ANNUAL REPORT 2015
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3
BMW GROUP IN FIGURES
6
REPORT OF THE SUPERVISORY BOARD
14
STATEMENT OF THE CHAIRMAN OF THE
BOARD OF MANAGEMENT
18
18
23
63
81
83
87
90
90
90
92
94
96
98
168
168
169
170
171
174
176
181
182
184
188
196
29
49
Business Model
Management System
COMBINED MANAGEMENT REPORT
General Information on the BMW Group
18
20
Report on Economic Position
23
27
27
General and Sector-specific Environment
Overall Assessment by Management
Financial and Non-financial Performance
Indicators
Review of Operations
Results of Operations, Financial Position and
Net Assets
Comments on Financial Statements of BMW AG
Events after the End of the Reporting Period
Outlook
Report on Risks and Opportunities
59
62
Report on Outlook, Risks and Opportunities
63
68
Internal Control System and Risk Management System
Relevant for the Financial Reporting Process
Disclosures Relevant for Takeovers
BMW Stock and Capital Markets in 2015
GROUP FINANCIAL STATEMENTS
Income Statements for Group and Segments
Statement of Comprehensive Income for Group
Balance Sheets for Group and Segments
Cash Flow Statements for Group and Segments
Group Statement of Changes in Equity
Notes to the Group Financial Statements
98
113
121
122
147
163
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
STATEMENT ON CORPORATE GOVERNANCE (§ 289 a HGB)
(Part of the Combined Management Report)
Information on the Company’s Governing Constitution
Declaration of the Board of Management
and of the Supervisory Board pursuant to § 161 AktG
Members of the Board of Management
Members of the Supervisory Board
Composition and Work Procedures of the Board of
Management of BMW AG and its Committees
Composition and Work Procedures of the Supervisory Board
of BMW AG and its Committees
Disclosures pursuant to the Act on Equal Gender Participation
Information on Corporate Governance Practices
Applied beyond Mandatory Requirements
Compliance in the BMW Group
Compensation Report
Responsibility Statement by the
Company’s Legal Representatives
197
Auditor’s Report
198
198
200
202
204
206
207
OTHER INFORMATION
BMW Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Financial Calendar
Contacts
3
BMW Group in figures
2011
2012
2013
2014
2015
Change in %
Key non-financial performance indicators
BMW Group
Workforce at year-end1
Automotive segment
Sales volume2
Fleet emissions in g CO2 / km3
Motorcycles segment
Sales volume 4
100,306
105,876
110,351
116,324
122,244
5.1
1,668,982
1,845,186
1,963,798
2,117,965
2,247,485
145
143
133
130
127
6.1
– 2.3
104,286
106,358
115,215
123,495
136,963
10.9
Further non-financial performance figures
Automotive segment
Sales volume
BMW 2
MINI
Rolls-Royce
Total 2
Production volume
BMW 5
MINI
Rolls-Royce
Total 5
Motorcycles segment
Production volume6
BMW
Financial Services segment
1,380,384
1,540,085
1,655,138
1,811,719
1,905,234
285,060
3,538
301,526
3,575
305,030
3,630
302,183
4,063
338,466
3,785
1,668,982
1,845,186
1,963,798
2,117,965
2,247,485
1,440,315
1,547,057
1,699,835
1,838,268
1,933,647
294,120
3,725
311,490
3,279
303,177
3,354
322,803
4,495
342,008
3,848
1,738,160
1,861,826
2,006,366
2,165,566
2,279,503
5.2
12.0
– 6.8
6.1
5.2
5.9
– 14.4
5.3
110,360
113,811
110,127
133,615
151,004
13.0
New contracts with retail customers
1,196,610
1,341,296
1,471,385
1,509,113
1,655,961
9.7
1 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units).
3 EU-28.
4 Excluding Husqvarna, sales volume up to 2013: 59,776 units.
5 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2011: 98,241 units, 2012: 150,052 units, 2013: 214,920 units, 2014: 287,466 units, 2015: 287,755 units).
6 Excluding Husqvarna, production up to 2013: 59,426 units.
4
BMW Group in figures
Key financial performance indicators
2011
2012
2013
2014
2015
Change in %
BMW Group
Profit before tax
Automotive segment
Revenues
EBIT margin
RoCE
Motorcycles segment
€ million
7,383
7,803
7,893
8,707
9,224
5.9
€ million
63,229
70,208
70,630
75,173
85,536
% (change in %pts)
% (change in %pts)
11.8
77.3
10.8
73.7
9.4
63.0
9.6
61.7
9.2
72.2
13.8
– 0.4
10.5
RoCE
% (change in %pts)
10.2
1.8
16.4
21.8
31.6
9.8
Financial Services segment
RoE
% (change in %pts)
29.4
21.2
20.0
19.4
20.2
0.8
Further financial performance figures
in € million
Capital expenditure
Depreciation and amortisation
Operating cash flow Automotive segment
Revenues
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
Profit before financial result (EBIT)
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
Profit before tax
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
Income taxes
Net profit
3,692
3,646
8,110
68,821
63,229
1,436
17,510
5
5,240
3,541
9,167
76,848
70,208
1,490
19,550
5
6,711
3,741
9,964
76,059
70,630
1,504
19,874
6
6,100
4,170
9,423
80,401
75,173
1,679
20,599
7
5,890
4,659
11,836
92,175
85,536
1,990
23,739
7
– 3.4
11.7
25.6
14.6
13.8
18.5
15.2
–
– 13,359
– 14,405
– 15,955
– 17,057
– 19,097
– 12.0
8,018
7,477
45
1,763
– 19
– 1,248
7,383
6,823
41
1,790
– 168
– 1,103
8,275
7,599
9
1,558
58
– 949
7,803
7,170
6
1,561
3
– 937
7,978
6,649
79
1,643
44
– 437
7,893
6,561
76
1,619
164
– 527
9,118
7,244
112
1,756
71
– 65
8,707
6,886
107
1,723
154
– 163
9,593
7,836
182
1,981
169
– 575
9,224
7,523
179
1,975
211
– 664
– 2,476
– 2,692
– 2,564
– 2,890
– 2,828
4,907
5,111
5,329
5,817
6,396
5.2
8.2
62.5
12.8
–
–
5.9
9.3
67.3
14.6
37.0
–
2.1
10.0
Earnings per share in €
7.45 / 7.47
7.75 / 7.77
8.08 / 8.10
8.83 / 8.85
9.70 / 9.72
9.9 / 9.8
5
BMW Group in figures
Sales volume of automobiles*
in thousand units
2,450
2,100
1,750
1,400
1,050
700
350
Revenues
in € billion
105
90
75
60
45
30
15
11
12
13
14
15
11
12
13
14
15
1,669.0 1,845.2 1,963.8 2,118.0 2,247.5
68.8
76.8
76.1
80.4
92.2
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
(2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units,
2015: 282,000 units).
Profit before financial result
in € million
Profit before tax
in € million
9,800
8,400
7,000
5,600
4,200
2,800
1,400
9,800
8,400
7,000
5,600
4,200
2,800
1,400
11
12
13
14
15
11
12
13
14
15
8,018
8,275
7,978
9,118
9,593
7,383
7,803
7,893
8,707
9,224
6
Norbert Reithofer – Chairman of the Supervisory Board
7 REPORT OF THE SUPERVISORY BOARD
Dear Shareholders,
Despite the volatile conditions prevailing on various markets, the BMW Group finished the financial year
2015 with another outstanding earnings performance, reaffirming its position as market leader in the
premium segment.
The BMW Group is now headed by Harald Krüger, who became the new Chairman of the Board of
Management on 13 May 2015. With this carefully planned generational change at the top of the Board of
Management, the Supervisory Board has not only ensured personnel continuity, it has also made an
impor tant contribution to shaping the future strategy of the BMW Group.
Main emphases of the Supervisory Board’s monitoring and advisory activities The Supervisory Board
performed the duties charged to it in accordance with the law and the Articles of Incorporation with the
utmost care. Throughout the financial year 2015, the Supervisory Board closely monitored the BMW Group’s
business performance and macroeconomic developments on important markets, diligently supervised the
governance of the Board of Management and advised it on significant projects and plans.
In a total of five meetings, the Supervisory Board deliberated at great length on the current business and
financial situation of the Group. Further topics of particular focus and consultation at Supervisory Board
meetings were corporate strategy (including a whole range of key topics involving the future shape of
business), corporate forecasts and the strategy and management of the Financial Services segment. In addi-
tion, decisions were taken regarding personnel changes on the Board of Management and with respect to
corporate governance.
Furthermore, the Supervisory Board attentively monitored the BMW Group’s business performance,
both at scheduled meetings and at other times, as the need arose. In particular, the Board of Management
provided regular reports on current sales and workforce figures. The Chairman of the Board of Management
kept the Chairman of the Supervisory Board well informed, both promptly and directly, on the progress
of important business projects and plans of strategic significance. In addition to scheduled meetings,
Dr Friedrich Eichiner, member of the Board of Management responsible for Finance, and Dr Karl-Ludwig Kley,
the Chairman of the Supervisory Board’s Audit Committee, consulted with each other directly at other times.
In its regular reports on the financial condition of the Group, the Board of Management provided infor-
mation on sales volume developments, market competition issues relevant for the Automotive and Motorcycles
segments, and changes in the size of the workforce. The Board of Management also dealt with questions re-
garding economic developments and the prospects of the world’s key regions. On the Financial Services side
of the business, the Board of Management provided regular updates on new business with retail customers
and changes in the portfolio of contracts with dealerships and retail customers as well as the total volume of
business. In its regular reports on the financial condition of the Group, the Board of Management also
reported to the Supervisory Board on any variances from budget.
Major transactions and projects were highlighted in the Board of Management’s reports on business
developments, and deliberated on in subsequent discussions. For example, the Supervisory Board was kept
informed of the status of acquisition projects, such as the joint acquisition of the navigation data provider
HERE in conjunction with other partners as well as the purchase of a leasing company in China. Furthermore,
the Board of Management reported on the BMW Group’s compliance with emissions limits and confirmed
that no distinction is made between “dyno mode” and on-road testing when measuring the exhaust emissions
of BMW Group vehicles. Over the course of the year under report, the two boards discussed at length eco-
nomic developments and business performance in China. Other subjects of discussion were progress in the
field of electric mobility, product quality and customer satisfaction.
Furthermore, the Board of Management provided detailed information on both the ongoing status and
its plans for expanding capacities at various BMW Group production sites.
8
At the first Supervisory Board meeting of the year, the Board of Management presented the new and
updated models scheduled for market launch in the course of 2015.
One of the Supervisory Board meetings was held at the Landshut (Germany) site, at which the focus was
placed on purchasing strategy and the significance of BMW component-producing plants in terms of pur-
chasing and production. The Board of Management also elaborated on the requirements that result from the
distribution of sales volume and production sites across the world for the Group’s purchasing team and
discussed with the Supervisory Board the measures necessary to establish a capable supplier base in growth
markets. During its visit to the plant, the Supervisory Board inspected the foundry as well as the production
facilities for electric motors and CFRP components.
The main topics discussed at a two-day meeting of the Supervisory Board held during the second half of
the year were business and product strategy as well as long-term corporate planning.
During the first part of the meeting, the Board of Management reported on the results of the annual
Number ONE corporate strategy review. The Board of Management also provided information on the planned
further development of the Group’s vehicle portfolio and its intention to continue its collaboration with
Toyota. In view of the increasing regulation of toxic emissions on key markets, the two boards discussed the
challenges facing the Group in the field of alternative drive technologies going forward and the strategic
importance of electric mobility. The Board of Management also reported in depth on topics relating to the
changing market environment and potential business opportunities emerging in connection with digitalisation
and vehicle connectivity, and provided an overview of its plans and activities in this field. The Supervisory
Board also gathered facts and figures on the BMW lightweight construction strategy.
As part of a series of vehicle presentations, members of the Supervisory Board took the opportunity to
drive selected BMW and MINI models on a test track, including the latest BMW 7 Series. Furthermore, the
current state of progress of selected vehicle development projects was presented and explained to the
Super visory Board.
In the second part of the meeting, the Supervisory Board deliberated at length on the long-term corporate
forecast presented by the Board of Management for the years 2016 to 2021. The Board of Management also
described various crisis scenarios to the Supervisory Board. The Supervisory Board lauded the management
team’s efforts to keep a tight control over fixed costs. After thorough examination and lengthy discussion,
the Supervisory Board gave the plans its formal approval.
The performance and strategic direction of the Financial Services segment as well as risk management
in this area were also reported on. The consequences of stricter regulation of financial services were also
discussed.
The Supervisory Board deliberated on the annual budget presented by the Board of Management for the
financial year 2016, including the main external influencing factors identified.
Again in 2015, the Personnel Committee and the full Supervisory Board examined both the structure and
the amount of compensation that Board of Management members receive. In addition to reviewing trends
in business performance and board compensation on a multi-year basis, consideration was also given to the
development of the remuneration of senior management and employees of BMW AG within Germany over the
course of time. An external compensation consultant, independent of both the Board of Management and
BMW AG, was called upon to provide expert advice and assist the Supervisory Board in the evaluation of DAX
compensation studies. After a careful review, the Supervisory Board concluded that the level of compen-
sation of board members, including pension entitlements, is appropriate and that the compensation system
has proved its worth. The Supervisory Board therefore resolved not to propose any changes to the system of
Board of Management compensation in 2015.
9 REPORT OF THE SUPERVISORY BOARD
Further information on the compensation of Board of Management members is provided in the Compen-
sation Report (see section “Statement on Corporate Governance”).
In 2015, the Board of Management and the Supervisory Board again conducted an in-depth review of the
corporate governance standards currently in place in the BMW Group as well as the rules set out in the German
Corporate Governance Code. In the most recent Declaration of Compliance issued in December 2015, both
boards decided that the BMW Group should comply with all of the recommendations issued by the German
Government Corporate Governance Code Commission on 12 June 2015, except for the disclosure of Board of
Management members’ compensation in prescribed model tables, as the Supervisory Board is of the opinion
that these tables do not improve the clarity and comprehensibility of the Compensation Report. The wording
of the Declaration of Compliance is contained in the Corporate Governance Report.
Both the Personnel Committee and the Supervisory Board again asked the Board of Management to
describe the state of progress in implementing the BMW Group’s diversity concept. This programme not only
relates to gender diversity, it also promotes both cultural diversity and a balanced mixture of age groups
among staff. The Board of Management also reported on the percentage of and development of female execu-
tives at various management levels within the Group and the targets determined by the Board of Management
for the two executive levels immediately below it. In addition, the Board of Management reported to the
Supervisory Board on measures to develop young talent for future strategic fields of expertise.
The Supervisory Board also consulted on the consequences of legislation relating to the equal participation
of women and men in management positions in Germany for the BMW Group’s two boards. As its target for
the proportion of women on the Board of Management by 31 December 2016, the Supervisory Board
has stipulated that the Board of Management should continue to have at least one female member. Assuming
the Board of Management continues to comprise eight members, this would correspond to a ratio of at least
12.5 %. The fact that the Supervisory Board considers it desirable to increase the proportion of women on the
board further supports the Board of Management’s current raft of measures, which is also aimed at increasing
the proportion of women at the highest executive management levels of the BMW Group.
The legal minimum of 30 per cent of female and male members in the Supervisory Board that came into
force on 1 January 2016 is already being complied with, both in terms of the Supervisory Board in its entirety
and also for both shareholder and employee representatives.
The Supervisory Board decided upon specific appointment objectives for its own composition based on
a detailed composition profile, a description of which is provided in the Corporate Governance Report. In
line with a new recommendation contained in the German Corporate Governance Code, the appointment
objectives have been supplemented to include a maximum length of office on the Supervisory Board. Based
on a self-assessment, the Supervisory Board determined that its composition at 31 December 2015 complied
with its appointment objectives.
In the financial year 2015, the Personnel Committee took the decision to disburse any costs to current and
former members of the Board of Management that could arise in connection with a civil action brought by a
former supplier in the USA. As a former member of the Board of Management, I did not personally vote on
this resolution, which was taken as a precautionary measure.
Apart from this matter, there were no indications of possible conflicts of interest on the part of Supervisory
Board members in the financial year 2015. Significant transactions with Supervisory Board members and
other related parties as defined by IAS 24, including close relatives and intermediate entities, are monitored
in the form of quarterly requests for relevant information.
The Supervisory Board endeavours to assess and continuously improve the efficiency of its work, including
that of its committees. Once a year, the efficiency examination is dealt with as a separate agenda point, at
10
which the members of the Board of Management are not present. Preparations for the examination are
facilitated by means of a questionnaire. As a result of the efficiency examination, suggestions for additional
topics of report were made during the year under report.
Each of the five Supervisory Board meetings in 2015 was attended on average by 95 per cent of its members,
a fact that can be corroborated by the analysis of attendance fees for individual members, as disclosed in the
Compensation Report. None of the members of the Supervisory Board took part in only half or less than half
of the meetings of the Supervisory Board, the Presiding Board or the committees to which the members
belong during their terms of office in the period under report.
Description of Presiding Board activities and committee work In order to work more efficiently and
prepare complex issues and decisions with greater thoroughness, the Supervisory Board has established a
Presiding Board and several committees. A description of the duties, composition and working procedures
of these committees is provided in the Corporate Governance Report.
The relevant chairmen reported at length on the status of Presiding Board and committee work at the
subsequent Supervisory Board meeting.
In a total of four meetings, the Presiding Board focused mainly on preparing topics for the meetings of
the full Supervisory Board, unless these fell under the remit of one of the committees. The treatment of more
extensive issues, such as the Long-term Business Forecast and the Annual Strategic Review, was prepared by
the Presiding Board on the basis of written and oral reports provided by Board of Management members and
senior department heads. The Presiding Board selected further topics of discussion for Supervisory Board
meetings and made suggestions to the Board of Management regarding items to be included in its reports to
the full Supervisory Board.
The Audit Committee held four meetings and three telephone conference calls during 2015. In those
telephone conference calls, the Audit Committee deliberated with the Board of Management on each of the
BMW Group’s Quarterly Reports, prior to their publication. Representatives of the external auditors were
present during the telephone conference call held to present the Interim Financial Report for the six-month
period ended 30 June 2015. The report had been subjected to review by the external auditors.
The Audit Committee meeting held in spring 2015 was primarily dedicated to preparing the Supervisory
Board meeting at which the financial statements were examined. Prior to proposing KPMG AG Wirtschafts-
prüfungs gesellschaft for election as Company and Group auditor at the Annual General Meeting 2015, the
Audit Committee obtained a Declaration of Independence from the proposed auditor. The Audit Committee
also considered the scope and composition of non-audit services, including tax advisory services provided by
KPMG entities to the BMW Group. There were no indications of conflicts of interest, grounds for exclusion
or lack of independence on the part of the auditor.
The fee proposals for the audit of the year-end Company and Group Financial Statements 2015 and the
review of the six-month Interim Financial Report were deemed appropriate by the Audit Committee. Sub-
sequent to the Annual General Meeting 2015, the Audit Committee therefore appointed KPMG AG for the
relevant engagements and specified audit focus areas.
The Head of Group Controlling reported to the Audit Committee on the current risk profile and on risk
management processes and developments within the BMW Group.
The Head of Group Financial Reporting provided a description of various aspects of the internal control
system (ICS) underlying financial reporting and explained measures being taken to further improve the system.
Testing performed during the year under report did not highlight any material ICS weaknesses that could
jeopardise the system’s effectiveness.
11 REPORT OF THE SUPERVISORY BOARD
The Chairman of the BMW Group Compliance Committee reported to the Audit Committee on the
current compliance situation, which, as in the previous year, was deemed satisfactory overall. None of the
information received relating to potential non-compliance or actual incidences of non-compliance identified
in specific cases give any indication of serious or systematic non-compliance with applicable requirements.
Moreover, the Audit Committee requested and received information regarding the further expansion of the
BMW Group Compliance Organisation.
The Head of Group Internal Audit reported to the Audit Committee on significant findings of audits con-
ducted by Group Internal Audit on the industrial and financial services sides of the business. In addition,
he provided information on the main topics of planned audits in both areas.
The Audit Committee has already obtained detailed information regarding audit reforms within the EU,
particularly with respect to preparing the selection of the auditor.
The Audit Committee and Supervisory Board obtained an auditor’s assurance report regarding compliance
with regulatory requirements for off-market transactions made by BMW AG involving derivatives. The effec-
tiveness of the system that BMW AG currently employs to ensure compliance with regulatory requirements
was confirmed. With an addition to its procedural rules, the Supervisory Board transferred tasks related to
examinations of this type to the Audit Committee.
The Audit Committee concurred with the decision of the Board of Management to raise the Company’s
share capital in accordance with § 4 (5) of the Articles of Incorporation (Authorised Capital 2014) by € 309,860
and to issue a corresponding number of new non-voting bearer shares of preferred stock, each with a par value
of € 1, at favourable conditions to employees.
The Personnel Committee convened four times during the financial year 2015. One of its tasks is to prepare
decisions relating to the composition of the Board of Management. In one case, the Personnel Committee
gave its approval for a member of the Board of Management to accept a mandate for membership of the
supervisory board of a non-BMW Group entity.
The Nomination Committee convened twice in 2015 to deliberate on successor planning for mandates of
the shareholders’ representatives and adopt recommendations for proposals for election at the 2015 and
2016 Annual General Meetings, taking the composition objectives stipulated by the Supervisory Board into
due account.
The statutory Mediation Committee was not required to convene during the financial year 2015.
Composition and organisation of the Board of Management After the Annual General Meeting held
on 13 May 2015, I resigned from the Board of Management as previously announced and Harald Krüger took
over as Chairman of the Board of Management. The Supervisory Board had previously appointed Oliver Zipse
as member of the Board of Management for the first time with effect from the end of the Annual General
Meeting. Mr Zipse has worked for the BMW Group since 1991, most recently as head of Group Planning and
Product Strategy. He took over responsibility for Production from Harald Krüger. In the financial year 2015,
the Supervisory Board resolved to extend the mandate of one Board of Management member.
Composition of the Supervisory Board, the Presiding Board and Supervisory Board Committees In
order to facilitate the generational change at the top of the Board of Management and the Supervisory Board,
which he both planned and personally supported, Professor Joachim Milberg resigned from the Supervisory
Board immediately after the 2015 Annual General Meeting. As previously announced, he will be playing a
leading role in the worldwide social engagement and philanthropic work of BMW AG, in particular as Chair-
man of the Board of Trustees of the BMW Foundation Herbert Quandt. Professor Milberg has faithfully served
and had a major influence on the BMW Group over a period of many years, beginning in 1993, first as
12
member and then as Chairman of the Board of Management from 1999. As from 2002 he served firstly as
member and finally, from 2005, as Chairman of the Supervisory Board. The Supervisory Board wishes to
take this opportunity to express its great respect for, and appreciation of, Professor Milberg’s achievements.
Wolfgang Mayrhuber also resigned from the Supervisory Board at his own request at the end of the 2015
Annual General Meeting. The Supervisory Board wishes to thank Mr Mayrhuber for his more than ten years
of valuable, trusted cooperation.
Simone Menne was elected to the Supervisory Board as new shareholder representative. Professor Dr
Henning Kagermann was re-elected as member of the Supervisory Board at the Annual General Meeting in
2015.
After my election to the Supervisory Board by the Annual General Meeting in 2015, the Supervisory Board
members elected me as their new Chairman. In this capacity, and in accordance with the relevant terms of
reference, I remained Chairman of the Personnel and Nomination Committees. I was also elected member of
the Audit Committee. The Corporate Governance Report contains a summary of the composition of the
Supervisory Board and its committees.
Examination of financial statements and the profit distribution proposal KPMG AG Wirtschaftsprüfungs-
gesellschaft conducted a review of the abridged Interim Group Financial Statements and Interim Group
Management Report for the six-month period ended 30 June 2015. The results of the review were presented
to the Audit Committee by representatives of KPMG AG Wirtschaftsprüfungsgesellschaft. No issues were iden-
tified that might indicate that the abridged Interim Group Financial Statements and Interim Group Manage-
ment Report had not been prepared, in all material respects, in accordance with the applicable provisions.
The Group and Company Financial Statements of Bayerische Motoren Werke Aktiengesellschaft for the
year ended 31 December 2015 and the Combined Management Report – as authorised for issue by the
Board of Management on 18 February 2016 – were audited by KPMG AG Wirtschaftsprüfungsgesellschaft
and given an unqualified audit opinion.
The Financial Statements and the Combined Management Report, the long-form audit reports of the
external auditors and the Board of Management’s profit distribution proposal were made available to all
members of the Supervisory Board in a timely manner.
In a first step, the Audit Committee dutifully examined and discussed these documents at a meeting held
on 25 February 2016. The Supervisory Board subsequently examined the relevant drafts of the Board of
Management at its meeting on 9 March 2016, after hearing the committee chairman’s report on the meeting of
the Audit Committee. In both meetings, the Board of Management gave a detailed explanation of the fi-
nancial reports it had prepared. Representatives of the external auditors attended both meetings, reported
on significant findings and answered any additional questions raised by the members of the Supervisory
Board. They also confirmed that the risk management system established by the Board of Management is
capable of identifying any events or developments that might impair the going-concern status of the Company
and that no material weaknesses in the internal control system and risk management system were found
with regard to the financial reporting process. Similarly, they confirmed that they had not identified any facts
in the course of their audit work that were inconsistent with the contents of the Declaration of Compliance
issued jointly by the two boards.
Based on thorough examinations at both Audit Committee and full Supervisory Board level, the Super-
visory Board concurred with the results of the external audit. In accordance with the conclusion reached after
the examination by the Audit Committee and Supervisory Board, no objections were raised. The Group and
Company Financial Statements of Bayerische Motoren Werke Aktiengesellschaft for the financial year 2015
prepared by the Board of Management were approved at the Supervisory Meeting held on 9 March 2016. The
separate financial statements have therefore been adopted.
13 REPORT OF THE SUPERVISORY BOARD
The Supervisory Board also examined the proposal of the Board of Management to use the unappropriated
profit to pay an increased dividend of € 3.20 per share of common stock and € 3.22 per share of non-voting
preferred stock. The Supervisory Board considers the proposal appropriate and therefore concurs with it.
Expression of appreciation by the Supervisory Board The financial year 2015 has again been a record
year for the BMW Group. The Supervisory Board wishes to thank the members of the Board of Management
and the entire staff of the BMW Group worldwide for their outstanding work and concerted performance.
Munich, 9 March 2016
On behalf of the Supervisory Board
Norbert Reithofer
Chairman of the Supervisory Board
14
Harald Krüger – Chairman of the Board of Management
15 STATEMENT OF THE CHAIRMAN OF THE BOARD OF MANAGEMENT
Dear Shareholders,
The 7 March 2016 marked an historic milestone in the history of our company. 100 years of Bayerische
Motoren Werke is the achievement of all the company’s associates since its founding in 1916 right up until
today. Our experiences and strengths establish the foundation for our future. However, we also know that
it is not past accomplishments but profitable growth, strength in innovation and competitiveness that deter-
mine the success of a company. This is why we are using the occasion of our centenary as a springboard for
“The Next 100 Years”. This makes it clear that the company’s strategy is and remains geared towards the
long term.
Successful development continued in the financial year 2015 The financial year 2015 was a successful
year for the BMW Group. We achieved new all-time highs for performance indicators such as sales, Group
revenues, Group profit before tax and net profit.
The strength of our premium brands is the backbone of our success Our three premium brands fascinate
people all around the world. In 2015, more than 2.2 million customers chose a BMW, MINI or Rolls-Royce,
more than in any other year. This was a solid increase of 6.1 per cent over the previous year. For the first time
in our corporate history, the BMW brand sold more than 1.9 million vehicles. With almost 137,000 motor-
cycles and scooters, BMW Motorrad also achieved a new record in sales. The MINI brand also reported the
best year ever, with over 338,400 vehicles sold. Rolls-Royce Motor Cars delivered 3,785 vehicles to customers,
making 2015 the second-best year in its 112-year history.
We continue to strive for a globally balanced distribution of value creation We continue to pursue a balanced
distribution of sales between the world’s three major regions, Europe, Asia and America. In view of the
heterogeneous and volatile development of the markets, our distribution strategy allows us to respond more
swiftly to fluctuations and to avoid overdependence on any single region. Europe is still our largest sales region.
Last year we surpassed the mark of one million vehicles sold there for the very first time. Overall, close to
45 per cent of our cars were delivered to customers in Europe. Asia accounted for approximately 30 per cent
of sales, the Americas for 22 per cent.
We are strategically expanding our global production network of currently 30 sites in 14 countries. Our
second engine plant in Shenyang opened in January 2016. In Mexico, preparations for the construction of our
new plant in San Luis Potosí are proceeding according to schedule. On top of that, we are currently expanding
the company’s largest production site in Spartanburg, USA in order to be able to meet the high demand
for our premium sports activity vehicles.
Positive sales development reflected in key financials Our successful development in sales is reflected in
our key financials: with over 92 billion euros in sales revenues, the BMW Group posted a significant growth
of 14.6 per cent over the previous year. As forecasted, the Group profit before tax achieved solid growth of
5.9 per cent to a new high of 9.2 billion euros. The annual net profit increased by 10 per cent to around 6.4 billion
euros. The EBIT margin in the Automotive segment stands at 9.2 per cent and therefore remains within our
strategic target range.
With over 1.65 million new contracts with customers and a profit before tax of 1.98 billion euros, the
Financial Services segment once again made a significant contribution to the Group result. The EBT in the
segment grew significantly to 14.6 per cent and stands well above the previous year’s level.
The Motorcycle segment is profitable due to its successful growth strategy. Based on an operating result
of 182 million euros in 2015, the segment reported an EBIT margin of 9.1 per cent.
Therefore, we achieved the goals we set for the 2015 financial year and we managed to do so in an environ-
ment characterised by intense competition as well as economic and political volatility.
16
We continue to fascinate our customers with new models and technologies In 2015, we launched a total
of 15 new models and model revisions in the market, among them the new BMW 2 Series Gran Tourer, the
new BMW X1 and the new MINI Clubman. At Rolls-Royce, the new Drophead Coupe called Dawn celebrated
its world premiere at the International Motor Show in Frankfurt. The model is scheduled to be introduced
in 2016. Most importantly, the model year 2015 was marked by the launch of the sixth generation of the new
BMW 7 Series. With its high-end innovations, our flagship has set new benchmarks in driving dynamics,
efficiency as well as driver assistance systems.
BMW i attracts new customer groups to the BMW brand With Efficient Dynamics technology and especially
with the BMW i models, the BMW Group has irreversibly charted the course towards sustainable mobility.
At the end of 2015, average emissions for our new car fleet stood at 127 grams of CO2 per kilometre. Last
year, we sold close to 30,000 BMW i vehicles – up around 66 per cent year-on-year. The fully electric BMW i3 is
already available in 50 countries; it is also the only vehicle with a certified carbon balance for the supply chain,
production, use and recycling. It has attracted new customers to the BMW brand – 80 per cent of i3 buyers
have never driven a BMW before. We have repeatedly stressed that electromobility is not a sprint but a mara-
thon. In order to enable access to e-mobility to many people, the BMW i3 has been included in our DriveNow
car-sharing fleet. Furthermore, the BMW Group and its partners support the establishment of a comprehensive
charging infrastructure in Europe, China and the USA.
Consistent technology transfer from BMW i to the BMW core brand The technologies developed for BMW i
are now also being incorporated in the models of our BMW core brand. This includes battery cells, the elec-
tronic control unit and electric drives from the i3 and i8 as well as our expertise in lightweight construction.
A good example of this technology transfer is the Carbon Core of the new BMW 7 Series, a mixed-material
design for the car body structure made of carbon fibre reinforced plastics (CFRP), aluminum and steel. This
Carbon Core received the EuroCarBody Award 2015, the world’s most prestigious recognition for innova-
tions in car body construction.
A broad range of innovative, efficient drivetrains plays a crucial role in adhering to the increasingly strin-
gent requirements for the reduction of emissions. BMW’s first plug-in hybrid series model has already been
released: the X5 xDrive40e. As of July 2016, all BMW plug-in hybrid models will be offered under the label of
“iPerformance” – from the BMW 2 Series Active Tourer to the BMW 7 Series. Furthermore, our iPerformance
customers will benefit from a 360° Electric offer, including a wall-mounted charging box and more.
Realignment of the company with Strategy NUMBER ONE > NEXT Our Strategy Number ONE has been
the guideline for our actions since autumn 2007. Since the global economic and financial crisis, the company
has developed successfully. At the same time, our environment has changed at a rapid pace. Digitalisation,
in particular, has brought about new technological opportunities for the automobile industry, ranging from
automated driving to connectivity in production.
Long-term growth targets up to 2020 In the light of these developments, we have revised and updated our
strategy for the future. We are operating from a solid basis: the BMW Group successfully combines financial
strength, innovation and profitability with further growth, and we intend to pursue this path further with
Strategy NUMBER ONE > NEXT.
Our business model will continue to focus on individual mobility in the premium segment – combined
with attractive mobility services. The customer is at the heart of everything we do. We are setting out long-
term targets that will guide us up to 2020 and are gradually implementing the related action plan.
Highly automated driving is becoming a part of the intelligent car of the future With BMW ConnectedDrive,
the BMW Group has been in a leading position when it comes to driver assistance systems for the past two
decades. These systems improve safety and comfort for our customers.
At the 2015 Consumer Electronics Show (CES) in Las Vegas we presented our self-driving BMW i3, which is
able to avoid obstacles and park itself. At the CES 2016, we showcased the BMW i8 Vision Future Interaction,
17 STATEMENT OF THE CHAIRMAN OF THE BOARD OF MANAGEMENT
which can be integrated into our customers’ digital lifestyle via a cloud-based set-up and various mobile end
devices. The vehicle provides the personalised digital assistant BMW Connected that makes it possible, among
other things, to control smart-home functions. The BMW Group is the first car company to offer such a com-
prehensive digital service package.
Connectivity is one of the major trends in our industry. Vehicles, their drivers and their environment will
be even more closely connected in the future. The next logical step is highly and then fully automated driving.
Once again, we see ourselves here as both a driver and an innovator. The new BMW 7 Series is the first series
vehicle that offers fully automated parking. Many things are technologically feasible today. However, beyond
the technical dimension we also require fundamental legal and transport-related policy decisions that will
clearly define the rights and obligations of an extended mobile value chain. The BMW Group takes a clear
position: we want to assist drivers in certain situations. We also want to improve people’s safety. And by
protecting their data, we protect their privacy as well.
Strategic acquisition of the map service HERE Highly and fully automated driving is based on high-accuracy
maps. Together with partners, we acquired the map service HERE in 2015 to safeguard our access to cloud-
based real-time maps and location-based services. We want HERE to become an independent platform for
the automotive industry and remain accessible beyond that. The combination of high-accuracy maps and
data from the vehicle’s environment makes driving safer and more comfortable for everyone. Already today,
HERE provides maps and location-based data for almost 200 countries in over 50 languages.
Our highly motivated associates are our number one success factor Individual mobility satisfies a fundamen-
tal human need and will remain a strong trend. To ensure our further growth, we need capable and motivated
people as well as new ideas and skills. In 2015, the BMW Group recruited more than 5,900 new associates.
At the end of last year, 4,700 young people were in vocational training with the BMW Group, more than ever
before. On behalf of the Board of Management, I would like to thank all of our 122,244 associates for their
accomplishments in the business year 2015. I would also like to thank our business partners and our suppliers
as well as the entire dealership organisation. We can only deliver on our premium claim thanks to the close
and trustful cooperation with our partners and dealers.
We are looking ahead – to the next 100 years of the BMW Group At the BMW Group, we regard every
day as a new opportunity to challenge ourselves and to excel. At our official centenary ceremony on 7 March
2016, we deliberately chose to look forward to the future: how will people move about 30 years from now?
Obviously, no one can predict precisely how our mobility behavior is going to develop. However, those who
do not try to imagine the future will simply not have one. We are presenting our ideas for mobility of the
future with our vision vehicle, the BMW VISION NEXT 100.
Dear Shareholders Due to its financial strength and the long-term focus of its Strategy NUMBER ONE > NEXT,
the BMW Group will continue to be an attractive investment. We want our shareholders to continue to par-
ticipate in our success. For the financial year 2015, the Board of Management and the Supervisory Board will
propose to the Annual General Meeting to make our anniversary year 2016 the first time in the company’s
history to pay dividends totalling over two billion euros. I would like to thank all our shareholders for their vote
of confidence and hope that you will continue to accompany us on our journey into the future.
Harald Krüger
Chairman of the Board of Management
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
18
COMBINED MANAGEMENT REPORT
General Information on the BMW Group
Business Model
This Combined Management Report incorporates the
management reports of Bayerische Motoren Werke
Aktiengesellschaft (BMW AG) and the BMW Group.
General information on the BMW Group
General information on the BMW Group is provided be-
low. There have been no significant changes compared
to the previous year.
Business model
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
based in Munich, Germany, is the parent company of
the BMW Group. The primary business objective of the
BMW Group is the development, manufacture and sale
of engines as well as all vehicles equipped with those
engines. The BMW Group is subdivided into the Auto-
motive, Motorcycles, Financial Services and Other Enti-
ties segments (the latter primarily comprising holding
companies and Group financing companies).
Bayerische Motoren Werke G. m. b. H. came into being
in 1917. Having been originally founded in 1916 as
Bayerische Flugzeugwerke AG (BFW), it finally became
Bayerische Motoren Werke Aktiengesellschaft (BMW AG)
in 1918. The BMW Group comprises BMW AG itself
and all subsidiaries over which BMW AG has either direct
or indirect control. BMW AG is also responsible for
managing the BMW Group as a whole. General condi-
tions on the world’s automobile and motorcycle markets
(such as the competitive situation, government policies,
statutory regulations), underlying trends within society
as well as changes in raw materials prices, exchange
rates and interest rates are some of the major external
factors that exert influence on business performance.
The BMW Group is one of the most successful makers of
cars and motorcycles worldwide and among the largest
industrial companies in Germany. With BMW, MINI
and Rolls-Royce, the BMW Group owns three of the
strongest premium brands in the automotive industry.
The vehicles manufactured by the BMW Group set ex-
ceptionally high standards in terms of aesthetics, dynam-
ics, technology and quality and are the culmination of
concerted expertise in engineering and innovation. In
addition to its strong position in the motorcycles market,
the BMW Group also offers its customers a successful
range of financial services. In recent years, it has also
established itself as a leading provider of premium ser-
vices for individual mobility. At the end of the reporting
period, the BMW Group employed a workforce of
122,244 people worldwide.
Long-term thinking and responsible action have long
been the cornerstones of the BMW Group’s success.
Striving for ecological and social sustainability along the
entire value-added chain, taking full responsibility for
products and giving an unequivocal commitment to pre-
serving resources are prime objectives firmly embedded
in the BMW Group’s corporate strategy. As a result of
these endeavours, the BMW Group has ranked among
the most sustainable companies in the automotive in-
dustry for many years.
The BMW Group operates on a global scale and is repre-
sented in more than 150 countries worldwide. Its research
and innovation network spans 13 locations in five
countries. At 31 December 2015, the Group’s production
network comprised a total of 30 locations in 14 countries.
BMW 3 Series and 4 Series models as well as petrol and
diesel engines are manufactured at the BMW Group
plant in Munich. BMW 1, 3 and 4 Series models as well
as the 2 Series Gran Tourer, the Z4 Roadster and the X1
are produced at the Regensburg plant. The BMW 3 Series
Gran Turismo, the BMW 4 Series Gran Coupé, models
of the BMW 5, 6 and 7 Series and also hybrid BMW 5 and
7 Series vehicles are manufactured at the BMW Group
plant in Dingolfing. Chassis and drive components are
also produced at this plant. Models of the BMW 1 and
2 Series as well as the electrically powered BMW i3 and
the BMW i8 hybrid sports car are manufactured at the
Group’s Leipzig site. The BMW 3 Series Sedan is assem-
bled at the plant in Rosslyn (South Africa). The BMW X3,
X4, X5 and X6 models are all manufactured at the Group’s
plant in Spartanburg (USA). The BMW X1 and various
models of the BMW 3 and 5 Series are built exclusively
for the Chinese market at the two plants operated by
the BMW Brilliance Automotive Ltd. joint venture in
Shenyang (China). Various models are also produced at
the BMW Group plants in Chennai (India) and Rayong
(Thailand). Production at the BMW Group’s newest plant
in Araquari (Brazil) currently includes the BMW 3 Series
Sedan, the 1 Series 5-door model, the X3 and the X1 as
well as the MINI Countryman.
A variety of components that supply the Group’s world-
wide production network are manufactured at the
plants in Landshut and Wackersdorf. The Eisenach site
makes special-purpose metalworking tools for the pro-
duction network. The manufacturing sites in Moses Lake
(USA) and Wackersdorf – both part of the SGL Auto-
motive Carbon Fibers (ACF) joint operations – supply
carbon fibre and carbon fibre fabrics for the production
of BMW i models and the new BMW 7 Series. The BMW
Group’s largest engine manufacturing plant in Steyr
(Austria) makes both petrol and diesel engines for the
various BMW and MINI plants. In 2016, the joint venture
BMW Brilliance Automotive Ltd. opened an engine plant
19 COMBINED MANAGEMENT REPORT
in Shenyang (China), which supplies petrol engines to
its neighbouring plants.
The primary function of the BMW Group’s partner plants
is to serve nearby regional markets. BMW and MINI cars
are currently also produced in Jakarta (Indonesia), Cairo
(Egypt), Kaliningrad (Russia) and Kulim (Malaysia).
MINI 3- and 5-door models and the MINI Clubman are
currently manufactured at the site in Oxford (United
Kingdom). The UK production triangle also includes the
components plant in Swindon and the engine plant at
Hams Hall, where petrol engines are manufactured for
MINI and BMW. In Graz (Austria), Magna Steyr Fahr-
zeug technik manufactures the MINI Countryman and,
since 2012, the MINI Paceman for the BMW Group.
The Dutch car manufacturer, VDL Nedcar bv (Born),
has been producing the MINI 3-door since 2014 and
the MINI Convertible since 2015 on behalf of the BMW
Group.
The Rolls-Royce Phantom, Ghost, Wraith and – since the
end of 2015 – the Dawn Convertible models are manu-
factured exclusively at the Goodwood plant (United
Kingdom).
BMW motorcycles are manufactured primarily at the
BMW Group plant in Berlin. Car brake discs are also pro-
duced at this location. Two further motorcycle produc-
tion plants are located in Manaus (Brazil) and Rayong
(Thailand).
The worldwide distribution network currently consists
of around 3,310 BMW, 1,550 MINI and 140 Rolls-Royce
dealerships. In China alone, around 60 BMW dealerships
were opened in 2015. Products and services are sold in
Germany through BMW Group branches and by inde-
pendent authorised dealers. Sales outside Germany are
handled primarily by subsidiary companies and by in-
dependent import companies in a number of markets.
The dealership and agency network for BMW i currently
covers some 950 locations. The BMW motorcycles sales
network is organised in a similar way to that of the
Group’s automobile business. Currently, there are
around 1,150 BMW Motorrad dealerships worldwide.
The BMW Group’s premium brands (BMW, MINI and
Rolls-Royce) are widely known and highly admired
around the globe for their innovative technologies
and state-of-the-art design. The BMW Group provides
the full spectrum of individual mobility, ranging from
premium-segment small vehicles through to highly luxu-
rious and powerful vehicles. The MINI brand is a veritable
icon in the premium small car segment, offering un-
rivalled driving pleasure in its class. Rolls-Royce has a
long tradition in the ultra-luxury segment stretching
back over 112 years. Our core BMW brand caters to a
broad array of customer wishes, ranging from fuel-
efficient and innovative models equipped with Efficient
Dynamics through to high-performance, efficient
BMW M vehicles, which help bring the flair of motor-
sport to the roads. All BMW vehicles share one thing in
common – their impressive driving dynamics.
At the same time, the BMW Group continues to push
the boundaries of “premium” to a new level with its
BMW i models. Inspired to the core by the desire for even
greater sustainability, the BMW i epitomises the vehicle
of the future – with its electric drivetrain, revolutionary
lightweight construction, exceptional design and an en-
tirely newly conceived range of mobility services.
BMW Motorrad also focuses on the premium segment
with its range of products, comprising motorcycles for
the Sport, Tour, Roadster, Heritage, Adventure and
Urban Mobility segments. A wide range of accessories
and equipment is also available to provide customers
with additional safety and comfort.
The Financial Services segment comprises more than
50 entities and cooperation arrangements with local
finan cial services providers and importers on all conti-
nents, making it one of the world’s leading financial
service providers in the automobile sector. Its main line
of business is providing credit financing and leasing for
BMW Group brand cars and motorcycles to retail cus-
tomers. It also provides customers with access to a wide
range of insurance and banking products. The BMW
Group’s international multi-brand fleet business,
operating under the brand name “Alphabet”, provides
fleet financing products and comprehensive manage-
ment services for corporate car fleets in 18 countries.
Within the multi-brand financing line of business, credit
financing, leasing and other services are marketed to
retail customers under the brand name “Alphera”. Pro-
viding support to the dealer organisation, such as by
finan cing dealership vehicle inventories, rounds off the
segment’s product range.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
20
General Information on the BMW Group
Management System
The business management system applied by the
BMW Group follows a value-based approach, with a
clear focus on achieving profitable growth, increasing
the value of the business for capital providers and
safeguarding jobs. Corporate autonomy can only be
ensured in the long term if the available capital is
profitably employed. For this to be the case, the profit
generated must sustainably exceed the cost of equity
and debt capital.
The BMW Group’s internal management system is based
on a multilayered structure, with varying degrees of
detail applicable, depending on the level of aggregation.
Operating performance, for instance, is managed first
Value added
−
Return on capital
(RoCE / RoE)
×
Return on sales
÷
Capital turnover
÷
Cost of capital
×
and foremost at segment level. In order to manage long-
term performance and assess strategic issues, addi-
tional key performance figures are taken into account at
Group level for controlling purposes. In this context,
the contribution made to business value growth during
the financial year is measured in terms of “value added”.
This approach is translated for operational purposes
at both Group and segment level by means of key finan-
cial and non-financial performance indicators (“value
drivers”). The link between value added and the rele-
vant value drivers is shown in a simplified form in the
following diagram.
Profit
–
Expenses
Revenues
Capital employed
Average weighted cost
of capital rate
Due to the extremely high aggregate impact of vari-
ous factors, it is difficult to manage a business pro-
actively simply by focusing on value added. This
key indicator therefore only serves for intermediate
reporting purposes.
Relevant value drivers which could have a significant
impact on profitability and the value of the business are
defined for each controlling level. The financial and
non-financial value drivers referred to above are reflected
in the key performance indicators used to manage the
business.
In the case of project-related decisions, the system
incorporates a project-oriented control logic focused on
value-based and return-based performance indicators,
which provide a crucial basis for decision-making.
Management of operating performance at segment level
Operating performance at segment level is managed in
its most aggregated form on the basis of capital rates of
return. Depending on the business model, the segments
are measured on the basis of total return or the return on
equity capital, namely the return on capital employed
(RoCE) for the Automotive and Motorcycles segments
and the return on equity (RoE) for the Financial Ser-
vices segment. As an overall reflection of profitability
(return on sales), capital efficiency (capital turnover)
and other factors, these key performance indicators
provide a cohesive insight into segment performance
and changes in the value of the business.
Automotive segment
The most aggregated key performance indicator used
for the Automotive segment is the RoCE. This indicator
provides useful information on the success with which
capital is being employed as well as on operational
profitability. The RoCE is measured on the basis of seg-
ment profit before financial result and the average
amount of capital employed in segment operations. The
strategic target for the Automotive segment’s RoCE is
26 %.
RoCE Automotive =
Profit before financial result
Capital employed
21 COMBINED MANAGEMENT REPORT
Capital employed corresponds to the sum of all current
and non-current operational assets, less liabilities that
do not incur interest (e. g. trade payables). Non-interest-
bearing liabilities are those capital shares which are
available to the operative business without interest. These
include, for example, trade payables.
of equity capital attributable to the Financial Services
segment. The target is a sustainable return on equity
of at least 18 %.
RoE Financial
Services
=
Profit before tax
Equity capital
Due to the key importance of the Automotive segment
for the Group as a whole, consideration is also given
to additional key performance indicators, with varying
degrees of detail, which have a significant impact on
RoCE and hence on segment performance. The most
important of these value drivers are deliveries to cus-
tomers, segment revenues and – as the key performance
indicator for segment profitability – the operating re-
turn on sales. Average carbon emissions for the fleet
are also taken into account, reflecting their potential
impact on earnings in the short term in the form of
ongoing development expenses, and, in the long term,
the consequences of meeting regulatory requirements.
For these purposes, “carbon emissions for the fleet”
corresponds to average emissions of CO2 for new cars
sold in the EU-28 countries.
Managing the business on the basis of key value drivers
makes it easier to identify the reasons for changes in
RoCE and to define suitable measures to influence its
development.
Motorcycles segment
As with the Automotive segment, operating performance
for the Motorcycles segment is managed on the basis of
RoCE. Capital employed is measured using the same
procedures as in the Automotive segment. The strategic
target for the Motorcycles segment’s RoCE is 26 %.
RoCE Motorcycles =
Profit before financial result
Capital employed
The number of vehicles delivered to customers is also
taken into account as a non-financial value driver.
Financial Services segment
As is common practice in the banking sector, the per-
formance of the Financial Services segment is measured
on the basis of return on equity. RoE is defined as seg-
ment profit before taxes, divided by the average amount
Strategic management at Group level
Strategic management, including quantification of the
financial impact of strategic issues on long-term fore-
casting, is performed primarily at Group level. The
most significant performance indicators for these pur-
poses are Group profit before tax and the size of the
Group’s workforce at the year-end. Group profit before
tax is a good overall measure of the Group’s perfor-
mance after consolidation procedures, and provides a
transparent basis for comparing performance, particu-
larly over time. The size of the Group’s workforce is
monitored as an additional key non-financial perfor-
mance indicator.
Information provided by these two key performance in-
dicators is supplemented by the measurement of value
added. This highly aggregated performance indicator
provides an insight into capital efficiency and the (op-
portunity) cost of capital required to generate Group
profit. Value added corresponds to the amount of earn-
ings over and above the cost of capital and gives an in-
dication of whether the Group is meeting the minimum
requirements for the rate of return expected by capital
providers. A positive value added means that a com-
pany is generating more additional value than the cost
of capital.
Value added Group = earnings amount – cost of capital
= earnings amount – (cost of capital rate ×
capital employed)
Capital employed comprises the average amount of
Group equity employed during the year as a whole, the
financial liabilities of the Automotive and Motorcycles
segments, and pension provisions. “Earnings amount”
for these purposes corresponds to Group profit before
tax, adjusted for interest expense incurred in conjunc-
tion with the pension provision and on the financial
liabilities of the Automotive and Motorcycles segments
(earnings before interest expense and taxes).
in € million
Earnings amount
Cost of capital (EC + DC)
Value added Group
2015
2014
2015
2014
2015
2014
BMW Group
9,723
9,051
6,040
5,212
3,683
3,839
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
22
The cost of capital is the minimum rate of return ex-
pected by capital providers in return for the capital em-
ployed by the Group. Since capital employed com-
prises an equity capital element (e. g. share capital) and
a debt capital element (e. g. bonds), the overall cost of
capital rate is determined on the basis of the weighted
average rates for equity and debt capital, measured
using standard market procedures. The pre-tax average
weighted cost of capital for the BMW Group in 2015
was 12 %, unchanged from the previous year.
Value management used to control projects
Operations in the Automotive and Motorcycles seg-
ments are shaped, to a large extent, by life-cycle-driven
project work. Projects have a substantial influence on
future performance. Project decisions are therefore a
crucial component of financial management for the
BMW Group.
Decisions are taken on the basis of project calculations
measured in terms of the cash flows each individual
project is expected to generate. Calculations are made
for the full term of a project, i. e. for all future years in
which the project generates cash flows. Project deci-
sions are taken on the basis of the capital value and in-
ternal rate of return calculated for the project.
The capital value of a project indicates the extent to
which a project will be able to generate a positive contri-
bution to earnings over and above the cost of capital.
A project with a positive capital value enhances value
added and therefore results in an increase in the value
of the business. The internal rate of return of the project
corresponds to the average return on capital employed
in the project and, in terms of scope, is equivalent to
the multi-year average RoCE for an individual project. It
is therefore consistent with one of the key performance
indicators.
The criteria used for taking decisions as well as the
long-term impact on periodic earnings is documented
for all project decisions and incorporated in the long-
term Group forecast. This system enables an analysis of
the periodic reporting impact of project decisions on
earnings and rates of return over the term of each project.
The overall result is a cohesive controlling model.
23 COMBINED MANAGEMENT REPORT
Report on Economic Position
General and Sector-specific Environment
General economic environment in 2015
The world economy grew at a rate of 3.1 % in 2015. The
USA recorded robust growth, while the Chinese govern-
ment’s plan to transform the country’s economy to a
more stable, sustainable level continued to take effect.
Falling demand in China held down the growth rate, ex-
erting a particularly crippling impact on the economies
of raw material exporting countries such as Brazil and
Russia. Moreover, the prospect of the US Federal Reserve
Bank tightening its monetary policy additionally damp-
ened the outlook for emerging economies. These factors
resulted in further capital outflows, lower investment
and currency devaluation in many developing countries.
Despite signs of a resurgence of Greece’s problems, mar-
kets in the eurozone continued to recover.
After some initial doubt regarding the robustness of the
economy, the US Federal Reserve Bank set the expected
interest rate turnaround in motion. The upheavals on
capital markets feared by the financial market only had
a limited impact.
In the eurozone, economic output grew more strongly
than one year earlier, with a gross domestic product
(GDP) increase of 1.5 %, helped by the monetary policies
of the European Central Bank (ECB). At 1.7 %, Germany
again played an important role in driving the European
economy. France (+ 1.1 %) and Italy (+ 0.7 %) also recorded
higher growth rates for the twelve-month period.
Similarly, the majority of southern Europe’s economies
showed a year-on-year improvement. For example,
Spain at 3.2 % and Portugal, at 1.5 %, both contributed
towards the continued economic recovery of the
eurozone.
At 2.2 %, the UK economy grew more slowly than one
year earlier. Nevertheless, as in all years since 2011, the
growth rate was higher than that of the eurozone. The
UK government made good use of the positive economic
environment to reduce the budget deficit to its lowest
level since 2007. Domestic consumer spending again
served as a pillar of the economy.
expected rise in inflation on the other hand prompted
the Federal Reserve Bank to usher in the interest rate
turnaround in December 2015.
The Japanese economy was unable to gain any signifi-
cant momentum in 2015. With GDP growth at only
0.6 %, it was the weakest of all the G7 countries. The
Bank of Japan continued its expansionary monetary
policies throughout 2015.
In China, the realigned economic strategy introduced
by the government led to a moderate slowdown in the
pace of economic growth (+ 6.9 %), with the growth
rate falling below the 7 % mark for the first time since
1990. Despite the ongoing transformation from an
investment to a consumer-oriented economy and
sharp stock market corrections in both mid-2015 and
early 2016, the Chinese economy has shown itself to
be stable.
Apart from India at 7.4 %, the other BRIC states failed to
live up to expectations for growth in 2015. Brazil and
Russia, both of which rely on the export of raw materials,
recorded negative growth of 3.6 % and 3.8 % respectively.
Neither of these countries was able to find a way out
of the currently difficult situation and remained in re-
cession.
Currency markets
The US dollar averaged an exchange rate of 1.11 to
the euro in 2015 and was therefore significantly stronger
than in the previous year. The different direction in
monetary policy currently being pursued by the Euro-
pean Central Bank and the US Federal Bank (Fed) caused
the US dollar to appreciate in value against the euro
from US$ 1.16 to US$ 1.09 (based on monthly averages)
over the course of the twelve-month period.
The British pound also gained in value, rising to an
average annual exchange rate of 0.73 to the euro. Unlike
the Fed, the Bank of England (BoE) has not yet seen any
acute need to raise reference interest rates.
The cyclical upturn in the USA gained further momen-
tum in 2015. The growth rate stood at 2.4 %, marginally
higher than one year earlier. The upward trend of the
US economy, now reaching as far back as 2010, con-
tinues to benefit from robust levels of consumer spending.
The stable economic situation on one hand and the
As its value is coupled to that of the US dollar, at 6.97,
the Chinese renminbi also gained in value against the
euro compared to the previous year. The upward trend
was temporarily halted when Chinese stock markets
witnessed a turbulent phase, only for some of the lost
ground to be regained by the end of the year.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
24
Exchange rates compared to the euro
(Index: December 2010 = 100)
190
175
160
145
130
115
100
85
70
Russian Rouble
Japanese Yen
British Pound
US Dollar
Chinese
Renminbi
11
12
13
14
15
Russian Rouble
Japanese Yen
British Pound
US Dollar
Chinese Renminbi
Source: Reuters.
The Japanese yen gained moderately in value against
the euro during 2015, primarily due to the expansion
of money supply within the eurozone, and recorded an
annual average exchange rate of 134 yen to the euro.
was US dollar 54, down 46 % on the previous year. WTI,
the benchmark for crude oil in the USA, followed a
similar trend.
The euro was stronger in 2015 compared to many of the
emerging market currencies, including those of Russia
and Brazil. Its annual average exchange rate increased by
approximately 19 % against the Brazilian real and by as
much as 33 % against the Russian rouble.
Energy and raw materials prices
After a brief decrease at the beginning of the year, the
price of Brent crude oil – the most relevant benchmark
for Europe – picked up again during the first half of
2015. In stark contrast, the price then proceeded to
plummet during the second six months of the year.
The average price per barrel over the year as a whole
Steel price trend
(Index: January 2011 = 100)
130
120
110
100
90
80
70
60
11
12
13
14
15
Source: Working Group for the Iron and Metal Processing Industry.
Oil price trend
Price per barrel of Brent Crude
120
110
100
90
80
70
60
50
40
Source: Reuters.
11
12
13
14
15
Price in US Dollar
Price in €
25 COMBINED MANAGEMENT REPORT
Precious metals price trend
(Index: December 2010 = 100)
130
120
110
100
90
80
70
60
Source: Reuters.
11
12
13
14
15
Gold
Palladium
Platinum
Precious metals prices stabilised for a short period at the
beginning of the year, before continuing their long-term
downward trend for the remainder of the twelve-month
period. The drop in prices reflects overcapacities on
the supply side, combined with weak demand on world
markets.
There was no sign of a turnaround on the world’s steel
markets during the period under report. Here, too,
the general slide in raw materials prices was reflected
in lower steel prices year-on-year.
Automobile markets
Worldwide registrations of passenger cars and light com-
mercial vehicles grew by 3.3 % to 82.4 million units.
The two largest automobile markets, the USA and China,
were once again the mainstays driving this outcome.
Registration figures in China, for instance, increased by
8.9 % to 20.5 million units. Although this number points
to a weaker performance than one year earlier, the
Chinese market nevertheless increased the gap between
itself and the US market, which grew by 5.7 % to 17.5 mil-
lion units.
dynamic performance in Spain (1.0 million units;
+ 20.9 %). Registrations in the United Kingdom were
6.3 % higher at 2.6 million units.
Japan’s automobile market contracted in 2015, with
new registrations falling and totalling only 4.9 million
units ( – 9.8 %).
Automobile markets in major emerging economies
continued to suffer from recession in 2015. The Russian
market shrank by more than one-third (1.5 million
units; – 36.0 %) and the Brazilian market by a good quar-
ter (2.5 million units; – 25.7 %).
Motorcycle markets
The world’s motorcycle markets in the 500 cc plus class
grew by 4.7 % in 2015. Motorcycle registrations in Europe
were up by 8.5 %, mainly due to a sharp recovery in
southern Europe. Italy recorded double-digit growth,
with registrations 11.3 % up on the previous year. Ger-
many’s motorcycle market reported a 4.5 % increase,
while France finished at a similar level to the previous
year (+ 0.3 %). The US market grew by 3.6 %.
Automobile markets in Europe picked up where they had
left off the previous year, growing by 9.2 % (14.2 million
units) during the period under report. Excluding registra-
tions in Germany, the European market fared slightly
better with a 10.3 % increase to 11.0 million units. The
German automobile market grew by 5.6 % to 3.2 million
units and therefore accounted for nearly a quarter of all
new registrations in Europe (22.6 %). France (1.9 million
units; + 6.8 %) and Italy (1.6 million units; + 15.5 %) both
saw robust growth, which also contributed to the re-
covery. Europe’s growth was also helped by a repeated
Financial services markets
While the majority of industrialised countries witnessed
an improvement in economic fundamentals in 2015,
market conditions were highly unfavourable for some of
the world’s major emerging economies.
After a slow start to the year, the US economy and em-
ployment market returned to an upward trend as from
the second quarter. The rate of inflation remained ex-
tremely low throughout the year, initially prompting the
Fed to adopt a “wait-and-see” approach regarding an
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
26
interest rate rise. The reference interest rate was finally
increased by 0.25 % in December 2015, the first rise
announced for almost ten years.
The ECB launched a large-scale bond-buying programme
in March 2015, with the dual objective of propping up
the eurozone’s economy and combating low inflation.
Helped by a combination of the low price of oil, a weak
euro and low interest rates, the euro zone managed to
stage a moderate economic recovery. The hoped-for in-
crease in inflation rates, however, proved elusive, mainly
due to lower energy prices.
The UK economy grew at a stable pace in 2015. The Bank
of England nevertheless refrained from increasing its
reference interest rate, mainly in light of the persistently
low rate of inflation.
A continuation of the economic slowdown in 2015, ac-
companied by high volatility on the Shanghai stock ex-
change, led to the Chinese economy contributing less to
global economic growth than in the previous year. The
Chinese central bank intervened with a series of interest
rate cuts, curtailing the renminbi’s upward trend.
The export-dependent Japanese economy suffered from
the slower rate of growth in China and a return to more
cautious consumer spending during the twelve-month
period under report. The Bank of Japan’s expansive mon-
etary policies helped the country avoid slipping into re-
cession in 2015.
Moderate price increases were observable in the premium
segment of Europe’s used car markets in 2015, while
prices in Asia remained stable and even fell slightly in
North America. Selling prices fluctuated within normal
ranges.
27 COMBINED MANAGEMENT REPORT
Report on Economic Position
Overall Assessment by Management
Financial and Non-financial Performance Indicators
Overall assessment of business performance
The BMW Group has every reason to be satisfied with its
performance in 2015. The overall picture was pleasing
in terms of results of operations, financial position and
net assets. Overall, management expectations for the
period were therefore met. This assessment also takes
into account events after the end of the reporting period.
Financial and non-financial performance indicators
In the following section, we report on the principal finan-
cial and non-financial performance indicators used as
the basis for managing the BMW Group and its segments.
As part of the review of operations and the financial
condition of the BMW Group, forecasts made the pre-
vious year for the financial year 2015 are compared with
actual outcomes in 2015.
BMW Group
Profit before tax
Despite facing strong competition on the world’s auto-
mobile markets and investing heavily in new technologies
as well as in the expansion of its production network, the
BMW Group remained firmly on course in 2015. Profit
before tax came in at a new all-time high of € 9,224 mil-
lion (2014: € 8,707 million; + 5.9 %). In addition to gen-
erally strong demand for the Group’s brands, earnings
also increased on the back of favourable currency fac-
tors. Good contributions to earnings also came from the
BMW X6 and X4 models launched at the end of 2014,
as well as from the BMW 2 Series with its various new
models and from the new MINI 3- and 5-door models.
As predicted in the outlook for the financial year 2015,
the Group’s profit before tax achieved a solid growth
and was therefore in line with expectations.
Workforce at year-end
At the end of 2015, the BMW Group employed a work-
force of 122,244 people (2014: 116,324 people; + 5.1 %).
This solid increase in the workforce mainly reflects
strong demand for the BMW Group’s brands of automo-
biles and motorcycles as well as the broader range of
mobility services now on offer. The BMW Group also
recruited skilled staff aimed at the increasingly digitali-
sation and at driving the continued development of
electric mobility.
As predicted in the outlook for the financial year 2015,
there was a solid increase in size of the BMW Group’s
workforce, which was therefore in line with expectations.
Automotive segment
Sales volume
The Automotive segment sold a record number of ve-
hicles for the fifth year in succession. Despite the in-
creasing normalisation of the market in China and the
tense geopolitical situation worldwide, most notably
the conflict hot spots in the Middle East, sales of BMW,
MINI and Rolls-Royce brand vehicles grew by a solid
6.1 % to 2,247,4851 units (2014: 2,117,9651 units). The
upward trend reflects the success of numerous new
models, including the expanded range of BMW 2 Series
models launched internationally during the year under
report. The MINI 3- and 5-door models introduced in
2014 also made an important contribution. This perfor-
mance enabled the BMW Group to retain a leading posi-
tion in the premium segment worldwide.
The number of BMW brand vehicles sold during the
twelve-month period increased to 1,905,2341 units (2014:
1,811,7191 units; + 5.2 %). MINI recorded a significant
sales volume increase of 12.0 % during the year under
report (338,466 units; 2014: 302,183 units). Rolls-Royce
Motor Cars sold 3,785 units (2014: 4,063 units; – 6.8 %).
As predicted in the Annual Report 2014 for the finan-
cial year 2015, the total number of cars sold by the
BMW Group rose by 6.1 % and was therefore in line
with expectations.
Fleet carbon emissions2
The BMW Group continually strives to reduce fuel con-
sumption and carbon emissions by deploying innovative
technologies developed in conjunction with the Group’s
Efficient Dynamics strategy. The outcome of these en-
deavours is highly efficient combustion engines and
electric drive systems that set standards in terms of both
dynamic flair and driving pleasure. The volume of car-
bon emissions produced by our vehicle fleet sold in
Europe was reduced slightly to 127 grams CO2 / km
(2014: 130 grams CO2 / km; – 2.3 %) during the year un-
der report.
As predicted in the outlook for the full year 2015, carbon
fleet emissions fell slightly and were therefore in line
with forecast.
Revenues
Segment revenues rose by 13.8 % to € 85,536 million
(2014: € 75,173 million), driven by a strong sales volume
performance and favourable currency factors. The re-
vised forecast for the year from a solid increase to a
significant increase, as communicated in the Quarterly
Report to 31 March 2015, was therefore borne out. In
the Annual Report 2014, the forecast had been a solid in-
crease in Automotive segment revenues.
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014:
275,891 units, 2015: 282,000 units).
2 EU-28.
28
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
EBIT margin and return on capital employed
The EBIT margin in the Automotive segment (profit be-
fore financial result divided by revenues) came in at 9.2 %
(2014: 9.6 %; – 0.4 percentage points). As predicted, the
EBIT margin from automobile business was within the
target range of between 8 and 10 % and thus in line with
forecasts.
The return on capital employed (RoCE) amounted to
72.2 % (2014: 61.7 %; + 10.5 percentage points). The
higher-than-expected increase in RoCE reflects the
pleasing upward trend in earnings on the one hand
and the rigorous management of capital employed on
the other. A number of other factors also influenced
RoCE, including transactions with other segments, the
higher volume of business with service and Connected
Drive contracts as well as efficiency improvements in
investing activities. In the Annual Report 2014, a
moderate decrease in RoCE was predicted. The rate
achieved by the Automotive segment was therefore
well above the minimum target of 26 %.
Motorcycles segment
Sales volume
In a highly favourable market environment, most notably
in Europe, BMW Motorrad achieved a significant in-
crease of 10.9 % with a sales volume of 136,963 units
(2014: 123,495 units). This performance was therefore
better than the solid increase forecast in the Annual
Report 2014. Apart from the robust market environment
Comparison of 2015 forecasts with actual outcomes 2015
and BMW Motorrad’s attractive model range, mild
weather conditions at the end of the year also gave the
strong performance additional tailwind.
Return on capital employed
The Motorcycles segment generated a return on capital
employed (RoCE) of 31.6 % in the year under report
(2014: 21.8 %; + 9.8 percentage points), a solid increase
on the previous year. In the Quarterly Report at 30 June
2015, the outlook was for a slight increase in RoCE
(outlook in the Annual Report 2014: RoCE in line with
the previous year’s level). Contributing factors for the
improved performance were higher sales volume, a sus-
tained high-value model mix and the positive impact
of the new brand strategy embarked upon in 2014.
Financial Services segment
Return on equity
The return on equity (RoE) generated by the Financial
Services segment improved to 20.2 % in the year under
report (2014: 19.4 %; + 0.8 percentage points), helped by
a strong operating performance and a stable risk pro-
file. As predicted in the Annual Report 2014, RoE was
in line with the previous year’s level and therefore re-
mained ahead of the minimum target of 18 %.
The following overall picture arises for the principal per-
formance indicators utilised by the BMW Group and its
segments:
Forecast for 2015
in 2014 Annual Report
Forecast revision
during the year
Actual outcome
in 2015
BMW Group
Profit before tax
Workforce at year-end
Automotive segment
Sales volume1
Fleet emissions2
Revenues
EBIT margin
solid increase
solid increase
solid increase
slight decrease
solid increase
Q1: significant increase
target range between 8 and 10 %
Return on capital employed
moderate decrease
Motorcycles segment
Sales volume
solid increase
Return on capital employed
in line with last year’s level
Q2: slight increase
€ million
9,224 (+ 5.9 %)
122,244 (+ 5.1%)
units
2,247,485 (+ 6.1 %)
g CO2 / km
€ million
%
%
units
%
127 (– 2.3 %)
85,536 (+ 13.8 %)
9.2 (– 0.4 %pts)
72.2 (+ 10.5 %pts)
136,963 (+ 10.9 %)
31.6 (+ 9.8 %pts)
Financial Services segment
Return on equity
in line with last year’s level
%
20.2 (+ 0.8 %pts)
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2015: 282,000 units).
