-
perts, as well as suggestions from investor and analyst circles,
may also be included in the deliberations. For the 2023 financial
year, the review has shown that the target, maximum and actual
remuneration are appropriate.
-
In accordance with the remuneration system, the Supervisory
Board acting on the proposal of the Personnel Committee
sets specific target remuneration for each individual member of
the Board of Management for the upcoming financial year, as
well as the performance criteria associated with the variable re-
muneration components provided for in the remuneration
system.
The total target remuneration is composed of the fixed remuner-
ation and the variable remuneration. Within the variable target
remuneration, the proportion of share-based remuneration as
long-term variable remuneration exceeds the share of the bonus
as short-term variable remuneration. The share of the individual
remuneration components is within the ranges specified by the
remuneration system.
Overview of total target remuneration for members of the
Board of Management¹
Fringe benefits²
1-4%
Contributions
Retirement
benefits
7-12%
ΤΟ
Base salary
25-30%
Bonus
27-30%
Variable
Remuneration
58-66%
Share-based
Remuneration
31-36%
1 The remuneration structure as defined in the remuneration system for total target remuneration is
depicted.
Group Financial Statements Responsibility Statement and Auditor's Report
2 Excluding a possible payment to new members of the Board of Management to compensate for
salary losses from a previous employment relationship and/or to cover relocation costs.
BMW Group Report 2023 To Our Stakeholders Combined Management Report
- Agreement entitling the BMW Group to reclaim variable remuneration already paid out in the event of specified serious incidences of non-compliance, incorrect calculation bases or incorrect financial statements
― Amounts may also be clawed back in principle after a member has left the Board
- € 1.152 million (from second period of office or fourth year of mandate = second remuneration level)
- € 2.115 million (Chairman of the Board of Management)
- Target amount of strategic focus target component p. a. (50% of target amount for personal cash investment amount):
- € 0.55 million (first period of office = first remuneration level)
- € 0.64 million (from second period of office or fourth year of mandate = second remuneration level)
― € 1.175 million (Chairman of the Board of Management)
- At least two strategic focus targets derived from the strategic plan
- Weighting of the strategic focus targets is decided before the start of the financial year
- Formula in the event of two strategic focus targets with equal weighting p. a.:
25% of target amount for personal cash investment amount x factor for strategic focus target 1 + 25% of target amount for personal cash investment amount x factor for strategic focus target 2
― Minimum, target and maximum values are defined before the start of the financial year
-Factor for each strategic focus target may not exceed 1.8
- Maximum amount of strategic focus target component p. a.:
― € 0.990 million (first period of office = first remuneration level)
― € 1.152 million (from second period of office or fourth year of mandate = second remuneration level)
― € 2.115 million (Chairman of the Board of Management)
-50% of the personal cash investment amount within the target structure depends on the ROCE and is therefore directly linked to a key target for the corporate strategy and reflects BMW AG's aspiration to
generate a significant premium on the cost of capital
-The remaining 50% of the personal cash investment amount encourages achievement of strategic focus targets and therefore contributes to business performance in key strategic areas
-Commitment to purchase shares of the Company's common stock and the four-year holding period provide additional motivation to support the Company's long-term development
Malus and clawback rules
Malus
Clawback
- Agreement to withhold variable remuneration in the event of specified serious compliance violations or (withholding amounts provisionally) in the event of reasonable suspicions of such
― Amounts may also be withheld in principle after a member has left the Board
262
700,000
Target remuneration for the 2023 financial year
The following tables show the individual target remuneration of
the members of the Board of Management and the relative share
of the respective remuneration component in the total target re-
muneration. The maximum remuneration and remuneration
earned for the 2023 financial year are shown below. 7 Maximum
remuneration vested in the 2023 financial year (vesting year)
BMW Group Report 2023
in %
Fixed remuneration (base salary)
1,950,000
27
1,950,000
27
150,000
27
(-)
(-)
Fringe benefits (other remuneration]1
26,113
0.4
17,249
0.2
3,331
1
(-)
(-)
Contribution to the company pension scheme
700,000
FY 2022
263
in €
in €
To Our Stakeholders
Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Target remuneration for the 2023 (2022) financial year
OLIVER ZIPSE
Chairman of the Board of Management since 16 August 2019
Member of the Board of Management since 13 May 2015
Fixed
remuneration
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
JOCHEN GOLLER
Customer, Brands, Sales
since 1 November 2023
← = Q
FY 2023
FY 2022
FY 2023
in €
in %
in €
in %
in %
- Maximum amount of ROCE component p. a.:
925,000
570,652
27
1,050,000
27
27,524
1
19,824
1
52,049
1
19,673
1
400,000
10
400,000
11
400,000
10
400,000
10
1,477,524
38
1,050,000
1,357,324
27
27
MILAN NEDELJKOVIĆ
Production
since 1 October 20191
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
PIETER NOTA
Customer, Brands, Sales
1 January 2018 to 31 October 2023²
← = Q
FY 2023
FY 2022
in €
in %
in €
in %
in €
FY 2023
in %
FY 2022
in €
in %
1,050,000
937,500
BONUS
39
38
Total variable remuneration
Total target remuneration
640,000
16
572,500
16
640,000
16
640,000
16
640,000
16
572,500
16
640,000
16
640,000
16
2,430,000
62
2,145,000
Strategic focus target component
1,502,049
RoCE component
SHARE-BASED REMUNERATION
1,469,673
38
Earnings component
575,000
15
500,000
14
575,000
15
575,000
15
Performance component
575,000
15
500,000
14
575,000
15
575,000
15
Variable
remuneration
Personal cash investment amount"
27
Total fixed remuneration
Fringe benefits (other remuneration]³
39
936,256
42
(-)
BONUS
Earnings component
575,000
15
491,667
14
301,178
13
(-)
Performance component
575,000
15
491,667
14
301,178
13
(-)
1,364,578
(-)
38
Total fixed remuneration
26
(-)
(-)
Fringe benefits (other remuneration]²
66,981
2
39,578
1
111,981
5
(-)
(-)
Contribution to the company pension scheme
400,000
10
400,000
12
253,623
11
(-)
(-)
1,516,981
Contribution to the company pension scheme
Variable
remuneration
(-)
(-)
100
3,477,911
100
2,236,076
100
(-)
(-)
CCC
IIII
1 Second remuneration level since 1 November 2022.
2 For more information about fringe benefits for the 2022 and 2023 financial years, refer to Remuneration granted and owed to members of the Board of Management pursuant to § 162 of the German Stock Corporation Act (AktG).
3 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
265
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Target remuneration for the 2023 (2022) financial year
Fixed
remuneration
Fixed remuneration (base salary)
58
SHARE-BASED REMUNERATION
1,299,820
2,113,333
Personal cash investment amount³
RoCE component
Strategic focus target component
Total variable remuneration
Total target remuneration
640,000
16
565,000
16
348,732
16
(-)
640,000
16
565,000
16
348,732
16
(-)
2,430,000
3,946,981
62
61
23,089
← = Q
In addition to the absolute amount of remuneration, the relative
share of the relevant remuneration component in the total remu-
neration granted and owed is also shown. For the sake of com-
pleteness, the individual service cost in accordance with IAS 19
for the Company pension scheme is also shown, although this
service cost is not classified as granted or owed remuneration
within the meaning of § 162 AktG.
1 Collective assessment of the Board of Management as a team. 2 Individual assessment for each member of the Board of Management.
Hand over products ready for mass production on time; focus on new vehicle and digital architecture
Continue development of automated driving; develop hydrogen technology
Future MINI portfolio
Develop competitive products
Continue development of a CO₂ management system in the supply chain
Ensure access to technology and continued ability to innovate
Meet quality requirements and cost targets
Weighting 10%
Anticipate market requirements, manage the production network and safeguard the supply chain
Frank Weber
Joachim Post
Walter Mertl (Member of the Board of Management since Performance programme financial targets including untapped potential in digitalisation processes
12 May 2023)
Capital market communication; continue development of non-financial reporting and reporting structure
Risk management and Group financing; optimisation of capital structure; investment planning
Anticipate market requirements, manage the production network and safeguard the supply chain
Continue development of digital marketing and sales concepts and prepare regional direct sales models
Effective communication and presentation of new products
Plan sales and prices, realise potential in our sales markets
Represent the Company in Chinese projects
273
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Proportionate target
bonus amount in €
Performance factor
target achieved in %
108.0
50
Interdepartmental targets - ESG
in %
Targets
Average degree to which
Weighting
Overview of target achievement for the performance component of the bonus for the 2023 financial year
III. Remuneration of the Members of the Board of Management
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Continue development of high-quality standards and ensure compliance with these standards
Progress in terms of decarbonisation and energy supply strategies for each location
Anticipate market requirements, manage the production network and safeguard the supply chain
Flexible production structure; enhancement of future-oriented production system
Progress in terms of decarbonisation and energy supply strategies for each location
Real estate portfolio management
departmental targets
All members
Joint
Contribute to meeting growth and profitability targets
Weighting 40%
Innovation performance (economic, e. g. proportion of sales attributable to new BMW vehicles with the ability to perform remote software upgrades)
Customer orientation (product, customer service quality, based on comparative studies and other information)
Reputation (e.g. brand strength)
Other interdepartmental
non-financial targets
Market position (e. g. sales volume of the BMW Group)
Leadership performance (employee satisfaction)
Entire Board of Management'
Weighting 50%
Innovation performance (environmental, e. g. proportion of sales attributable to all-electric vehicles (battery electric vehicles, BEV))
Reputation (corporate reputation, preventive activities in ensuring compliance)
Adaptability (investment in training and further education, sustainability)
Employer attractiveness (e. g. placement in rankings)
ESG targets
Interdepartmental
Targets set for the performance component of the bonus for financial year 2023
of the Board of Management²
Performance component
Specific
departmental targets
Ilka Horstmeier
Manage personnel structures, capacities and costs; oversee skills transformation
Ensure the BMW Group is an attractive employer and ensure labour availability
Future portfolio of the brands
Progress with sustainability strategy and transformation process
Represent the Company's interests, present new products
Coordinate the work of the Board of Management
Increased quality focus
Preventive activities in ensuring compliance in the department
Leadership performance in the department and achievement of departmental diversity targets
until 11 May 2023)/
Nicolas Peter (Member of the Board of Management
since 1 November 2023)
Jochen Goller (Member of the Board of Management
Pieter Nota (Member of the Board of Management until
31 October 2023)/
Milan Nedeljković
Oliver Zipse
of bonus in €
Oliver Zipse
Interdepartmental targets - Other non-financial
40
Interdepartmental targets - Other non-financial
Milan Nedeljković
108.0
50
Interdepartmental targets - ESG
111.9
10
Departmental targets
307,201
301,178
1.02
92.5
40
Interdepartmental targets - Other non-financial
92.5
Walter Mertl²
1.02
586,500
10
Departmental targets
586,500
575,000
1.02
92.5
40
Interdepartmental targets - Other non-financial
Pieter Nota3
108.0
50
Interdepartmental targets - ESG
111.3
10
Departmental targets
575,000
III. Remuneration of the Members of the Board of Management
108.0
Interdepartmental targets - ESG
92.5
40
Interdepartmental targets - Other non-financial
Jochen Goller¹
108.0
50
Interdepartmental targets - ESG
118.8
10
Departmental targets
1,081,500
1,050,000
1.03
92.5
40
1.02
50
79,167
Departmental targets
110.0
10
Departmental targets
586,500
575,000
1.02
92.5
40
Interdepartmental targets - Other non-financial
Ilka Horstmeier
108.0
50
Interdepartmental targets - ESG
108.1
10
80,750
← = Q
Other Information
Remuneration Report
279
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
service contract is terminated prematurely and the Company has
an extraordinary right of termination, or if the Board member re-
signs without the Company's agreement, entitlements to match-
ing components as yet unpaid are forfeited. Entitlements to other
variable remuneration components (bonus, personal cash in-
vestment amount) are forfeited as soon as they exceed the target
amounts.
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
← = Q
6.
Retirement benefits
The retirement benefits system provides for the Company to
make annual contributions to a savings account for every year
that members of the Board of Management are appointed. After
they are confirmed, pension entitlements become vested when
the employment relationship has existed for one year. Members
of the Board of Management receive a disability pension in the
event of invalidity. Retired members of the Board of Manage-
ment are entitled to retirement benefits after the age of 62 at the
earliest and after leaving the Board. If a member of the Board of
Management dies before becoming entitled to a retirement or in-
validity benefit, a surviving spouse or registered partner is enti-
tled to a survivor's benefit; otherwise, surviving children are enti-
tled to a survivor's benefit depending on their age and level of
education. The amount of the benefits to be paid is determined
on the basis of the amount accrued in each Board member's in-
dividual pension savings account. This figure is in turn based on
the annual contributions and annual profit participation depend-
ing on the form of investment. For the contributions made, there
is a guaranteed minimum interest rate equal to the maximum in-
terest rates specified in the German actuarial reserve regulation
(Deckungsrückstellungsverordnung). The payment is made as a
lump sum or in annual instalments at the discretion of the mem-
ber of the Board of Management. For entitlements arising before
2016, there is an option to receive payment as a lifelong monthly
pension or in a combined form. In the event of death or invalidity,
a minimum benefit in the amount of the potential annual pension
contributions that could have been made up to the age of 60 is
approved. This benefit cannot exceed ten years of contributions.
Members of the Board of Management who retire immediately
after their service on the Board, or who are deemed to be in an
equivalent position, are entitled to acquire vehicles and other
BMW Group products and services at conditions that also apply
to BMW pensioners and to lease BMW Group vehicles in accord-
ance with the guidelines applicable to senior heads of depart-
ments. Retired Chairmen of the Board of Management also have
the option of using the BMW car service, subject to availability
and at a charge.
For members of the Board of Management in office in the 2023
financial year, expenses for post-employment benefits of € 3.2
million were incurred. These benefits correspond in their entirety
to allocations to pension provisions in accordance with IAS 19.
7 Second remuneration level since 1 July 2023.
Pension entitlements 2023
6 Member of the Board of Management since 12 May 2023.
"Value of share portfolio as at 31 December 2023 in relation to base salary paid in 2023. For more information about the base salary, please refer to table in Remuneration granted and owed to mem-
bers of the Board of Management pursuant to § 162 of the German Stock Corporation Act (AktG).
6,686
673,815
75%
11,383
74,091
7,178
42,995
(-)
18,561
1,870,578
192%
4,117
112,969
11,385,016
1 Includes only shares of BMW common stock acquired using the cash remuneration component of the share-based remuneration programme for members of the Board of Management, for which the four-
year holding period has not yet expired.
2 Payment of the 2022 cash remuneration component (personal cash investment amount) in May 2023 with subsequent acquisition of reported shares of BMW common stock (purchase date: 31 May
2023; purchase price: € 103.42), for which the four-year holding period until 2027 applies.
3 Last trading day of 2023: 29 December 2023. XETRA closing price on 29 December 2023: € 100.78.
5 Member of the Board of Management since 1 November 2023.
(-)
in €
Jochen Goller¹
Ilka Horstmeier
Walter Mertl²
1 Member of the Board of Management since 1 November 2023.
2 Member of the Board of Management since 12 May 2023.
3 Member of the Board of Management until 31 October 2023, service contract until 31 July 2024,
see Premature termination of activities and post-contractual non-competition clause.
"Member of the Board of Management until 11 May 2023, service contract until 31 May 2023,
see Premature termination of activities and post-contractual non-competition clause.
7.
Malus and clawback provisions
The current remuneration system provides for the possibility of
withholding variable remuneration (malus) and reclaiming vari-
able remuneration already paid out (clawback) under certain
conditions. The rules allow the Supervisory Board to withhold or
reclaim variable remuneration in the event of certain serious
compliance-related violations (compliance malus and/or compli-
ance clawback). These provisions can also be applied where var-
iable remuneration components linked to the achievement of cer-
tain targets have been paid out on the basis of incorrect calcula-
tion bases or incorrect financial statements. Remuneration can
also be withheld or reclaimed after an individual's departure from
the Board of Management.
The Supervisory Board has not identified any reason to withhold
or reclaim variable remuneration components in the 2023 finan-
cial year.
8. Premature termination of activities and
post-contractual non-competition clause
Board of Management service contracts provide for severance
pay to be paid to the Board member in the event of premature
termination by the Company without due cause, the amount of
which is limited to a maximum of two years' remuneration (sev-
erance payment cap). The member will not be compensated for
more than the remaining term of the service contract. If the re-
maining term of the contract is less than two years, the sever-
ance payment is reduced proportionately. The annual remuner-
ation paid generally includes the base salary, the target amount
of the bonus and target amount of the personal cash investment
amount, unless the relevant target amount was not achieved in
the previous year. In this case, the bonus that was actually
granted or the personal cash investment amount that was actu-
ally disbursed will apply.
There are no specific severance arrangements covering early
termination of a Board member's mandate due to a change of
control or in connection with a takeover offer.
In the event of death or invalidity, special rules apply for waiving
the holding period for shares of common stock that were ac-
quired with share-based remuneration components. Where the
280
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Total
Oliver Zipse
1,174,735
1,845,023
22,870,768
407,525
Service cost in accordance
with IFRS for the
financial year 2023
Cash value of entitlements
to pension benefits
in accordance with IFRS
as at 31 December 2023
5,749,540
1,039,801
2,704,634
807,853
3,174,055
2,336,557
4,038,570
712,729
66,667
407,533
254,444
Milan Nedeljković
Pieter Nota³
407,391
407,516
Nicolas Peter'
166,667
Joachim Post
Frank Weber
408,504
3,238,976
111.9
6,686
203%
← = Q
III. Remuneration of the Members of the Board of Management
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
271
4 Member of the Board of Management until 11 May 2023, service contract ended 31 May 2023. See
5 Second remuneration level since 1 July 2023.
Premature termination of activities and post-contractual non-competition clause.
Premature termination of activities and post-contractual non-competition clause.
278
BMW Group Report 2023
Targets set and extent of achievement - performance component of
the bonus for the 2023 financial year
To Our Stakeholders Combined Management Report
The targets set by the Supervisory Board for the 2023 vesting
year as part of the performance component of the bonus, the
weighting of the relevant criteria and the individual target
achievement are summarised in the tables below.
The leadership performance of the individual members of the
Board of Management was assessed along with the overall per-
formance of the Board of Management as a whole. With regard
to the departmental targets, the Supervisory Board assessed the
individual performance of each member of the Board of Manage-
ment. With regard to the interdepartmental targets, the Supervi-
sory Board considered the Board of Management as a team and
assessed the performance of all the members of the Board of
Management as a whole. The Supervisory Board's decision-
making process is based on a detailed, documented analysis of
performance as measured against all the agreed criteria, as well
as in-depth discussions at Personnel Committee and full Super-
visory Board level. As a basis for the targets set in the previous
year and the assessment process following the financial year, the
Supervisory Board was guided, in particular, by the quantitative
and qualitative metrics that were defined in the corporate plan-
ning before the beginning of the financial year.
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
272
3 Collective assessment of the Board of Management as a team.
2 Individual assessment for each member of the Board of Management.
Based on the target amount of the performance component of the bonus.
Interdepartmental
ESG targets³
50%
interdepartmental
non-financial targets³
40%
Other
10%
Departmental
targets²
Overview of targets of the performance component of the
bonus for the financial year 20231
The defined quantitative and qualitative metrics include indica-
tors such as vehicle sales, segment shares, the share of sales for
electrified and all-electric vehicles and the share of BMW brand
vehicles with remote software upgrade capability. Other metrics
included assessments of the quality of the customer experience
compared to the competition, the R&D ratio, spending on em-
ployee training and development and diversity targets.
The results of comparative studies and calculations vis-à-vis
competitors were also used to assess individual metrics. In addi-
tion to a review of performance in 2023, the Supervisory Board
carried out a trend review covering several financial years. In do-
ing so, it assessed the effects of decisions, measures and the
overall course set in previous financial years on the 2023 finan-
cial year and also estimated the significance of the performance
in 2023 for the future development of the Company.
The Supervisory Board assessed the performance of the mem-
bers of the Board of Management in terms of the departmental
targets, on the one hand, and the interdepartmental targets, on
the other hand, within a target achievement corridor with a partial
performance factor between 0 (corresponding to a target being
0% achieved) and 1.80 (corresponding to a target being 180%
achieved, the highest possible percentage). The performance
factor for the bonus was determined from the partial perfor-
mance factors, with a weighting of 10% for the departmental tar-
gets and 90% for the interdepartmental targets, in each case in
relation to the target amount of the performance component of
the bonus. With regard to the interdepartmental targets, 50% of
the weighting is for non-financial environmental, social and gov-
ernance (ESG) targets, and 40% is for other non-financial tar-
gets, in each case in relation to the target amount of the perfor-
mance component of the bonus.
(-)
Group Financial Statements Responsibility Statement and Auditor's Report
Other Information
20,682
4,622,577
(-)
2,084,332
Relation value/
base salary 2023 in %4
237%
(-)
199%
(-)
(-)
(-)
(-)
(-)
(-)
13,700
7,472
(-)
21,172
2,133,714
(-)
Remuneration Report
7,374
(-)
III. Remuneration of the Members of the Board of Management
← = Q
5. Share ownership guideline
The members of the Board of Management in office as at 31 De-
cember 2023 hold a total of 112,969 shares of BMW common
stock which they are required to hold in accordance with the
terms of the share-based remuneration programmes for the fi-
nancial years 2019-2022. The four-year holding period re-
mains in effect even if the member leaves the Board of
Management.
The share-based remuneration (personal cash investment
amount) for vesting year 2022 was disbursed as part of the next
payroll run after the Annual General Meeting 2023. The afore-
mentioned members of the Board of Management acquired a to-
tal of 42,995 shares of BMW common stock immediately there-
after which must be held until 2027. The share-based remuner-
ation (personal cash investment amount) for vesting year 2023
will be paid as part of the next payroll run after the Annual Gen-
eral Meeting 2024. The shares of BMW common stock will be
acquired immediately thereafter and must be held until 2028.
The value of the shares of common stock in BMW held by the
members of the Board of Management in office as at 31 Decem-
ber 2023 came to between 237% and 75% of the respective
base salary for the 2023 financial year³,4.
Pursuant to Article 19 of the Market Abuse Regulation (EU) No.
569/2014 (Managers' Transactions), any purchase or sale of
BMW AG shares and related financial instruments by members
of the Board of Management must be reported, even after the
minimum holding period has expired. No member of the Board
of Management reported a sale of BMW AG shares or related fi-
nancial instruments in the 2023 financial year.
Shares of BMW common stock subject to holding requirements in connection with share-based remuneration for financial
years 2019-20221
Share portfolio as at
1 January 2023
Oliver Zipse
Jochen Goller5
Ilka Horstmeier
Walter Mertl6
Milan Nedeljković
Joachim Post
Frank Weber'
Total
35,700
(-)
13,308
Additions in the
financial year 2023²
14,285
End of the holding period
in the financial year 2023
4,117
Share portfolio as at Value in € as at
31 December 2023 31 December 20233
45,868
(-)
(-)
III. Remuneration of the Members of the Board of Management
Interdepartmental targets - ESG
108.0
0.97
97%
375,716
465,000
380,000
300,000
Overview of share-based remuneration for financial year 2023
25
114%
102.1
98
103
125
25
1.14
← = Q
Strategic
focus targets
focus target
Proportionate Strategic focus
target amount
target factor
in €
(BEV)
factor component CO₂
(CO2)
in €
Strategic
total
Strategic focus target component (BEV)
Strategic Strategic
focus target focus target
Strategic focus target component (CO2)
Proportionate
target amount
in €
ROCE
component
in €
RoCE factor
in €
Member of the Board of Management
Proportionate
target amount
RoCE component
Reduction of fleet
CO2 emissions (in g/km)
Sales of all-electric vehicles
(BEV) in units
Strategic focus target
component
1.67
167%
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
277
← = Q
BEV sales in units
→ Extent to which target achieved: 97%
465,000
Maximum value
380,000
Target value
Minimum value
300,000
375,716
Actual value 2023
0%
50%
The following tables provide an overview of the targets set and
extent of achievement for share-based remuneration for the
2023 financial year.
component
BEV in €
Targets set and extent of achievement for share-based remuneration for financial year 2023
Other Information
20.2
21
16
12
50
RoCE in the Automotive
segment (in %)
RoCE component
Factor
Extent to which
target achieved
Actual value
Target value Maximum value
(in %) Minimum value
Performance criteria
Weighting
III. Remuneration of the Members of the Board of Management
Remuneration Report
in €
Total
Personal cash
investment
amount
in €
Oliver Zipse
129,333
133,333
152,000
133,333
445,333
266,667
Frank Weber5
Joachim Post
Nicolas Peter
675,200 1,744,000
310,400
320,000
364,800
320,000
3,201,875
249,792
1,744,000
950,294
1,744,000
281,333
675,200
726,667
918,500
1 Member of the Board of Management since 1 November 2023.
1,621,375
627,725
288,575
297,500
339,150
297,500
993,650
595,000
1,498,750
580,250
266,750
275,000
313,500
275,000
550,000
100%
310,400
320,000
45,833
52,250
45,833
587,500
669,750
587,500
1,962,250
153,083
1,068,800
640,000
91,667
1,175,000
Pieter Nota³
Milan Nedeljković
Walter Mertl²
Ilka Horstmeier
Jochen Goller¹
569,875
44,458
0.97
320,000
320,000
364,800
1.14
320,000
367,912
169,135
174,366
198,777
174,366
582,382
1,068,800
1,068,800
640,000
1.67
640,000
348,732
1,239,625
96,708
675,200
310,400
364,800
150%
Extent to which target achieved
200%
180%
Target amount for the personal cash investment amount
The target amounts for the individual members of the Board of
Management for the 2023 financial year are presented in the
table Overview of share-based remuneration for financial year 2023.
RoCE component + strategic focus target component
Personal cash investment amount =
The personal cash investment amount for the 2023 financial
year will be paid as part of the next payroll run after the Annual
General Meeting in 2024. The size of this amount depends on
the target amount, the RoCE achieved in the Automotive seg-
ment and the degree to which certain strategic focus targets
were achieved in the vesting year. The personal cash investment
amount is limited to a maximum of 180% of the target amount
and is calculated as follows:
Personal cash investment amount
(2) Share-based remuneration for the 2023 financial year
As part of the share-based remuneration as a variable long-term
component of remuneration, the members of the Board of Man-
agement receive a cash payment earmarked for investment in
BMW shares of common stock (the "personal cash investment
amount"). This amount depends on the achievement of certain
financial and non-financial targets in the past financial year (vest-
ing year). The members of the Board of Management are obliged
to invest their personal cash investment amounts (less taxes and
duties) in BMW shares of common stock immediately after dis-
bursement, and to hold these shares for a period of at least four
years (share ownership guideline). The holding period remains in
effect even if the member leaves the Board of Management.
← = Q
III. Remuneration of the Members of the Board of Management
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
274
3 Member of the Board of Management until 31 October 2023, service contract comes to an end on 31 July 2024. See Premature termination of activities and post-contractual non-competition clause.
4 Member of the Board of Management until 11 May 2023, service contract ended 31 May 2023. See Premature termination of activities and post-contractual non-competition clause.
5 Second remuneration level since 1 July 2023.
RoCE component of the personal cash investment amount
Before the beginning of the relevant vesting year, the Supervi-
sory Board sets minimum, target and maximum values for the
RoCE in the Automotive segment in the vesting year on the basis
of corporate planning, and assigns a RoCE factor to each of these
values. If the minimum value is not reached, the RoCE factor is 0.
If the target value is reached, the RoCE factor is 1.00. If the max-
imum value is reached or exceeded, the RoCE factor is 1.80. The
ROCE component of the personal investment cash amount is
2 Member of the Board of Management since 12 May 2023.
Overview of share-based remuneration¹
Target amount
FY n+2
FY
+
Performance period: 1 year
Share performance over 4 years³
Amount paid out
Taxes and deductions
Personal cash
investment amount
(capped at 180%
of the target amount)
Strategic focus target factor
Extent of target achievement
for strategic focus targets²
(value between 0 and 1.80)
50%
Target amount
1 Simplified depiction.
Extent of target achievement for
RoCE in the Automotive segment
(value between 0 and 1.80)
RoCE factor
50%
FYn
FY n+3
1 Member of the Board of Management since 1 November 2023.
10
Interdepartmental targets - Other non-financial
Joachim Post
108.0
50
Interdepartmental targets - ESG
116.9
10
Departmental targets
246,771
239,583
1.03
92.5
40
Interdepartmental targets - Other non-financial
Nicolas Peter
40
111.9
92.5
475,000
Departmental targets
535,500
525,000
1.02
92.5
40
Interdepartmental targets - Other non-financial
Frank Weber5
108.0
50
Interdepartmental targets - ESG
110.0
10
Departmental targets
484,500
1.02
50
FY +4
Yn+1
100%
Actual value 2023
102.1
150%
| Extent to which target achieved
180%
200%
T
Targets set and extent of achievement - reduction of fleet carbon emissions (EU)
RoCE in Automotive segment in %
→ Extent to which target achieved: 167%
Maximum value
Target value
21
16
12
Minimum value
50%
0%
0%
103
T
Targets set and extent of achievement - BEV sales
For sales of all-electric vehicles (BEV), the Supervisory Board set
the following reference values in units for the vesting year 2023:
minimum value: 300,000 units (target achievement 50%), tar-
get value: 380,000 units (target achievement 100%), maximum
value: 465,000 units (target achievement 180%). The actual
value for the 2023 financial year was 375,716 units, resulting in
a target achievement of 97%.
With regard to reducing fleet carbon emissions according to
WLTP, the Supervisory Board set the following values in g/km
CO₂ under WLTP for fleet consumption in Europe as threshold
values relevant to remuneration for the vesting year 2023: Mini-
mum value: 125 g/km CO₂ (target achievement 50%), target
value: 103 g/km CO2 (target achievement 100%), maximum
value: 98 g/km CO₂ (extent to which target achieved: 180%).
The actual value for the 2023 financial year was 102.1 g/km
CO2, resulting in a target achievement of 114%.
III. Remuneration of the Members of the Board of Management
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
BMW Group Report 2023 To Our Stakeholders
276
CO₂ g/km
125
Minimum value
→ Extent to which target achieved: 114%
Target value
98
Maximum value
FY +5
50%
150%
BMW Group Report 2023
275
investment amount is determined in a two-step process. In the
first step, the factor for the vesting year achieved for the relevant
strategic focus target is multiplied by the share of the individual
target amount attributable to this target. In the second step, the
values determined for the individual strategic focus targets using
this calculation are added together. If two strategic focus targets
are set, each strategic focus target accounts for 25% of the indi-
vidual target amount, unless the Supervisory Board decides on a
different weighting. If more than two strategic focus targets are
set, the Supervisory Board determines the weighting of each
target.
The Supervisory Board sets at least two strategic focus targets
before the start of the vesting year. It derives these targets from
the corporate strategy and corporate planning. It then sets a min-
imum, target and maximum value for each strategic focus target,
and assigns a factor to each of these values. If the minimum
value is not reached, the factor for that target is 0. If the target
value is reached, the factor for that target is 1.00. If the maximum
value is reached or exceeded, the factor for that target is 1.80.
The strategic focus targets component of the personal cash
Strategic focus targets component of the personal cash investment
amount
determined by multiplying the RoCE factor for the vesting year by
50% of the individual target amount.
"Payment of the personal cash investment amount, acquisition of shares and the start of the four-year holding period occur as part of the next payroll run after the Annual General Meeting at which the
annual financial statements for the vesting year are presented.
3 Exemplary illustration of price development.
2 At least two strategic focus targets and their proportion of the target amount are determined by the Supervisory Board.
of the payment amount]
(amounting to 100%
Acquisition of shares
Total performance period: 5 years
Freely
available
shares
Performance period: 4 years
To Our Stakeholders Combined Management Report
100%
Group Financial Statements
Remuneration Report
20.2
Actual value 2023
Extent to which target achieved
200%
180%
T
Targets set and extent of achievement - RoCE component
Sales of all-electric vehicles (battery electric vehicles, BEV);
weighting in relation to individual personal cash investment
target: 25%.
Reduce fleet carbon emissions in the EU according to
WLTP; weighting in relation to individual personal cash
investment target: 25%.
In December 2023, the Supervisory Board set the following stra-
tegic focus targets for the vesting year 2022 in accordance with
the remuneration system:
Targets set and extent of achievement for the strategic
focus targets component for the 2023 financial year
ROCE in the Automotive segment for the 2023 financial year is
defined as segment profit before the financial result, divided by
the average capital employed in the segment. In December
2022, the Supervisory Board determined the following values for
the ROCE component for the vesting year 2023, based on the
long-term corporate planning: minimum value: 12% (target
achievement 50%), target value: 16% (target achievement
100%), maximum value: 21% (target achievement 180%). The
ROCE achieved in the Automotive Segment for the 2023 finan-
cial year is 20.2% and the ROCE factor for calculating the per-
sonal cash investment amount is therefore 1.67.
Targets set and extent of achievement for the ROCE component for
the 2023 financial year
III. Remuneration of the Members of the Board of Management
← = Q
Other Information
Responsibility Statement and Auditor's Report
2 Member of the Board of Management since 12 May 2023.
3 Member of the Board of Management until 31 October 2023, service contract until 31 July 2024. See
remuneration will continue to be paid to him on the contractually
agreed due dates until the end of his employment contract; his
remuneration will not be settled or paid early; he will not receive
a termination payment. For the period from 1 November to 31
December 2023, he received fixed remuneration (base salary
and other remuneration) of € 0.2 million, a bonus of € 0.3 million
and a personal cash investment amount of € 0.3 million (all pro
rata). The pension contribution comes to € 0.07 million for the
period from 1 November to 31 December 2023. For the period
from 1 January to 31 July 2024, his base salary comes to € 0.6
million, with a maximum bonus of € 0.7 million and a maximum
personal cash investment amount of € 0.7 million. The pension
contribution for the relevant portion of the 2024 financial year is
€ 0.2 million. A one-year post-contractual non-competition
clause applies. For the period from 1 August 2024 to 31 July
2025, the waiting allowance contractually owed to him amounts
to € 1.1 million.
Thus, the remuneration granted and owed includes all remuner-
ation components earned through the activities of the members
of the Board of Management in the 2023 financial year. In addi-
tion, it includes remuneration components already earned as a
result of activity in previous financial years, but for which the re-
spective member of the Board of Management's payment enti-
tlement only arose due to the occurrence of conditions in the
2023 financial year.
Bonus for the 2023 financial year (to be paid out in 2024)
Share-based remuneration (personal cash investment
amount) for the 2023 financial year (to be paid out in 2024)
Share-based remuneration component (matching
component) for vesting year 2018, due to the expiry of the
four-year holding period in the 2023 financial year (paid out
in 2023)
Thus, in addition to the fixed remuneration components, the fol-
lowing variable remuneration components are reported as remu-
neration granted for the 2023 financial year within the meaning
of § 162 of the German Stock Corporation Act (AktG):
balance sheet date, and if all conditions for entitlement have
been met.
In addition to actual amounts received, "remuneration granted"
in the reporting year is also assumed to exist if the activity on
which the remuneration component is based has been fully per-
formed by the member of the Board of Management as of the
The tables include all amounts received by the individual mem-
bers of the Board of Management in the reporting period ("remu-
neration granted") and all remuneration legally due but not yet
received ("remuneration owed").
Remuneration granted and owed to members of the
Board of Management pursuant to § 162 of the German Stock
Corporation Act (AktG)
The following tables Remuneration granted and owed show the re-
muneration granted and owed to the members of the Board of
Management in office during the reporting year in accordance
with § 162 AktG. The remuneration shown for the members of
the Board of Management who left during the year also includes
the remuneration granted and owed in the reporting year after
they leave the company.
9.
Mr Pieter Nota left the Board of Management on 31 October
2023 by mutual agreement as part of a succession arrange-
ment. His service contract comes to an end on 31 July 2024. His
Dr Nicolas Peter left the Board of Management on 11 May 2023
by mutual agreement as part of a succession arrangement. He
received fixed remuneration (base salary and other remunera-
tion) of € 0.05 million for the remaining term of his service con-
tract up to 31 May 2023. The bonus and personal investment
cash amount for the period between 12 May and 31 May 2023
came to € 0.08 million and € 0.09 million respectively. A pro rata
pension contribution of € 0.02 million was made for the period
between him leaving the Board of Management and the end of
his service contract. A one-year post-contractual non-competi-
tion clause applies. The waiting allowance contractually owed to
him amounts to € 1.1 million for the period from 1 June 2023 to
31 May 2024 and € 0.6 million for the period from 1 June to 31
December 2023.
A one-year post-contractual non-competition clause has been
agreed with the Board members under specified circumstances
against payment of a remuneration amount. Service contracts
provide for the payment of a monthly waiting allowance in the
amount of the applicable monthly base salary for the duration of
the post-contractual non-competition clause. In accordance with
Recommendation G.13 of the GCGC, any severance payment is
offset against the waiting allowance. The same applies to other
income from third parties, except remuneration for Supervisory
Board appointments approved during the term of office. The
Company may unilaterally waive the requirement to comply with
the post-contractual non-competition clause.
73 or 3
3,243,300
BMW Group Report 2023
59 or 21
130,087
1,145,800
3,296,500
17
14
(-)
742,400
15
(-)
3,426,587
Total variable remuneration for vesting year 2023 or earlier vesting years
Total
76
4,312,973
80
1 Member of the Board of Management until 31 October 2023, service contract until 31 July 2024. See Premature termination of activities and post-contractual non-competition clause.
Total remuneration plus service cost
100
5,458,773
407,516
100
4,528,636
407,516
4,389,100
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost
1,145,800
(-)
97 or 3
130,087
4,398,549
Remuneration for vesting year 2023 or earlier vesting years
79 or 21
902,400
(-)
(-)
19
52,049
(-)
1
19,673
(-)
0.4
1,102,049
24
1,069,673
20
966,000
586,500
21
13
1,035,000
(-)
19
1,068,800
675,200
Strategic focus target component
RoCE component
5,866,289
(-)
(-)
24
3
(-)
21
1,145,800
10
10
563,500
130,0872
2 The number of shares purchased in 2019 with the cash remuneration component (investment component) for the 2018 financial year amounted to 3,954. The number of mathematical matching shares for calculating the equivalent value in cash amounts to 1,318.
3 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
5 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
Earlier vesting years
as a % of
in €
in €
total remuneration
437,500
(-)
17
1,050,000
(-)
18
23,089
(-)
1
30,825
(-)
1
1,280,600
10
569,250
10
18
(-)
Vesting year 2022
1,035,000
246,771
402,500
19
1,080,825
18
460,589
16
4 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
as a % of
total remuneration
in €
4,936,152
288
BMW Group Report 2023
(-)
Remuneration granted and owed in financial year 2023 (2022)
NICOLAS PETER
Finance
1 January 2017 to 11 May 20231
Fixed
remuneration
Variable
remuneration
Fixed remuneration (base salary)
Fringe benefits (other remuneration]
Total
BONUS
Earnings component of bonus
Earlier vesting years
Vesting year 2023
FY 2022
FY 2023
← = Q
III. Remuneration of the Members of the Board of Management
in €
Other Information
Personal cash investment amount³
Share-based remuneration component (matching component)
SHARE-BASED REMUNERATION
PCP 2020-2022
PERFORMANCE CASH PLAN
Performance component of bonus
Remuneration Report
1,050,000
as a % of
(-)
1,950,000
total remuneration
in €
in €
as a % of
Earlier vesting years
Vesting year 2022
as a % of
total remuneration
in €
Earlier vesting years
Vesting year 2023
in €
FY 2022
FY 2023
← = Q
III. Remuneration of the Members of the Board of Management
Other Information
Remuneration Report
remuneration
Fixed remuneration (base salary)
Fringe benefits (other remuneration)
Total
BONUS
Earnings component of bonus
(-)
Performance component of bonus
Variable
PCP 2020-2022
SHARE-BASED REMUNERATION
remuneration
Share-based remuneration component (matching component)
Personal cash investment amount²
PERFORMANCE CASH PLAN
Fixed
24
(-)
1,962,250
RoCE component
1
79,326
(-)
2
135,416¹
(-)
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
2,156,800
10
(-)
1,039,500
13
19
(-)
1,890,000
19
26,113
(-)
0.3
17,249
(-)
1,950,000
0.2
24
1,967,249
19
1,764,000
1,081,500
22
1,976,113
Chairman of the Board of Management since 16 August 2019
Member of the Board of Management since 13 May 2015
OLIVER ZIPSE
Remuneration granted and owed in financial year 2023 (2022)
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
BMW Group Report 2023 To Our Stakeholders
281
BONUS
Earnings component of bonus
Performance component of bonus
PERFORMANCE CASH PLAN
Variable
PCP 2020-2022
SHARE-BASED REMUNERATION
remuneration
Share-based remuneration component (matching component)
Personal cash investment amount³
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
1,050,000
total remuneration
in €
in €
23
Earlier vesting years
Overview of remuneration granted and owed in 2023 financial year with payout profile¹
Vesting year 2022
in €
Earlier vesting years
Vesting year 2023
in €
FY 2022
FY 2023
← = Q
as a % of
total remuneration
Share-based remuneration 2018²
Four-year holding period for acquired BMW AG shares
2018
Other Information
III. Remuneration of the Members of the Board of Management
← = Q
a) Variable remuneration for the 2023 financial year
The variable remuneration for the 2023 financial year and the
extent to which targets were achieved are set out above in
7 Variable remuneration for the 2023 financial year.
b) Share-based remuneration component (matching component)
Remuneration Report
2018
for financial year 2018 (the investment component), which they
were each required to invest in shares of the Company's com-
mon stock after taking taxes and deductions into account. Under
a matching plan, the member of the Board of Management re-
ceives from the Company - at the Company's discretion - either
one additional share of common stock or the equivalent in cash
(share-based remuneration component/matching component)
for every three shares of common stock held after the four-year
holding period. The investment component for financial year
2018 was paid out immediately after the 2019 Annual General
Meeting on 16 May 2019, and the shares of common stock were
acquired on 17 May 2019 at a price of € 65.84. The holding pe-
riod for the shares of common stock acquired in 2019 expired on
16 May 2023. The Company settled the matching component in
cash based on a reference price of € 98.70. A matching compo-
nent will be paid for the last time in 2025.
c) Presentation of remuneration granted and owed
The following tables show the remuneration granted and owed
to the members of the Board of Management in office during the
reporting year.
282
BMW Group Report 2023
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Share-based remuneration components have been included in
the remuneration of members of the BMW AG Board of Manage-
ment since 2011. In the 2023 financial year, the matching com-
ponent of the share-based remuneration for vesting year 2018
was paid out. Under the share-based remuneration programme
for financial year 2018, the members of the Board of Manage-
ment in office in 2018 received an amount equal to 45% of the
gross bonus as additional cash remuneration from the Company
23
2 Payment of 2018 cash remuneration component (investment component) in 2019, immediately following the acquisition of shares of BMW common stock subject to holding requirements for
2019-2023.
2028
2019
2020
2021
2022
Personal cash investment amount 2023
Bonus 2023
1 Simplified depiction.
11th May
2023
Contribution to company pension scheme
Payout of matching component 2018
Payment after the Annual
General Meeting 2024,
Acquisition of BMW AG
shares
Four-year holding period for
acquired BMW AG shares
Payment after the Annual
General Meeting 2024
2024
Basic remuneration and fringe benefits
(-)
RoCE component
5
Performance component of bonus
PERFORMANCE CASH PLAN
PCP 2020-2022
Variable
SHARE-BASED REMUNERATION
remuneration
Share-based remuneration component (matching component)
Personal cash investment amount²
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
← = Q
FY 2023
FY 2022
Vesting year 2023
Earlier vesting years
in €
29,392
21
(-)
total remuneration
in €
in €
900,000
Earnings component of bonus
24
975,000
as a % of
Earlier vesting years
Vesting year 2022
as a % of
total remuneration
in €
(-)
(-)
BONUS
Fringe benefits (other remuneration)
Total
2,781,250
75
2,734,000
73
Remuneration for vesting year 2023 or earlier vesting years
3,703,942
(-)
100 or 0
3,736,259
(-)
100 or 0
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost²
3,703,942
408,504
100
3,736,259
408,504
100
Fixed remuneration (base salary)
Fixed
remuneration
since 1 July 20201
Development
FRANK WEBER
Remuneration granted and owed in financial year 2023 (2022)
Total
BMW Group Report 2023 To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
3 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
2 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
1 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
4,144,763
4,112,446
Total remuneration plus service cost³
290
73 or 0
1
(-)
15
Total variable remuneration for vesting year 2023 or earlier vesting years
Total
3,038,875
(-)
75 or 0
2,734,000
572,900
64 or 14
3,038,875
75
3,306,900
78
Remuneration for vesting year 2023 or earlier vesting years
4,043,267
(-)
100 or 0
3,668,077
4 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
3 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
2 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
1 Second remuneration level since 1 July 2023.
4,648,502
4,450,792
(-)
Total remuneration plus service cost
4,240,977
407,525
100
4,043,267
407,525
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost³
86 or 14
572,900
100
34,077
638,000
(-)
1
1,004,392
25
934,077
22
882,000
535,500
22
855,000
13
465,500
(-)
20
11
572,900
14
(-)
627,725
Strategic focus target component
18
(-)
775,500
25
16
(-)
RoCE component
(-)
(-)
(-)
(-)
(-)
993,650
(-)
2,734,000
75 or 0
(-)
(-)
95 or 5
4,329,875
1,359,926
76 or 24
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost
2,570,131
166,667
100
5,689,801
407,274
100
Total remuneration plus service cost
1 Member of the Board of Management until 11 May 2023, service contract ended 31 May 2023. See Premature termination of activities and post-contractual non-competition clause.
6,097,075
2 The number of shares purchased in 2019 with the cash remuneration component (investment component) for the 2018 financial year amounted to 3,683. The number of mathematical matching shares for calculating the equivalent value in cash amounts to 1,227.
