BMW AG Annual Report 2010

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FY2010 Annual Report · BMW AG

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ANNUAL REPORT 2010

FACTS AND FIGURES

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BMW GROUP IN FIGURES

REPORT OF THE SUPERVISORY BOARD

12
12
14
18
41
44
47

62
63
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 2010
Disclosures relevant for takeovers and explanatory comments
Financial Analysis
47
49
51
53
55
55
57
58
Internal Control System and explanatory comments
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
89
95
96
117
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

Auditor’s Report

140

142

143
144
147

154
162

163

166
166
168
170
172
175
176

STATEMENT ON CORPORATE GOVERNANCE
(Part 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 Board of Management
Members of the Supervisory Board
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 Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Financial Calendar
Contacts

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 – one of Germany’s largest industrial companies – is one of the most success-
ful car and motorcycle manufacturers in the world. With BMW, MINI and Rolls-Royce, the
BMW Group owns three of the strongest premium brands in the automobile industry. The vehicles
it manufactures set the highest standards in terms of aesthetics, dynamics, technology and
quality, borne out by the company’s leading position in engineering and innovation. In addition
to its strong position in the motorcycles market with the BMW and Husqvarna brands, the
BMW Group also offers a successful range of financial services.

The course towards a successful future was set in 2007 with the adoption of Strategy Number ONE.
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
inter national 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 indi-
vidual 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 six years.

BMW Group in figures

Sales volume of automobiles

in thousand units

1,600

1,500

1,400

1,300

1,200

1,100

1,000

Revenues

in euro billion

1,374.0 1,500.7 1,435.9 1,286.3 1,461.2

49.0

56.0

53.2

50.7

60.5

Profit before financial result

in euro million

Profit before tax

in euro million

5,250

4,500

3,750

3,000

2,250

1,500

750

5,250

4,500

3,750

3,000

2,250

1,500

750

4,050

4,212

921

289

5,094

4,124

3,873

351

413

4,836

BMW Group in figures

Sales volume – Automobiles

BMW

MINI

Rolls-Royce

Total

Sales volume – Motorcycles

BMW

Husqvarna

Total

Production – Automobiles

BMW

MINI

Rolls-Royce

Total

Production – Motorcycles

BMW

Husqvarna

Total

Workforce at end of year1

2006

2007

2008

2009

2010

Change in %

1,185,088

1,276,793

1,202,239

1,068,770

1,224,280

188,077

805

222,875

1,010

232,425

1,212

216,538

234,175

1,002

2,711

1,373,970

1,500,678

1,435,876

1,286,310

1,461,166

100,064

102,467

–

100,064

102,467

101,685

13,511

115,196

87,306

13,052

100,358

98,047

12,066

110,113

1,179,317

1,302,774

1,203,482

1,043,829

1,236,989

186,674

847

237,700

1,029

235,019

1,417

213,670

241,043

918

3,221

1,366,838

1,541,503

1,439,918

1,258,417

1,481,253

103,759

104,396

–

103,759

104,396

104,220

14,232

118,452

82,631

10,612

93,243

99,236

13,035

112,271

14.6

8.1

–

13.6

12.3

– 7.6

9.7

18.5

12.8

–

17.7

20.1

22.8

20.4

BMW Group

106,575

107,539

100,041

96,230

95,453

– 0.8

Financial figures

in euro million

Revenues

Capital expenditure

Depreciation and amortisation
Operating cash flow 2

Profit before financial result

Profit before tax

Net profit

48,999

56,018

53,197

50,681

60,477

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

3,263

3,682

8,150

5,094

4,836

3,234

19.3

– 6.0

2.3

65.6

–

1 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
2 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 Auto-

mobiles segment

Joachim Milberg
Chairman of the Supervisory Board

07 REPORT OF THE SUPERVISORY BOARD

Dear Ladies and Gentlemen,

The ﬁ nancial year 2010 marked an upswing for the BMW Group after the global ﬁ nancial crisis. Together with the Board
of Management and the entire workforce, we are delighted with the way business has developed, enabling us to report
the best result to date in the BMW Group’s corporate history.

During the year under report, we continuously and carefully monitored the running of the business and its perform-
ance with the aid of regular written and oral reports provided by the Board of Management. Joint discussions were also
held in which we advised the Board of Management on important aspects of projects and planning. These discussions
with the Board of Management were always conducted constructively and in an atmosphere of trust.

Main emphases of the Supervisory Board’s monitoring and advisory activities In a total of ﬁ ve meetings, one of
them held over a two-day period, we deliberated in particular on the BMW Group’s current performance and ﬁ nancial
position, the corporate plan and strategy, risk management and risk provision, personnel decisions, the further develop-
ment of the Board of Management’s compensation system and corporate governance. In addition to the scheduled
meetings, the Board of Management also kept us informed of current business and economic developments, particularly
sales volume performance, personnel ﬁ gures and other signiﬁ cant matters. The Chairman of the Board of Manage-
ment informed me personally and on a regular basis about major business transactions and projects.

Again in 2010 the Supervisory Board examined the management and organisation of the Financial Services segment.

In preparation for the full Supervisory Board meeting, we discussed with the Presiding Board the current organisation
of the Financial Services segment, which falls under the remit of the “Finances” management portfolio. We received
a detailed status report on various projects aimed at improving liquidity and risk management, maximising the beneﬁ ts
from sales support given to the Automobiles segment and optimising legal entity and management structures. The
framework conditions and organisational implications of the planned changes in the segment were also discussed at
length. The Supervisory Board is in favour of enhancing the segment‘s legal and organisational structure in a way that
ensures that suitable control and balancing mechanisms are in place in the relationship between the core industrial
segments and the Financial Services segment.

One meeting of the Supervisory Board took place at the Regensburg plant, where vehicles such as the BMW 1 Series,

the BMW 3 Series and the BMW Z4 are manufactured. During our visit, we took the opportunity to look for ourselves
at the preparations being made for the scheduled model start-ups in 2011. Using examples from the pressing plant, body
construction and assembly areas, the members of the Supervisory Board were given a demonstration of how the prin-
ciples of a value-added production system (VPS) can be applied to achieve further process improvements.

In September, another two-day meeting was held, providing us with the opportunity for an in-depth discussion with
the Board of Management regarding technical innovations and new vehicle concepts. The Supervisory Board members
were able to test several of the vehicles that are now already capable of fulﬁ lling customer requirements for forward-
looking mobility in various vehicle categories. These included a next-generation BMW 5 Series ActiveHybrid prototype,
but also production models such as the BMW 320d Effi cientDynamics Edition. We were also able to test vehicles such
as the BMW X3 xDrive 20d that will soon be going into series production. A further part of the meeting was dedicated to
the strategy review. The Board of Management provided us with an insight into the progress made over the last twelve
months in implementing Strategy Number ONE, based on the four pillars “Growth”, “Shaping the Future”, “Proﬁ tability”
and “Access to Technologies and Customers”. Market and volume forecasts for the Automobiles segment were discussed
at great length, with certain markets also successfully being subjected to a stress test. The Supervisory Board supports
the Board of Management in its endeavours to achieve a balanced relationship in its sales activities between the major
markets of Europe, Asia and America. Furthermore, we discussed a number of selected issues relating to product and
brand strategy, such as plans to establish a new BMW sub-brand in the ﬁ eld of electromobility. In the opinion of the
Supervisory Board, Strategy Number ONE has proved to be robust in times of crisis: we believe that the Board of Manage-
ment remains on the right track in strategic terms.

Before giving our go-ahead, we carefully reviewed the long-term business plan presented to us for approval by the
Board of Management, which forecasts highly positive and rising economic added value for the years from 2011 to 2016.
The Board of Management explained changes from previous forecasts and targets. The most important external risk
factors, such as regulatory requirements and potential challenges caused by a repeat of the ﬁ nancial crisis, were also dealt
with in both written reports and joint discussions. We stressed the importance to the Board of Management of planning
ﬁ xed costs and personnel requirements prudently, despite the current economic recovery. The Supervisory Board gave
appreciative recognition to the fact that, despite the ﬁ nancial crisis, the eff orts expended in recent years have brought

about improved transparency in the Financial Services segment, driven progress in product strategy and electromobility
and encouraged new, positive approaches to marketing.

We also deliberated with the Board of Management on the BMW Group’s situation and positioning in the areas of
personnel marketing, programmes for new recruits, further training and vocational training. We fully agree with the
Board of Management that, even though BMW is generally seen as a highly attractive employer, it is imperative that we
continue to build up and maintain expertise and acknowledge the importance of further training. These issues repre-
sent a major challenge for the future, not least because of the demographic aging of society. The Board of Management
also presented and explained its diversity concept for the BMW Group to the Supervisory Board.

We carefully considered the annual budget for the ﬁ nancial year 2011 and discussed earnings opportunities and

risks with the Board of Management. The underlying plans give good reason to believe it will be possible, at the very
least, to achieve the targets set in conjunction with Strategy Number ONE, despite the intervening ﬁ nancial crisis.

As part of a special review, the Board of Management presented an in-depth report on the activities, organisational

structure and strategic direction of the board portfolio “Purchasing and Supplier Network”. This network was set up in
2007 as a result of Strategy Number ONE and aims to create the world’s most effi cient car manufacturer supply chain in
terms of quality, innovation, compliance with deadlines and cost. The presentation also included an explanation of the
instruments with which the BMW Group intends to compensate for beneﬁ ts of scale enjoyed by larger-scale manufacturers.

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 on
key markets as well as developments in earnings and proﬁ tability during the year. The Board of Management and the
Supervisory Board use the reports to keep abreast of and discuss current issues aff ecting the automobile sector. In this
context, the Board of Management provided information to the Supervisory Board on a number of issues, including
BMW internal rules and processes relating to quality assurance and the management of product defects, should they arise.
The Board of Management also addressed major developments in China of signiﬁ cance for the BMW Group, such as
the progress being made in expanding production capacities at the Tiexi and Dadong sites in Shenyang and the BMW
Group’s involvement in the joint venture with Brilliance.

The Supervisory Board again conducted a thorough review of the structure and level of Board of Management com-
pensation in 2010. For this purpose, advice was obtained from an independent external ﬁ rm of compensation consultants.
In July – after the Board of Management’s decision to approve payment of a special bonus to employees of BMW AG –
the Supervisory Board decided to approve a special bonus for members of the Board of Management, based on the prin-
ciple of consistency and taking into account senior management compensation (below board level). The payment
was made in recognition of the fact that the Board of Management had undertaken structural measures that helped the
BMW Group overcome the ﬁ nancial crisis. In December the Supervisory Board decided to add a stock-based compen-
sation element to the Board of Management’s compensation system for ﬁ nancial years commencing after 1 January 2011.
Further information on this matter is included in the detailed Compensation Report within the Corporate Governance
Report section of the Annual Report (pages 154 et seq.).

Corporate governance and Declaration of Compliance In their joint meeting in December, the two boards delib-

erated on corporate governance within the BMW Group and took a number of decisions on ways in which it could be
further improved. The joint Declaration of Compliance and other explanatory comments can be found in the Corporate
Governance Report. The recommendations of the Government Commission on German Corporate Governance con-
tained in the revised Code issued on 2 July 2010 (Code version dated 26 May 2010) will be complied with without
exception in the future. This also includes recommendations on succession planning for the Board of Management.
Together with the Board of Management, the Personnel Committee and full Supervisory Board will ensure that long-
term succession planning is in place. In their assessment of candidates for a post on the Board of Management, the
underlying criteria applied by the Supervisory Board for determining the suitability of candidates are their professional
expertise in the relevant area of board responsibility, outstanding leadership qualities, a proven track record and a pro-
found understanding of the BMW Group’s business. We also take diversity into account when assessing, on balance,
which individual will best complement the Board of Management as a representative body. In the context of the decision
process, we understand “diversity” to encompass various complementary individual proﬁ les, work and life experience,
at both national and international levels, as well as appropriate representation of both sexes. When making new
appointments, our aim in the medium and long term is to achieve an appropriate representation of women on the Board
of Management of BMW AG. The Board of Management will accordingly report to the Personnel Committee – at regular
intervals and, on request, prior to personnel decisions being taken by the Supervisory Board – on the proportion of, and

09 REPORT OF THE SUPERVISORY BOARD

changes in, management positions held by women, in particular below senior executive level and at uppermost manage-
ment level. When actually selecting an individual for a post on the Board of Management, the Supervisory Board
will decide in the best interests of the Company and after taking account of all relevant circumstances.

For its own composition, the Supervisory Board has drawn up speciﬁ c criteria, which are described in the Corporate
Governance Report (pages 153 et seq.). A conscious decision has been taken to set out a detailed composition proﬁ le for
the Supervisory Board based on a proﬁ le previously drawn up and used by the Nomination Committee, which has now
been expanded and applied to the entire Supervisory Board.

Examining and improving the effi ciency 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. In a separate discussion, the full Supervisory Board also discussed its own effi ciency. Our preparations
for the discussion were based on the results of a questionnaire previously devised and distributed by the members of
the Supervisory Board in advance of the meeting.

There was no indication of any conﬂ icts of interest on the part of members of the Supervisory Board or the Board of
Management during the past year. The nature and scale of signiﬁ cant transactions with related parties as deﬁ ned by IAS 24
is tested with the aid of a questionnaire which members of both boards are required to complete on a quarterly basis.
The questionnaire also covers transactions with close family members and intermediary entities (see pages 128 et seq.).

Each of the ﬁ ve Supervisory Board meetings in 2010 was attended by at least 90% of its members (18 out of 20), a
fact that can be tied in to the analysis of attendance fees for individual members disclosed in the Compensation Report
(see pages 154 et seq.). One member was unable to attend three meetings during the ﬁ nancial year 2010 due to illness.
Presiding Board and committee meetings were fully attended (see page 152).

Description of Presiding Board activities and committee work In a total of four meetings, the Presiding Board fo-
cused mainly on the preparation of speciﬁ c topics for the meetings of the full Supervisory Board unless such preparation fell
under the remit of one of the committees. The Presiding Board selected additional 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 four times during the reporting period 2010. In accordance with a recommendation

by the German Corporate Governance Code, the Group’s three interim reports in 2010 were discussed (in telephone
conferences) with the Board of Management prior to publication. Representatives of the external auditors were present
for part of the time at the telephone conference held to present the Half-Year Financial Report. The report had been
subjected to review by the external auditors.

One meeting of the Audit Committee dealt in particular with preparations for the Supervisory Board meeting at the be-
ginning of 2010 at which the ﬁ nancial statements were examined. Before giving the full Supervisory Board its recommenda-
tions for nominations for election at the Annual General Meeting and engaging the external auditor for the ﬁ nancial year
2010, the Audit Committee obtained a Declaration of Independence from the proposed external auditor. The fee proposals
for the audit of the year-end ﬁ nancial statements and for the review of the half-year ﬁ nancial report were deemed appropriate
by the Audit Committee. After the Annual General Meeting 2010, the Audit Committee appointed the external auditor for the
ﬁ nancial year 2010 and, taking the suggestions of the full Supervisory Board into account, speciﬁ ed areas of audit emphasis,
including accounting policy changes in the HGB ﬁ nancial statements as a result of the German Accounting Law Modernisa-
tion Act (BilMoG), the measurement of warranty provisions and the accounting treatment of derivative ﬁ nancial instruments.

With a view to ensuring the independence of the external auditor, the Audit Committee had previously considered the

scope of non-audit services provided by KPMG entities to the BMW Group and set out guidelines for the future with re-
spect to non-audit and audit-related services. There were no indications of lack of independence or grounds for exclusion.

Other areas of emphasis covered by the Audit Committee were the risk management system (including additional

notiﬁ cation requirements as part of the internal reporting process), the current risk proﬁ le and the level of risk provision.
In this context, the Board of Management also reported to the Audit Committee on changes in the internal control system
within the Group, in particular with respect to ﬁ nancial reporting processes.

The Chairman of the BMW Group Compliance Committee reported to the Audit Committee on the current com-
pliance situation, which was deemed satisfactory. The Audit Committee took a particular interest in the ﬁ rst full set of
compliance reports for the 2009 ﬁ nancial year, which included feedback from 132 BMW Group compliance offi cers, as

well as in the analysis of compliance enquiries and information received with respect to non-compliance and suspicious
cases dealt with in the Group’s case management system. At the same meeting, the Audit Committee also considered
the BMW Group Compliance Committee’s plans to introduce additional control procedures and devote more attention
to procedures aimed at identifying corruption.

The Head of Group Internal Audit reported to the Audit Committee on the main areas of emphasis of Group internal

audit activities, the results of audits performed and forthcoming plans.

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 Article 4 section 5 of the Articles of Incor-
poration (Authorised Capital 2009) by euro 498,050 and, in conjunction with the employee share scheme, to issue a
corresponding number of new non-voting shares of preferred stock, each with a par value of euro 1, at favourable con-
ditions to employees.

The Personnel Committee convened four times during the ﬁ nancial year 2010, with the emphasis of activities on the

preparation of personnel- and compensation-related decisions. In a small number of cases, the Personnel Committee
also approved the assumption of external mandates by members of the Board of Management in non-Group supervisory
or equivalent boards and approved contracts falling under its terms of reference.

The Nomination Committee, which is charged with the task of ﬁ nding suitable candidates for the Supervisory Board

for inclusion in the Supervisory Board’s proposals for election at the Annual General Meeting, met once during the
ﬁ nancial year under report to consider proposals for candidates and make recommendations for the election of Super-
visory Board members at the Annual General Meeting.

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

the ﬁ nancial year 2010.

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

Board and committee work. A description of work procedures of the Supervisory Board is provided in the Corporate
Governance Report.

Composition and organisation of the Board of Management The Board of Management, with its team of seven

persons, remained unchanged in 2010 in terms of composition and portfolio responsibilities. The mandates of three
members of the Board of Management were extended by the Supervisory Board.

Changes in the composition of the Supervisory Board, Presiding Board and committees The mandate of
Prof. Dr. Jürgen Strube came to an end at the conclusion of the Annual General Meeting on 18 May 2010. In view of the
agreed age limit for Supervisory Board members, he decided not to stand for re-election. Prof. Strube had been a
shareholder representative on the Supervisory Board for nine years. During that time he served for two years as mem-
ber of the Presiding Board, the Personnel Committee, the Nomination Committee and the Audit Committee, taking
over the chair of the latter in 2008 and performing that role with great skill and vision during the challenging times of
the economic and ﬁ nancial crisis. On behalf of the Supervisory Board I would like to take this opportunity once again
to thank Prof. Strube very warmly for his many years of valued work as a member of the Supervisory Board and its com-
mittees, in particular the Audit Committee, and for his steadfast, valuable contribution in the interests of the BMW
Group. On 18 May 2010 Prof. Henning Kagermann was elected to the Supervisory Board at the Annual General Meeting.
After the Annual General Meeting, the Supervisory Board appointed Dr. Karl-Ludwig Kley as additional Deputy Chair-
man of the Supervisory Board. As an independent member, he was also appointed to the Personnel and Nomination
committees and – in acknowledgement of his expertise in the ﬁ eld of ﬁ nancial reporting gained as management board
member for ﬁ nances of another DAX company – as member and Chairman of the Audit Committee. Werner Neugebauer
resigned his mandate as employee representative on the Supervisory Board on 31 December 2010 after more than ten
years of service. On behalf of the Supervisory Board, I would like to thank Mr. Neugebauer most warmly for his dedicated
and commendable work in the interests of the company. In place of Mr. Neugebauer, the District Court of Munich
appointed Jürgen Wechsler, Regional Executive Offi cer of IG Metall Bavaria Region, on 10 February 2011 as employee
representative on the Supervisory Board for the remaining term of offi ce. In his place, on 10 February 2011 the District
Court of Munich appointed Jürgen Wechsler, Regional Executive Offi cer of IG Metall Bavaria Region, as employee
representative on the Supervisory Board for the remaining term of offi ce.

The Corporate Governance Report includes an overview of the composition of the Supervisory Board and its committees.

11 REPORT OF THE SUPERVISORY BOARD

Examination of ﬁ nancial statements and the proﬁ t distribution proposal KPMG AG Wirtschaftsprüfungsgesell-
schaft conducted a review of the abridged Interim Group Financial Statements and Interim Group Management Report
for the six-month period ended 30 June 2010. The results of the review were reported orally to the Audit Committee.
No issues were identiﬁ ed that might indicate that the abridged Interim Group Financial Statements and Interim Group
Management Report had not been prepared, in all material respects, in accordance with the applicable provisions.

The Company and Group Financial Statements of Bayerische Motoren Werke Aktiengesellschaft for the year ended
31 December 2010 and the combined Company and Group Management Report were audited by KPMG AG Wirtschafts-
prüfungs gesellschaft and given an unqualiﬁ ed audit opinion on 15 February 2011.

The Audit Committee examined these documents in detail at its meeting on 25 February 2011. At its meeting on
10 March 2011 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 signiﬁ cant ﬁ ndings and answered any
additional questions raised by the members of the Supervisory Board. The representatives of the external auditors con-
ﬁ rmed 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 weaknesses in the internal con-
trol system and risk management system were found with regard to the ﬁ nancial 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 Financial Statements, the combined Management Report, the long-

form audit reports of the external auditors and the Board of Management’s proﬁ t distribution proposal were made
available to all members of the Supervisory Board in a timely manner.

Based on our own examination, we concurred with the results of the external audit and approved the Company and

Group Financial Statements of Bayerische Motoren Werke Aktiengesellschaft for the ﬁ nancial year 2010 prepared by
the Board of Management. The Company Financial Statements are therefore adopted. We also reviewed the Board of
Management’s proﬁ t distribution proposal at meetings of the Audit Committee and the full Supervisory Board. We con-
sider the proposal appropriate and therefore concur with it. In accordance with the conclusion reached on the examina-
tion by the Audit Committee and Supervisory Board, no objections were raised.

Expression of thanks by the Supervisory Board 2010 was a very successful year for the BMW Group. The Group
earnings performance in 2010 was achieved as a result of hard work on the part of the Board of Management and the
workforce as a whole. Measures introduced since 2007 in conjunction with Strategy Number ONE – in particular the
decisions to incorporate Effi cient Dynamics throughout the whole range of products and to implement measures aimed
at im proving proﬁ tability – have become the cornerstone of the BMW Group’s successful performance. In recent years
both the Board of Management and the workforce have proved their commitment to excellence and amply demon-
strated their innovative skills. Their ability to adapt to new circumstances will be put even more to the test in future by
changing expectations for individual mobility on the part of customers and other developments in that direction, and
not least as a result of own aspirations as a premium manufacturer. In order to rise to the various challenges that face us,
we are committed to working closely and constructively with employee representatives.

On behalf of the Supervisory Board, I would like to express my gratitude to the members of the Board of Manage-
ment and all employees worldwide, not only for their performance in 2010, but also for their contribution to the long-
term increase in the value of the business and to the future viability of the BMW Group.

Munich, 10 March 2011

On behalf of the Supervisory Board

Joachim Milberg
Chairman of the Supervisory Board

GROUP MANAGEMENT REPORT

A Review of the Financial Year

12
12
14
18
41

63
70

GROUP MANAGEMENT REPORT
A Review of the Financial Year
General Economic Environment
Review of Operations
BMW Group – Capital Market
Activities
Disclosures relevant for takeovers
and explanatory comments
Financial Analysis
47
49
51
53
55
55
57
58
Internal Control System and
explanatory comments
Risk Management
Outlook

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

Highly successful financial year 2010 for the
BMW Group
With the global economic and financial crisis now coming
to an end, the global economy found itself well on the
road to recovery in 2010. Against this background, inter-
national car markets also stabilised to a large extent.
Demand for premium vehicles grew strongly, particularly
in Asia and to a slightly lesser degree in the USA. The
BMW Group benefited from these developments and
strengthened its role as a leading provider in the premium
car segment with a range of new and attractive models.
The situation on international capital markets also con-
tinued to ease generally in 2010, and thus had a positive
impact on our Financial Services business.

With the economy recovering on a broad footing, we
were able to record a sharp rise in the number of cars
sold. Sales volume growth gathered even more momen-
tum during the second half of the year. In total we sold
1,461,166 BMW, MINI and Rolls-Royce cars worldwide
during the year under report (+13.6%), and thus achieved
one of the best sales volume performances in the history
of the Group.

Our Motorcycles business performed well in 2010 de-
spite continuing unfavourable market conditions. A total
of 110,113 BMW and Husqvarna brand motorcycles was
sold worldwide, 9.7% up on the previous year’s figure.

The Financial Services segment also made an important
contribution to the success of the BMW Group and
3,190,353 credit financing and lease contracts were in
place with dealers and retail customers at 31 December
2010 (+ 3.4%).

Record figures for both revenues and earnings
The sharp rise in sales volumes enabled the BMW Group
to achieve new records for Group revenues and earnings.
Revenues in 2010 amounted to euro 60,477 million, 19.3%
higher than in the previous year. Earnings performed
similarly well: the profit before financial result (EBIT) rose
steeply to euro 5,094 million (2009: euro 289 million)
and the profit before tax amounted to euro 4,836 million
(2009: euro 413 million).

Revenues in the Automobiles segment increased by al-
most a quarter to euro 54,137 million (+ 23.8%). Segment
EBIT turned around from a negative euro 265 million in
2009 to a positive euro 4,355 million in 2010. The seg-
ment recorded profit before tax of euro 3,887 million for
the year (2009: loss before tax of euro 588 million).

The good sales volume performance recorded by the
Motorcycles segment was also reflected in a sharp rise in
revenues in 2010. Compared to the previous year, seg-
ment revenues increased by 22.0% to euro 1,304 million.
Segment EBIT amounted to euro 71 million (2009: euro

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

Asia / Oceania

North America

Germany

Other markets

Rest of Europe

Asia / Oceania

North America

Germany

Other markets

Total

18,440

6,200

11,779

10,601

1,979

48,999

22,395

7,353

12,161

11,918

2,191

56,018

20,693

7,523

12,461

10,739

1,781

53,197

16,989

8,495

11,724

11,436

2,037

50,681

18,581

14,776

12,966

11,207

2,947

60,477

BMW Group Capital expenditure and operating cash flow

in euro million

8,000

7,000

6,000

5,000

4,000

3,000

2,000

Capital
expenditure

Operating
cash flow*

4,313

4,267

4,204

3,471 3,263

5,373

6,246

4,471

4,921 8,150

* 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

13 GROUP MANAGEMENT REPORT

19 million) and the profit before tax totalled euro 65 mil-
lion (2009: euro 11 million).

Financial Services business also benefited from the eco-
nomic recovery, with segment revenues rising to euro
16,617 million (+ 5.2%). At euro 1,201 million, segment
EBIT was well up on the previous year (2009: euro 355 mil-
lion), while pre-tax segment profit rose to euro 1,214 mil-
lion (2009: euro 365 million).

The tax expense for 2010 totalled euro 1,602 million (2009:
euro 203 million). The effective tax rate for the year de-
creased by 16.1 percentage points to 33.1%. The Group
reported a net profit for the year of euro 3,234 million,
a significant improvement on the previous year (2009:
euro 210 million).

Dividend raised sharply
Reflecting the very strong earnings performance, the
Board of Management and Supervisory Board propose to
the Annual General Meeting to use the unappropriated
profit available for distribution in BMW AG totalling euro
852 million to pay a dividend of euro 1.30 for each share
of common stock (2009: euro 0.30) and euro 1.32 for each
share of preferred stock (2009: euro 0.32). The distribution
rate for 2010 would then be 26.5%.

Capital expenditure reduced
Capital expenditure in 2010 amounted to euro 3,263 mil-
lion, 6.0% below the previous year’s figure (2009: euro
3,471 million). The two main focal points were product
investments for the start-up of new models such as the
BMW X3, the 5 Series, the 6 Series Convertible and the
MINI Countryman on the one hand and investments in
infrastructure on the other.

In 2010 we invested euro 2,312 million in property, plant
and equipment and other intangible assets (2009: euro
2,384 million; – 3.0%). In addition, development expend-
iture of euro 951 million was recognised as assets (2009:
euro 1,087 million; –12.5%). The percentage of develop-
ment costs capitalised decreased to 34.3% (2009: 44.4%).

The capital expenditure ratio (capital expenditure as a
percentage of Group revenues) fell to 5.4% in 2010 (2009:
6.8%). Due to development-related factors and despite
our investment in innovative products and technologies,
the ratio remained below 7% of Group revenues and
thus within the target range set in conjunction with the
Group’s Strategy Number ONE.

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General Economic Environment

Strong recovery after crisis
The global economy recovered well in 2010 from the
economic collapse caused by the international economic
and financial crisis. The principal factors driving the up-
swing out of the deepest recession since the Second World
War were massive state-funded stimulus programmes
and the highly expansionary monetary policies pursued
by the world’s major central banks.

The situation was also aided by the fact that most of the
emerging markets in Asia and Latin America had suffered
significantly lower drops in growth than the industrial-
ised countries during the crisis and therefore propped up
the global economy as it swiftly returned to its previous
growth pattern. One of the overall effects of the crisis was
therefore a further shift in economic power towards Asia.

China’s economy grew very strongly again at a rate of
10.3% in 2010. Against this background, many asset prices
continued to rise and there is still a danger of overheating,
particularly on certain regional property markets.

In the USA, the economy recovered from the contraction
experienced in 2009, although by American standards the
upswing was relatively modest at 2.9%. One reason for
this was low consumer spending in the USA, primarily at-
tributable to high unemployment, the faltering property
market and high levels of private debt (albeit falling some-
what).

Markets in the euro zone developed highly diversely in
2010 and the average growth rate was 1.7%. With the ex-
ception of Germany, most major countries were unable
to achieve more than moderate growth. The southern
European countries and Ireland fared poorly after a loss
of confidence in their state bonds and the resulting politi-

cal turmoil. While Spain and Ireland stagnated, Greece
was forced to go through yet another year of recession.
Germany was the only country that really took off, record-
ing strong economic growth of 3.6%. The upturn was
largely attributable to improved export figures, but also
assisted by increasingly robust domestic demand driven
by investment expenditure. Although unemployment
dropped to it lowest level for almost 20 years, consumer
spending remained moderate.

The British economy climbed somewhat more slowly out
of recession, with the property market stabilising at a
low level. The sharp rise in unemployment, high levels of
private debt and the resulting weak domestic demand
only allowed a moderate growth rate of 1.7%.

Japan registered very robust growth in 2010, equalling
that of Germany. The economy profited enormously from
the global economic upswing on the one hand (despite
the strong yen), and a return to greater consumer
spending on the other, enabling Japanese gross national
product (GNP) to rise by 4.1%.

Asian and Latin American emerging markets, which had
stood up well during the crisis, were mostly able to
match or even exceed their long-term growth rates in
2010. India and Brazil, for example, recorded growth
rates of 8.7% and 7.6% respectively. By contrast, most
Eastern European countries grew at significantly lower
rates than in the years prior to the financial crisis. This
was particularly true for Russia with a growth rate of 4.0%.

US dollar and yen stronger, British pound remains weak
The value of the US dollar against the euro increased
significantly over the course of the year, with wide fluctu-
ations along the way. After standing at US dollar 1.44 to

Exchange rates compared to the Euro

(Index: 30 December 2005 = 100)

140

130

120

110

100

Source: Reuters

British Pound

US Dollar

Chinese
Renminbi

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

the euro at the beginning of the year, partly as a result of
the zero interest policy pursued by the US Federal Reserve
Bank, the US currency appreciated at one stage to US dol-
lar 1.19 during the confidence crisis in the euro zone. At
the end of 2010 the exchange rate stood at US dollar 1.34,
thus making the US dollar 7.4% stronger than one year
earlier.

Due to the ongoing weakness of the British economy, the
British pound remained weak against the euro through-
out 2010, hovering at around British pound 0.85 to the
euro. The Japanese yen gained further ground against the
euro during 2010, ending the year at yen 109 to the euro.
Massive capital inflows meant that the currencies of
practically all emerging market countries gained in value
in 2010 after suffering losses during the financial crisis,
in some cases quite significant ones.

on the previous highest levels recorded in summer 2008.
On the one hand the development reflects the ongoing
global economic recovery, with demand from China re-
maining at a very high level. However, it also results from
surplus liquidity and the worldwide search for invest-

Steel price trend

(Index: January 2006 = 100)

140

130

120

110

100

Raw materials prices continue to rise
Raw material prices continued to rise over the course of
2010. Prices of non-energy raw materials were even up

Source: Working Group for the Iron and Metal Processing Industry

Precious metals price trend

(Index: 30 December 2005 = 100)

400

350

300

250

200

150

100

Source: Reuters

Palladium

Gold

Platinum

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Key Performance Figures
Comments on BMW AG

ment opportunities. Prices of both non-ferrous and pre-
cious metals also rose, in some cases substantially. The
price of oil increased from US dollar 80 per barrel at the
start of the year to US dollar 92 on the last day of trading.

Car markets in 2010
Thanks to the worldwide recovery, the market for pas-
senger cars and light commercial vehicles again grew
sharply in 2010, rising from 63.8 million to 69.6 million
units (+ 9.2%). China increasingly confirmed its position
the as largest car market, the designation it had gained
in 2009. The Chinese market as a whole leapt from
13.6 million to 18.1 million units (+ 32.4%), while the
USA, formerly the world’s largest car market, grew
by a robust but still significantly lower rate of 11.1%
with sales up from 10.4 million units to 11.6 million
units.

The differing expiry times of the various stimulus pro-
grammes previously in place across the European Union
created a very diverse picture on national markets.
Overall, demand fell throughout the region by a further
5.5% in 2010 to 13.4 million vehicles, mainly due to the
slump in passenger car sales in Germany following the
expiry of the scrappage bonus scheme at the end of 2009.
Despite positive economic developments, the number
of newly registered passenger vehicles fell by about one
quarter to 2.9 million units. The French and Italian car
markets also contracted for the same reason. Sales of
passenger cars in France fell by 2.2% to 2.3 million units
and in Italy by 9.2% to 2.0 million units.

Most of the other countries managed to record slight
growth. New vehicle sales in the UK, for instance, rose by
1.8% to 2.0 million units and in Spain by 3.1% to almost
1 million units. On the other hand, Eastern European
EU countries recorded a further decline, with vehicle sales
down by 3.2% to 0.8 million units.

The Japanese car market benefited from the scrappage
scheme that remained in place into 2010, with vehicle
sales up by 7.5% to 5.0 million.

Emerging markets performed very positively in 2010,
albeit at different rates. In Russia, the market grew by one-
third to reach 1.8 million vehicles, partially offsetting
the slump experienced in 2009. The Indian market also
registered a similar high growth rate (2.8 million units;

+35.7%). By contrast, the car market in Brazil grew by only
8% to 3.2 million units.

Motorcycle markets in 2010
The world’s motorcycle markets in the 500 cc plus class
relevant for the BMW Group were 11.7% down on the
previous year. In Europe most markets registered lower
figures than those of the previous year (– 10.3%). The
German market for 500 cc plus motorcycles fell by 7.2%.
Shortfalls against the previous year were also recorded
in Italy (–14.8%), France (–7.1%) and the UK (–17.8%).
Spain was the only market to show an upward trend, re-
bounding with a 3.0% increase in response to the ex-
tremely steep drop recorded the previous year. The mar-
kets for 500 cc plus motorcycles also failed to recover in
the USA (– 14.2%) and Japan (– 6.3%) in 2010. There are
no reliable figures available for the engine-capacity seg-
ments relevant for the Husqvarna brand, as most of these
motorcycles are used for sporting and off-road activities
and therefore not included in registration statistics.

Financial Services market in 2010
The financial services sector also benefited from the
relatively speedy end to the worldwide recession. Even
so, the effects of the crisis could still be felt in 2010.
Substantial write-downs by banks and more rigorous
equity and liquidity requirements due to Basel III regula-
tions dominated the financial system. Greece and Ireland
were obliged to accept financial support from the EU and
the International Monetary Fund. Although the money
and capital markets reacted nervously to these develop-
ments, risk spreads only widened for a short period of
time. Overall, risk spreads narrowed slightly in 2010, with-
out returning to the levels prevailing before the crisis.

Reference interest rates in most industrial countries re-
mained at historically low levels during 2010. The Bank
of Japan lowered its overnight interest rate in October
by a further 20 basis points, thus ranging from 0% to
0.10%. China, on the other hand, raised its reference rate
during the year by 25 basis points, to 5.81% and has
implemented further measures to subdue inflationary
pressures. Similarly, the central banks of Canada and
Australia raised their reference rates in autumn by 25 ba-
sis points to 1.00% and 4.75% respectively. In contrast,
the prospect of continuing low reference rates in the euro
region caused interest rates for contracts with medium-
term maturities to fall slightly.

17 GROUP MANAGEMENT REPORT

Used car markets generally continued to stabilise in
2010, despite remaining below pre-crisis levels in North
America and the UK. In Continental Europe, the eco-
nomic recovery and lower inventory levels resulted
in a sharp increase in used car prices during the second
half of the year. Prices nevertheless remained below
pre-crisis levels.

Review of Operations

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Sharp rise in car sales volume
The worldwide economic recovery, our strong competi-
tive position in Europe and North America and dynamic
growth in Asia all contributed to the fact that we were
able to record-double-digit growth in car sales volume
in 2010; thanks to our attractive model range we sold a
total of 1,461,166 BMW, MINI and Rolls-Royce brand
cars (+ 13.6%). Sales of the BMW brand grew by 14.6%
(1,224,280 units). MINI brand sales totalled 234,175 units
worldwide in 2010 (+ 8.1%) while Rolls-Royce grew
particularly strongly with sales figures more than doubling
to 2,711 units (2009: 1,002 units).

Higher sales volumes in most markets
While sales growth in some of our markets was particu-
larly dynamic in 2010, especially in Latin America and
Asia, sales volume in Europe developed inconsistently,
although up on the previous year. In total, we sold
791,220 BMW, MINI and Rolls-Royce brand cars (+ 3.9%)
in this region. In Germany, currently the largest single
market for the BMW Group, we sold a total of 267,160
cars in 2010, similar to the previous year’s level. Sales in
Great Britain rose considerably (+12.9%) to 154,750 units.
The previous year’s sales figures were also exceeded in
France (64,854 units; + 2.4%) and Spain (41,289 units;
+ 1.4%). The only country in which sales were down on
the previous year was Italy (69,161 units; – 8.6%) where
the overall market contracted sharply.

The market for premium cars also recovered in North
America in 2010, where we sold a total of 298,316 cars

BMW Group Sales volume of vehicles by region and market

in 1,000 units

BMW Group – key automobile markets 2010

as a percentage of sales volume

Other

Germany

USA

Japan

France

Italy

United Kingdom

China

Germany

USA

China

United Kingdom

18.3

18.2

12.5

10.6

Italy

France

Japan

Other

4.7

4.4

3.0

28.3

during the period under report, 10.1% up on the previous
year. The number of cars handed over to customers in the
USA increased to 266,580 units (+ 10.1%).

The sales volume recorded in Asia increased dynamically
in 2010 to 286,297 units, outstripping the previous year’s
figure by 56.3%. The Chinese markets (China, Hong Kong,
Taiwan) made a major contribution to this notable per-
formance. The rate of growth on these markets surged by
85.3%, with 183,328 units sold. In Japan, sales were up
by 6.1% to 43,644 units.

1,600

1,400

1,200

1,000

800

600

400

200

Rest of Europe

North America

Asia

Germany

United Kingdom
Other markets

Rest of Europe

North America

Asia

Germany

United Kingdom

Other markets

375.0

337.4

142.2

285.3

154.1

80.0

443.6

364.0

159.5

280.9

173.8

78.9

432.2

331.8

165.7

280.9

151.5

73.8

357.3

271.0

183.1

267.5

137.1

70.3

369.3

298.3

286.3

267.2

154.8

85.3

Total

1,374.0

1,500.7

1,435.9

1,286.3

1,461.2

19 GROUP MANAGEMENT REPORT

BMW remains leading premium brand
Now approaching the end of its life cycle, sales of the
BMW 1 Series were 9.7% down on the previous year’s
level with a total of 196,004 units sold in 2010. The
BMW 3 Series, with a sales volume of 399,009 units, re-
mained at a similar level to the previous year (+ 0.5%).

Following the successful launch of the BMW 5 Series
Sedan in spring, the new BMW 5 Series Touring has also
been available since autumn 2010. The rejuvenation of
the 5 Series models resulted in a 35.5% sale volume in-

crease, with 238,454 units sold. This performance enabled
the BMW 5 Series to take over worldwide market leader-
ship in its segment in the fourth quarter 2010. In the final
year of its life cycle, sales of the BMW 6 Series models
were, as expected, down on the previous year: 5,848 units
of the BMW 6 Series were handed over to customers
(– 32.4%) during the period. In January 2011 the new
BMW 6 Series Convertible celebrated its world debut at
the Detroit Motor Show. 65,814 units of the BMW 7 Se-
ries were sold in 2010, a 24.9% rise on the previous year’s
figure.

Sales volume of BMW vehicles by model variant
in units

2010

2009

Change

Proportion of
in % BMW sales volume
2010 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

31,980

113,030

26,191

24,803

196,004

44,034

120,323

24,081

28,506

216,944

242,831

219,850

74,008

46,358

35,812

84,601

54,852

37,800

399,009

397,103

179,680

32,288

26,486

238,454

3,050

2,798

5,848

135,944

36,987

3,052

175,983

4,501

4,147

8,648

65,814

52,680

99,990

8,499

– 27.4

– 6.1

8.8

–13.0

– 9.7

10.5

–12.5

–15.5

– 5.3

0.5

32.2

–12.7

–

35.5

– 32.2

– 32.5

– 32.4

24.9

–

46,004

55,634

–17.3

102,178

88,851

46,404

41,667

24,575

22,761

15.0

11.4

8.0

14.6

16.0

32.6

19.5

0.5

5.4

8.2

3.7

8.3

3.8

2.0

100.0

BMW total

1,224,280

1,068,770

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Key Performance Figures
Comments on BMW AG

The BMW X1 has performed extremely well since its
market launch, with 99,990 units sold worldwide during
the year under report, bringing the sales volume since
its market launch in October 2009 to over 100,000 units.
Due to the model change, sales of the BMW X3 for the
year dropped by 17.3% to 46,004 units. The new BMW
X3 has been available worldwide since November. It has
received an enthusiastic response from customers and
the media alike and will provide a strong impetus for
sales. The BMW X5 also remained market leader in its
segment during the year under report, with sales up by
15.0% to 102,178 units. The sales volume performance of
the BMW X6 was similarly impressive and 46,404 units
(+ 11.4%) were handed over to customers.

Altogether, 24,575 units of the BMW Z4 were sold in 2010,
an 8.0% increase on the previous year.

Small increase in proportion of diesel-powered
BMW brand cars
The proportion of diesel-powered vehicles increased
further in 2010, accounting for 44.0% of BMW brand cars
sold worldwide. The proportion is particularly high in
Europe, exceeding 90% in a number of countries, includ-
ing Spain (90.9%), Belgium and Luxembourg (91.4%),
Italy (92.9%), France (95.0%) and Portugal (97.1%). In

Sales volume of MINI vehicles by model variant
in units

Sales volume of BMW diesel automobiles

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

550

500

450

400

350

300

units

472.7

525.9

511.2

464.2 538.2

as a percentage
of total volume

39.9

41.2

42.5

43.4

44.0

Germany, the proportion of BMW brand cars powered
by diesel engines increased by 6.1 percentage points to
68.6% in 2010.

MINI sales volume well up on previous year
MINI sales in 2010 were positively influenced by revi-
sions to existing models and the market launch of the
Countryman, which was also reflected in increased sales
volumes. We sold 234,175 MINI brand cars worldwide

2010

2009

Change

Proportion of
in % MINI sales volume
2010 in %

MINI

One

Cooper

Cooper S

MINI Convertible

One

Cooper

Cooper S

MINI Clubman

One

Cooper

Cooper S

MINI Countryman

One

Cooper

Cooper S

MINI total

44,268

76,520

35,053

41,180

75,213

33,650

155,841

150,043

4,525

16,613

11,542

32,680

2,973

19,551

8,793

31,317

1,733

7,770

4,834

14,337

186

16,565

11,552

28,303

2,291

24,265

11,636

38,192

–

234,175

216,538

7.5

1.7

4.2

3.9

–

0.3

– 0.1

15.5

29.8

–19.4

– 24.4

–18.0

–

8.1

66.5

14.0

13.4

6.1

100.0

21 GROUP MANAGEMENT REPORT

MINI brand cars in 2010 – 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

(including Cooper D)

51.4 MINI One (including One D)

25.7

22.9

(+ 8.1%), a new sales record for a 12-month period. The
MINI brand again generated an extremely high-value
product mix in 2010, with 51.4% of customers opting for
the MINI Cooper, 25.7% for the MINI Cooper S and
22.9% for the MINI One. The new Countryman has per-
formed very successfully so far, with 14,337 units sold
during the two-month period since its market launch.

Rolls-Royce records strong growth
Rolls-Royce also enjoyed a highly successful year in the
luxury car segment. We handed over 2,711 Rolls-Royce
cars worldwide, easily doubling the previous year’s
sales volume figure (2009: 1,002 units). One of the
strongest contributing factors behind this outstanding
performance was the level of business transacted on
Asian markets.

MINI and Rolls-Royce brand cars left our production
network (+ 17.7%) during the year. The number of
BMW brand cars produced rose by 18.5% to 1,236,989
units. MINI production rose by 12.8% to 241,043 units.
Rolls-Royce Motor Cars increased production three-
fold to 3,221 units (2009: 918 units).

Production in full swing
The production network again displayed great flexibility
in 2010. The process of internationalisation proceeded
with plant expansions both in China and the USA. The
Group’s production sites proved their strength yet again
with 14 production start-ups successfully implemented
at a consistently high standard worldwide. At the same
time, the shift from below-capacity utilisation in the cri-
sis year 2009 back to full capacity in 2010 was mastered
seamlessly. Most manufacturing sites registered pro-
duction volume records in the fourth quarter 2010. In
2009 and 2010 we invested some euro 1.5 billion in the
German plants alone.

The BMW plant in Munich achieved the second-highest
production output in its almost 90-year history, manu-
facturing a total of 205,000 units of the BMW 3 Series
Sedan and the 3 Series Touring in the course of 2010. Pro-
duction ran at full swing, particularly during the fourth
quarter 2010, and the Munich plant set a new record with
some 56,000 units manufactured over the three-month
period. Simultaneously, the BMW Group has also in-
vested heavily in various production facilities at the Mu-
nich plant, particularly in pressing equipment and chas-
sis construction, to pave the way for the introduction of
future model generations. Production of the new BMW
four-cylinder combustion engine also commenced at
the Munich engine plant at the beginning of December
2010.

Sharp increase in automobile production
Automobile production was raised sharply in 2010 in
response to greater demand. In total, 1,481,253 BMW,

At the BMW Dingolfing plant, production of the new
BMW 5 Series Sedan started successfully in January 2010,

Sales volume of Rolls-Royce vehicles by model variant
in units

Rolls-Royce

Phantom (including Phantom Extended Wheelbase)

Coupé (including Drophead Coupé)

Ghost

Rolls-Royce total

2010

2009

351

186

2,174

2,711

376

459

167

1,002

Change
in %

– 6.6

– 59.5

–

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Vehicle production of the BMW Group by plant in 2010

in 1,000 units

Assembly plants

Graz2

Shenyang1

Goodwood
Rosslyn

Dingolfing

Spartanburg

Leipzig

Regensburg

Munich

Oxford

Dingolfing

Regensburg

Oxford

Munich

Leipzig

Spartanburg

1 Joint venture
2 Contract production

287.4

244.0

216.3

205.7

186.8

159.3

Rosslyn

Goodwood
Shenyang1
Graz (Magna Steyr) 2

Assembly plants

49.0

3.2

55.6

54.9

19.1

followed by the new BMW 5 Series Touring in June. These
two models together account for some two-thirds of the
Dingolfing plant’s output. In response to increased de-
mand, we raised the daily production volume from Octo-
ber onwards from 1,200 to 1,400 units, a new record for
a BMW Group plant. In February 2010, the foundation
stone was laid at the Dingolfing component plant for a
factory building destined to house the production of axle
drives. This new facility will come on line in early summer
2011. The project has been planned with a strong em-
phasis on sustainability. For example, energy consump-
tion in the new building will be 25% lower than the level
prescribed by the relevant energy-saving regulations.
Energy requirements for welding processes will also be
reduced by 20%. Moreover, the design of the new axle
drive assembly will comply in all respects with the prin-
ciples of the BMW Group’s “Today for Tomorrow” pro-
gramme, which takes appropriate account of the demo-
graphic aging of the population.

At the beginning of December, the 50,000th BMW Z4
since production of this vehicle was transferred to Ger-
many came off the production line at the BMW plant in
Regensburg. The building expansion and equipment
modernisation measures that began in 2009 were also
continued, involving expenditure of approximately euro
300 million. The expansion will be completed in the
course of 2011 and includes the construction and com-
missioning of new and expanded assembly finishing
facilities, new robot equipment for chassis construction
as well as process changes and modernisation in the

paint shop. Thus the foundation has been laid for re-
fitting production facilities to accommodate the manu-
facture of future models.

Mid-July saw the official start of production of SGL
Carbon Automotive Carbon Fibers GmbH, a joint ven-
ture between the BMW Group and the SGL Group
at the BMW plant in Wackersdorf. Composite layers
used in carbon-fibre reinforced plastics (CFRP) produc-
tion will be produced there for the planned Megacity
Vehicle.

Due to very high demand for the BMW X1 worldwide,
the BMW plant in Leipzig raised the production volume
for this model by more than 26% to over 475 units per
day, bringing total production up to more than 720 units
per day. As a result of the strong order-book situation,
we gave approximately 100 temporary staff at the Leipzig
plant permanent employment contracts with effect from
the beginning of 2011. Under the motto “We are building
the future”, on 5 November 2010 the go-ahead was given
to expand the Leipzig plant as the production location
for the future Megacity Vehicle. In the period up to 2013,
the BMW Group will invest some euro 400 million on
new buildings and equipment in Leipzig for the large-
scale series manufacture of this electric vehicle with a
CFRP-constructed passenger compartment.

We are currently expanding the existing CFRP production
facilities at the BMW plant in Landshut. On an area
covering approximately 7,000 square metres, up to 100
employees will process carbon-fibre layers to form CFRP
components for the Megacity Vehicle in the future.
The BMW Group can boast more than ten years of CRFP-
related process know-how and materials expertise gained
through experience at the Landshut site. The material
is presently being used to construct components for
BMW M models.

In 2010 the light-metal foundry at the Landshut plant
won the prestigious “Automotive Lean Production Award”
in the category “Overall System Excellence”. The prize
is one of the most important in the automobile industry.
The “Overall System Excellence” award pays tribute to
the focus of production systems on value created by the
production workforce across all areas and levels.

Since the beginning of 2010, plastic components have
been cleaned in the exterior production at the BMW plant
in Landshut using the new and innovative resource-
saving “snow cleaning” system. The BMW Group is one
of the first companies in the world to employ this inno-
vative system for large-surface parts such as bumpers
or side panels. Under this system, the plastic components
are no longer cleaned in a conventional washing plant

More than 385,000 engines were manufactured for
BMW and MINI at the Hams Hall engine plant in Eng-
land during the year under report, a new record.

The Rolls-Royce plant in Goodwood, England, also set
a new production record with 3,221 Rolls-Royce cars
manufactured during the year. Strong demand for the
Rolls-Royce Ghost introduced in December 2009 con-
tributed to this performance. In order to meet demand
in the future we have expanded the leather workshop at
the Goodwood plant.

23 GROUP MANAGEMENT REPORT

before the primer is applied, but with the aid of CO2
snow. The Landshut plant has been able to cut its an-
nual energy consumption substantially and reduce the
amount of water used by approximately 4,000 cubic
metres per annum.

Activities at our plant in Spartanburg, USA in 2010 were
dominated in particular by the plant expansion and pro-
duction start of the new BMW X3. Capacities were signifi-
cantly increased, enabling the production of up to 1,000
vehicles per day or up to 240,000 vehicles per year. A new
coating system was also introduced in Spartanburg at
the same time. The new technology eliminates three stages
from the coating process, saving energy and water and
thereby reducing emissions.

Production of the BMW 3 Series xDrive started in 2010
at the Rosslyn plant in South Africa. The plant also began
supplying painted car bodies to our assembly plant in
Chennai, India, in November 2010.

Production of the extended wheelbase version of the
new BMW 5 Series Sedan, developed especially for the
Chinese market, commenced at the Shenyang plant in
China in autumn 2010. Construction of the new plant
in Shenyang, where the BMW X1 will also be manufac-
tured in future, started in June. Once completed, pro-
duction capacity in China will rise to well over 150,000
units per annum.

A new production record was set at the BMW Group’s
largest engine plant in Steyr, Austria, in 2010, with more
than one million units produced for the first time in a
single year. The figure was significantly higher than the
previous annual record of 817,000 units. Series produc-
tion of the new 4-cylinder diesel engine for the MINI
also started. The Steyr plant again set standards in the
automobile sector in 2010, winning two top places in
the international “Engine of the Year Award”. The BMW
6-cylinder petrol engine with TwinPower Turbo and the
BMW 4-cylinder diesel engine with TwinPower Turbo were
both voted winners in their categories by the jury. In June
2010, the Steyr plant also won the award “Fabrik2010” as
the most efficient production company in Austria.

More than 216,000 MINIs were produced at the MINI
plant in Oxford in 2010 (all models except the MINI
Countryman). Almost 25,000 MINI Countryman vehi-
cles were manufactured by Magna Steyr in Graz during
the year under report. Preparations for series produc-
tion of the MINI Coupé and MINI Roadster also began
in Oxford in 2010. Production is due to start in 2011. In
the Initial Quality Survey (IQS) organised by J. D. Power,
more than 1,000 US customers voted the MINI brand as
best developed brand.

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Comments on BMW AG

Motorcycle sales volume increased significantly
The number of BMW and Husqvarna motorcycles sold
worldwide in 2010 rose by 9.7% to a total of 110,113 units,
bucking the general market trend. The BMW brand ac-
counted for 98,047 units (+12.3%) and the Husqvarna
brand for 12,066 units (– 7.6%). With most international
motor cycle markets actually contracting, we were able
to increase market share and are now market leaders in
the 500 cc plus segment in countries such as Germany,
Italy, Spain, the Netherlands, Belgium, Austria and South
Africa.

Sales increased in most markets
Sales of motorcycles in Europe rose by 9.6% to 74,334 units
in 2010. In Germany, we achieved a sharp sales volume
increase of 10.0% (18,260 units). The number of motor-
cycles handed over to customers in Italy went up by 3.6%
to 16,959 units. Increases were also registered in 2010 in
Spain (7,215 units; + 4.8%), France (9,744 units; +18.0%)
and Great Britain (6,801 units; +11.1%). In contrast, mo-
torcycles sales volume in the USA fell by 3.6% to 11,154
units. 3,392 motorcycles were sold to customers in Japan
(+ 5.5%). In December we expanded our sales network
to include India.

Expansion of the model range continued
In terms of the BMW brand, the R 1200 GS and the
R 1200 GS Adventure were technically upgraded and the
revised R 1200 RT was brought onto the markets in 2010.
At Husqvarna, we launched a total of eleven new models
and model variants as well as two model revisions.