2 EU-28.
29 COMBINED MANAGEMENT REPORT
Report on Economic Position
Review of Operations
AUTOMOTIVE SEGMENT
Solid sales volume growth
The BMW Group sold 2,247,485* BMW, MINI and
Rolls-Royce brand vehicles worldwide in 2015, thereby
setting a new record for the fifth year in succession
(2014: 2,117,965* units; + 6.1 %). Sales of BMW models
climbed by a solid 5.2 % to 1,905,234* units (2014:
1,811,719* units). MINI recorded even more impressive
growth, with sales rising by 12.0 % to 338,466 units (2014:
302,183 units). Rolls-Royce Motor Cars sold 3,785 ultra-
luxury sedans, moderately down on the previous year’s
high level (2014: 4,063 units; – 6.8 %).
Europe showing good signs of recovery
In a mostly friendly market environment in Europe,
sales of BMW, MINI and Rolls-Royce brand vehicles rose
by 9.4 % to a total of 1,000,427 units, surpassing the one-
million threshold for the first time (2014: 914,587 units).
The number of vehicles sold in Germany was 5.0 % up
on the previous year (286,098 units; 2014: 272,345 units).
Business in Great Britain also developed very posi-
tively, with sales rising to a total of 230,982 units (2014:
205,071 units; + 12.6 %). The pace of growth in Asia
slowed somewhat, mainly reflecting the anticipated
normalisation of the Chinese automobile market. The
BMW Group sold a total of 685,792* units of its three
BMW Group sales volume of vehicles by region and market
in 1,000 units
2,400
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
BMW Group – key automobile markets 2015
as a percentage of sales volume
Other
Japan
Italy
France
China*
USA
Great Britain
Germany
China*
USA
Germany
Great Britain
20.6
18.1
12.7
10.3
France
Italy
Japan
Other
3.5
3.2
3.1
28.5
brands in Asia during the year under report (2014:
658,384* units; + 4.2 %). The sales volume figure of
464,086* units for China was slightly up on one year
earlier (2014: 456,732* units; + 1.6 %). Sales in the
Europe
thereof Germany
Asia*
thereof China*
Americas
thereof USA
Other markets
11
12
13
14
15
Europe
thereof Germany
Asia*
thereof China*
Americas
thereof USA
Other markets
Total*
858.4
285.3
375.5
233.6
380.3
306.3
54.8
865.4
287.4
493.4
327.3
425.3
348.5
61.1
859.5
259.2
578.7
391.7
463.8
376.6
61.8
914.6
272.3
658.4
456.7
482.3
397.0
62.7
1,000.4
286.1
685.8
464.1
495.9
405.7
65.4
1,669.0
1,845.2
1,963.8
2,118.0
2,247.5
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units).
30
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Americas region increased by 2.8 % to 495,897 units
(2014: 482,257 units), the USA accounting for
405,715 units, 2.2 % up on the previous year (2014:
396,961 units).
Solid growth for the BMW brand*
The BMW brand marked another highly successful
performance in the premium segment during the year
under report. The BMW X5 as well as the BMW 4, 5
and 6 Series, for instance, all continued to head their
relevant segments.
With the Coupé and Convertible body variants now re-
ported as part of the new 2 Series, sales of the BMW 1 Se-
ries, at 182,158 units, were nominally below the previous
year’s level (2014: 190,033 units; – 4.1 %). The BMW 2 Se-
ries has been a highly popular customer choice since its
launch, with 157,144 units sold during the twelve-month
period under report (2014: 41,038 units). Sales figures
for the BMW 3 Series were also nominally down year-on-
year, at 444,338 units, reflecting the fact that the Coupé
and Convertible body variants are now reported as
part of the BMW 4 Series (2014: 480,214 units; – 7.5 %).
Customers took delivery of a total of 152,390 units of
the BMW 4 Series during the period under report (2014:
119,580 units; + 27.4 %). Now nearing the end of its life
cycle, at 347,096 units, sales of the BMW 5 Series did
not quite match the previous year’s high figure (2014:
373,053 units; – 7.0 %). Owing to the model change at
the end of 2015, worldwide sales of the BMW 7 Series
fell to 36,364 units (2014: 48,519 units; – 25.1 %). Now
in its sixth generation, this luxury class model has at-
tracted extremely positive feedback from the trade
press and from customers alike, raising expectations
of a perceptible resurgence in sales figures during
2016.
Sales volume of BMW vehicles by model variant*
in units
BMW 1 Series
BMW 2 Series
BMW 3 Series
BMW 4 Series
BMW 5 Series
BMW 6 Series
BMW 7 Series
BMW X1
BMW X3
BMW X4
BMW X5
BMW X6
BMW Z4
BMW i
BMW total
2015
2014
Change
in %
Proportion of
BMW sales volume
2015 in %
182,158
157,144
444,338
152,390
347,096
20,962
36,364
120,011
137,810
55,050
168,143
46,305
7,950
29,513
190,033
41,038
480,214
119,580
373,053
23,988
48,519
156,471
150,915
21,688
147,381
30,244
10,802
17,793
1,905,234
1,811,719
– 4.1
–
– 7.5
27.4
– 7.0
– 12.6
– 25.1
– 23.3
– 8.7
–
14.1
53.1
– 26.4
65.9
5.2
9.6
8.3
23.3
8.0
18.2
1.1
1.9
6.3
7.3
2.9
8.8
2.4
0.4
1.5
100.0
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 275,891 units, 2015: 282,000 units).
The BMW X family also continued to perform well in
2015, with worldwide deliveries to customers totalling
527,319 units (2014: 506,699 units; + 4.1 %). Sales of
the BMW X5 rose by 14.1 % to 168,143 units (2014:
147,381 units). With 137,810 units sold in 2015, the
BMW X3 remained below its previous year’s level (2014:
150,915 units; – 8.7 %). The BMW X4 more than doubled
sales volume during the twelve-month period
(55,050 units; 2014: 21,688 units). As a result of the
model change, sales of the BMW X1, at 120,011 units,
were lower than one year earlier (2014: 156,471 units;
– 23.3 %). The second-generation BMW X1 first appeared
in showrooms at the end of October 2015 and is set to
continue its predecessor’s success story in 2016.
31 COMBINED MANAGEMENT REPORT
Significant increase for the MINI brand
MINI sales grew by 12.0 % worldwide to 338,466 units
(2014: 302,183 units), helped primarily by the popularity
of the new MINI 3- and 5-door models, of which a total
of 221,982 units were delivered to customers (2014:
140,051 units; + 58.5 %). Sales of the MINI Countryman
totalled 80,230 units (2014: 106,995 units; – 25.0 %).
The new MINI Clubman became available towards the
end of October, since then approximately 8,000 units
have been sold.
Sales volume of MINI vehicles by model variant
in units
MINI 3- and 5-door
MINI Convertible
MINI Clubman
MINI Countryman
MINI Coupé
MINI Roadster
MINI Paceman
MINI total
2015
2014
Change
in %
Proportion of
MINI sales volume
2015 in %
221,982
14,145
8,003
80,230
2,784
3,075
8,247
338,466
140,051
17,327
13,326
106,995
3,816
5,101
15,567
302,183
58.5
– 18.4
– 39.9
– 25.0
– 27.0
– 39.7
– 47.0
12.0
65.6
4.2
2.4
23.7
0.8
0.9
2.4
100.0
Rolls-Royce moderately down on previous year’s
high level
In sales volume terms, Rolls-Royce Motor Cars reported
the second-best year in its history (3,785 units; 2014:
4,063 units; – 6.8 %). The Rolls-Royce Wraith recorded
Sales volume of Rolls-Royce vehicles by model variant
the sale of 1,688 units (2014: 1,906; – 11.4 %). Sales of the
Rolls-Royce Ghost rose slightly by 3.5 % to 1,609 units
(2014: 1,555 units).
in units
Phantom
Ghost
Wraith
Rolls-Royce total
2015
488
1,609
1,688
3,785
2014
Change in %
602
1,555
1,906
4,063
– 18.9
3.5
– 11.4
– 6.8
High capacity utilisation throughout production network
Strong demand and the production start-up of numerous
new models resulted in very high capacity utilisation
levels throughout the BMW Group’s production net-
work. At the same time, the process of expanding inter-
national production sites was continued apace. The
production network comprises 30 locations in 14 coun-
tries worldwide.
+ 5.3 %), comprising 1,933,647* BMW (2014: 1,838,268*
units; + 5.2 %), 342,008 MINI (2014: 322,803 units; + 5.9 %)
and 3,848 Rolls-Royce brand vehicles (2014: 4,495 units;
– 14.4 %).
Internationalisation of production network making
good progress
Following global market developments, the BMW Group
has continued to expand its international production
The network set new production volume records in 2015,
making a total of 2,279,503* units (2014: 2,165,566* units;
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
(2014: 287,466 units, 2015: 287,755 units).
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
32
Vehicle production of the BMW Group by plant
in units
Munich
Dingolfing
Regensburg
Leipzig
Rosslyn
Spartanburg
Dadong1
Tiexi 1
Rayong
Araquari
Chennai
Oxford
Graz (Magna Steyr) 2
Born (VDL Nedcar) 2
Goodwood
Partner plants
BMW Group
2015
2014
Change
in %
Proportion of
production in %
221,998
360,804
304,509
233,656
71,353
400,904
142,767
144,988
8,928
9,936
7,716
201,206
82,655
57,019
3,848
27,216
228,126
369,027
272,015
211,434
68,771
349,949
143,390
144,076
6,012
5,616
4,824
179,318
113,401
29,196
4,495
35,916
2,279,503
2,165,566
– 2.7
– 2.2
11.9
10.5
3.8
14.6
– 0.4
0.6
48.5
76.9
60.0
12.2
– 27.1
95.3
– 14.4
– 24.2
5.3
9.7
15.8
13.4
10.3
3.1
17.6
6.3
6.4
0.4
0.4
0.3
8.8
3.6
2.5
0.2
1.2
100.0
1 Joint venture BMW Brilliance Automotive Ltd., Shenyang.
2 Contract production.
network with the aim of ensuring a balanced distribution
of value added along the production chain.
currently built in Araquari. Only one year after produc-
tion officially began, the 10,000th vehicle has already
rolled off the production lines.
In North America, the expansion of the plant in Spartan-
burg, USA, continues to make good progress. A new,
state-of-the-art vehicle body manufacturing facility is
currently under construction, as part of the investment
programme announced in 2014. Annual production at
the plant achieved a new record of over 400,000 units in
the year under report. In terms of production volume,
the Spartanburg plant is therefore the largest in the BMW
Group’s network.
In San Luis Potosí, Mexico, preparations for constructing
the new plant are running on schedule. A local train-
ing centre has already been opened at the site and the
first employees recruited. The plant is due to commence
operations in 2019.
The comprehensive expansion of the BMW Group plant
in Araquari, Brazil, was completed in September 2015.
The manufacturing infrastructure at the site now in-
cludes body-making, a paint shop and assembly facilities.
The BMW 1 Series 5-door version, the BMW 3 Series Se-
dan, the BMW X1, the X3 and the MINI Countryman are
In Europe, the British production triangle comprising
the MINI plant in Oxford, the components plant in
Swindon and the engine production facility in Hams
Hall is a fundamental element of the BMW Group’s pro-
duction network. At the end of 2015, production at
the Oxford plant comprised the MINI 3- and 5-door ver-
sions and the new MINI Clubman.
In order to secure greater capacity for the planned growth,
since 2014 the MINI 3-door model is also being pro-
duced for the BMW Group at the Dutch carmaker VDL
Nedcar in Born. Since 2015, VDL Nedcar has also been
producing the MINI Convertible. The MINI Countryman
and MINI Paceman models are being produced under
contract by the company Magna Steyr Fahrzeugtechnik
in Graz, Austria. This additional capacity with external
partners provides the BMW Group’s production network
with even greater flexibility.
At the home of Rolls-Royce in Goodwood (United King-
dom), important construction work was carried out to
33 COMBINED MANAGEMENT REPORT
convert and expand the plant throughout 2015. The BMW
Group is investing in a new single-line production system
at this site as the basis for ensuring the brand’s innova-
tive product strategy in the long term. The new tech-
nology and logistics centre in Bognor Regis near Good-
wood was opened as planned. Moreover, Rolls-Royce
Motor Cars recruited 100 new employees during the
period under report.
In Rosslyn (South Africa) the one-millionth BMW 3 Series
vehicle rolled off the production line in February 2015.
In 1973, the plant was opened as the BMW Group’s first
international manufacturing facility and is now an im-
portant part of the network. Within the next few years,
the plant will discontinue production of the BMW 3 Se-
ries and begin making the successor to the current
BMW X3.
In Shenyang (China), BMW Brilliance Automotive Ltd.
(BBA) produced its one-millionth vehicle during the
period under report. BBA is a joint venture of the BMW
Group and its partner Brilliance China Automotive
Holdings Ltd. Its two plants in Dadong and Tiexi manu-
facture the BMW 3 Series long-wheelbase version, the
BMW 3 Series Sedan, the BMW 5 Series long-wheelbase
version, the BMW 5 Series Plug-in Hybrid and the
BMW X1 for the Chinese market.
The manufacturing sites in Chennai (India) and Rayong
(Thailand) complete the BMW Group’s production net-
work. Last year, the plant in Thailand celebrated its 15th
anniversary and expansion work was continued at the
plant at the same time. It is the only production facility
within the network that produces not only BMW and
MINI vehicles, but also BMW motorcycles.
At the Group’s partner plants, which mostly serve
their regional markets, a total of 27,216 vehicles were
produced during the period under report. These part-
ner plants include those in Kaliningrad (Russia), Cairo
(Egypt), Jakarta (Indonesia) and Kulim (Malaysia).
Introduction of modular engine concept practically
completed
In January 2016, the new engine manufacturing plant,
which includes a foundry, was commissioned in Shen-
yang (China) and now supplies engines for vehicle pro-
duction for the Chinese market. With Munich, Hams
Hall (United Kingdom) and Steyr (Austria), the BMW
Group now manufactures engines at a total of four lo-
cations. Moreover, since 2014 the new modular engine
has been introduced in the engine plants step by step,
expanding options for a flexible production system with
uniform production and process standards.
Production of modular engines at the Steyr plant was
increased in 2015. At the same time, the development
centre for diesel engines, which is connected with the
plant, is currently being expanded. The Hams Hall en-
gine plant makes 3- and 4-cylinder petrol engines for
BMW and MINI and is also the exclusive manufacturer
of 3-cylinder petrol engines for the BMW i8.
Strong production base in Germany
Apart from the expansion of the international production
network, the German plants are an important focus of
ongoing development. For the fifth time in succession,
the BMW Group produced a total of over one million
vehicles at its plants in Munich, Dingolfing, Regensburg
and Leipzig.
Thanks to their innovative strength, the plants in Ger-
many play a leading role within the international pro-
duction network and are often the inspiring source
of impetus for the global network as a whole. Digitalisa-
tion, modular concepts and intelligent composite manu-
facture are examples that demonstrate the outstanding
expertise of the production network.
Digitalisation in particular will contribute towards help-
ing the network produce even more flexibly and effi-
ciently. The use of IT-supported technologies in produc-
tion and logistics makes it possible to design even highly
complex workflows, such as through the use of flexible
robot systems, intelligent tools for staff, simulation, and
automated data collection and analysis.
With the production start-up of the new BMW 7 Series,
employees at the Dingolfing plant have proved that
innovation can be combined with complex production
processes. The intelligent composite manufacture is
particularly obvious in the new BMW 7 Series, where
carbon-fibre reinforced polymer (CFRP) is exclusively
used in the passenger compartment. The body struc-
ture, known as Carbon Core, is based on a technology
transfer from the BMW i models. The utilisation of ultra-
lightweight CFRP material and a comprehensive light-
weight design concept make the new 7 Series models
up to 130 kg lighter than their predecessors.
Despite the BMW 7 Series model change, with a total
of around 360,000 units manufactured in 2015, the
Dingolfing plant registered the second-highest annual
production figure in its history. At the same time,
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
34
expansion and modification work at the Dingolfing plant,
which has been ongoing since the end of 2012, made
good progress during the year under report. The BMW
Group is currently investing substantial amounts in the
Dingolfing site in preparation for future vehicle models
and upcoming technologies.
bumpers and other plastic add-on components. Further-
more, the new strategy for the plant continued to make
good progress. The aim is to make the components plant
even more flexible and thus increase the site’s long-term
competitiveness. Trendsetting lightweight construction
technologies will play a key role in achieving this end.
The Wackersdorf Innovation Park is the logistical hub for
materials management and just-in-sequence supply to
BMW Group plants in ten different countries. Further-
more, the dashboards for several plants are produced in
Wackersdorf.
SGL Automotive Carbon Fibers (SGL ACF), the joint
operation of the BMW Group with the SGL Group, is
also based in Wackersdorf. In Moses Lake, USA, SGL
ACF operates a carbon fibre production plant that is
powered by hydroelectricity and supplies carbon fibres
to the SGL ACF plant in Wackersdorf, where they are
processed into textile parts.
The expansion of the BMW Group’s Eisenach plant con-
tinued as planned in 2015. The site is being extended to
include new buildings and additional production floor
space. Moreover, a state-of-the-art Servo tryout press is
being installed. The project is scheduled for completion
in 2016. The Eisenach plant is one of the three BMW
Group locations worldwide that builds pressing tools.
In addition, some 250 employees at the Eisenach plant
manufacture the majority of the outer body parts
from sheet metal, aluminium and stainless steel for the
Rolls-Royce plant in Goodwood (United Kingdom) as
well as parts for the production of BMW motorcycles in
Berlin.
Extensive refurbishment measures were also commenced
at the main plant in Munich in 2015. By mid-2017, a
state-of-the-art painting line will be completed that
meets the utmost standards in terms of profitability and
efficient use of resources. The new building is part of an
extensive investment programme that also includes the
enlargement of the body-making section and vehicle
assembly as well as parts of the logistics department. At
the present time, around 1,000 vehicles a day are rolling
off production lines at the BMW Group’s Munich plant,
including the BMW 3 Series Sedan, the BMW 3 Series
Touring, the BMW 4 Series Coupé, the BMW M4 Coupé
and, since the end of 2015, the BMW 3 Series Plug-in
Hybrid.
The BMW Group’s Regensburg plant raised production
volume by almost 12 % year-on-year, manufacturing more
than 300,000 units during the period under report. In the
course of the year, the six-millionth vehicle rolled off
the production line since the plant was first opened in
1986. Furthermore, production of three new models,
the BMW 1 Series, the 2 Series Gran Tourer and the X1
all started during 2015.
At the Leipzig plant, growing demand for electric vehicles
worldwide resulted in annual production of the BMW i
vehicles increasing to over 30,000 units. The BMW i3 is
one of the three best-selling electric vehicles both in the
USA and on markets worldwide. The team in Leipzig is
currently producing around 120 BMW i models daily. After
the success of the BMW i8, since 2015 the BMW 225xe
Active Tourer is the second model featuring a plug-in
hybrid drive system to be manufactured at the plant.
Production of the new BMW M2 also started in Leipzig
in 2015, with vehicles produced for the most part in
a flexible mix with all other models of the BMW 1 and
2 Series.
The growing demand for passenger vehicles also resulted
in high-capacity utilisation at the Landshut plant during
the year under report. The main focus during 2015
was on the start-up of components production for the
BMW brand’s flagship model, the BMW 7 Series, includ-
ing production of structural components, light metal die-
cast engine components, CFRP body structure parts,
35 COMBINED MANAGEMENT REPORT
MOTORCYCLES SEGMENT
BMW Motorrad reports significant growth in business
The Motorcycles segment profited from a positive market
environment during the period under report, achieving a
new sales volume record for the fifth year in succession.
The number of BMW motorcycles sold to customers world-
wide rose by 10.9 % to 136,963 units (2014: 123,495 units).
Motorcycle sales particularly strong in Europe
The number of motorcycles sold in Europe in 2015 to-
talled 81,834 units (2014: 73,611 units), an increase of
11.2 %. In Germany, BMW Motorrad reported a solid in-
crease of 9.7 % with a sales volume of 23,823 units (2014:
21,714 units). Italy also saw a year-on-year improvement,
with sales 6.3 % up at 11,150 units (2014: 10,487 units).
Deliveries to customers in France, at 12,550 units, were
also higher than one year earlier (2014: 11,600 units;
+ 8.2 %), even though the market as a whole remained
flat. The Motorcycles segment sold 16,501 units in the
USA (2014: 15,301 units; + 7.8 %).
New models performing well
A number of new models helped the Motorcycles seg-
ment deliver another outstanding performance in 2015.
The F 800 R was launched in time for the beginning of
the 2015 motorcycling season, followed by the R 1200 R,
R 1200 RS, S 1000 XR and S 1000 RR models over the
course of the year. December 2015 saw the market launch
of the C 650 Sport and C 650 GT model updates, both of
which had previously been presented at the EICMA in-
ternational motorcycle trade fair in Milan. Thanks to an
extensively modified drivetrain, more comfortable sus-
pension settings and revamped controls, these two dy-
namic maxi-scooters offer the ideal combination of sport-
ing flair, smooth touring comfort and urban mobility.
BMW Group sales volume of motorcycles*
in 1,000 units
140
120
100
80
60
40
20
11
12
13
14
15
104.3
106.4
115.2
123.5 137.0
* Excluding Husqvarna, sales volume up to 2013: 59,776 units.
BMW Group – key motorcycle markets 2015
as a percentage of sales volume
Other
Germany
USA
France
Brazil
Great Britain
Italy
Spain
Germany
USA
France
Italy
17.4
12.0
9.2
8.1
Spain
Great Britain
Brazil
Other
5.8
5.8
5.6
36.1
The R nineT Scrambler, G 310 R, F 700 GS and F 800 GS
models were all on display for the first time at the
EICMA. The F 700 GS and F 800 GS will both be avail-
able to customers in time for the beginning of the 2016
motorcycling season. Apart from their powerful engines,
they promise exceptional riding pleasure, both on- and
off-road. Like its successful R nineT sister model, the
R nineT Scrambler – which is due to go on sale in the
summer – offers plenty of ways for owners to give it
their own personal touch. Also scheduled for a summer
launch is the G 310 R, which will deliver a combination
of great dynamics and comfort, whether in town or
out cruising on country roads. This innovative machine
signals BMW Motorrad’s entry into the under-500 cc
segment as part of the strategic realignment of the
Motorcycles segment, which is aiming for further growth
and increasing internationalisation.
With its eRR concept study, BMW Motorrad is drawing
attention to the many possibilities of a fully electric-
powered supersport motorcycle. In terms of design and
chassis technology, the eRR has taken its lead from
the S 1000 RR supersport machine, but with an electric
drive, and is an outstanding example of the possibilities
of sustainable mobility.
Further international growth for BMW Motorrad
The aim of BMW Motorrad’s strategic realignment is to
achieve additional growth going forward. With this in
mind, the Motorcycles segment is planning to engage in
36
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
further markets in Asia and Latin America. The new
model initiative will also be expanded, including the ad-
dition of products that provide greater urban mobility.
Sales volume growth should also benefit from the new
premium models in the under-500 cc segment and a
significantly expanded dealership network. The market
launch of the G 310 R in the second half of 2016 will
be an initial step in this direction. This motorcycle is
designed to appeal to new markets and a younger tar-
get group and will be produced in cooperation with
the TVS Motor Company in India.
Significant increase in motorcycle production
Overall, the BMW Group produced 151,004 motor-
cycles during the year under report (2014: 133,615 units;
+ 13.0 %). This significant rise partly reflects the growing
importance of BMW’s production plants in Brazil, where
8,555 motorcycles were assembled (2014: 5,996 units;
+ 42.7 %) and in Thailand, where production more than
doubled to reach 2,712 units (2014: 1,169 units).
In line with the new growth strategy, during the year un-
der report the decision was taken to expand the BMW
motorcycle manufacturing plant in Berlin. Moreover, a
new, state-of-the-art logistics centre is due to be con-
structed right next to the Berlin plant.
FINANCIAL SERVICES SEGMENT
Financial Services segment continues to grow
The Financial Services segment remained on course in
2015, delivering another good performance within a diffi-
cult market environment. In balance sheet terms, busi-
ness volume grew by 15.4 % to stand at € 111,191 million
(2014: € 96,390 million), partly as a result of favourable
currency factors. The contract portfolio under manage-
ment at 31 December 2015 comprised 4,718,970 con-
tracts (2014: 4,359,572 contracts; + 8.2 %).
Further growth in new business
As in the previous year, credit financing and leasing busi-
ness with retail customers was an important part of the
segment’s success in 2015. In total, 1,655,961 new con-
tracts were signed during the period under report, 9.7 %
more than in the previous year (2014: 1,509,113 con-
tracts). Leasing business registered a significant in-
crease, growing year-on-year by 11.5 %. Credit financing
increased by 8.8 %. As a proportion of new business, leas-
ing accounted for 35.3 % and credit financing for 64.7 %.
The proportion of new BMW Group vehicles* leased or
financed by the Financial Services segment was 46.3 %,
an increase of 4.6 percentage points over the previous
year (2014: 41.7 %).
In the BMW and MINI brand pre-owned vehicle financ-
ing and leasing lines of business, the number of new
contracts signed by the segment fell slightly (– 2.1 %) to
327,391 contracts (2014: 334,289 contracts).
* The calculation only includes automobile markets, in which the Financial Services
segment is represented by a consolidated entity.
Contract portfolio of Financial Services segment
in 1,000 units
4,900
4,200
3,500
2,800
2,100
1,400
700
11
12
13
14
15
3,592
3,846
4,130
4,360 4,719
37 COMBINED MANAGEMENT REPORT
Contract portfolio retail customer financing of
Financial Services segment 2015
as a percentage by region
Asia / Pacific
Americas
Europe / Middle
East / Africa
EU Bank*
Americas
EU Bank*
30.4
28.5
Europe / Middle East / Africa
Asia / Pacific
24.8
16.3
* EU Bank comprises BMW Bank GmbH, its branches in Italy, Spain and Portugal, and
its subsidiary in France.
The total volume of new credit and leasing contracts
concluded with retail customers during the twelve-
month period under report was € 50,606 million, sig-
nificantly up (+ 22.5 %) on the previous year’s figure
(2014: € 41,318 million).
The dynamic increase in new retail customer business
is also reflected in the overall size of the contract port-
folio. In total, 4,326,631 contracts were in place with re-
tail customers at 31 December 2015 (2014: 4,005,428 con-
tracts), a solid year-on-year increase of 8.0 %. In regional
terms, the Asia / Pacific region continued to enjoy strong
BMW Group new vehicles financed by
Financial Services segment
in %
50
40
30
20
10
11
12
13
14
15
Financing
Leasing
20.0
21.1
20.7
19.7
22.5
21.5
20.8
20.9
24.2
22.1
growth with a 19.4 % increase in the number of contracts
being managed at the end of the reporting period. The
Americas region (+ 8.0 %), Europe / Middle East / Africa
(+ 6.7 %) and the EU Bank* (+ 3.5 %) also recorded year-on-
year growth.
Further solid growth in fleet business
The BMW Group is one of the leading leasing and full-
service providers of fleet management services in Europe.
Lease and financing arrangements as well as other ser-
vices are provided to commercial customers under the
brand name “Alphabet”. At 31 December 2015 the
segment was managing a total portfolio of 602,303 fleet
contracts, 8.5 % more than in the previous year (2014:
555,349 contracts).
Slight decrease in multi-brand financing
Multi-brand financing saw a slight decrease (– 1.8 %)
in the number of new contracts signed in 2015
(162,870 contracts), compared to the previous year
(2014: 165,776 contracts). At 31 December 2015, the
total portfolio comprised 470,150 contracts, slightly
more than one year earlier (2014: 465,702 contracts;
+ 1.0 %).
Dealership financing significantly up on previous year
As in the previous year, the total volume of dealer finan-
cing increased significantly again year-on-year, growing
by 16.6 % to stand at € 17,156 million at the end of the
reporting period (2014: € 14,710 million).
Solid increase in deposit business
Deposit business provides an important source of fund-
ing for the Financial Services segment. The volume of
customer deposits held at the year-end grew by a solid
8.4 % to € 13,509 million (2014: € 12,466 million).
Significant growth in insurance business
Demand for insurance products remains high. In addition
to the Group’s financing and leasing products, customers
can select from a broad range of insurance arrange-
ments, addressing all aspects of individual mobility. Sig-
nificant growth was recorded in 2015, with the num-
ber of new insurance contracts signed up by 11.2 % to
1,207,196 contracts (2014: 1,085,781 contracts). At 31 De-
cember 2015, the insurance contract portfolio com-
prised 3,200,742 contracts (2014: 2,874,158 contracts;
+ 11.4 %).
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
38
Development of credit loss ratio
in %
0.7
0.6
0.5
0.4
0.3
0.2
0.1
11
12
13
14
15
0.49
0.48
0.46
0.50
0.37
Risk profile improved
The positive trend in the global economy and the on-
going lull in the euro crisis enabled the risk profile rele-
vant for the Financial Services segment’s total portfolio
to improve again in 2015. The positive trend in bad
debt levels continued in 2015, both for retail and corpo-
rate customers. The risk profile in the credit line of busi-
ness improved slightly compared to the previous year.
The credit loss ratio incurred on the segment’s total credit
portfolio decreased by 13 basis points to 0.37 % (2014:
0.50 %). Reflecting the generally stable conditions pre-
vailing on the international used car markets, sales prices
for BMW and MINI brand pre-owned cars developed
robustly. Average residual value losses incurred on the
resale of these vehicles were marginally higher than in
the pre vious year. Further information on the risk profile
is provided in the section “Report on risks and oppor-
tunities”.
RESEARCH AND DEVELOPMENT
Research and development are absolutely essential for
the BMW Group to maintain competitiveness as a pre-
mium manufacturer. As part of the Efficient Dynamics
strategy, the Group works continually on additionally
improving energy efficiency and reducing the emissions
of the entire range of automobiles and motorcycles it
sells. Under the catchword “Connected Drive”, the BMW
Group works on the connectivity of driver, vehicle and
the outside world. Both concepts embrace forward-
looking technologies in vehicles and are testimony to
the BMW Group’s innovative strength. Going forward,
the BMW Group will no doubt continue to set standards
in the field of connectivity on the roads. At 31 Decem-
ber 2015, a total of 12,669 people at 13 locations in five
countries worldwide were working in the BMW Group’s
research and development network to achieve this end.
Expenditure for research and development rose by 13.2 %
to € 5,169 million, mostly for projects aimed at securing
the Group’s future (2014: € 4,566 million). The research
and development ratio stood at 5.6 % and therefore at a
similar level to the previous year (2014: 5.7 %). The ratio
of capitalised development costs to total research and
development expenditure for the period (capitalisation
ratio) was 39.9 % (2014: 32.8 %). Amortisation of capi-
talised development costs totalled € 1,166 million (2014:
€ 1,068 million; + 9.2 %). Further information on research
and development expenditure is provided in the section
“Report on Economic Position” (Results of Operations)
and in note 10 to the Group Financial Statements.
Given the pace of technological innovation, cooperation
arrangements in the field of research and development
are commonplace in the automotive industry. The BMW
Group also enters into cooperation agreements with
selected partners. The aim of these research and devel-
opment activities, which may also include cross-sector
input, is to help find innovative solutions for individual
mobility. The focus is currently on next-generation
technologies, such as digitalisation and alternative drive
systems.
Broadly diversified drive system research
In the course of 2015, the Group integrated hybrid tech-
nologies in further BMW brand models. In parallel, en-
gineers continued development work on highly-efficient
combustion engines. In the medium and long term, the
BMW Group is also developing a fuel cell electric vehi-
cle (FCEV). With these varying drive systems, the BMW
Group is well prepared for the challenges of the future
and will also be able to flexibly cater to both the require-
ments of customers and the standards dictated by
39 COMBINED MANAGEMENT REPORT
legislators going forward. With efficient petrol- and
diesel-driven engines, plug-in hybrid systems, battery-
powered drives and also, in future, hydrogen fuel cell
electric vehicles, the BMW Group is looking to provide
suitable technologies for every segment and require-
ment.
In a prototype presented in 2015, a direct water injec-
tion system was used for turbocharged petrol engines
for the first time. This innovative technology greatly
reduces the temperature in the combustion process,
thereby raising the efficiency factor. Moreover, the
technology reduces fuel consumption during higher
performance requirements. The newly developed
BMW 2 Series Active Tourer Plug-in Hybrid is fitted
with a 3-cylinder front-wheel-drive petrol engine, a
high-voltage generator installed at the front and an
electric motor that transfers power to the rear wheels.
The result is a road-linked all-wheel-drive system
unique in its segment.
The hydrogen fuel cell electric drive system is destined
to become an integrated component of the Group’s
Effi cient Dynamics strategy. The diversity of drive tech-
nologies that can be flexibly coordinated to suit varying
vehicle concepts, customer requirements and statutory
framework conditions on international markets is there-
fore growing. The hydrogen fuel cell electric drive sys-
tem, which converts hydrogen to electricity and steam,
enables locally emissions-free, electrically powered
driving with the dynamic flair typical for the BMW brand,
high suitability for covering long distances, and short
refuelling times, therefore representing a further key
option in the range of BMW eDrive technologies. The
BMW Group has been conducting research and develop-
ment work in the field of hydrogen fuel cell electric ve-
hicles for over 15 years.
Highly and fully automated driving
Assistance systems increase both safety and conveni-
ence levels while driving, although the degree of driver
support differs. Fully automated assistance systems of-
fer the highest degree of automation. Fully automated
functions are those which no longer need to be moni-
tored by the driver. As with the fully automated Remote
Valet Parking Assistant, the driver does not even need
to be in the vehicle. Highly automated systems are the
stage before fully automated systems and do not need
to be constantly monitored by the driver. They con-
trol both the longitudinal (driving forwards and back-
wards) and latitudinal (driving to the left or right by
steering) movements of the vehicle. By contrast, al-
though semi-automated systems are capable of con-
trolling both the longitudinal and latitudinal move-
ments of the vehicle (e. g. congestion assistant), they
need to be continually monitored by the driver. As-
sisted systems (such as ACC) on the other hand, only
support the driver when driving forwards or steering
left or right.
At the Consumer Electronics Show (CES) in Las Vegas
in 2015, the BMW Group presented a BMW i3 research
vehicle that demonstrated how parking spaces can be
found in a multi-storey car park with a fully automated,
driverless vehicle. The advantages are less vehicle
damage and far better use of the available parking
space. Laser scanners installed on the vehicle create an
exact picture of the surroundings. The Remote Valet
Parking Assistant links this information with the digital
floor plan of the car park and, based on this data, is capa-
ble of automatically driving the vehicle to a free space
and parking it. When the driver wishes to leave again,
he or she calls the vehicle (via smartwatch, for example)
and it automatically drives to the car park exit, ready to
continue to its next destination, without having to rely
on a GPS signal. As the research vehicle is fitted not only
with its own laser sensors but also with its own computers
and the required algorithms, it can calculate its exact
position in the car park, perfectly monitor its surround-
ings and independently navigate, fully automatically.
Multi-storey car parks do not need to be elaborately
equipped with special infrastructure. The new BMW 7 Se-
ries can already park straight in and out of a parking
space via remote control. The fully automated Parking
Assistant demonstrated in the prototype is a logical con-
tinuation of this innovative technological progress.
At the CES, a further research vehicle was presented
featuring a fully automated system that warns the driver
in the event of an imminent collision and automatically
triggers a braking manoeuvre precise to the last centi-
metre if required. Up to a certain speed, the test vehicle
makes it practically impossible for the driver to collide
with another obstacle. In order to achieve this feat, cam-
eras, radar and laser sensors record the entire surround-
ings of the vehicle. Collision-free driving forms the basis
for taking a crucial step towards achieving accident-free
individual mobility and for that reason the BMW Group
has been working for many years to implement this vi-
sion. Assistance systems such as Active Cruise Control
with a stop-and-go feature (ACC) are already built into
the latest BMW models and react to vehicles driving
ahead. They are radar- and camera-based and apply the
brakes, even until the vehicle comes to a halt if necessary.
In the “International Engine of the Year Award”, the most
prestigious engine competition worldwide, the BMW
Group was winner in three different classes as well as
overall winner. The new BMW TwinPower Turbo 3-cylin-
der petrol engine, which powers the BMW i8, was win-
ner in its class. The complete drivetrain of the BMW i8
also won the “best new engine” award. The successful
combination of electric motor and petrol engine also won
the overall award. Winner in the 2.5- to 3.0-litre category
was the M TwinPower Turbo in-line 6-cylinder petrol
engine. The quadruple triumph for the BMW Group at
the “International Engine of the Year Award” in 2015
additionally underscores the outstanding efficiency of
the Efficient Dynamics technology package, which, since
2007, has enabled the BMW Group to continually in-
crease the sheer driving pleasure and reduce consump-
tion and emission levels at the same time.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
40
MINI presents Augmented Reality glasses
The MINI Augmented Reality glasses presented at the
Auto Shanghai 2015 supplement reality by superimpos-
ing the wearer’s field of vision with additional useful
digital information on events in and around the vehicle,
offering the user not only increased safety, but also
greater convenience. Information relevant for driving,
such as the current speed of the vehicle and the speed
limit, are always displayed in the same position above
the steering wheel, regardless of the driver’s head move-
ments, ensuring that other road users or possible dan-
gers are not hidden from view. Navigation arrows vir-
tually projected onto the road assist the driver by
ensuring that he or she continually concentrates on
the surrounding traffic. If required, the glasses can
also be adjusted to show places of interest or even free
parking spaces en route. A camera installed on the
side of the vehicle assists the driver when parking, en-
abling the driver to check both the obstacles in his or
her line of vision and the distance to the kerb, which is
displayed in their field of vision. The glasses also pro-
vide the driver with a virtual view through parts of the
bodywork by making the A-pillar invisible, for instance,
hence improving all-round vision.
Innovations included in series vehicles
In 2015, a new lighting technology known as organic
light-emitting diodes, or OLEDs, were installed in a
series model for the first time. OLEDs consume less
electricity and therefore help further reduce CO2 emis-
sions. Unlike the point-like light emitted by LEDs,
OLEDs illuminate entire areas and are also smaller.
The BMW Group has also installed numerous innova-
tions for added driving convenience and assistance in
the latest BMW 7 Series. For example, infotainment
and communication features can be controlled from the
back seat by means of a tablet. Self-configured or pre-
configured functions can be controlled by hand gestures
made within the vehicle. Using the new display key,
the vehicle can be remotely and driverlessly manoeuvred
in and out of tight parking spaces.
Awards and prizes in 2015
The BMW Group won three “Golden Steering Wheels”
during the year under report: for the BMW 7 Series in the
luxury class, for the new BMW X1 among the medium-
sized SUVs, and for the BMW 2 Series Gran Tourer in
the family class, making BMW the most successful brand
in this year’s Golden Steering Wheel competition.
Group. Investing in state-of-the-art manufacturing facili-
ties and efficient structures increases the competitive-
ness of in-house component production. During the
finan cial year under report, the cornerstone was laid for
a new lightweight design centre at the BMW Group’s
component production plant in Landshut. When com-
pleted, the centre will house facilities for some 160 engi-
neers, who will research innovative materials, composite
construction concepts and manufacturing processes
for future vehicle generations.
41 COMBINED MANAGEMENT REPORT
PURCHASING AND SUPPLIER NETWORK
PURCHASING AND SUPPLIER NETWORK
Ideal balance between quality, innovation, flexibility
and costs
The underlying objective of the BMW Group’s pur-
chasing, quality assurance and component production
functions is to achieve the ideal balance between
quality, innovation, flexible supply structures and com-
petitive costs. At all levels – production materials, raw
materials, services and capital goods – arrangements
are in place to ensure that the BMW Group is able to
react flexibly to fluctuations in demand, especially
when operating within a volatile market environment.
Increasing pace of globalisation
Increased globalisation, the interconnected nature of
supplier markets and the widespread expansion of
BMW Group sales and production operations around
the world mean that the distribution of purchase
volumes is changing continuously. In the coming years,
the NAFTA region in particular will be the focus of
growth, given the increasing volume of production
planned for the Spartanburg plant in the USA. The
addition of the BMW Group’s new plant in San Luis
Potosí, Mexico, which is scheduled to open in 2019,
will reinforce this shift. The BMW Group remains com-
mitted to achieving globally balanced growth in terms
of sales, production and purchase volumes. This strategy
also makes an important contribution to natural cur-
rency hedging.
Investments safeguard productivity and
technology leadership
The Purchasing and Supplier Network is also responsi-
ble for component production throughout the BMW
Regional mix of BMW Group purchase volumes 2015
in %, basis: production material
Africa
Asia / Australia
Rest of
Western Europe
NAFTA
Eastern Europe
Germany
Germany
Eastern Europe
NAFTA
42.6
19.7
15.9
Rest of Western Europe
15.8
Asia / Australia
Africa
4.6
1.4
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
42
SALES AND MARKETING
The Group’s worldwide distribution network cur-
rently consists of around 3,310 BMW, 1,550 MINI and
140 Rolls-Royce dealerships. In China alone, around
60 BMW dealerships were opened in 2015. Products
and services are sold in Germany through BMW Group
branches and by independent authorised dealers. Sales
outside Germany are handled primarily by subsidiary
companies and, in a number of markets, by independent
import companies. The dealership and agency network
for BMW i currently covers some 950 locations.
Connected mobility and digital services expanded
In 2015, the BMW Group stepped up its activities in the
world of connected mobility. With Connected Drive,
the BMW Group occupies a leading position as provider
of online-based services in vehicles and the connectivity
of driver, vehicle and environment. Connected Drive is
meanwhile available in 45 markets. Comprehensive
connectivity via the on-board SIM card features in more
than 95 % of all new BMW cars. Besides its well-known
functions, such as the intelligent emergency call, the
Concierge Call or the real-time traffic information fea-
ture, Connected Drive also includes new highlights
such as a Wi-Fi hotspot in the new BMW 7 Series. It is
also possible to integrate apps from external providers.
All Connected Drive functions can be ordered either
conveniently from home or directly in the vehicle itself
via the Connected Drive Store, which is meanwhile
available in 18 markets.
The “Digital Services and Business Models” unit has
been set up to make better use of the opportunities of-
fered by digitalisation and to highlight the significance
of connected mobility beyond the vehicle. The objective
of this new customer-oriented function is to create a
comprehensive range of integrated digital services for
state-of-the-art mobility and to manage the expansion
of those services going forward.
BMW i now well-established
Under the brand name BMW i, the BMW Group offers
solutions for urban mobility that include not only the
vehicles themselves, but also services such as car sharing,
parking and battery charging. Two years on from its
sales launch, the BMW i3 has meanwhile established
itself among the front runners in its segment and is
now one of the three best-selling electric vehicles in the
world. BMW i vehicles are currently on sale in 50 coun-
tries. Over 80 % of BMW i buyers are first-time customers
for the BMW Group.
The BMW i8 stands for a responsible attitude that com-
bines sustainability and an exclusive lifestyle. With
this in mind, the BMW i Pure Impulse Experience
programme has been created under the name “Next
Premium”. The programme gives participants an exclu-
sive insight into innovative and future-oriented trends
from the worlds of design, innovation, culture, cuisine
and travel.
The global dealership and agency network for BMW i
currently covers some 950 locations. A total of 438 se-
lected BMW i partners are currently offering this brand
on the direct sales markets of Europe and Japan. The
i models are also being offered in ten direct sales markets
via new sales channels, one of which is the “Customer
Interaction Center”. Furthermore, the “Mobile Sales
Advisor” sales channel has meanwhile become an inte-
gral component of the BMW i sales model in seven mar-
kets. The BMW i online sales platform gives customers
in the Netherlands, Belgium and Luxembourg the oppor-
tunity to order a BMW i3 via the Internet.
With BMW i 360° ELECTRIC, the BMW Group pro-
vides a comprehensive product and service portfolio
for charging both battery-driven vehicles and plug-in
hybrids worldwide. The BMW i wall boxes and an in-
stallation service are available for simple, quick, emis-
sions-free home charging. As an on-the-road solution,
BMW i is offering the ChargeNow mobility service with
the most wide-ranging network of public charging
stations globally. With over 38,000 charging points in
25 countries, ChargeNow is the largest service provider
of its kind in the world.
Premium services for individual mobility
Since 2011, the BMW Group and Sixt SE have operated
the car-sharing service DriveNow in the form of a joint
venture. The integration of electric vehicles in these
operations is seen as an increasingly important aspect
of the business. For this reason, over 800 BMW i3 vehi-
cles were added to various DriveNow fleets during the
period under report. Electric vehicles accounted for
approximately 20 % of the DriveNow fleet at 31 De-
cember 2015 and DriveNow was being used by some
580,000 customers worldwide. With AlphaCity, com-
panies can offer their staff an alternative car-sharing op-
tion for both business and private use.
ChargeNow makes public charging simple and transpar-
ent and is therefore an important feature of sustainable
electric mobility. With a single customer card, BMW i
customers have access to a worldwide charging network.
The stations are displayed via the Connected Drive ser-
vices in the navigation unit, via the ChargeNow app or
on the ChargeNow website. ParkNow is a service that
facilitates parking, both on the street and in multi-storey
car parks. Spaces in car parks can be found, booked and
paid for, either online or via an app.
43 COMBINED MANAGEMENT REPORT
BMW i Ventures invests in start-ups and growing com-
panies that concentrate on mobility requirements in
large urban areas. To date, the BMW i Ventures port-
folio comprises 14 investments.
BMW continues new model offensive
The BMW brand forged ahead with its new model offen-
sive in 2015. As successor to the 1 Series Convertible,
the new BMW 2 Series Convertible has been on sale
since February 2015. The BMW X5 M and X6 M models
were launched in March. The updated models of the
BMW 6 Series and M6 vehicles as well as the BMW 1 Se-
ries have also been available since March. In the com-
pact class, the facelifted BMW 1 Series excels with its sig-
nificantly changed, more dynamic design. It is now
available for the first time with powerful, highly efficient
3-cylinder petrol and diesel engines.
Launched in June 2015, the new BMW 2 Series Gran
Tourer is the first BMW to enter the multipurpose vehi-
cle segment. It offers up to seven seats and space for
three children’s seats in the second row as a new stand-
ard feature. The updated BMW 3 Series Sedan, the 3 Se-
ries Touring and the M3 have all been on the market
since the end of July. The new-look design highlights
the sporting flair of the 3 Series, while new engines de-
liver instant power more efficiently than ever before.
The second generation of the BMW X1 was launched in
October 2015. Alongside best values to date in terms of
dynamics and efficiency, this highly successful model
also comes with numerous optional features – a com-
bination that will surely enable this new generation to
continue where its predecessor left off. The extremely ef-
ficient BMW X5 xDrive40e arrived on showroom floors
in the USA in early October and launched worldwide in
November. It is the first BMW Sports Activity Vehicle
to combine the BMW xDrive all-wheel drive system with
a more advanced plug-in hybrid system. This vehicle
represents the next step in the process of transferring
innovative drivetrain systems from BMW i models to the
core BMW brand.
New integrated marketing approach adopted for
BMW 7 Series market launch
With the sixth generation of its 7 Series, the BMW Group
is heralding a new era in the luxury segment. As the
year’s most important market launch, the 7 Series not
only strengthens the brand, it also delivers an innovative
interpretation of luxury. The new BMW 7 Series cele-
brated its world debut at the International Motor Show
(IAA) in Frankfurt in September and its market launch
at the end of October 2015.
For the first time ever, exclusive product presentations
were deployed to address potential customers well in
advance of official announcements. For example, several
months prior to market launch, more than 26,000 exist-
ing and potential customers from several countries were
invited to stylish presentations, where they had the
opportunity to acquaint themselves with upcoming vehi-
cles and their many new features.
Moreover, market launches were underpinned by select
communication media, showcasing trendsetting inno-
vations with a range of state-of-the-art technologies to
highlight the exclusive luxury and exceptional comfort
of the new BMW 7 Series. For example, Gesture Control,
the new Display Key, BMW Touch Command, Executive
Lounge, Ambient Lighting and the outstanding quality
of materials were presented and described with all their
special features.
New models for the third-generation MINI
The new MINI John Cooper Works has been available
since April 2015. The new MINI Clubman followed at
the end of October 2015. With its increased size and ad-
ditional functionality, the Clubman has taken on a new
dimension and now easily fits the bill as a household’s
first car. The model’s outstanding chassis technology de-
livers a high degree of driving comfort.
Also in October, MINI presented the new version of the
Convertible, which remains the only model of its kind
in the small car premium segment. The fully automatic
textile top, featuring a totally automated opening and
closing mechanism and sliding roof function, can be
opened in 18 seconds, even while driving at speeds of
up to 30 km / h.
Rolls-Royce presents new luxury convertible
At the IAA, Rolls-Royce Motor Cars officially introduced
a luxury convertible, the Rolls-Royce Dawn. The specially
designed roof of the Dawn reduces noise in the vehicle’s
interior to a minimum. Rolls-Royce also announced its
intention to develop an all-terrain vehicle.
44
WORKFORCE
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Workforce numbers higher
At 31 December 2015, the BMW Group employed a work-
force of 122,244 people worldwide, 5.1 % more than one
year earlier (2014: 116,324 employees). The enlargement
mainly reflects the ongoing expansion of the Group’s
international production network in addition to the tar-
geted recruitment of the engineers, IT specialists and
skilled workers it needs to forge ahead with continually
developing new technologies.
Dual vocational training expanded worldwide
The BMW Group expanded its international training
activities in 2015 with the addition of new vocational
training centres in Brazil, Mexico and Thailand. The
number of new entrants at German sites offering voca-
tional training remained constant at 1,200 apprentices.
All told, some 1,500 apprentices commenced training
with the BMW Group in the course of 2015. At the end
of the reporting period, 4,700 young people were in
vocational training and training programmes for promis-
ing talent (2014: 4,595 apprentices; + 2.3 %).
High level of investment to promote employee skill sets
At € 352 million, expenditure on basic and further
training was 5.1 % higher than one year earlier (2014:
€ 335 million). Further training mainly focused on-
advanced production techniques and new vehicle de-
velopment technologies.
Further progress made as attractive employer
The BMW Group retained its status as one of world’s
most attractive employers in 2015. In the latest “World’s
Most Attractive Employers” rankings published by the
agency Universum, the BMW Group was once again
named best German employer across all sectors and
the most attractive automotive company in the world.
The BMW Group again improved its ranking according
to the Trendence agency’s “European Graduate Barome-
BMW Group apprentices at 31 December
4,500
3,750
3,000
2,250
1,500
750
11
12
13
14
15
3,899
4,266
4,445
4,595 4,700
ter”. In Trendence’s “Young Professional Barometer
Germany”, the BMW Group occupied first place for the
fourth year in a row. In Universum’s “Young Profes-
sionals Study Germany”, the BMW Group achieved its
best results since 2007, taking first place in the “Engi-
neering” and “Business” categories and coming third in
the “IT” category.
Diversity as a competitive factor
Diversity constitutes a key factor in ensuring the BMW
Group’s continued competitiveness going forward,
focusing on the three aspects of gender, origin / cultural
background, and age / experience. Equal opportunities
for all employees must be ensured, and diversity in
the workforce encouraged and put to good use. In 2015,
various measures were implemented with the aim of
promoting diversity within the Group.
The proportion of women in the workforce as a whole,
both in management functions and in training pro-
grammes for young employees and interns, continued
to increase. The figure for women as a percentage of
the total BMW Group workforce improved to 18.1 %
(BMW AG: 15.3 %), ahead of the internal target range
BMW Group employees
Automotive
Motorcycles
Financial Services
Other
BMW Group
31.12. 2015
31.12. 2014
111,410
106,064
3,021
7,697
116
2,894
7,245
121
122,244
116,324
Change
in %
5.0
4.4
6.2
– 4.1
5.1
45 COMBINED MANAGEMENT REPORT
Proportion of non-tariff female employees at
BMW AG / BMW Group
in %
14
13
12
11
10
9
11
12
13
14
15
BMW AG
BMW Group
9.1
11.8
10.0
12.7
10.9
13.8
11.4
11.9
14.2
14.5
of 15 to 17 %. The number of women in management
positions rose to 14.5 % for the BMW Group as a whole
and 11.9 % for BMW AG. Female representation in pro-
grammes for young employees and interns in the year
under report was approximately 44 % for employee
trainee programmes and 25 % for student training pro-
grammes.
The workforce in Germany is becoming increasingly
international in character, amply borne out by the fact
that employees from over 100 countries work together
successfully at the Munich site alone. Furthermore, a
balanced age structure in the workforce encourages an
exchange of skills and information between generations
and plays an active role in reducing loss of know-how
when employees retire.
Employee attrition rate at BMW AG*
as a percentage of workforce
7.0
6.0
5.0
4.0
3.0
2.0
1.0
11
12
13
14
15
2.16
3.87
3.47
1.41
2.08
* Number of employees on unlimited employment contracts leaving the Company.
SUSTAINABILITY
The BMW Group safeguards the future viability of its
business model and its long-term growth through sus-
tainable activity. In terms of sustainability, the BMW
Group focuses on three broad areas: the development
of products and services for sustainable individual
mobility (e. g. electric mobility and services such as
DriveNow), the efficient handling of resources along
the entire value-added chain, and its responsibility
towards both its employees and society as a whole.
The personal commitment and creative ideas of our em-
ployees are key factors in achieving sustainable success.
This fact is underlined, for example, by the € 17.5 mil-
lion saved in 2015 alone through the CREATE ideas
management system.
With its host of sustainability measures, the BMW Group
is supporting the implementation of the UN’s Sustain-
able Development Goals (SDGs), which were adopted in
September 2015. Even before the final version was pub-
lished, the SDGs were taken into account when draw-
ing up the list of topics for the Group’s 2015 materiality
analysis.
Stakeholder dialogues and materiality analysis
As a globally operating organisation, the BMW Group
engages in constant exchange with a variety of stake-
holders, both in Germany and abroad. This dialogue
helps identify trends at an early stage, increase the
scope of social engagement, and work better towards
achieving sustainability targets. The BMW Group seeks
contact with selected stakeholders in Europe, Asia and
North America at events held under the banner of the
BMW Group Dialogue. The resulting discussions enable
the impact of current trends on the business environ-
ment to be identified and provide useful feedback on
activities undertaken by the BMW Group in this area.
In order to identify significant sustainability topics as
early as possible, the BMW Group also carries out regu-
lar materiality analyses. In this context, it analyses the
importance of various challenges on society, both from
the point of view of different stakeholder groups as
well as from an internal BMW Group perspective. The
results of the materiality analysis, which are shown in
the materiality matrix, form a sound base for verifying
the direction of the BMW Group’s sustainability strategy.
The matrix and other details are described in greater
depth in the Sustainability Report 2015.
46
Materiality matrix
l
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
i
a
c
u
r
c
e
t
u
o
s
b
A
l
l
s
r
e
d
o
h
e
k
a
t
s
e
h
t
r
o
f
e
c
n
a
t
r
o
p
m
I
t
n
a
t
r
o
p
m
i
s
s
e
L
Vehicle efficiency and CO2 emissions
Energy use and GHG emissions
of operations and supply chain
Air emissions of vehicles
Alternative drivetrain technologies
Occupational health and safety
Product safety
Environmental and social standards
in the supply chain / sustainable sourcing
Human rights
Prevention of corruption and
anticompetitive behaviour
Connected and autonomous driving
Mobility concepts and services
Data protection
Air emissions of operations
and supply chain
Attractive workplace, talent attraction and retention
Diversity and equal opportunity
Customer satisfaction
Water consumption
Waste and water pollution
Employee development and training
Socio-economic impacts in society
Design for recycling and resource efficiency
Use of urban space
Responsible marketing and product communication
Responsible financial services
Employee-management relations
Efficient use of materials in operations and supply chain
Political involvement
Involvement with local communities
Biodiversity
Corporate volunteering
Donations and philanthropy
Corporate Citizenship
Less important
Importance for the BMW Group
Absolute crucial
Low materiality
Medium materiality
High materiality
Sustainability ratings
In 2015, the BMW Group maintained its position among
the world’s leading carmakers in terms of sustainability
and again secured excellent placings in widely regarded
ratings. In the Dow Jones Sustainability Indices (DJSI),
the BMW Group took first place in the Automobiles sec-
tor and remains the only enterprise in this sector to have
been consecutively listed in the index since its inception.
In the Global 500 rating of the Carbon Disclosure Project
(CDP), the BMW Group achieved 100 out of a pos sible
100 points for transparent reporting for the third time
in a row and the top mark “A” for climate protection
measures, making it one of only three companies to have
achieved the CDP’s top mark “A” six times running. The
BMW Group was also included in the British FTSE4Good
Index again in 2015.
47 COMBINED MANAGEMENT REPORT
Fleet carbon emissions again reduced
The development of sustainable products and services
is an important aspect of the BMW Group’s business
model. CO2 emissions levels are continually being re-
duced by incorporating Efficient Dynamics technolo-
gies in all of the Group’s vehicles. The scope of electri-
fication within the fleet was further increased in 2015.
These measures form the basis for complying with le-
gally stipulated CO2 and fuel consumption limits moving
forward. Between 1995 and 2015, the average amount of
CO2 emitted by the Group’s three brands sold in Europe
fell by 39.5 %. In 2015, the BMW Group’s fleet of new
vehicles sold in Europe (EU-28) consumed an average
of 4.7 litres of diesel per 100 km and 5.7 litres of petrol
respectively. CO2 emissions averaged 127 grams per km.
Clean production
The efficient use of resources is an important aspect of
running the business on a sustainable basis. When
applied to all production-related processes, resource
efficiency helps protect the environment and minimise
costs. Since 2006, the consumption of resources and
emissions per vehicle produced has been reduced by an
average of 48.1 %. The individual figures are as follows:
Energy consumption
Water consumption
Process wastewater
Non-recyclable waste
Solvent emissions
CO2 emissions
– 36.0 %
– 31.3 %
– 45.1 %
– 78.9 %
– 51.4 %
– 45.7 %
In 2015, the BMW Group reduced the consumption of
resources and emissions per vehicle produced by an
average of 7.0 % compared with the previous year, giving
rise to savings of € 8.2 million. The BMW Group again
cut the energy consumption per vehicle produced by
2.7 % to 2.19 MWh during the period under report (2014:
2.25 MWh). The utilisation of highly efficient, ecologically
sustainable combined heat and power plants (CHPs)
and electricity generated from renewable sources at our
production sites, as well as improved energy efficiency
measures, enabled production-related CO2 emissions
per vehicle produced to be forced down by another 13.6 %
year-on-year to 0.57 tonnes during the period under re-
port (2014: 0.66 tonnes). At 2.24 m³ per vehicle produced,
water consumption was slightly higher than one year
earlier, largely due to increased cooling requirements
caused by the hot summer in Germany (2014: 2.18 m³;
+ 2.8 %). At 0.45 m³, the volume of process wastewater
per vehicle produced fell by 4.3 % (2014: 0.47 m³). The
volume of non-recyclable production waste was further
reduced to 4.00 kg per vehicle produced in 2015 (2014:
4.93 kg; – 18.9 %). Solvent emissions were successfully
curtailed by 5.4 % to 1.22 kg per vehicle produced during
2015 (2014: 1.29 kg).
Sustainability along the entire value-added chain
Sustainability criteria are not only a vital aspect of in-
house production, they also play a major role in the
selection and assessment of suppliers as well as in the
field of transport logistics. The active management
of sustainability risks along the supply chain mitigates
compliance and image risks. With this in mind, the
BMW Group has integrated a comprehensive system of
sustainability management in its purchasing processes.
The amount of energy required for transportation world-
wide has continued to rise sharply in recent years. In
order to keep CO2 emissions to an absolute minimum,
the principle “production follows the market” is applied.
In addition, the proportion of CO2-efficient modes of
transport is being increased continually.
In the year under report, for instance, the proportion
of goods transported by air freight was significantly re-
duced. At 63.1 %, the proportion of new vehicles leaving
BMW Group plants by rail was maintained at a high
level (2014: 63.3 %).
Competitive thanks to sustainable human
resources policies
In 2015, the BMW Group reinforced its position as one
of the most attractive employers in the world. The
prominent role played in the field of sustainability helps
employees identify with the business and its products.
This strong sense of identification is one of the factors
contributing to the low attrition rate within the BMW
Group, in turn helping to keep personnel recruitment
expenses on the low side.
Social engagement
The BMW Group expended a total of € 39.1 million
(2014: € 34.5 million) for social engagement in 2015, in-
cluding € 17.1 million (2014: € 10.2 million) in the form
of donations. The sharp increase in overall expenditure
for social engagement compared to 2014 mainly reflects
48
larger donations to the BMW Foundation Herbert Quandt
and to the Eberhard von Kuenheim Foundation.
Further information on the subject of sustainability
within the BMW Group and the main topics is provided
in the Sustainability Report, which can be accessed on-
line at http: / / www.bmwgroup.com. The Sustainable
Value Report 2015 was drawn up in accordance with the
Guidelines of the Global Reporting Initiative (GRI G4),
the most commonly used set of guidelines for sustain-
ability reporting. The Sustainable Value Report 2015 is
drawn up in accordance with the “comprehensive op-
tion” and is published at the same time as the Annual
Report 2015.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
49 COMBINED MANAGEMENT REPORT
Report on Economic Position
Results of Operations, Financial Position and Net Assets
Earnings performance
Once again, the BMW Group achieved year-on-year
growth in revenues, sales volume and profit before
tax in the financial year 2015. The number of BMW,
MINI and Rolls-Royce brand cars sold rose by 6.1 % to
2,247,485* units.
The BMW Group recorded a net profit of € 6,396 million
for the financial year ended 31 December 2015 (2014:
€ 5,817 million). The post-tax return on sales was 6.9 %
(2014: 7.2 %). Earnings per share of common and pre-
ferred stock were € 9.70 and € 9.72 respectively (2014:
€ 8.83 and € 8.85 respectively).
BMW Group revenues increased by 14.6 % year-on-year
to reach € 92,175 million (2014: € 80,401 million). The
main growth drivers were higher sales volume and fa-
vourable currency factors. Adjusted for exchange rate
factors, revenues rose by 7.7 %.
customers (2015: € 8,181 million; 2014: € 6,716 million)
and interest income on loan financing (2015: € 3,253 mil-
lion; 2014: € 2,881 million).
External revenues recorded by the segments were
generally up on the previous year’s figure. Revenues
from the sale of BMW, MINI and Rolls-Royce brand cars
were significantly higher (14.1 %) than one year earlier.
Adjusted for exchange rate factors, revenues grew by
7.4 % and therefore slightly faster than sales volume.
The positive currency impact was mainly attributable
to the change in the average exchange rates of the US
dollar, the Chinese renminbi and the British pound
against the euro. The BMW Group recorded a significant
year-on-year rise (18.7 %) in external revenues from its
Motorcycles business. External revenues generated
with Financial Services business were 16.1 % up on the
previous year. Adjusted for exchange rate factors, exter-
nal revenues for the Motorcycles and Financial Services
segments increased by 15.6 % and 8.0 % respectively.
Revenues mainly comprise the sale of vehicles and re-
lated products (2015: € 68,643 million; 2014: € 60,280 mil-
lion), lease instalments (2015: € 8,965 million; 2014:
€ 7,748 million), the sale of vehicles previously leased to
Group revenues are spread across all regions, with the
Europe region (including Germany) accounting for
45.6 % (2014: 46.8 %), the Americas region for 23.3 %
Group Income Statement
in € million
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
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
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 275,891 units, 2015: 282,000 units).
2015
2014
92,175
– 74,043
18,132
80,401
– 63,396
17,005
– 8,633
– 7,892
914
– 820
9,593
518
185
– 618
– 454
– 369
9,224
877
– 872
9,118
655
200
– 519
– 747
– 411
8,707
– 2,828
6,396
– 2,890
5,817
50
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
(2014: 20.7 %) and the Africa, Asia and Oceania region
for 31.1 % (2014: 32.5 %) of business.
External revenues in Germany edged up by 3.1 %. In
the Rest of Europe region and in the Americas region, ex-
ternal revenues increased by 16.2 % and 29.4 % respec-
tively. Good contributions to the increase in Europe were
made by Great Britain, France, Spain and Italy. Reve-
nues in the Africa, Asia and Oceania region grew 9.6 %
to € 28,648 million (2014: € 26,147 million). Particularly
in China and South Korea, revenues increased on the
back of higher sales volume figures and favourable cur-
rency factors.
The Group’s cost of sales was 16.8 % higher year-on-
year, due to sales volume and currency factors. This
line item mainly comprises manufacturing costs (2015:
€ 43,685 million; 2014: € 38,253 million), the cost of
sales directly attributable to financial services (2015:
€ 17,407 million; 2014: € 14,716 million) and research and
development expenses (2015: € 4,271 million; 2014:
€ 4,135 million).
Gross profit improved by 6.6 % to € 18,132 million, re-
sulting in a gross profit margin of 19.7 % (2014: 21.2 %).
The Automotive segment recorded a gross profit mar-
gin of 17.7 % (2014: 18.6 %), while that of the Motor-
cycles segment rose from 18.7 % to 22.5 %. In the Finan-
cial Services segment, the gross profit margin came in
at 13.3 % (2014: 13.7 %).
Compared to the previous year, research and develop-
ment expenses increased by € 136 million to € 4,271 mil-
lion. As a percentage of revenues, the research and de-
velopment ratio fell by 0.5 percentage points to 4.6 %.
Research and development expenses include amortisa-
tion of capitalised development costs amounting to
€ 1,166 million (2014: € 1,068 million). Total research and
development expenditure – comprising research costs,
non-capitalised development costs and capitalised de-
velopment costs (excluding systematic amortisation
thereon) – amounted to € 5,169 million (2014: € 4,566 mil-
lion). The research and development expenditure ratio
was therefore 5.6 % (2014: 5.7 %). The proportion of
development costs recognised as assets was 39.9 % (2014:
32.8 %).
Compared to the previous year, selling and administra-
tive expenses increased by € 741 million to € 8,633 million.
Overall, selling and administrative expenses were
equivalent to 9.4 % (2014: 9.8 %) of revenues. Adminis-
trative expenses increased due to a number of factors,
including the increased size of the workforce and
higher expenses for new IT projects. Depreciation and
amortisation on property, plant and equipment and
intangible assets recorded in cost of sales and in selling
and administrative expenses amounted to € 4,659 mil-
lion (2014: € 4,170 million).
The net positive amount from other operating income
and expenses improved from € 5 million to € 94 mil-
lion, mainly reflecting gains on the sale of marketable
securities.
Profit before financial result (EBIT) amounted to
€ 9,593 million (2014: € 9,118 million).
The financial result for the twelve-month period was a
net negative amount of € 369 million, an improvement
of € 42 million compared to the previous year. The
result from equity-accounted investments, comprising
the Group’s share of the results of the joint ventures
BMW Brilliance Automotive Ltd., Shenyang, DriveNow
GmbH & Co. KG, Munich, and DriveNow Verwaltungs
GmbH, Munich, fell by € 137 million to € 518 million.
The net interest expense also deteriorated year-on-year,
rising by € 114 million to € 433 million. This increase
was partly attributable to higher net interest expenses
from defined benefit pension plans. Other financial
result in 2015 was a negative amount of € 454 million,
mostly arising in connection with the fair value meas-
urement of currency and commodity derivatives. Com-
pared to the previous year, other financial result im-
proved by € 293 million, mainly thanks to the lower
negative impact of currency derivatives. In the previous
year, impairment losses recognised on other investments,
most notably on the investment in SGL Carbon SE,
Wiesbaden, had also negatively impacted other finan-
cial result.
Profit before tax increased to € 9,224 million (2014:
€ 8,707 million). The pre-tax return on sales was 10.0 %
(2014: 10.8 %).
Income tax expense amounted to € 2,828 million
(2014: € 2,890 million), corresponding to an effective
tax rate of 30.7 % (2014: 33.2 %). The lower income tax
expense for the twelve-month period was partly due
to the changed regional earnings mix as well as inter-
group pricing issues.
Earnings performance by segment
Revenues of the Automotive segment grew by 13.8 % to
€ 85,536 million on the back of higher sales volume
and the positive currency impact. Adjusted for exchange
51 COMBINED MANAGEMENT REPORT
Revenues by segment
in € million
Profit / loss before tax by segment
in € million
2015
2014
2015
2014
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
Group
85,536
1,990
23,739
7
– 19,097
92,175
75,173
1,679
20,599
Automotive
Motorcycles
Financial Services
7
Other Entities
– 17,057
80,401
Eliminations
Group
7,523
179
1,975
211
– 664
9,224
6,886
107
1,723
154
– 163
8,707
rate factors, the increase was 6.3 %. The gross profit
margin was at a similar level to the previous year at
17.7 % (2014: 18.6 %).