3 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
4 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
5 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
2,736,798
Performance component of bonus
Earnings component of bonus
BONUS
Total
Fringe benefits (other remuneration)
Fixed remuneration (base salary)
81
Fixed
remuneration
Purchasing and Supplier Network
JOACHIM POST
Remuneration granted and owed in financial year 2023 (2022)
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
289
since 1 January 2022
PERFORMANCE CASH PLAN
4,608,976
(-)
(-)
121,105
(-)
79,326
1
(-)
445,333
(-)
17
902,400
(-)
16
Strategic focus target component
281,333
(-)
11
742,400
(-)
13
2,449,026
Remuneration for vesting year 2023 or earlier vesting years
612,500
Waiting allowance
58
1,497,042
24
Total
1,359,926
3,249,050
54 or 5
121,105
1,375,937
Total variable remuneration for vesting year 2023 or earlier vesting years
57 or 24
PCP 2020-2022
Variable
SHARE-BASED REMUNERATION
as a % of
total remuneration
24
3
27
(-)
23
12
I
(-)
(-)
(-)
(-)
(-)
(-)
RoCE component
918,500
(-)
(-)
2,781,250
Total variable remuneration for vesting year 2023 or earlier vesting years
17
(-)
638,000
FY 2022
16
580,250
Strategic focus target component
21
(-)
775,500
25
(-)
← = Q
465,500
13
Earlier vesting years
Vesting year 2022
as a % of
total remuneration
in €
in €
Earlier vesting years
900,000
Vesting year 2023
III. Remuneration of the Members of the Board of Management
Other Information
Remuneration Report
Personal cash investment amount¹
Share-based remuneration component (matching component)
remuneration
FY 2023
121,105²
(-)
in €
900,000
855,000
22
484,500
798,000
1,002,259
25
24
922,692
102,259
1
(-)
22,692
(-)
in €
(-)
24
21
(-)
SHARE-BASED REMUNERATION
PCP 2020-2022
Variable
PERFORMANCE CASH PLAN
Performance component of bonus
Earnings component of bonus
BONUS
Total
Fringe benefits (other remuneration]
Fixed remuneration (base salary)
remuneration
Fixed
since 1 November 20191
remuneration
Human Resources and Real Estate, Labour Director
Remuneration granted and owed in financial year 2023 (2022)
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
284
3 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
2 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
1 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
(-)
(-)
(-)
(-)
(-)
III
ILKA HORSTMEIER
Share-based remuneration component (matching component)
Personal cash investment amount²
Remuneration Report
964,578
25
1,116,981
1
(-)
39,578
2
(-)
66,981
19
(-)
total remuneration
in €
in €
925,000
24
(-)
1,050,000
as a % of
Earlier vesting years
Vesting year 2022
as a % of
total remuneration
in €
Earlier vesting years
Vesting year 2023
in €
FY 2022
FY 2023
← = Q
III. Remuneration of the Members of the Board of Management
Other Information
(-)
20
100
Total remuneration plus service cost³
367,912
(-)
15
(-)
Remuneration granted and owed in financial year 2023 (2022)
(-)
(-)
Total variable remuneration for vesting year 2023 or earlier vesting years
1,763,473
(-)
72 or 0
(-)
(-)
Strategic focus target component
(-)
1,763,473
72
(-)
Remuneration for vesting year 2023 or earlier vesting years
2,446,106
(-)
100 or 0
(-)
(-)
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost²
2,446,106
254,444
100
(-)
Total
1,656,750
(-)
(-)
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost²
(-)
(-)
100 or 0
(-)
616,872
Remuneration for vesting year 2023 or earlier vesting years
(-)
75
463,541
Total
(-)
(-)
(-)
75 or 0
(-)
463,541
Total variable remuneration for vesting year 2023 or earlier vesting years
(-)
(-)
(-)
16
(-)
96,708
Strategic focus target component
(-)
(-)
24
(-)
616,872
66,667
683,539
966,000
586,500
22
in €
as a % of
Earlier vesting years
Vesting year 2022
as a % of
total remuneration
in €
in €
Earlier vesting years
Vesting year 2023
FY 2022
FY 2023
← = Q
III. Remuneration of the Members of the Board of Management
in €
Other Information
Personal cash investment amount¹
Share-based remuneration component (matching component)
remuneration
SHARE-BASED REMUNERATION
Variable
PCP 2020-2022
PERFORMANCE CASH PLAN
Performance component of bonus
Earnings component of bonus
BONUS
Total
Fringe benefits (other remuneration]
Fixed remuneration (base salary)
Remuneration Report
total remuneration
570,652
(-)
(-)
(-)
(-)
(-)
(-)
(-)
I
I
13
(-)
(-)
(-)
21
307,201
505,978
(-)
(-)
28
682,633
(-)
(-)
(-)
5
(-)
111,981
(-)
(-)
(-)
23
remuneration
Fixed
since 12 May 2023
Finance
75 or 0
(-)
3,296,500
Total variable remuneration for vesting year 2023 or earlier vesting years
Total
15
(-)
675,200
Strategic focus target component
16
(-)
796,650
24
(-)
1,068,800
RoCE component
(-)
(-)
(-)
(-)
(-)
(-)
23
1,145,800
10
18
(-)
481,833
13
885,000
655,400
2,818,883
III
(-)
1,145,800
WALTER MERTL
Remuneration granted and owed in financial year 2023 (2022)
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
285
4 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
3 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
2 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
1 Second remuneration level since 1 November 2022.
5,336,794
4,821,014
Total remuneration plus service cost❝
100
4,929,261
407,533
100
4,413,481
407,533
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost³
77 or 23
1,145,800
3,783,461
100 or 0
(-)
4,413,481
Remuneration for vesting year 2023 or earlier vesting years
80
3,964,683
75
3,296,500
57 or 23
13
RoCE component
582,382
100
(-)
153,083
RoCE component
(-)
(-)
(-)
(-)
(-)
(-)
I
I
13
25
(-)
(-)
22
80,750
133,000
(-)
(-)
25
153,331
(-)
(-)
(-)
1
(-)
(-)
(-)
Total
3,818,649
1,145,800
77 or 23
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost³
4,374,024
100
407,391
4,964,449
407,391
Remuneration for vesting year 2023 or earlier vesting years
Total remuneration plus service cost❝
4,781,415
5,371,840
1 Second remuneration level since 1 October 2022.
2 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
3 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
4 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
287
BMW Group Report 2023
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration granted and owed in financial year 2023 (2022)
PIETER NOTA
Customer, Brands, Sales
1 January 2018 to 31 October 20231
Fixed
remuneration
Fixed remuneration (base salary)
Fringe benefits (other remuneration)
(-)
100 or 0
3,331
(-)
Total
Fringe benefits (other remuneration]
Fixed remuneration (base salary)
remuneration
Fixed
since 1 November 2023
Customer, Brands, Sales
JOCHEN GOLLER
Remuneration granted and owed in financial year 2023 (2022)
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
283
BONUS
4 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
1 The number of shares purchased in 2019 with the 2018 cash remuneration component (investment component) for the financial year amounted to 4,117. The number of mathematical matching shares for calculating the equivalent value in cash amounts to 1,372.
2 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
10,865,354
100
10,152,625
712,729
100
8,158,904
712,729
8,871,633
Total remuneration plus service cost
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost³
78 or 22
2,236,126
7,916,499
98 or 2
3 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
Earnings component of bonus
Performance component of bonus
PERFORMANCE CASH PLAN
(-)
24
(-)
150,000
total remuneration
in €
in €
as a % of
Earlier vesting years
Vesting year 2022
as a % of
total remuneration
in €
in €
Earlier vesting years
Vesting year 2023
FY 2022
FY 2023
← = Q
III. Remuneration of the Members of the Board of Management
Other Information
Remuneration Report
Personal cash investment amount¹
Share-based remuneration component (matching component)
remuneration
SHARE-BASED REMUNERATION
PCP 2020-2022
Variable
(-)
(-)
4,374,024
Remuneration for vesting year 2023 or earlier vesting years
Production
since 1 October 20191
Fixed
remuneration
Fixed remuneration (base salary)
Fringe benefits (other remuneration]
Total
BONUS
Earnings component of bonus
Performance component of bonus
PERFORMANCE CASH PLAN
Variable
MILAN NEDELJKOVIĆ
PCP 2020-2022
remuneration
Share-based remuneration component (matching component)
Personal cash investment amount²
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
← = Q
FY 2023
FY 2022
Vesting year 2023
in €
Earlier vesting years
in €
SHARE-BASED REMUNERATION
286
3 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
2 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
16
Strategic focus target component
1,239,625
(-)
15
1,363,000
(-)
13
Total variable remuneration for vesting year 2023 or earlier vesting years
Total
6,047,375
135,416
74 or 2
5,949,250
2,236,126
59 or 22
6,182,791
76
8,185,376
81
(-)
(-)
(-)
(-)
Total remuneration plus service cost³
2,700,550
(-)
1 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
as a % of
total remuneration
1,050,000
(-)
24
(-)
(-)
(-)
RoCE component
1,068,800
(-)
24
807,225
(-)
16
Strategic focus target component
675,200
(-)
15
Total variable remuneration for vesting year 2023 or earlier vesting years
Total
3,296,500
(-)
75 or 0
664,100
2,861,325
(-)
13
1,145,800
58 or 23
3,296,500
75
4,007,125
81
(-)
135,416
(-)
23
Vesting year 2022
in €
937,500
Earlier vesting years
as a % of
in €
total remuneration
(-)
19
27,524
(-)
1
19,824
(-)
0.4
1,077,524
25
957,324
19
966,000
586,500
22
900,000
13
490,000
(-)
18
10
1,145,800
(-)
8,023,488
Group Financial Statements
Last year, there were two major milestones: at the CES in Las Vegas at the start of the year,
we unveiled our BMW i Vision Dee, full of digital innovations. Then, in September, at the IAA
MOBILITY, we presented our BMW VISION Neue Klasse. No other car at the IAA MOBILITY
received as much media coverage and attention as the BMW VISION Neue Klasse.
Combined Management Report
Statement of the Chairman of the Board of Management
Remuneration Report
BMW Group Report 2023
24
Other Information
In January 2024, we sold and delivered our first vehicle, a MINI, through our new sales sys-
tem. We have already switched the MINI brand to a direct sales model in Poland, Italy and
Sweden, with other European markets to follow. In China, we have been successfully using
this approach for MINI since 2023.
← = Q
For the BMW brand, we are also setting ourselves up for direct sales access to customers in
the future and will be launching NEW RETAIL for BMW in Europe from 2026
onwards.
Responsibility Statement and Auditor's Report
We aim to digitalise and simplify the car-buying process for customers, with transparent, con-
sistent pricing nationwide. This will create a win-win situation for everyone involved. Our retail
partners and their profitable business model will remain an essential pillar of these new
arrangements.
Automated driving: the car as digital companion.
goes without saying that we offer our customers the newest innovations and the latest,
state-of-the-art technology. Over-the-air upgrades ensure that every one of our vehicles is
always digitally up to date. The art lies in mastering this process: we anticipate far in advance
what our customers are going to need and want in five to ten years' time. That is how we
ensure they get the best overall package from us. This is our aspiration.
And that is why we keep setting benchmarks:
The BMW 5 Series Sedan is the first car in Germany to be approved for partially automated
driving at speeds up to 130 km/h on motorways. The BMW Highway Assistant allows the
driver to take their hands off the steering wheel while driving longer distances. We also
added a completely new feature: Active Lane Change Assistant with eye confirmation. This
allows the vehicle to make an automated lane change without a steering intervention: a
glance in the exterior mirror is all that is required.
Taking your hands off the steering wheel and even being able to temporarily turn your atten-
tion away from the road - that is Level 3 highly automated driving. From March 2024 on-
wards, our customers will be able to do precisely this in the models of the new BMW 7 Series.
BMW Personal Pilot L3 is the name of this new function, which takes over driving in certain
defined traffic situations and manages speed, distance and lane tracking autonomously.
For us, the highest level of premium functionality goes hand in hand with maximum safety
for our customers and all road users. We therefore opened the Future Mobility Development
Centre in Sokolov in the Czech Republic in summer 2023, where we are testing automated
driving and parking functions, up to and including fully automated driving (Level 4). At this
location, we are able to simulate virtually all situations that occur in road traffic and thus en-
sure the maturity of our technical solutions.
NEUE KLASSE - vision becomes reality.
With its spectacular Vision Vehicles, your Company showcases time and again indicates the
direction in which we are taking mobility, in line with the major global topics of the future -
through bold leaps in innovation and responsible action. This is what our NEUE KLASSE
mega-project represents in a unique way.
It
To Our Stakeholders
We aim to continue our profitable growth.
With the CE02, BMW Motorrad is already releasing its second all-electric model onto the mar-
ket, as well as the second M motorcycle model, the M 1000 XR, and the R 1300 GS Adven-
ture. That means there will be no fewer than three new top models at BMW Motorrad. They
all illustrate the breadth of the product line-up. Everyone - and that also applies to me as a
motorcycle rider - can find the right bike for their needs at BMW Motorrad.
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
Statement of the Chairman of the Board of Management
BMW Group Report 2023
22
272
"We make conscious decisions, that are
consistently based on facts."
Our profitability puts us in a position where we can once again pay you an attractive dividend.
We are making major investments in our future. The same applies to 2023 as well as to the
current financial year. Our R&D spending focus on our products, further electrification and
digitalisation of our line-up and automated driving. At the same time, we are investing in the
NEUE KLASSE mega-project, our modular kits, construction of high-voltage battery produc-
tion facilities in various markets, and the new plant in Debrecen, to name just a few examples.
Your Company is going to profit noticeably from all this in the coming years.
Your Company is robust and financially strong. Our Automotive EBIT margin for financial year
2023 was within our upwardly adjusted target range of 9.0 to 10.5%. As you know, we are
still targeting a range of 8 to 10% in the long term. At Group level, our EBT margin for 2023
of 11% exceeded our strategic target of 10%.
Your investment in the BMW Group must be worth it.
We know where we are headed at all times and we know what we need. Our consistent be-
haviour shapes the image of your Company in the eyes of the public and among our stake-
holders. People expect us to consider things carefully and to come up with practical solu-
tions. We "walk the talk" - people know that we take big leaps, but that we also deliver. All-
electric vehicles are projected to account for half of our global deliveries before 2030. We
are right on track.
The future is always ahead of us. And we are prepared!
Timing is key in whether innovations gain traction and the Company stays relevant, but it is
also clear that:
← = Q
A glance in the rear-view mirror shows that we are certainly capable of doing this: BMW has
overcome difficult situations many times in the past. This certainty has shaped our self-con-
fidence for 108 years. Your Company has constantly reinvented itself - taking bold leaps in
innovation at exactly the right time.
We are taking advantage of these opportunities in our rolling strategic approach and our long-
term corporate planning. What sets us apart is that we make conscious decisions, that are
consistently based on facts, empirical findings and well-founded analysis - not driven by the
current "zeitgeist" or short-term hypes. And, of course, it takes experience and sometimes
also common sense.
Our business model – individual premium mobility in its different forms and in line with re-
gional requirements - continues to offer substantial potential for achieving profitable growth
and gaining market share.
Your Company intends to stay on track for success.
More than 150,000 associates worldwide carry your Company forwards through their hard
work and dedication every day. They all value your commitment and your loyalty to the
BMW Group as shareholders.
All these things make your Company strong and resilient. This is especially true in the cur-
rent conditions, where we face a variety of extremely demanding requirements in individual
regions of the world, with geopolitical uncertainty and entirely new challenges constantly
emerging. We provide a substantial response to all these things.
You lend us your support and give us the latitude we need to make decisions with a long-
term perspective. Entrepreneur Herbert Quandt laid the foundation for this many years ago.
His family's next generation and all of us who work at the Company are following his legacy.
In his spirit, the Company and its employee representatives work together - negotiating
firmly, but always focused on finding solutions for the future. That, too, is our lived BMW cul-
ture.
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Statement of the Chairman of the Board of Management
To Our Stakeholders
BMW Group Report 2023
21
Our BMW, MINI, Rolls-Royce and BMW Motorrad brands enjoy an excellent reputation
worldwide. Our products don't just get people from A to B; they touch hearts and spark
emotions. Our customers experience their mobility in a very individual way. To achieve this,
we are making mobility more human, more intelligent and more sustainable.
Strong products generate strong demand.
We delivered a total of 2.55 million vehicles to customers in 2023. As anticipated, we not
only posted solid year-on-year growth, but also achieved a new all-time high at Group level.
Our brands performed very well individually, too, with new all-time highs for BMW, BMW M,
Rolls-Royce and BMW Motorrad. Despite the model changeover due to the extensive realign-
ment of the brand, MINI reported higher sales than the previous year.
Our core BMW brand maintains its leading position in the global premium segment. In
March 2024, BMW was ranked number one in the US by the consumer portal "Consumer
Reports". This independent platform compared test ratings, reliability, customer satisfaction
and safety criteria among 34 automotive manufacturers. Four BMW models even earned
the "Green Choice" environmental seal for being among the vehicles in the United States
with the lowest emissions.
The new MINI models for 2024 include the next member of the new MINI family, the Aceman,
which will celebrate its world premiere in April 2024. This electric-only crossover in the pre-
mium compact-car segment will also bring a massive leap in digitalisation. MINI has a de-
voted community and creates a unique sense of life and community spirit. The new MINI
family is produced at our Chinese joint venture, Spotlight, in Oxford, UK, and, for the first time,
in Germany, at the Leipzig plant. At Rolls-Royce, Spectre is the first battery-electric model to
become available. Rolls-Royce has long been a standout and unrivalled in the ultra-luxury
class with exclusive models.
We presented our latest models to members of the international media in Portugal in Febru-
ary 2024. Shortly afterwards, we invited 1,500 retailers from 30 European countries to Am-
sterdam for a glimpse of the future, including the new BMW 1 Series and the latest edition of
one of our top-selling individual models, the BMW X3.
All our brands and drivetrain variants help assure the continued profitable growth of your
Company. We expect to see significant double-digit growth in sales of our BEV models again
in 2024. We continue to steer the e-mobility ramp-up smartly and precisely in line with differ-
entiated demand in all regions of the world.
"We are steering the e-mobility ramp-up smartly
and precisely in line with demand in all regions of
the world."
Our vehicles performed well under various climate and traffic conditions - and the public re-
sponse has been overwhelmingly positive. This is understandable, since hydrogen fuel cell
drivetrains combine the best of both worlds: the advantages of an emissions-free e-drive,
with the fast refuelling people are used to. We also demonstrated this at the COP28 UN Cli-
mate Change Conference in Dubai. Your Company is supporting the growth of the hydrogen
economy worldwide, as well as locally, including expansion of infrastructure networks for
hydrogen filling stations.
We have been testing the BMW iX5 Hydrogen on the road in selected countries under every-
day conditions since last year. Our pilot fleet's world tour has raised awareness of the role
hydrogen can play in the energy transition – not just for mobility, but industry-wide. We see
hydrogen as a possible alternative drive technology in the mid to long term.
We are already testing hydrogen drivetrains in everyday situations.
Early in 2024, we passed the milestone of two million electrified vehicles sold. This includes
both pure electric vehicles and plug-in hybrids.
We also haven't forgotten the fans of the BMW M brand: they can look forward to a new
edition of the M5 this year - as both Sedan and Touring variants. Both M variants come with
an impressive partially electrified drivetrain.
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Statement of the Chairman of the Board of Management
To Our Stakeholders
BMW Group Report 2023
23
Dynamic growth for our all-electric models.
In addition to significant growth in the luxury class and upper premium segment, the strongest
impetus for growth last year came from our all-electric vehicles. We sold over 375,000 BEVs
- which is about 75% more than the previous year. This means that, by the end of 2023, all-
electric vehicles made up around 15% of our total sales.
This is also reflected in our share of the global BEV market: at 4.1%, it is already significantly
higher than our share of the total global market, which remains stable at 3.3%.
By the end of 2024, we will have more than 15 all-electric models in our line-up across all
brands, from MINI to BMW to Rolls-Royce. All of this speaks for our fresh and highly attractive
product range - across all brands, all segments and all drive technologies.
In 2023, all our new vehicles went into production or were released onto the market, as
planned, including the new BMW 5 Series and the new BMW X2 with the all-electric variants,
the i5 and iX2. MINI also presented two models from the all-new MINI family at the IAA
MOBILITY: the Cooper 3-door and the Countryman.
BMW Motorrad celebrated its centenary in late September of last year, with Federal Chancel-
lor Olaf Scholz attending the anniversary celebrations at the Berlin-Spandau plant. There
were two main highlights: the inauguration of the BMW Motorrad Welt - the counterpart to
our BMW Welt in Munich, as a delivery and visitor centre - and the premiere of the R 1300
GS. Fans all over the world have been eagerly awaiting this leap in the next GS generation.
All I have to say is: pure high-tech on two wheels - earning extremely positive feedback from
the trade press.
NEW RETAIL: direct sales as win-win for everyone involved.
Our technological expertise is delivering results.
Your Company outperformed the EU CO₂ fleet target by 20%.
As in previous years, we not only met the EU CO₂ fleet target for the use phase in 2023, but
significantly overfulfilled it: the BMW Group's numbers came in at 26.5 grams significantly
below the applicable limit for the reporting year of 128.6 grams of CO2 per kilometre. We
therefore ended up below the CO₂ limit set for BMW by more than 20%.
As you can see, we are continuing the positive trend of recent years, through further electri-
fication of our vehicle portfolio and by using innovative Efficient Dynamics technologies
throughout our entire fleet.
Technology openness in BMW 5 Series and 5 Series Touring.
Following on from the new BMW 5 Series Sedan, which has been available since late 2023,
the new BMW 5 Series Touring is another perfect example of how our comprehensive tech-
nological expertise works in practice.
The Touring, which will be launched this spring, is especially popular in Europe. Here, also,
customers will have four drive concepts to choose from: all-electric, plug-in hybrid or highly
efficient diesel and petrol engines with 48-volt mild-hybrid technology. BMW is where Touring
meets e-drive. No one else in this segment offers a vehicle like the all-electric BMW i5 Tour-
ing, with an electric range of over 500 kilometres.
Our broad, yet centred, approach, with systematic further development of all drive technol-
ogies, reflects BMW's typical self-belief, as well as the effectiveness of our strategy. General
recognition of our strategy keeps on growing since we continue to present measurable suc-
cesses in decarbonisation.
Our plug-in hybrid models remain an important element of our drivetrain portfolio. Current
Gen5 battery technology already enables an attractive range. Plug-in hybrids also provide a
boost to e-mobility that should not be underestimated. Many customers discover the ad-
vantages of electric driving for the first time this way.
From left to right:
25
Member from 2017 until 11 May 2023
Finance
Mandates
BMW Brilliance Automotive Ltd. ***, Chairman
(until 11 May 2023)
General Counsel:
DR ANDREAS LIEPE
Not listed on the stock exchange.
BMW Group mandate.
***Group mandate (other).
- Memberships on other mandatory supervisory boards.
- Memberships on comparable boards in Germany and abroad.
DR NICOLAS PETER (b. 1962)
30
To Our Stakeholders
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Composition of the Board of Management and Supervisory Board
Remuneration Report
Other Information
← = Q
CURRENT MEMBERS OF THE SUPERVISORY BOARD
DR-ING DR-ING Eh NORBERT REITHOFER (b. 1956)
Member since 2015, elected until the AGM 2025
Chairman of the Supervisory Board
Former Chairman of the Board of Management of BMW AG
Mandates
Siemens AG (until 9 February 2023)
BMW Group Report 2023
Rolls-Royce Motor Cars Ltd.***, Chairman
(until 1 November 2023)
Mandates
Customer, Brands, Sales
Member since 1 November 2023
Customer, Brands, Sales
Mandates
Rolls-Royce Motor Cars Ltd.***, Chairman
(since 1 November 2023)
ILKA HORSTMEIER (b. 1969)
Member since 2019
People and Real Estate,
Labour Relations Director
WALTER MERTL (b. 1974)
Member since 12 May 2023
Finance
Mandates
BMW Brilliance Automotive Ltd.***, Chairman
(since 12 May 2023)
DR-ING MILAN NEDELJKOVIĆ (b. 1969)
Member since 2019
Production
Mandates
BMW (South Africa) (Pty) Ltd.***, Chairman
BMW Motoren GmbH***, Chairman
DR-ING JOACHIM POST (b. 1971)
Member since 2022
Purchasing and Supplier Network
FRANK WEBER (b. 1966)
Member since 2020
Development
OUTGOING MEMBERS OF THE
BOARD OF MANAGEMENT
PIETER NOTA (b. 1964)
Member from 2018 until 31 October 2023
Henkel Management AG*
JOCHEN GOLLER (b. 1966)
Henkel AG & Co. KGaA (Shareholders' Committee)
Member since 18 January 2023, appointed until the AGM 2024
Deputy Chairman of the Supervisory Board
We also presented this Vision Vehicle to our associates at an exclusive evening event. The
interest was huge. Up to 700 associates from across Germany were selected by lottery to
attend the event live with a companion. Another 25,000 watched the live stream or the re-
cording of the event. That is a sixth of our global workforce. I see that as genuine interest in
our joint future project, the NEUE KLASSE.
- Memberships on comparable boards in Germany and abroad.
- Memberships on other mandatory supervisory boards.
Group mandate (other).
BMW Group mandate.
Not listed on the stock exchange.
Executive employee of the enterprise.
2 Union representative.
Employee of the enterprise.
Whirlpool Corp., Chairman
STEFAN QUANDT (b. 1966)
Simex Trading AG*
Member since 2021, elected until the AGM 2025
Chairman and CEO of Whirlpool Corp.
DR MARC BITZER (b. 1965)
Note: Mr Quandt is the sole shareholder of DELTON Health AG, DELTON Technology SE and AQ-
TON SE, and indirectly holds majority interests in Entrust Corp. and SOLARWATT GmbH.
SOLARWATT GmbH****
Entrust Corp.****
DELTON Health AG****, Chairman
DELTON Technology SE*****, Chairman
Frankfurter Allgemeine Zeitung GmbH*
AQTON SE****, Chairman
Mandates
Entrepreneur
Deputy Chairman of the Supervisory Board
Member since 1997, elected until the AGM 2024
Mandates
ZF Friedrichshafen AG*, Chairman
Fresenius Management SE*
Deutsche Post AG
(since 23 January 2023)
Chairman of the General Works Council and Works Council
Munich of BMW AG
STEFAN SCHMID¹ (b. 1965)
Member since 2007, elected until the AGM 2024
Deputy Chairman of the Supervisory Board
Chairman of the BMW AG Works Council Dingolfing
DR KURT BOCK (b. 1958)
Member since 2018, elected until the AGM 2027
Deputy Chairman of the Supervisory Board and
Chairman of the Audit Committee
Chairman of the Supervisory Board of BASF SE
Mandates
BASF SE, Chairman
CHRISTIANE BENNER² (b. 1968)
Member since 2014, elected until the AGM 2024
First Chairwoman of IG Metall (since 23 October 2023)
Mandates
Continental AG, Deputy Chairwoman
BERNHARD EBNER¹ (b. 1978)
Member since 2021, appointed until the AGM 2024
Chairman of the BMW AG Works Council Landshut
RACHEL EMPEY (b. 1976)
Member since 2021, elected until the AGM 2025
Member of Supervisory Boards
Mandates
-
ZF Friedrichshafen AG* (since 15 March 2023)
DR-ING HEINRICH HIESINGER (b. 1960)
Member since 2017, elected until the AGM 2026
Chairman of the Supervisory Board of ZF Friedrichshafen AG
Mandates
DR MARTIN KIMMICH¹ (b. 1972)
Fraunhofer-Gesellschaft zur Förderung der
angewandten Forschung e. V.", Deputy Chairman
Mandates
Chairman (since 2019)
← = Q
People like working for the BMW Group.
Last year, renowned US publication Time Magazine and online platform Statista compared
750 international companies. Your Company did exceptionally well to make it into the top 10,
and was, in fact, the highest-ranked automotive manufacturer in the global comparison.
Three criteria were decisive for this assessment: revenue growth, sustainability and employee
satisfaction. These three are not opposing factors but belong together.
With regard to employees: in autumn 2023, we once again asked our global team to share
their opinion. For the first time, all 150,000 associates worldwide were able to take part.
84% took advantage of this opportunity.
The vote was unequivocal: 85% support our strategy - our BMW way. Another very clear
majority of 88% said they would recommend our Company as an employer. 93% are proud
to work for the BMW Group.
Is there any better foundation for continuing on our successful course together?
2023 was another strong team effort.
Personally, and on behalf of the entire Board of Management, I would like to thank all our
associates. Everyone made a valuable contribution. I would also like to thank all our custom-
ers worldwide, our retail organisation and our suppliers.
All of us at BMW are united by a can-do spirit: think ahead - perform - succeed!
Dear Shareholders,
Other Information
Our business environment will again be dominated by a great many challenges this financial
year, including weak economic development in several markets, the price development in the
automotive sector, high interest rates and the uncertainty created by geopolitical shifts.
Courage, pride in performance and resilience.
That is what makes your Company different. We dare to chart our own course, even in turbu-
lent times; we are able to withstand the headwinds, as long as we are convinced that we are
on the right path.
Your Company is a high-performance organisation. That is why we once again have ambi-
tious plans for 2024: on the automotive side, 14 new models will go into production and
BMW Motorrad will release a further 12 new models - not to mention numerous model up-
dates and engine variants. We have never postponed a launch and we will not waver from
this.
All of this shows that we are continually laying the foundation for our future success. That is
continuous progress. In other words: DRIVING THE NEXT ERA.
That is why the following applies to your Company:
Strong today - strong tomorrow.
“Our customers experience their mobility in a
very individual way. We therefore are continually
laying the foundation for our future success.
That is continuous progress.
"I
Yours
V.fiume
That is why it is so decisive that we recognise and systematically exploit our opportunities. It
is important to me that all of us at the BMW Group approach our tasks with self-belief, confi-
dence and the necessary grit. I travel the world a lot, visiting our markets and facilities.
Everywhere I go, I see how valuable and important individual mobility is in many people's
everyday lives.
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Statement of the Chairman of the Board of Management
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Statement of the Chairman of the Board of Management
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report Other Information
← = Q
―
The NEUE KLASSE is so much more than just a single car; it is an entirely new generation of
BMW models all of them developed with an all-electric heart, fully digitalised and with a
clear focus on sustainability. The innovations of the NEUE KLASSE will benefit all future BMW
models.
We are preparing to launch the NEUE KLASSE onto the market at an unprecedented pace
from 2025 onwards, with six models within just 24 months of the start of production. We
showed the scope of the NEUE KLASSE in a very concrete way for the first time at the BMW
Group Annual Conference on 21 March 2024. Its offering ranges from sporty sedan to X
model. The BMW VISION Neue Klasse and our newest Vision Vehicle - the BMW VISION
Neue Klasse X - represent these two bookends.
I can promise you that both Vision Vehicles will be on the market soon in a very similar form.
In-between these two models, there is plenty of room for everything that will define the BMW
brand in the future.
The Board of Management members already had the chance to drive prototypes of the
NEUE KLASSE. What a fantastic driving experience! The first camouflaged prototypes are
already being tested on the roads and we will be building the first pre-production vehicles
before the end of the year.
After the official start of production, in 2025, at our newest BMW plant in Debrecen, Hun-
gary, the NEUE KLASSE will also come off the production line at our oldest plant in Munich
from 2026, with other locations worldwide to follow. Incidentally, one out of every two
BMWs leaving the Munich production line is already fully electric today. From 2027 on-
wards, our more than 100-year-old main plant will build only electric vehicles.
"The NEUE KLASSE is much more than just a
single car. It is an entirely new generation of
BMW models - all of them developed with an
all-electric heart, fully digitalised and with a
clear focus on sustainability."
Mobility is movement - and movement requires energy and functioning supply
chains.
We are talking here about powerful, innovative and sustainably produced battery cells - in
other words, high-voltage batteries. In the models of the NEUE KLASSE, we will be using our
newly developed round lithium-ion battery cells, which have been optimised for the new ar-
chitecture, for the very first time.
Our sixth-generation BMW eDrive technology represents an enormous leap in technology,
compared to the previous generation: we are increasing energy density by more than 20%,
improving charging speed by up to 30% and boosting range by around 30% - at the same
time as lowering costs. We are also reducing CO₂ emissions from cell production by up to
60%.
For both basic research and development of mass-manufacturing processes for high-voltage
batteries, your Company is relying on in-house expertise. We want to understand every as-
pect of the high-voltage battery. To do so, we have created the necessary conditions for this
with the Battery Cell Competence Centre in Munich and the Cell Manufacturing Competence
Centre in Parsdorf, Bavaria, enabling us to span all value creation processes involved in cell
production; this is a crucial step for us.
The Gen6 batteries for our plants in Bavaria will be supplied from our planned new location
in Irlbach-Straßkirchen from 2026 onwards. Before embarking on the building project, we
sought frank and open dialogue with local residents. We were very pleased that they voted
strongly in favour of our site and see this as confirmation of our efforts.
Your Company is building production facilities for BMW high-voltage batteries not just in
Lower Bavaria, but all over the world - always in close proximity to our vehicle plants in
Hungary, the US, Mexico, China and Thailand. Our strategic "local for local" approach also
guarantees short transport distances for high-voltage batteries and secures our supply
against unforeseen events in different regions of the world.
With our "i Supply Chain" strategy, we are ensuring resilient, excellent and digital supply
chains in all areas. Our plants worldwide need supplying with 36 million parts every day - at
the right time, in the best quality and in the right quantity. For the digitalisation of our supply
chains, we are relying on Catena-X, a shared data ecosystem for automotive manufacturers,
suppliers and subcontractors, as well as recycling companies in the future. This digital collab-
oration increases efficiency and transparency - for example, around the carbon footprint and
options for tracing components and raw materials.
26
BMW Group Report 2023
To Our Stakeholders
Oliver Zipse
Chairman of the Board of Managemen
22
27
28
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
The Board of Management
20
29
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Composition of the Board of Management and Supervisory Board
Remuneration Report
Other Information
← = Q
COMPOSITION OF THE BOARD OF
MANAGEMENT AND SUPERVISORY BOARD
CURRENT MEMBERS OF THE
BOARD OF MANAGEMENT
OLIVER ZIPSE (b. 1964)
Member since 2015
Member of the Board of Management,
Production
they get the best overall package from us.”
Milan Nedeljković
Frank Weber
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
The Board of Management
From left to right:
Ilka Horstmeier
Member of the Board of Management,
People and Real Estate
Joachim Post
Member of the Board of Management,
Purchasing and Supplier Network
THE BOARD OF
MANAGEMENT
Walter Mertl
Member of the Board of Management,
Finance
Oliver Zipse
Chairman of the Board of Management
Jochen Goller
Member of the Board of Management,
Customer, Brands, Sales
From left to right:
Member of the Board of Management,
Development
"We anticipate far in advance what our
customers want. That is how we ensure
2,115,000
5
33,568
9
21,600
Member of the Board of Management until 31 December 2017
Earlier
vesting years in €
(-)
as a % of
total remuneration
10
33,568
9
21,600
10
Share-based remuneration component (matching component) 2018
(-)
(-)
(-)
(-)
(-)
(-)
(-)
(-)
Fringe benefits (other remuneration)
benefits
retirement
allowance/
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
III. Remuneration of the Members of the Board of Management
Remuneration granted and owed in financial year 2023
NORBERT REITHOFER
IAN ROBERTSON
Chairman of the Board of Management until 13 May 2015
Chairman of the Supervisory Board since 13 May 2015
(-)
Financial year 2023
in €
as a % of
total remuneration
Financial year 2023
in €
Fixed
remuneration
Total fringe benefits
Variable
remuneration
Total variable remuneration
Waiting
Waiting allowance
Earlier
vesting years in €
Retirement benefits
Total waiting allowance/retirement benefits
Total remuneration for financial years 2023 or earlier vesting years
Financial year 2023
in €
15
32,384
Member of the Board of Management until 31 December 2021
Earlier
as a % of
vesting years in €
total remuneration
(-)
50
remuneration
Total fringe benefits
26,354
15
ANDREAS WENDT
32,384
Variable
remuneration
Share-based remuneration component (matching component) 2018
(-)
152,9851
85
(-)
32,4722
50
Total variable remuneration
50
Group Financial Statements
PETER SCHWARZENBAUER
Member of the Board of Management until 31 October 2019
Earlier
as a % of
vesting years in €
total remuneration
(-)
Fringe benefits (other remuneration)
330,197
(-)
91
194,878
(-)
90
330,197
91
194,878
26,354
90
216,478
Total remuneration according to § 162 German Stock Corporation Act (AktG)
363,765
100
216,478
100
Financial year 2023
in €
Fixed
363,765
152,985
BMW Group Report 2023 To Our Stakeholders Combined Management Report
1 The number of shares purchased in 2019 with the 2018 cash remuneration component (investment component) amounted to 4,333. The number of mathematical matching shares for calculating the equivalent value in cash amounts to 1,444.
2 The number of shares purchased in 2019 with the 2018 cash remuneration component (investment component) amounted to 7,801. The number of mathematical matching shares for calculating the equivalent value in cash amounts to 2,600.
(-)
Total remuneration according to § 162 German Stock Corporation Act (AktG)
313,878
100
302,023
100
Financial year 2023
Fixed
Fringe benefits (other remuneration)
in €
18,736
vesting years in €
KLAUS FRÖHLICH
Member of the Board of Management until 30 June 2020
Earlier
as a % of
total remuneration
HARALD KRÜGER
5
Financial year 2023
in €
17,642
Chairman of the Board of Management until 15 August 2019
Earlier
as a % of
vesting years in €
total remuneration
6
remuneration
Total fringe benefits
302,023
(-)
313,878
92
(-)
(-)
(-)
(-)
(-)
allowance/
retirement
benefits
Retirement benefits
18,736
Total waiting allowance/retirement benefits
285,612
(-)
91
278,209
(-)
92
285,612
91
278,209
Total remuneration for financial years 2023 or earlier vesting years
5
17,642
6
185,589
(-)
54
(-)
(-)
(-)
185,589
54
(-)
Total waiting allowance/retirement benefits
(-)
204,325
142,523
17,642
256,620
Total remuneration according to § 162 German Stock Corporation Act (AktG)
346,848
100
274,262
100
Total remuneration for financial years 2023 or earlier vesting years
293
Retirement benefits
allowance/
Variable
remuneration
Share-based remuneration component (matching component) 2018
(-)
142,5231
41
(-)
256,620²
94
Total variable remuneration
retirement
benefits
Waiting
142,523
(-)
41
256,620
94
(-)
(-)
(-)
(-)
(-)
Waiting allowance
85
32,472
50
1,239,625
165,000
96,708
1,152,000
675,200
627,717
367,912
Total variable remuneration
8,010,000
6,047,375
615,000
463,541
Total fixed and variable remuneration
9,986,113
8,023,488
768,331
616,872
Service cost³
Maximum remuneration"/Vested remuneration incl. service cost
2,115,000
Strategic focus target component
582,382
627,717
542,120
505,978
1,890,000
1,081,500
142,500
80,750
1,035,000
586,500
542,120
712,729
9,850,000
307,201
SHARE-BASED REMUNERATION
remuneration
(PERSONAL CASH INVESTMENT AMOUNT)²
RoCE component
1,962,250
165,000
153,083
1,152,000
1,068,800
Variable
712,729
8,736,217
66,667
66,667
Other Information
← = Q
III. Remuneration of the Members of the Board of Management
Maximum remuneration and remuneration vested in the 2023 financial year (vesting year)
MILAN NEDELJKOVIĆ
Production
since 1 October 2019
PIETER NOTA
Customer, Brands, Sales
NICOLAS PETER
Finance
JOACHIM POST
Purchasing and Supplier Network
Remuneration Report
1 January 2018 to 31 October 20231
Max.
Remuneration
vested
Remuneration
Max.
vested
Max.
1 January 2017 to 11 May 20232
Remuneration
vested
since 1 January 2022
Remuneration
in €
966,000
Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
4,374,000
5,490,981
407,533
3,296,500
2,339,674
1,763,473
4,413,481
3,022,307
2,446,106
407,533
254,444
Group Financial Statements
254,444
683,539
5,500,000
4,821,014
3,122,736
2,700,550
1 For more information about fringe benefits for the 2023 financial year, refer to Remuneration granted and owed to members of the Board of Management pursuant to § 162 of the German Stock Corporation Act (AktG).
2 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
3 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
4 Maximum remuneration within the meaning of § 87a (1) Sentence 2 No. 1 AktG. The overall cap is lower than the sum of the maximum amounts for the individual components. Any special payments to compensate for salary losses from a previous employment relationship and/or to cover relocation costs in
the case of new appointments are also subject to maximum remuneration.
295
BMW Group Report 2023
820,833
1,035,000
133,000
142,500
152,985
32,384
32,472
179,339
100
64,856
100
1 The number of shares purchased in 2019 with the 2018 cash remuneration component (investment component) amounted to 4,652. The number of mathematical matching shares for calculating the equivalent value in cash amounts to 1,550.
2 The number of shares purchased in 2019 with the 2018 cash remuneration component (investment component) amounted to 988. The number of mathematical matching shares for calculating the equivalent value in cash amounts to 329.
294
26,354
BMW Group Report 2023
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
← = Q
11. Maximum remuneration and remuneration vested in the 2023
financial year (vesting year)
The Supervisory Board has set upper limits on the remuneration
of Members of the Board of Management for the 2023 financial
year (vesting year) in two ways: it has set maximum limits in
terms of the amount paid for all variable remuneration compo-
nents and, additionally, for the total remuneration of the Board of
Management members in each case. Both components of the
bonus as well as the two components of the share-based
remuneration (personal investment cash amount) are limited to
a maximum of 180% of the respective target amounts.
The maximum remuneration of the Board of Management mem-
bers for the vesting year 2023 determined in accordance with
§ 87a (1) Sentence 2 No. 1 German Stock Corporation Act
(AktG) includes, as fixed components, the basic remuneration for
2023, other fixed remuneration for 2023, the service cost (in ac-
cordance with IAS 19) for 2023 and, as variable components,
Maximum remuneration and remuneration vested in the 2023 financial year (vesting year)
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
OLIVER ZIPSE
Total remuneration according to § 162 German Stock Corporation Act (AktG)
(-)
Waiting
Waiting allowance
(-)
(-)
(-)
(-)
(-)
(-)
allowance/
retirement
benefits
Total remuneration for financial years 2023 or earlier vesting years
Retirement benefits
(-)
(-)
(-)
(-)
(-)
(-)
(-)
(-)
(-)
Total waiting allowance/retirement benefits
(-)
Chairman of the Board of Management
since 16 August 2019
Member of the Board of Management
JOCHEN GOLLER
Customer, Brands, Sales
since 1 November 2023
3,331
remuneration
Total fixed remuneration
1,976,113
1,976,113
153,331
3,331
153,331
1,050,000
66,981
1,116,981
1,050,000
66,981
1,116,981
26,113
570,652
111,981
111,981
682,633
682,633
BONUS
Earnings component of the bonus
Performance component of the bonus
1,890,000
1,764,000
570,652
2
26,113
Fixed
ILKA HORSTMEIER
Human Resources and Real Estate,
Labour Director
since 1 November 2019
WALTER MERTL
Finance
since 12 May 2023
since 13 May 2015
Remuneration
Remuneration
Remuneration
Remuneration
in €
Max.
Fringe benefits (other remuneration)¹
vested
Fixed remuneration (base salary)
1,950,000
1,950,000
150,000
vested
150,000
Max.
vested
Max.
vested
Max.
Waiting allowance
Waiting
(-)
200,000
95
10,000
98
210,000
100
(200,000)
(95)
(10,000)
(5)
(210,000)
(100)
Gerhard Kurz
200,000
95
10,000
5
210,000
100
Jens Köhler¹
(100)
(210,000)
(5)
95
10,000
5
210,000
(200,000)
(95)
(10,000)
(5)
(210,000)
(94,624)
100
(100)
200,000
96
8,000
4
208,000
100
(200,000)
(95)
(10,000)
Susanne Klatten
(94)
(6,000)
[6]
(10,000)
(4)
(260,000)
(100)
Anke Schäferkordt
200,000
95
10,000
5
(96)
210,000
(200,000)
(95)
(10,000)
(5)
(210,000)
(100)
Christoph Schmidt
200,000
95
100
total remuneration
(250,000)
410,000
(100,624)
(100)
André Mandl¹
200,000
95
10,000
5
210,000
100
100
(148,333)
(8,000)
(5)
(156,333)
(100)
Dominique Mohabeer1,2
400,000
98
10,000
2
(95)
in €
as a % of
as a % of
total remuneration
10,000
5
210,000
100
(200,000)
(95)
(10,000)
(5)
(210,000)
95
(100)
200,000
95
10,000
5
210,000
100
(200,000)
(95)
(10,000)
Bernhard Ebner¹
(5)
200,000
(100)
460,000
100
(450,000)
(98)
(10,000)
(2)
(460,000)
(100)
Christiane Benner¹
Marc Bitzer
200,000
10,000
5
210,000
100
(200,000)
(95)
(10,000)
(5)
(210,000)
95
10,000
(210,000)
Rachel Empey³
1 These employee representatives have declared that they will transfer their remuneration to the Hans Böckler Foundation in accordance with the guidelines of the Confederation of German Trade Unions.
2 Member of the Supervisory Board since 18 January 2023, Deputy Chairman since 23 January 2023.
3 Member of the Audit Committee.
← = Q
299
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration granted and owed to Supervisory Board members pursuant to § 162 AktG in financial year 2023 (2022)
MEMBERS OF THE SUPERVISORY BOARD IN OFFICE AS AT 31 DECEMBER 2023
(100)
Remuneration Report
IV. Remuneration of the Members of the Supervisory Board
Fixed remuneration
Attendance fee
Total remuneration
as a % of
Johann Horn¹
in €
200,000
total remuneration
in €
Other Information
(100)
(210,000)
(10,000)
400,000
98
10,000
2
410,000
100
(250,000)
(96)
(10,000)
(5)
(4)
(100)
Heinrich Hiesinger
200,000
(200,000)
95
10,000
5
210,000
100
(95)
(260,000)
Max.
5
100
16
Variable
Share-based remuneration component (matching component) 2018
(-)
152,985*
84
remuneration
Total variable remuneration
152,985
84
Waiting allowance
(-)
(-)
(-)
Retirement benefits
(-)
(-)
(-)
(-)
28,094
Total fringe benefits
remuneration
16
97
379,545
Manfred Schoch (Deputy Chairman) 1.2
291
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
(-)
III. Remuneration of the Members of the Board of Management
10. Remuneration granted and owed to former members of the
Board of Management pursuant to § 162 of the German Stock
Corporation Act (AktG)
The following tables show the fixed and variable remuneration
granted and owed to the former members of the Board of Man-
agement in the reporting year in accordance with § 162 German
Stock Corporation Act (AktG). In accordance with § 162 (5) AktG,
individual figures are not shown for former members of the Board
of Management who stepped down from the Board of Manage-
ment in 2013 or earlier. The remuneration of the members of
the Board of Management who left in the reporting year is pro-
vided in Remuneration granted and owed to members of the Board of
Management pursuant to § 162 of the German Stock Corporation Act (AktG).