To mark the 30th anniversary, limited editions of the
R 1200 GS, R 1200 GS Adventure, F 800 GS and F 650 GS
Enduro models featuring special paintwork and high-
quality equipment were launched during the early part of
the summer. At the beginning of October we presented
the new K 1600 GT and K 1600 GTL models to the public.

BMW Group Sales volume of motorcycles

in 1,000 units

140

120

100

BMW

100.1

102.5

101.7

Husqvarna

13.5

87.3

13.1

98.0

12.1

BMW Group – key motorcycle markets 2010

as a percentage of sales volume

Germany

Italy

USA

Other

United Kingdom

Spain

France

Germany

Italy

USA

France

16.6

15.4

10.1

8.8

Spain

United Kingdom

Other

6.6

6.2

36.3

This is the first time in BMW’s history that we have engi-
neered motorcycles fitted with six-cylinder in-line engines.
At the beginning of November we also presented the
new G 650 GS, R 1200 R and R 1200 R Classic models as
well as the BMW Concept C. The G 650 GS is an ideal
entry-level motorcycle. Both the sporty, modern roadster
R 1200 R and the timeless motorcycle design of the
R 1200 R Classic have one thing in common – vastly im-
proved riding dynamics. The BMW Concept C is the
outcome of a near-production study aimed at the large-
sized scooters segment.

Motorcycle production increased
Motorcycle production was brought into line with signifi-
cantly higher demand and a total of 112,271 BMW and
Husqvarna brand motorcycles was produced. 99,236
BMW brand motorcycles came off the production lines
during 2010 (+ 20.1%), including 2,160 construction kits
for the assembly plant in Manaus, Brazil, which started
operations at the end of 2009. The number of Husqvarna
brand motorcycles produced was increased by 22.8% to
13,035 units.

In November the BMW Group won the European Supply
Chain Excellence Award 2010 for the best value-added
chain. This award pays tribute to innovative solutions
in supply chain management which contribute to sub-
stantially increased competitiveness and which are
groundbreaking for other entities.

25 GROUP MANAGEMENT REPORT

Successful financial year for Financial Services segment
With its range of attractive products, the Financial Services
segment also benefited from the worldwide economic
recovery and grew profitably in 2010. The business vol-
ume in balance sheet terms stood at euro 66,233 million
at the end of the reporting period, 8.2% higher than one
year earlier. 3,190,353 credit financing and lease con-
tracts were in place with dealers and retail customers at
31 December 2010 (+ 3.4%).

The Financial Services segment is represented in more
than 50 countries, serves as a strong, reliable partner for
the dealer organisation and offers customers a coordi-
nated range of products. The segment comprises the fol-
lowing six lines of business: lease and credit financing
of BMW Group vehicles for retail customers, multi-brand
financing, dealer financing, lease and credit financing for
fleet customers, insurance and banking.

Credit financing and the lease of BMW, MINI and Rolls-
Royce brand cars and motorcycles to retail customers is
the largest line of business. The multi-brand financing
line of business involves the financing of other brands
alongside BMW Group brands. The Financial Services
segment also supports the dealer organisation by provid-
ing financing for dealership vehicle inventories, real
estate and equipment. Fleet business involves managing
vehicle fleets, comprising BMW, MINI and Rolls-Royce
brand cars as well as other brands, for major customers.
Operating under the brand name “Alphabet”, vehicle
financing and a range of other services are also provided
to customers, including full fleet management. As a sup-
plement to lease and financing contracts, the segment
also offers its customers selected insurance and banking
services.

New retail customer business performing strongly
Finance and lease business with retail customers was
further expanded in 2010. The number of new contracts

signed rose sharply (+6.6%) to 1,083,154 units. Lease busi-
ness grew by 3.2% and credit financing increased by 8.1%
compared to the previous year. Leasing accounted for
28.8% of new business, credit financing for 71.2%. The
proportion of new BMW Group vehicles leased or financed
by the Financial Services segment was 48.2%, marginally
lower (0.8 percentage points) than one year earlier.

In the used car financing line of business, a total of
317,742 contracts were signed during the year under
report. The number of new contracts for BMW and MINI
was therefore 1.5% up on the previous year.

The total volume of all new credit and leasing contracts
concluded with retail customers amounted to euro
28,045 million, an increase of 13.5%.

The growth in new retail customer business also had an
impact on the overall portfolio. In total, 2,935,541 con-
tracts were in place with retail customers at 31 December
2010 (+ 3.3%). As in the past, this growth was achieved
across all regions. For example, the contract portfolio
for the European markets increased by 2.2% while that
for the Asia /Oceania /Africa region grew by 3.0%. The
sharpest increase was again recorded in the Americas re-
gion (+ 5.2%).

Top places won for quality of service
The BMW Group’s Financial Services segment again won
numerous international awards in 2010. In the annual
survey on quality of service (Dealer Financing Satisfac-
tion StudySM) carried out by the well-known market re-
search institute, J. D. Power and Associates, our financial
services operations in the USA came first for the seventh
time in succession in the category “Retail Customer Leas-
ing”. First places were also won in the categories “Dealer
Financing” as well as “Retail Customer Credit Business –
Multi-brand Financing”. In Canada, the Financial Services
segment took first place amongst manufacturer-related

Contract portfolio of Financial Services segment

in 1,000 units

BMW Group new vehicles financed by
Financial Services segment

3,200

3,000

2,800

2,600

2,400

2,200

2,000

in %

2,271

2,630

3,032

3,086 3,190

Financing

Leasing

17.2

25.2

17.4

27.2

20.9

27.6

24.7

24.3

24.1

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Contract portfolio retail customer financing of
BMW Group Financial Services 2010

as a percentage by region

Asia / Oceania / Africa

Americas

Europe

Americas

52.8

34.5

Asia / Oceania / Africa

12.7

financial service providers in the category “Retail Cus-
tomer Credit Business”. These awards are the visible result
of our rigorous focus on providing our customers with
the best possible service.

Expansion of BMW Bank continued in line with plan
By expanding the BMW Bank into a credit institution with
operations across Europe, the Financial Services seg-
ment is increasing the flexibility with which it can manage
liquidity. In conjunction with the BMW Group EU pass-
port project, the previously legally separate segment en-
tity in Spain was transformed into a branch of the BMW
Bank in 2009. During the year under report, integration
of the Group’s Italian financial services entity was suc-
cessfully completed with the creation of a banking group.
The BMW Bank had previously taken the EU passport
route to set up a branch in Portugal. Further entities will
be integrated in the BMW Bank in coming years.

Operations started in growth markets
Regional expansion in the BMW Group’s principal growth
markets was continued during the year under report. In
September the Chinese Banking Regulatory Commis-
sion granted a licence to the BMW Group, entitling a
joint venture to commence business operations in China.
Operational activities commenced in India in October.
Cooperation arrangements were also put in place with lo-
cal financial services providers in selected markets.

managed at the end of the reporting period, 7.7% fewer
than one year earlier. The number of financing contracts
was slightly up on the previous year. The number of
service contracts without a financing element was strate-
gically reduced.

By contrast, targeted measures were undertaken to grow
multi-brand financing business which consequently
surged by 45.4% with a total of 122,840 new contracts.
Europe accounted for the largest proportion of these ad-
ditions. This line of business was also expanded to in-
clude the Russian Federation in 2010. Following this move,
credit financing, leasing and other products are now mar-
keted to retail customers via dealerships in 22 markets
under the brand name “Alphera”.

Increase in dealer financing
The Financial Services segment is a strong and reliable
partner, providing a well-designed range of financing
products to the dealer organisation. Dealer financing ac-
counted for a business volume of euro 10,154 million
at 31 December 2010, 7.7% up on the previous year.

Deposit business expanded
One aspect of the expansion of the BMW Bank is that
increased deposit volumes will serve as an additional re-
financing source for the Financial Services segment. The
volume of deposits worldwide rose by 7.6% during the
year under report to stand at euro 10,688 million. The
number of securities custodian accounts under manage-
ment decreased to 24,471 at the end of the reporting
period (– 9.4%). Credit card business was slightly down
by 0.7% on the previous year to 293,266 contracts.

Sharp rise in insurance business
As a supplement to our credit financing and leasing
products, we also offer a range of car, residual liability,
warranty and other vehicle-related insurance policies to
customers in more than 30 markets. Demand for insur-
ance products remains high, reflected in an 18.1% rise in
the number of new contracts signed (689,928 contracts).
At 31 December 2010 a total of 1,571,708 insurance con-
tracts were in place (+ 12.8%). This growth was partially
a result of the new strategic direction pursued for this
line of business in the USA. Further growth opportunities
are being opened up, particularly in the emerging mar-
kets of Asia and in the form of cooperation arrangements
with Allianz SE.

Fleet business volumes slightly down, dynamic growth
for multi-brand financing
The BMW Group operates its international multi-brand
fleet business under the brand name “Alphabet”. In total,
a portfolio of 301,284 fleet vehicle contracts were being

Risk situation significantly eased
The improved economic situation on the markets also
helped to ease the risk situation significantly. Risk-mitigat-
ing measures taken in the area of receivables manage-

27 GROUP MANAGEMENT REPORT

Development of credit loss ratio

in %

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.41

0.46

0.59

0.84

0.67

ment, a more restrictive policy applied to the purchase of
receivables and higher collateral levels resulted in the
loss ratio incurred on the segment’s total credit portfolio
being reduced to 0.67%, an improvement of 17 basis
points against the previous year (2009: 0.84%).

The interest rate risk is managed using a risk-return ap-
proach and measured using Value at Risk (VaR) tech-
niques. At a 99% confidence level for a holding period
of ten days, the aggregate VaR for all financial services
entities amounted to euro 58.5 million.

Size of workforce slightly reduced
The size of the BMW Group workforce decreased slightly
in 2010 by a net total of 777 persons (– 0.8%) to 95,453
employees at 31 December 2010. The primary reasons
were natural fluctuation, pre-retirement part-time work-
ing arrangements and voluntary employment contract
termination agreements. As part of the process of build-
ing up and retaining expertise within the Group, ensuring
access to new talent and strengthening long-term com-
petitiveness, the BMW Group recruited more than
1,300 employees worldwide in 2010 as well as taking on
more than 1,100 new apprentices.

Temporary employment contracts as basis for flexibility
Against a background of rapidly changing business con-
ditions, the BMW Group employs a range of measures
to ensure flexibility, including cross-site deployment of
staff, time accounts, flexible working time modules and
temporary employment contracts. The employment of
temporary staff is a particularly effective way of raising
flexibility and handling short- and medium-term work-
load fluctuations. The BMW Group has made a voluntary
commitment to base the remuneration of temporary
workers on the more generous tariff agreements that
apply to the BMW Group rather than on those otherwise
relevant for the temporary employment sector.

Number of apprenticeships remains at high level
The BMW Group offers a wide range of vocational training
which provides the basis for covering future staffing
requirements at our locations, both in Germany and
abroad. At the beginning of the new training year, a total
of 1,124 young people, 1,080 of them in Germany, com-
menced their working life in apprenticeships with the
BMW Group. Trainees are offered a wide range of oppor-
tunities. The conventional training route to becoming
a skilled worker can also be combined with qualifying for
subsequent entry to university.

In particular, promising graduates with middle school
qualifications (i.e. Realschule in Germany) have the
opportunity to study for a Bachelor’s degree under the
auspices of the company after completing their appren-
ticeships. The best performers receive scholarships and
are able to take part in additional training courses as part
of our “SpeedUp” training programme. This arrange-
ment also helps us cover our long-term need for qualified
engineers.

Our social responsibilities include a commitment to
offering opportunities to under-achieving school leavers.
The BMW Group is therefore creating more places for
the so-called starter qualification, which aims to prepare

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BMW Group Apprentices at 31 December

Proportion of non-tariff female employees at BMW AG

4,500

4,000

3,500

3,000

2,500

2,000

in %

9.0

8.5

8.0

7.5

7.0

6.5

4,359

4,281

4,102

3,915 3,798

7.8

8.1

8.4

8.8

school leavers for subsequent entry into apprenticeships.
This strategy has proved highly successful – approxi-
mately 64% of these young people go on to receive regu-
lar training contracts.

The BMW Group is also closely involved with JOBLINGE,
an initiative aimed at combating youth unemployment
in Germany. In a six-month programme, disadvantaged
young people are given personal and practical support
to enable them to take up training or work. In addition to
helping the scheme with financial and material support, so
far the BMW Group has provided 19 practical placements,
two starter qualification positions and five apprentice-
ships in Munich and Berlin. The varied range of vocational
training courses helps fulfil the BMW Group’s future re-
quirements for specialist staff both within Germany and
abroad.

The range of further training activities available to all
groups of employees has therefore been expanded con-
siderably. New programmes are constantly being added
to the proven and tested range of further training on of-
fer to those who have already completed their vocational
training. As well as preparing them for carrying out inter-
esting tasks, these programmes also help to improve em-
ployees’ personal skills.

Employee training as an investment for the future
Building up and maintaining skills expertise within the
Group’s workforce are key aspects of strategic corporate
governance. With this aim in mind, the BMW Group
increased expenditure on basic and further training by
approximately one-quarter to euro 179 million (+ 25.2%)
in 2010.

Range of basic and further training expanded
Basic and further training programmes are of major im-
portance to the BMW Group as they provide the key
skills essential for meeting future competitive challenges.

As well as training along traditional lines, we also offer
an extended range of educational measures aimed at
meeting the foreseeable need for qualified staff. In this
context, the BMW Group is working closely with a
number of higher education establishments. Courses

BMW Group Employees

Automobiles

Motorcycles

Financial Services

Other

BMW Group

31.12. 2010

31.12. 2009

88,468

2,814

4,053

118

95,453

89,457

2,796

3,882

96,230

Change
in %

–1.1

0.6

4.4

24.2

– 0.8

29 GROUP MANAGEMENT REPORT

Employee attrition ratio at BMW AG1
as a percentage of workforce

Student” programme, designed to establish contact with
interested students.

6.0

5.0

4.0

3.0

2.0

1.0

2.68

2.66

5.85 2 4.59 2 2.74

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 (voluntary employment contract termination agreements)

combining work with study have been designed both for
graduate employees and those with technical qualifica-
tions. Further opportunities aimed at other areas are also
currently being prepared.

Effective measures to counter the shortage of
skilled workers
The BMW Group has been working for many years now
on ways to counter the threat of a shortage of skilled
workers. Two issues play a particularly important role in
a forward-looking strategy for recruiting new staff.

Firstly, we are determined to remain one of the most at-
tractive employers in the world. Our excellent reputation
quite clearly facilitates the recruitment of suitably qualified
employees. Our success in this endeavour is confirmed
by the excellent results we achieve in international sur-
veys, such as the Top Global 50 Study conducted by Uni-
versum. The BMW Group was once again found to be the
most attractive employer in Germany as well as the most
highly rated automobile company.

Secondly, existing recruitment measures have been
enhanced and new programmes initiated, including new
programmes for management trainees (BMW Group
Graduate Programme) and school leavers (SpeedUp – the
BMW Bachelor programme) during the year under re-
port. The new doctorate programme, ProMotion, was
also developed and is due to commence in 2011 with
roughly 200 participants. The programme encourages
highly talented young people to work on innovative
projects, either in close conjunction with universities or
within the company. Other measures complement the
range of programmes; one example of this is the “Formula

Workforce diversity as key factor for future
We believe it is essential to aim for social diversity within
the workforce to ensure future competitiveness. With
this in mind, the BMW Group’s Diversity Concept has an
important part to play in the company’s new strategic
direction. The concept of diversity is not just a matter of
providing opportunities for women. Only when we have
successfully combined the following three factors – an
international workforce, a mixture of ages and an ade-
quate representation of women – will we have access to
the knowledge and skills needed to service existing sales
markets and engage in new ones. Achieving this aim is
seen as a prerequisite for a strong business both now and
in the future.

We have identified gender, cultural background and age
as key diversity criteria in the face of challenges such as
demographic change and gaining access to new sales
markets. These criteria will be applied in future through-
out the BMW Group to the extent that local conditions
permit.

Since we consider the aptitude of an employee as the
paramount consideration, we are not aiming to have a
strict quota for female employees, but rather to recruit
the best candidate for the business in each individual
case.

Visible progress has been achieved in the past in terms of
the proportion of female employees. Between 2005 and
2010 the number of female non-tariff employees rose
from 7.4% to 8.8%. The proportion of women in manage-
ment positions worldwide in the BMW Group exceeds
10%. With regard to endeavours to increase the propor-
tion of women working for the BMW Group, particularly
in programmes offered for new recruits, it is important
to bear in mind that women are extremely poorly repre-
sented on engineering courses at universities and in
technical fields.

Managing demography – Today for Tomorrow
As a result of demographic change, the future performance
of the BMW Group will depend on a workforce with a
much higher average age than at present. In order to
remain ahead of competitors, the BMW Group must
strengthen the health and skills of its workforce and
adapt the working environment to accommodate the
changing age structure.

In order to achieve this, we have developed an integrated
operational concept called Health Management 2020.
The aim is to create a concept which brings together the
main issues relevant for promoting the general health
of the workforce. Our integrated health management
programme is therefore an important aspect of sustain-
able governance within the BMW Group.

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The “Today for Tomorrow” project is one of the ways the
situation is being addressed. The project aims at carrying
out preventive measures to maintain a stable and pro-
ductive workforce.

Designing competitive remuneration systems
Maintaining a competitive level of personnel expense
plays a major role in the success of the BMW Group. In
addition to focusing on cost, the aim is also to increase
efficiency at all levels of the business. The high degree of
motivation amongst employees and the positive corpo-
rate approach towards staff are maintained and under-
lined by a combination of rewards determined individu-
ally on the basis of performance and success. Flexible
and individually designed working time models repre-
sent a further important aspect. Remuneration, working
time rules and other benefits are reviewed and adjusted
as the need arises in close cooperation with employee
representatives.

Competitive advantages through excellent leadership
The BMW Group’s leading market position is largely
attributable to its workforce. In times of great complexity
and rapid change, outstanding leadership is of the high-
est importance in achieving the ambitious targets set
out in our Strategy Number ONE. Excellence in leader-
ship relies on a common understanding of the concept
of leadership. In 2010 we endeavoured to entrench this
common understanding at all levels of management.

Open dialogue between managers and staff is encouraged
and seen as an important aspect of our success. This is
exemplified by the E Change LIFE project, in which man-
agers design and organise workshops for all employees
engaged in development, encouraging managers and staff
to tackle the change process together.

Health management
The performance of the workforce depends on its skill,
motivation and, above all, its health. This fact will become
increasingly relevant in future, as the average working
life will have to be extended to allow for the anticipated
shortage of skilled workers as well as demographic
change. The situation will be exacerbated by increasing
demands being placed on the workforce in an ever-chang-
ing working environment.

We endeavour to maintain and promote the health of
our employees by encouraging health awareness and a
healthy lifestyle. We also attach great importance to ful-
filling health and safety requirements in the workplace.

31 GROUP MANAGEMENT REPORT

Implementing sustainable management throughout
the Group
Following on from 2009, when the BMW Group’s sustain-
ability strategy underwent further comprehensive devel-
opment, a number of measures and assessment criteria,
derived from groupwide strategic plans, were established
in 2010 for the various areas of management responsibil-
ity. Driving these measures was the objective of remain-
ing the most sustainable car manufacturer in the world.
This was achieved again in 2010 and confirmed by an in-
dependent source: the BMW Group remains the auto-
mobile sector leader for the sixth consecutive year in the
Dow Jones Sustainability Index family.

Our primary objective is to instil the concept of sustaina-
bility throughout the entire value-added chain and its
underlying processes. We will therefore continue to de-
velop our innovative drive train technologies and imple-
ment concepts for sustainable mobility in metropolitan
areas. At production level, we will continue to cut down
on the volume of resources used, reduce the impact that
production processes have on the environment and en-
deavour to include ecological and social requirements
in the supply chain. Furthermore, we wish to remain an
attractive employer for our staff in the future. As an inte-
gral part of society, we will continue to be involved in
finding solutions for social challenges.

Sustainable management based on a “balanced score-
card” is a corporate objective which is now integrated in
processes throughout the BMW Group. Every project is
now required to be assessed in terms of this objective.
This involves measuring the consumption of resources,
emissions and also the social and socio-political impacts.
Key elements in our sustainability management are the
continual and systematic analysis of external develop-
ments, ongoing dialogue with our stakeholders and the
consideration of both social and ecological aspects when
making decisions.

A sustainability structure has been established to en-
sure that our sustainability efforts are continuously man-
aged and further developed. At the highest level in the
Group is the Sustainability Board which makes all deci-
sions of strategic relevance. All members of the Board of
Management are automatically members of this board.
The Sustainability Circle, consisting of representatives
from the various divisions and headed by the Group
Officer for Sustainability and Environmental Protection,
is responsible for implementing sustainability activities
across the Group.

Clear targets for clean production
It is our intention to reduce the environmental impact of
production to the greatest extent possible. Items meas-
ured in this context include energy and water consump-
tion, process wastewater, solvent emissions and waste
for disposal – expressed in terms of “waste per vehicle
produced”. We also measure carbon dioxide emissions
caused by the consumption of energy. The target is, by
2012, to reduce resource consumption and emissions
levels per vehicle produced by 30% compared with 2006.
Using an environmental efficiency figure as an indicator,
changes in resource consumption and emissions are
analysed across all items being measured. The environ-
mental efficiency figure for 2010 was improved by 6 per-
centage points during the period under report. The im-
provement since 2006 is 26%, surpassing the original
target of 20% set for 2010.

Energy consumption and emissions reduced
Total energy consumption in 2010 was reduced by
380,000 MWh and energy efficiency improved at the
same time. Energy consumed per vehicle produced in
2010 was 2.75 MWh (– 4.8%), in part helped by im-
proved capacity utilisation of equipment. As a result of
the lower amount of energy used in production, CO2
emissions were reduced by 74,700 tons. At 0.86 tons of
CO2 per vehicle produced, this was the equivalent of a
5.5% cut in emissions. Rigorous implementation of
savings measures is bringing us ever closer to our objec-
tive of improving energy efficiency by 30% between
2006 and 2012, in line with schedule.

Significant amounts of energy were saved through the
implementation of the “best practice” approach for inno-
vative production technologies. One example of this is
the new Integrated Paint Process (IPP) technology which
was initially developed at the Oxford plant and intro-
duced at the Spartanburg plant in 2010. The technology
ensures considerably lower environmental pollution and
higher productivity at the same time. After full conver-
sion, energy consumption in the paint shop will be re-
duced by 30%, CO2 emissions by 43% and solvent emis-
sions (VOC) by 7%. IPP has also reduced the processing
time per vehicle and will ultimately facilitate a produc-
tivity improvement of approximately 40%.

The aim is for each production site in the BMW Group
to be powered by the most ecologically and economically
sustainable energy resource available. The US plant in
Spartanburg, for example, covers around 50% of its energy
needs using gas recovered from a nearby landfill site and

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powers its fleet of forklift trucks by hydrogen. A solar
thermal plant installed at the BMW plant in Rosslyn
heats the water needed for the paint shop. At the Research
and Innovation Centre (FIZ) in Munich, the low tempera-
ture of the groundwater is used for air conditioning pur-
poses. Furthermore, at certain production sites the BMW
Group operates its own combined heat and power plants
that make particularly efficient use of resources.

Less water, less wastewater
Despite higher production volumes, the BMW Group has
reduced its water consumption by 370,000 m3 compared
with the previous year. 2.31 m3 of water were consumed
per vehicle produced (–9.8%). The total amount of
process water used was reduced by 60,000 m3 (–6.5%).
New technologies have contributed towards the improve-
ment, such as “snow cleaning”, an innovative process
developed at the BMW Landshut plant, in which plastic
parts such as bumpers and wing mirrors are no longer
cleaned with water and detergents during production
but with snow made from frozen carbon dioxide. The CO2
is completely recovered and reused.

Waste and solvent emissions further reduced
The amount of non-recyclable production waste was de-
creased by a further 5.1% in 2010, as a result of which
only 10.09 kg of non-recyclable waste accumulated per
vehicle produced (2009: 10.63 kg). After successfully de-
creasing the amount by 28% the previous year, we have
meanwhile developed better ways of recycling waste
and using materials more efficiently.

reduction was partly achieved through the use of low-
solvent and solvent-free rinsing and cleaning processes
in the painting pre-treatment process. Optimised colour-
change cycles in the paint shop further reduced the
number of cleaning processes required. Solvent emis-
sions have been reduced by more than 30% since 2006,
so that we have already reached the target set for 2012.

Clean production in Shenyang
We are currently building a further plant in Shenyang,
China. Numerous ecological and social criteria were
taken into account when selecting the site of the new
plant. At the planning stage the location of the plant on
high ground was also chosen to compensate for any
future climatic changes and thus protect it from possible
flooding. A further criterion when deciding for the lo-
cation was the basic availability of renewable energy
sources. The paint shop will be the most sustainable fa-
cility in the entire BMW Group production network.

Eco-friendly transportation solutions
We also reduced the environmental impact of our freight
transportation in 2010 by optimising transportation net-
works. Regional shifts in sales volume resulted in changes
in the proportion of goods transported by each mode. At
0.5%, the percentage of goods transported by air freight
during the reporting year again remained very low (2009:
0.2%). Growth in China caused an increase in the per-
centage of sea freight to 79.9% (2009: 78.0%). The pro-
portion of goods transported by rail rose slightly to 6.3%
in 2010 (2009: 6.0%). Conversely, the percentage trans-
ported by road fell to 13.3% (2009: 15.8%).

The BMW Group was able to reduce its solvent emissions
(VOC) by around 10% in 2010, bringing emissions per
vehicle produced down to 1.60 kg (2009: 1.77 kg). This

Sales volume performance is also reflected in the distri-
bution of transportation methods for our new cars: in

Energy consumed per vehicle produced

in MWh / vehicle

CO2 emissions per vehicle produced
in t / vehicle

3.40

3.20

3.00

2.80

2.60

2.40

1.00

0.95

0.90

0.85

0.80

0.75

06 *

3.28

2.78

2.80

2.89

2.75

0.96

0.84

0.82

0.91

0.86

* Value extrapolated for 17 locations. Actual reporting covered ten locations.

33 GROUP MANAGEMENT REPORT

total, 49.5% of all new cars left the Group’s plants by rail,
2.5 percentage points up on the previous year (2009:
47.0%).

Sustainability of value-added chains
Our suppliers, too, are required to maintain the high eco-
logical and social standards set by the BMW Group. For
this reason we have drawn up more specific sustainability
criteria for the selection of suppliers and intensified su-
pervision of existing suppliers. The major focus was on
the evaluation and supervision of production locations of
our suppliers worldwide.

Consistent CO2 reduction with Efficient Dynamics
At an early stage the BMW Group adopted a development
strategy that is now generating tangible benefits for
climate, resources and customers alike. At the centre of
these endeavours is our Efficient Dynamics technology
package. Since March 2007 we have been introducing
consumption- and emissions-reducing technologies step
by step in all of our models as standard. Their positive
impact is now coming to fruition with every car sold and
not just for special models. The Efficient Dynamics tech-
nologies comprise:
– optimised engine and drive train engineering (e.g.
petrol engines featuring High Precision Injection,
TwinPower Turbo technology and particularly efficient
diesel engines)

– lightweight construction and optimised aerodynamics
(e.g. through the intelligent use of aluminium and
high-tensile steels)

– intelligent energy management (e.g. through Brake

Energy Regeneration and the Auto Start Stop function)

Our main guiding principle in all our endeavours is:
greater dynamism, less fuel consumption and fewer emis-
sions. These developments have enabled us to reduce the
CO2 emissions of our newly sold cars in Europe (EU-15)
by 30% between 1995 and 2010, thereby more than
fulfilling the commitment given by the European auto-
motive industry to reduce average CO2 emissions for
new fleets of cars by 25% between 1995 and 2008 (ACEA
self-commitment).

In 2010 our fleet achieved an average fuel consumption
of 5.4 litres of diesel /100 km, 6.6 litres of petrol /100 km
and average emissions of 148 g / km of CO2 in Europe
(EU-27). We also lead the field among German manufac-
turers with CO2 emissions of approximately 154 g / km.
These figures have confirmed our leading role in the
premium segment in Germany. Our progress in this field
is also receiving recognition from customers. Efficient
Dynamics have given us a competitive edge, particularly
in markets where a CO2-based vehicle tax is in place.
The running cost of cars fitted with Efficient Dynamics is
significantly lower than that of our competitors.

We have set ourselves a clear goal for the coming years:
reduction by at least a further 25% in the carbon dioxide
emissions of our cars during the period from 2008 to
2020. We are proceeding in a three-step strategy in or-
der to achieve this goal and move towards sustainable
mobility:
1. We will continue unswervingly to develop our Efficient

Dynamics technology package.

2. We will increasingly exploit the potential of electrify-
ing the drive train to reduce fuel consumption and
include these developments in a broad range of
models.

Water consumption1 per vehicle produced
in m3 / vehicle

Process wastewater per vehicle produced
in m3 / vehicle

3.20

3.00

2.80

2.60

2.40

2.20

0.90

0.80

0.70

0.60

0.50

0.40

06 2

06 *

2.99

2.61

2.56

2.31

0.75

0.64

0.62

0.58

1 The indicators for water consumption refer to the production sites of the BMW Group.

* Value extrapolated for 17 locations. Actual reporting covered ten locations.

The water consumption includes the process water input for the production as well as
the general water consumption e.g. for sanitation facilities.

2 Value extrapolated for 17 locations. Actual reporting covered ten locations.

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

2.50

2.25

2.00

1.75

1.50

16.17

14.84

10.63 10.09

06 *

2.30

2.36

1.96

1.77

1.60

* Value extrapolated for 17 locations. Actual reporting covered ten locations.

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

and has been reported since then.

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3. Our long-term aim is to produce emissions-free mobil-
ity with vehicles powered by electricity and hydrogen.

Building up expertise for the mobility of the future
Back in 2007 we initiated the forward-looking “project i”
for the purpose of developing alternative concepts for
individual mobility. By that we do not just mean the de-
velopment of alternative drive systems, but also the use
of completely new materials such as composites. In
“project i” we do not merely work 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.

The first publicly visible result of “project i” was the
largest electromobility field trial to date: around 600 fully
electric MINI cars were handed over to private and busi-
ness customers in the USA, Great Britain, Germany,
France, Japan and China. After well over 10 million kilo-
metres of electromobility in daily use, we have gained a
great deal of useful information that can be directly used
to help develop the first fully electric production car for
the BMW Group.

Tomorrow’s sustainable mobility produced
in Leipzig
Under the working name of “Megacity Vehicle” (MCV)
we are currently developing the first large-scale series-
produced vehicle in the car industry exclusively designed
to meet the requirements of future electromobility in
metropolitan areas. Construction of the plant was started
in Leipzig in November 2010; the MCV will be launched
on the market in 2013.

The BMW Group is placing great emphasis on sustain-
ability throughout the entire value-added chain of the
Megacity Vehicle. This approach involves far more than
just the powering of an emissions-free vehicle. As far as
production is concerned, the BMW Group has again set
its sights very high in terms of environmental protection
and the preservation of natural resources. The amount
of energy used for assembly at the Leipzig plant is to be
reduced by 50% and the water consumption by 70%
per vehicle. The aim is to cover energy requirements for
MCV production completely from regenerative sources.

The BMW ActiveE (based on the BMW 1 Series Coupé)
is scheduled to roll off the production lines in Leipzig in
2011. Following on from the MINI E, this vehicle repre-
sents the second step made by the BMW Group towards
the series production of the emissions-free electric car.
The experience gained with the MINI E and the BMW
ActiveE will be incorporated directly into the series de-
velopment of the Megacity Vehicle. By 2011, Leipzig will
therefore be a centre of expertise for the production of
electric cars within the BMW Group network.

Social commitment as an integral part of
corporate philosophy
Social commitment has long been an integral part of the
corporate philosophy and sustainability strategy of the
BMW Group. True to this principle, the BMW Group is
involved worldwide with projects such as the Award for
Intercultural Engagement aimed at achieving a better
understanding between different nations, ethnic groups,
religions and cultures. The main focus is on long-term
partnerships and activities that create a long-term basis

35 GROUP MANAGEMENT REPORT

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 self-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

70.0

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

for constructive coexistence in a modern society through
the spirit of innovation and foresight.

The BMW Group has been engaged in numerous cultural
projects worldwide for 40 years. From the biggest street
festival in Mexico City to “State Opera for Everyone” in
Berlin, the BMW Group always acts in the long-term in-
terest and with sustainability in mind. As a cooperation
partner in the world of culture, the BMW Group leaves
both the creative freedom and the curatorial decision-
making completely up to the cultural institutions them-
selves. The BMW Guggenheim Lab was initiated in 2010.
In numerous European, American and Asian cities this
project provides temporary, multidisciplinary platforms
that invite international dialogue aimed at meeting the
challenges of the future.

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Research and development expenditure increased
The BMW Group employed over 9,000 people in its
research and innovation network at eleven sites in five
countries during the year under report. Expenditure
for research and development in 2010 rose by 13.3%
to euro 2,773 million. The research and development ra-
tio of 4.6% was 0.2 percentage points lower than in the
previous year. Further information on research and
development activities is provided in the notes to the
Group Financial Statements (Note 8).

Innovative and sustainable
The continuous search for efficient solutions to reduce
the emissions levels of our fleet is an essential driving
force for our research and development activities. For
this reason, we are committed to achieving maximum
improvements with our Efficient Dynamics package of
measures.

Above all, a switch to electrically powered cars will have
a positive impact on the carbon footprint as soon as the
energy used is also generated on a renewable basis. New
drive concepts based on hybrid and electric power, and
in the long term hydrogen power, will become increas-
ingly important.

We are currently developing a completely new concept
for sustainable mobility in urban areas. The electrically
powered Megacity Vehicle (MCV) is equipped with a
newly developed drive system as well as a revolutionary
vehicle architecture that combines consistent lightweight
construction, optimal space functionality and the highest
standard of safety. The MCV will be launched as a series-
manufactured vehicle in the premium segment in 2013.

Focus on benefits for the customer
One of the key aspects of our strong competitive position
is our ability to offer customers recognisable added value
with innovative technologies, including, first and fore-
most, our innovative Efficient Dynamics package of meas-
ures. Efficient Dynamics, which combines all of the effi-
ciency measures we have achieved in engine technology,
energy management, lightweight construction and aero-
dynamics, has enabled us to win pole position in the pre-
mium segment in recent years in terms of fuel economy.

Connected Drive is the second core theme in the develop-
ment of innovative technologies and incorporates all
aspects of information flows relating to the vehicle. Its
range of features not only includes the services BMW
Assist and BMW Online, but numerous other systems
that provide additional convenience, information and

entertainment as well as safety through interconnected-
ness. The Lane Change Warning and Lane Departure
Warning systems, speed limit information, BMW Night
Vision with pedestrian recognition, reversing camera
including Top View and the parking assistant are some of
the features that are offered. We also optimise the inte-
gration of innovative end devices, such as smart phones
and music players. Alongside access to the Internet,
Connected Drive also enables the display of e-mails
received by smart phone as well as the use of Internet-
based services for navigation and infotainment.

In the new BMW 6 Series Convertible, available from
spring 2011, the new generation of Head-Up Display will
be a feature for the first time. The system projects key
information onto the windscreen directly in the driver’s
field of vision. The presentation of the three-dimension-
ally displayed graphics covers the entire colour spectrum,
enabling traffic signs to be realistically displayed.

Energy and environmental technology test centre
opened
In May 2010 we opened the new Energy and Environ-
mental Test Centre (EVZ) in Munich. Right from the
planning stage the centre was designed to operate in an
ecologically sustainable way. In this completely new
simulation centre, innovations are tested in a wide range
of varying climatic conditions prior to their use in se-
ries production. The new facility enables us to recreate
realistic simulations of key environmental conditions
such as temperature fluctuations, air humidity, air pres-
sure, precipitation and wind, thereby avoiding costly and
elaborate testing in countries with hot and cold climates.
The strategy reduces both time and costs for transpor-
tation and also means that fewer prototypes can be used
for a greater number of trials. Furthermore, the concen-
tration of the various test series under one roof regard-
less of seasonal weather conditions makes test results far
more quickly available.

Taking opportunities together
In 2010 the BMW Group and the PSA Group decided to
extend the long-standing cooperation arrangements
already in place for the development and production of
hybrid systems. The BMW Group and PSA Peugeot
Citroën additionally signed an agreement to establish a
joint venture in February 2011. The first priority of the
initiative entered into by the two companies is to de-
velop standardised components for use in the electrifica-
tion of the respective vehicle fleets. Joint research, de-
velopment, production and component procurement will
mean significant cost benefits for both groups.

engines were the V8 engine of the BMW M3, the in-line
six-cylinder petrol engine featuring BMW TwinPower
Turbo direct fuel injection and VALVETRONIC used in
the BMW 1 Series, 3 Series and 5 Series, the four-cylinder
diesel featuring the BMW TwinPower Turbo that powers
the BMW X1 xDrive23d and the BMW 123d and the four-
cylinder twin-scroll turbo engine of the MINI Cooper S.

In the ADAC EcoTest the BMW 320d EfficientDynamics
Edition achieved the highest possible evaluation of five
stars and thus the best ever recorded result achieved by a
conventionally powered vehicle. With 92 out of a possi-
ble 100 points, the four-door sedan has proven to be the
most economical diesel-powered vehicle in the medium
class. In the same test, the BMW 320d EfficientDynamics
Edition achieved fuel economy of 4.4 litres per 100 kilo-
metres driven and CO2 emissions of a mere 116 grams
per kilometre.

The safety testing institute Euro NCAP (European New
Car Assessment Programme) presented the BMW Group
with a special award for the BMW Assist Advanced eCall
extended emergency call that features automatic location
pinpointing and an injury risk forecast. The Euro NCAP
Advanced Award, which was presented for the first time,
honours groundbreaking technologies in the fields of
vehicle safety and passenger protection over and above
the requirements of crash tests recognised throughout
Europe.

37 GROUP MANAGEMENT REPORT

Research for the future continued
In 2010 we presented a fuel-cell-powered hybrid vehicle
to the public for the first time. Based on the BMW 1 Se-
ries, this research vehicle is fitted with an innovative form
of hybrid technology which uses hydrogen as a source
of energy. In addition to a four-cylinder petrol engine, the
prototype is also equipped with an electric drive system
for city use. The vehicle is highly effective in city traffic
due to the use of a comparatively small fuel cell that gen-
erates electricity from hydrogen. The combustion engine
is only used for driving at higher speeds. This combina-
tion could in future provide an emissions-free range of
several hundred kilometres in city traffic and recharging
within a few minutes.

The Emergency Stop Assistant developed as part of our
research projects considerably raises the level of road
safety. If the system detects an emergency situation re-
lated to the driver’s health, it switches to an autonomous
driving mode and then proceeds to carry out a safe emer-
gency stop manoeuvre. The basis for the precise, safe
execution of the manoeuvre is not only the localisation
of the vehicle within its own driving lane but also the re-
liable and complete recognition of all vehicles in the im-
mediate vicinity.

The prototype of a multifunctional car key has been de-
veloped as a way of networking mobility with the driver’s
environment. The so-called BMW Key is fitted with a
security chip capable of providing such amenities as
cashless shopping or the booking of a hotel room. Fur-
thermore, the BMW key with its integrated credit card
function will enable the driver to purchase electronic
tickets for buses and trains as well as book flight tickets
straight from the car and store them on the key.

Numerous awards for the BMW Group
The Rolls-Royce Ghost, BMW 5 Series Sedan, BMW X1,
BMW 5 Series Gran Turismo, BMW F 800 R and BMW
S 1000 RR as well as five innovative developments by
BMW Group DesignworksUSA received red dot awards
for outstanding product design. The new Rolls-Royce
Ghost received the special prize “red dot: best of the best”
for the highest quality design. The new BMW 5 Series
Sedan was additionally awarded the silver design prize of
the Federal Republic of Germany by the German Design
Council.

The BMW Group was also highly successful at the “Inter-
national Engine of the Year Award” in 2010: the Group
dominated the competition by winning first prize in four
out of a total of eight cubic capacity classes. The successful

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Reorientation of purchasing and supplier network
functions
Increasing internationalisation and the growing com-
plexity prevailing on procurement markets as well as
within the production network prompted us to reor-
ganise the purchasing function in 2010 along the lines
of technological product groups. The main focuses of
this strategy are to concentrate responsibilities world-
wide and further improve our understanding of market
and technological developments.

Numerous model start-ups in 2010
The year 2010 saw a large number of model start-ups
within our worldwide production network. The BMW
Group again rose to the challenge of the various produc-
tion start-ups (the new BMW 5 Series, the new BMW 6
Series in Germany, the 5 Series extended wheelbase ver-
sion in China and the new BMW X3 in the USA as well
as the revised MINI in the UK) by involving the supplier
network at a very early stage. For the BMW 5 Series ex-
tended wheelbase version and the X3, local suppliers
were increasingly trained in advance in order to guaran-
tee the exacting quality requirements and standards de-
manded by the BMW Group right from the commence-
ment of production.

Activities on international procurement markets
Throughout 2010 we continued to expand our global
procurement activities for future vehicle projects. Apart
from Europe, our major sales markets in the NAFTA re-
gion and in Asia were the main areas of focus. As part of
the process of selecting suppliers, we have specifically
given priority to increasingly obtaining supplies for fu-
ture models (BMW X Series, MINI, BMW 1 Series) from
locally based suppliers in each of the production markets.
This strategy allows us to make better use of the inno-
vation potential, but also to generate cost benefits. At the
same time, purchasing in the relevant foreign currency
reduces the currency risk for both the BMW Group and
the supplier. The application of multi-currency ordering
across all regions is also helpful. This is a new approach
in the car industry, with ordering and invoicing of pro-
duction material executed in various currencies depend-
ing on the percentage of added value in each case.

Leader in productivity and technology in
CFRP production
The closer coordination of production and purchasing
activities for the plastic outer skin of the Megacity
Vehicle has enabled us to generate significant synergies
within the process chain. This enables us to decide,

Regional mix of BMW Group purchase volumes 2010

in %, basis: production material

Asia / Australia

Africa

NAFTA

Central and
Eastern Europe

Rest of Western Europe

Germany

Rest of Western Europe

Central and Eastern Europe

NAFTA

Asia / Australia

Africa

quickly and competently, whether components should
be produced in-house or externally ordered. Expertise in
the areas of production, quality management and pur-
chasing are bundled appropriately, enabling us to achieve
better coordination with our suppliers.

The expansion of the CFRP production at the BMW
Landshut plant and the simultaneous commissioning of
facilities to produce carbon fibre layers marked the
beginning of preparations for the series production of
the Megacity Vehicle, scheduled for launch in 2013. The
Wackersdorf plant also supplies the textile carbon fibre
layers which are processed to make lightweight CFRP
body components at the Landshut plant. The vehicle will
be produced at the BMW Group’s Leipzig plant.

Cooperation arrangements expanded
The cooperation talks between BMW AG and Daimler AG
concerning the joint purchasing of components are
making good progress. We have identified a double-digit
number of components that could be jointly purchased.
The cooperation arrangements only involve components
that do not contribute towards differentiating between
the two brands and which therefore have no impact on
competition. Plans are underway to extend the coopera-
tion arrangements step by step to cover a larger number
of parts and components.

Joint purchasing in China also presents excellent oppor-
tunities. The two companies intend to work together in
evaluating audit results and checking the qualifications
of suppliers.

39 GROUP MANAGEMENT REPORT

Sustainability of value-added chains
Adherence to the high ecological and social standards of
the BMW Group was again a key criterion for selecting
suppliers in 2010. Our main focus of attention was on the
intensive evaluation and supervision of the production
locations of our suppliers worldwide. The same princi-
ples are applied for observing in-house components and
bought-in parts over the complete product life cycle,
from the acquisition of raw materials to the recycling of
waste material.

Model range expanded
We continued our new product initiative throughout
the course of 2010. After its introduction on European
markets at the end of 2009, the worldwide launch of the
highly successful BMW X1 was continued in 2010. The
new BMW 5 Series Sedan was launched on selected mar-
kets in spring 2010 and has been available worldwide
since June. Sales of the new BMW 5 Series Touring com-
menced in September. The extended wheelbase version
of the BMW 5 Series Sedan, specially designed for the
Chinese market, has been available there since the be-
ginning of September. The new BMW X3 was presented
at the Paris Motor Show at the beginning of October.
The second generation of this successful model had been
available on the markets since the end of November. We
also presented various concept studies to the public. In
April 2010, in Beijing, we presented the BMW Concept
Gran Coupé as an example of the new generation of large
BMW Coupés. In October, the BMW Concept 6 Series
Coupé was presented at the Paris Motor Show as a pre-
view of the new BMW 6 Series Coupé. In mid-November
we announced that a new BMW 6 Series Convertible
would be available in spring 2011.

Countryman added to MINI family
The year 2010 marked the introduction of the fourth
member of the MINI family. The unveiling of the MINI
Countryman at the Geneva International Motor Show
at the beginning of 2010 was followed by the sales
launch on European markets in September 2010 and
introduction in Asia and the Americas at the beginning
of 2011.

The MINI Countryman represents a significant addition
to the MINI portfolio. With its four doors and four-
wheel drive, the model is designed to appeal to a new
target group. This represents another step on the way
to MINI becoming a multi-product brand. The exist-
ing model range had been revised during the previous
year.

With three victories at the Monte Carlo Rally, the MINI
had already become an inherent part of rally sport back
in the sixties. We intend to continue in this tradition.
The rally version of the new MINI Countryman will take
part in the FIA World Rally Championship (WRC) as
from 2011.

Range of mobility services broadened
In its Strategy Number ONE, the BMW Group set itself
the task of becoming the world’s leading provider of

premium products and premium services for individual
mobility. An additional, profitable line of business has
been created by offering innovative mobility services.

MINI sales organisation. A total of 32 metro delivery
centres have now been established worldwide since
2008.

Rolls-Royce launches “21st Century Legends”
campaign
In October 2010 Rolls-Royce Motor Cars launched a
worldwide image campaign entitled “21st Century
Legends”. In a series of five films the campaign provides
an unusual insight into the world of the Rolls-Royce
brand.

12
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63
70

GROUP MANAGEMENT REPORT
A Review of the Financial Year
General Economic Environment
Review of Operations
BMW Group – Capital Market

Activities
Disclosures relevant for takeovers
and explanatory comments
Financial Analysis
47
49
51
53
55
55
57
58
Internal Control System and
explanatory comments
Risk Management
Outlook

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

For many years we have successfully been providing car-
related services for BMW and MINI customers under the
name BMW ConnectedDrive. This range of services will
be significantly expanded in future. The strategy is in line
with our full-coverage approach, which includes vehicle-
related and non-vehicle-related mobility services de-
signed to cover the whole spectrum of premium mobility
services.

Expansion of distribution network
In order to meet the demands of the emerging markets,
we have expanded our distribution network in China and
the other BRIC markets. In total, some 100 new dealer-
ships have been opened in these markets. The worldwide
distribution network consists of around 3,100 BMW,
1,300 MINI and 80 Rolls-Royce dealerships.

Strengthening the sales organisation
More than 800 dealers in 14 markets had been individu-
ally trained up to the end of 2010 under the dealer quali-
fication programme started in 2009. The main objective
was to promote the sale of new cars. It was also a way
of helping to shore up the profitability of the dealership
network in difficult times. Based on the results achieved
as well as the highly positive response from the sales
organisation we have decided to expand the methodol-
ogy and contents of the programme to other sales areas.
This is seen as a long-term instrument to strengthen the
dealer organisation.

After-sales service as important success factor
After-sales service plays a key role in achieving customer
satisfaction. For the BMW Group and its worldwide
dealer network, the sale of BMW and MINI parts, acces-
sories and services represents an important factor in the
Group’s success. Sales generally performed very well in
this line of business, with the German and Chinese mar-
kets recording particularly dynamic growth during the
period under report.

The existing distribution network was expanded in 2010.
Ten additional metro delivery centres commenced oper-
ations in various metropolitan areas around the world.
These centres enable the same-day multiple delivery of
original spare parts and accessories to the BMW and

41 GROUP MANAGEMENT REPORT

BMW Group – Capital Market Activities in 2010

Automobile stocks boost DAX
Against the background of the sovereign debt crisis in the
euro zone and concerns about the economy in the USA,
the world’s stock exchanges developed inconsistently in
2010. The German stock index, the DAX, benefited from
robust economic growth in Germany and rose signifi-
cantly. Much of the impetus for this development came
from automobile stocks.

The index therefore climbed by 956.76 points over the
course of the year, finishing the stock exchange year at
6,914.19 points (+ 16.1%). The highest level for the year
was recorded in December when it climbed to 7,087.84
points. The sharp rise in prices of German automobile
stocks was also reflected in the performance of the Prime
Automobile Index, which rose by 306.51 points to 849.29
points. This represented an increase of 56.5% over its
closing level at the end of the previous financial year. In
contrast, the EURO STOXX 50 lost value in 2010, finish-
ing the stock exchange year 2010 at 2,792.82 points
(– 5.8%).

BMW stock also performed exceptionally well in 2010.
BMW common stock closed at euro 58.85 on the last day
of trading, an increase of 85.1% over its closing price
one year earlier. BMW common stock was therefore the
DAX 30’s best-performing share in 2010. Reflecting its
market significance, BMW common stock was taken
into the EURO STOXX 50 index in September 2010. The
EURO STOXX 50 index comprises the 50 largest listed
companies in the euro zone. BMW preferred stock also
performed well during the period under report, finishing
the year 2010 at euro 38.50, 67.4% ahead of its closing
price one year earlier.

Employee share scheme continued
BMW AG has enabled its employees to participate in its
success for more than 35 years. Since 1989 this participa-
tion has taken the form of an employee share scheme.
In total, 499,590 shares of preferred stock were issued to
employees in 2010 in conjunction with this scheme.
These include 498,050 shares drawn from Authorised
Capital 2009, with the remainder bought back via the
stock exchange. The new shares of preferred stock carry
the same rights as existing shares of preferred stock.

Attractive conditions on volatile financial markets
International debt capital markets also made a significant
recovery in 2010. As a result, the BMW Group was also
able to benefit from favourable refinancing conditions.
The European debt crisis did, however, cause phases
of increased volatility on the debt capital market during
the year.

The BMW Group was again active on the markets as an
issuer of bonds, notes and ABS instruments in order to
refinance its Financial Services activities. In 2010, two
euro-benchmark bonds with a total issue volume of
euro 2.5 billion were issued on European capital markets.
We also issued Canadian dollar, South African rand and
Swiss franc denominated bonds for a total amount of
euro 1.4 billion. Private placements in various currencies
raised a total of euro 2.7 billion. In 2010 we were able
once again to demonstrate our refinancing strength. Is-
sues of public ABS bonds raised US dollar 1.75 billion
in the USA and euro 800 million in Germany. Amounts
were also securitised in Germany (euro 400 million),
Japan (yen 25 billion) and Canada (Canadian dollar
428 million) and placed as private ABS transactions. As

Development of BMW stock compared to stock exchange indices

(Index: 29.12.2000 = 100)

350

300

250

200

150

100

BMW preferred stock

BMW common stock

Prime Automobile

DAX

in previous years, all issues were highly sought after by
both institutional and private investors.

depth at conferences on Socially Responsible Investment
and in numerous discussions held with investors.

12
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41

63
70

GROUP MANAGEMENT REPORT
A Review of the Financial Year
General Economic Environment
Review of Operations
BMW Group – Capital Market

Activities
Disclosures relevant for takeovers
and explanatory comments
Financial Analysis
47
49
51
53
55
55
57
58
Internal Control System and
explanatory comments
Risk Management
Outlook

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

Rating outlook raised
In September 2010, the rating outlook for BMW AG was
raised by the rating agencies Moody’s and S & P, in each
case from “negative” to “stable”. The improved outlook
comes as a result of higher demand for premium cars
worldwide, a development which particularly benefits
the BMW Group.

Reporting on sustainability
In 2010 we continued to communicate our sustainability
strategy and the way it is being implemented throughout
the BMW Group in the form of an intensive dialogue with
investors and analysts. In addition to the now well-estab-
lished annual stakeholders’ round table held in Munich,
this two-way dialogue was also continued in greater

BMW Group sector leader in Dow Jones Sustainability
Index for sixth time
In September 2010 the rating agency SAM named the
BMW Group as sector leader in the Dow Jones Sustain-
ability Index World and Europe for the sixth time. The
SAM analysts stressed that the BMW Group stands out
with its clear sustainability strategy and for the way it
implements that strategy rigorously along the whole
added-value chain. They also drew particular attention
to the BMW Group’s great achievements in reducing
vehicle fleet fuel consumption and CO2 emissions. The
BMW Group is the only enterprise in the automobile
sector to have been represented continuously in this im-
portant group of sustainability indices since their crea-
tion in 1999.

BMW stock

Common stock

Number of shares in 1,000
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

2010

2009

2008

2007

2006

601,995

58.85

64.80

28.65

53,163

–

38.50

41.90

21.45

1.30 2
1.32 2

4.91

4.93

12.45

35.26

31.80

35.94

17.61

52,665

–

23.00

24.79

11.05

0.30

0.32

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

30.42

30.99

33.24

29.24

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

43 GROUP MANAGEMENT REPORT

The BMW Group was also included in the prestigious
FTSE4Good Index and FTSE4Good Environmental Index
in both halves of 2010.

In conjunction with the annual evaluation of the Carbon
Disclosure Projects (CDP) – a co-operative initiative of
534 globally active institutional investors – the BMW
Group once again achieved a leading position thanks to
its transparent reporting and exemplary contribution to
environmental protection. In 2010 the Carbon Disclosure
Project not only assessed reporting transparency, for the
first time, it also took account of the efficiency of environ-
mental protection management and the extent to which
companies succeeded in reducing greenhouse gases.
The Carbon Performance Leadership Index was initially
set up in this context. The BMW Group was one of just
48 companies to be included in this index.

Investor relations activities successfully expanded
Extensive communication with the capital markets was
expanded in 2010, on the one hand to facilitate refinanc-
ing activities and on the other to keep investors and
analysts fully informed. The number of roadshows held
in the world’s major financial centres and our participa-
tion in international investors’ conferences were in-
creased significantly. The number of investors’ meetings
in Munich and conference calls also rose considerably.
These endeavours were seen in a very positive light by
the capital market and duly rewarded. In conjunction with
the Thomson Extel Survey – which has over 1,800 partici-
pants and is Europe’s most important survey for invest-
ment professionals – the BMW Group’s Investor Rela-
tions Team was named the best IR team in the European
automobile sector. This result was also confirmed by
“Institutional Investor” magazine. A survey of more than
1,700 investors and analysts also found our team to be
the best IR team in the automobile sector.