Compared to the previous year, selling and administra-
tive expenses increased by € 574 million to € 7,219 mil-
lion. Administrative expenses increased due to a number
of factors, including the increased size of the workforce
and higher expenses for new IT projects. Overall, selling
and administrative expenses were equivalent to 8.4 %
(2014: 8.8 %) of revenues.
Other operating income and expenses deteriorated by
€ 19 million to a net expense of € 82 million.
Profit before financial result (EBIT) amounted to
€ 7,836 million (2014: € 7,244 million), giving an EBIT
margin of 9.2 % (2014: 9.6 %).
The financial result of the Automotive segment was a
net negative amount of € 313 million, an improvement
of € 45 million compared to the previous year. The result
from equity-accounted investments, comprising the
segment’s share of the results of the BMW Brilliance
Automotive Ltd., Shenyang, joint venture and the two
DriveNow entities, was € 137 million lower than one
year earlier. The interest result for the year deteriorated
by € 146 million to a net expense of € 435 million. This
was partly attributable to higher net interest expenses
from defined benefit pension plans. Other financial
result in 2015 was a negative amount of € 396 million,
mostly arising in connection with the fair value meas-
urement of currency and commodities derivatives.
Compared to the previous year, other financial result
improved by € 328 million, mainly thanks to the lower
negative impact of currency derivatives. In the previous
year, impairment losses recognised on other investments,
most notably on the investment in SGL Carbon SE,
Wiesbaden, had also negatively impacted other finan-
cial result.
Overall, the Automotive segment reports a solid rise in
profit before tax to € 7,523 million (2014: € 6,886 million).
Motorcycles segment revenues were 18.5 % up on the
previous year. Adjusted for exchange rate factors, the in-
crease was 15.4 %.
Segment profit before tax improved by € 72 million to
€ 179 million on the back of higher sales volume.
Financial Services segment revenues grew by 15.2 % to
€ 23,739 million. Adjusted for exchange rate factors, rev-
enues went up by 7.6 %. The segment’s revenue perfor-
mance primarily reflects the growth of its contract port-
folio. The gross profit margin, at 13.3 %, was roughly
in line with the previous year (2014: 13.7 %). Selling and
administrative expenses were € 129 million higher at
€ 1,164 million. Other operating income and expenses
improved by € 17 million to a net expense of € 8 million.
Overall, the Financial Services segment reports profit
before tax of € 1,975 million, 14.6 % up on the previous
year (2014: € 1,723 million).
Profit before tax in the Other Entities segment, at
€ 211 million, was € 57 million higher than one year
earlier.
The negative impact on earnings at the level of profit be-
fore tax reported in the Eliminations column increased
from € 163 million in 2014 to € 664 million in 2015,
mainly due to an increase in new leasing business and
changes in the leased products portfolio. The previous
year’s figures had also benefited from elimination re-
versal effects.
Financial position
The consolidated cash flow statements for the Group and
the Automotive and Financial Services segments show
the sources and applications of cash flows for the finan-
cial years 2015 and 2014, classified into cash flows from
52
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
operating, 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
indirectly, starting with Group and segment net profit.
By contrast, cash flows from investing and financing
activities are based on actual payments and receipts.
The cash inflow from operating activities in 2015 de-
creased by € 1,952 million to € 960 million (2014:
€ 2,912 million), mainly reflecting a € 2,739 million
increase in receivables from sales financing offset by
a € 298 million decrease in inventories (2014: increase
of € 971 million).
The cash outflow for investing activities amounted to
€ 7,603 million (2014: € 6,116 million) and was thus 24.3 %
higher than in the previous year. The principal reasons
for the higher cash outflow were a € 647 million increase
in expenditure for investments (2014: € 99 million)
relating to the acquisition of a shareholding in THERE
Holding B.V., Amsterdam, (accounted for at equity) for
an amount of € 668 million and a € 1,077 million increase
in the net outflow for investments in marketable secu-
rities and term deposits with longer terms (2015: out-
flow of € 1,221 million). The net outflow for these items
comprises investments in marketable securities and
term deposits on the one hand, and proceeds from the
sale of marketable securities and the expiry of term de-
posits on the other.
Further information on investments is provided in the
section on the net assets position.
Cash inflow from financing activities totalled € 5,004 mil-
lion (2014: € 3,133 million). Proceeds from the issue of
bonds brought in € 13,007 million (2014: € 10,892 mil-
lion), compared with an outflow of € 8,908 million (2014:
€ 7,249 million) for the repayment of bonds. Non-cur-
rent other financial liabilities resulted in a cash inflow
of € 9,715 million (2014: € 5,900 million) and a cash
outflow of € 8,802 million (2014: € 5,697 million). The net
cash inflow for current other financial liabilities was
€ 2,648 million (2014: € 2,132 million). The change in
commercial paper gave rise to a net cash outflow of
€ 498 million (2014: € 1,012 million). The payment of
dividends resulted in a cash outflow of € 1,917 million
(2014: € 1,715 million).
The cash outflow from investing activities exceeded the
cash inflow from operating activities by € 6,643 million
in 2015. A similar constellation arose in the previous
year, when the shortfall had amounted to € 3,204 million.
After adjusting for the effects of exchange rate fluc-
tuations and changes in the composition of the BMW
Group with a total positive amount of € 73 million
(2014: € 88 million), the various cash flows resulted in
a decrease of cash and cash equivalents of € 1,566 mil-
lion (2014: increase of € 17 million).
The cash flow statement for the Automotive segment
shows that the cash inflow from operating activities ex-
ceeded the cash outflow from investing activities by
€ 4,312 million (2014: € 3,587 million). Adjusted for net
investments in marketable securities and term deposits
with longer terms totalling € 1,092 million (2014: outflow
of € 106 million), mainly in conjunction with strategic
Change in cash and cash equivalents
in € million
11,000
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
Cash and cash
equivalents
31.12. 2014
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. 2015
7,688
+ 960
– 7,603
+ 5,004
+ 73
6,122
53 COMBINED MANAGEMENT REPORT
liquidity planning, the excess amount was € 5,404 mil-
lion (2014: € 3,481 million).
Free cash flow for the Automotive segment was as
follows:
in € million
Cash inflow from operating activities
Cash outflow from investing activities
Net investment in marketable securities and term deposits
Free cash flow Automotive segment
2015
2014
11,836
– 7,524
1,092
5,404
9,423
– 5,836
– 106
3,481
Cash outflows for operating activities in the Financial
Services segment are driven primarily by cash flows re-
lating to leased products and receivables from sales fi-
nancing and totalled € 10,351 million (2014: € 4,715 mil-
lion). Overall, cash outflows from investing activities
totalled € 140 million (2014: € 297 million). Cash inflows
from financing activities went up by € 4,101 million to
€ 10,028 million, mainly influenced by the change in
other financial liabilities.
Net financial assets of the Automotive segment comprise
the following:
in € million
31.12. 2015
31.12. 2014
Cash and cash equivalents
Marketable securities and investment funds
Intragroup net financial assets
Financial assets
Less: external financial liabilities*
Net financial assets Automotive segment
* Excluding derivative financial instruments.
3,952
4,326
11,278
19,556
– 2,645
16,911
5,752
3,366
8,583
17,701
– 3,478
14,223
Refinancing
A broadly based range of instruments transacted on in-
ternational money and capital markets is used to refi-
nance worldwide operations. Practically all of the funds
raised are used to finance the BMW Group’s Financial
Services business.
The overall objective of Group financing is to ensure the
solvency of the BMW Group at all times. Achieving this
objective is tackled in three strategic areas:
1. The ability to act at all times by assuring permanent
access to strategically important capital markets,
2. Autonomy through the diversification of refinancing
instruments and investors, and
3. Focus on value by optimising financing costs.
Financing measures undertaken centrally ensure access
to liquidity for the Group’s operating subsidiaries on
market-based and consistent conditions. Funds are ac-
quired with a view to achieving a desired structure for
the composition of liabilities, comprising a finely tuned
mix of financing instruments. The use of longer-term
financing instruments to finance the Group’s financial
services business and the maintenance of a sufficiently
high liquidity reserve serves to avoid the liquidity risk
intrinsic to any large portfolio of contracts. This prudent
approach to financing also bolsters BMW AG’s ratings.
Further information is provided in the “Liquidity risks”
section of the “Report on outlook, risks and opportu-
nities”.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
54
Apart from issuing commercial paper on the money
market, the BMW Group’s financing companies also
issue bearer bonds. In addition, retail customer and
dealer financing receivables on the one hand and leas-
ing rights and obligations on the other are securitised
in the form of asset-backed securities (ABS) financing
arrangements. Financing instruments employed by the
Group’s in-house banks in Germany and the USA (e. g.
customer deposits) are also used as a supplementary
source of financing. Owing to the increased use of in-
ternational money and capital markets to raise funds,
the scale of funds raised in the form of loans from in-
ternational banks is relatively small.
Thanks to its good ratings and the high level of accept-
ance it has on capital markets, the BMW Group was
again able to refinance operations during the financial
year 2015 on debt capital markets. In addition to the
issue of bonds and loan notes on the one hand and
private placements on the other, commercial paper was
also issued. Additional funds were raised via new secu-
ritised instruments and the prolongation of existing in-
struments. As in previous years, all issues were highly
sought after by both private and institutional investors.
In the course of 2015, the BMW Group issued eight euro
benchmark bonds with a total issue volume of € 6.75 bil-
BMW Group – financial liabilities
in € million
Other
Derivative instruments
Commercial paper
Liabilities to banks
Bonds
Liabilities from customer
deposits (banking)
Asset-backed financing
transactions
Bonds
Asset-backed financing transactions
Liabilities from customer deposits (banking)
Liabilities to banks
Commercial paper
Derivative instruments
Other
BMW Group – financial liabilities
in € million
45,000
37,500
30,000
22,500
15,000
7,500
Maturity (years)
within 1
between 1 and 5
later than 5
42,160
41,289
8,234
lion on European capital markets. Bonds were also
issued in British pounds, US dollars, Australian dollars,
South Korean won and other currencies for a total
amount of € 6.35 billion.
Nine public ABS transactions were executed in 2015, in-
cluding three in the USA, two each in Germany and
China, and one each in Canada and France, with a total
volume equivalent to € 5.7 billion. Further funds were
also raised via new ABS conduit transactions in Canada,
Japan and Switzerland totalling € 1.1 billion. Other exist-
ing transactions remained in place in various countries,
including the UK, South Korea, South Africa, Brazil and
Australia.
The regular issue of commercial paper also strengthens
the BMW Group’s financial basis. The following table
provides an overview of amounts utilised at 31 December
2015 in connection with the BMW Group’s money and
capital market programmes:
Programme
in € billion
Euro Medium Term Notes
Australian Medium Term Notes
Commercial paper
Amount utilised
36.3
0.3
5.6
40,319
13,631
13,509
12,720
5,415
4,550
1,539
Liquid funds stood at a high level of € 11.4 billion at
31 December 2015. The BMW Group also has access to
a syndicated credit line of € 6 billion, with a term up to
October 2018. This credit line, which is provided by a
consortium of 38 international banks, had not been
utilised at the end of the reporting period.
55 COMBINED MANAGEMENT REPORT
Further information with respect to financial liabilities
is provided in notes 34, 38 and 42 to the Group Financial
Statements.
creased by 21.1 %, mainly as a result of the purchase of
marketable securities.
Net assets
The Group balance sheet total increased by € 17,371 mil-
lion (11.2 %) compared to the end of the previous finan-
cial year to stand at € 172,174 million at 31 December
2015. Adjusted for exchange rate factors, the balance
sheet total increased by 7.7 %. The currency impact
was mainly attributable to the appreciation in the value
of a number of currencies against the euro, most nota-
bly the US dollar, the British pound and the Chinese
renminbi.
The increase in non-current assets on the assets side of
the balance sheet related primarily to leased products
(15.9 %), receivables from sales financing (11.8 %) and
investments accounted for using the equity method
(105.2 %).
Within current assets, increases were registered in par-
ticular for receivables from sales financing (19.5 %) and
financial assets (23.2 %). By contrast, cash and cash
equivalents decreased by 20.4 %.
The growth in business reported by the Financial Services
segment is reflected in increases of € 4,592 million and
€ 4,427 million in current and non-current receivables
from sales financing respectively and in the higher level
of leased products (up by € 4,800 million). At 31 Decem-
ber 2015, leased products accounted for 20.3 % of total
assets (2014: 19.5 %). Adjusted for exchange rate factors,
leased products increased by 10.6 %. Non-current re-
ceivables from sales financing accounted for 24.3 %
(2014: 24.2 %) of total assets, current receivables from
sales financing for 16.4 % (2014: 15.2 %). Adjusted for ex-
change rate factors, non-current receivables from sales
financing went up by 7.7 %, current receivables from
sales financing by 14.5 %.
Investments accounted for using the equity method were
€ 1,145 million higher at € 2,233 million, whereby the
increase was mainly attributable to the first-time con-
solidation of THERE Holding B. V., Amsterdam, and the
BMW Group’s share of earnings of the BMW Brilliance
Automotive Ltd., Shenyang, joint venture.
Cash and cash equivalents went down by € 1,566 million
to € 6,122 million, due to investments made in mar-
ketable securities. Changes in cash and cash equiva-
lents are described in the “Financial position” section.
On the equity and liabilities side of the balance sheet,
increases were recorded for non-current and current
finan cial liabilities (14.7 % and 12.5 % respectively),
Group equity (14.2 %) and current other provisions
(18.4 %). By contrast, pension provisions decreased
by 34.8 %.
Non-current and current financial liabilities increased
from € 80,649 million to € 91,683 million over the twelve-
month period. Adjusted for currency factors, the in-
crease was 10.1 %. The execution of new ABS transac-
tions and the issue of new bonds were the main factors
driving the increase in non-current and current finan-
cial liabilities.
Group equity rose by € 5,327 million to € 42,764 million,
increased primarily by the profit attributable to share-
holders of BMW AG (€ 6,369 million). The dividend paid
by BMW AG reduced equity by € 1,904 million. Equity
increased as a result of the positive impact arising on
the currency translation of foreign subsidiaries’ finan-
cial statements (€ 765 million) and on remeasurements
of the net defined benefit liability for pension plans
(€ 1,413 million), the latter attributable primarily to the
higher discount rates applied in Germany, the UK and
the USA. In addition, deferred taxes on items recognised
directly in equity increased equity by € 115 million.
Group equity was reduced by net fair value losses on
derivative financial instruments (€ 1,301 million) and
on marketable securities (€ 170 million). Other items in-
creased equity by € 40 million.
Current other liabilities went up by € 1,433 million to
€ 9,208 million, partly due to increases in deposits re-
ceived, advance payments from customers, and in-
creases in other taxes. The change in deferred income
due to greater volumes of service contracts, Connected
Drive offers and leasing business also contributed to
the increase.
Other current financial assets went up by € 1,251 million
compared to 31 December 2014 to stand at € 6,635 mil-
lion and accounted for 3.9 % (2014: 3.5 %) of total assets.
Adjusted for exchange rate factors, financial assets in-
Pension provisions decreased from € 4,604 million to
€ 3,000 million over the twelve-month period, mainly as
a result of the higher discount factors used in Germany,
the UK and the USA.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
56
Balance sheet structure – Group
Total equity and liabilities in € billion
Non-current assets
64 %
63 %
24 %
38 %
25 %
37 %
Equity
Non-current provisions and liabilities
Current assets
36 %
37 %
38 %
38 %
Current provisions and liabilities
thereof cash and cash equivalents
4 %
5 %
2015
2014
2014
2015
172
155
155
172
Balance sheet structure – Automotive segment
Total equity and liabilities in € billion
Non-current assets
48 %
40 %
46 %
39 %
Equity
Current assets
52 %
54 %
18 %
43 %
17 %
43 %
Non-current provisions and liabilities
Current provisions and liabilities
thereof cash and cash equivalents
5 %
7 %
2015
2014
2014
2015
83
79
79
83
The Group equity ratio at the end of the reporting period
was 24.8 % (31 December 2014: 24.2 %). The equity ratio
of the Automotive segment was 40.1 % (31 December
2014: 39.2 %) and that of the Financial Services segment
was 8.2 % (31 December 2014: 8.8 %).
Overall, the results of operations, financial position and
net assets position of the BMW Group continued to de-
velop positively during the year under report.
Compensation Report
The compensation of the Board of Management com-
prises both a fixed and a variable component. Bene-
fits are also payable – primarily in the form of pension
benefits – at the end of members’ mandates. Further
details, including an analysis of remuneration by
each individual, are disclosed in the Compensation
Report, which can be found in the section “Statement
on Corporate Governance”. The Compensation
57 COMBINED MANAGEMENT REPORT
Report is a subsection of the Combined Management
Report.
Net valued added by the BMW Group in 2015 in-
creased by 9.2 % to € 22,524 million and was once
again at a high level.
Value added statement
The value added statement shows the value of work per-
formed, less the value of work bought in by the BMW
Group during the financial year. Depreciation and
amortisation, cost of materials, and other expenses are
treated as bought-in costs in the value added calcula-
tion. The allocation statement applies value added to
each of the participants involved in the value added
process. It should be noted that the gross value added
amount treats depreciation as a component of value
added which, in the allocation statement, is treated as
internal financing.
BMW Group value added statement
The bulk of the net value added (48.3 %) is applied to
employees. The proportion applied to providers of
finance was at a similar level to the previous year (8.5 %).
The government / public sector (including deferred tax
expense) accounted for 14.8 %. The proportion of net
value added applied to shareholders was at a similar level
to the previous year (9.3 %). Minority interests take a
0.1 % share of net value added. The remaining proportion
of net value added (19.0 %) will be retained in the Group
to finance future operations.
2015
in € million
2015
in %
2014
in € million
2014
in %
Change
in %
Work performed
Revenues
Financial income
Other income
Total output
Cost of materials*
Other expenses
Bought-in costs
92,175
200
914
93,289
51,145
11,398
62,543
98.8
0.2
1.0
100.0
54.8
12.2
67.0
80,401
156
877
81,434
44,078
9,012
53,090
Gross value added
30,746
33.0
28,344
Depreciation and amortisation of total tangible,
intangible and investment assets
Net value added
Applied to
Employees
Providers of finance
Government / public sector
Shareholders
Group
Minority interest
Net value added
8,222
22,524
10,870
1,918
3,340
2,102
4,267
27
8.8
24.2
48.3
8.5
14.8
9.3
19.0
0.1
7,724
20,620
9,764
1,733
3,306
1,904
3,894
19
22,524
100.0
20,620
100.0
98.7
0.2
1.1
100.0
54.1
11.1
65.2
34.8
9.5
25.3
47.4
8.4
16.0
9.2
18.9
0.1
14.6
17.8
8.5
9.2
11.3
10.7
1.0
10.4
9.6
42.1
9.2
* Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
58
BMW Group value added 2015
in %
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Depreciation and amortisation
Other expenses
48.3 %
Employees
Net value added
Cost of materials
Net value added
Cost of materials
24.2
54.8
Depreciation and amortisation
8.8
Other expenses
12.2
8.5 %
Providers of finance
14.8 %
Government / public sector
9.3 %
19.0 %
Shareholders
Group
0.1 %
Minority interest
Key performance figures
Group gross margin
Group EBITDA margin
Group EBIT margin
Group pre-tax return on sales
Group post-tax return on sales
Group pre-tax return on equity
Group post-tax return on equity
Group equity ratio
Automotive equity ratio
Financial Services equity ratio
Coverage of intangible assets, property, plant and equipment by equity (Group)
Return on capital employed
Group
Automotive
Motorcycles
Return on equity
Financial Services
Cash inflow from operating activities (Group)
Cash outflow from investing activities (Group)
Coverage of cash outflow from investing activities by cash inflow from operating activities (Group)
Free cash flow of Automotive segment
Net financial assets Automotive segment
2015
2014
19.7
15.5
10.4
10.0
6.9
24.6
17.1
24.8
40.1
8.2
21.2
16.5
11.3
10.8
7.2
24.5
16.3
24.2
39.2
8.8
169.9
158.1
19.3
72.2
31.6
20.2
960
20.8
61.7
21.8
19.4
2,912
– 7,603
– 6,116
12.6
5,404
16,911
47.6
3,481
14,223
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
€ million
€ million
%
€ million
€ million
59 COMBINED MANAGEMENT REPORT
Report on Economic Position
Comments on Financial Statements of BMW AG
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
based in Munich, Germany, is the parent company of
the BMW Group. The comments on the BMW Group
and Automotive segment provided in earlier sections
are also relevant for BMW AG, unless presented differ-
ently in the following section. The Financial Statements
of BMW AG are drawn up in accordance with the pro-
visions of the German Commercial Code (HGB) and
the relevant supplementary provisions contained in
the German Stock Corporation Act (AktG).
The main financial and non-financial performance indi-
cators relevant for BMW AG are largely identical and
synchronous with those of the Automotive segment
of the BMW Group and are described in detail in the
“Report on Economic Position” section of the Combined
Management Report.
Differences between the accounting policies used in the
BMW AG financial statements (prepared in accordance
with HGB) and the BMW Group Financial Statements
(prepared in accordance with IFRS) arise primarily in
connection with the accounting treatment of intangible
assets, financial instruments, provisions and deferred
taxes.
Business environment and review of operations
The general and sector-specific environment in which
the BMW AG operates is the same as that for the
BMW Group and is essentially described in the “Report
on Economic Position” section of the Combined Manage-
ment Report.
BMW AG develops, manufactures and sells cars and
motorcycles as well as spare parts and accessories manu-
factured by itself, foreign subsidiaries and external
suppliers. Sales activities are carried out primarily
through branches, subsidiaries, independent dealers
and importers. In 2015, BMW AG increased sales vol-
ume by 108,595 units to 2,275,367 units. This figure
includes 287,755 units relating to series sets supplied
to the joint venture BMW Brilliance Automotive Ltd.,
Shenyang, an increase of 289 units over the previous
year. At 31 December 2015, BMW AG employed a work-
force of 84,860 people, 4,185 more than one year earlier.
Results of operations
Revenues increased by 8.7 % compared to the previous
year, primarily as a result of higher sales volume. In geo-
graphical terms, most of the increase related to North
America and Europe. Sales to Group entities accounted
for € 55.5 billion or 76.7 % of total revenues of € 72.4 billion.
Cost of sales increased by 11.5 % to € 57,764 million and
therefore at a more pronounced rate than the increase in
revenues, mainly reflecting higher purchase prices from
production sites outside Germany and the intragroup
transfer of prior-year warranty expenses from one of the
Group’s sales company to BMW AG. As a result, gross
profit decreased by € 167 million to € 14,620 million.
BMW AG Income Statement
in € million
Revenues
Cost of sales
Gross profit
Selling expenses
Administrative expenses
Research and development expenses
Other operating income and expenses
Result on investments
Financial result
Profit from ordinary activities
Income taxes
Other taxes
Net profit
Transfer to revenue reserves
Unappropriated profit available for distribution
2015
2014
72,384
– 57,764
14,620
– 3,427
– 2,610
– 4,758
184
1,606
– 1,043
4,572
66,599
– 51,812
14,787
– 3,533
– 2,259
– 4,152
28
741
– 449
5,163
– 1,782
– 1,884
– 49
2,741
– 639
2,102
– 50
3,229
– 1,325
1,904
60
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
At € 3,427 million, selling expenses were slightly lower
than one year earlier (2014: € 3,533 million).
stocking up in conjunction with the introduction of new
models.
Administrative expenses went up by 15.5 % to € 2,610 mil-
lion, mainly as a result of new IT projects and the higher
workforce size.
Receivables from subsidiaries climbed by € 1,029 million
to € 6,229 million, largely in conjunction with intragroup
financing receivables.
Research and development expenses related mainly to
new vehicle models (including relevant expenses relat-
ing to the start-up of the new 7 Series), the development
of drive systems and work on other innovations. Over-
all, research and development expenses increased by
14.6 % year-on-year.
The decrease in other receivables and other assets to
€ 1,820 million (2014: € 2,502 million) was mainly at-
tributable to a lower volume of genuine repurchase
(repo) transactions in place at the end of the reporting
period and lower tax receivables.
The net positive amount of other operating income and
expenses improved by € 156 million to € 184 million,
and included primarily realised exchange rate gains and
losses as well as reversals of and allocations to provisions.
The financial result deteriorated by € 594 million, mainly
as a result of lower gains on the fair value measurement
of designated plan assets and the reduction in the dis-
count interest rate used in conjunction with pension and
other non-current personnel provisions. Lower write-
downs on investments worked in the opposite direction.
The profit from ordinary activities decreased from
€ 5,163 million to € 4,572 million.
Liquidity within the BMW Group is managed centrally by
BMW AG on the basis of a group-wide liquidity concept,
which revolves around the strategy of concentrating a
significant part of the Group’s liquidity at the level of
BMW AG. An important instrument used to achieve this
aim is the cash pool headed by BMW AG. The liquidity
position reported by BMW AG therefore reflects the
global activities of BMW AG and other Group companies.
Cash and cash equivalents went down by € 595 million
to € 2,478 million. This decrease over the twelve-month
period was mainly due to the increase in funds invested
in marketable securities as a strategic liquidity reserve.
At the same time, intragroup refinancing volumes at the
level of BMW AG were also reduced.
The expense for income taxes relates primarily to cur-
rent tax for the financial year 2015.
Equity rose by € 861 million to € 12,927 million, while the
equity ratio improved from 35.2 % to 37.0 %.
After deducting the expense for taxes, the Company
reports a net profit of € 2,741 million, compared to
€ 3,229 million in the previous year.
Financial and net assets position
Capital expenditure on intangible assets and property,
plant and equipment in the year under report amounted
to € 2,748 million (2014: € 3,150 million), down by 12.8 %
compared to the previous year. Depreciation and amor-
tisation amounted to € 2,072 million (2014: € 1,890 mil-
lion).
At € 3,250 million, the carrying amount of investments
was similar to one year earlier (2014: € 3,236 million).
Inventories increased to € 4,267 million (2014: € 3,859 mil-
lion) due to higher business volumes generally and
In order to secure obligations resulting from pre-retire-
ment part-time working arrangements and pension obli-
gations, investments in fund assets totalling € 496 million
were transferred to BMW Trust e.V., Munich, in con-
junction with a Contractual Trust Arrangement (CTA).
Fund assets are offset against the related guaranteed ob-
ligations. The resulting surplus of assets over liabilities
is reported in the BMW AG balance sheet on the line “Sur-
plus of pension and similar plan assets over liabilities”.
Pension provisions, net of designated plan assets, in-
creased from € 12 million to € 82 million.
The increase in other provisions related mainly to sales-
related obligations, pending losses on commodity and
currency contracts, warranties and personnel-related
obligations.
61 COMBINED MANAGEMENT REPORT
BMW AG Balance Sheet at 31 December
in € 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
2015
2014
353
11,016
3,250
14,619
4,267
628
6,229
1,820
3,911
2,478
405
10,304
3,236
13,945
3,859
697
5,200
2,502
3,572
3,073
19,333
18,903
303
722
34,977
265
1,123
34,236
657
2,107
8,061
2,102
656
2,084
7,422
1,904
12,927
12,066
30
82
7,617
7,699
1,343
4,500
6,690
239
31
12
7,308
7,320
1,864
4,784
6,872
216
12,772
13,736
1,549
34,977
1,083
34,236
Liabilities to banks decreased as a result of the repay-
ment of project-related loans.
Deferred income went up by € 466 million to € 1,549 million
and comprised mainly amounts relating to services still to
be performed for service and maintenance contracts.
Events after the end of the reporting period
No events have occurred since the end of the reporting
period which could have a major impact on the result
of operations, financial position and net assets of BMW AG
or the BMW Group.
62
Report on Economic Position
Events after the End of the Reporting Period
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Risks and opportunities
BMW AG’s performance is highly dependent on the
same set of risks and opportunities that affect the BMW
Group and which are described in detail in the “Report
on Outlook, Risks and Opportunities” section of the Com-
bined Management Report. As a general rule, BMW AG
participates in the risks entered into by Group entities
on the basis of the relevant shareholding percentage.
BMW AG is integrated in the group-wide risk manage-
ment system and internal control system of the BMW
Group. Further information is provided in the “Internal
Control System and Risk Management System Relevant
for the Financial Reporting Process” section of the Com-
bined Management Report.
Outlook
Due to its dominant role in the Group and its close ties
with Group entities, expectations for the BMW AG with
respect to the Company’s financial and non-financial
performance indicators correspond largely to the BMW
Group’s outlook for the Automotive segment, which is
described in detail in the “Report on Outlook, Risks and
Opportunities” section of the Combined Management
Report.
KPMG AG Wirtschaftsprüfungsgesellschaft, Munich,
has issued an unqualified audit opinion on the financial
statements of BMW AG, of which the balance sheet and
the income statement are presented here. The BMW AG
financial statements for the financial year 2015 will be
submitted to the operator of the electronic version of the
German Federal Gazette and can be obtained via the
Company Register website. These financial statements
are available from BMW AG, 80788 Munich, Germany.
63 COMBINED MANAGEMENT REPORT
Report on Outlook, Risks and Opportunities
Outlook
The report on outlook, risks and opportunities describes
the expected development of the BMW Group, including
the associated material risks and opportunities, from a
Group management perspective. The outlook covers
a period of one year, in line with the Group’s internal
management system. However, risks and opportunities
are managed on the basis of a two-year assessment.
The report on risks and opportunities therefore covers a
period of two years.
The report on outlook, risks and opportunities contains
forward-looking assertions based on the BMW Group’s
expectations and assessments, which are, by their very
nature, subject to uncertainty. As a result, actual out-
comes, including those attributable to political and eco-
nomic developments, could differ substantially – either
positively or negatively – from the expectations de-
scribed below. Further information can be found in the
section “Report on Risks and Opportunities”.
Outlook
Assumptions used in the outlook
The following outlook relates to a forward-looking pe-
riod of one year and is based on the composition of the
BMW Group during that period. The outlook takes ac-
count of all information known up to the date on which
the financial statements are authorised for issue and
which could have a material effect on the overall perfor-
mance of the BMW Group. The expectations contained
in the outlook are based on the BMW Group’s forecasts
for 2016 and reflect the most recent status. The basis for
the preparation of and the principal assumptions used in
the forecasts – which consider the consensual opinions
of leading organisations, such as economic research in-
stitutes and banks – are set out below. The BMW Group’s
forecast is drawn up on the basis of these assumptions.
The continuous forecasting process ensures that the
BMW Group is always ready to take advantage of op-
portunities as they arise and to react appropriately to
unexpected risks. The principal risks and opportuni-
ties are described in detail in the section “Report on
Risks and Opportunities”. The risks and opportunities
discussed in that section are relevant for all of the
BMW Group’s key performance indicators and could
result in variances between the outlook and actual
outcomes.
Economic outlook
The upturn in the world economy is likely to continue
and generate growth of 3.4 % in 2016. A more restrictive
monetary policy in the USA, the political instability in
Europe, the high levels of sovereign debt being amassed
in Japan and over-capacities in various industrial sectors
in China pose the greatest risks for global economic
growth. Unsolved geopolitical conflicts and problems
resulting from the high number of people seeking refuge,
particularly in Europe, could possibly lead to nationalis-
tic interests becoming a major issue, with correspond-
ingly negative consequences for world trade. Further in-
formation on political and global economic risks can be
found in the risk report.
Economic recovery in the eurozone is expected to con-
tinue at a growth rate of 1.6 % in 2016. Similar to the
previous year, the German economy is predicted to play
a major role and grow by 1.8 %. The economies of both
France (1.4 %) and Italy (1.3 %) are set to record higher
growth rates than one year earlier.
In southern Europe, the reforms implemented in recent
years are contributing to an economic recovery, enabling
Spain and Portugal to continue growing on the back of
the general upturn and are likely to grow by 2.7 % and
1.6 % respectively, according to forecasts.
Growth in the UK will probably be somewhat weaker,
although again in 2016 the expected GDP growth of
2.2 % is well above that of the eurozone. The referendum
on the UK remaining in the EU, which must be held by
the end of 2017, can take place at the earliest in the
second half of 2016 and is therefore a source of additional
uncertainty.
The US economy is likely to maintain its current high
pace of growth. Despite the increase in benchmark in-
terest rates, and hence a less expansive monetary policy,
growth of 2.4 % is predicted for 2016. The low price of
oil is highly likely to have a positive impact on consumer
spending.
In Japan, the central bank is again set to continue its
“cheap money” policy in 2016 and therefore guarantee
companies attractive financing conditions, which is
likely to give the Japanese economy sufficient momen-
tum to warrant 1.0 % growth.
In China, economic growth is again expected to weaken
slightly in 2016, resulting in a growth rate in the region
of 6.5 %. The realignment of the Chinese economy to-
wards a more consumption-oriented society is designed
to lead to greater stability, even if growth rates are likely
64
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
to be weaker in the short term. It cannot be ruled out,
however, that economic output in China may slow down
more than currently expected.
In India, investment-friendly economic policies are likely
to continue in 2016, helping to generate a growth rate
of 7.6 %. The outlook for Russia (– 0.2 %) and Brazil
(– 2.6 %) is far less bright. After drops in economic output
in 2015, both economies are likely to remain in reces-
sion in 2016, with persistently low prices for raw mate-
rials exerting a detrimental effect on growth.
Currency markets
Currencies which have the greatest influence on the
BMW Group’s international business, i. e. the US dollar,
the Chinese renminbi, the Japanese yen and the British
pound, may well be subject to a significant degree of
fluctuation again in 2016.
The US dollar is again likely to remain generally strong
against the euro in 2016. This assumption is supported
by the interest rate turnaround initiated in the USA in
December 2015, highlighting the different approaches
to monetary policies taken by the Fed and the ECB.
Another factor is that economic recovery in Europe is
likely to proceed at a slower pace than in the USA.
Given that the Chinese renminbi will probably remain
closely coupled to the US dollar in the short term, there
is a considerable likelihood that its value against the
euro will tend upwards in 2016. If, on the other hand,
the Chinese central bank continues to intervene in cur-
rency markets, thus halting the upward trend, the value
of the renminbi may possibly move sideways. In the
long term, however, capital markets in China are likely
to become more liberalised, as a result of which the con-
vertibility of the renminbi with other currencies would
increase.
As the Bank of Japan and the ECB seem set to continue
their expansionary monetary policies for the time be-
ing, the rate of the Japanese yen is unlikely to fluctuate
greatly in relation to the euro.
The onset of normalisation with respect to US mone-
tary policies suggests that the currencies of numerous
emerging economies will remain under pressure in the
foreseeable future. Countries that export raw materials
and are faced with current account and fiscal deficits
are most likely to be affected.
Automobile markets
Worldwide demand for automobiles is forecast to grow by
approximately 1.9 % in the current year to an estimated
84.0 million units. Breaking that figure down, the BMW
Group forecasts slightly lower growth in the USA than
in 2015, with market volume edging up by around 1.3 %
to 17.7 million units. China is expected to see a further
drop in the pace of vehicle registration growth, slowing
to around 6.9 % or 22.0 million units.
The majority of Europe’s markets are likely to continue
recovering in 2016, growing overall by approximately
1.4 % to 14.4 million units. Excluding Germany, the pic-
ture across Europe is similar, with market volume also
expected to grow by 1.4 % to 11.2 million units. The re-
gion’s core markets, however, are only likely to see rela-
tively weak growth. Registration figures in Germany, for
instance, are predicted to increase by 1.4 % to 3.3 mil-
lion units. The French market is expected to grow by
3.3 % to 1.9 million units and the Italian market by 3.0 %
to 1.6 million units. By contrast, demand in Spain is
expected to show even more vitality than in 2015 and
grow by 9.7 % to 1.1 million units.
The market in Japan is forecast to grow by 7.3 % to 5.2 mil-
lion units year-on-year.
Automobile markets in major emerging economies are
likely to remain under pressure in the current year. Due
to the prevailing unfavourable economic and political
situation, Russia is expected to see a further drop of
15.4 % to 1.2 million units. The situation in Brazil seems
unlikely to stabilise after the decrease recorded in 2015,
with the market expected to contract by a further 7.6 %
to 2.3 million units.
Owing to the robust state of the UK economy, and fanned
by speculation that the Bank of England is on the verge
of raising interest rates, the British pound could either
remain at its current level or even gain additional ground
in the short to medium term.
Motorcycle markets
Markets for 500 cc plus motorcycles are likely to con-
tinue growing slightly in 2016. Registration figures for
Europe as a whole are also expected to rise slightly,
including a minor increase in Germany. Italy and
France are set to remain at similar levels to the past
65 COMBINED MANAGEMENT REPORT
year. The positive trend in the USA is expected to
continue.
Financial services markets
The trend towards more normal rates of growth in
China, together with weaker signals coming from other
emerging markets, is bound to have an influence on
global trade, and hence on export-oriented industrialised
countries in 2016. While the Chinese central bank will
no doubt be directing its attention to measures aimed at
stabilising the domestic economy, other key central
banks are likely to focus on achieving price stability.
In the USA, stable economic growth, the improving em-
ployment situation and higher inflation could induce
the Fed to raise interest rates moderately over the course
of the year.
In the eurozone, interest rates are set to remain low over
the coming year. Factors such as stubbornly low infla-
tion rates, steady economic recovery and uncertainty re-
garding economic developments on major emerging
markets could persuade the ECB to continue its bond-
buying programme.
Depending on rates of growth and inflation on the
domestic front and developments in key emerging
economies, the UK could well see a first interest rate
rise at some point in 2016. Uncertainties prevailing
prior to the referendum on a possible exit from the EU
could, however, forestall a return to more accustomed
monetary policies.
The Japanese economy is again only likely to see slow
growth in 2016. Even though consumer spending vol-
umes should rise on the back of the Bank of Japan’s ex-
pansionary monetary policy, other unfavourable factors,
such as weak demand from China, could stand in the
way of a sustainable upturn.
Expected consequences for the BMW Group
Future developments on international automobile
markets also have a direct influence on outcomes for
the BMW Group. Whereas competition might intensify
in contracting markets, new opportunities beckon in
growth regions. Sales volumes in some countries are
likely to be affected by a range of new competitive chal-
lenges. The dynamic growth seen on European mar-
kets in 2015 is not expected to maintain the same pace
in 2016. The Americas region should see a continua-
tion of the upward trend of previous years. Despite
the ongoing process of normalisation on the Chinese
market, sales volumes in Asia could well pick up
again.
Due to its global business model, the BMW Group is well
placed to exploit opportunities, including those arising
at short notice. Outstanding coordination between the
Group’s sales and production networks also helps cush-
ion the impact of unforeseeable developments in its
various regions. Investing in markets with good future
prospects is also a basis for further growth, while simul-
taneously expanding the global presence of the BMW
Group. Thanks to its three strong brands – BMW, MINI
and Rolls-Royce – there is every reason to assume that
the BMW Group will continue performing successfully
during the current year.
Outlook for the BMW Group
BMW Group
Profit before tax: slight increase expected
Competition on international automobile markets is set
to remain fierce in the current year. Furthermore, con-
tinuing normalisation on the Chinese market and develop-
ments in Russia are likely to influence the pace of earn-
ings growth. Political and macroeconomic uncertainties
in Europe may also play a role (see the section “Political
and global economic risks” in the risk report).
Nevertheless, the BMW Group expects to remain firmly
on course for growth in 2016. Attractive products and
services, covering the entire spectrum of individual mo-
bility, will continue making a substantial contribution
to further improving earnings. This upward trend will,
however, be held down by rising personnel expenses
and high levels of investment in projects that ultimately
help safeguard future competitiveness. Overall, Group
profit before tax is expected to increase slightly year-on-
year (2015: € 9,224 million).
Workforce at year-end: slight increase expected
The BMW Group will continue to recruit staff in 2016,
spurred by growth in the automobile and motorcycle
lines of business on the one hand and the expansion of
its financial and mobility services on the other. Based
on our latest forecasts, we expect a slight increase in the
size of the workforce (2015: 122,244 employees) during
the coming twelve-month period.
66
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Automotive segment
Deliveries to customers: slight increase expected
The BMW Group forecasts successful sales volume per-
formances for all three of its brands in 2016. Apart
from aiming for evenly balanced growth in the various
regions, a sharp eye is also always kept on profitability.
Based on these forecasts, the BMW Group is set to re-
main at the forefront of the premium segment in 2016.
Assuming economic conditions remain stable, deliveries
to customers are expected to rise slightly to a new re-
cord level (2015: 2,247,4851 units).
Although the overall pace of growth may be marginally
weaker than one year earlier, the combination of attrac-
tive new models and good market conditions, particu-
larly in Europe, should nevertheless provide additional
impetus for vehicle sales. Most notably, the previous
year’s upward trend on southern European markets is
set to continue. By contrast, the situation on the Russian
car market is likely to remain tense over the forecast pe-
riod. Despite progressive normalisation on the Chinese
market, Asia as a whole is expected to provide a certain
degree of momentum for growth. Sales volume in the
USA is also forecast to rise slightly.
A good contribution to overall sales performance in 2016
is expected to come from the new models available since
mid-2015, including the new seven-seater BMW 2 Series
Gran Tourer and the model updates of the BMW 3 Series
Sedan, the 3 Series Touring and the M3. The second
generation of the extremely successful BMW X1 was
launched in October 2015. The highly efficient BMW X5
xDrive40e has been in showrooms since the end of
2015. This plug-in hybrid vehicle represents the next
step in the process of transferring innovative drivetrain
system technologies from BMW i models to the core
BMW brand. At the end of October 2015, the sixth gen-
eration of the BMW 7 Series heralded the beginning of a
new era in the luxury segment. The new MINI Clubman
has also been on the market since the end of October
2015.
Further additions to the model range will also be made
in the course of 2016. February saw the launch of the
new BMW X4 M40i. The premium small car segment
was enriched by the addition of the new version of the
MINI Convertible in early March. A luxury convertible,
the Rolls-Royce Dawn, will become available during the
first half of the year.
Carbon fleet emissions2: slight decrease expected
Regulations governing vehicle carbon emissions are be-
coming stricter all around the world. Developing highly
efficient combustion engines and increasing the scope
of electrification in its fleet of vehicles are key aspects in
the BMW Group’s constant efforts to reduce fuel con-
sumption and carbon emissions, without compromising
its excellent standards in terms of sporting flair and
dynamic driving performance. Fleet emissions are fore-
cast to improve slightly in 2016, thus continuing the
trend seen in previous years (2015: 127 grams CO2 / km).
Revenues: slight increase expected
The positive business performance predicted for the
BMW Group will also be reflected in Automotive seg-
ment revenues. A slight increase in segment revenues
is therefore predicted for the forecast period (2015:
€ 85,536 million).
EBIT margin in target range between 8 and 10 % expected
An EBIT margin in a range between 8 and 10 % (2015:
9.2 %) remains the target for the Automotive segment.
Segment RoCE is forecast to decrease moderately (2015:
72.2 %). However, the long-term target RoCE of at least
26 % for the Automotive segment will be easily surpassed.
Motorcycles segment
Deliveries to customers: slight increase expected
The BMW Group expects the upward trend in the Motor-
cycles segment to continue. The new R NineT Scrambler
and G 310 R models unveiled at last autumn’s trade fairs
will broaden the product portfolio and attract new cus-
tomer groups. Overall, deliveries of BMW motorcycles to
customers are forecast to increase slightly year-on-year
(2015: 136,963 units).
Return on capital employed: slight decrease expected
Segment RoCE is forecast to decrease slightly in 2016
(2015: 31.6 %), mainly reflecting the scheduled build-up
of inventory levels due to the Indian partner entity, TVS,
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
(2015: 282,000 units).
2 EU-28.
67 COMBINED MANAGEMENT REPORT
commencing production and the plants in Brazil and
Thailand raising production volumes.
Financial Services segment
Return on equity expected at previous year’s level
The Financial Services segment is likely to continue per-
forming well in 2016. Segment RoE is expected to come
in at a similar level to the previous year (2015: 20.2 %),
thus remaining ahead of the minimum target of 18 %.
Overall assessment by Group management
Business is expected to develop well in the financial year
2016, with the introduction of new models and the ex-
pansion of individual mobility-related services promising
further profitable growth. Despite the many challenges
described above, Group profit before tax is forecast to
increase slightly. Automotive segment revenues are ex-
pected to increase slightly on the back of a slight in-
crease in deliveries to customers. Simultaneously, a
slight decrease in fleet carbon emissions is predicted.
The Group’s targets are to be met with only a slight rise
in staff numbers worldwide. The Automotive segment’s
EBIT margin is set to remain within the target range
of between 8 and 10 %, although its RoCE is likely to de-
crease moderately. The Financial Services segment’s
RoE will be broadly in line with the previous year. Never-
theless, both performance indicators will be higher than
their long-term targets of 26 % (RoCE) and 18 % (RoE)
respectively. Motorcycles segment sales are also forecast
to grow slightly, accompanied by a slight drop in RoCE.
Depending on the political and economic situation and
the outcomes of the risks and opportunities described
below, actual business performance could, however, dif-
fer from current expectations.
Principal performance indicators
BMW Group
Profit before tax
Workforce at year-end
Automotive segment
Sales volume1
Fleet emissions2
Revenues
EBIT margin
Return on capital employed
Motorcycles segment
Sales volume
Return on capital employed
Financial Services segment
Return on equity
€ million
2015
9,224
122,244
2016
Outlook
slight increase
slight increase
units
2,247,485
slight increase
g CO2 / km
€ million
%
%
units
%
%
127
85,536
9.2
72.2
136,963
31.6
slight decrease
slight increase
between 8 and 10
moderate decrease
slight increase
slight decrease
20.2
in line with last year’s level
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2015: 282,000 units).
2 EU-28.
68
Report on Outlook, Risks and Opportunities
Report on Risks and Opportunities
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
As a worldwide leading manufacturer of premium cars
and motorcycles and provider of premium financing
and mobility services, the BMW Group is exposed to
numerous uncertainties and changes. Making full use of
the opportunities that present themselves is the basis for
its entrepreneurial success. In order to achieve growth,
drive profitability, boost efficiency and maintain sustain-
able levels of business going forward, the BMW Group
consciously takes certain risks.
The prudent management of opportunities and risks is
a fundamental prerequisite for the Group’s ability to
react appropriately to changes in political, legal, techni-
cal or economic conditions. All opportunities and risks
identified are addressed in the Outlook Report, if they
seem likely to materialise. The following sections focus
on potential future developments or events, which could
result in a positive variance (opportunities) or a nega-
tive variance (risks) in the BMW Group’s outlook. The
potential impact of risks and opportunities is assessed
separately as a general rule, i.e. without set-off.
As a general rule, opportunities and risks are assessed
over a medium-term period of two years. All potential
risks of losses (individual and accumulated risks) are
monitored and managed from a risk management per-
spective. As a matter of principle, any risks capable of
posing a threat to the going-concern status of the BMW
Group are avoided. If there is no specific reference to a
segment, opportunities and risks relate to the Auto-
motive segment.
The scope of entities covered by the report on risks and
opportunities corresponds to the scope of consolidated
entities included in the BMW Group Financial Statements.
Risk management system
The objective of the risk management system, and one
of the key functions of risk reporting, is to identify,
record and actively manage any internal or external
risks that could pose a threat to the attainment of the
Group’s corporate targets. The risk management system
covers all significant risks to the Group and any which
could pose a threat to its going-concern status. In terms
of the structure of the risk management system, the re-
sponsibility for risk reporting lies with each individual
employee and manager in their various roles – and not
with any centralised unit in particular. Every person
employed by the Group is required to report any risks
identified via the available reporting channels. This re-
quirement is set out in guidelines that apply throughout
the Group.
The Group risk management system comprises a decen-
tralised network covering all parts of the business and
is steered by a centralised risk management function.
Each of the BMW Group’s fields of responsibility is
represented within the risk management network by
Risk management in the BMW Group
Group-wide risk management
Identification
Effectiveness
Reporting
Analysis and
Measurement
Supervisory Board
Usefulness
Compliance
Committee
Risk management
Completeness
Monitoring
Controlling
Risk Management
Steering Committee
Board of Management
Group Audit
Internal Control System
69 COMBINED MANAGEMENT REPORT
“Network Representatives”. The network’s formal or-
ganisational structure helps promote its visibility and
underline the importance of risk management within
the BMW Group. The duties, responsibilities, and tasks
of the centralised risk management unit and the above-
mentioned Network Representatives are clearly de-
scribed, documented and accepted. Group risk manage-
ment is geared towards meeting the following three
criteria: effectiveness, usefulness and completeness.
Risks are also potentially capable of damaging the BMW
Group’s reputation. Although reputational risks are dif-
ficult to quantify, their importance is constantly grow-
ing, particularly in view of an increasingly critical gen-
eral public and the speed with which information can
be distributed online. With this in mind, a new concept
has been developed (and validated with the aid of exter-
nal experts), aimed at strengthening links between the
BMW Group’s risk management and its corporate com-
munication functions. In order to take better account
of reputational risks in the overall risk assessment, the
Head of Group Communication Strategy, Corporate
and Market Communication is now also a member of
the Risk Management Steering Committee. A further
focus was placed on checking the skill sets of staff and
managers involved in risk management throughout the
BMW Group. The revamped intranet portal used for
centralised risk management provides helpful support
for those working in this field, whilst ensuring that risk
reporting is complete.
Risk management for the Group as a whole falls under
the remit of the Risk Management Steering Committee,
the Compliance Committee, the Internal Control System
and the Group Internal Audit.
Risk management process
The risk management process applies throughout the
Group and comprises the early identification and pene-
tration of risks, comprehensive analysis and risk meas-
urement, the coordinated use of suitable management
tools and also the monitoring and evaluation of any
measures taken.
Risks reported from within the network are firstly pre-
sented for review to the Risk Management Steering
Committee, for which Group Controlling is responsible.
After review, the risks are reported to the Board of
Management and the Supervisory Board. Any significant
or going-concern-related risks are classified according
to their potential to impact the Group’s results of opera-
tions, financial position and net assets. The level of risk
is then quantified in each case, depending on its proba-
bility of occurrence and the respective risk mitigation
measures.
The risk management system is regularly examined by
the Internal Audit. By sharing experiences with other
companies on an ongoing basis, the BMW Group en-
deavours to incorporate new insights in the risk manage-
ment system, thus ensuring continual improvement.
Regular basic and further training as well as information
events held throughout the BMW Group, particularly
within the risk management network, are invaluable ways
of preparing people for new or additional challenges re-
lating to the processes in which they are involved.
In addition to comprehensive risk management, manag-
ing the business on a sustainable basis also constitutes
one of the Group’s core corporate principles. Any risks
or opportunities relating to sustainability issues are ex-
amined and discussed by the Sustainability Committee.
Strategic options and measures open to the BMW Group
are put forward to the Sustainability Board, which in-
cludes the entire Board of Management. Risk aspects
discussed at this level are integrated in the work of the
group-wide risk network. The overall composition of
the Risk Management Steering Committee and the Sus-
tainability Committee ensures that risk and sustainability
management are closely coordinated.
Risk measurement
In order to determine which risks can be considered
significant in relation to results of operations, financial
position and net assets and to identify changes in key
performance indicators used by the BMW Group, risks
are classified as high, medium or low. The impact of
risks is measured and reported net of risk mitigation
measures (net basis).
The overall impact on results of operations based on the
assumption that the risk will materialise is measured
for the two-year assessment period and allocated to the
following categories:
Class
Low
Medium
High
Earnings impact
> €0 – 500 million
> €500 – 2,000 million
> €2,000 million
For the sake of simplicity, the overall impact on results
of operations, financial position and net assets is referred
to in the Report on Risks and Opportunities as “earnings
impact”.
The significance of risks for the BMW Group is deter-
mined on the basis of risk amounts. The measurement
of the amount of a risk takes account of both its impact
70
(net of appropriate countermeasures) and its likelihood
of occurrence in each case. The amount of a risk is ap-
proximated in the case of risks measured on the basis of
“value-at-risk” and “cash-flow-at-risk” models. In this
situation, the following assessment criteria are applied:
Class
Risk amount
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Low
Medium
High
Position and Net Assets
59 Comments on Financial Statements
> €0 – 50 million
> €50 – 400 million
> €400 million
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Opportunities management system and
identifying opportunities
New opportunities regularly present themselves in the
dynamic business environment in which the BMW
Group operates. General economic trends and sector-
specific factors – including external regulations, sup-
pliers, customers and competitors – are monitored on a
continuous basis. Identifying opportunities is an integral
part of the process of developing strategies and drawing
up forecasts for the BMW Group.
The Group’s product and service portfolio is continually
reviewed on the strength of these analyses and new
product projects are presented to the Board of Manage-
ment for consideration, as deemed appropriate.
a high return on capital employed. Any profitability im-
provement measures likely to be implemented are in-
corporated in the forecast. One example is the imple-
mentation of modular-based production and common
architectures, which enable a greater commonality of
features between different models and product lines.
This strategy, in turn, contributes to improved profita-
bility by reducing development costs and other invest-
ment on the series development of new vehicles. The
new approach helps cut production costs and increase
production flexibility. Moreover, a more competitive cost
basis opens up opportunities to engage in new market
segments.
The implementation of identified opportunities is un-
dertaken on a decentralised basis. The significance
of opportunities for the BMW Group is classified in
the categories “material” or “not material”.
Risks and opportunities
The following table provides an overview of all risks
and opportunities and illustrates their significance for
the BMW Group.
Neither at the balance sheet date nor at the date on
which the Group Financial Statements were authorised
for issue were any risks identified that could pose a
threat to the going-concern status of the BMW Group.
The continuous improvement of important business pro-
cesses and strict cost controls are essential in the Group’s
ongoing endeavours to ensure good profitability and
Any risks or opportunities which could, from today’s
perspective, have a significant impact on the results of
operations, financial position and / or net assets of the
BMW Group are described in the following sections.
Risks and opportunities
Risk amount
Change com-
pared to prior year
Opportunities
Change com-
pared to prior year
Political and global economic risks and opportunities
Strategic and sector risks and opportunities
Risks and opportunities relating to operations
High
High
Stable
Insignificant
Increased
Insignificant
Production and technology
Purchasing
Sales and marketing
Pension obligations
Information, data protection and IT
Financial risks and opportunities
Foreign currencies
Raw materials
Liquidity
Risks and opportunities relating to the provision of financial services
Credit risk
Residual value
Interest rate changes
Liquidity / operational risks
Legal risks
Medium
Medium
High
High
Medium
High
High
Low
High
High
High
Medium
Low
Stable
Insignificant
Reduced
Insignificant
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Increased
Stable
Stable
Insignificant
Significant
Insignificant
Significant
Significant
–
Significant
Significant
Significant
–
–
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
–
Stable
Stable
Stable
–
–
71 COMBINED MANAGEMENT REPORT
Political and global economic risks and opportunities
As one of the world’s leading providers of premium
products and services, the BMW Group faces a variety
of major challenges. The world is changing at great
speed and the resulting situations can give rise to risks
on the one hand and opportunities on the other.
Political and global economic risks
Efficient individual mobility remains a key issue in many
countries, in terms of the political regulation of both
national environmental and industrial policymaking.
Changing values in society call for innovative mobility
and service solutions. The potential effect of unforesee-
able disturbances in global economic interdependen-
cies, increasingly fierce competition among established
manufacturers and the emergence of new competitors
is extremely difficult to predict.
Shifts between volatile and stable economic phases, com-
bined with the ready availability of information, also
contribute to the uncertainty experienced by both mar-
kets and consumers. Although the US and UK econo-
mies may currently appear to be robust, the underlying
macroeconomic risks – such as misallocations between
asset price classes – have not become any less real com-
pared to the previous year. The transition of the Chinese
economy from an investment-driven to a consumer-
driven market will entail slower growth rates and greater
instability on financial markets. Apart from precipitat-
ing a decline in automobile sales, this process may also
result in lower demand for commodities, which is most
likely to hurt mainly emerging economies such as
Brazil or Russia. A further drop in commodities prices
could result in political and economic upheavals and
hence lead to lower aggregate demand from the coun-
tries affected.
The threat of distortions on the Chinese property, stock
and banking markets on the one hand and / or an overly
rapid hike in interest rates by the US Federal Bank pose
considerable risks for global financial market stability.
Unsolved structural problems in the eurozone or a re-
newed deterioration in the economic climate, for instance
in Greece, could potentially dampen growth prospects
for the BMW Group. At a political level, the current
refugee crisis poses a threat to European integration
and hopes of further expanding or at least maintaining
a single economic and monetary area.
Increasing political unrest, military conflicts, terrorist
activities, natural disasters and / or pandemics could
have a lasting negative impact on the global economy
and international capital markets. The risks referred to
above could curtail purchasing power in the countries
and regions involved and, among other things, lead to
reduced demand for the products and services offered
by the BMW Group. The Group counters these risks
primarily by internationalising its sales and production
structures, in order to minimise the extent to which
earnings are dependent on the outcomes of risks in in-
dividual countries and regions. The regular monitoring
of macroeconomic data, which serve as the basis for
sales volume and production planning, ensures that
market changes are identified at an early stage. The ex-
tent of political and global economic risks is determined
by analysing historical data and applying a cash-flow-at-
risk approach.
If risks from this category were to materialise, they
could – due to sales volume fluctuations – have a high
earnings impact over the two-year assessment period.
Overall, the risk amounts attached to political and global
economic risks are classified as high.
Political and global economic opportunities
Economic conditions influence the operations, financial
position and results of operations of the BMW Group.
Should the global economy develop significantly better
than reflected in the outlook, the revenues and earnings
of the BMW Group could be significantly higher than
originally predicted. A better-than-expected perfor-
mance of the global economy with stronger growth in
China, the introduction of economic stimulus pro-
grammes, the implementation of structural reforms
within the eurozone and robust consumer spending in
the USA could – despite higher financing costs – result
in significantly stronger sales volume growth, reduced
competitive pressure and the possibility of achieving
better selling prices. Economic opportunities present
themselves for the BMW Group through the focused
identification of, and engagement in, growth markets.
Any political and / or global economic opportunities
capable of having a positive sustainable impact on
earnings are currently classified by the BMW Group
as insignificant.
Strategic and sector risks and opportunities
New regulations and rising fuel and energy prices can
also influence customer behaviour. Medium- and
long-term targets have already been put in place in
Europe, North America, Japan, China and other coun-
tries to minimise both fuel consumption and carbon
emissions.
72
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Risks arising from the tightening of laws and regulations
One of the greatest risks for the automobile industry is
the possible threat of short-term tightening of laws
and regulations, as they could give rise to significantly
higher levels of investment and ongoing expenses, and
perhaps more importantly, result in changes in cus-
tomer behaviour. The potential tightening of consumer
protection laws could also result in a greater number of
recalls. In some cases, changes in customer behaviour
are not only brought on by new regulations, but also
through changes in public opinion, values, environmen-
tal issues and fuel / energy prices. There is a clear move
towards increasingly stringent vehicle emissions regu-
lations, particularly for conventional drive systems, not
only in the developed markets of Europe and North
America, but also in emerging markets such as China.
The BMW Group counters this risk with its Efficient
Dynamics technology and continues to play a pioneering
role in the premium segment by continually reducing
both fuel consumption and emissions. Since 2013, elec-
tric drive systems built into BMW i vehicles have in-
creasingly broadened the mix on offer, thus bolstering
the BMW Group’s efforts to comply with statutory car-
bon emissions regulations and requirements. The BMW
Group is investing in the development of sustainable
drive technologies and materials, with the aim of pro-
viding highly efficient vehicles for individual mobility in
the premium segment, both now and in the future.
Further significant risks could be triggered by the
tightening of existing import and export regulations, re-
sulting primarily in additional expenses, but also in re-
strictions in the import and export of vehicles and / or
parts. Changes in the legal business environment are
monitored and assessed regularly by the relevant central-
ised departments, thus ensuring that the BMW Group
always complies with statutory requirements. The impact
of legislation that has either been enacted or is likely to
be enacted is taken into account in the outlook.
Employees make a vital contribution to sustainable
growth and improved profitability through their innova-
tive skills. One prerequisite in this regard is a consistent
strategic approach to the management of human re-
sources, even in the event of changes in the legal frame-
work. The BMW Group has put appropriate measures in
place for such eventualities. Risk amounts and earnings
impact in this category are measured on the basis of ex-
tensive scenario analyses.
If strategic and sector category risks were to materialise,
they could have a high earnings impact over the two-
year assessment period. The amounts of risk attached to
strategic and sector-specific risks are classified as high.
Strategic and sector opportunities
Additions to the product and mobility portfolio and ex-
pansion in growth regions are seen as the most im-
portant opportunities for growth in the medium to long
term.
Remaining on growth course depends above all on the
ability to develop innovative products and bring them
to market. The introduction of the BMW i brand opens
up new customer target groups for the Group and con-
solidates the position of BMW as a sustainable, forward-
looking brand. BMW i products can be seen as “empower-
ment projects” for new technologies and processes, which
may also benefit other vehicle concepts. The existing
product portfolio has been expanded to include mobility
services such as DriveNow, ChargeNow and ParkNow.
In 2015, the BMW Group entered new segments with
the BMW 2 Series Active Tourer and the 2 Series Gran
Tourer. The market acceptance and sales volumes of
product innovations that are either planned for the future
or have recently been launched could turn out to be
greater than predicted in the outlook. In the short term,
however, any potentially positive impact is classified as
insignificant.
The long-term trend towards greater sustainability pro-
vides opportunities to boost sales of sustainable products
and, under the right circumstances, achieve better sell-
ing prices. Innovations such as the BMW i3 and i8 in the
field of electric mobility or Efficient Dynamics across the
entire product portfolio provide excellent platforms for
future growth. Potential also exists in engaging in new
product and market categories and developing new cus-
tomer target groups. New business models and coopera-
tion arrangements with the BMW Group’s growing
network of business partners often provide the best
means to exploit these opportunities. Good examples
are the implementation of the 360° ELECTRIC portfolio
in the field of electric mobility, the partnership with
Sixt in the field of mobility services, and collaboration
with Toyota on developing a hydrogen fuel cell system.
The BMW Group is constantly refining the tools it uses
to recruit staff, encourage career development and re-
tain employees within the Group. This environment of-
fers people the ideal situation in which to develop their
skills. If these measures generate greater benefits than
currently expected, the BMW Group’s revenues, results
of operations and cash flows can be positively impacted
73 COMBINED MANAGEMENT REPORT
and forecasted figures surpassed. Creating a successful
performance culture and developing the expertise and
skill sets of both staff and managers alike throughout
the organisation can also have a positive impact on both
revenue and profitability.
The BMW Group’s earnings can be positively affected in
the short to medium term by changes in the legal envi-
ronment. A possible reduction in tariff barriers, import
restrictions or direct excise duties could lower the cost
of materials for the BMW Group, also enabling products
and services to be offered to customers at lower prices.
Overall, strategic and sector opportunities capable of
having a positive and sustainable impact on earnings
are currently classified by the BMW Group as insignifi-
cant.
Risks and opportunities relating to operations
Production- and technology-related risks
Production stoppages and downtimes – in particular due
to fire, but also to manufacturing and control equipment
breakdowns or transportation and logistical disruptions
– pose risks against which the BMW Group has put suit-
able measures in place. From the outset, production
structures and processes are designed with a view to
minimising any potential damage and its probability of
occurrence. The broad array of measures taken includes
technical fire protection solutions, land development
measures including contingencies against flooding, pre-
ventative maintenance, spare parts management on a
multi-site basis, and backup plans for alternative trans-
portation. The level of risk is also reduced by the deploy-
ment of flexible work-schedule models and employee
time accounts, but also by the ability to develop indi-
vidual models at additional sites if necessary, thus en-
abling any backlog arising from production interruptions
to be clawed back within a short time. Moreover, risks
arising from business interruption and loss of production
due to fire are also insured up to economically reason-
able levels with underwriters of good credit standing.
The development and production of technologically com-
plex vehicles in high volumes is technically challenging
and a source of potential quality risks. In order to
achieve the outstanding level of quality expected of the
BMW Group’s products and minimise both statutory
and non-statutory warranty costs, it may possibly be
necessary to incur a higher level of expenditure than
originally forecast. There is also a risk of limited avail-
ability of products, particularly around the time of new
vehicle production start-ups. These risks are mitigated
through quality assurance activities in the form of regu-
lar audits and the continual improvement of quality
management systems. The BMW Group also recognises
appropriate provisions for both statutory and non-
statutory warranty obligations. These provisions reduce
the risk to the BMW Group’s earnings, a fact already
taken into account in the forecast. Further information
on risks in conjunction with provisions for statutory
and non-statutory warranty obligations is provided in
note 36 of the Group Financial Statements.
If risks from the production- and technology-related
risks category were to materialise, they could have a
high negative earnings impact over the two-year assess-
ment period. The level of risk attached to production-
and technology-related issues is classified as medium.
Production- and technology-related opportunities
Opportunities could arise as a result of product- or pro-
cess-related technological innovations, or from organi-
sational changes designed to improve efficiency or
increase competitiveness. In the field of lightweight
construction, for example, carbon is being utilised in
high volumes for the first time in the automobile indus-
try in the construction of the BMW i3. During the year
under report, the BMW Group went one step further
by introducing the use of carbon in the BMW 7 Series,
thereby generating competitive benefits in the form of
lower fuel consumption and better driving dynamics
through reduced vehicle weight.
Given the long lead times involved in developing new
products and processes, the BMW Group does not
expect these opportunities to have a material impact on
earnings during the forecast period.
Purchasing risks
Close cooperation between carmakers and automotive
suppliers in the development and production of vehicles
and the provision of services generates economic bene-
fits, but also raises levels of dependency. The increasing
trend towards modular-based production with a set
of common architectures covering various models and
product lines exacerbates the consequences of the loss
of an individual supplier or failure to supply on time.
As part of the supplier preselection process, the BMW
Group is careful to ensure that its future business part-
ners meet the same high ecological, social and corporate
governance standards by which the BMW Group itself
expects to be measured. The BMW Group Sustain-
ability Standard, which contains a set of fundamental
principles and standards covering both production and
74
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
non-production aspects relevant for bought-in goods
and services, serves as the basis for the supplier net-
work, including the requirement to comply with inter-
nationally recognised human rights and applicable
labour and social standards. The principal tool for en-
suring compliance with the BMW Group Sustainability
Standard is a three-stage sustainability and risk manage-
ment approach comprising a BMW Group-specific sus-
tainability risk filter, a sustainability questionnaire and
a sustainability audit. In addition, the technical and
finan cial capabilities of suppliers – especially those sup-
plying for modular-based production – are continuously
monitored during both the development and the pro-
duction phases of the Group’s vehicles. Particular atten-
tion is paid to the quality of parts. In order to attain the
level of quality required, it may become necessary to
invest in new technological concepts or discontinue
planned innovations, with the consequence that the cost
of materials could exceed levels incorporated in the
forecast. Supplier sites are assessed for exposure to nat-
ural hazards, such as floods or earthquakes, in order to
identify supply risks at an early stage and implement
appropriate countermeasures. Fire risks at series sup-
pliers are evaluated by means of questionnaires and
selective site inspections. Raw materials management
procedures are in place to mitigate the risk of a produc-
tion interruption due to shortages of supplies of critical
raw materials. In order to reduce supply risks, the
BMW Group works hard to minimise the input of raw
materials or to use alternative raw materials as a sub-
stitute. The increasingly complex nature of the supplier
network, especially at the level of sub-suppliers, whose
operations can only be indirectly influenced by the
BMW Group, is a further potential cause of downtimes
at supplier locations. Production problems incurred
by suppliers could have adverse consequences for the
BMW Group, ranging from increased expenditure to
production interruptions and a corresponding reduc-
tion in sales volume.
If purchasing risks were to materialise, they could have
a high negative earnings impact over the two-year as-
sessment period. The level of risk attached to supply risk
is classified as medium.
developed by suppliers, in some cases leading to a
broader range of products.
By observing and playing a proactive role in developing
global supplier markets, the BMW Group continuously
strives to increase its competitiveness by working to-
gether with the best providers in the global marketplace
for products and services. Opportunities arise particu-
larly in conjunction with the introduction of new and
innovative production technologies and by capitalising
on favourable location-specific cost factors that present
themselves when local supplier structures are devel-
oped nearby new and existing BMW Group production
plants.
The integration of previously unidentified innovations
from the supplier market in the product range is a fur-
ther source of opportunities. Innovative suppliers are
offered a variety of options when drawing up contracts,
in order to make it more attractive for those developing
innovative solutions. At regular intervals, the BMW
Group honours its most inventive supplier entities with
the Supplier Innovation Award.
The BMW Group does not expect these opportunities
to have a material earnings impact over the two-year as-
sessment period when compared to the assumptions
made in the outlook.
Risks relating to sales and marketing
Changes in global economic conditions and increasingly
protectionist trends are among the factors that could
result in lower demand as well as fluctuations in the re-
gional spread and composition of sales in terms of
vehicles and mobility services. Risks relating to these
developments can be reduced with the aid of flexible
selling and production processes. At the same time, in-
creased pressure on selling prices and margins caused
by intense competition on the world’s markets, particu-
larly in western Europe, the USA and China, requires
constant analysis, including keeping an eye on develop-
ments in grey market volumes from the USA to China.
Selling price and margin risks are measured using a
scenario approach, based on a bottom-up survey of the
key sales markets and an analysis of historical data.