For individual former members of the Board of Management, the
remuneration granted and owed also includes the share-based
remuneration component (matching component) 2018. In this
regard, please refer to the statements on remuneration granted
and owed for the active members of the Board of Management
7 Share-based remuneration component (matching component) 2018.
Remuneration granted and owed in financial year 2023
Fixed
Fringe benefits (other remuneration)
Financial year 2023
in €
28,094
MILAGROS CAIÑA CARREIRO-ANDREE
Member of the Board of Management until 31 October 2019
Earlier
as a % of
vesting years in €
total remuneration
(-)
← = Q
28,094
152,985
181,079
9
23,814
Member of the Board of Management until 31 December 2016
Earlier
vesting years in €
(-)
as a % of
total remuneration
8
remuneration
Total fringe benefits
28,266
9
Financial year 2023
in €
23,814
Variable
remuneration
Share-based remuneration component (matching component) 2018
(-)
(-)
(-)
(-)
Total variable remuneration
(-)
(-)
8
10,000
as a % of
total remuneration
Financial year 2023
in €
28,266
100
Waiting
allowance/
retirement
benefits
Total waiting allowance/retirement benefits
Total remuneration for financial years 2023 or earlier vesting years
Total remuneration according to § 162 German Stock Corporation Act (AktG)
*The number of shares purchased in 2019 with the 2018 cash remuneration component (investment component) amounted to 4,652. The number of mathematical matching shares for calculating the
equivalent value in cash amounts to 1,550.
292
Member of the Board of Management until 30 September 2016
Earlier
vesting years in €
(-)
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Remuneration Report
Other Information
← = Q
III. Remuneration of the Members of the Board of Management
Remuneration granted and owed in financial year 2023
KLAUS DRAEGER
FRIEDRICH EICHINER
Fixed
Fringe benefits (other remuneration)
Group Financial Statements Responsibility Statement and Auditor's Report
3
389,545
100
210,000
100
(198,387)
(95)
(10,000)
(5)
(208,387)
(100)
Total acting members of the Supervisory Board
5
5,629,545
198,000
3
5,827,545
100
(4,791,344)
(96)
(184,000)
(4)
(4,975,344)
97
(100)
10,000
200,000
(200,000)
(95)
(10,000)
(5)
(210,000)
(100)
Vishal Sikka
200,000
95
95
10,000
210,000
100
(200,000)
(95)
(10,000)
(5)
(210,000)
(100)
Sibylle Wankel¹
5
210,000
1 These employee representatives have declared that they will transfer their remuneration to the Hans Böckler Foundation in accordance with the guidelines of the Confederation of German Trade Unions.
2 Member of the Audit Committee.
300
10,000
98
400,000
Stefan Schmid (Deputy Chairman)'
(100)
(410,000)
(2)
(10,000)
(98)
2
(400,000)
410,000
2
10,000
98
400,000
Stefan Quandt (Deputy Chairman)
(-)
(-)
(-)
100
← = Q
410,000
(400,000)
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
V. Comparison of Change in Remuneration and Earnings
V.
COMPARISON OF CHANGE IN REMUNER-
ATION AND EARNINGS PURSUANT TO
§ 162 (1) SENTENCE 2 NO. 2 OF THE
GERMAN STOCK CORPORATION ACT
(AKTG)
Pursuant to § 162 (1) Sentence 2 No. 2 German Stock Corpora-
tion Act (AktG), the following table shows the change in earnings,
the annual change in the remuneration of the members of the
Board of Management and the Supervisory Board, and the an-
nual change in the average remuneration of the employees on a
full-time equivalent basis over the last five financial years.
100
For the members of the Board of Management and the Supervi-
sory Board, the remuneration granted and owed in the relevant
financial year is presented within the meaning of § 162 (1) Sen-
tence 1 AktG. The remuneration granted and owed to former
members of the Board of Management includes any variable re-
muneration from previous vesting years and any remuneration
from any contracts of employment that remained valid beyond
the end of their mandate, as well as retirement benefit plans
(pension payments, payments from the retirement capital ac-
count), fringe benefits and any waiting allowances paid.
The presentation of average employee remuneration is based on
the average remuneration of all employees of BMW AG on a full-
time equivalent basis. In the 2023 financial year, this was
83,383 people. Worldwide, the BMW Group employed 154,950
people at 31 December 2023. In order to calculate the average
employee remuneration presented, the principles applicable to
the calculation of the remuneration granted and owed to the
members of the Board of Management and the Supervisory
Board pursuant to § 162 (1) Sentence 1 AktG were applied
accordingly.
← = Q
450,000
Kurt Bock (Deputy Chairman, Chairman of the Audit Committee)
(100)
(410,000)
(2)
(10,000)
(98)
The change in earnings is presented on the basis of BMW AG's
net profit for the year in accordance with the German Commercial
Code (HGB). In addition, the changes in the key indicators "earn-
ings attributable to shareholders of BMW AG" and "Group return
on sales after tax" are reported, as these key indicators are rele-
vant for both the calculation of the variable remuneration of the
members of the Board of Management (earnings component of
the bonus) and the performance-related remuneration of man-
agers and employees.
vested
the bonus and the share-based remuneration (personal invest-
ment cash amount) for the vesting year 2023. Any special pay-
ments to compensate for salary losses from a previous employ-
ment relationship and/or to cover relocation costs in the case of
new appointments are also subject to maximum remuneration.
A commitment to cover relocation costs was issued in the 2023
financial year.
1,050,000
Maximum remuneration5/Vested remuneration incl. service cost
5,212,500
4,450,792
1 Second remuneration level since 1 July 2023.
2 For more information about fringe benefits for the 2023 financial year, refer to Remuneration granted and owed to members of the Board of Management
pursuant to § 162 of the German Stock Corporation Act (AktG).
3 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired
with the payout amount.
4 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
5 Maximum remuneration within the meaning of § 87a (1) Sentence 2 No. 1 AktG. The overall cap is lower than the sum of the maximum amounts for the indi-
vidual components. Any special payments to compensate for salary losses from a previous employment relationship and/or to cover relocation costs in the
case of new appointments are also subject to maximum remuneration.
Minimum remuneration of Board of Management members is
ensured by the fixed remuneration components, in particular the
basic remuneration.
The total fixed maximum remuneration is less than the sum of
the maximum amounts for the individual components.In addition
to the maximum limits for the individual components of overall
remuneration, the Supervisory Board also set minimum thresh-
olds that had to be exceeded in order for a target to be achieved.
If these minimum thresholds are not reached, the relevant com-
ponent of the variable remuneration is not paid.
The maximum limits for each individual element of the variable
remuneration in the 2023 vesting year and the stipulated maxi-
mum remuneration limits were complied with in all cases.
407,525
The remuneration granted and owed for the 2023 financial year
pursuant to § 162 AktG, see Remuneration granted and owed for the
297
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
IV. Remuneration of the Members of the Supervisory Board
← = Q
IV. REMUNERATION OF THE MEMBERS OF
THE SUPERVISORY BOARD
1. Articles of incorporation and procedure
The regulation governing remuneration for the Supervisory
Board is set out in § 16 of the Articles of Incorporation, and spec-
ifies both the remuneration system to be used and the precise
framework for calculating the remuneration due to the members
of the Supervisory Board. The regulation was adopted by the An-
nual General Meeting on 14 May 2020 and confirmed on
12 May 2021 with a majority of 99.40% of the valid votes cast.
2.
Principles and elements of remuneration
The Supervisory Board remuneration is structured as a purely
fixed remuneration in line with suggestion G.18 of the GCGC.
Fixed remuneration strengthens the independence of the Super-
visory Board in advising and monitoring the Board of Manage-
ment. The structure and amount of the fixed remuneration
should ensure that highly qualified individuals can be proposed
to the Annual General Meeting for membership of the Supervi-
sory Board. This promotes the quality of advice and oversight,
which contributes to the Company's sustainable and long-term
development.
actual financial year, includes the payment of the matching compo-
nent of the share-based remuneration for the 2018 vesting year
to the Board of Management members who were already in of-
fice in that financial year. This payment was made in May 2023,
after the expiry of the four-year shareholding period. This com-
ponent is subject to the overall cap set for the vesting year 2018,
which was complied with for the Board of Management mem-
bers in office at that time.
407,525
4,043,267
5,036,392
Max.
vested
975,000
975,000
29,392
29,392
1,004,392
1,004,392
Performance component of the bonus
945,000
882,000
945,000
535,500
Variable
remuneration
SHARE-BASED REMUNERATION
(PERSONAL CASH INVESTMENT AMOUNT) ³
RoCE component
1,071,000
993,650
Strategic focus target component
1,071,000
627,725
Total variable remuneration
4,032,000
3,038,875
Total fixed and variable remuneration
Service cost
In accordance with the Articles of Incorporation, each member of
the Supervisory Board of BMW AG who does not exercise any
additional function relevant to remuneration receives fixed remu-
neration of € 200,000 p.a.
The GCGC recommends that exercising the functions of the chair
and deputy chair of the Supervisory Board should also be con-
sidered when determining the level of remuneration, along with
any committees an individual chairs or sits on (Suggestion G.17).
This is to take account of the extra time commitment associated
with these positions. The Articles of Incorporation of BMW AG
also take account of the requirements for the Audit Committee
and its Chairman. They stipulate that the Chairman of the Super-
visory Board shall receive three times the amount, and each
Deputy Chairman twice the amount, of remuneration paid to a
Supervisory Board member who has no additional remunera-
tion-relevant functions. The Chair of the Audit Committee re-
ceives two-and-a-quarter times the amount, the Chairs of other
Supervisory Board committees twice the amount, each member
of the Audit Committee twice the amount, and each member of
another committee one-and-a-half times the amount of the re-
muneration paid to a Supervisory Board member, provided the
relevant committee convened on at least three days during the
financial year. If a member of the Supervisory Board exercises
more than one of the functions referred to above, their remuner-
ation is measured only on the basis of the function receiving the
highest amount.
In the event of changes in the composition of the Supervisory
Board during the year, or if additional remuneration-relevant
functions are performed, remuneration is calculated on a propor-
tionate basis.
Remuneration granted and owed to Supervisory Board members pursuant to § 162 AktG in financial year 2023 (2022)
MEMBERS OF THE SUPERVISORY BOARD IN OFFICE AS AT 31 DECEMBER 2023
Remuneration Report
Other Information
IV. Remuneration of the Members of the Supervisory Board
Fixed remuneration
Attendance fee
Total remuneration
as a % of
Norbert Reithofer (Chairman)
in €
600,000
total remuneration
in €
as a % of
total remuneration
as a % of
98
10,000
2
in €
610,000
total remuneration
(600,000)
(98)
(10,000)
(2)
(610,000)
100
(100)
Fixed remuneration (base salary)
Responsibility Statement and Auditor's Report
Remuneration
Group Financial Statements
BMW Group Report 2023
In addition, each member of the Supervisory Board receives an
attendance fee of € 2,000 per meeting for each meeting of the
Supervisory Board (plenary) in which he or she participates. This
also applies to participation by telephone or video link. If they at-
tend more than one meeting on the same day, the meetings are
not remunerated separately. A continuous session on two con-
secutive days is treated as one session.
The remuneration and the attendance fee are only paid after the
end of the respective financial year. Furthermore, the company
reimburses each member of the Supervisory Board for their rea-
sonable expenses. In order to be able to perform his duties, the
Chairman of the Supervisory Board is provided with secretariat
and chauffeur services.
3.
Remuneration granted and owed to members of the
Supervisory Board pursuant to § 162 of the German Stock Cor-
poration Act (AktG)
The following table shows the remuneration granted and owed
to the members of the Supervisory Board in the 2023 financial
year in accordance with § 162 (1) Sentence 1 German Stock
Corporation Act (AktG). The activity on which the remuneration
for the 2023 financial year is based was fully performed by the
balance sheet date. Therefore, the remuneration for the Super-
visory Board activities is classified as granted for the 2023 finan-
cial year, even if the payment of the Supervisory Board remuner-
ation (including the attendance fee) was made after the end of
the 2023 financial year.
Overview of remuneration of the members of the
Supervisory Board'
Member of Supervisory Board
Chairman Supervisory Board
Deputy Chairman Supervisory Board
Chairman of the Audit Committee²
Chairman of other committee²
Member of the Audit Committee²
Member of other committee²
Factor
Amount in € p. a.³
1.00
200,000
3.00
600,000
2.00
400,000
2.25
450,000
2.00
400,000
2.00
400,000
1.50
300,000
1 If a Supervisory Board member performs more than one of the functions referred to above, their
remuneration is measured only on the basis of the function that is remunerated with the highest
amount.
2 Provided that the Committee has met on at least three days during the financial year.
3 Plus attendance fee of € 2,000 per plenary session.
298
To Our Stakeholders Combined Management Report
Earnings component of the bonus
10,000
Total fixed remuneration
431,250
402,500
855,000
798,000
1,035,000
586,500
1,035,000
586,500
431,250
246,771
855,000
484,500
Variable
remuneration
SHARE-BASED REMUNERATION
(PERSONAL CASH INVESTMENT AMOUNT)"
RoCE component
1,152,000
1,068,800
1,152,000
1,068,800
480,000
445,333
990,000
918,500
Strategic focus target component
1,152,000
675,200
966,000
1,152,000
1,035,000
1,035,000
1,050,000
BONUS
Fixed
Fringe benefits (other remuneration)³
27,524
remuneration
Total fixed remuneration
1,077,524
27,524
1,077,524
1,050,000
52,049
1,102,049
1,050,000
437,500
900,000
900,000
52,049
23,089
23,089
22,692
22,692
1,102,049
460,589
460,589
922,692
922,692
BONUS
Earnings component of the bonus
Performance component of the bonus
966,000
675,200
437,500
281,333
4,781,415
5,500,000
4,806,065
2,291,667
2,003,193
4,925,000
4,112,446
1 Service contract comes to an end on 31 July 2024. See Premature termination of activities and post-contractual non-competition clause.
2 Service contract ended 31 May 2023. See Premature termination of activities and post-contractual non-competition clause.
3 For more information about fringe benefits for the 2023 financial year, refer to Remuneration granted and owed to members of the Board of Management pursuant to § 162 of the German Stock Corporation Act (AktG).
" Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
5 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
6 Maximum remuneration within the meaning of § 87a (1) Sentence 2 No. 1 AktG. The overall cap is lower than the sum of the maximum amounts for the individual components. Any special payments to compensate for salary losses from a previous employment relationship and/or to cover relocation costs in
the case of new appointments are also subject to maximum remuneration.
296
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
← = Q
FRANK WEBER
Development
since 1 July 20201
in €
Fixed
remuneration
Fringe benefits (other remuneration)²
480,000
Fixed remuneration (base salary)
5,500,000
Maximum remuneration/Vested remuneration incl. service cost
Maximum remuneration and remuneration vested in the 2023 financial year (vesting year)
408,504
580,250
Total variable remuneration
408,504
990,000
4,374,000
3,296,500
3,296,500
1,822,500
1,375,937
3,690,000
2,781,250
Total fixed and variable remuneration
5,451,524
4,374,000
5,476,049
4,374,024
407,516
166,667
407,391
Service cost5
3,703,942
407,391
4,612,692
1,836,526
2,283,089
4,398,549
166,667
407,516
2021
Remuneration Report
2020
2019
Further GRI Information
← = Q
Other Information
2022
Total emissions
Company-owned planes
Company vehicles 5,6,7
BMW Group locations 2,3,4
SCOPE 1: DIRECT GREENHOUSE GAS EMISSIONS
Total emissions¹
int CO₂
BMW Group Carbon footprint
2023
PRODUCTION, PURCHASING AND SUPPLIER NETWORK
FURTHER GRI INFORMATION
SCOPE 2: INDIRECT GREENHOUSE GAS EMISSIONS
147,257,699
631,304
137,592,164
← = Q
307 BMW Group Report 2023 To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
V. Comparison of Change in Remuneration and Earnings
Other Information
Remuneration Report
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
301
72,554
85,667
595,257
614,117
604,620
586,638
713,933
694,057
699,713
678,967
678,403
134,699,641
130,743,357
132,064,779
INFORMATION
Reference to an Other Matter - Formal Audit of the
Remuneration Report according to § 162 AktG
*Part of the Combined Management Report
In our opinion, based on the findings of our audit, the remunera-
tion report for the financial year from January 1, 2023 to Decem-
ber 31 2023, including the related disclosures, complies in all
material respects with the accounting provisions of § 162 AktG.
Audit Opinion
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
In making those risk assessments, the auditor considers internal
control relevant to the preparation of the remuneration report in-
cluding the related disclosures. The objective of this is to plan
and perform audit procedures that are appropriate in the circum-
stances, but not for the purpose of expressing an opinion on the
effectiveness of the company's internal control. An audit also in-
cludes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by
the executive directors and the supervisory board, as well as
evaluating the overall presentation of remuneration report in-
cluding the related disclosures.
An audit involves performing procedures to obtain audit evidence
about the amounts including the related disclosures stated in the
remuneration report. The procedures selected depend on the au-
ditor's judgment. This includes the assessment of the risks of
material misstatement of the remuneration report including the
related disclosures, whether due to fraud or error.
Our responsibility is to express an opinion on this remuneration
report, including the related disclosures, based on our audit. We
conducted our audit in accordance with German generally ac-
cepted standards for the audit of financial statements promul-
gated by the Institut der Wirtschaftsprüfer (Institute of Public Au-
ditors in Germany) (IDW). Those standards require that we com-
ply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the remuneration
report, including the related disclosures, is free from material
misstatement.
Auditor's Responsibilities
The executive directors and the supervisory board of Bayerische
Motoren Werke Aktiengesellschaft are responsible for the prep-
aration of the remuneration report, including the related disclo-
sures, that complies with the requirements of § 162 AktG. The
executive directors and the supervisory board are also responsi-
ble for such internal control as they determine is necessary to
enable the preparation of a remuneration report, including the re-
lated disclosures, that is free from material misstatement,
whether due to fraud or error.
Responsibilities of the Executive Directors and the
Supervisory Board
We have audited the remuneration report of Bayerische Motoren
Werke Aktiengesellschaft, München, for the financial year from
January 1, 2023 to December 31, 2023 including the related
disclosures, which was prepared to comply with § [Article] 162
AktG [Aktiengesetz: German Stock Corporation Act].
To Bayerische Motoren Werke Aktiengesellschaft, München
VII. AUDITOR'S REPORT
← = Q
Other Information
Remuneration Report
VII. Auditor's Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
305
← = Q
Comparison of changes in earnings and remuneration for employees, the Board of Management and the Supervisory Board
The audit of the content of the remuneration report described in
this auditor's report includes the formal audit of the remuneration
report required by § 162 Abs. [paragraph] 3 AktG, including the
issuance of a report on this audit. As we express an unqualified
audit opinion on the content of the remuneration report, this audit
opinion includes that the information required by § 162 Abs. 1
and 2 AktG has been disclosed in all material respects in the re-
muneration report.
Restriction on use
We issue this auditor's report on the basis of the engagement
agreed with Bayerische Motoren Werke Aktiengesellschaft. The
audit has been performed only for purposes of the company and
the auditor's report is solely intended to inform the company as
to the results of the audit. Our responsibility for the audit and for
our auditor's report is only towards the company in accordance
with this engagement. The auditor's report is not intended for
any third parties to base any (financial) decisions thereon. We do
not assume any responsibility, duty of care or liability towards
third parties; no third parties are included in the scope of protec-
tion of the underlying engagement. § 334 BGB [Bürgerliches
Gesetzbuch: German Civil Code], according to which objections
arising from a contract may also be raised against third parties,
is not waived.
Munich, March 14, 2024
338 Contacts
337 Financial Calendar
330 Glossary and Explanation of Key Figures*
328 BMW Group Ten-year Comparison
326 Consumption and Carbon Disclosures
325 NFS Index
321 TCFD Index
318 SASB Index
314 Employees and Society
307 Production, Purchasing and Supplier Network
06
OTHER
307 Further GRI Information
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
306
Michael Popp
Wirtschaftsprüfer
(German Public Auditor)
Petra Justenhoven
Wirtschaftsprüferin
(German Public Auditor)
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
←三〇
2019
36%
(-)
Change 2020
vs 2019 in %
384,435
since May 2023
since November 2019
Pieter Nota3,4
Milan Nedeljković
Walter Mertl
Ilka Horstmeier
16%
(-)
(-)
(-)
(-)
10,152,625
64%
8,752,558
Board of Management
since November 2023
Jochen Goller
Chairman since 16 August 2019
Oliver Zipse²
since May 2015,
III. REMUNERATION OF THE BOARD OF MANAGEMENT IN €¹
2,043,706
0%
432%
93%
4,964,449
95%
4,017,337
283%
2,058,305
537,696
since October 2019
(-)
2,446,106
(-)
(-)
(-)
(-)
(-)
(-)
(-)
(-)
-10%
-20%
8,158,904
616,872
4,413,481
25%
4,929,261
3,949,908
2020
102,047
102,394
12,382
- 23%
3,775
4,915
- 31%
4,366
29%
6,311
188%
4,910
- 19%
1,702
2,107
Net income of BMW AG according to the German Commercial Code (HGB) (in € million)
Profit attributable to shareholders of BMW AG (in € million)
I. CHANGES IN EARNINGS
Change 2023
vs 2022 in %
2023
Change 2022
vs 2021 in %
2022
Change 2021
vs 2020 in %
2021
228%
3%
17,941
11,290
14%
99,169
-3%
86,715
89,353
Average remuneration of employees of BMW AG in €
II. AVERAGE REMUNERATION OF EMPLOYEES IN €
5,338,865
(-)
(-)
3,923,856
-40%
7.8
16%
13.0
187%
11.2
- 19%
3.9
4.8
Group return on sales after tax (in %)
-37%
45%
Chairman of the
(-)
For the Board of Management
0%
210,000
0%
210,000
0%
210,000
- 5%
210,000
220,000
since May 2017
Heinrich Hiesinger
58%
410,000
92%
260,000
(-)
135,419
(-)
(-)
(-)
since May 2021
Johann Horn¹
Rachel Empey"
since May 2021
(-)
(-)
since August 2021
Jens Köhler¹
- 1%
208,000
0%
210,000
0%
210,000
- 5%
210,000
220,000
since May 1997
Susanne Klatten
0%
210,000
59%
210,000
(-)
132,344
(-)
(-)
0%
210,000
335%
210,000
220,000
since May 2014
Christiane Benner¹
0%
460,000
0%
460,000
25%
460,000
67%
367,930
220,000
Audit Committee
Kurt Bock³
since May 2018, Deputy Chairman and Chairman of the
0%
410,000
0%
410,000
0%
- 5%
210,000
0%
210,000
210,000
(-)
48,237
(-)
(-)
(-)
since October 2021
Bernhard Ebner¹
0%
210,000
(-)
55%
(-)
135,419
(-)
(-)
(-)
since May 2021
Marc Bitzer
0%
210,000
0%
210,000
Oliver Zipse
(-)
(-)
0%
210,000
0%
210,000
1%
210,000
49%
208,000
139,532
(-)
since January 2022
Sibylle Wankel¹
since May 2019
Vishal Sikka
0%
210,000
55%
210,000
(-)
135,419
(-)
(-)
(-)
(-)
(-)
(-)
Norbert Reithofer
Chairman of the
Supervisory Board
Dr-Ing Dr-Ing Eh
For the Supervisory Board
Bayerische Motoren Werke Aktiengesellschaft
The Company maintains a financial loss liability insurance policy
for the members of the Board of Management and the
Supervisory Board. The insurance provides cover for legal
liability claims and protects the private assets of members of
BMW AG's Board of Management and Supervisory Board if a
claim is made against them for financial loss in the course of
exercising their function as a corporate entity. A deductible is
provided for members of the Board of Management that
complies with the requirements of the German Stock Corporation
Act (AktG).
BMW Group companies did not grant any loans to members of
the Board of Management or the Supervisory Board in the 2023
financial year, nor did they enter into any contingent liabilities in
their favour. In the year under review, members of the Board of
Management and the Supervisory Board concluded contracts
with BMW Group companies for the purchase of vehicles, other
services (maintenance and repair work) and cash deposits at
arm's length conditions.
VI. OTHER CONSIDERATIONS
VI. Other Considerations
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report Group Financial Statements
BMW Group Report 2023
304
4 Member of the Audit Committee since 1 October 2022.
3 Dr Bock was elected Chairman of the Audit Committee in May 2020.
1 These employee representatives have declared that they will transfer their remuneration to the Hans Böckler Foundation in accordance with the guidelines of the Confederation of German Trade Unions.
2 Member since 18 January 2023, Deputy Chairman since 23 January 2023.
1%
210,000
(-)
208,387
(-)
since May 2021
Christoph Schmidt
0%
(-)
(-)
(-)
(-)
since April 2022
André Mandl¹
109%
210,000
(-)
100,624
(-)
(-)
(-)
(-)
(-)
since July 2022
Gerhard Kurz
0%
210,000
143%
210,000
(-)
156,333
(-)
210,000
210,000
0%
210,000
56%
210,000
(-)
134,344
24%
since May 2020
Anke Schäferkordt
86,258
58%
24%
260,000
0%
210,000
-5%
210,000
220,000
since June 2012
Dominique Mohabeer¹4
34%
410,000
4,374,024
- 1%
January 2018 until 31 October 2023
101,574
125,450
114,072
120,583
4,954,639
4,750,321
5,329,550
4,946,865
5,226,227
6,380,652
6,295,990
6,476,955
6,040,824
6,348,009
2023
2022
2021
2020
2019
← = Q
Further GRI Information
105,614
CHP losses³
1,001,199
1,021,955
284,763
31,882
274,484
33,322
2,711,392
2,542,434
2,453,215
2,320,314
2,653,855
367,040
33,688
Other fossil fuels
Solar (photovoltaics)
of which CHP losses
Biogas (landfill gas)
of which CHP losses
Natural gas
Community cooling
Community heating
Electricity
TOTAL ENERGY CONSUMPTION BY SOURCE
429,782
537,919
890,617
906,175
979,887
307,163
Non-manufacturing areas
Vehicle production
129,958,000
136,757,602
2,203,818
29,765
139,999
33,131,882
99,805,490
131,255,722
1,939,191
25,217
166,586
29,094,346
98,782,354
97,171
1,150,857
2,178,437
129,646
146,298
31,486,873
110,899,066
115,863
1,269,018
146,225,201
2023
2022
2021
2020
2019
Disposal 1.7.9
Logistics - aftersales logistics
Use phase 4,8
Purchased Goods and Services6,7
Employees' commuter traffic4,5
Logistics - material supply of the plants and distribution of vehicles²
Business trips³
Total emissions
SCOPE 3: INDIRECT GREENHOUSE GAS EMISSIONS
in t CO₂/CO₂e¹
BMW Group Carbon footprint
← = Q
133,875,567
Motorcycle production
130,210
1,316,438
2,746,124
TOTAL ENERGY CONSUMPTION BY AREA
Total energy consumption
TOTAL ENERGY CONSUMPTION
in MWh
Energy consumption¹²
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
309
6 The methodology used to calculate carbon emissions changed in the 2023 reporting year. Previously, the CO₂e values were calculated on the basis of a small set of TÜV-validated life cycle assessments performed for European vehicles. Enhancements to the IT system have made it possible to perform a
differentiated calculation for all vehicles taking into account different energy mixes and carbon emission factors for different production regions (see Glossary). The values in the time series were adapted using this new methodology (values based on prior methodology: 2019: 18,505,921 t CO₂e, 2020:
16,234,959 t CO₂e, 2021: 18,534,765 t CO₂e, 2022: 19,758,702 t CO₂e). The values for 2019 through 2021 as well as 2023 shown in the table according to the new methodology were subjected to a reasonable assurance audit. The carbon-reducing measures are taken into account from 2022 onwards.
The implementation of measures for 2022 was subjected to a limited assurance audit.
7 Energy consumption values (lower calorific value)] in the "Purchased goods and services" category and the "Disposal" category are estimated using the methodology specified in footnote (9): 113,179 GWh in the "Purchased goods and services" category and 908 GWh in the "Disposal" category.
8 The absolute emissions in the use phase are based on the Carbon emissions of the new vehicle fleet worldwide, including upstream emissions (Scope 3 downstream, well-to-wheel). The total value in t CO2 is the result of multiplying the average value with all BMW Group vehicles sold in the reporting period
and an assumed average mileage of 200,000 km (as per VDA 900-100).
9 CO₂e calculated based on life cycle assessments as per ISO 14040/44 of representative vehicles from the product lines using the "LCA for Experts" tool provided by Sphera (including climate-impacting gases CO2, CH4, N2O, SF6, NF3). For definition, see Glossary.
5 2019 is not directly comparable to the other years because an improved data basis was available from 2020 onwards. In some cases, figures have been extrapolated based on data collected at major national and international BMW Group locations. The sites in Farnborough, UK, and Woodcliff Lake, USA,
were included in the calculation for the first time in the reporting year 2023.
4 Emissions from company cars (Scope 1) are also included on a pro-rata basis under employee commuting and use phase (both Scope 3). A distinction in the systems is currently not possible.
3 Includes business trips by plane, rail and rental car. As a result of the extensive travel restrictions in place during the pandemic, 2019 is used as a base year for more conclusive comparisons in terms of business travel.
1 Carbon emissions in the supply chain, including in transport logistics, as well as in upstream fuel production (well-to-tank) are referred to as CO₂e.
2 The methodology used to calculate carbon emissions changed in the reporting year 2023. Each vehicle is assigned an average value based on the CO₂e assessment of individual transport movements. The values in the time series were adjusted to reflect the new methodology. The emission factors were also
adjusted retrospectively (values prior to change in methodology and adjustment of transport logistics emission factors, excluding aftersales logistics: 2019: 1,454,534 t CO₂e, 2020: 1,225,688 t CO₂e, 2021: 1,748,700 t CO₂e, 2022: 2,100,161 t CO₂e) Glossary.
1,621,631
183,417
34,267,874
94,774,779
166,273
115,469
2,200,661
66,170
145,284
33,029,416
92,947,849
174,017
1,394,603
354,015
3,117,505
3,206,948
2,267
2,447
54,362
2,746,124
52,111
2,200,661
31,263
1,516,823
1,226,423
25,511
23,099
1,229,301
26,600
974,238
2023
2022
← = Q
Further GRI Information
Air in %
Road in %
Rail in %
Sea in %
PERCENTAGE SHARE OF CARRIERS IN TOTAL IN TERMS OF TRANSPORT VOLUME AND CO2 EMISSIONS
CO₂e emissions in t
Transport volume in million tkm
CUSTOMER SUPPORT LOGISTICS (AFTERSALES LOGISTICS)
CO₂e emissions in t
174,017
TOTAL MATERIAL SUPPLY OF THE PLANTS AND DISTRIBUTION OF VEHICLES (INBOUND AND OUTBOUND)
Transport volume in million tkm
183,417
g CO₂e
3 These figures refer to the distribution of manufactured vehicles (BMW Group, contract manufacturing and partial volumes for partner plants) to markets worldwide. Glossary.
2 Figures relate to spare parts deliveries to vehicle production facilities (BMW Group and partner plants, excluding contract manufacturing). Further information can be found in the Glossary. In some cases, figures have been extrapolated for individual months.
1 From 2022, application of the international GLEC Framework directive in the version applicable during the yearly tranche, along with CleanCargo and DIN EN 16258/ISO 14083 still being in force. The methodology used to calculate carbon emissions changed in the reporting year 2023. Each vehicle is
assigned an average value based on the CO₂e assessment of individual transport movements. The values in the time series were adapted using the new methodology. The emission factors were also adjusted retrospectively (values prior to change in methodology and adjustment of transport logistics (inbound
and outbound) emission factors, excluding aftersales logistics: 2022: 2,100,161 t CO₂e). For more information about calculating the CO₂e emissions, please refer to the Glossary.
22.2
1.6
19.4
1.2
5.2
7.5
5.5
7.3
30.9
14.2
31.7
14.4
41.7
76.7
43.4
77.1
g CO₂e
tkm
tkm
CO₂e emissions in t
Transport volume in million tkm
DISTRIBUTION OF VEHICLES (OUTBOUND) ³
2,316
1,703
30,908
60,331
67,038
65,065
68,560
107,864
144,266
177,564
192,911
164,957
398,874
477,588
508,318
498,299
425,796
3,170,701
23,516
28,455
3,253,638
3,517,068
2,344
2,209
4,123
7,760
CO₂e emissions in t
Transport volume in million tkm
MATERIAL SUPPLY OF THE PLANTS (INBOUND)²
Transport logistics: carriers and CO₂ emissions¹
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
310
Further GRI Information
3 CHP losses refer to the losses resulting from converting a fuel source into electricity and heat in a combined heat and power plant (CHP plant). These are listed separately as of the 2022 reporting year. Energy consumption for the automotive production, motorcycle production and non-manufacturing sites was
not adjusted retrospectively for previous years. As a result, the figures for 2022 are not directly comparable with previous years.
1,109
1,095
1,211
1,161
1,501
Other biogenic fuels
7,931
16,730
8,908
9,368
1 Energy consumption generated by vehicle production (BMW Group plants including BMW Motorcycle, excluding partner plants and contract manufacturing) and by other BMW Group locations not directly related to production (e.g. research centres, sales centres, office buildings).
2 Upper calorific value
- 12%
Other Information
Group Financial Statements Responsibility Statement and Auditor's Report
until August 2019
until June 2020
until December 2016
until September 2016
Peter Schwarzenbauer
Ian Robertson
Norbert Reithofer
Harald Krüger4,5
Klaus Fröhlich²
Friedrich Eichiner
Klaus Draeger
- 77%
181,079
- 68%
-25%
until October 2019
Milagros Caiña Carreiro-Andree²,3
2023 vs 2022 in %
2023
2022 vs 2021 in %
2021 vs 2020 in %
2%
2020 vs 2019 in %
2%
62%
- 1%
363,765
1%
1%
-21%
until May 2015, since May 2015 Chairman of the Supervisory Board
- 70%
274,262
- 34%
- 64%
-34%
- 62%
346,848
24%
- 69%
-23%
1%
1%
313,878
302,023
-25%
- 32%
- 18%
until December 2017
Change
Change
18%
5,689,801
55%
- 17%
4,528,636
13%
5,458,773
4,820,525
4,824,746
(-)
(-)
(-)
1,006,759
(-)
(-)
(-)
17%
4%
2,757,590
3,117,471
2,660,349
January 2017 until 11 May 2023
since January 2022
since July 2020
Frank Weber
Joachim Post
Nicolas Peter 3,5
2,651,143
2,570,131
Change
- 55%
3,736,259
Change
← = Q
V. Comparison of Change in Remuneration and Earnings
Other Information
Remuneration Report
FORMER MEMBERS OF THE BOARD OF MANAGEMENT IN €1
Comparison of changes in earnings and remuneration for employees, the Board of Management and the Supervisory Board
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
302
5 Service contract ended 31 May 2023. See Premature termination of activities and post-contractual non-competition clause.
1 The reported remuneration for the years 2019 and 2020 has been recalculated pursuant to § 162 of the German Stock Corporation Act (AktG).
2 For the 2019 and 2020 financial years, the advance payments of € 566,667 and € 712,000 from the 2018-2020 and 2019-2021 Performance Cash Plans, which were paid in 2019 and 2020 respectively, were also included in the calculation of remuneration.
3 For the 2019 and 2020 financial years, the advance payments of € 500,000 each from the 2018-2020 and 2019-2021 Performance Cash Plans, which were paid in 2019 and 2020 respectively, were also included in the calculation of remuneration.
4 Service contract comes to an end on 31 July 2024. See Premature termination of activities and post-contractual non-competition clause.
-5%
4,043,267
10%
4,240,977
283%
3,856,458
- 1%
3,703,942
(-)
(-)
until October 2019
10%
7%
66,442
410,000
430,000
since 2007, Deputy Chairman
0%
410,000
0%
410,000
0%
410,000
- 5%
410,000
430,000
since 1997, Deputy Chairman
Stefan Schmid¹
Stefan Quandt
(-)
389,545
(-)
(-)
(-)
76,491
(-)
113,431
1,793
To Our Stakeholders Combined Management Report
BMW Group Report 2023
308
9 Scope 2 emissions calculated using the market-based method in accordance with the GHG Protocol Scope 2 guidance; mainly based on the emissions factors for electricity, district heating and fuels reported by the VDA (each in the latest version dated 12/2023) and occasionally using local emissions factors;
alternative calculation using the location-based method: 1,195,818 t CO2.
7 The increase in this metric is the result of the scope being increased as compared to the previous year. Reporting was only submitted for Germany and the international test sites up to and including 2022. During the 2023 reporting year, all BMW Group plants and the 12 major markets were integrated into the
figure. A calculation based on the Scope from 2022 results in a comparative value for 2023 of 80,869 t CO2 (+5.7% compared to previous year). No retrospective adjustment was made. As a result, the figures for 2023 are not directly comparable with previous years.
8 As a result of the extensive travel restrictions in place during the pandemic, 2019 is used as a base year for more meaningful comparisons in terms of civil aviation.
6 Emissions from company cars (Scope 1) are also included on a pro-rata basis under employee commuting and use phase (both Scope 3). A distinction in the systems is currently not possible.
5 Includes the emissions of company cars and function-related vehicles of the BMW Group plants, as well as the 12 major markets. Emissions are preferably calculated on the basis of tank refills. This is the case for the plants and/or markets in Australia, Austria, Brazil, France, Germany, Hungary, India, Italy
(only Alphabet Italia S.p.A. and BMW Bank GmbH, Milan), Japan, Mexico, South Africa, South Korea (only BMW Financial Services Korea Co., Ltd., Seoul), Thailand and the UK. In the remaining cases, they are determined based on kilometres driven. For the USA, the data are partly extrapolated for 2023
because the information was not yet available for the entire period at the time the data was collected. For BMW Italia S.p.A. and BMW Italia Retail S.r.l., values for the reporting period are calculated based on average kilometres per day. For system-related reasons, the refuelling of company vehicles includes
both business and private trips, except refuelling paid for by employees themselves.
3 This amount includes 15,881 t CO₂ from the direct use of biomass.
4 Calculation of Scope 1 and Scope 2 emissions, using the operational control approach in accordance with the GHG Protocol. Leased space without the direct influence of the BMW Group on energy supply is therefore not included.
2 Carbon emissions (excluding climate-impacting gases other than carbon dioxide) generated by vehicle production (BMW Group plants and BMW Motorcycle, excluding partner plants and contract manufacturing) and by other BMW Group locations not directly related to production (e.g. research centres, sales
centres, office buildings).
1 The CO2 emissions listed account for approximately 90% of the BMW Group's total Scope 1 to Scope 3 emissions. The methodology used to calculate CO2 emissions changed in the reporting year 2023 for the items "Purchased Goods and services" and "Logistics - material supply of the plants and
distribution of vehicles". The prior-year figures have been adjusted retrospectively.
110,141
110,141
91,300
91,300
134,849
134,849
130,090
130,090
354,095
354,095
Electricity/heat purchased by BMW Group locations²,4,9
Total emissions
5,245
3,449
1,967
6,098
(-)
(-)
0%
Remuneration Report
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
303
6 For the 2019 and 2020 financial years, the advance payments of € 600,000 and € 500,000 from the 2018-2020 and 2019-2021 Performance Cash Plans, respectively, which were paid in 2019 and 2020 respectively, were also included in the calculation of remuneration.
4 For the 2019 and 2020 financial years, the advance payments of € 900,000 each from the 2018-2020 and 2019-2021 Performance Cash Plans, which were paid in 2019 and 2020 respectively, were also included in the calculation of remuneration.
5 Mr Krüger's employment contract ended on 30 April 2020.
2 For the 2019 and 2020 financial years, the advance payments of € 600,000 each from the 2018-2020 and 2019-2021 Performance Cash Plans, which were paid in 2019 and 2020 respectively, were also included in the calculation of remuneration.
3 Ms Caiña Carreiro-Andree's contract of employment ended on 30 June 2020.
1 The reported remuneration for the years 2019 and 2020 has been recalculated pursuant to § 162 of the German Stock Corporation Act (AktG).
- 97%
64,856
- 54%
120%
- 1%
until December 2021
Andreas Wendt
- 31%
50%
179,339
- 96%
149%
-54%
216,478
2%
Other Information
V. Comparison of Change in Remuneration and Earnings
← = Q
Comparison of changes in earnings and remuneration for employees, the Board of Management and the Supervisory Board
610,000
0%
610,000
0%
610,000
- 5%
610,000
640,000
(-)
since January 2023, Deputy Chairman
Martin Kimmich 1,2
Remuneration Report
since May 2015, Chairman
IV. REMUNERATION OF THE SUPERVISORY BOARD IN €
Change 2023
vs 2022 in %
2023
Change 2022
vs 2021 in %
2022
Change 2021
vs 2020 in %
2021
Change 2020
vs 2019 in %
2020
2019
Norbert Reithofer
BMW Group Report 2023
75%
- 5%
410,000
7 Closing material loops
Share of employees represented by a trade union or falling under collective bargaining agreements¹
Further GRI Information
← = Q
Other Information
Remuneration Report
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
315
6 Of this figure, 41.9% clock-controlled production employees of the BMW Group.
5 Of this figure, 42.5% clock-controlled production employees of the BMW Group.
4 Of this figure, 38.0% clock-controlled production employees of the BMW Group.
3 Of this figure, 37.9% clock-controlled production employees of the BMW Group.
² Of this figure, 38.2% clock-controlled production employees of the BMW Group.
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition,
see Glossary).
2023
2022
2021
in %
2020
2019
2021
100
100
China (Dadong, Tiexi incl. Lydia plants)
82
82
83
84
85
UK (Plants Hams Hall, Oxford, Swindon, Goodwood, Transport and
Logistics Centre (Bognor Regis))
100
100
100
100
100
Germany (BMW AG)²
2023
2022
2020
2019
118.94
120.73
14,536
15,039
2,503
2,892
3,489
Employees with fixed-term contracts²
100
92
97
103
110
8,413
8,616
8,466
8,473
8,684
3,996
Employees in part-time employment³
6,318
6,433
6,846
126.0²
155.06
149.55
0
Employees in
Germany
30
60
abroad
100
90
120
150
Number of employees in thousands
Employees in Germany and abroad¹
2 Around 24% of these are women employed at BMW AG. For system-related reasons, this data is only collected for BMW AG.
3 Permanent and fixed-term employees.
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition, see Glossary).
7,973
7,315
Employees
3,711
100
Austria (Steyr plant)²
43,707
41,180
43,309
36,208
15
12,623
28,076
China
8.2
7.8
7.7
7.0
6.6
18
844
87,304
Germany
45,673
6,949
USA
25
126
3,857
Austria
4,833
4,170
3,736
4,747
5,474
18
65
6,743
UK
85.4
85.9
84.3
87.2
70.8
12,736
6,388
5,951
5,568
100
100
100
100
100
USA (Spartanburg plant, no collective bargaining agreements in place)
Mexico (San Luis Potosí plant)²
70
70
70
63
59
South Africa (Rosslyn plant, Sales, IT, Financial Services)
100
100
100
100
100
Status: 31.12.2023.
2 Excluding senior management and representatives. GRI Index: 2-30
Alternative ways of working at BMW AG¹
Number of employees per country with production site(s)*
5,440
Parental leave
in % of total number of employees
Sabbaticals
in % of total number of employees
Vollzeit Select model
in % of total number of employees
Mobile work³
100
in % of total number of employees
of which Share of women
fixed-term
in %
Total
2023
2022
2021
2020
2019
Number of employees
Part-time employment²
3,418
3,474
3,503
2020
2019
in kg
Waste for disposal per vehicle produced*
Total waste
in t
Waste¹
← = Q
Further GRI Information
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
312
← = Q
Further GRI Information
2021
*Water used by automotive production (BMW Group plants, excluding partner plants and contract manufacturing).
2022
780,911
3.33
5,326
6,113
6,650
7,168
9,749
Waste for disposal
4.09
922,554
812,274
927,880
818,387
829,498
822,848
768,292
771,162
Materials for recycling²
775,459
2023
0.2
0.3
0.3
4,722,310
5,417,428
2023
2022
2021
2020
2019
of which groundwater in %
of which potable water in %
Water consumption
in m³
Water consumption*
3 Value of the base year 2016 to the target reduction of -25% by 2030: 2.00.
² Potable water consumption refers to water purchased from external water suppliers. If a BMW
Group location does not purchase water from an external supplier, the primary source of supply is
counted as potable water. This applies to the BMW Group plants in San Luis Potosí, Mexico, and
Araquari, Brazil, where groundwater is the main source.
Efficiency indicator calculated from the potable water consumption measured for automobile pro-
duction (BMW Group plants, excluding partner plants and contract manufacturing) divided by the
number of vehicles produced in automobile production (BMW Group plants and partner plants,
excluding contract manufacturing).
2 The number of vehicles produced (BMW Group plants, partner plants and contract manufactur-
ing] increased year-on-year to around 2.66 million vehicles (2022: around 2.38 million). Based
on an average vehicle weight of BMW Group vehicles of around 2.0 tonnes, the total weight of in-
put materials is around 4.9 million tonnes. To calculate the individual material flows, the total
weight is multiplied by the average distribution of the materials in BMW Group vehicles.
1 Calculated using unit-adjusted averages for the BMW 1 Series, 2 Series, 3 Series, 4 Series, 5 Se-
ries, 6 Series, 7 Series, 8 Series, the X1, X2, X3, X4, X5, X6, X7 of Rolls-Royce, MINI and M-
GmbH, as well as the BEV vehicles i3 long, 14, 15, 17, ix, iX1, ix2, iX3, MINI E, Rolls-Royce Spectre
and PHEV versions.
4,924,477
4,840,161
5,049,144
87.4
0.1
0.0
of which rainwater in %
0.1
0.0
0.0
0.0
0.0
1 Waste generated by automotive production (BMW Group plants, excluding partner plants and contract manufacturing).
2 Includes both recycling and thermal recovery.
of which surface water in %
15.7
14.6
13.6
12.6
83.8
84.0
85.1
86.3
15.9
!!!!
2.90
2.74
Further GRI Information
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023 To Our Stakeholders Combined Management Report
314
← = Q
Further GRI Information
All notifications are processed until they are fully resolved, including across several financial years. Five notifications received in 2023 were still at the internal processing stage at the end of the financial
year and had not yet been fully resolved. Similarly, four notifications from 2022 were still being processed in 2023 that had not been fully resolved by the end of the 2022 financial year. Three of these
notifications were resolved in 2023 and were proven unjustified. The remaining notification will continue to be processed during the next financial year.
6
4
11
8
2023
2022
of which number of justified notifications that were clarified during the reporting year
EMPLOYEES AND SOCIETY
Employees at end of year¹
BMW Group
Automotive
142,441
137,056
106,928
108,676
113,719
154,950
149,475
118,909
of which number of notifications that were clarified during the reporting year*
120,726
2023
2022
2021
2020
2019
Other
Financial Services
Motorcycles
126,016
16
Number of notifications of potential violations of our sustainability principles received through our reporting channels
measures.
2019
0
*The efficiency indicator is calculated on the basis of solvent emissions (VOCs) generated by auto-
mobile production (BMW Group plants, excluding partner plants and contract manufacturing) di-
vided by the number of vehicles produced in automobile production (BMW Group plants and part-
ner plants, excluding contract manufacturing).
