BMW AG Annual Report 2009

FY2009 Annual Report · BMW AG

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Annual Report 2009

Facts and figures

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A further contribution towards preserving resources

BMW Group Annual Report 2009 awarded the „Blue Angel“ eco-label. The paper used (Enviro Top
and Nanoo Color) was produced, climate-neutrally and without optical brighteners and chlorine bleach,
from recycled waste paper. All other production materials used also comply with the requirements of
the Blue Angel eco-label (RAL-UZ 14). The Blue Angel is considered to be one of the most stringent
eco-labels in the world.

The CO2 emissions generated through print and production were neutralised by the BMW Group.
To this end, the corresponding amount of emissions allowances was erased, with the transaction
identification DE-89388 on February 23, 2010.

Published by
Bayerische Motoren Werke
Aktiengesellschaft
80788 Munich
Germany
Telephone +49 89 382-0

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BMW Group in figures

Report of the Supervisory Board

12
12
14
18
42
45
48

63
64
70

74
74
74
76
78
80
81

Group Management Report
A Review of the Financial Year
General Economic Environment
Review of Operations
BMW Group – Capital Market Activities in 2009
Disclosures pursuant to § 289 (4) and § 315 (4) HGB
Financial Analysis
48
50
52
54
56
56
58
59
Internal Control System
Risk Management
Outlook

Group Internal Management System
Earnings Performance
Financial Position
Net Assets Position
Subsequent Events Report
Value Added Statement
Key Performance Figures
Comments on Financial Statements of BMW AG

Group Financial Statements
Income Statements
Statement of Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes in Equity
Notes to the Group Financial Statements

81
90
97
98
119
133

Accounting Principles and Policies
Notes to the Income Statement
Notes to the Statement of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

138

Responsibility Statement by the
Company’s Legal Representatives

139

Auditors’ Report

140

141

142
145
146

151
157

158

162
162
164
166
168
170
173
174

Statement on Corporate Governance
(Sub-section of Management Report)
Information on the Company’s Governing
Constitution
Declaration of the Board of Management
and of the Supervisory Board pursuant
to § 161 AktG
Members of the Supervisory Board
Members of the Board of Management
Information on Work Procedures of the
Management Board and Supervisory Board
and on the Composition and Work
Procedures of its Committees
Compensation Report
Information on Corporate Governance
Practices Applied Beyond Mandatory
Requirements
Compliance in the BMW Group

Other Information
BMW AG Principal Subsidiaries
BMW Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Financial Calendar
Contacts

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Model

Urban
(l / 100 km)

Extra-urban
(l / 100 km)

Combined
(l / 100 km)

CO2 emis-
sions (g / km)

Model

Urban
(l / 100 km)

Extra-urban
(l / 100 km)

Combined
(l / 100 km)

CO2 emis-
sions (g / km)

BMW
530d xDrive Touring
535d Touring 2
M5 Touring 3

535i Gran Turismo 2, 4
550i Gran Turismo 2, 4
530d Gran Turismo 2, 4
535d Gran Turismo 2, 4

630i Coupé
650i Coupé
635d Coupé 2
630i Convertible
650i Convertible
635d Convertible 2
M6 Coupé 3
M6 Convertible 3

740i 2, 4
740Li 2, 4
750i 2, 4
750i xDrive 2, 4
750Li 2, 4
750Li xDrive 2, 4
760i 2, 4
760Li 2, 4
730d 2, 4
730Ld 2, 4
740d 2, 4
ActiveHybrid 7 2, 4
ActiveHybrid 7L 2, 4

X1 sDrive18i 4
X1 xDrive25i 2, 4
X1 xDrive28i 2, 4
X1 sDrive18d 4
X1 xDrive18d 4
X1 sDrive20d 4
X1 xDrive20d 4
X1 xDrive23d 2, 4

X3 xDrive20i 1
X3 xDrive25i
X3 xDrive30i
X3 xDrive18d 1, 4
X3 xDrive20d 4
X3 xDrive30d
X3 xDrive35d 2

X5 xDrive35i 2, 4
X5 xDrive50i 2, 4
X5 xDrive30d 2, 4
X5 xDrive40d 2, 4
X5 M 4, 10

X6 xDrive35i 2, 4
X6 xDrive50i 2, 4
X6 xDrive30d 2, 4
X6 xDrive40d 2, 4
ActiveHybrid X6 2, 4

9.6 (9.9)
9.2
21.7

5.8 (5.6)
5.6
10.5

7.2 (7.2)
6.9
14.6

192 (192)
182
348

12.3
16.2
8.1
8.3

6.9
8.3
5.6
5.8

8.9
11.2
6.5
6.7

209
263
173
175

11.2 (11.0)
17.8 (15.9)
9.2
11.8 (11.6)
19.2 (16.5)
9.6
21.4
22.0

6.0 (5.8)
8.1 (7.4)
5.6
6.3 (6.0)
8.8 (7.7)
5.8
10.2
10.6

7.9 (7.7)
11.7 (10.5)
6.9
8.3 (8.1)
12.6 (10.9)
7.2
14.3
14.7

188 (184)
279 (249)
183
198 (192)
299 (258)
190
342
352

13.8
14.0
16.4
17.1
16.4
17.1
18.8
18.9
9.0
9.1
9.0
12.6
12.6

11.3 (11.5)
12.9
13.0
6.1 (7.1)
6.7 (7.7)
6.4 (7.1)
7.0 (7.7)
7.8

12.6
12.8 (13.1)
13.4 (13.3)
7.9
8.2 (8.3)
9.7 (9.9)
9.7

13.2
17.5
8.7
8.8
19.3

13.2
17.5
8.7
8.8
10.8

7.6
7.7
8.5
8.9
8.5
8.9
9.5
9.6
5.5
5.6
5.7
7.6
7.6

6.4 (6.6)
7.2
7.3
4.7 (5.2)
5.1 (5.4)
4.7 (5.2)
5.1 (5.4)
5.5

6.9
7.3 (7.4)
7.3 (7.6)
5.2
5.5 (5.8)
6.0 (6.4)
6.7

8.3
9.6
6.7
6.8
10.8

8.3
9.6
6.7
6.8
9.4

9.9
10.0
11.4
11.9
11.4
11.9
12.9
13.0
6.8
6.9
6.9
9.4
9.4

232
235
266
278
266
278
299
303
178
180
181
219
219

8.2 (8.4)
9.3
9.4
5.2 (5.9)
5.7 (6.2)
5.3 (5.9)
5.8 (6.2)
6.3

9.0
9.3 (9.5)
9.5 (9.7)
6.2
6.5 (6.7)
7.4 (7.7)
7.8

191 (195)
217
219
136 (155)
150 (164)
139 (155)
153 (164)
167

215
224 (228)
229 (233)
165
172 (178)
196 (206)
208

10.1
12.5
7.4
7.5
13.9

10.1
12.5
7.4
7.5
9.9

236
292
195
198
325

236
292
195
198
231

BMW
X6 M 4, 10

19.3

10.8

13.9

325

Z4 sDrive23i 4
Z4 sDrive30i 4
Z4 sDrive35i 4
Z4 sDrive35is 2, 4

12.4 (11.8)
12.4 (11.9)
13.5 (12.6)
12.6

6.2 (6.1)
6.2 (6.2)
7.0 (6.9)
6.9

8.5 (8.2)
8.5 (8.3)
9.4 (9.0)
9.0

199 (192)
199 (195)
219 (210)
210

MINI
MINI One 4
MINI One MINIMALIST 4, 8
MINI Cooper 4
MINI Cooper S 4
MINI John Cooper Works 1, 4
MINI One D 1
MINI Cooper D

7.2 (8.7)
6.5
6.9 (8.7)
7.3 (8.9)
9.4
4.7
4.7 (6.5)

MINI One Convertible 4
7.3 (8.9)
MINI Cooper Convertible 4
7.2 (8.9)
MINI Cooper S Convertible 4 7.5 (9.1)
MINI John Cooper Works
Convertible 1, 4

9.6

4.4 (5.1)
4.3
4.6 (5.1)
5.0 (5.0)
5.8
3.5
3.5 (4.2)

4.3 (5.3)
4.9 (5.3)
5.1 (5.1)

5.4 (6.4)
5.1
5.4 (6.4)
5.8 (6.4)
7.1
3.9
3.9 (5.0)

127 (150)
119
127 (150)
136 (149)
165
104
104 (134)

5.7 (6.6)
5.7 (6.6)
6.0 (6.6)

133 (154)
133 (154)
139 (153)

5.9

7.3

169

MINI One Clubman 4
MINI Cooper Clubman 4
MINI Cooper S Clubman 4
MINI John Cooper Works
Clubman 1, 4
MINI Cooper D Clubman

Rolls-Royce
Rolls-Royce Ghost 2, 4
Rolls-Royce Phantom 2
Rolls-Royce Phantom
extended Wheelbase 2

7.3 (8.8)
7.0 (8.8)
7.4 (8.9)

4.5 (5.2)
4.7 (5.2)
5.0 (5.0)

5.5 (6.5)
5.5 (6.5)
5.9 (6.4)

129 (152)
129 (152)
137 (150)

9.5
4.9 (6.6)

5.8
3.6 (4.2)

7.2
4.1 (5.1)

167
109 (136)

20.5
23.2

9.6
11.3

13.6
15.7

317
377

23.3

11.4

15.8

380

Rolls-Royce Phantom Coupé 2

23.2

11.3

15.7

377

Rolls-Royce Phantom
Drophead Coupé 2

23.2

11.3

15.7

377

Figures in brackets only valid for automatic transmissions.

1 only available with manual transmission
2 only available with automatic transmission
3 comes as standard with sequential M transmission (7-gear)
4 EU-5 comes as standard
5 EU-4 comes as standard for right-hand drive vehicles
6 variant with 1.6-litre cubic capacity
7 Consumption values for models with automatic transmission in right-hand drive

vehicles vary.

8 only available in selected EU countries
9 figures not yet available
10 comes as standard with 6-gear M Sport automatic transmission

Further information and constantly updated data for the vehicles is available on the
Internet at www.bmw.com, www.mini.com and www.rolls-roycemotorcars.com.

as of model year 2010

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Annual Report 2009

Facts and figures

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A further contribution towards preserving resources

Published by
Bayerische Motoren Werke
Aktiengesellschaft
80788 Munich
Germany
Telephone +49 89 382-0

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BMW Group in figures

Report of the Supervisory Board

12
12
14
18
42
45
48

63
64
70

74
74
74
76
78
80
81

Group Financial Statements
Income Statements
Statement of Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes in Equity
Notes to the Group Financial Statements

81
90
97
98
119
133

Accounting Principles and Policies
Notes to the Income Statement
Notes to the Statement of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

138

Responsibility Statement by the
Company’s Legal Representatives

139

Auditors’ Report

140

141

142
145
146

151
157

158

162
162
164
166
168
170
173
174

Other Information
BMW AG Principal Subsidiaries
BMW Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Financial Calendar
Contacts

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Model

Urban
(l / 100 km)

Extra-urban
(l / 100 km)

Combined
(l / 100 km)

CO2 emis-
sions (g / km)

Model

Urban
(l / 100 km)

Extra-urban
(l / 100 km)

Combined
(l / 100 km)

CO2 emis-
sions (g / km)

BMW
530d xDrive Touring
535d Touring 2
M5 Touring 3

535i Gran Turismo 2, 4
550i Gran Turismo 2, 4
530d Gran Turismo 2, 4
535d Gran Turismo 2, 4

630i Coupé
650i Coupé
635d Coupé 2
630i Convertible
650i Convertible
635d Convertible 2
M6 Coupé 3
M6 Convertible 3

740i 2, 4
740Li 2, 4
750i 2, 4
750i xDrive 2, 4
750Li 2, 4
750Li xDrive 2, 4
760i 2, 4
760Li 2, 4
730d 2, 4
730Ld 2, 4
740d 2, 4
ActiveHybrid 7 2, 4
ActiveHybrid 7L 2, 4

X1 sDrive18i 4
X1 xDrive25i 2, 4
X1 xDrive28i 2, 4
X1 sDrive18d 4
X1 xDrive18d 4
X1 sDrive20d 4
X1 xDrive20d 4
X1 xDrive23d 2, 4

X3 xDrive20i 1
X3 xDrive25i
X3 xDrive30i
X3 xDrive18d 1, 4
X3 xDrive20d 4
X3 xDrive30d
X3 xDrive35d 2

X5 xDrive35i 2, 4
X5 xDrive50i 2, 4
X5 xDrive30d 2, 4
X5 xDrive40d 2, 4
X5 M 4, 10

X6 xDrive35i 2, 4
X6 xDrive50i 2, 4
X6 xDrive30d 2, 4
X6 xDrive40d 2, 4
ActiveHybrid X6 2, 4

9.6 (9.9)
9.2
21.7

5.8 (5.6)
5.6
10.5

7.2 (7.2)
6.9
14.6

192 (192)
182
348

12.3
16.2
8.1
8.3

6.9
8.3
5.6
5.8

8.9
11.2
6.5
6.7

209
263
173
175

11.2 (11.0)
17.8 (15.9)
9.2
11.8 (11.6)
19.2 (16.5)
9.6
21.4
22.0

6.0 (5.8)
8.1 (7.4)
5.6
6.3 (6.0)
8.8 (7.7)
5.8
10.2
10.6

7.9 (7.7)
11.7 (10.5)
6.9
8.3 (8.1)
12.6 (10.9)
7.2
14.3
14.7

188 (184)
279 (249)
183
198 (192)
299 (258)
190
342
352

13.8
14.0
16.4
17.1
16.4
17.1
18.8
18.9
9.0
9.1
9.0
12.6
12.6

11.3 (11.5)
12.9
13.0
6.1 (7.1)
6.7 (7.7)
6.4 (7.1)
7.0 (7.7)
7.8

12.6
12.8 (13.1)
13.4 (13.3)
7.9
8.2 (8.3)
9.7 (9.9)
9.7

13.2
17.5
8.7
8.8
19.3

13.2
17.5
8.7
8.8
10.8

7.6
7.7
8.5
8.9
8.5
8.9
9.5
9.6
5.5
5.6
5.7
7.6
7.6

6.4 (6.6)
7.2
7.3
4.7 (5.2)
5.1 (5.4)
4.7 (5.2)
5.1 (5.4)
5.5

6.9
7.3 (7.4)
7.3 (7.6)
5.2
5.5 (5.8)
6.0 (6.4)
6.7

8.3
9.6
6.7
6.8
10.8

8.3
9.6
6.7
6.8
9.4

9.9
10.0
11.4
11.9
11.4
11.9
12.9
13.0
6.8
6.9
6.9
9.4
9.4

232
235
266
278
266
278
299
303
178
180
181
219
219

8.2 (8.4)
9.3
9.4
5.2 (5.9)
5.7 (6.2)
5.3 (5.9)
5.8 (6.2)
6.3

9.0
9.3 (9.5)
9.5 (9.7)
6.2
6.5 (6.7)
7.4 (7.7)
7.8

191 (195)
217
219
136 (155)
150 (164)
139 (155)
153 (164)
167

215
224 (228)
229 (233)
165
172 (178)
196 (206)
208

10.1
12.5
7.4
7.5
13.9

10.1
12.5
7.4
7.5
9.9

236
292
195
198
325

236
292
195
198
231

BMW
X6 M 4, 10

19.3

10.8

13.9

325

Z4 sDrive23i 4
Z4 sDrive30i 4
Z4 sDrive35i 4
Z4 sDrive35is 2, 4

12.4 (11.8)
12.4 (11.9)
13.5 (12.6)
12.6

6.2 (6.1)
6.2 (6.2)
7.0 (6.9)
6.9

8.5 (8.2)
8.5 (8.3)
9.4 (9.0)
9.0

199 (192)
199 (195)
219 (210)
210

MINI
MINI One 4
MINI One MINIMALIST 4, 8
MINI Cooper 4
MINI Cooper S 4
MINI John Cooper Works 1, 4
MINI One D 1
MINI Cooper D

7.2 (8.7)
6.5
6.9 (8.7)
7.3 (8.9)
9.4
4.7
4.7 (6.5)

MINI One Convertible 4
7.3 (8.9)
MINI Cooper Convertible 4
7.2 (8.9)
MINI Cooper S Convertible 4 7.5 (9.1)
MINI John Cooper Works
Convertible 1, 4

9.6

4.4 (5.1)
4.3
4.6 (5.1)
5.0 (5.0)
5.8
3.5
3.5 (4.2)

4.3 (5.3)
4.9 (5.3)
5.1 (5.1)

5.4 (6.4)
5.1
5.4 (6.4)
5.8 (6.4)
7.1
3.9
3.9 (5.0)

127 (150)
119
127 (150)
136 (149)
165
104
104 (134)

5.7 (6.6)
5.7 (6.6)
6.0 (6.6)

133 (154)
133 (154)
139 (153)

5.9

7.3

169

MINI One Clubman 4
MINI Cooper Clubman 4
MINI Cooper S Clubman 4
MINI John Cooper Works
Clubman 1, 4
MINI Cooper D Clubman

Rolls-Royce
Rolls-Royce Ghost 2, 4
Rolls-Royce Phantom 2
Rolls-Royce Phantom
extended Wheelbase 2

7.3 (8.8)
7.0 (8.8)
7.4 (8.9)

4.5 (5.2)
4.7 (5.2)
5.0 (5.0)

5.5 (6.5)
5.5 (6.5)
5.9 (6.4)

129 (152)
129 (152)
137 (150)

9.5
4.9 (6.6)

5.8
3.6 (4.2)

7.2
4.1 (5.1)

167
109 (136)

20.5
23.2

9.6
11.3

13.6
15.7

317
377

23.3

11.4

15.8

380

Rolls-Royce Phantom Coupé 2

23.2

11.3

15.7

377

Rolls-Royce Phantom
Drophead Coupé 2

23.2

11.3

15.7

377

Figures in brackets only valid for automatic transmissions.

vehicles vary.

8 only available in selected EU countries
9 figures not yet available
10 comes as standard with 6-gear M Sport automatic transmission

Further information and constantly updated data for the vehicles is available on the
Internet at www.bmw.com, www.mini.com and www.rolls-roycemotorcars.com.

as of model year 2010

A portrait of the Company

Bayerische Motoren Werke G. m. b. H. came into being in 1917, having been founded in 1916 as
Bayerische Flugzeugwerke AG (BFW); it became Bayerische Motoren Werke Aktiengesellschaft
(BMW AG) in 1918.

The BMW Group has meanwhile become one of the ten largest car manufacturers in the world. With
our BMW, MINI and Rolls-Royce brands, we possess three of the strongest premium brands in the
automobile industry. We also command a strong market position in the motorcycle sector and operate
successfully in the field of financial services.

The Strategy Number ONE adopted in 2007 has put us on the right path to a successful future. The
business was given a new strategic direction with an emphasis on profitability and long-term value
growth. Our activities will remain firmly focused on the premium segments of the international car
markets. Our mission statement up to the year 2020 is clearly defined: the BMW Group is the world’s
leading provider of premium products and premium services for individual mobility.

Long-term thinking and responsible action have long been the cornerstones of our success. Striving
for ecological and social sustainability along the entire value-added chain, taking full responsibility
for our products and giving an unequivocal commitment to preserving resources are prime objectives
firmly embedded in our corporate strategy. For these reasons, the BMW Group has been sector leader
in the Dow Jones Sustainability Indices for the last five years.

BMW Group in figures

Deliveries of automobiles

in thousand units

1,500

1,400

1,300

1,200

1,100

1,000

Revenues

in euro billion

1,328.0 1,374.0 1,500.7 1,435.9 1,286.3

46.7

49.0

56.0

53.2

50.7

Profit before financial result

in euro million

Profit before tax

in euro million

4,500

3,750

3,000

2,250

1,500

750

4,500

3,750

3,000

2,250

1,500

750

3,793

4,050

4,212

921

289

3,287

4,124

3,873

351

413

BMW Group in figures

Deliveries to customers

BMW

MINI

Rolls-Royce

2005

2006

2007

2008

2009

Change in %

Automobile deliveries total

1,327,992

1,373,970

1,500,678

1,435,876

1,286,310

1,126,768

1,185,088

1,276,793

1,202,239

1,068,770

200,428

796

188,077

805

222,875

1,010

232,425

1,212

216,538

1,002

–11.1

– 6.8

–17.3

–10.4

Motorcycles1

97,474

100,064

102,467

101,685

87,306

–14.1

Vehicle production

BMW

MINI

Rolls-Royce

1,122,308

1,179,317

1,302,774

1,203,482

1,043,829

200,119

692

186,674

847

237,700

1,029

235,019

1,417

213,670

918

Automobile production total

1,323,119

1,366,838

1,541,503

1,439,918

1,258,417

–13.3

– 9.1

– 35.2

–12.6

Motorcycles2

92,012

103,759

104,396

104,220

82,631

– 20.7

Workforce at end of year 3

BMW Group

105,798

106,575

107,539

100,041

96,230

– 3.8

Financial figures

in euro million

Revenues

Capital expenditure

Depreciation and amortisation
Operating cash flow 4

Profit before financial result

Profit before tax

Net profit

46,656

48,999

56,018

53,197

50,681

3,993

3,025

6,184

3,793

3,287

2,239

4,313

3,272

5,373

4,050

4,124

2,874

4,267

3,683

6,246

4,212

3,873

3,134

4,204

3,670

4,471

921

351

330

3,471

3,600

4,921

289

413

210

– 4.7

– 17.4

– 1.9

10.1

– 68.6

17.7

– 36.4

1 excluding Husqvarna Motorcycles (13,052 motorcycles)
2 from 2006 including BMW G 650 X assembly by Piaggio S. p. A., excluding Husqvarna Motorcycles (10,612 motorcycles)
3 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
4 reported in the cash flow statement up to 2006 as cash inflow from operating activities of Industrial Operations and from 2007 as cash inflow from operating activities of the

Automobiles segment

Joachim Milberg

Chairman of the Supervisory Board

07 Report of the Supervisory Board

Ladies and Gentlemen,

The financial year 2009 presented many challenges for the BMW Group. Throughout this difficult period, the Super-
visory Board and Board of Management worked together closely, constructively and in an atmosphere of trust.
We supported the Board of Management in an advisory capacity in key management issues, including strategic
decisions concerning the expansion of the product portfolio within the Automobiles segment. We also continu-
ously monitored the management of the business with the aid of regular written and oral reports provided by the
Board of Management and on the basis of joint discussions. In a total of five meetings, one of them held over a
two-day period, we deliberated at length on the Group’s business plan and forecasts – the preparation of which
has clearly been rendered more difficult by the financial and economic crisis. Our discussions also covered risk
management issues, risk provisions, the current performance and financial position of the BMW Group and the
compensation of the Board of Management. In addition to the scheduled meetings, the Board of Management
also kept us informed of current business and economic developments, in particular sales volume performance,
personnel figures and other significant matters. The Chairman of the Board of Management informed me per-
sonally and on a regular basis about major business transactions and projects.

Primary objectives of the Supervisory Board’s monitoring and advisory activities Against the background of the
current financial and economic crisis, legislative measures in key markets to reduce CO2 emissions and changing
customer requirements, we paid particular attention to the Board of Management’s detailing and implementation
of the Strategy Number ONE. The main focus of our monitoring and advisory work was on management’s en-
deavours to engage in new growth areas and with new customer target groups, on securing access to customers
and innovative technologies, on improving profitability and hence safeguarding the long-term competitiveness of
the BMW Group. The Board of Management reported to the Supervisory Board at regular intervals and in depth
on risk management and risk provision issues. These two topics constituted a further area of emphasis for our de-
liberations in the Supervisory Board.

The Board of Management kept us informed of changes in the general economic environment caused by the
finan cial and economic crisis and provided a detailed analysis of the risk profile, particularly that of the Financial
Services segment. In this context we also held discussions with the Board of Management regarding its plans
to restructure activities in this segment to take account of the changing economic environment and regulatory
framework. The Supervisory Board fully supports the initiatives taken by the Board of Management to optimise
liquidity management, risk management, sales support facilities within the Automobiles segment as well as cor-
porate and management organisational structures.

In September we joined the Board of Management over a two-day period in a board meeting with a new format.
During one session of that meeting – dedicated to reviewing technical information, exploring the concept of
motoring as an experience and exchanging ideas – members of the Board of Management gave presentations on
new products and innovative drive concepts developed in conjunction with the Strategy Number ONE. It is hoped
that these developments will provide some answers to the changing requirements of customers, legislation and
the environment. In a further session, the Board of Management presented the results of its strategy review which
were discussed at great length. The Supervisory Board considers that the Board of Management is on the right
track with new projects designed to tap new growth markets, address new customer groups and move into other
vehicle segments. In the course of this meeting we also gave intensive consideration to the long-term business
plan which the Board of Management presented for approval and which, due to the financial and economic crisis,
predicts a delayed increase in sales volume but a quality of earnings from 2012 onwards in line with pre vious
forecasts. The Board of Management explained variances from earlier forecasts and reported fully on the main
external risk factors affecting business. The Supervisory Board remains convinced that the Board of Manage-
ment’s Strategy Number ONE is robust and accordingly granted its formal approval to the long-term business
plan.

We also carefully considered the annual budget for the financial year 2010 and the targets incorporated therein
and discussed these with the Board of Management.

In regular reports, the Board of Management kept us informed of sales volume performance in the Automobiles
and Motorcycles segments, new business developments in the Financial Services segment and vehicle residual
values in key markets. We were also regularly informed about measures to bring production capacities into line
with current demand and about important changes in the area of human resources. The Board of Management
also reported on other current events such as the sale of the Formula One racing team. Key projects, such as the
expansion of production capacities in China undertaken to strengthen competitiveness and open up potential
opportunities for growth, were also explained. One Supervisory Board meeting was held at the BMW plant in
Dingolfing, Lower Bavaria, where the BMW 5 Series, 6 Series, 7 Series, 5 Series Gran Turismo and a wide range
of components are produced. The central parts distribution centre is also located at this site. During our visit to
the plant we were shown how profitability has been significantly improved through rigorous application of the
principles of value-added production.

In 2009 the Personnel Committee and the Supervisory Board carried out an in-depth review of the structure and
level of the Board of Management’s compensation, and deliberated on the new pension arrangements for mem-
bers of the Board of Management. A detailed Compensation Report is included in the Corporate Governance
Report section of the Annual Report. Tasks dealing with issues relating to the Board of Management’s compensa-
tion were reallocated between the Personnel Committee and the Supervisory Board as a result of the German
Act on the Appropriateness of Management Board Compensation (VorstAG). With effect from the date on which
that law came into force, the Supervisory Board has been responsible for determining and regularly reviewing the
Board of Management’s compensation. The Personnel Committee now plays a preparatory role in this process.
The Supervisory Board’s terms of reference were adapted to take account of the change in allocation of tasks be-
tween the Personnel Committee and the full Supervisory Board. The Personnel Committee and the Supervisory
Board also took an in-depth look at the requirements of the VorstAG and the recommendations of the German
Corporate Governance Code relating to the structure of board compensation. Further information is provided in
the detailed Compensation Report.

Corporate Governance and Declaration of Compliance At a joint meeting in December 2009, the Supervisory
Board and the Board of Management examined whether the corporate governance principles laid down in the
previous year had been applied during the financial year 2009 and also deliberated in detail on future corporate
governance developments within the BMW Group. The two boards issued a joint Declaration of Compliance with
the German Corporate Governance Code (GCGC) pursuant to § 161 AktG and had it posted to the BMW Group’s
website. The recommendations of the Government Commission on the German Corporate Governance Code (draft
from 18 June 2009) contained in the revised code issued on 5 August 2009 will be complied with in the future
with one exception, namely the level of an appropriate excess amount of directors’ and officers’ (D & O) liability in-
surance for Supervisory Board members. In view of the different financial circumstances of Supervisory Board
members, both boards consider it appropriate that a differentiation should be made in the level of the D & O insur-
ance excess amount applicable for members of the Board of Management on the one hand and members of the
Supervisory Board on the other, and are of the opinion that the levels of insurance excess already agreed for mem-
bers of the Supervisory Board remain appropriate. The Board of Management and the Supervisory Board decided
to comply with all other recommendations. This includes the code’s recommendations to take diversity into ac-
count when making proposals for elections to the Supervisory Board and in the composition of the Board of Man-
agement. In their assess ment of individuals for posts on the Board of Management or for proposed election to the
Supervisory Board, the Personnel Committee, Nomination Committee and the full Supervisory Board will take
even more care to ensure that the process is impartial and also pays due attention to diversity. The full Declaration
of Compliance is also shown in the Corporate Governance Report (part of the Annual Report). The BMW Group
Corporate Governance Code was updated on the basis of resolutions taken by the Board of Management and the
Supervisory Board. This code, which sets out the principles of good corporate governance applied within the
BMW Group, is available to shareholders and the general public via the Group’s website. Examining and improving
the efficiency of the Supervisory Board’s work is seen as an ongoing task, one key element of which is to engage
in open and constructive dialogue within the Supervisory Board and in dealings with the Board of Management.
The efficiency examination was also the subject of a separate discussion by the full Supervisory Board. Our prepa-
rations for this were based on the results of a questionnaire previously devised and distributed by the members

09 Report of the Supervisory Board

of the Supervisory Board in advance of the meeting. The two-day meeting held in September (including self-
evaluation sessions and opportunities for in-depth technical discussions amongst the members of the two boards)
and the introductory programme for new Supervisory Board members received much praise.

There was no indication during the past year of any conflicts of interest on the part of members of the Supervisory
Board or the Board of Management.

Attendance at Supervisory Board meetings in 2009 was on average over 90 %. One member was unable to attend
four meetings during the financial year 2009 due to illness. Presiding Board and committee meetings were fully
attended.

Description of Presiding Board activities and committee work In a total of five meetings, the Presiding Board
focused mainly on preparing for the meetings of the full Supervisory Board, including corporate governance related
issues unless such preparation fell under the remit of one of the committees. The Presiding Board selected addi-
tional topics for Supervisory Board meetings and made suggestions to the Board of Management regarding items
to be included in its reports to the full Supervisory Board.

The Audit Committee convened five times during the period under report. In accordance with a recommendation
by the GCGC, the Group’s three interim reports in 2009 were discussed with the Board of Management prior to
publication (by telephone conference). One meeting of the Audit Committee dealt in particular with preparations
for the Supervisory Board meeting at the beginning of 2009 at which the financial statements were examined.
Before giving the Supervisory Board its recommendations for nominations for election at the Annual General
Meeting and engaging the external auditor for the financial year 2009, the Audit Committee obtained a Declaration
of Independence from the proposed external auditor as well as fee proposals for the audit of the year-end financial
statements and the review of the six-month financial report. After the Annual General Meeting 2009, the Audit
Committee appointed the external auditor for the financial year 2009 and, taking the suggestions of the full Super-
visory Board into account, specified areas of audit emphasis, including risk management within the financial
services line of business.

The Audit Committee also looked carefully at the current risk profile, risk management and risk provision issues
(in particular with regard to the Financial Services segment) as well as at the Group’s internal control system. The
Audit Committee received reports from the Head of Group Internal Audit on the main areas of emphasis, the re-
sults of the audits conducted as well as on the Group Internal Audit Department’s organisation, capacities and
audit projects. The BMW Group Compliance Committee chairman reported to the Audit Committee on the current
status of implementation of the Group’s compliance programme at an international level, preventative measures
taken and the evaluation of any indications of non-compliance.

In line with the authority given to it by the full Supervisory Board, the Audit Committee approved the decision taken
by the Board of Management to increase BMW AG’s share capital pursuant to § 4 section 5 of the Articles of
Incorporation (Authorised Capital 2009) by euro 469,200 and, in conjunction with the employee share scheme,
to issue 469,200 new non-voting shares of preferred stock, each with a par value of euro 1, at favourable conditions
to employees.

The Personnel Committee held five meetings during the financial year 2009, focusing in particular on issues
relating to the compensation of the Board of Management. Further information is provided in the detailed Com-
pensation Report. In addition, the Personnel Committee undertook preparatory work ahead of the full Super-
visory Board’s decisions to extend two mandates of Board of Management members. In line with its terms of
reference, the Personnel Committee also gave its approval in specific cases to contracts with Board of Manage-
ment members.

The Nomination Committee, which is charged with the task of finding suitable candidates for the Supervisory
Board for inclusion in the Supervisory Board’s proposals for election at the Annual General Meeting, met twice

in 2009 to agree on the names of candidates and recommendations to be put forward to the full Supervisory
Board.

The statutory Mediation Committee (§ 27 (3) of the Law on Worker Participation) was not required to convene
during the financial year 2009.

The relevant chairmen reported regularly and in depth at Supervisory Board meetings on the status of Presiding
Board and committee work.

Changes in the composition and organisation of the Board of Management The management team comprising
seven persons was unchanged in 2009 in terms of composition and portfolio responsibilities. The Supervisory
Board extended mandates in two cases.

Changes in the composition of the Supervisory Board, Presiding Board and committees 17 members of the
Supervisory Board commenced their new term of office at the end of the Annual General Meeting 2009. The ten
employee representatives elected at the meeting of Workers’ Delegates held on 3 March 2009 in accordance with
applicable co-determination regulations – Bertin Eichler, Willibald Löw, Werner Neugebauer, Franz Oberländer,
Anton Ruf, Stefan Schmid, Maria Schmidt, Manfred Schoch, Werner Zierer and, for the first time, Horst Lischka –
took up office alongside the shareholders’ representatives elected individually at the Annual General Meeting
held on 14 May 2009. The following representatives were elected at the Annual General Meeting: Franz Markus
Haniel, Susanne Klatten, Wolfgang Mayrhuber, Stefan Quandt, Professor Dr. Jürgen Strube and myself, and one
new representative, Dr. Robert Lane. The mandates of Ulrich Eckelmann and Professor Dr. rer. nat. Dr. h. c. mult.
Hubert Markl came to an end at the conclusion of the Annual General Meeting. Mr. Eckelmann had been an em-
ployee representative on the Supervisory Board for more than eleven years, Professor Markl a shareholders’ repre-
sentative on the Supervisory Board for almost 15 years. On behalf of the Supervisory Board, I would like to thank
both gentlemen for their commendable work and their constructive, steadfast years of service to the BMW Group.

After the Annual General Meeting 2009, the Presiding Board and committees were constituted anew. I was elected
unanimously as Chairman, Mr. Manfred Schoch as First Deputy Chairman and Messrs. Stefan Quandt, Stefan
Schmid and Professor Dr. Jürgen Strube as further Deputy Chairmen. In accordance with the recommendations
of the GCGC, I had it made known on the BMW Group’s website in conjunction with the invitation of shareholders
to the Annual General Meeting, and again before election at that meeting, that, should I be re-elected to the Su-
pervisory Board, I would stand again for the position of Chairman. The Supervisory Board passed a resolution that
the Presiding Board should at the same time take over the function of the Personnel Committee and the Audit
Committee. The shareholders’ representatives on the Supervisory Board elected Stefan Quandt and Professor
Dr. Jürgen Strube as members of the Nomination Committee. By virtue of my position as Chairman of the Super-
visory Board, in accordance with the applicable terms of reference, I assumed the chair of both the Nomination
Committee and the Personnel Committee, in line with the recommendation of the GCGC. As a result of his exper-
tise in the fields of financial reporting and internal control procedures, Professor Dr. Jürgen Strube was re-elected
(as an independent member of the Supervisory Board) to chair the Audit Committee. Together with myself and
the First Deputy Chairman of the Supervisory Board, Messrs. Stefan Quandt and Stefan Schmid were elected
members of the Mediation Committee.

The work procedures of the Supervisory Board committees are described in detail in the corporate governance
section of the Annual Report. This also includes an overview of the structure of the Supervisory Board and its
committees.

Examination of financial statements and the profit distribution proposal KPMG AG Wirtschaftsprüfungsgesell-
schaft, Berlin, conducted a review of the abridged Interim Group Financial Statements and Interim Group Manage-

11 Report of the Supervisory Board

ment Report for the six-month period ended 30 June 2009. The results of the review were reported orally to
the Audit Committee: no issues were identified that might indicate that the abridged Interim Group Financial
Statements and Interim Group Management Report had not been prepared, in all material respects, in accord-
ance with the applicable provisions.

The Company and Group Financial Statements of Bayerische Motoren Werke Aktiengesellschaft for the year
ended 31 December 2009 and the combined Company and Group Management Report were audited by
KPMG AG Wirtschaftsprüfungsgesellschaft and given an unqualified audit opinion on 19 February 2010. The Audit
Committee examined these documents in detail at its meeting on 26 February 2010. At its meeting on 11 March
2010 and after hearing the committee chairman’s report on the meeting of the Audit Committee, the Supervisory
Board deliberated on and examined the relevant drafts drawn up by the Board of Management. Representatives
of the external auditors attended both meetings, reported on significant findings and answered any additional
questions raised by the members of the Supervisory Board. The representatives of the external auditors con-
firmed that the risk management system established by the Board of Management is capable of identifying
events or developments impairing the going-concern status of the Company and that no material weakness in the
internal control system and risk management system were found with regard to the financial reporting process. In
the course of their audit work, the external auditors did not identify any facts inconsistent with the contents of the
Declaration of Compliance issued jointly by the two boards. Documents relating to the Company and Group Fi-
nancial Statements, the combined Management Report, the long-form audit reports of the external auditors and
the Board of Management’s profit distribution proposal were made available to all members of the Supervisory
Board in a timely manner. The Supervisory Board concurred with the results of the external audit and approved
the Company and Group Financial Statements of Bayerische Motoren Werke Aktiengesellschaft for the financial
year 2009 prepared by the Board of Management. The Company Financial Statements are therefore adopted.
The Board of Management’s profit distribution proposal was reviewed by the Audit Committee and the Supervi-
sory Board. Taking account of the financial condition of the BMW Group and the interests of the shareholders,
they consider the proposal appropriate and concur with it. In accordance with the conclusion reached on the ex-
amination by the Audit Committee and Supervisory Board, no objections were raised.

The financial year 2009 was overshadowed by the ongoing financial and economic crisis. The strategy of incorpo-
rating Efficient Dynamics throughout the whole range of products and the successful implementation of profita-
bility improvement measures made an important contribution to the Group’s ability to take action and be competi-
tive during the financial year 2009. Seen in the context of unfavourable macroeconomic conditions, the BMW Group
was able to successfully assert itself in 2009 as a robust, autonomous company. This achievement required a
high degree of commitment and constructive cooperation at all levels.

On behalf of the Supervisory Board I sincerely wish to thank the members of the Board of Management, all em-
ployees and employee representatives for their continued hard work and their commitment to furthering the interests
of the BMW Group.

Munich, 11 March 2010
On behalf of the Supervisory Board

Joachim Milberg

Chairman of the Supervisory Board

Group Management Report
12
12
A Review of the Financial Year
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

Review of Operations
BMW Group – Capital Market
Activities
Disclosures pursuant to § 289 (4)
and § 315 (4) HGB
Financial Analysis
48
50
52
54 Net Assets Position
Subsequent Events Report
56
Value Added Statement
56
58
Key Performance Figures
59 Comments on BMW AG
Internal Control System
Risk Management

63
64
70 Outlook

Group Management Report
A Review of the Financial Year

BMW Group performs well despite
economic crisis
The worldwide economic and financial crisis again had a
major impact on our business in 2009. The steep decline in
demand on key sales markets and unfavourable refinanc-
ing conditions on international capital markets were partic-
ularly pronounced during the first half of the year. Manufac-
turers of premium vehicles benefited only to a very minor
extent from the various stimulus programmes established
in many countries to help increase car sales volumes.

The first signs of moderate economic recovery, from which
our automobile business also profited, emerged during
the second half of the year. With a total of 1,286,310 BMW,
MINI and Rolls-Royce cars sold in 2009, we ended the year
10.4 % down on the previous year’s sales volume perform-
ance and within the predicted range of 10 % to 15 %. In-
tense competition and model life-cycle factors also played
a role in reducing sales volumes to below the previous
year’s figures. We were nevertheless able to increase mar-
ket share in the premium segment and retain our position
as the world’s leading premium manufacturer.

International motorcycle markets contracted on average
by roughly one third in 2009. Despite this difficult environ-
ment, we were still able to sell 87,306 BMW motorcycles
worldwide (– 14.1 %), convincingly outperforming the mar-
ket as a whole.

The weak state of the global economy also cast its shadow
over financial services business in 2009. Ongoing adverse
conditions on the international car markets also caused new
financing and lease business to decline. The situation on
the international used car markets differed greatly from
market to market. Whereas demand for previously owned
cars stabilised over the course of the year in North America
and the United Kingdom, the situation in Continental
Europe remained difficult. The economic and financial crisis
was especially reflected in this region in a higher volume
of bad debts. Narrower risk spreads on the international
capital markets reduced refinancing costs during the year.

Due to the uncertain conditions on international capital
markets, we increased our liquidity levels at the beginning
of 2009. As the financial markets have settled somewhat
and with economic conditions stabilising, we have been
able to reduce those levels. Some of the liquidity raised was
used to externalise the financing of a second tranche of
pension liabilities.

Positive earnings achieved
With the economy performing so weakly, revenues fell
short of their previous year’s level. Group revenues in 2009

totalled euro 50,681 million, 4.7 % down on the previous
year. Excluding the exchange rate impact, revenues would
have fallen by 5.1 %.

Efficiency improvement measures initiated at an early stage
as part of our Strategy Number ONE and rigorous cost
management policies have both helped to enable us to
report positive Group earnings for the full year. A steep
sales volume decline, adverse exchange rate factors and
a difficult competitive environment had a negative impact
on business performance. The BMW Group reports a
profit before financial result (EBIT) of euro 289 million
(– 68.6 %). At euro 413 million, the profit before tax was up
by 17.7 % on the previous year.

In line with the sales volume performance, automobile
business revenues fell short of the previous year, dropping
by 10.3 % to euro 43,737 million. Reflecting the weak
state of most of the major car markets, the Automobiles
segment recorded a negative EBIT of euro 265 million
(2008: positive EBIT of euro 690 million). The slight eco-
nomic recovery in the final months of 2009 resulted in
a resurgence in car sales volume, enabling the segment
to achieve a positive EBIT of euro 93 million in the last quar-
ter of 2009. The segment recorded a loss before tax of
euro 588 million for the year (2008: profit before tax of
euro 318 million).

The Motorcycles segment generated revenues totalling
euro 1,069 million in 2009, 13.1 % down on the previous
year. The difficult market environment in 2009 pushed
down EBIT by 68.3 % to euro 19 million, with profit before
tax falling to euro 11 million (– 78.4 %).

The total business volume of the Financial Services seg-
ment was similar to that of the previous year, with revenues
of euro 15,798 million (+ 0.5 %). The positive EBIT gen-
erated by this line of business, at euro 355 million, was well
above the previous year’s level (2008: negative EBIT of
euro 216 million). The pre-tax segment result turned around
from a segment loss before tax of euro 292 million to a seg-
ment profit before tax of euro 365 million. The slight im-
provement in the global economy brought with it lower risk
levels in terms of residual values and within the lending
business. Narrower risk spreads on capital markets nudged
refinancing costs down during the year.

The income tax expense for the year was euro 203 million
(2008: euro 21 million). The sharp increase in the effective
tax rate was due to the lower level of tax-exempt income
and partly to the tax expense incurred for prior years in con-
junction with a tax field audit at the level of BMW AG, mostly
relating to intragroup transfer pricing arrangements. The

13 Group Management Report

BMW Group Revenues by region

in euro million

60,000

52,500

45,000

37,500

30,000

22,500

15,000

7,500

Rest of Europe

North America

Germany

Asia / Oceania
United Kingdom
Other markets

Rest of Europe

North America

Germany

Asia / Oceania

United Kingdom

Other markets

Total

12,141

10,957

11,001

5,538

5,125

1,894

46,656

13,226

11,779

10,601

6,200

5,214

1,979

48,999

16,450

12,161

11,918

7,353

5,945

2,191

56,018

15,780

12,461

10,739

7,523

4,913

1,781

53,197

12,911

11,724

11,436

8,495

4,078

2,037

50,681

Group net profit for the year decreased to euro 210 million
(– 36.4 %).

Dividend maintained at previous year’s level
Despite the adverse economic factors affecting earnings
generated in 2009, the Board of Management and the
Supervisory Board will propose to shareholders at the
Annual General Meeting that the unappropriated profit
available for distribution at the level of BMW AG, amounting
to euro 197 million, be used to pay an unchanged dividend
of euro 0.30 for each share of common stock and an un-
changed dividend of euro 0.32 for each share of preferred
stock. The distribution rate for 2009 would then be 96.6 %
(2008: 60.8 %).

Capital expenditure reduced on targeted basis
At euro 3,471 million, capital expenditure in 2009 was
reduced by comparison to the previous year (2008: euro
4,204 million / –17.4 %), with the main focus on product
investments for new model start-ups (such as the new
BMW 5 Series, the 5 Series Gran Turismo, the X1, the
MINI Convertible and the Rolls-Royce Ghost) and on in-
frastructure investments.

In 2009 we invested euro 2,384 million in property, plant
and equipment and other intangible assets (2008: euro
2,980 million / – 20.0 %). In addition, development expen-
diture of euro 1,087 million was recognised as assets (2008:
euro 1,224 million / –11.2 %). The percentage of develop-
ment costs capitalised rose to 44.4 % (2008: 42.7 %).

The capital expenditure ratio (capital expenditure / Group
revenue) fell to 6.8 % in 2009 (2008: 7.9 %) due to more
efficient use of capital. Despite our investment in innovative
technologies, the ratio was below 7 % of Group revenues
and therefore within the target range set in conjunction
with Strategy Number ONE.

BMW Group Capital expenditure and operating cash flow

in euro million

7,000

6,000

5,000

4,000

3,000

2,000

1,000

Capital
expenditure

Operating
cash flow*

3,993

4,313

4,267

4,204 3,471

6,184

5,373

6,246

4,471 4,921

* reported in the cash flow statement up to 2006 as cash inflow from operating activities
of Industrial Operations and from 2007 as cash inflow from operating activities of
the Automobiles segment

12
12
14
18
42

Group Management Report
A Review of the Financial Year
General Economic Environment
Review of Operations
BMW Group – Capital Market
Activities
Disclosures pursuant to § 289 (4)
and § 315 (4) HGB
Financial Analysis
48
50
52
54 Net Assets Position
Subsequent Events Report
56
Value Added Statement
56
58
Key Performance Figures
59 Comments on BMW AG
Internal Control System
Risk Management

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

General Economic Environment

End of worldwide recession reached
The year 2009 was dominated by the worst economic crisis
seen for decades. Global economic output decreased for
the first time since the Second World War. The property
and financial crisis that started in the USA in 2007 devel-
oped into a crisis of the real economy over the winter period
2008 / 09, encompassing practically all countries and busi-
ness sectors. The lowest point of this global recession
came during the first quarter 2009. Falling property prices,
the virtual collapse of the credit markets, a massive drop in
prices on the share and commodity markets and a drastic
slump in global trading volumes cast their shadows over
the economic landscape until well into the second quarter
2009. The slump in the world economy was only halted
during the second quarter 2009 by the global switch to
expansionary money and fiscal policies. Share and com-
modity prices have recovered strongly from their low points
in the first quarter. Risk spreads in the credit markets nar-
rowed somewhat, although nowhere near the levels seen
prior to the crisis. Most countries again began reporting
positive growth rates during the second half of 2009.

The crisis favoured an eastward shift in regional economic
strength: China recorded growth of approximately 8.7 % in
gross domestic product (GDP) even in the year of crisis and
although the global economy was contracting. China’s state-
financed economic stimulus programmes had a stabilising
effect on the domestic economy as a whole as well as on
the commodity, investment and consumer goods markets.

Unlike the benefits felt from consumer spending in China,
US consumers did not provide a similar impetus in 2009.
The 2.4 % drop in GDP in the USA was largely attributable
to weak consumer spending. With the unemployment
rate doubling to more than 10 % since the beginning of the
crisis and with many private households suffering under
the burden of high debt, falling residential property prices
and deteriorating credit conditions, there was a definite
lack of willingness to spend.

The euro zone was even more negatively affected by the
crisis in 2009 and recorded a 4.0 % downturn in economic

output. The drastic slump in global trade over the 2008 / 09
winter period took a particularly heavy toll on export-based
economies. Germany registered one of its biggest drops
ever, with GDP down by 4.9 % for the year 2009. Unem-
ployment, however, rose less than expected thanks to the
implementation of short-time working arrangements. With
effect from the second quarter of the year, Germany even
found itself leading the upturn within the euro zone. Due
to the high proportion of exported investment goods, the
German economy benefited particularly strongly from eco-
nomic stimulus programmes initiated both in Germany and
elsewhere. Private spending was boosted by the scrap-
page bonus scheme, which generated a level of demand
not seen in the automotive industry for many years.

The British economy also performed weakly over the
course of 2009, contracting by 4.8 % compared to the
previous year. As in the USA, the crisis in the UK was mainly
characterised by sharply declining property prices, high
levels of private debt, rising unemployment and weak con-
sumer spending. Despite the persistent weakness of the
British pound, structural deficiencies in the industrial sec-
tor prevented the British economy from rallying as global
trade picked up.

Of all the world’s major economies, Japan has witnessed
the greatest volatility over the course of the economic crisis
due to its high dependency on exports. Similar to Germany,
there was a dramatic slump in the first quarter of 2009 fol-
lowed by a period of stabilisation at a relatively early stage
on the back of state-funded stimulus programmes and a re-
covery in demand for exports from the second quarter on-
wards. Over the year, however, GDP deteriorated by 5.0 %.

After several years of economic boom, the crisis took a
heavy toll on most countries in Eastern Europe. The EU
countries in that region saw an overall drop of 3.7 % in
economic output as international capital was withdrawn.
Russia’s GDP fell by 7.9 % compared to the previous year,
revealing the extent to which the Russian economy is
dependent on the international raw material markets. In
contrast to Eastern Europe and to past economic crises,

Exchange rates compared to the Euro

(Index: 31 December 2004 = 100)

150

140

130

120

110

100

Source: Reuters

British Pound

US Dollar

Japanese Yen

15 Group Management Report

Oil price trend

Price per barrel of Brent Crude

160

140

120

100

Source: Reuters

Price in US Dollar

Price in Euro

other major emerging economies proved to be surprisingly
stable. India came through the global recession success-
fully with the aid of its own stimulus programme and fin-
ished the year with a growth rate of 6.0 %. Brazil managed
to keep economic output at a relatively stable level (– 0.3 %).

US dollar and British pound weaker
At the beginning of 2009, the worst point of the economic
crisis, the US dollar gained sharply with rates of up to US
dollar 1.25 to the euro. As a result of the zero-interest-rate
policy of the US Reserve Bank and the increased willing-
ness of international investors to take risks, the value of the
US dollar deteriorated over the course of the year to as low
as US dollar 1.50 to the euro. At the end of the period un-
der report, the US currency closed at US dollar 1.43 to the
euro, 2 % below its closing exchange rate one year earlier.
The British pound also lost significantly in value during the
crisis, hovering at around GBP 0.90 to the euro for most of
the year. The Japanese yen rose sharply against the euro
during the winter months of 2008 / 09, rising to yen 115 to
the euro. By the year-end, however, it had fallen back to
yen 133 to the euro. Emerging economy currencies were
amongst the strongest in 2009 after having suffered sig-
nificantly at the end of 2008 due to massive capital out-
flows. The currencies of countries which export raw mate-
rials – such as Brazil and Australia – also increased sharply
in value against the euro over the course of 2009.

Raw material prices steadier again
After plummeting by an average of almost two thirds on
worldwide markets during the second half of 2008, raw
material prices regained more than half of the ground lost
between their lowest point in February 2009 and the end
of the year. The price of oil almost doubled, rising from US
dollar 43 per barrel at the start of the year to US dollar 80
per barrel at the end. Massive injections of speculative
capital in the raw materials sector also caused the prices
of non-ferrous metals and precious metals to rise steeply.

Steel price trend

(Index: January 2005 = 100)

140

130

120

110

100

Source: Working Group for the Iron and Metal Processing Industry

Precious metals price trend

(Index: 31 December 2004 = 100)

400

350

300

250

200

150

100

Source: Reuters

Palladium
Gold

Platinum

12
12
14
18
42

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

Within the real economy, the main factor behind the sharp
rise in prices was China’s continuing need for raw materials.

Car markets in 2009
Due to the economic crisis, the number of passenger cars
and light commercial vehicles sold worldwide fell from
66.2 million units in 2008 to 62.5 million in 2009 (– 5.7 %).
Whereas the total sales volume in the USA dropped by
almost a quarter from 13.2 million units to 10.5 million units
in 2009, the number sold in China rose from 8.6 million
to 12.6 million. As a result, China replaced the USA as the
world’s largest vehicle market (passenger cars and light
commercial vehicles) for the first time. Amongst other fac-
tors, the Chinese car market profited from the halving of
the registration tax for small vehicles for a limited period of
time.

In the USA, however, the scrappage bonus programme
(“cash for clunkers”) set up in summer 2009 failed to stop
the market as a whole from contracting to its lowest level
for many years. The market share of US manufacturers
decreased by a further three percentage points to approxi-
mately 45 % in 2009, with the insolvencies of General
Motors and Chrysler playing a considerable role.

The passenger car market also contracted in the European
Union, falling by 2 % to 14.0 million units. Market perform-
ance differed greatly from country to country, however,
depending on the efficacy of various stimulus programmes
in place. In Germany, Europe’s largest market, demand
from private customers rose sharply. Despite the German
economy suffering particularly badly in a European com-
parison, the number of new registrations in Germany
jumped by approximately one quarter to 3.8 million units.
The scrappage programme in France boosted domestic
passenger car sales to 2.3 million units (+ 11 %) in 2009.
By contrast, however, national scrappage bonus pro-
grammes put in place in countries where the property and
credit markets were directly affected by the global eco-
nomic crisis failed to compensate for weaker demand. In
the UK, for instance, the number of new cars sold fell by
6 % to 2.0 million. In Spain – particularly hard hit by the
property crisis – sales were down by a quarter to less than
one million units in 2009, meaning that this market had
contracted by almost one-half due to the crisis. Eastern
European EU countries also registered a slump in passen-
ger car sales (by approximately a quarter), with only 0.9 mil-
lion units sold altogether.

The Japanese car market was also unable to escape the
effects of the international crisis, contracting by a further
9 % to only 4.5 million units despite the introduction of a
scrappage bonus programme and tax breaks.

Market performance among the emerging economies
varied greatly. Sales in Russia fell by one half to 1.4 million
units, whereas the Brazilian car market grew by 9 % to
3.0 million units on the back of a short-term tax reduction
for small cars. The car market in India continued to grow,
with sales up by 18 % to 2.1 million units.

For the first time in automotive history, at 47 %, sales in
the triad of traditional markets – the USA, Europe and
Japan – accounted for less than half of car sales world-
wide.

Motorcycle markets in 2009
Developments on international motorcycle markets in
2009 were largely shaped by the knock-on effects of the
international economic and financial crisis. Worldwide
motor cycle sales in the 500 cc plus segment were down
by almost one third (– 30.3 %) against the previous year.
The number sold in Europe fell by 21.9 %, with all coun-
tries registering negative rates. While the decreases in
France (– 9.6 %) and the United Kingdom (– 10.3 %) were
relatively moderate, market volumes in Spain (– 55.2 %),
Italy (– 21.7 %) and Germany (– 16.7 %) were well down on
those of the previous year.

The decline in sales in the USA – the largest market for
motorcycles in the 500 cc plus segment – was particularly
steep at 40.9 %. The Japanese market also failed to reach
the previous year’s figures (–17.1 %).

The financial services market in 2009
The escalation of the international financial crisis during the
winter months of 2008 / 2009 created an all-encompassing
sense of uncertainty on the money and capital markets
throughout 2009. At the beginning of the year, governments
around the world adopted extensive measures in an effort
to stabilise the financial markets. In addition, the leading
central banks continued the policy, begun in 2008, of re-
ducing interest rates in order to counter worldwide reces-
sion. Towards the middle of the year, these measures did
indeed begin to have a certain positive impact. In particular,
they ensured the supply of liquidity to international money
and capital markets, which was also beneficial to the finan-
cial services sector. However, developments on the em-
ployment market and rising public-sector debt remain risk
factors which could jeopardise the situation.

After initially narrowing, credit risk spreads then widened
substantially during the early months of 2009 before
the situation began to ease on money and capital mar-
kets. Spreads then went on to stabilise at much narrower
levels during the second half of 2009, without, however,
reaching the levels seen before the onset of the crisis.

17 Group Management Report

The leading central banks continued to lower their reference
interest rates throughout the reporting period and then
kept them at an historically low level. During the year, the
US reference rate moved within a range of 0 % to 0.25 %.
The European Central Bank reduced its reference interest
rate by 1.5 percentage points in four steps to 1.0 %, while
the Bank of England lowered its reference interest rate by
1.5 percentage points to 0.5 % in three steps. With certain
economies recovering earlier than expected, the central
banks of some countries, including Australia and Norway,
decided to raise their rates. Despite improved prospects
for growth, interest rates within the medium-term maturity
segment remained largely at the same historically low
level. Interest rate rises were only observed in countries with
better economic indicators, such as Australia.

Developments on used car markets varied greatly around
the world. The situation in North America and in the United
Kingdom stabilised in 2009. In Continental Europe, the
impact of the economic crisis on used car markets was not
felt until later.

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

Review of Operations

Car sales down on previous year as expected
As predicted, the worldwide economic downturn had a
palpable effect on the BMW Group’s car sales volumes in
2009. In many countries, sales volume figures only really
began to stabilise in the fourth quarter 2009. A total of
1,286,310 vehicles was sold in 2009, 10.4 % down on the
previous year, and hence within the 10 to 15 % range pre-
dicted earlier in the year. 1,068,770 BMW brand cars
were sold worldwide in 2009, 11.1 % fewer than in 2008.
The number of MINI brand cars sold fell by 6.8 % to
216,538 units. A total of 1,002 Rolls-Royce brand vehicles
was handed over to customers in the course of the year
(– 17.3 %).

First signs of recovery in a number of markets
The first signs of stabilisation on international car markets
are slowly emerging, most evidently in the last three months
of 2009. However, many markets registered a contraction
for the year as a whole. In North America we handed over
271,032 BMW, MINI and Rolls-Royce brand cars (– 18.3 %)
to customers during the year under report. Sales in the
USA in 2009 fell to 242,053 units (– 20.3 %). In Canada, by
contrast, we sold 28,979 units, surpassing our previous
year’s sales volume performance by 2.9 %.

The difficult market conditions also had a negative impact
on business in Europe. We sold 761,887 vehicles in this
region in 2009, 11.9 % fewer than in the previous year. In
Germany, currently our largest single market, we recorded
a sales volume of 267,539 units, down slightly (– 4.8 %) on
2008. 137,062 units (– 9.5 %) were sold in the UK in 2009.

BMW Group Deliveries of automobiles by region and market

in 1,000 units

BMW Group – key automobile markets 2009

as a percentage of sales volume

Other

Germany

Spain

France

Italy

USA

China

United Kingdom

Germany

USA

United Kingdom

China

20.8

18.8

10.7

7.7

Italy

France

Spain

Other

5.9

4.9

3.2

28.0

This included 37,361 units sold in the last three months
of the year, an increase of 55.8 % compared to the same
period last year. Car sales in Italy totalled 75,679 units
(– 16.3 %) in 2009. The car markets in Spain and France
did not even recover in the final quarter of the year. As a
consequence, the number of cars sold in Spain in 2009 fell
by 31.7 % to 40,718 units and the number in France to
63,309 units (– 10.2 %).

Sales volume grew sharply in Asia, with 183,206 units sold
in 2009 (+ 10.5 %). The Chinese markets (China, Hong

1,600

1,400

1,200

1,000

800

600

400

200

Rest of Europe

North America

Germany

Asia

United Kingdom
Other markets

Rest of Europe

North America

Germany

Asia

United Kingdom

Other markets

350.8

329.0

295.9

125.7

156.2

70.4

375.0

337.4

285.3

142.2

154.1

80.0

443.6

364.0

280.9

159.5

173.8

78.9

432.2

331.8

280.9

165.7

151.5

73.8

357.3

271.0

267.5

183.1

137.1

70.3

Total

1,328.0

1,374.0

1,500.7

1,435.9

1,286.3

19 Group Management Report

Kong, Taiwan) made a big contribution to this performance.
The number of cars sold there rose by 31.1 % to 98,960
units. As experienced in many countries, the sales volume
achieved in Japan fell by 15.8 % to 41,125 units for the
full year. Here, too, the market picked up slightly in the final
quarter of the year (10,162 units / +2.1 %).

BMW brand sales volume below previous year’s level
Sales volume performance for the BMW brand was ad-
versely affected by both the generally weak state of the

economy and, in part, model life-cycle factors. During 2009,
216,944 units of the BMW 1 Series were handed over to
customers, a moderate reduction of 3.6 % for the year. Sales
of the BMW 3 Series during the year under report fell by
16.3 % to 397,103 units. Despite this fact, the BMW 3 Se-
ries remained the worldwide leader in its segment. Model
life-cycle factors held down sales of the BMW 5 Series
(175,983 units / – 13.0 %) and the BMW 6 Series (8,648
units / – 46.9 %). 3,052 units of the BMW 5 Series Gran
Turismo had been sold by year-end, even though this

Deliveries of BMW automobiles by model variant
in units

2009

2008

Change

Proportion of
in % BMW deliveries
2009 in %

BMW 1 Series

Three-door

Five-door

Coupé

Convertible

BMW 3 Series

Sedan

Touring

Coupé

Convertible

BMW 5 Series

Sedan

Touring

Gran Turismo

BMW 6 Series

Coupé

Convertible

BMW 7 Series

BMW X1

BMW X3

BMW X5

BMW X6

BMW Z4

44,034

120,323

24,081

28,506

216,944

49,559

122,666

26,304

26,566

225,095

219,850

246,231

84,601

54,852

37,800

93,191

79,248

55,538

397,103

474,208

135,944

36,987

3,052

175,983

4,501

4,147

8,648

156,825

45,462

–

202,287

8,337

7,962

16,299

–11.1

–1.9

– 8.5

7.3

– 3.6

–10.7

– 9.2

– 30.8

– 31.9

–16.3

–13.3

–18.6

–

–13.0

– 46.0

– 47.9

– 46.9

52,680

38,835

35.7

8,499

–

55,634

84,440

– 34.1

88,851

116,489

– 23.7

41,667

26,580

22,761

18,006

56.8

26.4

20.3

37.2

16.5

0.8

4.9

0.8

5.2

8.3

3.9

2.1

BMW total

1,068,770

1,202,239

–11.1

100.0

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

model did not come onto the markets until the end of
October 2009. By contrast, there was a sharp increase
(+ 35.7 %) in sales volume for the new BMW 7 Series –
available worldwide since spring 2009, with 52,680 units
sold. As a result of this performance, the new BMW 7 Se-
ries became segment leader in both Europe and China.

The BMW X1, which has been available since the end of
October 2009, sold remarkably well right through to the
end of the year. During this short space of time, 8,499 cus-
tomers chose to purchase the first compact Sports Activity
Vehicle available in the premium segment. Now getting
towards the end of its life-cycle, we sold 55,634 units of
the BMW X3, a decrease of 34.1 % on the previous year’s
figure. At 88,851 units, sales of the BMW X5 were also
down on the previous year (– 23.7 %). In the case of the
BMW X6, sales volume rose by 56.8 % to 41,667 units.

Deliveries of BMW diesel automobiles

in 1,000 units and as a percentage of total volume

650

600

550

500

450

400

350

300

units

438.3

472.7

525.9

511.2 464.2

as a percentage
of total volume

The BMW Z4, launched in May 2009, is enjoying great
popularity with the number of cars sold up by 26.4 % to
22,761 units.

Italy (91 %) and in Belgium / Luxembourg (90 %). In Germany
the proportion rose by two percentage points to 63 %.

Proportion of diesel-powered BMW cars
remains high
The proportion of diesel-powered BMW brand cars con-
tinues to be high (43 %). The proportion in Europe was
71 %, up slightly by one percentage point. BMW diesels
were particularly popular in Portugal where they accounted
for 95 % of sales. The proportion of diesel-powered BMW
brand cars also remained very high in France (93 %), in

MINI brand sales volume slightly down
The BMW Group sold 216,538 MINI brand cars worldwide
in 2009 (– 6.8 %). The new MINI Convertible, which has
been on the markets since spring 2009, recorded sales of
28,303 units, an increase of 22.0 % over the previous year.
At 150,043 units, the total number of MINI cars sold fell
7.5 % short of the previous year. The MINI Clubman re-
corded a sales volume of 38,192 units (– 18.9 %).

Deliveries of MINI automobiles by model variant
in units

MINI

One

Cooper

Cooper S

MINI Convertible

One

Cooper

Cooper S

MINI Clubman

One

Cooper

Cooper S

2009

2008

Change
in %

Proportion of
MINI deliveries
2009 in %

41,180

75,213

33,650

27,154

91,695

43,286

150,043

162,135

186

16,565

11,552

28,303

2,291

24,265

11,636

38,192

4,100

11,706

7,402

23,208

–

31,741

15,341

47,082

51.7

–18.0

– 22.3

– 7.5

– 95.5

41.5

56.1

22.0

–

– 23.6

– 24.2

–18.9

69.3

13.1

17.6

MINI total

216,538

232,425

– 6.8

100.0

21 Group Management Report

MINI brand cars in 2009 – analysis by model variant

as a percentage of total MINI brand sales volume

MINI One
(including One D)

MINI Cooper S

MINI Cooper
(including Cooper D)

MINI Cooper

MINI Cooper S

26.2

(including Cooper D)

53.6

MINI One (including One D) 20.2

In 2009 the MINI brand continued to generate a very
high-value product mix in terms of engine variants sold.
More than one half of customers (53.6 %) opted for the
MINI Cooper, with 26.2 % selecting the MINI Cooper S
and 20.2 % the MINI One.

Rolls-Royce remains segment leader
Despite the lower sales volume recorded by Rolls-Royce
Motor Cars in 2009, the brand once again underlined the
leading role it plays in its segment. In total, we handed
over 1,002 Rolls-Royce brand cars to customers in 2009
(– 17.3 %). The new model, the Ghost, which only became
available in December, achieved a sales volume of 167 units
within a very short time.

Car production volumes adjusted flexibly to
match lower demand
Production volumes were reduced at an early stage in line
with falling demand. In total, 1,258,417 BMW, MINI and
Rolls-Royce brand cars came off the production lines in
2009 (– 12.6 %).

Deliveries of Rolls-Royce automobiles by model variant
in units

Rolls-Royce

Phantom (including Phantom Extended Wheelbase)

Drophead Coupé

Coupé

Ghost

Rolls-Royce total

The BMW brand accounted for 1,043,829 units (– 13.3 %).
A total of 213,670 MINI brand cars left the Oxford
plant in England, 9.1 % fewer than in the previous year.
918 Rolls-Royce brand cars were manufactured during the
year under report (– 35.2 %).

Production network displays great flexibility
Our production network proved its underlying strength
during a difficult year. Efficiency and flexibility were both
further improved despite the difficult business conditions.
With nine product start-ups successfully executed and a
whole range of investments made at the plants in 2009
at a cost in excess of euro one billion, we continued to
lay the foundation for further rises in productivity. Instru-
ments such as flexible working hours and shift models
made it possible to adjust production schedules at short
notice.

At the BMW plant in Munich, we reacted flexibly to fluctua-
tions in demand on the automobile markets in 2009 with
non-production days during the first half of the year and
additional shifts in the second. It was not necessary there-
fore to introduce short-time working arrangements for car
production at the Munich site. Overall, in fact, we pro-
duced more cars than in the previous year. With more than
24,000 units manufactured in September 2009, the Mu-
nich plant recorded its best-ever monthly production vol-
ume figure in its almost 90 years of existence.

In November 2009, the 5,555,555th BMW 5 Series came
off the production lines at our Dingolfing plant and was
donated to the Bavarian Forest National Park. During the
year under report, series production commenced at the
Dingolfing plant for a total of 23 new models and engine
variants (BMW 7 Series and 5 Series Gran Turismo) and
preparations were made for the new generation of the
BMW 5 Series. We also invested euro 50 million at the
Dingolfing site on two new sheet steel presses for automo-
tive bodywork. This involves the first-time use of innovative
hot stamping technology in the automobile industry. This

2009

2008

376

261

198

167

644

431

137

–

1,002

1,212

Change
in %

– 41.6

– 39.4

44.5

–

–17.3

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

Automobile production of the BMW Group by plant in 2009

in 1,000 units

Graz2

Shenyang1

Goodwood
Rosslyn

Regensburg

Spartanburg

Leipzig

Oxford

Dingolfing

Munich

Regensburg

Oxford

Munich

Dingolfing

Leipzig

1 Joint venture
2 Contract production

250.5

213.7

203.9

194.7

143.5

Spartanburg

Rosslyn

Goodwood
Shenyang1
Graz (Magna Steyr) 2

123.0

46.2

0.9

36.0

46.0

new technique allows the production of high-strength, low-
weight body panels.

The new BMW Z4 came off the production lines at the
Regensburg plant for the first time in February 2009. With
the production of future models in mind, we invested a total
of euro 130 million from 2007 to 2009 in expanding this
plant for BMW Z4 production. A further euro 84 million has
been invested to expand the pressing plant. The Regens-
burg site now has the world’s first servo drive cutting press
and is able to cut high-strength and ultra high-strength
steel directly from coils and pre-stamp it into sheet metal
blanks for pressing. In future, nearly all of the pressed parts
required will be manufactured on-site and go directly into
bodywork production, enabling annual savings of some
two million truck-kilometres and 1,600 tons of CO2 emis-
sions. We also plan to invest a further euro 300 million
in car body construction and assembly during the coming
years.