Purchasing opportunities
Global sourcing is seen as a key area for generating
opportunities within the Purchasing and Supplier Net-
work, whereby the BMW Group benefits from effi-
ciency improvements and access to innovative solutions
If sales and marketing risks were to materialise, they
could have a high negative earnings impact over the
two-year assessment period. The level of risk attached
to sales and marketing risks is classified as high.
75 COMBINED MANAGEMENT REPORT
Opportunities relating to sales and marketing
The BMW Group focuses its selling capacities primarily
on markets with the greatest sales volume and revenue
potential and fastest growth rates. Developments in the
field of digital communication and connectivity are also
opening up opportunities for marketing the BMW
Group’s various brands. Consumers can meanwhile be
reached on a more targeted and individual basis, thus
helping to strengthen long-term relationships and
brand loyalty. Investment in both existing and new mar-
keting concepts is firmly aimed at intensifying relation-
ships with customers. A new online sales platform was
introduced in Great Britain, for example, which enables
customers to select, finance and buy their vehicles
online. There will be no relaxing of efforts in the ac-
tive search for new opportunities to create even greater
added value for customers than currently expected,
whilst at the same time looking for ways to boost sales
volumes and achieve better selling prices. The BMW
Group keeps track of the latest developments and trends
in communication technology, including the use of social
media and networks, in order to extend customer reach
for its brands. The automotive-related business activities
of technology companies are also closely followed (e. g.
automated driving). The BMW Group’s brands are present
on numerous platforms, such as Facebook, YouTube
and Twitter. Digital communication can result in a more
intense product and brand experience for customers,
which could, in turn, have a positive impact on revenues
and earnings.
and the related assets are kept separate from those of
the Group. The amount of funds required to finance pen-
sion payments out of operations in the future is there-
fore substantially reduced, since most of the Group’s
pension obligations are settled out of pension fund
assets. The pension assets of the BMW Group comprise
interest-bearing securities, equities, real estate and
other investment classes. Assets held by pension funds
and trust arrangements are monitored continuously
and managed on a risk-and-yield basis. A broad spread
of investments also helps to mitigate risk. In order to re-
duce fluctuations in pension funding shortfalls, invest-
ments are structured to coincide with the timing of
pension payments and the expected pattern of pension
obligations. Remeasurements on the obligations and
fund asset sides are recognised, net of deferred taxes, in
“Other comprehensive income” and hence directly in
equity (within revenue reserves).
If risks relating to pension obligations were to materialise,
they could have a high negative earnings impact over
the two-year assessment period. The level of risk relating
to pension obligations is classified as high.
Within a favourable capital market environment, the
return generated by pension assets may exceed expecta-
tions and reduce the deficit of the relevant pension
plans. This, in turn, could have a materially favourable
impact on the net assets position and earnings perfor-
mance of the BMW Group.
The BMW Group considers that these opportunities will
not have a material earnings impact over the two-year
assessment period compared to the assumptions made
in the outlook.
Further information on risks in conjunction with pen-
sion provisions is provided in note 35 of the Group
Financial Statements.
Risks and opportunities relating to pension obligations
The BMW Group’s pension obligations to its employees
resulting from defined benefit plans are measured on
the basis of actuarial reports. Future pension payments
are discounted by reference to market yields on high-
quality corporate bonds. These yields are subject to
market fluctuation and therefore influence the level of
pension obligations. Changes in other parameters, such
as rises in inflation and longer life expectancy, also im-
pact pension obligations and payments. Opportunities
and risks arise depending on the nature and scale of
changes in these parameters.
Most of the BMW Group’s pension obligations are
managed in external pension funds or trust arrangements
Risks and opportunities relating to information, data
protection and IT systems
Information technology (IT) is used to an increasing
extent in every aspect of the business. In this context,
the significance of electronically processed data and
the availability of IT systems is constantly growing.
These developments create opportunities on the one
hand, whilst also posing a source of risk on the other.
Information, data protection and IT risks
The BMW Group could incur damage if the confiden-
tiality or integrity of sensitive information, data and
systems were to be compromised and / or availability re-
stricted. One of the direct consequences of such an
eventuality would be additional expense incurred to re-
cover data and restore systems. Such eventualities could
76
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
also possibly have a negative impact on operating per-
formance due to the non-availability of products and
services or even downtimes in the production of spare
parts and / or vehicles. Indirectly, the BMW Group could
also be exposed to unquantifiable reputational risks.
Risk management procedures include the systematic
documentation of all informational and IT risks, regu-
lar monitoring, and the implementation of appropriate
measures by the departments responsible. Technical
data protection procedures include virus scanners, fire-
wall systems, access authorisation controls at both oper-
ating system and application level, regular data back-
ups and data encryption. Regular analyses and controls
(for example the testing of data protection requirements)
and rigorous security management ensure a high level
of security.
The demands placed on IT facilities, both externally and
internally, are changing at a breathtaking pace in the
face of technological developments. Potential risks are
therefore investigated continuously and appropriate
measures put in place in order to either prevent them
or minimise their impact. Despite regular testing and
the whole gamut of preventative security measures em-
ployed, it is nevertheless impossible to rule out risks
completely in this area.
Great emphasis is placed on protecting both business
information and employee and customer data from un-
authorised access and / or misuse. Data security based
on International Security Standard ISO / IEC 27001 is
an integral component in all business processes. Per-
sonal data is protected in accordance with the stringent
requirements of the EU Data Protection Directive and
the Federal Data Protection Act (Bundes daten schutz-
gesetz – BDSG).
All employees are required to treat confidential infor-
mation (such as customer and employee data) in an ap-
propriate manner, ensure that information systems are
properly used and that risks are handled with the ut-
most transparency. Uniform requirements, documented
in a coordinated and comprehensive set of principles,
guidelines and work instructions, are applicable group-
wide. Regular communication and awareness-raising
activities create a high degree of security and risk con-
sciousness among the employees involved. Employees
receive training to ensure compliance with the applicable
requirements and in-house rules.
Responsibility for data protection in each Group entity
lies with the Board of Management (of BMW AG) or the
relevant company management team. Local Data Privacy
Protection Officers are embedded in each of the Group’s
entities. In the case of cooperation arrangements and
business partner relationships, the BMW Group protects
its intellectual property as well as customer and em-
ployee data by stipulating clear instructions with regard
to data protection and the use of information technology.
Information pertaining to key areas of expertise as well
as sensitive personal data are subject to particularly strin-
gent security measures. In a clear signal to employees,
customers and Europe’s data protection authorities that
data protection is taken very seriously, the Board of
Management of BMW AG has resolved a set of Binding
Corporate Rules governing the handling of employee
data.
If information, data protection and IT risks were to
materialise, they could have a medium earnings impact
over the two-year assessment period. The levels of risk
attached to information, data protection and IT risks are
classified as medium.
Information, data protection and IT opportunities
Conversely, the deployment of information technology
also opens up a great many opportunities for the BMW
Group. New approaches to production and energy sup-
ply systems currently being investigated in the context
of the Industrial Internet (“Industrie 4.0”) are generat-
ing significant efficiency improvements and resulting in
greater sustainability. The range of services and apps
on offer to customers via Connected Drive is constantly
being expanded and updated. The BMW 7 Series offers
the comfort of partially automated driving functions with
the optional Driving Assistant Plus feature. The pur-
chase of a stake in HERE mapping service was an im-
portant step for the next generation of mobility and
location-based services. For the automobile sector, it
serves as the basis for a variety of new customer-oriented
functions, ranging from innovative assistance systems
through to fully automated driving.
The BMW Group does not expect these opportunities
to have a material earnings impact over the two-year
77 COMBINED MANAGEMENT REPORT
assessment period compared to the assumptions made
in the outlook.
The principal objective of these management processes
is to increase planning reliability for the BMW Group.
Financial risks and risks relating to the use of financial
instruments
Currency risks and opportunities
As an internationally operating enterprise, the BMW
Group conducts business in a variety of currencies, thus
giving rise to currency risks and opportunities. Since a
substantial portion of Group revenues is generated out-
side the eurozone (particularly in China and the USA)
and the procurement of production material and fund-
ing is also organised on a worldwide basis, fluctuations
in exchange rates can play a significant role for Group
earnings. Cash-flow-at-risk models and scenario analyses
are used to measure currency risks and opportunities.
Operational currency management is based on the results
provided by these tools. In 2015 the Chinese renminbi,
the US dollar, the British pound, the Russian rouble and
the Japanese yen constituted approximately 70 % of the
total foreign currency exposure of the BMW Group.
The BMW Group manages currency risks at both strate-
gic (medium and long term) and operating levels (short
and medium term). Medium- and long-term measures
include increasing production volumes in non-euro-re-
gion countries (natural hedging) and increasing purchase
volumes denominated in foreign currencies. Construct-
ing new plants in countries such as the USA, China or
Brazil has also helped reduce foreign currency expo-
sures. Currency risks are managed in the short to me-
dium term and for operational purposes by means of
hedging. Hedging transactions are entered into only with
financial partners of good credit standing. Opportunities
are also secured through the deployment of options.
Counterparty risk management procedures are carried
out continuously in order to monitor the creditworthi-
ness of business partners.
If currency risks were to materialise, they could have a
high earnings impact over the two-year assessment
period. A high level of risk is attached to currency risks.
Significant opportunities can arise if currency develop-
ments are favourable for the BMW Group.
Price risks and opportunities relating to precious metals
(platinum, palladium, rhodium) and non-ferrous
metals (aluminium, copper, lead) and, to some extent,
to steel and steel ingredients (iron ore, coke / coal) and
energy (gas, electricity) are hedged using financial
derivatives and / or supply contracts with fixed pricing
arrangements.
If risks relating to raw materials were to materialise,
they could have a medium earnings impact over the
two-year assessment period. A high level of risk is at-
tached to risks relating to raw materials.
Conversely, significant opportunities can arise if
prices of raw materials develop favourably for the
BMW Group.
Liquidity risks
Based on experience gained during the financial crisis,
a minimum liquidity concept has been developed and is
rigorously adhered to. Solvency is assured at all times
throughout the BMW Group by maintaining a liquidity
reserve and by the broad diversification of refinancing
sources. The liquidity position is monitored continu-
ously at a separate entity level and managed by means
of a cash flow requirements and sourcing forecast system
in place throughout the Group. Liquidity risks may
be reflected in rising refinancing costs. They may also
manifest themselves in restricted access to funds as a
consequence of the general market situation or the de-
fault of individual banks. The major part of the Finan-
cial Services segment’s credit financing and lease busi-
ness is refinanced on capital markets. Thanks to its
excellent creditworthiness, the BMW Group has good
access to financial markets and, as in previous years,
was able to raise funds at good conditions during the
year under report, reflecting a diversified refinancing
strategy and the solid liquidity and earnings base of the
BMW Group. Internationally recognised rating agencies
have additionally confirmed the BMW Group’s strong
creditworthiness.
Risks and opportunities relating to raw materials
Changes in prices of raw materials are monitored on the
basis of a set of well-defined management procedures.
If liquidity risks were to materialise, they could have a
low earnings impact over the two-year assessment
period. The risk of incurring liquidity risk is classified
as low – including the risk of the BMW Group’s rating
78
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
being downgraded and any ensuing deterioration in
financing conditions.
A description of the methods applied for risk measure-
ment and hedging in conjunction with currency and
commodity risks is provided in note 42 of the Group
Finan cial Statements. If the relevant recognition criteria
are fulfilled, derivatives used by the BMW Group as
hedges are accounted for as hedging relationships.
Further information on risks in conjunction with finan-
cial instruments is provided in note 42 to the Group
Financial Statements.
Risks and opportunities relating to the Financial
Services segment
The categories of risk relating to the provision of finan-
cial services are credit and counterparty risk, residual
value risk, interest rate risk, liquidity risk and opera-
tional risk. In order to identify, measure, manage and
monitor these risks, a variety of internal methods has
been developed based on regulatory environment re-
quirements (such as Basel III) and which comply with
both national and international standards. The adopted
risk strategy, in combination with a set of strategic prin-
ciples and rules derived from regulatory requirements,
serve as the basis for risk management within the Finan-
cial Services segment. At the heart of the risk manage-
ment process is a clear division between front- and
back-office activities and a comprehensive internal con-
trol system. The key risk management tool employed
within the Financial Services segment is aimed at en-
suring that the Group’s risk-bearing capacity is not ex-
ceeded. In this context, all risks (defined as “unexpected
losses”) must be covered at all times by an appropriate
asset cushion in the form of equity capital. Unexpected
losses are measured using a variety of value-at-risk tech-
niques that have been developed for each risk category.
The appropriateness of these techniques is tested at reg-
ular intervals. Risks are aggregated after taking account
of correlation effects. The total amount of risks calculated
in this way is then compared with the so-called “risk
coverage amount”, i.e. the resources allocated to cover
risks. The risk coverage amount is determined on the
basis of the Financial Services segment’s willingness to
take risks. The segment’s risk-bearing capacity is moni-
tored continuously with the aid of an integrated limit
system that also differentiates between the various risk
categories. The segment’s total risk exposure was covered
at all times during the past year by the available risk-
coverage volumes.
Credit and counterparty risks and opportunities
Credit and counterparty default risk arises within the
Financial Services segment if a contractual partner (i. e.
a customer or dealer) either becomes unable or only
partially able to fulfil its contractual obligations, such
that either lower income is generated or losses are in-
curred. The Financial Services segment uses a variety of
rating systems in order to assess the creditworthiness
of its contractual partners. Credit risks are managed at
the time of the initial credit decision on the basis of a
calculation of the present value of standard risk costs
and subsequently, during the term of the credit, by
using a range of risk provisioning techniques to cover
risks emanating from changes in customer creditworthi-
ness. In this context, individual customers are classified
by category each month on the basis of their current
contractual status, and appropriate levels of allowance
recognised in accordance with that classification. If
economies develop more favourably than assumed in the
outlook, there is a chance that credit losses may be re-
duced and earnings improved accordingly.
If credit and counterparty risks were to materialise, they
could have a medium earnings impact over the two-
year assessment period. The level of risk attached to
credit and counterparty risks is classified as high. The
BMW Group classifies potential opportunities in this
area as significant.
Residual value risks and opportunities
Risks and opportunities arise in conjunction with lease
contracts if the market value of a leased vehicle at the
end of the contractual term of a lease differs from the
residual value estimated at the inception of the lease
and factored into the lease payments.
A residual value risk exists if the expected market value
of the vehicle at the end of the contractual term is lower
than its estimated residual value at the date the contract
is entered into. Each vehicle’s estimated residual value
is calculated on the basis of historical external and inter-
nal data and used to predict the expected market value
of the vehicle at the end of the contractual period. As
part of the process of managing residual value risks, a
calculation is performed at the inception of each con-
tract to determine the net present value of risk costs.
Market developments are observed throughout the con-
tractual period and the risk assessment updated appro-
priately.
79 COMBINED MANAGEMENT REPORT
If residual value risks were to materialise, they could
have a high earnings impact over the two-year assess-
ment period. A medium earnings impact would then
arise for the segments affected (Financial Services and
Automotive). The level of risk is classified as high for
the Group as a whole.
The BMW Group classifies potential residual value op-
portunities as significant.
Interest rate risks and opportunities
Interest rate risks in the Financial Services segment re-
late to potential losses caused by changes in market
interest rates and can arise when fixed interest rate pe-
riods for assets and liabilities recognised in the balance
sheet do not match. Interest rate risks in the Financial
Services line of business are managed by raising refi-
nancing funds with matching maturities and by em-
ploying interest rate derivatives.
If risks relating to interest rate risks were to materialise,
they could have a medium earnings impact over the
two-year assessment period. The level of risk attached
to interest rate risks is classified as high.
Interest rate developments that are positive compared
to the forecast constitute interest rate opportunities which
the BMW Group classifies as significant.
If the relevant recognition criteria are fulfilled, deriva-
tives used by the BMW Group are accounted for as
hedging relationships. Further information on risks in
conjunction with financial instruments is provided in
note 42 to the Group Financial Statements.
Liquidity and operational risks in the
Financial Services segment
Use of the “matched funding principle” to finance the
Financial Services segment’s operations eliminates li-
quidity risks to a large extent. Regular measurement
and monitoring ensure that cash inflows and outflows
from transactions in varying maturity cycles and cur-
rencies offset each other. The relevant procedures are
incorporated in the BMW Group’s target liquidity con-
cept. Operational risks are defined in the Financial
Services segment as the risk of losses arising as a conse-
quence of the inappropriateness or failure of internal
procedures (process risks), people (personnel-related
risks), systems (infrastructure and IT risks) and external
events (external risks). These four categories of risk also
include related legal and reputational risks. The com-
prehensive recording and measurement of risk scenarios,
loss events and countermeasures in the Operational
Risk Management Suite (OpRisk-Suite) provides the ba-
sis for a systematic analysis and management of poten-
tial and / or actual operational risks. Annual self-assess-
ments are also carried out.
If operational risks were to materialise, they could have
a low earnings impact over the two-year assessment
period. The level of risk attached to operational risks is
classified as medium.
Legal risks
Compliance with the law is a basic prerequisite for the
success of the BMW Group. Current law provides the
binding framework for the BMW Group’s various busi-
ness activities around the world. The growing interna-
tional scale of the BMW Group’s operations, the com-
plexity of the business world and the whole gamut of
complex legal regulations increase the risk of laws not
being adhered to, simply because they are either not
known or not fully understood.
The BMW Group has established a Compliance Organi-
sation aimed at ensuring that its representative bodies,
managers and staff act in a lawful manner at all times.
Further information on the BMW Group’s Compliance
Organisation can be found in the section “Corporate
Governance”.
Like all internationally operating enterprises, the BMW
Group is confronted with legal disputes relating, in
particular, to warranty claims, product liability, infringe-
ments of protected rights and proceedings initiated
by government agencies. Any of these matters could,
among other outcomes, have an adverse impact on the
Group’s reputation. Such proceedings are typical for
the sector and can arise as a consequence of realigning
product or purchasing strategies to suit changed market
conditions. Particularly in the US market, class action
lawsuits and product liability risks can have substantial
financial consequences and cause damage to the Group’s
public image. The high quality of the Group’s products,
which is ensured by regular quality audits and ongoing
improvement measures, helps reduce this risk.
The BMW Group recognises appropriate levels of pro-
vision for lawsuits. A part of these risks, particularly re-
garding the US market, is insured where this makes
on the BMW Group’s results of operations, financial
position and net assets, as well as on its reputation. A
comprehensive risk management system is in place to
ensure that the BMW Group successfully manages risks
to the greatest extent possible. In addition, the opportu-
nities described above could potentially help the BMW
Group to achieve its targets and forecasts.
From today’s perspective, management does not see any
threat to the BMW Group’s going-concern status. As in
the previous year, identified risks are considered to be
manageable, but could – just like opportunities – have
an impact on the BMW Group’s forecasts if they were to
materialise. The BMW Group’s liquidity is stable and all
cash requirements are currently covered by available
funds and accessible credit lines.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
80
business sense. The application of more rigorous con-
sumer regulations or the stricter interpretation of exist-
ing regulations could result in a greater number of recalls.
Some risks, however, either cannot be estimated or only
to a limited extent. In other cases, the incurrence of ex-
penses or losses may only be considered possible, but
not probable. Such items are reported as contingent lia-
bilities. It cannot be ruled out, however, that losses
from damages could arise that are either not covered or
not fully covered by insurance policies or provisions, or
which are only reported as contingent liabilities. In ac-
cordance with IAS 37 (Provisions, Contingent Liabilities
and Contingent Assets), the required information is
not provided if the BMW Group concludes that disclosure
of the information could seriously prejudice the out-
come of the relevant legal proceedings. Further informa-
tion on contingent liabilities is provided in note 41 to
the Group Financial Statements.
If legal risks were to materialise, they could have a low
earnings impact over the two-year assessment period.
The level of risk attached to legal risks is classified as
low. However, it cannot be ruled out that new legal
risks, as yet unidentified, could materialise that could
have a high impact on the BMW Group’s results of
operations and financial condition.
Overall assessment of the risk and
opportunities situation
The overall risk assessment is based on a consolidated
view of all significant individual risks and opportuni-
ties. In terms of strategic and sector-specific risks, the
BMW Group has identified a higher level of risk, par-
ticularly in connection with the trend towards stricter
statutory regulations. Operational risks on the purchas-
ing side are decreasing, thanks to the successful imple-
mentation of cost-cutting measures. The level of risk
attached to the category “Risks relating to the Financial
Services segment” has increased as a result of the grow-
ing size of the portfolio. In view of these changes, the
overall risk situation for the BMW Group has increased
compared to the previous year.
In addition to the risk categories described above, un-
foreseeable events could possibly have a negative impact
81 COMBINED MANAGEMENT REPORT
Internal Control System* and Risk Management System Relevant for the Financial Reporting Process
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
significant factor in the management of process risks.
The principal features of the internal control system
and the risk management system, as far as they relate
to individual entity and Group financial reporting pro-
cesses, are described below.
Information and communication
One component of the internal control system is that of
“Information and Communication”. It ensures that all
the information needed to achieve the objectives set for
the internal control system is made available to those
responsible in an appropriate and timely manner. Infor-
mation relevant for the various financial reporting pro-
cesses – at BMW AG, other consolidated Group entities
and for the BMW Group as a whole – is set out pri-
marily in organisational manuals, internal and external
financial reporting guidelines, accounting manuals and
training documentation. This information, which can
be accessed at all levels via the BMW Group’s intranet
system, provide the framework for ensuring that the
relevant rules are applied consistently throughout the
Group. The quality and relevance of these instructions
are ensured by regular review as well as by continuous
communication between the relevant departments.
Organisational measures
All financial reporting processes (including Group finan-
cial reporting processes) are structured in organisa-
tional terms in accordance with the principle of segrega-
tion of duties, thus making an important contribution
to the early identification of errors and the prevention
of potential wrongdoing. Regular comparison of inter-
nal forecasts and external financial reports, for example,
improves the quality of financial reporting. Moreover,
the internal audit department, in its capacity as a pro-
cess-independent function, tests and assesses the effec-
tiveness of the internal control system and proposes
improvements where appropriate.
Controls
Extensive controls are carried out by managers and staff
in all financial reporting processes at an individual
entity and Group level, thus ensuring that legal require-
ments and internal guidelines are complied with and
that all business transactions are properly executed. Con-
trols are also carried out with the aid of IT applications,
thus reducing the incidence of process risks. Moreover,
the performance of controls on accounts deemed to
be exposed to risk are subject to additional monitoring.
IT authorisations
All IT applications used in financial reporting processes
throughout the BMW Group are subject to access re-
strictions, allowing only authorised persons to gain ac-
cess to systems and data in a controlled environment.
Access authorisations are allocated on the basis of the
nature of the duties to be performed. In addition, IT
processes are designed and authorisations allocated
using the dual control principle, as a result of which, for
instance, requests cannot be submitted and approved
by the same person. Technical monitoring procedures
are also in place to ensure appropriate authorisation
security throughout all IT systems.
Internal control training for employees
All employees are appropriately trained to carry out
their duties and kept informed of any changes in regula-
tions or processes that affect them. Managers and staff
also have access to detailed best-practice descriptions
relating to risks and controls in the various processes,
thus increasing risk awareness at all levels. As a conse-
quence, the internal control system can be evaluated
regularly and further improved as necessary. Employees
can, at any time and independently, deepen their un-
derstanding of control methods and design using an
information platform that is accessible throughout the
entire Group.
Evaluating the effectiveness of the internal
control system
Responsibilities for ensuring the effectiveness of the in-
ternal control system in relation to individual entity
* Disclosures pursuant to § 289 (5) HGB and § 315 (2) no. 5 HGB.
82
and Group financial reporting processes are clearly de-
fined and allocated to the relevant managers and are
subject to internal audits (e. g. management self-audits,
internal audit department findings). Data analysis tools
are also employed to identify risks relating to business
transactions. Continuous revision and further develop-
ment ensures the effectiveness of the internal control
system. Group entities are required to confirm regularly
as part of their reporting duties that the internal con-
trol system is functioning properly. Effective measures
are implemented whenever weaknesses are identified
and reported.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
83 COMBINED MANAGEMENT REPORT
Disclosures Relevant for Takeovers1 and Explanatory Comments
Composition of subscribed capital
The subscribed capital (share capital) of BMW AG
amounted to € 656,804,600 (2014: € 656,494,740) at
31 December 2015 and, in accordance with Article 4
no. 1 of the Articles of Incorporation, is sub-divided
into 601,995,196 shares of common stock (91.66 %)
(2014: 601,995,196; 91.70 %) each with a par value of
€1, and 54,809,404 (8.34 %) (2014: 54,499,544; 8.30 %)
shares of non-voting preferred stock, each with a par
value of €1. The Company’s shares are issued to bearer.
The rights and duties of shareholders derive from the
German Stock Corporation Act (AktG) in conjunction
with the Company’s Articles of Incorporation, the full
text of which is available at www.bmwgroup.com. The
right of shareholders to have their shares evidenced is
excluded in accordance with the Articles of Incorpora-
tion. The voting power attached to each share corre-
sponds to its par value. Each €1 of par value of share
capital represented in a vote entitles the holder to one
vote (Article 18 no. 1 of the Articles of Incorporation).
The Company’s shares of preferred stock are shares
within the meaning of § 139 et seq. AktG, which carry a
cumulative preferential right in terms of the allocation
of profit and for which voting rights are normally ex-
cluded. These shares only confer voting rights in excep-
tional cases stipulated by law, in particular when the
preference amount has not been paid or has not been
fully paid in one year and the arrears are not paid in the
subsequent year alongside the full preference amount
due for that year. With the exception of voting rights,
holders of shares of preferred stock are entitled to the
same rights as holders of shares of common stock.
Article 24 of the Articles of Incorporation confers pref-
erential treatment to the non-voting shares of preferred
stock with regard to the appropriation of the Com-
pany’s unappropriated profit. Accordingly, the unap-
propriated profit is required to be appropriated in the
following order:
(a) subsequent payment of any arrears on dividends on
non-voting preferred shares in the order of accrue-
ment,
(b) payment of an additional dividend of € 0.02 per € 1
par value on non-voting preferred shares and
(c) uniform payment of any other dividends on shares
on common and preferred stock, provided the
shareholders do not resolve otherwise at the Annual
General Meeting.
Restrictions on voting rights or the transfer of shares
As well as shares of common stock, the Company has
also issued non-voting shares of preferred stock. Fur-
ther information relating to this can be found above in
the section “Composition of subscribed capital”.
When the Company issues non-voting shares of pre-
ferred stock to employees in conjunction with its Em-
ployee Share Programme, these shares are subject as a
general rule to a company-imposed vesting period of
four years, measured from the beginning of the calen-
dar year in which the shares are issued.
Contractual holding period arrangements also apply to
shares of common stock required to be acquired by
Board of Management members and certain senior de-
partment heads in conjunction with the share-based
remuneration programmes (Compensation Report of
the Corporate Governance section; note 19 to the
Group Financial Statements).
Direct or indirect investments in capital exceeding
10 % of voting rights
Based on the information available to the Company, the
following direct or indirect holdings exceeding 10 % of
the voting rights at the end of the reporting period were
held at the date stated2:
Stefan Quandt, Germany
Susanne Klatten, Germany
AQTON SE, Bad Homburg v. d. Höhe, Germany
Johanna Quandt GmbH, Bad Homburg v. d. Höhe, Germany
Johanna Quandt GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany
Susanne Klatten Beteiligungs GmbH, Bad Homburg v. d. Höhe, Germany
Direct share of
voting rights (%)
Indirect share of
voting rights (%)
33.83, 4
28.93, 5
16.46
0.2
0.2
17.4
16.4
12.6
1 Disclosures pursuant to § 289 (4) HGB and § 315 (4) HGB.
2 Based on voluntary notifications provided by the listed shareholders as at 31 December 2015.
3 Voting rights held indirectly by the joint heirs of the Johanna Quandt estate are attributed in full in both cases to Stefan Quandt and Susanne Klatten.
4 Controlled entities, of which 3 % or more are attributed: Johanna Quandt GmbH, Johanna Quandt GmbH & Co. KG für Automobilwerte, AQTON SE.
5 Controlled entities, of which 3 % or more are attributed: Johanna Quandt GmbH, Johanna Quandt GmbH, Johanna Quandt GmbH & Co. KG für Automobilwerte,
Susanne Klatten Beteiligungs GmbH.
6 Controlled entities, of which 3 % or more are attributed: Johanna Quandt GmbH & Co. KG für Automobilwerte.
84
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
The voting power percentages disclosed above may have
changed subsequent to the stated date if these changes
were not required to be reported to the Company. Due
to the fact that the Company’s shares are issued to bearer,
the Company is generally only aware of changes in
shareholdings if such changes are subject to mandatory
notification rules.
Shares with special rights which confer control rights
There are no shares with special rights which confer
control rights.
System of control over voting rights when employees
participate in capital and do not exercise their control
rights directly
Like all other shareholders, employees exercise their
control rights pertaining to shares they have acquired
in conjunction with the Employee Share Programme
and / or the share-based remuneration programme
directly on the basis of relevant legal provisions and the
Company’s Articles of Incorporation.
Statutory regulations and Articles of Incorporation
provisions with regard to the appointment and removal
of members of the Board of Management and changes
to the Articles of Incorporation
The appointment or removal of members of the Board
of Management is based on the rules contained in
§ 84 et seq. AktG in conjunction with § 31 of the German
Co-Determination Act (MitbestG).
Amendments to the Articles of Incorporation must
comply with § 179 et seq. AktG. All amendments must
be decided upon by the shareholders at the Annual
General Meeting (§ 119 (1) no. 5, § 179 (1) AktG). The
Supervisory Board is authorised to approve amend-
ments to the Articles of Incorporation which only affect
its wording (Article 14 no. 3 of the Articles of Incorpo-
ration). Resolutions are passed at the Annual General
Meeting by simple majority of shares unless otherwise
explicitly required by binding provisions of law or, when
a majority of share capital is required, by simple majority
of shares represented in the vote (Article 20 no.1 of the
Articles of Incorporation).
Authorisations given to the Board of Management
in particular with respect to the issuing or buying back
of shares
The Board of Management is authorised to buy back
shares and sell repurchased shares in situations specified
in § 71 AktG, e. g. to avert serious and imminent damage
to the Company and / or to offer shares to persons em-
ployed or previously employed by BMW AG or one of its
affiliated companies.
In accordance with the resolution passed at the Annual
General Meeting on 15 May 2014, the Board of Manage-
ment is also authorised – up to 14 May 2019 – to acquire
shares of non-voting preferred stock of the Company
via the stock exchange, up to a maximum of 1 % of the
share capital existing at the date of the resolution. The
consideration paid by the Company per share of non-
voting preferred stock (excluding transaction costs) may
not be more than 10 % above or below the market price
determined by the opening auction on the date of trad-
ing of the stock in the Xetra trading system (or a suc-
cessor system having a comparable function). Moreover,
the Board of Management is authorised to use the ac-
quired Company’s own shares of non-voting preferred
stock for all legally admissible purposes, specifically in-
cluding the right to offer and transfer shares to persons
employed by the Company or one of its affiliated com-
panies up to a proportionate amount of € 5 million of
share capital. The subscription rights of existing share-
holders to the new shares of preferred stock used for
the purpose stated above are excluded. The authorisa-
tions may also be exercised in parts on more than one
occasion.
In accordance with § 4 no. 5 of the Articles of Incorpo-
ration, the Board of Management is authorised – with
the approval of the Supervisory Board – to increase
BMW AG’s share capital during the period until 14 May
2019 by up to € 4,450,383 for the purposes of an Em-
ployee Share Programme by issuing new non-voting
shares of preferred stock, which carry the same rights
as existing non-voting preferred stock, in return for
cash contributions (Authorised Capital 2014). Existing
shareholders may not subscribe to the new shares. No
conditional capital is in place at the reporting date.
Significant agreements entered into by the Company
subject to control change clauses in the event of a
takeover bid
The BMW AG is party to the following major agreements
which contain provisions for the event of a change in
control or the acquisition of control as a result of a take-
over bid:
– An agreement concluded with an international con-
sortium of banks relating to a syndicated credit line
85 COMBINED MANAGEMENT REPORT
(which was not being utilised at the balance sheet
date) entitles the lending banks to give extraordinary
notice to terminate the credit line (such that all out-
standing amounts, including interest, would fall due
immediately) if one or more parties jointly acquire
direct or indirect control of BMW AG. The term “con-
trol” is defined as the acquisition of more than 50 %
of the share capital of BMW AG, the right to receive
more than 50 % of the dividend or the right to direct
the affairs of the Company or appoint the majority of
members of the Supervisory Board.
– A cooperation agreement concluded with Peugeot SA
relating to the joint development and production of
a new family of small (1 to 1.6 litre) petrol-driven en-
gines entitles each of the cooperation partners to give
extraordinary notification of termination in the event
of a competitor acquiring control over the other con-
tractual party and if any concerns of the other con-
tractual party concerning the impact of the change
of control on the cooperation arrangements are not
allayed during the subsequent discussion process.
– BMW AG acts as guarantor for all obligations arising
from the joint venture agreement relating to BMW
Brilliance Automotive Ltd. in China. This agreement
grants an extraordinary right of termination to either
joint venture partner in the event that, either directly
or indirectly, more than 25 % of the shares of the
other party are acquired by a third party or the other
party is merged with another legal entity. The termi-
nation of the joint venture agreement may result in
the sale of the shares to the other joint venture part-
ner or in the liquidation of the joint venture entity.
– Framework agreements are in place with financial in-
stitutions and banks (ISDA Master Agreements) with
respect to trading activities with derivative financial
instruments. Each of these agreements includes an
extraordinary right of termination which triggers the
immediate settlement of all current transactions in
the event that the creditworthiness of the party in-
volved is materially weaker following a direct or indi-
rect acquisition of beneficially owned equity capital
which confers the power to elect a majority of the
Supervisory Board of a contractual party or any other
ownership interest that enables the acquirer to exer-
cise control over a contractual party or which consti-
tutes a merger or a transfer of net assets.
– Financing agreements in place with the European
Investment Bank (EIB) entitle the EIB to request early
repayment of the loan in the event of an imminent
or actual change in control at the level of BMW AG
(partially in the capacity of guarantor and partially in
the capacity of borrower), if the EIB has reason to
assume – after the change in control has taken place
or 30 days after it has made a request to discuss the
situation – that the change in control could have a
significantly adverse impact or if the borrower refuses
to hold any such discussions. A change in control of
BMW AG arises if one or more individuals take over or
lose control of BMW AG, with control being defined
in the above-mentioned financing agreements as
(i) holding or having control over more than 50 % of
the voting rights, (ii) the right to stipulate the majority
of the members of the Board of Management or
Super visory Board, (iii) the right to receive more than
50 % of dividends payable or (iv) any other comparable
controlling influence over BMW AG.
– BMW AG is party to an agreement with SGL Carbon
SE, Wiesbaden, relating to the joint operations SGL
Automotive Carbon Fibers LLC, Delaware, USA and
SGL Automotive Carbon Fibers GmbH & Co. KG,
Munich. The agreement includes call and put rights
in case – either directly or indirectly – 50 % or more of
the voting rights relating to the relevant other share-
holder of the joint operations are acquired by a third
party, or if 25 % of such voting rights have been ac-
quired by a third party if that third party is a com-
petitor of the party that has not been affected by the
acquisition of the voting rights. In the event of such
acquisitions of voting rights by a third party, the non-
affected shareholder has the right to purchase the
shares of the joint operations from the affected share-
holder or to require the affected party to acquire the
other shareholder’s shares.
– The framework cooperation agreement entered into
by BMW AG and Sixt SE (as well as other BMW and
Sixt entities), relating to the foundation and operation
of the car sharing joint venture DriveNow, may be
terminated by Sixt SE if a car hire company acquires
more than 50 % of the shares of common stock of
BMW AG. In the event of such a termination, Sixt SE
may, at its own discretion, stipulate the sale of BMW’s
interest in the joint venture to Sixt SE or the pur-
chase of Sixt’s interest in the joint venture by BMW AG
or one its subsidiaries.
– An engine supply agreement between BMW AG and
Toyota Motor Europe SA relating to the sale of diesel
engines entitles each of the contractual parties to give
extraordinary notification of termination in the event
that one of the contractual parties merges with an-
other company or is taken over by another company.
86
– In accordance with the agreement between BMW AG,
Daimler AG and AUDI AG pertaining to the acqui-
sition of entities of the HERE Group and the related
foundation of There Holding B.V., each contractual
party is required to offer its shares in There Holding
B.V. for sale to the other shareholders in the event
of a change in control. If neither of the other two
parties acquire these shares, these other parties are
entitled to resolve that There Holding B.V. be dis-
solved.
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
offer.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
87 COMBINED MANAGEMENT REPORT
BMW Stock and Capital Markets in 2015
BMW shares of common stock climbed to a new record
high of € 122.60 during 2015. The BMW Group contin-
ues to have the best ratings in the European automobile
sector, enabling it to benefit from excellent access to in-
ternational capital markets.
Volatile stock markets in 2015
The 2015 stock market year was influenced by the slow-
down of the Chinese economy, the weakness of the
euro against the US dollar and the depreciation in value
of the Chinese renminbi. The Greek debt crisis and the
monetary policies pursued by the US Federal Reserve
Bank were sources of additional uncertainty for inves-
tors. Even the bond-buying programme put in place by
the ECB in the first quarter, initially lauded by capital
markets, was unable to fully counteract the negative con-
sequences of these events. However, thanks to the im-
proved mood towards the year-end, most stock markets
recorded a gain for the twelve-month period.
At the beginning of 2015, the ECB’s expansionary mone-
tary policies prompted an upturn in Europe’s capital
markets. The loss in value of the euro against the US
dollar provided a boost for European exports and con-
tributed to a more amenable stock market climate. This
initial momentum was overshadowed in the second
quarter by the renewed flare-up of the debt crisis in
Greece, news of China’s faltering economy, and the
Ukraine crisis. The Chinese government revised down
its growth forecast for the domestic economy for 2015
from 7.5 % to 7.0 %. The Greek sovereign debt crisis took
another turn for the worse in June, putting a further
dampener on sentiment among investors. The financial
situation in Greece eased in the third quarter, following
Development of BMW stock compared to stock exchange indices
(Index: December 2010 = 100)
Development of BMW stock compared to stock exchange
indices since 30 December 2010
in %
240
200
160
120
80
40
BMW
preferred stock
BMW
common stock
Prime
Automobile
DAX
201.1
165.9
187.9
155.4
the authorisation of a further rescue package. However,
the Chinese government’s announcement of its inten-
tion to devalue the renminbi triggered further shock
waves on the world’s capital markets. Moreover, news
of the manipulation of competitors’ diesel and petrol
engines at the end of the third quarter had a negative
effect on investor sentiment with respect to the auto-
mobile industry as a whole. The general mood on stock
markets proceeded to turn yet again during the final
three months of the year. The ECB’s announcement that
it is was considering expanding the scale of cheap money
within the euro region and the news of a renewed re-
duction in the reference interest rate by the Chinese
government fuelled the hopes of investors that the global
economy could pick up. As a consequence, the DAX
and the EURO STOXX 50 finished the year with a tangi-
ble gain, despite the losses arising in the interim period.
250
225
200
175
150
125
100
75
50
BMW preferred stock
Prime Automobile
BMW common stock
DAX
11
12
13
14
15
BMW preferred stock
Prime Automobile
BMW common stock
DAX
88
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Against this background, the DAX reached a new all-
time high of 12,375 points in April. The slowdown of
the Chinese economy and the debate regarding the
manipulation of exhaust emissions of competitors had a
strong negative subsequent influence on the index. The
low for the year of 9,428 points was recorded in Sep-
tember. Following an upturn in the market environment,
the DAX finished the year at 10,743 points, up 9.6 % for
the twelve-month period.
The EURO STOXX 50 recorded a gain of 3.9 % in 2015,
closing at 3,268 points on 31 December.
The Prime Automobile Index performed even better, gain-
ing 7.1 % over the year under report to reach 1,596 points.
In March, BMW common stock climbed initially to reach
a new high of € 122.60. After falling back to a low for the
year of € 75.68 in September, it regained momentum in
the fourth quarter, finishing the year at € 97.63, 8.8 %
higher than at the end of 2014. BMW preferred stock
gained 14.1 % in value compared to its closing price at
the end of the previous year. At the end of the stock
market year it stood at € 77.41 after recording a new all-
time high of € 92.19 in March.
With a market capitalisation of approximately € 63 bil-
lion, the BMW Group was among the ten most valuable
German enterprises listed on the stock market at the
end of 2015.
Employee Share Programme
BMW AG has enabled its employees to participate in
its success for more than 40 years. Since 1989, this
participation has taken the form of an Employee Share
Programme. A total of 309,944 shares of preferred stock
were issued to employees as part of this programme in
2015.
BMW stock
Common stock
Number of shares in 1,000
Stock exchange price in €1
Year-end closing price
High
Low
Preferred stock
Number of shares in 1,000
Stock exchange price in €1
Year-end closing price
High
Low
Key data per share in €
Dividend
Common stock
Preferred stock
Earnings per share of common stock 3
Earnings per share of preferred stock 4
Operating cash flow Automotive segment
Equity
1 Xetra closing prices.
2 Proposed by management.
3 Annual average weighted amount.
4 Stock weighted according to dividend entitlements.
2015
2014
2013
2012
2011
601,995
601,995
601,995
601,995
601,995
97.63
122.60
75.68
89.77
95.51
77.41
85.22
85.42
63.93
72.93
73.76
53.16
51.76
73.52
45.04
54,809
54,500
54,260
53,994
53,571
77.41
92.19
58.96
3.20 2
3.22 2
9.70
9.72
18.02
65.03
67.84
74.60
59.08
2.90
2.92
8.83
8.85
14.35
57.03
62.09
64.65
48.69
2.60
2.62
8.08
8.10
15.19
54.25
48.76
49.23
35.70
2.50
2.52
7.77
7.79
13.98
46.66
36.55
45.98
32.01
2.30
2.32
7.45
7.47
12.38
41.34
Intensive communication with capital markets
The BMW Group continued to keep analysts, investors
and rating agencies up to date throughout 2015 with
regular quarterly and year-end financial reports. As in
previous years, numerous one-to-one discussions,
group discussions and dedicated Socially Responsible
Investment (SRI) roadshows were held for investors
wishing to incorporate sustainability criteria in their in-
vestment decisions. This comprehensive communication
with relevant capital market participants was supple-
mented by debt roadshows for capital debt investors
and credit analysts. Communication focused primarily
on developments on the Chinese market, digitalisation
and other technological trends in the automobile in-
dustry, and the relevance of alternative drive systems.
Events organised during the year included a Capital
Markets Day for analysts and investors at the BMW
Group’s Spartanburg plant in the USA.
89 COMBINED MANAGEMENT REPORT
In this context, and with the approval of the Super-
visory Board, the Board of Management increased
BMW AG’s share capital by € 309,860 from € 656,494,740
to € 656,804,600 by issuing 309,860 new non-voting
shares of preferred stock. The increase was executed on
the basis of Authorised Capital 2014 in Article 4 (5) of
the Articles of Incorporation. The new shares of pre-
ferred stock carry the same rights as existing shares of
preferred stock and were issued to enable employees to
obtain an equity participation in the Company. In addi-
tion, 84 shares of preferred stock were bought back via
the stock market in order to service the Employee Share
Programme.
Proposed dividend increase
Reflecting the good earnings performance, the Board of
Management and the Supervisory Board will propose
to the Annual General Meeting to use BMW AG’s un-
appropriated profit of € 2,102 million (2014: € 1,904 mil-
lion) to pay a dividend of € 3.20 for each share of com-
mon stock (2014: € 2.90) and a dividend of € 3.22 for each
share of preferred stock (2014: € 2.92), a distribution rate
of 32.9 % for 2015 (2014: 32.7 %).
Ratings remain at top level
The BMW Group continues to have the best ratings in
the European automobile sector. Since December 2013,
BMW AG has had a long-term rating of A+ (stable out-
look) and a short-term rating of A-1 from the rating
agency Standard & Poor’s, currently the highest rating
given by Standard & Poor’s to a European car manufac-
turer.
On 24 March 2015, Moody’s raised the outlook for
BMW AG’s rating from “stable” to “positive”. At the same
time, it confirmed BMW AG’s long-term rating (A2) and
its short-term rating (P-1), both of which represent the
best ratings currently awarded in the European automo-
bile sector.
The rating assessments underline the BMW Group’s ro-
bust financial condition and excellent creditworthiness.
Thanks to these attributes, the Group not only has good
access to international capital markets, it also benefits
from attractive refinancing conditions, which are par-
ticularly helpful for the BMW Group’s financial services
business.
90
GROUP FINANCIAL STATEMENTS
BMW Group
Income Statements for Group and Segments
Statement of Comprehensive Income for Group
Income Statements for Group and Segments
in € million
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income
Other operating expenses
Profit / loss before financial result
Result from equity accounted investments
Interest and similar income
Interest and similar expenses
Other financial result
Financial result
Profit / loss before tax
Income taxes
Net profit / loss
Attributable to minority interest
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
Statement of Comprehensive Income for Group
in € million
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Note
Group
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
9
10
11
12
12
13
14
14
15
16
34
34
17
17
17
17
92,175
80,401
85,536
75,173
1,990
1,679
23,739
20,599
– 74,043
– 63,396
– 70,399
– 61,221
– 1,542
– 1,365
– 20,586
– 17,783
18,132
17,005
15,137
13,952
448
314
3,153
2,816
– 8,633
– 7,892
– 7,219
– 6,645
– 239
– 201
– 1,164
– 1,035
914
– 820
9,593
518
185
– 618
– 454
– 369
9,224
877
– 872
9,118
655
200
– 519
– 747
– 411
8,707
689
– 771
7,836
518
327
– 762
– 396
– 313
7,523
749
– 812
7,244
655
331
– 620
– 724
– 358
6,886
– 2,828
– 2,890
– 2,376
– 2,365
5,147
5
5,142
4,521
7
4,514
6,396
27
6,369
9.70
9.72
–
9.70
9.72
5,817
19
5,798
8.83
8.85
–
8.83
8.85
–
– 27
182
–
–
– 3
–
– 3
179
– 55
124
–
124
–
– 1
112
–
–
– 5
–
– 5
107
– 34
73
–
73
46
– 54
1,981
–
4
– 7
– 3
– 6
1,975
– 528
1,447
21
1,426
73
– 98
1,756
–
4
– 29
– 8
– 33
1,723
– 525
1,198
11
1,187
– 19,097
– 17,057
Revenues
18,484
16,973
Cost of sales
– 84
Gross profit
17
Selling and administrative expenses
– 81
Other operating income
83
Other operating expenses
– 65
Profit / loss before financial result
–
Result from equity accounted investments
– 1,323
– 1,430
Interest and similar income
– 1,080
– 1,197
1,234
1,332
Interest and similar expenses
7
–
7
– 30
238
– 46
169
–
1,177
– 55
42
211
– 73
138
1
137
7
–
7
– 28
136
– 44
71
–
1,295
– 15
83
154
– 49
105
1
104
– 613
19
– 59
78
– 575
–
–
– 89
– 664
204
– 460
–
– 460
–
Other financial result
– 98
Financial result
– 163
Profit / loss before tax
83
Income taxes
– 80
Net profit / loss
–
Attributable to minority interest
– 80
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
Net profit
Remeasurement of the net defined benefit liability for pension plans
Deferred taxes
Items not expected to be reclassified to the income statement in the future
Available-for-sale securities
Financial instruments used for hedging purposes
Other comprehensive income from equity accounted investments
Deferred taxes
Currency translation foreign operations
Items expected to be reclassified to the income statement in the future
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
Note
35
20
34
2015
2014
6,396
1,413
– 401
1,012
– 170
5,817
– 2,298
706
– 1,592
40
– 1,301
– 2,194
71
516
765
– 119
– 48
732
764
– 706
893
– 2,298
7,289
27
7,262
3,519
19
3,500
91 GROUP FINANCIAL STATEMENTS
Motorcycles
Financial Services
Other Entities
Eliminations
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
2015
2014
2015
2014
2015
2014
2015
2014
1,990
1,679
23,739
20,599
– 1,542
– 1,365
– 20,586
– 17,783
448
314
3,153
2,816
– 239
– 201
– 1,164
– 1,035
–
– 27
182
–
–
– 3
–
– 3
179
– 55
124
–
124
–
– 1
112
–
–
– 5
–
– 5
107
– 34
73
–
73
46
– 54
1,981
–
4
– 7
– 3
– 6
1,975
– 528
1,447
21
1,426
73
– 98
1,756
–
4
– 29
– 8
– 33
1,723
– 525
1,198
11
1,187
7
–
7
– 30
238
– 46
169
–
1,177
7
–
7
– 28
136
– 44
71
–
1,295
– 19,097
– 17,057
Revenues
18,484
16,973
Cost of sales
– 613
19
– 59
78
– 575
–
– 84
Gross profit
17
Selling and administrative expenses
– 81
Other operating income
83
Other operating expenses
– 65
Profit / loss before financial result
–
Result from equity accounted investments
– 1,323
– 1,430
Interest and similar income
– 1,080
– 1,197
1,234
1,332
Interest and similar expenses
– 55
42
211
– 73
138
1
137
– 15
83
154
– 49
105
1
104
–
– 89
– 664
204
– 460
–
– 460
–
Other financial result
– 98
Financial result
– 163
Profit / loss before tax
83
Income taxes
– 80
Net profit / loss
–
Attributable to minority interest
– 80
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
92
BMW Group
Balance Sheets for Group and Segments at 31 December
Assets
in € million
Intangible assets
Property, plant and equipment
Leased products
Investments accounted for using the equity method
Other investments
Receivables from sales financing
Financial assets
Deferred tax
Other assets
Non-current assets
Inventories
Trade receivables
Receivables from sales financing
Financial assets
Current tax
Other assets
Cash and cash equivalents
Current assets
Note
Group
Automotive
(unaudited supplementary information)
2015
2014
2015
2014
22
23
24
25
26
27
28
16
30
31
32
27
28
29
30
33
7,372
17,759
34,965
2,233
428
41,865
2,208
1,945
1,568
6,499
17,182
30,165
1,088
408
37,438
2,024
2,061
1,094
110,343
97,959
11,071
2,751
28,178
6,635
2,381
4,693
6,122
11,089
2,153
23,586
5,384
1,906
5,038
7,688
61,831
56,844
6,899
17,416
–
2,233
5,147
–
586
4,114
3,935
40,330
10,611
2,453
–
4,859
1,240
19,907
3,952
43,022
5,999
16,863
3
1,088
5,110
–
447
3,253
3,662
36,425
10,698
1,887
–
3,952
1,186
19,231
5,752
42,706
Total assets
172,174
154,803
83,352
79,131
Equity and liabilities
in € million
Subscribed capital
Capital reserves
Revenue reserves
Accumulated other equity
Equity attributable to shareholders of BMW AG
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
Automotive
(unaudited supplementary information)
2015
2014
2015
2014
34
34
34
34
34
34
35
36
16
38
39
36
37
38
40
39
657
2,027
41,027
– 1,181
42,530
234
42,764
3,000
4,621
2,116
49,523
4,559
63,819
5,009
1,441
42,160
7,773
9,208
65,591
656
2,005
35,621
– 1,062
37,220
217
37,437
4,604
4,268
1,974
43,167
4,275
58,288
4,522
1,590
37,482
7,709
7,775
59,078
33,460
31,045
1,770
4,141
429
2,621
5,545
2,741
3,777
421
1,933
5,445
14,506
14,317
4,398
810
3,211
6,856
20,111
35,386
3,746
1,050
3,250
6,929
18,794
33,769
Total equity and liabilities
172,174
154,803
83,352
79,131
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
93 GROUP FINANCIAL STATEMENTS
Motorcycles
Financial Services
Other Entities
Eliminations
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
2015
2014
2015
2014
2015
2014
2015
2014
Assets
48
313
–
–
–
–
–
–
25
386
453
139
–
–
–
–
–
592
978
54
285
–
–
–
–
–
–
20
359
383
128
–
–
–
–
–
511
424
30
445
34
41,148
35,366
–
2
–
6
41,865
37,438
236
222
2,469
86,396
7
158
28,178
1,354
37
4,540
1,359
35,633
210
287
1,913
75,699
8
137
23,586
1,048
102
3,953
1,783
30,617
1
–
–
–
5,966
–
1,985
205
22,268
30,425
–
1
–
1,121
1,104
45,379
811
48,416
1
–
–
–
5,808
–
1,751
367
21,895
29,822
–
1
–
898
618
–
–
–
Intangible assets
–
Property, plant and equipment
– 6,183
– 5,204
Leased products
–
–
Investments accounted for using the equity method
– 10,687
– 10,516
Other investments
–
– 599
– 2,596
–
Receivables from sales financing
– 384
Financial assets
– 1,846
Deferred tax
– 27,129
– 26,396
Other assets
– 47,194
– 44,346
Non-current assets
–
–
–
– 699
–
–
Inventories
–
Trade receivables
–
Receivables from sales financing
– 514
Financial assets
–
Current tax
36,682
– 65,133
– 54,828
Other assets
153
38,352
–
–
Cash and cash equivalents
– 65,832
– 55,342
Current assets
870
122,029
106,316
78,841
68,174
– 113,026
– 99,688
Total assets
Motorcycles
Financial Services
Other Entities
Eliminations
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
2015
2014
2015
2014
2015
2014
2015
2014
Equity and liabilities
9,948
9,357
15,225
12,031
– 15,869
– 14,996
Equity
Subscribed capital
Capital reserves
Revenue reserves
Accumulated other equity
Equity attributable to shareholders of BMW AG
Minority interest
55
313
6,158
16,030
23,613
46,169
518
223
23,038
630
41,503
65,912
75
273
5,078
14,695
23,680
43,801
432
162
19,122
571
32,871
53,158
31
28
31,471
835
33,495
8
408
16,610
24
13,071
30,121
1,130
1,710
58
13
26,923
–
–
– 4,499
– 599
–
Pension provisions
–
Other provisions
– 3,538
Deferred tax
– 384
Financial liabilities
51
– 25,835
– 25,258
Other liabilities
28,755
– 30,933
– 29,180
Non-current provisions and liabilities
282
378
15,624
17
11,087
27,388
–
–
– 699
–
–
Other provisions
–
Current tax
– 514
Financial liabilities
–
Trade payables
– 65,525
– 54,998
Other liabilities
– 66,224
– 55,512
Current provisions and liabilities
870
122,029
106,316
78,841
68,174
– 113,026
– 99,688
Total equity and liabilities
–
78
160
–
–
357
595
62
–
–
192
21
275
–
45
136
–
–
401
582
85
–
–
263
48
396
978
94
BMW Group
Cash Flow Statements for Group and Segments
in € million
Net profit
Reconciliation between net profit and cash inflow / outflow from operating activities
Current tax
Other interest and similar income / expenses
Depreciation and amortisation of other tangible, intangible and investment assets
Change in provisions
Change in leased products
Change in receivables from sales financing
Change in deferred taxes
Other non-cash income and expense items
Gain / loss on disposal of tangible and intangible assets and marketable securities
Result from equity accounted investments
Changes in working capital
Change in inventories
Change in trade receivables
Change in trade payables
Change in other operating assets and liabilities
Income taxes paid
Interest received
Cash inflow / outflow from operating activities
Investment in intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investments
Proceeds from the disposal of investments
Investments in marketable securities and term deposits
Proceeds from the sale of marketable securities and from matured term deposits
Cash inflow / outflow from investing activities
Issue / buy-back of treasury shares
Payments into equity
Payment of dividend for the previous year
Intragroup financing and equity transactions
Interest paid
Proceeds from the issue of bonds
Repayment of bonds
Proceeds from new non-current other financial liabilities
Repayment of non-current other financial liabilities
Change in current other financial liabilities
Change in commercial paper
Cash inflow / outflow from financing activities
Effect of exchange rate on cash and cash equivalents
Effect of changes in composition of Group on cash and cash equivalents
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Note
Group
2015
2014
6,396
5,817
2,751
239
4,686
296
– 3,299
– 6,637
77
47
– 144
– 518
– 293
298
– 566
– 25
550
2,774
127
4,323
1,103
– 2,720
– 3,898
116
331
– 63
– 655
– 551
– 971
379
41
323
– 3,323
– 4,252
132
960
137
2,912
– 5,889
– 6,099
38
– 7461
215
– 6,880
5,659
– 7,603
–
23
36
– 99
190
– 4,216
4,072
– 6,116
–
15
– 1,917
– 1,715
–
– 264
13,007
– 8,908
9,715
– 8,802
2,648
– 498
5,004
73
–
–
– 133
10,892
– 7,249
5,900
– 5,697
2,132
– 1,012
3,133
86
2
17
7,671
7,688
43
43
43
Change in cash and cash equivalents
43
– 1,566
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
7,688
6,122
1 Expenditure for investments includes the acquisition of shares in THERE Holding B. V., Amsterdam, amounting to € 668 million.
2 Interest relating to financial services business is classified as revenues / cost of sales.
95 GROUP FINANCIAL STATEMENTS
Automotive
Financial Services
(unaudited supplementary information)
(unaudited supplementary information)
2015
2014
2015
2014
5,147
4,521
1,447
1,198
Net profit
2,893
302
4,577
128
3
–
– 369
316
– 138
– 518
– 337
367
– 541
– 163
2,295
2,786
159
4,230
1,034
15
–
– 124
– 5
– 54
– 655
– 552
– 907
371
– 16
419
– 2,595
– 2,531
132
11,836
180
9,423
– 5,791
– 6,021
38
– 823
144
– 6,498
5,406
– 7,524
–
23
– 1,917
– 2,840
– 264
–
–
108
– 521
– 719
–
36
– 134
177
– 3,775
3,881
– 5,836
–
15
– 1,715
– 4,299
– 136
–
–
452
– 41
1,042
–
– 125
12
31
172
– 4,026
– 6,637
579
5
– 5
–
46
1
– 15
60
Reconciliation between net profit and cash inflow / outflow from operating activities
– 40
242
29
109
Current tax
Other interest and similar income / expenses
Depreciation and amortisation of other tangible, intangible and investment assets
Change in provisions
– 3,309
Change in leased products
– 3,898
Change in receivables from sales financing
383
Change in deferred taxes
14
8
–
70
–
14
56
Other non-cash income and expense items
Gain / loss on disposal of tangible and intangible assets and marketable securities
Result from equity accounted investments
Changes in working capital
Change in inventories
Change in trade receivables
Change in trade payables
– 1,706
858
Change in other operating assets and liabilities
– 133
–2
– 161
–2
Income taxes paid
Interest received
– 10,351
– 4,715
Cash inflow / outflow from operating activities
– 6
–
–
–
– 387
253
– 140
–
–
–
5,913
–2
429
– 773
8,787
– 7,671
3,343
–
– 9
Investment in intangible assets and property, plant and equipment
–
–
–
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investments
Proceeds from the disposal of investments
– 458
Investments in marketable securities and term deposits
170
Proceeds from the sale of marketable securities and from matured term deposits
– 297
Cash inflow / outflow from investing activities
–
–
–
4,094
–2
Issue / buy-back of treasury shares
Payments into equity
Payment of dividend for the previous year
Intragroup financing and equity transactions
Interest paid
1,009
Proceeds from the issue of bonds
– 733
Repayment of bonds
5,298
Proceeds from new non-current other financial liabilities
– 4,814
Repayment of non-current other financial liabilities
1,073
Change in current other financial liabilities
–
Change in commercial paper
– 6,130
– 4,682
10,028
5,927
Cash inflow / outflow from financing activities
18
–
70
2
39
–
– 11
Effect of exchange rate on cash and cash equivalents
–
Effect of changes in composition of Group on cash and cash equivalents
– 1,800
– 1,023
– 424
904
Change in cash and cash equivalents
5,752
3,952
6,775
5,752
1,783
1,359
879
Cash and cash equivalents as at 1 January
1,783
Cash and cash equivalents as at 31 December
96
BMW Group
Group Statement of Changes in Equity
in € million
Note
Subscribed
capital
Capital
reserves
Revenue reserves
1 January 2014
Dividends paid
Net profit
Other comprehensive income for the period after tax
Comprehensive income 31 December 2014
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2014
34
34
656
–
–
–
–
–
–
–
656
1,990
–
–
–
–
–
15
–
33,122
– 1,707
5,798
– 1,592
4,206
–
–
–
2,005
35,621
in € million
Note
Subscribed
capital
Capital
reserves
Revenue reserves
1 January 2015
Dividends paid
Net profit
Other comprehensive income for the period after tax
Comprehensive income 31 December 2015
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2015
34
34
656
–
–
–
–
1
–
–
657
2,005
–
–
–
–
–
22
–
2,027
35,621
– 1,904
6,369
1,012
7,381
–
–
– 71
41,027
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
97 GROUP FINANCIAL STATEMENTS
Accumulated other equity
Equity
attributable to
shareholders
of BMW AG
Minority
interest
Total
Currency
translation
differences
Securities
Derivative
financial
instruments
– 1,627
135
1,136
35,412
–
–
904
904
–
–
–
– 723
–
–
6
6
–
–
–
141
–
–
– 1,616
– 1,616
–
–
–
– 1,707
5,798
– 2,298
3,500
–
15
–
– 480
37,220
188
–
19
–
19
–
–
10
217
35,600
1 January 2014
– 1,707
Dividends paid
5,817
Net profit
– 2,298
Other comprehensive income for the period after tax
3,519
Comprehensive income 31 December 2014
–
15
10
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
37,437
31 December 2014
Accumulated other equity
Equity
attributable to
shareholders
of BMW AG
Minority
interest
Total
Currency
translation
differences
Securities
Derivative
financial
instruments
– 723
141
– 480
37,220
–
–
855
855
–
–
–
132
–
–
– 117
– 117
–
–
–
–
–
– 857
– 857
–
–
–
– 1,904
6,369
893
7,262
1
22
– 71
24
– 1,337
42,530
217
–
27
–
27
–
–
– 10
234
37,437
1 January 2015
– 1,904
Dividends paid
6,396
Net profit
893
Other comprehensive income for the period after tax
7,289
Comprehensive income 31 December 2015
1
Subscribed share capital increase out of Authorised Capital
22
Premium arising on capital increase relating to preferred stock
– 81
Other changes
42,764
31 December 2015
98
BMW Group
Notes to the Group Financial Statements
Accounting Principles and Policies
1
Basis of preparation
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMW AG Group Finan-
cial Statements or Group Financial Statements) at 31 De-
cember 2015 have been drawn up in accordance with
International Financial Reporting Standards (IFRS) as
endorsed by the EU. The designation “IFRS” also in-
cludes all valid International Accounting Standards (IAS).
All Interpretations of the IFRS Interpretations Commit-
tee (IFRIC) mandatory for the financial year 2015 are
also applied.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
The Group Financial Statements comply with § 315a of
the German Commercial Code (HGB). This provision,
in conjunction with the Regulation (EC) No. 1606 / 2002
of the European Parliament and Council of 19 July
2002, relating to the application of International Finan-
cial Reporting Standards, provides the legal basis for
preparing consolidated financial statements in accord-
ance with international standards in Germany and
applies to financial years beginning on or after 1 January
2005.
The BMW Group and segment income statements are
presented using the cost of sales method. The Group
and segment balance sheets correspond to the classi-
fication provisions contained in IAS 1 (Presentation of
Financial Statements).
In order to improve clarity, various items are aggregated
in the income statements and balance sheets presented.
These items are disclosed and analysed separately in the
notes.
A Statement of Comprehensive Income is presented at
Group level reconciling the net profit to comprehensive
income for the year.
In order to provide a better insight into the net assets,
financial position and performance of the BMW Group
and going beyond the requirements of IFRS 8 (Operat-
ing Segments), the Group Financial Statements also
include balance sheets and income statements for the
Automotive, Motorcycles, Financial Services and Other
Entities segments. The Group Cash Flow Statement is
supplemented by statements of cash flows for the Auto-
motive and Financial Services segments. This supple-
mentary information is unaudited.
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.
Inter-segment transactions – relating primarily to inter-
nal sales of products, the provision of funds and the
related interest – are eliminated in the “Eliminations”
column. Further information regarding the allocation
of activities of the BMW Group to segments and a
description of the segments is provided in note 49.
In conjunction with the refinancing of financial services
business, a significant volume of receivables arising
from retail customer and dealer financing is sold. Simi-
larly, rights and obligations relating to leases are sold.
The sale of receivables is a well-established instrument
used by industrial companies. These transactions usually
take the form of asset-backed financing transactions
involving the sale of a portfolio of receivables to a trust
which, in turn, issues marketable securities to refinance
the purchase price. The BMW Group continues to “ser-
vice” the receivables and receives an appropriate fee for
these services. Such assets remain in the Group Finan-
cial Statements although they have been legally sold.
Gains and losses relating to the sale of such assets are
not recognised until the assets are removed from the
Group balance sheet. Special purpose trusts / entities
are included as consolidated companies in accordance
with IFRS 10 (Consolidated Financial Statements).
In addition to credit financing and leasing contracts, the
Financial Services segment also brokers insurance busi-
ness via cooperation arrangements entered into with
local insurance companies. These activities are not ma-
terial to the BMW Group as a whole.
The Group currency is the euro. All amounts are dis-
closed in millions of euros (€ 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.
99 GROUP FINANCIAL STATEMENTS
All consolidated subsidiaries have the same year-end as
BMW AG with the exception of BMW India Private Ltd.,
Gurgaon, and BMW India Financial Services Private
Ltd., Gurgaon, both of whose year-ends are 31 March in
accordance with local legal requirements.
The Group Financial Statements, drawn up in accord-
ance with § 315a HGB, and the Combined Manage-
ment Report for the financial year ended 31 December
2015 will be submitted to the operator of the elec-
tronic version of the German Federal Gazette and
can be obtained via the Company Register website.
Printed copies will also be made available on re-
quest. In addition the Group Financial Statements
and the Combined Management Report can be
downloaded from the BMW Group website at www.
bmwgroup.com / ir.
The Board of Management authorised the Group
Financial Statements for issue on 18 February 2016.
2
Consolidated companies
The scope of the consolidated financial statements is
based on the application of IFRS 10 (Consolidated
Financial Statements) and IFRS 11 (Joint Arrangements).
The BMW AG Group Financial Statements include,
besides BMW AG, all material subsidiaries, one spe-
cial purpose securities fund and 21 special purpose
Included at 31 December 2014
Included for the first time in 2015
No longer included in 2015
Included at 31 December 2015
trusts (almost all used for asset-backed financing
transactions).
The number of subsidiaries – including the special
purpose securities fund and special purpose trusts –
consolidated in the Group Financial Statements
changed in 2015 as follows:
Germany
Foreign
Total
22
–
1
21
167
7
17
157
189
7
18
178
41 subsidiaries (2014: 43), either dormant or generating
a negligible volume of business, and four joint opera-
tions (2014: 4) are not consolidated on the grounds
that their inclusion would not influence the economic
decisions of users of the Group Financial Statements.
Non-inclusion of operating subsidiaries and joint opera-
tions reduces total Group revenues by 0.3 % (2014: 0.3 %).
Together with SGL Carbon SE, Wiesbaden, the BMW
Group is party to three joint operations that manufacture
carbon fibres and carbon fibre fabrics used in vehicle
production. The joint operations – SGL Automotive
Carbon Fibers GmbH & Co. KG, Munich, SGL Automo-
tive Carbon Fibers Verwaltungs GmbH, Munich, and
SGL Automotive Carbon Fibers LLC, Dover, DE – are
consolidated proportionately on the basis of the BMW
Group’s 49 % shareholding.
The joint ventures, BMW Brilliance Automotive Ltd.,
Shenyang, DriveNow GmbH & Co. KG, Munich, and
DriveNow Verwaltungs GmbH, Munich, are accounted
for using the equity method.
As in the previous year, seven participations are not
consolidated using the equity method on the grounds of
immateriality. They are included in the Group balance
sheet in the line “Other investments”, measured at cost
less – where applicable – accumulated impairment
losses.
A “List of Group Investments” pursuant to § 313 (2)
HGB will be submitted to the operator of the electronic
version of the German Federal Gazette. This list, along
with the “List of Third Party Companies which are not
of Minor Importance for the Group”, will also be posted
on the BMW Group website at www.bmwgroup.com / ir.
No entities were consolidated fully for the first time in
the financial year 2015. LARGUS Grundstücks-Verwal-
tungsgesellschaft mbH & Co. KG, Munich, was merged
with LARGUS Grundstücks-Verwaltungsgesellschaft
mbH, Munich, and therefore ceased to be a separate
consolidated company. BMW Services Italia S.p.A., San
Donato Milanese, was merged with BMW Italia S.p.A.,
Milan, and ceased to be a separate consolidated com-
100
pany. Furthermore, the non-consolidated entity, BMW
Forschung und Technik GmbH, Munich, was merged
with BMW AG.
THERE Holding B. V., Amsterdam, is included in the
BMW AG Group Financial Statements for the year
ended 31 December 2015 as an associated company using
the equity method (see also note 3).
3
Business acquisitions
In August 2015, BMW AG (Munich), Daimler AG (Stutt-
gart) and AUDI AG (Ingolstadt) agreed with Nokia
Corporation, Helsinki, to acquire that entity’s maps and
location-based services business (HERE Group), as part
of a joint strategy to secure the long-term availability of
HERE’s products and services as an open, independent
and value-creating platform for cloud-based maps and
other mobility services.