2023
2022
2021
2020
2019
0
0.52
0.61
0.70
0.81
0.85
in kg
VOC Solvent emissions per vehicle produced*
2.12
2020
2021
2022
2023
2 A new version of the questionnaire containing additional requirements was introduced. As a result, some suppliers had to redo their questionnaires. Some suppliers had to implement additional preventive
31
22
55
70
2023
2022
Proportion of suppliers of production-related material with agreed preventive measures at the time of awarding
Basis: industry-specific sustainability questionnaire.
Notifications of potential violations in the supply chain
Proportion of suppliers of production-related material with implemented preventive measures at the time of awarding
Sustainability assessment of relevant supplier locations 1,2
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
313
*Efficiency ratio calculated on the basis of waste for disposal in automobile production (BMW
Group plants, excluding partner plants and contract manufacturing] divided by the total number of
vehicles produced in automobile (BMW Group plants and partner plants, excluding contract man-
ufacturing).
in %
6.6
6.0
2023
TR-AU-000.A
Number
Quantitative
Number of vehicles manufactured
Notes
Code
Unit
Category
Accounting metric
[[Topic
SASB INDEX
SASB-Index
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
7 Production network
Combined Management Report
Activity metric
Quantitative
* The survey period runs from November of the previous year through to November of the
reporting year, as to allow for a processing time after the receipt of complaints.
100%* of safety-relevant complaints were reviewed.
- 67% - Korean New Car Assessment Programme (KNCAP)
In its reporting on NCAP programmes, the BMW Group focuses on
markets in the EU (including the UK), China, the USA and South
Korea. More information about NCAP can be found in the chapter
Product Quality and Safety.
- 100% - China New Car Assessment Programme (C-NCAP)
-40% - U.S. National Highway Traffic Safety Administration's
(NHTSA) New Car Assessment Programme (NCAP)
- 88% - European New Car Assessment Programme
(Euro NCAP)
TR-AU-250a.2
Number, Percentage
(%)
Quantitative
Number of safety-related defect
complaints, percentage investigated
TR-AU-250a.1
Percentage (%)
Quantitative
Percentage of vehicle models rated by
NCAP programmes with an overall 5-star
safety rating, by region
Product safety
7 Key performance indicators
TR-AU-000.B
Number
Number of vehicles sold
To Our Stakeholders
BMW Group Report 2023
318
86.0
88.2
85.1
84.9
78.2
Brazil
Ancillary activities 12.6
75.6
80.0
78.4
68.4
82.1
India
Walking 28.2
Cleaning 2.4
Testing 2.1
85.8
88.4
China
73.7
78.8
82.2
case.
* "Local" refers to managers with local contracts. People deployed to work at the location who do not have a local employment contract are not included. These are reflected in the difference to 100 in each
74.2
72.7
67.8
62.9
48.4
Mexico
Number of vehicles recalled
67.4
60.0
57.8
57.1
Thailand
Handling of pieces 12.8
Assembling/
disassembling 14.5
84.5
85.1
65.2
Quantitative
Number
TR-AU-250a.3
Code
Unit
Category
Description of the management of risks
associated with the use of critical
materials
Accounting Metric
Raw material sourcing
[[Topic
SASB-Index
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
320
In line with its corporate strategy, the BMW Group is pursuing a
clear course of decarbonisation. Against a backdrop of increasing
electrification, it is particularly important to consider carbon
emissions over the entire life cycle of a vehicle. In this context, the
BMW Group has set itself decarbonisation targets by 2030 (base
year 2019) during the usephase, in the upstream supply chain
and in production. These have been registered with the SBTi and
validated (Reducing carbon emissions across the entire value
chain). The BMW Group is also taking measures to mitigate and
adapt to climate change. It is therefore imperative to identify
climate-related risks and opportunities and to take appropriate
account of them in determining the strategic direction to be
followed, managing the business and organising a Group-wide
risk management system. For further information, see ▾ Climate-
related Risks and Opportunities. The BMW Group is also working
consistently to reduce vehicle pollutants such as nitrogen oxides
(NOx), carbon monoxide (CO) and particulate matter (PM)
(Pollutants).
(2) The BMW Group portfolio includes BEVs (1) and PHEVs (2).
Under the BMW Group definition, see Glossary Electrified
Vehicles, 48 V vehicles are not counted as hybrid vehicles.
(3) Plug-in hybrid electric vehicles (PHEV): 190,159
Discussion and analysis n/a
TR-AU-440a.1
Materials efficiency and recycling
Total amount of waste from
manufacturing, percentage recycled
At the Recycling and Dismantling Centre in Munich, 4,386
vehicles (including motorcycles) were taken back and recycled
during the reporting year. This corresponds to a total scrapping
weight for vehicles (including motorcycles) of 6,105 t. In relation
to the entire vehicle (excluding motorcycles), at least 85% of
materials are recycled and, including thermal utilisation, at least
95% as stipulated by legal requirements (European End-of-Life
Vehicles Directive ELV 2000/53/EC).
91.4% of the total amount of waste (927,880 t) was recycled
and 8.1% was thermally utilised.
7 Further GRI Information
tons (t)
sales-weighted metric
TR-AU-440b.3
Percentage (%) by
Average recyclability of vehicles sold Quantitative
(1) Emissions-free vehicles (BEV): 375,716
TR-AU-440b.2
Weight of end-of-life material recovered, Quantitative
percentage recycled
7 Waste
TR-AU-440b.1
Metric tons (t),
Percentage (%)
More information about this can be found online.
7 Raw materials security and strategy
Notes
Quantitative
Metric tons (t),
Percentage (%)
85.4
7 As in previous years, statutory carbon emissions limits during the use
phase are met again
(1) The BMW Group provides the number of work stoppages
(strikes and lockouts) affecting more than 1,000 employees and
that lasted one full shift or longer. The number of work stoppages
for 2023 was zero.
[[Topic
SASB-Index
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
319
7 Further GRI Information
TR-AU-310a.1
Percentage (%)
Quantitative
Share of employees represented by a
trade union or falling under collective
agreements
Labour practices
Product safety
7 Quality management in the BMW Group
Accounting Metric
Labour practices
(1) Number of work stoppages
Category
Quantitative
Notes
opportunities
TR-AU-410a.3
Discussion of strategy for managing fleet Discussion and analysis n/a
fuel economy and emissions risks and
Fuel economy and use-phase emissions
TR-AU-410a.2
Number
Quantitative
(2) The BMW Group provides the total number of days idle
resulting from work stoppages as per the definition in (1). The
total number of days idle can be calculated from the total number
of employees involved with each work stoppage and the number
of days the work stoppage lasted. The number of days idle for
2023 was zero. Strike action is usually taken to reinforce pay rise
demands.
Number of (1) zero-emission vehicles
(ZEV), (2) hybrid vehicles and (3) plug-in
hybrid vehicles sold
Mpg, L/km, gCO2/km, TR-AU-410a.1
km/L
(2) total days idle
Fuel economy and use-phase emissions
and
TR-AU-310a.2
Number, days idle
Code
Unit
Sales-weighted average passenger fleet Quantitative
fuel economy, by region
All BMW Group vehicles sold since 2008 meet the currently
applicable worldwide requirements for the recycling of end-of-life
vehicles, components and materials. Vehicles (except for
motorcycles) are already currently required to be 85% recyclable
or 95% recyclable including thermal utilisation (based on vehicle
weight).
]]
85.9
78.7
2021
Employee category
Number of hours
employee category
Average training hours at the BMW AG Academy, by
Further GRI Information
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
316
*Status: 31 December 2023.
"As a result of changes in the way information is recorded, data for 2022 have been retrospectively adjusted (Values before adjustment: 493 employees in sabbaticals; 0,6% of total number of employ-
ees).
3 Only workers in administrative positions who engaged in mobile work.
18
38
2022
915
2023
30.7
lill
21.6
23.1
23.7
16.0
Average number of hours of training and further education
per employee of the BMW Group*
20.7
14.1
10.8
Tariff
68.9
43.1
27.0
"Meister" (master craftsmen)
26.0
38.2
26.4
Non-tariff employees
Hungary
2 Of which 4,118 were female (60%). For systemic reasons, this number is only calculated for BMW AG.
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition, see > Glossary).
0.8
0.9
23
436
2,867
South Africa
657
5604
464
653
764
35
2
3,703
Mexico
5.7
5.1
0.6
0.74
0.8
Brazil
9
3
572
India
4.6
29
157
691
0
Thailand
4,183
5.1
4,211
5.4
4,158
5.2
4,082
4.9
in % of total number of employees
22
2
861
3,938
2019
2020
2021
99.7
99.8
99.7
99.7
UK
Germany
2023
2022
2021
2020
2019
in %
Principal hazard spots
Share of local employees in management positions at major Company locations*
= Q
↑
Further GRI Information
99.5
Others 7.2
87.5
89.8
77.7
79.1
78.7
82.3
Driving 3.8
Transport 10.2
88.5
89.2
Other Information
88.3
87.4
South Africa
Austria
USA
Processing 6.2
90.2
88.8
89.5
89.1
82.7
Remuneration Report
317
Part-time retirement, retirement, death
3,107
3,191
3,720
4,535
2,794
Total
2023
2022
2021
2020
2019
Number
Total number of employees leaving BMW AG, by reason for leaving¹
* Training for BMW Group employees at consolidated and non-consolidated subsidiaries world-
wide. Data is collated on the basis of direct input by participants and, to a small extent, by extrap-
olation. Data also includes e-learning formats. GRI Index: 404-1
2023
2022
1,700
1,884
1,938
2,110
= Q
↑
2 Increase mainly due to a set of personnel measures.
1 Figures refer to employees with permanent contracts.
91
70
33
50
BMW Group Report 2023 To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
65
911
1,011
1,749²
2,6012
1,029
contract by employee)
Voluntarily left Company (termination or suspension of employment
2,105
Dismissed by employer
4.8
311
0
2022
2021
2020
2019
Elastomers (e.g. tyres,
seals) 3.6
1.78
1.90
1.91
2.05
Non-ferrous metals 21.0
Textiles 1.1
Steel and iron 48.4
12.5
Duromers 2.0
2.12
Natural mat.) 0.3
BMW Group Report 2023
To Our Stakeholders Combined Management Report Group Financial Statements
Thermoplastic resins
Remuneration Report
Other Information
Potable water consumption per vehicle produced 1,2,3
Responsibility Statement and Auditor's Report
in %
in m³
Others (including glass and
operating materials) 11.1
M.O.N. (mod. Organ.
Average distribution of materials in BMW Group vehicles¹²
* Environmental Analysis
7 Purchasing and Supplier Network
Respect for human rights
Combating corruption and bribery
7 Compliance and Human Rights
Disclosures regarding revenues that are taxonomy-eligible and taxonomy-aligned, capital
expenditure (CapEx) and operational expenditure (OpEx)
7 Purchasing and Supplier Network
7 Employees and Society
7 Compliance and Human Rights
Mandatory disclosure pursuant to Section 8 of the EU Taxonomy Regulation*
Performance Indicators and Performance Management
90,630
The BMW Group Strategy
Climate-related Risks and Opportunities
-
-
-
7 Risks and Opportunities
7 Production and Supplier Network
7 Products
Performance Indicators and Performance Management
7 EU Taxonomy
Cornerstones of the Strategy
NFS-Index
may
* Regulation (EU) 2020/852 of the European Council and of the European Parliament on the Es-
tablishment of a Framework to Facilitate Sustainable Investment, and amending Regulation (EU)
2019/2088, Commission Delegated Regulation (EU) 2021/2139, Commission Delegated Regu-
lation (EU) 2021/2178, Commission Delegated Regulation (EU) 2023/2485 and Commission
Delegated Regulation (EU) 2023/2486.
Electric range
(combined/weighted
Figures according to WLTP
in kWh/100 km
(combined/weighted
combined) max/min
Electricity power
consumption
CO₂ emissions
in g/km
(combined/weighted
combined) max/min
Fuel consumption
in l/100km
(combined/weighted
combined) max/min
As of February 2024
apply for the assessment of taxes and other vehicle-related du-
ties which are also based on CO2 emissions. Further information
about the official fuel consumption and official specific carbon
emissions of new vehicles can be found in the "Manual on fuel
consumption, carbon emissions and electricity consumption of
new vehicles". www.dat.de/co2
Environmental Analysis
For vehicles that were newly type-approved on or after 1 January
2021, official figures are only based on WLTP. In the vehicles,
different figures than those published here
The figures for fuel consumption, CO₂ emissions and power con-
sumption are calculated based on the measurement methods
stipulated in the current version of Regulation (EU) 715 / 2007.
The information is based on a vehicle with basic equipment in
Germany. Ranges take into account differences in wheel and tyre
size selected as well as optional equipment and can change
based on configuration. The figures have been calculated based
on the new WLTP test cycle and adapted to NEDC for compari-
son purposes.
Disclosures regarding fuel consumption, carbon emissions and electricity consumption
CONSUMPTION AND
CARBON DISCLOSURES
Consumption and Carbon Disclosures
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
326
↑
The BMW Group Strategy
The BMW Group Strategy
-
C6.1, C6.2, C6.3, C6.4, C6.4a, C6.5, C6.10, C7.1,
C7.2, C7.3, C7.3a, C-TO7.4, C7.5, C7.6, C7.6a, C-
T07.8, C7.9, C7.9a, C7.9b
7 EU Taxonomy
-> Financial market player with sustainability credentials
Dialogue with Stakeholders
-
7 To Our Stakeholders
Reducing carbon emissions across the entire value chain
Carbon Emissions
-
-
Products
-> Managing sustainability
Performance Indicators and Performance Management
- Position - What does the BMW Group stand for?
Cornerstones of the Strategy
The BMW Group Strategy
-
-
- Circular Economy, Resource Efficiency and Renewable Energy
7 Production and Supplier Network
- Carbon Emissions
C4.1, C4.1b, C4.2, C4.2a, C4.2b, C4.2c
325
BMW Group Report 2023
To Our Stakeholders Combined Management Report
-
7 Risks and Opportunities
* Environmental Analysis
- Performance Indicators and Performance Management
Cornerstones of the Strategy
The BMW Group Strategy
-
Social matters
Employee matters
Environmental matters
About This Report
Connection to figures in financial statements
Integration of top management
Fuel consumption
7 Organisation and Business Model
BMW Group Report 2023
Business model
Mandatory disclosure pursuant to § 289 c - e HGB
NFS INDEX
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Risks
combined)
492-590
CO2 emissions
in g/km
(combined/weighted
combined) max/min
in kWh/100 km
(combined/weighted
combined) max/min
consumption
Electricity power
CO₂ emissions
in g/km
(combined/weighted
combined) max/min
← = Q
As of February 2024
Consumption and Carbon Disclosures
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report Group Financial Statements
BMW Group Report 2023
327
in kWh/100 km
(combined/weighted
combined) max/min
Figures according to NEDC
Electricity power
consumption
501 - 564
587 633
490-559
403-435
24.7-21.9
21.3 -19.5
BMW iX M60
Figures according to WLTP
Fuel consumption
Electric range
(combined/weighted
17.2 - 15.4
37-30
1.7-1.3
76-82
33.5-32.5
45-35
2.0-1.6
76-83
33.6-32.5
43-35
1.9 1.5
BMW iX xDrive50
453-461
417-449
17.7-16.3
417-439
18.1 - 16.9
in kWh/100 km
(combined/weighted
combined) max/min
consumption
Figures according to NEDC
Electricity power
CO₂ emissions
in g/km
(combined/weighted
combined) max/min
in l/100km
(combined/weighted
combined) max/min
combined)
430-474
18.9 - 18.5
in l/100km
(combined/weighted
combined) max/min
21.4 -19.4
23.7-20.8
BMW i5 M60 xDrive
483-560
19.3-16.5
497-582
18.9-15.9
415-520
22.5-18.0
7 Products
19.116.1
406-483
18.7 -15.8
234-229
10.4-10.1
BMW i5 eDrive40 Touring
BMW i5 eDrive40
BMW i4 M50
BMW i4 eDrive40
BMW i4 eDrive35
BMW M3 CS
BMW
Model
20.5-18.2
457-516
BMW i5 M60 xDrive Touring
20.8 18.3
589-624
19.6 - 18.5
575-611
20.3 - 19.1
BMW i7 M70 xDrive
BMW i7 xDrive 60
BMW i7 xDrive50
94-110
27.0-22.9
26-18
BMW iX xDrive40
1.1-0.8
83-90
23.2 - 21.6
23-19
93-103
21.7 -19.9
17-13
0.8 -0.6
1.0-0.8
BMW 530e xDrive
BMW 530e
445-506
BMW X5 xDrive 50e
Further GRI Information (Table BMW Group Carbon Footprint)
-
The BMW Group Strategy
-> Transitory climate risks
- Climate scenarios
Climate-related Risks and Opportunities
-> Risks and opportunities relating to purchasing
Strategic and sector-specific risks and opportunities
Material Short-term Risks and Opportunities
-
-
-
-> Non-financial risks as reported in the non-financial statement (NFS)
Climate-related risks
-
- Risk and Opportunity Management
Risks and Opportunities
- Environmental Analysis
The BMW Group Strategy
BMW Group Report 2023
C. Describe the resilience of the Company's strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario.
B. Describe the impact of climate-related risks and
opportunities on the Company's businesses, strategy,
and financial planning.
A. Describe the climate-related risks and
opportunities.
Disclose the actual and potential impacts of climate-related risks and opportunities on the Company's businesses, strategy, and financial planning where such information is material.
Recommended TCFD Disclosures
- Physical climate risks
[[Strategy
-
The BMW Group Strategy
-> Material Short-term Risks and Opportunities
- Risk and Opportunity Management
7 Risks and Opportunities
- Carbon emissions in the supply chain
Purchasing and Supplier Network
-
7 Production and Supplier Network
- Thinking holistically about electric mobility
- Electromobility
-> Further reduction in pollutant emissions
- Making conventional drivetrains more efficient and lowering their emissions
Reducing carbon emissions across the entire value chain
-
Carbon Emissions
-
-
Drivetrain technologies of the future
- Innovation, Digitalisation and Customer Orientation
Products
- Cornerstones of the Strategy
-> Environmental Analysis
Climate-related opportunities
↑
TCFD-Index
Other Information
- Managing sustainability
Performance Indicators and Performance Management
- Position - What does the BMW Group stand for?
-
- Cornerstones of the Strategy
The BMW Group Strategy
BMW Group Report 2023
B. Describe Management's role in assessing and
managing climate-related risks and opportunities.
A. Describe the Board's oversight of climate-related
risks and opportunities.
Recommended TCFD Disclosures
Disclose the Company's governance around climate-related risks and opportunities.
[[Governance
TCFD INDEX
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Combined Management Report Group Financial Statements
To Our Stakeholders
BMW Group Report 2023
321
Risks and Opportunities
- Risk and Opportunity Management
-
Organisation of Risk Management
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
322
C1.2
C1.1a, C1.1b
CDP Questionnaire 2023
TCFD-Index
Organisation of Risk Management
Climate-related Risks and Opportunities
-
-
Risks and Opportunities
-
-
Performance Indicators and Performance Management
Cornerstones of the Strategy
The BMW Group Strategy
- Carbon Emissions
7 Products
7 Appropriateness and Effectiveness of the Internal Control System and Risk Management System
Risk and Opportunity Management
7 Risks and Opportunities
-
Climate-related Risks and Opportunities
↑
C2.2
Climate-related Risks and Opportunities
- Risk measurement
-> Organisation of Risk Management
-
-> Risk and Opportunity Management
Risks and Opportunities
- Position - What does the BMW Group stand for?
Cornerstones of the Strategy
-> Managing and sustainability
-
- Performance Indicators and Performance Management
The BMW Group Strategy
Organisation of Risk Management
the Company's overall risk management.
and managing climate-related risks are integrated into
C. Describe how processes for identifying, assessing,
Risk measurement
-
-
]]
324
BMW Group Report 2023
To Our Stakeholders Combined Management Report Group Financial Statements
Reducing carbon emissions across the entire value chain
Carbon Emissions
-
-
7 Products
7 Dashboard
Further GRI Information (Table BMW Group Carbon Footprint)
C. Describe the targets used by the Company to
manage climate-related risks and opportunities.
B. Disclose Scope 1, Scope 2 and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions.
↑
Risk and Opportunity Management
CDP Questionnaire 2023
C4.1b, C4.2, C4.2a, C4.2b, C4.2c
32.2-31.5
7 The BMW Group Strategy
A. Disclose the metrics used by the Company to assess
climate-related risks and opportunities.
BMW Group Report 2023
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.
Recommended TCFD Disclosures
[[Metrics and Targets
TCFD-Index
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Performance Indicators and Performance Management
-> Managing Sustainability
- Performance Indicators and Performance Management
-
B. Describe the Company's processes for managing
climate-related risks.
Disclose how the Company identifies, assesses, and manages climate-related risks.
[[Risk Management
TCFD-Index
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report Group Financial Statements
BMW Group Report 2023
323
C2.3, C2.3a, C2.4, C2.4a, C3.1, C3.3, C3.4, C3.5,
C3.5a
C2.1b, C2.3, C2.3a, C2.4, C2.4a, C3.1, C3.3, C3.4,
C3.5, C3.5a
C2.1, C2.1a, C2.1b, C2.2a, C2.3, C2.3a, C2.4,
C2.4a
CDP Questionnaire 2023
Climate-related opportunities
-
Physical climate risks
-
Transitory climate risks
-
Climate scenarios
-
Recommended TCFD Disclosures
A. Describe the Company's processes for identifying
and assessing climate-related risks.
BMW Group Report 2023
Risks and Opportunities
-
C2.1, C2.2, C2.2a
-> Position - What does the BMW Group stand for?
Cornerstones of the Strategy
- Managing sustainability
Performance Indicators and Performance Management
The BMW Group Strategy
C2.1, C2.2, C2.2a
CDP Questionnaire 2023
-
Risks and Opportunities
Physical climate risks
Transitory climate risks
-
-
-
-Climate scenarios
Climate-related Risks and Opportunities
Climate-related risks
- Risk measurement
-> Organisation of Risk Management
-> Risk and Opportunity Management
-
81,807
78-84
167-157
8.50/8.52
3,827
5.80/5.82
1,253
1.90 / 1.92
1,646
2.50/2.52
2,303
3.50/3.52
2,630
4,00/4.02
2,300
3.50/3.52
2,102
3.20/3.22
1,904
2.90/2.92
1 The 2018 figures were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 (see Annual Report 2019, note 6 to the Group Financial Statements). In addition, prior year figures were adjusted due to changes in the presentation of selected items that are of minor
importance overall.
2 Since the reporting year 2020, a new definition for workforce size has been applied ( Glossary). To enable better comparability, the value for 2019 was adjusted accordingly (2019 before adjustment: 133,778 employees). For the timeframe including and prior to 2018, the share of the employees that are no
longer reflected in reporting is about 7.5-8.0%.
3 Proposal by management. The dividend total may change before the date of the Annual General Meeting due to the share buyback and a resulting change in the number of shares entitled to receive a dividend.
330
BMW Group Report 2023
To Our Stakeholders Combined Management Report Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
5,481
Other Information
Glossary and Explanation of Key Figures
3,802³
6,00/6,023
€ million
5,792
5,404
3,481
PERSONNEL
Workforce at year-end²
Personnel cost per employee²
DIVIDEND
154,950
Е
96,778
149,475
94,952
118,909
103,569
120,726
99,647
126,016
98,901
134,682
101,178
129,932
100,760
124,729
99,575
122,244
116,324
97,136
92,337
Dividend total
Dividend per share of common stock/preferred stock
€
← = Q
GLOSSARY AND EXPLANATION OF KEY FIGURES*
A
110,343
121,671
121,964
124,202
137,404
134,851
143,354
154,722
155,918
€ million
Current assets
Non-current assets
BALANCE SHEET
2014
2015
2016
2017
2018¹
2019
2020
2021
2022
2023
97,959
€ million
94,972
92,204
Apprentices
The number of all people on multi-year vocational training
courses at a BMW Group company (includes all of the consoli-
dated and non-consolidated companies in which the BMW
Group holds more than 50 % of the shares), with these training
courses consisting of practical and theory sections.
Asset-backed financing transactions
A form of corporate financing involving the sale of receivables to
a financing company.
B
Beyond Value Chain Mitigation (BVCM)
Beyond Value Chain Mitigation (BVCM) refers to all investments
and measures that a company takes in addition to its Science
Based Targets (SBTS) to reduce emissions outside its value
chain. This includes activities that avoid or reduce greenhouse
gas emissions as well as those that remove greenhouse gases
from the atmosphere and store them. BVCM is strongly recom-
mended by the Science Based Targets initiative (SBTI) to vali-
dated companies in addition to CO₂ reduction in their own value
chain. The BMW Group is committed to this reduction hierarchy
and already actively manages both direct and indirect carbon
emissions from its plants in line with the 1.5°C pathway set by
the Science Based Targets initiative (SBTI), which involves im-
plementing significant measures in our value chain, plus addi-
tionally engaging in BVCM to address emissions outside our own
value chain. We voluntarily back these initiatives without them
counting towards the BMW Group's CO₂ reduction targets.
BVCM involves, for example, purchasing certificates on the vol-
untary carbon market. Criteria such as additionality, perma-
nence, and certification by independent institutions following in-
ternational standards (Gold Standard) contribute to the quality of
the certificates employed, thereby bolstering the efficacy of our
commitment beyond our internal value chain.
It is also important to us that projects in the Global South create
a social benefit in line with the Sustainable Development Goals
(SDGs). These include, for example, initiatives that create health
benefits such as avoiding open fires in enclosed spaces.
Bond
A securitised debt instrument in which the issuer certifies its ob-
ligation to repay the nominal amount at the end of a fixed term
and to pay a fixed or variable rate of interest.
4,459
Business volume in balance sheet terms
C
Capitalisation rate
Capitalised development costs as a percentage of research and
development expenditure.
Capital expenditure ratio (excluding capitalised
development costs)
Investments in property, plant and equipment and other intangi-
ble assets (excluding capitalised development costs) as a per-
centage of Group turnover.
Capital expenditure ratio (excluding right-of-use assets and
capitalised development costs)
Investments in property, plant and equipment (excluding right-
of-use assets in accordance with IFRS 16) and other intangible
assets (excluding capitalised development costs) as a percent-
age of Group turnover.
Carbon dioxide equivalents/CO₂e
CO₂e is a unit of measurement used to standardise the climate
impact of various greenhouse gas (GHG) emissions, such as me-
thane or nitrous oxide. This is necessary because the individual
gases do not all contribute equally to the greenhouse effect. In
addition, the expert committee at the United Nations (Intergov-
ernmental Panel on Climate Change, IPCC) has defined "global
warming potential" (GWP). This is an index used to express
warming impact compared with CO₂ so that all GHGs are aggre-
gated. For example, over a period of 100 years, methane has 28
times the impact of CO2, while for nitrous oxide the impact is 265
times higher.
Carbon emissions in the supply chain, including in transport lo-
gistics, as well as in upstream fuel production (well-to-tank) are
referred to as CO₂e. Climate-impacting gases under Scope 1 and
2 are not recognised for reasons of materiality.
*Part of the Combined Management Report.
The sum of the balance sheet line items "Leased products" and
"Receivables from sales financing" (current and non-current), as
reported in the balance sheet for the Financial Services segment.
← = Q
2,713
6,122
4.5
4.0
5.4
5.2
4.8
4.0
4.2
5.7
€ million
92,923
91,288
75,132
61,520
59,907
57,829
54,107
47,363
42,764
37,437
%
37.0
37.0
32.7
5.5
28.4
5.7
Balance sheet total
84,736
73,542
66,864
61,831
56,844
Capital expenditure (excluding capitalised development costs)
€ million
8,836
7,791
5,012
3,922
5,650
5,029
4,688
3,731
3,826
4,601
Capital expenditure ratio (excluding capitalised development
costs)
Equity
Equity ratio
Non-current provisions and liabilities
Current provisions and liabilities
%
26.3
27.7
27.7
229,527
216,658
228,034
208,938
195,506
188,535
172,174
154,803
CASH FLOW STATEMENT
Cash and cash equivalents at balance sheet date
86,173
17,327
16,870
Free cash flow Automotive segment
€ million
6,942
11,071
16,009
6,354
13,537
3,395
12,036
2,567
10,979
9,039
7,880
246,926
250,890
€ million
59,078
25.1
24.8
24.2
€ million
70,966
71,217
77,929
83,175
85,502
79,698
69,634
7,688
73,183
58,288
€ million
87,001
84,421
76,466
71,963
82,625
71,411
71,765
67,989
65,591
63,819
7.4-6.9
8.1-7.9
Other Information
BMW Group Ten-Year Comparison
Responsibility Statement and Auditor's Report
2,486,149
165,566
2,537,504
175,162
2,325,179
169,272
2,521,514
194,261
2,399,632
202,895
2,554,183
209,066
units
units
Motorcycles
Automobiles
2014
2015
2016
2017
2018¹
2019
2020
2021
2022
2023
DELIVERIES
BMW GROUP TEN-YEAR COMPARISON
BMW Group Ten-Year Comparison
2,465,021
164,153
← = Q
2,349,962
145,032
2,117,965
123,495
5,859,890
139,530
5,513,129
135,689
5,312,689
137,910
€ million
Business volume (based on balance sheet carrying amounts)
contracts
Contract portfolio
FINANCIAL SERVICES
2,165,566
133,615
2,279,503
151,004
2,359,756
145,555
2,505,741
185,682
2,541,534
162,687
2,564,025
187,116
2,255,637
168,104
2,461,269
187,500
2,382,305
215,932
2,661,922
221,988
units
units
Motorcycles
Automobiles
PRODUCTION VOLUME
2,259,733
136,963
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
in l/100km
(combined/weighted
combined) max/min
Fuel consumption
Rolls-Royce Ghost
Rolls-Royce Cullinan
ROLLS-ROYCE
MINI Countryman SE ALL4
MINI Countryman E
MINI Cooper SE Cabrio
MINI Cooper SE (from model year 2024)
MINI Cooper SE (until model year 2023)
MINI Cooper E
MINI
BMW Z4 Roadster M40i
BMW Z4 Roadster sDrive20i
BMW XM 50e
BMW XM Label Red
BMW XM
BMW iX3
BMW iX2 xDrive30
BMW iX1 xDrive30
BMW iX1 xDrive20
Model
184-179
14.3 -13.8
293-305
17.6-15.4
203-232
To Our Stakeholders Combined Management Report
BMW Group Report 2023
328
500-530
23.6-22.2
Rolls-Royce Spectre
369-357
16.3 15.8
Rolls-Royce Wraith
381-367
16.9-16.2
5,981,928
133,093
Rolls-Royce Dawn
15.8 -15.2
377-368
16.5-16.1
399-432
18.5-16.8
423-462
17.4-15.7
201
17.2
387-402
14.7 -14.1
359-347
5,973,682
142,834
5,708,032
133,147
5,380,785
124,719
Effective tax rate
2,890
2,828
2,755
2,000
2,530
2,140
1,365
3,597
4,927
4,931
€ million
Income taxes
10.8
10.0
10.3
10.9
9.9
6.8
5.3
14.4
16.5
11.0
%
28.8
21.0
22.4
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
329
5,817
6,396
6,910
8,675
7,064
5,022
%
3,857
18,582
12,165
€ million
Net profit for the year
33.2
30.7
28.5
18.7
26.3
30.1
26.1
12,463
Remuneration Report
€ million
8,707
17.3
13.7
19.8
17.2
19.1
%
80,401
92,175
94,163
98,282
96,855
104,210
98,990
111,239
142,610
155,498
€ million
Gross profit margin
Revenues
INCOME STATEMENT
4,359,572
96,390
4,718,970
111,191
5,114,906
123,394
19.0
20.3
19.9
19.7
9,224
9,665
10,675
9,627
7,118
5,222
16,060
23,509
17,096
€ million
Earnings before tax
Return on sales (earnings before tax/revenues)
9,118
9,386
9,899
8,933
7,411
4,830
13,400
13,999
18,482
€ million
Earnings before financial result
21.2
9,593
331
BMW Group Report 2023 To Our Stakeholders Combined Management Report
EBIT
N
The number of people with active employment contracts who are
absent from work, as permitted by law, before and after the birth
of a child (maternity protection) or due to parenthood, as pro-
vided for by law in the country in question (parental leave).
Maternity protection, parental leave
Management positions are positions at functional levels I to IV
below the Board of Management level.
Management positions
M
Annual General Meeting
Cash and cash equivalents as well as marketable securities and
investment funds.
L
← = Q
Glossary and Explanation of Key Figures
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Liquidity
Group Financial Statements
14 May 2025
7 May 2025
BMW Group Annual Conference
8 May 2024
Quarterly Statement to 31 March 2024
15 May 2024
Annual General Meeting
1 August 2024
Quarterly Statement to 31 March 2025
Half-Year Report to 30 June 2024
Quarterly Statement to 30 September 2024
2025
20 March 2025
BMW Group Report 2024
20 March 2025
BMW Group Annual Conference
6 November 2024
To Our Stakeholders Combined Management Report
BMW Group Report 2023
335
Equity ratio
retirement working arrangements and who are in the non-active
phase of this model (the second part, following the active phase
in this model).
The number of people with temporary or permanent employ-
ment contracts who have opted for retirement via partial
Employees in the non-work phase of partial retirement
working arrangements
Until 2019, temporary staff, postgraduate students, interns, ap-
prentices, and people on extended sick leave or on sabbatical
were also included in this definition.
Since 2020, all people with active temporary or permanent em-
ployment contracts (as of 31 December in the year in question)
with the BMW Group (includes all of the consolidated and non-
consolidated companies in which the BMW Group holds more
than 50% of the shares) have been considered "employees of
the BMW Group". This excludes apprentices, interns, temporary
staff (students on work experience), temporary employees,
dormant/inactive employment contracts due to maternity leave,
sabbaticals, parental leave, long-term illness (as defined in the
country in question), those in inactive early retirement phase, and
employees accompanying their partner abroad.
Equity capital as a percentage of the balance sheet total.
Employees BMW Group
Electrified vehicles
The effective tax rate is calculated by dividing the income tax ex-
pense by the Group profit before tax.
Effective tax rate
EBIT plus financial result.
EBT
Profit/loss before financial result as a percentage of revenues.
The BMW Group uses the terms battery electric vehicle (BEV) to
denote fully electric vehicles and plug-in hybrid vehicle (PHEV) to
denote vehicles that can be charged and also driven on a fully
electric basis.
EU Taxonomy - operating expenditure (OpEx)
Operating expenditure only comprises non-capitalised develop-
ment costs, maintenance and refurbishment costs for buildings,
repairs to property, plant and equipment, relevant IT costs in the
Financial Services segment, non-capitalised expenses relating
to short-term lease contracts, expenditure for low value assets,
and purely variable remuneration. The KPI figure calculated for
taxonomy-purposes is not used by the BMW Group for financial
reporting purposes.
EU Taxonomy - capital expenditure (CapEx)
Capital expenditure is calculated on the basis of IAS 16.73(e)(i)
and (iii) for property, plant and equipment, IAS 38.118(e)(i) for
intangible assets and IFRS 16.53(h) for leases. In accordance
with the definition of capital expenditure provided in Annex I of
the Commission Delegated Regulation (EU) 2021/2178 and
taking into account the adjustments made by Delegated Regula-
tion (EU) 2023/2486, the KPI figure used for taxonomy pur-
poses comprises additions to intangible assets, in particular cap-
italised development costs, additions to property, plant and
equipment as well as right-of-use assets in accordance with
IFRS 16, and leased-out products. Capital expenditure relating
to the sale of parts to external third parties or the delivery of parts
to cooperation partners are not taken into account.
The number of people completing voluntary or mandatory work
experience programmes at a BMW Group company (includes all
of the consolidated and non-consolidated companies in which
the BMW Group holds more than 50 % of the shares) while stud-
ying for a degree.
Interns
Gross profit as a percentage of Group turnover.
Gross profit margin
Acquired goodwill is considered an intangible asset. It corre-
sponds to the difference between the purchase price and the net
assets of the acquired business as measured at fair value.
Goodwill
G
Free cash flow is derived from cash flows from operating and in-
vesting activities. The cash flows from investing activities from
the purchase and sale of marketable securities and investment
funds is not included. Cash flows from the purchase and sale of
shares and the dividend payout from investments accounted for
using the equity method are included in the cash flows from in-
vesting activities.
Free cash flow (Automotive segment)
A hedge against exposures to fluctuations in the fair values of
balance sheet items.
Fair value hedge
F
included, as these economic activities are not classified as tax-
onomy-eligible.
Revenues are calculated in accordance with Article 2(5) of Di-
rective 2013/34/EU. Revenues comprise the income and earn-
ings reported in accordance with IAS 1.82(a). Revenues relating
to the sale of parts and components (e. g. after-sales business
excluding the provision of repair services) and the supply of pro-
duction components to third parties, insurance premiums, and
interest income on deposit-taking and credit business were not
EU Taxonomy - revenues
21 March 2024
2024
FINANCIAL CALENDAR
Financial Calendar
Group net profit as a percentage of Group revenues.
Pre-tax return on sales
Group profit/loss before tax as a percentage of Group revenues.
R
Research and development expenditure
The sum of research and non-capitalised development costs and
investments in capitalised development costs not including the
associated scheduled amortisation.
Post-tax return on sales
Research and development expenditure ratio
Research and development expenditure as a percentage of
Group turnover.
The engineering, IT and process expertise required for the (pre-)
development of hardware and software for all BMW Group prod-
ucts and services is combined at the Group's international re-
search and development locations.
Return on capital employed (ROCE)
ROCE in the Automotive and Motorcycles segments is measured
on the basis of relevant segment profit before financial result and
the average amount of capital employed - at the end of the last
five quarters - in the segment concerned. Capital employed cor-
responds to the sum of intangible assets, property, plant and
equipment and net working capital, the latter comprising inven-
tories and trade receivables less trade payables.
Up to the financial year 2021, capital employed corresponds to
the sum of all current and non-current operational assets, less
336
BMW Group Report 2023
Research and development locations
The number of people with active employment contracts who are
absent from work on grounds of illness for an extended period of
time (as defined in the country in question - in Germany, this
means an absence of more than 42 calendar days with a given
illness).
People on extended sick leave
Ratio of unappropriated profit of BMW AG in accordance with
HGB to profit attributable to shareholders of BMW AG, based on
the BMW Group's net profit for the year under IFRS. Until the
2021 financial year, the payout ratio corresponded to the ratio of
unappropriated profit belonging to BMW AG in accordance with
HGB to the net profit for the year of the BMW Group in accord-
ance with IFRS.
Number of training participants
The number of employees of the BMW Group participating in fur-
ther education worldwide (includes all consolidated subsidiaries
of the BMW Group). Data is collated on the basis of direct input
by participants and, to a small extent, by extrapolation. It com-
prises the overall number of participants on training and qualifi-
cation courses, including e-learning courses.
0
Outlook
Unless specific ranges are specified, the BMW Group uses the
following terminology and ranges as a basis when forecasting
key performance indicators:
At previous year's level [-0.9 %/+ 0.9%]
Slight increase
Slight decrease
Solid increase
Moderate decrease
Significant increase
Significant decrease
P
Part time, full time
[+ 1.0 %/+ 4.9%]
[-1.0%/- 4.9%]
[+5.0 %/+ 9.9%]
[-5.0 %/-9.9%]
≥ + 10.0 %
≤ -10.0 %
The number of employees (see definition of "Employees"), dis-
tinguishing between employees who have contractually stipu-
lated weekly working hours as prescribed by law, in a collective
wage agreement or by the company in question (full time) and
employees with a contractually stipulated reduction in their num-
ber of weekly working hours, which are thus less than the respec-
tive number of full-time working hours (part time).
Payout ratio
To Our Stakeholders Combined Management Report
EBIT margin
Group Financial Statements Responsibility Statement and Auditor's Report
Other Information
By contrast, the tank-to-wheel method takes into account the im-
pact chain of energy received (fuel, electricity) until it is converted
into kinetic energy by the vehicle. As such, this approach consid-
ers the impact chain that arises during the use of the vehicle.
Working hours/working times
Contractually stipulated weekly hours of work.
Glossary and Explanation of Key Figures
← = Q
337
The well-to-tank method takes into account the carbon emis-
sions from the supply chain as well as the upstream fuel supply
from the oil well or the energy generation source. As such, this
approach considers the impact chain that arises until the energy
is supplied to the vehicle, but does not include the vehicle itself.
BMW Group Report 2023
Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
To Our Stakeholders
The well-to-wheel method takes into account the entire impact
chain behind vehicle motion - from the generation and supply of
drivetrain power to its conversion into energy. This approach also
includes the environmental impacts associated with the produc-
tion of fuel and electricity. For example, the BMW Group uses the
current energy report from the International Energy Agency (IEA;
reference basis: previous year) as the basis for calculating emis-
sions from electrified vehicles (provision of electrical energy). As
a result, this approach can be divided into the following two com-
ponents:
Well-to-wheel
W
liabilities that generally do not incur interest. The deductible cap-
ital consisted of capital shares that are available to the opera-
tional business, largely without interest.
Return on equity (ROE)
RoE in the Financial Services segment is calculated as segment
profit before taxes, divided by the average amount of equity cap-
ital at the end of the last five quarters - attributable to the Fi-
nancial Services segment.
S
Sabbatical
The number of people with active employment contracts who are
absent from work for at least one month and for not more than
six months due to an employee-funded leave of absence ("sab-
batical").
Spending on employee training and development
Investment in training comprises all costs incurred in the report-
ing year for vocational training within the consolidated subsidiar-
ies of the BMW Group, including personnel costs for trainers and
apprentices as well as other costs and investments related to vo-
cational training. The investments in further training are calcu-
lated for all consolidated subsidiaries of the BMW Group. The in-
vestments in further training are calculated for all consolidated
subsidiaries of the BMW Group. This includes preparation and
implementation costs, opportunity costs and investments made
in order to provide such further education. These costs also in-
clude notional depreciation, measured on the basis of inventory
lists.
T
Temporary employees
People who the BMW Group (includes all consolidated and non-
consolidated companies in which the BMW Group holds more
than 50% of the shares) has hired from a temporary employ-
ment agency to work on a temporary basis.
Temporary staff/working students
The number of people employed on an hourly basis as tempo-
rary staff at a BMW Group company (includes all of the consoli-
dated and non-consolidated companies in which the BMW
Group holds more than 50 % of the shares) while studying for a
degree.
V
Value at risk
A measure of the potential maximum loss in value of an item dur-
ing a set time period, based on a specified probability.
Remuneration Report
Earnings Before Interest and Taxes. This is comprised of reve-
nues less cost of sales, selling and administrative expenses and
the net amount of other operating income and expenses.
Net Zero
← = Q
the recording of transport flows and their CO₂e assessment. In
line with the range of factors and data sources used for emis-
sions from 2022 onward, a retrospective assessment of
transport logistics emissions is carried out for the years 2019 to
2021, following the same methodology as from 2022 onward.
This involves using factory- or market-specific inbound and out-
bound CO₂e emissions data from 2022 for the vehicles produced
in each corresponding year. Vehicle variants from 2019 to 2021
that are no longer produced in 2022 will be supplemented on the
basis of existing derivatives with similar transport routes.
← = Q
Other Information
Glossary and Explanation of Key Figures
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
Carbon emissions of the new vehicle fleet in the EU (Scope 3
downstream, tank-to-wheel)
BMW Group Report 2023
CO₂e emissions for the years 2019 to 2021 were calculated in
previous corporate reports using a variety of emissions factors.
Between 2019 and 2022, the recording or assessment of CO₂e
from transport movements was consistently improved. Among
other things, a new IT system was introduced in 2022 to expand
In a second step, an average, derivative-specific inbound CO₂e
value is assigned to each vehicle produced from the CO₂e as-
sessed transport flows, based on plant location and type of drive,
and an outbound CO₂e value is assigned based on the factory-
market relationship. If inbound and/or outbound CO₂e values for
individual derivatives are missing in the recorded transport
streams (step 1), these are supplemented on the basis of exist-
ing derivatives with similar transport routes. Consequently, each
manufactured vehicle is allocated an inbound and outbound
CO₂e factor based on the production site and intended market.
The share of CO₂e emissions attributed to transport logistics
within the "supply chain and logistics emissions" metric is deter-
mined by aggregating the inbound and outbound CO₂e emis-
sions of all vehicles manufactured in the reporting year.
This ap-
proach applies to the CO₂e contributions from transport logistics
in the base year and in 2022.
CO₂e emissions are calculated for the gross weight (component
weight including packaging and shipping material) as well as the
specific vehicle weight and the distance travelled in kilometres.
This calculation is based on the respective CO₂e emission factor,
which varies depending on the technology and mode of transport
(road, sea, rail or air). The CO₂e emission factors used are de-
rived from contemporary standards such as the GLEC Frame-
work V3.0 and ISO 14083, supplemented by supplier-specific
values whenever possible.
transportation from the Tier 1 supplier's shipping location to the
receipt of goods at individual production plants worldwide, in-
cluding partner plants and excluding contract manufacturing
sites. In outbound logistics (vehicle distribution), all transport
flows of new vehicles transported from the production sites
through compounds and national distributors to individual deal-
erships worldwide are considered. Exceptions include partial vol-
umes from partner plants.
In inbound logistics (production supply), all transport flows of in-
dividual component parts for automobile manufacturing (BMW,
MINI and Rolls Royce) are considered. This includes
This indicator takes into account transport logistics emissions in
the reporting year. Firstly, inbound and outbound transport flows
are documented using IT-enabled billing and movement data to
calculate the CO₂e emissions in tonnes and the transport volume
in tonne-kilometres.
333
The average carbon emissions of a manufacturer's fleet (use
phase) are calculated on the basis of the weighted average of
carbon emissions across all vehicles newly registered during the
reporting period. This is based on the volume of new registra-
tions by a manufacturer in the EU, including Norway and Iceland,
in the calendar year and the individual vehicle-specific carbon
emissions determined in accordance with the WLTP type test
procedure. The BMW Group's fleet carbon emissions figure, as
measured internally, includes a legally permitted allowance for
eco-innovations with minor significance. The performance indi-
cator for reporting purposes is g CO₂ per kilometre driven.