We were able to avoid having to resort to short-time working
arrangements at the BMW plant in Leipzig during the year
under report by switching to one-shift operations and
utilising the flexibility of working-time accounts at an early
stage. We returned to two-shift operations in summer
2009 with the production start-up of the new BMW X1. Ad-
ditional employees from other plants helped to cope with
capacity peaks. The new pressing plant and new produc-
tion facilities for doors and front and rear hatches was
commissioned in September 2009. Overall, we invested
approximately euro 100 million in the plant.

The switch to a new, environment-friendly production
process was initiated at our light-metal foundry at the
Landshut plant in 2009. In 2010 it will then become the
world’s first emission-free foundry in which sand cores
will be used as the basis for casting. Instead of using con-
ventional, organic binding agents, processes in the future
will involve the use of particularly eco-compatible and in-
organic binding agents which create practically no environ-
mentally harmful emissions. Using these innovative pro-
duction techniques, the light-metal foundry will be able to
reduce emissions from combustion residues by 98 %. This
not only protects the environment; the new techniques also
generate commercial and work-related benefits. Amongst
other things, our employees are able to work under sig-
nificantly improved working conditions.

The new BMW 6-cylinder petrol engine featuring Twin-
Power Turbo Technology was produced for the first time in
2009 at our engine factory in Steyr, Austria. This engine
is destined for use in the new BMW 5 Series Gran Turismo.
Production of the new BMW 6-cylinder diesel engine
equipped with TwinPower Turbo Technology was also com-
menced. This engine, which powers the new BMW 740d,
has an exceptionally low level of fuel consumption (only
6.9 litres / 100 km) for its category. We have also sharply
reduced the volume of electricity consumed at the Steyr
plant thanks to our rigorous energy management strategy.
The quantity of electricity bought in for the plant in 2009
was 26 % lower than in 2006. The amount thus saved
would be sufficient to provide electricity to approximately
15,000 households for one year.

In May 2009, celebrations were held at the MINI plant in
Oxford to mark fifty years of the MINI brand. More than
1.5 million units of the new MINI have left the plant since
production began in 2001. We also announced in Sep-
tember that two further models would be produced at the
Oxford plant.

The 500,000th engine destined for a MINI left our Hams
Hall plant in August 2009. In total, more than 360,000 en-
gines were produced for BMW and MINI brand cars during
the reporting period. More than two million engines have
been produced at Hams Hall since production was taken
up in 2001.

One of the main focuses of activities at the Goodwood
plant in England in 2009 was the start-up of production
of the new Rolls-Royce Ghost. The first customers took
delivery of their Ghosts just before the end of 2009. Due
to strong demand, the new model will continue to have
an important impact on activities at Goodwood in 2010.
The Phantom nevertheless remains the brand’s key
model.

23 Group Management Report

In October 2009 we announced plans to invest the equiv-
alent of more than euro 200 million in the BMW Rosslyn
plant in South Africa prior to introducing the next generation
of the BMW 3 Series.

In the course of 2009 we completed the construction of
new assembly facilities at our plant in Spartanburg, USA,
which has now been in operation for 15 years. The paint
shop was also expanded and car body construction facili-
ties renovated. These investments were made primarily as
part of a set of measures prior to the start-up for the new
generation of the BMW X3. Production of the M variants of
the BMW X5 and X6 as well as the BMW ActiveHybrid X6
was also commenced during the year. 60 % of the energy
requirements for the plant were provided by methane gas
collected from a local waste disposal site, enabling some
59,000 tons of CO2 emissions to be avoided each year.

Together with our joint venture partner, Brilliance China
Automotive Holdings Limited, we announced in November
2009 that we will be constructing a second production
plant at the Shenyang site. The total amount to be invested
is euro 560 million. Construction is to commence in 2010
and the new plant should start production activities in
2012.

Motorcycle sales down on previous year
The number of BMW motorcycles sold in 2009 fell to
87,306 units worldwide (– 14.1 %) in a difficult market
environment. Despite the adverse conditions, the Motor-
cycles segment was nevertheless able to improve its
position and gain market share on all fronts, reflecting the
fact that the drop in sales volume of BMW motorcycles
was much less pronounced than the overall contraction
of the markets in which we operate. A major contribution
to this performance came from the K 1300 R, K 1300 S
and K 1300 GT models, which have been available to
customers since February, and from the F 800 R, on sale
since May 2009.

Lower sales volumes registered on most markets
In total, 60,178 BMW motorcycles were handed over to
customers in Europe in 2009, a decrease of 16.3 %. In
Germany, currently the largest single market for BMW
motorcycles, we were able to maintain market leadership
with 15,375 units sold (– 17.2 %). Sales in France (7,014
units / – 14.6 %), Italy (13,162 units / – 12.5 %) and Spain
(6,457 units / – 36.4 %) were all down on the previous year.
In the United Kingdom, however, sales increased by 4.3 %
to 5,859 units despite a generally contracting market.

The number of motorcycles sold in 2009 fell by 20.9 %
to 9,191 units in the USA and by 6.3 % to 2,825 units in
Japan.

Model range expanded
The expansion of the model range in 2009 helped to
cushion the impact of adverse business conditions for the
Motorcycles segment. The K 1300 R, K 1300 S and
K 1300 GT models were shipped to dealers for the first
time in February 2009. The F 800 R and the special
R 1200 GS, R 1200 R and R 1200 RT models (launched
to coincide with the 15th anniversary of four-valve boxer

BMW motorcycles delivered

in 1,000 units

105

100

09 *

97.5

100.1

102.5

101.7

87.3

* excluding Husqvarna Motorcycles (13,052 motorcycles)

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

Motorcycle production selectively reduced in
response to drop in demand
We also selectively adapted motorcycle production volumes
in 2009 to match the sharp decline in demand. In total,
82,631 motorcycles (– 20.7 %) were manufactured over
the course of the year. During the year under report, our
Berlin plant celebrated its 40th year as a production site for
BMW motorcycles. During this period almost 1.9 million
BMW motorcycles came off the production lines. The one-
millionth BMW motorcycle equipped with ABS left the
Spandau plant in summer 2009. Twenty-one years ago we
were the first motorcycle manufacturer worldwide to equip
motorcycles with ABS anti-blocking technology, thus
setting an important milestone for active motorcycling safety
at that time.

BMW Group – key motorcycle markets 2009

as a percentage of sales volume

Other

Germany

Italy

United Kingdom

USA

Spain

France

Germany

Italy

USA

France

17.6

15.1

10.5

8.0

Spain

United Kingdom

Other

7.4

6.7

34.7

engines) followed in the period from May onwards. The
S 1000 RR (based on the racing version) was launched in
December. A technical update of the R 1200 GS and a
model revision of the R 1200 RT were presented at the
International Motorcycle Exhibition (EICMA) in Milan.
A BMW motor cycle with a six-cylinder engine – the
Concept 6 – was also unveiled for the first time. This con-
cept study shows that a straight six-cylinder engine can be
highly dynamic thanks to state-of-the-art design and en-
gineering methods. The K model range will be expanded
in the foreseeable future by the addition of the new BMW
six-cylinder version. The first series production model will
also be an innovative and luxurious BMW touring bike.

BMW motorcycles in 2009 – analysis by series

as a percentage of sales volume

K Series

F Series

R Series

F Series

45.9

38.4

K Series

15.7

25 Group Management Report

Financial services business continues to stabilise
The knock-on effects of the worldwide economic and
finan cial crisis continued to be felt throughout the financial
year 2009. The situation remains tense on used car mar-
kets, particularly in Europe. Bad debt risk levels continue
to be higher than normal. Despite this difficult situation,
our financial services business continued to stabilise.

Compared to 31 December 2008, the segment’s business
volume in balance sheet terms increased by 0.9 % to euro
61,202 million. A total of 3,085,946 lease and financing
contracts was in place with dealers and retail customers at
the end of the reporting period, 1.8 % more than one year
earlier.

The slight recovery on the used car markets in the USA
and the UK had a stabilising impact on residual value levels.
The situation remained difficult in Continental Europe.
Credit risk remained high in the face of difficult economic
conditions in 2009. The loss ratio incurred on the segment’s
total credit portfolio was 0.84 % and therefore 25 basis
points higher than in the previous year (2008: 0.59 %). Nu-
merous measures – including stricter receivables manage-
ment, revised credit-decision processes with more re-
strictive rules for purchasing receivables and higher levels
of collateral – were implemented as part of the process of
actively managing credit risk exposures. The interest rate
risk is managed using a risk-return approach and measured
using value at risk (VaR) techniques. The VaR for the Finan-
cial Services segment increased to euro 78.6 million at
the end of 2009 compared to euro 51.0 million at the end
of 2008.

Awards underline high quality of service
Our financial services line of business won further awards in
2009 from the internationally renowned market research
institute J. D. Power and Associates. In the Dealer Financing
Satisfaction StudySM published in the USA, our financial
services operations came first for the sixth time in succes-
sion in the category “Leasing”. Top marks were also received
in other categories. In Canada we came first amongst
leading credit providers in the area of dealer satisfaction.
These awards underline once again the high quality of our
financial services operations and the focus placed on pro-
viding a high level of service.

“EU passport” project started
The decision was taken in 2009 to convert previous sepa-
rate legal entities within the Financial Services segment
into branches of BMW Bank, with the primary aim of further
improving the allocation of segment liquidity and equity.
This became feasible following the introduction of the so-
called “EU passport” which allows banks to set up branches

in European countries outside Germany under a German
banking licence. The BMW Bank had previously taken
the EU passport route to set up a branch in Portugal. The
finan cial services company in Spain was converted into a
BMW Bank branch during the financial year 2009. Measures
are currently being drawn up to integrate further entities.

The establishment of a single bank throughout the EU will
enable us to expand deposit business and, in the medium
term, to create the basis for open-market transactions.
This will be a key factor in refinancing our financial services
business more efficiently and flexibly in the future.

Regional presence expanded
We continued to pursue our strategy of targeted regional
expansion during the financial year 2009 with the aim of
opening up further opportunities for growth in Asia. In March
2009 for instance, a separate entity for financial services
was established in Singapore. In future, cooperation ar-
rangements with local insurance companies will provide an
outlet for insurance products in Egypt, Cyprus and Croatia.

Decline in volume of new business
The unfavourable conditions prevailing on international car
markets resulted in a lower volume of new financing and
lease business in 2009. In total, 1,015,833 new contracts
were concluded with retail customers, 15.2 % down on the
previous year’s figure. The number of new leasing contracts
decreased by 26.1 % while the number of credit contracts
in the field of new retail customer business fell by 9.5 %.
The creditworthiness of our customers, however, remained
at a high level.

Lease contracts accounted for 29.8 % of total new busi-
ness, 4.4 percentage points lower than in the previous year,
reflecting a targeted change in the proportion of new cus-
tomer business towards credit financing. Credit financing
contracts accounted for 70.2 % of new business. 49.0 %

Contract portfolio of BMW Group Financial Services

in 1,000 units

3,000

2,800

2,600

2,400

2,200

2,000

1,800

2,087

2,271

2,630

3,032 3,086

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

Contract portfolio retail customer financing of
BMW Group Financial Services 2009

as a percentage by region

Asia / Oceania / Africa

America

Europe

America

53.4

33.9

Asia / Oceania / Africa

12.7

of new cars were leased or financed by the Financial
Services segment, an increase of 0.5 percentage points
compared to the previous year.

In the used car financing line of business, 312,960 new
contracts for BMW and MINI brand cars were signed dur-
ing the year under report, 6.6 % more than in 2008.

The total volume of all new credit and leasing contracts
concluded with retail customers during the period under
report amounted to euro 24,709 million (– 15.8 %). How-
ever, due to delayed effects, the decline in new business
has not yet begun to affect the overall size of the portfolio.
The total number of retail customer contracts under manage-
ment increased by 2.0 % to 2,840,530 units, with growth
attributable to Europe and the Americas. The number of
retail customer contracts in Europe edged up by 0.7 %.
Growth of 5.1 % was registered in the Americas region,
whereas Asia / Oceania / Africa was roughly in line with the
previous year (– 0.5 %).

Dealer financing up on previous year
The Financial Services segment offers inventories, real
estate and equipment financing products for dealers, thus
ensuring that it remains a key partner for dealerships, par-
ticularly in difficult economic times. The total volume of
dealer financing contracts managed by the Financial Ser-
vices segment at the end of 2009 totalled euro 9,429 mil-
lion, 6.1 % up on the previous year. 245,416 dealer financing
contracts were in place at 31 December 2009 (– 0.4 %).

Fleet business remains stable, multi-brand
financing down
The BMW Group’s international brand-neutral fleet busi-
ness operates in the fields of financing, full-service leasing
and fleet management, offering its services under the
name “Alphabet”. Fleet business remained stable in 2009
despite the difficult economic situation. At 31 December
2009, 14 fleet entities managed a portfolio of 326,452
units worldwide, a 1.1 % increase in the contract portfolio.
Within the multi-brand financing line of business, credit
financ ing, leasing and other products were marketed to
retail customers via dealerships in 21 markets under the
brand name “Alphera”. With the portfolio continuing to
grow profitably, a more restrictive credit approval policy re-
sulted in a 51.0 % fall in the number of new contracts. A
total of 84,463 new contracts was signed during the year
under report. At the end of the reporting period, 312,687
contracts were under management (+ 0.7 %).

Sharp rise in volume of deposits
The Financial Services segment’s deposit volume world-
wide increased to euro 9,933 million due to the attractive
conditions offered. This represented an increase of 21.0 %.
At the end of the reporting period we were managing
27,000 securities custodian accounts (– 14.8 %).

It was not possible to maintain credit card business at the
previous year’s level. The managed portfolio fell by 16.9 %
to 295,334 BMW and MINI credit cards.

Continued growth in the area of insurance business
As attractive add-ons to lease and credit contracts we
also offer customers in more than 30 markets a wide
range of insurance products relating to individual mobility.
Demand for these products and in particular for package
solutions in combination with vehicle financing remained
strong throughout the period under report. The number
of new insurance contracts signed in 2009 rose by 18.3 %
to 584,119 units. The insurance contract portfolio grew
by 21.5 % compared to the previous year, increasing to
1,393,480 contracts at 31 December 2009.

27 Group Management Report

Size of workforce reduced
The size of the workforce decreased over the course of
2009 to stand at 96,230 employees at 31 December 2009.
The reduction of 3,811 employees (– 3.8 %) was due to
natural employee fluctuation, pre-retirement part-time
working arrangements and voluntary employment contract
termination agreements. Nonetheless, in addition to taking
on more than 1,100 new apprentices, we also recruited
staff again on a targeted basis.

Apprentice numbers remain high
A total of 1,118 young people started their apprenticeships
with us at the beginning of the training year. 263 of these
are pursuing dual vocational training courses at the end
of which they will be qualified to attend a university. The
number of apprentices has remained at a consistently
high level for several years. The BMW Group employed
3,915 apprentices at 31 December 2009, 4.6 % less than
one year earlier. The apprenticeship ratio in Germany (i. e.
the ratio of apprentices to the total workforce) fell by 0.1
of a percentage point to 4.9 %. Since the beginning of
2009, apprentices who have completed their vocational
training with us have also been given the opportunity to
start their careers in Shenyang, China. We also offer highly
attractive introductory programmes.

Basic and further training tailored to requirements
As a premium provider, we attach great importance to both
the basic and the further training of our workforce. The
creation of a training academy clearly demonstrates our
commitment to training and education within the company.
Training opportunities are made available to our German
and British employees at the academy. Basic and further
training courses are tailored to suit current requirements
and implemented with specific objectives in mind. In the
face of difficult business conditions, further training activi-
ties in 2009 were focused on selected target groups and
specific priority topics. Expenditure on basic and further
training totalled euro 143 million in the financial year 2009
(– 7.1 %).

BMW Group Employees

Automobiles

Motorcycles

Financial Services

Other

BMW Group

Attractiveness as employer confirmed
We have long been aware of the strategic importance of
being an attractive employer. Numerous measures have
been put in place to ensure that the BMW Group is regarded
as an employer of the highest repute. To this end, we focus
on two areas of activity. Firstly, we regularly review our
programmes for new recruits and modify them to meet
changing requirements. The BMW Group Graduate Pro-
gramme has been developed in this context; it is an interna-
tionally oriented trainee programme for university graduates
and applicants with some work experience. The structure
of the programme and the guidance offered by mentors
are designed to ensure that our highly qualified recruits are
given the most appropriate training. Another new develop-
ment is the SpeedUp programme, which is due to start
in autumn 2010. This course, which ends with a Bachelor
qualification, includes more than twelve months of prac-
tical experience in Germany and abroad as well as one term
of study abroad. In addition to the programmes offered for
new recruits, university graduates are also given the option
of joining the BMW Group directly.

Secondly, we regularly assess how relevant target groups
(students, graduates, new entrants) rate us as an employer.

BMW Group Apprentices at 31 December

5,500

5,000

4,500

4,000

3,500

3,000

2,500

4,464

4,359

4,281

4,102 3,915

31.12. 2009

31.12. 2008

89,457

2,796

3,882

96,230

92,924

2,917

4,077

123

100,041

Change
in %

– 3.7

– 4.1

– 4.8

– 22.8

– 3.8

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

Share of women in management positions at BMW AG

in %

9.0

8.0

7.0

6.0

5.0

4.0

3.0

Employee fluctuation ratio BMW AG1
as a percentage of workforce

7.0

6.0

5.0

4.0

3.0

2.0

1.0

6.9

7.0

7.4

7.8

8.0

2.45

2.68

2.66

5.85 2 4.59

The result is extremely positive and once again we were
nominated as one of the most attractive employers in
2009. This conclusion is based on numerous studies and
ranking tables (including Trendence and Universum). Ac-
cording to these, young academics studying in the fields
of economics and engineering sciences voted us among
the most popular employers. We were the highest placed
German company in Universum’s worldwide ranking
table, coming fourth in the list selected by engineers.
This is a further confirmation of our excellent reputation
amongst students and young people about to embark on
careers.

Encouraging women to join our company
Women are still under-represented at BMW AG, whether
as apprentices (23.0 %), works students, employees
working towards diplomas and doctorates (27.8 %) or in
management positions (8.0 %). Nevertheless, the number
of women in management positions at BMW AG is 52 %
higher than it was six years ago. The total proportion of
women working for BMW AG currently stands at 13.1 %.
Our aim is to encourage more women to join the company
and support them on their way from the training stage
into management positions. We therefore make a point of
increasing the opportunities for women with the aid of
various mentoring programmes and internal networks.

Safety at work in line with international standards
A safe working environment is one of the basic precon-
ditions for a healthy workforce. Health and safety-at-work
management systems that comply with international
standards are in place at twelve of our 24 production sites.
Similar systems that comply with national standards are
in place at a further four sites. Approximately 80 % of our
employees are in workplaces covered by certified man-
agement systems. More locations will follow suit in 2010.

1 Number of employees on unlimited employment contracts leaving the company
2 after implementation of previously reported measures to reduce the size of the

workforce

The accident rate for the BMW Group in 2009 was 3.1 ac-
cidents per one million working hours (2008: 2.7), again
lower than the average for the sector as a whole.

“Today for Tomorrow” project – seeing
demographic change as an opportunity
The BMW Group is consciously preparing itself for the com-
ing changes in age structure, particularly in industrialised
countries. Maintaining and furthering the performance
of our employees is seen as a crucial factor for success.
With its holistic approach and emphasis on preventative
measures, our “Today for Tomorrow” project is intended to
create the conditions necessary for maintaining a stable,
productive workforce in the future.

Designing competitive remuneration systems
Maintaining a competitive level of personnel costs plays a
major role in the success of the BMW Group. This is not
simply a one-sided matter of focusing on cost; it is equally
important to achieve greater efficiency by improving pro-
ductivity. The high degree of motivation amongst employees
and the positive corporate approach towards staff are
maintained and underlined by a combination of rewards
determined individually on the basis of performance and
success. Flexible and individually designed working time
models represent a further important aspect. Remunera-
tion, working time rules and other benefits are reviewed
regularly and, when necessary, adjusted in close coopera-
tion with employee representatives.

Commitment to the new understanding of
management leadership
Implementing the Strategy Number ONE also places new
demands on our approach to leadership within the organi-
sation. A key task for managers is to make staff aware that
changes are omnipresent and that management must deal

29 Group Management Report

Accident frequency at BMW Group

per one million hours worked

4.5

4.0

3.5

3.0

2.5

2.0

1.5

3.3

3.1

2.7

3.1

with these changes. By taking this approach, employees are
better able to understand, support and proactively facilitate
change.

Our management team is highly professional and focused
on results. Defining targets clearly and taking a process-
based approach are firmly embedded in our management
culture. In these challenging times it is a special respon-
sibility of each manager to provide guidance to, and instil
confidence in, the workforce. Staff will only be open to
change and motivated to work at their best, if management
can generate a sense of passion and enthusiasm for the
tasks ahead.

Thus, in addition to traditional managerial qualities, leader-
ship is also called for. The Board of Management has im-
pressed the importance of this understanding of excellent
leadership throughout all levels of management in a “top-
down” process and made it a key element both in the
evaluation process and the set of skills that managers are
expected to have. This process is being continuously im-
proved. We are convinced that we are in an optimal posi-
tion with our management team to accomplish the targets
laid down in the Strategy Number ONE.

Remuneration systems
We also wish to see sustainability reflected in our remuner-
ation systems. The BMW Group depends on the perform-
ance of highly motivated employees for whom hard work
and commitment are the norm. Based on this understand-
ing, annual pay not only serves as an incentive, it is also
our way of showing our appreciation for the work performed
by each and every employee.

The remuneration system practiced at the BMW Group is
based on the following underlying principles:

– Fairness, transparency and understandability.
– Continuity through all levels of corporate hierarchy, re-

flected in a well-balanced salary progression.

– Encouraging a performance-oriented corporate culture
by a targeted combination of fixed and variable remuner-
ation components.

– Key performers can be retained and potential employ-

ees attracted to the BMW Group.

The remuneration system is based on a number of com-
ponents. Each BMW Group employee receives a fixed
salary consisting of 12 monthly payments, complemented
by additional components according to local conditions.
This fixed salary is reviewed once a year and adjusted as
appropriate.

In addition, staff and managers receive variable salary com-
ponents designed to encourage them to participate in the
Group’s success and reward personal performance.

Corporate success is the reflection of the Group’s perform-
ance as a whole. This, in turn, is rewarded by participating
staff and managers in the Group’s success through the
payment of variable components. The level of these com-
ponents does not depend on individual performance but
solely on the results achieved by the Group as a whole.
Working in close cooperation with the General Works
Council, it is now ensured that this remuneration com-
ponent is measured using a standardised methodology
across all hierarchies within BMW AG. For this reason
the system previously used to calculate the remuneration
of Board of Management members as well as middle and
senior management will also be applied from 1 January
2010 onwards to tariff employees. The key indicators used
to determine variable remuneration components, which
are dependent on the Group’s success, are the Group’s
post-tax return on sales, Group net profit and the dividend
paid on common stock.

The recognition of personal commitment is also taken
into account by means of appropriate components in the
remuneration of employees, managers and Board of
Manage ment members. This is taken into account in tariff-
based remuneration in the form of performance bonuses.
From the middle management level upwards, this part of
the remuneration depends on the extent to which targets,
individually agreed upon with each manager, are achieved.
As well as key business performance indicators, the suc-
cessful involvement in areas aimed at securing the Group’s
future also play an important role. Examples of this are
achievements made in the area of personnel development
and behavioural aspects in the implementation of corporate
strategies: importance is attached not only on achieving

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

targets but also on the way in which they are achieved.
A binding evaluation instrument is in place for all non-
tariff-remunerated employees, based on the Group’s core
principles.

The two variable components of remuneration are added
and weighted similarly in terms of the target structure.
Overall, the remuneration system described above will –
depending of future market developments – help us to
achieve our long-term corporate objectives and success-
fully implement the Strategy Number ONE.

Implementation of instruments to increase flexibility
In view of the difficult economic conditions in 2009 we
implemented a series of measures to increase flexibility,
thus adapting vehicle production to the situation swiftly and
in a timely manner. Good examples of this, in close coordi-
nation with employee representatives, were the use of
employee time accounts and the flexible deployment of
employees within the production network. Fluctuating pro-
duction volumes were also managed flexibly by means
of temporary short-time working arrangements at specific
sites.

The proportion of variable remuneration to total remunera-
tion increases commensurate to the position within the
corporate hierarchy. The BMW Group differs from its com-
petitors by setting store on a higher proportion of variable
payments in its remuneration system. Thus in 2009 the
annual income of a tariff-paid employee fell by the amount
of the variable component (approximately 10 %) due to
the sharp drop in operating profit, whereas that of a head
of division fell by approximately one third.

In this age of demographic change, company pensions are
becoming an increasingly important aspect of a person’s
remuneration package. The BMW Group offers its staff
and managers attractive old-age pension models tailored
to suit the structures existing on the various local markets.
The BMW AG company pension scheme for middle and
upper management was restructured during the year un-
der report. The new scheme is based on a defined contri-
bution system with a guaranteed minimum return that pro-
vides the individual with a high degree of flexibility upon
reaching retirement age. Under the new system, pension
costs are significantly easier to predict. The new pension
scheme is appropriate both for the current situation and for
the future.

Depending on local requirements and the individual’s grade,
the BMW Group also offers its employees additional bene-
fits such as cars at special conditions, a group accident
insurance for managers in Germany and additional health
insurance benefits.

The remuneration philosophy described in this section,
based on a set of defined principles and structures, is an
essential contribution towards achieving sustainable hu-
man resource policies. The new system has found broad
acceptance and appreciation among staff and managers
alike. On the one hand, they firmly believe in the long-term
success of the BMW Group. On the other, there is a defi-
nite consensus of opinion that it is reasonable and neces-
sary to base a part of remuneration on the company’s
success.

31 Group Management Report

Further progress made with sustainability strategy
During the first half of 2009 we made further progress in
developing our sustainability strategy. The Group’s sustain-
ability strategy is directly derived from the Strategy Number
ONE and applies across all board divisions worldwide.
The primary objective is to instil sustainability in each and
every link of the value-added chain and its underlying
processes. In order to implement this sustainability strategy
we have established a set of core principles and defined
fields of action. These include the continued expansion of
our efficient drive train technologies and the implementa-
tion of concepts for sustainable mobility in metropolitan
areas. At production level, we will continue to cut down on
the volume of resources used and reduce the impact that
production processes have on the environment. As an
attractive employer, we want to motivate and increase the
sense of satisfaction felt by our employees, while at the
same time preparing our specialists and managers for
future challenges. We are also endeavouring to embed our
ecological and social requirements at all points along the
supply chain. As an integral part of society, we are com-
mitted to solving challenging social issues with the ulti-
mate aim of making a proactive contribution towards shap-
ing the overall conditions under which we operate. Using
a so-called “environmental radar” that includes ecological
and social criteria, engaging in dialogue with stakeholders,
taking sustainability into account in all decisions and keep-
ing a tight watch over the whole of the value-added chain
are key elements of sustainability management.

Corporate sustainability measured in balanced scorecard
terms (at Group level) was first included as a formal corpo-
rate objective at the beginning of 2009. Detailed targets
are then derived for each of the divisions within the Group.
Nowadays, every project must be measured in terms of

corporate sustainability. This involves measuring the con-
sumption of resources and emission levels as well as the
social and socio-political consequences of the various so-
lutions at hand. As part of the process of improving the way
in which we measure and manage our corporate sustain-
ability activities and taking account more of strategic im-
pulses, we continued to expand our sustainability organisa-
tion in 2009. The newly established Sustainability Circle,
consisting of one representative from each division, is re-
sponsible for implementing sustainability activities across
the Group. The Circle is headed by the Group Repre-
sentative for Sustainability and Environmental Protection.
The Sustainability Board, composed of the entire Board
of Management, was set up in summer 2009 and is re-
sponsible for setting the strategic course with respect to
corporate sustainability.

Clear guidelines for clean production
In keeping with our “clean production” approach, we design
our production processes worldwide with the goal of
keeping the environmental impact as low as possible and
totally eliminating it in the ideal case. The measurable
values of energy and water consumption, process waste-
water, solvent emissions and waste for disposal – ex-
pressed in terms of “waste per vehicle produced” – are in-
tegral components of the groupwide target system and
are managed accordingly. CO2 emissions per vehicle pro-
duced are also measured as a factor of the amount of
energy consumed and the energy mix used. Our objectives
are clear: by the year 2012 resource consumption and
emission levels are to be reduced by 30 % compared to
2006 levels. Using a so-called Environmental Efficiency
Figure (EEF) as indicator, reductions in resource consump-
tion and emission levels will be measured from all available
perspectives. The EEF for 2009 shows that resource

Energy consumed per vehicle produced

in MWh / vehicle

CO2 emissions per vehicle produced
in t / vehicle

3.00

2.90

2.80

2.70

2.60

2.50

1.00

0.95

0.90

0.85

0.80

0.75

07 *

2.94

2.90

2.78

2.80

2.89

0.99

0.94

0.84

0.82

0.91

* Basis for data expanded in 2007 from ten to 17 locations. Until 2006: Munich,

Dingolfing, Landshut, Regensburg, Leipzig, Steyr, Rosslyn, Spartanburg, Hams Hall,
Oxford. Since 2007: Berlin (brake disc production), Eisenach, Swindon, Goodwood,
Rayong (assembly), Chennai (assembly) and BMW Brilliance in Shenyang.

* Basis for data expanded in 2007 from ten to 17 locations. Until 2006: Munich,
Dingolfing, Landshut, Regensburg, Leipzig, Steyr, Rosslyn, Spartanburg, Hams Hall,
Oxford. Since 2007: Berlin (brake disc production), Eisenach, Swindon, Goodwood,
Rayong (assembly), Chennai (assembly) and BMW Brilliance in Shenyang.

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efficiency was raised by a further 8 percentage points
during the 12-month period under report.

Greater resource conservation in production
Groupwide activities undertaken to raise energy efficiency,
coupled with the effect of lower production volumes
(– 181,501 automobiles / – 12.6 %), resulted in 400,000 MWh
less energy being required in 2009 than in the pre vious
year. Energy-saving measures included optimised operat-
ing times for technical equipment, increased efficiency
of ventilation systems and improved light management.
These measures saved approximately euro 9 million in
2009. Energy consumption per vehicle produced, how-
ever, rose slightly to 2.89 MWh (2008: 2.80 MWh), partly
due to the fact that despite the reduced production volume
in 2009 energy is still required, even in production-free
times. Secondly, production start-ups for new models
such as the BMW 5 Series Gran Turismo and the BMW X1
as well as extensive construction work (for instance at the
US plant in Spartanburg), temporarily required two pro-
duction lines to be operated simultaneously and additional
energy-intensive work to be carried out during production
downtimes. However, the newly constructed and more
efficient paint shops and assembly lines at the Spartanburg
plant will help reduce resource consumption from 2010
onwards. In line with the slight rise in energy consumption,
CO2 emissions per vehicle produced also rose to 0.91 tons
of CO2 in 2009 (2008: 0.82 tons). In 2009 we did not,
however, need to make full use of the CO2 emissions al-
lowances allocated to us within the European Emissions
Trading System.

The Spartanburg plant in the US covers a large part of its
energy needs (electricity and heat) by using methane gas
collected at a nearby landfill site. In 2009 approximately
euro 8.6 million was spent on expanding the capacity and
improving the efficiency of this system. Despite the expan-
sion of the plant, this investment enables more than 60 %

of the plant’s total energy requirements to be covered by
methane gas. Savings in the Spartanburg region will in-
crease from a current figure of 59,000 tons of CO2 p. a. to
approximately 92,000 tons in 2010. This innovative project
enables the plant to save approximately euro 5 million
p. a. in energy costs.

Total water consumption for production was reduced by
460,000 m3 in 2009. At 2.56 m3 per vehicle produced,
we again achieved the previous year’s low value. Process
wastewater was reduced from 0.64 m3 per vehicle (2008)
to 0.62 m3 (2009). Similar to energy consumption, we are
continually working on ways of reducing water consump-
tion and the amount of process wastewater consumed
during production downtimes.

The amount of non-recyclable production waste sank
by over 28 % in 2009. The amount of waste for disposal
per vehicle produced decreased from 14.84 kg in 2008
to 10.63 kg in 2009. We achieved these improvements
partly by using new recycling processes and also by en-
hancing the quality of waste separation in the production
area.

We also reduced the amount of solvent used by almost
10 % in 2009. Solvent emissions (VOC) per vehicle pro-
duced currently stand at 1.77 kg (2008: 1.96 kg). The in-
creased bundling of car bodies of the same colour in the
painting process made it possible to reduce the amount of
solvent needed for rinsing and cleaning painting equip-
ment. We were also able to further reduce the solvent con-
centration used in cleaning solutions.

A further reduction in surface protection for new cars also
contributed to lower emissions during the year under re-
port. In 2009, some 91 % of new cars were delivered with-
out surface protection such as wax, adhesive films or pro-
tective sheaths (2008: 82 %).

Water consumption* per vehicle produced
in m3 / vehicle

Process wastewater per vehicle produced
in m3 / vehicle

2.70

2.60

2.50

2.40

2.30

2.20

0.90

0.80

0.70

0.60

0.50

0.40

07 *

2.60

2.56

2.61

2.56

0.76

0.67

0.64

0.62

* The indicators for water consumption refer to the production sites of the BMW Group.
The water consumption includes the process water input for the production as well
as the general water consumption e. g. for sanitation facilities.

* Basis for data expanded in 2007 from ten to 17 locations. Until 2006: Munich,

33 Group Management Report

Waste for disposal* per vehicle produced
in kg / vehicle

17.5

15.0

12.5

10.0

7.5

5.0

Volatile organic compounds (VOC) per vehicle produced

in kg / vehicle

2.75

2.50

2.25

2.00

1.75

1.50

07 *

16.17

14.84 10.63

2.07

2.04

2.36

1.96

1.77

* “Waste for disposal per vehicle produced“ became a performance indicator in 2007

* Basis for data expanded in 2007 from ten to 17 locations. Until 2006: Munich,

and has been reported since then.

Eco-friendly transportation solutions
In 2009 we continued to work on ways of reducing the en-
vironmental impact of the logistics process. Efficiency was
raised by optimising transport networks, including the in-
creased capacity utilisation of the various modes of trans-
port. Shifts in sales volume by region, however, resulted in
changes in the proportion of goods transported by each
mode. At 0.2 %, the percentage of goods transported by
air remained very low during the year under report (2008:
0.1 %). The decline in sales volumes in the USA and Japan
slightly reduced the percentage of goods transported by
sea to 78.0 % (2008: 79.1 %). The proportion of goods
transported by rail fell slightly (by 0.3 percentage points) to
6.0 % in 2009. The percentage of goods transported by
road rose to 15.8 % (2008: 14.5 %) due to the small sales
volume increase in Germany.

Sales volume performance is also reflected in the distribu-
tion of transportation methods for our new cars: overall,
47.0 % of newly produced cars left the Group’s plants by
rail, 3.3 percentage points less than in the previous year.

Leader in CO2 reduction with Efficient Dynamics
At an early stage we adopted a development strategy
that is now resulting in tangible benefits for the climate,
resources and customers alike. The centrepiece of these
activities is our Efficient Dynamics technology package.
Efficient Dynamics innovations have been introduced step
by step to all series models since March 2007, automatically
generating benefits with each unit sold. These include:

– optimised engine and drive train engineering (e. g. petrol
engines featuring High Precision Injection as well as
particularly efficient diesel engines)

– lightweight construction and improved aerodynamics

(e. g. through the intelligent use of aluminium and high-
tensile steels)

– energy management (e. g. Brake Energy Regeneration

and the Auto Start Stop function)

Our main guiding principles throughout are: greater dyna-
mism, reduced fuel consumption and lower emissions.
These developments have enabled us to reduce the CO2

Roadmap of the BMW Group for sustainable mobility

BMW Group cuts
fuel consumption in
Germany pursuant to
VDA agreement of
1990 by 2005 by al-
most 30 %.

Introduction of
Efficient Dynamics
measures in nu-
merous BMW and
MINI models.

A fleet of approxi-
mately 600 purely
electrically driven
cars, the MINI E,
put to the test
in everyday traffic
conditions.

First BMW Group
vehicles with
hybrid drive.

Use of regenerative
hydrogen as fuel in
motor traffic.

2005

2006

2007

2008

2009

2010

long-term

BMW Hydrogen 7
is presented to the
public.

About 40 % of the
BMW Group’s new
vehicles in Europe
emitting a maximum
of 140 g CO2 / km.

More than one
million vehicles
equipped with
Efficient Dynamics.

BMW Group is pro-
viding vehicles for
sustainable mobility
in densely populated
areas.

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Development of CO2 emissions of BMW Group cars in Europe
(Index: 1995 = 100; Basis: fleet consumption of newly registered cars in Europe (EU-15) measured on the basis of the New European Driving Cycle in accordance
with the ACEA commitment)

105

100

09 *

100.0

101.0

102.4

101.0

98.6

96.7

92.9

94.8

90.0

88.6

80.0

73.3

71.4

* measured only on EU-27 basis with effect from 2009

emissions of new cars in Europe (EU-15) by almost 27 %
between 1995 and 2008, thereby more than fulfilling the
commitment given by the European automotive industry
to reduce average CO2 emissions for new fleets of cars by
25 % between 1995 and 2008 (ACEA self-commitment).

In 2009 our fleet in Germany recorded an average fuel
consumption of 5.9 litres of diesel / 100 km, 6.5 litres of
petrol / 100 km and average emissions of 156 g / km of CO2,
thus confirming our leading role in the premium segment in
Germany. We also lead the field amongst European manu-
facturers with CO2 emissions of approximately 150 g / km*.
The progress made is also appreciated by our customers.
Efficient Dynamics has given us a competitive edge,
particularly in markets subject to CO2-based vehicle tax
regulations. The cost of running our cars in these markets
is significantly lower than those of the competition. Pre-
owned cars equipped with Efficient Dynamics also com-
mand higher residual prices.

Our success in reducing fuel consumption is the result of
our wide-ranging goal of achieving lower CO2 emissions.
This goal embraces the following statements:

– All vehicles manufactured by the BMW Group are seg-

ment leaders in terms of the combination of efficiency
and dynamics.

– Efficient Dynamics technologies are a standard feature

of all vehicles.

– The BMW Group pursues a policy of fulfilling all emis-
sion-related legislation. Making compensation pay-
ments instead of investing in the future does not con-
stitute a sustainable option capable of encouraging the

* 150 g / km internal calculation (EU-27)

development of emission-reducing technologies for the
benefit of the customer and the environment.

In addition to the above points we have also set ourselves
a long-term reduction target: from 2008 to 2020 the CO2
emissions of our cars are to be reduced by at least another
25 %. In order to achieve this target and to move even
closer to sustainable mobility, we are proceeding in a three-
step strategy:

1. We will continue to develop our Efficient Dynamics

technology package with great determination.

2. In the medium term we will achieve greater fuel economy
through electrifying the drive train and developing hybrid
solutions.

3. In the long term, we are committed to electromobility

and the use of regeneratively produced hydrogen.

The next steps
With the BMW Vision EfficientDynamics we presented a
concept car at the IAA 2009 that is powered by a three-
cylinder turbo diesel engine and two electric motors. With
total system output of 262 kW / 356 hp, the fuel con-
sumption according to the EU test cycle registered a mere
3.76 l / 100 km and CO2 emissions of only 99 g / km.

Environmentally friendly automotive technologies
We are constantly working on reducing the environmental
impact of our vehicle fleet by adopting a broad range of
further innovations designed to reduce the levels of carbon
dioxide (CO2) and nitrogen oxide (NOx) as well as noise
produced by our fleet of cars to an absolute minimum. In
autumn 2009 we already had 90 models that fulfilled the
Euro-5 standard governing NOx emissions. This standard
will be compulsory for all cars from September 2010

gained, we will be launching a series-built electrically driven
car on the market sometime during the first half of the cur-
rent decade.

Around four million kilometres driven with
hydrogen in the tank
The drive train technology used in the hydrogen-powered
BMW Hydrogen 7 is groundbreaking. Hydrogen is practi-
cally carbon-neutral when burnt and emission-free. An ini-
tial small-scale series of 100 cars has covered some four
million kilometres worldwide since 2007. These tests go to
prove the suitability of our hydrogen-powered cars for both
series production and everyday use. Regardless of this
fact, we continue to work on optimising various system
components (for instance on systems suitable for storing
hydrogen).

Communicating sustainability
Our sustainability activities were accompanied during the
reporting period by a communication initiative. At events
such as the ZEIT Conference at the IAA and the World
Climate Summit in Copenhagen, we took the opportunity
to elucidate our position as the world’s most sustainable
car manufacturer, including discussions held with opinion
leaders. Our print campaign “What’s Next?”, mostly ap-
pearing in German leading media, also helped to highlight
to the general public the lead we are taking in this area.

35 Group Management Report

onwards. The introduction of the Euro-6 standard in
2014 will further limit the emission levels allowed for die-
sel-powered passenger cars. In September 2008 the
BMW 330d with optional BMW BluePerformance tech-
nology became the first car to comply with the Euro-6
exhaust emission standard. In 2009, the BMW 730d and
the BMW 530d as well as the BMW 320d (2010 model
year onwards) became the next diesel models to feature
optional BluePerformance technology.

Groundbreaking BMW hybrid technology
The first hybrid series cars to be manufactured by the
BMW Group, the BMW ActiveHybrid X6 and the BMW
ActiveHybrid 7, were presented at the IAA in Frankfurt in
autumn 2009. These cars combine the advantages of
electric motors with those of combustion engines. This
technology therefore enables fuel savings of up to 20 %
compared to cars powered by conventional combustion
engines. In future the BMW Group will be able to provide
its customers with a comprehensive hybrid module system
that provides the most suitable hybrid solution for each
particular model.

Field testing for electromobility
Project i, originally aimed at the further development of al-
ternative drive train systems, was set up in 2007 in con-
junction with our Strategy Number ONE. However, this
project does not only focus on these systems. Project i
thinks several steps ahead – new types of composite
material, new car concepts as well as alternative mobility
concepts are equally important. Project i embodies a
far-reaching initiative to develop completely new vehicle
concepts. We are not only working on electrically driven
cars, but also on concepts designed to significantly reduce
the environmental impact of the car all the way along the
value-added chain. In an initial step, approximately 600 fully
electrically driven MINI cars were built for a large-scale trial
and handed over to both private and business customers
in the USA, the UK and Germany. The cars are powered by
a 150-kW electric motor fed by highly efficient lithium-ion
batteries. The MINI E can reach a top speed of 152 km / h.
The energy storage system enables the car to cover up
to 250 kilometres and can be recharged within 2.5 hours
using its own charging device. That makes us one of the
first manufacturers to have handed over electric cars
served by lithium-ion technology for wide-scale use on
public roads. Field testing in New York, Los Angeles, Lon-
don, Berlin and Munich is providing us with important
knowledge with respect to everyday use of this technology
and helping us in our efforts to further develop the con-
cept of electro mobility. We are also making this information
available to scientists and policymakers with the aim of
creating an efficient and environmentally friendly infrastruc-
ture for electromobility. On the basis of the knowledge

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Research and development expenditure reduced
The research and development expenditure ratio de-
creased by 0.6 percentage points in 2009 to 4.8 %, with
total research and development expenditure reduced by
14.5 % to euro 2,448 million.

During the year under report we employed approximately
8,900 people throughout our research and innovation net-
work at eleven locations in five countries. We underlined
our innovative strength again in 2009 with a portfolio of ap-
proximately 60,000 patents and other industrial property
rights, including more than 800 new applications and ex-
tensions added in 2009.

Detailed disclosures on research and development work
performed are provided in the notes to the Group Financial
Statements (Note 9

Ongoing improvements to Efficient Dynamics
package
The BMW Group continued to lead the field in the reduction
of CO2 emissions in 2009. This fact was again confirmed
by the German Federal Motor Transport Authority (KBA).
The latest KBA statistics show average CO2 emission
levels of 156 g / km for BMW and MINI brand cars newly
registered in Germany in 2009. We are therefore lower
than some European volume manufacturers despite the
far greater engine performance of our cars and on a par
with numerous car manufacturers whose product port-
folios include a relatively high proportion of small and
supermini cars.

We are constantly working on ways of extending that lead
en route to our goal of sustainable mobility. At the Inter-
national Motor Show (IAA) in Frankfurt we presented a con-
cept vehicle, the BMW Vision EfficientDynamics, in which
the Efficient Dynamics innovation package has been
developed to new levels and combined with the typical
sporting flair of a BMW. The car is powered by a new three-
cylinder turbo diesel engine and two innovative electric mo-
tors mounted on the axles. It can be driven fully electrically,
exclusively with the power of the turbo diesel engine or
with an infinitely variable combination of all three power
sources. This highly innovative concept car is renewed
proof of our expertise in developing new ideas. In this
vehicle, for example, the electric motor at the rear axle acts
as a generator during acceleration or when braking and
transmits the electricity to the vehicle’s internal lithium-
polymer battery. The recovery of braking energy – a principle
incorporated in the latest BMW models – can therefore be
realised with far greater efficiency.

Lightweight construction is an important aspect of the
BMW Vision EfficientDynamics concept car. The chassis is

built solely of aluminium, while the roof and the outer skin
of the large doors consist almost entirely of a special type
of polycarbonate glass. The car therefore only weighs ap-
proximately 1,400 kilograms.

In order to optimise the aerodynamics of the car as a whole
and to keep rolling resistance to an absolute minimum, the
BMW Vision EfficientDynamics is equipped with tyres and
rims of unusual dimensions for a sports car. Furthermore,
the integrated blade profile of the wheel rims improves
overall aerodynamics. This package of improvements to the
aerodynamics of the car results in very low air resistance
values (cx of 0.22).

Propulsion and aerodynamics are the most obvious areas
in which the concept car presents a small glimpse of the
direction in which the Efficient Dynamics development
strategy is heading. A further aim is to limit the energy
loss that still exists in even the most efficient com-
bustion engines at as many points as possible. For this
reason, the exhaust system of the BMW Vision Efficient-
Dynamics is equipped with an integrated water-cooled
thermoelectric generator which converts a considerable
amount of the heat energy contained in the exhaust
fumes into electricity.

The networking of the various system components on
board the concept car has made it possible to integrate a
forward-thinking energy and heat management system.
The on-board computer can, among other things, create
a forecast of the driving situation for the road immediately
ahead. If, for instance, the driver is about to leave a rural
road to enter a motorway, the temperatures of the coolant
and oil are reduced in advance in order to provide greater
engine performance. During city driving, however, the
temperature of the coolant and engine oil is raised because
no high loads are anticipated that would require particular
cooling. This results in lower internal engine friction and thus
greater efficiency.

State-of-the-art wind canal technology for
realistic measurements
The aerodynamics of a car have a direct impact on both its
fuel consumption and its emission values. As an essential
component in the continued development of the Efficient
Dynamics system, we opened the new aerodynamics test-
ing centre (AVZ) in June 2009. The centre accommodates
two wind canals, one of which is used to analyse various
original-sized vehicles while the other is mainly designed
for testing models. The BMW Group has invested approxi-
mately euro 170 million in the construction and equipping
of the aerodynamics testing centre. As a result, we now
have the world’s most modern centre of its kind in the field
of automotive construction.

37 Group Management Report

The advantage of the AVZ is that car models can be ana-
lysed in numerous realistic situations at a very early stage
in their development. One of the first innovations that can
be further developed using the new methods of analysis
available at the AVZ is the so-called “air curtain”, a measure
designed to reduce air resistance around the wheel hous-
ings and wheels. In future, any knowledge gained can be
integrated in the development process far more quickly,
thus contributing effectively towards improving the aero-
dynamics of new models.

BMW Group invests in research for the future
of road safety
Research staff from the BMW Group – working in coopera-
tion with Continental Safety Engineering International
GmbH, the Fraunhofer Institute for Integrated Circuits, the
Technical University of Munich’s ultra-high-frequency
technology department and ZENTEC GmbH – have been
investigating the potential of so-called Car2X communi-
cation as part of the three-year AMULETT research
project promoted by the Bavarian Ministry of Economic
Affairs, Infrastructure, Transport and Technology. The re-
search project, which was concluded in 2009, was aimed
at raising safety standards for pedestrians. Vehicles ex-
change data by radio with an active RFID-like element
(Radio Frequency Identification). In future, this element
could, for example, be integrated in a schoolbag or hand-
bag. This technology allows individuals to be localised
and identified as endangered road users, something the
motorist would not normally be aware of in a dangerous
situation. The driver is only actually warned (for instance via
the head-up display) in the event of real danger. If an acci-
dent cannot be avoided in the normal reaction time of the
driver, the system automatically actuates the car’s brakes
in order to at least minimise the consequences of the
accident.

AMULETT has proved that the concepts devised are tech-
nically feasible. Since September 2009, the project has
been continued in the form of the Ko-FAS (Cooperative
Vehicle Safety) project, which is being promoted by the
Federal Ministry of Economics and Technology. The aim of
the project continues to be a significant increase in road
safety and hence a reduction in traffic accidents and road
casualties. The idea is to achieve this by enabling the
vehicle to reliably identify the driving environment, analyse
situations comprehensively on the basis of accurate
measurements that help to assess the risk of collision and
subsequently trigger appropriate preventive measures.
BMW Forschung und Technik GmbH is heading two of the
three Ko-FAS sub-projects.

Numerous other projects carried out by the BMW Group’s
research and technology experts have meanwhile found

their way into series production cars. The parking assistant
or the innovative iDrive operating concept are just two such
examples.

Numerous awards underpin innovative strength
of the BMW Group
Again in 2009, we received numerous awards in recogni-
tion of our ability to innovate. In January the Federal Minister
of Transport, Construction and Urban Development
awarded the BMW Group its special prize for innovation for
the MINI E at the “Auto der Vernunft” ceremony. The prize
was awarded in recognition of the BMW Group’s particular
consideration of ecological and economic aspects. The
“ÖkoGlobe 2009” also went to the MINI E. This award is
presented by various organisations, including the University
of Duisburg-Essen, for outstanding innovations in the field
of sustainable mobility.

The BMW Group again underlined its position as leading
engine manufacturer with victories in three different catego-
ries at the International Engine of the Year Award. In the
most prestigious engine competition worldwide, the V8 en-
gine (in the BMW M3), the straight six-cylinder engine fea-
turing twin turbo technology (in the BMW 3 Series, 1 Series
and the BMW X6) and the four-cylinder twin-scroll turbo
engine (in the MINI Cooper S) all achieved top places in
their relevant cubic capacity categories. The BMW Group
has already won more than 40 trophies in the eleven com-
petitions held since 1999. The continuing success in in-
ternationally prestigious engine competitions is impressive
proof of the BMW Group’s unique expertise in the field of
drive train development.

Coinciding with its successful launch, the BMW X1 won the
“TOPAuto 2010” award of the MID (Motor-Informations-
Dienst) engine information service. Over 150 motoring
journalists from Germany, Austria and Switzerland took
part in the voting. The BMW Vision EfficientDynamics was
also voted concept car of the year.

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Further improvements in profitability along the
value-added chain
Our main focus with regard to the purchasing and supplier
network in 2009 was to continue the previous year’s ini-
tiative of creating the most efficient value-added chain in
the automotive industry.

Working closely with our suppliers, we made further
progress in reducing the cost of materials for vehicle
projects both in the development and series production
stages. Particular attention was paid to maintaining
the high level of quality expected by our customers. The
purchasing department was supported in this process
by the development team, particularly in its consistent
application of modular solutions. The increased use of
standardised components enables both time and costs
to be reduced across all models. Important milestones
were therefore set in 2009 with regards to the future pur-
chasing arrangements for the BMW 1 and 3 Series suc-
cessor models.

Parts supply assured despite difficult market
environment
The consequences of the worldwide financial and eco-
nomic crisis particularly affected the automotive supply in-
dustry during the year under report. Declining production
volumes coupled with simultaneously decreasing liquidity
levels and rising financing costs had a significant impact
on the financial stability of the supplier market, resulting in
a greater incidence of crisis situations among suppliers at
a national and international level. However, a consistent
strategy of risk and intervention management enabled the
various crises to be successfully mastered without having
a lasting detrimental effect on supply security or car pro-
duction quality.

Increasing internationalisation of the purchasing
network
We continued to expand our international purchasing
network with great determination in 2009. By concentrating
on the Asian and NAFTA regions for new purchase vol-
umes, we were able to make optimal use of cost advan-
tages, while also expanding the scope of so-called “natural
hedging” – the strategy of purchasing in foreign curren-
cies to minimise exchange risks. With this in mind, re-
gional experts with a good understanding of purchasing,
quality and logistics issues analyse the various procure-
ment markets and suppliers in close cooperation with cen-
tralised management functions. This strategy will enable
us to achieve cost and currency benefits on purchases for
future models. The basis for this was laid in 2009 with the
selection of suppliers for the BMW 1 Series and 3 Series
models.

Regional mix of BMW Group purchase volumes 2009

in %, basis: production material

Asia / Australia

Africa

NAFTA

Central and
Eastern Europe

Rest of Western Europe

Germany

Rest of Western Europe

NAFTA

Asia / Australia

Central and Eastern Europe

Africa

Future natural hedging volumes are also increased by
placing multi-currency orders (i. e. purchasing individual
components in varying currency proportions) – a practise
we have employed since 2009.

Innovation and technology leadership of BMW
in-house component production maintained
In the fields of bodywork and interiors, our components
plant in Landshut again demonstrated its innovative and
technological leadership. At the European SPE Auto-
motive Division Award competition held in 2009, the
International Plastics Society presented the highest
awards in the categories “Exterior” and “Interior” to the
BMW Group.

Our light metal foundry also confirmed its technological
leadership. We will be commissioning the world’s first
odourless foundry at our Landshut plant in 2010. The use
of environmentally sustainable binding agents will enable
us to reduce emissions from combustion residues by
98 %.

Greater emphasis on sustainability and innovation
in supplier market
Our stringent requirements for ecological and social
standards are increasingly being applied along the value-
added chains within the supplier network. Suppliers and
their partners must provide detailed proof of their com-
pliance with the required standards for sustainability in
order to take part in the tendering procedure. As part
of the selection process, our experts check whether pro-
spective suppliers are complying with the required
standards.

39 Group Management Report

The establishment of a joint venture with the SGL Group in
autumn 2009 was an important step in gaining access to
innovations in the field of lightweight construction. This
joint venture has been set up to manufacture carbon fibre
and textile semi-finished products for use in automotive
construction. A primary selection criterion in this case was
our requirement for the use of environmentally friendly
sources of energy in both the production and the recycling
of carbon fibres.

We have also started working with SB Limotive, a joint
venture of Bosch and Samsung SDI, thus forming alliances
with two further world market leaders in the field of electro-
mobility. As supplier of the battery cells that are to power
our future project, the “Megacity Vehicle”, SB Limotive
offers state-of-the-art technology, bringing together Ger-
man automotive expertise and Korean battery-making
know-how.

Further additions to model range
In 2009 we added numerous new models to the existing
range. Furthermore, we also presented concept studies for
the BMW and MINI brands.

After initially introducing the new BMW 7 Series in selected
markets at the end of 2008, the model was subsequently
launched worldwide at the beginning of 2009. Towards
the end of the reporting period we also presented a four-
wheel-drive version of the BMW 7 Series. The M versions
of the BMW X5 and X6 were launched in autumn. The
BMW 5 Series Gran Turismo and the BMW X1 celebrated
their world debuts at the International Motor Show (IAA)
in September and have been available to customers in
Europe since October. We also showcased the BMW
ActiveHybrid X6 and the BMW ActiveHybrid 7 at the IAA.
The BMW ActiveHybrid X6 first became available in se-
lected markets at the end of 2009 and the first delivery of
the BMW ActiveHybrid 7 will take place in spring 2010.
The low-fuel-consumption BMW 320d Efficient Dynamics
Edition was also presented to the public at the IAA
and will be available to customers from the beginning of
2010.

The new MINI convertible models in the Cooper, Cooper S
and John Cooper Works versions have been on the market
since the middle of 2009. We also celebrated the 50th
birthday of the MINI brand with the launching of some spe-
cial limited editions: the MINI 50 Mayfair and the MINI 50
Camden. We now also offer diesel-driven versions of
the MINI One Clubman and the MINI One as entry-level
models.

A new model was also added to the Rolls-Royce brand:
the Ghost made its world debut at the IAA, and has been
available to customers in selected markets since the end
of 2009.

We additionally presented two MINI brand concept cars at
the IAA: the MINI Coupé Concept and the MINI Roadster
Concept. The MINI Countryman is also due to be launched
in 2010.

Formula One involvement ended
Fully in line with the new direction taken in conjunction with
the Strategy Number ONE, we decided not to extend our
involvement in Formula One beyond the end of the 2009
season. The resources freed up by this move will flow in
particular into developing new and innovative drivetrain
technologies. The BMW Group remains active in the area
of touring car racing and continues to support young tal-
ented drivers in Formula BMW. We also remain committed
to customer sport with series production cars.

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

Technological leadership demonstrated at the IAA
We also demonstrated our innovative strength and tech-
nological leadership during the IAA with the presentation
of various concept cars. The BMW Vision EfficientDynamics
for instance enabled us to prove that cars can be sporty
and still display high fuel economy at the same time. The
BMW Vision EfficientDynamics combines the potential
benefits of BMW’s ActiveHybrid technology with the in-
novative strength of our Efficient Dynamics technology
package. The car is powered by a newly developed three-
cylinder turbo diesel engine and two innovative electric
motors mounted on the axles. Fuel consumption is 3.76 l /
100 km and CO2 emissions of only 99 g / km.

of advertising media and the changing ways in which
various media are now being used. The BMW brand’s core
message of “joy” will play a greater role in our worldwide
marketing communication strategy in future. The Efficient
Dynamics package and the design of our cars are also
being increasingly emphasised. Focusing on these central
messages on a worldwide basis will help to strengthen
the brand’s strong market position. The prelude to the re-
aligned strategy was “The Story of Joy” campaign initiated
in Germany in June 2009, which has meanwhile been ex-
tended to cover additional markets. Initial market research
results show that the new campaign’s messages are being
well received and enriching the image of the BMW brand.

We are also exploring ways of efficiently utilising waste
heat by means of a thermoelectric generator (TEG). The
TEG generates electrical energy from the exhaust system,
exploiting the difference in temperature between the hot
exhaust pipe and the coolant, which can, for instance, be
used to power the car’s on-board electrical system.

Innovative exhibition stand concept at the IAA
We presented all three of the BMW Group’s brands under
one roof for the first time at the IAA in Frankfurt.

The underlying theme emphasised for the BMW brand
was the sheer joy of driving. The new exhibition concept,
which included a 280-metre-long track, enabled us to give
a demonstration of our cars in real driving situations for the
first time. The main focus was on enabling potential cus-
tomers to sense the “BMW brand atmosphere” and to ex-
perience the values of joy, efficiency and dynamism that
are inseparably associated with the BMW brand.

The 50th birthday celebrations were the highlight of the
MINI brand’s appearance at the IAA. The “birthday studio”
formed the centrepiece of the exhibition, where a docu-
mentary portraying 50 years of the MINI was shown: a film
spanning the history of the MINI from 1959 to 2009. We
were able to demonstrate the diversity of the MINI brand,
from the original Morris Mini Minor of 1959 to the anniver-
sary models and finally the concept studies.

The MINI turns 50
In May 2009, 25,000 avid fans from 40 countries cele-
brated the 50th birthday of the MINI. Over 10,000 MINI
enthusiasts congregated at Silverstone, not far from the
Oxford plant where the MINI is produced today. We pre-
sented a special limited edition car to celebrate the 50th
anniversary of the first Formula One victory of the John
Cooper team: the MINI John Cooper Works World Cham-
pionship 50 “Character”.

New trends in sales network
With approximately 3,000 BMW, 1,300 MINI and 80
Rolls-Royce dealerships, the worldwide sales network of
the BMW Group’s three brands remained unchanged
during the year under report. Although we slightly reduced
the number of dealerships in the established markets, the
BMW Group’s trade organisation in emerging markets
such as China and Russia was expanded further. We suc-
cessfully met the challenges presented by the impact of
the financial crisis with a set of targeted measures aimed
at strengthening the dealership network. The number of
customer service centres (Sales and Services) therefore
remained at a high level.

The main focus of our global retail activities became in-
creasingly directed towards the main cities of the world.
Altogether, consolidation at some international locations re-
sulted in a slight reduction in the total number of branches.

The world debut of the Rolls-Royce Ghost was the main
focus of Rolls-Royce’s appearance at the IAA. The exhi-
bition stand was designed to give the impression of an
open building complete with daylight ceiling in which the
brand’s range of models was presented. The space used
to exhibit vehicles was surrounded with a glass surface,
with the publicly accessible Rolls-Royce plaza immediately
in front of it.

BMW marketing communication realigned
Marketing communication for the BMW brand has been
realigned to take greater account of the increasing diversity

Sales organisation further strengthened
During the year under report we continued to promote
projects – some of them initiated in 2008 in conjunction
with the Strategy Number ONE – designed to strengthen
the sales organisation and improve the BMW Group’s
customer orientation. In this context, we created a world-
wide programme to enable dealers to hone their skills. The
programme focuses on individuals and serves as a good
way of highlighting potential areas for improvement. It has
been very well received by the sales organisation and met
with considerable success in a short space of time. The
success of this initiative has led us to introduce the project

41 Group Management Report

in 2010 in other markets too. Approximately 750 dealers in
15 countries will have participated in this programme by
the end of 2010.

Customer service and accessories business
expanded
Customer service and the sale of accessories make an im-
portant contribution to business, particularly for the dealer-
ships. In view of the growing number of our vehicles on
the roads, both lines of business are stability factors in a
volatile market environment. In conjunction with the Strategy
Number ONE, we carried out numerous projects in 2009
aimed at expanding these lines of business.

The sale of BMW and MINI parts, accessories and services
represents an important source of earnings. The accesso-
ries line of business was accordingly realigned in 2009.
One of the measures taken was to include the marketing of
accessories in the process of selling new cars. Selected
products designed for special models can now also be or-
dered directly ex works. In addition, the range of products
was revised and streamlined. This has put us in an even
better position to provide new market-compatible and sus-
tainable products to our customers.

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

BMW Group – Capital Market Activities in 2009

Volatile year on the stock markets ends with
strong gains
At the beginning of 2009 the situation was dominated by
the worldwide financial and economic crisis. The leading
stock market indices recorded their lowest levels for the
year as negative expectations prevailed. However, helped
by economic stimulus programmes and hopes of a rapid
recovery for the global economy, the world’s stock markets
recovered well over the course of the year.

In 2009 the German stock index, the DAX, moved away
from its year’s low of 3,588.89 points and, after a great
deal of volatility, closed the year at 5,957.43 points.
Compared to the end of 2008, the DAX therefore gained
1,147.23 points or approximately one quarter in value
during the year under report. The increase against the
year’s low in March was as much as 66 %. Due to one
exceptional factor, the Prime Automobile sector index did
not perform as well as the DAX. It closed on the final day
of trading in 2009 at 542.78 points, only 6.8 % higher
than at the end of the previous year. The Dow Jones
EURO STOXX 50 ended the stock market year 2009 with
a gain of 21.0 %.

BMW stock performed well during the reporting period.
BMW common stock closed the year at a price of euro
31.80 and hence 47.2 % higher than one year earlier.
BMW preferred stock performed even better and gained
66 % compared to the previous year’s closing price,
finishing at euro 23.00 on the last day of trading.

Authorisation to buy back shares of common
stock extended
BMW AG purchased treasury shares in 2005 and 2006
and withdrew them from circulation. At the Annual General
Meeting on 14 May 2009 the Board of Management was

again authorised to acquire treasury shares via the stock
exchange, up to a maximum of 10 % of the share capital in
place at the date of the resolution and to withdraw these
shares from circulation without any further resolution by
the Annual General Meeting. At the same time, the authori-
sation from 8 May 2008 to acquire treasury shares was
rescinded. The authorisation from 14 May 2009 is valid
until 12 November 2010. There are no current plans to
exercise the authorisation. The option of a share buy-back
does, however, remain open to BMW AG.

Employee share scheme
BMW AG has allowed its employees to participate in its
success for more than 30 years. Since 1989 this partici-
pation has taken the form of an employee share scheme.
In total, 831,425 shares of preferred stock were issued to
employees in 2009 in conjunction with this scheme.

362,225 of these came from the buy-back of shares of
preferred shares in 2008. In addition to this – and in ac-
cordance with a resolution taken by the Board of Manage-
ment on 24 November 2009 with the approval by the
Supervisory Board – the share capital was increased by euro
469,200 from euro 654,191,358 to euro 654,660,558 by
the issue of 469,200 new non-voting shares of preferred
stock. This increase was executed on the basis of Authorised
Capital 2009 in Article 4 (5) of the Articles of Incorporation.
The new shares of preferred stock carry the same rights
as existing shares of preferred stock and were issued to
enable employees to obtain an equity participation in the
company.

Debt instruments successfully issued under
difficult conditions
The international debt capital market was very much domi-
nated by the knock-on effects of the worldwide financial

Development of BMW stock compared to stock exchange indices

(Index: 30.12.1999 = 100)

350

300

250

200

150

100

BMW preferred stock

BMW common stock

Prime Automobile

DAX

43 Group Management Report

crisis at the start of 2009. After considerable upheavals,
however, the market recovered during the first half of 2009
and remained stable throughout the remainder of the year.
The BMW Group was again active on the markets in 2009
as an issuer of bonds, notes and ABS instruments in order
to refinance its financial services activities.

obtain funds by issuing ABS instruments. Amounts se-
curitised included US dollar 2.55 billion in the USA, yen
25 billion in Japan and Australian dollar 350 million in
Australia. ABS instruments for Canadian dollar 400 million
and South African rand 800 million were also successfully
placed.

During 2009 the BMW Group successfully issued three
euro benchmark bonds and increased the volume of two
existing euro benchmark bonds, raising in total more than
euro 5 billion on European capital markets. The BMW Group
also issued bonds denominated in US dollars, British
pounds and Australian dollars with a total volume of approxi-
mately euro 760 million. Private placements in various
currencies raised a total of euro 3.8 billion.

Despite the difficult environment for capital market activi-
ties, we were once again able to demonstrate our ability to

As in previous years, issues were highly sought after both
by institutional and private investors, thanks to our good
creditworthiness and continuous communication with the
capital markets.

Capital markets acknowledge sustainability
as value driver
We continued to communicate intensively with the capital
markets on the subject of Socially Responsible Investment
(SRI). The exchange of ideas with sustainability investors
and analysts was continued successfully in discussions

BMW stock

Common stock

Number of shares in 1,000

Shares bought back at the reporting date
Stock exchange price in euro1

Year-end closing price

High

Low

Preferred stock

Number of shares in 1,000

Shares bought back at the reporting date
Stock exchange price in euro1

Year-end closing price

High

Low

Key data per share in euro

Dividend

Common stock

Preferred stock

Earnings per share of common stock3
Earnings per share of preferred stock4
Cash flow5

Equity

2009

2008

2007

2006

2005

601,995

–

31.80

35.94

17.61

52,665

–

23.00

24.79

11.05

0.302
0.322

0.31

0.33

7.53

21.61

42.73

17.04

52,196

363

13.86

36.51

13.00

0.30

0.32

0.49

0.51

6.84

42.35

50.73

39.81

52,196

–

36.30

47.52

33.64

1.06

1.08

4.78

4.80

9.70

43.51

46.47

35.52

52,196

–

43.52

45.91

31.80

0.70

0.72

4.38

4.40

8.21

622,228

13,488

37.05

39.97

32.04

52,196

–

33.00

33.98

24.48

0.64

0.66

3.33

3.35

9.17

30.42

30.99

33.24

29.24

25.17

1 Xetra closing prices
2 proposed by management
3 annual average weighted amount
4 stock weighted according to dividend entitlements
5 calculated on the basis of operating cash flow: up to 2006 as cash inflow from operating activities of Industrial Operations and from 2007 as cash inflow from operating activities

of the Automobiles segment

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

held at the IAA in Frankfurt and expanded by the addition
of a stakeholder roundtable in Munich.

At the beginning of September 2009 the BMW Group once
again received the accolade of being industry leader in the
Dow Jones Sustainability Index. We have now been the
most sustainable car manufacturer in the world for the fifth
time in succession. The BMW Group is the only enterprise
in the automotive sector to have been represented con-
tinuously in this important group of sustainability indices
since their creation in 1999.

At the end of September 2009 the BMW Group was in-
cluded in the Carbon Disclosure Leadership Index, thus
confirming from the perspective of the Carbon Disclosure
Project (CDP) – a joint initiative of 475 investors with global
operations – that we are making an exemplary contribution
to climate protection.

During the winter of 2009, Sustainalytics assessed the sus-
tainability performance of all DAX 30® companies. Scoring
74.3 out of a possible 100 points, the BMW Group received
the best mark for sustainability. Important areas in which
we excel were identified as the environmental and social
standards set for suppliers, sound personnel and social
policies for the workforce and a high level of commitment
to the wider community. Sustainalytics is an independent,
innovative provider of “Responsible Investment Services”
and is one of the market leaders in Europe and North
America.

The BMW Group also won awards in 2009 for its Sustain-
able Value Report 2008. The BMW Group Sustainable
Value Report 2008 was deemed to be one of the three
best sustainability reports of the 150 largest companies in
Germany and the best one in the automotive sector. The
BMW Group made an impression on the jury in its Sustain-
able Value Report, particularly in its pursuit of sustainability
strategies and the way it has embedded the idea of sus-
tainability at all levels of the business. The competition for
the best sustainability reports is promoted by the Federal
Ministry of Labour and Social Affairs and by the Council for
Sustainable Development.