The HERE Group’s digital maps are fundamental for the
next generation of mobility and location-based services,
providing the basis for new assistance systems and, ulti-
mately, fully autonomous driving. Using high-precision
digital maps in combination with real-time vehicle data,
it will be possible to increase road safety and facilitate the
development of innovative new products and services.
THERE Holding B. V., Amsterdam, and its wholly owned
subsidiary, HERE International B. V., Amsterdam (until
28 January 2016: THERE Acquisition B. V., Amsterdam)
were founded in connection with the acquisition. HERE
International B. V., Amsterdam, acquired all of the shares
of the HERE Group. Via BMW International Holding
B. V., The Hague, the BMW Group has a 33.3 % share-
holding in THERE Holding B. V., Amsterdam.
BMW, AUDI and Daimler jointly acquired HERE’s map-
ping service with effect from 4 December 2015. Out of
the total purchase price of € 2.6 billion (subject to pur-
chase price adjustments), an amount of € 0.6 billion was
financed via bank loans taken up by the intermediary
acquiring entity. The remainder is being financed by the
three partners in equal parts. The BMW Group’s share
of this amount was approximately € 0.67 billion.
THERE Holding B. V., Amsterdam, is included in the
BMW AG Group Financial Statements as an associated
company using the equity method and allocated for
segment reporting purposes to the Automotive segment.
In view of the proximity of the reporting date and on
the grounds of materiality, no fair value adjustments
were recorded in conjunction with the at-equity carry-
ing amount at 31 December 2015, with the consequence
that the Group’s interest is accounted for at cost at that
date. The purchase price allocation is expected to be com-
pleted in the first quarter of 2016.
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, whereby identifiable assets and
liabilities acquired are measured at their fair value at
acquisition date. An excess of acquisition cost over the
Group’s share of the net fair value of identifiable assets,
liabilities and contingent liabilities is recognised as good-
will in a separate balance sheet line item and allocated
to the relevant cash-generating unit (CGU).
Receivables, payables, provisions, income and expenses
and profits between consolidated companies (intragroup
results) are eliminated on consolidation.
Joint operations and joint ventures are forms of joint
arrangements. Such an arrangement exists when the
BMW Group jointly carries out activities on the basis of
a contractual agreement with a third party that requires
the unanimous consent of both parties with respect to
all significant activities of the joint arrangement.
In the case of a joint operation, the parties that have
joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating to the
arrangement. Assets, liabilities, revenues and expenses
of a joint operation are recognised proportionately
in the Group Financial Statements on the basis of the
BMW Group’s rights and obligations.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
4
101 GROUP FINANCIAL STATEMENTS
Investments accounted for using the equity method
(joint ventures and associated companies) are meas-
ured at the BMW Group’s share of equity, taking
account of fair value adjustments. Any difference be-
tween the cost of investment and the Group’s share of
equity is accounted for in accordance with the acquisi-
tion method. Investments in other companies are ac-
counted for as a general rule using the equity method
when significant influence can be exercised (IAS 28
Investments in Associates and Joint Ventures). As a
general rule, there is a rebuttable assumption that the
Group has significant influence if it holds between 20 %
and 50 % of the associated company’s or joint venture’s
voting power.
5
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 subsidiary is determined as a general rule on the
basis of the primary economic environment in which it
operates and corresponds therefore usually to the rele-
vant local currency. Income and expenses of foreign
subsidiaries are translated in the Group Financial State-
ments at the average exchange rate for the year, and
assets and liabilities are translated at the closing rate.
Exchange differences arising from the translation of
shareholders’ equity are recognised directly in accumu-
lated other equity. Exchange differences arising from the
use of different exchange rates to translate the income
US Dollar
British Pound
Chinese Renminbi
Japanese Yen
Russian Rouble
Korean Won
statement are also recognised directly in 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. At the end
of the reporting period, foreign currency receivables
and payables are translated at the closing exchange rate.
The resulting unrealised gains and losses as well as the
subsequent realised gains and losses arising on settle-
ment are recognised in the income statement in accord-
ance with the underlying substance of the relevant
transactions.
The exchange rates of those currencies which have a
material impact on the Group Financial Statements
were as follows:
Closing rate
Average rate
31.12. 2015
31.12. 2014
2015
2014
1.09
0.74
7.07
130.74
79.91
1.21
0.78
7.53
144.95
70.98
1.11
0.73
6.97
134.28
68.01
1.33
0.81
8.19
140.38
51.03
1,278.92
1,324.84
1,255.38
1,397.80
6
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 poli-
cies in accordance with IFRS 10 (Consolidated Financial
Statements).
Revenues from the sale of products are recognised
when the risks and rewards of ownership of the goods
are transferred to the dealer or customer, provided that
the amount of revenue can be measured reliably, it is
probable that the economic benefits associated with the
transaction will flow to the entity and costs incurred or
to be incurred in respect of the sale can be measured
reliably. Revenues are stated net of settlement discount,
bonuses and rebates. Revenues also include lease rentals
and interest income earned in conjunction with finan-
cial services. Revenues from leasing instalments relate
to operating leases and are recognised in the income
statement on a straight line basis over the relevant term
102
of the lease. Interest income from finance leases and
from customer and dealer financing are recognised
using the effective interest method and reported as rev-
enues within the line item “Interest income on loan
finan cing”. If the sale of products includes a determina-
ble amount for subsequent services (multiple-compo-
nent contracts), the related revenues are deferred and
recognised as income over the relevant service period.
Amounts are normally recognised as income by reference
to the pattern of related expenditure. Profits arising on
the sale of vehicles for which a Group company retains a
repurchase commitment (buy-back contracts) are not
recognised until such profits have been realised. The
difference between the sales and buy-back price is ac-
counted for as deferred income and recognised in in-
stalments as revenue over the contract term.
Cost of sales comprises the cost of products sold and the
acquisition cost of purchased goods sold. In addition
to directly attributable material and production costs, it
also includes statutory and non-statutory warranty ex-
penses, research costs, non-capitalised development
costs, amortisation on capitalised development costs,
production-related overheads (including depreciation of
property, plant and equipment and amortisation of other
intangible assets relating to production), write-downs
on inventories, freight and insurance costs relating to
deliveries to dealers and agency fees on direct sales.
Expenses which are directly attributable to financial
services business (including depreciation on leased
products), the interest expense from refinancing the en-
tire financial services business as well as the expense
of risk provisions and write-downs relating to such busi-
ness are also reported in cost of sales.
In accordance with IAS 20 (Accounting for Government
Grants and Disclosure of Government Assistance),
public sector grants are not recognised until there is rea-
sonable assurance that the conditions attaching to them
have been complied with and the grants will be received.
The resulting income is recognised in cost of sales over
the periods necessary to match them with the related
costs which they are intended to compensate.
Basic earnings per share are computed in accordance
with IAS 33 (Earnings per Share). Basic earnings per
share are calculated for common and preferred stock by
dividing the Group net profit after minority interests,
as attributable to each category of stock, by the average
number of outstanding shares. The net profit is accord-
ingly allocated to the different categories of stock. The
portion of the Group net profit for the year which is not
being distributed is allocated to each category of stock
based on the number of outstanding shares. Profits
available for distribution are determined directly on the
basis of the dividend resolutions passed for common
and preferred stock. Diluted earnings per share are dis-
closed separately.
Share-based remuneration programmes which are ex-
pected to be settled in shares are, in accordance with
IFRS 2 (Share-based Payments), measured at their fair
value at grant date. The related expense is recognised
in the income statement (as personnel expense) over the
vesting period, with a contra (credit) entry recorded
against capital reserves.
Share-based remuneration programmes expected to be
settled in cash are revalued to their fair value at each
balance sheet date between the grant date and the settle-
ment date and on the settlement date itself. The ex-
pense for such programmes is recognised in the income
statement (as personnel expense) over the vesting pe-
riod of the programmes and recognised in the balance
sheet as a provision.
The share-based remuneration programme for Board
of Management members and senior heads of depart-
ment entitles BMW AG to elect whether to settle its
commitments in cash or with shares of BMW AG com-
mon stock. Following the decision to settle in cash,
this programme is accounted for as a cash-settled share-
based transaction. Further information on share-based
remuneration programmes is provided in note 19.
Purchased and internally-generated intangible assets
are recognised as assets in accordance with IAS 38
(Intangible Assets), where it is probable that the use of
the asset will generate future economic benefits and
where the costs of the asset can be determined reliably.
Such assets are measured at acquisition and / or manu-
facturing cost and, to the extent that they have a finite
useful life, amortised over their estimated useful lives.
With the exception of capitalised development costs,
intangible assets are generally amortised over their esti-
mated useful lives of between three and 20 years.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
103 GROUP FINANCIAL STATEMENTS
Development costs for vehicle and engine projects
are capitalised at manufacturing cost, to the extent
that attributable costs can be measured reliably and
both technical feasibility and successful marketing
are assured. It must also be probable that the devel-
opment expenditure will generate future economic
benefits. Capitalised development costs comprise all
expenditure that can be attributed directly to the de-
velopment process, including development-related
overheads. Capitalised development costs are amor-
tised systematically over the estimated product life
(usually four to eleven years) following the start of
production.
the Group’s share of the fair value of the individually
identifiable assets acquired and liabilities and contin-
gent liabilities assumed.
All items of property, plant and equipment are consid-
ered to have finite useful lives. They are recognised at
acquisition or manufacturing cost less scheduled de-
preciation based on the estimated useful lives of the
assets. Depreciation on property, plant and equipment
reflects the pattern of their usage and is generally com-
puted using the straight-line method. Components of
items of property, plant and equipment with different
useful lives are depreciated separately.
Goodwill arises on first-time consolidation of an ac-
quired business when the cost of acquisition exceeds
Systematic depreciation is based on the following useful
lives, applied throughout the BMW Group:
in years
Factory and office buildings, residential buildings, fixed installations in buildings and outside facilities
Plant and machinery
Other equipment, factory and office equipment
8 to 50
3 to 21
2 to 25
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 as well as an appropriate pro-
portion of production-related overheads. This includes
production-related depreciation and an appropriate
proportion of administrative and social costs.
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 on the one hand and leases out vehicles produced
by the Group and other brands as lessor on the other.
IAS 17 (Leases) contains rules for determining, on the
basis of risks and rewards, the economic owner of the
assets. In the case of finance leases, the assets are at-
tributed to the lessee and in the case of operating leases
the assets are attributed to the lessor.
In accordance with IAS 17, assets leased under finance
leases are measured at their fair value at the inception of
the lease or at the present value of the lease payments,
if lower. The assets are depreciated using the straight-
line method over their estimated useful lives or over the
lease period, if shorter. The obligations for future lease
instalments are recognised as other financial liabili-
ties.
Where Group products are recognised by BMW Group
entities as leased products under operating leases, they
are measured at manufacturing cost. All other leased
products are measured at acquisition cost. All leased
products are depreciated over the period of the lease
using the straight-line method down to their expected
residual value. Changes in residual value expectations
are recognised – in situations where the recoverable
amount of the lease exceeds the asset’s carrying amount –
by adjusting scheduled depreciation prospectively over
the remaining term of the lease contract. If the recover-
able amount is lower than the asset’s carrying amount,
an impairment loss is recognised for the shortfall. A test
is carried out at each balance sheet date to determine
whether an impairment loss recognised in prior years no
longer exists or has decreased. In these cases, the carry-
ing amount of the asset is increased to the recoverable
amount. The higher carrying amount resulting from the
104
reversal may not, however, exceed the rolled-forward
amortised cost of the asset.
If there is any evidence of impairment of non-financial
assets (except inventories and deferred taxes), or if an
annual impairment test is required to be carried out –
i. e. for intangible assets not yet available for use, intan-
gible assets with an indefinite useful life and goodwill
acquired as part of a business combination – an impair-
ment test pursuant to IAS 36 (Impairment of Assets)
is performed. Each individual asset is tested separately
unless the cash flows generated by the asset cannot be
distinguished to a large degree from the cash flows
generated by other assets or groups of assets (cash-gen-
erating units / CGUs). For the purposes of the impair-
ment test, the asset’s carrying amount is compared with
its recoverable amount, the latter defined as the higher
of the asset’s fair value less costs to sell and its value in
use. An impairment loss is recognised when the recover-
able amount is lower than the asset’s carrying amount.
Fair value is the price that would be received to sell an
asset in an orderly transaction between market partici-
pants at the measurement date. The value in use corre-
sponds to the present value of future cash flows ex-
pected to be derived from an asset or group of assets.
The first step of the impairment test is to determine the
value in use of an asset. If the calculated value in use is
lower than the carrying amount of the asset, then its
fair value less costs to sell are also determined. If the lat-
ter is also lower than the carrying amount of the asset,
then an impairment loss is recorded, reducing the car-
rying amount to the higher of the asset’s value in use or
fair value less costs to sell. The value in use is deter-
mined on the basis of a present value computation.
Cash flows used for the purposes of this calculation are
derived from long-term forecasts approved by manage-
ment. The long-term forecasts themselves are based on
detailed forecasts drawn up at an operational level and,
based on a planning period of six years, correspond
roughly to a typical product’s life-cycle. For the pur-
poses of calculating cash flows beyond the planning pe-
riod, the asset’s assumed residual value does not take
growth into account. Forecasting assumptions are con-
tinually brought up to date and regularly compared with
external sources of information. The assumptions used
take account in particular of expectations of the profita-
bility of the product portfolio, future market share de-
velopments, macro-economic developments (such as
currency, interest rate and raw materials prices) as well
as the legal environment and past experience. Cash
flows of the Automotive and Motorcycles CGUs are dis-
counted using a risk-adjusted pre-tax weighted average
cost of capital (WACC) of 12.0 % (2014: 12.0 %). In the
case of the Financial Services CGU, a sector-compatible
pre-tax cost of equity capital of 13.4 % (2014: 13.4 %) is
applied. In conjunction with the impairment tests for
CGUs, sensitivity analyses are performed for the main
assumptions. Analyses performed in the year under re-
port confirmed, as in the previous year, that no impair-
ment loss was required to be recognised.
If the reason for a previously recognised impairment
loss no longer exists, the impairment loss is reversed
up to the level of the recoverable amount, capped at
the level of rolled-forward amortised cost. This does
not apply to goodwill: previously recognised impair-
ment losses on goodwill are not reversed. No reversals
of impairment losses were recorded in the financial
year 2015.
Investments accounted for using the equity method are
(except when the investment is impaired) measured at
the Group’s share of equity taking account of fair value
adjustments on acquisition. As an exception from this
rule, the associated company, THERE Holding B. V.,
Amsterdam, is included in the Group Financial State-
ments for the financial year 2015 at its acquisition cost
(at 4 December 2015). Investments accounted for using
the equity method comprise joint ventures and signifi-
cant associated companies.
Investments in non-consolidated Group companies,
non-consolidated joint operations and interests in asso-
ciated companies, joint ventures and participations
not accounted for using the equity method, are reported
as Other investments, measured at their fair value. If
this value is not available or cannot be determined relia-
bly, they are measured at cost.
Non-current marketable securities are measured accord-
ing to the category of financial asset to which they are
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
105 GROUP FINANCIAL STATEMENTS
classified. No held-for-trading financial assets are in-
cluded under this heading.
A financial instrument is a contract that gives rise to a
financial asset of one entity and a financial liability or
equity instrument of another entity. Once a BMW Group
entity becomes party to such to a contract, the financial
instrument is recognised either as a financial asset or as
a financial liability.
Financial assets are accounted for on the basis of the set-
tlement date. On initial recognition, they are measured
at their fair value. Transaction costs are included in the
fair value unless the financial assets are allocated to the
category “financial assets measured at fair value through
profit or loss”.
The Group’s financial assets are allocated to either
cash funds or to the categories “loans and receivables”,
“available-for-sale”, “held for trading” or “fair value
option”.
The prerequisite for categorising an item as a “financial
asset measured at fair value through profit and loss” is
that
– a measurement or recognition inconsistency (“ac-
counting mismatch”) is eliminated or significantly
reduced or
– a group of financial instruments is managed, and
its performance evaluated, on a fair value basis or
– the financial instrument contains one or more
embedded derivatives that are required to be
separated.
Financial assets, for which the fair value option is ap-
plied, include other investments, and remain in the
relevant balance sheet line item after initial recognition.
Gains and losses are presented in the income statement
line item “Other financial result” and interest income
and expenses are presented within the net interest result.
Subsequent to initial recognition, financial assets which
are available-for-sale or held-for-trading or for which
the fair value option is applied, are measured at their fair
value. When market prices are not available, the fair
value of available-for-sale financial assets is measured
using appropriate valuation techniques e. g. discounted
cash flow analysis based on market information available
at the balance sheet date.
Available-for-sale assets include non-current invest-
ments, securities and investment fund shares. This cate-
gory includes all non-derivative financial assets which
are not classified as “loans and receivables” or “held-to-
maturity investments” or as items measured “at fair value
through profit and loss”.
Loans and receivables which are not held for trading
and held-to-maturity financial investments with a fixed
term are measured at amortised cost using the effec-
tive interest method. All financial assets for which pub-
lished price quotations in an active market are not avail-
able and whose fair value cannot be determined reliably
are required to be measured at cost.
In accordance with IAS 39 (Financial Instruments:
Recognition and Measurement), assessments are made
regularly as to whether there is any objective evidence
that a financial asset or group of assets may be impaired.
Available-for-sale financial assets are written down if
there is objective evidence that impairment has occurred.
In the case of equity capital instruments that are listed
on a stock market, it is assumed that an item is impaired
if its fair value falls significantly (more than 20 %) or on
a prolonged basis (more that 5 % over nine months) be-
low acquisition cost. Impairment losses identified after
carrying out an impairment test are recognised as an ex-
pense. Gains and losses on available-for-sale financial
assets are recognised directly in other accumulated
equity until the financial asset is disposed of or is deter-
mined to be impaired, at which time the cumulative loss
previously recognised in other comprehensive income
is reclassified to profit or loss for the period.
With the exception of derivative financial instruments,
all receivables and other current assets relate to loans
and receivables which are not held for trading. All such
items are measured at amortised cost. Appropriate
impairment losses are recognised to take account of all
identifiable risks.
106
Receivables from sales financing comprise receivables
from retail customer, dealer and lease financing.
measured in accordance with IAS 39 at their fair value,
irrespective of their purpose or the intention for which
they are held.
Impairment losses on receivables relating to financial
services business are recognised using a uniform meth-
odology that is applied throughout the Group and meets
the requirements of IAS 39. This methodology results in
the recognition of impairment losses both on individual
assets and on groups of assets. If there is objective evi-
dence of impairment, the BMW Group recognises im-
pairment losses on the basis of individual assets. Within
the retail customer business, the existence of overdue
balances or the incidence of similar events in the past
are examples of such objective evidence. In the event of
overdue receivables, impairment losses are always rec-
ognised individually based on the length of period of
the arrears. In the case of dealer financing receivables,
the allocation of the dealer to a corresponding rating
category is also deemed to represent objective evidence
of impairment. If there is no objective evidence of im-
pairment, impairment losses are recognised on financial
assets using a portfolio approach based on similar groups
of assets. Company-specific loss probabilities and loss
ratios, derived from historical data, are used to measure
impairment losses on similar groups of assets.
The recognition of impairment losses on receivables
relating to industrial business is also, as far as possible,
based on the same procedures applied to financial ser-
vices business. Impairment losses (write-downs and
allowances) on receivables are always recorded on
separate accounts and derecognised at the same time
the corresponding receivables are derecognised.
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.
If there are no quoted prices on active markets for deriva-
tive financial instruments, credit risk is taken into ac-
count as an adjustment to the fair value of the financial
instrument. The BMW Group applies the option of
measuring the credit risk for a group of financial assets
and financial liabilities on the basis of its net exposure.
Portfolio-based value adjustments to the individual finan-
cial assets and financial liabilities are allocated using the
relative fair value approach (net method).
The fair values of the derivative financial instruments
are measured using market information and recognised
valuation techniques. In those cases where hedge ac-
counting is applied, changes in fair value are recognised
either in profit or loss or in other comprehensive in-
come as a component of accumulated other equity, de-
pending on whether the transactions are classified as
fair value hedges or cash flow hedges. In the case of fair
value hedges, the results of the fair value measurement
of the derivative financial instruments and the related
hedged items are recognised in the income statement.
In the case of fair value changes in cash flow hedges
which are used to mitigate the future cash flow risk on
a recognised asset or liability or on forecast transactions,
unrealised gains and losses on the hedging instrument
are recognised initially directly in accumulated other
equity. Any such gains or losses are recognised subse-
quently in the income statement when the hedged
item (usually external revenue) is recognised in the in-
come statement. The portion of the gains or losses from
fair value measurement not relating to the hedged
item is recognised immediately in the income statement.
If, contrary to the normal case within the BMW Group,
hedge accounting cannot be applied, the gains or losses
from the fair value measurement of derivative finan-
cial instruments are recognised immediately in the in-
come statement.
All derivative financial instruments (such as interest,
currency and combined interest / currency swaps, for-
ward currency and forward commodity contracts) are
In accordance with IAS 12 (Income Taxes), deferred
taxes are recognised on all temporary differences be-
tween the tax and accounting bases of assets and lia-
bilities and on consolidation procedures. Deferred
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
107 GROUP FINANCIAL STATEMENTS
tax assets also include claims to future tax reductions
which arise from the expected usage of existing tax
losses available for carryforward to the extent that fu-
ture usage is probable. Deferred taxes are computed
using enacted or planned tax rates which are expected
to apply in the relevant national jurisdictions when
the amounts are recovered.
Inventories of raw materials, supplies and goods for
resale are stated at the lower of average acquisition cost
and net realisable value.
Work in progress and finished goods are stated at the
lower of average manufacturing cost and net realisable
value. Manufacturing cost comprises all costs which
are directly attributable to the manufacturing process
and an appropriate proportion of production-related
overheads. This includes production-related deprecia-
tion and an appropriate proportion of administrative
and social costs.
Borrowing costs are not included in the acquisition or
manufacturing cost of inventories.
Cash and cash equivalents comprise mainly cash on
hand and cash at bank with an original term of up to
three months.
Assets held for sale and disposal groups held for sale
are presented separately in the balance sheet in accord-
ance with IFRS 5, if the carrying amount of the relevant
assets will be recovered principally through a sale trans-
action rather than through continuing use. This situa-
tion only arises if the assets can be sold immediately
in their present condition, the sale is expected to be
completed within one year from the date of classifica-
tion and the sale is highly probable. At the date of
classification, property, plant and equipment, intangible
assets and disposal groups which are being held for
sale are measured at the lower of their carrying amount
and their fair value less costs to sell and scheduled depre-
ciation / amortisation ceases. This does not apply, how-
ever, to items within the disposal group which are not
covered by the measurement rules contained in IFRS 5.
Simultaneously, liabilities directly related to the sale are
presented separately on the equity and liabilities side
of the balance sheet as “Liabilities in conjunction with
assets held for sale”.
Provisions for pensions are recognised using the pro-
jected unit credit method in accordance with IAS 19
(Employee Benefits). Under this method, not only obli-
gations relating to known vested benefits at the re-
porting date are recognised, but also the effect of future
increases in pensions and salaries. This involves taking
account of various input factors which are evaluated
on a prudent basis. The calculation is based on an inde-
pendent actuarial valuation which takes into account
all relevant biometric factors.
Remeasurements of the net defined benefit liability
for pension plans are recognised, net of deferred tax,
directly in equity (revenue reserves).
Net interest expense on the net defined benefit liability
and / or net interest income on the net defined benefit
asset are presented separately within the financial result.
All other costs relating to allocations to pension pro-
visions are allocated to costs by function in the income
statement.
Other provisions are recognised when the BMW Group
has a present obligation (legal or constructive) arising
from past events, the settlement of which is probable
and when a reliable estimate can be made of the amount
of the obligation. Measurement of provisions is based
on the best estimate of the expenditure required to settle
the present obligation at the end of the reporting
period. Non-current provisions with a remaining period
of more than one year are discounted to the present
value of the expenditures expected to settle the obliga-
tion at the end of the reporting period.
Financial liabilities are measured on first-time recogni-
tion at cost which corresponds to the fair value of the
consideration given. Transaction costs are also taken
into account except for financial liabilities allocated to
the category “financial liabilities measured at fair value
through profit or loss”. Subsequent to initial recogni-
tion, liabilities are – with the exception of derivative
financial instruments – measured at amortised cost
using the effective interest method. The BMW Group
108
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
financial liabilities.
7
Assumptions, judgements and estimations
The preparation of the Group Financial Statements in
accordance with IFRS requires management to make
certain assumptions and judgements and to use estimates
that can affect the reported amounts of assets and lia-
bilities, revenues and expenses and contingent liabilities.
Major items requiring assumptions and estimations
are described below. The assumptions used are con-
tinuously checked for their validity. Actual amounts
could differ from the assumptions and estimations used
if business conditions develop differently to the Group’s
expectations.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Estimations are required to assess the recoverability of
a cash-generating unit (CGU). If the recoverability of an
asset is being tested at the level of a CGU, assumptions
must be made with regard to future cash inflows and
outflows, involving in particular an assessment of the
forecasting period to be used and of developments
after that period. For the purposes of determining future
cash inflows and outflows, management applies fore-
casting assumptions which are continually brought up
to date and regularly compared with external sources
of information. The assumptions used take account in
particular of expectations of the profitability of the
product portfolio, future market share developments,
macro-economic developments (such as currency, inter-
est rate and raw materials), the legal environment and
past experience.
The BMW Group regularly checks the recoverability of
its leased products. One of the main assumptions re-
quired for leased products relates to their residual value
since this represents a significant portion of future cash
inflows. In order to estimate the level of prices likely to
be achieved in the future, the BMW Group incorpo-
rates internally available historical data, current market
data and forecasts of external institutions into its cal-
culations. Internal back-testing is applied to validate the
estimations made. Further information is provided in
note 24.
The bad debt risk relating to receivables from sales
financing is assessed regularly by the BMW Group. For
these purposes, the main factors taken into consideration
are past experience, current market data (such as the
level of financing business arrears), rating classes and
scoring information. Further information is provided
in note 27.
The calculation of deferred tax assets requires assump-
tions to be made with regard to the level of future tax-
able income and the timing of recovery of deferred tax
assets. These assumptions take account of forecast oper-
ating results and the impact on earnings of the reversal
of taxable temporary differences. Since future busi-
ness developments cannot be predicted with certainty
and to some extent cannot be influenced by the BMW
Group, the measurement of deferred tax assets is sub-
ject to uncertainty. Further information is provided in
note 16.
Current income taxes are computed throughout the
BMW Group in accordance with tax legislation appli-
cable in each relevant country. In situations where a
permissible element of discretion has been applied
in determining the amount of a tax exposure to be
recognised in the financial statements, there is always
a possibility that local tax authorities may reach a dif-
ferent conclusion.
The calculation of pension provisions requires assump-
tions to be made with regard to discount factors, salary
trends, employee fluctuation and the life expectancy
of employees. As in previous years, discount factors are
determined by reference to market yields at the end
of the reporting period on high quality corporate bonds.
The salary level trend refers to the expected rate of
salary increase which is estimated annually depending
on inflation and the career development of employees
within the Group. Further information is provided in
note 35.
Estimations are required for the purposes of recognising
and measuring provisions for warranty obligations
(statutory, contractual and voluntary). In addition to
statutorily prescribed manufacturer warranties, the
BMW Group also offers various categories of warranty
109 GROUP FINANCIAL STATEMENTS
depending on the product and sales market concerned.
Warranty provisions are recognised when the risks and
rewards of ownership of the goods are transferred to
the dealer or retail customer or when a new category of
warranty is introduced. In order to determine the level
of the provision, various factors are taken into considera-
tion, including estimations based on past experience
with the nature and amount of claims. These estima-
tions also involve assessing the future level of potential
repair costs and price increases per product and mar-
ket. Provisions for warranties are adjusted regularly to
take account of new circumstances and the impact of
any changes recognised in the income statement. Further
information is provided in note 36. Similar estimates
are also made in conjunction with the measurement of
expected reimbursement claims.
In the event of involvement in legal proceedings or
when claims are brought against a Group entity, provi-
sions for litigation and liability risks are recognised
when an outflow of resources is probable and a reliable
estimate can be made of the amount of the obligation.
Management is required to make assumptions with re-
spect to the probability of occurrence, the amount in-
volved and the duration of the legal dispute. For these
reasons, the recognition and measurement of provi-
sions for litigation and liability risks are subject to un-
certainty. The outcome of legal proceedings is often
difficult to predict. Further information is provided in
note 36. If the recognition and measurement criteria
relevant for provisions are not fulfilled and the possi-
bility of any outflow in settlement is remote, the poten-
tial obligation is disclosed as a contingent liability.
In addition, judgement is required in particular when
assessing whether the risks and rewards incidental to
ownership of a leased asset have been transferred for
the purposes of determining the classification of leasing
arrangements.
Determining the scope of consolidated companies to be
included in the Group Financial Statements may involve
the use of judgement. In particular when the BMW
Group holds 50 % or less of the voting rights, a detailed
assessment must be made as to whether sole control,
joint control or significant influence applies. For instance,
other contractual rights and / or other matters and cir-
cumstances could result in the conclusion that the BMW
entity concerned controls or jointly controls an entity
in which it has a participation. In the latter case, it must
then be decided whether the joint arrangement is a joint
operation or a joint venture. In making its judgement,
the BMW Group must take all contractual arrangements
and other circumstances into account, and not just the
structure and legal form of the entity. A new assessment
is made in the event of any indication of changes in the
previous assessment of (joint) control. Further informa-
tion is provided in note 2.
8
Financial reporting rules
(a) Financial reporting rules applied for the first time in the financial year 2015
The following Standards, Revised Standards, Amendments and Interpretations were applied for the first time in
the financial year 2015:
Standard / Interpretation
Date of
issue by IASB
Date of
mandatory
application
IASB
Date of
mandatory
application
EU
Impact
on BMW Group
IAS 19
Employment Benefits:
21. 11. 2013
1. 7. 2014
1. 2. 20151
Insignificant
Employee Contributions (Amendments to
IAS 19)
IFRIC 21
Levies
20. 5. 2013
1. 1. 2014
Annual Improvements to IFRS 2010 – 2012
12. 12. 2013
1. 7. 2014
17. 6. 20142
1. 2. 20151
Insignificant
Insignificant
Annual Improvements to IFRS 2011 – 2013
12. 12. 2013
1. 7. 2014
1. 1. 2015
Insignificant
1 Mandatory application in annual periods beginning on or after 1 February 2015.
2 Mandatory application in annual periods beginning on or after 17 June 2014.
110
(b) Financial reporting pronouncements issued by the IASB, but not yet applied
Standard / Interpretation
Date of
issue by IASB
Date of
mandatory
application
IASB
Date of
mandatory
application
EU
Expected impact
on BMW Group
IFRS 9
Financial Instruments
/
12. 11. 2009
1. 1. 2018
No
Significant in principle
28. 10. 2010
/
16. 12. 2011
/
19. 11. 2013
/
24. 7. 2014
IFRS 10 /
Sale or Contribution of Assets between an
11. 9. 2014
–1
No
Insignificant
IAS 28
Investor and an Associate or Joint Venture
(Amendments to IFRS 10 and IAS 28)
IFRS 10 /
IFRS 12 /
IAS 28
Investment Entities: Applying the
18. 12. 2014
1. 1. 2016
No
Insignificant
Consolidation Exception (Amendments to
IFRS 10, IFRS 12 and IAS 28)
IFRS 11
Acquisition of an Interest in a Joint Operation
6. 5. 2014
1. 1. 2016
1. 1. 2016
Insignificant
(Amendments to IFRS 11)
IFRS 14
Regulatory Deferral Accounts
30. 1. 2014
1. 1. 2016
No2
Insignificant
IFRS 15
Revenue from Contracts with Customers
28. 5. 2014
/
11. 9. 2015
1. 1. 2018
No
Significant in principle
IFRS 16
Leases
13. 1. 2016
1. 1. 2019
No
Significant in principle
IAS 1
Presentation of Financial Statements
18. 12. 2014
1. 1. 2016
1. 1. 2016
Significant in principle
(Initiative to Improve Disclosure Require-
ments – Amendments to IAS 1)
IAS 7
Cash Flow Statements (Initiative to
29. 1. 2016
1. 1. 2017
No
Insignificant
Improve Disclosure Requirements –
Amendments to IAS 7)
IAS 12
Recognition of Deferred Tax Assets
19. 1. 2016
1. 1. 2017
No
Insignificant
for Unrealised Losses
(Amendments to IAS 12)
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Clarification of Acceptable Methods of
12. 5. 2014
1. 1. 2016
1. 1. 2016
Insignificant
IAS 16 /
IAS 38
IAS 16 /
IAS 41
Depreciation and Amortisation
(Amendments to IAS 16 and IAS 38)
Agriculture: Bearer Plants
30. 6. 2014
1. 1. 2016
1. 1. 2016
(Amendments to IAS 16 and IAS 41)
IAS 27
Equity Method in Separate Financial
12. 8. 2014
1. 1. 2016
1. 1. 2016
Statements (Amendments to IAS 27)
None
None
Annual Improvements to IFRS 2012 – 2014
25. 9. 2014
1. 1. 2016
1. 1. 2016
Insignificant
Amendments to “International Financial
21. 5. 2015
1. 1. 2017
No
None
Reporting Standard for Small and Medium-
sized Entities” (IFRS for SMEs)
1 The mandatory effective date for the Amendments was deferred by the IASB for an indefinite period on 17 December 2015.
2 Interim standard IFRS 14 will not be endorsed into EU law.
In November 2009 the IASB issued IFRS 9 (Financial
Instruments) as part of a project to revise the accounting
for financial instruments. This Standard marks the first
of three phases of the IASB project to replace the exist-
ing IAS 39 (Financial Instruments: Recognition and
Measurement). The first phase deals initially only with
111 GROUP FINANCIAL STATEMENTS
financial assets. IFRS 9 amends the recognition and
measurement requirements for financial assets, in-
cluding various hybrid contracts.
a single Standard. The new Standard also stipulates uni-
form revenue recognition principles for all sectors and
all categories.
Financial assets are measured at either amortised cost
or fair value. IFRS 9 harmonises the various rules con-
tained in IAS 39 and reduces the number of valuation
categories for financial instruments on the assets side
of the balance sheet.
The new categorisation is based partly on the entity’s
business model and partly on the contractual cash flow
characteristics.
In October 2010, additional rules for financial liabilities
were added to IFRS 9. The requirements for financial
liabilities contained in IAS 39 remain unchanged with
the exception of new requirements relating to the
measurement of an entity’s own credit risk at fair value.
A package of amendments to IFRS 9 was announced
on 19 November 2013. On the one hand, the amend-
ments overhaul the requirements for hedge accounting
by introducing a new hedge accounting model. They
also enable entities to change the accounting for lia-
bilities they have elected to measure at fair value, such
that fair value changes due to changes in “own credit
risk” would not require to be recognised in profit or loss.
The mandatory effective date of 1 January 2015 was re-
moved and a new application date of 1 January 2018 set.
The impact of adoption of the Standard on the Group
Financial Statements is currently being investigated.
Based on analyses to date, the new rules are not expected
to have a material impact in terms of the classification
and measurement of financial instruments when the
Standard is adopted. As far as the accounting for hedging
relationships is concerned, analyses to date indicate
that it will be possible to account for the majority of
commodity hedging contracts using hedge accounting
rules. As a result, fluctuations in the price of hedging
contracts during their term will be presented as a com-
ponent of accumulated other equity, thus reducing vola-
tility in reported earnings.
In May 2014 the IASB issued IFRS 15 (Revenue from
Contracts with Customers) together with the Financial
Accounting Standards Board. The objective of the new
Standard is to assimilate all the various existing require-
ments and Interpretations relating to revenue recogni-
tion (IAS 11 Construction Contracts, IAS 18 Revenue,
IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agree-
ments for the Construction of Real Estate, IFRIC 18
Transfers of Assets from Customers, SIC-31 Revenue –
Barter Transactions involving Advertising Services) in
The new Standard is based on a five-step model, which
sets out the rules for revenue from contracts with cus-
tomers, with the exception – among other things – of
lease arrangements, insurance contracts, financial in-
struments and specified contractual rights and obliga-
tions relating to non-monetary transactions between
entities within the same sector. Revenue can be recog-
nised either over time or at a specific point in time.
The five-step model describes the five steps necessary
to recognise revenue on the basis of the transfer of
control:
1. Identify the contract with the customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to separate performance
obligations
5. Recognise revenue when a performance obligation is
satisfied.
A major difference to the previous Standard is the in-
creased scope of discretion for estimates and the intro-
duction of thresholds that could influence the amount
and timing of revenue recognition.
The impact of adoption of the new requirements on the
Group Financial Statements is currently being assessed.
In the case of multi-component contracts with variable
consideration components, it is possible that a change
in the allocation of transaction prices may result in an
earlier recognition of revenues. Buy-back arrangements
with customers could result in the need to change the
accounting treatment, with revenues being recognised
either earlier or later by the BMW Group, depending
on the individual case. Accounting for rights of return
could, under certain circumstances, result in the need
to record eliminations between the operating segments
at an earlier stage. Any such changes would only have
an impact at the moment of first-time adoption, not,
however, during the period in which the new rules are
adopted or in subsequent periods.
IFRS 15 – subject to EU endorsement – is mandatory for
the first time for annual periods beginning on or after
1 January 2018. Early adoption is permitted. In July 2015,
the IASB also published an Exposure Draft containing
clarifications to the Standard, as a consequence of which
the Standard may be amended. For this reason, the
potential impact of applying IFRS 15 cannot be reliably
assessed at present.
112
In January 2016, the IASB published the new Standard
IFRS 16 (Leases). IFRS 16 supersedes IAS 17 and the
related Interpretations (IFRIC 4 Determining whether
an Arrangement contains a Lease, SIC-15 Operating
Leases – Incentives and SIC-27 Evaluating the Substance
of Transactions involving the Legal Form of a Lease).
quently reclassified to profit and loss” and “compo-
nents, which will be not subsequently reclassified to
profit and loss”. Fourthly, it is stressed that there is no
standard template for the notes and that the emphasis
should be on structuring the notes based on the rele-
vance for the specific reporting entity.
The new Standard stipulates a completely new approach
to accounting for leases by lessees. Whereas under IAS 17,
the accounting treatment of a lease was determined on
the basis of the transfer of risks and rewards incidental
to ownership of the relevant asset, in the future, all
lease arrangements will be required as a general rule
to be accounted for by the lessee in a similar way to
finance leases.
The Standard is mandatory for the first time for annual
periods beginning on or after 1 January 2016. Applica-
tion of the new rules will not have a material impact on
the Group Financial Statements.
Early adoption of all of the new IFRS requirements is
permitted. As things stand, the BMW Group does not
plan to adopt any of the new requirements early.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
By contrast, the accounting requirements for lessors, par-
ticularly in relation to the requirement to classify leases,
will remain largely unchanged.
The new Standard is mandatory for annual periods be-
ginning on or after 1 January 2019. Early adoption will
be permitted, provided that IFRS 15 is also adopted at
the same time.
Given that the BMW Group is still in a very early phase
of considering the implications of introducing IFRS 16
and the definitive version of the Standard was only pub-
lished at the beginning of 2016, the detailed impact of
the Standard on the IFRS Group Financial Statements
from the perspective of lessees and lessors, cannot be
foreseen at present.
In December 2014, the IASB issued Amendments to
IAS 1 (Presentation of Financial Statements) as part of
its disclosure initiative. The amendments relate pri-
marily to clarifications relating to the presentation of
financial reports.
Firstly, disclosures are only required to be made in the
notes if their inclusion is material for users of the finan-
cial statements. This also applies when an IFRS Stand-
ard explicitly specifies a minimum list of disclosures.
Secondly, items to be presented in the balance sheet, in-
come statement and comprehensive income can be
aggregated or disaggregated by using subtotals. Thirdly,
it clarifies that an entity’s share of other comprehensive
income of equity-accounted entities is required to be
analysed – within the Statement of Comprehensive
Income – to show “components, which will be subse-
113 GROUP FINANCIAL STATEMENTS
BMW Group
Notes to the Group Financial Statements
Notes to the Income Statement
9
Revenues
Revenues by activity comprise the following:
in € million
Sales of products and related goods
Income from lease instalments
Sales of products previously leased to customers
Interest income on loan financing
Other income
Revenues
2015
2014
68,643
60,280
8,965
8,181
3,253
3,133
7,748
6,716
2,881
2,776
92,175
80,401
An analysis of revenues by segment and geographical region is shown in the segment information in note 49.
10
Cost of sales
Cost of sales comprises:
in € million
Manufacturing costs
Research and development expenses
Warranty expenditure
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
2015
2014
43,685
4,271
1,891
17,407
1,495
547
4,747
74,043
38,253
4,135
1,451
14,716
1,407
362
3,072
63,396
Group cost of sales include € 19,449 million (2014:
€ 16,485 million) relating to Financial Services business.
based taxes amounting to € 71 million (2014: € 54 mil-
lion).
Manufacturing costs include impairment losses on
intangible assets and property, plant and equipment
totalling € 3 million (2014: € – million). Cost of sales
is reduced by public-sector subsidies in the form of
reduced taxes on assets and reduced consumption-
Total research and development expenditure comprises
research costs, non-capitalised development costs and
capitalised development costs (excluding scheduled
amortisation). Total research and development expendi-
ture was as follows:
in € million
Research and development expenses
Amortisation
New expenditure for capitalised development costs
Total research and development expenditure
2015
2014
4,271
– 1,166
2,064
5,169
4,135
– 1,068
1,499
4,566
11
Selling and administrative expenses
Selling expenses amounted to € 5,758 million (2014:
€ 5,344 million) and comprise mainly marketing, adver-
tising and sales personnel costs.
Administrative expenses amounted to € 2,875 million
(2014: € 2,548 million) and comprise expenses for
administration not attributable to development, pro-
duction or sales functions.
114
12
Other operating income and expenses
in € million
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
Expense for impairment losses and write-downs
Losses on the disposal of assets
Sundry operating expenses
Other operating expenses
2015
2014
323
172
27
173
219
914
– 311
– 192
– 76
– 23
– 218
– 820
311
184
30
101
251
877
– 334
– 225
– 86
– 25
– 202
– 872
Other operating income and expenses
94
5
Income and expenses relating to impairment losses and
write-downs (reversals and additions) relate primarily
to allowances on receivables.
Income from the reversal of provisions includes amounts
arising on the termination of legal disputes relating to
the Other Entities segment.
Result from equity accounted investments
The profit from equity accounted investments
amounted to € 518 million (2014: € 655 million)
and includes primarily the Group’s share of the result
of the BMW Brilliance Automotive Ltd., Shenyang,
joint venture.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
13
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
14
Net interest result
in € million
Other interest and similar income
thereof from subsidiaries: € 19 million (2014: € 18 million)
Interest and similar income
Net interest expense on the net defined benefit liability for pension plans
Expense relating to interest impact on other long-term provisions
Other interest and similar expenses
thereof to subsidiaries: € – 5 million (2014: € – 6 million)
Interest and similar expenses
Net interest result
2015
2014
185
185
– 123
– 72
– 423
200
200
– 88
– 105
– 326
– 618
– 519
– 433
– 319
115 GROUP FINANCIAL STATEMENTS
15 Other financial result
in € million
Income from investments in subsidiaries and participations
thereof from subsidiaries: € – million (2014: € 2 million)
Impairment losses on investments in subsidiaries and participations
Result on investments
Losses and gains relating to financial instruments
Sundry other financial result
2015
2014
1
– 25
– 24
– 430
– 430
3
– 153
– 150
– 597
– 597
Other financial result
– 454
– 747
The result on investments for the year under report
includes impairment losses on other investments total-
ling € 25 million (2014: € 153 million). In the previous
year, this line item was influenced by an impairment
loss of € 152 million recognised on the investment in
SGL Carbon SE, Wiesbaden.
The improvement in other financial result was primarily
attributable to the lower net negative impact arising on
currency derivatives.
16
Income taxes
Taxes on income comprise the following:
in € million
Current tax expense
Deferred tax expense
Income taxes
2015
2014
2,751
77
2,828
2,774
116
2,890
Current tax expense includes € 164 million (2014:
€ 275 million) relating to prior periods.
A deferred tax expense of € 52 million (2014: € 83 mil-
lion) is attributable to new temporary differences and
the reversal of temporary differences brought forward.
The tax expense was reduced by € 64 million (2014:
€ 27 million) as a result of utilising tax losses / tax credits
brought forward, for which deferred assets had not
previously been recognised.
The change in the valuation allowance on deferred tax
assets relating to tax losses available for carryforward
and temporary differences resulted in a tax expense of
€ 105 million (2014: € 49 million).
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 % plus solidarity
surcharge of 5.5 % applies in Germany, giving a tax rate of
15.8 %, unchanged from the previous year. After taking
account of an average municipal trade tax multiplier rate
(Hebesatz) of 425.0 % (2014: 425.0 %), the municipal trade
tax rate for German entities is 14.9 % (2014: 14.9 %). The
overall income tax rate in Germany is therefore 30.7 %
(2014: 30.7 %). Deferred taxes for non-German entities
are calculated on the basis of the relevant country-spe-
cific tax rates and remained in a range of between 12.5 %
and 46.9 %. Changes in tax rates resulted in a deferred
tax expense of € 36 million (2014: € 22 million).
The actual tax expense for the financial year 2015 of
€ 2,828 million (2014: € 2,890 million) is € 4 million
(2014: € 217 million higher) lower than the expected tax
expense of € 2,832 million (2014: € 2,673 million) which
would theoretically arise if the tax rate of 30.7 %
116
(2014: 30.7 %), applicable for German companies, was
applied across the Group.
The difference between the expected and actual tax ex-
pense is explained in the following reconciliation:
in € million
Profit before tax
Tax rate applicable in Germany
Expected tax expense
Variances due to different tax rates
Tax increases (+) / tax reductions (–) as a result of non-deductible expenses and tax-exempt income
Tax expense (+) / benefits (–) for prior years
Other variances
Actual tax expense
Effective tax rate
2015
2014
9,224
30.7 %
2,832
– 119
42
164
– 91
2,828
30.7 %
8,707
30.7 %
2,673
– 55
150
275
– 153
2,890
33.2 %
Tax increases as a result of non-deductible expenses
and tax reductions due to tax-exempt income de-
creased significantly compared to one year earlier. As
in the previous year, tax increases as a result of non-
tax-deductible expenses were attributable primarily to
the impact of non-recoverable withholding taxes and
transfer price issues.
in € million
The line “Other variances” comprises primarily recon-
ciling items relating to the Group’s share of results of
equity accounted investments.
The allocation of deferred tax assets and liabilities to
balance sheet line items at 31 December is shown in the
following table:
Deferred tax assets
Deferred tax liabilities
2015
2014
2015
2014
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Intangible assets
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Property, plant and equipment
Leased products
Other investments
Other assets
Tax loss carryforwards
Provisions
Liabilities
Eliminations
Valuation allowance
Netting
Deferred taxes
Net
10
20
367
5
1,363
548
4,187
2,654
3,281
11
50
393
5
1,289
566
4,175
2,827
2,945
1,977
376
6,260
11
2,109
–
178
478
715
1,706
400
5,486
12
2,687
–
95
602
690
12,435
12,261
12,104
11,678
– 502
– 9,988
1,945
– 496
– 9,704
2,061
87
–
– 9,988
2,116
171
–
– 9,704
1,974
117 GROUP FINANCIAL STATEMENTS
Deferred tax assets on tax loss carryforwards and capital
losses before allowances totalled € 548 million (2014:
€ 566 million). After valuation allowances of € 502 million
(2014: € 496 million), their carrying amount stood at
€ 46 million (2014: € 70 million).
increased to € 2,234 million due to exchange rate factors
(2014: € 2,112 million). As in previous years, deferred
tax assets recognised on these tax losses – amounting to
€ 402 million at the end of the reporting period (2014:
€ 422 million) – were fully written down since they can
only be utilised against future capital gains.
Tax losses available for carryforward – for the most
part usable without restriction – amounted to € 468 mil-
lion (2014: € 469 million). This includes an amount of
€ 345 million (2014: € 228 million), for which a valuation
allowance of € 100 million (2014: € 74 million) was rec-
ognised on the related deferred tax asset. For entities
with tax losses available for carryforward, a net surplus
of deferred tax assets over deferred tax liabilities is re-
ported at 31 December 2015 amounting to € 104 mil-
lion (2014: € 140 million). Deferred tax assets are recog-
nised on the basis of management’s assessment of
whether it is probable that the relevant entities will gen-
erate sufficient future taxable profits, against which
deductible temporary differences can be offset.
Capital losses available for carryforward in the United
Kingdom which do not relate to ongoing operations
in € million
Deferred taxes at 1 January (assets (–) / liabilities (+))
Deferred tax expense (+) / income (–) recognised through income statement
Change in deferred taxes recognised directly in equity
Exchange rate impact and other changes
Deferred taxes at 31 December (assets (–) / liabilities (+))
Netting relates to the offset of deferred tax assets and
liabilities within individual separate entities or tax
groups to the extent that they relate to the same tax
authorities.
Deferred taxes recognised directly in equity amounted
to € 2,004 million (2014: € 1,889 million), an increase of
€ 115 million (2014: € 1,438 million) compared to the end
of the previous year. The change includes an increase
in deferred taxes recognised in conjunction with cur-
rency translation amounting to € 43 million (2014: € 9 mil-
lion).
Changes in deferred tax assets and liabilities during the
reporting period can be summarised as follows:
2015
2014
– 87
77
– 72
253
171
839
116
– 1,429
387
– 87
Changes in deferred tax assets and liabilities include
changes relating to items recognised either through
the income statement or directly in equity as well as
the impact of exchange rate and other factors. Deferred
taxes recognised directly in equity increased in total
by € 72 million (2014: € 1,429 million). Of this amount,
€ 520 million (2014: € 759 million) related to the fair
value measurement of derivative financial instruments
and marketable securities (recognised directly in equity),
shown in the summary above in the line items “Other
assets” and “Liabilities”. Working in the opposite direc-
tion, deferred taxes relating to remeasurements of the
net defined benefit liability for pension plans (recognised
directly in equity), shown in the summary above in the
line item “Provisions”, fell by € 448 million (2014: increase
of € 670 million).
Deferred taxes are not recognised on retained profits of
€ 33.7 billion (2014: € 30.7 billion) of foreign subsidiaries,
as it is intended to invest these profits to maintain and
expand the business volume of the relevant companies.
A computation was not made of the potential impact
of income taxes on the grounds of disproportionate ex-
pense.
The tax returns of BMW Group entities are checked
regularly by German and foreign tax authorities. Taking
account of a variety of factors – including existing inter-
pretations, commentaries and legal decisions taken re-
lating to the various tax jurisdictions and the BMW
Group’s past experience – adequate provision has, to
the extent identifiable and probable, been made for
potential future tax obligations.
118
17
Earnings per share
2015
2014
Net profit for the year after minority interest
€ million
6,369.4
5,798.1
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
18
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Profit attributable to common stock
Profit attributable to preferred stock
Average number of common stock shares in circulation
Average number of preferred stock shares in circulation
Basic earnings per share of common stock
Basic earnings per share of preferred stock
Dividend per share of common stock
Dividend per share of preferred stock
* Proposal by management.
€ million
€ million
5,839.6
529.8
5,317.7
480.4
number
601,995,196
601,995,196
number
54,499,460
54,259,767
€
€
€
€
9.70
9.72
3.20*
3.22*
8.83
8.85
2.90
2.92
Basic earnings per share of preferred stock are com-
puted on the basis of the number of preferred stock
shares entitled to receive a dividend in each of the
relevant financial years. As in the previous year, diluted
earnings per share correspond to basic earnings per
share.
Other disclosures relating to the income statement
Personnel expenses
The income statement includes personnel costs as follows:
in € million
Wages and salaries
Social security, retirement and welfare costs
thereof pension costs: € 1,250 million (2014: € 991 million)
Personnel expenses
2015
2014
8,887
1,983
8,094
1,670
10,870
9,764
Personnel expenses include € 48 million (2014: € 42 mil-
lion) of expenditure incurred to adjust the workforce size.
The average number of employees during the year
was:
Employees
thereof 214 (2014: 186) at proportionately-consolidated entities
Apprentices and students gaining work experience
thereof 2 (2014: 2) at proportionately-consolidated entities
Average number of employees
2015
2014
111,905
105,743
7,783
7,560
119,688
113,303
The number of employees at the end of the reporting period is disclosed in the Combined Management Report.
119 GROUP FINANCIAL STATEMENTS
Fee expense
The fee expense pursuant to § 314 (1) no. 9 HGB recog-
nised in the financial year 2015 for the Group auditor
and its network of audit firms amounted to € 23 mil-
lion (2014: € 23 million) and consists of the following:
in € million
2015
2014
Audit of financial statements
thereof KPMG AG Wirtschaftsprüfungsgesellschaft
Other attestation services
thereof KPMG AG Wirtschaftsprüfungsgesellschaft
Tax advisory services
thereof KPMG AG Wirtschaftsprüfungsgesellschaft
Other services
thereof KPMG AG Wirtschaftsprüfungsgesellschaft
Fee expense
thereof KPMG AG Wirtschaftsprüfungsgesellschaft
15
4
4
2
3
–
1
1
23
7
15
3
2
1
4
1
2
1
23
6
The total fee comprises expenses recorded by BMW AG,
Munich, and all consolidated subsidiaries.
and € 132 million (2014: € 73 million) respectively, were
recognised in the income statement in 2015.
The fee expense shown for KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin, relates only to services
provided on behalf of BMW AG, Munich, and its
German subsidiaries.
Government grants and government assistance
Income from asset-related and performance-related
grants, amounting to € 33 million (2014: € 30 million)
A large part of these amount to public sector grants for
the promotion of regional structures and to subsidies
for plant expansion.
19 Share-based remuneration
The BMW Group operates three share-based remunera-
tion programmes, namely the Employee Share Pro-
gramme (for entitled employees), share-based com-
mitments to members of the Board of Management
and share-based commitments to senior heads of de-
partment.
In the case of the Employee Share Programme, non-
voting shares of preferred stock in BMW AG were
granted to qualifying employees during the financial
year 2015 at favourable conditions (see note 34 for the
number and price of issued shares). The holding pe-
riod for these shares is up to 31 December 2018. The
BMW Group recorded a personnel expense of € 6 mil-
lion (2014: € 6 million) for the Employee Share Pro-
gramme in 2015, corresponding to the difference between
the market price and the reduced price of the shares of
preferred stock purchased by employees. The Board of
Management reserves the right to decide anew each year
with respect to an Employee Share Programme.
For financial years beginning after 1 January 2011,
BMW AG has added a share-based remuneration com-
ponent to the existing compensation system for Board
of Management members.
Each Board of Management member is required to invest
20 % of his / her total bonus (after tax) in shares of BMW AG
common stock, which are recorded in a separate custodian
account for each member concerned (annual tranche).
Each annual tranche is subject to a holding period of
120
four years. Once the holding period is fulfilled, BMW AG
grants one additional share of BMW AG common stock
for each three held or, at its discretion, pays the equiva-
lent amount in cash (share-based remuneration com-
ponent). Special rules apply in the case of death or in-
validity of a Board of Management member or early
termination of the contractual relationship before ful-
filment of the holding period.
With effect from the financial year 2012, qualifying
senior heads of department are also entitled to opt for a
share-based remuneration component, which, in most
respects, is comparable to the share-based remunera-
tion arrangements for Board of Management members.
The share-based remuneration component is measured
at its fair value at each balance sheet date between grant
and settlement date, and on the settlement date itself.
The appropriate amounts are recognised as personnel
expense on a straight-line basis over the vesting period
and reported in the balance sheet as a provision.
The cash-settlement obligation for the share-based re-
muneration component is measured at its fair value at
the balance sheet date (based on the closing price of
BMW AG common stock in Xetra trading at 31 Decem-
ber 2015).
The total carrying amount of the provision for the share-
based remuneration component of current and former
Board of Management members and senior heads of
department at 31 December 2015 was € 4,989,668 (2014:
€ 3,096,674).
The total expense recognised in 2015 for the share-based
remuneration component of current and former Board
of Management members and senior heads of depart-
ment was €1,892,994 (2014: €1,449,486).
The fair value of the programmes for Board of Manage-
ment members and senior heads of department at the
date of grant of the share-based remuneration compo-
nents was € 1,605,147 (2014: € 1,479,939), based on a
total of 18,143 shares (2014: 17,712 shares) of BMW AG
common stock or a corresponding cash-based settle-
ment measured at the relevant market share price pre-
vailing on the grant date.
Further details on the remuneration of the Board of
Management are provided in the 2015 Compensation
Report, which is part of the Combined Management
Report.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
121 GROUP FINANCIAL STATEMENTS
BMW Group
Notes to the Group Financial Statements
Notes to the Statement of Comprehensive Income
20 Disclosures relating to the statement of total comprehensive income
Other comprehensive income for the period after tax comprises the following:
in € million
2015
2014
Remeasurement of the net defined benefit liability for pension plans
Deferred taxes
Items not expected to be reclassified to the income statement in the future
Available-for-sale securities
thereof gains / losses arising in the period under report
thereof reclassifications to the income statement
Financial instruments used for hedging purposes
thereof gains / losses arising in the period under report
thereof reclassifications to the income statement
Other comprehensive income from equity accounted investments
Deferred taxes
Currency translation foreign operations
Items expected to be reclassified to the income statement in the future
1,413
– 401
1,012
– 170
– 26
– 144
– 1,301
– 2,619
1,318
71
516
765
– 119
– 2,298
706
– 1,592
40
109
– 69
– 2,194
– 1,939
– 255
– 48
732
764
– 706
Other comprehensive income for the period after tax
893
– 2,298
Deferred taxes on components of other comprehensive income are as follows:
in € million
2015
2014
Before
tax
Deferred
taxes
After
tax
Before
tax
Deferred
taxes
After
tax
Remeasurement of the net defined benefit liability for pension plans
Available-for-sale securities
Financial instruments used for hedging purposes
Other comprehensive income from equity accounted investments
Currency translation foreign operations
Other comprehensive income
1,413
– 170
– 1,301
71
765
778
– 401
53
459
4
–
115
1,012
– 117
– 2,298
40
– 842
– 2,194
75
765
893
– 48
764
706
– 34
719
47
–
– 1,592
6
– 1,475
– 1
764
– 3,736
1,438
– 2,298
Other comprehensive income arising at the level of equity
accounted investments is reported in the Statement of
Changes in Equity within “Translation differences” with
a positive amount of € 90 million (2014: positive amount
of € 140 million) and within “Derivative financial instru-
ments” with a negative amount of € 15 million (2014:
negative amount of € 141 million).
122
BMW Group
Notes to the Group Financial Statements
Notes to the Balance Sheet
21 Analysis of changes in Group tangible, intangible and investment assets 2015
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
in € million
Development costs
Goodwill
Other intangible assets
Intangible assets
Acquisition and manufacturing cost
1. 1. 20151
Translation
differences
Additions
Reclassi-
fications
Disposals
31. 12.
2015
9,341
369
1,445
–
–
15
2,064
–
146
–
–
–
883
–
152
10,522
369
1,454
11,155
15
2,210
–
1,035
12,345
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
9,806
32,770
2,517
2,020
47,113
164
551
47
4
766
240
1,954
218
1,268
3,680
Leased products
36,969
1,738
18,011
Investments accounted for using the equity method
1,088
–
1,293
Investments in non-consolidated subsidiaries
Participations
Non-current marketable securities
Other investments
1 Including mergers, see note 2.
2 Including assets under construction of € 1,187 million.
226
641
–
867
3
–
–
3
68
15
28
111
295
1,362
34
– 1,691
–
–
–
–
–
–
–
75
1,168
215
4
10,430
35,469
2,601
1,597
1,462
50,097
14,452
42,266
148
64
–
–
64
2,233
233
656
28
917
Analysis of changes in Group tangible, intangible and investment assets 2014
in € million
Development costs
Goodwill
Other intangible assets
Intangible assets
Acquisition and manufacturing cost
1. 1. 20141
Translation
differences
Additions
Reclassi-
fications
Disposals
31. 12.
2014
9,667
374
1,459
–
–
15
1,499
–
62
–
–
–
1,825
5
93
9,341
369
1,443
11,500
15
1,561
–
1,923
11,153
Land, titles to land, buildings, including buildings on
third party land
Plant and machinery
Other facilities, factory and office equipment
Advance payments made and construction in progress
Property, plant and equipment
8,812
28,843
2,355
2,972
42,982
207
607
65
37
916
407
2,436
207
1,489
4,539
Leased products
32,486
1,954
14,576
Investments accounted for using the equity method
Investments in non-consolidated subsidiaries
Participations
Non-current marketable securities
Other investments
638
240
575
–
815
–
2
–
–
2
600
41
66
–
107
428
2,023
32
– 2,483
–
–
–
–
–
–
–
51
9,803
1,145
32,764
149
1
2,510
2,014
1,346
47,091
12,047
36,969
150
57
–
–
57
1,088
226
641
–
867
1 Including first-time consolidations.
2 Prior year figures have been adjusted for changes in accordance with IAS 8 as described in note 9 of the Financial Statements 2014.
3 Including assets under construction of € 1,679 million.
123 GROUP FINANCIAL STATEMENTS
Depreciation and amortisation
Trans-
lation
differ-
ences
–
–
11
Current
year
Dis-
posals
31. 12.
2015
Carrying amount
31. 12.
2015
31. 12.
2014
1,166
–
175
883
–
152
4,171
5
797
6,351
5,453
Development costs
364
657
364
Goodwill
682
Other intangible assets
11
1,341
1,035
4,973
7,372
6,499
Intangible assets
77
390
43
–
510
238
–
2
–
–
2
319
2,795
204
–
62
1,150
208
–
4,515
25,876
1,941
6
5,915
9,593
660
1,5912
5,625
Land, titles to land, buildings, including buildings on
third party land
8,930
Plant and machinery
613
Other facilities, factory and office equipment
2,014
Advance payments made and construction in progress
3,318
1,420
32,338
17,759
17,182
Property, plant and equipment
3,536
3,277
7,301
34,965
30,165
Leased products
–
12
13
2
27
–
–
–
–
–
–
76
411
2
489
2,233
1,088
Investments accounted for using the equity method
157
245
26
428
164
Investments in non-consolidated subsidiaries
244
Participations
–
Non-current marketable securities
408
Other investments
1. 1. 20151
3,888
5
763
4,656
4,181
23,841
1,902
6
29,930
6,804
–
62
398
–
460
1. 1. 20141
4,645
5
665
Depreciation and amortisation
Trans-
lation
differ-
ences
–
–
10
Current
year
Changes
not effect-
ing net
income
1,068
–
178
–
–
–
Dis-
posals
31. 12.
2014
Carrying amount
31. 12.
2014
31. 12.
20132
1,825
3,888
5,453
5,022
Development costs
–
92
5
761
364
682
369
Goodwill
788
Other intangible assets
5,315
10
1,246
–
1,917
4,654
6,499
6,179
Intangible assets
3,849
22,071
1,809
–
27,729
85
431
52
–
568
282
2,461
181
–
2,924
6,572
293
3,401
–
76
188
–
264
–
1
–
–
1
–
1
152
–
153
–
–
–
–
–
–
–
–
57
–
57
38
4,178
1,129
23,834
145
–
1,897
–
1,312
29,909
5,625
8,930
613
2,0143
4,890
Land, titles to land, buildings, including buildings on
third party land
6,771
Plant and machinery
536
Other facilities, factory and office equipment
2,971
Advance payments made and construction in progress
17,182
15,168
Property, plant and equipment
3,462
6,804
30,165
25,914
Leased products
–
16
–
–
16
–
62
397
–
459
1,088
638
Investments accounted for using the equity method
164
244
–
408
166
Investments in non-consolidated subsidiaries
387
Participations
–
Non-current marketable securities
553
Other investments
124
22
Intangible assets
Intangible assets mainly comprise capitalised develop-
ment costs on vehicle and engine projects as well as
subsidies for tool costs, licences, purchased development
projects, software and purchased customer bases.
Amortisation on intangible assets is presented in cost
of sales, selling expenses and administrative expenses.
Other intangible assets include a brand-name right
amounting to € 48 million (2014: € 46 million), which is
allocated to the Automotive segment and is not sub-
ject to scheduled depreciation since its useful life is
deemed to be indefinite. The year-on-year change is due
entirely to currency factors. This line item also includes
goodwill of € 33 million (2014: € 33 million) allocated to
the Automotive cash-generating unit (CGU) and good-
will of € 331 million (2014: € 331 million) allocated to
the Financial Services CGU.
Intangible assets amounting to € 48 million (2014:
€ 46 million) are subject to restrictions on title.
As in the previous year, there was no requirement to
recognise impairment losses or reversals of impairment
losses on intangible assets in 2015.
No borrowing costs were recognised as a cost compo-
nent of intangible assets during the year under report.
An analysis of changes in intangible assets is provided
in note 21.
23
Property, plant and equipment
A break-down of the different classes of property, plant
and equipment disclosed in the balance sheet and
changes during the year are shown in note 21.
An impairment loss of € 3 million (2014: € – million) was
recognised on plant and machinery in the Automotive
segment in 2015.
No borrowing costs were recognised as a cost compo-
nent of property, plant and equipment during the year
under report.
ship is attributable to the BMW Group due to the na-
ture of the lease arrangements (finance leases). Leases
to which BMW AG is party, with a carrying amount
of € 102 million (2014: € 64 million), run for periods up
to 2030 at the latest and contain price adjustment
clauses in the form of index-linked rentals as well as
extension and purchase options. Assets leased by
BMW Tokyo Corp., Tokyo, with a carrying amount of
€ 7 million (2014: € 2 million), have remaining terms
up to 2039 at the latest. BMW Osaka Corp., Osaka, is
party to a finance lease running until 2022 for an opera-
tional building with a carrying amount of € 1 million at
the end of the reporting period (2014: € 1 million).
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Property, plant and equipment include a total of
€ 110 million (2014: € 67 million) relating to land and
operational buildings, for which economic owner-
Minimum lease payments of the relevant leases are as
follows:
in € million
31. 12. 2015
31. 12. 2014
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
22
69
99
190
10
32
27
69
12
37
72
121
13
53
53
119
8
25
12
45
5
28
41
74
125 GROUP FINANCIAL STATEMENTS
24
Leased products
The BMW Group, as lessor, leases out its own products
and those of other manufacturers as part of its finan-
cial services business. Minimum lease payments of
€ 16,527 million (2014: € 14,712 million) from non-can-
cellable operating leases fall due as follows:
in € million
within one year
between one and five years
later than five years
Minimum lease payments
31. 12. 2015
31. 12. 2014
8,079
8,445
3
16,527
7,267
7,442
3
14,712
Contingent rents of € 54 million (2014: € 56 million), based
principally on the distance driven, were recognised in
income. Some of the agreements contain price adjust-
ment clauses as well as extension and purchase options.
ment losses amounting to € 24 million (2014: € 44 million)
were recognised on leased products in 2015 as a con-
sequence of changes in residual value expectations.
Impairment losses amounting to € 119 million (2014:
€ 137 million) and income from the reversal of impair-
An analysis of changes in leased products is provided in
note 21.
25
Investments accounted for using the equity method
Investments accounted for using the equity method com-
prise the joint ventures BMW Brilliance Automotive Ltd.,
Shenyang (BMW Brilliance), DriveNow GmbH & Co. KG,
Munich, and DriveNow Verwaltungs GmbH, Munich
(DriveNow), as well as the associated company THERE
Holding B. V., Amsterdam (THERE).
The BMW Brilliance Automotive Ltd., Shenyang, joint
venture (in which the BMW Group has a 50.0 % share-
holding) produces mainly BMW brand models for the
Chinese market and also has engine manufacturing
facilities, which supply the joint venture’s two plants
with petrol engines.
The joint ventures DriveNow GmbH & Co. KG, Munich,
and DriveNow Verwaltungs GmbH, Munich, (in both
cases with a 50.0 % shareholding) is a car sharing pro-
vider which currently offers car-sharing services in major
German cities and, going forward, increasingly outside
Germany.
The associated company, THERE Holding B. V., Amsterdam,
(in which the BMW Group has a 33.3 % shareholding),
wholly owns HERE International B. V., Amsterdam (until
28 January 2016: THERE Acquisition B. V., Amsterdam),
which, in turn, serves as the parent company of the HERE
Group. Further information is provided in note 3.
The accounting treatment applied to investments ac-
counted for using the equity method is described in
note 6. Financial information relating to equity accounted
investments is aggregated in the following table:
in € million
Disclosures relating to the income statement
Revenues
Scheduled depreciation
Profit / loss before financial result
Interest income
Interest expenses
Income taxes
Other comprehensive income
Total comprehensive income
Dividends received by the Group
BMW Brilliance
DriveNow
2015
2014
2015
2014
THERE*
2015
13,220
380
1,399
40
15
369
–
1,081
144
11,550
247
1,702
24
–
449
–
1,339
147
47
–
– 6
–
–
–
–
– 6
–
32
–
– 5
–
–
–
–
– 5
–
–
–
–
–
–
–
–
–
–
* No disclosure of income statement figures for 2015 on the grounds of immateriality. See also note 3.