Carbon emissions of the new vehicle fleet worldwide
including upstream emissions (Scope 3 downstream, well-
to-wheel)
This indicator documents the progress made by the BMW Group
in its strategic objective of reducing carbon emissions during the
use phase including upstream emissions (drivetrain energy sup-
ply) by an average rate of at least 50% per kilometre driven by
2030 (base year 2019). For the purpose of this calculation, vol-
ume-weighted average fleet carbon emissions are calculated for
the core markets EU (27 EU countries including Norway and Ice-
land plus UK) (driving cycle: Worldwide Harmonized Light Vehi-
cles Test Procedure; basis: vehicle registrations), USA (driving
cycle: United States Combined; basis: production volume) and
China (driving cycle: Worldwide Harmonized Test Cycle, subject
to China-specific framework conditions for testing; basis: import
or local production volumes) before deduction of legally
7 www.mini.com
7 www.rolls-roycemotorcars.com
7 www.bmw-motorrad.com
BMW VISION
Neue Klasse
www.BMWGROUP.COM
Credit default swap (CDS)
The process of consolidating separate financial statements of
Group entities into Group Financial Statements, depicting the fi-
nancial position, net assets and results of operations of the
Group as a single economic entity.
Consolidation
Deep-discounted bonds with a term of less than one year.
Hedges against exposures to the variability in forecasted cash
flows, particularly in connection with exchange rate fluctuations.
Commercial paper
Cash flow hedges
Similar to "value at risk" (see definition below).
Cash flow at risk
permitted credit factors (e.g. supercredits and eco-innovations)
and standardised according to the WLTP (European) driving cy-
cle. These core markets account for more than 80% of the BMW
Group's sales. The calculated figures are increased by 10% to
account for possible discrepancies between cycle values and real
emissions, as required by the Science Based Targets initiative.
This indicator also includes the upstream emissions of the en-
ergy sources (fossil fuels and electricity used for charging), in line
with the well-to-wheel approach. This covers the entire impact
chain behind vehicle motion, i.e. from the generation and supply
of power to its conversion into drivetrain energy. This approach
also includes the environmental impacts associated with the pro-
duction of fuel and electricity. For example, to calculate the vol-
ume of emissions resulting from upstream electricity (drivetrain
energy supply), the BMW Group uses the energy report pub-
lished by the International Energy Agency (IEA; reference basis:
previous year) as a basis in order to assess the emissions asso-
ciated with the electricity mix in its core markets. The perfor-
mance indicator for reporting purposes is g CO₂ per kilometre
driven.
Transport logistics' share of the reporting value
7 www.bmw.com
An external service provider commissioned by BMW conducts
the verification of measures at affected suppliers and their sub-
contractors at the impacted manufacturing sites. A defined
method is used to ensure that the contractually agreed emis-
sions-reducing measures are implemented clearly and without
duplication in the reporting year. There are some limitations re-
garding the clear and non-repetitive allocation of material flows
with secondary raw materials. Due to the lack of regulatory man-
dates, there is currently neither a requirement for the recording
and documentation of material flows for secondary materials
across the supply chain (for example on delivery notes), nor is
there a government-operated/regulatory registry similar to that
of green energy certificates that facilitates the distinct allocation
of secondary materials to specific customers without duplication.
Therefore, the secondary material quota is confirmed using sys-
tem extracts from the relevant suppliers' Enterprise Resource
Planning (ERP) systems, along with details and evidence of sec-
ondary material procurement through mass balances. Further-
more, written confirmation is obtained from suppliers and n-tier
suppliers (via declarations of conformity) to clearly attribute sec-
ondary materials to BMW products, preventing any possibility of
double-counting with other customers.
The total emission-reducing measures for all components and
raw materials in the vehicles produced in the reporting year that
are evaluated in this manner is subtracted from the baseline
value. This results in the share of supply chain CO₂e emissions in
the reporting value of the overall indicator. The methodology for
calculating the supply chain CO₂e emissions outlined above
marks a key improvement over the previous approach. This im-
provement allows for the inclusion of agreed-upon emission-re-
ducing measures at the level of individual components and raw
materials, among other factors. Until 2022, each vehicle in the
The initial calculation of the supply chain CO₂e emissions for a
representative selection of vehicles is based on their bill of mate-
rials. This selection reflects the range of vehicle classes (from
premium compact to luxury) and types of drive (petrol, diesel,
PHEV and BEV) produced during the period under review.
Baseline calculation of supply chain emissions
The indicator quantifies greenhouse gas emissions (CO₂e) pro-
duced during production (GHG Protocol Scope 3 upstream cate-
gory 1), including the transportation of purchased goods and ser-
vices for production ("inbound"), as well as the global vehicle dis-
tribution of BMW Group automobiles ("outbound") (collectively
GHG Protocol Scope 3 upstream category 4). Contrary to the def-
inition of the scopes of the GHG Protocol, the following are not
included: motorcycles, racing vehicles and aftersales products,
including their transport logistics, as well as purchased IT cloud
services and engineering or development services.
(LCA). However, it should be noted that this approach may not
be directly comparable with methods or values employed by
other companies. Due to a lack of data availability, various esti-
mates, assumptions and average values are used to determine
the key indicator. The aim is to improve the quality of the model
for calculating key metrics in future years. This will be achieved
by boosting transparency in supply chains and expanding the de-
tail of the model, all while maintaining consistency in calculations
over time.
A methodology tailored specifically for BMW was created to as-
sess the supply chain and logistics emissions in terms of their
CO₂e equivalents. Due to the absence of supplier-specific CO₂e
values throughout the entire supply chain, a model incorporating
industry averages and, when accessible, supplier-specific data is
used. This method draws upon components of ISO 14040/44
and follows common practice in preparing life cycle analyses
CO₂e emissions from the supply chain including transport
logistics per vehicle produced (Scope 3 upstream)
For the representative vehicles, the CO₂e emissions of all in-
stalled components are calculated on the basis of their material
composition and related processing steps. Up to around 60,000
individual entries are evaluated in each case. The CO₂e value of
the relevant vehicle is calculated by adding these contributions
together.
This key indicator is calculated from the direct and indirect car-
bon emissions of BMW Group locations relating to the number of
vehicles produced during the year under report. The carbon
emissions result from energy consumption in the BMW Group
plants as well as non-manufacturing sites. Electricity from on-
site renewable generation, Power Purchase Agreements for
green electricity and Energy Attribute Certificates (e.g. guaran-
tees of origin) are all taken into account. The conversion is based
on emission factors for electricity, district heating and fuels from
the German Association of the Automotive Industry (VDA) in the
most current valid version and occasionally local emission fac-
tors. This key indicator is the basis for measuring the strategic
target by 2030 with regard to Scope 1 and 2 emissions. The re-
porting indicator is t CO₂ per vehicle produced.
The carbon emissions generated by a company are reported in
various categories. The Greenhouse Gas Protocol, a partnership
between the World Resources Institute (WRI) and the World Busi-
ness Council for Sustainable Development (WBCSD), distin-
guishes between Scope 1, Scope 2 and Scope 3 emissions,
based on their various sources. Whereas direct emissions (Scope
1) are generated within a company through the combustion of
fossil fuels, Scope 2 refers to the indirect emissions caused by
the consumption of electricity and heat from externally generated
sources of energy. Additional indirect (Scope 3) emissions are
generated in the upstream and downstream stages of the value
chain, for instance in the supply chain (upstream) and in the sub-
sequent use of products and services (downstream).
Carbon emissions: Scope 1 to Scope 3
← = Q
Other Information
Glossary and Explanation of Key Figures
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Carbon emissions from BMW Group locations per vehicle
produced (Scope 1 and 2)
For the vast majority of vehicle models produced that are not in-
cluded in the representative vehicles, there is no individual CO₂e
calculation available on a bill of materials basis. A modular scal-
ing calculation method has been developed to include these in
the overall result:
The bill of materials of the representative vehicles is divided into
sections (modules) according to functional criteria, and these are
assessed in terms of their total CO₂e emissions. Previously un-
assessed vehicle derivatives can now be custom-built using
these basic components, with different building blocks selected
based on the specific technical features of the target vehicles, in-
cluding engine type, all-wheel drive or body style. Components
that do not fit are scaled from existing ones. The scaling tech-
niques are based on empirical data derived from similar analyses
as well as on expert evaluations. This encompasses the scaling
of detailed bodywork calculations ranging from sedans to touring
models with identical engine specifications.
For example, in the baseline calculation for 2023, there is a 520i
listed as a bill of materials vehicle, but no 520i Touring. To en-
sure that the latter is accurately represented, the calculated CO₂e
emissions for components like the drivetrain, wheels, seats and
so on remain unchanged, while the body values are multiplied by
a scaling factor when calculating the Touring model.
The CO₂e value for these components and materials before the
implementation of measures is initially determined using the
"LCA for Experts" database on the basis of the type and quantity
of material. The emission-reducing measures are then deducted.
The calculation of the effect is also carried out using industry av-
erage values from "LCA for Experts" for green electricity and sec-
ondary raw materials.
The reduction in CO₂e emissions compared to the BMW Group's
baseline is the result of emission-reducing measures in the sup-
ply chain that were contractually agreed with suppliers and veri-
fiably implemented during the reporting year (e.g. electricity from
renewable sources, use of recycled materials). Agreements with
suppliers of aluminium and precious metals as well as high-volt-
age storage cells resulted in particularly high reduction contribu-
tions.
Share of the reported value attributable to the supply chain
This approach gives each vehicle built during the period under
review its specific CO₂e value for supply chain emissions. The to-
tal fleet value of CO₂e supply chain emissions is calculated by
adding up the CO₂e contributions of all vehicles produced in the
reporting year.
to assess the cells. In addition to the actual assembly sites of the
battery cells, the material compositions and related production
processes, it also accounts for the unique characteristics of the
cell chemistry (anode and cathode) as well as the emissions as-
sociated with supplier-specific energy consumption.
← = Q
Other Information
Glossary and Explanation of Key Figures
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
BMW Group Report 2023 To Our Stakeholders Combined Management Report
332
Given the significant impact of battery cell production on the ve-
hicles' total CO₂e emissions, a detailed calculation model is used
The CO₂e emissions of supply chains vary across different re-
gions of the world. For this reason, we allocate the production
sites of the vehicles to one of three regions: Europe, Asia or the
USA. We then calculate the emissions for the entire vehicle sup-
ply chain using the Sphera datasets that are valid for that region.
The particularly emission-intensive components, battery cells
and catalytic converter coating are specifically calculated based
on their actual production region, regardless of the vehicle's
manufacturing location.
The methodology outlined above depends on the established
"LCA for Experts" database (previously known as "GaBi") from
Sphera to ascertain CO₂e factors for energy, raw materials and
manufacturing processes. In this process, the current datasets
are consistently used, starting with the 2023 reporting year. Ret-
rospectively from 2019 until the release of the current datasets
at the end of February 2023, data from 2019 are used to calcu-
late CO₂e emissions.
fleet was allocated the supply chain CO₂e value of the most sim-
ilar vehicle from a small selection of vehicles that already had
TÜV-validated life cycle assessments available. The reporting
metric is then obtained by adding the transport logistics CO₂e
emissions, the calculation of which is described in the following
section.
Reduction of Scope 1, 2 and 3 emissions (in line with the sci-
ence-based principles [SBTi]) to a residual level that corre-
sponds with achieving net zero emissions at global or sectoral
level in recognised 1.5°C scenarios or sectoral pathways (corre-
sponding to a maximum of 10% of the emissions of the chosen
base year). In addition, all remaining emissions are to be neutral-
ised by the net zero target date and beyond.
Information about the various BMW Group brands is available at:
+49 89 382-1 46 61
338
Quarterly Statement to 30 September 2025
5 November 2025
Half-Year Report to 30 June 2025
31 July 2025
Other Information
Glossary and Explanation of Key Figures
Remuneration Report
ir@bmwgroup.com
Responsibility Statement and Auditor's Report
Group Financial Statements
BMW Group Report 2023
To Our Stakeholders Combined Management Report
334
Basic earnings per share are calculated by dividing the earnings
attributable to the shareholders of BMW AG for ordinary and
preference shares by the average number of shares in each cat-
egory. Earnings per share of preferred stock are computed on the
basis of the number of preferred stock shares entitled to receive
a dividend in each of the relevant financial years.
Earnings per share (EPS)
-
E
A new or used vehicle will be recorded as a delivery once handed
over to the end user. End users also include leaseholders under
lease contracts with BMW Financial Services and - in the US and
Canada – dealerships when they designate a vehicle as a service
loaner or demonstrator vehicle. In the case of used vehicles, end
users may include dealerships and other third parties when they
purchase a vehicle at auction or directly from the BMW Group.
Vehicles designated for the end user which suffer a total loss in
transit are also recorded as deliveries. Deliveries may be made
by BMW AG, one of its international subsidiaries, a BMW Group
retail outlet, or independent dealerships. The vast majority of de-
liveries and hence the reporting to BMW Group of deliveries -
are made by independent dealerships. In the US and Canada,
the period start and end dates for the reporting of deliveries de-
viate immaterially from the beginning and, respectively, end of
calendar years or calendar quarters and instead follow industry-
standard reporting calendars. In the German-language version
of the BMW Group Report, the terms "Auslieferungen" (deliver-
ies) and “Absatz" (sales) are used interchangeably.
Deliveries
D
credit default insurance agreements, the party receiving the pre-
miums gives a commitment to compensate the bond creditor in
the event of default.
Financial swap agreements, under which creditors of securities
(usually bonds) pay premiums to the seller of the CDS to hedge
against the risk that the issuer of the bond will default. As with
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Fax
Telephone +49 89 382-2 53 87
INVESTOR RELATIONS
Telephone +49 89 382-0
Bayerische Motoren Werke
Aktiengesellschaft
80788 Munich
Germany
7 www.bmwgroup.com/ir
Investor Relations information is available directly at:
presse@bmwgroup.com
Email
+49 89 382-2 44 18
Responsibility Statement and Auditor's Report
Fax
7 www.bmwgroup.com
Further information about the BMW Group is available online at:
PUBLISHED BY
Contacts
THE BMW GROUP ON THE INTERNET
Telephone +49 89 382-2 45 44
BUSINESS AND FINANCE PRESS
CONTACTS
← = Q
Other Information
Remuneration Report
+49 89 382-2 41 18
Email
Other Information
← = Q
601,995
A HIGH LEVEL
601,995
601,995
601,995
579,796
2019
2020
2021
DIVIDENDS ONCE AGAIN AT
2022
PREFERRED STOCK
Low
High
Shares bought back as of reporting date in 1,000
Stock exchange price in €¹
Year-end closing price
Number of issued shares in 1,000
COMMON STOCK
The Board of Management and the Supervisory Board will pro-
pose to the Annual General Meeting that the unappropriated
profit of BMW AG amounting to € 3,802 million (2022:
€ 5,481 million) be used to pay a dividend of € 6.00 for each
share of common stock entitled to receive a dividend (2022:
€ 8.50) and a dividend of € 6.02 for each share of preferred
stock entitled to receive a dividend (2022: € 8.52) and to transfer
the remaining amount to other revenue reserves. The payout ra-
tio (unappropriated profit of BMW AG in accordance with HGB in
relation to the Group net profit attributable to shareholders of
BMW AG in accordance with IFRS) for 2023 therefore stands at
33.7% (2022: 30.6%).
2023
The BMW Group is also pursuing a consistent electrification
strategy in the premium motorcycles segment. In its centenary
year, the BMW Motorrad brand set a new milestone in the pre-
mium segment with the all-electric eParkourer CE 02 from the
Urban Mobility segment. BMW Motorrad offers a range of vehi-
cles in the Sport, Tour, Roadster, Heritage and Adventure cate-
gories. Currently, BMW motorcycles are sold by more than 1,200
dealerships and importers in over 90 countries worldwide.
7 Motorcycles segment
² S&P scale for long-term ratings: AAA to D. S&P scale for short-term ratings: A-1 to D.
Group Financial Statements Responsibility Statement and Auditor's Report
→ Customers
Point of contact for questions on policy, information
provided to political decision makers on relevant
topics for the Company
→ Political decicion makers
Dialogue with employees and managers,
employee survey, internal media
→ Employees
Dialogue, conferences and technology workshops
with investors and analysts
→ Capital market
Dialogue as part of branch initiatives,
joint events, training sessions,
presentations, supplier risk assessment
→ Suppliers
Dialogue with market and importer dealership
organisations
→ Business partners
Participation of Company experts in committees
and working groups, memberships in initiatives
and associations
social media, trade fairs, mass media
Surveys (including a corporate reputation study),
Stakeholder groups and forms of dialogue
← = Q
Other Information
← = Q
Financial market player with sustainability credentials
Regular, in-depth communication with capital market players has
always been given a high priority within the BMW Group. The
BMW Group kept investors, analysts and rating agencies up to
date again in 2023 with its regular quarterly and annual report-
ing. The BMW Group has stepped up its communication with in-
vestors who consider sustainability criteria in their investment
decisions in the past few years and now meets this group's in-
formation needs with in-person and virtual ESG conferences, in
addition to individual and group meetings. The Group's commu-
nication focused on the further development of the business
model, digitalisation and other technology trends in the automo-
tive industry, sustainability in the supply chain and the ramp-up
of electromobility. In 2023, the Group also focused on measuring
the carbon footprint of its pension plan assets in the UK and Ger-
many, and validating the data available for this purpose. The
7 TCFD Report was created for the UK BOPS* Plan, reiterating the
target to achieve carbon neutrality for the scheme's asset port-
folio by 2050.
The volume of non-liquid pension plan assets invested in our var-
ious impact funds continues to grow according to schedule, with
several new subscriptions exercised in the form of fund-based
investments. The investments made to date in this area relate
not only to climate protection, but also to other Sustainable De-
velopment Goals (SDGs) set out by the UN. Investments that
have a beneficial effect on the climate are at the forefront of the
impact funds.
Outlook
The BMW Group will continue to interact closely and construc-
tively with its stakeholders and develop existing dialogue oppor-
tunities in 2024, and will continue to maintain active dialogue
with capital market players such as investors, financial analysts
and rating agencies. As in previous years, our activities will in-
clude direct dialogue as well as participation in in-person and vir-
tual ESG conferences.
Moreover, plans are in place for the coming year to expand the
scope of recording the carbon emissions associated with those
investments, with the primary aim of reliably assessing and
transparently documenting the compatibility of our investments
with the climate goals enshrined in the Paris Agreement. To the
extent possible, our aim is to take account of non-liquid invest-
ments in the Group's reporting on sustainability, or at least for all
such investments to be reviewed from a sustainability perspec-
tive.
The Board of Management's collaboration with
stakeholders to identify and manage impacts
The Board of Management keeps up to date with stakeholder
feedback and positions through a variety of channels, for exam-
ple in regular Board meetings, in direct dialogue with stakeholder
groups (such as investors or political decision makers) and
through briefings conducted by BMW Group departments, espe-
cially prior to attending major events such as OECD conferences
or the Group's Annual General Meetings. The Chairman of the
Supervisory Board also maintains regular contact with stake-
holders. The members of the Supervisory Board attend the An-
nual General Meeting, and many of them also interact with stake-
holders as part of their other activities and mandates.
→ Networks and associations
Approach taken to engage stakeholders
*BMW Operations Pension Scheme.
34
BMW Group Report 2023
To Our Stakeholders
Dialogue with Stakeholders
Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
The BMW Group continuously communicates with a large num-
ber of different stakeholder groups at all locations and in all mar-
kets. Appropriate forms and methods of engagement are se-
lected, depending on the situation.
Remuneration Report
BMW Group
Visits to universities, lectures, discussions, dialogue
Moody's¹
& Poor's²
A2
A
P-1
A-1
stable
stable
GOOD PLACEMENT IN
SUSTAINABILITY RATINGS
The BMW Group again achieved a good ranking in prestigious
sustainability ratings in 2023, confirming its strong position in
this respect. The BMW Group has an AA rating from MSCI ESG,
a score of 24.8 from Sustainalytics, and a C+ rating and Prime
status from ISS ESG.
BMW AG continues to have one of the best credit ratings of any
automobile manufacturer. In 2023, the rating agencies Moody's
and Standard & Poor's (S&P) both confirmed BMW AG's high in-
vestment-grade credit ratings within a challenging market envi-
ronment. Moody's long-term rating remains at "A2 with stable
outlook", while the short-term rating is unchanged at "P-1".
S&P's long-term rating remains at "A with stable outlook", with a
short-term rating of "A-1".
The credit ratings reflect BMW's continued strong operating per-
formance. The credit rating is also backed up by the Company's
solid capital structure, balanced financial policy and solid liquidity
position. Moreover, the increasing proportion of Group sales of
all-electric vehicles is seen as a positive factor. With this profile,
the rating agencies view BMW AG as well prepared to master the
numerous challenges arising in conjunction with the transfor-
mation of the automotive industry and in terms of future macro-
economic developments (including volatile prices, supply bottle-
necks, geopolitical upheavals, inflation and rising interest rates).
Company rating
Long-term debt
Short-term debt
1 Moody's scale for long-term ratings: Aaa to C. Moody's scale for short-term ratings: P-1 (Prime-
1) to NP (Not Prime).
4,218
36
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
BMW Group and Capital Markets
Standard
Outlook
These above-average credit ratings are testimony to BMW AG's
excellent creditworthiness. Accordingly, BMW AG enjoys good
access to international capital markets and benefits from attrac-
tive refinancing conditions.
RATINGS REMAIN AT HIGH
LEVEL
events with students
→ Science
Dialogue as part of press tours, press releases,
informational events on new products, test
drives, trade shows
→ Media
Neighbourhood talks, plant visits, press
conferences
→ Local stakeholders
One-to-one meetings / dialogues, answering
queries
in dialogue
→ Civil society and NGOs
35
BMW Group Report 2023
To Our Stakeholders
Combined Management Report Group Financial Statements
BMW Group and Capital Markets
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
BMW GROUP AND CAPITAL MARKETS
7 GRI Index: 2-29
15,312
8.52
83.38
3
HY73 EZC
1 Battery Electric Vehicle Electrified Vehicles.
2 Plug-in Hybrid Electric Vehicle Electrified Vehicles.
37 Consumption and Carbon Disclosures.
39
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Overview of the BMW Group
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
The MINI brand stands for maximum driving pleasure in the pre-
mium compact segment. The all-electric MINI Cooper SE* re-
mained the brand's best-selling model in the year under report.
When it unveiled the "New MINI Family" in the autumn of 2023,
the brand heralded the start of a new all-electric future focused
on the digital experience, innovative technologies and the unmis-
takable driving pleasure that comes from driving a MINI. In spring
2024, the MINI Aceman will celebrate its world premiere as the
first all-electric crossover model.
The Rolls-Royce brand is steeped in tradition and offers automo-
biles in the ultra-luxury class, with a focus on exclusive service
and meeting bespoke customer specifications. The luxury brand
is en route to the all-electric age after launching its first BEV
model, the Rolls-Royce Spectre*, at the end of 2023.
The global sales network of the BMW Group's automobile busi-
ness currently comprises more than 3,500 BMW, 1,600 MINI
and 147 Rolls-Royce dealerships. Automotive segment
40
40
* Consumption and Carbon Disclosures.
BMW Group's largest automobile and motorcycle markets are lo-
cated in Europe, particularly in Germany and the United Kingdom
(UK), as well as in the USA and China.
basis. The
worldwide
14 496E
The BMW Group operates on a
LOCATIONS
R
Operating under the brand name Alphabet, the BMW Group is a
partner in the international multi-brand fleet business. Its ser-
vices consist mostly of vehicle fleet financing for large customers
and comprehensive management services for corporate car
fleets, including support of customers' sustainable and environ-
mentally friendly fleet management. Financial Services segment
The BMW Group is a leading provider of financial services in the
automotive sector. It offers these services in more than 50 coun-
tries worldwide via subsidiaries and cooperation arrangements
with local financial service providers and importers. The Financial
Services segment's main line of business comprises credit fi-
nancing and the leasing of BMW Group brand automobiles and
motorcycles to retail customers.
Financial Services segment
Motorcycles segment
Global overview
BMW Group Report 2023
B.CH264SE
class.
122 Corporate Citizenship
123 Outlook
126 Appropriateness and Effectiveness of the Internal Control System
and Risk Management System
127 Risks and Opportunities
127 Risk and Opportunity Management
130 Material Short-term Risks and Opportunities
137 Climate-related Risks and Opportunities
141 Summary and Outlook
142 Compliance and Human Rights
146 Internal Control System
147 Disclosures Relevant for Takeovers and Explanatory Comments
02
COMBINED
MANAGEMENT REPORT
38
BMW Group Report 2023
To Our Stakeholders
With its automobile brands BMW, MINI and Rolls-Royce, the
BMW Group caters to a wide range of customer requirements.
The essence of the BMW brand lies in the seamless interplay be-
tween components, which provide the distinctive driving dynam-
ics synonymous with the brand. An extensive and attractive
product range with a variety of drivetrains - from purely electric
drives (BEV¹) and modern plug-in hybrids (PHEV²) to highly effi-
cient combustion engines - reflects BMW's technology-oriented
approach. The product range includes automobiles ranging from
the premium compact class to the luxury class. The range of ve-
hicles in the various classes is rounded out by the innovative
high-performance automobiles in BMW M's high-performance
Automotive segment
At 31 December 2023, the BMW Group employed a workforce
of 154,950 people worldwide.
Bayerische Motoren Werke Aktiengesellschaft (BMW AG), based
in Munich, Germany, is the parent company of the BMW Group.
The BMW Group comprises BMW AG itself and all subsidiaries
over which BMW AG has either direct or indirect control List of
Investments. The BMW Group is subdivided into the 7 Automotive,
Motorcycles and Financial Services segments and the Other Entities
segment. Presentation of segments BMW AG assumes central re-
sponsibility for the management of the Automotive, Motorcycles
and Financial Services operating segments.
Electric, digital and circular - for the BMW Group, these are the
keys to individual mobility with a clear focus on sustainability.
The BMW Group is leading the way in shaping tomorrow's mo-
bility with its brands' innovative products. The Vision Vehicle
7 BMW VISION Neue Klasse marks the first time that all three areas -
electromobility, digitalisation and circularity - have been brought
together and provides a look ahead at the completely new model
generation of the NEUE KLASSE.
The BMW Group develops and manufactures innovative pre-
mium automobiles and motorcycles. Its BMW, MINI, Rolls-Royce
and BMW Motorrad brands are among the best-known in the
world. The BMW Group occupies leading market positions in
both the premium segment and the financial services sector.
C4420
SEGMENTS
OVERVIEW OF THE BMW GROUP
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Overview of the BMW Group
ORGANISATION AND
BUSINESS MODEL
To Our Stakeholders
Combined Management Report
Overview of the BMW Group
Group Financial Statements Responsibility Statement and Auditor's Report
41
Sales subsidiaries and Financial
Services locations worldwide
32
Production and assembly plants
ANO
17
Countries with research
and development locations
Π
◉
ㅁ
Production outside Europe
BMW Group plant Araquari, Brazil
BMW Group plant Chennai, India
BMW Group plant Manaus, Brazil
BMW Group plant Rayong, Thailand
BMW Group plant Rosslyn, South Africa
BMW Group plant San Luis Potosí, Mexico
BMW Group plant Spartanburg, USA
BMW Brilliance Automotive, China (3 plants)
Spotlight Automotive, China (Joint operation)
Partner plants outside Europe
Partner plant, Chongqing, China
Partner plant, Chu Lai, Vietnam
Partner plant, Hosur, India
Partner plant, Jakarta, Indonesia
Partner plant, Cairo, Egypt
BMW Group IT Technology Office, Nanjing, China
BMW Group IT Technology Office, Singapore
BMW Group IT DevOps Hub, Chennai, India
BMW Group IT DevOps Hub, Rosslyn, South Africa
BMW do Brasil Entwicklung, Araquari, Brazil
BMW Group Technology Office Tel Aviv, Tel Aviv, Israel
BMW Group R&D Center Seoul, Seoul, South Korea
BMW Group Prototype Testing, Rosslyn, South Africa
BMW Brilliance Automotive, Shenyang, China
19
BMW Group IT Technology Office, Greenville, USA
BMW Group Development USA, Woodcliff Lake, USA
BMW Group Development and Technology Office, Tokyo, Japan
BMW Group Development China, Beijing, China
Brazil
BMW Group Design, Technology and ConnectedDrive Lab,
Shanghai, China
BMW Group Technology Office USA, Mountain View, USA
BMW Group Designworks, Newbury Park, USA
= Q
↑
Research and Development outside Europe
Partner plant, Kulim, Malaysia
BMW Group Engineering and Emission Test Center, Oxnard, USA
6
13 Japan
United Arab Emirates
15 Malaysia
South Africa
8
Financial Services
■
* Sales locations only.
1
14 Thailand
7
Sales subsidiaries and
.
LOCATIONS WORLDWIDE
Other Information
Remuneration Report
Argentina*
Comments on the Financial Statements of BMW AG
Headquarters
Russia
5
19 New Zealand
18 Australia
17 Indonesia*
12 South Korea
Mexico
9
4
USA
3
10 India
Canada
2
16 Singapore*
11 China
74
Course of Business and Segments
66
67.85
58.85
51.60
32.50
47.54
KEY DATA PER SHARE IN €
Dividend
Common stock
6.00²
8.50
5.80
1.90
2.50
Preferred stock
6.02²
Remuneration Report
5.82
7.49
5.75
18.79
27.33
17.69
Earnings per share of preferred stock"
57.60
7.47
18.77
27.31
17.67
Earnings per share of common stock³
2.50
1.92
5.73
82.00
85.20
55.05
89.95
58.70
37.66
68.34
69.13
85.80
105.00
77.75
95.89
99.32
112.90
73.14
72.23
88.49
76.68
Free cash flow Automotive segments
80.15
58,920
55.20
73.30
79.55
Low
High
Year-end closing price
Number of issued shares in 1,000
Stock exchange price in €¹
943
Shares bought back as of reporting date in 1,000
56,867
57,689
59,404
60,844
1,449
100.78
10.96
9.61
Locations
95
Product Quality and Safety
42
The BMW Group Strategy
97
Carbon Emissions
42
Environmental Analysis
43
Cornerstones of the Strategy
47
Performance Indicators and Performance Management
52
Financial Performance
52
General and Sector-specific Environment
120 Diversity, Equal Opportunity and Inclusion
118 Health and Performance
115 Employer Attractiveness and Employee Development
115 Employees and Society
111 Purchasing and Supplier Network
107 Circular Economy, Resource Efficiency and Renewable Energy
39
104 Production Network
100 Electromobility
57 Financial Position
Comparison of Forecasts with Actual Outcomes
56
66
55 Overall Assessment by Management of the Financial Year
104 Production and Supplier Network
Innovation, Digitalisation and Customer Orientation
90
Segments
6 From the 2022 financial year, the equity of BMW AG shareholders will be used for the calculation.
5 The key figure is calculated without the repurchased shares.
4 Stock weighted according to dividend entitlements.
3 Weighted average number of shares for the year.
2 Proposed by management.
1 Xetra closing prices.
52
90.92
113.60
134.85
141.42
Equity 5,6
3.90
5.15
93.26
17.14
37
To Our Stakeholders Combined Management Report
38
Products
90
Organisation and Business Model
38
EU Taxonomy
BMW Group Report 2023
78
38
←=Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Overview of the BMW Group
Group Financial Statements Responsibility Statement and Auditor's Report
BMW AG Stock
To Our Stakeholders
Dialogue with Stakeholders
ALTANA AG****, Deputy Chairwoman
SGL Carbon SE, Chairwoman (until 9 May 2023)
SprinD GmbH*
UnternehmerTUM GmbH*, Chairwoman
DR DOMINIQUE MOHABEER¹ (b. 1963)
Member Since 2012, elected until the ACM 2024
ANKE SCHÄFERKORDT (b. 1962)
Member since 2020, elected until the AGM 2025
Member of Supervisory Boards
Mandates
Serviceplan Group Management SE*
Wayfair Inc.
Mandates
-
Member since 2022, appointed until the AGM 2024
Managing Director and First Representative
of IG Metall's Munich Office
Mandates
KraussMaffei Group GmbH*, Deputy Chairwoman
MAN Truck & Bus SE*
Note: Dr hc Klatten indirectly holds all shares in ALTANA AG and a significant non-controlling inter-
est in SGL Carbon SE; she is the sole shareholder of UnternehmerTUM GmbH. The mandates at
SprinD GmbH and UnternehmerTUM GmbH are primarily an expression of her corporate citizenship.
JENS KÖHLER1 (b. 1964)
Member since 2021, appointed until the AGM 2024
Chairman of the BMW AG Works Council Leipzig
PROF DR DR HC CHRISTOPH M. SCHMIDT (b. 1962)
Member since 2021, elected until the AGM 2025
President of RWI - Leibniz-Institute of Economic Research
Essen, University Professor
Mandates
SIBYLLE WANKEL² (b. 1964)
Basalt-Actien-Gesellschaft*
Member since 1997, elected until the AGM 2024
Entrepreneur
Oracle Corp.
Combined Management Report
31
BMW Group Report 2023
To Our Stakeholders
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
DR HC SUSANNE KLATTEN (b. 1962)
JOHANN HORN² (b. 1958)
Mandates
Siemens Healthcare GmbH*
ANDRÉ MANDL¹ (b. 1984)
Member since 2022, appointed until the AGM 2024
Chairman of the BMW AG Works Council Regensburg/
Wackersdorf
DR VISHAL SIKKA (b. 1967)
Member since 2019, elected until the AGM 2024
CEO and Founder, Vianai Systems, Inc.*
Mandates
GSK plc.
Member since 2021, appointed until the AGM 2024
Union Secretary
Thyssen Vermögensverwaltung GmbH*
Combined Management Report
Composition of the Board of Management and Supervisory Board
Member since 2022, appointed until the AGM 2024
Head of Corporate Quality at BMW AG
Emissions limits with a focus on technological diversity in
terms of drivetrain technologies and vehicle concepts
Hydrogen as a potential energy storage for electric
drivetrain systems
Circular design and use of secondary materials (particularly
in relation to battery recycling)
Active crisis management regarding the geopolitical
situation and energy supply
Supply of critical raw materials
Compliance with statutory due diligence obligations in
supply chains, particularly environmental and social
standards and respect for human rights, especially
regarding the procurement of raw materials for
electromobility applications
Sustainable financing, EU taxonomy and sustainability
reporting standards, greenwashing
Social responsibility for employees
The Paris Climate Agreement and climate neutrality goal of
the BMW Group
Increased transparency in the sustainability indicators
provided in product information
BMW Group Xchange
The BMW Group XChange encompasses the well-established
forms of events organised by the Group, such as the BMW Group
Dialogues and the rad°hub, providing the appropriate platforms
to encourage dialogue with a variety of target groups. The for-
mats selected usually take place several times a year. The results
of these stakeholder dialogues are documented and incorpo-
rated in the Group's strategic considerations. GRI Index: 2-12
Participation in public policy development and work in
associations
The BMW Group maintains an active, open and transparent dia-
logue with decision makers and representatives of politics, trade
unions, associations and non-governmental organisations
(NGOs), with a view to playing a constructive and transparent
role in helping to shape the general political framework to the ex-
tent that it concerns the Group's business activities. The
BMW Group is a member of numerous associations in various
countries. As a rule, membership and commitment are voluntary.
In certain cases, however, participation may also be based on
statutory requirements.
The BMW Group's involvement in associations ranges from
board memberships in association bodies to active participation
in working groups as well as simple observer status. Our goal is
to coordinate our approach with the respective associations on
positions regarding relevant strategic issues. If the BMW Group
identifies discrepancies between association and Company po-
sitions, the Company works with the association concerned with
the aim of bringing the positions closer together. The BMW
Group sees its role as sharing its corporate opinions as part of
the associations' policy-forming process. In this way, we are able
to participate in discussions on key strategic issues such as cli-
mate protection, human rights, the circular economy, decarboni-
sation with a view to achieving the Paris climate targets, and
transparent supply chain management.
33
BMW Group Report 2023
GERHARD KURZ³ (b. 1963)
Establishment of a new site in Germany to assemble high-
voltage batteries
-
A comprehensive overview of the BMW Group's key political po-
sitions and activities can be found at 7 Advocacy, a new section of
the website made available in May 2023 which goes beyond and
replaces the previous Climate Commitment Report.
Key topics in 2023
The BMW Group's interaction with stakeholders includes topics
brought to its attention from outside the Group as well as those
in which it proactively engages in dialogue. This combination re-
sults in a comprehensive spectrum of topics:
2 Union representative.
Not listed on the stock exchange.
BMW Group mandate.
Group mandate (other).
- Memberships on other mandatory supervisory boards.
- Memberships on comparable boards in Germany and abroad.
32
32
Executive employee of the enterprise.
To Our Stakeholders
Dialogue with Stakeholders
The BMW Group operates within a highly interconnected, com-
plex world. Its business activities impact the environment in
which it operates, and can have both a direct and an indirect
bearing on the interests of a wide variety of stakeholders. Con-
versely, societal trends and developments can influence many
aspects of the Group's business activities. Against this backdrop,
the BMW Group maintains a continuous dialogue with its stake-
holders worldwide. GRI Index: 2-29
Stakeholder engagement
BMW Group Report 2023
DIALOGUE WITH STAKEHOLDERS
Employee of the enterprise.
Group Financial Statements Responsibility Statement and Auditor's Report
Other Information
Remuneration Report
Combined Management Report
← = Q
Return on
capital
BMW Group - Value drivers
The BMW Group's performance management system follows a
value-based approach that focuses on profitability, consistent
Company growth, value enhancement for capital providers, sus-
tainability, climate change mitigation and job security. Capital is
considered to be employed profitably when the amount of profit
generated on a sustained basis exceeds the cost of equity and
debt capital. This strategy also secures the desired degree of cor-
porate autonomy in the long term.
Performance management
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Motorcycles segment
To Our Stakeholders
BMW Group Report 2023
46
Return on equity (RoE; in %)
Financial Services segment
Return on capital employed (RoCE; in %)
Deliveries (in units)
Value added
Profit before financial result as a percentage of segment
revenues (EBIT margin; in %)
Combined Management Report
The BMW Group Strategy
48
average cost
Cost of capital
BMW Group Report 2023
Carbon emissions of the EU new vehicle fleet (in g/km)
Carbon emissions per vehicle produced (in tonnes)
49
49
An integrated approach to target management ensures that the
BMW Group's vehicle projects make a positive contribution to-
wards achieving the sustainability targets that have been set.
Furthermore, the BMW Group will consistently increase its use
of secondary raw materials. The Group intends to already have
made significant progress by 2025 with the introduction of the
first X model of the NEUE KLASSE. Non-financial performance
indicators such as carbon emissions and, in future, secondary
raw materials quotas are therefore key performance indicators
for all new vehicle projects. It is also ensured that financial as-
pects are taken into consideration and the most effective
measures are prioritised for implementation in all areas. The
overall result is a cohesive management model across all as-
pects of the business. GRI Index: 2-13
The BMW Group has set itself the target of decarbonising its
vehicle fleet by at least 40% over the entire life cycle by 2030,
based on the reference year 2019. In this context, specific tar-
gets have been set for the scopes of the vehicle's use phase,
production and supply chain (7 Position, ▾ Carbon Emissions). This
entails setting specific carbon targets for each vehicle project,
managing them through digital processes and tracking their at-
tainment.
The BMW Group's long-term corporate strategy is determined
by the Board of Management. Responsibility for implementing
the Group's sustainability goals also lies with the full Board. Sig-
nificant decisions are therefore evaluated from the point of view
of sustainability. This ensures that sustainability issues are sys-
tematically integrated in decision-making processes and to
compensation at top management levels. As part of the proce-
dures for managing sustainability on an integrated basis at cor-
porate level, a Group target system has been created, which ap-
plies to specific departments.
Managing sustainability
(ROCE oder
RoE)
Revenues
of capital
Weighted
Capital
employed
Profit
This aspiration to add value is measured at both Group and seg-
ment level by means of the key performance indicators. The link
between value added and the relevant value drivers is presented
in a simplified form below.
The BMW Group's performance management system is based
on a multilayered structure. Operational performance is man-
aged primarily at segment level. In order to influence long-term
corporate performance, additional performance indicators are
taken into account within the management system at Group
level. In this context, the value added serves as one of several
indicators to measure the contribution made to enterprise value
during the financial year.
Capital
turnover
Return on
sales
Expense
Share of all-electric automobiles in deliveries
(in %)
47
Profit before financial result as a percentage of segment
revenues (EBIT margin; in %)
BMW Group employees not only work closely together within the
Company, but also with external partners. The stable relation-
ships that have grown in our partner networks over time are
based on the same values as those at the BMW Group. They al-
low us to maximise our effectiveness and work together to lead
the Company to success. Experiences from the crisis years have
further strengthened these relationships, as exemplified by our
supply chains. Purchasing and Supplier Network
of women in management positions at the BMW Group to 22%
by 2025. Performance Indicators and Performance Management
The BMW Group constantly strives for the best results, support-
ing its employees with the discovery and development of their
potential so they are able to remain productive. We support and
challenge strong teams with complementary strengths who work
together to achieve the best solutions in a complex environment.
We see diversity as an important element of our competitiveness.
7 Employees and Society The diversity metric defines the share of
women in management positions as a key performance indicator
and a strategic target variable. The aim is to increase the share
How does the BMW Group achieve this?
Collaboration -
DO DO
8
Do
Together with our cooperation partners, we realise potential by
accessing more expertise and improving our profitability and
technology footprint. In addition to the collaboration with Qual-
comm in the advancement of assisted and automated driving,
the development partnership between the BMW Group and Solid
Power, for instance, presents advantages for both companies.
Examples include our Cell Manufacturing Competence Centre
(CMCC) in Parsdorf near Munich, where our expertise in design-
ing and manufacturing solid-state cells is continuously expanded
through a dedicated prototype line, bringing significant value to
our partnership with Solid Power. We continuously expand our
collaborations to unlock additional potential for value creation in
the Group. Innovation, Digitalisation and Customer Orientation
Circularity is a key focus for the BMW Group in the drive towards
more resource-efficient mobility. The concept revolves around
recycling materials to the fullest extent, ensuring that resources
are utilised sustainably and retain their value over time. This ap-
proach opens up a range of opportunities across the entire value
chain. Reusing valuable resources reduces our reliance on pri-
mary raw materials and their fluctuating prices. Furthermore, the
use of high-quality secondary materials significantly reduces the
carbon footprint of our vehicles. Circular Economy, Resource Efficiency
and Renewable Energy. We aim to progress gradually towards a cir-
cular economy, from designing for circularity through to increas-
ing the use of secondary materials for parts and components and
ultimately advancing to the recycling of end-of-life vehicles.
The trading partners will be closely involved in the implementa-
tion. The new sales structure offers an attractive and sustainable
business model for these partners, and they will continue to be
the face for customers in the future, where they can focus on
providing the best advice and support. At the same time, we aim
to achieve consistent prices across each sales channel.
our
A central aspect of the revamped sales structure is the transition
to direct sales. After the pilot market in South Africa, MINI was
the first Group brand to implement the new sales model in China
in March 2023, followed by Europe in January 2024 with Italy,
Poland and Sweden. The remaining European countries will
transition over the course of 2024 and 2025 and the BMW brand
will follow suit in Europe in 2026. Going forward, our existing
trading partners will continue in their roles as active commercial
intermediaries between the BMW Group and
customers.
The BMW Group is decisively and consistently driving forward
with its online sale of vehicles. Customers are free to choose
whether they would like to order their vehicle from agents or
online. They also have the option to seamlessly transition be-
tween both worlds.
The BMW Group is making customer experience the focus of all
its marketing and sales activities. In an increasingly digital envi-
ronment with changing customer needs, the Company relies on
a future-oriented sales structure with a focus on the digitalisation
of the customer interface and direct customer access. The aim is
to offer the industry's best premium customer experience. In this
context, the My BMW App and MINI App play a significant role
with over 12 million users (as at December 2023). More than
three million customers (as at December 2023) access the apps
every day. Using their smartphones, they interact with their BMW
or MINI vehicles, the BMW Group itself and the BMW and MINI
dealerships, and also receive personalised offers. The relation-
ship with the customer thus becomes even closer.
← = Q
Other Information
To Our Stakeholders
By enabling smooth transitions between physical and digital
channels and launching direct sales, the BMW Group is improv-
ing direct customer connections - an essential step for providing
the best customer experience Automotive segment. In the Finan-
cial Services segment, we are also continually expanding our ser-
vices to include digital and modular services. The aim is for our
products to be accessible to all customer groups across all chan-
nels within our strategic orientation in the Financial Services seg-
ment. Financial Services segment. This ensures that our customers
receive personalised offers designed to meet their specific
needs.
Return on capital employed (RoCE; in %)
Deliveries (in units)
The BMW Group invests in the development of employee skills,
with the view that continuous training guarantees jobs world-
wide. Employees and Society The restructuring of our Munich head-
quarters is an example of this commitment. The complete re-
structuring of an entire plant, including combustion engine vehi-
cle production, to 100% electromobility, will be implemented by
2027 while production is ongoing. The BMW Group is already
designing and producing electrified drive components for its ex-
isting electric vehicles at German facilities in Munich, Dingolfing,
Leipzig and Regensburg, as well as in China at the Shenyang lo-
cation. For the next generation of high-voltage batteries, new as-
sembly sites will be established in Debrecen (Hungary), San Luis
Potosí (Mexico), Woodruff near Spartanburg (USA) and in Ger-
many at the planned new facility in Irlbach-Straßkirchen, accom-
panied by the development of corresponding expertise. In this
To Our Stakeholders
Number of employees at the end of the year
Share of women in management positions (in %)
Automotive segment
Profit before tax (EBT)
-
Group
Once approved by the Board of Management and the Supervi-
sory Board, the target amounts decided upon within the strategic
target system become the basis of planning for the current re-
porting year and for the target agreements with BMW Group
managers. Remuneration Report. The following summarises the
key performance indicators defined in DRS 20, which also form
the basis for performance management in the BMW Group.
Long-range corporate planning for the Company as a whole and
its segments is geared towards the structure of the BMW Group
target system. In this way, the targets set out in the planning are
regularly compared with the BMW Group's strategic goals.
The BMW Group's strategic targets are derived from the findings
of the Environmental analysis in an ongoing strategic process and
subsequently translated into a system for measuring perfor-
mance ▾ Cornerstones of the strategy. The resulting target system is
therefore a key instrument for anchoring strategy throughout the
Company. For corporate management purposes, the strategic
targets are backed by effective performance indicators.