12
12
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41

GROUP MANAGEMENT REPORT
A Review of the Financial Year
General Economic Environment
Review of Operations
BMW Group – Capital Market
Activities

Disclosures relevant for takeovers

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

and explanatory comments
Financial Analysis
47
49
51
53
55
55
57
58
Internal Control System and
explanatory comments
Risk Management
Outlook

63
70

Disclosures relevant for takeovers1 and explanatory comments

Composition of subscribed capital
The subscribed capital (share capital) of BMW AG
amounted to euro 655,158,608 at 31 December 2010
(2009: euro 654,660,558) and, in accordance with Arti-
cle 4 (1) of the Articles of Incorporation, is subdivided
into 601,995,196 shares of common stock (91.89%)
(2009: 601,995,196; 91.96%) and 53,163,412 shares of
non-voting preferred stock (8.11%) (2009: 52,665,362;
8.04%), each with a par value of euro 1. The Company’s
shares are issued to bearer. The rights and duties of
shareholders derive from the German Stock Corpora-
tion Act (AktG) in conjunction with the Company’s Arti-
cles of Incorporation, the full text of which is available
at www.bmwgroup.com. The right of shareholders to
have their shares evidenced in writing is excluded in ac-
cordance with the Articles of Incorporation.

The voting power attached to each share corresponds to
its par value. Each euro 1 of par value of share capital
represented in a vote is entitled to one vote (Article 18 (1)
of the Articles of Incorporation). The Company’s shares
of preferred stock are non-voting within the meaning of
§ 139 et seq. AktG, i.e. they only confer voting rights in
exceptional cases stipulated by law, in particular when
the preference amount has not been paid or has not been
fully paid in one year and the arrears are not paid in the
subsequent year alongside the full preference amount due
for that year. With the exception of voting rights, holders
of shares of preferred stock are entitled to the same rights
as holders of shares of common stock. Article 24 of the
Articles of Incorporation confers preferential treatment
to the non-voting shares of preferred stock with regard to
1 disclosures pursuant to § 289 (4) HGB and § 315 (4) HGB

the appropriation of the Company’s unappropriated
profit. Accordingly, the unappropriated profit is required
to be appropriated in the following order:

(a) subsequent payment of any arrears on dividends on

non-voting preferred shares in the order of accruement,

(b) payment of an additional dividend of euro 0.02 per

euro 1 par value on non-voting preferred shares and
(c) uniform payment of any other dividends on shares
on common and preferred stock, provided the share-
holders do not resolve otherwise at the Annual
General Meeting.

Restrictions affecting voting rights or the transfer
of shares
As well as shares of common stock, the Company has
also issued non-voting shares of preferred stock. Further
information relating to this can be found above in the
section “Composition of subscribed capital”.

When the Company issues non-voting shares of preferred
stock to employees in conjunction with its employee
share scheme, these shares are subject to a company-im-
posed vesting period of four years, measured from the
beginning of the calendar year in which the shares are is-
sued. During this time the shares may not be sold.

Direct or indirect investments in capital exceeding
10 % of voting rights
Based on the information available to the Company, the
following direct or indirect holdings exceeding 10% of
the voting rights at the end of the reporting period were
held at the date stated:2

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

2 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

45 GROUP MANAGEMENT REPORT

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 notifi-
cation rules.

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

Nature of control over voting rights when employees
participate in capital and do not exercise their control
rights directly
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 provisions and the Company’s Articles of Incor-
poration.

Statutory regulations and Articles of Incorporation
provisions with regard to the appointment and removal
of members of the Board of Management and changes
to the Articles of Incorporation
The appointment or removal of members of the Board
of Management is based on the rules contained in § 84 et
seq. AktG in conjunction with § 31 of the German Co-
Determination Act (MitbestG).

Amendments to the Articles of Incorporation must
comply with § 179 et seq. AktG. All amendments must
be resolved by the shareholders at the Annual General
Meeting (§ 119 (1) no. 5, § 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 Article 4 of the Articles of
Incorporation in line with the relevant utilisation of
Authorised Capital 2009. Resolutions are passed at the
Annual General Meeting by simple majority of shares
unless otherwise explicitly required by binding provisions
of law or, when a majority of share capital is required, by
simple majority of shares represented in the vote (Arti-
cle 20 of the Articles of Incorporation).

Authorisations given to the Board of Management in
particular with respect to the issuing or buying back
of shares
In accordance with the resolution passed at the Annual
General Meeting on 14 May 2009, the Board of Manage-
ment was 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.
This authorisation was not made use of during the finan-
cial year 2010. The Board of Management is authorised
to buy back shares and sell repurchased shares in situa-
tions specified in § 71 AktG, e.g. to avert serious and
imminent damage to the Company. 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 capi-
tal during the period until 13 May 2014 by up to euro
4,032,750 for the purposes of an employee share scheme
by issuing new non-voting shares of preferred stock,
which carry the same rights as existing non-voting pre-
ferred stock, in return for cash contributions (Authorised
Capital 2009). Existing shareholders may not subscribe
to the new shares. There is no conditional capital in place
at the reporting date.

Significant agreements entered into by the Company
subject to control change clauses in the event of a
takeover bid
The BMW AG is party to the following major agreements
which contain provisions for the event of a change in
control or the acquisition of control as a result of a take-
over bid:
– An agreement concluded with an international con-
sortium of banks relating to a syndicated credit line
(which was not being utilised at the balance sheet
date) entitles the lending banks to give extraordinary
notice to terminate the credit line (such that all out-
standing amounts, including interest, would fall due
immediately) if one or more parties jointly acquire di-
rect or indirect control of BMW AG. The term “control”
is defined as the acquisition of more than 50% of the
share capital of BMW AG, the right to receive more
than 50% of the dividend or the right to direct the af-
fairs of the Company or appoint the majority of mem-
bers of the Supervisory Board.

12
12
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41

GROUP MANAGEMENT REPORT
A Review of the Financial Year
General Economic Environment
Review of Operations
BMW Group – Capital Market
Activities

Disclosures relevant for takeovers

and explanatory comments

Financial Analysis

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

47
49
51
53
55
55
57
58
Internal Control System and
explanatory comments
Risk Management
Outlook

63
70

– A cooperation agreement concluded with Peugeot SA
relating to the joint development and production of
a new range of small (1 to 1.6 litre) petrol-driven en-
gines entitles each of the cooperation partners to give
extraordinary notification of termination in the event
of a competitor acquiring control over the other con-
tractual party and if any concerns of the other contrac-
tual party concerning the impact of the change of con-
trol on the cooperation arrangements are not allayed
during the subsequent discussion process.

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

– Regarding the trading of derivative financial instru-

ments, framework agreements are in place with finan-
cial institutions and banks (ISDA Master Agreements),
each of which contain extraordinary rights of termi-
nation which trigger the immediate settlement of all
current transactions, in the event that the creditwor-
thiness of the respective party is materially weaker fol-
lowing the direct or indirect acquisition of beneficial
ownership of equity securities having the power to
elect a majority of the Supervisory Board of a contrac-
tual party or any other ownership interest enabling
the acquirer to exercise control of a contractual party
or a merger or transfer of assets.

– Financing agreements in place with the European In-
vestment Bank (EIB) entitle the EIB to request early
repayment of the loans in the event of an imminent or
actual change in control at the level of BMW AG (which
is in most cases the guarantor, in one case, however,
the borrower), if the EIB has reason to assume – either
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 significantly adverse
impact, or if – as stated in two of the contracts – the
borrower refuses to hold such discussions. A change
in control of BMW AG arises if one or more individuals
take over or lose control of BMW AG, with control
being defined in the above-mentioned financing agree-

ments as (i) holding or having control over more than
50% of the voting rights, (ii) the right to stipulate the
majority of the members of the Board of Management
or Supervisory Board, or (iii) the right to receive more
than 50% of dividends payable, and, in one case as
additional alternative (iv) other comparable controlling
influence over BMW AG.

– BMW AG is party to an agreement with SGL Carbon SE,
Wiesbaden, relating to the joint ventures SGL Auto-
motive Carbon Fibers LLC, Delaware, USA, and SGL
Automotive Carbon Fibers GmbH & Co. KG, Munich.
The agreement includes call and put rights in the
event that 50% or more of the voting rights relating to
the relevant other shareholder of the joint venture
are either directly or indirectly acquired by a third party,
or in the event that 25% of such voting rights are ac-
quired by a third party who is a competitor of the party
not affected by the acquisition of voting rights. In the
event of such acquisitions of voting rights by a third
party, the non-affected shareholder has the right to
purchase the affected shareholder’s shares in the joint
venture or to demand the sale of its own shares in the
joint venture to the affected shareholder.

– BMW AG is party to an agreement with Peugeot SA,
Paris, relating to the joint venture BMW Peugeot
Citroën Electrification B. V., the Netherlands. The agree-
ment includes call and put rights in the event that 50%
or more of the voting rights relating to the relevant
other shareholder of the joint venture are either directly
or indirectly acquired by a third party, or in the event
that one-third of such voting rights are acquired by a
third party who is a competitor of the party not affected
by the acquisition of voting rights. In the event of
such acquisitions of voting rights by a third party, the
non-affected shareholder has the right to purchase
the affected shareholder’s shares in the joint venture
or to demand the sale of its own shares in the joint
venture to the affected shareholder. The validity of the
agreement between BMW AG and Peugeot SA is sub-
ject to the condition precedent that the transaction is
authorised by the relevant cartel authorities.

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

47 GROUP MANAGEMENT REPORT

Analysis of the Group Financial Statements

Group Internal Management System
Taking into account the interests and rights of capital pro-
viders represents the basis for value-based management
within the BMW Group. Only companies generating
profits on a sustainable basis that exceed the cost of equity
and debt capital employed are capable of ensuring con-
tinuous growth, an increase in value for capital providers,
jobs and, in the final analysis, corporate independence.
As part of the process of developing the Group’s manage-
ment system, “economic value added” has been intro-
duced at Group level as a new key performance indicator.
Value created represents a logical development of the

method currently in use for managing the efficient use of
capital based on the “return on capital employed” (ROCE).

Economic value
added Group

(ROCE Group – cost of capital rate)

x capital employed

The economic value added can also be presented as
earnings less the cost of capital.

Economic value
added Group

earnings amount – cost of capital = earnings

amount – (cost of capital rate x capital
employed)

in euro million

Earnings amount

Cost of capital (EC + DC)

Economic value added Group

2010

2009

2010

2009

2010

2009

BMW Group

5,203

922

3,187

3,351

2,016

– 2,429

A positive value contribution means that a company is
earning more than its cost of capital. An increase or de-
crease in value contribution is an important measure of
financial success.

Cost of capital percentage for capital employed
The cost of capital percentage is calculated as a weighted
average of equity and debt capital costs using the standard
weighted average cost of capital (WACC) approach. Equity
capital costs are determined using the capital asset pric-
ing model (CAPM) and are based on the risk-free interest
rate plus the risk premium required by investors. The
risk premium is calculated on the basis of the market risk
premium and a beta factor. The beta factor is a measure
of a stock’s volatility in relation to the market. Interest
rates on debt capital are calculated as the average inter-
est rates relevant for long-term debt and pension obliga-
tions. The average cost of capital is calculated on the
basis of a long-term targeted capital structure, thus en-
suring stability in the way the business is managed in
the long term.

Cost of capital rate (before tax)
in %

2010

2009

Return on capital used to measure value on a
periodic basis
Specific earnings and rate of return indicators are used
to manage operational performance at segment and
Group level and measure performance by reporting
period. The period-related targets are monitored and
managed on a long-term basis in order to ensure that
earnings can develop at a steady pace. In line with the
method applied at Group level, the return on capital
employed is used as a profitability indicator for the Auto-
mobiles and Motor cycles segments. The Financial
Services segment is managed on the basis of the return
on equity (ROE). The ROE performance indicator is
important for the value-based management of the Finan-
cial Services segment because it focuses on equity as a
resource with limited availability and prioritises the effi-
cient utilisation of capital.

ROCE Group

Profit before interest expense and tax
=

Capital employed

ROCE Automobiles
and Motorcycles

Profit before financial result

Capital employed

BMW Group

ROE Financial
Services

Profit before tax

Equity capital

12
12
14
18
41

Financial Analysis

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

47
49
51
53
55
55
57
58
Internal Control System and
explanatory comments
Risk Management
Outlook

63
70

Group ROCE is measured by dividing earnings for ROCE
purposes by the average amount of capital employed.
For these purposes, capital employed comprises group
equity, pension provisions and the financial liabilities of
the Automobiles and Motorcycles segments.

Capital employed by Automobiles segment
in euro million

2010

2009

Operational assets

less: Non-interest-bearing liabilities

Capital employed

27,787

16,948

10,839

27,659

14,516

13,143

The average level of capital employed for a particular
year is measured as the average capital employed at the

Return on capital employed

beginning of the year, at quarter-ends and at the end of
the year. In line with the computation of employed capital,
earnings for ROCE purposes are 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 on the basis of the profit before finan-
cial result and the average level of capital employed.
The latter comprises all current and non-current opera-
tional assets less liabilities that do not incur interest e.g.
trade payables. Based on the cost of capital as a mini-
mum rate of return and comparisons with competitive
market returns, the target ROCE for the Automobiles
and Motorcycles segments has been set at a minimum
of 26%.

Earnings for
ROCE purposes
in euro million

Capital
employed
in euro million

Return on
capital employed
in %

2010

2009

2010

2009

2010

2009

BMW Group

Automobiles

Motorcycles

5,203

4,355

922

– 265

26,555

27,923

10,839

13,143

394

405

19.6

40.2

18.0

3.3

–

4.7

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 sustainable return on
equity of at least 18%.

Return on equity

Profit
before tax
in euro million

Equity

in euro million

Return
on equity
in %

2010

2009

2010

2009

2010

2009

Financial Services

1,214

365

4,654

3,978

26.1

9.2

Value management in the context of project management
The Automobiles and Motorcycles segments are managed
on the basis of specific product projects on the one hand
and process and infrastructure projects on the other, all of
which are subject to the framework set by the Group’s

forecasts by period. The project decision and related
project selection are important 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 standardised approach to assessing

49 GROUP MANAGEMENT REPORT

opportunities and risks. Internal project rates of return
and capital values (model rates of return in the case of
vehicle projects) are measured on the basis of cash flows.
Model rates of return are also compared with competi-
tive market values.

In this way, the amount a project will contribute to the
total value of the segment can be measured when the
project decision is taken. Targets and performance are
controlled on the basis of individual cash-flow-related
parameters.

Long-term creation of value
The overall target set for earnings is continuous growth.
The minimum rate of return set for each line of busi-
ness is used as the relevant parameter. These periodic
targets are supplementary to project and programme
targets.

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 are also taken
into account ensures consistency within the target and
management model. This approach allows an analysis of
the effect of each project decision on earnings and rates

of return. Multi-project planning data resulting from
these procedures allows ongoing comparison between
multi-period and single-period performance.

Earnings performance
The recovery on international car markets had a positive
impact on earnings in 2010. The BMW Group benefited
from its strong competitive position on international
markets, driven in particular by attractive new vehicle
models offered by the Automobiles segment. The easing
of pressure on international capital markets in 2010 also
helped to improve margins generated in the Financial
Services segment.

The BMW Group recorded a net profit of euro 3,234 mil-
lion (2009: euro 210 million) for the financial year 2010.
The post-tax return on sales was 5.3% (2009: 0.4%).
Earnings per share of common and preferred stock were
euro 4.91 and euro 4.93 respectively (2009: euro 0.31 for
common stock and euro 0.33 for preferred stock).

Group revenues rose by 19.3% to euro 60,477 million
(2009: euro 50,681 million). Adjusted for exchange rate
factors, the increase would have been 14.4%. Revenues
from the sale of BMW, MINI and Rolls-Royce brand cars
climbed by 24.2% due to higher sales volumes. Motor-

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

2010

2009

60,477

– 49,562

10,915

– 5,529

766

–1,058

5,094

685

– 966

– 75

– 258

4,836

– 1,602

3,234

50,681

– 45,356

5,325

– 5,040

808

– 804

289

856

–1,014

246

124

413

– 203

210

12
12
14
18
41

Financial Analysis

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

47
49
51
53
55
55
57
58
Internal Control System and
explanatory comments
Risk Management
Outlook

63
70

cycles business revenues were 21.9% up on the previous
year. Revenues generated with Financial Services activities
rose by 6.8%. Revenues attributable to “Other Entities”
amounted to euro 1 million, similar to the previous year.

euro 296 million compared to the previous year. The
main reasons for this were the higher level of allocations
to provisions and the lower result on currency trans-
actions.

Total revenues grew in the Africa, Asia and Oceania
regions by 68.2%. The figure includes China, where rev-
enues jumped by 109.1%. Revenues in Europe and the
Americas region grew by 9.4% and 14.0% respectively,
whereas they fell in Germany by 2.0%.

Group cost of sales increased by 9.3% to euro 49,562 mil-
lion (2009: euro 45,356 million), rising therefore at a
slower rate than revenues. The main factors responsible
for the improvement were reduced material costs and
lower refinancing costs. As a result, the gross profit jumped
by 105.0% to euro 10,915 million. The gross profit mar-
gin was 18.0% (2009: 10.5%).

The gross profit margin recorded by the Automobiles
segment was 17.4% (2009: 9.4%) and that of the Motor-
cycles segment was 16.0% (2009: 13.5%). The Finan-
cial Services segment’s gross profit margin improved by
5.1 percentage points to 10.9%.

Research and development costs rose by 19.1% to euro
3,082 million and represented 5.1% of revenues, un-
changed compared to the previous year. Research and
development costs include amortisation of capitalised
development costs amounting to euro 1,260 million (2009:
euro 1,226 million). Total research and development
expenditures amounted to euro 2,773 million (2009:
euro 2,448 million). This figure comprises research costs,
development costs not recognised as assets and capital-
ised development costs. The research and development
expenditure ratio for 2010 was 4.6% (2009: 4.8%). The
proportion of development costs recognised as assets in
2010 was 34.3% (2009: 44.4%).

As a result of the positive factors referred to above, the
profit before financial result amounted to euro 5,094 mil-
lion (2009: euro 289 million).

The financial result was a net expense of euro 258 mil-
lion, a deterioration of euro 382 million against the pre-
vious year (2009: net income of euro 124 million). The
change was mainly attributable to the fact that net in-
come from investments was euro 172 million lower due
to impairment losses recognised on investments in sub-
sidiaries. Sundry other financial result deteriorated by
euro 149 million to euro 96 million, reflecting lower net
gains on stand-alone commodities derivatives. Within the
financial result, net interest expense increased by euro
123 million. By contrast, the result from equity-accounted
investments improved by euro 62 million to euro 98 mil-
lion. In addition to the Group’s share of results from its
equity-accounted investments in BMW Brilliance Auto-
motive Ltd., Shenyang, and the Cirquent Group, this also
includes for the first time the Group’s share of results
from joint ventures with the SGL Carbon Group.

Taking all these factors into consideration, the profit be-
fore tax improved to euro 4,836 million (2009: euro
413 million). The pre-tax return on sales was 8.0% (2009:
0.8%).

The tax expense amounted to euro 1,602 million (2009:
euro 203 million), resulting in an effective tax rate of
33.1% (2009: 49.2%). The previous year’s high effective
tax rate was primarily attributable to tax expenses in-
curred in conjunction with a tax field audit at the level of
BMW AG.

Sales and administrative costs increased by 9.7% com-
pared to the previous year, equivalent to 9.1% of revenues
and therefore 0.8 percentage points lower on a year-to-
year comparison.

Overall, the BMW Group recorded a net profit of euro
3,234 million (2009: euro 210 million) for the financial
year 2010. The post-tax return on sales was 5.3% (2009:
0.4%).

Depreciation and amortisation on property, plant and
equipment and intangible assets recorded in cost of sales
and in sales and administrative costs amounted to euro
3,682 million (2009: euro 3,600 million).

The net expense from other operating income and ex-
penses amounted to euro 292 million, a deterioration of

Revenues of the Automobiles segment rose by 23.8%.
The pre-tax segment result turned round from a seg-
ment loss before tax of euro 588 million in 2009 to a seg-
ment profit before tax of euro 3,887 million in 2010. The
number of cars sold increased by 13.6%, reflecting the
gradual expansion and rejuvenation of our model port-
folio as well as dynamic growth in Asia.

51 GROUP MANAGEMENT REPORT

Revenues by segment
in euro million

Profit / loss before tax by segment
in euro million

2010

2009

2010

2009

Automobiles

Motorcycles

Financial Services

Other Entities

Eliminations

Group

54,137

1,304

16,617

–11,585

60,477

43,737

1,069

15,798

Automobiles

Motorcycles

Financial Services

Other Entities

– 9,926

50,681

Eliminations

Group

3,887

1,214

– 375

4,836

– 588

365

574

413

In the Motorcycles segment, the number of BMW motor-
cycles handed over to customers increased by 12.3%,
compared with a 22.0% increase in segment revenues.
The pre-tax segment result increased by euro 54 million
to euro 65 million.

Financial Services segment revenues grew by 5.2% to
euro 16,617 million. The pre-tax segment result climbed
to euro 1,214 million (2009: euro 365 million). The im-
provement mainly reflected lower expense for risk pro-
vision in the areas of credit financing and residual values
on the one hand and lower refinancing costs on the
other.

The Other Entities segment recorded a pre-tax profit of
euro 45 million (2009: euro 51 million).

The result from inter-segment eliminations was a net
expense of euro 375 million (2009: net income of euro
574 million), mainly reflecting the higher volume of new
leasing business and lower Group production costs.

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 2009 and 2010, classified into cash flows from oper-
ating, investing and financing activities. Cash and cash
equivalents in the cash flow statements correspond to the
amount disclosed in the balance sheet.

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

of euro 3,380 million or 32.9% compared to the previous
year. The higher net profit in 2010 accounted for euro
3,024 million of the increased cash inflow. Changes in
working capital reduced cash flows from operating activi-
ties by euro 2,205 million. This compared with changes
in other operating assets and liabilities (up by euro
1,466 million) and provisions (up by euro 910 million),
which resulted in an increase in the cash flow from oper-
ating activities.

The cash outflow for investing activities amounted to
euro 14,522 million and was therefore euro 3,194 million
higher than in 2009. Capital expenditure for intangible
assets and property, plant and equipment resulted in the
cash outflow for investing activities decreasing by euro
208 million compared to the corresponding period last
year. The cash outflow for the net investment in leased
products and receivables from sales financing increased
by euro 3,632 million to euro 9,332 million, primarily re-
flecting the higher level of new business recorded in the
Financial Services segment. The change in marketable
securities resulted in a euro 363 million decrease in cash
outflow.

Financing activities generated a cash inflow of euro
510 million in 2010, euro 842 million lower than in the
previous year (2009: cash inflow of euro 1,352 million).
Cash inflows from the issue of bonds totalled euro
4,578 million (2009: euro 9,762 million), while euro
3,406 million (2009: euro 6,440 million) was used to
repay bonds. The dividend payment for the financial
year 2010 amounted to euro 197 million. The cash out-
flow for other financial liabilities and commercial paper
was euro 260 million (2009: cash outflow of euro
1,562 million).

Operating activities of the BMW Group generated a posi-
tive cash flow of euro 13,651 million in 2010, an increase

94.0% (2009: 90.7%) of the cash outflow for investing
activities was covered by the cash inflow from operating

Change in cash and cash equivalents

in euro million

12
12
14
18
41

Financial Analysis

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

47
49
51
53
55
55
57
58
Internal Control System and
explanatory comments
Risk Management
Outlook

63
70

22,500

21,000

19,500

18,000

16,500

15,000

13,500

12,000

10,500

9,000

7,500

6,000

4,500

3,000

1,500

Cash and cash
equivalents
31.12. 2009

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. 2010

7,767

+ 13,651

– 14,522

+ 510

+ 26

7,432

activities. The cash flow statement for the Automobiles
segment shows that the cash inflow from operating
activities exceeded the cash outflow for investing activi-
ties by euro 2,608 million (2009: shortfall of euro 754 mil-
lion) or 147.1%. Adjusted for net investments in mar-
ketable securities amounting to euro 1,863 million (2009:
euro 2,210 million), mainly in connection with the

further externalisation of pension obligations,
coverage in 2010 amounted to euro 4,471 million
(2009: coverage of euro 1,456 million) or 221.5%
(2009: 142.0%).

Free cash flow of the Automobiles segment can be
analysed as follows:

in euro million

31. 12. 2010

31. 12. 2009

Cash inflow from operating activities

Cash outflow for investing activities

Net investment in marketable securities

Free cash flow Automobiles segment

8,150

– 5,542

1,863

4,471

4,921

– 5,675

2,210

1,456

Due to the higher level of investment in leased products
and receivables from sales financing, the cash flow state-
ment of the Financial Services segment shows a shortfall
of 59.1% of cash outflow for investing activities against
cash inflows from operating activities (2009: coverage of
115.8%).

After adjustment for the effects of exchange-rate fluctua-
tions and changes in the composition of the BMW Group
amounting to a net positive amount of euro 26 million
(2009: euro 18 million), the various cash flows resulted in
a decrease in cash and cash equivalents of euro 335 mil-
lion (2009: increase of euro 313 million).

53 GROUP MANAGEMENT REPORT

Net financial assets of the Automobiles segment comprise the following:

in euro million

31. 12. 2010

31. 12. 2009

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

5,585

1,134

5,690

12,409

–1,123

11,286

4,331

1,129

8,272

13,732

– 4,770

8,962

Net assets position
The Group balance sheet total increased by euro 6,914
million (+ 6.8%) to stand at euro 108,867 million at 31
December 2010. Adjusted for changes in exchange rates,
the balance sheet total would have increased by 1.7%.

The main factors behind the increase on the assets side
of the balance sheet were receivables from sales financing
(+ 11.8%), inventories (+ 18.5%), other assets (+ 16.8%)
and trade receivables (+25.4%). By contrast, decreases were
recorded for intangible assets (– 6.5%) as well as for cash
and cash equivalents (– 4.3%). On the equity and liabili-
ties side of the balance sheet, the increase was due to the
rise in equity (+ 16.0%), other liabilities (+ 25.2%), trade
payables (+39.4%) and financial liabilities (+1.7%). Pen-
sion provisions decreased by 47.4%.

At euro 5,031 million, intangible assets were euro 348 mil-
lion lower than at the end of the previous reporting
period. Within intangible assets, capitalised development
costs decreased by euro 309 million to euro 4,625 mil-
lion. Development costs recognised as assets during the
year under report amounted to euro 951 million (–12.5%),
equivalent to a capitalisation ratio of 34.3% (2009: 44.4%).
The lower level of additions to capitalised development
costs in 2010 was due to cost and process efficiencies
during the series development phase. The corresponding
amortisation expense was euro 1,260 million (2009: euro
1,226 million).

ments for production start-ups and infrastructure improve-
ments. Depreciation on property, plant and equipment
totalled euro 2,303 million (+ 1.9%). Balances brought
forward for subsidiaries being consolidated for the first
time amounted to euro 14 million. Total capital expendi-
ture as a percentage of revenues was 5.4% (2009: 6.8%).

Leased-out products decreased by euro 182 million or
1.0%. Excluding the effect of exchange rate fluctuations,
leased-out products would have decreased by 4.8 %.

Other investments fell by 23.7% to euro 177 million,
mainly as a result of impairment losses recognised on
investments in non-consolidated subsidiaries.

Receivables from sales financing were up by 11.8% to
euro 45,365 million due to higher business volumes. Of
this amount, customer and dealer financing accounted
for euro 35,460 million (+ 10.9%) and finance leases ac-
counted for euro 9,905 million (+ 14.9%).

Inventories rose by euro 1,211 million or 18.5% to euro
7,766 million. Adjusted for exchange rate factors, the
increase would have been 13.1%. The increase reflects
the effect of stocking-up in conjunction with the intro-
duction of new models and the expansion of business
operations.

Trade receivables were 25.4% higher than at 31 Decem-
ber 2009.

Property, plant and equipment increased slightly (+ 0.4%)
to euro 11,427 million. Capital expenditure of euro 2,235
million was 4.2% lower than in the previous year (2009:
euro 2,334 million). The main focus was on product invest-

Financial assets increased by 8.3% to euro 5,129 million,
mainly as a result of the higher fair values of derivative
portfolios.

12
12
14
18
41

Financial Analysis

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

47
49
51
53
55
55
57
58
Internal Control System and
explanatory comments
Risk Management
Outlook

63
70

Balance sheet structure – Group

in euro billion

Non-current assets

60 %

61 %

20 %

44 %

21 %

42 %

Equity

Non-current provisions and liabilities

Current assets

40 %

39 %

36 %

37 %

Current provisions and liabilities

thereof cash and cash equivalents

7 %

8 %

2010

2009

2010

109

102

109

Balance sheet structure – Automobiles segment

in euro billion

Non-current assets

42 %

41 %

Equity

Current assets

58 %

44 %

42 %

56 %

18 %

40 %

14 %

45 %

Non-current provisions and liabilities

Current provisions and liabilities

thereof cash and cash equivalents

10 %

8 %

2010

2009

2010

Liquid funds decreased by 4.4% to euro 8,998 million.
Liquid funds comprise cash and cash equivalents as well
as marketable securities and investment fund shares
(the last two items reported as financial assets). Within
that item, marketable securities and investment fund
shares decreased by euro 82 million.

Cash and cash equivalents went down by euro 335 mil-
lion to euro 7,432 million.

On the equity and liabilities side of the balance sheet,
equity increased by euro 3,185 million (+ 16.0%) to euro
23,100 million, due to the net profit for the year (+ euro
3,234 million) and translation differences (+ euro 683 mil-
lion). Deferred taxes on fair value gains and losses recog-
nised directly in equity increased equity by euro 263 mil-
lion. Group equity decreased as a result of actuarial
losses on pension obligations resulting from lower inter-
est rates (– euro 277 million) and in conjunction with the

55 GROUP MANAGEMENT REPORT

fair value measurement of derivative financial instru-
ments (– euro 520 million) and marketable securities
(– euro 16 million). The dividend payment reduced
Group equity by euro 197 million.

The Authorised Capital created at the Annual General
Meeting held on 14 May 2009 in conjunction with the
employee share scheme was partially used during the
financial year under report to issue shares of preferred
stock to employees, increasing subscribed capital by
euro 0.5 million. An amount of euro 18 million was
transferred to capital reserves in conjunction with this
share capital increase. Other items reduced equity by
euro 3 million.

The equity ratio of the BMW Group improved overall by
1.7 percentage points to 21.2%. The equity ratio of the
Automobiles segment was 40.9% (2009: 41.7%) and that
of the Financial Services segment was 7.1% (2009: 6.0%).

Pension provisions decreased by 47.4% to euro 1,563 mil-
lion. 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 a further tranche of pension obligations to
BMW Trust e.V., Munich, in conjunction with Contractual
Trust Arrangements (CTAs). Lower interest rates in Ger-
many had the effect of increasing the provision.

Other provisions increased by euro 783 million (+ 16.4%)
to euro 5,547 million. Within other provisions, provisions
for personnel-related expenses went up by euro 432 mil-
lion, provisions for other obligations by euro 207 million
and provisions for on-going operational expenses by
euro 144 million.

Financial liabilities increased by 1.7% to euro 62,353 mil-
lion, mostly due to exchange rate factors. Within financial
liabilities, derivative instruments increased by 83.9% to
euro 2,010 million, liabilities from customer deposits by
7.6% to euro 10,689 million and bonds by 2.0% to euro
27,568 million. Working in the opposite direction, liabili-
ties to banks decreased by 15.6% to euro 7,740 million
and asset-backed-financing liabilities were down by 3.9%
to euro 7,506 million.

Trade payables amounted to euro 4,351 million and were
thus 39.4% higher than one year earlier.

Other liabilities increased by euro 1,572 million to euro
7,822 million.

Overall, the earnings performance, financial position and
nets assets of the BMW Group improved significantly dur-
ing the financial year under report.

Compensation report
The compensation of the Board of Management com-
prises both a fixed and a variable component. In addi-
tion, benefits are also payable at the end of members’
mandates, primarily in the form of pension benefits.
Further details, including an analysis of remuneration
by individual, are disclosed in the Compensation Report,
which can be found in the Corporate Governance sec-
tion of the Annual Report on pages 140 et seq. The
Compensation Report is a sub-section of the Manage-
ment 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 nets 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 amor-
tisation, cost of materials and other expenses are treated
as bought-in costs in the value added calculation. The
allocation statement applies value added to each of the
participants involved in the value added process. It
should be noted that the gross value added amount
treats depreciation as a component of value added
which, in the allocation statement, is treated as internal
financing.

Net value added by the BMW Group in 2010 increased by
42.7% to euro 14,902 million, reflecting the fact that the
value of work performed rose significantly faster than the
value of work bought in.

The bulk of the net value added (48.8%) is applied to em-
ployees. The proportion applied to providers of finance
fell to 15.9%, mainly due to the further easing of pressure
on international capital markets. The government / pub-
lic sector (including deferred tax expense) accounted
for 13.6%. The proportion of net value added applied to
shareholders, at 5.7%, was higher than in the previous
year. Other shareholders take a 0.1% share of net value
added. The remaining proportion of net value added
(15.9%) will be retained in the Group to finance future
operations.

12
12
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41

Financial Analysis

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

47
49
51
53
55
55
57
58
Internal Control System and
explanatory comments
Risk Management
Outlook

63
70

BMW Group Value added statement

2010
in euro million

2010
in %

2009
in euro million

2009
in %

Change
in %

60,477

– 7

766

61,236

32,108

7,548

39,656

21,580

6,678

14,902

7,278

2,363

2,027

852

2,366

98.7

–

1.3

100.0

52.4

12.4

64.8

35.2

10.9

24.3

48.8

15.9

13.6

5.7

15.9

0.1

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

–

17.8

15.8

21.7

42.7

13.8

– 27.1

–

14,902

100.0

10,441

100.0

42.7

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

* including expenses incurred to downsize the workforce

BMW Group Value added 2010

in %

Depreciation and amortisation

Other expenses

48.8 %

Employees

Net value added

Cost of materials

Net value added

Cost of materials

24.3

52.4

Depreciation and amortisation

10.9

Other expenses

12.4

15.9 %

Providers of finance

13.6 %

Government / public sector

5.7 %
15.9 %

Shareholders
Group

0.1 %

Other shareholders

57 GROUP MANAGEMENT REPORT

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

Free cash flow of Automobiles segment

Net financial assets Automobiles segment

2010

2009

euro million

18.0

14.5

8.4

8.0

5.3

24.3

16.2

21.2

40.9

7.1

140.4

19.6

40.2

18.0

26.1

13,651

14,522

94.0

4,471

11,286

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

1,456

8,962

12
12
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41

Financial Analysis

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

47
49
51
53
55
55
57
58
Internal Control System and
explanatory comments
Risk Management
Outlook

63
70

Comments on Financial Statements of BMW AG
The financial statements of BMW AG are drawn up in
accordance with the German Commercial Code (HGB)
and the German Stock Corporation Act (AktG). The pro-
visions of the German Accounting Law Modernisation
Act (BilMoG) were applied for the first time in the finan-
cial year 2010. Prior year figures have not been restated.
Application of the BilMoG requirements had an impact
on extraordinary items in the income statement and
revenue reserves in the balance sheet.

BMW AG develops, manufactures and sells cars and
motorcycles manufactured by itself and foreign sub-
sidiaries. 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 2010 rose by 17.7% to 1,481,253
units. The workforce of BMW AG decreased by 705 to
69,518 employees at 31 December 2010, primarily as
a result of natural employee fluctuation, pre-retirement
part-time working arrangements and voluntary employ-
ment contract termination agreements.

Widespread economic recovery and model life cycle fac-
tors resulted in strong sales volume growth, which was
reflected in a 20.5% growth in revenues. The most sig-
nificant increase was recorded in Asia. Sales to Group
sales companies accounted for euro 32.6 billion or ap-
proximately 71.2% of total revenues of euro 45.8 billion.
The increase in cost of sales was less pronounced than
the increase in revenues, mainly due to reduced material
costs. As a consequence, gross profit increased by euro
3.3 billion to euro 8.6 billion.

The decrease in other operating income and expenses
and in the result on investments was attributable to re-
duced income from Group companies and the lower
level of income from the reversal of provisions.

The profit from ordinary activities increased from euro
605 million to euro 2,337 million.

Extraordinary income and expenses mainly contain
items relating to the first-time application of BilMoG:
this gave rise to net extraordinary income of euro 274 mil-
lion in 2010. Further information on the impact of
BilMoG is provided in the notes to the financial statements
of BMW AG.

The tax expense in 2010 comprises current year tax and
adjustments for previous years arising in connection
with intra-group transfer pricing arrangements. The re-
sulting threat of a double taxation charge at Group level
is being avoided primarily by instigating bilateral appeal
proceedings.

After deducting the expense for taxes, the Company reports
a net profit of euro 1,506 million (2009: euro 202 million).

Investments went up from euro 1,303 million at the end of
2009 to euro 1,875 million at 31 December 2010, mainly
as a result of capital increases made at the level of BMW
Bank GmbH, Munich, following a cash contribution
from BMW AG and the transfer of an investment by way
of non-cash contribution. The merger of BMW Ingenieur-
Zentrum GmbH, Dingolfing, and hence the automatic
transfer of assets and liabilities of BMW Ingenieur-Zen-
trum GmbH + Co oHG, Dingolfing, to BMW AG, Munich,
had the effect of reducing investments.

Capital expenditure on intangible assets and property,
plant and equipment amounted to euro 1,582 million
(2009: euro 1,667 million), 5.1% lower than in the pre-
vious year. The main focus in 2010 was on product in-
vestments for production start-ups. In addition, property,
plant and equipment with a carrying amount of euro
703 million was transferred to BMW AG in conjunction
with the restructuring measure referred to above. Depreci-
ation and amortisation amounted to euro 1,540 million.

In order to secure obligations resulting from pre-retire-
ment part-time work arrangements and a part of the
Company’s pension obligations, assets were transferred
to BMW Trust e.V., Munich, in conjunction with Contrac-
tual Trust Arrangements (CTA). The assets concerned
comprise mainly holdings in investment fund assets and
a receivable resulting from a so-called “Capitalisation
Transaction” (Kapitalisierungs geschäft). A further tranche
of pension obligations was externalised in 2010. Follow-
ing the implementation of BilMoG, fund assets have
been offset for the first time against the related guaran-
teed obligations. The resulting surplus of assets over
liabilities is reported in the BMW AG balance sheet on
the line “Surplus of pension and similar plan assets over
liabilities”.

Equity rose by euro 1,734 million to euro 7,088 million.
The first-time application of BilMoG resulted in a euro
407 million increase in reserves. The equity ratio im-
proved from 21.7% to 29.1%.

The amount recognised in the balance sheet for pension
provisions fell to euro 24 million. This was attributable
to the first-time offsetting of pension obligations against
assets transferred to BMW Trust e.V., Munich, as part of
the process of externalising pension obligations.

External liabilities to banks and from commercial paper
programmes were reduced during the financial year. In the
opposite direction, liabilities to subsidiaries in conjunction
with intra-group financing arrangements increased.

59 GROUP MANAGEMENT REPORT

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

Surplus of pension and similar plan assets over liabilities

Total assets

Equity and liabilities

Subscribed capital

Capital reserves

Revenue reserves

Unappropriated profit available for distribution

Equity

Registered profit-sharing certificates

Pension provisions

Other provisions

Provisions

Liabilities to banks

Trade payables

Liabilities to subsidiaries

Other liabilities

Liabilities

Deferred income

Total equity and liabilities

2010

2009

141

6,257

1,875

8,273

3,259

667

6,448

1,122

2,556

1,574

145

5,536

1,303

6,984

2,620

690

6,197

882

4,987

2,195

15,626

17,571

106

341

–

24,346

24,647

655

2,019

3,562

852

7,088

6,613

6,637

512

2,384

7,366

322

10,584

655

2,001

2,501

197

5,354

4,586

6,323

10,909

2,488

1,548

2,409

1,902

8,347

24,346

24,647

12
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41

Financial Analysis

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

47
49
51
53
55
55
57
58
Internal Control System and
explanatory comments
Risk Management
Outlook

63
70

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

Extraordinary income

Extraordinary expenses

Income taxes

Other taxes

Net profit

Transfer to revenue reserves

Unappropriated profit available for distribution

2010

2009

45,773

– 37,125

8,648

– 2,783

– 1,345

– 2,537

567

152

– 365

2,337

314

– 39

–1,088

–18

1,506

– 654

852

37,980

– 32,679

5,301

– 3,105

–1,379

– 2,451

1,243

1,084

– 88

605

–

– 393

– 10

202

– 5

197

61 GROUP MANAGEMENT REPORT

KPMG AG Wirtschaftsprüfungsgesellschaft, Munich, has
issued an unqualified audit opinion on the financial
statements of BMW AG, of which the balance sheet and
the income statement are presented here. The BMW AG
financial statements for the financial year 2010 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.

12
12
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Internal Management System
Earnings Performance
Financial Position
Net Assets Position
Subsequent Events Report
Value Added Statement
Key Performance Figures
Comments on BMW AG

Internal Control System and

explanatory comments

63
70

Risk Management
Outlook

Internal Control System* and explanatory comments

The internal control system in place throughout the
BMW Group is aimed at ensuring the effectiveness of
operations. It makes an important contribution towards
ensuring compliance with the laws that apply to the
BMW Group as well as providing assurance on the pro-
priety and reliability of internal and external financial
reporting. The internal control system is therefore a sig-
nificant factor in the management of process risks. The
principal features of the internal control system and the
risk management system, as far as they relate to individ-
ual entity and Group financial reporting processes, are
described below.

Information and communication
One component of the internal control system is that of
“Information and Communication”. It ensures that all
the information needed to achieve the objectives set for
the internal control system is made available to those
responsible in an appropriate and timely manner. The re-
quirements 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
primarily set out in organisational manuals, in guidelines
covering internal and external financial reporting issues
and in accounting manuals. These instructions, which
can be accessed at all levels via the BMW Group’s intranet
system, provide the framework for ensuring that the rele-
vant rules are applied consistently throughout the Group.
The quality and relevance of these instructions is en-
sured by regular review as well as by continuous commu-
nication between the relevant departments.

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

Controls
Extensive controls are carried out by management in all
financial reporting processes at an individual entity and
* disclosures pursuant to § 289 (5) HGB and § 315 (2) no. 5 HGB

Group level, thus ensuring that legal requirements and
internal guidelines are complied with and that all business
transactions are properly executed. Controls are also car-
ried 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, allowing only authorised persons to gain access
to systems and data in a controlled environment. Access
authorisations are allocated on the basis of the nature
of the duties to be performed. In addition, IT processes
are designed and authorisations allocated using the dual
control principle, as a result of which, for instance, re-
quests 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 in-
creasing 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 plat-
form that is accessible throughout the entire Group.

Evaluating the effectiveness of the internal
control system
Responsibilities for ensuring the effectiveness of the in-
ternal control system in relation to individual entity
and Group financial reporting processes are clearly de-
fined 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 (e.g. management self-audits,
internal audit findings). Audits performed at regular in-
tervals show that the internal control system in place
throughout the BMW Group is both appropriate and ef-
fective. Continuous revision and further development of
the internal control system ensures its continued effec-
tiveness. Group entities are required to confirm regu-
larly as part of their reporting duties that the internal
control system is functioning properly. Effective measures
are implemented whenever weaknesses are identified
and reported.

63 GROUP MANAGEMENT REPORT

Risk Management

Risk management in the BMW Group
The BMW Group’s risk management system comprises
a wide range of finely tuned organisational and meth-
odological components. It is based on a decentralised
structure and supported by a network of risk managers.
The risk management system is aimed at encouraging
a balanced approach to risks at all organisational levels.
The risk management process is applied throughout
the Group and comprises the early identification and
analysis of opportunities and risks, their measurement
and the use of suitable instruments to manage and
monitor risks. As part of the risk reporting system, deci-
sion makers are regularly informed about risks that could
have a significant impact on business performance.
Business decisions are reached after consideration of in-
depth project analyses which show both potential risks
and potential opportunities. In conjunction with the
Group’s monthly and medium- and long-term forecasting
systems, opportunities and risks attached to specific
business activities are evaluated and used as the basis for
implementing measures to mitigate risks and achieve
targets. Important success factors are monitored con-
tinuously to ensure that unfavourable developments are
identified at an early stage and appropriate counter-
measures implemented.

Changes in the legal, economic or regulatory environ-
ment or within the Company itself can only be assessed
in good time by means of ongoing processes. Standard-
ised rules and procedures consistently applied through-
out the BMW Group form the basis for an organisation
that is permanently learning. By regularly sharing expe-
riences with other companies, we ensure that innovative
ideas and approaches are incorporated in the risk manage-
ment system and that risk management is subjected to
continual improvement. Regular basic and further train-
ing as well as information events are invaluable ways
of preparing staff for new or additional requirements with
regard to the processes in which they are involved.

Risk management is performed centrally and reviewed
regularly for appropriateness and effectiveness by inter-
nal auditors. Knowledge gained from these audits serves
as the basis for further improvements. Consciously tak-
ing calculated risks and making full use of the opportu-
nities relating to them has long been the basis for our cor-
porate success.

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.

In risk management terms, the financial year 2010 can be
sub-divided into two principal phases. During the first
half of the year, the knock-on effect of the international
economic and financial crisis was still highly evident and
the main focus was to manage related risks. The euro /US
dollar exchange rate stood at approximately 1.45 at the
beginning of the year, in retrospect its highest level for
the year. Some sales markets, particularly the USA, did
not recover quickly from the consequences of the crisis.
More to the point, the worry of renewed recession
emerged. It was only over the course of the year that op-
portunities gained the upper hand as some of the world’s
economies picked up perceptibly. In this situation, pro-
active management helped us make the most of the op-
portunities that arose.

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 the notes
to the Group Financial Statements.

Risks relating to the general economic environment
Global conditions were subject to a great deal of change
during the past year. Regional economic growth differ-
ences and various measures designed to revive the
economy in the wake of the worldwide economic and
financial crisis were significant for Group revenues and
earnings.

The sale of vehicles outside the European Currency
Union gives rise to exchange risks, in particular in rela-
tion to the Chinese renminbi, the US dollar, the British
pound and the Japanese yen. These four currencies
accounted for over two-thirds of our total foreign cur-
rency exposure in 2010. Cash-flow-at-risk models and
scenario analyses are used to measure exchange rate

12
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Internal Management System
Earnings Performance
Financial Position
Net Assets Position
Subsequent Events Report
Value Added Statement
Key Performance Figures
Comments on BMW AG

63
70

Risk Management
Outlook

risks. These instruments also serve as part of the process
of currency management for the purpose of taking busi-
ness decisions.

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 increas-
ing the volume of local production. In this context, the
completed expansion of the plant in Spartanburg, USA,
and the new factory in Shenyang, China (under con-
struction), will help to reduce foreign exchange risks in
two major sales markets. For operating purposes (short
and medium term), currency risks are hedged on the
financial markets. Hedging transactions are entered into
only with financial partners that have a good credit
standing. Counterparty risk management procedures are
carried out continuously to monitor creditworthiness.
The relevant procedures are set out in mandatory work
instructions.

Interest-rate risks are managed by raising refinancing
funds with matching maturities and by employing de-
rivative financial instruments. Interest-rate risks are
measured and limited both at country and Group level
on the basis of a value-at-risk approach. Limits are meas-
ured and interest-rate risks assessed on the basis of the
risk-bearing concept, combined with targets defined in
conjunction with the benchmark approach. The risk-
return ratio is also measured 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.

Access to liquid funds across the Group is ensured by a
broad diversification of refinancing sources. The 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.
Knowledge gained from the financial crisis has been
incorporated into a so-called “target liquidity concept”.
Liquidity risk is continuously monitored at a separate
entity level. A cash flow requirements and sourcing fore-
cast system is also implemented throughout the Group
to document and manage liquidity risk. Most of the Finan-
cial Services segment’s credit and lease business is re-
financed on the capital markets.

The BMW Group has good access to the capital markets,
thanks on the one hand to a diversified refinancing
strategy and a solid liquidity base on the other, as con-
firmed by internationally recognised rating agencies. The
Group’s good creditworthiness is reflected in the long-
standing first-class short-term ratings issued by Moody’s
(P-2) and Standard & Poor’s (A-2), a good basis for obtain-
ing competitive refinancing conditions for short-term debt.

The outlook issued by the agencies alongside the ratings
was also lifted thanks to the recovery of sales markets
and the generally improved economic situation. In Sep-
tember 2010, Moody’s (long-term rating: A3) and Stand-
ard & Poor’s (long-term rating: A–) both raised their
outlook from negative to stable.

During the financial year under report, we were once
again able to raise funds at good conditions. Major factors
contributing to this were our diversified refinancing
strategy, solid liquidity and strong free cash flows. If this
trend continues, the rating agencies may also raise credit-
worthiness assessments for companies in the automobile
sector.

Business performance is also influenced by conditions
prevailing on the international commodities markets. In
order to safeguard the supply of production materials
and minimise the cost risk, all relevant commodities mar-
kets are closely monitored. Raw material prices rose
steadily as a consequence of high market liquidity and
the revival of the global economy. Over the course of
2010, we reaped the benefits of hedging contracts previ-
ously put in place. We took advantage of the favourable
market situation at the end of 2009 and beginning of
2010 to hedge the prices of precious metals (such as plat-
inum, palladium and rhodium) and of non-ferrous metals
for the current and future years using derivative instru-
ments. Changes in the price of crude oil, which is an im-
portant basic material in the manufacture of components,
have an indirect impact on our production costs. The
price of crude oil also directly influences the purchasing
behaviour of motorists when fuel prices change.

An escalation of political tensions and terrorist activi-
ties, natural catastrophes or possible pandemics could
cause raw material shortages on the one hand and, if
materials and parts fail to be delivered, could result di-
rectly in lost production. Such factors could, however,
also impact business performance indirectly if they affect
the economy and the international capital markets.

65 GROUP MANAGEMENT REPORT

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

Medium- to long-term requirements have been put in
place in Europe, North America, Japan, China and other
countries with respect to vehicle fuel consumption and
CO2 emissions. More than 90% of the BMW Group’s sales
are covered by these requirements. Europe has set a tar-
get of achieving an average of 130 g / km for all new vehi-
cles 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 uniform consumption and CO2 regulation
will apply for the model years 2012 to 2016 in the USA.
Starting with a step-by-step reduction in model year 2012,
the new vehicle fleets of all manufacturers are expected
to come down to an average value of 250 g of CO2 per
mile in model year 2016. The Japanese government has
also set ambitious targets to reduce consumption, includ-
ing statutory regulations for 2010 and 2015. The govern-
ment in China is currently discussing the introduction
of fuel consumption requirements (more stringent than
current ones) planned to come into force in 2012.

Political discussions are currently being held worldwide
regarding potential new legislation for the period up to
2020 and beyond. Increased expectations for alternative
drive systems and fuels pose new challenges. We are
addressing these challenges with our technological ex-
pertise and innovative strength to achieve significant and
consistent reductions in CO2 emissions. The need to
reduce both consumption and emissions is an integral
part of the Group’s product innovation process. We are
therefore carrying out studies into the interplay of energy
management, aerodynamics, lightweight construction,
performance and CO2 emissions. The Efficient Dynamics
concept was adopted some years ago: a combination of
highly efficient engines, improved aerodynamics, light-
weight construction and energy management reduces
the average fuel consumption and emissions across the
vehicle fleet. In the medium term we will achieve greater
fuel economy through electrifying the drive train and
developing comprehensive hybrid systems. We are also
working on solutions for sustainable mobility in densely

populated areas. For example, large-scale field trials
are currently being carried out with the MINI E in the UK,
Germany, France, the USA, China and Japan. The BMW
ActiveE, an electrically powered vehicle based on the
BMW 1 Series Coupé, will be on the roads from 2011. The
practical experience gained from these two trials is con-
tinually being incorporated in the ongoing series devel-
opment of our electric vehicles. The Megacity Vehicle
will be launched as a series production electric vehicle
as from 2013. The use of hydrogen gained from various
renewable sources to power engines also remains an
important component in our long-term strategy towards
sustainable mobility.

The BMW Group’s Efficient Dynamics strategy enables it
to comply with legal standards. There is a risk that these
standards will be further raised.

Operating risks
The flexible nature of our production network and work-
ing time models generally helps to reduce operating risks.
In addition, risks arising from business interruptions
and loss of production are also insured up to economi-
cally reasonable 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
selecting suppliers. Before a contractual relationship
comes into being, supplier relationship management
procedures, which also cover social and ecological as-
pects, help to reduce risk exposure. We continue to as-
sess and manage supplier performance during the
series production phase, thus creating the basis for
enduring and stable working relationships with our
suppliers.

Close cooperation between manufacturers and suppliers
is usual in the automotive sector, and although this pro-
vides economic benefits, it also creates a certain degree of
mutual dependence. Delivery delays and cancellations
due to strikes, natural catastrophes, fire or insolvencies can
lead to production stoppages and thus have a negative
impact on profitability. A consistent strategy of interven-
tion management enabled all supplier-related crises to
be successfully mastered.

Risks relating to the provision of financial services
The economic recovery seen over the past year has had
a favourable impact on the overall risk situation. Risks

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are identified, measured, monitored, evaluated and
managed in the BMW Group on the basis of recognised
standards and regulations that generally apply world-
wide in this line of business. Risk management is based
on concepts, methods and procedures developed and
continuously being updated within the regulated bank-
ing sector, e.g. the “Minimum Requirements for Risk
Management” (MaRisk) applicable in Germany.

The main categories of risk relating to the provision of
financial services are credit and counterparty risk, residual
value risk, interest rate risk, liquidity risk and operating
risks. We have developed internal methodologies and
techniques that comply with national and international
standards and regulatory requirements such as Basel II 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 arise in conjunction with lending to retail
customers (leasing, credit financing) and commercial
customers (dealers, fleet customers, importers). Counter-
party risks arise on financial transactions with banks and
financial institutions entered into to refinance business
and manage risk. Advanced scoring and rating models
are employed to assess customers’ creditworthiness as
part of the risk management process for lending. Lending
is based on a conservative evaluation of col lateral (nor-
mally the financed vehicle or object).

The recoverability of the value of collateral is continu-
ously checked and measured in order to assess the level
of unsecured risks. Stress tests and back-testing proce-
dures ensure that the measurement of our portfolios is
up to date. Modern credit-value-at-risk methods, incorpo-
rating binding and fixed limits for credit risks, are used
for measurement purposes. These limits are regularly
reviewed every quarter. In order to minimise risk, we em-
ploy typical banking instruments such as retrospective
collateral, multiple collateral, retention of vehicle docu-
ments and higher upfront payments.

In addition, close and regular contact with borrowers, a
good understanding of the leased or financed vehicles
involved (including subsequent disposal of the asset)
and prudent measurement of collateral all help to mini-
mise risk substantially. Lending based on typical bank-
ing sector criteria and guidelines together with principles
derived from MaRisk, such as segregation of duties be-

tween front-office and back-office functions, dual control
at all stages of the credit decision, risk-based upfront
payments and mandatory authorisation matrices, are
integral components of the Group’s risk-based credit
processes.

All process steps, such as segregation of duties, or the use
of techniques to recognise risks at an early stage, are
required to be applied worldwide. Appropriate testing is
carried out to ensure that the systems are up to date and
working properly. Local, regional and centralised credit
audits are regularly performed to test compliance with
lending guidelines applicable throughout the Group, credit
processes and the underlying IT systems.

We continue to develop standardised credit decision
processes for the BMW Group worldwide and are con-
stantly endeavouring to improve the quality of credit
applications, the Group’s rating methodology and pro-
cedures used to select employees within the worldwide
counterparty risk network.