45 Group Management Report

Disclosures pursuant to § 289 (4) HGB and § 315 (4) HGB and Explanatory Report

Pursuant to Article 4 (1) of the Articles of Incorporation,
BMW AG’s share capital totalling euro 654,660,558 is
sub-divided into 601,995,196 shares of common stock
and 52,665,362 non-voting shares of preferred stock,
each with a par value of euro 1. In accordance with a reso-
lution taken by the Board of Management on 24 November
2009 and with the approval of the Supervisory Board,
the share capital was increased by euro 469,200 from euro
654,191,358 to euro 654,660,558 by the issue of 469,200
new non-voting shares of preferred stock. This increase
was executed on the basis of Authorised Capital 2009 in
Article 4 (5) of the Articles of Incorporation. The new
shares were issued to employees in conjunction with the
existing employee share scheme. The Company’s shares
are issued to bearer. The rights and duties of shareholders
derive from the German Stock Corporation Act (AktG) in
conjunction with the Company’s Articles of Incorporation,
the full text of which is available at www.bmwgroup.com.
The voting power attached to each share corresponds to
its par value. Each euro 1 of par value of share capital repre-
sented in a vote entitles the holder to one vote (Article 18
(1) of the Articles of Incorporation). The Company’s shares
of preferred stock are non-voting pursuant to § 139 AktG
et seq., i. e. they only confer voting rights in exceptional cases
stipulated by law such as when the preference amount has
not been paid or has not been fully paid within one year or
the arrears have not been paid within the subsequent year.
With the exception of voting rights, holders of shares of
preferred stock are entitled to the same rights as holders
of shares of common stock. Article 24 of the Articles of
Incorporation confers preferential treatment to the non-
voting shares of preferred stock with regard to the appropri-
ation of the Company’s unappropriated profit. Accordingly,
the unappropriated profit is required to be appropriated in
the following order:

(c) uniform payment of any other dividends on shares on
common and preferred stock, provided the share-
holders do not resolve otherwise at the Annual General
Meeting.

The right of shareholders to have their shares evidenced in
writing is excluded.

Shareholders are only entitled to participate at the Annual
General Meeting and exercise their voting rights if, prior to
the meeting, they have given written notice (in the form
prescribed by § 126b of the German Civil Code), either in
German or English, of their intention to participate. Share-
holders are also required to provide evidence of their en-
titlement to participate and exercise their voting rights at
the Annual General Meeting. For this purpose, documen-
tary evidence of the shareholding, issued by the custodian
bank (in the written form prescribed by § 126 b BGB), in
either German or English, is required. Voting rights may also
be exercised by proxy. The chairperson may determine a
reasonable time limit for shareholders to exercise their right
to raise questions and speak (Article 19 (2) of the Articles
of Association).

When the Company issues shares to employees in con-
junction with its employee share scheme, the shares are
subject to a company-imposed vesting period of four years,
measured from the beginning of the calendar year in which
the shares are issued. During this time the shares may not
be sold. The shares issued in conjunction with the employee
share scheme are shares of non-voting preferred stock
which are transferred solely and directly to employees. Like
all other shareholders, employees exercise their control
rights over these shares on the basis of relevant legal provi-
sions and the Company’s Articles of Incorporation.

(a) subsequent payment of any arrears on dividends on

non-voting preferred shares in the order of accruement,

(b) payment of an additional dividend of euro 0.02 per
euro 1 par value on non-voting preferred shares and

Based on the information available to the Company, the
following direct or indirect holdings exceeding 10 % of the
voting rights at the end of the reporting period were held
at the date stated:*

Stefan Quandt, Bad Homburg v. d. Höhe, Germany

AQTON SE, Bad Homburg v. d. Höhe, Germany

Stefan Quandt Verwaltungs GmbH, Bad Homburg v. d. Höhe, Germany

Stefan Quandt GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany

Johanna Quandt, Bad Homburg v. d. Höhe, Germany

Johanna Quandt GmbH, Bad Homburg v. d. Höhe, Germany

Johanna Quandt GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany

Susanne Klatten, Munich, Germany

Susanne Klatten Beteiligungs GmbH, Bad Homburg v. d. Höhe, Germany

Susanne Klatten GmbH, Bad Homburg v. d. Höhe, Germany

Susanne Klatten GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany

* based on voluntary balance notifications provided by the listed shareholders at 31 December 2008

Direct share of
voting rights (%)

Indirect share of
voting rights (%)

17.4

16.3

12.6

17.4

0.4

16.3

12.6

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

The voting power percentages disclosed above may have
changed subsequent to the stated date if these changes
were not required to be reported to the Company. Due to
the fact that the Company’s shares are issued to bearer,
the Company is generally only aware of changes in share-
holdings if such changes are subject to mandatory notifica-
tion rules.

There are no shares with special rights which confer con-
trol rights.

Appointments and revocation of appointments of mem-
bers of the Board of Management are based on the rules
contained in §84 et seq. of the German Stock Corporation
Act (AktG) in conjunction with Article 31 of the German Co-
Determination Act (MitbestG). In accordance with Article 7
of the Articles of Incorporation, the Board of Management
consists of two or more members. The Supervisory Board
determines the number of the members of the Board of
Management. It is responsible for appointing members to
the Board of Management and for revoking appointments.
It also designates one of the members as the Chairman.

Amendments to the Articles of Incorporation must comply
with § 179 et seq. AktG. All amendments must be decided
upon by the shareholders at the Annual General Meeting
(Article 119 (1) no. 5, Article 179 (1) AktG). The Super visory
Board is authorised to approve amendments to the Articles
of Incorporation which only affect its wording (Article 14
no. 3 of the Articles of Incorporation). It is also authorised
to change § 4 of the Articles of Incorporation in line with
the relevant amount of Authorised Capital 2009 utilised.
Resolutions are passed at the Annual General Meeting by
a simple majority of shares unless otherwise explicitly
required by binding provisions of law (§ 20 of the Articles of
Incorporation).

In accordance with the resolution passed at the Annual
General Meeting on 14 May 2009, the Board of Manage-
ment is authorised, up to 12 November 2010 and subject
to the price limits stipulated in the resolution, to acquire
shares of common and / or non-voting preferred stock via
the stock exchange, up to a maximum of 10 % of the share
capital in place at the date of the resolution. The Board
of Management is also authorised to cancel the shares
of common / non-voting preferred stock acquired on the
basis of the above-mentioned authorisation or previously
acquired shares of common / non-voting preferred stock
without further resolution at the Annual General Meeting
and to offer and transfer shares of non-voting preferred
stock to persons employed by BMW AG or one of its affili-
ated companies for an amount of up to euro 2,000,000
of share capital. The subscription right of existing share-
holders to the new shares of preferred stock used for the

purpose stated above is excluded. Furthermore, the Board
of Management is authorised to buy back shares and
sell bought-back shares in situations specified in Article 71
AktG, e. g. to avert serious and imminent damage to the
Com pany. In accordance with Article 4 (5) of the Articles
of Incorporation, the Board of Management is authorised –
with the approval of the Supervisory Board – to increase
BMW AG’s share capital during the period until 13 May
2014 by up to euro 4,530,800 for the purposes of an em-
ployee share scheme by issuing new non-voting shares
of preferred stock, which carry the same rights as existing
non-voting preferred stock, in return for cash contributions
(Authorised Capital 2009). Existing shareholders may
not subscribe to the new shares. There is no conditional
capital at the reporting date.

The BMW AG is party to the following major agreements
which contain provisions for the event of a change in
control or the acquisition of control as a result of a takeover
offer:

– An agreement concluded with an international consorti-
um of banks relating to a syndicated credit line (which
was not being utilised at the balance sheet date) entitles
the lending banks to give extraordinary notice to termi-
nate the credit line (such that all outstanding amounts,
including interest, would fall due immediately) if one or
more parties jointly acquire direct or indirect control of
BMW AG. The term “control” is defined as the acquisi-
tion of more than 50 % of the share capital of BMW AG,
the right to receive more than 50 % of the dividend or
the right to direct the affairs of the Company or appoint
the majority of members of the Supervisory Board.
– A cooperation agreement concluded with Peugeot SA
relating to the joint development and production of a
new family of small (1 to 1.6 litre) petrol-driven engines
entitles each of the cooperation partners to give extra-
ordinary notification of termination in the event of a com-
petitor acquiring control over the other contractual
party and if any concerns of the other contractual party
regarding the impact of the change of control on the
cooperation arrangements are not allayed during the
subsequent discussion process.

– BMW AG acts as guarantor for all obligations arising from
the joint venture agreement relating to BMW Brilliance
Automotive Ltd. in China. This agreement grants an
extraordinary right of termination to either joint venture
partner in the event that, either directly or indirectly,
more than 25 % of the shares of the other party are ac-
quired by a third party or the other party is merged with
another legal entity. The termination of the joint venture
agreement may result in the sale of the shares to the
other joint venture partner or in the liquidation of the joint
venture entity.

47 Group Management Report

– Framework agreements are in place with financial institu-
tions and banks (ISDA Master Agreements) with respect
to trading activities with derivative financial instruments.
Each of these agreements includes an extraordinary
right of termination which triggers the immediate settle-
ment of all current transactions in the event that the
creditworthiness of the party involved is materially weaker
following a direct or indirect acquisition of beneficially
owned equity capital which confers the power to elect a
majority of the Supervisory Board of a contractual party
or any other ownership interest that enables the acquirer
to exercise control over a contractual party or which con-
stitutes a merger or a transfer of net assets.

– Loan agreements in place with the European Investment
Bank (EIB) entitle the EIB to request early repayment of
the loan in the event of an imminent or actual change
in control at the level of the guarantor, BMW AG, if the
EIB has reason to assume – after the change of control
has taken place or 30 days after it has requested to
discuss the situation – that the change in control could
have a significant adverse impact, or if – as stated in
one of the contracts – the borrower refuses to hold such
discussions.

– BMW AG is party to an agreement with SGL Carbon SE,
Wiesbaden, relating to the joint ventures SGL Automotive
Carbon Fibers LLC, Delaware, USA and SGL Automotive
Carbon Fibers GmbH & Co. KG, Munich. The agree-
ment includes call and put rights in case – directly or in-
directly – 50 % or more of the voting rights relating to
the relevant other shareholder of the joint ventures is ac-
quired by a third party, or if 25 % of such voting rights is
acquired by a third party if that third party is a competitor
of the party that has not been affected by the acquisi-
tion of the voting rights. In the event of such acquisitions
of voting rights by a third party, the non- affected share-
holder has the right to purchase the shares of the joint
ventures from the affected shareholder or to require the
affected party to acquire the other shareholder’s shares.

The BMW Group has not concluded any compensation
agreements with members of the Board of Management
or with employees for situations involving a takeover offer.

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

Analysis of the Group Financial Statements

Group Internal Management System
Our financial management system is oriented towards the
BMW Group’s strategic objectives, measured primarily in
terms of profitability and long-term growth in value. One of
the prime criteria determining decisions made at project,
segment and group levels is the coherent management
of capital employed. The rates of return set for the Auto-
mobiles, Motorcycles and Financial Services segments all
stem from this objective. The Automobiles and Motor-
cycles segments are managed on the basis of specific
product projects on the one hand and process and infra-
structure projects on the other. The credit and lease port-
folios of the Financial Services segment are managed
primarily from a cash flow and risk perspective.

Minimum rates of return as basis for value-based
management
The cornerstone of the value-added management of the
BMW Group is the entity-specific minimum rate of return,
derived from capital market data, and based on the
weighted average cost of capital (WACC) as follows:

Cost of equity capital x fair value of equity capital

Fair value of equity and debt capital

WACC =

Cost of debt capital x fair value of debt capital

Fair value of total capital

The cost of equity capital is measured using the Capital
Asset Pricing Model (CAPM). The cost of debt capital is
based partly on the average interest rate paid for long-term
external debt and partly on the interest rate applicable for
pension obligations.

remains effective. Once a positive decision has been
reached for a particular project, it is managed over time
using a value-based approach. Projects are monitored
continuously and resources reallocated according to
requirements.

The project decision and related project selection are im-
portant aspects of our value-based management approach.
Project decisions are taken on the basis of rates of return
and net present values (NPVs), supplemented by a stand-
ardised approach to assessing opportunities and risks.
This involves computing the present value of cash flows
and the internal project rate of return (or model rate of
return in the case of vehicle projects) expected to be gen-
erated by a project decision and comparing the results
with competitive market values.

Accordingly, the amount a project will contribute to the to-
tal value of the segment can be measured when the project
decision is taken. Targets and performance are controlled
using project-related target NPVs and individual cash-flow-
related parameters which have an impact on the targeted
rates of return.

Return on capital used to measure value on a
periodic basis
General business conditions relevant for periodic planning
have a bearing on how individual product projects and the
product programme as a whole are managed. It is impor-
tant that period-specific targets are also monitored and
managed on a long-term basis. This helps to ensure that

Capital employed by BMW Group
in euro million

Value management in the context of project control
Strategic priorities set at a functional level are based on
segment-specific strategies and on the project decisions
reached in accordance with those strategies. The close
link between segment-specific strategies and project
objectives ensures that the project development process

Group equity

+ Financial liabilities

+ Pension provisions

Capital employed

2009

2008

20,031

4,658

3,234

27,923

21,766

2,832

3,717

28,315

Return on Capital Employed

BMW Group

Automobiles

Motorcycles

Earnings for
ROCE purposes
in euro million

Capital
employed
in euro million

Return on
capital employed
in %

2009

2008

2009

2008

2009

2008

922

– 265

639

690

27,923

28,315

13,143

14,056

405

432

3.3

–

4.7

2.3

4.9

13.9

49 Group Management Report

Capital employed by Automobiles segment
in euro million

2009

2008

Operational assets

less: Non-interest bearing liabilities

Capital employed

27,659

14,516

13,143

28,867

14,811

14,056

the BMW Group’s earnings performance can develop at a
steady pace. Periodic performance is managed in the con-
text of defined accounting policies and external financial
reporting requirements. We primarily use profit before tax
and segment-specific rates of return as the key indicator
figures in managing operating performance by reporting
period.

Capital efficiency is measured within the BMW Group on the
basis of the return on capital employed (ROCE). This key
indicator shows the amount of capital employed across all
lines of business, thus reflecting the overall Group perform-
ance. In line with the method applied at Group level, the
return on capital employed is also the primary performance
indicator used by the Automobiles and Motorcycles seg-
ments. In contrast, the performance of the Financial Services
segment is measured on the basis of the return on equity
(ROE). The ROE performance indicator is important for the
value-based management of the Financial Services seg-
ment because it focuses on equity as a resource with limited
availability and puts the efficient utilisation of capital at the
forefront.

ROCE Group

Profit before interest expense and tax
=

Capital employed

ROCE Automobiles
and Motorcycles

Profit before financial result

Capital employed

ROE Financial
Services

Profit before tax

Equity capital

Return on Equity

Group ROCE is measured by dividing earnings for ROCE
purposes by the average amount of capital employed.
Capital employed is measured at Group level by reference
to the equity and liabilities side of the balance sheet and
comprises Group equity, pension provisions and the finan-
cial liabilities of the Automobiles and Motorcycles seg-
ments. The average level of capital employed for a par-
ticular year is measured as the average capital employed
at the beginning of the year, at quarter-ends and at the end
of the year. In line with the computation of employed capi-
tal, earnings for ROCE purposes is defined as profit before
interest expense incurred in conjunction with the pension
provision and the financial liabilities of the Automobiles and
Motorcycles segments (profit before interest expense and
taxes).

The ROCE of the Automobiles and Motorcycles seg-
ments is measured as the ratio of the profit before finan-
cial result and the average level of capital employed. The
latter comprises all current and non-current operational
assets after deducting liabilities not subject to interest,
e. g. trade payables. Based on the cost of capital as a
minimum rate of return and comparisons with competi-
tive market values, the target ROCE for the Automobiles
and Motorcycles segments has been set at a minimum
of 26 %.

ROE is defined as the profit before taxes divided by the
average amount of equity capital allocated to the Financial
Services segment. The target is a minimum return on
equity of 18 %.

Long-term creation of value
The overall target set for earnings is continuous growth;
the minimum rate of return required for each line of busi-
ness is used as the relevant parameter. These periodic
targets are supplementary to project and programme tar-
gets. For all project decisions reached, the impact of cash
flows on the model rate of return as well as the impact on
periodic earnings over the long term are documented.
The fact that the performance indicators also take account
of periodic financial reporting requirements ensures con-
sistency within the target and management model. This

Profit
before tax
in euro million

Equity

in euro million

Return
on equity
in %

2009

2008

2009

2008

2009

2008

Financial Services

365

– 292

3,978

4,013

9.2

–

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

Key performance indicators
in %

Return on Capital Employed

BMW Group

Automobiles

Motorcycles

Return on Equity

Financial Services

* Capital employed calculated on year-end basis

2009

2008

2007

2006*

2005*

3.3

–

4.7

9.2

2.3

4.9

13.9

–

15.3

24.7

18.0

18.1

16.7

21.7

17.7

17.6

15.1

23.2

17.8

16.9

approach allows an analysis of the effect of each project-
based decision on earnings and rates of return. Multi-project
planning data resulting from these procedures allows on-
going comparison between dynamic multi-period targets
and periodic performance.

Earnings Performance
The BMW Group’s performance in the financial year 2009
was dampened by the impact of the international economic
and financial crisis. In addition to sales volume decreases
on major markets, reported figures were also adversely
affected by an intense level of competition and some model
life-cycle factors.

The BMW Group recorded a net profit of euro 210 million
for the financial year 2009 (2008: euro 330 million). The
post-tax return on sales was 0.4 % (2008: 0.6 %). Earnings
per share of common and preferred stock were euro 0.31
and euro 0.33 respectively (2008: euro 0.49 and euro 0.51
respectively).

Group revenues fell by 4.7 % compared to the previous
year. Adjusted for exchange rate factors, revenues would
have decreased by 5.1 %. Revenues from the sale of
BMW, MINI and Rolls-Royce brand cars fell by 6.0 %, re-
flecting the sales volume performance. Motorcycles busi-
ness revenues were 13.3 % down on the previous year.

Group Income Statement
in euro million

Revenues
Cost of sales*

Gross profit

Sales and administrative costs

Other operating income

Other operating expenses

Profit before financial result

Result from equity accounted investments

Interest and similar income

Interest and similar expenses

Other financial result

Financial result

Profit before tax

Income taxes

Net profit

* after reclassification of research and development costs to cost of sales

2009

2008

50,681

– 45,356

5,325

– 5,040

808

– 804

289

856

–1,014

246

124

413

– 203

210

53,197

– 47,148

6,049

– 5,369

1,428

– 1,187

921

685

– 930

– 351

– 570

351

– 21

330

51 Group Management Report

Revenues generated with financial services activities edged
up by 0.4 %. Revenues attributable to “Other Entities”
amounted to euro 1 million. The corresponding figure in
2008 amounted to euro 146 million and related primarily
to the Cirquent Group.

Revenues generated in the Africa, Asia and Oceania regions
grew in total by 16.0 %. This includes the impact of a 46.2 %
leap in sales revenue in China.

While revenues in Germany rose by 6.5 %, they fell through-
out the rest of Europe by 17.9 % and in the Americas re-
gion by 6.5 %. Group cost of sales totalled euro 45,356 mil-
lion (2008: euro 47,148 million) and fell therefore by 3.8 %.
Although fixed costs were lowered, it was not possible to
compensate fully for the decrease in revenues. Negative
currency and model life-cycle factors had the opposite
effect on cost of sales. The gross profit in absolute terms
decreased by 12.0 % to euro 5,325 million and the gross
profit margin was 10.5 % (2008: 11.4 %). The gross profit
margin recorded by the Automobiles segment was 9.4 %
(2008: 10.8 %) and that of the Motorcycles segment was
13.5 % (2008: 16.7 %). With effect from the beginning
of the finan cial year 2009, research and development
costs are reported as cost of sales. Research and develop-
ment costs were reduced by 8.4 % to euro 2,587 million.
This corresponded to 5.1 % (2008: 5.3 %) of revenues.
Research and development costs include amortisation of
capitalised development costs amounting to euro 1,226 mil-
lion (2008: euro 1,185 million). Total research and develop-
ment costs amounted to euro 2,448 million (2008: euro
2,864 million). This figure comprises research costs, de-
velopment costs not recognised as assets and capitalised
development costs. The research and development ex-
penditure ratio for 2009 was 4.8 % (2008: 5.4 %).

Sales and administrative costs fell by 6.1 % compared to
the previous year. They represented 9.9 % of revenues,
and were therefore 0.2 percentage points lower on a year-
to-year comparison.

Depreciation and amortisation on property, plant and
equipment and intangible assets recorded in cost of sales
and in sales and administrative costs amounted in total
to euro 3,600 million (2008: euro 3,670 million).

Due to the adverse factors referred to above, the profit be-
fore financial result decreased by euro 632 million to euro
289 million.

The financial result improved by euro 694 million, turning
from net financial expenses of euro 570 million in 2008
to net financial income of euro 124 million in 2009. Euro
597 million of the improvement relates to the item “Other
financial result”. The main reasons for this development
were higher positive fair values of stand-alone interest-rate
derivatives (up in line with changed interest-rate structure
curves) and higher positive fair values of commodities
derivatives. Income from investments was up by euro 4 mil-
lion. At the same time, the net interest result improved by
euro 87 million, mainly as a result of lower write-downs on
marketable securities. The result from investments ac-
counted for using the equity method improved by euro
10 million to euro 36 million. This includes the Group’s
share of the result of BMW Brilliance Auto motive Ltd.,
Shenyang, and that of the Cirquent Group.

Including the impact of the changes in financial result de-
scribed above, the Group pre-tax profit went up by 17.7 %
to euro 413 million. The pre-tax return on sales was 0.8 %
(2008: 0.7 %).

The Group net profit was euro 120 million or 36.4 % down
on the previous year. The sharp increase in the effective
tax rate was partly due to the lower level of tax-exempt in-
come. In addition, tax expenses incurred for prior years in
conjunction with a tax field audit at the level of BMW AG,
mostly relating to intragroup transfer pricing arrangements,
had an impact. Corresponding reimbursement claims at
the level of foreign subsidiaries did not fully offset the tax
expense incurred due to differences in tax rates in the tax
jurisdictions involved.

The Automobiles segment recorded a 10.4 % decrease in
sales volume and a 10.3 % decrease in revenues. Due to
the adverse factors described above, the segment result fell
by euro 906 million, turning into a loss of euro 588 million.

Revenues of the Motorcycles segment fell by 13.1 % while
the number of units sold was down by 14.1 %. Difficult
business conditions caused the segment profit to drop by
78.4 % to euro 11 million.

The positive net amount from other operating income and
expenses decreased by euro 237 million due to the higher
level of income from the reversal of provisions recorded in
the previous year.

Financial Services segment revenues edged up by 0.5 %
to euro 15,798 million. The segment result improved
by euro 657 million to become a profit of euro 365 mil-

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Review of Operations
BMW Group – Capital Market
Activities
Disclosures pursuant to § 289 (4)
and § 315 (4) HGB
Financial Analysis
Internal Management System
48
Earnings Performance
50
52
Financial Position
54 Net Assets Position
Subsequent Events Report
56
Value Added Statement
56
58
Key Performance Figures
59 Comments on BMW AG
Internal Control System
Risk Management

63
64
70 Outlook

Revenues by segment
in euro million

Profit / loss before tax by segment
in euro million

2009

2008

2009

2008

Automobiles

Motorcycles

Financial Services

Other Entities

Eliminations

Group

43,737

1,069

15,798

– 9,926

50,681

48,782

1,230

15,725

191

– 12,731

53,197

Automobiles

Motorcycles

Financial Services

Other Entities

Eliminations

Group

– 588

365

574

413

318

– 292

295

– 21

351

lion, mainly reflecting the lower level of expense for risk
provision.

downs on leased products (down by euro 1,287 million to
euro 5,476 million).

The segment profit for the Other Entities segment was
euro 51 million (2008: euro 295 million). The decrease
here was mainly due to higher income from the reversal of
provisions in the previous year and a gain on the partial
sale of the Cirquent Group, also recognised in the previous
year.

The result from inter-segment eliminations improved to a
positive amount of euro 574 million (2008: negative amount
of euro 21 million), mainly as a result of the lower volume
of new leasing business.

Financial Position
The cash flow statements of the BMW Group and the
Automobiles and Financial Services segments show the
sources and applications of cash flows for the financial
years 2008 and 2009, classified into cash flows from
operating, investing and financing activities. Cash and
cash equivalents in the cash flow statement correspond
to the amount disclosed in the balance sheet.

Cash flows from operating activities are determined indi-
rectly starting with the Group net profit. By contrast, cash
flows from investing and financing activities are based on
actual payments and receipts.

Operating activities of the BMW Group generated a posi-
tive cash flow of euro 10,271 million in 2009, a decrease of
euro 601 million or 5.5 % compared to the previous year.
Changes in working capital and other operating assets
and liabilities during 2009 generated a cash inflow of euro
908 million (2008: euro 411 million). The increase was more
than offset by the decrease in depreciation and write-

The cash outflow for investing activities amounted to euro
11,328 million and was therefore euro 7,324 million lower
than in 2008. Capital expenditure for intangible assets and
property, plant and equipment resulted in the cash outflow
for investing activities decreasing by euro 733 million on
a year-on-year comparison. The cash outflow for the net
investment in leased products and receivables from sales
financing decreased by euro 8,692 million to euro 5,700
million as a result of the lower level of new business and
the fact that an exceptional item in the previous year was
not repeated (buy-back in 2008 of previously off-balance-
sheet vehicle portfolio of a leasing company).

Financing activities generated a cash inflow of euro 1,352
million in 2009 (2008: euro 12,904 million). Cash inflows
from the issue of bonds totalled euro 9,762 million (2008:
euro 9,959 million), and euro 6,440 million (2008: euro
5,080 million) was used to repay bonds. The dividend pay-
ment for the financial year 2009 amounted to euro 197
million. The cash outflow for other financial liabilities and
Commercial Paper was euro 1,562 million (2008: cash in-
flow of euro 9,041 million).

90.7 % (2008: 58.3 %) of the cash outflow for investing
activities was covered by the cash inflow from operating
activities. The cash flow statement for the Automobiles
segment shows that the cash inflow from operating
activities fell short of the cash outflow for investing activi-
ties by euro 754 million (2008: euro 81 million). Adjusted
for purchases of marketable securities amounting to euro
2,210 million (mainly in connection with the further exter-
nalisation of pension obligations), there would have been
a surplus of euro 1,456 million or 142.0 %. Due to the

53 Group Management Report

Change in cash and cash equivalents

in euro million

17,000

16,000

15,000

14,000

13,000

12,000

11,000

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

Cash and cash
equivalents
31.12. 2008

Cash inflow
from operating
activities

Cash outflow
from investing
activities

Cash inflow
from financing
activities

Currency trans-
lation, changes in
Group composition

Cash and cash
equivalents
31.12. 2009

7,454

+ 10,271

– 11,328

+ 1,352

+ 18

7,767

lower level of investment in leased products and receivables
from sales financing, the cash flow statement of the Finan-
cial Services segment shows coverage of 115.8 % (2008:
shortfall of 39.4 %).

amounting to a net positive amount of euro 18 million
(2008: net negative amount of euro 63 million), the various
cash flows resulted in an increase in cash and cash equiv-
alents of euro 313 million (2008: euro 5,061 million).

After adjustment for the effects of exchange-rate fluctua-
tions and changes in the composition of the BMW Group

Net financial assets of the Automobiles segment comprise
the following:

in euro million

31. 12. 2009

31. 12. 2008

Cash and cash equivalents

Marketable securities and investment funds

Intragroup net financial receivables

Financial assets

Less: external financial liabilities*

Net financial assets

* excluding derivative financial instruments

4,331

1,129

8,272

13,732

– 4,770

8,962

5,073

557

8,185

13,815

– 4,769

9,046

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Review of Operations
BMW Group – Capital Market
Activities
Disclosures pursuant to § 289 (4)
and § 315 (4) HGB
Financial Analysis
Internal Management System
48
Earnings Performance
50
Financial Position
52
Net Assets Position
54
Subsequent Events Report
56
Value Added Statement
56
58
Key Performance Figures
59 Comments on BMW AG
Internal Control System
Risk Management

63
64
70 Outlook

Net Assets Position
The Group balance sheet total increased by euro 867 mil-
lion (+ 0.9 %) to euro 101,953 million compared to 31 De-
cember 2008. Adjusted for changes in exchange rates, the
balance sheet total would have decreased by 0.9 %.

Receivables from sales financing were up by 6.6 % to
euro 40,594 million due to higher business volumes. Of
this amount, retail customer and dealer financing ac-
counted for euro 31,971 million (+ 8.5 %) and finance
leases accounted for euro 8,623 million (+ 0.3 %).

The main factors behind the increase on the assets side
were the increased level of receivables from sales financ-
ing (+ 6.6 %), other assets (+ 24.9 %) and deferred taxes
(+ 46.2 %). Leased products (– 7.9 %) and inventories
(– 10.1 %) decreased. On the equity and liabilities side of
the balance sheet, the increase was due to the increase
in financial liabilities (+ 1.6 %) and trade payables (+ 21.9 %).
There were decreases in pension provisions (– 10.3 %) and
equity (– 1.8 %).

At euro 5,379 million, intangible assets were euro 262 mil-
lion lower than at the end of the previous reporting period.
Within intangible assets, capitalised development costs
went down by 2.7 % to euro 4,934 million. Development
costs recognised as assets during the year under report
amounted to euro 1,087 million (– 11.2 %), equivalent to a
capitalisation ratio of 44.4 % (2008: 42.7 %). The lower
level of additions to capitalised development costs in 2009
was attributable cost and process efficiencies during the
series development phase. The corresponding amortisa-
tion expense was euro 1,226 million (2008: euro 1,185 mil-
lion).

The carrying amount of property, plant and equipment in-
creased slightly by 0.8 % to euro 11,385 million. Capital
expenditure of euro 2,334 million was 18.5 % lower than
in the previous year. The main focus was on product in-
vestments for production start-ups and infrastructure im-
provements. Depreciation on property, plant and equip-
ment totalled euro 2,260 million (– 4.8 %). Balances
brought forward for subsidiaries being consolidated for
the first time amounted to euro 48 million. Total capital ex-
penditure as a percentage of revenues was 6.8 % (2008:
7.9 %).

Leased products decreased by euro 1,551 million or
7.9 %. Excluding the effect of exchange rate fluctuations,
leased products would have decreased by 7.7 %. The
decrease was attributable to the lower volume of new
lease business in 2009 and the impact of an exceptional
item in 2008.

The carrying amount of other investments decreased by
28.0 % to euro 232 million, mainly reflecting the sale of
the BMW Sauber Group and the first-time inclusion of pre-
viously unconsolidated subsidiaries.

Inventories decreased by euro 735 million or 10.1 % to
euro 6,555 million as a result of the higher sales volume in
the fourth quarter 2009 and lower inventories of goods
for resale and work in progress.

Trade receivables were 19.4 % lower than at 31 December
2008.

Financial assets decreased by 7.4 % to euro 4,734 million
mainly as a result of the expiry in 2009 of currency deriva-
tives with positive fair values.

Liquid funds increased by 16.1 % to euro 9,415 million.
Within that item, marketable securities and investment
fund shares rose by euro 995 million. Liquid funds com-
prise cash and cash equivalents as well as marketable
securities and investment fund shares (the last two items
reported as financial assets).

Cash and cash equivalents went up by euro 313 million to
euro 7,767 million.

On the equity and liabilities side of the balance sheet,
equity decreased by euro 358 million to euro 19,915 mil-
lion. This was primarily a result of the payment of the
dividend (euro 197 million), actuarial losses on pension
obligations due to lower interest rates and a changed as-
sumption for future inflation rates, totalling euro 1,198 mil-
lion. Group equity increased due to translation differences
(+ euro 318 million), the fair value measurement of deriva-
tive financial instruments (+ euro 295 million), the fair
value measurement of marketable securities (+ euro 4 mil-
lion) and the net profit for the period (+ euro 210 million).
Deferred taxes on fair value gains and losses recognised
directly in equity increased equity by euro 190 million.
Treasury shares (preferred stock) held at the end of the
previous financial year were issued to employees in 2009
in conjunction with an employee share scheme, increas-
ing equity by euro 10 million. In addition, the Authorised
Capital created at the Annual General Meeting held on
14 May 2009 was partially used during the financial year
under report to issue shares of preferred stock to employees,
increasing subscribed capital by euro 1 million. An amount
of euro 10 million was transferred to capital reserves in
conjunction with this share capital increase. Other items
reduced equity by euro 1 million.

55 Group Management Report

Balance sheet structure – Group

in euro billion

Non-current assets

61 %

62 %

20 %

Equity

41 %

44 %

Non-current provisions and liabilities

Current assets

39 %

38 %

39 %

36 %

Current provisions and liabilities

thereof cash and cash equivalents

8 %

7 %

2009

2008

2009

102

101

102

Balance sheet structure – Automobiles segment

in euro billion

Non-current assets

44 %

42 %

Equity

Current assets

56 %

26 %

18 %

Non-current provisions and liabilities

40 %

Current provisions and liabilities

32 %

thereof cash and cash equivalents

8 %

10 %

2009

2008

2009

The equity ratio of the BMW Group fell overall by 0.6 per-
centage points to 19.5 %. The equity ratio of the Auto-
mobiles segment was 41.7 % (2008: 42.3 %) and that of
the Financial Services segment was 6.0 % (2008: 5.4 %).

Pension provisions went down by 10.3 % to euro 2,972
million. In the case of pension plans with fund assets, the

fair value of fund assets is offset against the defined
benefit obligation. The decrease was mainly due to the
transfer of pension obligations to BMW Trust e. V., Munich,
in conjunction with a Contractual Trust Arrangement (CTA).
This was only partly offset by the increase in pension
provisions caused by lower interest rates and a changed
assumption for future inflation rates.

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Review of Operations
BMW Group – Capital Market
Activities
Disclosures pursuant to § 289 (4)
and § 315 (4) HGB
Financial Analysis
Internal Management System
48
Earnings Performance
50
Financial Position
52
Net Assets Position
54
Subsequent Events Report
56
Value Added Statement
56
58
Key Performance Figures
59 Comments on BMW AG
Internal Control System
Risk Management

63
64
70 Outlook

Other provisions went down by 2.4 % to euro 4,764 million,
primarily reflecting lower personnel-related obligations.

component of value added which, in the allocation state-
ment, is treated as internal financing.

Net value added by the BMW Group in 2009 decreased by
0.3 % to euro 10,441 million. Lower cost of materials and
depreciation / amortisation expense could not fully offset
the impact of lower revenues and higher other expenses.

The bulk of the net value added (61.2 %) is applied to
employees. The amount applied to providers of finance
increased to 31.1 % mainly as a result of the higher funding
volume required for financial services business. The govern-
ment / public sector (including deferred tax expense) ac-
counted for 5.7 %. The proportion of net value added ap-
plied to shareholders, at 1.9 %, was similar to the previous
year’s level.

Financial liabilities increased by 1.6 % to euro 61,325 mil-
lion, mainly in conjunction with the refinancing of financial
services business. Within financial liabilities, bonds in-
creased by 11.8 % to euro 27,017 million and deposit lia-
bilities (from banking) rose by 21.0 % to euro 9,933 million.
Working in the opposite direction, liabilities to banks de-
creased by 17.7 % to euro 9,174 million and asset-backed-
financing liabilities were down by 10.2 % to euro 7,812 mil-
lion.

Trade payables amounted to euro 3,122 million and were
thus 21.9 % higher than one year earlier.

Other liabilities decreased by euro 31 million to euro 6,250
million at 31 December 2009.

Overall, thanks to the measures implemented, the BMW
Group succeeded in limiting the negative impact of the
economic and financial crisis on its earnings, financial and
net assets position.

Compensation Report
The compensation of the Board of Management com-
prises a fixed and a variable component. In addition, bene-
fits are also payable at the end of members’ mandates,
primarily in the form of pension benefits. Further details, in-
cluding an analysis of remuneration by individual, are dis-
closed in the Compensation Report which can be found in
the Corporate Governance section of the Annual Report
on page 151 et seq. The Compensation Report is a sub-
section of the Management Report.

Subsequent Events Report
No events have occurred after the balance sheet date which
could have a major impact on the earnings performance,
financial position and net assets of the BMW Group.

Value Added Statement
The value added statement shows the value of work per-
formed less the value of work bought in by the BMW
Group during the financial year. Depreciation and amortisa-
tion, cost of materials and other expenses are treated as
bought-in costs in the value added calculation. The alloca-
tion statement applies value added to each of the partici-
pants involved in the value added process. It should be
noted that the gross value added treats depreciation as a

57 Group Management Report

BMW Group Value added statement

2009
in euro million

2009
in %

2008
in euro million

2008
in %

Change
in %

Work performed

Revenues

Financial income and expenses

Other income

Total output

Cost of materials
Other expenses*

Bought-in costs

Gross value added

Depreciation and amortisation

Net value added

Applied to

Employees

Providers of finance

Government / public sector

Shareholders

Group

Minority interest

Net value added

50,681

488

808

51,977

27,399

6,845

34,244

17,733

7,292

10,441

6,395

3,243

593

197

97.5

0.9

1.6

100.0

52.7

13.2

65.9

34.1

14.0

20.1

61.2

31.1

5.7

1.9

0.1

–

53,197

– 410

1,428

54,215

30,648

5,447

36,095

18,120

7,651

10,469

6,781

2,823

535

197

127

98.1

– 0.7

2.6

100.0

56.5

10.1

66.6

33.4

14.1

19.3

64.8

27.0

5.1

1.9

1.2

–

10,441

100.0

10,469

100.0

– 4.1

– 5.1

– 2.1

– 0.3

– 5.7

14.9

10.8

–

– 94.5

–

– 0.3

* including expenses incurred to downsize the workforce

BMW Group Value added 2009

in %

Depreciation and amortisation

Other expenses

Net value added

Cost of materials

Net value added

Cost of materials

20.1

52.7

Depreciation and amortisation

14.0

Other expenses

13.2

61.2 %

Employees

31.1 %

Providers of finance

5.7 %
1.9 %
0.1 %

Government / public sector
Shareholders
Group

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

Review of Operations
BMW Group – Capital Market
Activities
Disclosures pursuant to § 289 (4)
and § 315 (4) HGB
Financial Analysis
48
50
52
54 Net Assets Position
56
56
58
59
Internal Control System
Risk Management

Subsequent Events Report
Value Added Statement
Key Performance Figures
Comments on BMW AG

63
64
70 Outlook

Key Performance Figures

Gross margin*

EBITDA margin

EBIT margin

Pre-tax return on sales

Post-tax return on sales

Pre-tax return on equity

Post-tax return on equity

Equity ratio – Group

Automobiles

Financial Services

Coverage of intangible assets, property, plant and equipment by equity

Return on capital employed

Group

Automobiles

Motorcycles

Return on equity

Financial Services

Cash inflow from operating activities

Cash outflow from investing activities

Coverage of cash outflow from investing activities by cash inflow from operating activities

Net financial assets Automobiles segment

* after reclassification of research and development costs to cost of sales

2009

2008

euro million

10.5

7.7

0.6

0.8

0.4

2.0

1.0

19.5

41.7

6.0

118.8

3.3

–

4.7

9.2

10,271

11,328

90.7

8,962

11.4

8.6

1.7

0.7

0.6

1.6

1.5

20.1

42.3

5.4

119.7

2.3

4.9

13.9

–

10,872

18,652

58.3

9,046

59 Group Management Report

Comments on Financial Statements of BMW AG
Whereas the Group Financial Statements are drawn up in
accordance with IFRSs issued by the IASB, the financial
statements of BMW AG are drawn up in accordance with
the provisions of the German Commercial Code (HGB).
Where it is permitted and considered sensible, the princi-
ples and policies of IFRSs are also applied in the individual
company financial statements. The pension provision in
the individual company financial statements, for example,
is also determined in accordance with IAS 19 and the full
defined benefit obligation recognised. In numerous other
cases, however, the accounting principles and policies in
the individual company financial statements of BMW AG
differ from those applied in the Group Financial State-
ments. The main differences relate to the recognition of
intangible assets, depreciation and amortisation methods,
the measurement of inventories and provisions as well as
the treatment of financial instruments.

BMW AG develops, manufactures and sells cars and motor-
cycles manufactured by itself and foreign subsidiaries.
These vehicles are sold through the Company’s own
branches, independent dealers, subsidiaries and importers.
The number of cars manufactured at German and foreign
plants in 2009 decreased by 12.6 % to 1,258,417 units.
The workforce of BMW AG decreased by 1,373 to 70,223
employees at 31 December 2009, due primarily to natural
employee fluctuation, pre-retirement part-time working
arrangements and voluntary employment contract termina-
tion agreements.

Consumer reluctance to spend in the face of the current
finan cial crisis as well as model life-cycle factors caused
a reduction in the number of cars sold by BMW AG. As
a consequence, revenues fell by 14.3 % in 2009. Sales to
group sales companies accounted for euro 26.6 billion
or approximately 70.0 % of the total revenues of euro 38.0
billion. The decrease in cost of sales was slightly less pro-
nounced than the decrease in revenues. Gross profit fell by
euro 1.2 billion (– 18.2 %) and amounted to euro 5.3 billion.

Adverse currency factors relating to the US dollar and
Japanese yen as well as continued intense competition
on the automobile markets had a negative impact on
BMW AG’s earnings.

A tax expense was recognised in the financial year 2009 in
conjunction with a tax field audit covering prior years. The
back-taxes were primarily related to the issue of intragroup
pricing arrangements. The resulting threat of a double
taxation charge at Group level is being avoided primarily by
initiating bilateral appeal proceedings.

Capital expenditure on intangible assets and property,
plant and equipment amounted to euro 1,667 million
(2008: euro 2,064 million). The 19.2 % decrease was pri-
marily due to the lower level of infrastructure investments.
De preciation and amortisation amounted to euro 1,505
million.

In order to secure obligations resulting from pre-retirement
part-time work arrangements and a part of the Company’s
pension obligations, an amount of euro 3,088 million was
transferred to BMW Trust e. V., Munich, in conjunction with
a Contractual Trust Arrangement (CTA).

Equity rose by euro 16 million to euro 5,354 million. The
existing authorisation to acquire treasury shares was not
exercised during the financial year 2009. 362,225 of the
363,130 shares of preferred stock held as treasury shares
were used for the employee share scheme; the remaining
905 shares were sold on the capital market. The equity
ratio fell from 22.9 % to 21.7 %. Long-term external capital
(registered profit-sharing certificates, pension provisions,
the liability to the BMW Unterstützungsvereins e. V. and
liabilities due after one year) decreased by 23.4 % to
euro 4,638 million, reflecting the fact that some loan lia-
bilities fall due for payment in 2010. In view of the turmoil
on the financial markets, funds were shifted into money
market funds in order to secure the liquidity position of
BMW AG.

The decrease in other operating expenses had a positive
effect on the profit from ordinary activities which increased
from euro 395 million to euro 605 million.

The Financial Reporting Modernisation Act (BilMoG) will
be applied with effect from the beginning of the financial
year 2010.

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

Subsequent Events Report
Value Added Statement
Key Performance Figures
Comments on BMW AG

63
64
70 Outlook

BMW AG Balance Sheet at 31 December
in euro million

Assets

Intangible assets

Property, plant and equipment

Investments

Tangible, intangible and investment assets

Inventories

Trade receivables

Receivables from subsidiaries

Other receivables and other assets

Marketable securities

Cash and cash equivalents

Current assets

Prepayments

Total assets

Equity and liabilities

Subscribed capital

Capital reserves

Revenue reserves

Unappropriated profit available for distribution

Equity

Registered profit-sharing certificates

Special untaxed reserves

Pension provisions

Other provisions

Provisions

Liabilities to banks

Trade payables

Liabilities to subsidiaries

Other liabilities

Liabilities

Deferred income

Total equity and liabilities

2009

2008

145

5,536

1,303

6,984

2,620

690

6,197

882

4,987

2,195

143

5,404

1,096

6,643

2,586

982

6,098

623

2,360

3,970

17,571

16,619

24,647

23,316

655

2,001

2,501

197

5,354

–

4,586

6,323

10,909

2,488

1,548

2,409

1,902

8,347

24,647

654

1,991

2,496

197

5,338

3,791

6,142

9,933

3,049

1,276

2,311

1,338

7,974

23,316

61 Group Management Report

BMW AG Income Statement
in euro million

Revenues

Cost of sales

Gross profit

Sales costs

Administrative costs

Research and development costs

Other operating income and expenses

Result on investments

Financial result

Profit from ordinary activities

Income taxes

Other taxes

Net profit

Transfer to revenue reserves

Unappropriated profit available for distribution

2009

2008

37,980

– 32,679

5,301

– 3,105

–1,379

– 2,451

1,243

1,084

– 88

605

– 393

– 10

202

– 5

197

44,313

– 37,833

6,480

– 3,085

–1,366

– 2,646

– 641

1,807

–154

395

–14

384

–187

197

Revenues from the sale of vehicles to car rental companies
are not recognised when there is an obligation to take
back the vehicles. In accordance with the draft financial
reporting pronouncement “Specific Issues relating to the
Transfer of Beneficial Ownership and Profit Realisation in
accordance with HGB” (IDW ERS HFA 13 revised version

dated 29 November 2006) issued by the German Institute
of Public Accountants (IDW), vehicles remain on the bal-
ance sheet, measured at amortised cost, because, on the
basis of the criteria set out in the pronouncement, benefi-
cial ownership has not been transferred to the car rental
companies.

KPMG AG Wirtschaftsprüfungsgesellschaft, Munich, has
issued an unqualified audit opinion on the financial state-
ments of BMW AG, of which the balance sheet and the in-
come statement are presented here. The BMW AG financial
statements for the financial year 2009 will be submitted to
the operator of the electronic version of the German Federal
Gazette and can be obtained via the Company Register
website. These financial statements are available from
BMW AG, 80788 Munich, Germany.

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

Subsequent Events Report
Value Added Statement
Key Performance Figures
Comments on BMW AG

63
64
70 Outlook

63 Group Management Report

Internal Control System

The internal control system of the BMW Group is aimed
at ensuring the effectiveness of operations. It makes an
important contribution towards ensuring compliance with
the BMW Group’s applicable laws as well as providing
assurance on the propriety and reliability of internal and
external financial reporting. It is therefore a significant fac-
tor in the management of process risks.

The principal features of the internal control system, as
far as they relate to individual entity and Group financial re-
porting processes, are described below. The risk manage-
ment system is an integral part of the internal control system
and is therefore not referred to in this section.

Information and communication
One of the elements of the internal control system is the
area of “Information and Communication”, which ensures
that all information necessary to achieve the objectives
set for the internal control system is made available in an
appropriate and timely manner to those responsible. The
requirements relating to the provision of information rele-
vant for financial reporting at the level of BMW AG, other
consolidated Group entities and the BMW Group are prima-
rily set out in organisational manuals, in guidelines cover-
ing internal and external financial reporting issues and in
accounting manuals. These instructions, which can be ac-
cessed at all levels via the BMW Group’s intranet system,
provide the framework for ensuring that the relevant rules
are applied consistently across the Group. The quality and
relevance of these instructions is ensured by regular review
as well as by continuous communication between the
relevant departments.

Organisational measures
All financial reporting processes (including Group financial
reporting processes) are structured in organisational terms
in accordance with the principle of segregation of duties.
These structures as well as rigorous application of the
principle of dual control allow errors to be identified at an
early stage and prevent potential wrongdoing. Regular
comparison of internal forecasts and external financial re-
ports improves the quality of financial reporting. The inter-
nal audit department serves as a process-independent
function, testing and assessing the effectiveness of the in-
ternal control system and proposing improvements when
appropriate.

Controls
Extensive controls are carried out by management in all
finan cial reporting processes at an individual entity and

Group level to ensure that legal requirements and internal
guidelines are complied with and that all business trans-
actions are properly executed. Controls are also carried out
with the aid of IT applications, thus reducing the incidence
of process risks.

IT authorisations
All IT applications used in financial reporting processes
throughout the BMW Group are subject to access restric-
tions. As a result, only authorised persons can gain access
on a controlled basis to systems and data, depending
on the nature of the work being performed. In addition, IT
processes are designed and authorisations allocated
using the dual control principle, as a result of which, for in-
stance, requests cannot be submitted and approved by
the same person.

Internal control training for employees
All employees are appropriately trained to carry out their
duties and kept informed of any changes in regulations or
processes that affect them. Managers and staff also have
access to detailed best-practice descriptions relating to
risks and controls in the various processes, thus increasing
risk awareness at all levels. As a consequence, the internal
control system can be evaluated regularly and further
improved as necessary. Employees can, at any time and
independently, deepen their understanding of control
methods and design using an information platform that is
accessible groupwide.

Evaluation of effectiveness of the internal
control system
Responsibilities for ensuring the effectiveness of the in-
ternal control system in relation to individual entity and
Group financial reporting processes are clearly defined
and allocated to the relevant managers and process
owners. The BMW Group assesses the design and effec-
tiveness of the internal control system on the basis of in-
ternal review procedures on the one hand (e. g. manage-
ment self-audits, internal audit findings) and the findings
of external auditors on the other. Audits performed at
regular intervals show that the internal control system in
place throughout the BMW Group is both appropriate and
effective. Continuous revision and further development
of the internal control system ensures its continued effec-
tiveness. Group entities are required to confirm regularly
as part of their reporting duties that the internal control
system is functioning properly. Effective measures are
implemented whenever weaknesses are identified and
reported.

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

Risk Management

Risk management in the BMW Group
As a globally operating organisation, the BMW Group is
exposed to a variety of risks, arising in part from the in-
creasing internationalisation of business activities and
ever-greater competition. Price fluctuations on the global
currency, money, capital and commodities markets as
well as shorter innovation cycles result in increasing com-
plexity, all of which place great demands on enterprises
with international operations.

The international financial and economic crisis and its
knock-on effects have shown quite clearly, particularly
during the financial year 2009, that effective and efficient
risk management is an essential aspect of safeguarding
the going-concern status of the Group in the long term on
the one side and help us to achieve our business objec-
tives on the other. Consciously taking calculated risks and
making full use of the opportunities relating to them has
long been the basis for our corporate success.

As part of the risk reporting system, the Board of Manage-
ment and the Supervisory Board are regularly informed
about risks which could have a significant impact on busi-
ness performance. Risk reporting within the BMW Group
is based on an integrated risk management approach.
Business decisions are reached after consideration of in-
depth project analyses which show both potential risks and
potential opportunities. In addition, as part of long-term
planning, annual budget and short-term forecasts, the
risks and opportunities attached to specific business activi-
ties are evaluated and used as the basis for implementing
measures to mitigate risks and achieve targets. The risk
management process is applied throughout the Group and
comprises the early identification of risks and opportuni-
ties, their measurement and the use of suitable instruments
to manage and monitor risks. Our risk management system
comprises a wide range of organisational and methodo-
logical components that are all finely tuned to each other.
The system’s decentralised structure also encourages a
balanced approach to risks at all organisational levels.

The Group reporting system provides decision makers with
comprehensive, up-to-date information on performance
against targets and on new developments with regard to
the market and competitors. Critical success factors are
monitored continuously to ensure that unfavourable devel-
opments are identified at an early stage to enable appro-
priate counter measures to be taken and business oppor-
tunities exploited accordingly.

We see risk management as a continuous process, given
the fact that changes in the legal, economic or regulatory
environment or those within the company itself could lead
to new risks or to known risks being differently assessed.
Standardised rules and procedures consistently applied
throughout the BMW Group form the basis for an organisa-
tion that is permanently learning. By regularly sharing ex-
periences with other companies, we ensure that innovative
ideas and approaches flow into the risk management
system and that risk management is subjected to continual
improvement. Regular basic and further training as well
as information events are invaluable ways of preparing
employees for new or additional requirements with regard
to the processes in which they are involved.

Overall risk management within the BMW Group is
managed centrally and reviewed for appropriateness and
effectiveness by the Group’s internal audit department.
In addition, knowledge gained from external audits also
provides a good basis for further improvements.

At present, no risks have been identified which could
threaten the going concern status of the BMW Group or
which could have a materially adverse impact on the net
assets, financial position or results of operations of the
Group. However, risks can never be entirely ruled out.

The main aspects of risk management activities are de-
scribed below. Additional comments on risks in conjunc-
tion with financial instruments are provided in Note 39
of the Group Financial Statements.

Risks relating to the general economic
environment
As a globally operating enterprise, the BMW Group is
affected by economic conditions worldwide. The interna-
tional economic crisis and its impact on financial, goods
and services markets had a significant bearing on Group
revenues and earnings in 2009. The sale of vehicles out-
side the European Currency Union gives rise to currency
exposures, in particular with regard to the US dollar, the
Japanese yen, the British pound and the Chinese renminbi.
These four currencies accounted for approximately two
thirds of our total foreign currency exposure in 2009. Cash-
flow-at-risk models and scenario analyses are used to
measure exchange rate risks. These instruments also serve
as part of the process of currency management for the
purpose of taking business decisions.

65 Group Management Report

We manage currency risks both at a strategic and at an
operating level. At a strategic level (medium and long term),
foreign exchange risks are managed by natural hedging,
in other words by increasing the volume of purchases
denominated in foreign currency or increasing the volume
of local production. For operating purposes (short and
medium term), currency risks are hedged on the financial
markets. Hedging transactions are entered into only with
financial partners with a good credit standing. The ongoing
financial crisis has, however, resulted in a deterioration in
the creditworthiness of many financial institutions and set
in motion a process of consolidation within the banking
sector. We take account of these circumstances by adjust-
ing counterparty limits as appropriate and by applying strict
counterparty risk management procedures. The nature
and scope of such measures are set out in Group guide-
lines.

Standard & Poor’s (S & P), we were not fully able to extri-
cate ourselves from the difficulties facing the automotive
sector in the wake of the financial and economic crisis. On
5 November 2008, S & P issued a long-term rating of A
with stable outlook (previously A+ with stable outlook) and
changed the outlook from stable to negative on 27 Febru-
ary 2009. In the face of unfavourable macro-economic con-
ditions and persisting doubts about whether the principal
sales markets would recover quickly, BMW AG’s long-term
rating was downgraded on 13 November 2009 to A –
with negative outlook. In conjunction with this downgrade,
S & P also changed its short-term rating to A-2. After
putting BMW AG’s rating to “under review for possible
downgrade” on 18 February 2009, Moody’s changed its
long-term rating on 3 April 2009 to A3 with negative out-
look (previously A2 with stable outlook) and downgraded
BMW AG’s short-term rating from P-1 to P-2.

We also reduce currency risk by refinancing credit and lease
business as a general rule in the currency of the relevant
market.

Interest-rate risks are managed by employing derivative
finan cial instruments. Interest-rate risks are measured and
limited both at country and Group level on the basis of a
value-at-risk approach. The risk-return ratio is also meas-
ured regularly using simulated computations in conjunction
with a present-value-based interest rate management
system. Sensitivity analyses, which contain stress scenarios
and show the potential impact of interest-rate changes
on earnings, are also used as tools to manage interest-rate
risks.

The deposit business operated by the Financial Services
segment, credit lines with various banks and the use of
other financing instruments ensure that sufficient liquid
funds are available to the Group. The finely tuned use of
a wide range of capital market instruments has proven its
worth, particularly in the midst of the difficult business
environment caused by the banking and financial crisis.
Liquidity risk is continuously monitored at a separate entity
level. A cash flow requirements and sourcing forecast
system is also implemented throughout the Group to docu-
ment and manage liquidity risk.

Most of the Financial Services segment’s credit and lease
business is refinanced on the capital markets. Compared to
previous years, when the BMW Group was able to benefit
from first-class short-term ratings issued by Moody’s and

With ratings of A– (S & P) and A3 (Moody’s), the agencies
continued to confirm BMW AG’s solid creditworthiness
for financial liabilities with a term of more than one year. If
challenges remain persistent or if the economy takes
another downturn, there is a risk that ratings for the whole
of the automotive sector deteriorate again.

Irrespective of the above developments, securities issued
by BMW Group entities continue to enjoy a level of credit-
worthiness that is comparatively high for the automotive
sector. Access to the capital markets remains good, with a
diversified range of refinancing opportunities available to
us. After deteriorating during the second half of 2008 in
response to the financial crisis, refinancing conditions
eased in terms of credit spreads in 2009, enabling us to
raise debt capital at better conditions.

Changes on the international raw materials markets also
have an impact on the business development of the BMW
Group. In order to safeguard the supply of production
materials and to minimise the cost risk, all relevant com-
modities markets are closely monitored. The economic
crisis and the related slump in demand on raw materials
markets enabled us to benefit from more favourable raw
materials price levels in 2009. We used the situation on
the market to hedge the price of precious metals (such as
platinum, palladium and rhodium) and of non-ferrous
metals for the current and future years using derivative in-
struments. Changes in the price of crude oil, which is an
important basic material in the manufacture of compo-
nents, have an indirect impact on our production costs.

Group Management Report
A Review of the Financial Year

12
12
14 General Economic Environment
18
42

Internal Management System
Earnings Performance
Financial Position

63
64
70 Outlook

Moreover, the price of crude oil also directly influences the
purchasing behaviour of drivers when fuel prices change.

An escalation of political tensions and / or terrorist activities,
natural catastrophes or possible pandemics could all have
a negative impact on the economic situation, the interna-
tional capital markets and hence the business performance
of the BMW Group.

Sector risks
The future price of fuel – influenced both by market factors
and governmental fiscal policies – as well as increasingly
stringent requirements to reduce vehicle fuel consumption
and emissions remain the main challenges for our engine
and product development activities. Our Efficient Dynamics
concept is generating visible benefits in terms of cutting
consumption and emissions.

Requirements over the medium and long term have been
put in place in Europe, North America, Japan, China and
other countries with respect to vehicle fuel consumption
and CO2 emissions. Europe has set a target of achieving
an average of 130 g / km for all new vehicles by 2015. EU
regulations set targets for CO2 emissions based on vehicle
weight. For our product range, a target of below 140 g / km
has been derived on the basis of the new rules. A new
regulation for fuel consumption and CO2 emissions is cur-
rently being discussed in the USA for the model years
2012 to 2016. Starting with a step-by-step reduction in
model year 2012, the new vehicle fleets of all manufac-
turers are expected to come down to an average value
of 250 g of CO2 per mile (equivalent to 155 g / km CO2) in
model year 2016. The Japanese government has also
set ambitious consumption targets, including statutory
regulations for 2010 and 2015. The government in China
is currently discussing the possibility of introducing con-
sumption requirements – planned to come into force in
2012 – that are more stringent than the current ones.

We are addressing these challenges by putting our tech-
nological expertise and innovative strength to best use,
working with determination to reduce the CO2 emissions
of our vehicles. The need to reduce consumption and
emissions is fully integrated in our product innovation
process. We are therefore working with the interplay of
energy management, aerodynamics, lightweight construc-
tion, drive performance and CO2 emissions. The Efficient
Dynamics concept was adopted at an early stage: A com-
bination of highly efficient engines, improved aerodynamics,
lightweight construction and energy management re-

duces the average fuel consumption and emissions of
the vehicle fleet. In the medium term, the BMW Group is
working on achieving additional fuel economy by a wide
range of measures from electrification of the drivetrain
through to hybrid solutions. Solutions for sustainable mo-
bility in densely populated areas are also being worked
on. As one example, large-scale field trials are currently
being carried out with the MINI E in the USA, the UK and
Germany. The practical experience gained from these
trials will be incorporated in the further development of
electric vehicles. The use of hydrogen gained from
various renewable sources to power engines remains an
important component of our strategy for sustainable
mobility.

New and generally more stringent regulations that have
already been made law have found their way into the BMW
Group’s Efficient Dynamics strategy. There is a risk that
these statutory regulations will be further tightened.

Operating risks
The flexible nature of our production network and working
time models generally help to reduce operating risks. In
addition, risks arising from business interruptions and loss
of production are also insured up to economically rea-
sonable levels with insurance companies of good credit
standing.

An evaluation of technical competence and financial
strength is taken into account as part of the process of se-
lecting suppliers. Before a contractual relationship comes
into being, supplier relationship management procedures –
which also cover social and ecological aspects – help to
reduce risk exposure.

Close cooperation between manufacturers and suppliers
is usual in the automotive sector and whilst this provides
economic benefits, it also creates a degree of mutual de-
pendence. Partly reflecting increasing consolidation within
the automotive supply industry, certain suppliers have
become extremely important for the BMW Group. Delivery
delays, delivery cancellations, strikes or poor quality can
lead to production stoppages and thus have a negative
impact on profitability. The prevailing adverse business cli-
mate is also affecting the supply industry. Revenue con-
traction in the automotive sector clearly has an impact on
the earnings of suppliers. The availability of capital is be-
coming increasingly critical for suppliers with high levels
of debt. In cooperation with other car manufacturers, we
maintain close contact with our suppliers in order to identify

67 Group Management Report

problems as early as possible and find appropriate solu-
tions. Despite the fact that a number of suppliers filed for
insolvency, this did not result in any significant loss of pro-
duction for us.

Risks relating to the provision of financial services
As a result of the worldwide recession, the risk profile has
also changed in the important area of financial services.
Risks are identified, measured, monitored, evaluated and
managed on the basis of recognised standards and regu-
lations that generally apply worldwide in this line of busi-
ness. A global Risk Committee, which serves as the highest
decision-making body within the Financial Services seg-
ment, is in place to decide upon the overall strategy. It also
approves internal guidelines and process descriptions that
are required to be followed internationally.

The main categories of risk relating to the provision of
finan cial services are credit risk, residual value risk, interest
rate risk, liquidity risk and operating risks. Internal method-
ologies and techniques that comply with national and in-
ternational standards and regulatory requirements such as
Basel II have been developed to measure credit, residual
value and interest rate risks on the one hand and operational
risks on the other. Internal guidelines are also in place to
manage liquidity risk and ensure compliance with regulatory
requirements.

Credit risks on the retail (leasing, credit financing) and com-
mercial lines of business (dealers, fleet customers, im-
porters) are monitored continuously on the basis of projec-
tions and stress tests and measured and evaluated using
a value-at-risk approach. Further measures are taken to
minimise risk when considered appropriate, including the
requirement for customers to provide additional collateral
or make higher up-front payments. Various risk methods
are used to measure risk, ranging from scoring techniques
in the area of retail customer business and the use of credit
rating or prudent measurement of collateral in the area of
commercial financing business. These methods are docu-
mented in guidelines that are required to be applied across
the Group.

Close contact with borrowers, a good understanding of
the leased or financed vehicles involved and prudent
measurement of collateral all help to minimise risk. Local
and centralised credit audits are also regularly performed
to test compliance with prescribed rules and to check
the effectiveness of processes and IT systems. For risk
management purposes, the BMW Group reverts to normal

good banking practices, such as the use of maximum
unsecured risks for each rating category or risk-based up-
front payments. Risk criteria such as arrears and bad debt
ratios are analysed regularly. The results of these analyses
are used as the basis for the proactive management of
the credit portfolio, ultimately aimed at improving portfolio
quality. The information provided to management along
with appropriate recommendations for action serve as the
basis for decision-making. Measures implemented in this
vein in 2009 therefore partially countered increased credit
risk exposures. The credit decision process comprises
three phases. Depending on the credit volume applied
for and the credit risk rating of the party involved, financing
applications for international dealers, importers and fleet
customers are presented to the local, regional or global
credit committees for approval. The principles of dual con-
trol and segregation of duties apply worldwide and are rigor-
ously implemented. In order to minimise risk further, the
BMW Group is continuously making efforts to standardise
its credit-decision processes and the quality of credit appli-
cations as well as to ensure that uniform and transparent
rating systems are in place worldwide. Allowances are rec-
ognised in the balance sheet to cover identified risks. Any
negative impact on the credit risk portfolio is generally re-
flected in higher payment arrears and bad debts with retail
customers or dealers. The drop in sales caused by the in-
ternational economic crisis has had an adverse impact on
the financial situation of the dealer network and increased
the risk of insolvency within the dealer organisation. These
developments in 2009 necessitated higher risk provisions
in the areas of retail customer and dealer financing busi-
ness.

In the case of vehicles which remain with the Group at the
end of a lease (leases and credit financing arrangements
with option of return), there is a risk that the originally calcu-
lated residual value may not be recovered when the ve-
hicle is sold (residual value risk). The volatility of pre-owned
car prices on the major sales markets has intensified as a
consequence of the financial crisis, thus increasing the re-
sidual value risk. Residual values are calculated uniformly
throughout the BMW Group in accordance with mandatory
guidelines. The residual values of our vehicles on used car
markets are continuously monitored over long periods and
future developments projected. External market observa-
tions are also used in this context. The overall risk position
is measured by comparing forecasted market values and
contractual values by model and market. The return ratio
for lease vehicles is also computed. The risk of unexpected
loss is measured using a value-at-risk approach. The

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resulting revaluation of the portfolio of vehicles exposed to
residual value risks and losses incurred selling pre-owned
cars had an additional negative impact on the earnings of
the Financial Services and Automobiles segments. Expected
risks are covered in the balance sheet either by provisions
or by write-downs on the lease vehicles concerned.

The BMW Group strives to mitigate declining residual values
by actively managing the life-cycles of current models, op-
timising reselling processes on international markets and
implementing targeted price and volume measures. Re-
sidual values in the leasing business are reviewed regularly
and adjusted to take account of the latest market conditions
and expected future developments.

Interest rate risks are measured initially at country level and
then aggregated at Group level. Maximum risk exposures
are also initially managed at country level in the form of
risk limits. The overall exposure from interest rate risks is
managed at Group level.

Operational risks relating to financial services business in-
clude the risk of damage caused by inappropriate or failed
internal procedures and systems, human error or external
factors. The scope of procedures applied in each country
to manage operational risks is set out in a Group manual
which, amongst other things, addresses the requirements
of Basel II. This manual stipulates the rules for identifying
and measuring potential risk scenarios and for computing
key risk indicators on an ongoing basis. It also sets out
the Group’s systematic approach to recording losses and
the nature of any agreed risk-mitigation measures. Both
qualitative and quantitative aspects need to be taken into
account in the decision process. The latter is backed up by
various system-based solutions, all of which follow the
principles of operational risk management, such as segre-
gation of duties, dual control, the documentation of system
changes and transparency. In addition, the effectiveness
and efficiency of the internal control system are tested
regularly.

Legal risks
The BMW Group is not currently involved in any court or
arbitration proceedings which could have a significant im-
pact on its financial condition.

Compliance with the law is one of the basic prerequisites
for our success. Current law provides the binding frame-
work for our wide range of activities around the world.
The growing international scale of business and the huge
number of complex legal regulations increase the risk of

laws being broken, simply because they are not known or
fully understood. We therefore take all necessary measures
to ensure that our management bodies, managers and
staff always act in compliance with the law. It is essential
for all employees to know and to comply with current legal
regulations. The extent of those regulations is set out in
corporate guidelines and in the BMW Group’s stated set
of core principles. However, wrongdoing by individuals can
never be entirely ruled out. Our objective is to keep such
risks to a minimum and to systematically uncover any cases
of corruption, bribery or blackmail. Further information on
compliance within the BMW Group is included in the “Com-
pliance Report” on page 158 et seq.

Like all enterprises, we are exposed to the risk of warranty
claims. Adequate provisions have been recognised in the
balance sheet to cover such claims. Part of the risk, espe-
cially where the American market is concerned, has been
insured externally up to economically acceptable levels.
The high quality of our products, additionally ensured by
regular quality audits and ongoing improvement measures,
helps to reduce this risk. In comparison with competitors,
this can give rise to benefits and opportunities for the
BMW Group.

Changes in the regulatory environment may impair our sales
volume, revenues and earnings performance in individual
markets or in individual economic regions. Further informa-
tion is given in the section on sector-specific risks.

Personnel risks
As an attractive employer, we have for many years enjoyed
a favourable position in the intense competition for quali-
fied technical and management staff. A high level of em-
ployee satisfaction helps to minimise the risk of know-how
drift. An international trainee programme will start again
in spring 2010, aimed at finding well-trained staff and de-
veloping their skills further. A bachelor programme will also
be offered that will create a wealth of opportunities for
high school leavers who have achieved top marks and for
those who have finished their apprenticeships and gone on
to qualify to attend a university.

The ageing and shrinking population in Germany will have
a lasting impact on the conditions prevailing in the labour,
product, services and financial markets. Demographic
change will give rise to risks and opportunities which will
affect enterprises more and more in the coming years. We
see demographic change as one of the main challenges
and are taking an active approach to planning for its effect
on operations. The focus is on the following areas of action,

Security Standard ISO / IEC 27001. Staff, process design
and information technology each play a role in the overall
security concept. The requirement to apply uniform stand-
ards across the Group is embedded in our core principles
and documented in detailed working instructions which
require employees to handle information appropriately and
ensure that information systems are properly used. Pur-
poseful communication and training measures create a
high degree of security awareness on the part of the em-
ployees involved. Employees also receive training from the
Group’s Compliance Organisation to ensure compliance
with legal and regulatory requirements.

The technical data protection procedures we use primarily
involve process-specific security measures. Standard
activities such as virus scanners, firewall systems, access
controls at both operating system and application level,
internal testing procedures and the regular backing up of
data are also employed. A security network is in place
groupwide to ensure compliance with security specifica-
tions. Regular analyses and rigorous security management
ensure high-quality protection. This includes the activities
of our Security Operations Center, which is responsible for
the security of internal network communications. Protecting
BMW Group-specific know-how is also treated as a major
issue as far as cooperation arrangements and relationships
with partner companies are concerned. We protect our
intellectual property by stipulating clear instructions with
regard to data protection and the use of information tech-
nology. Information underlying key areas of expertise is
subject to particularly stringent security measures.

69 Group Management Report

aimed at creating and retaining a motivated workforce in
the long term:

(1) the creation of a working environment for the future,
(2) promotion and maintenance of the workforce’s ability to

perform with the appropriate set of skills,

(3) appropriate qualifications,
(4) increasing employees’ awareness of their responsibility

to make personal provisions for their future and
(5) individual employee working life-time models.