MANAGEMENT
BMW Group Report 2023
AND PERFORMANCE
Production of vehicles for the NEUE KLASSE will get underway
in 2025 at the newly constructed BMW Group plant in Debrecen
and then be expanded to other locations. Production Network
Beginning in 2025, we will take the next step in our transfor-
mation process with the NEUE KLASSE, which is expected to set
standards in electrification, digitalisation and circularity. The con-
cept vehicle, unveiled at the IAA Mobility 2023 International Mo-
tor Show in Munich, offered a glimpse into the future of the NEUE
KLASSE. The NEUE KLASSE is distinguished by its new cluster
architecture (NCAR), which is entirely focused on BEVS (battery
electric vehicles). The sixth-generation BMW e-drive technology
will significantly improve driving pleasure and efficiency. In the
interior, the next generation of BMW iDrive delivers a completely
fresh digital user experience, seamlessly blending real and virtual
worlds. Key components include BMW Panoramic Vision, a rev-
olutionary new head-up technology, the new BMW 3D Head-up
Display for presenting 3D animated and highly accurate driving
information, the multifunctional steering wheel for personalised
control of display content and the central display with intuitive
touch functionality. Another aim of the NEUE KLASSE is to
achieve a new level of sustainability across the entire vehicle life
cycle. To accomplish this, the BMW Group is increasingly inte-
grating secondary materials and implementing resource-efficient
production methods. Circular Economy, Resource Efficiency and
Renewable Energies
context, the BMW Group is making considerable investments to
also drive this continuous transformation in all aspects of sus-
tainability (ESG criteria). Production and Supplier Network,
7 Employees and Society
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
The BMW Group Strategy
PERFORMANCE INDICATORS
Combined Management Report
The BMW Group Strategy
Average capital employed
in € million
Responsibility Statement and Auditor's Report
2022
2023
2022
257
2023
259
Average
equity capital
tax
Profit before
RoE Financial Services =
2023
Financial Services
The performance of the Financial Services segment is measured
on the basis of the return on equity (ROE), a key performance in-
dicator commonly used in the banking sector. Within the BMW
Group, RoE is defined as segment profit/loss before tax, divided
by the average amount of equity capital in the Financial Services
segment. The target is a return on equity of at least 14%.
Financial Services segment
The main value drivers are the deliveries and the operating return
on sales (EBIT margin: segment profit before financial result as
a percentage of segment revenues) as the key performance in-
dicator for segment profitability.
The Motorcycles segment is largely managed according to the
same logic applied to the Automotive segment. The principal key
performance indicator is the return on capital employed (ROCE).
The strategic RoCE target set for the Motorcycles segment is
18%.
Motorcycles segment
in %
Return on capital employed
Remuneration Report
Motorcycles
in € million
2022
1,031
17.9
17.2
17,891
2022
2023
2022
2023
17,176
2,962
1,171
2022
in %
Return on equity
Average equity
capital in € million
in € million
Profit before tax
Return on equity (Financial Services segment)
24.9
22.1
2023
Group Financial Statements
Profit before financial result
= Q
Average capital employed
in € million
in € million
Profit before financial result
Average
capital employed
Profit before
Financial result
RoCE Automotive
or Motorcycles
Furthermore, the Automotive segment manages its compliance
with fleet carbon emissions requirements in regulated markets.
This also includes the share of all-electric automobiles in deliver-
ies reported since the 2023 financial year. The proportion of
electrified automobiles, including PHEV models, was reported as
a performance indicator until 2022. Performance indicators As
compliance with regulatory requirements is a significant factor in
the BMW Group's success, business decisions relating to vehicle
projects also take targets for fleet carbon emissions into
account. Managing sustainability
Due to the special significance of ROCE for the BMW Group, the
Automotive segment is also managed on the basis of a number
of additional key performance indicators that have a significant
impact on ROCE and hence on segment performance. These
value drivers include deliveries and the operating return on sales
(EBIT margin: segment profit before financial result as a percent-
age of segment revenues) as a key figure for profitability in the
segment.
Return on capital employed
The strategic target for RoCE is 18%.
The capital employed items taken into account reflect the focus
of operational segment management. Capital employed is
The most comprehensive key performance indicator used for the
Automotive segment is RoCE, which provides information on the
profitability of capital employed and business operations. Value
driver analyses are used to interpret the causes of a change in
ROCE and derive suitable measures to influence its development.
Automotive segment
Return on capital employed (ROCE) is used for the Automotive
and Motorcycles segments and return on equity (ROE) for the Fi-
nancial Services segment. These indicators combine a wide
range of relevant economic information, such as profitability (re-
turn on sales) and capital efficiency (capital turnover) to measure
segment performance and the development of enterprise value.
Managing operational performance at segment level
At segment level, operational performance is managed using an
aggregated approach based on returns on capital. Depending on
the business model, the segments are measured on the basis of
return on total capital or return on equity.
← = Q
Other Information
Remuneration Report
calculated as the sum of intangible assets, property, plant and
equipment and net working capital, the latter comprising inven-
tories and trade receivables less trade payables. The amount of
capital employed increased in light of the full consolidation of
BMW Brilliance in the BMW Group Financial Statements as at
11 February 2022. The increase arose primarily due to the take-
over of property, plant and equipment and intangible assets, as
well as the capitalisation of reacquired rights in conjunction with
the purchase price allocation. The ROCE will be impacted tempo-
rarily by the higher capital base as well as the related amortisa-
tion expense expected to be recorded.
Return on capital employed (Motorcycles segment)
in %
Automotive
↑
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
The BMW Group Strategy
To Our Stakeholders
BMW Group Report 2023
50
Return on capital employed (Automotive segment)
18.1
58,728
2022
2023
2022
2023
64,412
2022
10,635
12,981
2023
20.2
Group Financial Statements Responsibility Statement and Auditor's Report
3,205
BMW Group Report 2023 To Our Stakeholders
BMW Group Diesel Competence Center, Steyr, Austria
Critical TechWorks S.A., Porto/Lisbon, Portugal
BMW Group Lightweight Construction and Technology Center,
Landshut, Germany
BMW Group Designworks, Munich, Germany
BMW Group Autonomous Driving Campus, Unterschleißheim,
Germany
BMW Car IT, Munich, Germany
BMW Group Research and Innovation Centre (FIZ), Munich,
Germany
Research and Development in Europe
Partner plant, Graz, Austria (contract manufacturing)
BMW France, S. A. S., Miramas, France
Rolls-Royce Motor Cars Ltd., Goodwood, UK
BMW Group Vehicle Testing, Arjeplog, Sweden
BMW Group Vehicle Testing, Granada, Spain
BMW Group Vehicle Testing, Sokolov, Czech Republic
Partner plant, Born, the Netherlands (contract manufacturing)
Partner plants in Europe
◉
Rolls-Royce Manufacturing Plant, Goodwood, UK
BMW Group plant Swindon, UK
BMW Group plant Berlin
BMW Group plant Dingolfing
BMW Group plant Eisenach
BMW Group plant Landshut
BMW Group plant Leipzig
BMW Group plant Munich
BMW Group plant Regensburg
BMW Group plant Wackersdorf
BMW Group plant Steyr, Austria
BMW Group plant Hams Hall, UK
BMW Group plant Oxford, UK
Production in Europe
15
UK
10
7
↑
42
ENVIRONMENTAL ANALYSIS
The strategy is integrated into annually revised, longer-range
corporate planning using a closed loop-based planning and
management system. Its implementation is monitored by a tar-
get system that is comprised of the aspects of finance, custom-
ers, processes, learning and development. Performance Indicators
and Performance Management
The strategy process allows plans to be drawn up for different
scenarios to account for increasingly volatile and challenging en-
vironmental conditions, thereby ensuring flexibility and respon-
siveness for the BMW Group. The BMW Group's strategy is
based on fundamental values such as the integrity of our
actions. Compliance and Human Rights
The corporate strategy and strategic targets of the BMW Group
form the starting point for the departments to define concrete ap-
proaches and implementation measures. This process is based
on strategic fields of action and key success factors.
For the BMW Group, the ongoing development of our corporate
strategy is a continuous process that begins with environmental
analysis. Trends with significant implications for the automotive
industry are analysed and evaluated and the underlying prem-
ises are scrutinised. Taking into account these influencing fac-
tors, characterised by their in parts rapid rate of change, we con-
tinually refine our corporate strategy and adjust our strategic ob-
jectives accordingly.
THE BMW GROUP STRATEGY
Performance Indicators and Performance
Management
47
= Q
Cornerstones of the Strategy
42 Environmental Analysis
THE BMW GROUP STRATEGY
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
The BMW Group Strategy
BMW Group Report 2023 To Our Stakeholders
43
A company's success depends to a large extent on its ability to
recognise changes in its environment early on, plan for different
scenarios, effectively manage risks and take advantage of op-
portunities that may arise from such changes. Risks and
Opportunities To this end, we continuously monitor the business
environment in our key regions, using available data to analyse
the trends and developments that could affect our business in
the future. In 2023, we undertook an extensive update and re-
view of our environmental analysis, significantly broadening the
scope of subject areas considered. Regular 7 Dialogue with
Stakeholders within the scope of the established BMW Group
XChange formats completes the picture from the analysis of ex-
ternal and environmental factors.
23 Greece
The Netherlands
9
Financial Services
■
* Sales locations only.
16 Czech Republic
Ireland
8
Sales subsidiaries and
Belgium/Luxembourg
.
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Overview of the BMW Group
To Our Stakeholders
BMW Group Report 2023
41
Combined Management Report
The BMW Group Strategy
LOCATIONS IN EUROPE
15 Portugal
17 Poland
Germany
6
22 Bulgaria*
14 Spain
Finland*
5
13 Slovenia*
Sweden
4
1
20 Hungary*
Denmark
3
19 Slovakia
18 Austria
11 Switzerland
10 France
Norway
2
12 Italy
Alongside the current development directions, certain trends are
gaining momentum, notably within digital technologies and the
political landscape. The most significant trends set to have a
long-term effect on the BMW Group's business model are clas-
sified according to their impact on society, technology, business,
environment and politics.
21 Romania*
Individual mobility remains a fundamental human need, though
vehicle ownership continues to depend to a large extent on in-
come, household size and location. The coronavirus pandemic
has not had any significant or lasting effects on mobility behav-
iour in general. On-demand mobility (ODM) services, especially
in urban areas, remain a supplementary option. Fuelled by the
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
The BMW Group Strategy
To Our Stakeholders
BMW Group Report 2023
45
* For the sake of simplicity, this figure has been rounded. The target validated under SBTi is 22%.
The BMW Group is actively working on numerous projects and
initiatives to improve the framework conditions for electromobil-
ity, including the expansion of charging infrastructure on a broad
basis. The ambitious goals of the Paris Climate Agreement are
designed to tackle climate change in the transport sector, requir-
ing a combination of modern drive technologies that are closely
aligned with customer needs and different mobility requirements
around the world. In addition to all-electric models, plug-in hy-
brids and modern combustion engine technology also make an
important contribution to the reduction of global carbon emis-
sions. The BMW Group is also forging ahead with its work with
hydrogen. Products
Other Information
* Performance management parameters such as Carbon Emissions over
the entire product life cycle are important Performance indicators
during the development phase of our vehicle projects. The Board
of Management receives and discusses a status report on sus-
tainability every quarter and derives appropriate measures as re-
quired.
An average of at least 20%* carbon reduction in the supply
chain (Scope 3 upstream) per vehicle produced Carbon
emissions in the supply chain
Carbon reduction during the vehicle's use phase (Scope 3
downstream) by an average of at least 50% per kilometre
driven. Increased efficiency in our electrified models and
the new generation of combustion engine technology will
make this possible. An additional driving force for this is the
dynamic growth in demand for our electrified vehicles
7 Electromobility, 7 Automotive segment
An average of 80% carbon reduction at our own plants
and locations (Scope 1 and 2) per vehicle produced
(Carbon emissions generated at BMW Group locations)
3.
2.
1.
The BMW Group is committed to the Paris Climate Agreement.
To achieve this, the BMW Group promotes the reduction of car-
bon emissions throughout the whole life cycle of its products as
well as the principles of the circular economy with a verifiable
track record of continuous improvement – from the supply chain
to production, the use phase and the recycling of its products. For
this reason, the BMW Group has laid out measurable, science-
based targets to be reached by 2030; these are firmly estab-
lished across the company (base year 2019). Carbon emissions
are to be reduced as follows:
With its inspiring and innovative products, the BMW Group is
committed to first-class individual mobility and contributes to
sustainable development. It aims to find the right balance be-
tween business, the environment and society. The key areas of
focus within the strategy are electrification, digitalisation and
sustainability or circularity. This enables us to seamlessly merge
enjoyment and responsibility, without compromising, and to
achieve our growth and profitability objectives.
We have joined the Science-Based Targets initiative (SBTI) for
this purpose. This will enable us to guarantee transparency and
comparability in the validation and measurement of our targets
and, at the same time, ensure they are in line with the latest sci-
entific findings and regulatory requirements. These are de-
scribed in more detail in the chapter 7 Carbon Emissions.
What does the BMW Group stand for?
← = Q
-
46
Society
Consumption and carbon emissions data
In addition to delivering product substance, we also offer custom-
ers a 360° approach with an appropriate charging ecosystem.
Customers can charge their vehicles at home, at work and in pub-
lic places, and can also use our BMW Charging and MINI Charg-
ing stations and we are actively involved in expanding the charg-
ing infrastructure. Electromobility
The launch of the BMW CE 04 electric scooter has successfully
established BMW Motorrad's position in the electromobility land-
scape. Building on this success, the eParkourer - the BMW CE
02 - is set to advance the electrification strategy for urban mo-
bility in April 2024. Motorcyles segment
In 2024, the market will welcome several new additions, includ-
ing the BMW iX2*, the extended-wheelbase version of the BMW
15 sedan tailored for the Chinese market, the BMW i5 Touring*,
the MINI Cooper SE*, the MINI Countryman SE* and the all-elec-
tric MINI Aceman, the brand's first crossover model. 7 Automotive
segment The BMW Group expects its attractive product range to
drive another significant increase in the number of all-electric ve-
hicles delivered in 2024. With intelligent vehicle architectures
and flexible production facilities, the company is well-prepared
for the continued expansion of electromobility. Society's ac-
ceptance of electromobility will depend on trends in customer de-
mand, regional regulations and the development of a suitable
framework, with a particular focus on infrastructure expansion.
The BMW Group is currently planning for all-electric vehicles to
account for more than 50% of all vehicles by 2030. The Rolls-
Royce brand is set to become all-electric by 2030, and the MINI
brand will follow suit by the early 2030s. Electromobility
BMW Group had introduced at least one all-electric model across
all its brands and segments. In 2023, the extended-wheelbase
version of the iX1 for the Chinese market, the BMW i5* sedan and
the Rolls-Royce Spectre* were launched on the market. In 2023,
deliveries of all-electric automobiles increased by more than
74.1%, reaching 375,716 automobiles, up from 215,752 auto-
mobiles in 2022. Electromobility
We recognised the importance of electromobility early on and
have been working resolutely to accelerate the adoption of all-
electric and connected mobility. By the close of 2023, the
Sustainability aspects (ESG criteria) are built into individual mar-
ket strategies across our global organisation. Best practices in
the fields of environmental protection, social sustainability, cor-
porate citizenship and governance are also shared within an in-
ternational sustainability network.
The BMW Group is focused on its customers worldwide and on
meeting their different requirements. It does so by understanding
the needs of its current and future customers and exceeding their
expectations. It combines ground-breaking technologies, emo-
tional products and individual customer care to create a unique
overall experience. The fields of action electrification, digitalisa-
tion and circularity are of particular importance.
Strategic approach -
D'O
אם
Digitalisation is consistently extended beyond the vehicle
Innovation, Digitalisation and Customer Orientation, encompassing both
corporate and customer processes, as well as along the automo-
tive value chain, enhancing the resilience and business agility of
the BMW Group. There are corresponding initiatives in all
areas of the Company. Our "Digital Process & Impact" initiative
is an example of commitment to significantly accelerating the
digitalisation of our internal processes and operations across the
Company, harnessing digital potential in every area through the
use of digitalised process management. The dedicated process
and digitalisation functions ensure the consistent implementa-
tion and corresponding development of expertise across all de-
partments. Concurrently, March 2023 marked the launch of DIG-
ITAL BOOST, one of the most comprehensive training pro-
gramme in the BMW Group's history. This virtual training pro-
gramme, designed for employees in indirect roles across all lev-
els of the organisation, delivers insights and opportunities in dig-
italisation on both national and international fronts. The aim is
for all employees to acquire the same basic knowledge of digital-
isation, enabling them to identify potential within their own areas
of responsibility and harness it for the benefit of the BMW Group.
The quality and reliability of all of our products and services are
the critical drivers for customer satisfaction, enthusiasm and the
economic success of the BMW Group. We are therefore commit-
ted to a comprehensive approach to quality, centred on deliver-
ing the best possible customer experience. The "Mission Quality"
initiative was launched across the Company in 2023. As a key
area of focus for the Company, the initiative promotes the
strengthening of quality awareness and focuses on the individual
contributions of all employees.
Economic performance is a very important aspect of our corpo-
rate management system and is anchored in our objective of har-
nessing growth potential and securing our profitability targets.
This is supported by our ambitious financial standards, which are
linked to the strategic key figures EBIT margin in the Automotive
segment (between 8 and 10%), ROCE in the Automotive seg-
ment of at least 18% and an EBT margin in the Group of more
than 10%. Performance Indicators and Performance Management
The BMW Group offers exciting products for current and future
generations and secures its independence as a company by
maintaining a high level of profitability. The BMW Group is shap-
ing the future of sustainable mobility with its passion and strong
capacity for innovation. Thanks to its exciting products, the BMW
Group is able to achieve maximum customer satisfaction and
brand strength, and thus grow its market share.
What drives the BMW Group?
Where is the BMW Group heading?
Position -
Direction
Do Do
Competition among various political systems is a dominating
force in international politics, influencing changes in international
trade flows using instruments like sanctions, tariffs and subsi-
dies. The need to secure supply chains is intensifying due to the
dual challenges of climate change and geopolitical risks.
Business and the environment are closely linked and influence
each other. Thus, alongside carbon emissions, resource effi-
ciency will also gain in importance. The demand for secondary
materials and recycling is also rising, for instance, due to quota
requirements. Simultaneously, this development is giving rise to
cross-industry initiatives and opportunities for new business
models. Circular Economy, Resource Efficiency and Renewable Energy
Business
As governments around the world work to transpose the goals of
the Paris Climate Agreement's carbon reduction targets into na-
tional laws, an ambitious orientation towards climate policy will
serve as an important basis for successful action for businesses.
It is equally vital to prepare for the consequences of current and
anticipated changes brought about by climate change, which
create a tangible urgency to take action. The role of hydrogen as
an energy source is set to undergo a fundamental shift, propelled
by the global imperative for decarbonisation.
Environment
be continued to ensure that electromobility is a long-term suc-
cess. Electromobility
The acceleration of electromobility worldwide continues to be an
important prerequisite on the path to climate neutrality, although
the pace of adoption is expected to vary regionally. In the long
term, there will be a parallel range of electric vehicles and com-
bustion engine vehicles available worldwide. However, the num-
ber of all-electric models in the automotive industry as a whole is
expected to continue to increase. Addressing remaining uncer-
tainties, including regulations, the swift and widespread develop-
ment of charging infrastructure and the availability of raw mate-
rials will be essential for the future expansion of this sector. It is
necessary to increase the pace at which capacities are expanded
in order to meet the ever-increasing demand for climate-neutral
and green energy across industries. The share of regenerative
energies in the energy mix is on the rise, increasing the volatility
of the entire energy supply and making it increasingly difficult to
maintain the stability of networks. Due to these factors and the
limited capacities of distribution networks, every effort needs to
For a technology-based company like the BMW Group, general
developments in this area are of particular importance. This area
is undergoing constant change, with the market environment
evolving dynamically and new collaborative models emerging.
New solutions, particularly in artificial intelligence, are emerging
and are finding applications across all aspects of life. Modern ve-
hicles are already one of the most complex digital items owned
by consumers. Vehicle requirements are also increasingly influ-
enced by the digital ecosystems that customers interact with
every day. Automobiles should be a reliable source of support in
everyday life, fit seamlessly into a person's living environment
and create a holistic overall experience. Software updates with
further functional developments are expected and generally be-
coming standard. Innovation, Digitalisation and Customer Orientation
Politics
Technology
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
The BMW Group Strategy
Collaboration
BMW Group Report 2023 To Our Stakeholders
43
industrialisation of digital technologies, innovative usage con-
cepts for stationary and moving vehicles are gaining importance.
Politics and regulations are narrowing the scope for action across
the entire automotive value creation model. There is an increas-
ing variety of legislation in all regions of the world.
Alongside digitalisation, development of automated/autono-
mous driving remains a key expectation for the future of mobility.
Initial offerings of Level 4* features are expected to launch in the
market before 2030, although widespread adoption is expected
to occur only after 2030. Products
CORNERSTONES OF THE
STRATEGY
Strategic approach
In urban areas within the European Union, infrastructure bottle-
necks and selective reallocation of road space are likely to result
in increased traffic congestion and reduced accessibility. Simul-
taneously, there is an increasing trend towards policies that dis-
courage car use in city centres. The planned deployment of smart
city technologies would, however, primarily affect cities in China.
Direction
Position
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
The BMW Group Strategy
Do
To Our Stakeholders
The BMW Group's strategy is oriented to its corporate purpose:
"The BMW Group exists to move body, heart and mind."
It is the driving force, the guiding principle and the orientation for
our employees, and our commitment to our active role in society.
Its long-term focus guides us purposefully through the extensive
transformation of the entire automotive industry and beyond.
With this in mind, the BMW Group's corporate strategy
(BMW Group strategy) defines the strategic framework and lays
the foundation for the Company to maintain a consistent and
market-oriented focus on profitability, growth and sustainability,
even in an increasingly dynamic environment. The BMW Group
strategy outlines targets in four areas: position, direction, strate-
gic approach and collaboration.
*Standard industry definition according to the Society of Automotive Engineers (SAE): Five levels
of automated driving.
Transitioning to the specific details of the BMW Group strategy,
the BMW Group Impact broadens the Company's long-term stra-
tegic vision and underscores its ambition to contribute to broader
societal development. "We make individual mobility more hu-
man, intelligent and responsible - creating an inspiring future for
all of us."
44
BMW Group Report 2023
BMW Group Strategy
1250
2022
2021
2023
2024
2020
WTI
Brent
Source: Weltbank via Macrobond
350
150
250
250
200
300
250
750
200
150
500
2019
100
1000
0
Decrease in energy and raw materials prices over course of
year
20
To Our Stakeholders
Combined Management Report
Financial Performance
50
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Energy and raw materials prices decreased again in 2023.
Throughout the year, the prices of aluminium and steel declined,
ending the year at approximately the same level as at the begin-
ning of 2021. Precious and non-ferrous metals exhibited a simi-
lar trend, with prices lower on average in 2023 compared to the
previous year. This development was partly due to the significant
price declines in metals such as rhodium (approximately -60%)
and palladium (approximately -40%).
Prices for battery-related raw materials also fell again. For the
majority of 2023, cobalt was once again below the long-term av-
erage, while lithium prices fell by up to 80% over the course of
the year.
Energy prices also fell over the course of the year, as Germany in
particular adapted to the changed availability of natural gas. By
the end of 2023, natural gas prices in Europe had returned to the
levels seen in autumn 2021, significantly lower than the levels
before the start of the conflict in Ukraine.
Oil price trend
Price per barrel Brent and WTI in US dollar
120
110
100
90
80
Development of raw material prices
Index: December 2018 = 100
70
60
50
40
30
10
100
thereof Germany
50
Nickel
Sources: CRU, LME, Fastmarkets, Bloomberg
55
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Financial Performance
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
International automobile markets achieve solid growth
Against the backdrop of economic developments described
above, international automobile markets also performed well
during the 2023 reporting year. Worldwide, the number of new
registrations rose by 8.3% to 77.1 million units.
International automobile markets
Europe
thereof France
Change compared to
previous year in %
+14.1
International motorcycle markets (250 cc plus) mostly
showing significant increases
International motorcycle markets in the 250 cc plus class devel-
oped positively in 2023 (+11.7%). Overall, European markets
recorded growth of 18.6%. Among the major motorcycle mar-
kets, Italy (+21.7%), Spain (+20.9%) and France (+13.4%)
contributed significantly to this trend. Germany also recorded a
sharp year-on-year increase of 14.3%. The US market remained
stable, growing by 0.4%. In China, the downward trend in the
motorcycle market continued (-22.9%), influenced by the linger-
ing effects of the pandemic. In Brazil, however, motorcycle regis-
trations were significantly higher than one year earlier, with an
increase of 50.4%. Registration figures for international motor-
cycle markets developed as follows in the 2023 reporting year:
+ 7.3
+ 16.1
thereof Italy
+ 19.1
thereof Spain
+ 20.8
International motorcycle markets
BMW Group Report 2023
thereof UK
Copper
0
Aluminium
Cobalt
0
2019
2020
2021
2022
2023
2024
2019
2020
2021
2022
2023
2024
2019
2020
2021
2022
2023
2024
Lithium hydroxide
Rhodium
Platinum
Palladium
Steel
54
Cost of capital (equity + debt capital)
Korean won
2023
5,642
2022
12,536
Earnings amount -
(cost of capital rate x capital employed)
In order to determine the internal rate of return, risk-adjusted cost
of capital rates are based on the average of actual rates in recent
years. In light of the long-term nature of product and investment
decisions, the following internal rates of return are used in con-
junction with segment management:
in %
Automotive
Motorcycles
Financial Services
2023
2022
12.0
12.0
12.0
12.0
13.4
13.4
Value-based management for project decisions
Operational business in the Automotive and Motorcycles seg-
ments is largely shaped by the life-cycle-dependent character of
investment projects that have a substantial influence on future
performance. Project-related decisions are therefore a crucial el-
ement of financial management in the BMW Group. Project deci-
sions are based on calculations derived from the expected cash
flows of each individual project. Calculations are made for the
complete term of a project, incorporating future years in which
the project is expected to generate cash flows.
Project decisions are taken on the basis of net present value and
the internal rate of return calculated for the project. The net pre-
sent value indicates the extent to which the project will be able to
generate future net cash inflows over and above the cost of cap-
ital. A project with a positive net present value enhances future
value added and therefore results in an increase in enterprise
value. The project's internal rate of return measures the average
return on the capital employed in the project. For all project deci-
sions, the project criteria and long-term impact on periodic re-
sults are measured and incorporated in the long-term Group
plan. This approach enables an analysis of the impact of project
decisions on periodic earnings and rates of return for each year
during the term of the project.
Board of Management remuneration
Performance criteria for the variable remuneration paid to mem-
bers of the Board of Management are based on the key strategic
targets and performance indicators. More information can be
found in the Remuneration Report.
52
BMW Group Report 2023
To Our Stakeholders
2022
11,194
Combined Management Report
Financial Performance
11,615
2022
23,730
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
The BMW Group Strategy
Strategic management at Group level
Strategic management and the measurement of its financial im-
pact are coordinated primarily at Group level in conjunction with
the long-term corporate plan. Group profit/loss before tax pro-
vides a comprehensive measure of the Group's overall corporate
performance after consolidation effects and enables a transpar-
ent comparison over time. Other key performance indicators at
Group level are the size of the workforce at the year-end as well
as the share of women in management positions. By 2025, the
BMW Group aims to increase the share of women in manage-
ment positions to 22%. Strategy Process
The information provided by these key performance indicators at
Group level is complemented by the two financial performance
indicators of pre-tax return on sales and value added. Value
added, as a highly aggregated performance indicator, also pro-
vides an insight into capital efficiency and the (opportunity) cost
of capital required to generate Group profit. A positive value
added means that a return on investment above the cost of cap-
ital has been achieved.
Capital employed comprises the amount of Group equity and
pension provisions as well as the financial liabilities of the Auto-
motive and Motorcycles segments employed on average at the
end of each of the last five quarters.
The earnings amount corresponds to Group profit/loss before
tax, adjusted for interest expense incurred in conjunction with the
pension provisions and on the financial liabilities of the Automo-
tive and Motorcycles segments (profit/loss before interest ex-
pense and tax). The cost of capital is the minimum rate of return
expected by capital providers in return for the capital employed.
Since capital employed comprises an equity capital (e.g. share
capital) and a debt capital element (e.g. bonds), the overall cost
of capital is determined on the basis of the weighted average
rates for equity and debt capital, measured using standard mar-
ket procedures. The pre-tax average weighted cost of capital for
the BMW Group in 2023 was 12%, unchanged from the previ-
ous year.
Value added Group
in € million
BMW Group
Earnings amount -
=
Cost of capital
Value added
Group
=
Value added Group
Earnings amount
+ 17.9
2023
17,257
2023
54
Group Financial Statements Responsibility Statement and Auditor's Report
Other Information
During the year, the US dollar fluctuated between 1.05 and 1.13
US dollars to the euro, culminating in an average annual ex-
change rate of 1.08 US dollars to the euro. In 2023, the British
pound was slightly weaker compared to the previous year, fluc-
tuating between 0.89 and 0.85 pounds to the euro, with an av-
erage annual exchange rate of 0.87 pounds to the euro.
In China, inflation was low during 2023, enabling the country's
central bank to pursue a newly evolving monetary policy, which
contributed to a depreciation of the Chinese renminbi. For the
year as a whole, the average exchange rate for the Chinese cur-
rency was 7.66 renminbi to the euro.
The Japanese currency fluctuated between 138 and 164 yen to
the euro during 2023. Based on an average exchange rate of
152 yen, the Japanese currency fell in value against the euro
compared to the previous year.
The currencies of major emerging markets mostly depreciated
against the euro. While the Indian rupee depreciated by approxi-
mately 8% on average, the South African rand declined by 16%.
On the other hand, the Brazilian real remained largely stable
against the euro, depreciating by less than 1% on average. Con-
versely, the Russian rouble depreciated markedly by 25% due to
the normalisation of energy prices and increasingly stringent
sanctions.
Exchange rates compared to the euro
Index: December 2018 = 100
130
120
110
100
90
80
2019
Source: ECB via Macrobond
2020
2021
2022
2023
2024
US dollar
British pound
Japanese yen
Chinese renminbi
← = Q
Remuneration Report
Other Information
Group Financial Statements Responsibility Statement and Auditor's Report
← = Q
FINANCIAL PERFORMANCE
52
General and Sector-specific Environment
55 Overall Assessment by Management of the
Financial Year
56 Comparison of Forecasts with Actual
FINANCIAL PERFORMANCE
Outcomes
57 Financial Position
66
74
Course of Business and Segments
Comments on the Financial Statements of
BMW AG
GENERAL AND SECTOR-
SPECIFIC ENVIRONMENT
The global economy performed better in 2023 than expected at
the beginning of the year. According to calculations of the Inter-
national Monetary Fund (IMF), global gross domestic product
(GDP) grew by 3.1% in 2023. While the US and China recorded
stronger growth than in the previous year, economic growth in
Europe weakened.
In the eurozone, growth in 2023 was 0.5% due to high inflation
rates and the resulting fall in demand. In Germany, GDP con-
tracted by 0.3% as a result of rising prices, declining export de-
mand and the low level of investments in light of higher interest
rates. In France (+0.9%), Italy (+0.7%) and Spain (+2.5%), eco-
nomic growth was more robust. The UK experienced a significant
slowdown in growth to 0.1%.
In the USA, the economy proved very resilient in the face of rising
interest rates and grew by 2.5% in the reporting period. A sus-
tained low level of unemployment in combination with rising
wages helped boost consumption. In China, the growth rate in
2023 stood at 5.2%, slightly higher than the target set by the
government. The momentum resulted in particular from catch-
up effects following the end of coronavirus lockdowns.
The Japanese economy recovered well during the reporting pe-
riod with a growth rate of 1.8%, benefiting from stronger export
demand on the back of the depreciated currency.
Higher benchmark interest rates in many markets and a
strong euro
At the beginning of 2023, inflation remained relatively high in a
number of countries. Only in the second half of the year did the
inflation rate gradually begin to decline. Therefore, many central
banks continued to pursue their restrictive monetary policies and
raise benchmark interest rates.
53
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Financial Performance
Remuneration Report
USA
Between 14 and 17
China
Pre-tax return on sales²
Post-tax return on sales³
Effective tax rate"
1 Gross profit as a percentage of Group revenues.
2 Group profit before tax as a percentage of Group revenues.
3 Group net profit as a percentage of Group revenues.
4 Income taxes as a percentage of Group profit before tax.
Group revenues by region were as follows:
BMW Group revenues by region
2022
142,610
Change in %
in %
2023
2022
9.0
Europe
37.7
36.1
- 118,042
-6.6
Asia
36.4
38.3
Gross profit margin¹
24,568
in %
- 125,809
29,689
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
FINANCIAL POSITION
EARNINGS PERFORMANCE OF THE BMW GROUP
BMW Group Condensed Income Statement
in € million
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income and expenses
Profit before financial result
Financial result
Profit before tax
Income taxes
Net profit
Earnings per share of common stock in €
Earnings per share of preferred stock in €
2023
155,498
- 4,931
Combined Management Report
Financial Performance
20.8
23.9
- 35.3
17.69
27.33
- 35.3
Change
2023
2022
in % points
19.1
17.2
1.9
11.0
16.5
- 5.5
7.8
13.0
- 5.2
28.8
21.0
7.8
58
Group Financial Statements
BMW Group Report 2023
27.31
Americas
17.67
18,582
23.6
-11,025
- 10,616
- 3.9
Other regions
2.0
2.0
- 182
47
Group
100.0
100.0
18,482
13,999
32.0
-1,386
9,510
17,096
23,509
- 27.3
- 4,927
-0.1
12,165
- 34.5
+ 12.1
To Our Stakeholders
57
- 22.9
Total
+ 11.7
56
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Financial Performance
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
COMPARISON OF FORECASTS
WITH ACTUAL OUTCOMES
BMW Group: Comparison of the forecast for 2023 with actual outcomes in 2023
Forecast for 2023 in 2022
Group Report
Forecast revision during
the year
Actual outcome
in 2023
The 2023 reporting year saw improved availability of vehicles,
high levels of orders on hand, and volume growth. Compared to
expectations at the beginning of the year, the BMW Group's per-
formance was bolstered by the easing of the supply situation as
well as by favourable pricing conditions in both new and pre-
owned vehicle markets, despite higher cost pressures.
Carbon emissions per vehicle produced decreased more than ex-
pected at BMW Group sites. This was due to reduced gas and
heating oil usage on the one hand and a simultaneous increase
in production volume on the other.
The following table summarises the development of the
BMW Group's key performance indicators as a whole as well as
those of the Automotive, Motorcycles and Financial Services
segments in the financial year 2023 compared to the forecasts
made in the BMW Group Report 2022.
Detailed information on the BMW Group's key performance indi-
cators is provided below in conjunction with the analysis of the
Group's results of operations, financial position and net assets.
The development of the most significant performance indicators
is described in the respective chapters on the Automotive, Mo-
torcycles, and Financial Services segments. An explanation of
the development of other non-financial performance indicators is
provided in the chapters on Products as well as Employees and
Society.
GROUP
Profit before tax
Workforce at year-end
thereof China
Share of women in management positions
in the BMW Group
- 11.4
+ 50.4
+ 5.6
Europe
Japan
+14.4
thereof Germany
South Korea
+ 3.8
thereof France
+ 8.3
thereof Italy
Total
thereof Spain
Americas
thereof USA
Change compared to
previous year in %
+ 18.6
+ 14.3
+ 13.4
+ 21.7
+ 20.9
+ 12.6
+ 0.4
OVERALL ASSESSMENT BY
MANAGEMENT OF THE
FINANCIAL YEAR
2023 was characterised by a volatile business environment
overshadowed by escalating geopolitical tensions. In many mar-
kets, higher inflation rates, accompanied by increased interest
rates, also weighed on consumer sentiment. Despite these fac-
tors, the BMW Group can look back on an overall positive course
of business in the financial
2023.
year
Deliveries of premium segment automobiles, motorcycles and
scooters were all at record-high levels. In particular, sales of all-
electric premium vehicles provided significant impetus for
growth.
BMW AG's solid financial condition is reflected in the results of
operations, financial position and net assets reported for the fi-
nancial year 2023. Performance was in line with management
expectations and the targets set for 2023. This assessment also
takes into account events after the end of the reporting period.
thereof Brazil
Asia
BMW Group Report 2023
Significant decrease
Slight increase
Slight reduction
Remuneration Report
Slight increase
Q2: 16 to 19
in %
in g/km
in t
2,554,183 (+6.4%)
Solid increase
14.7% (+63.3%)
Significant increase
102.1 (-2.8%)
Slight reduction
0.28 (-12.5%)
Significant reduction
in %
8.1 (+0.0% points)
in %
22.1 (-2.8% points)
in units
209,066 (+3.3%)
Slight increase
in %
17.2 (-0.7% points)
1 EU-27 countries including Norway and Iceland; with effect from 2021, values are calculated on a converted basis in line with WLTP (Worldwide Harmonised Light Vehicles Test Procedure).
2 This is a preliminary internal calculation with a potential variation of +/- 0.5 g CO2/km, as official registration figures from the authorities are not available for all EU states. Figures officially published by
the EU Commission are not expected to be available until November of the following year.
3 Including an allowance for eco-innovations (amounts of minor significance).
"Efficiency ratio calculated on the basis of Scope 1 and Scope 2 carbon emissions (i.e. a market-based method in accordance with GHG Protocol Scope 2 guidance; mainly based on the emissions factors
for electricity, district heating and fuels reported by the VDA (each in the latest version dated 12/2023) and occasionally using local emissions factors; excluding climate-changing gases other than carbon
dioxide generated during vehicle production (BMW Group manufacturing sites including Motorrad, but excluding partner plants and contract manufacturers), as well as BMW Group non-manufacturing
sites (e.g. research centres, sales centres, office buildings) divided by the number of vehicles produced (BMW Group manufacturing sites and partner plants, excluding contract manufacturers).
Slight reduction
Slight increase
Significant increase
Return on capital employed (ROCE)
Deliveries
in € million
17,069 (-27.3%)
Significant decrease
154,950 (+3.7%)
Slight increase
in %
20.8 (+3.0%)
Slight increase
AUTOMOTIVE SEGMENT
EBIT margin
Return on capital employed (ROCE)
Deliveries
Between 8 and 10
Between 15 and 20
Q2: 9 to 10.5
in %
9.8 (+1.2% points)
Q2: 18 to 22
in %
20.2 (+2.1% points)
Slight increase
Q2: solid increase
in units
Share of all-electric cars in deliveries
CO2 emissions EU new vehicle fleet 1,2,3
CO₂ emissions BMW Group locations per vehicle
produced
MOTORCYCLES SEGMENT
EBIT margin
FINANCIAL SERVICES SEGMENT
Return on equity (ROE)
Combined Management Report
Between 8 and 10
Between 21 and 26
51
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Financial Performance
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
60
← = Q
The consolidated cash flow statements for the Group and the
Automotive and Financial Services segments show the sources
and applications of cash flows for the 2023 and 2022 reporting
years, classified according to operating, investing and financing
activities. Cash and cash equivalents in the cash flow statements
correspond to the amounts disclosed in the balance sheet.
Cash flows from operating activities are determined indirectly,
starting with Group/segment profit before tax. By contrast, cash
flows from investing and financing activities are based on actual
payments and receipts.
The lower net cash inflow from operating activities was primarily
due to changes in leased products and receivables from sales
financing, particularly credit financing for dealerships. The year-
on-year increase in credit financing for dealerships was driven by
improved vehicle availability, model changes and a higher aver-
age financing volume per vehicle.
A further factor for the decrease in cash inflow from operating
activities was the higher level of inventories held with a view to
servicing markets and fulfilling customer demand. A lower in-
crease in receivables and higher payables had a positive impact
on the cash inflow from operating activities.
The cash outflow from investing activities was higher than one
year earlier. In 2022, the first-time full consolidation of BMW Bril-
liance resulted in a positive impact of € 3,587 million to cash out-
flow from investing activities, resulting from cash acquired on the
business combination and the purchase price paid. Moreover, in-
creased investments in property, plant and equipment, particu-
larly for introducing new vehicle models, digitalising the fleet as
well as pressing ahead with automated driving and the NEUE
KLASSE, resulted in a higher net cash outflow than one year ear-
lier.
In contrast, the net cash inflow arising on the sale of marketable
securities had a positive impact on cash flows from investing
activities.
The decrease in the net cash outflow from financing activities
was mainly the result of higher borrowings and lower repay-
ments.
FINANCIAL POSITION OF THE
BMW GROUP
Higher dividend payments to shareholders of BMW AG (2023:
€ 5,430 million; 2022: € 3,827 million) increased the net cash
outflow from financing activities.
The second share buyback programme will be concluded by 31
December 2025, at the latest.
On 3 May 2023, on the basis of the authorisation granted by the
Annual General Meeting on 11 May 2022, the Management
Board resolved to initiate a second share buyback programme,
which duly began on 3 July 2023. The programme, with a vol-
ume of up to € 2 billion (total purchase price excluding incidental
acquisition costs) pertains to common and preferred stock, the
latter of which is limited to a maximum volume of € 350 million.
The first tranche of the second share buyback programme was
successfully completed on 1 December 2023. As part of this first
tranche, a total of 4,218,363 shares of common stock and
942,892 shares of preferred stock were acquired between 3 July
2023 and 1 December 2023. A total purchase price (excluding
incidental acquisition costs) of around € 500 million was paid for
the shares repurchased as part of this tranche.
The effective tax rate was 28.8% (2022: 21.0%). In the previous
financial year, the primary factor reducing the effective tax rate
was the tax-neutral gain resulting from the remeasurement of
the shares held prior to the business combination with BMW Bril-
liance.
In the reporting year, the size of the workforce was slightly higher
at 154,950 employees, which was in line with expectations
(2022: 149,475 employees; +3.7%).
2023
7,755
-2,604
2,387
7,538
2022
7,178
- 2,819
2,265
6,624
Change
in % points
The second tranche of the second share buyback programme
will be carried out with a volume of up to € 410 million for com-
mon stock and up to € 90 million for preferred stock in the period
from 2 January 2024 to 28 June 2024, at the latest.
2023
5.0
5.0
33.6
39.3
- 5.7
Share buyback programme continued - share redemption
completed
At the Annual General Meeting of BMW AG held on 11 May
2022, the shareholders authorised the Board of Management to
acquire treasury shares via the stock exchange, up to a maxi-
mum of 10% of the share capital in place at the date of the res-
olution and to redeem those shares without any further action
required by the Annual General Meeting. The buyback authori-
sation remains valid until 10 May 2027. In July 2022, on the ba-
sis of this authorisation, BMW AG resolved an initial share buy-
back programme, with a volume of up to € 2.0 billion (total pur-
chase price excluding incidental acquisition costs), comprising up
to € 1.85 billion for shares of common stock and up to € 0.15
billion for shares of preferred stock. The programme was
launched on 1 July 2022 and ended on 30 June 2023. BMW AG
repurchased a total of 22,199,529 shares of common stock for
€ 1,850 million and 1,923,871 shares of preferred stock for
€ 150 million. On 18 July 2023, the Board of Management re-
solved to redeem all of the shares repurchased in conjunction
with the initial buyback programme. The process of redeeming
the shares was completed during the third quarter 2023.
2022
At € 4,931 million (2022: € 4,927 million; +0.1%), income tax
expense in the reporting year was at a similar level to the previ-
ous year.
BMW Group cash flows
Cash inflow (+) / outflow (-) from operating activities
Cash inflow (+)/ outflow (-) from investing activities
Cash inflow (+) / outflow (-) from financing activities
Effects of exchange rate and changes in composition of segment
Change in cash and cash equivalents
2023
2022
17,675
14,782
Change
2,893
-9,373
- 3,179
- 404
- 6,194
-532
- 828
6,942
11,071
- 4,129
BMW Group Report 2023 To Our Stakeholders
To Our Stakeholders Combined Management Report
Financial Performance
- 1,360
in € million
861
94
Free cash flow for the Automotive segment was as follows:
Free cash flow Automotive segment
in € million
Cash inflow (+)/ outflow (-) from operating activities
Cash inflow (+) / outflow (-) from investing activities
Adjustment for net investment in marketable securities and investment funds
Free cash flow Automotive segment
2023
17,542
2022
23,523
-772
Change
- 9,548
-4,772
-4,776
- 6,859
- 17,984
11,125
-678
457
- 5,981
Accordingly, Group profit before tax amounting to € 17,096 mil-
lion - as forecast - was significantly lower than one year earlier
(2022: € 23,509 million).
Group Financial Statements Responsibility Statement and Auditor's Report
² Capitalised development costs as a percentage of research and development expenditure.
27,764
27,517
0.9
thereof interest expense relating to financial services business
3,554
2,114
68.1
7.5
Research and development expenses
6,624
13.8
thereof amortisation of capitalised development costs
Expenses for service contracts, telematics and roadside assistance
2,387
2,265
5.4
2,780
7,538
2,775
76,760
Change
in %
← = Q
Similarly, the net interest result deteriorated year on year. In the
previous year, interest and similar expenses included income
arising on the change in interest rates in connection with the
measurement of provisions. By contrast, falling interest rates in
2023 had a negative impact.
Other Information
Solid increase in Group revenues
When comparing figures with the previous financial year, it
should be noted that BMW Brilliance Automotive Ltd. (BMW Bril-
liance) has been fully consolidated as a subsidiary since 11 Feb-
ruary 2022, whereas up to that date, it had been accounted for
using the equity method. Consequently, BMW Brilliance is in-
cluded for the whole of 2023, but only for a proportionate period
of the previous year.
Group revenues totalled € 155,498 million in the reporting year
(2022: € 142,610 million), representing a solid increase over
the previous year (+9.0%). The main reason for revenue growth
was the higher number of vehicles delivered. Furthermore, fa-
vourable product mix effects and the aforementioned full consol-
idation of BMW Brilliance contributed to the year-on-year in-
crease in revenues. Additionally, higher interest rates and in-
come from dealership financing further increased revenues in
2023, mainly reflecting the impact of higher inventory levels held
by dealerships in light of improved vehicle availability, model
changes and a higher average financing volume per vehicle.
BMW Group cost of sales
82,549
in € million
Cost of sales relating to financial services business
These favourable factors were offset by unfavourable exchange
rate effects from the Chinese renminbi and the US dollar which
held down Group revenues.
The year-on-year increase in cost of sales reflected sales volume
growth as well as higher expenses for materials and warranty
obligations. Similarly, cost of sales recorded by BMW Brilliance
also contributed to an increase compared to 2022. Cost of sales
in the previous financial year were also additionally negatively
impacted by the first-time full consolidation of BMW Brilliance.
Rising interest rates increased interest expenses for the Finan-
cial Services segment.
Group research and development expenses increased signifi-
cantly by 13.8% year on year. Research and development ex-
penditure related primarily to the digitalisation and electrification
of the vehicle fleet across all model series, as well as the devel-
opment of automated driving functions. Further expenditure was
incurred for the development of new models, such as the all-elec-
tric BMW i5*, the X3 and X5 and the Rolls-Royce Spectre and
NEUE KLASSE models.
Due to revenue growth, the research and development expendi-
ture ratio remained at the same level as one year earlier.
2023
2022
Manufacturing costs
0.2
Reduced intersegment eliminations associated with leasing
business had a positive impact on revenues.