126
in € million
Disclosures relating to the balance sheet
Non-current assets
Cash and cash equivalents
Current assets
Equity
Non-current financial liabilities
Non-current provisions and liabilities
Current financial liabilities
Current provisions and liabilities
Reconciliation of aggregated financial information
Assets
Equity and liabilities
Net assets
Group’s interest in net assets
Eliminations
Carrying amount
BMW Brilliance
DriveNow
2015
2014
2015
2014
THERE1
2015
5,415
1,663
3,841
3,853
–
589
641
4,171
976
3,404
2,910
–
450
236
4,814
4,215
9,256
5,403
3,853
1,927
– 376
1,551
7,575
4,665
2,910
1,455
– 373
1,082
–
23
32
202
–
–
–
12
32
12
20
143
–
14
1
13
19
12
–
–
–
8
20
8
12
6
–
6
3,115
96
365
2,003
48
1,093
48
384
3,480
1,477
2,003
668
–
668
1 Carrying amounts as at acquisition date (4 December 2015). See also note 3.
2 Corresponds to the consolidated capital (provided by the shareholders) of DriveNow GmbH & Co. KG, Munich, and its subsidiaries.
3 The BMW Group holds 73.8 % (2014: 50.0 %) of net assets at 31 December 2015. Due to the allocation of voting rights within the decision-making bodies of the two entities,
operations remain subject to joint control.
Other investments
Other investments relate to investments in non-consoli-
dated subsidiaries, joints ventures, joint operations and
associated companies, participations and non-current
marketable securities.
The additions to investments in non-consolidated sub-
sidiaries relate to capital increases at the level of BMW
SLP S. A. de C. V., San Luis Potosí, BMW i Ventures B. V.,
Rijswijk, and BMW i Ventures, LLC, WiImington, DE.
The additions to non-current marketable securities re-
late to the acquisition of part of a convertible bond,
issued by SGL Carbon SE, Wiesbaden, with a nominal
volume of € 28 million. Disposals of investment in non-
consolidated subsidiaries result from the winding-up
of BMW Services Netherlands B. V., Rijswijk.
Impairment losses on investments in non-consolidated
subsidiaries – recognised with income statement effect –
related primarily to BMW i Ventures B. V., Rijswijk.
Impairment losses on participations – recognised with
income statement effect – related to the investment in
SGL Carbon SE, Wiesbaden, which was written down
on the basis of objective criteria, see also note 6.
A break-down of the different classes of other invest-
ments disclosed in the balance sheet and changes
during the year are shown in note 21.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
26
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
127 GROUP FINANCIAL STATEMENTS
27 Receivables from sales financing
Receivables from sales financing, totalling € 70,043 mil-
lion (2014: € 61,024 million), comprise € 52,915 million
(2014: € 45,849 million) for credit financing for retail
customers and dealers and € 17,128 million (2014:
€ 15,175 million) for finance leases. Finance leases are
analysed as follows:
in € million
31. 12. 2015
31. 12. 2014
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
5,974
12,816
134
18,924
5,429
11,572
127
17,128
5,366
11,231
109
16,706
4,898
10,175
102
15,175
Unrealised interest income
1,796
1,531
Contingent rents recognised as income (generally relat-
ing to the distance driven) amounted to € 1 million
(2014: € 2 million). Impairment losses on finance leases
amounting to € 174 million (2014: € 183 million) were
measured and recognised on the basis of specific credit
risks. Non-guaranteed residual values that fall to the
benefit of the lessor amounted to € 165 million (2014:
€ 140 million).
Receivables from sales financing include € 41,865 mil-
lion (2014: € 37,438 million) with a remaining term of
more than one year.
Allowances for impairment and credit risk
in € million
Gross carrying amount
Allowance for impairment
Net carrying amount
31. 12. 2015
31. 12. 2014
71,536
– 1,493
70,043
62,539
– 1,515
61,024
Allowances on receivables from sales financing – which only arise within the Financial Services segment – developed
as follows:
2015
in € 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
1,000
265
– 319
17
963
515
30
– 22
7
530
Total
1,515
295
– 341
24
1,493
128
2014
in € 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
1,098
239
– 371
34
1,000
482
41
– 20
12
515
Total
1,580
280
– 391
46
1,515
* Balance at 1 January adjusted due to deconsolidation of entities.
At the end of the reporting period, impairment allow-
ances of € 530 million (2014: € 515 million) were recog-
nised on a group basis on gross receivables from sales
financing totalling € 44,473 million (2014: € 38,780 mil-
lion). Impairment allowances of € 963 million (2014:
€ 1,000 million) were recognised at 31 December 2015
on a specific item basis on gross receivables from sales
financing totalling € 13,742 million (2014: € 12,951 million).
Receivables from sales financing which were not over-
due at the end of the reporting period amounted to
€ 13,321 million (2014: € 10,808 million). No impairment
losses were recognised for these balances.
The estimated fair value of collateral received for re-
ceivables on which impairment losses were recognised
totalled € 26,992 million (2014: € 25,443 million) at
the end of the reporting period. This collateral related
primarily to vehicles. The carrying amount of assets
held as collateral and taken back as a result of pay-
ment default amounted to € 40 million (2014: € 41 mil-
lion).
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
28 Financial assets
Financial assets comprise:
in € million
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Derivative instruments
Marketable securities and investment funds
Loans to third parties
Credit card receivables
Other
Financial assets
thereof non-current
thereof current
31. 12. 2015
31. 12. 2014
3,030
5,261
133
272
147
8,843
2,208
6,635
2,888
3,972
12
239
297
7,408
2,024
5,384
The increase in derivative instruments was primarily
attributable to positive market price developments of
currency derivatives.
The rise in marketable securities and investment funds
results primarily from investments in fixed income
marketable securities.
The amount by which the value of the investment funds
exceeds obligations for part-time working arrange-
ments (€ 12 million; 2014: € 48 million) is reported under
“Other financial assets”. Investment funds are held to
secure these obligations. These funds are managed by
BMW Trust e. V., Munich, as part of a Contractual Trust
Arrangement (CTA) and are therefore netted against
the corresponding settlement arrears for pre-retirement
part-time working arrangements.
129 GROUP FINANCIAL STATEMENTS
Marketable securities and investment funds relate to available-for-sale financial assets and comprise:
in € million
Stocks
Fixed income securities
Other debt securities
Marketable securities and investment funds
The contracted maturities of debt securities are as follows:
in € million
Fixed income securities
due within three months
due later than three months
Other debt securities
due within three months
due later than three months
Debt securities
Allowances for impairment and credit risk
Receivables relating to credit card business comprise the following:
in € million
Gross carrying amount
Allowance for impairment
Net carrying amount
31. 12. 2015
31. 12. 2014
561
4,356
344
5,261
100
3,340
532
3,972
31. 12. 2015
31. 12. 2014
699
3,657
344
–
4,700
595
2,745
532
–
3,872
31. 12. 2015
31. 12. 2014
280
– 8
272
247
– 8
239
Allowances for impairment losses on receivables relating to credit card business developed as follows during the
year under report:
2015
in € million
Balance at 1 January
Allocated (+) / reversed (–)
Utilised
Exchange rate impact and other changes
Balance at 31 December
2014
in € 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
8
7
– 8
1
8
–
–
–
–
–
Allowance for impairment recognised on a
group basis
specific item basis
9
6
– 8
1
8
–
–
–
–
–
Total
8
7
– 8
1
8
Total
9
6
– 8
1
8
130
29
Income tax assets
Income tax assets totalling € 2,381 million (2014: € 1,906
million) include claims amounting to € 519 million
(2014: € 653 million) which are expected to be settled af-
ter more than twelve months. Some of the claims may
be settled earlier than this depending on the timing of
proceedings.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
30 Other assets
Other assets comprise:
in € million
Prepayments
Receivables from subsidiaries
Receivables from other companies in which an investment is held
Other taxes
Collateral receivables
Expected reimbursement claims
Sundry other assets
Other assets
thereof non-current
thereof current
31. 12. 2015
31. 12. 2014
1,527
716
893
1,036
412
711
966
6,261
1,568
4,693
1,323
721
1,055
1,078
412
641
902
6,132
1,094
5,038
Prepayments of € 1,527 million (2014: € 1,323 million) re-
late mainly to prepaid interest and commission paid
to dealers. Prepayments of € 795 million (2014: € 674 mil-
lion) have a maturity of less than one year.
Receivables from other companies in which an invest-
ment is held include € 892 million (2014: € 1,054 million)
due within one year.
Receivables from subsidiaries include trade receivables
of € 39 million (2014: € 41 million) and financial receiva-
bles of € 677 million (2014: € 680 million). They include
€ 265 million (2014: € 293 million) with a remaining term
of more than one year.
Collateral receivables comprise mainly customary
collateral (banking deposits) arising on the sale of re-
ceivables.
31
Inventories
Inventories comprise the following:
in € million
31. 12. 2015
31. 12. 2014
Raw materials and supplies
Work in progress, unbilled contracts
Finished goods and goods for resale
Inventories
1,004
1,098
8,969
11,071
918
944
9,227
11,089
At 31 December 2015, inventories measured at their
net realisable value amounted to € 1,054 million (2014:
€ 723 million) and are included in total inventories of
€ 11,071 million (2014: € 11,089 million). Write-downs to
net realisable value amounting to € 486 million (2014:
€ 29 million) were recognised in 2015 and resulted pri-
marily from accidents and natural disasters. No reversals
of write-down were recognised in the period under re-
port (2014: € 3 million).
131 GROUP FINANCIAL STATEMENTS
32
Trade receivables
Trade receivables totalling € 2,751 million (2014: € 2,153
million) include € 53 million (2014: € 47 million) due
later than one year.
Allowances for impairment and credit risk
in € million
Gross carrying amount
Allowance for impairment
Net carrying amount
31. 12. 2015
31. 12. 2014
2,847
– 96
2,751
2,236
– 83
2,153
Allowances on trade receivables developed as follows during the year under report:
2015
in € million
Balance at 1 January
Allocated (+) / reversed (–)
Utilised
Exchange rate impact and other changes
Balance at 31 December
2014
in € 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
76
36
– 27
– 1
84
7
7
– 1
– 1
12
Allowance for impairment recognised on a
group basis
specific item basis
98
– 6
– 15
– 1
76
9
– 2
–
–
7
Total
83
43
– 28
– 2
96
Total
107
– 8
– 15
– 1
83
Some trade receivables were overdue for which an impairment loss was not recognised. Overdue balances are
analysed into the following time windows:
in € million
1 – 30 days overdue
31 – 60 days overdue
61 – 90 days overdue
91 – 120 days overdue
More than 120 days overdue
31. 12. 2015
31. 12. 2014
128
20
10
15
22
195
100
73
26
30
52
281
132
Receivables that are overdue by between one and 30 days
do not normally result in bad debt losses since the over-
due nature of the receivables is primarily attributable to
the timing of receipts around the month-end. In the case
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.
33
Cash and cash equivalents
Cash and cash equivalents of € 6,122 million (2014:
€ 7,688 million) comprise cash on hand and at bank, all
with an original term of up to three months.
34 Equity
Number of shares issued
Preferred stock
Common stock
2015
2014
2015
2014
Shares issued / in circulation at 1 January
54,499,544
54,259,787
601,995,196
601,995,196
Shares issued in conjunction with Employee Share Programme
309,944
239,777
Less: shares repurchased and re-issued
84
20
–
–
–
–
Shares issued / in circulation at 31 December
54,809,404
54,499,544
601,995,196
601,995,196
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
At 31 December 2015 common stock issued by BMW AG
was divided, as at the end of the previous year, into
601,995,196 shares of common stock with a par-value of
€ 1.00. Preferred stock issued by BMW AG was divided
into 54,809,404 shares (2014: 54,499,544 shares) with a
par-value of € 1.00. Unlike the common stock, no voting
rights are attached to the preferred stock. All of the
Company’s stock is issued to bearer. Preferred stock bears
an additional dividend of € 0.02 per share.
In 2015, a total of 309,944 shares of preferred stock was
sold to employees at a reduced price of €53.66 per share
in conjunction with the Company’s Employee Share Pro-
gramme. These shares are entitled to receive dividends
with effect from the financial year 2016. 84 shares of
preferred stock were bought back via the stock exchange
in conjunction with the Company’s Employee Share
Programme.
Further information on share-based remuneration is
provided in note 19.
Issued share capital increased by € 0.3 million as a result
of the issue to employees of 309,860 shares of non-voting
preferred stock. The number of authorised shares and
the Authorised Capital of BMW AG amounted to 4.5 mil-
lion shares and € 4.5 million respectively at the end of
the reporting period. The Company is authorised to
issue 5 million shares of non-voting preferred stock
amounting to nominal € 5.0 million prior to 14 May 2019.
The share premium of € 22.8 million arising on the share
capital increase was transferred to capital reserves.
Capital reserves
Capital reserves include premiums arising from the issue
of shares and totalled € 2,027 million (2014: € 2,005 mil-
lion). The change related to the share capital increase in
conjunction with the issue of shares of preferred stock
to employees.
Revenue reserves
Revenue reserves comprise the post-acquisition and non-
distributed earnings of consolidated companies. In
addition, remeasurements of the net defined benefit lia-
bility for pension plans are also presented in revenue
reserves.
Revenue reserves increased during the twelve-month
period under report to € 41,027 million (31 December
2014: € 35,621 million). They were increased by the
amount of the net profit attributable to shareholders of
BMW AG amounting to € 6,369 million (2014: € 5,798 mil-
lion) and reduced by the payment of the dividend for
2014 amounting to € 1,904 million (for 2013: € 1,707 mil-
lion). Revenue reserves also increased by € 1,012 million
(2014: reduced by € 1,592 million) as a result of re-
measurements of net defined benefit liability for pen-
sion plans (net of deferred tax recognised directly in
133 GROUP FINANCIAL STATEMENTS
equity). Other miscellaneous changes reduced revenue
reserves by € 71 million (2014: € – million).
going concern in the long-term and to provide an ade-
quate return to shareholders.
The unappropriated profit of BMW AG at 31 December
2015 amounts to € 2,102 million and will be proposed
to the Annual General Meeting for distribution. This
amount includes € 175 million relating to preferred stock.
The amount proposed for distribution represents an
amount of €3.22 per share of preferred stock and €3.20
per share of common stock. The proposed distribution
must be authorised by the shareholders at the Annual
General Meeting of BMW AG. It is therefore not recog-
nised as a liability in the Group Financial Statements.
Accumulated other equity
Accumulated other equity comprises all amounts recog-
nised directly in equity resulting from the translation
of the financial statements of foreign subsidiaries, the
effects of recognising changes in the fair value of deriva-
tive financial instruments and marketable securities
directly in equity and the related deferred taxes recog-
nised directly in equity.
Minority interests
Equity attributable to minority interests amounted to
€ 234 million (2014: € 217 million). This includes a mi-
nority interest of € 27 million in the results for the year
(2014: € 19 million).
Capital management disclosures
The BMW Group’s objectives when managing capital
are to safeguard the Group’s ability to continue as a
The BMW Group manages the capital structure and
makes adjustments to it in the light of changes in eco-
nomic conditions and the risk profile of the underlying
assets.
The BMW Group is not subject to any external minimum
equity capital requirements. Within the Financial Ser-
vices segment, however, there are a number of individual
entities which are subject to equity capital requirements
set by regulatory banking agencies.
In order to manage its capital structure, the BMW Group
uses various instruments including the amount of divi-
dends paid to shareholders and share buy-backs.
Moreover, the BMW Group pro-actively manages debt
capital, determining levels of debt capital transactions
with a target debt structure in mind. An important as-
pect of the selection of financial instruments is the ob-
jective to achieve matching maturities for the Group’s
financing requirements. In order to reduce non-sys-
tematic risk, the BMW Group uses a variety of financial
instruments available on the world’s capital markets to
achieve diversification.
The capital structure at the end of the reporting period
was as follows:
in € million
31. 12. 2015
31. 12. 2014
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
42,530
31.7 %
49,523
42,160
91,683
68.3 %
37,220
31.6 %
43,167
37,482
80,649
68.4 %
134,213
117,869
134
Equity attributable to shareholders of BMW AG increased
during the financial year by 0.1 percentage points,
primarily reflecting the increase in revenue reserves.
Since December 2013, the BMW AG has a long-term
rating of A+ (with stable outlook) and a short-term rating
of A-1 from the rating agency Standard & Poor’s, cur-
rently the highest rating given by Standard & Poor’s to
a European car manufacturer. Since July 2011, the
BMW AG has a long-term rating of A2 (with stable out-
look) and a short-term rating of P-1 from the rating
agency Moody’s. In March 2015, Moody’s raised the
outlook from “stable” to “positive” and at the same
time confirmed the long-term and short-term ratings
of A2 and P-1 respectively. This means that BMW AG
continues to enjoy the best ratings of all European car
manufacturers, clearly reflecting the financial strength
of the BMW Group.
Company rating
Non-current financial liabilities
Current financial liabilities
Outlook
Moody’s
Standard & Poor’s
A2
P-1
positive
A +
A-1
stable
With their current long-term ratings of A+ (Standard &
Poor’s) and A2 (Moody’s), the agencies continue to
confirm BMW AG’s robust creditworthiness for debt
with a term of more than one year. BMW AG’s credit-
worthiness for short-term debt is also classified by the
rating agencies as very good, thus enabling it to obtain
refinancing funds on competitive conditions.
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, salary and remuneration structure
of the employees involved. Due to similarity of nature,
the obligations of BMW Group companies in the USA
and of BMW (South Africa) (Pty) Ltd., Pretoria, for post-
retirement medical care are also accounted for as pen-
sion provisions in accordance with IAS 19.
Post-employment benefit plans are classified as either
defined contribution or defined benefit plans. Under
defined contribution plans an enterprise pays fixed
contributions into a separate entity or fund and does
not assume any other obligations. The total pension ex-
pense for defined contribution plans of the BMW Group
amounted to € 71 million (2014: € 60 million).
Employer contributions paid to state pension insurance
programmes totalled € 571 million (2014: € 517 million).
Under defined benefit plans the enterprise is required to
pay the benefits granted to present and past employees.
Defined benefit plans may be funded or unfunded, the
latter sometimes covered by accounting provisions.
Pension commitments in Germany are mostly covered
by assets contributed to BMW Trust e. V. , Munich, in
conjunction with a contractual trust arrangement (CTA).
The main other countries with funded plans were the
UK, the USA, Switzerland, the Netherlands, Belgium
and Japan. In the meantime, most of the defined bene-
fit plans have been closed to new entrants.
In the case of externally funded plans, the defined bene-
fit obligation is offset against plan assets measured at
their fair value. Where the plan assets exceed the pen-
sion obligations and the BMW Group has a right of re-
imbursement or a right to reduce future contributions,
it reports an asset (within “Other financial assets”) at
an amount equivalent to the present value of the future
economic benefits attached to the plan assets. If the plan
is externally funded, a liability is recognised under
pension provisions where the benefit obligation exceeds
fund assets.
Remeasurements of the net liability arise from changes
in the present value of the defined benefit obligation,
the fair value of the plan assets or the asset ceiling. Rea-
sons for remeasurements include changes in financial
and demographic assumptions as well as changes in the
detailed composition of beneficiaries. Remeasurements
are recognised immediately in “Other comprehensive
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
35
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
135 GROUP FINANCIAL STATEMENTS
income” and hence directly in equity (within revenue
reserves).
Past service cost arises where a BMW Group entity in-
troduces a defined benefit plan or changes the benefits
payable under an existing plan. These costs are recog-
nised immediately in the income statement. Similarly,
gains and losses arising on the settlement of a defined
benefit plan are recognised immediately in the income
statement.
The defined benefit obligation is calculated on an ac-
tuarial basis. The actuarial computation requires the
use of estimates and assumptions, which depend on the
economic situation in each particular country. The most
important assumptions applied by the BMW Group are
shown below. The following weighted average values
have been used for Germany, the United Kingdom and
other countries:
31 December
in %
Discount rate
Pension level trend
Germany
2015
2014
United Kingdom
2015
2014
Other
2015
2014
2.51
1.60
2.10
1.60
3.58
2.43
3.40
2.43
3.83
0.02
3.48
0.03
The following mortality tables are applied in countries, in which the BMW Group has significant defined benefit plans:
Germany
Mortality Table 2005 G issued by Prof. K. Heubeck (with invalidity rates reduced by 50 %)
United Kingdom S1PA tables weighted accordingly, and S1NA tables minus 2 years, both with a minimum long term annual improvement allowance
USA
RP2014 Mortality Table with collar adjustments projected with MP2015
In Germany, the so-called “pension entitlement trend”
(Festbetragstrend) also represents a significant actuarial
assumption for the purposes of determining benefits
payable at retirement and was left unchanged at 2.0 %.
By contrast, the salary level trend assumption is subject
to a comparatively low level of sensitivity within the
BMW Group. The calculation of the salary level trend in
the UK also takes account of restrictions due to caps and
floors.
Based on the measurement principles contained in
IAS 19, the following balance sheet carrying amounts
apply to the Group’s pension plans:
31 December
in € million
Germany
United Kingdom
Other
Total
2015
2014
2015
2014
2015
2014
2015
2014
Present value of defined benefit obligations
Fair value of plan assets
9,215
7,855
9,636
9,327
7,323
8,153
Effect of limiting net defined benefit asset to asset ceiling
–
–
–
9,499
7,734
–
Carrying amounts at 31 December
1,360
2,313
1,174
1,765
thereof pension provision
thereof assets
1,360
2,313
1,174
1,765
–
–
–
–
1,384
1,327
19,926
20,462
922
3
465
466
– 1
804
16,930
15,861
2
525
526
– 1
3
2
2,999
4,603
3,000
4,604
– 1
– 1
136
The decrease in defined benefit obligations results
mainly from the change in the discount rate used for
the actuarial computation in Germany, the UK and
the USA.
The provision for pension-like obligations for post-em-
ployment medical care in the USA and South Africa
amounts to € 52 million (2014: € 57 million) and is deter-
mined on a similar basis to the measurement of pension
obligations in accordance with IAS 19. Increased costs
do not have a direct impact on medical care obligations
relating to pensioners in the USA. In the case of South
Africa, however, it was assumed that costs would in-
crease in the long term by 8.4 % (2014: 8.3 %) p. a. The
expense recognised for obligations relating to post-em-
ployment medical care amounted to € 10 million (2014:
€ 8 million).
Numerous defined benefit plans are in place through-
out the BMW Group, the most significant of which are
described below.
Germany
Both employer- and employee-funded benefit plans are
in place in Germany. Benefits paid in conjunction with
these plans comprise old-age retirement pensions as
well as invalidity and surviving dependants’ benefits.
The Deferred Remuneration Retirement Plan is an em-
ployee-financed defined contribution plan with a mini-
mum rate of return. The fact that the plan involves a
minimum rate of return means that it is classified as a
defined benefit plan. Employees have the option to
waive payment of certain remuneration components in
return for a future benefit. Any employer social security
contributions saved are credited in the following year
to the individual’s benefits account. The converted re-
muneration components and the social security contri-
butions saved are invested on capital markets. When
the benefit falls due, it is paid on the basis of the higher
of the value of the depot account or a guaranteed mini-
mum amount.
Defined benefit obligations also remain in Germany, for
which benefits are determined either by multiplying
a fixed amount by the number of years of service or on
the basis of an employee’s final salary. The defined bene-
fit plans have been closed to new entrants. With effect
from 1 January 2014, new employees receive a defined
contribution entitlement with a minimum rate of return.
The assets of the German pension plans are adminis-
tered by BMW Trust e. V. , Munich, (German registered
association) in accordance with a CTA. The repre-
sentative bodies of this entity are the Board of Directors
and the Members’ General Meeting. BMW Trust e. V.,
Munich, currently has seven members and three Board
of Directors members elected by the Members’ General
Meeting. The Board of Directors is responsible for in-
vestments, drawing up and deciding on investment
guidelines as well as monitoring compliance with those
guidelines. The members of the association can be em-
ployees, senior executives and members of the Board
of Directors. An ordinary Members’ General Meeting
takes place once every calendar year, and deals with a
range of matters, including receiving and approving
the association’s annual report, ratifying the activities of
the Board of Directors and adopting changes to the as-
sociation’s statutes.
United Kingdom
In the United Kingdom, the BMW Group has defined
benefit plans, which are primarily employer-funded
combined with employee-funded components based on
the conversion of employee remuneration. These plans
are subject to statutory minimum recovery require-
ments. Benefits paid in conjunction with these plans
comprise old-age retirement pensions as well as inva-
lidity and surviving dependants’ benefits. These de-
fined benefit plans have been closed to new entrants,
who, since 1 January 2014, are covered by a defined
contribution plan.
The pension plans are administered by BMW Pension
Trustees Limited, Hams Hall, and BMW (UK) Trustees
Limited, Hams Hall, both trustee companies which act
independently of the BMW Group. BMW (UK) Trustees
Limited, Hams Hall, is represented by 14 trustees and
BMW Pension Trustees Limited, Hams Hall, by five
trustees. A minimum of one third of the trustees must
be elected by plan participants. The trustees represent
the interests of plan participants and decide on invest-
ment strategies. Recovery contributions to the funds
are determined in agreement with the BMW Group.
USA
The BMW Group’s defined benefit plans in the USA are
primarily employer-funded and include final salary
pension plans and a post-retirement medical care plan.
Benefits paid in conjunction with these plans comprise
old-age retirement pensions, early retirement benefits,
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
137 GROUP FINANCIAL STATEMENTS
surviving dependants’ benefits as well as post-retirement
medical care benefits.
Statutory minimum funding requirements apply to the
final salary pension plans. Plan participants are repre-
sented by a committee consisting of six members, which
is authorised to take all decisions pertaining to the
relevant pension plan, including plan structure, invest-
ments and selection of investment managers as well as
regular allocations and retrospective allocations to the
plan. The committee members are nominated by the
management of the relevant participating US entities.
Plan committees act in a fiduciary capacity and are
subject to statutory framework conditions.
The change in the net defined benefit liability for pen-
sion plans can be derived as follows:
in € million
Defined benefit
obligation
Plan assets
Total
Limitation of
the net defined
benefit asset to
the asset ceiling
Net defined
benefit liability
1 January 2015
20,462
– 15,861
4,601
Expense / income
Current service cost
Interest expense (+) / income (–)
Past service cost
Remeasurements
Gains (–) or losses (+) on plan assets, excluding
amounts included in interest income
Gains (–) or losses (+) arising from changes in
demographic assumptions
Gains (–) or losses (+) arising from changes in
financial assumptions
Changes in the limitation of the net defined benefit
asset to the asset ceiling
Gains (–) or losses (+) arising from
experience adjustments
Transfers to fund
Employee contributions
Pensions and other benefits paid
Translation differences and other changes
31 December 2015
thereof pension provision
thereof assets
494
591
– 9
–
– 468
–
494
123
– 9
–
325
325
– 224
– 1,181
–
– 429
–
79
– 540
683
19,926
–
–
–
–
– 872
– 79
554
– 529
– 16,930
– 224
– 1,181
–
– 429
– 872
–
14
154
2,996
2
–
–
–
–
–
–
1
–
–
–
–
–
3
4,603
494
123
– 9
325
– 224
– 1,181
1
– 429
– 872
–
14
154
2,999
3,000
– 1
138
in € million
Defined benefit
obligation
Plan assets
Total
Limitation of
the net defined
benefit asset to
the asset ceiling
Net defined
benefit liability
1 January 2014
15,758
– 13,461
2,297
Expense / income
Current service cost
Interest expense (+) / income (–)
Past service cost
Gains (–) or losses (+) arising from settlements
Remeasurements
Gains (–) or losses (+) on plan assets, excluding
amounts included in interest income
Gains (–) or losses (+) arising from changes in
demographic assumptions
Gains (–) or losses (+) arising from changes in
financial assumptions
Changes in the limitation of the net defined benefit
asset to the asset ceiling
Gains (–) or losses (+) arising from
experience adjustments
Transfers to fund
Employee contributions
Pensions and other benefits paid
Translation differences and other changes
31 December 2014
thereof pension provision
thereof assets
337
628
– 3
– 8
–
53
3,490
–
– 24
–
71
– 519
679
20,462
–
– 540
–
–
337
88
– 3
– 8
– 1,394
– 1,394
–
–
–
–
– 383
– 71
522
– 534
– 15,861
53
3,490
–
– 24
– 383
–
3
145
4,601
4
–
–
–
–
–
–
–
– 1
–
–
–
–
– 1
2
2,301
337
88
– 3
– 8
– 1,394
53
3,490
– 1
– 24
– 383
–
3
144
4,603
4,604
– 1
Net interest expense on the net defined benefit liability
is presented within the financial result. All other com-
ponents of pension expense are presented in the in-
come statement under cost of sales, selling and adminis-
trative expenses.
Remeasurements on the obligations side gave rise to
a negative amount of € 1,834 million (2014: positive
amount of € 3,519 million) and related mainly to the
higher discount rates used in Germany, the UK and
the USA.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
139 GROUP FINANCIAL STATEMENTS
The net defined benefit liability for pension plans in Germany, the UK and other countries changed as follows:
Germany
in € million
1 January
Expense (+) / income (–)
Remeasurements
Payments to external funds
Employee contributions
Payments on account and pension payments
31 December
United Kingdom
in € million
1 January
Expense (+) / income (–)
Remeasurements
Payments to external funds
Employee contributions
Defined benefit obligation
Plan assets
Net liability
2015
2014
2015
2014
2015
2014
9,636
7,400
– 7,323
– 6,749
518
475
– 825
1,872
–
53
– 167
9,215
–
48
– 159
9,636
– 155
– 7
– 490
– 53
173
– 237
– 351
– 97
– 48
159
2,313
363
– 832
– 490
–
6
651
238
1,521
– 97
–
–
– 7,855
– 7,323
1,360
2,313
Defined benefit obligation
Plan assets
Net liability
2015
2014
2015
2014
2015
2014
9,499
7,409
– 7,734
– 6,076
1,765
1,333
449
405
– 876
1,390
–
23
–
20
– 283
294
– 295
– 23
334
– 275
– 990
– 212
– 20
302
166
– 582
– 295
–
8
130
400
– 212
–
8
112
106
1,174
1,765
Payments on account and pension payments
– 326
– 294
Translation differences and other changes
558
569
– 446
– 463
31 December
9,327
9,499
– 8,153
– 7,734
Other
in € million
1 January
Expense (+) / income (–)
Remeasurements
Payments to external funds
Employee contributions
Payments on account and pension payments
Translation differences and other changes
Defined benefit
obligation
Plan assets
Effect of limiting the
net defined benefit
asset to the asset ceiling
Net liability
2015
2014
2015
2014
2015
2014
2015
2014
1,327
109
– 133
–
3
– 47
125
949
74
257
–
3
– 66
110
– 804
– 636
– 30
38
– 87
– 3
47
– 83
– 922
– 28
– 53
– 74
– 3
61
– 71
– 804
2
–
1
–
–
–
–
3
4
–
– 1
–
–
–
– 1
2
525
79
– 94
– 87
–
–
42
465
317
46
203
– 74
–
– 5
38
525
31 December
1,384
1,327
Depending on the cash flow profile and risk structure of the pension obligations involved, pension plan assets are
invested in various investment classes.
140
Plan assets in Germany, the UK and other countries comprised the following:
Components of plan assets
in € million
2015
2014
2015
2014
2015
2014
2015
2014
Germany
United Kingdom
Other
Total
Equity instruments
Debt instruments
thereof investment grade
thereof non-investment grade
Real estate
Money market funds
Absolute return funds
Other
1,807
4,834
3,525
1,309
–
–
–
–
1,865
4,509
3,271
1,238
–
–
–
–
1,340
4,623
4,437
186
–
255
33
–
1,230
4,562
4,331
231
3
100
26
5
224
420
383
37
20
19
–
–
203
379
334
45
–
12
–
–
3,371
9,877
8,345
1,532
20
274
33
–
3,298
9,450
7,936
1,514
3
112
26
5
Total with quoted market price
6,641
6,374
6,251
5,926
683
594
13,575
12,894
Debt instruments
thereof investment grade
thereof non-investment grade
Real estate
Cash and cash equivalents
Absolute return funds
Other
189
189
–
172
17
554
282
Total without quoted market price
1,214
183
183
–
107
11
424
224
949
207
2
205
783
24
705
183
298
111
187
683
9
557
261
1,902
1,808
31 December
7,855
7,323
8,153
7,734
3
1
2
12
12
–
105
105
–
34
97
239
922
–
–
93
210
804
399
192
207
1,060
41
1,293
562
493
306
187
895
20
981
578
3,355
2,967
16,930
15,861
Employer contributions to plan assets are expected to
amount to € 692 million in the coming year. Plan assets
of the BMW Group include own transferable financial
instruments amounting to € 6 million (2014: € 5 million).
account in the actuarial assumptions applied. The
financial risk of longer-than-assumed life expectancy is
hedged for the majority of participants of the BMW
Group’s largest pension plan in the UK by means of a
so-called “longevity hedge”.
The BMW Group is exposed to risks arising from defined
benefit plans on the one hand and defined contribution
plans with a minimum return guarantee on the other.
Pension obligations to employees under such plans are
measured on the basis of actuarial reports. Future pen-
sion payments are discounted by reference to market
yields on high quality corporate bonds. These yields are
subject to market fluctuation and influence the level
of pension obligations. Furthermore, changes in other
actuarial parameters, such as expected rates of inflation,
also have an impact on pension obligations.
A substantial portion of plan assets is invested in debt
instruments in order to minimise the effect of capital
market fluctuations on the net liability. The asset port-
folio also includes equity instruments, property and
alternative investments – asset classes capable of gen-
erating the higher rates of return necessary to cover
risks (such as changes in mortality tables) not taken into
In order to reduce currency exposures, a substantial
portion of plan assets are either invested in the same
currency as the underlying plan or hedged by means of
currency derivatives.
Pension fund assets are monitored continuously and
managed from a risk-and-yield perspective. Risk is re-
duced by ensuring a broad spread of investments. In
this context, the BMW Group continuously monitors
the degree of coverage of pension plans as well as ad-
herence to the stipulated investment strategy.
As part of the internal reporting procedures and for in-
ternal management purposes, financial risks relating
to the pension plans are reported on using a deficit-
value-at-risk approach. The investment strategy is also
subjected to regular review together with external con-
sultants, with the aim of ensuring that investments are
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
141 GROUP FINANCIAL STATEMENTS
structured to coincide with the timing of pension pay-
ments and the expected pattern of pension obligations.
In their own way, each of these measures helps to re-
duce fluctuations in pension funding shortfalls.
pension payments out of operations will be substan-
tially reduced in the future, since most of the Group’s
pension obligations are settled out of the assets of
pension funds / trust fund arrangements.
Most of the BMW Group’s pension assets are adminis-
tered separately and kept legally segregated from
company assets using trust fund arrangements. As a
consequence, the level of funds required to finance
The defined benefit obligation relates to current em-
ployees, former employees with vested benefits and
pensioners as follows:
31 December
in € million
Current employees
Pensioners
Former employees with vested benefits
Defined benefit obligation
Germany
2015
2014
United Kingdom
2015
2014
Other
2015
2014
6,114
2,635
466
6,495
2,650
491
9,215
9,636
2,183
4,537
2,607
9,327
2,295
4,208
2,996
9,499
1,038
1,003
231
115
212
112
1,384
1,327
The sensitivity analysis provided below shows the ex-
tent to which – based on an appropriate review – the
defined benefit obligation would have been affected by
changes in the relevant assumptions that were possible
at the end of the reporting period, if the other assump-
tions used in the calculation were kept constant. It is
only possible, however, to aggregate sensitivities to a
limited extent. Since the change in obligations does not
31 December
follow a linear pattern, all estimates made on the basis
of the specified sensitivities have to be made subject to
this restriction. The calculation of sensitivities using
ranges other than those specified could result in a non-
proportional changes in the defined benefit obligation.
The defined benefit obligation amounted to € 19,926 mil-
lion at 31 December 2015.
Change in defined benefit obligation
2015
2014
in € million
in %
in € million
in %
Discount rate
increase of 0.75 %
– 2,577
– 12.9
– 2,888
– 14.1
Pension level trend
Average life expectancy
Pension entitlement trend
decrease of 0.75 %
increase of 0.25 %
decrease of 0.25 %
increase of 1 year
decrease of 1 year
increase of 0.25 %
decrease of 0.25 %
3,253
655
– 610
632
– 633
134
– 128
16.3
3.3
– 3.1
3.2
– 3.2
0.7
– 0.6
3,675
727
– 679
703
– 700
152
– 146
18.0
3.6
– 3.3
3.4
– 3.4
0.7
– 0.7
In the UK, the sensitivity analysis for the pension level
trend also takes account of restrictions due to caps and
floors.
The weighted duration of all pension obligations in Ger-
many, the UK and other countries (based on present values
of the defined benefit obligation) developed as follows:
31 December
in years
Germany
2015
2014
United Kingdom
2015
2014
Other
2015
2014
Weighted duration of all pension obligations
20.5
21.4
19.2
19.9
18.4
19.2
142
Statutory minimum funding and recovery requirements
apply in the UK and the USA which may have an effect
on future amounts. Valuations are performed regularly
to measure the level of funding. In conjunction with
these valuations, funding plans are drawn up and the
amount of any necessary special allocations determined.
36 Other provisions
Other provisions comprise the following items:
in € million
31. 12. 2015
31. 12. 2014
Obligations for personnel and social expenses
Obligations for ongoing operational expenses
Other obligations
Other provisions
Total
1,939
5,811
1,880
9,630
thereof
due within
one year
1,475
2,430
1,104
5,009
Total
1,871
4,887
2,032
8,790
thereof
due within
one year
1,442
1,786
1,294
4,522
Provisions for obligations for personnel and social ex-
penses comprise mainly performance-related remunera-
tion components, early retirement part-time working
arrangements and employee long-service awards. Obliga-
tions for performance-related remuneration components
are normally settled in the following financial year.
fulfil obligations over the whole period of the war-
ranty or guarantee. Expected reimbursement claims
amounted to € 711 million at the end of the reporting
period (2014: € 641 million). Also included are other
provisions for expected payments for bonuses, rebates
and other price deductions.
Provisions for obligations for ongoing operational ex-
penses relate primarily to warranty obligations and
comprise both statutorily prescribed manufacturer
warranties and other guaranties offered by the BMW
Group. Depending on when claims are made, it is
possible that the BMW Group may be called upon to
Provisions for other obligations cover numerous specific
risks and obligations of uncertain timing and amount,
in particular for litigation and liability risks.
Other provisions changed during the year as follows:
in € million
1.1. 2015
Translation
differences
Additions
Reversal of
discounting
Utilised
Reversed
31. 12. 2015
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Obligations for personnel and social expenses
Obligations for ongoing operational expenses
Other obligations
Other provisions
1,871
4,887
2,032
8,790
7
283
54
344
1,496
3,462
677
5,635
1
72
2
– 1,414
– 2,474
– 604
75
– 4,492
– 22
– 419
– 281
– 722
1,939
5,811
1,880
9,630
Income from the reversal of other provisions amounting to € 550 million (2014: € 198 million) is recorded in cost of
sales and in selling and administrative expenses.
37
Income tax liabilities
Income tax liabilities totalling € 1,441 million (2014:
€ 1,590 million) include obligations amounting to
€ 485 million (2014: € 956 million) which are expected
to be settled after more than twelve months. Some of
the liabilities may be settled earlier than this depend-
ing on the timing of proceedings.
Current tax liabilities of € 1,441 million (2014: € 1,590 mil-
lion) comprise € 288 million (2014: € 151 million) for
taxes payable and € 1,153 million (2014: € 1,439 million)
for tax provisions. Tax provisions totalling € 8 million
were reversed in the year under report (2014: € 1 mil-
lion).
143 GROUP FINANCIAL STATEMENTS
38 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 2015
in € million
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Other
Financial liabilities
31 December 2014
in € million
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Other
Financial liabilities
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
10,124
23,283
6,912
9,030
9,719
5,415
5,046
2,198
628
3,194
3,657
–
8,585
2,245
325
496
133
–
–
107
586
42,160
41,289
8,234
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
8,561
7,784
9,157
5,599
3,825
1,930
626
22,817
3,281
3,309
–
6,990
1,190
387
37,482
37,974
4,111
489
–
–
69
23
501
5,193
Total
40,319
12,720
13,509
5,415
13,631
4,550
1,539
91,683
Total
35,489
11,554
12,466
5,599
10,884
3,143
1,514
80,649
The increase in liabilities relating to derivatives results
from the fair value measurement of currency and com-
modity derivative instruments.
The main instruments used are corporate bonds, asset-
backed financing transactions, liabilities to banks and
liabilities from customer deposits (banking).
The BMW Group uses various short-term and long-term
refinancing instruments on money and capital markets
to finance its operations. This diversification enables it to
obtain attractive market conditions.
Customer deposit liabilities arise in the BMW Group’s
banks, notably in Germany and the USA, which offer a
range of investment products.
144
Bonds comprise:
Issuer
BMW Finance N. V., The Hague
BMW US Capital, LLC, Wilmington, DE
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
BMW Australia Finance Ltd., Melbourne, Victoria
Other
Interest
variable
variable
variable
variable
fixed
fixed
fixed
fixed
fixed
fixed
fixed
fixed
variable
variable
variable
variable
fixed
fixed
fixed
fixed
fixed
fixed
fixed
variable
variable
variable
fixed
fixed
fixed
fixed
Issue volume
in relevant currency
(ISO-Code)
Weighted
average maturity
period (in years)
Weighted
average nominal
interest rate (in %)
EUR 5,415 million
GBP 25 million
SEK 4,700 million
USD 640 million
AUD 500 million
CHF 300 million
EUR 15,064 million
GBP 2,100 million
HKD 500 million
JPY 51,000 million
NOK 750 million
SEK 1,750 million
EUR 1,500 million
GBP 400 million
SEK 500 million
USD 2,100 million
AUD 200 million
EUR 4,340 million
GBP 300 million
HKD 500 million
JPY 30,000 million
NZD 100 million
USD 2,280 million
AUD 700 million
EUR 50 million
USD 170 million
INR 3,500 million
CAD 1,850 million
JPY 48,000 million
KRW 410,000 million
2.2
1.0
2.5
1.5
4.0
6.0
6.9
5.0
3.0
2.5
5.0
5.0
2.6
0.6
0.6
1.1
0.3
4.5
3.9
1.9
2.6
1.9
5.3
3.0
3.0
2.6
5.0
4.0
2.7
3.2
0.2
1.0
0.0
0.8
4.2
1.8
2.3
2.9
1.6
0.4
2.8
1.9
0.2
0.7
0.0
0.6
4.0
1.0
2.0
1.4
0.2
4.4
3.2
3.0
0.2
0.8
10.3
2.2
0.3
2.7
The following details apply to the commercial paper:
Issuer
BMW Finance N. V., The Hague
BMW Malta Finance Ltd., Floriana
BMW US Capital, LLC, Wilmington, DE
Issue volume
in relevant currency
(ISO-Code)
Weighted
average maturity
period (in days)
Weighted
average nominal
interest rate (in %)
EUR 1,440 million
GBP 265 million
EUR 268 million
USD 3,645 million
81
74
13
23
0.00
0.62
0.01
0.32
145 GROUP FINANCIAL STATEMENTS
39
Other liabilities
Other liabilities comprise the following items:
31 December 2015
in € 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 2014
in € million
Other taxes
Social security
Advance payments from customers
Deposits received
Payables to subsidiaries
Payables to other companies in which an investment is held
Deferred income
Other
Other liabilities
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
1,080
71
681
492
86
107
2,399
4,292
9,208
–
17
121
374
–
–
3,640
176
4,328
–
1
–
5
–
–
215
10
231
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
929
69
460
415
162
5
1,894
3,841
7,775
–
7
105
348
–
–
3,373
193
4,026
14
2
–
5
–
–
221
7
249
Total
1,080
89
802
871
86
107
6,254
4,478
13,767
Total
943
78
565
768
162
5
5,488
4,041
12,050
Deferred income comprises the following items:
in € million
31. 12. 2015
31. 12. 2014
Deferred income from lease financing
Deferred income relating to service contracts
Grants
Other deferred income
Deferred income
Total
1,922
3,910
299
123
6,254
thereof
due within
one year
915
1,397
32
55
2,399
Total
1,685
3,370
306
127
5,488
thereof
due within
one year
780
1,027
31
56
1,894
Deferred income relating to service contracts relates to
service and repair work to be provided under commit-
ments given at the time of the sale of a vehicle (multi-
component arrangements). Grants comprise primarily
public sector funds to promote regional structures
which have been invested in the production plants in
Brazil, Leipzig and Berlin. The grants for the two Ger-
man sites mentioned are subject to holding periods
for the assets concerned of up to five years and mini-
mum employment figures. All conditions attached to
the grants were complied with at 31 December 2015.
In accordance with IAS 20, grant income is recog-
nised over the useful lives of the assets to which they
relate.
146
40 Trade payables
31 December 2015
in € million
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
Total
Trade payables
7,701
72
–
7,773
31 December 2014
in € million
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
Total
Trade payables
7,580
129
–
7,709
The total amount of financial liabilities, other liabili-
ties and trade payables with a maturity later than five
years amounts to € 8,465 million (2014: € 5,442 mil-
lion).
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
147 GROUP FINANCIAL STATEMENTS
BMW Group
Notes to the Group Financial Statements
Other Disclosures
41 Contingent liabilities and other financial commitments
Contingent liabilities
No provisions were recognised for the following contingent liabilities (stated at estimated amounts), since an out-
flow of resources is not considered to be probable:
in € million
Guarantees
Performance guarantees
Other
Contingent liabilities
31. 12. 2015
31. 12. 2014
93
–
213
306
33
4
84
121
Contingent liabilities relate entirely to third parties.
adverse impact on the result of operations, financial
position and net assets of the Group.
Other contingent liabilities comprise mainly legal dis-
putes as well as risks relating to taxes and customs duties.
The BMW Group determines its best estimate of contin-
gent liabilities on the basis of the information available
at the date of preparation of the Group Financial State-
ments. This assessment may change over time and is
adjusted regularly on the basis of new information and
circumstances. A part of these risks is insured where
this makes business sense.
In accordance with IAS 37, the BMW Group does not
disclose information relating to legal disputes and
risks relating to taxes and customs duties, if such dis-
closures could be expected to prejudice seriously the
position of the BMW Group or if disclosure is not
practicable.
From today’s perspective, the BMW Group does not
expect any pending proceedings to have a significant
Other financial commitments
In addition to liabilities, provisions and contingent lia-
bilities, the BMW Group also has other financial com-
mitments, primarily under lease contracts for land,
buildings, plant and machinery, tools, office and other
facilities. These contracts run for periods of one to
49 years. Some of them contain extension and purchase
options as well as price adjustment clauses, based on
index-linked or graduated rentals, including adjust-
ments for inflation. In 2015 an amount of € 315 million
(2014: € 350 million) was recognised as expense in con-
junction with operating leases. All of these amounts re-
late to minimum lease payments.
The total of future minimum lease payments under non-
cancellable and other operating leases can be analysed
by maturity as follows:
in € million
31. 12. 2015
31. 12. 2014
due within one year
due between one and five years
due later than five years
Other financial obligations
371
1,003
816
2,190
299
888
603
1,790
Other financial commitments include € 14 million (2014:
€ 7 million) in respect of obligations to non-consolidated
subsidiaries. No back-to-back operating leases were in
place at the end of the reporting period (2014: € 1 million).
Purchase commitments amounted to € 2,217 million
(2014: € 2,247 million) for property, plant and equipment
and € 757 million (2014: € 750 million) for intangible
assets.
148
42 Financial instruments
The carrying amounts and fair values of financial instruments are assigned to IAS 39 categories and cash funds as
follows:1, 2
31 December 2015
in € 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
6,122
6,122
–
–
72,309
70,043
–
–
–
100
133
272
147
–
–
–
–
100
133
272
147
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
Trade receivables
Other assets
Receivables from subsidiaries
Receivables from companies in which
an investment is held
Collateral receivables
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Other
Total
31 December 2015
in € million
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
–
–
–
314
–
6,436
–
–
–
314
–
6,436
2,751
2,751
716
893
–
1,050
78,371
716
893
–
1,050
76,105
Cash funds
Loans
and receivables
Held-to-maturity
investments
Fair value
Carrying
amount
Fair value
Carrying
amount
Fair value
Carrying
amount
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 The carrying amounts of cash flow and fair value hedges are allocated to the category “Held for trading” for the sake of clarity.
2 Based on the fact that maturities are generally short, it is assumed for some items that fair value corresponds to the carrying amount.
3 Carrying amount corresponds to fair value.
149 GROUP FINANCIAL STATEMENTS
Other liabilities
Fair value
Carrying
amount
Available-
for-sale
Carrying
amount 3
Fair value
option
Carrying
amount 3
Held for
trading
Carrying
amount1, 3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
402
–
–
–
–
5,161
–
–
–
–
–
–
–
98
–
26
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
830
1,194
1,006
–
–
–
–
–
–
–
–
–
–
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
–
–
5,661
26
3,030
Total
Other liabilities
Fair value 2
Carrying
amount
Available-
for-sale
Carrying
amount 3
Fair value
option
Carrying
amount 3
Held for
trading
Carrying
amount1, 3
40,701
12,783
13,543
5,415
13,611
–
–
–
1,539
7,773
40,319
12,720
13,509
5,415
13,631
–
–
–
1,539
7,773
86
86
107
5,075
107
5,075
–
–
–
–
–
–
–
–
–
–
–
–
–
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
–
–
–
–
–
2,535
563
1,452
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100,633
100,174
–
–
4,550
Total
150
31 December 2014
in € 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
7,688
7,688
–
–
62,642
61,024
–
–
–
200
12
239
297
–
–
–
–
200
12
239
297
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Trade receivables
Other assets
Receivables from subsidiaries
Receivables from companies in which
an investment is held
Collateral receivables
Other
Total
31 December 2014
in € million
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
–
–
–
412
–
–
–
–
412
–
2,153
2,153
721
721
1,055
–
971
1,055
–
971
8,100
8,100
68,290
66,672
–
–
Cash funds
Loans
and receivables
Held-to-maturity
investments
Fair value
Carrying
amount
Fair value
Carrying
amount
Fair value
Carrying
amount
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 The carrying amounts of cash flow and fair value hedges are allocated to the category “Held for trading” for the sake of clarity.
2 Based on the fact that maturities are generally short, it is assumed for some items that fair value corresponds to the carrying amount.
3 Carrying amount corresponds to fair value.
151 GROUP FINANCIAL STATEMENTS
Other liabilities
Fair value
Carrying
amount
Available-
for-sale
Carrying
amount 3
Fair value
option
Carrying
amount 3
Held for
trading
Carrying
amount1, 3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
408
–
–
–
–
3,772
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
708
1,294
886
–
–
–
–
–
–
–
–
–
–
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
–
–
4,180
–
2,888
Total
Other liabilities
Fair value 2
Carrying
amount
Available-
for-sale
Carrying
amount 3
Fair value
option
Carrying
amount 3
Held for
trading
Carrying
amount1, 3
36,083
11,636
12,487
5,599
10,886
–
–
–
1,514
7,709
162
5
4,281
90,362
35,489
11,554
12,466
5,599
10,884
–
–
–
1,514
7,709
162
5
4,281
89,663
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Liabilities
Financial liabilities
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Other
Trade payables
Other liabilities
Payables to subsidiaries
Payables to other companies in which
an investment is held
Other
–
–
–
–
–
1,302
721
1,120
–
–
–
–
–
3,143
Total
–
–
–
–
–
–
–
–
–
–
–
–
–
–
152
Fair value measurement of financial instruments
The fair values shown are computed using market in-
formation available at the balance sheet date, on the
basis of prices quoted by the contract partners or using
appropriate measurement methods, e. g. discounted cash
flow models. In the latter case, amounts were discounted
at 31 December 2015 on the basis of the following inter-
est rates:
ISO Code
in %
Interest rate for six months
Interest rate for one year
Interest rate for five years
Interest rate for ten years
EUR
USD
GBP
JPY
CNY
– 0.04
– 0.06
0.33
1.02
0.70
0.85
1.72
2.20
0.83
0.84
1.59
2.03
– 0.16
0.12
0.17
0.43
3.08
3.07
3.26
3.31
Interest rates taken from interest rate curves were ad-
justed, where necessary, to take account of the credit
quality and risk of the underlying financial instrument.
Commodity derivatives were measured on the basis of
the following quoted market prices:
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Raw material
Iron ore
Coke / coal
Aluminium
Palladium
Derivative financial instruments are measured at their
fair value. The fair values of derivative financial instru-
ments are determined using measurement models, as a
consequence of which there is a risk that the amounts
calculated could differ from realisable market prices on
disposal. Observable financial market price spreads are
taken into account in the measurement of derivative
financial instruments. The supply of data to the model
used to calculate fair values also takes account of tenor
and currency basis spreads, thus helping to minimise
differences between the carrying amounts of the in-
struments and the amounts that can be realised on the
financial markets on their disposal. In addition, the
Group’s own default risk and that of counterparties is
taken into account in the form of credit default swap
contracts which have matching terms and which can
be observed on the market.
31 December 2015
in € million
31. 12. 2015
31. 12. 2014
USD / t
USD / t
USD / t
USD / oz
43.05
76.45
1,507.00
561.70
71.75
110.00
1,852.50
591.00
Financial instruments measured at fair value are allo-
cated to different measurement levels in accordance
with IFRS 13. 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 the end of the reporting
period:
Level hierarchy in accordance with IFRS 13
Level 2
Level 3
Level 1
Marketable securities, investment fund shares and collateral assets – available-for-sale
Other investments – available-for-sale / fair value option
Derivative instruments (assets)
Interest rate risks
Currency risks
Raw materials price risks
Derivative instruments (liabilities)
Interest rate risks
Currency risks
Raw materials price risks
5,259
244
–
–
–
–
–
–
–
–
1,939
1,086
5
1,352
2,136
1,062
–
–
–
–
–
–
–
–
153 GROUP FINANCIAL STATEMENTS
31 December 2014
in € million
Level hierarchy in accordance with IFRS 13
Level 1
Level 2
Level 3
Marketable securities, investment fund shares and collateral assets – available-for-sale
Other investments – available-for-sale / fair value option
Derivative instruments (assets)*
Interest rate risks
Currency risks
Raw materials price risks
Derivative instruments (liabilities)*
Interest rate risks
Currency risks
Raw materials price risks
3,772
231
–
–
–
–
–
–
–
–
1,846
981
61
1,392
1,281
470
–
–
–
–
–
–
–
–
* The amounts presented for derivative instruments in the previous year have been adjusted and are now based on risk classes.
Other investments (available-for-sale) amounting to
€ 184 million (2014: € 177 million) are measured at amor-
tised cost since quoted market prices are not available
or cannot be determined reliably. These are therefore
not included in the level hierarchy shown above. In ad-
dition, other investments amounting to € 244 million
(2014: € 231 million) are measured at fair value since
quoted market prices are available. These items are in-
cluded in Level 1.
As in the previous year, there were no reclassifications
within the level hierarchy during the financial year
2015.
In situations where a fair value was required to be
measured for a financial instrument only for disclosure
in € million
purposes, this was achieved using the discounted cash
flow method and taking account of the BMW Group’s
own default risk; for this reason, the fair values calculated
can be allocated to Level 2.
Offsetting of financial instruments
In the BMW Group, financial assets and liabilities re-
lating to derivative financial instruments would nor-
mally be required to be offset. No offsetting takes
place for accounting purposes, however, since the nec-
essary criteria are not met. Since legally enforceable
master netting agreements or similar contracts are in
place, actual offsetting would be possible in principle,
for instance in the case of insolvency. Offsetting would
have the following impact on the carrying amounts of
derivatives:
31. 12. 2015
31. 12. 2014
Reported on
assets side
Reported on
equity and
liabilities side
Reported on
assets side
Reported on
equity and
liabilities side
Balance sheet amounts as reported
Gross amount of derivatives which can be offset in case of insolvency
Net amount after offsetting
3,030
– 1,285
1,745
4,550
– 1,285
3,265
2,888
– 1,228
1,660
3,143
– 1,228
1,915
154
Gains and losses on financial instruments
The following table shows the net gains and losses arising for each of the categories of financial instrument defined
by IAS 39:
in € million
Held for trading
2015
2014
Gains / losses from the use of derivative instruments
– 717
– 971
Fair value option
Gains / losses on investments measured at fair value through profit and loss
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)
Net income from participations and investments
Accumulated other equity
Balance at 1 January
Total change during the year
thereof 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
– 2
129
1
141
– 117
– 144
24
– 345
– 77
–
– 65
3
135
6
– 69
141
– 278
– 506
32
238
Gains / losses from the use of derivatives relate primarily to
fair value gains or losses arising on stand-alone derivatives.
Net losses arising from other investments measured us-
ing the fair value option amounted to € 2 million. The
fair value option is applied for non-current marketable
securities with embedded derivatives. No changes in
fair values arose, either during the year under report or
on an accumulated basis since acquisition, which were
attributable to changes in the default risk.
Such credit-risk related changes in fair values are calcu-
lated as a general rule by deducting market-related
changes in fair value from the overall change in fair value.
Net interest expenses from interest rate and interest
rate / currency swaps amounted to € 22 million (2014: net
interest income of € 101 million).
available-for-sale securities accounted for as participa-
tions, for which fair value changes had previously been
recognised directly in equity. No reversals of impair-
ment losses on marketable securities were recognised
directly in equity in the year under report (2014: € 7 mil-
lion).
The disclosure of interest income resulting from the un-
winding of interest on future expected receipts would
normally only be relevant for the BMW Group where as-
sets have been discounted as part of the process of de-
termining impairment losses. However, as a result of
the assumption that most of the income that is subse-
quently recovered is received within one year and the
fact that the impact is not material, the BMW Group
does not discount assets for the purposes of determining
impairment losses.
Impairment losses of € 13 million (2014: € 152 million)
were recognised in the income statement in 2015 on
Cash flow hedges
The effect of cash flow hedges on accumulated other
equity was as follows:
in € million
Balance at 1 January
Total changes during the year
thereof reclassified to the income statement
Balance at 31 December
2015
2014
– 480
– 857
1,318
– 1,337
1,136
– 1,616
– 255
– 480
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
155 GROUP FINANCIAL STATEMENTS
Fair value gains and losses recognised on derivatives and
recorded initially in accumulated other equity are re-
classified to cost of sales when the derivatives mature.
revenues are recognised. It is expected that € 623 million
of net losses, recognised in equity at the end of the re-
porting period, will be reclassified to profit and loss in
the new financial year (2014: losses of € 278 million).
An amount of € 8 million (2014: € – million) attributable
to forecasting errors (and the resulting over-hedging of
currency exposures) was recognised as a loss in “Finan-
cial Result” in the period under report. Gains attributable
to the ineffective portion of cash flow hedges amount-
ing to € 9 million were recognised in “Financial Result”
(2014: losses of € 27 million). No gains or losses were
recognised in “Financial Result” in 2015 in connection
with forecasting errors relating to cash flow hedges for
commodities (2014: losses of € 6 million). Losses attribut-
able to the ineffective portion of cash flow hedges
amounting to € 13 million were also recognised in “Finan-
cial Result” (2014: gains of € 6 million).
At 31 December 2015 the BMW Group held derivative
financial instruments (mainly forward currency and
option contracts) with terms of up to 55 months (2014:
60 months) in order to hedge currency risks attached
to future transactions. These derivative instruments are
intended to hedge forecast sales denominated in a foreign
currency over the coming 55 months. The income state-
ment impact of the hedged cash flows will be recognised
as a general rule in the same periods in which external
The BMW Group did not hold any derivative financial
instruments at 31 December 2015, which had been
designated as cash flow hedges to hedge against inter-
est-rate risks.
At 31 December 2015 the BMW Group held derivative
financial instruments (mostly commodity swaps) with
terms of up to 58 months (2014: 59 months) to hedge
raw materials price risks attached to future transactions
over the coming 58 months. The income statement im-
pact of the hedged cash flows will be recognised as a
general rule in the same periods in which the derivative
matures. It is expected that € 127 million of net losses,
recognised in equity at the end of the reporting period,
will be reclassified to profit and loss in the new finan-
cial year (2014: € 54 million).
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 € million
31. 12. 2015
31. 12. 2014
Gains / losses on hedging instruments designated as part of a fair value hedge relationship
Gains / losses from hedged items
Ineffectiveness of fair value hedges
– 269
276
7
369
– 359
10
The difference between the gains / losses on hedging
instruments (mostly interest rate swaps) and the results
recognised on hedged items represents the ineffective
portion of fair value hedges.
Fair value hedges are mainly used to hedge the market
prices of bonds, other financial liabilities and receivables
from sales financing.
In the case of performance relationships underlying
non-derivative financial instruments, collateral will be
required, information on the credit-standing of the
counterparty obtained or historical data based on the
existing business relationship (i. e. payment patterns to
date) reviewed in order to minimise the credit risk, all
depending on the nature and amount of the exposure
that the BMW Group is proposing to enter into.
Bad debt risk
Notwithstanding the existence of collateral accepted,
the carrying amounts of financial assets generally take
account of the maximum credit risk arising from the
possibility that the counterparties will not be able to
fulfil their contractual obligations. The maximum credit
risk for irrevocable credit commitments relating to
credit card business amounts to € 2,011 million (2014:
€ 1,181 million). The equivalent figure for dealer financ-
ing is € 24,733 million (2014: € 22,025 million).
Within the financial services business, the financed items
(e. g. vehicles, equipment and property) in the retail cus-
tomer and dealer lines of business serve as first-ranking
collateral with a recoverable value. Security is also put
up by customers in the form of collateral asset pledges,
asset assignment and first-ranking mortgages, supple-
mented where appropriate by warranties and guarantees.
If an item previously accepted as collateral is acquired,
it undergoes a multi-stage process of repossession and
disposal in accordance with the legal situation prevailing
156
in the relevant market. The assets involved are generally
vehicles which can be converted into cash at any time
via the dealer organisation.
Impairment losses are recorded as soon as credit risks
are identified on individual financial assets, using a
methodology specifically designed by the BMW Group.
More detailed information regarding this methodology
is provided in the section on accounting policies (note 6).
Creditworthiness testing is an important aspect of the
BMW Group’s credit risk management. Every borrower’s
creditworthiness is tested for all credit financing and
lease contracts entered into by the BMW Group. In the
case of retail customers, creditworthiness is assessed
using validated scoring systems integrated into the pur-
chasing process. In the area of dealer financing, credit-
worthiness is assessed by means of ongoing credit
monitoring and an internal rating system that takes ac-
count not only of the tangible situation of the borrower
but also of qualitative factors such as past reliability in
business relations.
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 con-
junction with financial instruments.
Further disclosures relating to credit risk – in particular
with regard to the amounts of impairment losses recog-
nised – are provided in the explanatory notes to the
relevant categories of receivables in notes 27, 28 and 32.
Liquidity risk
The following table shows the maturity structure of ex-
pected contractual cash flows (undiscounted) for finan-
cial liabilities:
31 December 2015
in € million
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Trade payables
Other financial liabilities
Total
31 December 2014
in € million
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Trade payables
Other financial liabilities
Total
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
10,774
24,241
9,464
9,805
5,416
5,195
2,564
7,701
261
3,485
3,990
–
8,849
3,366
72
372
7,230
405
133
–
–
174
–
570
Total
42,245
13,354
13,928
5,416
14,044
6,104
7,773
1,203
51,180
44,375
8,512
104,067
Maturity
within
one year
Maturity
between one
and five years
9,266
8,110
9,225
5,601
3,882
2,100
7,581
177
23,786
3,432
3,461
–
7,226
1,317
129
434
45,942
39,785
Maturity
later than
five years
4,232
489
–
–
77
1
–
500
5,299
Total
37,284
12,031
12,686
5,601
11,185
3,418
7,710
1,111
91,026
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.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
157 GROUP FINANCIAL STATEMENTS
At 31 December 2015 irrevocable credit commitments
to dealers which had not been called upon at the end of
the reporting period amounted to € 7,552 million (2014:
€ 7,247 million).
maining after netting. Financial instruments are only
used to hedge underlying positions or forecast trans-
actions.
Solvency is assured at all times by managing and moni-
toring the liquidity situation on the basis of a rolling
cash flow forecast. The resulting funding requirements
are secured by a variety of instruments placed on the
world’s financial markets. The objective is to minimise
risk by matching maturities for the Group’s financing
requirements within the framework of the target debt
structure. The BMW Group has good access to capital
markets as a result of its solid financial position and a
diversified refinancing strategy. This is underpinned
by the longstanding long- and short-term ratings issued
by Moody’s and Standard & Poor’s.
Short-term liquidity is managed primarily by issuing
money market instruments (commercial paper). In
this area too, competitive refinancing conditions can
be achieved thanks to Moody’s and Standard & Poor’s
short-term ratings of P-1 and A-1 respectively.
Also reducing liquidity risk, additional secured and un-
secured lines of credit are in place with international
banks, including a syndicated credit line totalling € 6 bil-
lion (2014: € 6 billion). Intra-group cash flow fluctua-
tions are evened out by the use of daily cash pooling
arrangements.
Market risks
The principal market risks to which the BMW Group is
exposed are currency risk, interest rate risk and raw
materials price risk.
Protection against such risks is provided in the first
instance through natural hedging which arises when
the values of non-derivative financial instruments have
matching maturities and amounts (netting). Derivative
financial instruments are used to reduce the risk re-
The scope of permitted transactions, responsibilities,
financial reporting procedures and control mechanisms
used for financial instruments are set out in internal
guidelines. This includes, above all, a clear separation of
duties between trading and processing. Currency, inter-
est rate and raw materials price risks of the BMW Group
are managed at a corporate level.
Further information is provided in the “Report on out-
look, risks and opportunities” section of the Combined
Management Report.
Currency risks
As an enterprise with worldwide operations, business
is conducted in a variety of currencies, from which cur-
rency risks arise. Since a significant portion of Group
revenues is generated outside the euro currency re-
gion and the procurement of production material and
funding is also organised on a worldwide basis, the
currency risk is an extremely important factor for Group
earnings.
At 31 December 2015 derivative financial instruments,
mostly in the form of forward currency and option
contracts, were in place to hedge the main currencies.
A description of the management of this risk is provided
in the Combined Management Report. The BMW
Group measures currency risk using a cash-flow-at-risk
model.
The starting point for analysing currency risk with this
model is the identification of forecast foreign currency
transactions or “exposures”. At the end of the reporting
period, the principal exposures for the relevant coming
year were as follows:
in € million
Euro / Chinese Renminbi
Euro / US Dollar
Euro / British Pound
Euro / Korean Won
Euro / Japanese Yen
31. 12. 2015
31. 12. 2014
9,973
4,770
5,396
1,985
1,162
10,937
4,743
4,818
1,584
1,004
In the next stage, these exposures are compared to all
hedges that are in place. The net cash flow surplus
represents an uncovered risk position. The cash-flow-at-
risk approach involves allocating the impact of potential
158
exchange rate fluctuations to operating cash flows on
the basis of probability distributions. Volatilities and
correlations serve as input factors to assess the relevant
probability distributions.
The potential negative impact on earnings is computed
for each currency for the following financial year on
the basis of current market prices and exposures to a con-
fidence level of 95 % and a holding period of up to one
year. Correlations between the various currencies are
taken into account when the risks are aggregated, thus
reducing the overall risk.
The following table shows the potential negative impact
for the BMW Group – measured on the basis of the cash-
flow-at-risk approach – attributable to unfavourable
changes in exchange rates. The impact for the principal
currencies, in each case for the following financial year,
is as follows:
in € million
Euro / Chinese Renminbi
Euro / US Dollar
Euro / British Pound
Euro / Korean Won
Euro / Japanese Yen
31. 12. 2015
31. 12. 2014
163
48
86
99
68
173
73
66
37
6
Currency risk for the BMW Group is concentrated on the
currencies referred to above.
Interest rate risks
The BMW Group’s financial management system involves
the use of standard financial instruments such as short-
term deposits, investments in variable and fixed-income
securities as well as securities funds. The BMW Group is
therefore exposed to risks resulting from changes in in-
terest rates.
These risks arise when funds with differing fixed-rate
periods or differing terms are borrowed and invested.
All items subject to, or bearing, interest are exposed to
interest rate risk. Interest rate risks can affect either
side of the balance sheet.
The fair values of the Group’s interest rate portfolios for
the five main currencies were as follows at the end of
the reporting period:
in € million
Euro
US Dollar
British Pound
Chinese Renminbi
Japanese Yen
31. 12. 2015
31. 12. 2014
21,785
10,742
4,220
1,006
536
17,535
12,087
5,091
574
113
Interest rate risks can be managed by the use of interest
rate derivatives. The interest rate contracts used for
hedging purposes comprise mainly swaps which are ac-
counted for on the basis of whether they are designated
as a fair value hedge or as a cash flow hedge. A descrip-
tion of the management of interest rate risks is provided
in the Combined Management Report.