Risks relating to pension obligations
The BMW Group’s pension obligations to its employees
resulting from defined benefit plans are measured on the
basis of actuarial reports. In accordance with IAS 19, future
pension payments are discounted by reference to market
yields on high-quality corporate bonds. These yields are
subject to market fluctuation and influence the level of pen-
sion obligations. Furthermore, changes in other factors,
such as rising inflation rates and longer life expectancies,
also have an impact on pension obligations. In the United
Kingdom, the USA and a number of other countries, funds
intended to cover the pension benefits of our employees
are held in pension funds which are kept separate from
corporate assets and invested in fixed-income securities
(with a high level of creditworthiness), equities, property
and other investment classes. In 2009, a further part of
the pension obligations arising in Germany has been ex-
ternalised by transferring assets to the external fund, BMW
Trust e. V. The process of externalising pension obligations
will be continued in the future.

Risk indicators (e. g. value-at-risk) are regularly computed
in order to identify risks at an early stage and used to de-
velop measures to mitigate risk. Risks affecting pension
funds are monitored continuously and managed from a
risk and yield perspective. Regular asset-liability studies
are performed and used to match the maturities of inter-
est-generating investments with future pension payments,
thereby reducing the interest rate risk relating to pensions.
Investments are broadly spread in order to reduce risk. In
addition, risk limits for investment activities have been
defined for each pension fund and are monitored contin-
uously.

Information and IT risks
We attach great importance to the protection of data, busi-
ness secrets and innovative development to safeguard
against unauthorised access, damage and misuse. The
protection of information and data is an integral compo-
nent of our business processes and based on International

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Outlook

The economic environment in 2010
The general trend towards a global economic upturn is likely
to continue. The first positive signs emerged during the
second half of 2009. Levels of activity seen before the finan-
cial crisis are, however, not to be expected and the trend
could be subject to the occasional setback.

Although the US property market stabilised towards the
end of 2009, any upswing in this area is likely to be modest.
The restructuring of the US banking system also seems
likely to drag on indefinitely considering the huge levels of
write-downs still being recorded on the mortgage credit
market. In previous periods of recovery, US consumer
spending acted as an important driving force. In 2010,
however, given the high level of debt in private households
and the sharp increase in unemployment, it is only likely
to have a minor impact on domestic demand. On the other
hand, a stronger export performance on the back of a
weak US dollar will have a positive effect.

Moderate economic recovery is expected in Europe in
2010. While the German economy would benefit most
from a recovery in world trade, consumer spending, which
only made a small impact in 2009 despite government
support, is only likely to stagnate in 2010. A significant fac-
tor here could be rising unemployment figures. The French
economy should see an upward trend in 2010, whereas
growth in Italy is likely to be weak. Due to the impact of
developments on the property and employment markets,
Spain will again be the only major European economy to
continue contracting in 2010. In the United Kingdom, the
ongoing upheavals on the property market and a hike in
the value-added tax rate with effect from the beginning of
2010 suggest that any recovery is likely to be modest.

Due to its strong focus on exports, Japan is likely to
benefit as world trade picks up again. It will, however, con-
tinue to be held back by structural weaknesses in the
consumer sector, one of the factors behind many years of
deflation. The Japanese economy is predicted to grow
roughly in line with the long-term trend rate of 1.3 %.

The main impetus for world economic growth is again likely
to come from the emerging markets in 2010. China will
continue to create momentum for the global economy.
High levels of investment in expanding public infrastruc-
ture in pre viously undeveloped provinces of the country’s
interior are enabling an increasing percentage of the popu-
lation to participate in China’s economic growth. India’s
dynamic growth is also expected to continue. The same

applies to Brazil, but to a lesser extent. Russia, however,
will grow much more slowly in 2010 than in the years prior
to the finan cial crisis.

High volatility expected on currency markets
The US dollar is likely to remain highly volatile in the fore-
seeable future. The fiscal problems facing a number of
countries in the euro zone and anticipation of faster interest
rate rises in the USA could have the effect of strengthen-
ing the US dollar in 2010. However, the increase in public
debt and the widening current account deficit in the USA
seem to suggest a weaker US dollar. The British pound is
also likely to remain under pressure against the euro in
2010. Its value will probably not win back lost ground until
a sustainable economic upturn sets in. The Japanese
yen is likely to tread water in 2010. High public debt and
the Japanese Reserve Bank’s zero interest policy give
little reason to suggest that the yen’s value will improve. As
the worldwide economic recovery gradually gains momen-
tum, the emerging economies can expect their currencies
to gain in value against the US dollar and the euro.

Car markets in 2010
With the global economy showing the first signs of a re-
covery, the international car markets also appear to have
bottomed out of the recession. In the light of these de-
velopments the car markets can also expect some growth
in 2010, albeit in the low single-digit percentage range.
However, since the slump experienced over the last two
years was so extreme, it will take some considerable time for
the world’s car markets to return to the levels seen before
the start of the crisis. China, the world’s largest automo-
tive market, is likely to see its growth rate slow down some-
what in 2010 after several years of strong growth. After
the historic slump on the US car market, demand for cars
should now begin to pick up again in the USA. The recovery
will not, however, be sufficient to surpass China as the
world’s largest car market.

By contrast, the total market in the European Union is ex-
pected to contract in 2010, largely due to lower demand
now that the scrappage bonus scheme has come to an end
in Germany. Car markets in the United Kingdom, France
and Italy are also expected to shrink moderately now that
their respective scrappage bonus schemes have been
discontinued. In Spain, 2010 should at least see some
stabilisation as the overall market has plummeted by half
since 2006. Markets in the new EU member countries of
Central and Eastern Europe are also expected to stagnate
at a low level.

71 Group Management Report

The car scrappage scheme in Japan is due to be discon-
tinued in spring 2010. At best, the market is only likely to
see a small improvement over the full year. Continued
growth is forecast for the emerging economies of India
and Brazil in 2010. In Russia, where demand for cars
halved in 2009, the market as a whole is forecast to stabi-
lise following the announcement that a scrappage scheme
will be introduced in 2010.

Motorcycle markets in 2010
Despite the first signs of an economic recovery, we do not
expect the international motorcycle markets in the 500 cc
plus class relevant for the BMW Group to make more than
a very modest recovery in 2010. The world market should
settle down at a level slightly higher than that of 2009.

The financial services market in 2010
The prospects for slightly improved economic conditions
are looking up worldwide. However, a rise in the number
of unemployed and the continuing use of short-time work-
ing arrangements are dampening consumer spending in
major sales markets.

The volatility of the international money and capital markets
has noticeably reduced. This, in turn, is resulting in better
conditions for providers of financial services. Now that credit
spreads have narrowed again, especially in the second
half of 2009, fluctuation is expected to be less extreme in
2010.

Future inflation rate expectations are also a cause of uncer-
tainty for the financial services sector. The monetary and
fiscal measures adopted in various parts of the world to
manage the economic and financial crisis could result in
first adjustments to the European Central Bank’s reference
interest rate during the second half of 2010. The US Reserve
Bank is expected to make a similar move at a later stage.
Interest rates in the medium-term maturity segment would
then change accordingly.

The process of consolidation at dealership level continues
unabated. Further bad debt losses in the sector cannot be
ruled out for 2010.

Europe. Taking all factors into consideration, a rapid re-
covery on international used car markets is unlikely in 2010.

Outlook for the BMW Group in 2010
The first encouraging signs are emerging to suggest that
the current economic crisis has passed its lowest point
and that the moderate recovery in global economic activity
seen in the second half of 2009 should continue. Growth
rates are, however, unlikely to reach the levels registered
in the years before the outbreak of the financial crisis in the
foreseeable future. Temporary setbacks could still arise
and it is still too early to assume that the recovery is sustain-
able. Taking all these factors into account, it is still difficult
to make reliable forecasts for 2010.

We have asserted our position well during this crisis-ridden
period. We began at an early stage to realign strategies
to enable us to meet the challenges created by a slump in
demand across key sales markets on the one hand and
problems stemming from the volatility of the international
financial and commodities markets on the other. At the
same time, we have kept on track with the Strategy Number
ONE to realign the BMW Group despite the onset of
recessionary conditions. We have used the crisis conditions
prevailing in 2009 to strengthen the BMW Group by im-
proving efficiency through better use of resources, thereby
ensuring that the BMW Group will be able to perform well
both in 2010 and beyond. Moreover, the BMW Group con-
tinues to enjoy a solid liquidity base.

With effect from the beginning of the financial year 2010,
additional momentum for profitable growth will come from
our renewed and rejuvenated model range. We also ex-
pect to achieve significantly higher sales volumes in China.
The US market is likely to make further progress on the
road to recovery. The worldwide launch of the BMW X1
and BMW 5 Series Gran Turismo was completed at the
beginning of 2010. These two innovative models open up
entirely new segments, a unique market selling point in
itself. Customers and trade press alike have been ex-
tremely positive about the introduction of both models.
The Rolls-Royce Ghost will become available worldwide
over the course of 2010.

It is particularly difficult at present to predict how used car
markets will develop, given that influencing factors are
working to some extent in opposite directions. However,
now that prices for pre-owned cars have stabilised in
the USA, Canada and the United Kingdom, the situation
is also likely to settle down at a low level in Continental

The new BMW 5 Series, one of the most successful models
in our range of vehicles, will be launched this spring. The
new 5 Series Sedan and the new 5 Series Touring (to be
launched before the end of 2010) will both help to boost
the competitiveness of our model range. The new model
has aroused a great deal of interest. The trade press has

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written very highly of the new model. The real benefit will
be felt from the second half of 2010 onwards, after the
BMW 5 Series Sedan has become available worldwide.

We will continue to revitalise our range over the course of
2010 with more worldwide firsts and model revisions.
These include the BMW ActiveHybrid 7 and the model re-
visions of the BMW X5 as well as the BMW 3 Series Con-
vertible and Coupé. The new MINI Countryman is also due
to be launched during the current year.

The services and spare parts business is of great strategic
importance to us. Putting our worldwide initiatives into
action is enabling us to systematically exploit further profit-
able growth potential in this field.

Rigorous cost management will be continued in 2010 as
part of our overall endeavour to improve efficiency and
productivity, a key element in the strategic reorientation
of the BMW Group. Measures taken to date are already
having a marked effect. A good example of this is the new
BMW 5 Series, the first major production model to be
developed fully in line with our modular strategy. The use
of identically constructed parts in all of the main models
allows us to derive greater benefit from the significantly
higher volumes produced. The new BMW 5 Series there-
fore signalises the beginning of a new, efficient develop-
ment strategy. Future BMW, MINI and Rolls-Royce brand
models will also be increasingly developed with the use of
modular and industrial standards in mind, enabling us to
reduce production costs significantly over the coming
years. The modular approach fits in entirely with profita-
bility targets set in conjunction with the Strategy Number
ONE. Customers also benefit from this approach as many
high-value items of equipment and options will no longer
be exclusively available to the major series production
models.

We have continued to make progress in managing and re-
ducing fixed costs. Stringent working capital management
is a further key parameter for managing the business.
During the year under report, for instance, we successfully
reduced inventory levels, which we will endeavour to con-
tinue in the current year. Further improvements in produc-
tivity will also bring benefits in 2010.

Whilst continuing to implement measures to bring us
closer to the profitability levels targeted in our Strategy
Number ONE, our main focus will be on developing new
vehicles and technologies for the future. The BMW Vision

EfficientDynamics concept car – presented on the world
stage for the first time at the International Motor Show (IAA)
in Frankfurt in September – includes a whole array of
technological innovations developed in conjunction with
the Efficient Dynamics measures package. The outcome
is a vehicle with the CO2 emission values of a compact car
and the dynamism of a sports car. This concept car sets
new standards and is further proof of our outstanding inno-
vative and technological expertise.

We remain committed to the use of state-of-the-art tech-
nologies to reduce the fuel consumption and emissions
of combustion engines. At an early stage we recognised
the pressure being brought to bear within society towards
down-sized, more efficient drive systems that can never-
theless deliver powerful performance as well as the trend
towards CO2-emissions-based taxation. We evaluated the
impact of these changes on our model range and planned
accordingly. With framework conditions becoming clearer,
we can now go on to sharpen the innovative edge we have
gained through our Efficient Dynamics strategy.

We will continue to invest in the future of the BMW Group
and extend our competitive lead. One aspect of this
strategy will be to develop alternative drive systems and
innovative mobility concepts in line with our forward-looking
“project i”. Our MINI E fleet now comprises some 600 test
cars. Field trials are currently being performed under real
conditions in the USA, the UK and Germany and are helping
us gain valuable knowledge with respect to electromobility.
The BMW Concept ActiveE, a purely electrically driven
concept study based on the BMW 1 Series Coupé, is also
demonstrating that electromobility is a real possibility in
keeping with the flair of the BMW brand. Based on this con-
cept study, we will be handing over another fleet of elec-
trically powered cars to customers for testing in 2011, en-
abling us to gain further important knowledge about the
use of electrically driven BMW vehicles for everyday pur-
poses. This concept vehicle will also be used to test the
electric drivetrain of the Megacity Vehicle at a pre-series
stage.

This groundwork is seen as an important factor in our
efforts to open up new opportunities in the medium and
long term. It will also enable us to fulfil the future needs
of customers with our premium products and premium
services.

The knock-on impact of the international economic and
finan cial crisis will continue to be felt in 2010. However,

of market interest rates is also creating more favourable
refinancing conditions.

We expect fair values of pre-owned cars in North America
and the United Kingdom to continue stabilising in 2010.
We also expect markets in Continental Europe to level out.
Given the slow pace of economic recovery in most main
sales markets, the bad debt risk situation is unlikely to ease
significantly in the field of retail customer and dealer finan-
cing. Rising unemployment could also inhibit an upswing.
Thus, further bad debt losses cannot be entirely ruled out
for 2010.

Alongside the reviving fortunes of the car markets world-
wide, we also forecast that earnings will develop positively
in the Financial Services segment.

Profitability targets for 2012 confirmed
We will continue with great determination to implement
our Strategy Number ONE in 2010. This includes working
towards the profitability targets already announced for the
year 2012. Based on these strategies, we plan to achieve
a return on capital employed (ROCE) of more than 26 %
and an EBIT margin of 8 to 10 % in our Automobiles seg-
ment. Originally announced in 2007, the Strategy Number
ONE is proving to be an appropriate and forward-looking
entrepreneurial decision for realigning the BMW Group.
By applying a rigorous value-added approach to business,
we will succeed in achieving the challenging targets we
have set ourselves.

73 Group Management Report

emerging signs of stability in certain sales markets should
benefit our performance. Ongoing productivity improve-
ment measures will also have a positive impact on earnings.
We therefore aim to achieve a Group pre-tax profit (EBT)
in 2010 that is significantly higher than in 2009 and which
will represent an important step towards achieving the
targets set down in our Strategy Number ONE.

If the macroeconomic environment revives in 2011, we ex-
pect to achieve another increase in business volumes and
a corresponding improvement in earnings. Our renewed
and rejuvenated model range will make a major contribu-
tion during this period.

Automobiles segment
In the light of a moderate economic recovery and with de-
mand gradually increasing on some major sales markets,
we forecast a sales volume growth rate for 2010 in the sin-
gle-digit range. We are also confident of again being able
to assert our strong position as the world’s leading premium
manufacturer in 2010 by expanding our product range
and purposefully strengthening our position on the world’s
growth markets. The gradual renewal of our vehicle port-
folio from 2010 onwards will create additional momentum
for sales volume growth, particularly in the second half
of the year. We will also benefit from further efficiency im-
provements and cost reductions. Taking all of these fac-
tors into account, we are aiming for an EBIT margin in
the low single-digit percentage range for the Automobiles
segment.

Motorcycles segment
We entered the supersport bikes segment for the first
time in December 2009 with the market launch of the
S 1000 RR. We expect this move to create additional impe-
tus for business, helping us to achieve our aim of beating
the past year’s sales volume figure in 2010. Revenues and
earnings will also improve accordingly.

Financial Services segment
The effects of the economic and financial crisis continued
to be felt sharply in the Financial Services segment during
the year under report. We nevertheless succeeded in
stabilising business volumes further by focusing on the key
areas of process efficiency and profitability. With this in
mind, we will also be taking a close look at the progress
being made in our various lines of business and take
measures to improve performance in terms of profitability.
An additional factor is that confidence in the financial
markets is generally picking up again. The current low level

Group Financial Statements
BMW Group
Income Statements for Group and Segments
Statement of Comprehensive Income for Group

Income Statements for Group and Segments
in euro million

Note

Group

Automobiles

Motorcycles

Financial

Services

Other

Entities

Eliminations

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

50,681

53,197

43,737

48,782

– 45,356

– 47,148

– 39,616

– 43,505

5,325

6,049

4,121

5,277

1,069

– 925

144

1,230

–1,024

206

15,798

15,725

–14,880

–15,332

918

393

– 9,926

–12,731

Revenues

10,065

12,858

Cost of sales*

139

127

Gross profit

– 5,040

808

– 804

289

856

–1,014

246

124

– 5,369

1,428

–1,187

921

685

– 930

– 351

– 570

– 4,329

– 4,572

–126

–147

443

– 500

– 265

560

559

– 574

690

766

–1,055

–1,036

130

– 323

–127

– 372

413

351

– 588

318

365

– 292

574

– 21

Profit / loss before tax

–1

–

–11

–

– 8

– 3

–

– 2

–

–10

–

– 9

–14

–

– 560

– 44

355

–

– 8

–147

218

–

218

– 583

– 57

– 216

–

– 8

– 70

– 76

131

–161

–

–161

–

–16

352

– 309

– 6

1,778

–1,852

101

–

191

–145

– 57

891

– 607

273

2,102

–1,927

–154

295

–16

279

–

279

– 9

– 30

150

–10

– 56

Sales and administrative costs

Other operating income

Other operating expenses

114

Profit / loss before financial result

–

Result from equity accounted investments

– 1,488

– 2,186

Interest and similar income

1,912

2,051

Interest and similar expenses

–

424

–

Other financial result

–135

Financial result

– 30

Income taxes

– 51

Net profit / loss

– 215

359

–

359

–

Attributable to minority interest

– 51

Attributable to shareholders of BMW AG

Earnings per share of common stock in euro

Earnings per share of preferred stock in euro

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

Revenues
Cost of sales*

Gross profit

Sales and administrative costs

Other operating income

Other operating expenses

Profit / loss before financial result

Result from equity accounted investments

Interest and similar income

Interest and similar expenses

Other financial result

Financial result

Profit / loss before tax

Income taxes

Net profit / loss

Attributable to minority interest

Attributable to shareholders of BMW AG

Earnings per share of common stock in euro

Earnings per share of preferred stock in euro

* after reclassification of research and development costs to cost of sales

Statement of Comprehensive Income for Group
in euro million

Net profit

Available-for-sale securities

Financial instruments used for hedging purposes

Exchange differences on translating foreign operations

Actuarial gains / losses relating to defined benefit pension and similar plans

Deferred taxes relating to components of other comprehensive income

Other comprehensive income for the period after tax

Total comprehensive income

Total comprehensive income attributable to minority interests

Total comprehensive income attributable to shareholders of BMW AG

– 203

210

204

0.31

0.33

– 21

330

324

0.49

0.51

Note

149

– 439

– 445

– 92

226

220

2009

2008

210

330

295

318

–1,198

190

– 391

–7

– 624

– 807

161

188

–1,089

–181

–759

–187

–764

75 Group Financial Statements

Income Statements for Group and Segments

in euro million

Revenues

Cost of sales*

Gross profit

Sales and administrative costs

Other operating income

Other operating expenses

Profit / loss before financial result

Result from equity accounted investments

Interest and similar income

Interest and similar expenses

Other financial result

Financial result

Income taxes

Net profit / loss

Attributable to minority interest

Attributable to shareholders of BMW AG

Earnings per share of common stock in euro

Earnings per share of preferred stock in euro

* after reclassification of research and development costs to cost of sales

Note

Group

Automobiles

Motorcycles

Financial
Services

Other
Entities

Eliminations

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

50,681

53,197

43,737

48,782

– 45,356

– 47,148

– 39,616

– 43,505

5,325

6,049

4,121

5,277

1,069

– 925

144

1,230

–1,024

206

15,798

15,725

–14,880

–15,332

918

393

– 4,329

– 4,572

–126

–147

–1

–

–11

–

– 8

– 3

–

– 2

–

–10

–

– 9

–14

–

– 5,040

808

– 804

289

–1,014

856

246

124

– 203

210

204

0.31

0.33

– 5,369

1,428

–1,187

921

685

– 930

– 351

– 570

– 21

330

324

0.49

0.51

–1,055

–1,036

443

– 500

– 265

560

130

– 323

149

– 439

– 445

559

– 574

690

766

–127

– 372

– 92

226

220

– 560

– 44

355

–

– 8

– 583

– 57

– 216

–

– 8

– 70

– 76

365

– 292

–147

218

–

218

131

–161

–

–161

–

–16

352

– 309

– 6

1,778

–1,852

101

–

191

–145

– 57

891

– 607

273

2,102

–1,927

–154

295

–16

279

–

279

– 9,926

–12,731

10,065

12,858

Revenues
Cost of sales*

139

127

Gross profit

– 9

– 30

150

–10

– 56

Sales and administrative costs

Other operating income

Other operating expenses

114

Profit / loss before financial result

–

Result from equity accounted investments

– 1,488

– 2,186

Interest and similar income

1,912

2,051

Interest and similar expenses

–

424

–

Other financial result

–135

Financial result

574

– 21

Profit / loss before tax

– 215

359

–

359

– 30

Income taxes

– 51

Net profit / loss

–

Attributable to minority interest

– 51

Attributable to shareholders of BMW AG

Earnings per share of common stock in euro

Earnings per share of preferred stock in euro

Profit / loss before tax

413

351

– 588

318

BMW Group
Balance Sheets for Group and Segments at 31 December

Assets

in euro million

Intangible assets

Property, plant and equipment

Leased products

Investments accounted for using the equity method

Other investments

Receivables from sales financing

Financial assets

Deferred tax

Other assets

Non-current assets

Inventories

Trade receivables

Receivables from sales financing

Financial assets

Current tax

Other assets

Cash and cash equivalents

Current assets

Note

Group

Automobiles

Motorcycles

Financial

Services

Other

Entities

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

Eliminations

Assets

5,379

11,385

17,973

137

232

23,478

1,519

1,266

640

5,641

11,292

19,524

111

322

22,192

1,808

866

660

62,009

62,416

6,555

1,857

17,116

3,215

950

2,484

7,767

39,944

7,290

2,305

15,871

3,306

602

1,842

7,454

38,670

5,230

11,181

187

114

2,678

–

475

1,514

2,114

23,493

6,289

1,608

–

1,666

789

14,863

4,331

29,546

5,403

11,074

268

2,693

–

238

1,346

2,144

23,248

7,005

2,070

–

1,401

358

14,028

5,073

29,935

20,608

22,590

– 2,822

– 3,334

Leased products

23,478

22,192

–

Receivables from sales financing

– 7,834

– 7,744

Other investments

–

Investments accounted for using the equity method

–

Intangible assets

Property, plant and equipment

110

–

575

1,375

46,202

123

924

4,071

2,803

25,074

123

–

424

485

122

839

1,961

47,825

3,034

2,053

21,967

17,116

15,871

–

5,380

–

1,186

355

10,389

17,333

–

916

133

27,179

633

28,864

–

5,348

–

1,381

160

14,055

21,037

–

1,481

205

328

23,127

–170

–1,178

–13,238

– 25,242

– 235

Financial assets

–1,125

Deferred tax

–17,500

Other assets

– 29,938

Non-current assets

–1

Inventories

–

Trade receivables

Receivables from sales financing

– 291

– 415

Financial assets

–

Current tax

21,109

– 43,629

– 36,329

Other assets

– 43,921

– 36,745

Current assets

–

Cash and cash equivalents

Total assets

101,953

101,086

53,039

53,183

71,276

69,792

46,197

44,164

– 69,163

– 66,683

Total assets

Equity and liabilities

in euro million

Subscribed capital

Capital reserves

Revenue reserves

Accumulated other equity

Treasury shares

Minority interest

Equity

Pension provisions

Other provisions

Deferred tax

Financial liabilities

Other liabilities

Non-current provisions and liabilities

Other provisions

Current tax

Financial liabilities

Trade payables

Other liabilities

Current provisions and liabilities

Note

Group

Automobiles

Motorcycles

Financial

Services

Other

Entities

Eliminations

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

655

1,921

20,426

– 3,100

–

654

1,911

20,419

– 2,709

–10

19,915

20,273

22,101

22,481

–

4,268

3,752

4,118

4,883

–10,572

–10,843

Equity

2,972

2,706

2,769

34,391

2,281

45,119

2,058

836

26,934

3,122

3,969

36,919

3,314

2,757

30,497

2,201

41,526

2,125

633

29,887

2,562

4,080

39,287

1,652

2,295

1,694

259

3,401

9,301

1,759

650

4,736

2,556

11,936

21,637

2,847

2,412

1,931

2,685

3,986

13,861

1,795

468

2,599

2,029

9,950

16,841

311

3,191

10,848

10,455

24,829

274

13,673

385

27,762

42,179

252

3,096

10,030

14,128

27,534

311

105

15,207

364

22,519

38,506

1,222

23,454

133

24,850

101

8,816

8,297

17,229

317

18,018

586

18,969

7,746

20,312

–

Pension provisions

Other provisions

– 2,127

–170

– 2,290

Deferred tax

– 236

Financial liabilities

–11,965

–16,751

Other liabilities

–14,262

–19,277

Non-current provisions and liabilities

– 4

Other provisions

–

Current tax

12,495

– 291

– 414

Financial liabilities

– 44,041

– 36,145

Other liabilities

–

Trade payables

– 44,329

– 36,563

Current provisions and liabilities

Equity and liabilities

Subscribed capital

Capital reserves

Revenue reserves

Accumulated other equity

Treasury shares

Minority interest

Total equity and liabilities

101,953

101,086

53,039

53,183

604

630

71,276

69,792

46,197

44,164

– 69,163

– 66,683

Total equity and liabilities

184

–

223

258

123

381

604

–

257

401

–

167

203

193

–

244

277

109

386

630

122

–

252

439

–

160

191

–

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

77 Group Financial Statements

Note

Group

Automobiles

Motorcycles

Financial
Services

Other
Entities

Eliminations

Assets

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

5,230

11,181

187

114

2,678

–

475

1,514

2,114

23,493

6,289

1,608

–

1,666

789

14,863

4,331

29,546

5,403

11,074

268

2,693

–

238

1,346

2,144

23,248

7,005

2,070

–

1,401

358

14,028

5,073

29,935

184

–

223

258

123

–

381

604

193

–

244

277

109

–

386

630

110

123

20,608

22,590

–

23,478

22,192

575

1,375

46,202

123

424

485

1,961

47,825

122

17,116

15,871

924

4,071

2,803

25,074

839

3,034

2,053

21,967

–

5,380

–

1,186

355

10,389

17,333

–

916

133

27,179

633

28,864

–

5,348

–

1,381

160

14,055

21,037

–

1,481

205

–

Intangible assets

Property, plant and equipment

– 2,822

– 3,334

Leased products

–

Investments accounted for using the equity method

– 7,834

– 7,744

Other investments

–

Receivables from sales financing

–170

–1,178

–13,238

– 25,242

– 235

Financial assets

–1,125

Deferred tax

–17,500

Other assets

– 29,938

Non-current assets

–1

–

– 291

–

–1

Inventories

–

Trade receivables

Receivables from sales financing

– 415

Financial assets

–

Current tax

21,109

– 43,629

– 36,329

Other assets

328

23,127

–

Cash and cash equivalents

– 43,921

– 36,745

Current assets

71,276

69,792

46,197

44,164

– 69,163

– 66,683

Total assets

101,953

101,086

53,039

53,183

Note

Group

Automobiles

Motorcycles

Financial
Services

Other
Entities

Eliminations

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

Equity and liabilities

Subscribed capital

Capital reserves

Revenue reserves

Accumulated other equity

Treasury shares

Minority interest

19,915

20,273

22,101

22,481

–

4,268

3,752

4,118

4,883

–10,572

–10,843

Equity

1,652

2,295

1,694

259

3,401

9,301

1,759

650

4,736

2,556

11,936

21,637

2,847

2,412

1,931

2,685

3,986

13,861

1,795

468

2,599

2,029

9,950

16,841

–

257

401

–

167

203

122

–

252

439

–

160

191

311

3,191

10,848

10,455

24,829

274

13,673

385

27,762

42,179

252

3,096

10,030

14,128

27,534

311

105

15,207

364

22,519

38,506

1,222

23,454

133

24,850

101

8,816

8,297

17,229

317

18,018

586

18,969

12,495

7,746

20,312

–

– 2,127

–170

–

Pension provisions

Other provisions

– 2,290

Deferred tax

– 236

Financial liabilities

–11,965

–16,751

Other liabilities

–14,262

–19,277

Non-current provisions and liabilities

–

– 291

–

– 4

Other provisions

–

Current tax

– 414

Financial liabilities

–

Trade payables

– 44,041

– 36,145

Other liabilities

– 44,329

– 36,563

Current provisions and liabilities

Total equity and liabilities

101,953

101,086

53,039

53,183

604

630

71,276

69,792

46,197

44,164

– 69,163

– 66,683

Total equity and liabilities

Investments accounted for using the equity method

Assets

in euro million

Intangible assets

Property, plant and equipment

Leased products

Other investments

Receivables from sales financing

Financial assets

Deferred tax

Other assets

Non-current assets

Receivables from sales financing

Inventories

Trade receivables

Financial assets

Current tax

Other assets

Cash and cash equivalents

Current assets

Total assets

Equity and liabilities

in euro million

Subscribed capital

Capital reserves

Revenue reserves

Accumulated other equity

Treasury shares

Minority interest

Equity

Pension provisions

Other provisions

Deferred tax

Financial liabilities

Other liabilities

Other provisions

Current tax

Financial liabilities

Trade payables

Other liabilities

Non-current provisions and liabilities

Current provisions and liabilities

62,009

62,416

5,379

11,385

17,973

137

232

23,478

1,519

1,266

640

6,555

1,857

17,116

3,215

950

2,484

7,767

39,944

655

1,921

20,426

– 3,100

–

2,972

2,706

2,769

34,391

2,281

45,119

2,058

836

26,934

3,122

3,969

36,919

5,641

11,292

19,524

111

322

22,192

1,808

866

660

7,290

2,305

15,871

3,306

602

1,842

7,454

38,670

654

1,911

20,419

– 2,709

–10

3,314

2,757

30,497

2,201

41,526

2,125

633

29,887

2,562

4,080

39,287

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

BMW Group
Cash Flow Statements for Group and Segments

in euro million

Net profit / loss

Note

Group

2009

20081

Automobiles

Financial Services

2009

20081

2009

20081

210

330

– 439

226

218

–161

Net profit / loss

Reconciliation between net profit / loss and cash inflow from operating activities

Current tax

Other interest and similar income / expenses

Depreciation of leased products

Depreciation and amortisation of tangible, intangible and investment assets

Change in provisions

Change in deferred taxes

Other non-cash income and expense items

Gain / loss on disposal of non-current assets and marketable securities

Result from equity accounted investments

Changes in working capital

Change in inventories

Change in trade receivables

Change in trade payables

Change in current other operating assets and liabilities

Change in non-current other operating assets and liabilities

Income taxes paid

Interest received

Cash inflow from operating activities

338

–113

5,476

3,603

– 95

– 35

– 36

855

506

441

129

–1,023

– 349

346

10,271

–169

6,763

3,676

– 332

– 51

424

– 21

– 26

385

– 972

– 548

1,509

– 448

240

10,872

Investment in intangible assets and property, plant and equipment

– 3,471

– 4,204

– 3,409

– 4,114

–10

– 31

Investment in intangible assets and property, plant and equipment

– 294

6,591

192

163

–

– 47

– 227

– 695

– 74

– 2

–

251

255

3,502

– 448

–170

– 29

– 43

871

513

422

335

–121

– 369

342

4,921

– 261

–197

271

– 2,787

577

– 5,675

–

–197

– 76

180

– 874

964

379

–113

3,567

– 515

– 213

– 22

– 25

401

– 746

1,853

– 340

– 281

191

4,471

177

– 319

– 353

333

–

– 5,317

5,039

– 4,552

–10

–

– 694

–127

–

2,786

2,858

– 868

3,945

152

5,732

307

– 438

747

– 99

– 2

6,817

–

– 2

722

– 351

–

– 201

Current tax

Other interest and similar income / expenses

Depreciation of leased products

Change in provisions

Change in deferred taxes

Depreciation and amortisation of tangible, intangible and investment assets

Other non-cash income and expense items

Gain / loss on disposal of non-current assets and marketable securities

Result from equity accounted investments

Changes in working capital

Change in inventories

Change in trade receivables

Change in trade payables

Change in current other operating assets and liabilities

Change in non-current other operating assets and liabilities

Income taxes paid

Interest received

5,603

Cash inflow from operating activities

Proceeds from the disposal of intangible assets and property, plant and equipment

Expenditure for investments

Proceeds from the disposal of investments

–10,236

–14,811

Investment in leased products

6,215

5,507

Disposals of leased products

– 49,629

– 61,630

Additions to receivables from sales financing

47,847

–121

56,562

Payments received on receivables from sales financing

– 75

260

Cash payments for the purchase of marketable securities

Cash proceeds from the sale of marketable securities

Issue / Buy-back of treasury shares

Payments into equity

Payment of dividend for the previous year

– 2

Interest paid

658

1,129

Proceeds from the issue of bonds

–1,230

–1,412

Repayment of bonds

3,768

6,405

Internal financing

Change in other financial liabilities

–

Change in commercial paper

9,890

Cash inflow / outflow from financing activities

169

– 53

177

–142

–10,433

–15,164

6,515

5,840

– 49,629

– 61,630

47,847

– 2,908

620

56,562

– 5,392

5,299

–11,328

–18,652

– 5,889

–14,218

Cash outflow from investing activities

Proceeds from the disposal of intangible assets and property, plant and equipment

Expenditure for investments

Proceeds from the disposal of investments

Investment in leased products

Disposals of leased products

Additions to receivables from sales financing

Payments received on receivables from sales financing

Cash payments for the purchase of marketable securities

Cash proceeds from the sale of marketable securities

Cash outflow from investing activities

Issue / Buy-back of treasury shares

Payments into equity

Payment of dividend for the previous year

Interest paid

Proceeds from the issue of bonds

Repayment of bonds

Internal financing

Change in other financial liabilities

Change in commercial paper

–197

– 224

9,762

–10

–

– 694

– 312

9,959

– 6,440

– 5,080

–

–1,307

– 255

1,352

–

9,050

– 9

12,904

Cash inflow / outflow from financing activities

Effect of exchange rate and changes in composition of Group
on cash and cash equivalents

– 63

– 40

–11

on cash and cash equivalents

Effect of exchange rate and changes in composition of Group

Change in cash and cash equivalents

313

5,061

– 742

3,824

750

1,264

Change in cash and cash equivalents

Cash and cash equivalents as at 1 January

Cash and cash equivalents as at 31 December

7,454

7,767

2,393

7,454

5,073

4,331

1,249

5,073

2,053

2,803

789

Cash and cash equivalents as at 1 January

2,053

Cash and cash equivalents as at 31 December

1 Previous year’s figures adjusted as a result of a change in presentation of other operating assets and liabilities
2 Interest relating to financial services business is classified as revenues / cost of sales.

79 Group Financial Statements

Reconciliation between net profit / loss and cash inflow from operating activities

210

330

– 439

226

218

–161

Net profit / loss

Note

Group

2009

20081

Automobiles

Financial Services

2009

20081

2009

20081

251

255

3,502

– 448

–170

– 29

– 43

871

513

422

335

–121

– 369

342

4,921

379

–113

3,567

– 515

– 213

– 22

– 25

401

– 746

1,853

– 340

– 281

191

4,471

152
42

5,732

307

–

– 438

747

– 99
– 2

6,817

– 294
52

6,591

192

163

–

– 47

– 227

– 695

– 74
– 2

Current tax

Other interest and similar income / expenses

Depreciation of leased products

Depreciation and amortisation of tangible, intangible and investment assets

Change in provisions

Change in deferred taxes

Other non-cash income and expense items

Gain / loss on disposal of non-current assets and marketable securities

Result from equity accounted investments

Changes in working capital

Change in inventories

Change in trade receivables

Change in trade payables

Change in current other operating assets and liabilities

Change in non-current other operating assets and liabilities

Income taxes paid

Interest received

5,603

Cash inflow from operating activities

Investment in intangible assets and property, plant and equipment

– 3,471

– 4,204

– 3,409

– 4,114

–10

– 31

Investment in intangible assets and property, plant and equipment

– 261

–197

271

–

– 2,787

577

– 5,675

–197

– 76

–

180

– 874

964

177

– 319

– 353

333

–

– 5,317

5,039

– 4,552

–10

–

– 694

–127

–

2,786

2,858

– 868

3,945

–

Proceeds from the disposal of intangible assets and property, plant and equipment

Expenditure for investments

Proceeds from the disposal of investments

–10,236

–14,811

Investment in leased products

6,215

5,507

Disposals of leased products

– 49,629

– 61,630

Additions to receivables from sales financing

47,847

–121

56,562

Payments received on receivables from sales financing

– 75

260

Cash payments for the purchase of marketable securities

Cash proceeds from the sale of marketable securities

– 5,889

–14,218

Cash outflow from investing activities

–

–
– 2

–

–
– 2

Issue / Buy-back of treasury shares

Payments into equity

Payment of dividend for the previous year

Interest paid

658

1,129

Proceeds from the issue of bonds

–1,230

–1,412

Repayment of bonds

722

– 351

–

– 201

3,768

6,405

Internal financing

Change in other financial liabilities

–

Change in commercial paper

9,890

Cash inflow / outflow from financing activities

Cash inflow from operating activities

10,872

in euro million

Net profit / loss

Current tax

Other interest and similar income / expenses

Depreciation of leased products

Depreciation and amortisation of tangible, intangible and investment assets

Change in provisions

Change in deferred taxes

Other non-cash income and expense items

Gain / loss on disposal of non-current assets and marketable securities

Result from equity accounted investments

Changes in working capital

Change in inventories

Change in trade receivables

Change in trade payables

Change in current other operating assets and liabilities

Change in non-current other operating assets and liabilities

Income taxes paid

Interest received

Proceeds from the disposal of intangible assets and property, plant and equipment

Expenditure for investments

Proceeds from the disposal of investments

Investment in leased products

Disposals of leased products

Additions to receivables from sales financing

Payments received on receivables from sales financing

Cash payments for the purchase of marketable securities

Cash proceeds from the sale of marketable securities

Cash outflow from investing activities

Issue / Buy-back of treasury shares

Payments into equity

Payment of dividend for the previous year

Interest paid

Proceeds from the issue of bonds

Repayment of bonds

Internal financing

Change in other financial liabilities

Change in commercial paper

338

–113

5,476

3,603

– 95

– 35

– 36

855

506

441

129

–1,023

– 349

346

10,271

169

– 53

–169

6,763

3,676

– 332

– 51

424

– 21

– 26

385

– 972

– 548

1,509

– 448

240

177

–142

–11,328

–18,652

–10,433

–15,164

6,515

5,840

– 49,629

– 61,630

47,847

– 2,908

620

56,562

– 5,392

5,299

–197

– 224

9,762

–

–1,307

– 255

1,352

–10

–

– 694

– 312

9,959

–

9,050

– 9

12,904

– 6,440

– 5,080

Cash inflow / outflow from financing activities

Effect of exchange rate and changes in composition of Group

on cash and cash equivalents

– 63

– 40

–11

Effect of exchange rate and changes in composition of Group
on cash and cash equivalents

Change in cash and cash equivalents

313

5,061

– 742

3,824

750

1,264

Change in cash and cash equivalents

Cash and cash equivalents as at 1 January

Cash and cash equivalents as at 31 December

7,454

7,767

2,393

7,454

5,073

4,331

1,249

5,073

2,053

2,803

789

Cash and cash equivalents as at 1 January

2,053

Cash and cash equivalents as at 31 December

1 Previous year’s figures adjusted as a result of a change in presentation of other operating assets and liabilities

2 Interest relating to financial services business is classified as revenues / cost of sales.

BMW Group
Group Statement of Changes in Equity

in euro million

Subscribed
capital

Capital
reserves

Revenue
reserves

Accumulated other equity

Treasury
shares

Minority
interest

Total

lation dif-
ferences

Trans- Securities Derivative
financial
instru-
ments

Pension
obliga-
tions

31 December 2007

654

1,911

20,789

–1,259

438

– 835

–

21,744

Acquisition of treasury shares

Dividends paid

Comprehensive income
31 December 2008

Other Changes

–

– 694

–

324

– 806

–18

– 393

–

129

–

–10

–

– 8

–10

– 694

–759

– 8

– 706

–10

20,273

31 December 2008

654

1,911

20,419

– 2,065

Issue of treasury shares

Subscribed share capital
increase out of
authorised capital

Premium arising on capital
increase relating to
preferred stock

Dividends paid

Comprehensive income
31 December 2009

Other Changes

–

–197

–

204

–

318

–

164

– 876

–

–197

– 1

–181

– 1

31 December 2009

655

1,921

20,426

–1,747

209

–1,582

–

19,915

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

81 Group Financial Statements

BMW Group
Notes to the Group Financial Statements
Accounting Principles and Policies

Basis of preparation
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (“BMW Group Financial
Statements” or “Group Financial Statements”) at 31 De-
cember 2009 have been drawn up in accordance with In-
ternational Financial Reporting Standards (IFRSs) as en-
dorsed by the EU. The designation “IFRSs” also includes
all valid International Accounting Standards (IASs). All In-
terpretations of the International Financial Reporting Inter-
pretations Committee (IFRIC) mandatory for the financial
year 2009 are also applied.

The Group Financial Statements comply with § 315 a of
the German Commercial Code (HGB). This provision, in
conjunction with the Regulation (EC) No. 1606 / 2002 of
the European Parliament and Council of 19 July 2002, re-
lating to the application of International Financial Reporting
Standards, provides the legal basis for preparing consoli-
dated financial statements in accordance with international
standards in Germany and applies to financial years be-
ginning on or after 1 January 2005.

The BMW Group and segment income statements are
presented using the cost of sales method. The Group and
segment balance sheets correspond to the classification
provisions contained in IAS 1 (Presentation of Financial
Statements).

In order to improve clarity, various items are aggregated in
the income statement and balance sheet. These items are
disclosed and analysed separately in the notes.

Following adoption of the revised version of IAS 1 (Presen-
tation of Financial Statements), a Statement of Compre-
hensive Income has been presented at Group level with
effect from the first quarter 2009, replacing the previously
presented Statement of Income and Expenses Recognised
in Equity.

Furthermore, in order to improve comparability, research
and development costs have been reported with effect
from the beginning of the first quarter 2009 as cost of
sales and not, as in the previous year, as a separate item
in the income statement. Research and development
costs in 2009 totalled euro 2,587 million (2008: euro
2,825 million).

In order to support the sale of its products, the BMW
Group provides various financial services – mainly loan
and lease financing – to retail customers and to dealers.
The inclusion of the financial services activities of the

Group therefore has an impact on the Group Financial
Statements.

In order to provide a better insight into the net assets, finan-
cial position and performance of the BMW Group and
going beyond the requirements of IFRS 8 (Operating Seg-
ments), the Group Financial Statements also include bal-
ance sheets and income statements for the Automobiles,
Motorcycles, Financial Services and Other Entities seg-
ments. The Group Cash Flow Statement is supplemented
by statements of cash flows for the Automobiles and Finan-
cial Services segments.

Inter-segment transactions – relating primarily to internal
sales of products, the provision of funds and the related in-
terest – are eliminated in the “Eliminations” column. Fur-
ther information regarding the allocation of activities of the
BMW Group to segments and a description of the seg-
ments is provided in the explanatory notes to segment in-
formation on page 133 et seq.

In conjunction with the refinancing of financial services
business, a significant volume of receivables arising from
retail customer and dealer financing is sold. Similarly, rights
and obligations relating to leases are sold. The sale of re-
ceivables is a well established instrument used by industrial
companies. These transactions usually take the form of
asset-backed financing transactions involving the sale of a
portfolio of receivables to a trust which, in turn, issues mar-
ketable securities to refinance the purchase price. The
BMW Group continues to “service” the receivables and re-
ceives an appropriate fee for these services. In accordance
with IAS 27 (Consolidated and Separate Financial State-
ments) and the interpretation contained in SIC-12 (Con-
solidation – Special Purpose Entities) such assets remain
in the Group Financial Statements although they have
been legally sold. Gains and losses relating to the sale of
such assets are not recognised until the assets are re-
moved from the Group balance sheet on transfer of the
related significant risks and rewards. The balance sheet
value of the assets sold at 31 December 2009 totalled
euro 7.8 billion (2008: euro 8.7 billion).

In addition to credit financing and leasing contracts, the
Finan cial Services segment also brokers insurance busi-
ness via cooperation arrangements entered into with local
insurance companies. These activities are not material to
the BMW Group as a whole.

The Group currency is the euro. All amounts are disclosed
in millions of euros (euro million) unless stated otherwise.

Bayerische Motoren Werke Aktiengesellschaft has its seat
in Munich, Petuelring 130, and is registered in the Com-
mercial Register of the District Court of Munich under the
number HRB 42243.

All consolidated subsidiaries with the exception of BMW
India Private Limited, New Delhi, (year-end 31 March 2009)
have the same year-end as BMW AG.

The Group Financial Statements, drawn up in accordance
with § 315 a HGB, and the Management Report for the

finan cial year 2009 will be submitted to the operator of the
electronic version of the German Federal Gazette and can
be obtained via the Company Register website. Printed
copies will also be made available on request. In addition,
the Group Financial Statements and the Group Manage-
ment Report can be downloaded from the BMW Group
website at www.bmwgroup.com/ir.

The Board of Management authorised the Group Financial
Statements for issue on 19 February 2010.

Consolidated companies
The BMW Group Financial Statements include, besides
BMW AG, all material subsidiaries, six special purpose
securities funds and 23 special purpose trusts (almost all
used for asset-backed financing transactions).

Included at 31 December 2008

Included for the first time in 2009

No longer included in 2009

Included at 31 December 2009

The number of subsidiaries, special purpose securities
funds and other special purpose trusts included in
the Group Financial Statements changed in 2009 as
follows:

Germany

Foreign

Total

153

149

184

181

53 subsidiaries (2008: 54), either dormant or generating a
negligible volume of business, are not included. These
subsidiaries were not consolidated because the resulting
impact on the Group Financial Statements would not in-
fluence the economic decisions of users taken on the
basis of the financial statements. Non-inclusion of operating
subsidiaries reduces total Group revenues by 0.6 % (2008:
1.1 %).

The joint venture BMW Brilliance Automotive Ltd., Shen-
yang, and the investment in Cirquent GmbH, Munich, are
accounted for using the equity method. 15 (2008: 14) par-
ticipations are not consolidated using the equity method
on the grounds of immateriality. They are included in the
balance sheet in the line “Other investments”, measured
at cost less, where applicable, accumulated impairment
losses.

A separate “List of Group Investments” pursuant to § 313 (4)
HGB will be submitted to the operator of the electronic

version of the German Federal Gazette. This list, along with
the “List of Third Party Companies which are not of Minor
Importance for the Group”, will also be posted on the BMW
Group website at www.bmwgroup.com/ir.

LARGUS Grundstücks-Verwaltungsgesellschaft mbH,
Grünwald, LARGUS Grundstücks-Verwaltungsgesellschaft
mbH & Co. KG, Grünwald, BMW Polska Sp. z o. o., Warsaw,
BMW India Private Limited, New Delhi, and BMW Extended
Services Corporation, Hilliard, were consolidated in the
BMW Group Financial Statements for the year ended 31 De-
cember 2009 for the first time.

Alphabet Fuhrparkmanagement GmbH, Munich, ceased
to be a consolidated company following its merger with
LHS Leasing- und Handelsgesellschaft Deutschland mbH,
Stuttgart. BMW Lease S. N. C., Guyancourt, and BMW
Location S. N. C., Guyancourt, also ceased to be consoli-
dated companies following their merger with BMW Finance
S. N. C., Guyancourt. BMW Financial Services Ibérica,

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

83 Group Financial Statements

E. F. C., S. A., Madrid, was merged with BMW Bank GmbH,
Munich, and therefore also ceased to be a consolidated
company. The companies Rover South Africa (Pty)
Ltd., Cape Town, and Sociedade Anglo-Portugese de
Automoveis Sarl, Lisbon, also ceased to be consolidated
companies.

The BMW Group reporting entity also changed by com-
parison to the previous year as a result of the first-time
consolidation of five special purpose trusts and the de-
consolidation of six special purpose securities funds and
one special purpose trust.

LHS Leasing- und Handelsgesellschaft Deutschland mbH,
Stuttgart, changed its name to Alphabet Fuhrparkmanage-
ment GmbH, Munich.

The changes are not material because the resulting impact
on the Group Financial Statements would not influence
the economic decisions of users taken on the basis of the
financial statements.

3 Business acquisitions

With effect from 1 January 2009, BMW Anlagen Verwal-
tungs GmbH, Munich, acquired all of the shares of LARGUS
Grundstücks-Verwaltungsgesellschaft, Grünwald, and, in-
directly, 94.5 % of the shares of that company’s subsidiary,
LARGUS Grundstücks-Verwaltungsgesellschaft mbH &

Co. KG, Grünwald. The acquisition of LARGUS Grund-
stücks-Verwaltungsgesellschaft mbH & Co. KG, Grünwald,
gave rise to a credit difference on consolidation (excess
of fair value of acquired net assets over purchase price) of
euro 2 million which was recognised as other operating
income in the first quarter 2009.

Consolidation principles
The equity of subsidiaries is consolidated in accordance
with IFRS 3 (Business Combinations). IFRS 3 requires
that all business combinations are accounted for using the
purchase method with identifiable assets and liabilities
acquired measured initially at their fair value. The excess of
the Group’s interest in the net fair value of the identifiable
assets and liabilities acquired over cost is recognised as
goodwill and is subjected to a regular review for impairment.
Goodwill of euro 91 million which arose prior to 1 January
1995 remains netted against reserves. The companies
LARGUS Grundstücks-Verwaltungsgesellschaft mbH,
Grünwald, LARGUS Grundstücks-Ver wal tungs gesell-
schaft mbH & Co. KG, Grünwald, BMW Polska Sp. z o.o.,
Warsaw, and BMW India Private Limited, New Delhi, were
consolidated for the first time with effect from 1 January
2009. The equivalent date for BMW Extended Services
Corporation, Hilliard, was 1 October 2009.

Receivables, liabilities, provisions, income and expenses
and profits between consolidated companies (intragroup
profits) are eliminated on consolidation.

Under the equity method, investments are measured at
the BMW Group’s share of equity taking account of fair
value adjustments on acquisition, based on the Group’s
shareholding. Any difference between the cost of invest-
ment and the Group’s share of equity is accounted for
in accordance with the purchase method. Investments in
other companies are accounted for as a general rule
using the equity method when significant influence can
be exercised (IAS 28, Investments in Associates). This is
normally the case when voting rights of between 20 %
and 50 % are held (associated companies).

Foreign currency translation
The financial statements of consolidated companies
which are drawn up in a foreign currency are translated us-
ing the functional currency concept (IAS 21, The Effects
of Changes in Foreign Exchange Rates) and the modified
closing rate method. The functional currency of a sub-
sidiary is determined as a general rule of the basis on the
primary economic environment in which it operates and
corresponds therefore to the relevant local currency. In-
come and expenses of foreign subsidiaries are translated in
the Group Financial Statements at the average exchange
rate for the year, and assets and liabilities are translated at

the closing rate. Exchange differences arising from the
translation of shareholders’ equity are offset directly
against accumulated other equity. Exchange differences
arising from the use of different exchange rates to trans-
late the income statement are also offset directly against
accumulated other equity.

Foreign currency receivables and payables in the single
entity accounts of BMW AG and subsidiaries are recorded,
at the date of the transaction, at cost. Exchange gains and
losses computed at the balance sheet date are recognised
as income or expense.

The exchange rates of those currencies which have a material impact on the Group Financial Statements were as follows:

US Dollar

British Pound

Chinese Renminbi

Japanese Yen

Closing rate

Average rate

31.12. 2009

31.12. 2008

2009

2008

1.43

0.89

9.78

1.40

0.95

9.54

1.39

0.89

9.52

133.17

126.74

130.37

1.47

0.80

10.23

152.29

Accounting principles
The financial statements of BMW AG and of its subsidiaries
in Germany and elsewhere have been prepared for con-
solidation purposes using uniform accounting policies in
accordance with IAS 27.

Revenues from the sale of products are recognised when
the risks and rewards of ownership of the goods are
transferred to the customer, the sales price is agreed or
determinable and receipt of payment can be assumed.
Revenues are stated net of discounts, allowances, settle-
ment discount and rebates. Revenues also include lease
rentals and interest income from financial services.

If the sale of products includes a determinable amount for
subsequent services (multiple-component contracts),
the related revenues are deferred and recognised as in-
come over the period of the contract. Amounts are nor-
mally recognised as income by reference to the pattern of
related expenditure.

Profits arising on the sale of vehicles for which a Group
company retains a repurchase commitment (buy-back
contracts) are not recognised until such profits have been
realised. The vehicles are included in inventories and
stated at cost.

Cost of sales comprises the cost of products sold and the
acquisition cost of purchased goods sold. In addition to
directly attributable material and production costs, it also
includes research costs and development costs not
recognised as assets, the amortisation of capitalised de-
velopment costs as well as overheads (including deprecia-
tion of property, plant and equipment and amortisation of
other intangible assets relating to production) and write-

downs on inventories. Cost of sales also includes freight
and insurance costs relating to deliveries to dealers and
agency fees on direct sales. Expenses which are directly
attributable to financial services business and interest
expense from refinancing the entire financial services busi-
ness, including the expense of risk provisions and write-
downs, are reported in cost of sales.

In accordance with IAS 20 (Accounting for Government
Grants and Disclosure of Government Assistance), public
sector grants are not recognised until there is reasonable
assurance that the conditions attaching to them have been
complied with and the grants will be received. They are
recognised as income over the periods necessary to match
them with the related costs which they are intended to
compensate.

Basic earnings per share are computed in accordance with
IAS 33 (Earnings per Share). Undiluted earnings per share
are calculated for common and preferred stock by dividing
the net profit after minority interests, as attributable to each
category of stock, by the average number of outstanding
shares. The net profit is accordingly allocated to the differ-
ent categories of stock. The portion of the Group net profit
for the year which is not being distributed is allocated to
each category of stock based on the number of outstand-
ing shares. Profits available for distribution are determined
directly on the basis of the dividend resolutions passed for
common and preferred stock. Diluted earnings per share
would have to be disclosed separately.

Purchased and internally-generated intangible assets are
recognised as assets in accordance with IAS 38 (Intangible
Assets), where it is probable that the use of the asset will
generate future economic benefits and where the costs

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

85 Group Financial Statements

of the asset can be determined reliably. Such assets are
measured at acquisition and / or manufacturing cost and,
to the extent that they have a finite useful life, amortised on
a straight-line basis over their estimated useful lives. With
the exception of capitalised development costs, intangible
assets are generally amortised over their estimated useful
lives of between three and five years. Intangible assets
with finite useful lives are assessed regularly for recovera-
bility and their carrying amounts are reduced to the re-
coverable amount in the event of impairment.

Development costs for vehicle and engine projects are
capitalised at manufacturing cost, to the extent that costs
can be allocated reliably and both technical feasibility and
successful marketing are assured. It must also be probable
that the development expenditure will generate future
economic benefits. Capitalised development costs com-
prise all expenditure that can be attributed directly to the

in years

Factory and office buildings, distribution facilities and residential buildings

Plant and machinery

Other equipment, factory and office equipment

development process, including development-related
overheads. Capitalised development costs are amortised
on a systematic basis, following the commencement of
production, over the estimated product life which is gen-
erally seven years.

All items of property, plant and equipment are subject to
operational use. Depreciable assets are recognised at
acquisition or manufacturing cost less scheduled depreci-
ation based on their estimated useful lives of the assets.
Depreciation on property, plant and equipment reflects the
pattern of their usage and is generally computed using the
straight-line method. Components of items of property,
plant and equipment with different useful lives are depre-
ciated separately.

Systematic depreciation is based on the following useful
lives, applied throughout the BMW Group:

8 to 50

4 to 21

3 to 10

For machinery used in multiple-shift operations, depre-
ciation rates are increased to account for the additional
utilisation.

The cost of internally constructed plant and equipment
comprises all costs which are directly attributable to the
manufacturing process and an appropriate portion of
production-related overheads. This includes production-
related depreciation and an appropriate proportion of
administrative and social costs.

As a general rule, borrowing costs are not included in ac-
quisition or manufacturing cost. Borrowing costs that are
directly attributable to the acquisition, construction or
production of a qualifying asset are recognised as a part of
the cost of that asset in accordance with IAS 23 (Borrowing
Costs).

Non-current assets also include assets relating to leases.
The BMW Group uses property, plant and equipment as
lessee and also leases out assets, mainly vehicles pro-
duced by the Group, as lessor. IAS 17 (Leases) contains

rules for determining, on the basis of risks and rewards, the
economic owner of the assets. In the case of finance leases
the assets are attributed to the lessee and in the case of
operating leases the assets are attributed to the lessor.

In accordance with IAS 17, assets leased under finance
leases are measured at their fair value at the inception of
the lease or at the present value of the lease payments, if
lower. The assets are depreciated using the straight-line
method over their estimated useful lives or over the lease
period, if shorter. The obligations for future lease instal-
ments are recognised as financial liabilities.

Where Group products are recognised by BMW Group
leasing companies as leased assets under operating
leases, they are measured at manufacturing cost. All other
leased products are measured at acquisition cost. All
leased products are depreciated using the straight-line
method over the period of the lease to the lower of their
imputed residual value or estimated fair value. Residual value
provisions are treated as write-downs and offset against
leased products on the assets side of the balance sheet.

The recoverability of the carrying amount of intangible as-
sets (including capitalised development costs and good-
will) and property, plant and equipment is tested regularly
for impairment in accordance with IAS 36 (Impairment of
Assets) on the basis of cash generating units. This relates
primarily to capitalised development costs and property,
plant and equipment connected with vehicle projects. If
there is no indication of impairment during the year, an an-
nual impairment test is carried out at the year-end. An im-
pairment loss is recognised when the recoverable amount
(defined as the higher of the asset’s net selling price and
its value in use) is lower than the carrying amount. The
value in use is determined on the basis of a present value
computation. If the reason for the previously recognised
impairment loss no longer exists, the impairment loss is
reversed up to the level of its rolled-forward depreciated or
amortised cost.

Investments accounted for using the equity method are
measured at the Group’s share of equity taking account
of fair value adjustments on acquisition unless the invest-
ment is impaired.

Investments in non-consolidated group subsidiaries re-
ported in other investments are measured at cost or, if
lower, at their fair value.

Participations are measured at their quoted market price
or fair value. When, in individual cases, these values are not
available or cannot be determined reliably, participations
are measured at cost.

Non-current marketable securities are measured accord-
ing to the category of financial asset to which they are
classified. No held-for-trading financial assets are included
under this heading.

Financial assets are accounted for on the basis of the
settlement date. On initial recognition, they are measured
at acquisition cost, including transaction costs.

Subsequent to initial recognition, available-for-sale and
held-for-trading financial assets are measured at fair value.
When market prices are not available, the fair value of
available-for-sale financial assets is measured using appro-
priate valuation techniques e. g. discounted cash flow
analysis based on market information available at the bal-
ance sheet date.

Available-for-sale assets include financial assets, securities
and investment fund shares. This category includes all
non-derivative financial assets which are not classified as
“loans and receivables” or “held-to-maturity investments”
or as items measured “at fair value through profit and loss”.

Loans and receivables which are not held for trading, held-
to-maturity financial investments and all financial assets
for which published price quotations in an active market
are not available and whose fair value cannot be determined
reliably, are measured, to the extent that they have a fixed
term, at amortised cost, using the effective interest method.
When the financial assets do not have a fixed term, they
are measured at acquisition cost.

In accordance with IAS 39 (Financial Instruments: Recog-
nition and Measurement), assessments are made regularly
as to whether there is any objective evidence that a finan-
cial asset or group of assets may be impaired. Impairment
losses identified after carrying out an impairment test are
recognised as an expense. Gains and losses on available-
for-sale financial assets are recognised directly in equity
until the financial asset is disposed of or is determined to
be impaired, at which time the cumulative loss previously
recognised in equity is included in net profit or loss for the
period.

With the exception of derivative financial instruments, all
receivables and other current assets relate to loans and
receivables which are not held for trading and they are
measured at amortised cost. Receivables with maturities
of over one year which bear no or a lower-than-market in-
terest rate are discounted. Appropriate impairment losses
are recognised to take account of all identifiable risks.

Receivables from sales financing comprise receivables from
retail customer, dealer and lease financing.

Impairment losses on receivables relating to financial
services business are recognised using a uniform meth-
odology that is applied throughout the Group and meets
the requirements of IAS 39. This methodology results in
the recognition of impairment losses on individual assets
and groups of assets. If there is objective evidence of im-
pairment, the BMW Group recognises impairment losses
on the basis of individual assets. Within the retail cus-
tomer business, the existence of overdue balances or the
incidence of similar events in the past are examples of

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80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

87 Group Financial Statements

such objective evidence. In the event of overdue receiv-
ables, impairment losses are always recognised individually
based on the length of period of the arrears. In the case of
dealer financing receivables, the allocation of the dealer to
a corresponding rating category is also deemed to repre-
sent objective evidence of impairment. If there is no objec-
tive evidence of impairment, impairment losses are recog-
nised on financial assets using a portfolio approach based
on similar groups of assets. Company-specific loss proba-
bilities and loss ratios, derived from historical data, are used
to measure impairment losses on similar groups of assets.

nised initially directly in accumulated other equity. Any such
gains or losses are recognised subsequently in the income
statement when the hedged item (usually external revenue)
is recognised in the income statement. The portion of the
gains or losses from fair value measurement not relating to
the hedged item is recognised immediately in the income
statement. If, contrary to the normal case within the BMW
Group, hedge accounting cannot be applied, the gains or
losses from the fair value measurement of derivative finan-
cial instruments are recognised immediately in the income
statement.

The recognition of impairment losses on receivables re-
lating to industrial business is also, as far as possible,
based on the same process applied to financial services
business.

Impairment losses (write-downs and allowances) on re-
ceivables are always recorded on separate accounts and
derecognised at the same time the corresponding re-
ceivables are derecognised.

Items are presented as financial assets to the extent that
they relate to financing transactions.

Derivative financial instruments are only used within the
BMW Group for hedging purposes in order to reduce cur-
rency, interest rate, fair value and market price risks from
operating activities and related financing requirements. All
derivative financial instruments (such as interest, currency
and combined interest / currency swaps as well as forward
currency and commodities contracts) are measured in
accordance with IAS 39 at their fair value, irrespective of
their purpose or the intention for which they are held. The
fair values of derivative financial instruments are measured
using market information and recognised valuation tech-
niques. In those cases where hedge accounting is applied,
changes in fair value are recognised either in the income
statement or directly in equity under accumulated other
equity, depending on whether the transactions are classi-
fied as fair value hedges or cash flow hedges. In the case
of fair value hedges, the results of the fair value measure-
ment of the derivative financial instruments and the related
hedged items are recognised in the income statement.
In the case of fair value changes in cash flow hedges which
are used to mitigate the future cash flow risk on a recog-
nised asset or liability or on forecast transactions, unrealised
gains and losses on the hedging instrument are recog-

In accordance with IAS 12 (Income Taxes), deferred taxes
are recognised on all temporary differences between the
tax and accounting bases of assets and liabilities and on
consolidation procedures. Deferred tax assets also include
claims to future tax reductions which arise from the ex-
pected usage of existing tax losses available for carryforward
(where future usage is probable). Deferred taxes are com-
puted using enacted or planned tax rates which are ex-
pected to apply in the relevant national jurisdictions when
the amounts are recovered.

Inventories of raw materials, supplies and goods for resale
are stated at the lower of average acquisition cost and net
realisable value.

Work in progress and finished goods are stated at the lower
of average manufacturing cost and net realisable value.
Manufacturing cost comprises all costs which are directly
attributable to the manufacturing process and an appro-
priate proportion of production-related overheads. This
includes production-related depreciation and an appro-
priate proportion of administrative and social costs.

Borrowing costs are not included in the acquisition or
manufacturing cost of inventories.

Provisions for pensions and similar obligations are recog-
nised using the projected unit credit method in accord-
ance with IAS 19 (Employee Benefits). Under this method,
not only obligations relating to known vested benefits at
the reporting date are recognised, but also the effect of
future increases in pensions and salaries. This involves
taking account of various input factors which are evaluated
on a prudent basis. The provision is derived from an in-
dependent actuarial valuation which takes into account all
relevant biometric factors.

Actuarial gains and losses are recognised, net of deferred
tax, directly in equity.

lease payments and disclosed under other financial lia-
bilities.

The expense related to the reversal of discounting on pen-
sion obligations and the income from the expected return
on pension plan assets are reported separately as part of
the financial result. All other costs relating to allocations to
pension provisions are allocated to costs by function in
the income statement.

Other provisions are recognised when the BMW Group
has an obligation to a third party, an outflow of resources
is probable and a reliable estimate can be made of the
amount of the obligation. Measurement is computed on
the basis of fully attributable costs. Non-current provisions
with a remaining period of more than one year are dis-
counted to the present value of the expenditures expected
to settle the obligation at the end of the reporting period.

Financial liabilities are measured on first-time recogni-
tion at cost, which is equivalent to the fair value of the con-
sideration given. Transaction costs are included in this
initial measurement. Subsequent to initial recognition, lia-
bilities are, with the exception of derivative financial instru-
ments, measured at amortised cost. The BMW Group
has no liabilities which are held for trading. Liabilities from
finance leases are stated at the present value of the future

The preparation of the Group Financial Statements in ac-
cordance with IFRSs requires management to make cer-
tain assumptions and estimates that affect the reported
amounts of assets and liabilities, revenues and expenses
and contingent liabilities. The assumptions and estimates
relate principally to the groupwide determination of eco-
nomic useful lives, the measurement of inventories, the
recognition and measurement of provisions and the re-
coverability of future tax benefits. All assumptions and
estimates are based on factors known at the end of the
reporting period. They are determined on the basis of the
most likely outcome of future business developments.
This includes the situation in the automotive sector and
the general business environment. Estimates and under-
lying assumptions are checked regularly. Actual amounts
could differ from those assumptions and estimates if
business conditions develop differently to the Group’s ex-
pectations at the end of the reporting period. Where new
information comes to light, differences are reflected in
the income statement and assumptions changed accord-
ingly. As a result of improvements in use of estimation to
measure the manufacturing cost of inventories, an addi-
tional expense of euro 174 million was recognised in 2009
in cost of sales.

New financial reporting rules
(a) Financial reporting rules applied for the first time in the financial year 2009
The following Standards and Revised Standards were applied for the first time in the financial year 2009:

Standard / Interpretation

Date of
mandatory
application

Endorsed
by EU at
31. 12. 2009

Impact on BMW Group

IFRS 1 and
IAS 27

IFRS 2

IFRS 7

Acquisition cost of subsidiaries,
joint and associated entities

Share-based remuneration:
Vesting conditions and cancellations

Improved disclosures on
financial instruments

1. 1. 2009

IAS 1

Presentation of Financial Statements

1. 1. 2009

Yes

None

Significant in principle:
extended disclosures on the fair
value measurement of financial
instruments and on liquidity risks

Significant in principle:
Change in presentation of
financial statements and
extended notes disclosures

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76
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80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

89 Group Financial Statements

Standard / Interpretation

Date of
mandatory
application

Endorsed
by EU at
31. 12. 2009

IAS 23

Borrowing Costs

1. 1. 2009

IAS 32 and
IAS 1

Puttable Financial Instruments and
Obligations Arising on Liquidation

Improvements to IFRSs

IFRIC 9 and
IAS 39

Reassessment of Embedded Derivatives
(in the case of reclassified financial
instruments)

IFRIC 13

IFRIC 15

IFRIC 16

Customer Loyalty Programmes

Agreements for the Construction of
Real Estate

Hedges of a Net Investment in
a Foreign Operation

1. 1. 2009

1. 1. 2009*

1. 1. 2009

1. 1. 2010

Yes

* Unless otherwise specified, the amendments are effective for annual periods beginning on or after 1 January 2009.

Impact on BMW Group

Significant in principle:
Increase in amount
recognised in the balance
sheet for qualifying asset

Insignificant

None

(b) New financial reporting rules issued in the financial year 2009
The following Standards and Interpretations, which had been issued by the IASB by the end of the financial year 2009,
but which were not mandatory for the reporting period, have not been applied by the BMW Group in the financial year 2009:

Standard / Interpretation

Date of
issue by IASB

Date of
mandatory
application

Endorsed
by EU at
31. 12. 2009

Expected impact on
on BMW Group

IFRS 1

IFRS 2

Additional Exceptions for First-time
Adopters

Share-based Payment: Accounting
for Cash-settled Share-based Payments
within the Group

23. 7. 2009

1. 1. 2010

18. 6. 2009

1. 1. 2010

IFRS 9

Financial instruments

12. 11. 2009

1. 1. 2013

IAS 24

IAS 32

Related Party Disclosures

Classification of Subscription Rights

IFRS for Small and Medium
Sized-entities

Improvements to IFRSs

IFRIC 14

IFRIC 18

IFRIC 19

Upfront-payments in conjunction with
Minimum Funding Requirements

Transfers of Assets from Customers

Extinguishing Financial Liabilities with
Equity Instruments

4. 11. 2009

8. 10. 2009

9. 7. 2009

16. 4. 2009

26. 11. 2009

29. 1. 2009

26. 11. 2009

1. 1. 2011

9. 7. 2009

1. 1. 2010*

1. 1. 2011

1. 1. 2010

1. 1. 2011

* Unless otherwise specified, the amendments are effective for annual periods beginning on or after 1 January 2010.