3,782
Combined Management Report
Financial Performance
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
BMW Group research and development expenses
in € million
BMW Group Report 2023 To Our Stakeholders
Research and development expenditure
Amortisation
Research and development expenses
BMW Group performance indicators relating to research and development expenses
Research and development expenditure ratio¹
1 Research and development expenditure as a percentage of Group revenues.
Warranty expenditure
Capitalisation rate²
Capitalised development costs
59
in %
* 7 Consumption and Carbon Disclosures
59
Other cost of sales
1,157
20.7
3,209
Cost of sales
125,809
1,396
6.6
Additionally, the other financial result was adversely impacted by
the fair value measurement of interest rate hedging transactions,
reflecting falling interest rates in the USA, the UK and the euro-
zone during the twelve-month period under report. In the previ-
ous year, the increase in interest rates resulted in favourable
measurement effects on interest rate hedging transactions.
The financial result deteriorated significantly to a net negative
amount of € 1,386 million (2022: net positive amount of
€ 9,510 million). In the previous year, other financial result ben-
efitted primarily from the gain of approximately € 7.7 billion aris-
ing on the remeasurement of the shares already held by the
BMW Group prior to the business combination with BMW Bril-
liance.
118,042
17.9
The net amount of other operating income and expenses deteri-
orated year on year. In 2022, other operating income was in-
creased by income arising on the reversal of provisions.
Depreciation and amortisation on property, plant and equipment
and intangible assets recorded in cost of sales as well as in sell-
ing and administrative expenses totalled € 8,974 million (2022:
€ 8,566 million).
Due to the various factors affecting gross profit, as described
above, profit before financial result climbed to € 18,482 million
(2022: € 13,999 million; +32.0%). The impact of the previous
year's first-time full consolidation of BMW Brilliance and lower
intersegment eliminations related to leasing business had a par-
ticularly positive effect on the year-on-year change in gross
profit.
Selling and administrative expenses went up slightly by 3.9%
year on year. The rise was due to higher administrative ex-
penses, primarily influenced by higher costs for IT projects, nota-
bly in connection with the planned switch to direct sales in Eu-
rope. The ratio of selling and administrative expenses to reve-
nues fell to 7.1% (2022: 7.4%).
2,854
85,708
1.9
4.3
34.8
Financial assets
8,237
-32.2
2.2
Deferred and current tax
3,630
87,355
5,518
- 33.0
Other investments
0.5
- 9.4
- 11.4
1,351
1,197
0.2
5.4
5.5
420
443
Investments accounted for using the equity method
17.2
27.2
1.8
Receivables from sales financing
31.2
4.5
Other assets
0.7
Equity
EQUITY AND LIABILITIES
100.0
3.9
1.6
246,926
250,890
Total assets
6.9
6.7
2.7
16,870
17,327
Cash and cash equivalents
1.7
0.8
9,133
10,632
- 14.1
- 12.7
3.6
Inventories
1.4
23,719
18.6
21.8
9.5
Trade receivables
4,162
4,127
20,005
42,820
63
Leased products
The credit line was not being utilised at 31 December 2023. Fur-
ther information with respect to financial liabilities is provided in
7 note 36 to the Group Financial Statements.
The BMW Group also has access to a syndicated credit line,
which was renewed in June 2023. The syndicated credit line
amounting to € 8 billion has a term without exercising extension
options until June 2028 and is provided by a consortium of 43
international banks.
As at 31 December 2023, liquidity on hand amounted to € 19.5
billion, slightly below the previous year's level (2022: € 20.3 bil-
lion).
The BMW Group continued to deploy robust liquidity-related
measures throughout 2023 to ensure its ability to act flexibly and
independently at all times.
3.3
13.0
22.9
50.0
Amount
utilised*
Programme
volume
* Measured at the year-end exchange rate.
Commercial paper
Euro medium-term notes
in € billion
92,923
Programmes
During the reporting period, the BMW Group issued bonds total-
ling approximately € 9.2 billion. The Group refinanced itself by
means of 144A transactions with a total volume of 3 billion US
dollars on the US capital market and by means of so-called
Panda bonds with a volume of 3 billion Chinese renminbi on the
Chinese capital market. Furthermore, the BMW Group issued,
among others, two euro benchmark bonds totalling € 3.0 billion,
as well as a pound sterling benchmark bond of 0.4 billion British
pounds and a Canadian bond of 0.5 billion Canadian dollars on
the international capital markets. ABS transactions with a total
financing volume equivalent to € 16.0 billion were executed in
2023, including both new and rolled-over ABS transactions.
During the reporting period, ABS financing transactions were
carried out in the following markets: Australia, China, Germany,
Japan, Canada, Switzerland, South Korea, the USA and the UK.
Specific banking instruments, such as the customer deposits
used by the Group's own banks in Germany and the USA, were
also deployed for financing purposes. In addition, loans were
taken from international banks.
Furthermore, retail customer and dealership financing receiv-
ables, rights and obligations from leasing contracts, as well as
collateral interests in the financed vehicles, were transferred to
structured entities that securitise them and place them as collat-
eralised securities on the capital market as part of the Group's
asset-backed securities financing arrangements (ABS financ-
ing).
Focused capital market management, good ratings and the high
level of acceptance enjoyed by the BMW Group on those markets
enabled it to refinance itself on the world's debt capital markets
at favourable conditions during the 12-month period under re-
port. In addition to bonds, the BMW Group also issued commer-
cial paper.
Financing measures undertaken at corporate level ensure ac-
cess to liquidity for the Group's operating subsidiaries at stand-
ard market conditions and consistent credit terms. Funds are ac-
quired in line with a target liability structure, comprising a bal-
anced mix of financing instruments. The use of longer-term in-
struments to refinance the Group's Financial Services business
and the maintenance of a sufficiently high liquidity reserve serves
to rule out any imminent liquidity risk for the portfolio. This con-
servative financial approach also has a favourable effect on the
Group's rating. Further information is provided in the section
Liquidity Risks within the chapter Risks and Opportunities.
3. A focus on value through the optimisation of financing costs
2. Autonomy through the diversification of refinancing instru-
ments and investors
1. The ability to act through permanent access to strategically
important capital markets
A broad range of instruments on international money and capital
markets is used to finance worldwide operations. The funds
raised are used almost exclusively to refinance the BMW Group's
Financial Services business. The overall objective of Group fi-
nancing is to ensure the solvency of the BMW Group at all times,
focusing on three areas:
FINANCING ACTIVITIES
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
The following table provides an overview of amounts utilised at
31 December 2023 in connection with the BMW Group's money
and capital market programmes:
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Financial Performance
Group Financial Statements
14.1
12.2
9.8
32,126
35,266
Property, plant and equipment
8.0
- 5.7
- 8.1
21,776
20,022
Intangible assets
ASSETS
change in %
Currency-adjusted
Change
in %
2022
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
NET ASSETS POSITION OF THE BMW GROUP
BMW Group Condensed Balance Sheet at 31 December
← = Q
43,118
Proportion of
balance sheet total
in % 2023
Intangible assets decreased moderately compared to 31 De-
cember 2022 on a currency-adjusted basis. The main reason for
the decrease was the amortisation recognised on reacquired
rights and dealership relationships from the acquisition of
BMW Brilliance.
Adjusted for currency effects, property, plant and equipment was
up by 12.2% year on year. This increase was driven in particular
by additions to land, buildings and production facilities of the
newly fully consolidated entity, BMW Manufacturing Hungary Kft.
Higher investments in the sixth generation of electric drives, as
well as for new vehicle projects such as the new BMW 5 Series,
also had an impact. The capital expenditure ratio stood at 5.7%
(2022: 5.5%) whereas the capital expenditure ratio excluding
right-of-use assets increased to 4.9% (2022: 4.3%).
Leased products were slightly up on a currency-adjusted basis.
The increase was driven by the higher level of new leasing busi-
ness and a higher average financing volume. In contrast, the
managed contract portfolio decreased to 1,712,330 contracts
(2022: 1,807,904 contracts; -5.3%).
Receivables from sales financing increased slightly compared to
31. Dezember 2022 on a currency-adjusted basis. An increase
in dealership financing, especially in the USA and Germany, had
an impact at 31 December 2023. The year-on-year increase in
dealership financing was due to better availability of vehicles, the
introduction of new models such as the BMW 7 Series and the
BMW i52, and a higher average financing volume per vehicle. The
increase was offset by a decrease in customer financing, partic-
ularly in China. The decrease in China was due to strong com-
petition from local banks.
in € million
2023
The Group's balance sheet total is slightly higher than one year
earlier. Currency effects from the Chinese renminbi and the US
dollar had a dampening effect on the balance sheet total.1
91,288
6.2
10.3
4.3
100.1
155,498
Change
in %
in %
in € million
2022
2022
2023
in %
in € million
2023
Cost of materials*
Other expenses
Bought-in costs
Financial income
Other income
Total output
WORK PERFORMED
Revenues
BMW Group value added statement
142,610
Net value added by the BMW Group declined in 2023 due to
lower earnings compared to the previous year.
VALUE ADDED STATEMENT
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Financial Performance
To Our Stakeholders
BMW Group Report 2023
65
11.9
11.0
- 2.6
45.7
43.1
The value added statement shows the value of work performed
by the BMW Group during the financial year, less the value of
work bought in. Depreciation and amortisation, cost of materials,
and other expenses are treated as bought-in costs in the net
value added calculation. The allocation statement applies value
added to each of the participants involved in the value added pro-
cess. The bulk of the net value added benefits the employees.
The remaining portion in the Group is retained to finance future
operations. The gross value added amount treats depreciation
and amortisation as a component of value added which, in the
allocation statement, would be treated as internal financing.
92.7
9.0
-1,227
32.3
50,180
Gross value added
5.5
64.9
99,660
67.7
105,136
16.1
12.7
19,479
14.6
22,609
2.9
52.1
80,181
53.1
-0.8
9,783
6.4
1,045
0.7
1,377
37.0
0.9
155,316
100.0
153,770
100.0
1.0
82,527
- 24.1
1.8
37.0
31.12.2022
12.3
10.1
14,120
15,547
Trade payables
37.9
2.8
0.9
94,196
95,010
Financial liabilities
1.7
6.2
5.2
Other liabilities
3,989
Deferred and current tax
6.8
10.1
8.1
15,761
17,037
Other provisions
0.2
26.0
26.0
339
427
Pension provisions
37.0
4,198
25,748
27,233
-5.5
31.12.2023
* Equity in each case as a percentage of corresponding balance sheet total.
Financial Services segment
Automotive segment
Group
in %
BMW Group equity ratio*
Currency-adjusted financial liabilities went up, primarily due to in-
creased volume of ABS financing and higher liabilities from cus-
tomer deposits. These increases took place against the backdrop
of rising financing requirements in light of the growth of Financial
Services business.
Other provisions increased significantly on a currency-adjusted
basis, largely due to higher provisions for statutory and non-stat-
utory warranty obligations, as well as product guarantees.
Pension obligations stood at € 427 million, surpassing the pre-
vious year's figure of € 339 million. The increase in the provision
for pensions resulted mainly from the application of lower dis-
count rates.
Equity attributable to shareholders of BMW AG rose to
€ 89,596 million mainly due to the net profit for the year attribut-
able to shareholders of BMW AG amounting to € 11,290 million.
The dividend payout amounting to € 5,430 million reduced
Group equity and, to an equal extent, equity attributable to
BMW AG shareholders. The continued share buy-back pro-
gramme also reduced equity attributable to shareholders of the
BMW Group.
Group equity climbed to € 92,923 million, driven primarily by the
Group net profit amounting to € 12,165 million (2022: € 18,582
million).
The increase in inventories was mainly due to the build-up of fin-
ished goods to service the markets and as a result of model
changes.
The managed contract portfolio with retail customers and deal-
erships fell by 2.8% to 3,600,359 contracts.
← = Q
Other Information
Remuneration Report
-2.7
Total equity and liabilities
250,890
246,926
1.6
3.9
Change
in % points
100.0
27 Consumption and carbon emissions data.
64
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Financial Performance
Group Financial Statements Responsibility Statement and Auditor's Report
1 The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior-year figures.
- 0.9
163,929
35.2
7.2
2,100,689
2,252,793
- 96.6
22,280
755
0.3
6,749
2.3
30.3
100.0
39,130
BMW total
BMW i3/18
BMW XM
BMW iX
2.7
5.5
57,905
61,117
BMW X7
12.5
50,989
thereof BEV
330,197
172,008
Record high for Rolls-Royce
All-electric vehicles accounted for 15.3% of deliveries (2022:
14.9%; +2.7%). The new MINI family will be launched in the
course of 2024. In addition to the completely new MINI Cooper
E*, an all-electric version of the MINI Countryman* is also availa-
ble for the first time. The new MINI Aceman, the brand's first
crossover model, will make its debut as a purely electrically pow-
ered model in spring 2024.
Deliveries of MINI vehicles by model variant
In 2023, the MINI brand delivered a total of 295,358 units to
customers (2022: 292,922 units; +0.8%), similar to the previ-
ous year's level. Electrification also had a highly perceptible im-
pact in the premium compact segment, with the MINI Cooper SE*
once again finishing the year as the brand's best-selling model.
The MINI Cooper SE Convertible* was also launched during the
reporting year, providing electrified driving pleasure in combina-
tion with an open-air experience. The limited edition of 999 ve-
hicles was quickly sold out. Overall, electrified MINI models (BEV
and PHEV models) accounted for 20.8% of the brand's deliver-
ies (2022: 20.8%; +0.0%).
MINI electrifies driving pleasure
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Financial Performance
To Our Stakeholders
BMW Group Report 2023
69
2 Deliveries including BMW Brilliance Automotive Ltd, also for the period prior to that entity's
full consolidation in the BMW Group Financial Statements (1 January to 10 February 2022:
96,133 units).
17 Consumption and Carbon Disclosures.
M.YH2739E
7.7
- 13.5
200,945
173,878
thereof PHEV
14.7
92.0
1.3
277,057
280,684
BMW X5/X6
BMW 7 Series/BMW 8 Series
BMW 5 Series/BMW 6 Series
BMW 3 Series/BMW 4 Series
10.0
9.6
205,971
225,827
Share of BMW
deliveries 2023 in %
Change in %
2022
2023
BMW 1 Series/BMW 2 Series
in units
Deliveries of BMW vehicles by model series²
The 2024 model year looks highly promising. Following the suc-
cess of the BMW M3 CS', another special model in the high-per-
formance class, the BMW M4 CS, is on the verge of being
launched. Further updates to the BMW M3, BMW M4 and BMW
M2 have already been announced and will be introduced during
the year. Alongside the new BMW M5, the lineup of BMW M in
the luxury segment has been complemented by the new BMW i5
M60 xDrive Touring¹.
The focus on the electrification of drive systems was also evident
in market launches in 2023. Right at the beginning of the year,
the BMW XM was launched worldwide as BMW M's first high-
performance class PHEV. The BMW i7 M70 xDrive¹ and BMW i5
M60 xDrive models expanded the BMW M portfolio of all-elec-
tric high-performance vehicles.
BMW M is also on course for growth. With a significant increase
of 14.2% to a total of 202,431 units, sales of high-performance
automobiles surpassed the 200,000-mark for the first time
(2022: 177,258 units). The positive development is also a result
of the electrification of the BMW M model range: the highest-vol-
ume model was once again the Sports Coupé BMW i4 M50¹.
BMW M sets new record
The focus of product innovations in 2023 was predominantly
aimed at the business class. The new BMW X5 and BMW X6
flagship models were launched in the spring. The new BMW 5
Series Sedan followed in autumn. At market launch, all drivetrain
variants were available for this model, including the first all-elec-
tric BMW i51, the two PHEV models BMW 530e¹ and BMW 550e
xDrive, as well as models powered by conventional combustion
engines. The globally popular Business Sedan, which received
an overwhelmingly positive response from the international trade
press shortly after its launch, will be available on the Chinese
market from early 2024. In October 2023, the BMW X2 also cel-
ebrated its world premiere with its first all-electric BMW iX21
model. The market launch will start in spring 2024.
New BMW brand products
← = Q
Other Information
Remuneration Report
BMW Z4
The
year 2023 was an extremely successful one for Rolls-Royce.
The luxury brand delivered a total of 6,032 units to customers in
the reporting year (2022: 6,021 units; +0.2%).
BMW X1/X2
558,462
18.0
1.2
400,898
405,562
14.1
31.3
242,189
318,051
0.5
- 8.9
12,029
10,957
2.7
22.7
48,708
59,763
12.2
- 13.2
315,590
273,877
24.8
16.6
478,932
BMW X3/X4
With this performance, Rolls-Royce achieved a new record high
in terms of deliveries of ultra-luxury class automobiles. Once
again, the most sought-after model was the Luxury Offroader
Rolls-Royce Cullinan. The Bespoke programme, which allows for
custom-made Rolls-Royce models tailored to individual cus-
tomer preferences, also enjoyed great success worldwide. To-
wards the end of 2023, the first all-electric Rolls-Royce Spectre*
made its market debut. The luxurious Supercoupé marks a mile-
stone in the history of the prestigious marque and already has a
backlog of orders stretching through to 2025.
Deliveries of Rolls-Royce automobiles by model variant
in units
The financial result of the Automotive segment was a net nega-
tive amount of € 339 million and therefore significantly down on
the previous year's corresponding figure (2022: net positive
The EBIT margin for the segment was at 9.8% for the reporting
year (2022: 8.6%; +1.2 percentage points). As forecasted in the
quarterly report for 30 September 2023, the EBIT margin was
within the range of 9.0 to 10.5%.
At € 12,981 million, profit before financial result in the 2023 fi-
nancial year was significantly higher than in the same period of
the previous year (2022: € 10,635 million; +22.1%). The full
consolidation of BMW Brilliance had a dampening impact in
2022 in the year-on-year comparison.
The net amount of other operating income and expenses de-
creased year-on-year. Among other factors, other operating in-
come in the previous year included higher reversals of provisions.
Selling and administrative expenses rose to € 9,195 million in
the reporting period (2022: € 8,801 million; +4.5%). A signifi-
cant reason for the increase is higher costs for IT projects.
development of new models, such as the BMW 5 Series and
NEUE KLASSE models, for example.
The increased research and development expenditure is primar-
ily related to the cross-series digitalisation and electrification of
the vehicle fleet, as well as the development of automated driving
functions. Furthermore, the expenditure resulted from the
In the previous year, the impact of the full consolidation of
BMW Brilliance, including approximately € 1.8 billion in depreci-
ation from purchase price allocation and the elimination of ap-
proximately € 1.3 billion in intra-group profits, had a negative ef-
fect on the cost of sales. Depreciation from the purchase price
allocation amounted to approximately € 1.4 billion in 2023.
The segment's cost of sales amounted to € 109,920 million and
was therefore moderately higher than the previous year (2022:
€ 104,324 million; +5.4%). Similar to revenue, higher vehicle
sales and full consolidation of BMW Brilliance also had an impact
in this regard. The segment's cost of sales was also negatively
impacted by increased expenses for warranties. A higher propor-
tion of electrified, especially all-electric, vehicles also contributed
to increased costs.
At € 132,277 million (2022: € 123,602 million; +7.0%, cur-
rency-adjusted: +11.3%), the Automotive segment recorded a
solid year-on-year increase in revenues on the back of higher ve-
hicle sales. In the previous year, vehicle sales fell due to produc-
tion cutbacks caused by the limited availability of semiconductors
and wiring harnesses as well as pandemic-related lockdowns in
China. Furthermore, the increased volume of high-revenue mod-
els sold, such as the BMW 7 Series and the BMW X5, as well as
growth in spare parts and accessories business, also contributed
to the year-on-year increase in revenues. The full consolidation
of BMW Brilliance also increased revenues. Unfavourable cur-
rency translation effects, primarily from the Chinese renminbi and
the US dollar, held down the increase in revenues.
As in the analysis of the Group's earnings performance, it should
be noted that BMW Brilliance has been fully consolidated since
11 February 2022, and therefore for only part of the financial
year 2022. In 2023, it has been included for the full year.
Automotive segment earnings performance in line with
expectations
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Financial Performance
To Our Stakeholders
BMW Group Report 2023
70
70
7 Consumption and Carbon Disclosures.
M.JA 1737E
BMW Group margins by segment
PUS659E
in %
Gross profit margin¹
EBIT margin²
2 Profit before financial result as a percentage of segment revenues.
8.1
0.1
17.3
1 Gross profit as a percentage of segment revenues.
8.1
17.4
1.2
8.6
9.8
1.3
15.6
16.9
Change
in % points
2022
2023
The Automotive segment's return on capital employed (ROCE)
for 2023 finished at 20.2%, and was therefore within the pre-
dicted target range of 18 to 22% (2022: 18.1%; +2.1 percent-
age points). The improvement was primarily due to the higher
profit before financial result.
At € 12,642 million, profit before tax for the financial year 2023
was significantly down on the previous year (2022:
€ 18,918 million), whereby the decrease was primarily due to
the gain of € 7.7 billion recognised in other financial result in
2022 arising on the remeasurement of the segment's previous
at-equity interest in BMW Brilliance.
In the year under report, the interest result was primarily im-
pacted by higher expenses arising from the unwinding of interest
on discounted provisions, while interest income from bank de-
posits had an offsetting effect. In the previous year, interest in-
come arising from the change in interest rates in connection with
the unwinding of interest on discounted provisions was reported
within interest and similar expenses.
amount of € 8,283 million). The main reason for the year-on-
year deterioration was the gain of € 7.7 billion recognised in
2022 in other financial result arising on the remeasurement of
the segment's previous at-equity interest in BMW Brilliance.
EBIT margin²
Gross profit margin¹
MOTORCYCLES
AUTOMOTIVE
Responsibility Statement and Auditor's Report
0.2
6,032
- 25.1
2,015
1,510
Ghost
52.7
- 5.1
Combined Management Report
Financial Performance
155,607
20.8
Change in %
2022
418
505
2023
in units
Phantom
Share of MINI
deliveries 2023 in %
Change in %
2022
2023
MINI total
MINI Countryman
MINI Clubman
MINI Convertible
MINI Hatch (3- and 5-door)
32,141
6,021
24,423
10.9
Rolls-Royce total
100.0
0.8
292,922
295,358
326
Spectre
28.2
8.7
76,700
83,403
8.1
3,260
3,523
Cullinan
8.2
- 13.1
27,870
24,207
- 48.8
328
168
Wraith/Dawn
31.6
54,110
Group Financial Statements
To Our Stakeholders
Change
in units
BMW Group deliveries of electrified models
The success of the BMW i44 and BMW iX14 models had a major
impact on sales growth. The BMW iX34 and the BMW iX4 also
continued to enjoy great popularity. Furthermore, electrification
made its debut in its top model series in the form of the BMW 174
Luxury Sedan. The new BMW 154 Business Sedan was also
added to the range of all-electric automobiles. This means that
the BMW Group now has an all-electric model in each of its core
segments.
The share of all-electric vehicles in deliveries increased to 14.7%
in 2023 (2022: 9.0%; +63.3%). The significant increase also
had a positive effect on the development of fleet carbon emis-
sions. Carbon Emissions
The BMW brand set a new record with deliveries totalling
2,252,793 units (2022: 2,100,6892 units; +7.2%). MINI deliv-
ered 295,358 units, similar to one year earlier (2022: 292,922
units; +0.8%). Rolls-Royce, the renowned luxury marque, deliv-
ered 6,032 units to customers, achieving a new all-time high
(2022: 6,021 units; +0.2%).
In total, during the reporting year, the BMW Group delivered
2,554,183 automobiles across the BMW, MINI and Rolls-Royce
brands, setting a new record high. In line with expectations, a
solid year-on-year increase in deliveries was therefore achieved
in the reporting year (2022: 2,399,6322 units; +6.4%).
The BMW Group can look back on a positive course of business
in the financial year 2023. Customers worldwide responded pos-
itively to the appealing and contemporary product portfolios of
the BMW, MINI and Rolls-Royce brands. The BMW Group offers
a diverse range of drive systems, encompassing all-electric mod-
els (BEV), state-of-the-art plug-in hybrids (PHEV) and highly ef-
ficient combustion engines, to meet a wide range of customer re-
quirements. The ramp-up of electric mobility was also a signifi-
cant driver of growth in 2023.
BMW Group finishes reporting year with new sales volume
record
AUTOMOTIVE SEGMENT
2023
M.EV 544E
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Financial Performance
To Our Stakeholders
BMW Group Report 2023
66
* Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
- 10.2
COURSE OF BUSINESS AND
SEGMENTS
BEV
375,716
2022
215,752
- 13.5
- 12.8
218,040
200,945
17,095
433,792
565,875
Total³
16,281
MINI
173,878
BMW
190,159
PHEV
326
Rolls-Royce
3.3
43,744
45,193
MINI
92.0
172,008
330,197
BMW
74.1
in %
100.0
39,654
100.0
35,615
Shareholders
Government/public sector
Providers of finance
5.7
35.1
13,932
41.3
14,721
Employees
ALLOCATION
- 10.2
25.8
39,654
22.9
35,615
Net value added
0.8
9.4
14,456
9.4
14,565
Depreciation and amortisation of total tangible, intangible and investment
assets
-7.3
3,665
- 4.8
10.3
5.7
Net value added
1.6
641
2.5
875
Non-controlling interests
- 39.9
31.4
12,461
21.0
7,488
Group
- 30.6
13.8
5,480
10.7
3,802
4.1
12.3
4,866
14.2
5,064
61.2
2,274
30.4
Electric mobility maintains momentum
MIA115E
778.4
847.9
793.5
826.3
thereof China¹
South Korea
930.8
986.5
1,067.9
1,031.0
1,073.1
Asia¹
3,4
France
375.7
307.9
368.0
363.5
397.3
thereof USA
3,1
472.9
379.7
724.7
451.7
3,3
56.1
BMW Group Report 2023
68
99
3
37 Consumption and Carbon Disclosures.
2 Including BMW Brilliance Automotive Ltd., also for the period before full consolidation in the BMW Group Financial Statements.
10,7
Deliveries including BMW Brilliance Automotive Ltd., also for the period prior to that entity's full consolidation in the Group Financial Statements of the BMW Group (1 January to 10 February 2022:
96,133 units, 2021: 651,236 units, 2020: 602,247 units, 2019: 538,612 units).
Germany
2,537.5
2,325.2
2,521.5
2,399.6
2,554.2
Total¹
15,6
6,2
USA
UK
52.2
45.4
52.8
48.6
Other markets
Combined Management Report
Financial Performance
441.5
Italy
thereof Germany
Europe
in 1,000 units
BMW Group deliveries of vehicles by region and market
M.ED1871E
The core BMW brand set a new sales record in 2023 with
2,252,793 units (2022: 2,100,6891 units; +7.2%) delivered.
This performance confirms the brand's top position in the global
premium segment. The key driver of growth was sales of all-elec-
tric models, which nearly doubled in 2023 to 330,197 units
(2022: 172,0082 units; +92.0%). Models from the X family, es-
pecially the BMW X1, continued to enjoy great popularity. Almost
every fifth vehicle (19%) of this highly successful model was sold
in the all-electric BMW iX13 version.
BMW retains top spot in global premium segment
Sales markets in Asia recovered slightly from the downturns that
had arisen in the previous year due to general pandemic-related
restrictions. In the reporting year, deliveries in this region totalled
1,073,115 units (2022: 1,030,9871 units; +4.1%). The sales
situation in China also improved, with deliveries up slightly by
4.1% to 826,257 units (2022: 793,520¹ units).
In the Americas, the BMW Group recorded solid growth, with
sales up to 482,048 units (2022: 441,471 units; +9.2%). The
positive trend also continued in the USA, with deliveries up by
9.3% to 397,325 units (2022: 363,541 units).
A look at the international markets also confirms the successful
development of sales during the reporting year. All key regions
contributed to growth. Vehicle sales in Europe totalled 942,958
units (2022: 878,515 units; +7.3%). Solid growth was also rec-
orded in Germany, where deliveries totalled 272,589 units
(2022: 254,292 units; +7.2%). In the UK, sales rose to 159,202
units (2022: 157,329 units; +1.2%). Significant growth was rec-
orded in France, with sales up to 86,606 units (2022: 75,805
units; +14.2%), while Italy also saw strong growth with 78,763
units delivered (2022: 67,025 units; +17.5%).
Solid growth in Europe and America, new record high in
Asia
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
Financial Performance
BMW Group Report 2023
67
47 Consumption and Carbon Disclosures.
3 Including BMW Brilliance Automotive Ltd., also for the period before full consolidation in the
BMW Group Financial Statements.
² Deliveries include BMW Brilliance Automotive Ltd., also for the period prior to that entity's full con-
solidation in the BMW Group Financial Statements (1 January to 10 February 2022: 96,133
units).
1See 7 Glossary for definition of deliveries. Retail vehicle deliveries during a given reporting period
do not correlate directly to the revenues that BMW Group recognizes in respect of such reporting
period.
The BMW Group's sales growth in the reporting year was signif-
icantly influenced by the systematic electrification of its product
range. This was borne out by continued strong growth in deliver-
ies of all-electric vehicles. Market demand for all-electric vehicles
from the BMW, MINI and Rolls-Royce brands resulted in deliver-
ies rising to 375,716 units (2022: 215,752³ units; +74.1%).
Overall, the BMW Group delivered more than half a million elec-
trified vehicles (BEV and PHEV) to customers for the first time
with a total of 565,875 units (2022: 433,792³ units; +30.4%).
BMW Group - largest automobile markets in 2023
482.0
in % of sales
2022
China
32,3
233.8
163.2
164.3
157.3
159.2
Americas
thereof UK
25,4
330.5
285.0
266.8
254.3
272.6
Other
1,081.6
913.6
949.1
878.5
943.0
2019
2020
2021
2023
To Our Stakeholders
BMW Group Report 2023 To Our Stakeholders
6
4,406
11,197
- 6,791
19,778
27,337
- 7,559
61
- 2,734
17,003
24,603
-41
-7,600
2023
488
2022
Change
9,145
- 8,657
- 50
56
-750
- 9,042
8,292
- 184
6
- 190
- 440
59
- 499
62
BMW Group Report 2023
- 1,249
3,031
-2,775
481
Combined Management Report
Financial Performance
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
The Automotive segment generated a free cash flow in 2023 to-
talling € 6,942 million.
The main factor for the year-on-year decrease was the net cash
outflow from investing activities, which, in 2022, had included a
positive impact of € 5,011 million in connection with the full con-
solidation of BMW Brilliance. Excluding that impact, the seg-
ment's free cash flow would have amounted to € 6,060 million
in 2022.
1,782
Net financial assets of the Automotive segment decreased year
on year due to dividend payments and the share buyback pro-
gramme.
In the Automotive segment, net financial assets comprised the
following:
Net financial assets Automotive segment
in € million
Cash and cash equivalents
Marketable securities and investment funds
Intercompany net financial assets
Automotive segment cash inflow from operating activities im-
proved year on year, with the change in trade receivables and
trade payables contributing to the increase. In contrast, the build-
up of inventories to service the markets had a negative impact.
Liabilities for bonus payments to dealerships went up, partly due
to the higher sales volume, and had a positive impact on the cash
flow. In addition, the net cash inflow from operating activities rose
due to lower income tax payments.
Less: external financial liabilities*
Financial assets
13,109
13,590
Change
2023
The change in the net cash outflow from financing activities was
attributable to lower cash outflows relating to intragroup refi-
nancing on the one hand and the decreased repayment of exter-
nal financial liabilities on the other.
The lower cash inflow from operating activities of the Financial
Services segment was primarily due to changes in leased prod-
ucts and receivables from sales financing, particularly credit fi-
nancing for dealerships. The year-on-year increase in credit fi-
nancing for dealerships was driven by improved vehicle availa-
bility, model changes, and a higher average financing volume per
vehicle.
2022
in € million
Cash flows Financial Services segment
Cash and cash equivalents held by the Financial Services seg-
ment changed as follows:
* Excluding derivative financial instruments.
Net financial assets Automotive segment
Cash inflow (+) / outflow (-) from operating activities
Cash inflow (+) / outflow (-) from investing activities
Cash inflow (+) / outflow (-) from financing activities
Effects of exchange rate and changes in composition of segment
Change in cash and cash equivalents
12,077
Tangible, intangible and investment assets
29,460
2,426
2,450
Capital reserves
12,093
Investments
663
- 5
Nominal amount of own shares
14,004
15,560
Property, plant and equipment
639
EQUITY AND LIABILITIES
Subscribed capital
-17
27,541
OTHER ENTITIES SEGMENT /
11,046
1,444
16,398
Receivables from subsidiaries
20,218
17,932
Equity
1,161
Revenue reserves
1,349
5,481
3,802
Unappropriated profit available for distribution
7,523
8,505
Inventories
11,665
Trade receivables
1,823
- 19
6,311
2023
Taxes on income resulted primarily from the current tax calcu-
lation for the financial year.
The financial result improved by € 2,842 million compared to
the previous year. The previous year mainly included higher ex-
penses from the the fair value measurement of plan assets off-
set against pension obligations.
Income from profit and loss transfer agreements with Group
companies, reported in the line item Result on investments, de-
creased significantly. This was essentially due to the decrease
in the profit of BMW INTEC Beteiliungs GmbH, Munich, which,
among other things, received lower distributions.
Other operating expenses decreased to € 2,067 million (2022:
€ 2,889 million) and, as in the previous year, mainly included
expenses from financial transactions and additions to other
provisions.
Other operating income was reduced to € 1,872 million (2022:
€ 2,529 million). The change was mainly due to lower reversals
of other provisions and lower income from financial transac-
tions.
A large proportion of research and development expenses was
related to new vehicle models, including the all-electric
BMW i5* and Rolls Royce Spectre* models and the electrified
BMW 5 Series, BMW X3 and BMW X5 models, as well as the
development of digital products, automated driving and the
NEUE KLASSE. In line with the ramp-up of vehicles and the ex-
penses for platforms related to the transformation towards
electromobility, research and development costs increased by
2.1% compared to the previous year.
Overall, selling expenses increased slightly, while general admin-
istrative costs increased substantially.
* Consumption and Carbon Disclosures
Gross profit decreased by € 145 million to € 17,009 million.
24,510
6,330
- 1,067
-84
Revenues increased by € 9,067 million compared to the previ-
ous year. Price and product mix effects, along with increased
sales volume, had a positive impact on revenue growth. Ex-
change rate factors also had a positive effect on revenues. Geo-
graphically, the increase in revenues was mainly attributable to
Europe and Asia. Revenues totalled € 107,874 million (2022:
€ 98,807 million), of which Group internal revenues accounted
for € 83,231 million (2022: € 77,843 million) or 77.2% (2022:
78.8%).
Transfer to capital reserves according to § 237 V AktG
Unappropriated profit available for distribution
Profit from the reduction of the share capital
Production costs went up by € 9,212 million to € 90,865 million,
mostly due to higher costs for materials and logistics.
76
BMW Group Report 2023
To Our Stakeholders
in € million
2022
2023
Intangible assets
ASSETS
in € million
BMW AG Balance Sheet at 31 December
The payout ratio takes into account the number of shares entitled
to dividends at 31 December 2023 and may change prior to the
Annual General Meeting due to the ongoing share buyback
programme.
BMW Group's consolidated net profit in accordance with IFRS.
The payout ratio thus remains within the forecasted corridor of
30% to 40%, as in 2022 (30.6%).
Financial and net assets position
Subject to the shareholders' approval of the appropriation of re-
sults at the Annual General Meeting, the unappropriated profit
available for distribution amounts to € 3,802 million (2022:
€ 5,481 million). This translates to a payout ratio of 33.7% cal-
culated based on the BMW AG shareholders' portion of the
After deducting the expense for taxes, the Company reported a
net profit of € 4,366 million, compared to € 6,311 million in the
previous year.
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Financial Performance
2022
Registered profit-sharing certificates
Liabilities to subsidiaries
25
Receivables from subsidiaries declined to € 16,398 million
(2022: € 24,510 million). Specifically, there was a decrease in
financial receivables from BMW INTEC Beteiliungs GmbH, Mu-
nich.
Investment assets remained in line with last year's level and to-
talled € 12,077 million (2022: € 12,093 million). Inventories in-
creased to € 8,505 million (2022: € 7,523 million), primarily due
to higher levels of finished goods and goods for resale.
Capital expenditure on intangible assets and property, plant and
equipment in the year under report totalled € 4,571 million
(2022: € 4,498 million). Depreciation and amortisation
amounted to € 2,607 million (2022: € 2,452 million).
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
The increase in other receivables and other assets to € 3,120
million (2022: € 2,281 million) was due in particular to an in-
crease in other assets.
To Our Stakeholders Combined Management Report
Financial Performance
77
72,243
67,824
72,243
67,824
Total assets
4,051
BMW Group Report 2023
Liquidity within the BMW Group is ensured by means of a liquidity
concept applied uniformly across the Group. This involves con-
centrating a significant part of the Group's liquidity at the level of
BMW AG. An important instrument in this context is the cash pool
based at BMW AG.
Cash and cash equivalents decreased slightly by € 62 million to
€ 6,145 million due to outflows from investing and financing
activities. This was offset by the surplus from operating activities.
Equity fell by € 2,286 million to € 17,932 million, mainly due to
lower unappropriated profit and lower retained earnings as a re-
sult of the share buyback programmes. The equity ratio changed
from 28.0% to 26.4%.
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
EU Taxonomy
To Our Stakeholders
BMW Group Report 2023
78
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesell-
schaft, Frankfurt am Main, Munich branch, has issued an unqual-
ified audit opinion on the Company Financial Statements of BMW
AG, of which the balance sheet and the income statement are
presented here. For the purposes of their inclusion in Company
Register, the Company Financial Statements of BMW AG for the
financial year 2023 will be submitted electronically to the body
that maintains the Company Register, and may be obtained via
the Company Register website. The financial statements are also
available on the BMW Group website at www.bmwgroup.com/ir.
Due to its significance in the Group and its close ties with Group
companies, expectations for BMW AG with respect to its non-fi-
nancial performance indicators correspond largely to the BMW
Group's outlook. This is described in detail in the 7 Outlook chapter
of the Combined Management Report.
For the financial year 2024, BMW AG expects an unchanged div-
idend payout ratio (unappropriated profit of BMW AG in accord-
ance with HGB in relation to the Group net profit attributable to
shareholders of BMW AG in accordance with IFRS), and there-
fore within the targeted range of between 30 and 40% (2023:
33.7%).
Outlook
BMW AG is integrated in the Group-wide risk management sys-
tem and internal control system of the BMW Group. Further in-
formation is provided in the Internal Control System chapter of the
Combined Management Report.
BMW AG's performance is essentially dependent on the same
set of risks and opportunities that affect the BMW Group and
which are described in detail in the Risks and Opportunities chapter
of the Combined Management Report. As a general rule, BMW
AG participates in the risks entered into by Group companies in
proportion to the respective shareholding percentage. At the
same time, the result on investments has a significant impact on
the earnings of BMW AG.
Risks and opportunities
Deferred income went up by € 450 million to € 4,501 million and
included primarily amounts for services still to be performed re-
lating to service and maintenance contracts.
The decrease in liabilities to subsidiaries to € 22,648 million
(2022: € 25,703 million) was mainly due to the decline in finan-
cial liabilities.
Other provisions decreased from € 11,686 million to € 11,537
million mainly due to a decline in provisions for taxes and provi-
sions for liability risks. Conversely, the provision for statutory and
non-statutory warranty and product guarantee obligations in-
creased.
After offsetting pension plan assets against pension obligations,
provisions for pensions decreased from € 2,871 million to
€ 2,231 million.
In order to secure pension obligations, cash funds totalling € 430
million were transferred to BMW Trust e. V., Munich, in conjunc-
tion with a Contractual Trust Arrangement (CTA), to be invested
in plan assets. Plan assets are offset against the related guaran-
teed obligations.
4,501
24
Deferred income
31,599
Provisions
6,207
6,145
Cash and cash equivalents
11,686
11,537
Other provisions
13,768
2,904
Marketable securities
2,871
2,231
Pension provisions
2,281
3,120
Other receivables and other assets
2,705
14,557
Current assets
38,222
Liabilities
902
1,364
25,703
22,648
Other liabilities
Transfer to revenue reserves
6,786
7,552
Trade payables
116
142
Prepaid expenses
1
35
Liabilities to banks
44,586
33,392
Net profit
2023
Profit after income tax
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Financial Performance
73
*The calculation only includes automobile markets in which the Financial Services segment is rep-
resented by a consolidated entity.
Retail customer contract portfolio in the Financial Services
segment in 2023
2023
2021
2020
2019
0
22.1
24.8
29.7
2022
in 1,000 units
5,486
5,592
ELIMINATIONS
At 31 December 2023, the total business volume of dealership
financing stood at € 18,941 million, up sharply compared to the
end of the previous financial year (2022: € 15,209 million;
+24.5%). The increase was mainly due to improved vehicle
availability, model changes and a higher average financing vol-
ume per vehicle.
Dealership financing up on previous year
Under the brand name Alphabet, the Financial Services segment
primarily offers credit financing and leasing contracts, as well as
related services, mainly to commercial customers as part of its
fleet management business. Out of the total portfolio of credit fi-
nancing and leasing contracts with retail customers, this line of
business accounted for 720,094 contracts at the end of the re-
porting period (31 December 2022: 714,630 contracts²;
+0.8%).
Fleet business at previous year's level
At 31 December 2023, a total of 4,952,318 credit financing and
leasing contracts were in place with retail customers (31 Decem-
ber 2022: 5,210,246 contracts; -5.0%), with a declining trend
arising in all regions (EU Bank¹ -6.0%; Europe -2.8%; Americas
-2.8%; Asia/Pacific/Middle East/Africa -1.2%; China -15.5%).
in 1,000 units
Retail customer contract portfolio in the Financial Services
segment in 2023
2023
2022
2021
2020
2019
0
4,952
5,210
5,577
28.4
The Other Entities segment recorded a loss before tax
of € 100 million (2022: profit before tax of € 995 million). The
main reason for the deterioration was the level of fair value
measurement losses recognised on interest rate hedging trans-
actions in the line item "Other financial result" as a result of falling
interest rates in the USA, the UK and the eurozone during the
reporting year. In the previous year, sharply rising interest rates
led to fair value measurement gains on interest rate hedging
transactions reported by the Other Entities segment.
29.9
Financing
The return on capital employed (ROCE) in the Motorcycles seg-
ment for the reporting year came in at 22.1%, and was therefore
within the expected target range of 21 to 26% (2022: 24.9%; -
2.8 percentage points). The primary factor for the year-on-year
change was the rise in net working capital, driven by a number of
factors, including the model update in 2023 and a moderate in-
crease in inventory levels.
At € 258 million, profit before tax in the financial year 2023 was
down slightly (2022: € 269 million; - 4.1%), whereby sales vol-
ume growth and positive pricing effects were offset by unfavour-
able product mix effects and higher material costs. In a year-on-
year comparison, net interest expense of € 1 million in 2023 had
a negative impact on the financial result (2022: net interest in-
come of € 12 million). In the previous year, interest income aris-
ing from the change in interest rates in connection with the un-
winding of interest on discounted provisions was reported within
interest and similar expenses. In contrast, decreasing interest
rates had a negative impact in 2023.
The EBIT margin of the Motorcycles segment came in at 8.1%
(2022: 8.1%) and therefore within the forecast target range of 8
to 10%.
Motorcycles segment earnings performance within target
forecast
← = Q
Other Information
Remuneration Report
FINANCIAL SERVICES SEGMENT
Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023 To Our Stakeholders
72
*For a definition of deliveries see Glossary. Retail vehicle deliveries during a given reporting pe-
riod do not correlate directly to the revenues that BMW Group recognizes in respect of such re-
porting period.
2023
2022
2021
2020
Combined Management Report
Financial Performance
Financial Services segment earnings down on previous year
Profit before tax reported by the Financial Services segment for
the financial year 2023 amounted to € 2,962 million (2022:
€ 3,205 million; -7.6%) and was therefore moderately down on
the previous year. Key reasons for the decrease were higher re-
financing costs due to rising interest rates and a decrease in the
contract portfolio. Remarketing revenues from lease returns re-
mained at a high level, but were nevertheless below the previous
year's figure. This also had a negative impact on earnings com-
pared to the previous year. On the other hand, a lower expense
for credit risk provisioning had a positive effect on earnings. In
the previous year, the level of expense recognised in connection
with credit risk provisioning was heavily influenced by geopolitical
uncertainties and a weaker macroeconomic outlook.
The credit loss ratio for the entire credit portfolio remained at a
low level in 2023, finishing at 0.18% for the year (2022: 0.13%).
In balance sheet terms, business volume increased slightly to
stand at € 137,910 million (2022: € 135,689 million; +1.6%).
Stable earnings performance by Financial Services segment
Return on equity for the Financial Services segment remained at
a similar level to the previous year, finishing at 17.2% for the fi-
nancial year 2023 (2022: 17.9%; -0.7 percentage points). Re-
turn on equity for 2023 was therefore within the revised target
range of between 16 and 19%.
New business with retail customers in line with last year's
level
IIII
16.1
16.2
20.8
21.4
22.3
38.2
41.0
50.5
49.8
52.2
in %
New BMW Group vehicles leased or financed by the
Financial Services segment*
The share of new BMW Group vehicles either leased or financed
by the Financial Services segment stood at 38.2%* in 2023
(2022: 41.0%; -2.8 percentage points).
The total volume new credit financing and leasing contracts with
retail customers rose by 3.4% to € 57,333 million (2022:
€ 55,449 million), mainly due to a higher average financing vol-
ume per vehicle as a result of an improved product mix in the
Automotive segment.
New lease business grew by 8.5% increase in 2023, whereas
credit financing business contracted by 4.1%. Leasing ac-
counted for 33.6% of total new business, credit financing for
66.4%.
Credit financing and leasing business with retail customers re-
mained at the same level in 2013, with a total of 1,542,514 new
contracts concluded (2022: 1,545,490 contracts; -0.2%). Out of
the new contracts concluded in 2023, 325,320 contracts (2022:
321,535 contracts; +1.2%) related to credit financing and leas-
ing of pre-owned BMW Group vehicles.
Leasing
Other taxes
At the level of profit before tax, eliminations increased to a posi-
tive amount of € 1,334 million (2022: € 122 million). In compar-
ison to the previous year, lower eliminations in 2023 for leasing
and credit financing business had a positive impact on the result
reported.
Middle East/Africa
10.3
- 3,624
- 3,824
-6,924
Research and development expenses
Administrative expenses
- 4,058
- 4,123
Selling expenses
- 6,782
107,874
-90,865
17,009
Remuneration Report
2,529
17,154
- 81,653
2022
98,807
Cost of sales
Revenues
Gross profit
Other operating income
1,872
-2,067
Income taxes
Financial result
Result on investments
Other operating expenses
5,481
3,802
-24
24
- 830
-564
4,366
- 18
4,384
- 1,594
8,520
-2,926
3,592
- 2,889
in € million
Asia/Pacific/
BMW AG Income Statement
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Financial Performance
BMW Group Report 2023 To Our Stakeholders
74
2 Previous year's value adjusted due to a change in brands for contracts with third-party branded
vehicles.