Risk criteria with worldwide applicability, such as retail
customer arrears, bad debt ratios, the expense for allo-
cations to bad debt allowances and the proportion of
dealer financing volumes subject to problems are calcu-
lated and analysed on a monthly or quarterly basis and
used in the context of proactive risk management. This
information is provided to local, regional and centralised
management along with appropriate recommendations
for action as the basis for decision-making. The measures
taken enabled us to present, measure and manage credit
risk more transparently in 2010 and to reduce its level
accordingly. The provision for credit risks in the field of
dealer financing was raised in 2010 as a consequence of
the delayed effect of the financial crisis. This field is only
likely to return to anywhere near normal levels after a
delay of one to three years.

All credit risk decisions relating to international dealers,
importers and fleet customers are made in a three-stage
credit decision process. Alongside the total credit amount
(before and after deduction of collateral), the credit rat-
ing allocated and the requirement to comply with stipu-
lated credit risk guidelines provide the basis for this
process. The final decision is made by the national, re-
gional or global credit committee, and the back-office
input to the relevant committees cannot be overruled.
Specific and general allowances are recognised at the ap-
propriate amounts to cover identified risks.

67 GROUP MANAGEMENT REPORT

In the case of vehicles which remain with the BMW
Group at the end of a lease (leases and credit financing
arrangements with option of return), there is a risk
that the originally calculated residual value may not be
recovered when the vehicle is sold (residual value risk).
The vola tility of pre-owned car prices on the major
sales markets has intensified as a consequence of the
financial crisis. The risk of incurring residual value
losses in the Financial Services segment has increased
accordingly.

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 observations
are also used in this context. The overall risk position is
measured by comparing forecasted market values and
contractual residual values by model and market. We also
compute the return ratio for leased vehicles. The risk of
unexpected loss is measured using a value-at-risk ap-
proach. The resulting revaluation of the portfolio of vehi-
cles exposed to residual value risks and losses incurred
selling pre-owned cars had an additional negative im-
pact on the earnings of the Financial Services and Auto-
mobiles segments. Expected risks are covered in the
balance sheet either by provisions or by write-downs on
the lease vehicles concerned. The situation on used car
markets stabilised during the financial year 2010. For this
reason, the level of provision did not need to be raised
further in this area. We counteract declining residual
values by actively managing the life cycles of current
models, optimising reselling processes on international
markets and implementing targeted price and volume
measures. Residual values in the leasing business are
reviewed regularly and adjusted to take account of the
latest market conditions and expected future develop-
ments.

Interest rate risks are measured initially at country level
and then aggregated at Group level. Maximum risk ex-
posures 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
include 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 re-
quirements 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-miti-
gation measures. We take account of qualitative as well
as quantitative aspects in the decision process. The latter
is backed up by various system-based solutions, all of
which follow the principles of operational risk manage-
ment, such as segregation 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
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, man-
agers 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 regula-
tions is set out in corporate guidelines and in the BMW
Group’s stated set of core principles. However, wrong-
doing 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, brib-
ery or blackmail. Further information on compliance
within the BMW Group is included in the “Compliance
Report”.

Like all enterprises, we are exposed to the risk of war-
ranty claims, product liability claims and other legal dis-
putes which are typical for the sector or which arise as
a con sequence of realigning our product or purchasing
strategy to suit changed market conditions. Adequate
provisions have been recognised in the balance sheet to
cover any such claims. Part of the risk, especially where
the US market is concerned, has been insured ex ternally
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.

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Apart from the issues discussed above, the BMW Group
is not currently involved in any court or arbitration pro-
ceedings that could have a significant impact on its finan-
cial condition.

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

Personnel risks
As an attractive employer, for many years we have enjoyed
a favourable position in the intense competition for
qualified technical and management staff. A high level
of employee satisfaction helps to minimise the risk of
know-how drift.

The further development of programmes for new recruits
from specific target groups also plays an important part
in both recruiting and furthering the careers of highly
qualified staff. In 2010, various programmes for manage-
ment trainees and school leavers were revised and started
afresh. Further progress was made in the programme
set up for doctoral postgraduates to encourage highly
motivated recruits to engage in innovative activities for
the BMW Group.

The ageing and shrinking population in Germany will
have a lasting impact on the conditions prevailing in the
labour, product, services and financial markets. Demo-
graphic change will give rise to risks and opportunities
which will affect businesses to an increasing degree in
the coming years. We see demographic change as one of
our main challenges and we are taking a proactive ap-
proach to planning for its effect on operations. The focus
is on the following areas of action, 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 responsi-

bility to make personal provisions for their future and

(5) Individual employee working life-time models.

Our diversity strategy is also increasing our ability to per-
form well in the long term. Thanks to the diverse structure
of our workforce, we have access to a body of knowledge
which ensures that existing sales markets are optimally

served, new markets tapped and the inherent strength of
the business maintained.

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 pension obligations. Furthermore, changes in
other factors such as rising inflation or longer life expect-
ancies can also have an impact on pension obligations.
The final tranche of pension obligations in Germany
was transferred to an external fund in 2010. The corre-
sponding level of assets was transferred to BMW Trust
e. V. In the UK, the USA and a number of other countries,
funds intended to cover the pension benefits of our
employees are also held in pension funds which are
kept separate from corporate assets. As a consequence,
the level of funds required to finance pension pay-
ments out of operations will be substantially reduced
in the future. Pension assets of the BMW Group com-
prise in terest-bearing securities with a high level of
creditworthiness, equities, property and other invest-
ment classes.

Risk indicators (e.g. value-at-risk) are regularly computed
in order to identify risks at an early stage and used to
develop 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 in-
terest-generating investments with future pension pay-
ments, thereby reducing the interest rate risk relating to
pensions. Investments are broadly spread in order to
reduce risk. In addition, risk limits for asset management
have been defined for each pension fund and are moni-
tored continuously.

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 com-
ponent of our business processes and based on Interna-
tional Security Standard ISO / IEC 27001. Staff, process
design and information technology each play a role in our
comprehensive risk and security concept.

69 GROUP MANAGEMENT REPORT

The requirement to apply uniform standards across the
Group is embedded in our core principles and docu-
mented in detailed working instructions. These instruc-
tions require employees to handle information appro-
priately, ensure that information systems are properly
used and that risks pertaining to information technology
(IT risks) are dealt with transparently. Purposeful com-
munication and training measures create a high degree of
security and risk awareness on the part of the employees
involved. Employees also receive training from the
Group’s Compliance Organisation to ensure compliance
with legal and regulatory requirements.

Potential IT risks resulting from the use of information
technology and from the processing of information are
regularly documented and reported on as part of the
risk management process. Senior management is respon-
sible for all decisions involving the assumption, mitiga-
tion or avoidance of risks.

The technical data protection procedures we use prima-
rily 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
Group-wide to ensure compliance with security specifi-
cations. Regular analyses and rigorous security manage-
ment ensure high-quality protection. This includes the
activities of our centralised IT Security Operation Centre,
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 in-
structions with regard to data protection and the use of
information technology. Information underlying key
areas of expertise is subject to particularly stringent secu-
rity measures.

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Outlook

The economic environment in 2011
We think it likely that the global economic upswing that
began in the second half of 2009 will continue during
2011, albeit with a significantly lower rate of growth. Some
persisting risks could, however, result in temporary set-
backs for the global economy.

countries are set to expand similarly in 2011. The econ-
omy in Brazil is also set to cool down slightly in 2011
after an exceedingly good performance over the past
year. Russia, too, will probably grow at a marginally lower
rate than in the years prior to the financial crisis.

Economic growth in the USA is again predicted to be
moderate in 2011. The slow recovery of the employment
and real estate markets as well as the high level of debt
in private households is likely to dampen consumer
spending in the USA in 2011 compared with the years
before the crisis. The strongest contribution to growth is
more likely to come from private investment, while ex-
ports are set to drop slightly.

Economic growth in Europe as a whole will remain lower
than in the USA. Germany will again be the economic
driving force in the region, although to a far lesser degree
than in 2010. Whereas exports are being affected by the
slowing down of the global economy, domestic demand
is proving to be quite robust thanks to positive trends
on the employment market. The French economy will
continue to grow at a similar pace and hence somewhat
slower than in Germany. In Italy growth is likely to
remain modest, whereas Spain’s economy should grow
in 2011 for the first time in four years, even if the situa-
tion as a whole remains weak in the face of high unem-
ployment and downward adjustments on the property
market. In contrast, markets in the UK are likely to grow
robustly again in 2011, despite the government’s drastic
saving plans.

The slow-down of the global economy and the strong yen
could well hold down Japan’s exports compared with
the past year. Consumer spending will also rise only
moderately after the strong performance in 2010, which
could well lead to significant slowing down, thus fuelling
deflation.

The prime drivers of global economic growth will again
be the emerging markets in Asia, Latin America and
Eastern Europe, with China and India at the forefront.
China’s government is likely to undertake massive efforts
in 2011 to keep the lid on the economic growth rate,
particularly for investment activities, while simultane-
ously attempting to encourage private spending. Al-
though still at a high level, growth in China could well
see a slowing down in 2011. With the pace of growth in
India continuing unabated, the economies of the two

Euro set to remain strong
The US dollar is expected to remain slightly undervalued
in 2011. The loss in confidence in the euro caused by
the turmoil on European state bond markets should pre-
vent another collapse of the US dollar. Low interest
rates, public budget and current account deficits are all
likely to have a negative impact on the US currency.
The British pound continues to be weak against the euro.
However, as the economy recovers, it could well gain
in value in the long term. The Japanese yen should re-
main strong against the euro in 2011 due to the fact that
it continues to be seen as a safe investment and to bene-
fit from Japan’s current account surplus. Bearing in
mind the high liquidity surpluses still being generated on
emerging markets, it is likely that currencies here will
remain strong against the US dollar and the euro.

Car markets in 2011
International car markets should continue to expand in
2011, although somewhat less dynamically than in the
past year. China, currently the world’s largest car market,
is forecast to grow somewhat more slowly than in the
past two years. Recovery in the USA is set to continue
gradually in 2011, similar to the rate recorded in 2010.

In the European Union, the situation is expected to return
to a normal level, now that the effects of state-funded
stimulus programmes are coming to an end. Overall, the
region’s economy should grow slightly, largely on the
back of economic recovery in Eastern Europe. The picture
in Western Europe still varies greatly from country to
country. Whereas Germany is expected to grow again
after the setback caused by the expiry of the scrappage
bonus scheme, the car market in France is expected to con-
tract again in 2011. Markets in the UK, Italy and Spain are
forecast to tread water to a large extent.

The Japanese market is also likely to stagnate after two
years of sales being driven by the state-sponsored stimu-
lus programme.

India could well see the fastest rate amongst the major
emerging markets, while growth in Brazil and Russia is
expected to be more moderate.

71 GROUP MANAGEMENT REPORT

Motorcycle markets in 2011
Despite the economic recovery in many countries, motor-
cycle markets contracted sharply again in 2010. We ex-
pect the situation to stabilise in some regions in 2011 and
market performance as a whole is likely to display a lateral
movement. For the 500 cc plus segment, however, we
forecast a low single-digit growth rate.

Financial Services market in 2011
There are favourable signs that the global economic up-
swing will continue in 2011, although probably at a less
pronounced rate than in 2010. Given the substantial spare
capacities and moderate inflation rates currently prevail-
ing in the major industrial countries, central banks are
likely to continue their expansionary monetary policies
for the time being.

The US Reserve Bank has extended the range of expan-
sionary monetary policy measures taken. Given the over-
cast economic outlook, the zero-interest-rate policy
being pursued in the USA is unlikely to be abandoned
before the beginning of 2012. The European Central
Bank will not raise its refinancing interest rate before the
fourth quarter 2011 as long as there is a risk of a renewed
debt crisis. During the first half of the year the European
Central Bank could reduce excess liquidity step by step,
which could well cause interest rates in the medium-term
maturity segment to rise.

Providers of financial services are exposed on the one
hand to risks arising from uncertainties and volatility on
financial markets. On the other hand, however, measures
to reduce public spending could result in tax increases
worldwide and hence force down domestic demand.

The process of consolidating dealer organisations will
continue in a number of markets in 2011. As a result of
the related increase in risk, further credit-related losses
for the sector cannot be entirely ruled out for 2011.

It is currently very difficult to predict how used car
markets will develop. Prices for pre-owned cars are likely
to stagnate during the coming twelve months. If the
economy falters, prices could fall again.

Outlook for the BMW Group in 2011
We expect macro-economic conditions to remain stable
in 2011. However, the threat of temporary setbacks
caused by knock-on effects from the recent crisis cannot
be ignored. International car markets are likely to con-

tinue performing well and the Group’s growth markets
are expected to expand rapidly. Economic recovery should
continue to make progress in the USA and give our sales
volumes another boost. Taking all of these factors into
consideration, the BMW Group will continue to perform
well in 2011.

Over the past year new models, innovative technologies
and attractive design have additionally driven customer
demand, which was already at a high level. Following on
from the introduction of new BMW 5 Series Sedan, the
new BMW 5 Series Touring has been available since mid-
autumn 2010. The BMW X1 is proving to be exceedingly
popular worldwide. The MINI range has been expanded
since autumn 2010 to include a fourth model, the MINI
Countryman. The Rolls-Royce Ghost is also experiencing
a high level of customer demand. On the heels of the
models introduced over the past year, we will be continu-
ing our new product initiative throughout 2011. In this
context we are currently rejuvenating the BMW 6 Series:
the Convertible will be available in Europe and Asia in
the spring, followed by the USA and other markets at the
beginning of May. The 6 Series Coupé will be launched
in autumn 2011. The new BMW X3, currently enjoying
great success in its class, will be launched worldwide over
the course of the year. The BMW 1 Series M Coupé will
come on to the markets in May, followed by the new
BMW M5 in autumn after its world debut at the IAA. The
new generation of the BMW 1 Series will also go on sale
from autumn 2011 onwards. The MINI Coupé will become
the fifth MINI model variant to join the family.

Engagement on growth markets, particularly Latin
America and Asia, and a wider international production
network resulting from the expansion of our plants in
the USA and China are helping us strengthen the BMW
Group in competitive terms. We are therefore laying the
foundation for profitable growth in the future.

We will continue to pursue a policy of rigorous cost
management in 2011, centred on the management of
fixed costs and working capital. The strategy also includes
the efficient utilisation of resources. The use of modular
and industrial standards is helping us to generate bene-
fits of scale and reduce production costs, an important
element in our new efficient development strategy, and
reflected in our R & D ratio of 4.6% (2009: 4.8%).

Our Strategy Number ONE remains the basis for the
BMW Group’s strategic realignment. Improvements

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achieved in efficiency and profitability are opening
up new opportunities for us. We will therefore continue
to invest in the technologies of the future and foster
our ability to innovate. The strategy includes the con-
tinued optimisation of the combustion engine and intel-
ligent lightweight construction in conjunction with the
Efficient Dynamics technology package as well as the
development of alternative drive systems and new mo-
bility concepts resulting from our forward-looking
“project i”. Environmental protection legislation in place
around the world provides the necessary institutional
framework conditions.

We also remain committed to the use of innovative tech-
nologies to reduce the fuel consumption and emission
levels of combustion engines. Our Efficient Dynamics
concept combines technological innovations in the area
of lightweight construction and drive systems, improved
aero dynamics and intelligent management of energy
flows within the vehicle. Efficient Dynamics is a global
strategy across all models. It is incorporated as a standard
feature of all the vehicles we produce and therefore im-
pacts the whole model range.

Ongoing field trials being conducted in the USA and
Europe with more than 600 MINI E vehicles are providing
an important insight into the requirements of future se-
ries of electrically powered vehicles.

We are using the BMW ActiveE to intensify our research
into electromobility for every-day operation and ex-
tending field trials to determine the feasibility of produc-
ing electric cars on a large-series scale. With a test fleet
of over 1,000 vehicles in the USA, Europe and China, the
BMW ActiveE will provide further useful information
regarding daily usage as from 2011. At the same time,
drive components and energy storage systems to be used
in the Megacity Vehicle (MCV) will be tested at the pre-
series stage. The knowledge thus gained will be subse-
quently incorporated directly in the series development
of the MCV.

After its launch in 2013, the MCV will be the BMW Group’s
first series-built electrically driven car. This innovative
vehicle, specifically developed for use in the world’s major
metropolitan regions, will have zero emissions and set
new standards in terms of sustainability.

The up-front expenditure incurred will also put us in good
stead to take advantage of any new medium- or long-term

opportunities that present themselves in a changing
environment. Our premium products and services will
continue to meet our customers’ needs in the best pos-
sible way.

In 2011 we aim to achieve a higher full-year Group
profit before tax than in 2010. The forecast earnings level
represents a further key step towards achieving the tar-
gets set out in our Strategy Number ONE.

Automobiles segment
Sales volume performance in 2011 will benefit from the
impetus provided by our new and attractive models.
Sales volumes are therefore likely to grow at a faster pace
in the first half of the year than in the second. If macro-
economic conditions remain stable and demand on major
car markets continues to revive as expected, we forecast
a sales volume of more than 1.5 million BMW, MINI and
Rolls-Royce brand vehicles in 2011. New record sales
levels are being targeted for all three brands.

Thanks to the competitive strength of the BMW Group, we
are confident of being able to confirm our position as the
world’s leading premium car manufacturer. The progress
being made in the areas of efficiency and profitability
also provides a sound foundation for the future success
of the business. We therefore aim to achieve an EBIT
margin of over 8% and a ROCE of more than 26% for the
Automobiles segment.

Motorcycles segment
We forecast a further sales volume increase for the Motor-
cycles segment in 2011, albeit less pronounced than the
rise seen in 2010. The new K 1600 GT and K 1600 GTL
models in particular and the segment’s highly attractive
model range in general will provide the basis for another
fine performance in 2011.

Financial Services segment
The Financial Services segment is set to remain in good
shape in 2011. A noticeably less tense situation on used
car markets, an improved risk profile in the credit line of
business as well as excellent liquidity and refinancing
conditions will also make a major contribution to busi-
ness performance. We will continue our strategy of ex-
panding business on a targeted basis on growth markets.
Building BMW Bank Germany into a credit institution
operating throughout Europe will make us more flexible
in terms of liquidity and equity allocation. In addition
to the entities in Spain, Portugal and Italy which have

73 GROUP MANAGEMENT REPORT

already been integrated in the BMW Bank, further enti-
ties will be converted into branch offices in the future.
At the same time, the strategic reorientation of the vari-
ous lines of business will provide a boost to earnings.

Assuming the risk profile remains stable, we again aim to
achieve a return on equity of over 18 % for the Financial
Services segment.

Profitability targets for 2012 confirmed
We are also working on the basis that macro-economic
conditions will remain stable in 2012. Against this back-
ground we will continue the process of rejuvenating our
product portfolio as planned. Attractive new models
will provide further momentum for increases in sales
volumes, revenues and earnings. We are also working
with great determination to achieve the challenging
targets resulting from the BMW Group’s strategic realign-
ment. These include the profitability targets already
announced for the year 2012. We continue to target a re-
turn on capital employed (ROCE) in excess of 26% and
an EBIT margin of between 8% and 10% for the Auto-
mobiles segment. By applying a rigorous value-added
approach to business, we will succeed in achieving the
challenging targets we have set ourselves.

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

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

Dilutive effects

Diluted earnings per share of common stock in euro

Diluted earnings per share of preferred stock in euro

Statement of Comprehensive Income for Group
in euro 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

96
117
133

Note

Group

Automobiles

2010

2009

2010

2009

60,477

50,681

54,137

43,737

– 49,562

– 45,356

– 44,703

– 39,616

10,915

5,325

9,434

4,121

– 5,529

– 5,040

– 4,778

– 4,329

766

–1,058

5,094

685

– 966

– 75

– 258

4,836

–1,602

3,234

3,218

4.91

4.93

–

4.91

4.93

808

– 804

289

856

–1,014

246

124

413

– 203

210

204

0.31

0.33

–

0.31

0.33

Note

508

– 809

4,355

556

– 871

– 251

– 468

443

– 500

– 265

560

–1,055

130

– 323

3,887

– 588

–1,280

2,607

2,592

149

– 439

– 445

2010

2009

3,234

210

–16

– 520

683

– 277

263

133

295

318

–1,198

190

– 391

3,367

–181

3,351

–187

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

75 GROUP FINANCIAL STATEMENTS

Motorcycles

Financial
Services

Other
Entities

Eliminations

2010

2009

2010

2009

2010

2009

2010

2009

1,304

–1,095

209

1,069

– 925

144

16,617

15,798

–14,798

–14,880

1,819

918

–140

–126

–1

–

–13

–

– 6

– 20

–

–1

–

–11

–

– 8

– 3

–

– 589

–101

1,201

–

– 7

1,214

– 446

768

767

– 560

– 44

355

–

– 8

365

–147

218

–

218

–

–16

224

– 253

– 41

–

1,984

–

–16

352

– 309

– 6

1,778

–11,585

– 9,926

Revenues

11,034

10,065

Cost of sales

– 551

139

Gross profit

– 6

– 41

106

– 492

– 9

Sales and administrative costs

– 30

Other operating income

Other operating expenses

150

Profit / loss before financial result

–

Result from equity accounted investments

–1,866

– 1,488

Interest and similar income

– 2,058

–1,852

1,983

1,912

Interest and similar expenses

160

–

101

–

117

–

424

Other financial result

Financial result

– 375

574

Profit / loss before tax

122

– 253

–

– 253

– 215

Income taxes

359

Net profit / loss

–

359

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

Dilutive effects

Diluted earnings per share of common stock in euro

Diluted earnings per share of preferred stock in euro

BMW Group
Balance Sheets for Group and Segments at 31 December

74
74
74

76
78
80

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

GROUP FINANCIAL STATEMENTS
Income Statements
Statement of
Comprehensive Income

Financial assets

Current tax

Other assets

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

96
117
133

Cash and cash equivalents

Current assets

Total assets

Equity and liabilities

in euro million

Subscribed capital

Capital reserves

Revenue reserves

Accumulated other equity

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

2010

2009

2010

2009

5,031

11,427

17,791

212

177

5,379

11,385

17,973

137

232

27,126

23,478

1,867

1,393

692

1,519

1,266

640

65,716

62,009

7,766

2,329

18,239

3,262

1,166

2,957

7,432

6,555

1,857

17,116

3,215

950

2,484

7,767

43,151

39,944

4,892

11,216

182

189

3,263

–

662

1,888

2,473

24,765

7,468

1,983

–

1,911

1,068

15,871

5,585

33,886

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

108,867

101,953

58,651

53,039

Note

Group

Automobiles

2010

2009

2010

2009

655

1,939

23,447

– 2,967

655

1,921

20,426

– 3,100

23,100

19,915

23,993

22,101

1,563

2,721

2,933

35,833

2,583

45,633

2,826

1,198

2,972

2,706

2,769

34,391

2,281

45,119

2,058

836

26,520

26,934

4,351

5,239

40,134

3,122

3,969

36,919

349

2,348

1,726

1,164

2,873

8,460

2,336

1,026

961

3,713

18,162

26,198

1,652

2,295

1,694

259

3,401

9,301

1,759

650

4,736

2,556

11,936

21,637

Total equity and liabilities

108,867

101,953

58,651

53,039

77 GROUP FINANCIAL STATEMENTS

Motorcycles

Financial
Services

Other
Entities

Eliminations

Assets

2010

2009

2010

2009

2010

2009

2010

2009

192

–

235

290

114

–

452

687

184

–

223

258

123

–

381

604

110

20,868

20,608

–

27,126

23,478

603

1,176

49,904

231

575

1,375

46,202

123

18,239

17,116

815

3,248

1,227

23,799

924

4,071

2,803

25,074

–

5,134

–

1,622

320

12,538

19,637

–

854

–

Intangible assets

Property, plant and equipment

– 3,259

– 2,822

Leased products

–

Investments accounted for using the equity method

5,380

– 8,228

– 7,834

Other investments

–

1,186

355

10,389

17,333

–

916

133

–

– 424

–1,419

–

Receivables from sales financing

–170

Financial assets

–1,178

Deferred tax

–15,495

–13,238

Other assets

– 28,825

– 25,242

Non-current assets

–

– 318

–

–1

Inventories

–

Trade receivables

Receivables from sales financing

– 291

Financial assets

–

Current tax

29,224

27,179

– 45,430

– 43,629

Other assets

616

633

–

Cash and cash equivalents

30,762

28,864

– 45,748

– 43,921

Current assets

73,703

71,276

50,399

46,197

– 74,573

– 69,163

Total assets

Motorcycles

Financial
Services

Other
Entities

Eliminations

2010

2009

2010

2009

2010

2009

2010

2009

Equity and liabilities

Subscribed capital

Capital reserves

Revenue reserves

Accumulated other equity

Minority interest

–

314

427

–

199

260

687

–

5,216

4,268

5,261

4,118

–11,370

–10,572

Equity

–

257

401

–

167

203

604

250

3,691

12,202

13,619

29,794

337

121

13,746

433

24,056

38,693

311

3,191

10,848

10,455

24,829

274

13,673

385

27,762

42,179

1,164

1,222

–

Pension provisions

Other provisions

– 2,489

– 2,127

Deferred tax

22,891

23,454

– 424

–170

Financial liabilities

133

–14,245

–11,965

Other liabilities

24,110

24,850

–17,158

–14,262

Non-current provisions and liabilities

103

12,131

8,737

21,028

101

8,816

8,297

17,229

–

– 318

–

Other provisions

–

Current tax

– 291

Financial liabilities

–

Trade payables

– 45,730

– 44,041

Other liabilities

– 46,045

– 44,329

Current provisions and liabilities

73,703

71,276

50,399

46,197

– 74,573

– 69,163

Total equity and liabilities

BMW Group
Cash Flow Statements for Group and Segments

in euro million

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 other tangible, intangible and investment assets

Change in provisions

Change in deferred taxes

Other non-cash income and expense items

Gain / loss on disposal of tangible, intangible and investment assets

Result from equity accounted investments

Changes in working capital

Change in inventories

Change in trade receivables

Change in trade payables

Change in other operating assets and liabilities

Income taxes paid

Interest received

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 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

Cash inflow / outflow from financing activities

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

Change in cash and cash equivalents

Cash and cash equivalents as at 1 January

Cash and cash equivalents as at 31 December

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.

Note

Group

2010

20091

3,234

210

1,430
422

5,381

3,861

911

340

– 454

– 98

– 403

– 1,170

– 427

1,194

572

– 1,318
1482

13,651

338
–1132

5,476

3,603

– 95

– 35

– 36

1,802

855

506

441

– 894

– 349
3462

10,271

– 3,263

– 3,471

– 80

169

– 53

– 11,898

–10,433

7,422

6,515

– 61,120

– 49,629

56,264

– 2,723

798

47,847

– 2,908

620

–

– 197
– 2232

4,578

–197
– 2242

9,762

– 3,406

– 6,440

–

– 292

–1,307

510

– 335

7,767

7,432

– 255

1,352

313

7,454

7,767

– 14,522

–11,328

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

96
117
133

Cash inflow from operating activities

Investment in intangible assets and property, plant and equipment

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

79 GROUP FINANCIAL STATEMENTS

Automobiles

Financial Services

2010

20091

2010

20091

2,607

– 439

768

218

Net profit / loss

1,145

150

3,762

869

116

– 98

– 374

– 1,163

– 364

1,153

999

– 1,199

136

8,150

251

255

3,502

– 448

–170

– 29

– 43

1.806

871

513

422

214

– 369

342

4,921

277
22

4,823

– 49

440

– 408

–

– 43

– 176

– 147
– 2

5,558

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

152
42

Current tax

Other interest and similar income / expenses

5,732

Depreciation of leased products

307

–

309

– 99
– 2

Depreciation and amortisation of other tangible, intangible and investment assets

Change in provisions

Change in deferred taxes

Other non-cash income and expense items

Gain / loss on disposal of tangible, intangible and investment assets

Result from equity accounted investments

Changes in working capital

Change in inventories

Change in trade receivables

Change in trade payables

Change in other operating assets and liabilities

Income taxes paid

Interest received

6,817

Cash inflow from operating activities

– 3,183

– 3,409

– 10

–10

Investment in intangible assets and property, plant and equipment

– 577

– 172

171

–

– 261

–197

271

–

– 2,620

– 2,787

757

– 5,542

577

– 5,675

–

– 197

– 212

–

– 52

2,703

– 2,117

– 1,519

– 1,376

–197

– 76

–

180

– 874

964

–

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

–

Expenditure for investments

Proceeds from the disposal of investments

– 11,726

–10,236

Investment in leased products

7,251

6,215

Disposals of leased products

– 61,120

– 49,629

Additions to receivables from sales financing

56,264

– 103

47,847

Payments received on receivables from sales financing

–121

Cash payments for the purchase of marketable securities

Cash proceeds from the sale of marketable securities

– 9,402

– 5,889

Cash outflow from investing activities

–

–
– 2

2,361

– 364

204

–

–
– 2

Issue of treasury shares

Payments into equity

Payment of dividend for the previous year

Interest paid

658

Proceeds from the issue of bonds

–1,230

Repayment of bonds

722

Internal financing

– 351

Change in other financial liabilities

–

Change in commercial paper

2,269

– 201

Cash inflow / outflow from financing activities

1,254

– 742

– 1,576

– 1

750

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

Change in cash and cash equivalents

4,331

5,585

5,073

4,331

2,803

1,227

2,053

Cash and cash equivalents as at 1 January

2,803

Cash and cash equivalents as at 31 December

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 2008

654

1,911

20,419

– 2,065

– 706

–10

20,273

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 2009

Other changes

–

–197

204

–

318

–

164

– 876

–

31 December 2009

655

1,921

20,426

–1,747

209

–1,582

–

Premium arising on capital
increase relating to
preferred stock

Dividends paid

Comprehensive income 2010

Other changes

–

–197

3,218

–

683

–

31 December 2010

655

1,939

23,447

–1,064

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

96
117
133

–

–11

– 336

– 203

–

–127

–1,785

–

– 1

–

– 3

–197

–181

– 1

19,915

–197

3,367

– 3

23,100

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 2010 have been drawn up in accordance with
International Financial Reporting Standards (IFRSs) as
endorsed by the EU. The designation “IFRSs” also includes
all valid International Accounting Standards (IASs). All
Interpretations of the IFRS Interpretations Committee
(IFRICs) mandatory for the financial year 2010 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,
relating to the application of International Financial Re-
porting Standards, provides the legal basis for preparing
consolidated financial statements in accordance with
international standards in Germany and applies to finan-
cial years beginning 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.

A Statement of Comprehensive Income is presented at
Group level reconciling the net profit to comprehensive
income for the year.

In order to facilitate the sale of its products, the BMW
Group provides various financial services – mainly loan
and lease financing – to both retail customers and dealers.
The inclusion of the financial services activities of the
Group therefore has an impact on the Group Financial
Statements.

In order to provide a better insight into the net assets,
financial position and performance of the BMW Group
and going beyond the requirements of IFRS 8 (Operating
Segments), the Group Financial Statements also include
balance sheets and income statements for the Automo-
biles, Motorcycles, Financial Services and Other Entities
segments. The Group Cash Flow Statement is supple-
mented by statements of cash flows for the Automobiles
and Financial Services segments.

Inter-segment transactions – relating primarily to inter-
nal sales of products, the provision of funds and the re-
lated interest – are eliminated in the “Eliminations”
column. Further information regarding the allocation of
activities of the BMW Group to segments and a descrip-
tion of the segments is provided in the explanatory notes
to segment information on pages 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 receivables is a well established instrument used by
industrial companies. These transactions usually take the
form of asset-backed financing transactions involving
the sale of a portfolio of receivables to a trust which, in
turn, issues marketable securities to refinance the purchase
price. The BMW Group continues to “service” the receiv-
ables and receives an appropriate fee for these services.
In accordance with IAS 27 (Consolidated and Separate Fi-
nancial Statements) and Interpretation SIC-12 (Consoli-
dation – 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 removed
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 2010 totalled euro 7.5 bil-
lion (2009: euro 7.8 billion).

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

The Group currency is the euro. All amounts are dis-
closed 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
Commercial Register of the District Court of Munich
under the number HRB 42243.

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

The Group Financial Statements, drawn up in accordance
with § 315 a HGB, and the Management Report for the
financial year 2010 will be submitted to the operator of

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

96
117
133

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

Management Report can be downloaded from the BMW
Group website at www.bmwgroup.com/ir.

The Board of Management authorised the Group Finan-
cial Statements for issue on 15 February 2011.

Consolidated companies
The BMW Group Financial Statements include, besides
BMW AG, all material subsidiaries, six special purpose
securities funds and 19 special purpose trusts (almost all
used for asset-backed financing transactions).

The number of subsidiaries, special purpose securities
funds and other special purpose entities included in the
Group Financial Statements changed in 2010 as follows:

Included at 31 December 2009

Included for the first time in 2010

No longer included in 2010

Included at 31 December 2010

Germany

Foreign

Total

–

149

146

181

176

51 subsidiaries (2009: 53), either dormant or generat-
ing a negligible volume of business, are not consoli-
dated on the grounds that their inclusion would not
influence the economic decisions of users of the Group
Financial Statements. Non-inclusion of operating
subsidiaries reduces total Group revenues by 0.3%
(2009: 0.6%).

The joint venture BMW Brilliance Automotive Ltd., Shen-
yang, and the investment in Cirquent GmbH, Munich,
are accounted for using the equity method. The entities
SGL Automotive Carbon Fibers GmbH & Co. KG, Munich,
SGL Automotive Carbon Fibers Verwaltungs GmbH,
Munich, and SGL Automotive Carbon Fibers LLC, Dover,
DE, (all joint ventures with the SGL Carbon Group), are
also accounted for using the equity method. 13 (2009:
15) participations are not consolidated using the equity
method on the grounds of immateriality. They are in-
cluded in the balance sheet in the line “Other investments”,
measured at cost less, where applicable, accumulated
impairment losses.

A “List of Group Investments” pursuant to § 313 (2) HGB
will be submitted to the operator of the electronic version
of the German Federal Gazette. This list, along with the
“List of Third Party Companies which are not of Minor Im-
portance for the Group”, will also be posted on the BMW
Group website at www.bmwgroup.com/ir.

Husqvarna Motorcycles North America LLC, Wilmington,
DE, and Husqvarna Motorcycles S. r. l., Cassinetta di
Biandronno, were consolidated for the first time at 31 De-
cember 2010.

BMW Ingenieur-Zentrum Verwaltungs GmbH, Dingolfing,
was merged with BMW Ingenieur-Zentrum GmbH+ Co
oHG, Dingolfing, (until 16 July 2010: BMW Ingenieur-
Zentrum GmbH+Co., Dingolfing) with retrospective ef-
fect from 1 January 2010. As a result, by dint of German
law, BMW Ingenieur-Zentrum GmbH+ Co oHG, Dingol-
fing, automatically became a part of BMW AG, Munich.
BMW Ingenieur-Zentrum Verwaltungs GmbH, Dingol-
fing, and BMW Ingenieur-Zentrum GmbH+Co oHG,
Dingol fing, therefore both ceased to be consolidated
companies. In addition, BMW Polska Sp. z o. o., Warsaw,
was merged with BMW Vertriebs GmbH, Salzburg, and
therefore also ceased to be a consolidated company.

The Group reporting entity also changed by comparison
to the previous year as a result of the first-time consoli-
dation of two special purpose entities and the deconsoli-
dation of six special purpose entities.

The changes are not material because the resulting im-
pact on the Group Financial Statements would not influ-
ence the economic decisions of users taken on the basis
of the financial statements.

83 GROUP FINANCIAL STATEMENTS

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 acquisition method under which identifiable assets
and liabilities acquired are measured at the acquisition
date 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 sub-
jected to a regular review for impairment. Goodwill of
euro 91 million which arose prior to 1 January 1995 re-
mains netted against reserves.

Receivables, liabilities, provisions, income and expenses
and profits between consolidated companies (intra-group
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. Any difference be-
tween the cost of investment and the Group’s share of
equity is accounted for in accordance with the acquisition
method. Investments in other companies are accounted
for as a general rule using the equity method when signifi-
cant 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
using the functional currency concept (IAS 21: The Effects
of Changes in Foreign Exchange Rates) and the modified
closing rate method. The functional currency of a 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 re-
corded, 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. 2010

31.12. 2009

2010

2009

1.34

0.86

8.80

1.43

0.89

9.78

1.33

0.86

8.97

1.39

0.89

9.52

108.61

133.17

116.29

130.37

Accounting policies
The financial statements of BMW AG and of its subsidi-
aries in Germany and elsewhere have been prepared for
consolidation 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
income over the period of the contract. Amounts are
normally recognised as income by reference to the pat-
tern 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 recog-
nised as assets, the amortisation of capitalised develop-
ment costs as well as overheads (including depreciation
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 ex-
pense 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 in-
tended 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 attribut-
able to each category of stock, by the average number
of outstanding shares. The net profit is accordingly allo-
cated to the different categories of stock. The portion of
the Group net profit for the year which is not being dis-
tributed is allocated to each category of stock based on
the number of outstanding shares. Profits available for
distribution are determined directly on the basis of the
dividend resolutions passed for common and preferred

in years

Factory and office buildings, distribution facilities and residential buildings

Plant and machinery

Other equipment, factory and office equipment

stock. Diluted earnings per share would have to be dis-
closed separately.

Purchased and internally-generated intangible assets
are recognised as assets in accordance with IAS 38 (Intan-
gible Assets), where it is probable that the use of the as-
set will generate future economic benefits and where the
costs 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, amor-
tised on a straight-line basis over their estimated useful
lives. With the exception of capitalised development costs,
intangible assets are generally amortised over their esti-
mated useful lives of between three and five years. Intangi-
ble assets with indefinite useful lives are assessed regularly
for recoverability and their carrying amounts are reduced
to the recoverable 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
comprise all expenditure that can be attributed directly
to the development process, including development-
related overheads. Capitalised development costs are
amortised on a systematic basis, following the com-
mencement of production, over the estimated product
life which is generally seven years.

All items of property, plant and equipment are con-
sidered to have finite useful lives. They are recognised at
acquisition or manufacturing cost less scheduled depre-
ciation based on the 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 depreciated separately.

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

8 to 50

4 to 21

3 to 10

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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

96
117
133

85 GROUP FINANCIAL STATEMENTS

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 proportion
of production-related overheads. This includes produc-
tion-related depreciation and an appropriate proportion
of administrative and social costs.

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

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
instalments 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 the contrac-
tual value. Residual value provisions are treated as write-
downs and offset against leased products on the assets
side of the balance sheet.

realised market values. Measurement also takes account
of other relevant up-to-date information. The underlying
assumptions are validated regularly in conjunction with
internal back-testing procedures.

The recoverability of the carrying amount of intangible
assets (including capitalised development costs and
goodwill) and property, plant and equipment is tested
regularly for impairment in accordance with IAS 36 (Im-
pairment of Assets) on the basis of cash generating units.
If there is no indication of impairment during the year,
an annual impairment test is carried out at the year-end
for intangible assets not yet available for use, for intan-
gible assets with an indefinite useful life and for goodwill
acquired as part of a business combination. In all other
cases, an impairment test is carried out when changed
circumstances or events indicate that the asset may be
impaired. An impairment 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. This
does not, however, apply to goodwill: previously recog-
nised impairment losses on goodwill are not reversed.

Investments accounted for using the equity method
are (except when the investment is impaired) measured
at the Group’s share of equity taking account of fair value
adjustments on acquisition.

Investments in non-consolidated Group companies 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, participa-
tions 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.

The imputed residual value of leased products is com-
puted by the BMW Group on the basis of forecasts issued
by external institutes (e.g. EurotaxSchwacke) or actual

A financial instrument is a contract that gives rise to a
financial asset of one entity and a financial liability or

equity instrument of another entity. Once the BMW Group
becomes party to such a contract, the financial instru-
ment is recognised either as a financial asset or as a finan-
cial liability.

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 their
fair value. When market prices are not available, the fair
value of available-for-sale financial assets is measured
using appropriate valuation techniques e.g. discounted
cash flow analysis based on market information avail-
able at the balance sheet date.

Available-for-sale assets include financial assets, securi-
ties and investment fund shares. This category includes
all non-derivative financial assets which are not classified
as “loans and receivables” or “held-to-maturity invest-
ments” 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 regu-
larly as to whether there is any objective evidence that a
financial asset or group of assets may be impaired. Im-
pairment losses identified after carrying out an impair-
ment test are recognised as an expense. Gains and losses
on available-for-sale financial assets are recognised di-
rectly in equity until the financial asset is disposed of or
is determined to be impaired, at which time the cumula-
tive 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 matu-
rities of over one year which bear no or a lower-than-mar-
ket interest rate are discounted. Appropriate impairment
losses are recognised to take account of all identifiable
risks.

Receivables from sales financing comprise receiv-
ables from retail customer, dealer and lease financing.

Impairment losses on receivables relating to financial
services business are recognised using a uniform method-
ology 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 customer
retail business, the existence of overdue balances or the
incidence of similar events in the past are examples of
such objective evidence. In the event of overdue receiv-
ables, impairment losses are always recognised individu-
ally based on the length of period of the arrears. In the
case of dealer financing receivables, the allocation of the
dealer to a corresponding rating category is also deemed
to represent objective evidence of impairment. If there
is no objective evidence of impairment, impairment
losses are recognised on financial assets using a portfolio
approach based on similar groups of assets. Company-
specific loss probabilities and loss ratios, derived from
historical data, are used to measure impairment losses on
similar groups of assets.

The recognition of impairment losses on receivables
relating 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 receiv-
ables are dercognised.

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
currency, interest rate, fair value and market price risks
from operating activities and related financing require-
ments. All derivative financial instruments (such as inter-
est, currency and combined interest /currency swaps as
well as forward currency and forward commodities con-
tracts) 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 finan-
cial instruments are measured using market information
and recognised valuation techniques. In those cases
where hedge accounting is applied, changes in fair value
are recognised either in income or directly in equity un-

74
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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

96
117
133

87 GROUP FINANCIAL STATEMENTS

der accumulated other equity, depending on whether
the transactions are classified as fair value hedges or cash
flow hedges. In the case of fair value hedges, the results
of the fair value measurement of the derivative financial
instruments and the related hedged items are recognised
in the income statement. In the case of fair value changes
in cash flow hedges which are used to mitigate the future
cash flow risk on a recognised asset or liability or on
forecast transactions, unrealised gains and losses on the
hedging instrument are recognised initially directly in
accumulated other equity. Any such gains or losses are
recognised subsequently in the income statement when
the hedged item (usually external revenue) is recog-
nised 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
financial instruments are recognised immediately in the
income statement.

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 in-
clude claims to future tax reductions which arise from the
expected usage of existing tax losses available for carry-
forward (where future usage is probable). Deferred taxes
are computed using enacted or planned tax rates which
are expected to apply in the relevant national jurisdictions
when the amounts are recovered.

Inventories of raw materials, supplies and goods for re-
sale 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
recognised using the projected unit credit method in ac-
cordance 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 calculation is based
on an independent actuarial valuation which takes into
account all relevant biometric factors.

Actuarial gains and losses arising on defined benefit
pension and similar obligations are recognised, net of
deferred tax, directly in equity.

The expense related to the reversal of discounting on
pension 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 provi-
sions with a remaining period of more than one year are
discounted to the present value of the expenditures ex-
pected 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
consideration given. Transaction costs are included in this
initial measurement. Subsequent to initial recognition,
liabilities are, with the exception of derivative financial
instruments, 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 lease payments and disclosed under other finan-
cial liabilities.

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 esti-
mates relate principally to the groupwide determination
of economic useful lives, the measurement of invento-
ries, the recognition and measurement of provisions and
the recoverability 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 develop-
ments. This includes the situation in the automotive sec-
tor and the general business environment. Estimates and
underlying assumptions are checked regularly. Actual

74
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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

96
117
133

amounts could differ from those assumptions and esti-
mates if business conditions develop differently to the
Group’s expectations at the end of the reporting period.
Where new information comes to light, differences
are reflected in the income statement and assumptions

changed accordingly. In addition, estimates used to
measure warranty provisions were refined on the basis
of current information. The positive impact of this
change in estimate amounted to euro 201 million and
has been recognised in cost of sales in 2010.

New financial reporting rules
(a) Financial reporting rules applied for the first time in the financial year 2010
The following Standards and Revised /Amended Standards and Interpretations were applied for the first time in the
financial year 2010:

Standard / Interpretation

Date of
mandatory
application

Endorsed
by EU at
31.12. 2010

Impact on BMW Group

IFRS 1

IFRS 2

IFRS 3 /
IAS 27

IAS 39

Additional Exceptions for First-time
Adopters

First-time Adoption of IFRS

Accounting for Cash-settled Share-based
and Separate Financial Statements

Business Combinations / Consolidated
and Separate Financial Statements

Exposures Qualifying for
Hedge Accounting
Annual Improvements to IFRS*

IFRIC 17

IFRIC 18

Distributions of Non-cash Assets to Owners

Transfers of Assets from Customers

1. 1. 2010

Yes

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

None

Significant in principle:
Revised accounting treatment
for business combinations

None

Insignificant

None

(b) New financial reporting rules issued in 2010
The following Standards and Revised /Amended Standards, which had been issued by the IASB by the end of the
financial year 2010, but which were not mandatory for the reporting period, have not been applied by the BMW Group
in the financial year 2010:

Standard

IFRS 1

IFRS 7

IFRS 9

IAS 12

Exemption from Comparative IFRS 7
Disclosures

Amendments with Respect to
Transition Dates and Severe Inflation

Financial Instruments: Disclosures

Additions to IFRS 9 for Financial
Liabilities Accounting

Recovery of Underlying Assets
Annual Improvements to IFRS*

Published by
IASB

Date of
mandatory
application

Endorsed
by EU at
31.12. 2010

Expected impact
on BMW Group

28. 1. 2010

1. 1. 2011

20. 12. 2010

1. 1. 2012

7. 10. 2010

28. 10. 2010

20. 12. 2010

6. 5. 2010

1. 1. 2012

1. 1. 2013

1. 1. 2012

1. 1. 2011

Yes

None

Insignificant

* Unless otherwise specified, the amendments are effective for annual periods beginning on or after 1 January 2011.

89 GROUP FINANCIAL STATEMENTS

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

2010

2009

44,838

5,181

6,139

2,604

1,715

60,477

36,126

5,641

5,294

2,582

1,038

50,681

An analysis of revenues by business segment and geographical region is shown in the segment information on
pages 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

2010

2009

29,173

3,082

928

11,110

2,112

893

2,264

49,562

24,930

2,587

996

10,092

2,879

1,310

2,562

45,356

Cost of sales include euro 14,115 million (2009: euro
14,281 million) relating to financial services business.

on assets and reduced consumption-based taxes
amounting to euro 36 million (2009: euro 27 million).

As in the previous year, manufacturing costs do not con-
tain any impairment losses on intangible assets and
property, plant and equipment. Cost of sales is reduced
by public-sector subsidies in the form of reduced taxes

Total research and development expenditure compris-
ing 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

2010

2009

3,082

–1,260

951

2,773

2,587

–1,226

1,087

2,448

Sales and administrative costs
Sales costs amounted to euro 4,020 million (2009: euro
3,647 million) and comprise mainly marketing, advertis-
ing and sales personnel costs.

Administrative costs amounted to euro 1,509 million
(2009: euro 1,393 million) and comprise expenses for
administration not attributable to development, produc-
tion 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

2010

2009

547

766

– 677

–186

– 40

–155

–1,058

455

169

808

– 482

– 78

– 85

–159

– 804

74
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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

96
117
133

Other operating income and expenses

– 292

Other operating income includes public-sector grants of euro 30 million (2009: euro 14 million).

Result from equity accounted investments
The profit from equity accounted investments of euro
98 million (2009: euro 36 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. It also includes for the first time
the Group’s share of the results of the joint ventures SGL
Automotive Carbon Fibers GmbH & Co. KG, Munich, SGL
Automotive Carbon Fibers Verwaltungs GmbH, Munich,
and SGL Automotive Carbon Fibers, LLC, Dover, DE.

Net interest result

in euro million

Expected return on plan assets

Other interest and similar income

thereof from subsidiaries: euro 13 million (2009: euro 6 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 (2009: euro – million)

Interest and similar expenses

Net interest result

2010

2009

476

209

685

– 588

–124

– 3

– 251

379

477

856

– 532

–115

– 3

– 364

– 966

–1,014

– 281

–158

The expected return on plan assets includes the expected
income on assets held to secure obligations relating to

pensions and pre-retirement part-time work arrange-
ments.

91 GROUP FINANCIAL STATEMENTS

13 Other financial result

in euro million

Income from investments

thereof from subsidiaries: euro 5 million (2008: euro 4 million)

Impairment losses on investments in subsidiaries

Income from reversal of impairmant losses on investments in subsidiaries

Result on investments

Losses and gains relating to financial instruments

Sundry other financial result

Other financial result

2010

2009

–179

–171

– 75

– 3

–

245

246

The result on investments in 2010 arose mainly as a re-
sult of the impairment loss recognised on the investment
in the Husqvarna Group.

The positive sundry other financial result was largely at-
tributable to fair value gains on stand-alone commodities
derivatives.

Income taxes
Taxes on income comprise the following:

in euro million

Current tax expense

Deferred tax income / expense

Income taxes

2010

2009

1,430

172

1,602

338

–135

203

Deferred taxes are recognised on temporary differences
between the carrying amount of assets and liabilities
for IFRS purposes and their tax bases. The deferred tax
expense of euro 172 million (2009: deferred tax income
of euro 135 million) is stated after offsetting deferred
tax income of euro 212 million (2009: deferred tax ex-
pense of euro 228 million) arising on new or reversed
temporary differences. 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 mu-
nicipal trade tax and the solidarity charge of 5.5%, the
overall tax rate for BMW companies in Germany is
30.2%, unchanged from the previous year. The tax rates
for companies outside Germany also remained in an
unchanged range of between 12.5% and 46.9%. A valua-
tion allowance is recognised on deferred tax assets when
recoverability is uncertain. In determining 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 below:

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

2010

2009

2010

2009

415

2,672

1,453

1,950

3,113

1,870

443

2,175

1,838

1,388

3,316

1,564

11,514

10,768

– 549

– 9,572

1,393

– 550

– 8,952

1,266

1,338

281

4,651

4,007

–

1,613

566

12,505

1,490

410

4,281

3,559

–

1,444

482

11,721

–

– 9,572

– 8,952

2,933

1,540

2,769

1,503

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

fully written down since they can only be utilised against
future capital gains. Capital losses are not connected to
on-going business operations.

Deferred tax assets on tax losses available for carryforward
and on capital losses decreased on a net basis. Tax losses
available for carryforward – for the most part usable
without restriction – decreased to euro 2.6 billion (2009:
euro 5.2 billion) mainly as a result of a tax field audit at
the level of BMW AG. A valuation allowance of euro
33 million (2009: euro 31 million) was recognised at
31 December 2010 on deferred tax assets relating to these
tax losses. In the entities affected, a net surplus of de-
ferred tax assets over deferred tax liabilities is reported
amounting to euro 587 million (2009: euro 618 million).
Capital losses in the United Kingdom were unchanged
at the end of the reporting period at euro 1.9 billion. As
in previous years, deferred tax assets recognised on these
tax losses – amounting to euro 516 million at the end
of the reporting period (2009: euro 519 million) – were

in euro million

Deferred taxes at 1 January

Deferred tax expenses recognised through income statement

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

Deferred taxes at 31 December

* including effect of first-time consolidations

Deferred tax assets are recognised on the basis of manage-
ment’s assessment of whether it is probable that the
relevant entities will generate sufficient taxable profits
against which deductible temporary differences can be
offset.

Deferred taxes recognised directly in equity amounted to
euro 756 million (2009: euro 493 million), an increase of
euro 263 million (2009: euro 190 million) compared to
the previous year. The change also includes a euro 6 mil-
lion (2009: euro 12 million) reduction in deferred taxes
arising on foreign currency translation.

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

2010

2009

1,503

172

– 269

134

1,540

1,891

–135

– 202

– 51

1,503

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

96
117
133

93 GROUP FINANCIAL STATEMENTS

Deferred taxes are not recognised on retained profits of
euro 16.2 billion (2009: euro 15.9 billion) of foreign sub-
sidiaries, as it is intended to invest these profits to main-
tain and expand the business volume of the relevant
companies. A computation was not made of the potential
impact of income taxes on the grounds of dispropor-
tionate expense.

The tax returns of BMW Group entities are checked re-
gularly by German and foreign tax authorities. Taking
account of a variety of factors – including existing inter-
pretations, commentaries and legal decisions taken
relating to the various tax jurisdictions and the BMW

Group’s past experience – adequate provision has, as
far as identifiable, been made for potential future tax ob-
ligations.

The actual tax expense for the financial year 2010 of euro
1,602 million (2009: euro 203 million) is euro 142 million
(2009: euro 79 million higher) higher than the expected
tax expense of euro 1,460 million (2009: euro 124 mil-
lion) which would theoretically arise if the tax rate of
30.2% applicable for German companies, and unchanged
from the previous year, was applied across the Group.
The difference between the expected and actual tax ex-
pense is attributable to the following:

in euro million

Expected tax expense

Variances due to different tax rates

Tax increases (+) / tax reductions (–) as a result of non-taxable income and non-deductible expenses

Tax expense (+) / benefits (–) for prior periods

Other variances

Actual tax expense

2010

2009

1,460

– 50

105

141

– 54

1,602

124

– 26

–1

203

Tax increases as a result of non-deductible expenses relate
mainly to the impact of non-recoverable withholding
taxes on intra-group dividends. This line also includes
write-downs recorded in the current year on investments.
The line “Tax expense (+ ) / benefits (–) for prior years”
mainly reflects the impact of tax field audits in Germany
and abroad.

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 7 million (2009:
euro 3 million). The tax income for the valuation allow-
ance on deferred tax assets relating to tax losses available
for carryforward and temporary differences and their
reversal amounted to euro 18 million (2009: euro 10 mil-
lion).

Earnings per share

Net profit for the year after minority interest

euro million

3,218.1

203.6

2010

2009

Profit attributable to common stock

Profit attributable to preferred stock

Average number of common stock shares in circulation

Average number of preferred stock shares in circulation

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 million

2,958.3

259.8

186.5

17.1

number

601,995,196

number

52,663,822

51,833,937

euro

4.91

4.93

1.30

1.32

0.31

0.33

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 correspond to undi-
luted earnings per share.

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 pension costs: euro 740 million (2008: euro 744 million)

Personnel costs

2010

2009

6,109

1,285

5,299

1,267

7,394

6,566

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

96
117
133

Personnel costs include euro 116 million (2009: euro 171
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

2010

2009

88,933

5,513

94,446

90,755

5,452

96,207

For information regarding the number of employees at
the year-end, reference is made to pages 27 et seq. in the
Group Management Report.