Yes

None

Significant in
principle:
Classification and
measurement of
financial assets could
change.

Insignificant

None

Insignificant

None

BMW Group
Notes to the Group Financial Statements
Notes to the Income Statement

Revenues
Revenues by activity comprise the following:

in euro million

Sales of products and related goods

Income from lease instalments

Sale of products previously leased to customers

Interest income on loan financing

Other income

Revenues

2009

2008

36,126

5,641

5,294

2,582

1,038

50,681

38,652

5,544

4,997

2,943

1,061

53,197

An analysis of revenues by operating segment and geographical region is shown in the segment information on page 133
et seq.

Cost of sales
Cost of sales comprises:

in euro million

Manufacturing costs

Research and development costs

Warranty expenditure

Cost of sales directly attributable to financial services

Interest expense relating to financial services business

Expense for risk provisions and write-downs for financial services business

Other cost of sales

Cost of sales

* adjusted as a result of the change in presentation of research and development costs

2009

2008*

24,930

2,587

996

10,092

2,879

1,310

2,562

45,356

26,727

2,825

990

9,634

2,666

1,697

2,609

47,148

Cost of sales include euro 14,281 million (2008: euro
13,997 million) relating to financial services business.

and reduced consumption-based taxes amounting to
euro 27 million (2008: euro 23 million).

Manufacturing costs do not contain any impairment losses
on intangible assets and property, plant and equipment
(2008: euro 3 million). Cost of sales is reduced by public-
sector subsidies in the form of reduced taxes on assets

Total research and development expenditure comprising
research costs, development costs not recognised
as assets and capitalised development costs were as
follows:

in euro million

Research and development costs

Amortisation

New expenditure for capitalised development costs

Total research and development expenditure

2009

2008

2,587

–1,226

1,087

2,448

2,825

–1,185

1,224

2,864

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80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

91 Group Financial Statements

Sales and administrative costs
Sales costs amounted to euro 3,647 million (2008: euro
4,047 million) and comprise mainly marketing, advertising
and sales personnel costs.

Administrative costs amounted to euro 1,393 million (2008:
euro 1,322 million) and comprised expenses for adminis-
tration not attributable to development, production or sales
functions.

Other operating income and expenses

in euro million

Exchange gains

Income from the reversal of provisions

Income from the reversal of impairment losses and write-downs

Gains on the disposal of assets

Sundry operating income

Other operating income

Exchange losses

Expense for additions to provisions

Expenses for impairment losses and write-downs

Sundry operating expenses

Other operating expenses

Other operating income and expenses

2009

2008

455

169

808

482

159

804

827

278

265

1,428

748

113

274

1,187

241

Other operating income includes public-sector grants of euro 14 million (2008: euro 32 million).

Result from equity accounted investments
The profit from equity accounted investments of euro
36 million (2008: euro 26 million) includes the Group’s
share of the results of the joint venture BMW Brilliance

Automotive Ltd., Shenyang, and the investment in Cirquent
GmbH, Munich. In the previous year, the result relating
to the investment in Cirquent GmbH, Munich, was only
recognised for the final three months of the year.

Net interest result

in euro million

Expected return on plan assets
Other interest and similar income*

thereof from subsidiaries: euro 6 million (2008: euro 10 million)

Interest and similar income

Expense from reversing the discounting of pension obligations

Expense from reversing the discounting of other long-term provisions

Write-downs on marketable securities
Other interest and similar expenses*

thereof to subsidiaries: euro – million (2008: euro 1 million)

Interest and similar expenses

Net interest result

2009

2008

379

477

856

– 532

–115

– 3

– 364

360

325

685

– 550

– 96

–123

–161

–1,014

– 930

–158

– 245

* Interest income and expenses relating to stand-alone derivatives are netted within the net interest result. Interest expenses include net interest expenses of euro 241 million
(2008: net interest expenses of euro 102 million) relating to stand-alone derivatives.

14 Other financial result

in euro million

Income from investments

thereof from subsidiaries: euro 4 million (2008: euro 4 million)

Expense of assuming losses under profit and loss transfer agreements

thereof from subsidiaries: euro – million (2008: euro – 1 million)

Impairment losses on investments in subsidiaries

Result on investments

Losses and gains relating to financial instruments

Sundry other financial result

Other financial result

2009

2008

–

– 3

245

246

–1

– 6

– 3

– 348

– 351

Sundry other financial result includes in particular gains
on stand-alone interest rate derivatives (the fair values of

which improved primarily due to changes in interest rate
structures) and gains on commodities derivatives.

Income taxes
Taxes on income comprise the following:

in euro million

Current tax expense

Deferred tax expense

Income taxes

2009

2008

338

–135

203

– 54

Deferred taxes are recognised on temporary differences
between the carrying amount of assets and liabilities for
IFRS purposes and their tax bases. Deferred taxes are
computed using enacted or planned tax rates which are
expected to apply in the relevant national jurisdictions
when the amounts are recovered. A uniform corporation
tax rate of 15.0 % applies in Germany. After taking account
of the average multiplier rate (Hebesatz) of 410.0 % for
municipal trade tax and the solidarity charge of 5.5 %,
the overall tax rate for BMW companies in Germany is
30.2 % (2008: 30.2 %). The tax rates for companies out-

side Germany range from 12.5 % (2008: 12.5 %) to 46.9 %
(2008: 46.9 %). A valuation allowance is recognised on
deferred tax assets when recoverability is uncertain. In de-
termining the level of the valuation allowance, all positive
and negative factors concerning the likely existence of
sufficient taxable profit in the future are taken into account.
These estimates can change depending on the actual
course of events.

An analysis of deferred taxes tax assets and liabilities by
position at 31 December is shown on the next page:

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78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

93 Group Financial Statements

in euro million

Intangible assets

Property, plant and equipment

Leased products

Investments

Other current assets

Tax loss carryforwards

Provisions

Liabilities

Consolidations

Valuation allowance

Netting

Deferred taxes

Net

Deferred tax assets

Deferred tax liabilities

2009

2008

2009

2008

443

2,175

1,838

1,388

3,316

1,564

10,768

– 550

– 8,952

1,266

573

1,796

1,438

1,197

2,945

1,736

9,732

– 513

– 8,353

866

1,490

410

4,281

3,559

–

1,444

482

11,721

1,541

454

4,137

3,196

–

1,296

406

11,110

–

– 8,952

– 8,353

2,769

1,503

2,757

1,891

“Netting” relates to the offset of deferred tax assets and
liabilities within individual separate entities or tax groups.

Deferred tax assets on tax losses available for carryforward
and on capital losses increased on a net basis. Tax losses
available for carryforward, which for the most part can be
carried forward without restriction, totalled euro 5.2 billion
at the end of the reporting period (2008: euro 3.8 billion).
A valuation allowance of euro 31 million (2008: euro 30 mil-
lion) was recognised in 2009 on deferred tax assets relat-
ing to tax losses available for carryforward. Capital losses in
the United Kingdom increased in 2009 to euro 1.9 billion
(2008: euro 1.7 billion) as a result of exchange rate factors.
As in previous years, deferred tax assets recognised on
these tax losses – amounting to euro 519 million at the end
of the reporting period (2008: euro 483 million) – were fully
written down since they can only be utilised against future
capital gains. Capital losses are not connected to ongoing

business operations. Deferred tax assets were recognised
in 2009 for entities which recorded tax losses in either 2009
or 2008. These deferred tax assets exceed deferred tax
liabilities by euro 618 million (2008: euro 185 million). De-
ferred tax assets are recognised on the basis of manage-
ment’s assessment of whether it is probable that the rele-
vant entities will generate sufficient taxable profits against
which deductible temporary differences can be offset.

Deferred taxes recognised directly in equity amounted to
euro 493 million (2008: euro 303 million), an increase of
euro 190 million (2008: euro 188 million) compared to the
previous year. The change also includes a euro 12 million
(2008: euro 39 million) reduction in deferred taxes arising
on foreign currency translation.

Changes in net deferred tax assets and liabilities during the
reporting period can be summarised as follows:

in euro million

Net deferred tax liabilities at 1 January

Deferred tax expenses recognised through income statement

Change in deferred taxes recognised directly in equity
Exchange rate impact and other changes*

Net deferred tax liabilities at 31 December

* including impact of first-time consolidation and deconsolidation

2009

2008

1,891

–135

– 202

– 51

1,503

1,994

– 54

– 227

178

1,891

Deferred taxes are not recognised on retained profits of
euro 15.9 billion (2008: euro 15.6 billion) of foreign sub-
sidiaries, as it is intended to invest these profits to main-
tain and expand the business volume of the relevant com-
panies. A computation was not made of the potential
impact of income taxes on the grounds of disproportionate
expense.

The tax returns of BMW Group entities are checked regu-
larly by German and foreign tax authorities. Taking account
of a variety of factors – including existing interpretations,
commentaries and legal decisions taken relating to the

various tax jurisdictions and the BMW Group’s past ex-
perience – adequate provision has, as far as identifiable,
been made for potential future tax obligations.

The actual tax expense for the financial year 2009 of euro
203 million (2008: euro 21 million) is euro 79 million higher
(2008: euro 85 million lower) than the expected tax ex-
pense of euro 124 million (2008: euro 106 million) which
would theoretically arise if the tax rate of 30.2 % (2008:
30.2 %), applicable for German companies, was applied
across the Group. The difference between the expected
and actual tax expense is attributable to the following:

in euro million

Expected tax expense

Variances due to different tax rates

Tax reductions (–) / tax increases (+) as a result of non-taxable income and non-deductible expenses

Tax expense (+) / benefits (–) for prior periods

Other variances

Actual tax expense

2009

2008

124

– 26

–1

203

106

– 49

– 60

–

Non-deductible expenses include the impact of non-re-
coverable withholding taxes. The item “Tax expense (+) /
benefits (–) for prior periods” includes tax income resulting
from rulings made by the European Court of Justice with
regard to German tax legislation. Working in the opposite
direction, tax expenses incurred for prior years in conjunc-
tion with a tax field audit at the level of BMW AG, mostly
relating to intragroup transfer pricing arrangements, also
had an impact. The resulting threat of a double taxation
charge is being avoided by initiating bilateral appeal pro-
ceedings. Corresponding reimbursement claims at the
level of foreign subsidiaries did not fully offset the tax ex-
pense incurred due to differences in tax rates in the
tax jurisdictions involved.

The item “Other variances” includes the impact of the
reduction in tax expense as a result of utilising tax losses
brought forward for which deferred assets had not pre-
viously been recognised and tax credits, also not pre-
viously recognised, amounting to euro 3 million (2008:
euro 4 million). Moreover, the tax expense was increased
by euro 26 million (2008: reduced by euro 9 million) as
a result of deferred taxes on previously unrecognised
temporary differences. The tax income for the valuation
allowance on deferred tax assets relating to tax losses
available for carryforward and temporary differences
and their reversal amounted to euro 10 million (2008:
euro – million).

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76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

95 Group Financial Statements

16 Earnings per share

Net profit for the year after minority interest

euro million

203.6

324.3

Profit attributable to common stock

Profit attributable to preferred stock

euro million

186.5

17.1

297.9

26.4

Average number of common stock shares in circulation

Average number of preferred stock shares in circulation

number

601,995,196

number

51,833,937

51,296,162

2009

2008

Earnings per share of common stock

Earnings per share of preferred stock

Dividend per share of common stock

Dividend per share of preferred stock

euro

0.31

0.33

0.30

0.32

0.49

0.51

0.30

0.32

Earnings per share of preferred stock are computed on the
basis of the number of preferred stock shares entitled to
receive a dividend in each of the relevant financial years.

Diluted earnings per share were not applicable in either the
current or prior year.

Other disclosures relating to the income statement
The income statement includes personnel costs as follows:

in euro million

Wages and salaries

Social security, retirement and welfare costs

thereof retirement costs: euro 744 million (2008: euro 811 million)

Personnel costs

2009

2008

5,299

1,267

6,566

5,991

1,245

7,236

Personnel costs include euro 171 million (2008: euro
455 million) of expenditure incurred to reduce the size of

the workforce. The average number of employees during
the year was:

Employees

Apprentices and students gaining work experience

2009

2008

90,755

5,452

96,207

95,699

6,034

101,733

For information regarding the number of employees at
the year-end, reference is made to page 27 et seq. in the
Group Management Report.

Wirtschaftsprüfungsgesellschaft and its affiliated entities,
pursuant to § 314 (1) no. 9 HGB amounted to euro 11 mil-
lion (2008: euro 7 million) and consists of the following:

The fee expense recognised in the financial year 2009 for
the auditors of the Group Financial Statements, KPMG AG

in euro million

Audit-related services

Tax advisory services

Other services

2009

2008

The various line items include expenses incurred by
BMW AG and its domestic subsidiaries as well as in the
United Kingdom, Switzerland, Spain, Belgium, and the

Netherlands. The previous year’s figure only included
fees for the BMW AG and its domestic subsidiaries and in
the United Kingdom, Switzerland and Spain.

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

97 Group Financial Statements

BMW Group
Notes to the Group Financial Statements
Notes to the Statement of Comprehensive Income

18 Disclosures relating to the statement of total comprehensive income
Other comprehensive income for the period after tax comprises the following:

in euro million

2009

2008

Available-for-sale securities

Gains / losses in the period

Amounts reclassified to income statement

Financial instruments used for hedging purposes

Gains / losses in the period

Amounts reclassified to income statement

Exchange differences on translating foreign operations

Actuarial gains / losses relating to defined benefit pension and similar plans

Deferred taxes relating to components of other comprehensive income

Other comprehensive income for the period after tax

Deferred taxes on components of other comprehensive income are as follows:

in euro million

Available-for-sale securities

Financial instruments used for hedging purposes

Exchange differences on translating foreign operations

Actuarial gains / losses relating to defined benefit pension and
similar plans

Other comprehensive income

2009

Deferred
taxes

–1

–131

–

Before
tax

295

318

– 7

358

– 63

295

318

– 1,198

190

– 391

– 27

– 7

– 627

– 624

– 807

161

188

–1,089

2008

After
tax

Before
tax

Deferred
taxes

After
tax

164

318

– 7

– 624

– 807

–11

231

–

– 32

188

–18

– 393

– 807

129

–1,089

–1,198

– 581

322

190

– 876

161

– 391

–1,277

BMW Group
Notes to the Group Financial Statements
Notes to the Balance Sheet

19 Analysis of changes in Group tangible, intangible and investment assets 2009

in euro million

Development costs

Other intangible assets

Intangible assets

Land, titles to land, buildings, including buildings on
third party land

Plant and machinery

Other facilities, factory and office equipment

Advance payments made and construction in progress

Property, plant and equipment

8,855

972

9,827

6,939

21,672

2,075

1,121

31,807

–

– 4

128

1,087

1,137

154

1,662

441

2,334

Leased products

25,407

8,646

Investments accounted for using the equity method

111

Investments in non-consolidated subsidiaries

Participations

Non-current marketable securities

Other investments

375

406

–

1 including gross balances brought forward for entities consolidated for the first time in the financial year
2 including assets under construction of euro 418 million

Analysis of changes in Group tangible, intangible and investment assets 2008

in euro million

Development costs

Other intangible assets

Intangible assets

Land, titles to land, buildings, including buildings on
third party land

Plant and machinery

Other facilities, factory and office equipment

Advance payments made and construction in progress

Property, plant and equipment

8,479

1,020

9,499

6,623

20,430

2,062

1,019

30,134

–

–11

–127

– 330

– 22

– 474

1,224

115

1,339

255

1,535

179

896

2,865

Leased products

20,860

– 22

12,376

Investments accounted for using the equity method

Investments in non-consolidated subsidiaries

Participations

Non-current marketable securities

Other investments

261

290

–

–1

–

– 5

– 6

158

–

165

1 including gross balances brought forward for entities consolidated for the first time in the financial year
2 including impairment losses of euro 3 million
3 including assets under construction of euro 727 million

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

1. 1. 20091

Translation
differences

Additions

Reclassi-
fications

Disposals

31. 12. 2009

1. 1. 20091

Translation

differences

Current year

Disposals

31. 12. 2009

31. 12. 2008

Acquisition and manufacturing cost

Depreciation and amortisation

Carrying amount

–

287

676

– 986

–

1,247

166

1,413

1,380

130

1,592

8,695

859

9,554

7,340

22,715

2,056

566

32,677

9,639

24,417

5,883

– 5

3,689

3,123

6,444

17,973

19,524

Leased products

106

–

125

137

307

319

3,782

401

4,183

2,745

16,150

1,574

20,470

–

3,445

378

3,823

2,626

14,783

1,549

18,959

–

– 2

– 4

– 58

– 214

–18

–

– 290

–

1,226

114

1,340

213

1,885

162

–

2,260

–

1,185

110

1,295

202

2,002

171

–

2,3752

–

1,247

101

1,348

1,361

123

–

1,525

–

846

938

423

130

–

605

–

3,761

414

4,175

2,936

16,732

1,623

21,292

–

3,782

394

4,176

2,718

16,148

1,572

20,439

–

5,073

Development costs

568

Other intangible assets

5,641

Intangible assets

Land, titles to land, buildings, including buildings on

4,157

5,518

third party land

Plant and machinery

497

Other facilities, factory and office equipment

1,120

Advance payments made and construction in progress

11,385

11,292

Property, plant and equipment

111

Investments accounted for using the equity method

296

Investments in non-consolidated subsidiaries

Participations

Non-current marketable securities

322

Other investments

5,034

Development costs

636

Other intangible assets

5,670

Intangible assets

Land, titles to land, buildings, including buildings on

3,945

5,635

third party land

Plant and machinery

510

Other facilities, factory and office equipment

1,018

Advance payments made and construction in progress

11,292

11,108

Property, plant and equipment

4,934

445

5,379

4,404

5,983

433

5652

137

225

232

5,073

568

5,641

4,157

5,518

497

1,1203

111

296

322

–

266

471

– 782

–13

–

848

175

1,023

142

440

182

781

8,855

962

9,817

6,875

21,666

2,069

1,121

31,731

7,807

25,407

3,847

3,975

1,967

5,883

19,524

17,013

Leased products

–

111

375

406

–

Investments accounted for using the equity method

185

Investments in non-consolidated subsidiaries

Participations

Non-current marketable securities

209

Other investments

1. 1. 20081

Translation
differences

Additions

Reclassi-
fications

Disposals

31. 12. 2008

1. 1. 20081

Translation

differences

Current year

Disposals

31. 12. 2008

31. 12. 2007

Acquisition and manufacturing cost

Depreciation and amortisation

Carrying amount

99 Group Financial Statements

1. 1. 20091

Translation

differences

Additions

Disposals

31. 12. 2009

Reclassi-

fications

1. 1. 20091

Translation
differences

Current year

Disposals

31. 12. 2009

31. 12. 2008

Acquisition and manufacturing cost

Depreciation and amortisation

Carrying amount

3,782

401

4,183

2,745

16,150

1,574

20,470

–

1,226

114

1,340

213

1,885

162

–

2,260

1,247

101

1,348

1,361

123

–

1,525

3,761

414

4,175

2,936

16,732

1,623

21,292

4,934

445

5,379

4,404

5,983

433
5652

5,073

Development costs

568

Other intangible assets

5,641

Intangible assets

4,157

5,518

Land, titles to land, buildings, including buildings on
third party land

Plant and machinery

497

Other facilities, factory and office equipment

1,120

Advance payments made and construction in progress

11,385

11,292

Property, plant and equipment

Leased products

25,407

8,646

9,639

24,417

5,883

– 5

3,689

3,123

6,444

17,973

19,524

Leased products

–

137

225

232

111

Investments accounted for using the equity method

296

Investments in non-consolidated subsidiaries

Participations

Non-current marketable securities

322

Other investments

1. 1. 20081

Translation

differences

Additions

Disposals

31. 12. 2008

Reclassi-

fications

1. 1. 20081

Translation
differences

Current year

Disposals

31. 12. 2008

31. 12. 2007

Acquisition and manufacturing cost

Depreciation and amortisation

Carrying amount

3,445

378

3,823

2,626

14,783

1,549

18,959

– 2

– 4

– 58

– 214

–18

–

– 290

1,185

110

1,295

202

2,002

171

–
2,3752

846

938

423

130

–

605

3,782

394

4,176

2,718

16,148

1,572

20,439

5,073

568

5,641

4,157

5,518

497
1,1203

5,034

Development costs

636

Other intangible assets

5,670

Intangible assets

3,945

5,635

Land, titles to land, buildings, including buildings on
third party land

Plant and machinery

510

Other facilities, factory and office equipment

1,018

Advance payments made and construction in progress

11,292

11,108

Property, plant and equipment

Leased products

20,860

– 22

12,376

7,807

25,407

3,847

3,975

1,967

5,883

19,524

17,013

Leased products

–

111

296

322

Investments accounted for using the equity method

185

Investments in non-consolidated subsidiaries

Participations

Non-current marketable securities

209

Other investments

in euro million

Development costs

Other intangible assets

Intangible assets

third party land

Plant and machinery

Land, titles to land, buildings, including buildings on

Other facilities, factory and office equipment

Advance payments made and construction in progress

Property, plant and equipment

8,855

972

9,827

6,939

21,672

2,075

1,121

31,807

375

406

8,479

1,020

9,499

6,623

20,430

2,062

1,019

30,134

261

290

–

– 4

128

–

–11

–127

– 330

– 22

– 474

–

–1

–

– 5

– 6

1,087

1,137

154

1,662

441

2,334

–

1,224

115

1,339

255

1,535

179

896

2,865

158

–

165

–

287

676

– 986

–

266

471

– 782

–13

–

1,247

166

1,413

1,380

130

1,592

106

–

125

848

175

1,023

142

440

182

781

–

8,695

859

9,554

7,340

22,715

2,056

566

32,677

137

307

319

8,855

962

9,817

6,875

21,666

2,069

1,121

31,731

111

375

406

Investments accounted for using the equity method

111

Investments in non-consolidated subsidiaries

Participations

Non-current marketable securities

Other investments

1 including gross balances brought forward for entities consolidated for the first time in the financial year

2 including assets under construction of euro 418 million

in euro million

Development costs

Other intangible assets

Intangible assets

third party land

Plant and machinery

Land, titles to land, buildings, including buildings on

Other facilities, factory and office equipment

Advance payments made and construction in progress

Property, plant and equipment

Investments accounted for using the equity method

Investments in non-consolidated subsidiaries

Participations

Non-current marketable securities

Other investments

1 including gross balances brought forward for entities consolidated for the first time in the financial year

2 including impairment losses of euro 3 million

3 including assets under construction of euro 727 million

100

Intangible assets
Intangible assets mainly comprise capitalised develop-
ment costs on vehicle and engine projects as well as sub-
sidies for tool costs, licences, purchased development
projects and software. Amortisation on intangible assets
is presented in cost of sales, administrative costs and
other operating expenses.

In addition, intangible assets include a brand-name right
amounting to euro 40 million (2008: euro 37 million) and
goodwill with an indefinite useful life of euro 111 million,
unchanged from the previous year. The latter comprises
goodwill arising on the acquisition of DEKRA SüdLeasing
Services GmbH, Stuttgart, and its subsidiaries and on
the acquisition of SimeLease (Malaysia) Sdn Bhd, Kuala

Lumpur, and its subsidiary SimeCredit (Malaysia) Sdn Bhd,
Kuala Lumpur. This item is not presented separately in
the BMW Group balance sheet since the amount is not
significant in relation to either the balance sheet total or in-
tangible assets.

As in the previous year, there were no reversals of impair-
ment losses on intangible assets.

No borrowing costs were recognised as a cost component
of intangible assets during the year under report.

Changes in intangible assets during the year are shown in
the analysis of changes in Group tangible, intangible and
investment assets on page 98 et seq.

Property, plant and equipment
No borrowing costs were recognised as a cost compo-
nent of property, plant and equipment during the year un-
der report.

A break-down of the different classes of property, plant
and equipment disclosed in the balance sheet and changes
during the year are shown in the analysis of changes in
Group tangible, intangible and investment assets on page
98 et seq.

Property, plant and equipment include a total of euro 57 mil-
lion (2008: euro 68 million) relating to operational buildings
used by BMW AG as well as leased plant, machinery and
other facilities, factory and office equipment used primarily
at the Oxford and Hams Hall production plants. Due to
the nature of the lease arrangements (finance leases),
economic ownership of these assets is attributable to the

BMW Group. The leases for buildings, with a carrying
amount of euro 48 million (2008: euro 50 million) run for
periods up to 2023 at the latest. Some of the leases
contain extension and purchase options. The leases for
plant and machinery and other facilities, factory and office
equipment at the Oxford plant, with a carrying amount of
euro 4 million (2008: euro 6 million) at 31 December 2009,
run for periods up to 2011 at the latest. For each of the
leases, there is a recurring option to extend the leases by
one year. A purchase option was not agreed. The lease
for plant and machinery and other facilities, factory and
office equipment at the Hams Hall production plant, with
a carrying amount of euro 1 million (2008: euro 10 million)
runs until 2018 and may be extended for one year periods
thereafter. A purchase option was not agreed.

Minimum lease payments of the relevant leases are as
follows:

in euro million

31. 12. 2009

31. 12. 2008

Total of future minimum lease payments

due within one year

due between one and five years

due later than five years

Interest portion of the future minimum lease payments

due within one year

due between one and five years

due later than five years

Present value of future minimum lease payments

due within one year

due between one and five years

due later than five years

166

117

358

141

290

202

157

426

175

108

341

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

101 Group Financial Statements

Leased products
The BMW Group, as lessor, leases out assets (predomi-
nantly own products) as part of its financial services busi-

ness. Minimum lease payments of euro 7,686 million
(2008: euro 8,515 million) from non-cancellable operating
leases fall due as follows:

in euro million

within one year

between one and five years

later than five years

Leased products

31. 12. 2009

31. 12. 2008

4,257

3,428

7,686

4,589

3,925

8,515

Contingent rents of euro 39 million (2008: euro 30 million),
based principally on the distance driven, were recognised
in income. The agreements have, in part, extension and
purchase options as well as price escalation clauses.

Changes in leased products during the year are shown in
the analysis of changes in Group tangible, intangible and
investment assets on page 98 et seq.

Investments accounted for using the equity
method and other investments
Investments accounted for using the equity method
comprise the Group’s interests in the joint venture BMW
Brilliance Automotive Ltd., Shenyang, and the invest-

ment in Cirquent GmbH, Munich. The disclosures relating
to the previous year’s income statement include the in-
come and expenses of Cirquent GmbH, Munich, after
deconsolidation of the Cirquent Group. The aggregated
interests of the Group are as follows:

in euro million

31. 12. 2009

31. 12. 2008

Disclosures relating to the income statement

Income

Expenses

Disclosures relating to the balance sheet

Non-current assets

Current assets

Equity

Non-current liabilities

Current liabilities

835

797

222

287

164

330

627

603

139

234

126

216

Other investments relate primarily to investments in non-
consolidated subsidiaries, participations and non-current
marketable securities.

New Delhi, and BMW Polska Sp. z o.o., Warsaw, as well
as the sale of BMW Sauber AG, Hinwil, BMW Sauber Engi-
neering AG, Hinwil, and BMW Sauber Holding AG, Vaduz.

Additions to investments in subsidiaries relate mainly to the
foundation of BMW Automotive Finance (China) Co., Ltd.,
Beijing, and BMW Financial Services Singapore Pte Ltd.,
Singapore.

Disposals of investments in subsidiaries arise as a result of
the first-time consolidation of BMW India Private Limited,

Impairment losses on investments in subsidiaries relate to
Westchester BMW, Inc., Wilmington, Del.

A break-down of the different classes of other investments
disclosed in the balance sheet and changes during the
year are shown in the analysis of changes in Group tangible,
intangible and investment assets on page 98 et seq.

102

24 Receivables from sales financing

Receivables from sales financing, totalling euro 40,594 mil-
lion (2008: euro 38,063 million), comprise euro 31,971 mil-
lion (2008: euro 29,470 million) for credit financing for retail

customers and dealers and euro 8,623 million (2008: euro
8,593 million) for finance leases. Finance leases are ana-
lysed as follows:

in euro million

31. 12. 2009

31. 12. 2008

Gross investment in finance leases

due within one year

due between one and five years

due later than five years

Present value of future minimum lease payments

due within one year

due between one and five years

due later than five years

Unrealised interest income

3,477

6,269

9,774

3,056

5,542

8,623

1,151

3,315

6,357

9,701

2,932

5,634

8,593

1,108

Contingent rents recognised as income (generally relating
to the distance driven) amounted to euro 3 million (2008:
euro 5 million). Write-downs on finance leases amounting
to euro 58 million (2008: euro 52 million) were measured
and recognised on the basis of specific credit risks. Un-
guaranteed residual values which will fall to the benefit of

the lessor amounted to euro 3 million (2008: euro 1 mil-
lion).

Receivables from sales financing include euro 23,478 mil-
lion (2008: euro 22,192 million) with a remaining term of
more than one year.

Allowance for impairment and credit risk

in euro million

Gross carrying amount

Allowance for impairment

Net carrying amount

31. 12. 2009

31. 12. 2008

41,950

–1,356

40,594

39,116

–1,053

38,063

Allowances for impairment on receivables from sales financing developed as following during the year under report:

2009
in euro million

Balance at 1 January

Allocated / reversed

Utilised

Exchange rate impact and other changes

Balance at 31 December

2008
in euro million

Balance at 1 January*

Allocated / reversed

Utilised

Exchange rate impact and other changes

Balance at 31 December

* including entities consolidated for the first time during the financial year

Allowance for impairment recognised on a
group basis

specific item basis

938

682

– 444

1,195

115

–10

161

Allowance for impairment recognised on a
group basis

specific item basis

672

543

– 262

–15

938

125

–14

– 6

115

Total

1,053

732

– 454

1,356

Total

797

553

– 276

– 21

1,053

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

103 Group Financial Statements

At the end of the reporting period, impairment allowances
of euro 161 million (2008: euro 115 million) were recognised
on a group basis on gross receivables from sales financing
totalling euro 19,509 million (2008: euro 17,274 million).
Impairment allowances of euro 1,195 million (2008: euro
938 million) were recognised at 31 December 2009 on a
specific item basis on gross receivables from sales financ-
ing totalling euro 10,581 million (2008: euro 7,755 million).

The estimated fair value of collateral received for receiv-
ables on which impairment losses were recognised totalled
euro 15,600 million (2008: euro 14,570 million) at the end
of the reporting period. This collateral related primarily to
vehicles. The carrying amount of assets held as collateral
and taken back as a result of payment default amounted to
euro 40 million (2008: euro 44 million).

Receivables from sales financing which were not overdue at
the end of the reporting period amounted to euro 11,860
million (2008: euro 14,087 million). No impairment losses
were recognised for these balances.

As at the end of the previous year, there were no receiv-
ables from sales financing at the balance sheet date which
have been renegotiated and which were otherwise over-
due or otherwise required recognition of an impairment
loss.

Financial assets
Financial assets comprise:

in euro million

Derivative instruments

Marketable securities and investment funds

Loans to third parties

Credit card receivables

Other

Financial assets

thereof non-current

thereof current

31. 12. 2009

31. 12. 2008

2,433

1,648

266

364

4,734

1,519

3,215

3,449

653

253

746

5,114

1,808

3,306

The change in the line item “Derivative instruments” relates
primarily to the expiry in 2009 of currency derivatives with
positive fair values.

The increase in marketable securities and investment
funds resulted from investments made in conjunction with
liquidity management.

were transferred in the past to BMW Trust e. V., Munich, as
part of a Contractual Trust Arrangement (CTA) and are there-
fore netted against the corresponding settlement arrears
for pre-retirement part-time work arrangements. The
amount by which the value of the investment funds exceeds
these obligations amounting to euro 28 million (2008:
euro 35 million) is reported under other financial assets.

Investment funds are held to secure obligations relating to
pre-retirement part-time work arrangements. These funds

Marketable securities and investment funds relate to avail-
able-for-sale financial assets and comprise:

in euro million

Stocks

Fixed income securities

Sundry marketable securities

Marketable securities and investment funds

31. 12. 2009

31. 12. 2008

–

1,647

1,648

620

653

104

The contracted maturities of debt securities are as follows:

in euro million

Fixed income securities

due within three months

due later than three months

Sundry marketable securities

due within three months

due later than three months

Debt securities

Allowance for impairment and credit risk
Receivables relating to credit card business comprise the following:

in euro million

Gross carrying amount

Allowance for impairment

Net carrying amount

31. 12. 2009

31. 12. 2008

302

1,345

–

1,648

–

620

–

621

31. 12. 2009

31. 12. 2008

283

–17

266

268

–15

253

Allowances for impairment losses on receivables relating to credit card business developed as following during the year
under report:

2009
in euro million

Balance at 1 January

Allocated / reversed

Utilised

Exchange rate impact and other changes

Balance at 31 December

2008
in euro million

Balance at 1 January

Allocated / reversed

Utilised

Exchange rate impact and other changes

Balance at 31 December

Allowance for impairment recognised on a
group basis

specific item basis

– 32

–1

–

Allowance for impairment recognised on a
group basis

specific item basis

–15

– 5

–1

–

Total

– 32

– 1

Total

– 16

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

105 Group Financial Statements

Income tax assets
Income tax assets can be analysed as follows:

31 December 2009
in euro million

Deferred tax

Current tax

Income tax assets

31 December 2008
in euro million

Deferred tax

Current tax

Income tax assets

Other assets
Other assets comprise:

in euro million

Other taxes

Receivables from subsidiaries

Receivables from other companies in which an investment is held

Prepayments

Collateral receivables

Sundry other assets

Other assets

thereof non-current

thereof current

Maturity
within one year

Maturity
later than one year

–

452

1,266

498

1,764

Maturity
within one year

Maturity
later than one year

–

498

866

104

970

Total

1,266

950

2,216

Total

866

602

1,468

31. 12. 2009

31. 12. 2008

445

485

171

898

507

618

373

425

103

848

291

462

3,124

2,502

640

2,484

660

1,842

Receivables from subsidiaries include trade receivables
of euro 70 million (2008: euro 139 million) and financial
receivables of euro 415 million (2008: euro 286 million).
They include euro 145 million (2008: euro 43 million) with
a remaining term of more than one year.

Prepayments of euro 898 million (2008: euro 848 million)
relate mainly to prepaid interest, development costs not
eligible for capitalisation as non-current assets, insurance
premiums and rent. Prepayments of euro 568 million (2008:
euro 483 million) have a maturity of less than one year.

Receivables from other companies in which an investment
is held are all due within one year.

Collateral receivables comprise mainly customary collateral
arising on the sale of receivables.

106

Inventories
Inventories comprise the following:

in euro million

31. 12. 2009

31. 12. 2008

Raw materials and supplies

Work in progress, unbilled contracts

Finished goods and goods for resale

Inventories

536

542

5,477

6,555

596

803

5,891

7,290

At 31 December 2009, inventories measured at their net
realisable value amounted to euro 355 million (2008: euro
426 million) and are included in total inventories of euro

6,555 million (2008: euro 7,290 million). Write-downs to
net realisable value amounting to euro 58 million (2008:
euro 47 million) were recognised in 2009.

Trade receivables
Trade receivables amounting in total to euro 1,857 million

(2008: euro 2,305 million) include euro 40 million due later
than one year (2008: euro 40 million).

Allowance for impairment and credit risk

in euro million

Gross carrying amount

Allowance for impairment

Net carrying amount

31. 12. 2009

31. 12. 2008

1,942

– 85

1,857

2,373

– 68

2,305

Allowances on trade receivables developed as following during the year under report:

2009
in euro million

Balance at 1 January*

Allocated / reversed

Utilised

Exchange rate impact and other changes

Balance at 31 December

* including entities consolidated for the first time during the financial year

2008
in euro million

Balance at 1 January

Allocated / reversed

Utilised

Exchange rate impact and other changes

Balance at 31 December

Allowance for impairment recognised on a
group basis

specific item basis

–17

–

– 2

Allowance for impairment recognised on a
group basis

specific item basis

– 8

–

– 2

–1

Total

–19

Total

–10

–1

As at the end of the previous year, there were no trade re-
ceivables at the balance sheet date which have been rene-

gotiated and which were otherwise overdue or otherwise
required recognition of an impairment loss.

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

107 Group Financial Statements

Some trade receivables were overdue for which an impairment loss was not recognised. Overdue balances are analysed
into the following time windows:

in euro million

1 – 30 days overdue

31 – 60 days overdue

61 – 90 days overdue

91 – 120 days overdue

More than 120 days overdue

31. 12. 2009

31. 12. 2008

149

321

301

434

Receivables that are overdue by between 1 and 30 days
do not normally result in bad debt losses since the overdue
nature of the receivables is primarily attributable to the
timing of receipts around the month-end. In the case of

trade receivables, collateral is generally held in the form of
vehicles documents and bank guarantees so that the risk
of bad debt loss is extremely low.

Cash and cash equivalents
Cash and cash equivalents of euro 7,767 million (2008:

euro 7,454 million) comprise cash on hand and at bank, all
with a maturity of under three months.

Equity
Number of shares issued
At 31 December 2009, common stock issued by BMW AG
was divided into 601,995,196 shares with a par value of
one euro. Preferred stock issued by BMW AG was divided
into 52,665,362 shares with a par value of one euro. Unlike
the common stock, no voting rights are attached to the
preferred stock. All of the Company’s stock is issued to
bearer. Preferred stock bears an additional dividend of euro
0.02 per share.

In 2009, 831,425 shares of non-voting preferred stock
were sold to employees at a reduced price of euro 15.56
per share in conjunction with an employee share scheme.
These shares are entitled to receive dividends with effect
from the financial year 2010. 362,225 treasury shares held
at the end of the previous year were used in this context:
the remaining 905 treasury shares held at the end of the
previous year were sold on the capital market. BMW AG
did not hold any treasury shares at 31 December 2009.

The Authorised Capital created at the Annual General
Meeting on 14 May 2009 amounting to euro 5 million in
total was used to issue a further 469,200 shares of pre-
ferred stock to employees. As a result, BMW AG’s issued
share capital increased by euro 0.5 million. The Authorised
Capital can be issued up to 13 May 2014 and amounted to
euro 4.5 million at the end of the reporting period.

The effect of applying IFRS 2 (Share-Based Payments) to
the employee share scheme is not material for the Group.

At the Annual General Meeting of BMW AG on 14 May
2009, the shareholders again authorised the Board of
Management to acquire treasury shares via the stock ex-
change, up to a maximum of 10 % of the share capital in
place at the date of the resolution and to withdraw those
shares from circulation without any further resolution by
the Annual General Meeting. At the same time, the authori-
sation from 8 May 2008 to acquire treasury shares was
rescinded. The authorisation from 14 May 2009 is valid
until 12 November 2010. The authorisation was not exer-
cised in 2009. It has not yet been decided whether or the
extent to which the authorisation will be used in the future.

Capital reserves
Capital reserves include premiums arising from the issue of
shares and totalled euro 1,921 million (2008: euro 1,911 mil-
lion). The change related to the share capital increase fol-
lowing the issue of shares of preferred stock to employees.

Revenues reserves
Revenue reserves comprise the post-acquisition and non-
distributed earnings of consolidated companies. In addi-
tion, revenue reserves include both positive and negative
goodwill arising on the consolidation of Group companies
prior to 31 December 1994.

108

Revenue reserves increased during the year to euro
20,426 million. The figure was increased in 2009 by the
amount of the net profit attributable to shareholders of
BMW AG (euro 204 million) and was reduced by the pay-
ment of the dividend for 2008 (euro 197 million).

Capital management disclosures
The BMW Group’s objectives when managing capital are
to safeguard the Group’s ability to continue as a going
concern in the long-term and to provide an adequate return
to shareholders.

The unappropriated profit of BMW AG of euro 197 million
for 2009 will be proposed to the Annual General Meeting
for distribution. The proposed distribution must be au-
thorised by the shareholders at the Annual General Meeting
of BMW AG. It is therefore not recognised as a liability in
the Group Financial Statements.

Accumulated other equity
Accumulated other equity consists of all amounts recog-
nised directly in equity resulting from the translation of
the financial statements of foreign subsidiaries, the effects
of recognising changes in the fair value of derivative finan-
cial instruments and marketable securities directly in
equity, and actuarial gains and losses relating to defined
benefit pension plans and similar obligations. It also in-
cludes deferred taxes on items recognised directly in equity.

Minority interests
Equity attributable to minority interests amounted to euro
13 million (2008: euro 8 million). This includes a minority
interest of euro 6 million (2008: euro 6 million) in the results
for the year.

The BMW Group manages the capital structure and
makes adjustments to it in the light of changes in eco-
nomic conditions and the risk profile of the underlying
assets.

In order to manage its capital structure, the BMW Group
uses various instruments including the amount of dividends
paid to shareholders and share buy-backs.

The BMW Group manages the structure of debt capital
on the basis of a target debt ratio. An important aspect
of the selection of financial instruments is the objective to
achieve matching maturities for the Group’s financing re-
quirements. In order to reduce non-systematic risk, the
BMW Group uses a variety of financial instruments available
on the world’s capital markets to achieve optimal diversi-
fication.

The capital structure at the end of the reporting period was
as follows:

in euro million

31. 12. 2009

31. 12. 2008

Equity attributable to shareholders of BMW AG

Proportion of total capital

Non-current financial liabilities

Current financial liabilities

Total financial liabilities

Proportion of total capital

Total capital

19,902

24.5 %

34,391

26,934

61,325

75.5 %

81,227

20,275

25.1 %

30,497

29,887

60,384

74.9 %

80,659

Equity attributable to shareholders of BMW AG decreased
during the financial year by 0.6 percentage points, mainly
as a result of changes in accumulated actuarial gains and
losses on pension obligations recognised directly in equity.
The increase in the proportion of financial liabilities mainly
reflects higher financing requirements for financial services
business.

The BMW AG is officially rated by the rating agencies,
Standard & Poor’s (S & P) and Moody’s. In previous years
the BMW AG benefited from first-class short-term ratings
issued by Moody’s and S & P. In 2009, the BMW AG was
not fully able to avoid the impact of adverse developments
in the automotive sector caused by the financial and eco-
nomic crisis.

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

109 Group Financial Statements

On 5 November 2008 S & P issued a long-term rating
of A with stable outlook (previously A+ with stable outlook)
and changed the outlook on 27 February 2009 from
“stable” to “negative”. In the face of unfavourable micro-
economic conditions and persisting doubts about
whether the principal markets would recover quickly,
BMW AG’s long-term rating was downgraded on 13 No-
vember 2009 to A– with negative outlook. In conjunction

with this downgrade, S & P also changed its short-term rat-
ing to A-2.

After putting BMW AG’s rating to “under review for possi-
ble downgrade” on 18 February 2009, Moody’s changed
its long-term rating on 3 April 2009 to A3 with negative
outlook (previously A2 with stable outlook) and downgraded
BMW AG’s short-term rating from P-1 to P-2.

Non-current financial liabilities

Current financial liabilities

Outlook

Moody’s

Standard & Poor’s

P-2

negative

A –

A -2

negative

With ratings of A– (S & P) and A3 (Moody’s), the agencies
continued to confirm BMW AG’s solid creditworthiness
for liabilities with a term of more than one year. The

BMW Group continues to have access to competitive re-
financing conditions for short-term debt.

Pension provisions
Pension provisions are recognised as a result of commit-
ments to pay future vested pension benefits and current
pensions to present and former employees of the BMW
Group and their dependants. Depending on the legal, eco-
nomic and tax circumstances prevailing in each country,
various pension plans are used, based generally on the
length of service, final salary and remuneration structure
of the employees involved. Due to similarity of nature, the
obligations of BMW Group companies in the USA and of
BMW (South Africa) (Pty) Ltd., Pretoria, for post-employ-
ment medical care are also disclosed as pension provisions.
The provision for these pension-like obligations amounts
to euro 70 million (2008: euro 66 million) and is measured,
similar to pension obligations, in accordance with IAS 19.
In the case of post-employment medical care, it is assumed
that the costs will increase on a long-term basis by 6 %
p. a. (unchanged from the previous year). The expense for
medical care costs in the financial year 2009 was euro 7 mil-
lion (2008: euro 7 million).

contribution plans, an enterprise pays fixed contributions
into a separate entity or fund and does not assume any
other obligations. The total pension expense for all defined
contribution plans of the BMW Group amounted to euro
387 million (2008: euro 412 million). This includes employer
contributions paid to state pension insurance schemes
amounting to euro 356 million (2008: euro 376 million).

Under defined benefit plans, the enterprise is required to
pay the benefits granted to present and past employees.
Defined benefit plans may be funded or unfunded, the
latter sometimes covered by accounting provisions. Most
of the pension commitments of the BMW Group in Ger-
many relate to BMW AG. In 2009 BMW AG transferred a
further portion of its pension obligations to BMW Trust e. V.,
Munich, in conjunction with a Contractual Trust Arrange-
ment (CTA). Obligations not covered by assets held by the
fund are covered by pension provisions. The main other
countries with funded plans were the UK, the USA, Switzer-
land, the Netherlands, Belgium and Japan.

Post-employment benefit plans are classified as either de-
fined contribution or defined benefit plans. Under defined

Pension obligations are computed on an actuarial basis at
the level of the defined benefit obligation. This computation

110

requires the use of estimates. The main assumptions, in
addition to life expectancy, depend on the economic
situation in each particular country. The following weighted

average values are used in the United Kingdom (UK) and
in the other countries:

31 December

in %

Discount rate

Salary level trend

Pension level trend

Germany

2009

2008

United Kingdom

2009

2008

Other

2009

2008

5.30

3.25

2.30

6.00

3.25

2.25

5.40

4.00

3.38

6.01

4.01

3.11

5.54

3.45

1.96

5.44

3.58

1.86

The salary level trend refers to the expected rate of salary
increase which is estimated annually depending on in-
flation and career development of employees within the
Group.

In the case of externally funded plans, the defined benefit
obligation is offset against plan assets measured at their
fair value. Where the plan assets exceed the pension obli-
gations and the enterprise has a right of reimbursement
or a right to reduce future contributions, the surplus amount
is recognised as an asset in accordance with IAS 19 and
presented within other financial assets. In the case of ex-
ternally funded plans, a liability is recognised under pen-
sion provisions where the benefit obligation exceeds fund
assets.

Actuarial gains or losses may result from increases or de-
creases in either the present value of the defined benefit
obligation or in the fair value of the plan assets. Causes of
actuarial gains or losses include the effect of changes in the
measurement parameters, changes in estimates caused
by the actual development of risks impacting on pension
obligations and differences between the actual and ex-
pected return on plan assets. Past service cost arises
where a BMW Group company introduces a defined bene-
fit plan or changes the benefits payable under an existing
plan.

Based on the measurement principles contained in IAS 19,
the following funding status applies to the Group’s pen-
sion plans:

31 December

in euro million

Germany

United Kingdom

Other

Total

2009

2008

2009

2008

2009

2008

2009

2008

Present value of pension benefits covered by
accounting provisions

–

131

162

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

Present value of funded pension benefits

4,616

3,817

5,743

4,403

Defined benefit obligations

Fair value of plan assets

Net obligation

Past service cost not yet recognised

Amount not recognised as an asset because of
the limit in IAS 19.58

4,619

3,848

5,743

4,403

3,144

1,155

4,487

4,059

1,475

2,693

1,256

–

Balance sheet amounts at 31 December

1,475

2,693

1,259

thereof pension provision

thereof pension assets (–)

1,475

2,693

1,259

–

499

569

346

223

406 10,858

8,626

537 10,931

8,788

277

260

7,977

5,491

2,954

3,297

234

273

2,968

3,311

238

– 4

276

2,972

3,314

– 3

– 4

– 3

344

–

345

–

111 Group Financial Statements

Pension provisions relating to pension plans in other coun-
tries amounted to euro 238 million (2008: euro 276 mil-
lion). This includes euro 168 million (2008: euro 145 million)
relating to externally funded plans.

ticular the gain in value of the British pound, had a signifi-
cant impact on the present value of pension obligations
and fund assets.

The change in the defined benefit obligations was attribut-
able mainly to changes in the discount rates used in the
actuarial computation. Changes in exchange rates, in par-

The changes in the pension provision and the pension
asset (reimbursement claims or right to reduce future con-
tributions to the funds) as disclosed in the balance sheet
can be derived as follows:

in euro million

2009

2008

2009

2008

2009

2008

2009

2008

Germany

United Kingdom

Other

Total

Balance sheet amounts at 1 January

2,693

3,849

345

647

273

127

3,311

4,623

Deconsolidation effects

Expense from pension obligations

–

237

– 4

293

–

357

–

399

Pension payments or transfers to external funds

–1,746 –1,471

– 99

– 98

– 58

–14

–1,903 –1,583

Actuarial gains (–) and losses (+)
on defined benefit obligations

522

– 271

946

– 647

Actuarial gains (–) and losses (+) on plan assets

– 234

278

– 40

Employee contributions

Translation differences and other changes

–1

–

486

–

–123

Balance sheet amounts at 31 December

1,475

2,693

1,259

345

thereof pension provision

thereof pension assets (–)

1,475

2,693

1,259

–

345

–

– 4

–15

–

– 5

234

238

– 4

–1

104

–

1,464

– 919

– 289

868

– 97

273

2,968

3,311

276

2,972

3,314

– 3

– 4

– 3

The defined benefit plans of the BMW Group give rise to
an expense from pension obligations in the financial year

2009 of euro 357 million (2008: euro 399 million), com-
prising the following components:

in euro million

Current service cost

Expense from reversing the discounting of pension obligations

Past service cost

Expected return on plan assets (–)

Expense from pension obligations

Germany

United Kingdom

Other

Total

2009

2008

2009

2008

2009

2008

2009

2008

103

228

–

– 94

237

117

209

–1

275

316

– 32

– 257

– 303

293

–

–19

–1

188

532

207

550

– 25

– 370

– 360

357

399

The expense from reversing the discounting of pension
obligations and the income from the expected return on
plan assets are reported as part of the financial result. All
other components of pension expense are included in the
relevant income statement under costs by function.

Depending on the risk structure of the pension obligations
involved, pension plan assets are invested in various in-

vestment classes, the most predominant one being bonds.
Other equity instruments, property and alternative invest-
ments are also considered. The expected rate of return is
derived on the basis of the specific investment strategy
applied to each individual pension fund. This is determined
on the basis of the rates of return from the individual in-
vestment classes taking account of costs and unplanned
risks.

112

This approach resulted in the following expected rates of return on plan assets (disclosed on the basis of weighted
averages).

in %

Germany

2009

2008

United Kingdom

2009

2008

Other

2009

2008

Expected rate of return on plan assets

6.12

5.43

6.03

5.93

6.55

6.99

Compared to the expected return of euro 370 million (2008:
euro 360 million), fund assets actually increased in the
financial year 2009 by euro 659 million (2008: decrease in
fund assets of euro 508 million). This gave rise to actuarial
gains on fund assets of euro 289 million (2008: actuarial
losses of euro 868 million). The actuarial gains on fund
assets compare with actuarial losses of euro 1,464 million
(2008: actuarial gains of euro 919 million) on benefit obli-
gations. These actuarial losses were attributable primarily
to lower discount rates and higher inflation rate expectations
in Germany and the United Kingdom.

The level of the pension obligations differs depending on
the pension system applicable in each country. Since the
state pension system in the United Kingdom only provides
a basic fixed amount benefit, retirement benefits are largely
organised in the form of company pensions and arrange-
ments financed by the individual. The pension benefits in
the United Kingdom therefore contain contributions made
by the employee.

The net obligation from pension plans in Germany, the
United Kingdom and other countries changed as follows:

Germany

in euro million

Defined benefit obligation

Plan assets

Net obligation

2009

2008

2009

2008

2009

2008

1 January

Deconsolidation effects

Expense from pension obligations and
expected return on plan assets

Payments to external funds

Employee contributions (deferred remuneration
retirement scheme)

Payments on account and pension payments

Actuarial gains (–) and losses (+)

Translation differences and other changes

3,848

3,849

–1,155

–

– 4

–

2,693

3,849

–

– 4

331

–

–111

325

–

– 99

522

– 271

–1

– 94

– 32

237

293

–1,642

–1,375

–1,642

–1,375

– 25

– 29

– 234

–1

278

–

–104

288

– 96

–1

31 December

4,619

3,848

– 3,144

–1,155

1,475

2,693

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

United Kingdom

in euro million

1 January

Deconsolidation effects

Expense from pension obligations and
expected return on plan assets

Payments to external funds

Employee contributions

Payments on account and pension payments

Actuarial gains (–) and losses (+)

Translation differences and other changes

Defined benefit obligation

Plan assets

Net obligation

2009

2008

2009

2008

2009

2008

4,403

6,327

– 4,059

– 5,686

–

– 24

–

334

379

– 257

– 303

–

– 264

946

323

– 285

– 647

–1,360

– 99

–1

264

– 40

– 98

–13

285

486

– 295

1,242

344

–

641

– 99

– 98

–

906

1,256

–

–161

–118

344

31 December

5,743

4,403

– 4,487

– 4,059

113 Group Financial Statements

Other

in euro million

1 January

Effects of first-time consolidation

Deconsolidation effects

Expense from pension obligations and
expected return on plan assets

Payments to external funds

Employee contributions

Payments on account and pension payments

Actuarial gains (–) and losses (+)

Translation differences and other changes

31 December

Defined benefit obligation

Plan assets

Net obligation

2009

2008

2009

2008

2009

2008

537

–

–19

– 4

– 9

569

455

–1

–

–17

–1

537

– 277

– 343

–

–19

– 54

– 2

–15

–

– 25

– 8

–1

104

–15

– 346

– 277

260

–

– 54

–

– 4

–19

– 3

223

112

–1

– 8

–

– 6

103

260

Plan assets in Germany, the United Kingdom and other countries comprised the following:

Components of plan assets

in euro million

2009

2008

2009

2008

2009

2008

2009

2008

Germany

United Kingdom

Other countries

Total

Equity instruments

Debt securities

Real estate

Other

31 December

1,020

1,835

–

289

379

641

–

135

823

642

2,951

2,620

315

398

278

519

3,144

1,155

4,487

4,059

165

142

346

151

101

277

2,008

4,928

335

706

1,172

3,362

285

672

7,977

5,491

A substantial portion of plan assets is invested in debt se-
curities in order to minimise the effect of capital market
fluctuations. Other investment classes, such as stocks and
shares, serve to generate higher rates of return. This is ne-
cessary to cover risks (such as changes in morbidity tables)
not taken into account in the actuarial assumptions applied.

The present value of the defined benefit obligations and
the fair values of fund assets – as well as the actuarial
adjustments made for those two items – have developed
as follows over the last five years:

in euro million

2009

2008

2007

2006

2005

Defined benefit obligation

Fair value of plan assets

Net obligation

Actuarial gains (–) and losses (+) on defined benefit obligations

Actuarial gains (–) and losses (+) on plan assets

10,931

7,977

2,954

1,464

– 289

8,788

5,491

3,297

– 919

868

10,631

6,029

4,602

– 557

11,430

6,432

4,998

– 400

–117

11,237

6,017

5,220

1,131

– 424

Experience adjustments for pension plans are not dis-
closed since the amounts involved are immaterial. Actuarial

gains on fund assets are primarily attributable to experience
adjustments.

114

Other provisions
Other provisions comprise the following items:

in euro million

31. 12. 2009

31. 12. 2008

Obligations for personnel and social expenses

Obligations for ongoing operational expenses

Other obligations

Other provisions

Total

960

2,816

988

4,764

thereof
due within
one year

445

1,031

582

2,058

Total

1,241

2,790

851

4,882

thereof
due within
one year

603

1,081

441

2,125

Provisions for obligations for personnel and social expenses
comprise mainly performance-related remuneration com-
ponents, pre-retirement part-time working arrangements
and employee long-service awards.

Provisions for other obligations cover numerous specific
risks and obligations of uncertain amount.

Other provisions changed during the year as follows:

Provisions for obligations for on-going operational expenses
comprise primarily warranty obligations.

in euro million

1.1. 20091 Translation
differences

Additions

Reversal of
discounting

Utilised2

Reversed

31. 12. 2009

Obligations for personnel and social expenses

Obligations for ongoing operational expenses

Other obligations

Other provisions

1,243

2,792

867

4,902

590

1,151

480

2,221

– 586

102

–1,091

115

– 248

–1,925

– 295

–159

–139

– 593

960

2,816

988

4,764

1 including entities consolidated for the first time during the financial year
2 including entities deconsolidated during the financial year

Of the amount shown as reversed, euro 509 million (2008: euro 263 million) are included in costs by function in the income
statement.

Income tax liabilities

31 December 2009
in euro million

Deferred tax

Current tax

Income tax liabilities

31 December 2008
in euro million

Deferred tax

Current tax

Income tax liabilities

Maturity
within one year

Maturity
later than one year

–

595

2,769

241

3,010

Maturity
within one year

Maturity
later than one year

–

265

2,757

368

3,125

Total

2,769

836

3,605

Total

2,757

633

3,390

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

115 Group Financial Statements

Current tax liabilities of euro 836 million (2008: euro 633
million) comprise euro 197 million (2008: euro 97 million)
for taxes payable and euro 639 million (2008: euro 536

million) for tax provisions. In 2009, tax provisions of euro 60
million were reversed (2008: euro 141 million).

Financial liabilities
Financial liabilities include all liabilities of the BMW Group at the relevant balance sheet dates relating to financing activities.
Financial liabilities comprise the following:

31 December 2009
in euro million

Bonds

Liabilities to banks

Liabilities from customer deposits (banking)

Commercial paper

Asset backed financing transactions

Derivative instruments

Other

Financial liabilities

31 December 2008
in euro million

Bonds

Liabilities to banks

Liabilities from customer deposits (banking)

Commercial paper

Asset backed financing transactions

Derivative instruments

Other

Financial liabilities

Maturity
within
one year

Maturity
between one
and five years

Maturity
later than
five years

4,483

6,534

7,212

5,213

2,086

549

857

18,320

1,840

2,700

–

5,726

532

145

4,214

800

–

Total

27,017

9,174

9,933

5,213

7,812

1,093

1,083

26,934

29,263

5,128

61,325

Maturity
within
one year

Maturity
between one
and five years

Maturity
later than
five years

6,685

6,365

6,402

5,471

3,439

762

763

11,787

3,879

1,785

–

5,263

796

207

5,687

900

–

108

Total

24,159

11,144

8,209

5,471

8,702

1,621

1,078

29,887

23,717

6,780

60,384

Issue volume
in relevant currency
(ISO-Code)

Weighted
average maturity
period (in years)

Weighted
average effective
interest rate (in %)

116

Bonds comprise:

Issuer

BMW Finance N. V., The Hague

BMW (UK) Capital plc, Bracknell

BMW US Capital, LLC, Wilmington, Del.

Interest

variable

fixed

variable

fixed

variable

fixed

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

JPY 10,000 million

SKK 768 million

EUR 1,733 million

USD 50 million

AUD 250 million

EUR 12,666 million

USD 1,250 million

GBP 300 million

SEK 1,000 million

NOK 450 million

RON 44 million

JPY 47,100 million

CZK 1,080 million

SEK 500 million

GBP 500 million

JPY 27,000 million

USD 278 million

EUR 100 million

CAD 100 million

MXN 405 million

EUR 5,000 million

USD 1,476 million

MXN 1,725 million

CHF 1,150 million

Rolls-Royce Motor Cars Limited, Bracknell

variable

GBP 46 million

Other

variable

fixed

JPY 19,600 million

EUR 480 million

NOK 200 million

SEK 1,451 million

USD 200 million

JPY 76,000 million

CHF 250 million

EUR 80 million

2.0

3.0

3.8

3.0

4.0

5.3

4.5

7.0

2.0

4.0

3.0

3.8

3.0

1.0

6.0

4.7

3.9

3.0

5.0

6.0

6.8

4.4

7.0

2.8

1.7

1.0

1.2

3.0

15.0

5.0

1.5

0.8

3.0

2.0

0.7

7.3

5.0

4.9

5.3

5.0

5.8

11.4

0.3

1.5

0.5

5.6

2.5

0.3

0.7

0.4

4.9

5.2

7.8

2.9

0.8

0.4

0.7

2.1

0.5

1.8

2.5

3.0

2.1

117 Group Financial Statements

The following details apply to the commercial paper:

Issuer

Issue volume
in relevant currency
(ISO-Code)

Weighted
average maturity
period (in days)

Weighted
average nominal
interest rate (in %)

BMW AG, Munich

BMW Finance N. V., The Hague

BMW Malta Finance Ltd., St. Julians

BMW (UK) Capital plc, Bracknell

BMW US Capital, LLC, Wilmington, Del.

EUR 1,717 million

EUR 1,924 million

EUR 385 million

EUR 100 million

EUR 1,551 million

46.3

62.0

47.9

11.0

14.5

Other liabilities
Other liabilities comprise the following items:

31 December 2009
in euro million

Other taxes

Social security

Advance payments from customers

Deposits received

Payables to subsidiaries

Payables to other companies in which an investment is held

Deferred income

Other

Other liabilities

31 December 2008
in euro million

Other taxes

Social security

Advance payments from customers

Deposits received

Payables to subsidiaries

Payables to other companies in which an investment is held

Deferred income

Other

Other liabilities

Maturity
within
one year

Maturity
between one
and five years

Maturity
later than
five years

473

395

124

1,109

1,779

3,969

–

1,795

101

2,037

–

230

244

Maturity
within
one year

Maturity
between one
and five years

Maturity
later than
five years

335

327

1,262

1,966

4,080

–

177

–

1,675

1,909

–

244

292

0.7

1.7

0.4

Total

495

417

202

3,134

1,887

6,250

Total

335

346

265

3,181

2,037

6,281

118

Deferred income comprises the following items:

in euro million

31. 12. 2009

31. 12. 2008

Deferred income from lease financing

Deferred income relating to service contracts

Grants

Other deferred income

Deferred income

Total

1,082

1,602

276

174

3,134

thereof
due within
one year

658

345

1,109

Total

1,068

1,615

303

195

3,181

thereof
due within
one year

654

485

1,262

Deferred income relating to service contracts relates to
service and repair work to be provided under commit-
ments given at the time of the sale of a vehicle (multi-
component arrangements). Grants comprise primarily
public funds to promote regional structures; this has been

invested in the construction of the production plant in
Leipzig. In accordance with IAS 20, they are recognised as
income over the useful lives of the assets to which they re-
late. Other deferred income includes primarily the effects
of the initial measurement of financial instruments.

Trade payables

31 December 2009
in euro million

Maturity
within
one year

Maturity
between one
and five years

Maturity
later than
five years

Total

Trade payables

3,106

–

3,122

31 December 2008
in euro million

Maturity
within
one year

Maturity
between one
and five years

Maturity
later than
five years

Total

Trade payables

2,525

–

2,562

The total amount of financial liabilities, other liabilities and trade payables with a maturity later than five years amounts to
euro 5,372 million (2008: euro 7,072 million).

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

119 Group Financial Statements

BMW Group
Notes to the Group Financial Statements
Other Disclosures

38 Contingent liabilities and other financial commitments

Contingent liabilities
No provisions were recognised for the following contingent liabilities (stated at their nominal amount) since an outflow of
resources is not considered to be probable:

in euro million

Guarantees

Performance guarantees

Other

Contingent liabilities

31. 12. 2009

31. 12. 2008

158

232

151

Contingent liabilities relate primarily to non-group entities.
Guarantees include an amount of euro 8 million (2008:
euro 5 million) in respect of non-consolidated subsidiaries.

Several liability applies in the case of investments in general
partnerships.

The usual commercial guarantees have been given in rela-
tion to the sale of Rover Cars and Land Rover activities.

Other financial obligations
In addition to liabilities, provisions and contingent liabilities,
the BMW Group also has other financial commitments,

primarily under lease contracts for buildings, plant and
machinery, tools, office and other facilities. The leases run
for periods of one to 93 years and in some cases contain
extension and / or purchase options. In 2009 an amount of
euro 199 million (2008: euro 230 million) was recognised
as expense in conjunction with other financial commit-
ments.

The total of future minimum lease payments under non-
cancellable leases can be analysed by maturity as follows:

in euro million

31. 12. 2009

31. 12. 2008

Nominal total of future minimum lease payments

due within one year

due between one and five years

due later than five years

Other financial obligations

208

598

697

1,503

222

619

695

1,536

The above amounts include euro 1 million (2008: euro 7 mil-
lion) in respect of non-consolidated subsidiaries and euro
1 million (2008: euro 1 million) for back-to-back operating
leases.

Purchase commitments for property, plant and equipment
amount to euro 1,697 million (2008: euro 1,891 million).
Sundry other financial commitments amount to euro 140
million (2008: euro 158 million).

120

39 Financial instruments

The carrying amounts and fair values of financial instruments are analysed below to IAS 39 categories, cash funds, cash
flow hedges and fair value hedges:

31 December 2009
in euro million

Cash funds

Loans
and receivables

Held-to-maturity
investments

Other liabilities

Available-

for-sale

Fair value

option

Held for

trading

Cash flow

hedges

Fair value

hedges

Fair value

Carrying
amount

Fair value

Carrying
amount

Fair value

Carrying
amount

Fair value

Carrying

amount

Carrying

amount*

Carrying

amount*

Carrying

amount*

Carrying

amount*

Carrying

amount*

Assets

Other investments

Receivables from sales financing

Financial assets

Derivative instruments

Marketable securities and investment funds

Loans to third parties

Credit card receivables

Other financial assets

–

Cash and cash equivalents

7,767

Trade receivables

Other assets

Receivables from subsidiaries

Receivables from companies in which
an investment is held

Collateral receivables

Other

Liabilities

Financial liabilities

Bonds

Liabilities to banks

Liabilities from customer deposits (banking)

Commercial paper

Asset backed financing transactions

Derivative instruments

Other financial liabilities

Trade payables

Other liabilities

Payables to subsidiaries

Payables to other companies in which
an investment is held

Other

* Carrying amount corresponds to fair value.

–

507

–

507

–

41,177

40,594

–

266

364

–

266

364

–

1,857

485

171

–

325

–

485

171

–

325

–

734

619

1,080

Derivative instruments

Marketable securities and investment funds

–

9,165

9,946

5,214

7,803

–

1,082

3,122

27,246

27,017

2,081

–

9,174

9,933

5,213

7,812

–

1,083

3,122

232

–

1,648

–

Assets

Other investments

Receivables from sales financing

Financial assets

Loans to third parties

Credit card receivables

Other financial assets

Cash and cash equivalents

Trade receivables

Other assets

Receivables from subsidiaries

Receivables from companies in which

an investment is held

Collateral receivables

Other

Liabilities

Financial liabilities

Bonds

Liabilities to banks

Liabilities from customer deposits (banking)

Commercial paper

Asset backed financing transactions

Other financial liabilities

Trade payables

Other liabilities

Payables to subsidiaries

Payables to other companies in which

an investment is held

Other

–

490

321

282

Derivative instruments

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

121 Group Financial Statements

31 December 2009

in euro million

Cash funds

Loans

and receivables

Held-to-maturity

investments

Other liabilities

Available-
for-sale

Fair value
option

Held for
trading

Cash flow
hedges

Fair value
hedges

Fair value

Carrying

amount

Carrying

amount

Carrying

amount

Fair value

Carrying
amount

Carrying
amount*

Cash and cash equivalents

7,767

1,857

Marketable securities and investment funds

Assets

Other investments

Receivables from sales financing

Financial assets

Derivative instruments

Loans to third parties

Credit card receivables

Other financial assets

Trade receivables

Other assets

Receivables from subsidiaries

Receivables from companies in which

an investment is held

Collateral receivables

Other

Liabilities

Financial liabilities

Bonds

Liabilities to banks

Liabilities from customer deposits (banking)

Commercial paper

Asset backed financing transactions

Derivative instruments

Other financial liabilities

Trade payables

Other liabilities

Payables to subsidiaries

Payables to other companies in which

an investment is held

Other

* Carrying amount corresponds to fair value.

507

–

507

–

41,177

40,594

–

266

364

–

485

171

–

325

–

266

364

–

485

171

–

325

–

27,246

27,017

9,165

9,946

5,214

7,803

–

1,082

3,122

9,174

9,933

5,213

7,812

–

1,083

3,122

2,081

232

–

1,648

–

Assets

Other investments

Receivables from sales financing

Financial assets

734

619

1,080

Derivative instruments

–

Marketable securities and investment funds

Loans to third parties

Credit card receivables

Other financial assets

Cash and cash equivalents

Trade receivables

Other assets

Receivables from subsidiaries

Receivables from companies in which
an investment is held

Collateral receivables

Other

Liabilities

Financial liabilities

Bonds

Liabilities to banks

Liabilities from customer deposits (banking)

Commercial paper

Asset backed financing transactions

490

321

282

Derivative instruments

–

Other financial liabilities

Trade payables

Other liabilities

Payables to subsidiaries

Payables to other companies in which
an investment is held

Other

122

31 December 2008
in euro million

Cash funds

Loans
and receivables

Held-to-maturity
investments

Other liabilities

Available-

for-sale

Fair value

option

Held for

trading

Cash flow

hedges

Fair value

hedges

Fair value

Carrying
amount

Fair value

Carrying
amount

Fair value

Carrying
amount

Fair value

Carrying

amount

Carrying

amount*

Carrying

amount*

Carrying

amount*

Carrying

amount*

Carrying

amount*

Assets

Other investments

Receivables from sales financing

Financial assets

Derivative instruments

Marketable securities and investment funds

Loans to third parties

Credit card receivables

Other financial assets

–

Cash and cash equivalents

7,454

Trade receivables

Other assets

Receivables from subsidiaries

Receivables from companies in which
an investment is held

Collateral receivables

Other

Liabilities

Financial liabilities

Bonds

Liabilities to banks

Liabilities from customer deposits (banking)

Commercial paper

Asset backed financing transactions

Derivative instruments

Other financial liabilities

Trade payables

Other liabilities

Payables to subsidiaries

Payables to other companies in which
an investment is held

Other

* Carrying amount corresponds to fair value.