← = Q
1EU Bank comprises BMW Bank GmbH with its branches in Italy, Spain and Portugal.
America
18.1
EU Bank'
10"
Europe
35.5
12.0
China
24.1
COMMENTS ON THE
FINANCIAL STATEMENTS OF
BMW AG
Bayerische Motoren Werke Aktiengesellschaft (BMW AG), based
in Munich, Germany, is the parent company of the BMW Group.
The comments on the BMW Group and Automotive segment
provided in earlier sections apply to BMW AG, unless presented
differently in the following section. The Financial Statements of
BMW AG are drawn up in accordance with the provisions of the
German Commercial Code (HGB) and the relevant supplemen-
tary requirements contained in the German Stock Corporation
Act (AktG).
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
Financial Performance
To Our Stakeholders
BMW Group Report 2023
75
75
BMW AG's solid financial condition is reflected in the results of
operations, financial position and net assets reported for the fi-
nancial year 2023. Business developed in line with management
expectations. This assessment also takes into account events
after the end of the reporting period.
year 2023 was characterised by a volatile business environ-
ment marked by increasing (geo-)political tensions. In addition,
in many markets higher inflation rates accompanied by increased
interest rates had a negative impact on the consumer climate.
Despite these factors, BMW AG overall looks back on a positive
business performance in the reporting year.
The
As of 31 December 2023, BMW AG had 85,168 employees,
plus 5,733 apprentices, interns and thesis students (31 Decem-
ber 2022 81,683 employees, plus 5,500 apprentices, interns
and thesis students).
BMW AG develops, manufactures and sells automobiles and
motorcycles as well as spare parts and accessories manufac-
tured in-house, by foreign subsidiaries and by external suppliers,
and performs services related to these products. Sales activities
are carried out primarily through branches, subsidiaries, inde-
pendent dealerships and importers. Automobile deliveries in-
creased by 235,621 to 2,620,920 units in the financial year
2023. This figure includes 692,267 units relating to series sets
supplied to BMW Brilliance Automotive Ltd., Shenyang, an in-
crease of 50,473 units compared with the previous year.
Business environment and review of operations
The general and sector-specific environment of BMW AG is es-
sentially the same as that of the BMW Group and is described in
the Financial Performance section of the Combined Management
Report.
Differences in accounting treatments based on HGB (used for
the Company Financial Statements) and IFRS (used for the
Group Financial Statements) are mainly to be found in connec-
tion with the capitalisation of intangible assets, the creation of
valuation units, the recognition and measurement of financial in-
struments and provisions as well as the recognition of deferred
tax assets. Differences also arise in the presentation of assets
and liabilities and of items in the income statement.
The key financial performance indicator for BMW AG is the divi-
dend payout ratio. This is defined as the unappropriated profit of
BMW AG in accordance with HGB in relation to the Group net
profit attributable to shareholders of BMW AG in accordance with
IFRS. The key non-financial performance indicators are essen-
tially identical and concurrent with those of the BMW Group.
These are described in detail in the ▾ Financial Performance section
of the Combined Management Report.
Results of operations
Other Information
Total equity and liabilities
EU TAXONOMY
||
Climate change
adaptation
о
III
Sustainable use
and protection of water
and marine resources
х
IV
2019
0
In parallel to the presentation of the model update of the S 1000
XR in October, the M variant - the M 1000 XR - was announced
as a new model and will provide new impetus in the sports seg-
ment. The R nineT family received a refreshed look with the world
debuts of the new R 12 nineT and R 12 boxer models towards
the end of the year.
As model updates, the F 800 GS, F 900 GS and GS Adventure
revive the BMW Motorrad 2-cylinder family in the Adventure
segment.
For BMW Motorrad, the 2023 reporting year was dominated by
the centenary celebrations. Four new models and four model up-
dates were presented for market launches in 2024. BMW Motor-
rad presented the new BMW CE 02 at the BMW Motorrad Days
in July 2023. One year after the launch of the BMW CE 04,
BMW Motorrad announced a further electric vehicle for urban
centres and is systematically pursuing its electric mobility strat-
egy. The BMW CE 02 eParkourer opens up a new vehicle seg-
ment in urban mobility.
China
7.6
Transition to a
circular economy
USA
8.1
Climate change mitigation
V
80
BMW Group Report 2023 To Our Stakeholders
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
EU Taxonomy
Remuneration Report
Other Information
← = Q
Pollution prevention
and control
[[The BMW Group examined the relevance of economic activity [[Environmental objectives of EU Taxonomy
In order to determine the Taxonomy alignment of economic ac-
tivities CCM 3.3 and CCM 6.5 in the reporting year, they must be
reviewed against the technical screening criteria relevant to
them:
1. They make a substantial contribution to the fulfilment of
the environmental objective based on the specific carbon
emissions for the respective vehicles ("Substantial contri-
bution").
2. They do not cause any significant harm to other environ-
mental objectives based on the specific requirements for
each relevant economic activity ("Do no significant harm"
or "DNSH").
It must also be ensured that the organisation carrying out the
economic activities has established minimum safeguards.]]
Protection and restoration
of biodiversity
and ecosystems
VI
CCM 3.18 "Manufacture of automotive and mobility compo-
nents" following the publication of the new Delegated Regulation
2023/2485. This economic activity may become increasingly
important in the next few years as the electrification of the vehicle
portfolio increases, but is not included in the reporting of the cur-
rent year.
7.7
Italien
10.4
units sold, slightly down on the high number achieved in the pre-
vious year (2022: 17,690 units; -3.8%). Sales in China in-
creased slightly to 15,832 units (2022: 15,404 units; +2.8%).
In the Americas, deliveries totalled 46,184 units, maintaining the
previous year's level (2022: 45,775 units; +0.9%). Solid growth
was recorded in Brazil with 14,106 units delivered to customers
(2022: 13,051 units; +8.1%). The USA saw a total of 17,017
All major regions worldwide contributed to the successful sales
result in 2023. In Europe, deliveries increased slightly to
116,011 units (2022: 110,788 units; +4.7%). Germany re-
mained at the previous year's level with 24,176 units (2022:
24,129 units; +0.2%). France achieved a slight increase with
21,668 units (2022: 21,223 units; +2.1%). Slight growth was
also recorded in Italy with 16,179 units (2022: 15,668 units;
+3.3%). Deliveries in Spain totalled 12,716 units (2022:
12,506 units; +1.7%).
Sales growth in all key regions
MOTORCYCLES SEGMENT
← = Q
Market launches in the reporting year
Other Information
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Financial Performance
To Our Stakeholders
BMW Group Report 2023
71
← = Q
Remuneration Report
In 2023, BMW Motorrad celebrated its centenary and took the
opportunity not only to renew but also expand its product portfo-
lio in the premium segment. The BMW R 1300 GS was intro-
duced as the highlight and start of the renewal of the legendary
GS Boxer family and has been available to customers since No-
vember 2023.
In the first half of the year, three model updates were introduced
in the Sport and Super Sport segment with the R 1250 RS, the S
1000 RR and their high-performance M variant - the M 1000
RR. The R 1250 R was updated within the Roadster lineup. The
M 1000 R, the first M Roadster, took to the roads as a completely
new model. The centenary celebrations were complemented in
the Heritage segment by two exclusive edition models: the BMW
R 18 100 Years and the BMW R nineT 100 Years. Another high-
light of the year was the opening of BMW Motorrad Welt in Berlin
as the "Home of the Brand". Fans and other interested parties
can enjoy a world of experience centred around the BMW Motor-
rad brand.
Deliveries of BMW motorcycles
Frankreich
Deutschland
11.6
New products unveiled by BMW Motorrad
C
Spanien
6.1
Brasilien
6.7
Sonstige
41.8
in % of sales
BMW Group - largest motorcycle markets 2023
169.3
175.2
194.3
202.9
209.1
in 1,000 units
80
*The additional economic activities specified in Delegated Regulation (EU) 2022/1214 of 9 March
2022 (in particular with regard to nuclear energy and gaseous fossil fuels) are not relevant to the
BMW Group. Accordingly, specific reporting tables for these activities are not included.
BMW Motorrad achieves record sales in centenary year
In 2023, BMW Motorrad celebrated its 100th anniversary and
achieved a new record, with a total of 209,066 motorcycles and
scooters* delivered to customers (2022: 202,895 units). This
represents a slight increase of 3.0%, in line expectations for the
financial year.
IV,,Transition to a circular economy"
To Our Stakeholders
Combined Management Report Group Financial Statements
EU Taxonomy
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
]]
[[Explanatory comments on reporting procedures
For the reporting year 2023, we are continuing to report on Tax-
onomy eligibility and Taxonomy alignment in relation to Environ-
mental Objective I "Climate change mitigation" and Environmen-
tal Objective II "Climate change adaptation". We will also be re-
porting on Taxonomy eligibility in relation to Environmental Ob-
jective IV "Transition to a circular economy" for the first time.
There are, at present, no economic activities relevant to the
BMW Group relating to Environmental Objective III “Sustainable
use and protection of water and marine resources", Environmen-
tal Objective V "Pollution prevention and control" or Environmen-
tal Objective VI "Protection and restoration of biodiversity and
ecosystems". Taxonomy eligibility is an initial indicator of the
maximum environmental sustainability potential of economic ac-
tivities as defined by the EU Taxonomy. Taxonomy alignment,
on the other hand, serves as an indicator of an organisation's
transformation towards environmentally sustainable economic
activities.
BMW Group Report 2023
An economic activity is considered as Taxonomy-eligible if it is
described in the Delegated Acts relating to one of the six envi-
ronmental objectives, regardless of whether that economic activ-
ity meets the technical screening criteria stipulated in those Del-
egated Acts. Following an analysis, the BMW Group's business
activities can be summarised under the following economic
activities*:]]
[[Explanatory comments on reporting procedures
Taxonomy
eligibility
Substantial
contribution
Do no
significant
harm (DNSH)
Minimum
safeguards
Economic
activity is
taxonomy-aligned
Economic activities
are described in one of the Delegated
Acts
[[ Overview of economic activities
Substantial contribution
to at least
one of the environmental
objectives
79
2 In this context the entire value chain is to be understood as Scope 1 and 2 as well as the Scope 3
categories applicable to the BMW Group (categories 1, 4 and 11) in accordance with the Green-
house Gas Protocol.
[[As part of the implementation of the European Green Deal and
the Action Plan "Financing Sustainable Growth", the EU Taxon-
omy is a cornerstone of the EU's aspiration to become climate-
neutral by 2050. It aims to channel capital flows towards envi-
ronmentally sustainable economic activities.
Taxonomy eligibility
The EU Taxonomy is a classification system that defines eco-
nomic activities as environmentally sustainable based on fulfil-
ment of predetermined technical screening criteria.
Essentially, an economic activity can only be classified as sus-
tainable if it substantially contributes to one of the following six
environmental objectives:
I.
Climate change mitigation
II. Climate change adaptation
III. Sustainable use and protection of water and marine re-
sources
19
IV. Transition to a circular economy
VI. Protection and restoration of biodiversity and ecosystems
This contribution is based on fulfilment of specific predetermined
requirements. Moreover, no other environmental objective may
be significantly harmed during performance of the activity and
the company involved must observe minimum safeguards,
among them compliance with human rights.
In the previous year, the BMW Group reported on the Taxonomy-
eligible and Taxonomy-aligned proportion of its revenues, capital
expenditure and operating expenditure for Environmental Objec-
tives I and II. From reporting year 2023 on, the BMW Group is
also required to report on the proportion of Taxonomy-eligible
revenues, capital expenditure and operating expenditure for
Environmental Objectives III to VI for the first time, following the
new Delegated Regulation 2023/2486. New activities for Envi-
ronmental Objectives I and II are set out by Delegated Regulation
2023/2485. The BMW Group will be required to report on Tax-
onomy alignment for all environmental objectives from reporting
year 2024 onwards.
The BMW Group supports the overarching goal of the EU Tax-
onomy to promote the private financing of environmentally sus-
tainable economic activities in order to make Europe the world's
first climate-neutral continent by 2050. As a company aspiring
to achieve Net zero across its entire value chain² by no later than
2050, the BMW Group had already set ambitious, science-
based targets for all three scopes in 2020, which it aims to
achieve by 2030 (base year 2019). These goals were validated
by the Science Based Targets initiative (SBTi). Each year, the
BMW Group informs about the actual level of progress. The BMW
Group Strategy
In the coming years, as a result of the significant increase in elec-
tric mobility, the majority of carbon emissions will no longer be
generated primarily in the use phase, but in the upstream value
chain. Without the planned set of measures to reduce carbon
emissions generated within the BMW Group supply chain, these
emissions (Scope 3 upstream) would already exceed actual car-
bon emissions in the use phase prior to 2030 (Scope 3 down-
stream) The BMW Group Strategy, Production and Supplier Network,
7 Carbon Emissions. Accordingly, the BMW Group is taking a holistic
approach to achieving its sustainability-related targets and is
committed to considering 7 Carbon Emissions over the entire life cy-
cle. Among other things, the BMW Group's measures include a
further reduction in energy demand, increased use of renewable
energy (Scope 1 and 2), the use of new, efficiency-increasing
technologies (Scope 3 downstream), the use of green electricity
as a criterion when awarding contracts to suppliers and a contin-
uously increasing secondary raw material quota (Scope 3 up-
stream). However, for the economic activities that are relevant to
the BMW Group, the EU Taxonomy focuses exclusively on reduc-
ing carbon emissions during the use phase that are attributable
to low-emissions (until 2025) and emissions-free drivetrains. In-
direct carbon emissions, for instance those produced when gen-
erating charging current or during the energy-intensive produc-
tion of high-voltage batteries, are not taken into account in the
context of these economic activities. Moreover, the EU Taxon-
omy only reflects the impact of decarbonisation measures on in-
house production to the extent that they serve to manufacture
Taxonomy-aligned products or to the extent that they are explic-
itly included in the description of an activity. For example, in-
creasing the energy efficiency of paint shop processes also re-
duces carbon emissions in in-house production when an internal
combustion engine vehicle is painted. The BMW Group's sus-
tainability efforts in this regard is not or only partially taken into
account as part of currently defined economic activities in the EU
Taxonomy. Carbon Emissions ]]
1The definition of the three performance indicators and their differentiation from IFRS can be found
in the Glossary.
V. Pollution prevention and control
Economic activity does
not cause significant
harm to other environmental
objectives
Our holistic understanding of sustainability
Transport by motorbikes,
passenger cars and light
commercial vehicles
Environmental objectives
Reporting 2023
Comments
Manufacture of low carbon
technologies for transport
CCM 3.3, CCA 3.3
- the sale of parts and components, such as after-sales business excluding the
provision of repair services,
I,,Climate change mitigation"
II,,Climate change adaptation"
Taxonomy alignment
CCM 6.5, CCA 6.5
Sale of second-hand goods
CE 5.4
- the supply of components for production to third parties
The acquisition, financing, lease and operation of automobiles and motorcycles,
excluding banking and insurance services performed by our non-automotive
Financial Services segment
Sale of second-hand automobiles that have been used for their intended purpose
before by a customer
II „Climate change adaptation"
Contribution to
EnvironmentalObjective II is
subsumed under Environmental
Objective I
I,,Climate change mitigation"
Description
The production of automobiles and motorcycles, excluding
Economic activities
minimum safeguard
procedures for human
rights, bribery and
corruption, taxation and
fair competition
Company establishes
Taxonomy alignment
Contribution to Environmental
Objective II is subsumed under
Environmental Objective I
Code(s)
control
The requirements to do no significant harm to Environmental
Objective V differ considerably for economic activity CCM 3.3 and
economic activity CCM 6.5.
With regard to economic activity CCM 3.3, the BMW Group has
established corresponding processes which aim to monitor and
ensure legal compliance with any prohibitions and limits relating
to the use of chemical substances at vehicle level. All substances
used by the BMW Group are in compliance with national and Eu-
ropean laws. Substitutes are sought for hazardous substances
that are categorised as being of very high concern in accordance
with Article 57 and 59 of the REACH Regulation, if they are used
directly or in a proportion exceeding 0.1% weight by weight in a
mixture in the production processes of the BMW Group and are
consequently contained in the products of the BMW Group, while
taking factors such as economic and technical requirements into
account. If the use of these hazardous substances cannot be
avoided, the BMW Group uses them under controlled conditions
in accordance with hazardous material regulations.
On the other hand, it is not possible to meet all criteria to do no
significant harm to Environmental Objective V in the case of eco-
nomic activity CCM 6.5. Current PHEV models with air pollutant
emissions under 50 g CO2/km WLTP offered by the BMW Group
and other manufacturers may make a substantial contribution as
defined by the EU Taxonomy. However, manufacturer specifica-
tions for air pollutant emissions in real driving conditions (real
driving emissions, RDE) can only be reduced for selected models
to 80% of the limit as required by the EU Taxonomy with refer-
ence to table 2 in the annex to the Clean Vehicles Directive, due
to potentially extreme driving situations. The vast majority of
PHEV in the vehicle portfolio for economic activity CCM 6.5 must
therefore be considered not Taxonomy-aligned, even if they
meet these values in everyday driving situations.
For the remaining PHEV and BEV models in the BMW Group's
vehicle portfolio, further deductions have to be made for individ-
ual models in the context of economic activity CCM 6.5 in light of
the requirements for rolling resistance coefficients for tyres and
in particular the external rolling noise of tyres. Owing to the lim-
ited availability of data, the eligibility of the models concerned is
calculated in a simplified manner based on the tyres approved
for these models, weighted by their purchase volumes and take
rates.
The DNSH requirements for Environmental Objective V are ful-
filled for economic activity CCM 3.3; however, not all are fulfilled
for economic activity CCM 6.5, owing to the RDE and tyre label
requirements described.
In the case of capital expenditure and operating expenditure, all
Taxonomy-eligible expenditure is allocated to the two economic
activities CCM 3.3 and CCM 6.5. There is no separable Taxon-
omy-eligible capital expenditure and operating expenditure for
economic activity CE 5.4.
Minimum safeguards
the BMW Group. All Taxonomy-eligible revenues, capital ex-
penditure and operating expenditure for economic activities CCM
3.3 and CCM 6.5 are disclosed under Environmental Objective I
"Climate change mitigation", given that there are no identifiable
values for Environmental Objective II "Climate change adapta-
tion" that can be separated from Environmental Objective I "Cli-
mate change mitigation". This approach avoids double counting
of revenues, capital expenditure and operating expenditure when
determining the KPI in the numerator across multiple economic
activities.
Additionally, companies that carry out economic activities as de-
fined by the EU Taxonomy are required to establish minimum
safeguards. These require the implementation of processes to
ensure compliance with due diligence obligations both within an
organisation and in stages of the upstream and downstream
value chain that have been outsourced. Specifically, this refers to
compliance with human rights and topics like bribery, corruption,
taxation and fair competition. In its Policy statement on respect for
human rights and corresponding environmental standards, the BMW Group
has, among other things, committed to compliance with the fol-
lowing standards for minimum safeguards as defined in Arti-
cle 18 of the Taxonomy Regulation: Organization for Economic
Cooperation and Development (OECD) Guidelines for Multina-
tional Enterprises, the UN Guiding Principles on Business and
Human Rights and the Ten Principles of the UN Global Compact,
which we signed back in 2001. 7 Purchasing and Supplier Network,
7 Compliance and Human Rights
The minimum safeguard requirements are met.
EU Taxonomy performance indicators
Please refer to the remarks in the glossary for the definition and
calculation of the Taxonomy-specific performance indicators rev-
enues, capital expenditure and operating expenditure and their
differentiation from IFRS. Glossary
The proportion of total revenues, capital expenditure and oper-
ating expenditure relating to eligible and non-eligible economic
activities are shown in each case as an aggregate percentage for
In most cases, values from financial data were allocated directly
to the economic activities for all three performance indicators,
based for example on the drivetrain or the vehicle model. In the
remaining cases, an allocation mechanism was used for each
economic activity and each performance indicator. For Taxon-
omy-eligible and Taxonomy-aligned capital expenditure for eco-
nomic activity CCM 3.3, the allocator is based on long-term Tax-
onomy-aligned revenues generated from the Automotive and
Motorcycles segment:
Allocator for economic activity CCM 3.3: Proportion (BEV +
PHEV [<50 g CO₂]) x Automotive segment revenues
(2024-2029)*
100 Electromobility
*PHEV volumes are only taken into account in the allocator until reporting year 2025 inclusive.
The following overview tables summarise the performance indi-
cators revenues, capital expenditure and operating expenditure
from Taxonomy-eligible and Taxonomy-aligned economic activ-
ities of the BMW Group. Regardless of the Taxonomy require-
ments, the BMW Group regularly and comprehensively ad-
dresses risks arising from climate change and their potential im-
pact on its sites and supply chains. 7 DNSH adaptation to climate
change, TCFD climate risks
Improvement in all three performance indicators for
reporting year 2023
It refers to capital expenditure on leased products.
Allocator for economic activity CCM 6.5: DNSH alignment
factor x BEV proportion x financing volume attributable to
new customer contracts (2023)
and Taxonomy-aligned capital
expenditure for economic activity CCM 6.5, the allocator is based
on the Taxonomy-aligned financing volume for new customers
in the current financial year:
For Taxonomy-eligible
[[For other operating expenditure (non-capitalised right-of-use
assets (lessee), maintenance/repair expenses) relating to
economic activity CCM 3.3, the allocator is based on the
Taxonomy-aligned revenues generated from the Automotive
and Motorcycles segment in the reporting period.
The allocator is based on detailed long-term corporate planning
for the next six years, as approved each year by the Board of
Management and Supervisory Board. It is used for capital
expenditure on property, plant and equipment (including right-of-
use assets from lessee relationships), intangible assets and
expenditure on research and development for economic activity
CCM 3.3. For operating expenditure, the allocator is only applied
to non-capitalised development costs.]]
← = Q
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
EU Taxonomy
BMW Group Report 2023 To Our Stakeholders
83
83
Pollution prevention and
Other Information
← = Q
In this context, the BMW Group carries out environmental impact
assessments in accordance with Directive 2011/92/EU during
the construction of new and expansion of existing sites within the
EU that also take account of water and biodiversity. At locations
outside the EU, the BMW Group carries out an environmental im-
pact assessment based on EU requirements. Moreover, a certi-
fied environmental management system pursuant to ISO 14001
has been implemented at all BMW Group production sites and all
local statutory requirements are met. Resource Management at all
locations
Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group perspective
90
90
BMW Group Report 2023
To Our Stakeholders
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Products
Remuneration Report
DIGITALISATION AND
CUSTOMER ORIENTATION
Other Information
← = Q
PRODUCTS
90
Innovation, Digitalisation and Customer
Orientation
95 Product Quality and Safety
97
Carbon Emissions
INNOVATION,
Remuneration Report Other Information
[[When developing innovations, the BMW Group attaches great
importance to rigorous customer orientation and the use of digi-
tal solutions. Innovations help to optimise processes, improve
products and introduce new technologies.
BMW VISION Neue Klasse
Combined Management Report
EU Taxonomy
BMW Group Report 2023 To Our Stakeholders
82
82
² SSP1-2.6, SSP2-4.5, SSP5-8.5.
1 The end-of-lease business for BEV previously included in economic activity CCM 6.5 is now re-
ported under economic activity CE 5.4 following the redefinition of this activity.
The DNSH requirements for Environmental Objective IV are ful-
filled for economic activities CCM 3.3 and CCM 6.5.1]
Remaining consistently one step ahead while keeping a firm eye
on the future is a core aspect of our philosophy as a company
and an expression of our firm commitment to innovation. The
BMW Group works tirelessly to provide our customers with for-
ward-thinking solutions today to simplify their daily lives. The
new BMW 5 series, for example, achieves a new level of digital
connectivity with its completely novel assistance systems. The
BMW VISION Neue Klasse offers a first glimpse at our next prod-
uct generation.
The requirements for both economic activities of the BMW Group
to do no significant harm to Environmental Objective IV differ for
each stage of the value chain. We fulfil these requirements during
the manufacturing process for BMW Group vehicles (economic
activity CCM 3.3) by, for example, using secondary raw materials
in our products, designing products to facilitate their recycling,
managing waste at our production sites in a way that prioritises
recycling over disposal, and systematically registering sub-
stances of concern along the entire supply chain. With regard to
the use phase and recycling of BMW Group vehicles (economic
activity CCM 6.5), we have set up appropriate processes to com-
ply with recycling requirements and established measures for
managing waste during maintenance and at the end of the life
cycle. All these criteria also form part of our comprehensive ap-
proach to the Transition to a circular economy.
The DNSH requirements for Environmental Objectives III and VI
are fulfilled for economic activity CCM 3.3.
PRODUCTS
In order to establish that no significant harm is caused to Envi-
ronmental Objectives III and VI, it is necessary to perform a com-
prehensive risk analysis that looks at the preservation and pro-
tection of environmental, water and marine resources for eco-
nomic activity CCM 3.3 (in both cases, not relevant for economic
activity CCM 6.5).
Sustainable use and protection of
water and marine resources and
protection and restoration of
biodiversity and ecosystems
до
The DNSH requirements for Environmental Objective II are ful-
filled for economic activities CCM 3.3 and CCM 6.5.
With the BMW VISION Neue Klasse, the BMW Group is demon-
strating what the next generation of core BMW brand vehicles
will look like. The Vision Vehicle, which was unveiled to the public
for the first time at the International Motor Show IAA Mobility
2023 in Munich, features a clear design language that is reduced
to the essentials with spacious surfaces and a small number of
striking lines. This approach focuses on signature features like
the BMW kidney grille and the Hofmeister kink in the side win-
dows. The design radiates more of the essence of BMW than
ever.]]
Transition to a circular economy
All three performance indicators have grown markedly on
the previous year at BMW Group level, highlighting that the
BMW Group is on the right track with its sustainable eco-
nomic activities relating to the EU Taxonomy.
in € million
leased products. Consequently, an examination of the pro-
portion of Taxonomy-aligned capital expenditure at BMW
Group level does not reflect the huge investment in sustain-
able economic activities and products. Operating expendi-
ture incurred for Taxonomy-aligned economic activities
amounted to € 2,051 million, corresponding to over 31% of
Taxonomy-eligible operating expenditure (2022: 29%).
7 Voluntary additional information on the Taxonomy-aligned share per
economic activity
15.2
23,690
155,498
n/a
n/a
n/a
12,661
11.0
n/a
n/a
18,799
1.44
1.9
350
18,465
15.74
n/a
22.1
of which
7,926
30,449
n/a
n/a
n/a
76
3.74
5.4
in % E T
1,018
43.24
60.4
6,908
Proportion
Proportion
Taxonomy-aligned
by activity
11,431
18,942
23,340
105,573
Proportion
Manufacture of low carbon technologies for transport (CCM 3.3)
Transport by motorbikes, passenger cars and light commercial
vehicles (CCM 6.5]
Revenues¹
[[Voluntary additional information on the Taxonomy-aligned share per economic activity
[[As the overview tables from Delegated Regulation (EU)
2023/2486 do not provide a detailed picture of the BMW
Group's business model per economic activity, the following
table provides detailed information about the three performance
indicators as regards Taxonomy alignment, reported separately
for economic activities CCM 3.3 and CCM 6.5.]]
← = Q
Other Information
Remuneration Report
Sale of second-hand goods (CE 5.4)
Responsibility Statement and Auditor's Report
BMW Group Report 2023 To Our Stakeholders
84
Economic activity CE 5.4, "Sale of second-hand goods”
As stipulated by Delegated Regulation 2023/2486, the
BMW Group only reports on the Taxonomy-eligible propor-
tion of revenues for economic activity CE 5.4. This economic
activity includes revenues from pre-owned vehicles in the
Automotive segment and revenues from the sale of used
cars after their intended use by clients in the Financial Ser-
vices segment, but does not include revenues from the sale
of used motorcycles. Around 12% of total revenues are
Taxonomy-eligible in reporting year 2023.1]
Economic activity CCM 6.5, "Transport by motorbikes,
passenger cars and light commercial vehicles"
The Taxonomy-aligned shares for the three performance in-
dicators are at a low single-digit level for the Financial Ser-
vices segment. This is due to the fact that there is a time lag
before the effects of the vehicle fleet electrification ramp-up
are reflected in the financing and leasing lines of business.
A further reason is the varied, stricter DNSH requirements
for economic activity CCM 6.5, in particular those relating to
Environmental Objective V "Pollution prevention and con-
trol", which lead to the exclusion of almost all PHEV and a
significant restriction in the recognition of BEV (for details
see section Do no significant harm). Third-party brands are
not included in the vehicle portfolio in the reporting on Tax-
onomy alignment for economic activity CCM 6.5. A lack of
available data regarding the tyre categories or WLTP emis-
sions values of third-party products makes it impossible to
review compliance with the DNSH criteria in full. Moreover,
revenues from the sale of lease returns are reported under
the new economic activity CE 5.4, differently from the previ-
ous year. The Financial Services segment recorded a de-
cline in revenues for 2023 in absolute terms following the
reallocation of revenue components to the new economic
activity CE 5.4. The Taxonomy-aligned proportion of capital
expenditure in the Financial Services segment rose by more
than 50% on the previous year to 3.3% (€ 1,018 million).
Based on total capital expenditure in the Financial Services
segment, the Taxonomy-aligned proportion rose by signifi-
cantly more than 40% to 5.4%. Voluntary additional information
on the Taxonomy-aligned share per economic activity
The Taxonomy-aligned proportion of capital expenditure in
the Automotive and Motorcycles segment rose to 22.7%
from 19.1% in the previous year. Looking only at the Tax-
onomy-aligned additions to intangible assets and property,
plant and equipment in the context of additions recorded by
the Automotive and Motorcycles segment, however, gives
rise to a considerably higher proportion of Taxonomy-
aligned capital expenditure of more than 60%. Segment-
specific capital expenditure is thus around 17 percentage
points higher than in the previous year. This was driven by
increased investment in sustainable products and plant in-
frastructure as part of electrification. This underscores the
BMW Group's extensive capital expenditure on sustainable
products and technologies. Voluntary additional information on
the Taxonomy-aligned share per economic activity
The Taxonomy-aligned share of revenues generated by the
Automotive and Motorcycles segment corresponded to
15.0% (economic activity CCM 3.3 "Manufacture of low-
carbon technologies for transport") of total Group revenues
(2022: 10.7%). As a percentage of third-party revenues of
the two segments, the Taxonomy-aligned share rose to
22.1% (2022: 15.7%). As a result, revenues from the Au-
tomotive and Motorcycles segment that are associated with
the manufacture of low-carbon technologies for transport
(CCM 3.3) increased by approximately 41%. In contrast to
the previous year, revenues from pre-owned vehicles in the
Automotive segment are reported under the new economic
activity CE 5.4, somewhat dampening the rise in Taxonomy-
aligned revenues. Segment information
Economic activity CCM 3.3, "Manufacture of low-carbon
technologies for transport”
Combined Management Report Group Financial Statements
EU Taxonomy
Taxonomy-non-eligible revenues
Total revenues BMW Group
Capital expenditures²
Proportion
of which
Taxonomy-aligned
by activity
in %
in %
2022
2023
2023
in € million
2023
Total OpEx BMW Group³
Transport by motorbikes, passenger cars and light commercial
vehicles (CCM 6.5)
Manufacture of low carbon technologies for transport (CCM 3.3)
Operating expeditures
Total CapEx BMW Group
Taxonomy-non-eligible capital expenditures
Manufacture of low carbon technologies for transport (CCM 3.3)
Transport by motorbikes, passenger cars and light commercial
vehicles (CCM 6.5)
Taxonomy-aligned revenues of the BMW Group amounted
to € 23,690 million (2022: € 15,705 million), correspond-
ing to 15% of total Group revenues and an increase on the
previous year of four percentage points. The Taxonomy-
aligned share of capital expenditure was 26% (€ 7,926 mil-
lion), which corresponds to an increase of almost five per-
centage points on 2022. Taxonomy-aligned capital ex-
penditure as a proportion of the BMW Group's total capital
expenditure is impacted significantly by additions related to
]]
Y
100.0
2,051
CCM 3.3; CCA 3.3
Category transitional activity
Category enabling activity
OpEx
aligned (A.1) or eligible (A.2)
Proportion of Taxonomy
30.9
Minimum safeguards
Circular economy
Pollution
Water
Climate change adaption
Climate change mitigation
in % Y;N;N/EL Y;N; N/EL Y;N; N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N Y;N Y;N Y;N Y;N Y;N Y;N
DNSH criteria
Biodiversity
Biodiversity
Y
N/EL
Y
0.2
11
CCM 6.5; CCA 6.5
E
28.5
Y
N
Y
Y
Y
Y
Y
N/EL
N/EL
N/EL
Y
N
Circular economy
2022
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
EU Taxonomy
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
81
[[Substantial contribution
In order to identify the specific carbon emissions of PHEV that
are not determined in line with Regulation (EU) 2019/631
(among others, USA and China), assumptions were made based
on the worst-case value for that vehicle model, even though
these emissions may have been lower in reality.
Do no significant harm
Compliance with the DNSH criteria was reviewed in the reporting
year for the five additional environmental objectives, based in
each case on the specific requirements for economic activity CCM
3.3 "Manufacture of low carbon technologies for transport" and
economic activity CCM 6.5 "Transport by motorbikes, passenger
cars and light commercial vehicles".
The vehicle portfolio for economic activity CCM 6.5 includes
BMW Group vehicles and vehicles from other manufacturers. As
no data are available regarding the relevant attributes of these
third-party products, it is currently not possible to make a com-
prehensive assessment in relation to the DNSH criteria. For this
reason, these vehicles are currently not reported as Taxonomy-
aligned.
I
Climate change adaptation
26.0
The BMW Group has reviewed its contribution to the environ-
mental objectives "Climate change mitigation" and "Climate
change adaptation" for the reporting year. Economic activity
CCM 3.3 and economic activity CCM 6.5 both make a substantial
contribution to Environmental Objective I "Climate change miti-
gation" due to the manufacture as well as financing and leasing
of low-emission (PHEV < 50 g CO2/km WLTP by 2025) and
zero-emission vehicles (BEV and motorcycles with 0 g CO2/km).
Economic activity CCM 3.3 and economic activity CCM 6.5 as un-
dertaken by the BMW Group are also described under Environ-
mental Objective II "Climate change adaptation". There are,
however, no identifiable values that can be separated from Envi-
ronmental Objective I "Climate change mitigation".¹
Pollution
A. TAXONOMY-ELIGIBLE ACTIVITIES
Transport by motorbikes, passenger cars and light commercial vehicles
OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1)
("Does not significantly harm")
Substantial contribution criteria
Water
Climate change adaption
Climate change mitigation
Proportion of OpEx²
2023
A.1 Environmentally sustainable activities (Taxonomy-aligned)
Manufacture of low carbon technologies for transport
in € million
Code(s)'
OpEx of Taxonomy-non-eligible activities
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
A. OpEx of Taxonomy-eligible activities (A.1+A.2)
A.2 Taxonomy-eligible but not environmentally sustainable activities
(not Taxonomy-aligned activities)
Of which transitional
Of which enabling
OpEx
༄།ཞ༐ རྗ།༅།
N/EL
N/EL
CCM 6.5; CCA 6.5
Transport by motorbikes, passenger cars and light commercial vehicles
N/EL
N/EL
N/EL
N/EL
EL
250
EL
4,322
CCM 3.3; CCA 3.3
Manufacture of low carbon technologies for transport
T
0.0
Y
Y
65.1
Y
3.8
EL
100.0
6,634
0.0
0
2 Taxonomy-aligned share of operatig expenditure per economic activity is 32.2% for CCM 3.3 and 4.2% for CCM 6.5, Voluntary additional information on the Taxonomy-aligned share per economic activity.
1 With reference to ANNEX II of Delegated Regulation (EU) of 27 June 2023 (EU 2023/2486).
EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL
EL
100.0
68.9
4,572
OpEx of Taxonomy-eligible but not environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
N/EL
N/EL
N/EL
N/EL
6,634
N/EL
Y
0.0
0%
0%
0%
0%
0%
31.1 31.1%
2,062
YYYYYYY
T
Y
Y
Y
Y
Y
Y
N/EL
0.1
0%
28.6
30.9
0
28.5 E
Y
Y
Y
Y
Y
2,051
Y
0%
0%
A robust climate risk and vulnerability assessment is required for
both economic activity CCM 3.3 and economic activity CCM 6.5
to determine that they do not cause significant harm to Environ-
mental Objective II. To satisfy this requirement, the physical cli-
mate risks at all key BMW Group production sites are considered
and an assessment of any damage that may occur as a result of
climate change is being carried out based on long-term climate
projection scenarios² up to 2035 and 2050. Moreover, we con-
sider potential natural hazards at all of our direct supplier loca-
tions in order to adequately take supply risks into account when
selecting and evaluating suppliers. Adaptive solutions to mitigate
risks are drawn up and implemented as appropriate based on
the results of this risk analysis and in consultation with site rep-
resentatives. For further information, see Climate-related Risks and
Opportunities.
0%
0%
0%
30.9%
Y
21.2
Revenues
by activity
6,373
80.3
91.3
]]
in % E T
Total
88
88
[[Capital expenditure
Financial year 2023
BMW Group Report 2023
n/a
To Our Stakeholders
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
EU Taxonomy
Economic activities
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (Taxonomy-aligned)
Manufacture of low carbon technologies for transport
Transport by motorbikes, passenger cars and light commercial vehicles
CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1)
Combined Management Report
22.9
།
57.5
N/EL
N/EL
18,799
12.1
N/EL
N/EL
N/EL
N/EL
EL
N/EL
Revenues of Taxonomy-eligible but not environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
119,147
76.6
142,837
91.9
EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL
1 With reference to ANNEX II of Delegated Regulation (EU) of 27 June 2023 (EU 2023/2486).
2 For economic activity CE 5.4, only the taxonomy eligibility is reported in accordance with Article 5 of Delegated Regulation (EU) of 27 June 2023 (EU 2023/2486).
3 Taxonomy-aligned share of revenues per economic activity is 22.1% for CCM 3.3 and 1.9% for CCM 6.5, Voluntary additional information on the Taxonomy-aligned share per economic activity.
12,661
8.1
155,498
100.0
Of which enabling
N/EL
Of which transitional
A. CapEx of Taxonomy-eligible activities (A.1+A.2)
Cap Ex
Category enabling activity
Category transitional activity
CCM 3.3; CCA 3.3
6,908
22.7
Y
N
N/EL
N/EL
aligned (A.1) or eligible (A.2)
N/EL
Y Y Y Y Y Y Y 19.1 E
CCM 6.5; CCA 6.5
1,018
3.3
Y
N
N/EL
N/EL
N/EL
7,926
N/EL
Proportion of Taxonomy
Minimum safeguards
Biodiversity
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
CapEx of Taxonomy-non-eligible activities
Code(s)'
Cap Ex
in € million
2023
Proportion of CapEx²
Climate change mitigation
Climate change adaption
Water
Substantial contribution criteria
("Does not significantly harm")
2022
Pollution
Circular economy
Biodiversity
DNSH criteria
in % Y;N;N/EL Y;N; N/EL Y;N; N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N Y;N Y;N Y;N Y;N Y;N Y;N
Climate change mitigation
Climate change adaption
Water
Pollution
Circular economy
A.2 Taxonomy-eligible but not environmentally sustainable activities
(not Taxonomy-aligned activities)
N/EL
EL
EL
Climate change adaption
Water
Pollution
Circular economy
Biodiversity
Minimum safeguards
Proportion of Taxonomy
aligned (A.1) or eligible (A.2)
revenues
Category enabling activity
Climate change mitigation
Category transitional activity
23,340
Y
N
N/EL
N/EL
N/EL
N/EL
Y Y Y Y Y Y Y 10.7 E
350
0.2
CCM 3.3; CCA 3.3
CCM 6.5; CCA 6.5
in % Y;N;N/EL Y;N; N/EL Y;N; N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N Y;N Y;N Y;N Y;N Y;N Y;N
in € million
DNSH criteria
Code(s)¹
Revenues of Taxonomy-non-eligible activities
Total
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
A. Revenues of Taxonomy-eligible activities (A.1+A.2)
A.2 Taxonomy-eligible but not environmentally sustainable activities
(not Taxonomy-aligned activities)
Of which transitional
Of which enabling
Transport by motorbikes, passenger cars and light commercial vehicles
Revenues of environmentally sustainable activities (Taxonomy-aligned) (A.1)
Manufacture of low carbon technologies for transport
A.1 Environmentally sustainable activities (Taxonomy-aligned)
A. TAXONOMY-ELIGIBLE ACTIVITIES
Economic activities
EU Taxonomy
Proportion of Revenues³
Climate change mitigation
Climate change adaption
Water
Substantial contribution criteria
("Does not significantly harm")
2022
Pollution
Circular economy
Biodiversity
Y
N
N/EL
N/EL
Y
Y
VVVVVVV 110 E
Y
Y
19
0.0
0%
T
Manufacture of low carbon technologies for transport
CCM 3.3; CCA 3.3
82,233
52.9
EL
EL
N/EL
N/EL
N/EL
N/EL
Transport by motorbikes, passenger cars and light commercial vehicles
Sale of second-hand goods²
CCM 6.5; CCA 6.5
CE 5.4
18,115
11.6
Y
26.0
Y
0%
N/EL
23,690
15.2
15.2%
0%
0%
0%
0%
N/EL
0% Y
V V V V V V V 0.3
T
Y
Y
Y
Y
11.0
23,340
15.0
15.0%
0%
0%
0%
0%
Y
26.0%
0%
0%
1,485
1,843
5,100
7,926
504
1,018
503
1,018
1
1
17
4,596
1,042
1,516
3,554
5,391
15,705
23,690
441
15,264
23,340
350
2022
6,908
14
191
156
[[CapEx plan for Environmental Objective I "Climate change
mitigation"
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
EU Taxonomy
To Our Stakeholders
BMW Group Report 2023
98
86
1 Including intangible assets and right-of-use assets from lessee relationships.
2 Including Spotlight Automotive Ltd.
[[Revenues for economy activity CCM 3.3 include small amounts
from Taxonomy-aligned activities related to the BMW Group's
Company car programme. These Company cars are generally
transferred to the BMW Group's external sales programme
within 12 months after a short period of in-house use.]]
← = Q
1,661
2,062
6
11
3
2
3
9
1,655
2,051
2023
Remuneration Report Other Information
Total
Total
[[Contextual KPI information related to Taxonomy-aligned economic activities
EU Taxonomy
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders
BMW Group Report 2023
85
"Prior-year figures adjusted due to change in calculation basis.
3 Only includes the operating expenditure defined in the EU Taxonomy.
2 Taxonomy-aligned share calculated with denominator as the Taxonomy-eligible value of the re-
spective economic activity. See Note [20] to the Group Financial Statements for details on the
BMW Group's capital expenditure.
1 Taxonomy-aligned share calculated with denominator as third-party revenue from Taxonomy-
eligible values of the respective economic activity.
28.61]
2.5
31.1
2,062
6,634
4.2
11
261
Proportion
29.6
32.2
2,051
Proportion
Taxonomy-aligned
in € million
A CapEx plan is required to be drawn up for capital expenditure
and operating expenditure that expand Taxonomy-aligned eco-
nomic activities or allow Taxonomy-eligible economic activities
to become Taxonomy-aligned. This plan has been approved by
the Board of Management of BMW AG and covers a seven-year
period (2023-2029). The CapEx plan covers capital expenditure
and operating expenditure for the reporting year and planned
capital expenditure and operating expenditure (only non-capital-
ised development costs) for 2023-2029 for economic activities
CCM 3.3 and CCM 6.5. The selected future period corresponds
to the detailed long-term corporate planning of the BMW Group
Revenues
Revenues related to financial services
Maintenance/repair expenses
Right-of-use assets (lessee) - not capitalised
Development costs - not capitalised²
Economic activity CCM 6.5
Total
Maintenance/repair expenses
Right-of-use assets (lessee) - not capitalised
Development costs not capitalised²
Economic activity CCM 3.3
Operating expenditure
Total
Total
Leased products
Development costs
Property, plant and equipment¹
Economic activity CCM 6.5
Total
Leased products
Development costs
Property, plant and equipment¹
Economic activity CCM 3.3
Capital expenditure
Total
Sales of products, related goods and revenue of service contracts
of which
and contains various investment measures with different imple-
mentation times (e.g. electrification of the vehicle fleet, model re-
visions, structural investments in production sites). The CapEx
plan earmarks € 68,473 million for economic activity CCM 3.3
and € 24,847 million for economic activity CCM 6.5. The in-
crease in Taxonomy-aligned capital expenditure and operating
expenditure as compared to the previous year's plan can largely
be attributed to the anticipated faster electrification of the vehicle
portfolio in the Automotive and Motorcycles segments and, with
a time delay, in the financing and leasing lines of business, and
generally higher capital expenditure and operating expenditure
associated with electrification until the end of the decade.]]
in € million
14.9
EL
EL
N/EL
N/EL
N/EL
N/EL
17,924
58.9
EL
4,524
EL
N/EL
N/EL
N/EL
CapEx of Taxonomy-eligible but not environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
22,448
73.7
30,374
99.8
EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL
1 With reference to ANNEX II of Delegated Regulation (EU) of 27 June 2023 (EU 2023/2486).
N/EL
CCM 3.3; CCA 3.3
CCM 6.5; CCA 6.5
Transport by motorbikes, passenger cars and light commercial vehicles
Manufacture of low carbon technologies for transport
0%
0%
N/EL
0%
6,908
22.7
22.7%
0%
0%
0%
0%
0%
168
0.6
0.6%
Y
Y
Y Y Y Y Y Y Y 2-1
YYYYYYY 19.1 E
T
T
Y
Y
0.0
2 Taxonomy-aligned share of capital expenditure per economic activity is 60.4% for CCM 3.3 and 5.4% for CCM 6.5, Voluntary additional information on the Taxonomy-aligned share per economic activity.
76
0.2
30,449
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
87
Financial year 2023
[Revenues
72,509 ]]
93,320
16,520
24,847
CCM 6.5
55,989
68,473
CCM 3.3
2022-2028
2023-2029
Code(s)
2022
2023
Total
Transport by motorbikes, passenger cars and light commercial vehicles
Manufacture of low carbon technologies for transport
Economic activities
Group Financial Statements Responsibility Statement and Auditor's Report
[[CapEx plan for expansion of or transformation into Taxonomy-aligned economic activities
Remuneration Report
← = Q
100.0
25.0
53.7
78.7
|
99.9
]]
in %
E T
Total
99
89
[[Operating expenditure
Financial year 2023
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
EU Taxonomy
Economic activities
2023
Other Information
15.0