The fee expense pursuant to § 314 (1) no. 9 HGB recog-
nised in the financial year 2010 for the Group auditors
amounted to euro 19 million (2009: euro 20 million) and
consists of the following:

in Mio. Euro

Audit of financial statements

thereof KPMG Europe LLP

Other attestation services

thereof KPMG Europe LLP

Tax advisory services

thereof KPMG Europe LLP

Other services

thereof KPMG Europe LLP

Fee expense

thereof KPMG Europe LLP

2010

2009

–

The total fee comprises expenses recorded by BMW AG
and consolidated subsidiaries.

Fee expense relating to KPMG Europe LLP comprise serv-
ices provided by KPMG AG Wirtschaftsprüfungs-
gesellschaft and its affiliated companies in the United

Kingdom, Switzerland, Spain, Belgium, the CIS (former
USSR) countries and the Netherlands. The prior year ex-
pense incurred by the subsidiary in the CIS countries
(which did not entail a significant amount) was not re-
ported in the previous year.

95 GROUP FINANCIAL STATEMENTS

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

17 Disclosures relating to total comprehensive income

Other comprehensive income for the period after tax comprises the following:

in euro million

2010

2009

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

–19

–16

– 794

274

– 520

683

– 277

263

133

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

2010

Deferred
taxes

2009

After
tax

Before
tax

Deferred
taxes

184

–

263

–11

– 336

683

295

318

– 203

–1,198

133

– 581

–1

–131

–

322

190

Before
tax

–16

– 520

683

– 277

–130

– 7

358

– 63

295

318

– 1,198

190

– 391

After
tax

164

318

– 876

– 391

BMW Group
Notes to the Group Financial Statements
Notes to the Balance Sheet

18 Analysis of changes in Group tangible, intangible and investment assets 2010

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

1. 1. 20101

Translation
differences

Additions

Reclassi-
fications

Disposals

31. 12. 2010

Acquisition and manufacturing cost

8,695

859

9,554

7,353

22,715

2,056

567
32,6911

–

118

221

414

951

1,028

1,422

109

610

2,235

–

430

– 496

–

499

537

622

761

9,147

910

10,057

7,571

24,166

2,142

700

34,579

Leased products

24,417

982

9,334

–

10,776

23,957

Investments accounted for using the equity method

137

Investments in non-consolidated subsidiaries

Participations

Non-current marketable securities

Other investments

307

319

–

103

120

–

124

–

178

–

182

212

251

–

263

1 including the acquisition cost of property, plant and equipment in conjunction with the first-time consolidation of the Husqvarna Group totalling euro 14 million
2 including assets under construction of euro 582 million

Analysis of changes in Group tangible, intangible and investment assets 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

96
117
133

1. 1. 20091

Translation
differences

Additions

Reclassi-
fications

Disposals

31. 12. 2009

Acquisition and manufacturing cost

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

Leased products

8,855

972

9,827

6,939

21,672

2,075

1,121

31,807

25,407

Investments accounted for using the equity method

111

Investments in non-consolidated subsidiaries

Participations

Non-current marketable securities

Other investments

375

406

–

– 4

128

–

1,087

1,137

154

1,662

441

2,334

8,646

–

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

106

–

125

137

307

319

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

97 GROUP FINANCIAL STATEMENTS

Depreciation and amortisation

Carrying amount

1. 1. 20101

Translation
differences

Current year

Disposals

Reversal
of impair-
ment losses

31. 12. 2010

31. 12. 2009

3,761

414

4,175

2,936

16,732

1,623

21,292

–

165

–

255

1,260

119

1,379

226

1,933

144

–

2,303

499

535

595

–

698

–

4,522

504

5,026

3,186

18,235

1,730

4,625

406

5,031

4,385

5,931

412
6992

4,934

Development costs

445

Other intangible assets

5,379

Intangible assets

4,404

Land, titles to land, buildings, including buildings on
third party land

5,983

Plant and machinery

433

Other facilities, factory and office equipment

565

Advance payments made and construction in progress

–

23,152

11,427

11,385

Property, plant and equipment

6,444

259

2,817

3,354

–

6,166

17,791

17,973

Leased products

–

–1

–

179

–

179

177

–

177

–

212

169

–

177

137

Investments accounted for using the equity method

225

Investments in non-consolidated subsidiaries

Participations

Non-current marketable securities

232

Other investments

Depreciation and amortisation

1. 1. 20091

Translation
differences

Current year

Disposals

Reversal
of impair-
ment losses

31. 12. 2009

31. 12. 2008

Carrying amount

3,782

401

4,183

2,745

16,150

1,574

20,470

–

1,226

114

1,340

213

1,885

162

–

1,247

101

1,348

1,361

123

–

3,761

414

4,175

2,936

16,732

1,623

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

Land, titles to land, buildings, including buildings on
third party land

5,518

Plant and machinery

497

Other facilities, factory and office equipment

1,120

Advance payments made and construction in progress

2,260

1,525

–

21,292

11,385

11,292

Property, plant and equipment

5,883

– 5

3,689

3,123

–

6,444

17,973

19,524

Leased products

–

137

111

Investments accounted for using the equity method

225

232

296

Investments in non-consolidated subsidiaries

Participations

Non-current marketable securities

322

Other investments

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, sales costs and administra-
tive costs.

In addition, intangible assets include a brand-name right
amounting to euro 41 million (2009: euro 40 million) and
goodwill with an indefinite useful life of euro 111 mil-
lion, unchanged from the previous year. The latter com-
prises 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 sepa-
rately in the BMW Group balance sheet since the amount
is not significant in relation to either the balance sheet
total or intangible 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 pages 96 et seq.

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

96
117
133

Property, plant and equipment
No borrowing costs were recognised as a cost component
of property, plant and equipment during the year under
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
pages 96 et seq.

Property, plant and equipment include a total of euro
55 million (2009: euro 57 million) relating to operational
buildings used by BMW AG as well as leased plant, ma-
chinery 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 46 million (2009: euro
48 million) run for periods up to 2028 at the latest.
Some of the leases contain extension and purchase op-
tions. The leases for plant and machinery and other
equipment at the Oxford plant, with a carrying amount
of euro 3 million (2009: euro 4 million) at 31 December,
run until 2011. For each of the leases, there is a recur-
ring option to extend the leases by one year. A purchase
option was not agreed. The lease for plant and ma-
chinery and other equipment at the Hams Hall plant,
with a carrying amount of euro 3 million (2009: euro
1 million) at 31 December, runs until 2018. Neither a
lease extension option nor a purchase option has been
agreed.

Minimum lease payments of the relevant leases are as
follows:

in euro million

31. 12. 2010

31. 12. 2009

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

116

300

242

166

117

358

141

290

99 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 8,070 million
(2009: euro 7,686 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. 2010

31. 12. 2009

4,303

3,766

8,070

4,257

3,428

7,686

Contingent rents of euro 47 million (2009: euro 39 mil-
lion), based principally on the distance driven, were
recognised in income. The agreements have, in part, ex-
tension 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 pages 96 et seq.

Investments accounted for using the equity method
and other investments
Investments accounted for using the equity method in-
clude the BMW Group’s interests in BMW Brilliance
Automotive Ltd., Shenyang, SGL Automotive Carbon

Fibers GmbH & Co. KG, Munich, SGL Automotive Carbon
Fibers Verwaltungs GmbH, Munich, and SGL Auto-
motive Carbon Fibers LLC, Dover, DE (all joint ventures)
and in Cirquent GmbH, Munich. The aggregated inter-
ests of the Group are as follows:

in euro million

31. 12. 2010

31. 12. 2009

Disclosures relating to the income statement

Income

Expenses

Profit

Disclosures relating to the balance sheet

Non-current assets

Current assets

Equity

Non-current liabilities

Current liabilities

Balance sheet total

1,240

–1,142

318

572

271

583

890

835

– 797

222

287

164

330

509

Other investments relate primarily to investments in
non-consolidated subsidiaries, investments in other
companies and non-current marketable securities.

Additions to investments in non-consolidated sub-
sidiaries relate primarily to the foundation of BMW India
Financial Services Pvt. Ltd., New Delhi, and to a capital
increase at the level of Husqvarna Motorcycles S. r. l.,
Cassinetta di Biandronno.

in use) was lower than the relevant carrying amounts.
Most of this expense was recorded by the Automobile
segment. Fair values were calculated by discounting
future cash flows using a risk-adjusted interest rate of
12.0% (unchanged from the previous year).

Changes in investments in non-consolidated subsidiar-
ies also reflect the capital increase, impairment and first-
time consolidation of the Husqvarna Group.

The write-downs on investments in affiliated companies
relates primarily to investments in the Husqvarna Group.
The new strategic direction being taken for these invest-
ments gave rise to an impairment loss of euro 178 mil-
lion, reflecting the fact that the recoverable amount (value

A break-down of the different classes of other invest-
ments 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 pages 96
et seq.

100

23 Receivables from sales financing

Receivables from sales financing, totalling euro 45,365 mil-
lion (2009: euro 40,594 million), comprise euro 35,460
million (2009: euro 31,971 million) for credit financing

for retail customers and dealers and euro 9,905 million
(2009: euro 8,623 million) for finance leases. Finance leases
are analysed as follows:

in euro million

31. 12. 2010

31. 12. 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

96
117
133

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

3,922

7,185

11,163

3,409

6,446

9,905

3,477

6,269

9,774

3,056

5,542

8,623

Unrealised interest income

1,258

1,151

Contingent rents recognised as income (generally re-
lating to the distance driven) amounted to euro 3 mil-
lion (2009: euro 3 million). Write-downs on finance
leases amounting to euro 68 million (2009: euro 58 mil-
lion) were measured and recognised on the basis of
specific credit risks. There are no guaranteed residual

values that fall to the benefit of the lessor (2009: euro
3 million).

Receivables from sales financing include euro 27,126 mil-
lion (2009: euro 23,478 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. 2010

31. 12. 2009

46,961

–1,596

45,365

41,950

–1,356

40,594

Allowances for impairment on receivables from sales financing developed as follows during the year under report:

2010
in euro million

Balance at 1 January

Allocated / reversed

Utilised

Exchange rate impact and other changes

Balance at 31 December

2009
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

1,195

489

– 365

1,393

161

–15

203

Allowance for impairment recognised on a
group basis

specific item basis

938

682

– 444

1,195

115

–10

161

Total

1,356

534

– 380

1,596

Total

1,053

732

– 454

1,356

101 GROUP FINANCIAL STATEMENTS

At the end of the reporting period, impairment allowances
of euro 203 million (2009: euro 161 million) were recog-
nised on a group basis on gross receivables from sales
financing totalling euro 24,477 million (2009: euro 19,509
million). Impairment allowances of euro 1,393 million
(2009: euro 1,195 million) were recognised at 31 Decem-
ber 2010 on a specific item basis on gross receivables
from sales financing totalling euro 10,722 million (2009:
euro 10,581 million).

Receivables from sales financing which were not over-
due at the end of the reporting period amounted to euro
11,762 million (2009: euro 11,860 million). No impair-
ment losses were recognised for these balances.

The estimated fair value of collateral received for receiv-
ables on which impairment losses were recognised to-
talled euro 19,282 million (2009: euro 15,600 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 35 million (2009: euro 40 mil-
lion). As at the end of the previous year, there were no
receivables from sales financing at the balance sheet
date which have been renegotiated and which were other-
wise overdue 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. 2010

31. 12. 2009

2,781

1,566

262

462

5,129

1,867

3,262

2,433

1,648

266

364

4,734

1,519

3,215

The change in derivative instruments mainly reflects
the positive development of fair values of commodity de-
rivatives.

Marketable securities and investment funds decreased
mainly as a result of the maturing of fixed-interest securi-
ties, the funds from which were not fully reinvested.

were transferred to BMW Trust e. V., Munich, as part of
Contractual Trust Arrangements (CTAs) and are therefore
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 50 million (2009: euro
28 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
available-for-sale financial assets and comprise:

in euro million

Stocks

Fixed income securities

Sundry marketable securities

Marketable securities and investment funds

31. 12. 2010

31. 12. 2009

1,565

–

1,566

–

1,647

1,648

102

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. 2010

31. 12. 2009

282

1,283

–

302

1,345

–

1,565

1,648

31. 12. 2010

31. 12. 2009

277

–15

262

283

–17

266

Allowances for impairment losses on receivables relating to credit card business developed as follows during the year
under report:

2010
in euro million

Balance at 1 January

Allocated / reversed

Utilised

Exchange rate impact and other changes

Balance at 31 December

2009
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

– 30

–

Allowance for impairment recognised on a
group basis

specific item basis

– 32

–1

–

Total

– 30

Total

– 32

– 1

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

96
117
133

103 GROUP FINANCIAL STATEMENTS

Income tax assets
Income tax assets can be analysed as follows:

31 December 2010
in euro million

Deferred tax

Current tax

Income tax assets

31 December 2009
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

–

302

1,393

864

2,257

Maturity
within one year

Maturity
later than one year

–

452

1,266

498

1,764

Total

1,393

1,166

2,559

Total

1,266

950

2,216

31. 12. 2010

31. 12. 2009

564

688

258

847

474

818

445

485

171

898

507

618

3,649

3,124

692

2,957

640

2,484

Receivables from subsidiaries include trade receivables
of euro 89 million (2009: euro 70 million) and financial
receivables of euro 599 million (2009: euro 415 million).
They include euro 259 million (2009: euro 145 million)
with a remaining term of more than one year.

Prepayments of euro 847 million (2009: euro 898 million)
relate mainly to prepaid interest, development costs not
eligible for capitalisation as non-current assets, insurance
premiums and rent. Prepayments of euro 542 million
(2009: euro 568 million) have a maturity of less than one
year.

Receivables from other companies in which an investment
is held include euro 251 million (2009: euro 171 million)
due within one year.

Collateral receivables comprise mainly customary col-
lateral arising on the sale of receivables.

104

Inventories
Inventories comprise the following:

in euro million

31. 12. 2010

31. 12. 2009

Raw materials and supplies

Work in progress, unbilled contracts

Finished goods and goods for resale

Inventories

663

683

6,420

7,766

536

542

5,477

6,555

At 31 December 2010, inventories measured at their net
realisable value amounted to euro 416 million (2009:
euro 355 million) and are included in total inventories of

euro 7,766 million (2009: euro 6,555 million). Write-
downs to net realisable value amounting to euro 18 mil-
lion (2009: euro 58 million) were recognised in 2010.

Trade receivables
Trade receivables amounting in total to euro 2,329 million (2009: euro 1,857 million) include euro 41 million due later
than one year (2009: euro 40 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

96
117
133

Allowance for impairment and credit risk

in euro million

Gross carrying amount

Allowance for impairment

Net carrying amount

31. 12. 2010

31. 12. 2009

2,424

– 95

2,329

1,942

– 85

1,857

Allowances on trade receivables developed as follows during the year under report:

2010
in euro million

Balance at 1 January

Allocated / reversed

Utilised

Exchange rate impact and other changes

Balance at 31 December

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

Allowance for impairment recognised on a
group basis

specific item basis

–12

–1

Allowance for impairment recognised on a
group basis

specific item basis

–17

–

– 2

Total

–13

Total

–19

As at the end of the previous year, there were no trade
receivables at the balance sheet date which have been re-

negotiated and which were otherwise overdue or required
recognition of an impairment loss.

105 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. 2010

31. 12. 2009

148

254

149

321

Receivables that are overdue by between 1 and 30 days
do not normally result in bad debt losses since the over-
due nature of the receivables is primarily attributable to
the timing of receipts around the month-end. In the case

of trade receivables, collateral is generally held in the
form of vehicle documents and bank guarantees so that
the risk of bad debt loss is extremely low.

Cash and cash equivalents
Cash and cash equivalents of euro 7,432 million (2009: euro 7,767 million) comprise cash on hand and at bank, all
with a maturity of under three months.

Equity
Number of shares issued
At 31 December 2010 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 53,163,412 shares with a par value of one euro. Un-
like 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 2010, a total of 499,590 shares of preferred stock was
sold to employees at a reduced price of euro 26.99 per
share in conjunction with an employee share scheme.
These shares are entitled to receive dividends with effect
from the financial year 2011. 1,540 shares of preferred
stock were bought back via the stock exchange in order
to service the Company’s employee share scheme.

Issued share capital increased by euro 0.5 million as a
result of the issue to employees of 498,050 shares of non-
voting preferred stock. The Authorised Capital of BMW
AG amounted to euro 4 million at the end of the report-
ing period. The Company is authorised to issue shares of
non-voting preferred stock amounting to nominal euro
5 million prior to 13 May 2014. The share premium of
euro 18 million arising on the share capital increase in
2010 was transferred to capital reserves.

The effect of applying IFRS 2 (Share-Based Payments)
to the employee share scheme is not material for the
Group.

Capital reserves
Capital reserves include premiums arising from the issue
of shares and totalled euro 1,939 million (2009: euro
1,921 million). The change related to the share capital
increase in conjunction with the issue of shares of pre-
ferred stock to employees.

Revenue reserves
Revenue reserves comprise the post-acquisition and
non-distributed earnings of consolidated companies. In
addition, revenue reserves include both positive and
negative goodwill arising on the consolidation of Group
companies prior to 31 December 1994.

Revenue reserves increased during the year to euro
23,447 million. The figure was increased by the amount
of the net profit attributable to shareholders of BMW AG
(euro 3,218 million) and reduced by the payment of the
dividend for 2009 (euro 197 million).

The unappropriated profit of BMW AG of euro 852 mil-
lion for 2010 will be proposed to the Annual General
Meeting for distribution. The proposed distribution must
be authorised by the shareholders at the Annual General

106

Meeting of BMW AG. It is therefore not recognised as a
liability in the Group Financial Statements.

concern in the long-term and to provide an adequate
return to shareholders.

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 ef-
fects of recognising changes in the fair value of derivative
financial instruments and marketable securities directly
in equity, and actuarial gains and losses relating to de-
fined benefit pension plans and similar obligations. It also
includes deferred taxes on items recognised directly in
equity.

Minority interests
Equity attributable to minority interests amounted to
euro 26 million (2009: euro 13 million). This includes a
minority interest of euro 16 million (2009: euro 6 mil-
lion) 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 divi-
dends 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
requirements. In order to reduce non-systematic risk, the
BMW Group uses a variety of financial instruments avail-
able on the world’s capital markets to achieve optimal
diversification.

Capital management disclosures
The BMW Group’s objectives when managing capital are
to safeguard the Group’s ability to continue as a going

The capital structure at the end of the reporting period
was as follows:

in euro million

31. 12. 2010

31. 12. 2009

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

23,074

27.0 %

35,833

26,520

62,353

73.0 %

85,427

19,902

24.5 %

34,391

26,934

61,325

75.5 %

81,227

Equity attributable to shareholders of BMW AG in-
creased during the financial year by 2.5 percentage points,
mainly reflecting the increase in revenue reserves com-
pared to the previous year. The decrease in the proportion
of financial liabilities mainly reflects the fact that financ-
ing requirements for financial services business only in-
creased slightly.

BMW AG is officially rated by the international rating

agencies, Standard & Poor’s (S & P) and Moody’s, and ad-
judged to be highly creditworthy. The long-term and
short-term ratings issued to BMW AG by the two rating
agencies have been robust for many years now.

In September 2010 Moody´s and S & P raised their ratings
for the Company’s outlook from negative to stable as
a result of the recovery of sales markets and improved
macro-economic conditions.

Non-current financial liabilities

Current financial liabilities

Outlook

Moody’s

Standard & Poor’s

P-2

stable

A –

A -2

stable

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

96
117
133

107 GROUP FINANCIAL STATEMENTS

With their current long-term ratings of A– (S & P) and A3
(Moody’s), the agencies continue to confirm BMW AG’s
robust creditworthiness for debt with a term of more
than one year. BMW AG’s creditworthiness for short-term

debt is also classified by the rating agencies as good, thus
enabling it to obtain refinancing funds on competitive
conditions.

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,
economic and tax circumstances prevailing in each coun-
try, various pension plans are used, based generally on
the length of service, final salary and remuneration struc-
ture of the employees involved. Due to similarity of na-
ture, the obligations of BMW Group companies in the
USA and of BMW (South Africa) (Pty) Ltd., Pretoria, for
post-employment medical care are also disclosed as pen-
sion provisions. The provision for these pension-like ob-
ligations amounts to euro 93 million (2009: euro 70 mil-
lion) and is measured, similar to pension obligations, in
accordance with IAS 19. In the case of post-employment
medical care, it is assumed that 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 2010 was euro 10 million (2009: euro 7 million). The
provisions for the medical care of employees in the USA
compare with reimbursement claims of euro 8 million
recognised in accordance with IAS 19.104A.

Post-employment benefit plans are classified as either
defined contribution or defined benefit plans. Under de-
fined contribution plans, an enterprise pays fixed con-
tributions into a separate entity or fund and does not as-
sume any other obligations. The total pension expense
for defined contribution plans within the BMW Group

amounted to euro 30 million (2009: euro 31 million).
Employer contributions paid to state pension insurance
schemes totalled euro 406 million (2009: euro 356 mil-
lion).

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 the financial year 2010, as
previously planned, BMW AG transferred a further por-
tion of its pension obligations to BMW Trust e. V., Munich,
in conjunction with Contractual Trust Agreements (CTAs).
As a result, almost all of the obligations in Germany are
now covered by fund assets. Obligations not covered
by assets held by the fund are covered by pension provi-
sions. The main other countries with funded plans were
the UK, the USA, Switzerland, the Netherlands, Belgium,
South Africa and Japan.

Pension obligations are computed on an actuarial basis at
the level of the defined benefit obligation. The actuarial
computation requires the use of estimates, based on as-
sumptions relating to life expectancy and the parameters
stated below that depend on the economic situation in
each particular country. The following weighted average
values have been used for Germany, the UK and other
countries:

31 December

in %

Discount rate

Salary level trend

Pension level trend

Germany

2010

2009

United Kingdom

2010

2009

Other

2010

2009

4.75

3.25

2.25

5.30

3.25

2.30

5.30

4.10

3.60

5.40

4.00

3.38

5.32

3.89

2.12

5.54

3.45

1.96

108

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 bene-
fit obligation is offset against plan assets measured at
their fair value. Where the plan assets exceed the pension
obligations and the enterprise has a right of reimburse-
ment 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 externally funded plans, a liability is recognised
under pension provisions where the benefit obligation
exceeds fund assets.

Actuarial gains or losses may result from increases or
decreases in either the present value of the defined bene-
fit obligation or 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 expected return on plan assets. Past service cost
arises where a BMW Group company introduces a de-
fined benefit 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

2010

2009

2010

2009

2010

2009

2010

2009

Present value of pension benefits covered by
accounting provisions

Present value of funded pension benefits

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

–

5,289

4,616

6,014

5,743

5,292

4,619

6,014

5,743

5,207

3,144

4,812

4,487

–

1,475

1,202

1,256

–

616

702

436

266

499 11,919

10,858

569 12,008

10,931

346 10,455

7,977

223

1,553

2,954

Balance sheet amounts at 31 December

1,475

1,202

1,259

275

234

1,562

2,968

thereof pension provision

thereof pension assets (–)

–

1,475

1,202

1,259

–

276

–1

238

1,563

2,972

– 4

–1

– 4

Pension provisions relating to pension plans in other
countries amounted to euro 276 million (2009: euro
238 million). This includes euro 190 million (2009: euro
168 million) relating to externally funded plans.

The increase in defined benefit obligations results mainly
from the change in the discount rate used in Germany for
the actuarial computation. The impact of this on pension
provisions was, however, more than offset by a further
transfer of assets to BMW Trust e.V., Munich, in Germany
and by positive fair value changes in fund 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

96
117
133

109 GROUP FINANCIAL STATEMENTS

The changes in the pension provision and the pension
asset (reimbursement claims or right to reduce future

contributions to the funds) as disclosed in the balance
sheet can be derived as follows:

in euro million

2010

2009

2010

2009

2010

2009

2010

2009

Germany

United Kingdom

Other

Total

Balance sheet amounts at 1 January

Effect of first-time consolidation

Expense from pension obligations

1,475

2,693

1,259

345

234

273

2,968

3,311

–

119

–

237

–

135

–

304

–

357

Pension payments or transfers to external funds

–1,851 –1,746

–112

– 99

– 38

– 58 – 2,001 –1,903

Actuarial gains (–) and losses (+)
on defined benefit obligations

Actuarial gains (–) and losses (+) on plan assets

Employee contributions

Translation differences and other changes

441

522

– 7

–102

– 234

–110

–

946

– 40

–

Balance sheet amounts at 31 December

1,475

1,202

1,259

thereof pension provision

thereof pension assets (–)

–

1,475

1,202

1,259

–

–15

–

275

276

–1

– 4

459

1,464

–15

–227

– 289

–

– 5

234

1,562

2,968

238

1,563

2,972

– 4

–1

– 4

The defined benefit plans of the BMW Group gave rise to
an expense from pension obligations in the financial

year 2010 of euro 304 million (2009: euro 357 million),
comprising 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

2010

2009

2010

2009

2010

2009

2010

2009

122

241

– 42

103

228

–

315

275

– 202

– 94

– 246

– 257

119

237

135

–

–20

–

217

588

– 33

188

532

–19

– 468

– 370

304

357

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 func-
tion.

Depending on the risk structure of the pension obli ga-
tions involved, pension plan assets are invested in
various investment classes, the most predominant one
being bonds. The asset portfolio also includes equity
instruments, property and alternative investments.
The expected rate of return is derived on the basis of

110

the specific investment strategy applied to each individual
pension fund. This is determined on the basis of the rates
of return from the individual investment classes taking

account of costs and unplanned risks. This approach re-
sulted in the following expected rates of return on plan
assets (disclosed on the basis of weighted averages):

in %

Germany

2010

2009

United Kingdom

2010

2009

Other

2010

2009

Expected rate of return on plan assets

5.30

6.12

5.40

6.03

5.51

6.55

Compared to the expected return of euro 468 million
(2009: euro 370 million), fund assets actually increased in
the financial year 2010 by euro 695 million (2009: increase
in fund assets of euro 659 million) as a result of positive
market price developments, giving rise to actuarial gains
on fund assets of euro 227 million (2009: actuarial gains
of euro 289 million). The actuarial gains on fund assets
compare with actuarial losses of euro 459 million (2009:
actuarial losses of euro 1,464 million) on benefit obliga-
tions. The actuarial losses in 2010 arose mainly as a result
of the application of a lower discount rate in Germany.

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 bene-
fits are largely organised in the form of company pen-
sions and arrangements financed by the individual. The
pension benefits in the United Kingdom therefore con-
tain 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

1 January

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

2010

2009

2010

2009

2010

2009

4,619

3,848

– 3,144

–1,155

1,475

2,693

321

–

331

–

–119

–111

441

522

– 202

– 94

119

237

–1,740

–1,642

–1,740

–1,642

– 27

– 25

–111

–104

–102

– 234

–

–1

339

288

31 December

5,292

4,619

– 5,207

– 3,144

1,475

United Kingdom

in euro million

1 January

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

2010

2009

2010

2009

2010

2009

5,743

4,403

– 4,487

– 4,059

1,256

344

381

334

– 246

– 257

–

– 282

– 264

– 7

178

946

323

–112

–1

282

–110

–138

– 99

–1

264

– 40

– 295

135

–112

–

–117

– 99

–

906

31 December

6,014

5,743

– 4,812

– 4,487

1,202

1,256

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

96
117
133

111 GROUP FINANCIAL STATEMENTS

Other

in euro million

1 January

Effect of first-time consolidation

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

2010

2009

2010

2009

2010

2009

569

–

–18

702

537

–

–19

– 4

– 9

569

– 346

– 277

–

– 20

– 35

– 2

–15

– 33

– 436

–19

– 54

– 2

–15

– 346

223

– 35

–

– 3

266

260

–

– 54

–

– 4

–19

– 3

223

Plan assets in Germany, the UK and other countries comprised the following:

Components of plan assets

in euro million

2010

2009

2010

2009

2010

2009

2010

2009

Germany

United Kingdom

Other countries

Total

Equity instruments

Debt securities

Real estate

Other

31 December

1,368

3,167

–

672

1,020

1,835

–

289

1,082

823

2,843

2,951

430

457

315

398

5,207

3,144

4,812

4,487

197

153

436

165

142

346

2,647

6,163

456

1,189

2,008

4,928

335

706

10,455

7,977

A substantial portion of plan assets is invested in debt
s ecurities 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 necessary to cover risks (such as changes in morbidity
tables) not taken into account in the actuarial assumptions
applied. The financial risk of pension payments having
to be made for longer than the calculated period is also

hedged for pensioners in the UK by a so-called “longevity
hedge”.

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

2010

2009

2008

2007

2006

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

12,008

10,455

1,553

459

– 227

10,931

7,977

2,954

1,464

– 289

8,788

5,491

3,297

– 919

868

10,631

11,430

6,029

4,602

– 557

6,432

4,998

– 400

–117

Actuarial gains on benefit obligations, mostly attributable
to experience adjustments, amounted to euro 76 million
(2009: euro 22 million).

Experience adjustments relating to fund assets also re-
sulted in actuarial gains of euro 221 million in the finan-
cial year under report (2009: euro 289 million).

112

Other provisions
Other provisions comprise the following items:

in euro million

31. 12. 2010

31. 12. 2009

Obligations for personnel and social expenses

Obligations for ongoing operational expenses

Other obligations

Other provisions

Total

1,392

2,960

1,195

5,547

thereof
due within
one year

941

1,233

652

2,826

Total

960

2,816

988

4,764

thereof
due within
one year

445

1,031

582

2,058

Provisions for obligations for personnel and social ex-
penses comprise mainly performance-related remunera-
tion components, early retirement part-time working
arrangements and employee long-service awards. Pro-
visions for obligations for on-going operational expenses

comprise primarily warranty obligations. Provisions for
other obligations cover numerous specific risks and obliga-
tions of uncertain timing and amount.

Other provisions changed during the year as follows:

in euro million

1.1. 2010* Translation
differences

Additions

Reversal of
discounting

Utilised

Reversed

31. 12. 2010

Obligations for personnel and social expenses

Obligations for ongoing operational expenses

Other obligations

Other provisions

961

2,826

991

4,778

916

944

605

102

2,465

108

117

468

874

336

1,678

103

107

237

1,392

2,960

1,195

5,547

* including entities consolidated for the first time during the financial year

Income from the reversal of other provisions amounting to euro 168 million (2009: euro 509 million) is included in
costs by function in the income statement.

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

96
117
133

Income tax liabilities

31 December 2010
in euro million

Deferred tax

Current tax

Income tax liabilities

31 December 2009
in euro million

Deferred tax

Current tax

Income tax liabilities

Maturity
within one year

Maturity
later than one year

–

649

2,933

549

3,482

Maturity
within one year

Maturity
later than one year

–

595

2,769

241

3,010

Total

2,933

1,198

4,131

Total

2,769

836

3,605

113 GROUP FINANCIAL STATEMENTS

Current tax liabilities of euro 1,198 million (2009: euro
836 million) comprise euro 189 million (2009: euro
197 million) for taxes payable and euro 1,009 million

(2009: euro 639 million) for tax provisions. There was no
income from the reversal of tax provisions in the period
under report (2009: euro 60 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 2010
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 2009
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

6,681

3,514

7,590

5,242

1,793

944

756

17,883

3,676

3,076

–

5,713

1,033

454

3,004

550

–

388

26,520

31,835

3,998

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

27,568

7,740

10,689

5,242

7,506

2,010

1,598

62,353

Total

27,017

9,174

9,933

5,213

7,812

1,093

1,083

26,934

29,263

5,128

61,325

114

Bonds comprise:

Issuer

BMW Finance N. V., The Hague

BMW (UK) Capital plc, Bracknell

BMW US Capital, LLC, Wilmington, DE

BMW Australia Finance Ltd., Melbourne, Victoria

Other

Interest

variable

fixed

variable

fixed

variable

fixed

variable

fixed

variable

fixed

Issue volume
in relevant currency
(ISO-Code)

Weighted
average maturity
period (in years)

Weighted
average effective
interest rate (in %)

EUR 874 million

USD 90 million

AUD 250 million

EUR 12,820 million

GBP 300 million

NOK 450 million

RON 44 million

SEK 1,000 million

USD 1,250 million

CZK 1,080 million

EUR 550 million

JPY 33,900 million

SEK 300 million

USD 100 million

CHF 500 million

GBP 300 million

JPY 27,000 million

EUR 75 million

MXN 405 million

USD 633 million

CHF 700 million

EUR 4,000 million

MXN 1,725 million

USD 1,416 million

AUD 180 million

EUR 285 million

JPY 4,000 million

SEK 2,600 million

USD 375 million

AUD 85 million

CHF 450 million

EUR 150 million

JPY 8,000 million

USD 100 million

JPY 14,600 million

USD 200 million

ZAR 2,500 million

CAD 750 million

JPY 33,600 million

1.9

2.1

4.0

5.8

7.0

4.0

3.0

2.0

4.5

3.0

1.6

4.1

1.5

5.0

8.0

4.7

1.0

5.0

2.4

4.9

6.3

4.4

7.0

1.2

1.5

2.0

1.5

1.9

2.6

4.1

1.3

2.0

2.5

1.3

3.0

1.8

3.0

3.5

3.1

0.8

7.3

4.8

5.3

5.8

11.4

5.0

4.9

1.6

1.0

0.2

2.0

0.3

2.1

5.0

2.5

1.0

4.9

0.3

3.3

5.5

7.8

5.1

5.8

1.6

0.7

2.0

1.1

5.8

2.1

1.5

0.9

1.1

0.2

1.8

6.7

3.2

1.1

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

96
117
133

115 GROUP FINANCIAL STATEMENTS

The following details apply to the commercial paper:

Issuer

BMW AG, Munich

BMW Finance N. V., The Hague

BMW Malta Finance Ltd., St. Julians

BMW US Capital, LLC, Wilmington, DE

Other liabilities
Other liabilities comprise the following items:

31 December 2010
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 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

Issue volume
in relevant currency
(ISO-Code)

Weighted
average maturity
period (in days)

Weighted
average nominal
interest rate (in %)

EUR 40 million

GBP 30 million

JPY 5,100 million

USD 97 million

EUR 3,009 million

EUR 505 million

EUR 2,055 million

26.0

108.0

62.5

31.8

47.0

42.1

27.0

Maturity
within
one year

Maturity
between one
and five years

Maturity
later than
five years

560

738

120

1,130

2,590

5,239

–

2,115

2,304

–

265

279

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

1.0

0.2

0.5

0.9

1.0

0.4

Total

560

773

202

3,510

2,651

7,822

Total

495

417

202

3,134

1,887

6,250

116

Deferred income comprises the following items:

in euro million

31. 12. 2010

31. 12. 2009

Deferred income from lease financing

Deferred income relating to service contracts

Grants

Other deferred income

Deferred income

Total

1,273

1,928

241

3,510

thereof
due within
one year

720

307

1,130

Total

1,082

1,602

276

174

3,134

thereof
due within
one year

658

345

1,109

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 and which

have been invested in 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 relate.
Other deferred income includes primarily the effects of
the initial measurement of financial instruments.

GROUP FINANCIAL STATEMENTS
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity

Trade payables

31 December 2010
in euro million

Maturity
within
one year

Maturity
between one
and five years

Maturity
later than
five years

Total

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

96
117
133

Trade payables

4,327

–

4,351

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

The total amount of financial liabilities, other liabilities and trade payables with a maturity later than five years amounts
euro 4,277 million (2009: euro 5,372 million).

74
74
74

76
78
80

117 GROUP FINANCIAL STATEMENTS

BMW Group
Notes to the Group Financial Statements
Other Disclosures

37 Contingent liabilities and other financial commitments

Contingent liabilities
No provisions were recognised for the following contingent liabilities (stated at their nominal amount), since an out-
flow of resources is not considered to be probable:

in euro million

Guarantees

Performance guarantees

Other

Contingent liabilities

31. 12. 2010

31. 12. 2009

158

232

Contingent liabilities relate entirely to non-group entities.
In the previous year, guarantees included an amount of
euro 8 million in respect of non-consolidated subsidiaries.

Several liability applies in the case of investments in gen-
eral partnerships.

The usual commercial guarantees have been given in re-
lation to the sale of Rover Cars and Land Rover activities.

Other financial obligations
In addition to liabilities, provisions and contingent lia-
bilities, the BMW Group also has other financial commit-

ments, primarily under lease contracts for land, buildings,
plant and machinery, tools, office and other facilities.
The leases run for periods of one to 92 years and in some
cases contain extension and /or purchase options as
well as price escalation clauses. In 2010 an amount of
euro 200 million (2009: euro 199 million) was recog-
nised as expense in conjunction with other financial
commitments.

The total of future minimum lease payments under
non-cancellable leases can be analysed by maturity as
follows:

in euro million

31. 12. 2010

31. 12. 2009

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

205

609

589

1,403

208

598

697

1,503

The above amounts include euro 4 million (2009: euro
1 million) in respect of non-consolidated subsidiaries
and, as in the previous year, euro 1 million for back-to-back
operating leases.

Purchase commitments for property, plant and equip-
ment amount to euro 1,193 million (2009: euro 1,697 mil-
lion).

118

38 Financial instruments

The carrying amounts and fair values of financial instruments are assigned to IAS 39 categories and cash funds as follows1:

31 December 2010
in euro million

Cash funds

Loans
and receivables

Held-to-maturity
investments

Fair value

Carrying
amount

Fair value

Carrying
amount

Fair value

Carrying
amount

–

Assets

Other investments

Receivables from sales financing

Financial assets

Derivative instruments

Cash flow hedges

Fair value hedges

Other derivative instruments

Marketable securities and investment funds

Loans to third parties

Credit card receivables

Other

–

Cash and cash equivalents

7,432

–

46,416

45,365

–

262

462

–

262

462

–

Trade receivables

Other assets

Receivables from subsidiaries

Receivables from companies in which
an investment is held

Collateral receivables

Other

Total

Liabilities

Financial liabilities

Bonds

Liabilities to banks

Liabilities from customer deposits (banking)

Commercial paper

Asset backed financing transactions

Derivative instruments

Cash flow hedges

Fair value hedges

Other derivative instruments

Other

Trade payables

Other liabilities

Payables to subsidiaries

Payables to other companies in which
an investment is held

Other

Total

–

474

–

7,906

–

474

–

2,329

688

258

–

274

688

258

–

274

7,906

50,747

49,696

–

1 For reasons of clarity, the carrying amounts of cash flow and fair value hedges are assigned to the category “Held for trading”.
2 Carrying amount corresponds to fair value.

–

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

96
117
133

119 GROUP FINANCIAL STATEMENTS

Other liabilities

Available-
for-sale

Fair value
option

Held for
trading

Fair value

Carrying
amount

Carrying
amount 2

–

177

–

1,566

–

900

1,102

779

–

Assets

Other investments

Receivables from sales financing

Financial assets

Derivative instruments

Cash flow hedges

Fair value hedges

Other derivative instruments

Marketable securities and investment funds

Loans to third parties

Credit card receivables

Other

Cash and cash equivalents

Trade receivables

Other assets

Receivables from subsidiaries

Receivables from companies in which
an investment is held

Collateral receivables

Other

–

1,743

–

2,781

Total

27,655

7,726

10,723

5,240

7,464

–

1,598

4,351

3,137

67,956

27,568

7,740

10,689

5,242

7,506

–

1,598

4,351

3,137

67,893

Liabilities

Financial liabilities

Bonds

Liabilities to banks

Liabilities from customer deposits (banking)

Commercial paper

Asset backed financing transactions

Derivative instruments

Cash flow hedges

Fair value hedges

Other derivative instruments

Other

Trade payables

Other liabilities

Payables to subsidiaries

Payables to other companies in which
an investment is held

Other

–

921

375

714

–

2,010

Total

120

31 December 2009
in euro million

Cash funds

Loans
and receivables

Held-to-maturity
investments

Fair value

Carrying
amount

Fair value

Carrying
amount

Fair value

Carrying
amount

Assets

Other investments

Receivables from sales financing

Financial assets

Derivative instruments

Cash flow hedges

Fair value hedges

Other derivative instruments

Marketable securities and investment funds

Loans to third parties

Credit card receivables

Other

–

Cash and cash equivalents

7,767

–

41,177

40,594

–

266

364

–

266

364

–

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

96
117
133

Trade receivables

Other assets

Receivables from subsidiaries

Receivables from companies in which

an investment is held

Collateral receivables

Other

Total

Liabilities

Financial liabilities

Bonds

Liabilities to banks

Liabilities from customer deposits (banking)

Commercial paper

Asset backed financing transactions

Derivative instruments

Cash flow hedges

Fair value hedges

Other derivative instruments

Other

Trade payables

Other liabilities

Payables to subsidiaries

Payables to other companies in which
an investment is held

Other

Total

* Carrying amount corresponds to fair value.

–

507

–

8,274

–

507

–

1,857

485

171

–

325

485

171

–

325

8,274

44,668

44,085

–

121 GROUP FINANCIAL STATEMENTS

Other liabilities

Available-
for-sale

Fair value
option

Held for
trading

Fair value

Carrying
amount

Carrying
amount*

–

232

–

1,648

–

619

1,080

734

–

Assets

Other investments

Receivables from sales financing

Financial assets

Derivative instruments

Cash flow hedges

Fair value hedges

Other derivative instruments

Marketable securities and investment funds

Loans to third parties

Credit card receivables

Other

Cash and cash equivalents

Trade receivables

Other assets

–

Receivables from subsidiaries

Receivables from companies in which

–

an investment is held

Collateral receivables

Other

–

1,880

–

2,433

Total

27,246

27,017

9,165

9,946

5,214

7,803

–

1,082

3,122

2,081

65,705

9,174

9,933

5,213

7,812

–

1,083

3,122

2,081

65,481

Liabilities

Financial liabilities

Bonds

Liabilities to banks

Liabilities from customer deposits (banking)

Commercial paper

Asset backed financing transactions

Derivative instruments

Cash flow hedges

Fair value hedges

Other derivative instruments

Other

Trade payables

Other liabilities

Payables to subsidiaries

Payables to other companies in which
an investment is held

Other

–

321

282

490

–

1,093

Total

122

Fair value measurement of financial instruments
The fair values shown are computed using market infor-
mation available at the balance sheet date, on the basis
of prices quoted by the contract partners or using appro-

priate measurement methods, e.g. discounted cash flow
models. In the latter case, amounts were discounted at
31 December 2010 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

Interest rates taken from interest rate curves were adjusted,
where necessary, to take account of the credit quality and
risk of the underlying financial instrument.

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 could
differ from realisable market prices on disposal. The supply
of data to the model used to calculate fair values was refined
in 2010. Observable financial market price spreads (e.g. for
liquidity risks) are now taken into account in the measure-
ment of derivative financial instruments, thus helping to
minimise differences between the carrying amounts of the
instruments and the amounts that can be realised on the
financial markets on the disposal of those instruments.

31 December 2010
in euro million

EUR

USD

GBP

JPY

0.85

0.94

2.51

3.39

0.31

0.39

2.22

3.55

0.63

0.71

2.69

3.69

0.23

0.30

0.56

1.18

Financial instruments measured at fair value are allocated
to different measurement levels in accordance with IFRS 7.
This includes financial instruments that are
1 measured at their fair values in an active market for

identical financial instruments (level 1),

2 measured at their fair values in an active market for

comparable financial instruments or using measure-
ment models whose main input factors are based on
observable market data (level 2) or

3 using input factors not based on observable market data

(level 3).

The following table shows the amounts allocated to each
measurement level at 31 December 2010:

Level hierarchy in accordance with IFRS 7
Level 2

Level 3

Level 1

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

96
117
133

Marketable securities and investment fund shares – available-for-sale

1,566

–

Derivative instruments (assets)

Cash flow hedges

Fair value hedges

Other derivative instruments

Derivative instruments (liabilities)

Cash flow hedges

Fair value hedges

Other derivative instruments

31 December 2009
in euro million

–

900

1,102

779

921

375

714

–

Level hierarchy in accordance with IFRS 7
Level 2

Level 3

Level 1

Marketable securities and investment fund shares – available-for-sale

543

1,105

Derivative instruments (assets)

Cash flow hedges

Fair value hedges

Other derivative instruments

Derivative instruments (liabilities)

Cash flow hedges

Fair value hedges

Other derivative instruments

–

619

1,080

734

321

282

489

–

123 GROUP FINANCIAL STATEMENTS

Other investments (available-for-sale) amounting to euro
177 million (2009: euro 232 million) are measured at
amortised cost since quoted market prices are not avail-
able or cannot be determined reliably. These are therefore
not included in the level hierarchy shown above.

As in the previous year, there were no significant reclassi-

in euro million

Held for trading

fications within the level hierarchy during the financial
year 2010.

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:

2010

2009

Gains / losses from the use of derivative instruments

338

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

–175

–11

– 581

– 69

– 23

– 7

– 801

– 49

– 90

–113

Gains / losses from the use of derivatives relate primarily
to fair value gains or losses arising on stand-alone deriva-
tives.

Interest income and expense from interest rate and inter-
est rate /currency swaps amounted to a net expense of
euro 178 million (2009: net expense of euro 294 million).

Write-downs of euro 3 million (2009: euro 3 million) on
available-for-sale securities, for which fair value changes
were previously recognised directly in equity, were rec-
ognised as expense in 2010. As in the previous year, there
were no reversals of write-downs on current marketable
securities recognised directly in equity.

The disclosure of interest income resulting from the un-
winding of interest on future expected receipts would
normally only be relevant for the BMW Group where as-
sets have been discounted as part of the process of deter-
mining impairment losses. However, as a result of the as-
sumption 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 dis-
count 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

2010

2009

209

– 336

274

–127

164

– 63

209

During the period under report, an expense of euro 24 mil-
lion (2009: euro 44 million) was recognised in the in-
come statement to reflect forecasting errors and conse-
quent over-hedging of currency exposures. In addition,
the ineffective portion of cash flow hedges relating to

raw materials expensed in the income statement amounted
to euro 3 million (2009: –).

At 31 December 2010 the BMW Group held derivative
instruments with terms of up to 60 months (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

96
117
133

124

46 months) to hedge currency risks attached to future
transactions. It is expected that euro 110 million of net
losses, recognised in equity at the end of the reporting
period, will be recognised in the income statement in 2011.

At 31 December 2010 the BMW Group held derivative
instruments with terms of up to 72 months (2009:
84 months) to hedge interest rate risks. It is expected that
euro 42 million of net losses, recognised in equity at
the end of the reporting period, will be recognised in the
income statement in 2011.

At 31 December 2010 the BMW Group held derivative
instruments with terms of up to 35 months (2009:

35 months) to hedge raw material price risks attached to
future transactions. It is expected that euro 88 million of
net gains, recognised in equity at the end of the reporting
period, will be recognised in the income statement in
2011.

Cash flow hedges are generally used to hedge cash flows
arising in conjunction with the supply of vehicles to sub-
sidiaries and to hedge raw material price fluctuations.

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. 2010

31. 12. 2009

Gains / losses on hedging instruments designated as part of a fair value hedge relationship

Gains / loss from hedged items

– 808

763

– 45

– 398

446

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, other financial liabilities and receivables
from sales financing.

where appropriate by warranties and guarantees. If an
item previously accepted as collateral is acquired, it under-
goes a multi-stage process of repossession and disposal
in accordance with the legal situation prevailing in the
relevant market. The assets involved are generally vehi-
cles 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 con-
tractual obligations. The maximum credit risk for irrevo-
cable credit commitments relating to credit card business
amounts to euro 1,020 million (2009: euro 1,513 mil-
lion). The equivalent figure for dealer financing is euro
14,388 million (2009: euro 12,634 million).

Impairment losses are recorded as soon as credit risks
are identified on individual financial assets, using a
methodology specifically designed by the BMW Group.
More detailed information regarding this methodology
is provided in the section on accounting policies.

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 re-
quired, information on the credit-standing of the coun-
terparty obtained or historical data based on the existing
business relationship (i.e. payment patterns to date) re-
viewed in order to minimise the credit risk, all depending
on the nature and amount of the exposure that the BMW
Group is proposing to enter into.

Within the financial services business, the financed items
(e.g. vehicles, equipment and property) in the retail cus-
tomer and dealer lines of business serve as first-ranking
collateral with a recoverable value. Security is also put up
by customers in the form of collateral asset pledges, asset
assignment and first-ranking mortgages, supplemented

The credit risk relating to derivative financial instruments
is minimised by the fact that the Group only enters into
such contracts with parties of first-class credit standing.
The general credit risk on derivative financial instru-
ments utilised by the BMW Group is therefore not con-
sidered to be significant.

A concentration of credit risk with particular borrowers or
groups of borrowers has not been identified in conjunc-
tion with financial instruments.

Further disclosures relating to credit risk, in particular
impairment losses recognised, are provided in the notes
to the relevant category of receivables on page 102 and
pages 104 et seq.

125 GROUP FINANCIAL STATEMENTS

Liquidity risk
The following table shows the maturity structure of expected contractual cash flows (undiscounted) for financial lia-
bilities:

31 December 2010
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 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

* previous year’s figures restated

Maturity
within
one year

Maturity
between one
and five years

Maturity
later than
five years

Total

– 7,812

– 3,594

– 8,089

– 5,246

–1,810

–1,244

– 4,327

– 771

– 19,567

– 4,029

– 3,210

–

– 5,811

–1,375

– 24

– 532

– 32,893

– 34,548

Maturity
within
one year

Maturity
between one
and five years

– 5,694

– 6,882

–7,834

– 5,251

– 2,246

– 690

– 3,106

– 859

– 22,951

– 2,075

– 2,759

–

– 6,278

– 447

–16

–162

– 32,562

– 34,688

– 3,197

– 30,576

– 587

– 25

–

– 35

–

– 525

– 4,369

Maturity
later than
five years

– 4,488

– 841

– 24

–

– 240

–

–118

– 5,711

– 8,210

– 11,324

– 5,246

– 7,621

– 2,654

– 4,351

–1,828

– 71,810

Total

– 33,133

– 9,798

–10,617

– 5,251

– 8,524

–1,377

– 3,122

–1,139

–72,961

The cash flows shown comprise principal repayments
and the related interest. The amounts disclosed for de-
rivatives comprise only cash flows relating to derivatives
that have a negative fair value at the balance sheet date.

Solvency is assured at all times by managing and moni-
toring the liquidity situation on the basis of a rolling cash
flow forecast. The resulting funding requirements are
secured by a variety of instruments placed on the world’s
financial markets. The objective is to minimise risk by
matching maturities for the Group’s financing require-
ments within the framework of the target debt ratio. The
BMW Group has good access to capital markets as a result
of its solid financial position and a diversified refinancing

strategy. This is underpinned by the longstanding long-
and short-term ratings issued by Moody’s and S & P.

Short-term liquidity is managed primarily by issuing
money market instruments (commercial paper). In this
area too, competitive refinancing conditions can be
achieved thanks to Moody’s und S & P short-term ratings
of A-2 and P-2 respectively.

Also reducing liquidity risk, additional secured and unse-
cured lines of credit are in place with first-class interna-
tional banks. Intra-group cash flow fluctuations are
evened out by the use of daily cash pooling arrange-
ments.

126

Market risks
The principal market risks to which the BMW Group is
exposed are currency risk and interest rate risk.

Protection against such risks is provided in the first in-
stance though natural hedging which arises when the
values of non-derivative financial instruments have
matching maturities and amounts (netting). Derivative
financial instruments are used to reduce the risk remain-
ing after netting. Financial instruments are only used
to hedge underlying positions or forecast transactions.

The scope of permitted transactions, responsibilities,
financial reporting procedures and control mechanisms
used for financial instruments are set out in internal
guidelines. This includes, above all, a clear separation
of duties between trading and processing. Currency and
interest rate risks are managed at a corporate level.

Further disclosures relating to risk management are pro-
vided in the Group Management Report.

Currency risk
As an enterprise with worldwide operations, business is
conducted in a variety of currencies, from which currency

risks arise. Since a significant portion of Group revenues
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
extremely important factor for Group earnings.

At 31 December 2010 derivative financial instruments
were in place to hedge exchange rate risks, in particular
for the currencies Chinese renminbi, US dollar, British
pound and Japanese yen. 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 pages 63 et seq.
The BMW Group measures currency risks using a cash-
flow-at-risk model.

The starting point for analysing currency risk with this
model is the identification of forecast foreign currency
transactions or “exposures”. At the end of the reporting
period, the principal exposures for the coming year were
as follows:

in euro million

Euro / Chinese Renminbi

Euro / US Dollar

Euro / British Pound

Euro / Japanese Yen

31. 12. 2010

31. 12. 2009

6,256

3,888

3,056

1,086

3,119

3,696

2,446

902

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
exchange rate fluctuations to operating cash flows on the
basis of probability distributions. Volatilities and corre-
lations serve as input factors to assess the relevant proba-
bility 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% and a holding
period of up to one year for each currency. Aggregation
of these results creates a risk reduction effect due to corre-
lations between the various portfolios.

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 / Chinese Renminbi

Euro / US Dollar

Euro / British Pound

Euro / Japanese Yen

31. 12. 2010

31. 12. 2009

265

103

184

201

174

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

96
117
133

127 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
interest 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. 2010

31. 12. 2009

4,290

7,429

2,599

5,514

6,628

2,031

Interest rate risks can be managed by the use of interest
rate derivatives. The interest rate contracts used for
hedging purposes comprise mainly swaps which are ac-
counted for on the basis of whether they are designated
as a fair value hedge or as a cash flow hedge. A description
of how interest rate risk is managed is provided in the
Group Management Report on page 67.

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 variance-covariance
method, 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 ten days 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
fluctuations – 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. 2010

31. 12. 2009

139

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 64. 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
content of purchases. Changes in the fair values of these
derivatives, which generally track the quoted market
prices of the raw material being hedged, gives rise to mar-
ket price risks for the Group.

If the market prices of hedged raw materials had been 10%

higher (lower) at 31 December 2010, the Group profit
before tax would have been euro 50 million higher (euro
50 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
Management Report on page 67. Information regarding
the residual value risk from operating leases is provided
on pages 83 et seq.

128

39 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 (Statement of Cash Flows),
cash flows are classified into cash flows from operating,
investing and financing activities. The Group and segment
cash flow statements are presented on pages 78 et seq.

Cash and cash equivalents included in the cash flow
statement comprise cash in hand, cheques, and cash at
bank, to the extent that they are available within three
months from the end of the reporting period and are
subject to an insignificant risk of changes in value. The
positive impact of changes in cash and cash equivalents
due to the effect of exchange rate fluctuations in 2010
was euro 22 million (2009: euro 40 million).

balance sheet positions shown in the cash flow statement
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 oper-
ating and investing activities.

If the BMW Group acts as the lessor in an operating
lease, cash flows are reported as part of the cash flow
from investing 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 cash flows from investing and financial 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 ac-
tivities are adjusted for currency translation effects and
changes in the composition of the Group. The changes in

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
5 million (2009: euro 4 million).

Related party relationships
In accordance with IAS 24 (Related Party Disclosures),
related individuals or entities which have the ability to
control the BMW Group or which are controlled by the
BMW Group, must be disclosed unless such parties are
not already included in the consolidated financial state-
ments 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
individuals that have the ability to exercise significant
influence over the financial and operating policies of the
BMW Group. This also includes close relatives and inter-
mediary entities. Significant influence over the financial
and operating policies of the BMW Group is presumed
when a party holds 20% or more of the voting power of
BMW AG. In addition, the requirements contained in
IAS 24 relating to key management personnel and close
members of their families or intermediary entities are
also applied. In the case of the BMW Group, this applies

to members of the Board of Management and Supervisory
Board.