–

291

–

291

–

37,839

38,063

–

253

711

–

253

711

–

2,305

425

103

–

186

–

425

103

–

186

–

836

817

1,796

Derivative instruments

Marketable securities and investment funds

–

24,280

11,120

8,263

5,473

8,615

–

1,097

2,562

24,159

11,144

8,209

5,471

8,702

–

1,078

2,562

1,931

322

–

653

–

Assets

Other investments

Receivables from sales financing

Financial assets

Loans to third parties

Credit card receivables

Other financial assets

Cash and cash equivalents

Trade receivables

Other assets

Receivables from subsidiaries

Receivables from companies in which

an investment is held

Collateral receivables

Other

Liabilities

Financial liabilities

Bonds

Liabilities to banks

Liabilities from customer deposits (banking)

Commercial paper

Asset backed financing transactions

Other financial liabilities

Trade payables

Other liabilities

Payables to subsidiaries

Payables to other companies in which

an investment is held

Other

–

610

637

374

Derivative instruments

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

123 Group Financial Statements

31 December 2008

in euro million

Cash funds

Loans

and receivables

Held-to-maturity

investments

Other liabilities

Available-
for-sale

Fair value
option

Held for
trading

Cash flow
hedges

Fair value
hedges

Fair value

Carrying

amount

Carrying

amount

Carrying

amount

Fair value

Carrying
amount

Carrying
amount*

Cash and cash equivalents

7,454

2,305

Marketable securities and investment funds

Assets

Other investments

Receivables from sales financing

Financial assets

Derivative instruments

Loans to third parties

Credit card receivables

Other financial assets

Trade receivables

Other assets

Receivables from subsidiaries

Receivables from companies in which

an investment is held

Collateral receivables

Other

Liabilities

Financial liabilities

Bonds

Liabilities to banks

Liabilities from customer deposits (banking)

Commercial paper

Asset backed financing transactions

Derivative instruments

Other financial liabilities

Trade payables

Other liabilities

Payables to subsidiaries

Payables to other companies in which

an investment is held

Other

* Carrying amount corresponds to fair value.

291

–

291

–

37,839

38,063

–

253

711

–

425

103

–

186

–

253

711

–

425

103

–

186

–

24,280

11,120

8,263

5,473

8,615

–

1,097

2,562

24,159

11,144

8,209

5,471

8,702

–

1,078

2,562

1,931

322

–

653

–

Assets

Other investments

Receivables from sales financing

Financial assets

836

817

1,796

Derivative instruments

–

Marketable securities and investment funds

Loans to third parties

Credit card receivables

Other financial assets

Cash and cash equivalents

Trade receivables

Other assets

Receivables from subsidiaries

Receivables from companies in which
an investment is held

Collateral receivables

Other

Liabilities

Financial liabilities

Bonds

Liabilities to banks

Liabilities from customer deposits (banking)

Commercial paper

Asset backed financing transactions

610

637

374

Derivative instruments

–

Other financial liabilities

Trade payables

Other liabilities

Payables to subsidiaries

Payables to other companies in which
an investment is held

Other

124

Fair value measurement of financial instruments
The fair values shown are computed using market informa-
tion available at the end of the reporting period on the ba-
sis of prices quoted by the counterparties or using appro-

priate measurement methods, e. g. discounted cash flow
models. In the latter case, amounts were discounted at
31 December 2009 on the basis of the following interest
rates:

ISO-Code
in %

Interest rate for six months

Interest rate for one year

Interest rate for five years

Interest rate for ten years

EUR

USD

GBP

JPY

0.5

0.9

2.9

3.7

0.3

0.6

3.1

4.2

0.6

0.9

3.5

4.3

0.5

0.7

1.5

Interest rates taken from interest rate structure curves
were adjusted, where necessary, to take account of the credit
quality and risk of the underlying financial instrument.

Financial instruments measured at fair value are allocated
to different measurement levels in accordance with IFRS 7.
This includes financial instruments that are

Derivative financial instruments are measured at their fair
value. The fair values of derivative financial instruments are
determined using measurement models, as a consequence
of which there is a risk that the amounts calculated on the
basis of those models could differ from realisable market
prices on disposal. Market price spreads (for liquidity and
credit risks for instance) remain wide as a result of the finan-
cial market crisis, therefore also affecting the measurement
of derivatives.

1 measured at their fair values in an active market for iden-

tical financial instruments (level 1),

2 measured at their fair values in an active market for com-
parable financial instruments or using measurement
models whose main input factors are based on observ-
able market data (level 2) or

3 using input factors not based on observable market data

(level 3).

The following table shows the mounts allocated to each
measurement level at 31 December 2009:

in euro million

Level hierarchy in accordance with IFRS 7
Level 2

Level 3

Level 1

Marketable securities and investment fund shares – available-for-sale

Derivatives (assets) – held for trading

Derivatives (liabilities) – held for trading

543

–

1,105

734

489

–

Other investments (available-for-sale) amounting to
euro 232 million are measured at amortised cost since
quoted market prices are not available or cannot be
determined reliably. These are therefore not included
in the level hierarchy shown above.

There were no significant reclassifications within the level
hierarchy during the financial year 2009.

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

125 Group Financial Statements

Gains and losses on financial instruments
The following table shows the net gains and losses arising for each of the categories of financial instrument defined by
IAS 39:

in euro million

Held for trading

2009

2008

Gains / losses from the use of derivative instruments

338

– 208

Available-for-sale

Gains and losses on sale and fair value measurement of marketable securities held for sale
(including investments in subsidiaries and participations measured at cost)

Income from investments

Accumulated other equity

Balance at 1 January

Total change during the year

of which recognised in the income statement during the period under report

Balance at 31 December

Loans and receivables

Impairment losses / reversals of impairment losses

Other income / expenses

Other liabilities

Income / expenses

– 23

– 7

– 801

– 49

–195

–18

– 610

– 41

–113

–109

Gains/losses from the use of derivatives relate primarily to
fair value gains or losses arising on stand-alone derivatives.

Write-downs of euro 3 million (2008: euro 123 million) on
available-for-sale securities, for which fair value changes
were previously recognised directly in equity, were recog-
nised as expenses in 2009. There were no reversals of
write-downs on current marketable securities recognised
directly in equity (2008: euro 5 million).

The disclosure of interest income resulting from the un-
winding of interest on future expected receipts would nor-

mally only be relevant for the BMW Group where assets
have been discounted as part of the process of determining
impairment losses. However, as a result of the assumption
that most of the income that is subsequently recovered is
received within one year and the fact that the impact is not
material, the BMW Group does not discount assets for the
purposes of determining impairment losses.

Cash flow hedges
The effect of cash flow hedges on accumulated other
equity was as follows:

in euro million

Balance at 1 January

Total changes during the year

of which recognised in the income statement during the period under report

Balance at 31 December

2009

2008

164

– 63

209

438

– 393

– 627

During the period under report, an expense of euro 44 mil-
lion (2008: income of euro 32 million) was recognised in
the income statement to reflect forecast errors and the
resulting over-hedging.

At 31 December 2009 the BMW Group held derivative in-
struments with terms of up to 46 months (2008: 48 months)
to hedge currency risks attached to future transactions. It
is expected that euro 187 million of net gains, recognised

126

in equity at the end of the reporting period, will be recog-
nised in the income statement in 2010.

Cash flow hedges are generally used to hedge cash flows
arising in conjunction with the supply of vehicles to sub-
sidiaries.

At 31 December 2009 the BMW Group held derivative in-
struments with terms of up to 84 months (2008: 96 months)
to hedge interest-rate risks attached to future transactions.
It is expected that euro 45 million of net losses, recog-
nised in equity at the end of the reporting period, will be
recognised in the income statement in 2010.

Fair value hedges
The following table shows gains and losses on hedging
instruments and hedged items which are deemed to be
part of a fair value hedge relationship:

in euro million

31. 12. 2009

31. 12. 2008

Gains / losses on hedging instruments designated as part of a fair value hedge relationship

Gains / loss from hedged items

– 398

446

386

– 405

–19

The difference between the gains / losses on hedging
instruments and the result recognised on hedged items
represents the ineffective portion of fair value hedges.

Fair value hedges are mainly used to hedge the market
prices of bonds and other financial liabilities.

previously accepted as collateral is acquired, it undergoes
a multi-stage process of repossession and disposal in
accordance with the legal situation prevailing in each rele-
vant market. The assets involved are generally vehicles
which can be converted into cash at any time via the dealer
organisation.

Credit risk
Notwithstanding the existence of collateral accepted, the
carrying amounts of financial assets generally take account
of the maximum credit risk arising from the possibility that
the counterparties will not be able to fulfil their contractual
obligations. The maximum credit risk for irrevocable credit
commitments relating to credit card business amounts to
euro 1,513 million (2008: euro 1,570 million). The equiva-
lent figure for dealer financing is euro 12,634 million (2008:
euro 12,490 million).

Impairment losses are recorded as soon as credit risks
are identified on individual financial assets, using a meth-
odology specifically designed by the BMW Group. More
detailed information regarding this methodology is provided
in the section on accounting policies.

The use of comprehensive rating and scoring techniques
and credit monitoring procedures ensures the recovera-
bility of the value of receivables from sales financing which
are neither overdue nor impaired.

In the case of performance relationships underlying non-
derivative financial instruments, collateral will be required,
information on the credit-standing of the counterparty
obtained or historical data based on the existing business
relationship (i.e. payment patterns to date) reviewed in
order to minimise the credit risk, all depending on the na-
ture and amount of the exposure that the BMW Group is
proposing to enter into.

Within the financial services business, the financed items
(e. g. vehicles, equipment and property) in the retail cus-
tomer and dealer lines of business serve as first-ranking
collateral with a recoverable value. Security is also put up
by customers in the form of collateral asset pledges, asset
assignment and first-ranking mortgages, supplemented
where appropriate by warranties and guarantees. If an item

The credit risk relating to derivative financial instruments is
minimised by the fact that the Group only enters into such
contracts with parties of first-class credit standing. The
general credit risk on derivative financial instruments utilised
by the BMW Group is therefore not considered to be sig-
nificant.

A concentration of credit risk with particular borrowers or
groups of borrowers has not been identified. In the context
of the current climate for financing, it must be reckoned
with that assessments of individual contractual partners’
creditworthiness may need to be amended.

Further disclosures relating to credit risk, in particular impair-
ment losses recognised, are provided in the notes to the rel-
evant category of receivables on pages 102 et seq. and 106.

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

127 Group Financial Statements

Liquidity risk
The following table shows the maturity structure of contractual cash flows (undiscounted and expected) for financial liabilities:

31 December 2009
in euro million

Bonds

Liabilities to banks

Liabilities from customer deposits (banking)

Commercial paper

Asset backed financing transactions

Derivative instruments

Trade payables

Other financial liabilities

31 December 2008
in euro million

Bonds

Liabilities to banks

Liabilities from customer deposits (banking)

Commercial paper

Asset backed financing transactions

Derivative instruments

Trade payables

Other financial liabilities

Maturity
within
one year

Maturity
between one
and five years

– 5,694

– 6,882

–7,834

– 5,251

– 2,246

– 86

– 3,106

– 859

– 31,958

– 22,951

– 2,075

– 2,759

–

– 6,278

264

–16

–162

– 33,977

Maturity
within
one year

Maturity
between one
and five years

– 7,755

– 6,434

– 6,639

– 5,504

– 3,670

349

– 2,525

– 766

– 32,944

–13,690

– 4,236

–1,866

–

– 5,405

383

– 37

– 218

– 25,069

Maturity
later than
five years

– 4,488

– 841

– 24

–

–176

–

–118

– 5,647

Maturity
later than
five years

– 5,900

– 945

– 26

–

–106

–

–145

– 7,122

Total

– 33,133

– 9,798

–10,617

– 5,251

– 8,524

– 3,122

–1,139

–71,582

Total

– 27,345

–11,615

– 8,531

– 5,504

– 9,075

626

– 2,562

–1,129

– 65,135

The cash flows shown comprise principal repayments and
the related interest. The amounts disclosed for derivative
instruments include all cash flows relating to derivatives
that have a negative fair value at the balance sheet date as
well as all cash flows relating to derivatives that have a
positive fair value at the balance sheet date but which are
part of a hedging relationship with a financial liability.

Solvency is assured at all times by managing and monitor-
ing the liquidity situation on the basis of a rolling cash flow
forecast. The resulting funding requirements are secured
by a variety of instruments placed on the world’s financial
markets. The objective is to minimise risk by matching ma-
turities for the Group’s financing requirements within the
framework of the target debt ratio. Despite rating down-
grades in 2009 due to the financial market and economic
crisis and the resulting adverse impact on the automotive
sector, the long-term ratings published by Standard & Poor’s

(S & P) and Moody’s of A– and A3 respectively ensure that
sufficient refinancing funds can still be raised at competitive
conditions.

Short-term liquidity is managed primarily by issuing money
market instruments (commercial paper). Competitive
conditions could also be achieved in this area despite the
fact that S & P and Moody’s downgraded their short-term
ratings to A-2 and P-2 respectively.

Also reducing liquidity risk, additional secured and unse-
cured lines of credit are in place with first-class international
banks. Intragroup cash flow fluctuations are evened out by
the use of daily cash pooling arrangements.

Market risks
The principal market risks to which the BMW Group is ex-
posed are currency risk and interest rate risk.

128

Protection against such risks is provided in the first instance
though natural hedging which arises when the values of
non-derivative financial instruments have matching maturi-
ties and amounts (netting). Derivative financial instruments
are used to reduce the risk remaining after netting. Finan-
cial instruments are only used to hedge underlying posi-
tions or forecast transactions.

The scope of permitted transactions, responsibilities, finan-
cial reporting procedures and control mechanisms used
for financial instruments are set out in internal guidelines.
This includes, above all, a clear separation of duties be-
tween trading and processing. Currency and interest rate
risks are managed at a corporate level.

Further disclosures relating to risk management are pro-
vided in the Group Management Report.

risks arise. Since a significant portion of Group revenues
are generated outside the euro currency region and the
procurement of production material and funding is also
organised on a worldwide basis, the currency risk is an ex-
tremely important factor for Group earnings.

At 31 December 2009, derivative financial instruments
were in place to hedge exchange rate risks, in particular
for the currencies US dollar, British pound, Japanese yen
and Chinese renminbi. The hedging contracts comprise
mainly option and forward currency contracts.

A description of how these risks are managed is provided
in the Group Management Report on page 64 et seq. The
BMW Group measures currency risks using a cash-flow-
at-risk model.

Currency risk
As an enterprise with worldwide operations, business is
conducted in a variety of currencies, from which currency

The starting point for analysing currency risk with this model
is the identification of forecast foreign currency transac-
tions or “exposures”. At the end of the reporting period, the
principal exposures for the coming year were as follows:

in euro million

Euro / US Dollar

Euro / Chinese Renminbi

Euro / British Pound

Euro / Japanese Yen

31. 12. 2009

31. 12. 2008

3,696

3,119

2,446

902

3,631

1,712

2,291

835

In the next stage, these exposures are compared to all
hedges that are in place. The net cash flow surplus repre-
sents an uncovered risk position. The cash-flow-at-risk
approach involves allocating the impact of potential ex-
change rate fluctuations to operating cash flows on the
basis of probability distributions. Volatilities and correlations
serve as input factors to assess those relevant probability
distributions.

The potential negative impact on earnings for the current
period is computed on the basis of current market prices

and exposures to a confidence level of 95 % for each cur-
rency. Aggregation of these results creates a risk reduc-
tion effect due to correlations between the various port-
folios.

The following table shows the potential negative impact
for the BMW Group – measured on the basis of the cash-
flow-at-risk approach – attributable at the balance sheet
date to unfavourable changes in exchange rates for the
principal currencies.

in euro million

Euro / US Dollar

Euro / Chinese Renminbi

Euro / British Pound

Euro / Japanese Yen

31. 12. 2009

31. 12. 2008

174

201

188

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

129 Group Financial Statements

The BMW Group’s currency risk relates primarily to the
currencies shown.

Interest rate risk
The BMW Group’s financial management system involves
the use of standard financial instruments such as short-
term deposits, investments in variable and fixed-income
securities as well as securities funds. The BMW Group
is therefore exposed to risks resulting from changes in in-
terest rates.

These risks arise when funds with differing fixed-rate
periods or differing terms are borrowed and invested. All
items subject to, or bearing, interest are exposed to inter-
est rate risk. Interest rate risks can affect either side of the
balance sheet.

The fair values of the Group’s interest rate portfolios for the
three principal currencies were as follows at the end of the
reporting period:

in euro million

Euro

US Dollar

British Pound

31. 12. 2009

31. 12. 2008

5,514

6,628

2,031

6,241

5,646

1,860

Interest rate risks can be managed by the use of interest
rate derivatives. The interest rate contracts used for hedging
purposes comprise mainly swaps which are accounted for
on the basis of whether they are designated as a fair value
hedge or as a cash flow hedge. A description of how inter-
est rate risk is managed is provided in the Group Manage-
ment Report on page 65.

As stated there, the BMW Group applies a value-at-risk
approach for internal reporting purposes and to manage
interest rate risks. This is based on a state-of-the-art his-
torical simulation, in which the potential future fair value

losses of the interest rate portfolios are compared across
the Group with expected amounts measured on the basis
of a holding period of three months and a confidence
level of 99 %. Aggregation of these results creates a risk
reduction effect due to correlations between the various
portfolios.

In the following table the potential volume of fair value fluc-
tuations – measured on the basis of the value-at-risk
approach – are compared with the expected value for the
interest rate relevant positions of the BMW Group for the
three principal currencies:

in euro million

Euro

US Dollar

British Pound

31. 12. 2009

31. 12. 2008

139

119

Other risks
The BMW Group is exposed to raw material price risks. A
description of how these risks are managed is provided in
the Group Management Report on page 65 et seq. In
order to reduce these risks, derivative financial instruments
are used that serve to hedge purchase price fluctuations
agreed with suppliers with respect to the raw material con-
tent of purchases. Changes in the fair values of these de-
rivatives, which generally track the quoted market prices of
the raw material being hedged, gives rise to market price
risks for the Group.

If the market prices of hedged raw materials had been 10 %
higher (lower) at 31 December 2009, the Group profit

before tax would have been euro 110 million higher (euro
110 million lower).

A further exposure relates to the residual value risk on
vehicles returned to the Group at the end of finance lease
contracts. The risks from financial instruments used in
this context were not material to the Group in the past and
at the end of the reporting period. A description of how
these risks are managed is provided in the Group Manage-
ment Report on pags 64 et seq. Information regarding
the residual value risk from operating leases is provided in
the section on accounting policies.

130

40 Explanatory notes to the cash flow statements

The cash flow statements show how the cash and cash
equivalents of the BMW Group and of the Automobiles
and Financial Services segments have changed in the
course of the year as a result of cash inflows and cash out-
flows. In accordance with IAS 7 (Cash Flow Statements),
cash flows are classified into cash flows from operating, in-
vesting and financing activities. The cash flow statements
of the BMW Group are presented on page 78 et seq.

Cash and cash equivalents included in the cash flow state-
ment comprise cash in hand, cheques, and cash at bank,
to the extent that they are available within three months
and are subject to an insignificant risk of changes in value.
The positive impact of changes in cash and cash equiva-
lents due to the effect of exchange rate fluctuations in
2009 was euro 40 million (2008: negative impact of euro
44 million).

The cash flows from investing and financing activities are
based on actual payments and receipts. By contrast, the
cash flow from operating activities is derived indirectly
from the net profit / loss for the year. Under this method,
changes in assets and liabilities relating to operating
activities are adjusted for currency translation effects and
changes in the composition of the Group. The changes
in balance sheet positions shown in the cash flow state-
ment do not therefore agree directly with the amounts
shown in the Group and segment balance sheets.

If the BMW Group acts as the lessor in a finance lease,
the relevant cash flows are reported in the cash flow state-
ments as part of the cash flow from investing activities.
If the BMW Group acts as the lessee in a finance lease,
the cash flows are reported as part of the cash flows from
operating and investing activities.

If the BMW Group acts as the lessee in an operating lease,
cash flows are reported as part of the cash flow from in-
vesting activities. In the final case, where the BMW Group
acts as the lessee in an operating lease, cash flows are
reported as part of the cash flow from operating activities.

The entities of the BMW Sauber Group, Hinwil, were sold
to Peter Sauber AG, Pfäffikon, in 2009. The cash inflow in
2009 relating to the sales price amounted to euro 15 mil-
lion and is presented in the Group and Automobiles seg-
ment cash flow statements as part of the cash inflow from
investing activities in the line item “Proceeds from the dis-
posal of investments”.

Cash outflows for taxes on income and cash inflows for
interest are classified as cash flows from operating activi-
ties in accordance with IAS 7.31 and IAS 7.35. Cash out-
flows for interest are presented on a separate line within
cash flows from financing activities.

Cash flows from dividends received amounted to euro 4 mil-
lion (2008: euro 4 million).

Related party relationships
In accordance with IAS 24 (Related Party Disclosures),
related individuals or entities which have the ability to con-
trol the BMW Group or which are controlled by the BMW
Group, must be disclosed unless such parties are not al-
ready included in the consolidated financial statements as
consolidated companies. Control is defined as ownership
of more than one half of the voting power of BMW AG or
the power to direct, by statute or agreement, the financial
and operating policies of the management of the Group.

In addition, the disclosure requirements of IAS 24 also cover
transactions with participations, joint ventures and indivi-
duals that have the ability to exercise significant in fluence
over the financial and operating policies of the BMW Group.
This also includes close relatives and intermediaries. Sig-
nificant influence over the financial and operating policies
of the BMW Group can arise when a party holds 20 % or

more of the shares of BMW AG or is a member of the Board
of Management or Supervisory Board of BMW AG.

For the financial year 2009, the disclosure requirements
contained in IAS 24 only affect the BMW Group with re-
gard to business relationships with affiliated, non-consoli-
dated entities, joint ventures and participations as well as
with members of the Board of Management and Super-
visory Board of BMW AG.

The BMW Group maintains normal business relationships
with affiliated, non-consolidated entities. Transactions
with these entities are small in scale, arise in the normal
course of business and are conducted on the basis of
arm’s length principles.

Transactions of BMW Group companies with the joint
venture, BMW Brilliance Automotive Ltd., Shenyang, all

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

131 Group Financial Statements

arise in the normal course of business and are conducted
on the basis of arm’s length principles. Group companies
sold goods and services to BMW Brilliance Automotive Ltd.,
Shenyang, during 2009 for an amount of euro 532 million
(2008: euro 406 million). At 31 December 2009, receivables
of Group companies from BMW Brilliance Automotive
Ltd., Shenyang, amounted to euro 170 million (2008: euro
102 million). As in the previous year, there were no payables
from Group companies to BMW Brilliance Automotive Ltd.,
Shenyang, at the end of the reporting period.

BMW INTEC Beteiligungs GmbH, Munich, and SGL Tech-
nologies GmbH, Wiesbaden, founded SGL Automotive
Carbon Fibers Verwaltungs GmbH, Munich, on 3 Decem-
ber 2009 and SGL Automotive Carbon Fibers GmbH &
Co. KG, Munich, on 10 December 2009 as joint ventures.
There were no business transactions between BMW Group
entities and the joint ventures in 2009.

Business transactions between BMW Group entities and
participations all arise in the normal course of business
and are conducted on the basis of arm’s length principles.
With the exception of Cirquent GmbH, Munich, business
relationships with such entities are on a small scale. The
BMW Group companies purchased services and goods
from Cirquent GmbH, Munich, amounting to euro 52 mil-
lion in 2009. At 31 December 2009, liabilities of Group
companies to Cirquent GmbH, Munich, totalled euro 10 mil-
lion (2008: euro 28 million). Receivables of Group com-
panies from Cirquent GmbH, Munich, amounted to euro 1
million (as at the end of the previous year).

Stefan Quandt is a shareholder and Deputy Chairman of
the Supervisory Board of BMW AG. He is also sole share-
holder and Chairman of the Supervisory Board of DELTON
AG, Bad Homburg v. d. H., which, via its subsidiaries, per-
formed logistics services for the BMW Group during the
financial year 2009. In addition, companies of the DELTON
Group acquired vehicles from the BMW Group, mostly
in the form of leasing contracts. These service and sales
contracts, which are not material for the BMW Group, all
arise in the normal course of business and are conducted,
without exception on the basis of arm’s length principles.

Susanne Klatten is a shareholder and member of the
Supervisory Board of BMW AG and also a shareholder and
Deputy Chairman of the Supervisory Board of Altana AG,
Wesel, which purchased vehicles from the BMW Group
during the financial year 2009. Susanne Klatten also holds
shares (and is member of the Supervisory Board) in SGL
Carbon SE, Wiesbaden, whose subsidiaries supplied com-
ponents to the BMW Group during the financial year 2009.
In addition she holds shares in Nordex AG, Norderstedt.
The corresponding sales contracts are not material for the
BMW Group, arise in the course of ordinary activities and
are made, without exception, on the basis of arm’s length
principles.

Apart from these transactions, companies of the BMW
Group did not enter into any contracts with members of
the Board of Management or Supervisory Board of BMW
AG. The same applies to close members of the families of
those persons.

Declaration with respect to the Corporate
Governance Code
The Board of Management and the Supervisory Board of
Bayerische Motoren Werke Aktiengesellschaft have issued
the Declaration of Compliance pursuant to § 161 of the Ger-

Shareholdings of members of the Board of
Management and Supervisory Board
The members of the Supervisory Board of BMW AG hold
in total 27.68 % of the issued common and preferred stock
shares, of which 16.11 % relates to Stefan Quandt, Bad
Homburg v. d. H. and 11.57 % to Susanne Klatten, Munich.

man Stock Corporation Act. The Declaration of Compliance is
reproduced on page 141 and is also available to shareholders
on the BMW Group website at www.bmwgroup.com/ir.

The shareholding of the members of the Board of Manage-
ment of BMW AG is, in total, less than 1 % of the issued
stock shares.

132

44 Compensation of members of the Board of Management and Supervisory Board

The compensation of current members of the Board of Management and Supervisory Board amounted to euro 13.0 mil-
lion (2008: euro 13.3 million) and comprised the following:

in euro million

Short-term employment benefits

Post-employment benefits

Compensation

2009

2008

12.3

0.7

13.0

12.5

0.8

13.3

The total remuneration of the members of the Board of
Management for the financial year 2009 amounted to euro
10.7 million (2008: euro 10.9 million). This comprised
fixed components of euro 3.7 million (2008: euro 3.1 mil-
lion) and variable components of euro 7.0 million (2008:
euro 7.8 million).

In addition, an amount of euro 0.7 million (2008: euro 0.8
million) has been granted to current members of the
Board of Management after the end of their employment
relationship. This relates to the expense for allocations to
pension provisions (service cost).

The remuneration of former members of the Board of
Management and their surviving dependants amounted to
euro 3.8 million (2008: euro 3.1 million).

Pension obligations to former members of the Board of
Management and their surviving dependants are fully cov-
ered by pension provisions amounting to euro 46.7 million
(2008: euro 44.3 million), computed in accordance with
IAS 19.

The compensation of the members of the Supervisory
Board for the financial year 2009 amounted to euro 1.6 mil-
lion and, as in the previous year comprises only fixed com-
ponents.

The compensation systems for members of the Board of
Management and the Supervisory Board do not include
any stock options, value appreciation rights comparable to
stock options or any other stock-based compensation
components.

No advances and loans were granted to members of the
Board of Management and the Supervisory Board, nor
were any contingent liabilities entered into on their behalf.

Further details about the remuneration of current mem-
bers of the Board of Management and the Supervisory
Board can be found in the Compensation Report on page
151 et seq. The compensation report is part of the Group
Management Report.

The names of the members of the Supervisory Board and of
the Board of Management are disclosed on page 142 et seq.

45 Application of exemptions pursuant to § 264 (3)

– BMW M GmbH Gesellschaft für individuelle Automobile,

and § 264 b HGB
A number of companies and incorporated partnerships (as
defined by § 264a HGB) which are affiliated, consolidated
entities of BMW AG and for which the consolidated finan-
cial statements of BMW AG represent exempting consoli-
dated financial statements, apply the exemptions available
in § 264 (3) and § 264b HGB with regard to the drawing up
of a management report. The exemptions have been ap-
plied by:

Munich

– BMW Vertriebs GmbH & Co. oHG, Dingolfing
– Rolls-Royce Motor Cars GmbH, Munich

In addition, the following entities apply the exemption avail-
able in § 264 (3) and § 264b HGB with regard to publica-
tion:

– Bavaria Wirtschaftsagentur GmbH, Munich
– BMW Fuhrparkmanagement Beteiligungs GmbH, Stutt-

– Bavaria Wirtschaftsagentur GmbH, Munich
– BMW Fahrzeugtechnik GmbH, Eisenach
– BMW Fuhrparkmanagement Beteiligungs GmbH, Stutt-

gart

– BMW Hams Hall Motoren GmbH, Munich
– BMW Ingenieur-Zentrum GmbH + Co., Dingolfing

gart

– BMW Hams Hall Motoren GmbH, Munich
– BMW Ingenieur-Zentrum GmbH + Co., Dingolfing
– BMW INTEC Beteiligungs GmbH, Munich
– BMW Vertriebs GmbH & Co. oHG, Dingolfing
– Rolls-Royce Motor Cars GmbH, Munich

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

133 Group Financial Statements

BMW Group
Notes to the Group Financial Statements
Segment Information

46 Explanatory notes to segment information

Information on reportable segments
For the purposes of presenting segment information, the
activities of the BMW Group are divided into operating
segments in accordance with the rules contained in IFRS 8
(Operating Segments). Operating segments are identified
on the same basis that is used internally to manage and
report on performance and takes account of the organisa-
tional structure of the BMW Group based on the various
products and services of the reportable segments.

The activities of the BMW Group are broken down into the
operating segments Automobiles, Motorcycles, Financial
Services and Other Entities.

The Automobiles segment develops, manufactures, as-
sembles and sells cars and off-road vehicles, under the
brands BMW, MINI and Rolls-Royce as well as spare parts
and accessories. BMW and MINI brand products are sold
in Germany through branches of BMW AG and by inde-
pendent, authorised dealers. Sales outside Germany
are handled primarily by subsidiary companies and, in a
number of markets, by independent import companies.
Rolls-Royce brand vehicles are sold in the USA via a sub-
sidiary com pany and elsewhere by independent, authorised
dealers.

The BMW Motorcycles segment develops, manufactures,
assembles and sells BMW brand motorcycles as well as
spare parts and accessories.

The Financial Services segment focuses primarily on car
leasing, fleet business, retail customer and dealer financing,
customer deposit business and insurance activities.

Holding and Group financing companies are included in
the Other Entities segment. This segment also includes
operating companies – BMW Services Ltd., Bracknell,
BMW (UK) Investments Ltd., Bracknell, Bavaria Lloyd
Reisebüro GmbH, Munich, and MITEC Mikroelektronik
Mikrotechnik Informatik GmbH, Dingolfing, – which are
not allocated to one of the other segments. In the previous

year, it also included the income and expenses recorded by
the Cirquent Group in first nine months of 2008.

Eliminations comprise the effects of eliminating business
relationships between the operating segments.

Internal management and reporting
Segment information is prepared in conformity with the
accounting policies adopted for preparing and presenting
the Group Financial Statements. There were no changes
in accounting policies compared to previous periods. In-
ter-segment receivables and payables, provisions, income,
expenses and profits are eliminated in the column “Elimi-
nations”. Inter-segment sales take place at arm’s length
prices.

The role of “chief operating decision maker” with respect
to resource allocation and performance assessment of
the reportable segment is embodied in the full Board of
Management. In order to assist the decision-taking process,
various measures of segment profit or loss and of seg-
ment assets have been set for the various operating seg-
ments.

The Automobiles and Motorcycles segments are managed
on the basis of the profit before financial result. Capital em-
ployed is the corresponding measure of segment assets
used to determine how to allocate resources. Capital em-
ployed comprises all current and non-current operational
assets of the segment, after deduction of liabilities used
operationally which are not subject to interest.

The performance of the Financial Services segment is
measured on the basis of profit or loss before tax. Net
assets, defined as all assets less all liabilities, are used as
the basis for assessing the allocation of resources.

The performance of the Other Entities segment is assessed
on the basis of profit or loss before tax. The corresponding
measure of segment assets used to manage the Other
Entities segment is total assets less tax-related assets and
other investments.

134

Segment information by operating segment is as follows:

Segment information by operating segment

in euro million

External revenues

Inter-segment revenues

Total revenues

Segment result

Capital expenditure on non-current assets

Depreciation and amortisation on non-current assets

* including impairment losses of euro 3 million

Automobiles

Motorcycles

Financial

Services

Other Entities

Reconciliation to

Group figures

Group

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

35,613

8,124

43,737

– 265

3,606

3,509

37,877

10,905

48,782

690

4,467

3,567

1,059

1,069

1,222

1,230

55
70*

14,008

1,790

15,798

365

10,246

5,757

13,952

1,773

15,725

– 292

14,842

6,339

–

146

191

295

–

– 9,926

243

– 1,787

– 2,050

–12,731

– 402

– 2,788

– 2,344

–

50,681

53,197

External revenues

–

Inter-segment revenues

50,681

53,197

Total revenues

413

12,117

7,289

351

Segment result

16,580

Capital expenditure on non-current assets

7,645

Depreciation and amortisation on non-current assets

in euro million

Segment assets

Automobiles

Motorcycles

Financial

Services

Other Entities

Reconciliation to

Group figures

Group

31. 12. 2009

31. 12. 2008

31. 12. 2009

31. 12. 2008

31. 12. 2009

31. 12. 2008

31. 12. 2009

31. 12. 2008

31. 12. 2009

31. 12. 2008

31. 12. 2009

31. 12. 2008

11,887

14,367

389

423

4,268

3,752

40,400

38,548

45,009

43,996

101,953

101,086

Segment assets

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

135 Group Financial Statements

Segment information by operating segment

in euro million

External revenues

Inter-segment revenues

Total revenues

Segment result

Capital expenditure on non-current assets

Depreciation and amortisation on non-current assets

* including impairment losses of euro 3 million

Automobiles

Motorcycles

Financial
Services

Other Entities

Reconciliation to
Group figures

Group

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

35,613

8,124

43,737

– 265

3,606

3,509

37,877

10,905

48,782

690

4,467

3,567

1,059

1,069

1,222

1,230

70*

14,008

1,790

15,798

365

10,246

5,757

13,952

1,773

15,725

– 292

14,842

6,339

–

146

191

295

–

– 9,926

243

– 1,787

– 2,050

–

50,681

53,197

External revenues

–12,731

– 402

– 2,788

– 2,344

–

Inter-segment revenues

50,681

53,197

Total revenues

413

12,117

7,289

351

Segment result

16,580

Capital expenditure on non-current assets

7,645

Depreciation and amortisation on non-current assets

in euro million

Segment assets

Automobiles

Motorcycles

Financial
Services

Other Entities

Reconciliation to
Group figures

Group

31. 12. 2009

31. 12. 2008

31. 12. 2009

31. 12. 2008

31. 12. 2009

31. 12. 2008

31. 12. 2009

31. 12. 2008

31. 12. 2009

31. 12. 2008

31. 12. 2009

31. 12. 2008

11,887

14,367

389

423

4,268

3,752

40,400

38,548

45,009

43,996

101,953

101,086

Segment assets

136

Interest and similar income of the Financial Services seg-
ment totalling euro 3 million (2008: euro 2 million) are in-
cluded in segment result. Interest and similar expenses of
the Financial Services segment amounted to euro 8 mil-
lion (2008: euro 8 million). The Other Entities segment
result includes interest and similar income amounting to
euro 1,778 million (2008: euro 2,102 million) and interest
and similar expenses amounting to euro 1,852 million
(2008: euro 1,927 million).

Also included in the Other Entities segment result is the
loss from equity accounted investments amounting
to euro 6 million in 2009 (2008: profit of euro 1 million).

in euro million

Reconciliation of segment result

Total for reportable segments

Financial result of Automobiles segment and Motorcycles segment

Elimination of inter-segment items

Group profit before tax

Reconciliation of capital expenditure on non-current assets

Total for reportable segments

Elimination of inter-segment items

Total Group capital expenditure on non-current assets

Reconciliation of depreciation and amortisation on non-current assets

Total for reportable segments

Elimination of inter-segment items

Total Group depreciation and amortisation on non-current assets

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

Reconciliation of segment assets

Total for reportable segments

Non-operating assets – Other Entities segment

Operating liabilities – Financial Services segment

Interest-bearing assets – Automobiles segment

Liabilities of Automobiles and Motorcycles segments not subject to interest

Elimination of inter-segment items

Total Group assets

Segment assets of the Other Entities segment at 31 De-
cember 2009 included investments accounted for using
the equity method amounting to euro 23 million (2008:
euro 29 million).

The information disclosed for capital expenditure and de-
preciation and amortisation relates to property, plant and
equipment, intangible assets and leased products.

Segment figures can be reconciled to the corresponding
Group figures as follows:

2009

2008

170

– 331

574

413

13,904

–1,787

12,117

9,339

– 2,050

7,289

56,944

5,797

67,008

25,826

15,541

– 69,163

101,953

753

– 381

– 21

351

19,368

– 2,788

16,580

9,989

– 2,344

7,645

57,090

5,616

66,040

24,849

14,174

– 66,683

101,086

137 Group Financial Statements

In the case of information by geographical region, external
sales are based on the location of the customer’s regis-
tered office. Revenues with major customers were not
material overall. The information disclosed for non-current

assets relates to property, plant and equipment, intan-
gible assets and leased products. The reconciling
item disclosed for non-current assets relates to leased
products.

Information by region

in euro million

Germany

USA

United Kingdom

Rest of Europe

Africa / Asia / Oceania

Rest of the Americas

Eliminations

Group

External
revenues

Non-current
assets

2009

2008

2009

2008

11,436

10,628

4,078

12,911

9,823

1,805

–

10,739

11,349

4,913

15,780

8,471

1,945

–

50,681

53,197

21,136

9,836

1,596

3,155

1,246

590

– 2,822

34,737

21,916

11,081

1,739

3,337

549

1,169

– 3,334

36,457

Munich, 19 February 2010

Bayerische Motoren Werke
Aktiengesellschaft

The Board of Management

138

Responsibility Statement by the Company’s Legal Representatives

Statement pursuant to § 37y No. 1 of the Securities
Trading Act (WpHG) in conjunction with § 297 (2)
sentence 3 and § 315 (1) sentence 6 of the German
Commercial Code (HGB)
“To the best of our knowledge, and in accordance with the
applicable reporting principles, the Consolidated Financial
Statements give a true and fair view of the assets, liabilities,
financial position and profit of the Group, and the Group
Management Report includes a fair review of the develop-
ment and performance of the business and the position of
the Group, together with a description of the principal op-
portunities and risks associated with the expected develop-
ment of the Group.”

Munich, 19 February 2010

Bayerische Motoren Werke
Aktiengesellschaft

The Board of Management

74
74
74

76
78
80

Group Financial Statements
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity
Notes
81

Accounting Principles
and Policies
Notes to the Income
Statement
Notes to the Statement
of Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information

98
119
133

139 Group Financial Statements

BMW Group
Auditors’ Report

We have audited the consolidated financial statements
prepared by Bayerische Motoren Werke Aktiengesellschaft,
comprising the income statement and statement of com-
prehensive income, the balance sheet, cash flow state-
ment, statements of changes in equity and the notes to the
consolidated financial statements and its report on the po-
sition of the Company and the Group for the business year
from 1 January to 31 December 2009. The preparation of
the consolidated finan cial statements and Group Manage-
ment Report in accordance with IFRS, as adopted by the
EU, and the additional requirements of German commercial
law pursuant to § 315 a (1) HGB are the responsibility of
the parent company’s management. Our responsibility is
to express an opinion on the consolidated financial state-
ments and on the Group Management Report based on our
audit.

economic and legal environment of the Group and ex-
pectations as to possible misstatements are taken into
account in the determination of audit procedures. The
effectiveness of the accounting-related internal control
system and the evidence supporting the disclosures in
the consolidated financial statements and in the Group
Management Report are examined primarily on a test basis
within the framework of the audit. The audit also includes
assessing the annual financial statements of those entities
included in consolidation, the determination of entities
to be included in consolidation, the accounting and con-
solidation principles used and significant estimates made
by the Board of Management, as well as evaluating the
overall presentation of the consolidated financial statements
and Group Management Report. We believe that our audit
provides a reasonable basis for our opinion.

We conducted our audit of the consolidated financial
statements in accordance with § 317 HGB and German
generally accepted standards for the audit of financial
statements promulgated by the Institut der Wirtschafts-
prüfer (IDW). Those standards require that we plan and
perform the audit such that material misstatements
materially affecting the presentation of the net assets,
financial position and results of operations in the con-
solidated financial statements in accordance with the
applicable financial reporting framework and in the Group
Management Report are detected with reasonable
assurance. Knowledge of the business activities and the

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the con-
solidated financial statements comply with IFRSs, as
adopted by the EU, the additional requirements of German
commercial law pursuant to § 315 a (1) HGB and give a
true and fair view of the net assets, financial position and
results of operations of the Group. The Group Management
Report is consistent with the consolidated financial state-
ments and as a whole provides a suitable view of the
Group’s position and suitably presents the opportunities
and risks of future development.

Munich, 26 February 2010

KPMG AG
Wirtschaftsprüfungsgesellschaft

Prof. Dr. Schindler
Wirtschaftsprüfer

Pastor
Wirtschaftsprüfer

140

Statement on Corporate Governance

Corporate governance – acting in accordance with the
principles of responsible management aimed at increasing
the value of the business on a sustainable basis – is an all-
embracing issue for the BMW Group affecting all areas of
the enterprise. The corporate culture within the BMW Group
is founded on transparent reporting and corporate com-
munication, a policy of corporate governance aimed at
the interests of stakeholders, a fair and open approach be-
tween the Board of Management, the Supervisory Board,
employees and compliance with the law. The Board of
Management reports in this statement, also on behalf
of the Supervisory Board, on important aspects of corpo-
rate governance pursuant to § 289 a HGB and section 3.10
GCGC. The statement is part of the Group Management
Report.

Information on the Company’s Governing
Constitution
The designation “BMW Group” comprises Bayerische Mo-
toren Werke Aktiengesellschaft (BMW AG) and its Group
entities. BMW AG is a stock corporation (Aktiengesellschaft)
based on the German Stock Corporation Act (Aktienge-
setz). It has three representative bodies: the Annual General
Meeting, the Supervisory Board and the Board of Manage-
ment. The duties and authorities of those bodies derive
from the Stock Corporation Act and the Articles of Incorpo-
ration of BMW AG. Shareholders, as the owners of the
business, exercise their rights at the Annual General Meet-
ing. The Annual General Meeting decides in particular on
the utilisation of unappropriated profit, the ratification of the
acts of the members of the Board of Management and of
the Supervisory Board, the appointment of the external
auditor, changes to the Articles of Incorporation, specified
capital measures and elects the shareholders’ repre-
sentatives to the Supervisory Board. The Board of Manage-
ment manages the enterprise under its own responsibility.
Within this framework, it is monitored and advised by the
Supervisory Board. The Supervisory Board appoints the
members of the Board of Management and can, at any
time, revoke an appointment if there is an important reason.
The Board of Management keeps the Super visory Board
informed of all significant matters regularly, without delay
and comprehensively, following the principles of conscien-
tious and faithful accountability and in accordance with pre-
vailing law and reporting duties allocated to it by the Super-
visory Board. The Board of Management requires the
approval of the Supervisory Board for certain major trans-
actions. The Supervisory Board is not, however, authorised
to undertake management measures itself.

In accordance with the regulations contained in the Ger-
man Co-determination Act, BMW AG’s Supervisory Board
comprises ten shareholder representatives (elected by the
Annual General Meeting) and ten employee representatives
(elected by employees). The close interaction between

the Board of Management and the Supervisory Board in the
interests of the enterprise as described above is also known
as a “two-tier board structure”. The composition of the Board
of Management and the Supervisory Board and of sub-
committees set up by the Supervisory Board is disclosed
on page 142 et seq. of this Annual Report. Further informa-
tion on work procedures of the Board of Management and
the Supervisory Board can be found on page 146 et seq.

Declaration of Compliance and the BMW Group
Corporate Governance Code
Management and supervisory boards of companies listed
in Germany are required by law (§ 161 German Stock Cor-
poration Act) to report once a year whether the officially
published and relevant recommendations issued by the
“German Government Corporate Governance Code Com-
mission”, as valid at the date of the declaration, have been,
and are being, complied with. Companies affected are
also required to state which of the recommendations of the
Code have not been or are not being applied and the rea-
son why not.

The Board of Management and Supervisory Board of
BMW AG believe that the recommendations and sugges-
tions contained in the German Corporate Governance
Code (GCGC) contribute to an enhancement of the finan-
cial markets in Germany, in particular for international in-
vestors. At the joint meeting held in December 2009, the
Board of Management and Supervisory Board of BMW AG
issued the declaration of compliance with the new version
of the GCGC valid from 5 August 2009 and posted it to
the BMW Group’s website.

In addition, the Board of Management and the Supervisory
Board have, in past years, developed the BMW Group’s
own Corporate Governance Code based on the GCGC in
order to provide shareholders and other stakeholders with
a comprehensive and stand-alone document covering
the corporate governance practices applied by the
BMW Group. The BMW Group’s Corporate Governance
Code has been revised in conjunction with the new ver-
sion of the GCGC. A coordinator responsible for all cor-
porate governance issues reports directly and on a regu-
lar basis to the Board of Management and the Supervisory
Board.

The Corporate Governance Code for the BMW Group, to-
gether with the Declaration of Compliance, Articles of Incor-
poration and other information, can be viewed / downloaded
on the BMW Group’s website at www.bmwgroup.com/ir
under the menu item “Corporate Facts” and “Corporate
Governance”.

The full text of the declaration is also provided on page 141
of this Annual Report.

140

141

142
145

Statement on
Corporate Governance
(Sub-section of Management Report)
Information on the Company’s
Governing Constitution
Declaration of the Board of
Management and of the Supervisory
Board pursuant to § 161 AktG
Members of the Supervisory Board
Members of the Board of
Management
Information on Work Procedures of
the Management Board and
Supervisory Board
Compensation Report
Information on Corporate
Governance Practices
158 Compliance in the BMW Group

151
157

146

141 Statement on Corporate Governance

Declaration by the Board of Management and the Supervisory Board of
Bayerische Motoren Werke Aktiengesellschaft regarding the Recommendations
of the German Government Corporate Governance Code Commission
in accordance with 161 German Stock Corporation Act

The Board of Management and the Supervisory Board of
Bayerische Motoren Werke Aktiengesellschaft (“BMW AG”)
declare the following regarding the recommendations of
the German Government Corporate Governance Code
Commission:

1. During the period since filing the last declaration of

December 2008 up until 5 August 2009 BMW AG com
plied with all of the recommendations published on
8 August 2008 in the electronic Federal Gazette (Code
version of 6 June 2008), except for the divergence from
section 4.2.2 paragraph 1 German Corporate Govern
ance Code already declared and explained in December
2008. That divergence ceased to apply on 5 August
2009 because, with effect from that date, the full Super
visory Board became responsible for the adoption of
resolutions relating to the Board of Management re
muneration system and for the regular review of the re
muneration system in accordance with the new legal
situation.

2. BMW AG will in future comply with all of the recommen
dations published on 5 August 2009 in the electronic
Federal Gazette (Code version of 18 June 2009) except
for only one deviation from the recommendation under
section 3.8 paragraph 3 German Corporate Governance
Code: In view of the differing financial circumstances
and incomes within the Supervisory Board we consider
it proper to differentiate between the amount of excess
under a D & O liability insurance policy for the members
of the Board of Management on the one hand and the
members of the Supervisory Board on the other hand
and we consider the excess agreed to date for the mem
bers of the Supervisory Board to still be appropriate.

Munich, December 2009

Bayerische Motoren Werke
Aktiengesellschaft

Supervisory Board

Board of Management

142

Members of the Supervisory Board

Prof. Dr.-Ing. Dr. h. c. Dr.-Ing. E. h.
Joachim Milberg

Chairman

Former Chairman of the Board of
Management of BMW AG

Chairman of the Presiding Board, Personnel Committee
and Nomination Committee; member of Audit Committee
and the Mediation Committee

Mandates

Bertelsmann AG
FESTO AG
SAP AG
ZF Friedrichshafen AG
Deere & Company

Manfred Schoch*
Deputy Chairman
Chairman of the General Works Council

Industrial Engineer

Member of the Presiding Board, Personnel Committee,
Audit Committee and Mediation Committee

Stefan Quandt
Deputy Chairman
Entrepreneur

Member of the Presiding Board, Personnel Committee,
Audit Committee, Nomination Committee and Mediation
Committee

Mandates

DELTON AG (Chairman)
Karlsruher Institut für Technologie (KIT) (since 01. 10. 2009)
AQTON SE (Chairman of the Administrative Board)
DataCard Corp.

Stefan Schmid *
Deputy Chairman
Chairman of the Works Council, Dingolfing

Member of the Presiding Board, Personnel Committee,
Audit Committee and Mediation Committee

Prof. Dr. Jürgen Strube
Deputy Chairman

Former Chairman of the Supervisory Board of
BASF SE

Chairman of the Audit Committee and Independent
Finance Expert; member of the Presiding Board,
Personnel Committee and Nomination Committee

Mandates

Allianz Deutschland AG (until 02. 04. 2009)
BASF SE (Chairman) (until 30. 04. 2009)
Bertelsmann AG (Deputy Chairman)
Fuchs Petrolub AG (Chairman)
Hapag-Lloyd AG (until 17. 03. 2009)

Ulrich Eckelmann*
(until 14. 05. 2009)

Head of the Industry, Technology and
Environment section

IG Metall Executive Board

Mandates

VOITH AG

Bertin Eichler*

Executive Member of the
Executive Board of IG Metall

Mandates

BGAG Beteiligungsgesellschaft der
Gewerkschaften GmbH (Chairman)

ThyssenKrupp AG (Deputy Chairman)

* Employee representative
Membership of other statutory supervisory boards
Membership of equivalent national or foreign boards of business enterprises

140

141

140

142
145

Statement on
Corporate Governance
(Sub-section of Management Report)
Information on the Company’s
Governing Constitution
Declaration of the Board of
Management and of the Supervisory
Board pursuant to § 161 AktG
Members of the Supervisory Board
Members of the Board of
Management
Information on Work Procedures of
the Management Board and
Supervisory Board
Compensation Report
Information on Corporate
Governance Practices
158 Compliance in the BMW Group

151
157

146

143 Statement on Corporate Governance

Franz Haniel
Engineer, MBA

Mandates

DELTON AG (Deputy Chairman)
Franz Haniel & Cie. GmbH (Chairman)
Heraeus Holding GmbH
Metro AG (Chairman)
secunet Security Networks AG
Giesecke & Devrient GmbH

Prof. Dr. rer. nat. Dr. h. c. Reinhard Hüttl

Chairman of the Executive Board of
Helmholtz-Zentrum Potsdam Deutsches
GeoForschungsZentrum – GFZ

University professor

Susanne Klatten
Entrepreneur

Mandates

ALTANA AG (Deputy Chairman)
SGL Carbon SE (since 25. 11. 2009)
UnternehmerTUM GmbH (Chairman)

Dr. jur. Karl-Ludwig Kley

Chairman of the Executive Management of
Merck KGaA

Mandates

Bertelsmann AG
1. FC Köln GmbH & Co. KGaA (Chairman)

Prof. Dr. rer. pol. Renate Köcher

Director of Institut für Demoskopie Allensbach
Gesellschaft zum Studium der öffentlichen
Meinung mbH

Mandates

Allianz SE
Infineon Technologies AG
MAN SE

Dr. h. c. Robert W. Lane

(since 14. 05. 2009)
Chairman and former Chief Executive Officer of
Deere & Company

Mandates

Deere & Company (Chairman)
General Electric Company
Northern Trust Corp.
Verizon Communications Inc.

Horst Lischka*

(since 14. 05. 2009)

General Representative of IG Metall Munich

Mandates

KraussMaffei AG
MAN Nutzfahrzeuge AG

Willibald Löw*
Chairman of the Works Council, Landshut

Prof. Dr. rer. nat. Dr. h. c. mult. Hubert Markl

(until 14. 05. 2009)
Former President of Max-Planck-Gesellschaft
zur Förderung der Wissenschaften e. V.

Professor of Biology (retired)

Mandates

Münchener Rückversicherungs-Gesellschaft AG
(until 22. 04. 2009)
Georg von Holtzbrinck GmbH

144

Wolfgang Mayrhuber
Chairman of the Board of Management of
Deutsche Lufthansa AG

Mandates

Fraport AG
Lufthansa Technik AG
Münchener Rückversicherungs-Gesellschaft AG
Austrian Airlines AG (since 14. 07. 2009)
HEICO Corp.
SN Brussels Airlines NV (since 24. 06. 2009)
SWISS International Air Lines AG (until 19. 10. 2009)

Werner Neugebauer*
Regional Executive Officer of IG Metall Bavaria

Mandates

ZF Sachs AG

Franz Oberländer*
Member of the Works Council, Munich

Anton Ruf *

Head of Development for the “Small Classes”
Product Line

Maria Schmidt*
Member of the Works Council, Dingolfing

Werner Zierer*
Chairman of the Works Council, Regensburg

140

141

140

Statement on
Corporate Governance
(Sub-section of Management Report)
Information on the Company’s
Governing Constitution
Declaration of the Board of
Management and of the Supervisory
Board pursuant to § 161 AktG
Members of the Supervisory Board
Members of the Board of
Management
Information on Work Procedures of
the Management Board and
Supervisory Board
Compensation Report
Information on Corporate
Governance Practices
158 Compliance in the BMW Group

142
145

151
157

146

* Employee representative
Membership of other statutory supervisory boards
Membership of equivalent national or foreign boards of business enterprises

145 Statement on Corporate Governance

Members of the Board of Management

Dr.-Ing. Norbert Reithofer
Chairman

Frank-Peter Arndt
Production

Mandates

BMW Motoren GmbH (Chairman)
BMW (South Africa) (Pty) Ltd. (Chairman)
Leipziger Messe GmbH

Dr.-Ing. Herbert Diess
Purchasing and Supplier Network

Dr.-Ing. Klaus Draeger
Development

Dr. Friedrich Eichiner
Finance

Mandates

Allianz Deutschland AG
BMW Brilliance Automotive Ltd. (Deputy Chairman)
BMW (US) Holding Corp. (until 31. 03. 2009)

Harald Krüger
Human Resources, Industrial Relations Director

Mandates

BMW Brilliance Automotive Ltd. (until 31. 01. 2009)

Ian Robertson

Sales and Marketing

Mandates

Rolls-Royce Motor Cars Limited (Chairman)

General Counsel:
Dr. Dieter Löchelt

Membership of other statutory supervisory boards
Membership of equivalent national or foreign boards of business enterprises

146

Information on Work Procedures of the Management
Board and the Supervisory Board and on the Com-
position and Work Procedures of its Committees

The Board of Management of BMW AG
A summary of the seven members of the Board of Manage-
ment and their areas of responsibility is shown on page
145.

The Board of Management manages the enterprise under
its own responsibility, acting in the interests of the BMW
Group with the aim of achieving sustainable growth in value.
The interests of shareholders, employees and other
stakeholders are also taken into account in the pursuit of
this aim.

The Board of Management determines the strategic orien-
tation of the enterprise, agrees upon it with the Supervisory
Board and ensures its implementation. The Board of
Management is responsible for ensuring that all provisions
of law and internal regulations are complied with. Further
information relating to compliance within the BMW Group
can be found on page 158 et seq. The Board of Manage-
ment is also responsible for ensuring that appropriate risk
management and risk controlling systems are in place
throughout the Group.

During their period of service for BMW AG, members of
the Board of Management are bound by a comprehen-
sive non-competition clause. They are required to act in
the enterprise’s best interests and may not pursue personal
interests in their decisions or take advantage of business
opportunities intended for the enterprise. They may only
undertake ancillary activities, in particular supervisory
board mandates outside the BMW Group, with the approval
of the Supervisory Board’s Personnel Committee. Each
member of the Board of Management of BMW AG is
obliged to disclose conflicts of interest to the Supervisory
Board without delay and inform the other members of the
Board of Management accordingly.

Following the appointment of a new member to the Board
of Management, the BMW Corporate Governance Officer
informs the new member of the context in which the board
member’s duties are to be carried out – in particular those
emanating from the BMW Group Corporate Governance
Code – as well as the duty to cooperate when a transaction
or event triggers reporting requirements or requires the
approval of the Supervisory Board.

The Board of Management consults and takes decisions
as a collegiate body at the following types of board meeting;

General Board, Product Board, Sustainability Board, Opera-
tions Committee and Committee for Executive Manage-
ment Matters. At its general meetings, the Board of
Management defines the overall framework for business
strategies and the use of resources, takes decisions re-
garding the implementation of strategies and deals with
issues of particular importance to the BMW Group which
are not directly related to a specific product or product
line. The Board of Management and its committees may,
as required and depending on the subject matters being
discussed, invite non-voting advisers to participate at
meetings.

Terms of reference approved by the Board of Management
contain a planned allocation of divisional responsibilities
between the individual board members. These terms of
reference also incorporate the principle that the full Board
of Management bears joint responsibility for all matters
of particular import and scope. In addition, each member
of the Board of Management manages the relevant port-
folio of duties under his responsibility, whereby case-by-
case rules can be put in place for cross-divisional projects.
Board members continually provide the Chairman of the
Board of Management with all information regarding major
transactions and developments within their area of respon-
sibility. The Chairman of the Board of Management coordi-
nates cross-divisional matters with the overall targets and
plans of the BMW Group, involving other board members
to the extent that divisions within their area of responsibility
are affected.

The Board of Management takes its decisions at meetings
generally held on a weekly basis which are convened,
coordinated and headed by the Chairman of the Board of
Management. At the request of the Chairman, decisions
can also be taken outside of board meetings if none of the
board members objects to this procedure. A meeting is
quorate if all Board of Management members are invited to
the meeting in good time. Members unable to attend any
meeting are entitled to vote in writing, by e-mail / telex / fax
or by phone. Votes cast by phone must be subsequently
confirmed in writing. Except in urgent cases, matters relat-
ing to a division for which the responsible board member is
not present will only be discussed and decided upon with
that member’s consent.

Unless stipulated otherwise by law or in BMW AG’s statutes,
the Board of Management makes decisions on the basis
of a simple majority of votes cast at meetings. Outside of
board meetings, decisions are taken on the basis of a sim-
ple majority of board members. In the event of a tied vote,
the Chairman of the Board of Management has the casting

140

141

140

142
145

Statement on
Corporate Governance
(Sub-section of Management Report)
Information on the Company’s
Governing Constitution
Declaration of the Board of
Management and of the Supervisory
Board pursuant to § 161 AktG
Members of the Supervisory Board
Members of the Board of
Management
Information on Work Procedures of
the Management Board and
Supervisory Board
Compensation Report
Information on Corporate
Governance Practices
158 Compliance in the BMW Group

151
157

146

147 Statement on Corporate Governance

vote. Any changes to the board’s terms of reference must
be passed unanimously. A board meeting is only held if
more than half of the board members are present.

In the event that the Chairman of the Board of Management
is not present or is unable to attend a meeting, the Mem-
ber of the Board responsible for Finances will represent
him.

Minutes are taken of all meetings and the Board of Manage-
ment’s resolutions and signed by the Chairman. Decisions
taken by the Board of Management are binding for all em-
ployees.

The rules relating to meetings and resolutions taken by the
full Board of Management are also applicable for its com-
mittees.

Members of the Board of Management not represented in
a committee are provided with the agendas and minutes
of committee meetings. Committee matters are dealt with
in full board meetings if the committee considers it neces-
sary or at the request of the member concerned.

The secretariat for Board of Management matters assists
the Chairman and other board members with the prepara-
tion and follow-up work connected with board meetings.

At Product Board meetings (generally held twice a month),
the full board takes decisions at a basic policy level relating
to the Group’s automobile product strategies and product
projects inasmuch as these are relevant for all brands.
Resources are authorised and approved at Product Board
meetings.

At meetings of the Operations Committee (generally held
twice a month), decisions are reached in connection with
automobile product projects, based on the strategic
orientation and decision framework stipulated at Product
Board meetings. The Operations Committee comprises
the members of the Board of Management responsible
for Development (Dr.-Ing. Klaus Draeger, who also chairs
the meetings), Purchasing and Supplier Network (Dr.-Ing.
Herbert Diess), Production (Frank-Peter Arndt), and Sales
and Marketing (Ian Robertson). In the event that the com-
mittee chairman is not present or unable to attend a
meeting, the Member of the Board responsible for Produc-
tion represents him. Resolutions taken at meetings of the
Operations Committee are made online.

The full board usually convenes twice a year in its function
as Sustainability Board in order to define strategy with

regard to sustainability and decide upon measures to im-
plement that strategy. The Head of Group Communication
and the Group Representative for Sustainability and Envi-
ronmental Protection participate in these meetings in an
advisory capacity.

The Board’s Committee for Executive Management Mat-
ters has the overall responsibility for BMW Group manage-
ment matters, such as organisational structure, the availa-
bility of suitable people for existing and future management
positions and other general human resources issues. This
committee has, on the one hand, an advisory and prepara-
tory role e. g. making suggestions for promotions to the
two remuneration groups below board level and preparing
decisions to be taken at board meetings with regard to
human resources principles (with the emphasis on execu-
tive management issues). It also takes decisions itself such
as those regarding appointments to senior management
positions and promotions to higher remuneration groups
or the wording of human resources principles decided
on by the full board. The Committee for Executive Manage-
ment Matters comprises the Chairman of the Board of
Management, Dr.-Ing. Norbert Reithofer (who also chairs
the meetings) and the board member responsible for
Human Resources, Harald Krüger. They hold their meet-
ings jointly and take decisions unanimously. The Head of
Human Resources, Personnel Network and Human Re-
sources International and the Head of Senior Management
also participate in an advisory function. Between five and
ten meetings are held each year.

The Board of Management is represented by its Chairman
in its dealings with the Supervisory Board. The Chairman
of the Board of Management maintains regular contact
with the Chairman of the Supervisory Board and keeps
him well informed of all important matters. The Supervisory
Board has passed a resolution specifying the information
and reporting duties of the Board of Management. As a
general rule, in the case of reports required by dint of law,
the Board of Management submits its reports to the Super-
visory Board in writing. To the extent possible, documents
required as a basis for taking decisions are sent to the mem-
bers of the Supervisory Board in good time before the rele-
vant meeting. Regarding transactions of fundamental im-
portance, the Supervisory Board has stipulated specific
transactions which require the approval of the Supervisory
Board. Whenever necessary, the Chairman of the Board
of Management obtains the approval of the Supervisory
Board and ensures that reporting duties to the Supervisory
Board are complied with. In order to fulfil these tasks, the
Chairman is supported by all members of the Board of
Management. The fundamental principle followed when

148

reporting to the Supervisory Board is that the latter should
be kept informed regularly, without delay and comprehen-
sively of all significant matters relating to planning, busi-
ness performance, risk exposures, risk management and
compliance as well as any major variances between actual
and budgeted figures.

The Supervisory Board of BMW AG
An overview of the members of the Supervisory Board is
shown on page 142 et seq.

As a basic rule, resolutions are passed by the Supervisory
Board by simple majority. The German Co-determination
Act contains specific requirements with regard to majority
voting and technical procedures, particularly with regard to
the appointment and revocation of appointment of man-
agement board members and the election of a supervisory
board chairman or deputy chairman. In the event of a tied
vote in the Supervisory Board, the Chairman of the Super-
visory Board has two votes in a renewed vote, even if this
also results in a tied vote.

BMW AG’s Supervisory Board, comprising ten shareholder
representatives (elected by the Annual General Meeting)
and ten employee representatives (elected by employees
in accordance with the German Co-determination Act),
has the task of advising and supervising the Board of
Management in its governance of the BMW Group. It is in-
volved in all decisions of fundamental importance for the
BMW Group. The Supervisory Board appoints the mem-
bers of the Board of Management and decides upon the
level of compensation they are to receive. The Supervisory
Board can revoke appointments for important reasons.
Together with the Board of Management, it ensures that
long-term successor planning is in place.

In practice, resolutions are taken by the Supervisory Board
and its committees at the relevant meetings. A Super-
visory Board member who is not present at a meeting can
have his / her vote cast by another Supervisory Board mem-
ber if an appropriate request has been made in writing, by
fax or in electronic form. This rule also applies to the
casting of the second vote by the Chairman of the Super-
visory Board. The Chairman of the Supervisory Board can
also accept the retrospective casting of votes by any mem-
bers not present at a meeting if this is done within the time
limit previously set. In special cases, resolutions may also
be taken outside of meetings, i.e. in writing, by fax or by
electronic means.

The Supervisory Board holds a minimum of two meetings
per calendar year. Normally, five plenary meetings are held
per calendar year, as was the case in 2009. One meeting
each year is planned to cover a number of days and is used,
among other things, to enable an in-depth exchange on
strategic and technological matters.

In line with the suggestion contained in the German Cor-
porate Governance Code, the shareholder representatives
and employee representatives prepare the Supervisory
Board meetings separately and, if necessary, together with
members of the Board of Management.

The Chairman of the Supervisory Board coordinates work
within the Supervisory Board, chairs its meetings, handles
the external affairs of the Supervisory Board and repre-
sents it in its dealings with the Board of Management.

Minutes are taken of each meeting and any resolutions
made signed by the Chairman of the Supervisory Board.
After its meetings, the Supervisory Board is generally pro-
vided information on new vehicle models in the form of a
short presentation.

Following the election of a new Supervisory Board mem-
ber, the BMW Corporate Governance Officer informs the
new member of the principal issues affecting his or her
duties – in particular those enshrined in the BMW Group
Corporate Governance Code – including the duty to co-
operate when a transaction or event triggers reporting re-
quirements or are subject to the approval of the Super-
visory Board. New Supervisory Board members are also
given the opportunity to become better acquainted with
the business outside of Supervisory Board meetings by
means of an information programme.

The Supervisory Board is quorate if all members have been
invited to the meeting and at least half of its members par-
ticipate in the vote on a particular resolution. A resolution re-
lating to an agenda item not included in the invitation is only
valid if none of the members of the Supervisory Board who
were present at the meeting object to the resolution and a
minimum of two thirds of the members are present.

All members of the Supervisory Board of BMW AG are
required to ensure that they have sufficient time to per-
form their duties. If members of the Supervisory Board of
BMW AG are also members of the Board of Management
of a listed company, they may not accept more than a total
of three non-BMW Group supervisory board mandates
for listed companies.

140

141

140

142
145

Statement on
Corporate Governance
(Sub-section of Management Report)
Information on the Company’s
Governing Constitution
Declaration of the Board of
Management and of the Supervisory
Board pursuant to § 161 AktG
Members of the Supervisory Board
Members of the Board of
Management
Information on Work Procedures of
the Management Board and
Supervisory Board
Compensation Report
Information on Corporate
Governance Practices
158 Compliance in the BMW Group

151
157

146

149 Statement on Corporate Governance

The Supervisory Board examines the efficiency of its ac-
tivities on a regular basis. Joint discussions are also held at
plenum meetings, prepared on the basis of a questionnaire
previously devised by and distributed to the members of
the Supervisory Board. The Chairman of the Supervisory
Board is open to suggestions for improvement at all times.
Based on this year’s self-evaluation by the Supervisory
Board, the information programme and the two-day strategy
meeting held in September were considered particularly
useful.

Each member of the Supervisory Board is bound to act in
the enterprise’s best interests. Members of the Supervisory
Board may not pursue personal interests in their decisions
or take advantage of business opportunities intended for
the benefit of the enterprise.

Members of the Supervisory Board are obliged to inform
the full Supervisory Board of any conflicts of interest which
may result from a consultant or directorship function with
clients, suppliers, lenders or other business partners, en-
abling the Supervisory Board to report to the shareholders
at the Annual General Meeting on how it has dealt with
such issues. Material conflicts of interest and those which
are not merely temporary in nature result in the termination
of the mandate of the relevant Supervisory Board member.

With regard to nominations for the election of members of
the Supervisory Board, care is taken that the Supervisory
Board always consists of members who possess the re-
quired knowledge, skills and expert experience to perform
their tasks in a proper manner. Regard is also given to the
international activities of the BMW Group, potential con-
flicts of interest and the age limit stipulated for members
of the Supervisory Board as well as maintaining sufficient
diversity.

The ability of the Supervisory Board to supervise and advise
the Board of Management independently is also assisted
by the fact that the Supervisory Board is required, based
on its own assessment, to have a sufficient number of
independent members. Prof. Dr.-Ing. Dr. h. c. Dr.-Ing. E. h.
Joachim Milberg is the only person on the Supervisory
Board to have previously served on the Board of Manage-
ment, of which he ceased to be a member in 2002. Super-
visory Board members do not exercise directorships or
similar positions or undertake advisory tasks for important
competitors of the BMW Group.

Taking into account the specific circumstances of the
BMW Group and the number of board members, the Super-

visory Board has set up a Presiding Board and four com-
mittees, namely the Personnel Committee, the Audit
Committee, the Nomination Committee and the Mediation
Committee. Such committees serve to raise the efficiency
of the Supervisory Board’s work and facilitate the handling
of complex issues. The establishment and function of a
Mediation Committee is prescribed by law. The person
chairing a committee reports in detail on its work at each
plenum meeting.