As stated there, the BMW Group applies a group-wide
value-at-risk approach for internal reporting purposes
and to manage interest rate risks. This is based on a state-
of-the-art historical simulation, in which the potential
future fair value losses of the interest rate portfolios are
compared across the Group with expected amounts
measured on the basis of a holding period of 250 days
and a confidence level of 99.98 %. Aggregation of these
results creates a risk reduction effect due to correlations
between the various portfolios.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
159 GROUP FINANCIAL STATEMENTS
In the following table the potential volumes of fair value
fluctuations – measured on the basis of the value-at-risk
approach – are compared with the expected value for
the interest-rate-sensitive exposures of the BMW Group:
in € million
Euro
US Dollar
British Pound
Chinese Renminbi
Japanese Yen
31. 12. 2015
31. 12. 2014
472
449
186
33
12
398
347
108
44
11
Raw materials price risk
The BMW Group is exposed to the risk of price fluctua-
tions for raw materials. A description of the management
of these risks is provided in the Combined Management
Report.
The first step in the analysis of the raw materials price
risk is to determine the volume of planned purchases of
raw materials (and components containing those raw
materials). These amounts, which represent the gross
exposure, were as follows at each reporting date for the
following financial year:
in € million
Raw materials price exposures
31. 12. 2015
31. 12. 2014
3,720
3,770
In the next stage, these exposures are compared to all
hedges that are in place. The net cash flow surplus
represents an uncovered risk position. The cash-flow-at-
risk approach involves allocating the impact of potential
raw materials fluctuations to operating cash flows on
the basis of probability distributions. Volatilities and cor-
relations serve as input factors to assess the relevant
probability distributions.
The potential negative impact on earnings is computed
for each raw material category for the following finan-
cial year on the basis of current market prices and ex-
posure to a confidence level of 95 % and a holding
period of up to one year. Correlations between the
various categories of raw materials are taken into ac-
count when the risks are aggregated, thus reducing
the overall risk.
The following table shows the potential negative impact
for the BMW Group – measured on the basis of the
cash-flow-at-risk approach – attributable to fluctuations
in prices across all categories of raw materials. The risk
at each reporting date for the following financial year was
as follows:
in € million
Cash flow at risk
31. 12. 2015
31. 12. 2014
155
230
43
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 Automotive
and Financial Services segments have changed in the
course of the year as a result of cash inflows and cash
outflows. In accordance with IAS 7 (Statement of Cash
Flows), cash flows are classified into cash flows from op-
erating, investing and financing activities.
Cash and cash equivalents included in the cash flow
statement comprise cash on hand, cheques, and cash at
bank, to the extent that they are available within three
months from the end of the reporting period and are
subject to an insignificant risk of changes in value.
The cash flows from investing and financing activities
are based on actual payments and receipts. By con-
trast, the cash flow from operating activities is derived
indirectly from the net profit for the year. Under this
method, changes in assets and liabilities relating to op-
erating activities are adjusted for currency translation
effects and changes in the composition of the Group. The
changes in balance sheet positions shown in the cash
flow statement do not therefore agree directly with the
160
amounts shown in the Group and segment balance
sheets.
the lessor) is also reported within cash flows from
operating activities.
Cash inflows and outflows relating to operating leases,
where the BMW Group is the lessor, are aggregated and
shown on the line “Change in leased products” within
cash flows from operating activities.
The net change in receivables from sales financing
(including finance leases, where the BMW Group is
Income taxes paid and interest received are classified
as cash flows from operating activities in accordance
with IAS 7.31 and IAS 7.35. Interest paid is presented
on a separate line within cash flows from financing
activities. Dividends received in the financial year 2015
amounted to € 1 million (2014: € 1 million).
44 Related party relationships
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
In accordance with IAS 24 (Related Party Disclosures),
related individuals or entities which have the ability to
control the BMW Group or which are controlled by the
BMW Group, must be disclosed unless such parties
are already included in the Group Financial Statements
of BMW AG as consolidated companies. Control is de-
fined as ownership of more than one half of the voting
power of BMW AG or the power to direct, by statute or
agreement, the financial and operating policies of the
management of the BMW Group. In addition, the dis-
closure requirements of IAS 24 also cover transactions
with associated companies, joint ventures and indi-
viduals that have the ability to exercise significant in-
fluence over the financial and operating policies of
the BMW Group. This also includes close relatives and
intermediary entities. Significant influence over the
finan cial and operating policies of the BMW Group is
presumed when a party holds 20 % or more of the voting
power of BMW AG. In addition, the requirements con-
tained in IAS 24 relating to key management personnel
and close members of their families or intermediary
entities are also applied. In the case of the BMW Group,
this applies to members of the Board of Management
and Supervisory Board.
In the financial year 2015, the disclosure requirements
contained in IAS 24 affect the BMW Group with regard
to business relationships with non-consolidated sub-
sidiaries, joint ventures and associated companies as
well as with members of the Board of Management and
Supervisory Board of BMW AG.
The BMW Group maintains normal business relation-
ships with non-consolidated subsidiaries. Transactions
with these companies are small in scale, arise in the
normal course of business and are conducted on the ba-
sis of arm’s length principles.
sold goods and services to BMW Brilliance Automotive
Ltd., Shenyang, during the financial year under report
for an amount of € 4,815 million (2014: € 4,417 million).
At 31 December 2015, receivables of Group companies
from BMW Brilliance Automotive Ltd., Shenyang, to-
talled € 892 million (2014: € 943 million). Trade and finan-
cial payables of Group companies to BMW Brilliance
Automotive Ltd., Shenyang, amounted to € 107 million
(2014: € – million). Group companies received goods
and services from BMW Brilliance Automotive Ltd.,
Shenyang, in 2015 for an amount of € 43 million (2014:
€ 34 million).
All relationships of BMW Group entities with the joint
ventures DriveNow GmbH & Co. KG, Munich, and
DriveNow Verwaltungs GmbH, Munich, are conducted
on the basis of arm’s length principles. Transactions
with these entities arise in the normal course of business
and are small in scale.
Transactions of BMW Group companies with the asso-
ciated company THERE Holding B. V., Amsterdam, and
that entity’s subsidiaries, all arise in the normal course
of business and are conducted on the basis of arm’s
length principles. The BMW Group did not sell any goods
or services to THERE Holding B. V., Amsterdam, or its
subsidiaries during the period from 4 to 31 December
2015. Goods or services totalling € 7 million were pur-
chased by BMW Group entities from THERE Holding
B. V., Amsterdam, during the period from 4 to 31 De-
cember 2015. At 31 December 2015, payables of BMW
Group entities to THERE Holding B. V., Amsterdam,
and that entity’s subsidiaries totalled € 3 million.
Business transactions between BMW Group entities and
other associated companies are small in scale, arise in
the normal course of business and are conducted on the
basis of arm’s length principles.
Transactions of BMW Group companies with the 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
Stefan Quandt is a shareholder and Deputy Chairman of
the Supervisory Board of BMW AG. He is also the sole
shareholder and Chairman of the Supervisory Board of
161 GROUP FINANCIAL STATEMENTS
DELTON AG, Bad Homburg v. d. H., which, via its sub-
sidiaries, performed logistic-related services for the
BMW Group during the financial year 2015 amounting
to € 23 million (2014: € 26 million). In addition, com-
panies of the DELTON Group used vehicles provided
by the BMW Group, mostly in the form of leasing con-
tracts. Income recognised by the BMW Group on these
transactions during the financial year 2015 amounted
to € 3 million (2014: € 3 million). Amounts payable to
DELTON Group entities at the end of the reporting pe-
riod totalled € 3 million (2014: € 2 million). Group com-
panies had no receivables from DELTON Group entities
at the end of the reporting period (2014: € – million).
Stefan Quandt is also the indirect majority shareholder of
Solarwatt GmbH, Dresden. Cooperation arrangements
are in place between BMW AG and Solarwatt GmbH,
Dresden, within the field of electromobility. The focus
of this collaboration is on providing complete photovol-
taic solutions for rooftop systems and carports to BMW i
customers. The BMW Group purchased goods or ser-
vices amounting to € 3 thousand (2014: € 222 thousand)
from Solarwatt GmbH, Dresden, during the financial
year 2015. Solarwatt GmbH, Dresden, leased vehicles
from the BMW Group in 2015, generating lease revenue
of € 287 thousand (2014: € 223 thousand) for the BMW
Group. All of the above-mentioned services, cooperation
and lease contracts arise in the normal course of business
and are conducted on the basis of arm’s length principles.
Receivables of BMW Group entities from Solarwatt GmbH,
Dresden, at 31 December 2015 amounted to € 7 thou-
sand (2014: € – thousand). As in the previous financial
year, there were no payables from Group entities to So-
larwatt GmbH, Dresden, at 31 December 2015.
and Deputy Chairman of the Supervisory Board of
Altana AG, Wesel. Altana AG, Wesel, acquired vehicles
from the BMW Group during the financial year 2015,
mostly in the form of lease contracts, generating lease
revenue of € 3 million (2014: € 3 million) for the BMW
Group. The lease contracts all arise in the normal course
of business and are conducted on the basis of arm’s
length principles. The BMW Group purchased goods or
services amounting to € 324 thousand (2014: € 230 thou-
sand) from Altana AG, Wesel, during the financial
year 2015. BMW Group companies had no payables to
Altana AG, Wesel at the end of the reporting period
(2014: € 4 thousand), while receivables amounted to
€ 312 thousand (2014: € 50 thousand).
Apart from vehicle lease contracts concluded on an arm’s
length basis, companies of the BMW Group have not
entered into any contracts with members of the Board
of Management or Supervisory Board of BMW AG. The
same applies to close members of the families of those
persons.
BMW Trust e. V., Munich, administers assets on a
trustee basis to secure obligations relating to pensions
and pre-retirement part-time working arrangements in
Germany and is therefore a related party of the BMW
Group in accordance with IAS 24. This entity, which is
a registered association (eingetragener Verein) under
German law, does not have any assets of its own. It did
not have any income or expenses during the period
under report. BMW AG bears expenses on a minor scale
and renders services on behalf of BMW Trust e. V.,
Munich.
Susanne Klatten is a shareholder and member of the
Supervisory Board of BMW AG and also a shareholder
For disclosures relating to key management personnel
pursuant to IAS 24.17, please see note 47 and the Com-
pensation Report.
45 Declaration with respect to the Corporate
Governance Code
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft have
issued the prescribed Declaration of Compliance pursu-
ant to § 161 of the German Stock Corporation Act. It is
reproduced in the Annual Report 2015 of the BMW
Group and is also available to shareholders on the BMW
Group website at www.bmwgroup.com / ir.
46 Shareholdings of members of the Board of
Management and Supervisory Board
The members of the Supervisory Board of BMW AG hold
in total 43.00 % (2014: 27.61 %) of the issued common
and preferred stock shares, of which 31.26 % (2014:
16.06 %) relates to Stefan Quandt, Germany, and 26.74 %
(2014: 11.54 %) to Susanne Klatten, Germany, whereby
15.00 % are held by Mr. Quandt and Mrs. Klatten indi-
rectly in a so-called “undivided community of heirs”,
with the consequence that the 15.00 % shareholding
is attributed to both in full. As at the end of the pre-
vious financial year, shareholdings of members of the
BMW AG Board of Management account, in total, for
less than 1 % of issued shares.
162
47 Compensation of members of the Board of
Management and Supervisory Board
The total compensation of the current members of
the Board of Management and the Supervisory Board
of BMW AG for the financial year 2015 amounted to
in € million
Short-term employment benefits
Share-based remuneration component
Post-employment benefits
Benefits in conjunction with the termination of an employment relationship
Compensation
€ 43.6 million (2014: € 46.1 million) and comprised the
following:
2015
2014
39.9
1.1
2.6
–
43.6
39.5
1.0
2.1
3.5
46.1
The total compensation of the current Board of Manage-
ment members for 2015 amounted to € 35.9 million
(2014: € 35.7 million). This comprised fixed components
of € 7.7 million (2014: € 7.7 million), variable compo-
nents of € 27.1 million (2014: € 27.0 million) and a share-
based compensation component totalling € 1.1 million
(2014: € 1.0 million). Pension obligations to current mem-
bers of the Board of Management are covered by provi-
sions amounting to € 23.2 million (2014: € 31.3 million),
computed in accordance with IAS 19 (Employee Benefits).
The compensation of the members of the Supervisory
Board for the financial year 2015 amounted to € 5.1 mil-
lion (2014: € 4.8 million). This comprised fixed compo-
nents of € 2.0 million (2014: € 2.0 million) and variable
components of € 3.1 million (2014: € 2.8 million).
Pension obligations to former members of the Board
of Management and their surviving dependants are
covered by pension provisions amounting to € 71.8 mil-
lion (2014: € 68.4 million), computed in accordance
with IAS 19.
The compensation systems for members of the Super-
visory Board do not include any stock options, value
appreciation rights comparable to stock options or any
other stock-based compensation components. Apart
from vehicle lease contracts entered into on customary
market conditions, no advances or loans were granted
to members of the Board of Management and the Super-
visory Board, nor were any contingent liabilities entered
into on their behalf.
The remuneration of former members of the Board
of Management and their dependants amounted to
€ 8.0 million (2014: € 5.8 million).
Further details about the remuneration of current mem-
bers of the Board of Management and the Supervisory
Board can be found in the Compensation Report, which
is part of the Combined Management Report.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
48
Application of exemption provisions
A number of companies and incorporated partnerships
(as defined by § 264a HGB) which are consolidated sub-
sidiaries of BMW AG and for which the Group Financial
Statements of BMW AG represent exempting consoli-
dated financial statements, apply the exemptions avail-
able in § 264 (3) and § 264b HGB with regard to the draw-
ing up of a management report. The exemptions have
been applied by:
– Alphabet International GmbH, Munich
– Bavaria Wirtschaftsagentur GmbH, Munich
– BMW Fahrzeugtechnik GmbH, Eisenach
– BMW Hams Hall Motoren GmbH, Munich
– BMW M GmbH Gesellschaft für individuelle
Automobile, Munich
– Rolls-Royce Motor Cars GmbH, Munich
The following German entities apply the exemption
available in § 264 (3) and § 264b HGB with regard to
publication:
– Alphabet International GmbH, Munich
– Bavaria Wirtschaftsagentur GmbH, Munich
– BMW Beteiligungs GmbH & Co. KG, Munich
– BMW Fahrzeugtechnik GmbH, Eisenach
– BMW Hams Hall Motoren GmbH, Munich
– BMW INTEC Beteiligungs GmbH, Munich
– BMW M GmbH Gesellschaft für individuelle
Automobile, Munich
– BMW Verwaltungs GmbH, Munich
– MITEC Mikroelektronik Mikrotechnik Informatik
GmbH, Munich
– Rolls-Royce Motor Cars GmbH, Munich
In addition, the Dutch entities, BMW International Holding
B. V., The Hague, and Alphabet Nederland B. V., Breda,
apply the exemption provision contained in Article 2:403
of the Civil Code of the Netherlands.
163 GROUP FINANCIAL STATEMENTS
BMW Group
Notes to the Group Financial Statements
Segment Information
49
Explanatory notes to segment information
Information on reportable segments
For the purposes of presenting segment information, the
activities of the BMW Group are divided into operating
segments in accordance with IFRS 8 (Operating Seg-
ments). Operating segments are identified on the same
basis that is used internally to manage and report on per-
formance and takes account of the organisational struc-
ture of the BMW Group based on the various products
and services of the reportable segments.
The activities of the BMW Group are broken down into
the operating segments Automotive, Motorcycles, Finan-
cial Services and Other Entities.
The Automotive segment develops, manufactures, as-
sembles and sells cars and off-road vehicles, under the
brands BMW, MINI and Rolls-Royce as well as spare
parts and accessories. BMW and MINI brand products
are sold in Germany through branches of BMW AG
and by independent, authorised dealers. Sales outside
Germany are handled primarily by subsidiary compa-
nies and by independent import companies in a num-
ber of markets. Rolls-Royce brand vehicles are sold in
the USA, China and Russia via subsidiary companies and
elsewhere by independent, authorised dealers.
The BMW Motorcycles segment develops, manufactures,
assembles and sells motorcycles as well as spare parts
and accessories.
The principal lines of business of the Financial Services
segment are car leasing, multi-brand financing, fleet
business, retail customer and dealer financing, customer
deposit business and insurance activities.
Holding and Group financing companies are included in
the Other Entities segment. This segment also includes
operating companies – BMW Services Ltd., Farnborough,
BMW (UK) Investments Ltd., Farnborough, Bavaria Lloyd
Reisebüro GmbH, Munich, and MITEC Mikroelektronik
Mikrotechnik Informatik GmbH, Munich, – which are
not allocated to one of the other segments.
Internal management and reporting
Segment information is prepared in conformity with the
accounting policies adopted for preparing and presenting
the Group Financial Statements. The only exceptions to
this general principle is the treatment of inter-segment
warranties (the earnings impact of which is allocated
to the Automotive and Financial Services segments on
the basis used internally to manage the business) and
cross-segment impairment losses on investments in
subsidiaries. Inter-segment receivables and payables,
provisions, income, expenses and profits are eliminated
in the column “Eliminations”. Inter-segment sales take
place at arm’s length prices.
The role of “chief operating decision maker” with re-
spect to resource allocation and performance assess-
ment of the reportable segment is embodied in the full
Board of Management. In order to assist the decision-
taking process, various measures of segment perfor-
mance as well as segment assets have been set for the
various operating segments.
The performance of the Automotive and Motorcycles
segments is managed on the basis of return on capital
employed (RoCE). The relevant measure of segment
results used is therefore profit before financial result.
Capital employed is the corresponding measure of
segment assets used to determine how to allocate re-
sources and comprises all current and non-current
operational assets after deduction of liabilities used
operationally which are not subject to interest (e. g.
trade payables).
The performance of the Financial Services segment is
measured on the basis of return on equity (RoE), with
profit before tax therefore representing the measure of
segment result used. For this reason, the measure of
segment assets in the Financial Services segment corre-
sponds to net assets, defined as total assets less total
liabilities.
The performance of the Other Entities segment is as-
sessed on the basis of profit or loss before tax. The
corresponding measure of segment assets used to
manage the Other Entities segment is total assets less
asset-side income tax items and intragroup invest-
ments.
164
Segment information by operating segment is as follows:
Segment information by operating segment
in € million
External revenues
Inter-segment revenues
Total revenues
Segment result
Result from equity accounted investments
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
Automotive
Motorcycles
2015
2014
2015
2014
68,045
17,491
85,536
7,836
518
5,792
4,559
59,654
15,519
75,173
7,244
655
6,022
4,080
1,984
6
1,990
182
–
92
69
1,671
8
1,679
112
–
69
64
in € million
31. 12. 2015
31. 12. 2014
31. 12. 2015
31. 12. 2014
Automotive
Motorcycles
Investments accounted for using the equity method
Segment assets
* See note 3.
2,233*
10,024
1,088
11,489
–
557
–
575
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
165 GROUP FINANCIAL STATEMENTS
Financial
Services
Other Entities
Reconciliation to
Group figures
Group
2015
2014
2015
2014
2015
2014
2015
2014
22,144
1,595
23,739
1,975
–
23,689
8,686
19,073
1,526
20,599
1,723
–
19,206
7,539
2
5
7
211
–
–
–
3
4
–
–
92,175
80,401
External revenues
– 19,097
– 17,057
–
–
Inter-segment revenues
7
– 19,097
– 17,057
92,175
80,401
Total revenues
154
–
–
–
– 980
–
– 5,672
– 5,119
– 526
–
– 4,621
– 4,112
9,224
518
23,901
8,195
8,707
Segment result
655
Result from equity accounted investments
20,676
Capital expenditure on non-current assets
7,571
Depreciation and amortisation on non-current assets
Financial
Services
Other Entities
Reconciliation to
Group figures
Group
31. 12. 2015
31. 12. 2014
31. 12. 2015
31. 12. 2014
31. 12. 2015
31. 12. 2014
31. 12. 2015
31. 12. 2014
–
9,948
–
9,357
–
–
–
–
2,233
1,088
Investments accounted for using the equity method
71,709
61,516
79,936
71,866
172,174
154,803
Segment assets
166
An impairment loss of € 3 million (2014: € – million) was
recognised on plant and machinery in the Automotive
segment in 2015.
Interest and similar income of the Financial Services
segment amounting to € 4 million (2014: € 4 million) and
interest and similar expenses amounting to € 7 million
(2014: € 29 million) are included in the segment result.
Write-downs on inventories to their net realisable value
amounting to € 486 million (2014: € 29 million) were
recognised by the Automotive segment in the financial
year 2015 and resulted primarily from accidents and
natural disasters. No reversals of write-downs were rec-
ognised in the period under report (2014: € 3 million).
Impairment losses and fair value changes on other in-
vestments amounting to € 17 million (2014: € 153 million)
relating to the Automotive segment and recognised in the
financial result are not included in the segment result.
The segment result of the Financial Services segment is
stated after impairment losses of € 406 million (2014:
€ 268 million) recognised on leased products and € 3 mil-
lion on other investments (2014: € – million). Reversals
of impairment losses on leased products amounted to
€ 81 million (2014: € 169 million).
in € million
Reconciliation of segment result
Total for reportable segments
Financial result of Automotive 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
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
The Other Entities’ segment result includes interest
and similar income amounting to € 1,177 million (2014:
€ 1,295 million) and interest and similar expenses
amounting to € 1,080 million (2014: € 1,197 million) as
well as impairment losses on other investments totalling
€ 7 million (2014: € – million).
The information disclosed for capital expenditure and
depreciation and amortisation relates to non-current
property, plant and equipment, intangible assets and
leased products.
Segment figures can be reconciled to the corresponding
Group figures as follows:
2015
2014
10,204
– 316
– 664
9,224
29,573
– 5,672
23,901
13,314
– 5,119
8,195
9,233
– 363
– 163
8,707
25,297
– 4,621
20,676
11,683
– 4,112
7,571
in € million
31. 12. 2015
31. 12. 2014
Reconciliation of segment assets
Total for reportable segments
Non-operating assets – Other Entities segment
Total liabilities – Financial Services segment
Non-operating assets – Automotive and Motorcycles segments
Liabilities of Automotive and Motorcycles segments not subject to interest
Elimination of inter-segment items
Total Group assets
92,238
7,132
112,081
41,932
31,817
– 113,026
172,174
82,937
6,658
96,959
39,449
28,488
– 99,688
154,803
167 GROUP FINANCIAL STATEMENTS
In the case of information by geographical region, ex-
ternal sales are based on the location of the customer’s
registered office. Revenues with major customers were
not material overall. The information disclosed for
non-current assets relates to property, plant and equip-
ment, intangible assets and leased products. Elimina-
tions disclosed for non-current assets relate to leased
products.
External
revenues
Non-current
assets
2015
2014
2015
2014
13,394
18,155
15,856
28,617
3,361
12,792
–
12,992
13,666
15,002
24,635
2,961
11,145
–
92,175
80,401
28,786
21,000
23
13,099
2,053
1,318
– 6,183
60,096
27,137
17,093
25
11,643
2,050
1,102
– 5,204
53,846
Information by region
in € million
Germany
USA
China
Rest of Europe
Rest of the Americas
Other
Eliminations
Group
Munich, 18 February 2016
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
Harald Krüger
Milagros Caiña Carreiro-Andree
Dr.-Ing. Klaus Draeger
Dr. Friedrich Eichiner
Klaus Fröhlich
Dr. Ian Robertson (HonDSc)
Peter Schwarzenbauer
Oliver Zipse
168
STATEMENT ON CORPORATE GOVERNANCE
Good corporate governance – acting in accordance with
the principles of responsible management aimed at in-
creasing the value of the business on a sustainable basis –
is an essential requirement for the BMW Group em-
bracing all areas of the business. Corporate culture within
the BMW Group is founded on transparent reporting and
internal communication, a policy of corporate governance
aimed at the interests of stakeholders, fair and open
dealings between the Board of Management and the
Supervisory Board as well as among employees and
compliance with the law. The Board of Management and
Supervisory Board report in this statement on important
aspects of corporate governance pursuant to § 289 a HGB
and section 3.10 of the German Corporate Governance
Code (GCGC).
Information on the Company’s Governing Constitution
The designation “BMW Group” comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and its
group entities. BMW AG is a stock corporation (Aktien-
gesellschaft) based on the German Stock Corporation
Act (Aktiengesetz) and has its registered office in
Munich, Germany. It has three representative bodies:
the Annual General Meeting, the Supervisory Board
and the Board of Management. The duties and authori-
ties of those bodies derive from the Stock Corporation
Act and the Articles of Incorporation of BMW AG.
Shareholders, as the owners of the business, exercise
their rights at the Annual General Meeting. The Annual
General Meeting decides in particular on the utilisation
of unappropriated profit, the ratification of the acts
of the members of the Board of Management and of the
Supervisory Board, the appointment of the external
auditor, changes to the Articles of Incorporation, speci-
fied capital measures and elects the shareholders’
representatives to the Supervisory Board. The Board of
Management manages the enterprise under its own
responsibility. Within this framework, it is monitored
and advised by the Supervisory Board. The Supervisory
Board appoints the members of the Board of Manage-
ment and can, at any time, revoke an appointment if
there is an important reason. The Board of Manage-
ment keeps the Supervisory Board informed of all sig-
nificant matters regularly, promptly and comprehen-
sively, following the principles of conscientious and
faithful accountability and in accordance with prevailing
law and the reporting duties allocated to it by the Super-
visory Board. The Board of Management requires
the approval of the Supervisory Board for certain major
transactions. The Supervisory Board is not, however,
authorised to undertake management measures itself.
In accordance with the requirements of the German
Co-determination Act for companies that generally em-
ploy more than 20,000 people, the Supervisory Board
of BMW AG is required to comprise ten shareholder
representatives elected at the Annual General Meeting
(Supervisory Board members representing equity or
shareholders) and ten employees elected in accordance
with the provisions of the Co-determination Act (Super-
visory Board members representing employees). The
ten Supervisory Board members representing employees
comprise seven Company employees, including one
executive staff representative, and three members elected
following nomination by unions.
The close interaction between Board of Management
and Supervisory Board in the interests of the enterprise
as described above is also known as a “two-tier board
structure”.
Declaration of Compliance and the BMW Group
Corporate Governance Code
Management and supervisory boards of companies listed
in Germany are required by law (§ 161 German Stock
Corporation Act) to report once a year whether the offi-
cially published and relevant recommendations issued
by the “Government Commission on the German Cor-
porate Governance Code”, as valid at the date of the
declaration, have been, and are being, complied with.
Com panies affected are also required to state which of
the recommendations of the Code have not been or
are not being applied, stating the reason or reasons. The
full text of the declaration, together with explanatory
comments, is shown on the following page of this Annual
Report.
The Board of Management and the Supervisory Board
approved the Group’s own Corporate Governance Code
based on the GCGC in previous years in order to pro-
vide interested parties with a comprehensive and stand-
alone document covering the corporate governance
practices applied by the BMW Group. A coordinator
responsible for all corporate governance issues reports
directly and on a regular basis to the Board of Manage-
ment and Supervisory Board.
The Corporate Governance Code for the BMW Group,
together with the Declaration of Compliance, Articles
of Incorporation and other information, can be viewed
and / or downloaded from the BMW Group’s website at
www.bmwgroup.com/ir under the menu items “Facts
about the BMW Group” and “Corporate Governance”.
168 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company’s
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
169 STATEMENT ON CORPORATE GOVERNANCE
Declaration of the Board of Management and of the
Supervisory Board of Bayerische Motoren Werke
Aktiengesellschaft with respect to the recommendations
of the “Government Commission on the German
Corporate Governance Code” pursuant to § 161 German
Stock Corporation Act
The Board of Management and Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft
(“BMW AG”) declare the following regarding the recom-
mendations of the “Government Commission on the
German Corporate Governance Code”:
1. Since issuance of the last Declaration in December
2014, BMW AG has complied with all of the recommen-
dations published officially on 30 September 2014
in the Federal Gazette (Code version dated 24 June
2014), as announced with the exception of section
4.2.5 sentences 5 and 6.
2. BMW AG will in future comply with all of the recom-
mendations published officially on 12 June 2015 in
the Federal Gazette (Code version dated 5 May 2015),
with the exception of section 4.2.5 sentences 5 and 6.
3. It is recommended in section 4.2.5 sentences 5 and 6
of the Code that specified information pertaining to
management board compensation be disclosed in the
Compensation Report. These recommendations have
not been and will not be complied with, due to un-
certainties with respect to their interpretation and
doubts as to whether the supplementary use of model
tables would be instrumental in making the BMW AG’s
Compensation Report transparent and generally un-
derstandable in accordance with generally applicable
financial reporting requirements (see section 4.2.5 sen-
tence 3 of the Code).
Munich, December 2015
Bayerische Motoren Werke
Aktiengesellschaft
On behalf of the
Supervisory Board
Dr.-Ing. Dr.-Ing. E. h.
Norbert Reithofer
Chairman
On behalf of the
Board of Management
Harald Krüger
Chairman
170
Members of the Board of Management
Harald Krüger (born 1965)
Chairman
(since 13. 05. 2015)
Production
(until 13. 05. 2015)
Mandates
BMW (South Africa) (Pty) Ltd. (Chairman)
(until 13. 05. 2015)
BMW Motoren GmbH (Chairman)
(until 15. 05. 2015)
Dr. Friedrich Eichiner (born 1955)
Finance
Mandates
Allianz Deutschland AG
FESTO Aktiengesellschaft
BMW Brilliance Automotive Ltd. (Deputy Chairman)
FESTO Management Aktiengesellschaft
Klaus Fröhlich (born 1960)
Development
Mandates
Dr.-Ing. Dr.-Ing. E. h. Norbert Reithofer (born 1956)
Chairman
HERE International B. V. (since 05. 12. 2015)
(until 13. 05. 2015)
Mandates
Dr. Ian Robertson (HonDSc) (born 1958)
Siemens Aktiengesellschaft
Henkel AG & Co. KGaA (Shareholders’ Committee)
Sales and Marketing BMW,
Sales Channels BMW Group
Milagros Caiña Carreiro-Andree (born 1962)
Human Resources, Industrial Relations Director
Dr.-Ing. Klaus Draeger (born 1956)
Purchasing and Supplier Network
Mandates
Dyson James Group Limited (until 31. 12. 2015)
Peter Schwarzenbauer (born 1959)
MINI, Motorcycles, Rolls-Royce,
Aftersales BMW Group
Mandates
Rolls-Royce Motor Cars Limited (Chairman)
Oliver Zipse (born 1964)
Production
(since 13. 05. 2015)
Mandates
BMW (South Africa) (Pty) Ltd. (Chairman)
(since 14. 05. 2015)
BMW Motoren GmbH (Chairman)
(since 15. 05. 2015)
General Counsel:
Dr. Jürgen Reul
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
Other mandates.
168 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company’s
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
171 STATEMENT ON CORPORATE GOVERNANCE
Members of the Supervisory Board
Dr.-Ing. Dr.-Ing. E. h. Norbert Reithofer (born 1956)
Member and Chairman since 13. 05. 2015
Former Chairman of the Board of
Management of BMW AG
Mandates
Siemens Aktiengesellschaft
Henkel AG & Co. KGaA (Shareholders’ Committee)
Stefan Quandt (born 1966)
Member since 1997
Deputy Chairman
Entrepreneur
Mandates
DELTON AG (Chairman)
AQTON SE (Chairman)
Entrust Datacard Corp.
Prof. Dr.-Ing. Dr. h. c. Dr.-Ing. E. h.
Joachim Milberg (born 1943)
Member from 2002 until 13. 05. 2015
Chairman until 13. 05. 2015
Chairman of the Board of Trustees of
BMW Stiftung Herbert Quandt
Former Chairman of the Board of
Management of BMW AG
Mandates
Bertelsmann Management SE (Deputy Chairman)
Bertelsmann SE & Co. KGaA (Deputy Chairman)
Deere & Company
Manfred Schoch1 (born 1955)
Member since 1988
Deputy Chairman
Chairman of the European and
General Works Council
Industrial Engineer
Stefan Schmid1 (born 1965)
Member since 2007
Deputy Chairman
Chairman of the Works Council, Dingolfing
Dr. jur. Karl-Ludwig Kley (born 1951)
Member since 2008
Deputy Chairman
Chairman of the Executive Management of
Merck KGaA
Mandates
Bertelsmann Management SE
Bertelsmann SE & Co. KGaA
Deutsche Lufthansa Aktiengesellschaft
Verizon Communications Inc. (since 05. 11. 2015)
Christiane Benner 2 (born 1968)
Member since 2014
Second Chairman of IG Metall
Mandates
Robert Bosch GmbH
1 Employee representatives (company employees).
2 Employee representatives (union representatives).
3 Employee representatives (members of senior management).
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
Other mandates.
172
Franz Haniel (born 1955)
Member since 2004
Entrepreneur
Mandates
DELTON AG (Deputy Chairman)
Franz Haniel & Cie. GmbH (Chairman)
Heraeus Holding GmbH
Metro AG (Chairman) (until 19. 02. 2016)
TBG Limited
Prof. Dr. rer. nat. Dr. h. c. Reinhard Hüttl (born 1957)
Member since 2008
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)
Member since 2010
President of acatech – Deutsche Akademie der
Technikwissenschaften e. V.
Mandates
Deutsche Bank AG
Deutsche Post AG
Franz Haniel & Cie. GmbH (until 25. 04. 2015)
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München
Susanne Klatten (born 1962)
Member since 1997
Entrepreneur
Mandates
ALTANA AG (Deputy Chairman)
SGL Carbon SE (Chairman)
UnternehmerTUM GmbH (Chairman)
Prof. Dr. rer. pol. Renate Köcher (born 1952)
Member since 2008
Director of Institut für Demoskopie Allensbach
Gesellschaft zum Studium der öffentlichen
Meinung mbH
Mandates
Allianz SE
Infineon Technologies AG
Nestlé Deutschland AG
Robert Bosch GmbH
Ulrich Kranz3 (born 1958)
Member since 2014
Head of Product Line BMW i
Dr. h. c. Robert W. Lane (born 1949)
Member since 2009
Former Chairman and Chief Executive Officer of
Deere & Company
Mandates
General Electric Company
Northern Trust Corporation (until 21. 04. 2015)
Verizon Communications Inc. (until 07. 05. 2015)
Horst Lischka2 (born 1963)
Member since 2009
General Representative of IG Metall Munich
Mandates
KraussMaffei Group GmbH
MAN Truck & Bus AG
Städtisches Klinikum München GmbH
Willibald Löw1 (born 1956)
Member since 1999
Chairman of the Works Council, Landshut
1 Employee representatives (company employees).
2 Employee representatives (union representatives).
3 Employee representatives (members of senior management).
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
Other mandates.
168 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company’s
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
Werner Zierer1 (born 1959)
Member since 2001
Chairman of the Works Council, Regensburg
173 STATEMENT ON CORPORATE GOVERNANCE
Wolfgang Mayrhuber (born 1947)
Member from 2004 until 13. 05. 2015
Chairman of the Supervisory Board of
Deutsche Lufthansa Aktiengesellschaft
Mandates
Deutsche Lufthansa Aktiengesellschaft (Chairman)
Infineon Technologies AG (Chairman)
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München
HEICO Corporation
Simone Menne (born 1960)
Member since 13. 05. 2015
Member of the Board of Management, Finance,
of Deutsche Lufthansa Aktiengesellschaft
Mandates
Delvag Luftfahrtversicherungs-AG (Chairman)
Deutsche Post AG
LSG Lufthansa Service Holding AG (Chairman)
Lufthansa Cargo AG
Lufthansa Technik AG
FWB Frankfurter Wertpapierbörse (Exchange Council)
Miles & More GmbH (Chairman Advisory Board)
Dr. Dominique Mohabeer1 (born 1963)
Member since 2012
Member of the Works Council, Munich
Brigitte Rödig1 (born 1963)
Member since 2013
Member of the Works Council, Dingolfing
Jürgen Wechsler 2 (born 1955)
Member since 2011
Regional Head of IG Metall Bavaria
Mandates
Schaeffler AG (Deputy Chairman)
Siemens Healthcare GmbH (since 29. 06. 2015)
174
Composition and work procedures of the Board of
Management of BMW AG and its committees
The Board of Management governs the enterprise under
its own responsibility, acting in the interests of the BMW
Group with the aim of achieving sustainable growth
in value. The interests of shareholders, employees and
other stakeholders are also taken into account in the
pursuit of this aim.
The Board of Management determines the strategic
orientation of the enterprise, agrees upon it with the
Supervisory Board and ensures its implementation.
The Board of Management is responsible for ensuring
that all provisions of law and internal regulations are
complied with. Further details about compliance within
the BMW Group can be found in the “Corporate
Governance” section of the Annual Report. The Board
of Management is also responsible for ensuring that
appropriate risk management and risk controlling sys-
tems are in place throughout the Group.
During their period of employment for BMW AG, mem-
bers of the Board of Management are bound by a com-
prehensive non-competition clause. They are required
to act in the enterprise’s best interests and may not
pursue personal interests in their decisions or take ad-
vantage of business opportunities intended for the
enterprise. They may only undertake ancillary activities,
in particular supervisory board mandates outside
the BMW Group, with the approval of the Supervisory
Board’s Personnel Committee. Each member of the
Board of Management of BMW AG is obliged to disclose
conflicts of interest to the Supervisory Board without
delay and inform the other members of the Board of
Management accordingly.
Following the appointment of a new member to the Board
of Management, the BMW Group Corporate Governance
Officer informs the new member of the framework con-
ditions under which the board member’s duties are to
be carried out – in particular those enshrined in the
BMW Group’s Corporate Governance Code – as well as
the duty to cooperate when a transaction or event triggers
reporting requirements or requires the approval of the
Supervisory Board.
The Board of Management consults and takes decisions
as a collegiate body in meetings of the Board of Manage-
ment, the Sustainability Board, the Operations Com-
mittee and the Committee for Executive Management
Matters. At its meetings, the Board of Management
defines the overall framework for business strategies
and the use of resources, takes decisions regarding the
implementation of strategies and deals with issues of
particular importance to the BMW Group. The full board
also takes decisions at a basic policy level relating to the
Group’s automobile product strategies and product
projects inasmuch as these are relevant for all brands.
The Board of Management and its committees may, as
required and depending on the subject matters being
discussed, invite non-voting advisers to participate at
meetings.
Terms of reference approved by the Board of Manage-
ment contain a planned allocation of divisional respon-
sibilities between the individual board members. These
terms of reference also incorporate the principle that
the full Board of Management bears joint responsibility
for all matters of particular importance and scope. In
addition, members of the Board of Management manage
the relevant portfolio of duties under their responsi-
bility, whereby case-by-case rules can be put in place
for cross-divisional projects. Board members continually
provide the Chairman of the Board of Management
with all information regarding major transactions and
developments within their area of responsibility. The
Chairman of the Board of Management coordinates
cross-divisional matters with the overall targets and plans
of the BMW Group, involving other board members to
the extent that divisions within their area of responsi-
bility are affected.
The Board of Management takes its decisions at meet-
ings generally held on a weekly basis which are con-
vened, coordinated and headed by the Chairman of the
Board of Management. At the request of the Chairman,
decisions can also be taken outside of board meetings if
none of the board members object to this procedure. A
meeting is quorate if all Board of Management members
are invited to the meeting in good time. Members unable
to attend any meeting are entitled to vote in writing,
by fax or by telephone. Votes cast by phone must be
subsequently confirmed in writing. Except in urgent
cases, matters relating to a division for which the re-
sponsible board member is not present will only be dis-
cussed and decided upon with that member’s consent.
Unless stipulated otherwise by law or in BMW AG’s
statutes, the Board of Management makes decisions on
the basis of a simple majority of votes cast at meetings.
Outside of board meetings, decisions are taken on
the basis of a simple majority of board members. In the
event of a tied vote, the Chairman of the Board of
Management has the casting vote. Any changes to the
board’s terms of reference must be passed unanimously.
A board meeting may only be held if more than half of
the board members are present.
In the event that the Chairman of the Board of Manage-
ment is not present or is unable to attend a meeting, the
168 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company’s
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
175 STATEMENT ON CORPORATE GOVERNANCE
member of the board responsible for Finance will
represent him.
Minutes are taken of all meetings and the Board of
Management’s resolutions and signed by the Chairman.
Decisions taken by the Board of Management are
binding for all employees.
The rules relating to meetings and resolutions taken
by the full Board of Management are also applicable for
its committees.
Members of the Board of Management not represented
in a committee are provided with the agendas and
minutes of committee meetings. Committee matters are
dealt with in full board meetings if the committee con-
siders it necessary or at the request of a member of the
Board of Management.
A secretariat for Board of Management matters has been
established to assist the Chairman and other board
members with the preparation and follow-up work con-
nected with board meetings.
At meetings of the Operations Committee (generally
held every two weeks), decisions are reached in connec-
tion with automobile product projects, based on the
strategic orientation and decision framework stipulated
at Board of Management meetings. The Operations
Committee comprises the Board of Management mem-
ber responsible for Development (who also chairs the
meetings), together with the board members responsible
for the following areas: Purchases and Supplier Network;
Production; Sales and Marketing BMW, Sales Channels
BMW Group; and MINI, Motorcycles, Rolls-Royce,
Aftersales BMW Group. If the committee chairman is
not present or unable to attend a meeting, the member
of the board responsible for Production represents
him. Resolutions taken at meetings of the Operations
Committee are made online.
The full board usually convenes twice a year in its func-
tion as Sustainability Board in order to define strategy
with regard to sustainability and decide upon measures
to implement that strategy. The Head of Corporate
Affairs and the Representative for Sustainability and
Environmental Protection participate in these meetings
in an advisory capacity.
The Board’s Committee for Executive Management
Matters deals with enterprise-wide issues affecting ex-
ecutive managers of the BMW Group, either in their
entirety or individually (such as the executive manage-
ment structure, potential candidates for executive
management, nominations for or promotions to senior
management positions). This committee has, on the
one hand, an advisory and preparatory role (e. g.
making suggestions for promotions to the two remu-
neration groups below board level and preparing
decisions to be taken at board meetings with regard to
human resources principles with the emphasis on
executive management issues) and a decision-taking
function on the other (e. g. deciding on appointments
to senior management positions and promotions to
higher remuneration groups or the wording of human
resources principles decided on by the full board).
The Committee has two members who are entitled to
vote at meetings, namely the Chairman of the Board of
Management (who also chairs the meetings) and the
board member responsible for Human Resources. The
Head of “Human Resources Management and Services”
as well as the Head of “Human Resources Executive
Management” also participate in these meetings in an
advisory function. At the request of the Chairman,
resolutions may also be passed outside of committee
meetings by casting votes in writing, by fax or by tele-
phone if the other member entitled to vote does not ob-
ject immediately. The Committee for Executive Manage-
ment Matters convenes up to ten times a year.
The Board of Management is represented by its Chair-
man in its dealings with the Supervisory Board. The
Chairman of the Board of Management maintains
regular contact with the Chairman of the Supervisory
Board and keeps him informed of all important mat-
ters. The Supervisory Board has passed a resolution
specifying the information and reporting duties of the
Board of Management. As a general rule, in the case
of reports required by dint of law, the Board of Manage-
ment submits its reports to the Supervisory Board in
writing. To the extent possible, documents required as
a basis for taking decisions are sent to the members of
the Supervisory Board in good time before the relevant
meeting. Regarding transactions of fundamental im-
portance, the Supervisory Board has stipulated specific
transactions which require the approval of the Super-
visory Board. Whenever necessary, the Chairman of
the Board of Management obtains the approval of the
Supervisory Board and ensures that reporting duties
to the Supervisory Board are complied with. In order
to fulfil these tasks, the Chairman is supported by all
members of the Board of Management. The fundamen-
tal principle followed when reporting to the Supervisory
Board is that the latter should be kept informed regu-
larly, without delay and comprehensively of all signifi-
cant matters relating to planning, business performance,
risk exposures, risk management and compliance, as
well as any major variances between actual and budgeted
figures.
176
Composition and work procedures of the Supervisory
Board of BMW AG and its committees
BMW AG’s Supervisory Board, comprising ten share-
holder representatives (elected by the Annual General
Meeting) and ten employee representatives (elected in
accordance with the Co-Determination Act), has the
task of advising and supervising the Board of Manage-
ment in its governance of the BMW Group. It is in-
volved in all decisions of fundamental importance for
the BMW Group. The Supervisory Board appoints
the members of the Board of Management and decides
upon the level of compensation they receive. The Super-
visory Board can revoke appointments for important
reasons.
Together with the Personnel Committee and the Board
of Management, the Supervisory Board ensures that
long-term successor planning is in place. In their assess-
ment of candidates for a post on the Board of Manage-
ment, the underlying criteria applied by the Supervisory
Board for determining the suitability of candidates are
their expertise in the relevant area of board responsi-
bility, outstanding leadership qualities, a proven track
record, and an understanding of the BMW Group’s
business. The Supervisory Board takes diversity into ac-
count when assessing, on balance, which individual
would best complement the Board of Management, in
view of the fact that it is a representative body of the
Company. “Diversity” in the context of the decision-
making process is understood by the Supervisory Board
to encompass various complementary individual pro-
files, work and life experience at both national and in-
ternational level and also the appropriate representa-
tion of both genders. As its target for the proportion of
women on the Board of Management by 31 December
2016, the Supervisory Board has stipulated that the
Board of Management should continue to have at least
one female member. Assuming that the Board of
Management continues to comprise eight members,
this would correspond to a ratio of at least 12.5 %.
The Supervisory Board considers that it would be de-
sirable to further increase the proportion of women on
the board, and therefore supports the Board of Manage-
ment’s current raft of measures aimed at increasing the
proportion of women at the highest executive manage-
ment levels of the BMW Group. The Board of Manage-
ment reports to the Personnel Committee and the Super-
visory Board at regular intervals on the proportion of,
and changes in, management positions held by women,
in particular within senior executive level and at upper-
most management level. When actually selecting an
individual for a post on the Board of Management, the
Supervisory Board decides in the best interest of the
Group and after amply considering all of the relevant
circumstances.
The Supervisory Board holds a minimum of two meet-
ings in each of the first and second six-month periods
of the calendar year. Normally, five plenary meetings
are held per calendar year. One meeting each year is
planned to cover a number of days and is used, among
other things, to enable an in-depth exchange on strategic
and technological matters. The main emphases of meet-
ings in the period under report are described in the
Report of the Supervisory Board. As a general rule, the
shareholder representatives and employee representa-
tives prepare the Supervisory Board meetings separately
and, if necessary, together with members of the Board
of Management. In particular, members of the Super-
visory Board are legally bound to maintain secrecy with
respect to any confidential reports they receive and any
confidential discussions in which they partake.
The Chairman of the Supervisory Board coordinates
work within the Supervisory Board, chairs its meetings,
handles the external affairs of the Supervisory Board
and represents it in its dealings with the Board of
Management.
The Supervisory Board is quorate if all members have
been invited to the meeting and at least half of its mem-
bers participate in the vote on a particular resolution.
A resolution relating to an agenda item not included in
the invitation is only valid if none of the members of
the Supervisory Board who were not present at the
meeting object to the resolution and if a minimum of
two-thirds of the members are present.
As a basic rule, resolutions are passed by the Super-
visory Board by a simple majority. The German Co-
determination Act contains specific requirements with
regard to majority voting and technical procedures, par-
ticularly with regard to the appointment and revoca-
tion of the appointment of management board mem-
bers and the election of a supervisory board chairman
or deputy chairman. In the event of a tied vote in the
Supervisory Board, the Chairman of the Supervisory
Board has two votes in a renewed vote, assuming it also
results in a tie.
In practice, resolutions are taken by the Supervisory
Board and its committees at the relevant meetings. If a
Supervisory Board member is not present at a meeting,
that member can have his / her vote cast by another
Supervisory Board member, assuming an appropriate
request has been made in writing, by fax or in electronic
form. This rule also applies to the casting of the second
vote by the Chairman of the Supervisory Board. The
Chairman of the Supervisory Board can also accept the
retrospective casting of votes by any members not
present at a meeting if this is done within the time limit
168 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company’s
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
177 STATEMENT ON CORPORATE GOVERNANCE
previously set. In special cases, resolutions may also be
taken outside of meetings, i. e. in writing, by fax or by
electronic means. Minutes are taken of all resolutions
and meetings, which are then signed by the relevant
Chairman.
After its meetings, the Supervisory Board is generally
provided with information on new vehicle models in the
form of a short presentation.
Following the election of a new Supervisory Board mem-
ber, the Corporate Governance Officer informs the
new member of the principal issues affecting his or her
duties – in particular those enshrined in the BMW Group
Corporate Governance Code – including the duty to
cooperate when a transaction or event triggers reporting
requirements or is subject to the approval of the Super-
visory Board.
Members of the Supervisory Board of BMW AG are re-
quired to ensure that they have sufficient time to perform
their mandate. If members of the Supervisory Board of
BMW AG are also members of the management board
of a listed company, they may not accept more than a to-
tal of three mandates on non-BMW Group supervisory
boards of listed companies or in other bodies with com-
parable requirements.
skills and expertise to perform its tasks in a proper
manner.
The Supervisory Board has set out specific targets for
its own composition (see section “Composition targets
for the Supervisory Board”).
The members of the Supervisory Board are responsible
for undertaking appropriate basic and further training
measures, if such measures are deemed necessary to
competently perform the tasks assigned to them. The
Company provides appropriate assistance to members
of the Supervisory Board in this respect.
Taking into account the specific circumstances of the
BMW Group and the number of board members, the
Supervisory Board has set up a Presiding Board and
four committees, namely the Personnel Committee, the
Audit Committee, the Nomination Committee and the
Mediation Committee (see “Overview of Supervisory
Board committees and their composition”). Such com-
mittees serve to raise the efficiency of the Supervisory
Board’s work and facilitate the handling of complex
issues. The establishment and function of a mediation
committee is prescribed by law. The person chairing a
committee reports in detail on its work at each plenum
meeting.
The Supervisory Board examines the efficiency of its
activities on a regular basis. Joint discussions are also
held at plenum meetings, prepared on the basis of a
questionnaire previously devised by and distributed to
the members of the Supervisory Board.
The composition of the Presiding Board and the com-
mittees is based on legal requirements, BMW AG’s
Articles of Incorporation, terms of reference and corpo-
rate governance principles. The expertise and technical
skills of its members is also taken into account.
Each member of the Supervisory Board of BMW AG is
bound to act in the best interest of the organisation as
a whole. Members of the Supervisory Board may not
pursue personal interests in their decisions or take ad-
vantage of business opportunities intended to benefit
the BMW Group.
Members of the Supervisory Board are obliged to inform
the full Supervisory Board of any conflicts of interest
which may result from a consultant or directorship func-
tion with clients, suppliers, lenders or other business
partners, enabling the Supervisory Board to report to
the shareholders at the Annual General Meeting on
how it has dealt with such issues. Material conflicts of
interest which are not merely temporary in nature, re-
sult in the termination of the mandate of the relevant
Supervisory Board member.
With regard to nominations for the election of members
of the Supervisory Board, care is taken that the Super-
visory Board in its entirety has the required knowledge,
According to the relevant terms of reference, the Chair-
man of the Supervisory Board is, in this capacity, auto-
matically a member of the Presiding Board, the Person-
nel Committee and the Nomination Committee, and
also chairs these committees.
The number of meetings held by the Presiding Board
and the committees depends on current requirements.
The Presiding Board, the Personnel Committee and
the Audit Committee normally hold several meetings in
the course of the year (see “Report of the Supervisory
Board” for details of the number of meetings held in
2015).
In line with the terms of reference for the activities of
the plenum, the Supervisory Board has also set out terms
of reference for the Presiding Board and the various
committees. The committees are only quorate if all mem-
bers are present. Resolutions taken by the committees
are passed by a simple majority, unless stipulated other-
wise by law.
178
Members of the Supervisory Board may not delegate their
duties. However, the Supervisory Board, the Presiding
Board and the committees may call on experts and
other suitably informed persons to attend meetings to
give advice on specific matters.
The Supervisory Board, the Presiding Board and the
committees also meet without the Board of Management
if deemed necessary.
BMW AG ensures that the Supervisory Board and its
committees are sufficiently equipped to carry out their
duties, including the services provided by a centralised
secretariat to support the chairmen in coordinating the
work of the Supervisory Board.
In accordance with the relevant terms of reference, the
Presiding Board comprises the Chairman of the Super-
visory Board and board deputies. The Presiding Board
prepares Supervisory Board meetings to the extent
that the subject matter to be discussed does not fall
within the remit of any of the committees. This in-
cludes, for example, preparing the annual Declaration
of Compliance with the German Corporate Governance
Code and the Supervisory Board’s efficiency exami-
nation.
The Personnel Committee prepares the decisions of the
Supervisory Board with regard to the appointment
and revocation of appointment of members of the Board
of Management and, together with the full Supervisory
Board and the Board of Management, ensures that
long-term successor planning is in place. The Personnel
Committee also prepares the decisions of the Super-
visory Board with regard to the Board of Management’s
compensation and the Supervisory Board’s regular
review of the Board of Management’s compensation
system. In conjunction with the resolutions taken by
the Supervisory Board regarding the compensation
of the Board of Management, the Personnel Committee
is responsible for drawing up, amending and revoking
service / employment contracts or, when necessary,
other relevant contracts with members of the Board of
Management. In specified cases, the Personnel Com-
mittee also has the authority to grant the necessary ap-
proval for a particular transaction (instead of the Super-
visory Board). This includes loans to members of the
Board of Management or Supervisory Board, specified
contracts with members of the Supervisory Board (in
each case taking account of the consequences of related
parties) and other activities of members of the Board
of Management, including the acceptance of non-BMW
Group supervisory board mandates.
The Audit Committee deals in particular with issues re-
lating to the supervision of the financial reporting pro-
cess, the effectiveness of the internal control system,
the risk management system, internal audit arrange-
ments and compliance as well as the performance of
Supervisory Board duties in connection with audits
pursuant to § 20 of the German Securities Trading Act
(WpHG). It also monitors the external audit, auditor
independence and any additional work performed by
the external auditor. It prepares the proposal for the
election of the external auditor at the Annual General
Meeting, makes a recommendation regarding the elec-
tion of the external auditor, issues the audit engage-
ment letter and agrees on points of audit focus as well
as the auditor’s fee. The Audit Committee prepares the
Supervisory Board’s resolution relating to the Company
and Group Financial Statements and discusses interim
reports with the Board of Management prior to publi-
cation. The Audit Committee also decides on the Super-
visory Board’s agreement to use Authorised Capital
2014 (Article 4 no. 5 of the Articles of Incorporation)
and on amendments to the Articles of Incorporation
which only affect its wording.
In line with the recommendations of the German Cor-
porate Governance Code, the Chairman of the Audit
Committee is independent, and not a former Chairman
of the Board of Management, and has specific knowledge
and experience in applying financial reporting stand-
ards and internal control procedures. He or she also ful-
fils the requirement of being an independent financial
expert as defined by § 100 (5) and § 107 (4) AktG.
The Nomination Committee is charged with the task
of finding suitable candidates for election to the Super-
visory Board (as shareholder representatives) and for
inclusion in the Supervisory Board’s proposals for elec-
tion at the Annual General Meeting. In line with the
recommendations of the German Corporate Governance
Code, the Nomination Committee comprises only share-
holder representatives.
The establishment and composition of a mediation com-
mittee are prescribed by the German Co-determination
Act. The Mediation Committee has the task of making
proposals to the Supervisory Board if a resolution for
the appointment of a member of the Board of Manage-
ment has not been carried by the necessary two-thirds
majority of members’ votes. In accordance with statutory
requirements, the Mediation Committee comprises the
Chairman and the Deputy Chairman of the Supervisory
Board, one member selected by shareholder repre-
sentatives and one by employee representatives.
168 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company’s
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
179 STATEMENT ON CORPORATE GOVERNANCE
Overview of Supervisory Board committees and their composition
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 mem-
bers 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 Manage ment members,
including acceptance of non-BMW Group supervisory mandates as well as the approval of trans-
actions requiring Supervisory Board approval by dint of law (e. g. loans to Board of Management
or Supervisory Board members)
– set up in accordance with the recommendation contained in the German Corporate Governance
Code, activities based on terms of reference
Members
Norbert Reithofer1 (since 13. 05. 2015)
Joachim Milberg1 (until 13. 05. 2015)
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Norbert Reithofer1 (since 13. 05. 2015)
Joachim Milberg1 (until 13. 05. 2015)
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Audit Committee
– supervision of the financial reporting process, the effectiveness of the internal control system,
the risk management system, internal audit arrangements and compliance as well as the
performance of Supervisory Board duties in connection with audits pursuant to § 20 of the
German Securities Trading Act (WpHG)
– supervision of external audit, in particular auditor independence and additional work performed
by external auditor
Karl-Ludwig Kley 1, 2
Norbert Reithofer (since 13. 05. 2015)
Joachim Milberg (until 13. 05. 2015)
Manfred Schoch
Stefan Quandt
Stefan Schmid
– preparation of proposals for election of external auditor at Annual General Meeting, engagement
of external auditor and compliance of audit engagement, determination of areas of audit emphasis
and fee agreements with external auditor
– 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 2014
– 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 representatives on the
Supervisory Board to be put forward for inclusion in the Super visory Board’s proposals for
election at the Annual General Meeting
– establishment in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of reference
Norbert Reithofer1 (since 13. 05. 2015)
Joachim Milberg1 (until 13. 05. 2015)
Susanne Klatten
Karl-Ludwig Kley
Stefan Quandt
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
1 Chair.
2 Independent financial expert within the meaning of § 100 (5) AktG and § 107 (4) AktG.
(In line with the recommendations of the German
Corporate Governance Code, the Nomination
Committee comprises only shareholder repre-
sentatives.)
Norbert Reithofer (since 13. 05. 2015)
Joachim Milberg (until 13. 05. 2015)
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 shareholder
representatives and employee representatives.)
180
Composition objectives of the Supervisory Board
The Supervisory Board must be composed in such a way
that its members as a group possess the knowledge,
skills and experience required to properly complete its
tasks.
To this end, the Supervisory Board has formally speci-
fied the following concrete objectives regarding its com-
position, taking into account the recommendations
contained in the German Corporate Governance Code:
– If possible, four of the members of the Supervisory
Board should have international experience or spe-
cialist knowledge with regard to one or more of the
non-German markets important to the BMW Group.
– If possible, the Supervisory Board should include
seven members who have acquired in-depth knowl-
edge and experience from within the enterprise.
The Supervisory Board should not, however, include
more than two former members of the Board of
Management.
– If possible, three of the shareholder representatives
in the Supervisory Board should be entrepreneurs
or persons who have already gained experience in
the management or supervision of another medium
or large-sized company.
– Ideally, three members of the Supervisory Board should
be figures from the worlds of business, science or
research who have gained experience in areas relevant
to the BMW Group, e. g. chemistry, energy supply, in-
formation technology, or who have acquired spe-
cialist knowledge in subjects relevant for the future of
the BMW Group, e. g. customer requirements, mobility,
resources or sustainability.
– When seeking suitably qualified individuals for the
Supervisory Board whose specialist skills and leader-
ship qualities are most likely to strengthen the Board
as a whole, consideration should also be given to
diversity. When preparing nominations, the extent to
which the work of the Supervisory Board would bene-
fit from diversified professional and personal back-
grounds (including international aspects) and from
an appropriate representation of both genders should
also be taken into account. It is the joint responsibility
of all persons and groupings participating in the
nomination and election process to ensure that the
Supervisory Board includes an appropriate number
of qualified women.
– At least twelve of the 20 members of the Supervisory
Board should be independent members within the
meaning of section 5.4.2 of the German Corporate
Governance Code, including at least six members
representing the Company’s shareholders.
– Two independent members of the Supervisory Board
should have expert knowledge of accounting or
auditing.
– No persons carrying out directorship functions or ad-
visory tasks for important competitors of the BMW
Group may belong to the Supervisory Board. In com-
pliance with prevailing legislation, the members of
the Supervisory Board will strive to ensure that no
persons will be nominated for election with whom a
serious conflict of interests could arise (other than
temporarily) due to other activities and functions
carried out by them outside the BMW Group; this in-
cludes in particular advisory activities or director-
ships with customers, suppliers, creditors or other
business partners.
– As a general rule, the age limit for membership of the
Supervisory Board should be set at 70 years. In ex-
ceptional cases, members may be allowed to remain
on the Board up until the end of the Annual General
Meeting following their 73rd birthday, in order to
fulfil legal requirements or to facilitate smooth succes-
sion in the case of persons with key roles or specialist
qualifications.
– Supervisory Board members should not, as a general
rule, hold office in the Supervisory Board for an over-
all period longer than up to the end of the Annual
General Meeting at which the shareholders vote on
the ratification of the member’s activities for the 14th
financial year since the beginning of the first period
of office, excluding the financial year in which the
first period of office began. This rule does not apply
to natural persons, who either directly or indirectly
hold significant investments in the Company. It may
also be in the Company’s interest to diverge from
the general maximum period, e. g. in order to work
towards another composition target, in particular
gender diversity and diversified professional and per-
sonal backgrounds.
The time schedule set by the Supervisory Board for
achieving the above-mentioned composition targets is
the period up to 31 December 2016. Future proposals
for nomination made by the Supervisory Board at the
Annual General Meeting – insofar as they apply to
shareholder Supervisory Board members – should take
account of these objectives in such a way that they can
be achieved with the support of the appropriate reso-
lutions at the Annual General Meeting. The Annual
General Meeting is not bound by nominations for elec-
tion proposed by the Supervisory Board. The freedom
of employees to vote for the employee members of
the Supervisory Board is also protected. Under the
168 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company’s
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
181 STATEMENT ON CORPORATE GOVERNANCE
procedural rules stipulated by the German Co-Deter-
mination Act, the Supervisory Board does not have the
right to nominate employee representatives for elec-
tion. The objectives which the Supervisory Board has
set itself with regard to its composition are therefore not
intended to be instructions to those entitled to vote or
restrictions on their freedom to vote.
In the Supervisory Board’s opinion, its composition as
at 31 December 2015 fulfilled the composition objec-
tives detailed above. In order to make it easier to assess
actual composition and composition targets, brief
curricula vitae of the current members of the Super-
visory Board are available on the Company’s website at
www.bmwgroup.com. Information relating to mem-
bers’ practised professions and to mandates in other
statutory supervisory boards and equivalent national or
foreign company boards, including the length of their
periods of service on the Supervisory Board, is provided
in the section “Statement on Corporate Governance”.
Judging from this information, it is evident that the
Supervisory Board of BMW AG is extremely diversified,
with significantly more than the targeted four members
having international experience or specialist knowledge
with regard to one or more of the non-German markets
important to the Company. In-depth knowledge and
experience from within the enterprise are provided by
seven employee representatives and the Supervisory
Chairman himself. Only one previous Board of Manage-
ment member holds office in the Supervisory Board.
At least four members of the Supervisory Board have
experience in managing another entity. The Super-
visory Board also has three entrepreneurs as members.
Most of the members of the Supervisory Board – in-
cluding the employee representatives – have some ex-
perience in supervising another medium-sized or large
company. Moreover, more than three members of the
Supervisory Board have experience and specialist
knowledge in subjects relevant for the future of the
BMW Group, such as customer requirements, mobility,
resources, sustainability and information technology.
For the purpose of assessing the independence of its
members, the Supervisory Board follows the recommen-
dations of the German Corporate Governance Code.
In the opinion of the Supervisory Board, the fact that a
member has a substantial shareholding in the Com-
pany, or holds office as an employee representative, or
was previously a member of the Board of Manage-
ment, does not rule out that he or she is independent.
A “substantial and not merely temporary conflict of
interests” within the meaning of section 5.4.2 of the
German Corporate Governance Code does not apply
to any of the Supervisory Board members. Employees
holding office in the Supervisory Board are protected by
law when performing their duties. At any rate, all other
Supervisory Board members have a sufficient degree of
economic independence from the Company. Business
with entities, in which the members of the Supervisory
Board carry out a significant function, is conducted on
an arm’s length basis. Overall, the Supervisory Board
has concluded that all of its members are independent.
At least three members meet the requirements for
being designated as an independent financial expert.
At the end of the reporting period, the Supervisory
Board had six female members (30 %), comprising three
shareholder representatives and three employee repre-
sentatives. The Supervisory Board has 14 male mem-
bers (70 %), comprising seven shareholder representa-
tives and seven employee representatives. The Company
therefore complies with the statutory gender quota of
at least 30 % female members applicable in Germany
with effect from 1 January 2016. The Supervisory Board
does not currently have any members more than 70 years
old. The principles specified by the Supervisory Board
regarding the length of office of its members will be
taken into account in all future proposals for election.
Disclosures pursuant to the Act on Equal Gender
Participation – targets for the proportion of women at
executive management levels I and II
The Act on Equal Participation of Women and Men in
Executive Positions in the Private and the Public Sector
(“Act on Equal Gender Participation”) was passed into
German law in 2015.
Under the new legislation, the Supervisory Board of
BMW AG is required to set a target for the proportion
of women on its Board of Management and a time limit
for meeting this target. Likewise, the Board of Manage-
ment of BMW AG is required to establish targets and
time limits for attaining these targets with respect to
the two executive management levels below the Board
of Management. In each case, the first of these time
limits may be no later than 30 June 2017. Since the Com-
pany’s financial year corresponds to the calendar year,
the Supervisory Board and the Board of Management
have each decided to set 31 December 2016 as the date
of the first time limit for attaining these targets.
As its target for the proportion of women on the Board
of Management by 31 December 2016, the Supervisory
Board has stipulated that the Board of Management
should continue to have at least one female member.
Assuming that the Board of Management continues to
182
comprise eight members, this would correspond to a
proportion of at least 12.5 %. The Super visory Board
considers it desirable to increase the proportion of
women on the board and supports the Board of Manage-
ment’s current raft of measures, which is also aimed
at increasing the proportion of women at the highest
executive management levels of the BMW Group.
The Board of Management has established target
ranges of 10 to 12 % for executive management level I
and 6 to 8 % for executive management level II, each to
be reached by 31 December 2016. The targets set out
are relatively modest in view of the imminence of the
deadline.
Top management within the BMW Group is structured
in terms of functions, following a cohesive job evalua-
tion system based on Mercer.
At 31 December 2015, the proportion of female execu-
tives within management / function level I stood at 9.6 %
and within management / function level II at 5.5 %.
Proportion of female executives within management /
function level I and II at BMW AG
in %
10
8
6
4
2
168 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company’s
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
Function level I
Function level II
9.6
5.5
The deployment of diverse, complementary talents in
the workforce increases both the ability of a company to
perform and its customer orientation. Sufficient diver-
sity in the BMW Group makes a major contribution to
improving competitiveness. Promoting an appropriate
gender balance is a key part of this skill mix. The aim of
the Board of Management therefore continues to be to
increase the proportion of women at all management
levels.
The proportion of women has risen further during the
financial year 2015, both in the workforce as a whole
and in management positions, accompanied also by
a large number of programmes, dialogues and infor-
mation events. Further information on the social di-
versity in the BMW Group can be found in the section
“Workforce”.
Information on corporate governance practices applied
beyond mandatory requirements
Core principles
Within the BMW Group, the Board of Management, the
Supervisory Board and the employees base their actions
on twelve core principles which are the cornerstone of
the success of the BMW Group:
Customer focus
The success of our Company is determined by our cus-
tomers. They are at the heart of everything we do.
The results of all our activities must be 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 has the personal responsi-
bility for the Company’s success. When working in a
team, each employee must assume personal responsibility
for his or her actions. We are fully aware that we are
working to achieve the Company’s goals. For this reason,
we work together in the best interests of the Company.
Effectiveness
The only results that count for the Company are those
which have a sustainable impact. In assessing leader-
ship, we must consider the effectiveness of performance
on results.
Adaptability
In order to ensure our long-term success we must adapt
to new challenges with speed and flexibility. We there-
fore see change as an opportunity – adaptability is essen-
tial to be able to capitalise on it.
Frankness
As we strive to find the best solution, it is each em-
ployee’s duty to express any opposing opinions they
may have. The solutions we agree upon will then be
consistently implemented by all those involved.
Respect, trust, fairness
We treat each other with respect. Leadership is based on
mutual trust. Trust is rooted in fairness and reliability.
183 STATEMENT ON CORPORATE GOVERNANCE
Employees
People make companies. Our employees are the
strongest factor in our success, which means our per-
sonnel decisions will be among the most important
we ever make.
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 “Careers” and “Working at
the BMW Group”.
to collective bargaining, the prohibition of child labour,
the right to appropriate remuneration, regulated working
times and compliance with work and safety regulations.
The complete text of the UN Global Compact and the
recommendations of the ILO and other relevant in-
formation can be found at www.unglobalcompact.org
and www.ilo.org. The Joint Declaration on Human
Rights and Working Conditions in the BMW Group
can be found at www.bmwgroup.com under the menu
item “Responsibility” and “Supply Chain Manage-
ment”.
It goes without saying that the BMW Group abides by
these fundamental principles and rights worldwide.
Employees have therefore been sensitised to this issue
since 2005 by means of regular internal communica-
tions and further training on recent developments in
this area. Two dedicated helplines – the “Human Rights
Contact” and the BMW Group SpeakUP Line – are
available to employees wishing to raise queries or com-
plaints relating to human rights issues. The UN Guiding
Principles for Business and Human Rights provide a
framework for critical reflection and continuous improve-
ment in our endeavours to ensure that human rights
are respected throughout the organisation.