For the financial year 2010, the disclosure requirements
contained in IAS 24 only affect the BMW Group with
regard to business relationships with affiliated, non-
consolidated entities, joint ventures and participations
as well as members of BMW AG’s Board of Management
and Supervisory Board.

The BMW Group maintains normal business relation-
ships with affiliated, non-consolidated entities. Trans-
actions 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
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 2010 for an amount of euro 1,046
million (2009: euro 532 million). At 31 December 2010,
receivables of Group companies from BMW Brilliance

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

96
117
133

129 GROUP FINANCIAL STATEMENTS

Automotive Ltd., Shenyang, amounted to euro 260 mil-
lion (2009: euro 170 million).

In the financial year 2010, Group entities disbursed loans
to the joint ventures, SGL Automotive Carbon Fibers
GmbH & Co. KG, Munich, und SGL Automotive Carbon
Fibers LLC, Dover, DE. As a result, loans receivable
amounting to euro 20 million were owed by joint ventures
to Group entities at 31 December 2010 (2009: -). The
loans were disbursed on the basis of arm’s length prin-
ciples. All other business transactions with the afore-
said joint ventures were concluded on the basis of
arm’s length principles and are not material for the BMW
Group.

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. In
2010 Group entities purchased services and goods from
Cirquent GmbH, Munich, amounting to euro 56 million
(2009: euro 52 million). At 31 December 2010 payables
of Group entities to Cirquent GmbH, Munich, totalled
euro 4 million (2009: euro 10 million). There were no re-
ceivables from Cirquent GmbH, Munich at the end of the
reporting period (2009: euro 1 million).

Stefan Quandt is a shareholder and Deputy Chairman
of the Supervisory Board of BMW AG. He is also sole
shareholder and Chairman of the Supervisory Board of
DELTON AG, Bad Homburg v. d. H., which, via its subsid-
iaries, performed logistics services for the BMW Group
during the financial year 2010. In addition, companies of
the DELTON Group acquired vehicles on the basis of
arm’s length principles from the BMW Group, mostly in

the form of leasing contracts. These service and sales con-
tracts, which are not material for the BMW Group, all
arise in the normal course of business and are conducted
on the basis of arm’s length principles.

Susanne Klatten is a shareholder and member of the Su-
pervisory 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 2010. Susanne Klatten is also a
shareholder and a member of the Supervisory Board of
SGL Carbon SE, Wiesbaden, subsidiaries of which supplied
components to the BMW Group in 2010. Susanne Klatten
also holds shares in Nordex AG, Norderstedt. The corre-
sponding 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 the transactions referred to above, 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.

BMW Trust e.V., Munich, administers assets on a trustee
basis to secure obligations relating to pensions and
pre-retirement part-time work arrangements in Germany
and is therefore a related party of the BMW Group in
accordance with IAS 24. This entity, which is a registered
association (eingetragener Verein) under German law,
does not have any assets of its own. It did not have any
income or expenses during the year under report. BMW
AG bears expenses incurred by BMW Trust e.V., Munich,
on a minor scale and renders services on the association’s
behalf.

Principal subsidiaries of BMW AG

Domestic1
BMW INTEC Beteiligungs GmbH, Munich2
BMW Bank GmbH, Munich2

BMW Finanz Verwaltungs GmbH, Munich

BMW Maschinenfabrik Spandau GmbH, Berlin
BMW Leasing GmbH, Munich2
BMW Hams Hall Motoren GmbH, Munich3
BMW Fahrzeugtechnik GmbH, Eisenach2
BMW M GmbH Gesellschaft für individuelle Automobile, Munich2

1 In the case of German subsidiaries, based on financial statements drawn up in accordance with HGB.
2 profit and loss transfer agreement with BMW AG
3 profit and loss transfer agreement with a subsidiary of BMW AG
4 below euro 500,000

Equity
in euro million

Net result
in euro million

Capital investment
in %

3,554

1,016

212

11
–4

–

100

130

Foreign*

BMW Österreich Holding GmbH, Steyr

BMW China Automotive Trading Ltd., Beijing

BMW Motoren GmbH, Steyr

BMW Russland Trading OOO, Moscow

BMW Austria Gesellschaft m.b.H., Salzburg

BMW Holding B. V., The Hague

BMW (South Africa) (Pty) Ltd., Pretoria

BMW Finance N. V., The Hague

BMW Overseas Enterprises N. V., Willemstad

BMW (Schweiz) AG, Dielsdorf

BMW Japan Corp., Tokyo

BMW Japan Finance Corp., Tokyo

BMW Italia S. p. A., Milan

BMW Australia Finance Ltd., Melbourne, Victoria

BMW Belgium Luxembourg S. A. / N. V., Bornem

BMW Canada Inc., Whitby

BMW France S. A., Montigny-le-Bretonneux

BMW Sverige AB, Stockholm

BMW Korea Co., Ltd., Seoul

BMW Portugal Lda., Lisbon

BMW Automotive (Ireland) Ltd., Dublin

BMW Hellas Trade of Cars SA, Athens

BMW New Zealand Ltd., Auckland

BMW Nederland B. V., The Hague

BMW Australia Ltd., Melbourne, Victoria

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 Corporation, Wilmington, DE

BMW Financial Services NA, LLC, Wilmington, DE

BMW Manufacturing, LLC, Wilmington, DE

BMW of North America, LLC, Wilmington, DE

BMW US Capital, LLC, Wilmington, DE

Equity
in euro million

Net result
in euro million

Capital investment
in %

1,168

1,051

764

199

6,072

628

398

364

362

292

354

223

216

128

126

– 2

–100

537

1,037

738

341

218

1,038

882

592

369

305

1,264

732

683

362

309

538

947

123

117

–1

907

144

–

265

– 36

– 65

– 2

–13

– 30

107

–

– 6

261

100

* 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.

74
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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

96
117
133

131 GROUP FINANCIAL STATEMENTS

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 German Stock Corporation Act. The Declaration
of Compliance is reproduced on page 142 and is also
available to shareholders on the BMW Group website at
www.bmwgroup.com/ir.

Shareholdings of members of the Board of Manage-
ment and Supervisory Board
The members of the Supervisory Board of BMW AG hold
in total 27.66% of the issued common and preferred stock
shares, of which 16.10% relates to Stefan Quandt, Bad
Homburg v.d.H. and 11.56% to Susanne Klatten, Munich.

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.

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 22.2 mil-
lion (2009: euro 13.0 million) and comprised the following:

in euro million

Short-term employment benefits

Post-employment benefits

Compensation

2010

2009

21.3

0.9

22.2

12.3

0.7

13.0

The total remuneration of the members of the Board of
Management for the financial year 2010 amounted to
euro 18.2 million (2009: euro 10.7 million). This comprised
fixed components of euro 3.7 million (2009: euro 3.7 mil-
lion) and variable components of euro 14.5 million (2009:
euro 7.0 million).

In addition, an expense of euro 0.9 million (2009: euro
0.7 million) has been granted to current members of the
Board of Management for the period after the end of their
employment relationship. This relates to the expense for
allocations to pension provisions (service cost). Provi-
sions for pension obligations to current members of the
Board of Management in accordance with IAS 19 stood at
euro 17.4 million (2009: euro 13.8 million).

The remuneration of former members of the Board of
Management and their surviving dependants amounted
to euro 3.7 million (2009: euro 3.8 million).

Pension obligations to former members of the Board of
Management and their dependants are fully covered by
pension provisions amounting to euro 49.7 million
(2009: euro 46.7 million), computed in accordance with
IAS 19.

The compensation of the members of the Supervisory
Board for the financial year 2010 amounted to euro 3.1 mil-
lion (2009: euro 1.6 million). This comprised fixed com-
ponents of euro 1.6 million (2009: euro 1.6 million) and
variable components of euro 1.5 million (2009: –).

The compensation system for members of the Board of
Management and the Supervisory Board does not in-
clude any stock options, value appreciation rights com-
parable to stock options or any other stock-based com-
pensation components.

No advances or loans were granted by the Company to
members of the Board of Management and the Super-
visory 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 of the Supervisory
Board can be found in the Compensation Report on
pages 154 to 161. 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 pages 143
to 146.

132

45 Application of exemptions pursuant to § 264 (3) and

§ 264 b HGB
A number of companies and incorporated partnerships
(as defined by § 264 a HGB) which are affiliated, con-
solidated entities of BMW AG and for which the Group
Financial Statements of BMW AG represent exempting
consolidated financial statements, apply the exemptions
available in § 264 (3) and § 264 b HGB with regard to
the drawing up of a management report. The exemptions
have been applied by:

– Bavaria Wirtschaftsagentur GmbH, Munich
– BMW Fahrzeugtechnik GmbH, Eisenach
– BMW Hams Hall Motoren GmbH, Munich
– BMW M GmbH Gesellschaft für individuelle

Automobile, Munich

– BMW Vertriebs GmbH & Co. oHG, Dingolfing
– Rolls-Royce Motor Cars GmbH, Munich

In addition, the following entities apply the exemption
available in § 264 (3) and § 264 b HGB with regard to pub-
lication:

– Bavaria Wirtschaftsagentur GmbH, Munich
– BMW Fuhrparkmanagement Beteiligungs GmbH,

Munich

– BMW Hams Hall Motoren GmbH, Munich
– 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

96
117
133

133 GROUP FINANCIAL STATEMENTS

BMW Group
Notes to the Group Financial Statements
Segment Information

46 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 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 organisational structure of the
BMW Group based on the various products and services
of the reportable segments.

The activities of the BMW Group are broken down into
the operating segments Automobiles, Motorcycles, Finan-
cial Services and Other Entities.

The Automobiles segment develops, manufactures,
assembles and sells cars and off-road vehicles, under the
brands BMW, MINI and Rolls-Royce as well as spare
parts and accessories. BMW and MINI brand products are
sold in Germany through branches of BMW AG and by
independent, authorised dealers. Sales outside Germany
are handled primarily by subsidiary companies and, in
a number of markets, by independent import companies.
Rolls-Royce brand vehicles are sold in the USA via a
subsidiary company and elsewhere by independent,
authorised dealers.

The Motorcycles segment develops, manufactures, as-
sembles and sells BMW and Husqvarna brand motor-
cycles as well as spare parts and accessories.

Mikrotechnik Informatik GmbH, Dingolfing – which are
not allocated to one of the other segments.

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. Inter-
segment receivables and payables, provisions, income, ex-
penses and profits are eliminated in the column “Elimina-
tions”. 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 Man-
agement. In order to assist the decision-taking process,
various measures of segment profit or loss and of segment
assets have been set for the various operating segments.

The Automobiles and Motorcycles segments are managed
on the basis of the profit before financial result. Capital
employed is the corresponding measure of segment as-
sets used to determine how to allocate resources. Capital
employed comprises all current and non-current opera-
tional assets of the segment, after deduction of liabilities
used operationally which are not subject to interest e.g.
trade payables.

The principal lines of business of the Financial Services
segment are car leasing, fleet business, retail customer
and dealer financing, customer deposit business and in-
surance activities.

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.

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

The performance of the Other Entities segment is as-
sessed on the basis of profit or loss before tax. The corre-
sponding measure of segment assets used to manage
the Other Entities segment is total assets less tax receiv-
ables and 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

Automobiles

Motorcycles

2010

2009

2010

2009

44,221

9,916

54,137

4,355

3,355

3,592

35,613

8,124

43,737

– 265

3,606

3,509

1,291

1,304

1,059

1,069

GROUP FINANCIAL STATEMENTS
Income Statements
Statement of
Comprehensive Income
Balance Sheets
Cash Flow Statements
Group Statement of Changes
in Equity

in euro million

Segment assets

Automobiles

Motorcycles

31. 12. 2010

31. 12. 2009

31. 12. 2010

31. 12. 2009

9,665

11,887

402

389

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

96
117
133

74
74
74

76
78
80

135 GROUP FINANCIAL STATEMENTS

Financial
Services

Other Entities

Reconciliation to
Group figures

Group

2010

2009

2010

2009

2010

2009

2010

2009

14,964

1,653

16,617

1,214

11,736

4,845

14,008

1,790

15,798

365

10,246

5,757

–

60,477

50,681

External revenues

–11,585

– 849

– 2,564

– 2,012

– 9,926

243

– 1,787

– 2,050

–

Inter-segment revenues

60,477

50,681

Total revenues

4,836

12,597

6,499

413

Segment result

12,117

Capital expenditure on non-current assets

7,289

Depreciation and amortisation on non-current assets

Financial
Services

Other Entities

Reconciliation to
Group figures

Group

31. 12. 2010

31. 12. 2009

31. 12. 2010

31. 12. 2009

31. 12. 2010

31. 12. 2009

31. 12. 2010

31. 12. 2009

5,216

4,268

44,985

40,400

48,599

45,009

108,867

101,953

Segment assets

136

Interest and similar income of the Financial Services seg-
ment totalling euro 4 million (2009: euro 3 million) are
included in segment result. Interest and similar expenses
of the Financial Services segment amounted to euro 7 mil-
lion (2009: euro 8 million). The Other Entities segment
result includes interest and similar income amounting to
euro 1,984 million (2009: euro 1,778 million) and inter-
est and similar expenses amounting to euro 2,058 million
(2009: euro 1,852 million).

Also included in the Other Entities segment result is the
result from equity accounted investments amounting to
euro zero million in 2010 (2009: negative result of euro
6 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

Reconciliation of segment assets

Total for reportable segments

Non-operating assets – Other Entities segment

Operating liabilities – Financial Services segment

Interest-bearing assets – Automobiles and Motorcycles segments

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 2010 included investments accounted for using
the equity method amounting to euro 23 million (2009:
euro 23 million).

The information disclosed for capital expenditure and
depreciation 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:

2010

2009

5,685

– 474

– 375

4,836

15,161

– 2,564

12,597

8,511

– 2,012

6,499

60,268

5,414

68,487

30,300

18,971

– 74,573

108,867

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

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

96
117
133

137 GROUP FINANCIAL STATEMENTS

In the case of information by geographical region, exter-
nal sales are based on the location of the customer’s reg-
istered office. Revenues with major customers were not
material overall. The information disclosed for non-cur-

rent assets relates to property, plant and equipment, in-
tangible assets and leased products. The reconciling
item disclosed for non-current assets relates to leased
products.

External
revenues

Non-current
assets

2010

2009

2010

2009

11,207

11,638

8,444

18,581

2,530

8,077

–

11,436

10,628

4,039

16,989

1,805

5,784

–

60,477

50,681

21,257

9,380

4,784

1,273

805

– 3,259

34,249

21,136

9,836

4,751

1,246

581

– 2,822

34,737

Information by region

in euro million

Germany

USA

China

Rest of Europe

Rest of the Americas

Other

Eliminations

Group

Munich, 15 February 2011

Bayerische Motoren Werke
Aktiengesellschaft

The Board of Management

Dr.-Ing. Norbert Reithofer

Frank-Peter Arndt

Dr.-Ing. Herbert Diess

Dr.-Ing. Klaus Draeger

Dr. Friedrich Eichiner

Harald Krüger

Ian Robertson

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
opportunities and risks associated with the expected de-
velopment of the Group.”

Munich, 15 February 2011

Bayerische Motoren Werke
Aktiengesellschaft

The Board of Management

Dr.-Ing. Norbert Reithofer

Frank-Peter Arndt

Dr.-Ing. Herbert Diess

Dr.-Ing. Klaus Draeger

Dr. Friedrich Eichiner

Harald Krüger

Ian Robertson

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

96
117
133

139 GROUP FINANCIAL STATEMENTS

BMW Group
Auditor’s Report

We have audited the consolidated financial statements
prepared by Bayerische Motoren Werke Aktiengesell-
schaft, comprising the income statement and statement
of comprehensive income, the balance sheet, cash flow
statement, statements of changes in equity and the notes
to the consolidated financial statements and its report
on the position of the Company and the Group for the
business year from 1 January to 31 December 2010. The
preparation of the consolidated finan cial statements and
Group Management 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 con-
solidated financial statements and on the Group Manage-
ment Report based on our audit.

nomic and legal environment of the Group and expecta-
tions as to possible misstatements are taken into account
in the determination of audit procedures. The effective-
ness of the accounting-related internal control system
and the evidence supporting the disclosures in the con-
solidated financial statements and in the Group Manage-
ment Report are examined primarily on a test basis with in
the framework of the audit. The audit also includes as-
sessing 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 finan cial state-
ments and Group Management Report. We believe that
our audit provides a reasonable basis for our opinion.

We conducted our audit of the consolidated financial
statements in accordance with § 317 HGB and German
generally accepted standards for the audit of financial
statements promulgated by the Institut der Wirtschafts-
prüfer (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 consol-
idated financial statements in accordance with the appli-
cable financial reporting framework and in the Group
Management Report are detected with reasonable assur-
ance. Knowledge of the business activities and the eco-

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the
consolidated financial statements comply with IFRSs, as
adopted by the EU, the additional requirements of Ger-
man commercial law pursuant to § 315 a (1) HGB and
give a true and fair view of the net assets, financial posi-
tion and results of operations of the Group. The Group
Management Report is consistent with the consolidated
financial statements and as a whole provides a suitable
view of the Group’s position and suitably presents the
opportunities and risks of future development.

Munich, 25 February 2011

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 a
comprehensive issue for the BMW Group embracing all
areas of the enterprise. Corporate culture within the
BMW Group is founded on transparent reporting and
internal communication, a policy of corporate govern-
ance aimed at the interests of stakeholders, fair and open
dealings between the Board of Management, the Super-
visory Board and employees and compliance with the
law. The Board of Management reports in this declaration,
also on behalf of the Supervisory Board, on important
aspects of corporate governance pursuant to § 289 a HGB
and section 3.10 of the German Corporate Governance
Code (GCGC).

Information on the Company’s Governing Constitution
The designation “BMW Group” comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and its
group entities. BMW AG is a stock corporation (Aktien-
gesellschaft) based on the German Stock Corporation Act
(Aktiengesetz). It has three representative bodies: the
Annual General Meeting, the Supervisory Board and the
Board of Management. The duties and authorities of
those bodies derive from the Stock Corporation Act and
the Articles of Incorporation of BMW AG. Shareholders,
as the owners of the business, exercise their rights at the
Annual General Meeting. The Annual General Meeting
decides in particular on the utilisation of unappropriated
profit, the ratification of the acts of the members of the
Board of Management and of the Supervisory Board, the
appointment of the external auditor, changes to the
Articles of Incorporation, specified capital measures and
elects the shareholders’ representatives to the Supervi-
sory Board. The Board of Management manages the en-
terprise under its own responsibility. Within this frame-
work, 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 Supervisory Board informed
of all significant matters regularly, promptly and compre-
hensively, following the principles of conscientious and
faithful accountability and in accordance with prevailing
law and the reporting duties allocated to it by the Super-
visory Board. The Board of Management requires the
approval of the Supervisory Board for certain major trans-
actions. The Supervisory Board is not, however, author-
ised to undertake management measures itself.

In accordance with the requirements of the German
Co-determination Act for companies that generally em-

ploy more than 20,000 people, the Supervisory Board of
BMW AG is required to comprise ten shareholder repre-
sentatives elected at the Annual General Meeting (Super-
visory Board members representing equity or share-
holders) and ten employees elected in accordance with
the provisions of the Co-determination Act (Supervisory
Board members representing employees). The ten Super-
visory Board members representing employees comprise
seven Company employees, including one senior staff
representative, and three members elected following
nomination by unions.

The close interaction between Board of Management
and Supervisory Board in the interests of the enterprise
as described above is also known as a “two-tier board
structure”.

The composition of the Board of Management the Su-
pervisory Board and of any sub-committees established
by the Supervisory Board is disclosed on pages 143 et
seq. of the Annual Report. Further information on the
work procedures of the Board of Management and the
Supervisory Board can be found on pages 147 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
Corporation Act) to report once a year on whether the
officially published and relevant recommendations is-
sued by the “German Government Corporate Govern-
ance Code Commission”, as valid at the date of the de-
claration, have been, and are being, complied with.
Companies affected are also required to state which of
the recommendations of the Code have not been or are
not being applied, stating the reason or reasons.

At the joint meeting held in December 2010, the Board of
Management and Supervisory Board of BMW AG issued
the annual Declaration of Compliance and posted it on
the BMW Group’s website. In accordance with that decla-
ration, in future BMW AG will comply with the recom-
mendations published on 2 July 2010 in the electronic
Federal Gazette (Code version dated 26 May 2010) with-
out exception.

In the past the Board of Management and the Super-
visory Board have adopted the Group’s own Corporate
Governance Code based on the GCGC in order to pro-
vide interested parties with a comprehensive and stand-
alone document covering the corporate governance
practices applied by the BMW Group. The BMW Group’s

140

STATEMENT ON

140

142

CORPORATE GOVERNANCE

(Part 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

143

Members of the Board of

Management

144
147

Members of the Supervisory Board
Information on Work Procedures
of the Management Board and
Supervisory Board

154
162

Compensation Report
Information on Corporate

Governance Practices

163

Compliance in the BMW Group

141 STATEMENT ON CORPORATE GOVERNANCE

Corporate Governance Code has been revised in con-
junction with the new version of the GCGC. A coordi-
nator responsible for all corporate governance issues
reports directly and on a regular basis to the Board of
Management and Supervisory Board.

The Corporate Governance Code for the BMW Group,
together with the Declaration of Compliance, Articles
of Incorporation and other information, can be viewed
and /or downloaded from the BMW Group’s website
at www.bmwgroup.com/ir under the menu item “Corpo-
rate Facts” and “Corporate Governance”.

The full text of the declaration is also provided on page 142
of this Annual Report.

142

Declaration of the Board of Management and of the Supervisory Board of
Bayerische Motoren Werke Aktiengesellschaft with respect to the recommendations
of the “Government Commission on the German Corporate Governance Code”
pursuant to § 161 German Stock Corporation Act

The Board of Management and Supervisory Board of
Bayerische Motoren Werke Aktiengesellschaft
(“BMWAG”) declare the following regarding the recom-
mendations of the “Government Commission on the
German Corporate Governance Code”:

1. BMW AG will in future comply with all of the recom-

mendations published on 2 July 2010 in the electronic
Federal Gazette (Code version dated 26 May 2010).

2. During the period since filing the most recent declara-
tion in December 2009, BMW AG complied with all of
the recommendations published on 5 August 2009
in the electronic Federal Gazette (Code version dated
18 June 2009), except for the divergence from sec-
tion 3.8 paragraph 3 GCGC referred to in that declara-
tion: as stated there, the amount of excess agreed for
the members of the Supervisory Board under a D & O
liability insurance policy was not changed at that stage
in view of the differing financial circumstances and in-
comes of board members.

This recommendation will also be complied with in
future.

Munich, December 2010

Bayerische Motoren Werke
Aktiengesellschaft

Supervisory Board

Board of Management

Prof. Dr.-Ing. Joachim Milberg
Chairman

Dr.-Ing. Norbert Reithofer
Chairman

140

STATEMENT ON

140

142

CORPORATE GOVERNANCE

(Part 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

143

Members of the Board of

Management

144
147

Members of the Supervisory Board
Information on Work Procedures
of the Management Board and
Supervisory Board

154
162

Compensation Report
Information on Corporate

Governance Practices

163

Compliance in the BMW Group

143 STATEMENT ON CORPORATE GOVERNANCE

Members of the Board of Management

Dr.-Ing. Norbert Reithofer (born 1956)
Chairman

Frank-Peter Arndt (born 1956)
Production

Mandates

BMW Motoren GmbH (Chairman)
TÜV Süd AG (since 16. 04. 2010)
BMW (South Africa) (Pty) Ltd. (Chairman)
Leipziger Messe GmbH

Dr.-Ing. Herbert Diess (born 1958)
Purchasing and Supplier Network

Dr.-Ing. Klaus Draeger (born 1956)
Development

Dr. Friedrich Eichiner (born 1955)
Finance

Mandates

Allianz Deutschland AG
BMW Brilliance Automotive Ltd. (Deputy Chairman)

Harald Krüger (born 1965)
Human Resources, Industrial Relations Director

Ian Robertson (born 1958)

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

144

Members of the Supervisory Board

Prof. Dr.-Ing. Dr. h. c. Dr.-Ing. E. h.
Joachim Milberg (born 1943)

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 Schoch1 (born 1955)
Deputy Chairman

Chairman of the European and
General Works Council
Industrial Engineer

Stefan Schmid1 (born 1965)
Deputy Chairman
Chairman of the Works Council, Dingolfing

Member of the Presiding Board, Personnel Committee,
Audit Committee and Mediation Committee

Dr. jur. Karl-Ludwig Kley (born 1951)
Deputy Chairman (since 18. 05. 2010)

Chairman of the Executive Management of
Merck KGaA

Chairman of the Audit Committee and Independent
Finance Expert; member of the Presiding Board,
Personnel Committee and Nomination Committee
(in each case from 18. 05. 2010)

Mandates

Bertelsmann AG
1. FC Köln GmbH & Co. KGaA (Chairman)

Member of the Presiding Board, Personnel Committee,
Audit Committee and Mediation Committee

(until 18. 05. 2010)
Deputy Chairman

Prof. Dr. Jürgen Strube (born 1939)

Stefan Quandt (born 1966)
Deputy Chairman
Entrepreneur

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

Member of the Presiding Board, Personnel Committee,
Audit Committee, Nomination Committee and Mediation
Committee

Mandates

Bertelsmann AG (Deputy Chairman)
Fuchs Petrolub AG (Chairman)

Mandates

DELTON AG (Chairman)
Karlsruher Institut für Technologie (KIT)
AQTON SE (Chairman)
DataCard Corp.

Bertin Eichler 2 (born 1952)
Executive Member of the
Executive Board of IG Metall

Mandates

BGAG Beteiligungsgesellschaft der
Gewerkschaften GmbH (Chairman)

ThyssenKrupp AG (Deputy Chairman)

1 Employee representatives (company employees).
2 Employee representatives (union representatives).
3 Employee representative (member of senior management).
Membership of other statutory supervisory boards
Membership of equivalent national or foreign boards of business enterprises

140

STATEMENT ON

140

142

CORPORATE GOVERNANCE

(Part 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

143

Members of the Board of

Management

144
147

Members of the Supervisory Board
Information on Work Procedures
of the Management Board and
Supervisory Board

154
162

Compensation Report
Information on Corporate

Governance Practices

163

Compliance in the BMW Group

145 STATEMENT ON CORPORATE GOVERNANCE

Franz Haniel (born 1955)
Engineer, MBA

Mandates

DELTON AG (Deputy Chairman)
Franz Haniel & Cie. GmbH (Chairman)
Heraeus Holding GmbH
Metro AG (Chairman) (until 15. 05. 2010)
secunet Security Networks AG
Giesecke & Devrient GmbH
TBG Limited

Prof. Dr. rer. nat. Dr. h. c. E. h. Reinhard Hüttl (born 1957)

Chairman of the Executive Board of
Helmholtz-Zentrum Potsdam Deutsches
GeoForschungsZentrum – GFZ

University professor

Prof. Dr. rer. nat. Dr.-Ing. E. h.
Henning Kagermann (born 1947)

(since 18. 05. 2010)
President of acatech – Deutsche Akademie der
Technikwissenschaften e. V.

Mandates

Deutsche Bank AG
Deutsche Post AG
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München
Nokia Corporation
Wipro Limited

Susanne Klatten (born 1962)
Entrepreneur

Mandates

ALTANA AG (Deputy Chairman)
SGL Carbon SE
UnternehmerTUM GmbH (Chairman)

Prof. Dr. rer. pol. Renate Köcher (born 1952)

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 (born 1949)

Former Chairman and Chief Executive Officer of
Deere & Company

Mandates

Deere & Company (Chairman) (until 24. 02. 2010)
General Electric Company
Northern Trust Corporation
Verizon Communications Inc.

Horst Lischka2 (born 1963)
General Representative of IG Metall Munich

Mandates

KraussMaffei AG
MAN Nutzfahrzeuge AG

Willibald Löw1 (born 1956)
Chairman of the Works Council, Landshut

146

Wolfgang Mayrhuber (born 1947)
Chairman of the Board of Management of
Deutsche Lufthansa AG (until 31. 12. 2010)

Mandates

Fraport AG (until 30. 06. 2010)
Lufthansa Technik AG
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München
Austrian Airlines AG
HEICO Corporation
SN Airholding NV (until 31. 12. 2010)
UBS AG (since 14. 04. 2010)

Werner Neugebauer 2 (born 1950)

(until 31. 12. 2010)
General Representative of the Executive Board
of IG Metall Bavaria

Mandates

ZF Sachs AG

Franz Oberländer1 (born 1952)
Member of the Works Council, Munich

Anton Ruf3 (born 1953)
Head of Development “Small Model Series”

Maria Schmidt1 (born 1954)
Member of the Works Council, Dingolfing

Jürgen Wechsler 2 (born 1955)

(since 10. 02. 2011)
Regional Head of IG Metall Bavaria

Mandates

Schaeffler GmbH (Deputy Chairman)

Werner Zierer1 (born 1959)
Chairman of the Works Council, Regensburg

140

STATEMENT ON

140

142

CORPORATE GOVERNANCE

(Part 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

143

Members of the Board of

Management

144
147

154
162

Members of the Supervisory Board
Information on Work Procedures
of the Management Board and
Supervisory Board
Compensation Report
Information on Corporate

Governance Practices

163

Compliance in the BMW Group

147 STATEMENT ON CORPORATE GOVERNANCE

Information on Work Procedures of the Board of
Management and the Supervisory Board and on the
Composition and Work Procedures of its Committees

The Board of Management of BMW AG
A summary of the seven members of the Board of Man-
agement and their areas of responsibility (portfolios) is
shown on page 143.

The Board of Management governs the enterprise under
its own responsibility, acting in the interests of the
BMW Group with the aim of achieving sustainable growth
in value. The interests of shareholders, employees and
other stakeholders are also taken into account in the pur-
suit of this aim.

The Board of Management determines the strategic orien-
tation of the enterprise, agrees upon it with the Super-
visory Board and ensures its implementation. The Board
of Management is responsible for ensuring that all pro-
visions of law and internal regulations are complied with.
Further information relating to compliance within the
BMW Group can be found on pages 163 et seq. The
Board of Management is also responsible for ensuring
that appropriate risk management and risk controlling
systems are in place throughout the Group.

During their period of employment for BMW AG, mem-
bers of the Board of Management are bound by a com-
prehensive non-competition clause. They are required to
act in the enterprise’s best interests and may not pursue
personal interests in their decisions or take advantage of
business opportunities intended for the enterprise. They
may only undertake ancillary activities, in particular su-
pervisory board mandates outside the BMW Group, with
the approval of the Supervisory Board’s Personnel Com-
mittee. 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 framework con-
ditions under which the board member’s duties are to
be carried out – in particular those enshrined in the BMW
Group’s Corporate Governance Code – as well as the
duty to cooperate when a transaction or event triggers
reporting requirements or requires the approval of the
Supervisory Board.

The Board of Management consults and takes decisions
as a collegiate body at the following types of board meet-
ing; General Board, Product Board, Sustainability Board,

Operations Committee and Committee for Executive
Management Matters. At its general meetings, the Board
of Management defines the overall framework for busi-
ness strategies and the use of resources, takes decisions
regarding 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 commit-
tees may, as required and depending on the subject mat-
ter being discussed, invite non-voting advisers to par-
ticipate at meetings.

Terms of reference approved by the Board of Manage-
ment contain a planned allocation of divisional responsi-
bilities between the individual board members. These
terms of reference also incorporate the principle that the
full Board of Management bears joint responsibility for
all matters of particular importance and scope. In addition,
each member of the Board of Management manages the
relevant portfolio of duties under their responsibility,
whereby case-by-case rules can be put in place for cross-
divisional projects. Board members continually provide
the Chairman of the Board of Management with all in-
formation regarding major transactions and develop-
ments within their area of responsibility. The Chairman
of the Board of Management coordinates cross-divisional
matters with the overall targets and plans of the BMW
Group, involving other board members to the extent that
divisions within their area of responsibility are affected.

The Board of Management takes its decisions at meetings
generally held on a weekly basis which are convened,
coordinated and headed by the Chairman of the Board of
Management. At the request of the Chairman, decisions
can also be taken outside of board meetings if none of
the board members object to this procedure. A meeting is
quorate if all Board of Management members are invited
to the meeting in good time. Members unable to attend
any meeting are entitled to vote in writing, by fax or by
telephone. Votes cast by phone must be subsequently
confirmed in writing. Except in urgent cases, matters re-
lating to a di vision for which the responsible board mem-
ber 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 simple
majority of board members. In the event of a tied vote, the
Chairman of the Board of Management has the casting
vote. Any changes to the board’s terms of reference must
be passed unanimously. A board meeting may only be
held if more than half of the board members are present.

148

In the event that the Chairman of the Board of Manage-
ment is not present or is unable to attend a meeting, the
Member of the Board responsible for Finances will repre-
sent him.

Minutes are taken of all meetings and the Board of
Management’s resolutions and signed by the Chairman.
Decisions taken by the Board of Management are bind-
ing for all employees.

The rules relating to meetings and resolutions adopted
by the full Board of Management are also applicable for
its committees.

Members of the Board of Management not represented
in a committee are provided with the agendas and min-
utes of committee meetings. Committee matters are dealt
with in full board meetings if the committee considers
it necessary or at the request of a member of the Board of
Management.

The secretariat for Board of Management matters assists
the Chairman and other board members with the
preparation and follow-up work connected with board
meetings.

At Product Board meetings (generally held twice a month),
the full board takes decisions at 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). If the committee
chairman is not present or unable to attend a meeting,
the Member of the Board responsible for Production rep-
resents him. Resolutions taken at meetings of the Opera-
tions Committee are made online.

The full board usually convenes twice a year in its func-
tion as Sustainability Board in order to define strategy
with regard to sustainability and decide upon measures
to implement that strategy. The Head of Group Com-
munication and the Group Representative for Sustaina-
bility and Environmental Protection participate in these
meetings in an advisory capacity.

The Board’s Committee for Executive Management Mat-
ters deals with enterprise-wide issues affecting executive
managers of the BMW Group, either in their entirety
or individually (such as the executive management struc-
ture, potential candidates for executive management,
nominations for or promotions to senior management
positions). This committee has, on the one hand, an advi-
sory and preparatory role (e.g. making suggestions for
promotions to the two remuneration groups below board
level and preparing decisions to be taken at board meet-
ings with regard to human resources principles with the
emphasis on executive management issues) and a deci-
sion-taking function on the other (e.g. deciding on ap-
pointments to senior management positions and pro-
motions to higher remuneration groups or the wording
of human resources principles decided on by the full
board). The Committee has two members who are enti-
tled to vote at meetings, namely the Chairman of the
Board of Management, Dr.-Ing. Norbert Reithofer (who
also chairs the meetings) and the board member respon-
sible for Human Resources, Harald Krüger. The Head
of Human Resources, Personnel Network and Human
Resources International and the Head of Human Re-
sources Senior Management also participate in an advi-
sory function. At the request of the Chairman, resolu-
tions may also be passed outside of committee meetings
by casting votes in writing, by fax or by telephone if
the other member entitled to vote does not object imme-
diately. As a general rule, between five and ten meetings
are held each year.

The Board of Management is represented by its Chair-
man in its dealings with the Supervisory Board. The
Chairman of the Board of Management maintains regu-
lar contact with the Chairman of the Supervisory Board
and keeps him informed of all important matters. The
Supervisory Board has passed a resolution specifying
the information and reporting duties of the Board of
Management. As a general rule, in the case of reports
required by dint of law, the Board of Management sub-
mits its reports to the Supervisory Board in writing. To
the extent possible, documents required as a basis for
taking decisions are sent to the members of the Super-
visory Board in good time before the relevant meeting.
Regarding transactions of fundamental importance, the
Supervisory Board has stipulated specific transactions
which require the approval of the Supervisory Board.
Whenever necessary, the Chairman of the Board of Man-
agement obtains the approval of the Supervisory Board
and ensures that reporting duties to the Supervisory
Board are complied with. In order to fulfil these tasks, the
Chairman is supported by all members of the Board of
Management. The fundamental principle followed when
reporting to the Supervisory Board is that the latter
should be kept informed regularly, without delay and

140

STATEMENT ON

140

142

CORPORATE GOVERNANCE

(Part 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

143

Members of the Board of

Management

144
147

154
162

Members of the Supervisory Board
Information on Work Procedures
of the Management Board and
Supervisory Board
Compensation Report
Information on Corporate

Governance Practices

163

Compliance in the BMW Group

149 STATEMENT ON CORPORATE GOVERNANCE

comprehensively of all significant matters relating to
planning, business performance, risk exposures, risk
management and compliance, as well as any major
variances between actual and budgeted figures.

The Supervisory Board of BMW AG
Overviews of members of the Supervisory Board, the
Presiding Board and committees can be found on pages
144 et seq. (members of the Supervisory Board and
their mandates) and on page 152 (Supervisory Board
committees, meetings).

BMW AG’s Supervisory Board, comprising ten share-
holder representatives (elected by the Annual General
Meeting) and ten employee representatives (elected by
employees in accordance with the German Co-deter-
mination Act), has the task of advising and supervising
the Board of Management in its governance of the BMW
Group. It is involved in all decisions of fundamental
importance for the BMW Group. The Supervisory Board
appoints the members of the Board of Management and
decides upon the level of compensation they are to re-
ceive. The Supervisory Board can revoke appointments
for important reasons. Together with the Personnel Com-
mittee and Board of Management, it ensures that long-
term successor planning is in place.

The Supervisory Board holds a minimum of two meet-
ings per calendar year. Normally, five plenary meetings
are held per calendar year, as was the case in 2010. One
meeting each year is planned to cover a number of days
and is used, amongst other things, to enable an in-
depth exchange on strategic and technological matters.
The main emphases of meetings in 2010 are described in
the Report of the Supervisory Board (pages 06 et seq.).

In line with the suggestion contained in the German
Corporate Governance Code, the shareholder represent-
atives and employee representatives prepare the Super-
visory 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.

The Supervisory Board is quorate if all members have
been invited to the meeting and at least half of its mem-
bers participate in the vote on a particular resolution.
A resolution relating to an agenda item not included in
the invitation is only valid if none of the members of the
Supervisory Board present at the meeting object to the
resolution and a minimum of two-thirds of the members
are present.

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 major-
ity voting and technical procedures, particularly with re-
gard to the appointment and revocation of appointment
of management 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 Chair-
man of the Supervisory Board has two votes in a renewed
vote, even if this also results in a tie.

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 their 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
members 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. Minutes are taken of each
meeting and any resolutions made are signed by the
Chairman of the Supervisory Board.

After its meetings, the Supervisory Board is generally
provided with information on new vehicle models in the
form of a short presentation.

Following the election of a new Supervisory Board mem-
ber, the 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
requirements or is subject to the approval of the Supervi-
sory 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.

All members of the Supervisory Board of BMW AG are re-
quired to ensure that they have sufficient time to perform
their mandate. If members of the Supervisory Board of
BMW AG are also members of the management board
of a listed company, they may not accept more than a to-
tal of three mandates on non-BMW Group supervisory
boards of listed companies or in other bodies with com-
parable requirements.

The Supervisory Board examines the efficiency of its
activities on a regular basis. Joint discussions are also
held at plenum meetings, prepared on the basis of a

150

questionnaire previously devised by and distributed to
the members of the Supervisory Board. The Chairman of
the Supervisory Board is open to suggestions for improve-
ment at all times.

Each member of the Supervisory Board of BMW AG is
bound to act in the enterprise’s best interests. Members
of the Supervisory Board may not pursue personal inter-
ests 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 func-
tion with clients, suppliers, lenders or other business
partners, enabling the Supervisory Board to report to the
shareholders at the Annual General Meeting on how it
has dealt with such issues. Material conflicts of interest
and those 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 Super-
visory Board in its entirety has the required knowledge,
skills and expert experience to perform its tasks in a
proper manner.

The Supervisory Board has set out specific targets for its
own composition. Further information about these ob-
jectives and their implementation status can be found on
page 153.

The members of the Supervisory Board are responsible
for undertaking appropriate basic and further training
measures such as may be necessary to carry out the tasks
assigned to them. The Company provides appropriate
assistance to members of the Supervisory Board in this
respect.

The ability of the Supervisory Board to supervise and ad-
vise the Board of Management independently is also as-
sisted by the fact that the Supervisory Board of BMW AG
is required, based on its own assessment, to have a suf-
ficient 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 Management, of which he ceased to be a mem-
ber in 2002. Supervisory 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 Su-
pervisory Board has set up a Presiding Board and four
committees, namely the Personnel Committee, the Audit
Committee, the Nomination Committee and the Media-
tion Committee (see overview on page 152). Such com-
mittees serve to raise the efficiency of the Supervisory
Board’s work and facilitate the handling of complex is-
sues. 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 various
committees is based on legal requirements, BMW AG’s
Articles of Incorporation, terms of reference and corpo-
rate governance principles. The expertise and technical
skills of its members are also taken into account.

According to the relevant terms of reference, the Chair-
man of the Supervisory Board is, in this capacity, auto-
matically a member of the Presiding Board, the Personnel
Committee and the Nomination Committee, and also
chairs these committees.

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 (further information regarding the number
of meetings held in 2010 can be found on page 152 and in
the Report of the Supervisory Board, page 06).

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 com-
mittees. 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 dealings 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
the various committees may call on experts and other
suitably informed persons to attend meetings to give ad-
vice on specific matters.

140

STATEMENT ON

140

142

CORPORATE GOVERNANCE

(Part 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

143

Members of the Board of

Management

144
147

154
162

Members of the Supervisory Board
Information on Work Procedures
of the Management Board and
Supervisory Board
Compensation Report
Information on Corporate

Governance Practices

163

Compliance in the BMW Group

151 STATEMENT ON CORPORATE GOVERNANCE

The Supervisory Board, the Presiding Board and the com-
mittees 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 their duties.
This includes the services provided by a centralised sec-
retariat to support the chairmen in coordinating the work
of the Supervisory Board.

In accordance with the relevant terms of reference, the
Presiding Board comprises the Chairman of the Super-
visory Board and board deputies. The Presiding Board
prepares Supervisory Board meetings to the extent that
the subject matter to be discussed does not fall within
the remit of a committee. This includes, for example, pre-
paring the annual Declaration of Compliance with the
German Corporate Governance Code and the Supervisory
Board’s efficiency examination.

The Personnel Committee prepares the decisions of the
Supervisory Board with regard to the appointment and
revocation of appointment of members of the Board of
Management and, together with the full Supervisory
Board and the Board of Management, ensures that long-
term successor planning is in place. For information
regarding the criteria applied, see pages 08 et seq. The
Personnel Committee also prepares the decisions of the
Supervisory Board with regard to the Board of Manage-
ment’s compensation and the Supervisory Board’s regu-
lar review of the Board of Management’s compensation
system. In conjunction with the resolutions taken by
the Supervisory Board regarding the compensation of
the Board of Management, the Personnel Committee is
responsible for drawing up, amending and revoking
service /employment contracts or, when necessary, other
relevant contracts with members of the Board of Manage-
ment. 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 members of the Board of Manage-
ment or Supervisory Board, specified contracts with
members of the Supervisory Board (in each case taking
account of the consequences of related party transac-
tions), as well as other activities of members of the Board
of Management, including the acceptance of non-BMW
Group supervisory mandates.

The Audit Committee deals in particular with issues re-
lating to the supervision of the financial reporting process,
the effectiveness of the internal control system, the risk

management system, internal audit arrangements and
compliance. It also monitors the external audit, auditor
independence and any additional work performed by
the external auditor. It prepares the proposal for the elec-
tion of the external auditor at the Annual General Meet-
ing, issues the audit engagement letter and agrees on
points of emphasis as well as the auditor’s fee. The Audit
Committee prepares the Supervisory Board’s resolution
relating to the Company and Group Financial Statements
and discusses interim reports with the Board of Manage-
ment before publication. The Audit Committee also de-
cides on the Supervisory Board’s agreement to use the
Authorised Capital 2009 (Article 4 point 5 of the Articles
of Incorporation) and on amendments to the Articles of
Incorporation which only affect their wording.

In line with the recommendations of the German Corpo-
rate Governance Code, the Chairman of the Audit Com-
mittee is independent and not a former Chairman of
the Board of Management. He or she 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 recommenda-
tions of the German Corporate Governance Code, the
Nomination Committee comprises only shareholder rep-
resentatives.

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
proposals to the Supervisory Board if a resolution for the
appointment of a member of the Board of Management
has not been carried by the necessary two-thirds majority
of members’ votes. In accordance with statutory require-
ments, the Mediation Committee comprises the Chair-
man and Deputy Chairman of the Supervisory Board and
one member each selected by shareholder representatives
and employee representatives.

152

Overview of Supervisory Board Committees, Meetings

Principal duties,
basis for activities

Presiding Board

– preparation of Supervisory Board meetings to the extent that the subject

matter to be discussed does not fall within the remit of a committee

– activities based on terms of reference

Personnel Committee

– preparation of decisions relating to the appointment and revocation of
appointment of members of the Board of Management, the compen-
sation and the regular review of the Board of Management‘s compensation
system

– conclusion, amendment and revocation of employment contracts (in

conjunction with the resolutions taken by the Supervisory Board regarding
the compensation of the Board of Management) and other contracts
with members of the Board of Management

– decisions relating to the approval of ancillary activities of Board of Man-

agement members, including acceptance of non-BMW Group supervisory
mandates as well as the approval of transactions requiring Supervisory
Board approval by dint of law (e.g. loans to Board of Management or Super-
visory Board members)

– set up in accordance with the recommendation contained in the German

Corporate Governance Code, activities based on terms of reference

Members

Joachim Milberg1
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley

Number
of meetings
2010

Average
attendance

100 %

Audit Committee

– supervision of the financial reporting process, effectiveness of the internal
control system, risk management system, internal audit arrangements and
compliance

– supervision of external audit, in particular auditor independence and addi-

tional work performed by external auditor

Karl-Ludwig Kley 1, 2
Joachim Milberg
Manfred Schoch
Stefan Quandt
Stefan Schmid

100 %

4
plus
3 telephone
conferences

– preparation of proposals for election of external auditor at Annual General
Meeting, engagement of external auditor and compliance of audit engage-
ment, determination of areas of audit emphasis and fee agreements with
external auditor

– preparation of Supervisory Board’s resolution on Company and Group

Financial Statements

– discussion of interim reports with Board of Management prior to publication

– decision on approval for utilisation of Authorised Capital 2009

– amendments to Articles of Incorporation only affecting wording

– establishment in accordance with the recommendation contained in the

German Corporate Governance Code, activities based on terms of reference

Nomination Committee

– identification of suitable candidates (male / female) as shareholder repre-

sentatives on the Supervisory Board, to be put forward for inclusion in the
Supervisory Board’s proposals for election at the Annual General Meeting

Joachim Milberg1
Stefan Quandt
Karl-Ludwig Kley

100 %

– establishment in accordance with the recommendation contained in the

German Corporate Governance Code, activities based on terms of reference

(In line with the recommendations of
the German Corporate Governance
Code, the Nomination Committee
comprises only shareholder represen-
tatives.)

Mediation Committee

– proposal to Supervisory Board if resolution for appointment of Board of

Management member has not been carried by the necessary two-thirds
majority of Supervisory Board members’ votes

– committee required by law

Joachim Milberg
Manfred Schoch
Stefan Quandt
Stefan Schmid

–

(In accordance with statutory require-
ments, the Mediation Committee
comprises the Chairman and Deputy
Chairman of the Supervisory Board and
one member each selected by share-
holder representatives and employee
representatives.)

1 Chair
2 Independent financial expert within the meaning of § 100 (5) AktG and § 107 (4) AktG

140

STATEMENT ON

140

142

CORPORATE GOVERNANCE

(Part 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

143

Members of the Board of

Management

144
147

154
162

Members of the Supervisory Board
Information on Work Procedures
of the Management Board and
Supervisory Board
Compensation Report
Information on Corporate

Governance Practices

163

Compliance in the BMW Group

153 STATEMENT ON CORPORATE GOVERNANCE

Composition of the Supervisory Board
The Supervisory Board must be composed in such a way
that its members as a group possess the knowledge, skills
and experience required to properly complete its tasks.

To this end, a resolution has been passed by BMW AG’s
Supervisory Board specifying the following concrete
objectives regarding its composition:
– At least four of the members of the Supervisory Board
should have international experience or specialist
knowledge with regard to one or more of the non-Ger-
man markets important to the company.

– If possible, the Supervisory Board should include seven
members who have acquired in-depth knowledge and
experience from within the company. The Supervisory
Board should not, however, include more than two
former members of the Board of Management.

– At least three of the shareholder representatives in the
Supervisory Board should be entrepreneurs or persons
who have already gained experience in the manage-
ment or supervision of another medium-sized or large
company.

– Ideally, three members of the Supervisory Board should
be figures from the worlds of business, science or re-
search who have gained experience in areas relevant
to the BMW Group – e.g. chemistry, energy supply,
information technology, or who have acquired special-
ist knowledge in subjects relevant for the future of
the BMW Group e.g. customer requirements, mobility,
resources and sustainability.

– When seeking suitably qualified individuals for the

Supervisory Board whose specialist skills and leader-
ship qualities are most likely to strengthen the Board
as a whole, consideration should also be given to diver-
sity. When preparing nominations, the extent to which
the work of the Supervisory Board would benefit from
diversified professional and personal backgrounds (in-
cluding international aspects) and from an appropriate
representation of both genders should also be taken
into account. In view of the proportion of women in the
workforce of BMW AG (31 December 2010: 13.2%),
the Supervisory Board is of the opinion that the cur-
rent proportion of three female members out of a total
of twenty members (15%) is satisfactory as far as gen-
der mix is concerned, but that an increase would be
desirable. If possible, the selection process in the near
future will therefore be carried out with the aim of
having four female members (20%) by the Annual
General Meeting in 2015.

– No persons carrying out directorship functions or ad-

visory tasks for important competitors of the company
may belong to the Supervisory Board. In compliance
with prevailing legislation, the members of the Super-
visory Board will strive to ensure that no persons will
be nominated for election with whom a serious con-
flict of interests could arise (other than temporarily)
due to other activities and functions carried out by
them outside the BMW Group; this includes in particu-
lar advisory activities or directorships with customers,
suppliers, creditors or other business partners.

– As a general rule, the age limit for membership of the
Supervisory Board should be set at 70 years. In excep-
tional cases, members may be allowed to remain on
the Board up until the Annual General Meeting follow-
ing their 73rd birthday in order to fulfil legal require-
ments or to facilitate smooth succession in the case of
persons with key roles or specialist qualifications.

The time schedule set by the Supervisory Board for achiev-
ing the above-mentioned composition targets is the
Annual General Meeting 2015, by which time elections
will have taken place for all positions on the Supervisory
Board.

Future proposals for nomination made by the Supervisory
Board at the Annual General Meeting – insofar as they
apply to shareholder Supervisory Board members –
should take account of these objectives in such a way that
they can be achieved with the support of the appropriate
resolutions at the Annual General Meeting. The Annual
General Meeting is not bound by nominations for elec-
tion proposed by the Supervisory Board. The freedom of
employees to vote for the employee members of the Su-
pervisory Board is also protected (for information on the
legal conditions relating to the composition of the Super-
visory Board please refer to page 140). Under the proce-
dural rules stipulated by the German Co-Determination
Act, the Supervisory Board does not have the right to
nominate employee representatives for election. The ob-
jectives which the Supervisory Board has set itself with
regard to its composition are therefore not intended to be
instructions to those entitled to vote or restrictions on
their freedom to vote. More to the point, they reflect the
composition which the current Supervisory Board be-
lieves should be striven for in future by those entitled to
nominate and elect board members, in view of the advisory
and supervisory needs of BMW AG’s Supervisory Board.

– The Supervisory Board should have at least seven in-

dependent members, two of whom must be independ-
ent individuals with expert knowledge of accounting
or auditing.

Apart from the desired increase in the number of female
Supervisory Board members, the present composition
of the Supervisory Board (see pages 144 et seq.) fulfils
the composition objectives detailed above.

154

Compensation Report
The following section describes the principles relating to
the compensation of the Board of Management and the
stipulations set out in the statutes relating to the com-
pensation of the Supervisory Board. In addition to dis-
cussing the compensation system, the com ponents of
compensation are also disclosed in absolute figures.
Furthermore, the compensation of each member of the
Board of Management and the Supervisory Board for the
financial year 2010 is disclosed by name and analysed
into components.

1. Compensation of the Board of Management
Responsibilities; approval by shareholders in 2010
The Supervisory Board is responsible for determining and
regularly reviewing the Board of Management’s compen-
sation. The Personnel Committee plays a preparatory role
in this process.

The compensation system in place for the Board of
Management for the financial year 2010 was approved by
shareholders at the Annual General Meeting 2010 as part
of a consultative process (“Say on Pay”) with a majority
vote of 97.66%.

Principles of compensation
The compensation structure is designed to promote sus-
tainable business development. At the same time, the
compensation model used for the Board of Management
should be attractive in the context of the competitive en-
vironment for highly qualified executives. All compensa-
tion components should be appropriate, both individually
and in total, and should not encourage the Board of Man-
agement to take on inappropriate risks for the company.

The compensation of members of the Board of Manage-
ment is determined by the full Supervisory Board on
the basis of performance criteria and after taking into ac-
count 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 com-
pensation are the nature of the tasks allocated to each
member of the Board of Management, an assessment of
the performance of those tasks, the economic situation,
the performance and future prospects of the BMW Group
as well as comparable levels of compensation in the
relevant sector and the compensation structure in place
elsewhere within the organisation.

Variable compensation in the form of corporate related
earnings- and performance-related bonus is based on
a period stretching over several years, during which both
positive and negative developments are taken into ac-
count.

The Personnel Committee and the Supervisory Board
engaged external experts to test the compatibility of the
compensation system in place in 2009 with the Act on
the Appropriateness of Management Board Remunera-
tion (VorstAG). The understanding gained in that process
was taken into account in amended contracts agreed on
mutual terms with all members of the Board of Manage-
ment with effect from 1 January 2010.

The Supervisory Board reviews the compensation system
at regular intervals, with regard to both the structure and
amount of the compensation of the Board of Manage-
ment. The Personnel Committee also makes use of remu-
neration studies. Recommendations made by an inde-
pendent external remuneration expert and suggestions
made by investors and analysts are also considered in
the consultative process. The Supervisory Board also
con siders the compensation structures and the levels of
compensation of staff and managers within the BMW
Group.

Compensation system, compensation components
The compensation of the Board of Management com-
prises both fixed and variable remuneration. In terms of
the overall compensation of current members of the
Board of Management, the Supervisory Board sets a com-
pensation target and a compensation framework with a
high variable proportion, taking into account the overall
situation and forecasts of the BMW Group. Contracts
with members of the Board of Management signed be-
fore 1 January 2010 contain a performance-related fixed
amount (defined benefit). In certain circumstances, Board
of Management members are entitled under contracts
signed before 1 January 2010 to receive so-called “transi-
tional payments” until their retirement.