The composition of the Presiding Board and the commit-
tees is based on legal requirements, BMW AG’s Articles
of Incorporation, terms of reference and corporate govern-
ance principles. The expertise and technical skills of its
members are also taken into account.

According to the relevant terms of reference, the Chairman
of the Supervisory Board is, in this capacity, automatically
a member of the Presiding Board, the Personnel Commit-
tee and the Nomination Committee, and chairs these com-
mittees.

The number of meetings held by the Presiding Board and
the committees depends on current requirements. The
Presiding Board, the Personnel Committee and the Audit
Committee normally hold several meetings in the course
of the year. During 2009 there were five meetings of the
Presiding Board, five meetings and three telephone con-
ferences of the Audit Committee, five meetings of the Per-
sonnel Committee and two meetings of the Nomination
Committee. The Mediation Committee did not need to
meet in 2009.

In line with the terms of reference for the activities of the
plenum, the Supervisory Board has also set terms of
reference for the Presiding Board and the various commit-
tees. The committees are only quorate if all members
are present. Resolutions taken by the committees are
passed by simple majority unless stipulated otherwise by
law. Minutes are also taken at the meetings and for the
resolutions of the committees and the Presiding Board,
and signed by the person chairing the particular meeting.
This person also represents the committee in any deal-
ings it may have with the Board of Management or third
parties.

Members of the Supervisory Board may not delegate
their duties. The Supervisory Board, the Presiding Board
and committees may call on experts and other suitably
informed persons to attend meetings to give advice on
specific matters.

150

The Supervisory Board, the Presiding Board and the
committees also meet without the Board of Management
if necessary.

BMW AG ensures that the Supervisory Board and its com-
mittees are sufficiently equipped to carry out its duties.
This includes the services provided by a centralised secre-
tariat to support the chairmen in coordinating the work of
the Supervisory Board.

In accordance with the relevant terms of reference, the
Presiding Board comprises the Chairman of the Super-
visory Board and board deputies. The Presiding Board
prepares Supervisory Board meetings, including the annual
Declaration of Compliance with the German Corporate
Governance Code and the Supervisory Board’s efficiency
examination. The following are members of the Presiding
Board: Prof. Dr.-Ing. Dr. h. c. Dr.-Ing. E. h. Joachim Milberg
(Chairman of the Supervisory Board), Manfred Schoch
(Deputy Chairman of the Supervisory Board), Stefan Quandt
(Deputy Chairman of the Supervisory Board), Stefan
Schmid (Deputy Chairman of the Supervisory Board), Prof.
Dr. Jürgen Strube (Deputy Chairman of the Supervisory
Board).

The Personnel Committee prepares the decisions of the
Supervisory Board with regard to the appointment and
revocation of appointment of members of the Board of
Management. In conjunction with the assessment of po-
tential Board of Management members, care is taken to
ensure an impartial process when preparing recommenda-
tions to the Supervisory Board, based on the interests of
the business and with due regard to diversity. The Person-
nel Committee also prepares the decisions of the Super-
visory Board with regard to the Board of Management’s
compensation and the Supervisory Board’s regular review
of the Board of Management’s compensation system. In
conjunction with the resolutions taken by the Supervisory
Board regarding the compensation of the Board of Manage-
ment, the Personnel Committee is responsible for drawing
up, amending and revoking service / employment con-
tracts or, when necessary, other relevant contracts with
members of the Board of Management. In specified cases,
the Personnel Committee also has the authority to give
the necessary approval for a particular transaction (instead
of the Supervisory Board). This includes loans to mem-
bers of the Board of Management or Supervisory Board,
specified contracts with members of the Supervisory Board
(in each case taking account of the consequences of
related party transactions), as well as other activities of

members of the Board of Management, including the
acceptance of non-BMW Group supervisory mandates.
Members of the Personnel Committee: Prof. Dr.-Ing. Dr. h. c.
Dr.-Ing. E.h. Joachim Milberg (Chairman), Manfred Schoch,
Stefan Quandt, Stefan Schmid, Prof. Dr. Jürgen Strube.

The Audit Committee deals in particular with issues relating
to the supervision of the financial reporting process, the
effectiveness of the internal control system, the risk man-
agement system, internal audit arrangements, compliance,
auditor independence, the engagement of the external
auditor and the compliance of the audit engagement, the
determination of specific areas of audit emphasis and the
fee agreements with the auditor. The Audit Committee
prepares the Supervisory Board’s resolution relating to the
Company and Group Financial Statements and discusses
interim reports with the Board of Management before
publication. Members of the Audit Committee: Prof. Dr.
Jürgen Strube (Chairman), Prof. Dr.-Ing. Dr. h. c. Dr.-Ing. E. h.
Joachim Milberg, Manfred Schoch, Stefan Quandt, Stefan
Schmid.

In line with the recommendations of the German Corporate
Governance Code, the Chairman of the Audit Committee
is independent and not a former Chairman of the Board of
Management. He is required to have specific know-how
and experience in applying financial reporting standards
and internal control procedures. Alongside other members
of the Supervisory Board, he also fulfils the requirements
of being an independent financial expert as defined by § 100
(5) and § 107 (4) AktG.

The Nomination Committee is charged with the task of
finding suitable candidates for election to the Supervisory
Board (as shareholder representatives) and for inclusion
in the Supervisory Board’s proposals for election at the
Annual General Meeting. In line with the recommen-
dations of the German Corporate Governance Code, the
Nomination Committee comprises only shareholder
representatives. Members of the Nomination Committee:
Prof. Dr.-Ing. Dr. h. c. Dr.-Ing. E. h. Joachim Milberg (Chair-
man), Stefan Quandt, Prof. Dr. Jürgen Strube.

The establishment and composition of a Mediation Com-
mittee are required by the German Co-determination Act.
The Mediation Committee has the task of making pro-
posals to the Supervisory Board if a resolution for the ap-
pointment of a member of the Board of Management has
not been carried by the necessary two thirds majority of
members’ votes. The Mediation Committee comprises the

140

141

140

142
145

Statement on
Corporate Governance
(Sub-section of Management Report)
Information on the Company’s
Governing Constitution
Declaration of the Board of
Management and of the Supervisory
Board pursuant to § 161 AktG
Members of the Supervisory Board
Members of the Board of
Management
Information on Work Procedures of
the Management Board and
Supervisory Board
Compensation Report
Information on Corporate
Governance Practices
158 Compliance in the BMW Group

151
157

146

151 Statement on Corporate Governance

Chairman and Deputy Chairman of the Supervisory Board
and one member each selected by shareholder repre-
sentatives and employee representatives. Members of the
Mediation Committee: Prof. Dr.-Ing. Dr. h. c. Dr.-Ing. E. h.
Joachim Milberg, Manfred Schoch, Stefan Quandt, Stefan
Schmid.

Compensation Report
The BMW Group supports the endeavours of the German
Corporate Governance Code (GCGC) to increase trans-
parency in the disclosure of the components of compensa-
tion. The following section therefore describes the principles
relating to the compensation of the Board of Management
and the stipulations set out in the statutes relating to the
compensation of the Supervisory Board. As well as dis-
cussing the structure of remuneration, the components of
compensation are also disclosed in absolute figures. In
accordance with the recommendations of the GCGC, the
compensation of each member of the Board of Manage-
ment and the Supervisory Board is disclosed by name and
analysed into components.

1. Compensation of the Board of Management
Responsibilities
Following the coming into force of the German Act on the
Appropriateness of Management Board Remuneration
(VorstAG) on 5 August 2009, supervisory boards became
responsible in Germany for determining and regularly ex-
amining the compensation of management boards. Pre-
viously, these tasks had been carried out within the BMW
Group by the Supervisory Board’s Personnel Committee,
which reported on its work at regular intervals and in detail
to the Supervisory Board. The Personnel Committee now
plays a preparatory role in the process of determining and
examining the remuneration of the Board of Management.
The Supervisory Board’s terms of reference have been
amended accordingly to take account of the change in al-
location of duties between the Personnel Committee and
the full Supervisory Board.

Principles of compensation
The Supervisory Board familiarised itself with the details
of the new act (VorstAG) in 2009 and fully supports the ob-
jective set out therein to bring about compensation struc-
tures that promote sustainable and long-term oriented
business performance. The compensation model used for
the management boards should be attractive in the con-
text of the competitive environment for highly qualified
executives. All compensation components should be ap-
propriate, both individually and in total, and should not
encourage an enterprise to take inappropriate risks.

The compensation of members of BMW AG’s Board of
Management is determined by the full Supervisory Board
on the basis of performance criteria and after taking into
account any remuneration received from Group compa-
nies. The Supervisory Board sets demanding and relevant
targets as the basis for variable compensation. The prin cipal
criteria for determining the appropriateness of compen-
sation are the nature of the tasks allocated to each member
of the Board of Management, an assessment of the per-
formance of those tasks and of the economic situation and
future prospects of the BMW Group, comparable levels of
compensation in the relevant sector and the compensation
structure in place elsewhere within the organisation.

Upper limits for compensation apply for all Board of Manage-
ment members. The Supervisory Board reviews the com-
pensation system at regular intervals, with regard to both
the structure and amount of the compensation. In doing so,
it takes note of compensation studies conducted by ex-
ternal experts and considers – as it always has done in the
past – the compensation structures and the levels of com-
pensation of staff and managers within the BMW Group.

The Personnel Committee and the Supervisory Board
engaged external experts to test the compatibility of the
compensation system for the Board of Management with
the latest legal requirements. This review reached the con-
clusion that the system in place at that stage was already
compatible with the changed requirements brought about
by the new VorstAG rules. This was most evident in the
fact that variable compensation was already based on a
period stretching over several years, during which both
positive and negative developments were taken into ac-
count. The Supervisory Board passed a resolution in 2009
setting out new bases of measurement for variable com-
pensation components during the period 2010 – 2012.
These bases of measurement will not be changed during
the period stated.

Compensation system, compensation components
The compensation of the Board of Management comprises
fixed and variable remuneration. Board of Management
members are also entitled to receive retirement benefits.
Under certain circumstances, the members of the Board
of Management are entitled to receive so-called “transi-
tional payments” until their retirement. In terms of the
overall compensation of current members of the Board of
Management, the Supervisory Board sets a compensation
target and a compensation framework with a high variable
proportion, taking into account the overall situation and
forecasts of the BMW Group.

152

Fixed remuneration comprises a base salary (paid monthly)
and other remuneration elements. Other remuneration
elements comprise mainly the use of company cars as well
as the payment of insurance premiums, contributions to-
wards security systems and an annual medical check-up.

The salaries of members of the Board of Management
were raised with effect from 1 January 2009 after regular
monitoring showed that they no longer fell within the target
corridor for comparable sector and DAX 30 companies
(2008 basis) considered appropriate by the Supervisory
Board. The salary of each member of the Board of Manage-
ment is euro 420,000 p. a. during the first term of appoint-
ment and euro 480,000 p. a. from the beginning of the
second term. The salary of the Chairman of the Board of
Management is euro 840,000 p. a.

The variable compensation of the Board of Management
is made up of two components, each equally weighted,
namely a corporate earnings-related bonus and a personal
performance-related bonus. The Supervisory Board may
also, in justified cases, decide to pay an additional special
bonus on a voluntary basis. The target bonus (100 %) for
a Board of Management member (i. e. covering both com-
ponents of variable compensation) totals euro 1.5 million
p. a. for the first term of appointment and euro 1.75 million
p. a. with effect from the second. The equivalent figure for
the Chairman of the Board of Management is euro 3 mil-
lion p. a. Upper limits are in place for all Board of Manage-
ment members (150 % of the relevant target bonus). The
total target compensation for a Board of Management
member (i. e. salary and target bonus) is therefore euro
1.92 million p. a. for the first term of appointment and euro
2.23 million p. a. with effect from the second. The equiva-
lent figure for the Chairman of the Board of Management
is euro 3.84 million p. a.

If the target bonus is fully achieved, the ratio of salary and
variable compensation is then approximately 20 % : 80 %.

The corporate earnings-related bonus is based on the
BMW Group’s net profit and post-tax return on sales
(which are combined into a single earnings factor) and the
level of the dividend (common stock). The corporate earn-
ings-related bonus is derived by multiplying the target
amount fixed for each member of the Board of Manage-
ment by the earnings factor and by the dividend factor. In
exceptional circumstances, for instance when there have
been major acquisitions or disposals, the Supervisory Board
may adjust the level of the corporate earnings-related bonus.

An earnings and dividend factor of 1.00 gives rise to a cor-
porate earnings-related bonus of euro 0.75 million for
a member of the Board of Management during the first
period of appointment and one of euro 0.875 million with
effect from the second. The equivalent bonus for the Chair-
man of the Board of Management is euro 1.5 million. The
earnings factor is 1.00 in the event of a Group net profit
of euro 3.1 billion and a post-tax return on sales of 5.6 %.
The dividend factor is 1.00 in the event that the dividend
paid on the shares of common stock is between 100 and
110 euro cents.

If the Group net profit is below euro 1 billion or if the post-
tax return on sales is less than 2 %, the earnings factor will
be zero. In these cases, no corporate earnings-related
bonus will be paid. Based on the principle of consistency,
this rule is also applicable in determining the corporate
earnings-related variable compensation components of all
managers and staff of BMW AG (see also page 29 et seq.).

The personal performance-related bonus is derived by
multiplying the target amount set for each member of the
Board of Management by a performance factor. The
Supervisory Board sets the performance factor on the
basis of its assessment of the contribution of the relevant
Board of Management member to sustainable and long-
term oriented business development. In setting the factor,
consideration is given equally to personal performance
and decisions taken in previous forecasting periods, key
decisions affecting the future development of the business,
the effectiveness of measures taken in response to chang-
ing external conditions as well as other activities aimed at
safeguarding the future viability of the business to the ex-
tent not included directly in the basis of measurement.

The methodology for determining variable compensation
of the Board of Management, including target bonuses
and the key figures used to determine the corporate earn-
ings-related bonus, has been fixed for the three financial
years during the period from 1 January 2010 to 31 De-
cember 2012. Targets and other parameters may not be
changed retrospectively during this period.

All current members of the Board of Management have
agreed to the corresponding changes in their contracts with
effect from 1 January 2010.

The compensation system does not include any stock
options, value appreciation rights, and other share-based
components incorporating other long-term incentives.

140

141

140

142
145

Statement on
Corporate Governance
(Sub-section of Management Report)
Information on the Company’s
Governing Constitution
Declaration of the Board of
Management and of the Supervisory
Board pursuant to § 161 AktG
Members of the Supervisory Board
Members of the Board of
Management
Information on Work Procedures of
the Management Board and
Supervisory Board
Compensation Report
Information on Corporate
Governance Practices
158 Compliance in the BMW Group

151
157

146

153 Statement on Corporate Governance

The Supervisory Board carries out an annual review of the
appropriateness of the total compensation of the Board
of Management; in horizontal terms, this is done by com-
paring compensation paid by DAX 30 companies and, in
vertical terms, by comparing board compensation with the
salaries of senior management (below board level) and
with average salaries of employees.

et seq.). Given the fact that board members already have a
legal right to receive the benefits already promised to them,
they have been given the option to choose between the
previous system and the new one. All current members of
the Board of Management have agreed to the correspond-
ing changes in their contracts with effect from 1 January
2010.

In the event of the termination of mandate, current mem-
bers of the Board of Management are entitled to receive
certain defined benefits. Pensions are paid to former mem-
bers of the Board of Management who have either reached
the age of 65, or, if their mandate was terminated earlier
and not extended, to members who have either reached
the age of 60 or who are unable to work due to ill-health
or accident, or who have entered into early retirement in
accordance with a special arrangement. The amount of
the pension comprises, unchanged from the previous year,
a basic monthly amount of euro 10,000 or euro 15,000
(Chairman of the Board of Management) plus a fixed
amount. The fixed amount is made up of approximately
euro 75 for each year of service in the company before
becoming a member of the Board of Management plus
between euro 400 and euro 600 for each full year of service
on the board (up to a maximum of 15 years). Pension pay-
ments are adjusted by analogy to the rules applicable for
the adjustment of civil servants’ pensions: the pensions
of members of the Board of Management are adjusted ac-
cordingly when the civil servants remuneration level B6
(excluding allowances) is increased by more than 5 % or
increased in accordance with the Company Pension Act.

If a mandate is ended early before the member of the Board
of Management reaches the age of 60, a transitional pay-
ment amounting to two-thirds of the pension theoretically
earned up to the date when a full pension can be drawn,
may become payable if, after a minimum of three years of
service as a member of the Board of Management, this is
considered appropriate on the basis of an objective evalua-
tion of all circumstances. Arrangements are in place con-
cerning the offsetting of other income against pensions
and transitional payments.

With effect from financial years beginning on or after 1 Jan-
uary 2010, the provision of retirement and surviving de-
pendants’ benefits for existing and future members of the
Board of Management has been changed to a defined
contribution system with a guaranteed minimum return
(similar to the switch to a defined contribution system for
middle and senior management in 2009 – see page 29

If a mandate is terminated after 1 January 2010, the new
system provides entitlements which can be paid either
(a) in the case of death or invalidity as a one-off amount or
over a maximum of ten years or (b) on retirement – depend-
ing on the wish of the ex-board member concerned – in the
form of a life-long monthly pension, as a one-off amount ,
over a maximum of ten years, or in a combined form (e. g.
a combination of a one-off payment and a proportionately
reduced life-long monthly pension). Pensions are paid to
former members of the Board of Management who have
either reached the statutory retirement age for the state
pension scheme in Germany, or if their mandate had ter-
minated earlier and had not been extended, to members
who have either reached the age of 60 or are permanently
unable to work, or who have entered into early retirement
in accordance with a special arrangement. In addition,
following the death of a retired board member who has
elected to receive a life-long pension, 60 % of that amount
is paid as a life-long widow’s pension.

The amount of the retirement pension to be paid is deter-
mined on the basis of the amount accrued in each board
member’s individual pension savings account. The amount
on this account arises from annual contributions paid by
the Company plus interest earned based on the type of
investment.

The annual contribution to be paid for each member of the
Board of Management amounts to euro 240,000 for 2010,
euro 270,000 for 2011 and euro 300,000 from 2012 on-
wards. The equivalent figures for the Chairman of the Board
of Management are euro 425,000, euro 475,000 and
euro 525,000. The contributions are credited, along with
interest earned, to the personal savings accounts of board
members on a monthly basis. The guaranteed minimum
rate of return p. a. corresponds to the maximum interest
rate used to calculate insurance reserves for life insurance
policies (guaranteed interest on life insurance policies)
which currently stands at 2.25 %.

In the case of invalidity or death, a minimum of 60 % of the
potential annual contributions will be paid until the person

154

concerned would have reached the age of 60. At the
changeover to the new system, current members of the
Board of Management will be credited with a starting bal-
ance of equivalent value to entitlements already vested.

The starting balance and all contributions subsequently
credited to board members under the new scheme are
externally financed in conjunction with a trust model that is
also used to fund pension obligations to employees.

Compensation of the Board of Management for the
finan cial year 2009 (total)
The total remuneration of the current members of the Board
of Management of BMW AG for the financial year 2009,
subject to approval by the Supervisory Board, amounted
to euro 10.7 million (2008: euro 10.9 million). This com-
prises fixed components (including other remuneration) of
euro 3.7 million (2008: euro 3.1 million) and variable com-
ponents of euro 7.0 million (2008: euro 7.8 million).

Pensions are increased annually by at least 1 %.

in euro million

2009

2008

Income earned on an employed or a self-employed basis
up to the age of 63 is offset against the pension entitle-
ment. In addition, certain circumstances have been speci-
fied in the event of which the Company no longer has any
obligation to pay benefits. In such cases, no transitional
payments are made either.

In the case of a board member’s mandate being terminat-
ed early without important reason, there are no contractual
commitments to pay compensation. Similarly, there are
no commitments to pay compensation for early termination
in the event of a change of control or a takeover offer. No
members of the Board of Management received any pay-
ments or benefits from third parties in 2009 on account of
their activities as the members of the Board of Management
of BMW AG.

Amount Proportion
in %

Amount Proportion

in %

28.4

71.6

Fixed remuneration

Variable remuneration

3.7

7.0

34.6

65.4

3.1

7.8

Total remuneration

10.7

100.0

10.9

100.0

In addition, an expense of euro 0.7 million (2008: euro
0.8 million) was recognised for current members of the
Board of Management for the period after the end of their
service relationship. This relates to the expense for allo-
cations to pension provisions (service cost).

The amount paid to former members of the Board of
Management and their surviving dependants was euro
3.8 million (2008: euro 3.1 million). Pension obligations
to former members of the Board of Management and their

Compensation of the individual members of the Board of Management for the financial year 2009 (2008)

140

141

140

142
145

Statement on
Corporate Governance
(Sub-section of Management Report)
Information on the Company’s
Governing Constitution
Declaration of the Board of
Management and of the Supervisory
Board pursuant to § 161 AktG
Members of the Supervisory Board
Members of the Board of
Management
Information on Work Procedures of
the Management Board and
Supervisory Board
Compensation Report
Information on Corporate
Governance Practices
158 Compliance in the BMW Group

151
157

146

in euro

Norbert Reithofer

Frank-Peter Arndt

Herbert Diess

Klaus Draeger

Friedrich Eichiner

Harald Krüger

Ian Robertson

Total2

Fixed compensation

Other
compensation

16,215
(16,271)

23,591
(19,708)

13,773
(29,762)

74,237
(26,276)

93,785
(23,516)

78,028
(2,777)

54,993
(102,938)

Salary

840,000
(600,000)

440,000
(300,000)

420,000
(300,000)

430,000
(300,000)

420,000
(300,000)

420,000
(25,000)

420,000
(240,323)

Total

856,215
(616,271)

463,591
(319,708)

433,773
(329,762)

504,237
(326,276)

513,785
(323,516)

498,028
(27,777)

474,993
(343,261)

Variable Compensation
Total

compensation

Allocation for
year to pension
provision1

1,725,000
(1,650,000)

910,417
(825,000)

862,500
(825,000)

886,458
(825,000)

862,500
(825,000)

862,500
(68,750)

862,500
(660,887)

2,581,215
(2,266,271)

1,374,007
(1,144,708)

1,296,273
(1,154,762)

1,390,696
(1,151,276)

1,376,285
(1,148,516)

1,360,528
(96,527)

1,337,493
(1,004,148)

131,815
(124,912)

73,233
(69,327)

93,685
(89,930)

74,495
(70,871)

86,612
(81,547)

51,300
(4,616)

189,682
(133,533)

700,822

(819,331)

3,390,000

354,622

3,744,622

6,971,875

10,716,497

(2,801,775)

(304,134)

(3,105,909)

(7,814,570)

(10,920,479)

1 includes service cost
2 Figures for the previous year include the remuneration of members of the Board of Management who left office during the financial year 2008.

155 Statement on Corporate Governance

surviving dependants are fully covered by pension provi-
sions amounting to euro 46.7 million (2008: euro 44.3 mil-
lion), computed in accordance with IAS 19.

2. Compensation of the Supervisory Board
Responsibilities, regulation pursuant to Articles of
Incorporation
The compensation of the Supervisory Board is determined
by shareholders’ resolution at the Annual General Meeting.
The compensation regulation valid for the financial year
2009 is the result of the shareholders’ resolutions taken at
the Annual General Meeting on 8 May 2008 and § 15 of
the Articles of Incorporation of BMW AG. The Articles of
Incorporation of BMW AG can be viewed / downloaded at
www.bmwgroup.com/ir under the menu item “Corporate
Facts” and “Corporate Governance”.

Compensation principles, compensation components
In line with the recommendations of the German Corporate
Governance Code, the members of the Supervisory Board
receive fixed as well as performance-related compensation.

Each member of the Supervisory Board receives, in addi-
tion to the reimbursement of expenses, a fixed amount of
euro 55,000 (payable at the end of the year) as well as a
corporate earnings related compensation of euro 220 for
each full euro 0.01 by which the earnings per share (EPS)
of common stock reported in the Group Financial State-
ments for the relevant financial year (remuneration year)
exceeds a minimum amount of euro 2.30 (payable after
the Annual General Meeting held in the following year).

An upper limit of euro 110,000 is in place for the corporate
earnings related compensation. Since the minimum EPS
was not achieved in 2009, no corporate earnings related
compensation is payable for the financial year 2009.

The German Corporate Governance Code also recom-
mends that the exercising of chair and deputy chair posi-
tions in the Supervisory Board as well the chair and mem-
bership of committees should also be considered when
determining the level of compensation.

Accordingly, the Articles of Incorporation of BMW AG
stipulate that the Chairman of the Supervisory Board re-
ceives three times the amount and each Deputy Chair-
man receives twice the amount of the remuneration of a
Super visory Board member. Provided the relevant com-
mittee convened for meetings on at least three days
during the financial year, each chairman of the Supervisory
Board’s committees receives twice the amount and each
member of a committee receives one and a half times
the amount of the remuneration of a Supervisory Board

member. If a member of the Supervisory Board exercises
more than one of the functions referred to above, the com-
pensation is measured only on the basis of the function
which is remunerated with the highest amount, thus avoid-
ing amounts accumulating when more than one function
is exercised.

In addition, each member of the Supervisory Board receives
an attendance fee of euro 2,000 for each full meeting of
the Supervisory Board (Plenum) which the member has
attended (payable at the end of the financial year). Attend-
ance at more than one meeting on the same day is not
remunerated separately.

The Company also reimburses to each member of the
Supervisory Board any value added tax arising on their
remuneration. The amounts disclosed below are net
amounts.

Compensation of the Supervisory Board for the
financial year 2009 (total)
In accordance with § 15 of the Articles of Incorporation, the
compensation of the Supervisory Board for activities dur-
ing the financial year 2009 amounted to euro 1.6 million
(2008: euro 1.6 million). This comprises fixed compensation
of euro 1.6 million (2008: euro 1.6 million). No variable com-
pensation is payable for the financial year 2009 (2008: –)
since the conditions stipulated in the Articles of Incorpora-
tion (minimum EPS of euro 2.30) were not met.

in euro million

2009

2008

Amount Proportion
in %

Amount Proportion

Fixed compensation

Variable compensation

1.6

–

100.0

–

1.6

–

Total compensation

1.6

100.0

1.6

100.0

Supervisory Board members did not receive any further
compensation or benefits from the BMW Group for
services performed by them, in particular advisory and
agency services. During the financial year 2009 BMW AG
concluded a contract with the market research organisa-
tion – Institut für Demoskopie Allensbach, Gesellschaft
zum Studium der öffentlichen Meinung mit beschränkter
Haftung, Allensbach – pertaining to the performance of a
market research study into the German premium segment
for cars in return for a total fee of euro 79,600. Since Prof.
Dr. Renate Köcher is a member of BMW AG’s Supervisory
Board and a Director of the Allensbach Institute, the
Board of Management obtained approval for the contract
from the Supervisory Board’s Personnel Committee be-
fore signing the contract.

in %

100.0

–

156

Compensation of the individual members of the Supervisory Board for the financial year 2009 (2008)

in euro

Fixed compensation

Attendance fee

Variable
compensation

Joachim Milberg (Chairman)

Manfred Schoch (Deputy Chairman)

Stefan Quandt (Deputy Chairman)

Stefan Schmid (Deputy Chairman)

Jürgen Strube (Deputy Chairman)

Ulrich Eckelmann1

Bertin Eichler

Franz Haniel

Reinhard Hüttl

Susanne Klatten

Karl-Ludwig Kley

Renate Köcher

Robert W. Lane2

Horst Lischka3

Willibald Löw

Hubert Markl 4

Wolfgang Mayrhuber

Werner Neugebauer

Franz Oberländer

Anton Ruf

Maria Schmidt

Werner Zierer

Total

140

141

140

142
145

Statement on
Corporate Governance
(Sub-section of Management Report)
Information on the Company’s
Governing Constitution
Declaration of the Board of
Management and of the Supervisory
Board pursuant to § 161 AktG
Members of the Supervisory Board
Members of the Board of
Management
Information on Work Procedures of
the Management Board and
Supervisory Board
Compensation Report
Information on Corporate
Governance Practices
158 Compliance in the BMW Group

151
157

146

165,000
(165,000)

110,000
(110,000)

110,000
(99,180)

110,000
(90,765)

20,192
(55,000)

55,000
(55,000)

55,000
(35,765)

55,000
(55,000)

55,000
(35,765)

34,959
(–)

55,000
(55,000)

20,192
(55,000)

55,000
(55,000)

55,000
(42,377)

55,000
(55,000)

10,000
(10,000)

2,000
(10,000)

10,000
(8,000)

8,000
(8,000)

10,000
(8,000)

8,000
(4,000)

10,000
(8,000)

6,000
(–)

8,000
(–)

10,000
(10,000)

2,000
(8,000)

8,000
(10,000)

8,000
(8,000)

4,000
(10,000)

10,000
(10,000)

10,000
(8,000)

10,000
(10,000)

–
(–)

Total5

175,000
(175,000)

120,000
(120,000)

120,000
(109,180)

120,000
(100,765)

22,192
(65,000)

65,000
(63,000)

63,000
(63,000)

65,000
(43,765)

65,000
(63,000)

63,000
(39,765)

65,000
(43,765)

40,959

(–)

42,959

(–)

65,000
(65,000)

22,192
(63,000)

63,000
(65,000)

63,000
(63,000)

59,000
(65,000)

65,000
(65,000)

65,000
(50,377)

65,000
(65,000)

1,430,302

(1,420,982)

184,000

(184,000)

–

(–)

1,614,302

(1,604,982)

1 Member of the Supervisory Board until 14 May 2009.
2 Member of the Supervisory Board from 14 May 2009.
3 Member of the Supervisory Board until 14 May 2009.
4 Member of the Supervisory Board from 14 May 2009.
5 Figures for the previous year include the remuneration of members of the Supervisory Board who left office during the financial year 2008.

157 Statement on Corporate Governance

3. Other
No loans or advances were granted by the BMW Group on
favourable conditions to members of the Board of Man-
agement or the Supervisory Board.

scheme is to be continued. Further information can be
found on page 42.

Information on Corporate Governance Practices
Applied Beyond Mandatory Requirements

Reportable securities transactions
(“Directors’ Dealings”)
Members of the Board of Management and the Super-
visory Board and related persons of those members, are
required, pursuant to § 15 a of the German Securities
Trading Act (WpHG), to give notice of any of their trans-
actions with BMW stock or related financial instruments
if the total sum of such transactions exceeds the amount
of euro 5,000 during the calendar year. BMW AG gives
notice of any transaction reported to it on its website at
www.bmwgroup.com/ir and in its Annual Document pur-
suant to § 10 (1) of the German Securities Prospectus
Act.

Shareholdings of members of the Board of
Management and the Supervisory Board
The members of the Supervisory Board of BMW AG hold
in total 27.68 % of the Company’s issued common and
preferred stock shares, of which 16.11 % relates to Stefan
Quandt, Bad Homburg v. d. H. and 11.57 % to Susanne
Klatten, Munich. The aggregated shareholdings of the
members of the Board of Management total less than
1 % of the issued shares.

Employee share scheme
Since 1989 BMW AG has also allowed its employees to
participate in the success of the business in the form of an
employee share scheme. In 2009 employees were able,
at their own discretion, to acquire up to 35 shares of non-
voting preferred stock at a discounted price. All employees
of BMW AG and its wholly owned German subsidiaries
(if agreed to by the directors of those entities) were entitled
to participate in the scheme. Employees were required to
have been in an uninterrupted employment relationship
with BMW AG or the relevant subsidiary for at least one
year at the date on which the the allocation for the year
was announced. Shares of preferred stock acquired in
conjunction with the employee share scheme are subject
to a vesting period of four years, starting from 1 January
of the year in which the shares were acquired. In total,
831,425 shares of preferred stock were acquired by
employees under the scheme in 2009. The Board of
Management of BMW AG decides each year whether the

Core principles
Within the BMW Group, the Board of Management, the
Supervisory Board and the employees base their actions
on twelve core principles which are the cornerstone of
the success of the BMW Group:

Customer focus
The success of our company is determined by our cus-
tomers. They are at the heart of everything we do. The
results of all our activities must be measured in terms of
the benefits they will generate for our customers.

Peak performance
We aim to be the best – a challenge to which all of us must
rise. Each and every employee must be prepared to deliver
peak performance. We strive to be among the elite, but
without being arrogant. It is the company and its products
that count – and nothing else.

Responsibility
Every BMW Group employee has the personal responsi-
bility for the company’s success. In team work, every em-
ployee must assume personal responsibility for his or her
actions. We are fully aware that we are working to achieve
the company’s goals. For this reason, we work together in
the best interests of the company.

Effectiveness
The only results that count for the company are those
which have a sustainable impact. In assessing leadership,
we must consider the effectiveness of performance on
results.

Adaptability
In order to ensure our long-term success we must adapt
to new challenges with speed and flexibility. We therefore
see change as an opportunity – and adaptability as essen-
tial to be able to capitalise on it.

Frankness
As we strive to find the best solution, it is each employee’s
duty to express any opposing opinions they may have.

158

The solutions agreed upon will then be consistently imple-
mented by all those involved.

Respect, trust, fairness
We treat each other with respect. Leadership is based on
mutual trust. Trust is rooted in fairness and reliability.

Employees
People make companies. Our employees are the strongest
factor in our success, which means our personnel decisions
will be amongst the most important we ever make.

Leading by example
Every manager must lead by example.

Sustainability
In our view, sustainability constitutes a lasting contribution
to the success of the company. This is the basis upon which
we assume ecological and social responsibility.

Society
Social responsibility is an integral part of our corporate self-
image.

Independence
We secure the corporate independence of the BMW Group
through sustained profitable growth.

The core principles are also available at www.bmwgroup.
com under the menu items “Responsibility” and “Em-
ployees”.

Social responsibility towards employees and
along the supplier chain
Questions relating to the issue of corporate social respon-
sibility are raised with each new day. The corporate culture
of the BMW Group combines the drive to be successful
with a will to be open-minded, trusting and transparent.
The BMW Group is very much aware of its responsibilities
towards society. The BMW Group’s models for sustainable
social responsibility towards employees and for ensuring
compliance with international social standards are based
on various internationally recognised guidelines. The BMW
Group is committed to adhering to the OECD’s guidelines
for multinational companies and the contents of the ICC
Business Charter for Sustainable Development. Details of
the contents of these guidelines and other relevant informa-
tion can be found at www.oecd.org and www.iccwbo.org.
The Board of Management signed the United Nations

Global Compact in 2001 and, in 2005, in conjunction with
employee representatives, issued a Joint Declaration on
Human Rights and Working Conditions in the BMW Group.
With these two documents, we have given our commit-
ment to abide worldwide by the International Labour Or-
ganization’s (ILO) fundamental working standards, princi-
ples and labour rights. The most important of these are
freedom of employment, the prohibition of discrimination,
the prohibition of child labour, the right to appropriate re-
muneration, regulated working times and compliance with
work and safety regulations. The complete text of the UN
Global Compact and the recommendations of the ILO and
other relevant information can be found at www.unglobal-
compact.org and www.ilo.org; the Joint Declaration on
Human Rights and Working Conditions in the BMW Group
can be found at www.bmwgroup.com under the menu
item “Responsibility”.

It goes without saying that the BMW Group abides by
these fundamental principles and rights worldwide. Activi-
ties can only be sustainable, however, if they encompass
the entire value-added chain. That is why the BMW Group
not only makes high demands of itself but also expects its
suppliers and partners to meet the ecological and social
standards it sets. The relevant sustainability criteria there-
fore play an integral part in all aspects of purchasing terms
and conditions. Potential suppliers must submit a full dis-
closure when completing BMW’s sustainability question-
naire, an inherent component of the acceptance procedure
for potential new suppliers. The BMW Group also insists
that its suppliers ensure that their sub-contractors comply
with set standards. Purchasing terms and conditions and
other information relating to purchasing can be found in
the publicly available section of the BMW Group Partner
Portal at https://b2b.bmw.com.

Compliance in the BMW Group
Responsible and lawful conduct is fundamental to the
success of the BMW Group. This approach is an integral
part of our corporate culture and is the reason why cus-
tomers, shareholders, business partners and the general
public place their trust in us. The Board of Management
and the employees of the BMW Group are obliged to act
responsibly and in compliance with applicable laws and
regulations.

This principle has been embedded in BMW’s internal
“Rules of Conduct” for many years now. In order to ensure
protection against compliance-related and reputational

140

141

142
145

146

151
157

158

Statement on
Corporate Governance
(Sub-section of Management Report)
Information on the Company’s
Governing Constitution
Declaration of the Board of
Management and of the Supervisory
Board pursuant to § 161 AktG
Members of the Supervisory Board
Members of the Board of
Management
Information on Work Procedures of
the Management Board and
Supervisory Board
Compensation Report
Information on Corporate
Governance Practices
Compliance in the BMW Group

159 Statement on Corporate Governance

risks, the Board of Management established a Compliance
Committee in 2007 mandated to introduce a worldwide
Compliance Organisation throughout the BMW Group.

Compliance Committee operates through the Compliance
Committee Office, which is organisationally allocated to
the Chairman of the Board of Management.

The BMW Group Compliance Committee comprises the
heads of the following departments: Legal and Patents,
Corporate Communication and Governmental Affairs,
Group Internal Audit, Group Financial Reporting, Organi-
sational Development and Group Human Resources. It
manages and monitors activities necessary to avoid non-
compliance with the law (Legal Compliance). These ac-
tivities include training, information and communication
measures, following up cases on non-compliance and im-
plementing compliance requirements.

The Compliance Committee reports regularly to the Board
of Management on all compliance-related issues, including
the progress made in setting up the Compliance Organi-
sation, details of investigations performed, identified cases
of non-compliance, sanctions imposed and corrective /
preventative measures implemented. The BMW Group

Compliance Committee

BMW AG Board of Management
Annual Status Report

Compliance
Committee

Identification and
monitoring

Code of
conduct

Reporting

Compliance
Committee Office

Communi-
cation

Compliance
contact

Training

Implementation with
appropriate personnel

The Chairman of the Compliance Committee keeps the
Audit Committee (i.e. a part of the Supervisory Board)
informed on the current status of compliance activities
within the BMW Group, both on a regular and a case-by-
case basis as the need arises.

The process of implementing the BMW Group Com-
pliance Organisation was begun in 2008 and has been
carried out in two steps. Implementation at BMW AG and
at a large number of the Group’s German subsidiaries
was completed in June 2009. At an international level,
implementation at a total of 69 entities worldwide within
the BMW Group was completed in November 2009.

The Compliance Organisation comprises the entire set of
measures taken to ensure that the BMW Group, its repre-
sentative bodies, its managers and its staff act in a lawful
manner. It is supplemented by a whole range of internal
principles, guidelines and instructions, which in part reflect
the applicable law.

The various elements of the BMW Group Compliance
Organisation are shown in the diagram on the left and are
applicable for all BMW Group entities worldwide. To the
extent that additional compliance requirements apply to
individual countries or specific lines of business, these are
covered by local compliance measures.

The BMW Group Legal Compliance Code is at the core
of the Compliance Organisation. This document explains
the significance of legal compliance and provides an
overview of the various areas relevant for the BMW Group.
The Legal Compliance Code is available as a printed
brochure and for download in German and English. In
addition, translations into eight other languages (French,
Spanish, Italian, Portuguese, Russian, Japanese, Thai and
Korean) have been made available since 2009.

Managers in particular bear a high degree of responsibility
and must set a good example in the process of avoiding
incidences of non-compliance. All managers are required
to inform the staff working for them of the content and sig-
nificance of the Legal Compliance Code and to make them
aware of legal risks. Managers must, at regular intervals
and on their own initiative, check compliance with the law

160

and communicate regularly with staff on this issue. Any
indication of non-compliance with the law must be rigor-
ously investigated.

tive entities, identified legal risks and incidences of non-
compliance as well as corrective or preventative measures
implemented.

In the course of implementation, more than 10,000 man-
agers and staff received training worldwide in com pliance
essentials up to the end of November 2009. The training
material is available on an internet-based training platform
in German and English and includes a final test. Success-
ful participation in the training programme, which is docu-
mented by a certificate, is mandatory for all BMW Group
managers. After completion of the implementation phase,
new HR processes have been introduced in order to en-
sure that all newly recruited managers and promoted staff
are required to undertake compliance training. This basic
training is supplemented by training programmes on spe-
cific compliance issues for selected target groups.

In order to avoid legal risks, all members of staff are ex-
pected to discuss matters with their managers and with
the relevant departments within the BMW Group, in par-
ticular the Legal Department, the Group Internal Audit
Department and the Group Security Department. As a
further point of contact (telephone or e-mail), the BMW
Group Compliance Contact has also been set up both for
employees and non-employees to answer any questions
that may arise regarding compliance. This also applies if
weaknesses or circumstances have been identified which
could result in non-compliance with the law. Information
can also be provided anonymously if so desired.

Compliance-related queries and all matters to which at-
tention has been drawn are documented and followed up
by the BMW Group Compliance Committee Office using
an electronic case management system. If necessary,
Group Internal Audit, Group Security and the legal depart-
ments may be called upon to assist in the investigation
process.

A reporting system is currently being established for the
Compliance Organisation which will enable compliance-
relevant issues to be reported to the Compliance Com-
mittee on a regular basis, and, if necessary, on an ad hoc
basis. To this end, a current total of 132 Compliance
Managers (at 31 December 2009) report on compliance
matters covering all areas of the BMW Group. This in-
cludes reporting on the compliance status of the respec-

Compliance with and implementation of the Legal Com-
pliance Code is reviewed regularly by Group Internal Audit
and Group Security. For this purpose, the Group Internal
Audit Department also performs on-site audits and inter-
views employees.

It is essential that employees are aware of and comply with
applicable legal regulations. The BMW Group does not
tolerate violations of law by its employees. Culpable vio-
lations of law may result in labour law sanctions and per-
sonal liability for the employee involved.

In order to avoid this, the BMW Group’s employees are
kept fully informed of the tools and measures used by the
Compliance Organisation via various internal channels.
The central means of communication is the Compliance
website within the BMW Group’s intranet where em-
ployees can find compliance-related information and also
have access to training materials in both German and
English. Employees can use the website to access fre-
quently asked questions (and answers) on compliance-
related issues. A special service area was added to the
website in 2009 where various practical tools and aids
are made available to employees, which help them to deal
with typical compliance-related matters.

Compliance is also an important factor in terms of safe-
guarding the future of the BMW Group’s workforce. For
that reason, in June 2009 the Board of Management and
the national and international employee representative
bodies of the BMW Group signed a set of Joint Principles
for Lawful Conduct. In doing so, all parties involved gave
a commitment to the principles contained in the BMW
Group Legal Compliance Code and to a trustful coopera-
tion in all matters relating to compliance.

In the interest of investor protection and in order to ensure
that the BMW Group complies with regulations relating to
potential insider information, as early as 1994 the Board
of Management appointed an Ad-hoc Committee con-
sisting of representatives of various specialist departments
and whose members examine the relevance of issues for
ad-hoc disclosure purposes. All persons working on behalf

140

141

142
145

146

151
157

158

Statement on
Corporate Governance
(Sub-section of Management Report)
Information on the Company’s
Governing Constitution
Declaration of the Board of
Management and of the Supervisory
Board pursuant to § 161 AktG
Members of the Supervisory Board
Members of the Board of
Management
Information on Work Procedures of
the Management Board and
Supervisory Board
Compensation Report
Information on Corporate
Governance Practices
Compliance in the BMW Group

161 Statement on Corporate Governance

of the enterprise who have access to insider information in
accordance with existing rules have been, and continue to
be, included in a corresponding, regularly updated list and
informed of the duties arising from insider rules.

The full text of the BMW Group’s Legal Compliance Code
can be viewed / downloaded at www.bmwgroup.com
under the menu items “Company” and “Company Portrait”.

162

Other Information
BMW AG
Principal Subsidiaries

Principal subsidiaries of BMW AG
at 31 December 2009

Domestic1
BMW INTEC Beteiligungs GmbH, Munich3
BMW Bank GmbH, Munich3

BMW Finanz Verwaltungs GmbH, Munich

BMW Ingenieur-Zentrum GmbH + Co., Dingolfing

BMW Maschinenfabrik Spandau GmbH, Berlin
BMW Leasing GmbH, Munich3
BMW Hams Hall Motoren GmbH, Munich4
BMW Fahrzeugtechnik GmbH, Eisenach3
BMW M GmbH Gesellschaft für individuelle Automobile, Munich3

Equity
in euro million

Net result
in euro million

Capital investment
in %

3,549

404

211

11
5

–

100

1 In the case of German subsidiaries, based on financial statements drawn up in accordance with HGB.
2 In the case of foreign subsidiaries, based on financial statements drawn up in accordance with uniform IFRSs accounting policies.

Equity and net result are translated at the closing rate.

3 profit and loss transfer agreement with BMW AG
4 profit and loss transfer agreement with a subsidiary of BMW AG
5 below euro 500,000

162
162
164
166
168
170
172
173
174

Other Information
BMW AG Principal Subsidiaries
BMW Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Index of graphs
Financial Calendar
Contacts

163 Other Information

Principal subsidiaries of BMW AG
at 31 December 2009

Foreign2

BMW Österreich Holding GmbH, Steyr

BMW Motoren GmbH, Steyr

BMW China Automotive Trading Ltd., Beijing

BMW Russland Trading OOO, Moscow

BMW Austria Gesellschaft m. b. H., Salzburg

BMW Holding B. V., The Hague

BMW Australia Finance Ltd., Melbourne, Victoria

BMW (South Africa) (Pty) Ltd., Pretoria

BMW (Schweiz) AG, Dielsdorf

BMW Italia S. p. A., Milan

BMW Finance N. V., The Hague

BMW Overseas Enterprises N. V., Willemstad

BMW Japan Corp., Tokyo

BMW Japan Finance Corp., Tokyo

BMW Belgium Luxembourg S. A. / N. V., Bornem

BMW France S. A., Montigny le Bretonneux

BMW Canada Inc., Whitby

BMW Australia Ltd., Melbourne, Victoria

BMW Portugal Lda., Lisbon

BMW Korea Co., Ltd., Seoul

BMW Hellas Trade of Cars SA, Athens

BMW New Zealand Ltd., Auckland

BMW Sverige AB, Stockholm

BMW Automotive (Ireland) Ltd., Dublin

BMW Nederland B. V., The Hague

BMW (UK) Holdings Ltd., Bracknell

BMW (UK) Manufacturing Ltd., Bracknell

BMW (UK) Ltd., Bracknell

BMW Financial Services (GB) Ltd., Hook

BMW (UK) Capital plc, Bracknell

BMW Malta Ltd., St. Julians

BMW Malta Finance Ltd., St. Julians

BMW Coordination Center V. o. F., Bornem

BMW España Finance S. L., Madrid

BMW Ibérica S. A., Madrid

BMW de Mexico, S. A. de C. V., Mexico City

BMW (US) Holding Corp., Wilmington, Del.

BMW Manufacturing, LLC, Wilmington, Del.

BMW Financial Services NA, LLC, Wilmington, Del.

BMW of North America, LLC, Wilmington, Del.

BMW US Capital, LLC, Wilmington, Del.

Equity
in euro million

Net result
in euro million

Capital investment
in %

1,219

741

472

266

140

405

– 53

– 5

5,165

1,428

477

444

409

390

337

273

350

211

191

142

– 2

497

983

637

222

153

1,055

833

592

365

303

1,186

577

440

342

276

– 3

–1
5

– 3

–12

–14

119

– 119

43
5

– 105

100

164

BMW Group Ten-year Comparison

Deliveries to customers
Automobiles3
Motorcycles4

Production
Automobiles3
Motorcycles5

Financial Services

2009

2008

2007

2006

2005

20041

2003

20022

2001

2000

units

1,286,310

1,435,876

1,500,678

1,373,970

1,327,992

1,208,732

1,104,916

1,057,344

87,306

101,685

102,467

100,064

97,474

92,266

92,962

92,599

1,258,417

1,439,918

1,541,503

1,366,838

1,323,119

1,250,345

1,118,940

1,090,258

82,631

104,220

104,396

103,759

92,012

93,836

89,745

93,010

905,657

84,713

1,011,874

74,614

Automobiles3

Motorcycles4

Deliveries to customers

946,730

90,478

1,026,775

74,397

Production

Automobiles3

Motorcycles5

Contract portfolio
Business volume (based on balance sheet carrying amounts)6

contracts

3,085,946

3,031,935

2,629,949

2,270,528

2,087,368

1,843,399

1,623,425

1,443,236

1,297,702

1,317,150

Contract portfolio

euro million

61,202

60,653

51,257

44,010

40,428

32,556

28,647

26,505

25,306

24,958

Business volume (based on balance sheet carrying amounts)6

Income Statement

Revenues
Gross profit margin Group7

Profit before financial result

Profit before tax

Return on sales (earnings before tax / revenues)

Income taxes

Effective tax rate

Net profit for the year

Balance Sheet

Non-current assets

Current assets

Equity

Equity ratio Group

Non-current provisions and liabilities

Current provisions and liabilities

Balance sheet total

Cash Flow Statement

Cash and cash equivalents at balance sheet date
Operating cash flow 8

Capital expenditure

Capital expenditure ratio (capital expenditure / revenues)

Personnel
Workforce at the end of year9

Personnel cost per employee

Dividend

Dividend total

euro million

50,681

53,197

56,018

48,999

46,656

44,335

41,525

42,411

38,463

37,226

Revenues

euro million

10.5

289

413

0.8

203

49.2

210

62,009

39,944

19,915

19.5

45,119

36,919

11.4

921

351

0.7

6.0

330

62,416

38,670

20,273

20.1

41,526

39,287

euro million

101,953

101,086

euro million

7,767

4,921

3,471

6.8

7,454

4,471

4,204

7.9

21.8

4,212

3,873

6.9

739

19.1

3,134

56,619

32,378

21,744

24.4

33,469

33,784

88,997

2,393

6,246

4,267

7.6

23.1

4,050

4,124

8.4

1,250

30.3

2,874

50,514

28,543

19,130

24.2

31,372

28,555

79,057

1,336

5,373

4,313

8.8

22.9

3,793

3,287

7.0

1,048

31.9

2,239

47,556

27,010

16,973

22.8

29,509

28,084

74,566

1,621

6,184

3,993

8.6

23.2

3,774

3,583

8.1

1,341

37.4

2,242

40,822

26,812

16,534

24.4

26,517

24,583

67,634

2,128

6,157

4,347

9.8

22.7

3,353

3,205

7.7

1,258

39.3

1,947

36,921

24,554

16,150

26.3

22,090

23,235

61,475

1,659

4,970

4,245

10.2

22.8

3,505

3,297

7.8

1,277

38.7

2,020

34,667

20,844

13,871

25.0

20,028

21,612

55,511

2,333

4,553

4,042

9.5

25.3

3,356

3,242

8.4

1,376

42.4

1,866

31,282

19,977

10,770

21.0

19,223

21,266

51,259

2,437

4,304

3,516

9.1

euro

96,230

72,349

100,041

75,612

107,539

76,704

106,575

76,621

105,798

75,238

105,972

73,241

104,342

73,499

101,395

69,560

97,275

66,711

93,624

Workforce at the end of year9

63,548

Personnel cost per employee

euro million

197

694

458

41910

419

392

351

350

310

Dividend total

Dividend per share of common stock / preferred stock

euro

0.30 / 0.32

1.06 / 1.08

0.70 / 0.72

0.64 / 0.66

0.62 / 0.64

0.58 / 0.60

0.52 / 0.54

0.46 / 0.48

Dividend per share of common stock / preferred stock

Financial Services

Income Statement

Gross profit margin Group7

Profit before financial result

Profit before tax

22.8

2,065

2,032

5.5

823

Income taxes

40.5

Effective tax rate

1,209

Net profit for the year

Balance Sheet

30,079

Non-current assets

19,261

Current assets

9,432

Equity

19.1

Equity ratio Group

Return on sales (earnings before tax / revenues)

17,386

Non-current provisions and liabilities

22,522

Current provisions and liabilities

49,340

Balance sheet total

Cash Flow Statement

Cash and cash equivalents at balance sheet date

2,927

3,966

2,781

Operating cash flow 8

Capital expenditure

7.5

Capital expenditure ratio (capital expenditure / revenues)

Personnel

Dividend

162
162
164
166
168
170
172
173
174

Other Information
BMW AG Principal Subsidiaries
BMW Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Index of graphs
Financial Calendar
Contacts

1 adjusted for new accounting treatment of pension obligations
2 reclassified after harmonisation of internal and external reporting systems
3 including Rover Cars up to 9 May 2000 and Land Rover up to 30 June 2000
4 excluding C1, sales volume to 2003: 32,859 units, excluding Husqvarna Motorcycles (13,052 motorcycles)
5 from 2006 including BMW G 650 X assembly by Piaggio S. p. A. / excluding C1 production by Bertone, production volume C1 up to 2002: 33,489 units, excluding

Husqvarna Motorcycles (10,612 motorcycles)

6 amount computed on the basis of balance sheet figures: until 2007 from the Group balance sheet, from 2008 onwards from the Financial Services segment balance sheet
7 research and development costs included in cost of sales with the effect from 2008
8 Figures are reported in the cash flow statement up to 2006 as cash inflow from operating activities of Industrial Operations and from 2007 as cash inflow from

operating activities of the Automobiles segment.

9 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.
10 adjustment to dividend due to buy-back of treasury shares

165 Other Information

2009

2008

2007

2006

2005

20041

2003

20022

2001

2000

1,286,310

1,435,876

1,500,678

1,373,970

1,327,992

1,208,732

1,104,916

1,057,344

87,306

101,685

102,467

100,064

97,474

92,266

92,962

92,599

1,258,417

1,439,918

1,541,503

1,366,838

1,323,119

1,250,345

1,118,940

1,090,258

82,631

104,220

104,396

103,759

92,012

93,836

89,745

93,010

905,657

84,713

1,011,874

74,614

Deliveries to customers
Automobiles3
Motorcycles4

946,730

90,478

1,026,775

74,397

Production
Automobiles3
Motorcycles5

Business volume (based on balance sheet carrying amounts)6

euro million

61,202

60,653

51,257

44,010

40,428

32,556

28,647

26,505

25,306

24,958

contracts

3,085,946

3,031,935

2,629,949

2,270,528

2,087,368

1,843,399

1,623,425

1,443,236

1,297,702

1,317,150

euro million

50,681

53,197

56,018

48,999

46,656

44,335

41,525

42,411

38,463

37,226

Deliveries to customers

Automobiles3

Motorcycles4

Production

Automobiles3

Motorcycles5

Financial Services

Contract portfolio

Income Statement

Revenues

Gross profit margin Group7

Profit before financial result

Profit before tax

Income taxes

Effective tax rate

Net profit for the year

Balance Sheet

Non-current assets

Current assets

Equity

Equity ratio Group

Return on sales (earnings before tax / revenues)

Non-current provisions and liabilities

Current provisions and liabilities

Balance sheet total

Cash Flow Statement

Cash and cash equivalents at balance sheet date

Operating cash flow 8

Capital expenditure

Capital expenditure ratio (capital expenditure / revenues)

Personnel

Workforce at the end of year9

Personnel cost per employee

Dividend

Dividend total

units

euro million

10.5

289

413

0.8

203

49.2

210

62,009

39,944

19,915

19.5

45,119

36,919

7,767

4,921

3,471

6.8

11.4

921

351

0.7

6.0

330

62,416

38,670

20,273

20.1

41,526

39,287

7,454

4,471

4,204

7.9

21.8

4,212

3,873

6.9

739

19.1

3,134

56,619

32,378

21,744

24.4

33,469

33,784

88,997

2,393

6,246

4,267

7.6

23.1

4,050

4,124

8.4

1,250

30.3

2,874

50,514

28,543

19,130

24.2

31,372

28,555

79,057

1,336

5,373

4,313

8.8

euro million

101,953

101,086

1 adjusted for new accounting treatment of pension obligations

2 reclassified after harmonisation of internal and external reporting systems

3 including Rover Cars up to 9 May 2000 and Land Rover up to 30 June 2000

4 excluding C1, sales volume to 2003: 32,859 units, excluding Husqvarna Motorcycles (13,052 motorcycles)

5 from 2006 including BMW G 650 X assembly by Piaggio S. p. A. / excluding C1 production by Bertone, production volume C1 up to 2002: 33,489 units, excluding

Husqvarna Motorcycles (10,612 motorcycles)

6 amount computed on the basis of balance sheet figures: until 2007 from the Group balance sheet, from 2008 onwards from the Financial Services segment balance sheet

7 research and development costs included in cost of sales with the effect from 2008

8 Figures are reported in the cash flow statement up to 2006 as cash inflow from operating activities of Industrial Operations and from 2007 as cash inflow from

9 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.

operating activities of the Automobiles segment.

10 adjustment to dividend due to buy-back of treasury shares

22.9

3,793

3,287

7.0

1,048

31.9

2,239

47,556

27,010

16,973

22.8

29,509

28,084

74,566

1,621

6,184

3,993

8.6

23.2

3,774

3,583

8.1

1,341

37.4

2,242

40,822

26,812

16,534

24.4

26,517

24,583

67,634

2,128

6,157

4,347

9.8

22.7

3,353

3,205

7.7

1,258

39.3

1,947

36,921

24,554

16,150

26.3

22,090

23,235

61,475

1,659

4,970

4,245

10.2

22.8

3,505

3,297

7.8

1,277

38.7

2,020

34,667

20,844

13,871

25.0

20,028

21,612

55,511

2,333

4,553

4,042

9.5

25.3

3,356

3,242

8.4

1,376

42.4

1,866

31,282

19,977

10,770

21.0

19,223

21,266

51,259

2,437

4,304

3,516

9.1

euro

96,230

72,349

100,041

75,612

107,539

76,704

106,575

76,621

105,798

75,238

105,972

73,241

104,342

73,499

101,395

69,560

97,275

66,711

Financial Services

Contract portfolio
Business volume (based on balance sheet carrying amounts)6

Income Statement

Revenues
Gross profit margin Group7

Profit before financial result

Profit before tax

Return on sales (earnings before tax / revenues)

Income taxes

22.8

2,065

2,032

5.5

823

40.5

Effective tax rate

1,209

Net profit for the year

Balance Sheet

30,079

Non-current assets

19,261

Current assets

9,432

Equity

19.1

Equity ratio Group

17,386

Non-current provisions and liabilities

22,522

Current provisions and liabilities

49,340

Balance sheet total

2,927

3,966

2,781

Cash Flow Statement

Cash and cash equivalents at balance sheet date
Operating cash flow 8

Capital expenditure

7.5

Capital expenditure ratio (capital expenditure / revenues)

93,624

Personnel
Workforce at the end of year9

63,548

Personnel cost per employee

Dividend

Dividend per share of common stock / preferred stock

euro

0.30 / 0.32

1.06 / 1.08

0.70 / 0.72

0.64 / 0.66

0.62 / 0.64

0.58 / 0.60

0.52 / 0.54

0.46 / 0.48

Dividend per share of common stock / preferred stock

euro million

197

694

458

41910

419

392

351

350

310

Dividend total

166

BMW Group
Locations

— R
— R
— R

— S

— R

— P

— S

— A

— P

— R

— S

— R

— S

— A

— S

— A

— S

— A

— S

— A

— P

— S

— A

— P

— S

— P

— S

— R

— H

— P

— R

— P

— S

— C

— P

— R

— S

— P

— S

— P

— S

The BMW Group is present in the world markets with
24 production and assembly plants, 43 sales subsidiaries
and a research and development network.

— H Headquarters

— R Research and Development

BMW Group Research and Innovation Centre
(FIZ), Munich
BMW Group Forschung und Technik, Munich
BMW Car IT, Munich
BMW Innovations- und Technologiezentrum für
Leichtbau, Landshut
BMW Entwicklungszentrum für Dieselmotoren,
Steyr, Austria
BMW Group Designworks, Newbury Park, USA
BMW Group Technology Office Palo Alto, USA
BMW Group Engineering and Emission Test Center,
Oxnard, USA
BMW Group Entwicklung Japan, Tokyo, Japan
BMW Group Entwicklung China, Beijing, China
BMW Group Entwicklung USA, Woodcliff Lake, USA

162
162
164
166
168
170
172
173
174

Other Information
BMW AG Principal Subsidiaries
BMW Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Index of graphs
Financial Calendar
Contacts

167 Other Information

— S

— P

— P
— P
— P
— P

— P
— P
— P

— S

— R

— P

— R

— S

— P

— R

— R
— S

— S

— S
— R

— A

— S

— A

— S

— A

— S
— A
— S

— A

— A
— S

— S

— P

— S

— A

— P

— S

— S
— P

— P
— S
— P

— P

— S

— P
— R
— R

— P
— P
— R
— P

— S
— P
— P
— C

— S
— C

— P
— P

— P
— R

— R

— H

— H
— P

— S

— P

— S

— P Production

— C Contract production

— S Sales subsidiary markets

Berlin plant
Dingolfing plant
Eisenach plant
Goodwood plant, GB (headquarters of
Rolls-Royce Motor Cars Limited)
Hams Hall plant, GB
Landshut plant
Leipzig plant
Munich plant
Oxford plant, GB
Regensburg plant
Rosslyn plant, South Africa
BMW Brilliance Automotive Ltd., Shenyang,
China (joint venture with Brilliance China
Automotive Holdings)
Spartanburg plant, USA
Steyr plant, Austria
Swindon plant, GB
Wackersdorf plant
Husqvarna Motorcycles S. r. l., Cassinetta di
Biandronno, Italy

Magna Steyr Fahrzeugtechnik, Austria

— A Assembly plants

CKD production Cairo, Egypt
CKD production Chennai, India
CKD production Jakarta, Indonesia
CKD production Kaliningrad, Russia
CKD production Kulim, Malaysia
CKD production Rayong, Thailand

Slovakia
Slovenia
South Africa
South Korea
Spain
Sweden
Switzerland
Thailand
USA

Argentina
Australia
Austria
Belgium
Brazil
Bulgaria
China
Canada
Czech Republic
Denmark
Dubai
Finland
France
Germany
Great Britain
Greece
Hungary

India
Indonesia
Ireland
Italy
Japan
Malaysia
Malta
Mexico
Netherlands
New Zealand
Norway
Panama
Poland
Portugal
Romania
Russia
Singapore

168

Glossary

Accident frequency
Shows the number of reportable industrial accidents per
one million hours worked. Definition of industrial accident
in accordance with the German Social Code: Industrial
accidents are accidents involving insured individuals and
resulting from the pursuit of their insured activity on the
industrial site. Accidents are events of limited duration that
impact the body externally, leading to damage to health or
death.

ACEA
Abbreviation for “Association des Constructeurs Européens
d’Automobiles” (European Automobile Manufacturers
Association).

Common stock
Stock with voting rights (cf. preferred stock).

Cost of materials
Comprises all expenditure to purchase raw materials and
supplies.

DAX
Abbreviation for “Deutscher Aktienindex”, the German
Stock Index. The index is based on the weighted market
prices of the 30 largest German stock corporations (by
stock market capitalisation).

Deferred taxes
Accounting for deferred taxes is a method of allocating tax
expense to the appropriate accounting period.

Derivatives
Financial products, whose measurement is derived princi-
pally from market price, market price fluctuations and ex-
pected market price changes of the underlying instrument
(e. g. indices, stocks or bonds).

DJSI World
Abbreviation for “Dow Jones Sustainability Index World”.
A family of indexes created by Dow Jones and the Swiss
investment agency SAM Sustainability Group for com-
panies with strategies based on a sustainability concept.
The BMW Group has been one of the leading companies
in the DJSI since 1999.

EBIT
Abbreviation for “Earnings Before Interest and Taxes”. The
profit before income taxes, minority interest and financial
result.

EBITDA
Abbreviation for “Earnings Before Interest, Taxes, Depre-
ciation and Amortisation”. The profit before income taxes,
minority interest, financial result and depreciation / amor-
tisation.

Effectiveness
The degree to which offsetting changes in fair value or cash
flows attributable to a hedged risk are achieved by the
hedging instrument.

Efficient Dynamics
The aim of Efficient Dynamics is to reduce consumption
and emissions whilst simultaneously increasing dynamics
and performance. This involves a holistic approach to
achieving optimum automobile potential, ranging from
efficient engine technologies and lightweight construction
to comprehensive energy and heat management inside
the vehicle.

Equity ratio
The proportion of equity (= subscribed capital, reserves,
accumulated other equity and minority interest) to the
balance sheet total.

Free cash flow
Free cash flow corresponds to the cash inflow from operat-
ing activities of the Automobiles segment less the cash
outflow for investing activities of the Automobiles segment.

Gross margin
Gross profit as a percentage of revenues.

IFRSs
International Financial Reporting Standards, intended to
ensure global comparability of financial reporting and con-
sistent presentation of financial statements. The IFRSs are
issued by the International Accounting Standards Board
and include the International Accounting Standards (IASs),
which are still valid.

ISO 14001
An internationally recognised standard for environmental
management systems.

Operating cash flow
Cash inflow from the operating activities of the Automobiles
segment.

162
162
164
166
168
170
172
173
174

Other Information
BMW AG Principal Subsidiaries
BMW Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Index of graphs
Financial Calendar
Contacts

169 Other Information

Preferred stock
Stock which receives a higher dividend than common
stock, but without voting rights.

Production network
The BMW Group production network consists worldwide
of 17 plants, six assembly plants and one contract produc-
tion plant. Within this network, the plants supply one an-
other with systems and components and are all character-
ised by a high level of productivity, agility and flexibility.

Rating
Standardised evaluation of a company’s credit standing
which is widely accepted on the global capital markets.
Ratings are published by independent rating agencies,
e. g. Standard & Poor’s or Moody’s, based on their analysis
of a company.

Return on sales
Pre-tax:
Post-tax: Profit as a percentage of revenues.

Profit before tax as a percentage of revenues.

Risk management
An integral component of all business processes. Follow-
ing enactment of the German Law on Control and Trans-
parency within Businesses (KonTraG), all companies listed
on a stock exchange in Germany are required to set up a
risk management system. The purpose of this system is to
identify risks at an early stage which could have a signifi-
cant adverse effect on the assets, liabilities, financial posi-
tion and results of operations, and which could endanger
the continued existence of the company. This applies in
particular to transactions involving risk, errors in accounting
or financial reporting and violations of legal requirements.
The Board of Management is required to set up an appro-
priate system, to document that system and monitor it reg-
ularly with the aid of the internal audit department.

Sales locations
Sales locations include separate legal entities, non-sepa-
rate entities and regional offices. In addition, 105 markets
are serviced by 97 importers.

Subscribed capital
The share capital of a company is computed by multiplying
the nominal value of the shares by the number of shares.

Subsidiaries
Subsidiaries are those enterprises which, either directly
or indirectly, are under the uniform control of the manage-
ment of BMW AG or in which BMW AG, either directly or
indirectly
– holds the majority of the voting rights
– has the right to appoint or remove the majority of the
members of the Board of Management or equivalent
governing body, and in which BMW AG is at the same
time (directly or indirectly) a shareholder

– has control (directly or indirectly) over another enterprise
on the basis of a control agreement or a provision in the
statutes of that enterprise.

Supplier relationship management
Supplier relationship management (SRM) uses focused
procurement strategies to organise networked supplier
relationships, optimise processes for supplier qualification
and selection, ensure the application of uniform standards
throughout the Group and create efficient sourcing and
procurement processes along the whole value added
chain.

Sustainability
Sustainability, or sustainable development, gives equal
consideration to ecological, social and economic develop-
ment. In 1987 the United Nations “World Commission on
Environment and Development” defined sustainable de-
velopment as development that meets the needs of the
present without compromising the ability of future genera-
tions to meet their own needs. The economic relevance
of corporate sustainability to the BMW Group is evident in
three areas: resources, reputation and risk.