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 trans-
parent. We are well aware of our responsibility towards
society. Our models for sustainable social responsibility
towards employees and for ensuring compliance with
international social standards are based on various in-
ternationally recognised guidelines. The BMW Group
is committed to adhering to the OECD’s guidelines for
multinational companies and the contents of the ICC
Business Charter for Sustainable Development. De-
tails of the contents of these guidelines and other rele-
vant information can be found at www.oecd.org and
www.iccwbo.org. The Board of Management signed the
United Nations Global Compact in 2001 and, in 2005,
together with employee representatives, issued a “Joint
Declaration on Human Rights and Working Conditions
in the BMW Group”. This Joint Declaration was recon-
firmed in 2010. With the signature of these documents,
we have given our commitment to abide worldwide by
internationally recognised human rights and with the
fundamental working standards of the International
Labour Organization (ILO). The most important of
these are freedom of employment, the prohibition of
discrimination, the freedom of association and the right
Further information on social responsibility to employees
can be found in the section “Workforce”.
Activities can only be sustainable, however, if they
cover the entire value-added chain. That is why the
BMW Group not only sets high standards for itself, but
also expects its suppliers and partners to meet the
ecological and social standards it sets and strives con-
tinually to improve the efficiency of processes, measures
and activities. For instance, we consistently require our
dealers and importers to comply with ecological and
social standards on a contractual basis. Moreover, cor-
responding criteria are embedded throughout the entire
purchasing system – including in enquiries to suppliers,
in the sector-wide OEM Sustainability Questionnaire,
in our purchasing terms and in our evaluation of sup-
pliers – in order to promote sustainability aspects in
line with the BMW Group Sustainability Standard. The
BMW Group expects suppliers to ensure that the
BMW Group’s sustainability criteria are also adhered
to by their sub-suppliers. Purchasing terms and con-
ditions and other information relating to purchasing
can be found in the publicly available section of the
BMW Group Partner Portal at https: / / b2b.bmw.com.
We also work in close partnership with our suppliers
and promote their commitment to sustainability.
184
Compliance in the BMW Group
Responsible and lawful conduct is fundamental to the
success of the BMW Group. It is an integral part of
our corporate culture and the reason why customers,
shareholders, business partners and the general public
place their trust in us. The Board of Management and
the employees of the BMW Group are obliged to act
responsibly and in compliance with applicable laws and
regulations.
This principle has been embedded in BMW’s internal
rules of conduct for many years. In order to protect itself
systematically against compliance-related and reputa-
tional risks, the Board of Management created a Com-
pliance Committee several years ago, mandated to es-
tablish a worldwide Compliance Management System
throughout the BMW Group.
The BMW Group Compliance Committee comprises
the heads of the following departments: Legal Affairs,
Corporate and Governmental Affairs, Corporate Audit,
Group Reporting, Organisational Development and
Corporate Human Resources. It manages and monitors
activities necessary to avoid non-compliance with the
law. These activities include training, information and
communication measures, compliance controls and
following up cases of non-compliance.
The BMW Group Compliance Committee reports regu-
larly to the Board of Management on all compliance-
related issues, including the progress made in refining
the BMW Group Compliance Management System,
details of investigations performed, known infringements
of the law, sanctions imposed and corrective / preven-
tative measures implemented. This ensures that the
Board of Management is immediately notified of any
cases of particular significance. The decisions taken by
the BMW Group Compliance Committee are drafted in
concept, and implemented operationally, by the BMW
Group Compliance Committee Office. The BMW Group
Compliance Committee Office comprises ten employees
and is allocated in organisational terms to the Chairman
of the Board of Management.
The Chairman of the BMW Group Compliance Commit-
tee keeps the Audit Committee (which is part of the
Supervisory Board) informed on the current status of
compliance activities within the BMW Group, both on
a regular and a case-by-case basis as the need arises.
BMW Group Compliance Management System
Supervisory Board BMW AG
Board of Management BMW AG
BMW Group Compliance Committee
BMW Group Compliance Committee Office
Company-wide Compliance
Network
Annual
Report
Annual
Report
Annual
Compliance
Reporting
Compliance Risk
Analysis
Legal Compliance
Code and Regulations
Compliance
Investigations
and Controls
Compliance
Reporting
Compliance
Instruments and
Measures of
the BMW Group
Compliance
Communication
Compliance
Training
Compliance
Contact and
SpeakUP Line
Compliance
Governance and
Processes
The Board of Management keeps track of and analyses
compliance-related developments and trends on the
basis of the Group’s compliance reporting and input
from the BMW Group Compliance Committee. Meas-
ures to improve the Compliance Management System
are initiated on the basis of identified requirements.
A coordinated set of instruments and measures is em-
ployed to ensure that the BMW Group, its representative
bodies, its managers and staff act in a lawful manner.
Particular emphasis is placed on compliance with anti-
trust legislation and the avoidance of corruption risks.
Compliance measures are supplemented by a whole
range of internal policies, guidelines and instructions,
which in part reflect applicable legislation. The BMW
Group Policy “Corruption Prevention” and the BMW
Group Instruction “Corporate Hospitality and Gifts”
168 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company’s
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
185 STATEMENT ON CORPORATE GOVERNANCE
deserve particular mention: these documents deal with
lawful handling of gifts and benefits and define appro-
priate assessment criteria and approval procedures for
specified actions.
Compliance measures are determined and prioritised on
the basis of a group-wide compliance risk assessment
covering all 346 business units and functions worldwide
within the BMW Group. The assessment of compliance
risks is updated annually. Measures are realised with
the aid of a regionally structured compliance manage-
ment team covering all parts of the BMW Group, which
oversees a network of more than 200 Compliance Respon-
sibles.
The various elements of the BMW Group Compliance
Management System are shown in the diagram on the
previous page and are applicable for all BMW Group
entities worldwide. To the extent that additional com-
pliance requirements apply to individual countries or
specific lines of business, these are covered by supple-
mentary compliance measures.
The BMW Group Legal Compliance Code is the corner-
stone of the Group’s Compliance Management System,
spelling out the Board of Management’s commitment
to compliance as a joint responsibility (“tone from the
top”). This document, which was revised and expanded
in 2014, explains the significance of legal compliance
and provides an overview of the various areas relevant
for the BMW Group. It is available both as a printed
brochure and for download in German and English. In
addition, translations into nine other languages are avail-
able in the BMW Group intranet.
Managers in particular bear a high degree of responsi-
bility and must set a good example with regard to pre-
venting infringements. Managers throughout the BMW
Group acknowledge this principle by signing a written
declaration, in which they also undertake to inform staff
working for them of the content and significance of the
Legal Compliance Code and make them aware of legal
risks. Managers must, at regular intervals and on their
own initiative, verify compliance with the law and com-
municate regularly with staff on this issue. Any indication
of non-compliance with the law must be rigorously in-
vestigated.
the introduction of the BMW Group Compliance Man-
agement System. The training material is available on
an Internet-based training platform in German and
English and includes a final test. Successful completion
of the training programme, which is documented by a
cer tifi cate, is mandatory for all BMW Group managers.
Appropriate processes are in place to ensure that all
newly recruited managers and promoted staff undergo
compliance training. In this way, the BMW Group en-
sures full training coverage for its managers in com-
pliance matters.
In addition to this basic training, more in-depth training
is also provided to certain groups of staff on specific
compliance issues. Since early 2014, a total of 1,900 em-
ployees at BMW AG branches received further training
as anti-money-laundering measures were upgraded.
Antitrust law training was also expanded in 2013, tar-
geting employees who come into contact with antitrust-
related issues as a result of their functions within sales
and marketing, purchasing, production or develop-
ment. Around 10,100 employees have already com-
pleted this training. The relevant divisions also imple-
mented and stepped up further antitrust compliance
measures and processes in 2015 to make employees
who participate in meetings with competitors or work
with suppliers or sales partners sufficiently aware of
antitrust risks.
Additional compliance coaching has also been imple-
mented for international sales and financial service loca-
tions. These multi-day classroom seminars strengthen
the understanding of compliance in selected units and
enhance cooperation between the central BMW Group
Compliance Committee Office and decentralised com-
pliance offices. In 2015, market coaching was conducted
in Belgium, Denmark, Finland, Italy, Norway, Portugal,
Spain and Sweden.
In order to avoid legal risks, all members of staff can
discuss compliance matters with their managers and
with the relevant departments within the BMW Group,
in particular Legal Affairs, Corporate Audit and Cor-
porate Security. The BMW Group Compliance Contact
serves as a further point of contact for both employees
and non-employees for any questions regarding com-
pliance.
More than 31,500 managers and staff worldwide have
received training in essential compliance matters since
Employees also have the opportunity to submit informa-
tion – anonymously and confidentially – via the BMW
186
Group SpeakUP Line about possible breaches of the law
within the Company. The BMW Group SpeakUP Line is
available in a total of 34 languages and can be reached
via local toll-free numbers in all countries in which BMW
Group employees are engaged in activities.
Compliance-related queries and concerns are docu-
mented and followed up by the BMW Group Compliance
Committee Office using an electronic Case Manage-
ment System. If necessary, Corporate Audit, Corporate
Security, the Works Council and legal departments may
be called upon to assist in the investigation process.
Through the group-wide reporting system, Compliance
Responsibles throughout the BMW Group report on
compliance-relevant issues to the Compliance Commit-
tee on a regular basis, and, if necessary, on an ad hoc
basis. This includes reporting on the compliance status
of the relevant entities, on identified legal risks and in-
cidences of non-compliance, as well as on corrective / pre-
ventative measures implemented.
Compliance with and implementation of the Legal Com-
pliance Code are audited regularly by Corporate Audit
and subjected to control checks by Corporate Security
and the BMW Group Compliance Committee Office.
As part of its regular activities, Corporate Audit carries
out on-site audits. The BMW Group Compliance Com-
mittee also engages Corporate Audit to perform com-
pliance-specific checks. In addition, four BMW Group
Compliance Spot Checks, sample tests specifically de-
signed to identify potential corruption risks, were carried
out in 2015. Compliance control activities are coordi-
nated by the BMW Group Panel Compliance Controls.
Any necessary follow-up measures are organised by the
BMW Group Compliance Committee Office.
It is essential that employees are aware of and comply
with applicable legal regulations. The BMW Group does
not tolerate violations of the law by its employees. Cul-
pable violations of the law result in employment-con-
tract sanctions and may involve personal liability conse-
quences for the employee involved.
To avoid this, BMW Group employees are kept fully up-
to-date with the instruments and measures used by the
Compliance Management System via various internal
channels. As of 2014, all new staff receive a welcome
email underscoring the BMW Group’s special commit-
ment to compliance when they join the Company. The
central means of communication is the Compliance
website within the BMW Group’s intranet, where em-
ployees can find compliance-related information and
have access to training materials in both German and
English. The website contains a special service area where
various practical tools are made available to employees
to help them deal with typical compliance-related mat-
ters. Since mid-2015, BMW Group employees have also
had access to an IT system, which helps them verify
legal admissibility and approve and document benefits,
especially in connection with corporate hospitality.
In the same way that the BMW Group is committed to
lawful and responsible conduct, it expects no less from
its business partners. In 2012, the BMW Group devel-
oped a new Business Relations Compliance programme
aimed at ensuring the reliability of its business relations.
Relevant business partners are checked and evaluated
with a view to identifying potential compliance risks.
These procedures are particularly relevant for relations
with sales partners and service providers, such as agen-
cies and consultants. Depending on the results of the
evaluation, appropriate measures – such as communica-
tion measures, training and possible monitoring – are
implemented to manage compliance risks. The Business
Relations Compliance programme has already been in-
troduced in 37 units since its launch and, over the com-
ing years, will be rolled out successively throughout the
BMW Group’s worldwide sales organisation. In 2015, the
Company also continued integrating compliance clauses
to protect contractual relationships into dealer and im-
porter contracts.
Compliance is also an important factor in safeguarding
the future of the BMW Group workforce. With this in
mind, the Board of Management and the national and in-
ternational employee representative bodies of the BMW
Group have agreed on a binding set of Joint Principles
for Lawful Conduct. In doing so, all parties involved
made a commitment to the principles contained in the
BMW Group Legal Compliance Code and to trustful co-
operation in all matters relating to compliance. Employee
representatives are therefore regularly involved in the
process of refining compliance measures within the
BMW Group.
In the interest of investor protection and to ensure that
the BMW Group complies with regulations relating to
potential insider information, the Board of Management
appointed an Ad Hoc Committee back in 1994, consist-
ing of representatives of various specialist departments,
whose members examine the relevance of issues for
168 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company’s
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
187 STATEMENT ON CORPORATE GOVERNANCE
ad hoc disclosure purposes. All persons working on be-
half of the Company who have access to insider informa-
tion in accordance with existing rules have been, and
continue to be, included in a corresponding, regularly
updated list and informed of the duties arising from in-
sider rules.
programme for Board of Management members is de-
scribed in detail in the Compensation Report (see also
the “Share-based remuneration” section in the Com-
pensation Report and note 19 to the Group Financial
Statements).
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, and any persons related to those
members, are required to give notice to BMW AG and
the Federal Agency for the Supervision of Financial
Services of transactions with BMW stock or related finan-
cial instruments if the total sum of such transactions
reaches or exceeds an amount of € 5,000 during any
given calendar year. BMW AG publishes such informa-
tion without delay and communicates it to the Com-
panies Register for archiving. Notice of publication is
issued to the Federal Agency for the Supervision of
Finan cial Services. Securities transactions notified to
BMW AG during the financial year 2015 were also re-
ported on the Company’s website.
Shareholdings of members of the Board of Management
and the Supervisory Board
The members of the Supervisory Board of BMW AG hold
a total of 43.00 % of the Company’s shares of common
and preferred stock (2014: 27.61 %), of which 31.26 %
(2014: 16.06 %) relates to Stefan Quandt, Germany, and
26.74 % (2014: 11.54 %) to Susanne Klatten, Germany,
whereby 15.00 % are held by Mr Quandt and Ms Klatten
indirectly in a so-called “undivided community of heirs”,
with the consequence that the 15.00 % shareholding
is attributed to both in full. The shareholdings of the
members of the Board of Management total less than
1 % of all issued shares.
Share-based compensation programmes for
employees and members of the Board of Management
Three share-based remuneration programmes were in
place at BMW AG during the year under report, namely
the Employee Share Programme (under which entitled
employees of BMW AG have been able to participate
in the enterprise’s success since 1989 in the form of non-
voting shares of preferred stock), a share-based remu-
neration programme for Board of Management mem-
bers, and a share-based remuneration programme for
senior heads of department (relating in both cases to
shares of common stock). The share-based remuneration
The share-based remuneration programme for qualify-
ing senior heads of department, introduced with effect
for financial years beginning after 1 January 2012, is
closely based on the programme for Board of Manage-
ment members and is aimed at rewarding a long-term,
entrepreneurial approach to running the business on
a sustainable basis.
Under the terms of this programme, participants give a
commitment to invest an amount equivalent to 20 % of
their performance-based bonus in BMW common stock
and to hold the shares so acquired for four years. In re-
turn for this commitment, BMW AG pays 100 % of the in-
vestment amount as a net subsidy. Once the four-year
holding period requirement has been fulfilled, the par-
ticipants receive – for each three common stock shares
held and at the Company’s option – one further share
of common stock or the equivalent amount in cash.
Under the terms of the Employee Share Programme, in
2015 employees were entitled to acquire packages of
between five and twelve shares of non-voting preferred
stock with a discount of € 20.83 (2014: € 25.00) per share
compared to the market price (average closing price in
Xetra trading during the period from 5 to 11 November
2015: € 74.49). All employees of BMW AG and its (di-
rectly or indirectly) wholly owned German subsidiaries
(if agreed to by the directors of those entities) were en-
titled to participate in the programme. Employees were
required to have been in an uninterrupted employment
relationship with BMW AG or the relevant subsidiary
for at least one year at the date on which the alloca-
tion for the year was announced. Shares of preferred
stock acquired in conjunction with the Employee Share
Programme are subject to a vesting period of four
years, starting from 1 January of the year in which the
employees acquired the shares. A total of 309,944 (2014:
239,777) shares of preferred stock were acquired by em-
ployees under the programme in 2015; 309,860 (2014:
239,757) of these shares were drawn from Authorised
Capital 2014, the remainder were bought back via the
stock exchange. Every year the Board of Management of
BMW AG decides whether the programme is to be con-
tinued. Further information is provided in notes 19
and 34 to the Group Financial Statements.
188
Compensation Report
The following section describes the principles govern-
ing the compensation of the Board of Management and
the stipulations set out in the statutes relating to the
compensation of the Supervisory Board. In addition to
explaining the compensation system, the components
of compensation are also disclosed in absolute figures.
Furthermore, the compensation of each member of the
Board of Management and the Supervisory Board for
the financial year 2015 is disclosed by individual mem-
ber and analysed in its component parts.
1. Board of Management compensation
Responsibility
The Supervisory Board is responsible for determining
and regularly reviewing the Board of Management’s
compensation. The Personnel Committee plays a pre-
paratory role in this process.
Principles of compensation
The compensation system for the Board of Management
at BMW AG is designed to encourage a management
approach focused on the sustainable development of
the BMW Group. One further principle applied when
designing remuneration systems at BMW is that of con-
sistency at different levels. In other words, compensation
systems for the Board of Management, senior manage-
ment and employees of BMW AG should all have a
similar structure and contain similar components. The
Supervisory Board carries out regular checks to ensure
that all Board of Management compensation compo-
nents are appropriate, both individually and in total,
and do not encourage the Board of Management to take
inappropriate risks on behalf of the BMW Group. At the
same time, the compensation model used for the Board
of Management needs to be sufficiently attractive for
highly qualified executives in a competitive environment.
The compensation of members of the Board of Manage-
ment is determined by the full Supervisory Board on
the basis of performance criteria and after taking into
account any remuneration received from Group com-
panies. The principal performance criteria are the na-
ture of the tasks allocated to each member of the Board
of Management, the economic situation and the per-
formance and future prospects of the BMW Group. The
Supervisory Board sets ambitious and relevant para-
meters as the basis for variable compensation. It also
ensures that variable components based on multi-year
assessment criteria take account of both positive and
negative developments and that the package as a whole
encourages a long-term approach to business perfor-
mance. Targets and other parameters may not be changed
retrospectively. The Supervisory Board reviews the ap-
propriateness of the compensation system annually.
In preparation, the Personnel Committee also consults
remuneration studies. The Supervisory Board reviews
the appropriateness of the compensation system in hori-
zontal terms by comparing compensation paid by
other DAX companies and in vertical terms by compar-
ing board compensation with the salaries of executive
managers and with the average salaries of employees of
BMW AG based in Germany, in both cases with regard
to their various levels and to changes over time. Recom-
mendations made by an independent external remuner-
ation expert and suggestions made by investors and
analysts are also considered in the consultative process.
Compensation system, compensation components
The compensation of the Board of Management com-
prises both fixed and variable remuneration as well as
a share-based component. Retirement and surviving
dependants’ benefit entitlements are also in place.
Fixed remuneration
Fixed remuneration consists of a base salary (paid
monthly) and other remuneration elements, which
comprise mainly the use of Company and leased cars as
well as the payment of insurance premiums, contribu-
tions towards security systems and an annual medical
check-up. Members of the Board of Management are
also entitled to purchase vehicles and other services of
the BMW Group at conditions that also apply in each
relevant case for employees.
The basic remuneration of members of the Board of
Management is unchanged from the previous year,
namely € 0.75 million p. a. for a board member during
the first period of office, € 0.9 million p. a. for a board
member from the second term of appointment or fourth
year of office onwards and € 1.5 million p. a. for the
Chairman of the Board of Management.
Variable remuneration
The variable remuneration of Board of Management
members comprises variable cash remuneration on the
one hand and a share-based remuneration component
on the other.
Variable cash remuneration, in particular bonuses
Variable cash remuneration consists of a cash bonus and
share-based remuneration component equivalent to
20 % of a board member’s total bonus after taxes, which
the board member is required to invest in BMW AG com-
mon stock. Taxes and social insurance relating to the
share-based remuneration are also borne by the Com-
pany. In substantiated cases, the Supervisory Board also
has the option of paying an additional special bonus.
168 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company’s
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
189 STATEMENT ON CORPORATE GOVERNANCE
The bonus comprises two components, each equally
weighted, namely a corporate earnings-related bonus
and a personal performance-related bonus. The tar-
get bonus (100 %) for a Board of Management member,
for both components of variable compensation, totals
€ 1.5 million p. a., rising to € 1.75 million p. a. from the
second term of appointment or fourth year of office on-
wards. The equivalent figure for the Chairman of the
Board of Management is € 3 million p. a. The bonus
figure is capped for all Board of Management members
at 200 % of the relevant target bonus.
The corporate earnings-related bonus is based on the
BMW Group’s net profit and post-tax return on sales
(which are combined in a single earnings factor) and
the level of the dividend (common stock). The corpo-
rate earnings-related bonus is derived by multiplying
the target amount fixed for each member of the Board
of Management by the earnings factor and by the divi-
dend factor. In exceptional circumstances, for instance
when there have been major acquisitions or disposals,
the Supervisory Board may adjust the level of the corpo-
rate earnings-related bonus.
An earnings and dividend factor of 1.00 would give rise
to an earnings-based bonus of € 0.75 million for the
finan cial year 2015 for a member of the Board of Manage-
ment during the first period of office and € 0.875 million
during the second term of appointment or from the
fourth year in office. The equivalent bonus for the Chair-
man of the Board of Management is € 1.5 million. The
earnings factor is 1.00 in the event of a Group net profit
of € 3.1 billion and a post-tax return on sales of 5.6 %.
The dividend factor is 1.00 in the event that the dividend
paid on the shares of common stock is between 101 and
110 cents. If the Group net profit were below € 1 billion,
or if the post-tax return on sales were less than 2 %, the
earnings factor for the financial year 2015 would be
zero. In this case, no corporate earnings-related bonus
would be paid.
The personal performance-related bonus is derived by
multiplying the target amount set for each member of
the Board of Management by a performance factor. The
Supervisory Board sets the performance factor on the
basis of its assessment of the contribution of the rele-
vant Board of Management member to sustainable and
long-term oriented business development. In setting the
factor, equal consideration is given to personal perfor-
mance, decisions taken in previous forecasting periods,
key decisions affecting the future development of the
business and the effectiveness of measures taken in re-
sponse to changing external conditions as well as other
activities aimed at safeguarding the future viability of the
business to the extent not included directly in the basis
of measurement. Performance factor criteria include
innovation (economic and ecological, e. g. reduction of
carbon emissions), customer focus, ability to adapt,
leadership accomplishments, contributions to the Com-
pany’s attractiveness as an employer, progress in imple-
menting the diversity concept, and activities that foster
corporate social responsibility. The target bonus and the
key figures used to determine the corporate earnings-
related bonus are fixed in advance for a period of three
financial years, during which time they may not be
amended retrospectively.
Share-based remuneration programme
The compensation system includes a share-based remu-
neration programme, in which the level of share-based
remuneration is based on the amount of bonus paid.
The system is aimed at creating further long-term incen-
tives to encourage sustainable governance.
This programme envisages a share-based remuneration
component equivalent to 20 % of the board member’s
total bonus after taxes, which the board member is re-
quired to invest in BMW AG common stock. Taxes and
social insurance relating to the share-based remunera-
tion component are borne by the Company. As a general
rule, the shares must be held for a minimum of four
years. As part of a matching plan, at the end of the
holding period the Board of Management members will
normally receive from the Company either one addi-
tional share of common stock or an equivalent cash
amount for three shares of common stock held, to be
decided at the discretion of the Company (share-based
remuneration component / matching component). Spe-
cial rules apply in the case of death or invalidity of a
Board of Management member or early termination of
the contractual relationship before fulfilment of the
holding period.
Retirement and surviving dependants’ benefits
The provision of retirement and surviving dependants’
benefits for Board of Management members was changed
to a defined contribution system with a guaranteed
minimum return with effect from 1 January 2010. How-
ever, given the fact that board members appointed for
the first time prior to 1 January 2010 for the most part
had a legal right to receive the benefits already prom-
ised to them, these board members were given the
option to choose between the previous system and the
new one.
In the event of the termination of mandate, Board of
Management members appointed for the first time prior
to 1 January 2010 are entitled to receive certain defined
190
Overview of compensation system and compensation components
Component
Parameter / measurement base
Basic compensation p. a.
Variable compensation
Bonus
a) Corporate earnings-related bonus
(corresponds to 50 % of target bonus if target is 100 %
achieved)
Member of the Board of Management:
– € 0.75 million (first term of appointment)
– € 0.90 million (from second term of appointment onwards or fourth year in office)
Chairman of the Board of Management:
– € 1.50 million
Target bonuses p. a. (if target is 100 % achieved):
– € 1.50 million (first term of appointment)
– € 1.75 million (from second term of appointment onwards or fourth year in office)
– € 3.00 million (Chairman of the Board of Management)
– Quantitative criteria fixed in advance for a period of three financial years
– Formula: 50 % of target bonus x earnings factor x dividend factor (common stock)
– The earnings factor is derived from the Group net profit and the Group post-tax return
on sales
b) Performance-related bonus
– 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
Special bonus payments
– Formula: 50 % of target bonus x performance factor
– Criteria for the performance factor also include: innovation (economic and ecological,
e. g. reduction of CO2 emissions), customer orientation, ability to adapt, leadership ac-
complishments and attractiveness as employer, progress in implementing the diversity
concept and activities that foster corporate social responsibility
May be paid in justified circumstances on an appropriate basis, contractual basis, no
entitlement
Share-based remuneration programme
– Requirement for Board of Management members to each invest an amount equivalent
a) Cash compensation component
– Earmarked cash remuneration equivalent to the amount required to be invested in
to 20 % of their total bonus (after tax) in BMW AG common stock
b) Share-based remuneration component
(matching component)
Other compensation
Retirement and surviving dependants’ benefits
Model
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))
BMW AG shares, plus taxes and social insurance contributions
– Once the four-year holding period requirement is fulfilled, Board of Management mem-
bers receive for each three common stock shares held either – at the Company’s option –
one further share of common stock or the equivalent amount in cash.
Contractual agreement, main points: use of Company cars, insurance premiums,
contributions towards security systems, medical check-up
Principal features
Pension of € 120,000 p. a. plus fixed amounts based on length of Company and board
service
b) Defined contribution system with guaranteed minimum
rate of return
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
Pension contributions p. a.:
Member of the Board of Management: € 350,000 – € 400,000
Chairman of the Board of Management: €500,000 – € 700,000
Remuneration caps (maximum remuneration)
in € p. a.
Bonus
Cash compensation
for share acquisition
Share-based compensation programme
Monetary value
of matching
component
Possible
special bonus
Total *
Member of the Board of Management
in the first term of appointment
Member of the Board of Management
in the second term of appointment
or from fourth year in office
Chairman of the Board of Management
3,000,000
700,000
700,000
1,000,000
4,925,000
3,500,000
6,000,000
800,000
1,400,000
800,000
1,400,000
1,200,000
1,500,000
5,500,000
9,850,000
* Including basic remuneration, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the
individual components.
168 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company’s
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
191 STATEMENT ON CORPORATE GOVERNANCE
benefits in accordance with the rules of an older (de-
fined benefit) pension plan. Under the defined benefit
plan, the entitlement to retirement benefits arises at the
earliest on reaching the age of 60 or in case of invalidity.
The amount of the pension comprises a basic monthly
amount of € 10,000 plus a fixed amount. The fixed amount
is made up of approximately € 75 for each year of ser-
vice in the Company before becoming a member of the
Board of Management and between € 400 and € 600 for
each full year of service on the board (up to a maximum
of 15 years). Pension payments are adjusted based on
the rules applicable for the adjustment of civil servants’
pensions, i. e. the pensions of members of the Board of
Management are adjusted when the civil servants re-
muneration level B6 (excluding allowances) is increased
by more than 5 % or in accordance with the Company
Pension Act.
If a mandate is terminated, the new defined contribution
system provides entitlements which can be paid either
(a) in case of death or invalidity as a one-off amount, in
instalments, or (b) upon retirement – depending on the
wish of the ex-board member concerned – optionally
in the form of a lifelong monthly pension, as a one-off
amount, or in instalments, or in a combined form (e. g.
a combination of a one-off payment and a proportion-
ately reduced lifelong monthly pension). Former mem-
bers of the Board of Management are entitled to receive
the retirement benefit at the earliest upon reaching the
age of 60, or in the case of entitlements awarded after
1 January 2012, upon reaching the age of 62.
The amount of the benefits to be paid is determined
on the basis of the amount accrued in each board mem-
ber’s individual pension savings account. The amount
on this account arises from annual contributions paid
in, plus interest earned depending on the type of
investment.
If a member of the Board of Management with a vested
entitlement dies prior to the commencement of benefit
payments, a surviving spouse or otherwise surviving
children – in the latter case depending on their age and
education – are entitled to receive benefits as surviving
dependants. In case of invalidity or death, a minimum
benefit based on the potential annual contributions (up
to a maximum of 10) will be paid until the person con-
cerned would have reached the age of 60. In addition,
following the death of a retired board member who has
elected to receive a lifelong pension, 60 % of that amount
is paid as a lifelong widow’s pension. Pensions are in-
creased annually by at least 1 %.
Depending on the length of membership in the Board
of Management and the board member’s previous ac-
tivities, the annual contribution to be paid amounts
to between € 350,000 and € 400,000 for a member of
the Board of Management and between € 500,000 and
€ 700,000 for its Chairman. The guaranteed minimum
rate of return p. a. corresponds to the maximum interest
rate used to calculate insurance reserves for life insur-
ance policies (guaranteed interest on life insurance poli-
cies). When granting pension entitlements, the Super-
visory Board considers the targeted level of pension
provision in each case as well as the resulting expense
for the BMW Group.
Contributions falling due under the defined contribution
model are paid into an external fund in conjunction
with a trust model that is also used to fund pension ob-
ligations to employees.
Income earned on an employed or a self-employed basis
up to the age of 63 may be offset against pension entitle-
ments. In addition, certain circumstances have been
specified, in the event of which the Company no longer
has any obligation to pay benefits. In such cases, no
transitional payments will be made.
Board of Management members who retire immediately
after their service on the board and who draw a retire-
ment pension are entitled to purchase vehicles and
other BMW Group services at conditions that also apply
in each relevant case for pensioners and to lease BMW
Group vehicles in accordance with the guidelines appli-
cable to senior heads of departments. Retired Chairmen
of the Board of Management are entitled to use a BMW
Group vehicle as a Company car on a similar basis to
senior heads of departments, and depending on availa-
bility and against payment, use BMW chauffeur services.
Termination benefits on premature termination of board
activities, benefits paid by third parties
In conjunction with the amicable early termination
of Dr Reithofer’s Board of Management mandate with
effect from the end of the Annual General Meeting
2015, the Company also reached an agreement with
Dr Reithofer concerning the early termination of his
service contract with effect from the end of the Annual
General Meeting 2015. The contract termination agree-
ment envisages the calculation of variable cash remu-
neration for prorated activities in the financial year 2015
based on target attainment for the financial year 2013.
This arrangement ensures that, having been elected to
the Supervisory Board, he will not be involved in decid-
192
ing on the level of his own performance-related remu-
neration. Other entitlements resulting from the service
contract were settled subsequent to Dr Reithofer leaving
the Board of Management, in line with agreed terms, by
a payment of € 2.5 million in 2015. The Company made
a final pension contribution of € 0.7 million on behalf of
Dr Reithofer for the financial year 2015.
No commitments or agreements exist to pay compensa-
tion if a board member’s mandate is terminated early in
the event of a change of control or a takeover offer. No
members of the Board of Management received any pay-
ments or benefits from third parties in 2015 on account
of their activities as members of the Board of Manage-
ment of BMW AG.
Remuneration caps
The Supervisory Board has stipulated caps for all variable
remuneration components and for the remuneration of
Board of Management members in total. The caps are
shown in the table “Overview of compensation system
and compensation components”.
Total compensation of the Board of Management for the
finan cial year 2015 (2014)
The total compensation of the current members of the
Board of Management of BMW AG for the financial year
2015 amounted to € 35.5 million (2014: € 35.4 million),
of which € 7.7 million (2014: € 7.7 million) relates to fixed
components (including other remuneration). Variable
components amounted to € 27.1 million (2014: € 27.0 mil-
lion) and the share-based remuneration component to
€ 0.7 million (2014: € 0.7 million).
in € million
2015
2014
Amount Proportion
in %
Amount Proportion
in %
Fixed compensation
7.7
21.7
7.7
21.8
Variable cash
compensation
Share-based compen-
sation component*
Total compensation
27.1
76.3
27.0
76.3
0.7
35.5
2.0
100.0
0.7
35.4
1.9
100.0
* Matching component; provisional number or provisional monetary value calculated at
grant date (date on which the entitlement became binding in law). The final number
of matching shares is determined in each case when the requirement to invest in
BMW AG common stock has been fulfilled.
Compensation of the individual members of the Board of Management for the financial year 2015 (2014)
in € or
number of
matching shares
Harald Krüger
Norbert Reithofer3
Milagros Caiña
Carreiro-Andree
Klaus Draeger
Friedrich Eichiner
Klaus Fröhlich
Ian Robertson
Peter
Schwarzenbauer
Oliver Zipse5
Fixed compensation
Basic
compen-
sation
Other
compen-
sation
1,280,645
(900,000)
552,419
(1,500,000)
825,000
(750,000)
900,000
(900,000)
900,000
(900,000)
750,000
(46,371)
900,000
(900,000)
750,000
(750,000)
475,806
(–)
21,809
(18,071)
11,652
(30,152)
74,717
(68,555)
24,797
(24,790)
23,982
(21,952)
71,792
(394)
14,501
(14,161)
31,101
(26,481)
44,089
(–)
Total
1,302,454
(918,071)
564,071
(1,530,152)
899,717
(818,555)
924,797
(924,790)
923,982
(921,952)
821,792
(46,765)
914,501
(914,161)
781,101
(776,481)
519,895
(–)
Variable
cash com-
pensation
Share-based compensation
component
(matching component)1
Monetary
Number
value
Com-
pensation
Total
Total value
of benefits
allocated in
financial year
2
4,786,438
(3,245,550)
1,940,9814
(5,563,800)
3,058,588
(2,781,900)
3,293,863
(3,245,550)
3,293,863
(3,245,550)
2,823,290
(172,000)
3,293,863
(3,245,550)
2,823,311
(2,781,900)
1,791,119
(–)
1,478
(1,055)
–
(1,810)
1,014
(971)
1,092
(1,133)
1,092
(1,133)
871
(52)
1,092
(1,133)
936
(971)
457
(–)
8,032
(8,258)
130,079
(88,135)
–
(151,207)
89,242
(81,117)
96,107
(94,651)
96,107
(94,651)
76,657
(4,623)
96,107
(94,651)
82,377
(81,117)
48,602
(–)
6,218,971
(4,251,756)
2,505,052
(7,245,159)
4,047,547
(3,681,572)
4,314,767
(4,264,991)
4,313,952
(4,262,153)
3,721,739
(223,388)
4,304,471
(4,254,362)
3,686,789
(3,639,498)
2,359,616
(–)
6,088,892
(4,163,621)
2,505,052
(7,093,952)
3,958,305
(3,600,455)
4,218,660
(4,170,340)
4,217,845
(4,167,502)
3,645,082
(218,765)
4,208,364
(4,159,711)
3,604,412
(3,558,381)
2,311,014
(–)
715,278
35,472,904
34,757,626
(690,152)
(35,437,174)
(34,747,022)
Total 6
7,333,870
318,440
7,652,310
27,105,316
(7,490,726)
(225,136)
(7,715,862)
(27,031,160)
1 Provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is
determined in each case when the requirement to invest in BMW AG common stock has been fulfilled. See note 19 to the Group Financial Statements for a description of the
accounting treatment of the share-based compensation component.
2 Value of benefits allocated in financial year 2015 for work performed on the Board of Management during the financial year 2015. No share-based remuneration component
(matching component) from previous years fell due for payment in the financial year 2015, since holding period requirements had not yet been fulfilled.
3 Member of the Board of Management until 13. 05. 2015.
4 In line with agreed terms, the variable cash remuneration of Dr Reithofer for the financial year 2015 was calculated based on target attainment for the financial year 2013.
5 Member of the Board of Management since 13. 05. 2015.
6 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2014.
168 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company’s
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
193 STATEMENT ON CORPORATE GOVERNANCE
In addition, an expense of € 2.6 million (2014: € 2.1 mil-
lion) was recognised in the financial year 2015 for
current members of the Board of Management for the
period after the end of their service relationship,
which relates to the expense for allocations to pension
provisions.
Share-based compensation component of the individual
members of the Board of Management for the financial year
2015 (2014)
in €
Expense in 2015
in accordance
with HGB and
IFRS
Provision at
31.12. 2015 in
accordance with
HGB and IFRS1
Total benefits paid to former members of the Board
of Management and their surviving dependants for the
finan cial year 2015 amounted to € 8.0 million (2014:
€ 5.8 million). This amount includes the above-men-
tioned settlement of € 2.5 million paid to Dr Reithofer.
Harald Krüger
Norbert Reithofer2
Milagros Caiña Carreiro-Andree
Pension obligations to former members of the Board of
Management, including Dr Reithofer, and their surviv-
ing dependants are fully covered by pension provisions
amounting to € 71.8 million (2014: € 68.4 million), com-
puted in accordance with IAS 19.
Klaus Draeger
Friedrich Eichiner
Klaus Fröhlich
Ian Robertson
Peter Schwarzenbauer
Oliver Zipse3
Total4
166,581
(94,542)
278,201
(191,845)
109,760
(103,493)
90,275
(191,814)
133,415
(181,389)
34,245
(130)
224,354
(125,621)
59,311
(31,055)
9,915
(–)
369,498
(202,917)
690,016
(411,815)
268,970
(159,210)
497,690
(407,415)
497,259
(363,844)
34,375
(130)
491,185
(266,831)
100,747
(41,435)
9,915
(–)
1,106,057
(1,012,523)
2,959,655
(1,253,625)
Pension benefits of the individual members of the Board of Management
in €
Service cost
in accordance with IFRS
for the financial year 20155
Service cost
in accordance with HGB
for the financial year 20155
Present value of
pension obligations
(defined benefit plans),
in accordance with IFRS6
Present value of
pension obligations
(defined benefit plans),
in accordance with HGB6
Harald Krüger
Milagros Caiña Carreiro-Andree
Klaus Draeger
Friedrich Eichiner
Klaus Fröhlich
Ian Robertson
Peter Schwarzenbauer
Oliver Zipse3
Total 4
Norbert Reithofer2
175,287
(220,609)
360,767
(366,848)
184,066
(147,483)
201,018
(177,335)
350,000
(3,643)
448,139
(356,067)
360,305
(369,234)
221,667
(–)
2,301,249
(1,922,497)
354,143
(281,278)
358,331
(359,256)
364,656
(368,968)
408,960
(409,663)
408,960
(409,663)
350,000
(2,747)
411,555
(414,827)
364,312
(371,398)
221,667
(–)
2,888,441
(3,054,178)
715,679
(717,656)
3,993,819
(3,927,671)
1,427,599
(990,507)
5,251,799
(5,359,750)
5,465,539
(5,599,794)
1,510,725
(2,138,633)
3,279,690
(3,029,448)
1,081,408
(688,271)
1,188,313
(–)
23,198,892
(31,334,919)
8,232,832
(9,600,845)
3,992,702
(3,204,346)
1,427,072
(989,277)
5,011,606
(4,485,792)
5,163,692
(4,633,694)
1,510,706
(1,286,247)
2,968,379
(2,395,377)
1,081,155
(687,570)
1,187,721
(–)
22,343,033
(25,028,384)
8,232,832
(7,346,081)
1 Provisional number or provisional monetary value calculated on the basis of the closing price of BMW common stock in the Xetra trading system on 30 December 2015 (€ 97.63)
(fair value at reporting date).
2 Member of the Board of Management until 13. 05. 2015.
3 Member of the Board of Management since 13. 05. 2015.
4 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2014.
5 Service cost differs due to the different valuation bases used to measure pension obligations for HGB purposes (expected settlement amount) and for IFRS purposes
(present value of the defined benefit obligation).
6 Based on a legal right to receive the benefits already promised to them, Board of Management members appointed for the first time prior to 1 January 2010 were given the option
of choosing between the previous defined benefit model and the new defined contribution model.
194
2. Supervisory Board compensation
Responsibilities, regulations pursuant to the Articles of
Incorporation
The compensation of the Supervisory Board is specified
either by a resolution of the shareholders at the Annual
General Meeting or in the Articles of Incorporation. The
compensation regulation valid for the financial year un-
der report was resolved by shareholders at the Annual
General Meeting on 14 May 2013 and is set out in Arti-
cle 15 of BMW AG’s Articles of Incorporation, which can
be viewed and / or downloaded at www.bmwgroup.com / ir
under the menu items “Facts about the BMW Group”
and “Corporate Governance”.
Compensation principles, compensation components
The Supervisory Board of BMW AG receives a fixed
compensation component as well as a corporate perfor-
mance-related compensation component, which is ori-
ented toward sustainable growth and based on a multi-
year assessment. The corporate performance-related
component is based on average earnings per share of
common stock for the remuneration year and the two
preceding financial years.
These two interacting components are intended to ensure
that the compensation of Supervisory Board members
is commensurate overall in relation to the tasks performed
and the Company’s financial condition and also takes
account of business performance over several years.
In accordance with the Articles of Incorporation, each
member of BMW AG’s Supervisory Board receives, in ad-
dition to the reimbursement of reasonable expenses, a
fixed amount of € 70,000 (payable at the end of the year)
as well as a corporate performance-related compensation
of € 170 for each full € 0.01 by which the average amount
of (undiluted) earnings per share (EPS) of common stock
reported in the Group Financial Statements for the re-
muneration year and the two preceding financial years
exceeds a minimum amount of € 2.00 (payable after the
Annual General Meeting held in the following year). An
upper limit corresponding to twice the amount of the
fixed compensation (€ 140,000) is in place for the corpo-
rate performance-related compensation.
With this combination of fixed compensation elements
and a corporate performance-related compensation
component oriented toward sustainable growth, the
compensation structure in place for BMW AG’s Supervi-
sory Board complies with the recommendation on su-
pervisory board compensation contained in section
5.4.6 paragraph 2 sentence 2 of the German Corporate
Governance Code (version dated 5 May 2015).
168 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company’s
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
exercising of chair and deputy chair positions in the
Supervisory Board as well as the chair and membership
of committees should also be considered when deter-
mining the level of compensation.
Accordingly, the Articles of Incorporation of BMW AG stip-
ulate that the Chairman of the Supervisory Board shall
receive three times the amount and each Deputy Chair-
man shall receive twice the amount of the remuneration
of a Supervisory Board member. Provided the relevant
committee convened for meetings on at least three days
during the financial year, each chairman of the Super-
visory Board’s committees receives twice the amount and
each member of a committee receives one-and-a-half times
the amount of the remuneration of a Supervisory Board
member. If a member of the Supervisory Board exercises
more than one of the functions referred to above, the
compensation is measured only on the basis of the func-
tion that is remunerated with the highest amount.
In addition, each member of the Supervisory Board re-
ceives an attendance fee of € 2,000 for each full meeting
of the Supervisory Board (Plenum) that the member has
attended (payable at the end of the financial year). At-
tendance at more than one meeting on the same day is
not remunerated separately.
The Company also reimburses to each member of the
Supervisory Board reasonable expenses and any value-
added tax arising on the member’s remuneration. The
amounts disclosed below are net amounts.
In order to 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
2015 (total)
In accordance with Article 15 of the Articles of Incor-
poration, the compensation of the Supervisory Board for
activities during the financial year 2015 amounted to € 5.1
million (2014: € 4.8 million). This amount includes fixed
compensation of € 2.0 million (2014: € 2.0 million) and
variable compensation of € 3.1 million (2014: € 2.8 million).
in € million
2015
2014
Amount Proportion
in %
Amount Proportion
Fixed compensation
Variable compensation
Total compensation
2.0
3.1
5.1
39.2
60.8
100.0
2.0
2.8
4.8
in %
41.7
58.3
100.0
The German Corporate Governance Code also recom-
mends in section 5.4.6 paragraph 1 sentence 2 that the
Supervisory Board members did not receive any further
compensation or benefits from the BMW Group for ad-
visory and / or agency services personally rendered.
195 STATEMENT ON CORPORATE GOVERNANCE
Compensation of the individual members of the Supervisory Board for the financial year 2015 (2014)
in €
Fixed
compensation
Attendance fee
Variable
compensation
Total
Norbert Reithofer (Chairman)1
Joachim Milberg (Chairman) 2
Manfred Schoch (Deputy Chairman)3
Stefan Quandt (Deputy Chairman)
Stefan Schmid (Deputy Chairman)3
Karl-Ludwig Kley (Deputy Chairman)
Christiane Benner 3
Franz Haniel
Reinhard Hüttl
Henning Kagermann
Susanne Klatten
Renate Köcher
Ulrich Kranz
Robert W. Lane
Horst Lischka 3
Willibald Löw 3
Wolfgang Mayrhuber 4
Simone Menne5
Dominique Mohabeer 3
Brigitte Rödig 3
Jürgen Wechsler 3
Werner Zierer 3
Total 6
134,055
(–)
76,521
(210,000)
140,000
(140,000)
140,000
(140,000)
140,000
(140,000)
140,000
(140,000)
70,000
(44,301)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(44,301)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
25,507
(70,000)
44,685
(–)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
8,000
(–)
2,000
(10,000)
10,000
(10,000)
10,000
(10,000)
10,000
(10,000)
4,000
(6,000)
10,000
(8,000)
10,000
(10,000)
10,000
(8,000)
10,000
(10,000)
10,000
(10,000)
10,000
(10,000)
10,000
(8,000)
10,000
(8,000)
8,000
(10,000)
10,000
(10,000)
2,000
(8,000)
8,000
(–)
10,000
(10,000)
10,000
(10,000)
8,000
(10,000)
10,000
(10,000)
223,986
(–)
127,855
(317,730)
233,920
(211,820)
233,920
(211,820)
233,920
(211,820)
233,920
(211,820)
116,960
(67,028)
116,960
(105,910)
116,960
(105,910)
116,960
(105,910)
116,960
(105,910)
116,960
(105,910)
116,960
(67,028)
116,960
(105,910)
116,960
(105,910)
116,960
(105,910)
42,618
(105,910)
74,662
(–)
116,960
(105,910)
116,960
(105,910)
116,960
(105,910)
116,960
(105,910)
366,041
(–)
206,376
(537,730)
383,920
(361,820)
383,920
(361,820)
383,920
(361,820)
377,920
(357,820)
196,960
(119,329)
196,960
(185,910)
196,960
(183,910)
196,960
(185,910)
196,960
(185,910)
196,960
(185,910)
196,960
(119,329)
196,960
(183,910)
194,960
(185,910)
196,960
(185,910)
70,125
(183,910)
127,347
(–)
196,960
(185,910)
196,960
(185,910)
194,960
(185,910)
196,960
(185,910)
1,820,768
(1,820,382)
190,000
(190,000)
3,042,241
(2,754,240)
5,053,009
(4,764,622)
1 Member and Chairman of the Supervisory Board since 13. 05. 2015.
2 Member and Chairman of the Supervisory Board until 13. 05. 2015.
3 These employee representatives have – in line with the guidelines of the Deutsche Gewerkschaftsbund – requested that their remuneration be paid into the
Hans Böckler Foundation.
4 Member of the Supervisory Board until 13. 05. 2015.
5 Member of the Supervisory Board since 13. 05. 2015.
6 Figures for the previous year include the remuneration of members of the Supervisory Board who left office during the financial year 2014.
3. Other
Apart from vehicle lease contracts entered into on cus-
tomary market conditions, no advances and loans were
granted by the Company to members of the Board of
Management and the Supervisory Board, nor were any
contingent liabilities entered into on their behalf.
196
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 4 and § 315 (1) sentence 6 of the German
Commercial Code (HGB)
“To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position and profit of the
Group, and the Group Management Report includes
a fair review of the development and performance of
the business and the position of the Group, together
with a description of the principal opportunities and
risks associated with the expected development of the
Group.”
Munich, 18 February 2016
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
Harald Krüger
Milagros Caiña Carreiro-Andree
Dr.-Ing. Klaus Draeger
Dr. Friedrich Eichiner
Klaus Fröhlich
Dr. Ian Robertson (HonDSc)
Peter Schwarzenbauer
168 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company’s
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
Oliver Zipse
197
BMW Group
Auditor’s Report
We have audited the consolidated financial statements
prepared by Bayerische Motoren Werke Aktiengesell-
schaft, comprising the income statement for group and
statement of comprehensive income for group, the
balance sheet for group, cash flow statement for group,
group statement of changes in equity and the notes to
the group financial statements and its report on the
position of the Company and the Group for the business
year from 1 January to 31 December 2015. The prepara-
tion of the consolidated finan cial statements and group
management report in accordance with IFRSs, as
adopted by the EU, and the additional requirements of
German commercial law pur suant to § 315 a (1) HGB
(Handelsgesetzbuch “German Commercial Code”) are
the responsibility of the parent company’s management.
Our responsibility is to express an opinion on the con-
solidated financial statements and on the group manage-
ment report based on our audit.
We conducted our audit of the consolidated financial
statements in accordance with § 317 HGB and German
generally accepted standards for the audit of financial
statements promulgated by the Institut der Wirtschafts-
prüfer (Institute of Public Auditors in Germany) (IDW).
Those standards require that we plan and perform the
audit such that misstatements materially affecting the
presentation of the net assets, financial position and
results of operations in the consolidated financial state-
ments in accordance with the applicable financial report-
ing framework and in the group management report
are detected with reasonable assurance. Knowledge of
the business activities and the economic and legal
environment of the Group and expectations as to possi-
ble misstatements are taken into account in the deter-
mination of audit procedures. The effectiveness of the
accounting-related internal control system and the evi-
dence supporting the disclosures in the consolidated
financial statements and in the group management
report are examined primarily on a test basis with in the
framework of the audit. The audit also includes assess-
ing the annual financial statements of those entities
included in consolidation, the determination of entities
to be included in consolidation, the accounting and
consolidation principles used and significant estimates
made by the management, as well as evaluating the
overall presentation of the con solidated finan cial state-
ments and group management report. We believe that
our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the
consolidated financial statements comply with IFRSs,
as adopted by the EU, the additional requirements of
German commercial law pursuant to § 315 a (1) HGB and
give a true and fair view of the net assets, financial
position and results of operations of the Group in ac-
cordance with these requirements. The group manage-
ment report is consistent with the consolidated finan-
cial statements and as a whole provides a suitable
view of the Group’s position and suitably presents the
opportunities and risks of future development.
Munich, 25 February 2016
KPMG AG
Wirtschaftsprüfungsgesellschaft
Pastor
Wirtschaftsprüfer
Feege
Wirtschaftsprüfer
198
OTHER INFORMATION
BMW Group Ten-year Comparison
Sales volume
Automobiles
Motorcycles1
Production volume
Automobiles
Motorcycles1
Financial Services
2015
2014
2013
2012
units
units
units
units
2,247,485
2,117,965
1,963,798
1,845,186
136,963
123,495
115,215
106,358
2,279,503
2,165,566
2,006,366
1,861,826
151,004
133,615
110,127
113,811
Contract portfolio
Business volume (based on balance sheet carrying amounts) 2
contracts
4,718,970
4,359,572
4,130,002
3,846,364
€ million
111,191
96,390
84,347
80,974
Income Statement
Revenues
Gross profit margin Group3
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 Automotive segment 4
Capital expenditure
Capital expenditure ratio (capital expenditure / revenues)
Personnel
Workforce at year-end5
Personnel cost per employee
Dividend
Dividend total
Dividend per share of common stock / preferred stock
€ million
92,175
80,401
76,059
76,848
%
€ million
€ million
%
€ million
%
€ million
€ million
€ million
€ million
%
€ million
€ million
€ million
€ million
€ million
€ million
%
19.7
9,593
9,224
10.0
2,828
30.7
6,396
110,343
61,831
42,764
24.8
63,819
65,591
21.2
9,118
8,707
10.8
2,890
33.2
5,817
97,959
56,844
37,437
24.2
58,288
59,078
20.1
7,978
7,893
10.4
2,564
32.5
5,329
86,193
52,184
35,600
25.7
51,643
51,134
20.2
8,275
7,803
10.2
2,692
34.5
5,111
81,305
50,530
30,606
23.2
52,834
48,395
172,174
154,803
138,377
131,835
6,122
11,836
5,890
6.4
7,688
9,423
6,100
7.6
7,671
9,964
6,711
8.8
8,370
9,167
5,240
6.8
122,244
97,136
116,324
92,337
110,351
89,869
105,876
89,161
€
€ million
€
2,102
3.206/ 3.226
1,904
1,707
1,640
2.90 / 2.92
2.60 / 2.62
2.50 /2.52
1 Excluding Husqvarna, sales volume up to 2013: 59,776 units; production up to 2013: 59,426 units.
2 Amount computed on the basis of balance sheet figures: until 2007 from the Group balance sheet, from 2008 onwards from the Financial Services segment balance sheet.
3 Research and development expenses included in cost of sales with the effect from 2008.
4 Figures are reported in the cash flow statement up to 2006 as cash inflow from operating activities of Industrial Operations.
5 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.
6 Proposal by management.
198 OTHER INFORMATION
198 BMW Group Ten-year Comparison
200 BMW Group Locations
202 Glossary
204 Index
205 Index of Graphs
206 Financial Calendar
207 Contacts
199 OTHER INFORMATION
2011
2010
2009
2008
2007
2006
1,668,982
1,461,166
1,286,310
1,435,876
1,500,678
1,373,970
104,286
98,047
87,306
101,685
102,467
100,064
1,738,160
1,481,253
1,258,417
1,439,918
1,541,503
1,366,838
110,360
99,236
82,631
104,220
104,396
103,759
Sales volume
Automobiles
Motorcycles1
Production volume
Automobiles
Motorcycles1
Financial Services
3,592,093
3,190,353
3,085,946
3,031,935
2,629,949
2,270,528
75,245
66,233
61,202
60,653
51,257
44,010
Contract portfolio
Business volume (based on balance sheet carrying amounts) 2
68,821
60,477
50,681
53,197
56,018
21.1
8,018
7,383
10.7
2,476
33.5
4,907
74,425
49,004
27,103
22.0
49,113
47,213
18.1
5,111
4,853
8.0
1,610
33.1
3,243
67,013
43,151
23,930
21.7
46,100
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
21
6.0
330
62,416
38,670
20,273
20.1
41,526
39,287
123,429
110,164
101,953
101,086
7,776
8,110
3,692
5.4
7,432
8,149
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
100,306
84,887
95,453
83,141
96,230
72,349
100,041
75,612
107,539
76,704
Income Statement
48,999
23.1
Revenues
Gross profit margin Group3
4,050
Profit before financial result
4,124
Profit before tax
8.4
Return on sales (earnings before tax / revenues)
1,250
Income taxes
30.3
Effective tax rate
2,874
Net profit for the year
Balance Sheet
50,514
Non-current assets
28,543
Current assets
19,130
Equity
24.2
Equity ratio Group
31,372
Non-current provisions and liabilities
28,555
Current provisions and liabilities
79,057
Balance sheet total
Cash Flow Statement
1,336
5,373
Cash and cash equivalents at balance sheet date
Operating cash flow Automotive segment 4
4,313
Capital expenditure
8.8
Capital expenditure ratio (capital expenditure / revenues)
106,575
Personnel
Workforce at year-end5
76,621
Personnel cost per employee
Dividend
1,508
852
197
197
694
458
Dividend total
2.30 / 2.32
1.30 /1.32
0.30 / 0.32
0.30 / 0.32
1.06 / 1.08
0.70 / 0.72
Dividend per share of common stock / preferred stock
200
BMW Group
Locations
The BMW Group is present in the world markets with
30 production and assembly plants, 42 sales subsidiaries
and a research and development network.
198 OTHER INFORMATION
198 BMW Group Ten-year Comparison
200 BMW Group Locations
202 Glossary
204 Index
205 Index of Graphs
206 Financial Calendar
207 Contacts
— H Headquarters
— R Research and Development
BMW Group Research and Innovation Centre (FIZ),
Munich, Germany
BMW Group Research and Technology, Munich,
Germany
BMW Car IT, Munich, Germany
BMW Innovation and Technology Centre, Landshut,
Germany
BMW Diesel Competence Centre, Steyr, Austria
BMW Group Designworks, Newbury Park, USA
BMW Group Technology Office USA, Mountain View, USA
BMW Group Engineering and Emission Test Center,
Oxnard, USA
BMW Group ConnectedDrive Lab China, Shanghai,
and BMW Group Designworks Studio Shanghai, China
BMW Group Engineering China, Beijing, China
BMW Group Engineering Japan, Tokyo, Japan
BMW Group Engineering USA, Woodcliff Lake, USA
BMW Technology, Chicago, USA
201 OTHER INFORMATION
— P Production
— A Partner plants
— S Sales subsidiary markets / Locations Financial Services
Partner plant, Born, Netherlands
Partner plant, Cairo, Egypt
Partner plant, Graz, Austria
Partner plant, Jakarta, Indonesia
Partner plant, Kaliningrad, Russia
Partner plant, Kulim, Malaysia
Partner plant, Manaus, Brazil
BMW Group plant Araquari, Brazil
BMW Group plant Berlin
BMW Group plant Chennai, India
BMW Group plant Dingolfing
BMW Group plant Eisenach
BMW Group plant Hams Hall, GB
BMW Group plant Landshut
BMW Group plant Leipzig
BMW Group plant Munich
BMW Group plant Oxford, GB
BMW Group plant Rayong, Thailand
BMW Group plant Regensburg
BMW Group plant Rosslyn, South Africa
BMW Group plant Spartanburg, USA
BMW Group plant Steyr, Austria
BMW Group plant Swindon, GB
BMW Group plant Wackersdorf
Rolls-Royce Manufacturing Plant, Goodwood, GB
BMW Brilliance Automotive, China (joint venture – 3 plants)
SGL Automotive Carbon Fibers (joint operation – 2 plants)
Argentina*
Australia
Austria
Belgium
Brazil
Bulgaria*
Canada
China
Czech Republic*
Denmark
Finland*
France
Germany
Great Britain
Greece
Hungary*
India
Indonesia*
Ireland
Italy
Japan
Luxembourg
Malaysia
Malta*
Mexico
Netherlands
New Zealand
Norway
Poland
Portugal
Romania*
Russia
Singapore*
Slovakia*
Slovenia*
South Africa
South Korea
Spain
Sweden
Switzerland
Thailand
USA
* Sales locations only.
202
Glossary
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.
Combined heat and power
Combined heat and power (CHP) or cogeneration is
the simultaneous conversion of energy sources into
electricity and useful heating. In comparison to separate
generation of electricity in conventional power plants,
energy is converted more efficiently and with greater
flexibility. As a result, this technology helps to reduce
CO2 emissions.
Common stock
Stock with voting rights (cf. preferred stock).
Connected Drive
Under the term Connected Drive, the BMW Group
already unites a unique portfolio of innovative features
that enhance comfort, raise infotainment to new levels
and significantly boost safety in BMW Group vehicles.
Cost of materials
Comprises all expenditure to purchase raw materials
and supplies.
DAX
Abbreviation for “Deutscher Aktienindex”, the German
Stock Index. The index is based on the weighted market
prices of the 30 largest German stock corporations (by stock
market capitalisation).
Deferred taxes
Accounting for deferred taxes is a method of allocating
tax expense to the appropriate accounting period.
DJSI World
Abbreviation for “Dow Jones Sustainability Index World”.
A family of indexes created by Dow Jones and the Swiss
investment agency SAM Sustainability Group for com-
panies with strategies based on a sustainability concept.
The BMW Group has been one of the leading companies
in the DJSI since 1999.
EBIT
Abbreviation for “Earnings Before Interest and Taxes”.
The profit before income taxes, minority interest and
financial result.
EBITDA
Abbreviation for “Earnings Before Interest, Taxes, Depre-
ciation and Amortisation”. The profit before income
taxes, minority interest, financial result and depreciation /
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
inside the vehicle.
Equity ratio
The proportion of equity (= subscribed capital, reserves,
accumulated other equity and minority interest) to the
balance sheet total.
Derivatives
Financial products, whose measurement is derived
principally from market price, market price fluctuations
and expected market price changes of the underlying
instrument (e. g. indices, stocks or bonds).
Free cash flow
Free cash flow corresponds to the cash inflow from oper-
ating activities of the Automotive segment less the cash
outflow for investing activities of the Automotive seg-
ment adjusted for net investments in marketable securities
and term deposits.
Gross margin
Gross profit as a percentage of revenues.
198 OTHER INFORMATION
198 BMW Group Ten-year Comparison
200 BMW Group Locations
202 Glossary
204 Index
205 Index of Graphs
206 Financial Calendar
207 Contacts
Subsidiaries
Subsidiaries are those enterprises which, either directly
or indirectly, are under the uniform control of the
management of BMW AG or in which BMW AG, either
directly or indirectly
– 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 qualifica-
tion and selection, ensure the application of uniform
standards throughout the Group and create efficient
sourcing and procurement processes along the whole value
added chain.
Sustainability
Sustainability, or sustainable development, gives equal
consideration to ecological, social and economic develop-
ment. In 1987 the United Nations “World Commission
on Environment and Development” defined sustainable
development as development that meets the needs of
the present without compromising the ability of future
generations to meet their own needs. The economic
relevance of corporate sustainability to the BMW Group
is evident in three areas: resources, reputation and risk.
203 OTHER INFORMATION
IFRS
International Financial Reporting Standards, intended
to ensure global comparability of financial reporting
and consistent presentation of financial statements.
The IFRS are issued by the International Accounting
Standards Board and include the International
Accounting Standards (IAS), which are still valid.
Indicator for water consumption
The indicators for water consumption refer to the pro-
duction sites of the BMW Group. The water consumption
includes the process water input for the production
as well as the general water consumption, e. g. for sani-
tation facilities.
Operating cash flow
Cash inflow from the operating activities of the Auto-
motive segment.
Preferred stock
Stock which receives a higher dividend than common
stock, but without voting rights.
Rating
Standardised evaluation of a company’s credit standing
which is widely accepted on the global capital markets.
Ratings are published by independent rating agencies,
e. g. Standard & Poor’s or Moody’s, based on their analysis
of a company.
Return on sales
Pre-tax: Profit before tax as a percentage of revenues.
Post-tax: Profit as a percentage of revenues.
Risk management
An integral component of all business processes. Following
enactment of the German Law on Control and Trans-
parency within Businesses (KonTraG), all companies
listed on a stock exchange in Germany are required to
set up a risk management system. The purpose of this
system is to identify risks at an early stage which could
have a significant adverse effect on the assets, liabilities,
financial position and results of operations, and which
could endanger the continued existence of the Company.
This applies in particular to transactions involving risk,
errors in accounting or financial reporting and violations
of legal requirements. The Board of Management is
required to set up an appropriate system, to document
that system and monitor it regularly with the aid of the
internal audit department.
204
Index
A
Accounting policies
Apprentices
Automotive segment
44
101 et seq.
29 et seq.
B
Balance sheet structure
54, 143 et seq.
Bonds
56
4, 50 et seq.
51 et seq., 132
4, 51 et seq., 94 et seq., 159 et seq.
51 et seq., 94 et seq., 159 et seq.
33 et seq.
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
Cost of materials
Cost of sales
57
50, 102, 113
184 et seq.
147
3, 27 et seq., 47, 66 et seq.
188 et seq.
38, 42, 46, 76
99 et seq.
100 et seq.
168 et seq.
D
Dealer organisation /dealerships
Declaration with respect to the Corporate Governance
Code
Dividend
Dow Jones Sustainability Index World
89, 118
19, 42
169
46
E
Earnings per share
Efficient Dynamics
Employees
Equity
Exchange rates
44 et seq.
55 et seq., 132 et seq.
49, 102, 118
39
23 et seq., 64, 77, 101, 157 et seq.
F
Financial assets
Financial instruments
Financial liabilities
Financial result
Financial Services segment
Fleet emissions
50 et seq., 60
55, 106, 128 et seq.
105 et seq., 148 et seq.
55, 107 et seq., 143
36 et seq.
3, 27 et seq., 47, 66 et seq.
198 OTHER INFORMATION
198 BMW Group Ten-year Comparison
200 BMW Group Locations
202 Glossary
204 Index
205 Index of Graphs
206 Financial Calendar
207 Contacts
G
Group tangible, intangible and investment
assets
122 et seq.
49, 59, 90 et seq., 113 et seq.
I
Income statement
Income taxes
Intangible assets
Inventories
Investments accounted for using the equity method
and other investments
50, 107, 115 et seq., 142
55 et seq., 102, 124
125 et seq.
107, 130
K
Key data per share
88
L
Lease business
Leased products
Locations
125
200 et seq.
36 et seq.
M
Mandates of members of the Board of
170
Management
Mandates of members of the
Supervisory Board
Marketable securities
Motorcycles segment
171 et seq.
105
35 et seq.
N
Net profit
New financial reporting rules
4, 49 et seq.
109 et seq.
115
O
Other financial result
Other investments
Other operating income and expenses
Other provisions
Outlook
65 et seq.
142
126
114
56, 60, 107, 134 et seq.
20 et seq., 27 et seq., 65 et seq.
118
P
Pension provisions
Performance indicators
Personnel expenses
Production
Production network
Profit before financial result
Profit before tax
Property, plant and equipment
41
Purchasing
31 et seq.
31 et seq.
4 et seq., 49 et seq.
4 et seq., 27 et seq., 49 et seq., 65, 67
103
205 OTHER INFORMATION
Index of Graphs
55, 106, 127 et seq.
89, 134
160 et seq.
188 et seq.
R
Rating
Receivables from sales financing
Related party relationships
Remuneration system
Report of the Supervisory Board
Research and development
Result from equity accounted investments
Return on sales
Revenue reserves
Revenues
101 et seq., 113
Risks report
20 et seq., 49 et seq.
68 et seq.
38 et seq.
132
6 et seq.
114
4 et seq., 27 et seq., 49 et seq., 59, 66 et seq.,
3, 27 et seq., 29, 65 et seq.
163 et seq.
S
Sales volume
Segment information
Selling and administrative expenses
113
Shareholdings of members of the Board of
Management and the Supervisory Board
Statement of Comprehensive Income
Stock
Sustainability
45 et seq.
87 et seq.
161
90, 121
T
Tangible, intangible and investment
assets
Trade payables
Trade receivables
103, 122 et seq.
60 et seq., 131
146
5
25
24
24
20
Finances
BMW Group in figures
Value drivers
Exchange rates compared to the euro
Oil price trend
24
Steel price trend
Precious metals price trend
Contract portfolio of Financial Services segment
BMW Group new vehicles financed by
Financial Services segment
Contract portfolio retail customer financing of
Financial Services segment
37
Development of credit loss ratio
Regional mix of purchase volumes
Change in cash and cash equivalents
Financial liabilities
54
Balance sheet structure – Automotive segment
Balance sheet structure – Group
BMW Group value added
Risk management in the BMW Group
56
68
58
41
37
38
52
56
36
Production and sales volume
BMW Group – key automobile markets
BMW Group sales volume by region
BMW Group – key motorcycle markets
BMW Group sales volume of motorcycles
29
29
35
Workforce
BMW Group apprentices at 31 December
Employee attrition rate at BMW AG
Proportion of non-tariff female employees
Proportion of female executives
182
45
35
44
45
Environment
Materiality matrix
46
Stock
Development of BMW stock
87
Compliance
BMW Group Compliance Management System
184
This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.
206
Financial Calendar
Annual Accounts Press Conference
Analyst and Investor Conference
Quarterly Report to 31 March 2016
Annual General Meeting
Quarterly Report to 30 June 2016
Quarterly Report to 30 September 2016
Annual Report 2016
Annual Accounts Press Conference
Analyst and Investor Conference
Quarterly Report to 31 March 2017
Annual General Meeting
Quarterly Report to 30 June 2017
Quarterly Report to 30 September 2017
16 March 2016
17 March 2016
3 May 2016
12 May 2016
2 August 2016
4 November 2016
21 March 2017
21 March 2017
22 March 2017
4 May 2017
11 May 2017
3 August 2017
7 November 2017
198 OTHER INFORMATION
198 BMW Group Ten-year Comparison
200 BMW Group Locations
202 Glossary
204 Index
205 Index of Graphs
206 Financial Calendar
207 Contacts
207 OTHER INFORMATION
Contacts
Business and Finance Press
Telephone
Fax
E-mail
Investor Relations
Telephone
Fax
E-mail
+49 89 382-2 45 44
+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
A FURTHER CONTRIBUTION
TOWARDS PRESERVING
RESOURCES
The BMW Group Annual Report was printed on paper with the Blue Angel
eco-label. The paper used was produced, climate-neutrally and without
optical brighteners and chlorine bleach, from recycled waste paper.
The corresponding emissions were compensated by additional climate
protection measures as part of a hydroelectric project (certificate
number: ID53152-1602-1014).
PUBLISHED BY
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Germany
Tel. +49 89 382-0