Fixed remuneration comprises a base salary (paid
monthly) and other remuneration elements. Other
remuneration elements comprise mainly the use of com-
pany cars as well as the payment of insurance premiums,
contributions towards security systems and an annual
medical check-up.

The salary of each member of the Board of Management
is euro 420,000 p. a. during the first term of appointment
and euro 480,000 p. a. from the beginning of the second
term. The salary of the Chairman of the Board of Manage-
ment is euro 840,000 p. a.

The variable compensation of the Board of Management
(bonus) is made up of two components, each equally
weighted, namely a corporate earnings-related bonus
and a personal performance-related bonus. The Super-
visory Board may also, in justified cases, decide to pay an
additional special bonus on a voluntary basis. The target

140

STATEMENT ON

140

142

CORPORATE GOVERNANCE

(Part 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

143

Members of the Board of

Management

144
147

Members of the Supervisory Board
Information on Work Procedures
of the Management Board and
Supervisory Board

154
162

Compensation Report
Information on Corporate

Governance Practices

163

Compliance in the BMW Group

155 STATEMENT ON CORPORATE GOVERNANCE

bonus (100%) for a Board of Management member (i.e.
covering both components of variable compensation)
totals euro 1.5 million p. a. for the first term of appoint-
ment and euro 1.75 million p. a. with effect from the sec-
ond. The equivalent figure for the Chairman of the Board
of Management is euro 3 million p. a. Upper limits for
the amount of the bonus are in place for all Board of
Management 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 ap-
pointment and euro 2.23 million p. a. with effect from
the second. The equivalent 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 (bonus) is 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 in a single earnings factor) and the
level of the dividend (common stock). The corporate
earnings-related bonus is derived by multiplying the
target amount fixed for each member of the Board of
Management by the earnings factor and by the dividend
factor. In exceptional circumstances, for instance when
there have been major acquisitions or disposals, the
Supervisory Board may adjust the level of the corporate
earnings-related bonus.

An earnings and dividend factor of 1.00 gives rise to an
earnings-based 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 during the
second period of appointment. The equivalent bonus
for the Chairman 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 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 con-
sistency, this rule is also applicable in determining the
corporate earnings-related variable compensation com-
ponents of all managers and staff of BMW AG.

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 per-
formance and decisions taken in previous forecasting
periods, key decisions affecting the future development
of the business and the effectiveness of measures taken
in response to changing external conditions as well as
other activities aimed at safeguarding the future viability
of the business to the extent not included directly in the
basis of measurement.

The target bonus and the key figures used to determine
the corporate earnings-related bonus, have been fixed
for a period of three financial years, during which time
target bonus and the key figures may not be amended
retrospectively.

As in previous years, the compensation system for 2010
does not include any stock options, value appreciation
rights or other share-based components incorporating
other long-term incentives. The Supervisory Board did,
however, decide in December 2010 to add a further com-
ponent to the compensation system for financial years
from 1 January 2011 onwards, requiring Board of Manage-
ment members to invest the equivalent of 20% of their
total bonuses (after tax) for financial years from 2011 on-
wards in BMW common stock and to hold these shares
for a minimum of four years. One half of the amount
required to finance this investment will be provided by
the Company. As part of a matching plan, the Board of
Management members will, at the end of the holding
period, receive from the Company either one additional
share of common stock or an equivalent cash amount
for three shares of common stock held, to be decided at
the discretion of the Company. The new requirement
is aimed at creating further long-term incentives to en-
courage sustainable 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 comparing compensation paid by DAX-30 companies
and, in vertical terms, by comparing board compensa-
tion with the salaries of senior management (below
board level) and with the average salaries of employees.

With effect from financial years beginning on or after
1 January 2010, the provision of retirement and surviving
dependants’ benefits for existing and future members
of the Board of Management was 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). Given the
fact that board members already have a legal right to

156

receive the benefits already promised to them, they have
been given the option to choose between the previous
system and the new one. No changes were made to exist-
ing arrangements in 2010.

In the event of the termination of mandate, current mem-
bers of the Board of Management are entitled to receive
certain defined benefits in accordance with the pension
scheme rules. Pensions are paid to former members 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 is unchanged from the previous year and
comprises 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 payments are adjusted by analogy
to the rules applicable for the adjustment of civil serv-
ants’ pensions: the pensions of members of the Board of
Management are adjusted when the civil servants remu-
neration level B6 (excluding allowances) is increased
by more than 5% or 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 transi-
tional payment 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 evaluation of all circumstances. Arrange-
ments are in place concerning the offsetting of other in-
come against pensions and transitional payments.

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 –
depending on the wish of the ex-board member con-
cerned – 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 pen-
sion). 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 terminated 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 de-
termined on the basis of the amount accrued in each
board member’s individual pension savings account. The
amount on this account arises from annual contribu-
tions paid 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 amounted to euro 240,000 for
2010, euro 270,000 for 2011 and euro 300,000 from 2012
onwards. 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 in monthly amounts. 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).

In the case of invalidity or death, a minimum of 60% of
the potential annual contributions will be paid until the
person concerned would have reached the age of 60. At
the changeover to the new system, current members of
the Board of Management were credited with a starting
balance of equivalent value to any entitlements already
vested.

The starting balance and all contributions subsequently
credited to board members under the new scheme have
been externally financed in conjunction with a trust
model that is also used to fund pension obligations to
employees.

Pensions are increased annually by an amount of at least
1%.

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 will be made either.

Retired board members are entitled to use company and
lease vehicles in line with the rules applicable for senior
heads of departments.

140

STATEMENT ON

140

142

CORPORATE GOVERNANCE

(Part 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

143

Members of the Board of

Management

144
147

Members of the Supervisory Board
Information on Work Procedures
of the Management Board and
Supervisory Board

154
162

Compensation Report
Information on Corporate

Governance Practices

163

Compliance in the BMW Group

157 STATEMENT ON CORPORATE GOVERNANCE

If a board member’s mandate is terminated 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
payments or benefits from third parties in 2010 on account
of their activities as members of the Board of Manage-
ment of BMW AG.

Overview of compensation system and compensation components

Component

Salary

Variable compensation

Bonus:
(if target is 100% achieved, the ratio of salary and bonus will
be approximately 20 : 80)

Parameter / measurement base

Member of the Board of Management:
– euro 420,000 p. a. (first term of appointment)
– euro 480,000 p. a. (from second term of appointment onwards)

Chairman of the Board of Management:
– euro 840,000 p. a.

Target bonuses (if target is 100 % achieved):
– euro 1.5 million (first term of appointment)
– euro 1.75 million (from second term of appointment onwards)
– euro 3.00 million (Chairman of the Board of Management)

a) Corporate earnings-related bonus

(corresponds to 50 % of target bonus if target is 100 %
achieved)

– Quantitative criteria fixed in advance for a period of three financial years
– Formula: 50 % of target bonus x earnings factor x dividend factor (common stock)
– the earnings factor is derived from the Group net profit and the Group post-tax return on

b) Performance-related bonus

sales

– Corridor: 0 –150 %* (fixed upper limit)
– Primarily qualitative criteria, expressed in terms of a performance factor aimed at

(corresponds to 50 % of target bonus if target is 100 %
achieved)

measuring the board members contribution to sustainable and long-term performance
and the future viability of the business

Share-based compensation components

Special bonus payments

Other remuneration

– Formula: 50 % of target bonus x performance factor
– Other criteria for performance factor: innovation (economic and ecological, e.g. reduc-
tion of CO2 emissions), leadership skills and attractiveness as employee, corporate
social responsibility, progress in implementing diversity concept

– Corridor: 0 –150 %* (fixed upper limit)

– introduction planned for financial years from 1 January 2011 onwards
– requirement for board members to invest 20 % of their total bonuses (after tax) for finan-

cial years from 1 January 2011 onwards in BMW AG common stock

– one half of the amount required to finance this investment to be provided by Company.
– minimum holding period of four years
– at the end of the holding period, board member receives either one additional share or

an equivalent cash amount (at option of Company)

May be paid in justified circumstances on appropriate basis, no entitlement

Contractual agreement, main points: use of company cars, insurance premiums,
contributions towards security systems, medical check-up

Compensation entitlements on termination of contract, compensation entitlements in event of change of control or takeover bid

No contractual entitlements

Retirement and surviving dependants’ benefits
Model

Principal features

a) Defined benefits

(only applies to board members appointed for the first
time before 1 January 2010; based on legal right to
receive the benefits already promised to them, this group
of persons is entitled to opt between (a) and (b))

Pension of base amount of euro 10,000 (Chairman: euro 15,000) plus fixed amounts
based on length of company and board service, in certain circumstances transitional
payments

b) Defined contribution system since 1 January 2010 with

guaranteed minimum rate of return

Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned

Annual contribution for board member (Chairman)
for 2010: euro 240,000 (euro 425,000)
for 2011: euro 270,000 (euro 475,000)
for financial year 2012 and thereafter: euro 300,000 (euro 525,000)

Various forms of disbursement

No transitional payments

* Upper limit for financial year 2011 and thereafter will increase to 250 %.

158

Compensation of the Board of Management for the
financial year 2010 (total)
The total remuneration of the current members of the
Board of Management of BMW AG amounted to euro
18.2 million (2009: euro 10.7 million). The amount com-
prises fixed components (including other remuneration)
of euro 3.7 million (2009: euro 3.7 million) and variable
components of euro 14.5 million (2009: euro 7.0 mil-
lion). The composition of the Board of Management was
unchanged in 2010 compared to the previous year. The
rules determining the level of board members’ salaries
remained unchanged during the financial year 2010;
differences in salaries compared to the previous year re-
sulted from the timing of appointment periods. Other
remuneration decreased due to the lower level of fringe
benefits paid in the year under report. Variable remu-
neration includes special bonus payments amounting to
euro 770,000 (2009: –) (euro 100,000 per board member,
euro 170,000 to the Chairman). The Supervisory Board
authorised these amounts in the context of the special
bonus payments to employees of BMW AG, based on the

principle of consistency and taking into account senior
management compensation (below board level). This
was in recognition of the fact that the Board of Manage-
ment has undertaken structural measures that have made
it easier for the BMW Group to overcome the economic
and financial crisis.

in euro million

2010

2009

Amount Proportion
in %

Fixed compensation

Variable compensation

Total compensation

3.7

14.5

18.2

20.3

79.7

100.0

Amount Proportion

in %

34.6

65.4

3.7

7.0

10.7

100.0

In addition, an expense of euro 0.9 million (2009: euro
0.7 million) was recognised in the financial year 2010 for
current members of the Board of Management for the
period after the end of their service relationship. This re-
lates to the expense for allocations to pension provisions
(service cost).

Compensation of the individual members of the Board of Management for the financial year 2010 (2009)

in euro

Norbert Reithofer

Frank-Peter Arndt

Herbert Diess

Klaus Draeger

Friedrich Eichiner

Harald Krüger

Ian Robertson

Total

Fixed compensation

Salary

Other
compensation

840,000
(840,000)

480,000
(440,000)

435,000
(420,000)

480,000
(430,000)

435,000
(420,000)

420,000
(420,000)

17,716
(16,215)

21,529
(23,591)

18,944
(13,773)

20,016
(74,237)

24,747
(93,785)

20,473
(78,028)

13,987
(54,993)

Variable Compensation
Total

compensation*

3,438,500
(1,725,000)

2,006,625
(910,417)

1,802,344
(862,500)

2,006,625
(886,458)

1,802,344
(862,500)

1,734,250
(862,500)

4,296,216
(2,581,215)

2,508,154
(1,374,008)

2,256,288
(1,296,273)

2,506,641
(1,390,695)

2,262,091
(1,376,285)

2,174,723
(1,360,528)

2,168,237
(1,337,493)

Total

857,716
(856,215)

501,529
(463,591)

453,944
(433,773)

500,016
(504,237)

459,747
(513,785)

440,473
(498,028)

433,987
(474,993)

3,510,000

137,412

3,647,412

14,524,938

18,172,350

(3,390,000)

(354,622)

(3,744,622)

(6,971,875)

(10,716,497)

* Variable remuneration for the financial year 2010 includes special bonus payments of euro 100,000 per board member (Chairman: euro 170,000).

140

STATEMENT ON

140

142

CORPORATE GOVERNANCE

(Part 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

143

Members of the Board of

Management

144
147

Members of the Supervisory Board
Information on Work Procedures
of the Management Board and
Supervisory Board

154
162

Compensation Report
Information on Corporate

Governance Practices

163

Compliance in the BMW Group

159 STATEMENT ON CORPORATE GOVERNANCE

Pension benefits

in euro

Norbert Reithofer

Frank-Peter Arndt

Herbert Diess

Klaus Draeger

Friedrich Eichiner

Harald Krüger

Ian Robertson

Gesamt2

Allocated to
pension provisions in
financial year 20101

Present value of
pension obligations
(defined benefit plans),
in accordance with IFRS2, 3

Present value of
pension obligations
(defined benefit plans),
in accordance with HGB2

Balance on pension
accounts at 31.12. 2010
(defined benefit plans)2

168,018
(131,815)

94,937
(73,233)

123,733
(93,685)

95,435
(74,495)

109,474
(86,612)

70,062
(51,300)

238,584
(189,682)

900,243

(700,822)

4,393,600
(3,583,214)

2,972,820
(2,440,806)

2,079,474
(1,619,404)

2,736,323
(2,223,687)

2,931,281
(2,406,328)

1,570,426
(1,187,492)

714,664
(381,011)

17,398,588

(13,841,942)

4,092,763
(3,583,214)

2,769,243
(2,440,806)

1,915,385
(1,619,404)

2,539,567
(2,223,687)

2,741,092
(2,406,328)

1,408,702
(1,187,492)

660,951
(381,011)

16,127,703

(13,841,942)

3,493,226

(–)

2,389,511

(–)

1,646,141

(–)

2,226,217

(–)

2,340,081

(–)

1,213,803

(–)

532,713

(–)

13,841,692

(–)

1 Corresponds to service cost in accordance with IFRS.
2 Based on legal right to receive the benefits already promised to them, current board members were given the option of choosing between the old and new models at the time the

Company changed from a defined benefit to a defined contribution system.

3 Defined benefit obligations (DBO)

The amount paid to former members of the Board of
Management and their dependants was euro 3.7 million
(2009: euro 3.8 million). Pension obligations to former
members of the Board of Management and their depend-
ants are fully covered by pension provisions amounting
to euro 49.7 million (2009: euro 46.7 million), 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 Meet-
ing. The compensation regulation valid for the financial
year 2010 was resolved by shareholders at the Annual
General Meeting on 8 May 2008 and is set out in Article
15 of BMW AG’s Articles of Incorporation, which can be
viewed and /or downloaded at www.bmwgroup.com\ir
under the menu items “Corporate Facts” and “Corporate
Governance”.

Compensation principles, compensation components
The Supervisory Board of BMW AG receives both fixed
and corporate performance-related compensation.
Earnings per share of common stock form the basis for
corporate 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 performance-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
Statements for the relevant financial year (remuneration
year) exceed 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
performance-related compensation.

With this combination of fixed and corporate perform-
ance-related compensation, the compensation structure
in place for BMW AG’s Supervisory Board complies
with the recommendation contained in section 5.4.6 of
the German Corporate Governance Code. The German
Corporate Governance Code also recommends that the
exercising of chair and deputy chair positions in the
Supervisory Board as well the chair and membership of
committees should also be considered when determin-
ing the level of compensation.

Accordingly, the Articles of Incorporation of BMW AG
stipulate that the Chairman of the Supervisory Board
shall receive three times the amount and each Deputy
Chairman shall receive twice the amount of the remu-
neration of a Supervisory Board member. Provided the
relevant committee convened for meetings on at least
three days during the financial year, each chairman of the
Supervisory Board’s committees receives twice the

160

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 Super-
visory Board exercises more than one of the functions re-
ferred to above, the compensation is measured only on
the basis of the function which is remunerated with the
highest amount, thus avoiding amounts accumulating
when more than one function is exercised.

3.1 million (2009: euro 1.6 million). This comprised a
fixed component of euro 1.6 million (2009: euro 1.6 mil-
lion) and a variable component of euro 1.5 million
(2009: –), reflecting the fact that the relevant criteria
stipulated in the Articles of Incorporation were satisfied
again for the first time in two years (minimum EPS of
euro 2.30).

in euro million

2010

2009

Amount Proportion
in %

Amount Proportion

in %

100.0

–

Fixed compensation

Variable compensation

1.6

1.5

51.6

48.4

1.6

–

Total compensation

3.1

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. Market research into the premium
segment for cars in Germany, for which the Institut für
Demoskopie Allensbach had been engaged in 2009, was
completed in 2010 as agreed. Of the total fee of euro
79,600, the final instalment of euro 26,533 was incurred
in 2010. 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 in 2009 prior to signing the contract.

In addition, each member of the Supervisory Board re-
ceives an attendance fee of euro 2,000 for each full meet-
ing of the Supervisory Board (Plenum) which the mem-
ber has attended (payable at the end of the financial
year). Attendance at more than one meeting on the same
day is not remunerated separately.

The Company also reimburses to each member of the
Supervisory Board any value added tax arising on their
remuneration. The amounts disclosed below are net
amounts.

In order to be able to perform his duties, the Chairman
of the Supervisory Board is provided with secretariat and
chauffeur services.

Compensation of the Supervisory Board for the
financial year 2010 (total)
In accordance with Article 15 of the Articles of Incorpora-
tion, the compensation of the Supervisory Board for ac-
tivities during the financial year 2010 amounted to euro

140

STATEMENT ON

140

142

CORPORATE GOVERNANCE

(Part 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

143

Members of the Board of

Management

144
147

Members of the Supervisory Board
Information on Work Procedures
of the Management Board and
Supervisory Board

154
162

Compensation Report
Information on Corporate

Governance Practices

163

Compliance in the BMW Group

161 STATEMENT ON CORPORATE GOVERNANCE

Compensation of the individual members of the Supervisory Board for the financial year 2010 (2009)

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)1

Karl-Ludwig Kley (Deputy Chairman2)

Bertin Eichler

Franz Haniel

Reinhard Hüttl

Henning Kagermann3

Susanne Klatten

Renate Köcher

Robert W. Lane

Horst Lischka

Willibald Löw

Wolfgang Mayrhuber

Werner Neugebauer

Franz Oberländer

Anton Ruf

Maria Schmidt

Werner Zierer

Total

165,000
(165,000)

110,000
(110,000)

41,589
(110,000)

89,356
(55,000)

55,000
(55,000)

34,356
(–)

55,000
(55,000)

55,000
(34,959)

55,000
(55,000)

1,430,301

(1,430,302)

10,000
(10,000)

2,000
(10,000)

10,000
(8,000)

10,000
(10,000)

10,000
(8,000)

8,000
(10,000)

6,000
(–)

10,000
(10,000)

10,000
(6,000)

10,000
(8,000)

10,000
(10,000)

6,000
(8,000)

4,000
(8,000)

8,000
(4,000)

10,000
(10,000)

184,000

(184,000)

172,260
(–)

114,840
(–)

43,419
(–)

93,288
(–)

57,420
(–)

35,868
(–)

57,420
(–)

Total 4

347,260
(175,000)

234,840
(120,000)

87,008

(120,000)

192,644
(63,000)

122,420
(65,000)

122,420
(63,000)

120,420
(65,000)

76,224

(–)

122,420
(65,000)

122,420
(40,959)

122,420
(42,959)

122,420
(65,000)

118,420
(63,000)

116,420
(63,000)

120,420
(59,000)

122,420
(65,000)

1 Member and Deputy Chairman of the Supervisory Board until 18 May 2010
2 Deputy Chairman of the Supervisory Board since 18 May 2010
3 Member of the Supervisory Board since 18 May 2010
4 Figures for the previous year include the remuneration of members of the Supervisory Board who left office during the financial year 2009.

1,493,235

(–)

3,107,536

(1,614,302)

162

3. Other
No advances or loans were granted by the Company to
Members of the Board of Management and the Super-
visory Board, nor were any contingent liabilities entered
into on their behalf.

Reportable securities transactions
(“Directors Dealings”)
Pursuant to § 15 a of the German Securities Trading Act
(WpHG), members of the Board of Management and the
Supervisory Board any persons related to those members,
are required to give notice to BMW AG and the Federal
Agency for the Supervision of Financial Services of trans-
actions with BMW stock or related financial instruments
if the total sum of such transactions exceeds an amount
of euro 5,000 during any given calendar year. All trans-
actions notified to BMW AG are disclosed on its website
at www.bmwgroup.com/ir and in its Annual Document
pursuant to § 10 (1) of the German Securities Prospectus
Act. During the financial year 2010, Dr. Karl-Ludwig Kley
gave notice of the sale of 1,320 shares of common stock
at an average selling price of euro 62.94.

Shareholdings of members of the Board of Manage-
ment and the Supervisory Board
The members of the Supervisory Board of BMW AG hold
in total 27.66% of the Company’s shares of common
and preferred stock, of which 16.10% relates to Stefan
Quandt, Bad Homburg v. d. H. and 11.56% to Susanne
Klatten, Bad Homburg v. d. H. The shareholding of the
members of the Board of Management totals 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 2010 employees were
able, at their own discretion, to acquire packages of be-
tween 5 and 25 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 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. A total of 499,590 shares of
preferred stock were acquired by employees under the
scheme in 2010; 498,050 of these shares were drawn
from the Authorised Capital 2009, the remainder were

bought back via the stock exchange. Every year the Board
of Management of BMW AG decides whether the scheme
is to be continued.

Information on corporate governance practices
applied beyond mandatory requirements

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 re-
sults of all our activities must be valued 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 takes personal responsi-
bility for the company’s success. When working in a
team, each employee must assume personal responsi-
bility for his or her actions. In doing so we are fully aware
that we are working towards achieving the company’s
goals. For this reason, we work together in the best inter-
ests 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 – adaptability as essential
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.
The solutions we agree upon will then be consistently im-
plemented by all those involved.

140

STATEMENT ON

140

142

CORPORATE GOVERNANCE

(Part 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

143

Members of the Board of

Management

144
147

Members of the Supervisory Board
Information on Work Procedures
of the Management Board and
Supervisory Board

154
162

Compensation Report
Information on Corporate

Governance Practices

163

Compliance in the BMW Group

163 STATEMENT ON CORPORATE GOVERNANCE

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 deci-
sions will be among the most important we ever make.

the prohibition of child labour, the right to appropriate
remuneration, regulated working times and compliance
with work and safety regulations. The complete text of
the UN Global Compact and the recommendations of
the ILO and other relevant information can be found at
www.unglobalcompact.org and www.ilo.org. The Joint
Declaration on Human Rights and Working Conditions
in the BMW Group can be found at www.bmwgroup.com
under the menu item “Responsibility”.

Leading by example
Every manager must lead by example.

Sustainability
In our view, sustainability constitutes a lasting contribu-
tion to the success of the company. This is the basis upon
which we assume ecological and social responsibility.

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
The BMW Group stands by its social responsibilities. Our
corporate culture combines the drive for success with a
willingness to be open, trustworthy and transparent. We
are well aware of our responsibility towards society. Our
models for sustainable social responsibility towards em-
ployees 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 information can be
found under www.oecd.org und www.iccwbo.org. The
Board of Management signed the United Nations Global
Compact in 2001 and, in 2005, together with employee
representatives, issued a Joint Declaration on Human
Rights and Working Conditions in the BMW Group. With
these two documents, we have given our commitment
to abide worldwide by the International Labour Organi-
zation’s (ILO) fundamental working standards, principles
and labour rights. The most important of these are free-
dom of employment, the prohibition of discrimination,

It goes without saying that the BMW Group abides by
these fundamental principles and rights worldwide. Ac-
tivities can only be sustainable, however, if they encom-
pass 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 therefore play an integral part in all aspects of
purchasing terms and conditions as well as for the pur-
poses of evaluating suppliers. Potential suppliers must
submit a full disclosure when completing BMW’s sus-
tainability questionnaire, 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 informa-
tion 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 risks and repu-
tational risk, the Board of Management created a Com-
pliance Committee in 2007, mandated to establish a
worldwide Compliance Organisation throughout the
BMW Group.

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,
Organisational Development and Group Human

164

Resources. It manages and monitors activities neces-
sary to ensure compliance with the law (Legal Com-
pliance). These activities include training, information
and communication measures, following up cases of
non-compliance and implementing compliance re-
quirements.

The Compliance Committee reports regularly to the
Board of Management on all compliance-related issues,
including the progress made in setting up and develop-
ing the Compliance Organisation, details of investiga-
tions performed, known infringements of the law, sanc-
tions imposed and corrective /preventative measures
implemented. The BMW Group Compliance Committee
operates through the Compliance Committee Office,
which is allocated in organisational terms to the Chair-
man of the Board of Management.

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 implementation of the BMW Group Compliance
Organisation began in 2008 and was completed in
November 2009. The BMW Group Compliance Organi-
sation comprises the entire set of measures taken to
ensure that the BMW Group, its representative 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 Or-
ganisation are shown in the diagram on the right 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 supplementary 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 over-
view of the various areas relevant for the BMW Group.
The Legal Compliance Code is available both as a printed
brochure and to download in German and English. In
addition, translations into nine other languages (French,
Spanish, Italian, Portuguese, Russian, Mandarin, Japa-
nese, Thai and Korean) have been available since 2009.

Managers in particular bear a high degree of responsi-
bility and must set a good example in the process of

preventing infringements. All managers are required to
inform the staff working for them of the content and
significance of the Legal Compliance Code and to make
them aware of legal risks. Managers must, at regular in-
tervals and on their own initiative, check compliance
with the law and communicate regularly with staff on
this issue. Any indication of non-compliance with the
law must be rigorously investigated.

More than 11,000 managers and staff have received train-
ing worldwide in essential compliance matters since
the introduction of the BMW Group Compliance Organi-
sation. The training material is available on an internet-
based training platform in German and English and in-
cludes a final test. Successful participation in the training
programme, which is documented by a certificate, is
mandatory for all BMW Group managers. Appropriate
processes are in place to ensure that all newly recruited
managers and promoted staff undergo compliance
training.

In addition to this basic training, in-depth training is
also provided to certain groups of staff on specific com-

Compliance Committee

BMW AG Supervisory Board
Annual Status Report

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

140

STATEMENT ON

140

142

CORPORATE GOVERNANCE

(Part 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

143

Members of the Board of

Management

144
147

Members of the Supervisory Board
Information on Work Procedures
of the Management Board and
Supervisory Board

154
162

Compensation Report
Information on Corporate

Governance Practices

163

Compliance in the BMW Group

165 STATEMENT ON CORPORATE GOVERNANCE

pliance issues. In 2010, for example, a European Union-
related training programme was prepared (“Compliance
Advanced – Competition and Antitrust Law”) aimed at
employees who come into contact with antitrust- related
issues as a result of their functions within sales or pur-
chasing.

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 for both
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 neces-
sary, the Group Internal Audit Department, the Group
Security Department and legal departments may be
called upon to assist in the investigation process.

A reporting system has been established for the Com-
pliance Organisation which enables compliance-relevant
issues to be reported to the Compliance Committee 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 2010) report on compliance matters
covering all areas of the BMW Group. The first full set of
compliance reporting was completed in 2010. This in-
cluded reporting on the compliance status of the relevant
entities, identified legal risks and incidences of non-
compliance as well as the corrective and preventative
measures implemented.

Both the compliance with and the implementation of the
Legal Compliance Code are reviewed regularly by Group
Internal Audit and Group Security. For this purpose,
the Group Internal Audit Department performs on-site
audits and interviews employees.

The Board of Management keeps track of and analyses
compliance-related developments and trends on the
basis of the Group’s compliance reporting and input from
the BMW Group Compliance Committee. Against the
background of rising expectations placed on the system-
atic approach and effectiveness of compliance organisa-

tions, in autumn 2010 the Board of Management decided
to expand the existing range of compliance measures.
This included additional measures aimed at avoiding cor-
ruption, strengthening controls and introducing region-
ally structured compliance management.

It is essential that employees are aware of and comply
with applicable regulations. The BMW Group does not
tolerate violations of law by its employees. Culpable
violations of law result in employment-contract sanc-
tions and may involve personal liability consequences
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 chan-
nels. The central means of communication is the Com-
pliance website within the BMW Group’s intranet where
employees can find compliance-related information and
also have access to training materials in both German
and English. Employees can use the website to access
frequently asked questions (and answers) on compli-
ance-related issues. The website contains a special service
area where various practical tools and aids are made
available to employees, which help them deal with typi-
cal compliance-related matters. With effect from the
beginning of 2010, employees also have access on the
website to an electronically supported authorisation
process for invitations in connection with business
partners.

Compliance is also an important factor in terms of safe-
guarding the future of the BMW Group’s workforce.
With this in mind, in 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 trustful cooperation
in all matters relating to compliance.

In the interest of investor protection and in order to en-
sure that the BMW Group complies with regulations
relating to potential insider information, as early as 1994
the Board of Management appointed an Ad-hoc Com-
mittee consisting of representatives of various specialist
departments and whose members examine the relevance
of issues for ad-hoc disclosure purposes. All persons
working on behalf of the enterprise who have access to
insider information in accordance with existing rules
have been, and continue to be, included in a correspond-
ing, regularly updated list and informed of the duties
arising from insider rules.

166

OTHER INFORMATION

BMW Group Ten-year Comparison

Deliveries to customers

Automobiles
Motorcycles3

Production

Automobiles
Motorcycles4

Financial Services

2010

2009

2008

2007

units

1,461,166

1,286,310

1,435,876

1,500,678

110,113

100,358

115,196

102,467

1,481,253

1,258,417

1,439,918

1,541,503

112,271

93,243

118,452

104,396

Contract portfolio
Business volume (based on balance sheet carrying amounts)5

contracts

3,190,353

3,085,946

3,031,935

2,629,949

euro million

66,233

61,202

60,653

51,257

Income Statement

Revenues
Gross profit margin Group6

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 7

Capital expenditure

Capital expenditure ratio (capital expenditure / revenues)

Personnel
Workforce at the end of year8

Personnel cost per employee

Dividend

Dividend total

euro million

60,477

50,681

53,197

56,018

euro million

18.0

5,094

4,836

8.0

1,602

33.1

3,234

65,716

43,151

23,100

21.2

45,633

40,134

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

108,867

101,953

101,086

euro million

7,432

8,150

3,263

5.4

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

euro

95,453

83,141

96,230

72,349

100,041

75,612

107,539

76,704

euro million

852

197

694

Dividend per share of common stock / preferred stock

euro

1.30 /1.32

0.30 / 0.32

1.06 / 1.08

166
166
168
170
172
174
175
176

OTHER INFORMATION
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 excluding C1, sales volume to 2003: 32,859 units, including Husqvarna Motorcycles
4 excluding C1 production by Bertone, production volume C1 up to 2002: 33,489 units, including Husqvarna Motorcycles
5 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
6 research and development costs included in cost of sales with the effect from 2008
7 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.

8 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.
9 adjustment to dividend due to buy-back of treasury shares

167 OTHER INFORMATION

2006

2005

20041

2003

20022

2001

1,373,970

1,327,992

1,208,732

1,104,916

1,057,344

100,064

97,474

92,266

92,962

92,599

905,657

84,713

Automobiles
Motorcycles3

Deliveries to customers

1,366,838

1,323,119

1,250,345

1,118,940

1,090,258

103,759

92,012

93,836

89,745

93,010

946,730

90,478

Production

Automobiles
Motorcycles4

Financial Services

2,270,528

2,087,368

1,843,399

1,623,425

1,443,236

1,297,702

44,010

40,428

32,556

28,647

26,505

25,306

Contract portfolio
Business volume (based on balance sheet carrying amounts)5

48,999

46,656

44,335

41,525

42,411

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

106,575

76,621

105,798

75,238

105,972

73,241

104,342

73,499

101,395

69,560

Income Statement

38,463

25.3

Revenues
Gross profit margin Group6

3,356

Profit before financial result

3,242

Profit before tax

8.4

Return on sales (earnings before tax / revenues)

1,376

Income taxes

42.4

Effective tax rate

1,866

Net profit for the year

Balance Sheet

31,282

Non-current assets

19,977

Current assets

10,770

Equity

21.0

Equity ratio Group

19,223

Non-current provisions and liabilities

21,266

Current provisions and liabilities

51,259

Balance sheet total

Cash Flow Statement

2,437

4,304

Cash and cash equivalents at balance sheet date
Operating cash flow 7

3,516

Capital expenditure

9.1

Capital expenditure ratio (capital expenditure / revenues)

97,275

Personnel
Workforce at the end of year8

66,711

Personnel cost per employee

Dividend

458

4199

419

392

351

350

Dividend total

0.70 / 0.72

0.64 / 0.66

0.62 / 0.64

0.58 / 0.60

0.52 / 0.54

Dividend per share of common stock / preferred stock

168

BMW Group
Locations

— R
— R
— R

— S

— R

— P

— S

— A

— S

— A

— S

— P

— S

The BMW Group is present in the world markets with
25 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

166
166
168
170
172
174
175
176

OTHER INFORMATION
BMW Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Index of Graphs
Financial Calendar
Contacts

169 OTHER INFORMATION

— P

— R

— S

— S
— R

— S

— A

— S
— A
— S

— A

— S

— A

— S

— P

— P
— P
— P

— S

— P

— S
— P

— S

— R

— H

— P

— P
— R

— P
— P

— P

— S
— C

— P

— R

— S

— P

— S

— P Production

— C Contract production

— S Sales subsidiary markets / Locations Financial Services

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 Manaus, Brazil
CKD production Rayong, Thailand

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

Slovakia
Slovenia
South Africa
South Korea
Spain
Sweden
Switzerland
Thailand
USA

* sales locations only

170

Glossary

ACEA
Abbreviation for “Association des Constructeurs Euro-
péens d’Automobiles” (European Automobile Manufac-
turers Association).

EBIT
Abbreviation for “Earnings Before Interest and Taxes”. The
profit before income taxes, minority interest and financial
result.

CFRP
Abbreviation for carbon-fibre reinforced polymer. CFRP
is a composite material, consisting of carbon-fibres sur-
rounded by a plastic matrix (resin). On a comparative
basis, CFRP is approximately 50% lighter than steel and
30% lighter than aluminium.

Common stock
Stock with voting rights (cf. preferred stock).

Connected Drive
Under the term Connected Drive, the BMW Group al-
ready unites a unique portfolio of innovative features
that enhance comfort, raise infotainment to new levels
and significantly boost safety in BMW Group vehicles.

Cost of materials
Comprises all expenditure to purchase raw materials and
supplies.

EBITDA
Abbreviation for “Earnings Before Interest, Taxes, Depre-
ciation and Amortisation”. The profit before income taxes,
minority interest, financial result and depreciation /
amortisation.

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 construc-
tion to comprehensive energy and heat management in-
side the vehicle.

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).

Equity ratio
The proportion of equity (= subscribed capital, reserves,
accumulated other equity and minority interest) to the
balance sheet total.

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 compa-
nies with strategies based on a sustainability concept. The
BMW Group has been one of the leading companies in the
DJSI since 1999.

Free cash flow
Free cash flow corresponds to the cash inflow from oper-
ating activities of the Automobiles segment less the cash
outflow for investing activities of the Automobiles seg-
ment adjusted for net investment in marketable securities.

Gross margin
Gross profit as a percentage of revenues.

IFRSs
International Financial Reporting Standards, intended to
ensure global comparability of financial reporting and
consistent 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.

166
166
168
170
172
174
175
176

OTHER INFORMATION
BMW Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Index of Graphs
Financial Calendar
Contacts

171 OTHER INFORMATION

Operating cash flow
Cash inflow from the operating activities of the Automo-
biles segment.

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, seven assembly plants and one contract pro-
duction plant. Within this network, the plants supply one
another with systems and components and are all charac-
terised 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: Profit before tax as a percentage of revenues.
Post-tax: Profit as a percentage of revenues.

Risk management
An integral component of all business processes. Following
enactment of the German Law on Control and Transpar-
ency within Businesses (KonTraG), all companies listed
on a stock exchange in Germany are required to set up a
risk management system. The purpose of this system is to
identify risks at an early stage which could have a significant
adverse effect on the assets, liabilities, financial position
and results of operations, and which could endanger the
continued existence of the company. This applies in partic-
ular 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.

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 enter-

prise on the basis of a control agreement or a provision
in the statutes of that enterprise.

Supplier relationship management
Supplier relationship management (SRM) uses focused
procurement strategies to organise networked supplier
relationships, optimise processes for supplier 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 devel-
opment. In 1987 the United Nations “World Commis-
sion on Environment and Development” defined sus-
tainable development as development that meets the
needs of the present without compromising the ability
of future generations to meet their own needs. The eco-
nomic relevance of corporate sustainability to the BMW
Group is evident in three areas: resources, reputation
and risk.

172

Index

83 et seq.

A
Accounting policies
Annual General Meeting
149 et seq., 159 et seq.
Application of § 264 (3) and § 264 b of the German
Commercial Code (HGB)
Apprentices
Automobiles segment

27 et seq., 94

18 et seq.

132

09 et seq., 13, 44 et seq., 140,

B
Balance sheet structure
Board of Management
147 et seq., 156 et seq., 162 et seq.
41, 51, 55, 78 et seq., 114
Bonds

54
45 et seq., 82, 131, 140 et seq.,

05, 13, 50 et seq., 136

52, 54 et seq., 105, 128 et seq.

13, 52, 128 et seq., 170 et seq.

51 et seq., 78 et seq., 81

55, 131, 154 et seq.

09 et seq., 163 et seq.

22, 38, 170

31, 33, 35, 65

C
Capital expenditure
Cash and cash equivalents
Cash flow
Cash flow statement
CFRP
CO2 emissions
Compensation Report
Compliance
Connected Drive
Consolidated companies
Consolidation principles
Contingent liabilities
Corporate Governance
149 et seq., 162
Cost of materials
Cost of sales
Current assets
Current provisions and liabilities

50, 84, 98

36, 170

55, 170

82
83

117

07 et seq., 131, 140 et seq., 147,

27 et seq., 36, 41, 55 , 58, 62, 68 et seq., 105,

84, 93 et seq.
33, 36, 65, 72, 170

E
Earnings per share
Efficient Dynamics
Employees
107, 148, 162 et seq.
Equity
170
Exchange rates
14, 54, 83
Explanatory notes to the cash flow statements

128

47 et seq., 53 et seq., 58, 76 et seq., 80, 105 et seq.,

F
Financial assets
Financial instruments
122 et seq., 126 et seq.
Financial liabilities
Financial result
Financial Services segment
Fleet consumption

50, 91

53 et seq., 86, 101

46, 86 et seq., 106, 118 et seq.,

52 et seq., 55, 87, 106, 113 et seq.

25 et seq.

G
Group tangible, intangible and investment assets
seq.

96 et

13, 49 et seq., 74 et seq., 87, 91 et seq., 103,

49, 60 , 74 et seq., 81, 89 et seq., 166

I
Income statement
et seq.
Income taxes
112 et seq., 166 et seq.
Intangible assets
Inventories
Investments accounted for using the equity method and
other investments

13, 50 et seq., 84, 98, 136

53, 84, 87, 104

85, 99

K
Key data per share

D
DAX
41, 170
Dealer organisation
Declaration with respect to the Corporate Governance
Code
Dividend
Dow Jones Sustainability Index World

25 et seq., 40

31, 42, 170

13, 42, 51

131, 142

166
166
168
170
172
174
175
176

OTHER INFORMATION
BMW Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Index of Graphs
Financial Calendar
Contacts

L
Lease business
Leased products
Locations

168 et seq.

25 et seq., 64, 67
51 et seq., 99

143

M
Mandates of members of the Board of Manage-
ment
Mandates of members of the Supervisory Board
seq.
Marketable securities
123
Motorcycles segment

51 et seq., 81, 85 et seq., 99, 101,

144 et

173 OTHER INFORMATION

05, 13, 49 et seq., 58, 128, 155

N
Net profit
New financial reporting rules
Non-current assets
Non-current provisions and liabilities

O
Other financial result
Other investments
Other operating income and expenses
Other provisions
Outlook

91
99, 123

70 et seq.

112

53, 55, 58, 87, 107 et seq.

129 et seq.

30, 94

P
Pension provisions
Personnel costs
Principal subsidiaries
Production
Production network
Profit before financial result
et seq., 166 et seq.
Profit before tax
seq., 127, 133, 136, 166 et seq., 170
Property, plant and equipment
Purchases

38 et seq., 163

05, 21 et seq., 31 et seq., 58

21 et seq., 65, 71, 171

04 et seq., 12, 47 et seq., 74

04 et seq., 12 et seq., 47 et seq., 74 et

13, 50 et seq., 58, 98, 117

81, 89, 133 et seq.

04, 12, 18 et seq., 24, 50 et seq., 71 et seq.,

S
Sales and administrative costs
Sales volume
166 et seq.
Segment information
Shareholdings of members of the Board of Management
and the Supervisory Board
Statement of Comprehensive Income
Stock
Subscribed capital
Subsidiaries
82
Supervisory Board
seq., 159 et seq.
Suppliers
Sustainability
seq., 163, 171

41 et seq., 44 et seq., 84, 93 et seq., 105, 162, 171

22, 31 et seq., 39, 42 et seq., 72, 147 et

31, 33, 38 et seq., 65, 163

06 et seq., 45, 128 et seq., 131, 140 et

74, 81, 95

44, 55

131

T
Tangible, intangible and investment assets 59, 85
Trade payables
Trade receivables

53, 104 et seq.

53, 55, 116

51 et seq., 86, 100 et

36 et seq., 41, 50, 72, 84, 89

128 et seq.

154 et seq.

42, 64, 106 et seq., 125, 171

R
Rating
Receivables from sales financing
seq., 124
Related party relationships
Remuneration System
Report of the Supervisory Board
Research and development
et seq., 168
Result from equity accounted investments
Return on sales
Revenue reserves
Revenues
Risk management

49 et seq., 155, 171
58, 105 et seq.

12, 49 et seq., 58, 83, 89

62 et seq., 147, 171

06 et seq.

90, 136

This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.

174

Index of Graphs

Finances
Profit before financial result
Profit before tax
Revenues
04
BMW Group Revenues by region
12
BMW Group Capital expenditure and
operating cash flow
Exchange rates compared to the Euro
Oil price trend
15
Precious metals price trend
Steel price trend
Contract portfolio of Financial Services segment
BMW Group new vehicles financed by
Financial Services segment
Contract portfolio retail customer financing of
BMW Group Financial Services 2010
Development of credit loss ratio
27
Regional mix of BMW Group purchase
38
volumes 2010
Change in cash and cash equivalents
Balance sheet structure – Automobiles segment
Balance sheet structure – Group
BMW Group Value added 2010

54
56

Environment
CO2 emissions per vehicle produced
32
Energy consumed per vehicle produced
33
Process wastewater per vehicle produced
Water consumption per vehicle produced
33
Volatile organic compounds (VOC) per vehicle
produced
Waste for disposal per vehicle produced
Development of CO2 emissions of BMW Group cars in
Europe

Stock
Development of BMW stock compared to stock
exchange indices

Production and sales volume
Sales volume of automobiles
BMW Group Sales volume of vehicles by region
and market
BMW Group – key automobile markets 2010
Sales volume of BMW diesel automobiles
MINI brand cars in 2010 – analysis by model variant
Vehicle production of the BMW Group by plant
in 2010
BMW Sales volume of motorcycles
BMW Group – key motorcycle markets 2010

Workforce
BMW Group Apprentices at 31 December
Proportion of non-tariff female employees
at BMW AG
Employee attrition ratio at BMW AG
Compliance Committee

164

166
166
168
170
172
174
175
176

OTHER INFORMATION
BMW Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Index of Graphs
Financial Calendar
Contacts

175 OTHER INFORMATION

Financial Calendar

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

Annual Report 2011
Annual Accounts Press Conference
Financial Analysts’ Meeting
Quarterly Report to 31 March 2012
Annual General Meeting
Quarterly Report to 30 June 2012
Quarterly Report to 30 September 2012

15 March 2011
16 March 2011
4 May 2011
12 May 2011
2 August 2011
3 November 2011

13 March 2012
13 March 2012
14 March 2012
3 May 2012
16 May 2012
1 August 2012
6 November 2012

176

Contacts

Business Press
Telephone

Fax
E-mail

Investor Relations
Telephone

Fax
E-mail

+ 49 89 382-2 23 32
+ 49 89 382-2 41 18
+ 49 89 382-2 44 18
presse@bmwgroup.com

+ 49 89 382-2 42 72
+ 49 89 382-2 53 87
+ 49 89 382-1 46 61
ir@bmwgroup.com

The BMW Group on the Internet
Further information about the BMW Group is available online at www.bmwgroup.com.
Investor Relations information is available directly 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

The Annual Report 2010 as an iPad app

166
166
168
170
172
174
175
176

OTHER INFORMATION
BMW Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Index of Graphs
Financial Calendar
Contacts

NUMBER ONE

FUTURE

A high-tech material for tomorrow’s mobility

GROWTH

From the ﬁ rst BMW 5 Series to an impressive global family

PROFITABILITY

CUSTOMERS

Intelligent communication for individual mobility

Stable performance in an age of global market ﬂ uctuations

58
58

NUMBER ONE

PREFACE

NUMBER ONE

With our corporate Strategy Number ONE, we are syste-
matically unlocking the future – opening up access to new
customers, new technologies and new markets. Number
ONE stands for dynamic growth and strong proﬁ tability in
equal measure.

What does premium stand for? What does it really
mean? And how can it be translated into ideas,
action and, not least, products?

For us, one of the things premium means is leader-
ship in the development of sustainable mobility.
We are achieving this with dedicated employees and
a production network that sets standards worldwide.
We deﬁ ne sustainable mobility with groundbreaking
vehicles and mobility concepts. We are inventing
the future by deﬁ ning it for ourselves.

One example of this is the high-tech material carbon,
which we will be using on a large scale for new vehicle
concepts of the future – creating a new dimension
in individual mobility. Another example is intelligent
networking between drivers, their vehicles and the
world around them. Natural hedging and the diver-
siﬁ cation of the globally successful BMW 5 Series
further illustrate our understanding of premium.

Premium sets innovative standards.
Premium is visionary.
Premium is being responsible.

The Annual Report 2010 as an iPad app

CONTENTS

Preface

Norbert Reithofer

Topic one

Future

MEGACITY VEHICLE

Topic two

Growth

A MODEL OF SUCCESS

Topic three

Customers

CONNECTED DRIVE

Topic four

Profitability

GLOBAL BALANCE

HIGHLIGHTS OF 2010

Moments of sheer pleasure
Auto China 2010 in Beijing
Building the future
50 years of independence

PREFACE

Norbert Reithofer
Chairman of the Board of Management

Dear Ladies and Gentlemen,

A year of new beginnings – what better way to sum up the 2010 ﬁ nancial

year from the BMW Group’s perspective? Just one year after the global
ﬁ nancial crisis, we achieved the best Group earnings in our company’s
history. The BMW Group remains the world’s top-selling manufacturer of
premium automobiles – and one that operates more sustainably than any
other company in its industry. This was conﬁ rmed by the Dow Jones Sustain-
ability Index, which ranked the BMW Group ﬁ rst in its sector for the sixth
consecutive year. This is also part of what we understand premium to be.
We accept responsibility – for the environment, for society and for our
employees at all locations around the world.

2010 was a successful year for the BMW Group – a success made possible

by our customers around the world. More than 1.46 million customers pur-
chased a BMW, MINI or Rolls-Royce vehicle, and another 110,000 bought
a BMW or Husqvarna brand motorcycle. This shows how much trust con-
sumers place in the BMW Group and its brands, its performance and its inno-
vative strength. For this, I sincerely thank all of our customers.

We think and act with a long-term perspective. It is embedded in our
DNA. We set the right course back in 2007 with our Strategy Number ONE,
when we deﬁ ned clear proﬁ tability targets for the year 2012 and developed
our vision we intend to realise by 2020.

In this annual report, we highlight the measures that form the four pillars

of our strategy: “Growth”, “Shaping the future”, “Proﬁ tability” and “Access
to technologies and customers”. You will be able to meet people we encounter
in our day-to-day business and read their stories in four photo articles.

PREFACE

The Megacity Vehicle – creating sustainable mobility for urban
centres. To realise mobility, you must be mobile and innovative yourself.
Our road to e-mobility is clearly deﬁ ned.

Step one: Our customers are testing the MINI E. Step two: In 2011, they will

test the BMW ActiveE, providing further valuable insights into the use of
electro mobility. Step three: In 2013, we will bring the Megacity Vehicle onto
the market. No other manufacturer has designed an entire vehicle speciﬁ cally
for electric propulsion. Ours will be the ﬁ rst vehicle with a passenger com-
partment made of carbon and a unique architecture, comprising separate Life
and Drive modules. We will build this highly innovative vehicle in Germany
as part of an international network that will manufacture carbon-ﬁ bres, and
with competent partners such as the SGL Group. Together with the Federal
German Chancellor, we marked the start of Germany’s ﬁ rst electric-car
production facility in autumn 2010 in Leipzig.

The Megacity Vehicle will not be alone. It will be part of a new BMW
family marketed under the sub-brand BMW i. In the same way that BMW M
off ers exceptional performance and individuality, BMW i will stand for
highly effi cient and sustainable mobility, and will open up many more oppor-
tunities for sheer driving pleasure in the future.

The new BMW 5 Series – setting new standards. The sixth generation

of the BMW 5 Series shows just how progressive today’s premium mobility
can be. The new 5 Series Sedan is a huge success and has already won many
awards worldwide. Its holistic safety concept earned a ﬁ ve-star rating from
Europe’s top crash test organisation, the Euro NCAP crash test, as well
as from its American counterpart, the US NCAP crash test. Readers of the
ADAC motor club magazine also named the new BMW 5 Series Sedan
Germany’s favourite car in early 2011.

The new BMW 5 Series is the ﬁ rst large series-produced model we have
developed strictly according to our modular concept. It also demonstrates how
we are continuing to reﬁ ne our fuel effi ciency programme Effi cient Dynamics.
We will be setting ourselves further ambitious targets in the future: We aim
to reduce the CO2 emissions of our vehicle ﬂ eet by at least another 25 percent
from 2008 to 2020.

BMW ConnectedDrive – taking a new approach to networking. For all
of us, digitalisation and networking are increasingly becoming part of everyday
life, including our cars. Today, with BMW ConnectedDrive, we already off er
intelligent driver assistance systems, such as extended emer gency call function,
Night Vision with pedestrian recognition, e-mail and Internet access. We are
continuing to expand this off ering to link drivers, passengers, their vehicles and
the world around them even more closely. Learn what happens – or rather,
what doesn’t happen – when the Emergency Stop Assistant takes over. You
can also read about how children discover and experience individual mobility.
We asked our young Junior Campus guests to capture the world of BMW
ConnectedDrive in their own words. Their answers may surprise you.

Global markets – aiming for balanced growth. The ﬁ nancial crisis
clearly demonstrated how volatile markets can be and how diffi cult it is to
predict economic trends. We aim for a good balance between Europe, Asia
and the Americas in our business and sales activities. This supports our
long-term positioning and makes us more resilient to market and exchange
rate ﬂ uctuations. Against this background, we invested in our sites once
again in 2010 – particularly in Germany, China, India and the US. This report
features our US plant in Spartanburg as an example.

The decisive factor is that wherever our associates work in our interna-
tional production network, they all share a passion for mobility and a strong

PREFACE

identiﬁ cation with our company. Teamwork is part of our culture. I would like
to thank all of our associates worldwide for their hard work and dedication
in 2010 – also on behalf of my fellow members of the Board of Management.
Our thanks also extend to our entire retail network, our suppliers and our
partners.

2011 – taking advantage of this year’s opportunities for long-term
success. We will continue to chart our own course. We will create new and
innovative solutions for our customers. Our BMW, MINI and Rolls-Royce
vehicles are not just automobiles – for many people they reﬂ ect their whole
attitude to life. Read how our customers feel when they ﬁ rst get the keys
to their new BMW, MINI or Rolls-Royce, or their BMW motorcycle. Such
“moments of sheer delight” are the best reward for our work we could possibly
imagine.

Rethinking mobility and putting it on the road is an incredibly exciting
process that challenges and inspires us on a daily basis. That is why we aim to
recruit the best experts and managerial staff worldwide, women and men, to
work for our company in the future.

We start the 2011 ﬁ nancial year full of drive and conﬁ dence. We see it as
a “year of opportunity”. We will take advantage of this to secure the long-term
success of the BMW Group. I would also like to thank our shareholders and
investors for their conﬁ dence in all of our BMW Group associates. Our com-
pany is well positioned to create a promising future for itself and for all of its
stakeholders worldwide.

Norbert Reithofer

FUTURE

MEGACITY VEHICLE

PROFITABILITY

CUSTOMERS

GROWTH

A high-tech material
for tomorrow’s mobility

The heavier the vehicle, the more kinetic
energy it uses. The higher its energy con-
sumption, the more power it needs to
store. But larger storage units also add to
a vehicle’s weight. This is the dilemma that
has plagued the development of cars
with electric batteries and drive trains until
now. It is also the reason why the BMW
Group has opted for a totally new approach.
For the past ten years or so, the company
has been working with carbon-ﬁ bre rein-
forced plastic (CFRP) to make future vehicles
much lighter, without compromising safety.
This is sure to give sustainable mobility an
enormous boost.

A NEW ERA OF MOBILITY

Moses Lake
Wackersdorf
Landshut
Leipzig

When series production of the electric-powered Megacity Vehicle
(MCV) ramps up in 2013, it will be the ﬁ rst volume-production
vehicle built with a passenger compartment made of CFRP. This
high-tech material is also set to open up a whole new dimension
in vehicle design and manufacture.

FUTURE
Megacity Vehicle

Johann Wolf –– Technology manager for CFRP and Exterior

As technology manager for plastics, Johann Wolf, 50, is responsible for
obtaining the materials for, and actually building, the Megacity Vehicle’s
passenger compartment – key elements of what make this vehicle stand
out among other electric cars.

JOHANN WOLF ON THE COUNTDOWN TO THE MEGACITY VEHICLE

Test production of some of the Megacity Vehicle’s CFRP components is due to

start in just a few months. Aren’t you nervous? Not at all. We’ve been testing, im-
plementing and continuously optimising the innovative production processes we’ll
be launching in series volumes next year on a smaller scale for quite some time now.
We’ve slashed cycle times for CFRP components from several hours to just a few minutes,
for instance. One of the good things about the MCV is that it can be built in a relatively
small space. We are quite certain that series production and our new processes will get
off to a smooth start.

There are quite a few e-mobility concepts out there now. What is so special
about the Megacity Vehicle? Everything. Our mission is to reﬁ ne the concept of sus-
tainable mobility in all of its ecological, economical and social components. We de-
signed the Megacity Vehicle not just with clean production in mind, but also speciﬁ cally
with regard to its recyclability. We always think in complete cycles. The result is a car
that is unmatched, whether you look at the details or the big picture.

What part does the high-tech material CFRP play in all this? An essential, and
therefore decisive, factor in achieving broad acceptance for electro mobility will be range.
One thing is certain: vehicles with a conventional aluminium or steel body, where
the combustion engine has simply been switched for an electric motor, are not a real
solution. That is why we have opted for an entirely new concept. The Megacity Vehicle
is the ﬁ rst electric car worldwide that is specially designed for this kind of drive tech-
nology. With its LifeDrive architecture and passenger compartment made of CFRP, the
Megacity Vehicle has two unique components which make it vastly more effi cient.