170

Index

59, 81, 84

A
Accounting principles
Annual General Meeting
107 – 108, 140, 148 – 150, 155
Application of § 264 (3) and § 264b of the German
Commercial Code (HGB)
Apprentices

27, 95

132

09 – 10, 13, 42, 45 – 46, 54,

B
Balance sheet structure
Board of Management
56, 64, 82, 107, 130 – 133, 137 – 141, 144 – 160, 169
43, 52, 56, 69, 79, 111, 126, 168
Bonds

07 – 11, 13, 29, 31, 42, 45 – 47,

05, 13, 52 – 55, 78 – 79, 81, 130,

05, 13, 52, 54, 59, 135 – 136, 165
52 – 55, 60, 77, 79, 107,

05, 13, 42, 48, 52 – 55, 65, 79, 86 – 87,

08 – 09, 11, 68 – 69, 131, 140, 150,

07, 22 – 23, 31 – 34, 36, 40, 66

08 – 09, 56, 132, 151

C
Capital expenditure
Cash and cash equivalents
121, 123, 130, 165
Cash flow
120 – 121, 123 – 127, 130, 139, 165, 168 – 169
Cash flow statement
139, 165
CO2 emissions
Compensation Report
Compliance
158 – 161
Consolidated companies
107, 130 – 131, 140, 150, 158 – 161
Consolidation principles
139 – 140, 150, 158 – 161
Contingent liabilities
131 – 132, 140, 150, 158 – 161
Corporate Governance
148, 150 – 151, 155, 157
Cost of materials
Cost of sales
100, 165
Current assets
135 – 137, 165
Current provisions and liabilities
Current taxes

76 – 79, 92, 105, 114 – 115

56 – 57, 168

55, 77, 165

08 – 09, 11, 68 – 69, 88, 119,

08, 56, 131, 140 – 141, 146,

55, 60, 77, 79, 85 – 86, 93, 101, 105,

08 – 09, 11, 68 – 69, 83, 131,

08 – 09, 11, 68 – 69, 82 – 83,

50, 51, 58 – 59, 61, 75, 79, 81, 84, 88, 90,

131

D
42, 44, 152 – 153, 168
DAX
67, 126
Dealer organisation
Declaration with respect to the Corporate Governance
Code
Deferred taxes
Development
42, 44, 46, 48, 50 – 51, 54, 58, 61, 63 – 70, 72, 75, 81,
84 – 86, 88, 90 – 91, 99 – 100, 105, 108, 110, 138 – 139,
144 – 147, 151 – 152, 158 – 159, 165 – 166, 169
Dividend
107 – 108, 130, 152, 165, 169
Dow Jones Sustainability Index World

54, 74, 79, 87, 92 – 94, 97, 108, 168
07 – 08, 11, 13, 16, 27, 29 – 30, 33 – 38,

13, 29, 43, 45 – 46, 52, 54, 79 – 80, 84, 95,

03, 44, 168

162
162
164
166
168
170
172
173
174

Other Information
BMW AG Principal Subsidiaries
BMW Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Index of graphs
Financial Calendar
Contacts

43, 50, 75, 95
11, 33 – 34, 36, 39 – 40, 66, 72, 168

E
Earnings per share
Efficient Dynamics
Employees
05, 09, 11, 22, 27 – 31, 42, 45, 47, 54,
56 – 57, 59, 63, 68 – 69, 95 – 96, 107, 109 – 110, 140,
146 – 148, 153 – 154, 157 – 158, 160, 165
Equity
25, 42 – 43, 47 – 51, 54 – 55, 58 – 60, 75, 77,
79 – 83, 86 – 89, 91, 93, 99, 101, 107 – 108, 111, 113,
125 – 126, 136, 139, 162 – 163, 165, 168
Exchange rates
Explanatory notes to the cash flow statements

54, 83, 84, 111, 128

130

47, 53 – 54, 59, 64 – 65, 86 – 89,

53 – 54, 58, 77, 86 – 87, 89, 103, 110,

F
Financial assets
121, 123, 126
Financial instruments
92, 108, 118, 120, 124 – 126, 128 – 129, 157
Financial liabilities
88, 108 – 109, 115, 118, 121, 123, 126 – 127
Financial result
133, 136, 165, 168
Financial Services
65, 67 – 68, 73, 79, 81 – 82, 101, 130, 133, 136, 163, 165
Fleet consumption
Foreign currency translation

48 – 49, 52 – 54, 56, 65, 77, 79, 85,

07 – 09, 12, 25 – 27, 48 – 53, 55, 58,

04 – 05, 12, 49 – 51, 61, 75, 88, 92, 111,

83, 93

G
Group tangible, intangible and investment assets
100 – 101

98,

114

62, 81, 83, 87 – 88, 93, 95, 97, 101,

50, 61, 75, 79, 87, 92, 94, 165, 168

I
Income statement
111, 114, 125 – 126, 139
Income tax assets
105
Income taxes
Income tax liabilities
Intangible assets
84 – 86, 90, 93, 99, 100, 136 – 137
Internal financing
Inventories
Investments
79, 82 – 83, 86, 91 – 93, 99, 101, 103, 111, 119, 121,
123 – 125, 129 – 130, 133, 136
Investments accounted for using the equity method and
other investments

26, 54, 59 – 60, 77, 79, 84, 87 – 88, 106

13, 51 – 52, 54, 58 – 59, 66, 77, 79,

13, 21, 23, 50 – 51, 54, 59 – 61, 69, 75, 77,

51, 86, 101

56, 79

K
Key data per share

L
Lease business
Leased products
136 – 137
Locations

12, 25, 54, 65

52, 54, 77, 79, 85, 93, 99, 101,

28, 31 – 33, 36, 40, 166, 169

171 Other Information

M
Mandates of members of the Board of Management
Mandates of members of the Supervisory Board
Marketable securities
101, 103 – 104, 108, 121, 123 – 125
Motorcycles
73, 75, 77, 81, 133, 135 – 136, 165, 167

143
51 – 54, 60, 79, 81, 86, 91, 99,

05, 08, 12, 16, 23 – 24, 27, 48 – 52, 58 – 59,

145

05, 13, 29, 50 – 52, 54, 61, 74 – 75, 79, 84, 86,

N
Net profit
95, 108, 130, 152, 165
New financial reporting rules
Non-current assets
165
Non-current provisions and liabilities

88 – 89

55, 77, 79, 85, 101, 105, 135 – 137,

55, 77, 165

50 – 51, 75, 92

O
Other disclosures relating to the income statement
Other financial result
Other investments
Other operating expenses
Other operating income
Other provisions
Outlook

50, 59, 75, 91, 100
50 – 51, 61, 75, 83, 91

56, 60, 77, 88, 114

65, 70 – 71, 109

54, 77, 82, 86, 99, 101, 121, 123 – 124

04 – 05, 12, 49 – 50, 52, 129, 136, 165,

05, 08, 21 – 24, 28, 30 – 33, 35, 37 – 39, 46,

60, 105

162 – 163

28, 91, 95

21, 30, 66, 169

04 – 05, 12, 49 – 51, 133,

48 – 49, 54 – 55, 59 – 60, 77, 88,

P
Pension provisions
109 – 111, 132, 154 – 155
Personnel costs
Prepayments
Principal subsidiaries
Production
54, 65 – 67, 72, 84 – 85, 87, 91, 100, 118, 128, 145, 147,
165 – 167, 169
Production network
Profit before financial result
165
Profit before tax
169
Property, plant and equipment
77, 79, 84 – 86, 90, 93, 100, 119, 136 – 137
Purchases
38, 52, 65, 129
R
Rating
Receivables from sales financing
102 – 103, 121, 123, 126
Related party relationships
Remuneration System
Report of the Supervisory Board
Research
155, 165 – 166
Research and development costs
81, 90, 165
Result from equity accounted investments
91

65, 67, 87, 108 – 109, 126 – 127, 169

130
28 – 30, 141

52, 54, 77, 79, 86,

06 – 11

50 – 51, 58, 61, 75,

50, 75, 79,

13, 51 – 52, 54, 58 – 60,

25, 36 – 37, 40, 50 – 51, 58, 61, 75, 81, 84, 90,

Return on sales
Revenue reserves
Risk management
146, 148, 150, 169

29, 50 – 51, 58, 152, 165, 169

60 – 61, 77, 107 – 108
07, 09, 11, 63 – 65, 67 – 68, 128,

157

81, 90, 133

50 – 51, 75, 91

07 – 08, 12, 16, 18 – 21, 23 – 24, 33,

74, 81, 97, 139
09, 13, 29, 42 – 43, 45 – 46, 50, 54, 59, 75, 80,

S
Sales and administrative costs
Sales volume
50 – 51, 54, 68, 73, 165
Segment information
Shareholdings of members of the Board of Management
and the Supervisory Board
Statement of Comprehensive Income
Stock
84, 95, 107, 131 – 132, 140 – 141, 152, 155, 157, 165,
168 – 169
Subscribed capital
Subsidiaries
94, 96, 99 – 101, 105, 108, 117, 119, 121, 123, 125 – 126,
131, 157, 159, 162 – 163, 166, 169
Supervisory Board
130 – 132, 140 – 142, 146 – 157, 159
Suppliers
Sustainability
158, 168 – 169

51, 54, 59 – 60, 82 – 84, 86, 88, 91 – 92,

03, 29, 31, 35, 38, 43 – 44, 146 – 147,

38, 44, 66 – 67, 129, 149, 158

06 – 11, 13, 42, 45 – 47, 64,

54, 60, 77, 168 – 169

T
Tangible, intangible and investment assets
100 – 101
Trade payables
127
Trade receivables

54, 60, 77, 79, 105 – 107, 121, 123

49, 54, 56, 60, 77, 79, 118, 121, 123,

60, 79, 98,

W
Workforce

05, 27 – 29, 44, 57, 59, 69, 95, 160, 165

This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.

172

Index of graphs

Finances
Profit before financial result
Profit before tax
Revenues
04
BMW Group Capital expenditure and
operating cash flow
BMW Group Revenues by region
13
Exchange rates compared to the Euro
Oil price trend
15
Precious metals price trend
Steel price trend
15
Contract portfolio of BMW Group Financial
Services
Contract portfolio retail customer financing of
BMW Group Financial Services 2009
Regional mix of BMW Group purchase
volumes 2009
38
Change in cash and cash equivalents
Balance sheet structure – Automobiles segment
Balance sheet structure Group
BMW Group Value added 2009

55
57

Stock
Development of BMW stock compared to stock
exchange indices

Production and sales volume
04
Deliveries of automobiles
BMW Group Deliveries of automobiles by region
and market
BMW Group – key automobile markets 2009
Deliveries of BMW diesel automobiles
MINI brand cars in 2009 – analysis by model variant
Automobile production of the BMW Group by
plant in 2009
BMW motorcycles delivered
BMW Group – key motorcycle markets 2009
BMW motorcycles in 2009 – analysis by series

Workforce
BMW Group Apprentices at 31 December
Employee fluctuation ratio BMW AG
28
Share of women in management positions
at BMW AG
Accident frequency at BMW Group
Compliance Committee

159

Environment
CO2 emissions per vehicle produced
Energy consumed per vehicle produced
Process wastewater per vehicle produced
Water consumption per vehicle produced
Roadmap of the BMW Group for sustainable mobility
Volatile organic compounds (VOC) per vehicle
produced
Waste for removal per vehicle produced
Development of CO2 emissions of BMW Group cars in
Europe

32
32

162
162
164
166
168
170
172
173
174

Other Information
BMW AG Principal Subsidiaries
BMW Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Index of graphs
Financial Calendar
Contacts

173 Other Information

Financial Calendar

Annual Accounts Press Conference
Financial Analysts’ Meeting
Quarterly Report to 31 March 2010
Annual General Meeting
Quarterly Report to 30 June 2010
Quarterly Report to 30 September 2010

Annual Report 2010
Annual Accounts Press Conference
Financial Analysts’ Meeting
Quarterly Report to 31 March 2011
Annual General Meeting
Quarterly Report to 30 June 2011
Quarterly Report to 30 September 2011

17 March 2010
18 March 2010
5 May 2010
18 May 2010
3 August 2010
3 November 2010

15 March 2011
15 March 2011
16 March 2011
4 May 2011
12 May 2011
2 August 2011
3 November 2011

174

Contacts

Business Press
Telephone

+49 89 382-2 33 62
+49 89 382-2 41 18
+49 89 382-2 44 18
presse@bmwgroup.com

Fax
E-mail

Investor Relations
Telephone +49 89 382-2 42 72
+49 89 382-2 53 87
+49 89 382-1 46 61
ir@bmwgroup.com

Fax
E-mail

The BMW Group on the Internet
Further information about the BMW Group is available online at www.bmwgroup.com.
Investor Relations information is available directly at www.bmwgroup.com/ir. Information
about the various BMW Group brands is available at www.bmw.com, www.mini.com
and www.rolls-roycemotorcars.com.

162
162
164
166
168
170
172
173
174

Other Information
BMW AG Principal Subsidiaries
BMW Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Index of graphs
Financial Calendar
Contacts

Number ONE

Creating individual mobility of the future.

Growth

Future
Developing a growth market.
Customers

Winning new customers through technological leadership.

Profitability

Preparing for the future by thinking ahead.

Falzmarke Imagetitel und Klappe

innen

Hakan Kaya and his family find the
BMW ActiveHybrid X6 appealing.

Connecting emotions

Our changing world constantly
demands new ideas. At the BMW
Group, we are working to create
cutting-edge mobility solutions for
the future. We are a sustainable
company. That is why we accept
responsibility for resources, the
environment and society. Our goal
is clear: for every person to be able
to experience the freedom of indi-
vidual mobility.

We offer premium solutions for per-
sonal transportation. Our strong
brands and outstanding products
inspire and impress our customers
around the world. We have a clear
strategy which we implement con-
sistently. That is what makes the
BMW Group different.

Connecting emotions

Vehicle fleet

Consumption and emissions data of BMW Group vehicles

Values measured in accordance with the New European Driving Cycle (EU Directive: 80 / 1268 / EEC in the relevant applicable version). Valid for vehicles with a European
country specification.
Vehicles with average CO2 emissions of below / maximum 140 grams CO2 / km are highlighted.

Model

BMW
116i 3-door 4
116i 3-door 4, 6
118i 3-door 4
120i 3-door 4
130i 3-door 4
116d 3-door 1
118d 3-door 4
120d 3-door 4
123d 3-door 4

116i 5-door 4
116i 5-door 4, 6
118i 5-door 4
120i 5-door 4
130i 5-door 4
116d 5-door 1
118d 5-door 4
120d 5-door 4
123d 5-door 4

120i Coupé 4
125i Coupé 4
135i Coupé 4
118d Coupé 4
120d Coupé 4
123d Coupé 4

118i Convertible 4
120i Convertible 4
125i Convertible 4
135i Convertible 4
118d Convertible 4, 7
120d Convertible 4, 7
123d Convertible 4

316i Sedan 4, 8
318i Sedan 4
320i Sedan 4
325i Sedan 4
325i xDrive Sedan 4
330i Sedan 4
330i xDrive Sedan 4
335i Sedan 4
335i xDrive Sedan 4
316d Sedan 1, 4
318d Sedan 4
320d Sedan 4
320d xDrive Sedan 4
320d EfficientDynamics
Edition Sedan 4
325d Sedan 4
330d Sedan 4
330d xDrive Sedan 4
335d Sedan 2, 4
M3 4

316i Touring 1, 4, 8
318i Touring 4
320i Touring 4
325i Touring 4

Urban
(l / 100 km)

Extra-urban
(l / 100 km)

Combined
(l / 100 km)

CO2 emis-
sions (g / km)

Model

Urban
(l / 100 km)

Extra-urban
(l / 100 km)

Combined
(l / 100 km)

CO2 emis-
sions (g / km)

7.9 (8.7)
7.9 (8.9)
7.9 (8.7)
8.6 (8.9)
12.4 (12.5)
5.3
5.4 (6.7)
5.9 (6.7)
6.4 (6.9)

8.6 (8.9)
11.9 (11.7)
12.1 (11.7)
5.4 (6.7)
5.9 (6.7)
6.4 (6.9)

8.5 (9.2)
8.8 (9.4)
12.1 (11.9)
12.2 (11.8)
5.8 (7.3)
6.2 (7.6)
6.6 (7.1)

8.1 (8.9)
8.1 (8.7)
8.3 (9.3)
9.8 (10.0)
11.0 (11.1)
10.0 (10.2)
11.1 (11.2)
12.0 (12.6)
12.4 (13.1)
5.4
5.4 (6.8)
5.9 (6.8)
6.4 (7.2)

5.0
7.3 (7.9)
7.3 (8.0)
8.3 (8.8)
9.0
17.7 (15.9)

8.1
8.1 (8.9)
8.3 (9.5)
9.9 (10.2)

5.1 (5.4)
5.1 (5.5)
5.1 (5.4)
5.4 (5.3)
6.3 (6.2)
3.9
4.0 (4.5)
4.1 (4.5)
4.4 (4.7)

5.4 (5.3)
6.0 (6.2)
6.4 (6.7)
4.0 (4.5)
4.1 (4.5)
4.4 (4.7)

5.5 (5.7)
5.6 (5.6)
6.2 (6.4)
6.5 (6.8)
4.4 (4.9)
4.4 (4.7)
4.6 (4.9)

5.3 (5.5)
5.3 (5.4)
5.3 (5.3)
5.7 (5.9)
6.4 (6.5)
5.9 (5.9)
6.5 (6.6)
6.3 (6.5)
6.7 (6.8)
4.0
4.0 (4.4)
4.0 (4.4)
4.5 (4.8)

6.1 (6.6)
6.1 (6.8)
6.1 (6.6)
6.6 (6.6)
8.5 (8.5)
4.4
4.5 (5.3)
4.7 (5.3)
5.1 (5.5)

6.6 (6.6)
8.2 (8.2)
8.5 (8.5)
4.5 (5.3)
4.7 (5.3)
5.1 (5.5)

6.6 (7.0)
6.8 (7.0)
8.4 (8.4)
8.6 (8.6)
4.9 (5.8)
5.0 (5.8)
5.3 (5.7)

6.3 (6.8)
6.3 (6.6)
6.4 (6.8)
7.2 (7.4)
8.1 (8.2)
7.4 (7.5)
8.2 (8.3)
8.4 (8.7)
8.8 (9.1)
4.5
4.5 (5.3)
4.7 (5.3)
5.2 (5.7)

3.6
4.8 (5.1)
4.8 (5.2)
5.5 (5.7)
5.2
9.3 (8.5)

4.1
5.7 (6.1)
5.7 (6.2)
6.5 (6.8)
6.6
12.4 (11.2)

143 (154)
143 (158)
143 (154)
153 (155)
199 (199)
118
119 (140)
125 (140)
135 (145)

153 (155)
190 (190)
198 (198)
119 (140)
125 (140)
135 (145)

153 (163)
159 (164)
195 (195)
200 (200)
129 (152)
133 (152)
140 (150)

146 (159)
146 (155)
148 (159)
168 (174)
188 (192)
173 (175)
191 (193)
196 (202)
205 (212)
118
119 (140)
125 (140)
137 (150)

109
151 (160)
152 (164)
171 (178)
174
290 (263)

5.3
5.3 (5.6)
5.3 (5.5)
5.8 (6.1)

6.3
6.3 (6.8)
6.4 (7.0)
7.3 (7.6)

147
147 (159)
149 (164)
170 (178)

BMW
325i xDrive Touring 4
330i Touring 4
330i xDrive Touring 4
335i Touring 4
335i xDrive Touring 4
316d Touring 1, 4
318d Touring 4
320d Touring 4
320d xDrive Touring 4
325d Touring 4
330d Touring 4
330d xDrive Touring 4
335d Touring 2, 4

316i Coupé 1, 4, 8
318i Coupé 1, 4
320i Coupé 4
325i Coupé 4
325i xDrive Coupé 4
330i Coupé 4
330i xDrive Coupè 4
335i Coupé 4
335i xDrive Coupé 4
320d Coupé 4
320d xDrive Coupé 4
325d Coupé 4
330d Coupé 4
330d xDrive Coupé 4
335d Coupé 2, 4
M3 Coupé 4

318i Convertible 1, 4
320i Convertible 4
325i Convertible 4
330i Convertible 4
335i Convertible 4
320d Convertible 4
325d Convertible 4
330d Convertible 4
M3 Convertible 4

523i Sedan 4
528i Sedan 4
535i Sedan 4
550i Sedan 2, 4
520d Sedan 4, 9
525d Sedan 4
530d Sedan 4

520i Touring
523i Touring
525i Touring
525i xDrive Touring
530i Touring
530i xDrive Touring
550i Touring
520d Touring 4, 5
525d Touring
525d xDrive Touring
530d Touring

11.1 (11.2)
10.2 (10.7)
11.2 (11.3)
12.1 (12.6)
12.4 (13.2)
5.4
5.4 (6.9)
6.0 (6.9)
6.5 (7.3)
7.4 (8.0)
7.5 (8.1)
8.4 (8.9)
9.1

8.1
8.1
8.6 (9.3)
9.8 (10.0)
11.0 (11.1)
10.0 (10.2)
11.1 (11.2)
12.0 (11.8)
12.4 (13.1)
5.9 (6.8)
6.4 (7.2)
7.3 (7.9)
7.3 (8.0)
8.3 (8.8)
9.0
17.7 (15.9)

8.4
8.8 (9.8)
10.2 (10.6)
10.5 (11.1)
12.4 (12.2)
6.3 (7.1)
7.7 (8.2)
7.7 (8.2)
18.0 (16.0)

10.5 (10.5)
10.4 (10.4)
11.8 (11.9)
15.4
k. A.
8.1 (7.7)
8.0 (7.7)

9.4 (9.5)
10.9 (10.9)
11.1 (11.0)
12.0 (11.8)
11.5 (11.4)
12.3 (12.4)
17.0 (16.1)
6.7 (7.7)
8.4 (8.6)
9.1 (9.2)
8.8 (9.3)

6.5 (6.6)
6.1 (6.2)
6.6 (6.7)
6.4 (6.5)
6.7 (6.9)
4.0
4.0 (4.5)
4.1 (4.5)
4.6 (4.9)
4.9 (5.2)
5.0 (5.3)
5.6 (5.8)
5.3

5.3
5.3
5.4 (5.3)
5.7 (5.9)
6.4 (6.5)
5.9 (5.9)
6.5 (6.6)
6.3 (6.4)
6.7 (6.8)
4.0 (4.4)
4.5 (4.8)
4.8 (5.1)
4.8 (5.2)
5.5 (5.7)
5.2
9.3 (8.5)

5.6
5.6 (5.8)
5.9 (6.3)
6.2 (6.5)
6.7 (6.8)
4.4 (4.7)
5.2 (5.4)
5.2 (5.4)
9.6 (8.9)

5.9 (5.9)
6.3 (6.0)
6.6 (6.4)
7.5
k. A.
5.1 (5.1)
5.3 (5.2)

5.6 (5.5)
6.1 (6.2)
6.0 (6.1)
6.6 (6.7)
6.1 (5.9)
6.6 (6.4)
7.8 (7.5)
4.5 (4.7)
5.2 (5.4)
5.6 (5.7)
5.3 (5.3)

8.2 (8.3)
7.6 (7.9)
8.3 (8.4)
8.5 (8.7)
8.8 (9.2)
4.5
4.5 (5.4)
4.8 (5.4)
5.3 (5.8)
5.8 (6.2)
5.9 (6.3)
6.6 (6.9)
6.7

6.3
6.3
6.6 (6.8)
7.2 (7.4)
8.1 (8.2)
7.4 (7.5)
8.2 (8.3)
8.4 (8.4)
8.8 (9.1)
4.7 (5.3)
5.2 (5.7)
5.7 (6.1)
5.7 (6.2)
6.5 (6.8)
6.6
12.4 (11.2)

6.6
6.8 (7.3)
7.5 (7.9)
7.8 (8.2)
8.8 (8.8)
5.1 (5.6)
6.1 (6.4)
6.1 (6.4)
12.7 (11.5)

7.6 (7.6)
7.8 (7.6)
8.5 (8.4)
10.4
5.0 (5.2)
6.2 (6.1)
6.3 (6.1)

6.9 (7.0)
7.9 (7.9)
7.9 (7.9)
8.6 (8.6)
8.1 (7.9)
8.7 (8.6)
11.2 (10.7)
5.3 (5.8)
6.4 (6.6)
6.9 (7.0)
6.6 (6.8)

190 (194)
177 (184)
193 (195)
199 (203)
206 (215)
119
120 (142)
128 (142)
140 (153)
153 (163)
155 (165)
174 (181)
176

146
146
154 (159)
168 (174)
188 (192)
173 (175)
191 (193)
196 (196)
205 (212)
125 (140)
137 (150)
151 (160)
152 (164)
171 (178)
174
290 (263)

154
159 (169)
176 (185)
182 (190)
205 (205)
135 (149)
160 (168)
162 (170)
297 (269)

177 (178)
182 (178)
199 (195)
243
132 (137)
162 (160)
166 (160)

166 (167)
186 (186)
186 (186)
203 (204)
191 (187)
205 (204)
267 (254)
140 (154)
171 (176)
184 (187)
176 (180)

— Contents —

Preface

Norbert Reithofer

Topic one

Future

project i

Topic two

Growth

India

Topic three

Customers

Efficient Dynamics

Topic four

Profitability

Efficient capital

Highlights 2009

Moments of sheer delight

IAA 2009

Norbert Reithofer

Chairman of the Board of Management

Preface

Ladies and Gentlemen,

The BMW Group achieved positive group earnings for the 2009
financial year, despite the global economic crisis. The company
remains the automobile industry’s leading premium manufacturer.
More than 1.28 million customers purchased a BMW, MINI or
Rolls-Royce last year, and over 87,000 customers bought a BMW
motorcycle. Sales benefited only marginally from the national
stimulus programmes initiated in many countries, such as the
scrappage bonus scheme in Germany.

Our accomplishments in 2009 were realised as an independent
company. We continue to chart our own course with courage and
determination – and with a clear view to the future.

As you read this annual report, you will learn more about how we
are preparing to face the future. The legally required section of
the report focuses on facts and figures from the 2009 financial
year. The image section illustrates how we are translating the four
pillars of our Strategy Number ONE – Future, Growth, Customers
and Profitability – into action. It also cites many examples of how
we are conserving resources and gradually realising sustainable
mobility. Ultimately, companies and products are made by people.
Here you can learn about the people behind our products: Who
are the men and women who make up the BMW Group? Above
all, you will have the opportunity to get to know our customers.
Who buys our vehicles, and why? What does their BMW, MINI or
Rolls-Royce mean to them?

2009 – Crisis management and innovative projects for the future Two fac-
tors determined our actions as a company in 2009: active crisis
management and innovative future projects. We acted quickly and
decisively in response to the economic crisis: Vehicle inventories
were reduced; fixed costs were substantially trimmed across all
divisions; and several plants temporarily implemented short-time
working. We also took steps to secure sufficient liquidity.

We were capable of operating effectively throughout and were able
to refinance at relatively favourable rates on the capital markets at
all times.

Parallel to these short-term measures, we also set the course for
the successful development of the BMW Group over the next few
years – something I believe is crucial. We invested in projects for
the future and our sites, in particular in Germany, the US, China
and India. Our involvement in India is one of the focal points of this
report. Our Strategy Number ONE lays the foundation and sets
out a vision that unites everyone at the BMW Group: to be the lead-
ing provider of premium products and premium services for indi-
vidual mobility in the year 2020.

This makes it quite clear that premium is, and will continue to be,
our business model.

The concept of “premium” is changing, just as society and people’s
lifestyles are changing. To give an example: People still want to be
mobile as individuals – and there is a rising demand for mobility,
especially in growth markets such as China and India. But people
all over the world are becoming more interested in how efficient
their vehicle is.

Our Efficient Dynamics measures have drastically reduced fuel
consumption and CO2 emissions across our entire fleet. Would you
ever have believed that BMW could be the world’s most environ-
mentally friendly premium brand? Or that the average fleet con-
sumption of the BMW and MINI fleets could be lower than that
of the mass manufacturers – even though they offer much better
performance? The statistics of the German Federal Motor Trans-
port Authority are unequivocal: Average CO2 emissions for new
BMW and MINI vehicles registered in Germany in 2009 were no
more than 156 grams of CO2 per kilometre. That represents an
average fuel consumption of 5.9 litres per 100 kilometres.

We will continue to push ahead with Efficient Dynamics For the BMW
Group, the year 2010 will largely be defined by the new BMW 5 Se-
ries. I personally believe that the new BMW 5 Series is one of the
best cars we have ever built. Currently, the vehicle with the best
fuel economy and lowest emissions in the BMW model range is
the 320d Efficient Dynamics Edition. Customers will be able to
experience its sheer driving pleasure with a fuel consumption of
just 4.1 litres per 100 kilometres and 109 grams of CO2 per kilo-
metre from spring 2010 onwards. We showcased everything that

Preface

Efficient Dynamics still has to offer at the 2009 IAA International
Motor Show within our BMW Vision EfficientDynamics. This con-
cept car rightly attracted a great deal of attention – not just for its
futuristic design, but also for its innovative drivetrain, comprising
a 3-cylinder turbo diesel engine with two electric motors mounted
on both axles. Consequently, this thoroughly sporty vehicle con-
sumes an average of just 3.76 litres per 100 kilometres. This tech-
nical masterpiece is highlighted further in detail.

New drive technologies: hybridisation and electrification We also believe
premium means offering our customers new technical solutions.
The first two BMW models with hybrid drive will become available
in 2010. Our worldwide MINI E customer test has so far been a
resounding success. There are about 600 MINI cars with electric
drives currently on the roads. No other electric car has clocked as
many kilometres and as many miles as the MINI E. Our customers
think it is terrific. They are helping us learn how e-mobility can
succeed in everyday situations. We also presented the first BMW
with electric drive, and will be releasing a further trial fleet of electric
vehicles based on the BMW Concept ActiveE concept car to cus-
tomers next year.

All of the experience we gain will be incorporated into our Megacity
Vehicle. This is much more than just a highly innovative car. We
aim to completely redefine how cars are built – with regard to vehicle
architecture, lightweight construction and use of materials – to
create a sustainable value chain.

No automobile manufacturer uses resources more efficiently Everybody is
talking about sustainability – when action is what is needed. We
believe our vehicles should also be produced in an environmentally
responsible manner. In September 2009, the Dow Jones Sustain-
ability Index named the BMW Group as the leading company in the
automobile sector for the fifth consecutive year. For us this is both
an incentive and an obligation. We are committed to sustainability in
all areas.

That is why we decided to send a clear signal and withdraw from
Formula One at the end of the 2009 season – although it was not
an easy decision after ten years of successfully competing at the
highest level in motorsports.

New directions with Strategy Number ONE We are taking a new direction
with our Strategy Number ONE. The small car segment represents
a source of growth opportunities, and we will therefore be offering
premium products for these customers. Collaboration with others
will also allow us to achieve economies of scale. We will continue
to rely on strategic partnerships with the best partners for the task
at hand. What is more, increased use of shared modules between
models and brands will enable us to further reduce costs through-
out the entire process chain, but still maintain our high quality.

Our industry is currently in a period of tremendous upheaval and
technological change. The economic crisis has further accelerated
this trend. In order to be successful on the marketplace, companies
must find the right answers to the challenges of tomorrow. Our
ideas and actions are geared towards the long term. Our strategy
provides us with the plan for shaping our own future.

We achieved a great deal in 2009. I would like to thank every single
one of our 96,230 employees for their outstanding personal dedi-
cation. I would also like to thank our customers for their confidence
in our products and our company, as well as our entire retail net-
work. We have also continued to work productively with our sup-
pliers. Last but not least, I would like to thank our shareholders
and investors for their commitment to the BMW Group – particularly
in these times of economic crisis.

The effects of the economic crisis will continue to be felt in 2010.
However, we are cautiously optimistic that we will be able to
resume our growth path this year.

We believe in the future of individual mobility – and we are already
creating it.

Norbert Reithofer

project i

Future

Growth

Customers

Profitability

Inventing the future –
by putting it to the test.

MINI E field trial

The drivers
Roughly 600 MINI customers in three countries

The cities
New York, Los Angeles, London, Berlin, Munich

The car
MINI E with a 150 kW electric motor and lithium-ion battery

The aim
To test e-mobility in everyday situations

Montclair, New Jersey
Malibu, California

MINI E No. 250, Tom Moloughney

MINI E No. 246, Sandra Kulli

Berlin

MINI E No. 15, Hudson Ledwon

Topic one

project i

Sandra Kulli

Tom Moloughney

The future starts now

Hudson Ledwon

They are highly efficient, quiet and, when run on energy from renewable
sources, unbeatably fuel-efficient and low in emissions. Electric motors
will undoubtedly play an important part in the future of the automobile.
But what does the e-mobility experience feel like today? What is it like
to drive an electric car on a daily basis? In other words, what can we learn
from the future? The BMW Group is finding answers with the help of
around 600 MINI E drivers from New York, Los Angeles, London, Berlin
and Munich.

Sandra Kulli
MINI E driver

MINI E No. 246

Malibu, California

Topic one

project i

How has your experience been?

What was your best experience with your MINI E so far?

And your worst experience?

What made you decide to take part in the MINI E
experiment?

What do you hope to see from the next generation of electric vehicles?

Malibu Vista Drive, Malibu

Since she got the keys to her MINI E in June 2009,
Sandra Kulli has been driving her electric car in and
around Los Angeles on a daily basis. The 62-year-
old real estate marketing strategist lives in Malibu,
off Pacific Coast Highway, and spends her free
time skiing, hiking and gardening.

Marketing strategist Sandra Kulli drives through Santa Monica
with her granddaughter Michelle [1 – 2]. Their route takes
them past the antique street lamps outside the LA County
Museum of Art [3] and along an aptly futuristic-sounding road
[4] to Santa Monica Beach [5].

Abbott Kinney Avenue, Santa Monica

Tom Moloughney
MINI E driver

MINI E No. 250

Montclair, New Jersey

Topic one

project i

Is the MINI E your only car, or do you drive any other vehicles?

How has your experience been?

What is the main difference to driving a conventional car?

Is the MINI E more of a fun car for you or just an
A-to-B car?

You have even started blogging about your MINI E experience. Why is that?

East Fox Chase Road, Chester

Tom Moloughney, 42, runs an Italian restaurant in
Montclair, New Jersey. MINI E driver No. 250 blogs
about his experiences with e-mobility.

Valley Road, Montclair

Since Tom Moloughney has had his MINI E, his sports
car usually stays parked in the garage [6]. That is also
where he charges the battery [7 – 8] for trips to Jersey City
[9 – 10] or to his restaurant in Montclair, New Jersey.

Hudson Ledwon
MINI E driver

MINI E No. 15

Berlin

Topic one

project i

What made you decide to take part in the MINI E field trial?

I ’m your typical “early adopter ” – new technologies fascinate me. Plus,
I like to drive a car that is fast and dynamic – and the MINI E is both
of these. And then, because I like to share a good thing, I also let my
friends and acquaintances borrow the MINI E for a day or so on several
occasions. The most spontaneous feedback I got was a text message from
one of my friends who ’s a racing enthusiast . It just said: “Great car.
Want one too.”

You live in the middle of the city. Where did you recharge your MINI E?

All over the city. Two energy providers have set up charging stations
throughout Berlin : outside shopping centres, in parking garages and even
along the Kudamm (one of Berlin ’s most famous boulevards). There are even
two parking spaces reserved exclusively for electric cars right in front
of Berlin Central Station . That is pretty cool.

How has your experience been?

So what is your verdict after six months driving the MINI E?

I love it ! I used the car every day and ended up driving about 5, 000
kilometres through Berlin during the six months or so I had it. If it
had been up to me, I would have liked to keep it longer – even though
there are obviously a few restrictions involved in driving an electric
prototype . For example, the performance of the lithium-ion battery
diminished considerably when temperatures in Berlin plunged just
before Christmas.

Heynstraße, Berlin

There is no quieter or emission-friendlier way to drive a car
in a city like Berlin [13 – 15] than to drive the MINI E. It is easy
for Hudson Ledwon to “fill up” on the go using a charger
cable at one of many public charging stations [11 – 12].

Puschkinallee, Berlin

Just a few days ago, Hudson Ledwon, 45, returned
his MINI E at the end of its field trial. From now on, the
IT consultant from Berlin will be back on the road in
more traditional style – on his motorbike and bicycle
and driving his sports car.

Conclusion no. 1: MINI E passes the test

Having 600 or so drivers on the roads in their electric-powered MINI E cars in
five totally different cities, day in, day out, results in numerous sets of extremely
valuable experiences. The kind of e-mobility that the MINI E brings to the road is
perfectly suitable for everyday driving. The customers selected to participate in
the field trial used their MINI E just like they would a conventional vehicle: to com-
mute to work, to go shopping or to drive to the cinema. Their average trip dis-
tance was 41 kilometres. This is just a sample of what a prototype like the MINI E
can already accomplish today – and impressive proof that e-mobility is not just
an amazing form of everyday transportation, but also a viable one.

Conclusion no. 2: Future technology on the road today

The MINI E field trial is now entering its second phase, with additional test drivers
in new cities. At the same time, we are already presenting the next step on the
road to sustainable CO2-free mobility: the BMW Concept ActiveE. This concept
vehicle, developed on the basis of the BMW 1 Series Coupé, will be powered by
a new, specially designed synchronous electric motor. In 2011, a trial fleet of
these vehicles will make their debut on the roads. Their purpose will be to provide
additional feedback from customers and test a preliminary version of the drivetrain
for the forthcoming Megacity Vehicle. This vehicle, which has been specially de-
signed for urban mobility, will enter series production by the middle of this decade –
and will contain much of what we are testing with customers today.

India

Future

Growth

Customers

Profitability

Opening markets
by winning
people’s hearts.

Over the past three years
the BMW Group has begun
growing its market share
in India. Today it is already
the market leader in India’s
steadily growing premium
segment. And there are
plenty of signs that this is
just the beginning.

New Delhi

December 8, 2009

Chennai plant

December 10, 2009

Topic two

India

Journey to an awakening land

At first sight, it appears to be an adventure of epic proportions: a country almost
as big as the European Union, but with more than twice the population. Six different
climate zones; 21 official languages; 1.2 billion people. A place where agriculture
is still the main source of employment and the average yearly income only 708 euros.
The speed limit on its highways is, in theory, 90 kilometres an hour – but the real
pace is dictated by the rhythm of ox carts and rickshaws. Not to mention the cows,
dust and potholes along the road. Explore India with us.

Total Indian road network
State highways
National highways
Motorways

200 km

3,314,000 km

131,899 km

70,548 km

But a closer look reveals the Indian subcontinent to be a market with tremendous
potential. India did not open up to the world market until the early nineties – but
today it is often referred to as an “awakening elephant”, with gross national product
growing by an average of seven percent, year after year. And with average income
climbing 14 percent per annum, the Indian middle class is now larger than the
population of Germany. This enormous momentum is also seen in the automobile
market, which has doubled in size to approximately 1.8 million cars within four
years, and includes more and more high-end premium vehicles. For an automobile
manufacturer, right now India is the place to be.

“India has traditionally been a small-car market – primarily because of the strong
demand for cheap mobility,” claims a current market analysis from the consultancy
Ernst & Young. “But we are also seeing an upward trend among consumers,
triggered by rising incomes, changes in customer preferences and a desire for
upward mobility.”

In other words, India is a prime example of an emerging market. It has become a
remarkable success story for the BMW Group. To understand how, it is important
to talk to the people who are involved with the company in the country: To people
like Rahul Chawla, for instance, an enthusiastic BMW customer from New Delhi.
Or Yadur Kapur (New Delhi), one of 16 dedicated BMW dealers across the country.
Or Dhimant Desai and his colleagues responsible for building vehicles to German
quality standards in Chennai in Southern India.

A special report.

Germany

Vehicles per 1,000 inhabitants
Population, Germany: 82.2 million

India

Vehicles per 1,000 inhabitants
Population, India: 1.2 billion

1 Comfortably wending its way between rickshaws and temples: a BMW built in India
2 Rahul Chawla enjoys a rare moment behind the wheel of his BMW 525i.

Topic two

India

Rahul Chawla, 39

Name
Home city
Customer since

New Delhi

2007

565

December 8, 2009 — 5 — 35 p.m.
Tronica City, northeast Delhi
The red-orange sun is already sinking behind the rice
paddies as Rahul Chawla steers his car across the
bridge over the Yamuna River. The 39-year-old carefully
manoeuvres his BMW 525i around potholes, bajaj
rickshaws, cyclists and packed buses. Traffic regularly
grinds to a halt because a motorcycle has broken down
or a cow stopped in the middle of the road. Chawla
uses the downtime to check email on his BlackBerry or
give his staff a few brief instructions on the phone.

Time is a precious commodity for the 39-year-old textile
businessman. He just built another new factory for 250
sewing workers on the outskirts of the Indian capital. In
his office in the heart of New Delhi he is working with
designers on ideas for his brand-new fashion label. As
chairman of the “Young Indians”, an association of young

business people from the city, he also organises educa-
tional projects for underprivileged children in his spare
time. “The more people I meet, the more I learn,” says
the self-made entrepreneur as he nervously checks his
Swiss wristwatch and hits the gas. Rahul Chawla is al-
ways on the go.

This young entrepreneur is typical of the mobile, cosmo-
politan, highly-motivated elite that is helping to develop
India’s potential as rapidly as possible. Many of these
young professionals have studied abroad and are com-
fortable working anywhere in the world. Chawla, for
instance, turned down attending Harvard in the early nine-
ties to set up his own textile business in Delhi. Today he
produces fashion designs for trend setting global labels,

regularly flies to the US for meetings and likes to spend
his holidays in Southern Europe.

For him it is perfectly normal to think globally and demand
the best when it comes to his own personal mobility –
so a BMW 525i from the new BMW assembly plant in
Chennai was the obvious choice. “BMW stands for
perfection, performance and reliability,” explains Chawla.
“And those are things that matter in my line of work.
BMW is a perfect fit for my lifestyle.”

A typical day in Chawla’s life begins early in the morning
in South Delhi, the city’s most exclusive neighbourhood,
where the 39-year-old lives with his wife, two children,
parents and brother. Chawla usually takes advantage of

+155 %

135,000

+152 %

53,000

21,000

Topic two

India

High-income households

his commute to the office through the chaos of the capi-
tal city to make a few early phone calls and work un-
disturbed on his laptop, before he gets caught up in his
day. He rarely has time to drop into his favourite bar –
the elegant “360°” on the ground floor of the Oberoi
Hotel – after work. It is even rarer that Chawla drives his
BMW himself. But whenever he does, he certainly enjoys
the experience.

“To me,” says Chawla, “a BMW isn’t a luxury. It’s part
of my work. It’s my way of rewarding myself.” What he
considers a luxury is coming home early and playing
with his son before bedtime. Or flying over to Europe for
a few days, like he did last summer, renting a BMW at
Nice Airport and just driving away.

3 Textile entrepreneur Chawla in the heart of New Delhi
4 Material testing at Rahul Chawla’s textile factory
5 The Oberoi’s “360°” bar is one of New Delhi’s top addresses.

95 %

BMW market coverage
of India’s premium sales potential

6 BMW customers and sales consultant: the excitement

of buying a new car

7 BMW showroom on the road from New Delhi to Agra
8 Yadur Kapur, self-made entrepreneur and successful

BMW dealer

December 9, 2009 — 10 — 01 a.m.
Mathura Road, New Delhi
For a moment you can’t help but wonder: Where is this
place? The gleaming white interior; the tasteful leather
chairs; the soft music playing behind the glass facade; the
“Joy is BMW” banner hanging on the wall. It takes a glance
out the window, across to the concrete pylons where
the new Sky-Train is being built, to remind us that we are
not in Milan or Miami, but in the BMW showroom in the
southeast of the megacity New Delhi.

For Yadur Kapur, one of the local BMW dealers, the building
site just outside his door is a perfect example of India’s
economic miracle. “Ten years ago you had to wait months
to get a telephone line – now it takes just 30 minutes. And
that new metro line out there? That will actually be finished
in time for the 2010 Commonwealth Games!” Delhi-born
Kapur was raised in Dubai and went to college in the US.

Topic two

India

Yadur Kapur, 39

New Delhi

2007

Name
Location
Dealer since
Staff

100

Like all of the 16 BMW dealerships in India Kapur offers
his customers a fully equipped service garage – with the
company’s head office in Munich on standby, a round-
the-clock emergency service, a private breakdown ser-
vice and expert mechanics, who are sent to the Chennai
plant’s training centre for regular training. All of these
services are still totally new to the emerging Indian auto-
mobile market. But they go a long way towards explaining
BMW’s success in the region.

“The challenges India faces are quite staggering,” he says.
“But then, so is the progress being made.”

And so it is only natural that the country is also seeing
the emergence of a steadily growing class of successful
professionals – who are, of course, potential BMW cus-
tomers. Kapur and his staff typically do business with
entrepreneurs, lawyers, managers and doctors – hard-
working, global-minded, brand-conscious and discrimin-
ating individuals. “All of these people travel a great deal.
They’ve been around the world and they know what a
good car is – so naturally they want to drive one at home.”
Almost all of them work in their BMW while a chauffeur
drives them where they need to go. The first question
Kapur’s clients ask is “not about the price, but about
how comfortable and well-equipped the interior is.”

India, Chennai plant

Chennai, capital of the South Indian state of Tamil Nadu, is well on its
way to becoming the car capital of India. Alongside New Delhi – home
to BMW India’s headquarters, including sales and the international
purchasing office – and the national parts centre in Mumbai, Chennai –
formerly known as Madras – is the third hub in the BMW Group’s
Indian market offensive. BMW 3 Series and 5 Series vehicles for the
Indian market have been assembled in this harbour city since February
2007. Back then, BMW was expected to sell about 2,400 vehicles a
year in India up until 2009. In actual fact, over 50 percent more were
sold last year.

39 % 41 %

33 %

9 %

BMW market share of
the Indian premium segment
(per year)

9 Dr. Dhimant Desai ensures BMW quality standards at the Chennai plant.
10 More than 120 highly qualified employees implement them.

Topic two

India

December 10, 2009 — 7 — 30 a.m.
Mahindra World City, Chennai
Early in the morning, when the working day begins,
dragonflies flit through the air and it is still pleasantly cool
in “Mahindra World City”. At this campus-like business
park south of Chennai, 123 BMW employees assembled
about 2,600 vehicles last year. To meet specific demand
from the Indian retail network, parts are ordered in Ger-
many, packed into containers at the plant in Wackersdorf
and transported to Bremerhaven for shipping. 30 days
later a truck delivers the parts from Chennai harbour to
the plant – and assembly can begin.

Adapting BMW vehicles to Indian road conditions and
lower-quality petrol means modifying injection pumps,
reinforcing under bodies and raising the wheelbase by
18 millimetres. “Other than that,” explains Dr. Dhimant
Desai, the plant’s quality manager, “our vehicles are no

different to BMWs built in Dingolfing or Spartanburg.
After all, Indian customers expect 100 % BMW quality.”
Assembly workers – most of whom are Indian, and
who have all completed engineering courses – are highly
motivated and extremely well qualified. “There is one
challenge, though,” explains plant manager Jürgen Eder,
“the climate here. In the weeks before the monsoon,
temperatures in the halls can reach 37 degrees Celsius.”

11 Pleased with good results:
employees at the BMW
plant in Chennai

4 — 30 p.m.
As plant buses bring workers home and the halls quiet
down, quality manager Desai and plant manager Eder
pore over the production plans one more time. Besides
production of the BMW 3 Series and the new 5 Series,
the X1 will ramp up in Chennai over the coming months.
And as BMW dealers open up showrooms and service
garages in ten more cities across the country, a separate
investment of 50 million US dollars will substantially
expand BMW Financial Services. In other words, market
leader BMW is setting course for further strong growth.

Efficient
Dynamics

Future

Growth

Customers

Profitability

Winning new
customers by asking
new questions.

More driving pleasure, lower
emissions: No other automobile
manufacturer in the world today
implements this principle
more successfully than the
BMW Group. Our engineers are
already working on the next
Efficient Dynamics technolo-
gies – on the future of efficient,
high-performance mobility.

Drive strategy

Aerolab

Vehicle architecture

Design

Heat management

Systems development

Energy management

Lightweight construction technology

Topic three

Efficient Dynamics

Fresh ideas – 1.8 million times over

When it comes to reducing fuel consumption and CO2 emissions, the BMW and
MINI brands outperform all other competitors in the premium segment. This
unique position was earned through Efficient Dynamics technologies – which
already enable enhanced performance and lower emissions in more than 1.8 mil-
lion BMW and MINI vehicles on the road today. This development strategy still
holds tremendous potential, as illustrated by the BMW Vision EfficientDynamics
concept car, a fascinating project realised jointly by BMW engineers and designers
from totally different disciplines.

Topic three

Efficient Dynamics

1 Every detail of the BMW Vision EfficientDynamics

was optimised.

2 Its design combines lightweight construction throughout

with aerodynamic qualities.

If efficiency and dynamic performance were seen as an
incentive instead of a contradiction, what would it mean
for individual mobility?

0.22

Air resistance
By comparison, conventional sports cars only achieve a maximum of 0.29 Cx

Holger Winkelmann, head of Aerodynamics
A top speed of 250 km / h provided by a 120 kW engine – that was the goal right from
the start of development of the BMW Vision EfficientDynamics concept. Ambitious
parameters like these represent a huge challenge for designers and aerodynamics
experts alike: Such a sporty but efficient vehicle demands an extremely aerodynamic
design. For this, it is necessary to precisely determine how the vehicle’s components
can be used to the best aerodynamic effect. This means imagining new concepts
with complex fluid mechanical processes that even experienced aerodynamicists
have trouble grasping.

However, these complex relationships are currently being explored at the BMW
Group’s new Munich-based Aerodynamics Testing Centre. Inside the 170-million-
euro facility – the most advanced of its kind in the world – we are able to simulate
wind speeds of up to 300 kilometres per hour, as well as cornering and even passing
manoeuvres. This is where the Air Curtain was created: Air hangs like an invisible
curtain over the front wheels, optimising the airflow around the wheel arch. This aero-
dynamic trick can be seen in the BMW Vision EfficientDynamics – and will soon
be a standard feature in many of our vehicles.

How do you design vehicles that are
radically different?

Can air be used to overcome
air resistance?

Johannes Liebl, head of Efficient Dynamics
Our development departments are home to a great many ex-
perts who are undoubtedly among the best in their particular
field of specialisation. But the most amazing ideas occur when
you put them together in a room with other specialists: with
the best and brightest from totally different disciplines; people
who question why things have to be done a particular way and
whether it wouldn’t be possible to do them completely differently.

The BMW Vision EfficientDynamics concept car was born from
many such questions. It is precisely this approach of developing,
discussing and building things differently that we are currently
applying to future generations of our series models. It is still too
early to say exactly what they will look like. But we are on the verge
of solving some extremely interesting questions. But one thing
is certain: We will once again be bringing improved dynamic per-
formance, combined with increased efficiency, to the road.

Topic three

Efficient Dynamics

3 As BMW “energy minister”, Johannes Liebl coordinates

Efficient Dynamics research.

4 Holger Winkelmann (left) knows how to build with air.
5 Test bench at the new Aerodynamics Testing Centre
6 Flow optimisation for the Vision EfficientDynamics

1.4 t

Weight
Thanks to a lightweight construction strategy
implemented consistently throughout

Why does better safety have to mean
more weight?

Jochen Esmann, head of Lightweight Construction and Vehicle Weight
The history of automobile manufacturing is one of steady improvements in safety and
comfort. That is a good thing – and important, too. All the same, every additional airbag
and every increase in crash safety automatically means more weight – and therefore
requires more fuel.

At least, that is how it was until a few years ago: Now we have begun to reverse the
upward spiral in weight. What does a vehicle need to be able to do? And what should
that feature be allowed to weigh? Which lightweight materials, new kinds of vehicle
topology and combined functions will allow the required features to be realised at the
lowest possible weight? Questions like these accompany us throughout the entire
development process. They are uncomfortable, difficult questions with no easy answers.
But they help us develop vehicles that offer considerably more comfort and safety for
relatively few extra kilos.

Topic three

Efficient Dynamics

Siegfried Koelbel, head of Systems Development,
Lateral and Vertical Dynamics
Laws of physics dictate that the narrower the tyre, the
lower its rolling resistance; the lower the rolling resistance,
the lower the vehicle’s fuel consumption. A ten percent
decrease in rolling resistance means at least one percent
lower fuel consumption. In theory, we would only have
to use narrow, low-resistance tyres to reduce fuel con-
sumption and emissions.

Reducing rolling resistance is a lot more difficult in prac-
tice, however. Our top priority is always to maximise safety
for the driver and the vehicle – and narrower tyres obvi-
ously offer less traction. At the same time, we also want
our customers to continue to enjoy BMW’s signature
dynamic driving experience. Both – safety and dynamic
performance – can realistically be achieved with the new
lower-resistance tyres we are currently researching. But
it will take extensive testing and numerous adjustments
to find the ideal combination of the three parameters:
structure, profile and material. However, a technological
breakthrough that we hope to have on the roads as
quickly as possible is imminent.

Mario Majdandzic, designer
The only way to reach totally new dimensions is to take
a totally new approach. For instance, for the BMW Vision
EfficientDynamics concept car design engineers, de-
velopers and designers worked in a development process
that is at least as efficient and dynamic as the end product.
Within a very short period of time this process produced
a high-end vehicle in which every detail is optimised for
the greatest possible efficiency and maximum sportiness.
For example, we designed its rear lights so that, besides
their main signalling function, they would also work as
airfoils to optimise rear-end aero dynamics. We are also
rapidly integrating similar smart components with dual
functions into our series models. As a result, it should
be possible in the future to recognise an efficient and
dynamic vehicle from its design, and not just from its con-
sumption and performance figures.

How do you make a tyre that is both
safe and economical?

Why will a rear light never be just a rear
light again?

7 Jochen Esmann (second from right) replaces kilos with ideas.
8 Mario Majdandzic (second from right) gives rear lights a new function.
9 Craftsmanship goes into the concept car.
10 Lightweight construction of the Vision EfficientDynamics body

3.76 l

Fuel consumption /100 km

Andreas Eder, manager Thermal Management – Advanced Development and
Simulation
It doesn’t take sophisticated measuring equipment to feel the thermal energy lost by a
car. All you have to do is hold your hand close to a warm exhaust pipe.

No more than one third of the energy supplied to the combustion engine from fuel is
converted into movement; two thirds are lost as heat through the radiator or exhaust pipe.
We intend to put a share of these remaining two thirds to work in the future. For this, we
will use a thermoelectric generator (TEG) to convert some of the heat lost into electric
current. NASA already uses this technology to supply its spacecraft with energy. But,
however surprising it may seem, much lower standards of materials and technology are
required in space than on earth: On the roads, our generators must be able to withstand
conditions like constant stop-and-go traffic, vibrations and drastic temperature swings.
Unlike NASA, we also have to find solutions that can be used hundreds of thousands of
times at a reasonable cost throughout our entire fleet.

Our TEG has already helped save several percent in fuel in the Vision EfficientDynamics
vehicle. In the series models we are currently working on, we hope to be able to meet
the vehicle’s total electric power requirements over longer distances. In this, the TEG
is the perfect complement to the brake energy regeneration that comes as standard:
With the TEG, we regenerate energy not only from braking, but also from accelerating
and driving at a constant speed.

Theodor Melcher, developer, Powertrain, Director CoC
Strategy, Pre Development, Architecture Powertrain
Even after many years, there are still occasional surprises
in store for our experienced engine developers. We knew,
for instance, that we could reach new dimensions of
performance and efficiency by combining a small-volume
turbo diesel engine with two high-performance electric
drives, as we had in the BMW Vision EfficientDynamics.
But we were still surprised by the concept car’s excep-
tionally dynamic performance on the road. Its fuel con-
sumption in the European driving cycle is only 3.76 litres
per 100 kilometres, with a CO2 emission rating of no
more than 99 grams per kilometre. In other words, it com-
bines the sporty performance of a BMW M automobile
with the fuel consumption of a small car. That was a very
pleasant surprise – and one with potential for the future.

Only a third of the energy from fuel is currently used –
so what could you do with the other two thirds?

How dynamic can an electric drive
potentially be?

11 Avoiding energy loss: thermoelectric generator in the exhaust gas system
12 Prototype in test operation: technology test in a workshop vehicle
13 Teaching vehicles how to think: Geert Schmitz (left)
14 Turning waste heat into electricity: TEG in the hands of Andreas Eder (centre)

Topic three

Efficient Dynamics

How to teach a car to think like a driver, but just
one step ahead?

Geert Schmitz, Energy Management, head of Energy Concepts
Imagine a car approaching a traffic jam far ahead. Or, to take another example: a driver
heading home from work along his usual route. Wouldn’t it make sense for the vehicle
to prepare for each scenario? Say, if it could charge its battery so it could save fuel by
driving through heavy traffic and residential areas on just its electric engine? What if it
could notify the driver of speed limits ahead and help avoid unnecessary braking?

We already know that defensive driving uses up to 20 percent less fuel. That is why we
are working on driver assistance systems to notify drivers proactively about gradients
and traffic jams. In the future, drivers will also be able to access fuel-saving route recom-
mendations to fit the type of vehicle they drive and their individual driving style.

We group technology issues such as these under the term forward-looking energy
management because they help the vehicle and its driver to drive defensively and there-
by save fuel. They are also referred to as forward-looking because we see a promising
future in these developments.

How much reality is there in a
vision?

Johannes Liebl, head of Efficient Dynamics
In the words of songwriter Tom Waits, “Everything you can
think of is true” – and the high-performance concept car,
BMW Vision EfficientDynamics, certainly is fascinating
proof of that claim. It boasts an outstanding combination
of efficiency and dynamic performance; and its futuristic
design offers a glimpse of what efficient but sporty
ve hicles might look like in the future.

On the other hand, this example of cutting-edge tech-
nology is simply the logical continuation of our BMW
Efficient Dynamics development strategy. Some of the
technologies used in the BMW Vision EfficientDynamics
are already being implemented in current BMW models;
others will soon be ready for series production. Or, to put it
simply, the BMW Vision EfficientDynamics is a remarkable
vision that could very soon become an exciting reality.

15 Steffi Zimmermann explains the design philosophy

behind the concept car.
16 Fascinating perspective:

the interior of the BMW Vision EfficientDynamics

Efficient
capital

Future

Growth

Customers

Profitability

We increase capital
by thinking
outside the box.

A company must maintain its
autonomy in order to act deci-
sively in a crisis. Through active
crisis management, efficiency
increases and consistent man-
agement of capital and costs,
the BMW Group did just that
during the recession in 2009.
At the same time, it also laid
the best foundation for a sus-
tainable upturn.

Topic four

Efficient capital

“ In a crisis, you can either hope for it to pass quickly,
or you can respond swiftly and deliberately – which
is what we did.”

left

Friedrich Eichiner
Friedrich Eichiner, 54, joined the BMW Group in 1987. After holding a series of
executive positions in logistics, sales development and corporate planning, he
was appointed to the Board of Management, where he was initially responsible
for Corporate and Brand Development. In December 2008 – in the midst of the
financial crisis – he assumed responsibility for the Finance Division.

Erich Ebner von Eschenbach
Erich Ebner von Eschenbach, 48, performed various management functions for
HypoVereinsbank and was Chief Financial Officer of two software com panies,
before becoming head of the BMW Group Treasury in October 2006.

right

“ Companies who are unable to offer their customers
attractive financing will lose those customers.”

Mr. Eichiner, Mr. Ebner von Eschenbach, how deeply has the BMW
Group been affected by the global economic and financial crisis to
date?

Mr. Eichiner

Like the rest of the automobile industry, the BMW Group
has been unable to fully escape the consequences of
the crisis. In an exceptional situation like this, there are
two options: hope for the economic crisis to pass, or
respond quickly and deliberately – which is what we did.
As a result, we came through 2008 in relatively good
shape and made a successful start to a difficult 2009.
Overall, we certainly performed better last year than
most of the other automobile manufacturers.

How do you manage such a massive economic downturn?

Mr. Eichiner

We immediately scaled back production in autumn
2008 to prevent inventories from building up and avoid
tying up funds unnecessarily. In an economic crisis,
cash really is king. Besides that, we consistently con-
trolled our financial resources, costs and our access to
the capital markets at all times to ensure our flexibility
and sufficient liquidity.

Mr. Ebner von Eschenbach

In that respect, we benefited from having a corporate
financial structure with an international focus. We have
our own financing companies in Singapore, New York
and in Europe, where we are represented on the global
capital markets round-the-clock, five days a week. This
is one of the reasons we were able to fund our financial
services business on attractive terms. During the crisis
not only was access to many segments of the capital
market limited, but investors were also demanding
much higher risk premiums.

What do those higher risk premiums cost you?

Mr. Ebner von Eschenbach

We have to raise between 20 and 30 billion euros’
worth of new capital for our financial services business

every year. With volumes like that, a risk premium that
may only be a few hundredths of a percentage point
higher automatically means additional costs in the high
double-digit million euro range.

Topic four

Efficient capital

Then why don’t you just leave financing the leasing business to
others?

Mr. Eichiner

Because the sales financing business is an essential
component in our value chain. Nowadays every other
new car sold by the BMW Group is financed by us. That
is a fact. But it also means that companies who are un-

able to offer their customers attractive financing will
lose those customers. During the crisis we saw many
market players withdrawing from the leasing and
financing business. We were successful in filling that
gap, thanks to the flexibility of our financial services
business.

So, even during a global economic crisis, investment capital is
definitely still available?

Mr. Ebner von Eschenbach

At no point did we have a problem raising capital – that
is because we have such a good reputation on the
capital markets. However, it is important to tap liquidity
at the right time, with the right instruments, backed
by strong arguments. Our customers in Germany, for
instance, increased their deposits with the BMW Bank
by two billion euros during a crisis year, thanks to our
high level of creditworthiness. Our banking business
in the US also expanded considerably over the past
year. We will use the insights we gained to continue
expanding our banking business in Germany and the
US and give our funding an even broader global base.

But, all the same, weren’t there moments over those dramatic few
months when you also felt a little nervous?

Mr. Eichiner

Of course. Back in late 2008, we were concerned, too.
We weren’t sure whether the global financial system
could withstand the pressure. No one had experienced
a situation like that with such a dramatic snowball effect.

Mr. Ebner von Eschenbach

The important thing to realise is that the BMW Group’s
core business is profitable and is financed from its own
resources. Our funding requirements originate solely
from our financial services business. That gives the
BMW Group an entirely different risk profile than com-
panies who are incurring operating losses and need to
fund these losses through borrowed capital.

Before the crisis you announced your aim of cutting costs by six billion
euros up to 2012. Is that still valid after the crisis?

Mr. Eichiner

Certainly. The crisis prompted us to take a more rigorous
approach to cost management than we had originally
intended. As a result, we will easily exceed our target of
six billion euros in savings.

Topic four

Efficient capital

“ Our core business is profitable. That gives the BMW
Group an entirely different risk profile than many of our
competitors.”

Would you say the BMW Group is a different company now than it
was before the crisis?

Mr. Eichiner

We are definitely more efficient today; stronger, faster,
more open and even more focused on our customers
than we were before. But the reasons for that are not to
be found in the crisis, but in our Strategy Number ONE,
which we developed back in 2006 / 2007. If you remem-
ber, back then no one saw the financial crisis coming.
Thanks to Number ONE, when the crisis did erupt, there
was no need to discuss fundamentals. Everyone in the
company knew what had to be done.

Does that mean no area of the company will be spared?

Mr. Eichiner

No, we aren’t using short-term cuts across the board
to make those economies, but long-term strategies.
We have not cancelled a single innovation programme:
We are not sacrificing the future to save costs. Instead
what we have done, for instance, is discuss making the

supply chain even more efficient with our suppliers.
We have switched our vehicle development to a modular
system with components that can be used for different
models. That is the decisive difference between short-
sighted cost-cutting measures and long-term improve-
ments in efficiency.

Was Strategy Number ONE damaged by the crisis at all? Did you have
to adapt your strategy to new realities?

Mr. Eichiner

On the contrary: Number ONE was instrumental in our
company weathering this crisis better than others. One
of our strategic goals is to boost profitability – and that
pays even greater dividends in times of crisis. Another
is the development of new markets and technologies.
We have strengthened our involvement in China and
India – in markets where we expect to see exceptionally
strong growth. Our Efficient Dynamics innovations,
which have already secured us a leading position in
the premium market today, are another example. And

“ We are more efficient today; stronger, more open and
even more focused on our customers. And that is why
we will emerge from this crisis as one of the winners.”

with the launch of new, highly efficient and dynamic
models, like the BMW X1, the 5 Series GT and the new
BMW 5 Series, we will pick up speed as the recovery
progresses. I am certain that the BMW Group will
emerge from this crisis as one of the winners. Our
profitability target for 2012 of a return on sales of
eight to ten percent in the automobile business re-
mains unchanged.

What have you yourselves learned over the past difficult months?

Mr. Eichiner

I have realised how important it is to act quickly and
decisively. And you can only do that if you have flexible
structures, like the BMW Group does. That is why,
for me, the most important realisation was also an
extremely encouraging one: that we are on the right
track.

Mr. Ebner von Eschenbach

Based on previous experience, we should expect to
face further economic downturns and challenges to
the international financial system in the future. The
companies hardest hit in situations like that will be
those who fail to learn the right lessons from this crisis.

Highlights
2009
Our highlights
fuel fascination.

Moments of sheer delight

In 2009 we presented around 1.4 million customers with their new vehicles. It is always a
special moment for us – and, of course, for our customers, too. We captured that moment
for seven customers.

BMW Z4 Christian Brandl on Jan. 22, 2010
BMW ActiveHybrid X6 Hakan Kaya on Feb. 6, 2010
BMW X1 Kämmerer Family on Jan. 20, 2010
BMW 5 Series Gran Turismo Douglas Lempereur on Feb. 12, 2010
Rolls-Royce Ghost Kai Berghäuser on Feb. 3, 2010
MINI Convertible Bettina Kroiß on Jan. 22, 2010
BMW S 1000 RR Claudia Engelmann on Dec. 14, 2009

IAA 2009

The IAA International Motor Show in Frankfurt is the world’s leading forum for individual
mobility. At the show, the BMW Group presents much more than just vehicles:

01 The pleasure of discovering the future for oneself
02 The fascination of experiencing Efficient Dynamics live
03 The knowledge to create sustainable mobility

Highlights 2009

“ My motto is: ‘Don’t just dream your
dreams, live them.’ And the BMW Z4
is one of mine.”

Christian Brandl
Jan. 22, 2010 BMW Welt, Munich

BMW Z4

The sportiness of a roadster with the elegance
of a classic car: The new edition of the popular
BMW Roadster is an expression of sheer driving
pleasure.

BMW X1

Kämmerer Family
Jan. 20, 2010 BMW Welt, Munich

Freedom is a source of pleasure – and that includes
being able to use a vehicle any way the driver wants.
With its highly versatile interior and strong performance
features, the BMW X1 offers maximum freedom for
every lifestyle.

“ Understated design. A dynamic
engine. The typical BMW driving
experience. In other words: The
perfect car for us.”

Highlights 2009

Hakan Kaya
Feb. 6, 2010 BMW Welt, Munich

“ A car that combines excel-
lent driving characteristics
with excellent environmen-
tal performance – what
more could you ask for?”

BMW ActiveHybrid X6

Generates the energy that powers it: The world’s first four-
wheel drive hybrid, the BMW ActiveHybrid X6, travels
short distances on electric power alone – and uses around
20 percent less fuel than the conventional model.

“ Great driving experience in the driver’s seat, and luxurious
comfort with ambient lighting in the back seat. For such a
car, I went all the way from Florida to Munich to pick it up.”

Douglas Lempereur
Feb. 12, 2010 BMW Welt, Munich

Highlights 2009

BMW 5 Series

Gran Turismo

A classy sedan? An adaptable estate car? A versatile SUV? The
BMW 5 Series Gran Turismo is all of those things rolled into one –
and therefore in a class of its own.

“ I was already amazed by the
Phantom. Now the Ghost is the
ultimate in motoring comfort
and elegance.”

Kai Berghäuser
Feb. 3, 2010 Procar Automobile, Cologne

Rolls-Royce Ghost

Of all the design maxims, simplicity is the hardest to deliver.
In the Rolls-Royce Ghost it has been honed to perfection –
and paired with state-of-the-art technologies for luxurious
mobility.

MINI
Convertible

Striking profile. High-performance
engine. A genuine four-seater with
maximum open-air feeling. In short:
a MINI Convertible.

Highlights 2009

Bettina Kroiß
Jan. 22, 2010 MINI retail outlet, Munich

“ This is such a cult car. It even
makes driving to work fun.”

BMW S 1000 RR

Speed requires control – something we have been
reinventing for the motorcycle for more than 20 years.
The S 1000 RR provides a good example of this:
It has a sporty feel, can be safely controlled and is still
pleasantly easy to drive in everyday situations.

Claudia Engelmann
Dec. 14, 2009 Tommy Wagner Motorräder, Munich

“ An elegant, lean, super
sports bike that sets the
standard in its class.”

Highlights 2009

IAA 2009

Experiencing the joy. For the first time, visitors to the
Frankfurt Motor Show were able to see the BMW Group’s
new vehicles in action. But experiencing the joy also
means shaping one’s own future – through conversations
with experts, or perhaps in a more playful manner.

01 The pleasure of discovering

the future for oneself

Sept. 17, 2009 Junior Campus

02 The fascination of

experiencing efficient
dynamics live

Sept. 16, 2009 BMW stand

03 The knowledge to create

sustainable mobility

Sept. 14, 2009 ZEIT Future Summit

Highlights 2009

Sept. 16, 2009 IAA – BMW stand

What does sheer driving pleasure really feel like? For the first
time, visitors to the IAA 2009 were able to experience that
signature BMW driving feeling up close. The BMW Group
showcased its Efficient Dynamics fleet and vehicle premieres,
such as the BMW ActiveHybrid X6 and the BMW 5 Series
Gran Turismo, driving around a several-hundred-metre circuit.
5 In the future: e-mobility MINI E style
6 In perfection: the new Rolls-Royce Ghost
7 In motion: the BMW Vision EfficientDynamics concept car (left)

Sept. 17, 2009 IAA – Junior Campus

How do you build the city car of the future? At the BMW
Group’s Junior Campus hundreds of children built their
own future vehicles. In sustainability workshops or-
ganised by the Campus they learned about issues such
as resource conservation and traffic management.
They were also able to improve their road safety aware-
ness on an integrated mobility course.
1 Children tested water saving technologies and logistic concepts in the Campus lab.
2 Several hundred children visited the Campus at the IAA.
3 Building sustainable products in the Campus workshop
4 A mobility concept for tomorrow – with its developers

Sept. 14, 2009 IAA – ZEIT Future Summit

What might sustainable mobility look like? That was the question
debated by leading experts at the Future Summit held by the German
weekly newspaper DIE ZEIT and hosted at the BMW Group stand for
the first time. According to former German Foreign Minister Joschka
Fischer: “E-mobility represents a major challenge.”
8 BMW Chairman of the Board of Management Reithofer: “The automobile must continue to evolve through innovation.”
9 Norbert Reithofer and Klaus Töpfer, former director of the UN Environmental Programme
10 Klaus Töpfer, Norbert Reithofer, Josef Joffe (DIE ZEIT), Regine Günther (WWF), Joschka Fischer, Stefan Schulte (Fraport)

(from left)

Speed is what defines change today –
where standing still means going
backwards. Every day we break new
ground with our ideas. We are pioneers
building our own future.

We have world-class employees –
a team that efficiently networks talent
and knowledge. And a corporate
culture where every individual out-
standing achievement strengthens
the BMW Group’s claim to leadership.