But, like any electric car, there is no engine noise or gear changes in the MCV.

What does that mean for BMW’s “sheer driving pleasure”? Don’t worry – our MCV
will be a true BMW. It will still deliver our brand’s signature “driving pleasure”. Electric
motors produce their maximum torque right away – combined with its innovative
lightweight construction, this guarantees extreme responsiveness and a high fun factor.
The car also accelerates continuously up to its top speed. The Megacity Vehicle does not
mean giving up “sheer driving pleasure” – it’s just an exciting new way to experience it.

FUTURE
Megacity Vehicle

Making CFRP needs a lot of energy.
Nature provides an abundant supply
at the Moses Lake location.

Sometimes it is the little things that make the
biggest diff erence. This particular detail is tiny, in fact,
but its potential to change things may well be
huge. The diameter of a carbon-ﬁ bre measures just
0.007 millimetres – just a seventh of that of a human
hair – but the possibilities it opens up are astounding.
This ultra-modern composite material, made from
a combination of carbon-ﬁ bres and synthetic resin,
boasts some very impressive properties. Carbon-ﬁ bre
reinforced plastic, or CFRP, is more robust than
steel, but less than half its weight; resistant but
highly malleable; versatile and relatively easy to
work with. Up until now, CFRP was mostly used in the
aerospace industry, in racing cars and wind rotors –
wherever heavy-duty, lightweight materials with high
rigidity and strength are needed. These properties
also make CFRP the ideal material for the body of the
Megacity Vehicle, a car which will mark the beginning
of a brand new chapter in sustainable automobile
design and production.

This may seem surprising, since the initial stages
in the life of a CFRP are fairly complex. Producing car-
bon-ﬁ bre reinforced plastic entails chemically modi-
fying polyacrylnitrile ﬁ bres at diff erent temperatures
to make a stable ﬁ bre of substantially pure carbon. This
is a relatively energy-intensive process. That is why,
early in the development process, the Megacity Vehicle
project team started looking for a production loca-
tion with a steady, competitively priced supply of sus-
tainable energy. They found what they were looking
for in
Moses Lake, in the US state of Washington,
where the hydroelectric power plants of the Columbia

Human hair in relation to carbon-fibre
Diameter in mm

0.007

0.050

Carbon fibre

Human hair

Looks like dressmaking, but is really high-tech:
materials testing for CFRP production in Wackersdorf.

CFRP production waste can even be reused. Here it
is being prepared for lab analysis.

At the Wackersdorf plant, four knitting machines the
size of railway wagons produce the CFRP used as the
basic material for car bodies.

FUTURE
Megacity Vehicle

Analysing ﬁ bre components in the standards laboratory

Fibre mats are still tested by hand.

Waste carbon-ﬁ bre fabric can be fed back into the pro-
duction chain.

The high-tech material up close

We are building the car bodies of
tomorrow right here on highly effi cient
knitting machines.

River generate practically inexhaustible quantities of
regenerative power. At the brand-new carbon-ﬁ bre
plant operated by SGL Automotive Carbon Fibers,
a joint venture between the BMW Group and the SGL
Group, textile ﬁ bres are reﬁ ned into carbon-ﬁ bres.
50,000 of these individual ﬁ laments are condensed
into ﬁ bre bundles at the Moses Lake facility, wound
onto coils and shipped to
Wackersdorf in Bavaria.

It is in Wackersdorf that the BMW Group and its

joint-venture partner, the SGL Group, have built
a one-of-a-kind textile plant to supply the body con-
struction process. Here the ﬁ bre bundles are woven

together into textile sheets (so-called fabrics) and
wound into rolls. Once diff erent fabrics with diff erent
ﬁ bre alignments are combined, highly integrated
large-surface body panels with completely diff erent
strengths and thicknesses can be customised. This al-
ready represents one of the outstanding features
of CFRP – the properties of aluminium or steel
components, in contrast, can only be customised
with great diffi culty. The body of the Megacity Vehicle
will therefore use much fewer components than a
steel body. This not only simpliﬁ es the production
process, but also reduces vehicle mass. Lower weight
also extends electric vehicles’ potential range – which
makes the use of CFRP an important factor in jump-
starting e-mobility.

However, there are several reasons why this high-
tech material has so far been used almost exclusively
in small-series production and prototype construction.
CFRP components for motor racing and aerospace
have mostly been produced by hand in a time-con-
suming and cost-intensive procedure. After soaking

Individual filaments of a carbon-fibre bundle
Bundled together, carbon-fibres provide tremendous strength.

50,000

FUTURE
Megacity Vehicle

CFRP is considered to be a high-tech
material of the future. Here in Landshut
we’ve been working with it for years.

in synthetic resin, the material is left to harden in a
closed furnace at temperatures of over 100 degrees
Celsius for several hours. This elaborate procedure
is the main reason why the material costs so much
more than steel.

Things are done diff erently at the BMW Group,
which has been making CFRP components in pro-
gressively larger quantities in a high-volume indus-
trialised production process since 2003. At the plant
in
Landshut – the next stop in the CFRP produc-
tion process – roofs are already been built for the
BMW M3 and M6 models. To accomplish this, the
BMW Group has, in recent years, reﬁ ned processes,

systems, materials and tools to the point where an
economical, high-quality volume production of CFRP
car body parts is now possible. One example is the
specially developed press tools used at the Landshut
plant: instead of “baking” at over 100 degrees Celsius,
the resin-soaked carbon fabrics harden at no more
than 100 degrees Celsius within just a few minutes.
Another example is the BMW Group’s one-of-a-kind
recycling concept, which allows CFRP waste to be
reused in the production process.

“We control and optimise every stage of the
manufacturing process, from textile ﬁ bres to the
ﬁ nished body,” explains Jochen Töpker, CFRP expert
at the BMW Group. “Applied to conventional automo-
tive engineering, it’s almost like a carmaker getting
involved in making and recycling steel, besides build-
ing cars. But that’s how we are gaining such a strong
lead in the volume production of CFRP.”

Changing rolls during CFRP production.

Carbon ﬁ bre fabrics are combined to make highly integrated car body
parts with totally diﬀ erent strengths and thicknesses.

Innovative press tools harden the resin-soaked carbon fabrics within
minutes at a temperature of 100 degrees Celsius.

FUTURE
Megacity Vehicle

No other body material is
this light and stable.

It is true that the key to economical and ecological

volume production of CFRP lies in complete pene-
tration of the value chain. It also explains why the
BMW Group is now able to exploit the potential of a
material many consider uniquely superior but too
diffi cult and costly for volume production.

CFRP is not only resistant to temperature ﬂ uctua-
tions, acids and corrosion (and therefore much more
durable than metal), it is also 30 percent lighter than
aluminium and 50 percent lighter than steel. “CFRP
is the lightest material that can be used in car-making
without compromising safety,” according to Nils
Borchers of the MCV development team. Crash tests
have proved that the Megacity Vehicle can withstand
a collision at least as well as conventional steel-
body vehicles. This is primarily due to the LifeDrive
architecture, a revolutionary combination of a CFRP
passenger compartment and a chassis made of alu-
minium. While the aluminium frame known as the
drive module absorbs the collision energy in a crash,
the high-strength, carbon-ﬁ bre reinforced life module
provides comprehensive protection for the Megacity
Vehicle’s occupants.

Since all of the drive units are located in the crash-

Leipzig plant where the Megacity Vehicle

proof drive module, there is no need for a transmis-
sion tunnel, which typically relays engine power to
the rear wheels. This leaves the Megacity Vehicle much
more space for passengers – and gives the BMW
Group’s vehicle designers new scope for interior de-
sign. Last but not least, the brilliant two-module de-
sign also has consequences for the vehicle’s production.
At the
will be assembled, the frame construction means that
complex conveyor technology is no longer needed.
This makes building a Megacity Vehicle less of an in-
vestment, much easier for employees to work with and
more ﬂ exible than conventional production processes.
“We can ramp up MCV production quickly with re-
latively low outlay,” adds Martin Arlt of the develop-
ment team. Its production will use 70 percent less water
and 50 percent less energy than the BMW Group’s
current plant average. Its total energy needs will
also be met completely from renewable sources.

Body weight in comparison
in percent

Carbon

Aluminium

Steel

100

Actually much too light for three people to carry: body side
panel made out of carbon.

One of the few jobs performed by hand: adding the ﬁ nal
touches to ﬁ nished CFRP components.

Synthetic resin gives carbon-ﬁ bres all the rigidity they need.

FUTURE
Megacity Vehicle

The future of vehicle construction.

The use of microscopic CFRP ﬁ bres is about so much

more than just substituting materials. It allows the
BMW Group to adopt a radical new approach, explore
unique design concepts and realise a new kind of car-
building. Over the years and decades ahead, elements
of this will be found not only in the Megacity Vehicle,
but also in many other BMW Group models.

The use of CFRP in volume production marks the beginning of a whole
new era in automotive development and manufacture. For vehicle
developers, it represents the most exciting challenge imaginable. For
the BMW Group, more than anything else, it represents fascinating
prospects for the future.

The Annual Report 2010 as an iPad app

GROWTH

A MODEL OF SUCCESS

PROFITABILITY

CUSTOMERS

FUTURE

From the ﬁ rst BMW 5 Series
to an impressive global family

It always starts out with an idea. The idea
becomes a concept, the concept becomes
a totally new kind of vehicle, and the car
ultimately becomes a class of its own. Time
and again, the BMW Group has taken new
vehicle concepts like the BMW 5 Series and
diversiﬁ ed them to create families with a
variety of popular model variants. The sixth
generation of this highly successful model
is now on the roads – and setting new
standards the world over.

THE BMW 5 SERIES SUCCESS STORY

The number 5 has stood for unmistakable driving
pleasure in the upper mid-range segment for
almost 40 years. Over those past four decades, the
5 Series has brought driving pleasure to more than
5.5 million customers across ﬁ ve continents.

Touring

Sedan

1970

1980

1990

1987 – 1996

3rd generation

1981 – 1988

2nd generation

1972 – 1981

1st generation

Gran Turismo

Touring

Long Wheelbase Sedan, China

Sedan

2000

2010

since 2009

6th generation

2003 – 2010

5th generation

1995 – 2004

4th generation

Diversiﬁ cation
How an exceptional car became a popular model family

The beginning of a global success story. The launch of
the BMW 520 and BMW 520i models at the IAA Inter-
national Motor Show in 1972 ushered in a new era in the
upper mid-range segment. The successors to BMW’s so-
called “New Class” quickly came to deﬁ ne the perfect
balance between sporting performance and elegance in
their segment. A year later, the model range was joined
by the BMW 525, with its powerful six-cylinder engine –
BMW’s response to customers’ desire for sheer perform-
ance. With sales of almost 700,000 BMW 5 Series, the
ﬁ rst generation was already a spectacular success, the
very essence of aesthetics and driving pleasure in the
upper mid-range segment.

Innovation
How a model series can win customers on all continents with
a constant stream of new ideas

The story continues. The second generation of the
5 Series family gave rise to the epitome of the dynamic
sports sedan, the BMW M5, and the very ﬁ rst 5 Series
diesel. Third-generation highlights included a completely
new design, the ﬁ rst eight-cylinder models and the ﬁ rst
BMW 5 Series Touring. The fourth-generation BMW 5 Se-
ries was the ﬁ rst with a light alloy chassis. As the model
portfolio continued to grow and new markets were de-
veloped, each new generation of the BMW 5 Series could
be relied upon to raise the standard over its previous
generation.

Americas p. 30
Ron Yaworsky

Europe p. 32
Dr. Jesus Rodriguez

Asia p. 34
He Xialong

Meet 5 of our 5.5 million customers. From 5 diﬀ erent continents.

Start

Africa p. 36
Abdul Tayob

Australia p. 38
Martin Carolan

The next chapter. The ﬁ fth generation of the BMW 5 Series
impressed once more with its progressive design and
innovative technology. From 2007 on, all versions came
with Effi cient Dynamics features such as Brake Energy
Regeneration and active air vent control as standard, to
achieve an optimum ratio between performance and fuel
consumption.

GROWTH

A model of success

A Totem poles in Stanley Park, Vancouver, Canada
B BMW 5 Series and admirers at the Granville Island ferry dock
C Ron Yaworsky at home in the house he designed himself

Americas 49° 17' N, 123° 7' W

Vancouver

BMW 5 Series Sedan

“This is the fourth BMW 5 Series I’ve owned out of the last three generations – and
each one brought unexpected improvements. The BMW 5 Series is the perfect com-
bination of luxury, good size, excellent performance, reasonable fuel economy and
the reassurance of xDrive’s all-weather capabilities.” Ron Yaworsky, Vancouver,
Canada

“Generation after generation, there’s always something new.”

GROWTH

A model of success

“Pure dynamics. There’s nothing like it.”

“60 kilometres to work and back every weekday. Trips out to the country on the
weekends. Family visits once a month, with a long drive to Asturias along winding
mountain roads: I need a car that is comfortable, dynamic and effi cient all in one. At
the end of the day, there was only one real option.” Dr. Jesus Rodriguez, Madrid, Spain

Europe 40° 25' N, 3° 42' W

Madrid

BMW 5 Series Sedan

A Dr. Jesus Rodriguez sitting in the “Café de Oriente” near the Madrid Opera.
B BMW 5 Series at Plaza Santa Ana in Madrid
C Traditional advertising in a Madrid bar

GROWTH

A model of success

BMW 5 Series Long Wheelbase Sedan, China

39° 56' N, 116° 23' E

A Enthusiastic BMW 5 Series customer He Xialong
B Lanterns in the Gui Jie district not far from the Forbidden City in Beijing
C BMW 5 Series Long Wheelbase version and New Year’s decorations over the Forbidden City

Beijing

Asia

“What does a businessman want from a premium vehicle? Besides exclusivity,
comfort and exceptional performance, the main thing is the space inside: the kind
of space that makes the BMW 5 Series Long Wheelbase version so very comfort-
able. And that is something not only I truly appreciate, but also my business
friends.” He Xialong, Beijing, China

“The moveable office.”

GROWTH

A model of success

“Bold performance and a relaxed way to travel.”

“The BMW 5 Series represents the perfect symbiosis between
excellent handling and comfort. In this car, I can enjoy trips into
the hills of KwaZulu-Natal as well as driving a cool professional
business sedan.” Abdul Tayob, Pietermaritzburg, South Africa

A Ready for the road: Abdul Tayob and his son, Mas’ood
B The Tayobs’ home in the Mountain Rise area of the city
C Abdul Tayob with three of his four children

29° 36' S, 30° 23' E Africa

Pietermaritzburg

BMW 5 Series Sedan

GROWTH

A model of success

Australia 33° 51' S, 151° 12' E

Sydney

BMW 5 Series Sedan

A The Olympic swimming pool under Sydney Harbour Bridge …
B … where Martin Carolan regularly trains before work.
C Carolan’s BMW 5 Series driving towards the Sydney Opera House.

“I was actually interested in the BMW X5, but when I saw the new 5 Series and took
it for a test drive I made up my mind within ﬁ ve minutes to get the BMW 5 Series
M Sport diesel version. My car is a real eye-catcher. It is a real pleasure to be able
to drive 900 kilometres on a single tank.” Martin Carolan, Sydney, Australia

“It’s a real eye-catcher. With the stamina of an athlete.”

GROWTH

A model of success

To be continued. With its sporty, elegant design and
the brand’s signature driving dynamics and effi ciency, as
well as innovative comfort and safety features, the sixth
generation of the BMW 5 Series business sedan show-
cases the multifaceted development skills of the world’s
most successful premium automobile manufacturer.
Once again, the BMW Group is deﬁ ning a whole new
vehicle segment with its BMW 5 Series Gran Turismo –
and writing the next chapter in a story full of fascinating
highlights.

Driving pleasure is anticipated pleasure –
now and in the future.

Like all success stories, this one is built around a strong central
theme. In the case of the BMW 5 Series, this is the unique
combination of aesthetics and driving pleasure, which wins
each generation and each model version of the BMW 5 Series
more and more enthusiastic customers.

The Annual Report 2010 as an iPad app

CUSTOMERS

CONNECTED DRIVE

PROFITABILITY

GROWTH

FUTURE

Intelligent communication
for individual mobility

People have never been as mobile as they
are today. And they have never had access
to a range of in-car digital services as
comprehensive as those oﬀ ered by BMW
ConnectedDrive in all series. Driving a car is
safer, more efﬁ cient and more convenient
than ever before, thanks to the BMW Group’s
portfolio of intelligent communication
technologies – all of which make our vehicles
increasingly attractive to drive in.

INTELLIGENT MOBILITY [01]

[02]

[03]

They will keep traffic flowing and
prevent road congestion. They will
make driving a car safer and more
convenient. They will save fuel and
help protect the climate. One thing is
certain: the intelligent technologies
that connect drivers with their vehicles
and the world around them have a
very promising future ahead of them.

The same applies to the road users of
tomorrow. At the Junior Campus at
BMW Welt in Munich, children discover
mobility with all their senses. We asked
three of them to describe the functions
of the Connected Drive portfolio in
their own words. This is what they had
to say.

Junior Campus BMW Welt Munich, 26 January 2011

INTELLIGENT MOBILITY [01]

[02]

[03]

4543

INTELLIGENT MOBILITY [01]

[02]

[03]

[01]

Emergency Stop Assistant

[02]

Customer
Support Centre

[03]

MINIMALISM Analyser

It all started more than thirty years ago with an onboard com-
puter that displayed the outside temperature. Milestones
along the way included the world’s ﬁ rst park distance control
and its ﬁ rst fully integrated mobile navigation system. Today,
the BMW Group is once again setting the standard for in-
telligent networking between the driver, the vehicle and the
world around them. And that is all just the beginning.

CUSTOMERS

Connected Drive

STEERING SAFELY THROUGH AN EMERGENCY

One minute, the BMW 528i is overtaking in the fast lane at
130 km/h. The next, it slows to 80 km/h and safely exits the out-
side lane to pull in between two vehicles driving in the right-hand
lane. The car continues to slow, indicates and changes lanes once
more before coming to a gradual standstill on the hard shoulder.
Less than one-and-a-half minutes have elapsed between the
overtaking manoeuvre at 130 km/h and the vehicle making a con-
trolled stop.

What is remarkable about this driving manoeuvre is that it did
not involve the driver at all. The person behind the wheel of the
BMW 5 Series suff ered a heart attack and lost consciousness as the
individual was in the process of passing. Or at least that was the
emergency simulated on a test drive on the high-speed track at the
BMW testing facility in Aschheim, near Munich in October 2010 –
one that occurs for real, time and again, on the roads, often with
disastrous consequences. Intelligent technologies like the Emer-
gency Stop Assistant are set to further reduce the number and
severity of such traffi c accidents.

[01]

The prototype of the Emergency Stop Assistant provides a fasci-

nating glimpse of the tremendous opportunities off ered by Con-
nected Drive. The BMW Group has been considered the pacemaker
for the automotive industry in this ﬁ eld for many years. From the
ﬁ rst radar-based distance warning device the company implemented
in a concept car back in the seventies, to innovations such as Park
Distance Control (PDC) and the ﬁ rst-ever integrated navigation
system, BMW Group series models have continually incorporated
pioneering technologies to connect drivers, vehicles and their en-
vironment. Today, Connected Drive comprises the widest and most
sophisticated off ering of in-car telematics services in the world.

Connected Drive stands for a package of intelligent technologies

designed to network driver, passengers, the vehicle and the world around
them for greatly enhanced safety, infotainment and convenience. An
overview of current options can be found at http://bmw.connecteddrive.info

4545

[01]

“The Emergency Stop Assistant guides me to safety.”

CUSTOMERS

Connected Drive

“It’s as if the car can see.
If you have a heart attack
or something, the car can
drive to the side of the
road and park all on its
own. Then it calls the
ambulance.”

Vanessa Meyer, 9 years old, explains how the Emergency Stop Assistant works.

[01]

“The Emergency Stop Assistant guides me to safety.”

Behind the Emergency Stop Assistant is a complex system of sensors,
a high-precision, satellite-based navigation system and special
algorithms which allow it to safely take control of the vehicle in an
emergency. To do so, the Emergency Stop Assistant automatically
analyses the driving and trafﬁ c situation and calculates the optimum
driving manoeuvre necessary to bring the vehicle safely to a halt. It
then triggers the hazard warning lights and places an emergency call
to the BMW ConnectedDrive Call Center.

CUSTOMERS

Connected Drive

STAYING UP-TO-DATE ON THE GO

Although a few more years of development will be needed before

the Emergency Stop Function is ready for series production, other
driver assistance systems are already making driving more safe and
convenient.

Connected Drive allows driving time to be used much more
eff ectively. However, driver and traffi c safety is always top priority.
The integrated mail function, for instance, enables drivers to manage
their schedule, organise tasks and access email. Incoming emails or
text messages are displayed and read aloud in real time, while the
forthcoming Message Dictation function will also allow messages to
be dictated and sent without drivers having to take their hands off
the wheel or their eyes off the road. The BMW Customer Support
Centre also ensures all relevant phone numbers, addresses and travel
data are at the driver’s ﬁ ngertips. “Your car will increasingly become
your mobile offi ce, so you can use your driving time more effi ciently
as work time,” says Eckhard Steinmeier, the manager responsible
for Connected Drive. “Our market research has shown that business
people and managers in particular really appreciate this added bene-
ﬁ t.” Searching is a thing of the past: with the Connected Drive
Customer Support Centre, drivers will always have access to all
the information they need on the go.

[02]

The mail function becomes even more attractive when combined

with other functions, such as those of the navigation system or a
stationary computer. Connected Drive can be used to send addresses
from Google Maps or hotel bookings directly from a desktop PC to
the vehicle; routes can be planned according to calendar appoint-
ments or addresses imported into the navigation system from an
Outlook address book. This saves time, since manual data input from
the PC into the onboard system through a human-machine inter-
face is no longer required.

Driver assistance systems further enhance control and safety
when driving. Model-speciﬁ c options range from Adaptive Headlights to
the Lane Change Warning System, Lane Departure Warning System,
BMW Night Vision with pedestrian recognition and Speed Limit Info, all the
way to Active Cruise Control with Stop & Go function including proximity
warning with braking function.

[02]

“ The Customer Support Centre knows
where to ﬁ nd the nearest pizzeria.”

CUSTOMERS

Connected Drive

“If you are driving in an
area you don’t know very
well, you can talk to the
BMW Customer Support
Centre. They can tell you
where the next pizzeria
is and things like that.
And there’s always some-
one there if you need
help.”

Flynn Traenckner, 10 years old, explains how the BMW Customer Support Centre works.

[02]

“ The Customer Support Centre knows
where to ﬁ nd the nearest pizzeria.”

BMW Customer Support Centre operators can also help ﬁ nd 24-hour
pharmacies, ATMs or golf courses, for example, reserve a table at
the best Italian restaurant or book a hotel room at your destination –
at up to 30 percent oﬀ the online rate. The address is sent straight
to the vehicle. The driver does not need to enter any further informa-
tion and can simply follow the navigation system’s directions. An
added bonus is that the BMW Customer Support Centre is available
round-the-clock, 365 days a year, and will respond in the driver’s own
language throughout Europe.

CUSTOMERS

Connected Drive

EFFICIENT, NETWORKED TRAVEL

After becoming the ﬁ rst carmaker to enable Internet, iPod and
iPhone integration in its vehicles, the BMW Group is now creating
another innovative highlight with its visionary Concept BMW
Application Store. It will be possible in the future to download and
store individual “apps” (applications) from the car at any time or
from a PC at home. The iPhone can already be used to activate
the horn and parking lights, switch on the auxiliary heating and
unlock the car. Furthermore, the iPhone application MINI
Connected transforms any MINI into a social network on
wheels with Internet access and Web radio – by the way,
another BMW Group innovation.

[03]

Similarly, it will be possible in the future to download regular

software updates to run engines even more fuel-effi ciently, for
instance. “Connected Drive is a fully comprehensive approach de-
signed to maximise the beneﬁ ts of seamlessly connecting the driver,
the vehicle and the world around them,” according to Dr. Klaus
Draeger, member of the Board of Management of the BMW Group,
responsible for Development. “We believe that networking –
alongside drive technologies and new materials – will become
one of the key forces driving future innovation in the automotive
industry.”

Individual drivers are not the only ones to gain from this intelli-

gent exchange of data – it also beneﬁ ts the environment and the
overall traffi c situation. “Cooperative traffi c systems will play an
increasingly important role in the future,” says traffi c expert Dr. Klaus
Bogenberger of the Munich-based research institute, Transver. “By
the start of the next decade, networking between vehicles and traffi c
infrastructure will automatically warn of road congestion, icy
roads or traffi c obstructions and use all data available to help direct
traffi c more safely and effi ciently than at present.”

Concept BMW Application Store. The BMW Group is the

world’s ﬁ rst carmaker to present its vision of vehicle-compatible
application stores – so that cars, like mobile phones, can be adapted
to meet today’s needs and oﬀ er almost limitless personalisation in
the future.

[03]

“ The MINIMALISM Analyser

helps you drive greener.”

CUSTOMERS

Connected Drive

“There’s an app for the
iPhone that shows how
green your driving is.
That earns you stars. If
you drive in a really
environmentally friendly
way, and don’t use
much petrol, you get lots
of stars.”

Dominik Meyer, 11 years old, explains how the MINIMALISM Analyser works.

[03]

“ The MINIMALISM Analyser

helps you drive greener.”

The MINIMALISM Analyser keeps drivers constantly updated on how
economically they are driving and how much power they are using.
The MINI Connected system stores fuel consumption data and analyses
it at the end of the trip to highlight the roads where the MINI was
driven most efﬁ ciently. It also oﬀ ers tips on how to get even better
mileage. Points are earned for particularly fuel-thrifty driving and
can be posted via iPhone to share with other members of the MINI
community.

CUSTOMERS

Connected Drive

THE LEADER IN INTELLIGENT AUTOMOBILITY

Communication between the driver, the vehicle and the world
around them has become more than just a convenient add-on. As a
technology package, it off ers tremendous beneﬁ ts, today and for
the future. The sensor data and information from Connected Drive
perfectly complement the fuel-saving features of the Effi cient
Dynamics technology package. With these and its many other
applications, Connected Drive helps save both time and fuel,
creates smarter traffi c ﬂ ows, makes mobility more effi cient, more
pleasant and more entertaining – and even saves lives. It is likely
to change automobility in the way that the introduction of electric
drive trains has.

Efﬁ cient Dynamics. The navigation system’s “Green
Driving Assistant”, for instance, displays typical fuel consumption
for diﬀ erent routes. This allows an individual time and fuel-opti-
mised route to be calculated for each destination.

Car drivers are increasingly coming to appreciate all of these beneﬁ ts.
In this way, Connected Drive is also strengthening connections between
the company and existing and potential customers.

The Annual Report 2010 as an iPad app

PROFITABILITY

GLOBAL BALANCE

FUTURE

GROWTH

CUSTOMERS

Stable performance in an age of
global market ﬂ uctuations

For a globally successful automobile manu-
facturer like the BMW Group, exchange rate
ﬂ uctuations clearly have a substantial im-
pact on results. However, to make the value
creation process as independent as possible
from market and exchange rate cycles, we
rely on instruments such as natural hedging,
besides ﬁ nancial hedging. From that per-
spective, the expansion of the BMW plant in
Spartanburg in the US represents an impor-
tant strategic step towards value creation
and proﬁ tability.

January morning in sunny South Carolina

SPARTANBURG PLANT EXPANSION

With an annual capacity of 240,000 vehicles, Spartanburg
in the US state of South Carolina is one of the most
important sites in the BMW Group’s production network.
To manufacture the new BMW X3, the plant recently
underwent a roughly 750-million-dollar expansion. In this
way, the BMW Group is using natural hedging to provide
even ﬂ exibility regarding exchange rate ﬂ uctuations.

PROFITABILITY

Global balance

2° Celsius in the morning

10:21 a.m.

BMW plant Spartanburg, Entrance West

The last of the machines are still being installed in the new, 1.6-kilometre-
long production hall, but production of the new BMW X3 is already in
full swing. The Spartanburg plant is already working at its full, extended
capacity to turn out a total of 1,000 vehicles per day, including BMW X5 and
X6 models. Plant manager Josef Kerscher certainly has his work cut out.

Spartanburg, South Carolina, USA, 20 January 2011

10:33 a.m.

Access control at the gates to the plant

“No country has felt the recent ups and downs in the markets and whole
economies more acutely than the United States. Just about everyone here
has friends or relatives who lost their jobs or their homes – sometimes both –
during the economic crisis. The BMW Group couldn’t escape the fallout
from the global recession completely, of course. But we have tools to mitigate
the effects. One of which is being created right here in front of us.”

Every millimetre counts

Precision workmanship BMW style

US dollar in relation
to the euro

1.50

1.00

0.50

1990

2000

2010

Ups and downs. The US dollar / euro exchange
rate fluctuates dramatically. Fluctuations of this kind
pose a serious risk for global players.

11:14 a.m.

Component testing at the Analysis Centre

“We have been building cars in Spartanburg since 1994 – which has always helped
us to optimise our global value creation process. The decision to transfer production
of the BMW X3, and to invest 750 million dollars in expanding our capacity from
150,000 to 240,000 vehicles per year, is another important step.

We have taken advantage of the plant expansion over the past two years to
modernise our production capacity. Thanks to innovations such as an extremely
low-emissions paint finishing line, one of the largest existing fleets of hydrogen
forklift trucks, energy generation from methane gas from a nearby landfill and
a highly flexible assembly architecture, Spartanburg is one of the most sustainable
auto plants in the world today. It’s truly world class.”

PROFITABILITY

Global balance

Bustling activity at the materials depot

Local value creation. The BMW X family models manufactured at
the BMW plant in Spartanburg involve a high percentage of local value
creation. This includes purchasing in the NAFTA countries, the US,
Canada and Mexico, as well as wage and manufacturing costs in the
local currency.

Approx.

70%

US dollar

Approx.

30%

euro
(and other currencies)

12:14 p.m.

Component delivery by the material train fleet

“One of the things we have mastered to perfection is how to build exceptional
premium vehicles. There are other things, of course, that we don’t have much con-
trol over – such as economic cycles and fluctuations in the exchange rate – but
they still have a definite impact on our results. What could be better than minimising
such effects of the one so that we can focus our resources and strengths on the
other, more crucial matters – building premium cars for our customers?”

Clean air thanks to innovative “integrated paint” paint shops

3:14 p.m.

Brief stop at the low-emissions paint finishing line

“We believe production should follow the market. But we have also
seen it work the other way around: local manufacturing also helps
develop a market. With the 7,000 jobs we have created here and a
total investment of 4.6 billion dollars in the Spartanburg plant, we
are now considered to be an American company, and one that is
highly respected by the American people. We sell a third of the vehi-
cles we build in Spartanburg here in the US. Today, BMW is the best-
selling European premium brand in the country. And with all the
buzz surrounding the new BMW X3, we should probably be able to
expand that lead in the future.”

4:12 p.m.

Chassis and brake control test bench

“Some of our employees from Spartanburg are currently assisting with the expansion
of the plant in Shenyang; others are helping their colleagues in Chennai in India, where
the demand for BMW Group automobiles is also growing steadily. The challenges,
production conditions and markets are very different from one place to another, of course.
But, at the end of the day, we are all working on the same project: optimising our global
value creation.”

PROFITABILITY

Global balance

A smile means this car passes the test.

4:05 p.m.

Final vehicle inspection

“It’s been more than four years since I took over as manager of the Spartanburg plant.
Back then, the euro was worth about 1.30 US dollars. Since, it’s been up to about
1.60 and fallen back to 1.20 US dollars. Historically, those fluctuations are actually quite
moderate. But they make a huge difference to our profitability.”

Winter sunshine in the loading area

gbp

usd

cny

jpy

Global balance. The BMW Group uses its world-
wide production and purchasing network to balance
out economic and currency fluctuations.

zar

5:35 p.m.

BMWs on their way to market

“Sound insulation from South Carolina; injection moulded components from Tennessee; tank systems
from Georgia; cable harnesses, control units and headlights from Mexico – the list of parts made
somewhere in North America and delivered directly to our assembly line by truck goes on. About two-
thirds of our components come from countries across the NAFTA region and are paid for in US dollars.
That means we can always stay competitive in North America – regardless of how the dollar performs
against the euro.

We have increased our total purchasing volume in the NAFTA region by another 60 percent in readiness
for the start of production of the BMW X3. And our purchasing office in Mexico City is working to boost
the percentage of local value creation even further.”

PROFITABILITY

Global balance

china

germany

north
america

Ready for the road

298,316

267,160

183,328

BMW Group sales volumes in 2010

Key markets. BMW is the most popular Euro-
pean premium brand in the United States. The US
is the BMW Group’s second-largest market after
Germany. Worldwide, the company sold almost
1.5 million vehicles last year.

Like all natural hedging instruments, it will take time for the Spartanburg
plant to reach its full eﬀ ect. But it will then provide the BMW Group with
much greater, long-term security against currency risks.

The Annual Report 2010 as an iPad app

HIGHLIGHTS OF 2010

The joy of
charting a new course

MOMENTS OF SHEER PLEASURE

More than 1.46 million customers became
the proud owners of one of our new vehicles
last year.

BMW 5 Series Sedan
BMW X3
BMW 5 Series Touring
MINI Countryman
BMW ActiveHybrid 7
BMW R 1200 RT Motorcycle

AUTO CHINA 2010 IN BEIJING

BUILDING THE FUTURE

50 YEARS OF INDEPENDENCE

MOMENTS OF SHEER PLEASURE

Our vehicles are as diﬀ erent as the people who drive them. But all
of our customers share a very special moment full of joy:
the moment they get to experience their vehicle for the ﬁ rst time.

HIGHLIGHTS

Moments of sheer pleasure

What are you most looking forward to?
“ The perfect design of the new BMW 5 Series.
Cool details like the BMW ConnectedDrive
package. Knowing we made exactly the right
choice.”

Florian Körner and Christina Middrup, 14 December 2010, BMW Welt Munich

1:55 p.m. – BMW Welt Munich: the joy of anticipation

BMW 5 Series Sedan

Sheer driving pleasure comes in many forms. In the new
BMW 5 Series Sedan, the epitome of aesthetics and driving
dynamics in the upper mid-range segment, it ﬁ nds its purest
expression.

2:53 p.m. – BMW Welt Munich: the joy of driving

2:22 p.m. – BMW Welt Munich: the joy of perfection

HIGHLIGHTS

Moments of sheer pleasure

9:55 a.m. – BMW Welt Munich: bright prospects

What are you most looking forward to?
“ Reliability in all weathers. As well as
the xDrive drive train – which can
withstand any conditions.”

Reiner and Heike Haselhorst, 14 December 2010, BMW Welt Munich

11:23 a.m. – BMW Welt Munich: new beginnings

BMW X3

Wherever the road takes you: With xDrive, the BMW X3
can handle the toughest road and weather conditions, and
totally redeﬁ nes the relationship between performance
and elegance at the same time.

10:45 a.m. – BMW Welt Munich: proud owners

HIGHLIGHTS

Moments of sheer pleasure

What are you most looking forward to?
“ Travelling in a car that’s not just elegant,
but roomy enough for passengers and
luggage – plus my Labrador.”

Ute Kleine and Klaus Trompeter, 15 December 2010, BMW Welt Munich

10:04 a.m. – BMW Welt Munich: a look of anticipation

10:55 a.m. – BMW Welt Munich: a look inside

BMW 5 Series Touring

Convenient mobility means having exactly the type of
vehicle the situation demands. You might need space
for all your luggage for a longer journey or just room
for a quick trip to the supermarket, perhaps with two-
or four-legged friends as passengers – either way, the
BMW 5 Series Touring is always elegant and ﬂ exible,
with maximum versatility practically built in.

10:30 a.m. – BMW Welt Munich: a look of joy

HIGHLIGHTS

Moments of sheer pleasure

What are you most looking forward to?
“ To having a car that doesn’t just carry all
my gear but also makes a statement about
my lifestyle as a professional sportsman:
young, dynamic – always on the go.”

Michi Halilovic, 12 November 2010, MINI Munich

1:28 p.m. – MINI Munich: big moment

3:25 p.m. – MINI Munich: big space

2:05 p.m. – MINI Munich: big fun

MINI Countryman

The ﬁ rst four-door MINI is over four metres long –
and yet still unmistakably MINI.

HIGHLIGHTS

Moments of sheer pleasure

1:24 p.m. – BMW Hamburg: hands-on happiness

BMW ActiveHybrid 7

The BMW ActiveHybrid 7 goes its own way – in design,
driving dynamics, comfort, safety and effi ciency. With
its high-performance ActiveHybrid drive train, it brings
luxury to the roads in its most responsible form.

1:44 p.m. – BMW Hamburg: preferred seating

What are you most looking forward to?
“ To the kind of comfortable motoring I already
know and appreciate from many years of driving
BMW cars. And having the opportunity to now
drive more fuel-efficiently with the innovative
ActiveHybrid drive train.”

Bernd Schymetzki and Janine Klitz-Schymetzki,
17 December 2010, BMW Hamburg

1:10 p.m. – BMW Hamburg: shared excitement

HIGHLIGHTS

Moments of sheer pleasure

What are you most looking forward to?
“ To total driving fun and 211 horsepower. To having
the roof down in the summer. To trips across the Alps
down to Lake Garda.”

Birgit Kahnes, 24 February 2011, MINI Munich

10:12 a.m. – MINI Munich: First impressions

MINI John Cooper Works Cabrio

It’s agile. It’s fast. It is all about sporty driving fun with a modiﬁ ed
6-speed transmission and a high-performance engine. In other
words, the MINI John Cooper Works Convertible is the ideal partner
for anyone looking for a dynamic but elegant ride.

11:05 a.m. – MINI Munich: First-class driving fun!

10:21 a.m. – MINI Munich: First encounter

HIGHLIGHTS

Moments of sheer pleasure

Distinguished design

Rolls-Royce Ghost

Rolls-Royce is the best in this segment, and it’s engaging,
too. Everything is simple but functional, which is what
modern means to me.

Exquisite elegance

Why a Rolls-Royce?
“ I feel like I’m at home
when I drive my Ghost.”

Simone Ceruti, Florence, Italy

Reﬁ ned ride

HIGHLIGHTS

Moments of sheer pleasure

3:02 p.m. – BMW Motorcycle Centre Munich: all keyed up

BMW R 1200 RT Motorcycle

A sporty yet comfortable R 1200 RT touring bike clocks up
tens of thousands of miles. But its fascination begins with
the very ﬁ rst one.

What are you most looking forward to?
“ To a bike with a sporty design,
powerful Boxer engine and optimum
wind and weather protection.
A bike that automatically guarantees
a longer motorcycling season.”

Paul Sedlmaier, 26 November 2010, BMW Motorcycle Centre Munich

3:55 p.m. – BMW Motorcycle Centre Munich: all ready to go

3:28 p.m. – BMW Motorcycle Centre Munich: all about the bike

HIGHLIGHTS

Auto China 2010 in Beijing
Building the future

AUTO CHINA 2010 IN BEIJING

23 April – 2 May 2010 China International Exhibition Centre, Beijing

CEO Norbert Reithofer writes the Chinese symbol for electricity
together with local partners in the MINI E project.
Presentation of the BMW 5 Series Long Wheelbase version with
electric motor, developed in collaboration with Tongji University
and local partners, on the evening before the show

Made in China for China. The BMW Group worked with Tongji University
to develop an electric-powered BMW 5 Series Long Wheelbase version
for research purposes as part of the ECHO project. The main components
for this ﬁ rst German-Chinese development cooperation on battery electric
vehicles were built in collaboration with Chinese suppliers and demonstrate
local technology potential. The BMW Group has also joined forces with the
Chinese energy partners, State Grid and Southern Grid, and the China
Automotive Technology and Research Centre (CATARC) to bring a ﬂ eet of
MINI E cars to China and announced that it would make the BMW ActiveE
available to local customers in 2011.

BUILDING THE FUTURE

5 November 2010 BMW plant, Leipzig

German Chancellor Angela Merkel and CEO Norbert Reithofer
set the ball rolling for the plant expansion.
German Chancellor Angela Merkel talks to the BMW Group’s
Board Member for Development, Klaus Draeger.

Tomorrow’s mobility will be made in Leipzig. The BMW Group
is transforming its Leipzig plant into Germany’s ﬁ rst site for the production
of emissions-free electric vehicles. Roughly 400 million euros will
be invested in new buildings and plant by 2013, creating about 800 jobs.

HIGHLIGHTS

50 years of independence

50 YEARS OF INDEPENDENCE

30 November 2010, Gala at the Theresienhöhe Congress Hall in Munich

Declaration of independence. Fifty years ago, at an historic Annual
General Meeting, BMW shareholders chose independence. Fifty years on,
a special ceremony celebrates this momentous decision.

The meaning of independence

What people say about BMW

BMW customer from the US

“ For me, once you’ve driven a BMW,
you never want to drive any other car.”

1+2 Hostesses in petticoats, historic BMW cars and the slogan

“Milestones of Joy” greet guests arriving at the gala event held
at Munich’s Theresienhöhe Congress Hall.
Fifty years ago, BMW shareholders made a historic decision –
that decision was celebrated on the same spot in 2010.
BMW Chairman of the Board of Management Norbert Reithofer,
Chairman of the General Works Council Manfred Schoch,
Chairman of the Supervisory Board Joachim Milberg and Super-
visory Board member Stefan Quandt.

BMW employee from Munich

“ BMW is more than an employer to me,
it’s my home.”

HIGHLIGHTS

50 years of independence

Independence means constantly thinking beyond the now.
The prototype of the BMW Vision Efﬁ cientDynamics oﬀ ers
a glimpse of the automotive future – BMW style.

Setting the course. The bold decision in favour of independence
still shapes and drives the company to this day. This was seen
clearly at the gala event held at Munich’s Theresienhöhe Congress
Hall: The BMW Group remains true to itself by continuing to evolve,
as it has done since its foundation.

Apprentice at the Landshut plant

“ ... vehicles that are ahead of their time.”

A promising future lies ahead for the BMW Group.
Our three brands, BMW, MINI and Rolls-Royce, are
among the strongest, most desirable premium
brands in the world. We will continue to pursue our
Strategy Number ONE. Our vision is to be the
leading provider of premium products and premium
services for individual mobility.

Over the next years, we will continue to follow this path:
developing innovative technologies, targeting new
customer groups and actively shaping the future of
individual mobility. This will build the foundation for
long-term, proﬁ table growth. We strive to be the best.
That’s what drives us, day after day.

The Annual Report 2010 as an iPad app

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C

A FURTHER CONTRIBUTION TOWARDS PRESERVING RESOURCES

BMW Group Annual Report 2010 awarded the Blue Angel eco-label. The paper used
(Enviro Top and Nanoo Color) was produced, climate-neutrally and without optical bright-
eners 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 con sidered 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-102771 on 4 March 2011.

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
116i 3-door 3
118i 3-door
120i 3-door
130i 3-door
116d 3-door 1
118d 3-door
120d 3-door
123d 3-door

116i 5-door
116i 5-door 3
118i 5-door
120i 5-door
130i 5-door
116d 5-door 1
118d 5-door
120d 5-door
123d 5-door

120i Coupé
125i Coupé
135i Coupé
118d Coupé
120d Coupé
123d Coupé
1er M Coupé 1

118i Convertible
120i Convertible
125i Convertible
135i Convertible
118d Convertible
120d Convertible
123d Convertible

316i Sedan 4
318i Sedan
320i Sedan
325i Sedan
325i xDrive Sedan
330i Sedan
330i xDrive Sedan
335i Sedan
335i xDrive Sedan
316d Sedan 1
318d Sedan
320d Sedan
320d xDrive Sedan
320d EfficientDynamics
Edition Sedan 1
325d Sedan
330d Sedan
330d xDrive Sedan
335d Sedan 2
M3 Sedan

316i Touring 1, 4
318i Touring
320i Touring
325i Touring

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)
8.1 (8.9)
7.9 (8.7)
8.6 (8.9)
12.4 (12.5)
5.4
5.4 (6.7)
5.9 (6.7)
6.4 (6.9)

8.5 (8.9)
11.8 (11.6)
12.1 (11.7)
5.3 (6.7)
5.9 (6.7)
6.4 (6.9)
13.6

8.4 (9.1)
8.8 (9.4)
12.0 (11.8)
12.2 (11.8)
5.7 (6.9)
6.2 (6.9)
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)
5.3 (5.5)
5.1 (5.4)
5.4 (5.3)
6.3 (6.2)
4.0
4.0 (4.5)
4.1 (4.5)
4.4 (4.7)

5.3 (5.3)
5.9 (6.1)
6.4 (6.7)
4.0 (4.5)
4.0 (4.5)
4.3 (4.7)
7.3

5.4 (5.6)
5.6 (5.6)
6.2 (6.3)
6.5 (6.8)
4.3 (4.7)
4.3 (4.7)
4.5 (4.8)

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)
6.3 (6.8)
6.1 (6.6)
6.6 (6.6)
8.5 (8.5)
4.5
4.5 (5.3)
4.7 (5.3)
5.1 (5.5)

6.5 (6.6)
8.1 (8.1)
8.5 (8.5)
4.5 (5.3)
4.7 (5.3)
5.1 (5.5)
9.6

6.5 (6.9)
6.8 (7.0)
8.3 (8.3)
8.6 (8.6)
4.8 (5.5)
5.0 (5.5)
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)
147 (158)
143 (154)
153 (155)
199 (199)
118
119 (140)
125 (140)
135 (145)

152 (154)
189 (189)
198 (198)
118 (140)
124 (140)
134 (145)
224

152 (162)
158 (163)
194 (194)
200 (200)
127 (145)
132 (145)
139 (149)

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
330i Touring
330i xDrive Touring
335i Touring
335i xDrive Touring
316d Touring 1
318d Touring
320d Touring
320d xDrive Touring
320d EfficientDynamics
Edition Touring 1
325d Touring
330d Touring
330d xDrive Touring
335d Touring 2

316i Coupé 1, 4
318i Coupé 1
320i Coupé
325i Coupé
325i xDrive Coupé
330i Coupé
330i xDrive Coupé
335i Coupé
335i xDrive Coupé
320d Coupé
320d xDrive Coupé
325d Coupé
330d Coupé
330d xDrive Coupé
335d Coupé 2
M3 Coupé
M3 GTS Coupé

318i Convertible 1
320i Convertible
325i Convertible
330i Convertible
335i Convertible
320d Convertible
325d Convertible
330d Convertible
M3 Convertible

523i Sedan
528i Sedan
535i Sedan
535i xDrive Sedan 2
550i Sedan 2
550i xDrive Sedan 2
520d Sedan
525d Sedan
530d Sedan
530d xDrive Sedan 2
535d Sedan 2

523i Touring
528i Touring
535i Touring
520d Touring
525d 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)

5.2
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)
18.4

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)
10.9
15.4
16.4
5.9 (6.4)
8.1 (7.7)
8.0 (7.7)
6.6
7.9

10.9 (10.8)
10.8 (10.6)
11.9 (11.9)
6.2 (6.5)
8.0 (7.8)

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)

3.8
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)
9.3

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)
6.5
7.5
7.9
4.3 (4.5)
5.1 (5.1)
5.3 (5.2)
5.2
5.1

6.2 (6.1)
6.4 (6.2)
6.7 (6.5)
4.5 (4.6)
5.3 (5.2)

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)

4.3
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)
12.7

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)
8.1
10.4
11.0
4.9 (5.2)
6.2 (6.1)
6.3 (6.1)
5.7
6.1

7.9 (7.8)
8.0 (7.8)
8.6 (8.5)
5.1 (5.3)
6.3 (6.2)

190 (194)
177 (184)
193 (195)
199 (203)
206 (215)
119
120 (142)
128 (142)
140 (153)

114
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)
295

154
159 (169)
176 (185)
182 (190)
205 (205)
135 (149)
160 (168)
162 (170)
297 (269)

177 (178)
182 (178)
199 (195)
189
243
257
129 (137)
162 (160)
166 (160)
150
162

185 (182)
188 (182)
201 (197)
135 (139)
164 (162)

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 Touring
530d xDrive Touring 2
535d Touring 2

535i Gran Turismo 2
535i xDrive Gran Turismo 2
550i Gran Turismo 2
550i xDrive Gran Turismo 2
530d Gran Turismo 2
530d xDrive Gran Turismo 2
535d Gran Turismo 2
535d xDrive Gran Turismo 2

640i Convertible 2
650i Convertible 2

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

X1 sDrive18i
X1 xDrive28i
X1 sDrive18d
X1 xDrive18d
X1 sDrive20d
X1 xDrive20d
X1 xDrive23d

X3 xDrive28i 2
X3 xDrive35i 2
X3 xDrive20d
X3 xDrive30d 2

X5 xDrive35i 2
X5 xDrive50i 2
X5 xDrive30d 2
X5 xDrive40d 2
X5 M 5

X6 xDrive35i 2
X6 xDrive50i 2
X6 xDrive30d 2
X6 xDrive40d 2
ActiveHybrid X6 2
X6 M 5

Z4 sDrive23i
Z4 sDrive30i
Z4 sDrive35i
Z4 sDrive35is 2

8.1 (8.0)
6.8
8.1

5.4 (5.3)
5.3
5.3

6.4 (6.3)
5.8
6.3

169 (165)
154
165

12.3
12.8
16.2
16.9
8.1
8.5
8.3
8.9

10.9
15.5

13.8
14.0
16.4
17.1
16.4
17.1
18.8
18.9
9.0
9.1
9.0
8.8
12.6
12.6

6.9
7.2
8.3
8.8
5.6
6.0
5.8
6.1

6.2
7.9

7.6
7.7
8.5
8.9
8.5
8.9
9.5
9.6
5.5
5.6
5.7
5.9
7.6
7.6

8.9
9.3
11.2
11.8
6.5
6.9
6.7
7.1

7.9
10.7

9.9
10.0
11.4
11.9
11.4
11.9
12.9
13.0
6.8
6.9
6.9
7.0
9.4
9.4

209
216
263
275
173
183
175
187

185
249

232
235
266
278
266
278
299
303
178
180
181
183
219
219

11.3 (11.5)
9.9 (10.4)
6.1 (7.1)
6.7 (7.7)
6.4 (7.1)
7.0 (7.7)
7.3 (7.8)

12.3
11.2
6.7 (6.1)
6.8

6.4 (6.6)
6.7 (6.4)
4.7 (5.2)
5.1 (5.4)
4.7 (5.2)
5.1 (5.4)
5.2 (5.5)

7.1
7.4
5.0 (5.3)
5.6

8.2 (8.4)
7.9 (7.9)
5.2 (5.9)
5.7 (6.2)
5.3 (5.9)
5.8 (6.2)
6.0 (6.3)

9.0
8.8
5.6 (5.6)
6.0

191 (195)
183 (183)
136 (155)
150 (164)
139 (155)
153 (164)
158 (167)

210
204
149 (147)
159

13.2
17.5
8.7
8.8
19.3

13.2
17.5
8.7
8.8
10.8
19.3

8.3
9.6
6.7
6.8
10.8

8.3
9.6
6.7
6.8
9.4
10.8

10.1
12.5
7.4
7.5
13.9

10.1
12.5
7.4
7.5
9.9
13.9

236
292
195
198
325

236
292
195
198
231
325

MINI
MINI One
MINI One MINIMALIST 1
MINI Cooper
MINI Cooper S
MINI One D 1
MINI Cooper D
MINI Cooper SD
MINI John Cooper Works 1

7.2 (8.7)
6.5
6.9 (8.7)
7.3 (8.9)
4.2
4.2 (6.8)
5.1 (6.9)
9.4

7.6 (8.9)
MINI One Convertible
7.2 (8.9)
MINI Cooper Convertible
7.5 (9.1)
MINI Cooper S Convertible
MINI Cooper D Convertible
4.5 (7.0)
MINI Cooper SD Convertible 5.3 (7.1)
MINI John Cooper Works
Convertible 1

9.6

4.4 (5.1)
4.3
4.6 (5.1)
5.0 (5.0)
3.5
3.5 (4.1)
3.9 (4.3)
5.8

4.6 (5.3)
4.9 (5.3)
5.1 (5.1)
3.7 (4.3)
4.0 (4.4)

5.4 (6.4)
5.1
5.4 (6.4)
5.8 (6.4)
3.8
3.8 (5.1)
4.3 (5.3)
7.1

5.7 (6.6)
5.7 (6.6)
6.0 (6.6)
4.0 (5.3)
4.5 (5.4)

127 (150)
119
127 (150)
136 (149)
99
99 (135)
114 (139)
165

133 (154)
133 (154)
139 (153)
105 (140)
118 (143)

5.9

7.3

169

MINI One Clubman
MINI Cooper Clubman
MINI Cooper S Clubman
MINI One D Clubman 1
MINI Cooper D Clubman
MINI Cooper SD Clubman
MINI John Cooper Works
Clubman 1

7.3 (8.8)
7.0 (8.8)
7.4 (8.9)
4.4
4.4 (6.9)
5.2 (7.0)

4.5 (5.2)
4.7 (5.2)
5.0 (5.0)
3.6
3.6 (4.2)
3.9 (4.3)

5.5 (6.5)
5.5 (6.5)
5.9 (6.4)
3.9
3.9 (5.2)
4.4 (5.3)

129 (152)
129 (152)
137 (150)
103
103 (138)
115 (141)

9.5

5.8

7.2

167

7.4 (9.3)
7.4 (9.3)
7.5 (9.5)

MINI One Countryman
MINI Cooper Countryman
MINI Cooper S Countryman
MINI Cooper S
8.2 (10.3)
Countryman ALL 4
MINI One D Countryman 1
4.7
MINI Cooper D Countryman
4.7 (7.2)
MINI Cooper SD Countryman 5.2 (7.3)
MINI Cooper D
Countryman ALL 4
MINI Cooper SD
Countryman ALL 4

5.3 (7.6)

5.3 (7.7)

5.2 (6.0)
5.2 (6.0)
5.4 (5.7)

5.8 (6.2)
4.2
4.2 (4.7)
4.3 (4.8)

6.0 (7.2)
6.0 (7.2)
6.1 (7.1)

139 (168)
140 (168)
143 (166)

6.7 (7.7)
4.4
4.4 (5.6)
4.6 (5.7)

157 (180)
115
115 (149)
122 (150)

4.7 (5.0)

4.9 (6.0)

129 (158)

4.7 (5.1)

4.9 (6.1)

130 (160)

Rolls-Royce
Rolls-Royce Ghost 2
Rolls-Royce Phantom 2
Rolls-Royce Phantom EWB 2
Rolls-Royce Phantom Coupé 2
Rolls-Royce Phantom
Drophead Coupé 2

20.5
25.0
25.1
25.0

9.6
11.5
11.7
11.5

13.6
16.5
16.6
16.5

317
385
388
385

25.0

11.5

16.5

385

Figures in brackets only valid for automatic transmissions.

1 only available with manual transmission
2 only available with automatic transmission
3 variant with 1.6-litre cubic capacity
4 only available in selected EU countries
5 comes as standard with 6-gear M Sport automatic transmission

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

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 2011

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